New Pharmacy Benefits Bureau to Supervise Unregulated Pharmacy Benefit Manager Industry
Directs the Department of Financial Services to Establish Standards to Protect Consumers and Independent Small Businesses
Pharmacy Benefit Managers Required to Register with New Bureau by June 1st and Submit Annual Report by July 1st
Governor Kathy Hochul today announced the first-in-the-nation approach to bring much needed oversight to Pharmacy Benefit Managers with the creation of the Department of Financial Services' Pharmacy Benefits Bureau. Pharmacy Benefit Managers are key intermediaries in the prescription drug supply chain that have, without regulatory oversight, long controlled the price of drugs for health plans and reimbursement rates for pharmacies. The new bureau will be tasked with licensing and supervising the industry, keeping a watchful eye on Pharmacy Benefit Managers' impact on consumers and the cost of health care.
"As we continue our comeback from the COVID-19 pandemic, it's crucial that we take every opportunity to improve the health care system and reduce costs for New Yorkers," Governor Hochul said. "This landmark regulatory body will provide careful oversight to protect consumers from predatory practices in the largely unregulated Pharmacy Benefits Managers industry. My administration remains committed to doing everything in its power to reduce the burden of health insurance and prescription drug costs on New Yorkers."
Earlier this year, Governor Kathy Hochul signed into law the most comprehensive regulatory regime for Pharmacy Benefit Managers (PBMs) in the country, assigning DFS new authority to license and supervise the industry. DFS now has the power to address the widely reported problematic practices in the PBM industry which in turn will help lower drug and health insurance costs, protect New Yorkers accessing those drugs, and support New York's pharmacies, many of which are independent small businesses.
Additionally, with the passage of the enacted 2023 State Budget, Governor Hochul secured a $5 million appropriation to fund and staff the new bureau. As the program fully develops, costs to administer this initiative will be offset through the application of fees, assessments, and penalties directly on the PBM industry, ensuring the cost of regulating this industry will fall on the PBMs, not on the taxpayers.
In addition to the regulation of PBMs, DFS' existing authority to investigate drug price spikes now falls under the supervision of the new Pharmacy Benefits Bureau. DFS will continue to review reporting, monitor the market conduct and ensure proper enforcement of consumer protections in New York.
DFS has met with external stakeholders in preparation for the registration deadlines. DFS reminds all PBMs of their requirement to register with the Bureau by June 1, 2022 and to submit their first annual report by July 1, 2022. The bureau has releases guidance on both registration and the annual report on the DFS website.
DFS will soon file regulatory amendments reflecting the creation of this Bureau. More information will be available in the State Register.