Relates to the purchase of prescription drugs

Summary of specific provisions

Section One of the bill provides definitions. "Same Reimbursement Amount" is defined as the same benchmark index, the same 'Maximum allowable cost' and the same 'national drum code', very specific terms that have meaning in the prescription market. "Mail order pharmacy" is defined as any pharmacy whose primary business is to receive prescriptions by mail, telefax or electronically and to deliver medications through the US mail or common carriers.

Amends Paragraph 28 of subsection (i) of section 3216 of the insurance law to remove provisions in current law that have served to impose extra requirements on network community pharmacies as a precondition for providing certain covered medications otherwise available by mail order. Specifically, this section removes 'terms and conditions' and 'in advance through a contractual network agreement'.

Section Two amends Paragraph 18 of subsection (l) of section 3221 of the insurance law to remove provisions in current law that have served to impose extra requirements on network community pharmacies as a precondition for providing certain covered medications otherwise available by mail order. Specifically, this section removes 'terms and conditions' and 'in advance through a contractual network agreement'.

Section Three amends Subsection (kk) of section 4303 of the insurance law to remove provisions in current law that have served to impose extra requirements on network community pharmacies-as a precondition for providing certain covered medications otherwise available by mail order. Specifically, this section removes 'terms and conditions' and 'in advance through a contractual network agreement'.

Section Four is the effective date of the bill.

Justification

In January, 2012 the current provisions of State Insurance Law took effect guaranteeing that consumers would always have the choice of obtaining covered prescription drugs from a local network participating pharmacy.

Over the course of the year, however, it became clear that the law was not working as intended. Consumers received letters from pharmacy benefit managers directing them to out-of-state "specialty" pharmacies. Consumers returning to their local participating pharmacy could no longer obtain their prescription drugs there because the

claim was blocked. The pharmacy was notified that coverage for that medication was no longer covered in the 'retail' pharmacy network. The patient was to be directed to the 'specialty' pharmacy.

Contrary to the intent of the law, beneficiaries were being forced into mandatory mail order programs on the basis of the medications they ware prescribed. Local pharmacies otherwise in the network were not in the new 'restricted' network. Pharmacy benefit managers were steering prescription volume out of their network pharmacies into their wholly owned pharmacy subsidiaries.

Community pharmacy owners took action. They contacted plan sponsors and pharmacy benefit managers asking for contracts that would allow them to continue to dispense covered medications available to them from their wholesalers. The phone calls, letters and e-mails that followed document that large pharmacy benefit managers were using "terms and conditions" as a legal roadblock against community pharmacies. These include unreasonable and onerous 'terms' such as costly accreditations, on-call 24-hour nursing services and excessive liability insurance demands. Some threatened to exclude community pharmacies from the 'retail network in order to be enrolled as a 'mail order' pharmacy. For these reasons, it is necessary to remove "terms and conditions" from current law.

The terms 'in advance through a contractual network agreement have served as another to the parity between mail order and community Pharmacies envisioned in the original law. A close reading of the law allows a local network pharmacy to agree to accept the same reimbursement amount, but nothing in the law requires the pharmacy benefit manager to grant the participating community pharmacy an additional contract to meet the mail order reimbursement price. The present statute must be amended to resolve this contradiction and restore original legislative intent. The amendments proposed are reasonable and fair. Defining 'mail order' is necessary so that its meaning cannot be manipulated by self-promoting pharmacy benefit managers.

Legislative history

New Legislation

Fiscal implications

None

Effective date

This act shall take effect immediately.