What's happening
This bill creates the Pharmacy Benefit Manager Transparency Act, requiring PBMs to disclose financial information and be regulated for transparency and accountability.
Why it matters
Shines light on PBM financial flows. By requiring detailed disclosure of rebates, discounts, fees, and other payments between pharmacy benefit managers (PBMs), drug manufacturers, and insurers, the bill exposes the often-hidden financial arrangements that can affect drug pricing and accessibility for consumers and employers.
Empowers state oversight and enforcement. The superintendent is given robust authority to investigate, sanction, and regulate PBMs, including imposing fines, suspending licenses, and restricting operations, which could deter unethical or anti-competitive PBM practices.
Aggregated reporting for public and policy use. The annual, anonymized reports published by the state will provide employers, patients, and policymakers with a clearer picture of how PBMs influence drug costs—potentially guiding future reforms or decisions about health benefits.
Potential to lower costs and improve fairness. By enforcing good faith dealings, conflict-of-interest disclosures, and transparency, the bill may help ensure that more of the negotiated savings and rebates are passed on to health plans and patients, rather than being retained by PBMs as hidden profit.
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Who cares
Headline styles
Make Drug Pricing Transparent
Plain English, a few words. Used as the page title.
Sponsors
Senator · Senate District 32
2 Co-sponsors
History
- Referred to insurance
- Referred to insurance
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Require PBM Transparency
In Assembly Committee · Insurance · Sponsor Felix Ortiz
Full text
4 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
1705
2019-2020 Regular Sessions
IN SENATE
January 15, 2019
Introduced by Sen. SEPULVEDA -- read twice and ordered printed, and when printed to be committed to the Committee on Insurance
AN ACT to amend the insurance law, in relation to implementing the pharmacy benefit manager transparency act
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. The insurance law is amended by adding a new article 6 to read as follows:
ARTICLE 6
PHARMACY BENEFIT MANAGER TRANSPARENCY ACT Section 601. Short title.
602. Definitions.
603. Responsibility to covered entities.
604. Pharmacy benefit manager transparency.
605. Report publication.
606. Compliance and enforcement.
607. Rulemaking authority.
§ 601. Short title. This article shall be known and may be cited as the "pharmacy benefit manager transparency act".
§ 602. Definitions. For the purposes of this article, the following definitions shall apply:
(1) "Covered entity" means a nonprofit hospital or medical service organization, insurer, health coverage plan, or health maintenance organization licensed in the state; a health program administered by the superintendent or the state in the capacity of provider of health coverage; or an employer, labor union, or other group of persons organized in the state that provides health coverage to covered individuals who are employed or reside in the state.
(2) "Covered individual" means a member, participant, enrollee, contract holder, or policy holder or beneficiary of a covered entity who is provided health coverage by the covered entity. This includes a
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD05277-01-9
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dependent or other person provided health coverage through a policy, contract, or plan for a covered individual.
(3) "Pharmacy benefit manager" means an entity that contracts with or is employed by a health benefit plan, state agency, insurer, managed care organization, or other third-party payor for the administration or management of prescription drug benefits provided by a covered entity for the benefit of covered individuals.
(4) "Wholesale acquisition cost" means the list price for a prescription drug, excluding any discounts, rebates, or reductions in price, as reported in the most recent editions of the wholesale price guides or other publications of drug pricing data a manufacturer provides to wholesalers or distributors in the United States, as specified in 42 U.S.C. 23 § 1395w-3a(c)(6)(B).
§ 603. Responsibility to covered entities. (1) A pharmacy benefit manager shall exercise good faith and fair dealing in the performance of its contractual obligations to a covered entity, and shall perform its duties with care, skill, prudence, diligence, and professionalism.
(2) A pharmacy benefit manager shall notify a covered entity in writing of any activity, policy, practice, ownership interest, or affiliation of the pharmacy benefit manager that presents a conflict of interest that interferes with the requirements imposed by this article.
§ 604. Pharmacy benefit manager transparency. (1) Each pharmacy benefit manager under contract with a covered entity shall submit to the covered entity and to the superintendent no later than February first of each year the following information for the immediately preceding calendar year relative to such contract:
(a) The wholesale acquisition cost for each drug on its formulary and the total number of prescriptions that were dispensed.
(b) The amount of rebates, discounts, and price concessions that the pharmacy benefit manager received for each drug on its formulary. The amount of rebates shall include any utilization discounts the pharmacy benefit manager receives from a manufacturer.
(c) The amount of rebates, discounts, and price concessions described in paragraph (b) of this subsection that were passed through to a covered entity, and the amount that were retained by the pharmacy benefit manager, for each drug on its formulary.
(d) The amount of any fee, administrative or otherwise, received from a manufacturer.
(e) The nature, type, and amount of all other payments that the pharmacy benefit manager receives, directly or indirectly, from a manufacturer in connection with a drug switch program, a formulary management program, a mail service pharmacy, educational support, data sales related to a covered individual, or any other function.
(f) The amount of any reimbursements the pharmacy benefit manager pays to contracting pharmacies, and the negotiated price covered entities pay the pharmacy benefit manager, for each drug on its formulary.
(g) Any other information as deemed necessary by the superintendent.
(2) The information disclosed pursuant to subsection one of this section shall include all retail, mail order, specialty, and compounded prescription products.
(3) Information submitted under this section shall be confidential and shall not be disclosed to any person by the superintendent or the covered entity receiving the information. Such information shall not be deemed a public record of the superintendent.
§ 605. Report publication. (1) In order to allow patients and employers to compare the ability of pharmacy benefit managers to negotiate
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rebates, discounts, and price concessions and the amount of such rebates, discounts, and price concessions that are passed through to plan sponsors, and to allow covered entities to evaluate the nature of the relationship between pharmacy benefit managers and manufacturers and the effectiveness of pharmacy benefit managers in reducing costs for covered entities and their beneficiaries, no later than February first of each year, the superintendent shall issue a report to be published on the superintendent's website aggregating the information received by all pharmacy benefit managers under this section for the preceding year.
(2) The superintendent shall ensure that the information described in subsection one of this section is reported in a manner that prevents the disclosure of the identity of a specific pharmacy benefit manager, a covered entity, prices charged for prescription drugs or any associated rebates, discounts or price concessions with respect to an individual drug or an individual plan, or any information that identifies a product or manufacturer.
(3) On or before February first of each year the superintendent shall analyze the information submitted by pharmacy benefit managers pursuant to this article and produce an additional report to be published on the superintendent's website on the impact of pharmacy benefit managers on the cost, administration, and availability of prescription drugs.
(4) The superintendent shall submit the report and any recommendations for proposed legislation or further action by the state pursuant to the report's findings to the temporary president of the senate, the speaker of the assembly and the governor on or before February first of each year.
§ 606. Compliance and enforcement. (1) All contracts for pharmacy benefit management entered into in this state or by a covered entity in this state shall comply with the requirements of this article.
(2) The superintendent is responsible for the enforcement of this article and may reasonably examine and investigate to ensure compliance with the provisions herein.
(3) The superintendent shall adopt procedures for investigating complaints of noncompliance with this article. If the superintendent finds a pharmacy benefit manager has failed to comply with any of the provisions of this article, the superintendent may, after notice and opportunity for a hearing, impose one or more sanctions as deemed appropriate or necessary to bring non-complying entities into full compliance, including, but not limited to:
(a) revoking or suspending a license issued to a pharmacy benefit manager, or denying an application for a renewal of a license;
(b) imposing a period of probation best adapted to protect the public health and safety and for any rehabilitation;
(c) imposing an administrative fine not to exceed two hundred fifty dollars for each violation or instance of noncompliance;
(d) assessing costs to be paid by the pharmacy benefit manager; or
(e) imposing restrictions on the scope of operation of the pharmacy benefit manager in the state.
(4) In addition to sanctions for noncompliance as described in subsection three of this section, if a pharmacy benefit manager fails to submit to the superintendent the information required under section six hundred four of this article by the specified date, the superintendent may impose against the pharmacy benefit manager an administrative penalty of not more than two hundred fifty dollars for each day of such failure.
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(5) Any money collected, as administrative penalties or otherwise, pursuant to this section must be used by the superintendent to cover the costs of implementation and enforcement of this article.
§ 607. Rulemaking authority. The superintendent shall promulgate and adopt rules and regulations to effectuate the purposes and provisions of this article. The rules and regulations shall be subject to review in accordance with general rules of administrative rulemaking and review of regulations in this state.
§ 2. This act shall take effect immediately.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the insurance law, in relation to implementing the pharmacy benefit manager transparency act
Purpose of the bill
This legislation will allow patients and employers to compare the abili- ty of pharmacy benefit managers to negotiate rebates, discounts, and price concessions and the amount of such rebates, discounts, and price concessions in reducing costs for consumers, patients, and their benefi- ciaries.
Summary of specific provisions
Section 1. The insurance law is amended by adding a new article 6. Section 601 entitles the article the "pharmacy benefit manager transpar- ency act."
Read the full memo (894 words)
Section 602; redefines; "Covered entity" to mean nonprofit, hospital, or medical organization, insurer, health coverage plan, or health mainte- nance organization licensed in the state. "Covered individual" means a member, participant, enrollee, contract holder, or policy holder or beneficiary of a covered entity which is provided health coverage by the covered entity. "Pharmacy benefit manager" means an entity that contracts with or is employees be a health benefit plan, state agehcy, insurer, managed care organization, or other third-party payer for the administration or management of prescription drug benefits. "Wholesale acquisition cost" means the list price for a prescription drug, exclud- ing any discounts, rebates, or reductions in price.
Section 603; shows responsibility to covered entities. A pharmacy bene- fit manager shall exercise in good faith and fair dealing in the performance of its contractual obligations to a covered entity, and shall perform its duties with care, skill, prudence, diligence, and professionalism. A benefits manage shall notify a covered entity in writing of any activity, policy, practice, ownership interest, or affil- iation in the case of a conflict of interest that interferes with the requirements imposed by this article.
Section 604; Each pharmacy benefit manager under contract with a covered entity shall submit to the covered entity and to the superintendent no later than February first of each year the whole sale acquisition cost for each drug, the amount of rebates, discounts, and price concessions that the benefits manager receives, the amount of rebates, discounts, and price concessions described in paragraph (b), the amount of any fee, the nature, type, and amount of all other payments that a pharmacy manger receives. The amount of reimbursements the pharmacy befit manager pays to contracting pharmacies, any other information deemed necessary by the superintendent. The information shall include all retail, mail order, specialty, and compounded prescription products and shall remain confidential.
Section 605; explains the report publication in that the information obtained to the superintendent shall be used to reduce costs for covered entities and their beneficiaries, no later than February first of each Year, and the superintendent shall issue a report to be published on the superintendent's website. The superintendent shall report in a manner that prevents the disclosure of the specific pharmacy benefit manage, a covered entity, prices charged for prescription drugs or any associated rebates, discounts or price concession with respect to an individual drug or plan.
Section 606; All contracts for pharmacy benefit management entered into this state or by a covered entity in this state shall comply with the requirements of this article. The superintendent is responsible for the enforcement of this article and may examine and investigate to ensure compliance such as revoking or suspending a license, or denying an application for a renewal of license, imposing a period of probation to protect the public health and safety, imposing an administrative fine not to exceed two hundred and fifty dollars for each violation or instance of noncompliance and assessing costs to be paid by the pharmacy benefits manager.
Section 2. This act shall take effect immediately.
Justification
This legislation specific intent is to allow patients and employers to compare the ability of pharmacy benefit managers when they negotiate rebates, discounts, and price concessions and the amount of such rebates, discounts, and price concession that are passed through to plan sponsors, and to allow covered entities to evaluate the nature of the relationship between pharmacy benefit managers and manufactures and the effectiveness of reducing costs for covered entities and their benefici- aries, no later than February 1st of each year. The commissioner or superintendent shall issue a report to be published on the commission- er's website by gathering the information received by all pharmacy bene- fits managers under this chapter for the preceding year.
The commissioner shall ensure that all information be reported in a manner that prevents the disclosure of the identity of a specific phar- macy benefit manager, a covered entity, prices charged for prescription drugs or any associate rebates, discounts or price concessions with respect to an individual drug or plan, or any information that identi- fies a product or manufacture.
On February 1st each consecutive year, the commissioner shall analyze the information submitted by a pharmacy benefit managers pursuant to the act and produce an additional report to be published on the commission- er's website on the impact of pharmacy benefit managers on the cost, administration, and availability of prescription drugs. The commissioner shall submit the report and any recommendations for proposed legislation or further action by the state pursuant to the report's finding to the legislature and the governor on or before February 1st.
Prior legislative history
S.8384 of 2018, referred to insurance
Fiscal implications
None to the State.
Effective date
This act shall take effect immediately.
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