New York, NY – Assemblymember Linda B. Rosenthal (D/WF-Manhattan) announced today that her legislation (A9764/S9040) to protect pharmacies, and the patients they serve, from abusive practices by pharmacy benefit managers (PBMs) was signed into law. The law, sponsored by Andrew Gounardes in the State Senate, builds upon existing prescription price transparency measures.

“Prescription drug costs have been steadily increasing for years and shady practices by PBMs have only made matters worse,” said Assemblymember Rosenthal. “Acting as the go-between for pharmacies, insurers and drug companies, PBMs have made billions off the backs of consumers while punishing pharmacies that have tried to pull back the curtain on their underhanded tactics.”

In 2018, Rosenthal sponsored a law to prohibit the use of “gag clauses” by PBMs, a practice that prevented pharmacies from disclosing to patients when a medication would be cheaper out-of-pocket instead of billing it to their insurance, allowing PBMs to pocket the difference. This legislation builds upon this law by allowing pharmacies to share the same information when healthcare services, such as vaccines, are cheaper out-of-pocket.

Current arrangements with PBMs have also provided extremely low reimbursement rates to pharmacies for certain medications, resulting in them losing money each time they dispense these drugs. Some pharmacies have opted not to stock the drugs at all, making it difficult for customers to access the medications they have been prescribed. However, if a pharmacy chooses to discuss this pricing agreement with its customers, it may be penalized by the PBM.

This month, the Federal Trade Commission filed a lawsuit against the nation’s three largest PBMs, Caremark Rx; Express Scripts; and OptumRx, for artificially inflating the cost of insulin and pushing patients toward the higher-cost medications that carried a larger profit.

“Small and independent pharmacies cannot continue to operate at a loss when filling prescriptions, and until now, pharmacists have had their hands tied by PBMs that do not want consumers to know how much their prescriptions actually cost,” said Assemblymember Linda B. Rosenthal. “Patients deserve transparency in the cost of their prescriptions, and I am proud to have sponsored yet another law to curtail the power of PBMs in New York State.”

This legislation, which takes effect immediately, will bring greater price transparency to customers and will protect pharmacists from facing unfair penalties for working with customers to provide medications at the lowest possible cost.