Relates to co-payments for prescription drugs

1 Co-sponsor

• Joseph P. Addabbo Jr.

BILL NUMBER:S4786A

Title of bill

An act to amend the insurance law, the public health law and the education law, in relation to copayments for prescription drugs

Purpose or general idea of bill

To reduce consumers' out-of-pocket prescription drug costs by prohibiting copayments which exceed the cost of the prescribed drug.

Summary of specific provisions

Section one adds a new subsection (h) to section 4325 of the Insurance Law to prohibit insurers offering prescription drug benefits from requiring or permitting copayments which exceed the usual and customary cost of the prescribed drug.

Section two adds a new subdivision 6 to section 4406-c of the Public Health Law to make the same change for health maintenance organizations (HMOs).

Section three adds a new section 6826-a to the Education Law to require pharmacies to charge consumers the lesser of the copayment required by a health plan and the pharmacy's usual customary and reasonable price for that drug.

Section four sets out the effective date.

Justification

Many health plans have adopted multi-tier copayment structures for pharmacy benefits in an effort to control prescription drug costs. Typically, these systems involve a low copayment for generic drugs, a higher copayment for name-brand drugs that are "preferred" by the plan and a third and much higher copayment for name-brand "non-preferred" drugs. While this effort to control rapidly escalating prescription drug costs through multi-tier copayment systems is understandable, these cost control efforts can unfairly penalize some consumers by requiring them to make a copayment that might actually exceed the cost of the drug that has been prescribed for them. A recent Wall Street Journal article, for example, detailed how consumers in Boston were making $5 copayments at a local chain pharmacy for a generic heart drug, when the pharmacy benefit manager had in fact negotiated a 76 cents price for the drug and was pocketing the difference.

This legislation would end this inequity by prohibiting insurers and health plans from requiring the higher copayments, and requiring pharmacies to change the lesser of the copayment or the usual and customary price for the drug. At a time when consumers and employer groups are reeling from escalating drug expenditures, this measure will provide some relief by reducing consumers' out-of-pocket costs.

Prior legislative history

Similar provisions contained in legislation (A.11235) passed in 2000. 2001: A.6483 Referred to insurance 2002: A.6483 Passed Assembly 2003: A.6851A Passed Assembly

2004: A.6851A Passed Assembly 2005: A.4406 Referred to Insurance 2006: A.4406 Referred to Insurance

Fiscal implications

None.

Effective date

Ninety days after it shall become a law.