Under a new law signed by Gov. Phil Murphy and sponsored Assemblyman Ron Dancer, prescription drug costs will be more affordable and transparent by eliminating controversial practices known as clawbacks and gag clauses.
The bill (S2690/A3993/A2214) prohibits pharmacy benefit managers, the middleman that manage the prescription drug part of health insurance plans, from charging a copay that exceeds a drug’s cash price and keeping the difference, a practice called clawbacks. It also removes gag clauses that prevented pharmacists from telling their customers about lower price options.
“Pharmacy benefit managers have been holding consumers and pharmacists hostage. This law will do away with the games,” said Dancer (R-Ocean). “Patients who need prescriptions for their health should not be subjected to profit-motivated deception.”
One study found nearly one-quarter of all insurance copays exceeded the price the pharmacy had negotiated for the same drug by at least $2. An NBC News investigation found these clawback schemes often targeted a wide variety of generic drugs that treat diabetes, blood pressure, cholesterol, depression and anxiety.
“The deck is stacked against prescription users who have no idea this is going on,” said Dancer. “The gag clause prohibits the pharmacists from informing their customers of this scheme. That’s not acceptable. Nobody should pay more for required drugs because they are insured.”
Under the new law, pharmacists are now required to tell people how much their prescriptions cost, including cheaper options to purchase without insurance. It also directs the Division of Consumer Affairs to develop a public awareness campaign on pre- scription costs and consumer rights.
New Jersey joins more than 30 states that have enacted laws prohibiting gag clauses and at least 20 others that outlaw copay clawbacks.