The New York Assembly recently introduced Assembly Bill 10107 (the “Bill”) which aims to improve the reimbursement independent pharmacies receive from Pharmacy Benefit Managers (“PBMs”) in New York. If the Bill becomes law, it will further improve New York’s PBM laws by adding another layer of reasonable regulation of PBMs doing business in New York.
New York’s Bill Aims to Address “Underwater” Reimbursement in New York
The Bill aims to prevent PBMs from reimbursing pharmacies less than a pharmacy’s acquisition cost, a predatory PBM practice that has become known as “underwater” reimbursement. This type of reimbursement practice by PBMs is a serious issue for pharmacies in New York, and across the country. In fact, this drastically low reimbursement has led to independent pharmacy closures throughout the entire country and has been shown to be an issue of concern throughout New York.
According to the Bill, if a drug is not available for a cost that is below a pharmacy’s acquisition cost from the pharmacy’s primary wholesaler, the PBM would be mandated to adjust the maximum allowable cost (or “MAC”) (or other pricing methodology) so that the pharmacy would at least break even for dispensing the drug. Also, pharmacies would be given the opportunity to reverse and rebill “each claim affected by the inability to procure the drug at a cost that is equal to or less than the previously challenged [MAC].” While pharmacies cannot survive on “break even” reimbursement standing alone, this Bill helps to address some of the most egregious reimbursement practices PBMs use against independent pharmacies.
Assembly Bill 10107 Attempts to Level the Pharmacy-PBM Playing Field
The Bill also aims to prevent PBMs from reimbursing independent pharmacies an amount that is less than the amount a PBM reimburses an affiliated pharmacy for the same pharmacy services. This would help to protect New York’s independent pharmacies from the vertically integrated healthcare behemoths that commonly own a PBM and affiliated pharmacies, which often creates a conflict of interest. While this type of legal protection is not a “silver bullet” to stop PBM reimbursement abuses, it does help to address the practice of reimbursing PBM affiliated pharmacies more favorably than non-affiliated, independent pharmacies. However, often times PBM affiliated pharmacy operations are more capable of withstanding low reimbursement so it is important that legislators and rule makers in New York (and throughout the country) recognize that this type of provision alone may be insufficient to address improper PBM reimbursement practices.
New York’s Bill is a Positive Development, but More Must be Done
New York’s new Bill is a positive development for independent pharmacies in the state, but legislators and pharmacy owners must remain vigilant and remain active. The Bill helps to address the concern of PBMs reimbursing pharmacies at rates below acquisition cost without any means for independent pharmacies to challenge PBMs’ improper reimbursement practices, but pharmacies overall reimbursement must be fair, not just break even.
Pharmacies and pharmacists should become familiar with this new Bill to ensure that if enacted into law, they are able to maximize all of the Bill’s protections. New York’s involvement in overseeing unjust PBM conduct could lead to significant improvements in pharmacies’ ability to conduct business in New York and provide additional legal rights when facing challenges with PBM reimbursement.
How Frier Levitt Can Help
Frier Levitt represents numerous pharmacies across the United States in challenging PBM audits, network access, reimbursement practices and other complex issues such as DIR fees. Our attorneys have extensive knowledge in all aspects of the pharmacy-PBM relationship. Contact us to speak with an attorney about how your pharmacy can leverage the various applicable laws and protections afforded to pharmacies that regulate PBM conduct.
