S1086-2013 Actions

• Jan 9, 2013: REFERRED TO HEALTH

S1086-2013 Memo

BILL NUMBER:S1086

TITLE OF BILL:
An act
to amend the public health law, in relation to pharmacy
benefit managers

PURPOSE OR GENERAL IDEA OF BILL:
This bill specifies the fiduciary
duties of pharmacy benefits managers and the obligation to serve the
covered entities with which they contract.

SUMMARY OF SPECIFIC PROVISIONS:
Section 1 establishes definitions,
particularly a definition of a Pharmacy Benefits Manager (PBM). It
also establishes that PBMs shall: have a fiduciary relationship with
a health plan, pass through all monies to a health plan other than
fee or payment for services, account for all funds and provide access
to all necessary information, disclose any relevant relationships,
and not substitute or cause the substitution of prescription drugs.

Section 2 is the severability clause.

JUSTIFICATION:
PBMs are companies that manage prescription drug benefit
programs for health plans. PBMs have promised to save health plans
and their members money, but in reality, their negotiations are very
secretive. PBMs commonly pocket payments from drug manufacturers that
ought to be used to lower drug prices, and they accept payments in
exchange for giving preference to more expensive drugs. This bill,
modeled on recent legislation in Maine, would require that PBMs act
not in their own best interest, but rather in the interest of the
health plan and its beneficiaries.

PRIOR LEGISLATIVE HISTORY:
2006:    S.7981    Referred to Health
2008:    S.2642    Referred to Health
2010:    S.3930    Referred to Health
2005:    A.10688   Reported to Codes Committee
2006:    A.10688A  Passed Assembly
2007-08: A.6341    Passed Assembly
2009-10: A.2008A   Passed Assembly
2011-12: S.4664/A809 Referred to Health

FISCAL IMPLICATIONS:
None.

EFFECTIVE DATE:
90 days after it shall become law.

S1086-2013 Text

 S T A T E   O F   N E W   Y O R K
 
 
                                         1086
 2013-2014 Regular Sessions
 I N  SENATE
 (PREFILED)
 January 9, 2013
 
 Introduced  by  Sen. MAZIARZ -- read twice and ordered printed, and when
 printed to be committed to the Committee on Health
 

AN ACT to amend the public health law, in relation to  pharmacy  benefit
 managers
 

THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM
 BLY, DO ENACT AS FOLLOWS:

 

Section 1. The public health law is amended by adding  a  new  section
 271-a to read as follows:

 

S  271-A.  PHARMACY BENEFIT MANAGERS. 1. DEFINITIONS.  AS USED IN THIS
 SECTION, THE FOLLOWING TERMS SHALL HAVE THE FOLLOWING MEANINGS:

 (A) "HEALTH PLAN OR PROVIDER" MEANS AN ENTITY  FOR  WHICH  A  PHARMACY
 BENEFIT  MANAGER PROVIDES PHARMACY BENEFIT MANAGEMENT INCLUDING, BUT NOT
 LIMITED TO: (I) A HEALTH BENEFIT PLAN OR  OTHER  ENTITY  THAT  APPROVES,
 PROVIDES, ARRANGES FOR, OR PAYS FOR HEALTH CARE ITEMS OR SERVICES, UNDER
 WHICH  PRESCRIPTION  DRUGS FOR BENEFICIARIES OF THE ENTITY ARE PURCHASED
 OR WHICH PROVIDES OR ARRANGES REIMBURSEMENT IN WHOLE OR IN PART FOR  THE
 PURCHASE  OF  PRESCRIPTION  DRUGS;  OR  (II)  A  HEALTH CARE PROVIDER OR
 PROFESSIONAL,  INCLUDING  A  STATE  OR  LOCAL  GOVERNMENT  ENTITY,  THAT
 ACQUIRES  PRESCRIPTION DRUGS TO USE OR DISPENSE IN PROVIDING HEALTH CARE
 TO PATIENTS.
 (B) "PHARMACY BENEFIT MANAGEMENT" MEANS  THE  SERVICE  PROVIDED  TO  A
 HEALTH  PLAN  OR PROVIDER, DIRECTLY OR THROUGH ANOTHER ENTITY, INCLUDING
 THE PROCUREMENT OF PRESCRIPTION DRUGS TO BE DISPENSED  TO  PATIENTS,  OR
 THE  ADMINISTRATION OR MANAGEMENT OF PRESCRIPTION DRUG BENEFITS, INCLUD
 ING 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;
 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
 [ ] is old law to be omitted.
 LBD02296-01-3
 
       S. 1086                             2
 (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 SUBSTI
 TUTION PROGRAMS; AND
 (VI) DISEASE MANAGEMENT.
 (C) "PHARMACY BENEFIT MANAGER" MEANS ANY ENTITY THAT PERFORMS PHARMACY
 BENEFIT MANAGEMENT FOR A HEALTH PLAN OR PROVIDER.
 2. APPLICATION OF SECTION.  THIS SECTION APPLIES TO THE  PROVIDING  OF
 PHARMACY  BENEFIT  MANAGEMENT BY A PHARMACY BENEFIT MANAGER TO A PARTIC
 ULAR HEALTH PLAN OR PROVIDER.
 3. DUTY, ACCOUNTABILITY AND TRANSPARENCY.   (A) THE  PHARMACY  BENEFIT
 MANAGER  SHALL  HAVE A FIDUCIARY RELATIONSHIP WITH AND OBLIGATION TO THE
 HEALTH PLAN OR PROVIDER, AND SHALL PERFORM PHARMACY  BENEFIT  MANAGEMENT
 WITH CARE, SKILL, PRUDENCE, DILIGENCE, AND PROFESSIONALISM.
 (B)  ALL FUNDS RECEIVED BY THE PHARMACY BENEFIT MANAGER IN RELATION TO
 PROVIDING PHARMACY BENEFIT MANAGEMENT SHALL BE RECEIVED BY THE  PHARMACY
 BENEFIT  MANAGER  IN  TRUST FOR THE HEALTH PLAN OR PROVIDER AND SHALL BE
 USED OR DISTRIBUTED ONLY PURSUANT  TO  THE  PHARMACY  BENEFIT  MANAGER'S
 CONTRACT  WITH THE HEALTH PLAN OR PROVIDER OR APPLICABLE LAW; EXCEPT FOR
 ANY FEE OR PAYMENT EXPRESSLY PROVIDED FOR IN THE  CONTRACT  BETWEEN  THE
 PHARMACY  BENEFIT  MANAGER AND THE HEALTH PLAN OR PROVIDER TO COMPENSATE
 THE PHARMACY BENEFIT MANAGER FOR ITS SERVICES.
 (C) THE PHARMACY BENEFIT MANAGER SHALL  PERIODICALLY  ACCOUNT  TO  THE
 HEALTH  PLAN  OR PROVIDER FOR ALL FUNDS RECEIVED BY THE PHARMACY BENEFIT
 MANAGER. THE HEALTH PLAN OR PROVIDER SHALL HAVE ACCESS TO ALL  FINANCIAL
 AND  UTILIZATION INFORMATION OF THE PHARMACY BENEFIT MANAGER IN RELATION
 TO PHARMACY BENEFIT MANAGEMENT PROVIDED TO THE HEALTH PLAN OR PROVIDER.
 (D) THE PHARMACY BENEFIT MANAGER SHALL  DISCLOSE  IN  WRITING  TO  THE
 HEALTH  PLAN  OR  PROVIDER  THE  TERMS AND CONDITIONS OF ANY CONTRACT OR
 ARRANGEMENT BETWEEN THE PHARMACY BENEFIT MANAGER AND ANY PARTY  RELATING
 TO PHARMACY BENEFIT MANAGEMENT PROVIDED TO THE HEALTH PLAN OR PROVIDER.
 (E)  THE  PHARMACY  BENEFIT  MANAGER  SHALL DISCLOSE IN WRITING TO THE
 HEALTH PLAN OR PROVIDER 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 OR PROVIDER.
 (F)  ANY  INFORMATION  REQUIRED  TO BE DISCLOSED BY A PHARMACY BENEFIT
 MANAGER TO A HEALTH PLAN OR PROVIDER UNDER THIS SECTION THAT IS  REASON
 ABLY  DESIGNATED BY THE PHARMACY BENEFIT MANAGER AS PROPRIETARY OR TRADE
 SECRET INFORMATION SHALL BE KEPT CONFIDENTIAL  BY  THE  HEALTH  PLAN  OR
 PROVIDER,  EXCEPT  AS REQUIRED OR PERMITTED BY LAW, INCLUDING DISCLOSURE
 NECESSARY TO PROSECUTE OR DEFEND ANY LEGITIMATE LEGAL CLAIM OR CAUSE  OF
 ACTION.
 4.  PRESCRIPTIONS.    A PHARMACY BENEFIT MANAGER MAY NOT SUBSTITUTE OR
 CAUSE THE SUBSTITUTING OF ONE PRESCRIPTION DRUG FOR ANOTHER IN  DISPENS
 ING  A  PRESCRIPTION,  OR  ALTER OR CAUSE THE ALTERING OF THE TERMS OF A
 PRESCRIPTION, EXCEPT WITH THE APPROVAL OF THE PRESCRIBER OR AS EXPLICIT
 LY REQUIRED OR PERMITTED BY LAW.
 

S 2. Severability.  If any provision of this act, or  any  application
 of  any  provision  of  this act, is held to be invalid, or ruled by any
 federal agency to violate or be inconsistent with any applicable federal
 law or regulation, that shall not affect the validity  or  effectiveness
 of  any  other provision of this act, or of any other application of any
 provision of this act.
 
       S. 1086                             3
 

S 3. This act shall take effect on the ninetieth day  after  it  shall
 become  a  law  and  shall  apply to any contract for providing pharmacy
 benefit management made or renewed on or after that date.

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