S4206

An Act concerning pharmacy benefits managers and supplementing P.L.2015, c.179 (C.17B:27F-1 et seq.).

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

1. As used in this act:

“Applicable entity” means:

(1) an applicable group purchasing organization, drug manufacturer, distributor, wholesaler, rebate aggregator (or other purchasing entity designed to aggregate rebates), or associated third party;

(2) any subsidiary, parent, affiliate, or subcontractor of a health plan, health insurance issuer, entity that provides pharmacy benefit management services on behalf of that plan or issuer, or any entity described in paragraph (1) of this definition; or

(3) another entity as specified by the department.

“Contracted compensation” means the sum of any ingredient cost and dispensing fee for a drug, inclusive of the out-of-pocket costs to the beneficiary, or another analogous compensation structure as specified by the department.

“Dispensing channel” means the method of furnishing a drug, and includes retail, mail order, and specialty pharmacy.

“Plan sponsor” means a carrier or purchaser of a health benefits plan.

2. a. A contract between a plan sponsor and a pharmacy benefits manager shall require the parties to the contract to comply with the provisions of this act, and provide for the disclosure of relevant information necessary to make the reports required pursuant to this act.

b. A contract between an applicable entity and a plan sponsor or pharmacy benefits manager shall require the parties to the contract to comply with the provisions of this act, and provide for the disclosure of relevant information necessary to make the reports required pursuant to this act.

3. A pharmacy benefits manager shall submit a report pursuant to this act to the plan sponsor and the department not less frequently than every six months. Each report shall be made available to the plan sponsor in plain language and in a machine-readable format or other formats as the department may determine. Each report required pursuant to this act shall contain:

a. A list of drugs for which a claim was filed and, with respect to each drug on that list:

(1) the contracted compensation paid by the plan sponsor for each covered drug, identified by National Drug Code, to the pharmacy benefits manager;

(2) the contracted compensation paid to the pharmacy, by any pharmacy benefits manager, for each covered drug, identified by National Drug Code;

(3) for each of those claims, the difference between the amount paid under paragraph (1) of this subsection and the amount paid under paragraph (2) of this subsection;

(4) the proprietary name, established name or proper name, and the National Drug Code;

(5) for each claim for the drug and for each dosage unit of the drug for which a claim was filed, the type of dispensing channel;

(6) with respect to each drug dispensed, for each type of dispensing channel:

(a) whether the drug is a brand name drug or a generic drug, and:

(i) in the case of a brand name drug, the wholesale acquisition cost, listed as cost per days supply and cost per dosage unit, on the date the drug was dispensed; and

(ii) in the case of a generic drug, the average wholesale price, listed as cost per days supply and cost per dosage unit, on the date the drug was dispensed; and

(b) the total number of:

(i) prescription claims;

(ii) beneficiaries for whom a claim for the drug was filed through the applicable dispensing channel;

(iii) dosage units and dosage units per fill of the drug; and

(iv) days supply of the drug per fill;

(7) the net price per course of treatment or single fill, such as a 30-day supply or 90-day supply to the plan after rebates, fees, alternative discounts, or other remuneration received from applicable entities;

(8) the total amount of out-of-pocket spending by beneficiaries on the drug, including spending through copayments, coinsurance, and deductibles, but not including any amounts spent by beneficiaries on drugs not covered under the plan, or for which no claim is submitted under the plan;

(9) the total net spending on the drug;

(10) the total amount received, or expected to be received, by the plan from any applicable entity in rebates, fees, alternative discounts, or other remuneration;

(11) the total amount received, or expected to be received, by the pharmacy benefits manager, from applicable entities, in rebates, fees, alternative discounts, or other remuneration from those entities:

(a) for claims incurred during the reporting period; and

(b) that is related to utilization of the drug or spending on the drug; and

(12) to the extent feasible, information on the total amount of remuneration for the drug, including copayment assistance dollars paid, copayment cards applied, or other discounts provided by each drug manufacturer, to the beneficiaries enrolled in that plan.

b. A list of each therapeutic class, as defined by the department, for which a claim was filed under the health benefits plan during the reporting period, and, with respect to each therapeutic class:

(1) the total gross spending on drugs in the class before rebates, price concessions, alternative discounts, or other remuneration from applicable entities;

(2) the net spending in the class after rebates, price concessions, alternative discounts, or other remuneration from applicable entities;

(3) the total amount received, or expected to be received, by the pharmacy benefits manager, from applicable entities, in rebates, fees, alternative discounts, or other remuneration from those entities:

(a) for claims incurred during the reporting period; and

(b) that is related to utilization of drugs or drug spending;

(4) the average net spending per 30-day supply and per 90-day supply by the plan with respect to coverage and its beneficiaries, among all drugs within the therapeutic class for which a claim was filed during the reporting period;

(5) the number of beneficiaries who filled a prescription for a drug in the class, including the National Drug Code for each drug;

(6) if applicable, a description of the formulary tiers and utilization mechanisms, such as prior authorization or step therapy, employed for drugs in that class; and

(7) the total out-of-pocket spending under the plan by beneficiaries, including spending through copayments, coinsurance, and deductibles, but not including any amounts spent by beneficiaries on drugs not covered under the plan or for which no claim is submitted under the plan.

c. With respect to any drug for which gross spending under the health benefits plan exceeded $10,000 during the reporting period or, in the case that gross spending under the health benefits plan exceeded $10,000 during the reporting period with respect to fewer than 50 drugs, with respect to the 50 prescription drugs with the highest spending during the reporting period:

(1) a list of all other drugs in the same therapeutic class as that drug;

(2) if applicable, the rationale for the formulary placement of the drug in that therapeutic category or class, selected from a list of standard rationales established by the department, in consultation with stakeholders; and

(3) any change in formulary placement compared to the prior plan year.

d. In the case that the plan sponsor or pharmacy benefits manager has an affiliated pharmacy or pharmacy under common ownership, including mandatory mail and specialty home delivery programs, retail and mail auto-refill programs, and cost sharing assistance incentives funded by the pharmacy benefits manager:

(1) an explanation of any benefit design parameters that encourage or require beneficiaries in the plan to fill prescriptions at mail order, specialty, or retail pharmacies;

(2) the percentage of total prescriptions dispensed by the pharmacies to participants or beneficiaries in the plan; and

(3) a list of all drugs dispensed by the pharmacies to beneficiaries enrolled in the plan, and, with respect to each drug dispensed:

(a) the amount charged, per dosage unit, per 30-day supply, or per 90-day supply to the plan, and to beneficiaries;

(b) the median amount charged to the plan, and the interquartile range of the costs, per dosage unit, per 30-day supply, and per 90-day supply, including amounts paid by the beneficiaries, when the same drug is dispensed by other pharmacies that are not affiliated with or under common ownership with the entity and that are included in the pharmacy network of the plan;

(c) the lowest cost per dosage unit, per 30-day supply and per 90-day supply, for each drug, including amounts charged to the plan and to beneficiaries, that is available from any pharmacy included in the network of the plan; and

(d) the net acquisition cost per dosage unit, per 30-day supply, and per 90-day supply, if the drug is subject to a maximum price discount.

4. At the time a report is provided pursuant to section 3 of this act, a pharmacy benefits manager shall provide to a plan sponsor:

a. A summary document for the health benefits plan that includes the information described in subsections a. through d. of section 3 of this act, as specified by the department through guidance, that the department determines useful to plan sponsors for purposes of selecting pharmacy benefit management services, such as an estimated net price to the plan and beneficiary, a cost per claim, the fee structure or reimbursement model, and estimated cost per participant or beneficiary.

b. A summary document for plans to provide to beneficiaries, which shall be made available to beneficiaries upon request to the plan, that:

(1) contains the information described in subsections c. through f. of this section, as applicable, as specified by the department through guidance, that the department determines useful to beneficiaries in better understanding the plan or benefits under the plan;

(2) contains only aggregate information; and

(3) states that beneficiaries may request specific, claims-level information related to their own claims.

c. With respect to drugs covered by the plan during the reporting period:

(1) the total net spending by the plan for those drugs;

(2) the total amount received, or expected to be received, by the plan from any applicable entity in rebates, fees, alternative discounts, or other remuneration; and

(3) to the extent feasible, information on the total amount of remuneration for those drugs, including copayment assistance dollars paid, copayment cards applied, or other discounts provided by each drug manufacturer to beneficiaries.

d. Amounts paid directly or indirectly in rebates, fees, or any other type of compensation to brokerage firms, brokers, consultants, advisors, or any other individual or firm, for:

(1) the referral of the plan’s business to a pharmacy benefits manager, including the identity of the recipient of those amounts;

(2) consideration of the pharmacy benefits manager by the plan; or

(3) the retention of the pharmacy benefits manager by the plan.

e. An explanation of any benefit design parameters that encourage or require beneficiaries in the plan to fill prescriptions at mail order, specialty, or retail pharmacies that are affiliated with or under common ownership with the pharmacy benefits manager, including mandatory mail and specialty home delivery programs, retail and mail auto-refill programs, and cost-sharing assistance incentives directly or indirectly funded by the pharmacy benefits manager.

f. Total gross spending on all drugs under the plan during the reporting period.

5. a. Not less than once a year, at the request of the plan sponsor, the pharmacy benefit manager shall allow for an audit of the pharmacy benefit manager to ensure compliance with all terms and conditions under the contract and the accuracy of information reported pursuant to this act.

b. The plan sponsor shall have the right to select an auditor. The pharmacy benefit manager shall not impose any limitations on the selection of the auditor.

c. The pharmacy benefit manager shall make available to the auditor all records, data, contracts, and other information necessary to confirm the accuracy of information reported under this act, subject to reasonable restrictions on how the information is to be reported to prevent redisclosure of the information.

d. The pharmacy benefit manager shall provide information, data, and records relevant to the audit to the auditor within six months of the initiation of the audit and respond to requests for additional information from the auditor within 30 days after the request for additional information.

e. The pharmacy benefit manager shall be responsible for providing to the auditor information required to be reported under this act that is owned or held by an affiliate of the pharmacy benefit manager.

6. This act shall take effect on the first day of the 12th month next following enactment and shall apply to contracts entered into on or after that date.

STATEMENT

This bill requires pharmacy benefits managers to make certain disclosures to health benefits plan sponsors and provides plan sponsors with certain rights to audit pharmacy benefits managers.

Specifically, the bill requires pharmacy benefits managers to submit reports to the plan sponsor and the department not less frequently than every six months. Each report is to be made available to the plan sponsor in plain language, in a machine-readable format, and as the department may determine, other formats.

The bill requires the reports to contain a list of drugs for which a claim was filed and, with respect to each drug on that list:

(1) the contracted compensation paid by the plan sponsor for each covered drug, identified by National Drug Code, to the pharmacy benefits manager;

(2) the contracted compensation paid to the pharmacy, by any pharmacy benefits manager, for each covered drug, identified by National Drug Code;

(3) for each of those claims, the difference between the amount paid to the pharmacy benefits manager and the amount paid to the pharmacy;

(4) the proprietary name, established name or proper name, and the National Drug Code;

(5) for each claim for the drug and for each dosage unit of the drug for which a claim was filed, the type of dispensing channel;

(6) various information with respect to each drug dispensed, for each type of dispensing channel;

(7) the net price per course of treatment or single fill to the plan after rebates received from applicable entities;

(8) the total amount of out-of-pocket spending by beneficiaries on the drug;

(9) the total net spending on the drug;

(10) the total amount received by the plan from any applicable entity in rebates;

(11) the total amount received by the pharmacy benefits manager from applicable entities in rebates from those entities:

(a) for claims incurred during the reporting period; and

(b) that is related to utilization of the drug or spending on the drug; and

(12) to the extent feasible, information on the total amount of remuneration for the drug, including copayment assistance or other discounts provided by each drug manufacturer, to the beneficiaries enrolled in the plan.

The bill requires the reports to contain a list of each therapeutic class, as defined by the department, for which a claim was filed under the health benefits plan during the reporting period, and, with respect to each therapeutic class:

(1) the total gross spending on drugs in the class before rebates, price concessions, alternative discounts, or other remuneration from applicable entities;

(2) the net spending in the class after rebates, price concessions, alternative discounts, or other remuneration from applicable entities;

(3) the total amount received, or expected to be received, by the pharmacy benefits manager, from applicable entities, in rebates from those entities:

(a) for claims incurred during the reporting period; and

(b) that is related to utilization of drugs or drug spending;

(5) the number of beneficiaries who filled a prescription for a drug in the class, including the National Drug Code for each drug;

(6) if applicable, a description of the formulary tiers and utilization mechanisms employed for drugs in that class; and

(7) the total out-of-pocket spending under the plan by beneficiaries, including spending through copayments, coinsurance, and deductibles.

with respect to any drug for which gross spending under the health benefits plan exceeded $10,000 during the reporting period or, in the case that gross spending under the health benefits plan exceeded $10,000 during the reporting period with respect to fewer than 50 drugs, with respect to the 50 prescription drugs with the highest spending during the reporting period:

(1) a list of all other drugs in the same therapeutic class as that drug;

(3) any change in formulary placement compared to the prior plan year; and

The bill requires the report to contain, in the case that the plan sponsor or pharmacy benefits manager has an affiliated pharmacy or pharmacy under common ownership, including mandatory mail and specialty home delivery programs, retail and mail auto-refill programs, and cost sharing assistance incentives funded by the pharmacy benefits manager:

(1) an explanation of any benefit design parameters that encourage or require beneficiaries in the plan to fill prescriptions at mail order, specialty, or retail pharmacies;

(2) the percentage of total prescriptions dispensed by the pharmacies to participants or beneficiaries in the plan; and

(3) a list of all drugs dispensed by the pharmacies to beneficiaries enrolled in the plan, and certain cost information with respect to each drug dispensed.

The bill also requires, at the time a report is provided, pharmacy benefits managers to provide to a plan sponsor a summary document for the health benefits plan that includes certain information described in the bill, as specified by the department through guidance, that the department determines useful to plan sponsors for purposes of selecting pharmacy benefit management services, such as an estimated net price to the plan and beneficiary, a cost per claim, the fee structure or reimbursement model, and estimated cost per participant or beneficiary. The report is to also contain a summary document for plans to provide to beneficiaries, which shall be made available to beneficiaries upon request to the plan, that contains aggregate information as specified by the department through guidance, that the department determines useful to beneficiaries in better understanding the plan or benefits under the plan.

The bill also provides that, not less than once a year, at the request of the plan sponsor, the pharmacy benefit manager is required to allow for an audit of the pharmacy benefit manager to ensure compliance with all terms and conditions under the contract and the accuracy of information reported pursuant to the bill.