BILL NUMBER: S5719
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 bene-
fit manager must reimburse a pharmacy or pharmacist in the state an
amount that is not less than what the pharmacy benefit manager reim-
burses its affiliate for providing the same pharmacist services. Subdi-
vision 4-a(b) clarifies that the reimbursement amount should be calcu-
lated on a per unit basis based on the same generic product identifier
or generic code number.
Section 2: Sets effective date.
 
JUSTIFICATION:
In the 1960s, insurance companies began expanding their prescription
medication coverage. This coverage expansion led to increased caseloads
that put a significant administrative burden on the insurance industry.
Prescription drug coverage plans began to outsource the processing and
administration of claims to new companies called Pharmacy Benefit Manag-
ers (PBMS). As the price of prescription medications increased, PBMs
could 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 insur-
ance company's drug formulary. The savings from these rebates and
discounts are meant to pass through to patients, making drugs more
affordable.
PBMS negotiates 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 the drug more affordable to consumers,
thus increasing its market share. Although many PBMs claim to pass on
the savings from these rebates to the consumer, many 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
difference between the amount they reimburse the pharmacy and the amount
they charge their clients. These controversial practices called "spread
pricing," "clawbacks," 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 pharmacy benefit managers'
(PBMs) practices and their impact on pharmacies and pharmacists in New
York State. By requiring PBMs to provide information about therapeuti-
cally equivalent drugs and adjust reimbursement rates when drugs are not
available at fair prices, the bill seeks to promote transparency,
protect pharmacies from financial burdens, and ensure patients have
access to affordable medications.
 
LEGISLATIVE HISTORY:
Senate
2023: S7110, Referred to Health
2024: S7110, Referred to Health Assembly
2023: N/A
2024: A10107, Referred to Health
 
FISCAL IMPLICATIONS:
TBD.
 
EFFECTIVE DATE:
This act shall take effect on the ninetieth day after it shall have
become a law.

Statutes affected:
S5719: 280-a public health law, 280-a(4) public health law