New York State Senator James Skoufis, Chair of the Senate Committee on Investigations & Government Operations, in coordination with Senator Gustavo Rivera, Chair of the Senate Committee on Health, has released the Final Investigative Report: Pharmacy Benefit Managers in New York. The report comes after the Committee opened an investigation into the practices of Pharmacy Benefit Managers (PBMs) in New York State in January 2019.
Some key findings of the report include:
• One of the key mechanisms by which PBMs generate revenue is through spread pricing
• The lack of transparency and oversight of PBMs has created an environment in which PBMs are able to engage in self-dealing to the detriment of consumers across New York State
• New York State must take immediate action to regulate the practices of spread pricing, MAC appeals, mail order operations, and reimbursements
• The New York State Comptroller should perform a full audit of all dollars paid to PBMs via spread pricing
Legislative recommendations provided by the report include:
• Regulate the practices of spread pricing in all pharmacy benefit contracts
• Enhance the transparency of MAC appeals
• Require the licensing and registration of PBMs to enhance accountability and oversight by instituting a fiduciary duty for their clients
• Prohibit PBMs from mandating that patients use specialty and mail order pharmacies
• Providing for the adequate and transparent reimbursements for pharmacies
• Require PBMs to pass-through all discounts or rebates received from drug manufacturers to its Medicaid managed care clients
This is definitely not the last time New York, or any other state, will develop policies to help regulate abusive PBM practices. Frier Levitt Government Affairs (FLGA) is constantly monitoring new state PBM policies and working with pharmacy stakeholders nationwide to have their voices heard. Contact FLGA today to learn more about getting involved.
Over the last week, three states- Alabama, Illinois and Louisiana- sent legislation to their respective Governor’s to sign aimed at fighting back against Pharmacy Benefit Managers (PBMs). Highlights of the pending legislative bills include:
Effective January 1, 2020, a PBM must be licensed by the Commissioner. The legislation also prohibits gag clauses. Furthermore, a health plan may not include a provision that requires an enrollee to make a payment for a prescription drug at the point of sale in an amount that exceeds the lessor of:
1. the contracted co-payment amount; or
2. the amount an individual would pay for a prescription if that individual were paying with cash.
This bill states that a contract between a health insurer and PBM must:
1. Require the PBM to update maximum allowable cost pricing information and maintain a process that will eliminate drugs from maximum allowable cost lists or modify drug prices to remain consistent with changes in pricing data
2. Prohibit the PBM from limiting a pharmacist’s ability to disclose the availability of a more affordable alternative drug
3. Prohibit the PBM from requiring an insured to make a payment for a prescription drug in an amount that exceeds the lesser of the applicable cost-sharing amount or the retail price of the drug
• Prohibits PBM spread pricing unless the PBM provides written notice consisting of spread pricing transparency to the insurer
• Provides the Board of Pharmacy with PBM oversight
• Requires PBM licensure
• Strengthens maximum allowable costs (MAC) requirements
• Creates a PBM monitoring advisory council
• Prohibits unfair or deceptive trade practices by PBMs including prohibits them from patient steering to a PBM owned pharmacy without disclosure and prohibits penalizing beneficiaries or inducing them to use a pharmacy that is PBM owned
• Prohibits retroactive denials or reductions in pharmacy claims that have already been approved by the PBM
This legislation provides a model for other states on ways to combat abusive PBM tactics.
Frier Levitt Government Affairs (FLGA) monitors new legislative developments for pharmacy stakeholders and provides tools to help keep them “in the know.” Contact FLGA today to learn more about new legislative developments and for help preparing legislation that will get you back on track to attaining a level playing field for your respective state(s).