N.Y. Public Health Law § 280-a: Pharmacy benefit managers

§ 280-a. Pharmacy benefit managers. 1. Definitions. As used in this

section, the following terms shall have the following meanings:

(a) "Health plan " means an entity for which a pharmacy benefit

manager provides pharmacy benefit management services and that is a

health benefit plan or other entity that approves, provides, arranges

for, or pays or reimburses in whole or in part for health care items or

services, to include at least prescription drugs, for a substantial

number of beneficiaries who work or reside in this state. The

superintendent shall determine, in his or her sole discretion, by

regulation how the phrase "a substantial number of beneficiaries who

work or reside in this state" shall be interpreted.

(b) "Pharmacy benefit management services" means the management or

administration of prescription drug benefits for a health plan, directly

or through another entity, and regardless of whether the pharmacy

benefit manager and the health plan are related, or associated by

ownership, common ownership, organization or otherwise; including the

procurement of prescription drugs to be dispensed to patients, or the

administration or management of prescription drug benefits, including

but not limited to, any of the following:

(i) mail service pharmacy;

(ii) claims processing, retail network management, or payment of

claims to pharmacies for dispensing prescription drugs;

(iii) clinical or other formulary or preferred drug list development

or management;

(iv) negotiation or administration of rebates, discounts, payment

differentials, or other incentives, for the inclusion of particular

prescription drugs in a particular category or to promote the purchase

of particular prescription drugs;

(v) patient compliance, therapeutic intervention, or generic

substitution programs;

(vi) disease management;

(vii) drug utilization review or prior authorization;

(viii) adjudication of appeals or grievances related to prescription

drug coverage;

(ix) contracting with network pharmacies; and

(x) controlling the cost of covered prescription drugs.

(c) "Pharmacy benefit manager" means any entity that performs pharmacy

benefit management services for a health plan.

(d) "Maximum allowable cost price" means a maximum reimbursement

amount set by the pharmacy benefit manager for therapeutically

equivalent multiple source generic drugs.

(e) "Controlling person" means any person or other entity who or which

directly or indirectly has the power to direct or cause to be directed

the management, control or activities of a pharmacy benefit manager.

(f) "Covered individual" means a member, participant, enrollee,

contract holder or policy holder or beneficiary of a health plan.

(g) "License" means a license to be a pharmacy benefit manager, under

article twenty-nine of the insurance law.

(h) "Spread pricing" means the practice of a pharmacy benefit manager

retaining an additional amount of money in addition to the amount paid

to the pharmacy to fill a prescription.

(i) "Superintendent" means the superintendent of financial services.

2. Duty, accountability and transparency. (a) (i) The pharmacy benefit

manager shall have a duty and obligation to perform pharmacy benefit

management services with care, skill, prudence, diligence, and

professionalism.

(ii) In addition to the duties as may be prescribed by regulation

pursuant to article twenty-nine of the insurance law:

(1) A pharmacy benefit manager interacting with a covered individual

shall have the same duty to a covered individual as the health plan for

whom it is performing pharmacy benefit management services.

(2) A pharmacy benefit manager shall have a duty of good faith and

fair dealing with all parties, including but not limited to covered

individuals and pharmacies, with whom it interacts in the performance of

pharmacy benefit management services.

(b) All funds received by the pharmacy benefit manager in relation to

providing pharmacy benefit management services shall be received by the

pharmacy benefit manager in trust and shall be used or distributed only

pursuant to the pharmacy benefit manager's contract with the health plan

or applicable law; including any administrative fee or payment to the

pharmacy benefit manager expressly provided for in the contract to

compensate the pharmacy benefit manager for its services. Any funds

received by the pharmacy benefit manager through spread pricing shall be

subject to this paragraph. In addition to any other power conferred by

law the superintendent shall have the authority to prescribe rules

concerning pharmacy benefit manager administrative fees, including

limitations on their form and use.

(c) The pharmacy benefit manager shall account, annually or more

frequently to the health plan for any pricing discounts, rebates of any

kind, inflationary payments, credits, clawbacks, fees, grants,

chargebacks, reimbursements, or other benefits received by the pharmacy

benefit manager. The health plan shall have access to all financial and

utilization information of the pharmacy benefit manager in relation to

pharmacy benefit management services provided to the health plan.

(d) The pharmacy benefit manager shall disclose in writing to the

health plan the terms and conditions of any contract or arrangement

between the pharmacy benefit manager and any party relating to pharmacy

benefit management services provided to the health plan including but

not limited to, dispensing fees paid to the pharmacies.

(e) The pharmacy benefit manager shall disclose in writing to the

health plan any activity, policy, practice, contract or arrangement of

the pharmacy benefit manager that directly or indirectly presents any

conflict of interest with the pharmacy benefit manager's relationship

with or obligation to the health plan.

(f) Any information required to be disclosed by a pharmacy benefit

manager to a health plan under this section that is reasonably

designated by the pharmacy benefit manager as proprietary or trade

secret information shall be kept confidential by the health plan, except

as required or permitted by law, including disclosure necessary to

prosecute or defend any legitimate legal claim or cause of action.

Designation of information as proprietary or trade secret information

under this subdivision shall have no effect on the obligations of any

pharmacy benefit manager or health plan to provide that information to

the department of health or the department of financial services.

(g) The superintendent, in consultation with the commissioner may make

regulations defining, limiting, and relating to the duties, obligations,

requirements and other provisions relating to pharmacy benefit managers

under this subdivision.

3. Prescriptions. A pharmacy benefit manager may not substitute or

cause the substituting of one prescription drug for another in

dispensing a prescription, or alter or cause the altering of the terms

of a prescription, except with the approval of the prescriber or as

explicitly required or permitted by law, including regulations of the

department of financial services or the department of health. The

superintendent and commissioner, in coordination with each other, are

authorized to promulgate regulations to determine when substitution of

prescription drugs may be required or permitted.

4. Appeals. A pharmacy benefit manager shall, with respect to

contracts between a pharmacy benefit manager and a pharmacy or,

alternatively, a pharmacy benefit manager and a pharmacy's contracting

agent, such as a pharmacy services administrative organization, include

a reasonable process to appeal, investigate and resolve disputes

regarding multi-source generic drug pricing. The appeals process shall

include the following provisions:

(a) the right to appeal by the pharmacy and/or the pharmacy's

contracting agent shall be limited to thirty days following the initial

claim submitted for payment;

(b) a telephone number through which a network pharmacy may contact

the pharmacy benefit manager for the purpose of filing an appeal and an

electronic mail address of the individual who is responsible for

processing appeals;

(c) the pharmacy benefit manager shall send an electronic mail message

acknowledging receipt of the appeal. The pharmacy benefit manager shall

respond in an electronic message to the pharmacy and/or the pharmacy's

contracting agent filing the appeal within seven business days

indicating its determination. If the appeal is determined to be valid,

the maximum allowable cost for the drug shall be adjusted for the

appealing pharmacy effective as of the date of the original claim for

payment. The pharmacy benefit manager shall require the appealing

pharmacy to reverse and rebill the claim in question in order to obtain

the corrected reimbursement;

(d) if an update to the maximum allowable cost is warranted, the

pharmacy benefit manager or covered entity shall adjust the maximum

allowable cost of the drug effective for all similarly situated

pharmacies in its network in the state on the date the appeal was

determined to be valid; and

(e) if an appeal is denied, the pharmacy benefit manager shall

identify the national drug code of a therapeutically equivalent drug, as

determined by the federal Food and Drug Administration, that is

available for purchase by pharmacies in this state from wholesalers

registered pursuant to subdivision four of section sixty-eight hundred

eight of the education law at a price which is equal to or less than the

maximum allowable cost for that drug as determined by the pharmacy

benefit manager.

5. Contract provisions. No pharmacy benefit manager shall, with

respect to contracts between such pharmacy benefit manager and a

pharmacy or, alternatively, such pharmacy benefit manager and a

pharmacy's contracting agent, such as a pharmacy services administrative

organization:

(a) prohibit or penalize a pharmacist or pharmacy from disclosing to

an individual purchasing a prescription medication or service

information regarding:

(i) the cost of the prescription medication or service to the

individual, or the cost of the prescription medication or service to the

pharmacy and the pharmacy's reimbursement for that prescription

medication or service; or

(ii) the availability of any therapeutically equivalent alternative

medications or alternative methods of purchasing the prescription

medication, including but not limited to, paying a cash price; or

(b) charge or collect from an individual a copayment that exceeds the

total submitted charges by the pharmacy for which the pharmacy is paid.

If an individual pays a copayment, the pharmacy shall retain the

adjudicated costs and the pharmacy benefit manager shall not redact or

recoup the adjudicated cost.