Statement from Senator Rivera on PBM Investigations Update

  "In an effort to protect the health and financial stability of New Yorkers, the Senate Committee on Investigations and Government Operations, with the assistance of the Senate Committee on Health, opened an investigation into the practices of pharmacy benefit managers in New York. For the past two months, our teams have been working on this ongoing investigation.

"In an attempt to address some of the serious issues that pharmacists and consumers face, investigators participated in good faith conversations with three major pharmacy benefit managers operating within New York State. Unfortunately, two of the three pharmacy benefit managers have completely halted any further good faith discussions, and as a result, our Committees have jointly submitted a number of proposals to be included in the New York State Senate one-house budget resolution.

"The proposals seek to maximize accountability amid concerns that some or all pharmacy benefit managers are engaged in price manipulation, causing significant harm to local pharmacists and consumers alike."

Below are the relevant Senate one-house budget proposals:

• Limit how much pharmacy benefit managers can charge Medicaid managed care plans by prohibiting the use of spread pricing in Medicaid managed care; 

• Prohibit pharmacy benefit managers from passing along other fees to Medicaid managed care plans;

• Require the registration and licensing of pharmacy benefit managers operating in New York State with the New York State Department of Financial Services. Addition of increased penalties for noncompliance;

• Require pharmacy benefit managers to disclose information to the Department of Financial Services including any financial incentive received by the pharmacy benefit manager for promoting the use of certain drugs, other financial arrangements affecting insurance plans, and other quarterly reports, as the Department requires;

• Authorizes the Department of Financial Services to revoke a pharmacy benefit manager's license if they violate New York State laws or regulations;

• Mandates increased penalties on pharmacy benefit managers for violating New York State laws or regulations;

• Language creating a fiduciary duty between a pharmacy benefit manager and its clients, including that the pharmacy benefit manager must hold funds in trust for its clients;

• Language requiring the pharmacy benefit manager to disclose financial incentives to its customers and/or clients;

• Require pharmacy benefit managers to disclose any potential conflict of interest to customers and/or clients;

• Language prohibiting a pharmacy benefit manager from requiring the substitution of one prescription drug for another in dispensing a prescription drug unless the prescriber approves.
   

"The Committee on Investigations and Government Operations is continuing to examine pharmacy benefit manager practices and will release a report upon the inquiry's conclusion with findings and additional recommendations."