2023 New York Laws › PBH - Public Health › Article 2-A - Prescription Drugs › Title 2 - Prescription Drugs; Various Provisions › 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  information
regarding:
(i) the cost of the prescription medication to the individual, 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.