NY State Senate Bill 2009-S2836

Senate Bill S2836

2009-2010 Legislative Session

Prohibits pharmacy benefits managers, HMOs, Insurers & health plans from offering incentives to health care providers to switch from one prescription drug to another

download bill text pdf

Archive: Last Bill Status - In Senate Committee Health Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 06, 2010	referred to health
Mar 04, 2009	referred to health

2009-S2836 (ACTIVE) - Details

Current Committee:: Senate Health
Law Section:: Public Health Law
Laws Affected:: Add Art 2-B §§281 - 281-c, Pub Health L

2009-S2836 (ACTIVE) - Summary

Prohibits pharmacy benefits managers, HMOs, insurers and health plans from offering incentives to health care providers to switch from one prescription drug to another specific prescription drug.

2009-S2836 (ACTIVE) - Sponsor Memo

                                 BILL NUMBER:  S2836

 TITLE OF BILL :
An act to amend the public health law, in relation to prohibiting
pharmacy benefit managers, health maintenance organizations, insurers
and other health plans from offering incentives to health care
providers to switch a patient from a specific prescription drug to
another specific drug, excluding generic substitution


 PURPOSE OR GENERAL IDEA OF THE BILL :
The bill prohibits pharmacy benefit managers ("PBMs") and health plans
(including HMOs, licensed insurers and employer groups that offer
pharmacy benefit to their beneficiaries and subscribers) from offering
or paying health providers incentives to induce changing a patient's
prescription when the change would substitute a therapeutic
alternative to the originally prescribed drug; that is, when the
change would substitute a single source or multi-source drug that is a
different chemical entity from the original drug and not its generic
or therapeutic equivalent. The bill also prohibits payments to health
care providers of monetary incentives, or the use of other payment
methodologies (such as withholds) to promote compliance with a plan's
direction to prescribe a specific prescription drug product, as well
as with formulary or other guidelines for drug selection.

 SUMMARY OF SPECIFIC PROVISIONS :

This bill adds a new Article to the Public Health Law, Article 2-B, to
proscribe payments by the PBMs and health plans for the purpose of
inducing physicians to switch patients off their current medications.

Section one defines a "prescription drug switch" as the direction by a
PBM of health plan to a health care provider to change a patient's
existing prescription to a different medication that is not the
generic or therapeutic equivalent of the original prescription.

Section two defines and prohibits two classes of improper payments: 1)
prescription drug switch payments, which consist of incentives for
prescription drug switches, and 2) other payment methodologies, such
as withholds, that are designed to create incentives for health care
provider compliance with formularies or other prescribing guidelines.
Payments that encourage or reward generic substitution, when
consistent with Section 6816-A of the Education Law, are exempted from
both categories of improper payment.

Section three expressly prohibits retaliation against a health care
provider for making prescribing choices that do not conform to PBM or
health plan direction or formulary guidelines, including termination
of a provider's status as a participating provider in the plan's
contracted provider network.

Section four provides for enforcement of the new Article by subjecting
each improper payment to a maximum penalty of $25,000 and by giving
any health care provider who suffers unlawful retaliation a private
right of action to seek equitable relief, recovery of the provider's
actual damages and a civil penalty of up to three times the amount of
such damages.

 JUSTIFICATION :
Current law does not adequately protect health care providers from
encountering undue pressure from PBMs and health plans to comply with
prescribing guidelines that are often injurious to patient health.
This pressure takes the form of per-switch payments, bonuses and other
monetary incentives paid to prescribing physicians as an inducement
for substituting one medication for another, eve when patients have
been well stabilized on their existing drug regimen, free of
side-effects or other impediments to ongoing prescription compliance.
In these circumstances, the rationale for inducing the switch is
typically solely economic benefit to the plan, not the therapeutic
interests of the patient. Indeed, peer-reviewed research shows that
patients subject to non-therapeutic switches are 30% more likely to
fail in prescription drug adherence (compared to those who are
maintained on their existing regimen), resulting in more complications
form chronic illness and thus higher overall medical costs.  Switching
payments also subject providers to ethical conflicts of interest, to
the extent they influence providers to make treatment decisions that
are not solely in the best interest of their patients.

This legislation would prevent PBMs and health plans operating in New
York from providing drug switching payments or other incentives to
participating providers. It would also prevent use of techniques, such
as monetary incentives or withholds, that coerce provider compliance
with drug formularies or guidelines or specific direction.

The bill expressly exempts any practice that promotes generic
substitution: i.e., the practice of substituting a multi-source,
generic medication for the therapeutically equivalent brand name
product originally prescribed.

 PRIOR LEGISLATIVE HISTORY :
None.

 FISCAL IMPLICATIONS :
None.

 EFFECTIVE DATE :
This Act shall take effect immediately.

2009-S2836 (ACTIVE) - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  2836

                       2009-2010 Regular Sessions

                            I N  S E N A T E

                              March 4, 2009
                               ___________

Introduced  by  Sen.  KLEIN  -- read twice and ordered printed, and when
  printed to be committed to the Committee on Health

AN ACT to amend the public health law, in relation to prohibiting  phar-
  macy  benefit managers, health maintenance organizations, insurers and
  other health plans from offering incentives to health  care  providers
  to  switch  a  patient  from  a  specific prescription drug to another
  specific drug, excluding generic substitution

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  The  public health law is amended by adding a new article
2-B to read as follows:
                               ARTICLE 2-B
                 IMPROPER PAYMENTS FOR PRESCRIPTION DRUG
                           SWITCHES PROHIBITED
SECTION 281.   DEFINITIONS.
        281-A. UNLAWFUL PAYMENTS WITH RESPECT TO  HEALTH  CARE  PROVIDER
                 PRESCRIBING PRACTICES.
        281-B. NO RETALIATION AGAINST HEALTH CARE PROVIDERS.
        281-C. ENFORCEMENT.
  S  281. DEFINITIONS. FOR THE PURPOSE OF THIS ARTICLE: 1. "HEALTH PLAN"
MEANS A NONHOSPITAL OR MEDICAL  SERVICE  ORGANIZATION,  INSURER,  HEALTH
COVERAGE  PLAN  OR  HEALTH MAINTENANCE ORGANIZATION LICENSED PURSUANT TO
THE INSURANCE LAW; ANY ORGANIZATION CERTIFIED OR RECOGNIZED PURSUANT  TO
ARTICLE  FORTY-FOUR  OF  THIS CHAPTER, INCLUDING AN INDEPENDENT PRACTICE
ASSOCIATION; OR AN EMPLOYER, LABOR  UNION  OR  OTHER  GROUP  OF  PERSONS
ORGANIZED IN THE STATE THAT PROVIDES HEALTH COVERAGE TO PARTICIPANTS WHO
ARE  EMPLOYED  OR  RESIDE IN THE STATE. "HEALTH PLAN" DOES NOT INCLUDE A
HEALTH PLAN THAT PROVIDES COVERAGE ONLY FOR ACCIDENTAL INJURY, SPECIFIED
DISEASE, HOSPITAL INDEMNITY,  MEDICARE  SUPPLEMENT,  DISABILITY  INCOME,
LONG-TERM  CARE  OR  OTHER LIMITED BENEFIT HEALTH INSURANCE POLICIES AND
CONTRACTS.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD08762-01-9

S. 2836                             2

  2. "HEALTH CARE PROVIDER" MEANS A LICENSED HEALTH CARE PROVIDER LEGAL-
LY AUTHORIZED TO PRESCRIBE DRUGS UNDER THE PROVISIONS OF  THE  EDUCATION
LAW.
  3.  "PRESCRIPTION  DRUG  PRODUCT"  MEANS  ANY  PRODUCT  SUBJECT TO THE
REQUIREMENTS OF SECTION SIXTY-EIGHT HUNDRED ELEVEN-A  OF  THE  EDUCATION
LAW.
  4.  "PHARMACY  BENEFIT MANAGER" OR "PBM" MEANS A PERSON OR ENTITY THAT
PROVIDES PHARMACY BENEFIT MANAGEMENT SERVICES TO A HEALTH PLAN.
  5. "PHARMACY BENEFIT MANAGEMENT SERVICES" MEANS THE NEGOTIATION OF THE
AMOUNT TO BE PAID FOR PRESCRIPTION DRUGS BY THE HEALTH PLAN FOR  PARTIC-
IPANTS  IN  THE  STATE, THE ADMINISTRATION OR MANAGEMENT OF PRESCRIPTION
DRUG BENEFITS PROVIDED BY A HEALTH PLAN OR INSURER FOR  THE  BENEFIT  OF
PARTICIPANTS,  OR  ANY  OF THE SERVICES LISTED IN PARAGRAPHS (A) THROUGH
(G) OF THIS SUBDIVISION THAT ARE PROVIDED WITH REGARD  TO  THE  ADMINIS-
TRATION OF PARTICIPANTS' PHARMACY BENEFITS:
  (A) MAIL SERVICE PHARMACY;
  (B) SPECIALTY PHARMACY;
  (C) CLAIMS PROCESSING, RETAIN NETWORK MANAGEMENT AND PAYMENT OF CLAIMS
TO PHARMACIES FOR PRESCRIPTION DRUGS DISPENSED TO PARTICIPANTS;
  (D) CLINICAL FORMULARY DEVELOPMENT AND MANAGEMENT SERVICES;
  (E) REBATE CONTRACTING AND ADMINISTRATION;
  (F)  PATIENT  COMPLIANCE, THERAPEUTIC INTERVENTION AND GENERIC SUBSTI-
TUTION PROGRAMS; AND
  (G) DISEASE MANAGEMENT PROGRAMS.
  6. "PATIENT" MEANS AN INDIVIDUAL WHO RECEIVES PRESCRIPTION DRUG  BENE-
FITS FROM A HEALTH PLAN OR PBM.
  7.  "THERAPEUTIC  ALTERNATIVE  PRESCRIPTION DRUG" MEANS A PRESCRIPTION
DRUG WITH THE SAME OR SIMILAR INDICATIONS TO ANOTHER  PRESCRIPTION  DRUG
BUT  WHICH, WHETHER A SINGLE SOURCE OR MULTIPLE SOURCE PRODUCT, IS NOT A
GENERIC OF, OR LISTED AS A THERAPEUTICALLY EQUIVALENT  VERSION  OF,  THE
OTHER  PRESCRIPTION DRUG ON THE LIST REQUIRED BY PARAGRAPH (O) OF SUBDI-
VISION ONE OF SECTION TWO HUNDRED SIX OF THIS CHAPTER.
  8. "PRESCRIPTION DRUG SWITCH" MEANS AN ATTEMPT BY A HEALTH PLAN OR PBM
TO ENCOURAGE  HEALTH  CARE  PROVIDERS  WHO  HAVE  PRESCRIBED  A  CERTAIN
PRESCRIPTION  DRUG  PRODUCT TO THEIR PATIENTS TO CHANGE THE PRESCRIPTION
DRUG PRODUCT: (A) WHEN SUCH AN ATTEMPT IS PART OF A CONCERTED EFFORT  TO
EFFECT  SUCH  CHANGE FOR MULTIPLE PATIENTS BASED EITHER ON GENERAL CLIN-
ICAL CONSIDERATIONS THAT ARE NOT SPECIFIC TO AN INDIVIDUAL PATIENT OR ON
THE ECONOMIC VALUE OF THE CHANGE TO THE HEALTH PLAN OR PBM; AND (B)  THE
ATTEMPT WOULD SUBSTITUTE A THERAPEUTIC ALTERNATIVE PRESCRIPTION DRUG.
  S  281-A.  UNLAWFUL  PAYMENTS  WITH  RESPECT  TO  HEALTH CARE PROVIDER
PRESCRIBING PRACTICES. (A) IMPROPER PRESCRIPTION DRUG  SWITCH  PAYMENTS.
NO HEALTH PLAN OR PBM SHALL, BY CONTRACT, WRITTEN POLICY OR PROCEDURE OR
ANY  OTHER  AGREEMENT  OR COURSE OF CONDUCT, OFFER OR FURNISH PAYMENT OR
ANY OTHER  INCENTIVE  TO  A  HEALTH  CARE  PROVIDER  TO  COMPLY  WITH  A
PRESCRIPTION DRUG SWITCH AS DEFINED IN THIS ARTICLE.
  (B) OTHER IMPROPER PAYMENTS RELATING TO HEALTH CARE PROVIDER PRESCRIB-
ING  DECISIONS. NO HEALTH PLAN OR PBM SHALL, BY CONTRACT, WRITTEN POLICY
OR PROCEDURE OR ANY OTHER AGREEMENT  OR  COURSE  OF  CONDUCT,  OFFER  OR
FURNISH  PAYMENT  OR  ANY  OTHER  INCENTIVE TO A HEALTH CARE PROVIDER TO
COMPLY WITH A DIRECTION TO PRESCRIBE A  SPECIFIC  PRESCRIPTION  DRUG  OR
WITH  FORMULARY  OR  OTHER GUIDELINES FOR SELECTION OF PRESCRIPTION DRUG
PRODUCTS, OR PROVIDE ANY DISINCENTIVE FOR NON-COMPLIANCE.
  (C) GENERIC SUBSTITUTION EXCEPTED. NOTHING IN THIS SECTION PROHIBITS A
HEALTH PLAN OR PBM, BY CONTRACT, WRITTEN  POLICY  OR  PROCEDURE  OR  ANY
OTHER  AGREEMENT  OR  COURSE  OF  CONDUCT,  FROM  OFFERING OR FURNISHING

S. 2836                             3

PAYMENT OR ANY OTHER INCENTIVE TO A HEALTH CARE PROVIDER  FOR  EFFECTING
GENERIC  SUBSTITUTIONS  OF  PRESCRIPTION DRUG PRODUCTS, OR PROVIDING ANY
DISINCENTIVE FOR FAILING TO EFFECT SUCH SUBSTITUTION.
  S  281-B.  NO  RETALIATION  AGAINST HEALTH CARE PROVIDERS. IT SHALL BE
UNLAWFUL FOR ANY HEALTH PLAN OR PBM TO DEPRIVE OR  THREATEN  TO  DEPRIVE
ANY  HEALTH  CARE PROVIDER OF EMPLOYMENT OR TO TERMINATE THE HEALTH CARE
PROVIDER'S ENGAGEMENT FOR SERVICES, TAKE OR THREATEN TO TAKE ANY RETALI-
ATORY ACTION AGAINST ANY HEALTH CARE PROVIDER, OR DIRECTLY OR INDIRECTLY
INTIMIDATE, THREATEN, COERCE, COMMAND OR ATTEMPT TO INTIMIDATE,  THREAT-
EN, COERCE, OR COMMAND ANY HEALTH CARE PROVIDER BECAUSE SUCH HEALTH CARE
PROVIDER  HAS  MADE PRESCRIBING CHOICES FOR PATIENTS THAT DO NOT CONFORM
TO A DIRECTION TO PRESCRIBE A SPECIFIC PRESCRIPTION DRUG OR WITH  FORMU-
LARY  OR  OTHER  GUIDELINES FOR SELECTION OF PRESCRIPTION DRUG PRODUCTS,
PROVIDED THAT SUCH DECISIONS ARE BASED ON  THE  HEALTH  CARE  PROVIDER'S
INDEPENDENT  CLINICAL  JUDGMENT  REGARDING  THE APPROPRIATE PRESCRIPTION
DRUG FOR EACH PATIENT FOR WHOM THE NON-CONFORMING CHOICE HAS BEEN MADE.
  S 281-C. ENFORCEMENT. (A) ANY  HEALTH  CARE  PROVIDER  THAT  HAS  BEEN
INJURED  BY  REASON  OF THE VIOLATION BY A HEALTH PLAN OR PBM OF SECTION
TWO HUNDRED EIGHTY-ONE-B OF THIS ARTICLE MAY BRING AN ACTION FOR EQUITA-
BLE RELIEF AND TO RECOVER THE PROVIDER'S  ACTUAL  DAMAGES  AND  A  CIVIL
PENALTY TO BE PAID TO THE HEALTH CARE PROVIDER NOT TO EXCEED THREE TIMES
THE HEALTH CARE PROVIDER'S ACTUAL DAMAGES.
  (B)  THE  COMMISSIONER MAY ASSESS A CIVIL PENALTY OF TWENTY-FIVE THOU-
SAND DOLLARS FOR EACH VIOLATION OF SECTION TWO HUNDRED  EIGHTY-ONE-A  OF
THIS ARTICLE.
  S 2. This act shall take effect immediately.

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