Bill
Bill > A5020
NJ A5020
NJ A5020Prohibits pharmacy benefit manager from using spread pricing as model of prescription drug pricing; requires transparency in provision of pharmacy benefits management services.
summary
Introduced
05/07/2026
05/07/2026
In Committee
05/07/2026
05/07/2026
Crossed Over
Passed
Dead
Introduced Session
2026-2027 Regular Session
Bill Summary
This bill prohibits pharmacy benefit managers from using spread pricing as a form of compensation in contracts for pharmacy benefits management services with carriers, health benefits plans, and pharmacies. Spread pricing is when a pharmacy benefits manager charges a health benefits plan or carrier a contracted price for a prescription drugs, and the contracted price for the prescription drugs differs from the amount the pharmacy benefit manager directly or indirectly pays the pharmacy. The bill bans the use of spread pricing by a pharmacy benefit manager, and it restricts a pharmacy benefit manager from entering into a contract to provide pharmacy benefits management services unless the contract provides that the pharmacy benefits manager remits 100 percent of rebates, fees, alternative discounts, and other remuneration received from any applicable entity that are related to the utilization of drugs or drug spending under the health benefits plan to the carrier, health benefits plan, or the purchaser. Additionally, the bill provides that a pharmacy benefit manager is required to submit to the Department of Banking and Insurance financial statements prepared as of the close of its fiscal year within 120 days after the close of the fiscal year, and that the department will conduct an audit of those statements. Further, the bill provides that the commissioner may require the submission of these reports on a monthly or other periodic basis. Finally, on an annual basis starting one year following the date of enactment, the bill requires the department to submit a report to the Governor and the Legislature pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), with all personal identifying information removed, on the compensation and pricing, and financial statements of pharmacy benefit managers, and how, if at all, that compensation and pricing impacts the cost of health benefits plans to covered persons. The bill requires the report to be available to the public on the department's website.
AI Summary
This bill prohibits pharmacy benefit managers (PBMs), which are companies that manage prescription drug benefits on behalf of health plans, from using "spread pricing" as a compensation model. Spread pricing occurs when a PBM charges a health plan a certain amount for a drug but pays the pharmacy a different, often lower, amount, keeping the difference. Instead, PBMs must pass on 100% of any rebates, fees, or discounts they receive from drug manufacturers or other entities back to the health plan or purchaser. The bill also requires PBMs to submit financial statements to the Department of Banking and Insurance annually, with the possibility of more frequent reporting, and mandates that the department conduct audits of these statements. Furthermore, starting one year after the bill becomes law, the department will publish an annual report on PBM compensation, pricing, and financial statements, detailing their impact on health plan costs for consumers, with all personal identifying information removed, and this report will be publicly available online. The bill defines key terms like "commissioner" (referring to the Commissioner of Banking and Insurance), "health benefits plan," "passthrough pricing model" (where PBMs pass drug costs directly to health plans), "pharmacy benefit management fee" (a flat fee for services, not tied to drug prices), and "spread pricing."
Committee Categories
Business and Industry
Sponsors (1)
Last Action
Introduced, Referred to Assembly Financial Institutions and Insurance Committee (on 05/07/2026)
Official Document
bill text
bill summary
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bill summary
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bill summary
| Document Type | Source Location |
|---|---|
| State Bill Page | https://www.njleg.state.nj.us/bill-search/2026/A5020 |
| BillText | https://pub.njleg.gov/Bills/2026/A5500/5020_I1.HTM |
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