The state Assembly is scheduled to vote Monday on legislation designed to limit the impact of health care middlemen in hopes of giving patients more choices in where they get their medication and driving down costs overall.
Supporters of the Democratic-sponsored proposal, called the “Patient and Provider Protection Act,” say restricting pharmacy benefit managers would help control what consumers pay for medication while also benefitting local pharmacies. Critics say it would increase costs for insurance companies, patients, and state taxpayers.
The bill passed the Assembly Appropriations Committee last week and cleared the Assembly Financial Institutions and Insurance Committee in March but has yet to have a hearing in the Senate.
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It is one of several measures lawmakers have introduced to further regulate pharmacy benefit managers, which serve as intermediaries between insurance companies and drug makers and use a complicated mix of discounts, rebates, and other mechanisms to control pharmaceutical costs.
Gov. Mikie Sherrill also targeted pharmacy benefit managers in her campaign for governor last year and in March’s budget speech, to which she invited an independent pharmacist, Amit Sikka from Chatham, who has been in business 60 years.
Prescription drug prices are among the pressures leading to a death spiral in some of the state’s public employee insurance plans.
Pharmacy representatives told the Appropriations Committee last week that pharmacy benefit managers are gaming the system by driving patients to purchase drugs at pharmacies they own and then reimbursing themselves at inflated rates. This drives up costs for everyone, they said.
“The singular inherent issue with prescription drug pricing in the U.S. is the PBMs’ ability to value the same medication at extremely different dollar amounts, depending on where that prescription is filled,” said Brian Pinto, a leader with the New Jersey Pharmacists Association who runs a pharmacy in Westfield.
Pinto said the bill would help offset trends like Rite-Aid’s closure of 60 facilities in New Jersey last year, following the national drug chain’s bankruptcy. The proposal is also supported by patient advocates and representatives for drug makers.
Opponents warned that, as drafted, the measure would increase costs for health insurance carriers and, by default, the patients they cover. The legislation calls for benchmarking drug prices and adding a standard pharmacy fee of $10.92 for each prescription, costs that are now negotiated by insurance companies contract and pharmacy benefit managers.
“That is probably about a five-fold increase in what’s paid. I want to make sure folks understand the fiscal elements,” said Wardell Sanders, president and CEO of the New Jersey Association of Health Plans, which represents health insurance carriers,
Heather Cascone, vice president for state affairs at the Pharmaceutical Care Management Association, which represents pharmacy benefit managers, said a set fee would also eliminate the incentive they now have to offer significant discounts to patients who use the pharmacies they own.
“That savings that you experienced and enjoyed would disappear,” she said.
In addition to standardizing drug payments, the bill would require pharmacy benefit managers to have a duty to benefit insurance carriers in negotiations, something advocates said has been done in several states. It would also require pharmacy benefit managers to pay pharmacies the same rates for the same medication and prohibit them from steering patients to pharmacies they own.
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