NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A676C
SPONSOR: Rosenthal (MS) TITLE OF BILL: An act to amend the public health law, in relation to
pharmacy benefit managers
PURPOSE:
To require contracts between pharmacy benefit managers and pharmacies to
include a reasonable appeals process
SUMMARY OF PROVISIONS:
Section one adds a new § 280-a to the Public Health Law to require
contracts between a pharmacy benefit manager (PBM) and a pharmacy, or a
pharmacy's contract agent, to include a reasonable appeals process.
Under the process, the right to appeal is limited to 30 days following
the initial claim submission. The PBM must provide a phone number and
email for processing the appeal, and must respond to an appeal within 7
business days. If the appeal is deemed valid, the price is adjusted for
the appealing pharmacy effective the date of the original claim and, if
warranted, the PBM shall update the maximum allowable cost for all simi-
larly situated pharmacies. If the appeal is denied, the PBM shall iden-
tify an equivalent drug that is available for purchase at an equal
price.
Section two provides that this act shall take effect 90 days after
enactment.
JUSTIFICATION:
Pharmacy benefit managers (PBMs) are business entities that manage the
pharmacy benefit for health plans, employers and other payers. Services
include managing pharmacy networks by contracting with pharmacy provid-
ers, establishing reimbursement rates for brands and generics, paying
pharmacies for submitted claims, managing formularies, establishing
co-payment amounts and other services. Contracts between PBMs and phar-
macies include reimbursement policies. For brand drugs, contracts
between pharmacies and PBMs refer to published pricing benchmarks such
as Wholesaler Acquisition Cost and Average Wholesale Price. On the other
hand, for generics PBM contracts refer to Maximum Allowable Cost(MAC).
MAC price lists for generics are developed and managed by individual
PBMs and are not included in with the contracts that are presented to
pharmacies or their contracting agents. Since each patient's policy may
be governed by a different MAC list that the pharmacist does not have
access to, a pharmacy typically will not know the reimbursed amount of
the drug prior to filling a prescription.
The recent unprecedented fluctuation in generic drug prices has gener-
ated significant attention and highlighted the need for this legis-
lation. Under this legislation, contracts would be required to include a
process by which a pharmacy can appeal a MAC price that is below its
cost, with a reasonable timeline for both the pharmacy to appeal and for
the PBM to respond. Similar legislation has been enacted in 16 other
states as well as the Medicare Part D policy scheduled to take effect in
January, 2016.
LEGISLATIVE HISTORY:
Similar to A.9264 of 2014
FISCAL IMPLICATIONS:
None.
EFFECTIVE DATE:
90 days after enactment
