The Department of Financial Services (DFS) in New York State is imposing stricter regulations on pharmacy benefit managers (PBMs) in an effort to increase competition and transparency in the pharmaceutical sector. According to Crain’s New York, these rules, which go into effect this month, will force PBMs to make their pharmacy network directories and prescription coverage lists publicly available in an effort to simplify the frequently confusing drug pricing system.
Although PBMs were first thought to be a way to save consumers money, they have turned into something quite different to the annoyance of both patients and small pharmacists. Adrienne Harris, superintendent of the New York State Department of Financial Services, noted that the market has grown “more vertically integrated and evolved and matured, really what we see is the opposite happening” in an effort to vigorously regulate and possibly dismantle this dysfunction. Building on an earlier effort to enforce a $10 dispensing fee, DFS has now chosen to more closely monitor PBMs’ behavior, especially with regard to their propensity to direct patients to pharmacies they operate, as described by Crain’s New York.
State regulations will also prohibit PBMs from prohibiting neighborhood pharmacies from providing home delivery or mail-order services, which PBMs themselves commonly offer, according to Crain’s New York. Additionally, when PBMs inadvertently pay out for medications, the revised regulations are intended to enforce more stringent auditing and payment clawback procedures. According to Harris, these steps are ready to bring about more enforcement, which may include inspections and other remedial measures.
According to the New York Law Journal, the DFS has already begun to solicit public input on these upcoming rules, which are intended to protect consumers and combat anti-competitive practices in the PBM industry. However, the largest PBM trade association, the Pharmaceutical Care Management Association (PCMA), has charged that New York has gone too far in attempting to regulate PBM operations even when they are carried out by federally regulated health plans, calling such regulations “highly invasive government regulations.”
Harris emphasized the sharp disparity between customer pricing and company profits, saying, “It is no coincidence that as New Yorkers continue to pay more for life-saving medication each year, the PBM industry records billions in revenue with little regulatory oversight,” according to the New York Law Journal. Although the DFS has taken action to implement a more streamlined set of regulations following industry criticism of their initial version, it is unclear how these new regulations will alter the dynamics of the market and resolve the long-standing complaints made by both independent pharmacies and consumers once they are enacted into law.
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