Requires a pharmacy benefit manager to pay an in-network pharmacy at minimum at the national average drug acquisition cost (NADAC) rate, or at the pharmacy acquisition cost rate if greater or there is not a NADAC rate, plus a professional dispensing fee that is at minimum the professional dispensing fee paid under the state medical assistance program.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A10327
SPONSOR: Rules (McDonald) TITLE OF BILL:
An act to amend the public health law, in relation to payments by phar-
macy benefit managers to in-network pharmacies
PURPOSE OF THE BILL:
SUMMARY OF SPECIFIC PROVISIONS:
Section one amends subdivision 1 of section 280-a of the public health
law is amended by adding paragraphs (j) and (k).
Section 2 amends subdivision 3 of section 280-a of the public health law
to add a paragraph (b)
Section 3 amends amends the opening paragraph of subdivision 4 of
section 280-a of the public health law
Section 4 contains the effective date of the bill.
JUSTIFICATION:
The Patient Access to Pharmacy Act (PAPTA) is intended to address the
growing loss of community retail pharmacies throughout New York State.
As has been published in many national news media outlets, large pharma-
cy chains such as CVS and Walgreens have been closing brick and mortar
retail community pharmacies as have independent pharmacies due to the
continued declining pharmacy reimbursement rates. This decline is due to
the constant battle of controlling prescription medications and is a
behind the scenes battle between those who manage the prescription drug
benefit plans (aka PBMs) and the pharmaceutical manufacturers (aka PHAR-
MA. It is not well known that behind the screen billions of dollars are
negotiated regarding prescription drug rebates which inure to the bene-
fit of the PBM or PHARMA. Meanwhile PBMs continue to press down on
community pharmacies by implementing pricing schemes that are below the
actual cost to the pharmacy based off an antiquated pricing methodology.
Community pharmacies and the patients they serve are stuck in the middle
of the clash between these major giants in the health care industry.
PAPTA implements for commercial prescription plans what the New York
State Medicaid Fee for Service (FFS) plan implemented across its fee for
service plan in 2023, which is a new benchmark cost plan called NADAC
(National Average Drug Acquisition Cost). NADAC is a monthly survey of
retail pharmacies to determine actual acquisition cost and is the most
transparent calculation for both brand and generic medications and is
lower in price than the current benchmarks being utilized. NADAC is
paired with the. Medicaid FFS dispensing fee to put forth a transparent
and straightforward reimbursement strategy for pharmacies in a simpli-
fied format yet does not disrupt the rebate negotiations between the PBM
and PHARMA. This strategy of transparency is meaningful for health plans
as well since there is a better view of pharmacy level costs. As the
federal government and state government look to move toward a reference
pricing methodology in the future this will create security for communi-
ty pharmacies. This legislation would keep community pharmacies open and
address the concern about reference pricing or federal negotiated
discount pricing leading to a new reimbursement directive that targets a
price for medications that cannot be acquired from the smallest to larg-
est of pharmacies. Currently, there is the potential for lack of access
to medications for patients due to inability to acquire the medications
by the pharmacies.
PAPTA is not a new idea. States such as West Virginia, Kentucky, Oregon
and Arkansas have adopted this model in the last year to ensure that
patients have access to pharmacies in their states. Here in New York
local nonprofit health plans such as CDPHP and national plans such as
United Health have introduced this concept in part or whole into their
networks to help minimize pharmacy conflicts over MAC pricing and many
other complaints and to maintain a stable reimbursement rate that all
pharmacies are subjected too. This too will eliminate the substantiated
claims that PBM owned pharmacies pay their own pharmacies a better rate
than competitors and puts all community pharmacies on even footing and
help restore consumer choice of pharmacy.
PAPTA also clarifies that this is not applicable to prescription drug
plans established under Medicare Part D and also self-funded health
plans or Employee Retirement Income Security (ERISA) plans which has
been a concern from various stakeholders.
PRIOR LEGISLATIVE HISTORY:
New Bill
FISCAL IMPLICATIONS:
None to the state
EFFECTIVE DATE:
This act shall take effect immediately.
