S 5464: Amends provisions governing reimbursement practices of pharmacy benefit managers to ensure that pharmacies are not reimbursed an amount less than the cost of procuring the drugs.

  
  STATE OF NEW YORK ________________________________________________________________________ 5464 2025-2026 Regular Sessions  IN SENATE February 21, 2025 ___________ Introduced by Sen. COMRIE -- read twice and ordered printed, and when printed to be committed to the Committee on Health AN ACT to amend the public health law, in relation to pharmacy benefit managers The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Section 280-a of the public health law, as added by chapter 2 828 of the laws of 2021, subdivisions 1, 2 and 3 as amended by chapter 3 128 of the laws of 2022 and subdivision 5 as amended by chapter 396 of 4 the laws of 2024, is amended to read as follows: 5 § 280-a. Pharmacy benefit managers. 1. Definitions. As used in this 6 section, the following terms shall have the following meanings: 7 (a) "Health plan" means an entity for which a pharmacy benefit manager 8 provides pharmacy benefit management services and that is a health bene- 9 fit plan or other entity that approves, provides, arranges for, or pays 10 or reimburses in whole or in part for health care items or services, to 11 include at least prescription drugs, for a substantial number of benefi- 12 ciaries who work or reside in this state. The superintendent shall 13 determine, in [his or her] their sole discretion, by regulation how the 14 phrase "a substantial number of beneficiaries who work or reside in this 15 state" shall be interpreted. 16 (b) "Pharmacy benefit management services" means the management or 17 administration of prescription drug benefits for a health plan, directly 18 or through another entity, and regardless of whether the pharmacy bene- 19 fit manager and the health plan are related, or associated by ownership, 20 common ownership, organization or otherwise; including the procurement 21 of prescription drugs to be dispensed to patients, or the administration 22 or management of prescription drug benefits, including but not limited 23 to, any of the following: 24 (i) mail service pharmacy; EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD09728-01-5 
 S. 5464 2 1 (ii) claims processing, retail network management, or payment of 2 claims to pharmacies for dispensing prescription drugs; 3 (iii) clinical or other formulary or preferred drug list development 4 or management; 5 (iv) negotiation or administration of rebates, discounts, payment 6 differentials, or other incentives, for the inclusion of particular 7 prescription drugs in a particular category or to promote the purchase 8 of particular prescription drugs; 9 (v) patient compliance, therapeutic intervention, or generic substi- 10 tution programs; 11 (vi) disease management; 12 (vii) drug utilization review or prior authorization; 13 (viii) adjudication of appeals or grievances related to prescription 14 drug coverage; 15 (ix) contracting with network pharmacies; and 16 (x) controlling the cost of covered prescription drugs. 17 (c) "Pharmacy benefit manager" means any entity that performs pharmacy 18 benefit management services for a health plan. 19 (d) "Maximum allowable cost price" means a maximum reimbursement 20 amount set by the pharmacy benefit manager for therapeutically equiv- 21 alent multiple source generic drugs. 22 (e) "Controlling person" means any person or other entity who or which 23 directly or indirectly has the power to direct or cause to be directed 24 the management, control or activities of a pharmacy benefit manager. 25 (f) "Covered individual" means a member, participant, enrollee, 26 contract holder or policy holder or beneficiary of a health plan. 27 (g) "License" means a license to be a pharmacy benefit manager, under 28 article twenty-nine of the insurance law. 29 (h) "Spread pricing" means the practice of a pharmacy benefit manager 30 retaining an additional amount of money in addition to the amount paid 31 to the pharmacy to fill a prescription. 32 (i) "Superintendent" means the superintendent of financial services. 33 (j) "Pharmacy acquisition cost" means the amount that a pharmaceutical 34 wholesaler charges for a pharmaceutical product as listed on the pharma- 35 cy's billing invoice. 36 (k) "Pharmacy benefit manager affiliate" means a pharmacy or pharma- 37 cist that directly or indirectly, through one or more intermediaries 38 owns or controls, is owned or controlled by, or is under common owner- 39 ship or control with a pharmacy benefit manager. 40 (l) "Pharmacy benefits plan or program" means a plan or program that 41 pays for, reimburses, covers the cost of, or otherwise provides for 42 pharmacist services to individuals who reside in or are employed in this 43 state. 44 2. Duty, accountability and transparency. (a) (i) The pharmacy benefit 45 manager shall have a duty and obligation to perform pharmacy benefit 46 management services with care, skill, prudence, diligence, and profes- 47 sionalism. 48 (ii) In addition to the duties as may be prescribed by regulation 49 pursuant to article twenty-nine of the insurance law: 50 (1) A pharmacy benefit manager interacting with a covered individual 51 shall have the same duty to a covered individual as the health plan for 52 whom it is performing pharmacy benefit management services. 53 (2) A pharmacy benefit manager shall have a duty of good faith and 54 fair dealing with all parties, including but not limited to covered 55 individuals and pharmacies, with whom it interacts in the performance of 56 pharmacy benefit management services. 
 S. 5464 3 1 (b) All funds received by the pharmacy benefit manager in relation to 2 providing pharmacy benefit management services shall be received by the 3 pharmacy benefit manager in trust and shall be used or distributed only 4 pursuant to the pharmacy benefit manager's contract with the health plan 5 or applicable law; including any administrative fee or payment to the 6 pharmacy benefit manager expressly provided for in the contract to 7 compensate the pharmacy benefit manager for its services. Any funds 8 received by the pharmacy benefit manager through spread pricing shall be 9 subject to this paragraph. In addition to any other power conferred by 10 law the superintendent shall have the authority to prescribe rules 11 concerning pharmacy benefit manager administrative fees, including limi- 12 tations on their form and use. 13 (c) The pharmacy benefit manager shall account, annually or more 14 frequently to the health plan for any pricing discounts, rebates of any 15 kind, inflationary payments, credits, clawbacks, fees, grants, charge- 16 backs, reimbursements, or other benefits received by the pharmacy bene- 17 fit manager. The health plan shall have access to all financial and 18 utilization information of the pharmacy benefit manager in relation to 19 pharmacy benefit management services provided to the health plan. 20 (d) The pharmacy benefit manager shall disclose in writing to the 21 health plan the terms and conditions of any contract or arrangement 22 between the pharmacy benefit manager and any party relating to pharmacy 23 benefit management services provided to the health plan including but 24 not limited to, dispensing fees paid to the pharmacies. 25 (e) The pharmacy benefit manager shall disclose in writing to the 26 health plan any activity, policy, practice, contract or arrangement of 27 the pharmacy benefit manager that directly or indirectly presents any 28 conflict of interest with the pharmacy benefit manager's relationship 29 with or obligation to the health plan. 30 (f) Any information required to be disclosed by a pharmacy benefit 31 manager to a health plan under this section that is reasonably desig- 32 nated by the pharmacy benefit manager as proprietary or trade secret 33 information shall be kept confidential by the health plan, except as 34 required or permitted by law, including disclosure necessary to prose- 35 cute or defend any legitimate legal claim or cause of action. Desig- 36 nation of information as proprietary or trade secret information under 37 this subdivision shall have no effect on the obligations of any pharmacy 38 benefit manager or health plan to provide that information to the 39 department of health or the department of financial services. 40 (g) The superintendent, in consultation with the commissioner may make 41 regulations defining, limiting, and relating to the duties, obligations, 42 requirements and other provisions relating to pharmacy benefit managers 43 under this subdivision. 44 3. Prescriptions. A pharmacy benefit manager may not substitute or 45 cause the substituting of one prescription drug for another in dispens- 46 ing a prescription, or alter or cause the altering of the terms of a 47 prescription, except with the approval of the prescriber or as explicit- 48 ly required or permitted by law, including regulations of the department 49 of financial services or the department of health. The superintendent 50 and commissioner, in coordination with each other, are authorized to 51 promulgate regulations to determine when substitution of prescription 52 drugs may be required or permitted. 53 4. Appeals. A pharmacy benefit manager shall, with respect to 54 contracts between a pharmacy benefit manager and a pharmacy or, alterna- 55 tively, a pharmacy benefit manager and a pharmacy's contracting agent, 56 such as a pharmacy services administrative organization, include a 
 S. 5464 4 1 reasonable process to appeal, investigate and resolve disputes regarding 2 multi-source generic drug pricing, including being below the pharmacy 3 acquisition cost. The appeals process shall include the following 4 provisions: 5 (a) the right to appeal by the pharmacy and/or the pharmacy's 6 contracting agent shall be limited to thirty days following the initial 7 claim submitted for payment; 8 (b) a telephone number through which a network pharmacy may contact 9 the pharmacy benefit manager for the purpose of filing an appeal and an 10 electronic mail address of the individual who is responsible for proc- 11 essing appeals; 12 (c) the pharmacy benefit manager shall send an electronic mail message 13 acknowledging receipt of the appeal. The pharmacy benefit manager shall 14 respond in an electronic message to the pharmacy and/or the pharmacy's 15 contracting agent filing the appeal within seven business days indicat- 16 ing its determination. If the appeal is determined to be valid, the 17 maximum allowable cost for the drug shall be adjusted for the appealing 18 pharmacy effective as of the date of the original claim for payment. The 19 pharmacy benefit manager shall require the appealing pharmacy to reverse 20 and rebill the claim in question in order to obtain the corrected 21 reimbursement; 22 (d) if an update to the maximum allowable cost is warranted, the phar- 23 macy benefit manager or covered entity shall adjust the maximum allow- 24 able cost of the drug effective for all similarly situated pharmacies in 25 its network in the state on the date the appeal was determined to be 26 valid; and 27 (e) if an appeal is denied, the pharmacy benefit manager shall identi- 28 fy the national drug code of a therapeutically equivalent drug, as 29 determined by the federal Food and Drug Administration, that is avail- 30 able for purchase by pharmacies in this state from wholesalers regis- 31 tered pursuant to subdivision four of section sixty-eight hundred eight 32 of the education law at a price which is equal to or less than the maxi- 33 mum allowable cost for that drug as determined by the pharmacy benefit 34 manager. 35 4-a. Maximum allowable costs. (a) If the national drug code number 36 provided by the pharmacy benefit manager is not available below the 37 pharmacy acquisition cost from the pharmaceutical wholesaler from whom 38 the pharmacy or pharmacist purchases the majority of prescription drugs 39 for resale, then the pharmacy benefit manager shall adjust the maximum 40 allowable cost above the challenging pharmacy's pharmacy acquisition 41 cost and permit the pharmacy to reverse and rebill each claim affected 42 by the inability to procure the drug at a cost that is equal to or less 43 than the previously challenged maximum allowable cost. 44 (b) A pharmacy benefit manager shall not reimburse a pharmacy or phar- 45 macist in this state an amount less than the amount that the pharmacy 46 benefit manager reimburses a pharmacy benefit manager affiliate for 47 providing the same pharmacist services. 48 (c) The amount shall be calculated on a per unit basis based on the 49 same generic product identified or generic code number. 50 (d) A pharmacy or pharmacist may decline to provide the pharmacist 51 services to a patient or pharmacy benefit manager if, as a result of a 52 maximum allowable cost, a pharmacy or pharmacist is to be paid less than 53 the pharmacy acquisition cost of the pharmacy providing pharmacist 54 services. 55 5. Contract provisions. No pharmacy benefit manager shall, with 56 respect to contracts between such pharmacy benefit manager and a pharma- 
 S. 5464 5 1 cy or, alternatively, such pharmacy benefit manager and a pharmacy's 2 contracting agent, such as a pharmacy services administrative organiza- 3 tion: 4 (a) prohibit or penalize a pharmacist or pharmacy from disclosing to 5 an individual purchasing a prescription medication or service informa- 6 tion regarding: 7 (i) the cost of the prescription medication or service to the individ- 8 ual, or the cost of the prescription medication or service to the phar- 9 macy and the pharmacy's reimbursement for that prescription medication 10 or service; or 11 (ii) the availability of any therapeutically equivalent alternative 12 medications or alternative methods of purchasing the prescription medi- 13 cation, including but not limited to, paying a cash price; or 14 (b) charge or collect from an individual a copayment that exceeds the 15 total submitted charges by the pharmacy for which the pharmacy is paid. 16 If an individual pays a copayment, the pharmacy shall retain the adjudi- 17 cated costs and the pharmacy benefit manager shall not redact or recoup 18 the adjudicated cost. 19 6. Pharmacy benefit manager additional duties. A pharmacy benefit 20 manager shall: 21 (a) provide access to its maximum allowable cost prices to each phar- 22 macy subject to the maximum allowable cost price; and 23 (b) update its maximum allowable cost prices on a timely basis, but in 24 no event longer than seven calendar days from an increase of ten percent 25 or more in the pharmacy acquisition cost from sixty percent or more of 26 the pharmaceutical wholesaler doing business in the state or a change in 27 the methodology on which the maximum allowable cost price is based or in 28 the value of a variable involved in the methodology. 29 § 2. This act shall take effect immediately.