DFS Superintendent Adrienne A. Harris Strengthens Consumer Protections with the Adoption of Pharmacy Benefit Manager Market Conduct Regulations

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Today, Superintendent Adrienne A. Harris announced that the New York State Department of Financial Services ("DFS" or "Department") has adopted new market conduct regulations to govern Pharmacy Benefit Managers ("PBMs") operating in New York. These adopted rules will help protect New Yorkers' access to prescription drugs, prohibit business practices that increase the cost of those drugs, and ensure that small, independent pharmacies compete on a level playing field with large pharmacies affiliated with PBMs.

"Pharmacy benefit managers have become a pervasive part of the prescription drug supply chain, playing an outsized role in access to prescription drugs and pharmacy services," said Superintendent Harris. "This regulation will put an end to the industry's opaque practices in New York, with the ultimate goal of lowering prescription drug costs, protecting access to life-saving drugs, and supporting patients' choice of pharmacies."

Senate Insurance Chair Neil Breslin said, "New Yorkers should never have to question whether they're paying too much for prescriptions or losing out on access to local pharmacies. These new rules will help ensure that pharmacy benefit managers operate transparently and fairly, supporting patients and local businesses alike."

Assembly Insurance Chair David Weprin said, "These new regulations bring essential transparency to pharmacy benefit managers, cutting costs and empowering patients in their healthcare choices. Superintendent Harris and DFS have shown strong leadership in protecting New Yorkers' access to affordable, life-saving medications."

New York State Senator James Skoufis said, "These regulations are a major victory for patients across New York, bringing accountability to an industry that has long prioritized profits over people. Now, New Yorkers can enjoy fairer access to medications and greater pharmacy choice."

New York State Senator Zellnor Myrie said, "New York is leading the way in standing up to anti-competitive practices in the prescription drug market. Thanks to DFS's efforts, we're ensuring that patients and community pharmacies are protected, creating a system that better serves all New Yorkers. I look forward to continuing our work to bring down prescription costs for our state's residents."

NYS Assemblymember John T. McDonald III, RPh said, "As a pharmacist, I've seen first-hand how much these changes are needed. DFS's regulations create a fairer marketplace for community pharmacies and give patients the power to make informed decisions about their prescriptions-a win for our communities and consumers."

In 2021, New York enacted a comprehensive statutory regime for PBMs, key intermediaries in the prescription drug supply chain that generated an estimated $498.5 billion in revenue in 2022 alone. The legislation charged DFS with developing regulations that would address conflicts of interest, along with deceptive, anti-competitive, and unfair claims practices by these companies.

The Department continues to develop nation-leading regulatory standards for PBMs. To date, DFS has hired over 25 experts who have completed the registration and licensure of all PBMs operating in the state. The new market conduct regulations are the third set of rules DFS has adopted to regulate PBMs, promoting transparency and leveling the playing field for New York's pharmacies.

The market conduct regulations require the following:

⦁ Allow Home Delivery. Prohibit PBMs from barring any in-network pharmacies from providing mail order or delivery services, which will increase patients' access to home delivery from their community pharmacy;
⦁ List Pharmacy Directories. Increase transparency to consumers and employers by requiring PBMs to list formularies and pharmacy directories online, and prohibiting PBMs from punishing a consumer who relies on said information;
⦁ Address Consumer Inquiries. Require PBMs to post a telephone number and email address for consumers to direct their questions to, and PBMs must respond in a reasonable amount of time;
⦁ Prohibit Steering. Prohibit anti-competitive practices that steer consumers away from their community pharmacy to larger pharmacies affiliated with the PBM;
⦁ Treat Pharmacies Fairly. Prohibit PBMs from unfairly passing losses onto pharmacies when the PBM mistakenly approved dispensing a drug and then seeks to retroactively deny reimbursement to the pharmacy;
⦁ Allow Electronic Submissions. Reduce administrative burdens and costs on small pharmacies by allowing them to submit information to and receive information from PBMs electronically; and
⦁ Apply Same Standards. Prevent the abuse of audits against small pharmacies who are not affiliated with a PBM by requiring PBMs to apply the same audit standards across all in-network pharmacies.

To inform the development of these regulations, the Department conducted extensive outreach to industry, health plans, pharmacy groups, state and federal regulators, and the general public.

A copy of the adopted regulations can be found on the Department's website. They will be published in the State Register on November 27, 2024.

The public is reminded that the DFS Pharmacy Benefits Bureau is always available to accept and investigate complaints of PBM misconduct via email at [email protected]. Additionally, DFS is empowered to investigate significant spikes in the price of prescription drugs. Anyone experiencing a spike in the cost of drugs is encouraged to reach out at [email protected].

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