Last Thursday, June 22, the two bills in the Governor’s prescription drug legislative package that affect the life sciences industry and pharmacy benefit managers (PBMs), A2840 and A536/2841, were reported by the Assembly Appropriations Committee. Once again, both bills moved along party-line votes and both were amended.

A2840, the data reporting/drug council bill, was amended to incorporate the changes that were adopted by the Senate Budget and Appropriations Committee last month. However, there were some additional changes to the language that modify confidentiality violations. Additionally, language was added that prevents the Division of Consumer Affairs from varying the annual assessments according to whether reporting entities are carriers, PBMs, manufacturers or other entities. Further, any surplus generated by the total assessment that exceeds funding for the Drug Affordability Council and related expenses would now be remitted to reporting entities. Another notable change is the elimination of reporting requirements for manufacturers of insulin products.

A536/A2841, the bill affecting PBMs, was also amended. The bill had previously been extensively amended in the Assembly Health Committee on March 14 of last year. Among the amendments are requirements that the Drug Affordability Council examine how PBMs handle drug rebates. Additionally, while prior language included a provision that would require rebate pass-through to Patients exclusively, the latest version of the bill adds an option for carriers to alternatively use rebates to offset premiums for covered individuals in future plan years. The bill was also reported by the Assembly Budget Committee (ABU) yesterday.

Both bills, along with A2839, which requires carriers to cover epinephrine auto-injector devices and asthma inhalers, are posted for floor votes in both the Assembly and Senate on Friday. The current language for both bills in the Assembly is expected to be adopted by the Senate.

A5323, which broadly reforms the State’s tax policies, was heard in the Assembly Budget Committee (ABU) yesterday. The bill’s Senate companion was reported by the Senate Budget and Appropriations Committee (SBA) on June 12, rendering both bills ready for floor votes.

Among the bill’s provisions is one that provides for R&E/R&D deductions to be made in the years during which they are incurred (Section 11 of the bill). In addition to support for the bill, BioNJ has worked with subject matter experts to recommend language that would ensure the provision achieves its fundamental purpose. Given that the fiscal analysis performed by the Legislature’s Office of Legislative Services (OLS) interprets the bill’s language to intend to decouple the State’s tax policy from IRC Section 174, among other indications, we are confident that these provisions will be implemented such that companies in New Jersey will be capable of expensing R&D costs in the years that costs are incurred.

The implementation of this provision would help to address the challenges arising from the changes made to IRC Section 174 by the Tax Cuts and Jobs Act of 2017. This legislation, which the Division of Taxation considers to be revenue neutral, positively impacts the treatment of GILTI as well. In addition to the expected sunset of the Corporate Business Tax surtax, these will be positive developments for the life sciences ecosystem in New Jersey.

Beyond the prescription drug and tax reform legislation, several bills of interest have made progress in the Legislature or are posted for a floor vote in the Assembly on Friday:

● A2014 (Conaway/Wirths/Umba) - "Manufacturing in Higher Education Act"; requires various State entities to promote manufacturing career pathways for students and provides assistance to manufacturing industry.

-Posted for an Assembly floor vote on Friday

● S3402 (Zwicker/Singer) - Allows Commission on Science, Innovation and Technology to provide grants to employees of public institutions of higher education and their companies.

-Passed by the Senate on June 20, ready for an Assembly floor vote

● A4052 (Reynolds-Jackson/Conaway/Mukherji/Carter) - Establishes three-year sickle cell disease pilot program; appropriates $10,200,000.

-Reported out of the Assembly Appropriations Committee on June 22

● A5557 (Tully/Murphy/DePhillips) - Increases amount of tax credits for investments made in certain technology business ventures under "New Jersey Angel Investor Tax Credit Act."

-Reported out of the Assembly Science, Innovation and Technology Committee (AST) on June 15. There is no Senate companion for this bill.

Following voting sessions and passage of the State budget by June 30, the Legislature is expected to break for the rest of the summer excluding some hearings in the Senate to evaluate the appointments of judges.

Following the publication of their analysis of the impact that the Inflation Reduction Act (IRA) will have on innovation in the life sciences, Vital Transformation — in partnership with We Work for Health — published a new study that explores the consequences that policies in the “Smart Prices Act” (SPA) would have.

The study finds that the SPA, which would implement some of the proposals that were included in President Biden’s budget proposal, would result in a loss of approximately 1 million jobs across the country, approximately 230 fewer new therapeutics over 10 years, and would have reduced the number of new therapeutics that emerged over the past 10 years had it been in place at the time.

As was the case in the analysis of the IRA, New Jersey would be among the states that would face the most severe ramifications in terms of both jobs and investment losses —and the SPA would exacerbate the impact of the IRA by tens of thousands of jobs and billions of dollars in lost State investments.

The Bayh-Dole Coalition, which advocates on behalf of the policies implemented by the law passed in 1980, has published a timeline of the history of the policy. The timeline begins in the nascent phase of the policy in 1945, and it enumerates many of the significant advancements that have resulted in more treatments and cures made available to Patients more rapidly. The Coalition is led by Joseph Allen, who was a key staffer in Sen. Birch Bayh’s office during the passage of the legislation.

Given the challenges that have been made to Bayh-Dole, including a proposal to exploit “march-in rights” to enact price controls in a manner that contradicts the purpose of these provisions, BioNJ will continue to convey to federal policymakers the crucial benefits that these policies have produced for Patients.

BioNJ is the voice of New Jersey’s life sciences sector in Trenton and Washington. BioNJ’s Public Policy Support Series sponsorship opportunities are now available for 2023. Help ensure BioNJ continues to deliver our message of improved Patient access and enhanced innovation through a Public Policy Support Series Sponsorship.  

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