NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A5723B
SPONSOR: Heastie TITLE OF BILL: An act to amend the insurance law, in relation to the
purchase of prescription drugs
PURPOSE OR GENERAL IDEA OF BILL: To clarify and strengthen provisions
in current law to ensure that consumers have the option to access every
covered medication from a local network participating pharmacy and are
not forced into mandatory mail order.
SUMMARY OF SPECIFIC PROVISIONS: Section One of the bill provides defi-
nitions. "Same Reimbursement Amount" is defined as the same benchmark
index, the same 'Maximum allowable cost' and the same 'national drug
code', very specific terms that have meaning in the prescription market.
"Mail order pharmacy" is defined as any pharmacy whose primary business
is to receive prescriptions by mail, telefax or electronically and to
deliver medications through the US mail or common carriers.
Section Two amends Paragraph 28 of subsection (i) of section 3216 of the
insurance law to remove provisions in current law that have served to
impose extra requirements on network community pharmacies as a precondi-
tion for providing certain covered medications otherwise available by
mail order. Specifically, this section removes 'terms and conditions'
and 'in advance through a contractual network agreement'.
Section Three amends Paragraph 18 of subsection (1) of section 3221 of
the insurance law to remove provisions in current law that have served
to impose extra requirements on network community pharmacies as a
precondition for providing certain covered medications otherwise avail-
able by mail order. Specifically, this section removes 'terms and condi-
tions' and 'in advance through a contractual network agreement'.
Section Four amends Subsection (kk) of section 4303 of the insurance law
to remove provisions in current law that have served to impose extra
requirements on network community pharmacies-as a precondition for
providing certain covered medications otherwise available by mail order.
Specifically, this section removes 'terms and conditions' and 'in
advance through a contractual network agreement'.
Section Five is the effective date of the bill.
JUSTIFICATION: In January, 2012 the current provisions of State Insur-
ance Law took effect guaranteeing that consumers would always have the
choice of obtaining covered prescription drugs from a local network
participating pharmacy.
Over the course of the year, however, it became clear that the law was
not working as intended. Consumers received letters from pharmacy bene-
fit managers directing them to out-of-state "specialty" pharmacies.
Consumers returning to their local participating pharmacy could no long-
er obtain their prescription drugs there because the claim was blocked.
The pharmacy was notified that coverage for that medication was no long-
er covered, in the 'retail' pharmacy network. The patient was to be
directed to the 'specialty' pharmacy.
Contrary to the intent of the law, beneficiaries were being forced into
mandatory mail order programs on the basis of the medications they were
prescribed. Local pharmacies otherwise in the network were not in the
new 'restricted' network. Pharmacy benefit managers were steering
prescription volume out of their network pharmacies into their wholly
owned pharmacy subsidiaries.
Community pharmacy owners took action, They contacted plan sponsors and
pharmacy benefit managers asking for contracts that would allow them to
continue to dispense covered medications available to them from their
wholesalers. The phone calls, letters and e-mails that followed document
that large pharmacy benefit managers were using "terms and conditions"
as a legal roadblock against community pharmacies. These include unrea-
sonable and onerous 'terms' such as costly accreditations, on-call
24-hour nursing services and excessive liability insurance demands. Some
threatened to exclude community pharmacies from the 'retail' network in
order to be enrolled as a 'mail order' pharmacy. For these reasons, it
is necessary to remove "terms and conditions" from current law.
The terms 'in advance through a contractual network agreement' have
served as another barrier to the parity between mail order and community
pharmacies envisioned in the original law. A close reading of the law
allows a local network pharmacy to agree to accept the same reimburse-
ment amount, but nothing in the law requires the pharmacy benefit manag-
er to grant the participating community pharmacy an additional contract
to meet the mail order reimbursement price. The present statute must be
amended to resolve this contradiction and restore original legislative
intent.
The amendments proposed are reasonable and fair. Defining 'mail order'
is necessary so that its meaning cannot be manipulated by self-promoting
pharmacy benefit managers.
LEGISLATIVE HISTORY: New Legislation
FISCAL IMPLICATIONS: None
EFFECTIVE DATE: This act shall take effect immediately.
STATE OF NEW YORK
________________________________________________________________________
5723--B
Cal. No. 562
2013-2014 Regular Sessions
IN ASSEMBLY
March 6, 2013
___________
Introduced by M. of A. HEASTIE, BRINDISI, RAIA, KEARNS, COLTON, PAULIN,
ABINANTI, PERRY, MALLIOTAKIS, CYMBROWITZ, RODRIGUEZ, HEVESI, LAVINE,
MOYA, ROSENTHAL, THIELE, McDONALD, PEOPLES-STOKES, JACOBS, CUSICK,
GOTTFRIED, BUCHWALD, ORTIZ, BENEDETTO, SEPULVEDA, AUBRY, WEPRIN,
TITONE, GUNTHER, SIMOTAS, OTIS, ZEBROWSKI, LUPINACCI -- Multi-Spon-
sored by -- M. of A. ARROYO, FARRELL, GARBARINO, GIGLIO, HOOPER,
LENTOL, O'DONNELL, RA, ROZIC, SCHIMEL, WEINSTEIN -- read once and
referred to the Committee on Insurance -- committee discharged, bill
amended, ordered reprinted as amended and recommitted to said commit-
tee -- ordered to a third reading -- committed to Insurance --
reported from committee, advanced to a third reading, amended and
ordered reprinted, retaining its place on the order of third reading
AN ACT to amend the insurance law, in relation to the purchase of
prescription drugs
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Paragraph 28 of subsection (i) of section 3216 of the
2 insurance law, as amended by chapter 11 of the laws of 2012, is amended
3 to read as follows:
4 (28) (A) Definitions. For the purpose of this paragraph:
5 (1) "Same reimbursement amount" shall mean that any coverage described
6 under subparagraph (B) of this paragraph shall provide the same bench-
7 mark index, including the same average wholesale price, maximum allow-
8 able cost and national prescription drug codes to reimburse all pharma-
9 cies participating in the insurance network regardless of whether a
10 pharmacy is a mail order pharmacy or a non-mail order pharmacy.
11 (2) "Mail order pharmacy" means a pharmacy whose primary business is
12 to receive prescriptions by mail, telefax or through electronic
13 submissions and to dispense medication to patients through the use of
14 the United States mail or other common or contract carrier services and
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD09462-06-4
A. 5723--B 2
1 provides any consultation with patients electronically rather than face-
2 to-face.
3 (B) Any policy that provides coverage for prescription drugs shall
4 permit each insured to fill any covered prescription that may be
5 obtained at a network participating mail order or other non-retail phar-
6 macy, at the insured's option, at a network participating non-mail order
7 retail pharmacy provided that the network participating non-mail order
8 retail pharmacy agrees [in advance, through a contractual network agree-
9 ment,] to the same reimbursement amount[, as well as the same applicable
10 terms and conditions,] that the insurer has established for the network
11 participating mail order or other non-retail pharmacy. In such a case,
12 the policy shall not impose a co-payment fee or other condition on any
13 insured who elects to purchase prescription drugs from a network partic-
14 ipating non-mail order retail pharmacy which is not also imposed on
15 insureds electing to purchase drugs from a network participating mail
16 order or other non-retail pharmacy.
17 § 2. Paragraph 18 of subsection (l) of section 3221 of the insurance
18 law, as amended by chapter 11 of the laws of 2012, is amended to read as
19 follows:
20 (18) (A) Definitions. For the purpose of this paragraph:
21 (1) "Same reimbursement amount" shall mean that any coverage described
22 under subparagraph (B) of this paragraph shall provide the same bench-
23 mark index, including the same average wholesale price, maximum allow-
24 able cost and national prescription drug codes to reimburse all pharma-
25 cies participating in the insurance network regardless of whether a
26 pharmacy is a mail order pharmacy or a non-mail order pharmacy.
27 (2) "Mail order pharmacy" means a pharmacy whose primary business is
28 to receive prescriptions by mail, telefax or through electronic
29 submissions and to dispense medication to patients through the use of
30 the United States mail or other common or contract carrier services and
31 provides any consultation with patients electronically rather than face-
32 to-face.
33 (B) Any insurer delivering a group or blanket policy or issuing a
34 group or blanket policy for delivery in this state that provides cover-
35 age for prescription drugs shall permit each insured to fill any covered
36 prescription that may be obtained at a network participating mail order
37 or other non-retail pharmacy, at the insured's option, at a network
38 participating non-mail order retail pharmacy provided that the network
39 participating non-mail order retail pharmacy agrees [in advance, through
40 a contractual network agreement,] to the same reimbursement amount[, as
41 well as the same applicable terms and conditions,] that the insurer has
42 established for the network participating mail order or other non-retail
43 pharmacy. In such a case, the policy shall not impose a co-payment fee
44 or other condition on any insured who elects to purchase drugs from a
45 network participating non-mail order retail pharmacy which is not also
46 imposed on insureds electing to purchase drugs from a network partic-
47 ipating mail order or other non-retail pharmacy; provided, however, that
48 the provisions of this section shall not supersede the terms of a
49 collective bargaining agreement or apply to a policy that is the result
50 of a collective bargaining agreement between an employer and a recog-
51 nized or certified employee organization.
52 § 3. Subsection (kk) of section 4303 of the insurance law, as amended
53 by chapter 11 of the laws of 2012 and as relettered by section 55 of
54 part D of chapter 56 of the laws of 2013, is amended to read as follows:
55 (kk) (1) Definitions. For the purpose of this subsection:
A. 5723--B 3
1 (A) "Same reimbursement amount" shall mean that any coverage described
2 under paragraph two of this subsection shall provide the same benchmark
3 index, including the same average wholesale price, maximum allowable
4 cost and national prescription drug codes to reimburse all pharmacies
5 participating in the health benefit plan regardless of whether a pharma-
6 cy is a mail order pharmacy or a non-mail order pharmacy.
7 (B) "Mail order pharmacy" means a pharmacy whose primary business is
8 to receive prescriptions by mail, telefax or through electronic
9 submissions and to dispense medication to patients through the use of
10 the United States mail or other common or contract carrier services and
11 provides any consultation with patients electronically rather than face-
12 to-face.
13 (2) Any contract issued by a medical expense indemnity corporation, a
14 hospital service corporation or a health services corporation that
15 provides coverage for prescription drugs shall permit each covered
16 person to fill any covered prescription that may be obtained at a
17 network participating mail order or other non-retail pharmacy, at the
18 covered person's option, at a network participating non-mail order
19 retail pharmacy provided that the network participating non-mail order
20 retail pharmacy agrees [in advance, through a contractual network agree-
21 ment,] to the same reimbursement amount[, as well as the same applicable
22 terms and conditions,] that the corporation has established for the
23 network participating mail order or other non-retail pharmacy. In such
24 a case, the contract shall not impose a copayment fee or other condition
25 on any covered person who elects to purchase drugs from a network
26 participating non-mail order retail pharmacy which is not also imposed
27 on covered persons electing to purchase drugs from a network participat-
28 ing mail order or other non-retail pharmacy; provided, however, that the
29 provisions of this section shall not supersede the terms of a collective
30 bargaining agreement or apply to a contract that is the result of a
31 collective bargaining agreement between an employer and a recognized or
32 certified employee organization.
33 § 4. This act shall take effect immediately.
