To the dismay of consumers and independent pharmacists, Governor Cuomo recently vetoed legislation passed by the state Legislature in June, designed to license and oversee pharmacy benefit managers (“PBMs”). The Bill, S. 6531, was endorsed by the Senate Investigations and Government Operations Committee, which found that PBM practices generate more revenue for them at the expense of patients and pharmacies, most notably through spread pricing. Licensing provisions under the new Bill would have subjected their practices and pricing to the State Insurance and Health Departments. Additionally, the Bill would have (among other things) required PBMs to eliminate conflicts of interest, deceptive and anti-competitive practices, conduct fair audits and process claims fairly, disclose contract terms, prohibit accreditation/certification requirements (beyond state laws/regulations) on network pharmacies, and give patients/pharmacies harmed by PBMs the right to sue.
PBMs had argued that the bill weakened their ability to lower drugs costs. The Governor’s rationale for the veto was that provisions would be preempted by ERISA and the Medicare Modernization Act (“MMA”), as applied to Medicare Part D. The Governor also suggested that the Bill, as written, would bring FTC and DOJ scrutiny, and that the state oversight would increase administrative costs and “sweep in” health benefit funds.
The main sponsors of the Bill plan on reintroducing it. Contact Frier Levitt today to speak with an attorney.
