Jersey Legislature Passes Ban Against Gag Clauses, Copay Clawbacks

The New Jersey legislature has approved a sweeping new bill that bans gag clauses in contracts between PBMs and pharmacies as well as so-called copay clawbacks.

The legislation (S.2690) is likely to be signed by Gov. Phil Murphy. It already has the endorsement of the main trade association for pharmacy benefit managers.

“This important legislation mirrors federal law that PBMs have supported,” the Pharmacy Care Management Association said in welcoming the legislation.

The new law makes the Garden State the seventh to ban gag clauses and the twelfth to ban clawbacks—when copays by commercially insured patients exceed the cost of the drug to the insurer or PBM. It comes as regulators and legislators in states and the federal government are threatening to get tough with the drug industry to rein in prescription drug prices.