New York Wraps Latest Round Of Public Comment On Regulation And Licensing Of Pharmacy Benefit Managers
22 November 2022
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After New York Governor Kathy Hochul created a new Pharmacy
Benefits Bureau within the Department of Financial Services
specifically charged with regulating and licensing Pharmacy Benefit
Managers (PBMs), the Bureau recently (Oct. 31) completed multiple
rounds of solicitation of public comment on various topics,
including patient steering by PBMs and documented examples of
adverse pharmacy reimbursement practices.
In light of rising prescription drug prices, declining patient
access, and the closing down of many independent pharmacies, the
Governor signed legislation S.3762/A.1396 at the end of 2021, a
part of the pharmacy rescue package, providing the Department of
Financial Services with authority to prescribe rules to bring
transparency to a murky industry. Among the specific grants of
regulatory authority, the Department may address
“anti-competitive practices” and “unfair claims
Although PBMs generate significant revenue and have usurped a
huge role in drug pricing and reimbursement, PBMs have been largely
invisible, unlicensed and unregulated, in stark contrast to
pharmacies, health plans, and pharmaceutical companies – the more
prominent members of the drug supply chain among which PBMs operate
largely behind the scenes.
New York enacted what it refers to as the most comprehensive
regulatory framework in the country after a 2019 investigation into
PBM practices by the New York Senate Committee on Investigations
& Government Operations. The investigation launched by
Committee Chair Senator James Skoufis culminated in a comprehensive report urgently
calling for transparency and oversight.
PBMs have faced increasing scrutiny from federal and state
authorities, accused of unfair practices, such as steering patients
to their own pharmacies. The three largest PBMs manage 80% of all
adjudicated claims. Each of the top three owns and operates mail
order pharmacy services. Many PBMs own, or are affiliated with,
large chain pharmacies. The New York Senate report noted a
“strong possibility of a conflict of interest” and
“an opportunity to manipulate drug dispensing at their mail
order pharmacies to enhance their own profits” when PBMs both
administer pharmacy benefits and dispense prescription drugs.
Harris Beach attorney Marina Plotkin, who is also a registered
pharmacist and formerly owned a community pharmacy, is monitoring
developments with PBM regulations. She said the State has received
numerous examples of anti-competitive practices. Marina is a Board Member of the New York City
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