Lawmakers Say Bill Would Cut Cost Of Prescription Drugs
Senate lawmakers on Thursday advanced a bill legislators claim would make some prescription drugs more affordable.
The measure (S334), which was unanimously approved by the Senate Commerce Committee, would require insurance carriers to pass onto consumers the financial benefits they receive from drug price negotiators.
Sen. Nellie Pou (D-Passaic), the committee’s chairwoman and one of the bill’s sponsors, said prescription drug costs are a problem not just in New Jersey but throughout the nation.
“Drug pricing has always been an extraordinarily high cost,” Pou said. “It’s important for us to be able to make it more affordable for all our residents, especially in those particular drugs that are absolutely life-saving drugs, medicines that are needed for people to survive.”
The bill focuses on cost savings negotiated by pharmacy benefit managers, who act as middlemen between drug manufacturers and insurance companies, winning discounts and rebates off list prices of pharmaceuticals.
Under the bill, the bill would require those discounts and rebates to be passed on to the consumer. It would also require carriers to submit an annual report to the Department of Banking and Insurance detailing their compliance.
It’s not clear the savings won by pharmacy benefit managers reduce consumers’ out-of-pocket prescription costs.
University of Southern California researchers in a 2020 white paper noted list prices on average rose by $1.17 for every $1 increase in rebates.
It’s unclear how much money the measure will save New Jerseyans. A fiscal note has yet to be drafted for the bill in the current legislative session. The Office of Legislative Services did not determine its impact on premiums and prescription drug prices in the fiscal note issued in December for a similar bill, noting only that state and local health plans’ savings would depend on how compensation was negotiated in contracts with their carriers.
“It’s a little ‘to be continued’ on what that actual amount can be, but we know because of the use of PBMs there are savings that are approved to the payers,” said Sen. Troy Singleton (D-Burlington), the bill’s prime sponsor. “We want to make sure that the payers, meaning the consumers, get the full measure of those.”
No testimony was given on the bill during the committee’s meeting Thursday. However, pharmacy groups — including the New Jersey Pharmacists Association, the Independent Pharmacy Alliance, and the Omega Pharmacy Group, among others — submitted slips supporting the legislation.
No groups noted their opposition. Singleton suggested the bill would have moved even if they had.
“With respect to the industry, I imagine there will be some actors who think that this is a bridge too far, but I think we’ll stand on the side of consumers with this one,” he said.
The bill would go into effect 180 days after being signed into law. It would affect health plans issued or renewed in the calendar year following its enactment.
The Assembly Financial Institutions and Insurance Committee will hear the bill in the lower chamber. It has no meetings scheduled.