Industry Letter

Date: November 10, 2023

To: Pharmacy Benefit Managers Registered in New York

Re: UPDATE: New York Pharmacy Benefit Manager (“PBM”) License Application

We are writing to inform you of two clarifications to the licensing application instructions sent on October 31, 2023.

  1. Applicants are required to submit a copy of their most recent fiscal year-end audited financial statements for the applicant applying for a license, which should not include any parent company.
  2. In addition to the list of each health plan the applicant contracts with to perform pharmacy benefit management services (PBM services) in this State, the applicant must also provide a description of which PBM services the applicant is providing to each of those individual health plans, and the number of enrollees or beneficiaries covered by each individual health plan for the preceding calendar year.

Please see below updated instructions, which clarifies the required filings for issuance of a license to a Pharmacy Benefit Manager as required by the provisions of Part 454 to Title 11 of the NYCRR (Insurance Regulation 224).

Pursuant to Insurance Law Section 2905, PBMs operating in New York must be licensed by the Department of Financial Services (the “Department”) by January 1, 2024.  The requirements for obtaining a license are codified in Part 454.

Overall, the license application is similar to the registration application, with certain additional documents, listed below, required to submit a complete application. The following additional information must be submitted by each registered applicant applying for a license:

  1. Organization Chart. A detailed corporate/ownership organizational chart for the applicant.
  2. Claims in Year 2022. The total number of claims the applicant adjudicated for pharmacies located in New York in 2022.
  3. Pharmacy Contracts. A list of each pharmacist or pharmacy located in this State and any Pharmacy Services Administrative Organizations (PSAO) with membership located in this State with which the applicant contracts for the administration of pharmacy benefits for health plans, including identification of whether the applicant has any ownership interest in, financial interest in, or other affiliation with, any such pharmacist, pharmacy, or PSAO.
  4. Manufacturer Contracts. A list of each manufacturer with which the applicant contracts in the administration of pharmacy benefits for health plans, including identification of whether the applicant has any ownership interest in, or affiliation with, such manufacturer.
  5. Rebate Aggregator Contracts. A list of each rebate aggregator with which the applicant contracts for the administration of pharmacy benefits for health plans, including identification of whether the applicant has any ownership interest in, or affiliation with, such rebate aggregator.
  6. Switch Company Contracts. A list of each switch company with which the applicant contracts for the administration of pharmacy benefits for health plans, including identification of whether the applicant has any ownership interest in, or affiliation with, such switch company.
  7. Wholesaler Contracts. A list of each wholesaler with which the applicant contracts for the administration of pharmacy benefits for health plans, including identification of whether the applicant has any ownership interest in, or affiliation with, such wholesaler.
  8. Audited Financial Statements. A copy of the most recent fiscal year-end audited financial statements for the applicant applying for a license, which should not include any parent company. If you are filing financial statements for a holding company, the applicant’s financial statements must be on a stand-alone basis, apart from the other entities in the holding company.

The following steps are required to submit your licensing application:

Step 1: Update Information in DFS Portal. Sign into the registration portal and update any information that is inaccurate or out of date. Note, during the registration process the applicant was only required to provide a list of each health plan with which the applicant has a current and in force contract to perform pharmacy benefit management services in this State; however, pursuant to Insurance Regulation 224, for purposes of licensing, the applicant must also provide a description of which pharmacy benefit management services the applicant is providing to each of those individual health plans and the number of enrollees or beneficiaries covered by each individual health plan for the preceding calendar year. You will also be required to acknowledge that you are seeking a license. Below are instructions for then submitting the additional documents required for a license application.

Step 2: Submit Application Documents. To submit the additional license application documents, select the PBM mySend link, and follow the instructions below:

  • Once the link is open in your web browser, you will be prompted to install an extension. You do not have to install this extension. (See attached screenshot on how to exit this installation process.)
  • Once you exit the installation process, enter your email address to gain access to the Dropbox.
  • You will then receive an email with a Dropbox link to upload the required documents.
  • Select the Dropbox link from your email.
  • Once Dropbox is open:
    • Follow instructions in the Dropbox.
    • Use the PBM’s Full Legal Name as your submission’s “Title”.
    • Do not check the “Encryption” and “Package Download” boxes.
    • Choose “IBM Aspera HTTP Gateway” from the dropdown.
    • Browse for and select single zip folder for “Contents”.
    • Check the “Terms of Service” box.

Step 3: Licensing Fee Payment. Email [email protected] for electronic payment instructions for the $24,000 licensing fee, as required by statute. This fee covers the three-year period for which the license is valid.

If an application for a license is filed, including payment of the non-refundable license application fee, on or before December 31, 2023, then the license sought shall be deemed to be in full force and effect either until the issuance of the license applied for or until five days after the Superintendent shall have refused to issue such license and given notice of such refusal to the applicant.