TRENTON, NJ – Pharmacy benefit managers working within the Medicaid program are required to disclose certain financial information to the NJ Department of Human Services under legislation the governor signed into law today.

Assemblywoman BettyLou DeCroce, who sponsored the bill (A1259/S249), said greater financial transparency is needed to lower Medicaid costs for taxpayers and prescription drug prices for beneficiaries.

Pharmacy benefits managers providing services within the Medicaid program must now disclose all sources and amounts of income, payments, and financial benefits received on behalf of a managed care organization (also known as a health plan), ingredient costs and dispensing fees or similar payments made to pharmacies, and administrative fees.

“By properly monitoring pharmacy benefit managers’ profits, their payment models and use of spread pricing, New Jersey will be better equipped to put a stop to practices that are costing taxpayers and Medicaid beneficiaries,” DeCroce (R-Morris) said.

Spread pricing occurs when pharmacy benefit managers keep a portion of the amount paid to them by the health plans for prescription drugs instead of passing the full payments on to pharmacies. Studies in other states have estimated that prohibiting spread pricing could save Medicaid programs up to $43 million annually.

“Everyone is negatively affected as the prices of prescription drugs rise. For our lower-income residents who forgo important medications to pay the bills to our taxpayers who are suffering under increased state spending, it’s time we reign in these runaway costs,” DeCroce said.

Data from the Centers for Medicare and Medicaid Services show that from 2013 to 2017, average state and federal Medicaid spending on prescription drugs increased by more than 14.8% annually. Average Medicaid prescription drug spending as a percentage of state budgets has increased by more than 89% over the past 10 years.