Superintendent of Financial Services Adrienne A. Harris announced today proposed regulations to govern the conduct of Pharmacy Benefit Managers (“PBMs”) operating in New York. These regulations establish strong protections for consumers and small businesses including prohibiting abusive contract terms that raise drug costs for consumers and strain small pharmacies, as well as establish network adequacy standards to ensure consumers have access to affordable prescriptions where they live. Together with three sets of regulations already adopted, DFS’s actions represent the most comprehensive rules surrounding PBMs in the nation.

“Our proposed regulation is a significant milestone in stopping unfair practices that have fueled years of runaway prescription drug prices,” said Superintendent Harris. “DFS remains committed to building out our nation-leading oversight of Pharmacy Benefit Managers and using every tool at our disposal to make health care more accessible and more affordable for all New Yorkers.”

DFS’s Pharmacy Benefits Bureau proactively sought feedback on the impacts of PBM conduct in New York prior to drafting these regulations, including pre-rulemaking requests for information and comments on reporting requirements, patient steering, pharmacy credentialing, pricing models, pharmacy reimbursement practices, and PBM audits of pharmacies. In addition to the feedback received, the Department also reviewed annual reports filed by PBMs registered in New York and over one hundred complaints received from pharmacies and pharmacy associations over the last year regarding PBM conduct and practices.

The regulations proposed today establish important consumer, pharmacy, and market protections including:

• Prohibiting deceptive marketing practices and establishing network adequacy standards to ensure patients have access to in-network pharmacies nearby and are not forced to travel long distances to get their medications 
• Banning abusive contract terms to ensure local pharmacies are paid fairly
• Prohibiting PBMs from providing preferential treatment to their own affiliated pharmacies
• Limiting further market concentration by requiring Department approval of any merger or acquisition activity involving a PBM licensed in the state

With today’s publication in the State Register, the proposed regulations are subject to a 60-day comment period. DFS looks forward to and appreciates receiving feedback to the proposed regulations during the comment period. For more information, a copy of the proposed regulations can be found on the DFS website. 

The public is reminded that DFS’s Pharmacy Benefits Bureau is always available to accept and investigate complaints of PBM misconduct via email at [email protected]. Additionally, DFS is empowered to investigate significant spikes in the price of prescription drugs. Anyone experiencing a spike in the cost of drugs is encouraged to reach out at [email protected].