Bill would address the rising cost of prescription drugs by establishing requirements for pharmacy benefit managers
(TRENTON) – With prescription drug prices continuing to rise, the need for stronger oversight and accountability in the pharmaceutical supply chain has never been greater. Legislation sponsored by Assemblyman Roy Freiman to regulate pharmacy benefit managers (PBMs) took a major step forward as Assembly bill A4953 cleared the Assembly Financial Institutions and Insurance Committee.
Recent federal investigations have underscored growing concerns about 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 now manage nearly 95 percent of all prescriptions filled in the United States, with increasing market concentration 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.
Under the bill, known as the “Patient and Provider Protection Act,” pharmacy benefit managers would be subject to new requirements governing their relationships with drug manufacturers and pharmacies, including a fiduciary duty to act in the best interests of the State Health Benefits Program, the School Employees’ Health Benefits Program, or the health insurance carrier with which they contract. The legislation would prohibit misleading marketing practices and rebate arrangements that exclude generic drugs.
“PBMs have operated in the shadows of our healthcare system for too long,” said Assemblyman Freiman (D-Hunterdon, Mercer, Middlesex, Somerset). “This bill shines a light on their practices and puts safeguards in place to ensure patients and independent pharmacies are treated fairly.”
The bill would also establish uniform reimbursement standards, ban differential payment pricing, restrict patient steering to affiliated pharmacies, and prevent formulary decisions that favor higher-cost drugs over lower-cost generic or biosimilar alternatives when based solely on cost.
The bill is also sponsored by Majority Leader Lou Greenwald, Assemblymen Gary Schaer, John Allen, and Dan Hutchison, Assemblywoman Luanne Peterpaul, and Assemblymen Avi Schnall and Sterley Stanley.