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Legislative Memo

Lev Ginsburg
Director of Government Afairs
T 518.465.7511 x207
www.bcnys.org

BILL:

A.5183-B (Simotas) / S.3749-B (Robach)

Support

SUBJECT:

Restrictions on Workers’ Comp Pharmaceutical Networks

 

DATE:

June 22, 2011

 

The Business Council opposes this legislation that will reverse one of the cost reductions included in the 2007 workers’ compensation reform package. In instance where an employer has entered into a contract with a pharmacy network to supply medicines to workers’ comp claimants, this bill would allow an injured employee to utilize any pharmacy that matched the state’s “published prices,” regardless of whether such pharmacy was in the employer’s network.

The authorization of pharmacy networks was part of New York’s vaunted 2007 workers’ compensation reform package.  That legislation - supported by both business and organized labor - provided significant increases in workers’ compensation benefits, the cost of which would be offset by system reforms.

Pharmaceutical networks were one such system reform, though which “volume discounts” could be offered to employers and claimants that were part of the network.

Unfortunately, the attractiveness of pharma networks has already been reduced by the burdensome implementation rules adopted by the Workers’ Compensation Board.

This legislation would fully negate any benefit from this reform, by eliminating the basis on which networks would provide discounts in the first place.

The state is seeing steady increases in overall workers’ compensation program costs, driven by increases in maximum benefits indexed to increases in the state’s average weekly wage, and to the extremely slow pace and inefficient implementation of key system reform measures.

We believe that 2007 statutory requirements for pharma networks provided a workable, efficient program for claimants, with an opportunity for modest cost savings for employers.  As such, we see no need for this legislation.

Moreover, we oppose this legislation as it would erode one of the 2007 cost reduction reforms, and contribute to further increases in workers’ compensation program costs.