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DFS Superintendent Harris Proposes Pharmacy Benefit Manager Regulations to Strengthen Consumer Protections and Address Anti-Competitive Conduct

DFS Superintendent Adrienne A. Harris Proposes Pharmacy Benefit Manager Regulations to Strengthen Consumer Protections and Address Anti-Competitive Conduct

The Department Concurrently Issued a Request for Information Regarding PBM Practices in New York

Today, Superintendent Adrienne A. Harris announced that the New York State Department of Financial Services (“DFS” or “Department”) proposed new market conduct regulations to govern Pharmacy Benefit Managers (“PBMs”) operating in New York. The Department is also inviting submissions of comments, data, or documented evidence from the public regarding network adequacy requirements, formulary changes, drug manufacturer rebates, and aberrant quantity/product list restrictions.

“It is no coincidence that as New Yorkers continue to pay more for life-saving medication each year, the PBM industry records billions in revenue with little regulatory oversight,” said Superintendent Harris. “This proposed regulation seeks to put an end to unfair practices by the PBM industry, making prescription drugs more affordable and accessible for New Yorkers.”

In 2021, New York enacted a comprehensive statutory regime for PBMs, key intermediaries in the prescription drug supply chain that generated an estimated $498.5 billion in revenue in 2022 alone. The legislation charged DFS with developing regulations that would address conflicts of interest; and deceptive, anti-competitive, and unfair claims practices by these companies. These proposed rules will help protect New Yorkers’ access to prescription drugs, prohibit business practices that increase the cost of those drugs, and will ensure that small, independent pharmacies compete on a level playing field with large pharmacies affiliated with PBMs.

The regulations propose the following:

  • Prohibit PBMs from barring any in-network pharmacies from providing mail order or delivery services, which will increase patients’ access to home delivery from their community pharmacy;
  • Increase transparency to consumers and employers by requiring PBMs to list formularies and pharmacy directories online and prohibiting PBMs from punishing a consumer who relies on said information;
  • Require PBMs to post a telephone number and email address for consumers to direct their questions to, and PBMs must respond in a reasonable amount of time;
  • Prohibit anti-competitive practices that steer consumers away from their community pharmacy to larger pharmacies affiliated with the PBM;
  • Prohibit PBMs from unfairly passing losses onto pharmacies when the PBM mistakenly approved dispensing a drug and then seeks to retroactively deny reimbursement to the pharmacy;
  • Reduce administrative burdens and costs on small pharmacies by allowing them to submit information to and receive information from PBMs electronically;
  • Prevent the abuse of audits against small pharmacies who are not affiliated with a PBM by requiring PBMs to apply the same audit standards across all in-network pharmacies.

To inform the development of these regulations, the Department conducted extensive outreach to industry, health plans, pharmacy groups, state and federal regulators, and the general public.

The proposed regulation is subject to a 10-day preproposal comment period beginning today, followed by a 60-day comment period upon publication in the State Register. DFS looks forward to and appreciates receiving feedback on the proposed regulation during the comment period. The Department will then review all received comments and issue a revised proposal or a notice of adoption of the final regulation.

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