Houghtaling & Downey Bill Banning Abusive Pharmaceutical Practices Passes Senate

OCEAN TOWNSHIP - A bill sponsored by Assembly Members Eric Houghtaling and Joann Downey that would prohibit pharmacy benefits managers (PBMs) from common abusive practices that harm community pharmacies was passed by the State Senate last week, and now proceeds to the Governor for approval. A PBM is a third-party administrator of prescription drug programs for a commercial, self-insured, Medicare Part D, Federal employee, or state employee health plan.

“If you pay a restaurant or cashier for a product or service, no person in their right mind would reasonably allow you to then demand a “fee” from the business in exchange for making that purchase,” said Houghtaling (D-Neptune). “Even so, this is exactly the relationship that many PBMs have forced community pharmacies into. It’s a demonstrably ridiculous system, and badly needs to be reformed.”

The bill (A-3717) bans PBMS from paying pharmacies for a prescription and then retroactively reducing the payment afterward. These “claw backs” are often made several months after a claim is made, making it difficult for pharmacies to operate with predictable revenues.

Under this bill, once a pharmacy has been paid for a prescription claim and cleanly documented it, a PBM would not be able to reduce the payment retroactively through any means. As an exception, a PBM would still be able to retrieve its funds if a routine audit finds an error in the claim or its payment.

“Our number-one goal here is to even the playing field between a multi-state corporation that might have dozens of attorneys on retainer and a Mom-and-Pop pharmacy that might have a total of three or four employees on payroll,” said Downey (D-Freehold). “Transparency, fairness, and oversight are the keys to bringing that balance, and we’ve made sure to include each of those aspects in this legislation.”

The bill also requires a PBM to disclose additional information to pharmacies regarding the execution and any potential changes to a contract made between them. The PBM must also disclose a reasonable process that allows contracted pharmacies to access certain pricing information.

Finally, the bill requires all such contracts to allow pharmacies and PBMs to appeal disputes over certain factors; allows New Jersey pharmacies to make deliveries and mail prescriptions to patients without PBM restrictions; and allows the Commissioner of Banking and Insurance to review and approve any PBM’s compensation plan to ensure that the reimbursement for pharmacist services is fair and reasonable.

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