NY State Senate Bill 2017-S8384

Senate Bill S8384

2017-2018 Legislative Session

Relates to implementing the pharmacy benefit manager transparency act

download bill text pdf

Archive: Last Bill Status - In Senate Committee Insurance 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
May 04, 2018	referred to insurance

2017-S8384 (ACTIVE) - Details

See Assembly Version of this Bill:: A10026
Current Committee:: Senate Insurance
Law Section:: Insurance Law
Laws Affected:: Add Art 6 §§601 - 607, Ins L
Versions Introduced in Other Legislative Sessions:: 2019-2020: S1705
2021-2022: S3014

2017-S8384 (ACTIVE) - Summary

Relates to implementing the pharmacy benefit manager transparency act.

2017-S8384 (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S8384

SPONSOR: SEPULVEDA
 
TITLE OF BILL:  An act to amend the insurance law, in relation to
implementing the pharmacy benefit manager transparency act

 
PURPOSE OF THE BILL:

This legislation will allow patients and employers to compare the abili-
ty of pharmacy benefit managers to negotiate rebates, discounts, and
price concessions and the amount of such rebates, discounts, and price
concessions in reducing costs for consumers, patients, and their benefi-
ciaries.

 
SUMMARY OF SPECIFIC PROVISIONS:

Section 1. The insurance law is amended by adding a new article 6.
Section 601 entitles the article the "pharmacy benefit manager transpar-
ancy act."

Section 602; redefines; "Covered entity" to mean nonprofit, hospital, or

medical organization, insurer, health coverage plan, or health mainte-
nance organization licensed in the state. "Covered individual" means a
member, participant, enrollee, contract holder, or policy holder or
beneficiary of a covered entity which is provided health coverage by the
covered entity. "Pharmacy benefit manager" means an entity that
contracts with or is employees be a health benefit plan, state agency,
insurer, managed care organization, or other third-party payer for the
administration or management of prescription drug benefits. "Wholesale
acquisition cost" means the list price for a prescription drug, exclud-
ing any discounts, rebates, or reductions in price.

Section 603; shows responsibility to covered entities. A pharmacy bene-
fit manager shall exercise in good faith and fair dealing in the
performance of its contractual obligations to a covered entity, and
shall perform its duties with care, skill, prudence, diligence, and
professionalism. A benefits manage shall notify a covered entity in
writing of any activity, policy, practice, ownership interest, or affil-
iation in the case of a conflict of interest that interferes with the
requirements imposed by this article.

Section 604; Each pharmacy benefit manager under contract with a covered
entity shall submit to the covered entity and to the superintendent no
later than February first of each year the whole sale acquisition cost
for each drug, the amount of rebates, discounts, and price concessions
that the benefits manager receives, the amount of rebates, discounts,
and price concessions described in paragraph (b), the amount of any fee,
the nature, type, and amount of all other payments that a pharmacy
manger receives. The amount of reimbursements the pharmacy befit manager
pays to contracting pharmacies, any other information deemed necessary
by the superintendent. The information shall include all retail, mail
order, specialty, and compounded prescription products and shall remain
confidential.

Section 605; explains the report publication in that the information
obtained to the superintendent shall be used to reduce costs for covered
entities and their beneficiaries, no later than February first of each
year, and the superintendent shall issue a report to be published on the
superintendent's website. The superintendent shall report in a manner
that prevents the disclosure of the specific pharmacy benefit manage, a
covered entity, prices charged for prescription drugs or any associated
rebates, discounts or price concession with respect to an individual
drug or plan.

Section 606; All contracts for pharmacy benefit management entered into
this state or by a covered entity in this state shall comply with the
requirements of this article. The superintendent is responsible for the
enforcement of this article and may examine and investigate to ensure
compliance such as revoking or suspending a license, or denying an
application for a renewal of license, imposing a period of probation to
protect the public health and safety, imposing an administrative fine
not to exceed two hundred and fifty dollars for each violation or
instance of noncompliance and assessing costs to be paid by the pharmacy
benefits manager.

Section 2. This act shall take effect immediately.

 
JUSTIFICATION:

This legislation specific intent is to allow patients and employers to
compare the ability of pharmacy benefit managers when they negotiate
rebates, discounts, and price concessions and the amount of such
rebates, discounts, and price concession that are passed through to plan
sponsors, and to allow covered entities to evaluate the nature of the
relationship between pharmacy benefit managers and manufactures and the
effectiveness of reducing costs for covered entities and their benefici-
aries, no later than February lst of each year. The commissioner or
superintendent shall issue a report to be published on the commission-
er's website by gathering the information received by all pharmacy bene-
fits managers under this chapter for the preceding year.

The commissioner shall ensure that all information be reported in a
manner that prevents the disclosure of the identity of a specific phar-
macy benefit manager, a covered entity, prices charged for prescription
drugs or any associate rebates, discounts or price concessions with
respect to an individual drug or plan, or any information that identi-
fies a product or manufacture.

On February 1st each consecutive year, the commissioner shall analyze
the information submitted by a pharmacy benefit managers pursuant to the
act and produce an additional report to be published on the commission-
er's website on the impact of pharmacy benefit managers on the cost,
administration, and availability of prescription drugs. The commissioner
shall submit the report and any recommendations for proposed legislation
or further action by the state pursuant to the report's finding to the
legislature and the governor on or before February 1st.

 
PRIOR LEGISLATIVE HISTORY:

New

 
FISCAL IMPLICATIONS:

None to the State.

 
EFFECTIVE DATE:
This act shall take effect immediately.

2017-S8384 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   8384
 
                             I N  S E N A T E
 
                                May 4, 2018
                                ___________
 
 Introduced by Sen. SEPULVEDA -- read twice and ordered printed, and when
   printed to be committed to the Committee on Insurance
 
 AN ACT to amend the insurance law, in relation to implementing the phar-
   macy benefit manager transparency act
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:

   Section 1. The insurance law is amended by adding a new article  6  to
 read as follows:
                                 ARTICLE 6
                 PHARMACY BENEFIT MANAGER TRANSPARENCY ACT
 SECTION 601. SHORT TITLE.
         602. DEFINITIONS.
         603. RESPONSIBILITY TO COVERED ENTITIES.
         604. PHARMACY BENEFIT MANAGER TRANSPARENCY.
         605. REPORT PUBLICATION.
         606. COMPLIANCE AND ENFORCEMENT.
         607. RULEMAKING AUTHORITY.
   §  601.  SHORT  TITLE. THIS ARTICLE SHALL BE KNOWN AND MAY BE CITED AS
 THE "PHARMACY BENEFIT MANAGER TRANSPARENCY ACT".
   § 602. DEFINITIONS. FOR THE PURPOSES OF THIS  ARTICLE,  THE  FOLLOWING
 DEFINITIONS SHALL APPLY:
   (1)  "COVERED  ENTITY"  MEANS  A NONPROFIT HOSPITAL OR MEDICAL SERVICE
 ORGANIZATION, INSURER,  HEALTH  COVERAGE  PLAN,  OR  HEALTH  MAINTENANCE
 ORGANIZATION LICENSED IN THE STATE; A HEALTH PROGRAM ADMINISTERED BY THE
 SUPERINTENDENT OR THE STATE IN THE CAPACITY OF PROVIDER OF HEALTH COVER-
 AGE; OR AN EMPLOYER, LABOR UNION, OR OTHER GROUP OF PERSONS ORGANIZED IN
 THE  STATE  THAT PROVIDES HEALTH COVERAGE TO COVERED INDIVIDUALS WHO ARE
 EMPLOYED OR RESIDE IN THE STATE.
   (2)  "COVERED  INDIVIDUAL"  MEANS  A  MEMBER,  PARTICIPANT,  ENROLLEE,
 CONTRACT HOLDER, OR POLICY HOLDER OR BENEFICIARY OF A COVERED ENTITY WHO
 IS  PROVIDED  HEALTH  COVERAGE  BY  THE  COVERED ENTITY. THIS INCLUDES A
 DEPENDENT OR OTHER PERSON PROVIDED HEALTH  COVERAGE  THROUGH  A  POLICY,
 CONTRACT, OR PLAN FOR A COVERED INDIVIDUAL.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD14871-01-8

 S. 8384                             2
 
   (3)  "PHARMACY BENEFIT MANAGER" MEANS AN ENTITY THAT CONTRACTS WITH OR
 IS EMPLOYED BY A HEALTH BENEFIT PLAN,  STATE  AGENCY,  INSURER,  MANAGED
 CARE  ORGANIZATION, OR OTHER THIRD-PARTY PAYOR FOR THE ADMINISTRATION OR
 MANAGEMENT OF PRESCRIPTION DRUG BENEFITS PROVIDED BY  A  COVERED  ENTITY
 FOR THE BENEFIT OF COVERED INDIVIDUALS.
   (4)   "WHOLESALE   ACQUISITION  COST"  MEANS  THE  LIST  PRICE  FOR  A
 PRESCRIPTION DRUG, EXCLUDING ANY DISCOUNTS, REBATES,  OR  REDUCTIONS  IN
 PRICE,  AS  REPORTED  IN THE MOST RECENT EDITIONS OF THE WHOLESALE PRICE
 GUIDES OR  OTHER  PUBLICATIONS  OF  DRUG  PRICING  DATA  A  MANUFACTURER
 PROVIDES  TO WHOLESALERS OR DISTRIBUTORS IN THE UNITED STATES, AS SPECI-
 FIED IN 42 U.S.C. 23 § 1395W-3A(C)(6)(B).
   § 603. RESPONSIBILITY TO COVERED  ENTITIES.  (1)  A  PHARMACY  BENEFIT
 MANAGER SHALL EXERCISE GOOD FAITH AND FAIR DEALING IN THE PERFORMANCE OF
 ITS  CONTRACTUAL  OBLIGATIONS TO A COVERED ENTITY, AND SHALL PERFORM ITS
 DUTIES WITH CARE, SKILL, PRUDENCE, DILIGENCE, AND PROFESSIONALISM.
   (2) A PHARMACY BENEFIT MANAGER SHALL NOTIFY A COVERED ENTITY IN  WRIT-
 ING  OF  ANY  ACTIVITY,  POLICY, PRACTICE, OWNERSHIP INTEREST, OR AFFIL-
 IATION OF THE PHARMACY BENEFIT  MANAGER  THAT  PRESENTS  A  CONFLICT  OF
 INTEREST THAT INTERFERES WITH THE REQUIREMENTS IMPOSED BY THIS ARTICLE.
   §  604. PHARMACY BENEFIT MANAGER TRANSPARENCY. (1) EACH PHARMACY BENE-
 FIT MANAGER UNDER CONTRACT WITH A COVERED ENTITY  SHALL  SUBMIT  TO  THE
 COVERED ENTITY AND TO THE SUPERINTENDENT NO LATER THAN FEBRUARY FIRST OF
 EACH YEAR THE FOLLOWING INFORMATION FOR THE IMMEDIATELY PRECEDING CALEN-
 DAR YEAR RELATIVE TO SUCH CONTRACT:
   (A)  THE WHOLESALE ACQUISITION COST FOR EACH DRUG ON ITS FORMULARY AND
 THE TOTAL NUMBER OF PRESCRIPTIONS THAT WERE DISPENSED.
   (B) THE AMOUNT OF REBATES, DISCOUNTS, AND PRICE CONCESSIONS  THAT  THE
 PHARMACY  BENEFIT  MANAGER  RECEIVED FOR EACH DRUG ON ITS FORMULARY. THE
 AMOUNT OF REBATES SHALL INCLUDE ANY UTILIZATION DISCOUNTS  THE  PHARMACY
 BENEFIT MANAGER RECEIVES FROM A MANUFACTURER.
   (C)  THE AMOUNT OF REBATES, DISCOUNTS, AND PRICE CONCESSIONS DESCRIBED
 IN PARAGRAPH (B) OF THIS  SUBSECTION  THAT  WERE  PASSED  THROUGH  TO  A
 COVERED  ENTITY, AND THE AMOUNT THAT WERE RETAINED BY THE PHARMACY BENE-
 FIT MANAGER, FOR EACH DRUG ON ITS FORMULARY.
   (D) THE AMOUNT OF ANY FEE, ADMINISTRATIVE OR OTHERWISE, RECEIVED  FROM
 A MANUFACTURER.
   (E)  THE NATURE, TYPE, AND AMOUNT OF ALL OTHER PAYMENTS THAT THE PHAR-
 MACY BENEFIT MANAGER RECEIVES, DIRECTLY OR INDIRECTLY, FROM  A  MANUFAC-
 TURER  IN  CONNECTION WITH A DRUG SWITCH PROGRAM, A FORMULARY MANAGEMENT
 PROGRAM, A  MAIL  SERVICE  PHARMACY,  EDUCATIONAL  SUPPORT,  DATA  SALES
 RELATED TO A COVERED INDIVIDUAL, OR ANY OTHER FUNCTION.
   (F) THE AMOUNT OF ANY REIMBURSEMENTS THE PHARMACY BENEFIT MANAGER PAYS
 TO CONTRACTING PHARMACIES, AND THE NEGOTIATED PRICE COVERED ENTITIES PAY
 THE PHARMACY BENEFIT MANAGER, FOR EACH DRUG ON ITS FORMULARY.
   (G) ANY OTHER INFORMATION AS DEEMED NECESSARY BY THE SUPERINTENDENT.
   (2)  THE  INFORMATION  DISCLOSED  PURSUANT  TO  SUBSECTION ONE OF THIS
 SECTION SHALL INCLUDE ALL RETAIL, MAIL ORDER, SPECIALTY, AND  COMPOUNDED
 PRESCRIPTION PRODUCTS.
   (3) INFORMATION SUBMITTED UNDER THIS SECTION SHALL BE CONFIDENTIAL AND
 SHALL  NOT  BE  DISCLOSED  TO  ANY  PERSON  BY THE SUPERINTENDENT OR THE
 COVERED ENTITY RECEIVING THE INFORMATION. SUCH INFORMATION SHALL NOT  BE
 DEEMED A PUBLIC RECORD OF THE SUPERINTENDENT.
   §  605. REPORT PUBLICATION. (1) IN ORDER TO ALLOW PATIENTS AND EMPLOY-
 ERS TO COMPARE THE ABILITY OF PHARMACY  BENEFIT  MANAGERS  TO  NEGOTIATE
 REBATES,  DISCOUNTS,  AND  PRICE  CONCESSIONS  AND  THE  AMOUNT  OF SUCH
 REBATES, DISCOUNTS, AND PRICE CONCESSIONS THAT  ARE  PASSED  THROUGH  TO

 S. 8384                             3
 
 PLAN  SPONSORS,  AND TO ALLOW COVERED ENTITIES TO EVALUATE THE NATURE OF
 THE RELATIONSHIP BETWEEN PHARMACY BENEFIT MANAGERS AND MANUFACTURERS AND
 THE EFFECTIVENESS OF PHARMACY BENEFIT MANAGERS  IN  REDUCING  COSTS  FOR
 COVERED  ENTITIES  AND THEIR BENEFICIARIES, NO LATER THAN FEBRUARY FIRST
 OF EACH YEAR, THE SUPERINTENDENT SHALL ISSUE A REPORT TO BE PUBLISHED ON
 THE SUPERINTENDENT'S WEBSITE AGGREGATING THE INFORMATION RECEIVED BY ALL
 PHARMACY BENEFIT MANAGERS UNDER THIS SECTION FOR THE PRECEDING YEAR.
   (2) THE SUPERINTENDENT SHALL ENSURE THAT THE INFORMATION DESCRIBED  IN
 SUBSECTION ONE OF THIS SECTION IS REPORTED IN A MANNER THAT PREVENTS THE
 DISCLOSURE  OF  THE  IDENTITY  OF A SPECIFIC PHARMACY BENEFIT MANAGER, A
 COVERED ENTITY, PRICES CHARGED FOR PRESCRIPTION DRUGS OR ANY  ASSOCIATED
 REBATES,  DISCOUNTS  OR  PRICE CONCESSIONS WITH RESPECT TO AN INDIVIDUAL
 DRUG OR AN INDIVIDUAL PLAN, OR ANY INFORMATION THAT IDENTIFIES A PRODUCT
 OR MANUFACTURER.
   (3) ON OR BEFORE FEBRUARY FIRST OF EACH YEAR THE SUPERINTENDENT  SHALL
 ANALYZE  THE INFORMATION SUBMITTED BY PHARMACY BENEFIT MANAGERS PURSUANT
 TO THIS ARTICLE AND PRODUCE AN ADDITIONAL REPORT TO BE PUBLISHED ON  THE
 SUPERINTENDENT'S  WEBSITE  ON THE IMPACT OF PHARMACY BENEFIT MANAGERS ON
 THE COST, ADMINISTRATION, AND AVAILABILITY OF PRESCRIPTION DRUGS.
   (4) THE SUPERINTENDENT SHALL SUBMIT THE REPORT AND ANY RECOMMENDATIONS
 FOR PROPOSED LEGISLATION OR FURTHER ACTION BY THE STATE PURSUANT TO  THE
 REPORT'S  FINDINGS TO THE TEMPORARY PRESIDENT OF THE SENATE, THE SPEAKER
 OF THE ASSEMBLY AND THE GOVERNOR ON OR BEFORE  FEBRUARY  FIRST  OF  EACH
 YEAR.
   §  606.  COMPLIANCE  AND  ENFORCEMENT.  (1) ALL CONTRACTS FOR PHARMACY
 BENEFIT MANAGEMENT ENTERED INTO IN THIS STATE OR BY A COVERED ENTITY  IN
 THIS STATE SHALL COMPLY WITH THE REQUIREMENTS OF THIS ARTICLE.
   (2)  THE  SUPERINTENDENT  IS  RESPONSIBLE  FOR THE ENFORCEMENT OF THIS
 ARTICLE AND MAY REASONABLY EXAMINE AND INVESTIGATE TO ENSURE  COMPLIANCE
 WITH THE PROVISIONS HEREIN.
   (3)  THE  SUPERINTENDENT  SHALL  ADOPT  PROCEDURES  FOR  INVESTIGATING
 COMPLAINTS OF NONCOMPLIANCE WITH THIS  ARTICLE.  IF  THE  SUPERINTENDENT
 FINDS  A  PHARMACY  BENEFIT MANAGER HAS FAILED TO COMPLY WITH ANY OF THE
 PROVISIONS OF THIS ARTICLE, THE SUPERINTENDENT  MAY,  AFTER  NOTICE  AND
 OPPORTUNITY FOR A HEARING, IMPOSE ONE OR MORE SANCTIONS AS DEEMED APPRO-
 PRIATE  OR  NECESSARY  TO BRING NON-COMPLYING ENTITIES INTO FULL COMPLI-
 ANCE, INCLUDING, BUT NOT LIMITED TO:
   (A) REVOKING OR SUSPENDING A LICENSE  ISSUED  TO  A  PHARMACY  BENEFIT
 MANAGER, OR DENYING AN APPLICATION FOR A RENEWAL OF A LICENSE;
   (B)  IMPOSING A PERIOD OF PROBATION BEST ADAPTED TO PROTECT THE PUBLIC
 HEALTH AND SAFETY AND FOR ANY REHABILITATION;
   (C) IMPOSING AN ADMINISTRATIVE FINE NOT TO EXCEED  TWO  HUNDRED  FIFTY
 DOLLARS FOR EACH VIOLATION OR INSTANCE OF NONCOMPLIANCE;
   (D) ASSESSING COSTS TO BE PAID BY THE PHARMACY BENEFIT MANAGER; OR
   (E)  IMPOSING  RESTRICTIONS  ON THE SCOPE OF OPERATION OF THE PHARMACY
 BENEFIT MANAGER IN THE STATE.
   (4) IN  ADDITION  TO  SANCTIONS  FOR  NONCOMPLIANCE  AS  DESCRIBED  IN
 SUBSECTION THREE OF THIS SECTION, IF A PHARMACY BENEFIT MANAGER FAILS TO
 SUBMIT  TO THE SUPERINTENDENT THE INFORMATION REQUIRED UNDER SECTION SIX
 HUNDRED FOUR OF THIS ARTICLE BY THE SPECIFIED DATE,  THE  SUPERINTENDENT
 MAY IMPOSE AGAINST THE PHARMACY BENEFIT MANAGER AN ADMINISTRATIVE PENAL-
 TY OF NOT MORE THAN TWO HUNDRED FIFTY DOLLARS FOR EACH DAY OF SUCH FAIL-
 URE.
   (5)  ANY  MONEY  COLLECTED,  AS ADMINISTRATIVE PENALTIES OR OTHERWISE,
 PURSUANT TO THIS SECTION MUST BE USED BY THE SUPERINTENDENT TO COVER THE
 COSTS OF IMPLEMENTATION AND ENFORCEMENT OF THIS ARTICLE.

 S. 8384                             4
 
   § 607. RULEMAKING AUTHORITY. THE SUPERINTENDENT SHALL  PROMULGATE  AND
 ADOPT RULES AND REGULATIONS TO EFFECTUATE THE PURPOSES AND PROVISIONS OF
 THIS  ARTICLE.  THE  RULES AND REGULATIONS SHALL BE SUBJECT TO REVIEW IN
 ACCORDANCE WITH GENERAL RULES OF ADMINISTRATIVE RULEMAKING AND REVIEW OF
 REGULATIONS IN THIS STATE.
   § 2. This act shall take effect immediately.

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