Another View: The Buffalo Nerws
New York’s PBM Legislation Needs to be Brought Back to Basics
By: Heather Briccetti, President/CEO, The Business Council of New York State
For almost a decade as head of the Business Council of New York State, I’ve witnessed many instances in which reasonable state or regulatory proposals are manipulated and modified far beyond the intent of the original idea.
Such is the case with a bill (S.6531/A.2836A ) that will have serious consequences for the state’s budget, employers and prescription drug consumers.
Governor Cuomo initially advanced reasonable regulations for pharmacy benefit managers – frequently referred to as PBMs. However, after rejecting the original measure during budget negotiations, legislative sponsors expanded its scope ultimately reducing flexibility and imposing additional complexities to New York’s health care system. The bill, with additional tinkering by the legislature passed both houses -- and by year’s end, will be on Governor Cuomo’s desk.
PBMs impact us by using cost-saving tools to keep costs down. In fact, PBMs saved the state’s Medicaid program $3.8 billion from 2011 through 2016. PBMs play an important role in New York’s health care system and their actions can curb increases in health insurance premiums.
In September, I listened carefully to state budget director Robert Mujica as he spoke to business leaders at our annual meeting. He reported that in order to close a multi-billion-dollar budget gap, the state will need to find ways to reduce expenses. He said that in anticipation of potential cuts from Washington, to programs such as Medicaid, New York is seeking to make midyear policy changes to reduce the costs-drivers of healthcare.
Keeping this in mind, consider the uncertain impact new legislation brings. Including in this proposal is a tangled clause opening the door to third party legal actions against PBMs by pharmacists and others based on conflicting expectations contained in the bill. These provisions are counterproductive to the state’s efforts to rein in healthcare costs and should be removed from the potential law.
If this measure moves ahead as written, the cost of healthcare will undoubtedly rise. One alarming analysis estimated that over the next ten years, it could increase costs by $28 billion. Pharmacy benefit managers’ cost controls, which provide savings to New York’s employees and retirees, will be seriously jeopardized.
The 2020 legislative session and will certainly present many challenges. Elected officials will push for increased funding for infrastructure, workforce development, education and many other important programs. However, if this bill is signed into law in its current form, the state’s healthcare budget, among its largest elements, will demand more dollars; leaving fewer resources for other budget priorities. This is legislatively induced outcome that hurts all New Yorkers.
We encourage Governor Cuomo to bring the legislation back to the more measured and sensible regulation he first prescribed bringing a dose of relief for millions of consumers and taxpayers.