Bill Text: NY S08934 | 2017-2018 | General Assembly | Introduced

Bill Title: Provides for pharmacy benefit management and the procurement of prescription drugs to be dispensed to patients, or the administration or management of prescription drug benefits; sets forth definitions; provides for funds received by a pharmacy in trust for the health plan or provider and provides for accountability of such funds; further provides for an appeals process to investigate and resolve disputes regarding multi-source generic drug pricing.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced) 2018-06-06 - REFERRED TO RULES [S08934 Detail]

Download: New_York-2017-S08934-Introduced.html

                STATE OF NEW YORK
                    IN SENATE
                                      June 6, 2018
        Introduced  by  Sen.  RIVERA -- read twice and ordered printed, and when
          printed to be committed to the Committee on Rules
        AN ACT to amend the public health law, in relation to  pharmacy  benefit
          managers; and to repeal certain provisions of such law relating there-
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
     1    Section 1. Section 280-a of the public health law is  REPEALED  and  a
     2  new section 280-a is added to read as follows:
     3    §  280-a.  Pharmacy benefit managers. 1. Definitions.  As used in this
     4  section, the following terms shall have the following meanings:
     5    (a) "Health plan or provider" means an entity  for  which  a  pharmacy
     6  benefit  manager provides pharmacy benefit management including, but not
     7  limited to: (i) a health benefit plan or  other  entity  that  approves,
     8  provides, arranges for, or pays for health care items or services, under
     9  which  prescription  drugs for beneficiaries of the entity are purchased
    10  or which provides or arranges reimbursement in whole or in part for  the
    11  purchase  of  prescription  drugs;  or  (ii)  a  health care provider or
    12  professional,  including  a  state  or  local  government  entity,  that
    13  acquires  prescription drugs to use or dispense in providing health care
    14  to patients.
    15    (b) "Pharmacy benefit management" means  the  service  provided  to  a
    16  health plan or provider, directly or through another entity, and regard-
    17  less  of  whether  the  pharmacy  benefit manager and the health plan or
    18  provider are related, or  associated  by  ownership,  common  ownership,
    19  organization  or  otherwise;  including  the procurement of prescription
    20  drugs to be dispensed to patients, or the administration  or  management
    21  of  prescription drug benefits, including but not limited to, any of the
    22  following:
    23    (i) mail service pharmacy;
    24    (ii) claims processing,  retail  network  management,  or  payment  of
    25  claims to pharmacies for dispensing prescription drugs;
    26    (iii)  clinical  or other formulary or preferred drug list development
    27  or management;
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.

        S. 8934                             2
     1    (iv) negotiation or  administration  of  rebates,  discounts,  payment
     2  differentials,  or  other  incentives,  for  the inclusion of particular
     3  prescription drugs in a particular category or to promote  the  purchase
     4  of particular prescription drugs;
     5    (v)  patient  compliance, therapeutic intervention, or generic substi-
     6  tution programs; and
     7    (vi) disease management.
     8    (c) "Pharmacy benefit manager" means any entity that performs pharmacy
     9  benefit management for a health plan or provider.
    10    (d) "Maximum allowable  cost  price"  means  a  maximum  reimbursement
    11  amount  set  by  the pharmacy benefit manager for therapeutically equiv-
    12  alent multiple source generic drugs.
    13    (e) "Controlling person" means any person or other entity who or which
    14  directly or indirectly has the power to direct or cause to  be  directed
    15  the management, control or activities of a pharmacy benefit manager.
    16    (f)  "Covered  individual"  means  a  member,  participant,  enrollee,
    17  contract holder or policy holder or beneficiary  of  a  health  plan  or
    18  provider.
    19    (g)  "License" means a license to be a pharmacy benefit manager, under
    20  subdivision seven of this section.
    21    2. Duty, accountability and transparency.   (a) The  pharmacy  benefit
    22  manager  shall  have a fiduciary relationship with and obligation to the
    23  health plan or provider, and shall perform pharmacy  benefit  management
    24  with care, skill, prudence, diligence, and professionalism.
    25    (b)  All funds received by the pharmacy benefit manager in relation to
    26  providing pharmacy benefit management shall be received by the  pharmacy
    27  benefit  manager  in  trust for the health plan or provider and shall be
    28  used or distributed only pursuant  to  the  pharmacy  benefit  manager's
    29  contract,  or  other terms in the absence of a contract, with the health
    30  plan or provider or applicable  law;  except  for  any  fee  or  payment
    31  expressly provided for in the contract, or other terms in the absence of
    32  a  contract, between the pharmacy benefit manager and the health plan or
    33  provider to compensate the pharmacy benefit manager for its services.
    34    (c) The pharmacy benefit manager shall  periodically  account  to  the
    35  health  plan  or provider for all funds received by the pharmacy benefit
    36  manager. The health plan or provider shall have access to all  financial
    37  and  utilization information of the pharmacy benefit manager in relation
    38  to pharmacy benefit management provided to the health plan or provider.
    39    (d) The pharmacy benefit manager shall  disclose  in  writing  to  the
    40  health  plan  or  provider  the  terms and conditions of any contract or
    41  arrangement between the pharmacy benefit manager and any party  relating
    42  to pharmacy benefit management provided to the health plan or provider.
    43    (e)  The  pharmacy  benefit  manager  shall disclose in writing to the
    44  health plan or provider any  activity,  policy,  practice,  contract  or
    45  arrangement  of the pharmacy benefit manager that directly or indirectly
    46  presents any conflict of interest with the  pharmacy  benefit  manager's
    47  relationship with or obligation to the health plan or provider.
    48    (f)  Any  information  required  to be disclosed by a pharmacy benefit
    49  manager to a health plan or provider under this section that is  reason-
    50  ably  designated by the pharmacy benefit manager as proprietary or trade
    51  secret information shall be kept confidential  by  the  health  plan  or
    52  provider,  except  as required or permitted by law, including disclosure
    53  necessary to prosecute or defend any legitimate legal claim or cause  of
    54  action.
    55    (g) The commissioner shall establish, by regulation, minimum standards
    56  for  pharmacy benefit management services which shall address the elimi-

        S. 8934                             3
     1  nation of conflicts of interest between pharmacy  benefit  managers  and
     2  health  insurers,  plans and providers; and the elimination of deceptive
     3  practices, anti-competitive practices, and unfair claims practices.
     4    3.  Prescriptions.    A pharmacy benefit manager may not substitute or
     5  cause the substituting of one prescription drug for another in  dispens-
     6  ing  a  prescription,  or  alter or cause the altering of the terms of a
     7  prescription, except with the approval of the prescriber or as explicit-
     8  ly required or permitted by law.
     9    4. Appeals.   A  pharmacy  benefit  manager  shall,  with  respect  to
    10  contracts between a pharmacy benefit manager and a pharmacy or, alterna-
    11  tively,  a  pharmacy benefit manager and a pharmacy's contracting agent,
    12  such as a  pharmacy  services  administrative  organization,  include  a
    13  reasonable process to appeal, investigate and resolve disputes regarding
    14  multi-source generic drug pricing. The appeals process shall include the
    15  following provisions:
    16    (a)  the  right  to  appeal  by  the  pharmacy  and/or  the pharmacy's
    17  contracting agent shall be limited to thirty days following the  initial
    18  claim submitted for payment;
    19    (b)  a  telephone  number through which a network pharmacy may contact
    20  the pharmacy benefit manager for the purpose of filing an appeal and  an
    21  electronic  mail  address of the individual who is responsible for proc-
    22  essing appeals;
    23    (c) the pharmacy benefit manager shall send an electronic mail message
    24  acknowledging receipt of the appeal. The pharmacy benefit manager  shall
    25  respond  in  an electronic message to the pharmacy and/or the pharmacy's
    26  contracting agent filing the appeal within seven business days  indicat-
    27  ing  its  determination.  If  the  appeal is determined to be valid, the
    28  maximum allowable cost for the drug shall be adjusted for the  appealing
    29  pharmacy effective as of the date of the original claim for payment. The
    30  pharmacy benefit manager shall require the appealing pharmacy to reverse
    31  and  rebill  the  claim  in  question  in  order to obtain the corrected
    32  reimbursement;
    33    (d) if an update to the maximum allowable cost is warranted, the phar-
    34  macy benefit manager or covered entity shall adjust the  maximum  allow-
    35  able cost of the drug effective for all similarly situated pharmacies in
    36  its  network  in  the  state on the date the appeal was determined to be
    37  valid; and
    38    (e) if an appeal is denied, the pharmacy benefit manager shall identi-
    39  fy the national drug code  of  a  therapeutically  equivalent  drug,  as
    40  determined  by  the federal Food and Drug Administration, that is avail-
    41  able for purchase by pharmacies in this state  from  wholesalers  regis-
    42  tered  pursuant to subdivision four of section sixty-eight hundred eight
    43  of the education law at a price which is equal to or less than the maxi-
    44  mum allowable cost for that drug as determined by the  pharmacy  benefit
    45  manager.
    46    5.  Contract  provisions.    No  pharmacy  benefit manager shall, with
    47  respect to contracts between such pharmacy benefit manager and a pharma-
    48  cy or, alternatively, such pharmacy benefit  manager  and  a  pharmacy's
    49  contracting  agent, such as a pharmacy services administrative organiza-
    50  tion:
    51    (a) prohibit or penalize a pharmacist or pharmacy from  disclosing  to
    52  an  individual  purchasing a prescription medication information regard-
    53  ing:
    54    (1) the cost of the prescription medication to the individual, or

        S. 8934                             4
     1    (2) the availability of  any  therapeutically  equivalent  alternative
     2  medications  or alternative methods of purchasing the prescription medi-
     3  cation, including but not limited to, paying a cash price; or
     4    (b)  charge or collect from an individual a copayment that exceeds the
     5  total submitted charges by the pharmacy for which the pharmacy is  paid.
     6  If an individual pays a copayment, the pharmacy shall retain the adjudi-
     7  cated  costs and the pharmacy benefit manager shall not redact or recoup
     8  the adjudicated cost.
     9    6. Acting without a license. (a) No person or  entity  may  act  as  a
    10  pharmacy  benefit manager on or after January first, two thousand twenty
    11  without having a currently valid license under this section. However,  a
    12  pharmacy  benefit  manager  providing pharmacy benefit management on and
    13  before that date may continue to do so  without  a  license  under  this
    14  section for a period of one hundred eighty days.
    15    (b)  No  health plan or provider may pay any fee or other compensation
    16  for pharmacy benefit management  to  any  person  or  entity  acting  in
    17  violation of this subdivision.
    18    (c)  Any  person or entity that violates this section shall be subject
    19  to penalties under sections twelve and twelve-b of this chapter.
    20    7. Licensing of pharmacy benefit managers. (a)  The  commissioner  may
    21  issue  a pharmacy benefit manager license to any person or entity who or
    22  that applies for a license and has complied  with  the  requirements  of
    23  this  section.  The  commissioner  may establish, by regulation, minimum
    24  standards for the issuance of a license to a pharmacy  benefit  manager.
    25  The  term  of  each  license  shall be a period of five years and may be
    26  renewed by the commissioner.
    27    (b)(1) Before a pharmacy benefit manager's license shall be issued  or
    28  renewed,  the  prospective  licensee shall file a written application in
    29  such form or forms and supplements as the commissioner may require,  and
    30  pay a fee of ten thousand dollars.
    31    (2)  Every  license  issued pursuant to this section may be renewed by
    32  filing the application and paying the fees at least sixty days prior  to
    33  the  expiration of the license, upon which the license shall continue in
    34  full force and effect until either (A) the issuance by the  commissioner
    35  of  the renewed license or (B) five business days after the commissioner
    36  shall have given notice to  the  applicant  that  the  commissioner  has
    37  rejected the renewal.
    38    (c)  The  commissioner may refuse to issue or renew a pharmacy benefit
    39  manager's license if, in the commissioner's judgment, the  applicant  or
    40  any  member,  principal,  officer  or  director of the applicant, is not
    41  trustworthy or competent to act as a pharmacy benefit manager, or if the
    42  commissioner is aware of cause for  revocation  or  suspension  of  such
    43  license.  The  commissioner shall notify the licensee of a determination
    44  to reject the application for the license or renewal and an  explanation
    45  of  the  cause for rejection, and shall provide a reasonable opportunity
    46  for the licensee to be heard under subdivision eight of this section.
    47    (d) Licensees shall be subject to  examination  at  any  time  by  the
    48  commissioner.
    49    8.  Revocation  or suspension of a license. (a) The commissioner, upon
    50  his or her own  investigation  or  complaint  from  another  party,  may
    51  revoke,  suspend or refuse to renew a license if, after notice and hear-
    52  ing, the commissioner determines that the licensee, has, in relation  to
    53  pharmacy  benefit  management  or  the operation of the pharmacy benefit
    54  manager:
    55    (1) violated any law, regulation, subpoena or order of the commission-
    56  er, or of another state that would constitute a violation in New York;

        S. 8934                             5
     1    (2) provided materially incorrect, materially  misleading,  materially
     2  incomplete or materially untrue information in a license application;
     3    (3)  obtained  or  attempted  to obtain a license through misrepresen-
     4  tation or fraud;
     5    (4) used fraudulent, coercive or dishonest practices;
     6    (5) demonstrated incompetence;
     7    (6) demonstrated untrustworthiness;
     8    (7) demonstrated financial irresponsibility  in  the  conduct  of  the
     9  business;
    10    (8)  improperly  withheld,  misappropriated or converted any monies or
    11  properties;
    12    (9) intentionally misrepresented the terms of an  actual  or  proposed
    13  contract with any party;
    14    (10) been convicted of a felony;
    15    (11)  had  a  pharmacy  benefit  manager  license,  or its equivalent,
    16  denied, suspended or revoked in any other state, province,  district  or
    17  territory; or
    18    (12) ceased to meet the requirements for licensure under this section.
    19    (b)  Before  revoking,  suspending or refusing to renew a license, the
    20  commissioner shall give notice to the licensee and shall hold, or  cause
    21  to  be  held, a hearing as provided under section twelve-a of this chap-
    22  ter. The commissioner shall also give notice to health plans and provid-
    23  ers under contract with the pharmacy  benefit  manager,  to  the  extent
    24  known to the commissioner.
    25    (c)  If a license is revoked or suspended, the commissioner shall give
    26  notice to the licensee and health plans  and  providers  under  contract
    27  with the pharmacy benefit manager to the extent known to the commission-
    28  er.
    29    9.  Change  of  address.  A  registrant or licensee under this section
    30  shall inform the commissioner by a means acceptable to the  commissioner
    31  of a change of address within thirty days of the change.
    32    10.  Violations.    Any  provision  of  a  contract  that violates the
    33  provisions of this section shall be deemed to be void and unenforceable.
    34    § 2. Severability.  If any provision of this act, or  any  application
    35  of  any  provision  of  this act, is held to be invalid, or ruled by any
    36  federal agency to violate or be inconsistent with any applicable federal
    37  law or regulation, that shall not affect the validity  or  effectiveness
    38  of  any  other provision of this act, or of any other application of any
    39  provision of this act.
    40    § 3. This act shall take effect on the ninetieth day  after  it  shall
    41  become  a  law  and  shall  apply to any contract for providing pharmacy
    42  benefit management made or renewed on  or  after  that  date.  Effective
    43  immediately,  the commissioner of health shall make regulations and take
    44  other actions reasonably necessary to implement this act on that date.