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Legislative Memo

Lev Ginsburg
Director of Government Affairs
T 518.465.7511
www.bcnys.org

BILL:

A.9264 (Rosenthal) / S.7025 (Hannon)

Support

SUBJECT:

Mandates PBMs to disclose proprietary pricing methodology

 

DATE:

May 23, 2014

 

The Business Council opposes A.9264 (Rosenthal) / S.7025 (Hannon) which among other things, would mandate pharmacy benefit managers (PBMs) to make available to contracted pharmacies access to the proprietary methodology used in determining the maximum allowable cost schedules as well as mandate a contractual appeals process for contracted pharmacies. The bill would lead to higher drug prices and higher premiums for consumers and employers alike.

PBMs have developed and successfully implemented programs such as drug utilization review, formulary management and disease and health management which encourage the appropriate, safe and effective use of prescription drugs to improve patient outcomes and control costs. The ability to use leverage for volume discounts and utilize contractual tools to manage prescription drug benefits is essential to allowing PBMs to continue to assure that pharmaceutical benefits are affordable for premium payers.

In the current market system, pharmacies compete with one another by offering deeper discounts or lower dispensing fees in order to be included in a PBM's network. By enabled contracting pharmacies and others to see PBMs' competitively sensitive cost information, a PBM's ability to negotiate discounts with these pharmacies and rebates with pharmaceutical companies is drastically reduced, thus significantly increasing drug prices for patients and payers.

In an age of ever-increasing health care costs, the state needs to be looking for ways to increase flexibility in cost management rather than creating market distortions that favor one party over another.

For these reasons, The Business Council opposes A.9264/ S.7025.