Assemblyman Roy Freiman’s ongoing efforts to address rising prescription costs took a big step forward today with the Assembly passage of the “Patient and Provider Protection Act” (A1502). The legislation aims to bring transparency and accountability to pharmacy benefit managers (PBMs), the middlemen who often drive up costs for patients and families. The “Patient and Provider Protection Act” would regulate PBMs and help make prescription drugs more affordable for New Jersey families.
“This bill is about putting patients first and making prescription drugs more affordable for New Jersey families,” said Assemblyman Freiman (D-Hunterdon, Mercer, Middlesex, Somerset). “PBMs need to be held accountable by providing a fair process for independent pharmacies to access medication and ensuring patients don’t have to jump through hoops to find the most affordable option for their prescriptions. This legislation would ensure that no New Jerseyan’s access to medication is hindered by contracts that place profits ahead of people.”
The bill would establish certain requirements for PBMs relating to the contractual agreements with manufacturers and pharmacies. Under the bill, PBMs would have a responsibility to act in the best interests of the carrier with which it contracts, including insurance companies, health service corporations, medical service corporations, the State Health Benefits Program, the School Employees’ Health Benefits Program, and Medicaid. This would ensure a PBM’s decision does not benefit them at the expense of the carriers and, by extension, the patients enrolled in those carriers’ plans.
“Right now, PBM compensation structures reward higher drug prices by incentivizing the promotion of more expensive medications to maximize profits,” said Assemblyman Freiman. “This bill would move PBMs to a flat-fee model, creating a fairer and more transparent system that puts patients first instead of profit margins. It would also require greater disclosure of third-party broker fees, ensuring the State and purchasers have a clearer understanding of where costs are coming from and how pricing decisions are being made.”
The bill is supported by numerous advocacy groups, including the HealthCare Institute of New Jersey, a trade group representing New Jersey’s leading research-based biopharmaceutical and medical technology companies.
“We applaud the Assembly’s passage of this important legislation, which will improve access to life-saving medications and lower costs for patients,” HealthCare Institute President and Chief Executive Officer Chrissy Buteas said after the vote. “New Jersey is known as the ‘Medicine Chest of the World’ for our global leadership in discovering new medicines – this bill aims to make sure PBMs and other middlemen don’t artificially inflate the cost of those medicines for their own profits at the expense of New Jersey patients.
Today’s action by the Assembly addresses the critical goal of making healthcare more affordable, helping patients and families across our state. We look forward to supporting the bill as it continues through the legislative process.”
The federal government has also acknowledged the role PBMs play in driving up prescription drug costs and limiting patient access. In July 2024, the Federal Trade Commission released an interim report finding that the six largest PBMs manage nearly 95 percent of all prescriptions filled in the United States. This level of consolidation limits competition and drives up prices, allowing PBMs to profit at the expense of patients and independent pharmacies. That same month, the U.S. House Committee on Oversight and Accountability released a report that showed how the three biggest PBMs have used pricing strategies that raise drug prices, undermine community pharmacies, and hurt patients all over the country.
Additional bill sponsors include Majority Leader Lou Greenwald and Assembly members Gary Schaer, Dan Hutchison, Luanne Peterpaul, Avi Schnall, Sterley Stanley, and Heather Simmons.
In April, Assemblyman Freiman joined the Jersey Rules podcast to discuss the bill and the need for comprehensive PBM reform in New Jersey. Listen to the full conversation here.