Source: https://www.nysenate.gov/legislation/bills/2019/S1705
Timestamp: 2019-09-21 00:37:27
Document Index: 227247595

Matched Legal Cases: ['Art 6', '§601', '§  601', '§ 602', '§ 1395', '§ 603', '§  604', '§  605', '§ 606', '§  607']

NY State Senate Bill S1705
senate Bill S1705
Get Status Alerts for S1705
S1705 (ACTIVE) - Details
Add Art 6 §§601 - 607, Ins L
S8384, A10023
S1705 (ACTIVE) - Summary
S1705 (ACTIVE) - Sponsor Memo
BILL NUMBER: S1705
implementing the pharmacy benefit manager transparency act
This legislation will allow patients and employers to compare the abili-
ty of pharmacy benefit managers to negotiate rebates, discounts, and
price concessions and the amount of such rebates, discounts, and price
concessions in reducing costs for consumers, patients, and their benefi-
Section 1. The insurance law is amended by adding a new article 6.
Section 601 entitles the article the "pharmacy benefit manager transpar-
ency act."
Section 602; redefines; "Covered entity" to mean nonprofit, hospital, or
medical organization, insurer, health coverage plan, or health mainte-
nance organization licensed in the state. "Covered individual" means a
member, participant, enrollee, contract holder, or policy holder or
beneficiary of a covered entity which is provided health coverage by the
covered entity. "Pharmacy benefit manager" means an entity that
contracts with or is employees be a health benefit plan, state agehcy,
insurer, managed care organization, or other third-party payer for the
administration or management of prescription drug benefits. "Wholesale
acquisition cost" means the list price for a prescription drug, exclud-
ing any discounts, rebates, or reductions in price.
Section 603; shows responsibility to covered entities. A pharmacy bene-
fit manager shall exercise in good faith and fair dealing in the
performance of its contractual obligations to a covered entity, and
shall perform its duties with care, skill, prudence, diligence, and
professionalism. A benefits manage shall notify a covered entity in
writing of any activity, policy, practice, ownership interest, or affil-
iation in the case of a conflict of interest that interferes with the
requirements imposed by this article.
Section 604; Each pharmacy benefit manager under contract with a covered
entity shall submit to the covered entity and to the superintendent no
later than February first of each year the whole sale acquisition cost
for each drug, the amount of rebates, discounts, and price concessions
that the benefits manager receives, the amount of rebates, discounts,
and price concessions described in paragraph (b), the amount of any fee,
the nature, type, and amount of all other payments that a pharmacy
manger receives. The amount of reimbursements the pharmacy befit manager
pays to contracting pharmacies, any other information deemed necessary
by the superintendent. The information shall include all retail, mail
order, specialty, and compounded prescription products and shall remain
Section 605; explains the report publication in that the information
obtained to the superintendent shall be used to reduce costs for covered
entities and their beneficiaries, no later than February first of each
Year, and the superintendent shall issue a report to be published on the
superintendent's website. The superintendent shall report in a manner
that prevents the disclosure of the specific pharmacy benefit manage, a
covered entity, prices charged for prescription drugs or any associated
rebates, discounts or price concession with respect to an individual
drug or plan.
Section 606; All contracts for pharmacy benefit management entered into
this state or by a covered entity in this state shall comply with the
requirements of this article. The superintendent is responsible for the
enforcement of this article and may examine and investigate to ensure
compliance such as revoking or suspending a license, or denying an
application for a renewal of license, imposing a period of probation to
protect the public health and safety, imposing an administrative fine
not to exceed two hundred and fifty dollars for each violation or
instance of noncompliance and assessing costs to be paid by the pharmacy
This legislation specific intent is to allow patients and employers to
compare the ability of pharmacy benefit managers when they negotiate
rebates, discounts, and price concessions and the amount of such
rebates, discounts, and price concession that are passed through to plan
sponsors, and to allow covered entities to evaluate the nature of the
relationship between pharmacy benefit managers and manufactures and the
effectiveness of reducing costs for covered entities and their benefici-
aries, no later than February 1st of each year. The commissioner or
superintendent shall issue a report to be published on the commission-
er's website by gathering the information received by all pharmacy bene-
fits managers under this chapter for the preceding year.
The commissioner shall ensure that all information be reported in a
manner that prevents the disclosure of the identity of a specific phar-
macy benefit manager, a covered entity, prices charged for prescription
drugs or any associate rebates, discounts or price concessions with
respect to an individual drug or plan, or any information that identi-
fies a product or manufacture.
On February 1st each consecutive year, the commissioner shall analyze
the information submitted by a pharmacy benefit managers pursuant to the
act and produce an additional report to be published on the commission-
er's website on the impact of pharmacy benefit managers on the cost,
administration, and availability of prescription drugs. The commissioner
shall submit the report and any recommendations for proposed legislation
or further action by the state pursuant to the report's finding to the
legislature and the governor on or before February 1st.
S.8384 of 2018, referred to insurance
S1705 (ACTIVE) - Bill Text download pdf
AN ACT to amend the insurance law, in relation to implementing the phar-
macy benefit manager transparency act
Section 1. The insurance law is amended by adding a new article  6  to
PHARMACY BENEFIT MANAGER TRANSPARENCY ACT
603. RESPONSIBILITY TO COVERED ENTITIES.
604. PHARMACY BENEFIT MANAGER TRANSPARENCY.
605. REPORT PUBLICATION.
606. COMPLIANCE AND ENFORCEMENT.
607. RULEMAKING AUTHORITY.
§  601.  SHORT  TITLE. THIS ARTICLE SHALL BE KNOWN AND MAY BE CITED AS
THE "PHARMACY BENEFIT MANAGER TRANSPARENCY ACT".
§ 602. DEFINITIONS. FOR THE PURPOSES OF THIS  ARTICLE,  THE  FOLLOWING
(1)  "COVERED  ENTITY"  MEANS  A NONPROFIT HOSPITAL OR MEDICAL SERVICE
ORGANIZATION, INSURER,  HEALTH  COVERAGE  PLAN,  OR  HEALTH  MAINTENANCE
ORGANIZATION LICENSED IN THE STATE; A HEALTH PROGRAM ADMINISTERED BY THE
SUPERINTENDENT OR THE STATE IN THE CAPACITY OF PROVIDER OF HEALTH COVER-
AGE; OR AN EMPLOYER, LABOR UNION, OR OTHER GROUP OF PERSONS ORGANIZED IN
THE  STATE  THAT PROVIDES HEALTH COVERAGE TO COVERED INDIVIDUALS WHO ARE
EMPLOYED OR RESIDE IN THE STATE.
(2)  "COVERED  INDIVIDUAL"  MEANS  A  MEMBER,  PARTICIPANT,  ENROLLEE,
CONTRACT HOLDER, OR POLICY HOLDER OR BENEFICIARY OF A COVERED ENTITY WHO
IS  PROVIDED  HEALTH  COVERAGE  BY  THE  COVERED ENTITY. THIS INCLUDES A
LBD05277-01-9
S. 1705                             2
DEPENDENT OR OTHER PERSON PROVIDED HEALTH  COVERAGE  THROUGH  A  POLICY,
CONTRACT, OR PLAN FOR A COVERED INDIVIDUAL.
(3)  "PHARMACY BENEFIT MANAGER" MEANS AN ENTITY THAT CONTRACTS WITH OR
IS EMPLOYED BY A HEALTH BENEFIT PLAN,  STATE  AGENCY,  INSURER,  MANAGED
CARE  ORGANIZATION, OR OTHER THIRD-PARTY PAYOR FOR THE ADMINISTRATION OR
MANAGEMENT OF PRESCRIPTION DRUG BENEFITS PROVIDED BY  A  COVERED  ENTITY
FOR THE BENEFIT OF COVERED INDIVIDUALS.
(4)   "WHOLESALE   ACQUISITION  COST"  MEANS  THE  LIST  PRICE  FOR  A
PRESCRIPTION DRUG, EXCLUDING ANY DISCOUNTS, REBATES,  OR  REDUCTIONS  IN
PRICE,  AS  REPORTED  IN THE MOST RECENT EDITIONS OF THE WHOLESALE PRICE
GUIDES OR  OTHER  PUBLICATIONS  OF  DRUG  PRICING  DATA  A  MANUFACTURER
PROVIDES  TO WHOLESALERS OR DISTRIBUTORS IN THE UNITED STATES, AS SPECI-
FIED IN 42 U.S.C. 23 § 1395W-3A(C)(6)(B).
§ 603. RESPONSIBILITY TO COVERED  ENTITIES.  (1)  A  PHARMACY  BENEFIT
MANAGER SHALL EXERCISE GOOD FAITH AND FAIR DEALING IN THE PERFORMANCE OF
ITS  CONTRACTUAL  OBLIGATIONS TO A COVERED ENTITY, AND SHALL PERFORM ITS
DUTIES WITH CARE, SKILL, PRUDENCE, DILIGENCE, AND PROFESSIONALISM.
(2) A PHARMACY BENEFIT MANAGER SHALL NOTIFY A COVERED ENTITY IN  WRIT-
ING  OF  ANY  ACTIVITY,  POLICY, PRACTICE, OWNERSHIP INTEREST, OR AFFIL-
IATION OF THE PHARMACY BENEFIT  MANAGER  THAT  PRESENTS  A  CONFLICT  OF
INTEREST THAT INTERFERES WITH THE REQUIREMENTS IMPOSED BY THIS ARTICLE.
§  604. PHARMACY BENEFIT MANAGER TRANSPARENCY. (1) EACH PHARMACY BENE-
FIT MANAGER UNDER CONTRACT WITH A COVERED ENTITY  SHALL  SUBMIT  TO  THE
COVERED ENTITY AND TO THE SUPERINTENDENT NO LATER THAN FEBRUARY FIRST OF
EACH YEAR THE FOLLOWING INFORMATION FOR THE IMMEDIATELY PRECEDING CALEN-
DAR YEAR RELATIVE TO SUCH CONTRACT:
(A)  THE WHOLESALE ACQUISITION COST FOR EACH DRUG ON ITS FORMULARY AND
(B) THE AMOUNT OF REBATES, DISCOUNTS, AND PRICE CONCESSIONS  THAT  THE
PHARMACY  BENEFIT  MANAGER  RECEIVED FOR EACH DRUG ON ITS FORMULARY. THE
AMOUNT OF REBATES SHALL INCLUDE ANY UTILIZATION DISCOUNTS  THE  PHARMACY
BENEFIT MANAGER RECEIVES FROM A MANUFACTURER.
(C)  THE AMOUNT OF REBATES, DISCOUNTS, AND PRICE CONCESSIONS DESCRIBED
IN PARAGRAPH (B) OF THIS  SUBSECTION  THAT  WERE  PASSED  THROUGH  TO  A
COVERED  ENTITY, AND THE AMOUNT THAT WERE RETAINED BY THE PHARMACY BENE-
FIT MANAGER, FOR EACH DRUG ON ITS FORMULARY.
(D) THE AMOUNT OF ANY FEE, ADMINISTRATIVE OR OTHERWISE, RECEIVED  FROM
(E)  THE NATURE, TYPE, AND AMOUNT OF ALL OTHER PAYMENTS THAT THE PHAR-
MACY BENEFIT MANAGER RECEIVES, DIRECTLY OR INDIRECTLY, FROM  A  MANUFAC-
TURER  IN  CONNECTION WITH A DRUG SWITCH PROGRAM, A FORMULARY MANAGEMENT
PROGRAM, A  MAIL  SERVICE  PHARMACY,  EDUCATIONAL  SUPPORT,  DATA  SALES
RELATED TO A COVERED INDIVIDUAL, OR ANY OTHER FUNCTION.
(F) THE AMOUNT OF ANY REIMBURSEMENTS THE PHARMACY BENEFIT MANAGER PAYS
TO CONTRACTING PHARMACIES, AND THE NEGOTIATED PRICE COVERED ENTITIES PAY
THE PHARMACY BENEFIT MANAGER, FOR EACH DRUG ON ITS FORMULARY.
(G) ANY OTHER INFORMATION AS DEEMED NECESSARY BY THE SUPERINTENDENT.
(2)  THE  INFORMATION  DISCLOSED  PURSUANT  TO  SUBSECTION ONE OF THIS
SECTION SHALL INCLUDE ALL RETAIL, MAIL ORDER, SPECIALTY, AND  COMPOUNDED
(3) INFORMATION SUBMITTED UNDER THIS SECTION SHALL BE CONFIDENTIAL AND
SHALL  NOT  BE  DISCLOSED  TO  ANY  PERSON  BY THE SUPERINTENDENT OR THE
COVERED ENTITY RECEIVING THE INFORMATION. SUCH INFORMATION SHALL NOT  BE
DEEMED A PUBLIC RECORD OF THE SUPERINTENDENT.
§  605. REPORT PUBLICATION. (1) IN ORDER TO ALLOW PATIENTS AND EMPLOY-
ERS TO COMPARE THE ABILITY OF PHARMACY  BENEFIT  MANAGERS  TO  NEGOTIATE
S. 1705                             3
REBATES,  DISCOUNTS,  AND  PRICE  CONCESSIONS  AND  THE  AMOUNT  OF SUCH
REBATES, DISCOUNTS, AND PRICE CONCESSIONS THAT  ARE  PASSED  THROUGH  TO
PLAN  SPONSORS,  AND TO ALLOW COVERED ENTITIES TO EVALUATE THE NATURE OF
THE RELATIONSHIP BETWEEN PHARMACY BENEFIT MANAGERS AND MANUFACTURERS AND
THE  EFFECTIVENESS  OF  PHARMACY  BENEFIT MANAGERS IN REDUCING COSTS FOR
COVERED ENTITIES AND THEIR BENEFICIARIES, NO LATER THAN  FEBRUARY  FIRST
OF EACH YEAR, THE SUPERINTENDENT SHALL ISSUE A REPORT TO BE PUBLISHED ON
THE SUPERINTENDENT'S WEBSITE AGGREGATING THE INFORMATION RECEIVED BY ALL
PHARMACY BENEFIT MANAGERS UNDER THIS SECTION FOR THE PRECEDING YEAR.
(2)  THE SUPERINTENDENT SHALL ENSURE THAT THE INFORMATION DESCRIBED IN
SUBSECTION ONE OF THIS SECTION IS REPORTED IN A MANNER THAT PREVENTS THE
DISCLOSURE OF THE IDENTITY OF A SPECIFIC  PHARMACY  BENEFIT  MANAGER,  A
COVERED  ENTITY, PRICES CHARGED FOR PRESCRIPTION DRUGS OR ANY ASSOCIATED
REBATES, DISCOUNTS OR PRICE CONCESSIONS WITH RESPECT  TO  AN  INDIVIDUAL
DRUG OR AN INDIVIDUAL PLAN, OR ANY INFORMATION THAT IDENTIFIES A PRODUCT
(3)  ON OR BEFORE FEBRUARY FIRST OF EACH YEAR THE SUPERINTENDENT SHALL
ANALYZE THE INFORMATION SUBMITTED BY PHARMACY BENEFIT MANAGERS  PURSUANT
TO  THIS ARTICLE AND PRODUCE AN ADDITIONAL REPORT TO BE PUBLISHED ON THE
SUPERINTENDENT'S WEBSITE ON THE IMPACT OF PHARMACY BENEFIT  MANAGERS  ON
THE COST, ADMINISTRATION, AND AVAILABILITY OF PRESCRIPTION DRUGS.
(4) THE SUPERINTENDENT SHALL SUBMIT THE REPORT AND ANY RECOMMENDATIONS
FOR  PROPOSED LEGISLATION OR FURTHER ACTION BY THE STATE PURSUANT TO THE
REPORT'S FINDINGS TO THE TEMPORARY PRESIDENT OF THE SENATE, THE  SPEAKER
OF  THE  ASSEMBLY  AND  THE GOVERNOR ON OR BEFORE FEBRUARY FIRST OF EACH
§ 606. COMPLIANCE AND ENFORCEMENT.  (1)  ALL  CONTRACTS  FOR  PHARMACY
BENEFIT  MANAGEMENT ENTERED INTO IN THIS STATE OR BY A COVERED ENTITY IN
THIS STATE SHALL COMPLY WITH THE REQUIREMENTS OF THIS ARTICLE.
(2) THE SUPERINTENDENT IS RESPONSIBLE  FOR  THE  ENFORCEMENT  OF  THIS
ARTICLE  AND MAY REASONABLY EXAMINE AND INVESTIGATE TO ENSURE COMPLIANCE
(3)  THE  SUPERINTENDENT  SHALL  ADOPT  PROCEDURES  FOR  INVESTIGATING
COMPLAINTS  OF  NONCOMPLIANCE  WITH  THIS ARTICLE. IF THE SUPERINTENDENT
FINDS A PHARMACY BENEFIT MANAGER HAS FAILED TO COMPLY WITH  ANY  OF  THE
PROVISIONS  OF  THIS  ARTICLE,  THE SUPERINTENDENT MAY, AFTER NOTICE AND
OPPORTUNITY FOR A HEARING, IMPOSE ONE OR MORE SANCTIONS AS DEEMED APPRO-
PRIATE OR NECESSARY TO BRING NON-COMPLYING ENTITIES  INTO  FULL  COMPLI-
ANCE, INCLUDING, BUT NOT LIMITED TO:
(A)  REVOKING  OR  SUSPENDING  A  LICENSE ISSUED TO A PHARMACY BENEFIT
MANAGER, OR DENYING AN APPLICATION FOR A RENEWAL OF A LICENSE;
(B) IMPOSING A PERIOD OF PROBATION BEST ADAPTED TO PROTECT THE  PUBLIC
HEALTH AND SAFETY AND FOR ANY REHABILITATION;
(C)  IMPOSING  AN  ADMINISTRATIVE FINE NOT TO EXCEED TWO HUNDRED FIFTY
DOLLARS FOR EACH VIOLATION OR INSTANCE OF NONCOMPLIANCE;
(D) ASSESSING COSTS TO BE PAID BY THE PHARMACY BENEFIT MANAGER; OR
(E) IMPOSING RESTRICTIONS ON THE SCOPE OF OPERATION  OF  THE  PHARMACY
BENEFIT MANAGER IN THE STATE.
(4)  IN  ADDITION  TO  SANCTIONS  FOR  NONCOMPLIANCE  AS  DESCRIBED IN
SUBSECTION THREE OF THIS SECTION, IF A PHARMACY BENEFIT MANAGER FAILS TO
SUBMIT TO THE SUPERINTENDENT THE INFORMATION REQUIRED UNDER SECTION  SIX
HUNDRED  FOUR  OF THIS ARTICLE BY THE SPECIFIED DATE, THE SUPERINTENDENT
MAY IMPOSE AGAINST THE PHARMACY BENEFIT MANAGER AN ADMINISTRATIVE PENAL-
TY OF NOT MORE THAN TWO HUNDRED FIFTY DOLLARS FOR EACH DAY OF SUCH FAIL-
S. 1705                             4
(5) ANY MONEY COLLECTED, AS  ADMINISTRATIVE  PENALTIES  OR  OTHERWISE,
PURSUANT TO THIS SECTION MUST BE USED BY THE SUPERINTENDENT TO COVER THE
COSTS OF IMPLEMENTATION AND ENFORCEMENT OF THIS ARTICLE.
§  607.  RULEMAKING AUTHORITY. THE SUPERINTENDENT SHALL PROMULGATE AND
ADOPT RULES AND REGULATIONS TO EFFECTUATE THE PURPOSES AND PROVISIONS OF
THIS ARTICLE. THE RULES AND REGULATIONS SHALL BE SUBJECT  TO  REVIEW  IN
ACCORDANCE WITH GENERAL RULES OF ADMINISTRATIVE RULEMAKING AND REVIEW OF
REGULATIONS IN THIS STATE.