Assembly panel advances bill package aimed at lowering drug prices

Supporters call bills ‘a mandate for action’

By: - May 25, 2022 7:03 am

The committee’s action is an advancement of a broader Democratic push that began in earnest earlier this year to halt the rise of prescription drug prices. (Getty Images)

Over the objections of business and industry groups, an Assembly panel approved a package of bills meant to rein in prescription drug prices after a roughly four-hour hearing Tuesday.

The bills include measures that would require increased reporting from sectors of the health care industry, cap out-of-pocket costs for certain prescriptions, and create a board to examine ways to lower drug prices in New Jersey.

Assemblyman John McKeon (D-Essex), a prime sponsor of several bills advanced Tuesday, said transparency shines a light on drug pricing and holds manufacturers accountable for cost increases or high prices for new prescription drugs.

“State agencies and the public should not be surprised by unfair fee surges. This legislative package would help solve that problem,” he said.

The committee’s action is an advancement of a broader Democratic push that began in earnest earlier this year to halt the rise of prescription drug prices. The votes on the bills varied: Some were unanimous in favor, some were approved with yes votes only from Democrats.

Among the bills advanced by the Assembly Health Committee Tuesday were ones requiring pharmacy benefit managers — who act as middlemen between drug manufacturers and insurance companies — pharmacy services administrative organizations, and pharmacy group purchasing organizations to be licensed and regulated by the state.

Those proposed rules include provisions requiring pharmacy benefit managers and insurance carriers to adhere to maximum price lists for some drugs.

Another bill would impose a hard cap on out-of-pocket expenses for asthma inhalers, epinephrine autoinjectors, and certain types of insulin, while a third would create a Prescription Drug Affordability Board tasked with tracking changes in drug prices reported to it by pharmacy-aligned groups.

Pharmacy benefit managers have come under increasing scrutiny from lawmakers around the country in recent years over a belief that rebates and discounts the firms negotiate on behalf of insurers do little to drive down drug prices.

Price control provisions included in some of the bills before the committee faced heavy opposition from the insurance industry, which claimed capping prices could lead to drug shortages. Regina Appolon, a lobbyist who testified on behalf of BioNJ, a life sciences industry association, said an affordability board with price controls “is not the solution.”

“We need a holistic and system-wide approach to truly address this important issue,” said Appolon.

Chris Emigholz, vice president of government affairs for the New Jersey Business and Industry Association warned price controls could stifle drug development in a state where pharmaceuticals are a huge industry.

The board would not be able to cap drug prices on its own. It would make recommendations to that effect and be responsible for jointly drafting price cap implementation plans with another new board, the Prescription Drug Affordability Stakeholder Council.

The Assembly speaker, Senate president, and governor would each appoint a third of the council’s 27 members, who must have backgrounds in specific health care fields.

The bill got a warm reception from progressive advocates.

“This legislation goes beyond transparency and provides a mandate for action,” said Laura Waddell, health care program director for New Jersey Citizen Action. “This is important to note because transparency without action, as we’ve heard today, does nothing to solve the problem.”

Bill slammed as ‘busy work’

In a break from Trenton norms, progressive activists and industry groups joined to deride a bill that would require certain firms along the drug supply chain to report additional information on prices to the state Division of Consumer Affairs.

Progressives likened the bill to “busy work” and said requiring firms to report on pricing practices would do little to lower drug costs. Numerous states have already done this work, they said.

“There are 10 states that have already reported on the top 25 drugs, and if you compare those lists, you will see the same drugs reported over and over again,” said Maura Collinsgru, a health policy advocate at New Jersey Citizen Action. “What we would really like to get to is real action to address things that are causing an affordability problem.”

Industry groups criticized legislators for wanting to extend drug price disclosure requirements to pharmacy services administrative organizations and wholesale distributors, who they said have no role in setting prices.

Pharmacy services administrative organizations are tasked with improving administrative efficiency at pharmacies and most often do so for a set fee paid by the pharmacy. Unlike pharmacy benefit managers, they do not generate revenue from administrative fees on third-party firms or through rebate sharing.

Matthew DiLoreto, senior vice president of government affairs for the Healthcare Distribution Alliance, said pharmacy services administrative organizations “do not have an impact on the cost of medication” and should not be part of discussions about price control.

Senate committees approved the bills in March, but they must still be amended to match Assembly versions and will have to clear the Senate Budget Committee before reaching the chamber’s floor.


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Nikita Biryukov
Nikita Biryukov

Nikita Biryukov most recently covered state government and politics for the New Jersey Globe. His tenure there included revelatory stories on marijuana legalization, voting reform and Rep. Jeff Van Drew's decamp to the Republican Party. Earlier, he worked as a freelancer for The Home News Tribune and The Press of Atlantic City.