Governor Kathy Hochul today announced the nation’s first approach to bringing much-needed oversight to pharmacy benefit managers with the creation of the Department of Financial Services’ Office of Pharmacy Benefits. Pharmacy Benefit Managers are key intermediaries in the prescription drug supply chain who, without regulatory oversight, have long controlled drug pricing for health plans and reimbursement rates for pharmacies. The new office will be responsible for licensing and overseeing the industry, keeping a watchful eye on the impact of drug benefit managers on consumers and the cost of health care.
“As we continue our comeback from the COVID-19 pandemic, it’s crucial that we seize every opportunity to improve the healthcare system and reduce costs for New Yorkers,” Governor Hochul said. “This landmark regulator will provide careful oversight to protect consumers from predatory practices in the largely unregulated industry of pharmacy benefit managers. My administration remains committed to doing everything in its power to reduce the burden of health insurance and prescription drug costs for New Yorkers.
Earlier this year, Governor Kathy Hochul signed into law the most comprehensive regulatory regime for Pharmacy Benefit Managers (PBMs) in the nation, giving DFS new authority to license and oversee the industry. DFS now has the power to address widely reported problematic practices in the PBM industry, which will help reduce drug and health insurance costs, protect New Yorkers with access to these drugs, and support New York pharmacies, many of which are small, independent businesses.
Additionally, with the passage of the enacted 2023 state budget, Governor Hochul was granted an appropriation of $5 million to fund and staff the new office. As the program grows, the costs of administering this initiative will be offset by the application of fees, assessments and penalties directly to the PBM industry, ensuring that the cost of regulating this industry will fall on PBMs, not taxpayers.
In addition to PBM regulation, the DFS’s current authority to investigate drug price spikes now falls under the oversight of the new Pharmacy Benefits Bureau. DFS will continue to review reports, monitor market conduct and ensure the proper enforcement of consumer protections in New York.
Superintendent of Financial Services Adrienne A. Harris said: “The health and well-being of New Yorkers depends on access to prescription drugs at a fair price. Through regulatory oversight of the pharmacy benefit industry, DFS will increase transparency and accountability in the entire industry, ultimately putting more money in the pockets of New Yorkers.”
New York State Health Commissioner Dr. Mary T. Bassett said: “Rising prescription drug prices not only increase the cost of health care for all New Yorkers, but place a particular burden on older adults and exacerbate systemic inequities in the delivery of health care. The DOH and the DFS will work together to promote transparency, preserve access and limit the rising cost of prescription drug prices for the most vulnerable.”
State Senator Neil D. Breslin said, “The PBM industry had not been regulated for quite a long time. PBMs, here in New York and across the country, have taken advantage of the lack of transparency to the detriment of patient well-being. I commend Governor Hochul, Superintendent Harris and Commissioner Bassett for advancing the regulatory process by ensuring that PBMs meet a standard of excellence. »
Assemblyman Richard Gottfried said: “PBMs are widely recognized as major players in driving up drug costs while profiting at the expense of patients and pharmacists. They have been a black box operating in secret without effective regulation, and PBMs’ mistreatment of independent pharmacists are getting worse as health plans merge with chain pharmacies.This Act will provide effective regulation of PBMs and I commend Governor, Commissioner Bassett and Superintendent Harris for moving the implementation forward. in right time.
DSF met with external stakeholders in preparation for the registration deadlines. The DFS reminds all PBMs of their obligation to register with the Bureau by June 1, 2022 and submit their first annual report by July 1, 2022. annual report on the DFS website.
DFS will soon file regulatory amendments reflecting the creation of this Office. More information will be available in the national register.