Senate Commerce Committee Statement to Senate, No. 1616 — State of New Jersey (March 14, 2022)

Summary

A Senate Commerce Committee statement to the Senate on Senate Bill No. 1616, State of New Jersey, dated March 14, 2022, reporting the bill favorably. The bill sets transparency standards for pharmacy benefits manager (PBM) business practices, requiring PBMs to apply for a license with the Department of Banking and Insurance every three years and carriers to ensure a contracted PBM owes them a fiduciary duty. Carriers must document that manufacturer compensation was remitted to covered persons at the point of sale or used to offset premium costs, and must establish pharmacy and therapeutics committees. The statement says the bill is identical to the Assembly Committee Substitute for Assembly Bill Nos. 536 and 2841.

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SENATE COMMERCE COMMITTEE

STATEMENT TO

SENATE, No.
1616

STATE
OF NEW JERSEY

DATED: MARCH
14, 2022

The
Senate Commerce Committee reports favorably Senate Bill No. 1616.

This
bill sets new transparency standards for pharmacy benefits manager (PBM)
business practices. Specifically, the bill concerns the licensing and
reporting requirements of a carrier or a PBM. The bill requires that PBMs apply
for a license with the Department of Banking and Insurance every three years
and requires carriers to ensure that a PBM under contract with the carrier owes
a fiduciary duty to the carrier. Carriers are to maintain detailed records of
transactions and submit annual documentation showing that any compensation
remitted by a manufacturer, developer, or labeler to a carrier or PBM was
either remitted directly to the covered person at the point of sale to reduce
out of pocket expenses or used to offset premium costs for future plan years.
Additionally, the bill mandates that carriers and PBMs establish pharmacy and
therapeutics committees that are free from conflicts of interest and use one or
more formularies. For the purposes of calculating a carrier’s anticipated loss
ratio, PBM compensation constitutes an administrative cost rather than a
benefit.

As
reported, this bill is identical to the Assembly Committee Substitute for
Assembly Bill Nos. 536 and 2841, as adopted and reported by the Assembly Financial
Institutions and Insurance Committee on this date.

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