Attorney General Jennifer Davenport and a bipartisan group of 44 other attorneys general supported a proposed federal rule to increase transparency from pharmacy benefit managers (PBMs) that serve employer-funded health plans, according to an April 16 announcement.
The issue is important because PBMs play a significant role in determining prescription drug prices, which affects the cost of healthcare for millions of Americans. The proposed rule aims to give employers more insight into how PBMs operate and make money, potentially leading to lower costs for consumers.
Governor Mikie Sherrill has called for greater oversight of PBMs, stating that New Jersey’s Medicaid program could save $20 million each year if these companies were prevented from inflating prices. “We all feel the financial pain of rising drug prices, but it doesn’t have to be this way,” Davenport said. “We’re standing together with a bipartisan coalition of attorneys general in urging the federal government to increase oversight over PBMs. Our office is committed to ensuring that PBMs are following the law—and to hold them accountable when they don’t.”
PBMs were initially created in the late 1960s just to process prescription claims but now manage prescription benefits for insurers and negotiate rebates with manufacturers. The top three PBMs currently handle about 80% of all prescription drug claims nationwide.
The proposed rule would require PBMs servicing employer-based plans to disclose twice yearly how they generate revenue and allow employers the right to audit them. It also addresses concerns about federal preemption under ERISA by urging clarification that state transparency laws will not be overridden. In their letter, the attorneys general requested ongoing cooperation between state regulators and the Department of Labor regarding enforcement issues involving PBMs.
All fifty states have enacted laws aimed at regulating PBM practices due to concerns over their influence on drug pricing. In New Jersey specifically, recent legislation requires PBMs to report pricing information or face civil penalties if they fail.
The New Jersey Attorney General Matthew Platkin’s office plays a key role in protecting residents’ lives and property while upholding legal standards statewide according to its official website. The office extends its authority across all counties and municipalities according to its official website, influences public safety through law enforcement oversight according to its official website, holds statutory authority over prosecution and regulation matters according to its official website, provides services such as victim advocacy and consumer protection initiatives according to its official website, and functions as an agency focused on justice throughout New Jersey according to its official website.
Broader implications include potential reductions in healthcare costs if increased oversight leads both state agencies and employers toward better control over prescription expenses.
