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Legislative Memo

Lev Ginsburg, Esq.
Director of Government Affairs
T 518.465.7511, ext. 207
www.bcnys.org

BILL:

S.5623 (Hannon) / A.4717-A (Rosenthal)

Support

SUBJECT:

PBM Civil Penalties

 

DATE:

May 15, 2017

 

The Business Council of New York State opposes S.5623 (Hannon) / A.4717-A (Rosenthal), which enacts penalties on Pharmacy Benefit Managers (PBMs) and mandates the impossible task that PBMs provide, for every Maximum Allowable Cost (MAC) Appeal received, the name of specific wholesalers that could sell a generic drug to a specific pharmacy at the MAC cost.  While this legislation purports to control costs, it does just the opposite. 

The purpose of the MAC list is to identify the market cost for generic drugs in an effort to achieve the lowest possible cost and not to specifically identify wholesalers offering pharmaceuticals at these particular prices.  These disclosure provisions would surely undermine the use of the MAC list by PBMs to set generic drug reimbursement at cost-effective levels.

The new MAC Appeal Law gives recourse for pharmacies when an update to the MAC is warranted based on changes in the market. The law incentivizes pharmacies to negotiate lower prices for prescription drugs.  This bill, and its included penalties undermines the usefulness of the MAC appeals process for all parties, in keeping the list as an accurate reflection of costs, as currently illustrated by the very small number of appeals that have been upheld to date, even with PBMs receiving thousands of  appeals the first year since the passage of the law. This bill would penalize any and all PBM non-compliance at $5,000 per occurrence, without defining “violation” and would be imposed whether such non-compliance is unintentional or accidental, including actions that occur without any fault.  Such treatment is unprecedented and would add millions of dollars to the ultimate cost of healthcare for New Yorkers. 

The additional administrative burdens both for the Attorney General’s office and PBMS would undoubtedly create unnecessary costs which would ultimately be passed on to premium-payers, namely New York’s employers, who are already struggling with astronomical healthcare costs.  There is simply no need to further add to this burden.

For these reasons, The Business Council opposes S.5623 (Hannon) / A.4717-A (Rosenthal).