Pharmacy benefit managers (PBM) operating in New York must be licensed by the Department of Financial Services to perform pharmacy benefit management services on behalf of health plans.

• See a list of PBMs currently licensed in New York.

DFS Connect

DFS has launched DFS Connect for New York consumers filing complaints regarding Benefits Managers (PBMs) and reporting drug price spikes. Through this portal, consumers can receive real-time status updates from DFS about their complaints. 

DFS Connect is also where PBMs and Drug Manufacturers can review complaints, correspond with the Department, and upload documentation relevant to cases. Entities access DFS Connect using their DFS portal login credentials. 

• Entities can create or log into their DFS Connect accounts at https://dfsconnect.dfs.ny.gov

Detailed instructions on how to access and respond to consumer complaints, can be found in the Responding to Consumer Complaints in DFS Connect User Guide (MS Word). 

Read the proposed draft regulations in the Proposed Outreach section of our Regulatory Activity - Insurance Law page.

Insurance Law Article 29 (NYSenate.gov) and Section 280-a of the Public Health Law (NYSenate.gov) authorize the Department of Financial Services to regulate Pharmacy Benefit Managers operating in New York.

Regulations

To view recently proposed and adopted regulations, visit our Regulatory and Legislative Activities section.

A pharmacy benefit manager (PBM) is any entity that performs PBM services for a health plan. The requirement does not include individual employees of a PBM or units/groups/divisions or other groups of employees of a health plan that perform PBM services for that health plan. A health plan that performs PBM services for another health plan meets the definition of pharmacy benefit manager and is required to obtain a license.

A health plan includes any entity that approves, provides, arranges for, or pays or reimburses for prescription drugs. To be covered under the statute a health plan must cover a “substantial number of beneficiaries who work or reside in this state.” A “substantial number of beneficiaries who work or reside in this state” means “50% or more of the beneficiaries of the plan work or reside in New York.

Pharmacy benefit management (PBM) services mean the management or administration of prescription drug benefits for a health plan, directly or through another entity. Any of the following services, individually or in combination, constitute PBM services:

• claims processing, retail network management, or payment of claims to pharmacies for dispensing prescription drugs
• clinical or other formulary or preferred drug list development or management
• negotiation or administration of rebates, discounts, payment differentials, or other incentives, for the inclusion of particular prescription drugs in a particular category or to promote the purchase of particular prescription drugs
• patient compliance, therapeutic intervention, or generic substitution programs
• disease management for prescription drug benefits
• drug utilization review or prior authorization for drug benefits
• adjudication of appeals or grievances related to prescription drug coverage
• contracting with and or managing the relationship with network pharmacies including mail service pharmacy agreements
• drug benefit design, including methods for the controlling of cost of covered prescription drugs

Therefore, if you have agreed to perform at least one of those functions for a health plan, you are performing PBM services.

Under Public Health Law section 280-a and Part 452 of the Department’s regulations, PBMs licensed by the Department are required to disclose certain information to health plans for which they perform services.

A health plan can request terms and conditions of any contract(s) or arrangement(s) once every 6 months.

What’s Required

Upon written request by any health plan, a PBM must do the following:

• Use of Funds. Demonstrate how all funds received by the PBM for PBM Services on behalf of the health plan were used as agreed to in the PBM’s contract with the health plan or, as applicable, the law.
• Full, Unredacted Third-Party Contracts. Provide full unredacted terms and conditions of any contract(s) or arrangement(s) between the PBM and any party relating to the contracted PBM Services.
• Conflicts of Interest. Disclose potential conflicts of interest, including where the PBM (or in some instances, an entity owned by or affiliated with the PBM):
  • Engages in spread pricing,
  • Retains a portion of manufacturer compensation,
  • Has ownership interests/affiliations with pharmacies,
  • Solicits or incentivizes covered individuals to use owned/affiliated pharmacies,
  • Transfers prescriptions to owned/affiliated pharmacies,
  • Audits pharmacies,
  • Restricts the use of manufacturer copay cards or coupons,
  • Shares data from a non-affiliated pharmacy with an owned/affiliated pharmacy, or
  • Where the health plan reasonably views any other activity, policy, practice, contract, or arrangement of the PBM as directly or indirectly presenting a conflict of interest with the PBM's relationship with or obligation to the health plan.

A PBM must produce requested “Use of Funds” information within 60 days of the health plan’s request.

A PBM must disclose “Full, Unredacted Third-Party Contracts” and “Conflicts of Interest” information within 30 days of the health plan’s request.

Disclosure of Third-Party Contracts

If a health plan requests disclosure of a Third-Party Contract that the PBM determines is not related to the PBM Services provided to the health plan, the PBM may appeal to the Department within 30 days of receiving the health plan’s request. The PBM’s response to the health plan is not required until the Department makes a decision. The Department may direct the PBM to make the disclosure, make the disclosure with specific redactions, or determine that the PBM is not required to make the disclosure.

Workers’ Compensation and Auto Insurance Plans

PBMs that provide PBM Services only for workers’ compensation and automobile insurance plans are exempted from the “Use of Funds” and “Third-Party Contract” disclosure requirements.

Yes. PBMs that provide PBM services only for workers’ compensation and automobile insurance plans are not exempt from the Conflicts of Interest disclosure requirement and must disclose conflicts of interest.

New York consumers file complaints about PBMs using DFS Connect. When a complaint is filed, PBM representatives are notified via email and DFS Connect. 

DFS Connect is where PBMs and Drug Manufacturers can review complaints, correspond with the Department, and upload documentation relevant to cases. Entities access DFS Connect using their DFS portal login credentials.

For more information on how to access and set up a DFS Connect account, please review the Accessing DFS Connect as an Entity User Guide.

• Entities can create or log into their DFS Connect accounts at https://dfsconnect.dfs.ny.gov.

Detailed instructions on how to access and respond to consumer complaints, can be found in the Responding to Consumer Complaints in DFS Connect User Guide (MS Word). 

Drug manufacturers looking to report drug price increases to the Department should visit the Prescription Drug Manufacturer Filings page.

An Annual Report must be completed and submitted to the Department by no later than July 1 each year.

The 2024 Annual Report consists of three separate documents that must be reviewed and/or completed:

• 2024 Annual Report Instructions
• 2024 Annual Report Spreadsheet (.xlsm)
• 2024 Annual Report Attestation (PDF)

Every licensed PBM must read the Instructions.

Every licensed PBM must complete and submit the Spreadsheet and Attestation.

The Spreadsheet includes various requests for supplemental documentation. All requested supplemental documents should be included in a single "zipped" file as part of the Annual Report submission. 

The CEO/President (or equivalent) must sign the Attestation.

How to Submit the 2024 Annual Report

To submit a the 2024 Annual Report, combine your submission documents into one "zipped" file, visit the Pharmacy Benefit Managers dropbox on the New York State MySend platform, and follow the 2024 Annual Report Instructions.

Note: Follow the instructions for each question carefully, including the naming convention. 

If you have any questions, check our FAQs About PBM Annual Reporting. If you still need help email [email protected].

A PBM must apply for and obtain a license from the Department to begin or continue performing PBM services in New York.

How to Apply for a License

Obtaining a license to operate as a PBM in New York includes an application, submission of documentation, and the payment of a licensing fee.

• Apply for a PBM license and pay the fee through DFS Connect, a secure web-based system.

If you have questions, check our FAQs About PBM Licensing. If you still need help, email [email protected].

License Term and Renewal

Every license is valid for 3 years (36 months) from the date it is issued.

Licenses may be renewed after an application has been filed and approved. If an application for renewal is filed with the Department at least 60 days before it expires, the existing license continues in full force and effect until the issuance of the new license, or until five days after the Department declines to issue a license and gives notice of the decision to the applicant.

Assessment

PBMs licensed by the Department are assessed for the operating expenses of the Department that are attributable to the regulation of these entities.

Each PBM submits the aggregate number of claims adjudicated for pharmacies located in New York for the preceding calendar year. The total operating cost is divided pro rata among licensees based upon each licensee’s share of the aggregate number of claims.

A PBM that is licensed for any part of a quarter is assessed for the full quarter.

Billing Schedule

The New York State fiscal year begins April 1 and ends March 31 of the following calendar year. Each licensed PBM is billed five times for a fiscal year: four quarterly assessments (each approximately 25 percent of the anticipated annual amount) and a final assessment (or true-up), based on actual total operating cost for the fiscal year.

Invoices are emailed to the contact person identified by each PBM for such purpose.

If any health plan, person, pharmacy, or other entity believes they have been harmed by a PBM, they should notify the Department by filing a complaint using DFS Connect. A copy of the complaint will be shared with the PBM, and the Department may take enforcement action when appropriate. For more information about how to submit a complaint against a PBM in DFS Connect, review the Submitting a Complaint Against a PBM User Guide.

Read our FAQs About PBMs in New York. If you have additional questions, please contact DFS using email [email protected].