Legislative Memo

Lev Ginsburg
Director of Government Affairs
T 518.465.7517 x207


S.3749-E (Robach) / A.5183-D (Simotas)



Restrictions on Workers' Comp Pharmaceutical Networks



June 19, 2012


The Business Council opposes this legislation that will reverse one of the cost reductions included in the 2007 workers’ compensation reform package. In instances 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 charges below the state’s “published prices,” a price typically considerably higher than an in-network negotiated price, 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, through which “volume discounts” could be offered to employers and claimants that were part of the network.

While this amendment is an improvement on the original bill, it still mandates that employers pay out-of-network pharmacies significantly more for prescriptions than in-network negotiated prices for the same drugs. This legislation would fully negate any benefit from the 2007 pharmacy network reform, by eliminating the basis on which networks would provide discounts in the first place.

The state is seeing large and 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 pharmaceutical 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.

For these reasons, The Business Council respectfully opposes this bill.