Treasury to appoint single pharmacy benefits manager

Summary#

A-5668, titled “Requires Department of Treasury to contract with pharmacy benefits manager to manage pharmacy benefits for certain State-sponsored health benefits plans,” would add new requirements to the law supplementing New Jersey’s 2015 pharmacy-benefit-manager law. Its stated goal is to have one contractor administer pharmacy benefits for the State Health Benefits Program and School Employees’ Health Benefits Program.

  • By January 1, 2030, the Treasury Department must seek proposals, choose one eligible third-party administrator with the two benefits commissions, and contract with it as the State pharmacy benefits manager.
  • Vendors serving the programs must contract with and use that manager for pharmacy benefits. The manager would handle payments, rebates, and other services and payments related to prescription drugs.
  • The contract must require the manager to pass rebates and other financial benefits related to the work to the State. The manager may keep income from a pharmacy-benefit-manager fee.
  • The contract must prohibit spread pricing, certain pharmacy and patient fees without the Department’s written approval, and requiring patients to use a particular pharmacy, mail-order pharmacy, or affiliated specialty pharmacy.
  • The Department must review and approve or deny pharmacy-related contracts and changes, conduct an annual audit, and publish its audit results. An independent accountant must also audit the manager’s internal controls each year, at the manager’s expense.
  • The Department and the two commissions must adopt rules on eligibility, pharmacy reimbursement, and dispensing fees. The bill sets a reimbursement method using drug-acquisition-cost benchmarks and the State Medicaid professional dispensing fee.

What it means for you#

  • State employees, retirees, and eligible dependents: The bill changes who administers pharmacy benefits, but does not itself list covered drugs or change who is eligible for the plans.
  • Pharmacies and pharmacists: Reimbursement methods and dispensing fees would be set by Department rules. The manager could not pay less than the applicable fee, and could not impose a fee on a pharmacy or pharmacist without the Department’s written approval.
  • People using the plans: The manager could not require you to use a particular pharmacy, mail-order pharmacy, or its affiliated specialty pharmacy. The bill does not say that every pharmacy must be in the plans’ networks.
  • Vendors serving the plans: They must use the single State pharmacy benefits manager for the pharmacy benefits they administer.
  • Treasury Department and the two commissions: They must select and oversee the manager, adopt rules, and review pharmacy-related contract actions. The bill creates a contracted role, not a new independent government agency.

Money#

No cost estimate is provided in the supplied material.

  • The State may pay the manager a contract fee; the bill does not set its amount.
  • The manager must pass rebates and other financial benefits from pharmacy-benefit services to the State.
  • The manager must pay for an independent annual audit of its internal controls. The Department must also conduct an annual audit, but no cost estimate is given.
  • The bill sets pharmacy reimbursement rules, but provides no estimate of their effect on State spending, pharmacy revenue, or patient costs.

What is unclear#

  • The Department must set eligibility criteria by rule. The bill does not identify all criteria or how many eligible applicants there may be.
  • The bill does not give the contract term, the manager’s fee, or a detailed process for handling disputes or appeals.
  • The supplied material does not include the 2015 law being supplemented. How this bill’s requirements would interact with that law and current plan arrangements could not be verified.
  • The bill bars certain ownership ties and manufacturer arrangements. How those rules would affect the pool of eligible applicants is not stated.
  • No publicly available information is provided on the expected savings, implementation costs, or effects on pharmacy access.

Case for#

  • The bill appears intended to give the State more control and visibility over pharmacy-benefit payments, rebates, fees, and related financial arrangements.
  • A single manager could give the State one contractor to oversee for these benefits, rather than leaving vendors to administer them separately.
  • The reimbursement rules aim, where practicable, to base payment on drug acquisition costs while seeking the greatest savings for the State.
  • Required audits, public posting of the Department’s audit, and approval of pharmacy-related contract changes could help the State monitor the arrangement.

Case against#

  • One manager would handle all pharmacy benefits in these plans, concentrating administration in a single contractor. The bill does not describe a backup arrangement if the contract does not work as intended.
  • The Department would have to review and approve pharmacy contracts and changes before they take effect. The bill does not set review deadlines, so delays are a possible concern.
  • The bill requires extensive oversight and rulemaking but gives no cost estimate or staffing plan.
  • The bill does not show whether its reimbursement method would produce savings or how it would affect pharmacy participation and patient access.