NJ Bill Aims to Lower Prescription Drug Costs, Increase Oversight of Pharmacy Benefit Managers

Freiman bill would address rising prescription costs by setting requirements and establishing a committee to oversee formulary systems for PBMs.

TRENTON — As prescription drug prices continue to rise, the need for stronger oversight and accountability in the pharmaceutical supply chain has never been greater.

On Thursday, March 19, 2026, the Assembly Financial Institutions and Insurance Committee advanced the “Patient and Provider Protection Act” (A1502). Sponsored by Assemblyman Roy Freiman, who chairs the committee, the legislation would regulate pharmacy benefit managers (PBMs) and take a major step forward in making prescription drugs more affordable.

“This bill is about putting patients first and making prescription drugs more affordable for New Jersey families,” said Assemblyman Freiman (D-Hunterdon, Mercer, Middlesex, Somerset). “PBMs need to be held accountable by providing a fair process for independent pharmacies to access medication and ensuring patients don’t have to jump through hoops to find the most affordable option for their prescriptions. This legislation would ensure that no New Jerseyan's access to medication is hindered by contracts that place profits ahead of people.”

Recent federal investigations have underscored growing concerns about the role PBMs play in driving up prescription drug costs and limiting patient access. In July 2024, the Federal Trade Commission released an interim report finding that the six largest PBMs manage nearly 95 percent of all prescriptions filled in the United States. This level of consolidation limits competition and drives up prices, allowing PBMs to profit at the expense of patients and independent pharmacies. That same month, the U.S. House Committee on Oversight and Accountability released a report that showed how the three biggest PBMs have used pricing strategies that raise drug prices, undermine community pharmacies, and hurt patients all over the country.

The bill would establish certain requirements for PBMs relating to the contractual agreements with manufacturers and pharmacies. Under the bill, PBMs would have a responsibility to act in the best interests of the carrier with which it contracts, including insurance companies, health service corporations, medical service corporations, the State Health Benefits Program, School Employees’ Health Benefits Program, and Medicaid. This would ensure a PBM’s decision does not benefit themselves at the expense of the carriers, and by extension, the patients enrolled in those carriers’ plans.

Currently, PBM compensation structures incentivize the promotion of expensive medications to maximize profits. To address this, PBM fees would be restructured as flat fees. The realignment of incentives would ensure compensation remains fair and transparent. Third-party broker fees would also be subject to disclosure to the State or purchasers upon request.

“In February, the 2026 Consolidated Appropriations Act was signed into law, and included a requirement for PBMs serving Medicare Part D and employer-sponsored plans governed by the Employee Retirement Income Security Act to operate on a flat fee model,” Assemblyman Freiman added. “By expanding regulations in New Jersey to include all PBMs, independent pharmacies would enter negotiations on a level playing field, equipped with the right tools to get the best care and price possible for their patients.”

A1502 would set uniform reimbursement standards tied to the National Average Drug Acquisition Cost plus the State-defined Medicaid professional dispensing fee. It would also restrict the steering of patients toward PBM-affiliated pharmacies and prohibit preferential payment for those pharmacies, and bar PBMs from blocking pharmacies that meet standard network terms from joining their networks.

Additional bill sponsors include Majority Leader Lou Greenwald and Assembly members Gary Schaer, Dan Hutchison, Luanne Peterpaul, Avi Schnall and Sterley Stanley.

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