A6184

An Act concerning prescription drug prices and hospitals and amending and supplementing P.L.2023, c.106 (C.45:14-82.2 et seq.).

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 1 of P.L.2023, c.106 (C.45:14-82.2) is amended to read as follows:

1. As used in P.L.2023, c.106 (C.45:14-82.2 et seq.) and P.L. , c. (C. ) (pending before the Legislature as this bill):

"Biosimilar" means a drug that is produced or distributed pursuant to a biologics license application approved under 42 U.S.C. s.262(k)(3).

"Brand-name drug" means a prescription drug approved under 21 USC s.355(b) or 42 USC s.262.

"Carrier" means the same as that term is defined in section 2 of P.L.1997, c.192 (C.26:2S-2).

"Division" means the Division of Consumer Affairs in the Department of Law and Public Safety.

"Drug group" means a group of drugs defined by the division for the purpose of facilitating revenue and cost reporting by manufacturers, carriers, pharmacy benefits managers, and wholesalers under sections 2 through 6 of P.L.2023, c.106 (C.45:14-82.3 through 45:14-82.7) and hospitals under section 6 of P.L. , c. (C. ) (pending before the Legislature as this bill).

"Hospital" means a general acute care hospital licensed pursuant to P.L.1971, c.136 (C.26:2H-1 et seq.).

"Logistics provider" means an entity that receives a prescription drug product from the original or contract manufacturer, warehouses and delivers the prescription drug product at the direction of the manufacturer, and does not purchase, sell, trade, or take title to the prescription drug product.

"Manufacturer" means a business registering under P.L.1961, c.52 (C.24:6B-1 et seq.) as a drug manufacturing business as defined in section 13 of P.L.1961, c.52 (C.24:6B-12).

"Market introduction" means the month and year in which a manufacturer acquired or first marketed a drug for sale in New Jersey.

"Medicare Part D specialty threshold" means the specialty tier cost threshold established by the Centers for Medicare and Medicaid Services.

"New drug" means a prescription drug that has received initial approval under an original new drug application under 21 U.S.C. s.355(b), under an abbreviated new drug application under 21 U.S.C. s.355(j), or under a biologics license application under 42 U.S.C. s.262. In cases where multiple products are included on an application, each product shall be considered a new prescription drug.

"Pharmacy benefits manager" means a corporation, business, or other entity, or unit within a corporation, business, or other entity that, pursuant to a contract or under an employment relationship with a carrier, a self-insurance plan or other third-party payer, either directly or through an intermediary, administers prescription drug benefits on behalf of a carrier, self-funded plan, or other third-party payer.

"Pharmacy services administrative organization" means an entity operating within the State that contracts with independent pharmacies to conduct business on their behalf with third-party payers.

"Pricing unit" means the smallest dispensable amount of a prescription drug that could be dispensed.

"Reporting entity" means any manufacturer, carrier, pharmacy benefits manager, wholesaler, pharmacy services administrative organization, hospital, or any other entity required to report to the division under P.L.2023, c.106 (C.45:14-82.2 et seq.) or P.L. , c. (C. ) (pending before the Legislature as this bill).

"Wholesale acquisition cost (WAC)" means, with respect to a prescription drug, the manufacturer's list price for the drug to wholesalers or direct purchasers in New Jersey, as defined in 42 U.S.C. s.1395w-3a(c)(6)(B), excluding any discounts, rebates, or reductions in price, for the most recent month for which the information is available, as reported in wholesale price guides or other publications of prescription drug pricing.

"Wholesaler" means a business registering under P.L.1961, c.52 (C.24:6B-1 et seq.) as a wholesale drug business as defined in section 13 of P.L.1961, c.52 (C.24:6B-12). "Wholesaler" shall not include a common carrier, or an employee thereof, whose possession of a prescription drug product is in the usual course of the common carrier's or employee's business or employment, and shall not include a logistics provider or an employee thereof.

(cf: P.L.2023, c.106, s.1)

2. Section 7 of P.L.2023, c.106 (C.45:14-82.8) is amended to read as follows:

7. a. The reporting entity shall certify required reporting under sections 2 through 6 of P.L.2023, c.106 (C.45:14-82.3 through 45:14-82.7) or section 6 of P.L. , c. (C. ) (pending before the Legislature as this bill) as accurate under the penalty of perjury.

b. Failure of a reporting entity to comply with any section of P.L.2023, c.106 (C.45:14-82.2 et seq.) or P.L. , c. (C. ) (pending before the Legislature as this bill) may result in a civil penalty as determined by the Director of the Division of Consumer Affairs. Civil penalties under P.L.2023, c.106 (C.45:14-82.2 et seq.) or P.L. , c. (C. ) (pending before the Legislature as this bill) may be imposed in the amount of $10,000 for the first day that the reporting entity is found to have violated any section of P.L.2023, c.106 (C.45:14-82.2 et seq.) or P.L. , c. (C. ) (pending before the Legislature as this bill), and for subsequent days of non-compliance, an amount starting at $11,000 and increasing by $1,000 for each additional day of non-compliance, not to exceed $100,000 per day.

c. The division may audit the data submitted to the division by a reporting entity pursuant to sections 2 through 6 of P.L.2023, c.106 (C.45:14-82.3 through 45:14-82.7) or section 6 of P.L. , c. (C. ) (pending before the Legislature as this bill), in a form and manner specified by the division. The reporting entity shall pay all costs associated with the audit.

d. The division may require a reporting entity to submit a corrective action plan, in a form and manner specified by the division, to correct deficiencies in reporting pursuant to sections 2 through 6 of P.L.2023, c.106 (C.45:14-82.3 through 45:14-82.7) or section 6 of P.L. , c. (C. ) (pending before the Legislature as this bill).

e. In addition to the annual public hearing required under subsection a. of section 9 of P.L.2023, c.106 (C.45:14-82.10), the division may call one or more additional public hearings and may subpoena any reporting entity pursuant to sections 2 through 6 of P.L.2023, c.106 (C.45:14-82.3 through 45:14-82.7) or section 6 of P.L. , c. (C. ) (pending before the Legislature as this bill).

(cf: P.L.2023, c.106, s.7)

3. Section 8 of P.L.2023, c.106 (C.45:14-82.9) is amended to read as follows:

8. a. Each reporting entity shall register with the division in a form and manner specified by the division no later than January 31 of each calendar year.

b. (1) With exception to pharmacy services administrative organizations, each reporting entity shall pay an annual assessment set by the division to support the operational costs of the division's activities as required by P.L.2023, c.106 (C.45:14-82.2 et seq.), including funding necessary to support the Drug Affordability Council. Operational costs shall include staff salaries, administrative expenses, data system expenses, and consulting fees of the division to effectuate the provisions of P.L.2023, c.106 (C.45:14-82.2 et seq.). The Director of the Division of Consumer Affairs shall certify actual and prospective costs of the division's activities under P.L.2023, c.106 (C.45:14-82.2 et seq.), which costs shall be the basis for the establishment of the annual assessment. The division shall not vary the amount of annual assessment based on whether a reporting entity is a carrier, pharmacy benefits manager, wholesaler, manufacturer, hospital, or other entity. If the total amount of the assessment that the division collects in a calendar year exceeds the operational costs certified by the division pursuant to this subsection, the division shall issue a notice of such surplus and remit the surplus funds in a timely, fair, and equitable manner across all reporting entities that paid the assessment. Penalties collected pursuant to section 7 of P.L.2023, c.106 (C.45:14-82.8) shall not be refunded pursuant to this subsection.

(2) A pharmacy services administrative organization shall be subject to an annual assessment, to be determined by the Director of the Division of Consumer Affairs, which is separate from the annual assessment required pursuant to paragraph (1) of this subsection.

(3) Requests for payment of the final assessments shall be sent by the division to all reporting entities under P.L.2023, c.106 (C.45:14-82.2 et seq.). The division shall allow reporting entities to make partial payments when paying the assessment required under this subsection, with the final payment, as well as any amounts remaining uncollected from the assessment of the previous fiscal year, to be made no later than December 31 of a given reporting year.

(cf: P.L.2023, c.106, s.8)

4. Section 9 of P.L.2023, c.106 (C.45:14-82.10) is amended to read as follows:

9. a. The division shall annually prepare and make available on its website a report on emerging trends in prescription drug prices, and conduct an annual public hearing based on the report findings. The report shall include, but may not be limited to, analysis of manufacturer prices and price increases as reported under P.L.2023, c.106 (C.45:14-82.2 et seq.) and P.L. , c. (C. ) (pending before the Legislature as this bill), and analysis of information as reported by carriers, pharmacy benefits managers, and wholesalers under P.L.2023, c.106 (C.45:14-82.2 et seq.) and hospitals under P.L. , c. (C. ) (pending before the Legislature as this bill), so as to make clear the major components of prescription drug pricing along the supply chain, and the impacts on insurance premiums and consumer cost sharing. The data in the report shall not include any information that the division determines to be confidential pursuant to this section.

b. (1) Except as provided in subsection a. of this section, the division shall keep confidential all information submitted by an individual reporting entity, and protect it from public disclosure. The division shall share such information with the Drug Affordability Council and the Department of Banking and Insurance which shall keep confidential any information shared by the division under P.L.2023, c.106 (C.45:14-82.2 et seq.) and P.L. , c. (C. ) (pending before the Legislature as this bill) and protect it from public disclosure. Information that is otherwise publicly available shall not be deemed confidential solely because it was submitted to the division pursuant to P.L.2023, c.106 (C.45:14-82.2 et seq.) or P.L. , c. (C. ) (pending before the Legislature as this bill). The confidentiality protections of this section shall be imposed on any downstream third party that may receive or otherwise have access to this information.

(2) A person who is authorized to access information submitted by an individual reporting entity to the division who willfully discloses such information to any person or entity who is not authorized to access the information shall be subject to a civil penalty in an amount not to exceed $2,500.

A civil penalty imposed under this subsection shall be collected by the director pursuant to the "Penalty Enforcement Law of 1999," P.L.1999, c.274 (C.2A:58-10 et seq.).

c. Any records, documents, or data provided pursuant to P.L.2023, c.106 (C.45:14-82.2 et seq.) or P.L. , c. (C. ) (pending before the Legislature as this bill) shall not be considered a government record under P.L.1963, c.73 (C.47:1A-1 et seq.) or the common law concerning access to government records.

d. The division shall make available on its Internet website a method for consumers to submit a complaint to the division regarding the failure of a reporting entity to provide to the division any information required by sections 2 through 6 of P.L.2023, c.106 (C.45:14-82.3 through 45:14-82.7) and section 6 of P.L. , c. (C. ) (pending before the Legislature as this bill).

(cf: P.L.2023, c.106, s.9)

5. Section 10 of P.L.2023, c.106 (C.45:14-82.11) is amended to read as follows:

10. a. The Drug Affordability Council is established in, but not of, the Department of Law and Public Safety. The purpose of the council is to formulate legislative and regulatory policy recommendations that will protect New Jersey residents, State and local governments, health benefits plans, health care providers, licensed pharmacies, and other stakeholders within the State health care system from the high costs of prescription drug products.

b. The council shall be comprised of five public members and three alternate public members, who shall participate in council deliberations in any case in which a public member is recused or if there is a vacancy on the council. Public members and alternative public members shall be appointed within 180 days following the effective date of P.L.2023, c.106 (C.45:14-82.2 et seq.).

(1) (a) The five public members of the council shall be appointed as follows: three members shall be appointed by the Governor; one member shall be appointed by the Governor upon recommendation of the President of the Senate; and one member shall be appointed by the Governor upon recommendation of the Speaker of the General Assembly.

(b) The three alternate members of the Council shall be appointed as follows: one member shall be appointed by the Governor; one member shall be appointed by the Governor upon recommendation of the President of the Senate; and one member shall be appointed by the Governor upon recommendation of the Speaker of the General Assembly.

(2) Each public member of the council shall have expertise in health care economics, health care policy, or clinical medicine. The membership of the council shall collectively have knowledge of:

(a) the pharmaceutical business model;

(b) supply chain business models;

(d) consumer and patient perspectives;

(e) health care cost trends and drivers;

(f) clinical and health services research; and

(g) the State's health care marketplace.

(3) No public member of the council may be an employee or board member of, or a consultant to, a manufacturer, pharmacy benefits manager, pharmacy services administrative organization, pharmacy, pharmacist, health benefits plan carrier, hospital, or wholesale distributor or related trade association.

(4) An individual appointed to the council as a public member shall disclose, at the time of appointment, any conflict of interest, including whether the individual has an association, including a financial or personal association, that has the potential to bias or has the appearance of biasing the individual's decision in matters related to the council or the conduct of the council's activities.

(5) To the extent practicable and consistent with State and federal law, the membership of the council shall reflect the racial, ethnic, and gender diversity of the State.

(6) The council shall appoint a chair from among its members.

c. Public members and alternative members of the council shall serve for a term of five years, except that, of the public members first appointed, one shall serve a term of three years, two shall serve a term of four years, and two shall serve a term of five years. Public members and alternative members shall be eligible for reappointment to the council. Vacancies in the membership shall be filled in the same manner as provided for the original appointment, and members shall serve until a successor has been appointed.

d. (1) The council shall meet in open session, except the council shall meet in closed session to discuss any information confidential pursuant to section 9 of P.L.2023, c.106 (C.45:14-82.10). The chair shall have the authority to postpone or cancel any required meeting. All meetings of the council shall be subject to the requirements of the "Senator Byron M. Baer Open Public Meetings Act," P.L.1975, c.231 (C.10:4-6 et seq.). Three members shall constitute a quorum for the purposes of conducting official council business. The division shall post on its Internet website information concerning public meetings of the council and reports issued by the council. Posts on the division's Internet website shall be subject to the confidentiality requirements set forth in section 9 of P.L.2023, c.106 (C.45:14-82.10) and subsection h. of this section.

(2) The council shall provide an opportunity for public comment at each open meeting of the council.

(3) The council shall provide the public with the opportunity to provide written comments.

(4) The council may allow expert testimony at council meetings.

e. Public members of the council shall not accept any gift or donation of services or property that indicates a potential conflict of interest or has the appearance of biasing the work of the council.

f. The council may call to its assistance and avail itself of the services of employees of the division as may be required and made available for the purposes of this section. Members of the council shall serve without compensation but may be reimbursed for expenses reasonably incurred in the performance of their official duties. The council may call to its assistance and avail itself of the services of any State, county, or municipal department, board, commission, or agency, as it may require, and as may be available to it for its purposes. The council may consult with any government entity, association, organization, or individual having knowledge or experience relevant to its work.

g. The council shall be constituted and hold its first meeting within 30 days following appointment of all public members and alternative public members pursuant to subsection b. of this section.

h. In addition to reviewing the reports issued and data collected by the division pursuant to P.L.2023, c.106 (C.45:14-82.2 et seq.) and P.L. , c. (C. ) (pending before the Legislature as this bill), the council may collect and review any available information regarding prescription drug product manufacturers, health benefits plan carriers, wholesale distributors, pharmacy benefits managers, hospitals, and pharmacy services administrative organizations, and any other transparency data for prescription drug products which the council may access and may find useful for its work. Information obtained by the council shall be made public, excluding identifying information about a patient or information that is a trade secret; provided, however, information obtained by the council from the division that was provided by reporting entities pursuant to P.L.2023, c.106 (C.45:14-82.2 et seq.) and P.L. , c. (C. ) (pending before the Legislature as this bill) shall be deemed confidential in accordance with section 9 of P.L.2023, c.106 (C.45:14-82.10), except that information that is otherwise publicly available shall not be deemed confidential solely because it was submitted to the division pursuant to P.L.2023, c.106 (C.45:14-82.2 et seq.) or P.L. , c. (C. ) (pending before the Legislature as this bill). The council shall impose the confidentiality protections of this subsection on any downstream third party that may receive or otherwise have access to this information.

i. The council shall review the reports issued and data collected by the division pursuant to P.L.2023, c.106 (C.45:14-82.2 et seq.) and P.L. , c. (C. ) (pending before the Legislature as this bill) and the information gathered under subsection h. of this section, and following such review, submit annually recommendations for legislative, regulatory or other action to the Governor and, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), to the Legislature that seek to advance the goal of more affordable and accessible prescription drugs for New Jersey residents, including recommendations designed to lower the cost of prescription drug products that the council determines have led or will lead to an affordability challenge for the State health care system and for New Jersey patients and recommendations concerning the types of data to be reported pursuant to P.L.2023, c.106 (C.45:14-82.2 et seq.) and P.L. , c. (C. ) (pending before the Legislature as this bill). In developing and providing recommendations, the council shall consider and address in its reports the impact that any recommendation could have on research and development, access to care, or any other direct or indirect economic or social costs that the council deems relevant. Reports issued by the council shall be subject to the confidentiality requirements set forth in section 9 of P.L.2023, c.106 (C.45:14-82.10) and subsection h. of this section.

(cf: P.L.2023, c.106, s.10)

6. a. (New section) A hospital shall, to the extent allowed by law, report to the division the following minimum data, and other data that may be specified by the division. The division shall annually notify hospitals for which specific drugs or drug groups for which reporting is required and a hospital shall have 60 days following such notification to report to the division the following:

(1) minimum and maximum price paid for each indicated drug and drug group in the last calendar year, related to prescriptions under an insurance policy issued in the State;

(2) volume in pricing units of each indicated drug and drug group that the hospital dispensed or administered in the last calendar year, for business in the State, in total and for each payer type as relevant;

(3) total rebates, discounts, and price concessions received for each drug and drug group as indicated by the division in the last calendar year, for business in the State, in total and for each payer type as relevant; and

(4) total net income received in the last calendar year for each drug and drug group as indicated by the division, for business in the State, in total and for each payer type as relevant.

b. Disclosure of all information reported under this section shall be subject to protections defined in section 9 of P.L.2023, c.106 (C.45:14-82.10).

7. Notwithstanding the provisions of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), to the contrary, the Director of the Division of Consumer Affairs may adopt, immediately upon filing with the Office of Administrative Law, regulations that the director deems necessary to implement the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill), which regulations shall be effective for a period not to exceed 545 days from the date of the filing. The director shall thereafter amend, adopt, or readopt the regulations in accordance with the requirements of P.L.1968, c.410 (C.52:14B-1 et seq.).

8. This act shall take effect within the first day of the thirteenth month next following the date of enactment. The New Jersey Division of Consumer Affairs may take such anticipatory rulemaking and other administrative action in advance of the operative date of this act as shall be necessary for the implementation of this act.

STATEMENT

This bill establishes certain data reporting requirements for hospitals, so that the Division of Consumer Affairs (division) in the Department of Law and Public Safety can study, and annually report on, emerging trends in prescription drug pricing in hospitals. Current law requires pharmacy benefits managers, wholesale drug distributors, insurance issuers, and manufacturers to register with the division and report certain data to the division concerning prescription drug transactions. This bill extends similar reporting requirements to hospitals and includes hospitals as reporting entities subject to certain requirements under P.L.2023, c.106.

Under this bill, hospitals will, to the extent allowed by law, report to the division the following minimum data, and other data that may be specified by the division. The division will annually notify hospitals for which specific drugs or drug groups for which reporting is required and a hospital shall have 60 days following such notification to report to the division the following:

(1) minimum and maximum price paid for each indicated drug and drug group in the last calendar year, related to prescriptions under an insurance policy issued in the State;

(4) total net income received in the last calendar year for each drug and drug group as indicated by the division, for business in the State, in total and for each payer type as relevant.

Disclosure of all information reported under this bill will be subject to protections under P.L.2023, c.106.