§ 280-A — Pharmacy benefit managers

§ 280-a. Pharmacy benefit managers. 1. Definitions. As used in this\nsection, the following terms shall have the following meanings:\n (a) "Health plan " means an entity for which a pharmacy benefit\nmanager provides pharmacy benefit management services and that is a\nhealth benefit plan or other entity that approves, provides, arranges\nfor, or pays or reimburses in whole or in part for health care items or\nservices, to include at least prescription drugs, for a substantial\nnumber of beneficiaries who work or reside in this state. The\nsuperintendent shall determine, in his or her sole discretion, by\nregulation how the phrase "a substantial number of beneficiaries who\nwork or reside in this state" shall be interpreted.\n (b) "Pharmacy benefit management services" means the management or\nadministration of prescription drug benefits for a health plan, directly\nor through another entity, and regardless of whether the pharmacy\nbenefit manager and the health plan are related, or associated by\nownership, common ownership, organization or otherwise; including the\nprocurement of prescription drugs to be dispensed to patients, or the\nadministration or management of prescription drug benefits, including\nbut not limited to, any of the following:\n (i) mail service pharmacy;\n (ii) claims processing, retail network management, or payment of\nclaims to pharmacies for dispensing prescription drugs;\n (iii) clinical or other formulary or preferred drug list development\nor management;\n (iv) negotiation or administration of rebates, discounts, payment\ndifferentials, or other incentives, for the inclusion of particular\nprescription drugs in a particular category or to promote the purchase\nof particular prescription drugs;\n (v) patient compliance, therapeutic intervention, or generic\nsubstitution programs;\n (vi) disease management;\n (vii) drug utilization review or prior authorization;\n (viii) adjudication of appeals or grievances related to prescription\ndrug coverage;\n (ix) contracting with network pharmacies; and\n (x) controlling the cost of covered prescription drugs.\n (c) "Pharmacy benefit manager" means any entity that performs pharmacy\nbenefit management services for a health plan.\n (d) "Maximum allowable cost price" means a maximum reimbursement\namount set by the pharmacy benefit manager for therapeutically\nequivalent multiple source generic drugs.\n (e) "Controlling person" means any person or other entity who or which\ndirectly or indirectly has the power to direct or cause to be directed\nthe management, control or activities of a pharmacy benefit manager.\n (f) "Covered individual" means a member, participant, enrollee,\ncontract holder or policy holder or beneficiary of a health plan.\n (g) "License" means a license to be a pharmacy benefit manager, under\narticle twenty-nine of the insurance law.\n (h) "Spread pricing" means the practice of a pharmacy benefit manager\nretaining an additional amount of money in addition to the amount paid\nto the pharmacy to fill a prescription.\n (i) "Superintendent" means the superintendent of financial services.\n 2. Duty, accountability and transparency. (a) (i) The pharmacy benefit\nmanager shall have a duty and obligation to perform pharmacy benefit\nmanagement services with care, skill, prudence, diligence, and\nprofessionalism.\n (ii) In addition to the duties as may be prescribed by regulation\npursuant to article twenty-nine of the insurance law:\n (1) A pharmacy benefit manager interacting with a covered individual\nshall have the same duty to a covered individual as the health plan for\nwhom it is performing pharmacy benefit management services.\n (2) A pharmacy benefit manager shall have a duty of good faith and\nfair dealing with all parties, including but not limited to covered\nindividuals and pharmacies, with whom it interacts in the performance of\npharmacy benefit management services.\n (b) All funds received by the pharmacy benefit manager in relation to\nproviding pharmacy benefit management services shall be received by the\npharmacy benefit manager in trust and shall be used or distributed only\npursuant to the pharmacy benefit manager's contract with the health plan\nor applicable law; including any administrative fee or payment to the\npharmacy benefit manager expressly provided for in the contract to\ncompensate the pharmacy benefit manager for its services. Any funds\nreceived by the pharmacy benefit manager through spread pricing shall be\nsubject to this paragraph. In addition to any other power conferred by\nlaw the superintendent shall have the authority to prescribe rules\nconcerning pharmacy benefit manager administrative fees, including\nlimitations on their form and use.\n (c) The pharmacy benefit manager shall account, annually or more\nfrequently to the health plan for any pricing discounts, rebates of any\nkind, inflationary payments, credits, clawbacks, fees, grants,\nchargebacks, reimbursements, or other benefits received by the pharmacy\nbenefit manager. The health plan shall have access to all financial and\nutilization information of the pharmacy benefit manager in relation to\npharmacy benefit management services provided to the health plan.\n (d) The pharmacy benefit manager shall disclose in writing to the\nhealth plan the terms and conditions of any contract or arrangement\nbetween the pharmacy benefit manager and any party relating to pharmacy\nbenefit management services provided to the health plan including but\nnot limited to, dispensing fees paid to the pharmacies.\n (e) The pharmacy benefit manager shall disclose in writing to the\nhealth plan any activity, policy, practice, contract or arrangement of\nthe pharmacy benefit manager that directly or indirectly presents any\nconflict of interest with the pharmacy benefit manager's relationship\nwith or obligation to the health plan.\n (f) Any information required to be disclosed by a pharmacy benefit\nmanager to a health plan under this section that is reasonably\ndesignated by the pharmacy benefit manager as proprietary or trade\nsecret information shall be kept confidential by the health plan, except\nas required or permitted by law, including disclosure necessary to\nprosecute or defend any legitimate legal claim or cause of action.\nDesignation of information as proprietary or trade secret information\nunder this subdivision shall have no effect on the obligations of any\npharmacy benefit manager or health plan to provide that information to\nthe department of health or the department of financial services.\n (g) The superintendent, in consultation with the commissioner may make\nregulations defining, limiting, and relating to the duties, obligations,\nrequirements and other provisions relating to pharmacy benefit managers\nunder this subdivision.\n 3. Prescriptions. A pharmacy benefit manager may not substitute or\ncause the substituting of one prescription drug for another in\ndispensing a prescription, or alter or cause the altering of the terms\nof a prescription, except with the approval of the prescriber or as\nexplicitly required or permitted by law, including regulations of the\ndepartment of financial services or the department of health. The\nsuperintendent and commissioner, in coordination with each other, are\nauthorized to promulgate regulations to determine when substitution of\nprescription drugs may be required or permitted.\n 4. Appeals. A pharmacy benefit manager shall, with respect to\ncontracts between a pharmacy benefit manager and a pharmacy or,\nalternatively, a pharmacy benefit manager and a pharmacy's contracting\nagent, such as a pharmacy services administrative organization, include\na reasonable process to appeal, investigate and resolve disputes\nregarding multi-source generic drug pricing. The appeals process shall\ninclude the following provisions:\n (a) the right to appeal by the pharmacy and/or the pharmacy's\ncontracting agent shall be limited to thirty days following the initial\nclaim submitted for payment;\n (b) a telephone number through which a network pharmacy may contact\nthe pharmacy benefit manager for the purpose of filing an appeal and an\nelectronic mail address of the individual who is responsible for\nprocessing appeals;\n (c) the pharmacy benefit manager shall send an electronic mail message\nacknowledging receipt of the appeal. The pharmacy benefit manager shall\nrespond in an electronic message to the pharmacy and/or the pharmacy's\ncontracting agent filing the appeal within seven business days\nindicating its determination. If the appeal is determined to be valid,\nthe maximum allowable cost for the drug shall be adjusted for the\nappealing pharmacy effective as of the date of the original claim for\npayment. The pharmacy benefit manager shall require the appealing\npharmacy to reverse and rebill the claim in question in order to obtain\nthe corrected reimbursement;\n (d) if an update to the maximum allowable cost is warranted, the\npharmacy benefit manager or covered entity shall adjust the maximum\nallowable cost of the drug effective for all similarly situated\npharmacies in its network in the state on the date the appeal was\ndetermined to be valid; and\n (e) if an appeal is denied, the pharmacy benefit manager shall\nidentify the national drug code of a therapeutically equivalent drug, as\ndetermined by the federal Food and Drug Administration, that is\navailable for purchase by pharmacies in this state from wholesalers\nregistered pursuant to subdivision four of section sixty-eight hundred\neight of the education law at a price which is equal to or less than the\nmaximum allowable cost for that drug as determined by the pharmacy\nbenefit manager.\n 5. Contract provisions. No pharmacy benefit manager shall, with\nrespect to contracts between such pharmacy benefit manager and a\npharmacy or, alternatively, such pharmacy benefit manager and a\npharmacy's contracting agent, such as a pharmacy services administrative\norganization:\n (a) prohibit or penalize a pharmacist or pharmacy from disclosing to\nan individual purchasing a prescription medication or service\ninformation regarding:\n (i) the cost of the prescription medication or service to the\nindividual, or the cost of the prescription medication or service to the\npharmacy and the pharmacy's reimbursement for that prescription\nmedication or service; or\n (ii) the availability of any therapeutically equivalent alternative\nmedications or alternative methods of purchasing the prescription\nmedication, including but not limited to, paying a cash price; or\n (b) charge or collect from an individual a copayment that exceeds the\ntotal submitted charges by the pharmacy for which the pharmacy is paid.\nIf an individual pays a copayment, the pharmacy shall retain the\nadjudicated costs and the pharmacy benefit manager shall not redact or\nrecoup the adjudicated cost.\n