Pharma

New York State proposes new regulations for PBMs

The new rules would require PBMs to pay a $10.18 dispensing fee per prescription, among other changes.
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Hannah Minn

3 min read

Pharmacy benefit managers (PBMs) claim new rules proposed by New York State’s Department of Financial Services (DFS) would cost New Yorkers billions in excess drug spending.

The regulations, proposed in August, would prohibit “abusive contract terms that raise drug costs for consumers and strain small pharmacies,” the DFS said in a statement.

But a cost analysis released on October 31 by the Pharmaceutical Care Management Association (PCMA), which represents PBMs, claims the proposed regulations would cost New York residents $3.1 billion in excess drug spending in the first year, and $40 billion over 10 years.

“The implementation of the law should not cater to one special interest group at the expense of all other New York citizens and stakeholders; instead, the administration’s top priority should be lowering prescription drug costs for New York patients,” Heather Cascone, assistant VP of state affairs at PCMA, said in a statement shared with Healthcare Brew. “This proposal clearly does not lower prescription drug costs, it does the opposite.”

PBMs—often called “middlemen” because they operate between insurers and pharmacies—negotiate with drug manufacturers to create lists of drugs that insurers cover.

After Adrienne Harris, the state’s superintendent of financial services, announced the proposed changes this summer, the state conducted a 60-day feedback period to hear comments and concerns on the proposed changes. Now, the state will consider the feedback, and decide whether to implement the new regulations.

“Our proposed regulation is a significant milestone in stopping unfair practices that have fueled years of runaway prescription drug prices,” Harris said in a statement. “DFS remains committed to building out our nation-leading oversight of pharmacy benefit managers and using every tool at our disposal to make healthcare more accessible and more affordable for all New Yorkers.”

Some of the proposed changes include:

  • Requiring PBMs to reimburse pharmacies at the same rate or higher than the national average drug acquisition cost of that drug, plus an additional $10.18 dispensing fee per prescription
  • Prohibiting PBMs from using “deceptive” marketing practices
  • Establishing standards on pharmacy locations to make sure patients don’t have to travel more than 30 minutes to pick up prescriptions
  • Prohibiting PBMs from giving preferential treatment to their own pharmacies
  • Requiring the state’s Department of Financial Services to approve any mergers or acquisitions of PBMs operating in the state
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Pharmacies generally support the regulations, claiming the new rules would increase transparency of PBM practices. The National Community Pharmacists Association, a trade group representing independent pharmacies, sent feedback to FDS saying it “applauds the proposal for its thoughtfulness and scope.”

New York isn’t alone in trying to reform PBM regulations. A federal bill called the Pharmacy Benefit Manager Transparency Act was introduced in 2022 to prohibit PBMs from charging insurers a different amount than what the insurers pay to reimburse a pharmacy.

The Senate Health, Education, Labor, and Pensions (HELP) Committee also passed multiple bills earlier this year to reform PBMs, including one that would untangle PBM compensation from drug costs, as Healthcare Brew previously reported.

Another bipartisan bill that was designed to increase transparency of PBM’s drug price negotiations passed in the Senate Commerce, Science, and Transportation Committee in March.

Navigate the healthcare industry

Healthcare Brew covers pharmaceutical developments, health startups, the latest tech, and how it impacts hospitals and providers to keep administrators and providers informed.

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