Albany’s Big Pharmacy Payout Bill Puts Your Rx Bill On The Line

Albany lawmakers this week pushed through a statewide measure that would force pharmacy benefit managers to pay pharmacies at least what they spend to buy drugs, plus a set dispensing fee. Backers say it could be a lifeline for independent and neighborhood drugstores. Critics worry that locking in higher payouts could show up later in the form of steeper premiums or bigger out-of-pocket costs for patients.

The Patient Access to Pharmacy Act cleared both chambers after bipartisan votes, with the Senate approving it 58-2 and the Assembly voting 132-0, according to LegiScan. With both houses on board, the measure now heads toward Gov. Kathy Hochul’s desk for consideration.

What the Bill Would Change

Under the proposal, pharmacy benefit managers would have to reimburse participating pharmacies at no less than the National Average Drug Acquisition Cost, or a pharmacy’s documented acquisition cost if that number is higher, plus a professional dispensing fee that cannot fall below the state Medicaid rate, which is currently $10.18 per prescription. The bill also spells out an appeals process for pharmacies to challenge reimbursement amounts, according to the New York Senate bill text and a memorandum from the Community Pharmacy Association of New York State.

Supporters: Shore Up Neighborhood Pharmacies

Sponsors such as Sen. James Skoufis are pitching the bill as a way to keep local drugstores from shuttering, pointing to New York’s shift to NADAC-based payments in Medicaid as proof the approach can work. Skoufis wrote that the measure “ensures pharmacies are reimbursed at or above the cost of acquiring medications,” and advocates have promoted it as a tool to stop pharmacies from routinely filling prescriptions at below cost, according to his Times Union commentary and the Pharmacists Society of the State of New York’s stated priorities.

Opponents Warn It Could Raise Costs

Pharmacy benefit managers and some business groups argue that importing Medicaid’s relatively high dispensing fee into commercial insurance contracts would be expensive for insurers and employers. The Pharmaceutical Care Management Association has estimated that the mandated fee, which is roughly four times the current average dispensing payment, could add about $570 million a year to what health plans and consumers pay, according to FingerLakes1. Policy analysts at the Empire Center have raised similar concerns, and Crain's New York Business has also reported on the debate.

Who Will Be Affected

The bill targets state-regulated commercial health plans “to the extent permitted under federal law,” a qualifier that legal analysts say limits how far New York can reach into self-insured employer plans governed by ERISA and into federal programs such as Medicare Part D. That carve-out means many large employer plans, which often self-fund their coverage, may fall outside the mandate. How that boundary is interpreted, and where enforcement lines are drawn, will likely be left to state regulators, according to LegiScan.

Next Steps

With the Legislature now adjourned for the summer, the measure is expected to be formally sent to Gov. Hochul. In general, a governor has 10 days to sign or veto a bill, although that window can shift when lawmakers are out of session. Legal advisories note that if the bill becomes law, its effective date and the nuts-and-bolts of administration could require follow-up guidance from state agencies, according to a legal roundup from Barclay Damon.

Why New Yorkers Should Care

Whether this measure ends up saving neighborhood pharmacies or nudging New Yorkers’ health costs higher will depend on how regulators write the rules, which contracts ultimately fall under the law, and whether PBMs absorb the extra expense or push it through to premiums and copays. For now, New Yorkers may want to keep an eye on statements from the governor’s office and any guidance from state regulators as the bill moves toward a final decision.