New York State is tightening the reins on pharmacy benefit managers (PBMs), with the Department of Financial Services (DFS) setting forth new rules aimed at bolstering competition and enhancing transparency within the pharmaceutical industry. As reported by Crain's New York, these regulations, which are set to take effect this month, will compel PBMs to publicly reveal their drug coverage lists and pharmacy network directories—a move to demystify the often opaque drug pricing system.
Despite PBMs initially being conceived as a means to save consumers money, they have—to the vexation of patients and independent pharmacies alike—evolved into something quite the opposite. In a bid to aggressively regulate and potentially break up this dysfunction, Adrienne Harris, superintendent of the New York State Department of Financial Services, pointed out that the market has become "more vertically integrated and evolved and matured, really what we see is the opposite happening." DFS, expanding upon a previous attempt to impose a $10 dispensing fee, has now opted to instead to more strictly monitor PBMs' conduct, particularly concerning their tendency to steer patients towards pharmacies they own, as detailed by Crain's New York.
According to Crain's New York, state rules will also prevent PBMs from preventing local pharmacies from offering mail-order or home delivery services—services that PBMs themselves frequently provide. Furthermore, the updated rules are designed to impose stricter auditing and payment clawback procedures when PBMs mistakenly pay out for drugs. Harris stated that these measures are prepared to usher in heightened enforcement including examinations and potential corrective actions.
Meanwhile, as reported by the New York Law Journal, the DFS has already been inviting public commentary on these impending regulations, sketched out to guard consumers and address anti-competitive behavior in the PBM sector. Yet, the Pharmaceutical Care Management Association (PCMA), representing the largest PBM trade association, has accused New York of overreaching by seeking to regulate PBM activities even when they operate under federally regulated health plans, arguing that such rules are "highly invasive government regulations."
"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," Harris noted, emphasizing the stark contrast between consumer costs and industry profits, as per New York Law Journal. While the DFS has taken steps to adopt a more refined set of regulations after their first iteration faced industry backlash, it remains to be seen how these new rules, once crystallized into active policy, will reshape the marketplace dynamics and address the long-standing grievances lodged by independent pharmacies and consumers alike.
