NY Gov. Hochul announces regulations on PBMs

ALBANY, N.Y. — Gov. Kathy Hochul has unveiled new regulations to safeguard New Yorkers from escalating prescription drug costs by targeting business practices that drive up prices and disadvantage small, independent pharmacies. These market conduct regulations for pharmacy benefit managers aim to ensure fair competition, enhance transparency and expand consumer access to essential medications.

"New Yorkers deserve access to affordable and fair-priced prescription drugs, and today's regulations ensure that consumers and small pharmacies are protected from unfair business practices," said Hochul.

"We are leveling the playing field for independent pharmacies, promoting competition and empowering consumers. These new measures will improve access to essential medications, eliminate anticompetitive practices and make the health care system work for everyone — not just the big players." 

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The regulations, developed by the Department of Financial Services (DFS), address long-standing concerns about PBMs. Key provisions include:  

- Prohibiting Anticompetitive Practices: PBMs can no longer steer consumers away from community pharmacies to larger chains affiliated with PBMs.  

- Ensuring Fair Treatment for Pharmacies: PBMs are barred from passing losses on to pharmacies for dispensing drugs previously approved for reimbursement.  

- Increasing Consumer Transparency: PBMs must list formulary and pharmacy directories online and promptly respond to consumer inquiries.  

- Supporting Small Pharmacies: The rules require equal audit standards for all in-network pharmacies, reducing administrative burdens by allowing electronic submissions.  

- Expanding Access: PBMs must permit in-network pharmacies to offer mail-order or delivery services, improving patient access to home delivery options. 

The regulations build upon Hochul's 2021 legislation requiring PBMs to obtain licenses and comply with stricter oversight, ensuring accountability and transparency in their operations.  

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Broad support for new regulations

The new rules have garnered praise from legislators, pharmacists and consumer advocates across New York State. 

Danny Dang, president of the Pharmacist Society of the State of New York, remarked, "PSSNY wholeheartedly supports adopting these new regulations. For decades, our members have seen the harm caused by PBM abuses. This is a significant step toward protecting both patients and pharmacists."

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State Sen. Gustavo Rivera highlighted the importance of transparency: "These new regulations provide much-needed oversight, protect small businesses and ensure a fair playing field for independent pharmacies."  

Assembly member Nily Rozic emphasized consumer benefits, stating, "Gov. Hochul's leadership ensures affordable prescription access while supporting local pharmacies." 

The regulations will be published in the State Register on November 27, 2024, and are available on the DFS website.