The Equitable Drug Pricing and Patient Access Act

By Margie Donlon and Luanne Peterpaul

Assemblywomen Luanne Peterpaul and Margie Donlon

We are working diligently in the State Legislature to advance our legislation to reform the pricing practices of pharmacy benefit managers (PBMs) and address their impact on prescription drug prices for New Jersey residents.

The Assembly Financial Institutions and Insurance, of which Assemblywoman Peterpaul is a member, recently conducted hearings to continue the discussion of reforming PBMs. Our Legislative District 11 partner, Senator Vin Gopal, also is pushing hard for the Senate to advance similar legislation to that we have co-primary sponsored in the Assembly. The legislation would establish the “Equitable Drug Pricing and Patient Access Act” to address price gouging by PBMs.

We have been working in bipartisan fashion to change the way PBMs reimburse pharmacies. While many patients wrestle with high prescription drug costs, this small group of prescription drug middlemen are keeping prices high to obtain a financial benefit. They are engaging in practices that threaten to put many independent local pharmacies out of business.

PBMs were originally established to serve as an intermediary between pharmacists, employers, and insurers to ensure the most cost-effective medication routes. However, a New York Times investigation and a Federal Trade Commission report released last July detailed how price manipulation by PBMs was driving up prescription drug costs and cutting accessibility to critical prescription drugs, including insulin and cancer treating drugs. These actions also impact people with health insurance, including those who are covered by New Jersey’s state health care benefits program. When PBMs take advantage of state health benefits programs and Medicaid and charge increasingly high premiums, taxpayers foot the bill and residents are apt to lose access to their local pharmacies.

When the reports were released, we joined independent pharmacy owners in calling on the state Attorney General to launch an investigation into PBMs and their impact on drug costs for New Jersey residents.

Constituents and independent pharmacies regularly call our Legislative District 11 office to seek help with skyrocketing drug prices that pose an increasing threat to their health. The FTC report affirms the scope of this problem. The FTC noted that the six largest PBMs manage nearly 95 percent of all prescriptions filled in the country.

The “Equitable Drug Pricing and Patient Access Act” brings reimbursement rates for prescription drug services paid to a pharmacy for a Medicaid beneficiary in line with the national average drug acquisition cost. The bill also requires that each Medicaid managed care contract in this state include pharmacy choice.

Last year, we passed a historic package of bills that went into effect in January mandating transparency and disclosure for lower-cost prescription options, put prohibitions on overcharging, and strengthened regulations for contracts between PBMs and pharmacies. However, the NYT and FTC reports, as well as the continued rise in prescription drug prices, indicate there’s still more work to be done. So we are stepping up our bipartisan efforts to put tighter controls on PBMs and for increased transparency in prescription drug pricing.

On an unrelated note, Asian American and Pacific Islander Heritage Month begins today, May 1.

As Senator Gopal is the first Indian American elected to the NJ legislature, it is gratifying to note that several of his bills have been signed into law demonstrating New Jersey’s commitment to prioritizing the protection of Asian Americans and Pacific Islanders from racism and violence. They include requiring state agencies to update demographic data collection methods on New Jersey’s AAPI residents, and requiring school districts to provide instruction on history and contributions of AAPI as part of the New Jersey Student Learning Standards in Social Studies.