On January 2, 2022, New York Governor Kathy Hochul announced the signing of legislation S.3762/A.1396 that seeks to regulate pharmacy benefit managers (“PBM”). PBMs doing business in New York must immediately register with the Superintendent of Insurance, be licensed by the Department of Financial Services by 2022 and renew their licenses every three years. The Superintendent, in consultation with the New York Commissioner of Health, will establish minimum standards for the issuance of a license, addressing conflicts of interest, deceptive practices, anti-competitive practices, unfair claims practices, and protection of consumers.
The legislation seeks to provide oversight and transparency into typically secretive PBM practices. Aside from requiring PBMs to conform with regulatory standards, it also includes disclosure requirements of all possible revenue streams and the terms and conditions PBMs place on their networks of pharmacies. New York State Senator Neil Breslin who sponsored the Bill stated, “The PBM industry has gone unregulated for long enough. PBMs, both here in New York and across the country have taken advantage of the lack of transparency at the expense of patients’ well-being.” Beyond transparency provisions, the legislation also includes an appeals process for multi-source generic drug pricing and prevents PBMs from substituting prescription drugs without the prescriber’s approval.
The relationship between pharmacies and PBMs is changing across the country as state legislatures continue to pass new rules of oversight and accountability. It is important for independent pharmacies to know their rights when engaging with PBMs whether it is during the application process, audit or in the unfortunate event of network termination. Call Boesen and Snow today for assistance with navigating the complex landscape of PBM contracting and audits.