Bill > A1646

Introduced Session

This bill provides for prescription drug disclosure requirements and measures to reduce costs for prescription drugs and biological products costs. Under the bill, pharmacy benefits managers (PBMs) are required to disclose certain information about prescription drug and biological product pricing and generic substitutions to benefit plan purchasers. The bill requires PBMs to establish a toll-free telephone number through which consumers and pharmacists can quickly obtain information regarding coverage, pricing and prescription drug and biological product safety. With respect to purchasers of pharmacy benefits management services, this bill requires PBMs to disclose, in the contract entered into between the purchaser and the PBM, the methodology and sources utilized to determine multiple source generic drug and biological product pricing. That pricing information shall be updated whenever a change occurs and must be provided to the purchaser. If a PBM uses a multiple source generic list for drugs and biological product dispensed at retail, but not for drugs and biological products dispensed by mail, this must be disclosed in the contract as well, or within 21 business days from the implementation of the practice. In addition, the bill requires PBMs to disclose to purchasers whether the multiple source generic pricing list used to bill the purchaser is the same as the list used to reimburse pharmacies. If the lists are not the same, the difference between the amount paid to the pharmacy and the amount charged to the purchaser shall be disclosed. This bill also requires PBMs to provide a toll-free telephone number for consumers and contracted pharmacies to speak with a New Jersey-licensed pharmacist concerning benefits coverage, drug and biological product pricing and prescription drug safety. Callers may not be placed on hold for longer than five minutes, and concerns must be resolved within 24 hours. This bill establishes the Prescription Drug and Biological Product Review Commission in the Division of Consumer Affairs in the Department of Law and Public Safety, which will be tasked with developing a list of critical prescription drugs and biological products for which drug and biological product manufacturers will be required to report certain information concerning development, production, and marketing costs. If the commission determines that a drug or biological product is priced excessively high in New Jersey, it will have the authority to establish a maximum price for the drug or biological product in the State. The commission will consist of nine members. In developing the list of critical prescription drugs and biological products, the commission will consider: the cost of the drug or biological product in the State, including the cost to public health care programs; the extent of utilization of the drug or biological product within the State; the availability and cost of comparable or therapeutically equivalent courses of treatment; the rate of successful treatment outcomes for the drug or biological product; other objectively quantifiable factors as the commission determines to be relevant. The commission may additionally consider recommendations for drugs and biological products to be included in the list made by government agencies, members of the public, and professional organizations. The commission will be required to review and update the list at least once every three years. For each prescription drug and biological product that the commission places on the critical prescription drug list, the manufacturer of the drug or biological product will be required to report information concerning: the total cost of production and approximate cost of production per dose; research and development costs; marketing and advertising costs; the prices for the drug or biological product that are charged to purchasers outside the United States for a representative set of countries determined by the commission; prices charged to typical New Jersey purchasers; true net typical prices charged to pharmacy benefit managers; and any rebates that are available to consumers which information is to be made publically available. Using information submitted under the bill, the commission will identify prescription drugs and biological products that have a cost in New Jersey that is excessively high when compared with the cost of the drug or biological product in other states and countries and when compared with the overall cost of researching, developing, and producing the drug or biological product in light of the number of years the drug or biological product has been made available for distribution. For prescription drugs and biological products with an excessively high cost, the commission will be permitted to set the maximum allowable price that the manufacturer can charge for that prescription drug or biological product in New Jersey, which is to be commensurate with the price of the drug in other states and countries, with full consideration of the overall cost of researching, developing, and producing the drug or biological product in light of the number of years the drug or biological product has been made available for distribution. This bill also prohibits manufacturers and wholesale distributors of prescription drugs and biological products from excessively increasing the price of certain prescription drugs and biological products without justification. Specifically, manufacturers and wholesale distributors may not engage in price gouging in the sale of an essential off-patent or generic drug or biological product. Price gouging is defined to mean an increase in the price of a drug or biological product that: (1) is excessive and not justified by the cost of producing the drug or biological product or expanding access to the drug or biological product to promote the public health; and (2) results in consumers having no alternative but to purchase the drug or biological product at an excessive price because of the importance of the drug or biological product to their health and insufficient marketplace competition. Under the bill, wholesale distributors will not be found to have violated this prohibition if the distributor increases the price of a drug or biological product in direct response to additional costs for the drug or biological product imposed on the distributor by the manufacturer. The bill defines "essential off-patent or generic drug or biological product" to mean any prescription drug or biological product, including any drug-device or biological product-device combination product for the delivery of the prescription drug or biological product: (1) that is made available for sale in the State; (2) for which all exclusive marketing rights granted under federal law have expired; (3) that is actively manufactured and marketed by three or fewer manufacturers; and (4) that appears on the current Model List of Essential Medicines adopted by the World Health Organization or has been otherwise designated as an essential medicine by the Commissioner of Health. The Director of the Division of Consumer Affairs in the Department of Law and Public Safety may notify the Attorney General of any increase in the price of an essential off-patent or generic drug or biological product whenever: (1) the price increase, individually or in combination with other price increases, would result in an increase of 50 percent or more in the wholesale acquisition cost for the drug or biological product or in the price paid for the drug or biological product by the State Medicaid or NJ FamilyCare programs within a one-year period; and (2) the wholesale acquisition cost of the drug or biological product is more than $80 for a 30-day supply or a full course of treatment. At the request of the Attorney General, the manufacturer of an essential off-patent or generic drug or biological product identified in a notice provided under the bill will be required to submit, within 45 days of receiving the request, a statement to the Attorney General: (1) detailing the cost of producing the drug or biological product; (2) identifying the circumstances and timing of any cost increases in the preceding year; (3) identifying the circumstances and timing of any expenditures made by the manufacturer to expand access to the drug or biological product, and explaining any resulting improvements in public health; and (4) any other information the manufacturer determines to be relevant to a determination as to whether a violation of the provisions of the bill has occurred. The Attorney General may require a manufacturer or a wholesale distributor to produce any records or documents that may be relevant to a determination as to whether a violation of the bill has occurred. The Attorney General may additionally petition for a court order: compelling submission of any required statement or records; restraining or enjoining a violation of the bill; restoring to any consumer, including any third party payor, any money acquired by the manufacturer or wholesale distributor as a result of a price increase that violates the bill; requiring a manufacturer that has engaged in price gouging to make the drug or biological product available in the State, for a period of up to one year, at a price that does not exceed the price immediately prior to the violation; and assessing a civil penalty of up to $10,000 against a manufacturer or wholesale distributor who has violated the provisions of the bill. For the purposes of assessing the civil penalty, each sale of a drug or biological product at a price that constitutes price gouging will be deemed a separate violation. Any information provided by a manufacturer or wholesale distributor under the bill will be confidential and may not be disclosed to the public or otherwise subjected to public access, inspection, or copying, unless the manufacturer or wholesale distributor waives confidentiality.

AI Summary

Committee Categories

David Bailey (D)*,  Heather Simmons (D)*, 

Introduced, Referred to Assembly Financial Institutions and Insurance Committee (on 01/09/2024)

Official Document