New York Proposes Pharmacy Benefit Manager Regulations

The New York State Department of Financial Services has proposed market conduct regulations to govern pharmacy benefit managers (PBMs) operating in the state. The regulations have been developed to implement a law passed in 2021 that requires licensing of PBMs and addresses conflicts of interest; and deceptive, anti-competitive, and unfair claims practices by PBMs.

DFS says the proposed rules will help protect New Yorkers’ access to prescription drugs, prohibit business practices that increase the cost of those drugs, and ensure that small, independent pharmacies compete on a level playing field with large pharmacies affiliated with PBMs.

“It is no coincidence that as New Yorkers continue to pay more for life-saving medication each year, the PBM industry records billions in revenue with little regulatory oversight,” said DFS Superintendent Adrienne A. Harris in releasing the regulations. “This proposed regulation seeks to put an end to unfair practices by the PBM industry, making prescription drugs more affordable and accessible for New Yorkers.”

This represents a renewed attempt by DFS at establishing PBM regulations. In October 2023, DFS withdrew a set of proposed rules after receiving feedback.

According to a DFS summary, the new regulations propose the following:

• Prohibit PBMs from barring any in-network pharmacies from providing mail order or delivery services, which will increase patients’ access to home delivery from their community pharmacy;
• Increase transparency to consumers and employers by requiring PBMs to list formularies and pharmacy directories online and prohibiting PBMs from punishing a consumer who relies on said information;
• Require PBMs to post a telephone number and email address for consumers to direct their questions to, and PBMs must respond in a reasonable amount of time;
• Prohibit anti-competitive practices that steer consumers away from their community pharmacy to larger pharmacies affiliated with the PBM;
• Prohibit PBMs from unfairly passing losses onto pharmacies when the PBM mistakenly approved dispensing a drug and then seeks to retroactively deny reimbursement to the pharmacy;
• Reduce administrative burdens and costs on small pharmacies by allowing them to submit information to and receive information from PBMs electronically;
• Prevent the abuse of audits against small pharmacies who are not affiliated with a PBM by requiring PBMs to apply the same audit standards across all in-network pharmacies.
• To inform the development of these regulations, the Department conducted extensive outreach to industry, health plans, pharmacy groups, state and federal regulators, and the general public.

The proposed regulation is subject to a 10-day comment period beginning today, followed by a 60-day comment period upon publication in the state register. DFS has also issued a request for information and data from the public on market conduct practices by PBMs.

Topics New York Legislation