Bill Text: NY A02836 | 2019-2020 | General Assembly | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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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: Slight Partisan Bill (Democrat 17-9)

Status: (Vetoed) 2019-12-26 - VETOED MEMO.286 [A02836 Detail]

Download: New_York-2019-A02836-Introduced.html

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                STATE OF NEW YORK
        ________________________________________________________________________
                                          2836
                               2019-2020 Regular Sessions
                   IN ASSEMBLY
                                    January 25, 2019
                                       ___________
        Introduced  by  M. of A. GOTTFRIED, GUNTHER -- read once and referred to
          the Committee on Health
        AN ACT to amend the public health law, in relation to  pharmacy  benefit
          managers; and to repeal certain provisions of such law relating there-
          to
          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 Section 280-a of the public health law is  REPEALED  and  a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;
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD06526-02-9
        A. 2836                             2
     1    (ii) claims processing,  retail  network  management,  or  payment  of
     2  claims to pharmacies for dispensing prescription drugs;
     3    (iii)  clinical  or other formulary or preferred drug list development
     4  or management;
     5    (iv) negotiation or  administration  of  rebates,  discounts,  payment
     6  differentials,  or  other  incentives,  for  the inclusion of particular
     7  prescription drugs in a particular category or to promote  the  purchase
     8  of particular prescription drugs;
     9    (v)  patient  compliance, therapeutic intervention, or generic substi-
    10  tution programs; and
    11    (vi) disease management.
    12    (c) "Pharmacy benefit manager" means any entity that performs pharmacy
    13  benefit management for a health plan or provider.
    14    (d) "Maximum allowable  cost  price"  means  a  maximum  reimbursement
    15  amount  set  by  the pharmacy benefit manager for therapeutically equiv-
    16  alent multiple source generic drugs.
    17    (e) "Controlling person" means any person or other entity who or which
    18  directly or indirectly has the power to direct or cause to  be  directed
    19  the management, control or activities of a pharmacy benefit manager.
    20    (f)  "Covered  individual"  means  a  member,  participant,  enrollee,
    21  contract holder or policy holder or beneficiary  of  a  health  plan  or
    22  provider.
    23    (g)  "License" means a license to be a pharmacy benefit manager, under
    24  subdivision seven of this section.
    25    (h) "Spread pricing" means the practice of a pharmacy benefit  manager
    26  retaining  an  additional amount of money in addition to the amount paid
    27  to the pharmacy to fill a prescription.
    28    2. Duty, accountability and transparency.   (a) The  pharmacy  benefit
    29  manager  shall  have a fiduciary relationship with and obligation to the
    30  health plan or provider, and shall perform pharmacy  benefit  management
    31  with care, skill, prudence, diligence, and professionalism.
    32    (b)  All funds received by the pharmacy benefit manager in relation to
    33  providing pharmacy benefit management shall be received by the  pharmacy
    34  benefit  manager  in  trust for the health plan or provider and shall be
    35  used or distributed only pursuant  to  the  pharmacy  benefit  manager's
    36  contract,  or  other terms in the absence of a contract, with the health
    37  plan or provider or applicable law; except for any administrative fee or
    38  payment expressly provided for in the contract, or other  terms  in  the
    39  absence  of  a  contract,  between  the pharmacy benefit manager and the
    40  health plan or provider to compensate the pharmacy benefit  manager  for
    41  its  services.    Any  funds  received  by  the pharmacy benefit manager
    42  through spread pricing shall be subject to this paragraph.
    43    (c) The pharmacy benefit manager shall  periodically  account  to  the
    44  health  plan  or provider for all funds received by the pharmacy benefit
    45  manager. The health plan or provider shall have access to all  financial
    46  and  utilization information of the pharmacy benefit manager in relation
    47  to pharmacy benefit management provided to the health plan or provider.
    48    (d) The pharmacy benefit manager shall  disclose  in  writing  to  the
    49  health  plan  or  provider  the  terms and conditions of any contract or
    50  arrangement between the pharmacy benefit manager and any party  relating
    51  to pharmacy benefit management provided to the health plan or provider.
    52    (e)  The  pharmacy  benefit  manager  shall disclose in writing to the
    53  health plan or provider any  activity,  policy,  practice,  contract  or
    54  arrangement  of the pharmacy benefit manager that directly or indirectly
    55  presents any conflict of interest with the  pharmacy  benefit  manager's
    56  relationship with or obligation to the health plan or provider.
        A. 2836                             3
     1    (f)  Any  information  required  to be disclosed by a pharmacy benefit
     2  manager to a health plan or provider under this section that is  reason-
     3  ably  designated by the pharmacy benefit manager as proprietary or trade
     4  secret information shall be kept confidential  by  the  health  plan  or
     5  provider,  except  as required or permitted by law, including disclosure
     6  necessary to prosecute or defend any legitimate legal claim or cause  of
     7  action.
     8    (g) The commissioner shall establish, by regulation, minimum standards
     9  for  pharmacy benefit management services which shall address the elimi-
    10  nation of conflicts of interest between pharmacy  benefit  managers  and
    11  health  insurers,  plans and providers; and the elimination of deceptive
    12  practices, anti-competitive practices, and unfair claims practices.
    13    3. Prescriptions.  A pharmacy benefit manager may  not  substitute  or
    14  cause  the substituting of one prescription drug for another in dispens-
    15  ing a prescription, or alter or cause the altering of  the  terms  of  a
    16  prescription, except with the approval of the prescriber or as explicit-
    17  ly required or permitted by law.
    18    4.  Appeals.    A  pharmacy  benefit  manager  shall,  with respect to
    19  contracts between a pharmacy benefit manager and a pharmacy or, alterna-
    20  tively, a pharmacy benefit manager and a pharmacy's  contracting  agent,
    21  such  as  a  pharmacy  services  administrative  organization, include a
    22  reasonable process to appeal, investigate and resolve disputes regarding
    23  multi-source generic drug pricing. The appeals process shall include the
    24  following provisions:
    25    (a) the  right  to  appeal  by  the  pharmacy  and/or  the  pharmacy's
    26  contracting  agent shall be limited to thirty days following the initial
    27  claim submitted for payment;
    28    (b) a telephone number through which a network  pharmacy  may  contact
    29  the  pharmacy benefit manager for the purpose of filing an appeal and an
    30  electronic mail address of the individual who is responsible  for  proc-
    31  essing appeals;
    32    (c) the pharmacy benefit manager shall send an electronic mail message
    33  acknowledging  receipt of the appeal. The pharmacy benefit manager shall
    34  respond in an electronic message to the pharmacy and/or  the  pharmacy's
    35  contracting  agent filing the appeal within seven business days indicat-
    36  ing its determination. If the appeal is  determined  to  be  valid,  the
    37  maximum  allowable cost for the drug shall be adjusted for the appealing
    38  pharmacy effective as of the date of the original claim for payment. The
    39  pharmacy benefit manager shall require the appealing pharmacy to reverse
    40  and rebill the claim in  question  in  order  to  obtain  the  corrected
    41  reimbursement;
    42    (d) if an update to the maximum allowable cost is warranted, the phar-
    43  macy  benefit  manager or covered entity shall adjust the maximum allow-
    44  able cost of the drug effective for all similarly situated pharmacies in
    45  its network in the state on the date the appeal  was  determined  to  be
    46  valid; and
    47    (e) if an appeal is denied, the pharmacy benefit manager shall identi-
    48  fy  the  national  drug  code  of  a therapeutically equivalent drug, as
    49  determined by the federal Food and Drug Administration, that  is  avail-
    50  able  for  purchase  by pharmacies in this state from wholesalers regis-
    51  tered pursuant to subdivision four of section sixty-eight hundred  eight
    52  of the education law at a price which is equal to or less than the maxi-
    53  mum  allowable  cost for that drug as determined by the pharmacy benefit
    54  manager.
    55    5. Contract provisions.   No  pharmacy  benefit  manager  shall,  with
    56  respect to contracts between such pharmacy benefit manager and a pharma-
        A. 2836                             4
     1  cy  or,  alternatively,  such  pharmacy benefit manager and a pharmacy's
     2  contracting agent, such as a pharmacy services administrative  organiza-
     3  tion:
     4    (a)  prohibit  or penalize a pharmacist or pharmacy from disclosing to
     5  an individual purchasing a prescription medication  information  regard-
     6  ing:
     7    (1) the cost of the prescription medication to the individual, or
     8    (2)  the  availability  of  any therapeutically equivalent alternative
     9  medications or alternative methods of purchasing the prescription  medi-
    10  cation, including but not limited to, paying a cash price;
    11    (b)  charge or collect from an individual a copayment that exceeds the
    12  total submitted charges by the pharmacy for which the pharmacy is  paid.
    13  If an individual pays a copayment, the pharmacy shall retain the adjudi-
    14  cated  costs and the pharmacy benefit manager shall not redact or recoup
    15  the adjudicated cost; or
    16    (c) require a pharmacy to meet any pharmacy accreditation standard  or
    17  recertification  requirement  inconsistent with, more stringent than, or
    18  in addition to federal and state requirements for licensure as a pharma-
    19  cy.
    20    6. Acting without a license. (a) No person or  entity  may  act  as  a
    21  pharmacy  benefit  manager on or after January first, two thousand twen-
    22  ty-one without having a currently  valid  license  under  this  section.
    23  However,  a  pharmacy benefit manager providing pharmacy benefit manage-
    24  ment on and before that date may continue to do  so  without  a  license
    25  under this section for a period of one hundred eighty days.
    26    (b)  No  health plan or provider may pay any fee or other compensation
    27  for pharmacy benefit management  to  any  person  or  entity  acting  in
    28  violation of this subdivision.
    29    (c)  Any  person or entity that violates this section shall be subject
    30  to penalties under sections twelve and twelve-b of this chapter.
    31    7. Licensing of pharmacy benefit managers. (a)  The  commissioner  may
    32  issue  a pharmacy benefit manager license to any person or entity who or
    33  that applies for a license and has complied  with  the  requirements  of
    34  this  section.  The  commissioner  may establish, by regulation, minimum
    35  standards for the issuance of a license to a pharmacy  benefit  manager.
    36  The  term  of  each  license  shall be a period of five years and may be
    37  renewed by the commissioner.
    38    (b)(1) Before a pharmacy benefit manager's license shall be issued  or
    39  renewed,  the  prospective  licensee shall file a written application in
    40  such form or forms and supplements as the commissioner may require,  and
    41  pay a fee of ten thousand dollars.
    42    (2)  Every  license  issued pursuant to this section may be renewed by
    43  filing the application and paying the fees at least sixty days prior  to
    44  the  expiration of the license, upon which the license shall continue in
    45  full force and effect until either (A) the issuance by the  commissioner
    46  of  the renewed license or (B) five business days after the commissioner
    47  shall have given notice to  the  applicant  that  the  commissioner  has
    48  rejected the renewal.
    49    (c)  The  commissioner may refuse to issue or renew a pharmacy benefit
    50  manager's license if, in the commissioner's judgment, the  applicant  or
    51  any  member,  principal,  officer  or  director of the applicant, is not
    52  trustworthy or competent to act as a pharmacy benefit manager, or if the
    53  commissioner is aware of cause for  revocation  or  suspension  of  such
    54  license.  The  commissioner shall notify the licensee of a determination
    55  to reject the application for the license or renewal and an  explanation
        A. 2836                             5
     1  of  the  cause for rejection, and shall provide a reasonable opportunity
     2  for the licensee to be heard under subdivision eight of this section.
     3    (d)  Licensees  shall  be  subject  to  examination at any time by the
     4  commissioner.
     5    8. Revocation or suspension of a license. (a) The  commissioner,  upon
     6  his  or  her  own  investigation  or  complaint  from another party, may
     7  revoke, suspend or refuse to renew a license if, after notice and  hear-
     8  ing,  the commissioner determines that the licensee, has, in relation to
     9  pharmacy benefit management or the operation  of  the  pharmacy  benefit
    10  manager:
    11    (1) violated any law, regulation, subpoena or order of the commission-
    12  er, or of another state that would constitute a violation in New York;
    13    (2)  provided  materially incorrect, materially misleading, materially
    14  incomplete or materially untrue information in a license application;
    15    (3) obtained or attempted to obtain  a  license  through  misrepresen-
    16  tation or fraud;
    17    (4) used fraudulent, coercive or dishonest practices;
    18    (5) demonstrated incompetence;
    19    (6) demonstrated untrustworthiness;
    20    (7)  demonstrated  financial  irresponsibility  in  the conduct of the
    21  business;
    22    (8) improperly withheld, misappropriated or converted  any  monies  or
    23  properties;
    24    (9)  intentionally  misrepresented  the terms of an actual or proposed
    25  contract with any party;
    26    (10) been convicted of a felony;
    27    (11) had a  pharmacy  benefit  manager  license,  or  its  equivalent,
    28  denied,  suspended  or revoked in any other state, province, district or
    29  territory; or
    30    (12) ceased to meet the requirements for licensure under this section.
    31    (b) Before revoking, suspending or refusing to renew  a  license,  the
    32  commissioner  shall give notice to the licensee and shall hold, or cause
    33  to be held, a hearing as provided under section twelve-a of  this  chap-
    34  ter. The commissioner shall also give notice to health plans and provid-
    35  ers  under  contract  with  the  pharmacy benefit manager, to the extent
    36  known to the commissioner.
    37    (c) If a license is revoked or suspended, the commissioner shall  give
    38  notice  to  the  licensee  and health plans and providers under contract
    39  with the pharmacy benefit manager to the extent known to the commission-
    40  er.
    41    9. Change of address. A registrant  or  licensee  under  this  section
    42  shall  inform the commissioner by a means acceptable to the commissioner
    43  of a change of address within thirty days of the change.
    44    10. Violations.   Any  provision  of  a  contract  that  violates  the
    45  provisions of this section shall be deemed to be void and unenforceable.
    46    11.  Beginning June first, two thousand twenty, and annually thereaft-
    47  er, each pharmacy benefit manager shall submit to the department a tran-
    48  sparency report containing data for the prior calendar year. The  trans-
    49  parency  report  shall  contain  the  following  information  as  to the
    50  pharmacy benefit manager:
    51    (i) the aggregate amount of all rebates received from  all  pharmaceu-
    52  tical manufacturers for all health plans or providers;
    53    (ii)  the  aggregate  administrative fees received from all pharmaceu-
    54  tical manufacturers for all health plans  or  providers  under  contract
    55  with the pharmacy benefit manager;
        A. 2836                             6
     1    (iii) the aggregate amounts retained as compensation received from all
     2  pharmaceutical  manufacturers  for  health  plans or providers not under
     3  contract with the  pharmacy  benefit  manager  as  provided  under  this
     4  section; and
     5    (iv)  the  aggregate  amounts,  and  such  amounts  as a percentage of
     6  rebates  received  from  pharmaceutical  manufacturers,  retained  under
     7  spread pricing for each health plan or provider.
     8    §  2. Severability.   If any provision of this act, or any application
     9  of any provision of this act, is held to be invalid,  or  ruled  by  any
    10  federal agency to violate or be inconsistent with any applicable federal
    11  law  or  regulation, that shall not affect the validity or effectiveness
    12  of any other provision of this act, or of any other application  of  any
    13  provision of this act.
    14    §  3.  This  act shall take effect on the ninetieth day after it shall
    15  become a law and shall apply to  any  contract  for  providing  pharmacy
    16  benefit  management  made  or  renewed  on or after that date. Effective
    17  immediately, the commissioner of health shall make regulations and  take
    18  other actions reasonably necessary to implement this act on that date.