A02312 Summary:

BILL NOA02312A
 
SAME ASNo Same As
 
SPONSORGottfried
 
COSPNSREnglebright, Galef, Paulin, Titus, Hooper, Jaffee, Colton, Weprin, Otis, Montesano, Rosenthal, Abinanti, Seawright
 
MLTSPNSRBenedetto, Cook, Crouch, Dinowitz, Duprey, Farrell, Gunther, Lavine, Lifton, McDonald, Ortiz, Peoples-Stokes, Perry, Ramos, Robinson, Wright
 
Rpld & add §280-a, Pub Health L
 
Provides for pharmacy benefit management and the procurement of prescription drugs to be dispensed to patients, or the administration or management of prescription drug benefits; sets forth definitions; provides for funds received by a pharmacy in trust for the health plan or provider and provides for accountability of such funds; further provides for an appeals process to investigate and resolve disputes regarding multi-source generic drug pricing.
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A02312 Actions:

BILL NOA02312A
 
01/15/2015referred to health
01/06/2016referred to health
02/12/2016amend (t) and recommit to health
02/12/2016print number 2312a
04/05/2016reported referred to codes
05/04/2016reported referred to ways and means
05/25/2016reported
05/26/2016advanced to third reading cal.748
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A02312 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A2312A
 
SPONSOR: Gottfried (MS)
  TITLE OF BILL: An act to amend the public health law, in relation to pharmacy benefit managers; and to repeal certain provisions of such law relating thereto   PURPOSE OR GENERAL IDEA OF BILL: This bill specifies the fiduciary duties of pharmacy benefits managers and the obligation to serve the covered entities with which they contract.   SUMMARY OF SPECIFIC PROVISIONS: Section 1 modifies PHL § 280-a by adding a definition of a "pharmacy benefits management" and requires a pharmacy benefit manager (PBM) to have a fiduciary relationship with a health plan, pass through all monies to a health plan other than fee or payment for services, account for all funds and provide access to all necessary information, disclose any relevant relationships, and not substitute or cause the substitution of prescription drugs. Section 2 is the severability clause.   JUSTIFICATION: PBMs are companies that manage prescription drug benefit programs for health plans. PBMs have promised to save health plans and their members money, but in reality, their negotiations are very secretive. PBMs commonly pocket payments from drug manufacturers that ought to be used to lower drug prices, and they accept payments in exchange for giving preference to more expensive drugs. This bill, modeled on recent legis- lation in Maine, would require that PBMs act not in their own best interest, but rather in the interest of the health plan and its benefi- ciaries.   PRIOR LEGISLATIVE HISTORY: 2005: A10688 - reported to Codes Committee 2006: A10688-A - passed Assembly 2007-08: A6341 - passed Assembly 2009-10: A.2008A - passed Assembly 2011-12: A809 - passed Assembly 2013-14: A5352 - passed Assembly   FISCAL IMPLICATIONS: None   EFFECTIVE DATE: 120 days after it shall become law.
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A02312 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                         2312--A
 
                               2015-2016 Regular Sessions
 
                   IN ASSEMBLY
 
                                    January 15, 2015
                                       ___________
 
        Introduced  by  M.  of  A. GOTTFRIED, ENGLEBRIGHT, GALEF, PAULIN, TITUS,
          HOOPER, JAFFEE, COLTON, WEPRIN, OTIS, MONTESANO, ROSENTHAL  --  Multi-
          Sponsored  by  -- M.   of A. ABINANTI, BENEDETTO, CLARK, COOK, CROUCH,
          DINOWITZ, DUPREY, FARRELL, GUNTHER, LAVINE, LIFTON,  McDONALD,  ORTIZ,
          PEOPLES-STOKES,  PERRY,  RAMOS,  ROBINSON,  WRIGHT  --  read  once and
          referred to the Committee on Health -- recommitted to the Committee on
          Health in accordance  with  Assembly  Rule  3,  sec.  2  --  committee
          discharged, bill amended, ordered reprinted as amended and recommitted
          to said committee
 
        AN  ACT  to amend the public health law, in relation to pharmacy benefit
          managers; and to repeal certain provisions of such law relating there-
          to
 
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
 
     1    Section  1.  Section  280-a of the public health law is REPEALED and a
     2  new section 280-a is added to read as follows:
     3    § 280-a. Pharmacy benefit managers. 1. Definitions.  As used  in  this
     4  section, the following terms shall have the following meanings:
     5    (a)  "Health  plan  or  provider" means an entity for which a pharmacy
     6  benefit manager provides pharmacy benefit management including, but  not
     7  limited  to:  (i)  a  health benefit plan or other entity that approves,
     8  provides, arranges for, or pays for health care items or services, under
     9  which prescription drugs for beneficiaries of the entity  are  purchased
    10  or  which provides or arranges reimbursement in whole or in part for the
    11  purchase of prescription drugs;  or  (ii)  a  health  care  provider  or
    12  professional,  including  a  state  or  local  government  entity,  that
    13  acquires prescription drugs to use or dispense in providing health  care
    14  to patients.
    15    (b)  "Pharmacy  benefit  management"  means  the service provided to a
    16  health plan or provider, directly or through another  entity,  including
    17  the  procurement  of  prescription drugs to be dispensed to patients, or
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD02697-02-6

        A. 2312--A                          2
 
     1  the administration or management of prescription drug benefits,  includ-
     2  ing but not limited to, any of the following:
     3    (i) mail service pharmacy;
     4    (ii)  claims  processing,  retail  network  management,  or payment of
     5  claims to pharmacies for dispensing prescription drugs;
     6    (iii) clinical or other formulary or preferred drug  list  development
     7  or management;
     8    (iv)  negotiation  or  administration  of  rebates, discounts, payment
     9  differentials, or other incentives,  for  the  inclusion  of  particular
    10  prescription  drugs  in a particular category or to promote the purchase
    11  of particular prescription drugs;
    12    (v) patient compliance, therapeutic intervention, or  generic  substi-
    13  tution programs; and
    14    (vi) disease management.
    15    (c) "Pharmacy benefit manager" means any entity that performs pharmacy
    16  benefit management for a health plan or provider.
    17    (d)  "Maximum  allowable  cost  price"  means  a maximum reimbursement
    18  amount set by the pharmacy benefit manager  for  therapeutically  equiv-
    19  alent multiple source generic drugs.
    20    2.  Application  of section.  This section applies to the providing of
    21  pharmacy benefit management by a pharmacy benefit manager to  a  partic-
    22  ular health plan or provider.
    23    3.  Duty,  accountability and transparency.   (a) The pharmacy benefit
    24  manager shall have a fiduciary relationship with and obligation  to  the
    25  health  plan  or provider, and shall perform pharmacy benefit management
    26  with care, skill, prudence, diligence, and professionalism.
    27    (b) All funds received by the pharmacy benefit manager in relation  to
    28  providing  pharmacy benefit management shall be received by the pharmacy
    29  benefit manager in trust for the health plan or provider  and  shall  be
    30  used  or  distributed  only  pursuant  to the pharmacy benefit manager's
    31  contract with the health plan or provider or applicable law; except  for
    32  any  fee  or  payment expressly provided for in the contract between the
    33  pharmacy benefit manager and the health plan or provider  to  compensate
    34  the pharmacy benefit manager for its services.
    35    (c)  The  pharmacy  benefit  manager shall periodically account to the
    36  health plan or provider for all funds received by the  pharmacy  benefit
    37  manager.  The health plan or provider shall have access to all financial
    38  and utilization information of the pharmacy benefit manager in  relation
    39  to pharmacy benefit management provided to the health plan or provider.
    40    (d)  The  pharmacy  benefit  manager  shall disclose in writing to the
    41  health plan or provider the terms and  conditions  of  any  contract  or
    42  arrangement  between the pharmacy benefit manager and any party relating
    43  to pharmacy benefit management provided to the health plan or provider.
    44    (e) The pharmacy benefit manager shall  disclose  in  writing  to  the
    45  health  plan  or  provider  any  activity, policy, practice, contract or
    46  arrangement of the pharmacy benefit manager that directly or  indirectly
    47  presents  any  conflict  of interest with the pharmacy benefit manager's
    48  relationship with or obligation to the health plan or provider.
    49    (f) Any information required to be disclosed  by  a  pharmacy  benefit
    50  manager  to a health plan or provider under this section that is reason-
    51  ably designated by the pharmacy benefit manager as proprietary or  trade
    52  secret  information  shall  be  kept  confidential by the health plan or
    53  provider, except as required or permitted by law,  including  disclosure
    54  necessary  to prosecute or defend any legitimate legal claim or cause of
    55  action.

        A. 2312--A                          3
 
     1    4. Prescriptions.  A pharmacy benefit manager may  not  substitute  or
     2  cause  the substituting of one prescription drug for another in dispens-
     3  ing a prescription, or alter or cause the altering of  the  terms  of  a
     4  prescription, except with the approval of the prescriber or as explicit-
     5  ly required or permitted by law.
     6    5. A pharmacy benefit manager shall, with respect to contracts between
     7  a  pharmacy benefit manager and a pharmacy or, alternatively, a pharmacy
     8  benefit manager and a pharmacy's contracting agent, such as  a  pharmacy
     9  services  administrative  organization,  include a reasonable process to
    10  appeal, investigate and resolve disputes regarding multi-source  generic
    11  drug   pricing.   The   appeals  process  shall  include  the  following
    12  provisions:
    13    (a) the  right  to  appeal  by  the  pharmacy  and/or  the  pharmacy's
    14  contracting  agent shall be limited to thirty days following the initial
    15  claim submitted for payment;
    16    (b) a telephone number through which a network  pharmacy  may  contact
    17  the  pharmacy benefit manager for the purpose of filing an appeal and an
    18  electronic mail address of the individual who is responsible  for  proc-
    19  essing appeals;
    20    (c) the pharmacy benefit manager shall send an electronic mail message
    21  acknowledging  receipt of the appeal. The pharmacy benefit manager shall
    22  respond in an electronic message to the pharmacy and/or  the  pharmacy's
    23  contracting  agent filing the appeal within seven business days indicat-
    24  ing its determination. If the appeal is  determined  to  be  valid,  the
    25  maximum  allowable cost for the drug shall be adjusted for the appealing
    26  pharmacy effective as of the date of the original claim for payment. The
    27  pharmacy benefit manager shall require the appealing pharmacy to reverse
    28  and rebill the claim in  question  in  order  to  obtain  the  corrected
    29  reimbursement;
    30    (d) if an update to the maximum allowable cost is warranted, the phar-
    31  macy  benefit  manager or covered entity shall adjust the maximum allow-
    32  able cost of the drug effective for all similarly situated pharmacies in
    33  its network in the state on the date the appeal  was  determined  to  be
    34  valid; and
    35    (e) if an appeal is denied, the pharmacy benefit manager shall identi-
    36  fy  the  national  drug  code  of  a therapeutically equivalent drug, as
    37  determined by the federal Food and Drug Administration, that  is  avail-
    38  able  for  purchase  by pharmacies in this state from wholesalers regis-
    39  tered pursuant to subdivision four of section sixty-eight hundred  eight
    40  of the education law at a price which is equal to or less than the maxi-
    41  mum  allowable  cost for that drug as determined by the pharmacy benefit
    42  manager.
    43    § 2. Severability.  If any provision of this act, or  any  application
    44  of  any  provision  of  this act, is held to be invalid, or ruled by any
    45  federal agency to violate or be inconsistent with any applicable federal
    46  law or regulation, that shall not affect the validity  or  effectiveness
    47  of  any  other provision of this act, or of any other application of any
    48  provision of this act.
    49    § 3. This act shall take effect on the ninetieth day  after  it  shall
    50  become  a  law  and  shall  apply to any contract for providing pharmacy
    51  benefit management made or renewed on or after that date.
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