STATE OF NEW YORK
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8384
IN SENATE
May 4, 2018
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Introduced by Sen. SEPULVEDA -- read twice and ordered printed, and when
printed to be committed to the Committee on Insurance
AN ACT to amend the insurance law, in relation to implementing the phar-
macy benefit manager transparency act
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. The insurance law is amended by adding a new article 6 to
2 read as follows:
3 ARTICLE 6
4 PHARMACY BENEFIT MANAGER TRANSPARENCY ACT
5 Section 601. Short title.
6 602. Definitions.
7 603. Responsibility to covered entities.
8 604. Pharmacy benefit manager transparency.
9 605. Report publication.
10 606. Compliance and enforcement.
11 607. Rulemaking authority.
12 § 601. Short title. This article shall be known and may be cited as
13 the "pharmacy benefit manager transparency act".
14 § 602. Definitions. For the purposes of this article, the following
15 definitions shall apply:
16 (1) "Covered entity" means a nonprofit hospital or medical service
17 organization, insurer, health coverage plan, or health maintenance
18 organization licensed in the state; a health program administered by the
19 superintendent or the state in the capacity of provider of health cover-
20 age; or an employer, labor union, or other group of persons organized in
21 the state that provides health coverage to covered individuals who are
22 employed or reside in the state.
23 (2) "Covered individual" means a member, participant, enrollee,
24 contract holder, or policy holder or beneficiary of a covered entity who
25 is provided health coverage by the covered entity. This includes a
26 dependent or other person provided health coverage through a policy,
27 contract, or plan for a covered individual.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD14871-01-8
S. 8384 2
1 (3) "Pharmacy benefit manager" means an entity that contracts with or
2 is employed by a health benefit plan, state agency, insurer, managed
3 care organization, or other third-party payor for the administration or
4 management of prescription drug benefits provided by a covered entity
5 for the benefit of covered individuals.
6 (4) "Wholesale acquisition cost" means the list price for a
7 prescription drug, excluding any discounts, rebates, or reductions in
8 price, as reported in the most recent editions of the wholesale price
9 guides or other publications of drug pricing data a manufacturer
10 provides to wholesalers or distributors in the United States, as speci-
11 fied in 42 U.S.C. 23 § 1395w-3a(c)(6)(B).
12 § 603. Responsibility to covered entities. (1) A pharmacy benefit
13 manager shall exercise good faith and fair dealing in the performance of
14 its contractual obligations to a covered entity, and shall perform its
15 duties with care, skill, prudence, diligence, and professionalism.
16 (2) A pharmacy benefit manager shall notify a covered entity in writ-
17 ing of any activity, policy, practice, ownership interest, or affil-
18 iation of the pharmacy benefit manager that presents a conflict of
19 interest that interferes with the requirements imposed by this article.
20 § 604. Pharmacy benefit manager transparency. (1) Each pharmacy bene-
21 fit manager under contract with a covered entity shall submit to the
22 covered entity and to the superintendent no later than February first of
23 each year the following information for the immediately preceding calen-
24 dar year relative to such contract:
25 (a) The wholesale acquisition cost for each drug on its formulary and
26 the total number of prescriptions that were dispensed.
27 (b) The amount of rebates, discounts, and price concessions that the
28 pharmacy benefit manager received for each drug on its formulary. The
29 amount of rebates shall include any utilization discounts the pharmacy
30 benefit manager receives from a manufacturer.
31 (c) The amount of rebates, discounts, and price concessions described
32 in paragraph (b) of this subsection that were passed through to a
33 covered entity, and the amount that were retained by the pharmacy bene-
34 fit manager, for each drug on its formulary.
35 (d) The amount of any fee, administrative or otherwise, received from
36 a manufacturer.
37 (e) The nature, type, and amount of all other payments that the phar-
38 macy benefit manager receives, directly or indirectly, from a manufac-
39 turer in connection with a drug switch program, a formulary management
40 program, a mail service pharmacy, educational support, data sales
41 related to a covered individual, or any other function.
42 (f) The amount of any reimbursements the pharmacy benefit manager pays
43 to contracting pharmacies, and the negotiated price covered entities pay
44 the pharmacy benefit manager, for each drug on its formulary.
45 (g) Any other information as deemed necessary by the superintendent.
46 (2) The information disclosed pursuant to subsection one of this
47 section shall include all retail, mail order, specialty, and compounded
48 prescription products.
49 (3) Information submitted under this section shall be confidential and
50 shall not be disclosed to any person by the superintendent or the
51 covered entity receiving the information. Such information shall not be
52 deemed a public record of the superintendent.
53 § 605. Report publication. (1) In order to allow patients and employ-
54 ers to compare the ability of pharmacy benefit managers to negotiate
55 rebates, discounts, and price concessions and the amount of such
56 rebates, discounts, and price concessions that are passed through to
S. 8384 3
1 plan sponsors, and to allow covered entities to evaluate the nature of
2 the relationship between pharmacy benefit managers and manufacturers and
3 the effectiveness of pharmacy benefit managers in reducing costs for
4 covered entities and their beneficiaries, no later than February first
5 of each year, the superintendent shall issue a report to be published on
6 the superintendent's website aggregating the information received by all
7 pharmacy benefit managers under this section for the preceding year.
8 (2) The superintendent shall ensure that the information described in
9 subsection one of this section is reported in a manner that prevents the
10 disclosure of the identity of a specific pharmacy benefit manager, a
11 covered entity, prices charged for prescription drugs or any associated
12 rebates, discounts or price concessions with respect to an individual
13 drug or an individual plan, or any information that identifies a product
14 or manufacturer.
15 (3) On or before February first of each year the superintendent shall
16 analyze the information submitted by pharmacy benefit managers pursuant
17 to this article and produce an additional report to be published on the
18 superintendent's website on the impact of pharmacy benefit managers on
19 the cost, administration, and availability of prescription drugs.
20 (4) The superintendent shall submit the report and any recommendations
21 for proposed legislation or further action by the state pursuant to the
22 report's findings to the temporary president of the senate, the speaker
23 of the assembly and the governor on or before February first of each
24 year.
25 § 606. Compliance and enforcement. (1) All contracts for pharmacy
26 benefit management entered into in this state or by a covered entity in
27 this state shall comply with the requirements of this article.
28 (2) The superintendent is responsible for the enforcement of this
29 article and may reasonably examine and investigate to ensure compliance
30 with the provisions herein.
31 (3) The superintendent shall adopt procedures for investigating
32 complaints of noncompliance with this article. If the superintendent
33 finds a pharmacy benefit manager has failed to comply with any of the
34 provisions of this article, the superintendent may, after notice and
35 opportunity for a hearing, impose one or more sanctions as deemed appro-
36 priate or necessary to bring non-complying entities into full compli-
37 ance, including, but not limited to:
38 (a) revoking or suspending a license issued to a pharmacy benefit
39 manager, or denying an application for a renewal of a license;
40 (b) imposing a period of probation best adapted to protect the public
41 health and safety and for any rehabilitation;
42 (c) imposing an administrative fine not to exceed two hundred fifty
43 dollars for each violation or instance of noncompliance;
44 (d) assessing costs to be paid by the pharmacy benefit manager; or
45 (e) imposing restrictions on the scope of operation of the pharmacy
46 benefit manager in the state.
47 (4) In addition to sanctions for noncompliance as described in
48 subsection three of this section, if a pharmacy benefit manager fails to
49 submit to the superintendent the information required under section six
50 hundred four of this article by the specified date, the superintendent
51 may impose against the pharmacy benefit manager an administrative penal-
52 ty of not more than two hundred fifty dollars for each day of such fail-
53 ure.
54 (5) Any money collected, as administrative penalties or otherwise,
55 pursuant to this section must be used by the superintendent to cover the
56 costs of implementation and enforcement of this article.
S. 8384 4
1 § 607. Rulemaking authority. The superintendent shall promulgate and
2 adopt rules and regulations to effectuate the purposes and provisions of
3 this article. The rules and regulations shall be subject to review in
4 accordance with general rules of administrative rulemaking and review of
5 regulations in this state.
6 § 2. This act shall take effect immediately.
