New Law Promotes Competition for Retail Pharmacies by Banning Mandatory Mail-Order Prescription Plans in New York

On December 12, 2011, New York Governor Andrew Cuomo signed a bill into law a bill which bans Pharmacy Benefit Managers (“PBMs”) from mandating customers to use mail order pharmacies for prescription drugs. Known as the New York AMMO Law, the Anti-Mandatory Mail Order Law prohibits insurance plans and PBMs from requiring that patients purchase prescription drugs from a mail order pharmacy or pay a co-payment fee when such purchases are not made from a mail order pharmacy, if a similar fee is not charged for drugs from a mail order pharmacy. This new law makes great improvements on patient-choice, and enables customers to freely fill their prescriptions at the pharmacy of their choosing. This law has been heralded by independent pharmacies as a necessary step in reducing health care costs and increasing patient-choice.

The law, which was signed on the condition that the New York state legislature passed amending legislation requiring retail pharmacies to accept reimbursement rates and terms identical to those for mail-order pharmacies, allows patients to fill their prescriptions at a local retail pharmacy without having to pay a co-pay that would not have been applicable if they had filled their prescriptions through a mail-order pharmacy. The new law applies to all New York plans, with the exception of those for unions which are subject to a collective bargaining agreement.

By prohibiting mandatory mail-order plans, the New York State government is increasing competition by affording patients the ability to choose their own local pharmacy over the PBMs’ mail-order pharmacies.

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