BILL NUMBER: S7110

SPONSOR: SKOUFIS
 
TITLE OF BILL:

An act to amend the public health law, in relation to reimbursement
rates of pharmacy benefit managers

 
PURPOSE:

To require pharmacy benefit managers (PBMs) in New York State to provide
information about therapeutically equivalent drugs and adjust reimburse-
ment rates if the drugs are not available at a cost equal to or less
than the maximum allowable cost.

 
SUMMARY OF PROVISIONS:

Section 1: Amends paragraph (e) of subdivision 4 of section 280-a of the
public health law. A new subdivision 4-a is added and states that if an
appeal is denied, the pharmacy benefit manager must identify a therapeu-
tically equivalent drug, as determined by the FDA, that is available for
purchase by pharmacies in the state at a price equal to or less than the
              

maximum allowable cost determined by the pharmacy benefit manager.

Subdivision 4(e)(ii) states that if the identified drug is not available
below the pharmacy acquisition cost, the pharmacy benefit manager must
adjust the maximum allowable cost and allow the pharmacy to reverse and
rebill affected claims.

Subdivision 4-a(a) states that a pharmacy benefit manager must reimburse
a pharmacy or pharmacist in the state an amount that is not less than
what the pharmacy benefit manager reimburses its affiliate for providing
the same pharmacist services.

Subdivision 4-a(b) clarifies that the reimbursement amount should be
calculated on a per unit basis based on the same generic product identi-
fied or generic code number.

Section 2: Sets effective date.

 
JUSTIFICATION:

In the 1960s, insurance companies began to expand their coverage of
prescription medications. This expansion of coverage led to increased
caseloads that put .a significant administrative burden on the insurance
industry. Prescription drug coverage plans began to outsource the proc-
essing and administration of claims to new companies called Pharmacy
Benefit Managers (PBMS). As the price of prescription medications
increased, PBMs were able to wield their significant power within the
prescription drug pricing industry and act as a "middleman," negotiating
discounts and rebates with a manufacturer in exchange for a preferable
position on an insurance company's drug formulary. The savings from
these rebates and discounts are meant to pass through to patients making
drugs more affordable.

PBMS negotiate rebates with the drug's manufacturer in exchange for a
favorable position on an insurance company's formulary. A favorable
position on a formulary makes it more affordable to consumers thus
increasing the drug's market share. Despite the fact that many PBMs
claim to pass on the savings from these rebates to the consumer, many
PBMs hold on to large portions or all of these rebates as profit.

PBMs also act on behalf of the insurance company to reimburse pharmacies
for the cost of purchasing the medication from the distributor and
dispensing the medication to the consumer. These costs, and often a
small profit, are covered through the "administrative fee" charged to
insurance companies they are contracted with.

Oftentimes, PBMs will also markup - sometimes dramatically - the differ-
ence between the amount they reimburse the pharmacy and the amount they
charge their clients. These controversial practices, called "spread
pricing," "claw backs," or "chargebacks," are most common with generic
drugs, which make up almost 901 of all prescriptions dispensed in the
United States, and where most believe PBMs make their greatest profit.

This bill will address concerns regarding the practices of pharmacy
benefit managers (PBMs) and their impact on pharmacies and pharmacists
in New York State. By requiring PBMs to provide information about thera-
peutically equivalent drugs and adjust reimbursement rates when drugs
are not available at fair prices, the bill seeks to promote transparen-
cy, protect pharmacies from financial burdens, and ensure access to
affordable medications for patients.

 
PRIOR LEGISLATIVE HISTORY:

New bill.

 
FISCAL IMPLICATIONS:

TBD.

 
EFFECTIVE DATE:
This act shall take effect on the ninetieth day after it shall have
become a law.