Assembly panel advances PBM reform bill after heated debate over $10.92 dispensing fee

The New Jersey Assembly Appropriations Committee on May 14 voted to report out Assembly Committee substitute A1502, the Patient and Provider Protection Act, after extensive testimony and questioning from both supporters and opponents.

The bill would require cost‑plus reimbursement tied to the federal average drug acquisition benchmark (NADAC) and apply a flat dispensing fee based on the New Jersey Medicaid fee‑for‑service rate of $10.92 for most prescriptions. Sponsor Assemblyman Freiman told the committee the measure also imposes a fiduciary duty on pharmacy benefit managers (PBMs) and seeks to decouple PBM compensation from drug list prices and rebate incentives.

Supporters argued the changes would reduce opportunities for PBMs to steer patients toward higher‑priced drugs that produce larger rebates and to overpay PBM‑owned pharmacies. Anthony Resnick of the Independent Pharmacy Alliance told the panel that Federal Trade Commission data and state studies show PBMs can pay affiliated pharmacies substantially more than independents for the same drugs: “We’ve seen cases where PBMs are charging hundreds or even thousands of dollars over the national average for specialty drugs,” he said. Brian Pinto, a pharmacy owner, demonstrated an example using NADAC plus the dispensing fee and said the result could be a substantial savings for plan sponsors.

Opponents, including Ward Sanders of the New Jersey Association of Health Plans and Heather Cascone of PCMA, warned the $10.92 dispensing fee could significantly increase costs for Medicaid, the state health benefits plan and private plan sponsors. Sanders told the committee the fee “is probably about a five‑fold increase in what’s paid” today and cautioned of “hundreds of millions of dollars of transfer in payments” if the fee is applied broadly. Cascone called the flat addition “a very expensive cost, a pill tax,” and repeatedly noted that a fiscal note had not been produced for the Appropriations Committee to review.

Committee members pressed witnesses on how the change would affect patients at the pharmacy counter. Several lawmakers noted that many patients now save via mail order copays and asked whether those savings would disappear if mail‑order reimbursement were effectively raised. Witnesses said mail order often offers lower per‑unit prices and that the bill would limit incentives that make mail order cheaper, potentially shifting costs to patients unless plan design mitigations are adopted.

Sponsor Freiman said the bill takes a multilayered approach—establishing a fiduciary duty, a flat fee model for PBM compensation, and a clear NADAC‑plus reimbursement—aimed at removing the structural incentives that can drive higher list prices and higher overall system costs. He acknowledged the bill is not a single cure for health‑care affordability and that more work will be needed after enactment.

After discussion, the committee took a motion to amend and report the committee substitute as amended. The transcript records a roll call and the clerk announced the committee substitute as amended was favorably reported. (Transcript roll‑call entries for the motion include explicit named yes and no votes; see actions array for recorded entries.)

What’s next: the committee’s favorable report moves the substitute to the Assembly for further consideration and possible floor amendments.