New York PBM Oversight Is Coming

State legislative initiatives to regulate Pharmacy Benefit Managers (“PBMs”) have gained momentum.  Arkansas successfully defended its state PBM regulation in 2020 before the United States Supreme Court.  Now, more states have been enacting laws to control abusive PBM practices.  New York may be next on the list of states. New York has a pending bill (S3762) awaiting Governor Cuomo’s signature after a near-unanimous vote by state legislature.

The bill, if it becomes law, institutes a number of changes to the public health law in relation to PBMs that benefit pharmacies, dispensing physicians, patients and plan sponsors.  This bill includes changes to:

  • Create a PBM duty to covered individuals, health plans and providers to perform their services with care, skill, prudence, diligence, and professionalism.
    • Providers and patients are afforded a private right of action to seek relief for any injury or loss resulting from any violation of a PBM’s duties under the bill.
  • Requires PBM registration immediately and licensure beginning in 2022.
  • Prohibits a PBM from substituting one prescription drug for another absent the approval of a prescriber.
  • Requires a PBM to include a reasonable process to appeal, investigate and resolve disputes regarding multi-source generic drug pricing meeting the minimum standards set forth in the bill.
  • Calls for standards of licensure and reporting that will be aimed at eliminating conflicts of interest, deceptive practices, anti-competitive practices, unfair claims practices and protection of consumers; and
  • Allows for third parties to file a complaint with the state to show sufficient ground for the revocation or suspension of a PBM license.

How Frier Levitt Can Help

The impact of this law is significant as it creates a new fiduciary duty of PBMs that benefits third parties that is actionable by private entities and individuals.  Further, reporting requirements may limit PBM efforts to keep disputes with heath care plans and providers private. Contact us today to better understand the changing landscape of PBM regulation and how it may impact your business.

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