S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 2312--A

                       2015-2016 Regular Sessions

                          I N  A S S E M B L Y

                            January 15, 2015
                               ___________

Introduced  by  M.  of  A. GOTTFRIED, ENGLEBRIGHT, GALEF, PAULIN, TITUS,
  HOOPER, JAFFEE, COLTON, WEPRIN, OTIS, MONTESANO, ROSENTHAL  --  Multi-
  Sponsored  by  -- M.   of A. ABINANTI, BENEDETTO, CLARK, COOK, CROUCH,
  DINOWITZ, DUPREY, FARRELL, GUNTHER, LAVINE, LIFTON,  McDONALD,  ORTIZ,
  PEOPLES-STOKES,  PERRY,  RAMOS,  ROBINSON,  WRIGHT  --  read  once and
  referred to the Committee on Health -- recommitted to the Committee on
  Health in accordance  with  Assembly  Rule  3,  sec.  2  --  committee
  discharged, bill amended, ordered reprinted as amended and recommitted
  to said committee

AN  ACT  to amend the public health law, in relation to pharmacy benefit
  managers; and to repeal certain provisions of such law relating there-
  to

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  Section  280-a of the public health law is REPEALED and a
new section 280-a is added to read as follows:
  S 280-A. PHARMACY BENEFIT MANAGERS. 1. DEFINITIONS.  AS USED  IN  THIS
SECTION, THE FOLLOWING TERMS SHALL HAVE THE FOLLOWING MEANINGS:
  (A)  "HEALTH  PLAN  OR  PROVIDER" MEANS AN ENTITY FOR WHICH A PHARMACY
BENEFIT MANAGER PROVIDES PHARMACY BENEFIT MANAGEMENT INCLUDING, BUT  NOT
LIMITED  TO:  (I)  A  HEALTH BENEFIT PLAN OR OTHER ENTITY THAT APPROVES,
PROVIDES, ARRANGES FOR, OR PAYS FOR HEALTH CARE ITEMS OR SERVICES, UNDER
WHICH PRESCRIPTION DRUGS FOR BENEFICIARIES OF THE ENTITY  ARE  PURCHASED
OR  WHICH PROVIDES OR ARRANGES REIMBURSEMENT IN WHOLE OR IN PART FOR THE
PURCHASE OF PRESCRIPTION DRUGS;  OR  (II)  A  HEALTH  CARE  PROVIDER  OR
PROFESSIONAL,  INCLUDING  A  STATE  OR  LOCAL  GOVERNMENT  ENTITY,  THAT
ACQUIRES PRESCRIPTION DRUGS TO USE OR DISPENSE IN PROVIDING HEALTH  CARE
TO PATIENTS.
  (B)  "PHARMACY  BENEFIT  MANAGEMENT"  MEANS  THE SERVICE PROVIDED TO A
HEALTH PLAN OR PROVIDER, DIRECTLY OR THROUGH ANOTHER  ENTITY,  INCLUDING
THE  PROCUREMENT  OF  PRESCRIPTION DRUGS TO BE DISPENSED TO PATIENTS, OR

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD02697-02-6
              

A. 2312--A                          2

THE ADMINISTRATION OR MANAGEMENT OF PRESCRIPTION DRUG BENEFITS,  INCLUD-
ING BUT NOT LIMITED TO, ANY OF THE FOLLOWING:
  (I) MAIL SERVICE PHARMACY;
  (II)  CLAIMS  PROCESSING,  RETAIL  NETWORK  MANAGEMENT,  OR PAYMENT OF
CLAIMS TO PHARMACIES FOR DISPENSING PRESCRIPTION DRUGS;
  (III) CLINICAL OR OTHER FORMULARY OR PREFERRED DRUG  LIST  DEVELOPMENT
OR MANAGEMENT;
  (IV)  NEGOTIATION  OR  ADMINISTRATION  OF  REBATES, DISCOUNTS, PAYMENT
DIFFERENTIALS, OR OTHER INCENTIVES,  FOR  THE  INCLUSION  OF  PARTICULAR
PRESCRIPTION  DRUGS  IN A PARTICULAR CATEGORY OR TO PROMOTE THE PURCHASE
OF PARTICULAR PRESCRIPTION DRUGS;
  (V) PATIENT COMPLIANCE, THERAPEUTIC INTERVENTION, OR  GENERIC  SUBSTI-
TUTION PROGRAMS; AND
  (VI) DISEASE MANAGEMENT.
  (C) "PHARMACY BENEFIT MANAGER" MEANS ANY ENTITY THAT PERFORMS PHARMACY
BENEFIT MANAGEMENT FOR A HEALTH PLAN OR PROVIDER.
  (D)  "MAXIMUM  ALLOWABLE  COST  PRICE"  MEANS  A MAXIMUM REIMBURSEMENT
AMOUNT SET BY THE PHARMACY BENEFIT MANAGER  FOR  THERAPEUTICALLY  EQUIV-
ALENT MULTIPLE SOURCE GENERIC DRUGS.
  2.  APPLICATION  OF SECTION.  THIS SECTION APPLIES TO THE PROVIDING OF
PHARMACY BENEFIT MANAGEMENT BY A PHARMACY BENEFIT MANAGER TO  A  PARTIC-
ULAR HEALTH PLAN OR PROVIDER.
  3.  DUTY,  ACCOUNTABILITY AND TRANSPARENCY.   (A) THE PHARMACY BENEFIT
MANAGER SHALL HAVE A FIDUCIARY RELATIONSHIP WITH AND OBLIGATION  TO  THE
HEALTH  PLAN  OR PROVIDER, AND SHALL PERFORM PHARMACY BENEFIT MANAGEMENT
WITH CARE, SKILL, PRUDENCE, DILIGENCE, AND PROFESSIONALISM.
  (B) ALL FUNDS RECEIVED BY THE PHARMACY BENEFIT MANAGER IN RELATION  TO
PROVIDING  PHARMACY BENEFIT MANAGEMENT SHALL BE RECEIVED BY THE PHARMACY
BENEFIT MANAGER IN TRUST FOR THE HEALTH PLAN OR PROVIDER  AND  SHALL  BE
USED  OR  DISTRIBUTED  ONLY  PURSUANT  TO THE PHARMACY BENEFIT MANAGER'S
CONTRACT WITH THE HEALTH PLAN OR PROVIDER OR APPLICABLE LAW; EXCEPT  FOR
ANY  FEE  OR  PAYMENT EXPRESSLY PROVIDED FOR IN THE CONTRACT BETWEEN THE
PHARMACY BENEFIT MANAGER AND THE HEALTH PLAN OR PROVIDER  TO  COMPENSATE
THE PHARMACY BENEFIT MANAGER FOR ITS SERVICES.
  (C)  THE  PHARMACY  BENEFIT  MANAGER SHALL PERIODICALLY ACCOUNT TO THE
HEALTH PLAN OR PROVIDER FOR ALL FUNDS RECEIVED BY THE  PHARMACY  BENEFIT
MANAGER.  THE HEALTH PLAN OR PROVIDER SHALL HAVE ACCESS TO ALL FINANCIAL
AND UTILIZATION INFORMATION OF THE PHARMACY BENEFIT MANAGER IN  RELATION
TO PHARMACY BENEFIT MANAGEMENT PROVIDED TO THE HEALTH PLAN OR PROVIDER.
  (D)  THE  PHARMACY  BENEFIT  MANAGER  SHALL DISCLOSE IN WRITING TO THE
HEALTH PLAN OR PROVIDER THE TERMS AND  CONDITIONS  OF  ANY  CONTRACT  OR
ARRANGEMENT  BETWEEN THE PHARMACY BENEFIT MANAGER AND ANY PARTY RELATING
TO PHARMACY BENEFIT MANAGEMENT PROVIDED TO THE HEALTH PLAN OR PROVIDER.
  (E) THE PHARMACY BENEFIT MANAGER SHALL  DISCLOSE  IN  WRITING  TO  THE
HEALTH  PLAN  OR  PROVIDER  ANY  ACTIVITY, POLICY, PRACTICE, CONTRACT OR
ARRANGEMENT OF THE PHARMACY BENEFIT MANAGER THAT DIRECTLY OR  INDIRECTLY
PRESENTS  ANY  CONFLICT  OF INTEREST WITH THE PHARMACY BENEFIT MANAGER'S
RELATIONSHIP WITH OR OBLIGATION TO THE HEALTH PLAN OR PROVIDER.
  (F) ANY INFORMATION REQUIRED TO BE DISCLOSED  BY  A  PHARMACY  BENEFIT
MANAGER  TO A HEALTH PLAN OR PROVIDER UNDER THIS SECTION THAT IS REASON-
ABLY DESIGNATED BY THE PHARMACY BENEFIT MANAGER AS PROPRIETARY OR  TRADE
SECRET  INFORMATION  SHALL  BE  KEPT  CONFIDENTIAL BY THE HEALTH PLAN OR
PROVIDER, EXCEPT AS REQUIRED OR PERMITTED BY LAW,  INCLUDING  DISCLOSURE
NECESSARY  TO PROSECUTE OR DEFEND ANY LEGITIMATE LEGAL CLAIM OR CAUSE OF
ACTION.

A. 2312--A                          3

  4. PRESCRIPTIONS.  A PHARMACY BENEFIT MANAGER MAY  NOT  SUBSTITUTE  OR
CAUSE  THE SUBSTITUTING OF ONE PRESCRIPTION DRUG FOR ANOTHER IN DISPENS-
ING A PRESCRIPTION, OR ALTER OR CAUSE THE ALTERING OF  THE  TERMS  OF  A
PRESCRIPTION, EXCEPT WITH THE APPROVAL OF THE PRESCRIBER OR AS EXPLICIT-
LY REQUIRED OR PERMITTED BY LAW.
  5. A PHARMACY BENEFIT MANAGER SHALL, WITH RESPECT TO CONTRACTS BETWEEN
A  PHARMACY BENEFIT MANAGER AND A PHARMACY OR, ALTERNATIVELY, A PHARMACY
BENEFIT MANAGER AND A PHARMACY'S CONTRACTING AGENT, SUCH AS  A  PHARMACY
SERVICES  ADMINISTRATIVE  ORGANIZATION,  INCLUDE A REASONABLE PROCESS TO
APPEAL, INVESTIGATE AND RESOLVE DISPUTES REGARDING MULTI-SOURCE  GENERIC
DRUG   PRICING.   THE   APPEALS  PROCESS  SHALL  INCLUDE  THE  FOLLOWING
PROVISIONS:
  (A) THE  RIGHT  TO  APPEAL  BY  THE  PHARMACY  AND/OR  THE  PHARMACY'S
CONTRACTING  AGENT SHALL BE LIMITED TO THIRTY DAYS FOLLOWING THE INITIAL
CLAIM SUBMITTED FOR PAYMENT;
  (B) A TELEPHONE NUMBER THROUGH WHICH A NETWORK  PHARMACY  MAY  CONTACT
THE  PHARMACY BENEFIT MANAGER FOR THE PURPOSE OF FILING AN APPEAL AND AN
ELECTRONIC MAIL ADDRESS OF THE INDIVIDUAL WHO IS RESPONSIBLE  FOR  PROC-
ESSING APPEALS;
  (C) THE PHARMACY BENEFIT MANAGER SHALL SEND AN ELECTRONIC MAIL MESSAGE
ACKNOWLEDGING  RECEIPT OF THE APPEAL. THE PHARMACY BENEFIT MANAGER SHALL
RESPOND IN AN ELECTRONIC MESSAGE TO THE PHARMACY AND/OR  THE  PHARMACY'S
CONTRACTING  AGENT FILING THE APPEAL WITHIN SEVEN BUSINESS DAYS INDICAT-
ING ITS DETERMINATION. IF THE APPEAL IS  DETERMINED  TO  BE  VALID,  THE
MAXIMUM  ALLOWABLE COST FOR THE DRUG SHALL BE ADJUSTED FOR THE APPEALING
PHARMACY EFFECTIVE AS OF THE DATE OF THE ORIGINAL CLAIM FOR PAYMENT. THE
PHARMACY BENEFIT MANAGER SHALL REQUIRE THE APPEALING PHARMACY TO REVERSE
AND REBILL THE CLAIM IN  QUESTION  IN  ORDER  TO  OBTAIN  THE  CORRECTED
REIMBURSEMENT;
  (D) IF AN UPDATE TO THE MAXIMUM ALLOWABLE COST IS WARRANTED, THE PHAR-
MACY  BENEFIT  MANAGER OR COVERED ENTITY SHALL ADJUST THE MAXIMUM ALLOW-
ABLE COST OF THE DRUG EFFECTIVE FOR ALL SIMILARLY SITUATED PHARMACIES IN
ITS NETWORK IN THE STATE ON THE DATE THE APPEAL  WAS  DETERMINED  TO  BE
VALID; AND
  (E) IF AN APPEAL IS DENIED, THE PHARMACY BENEFIT MANAGER SHALL IDENTI-
FY  THE  NATIONAL  DRUG  CODE  OF  A THERAPEUTICALLY EQUIVALENT DRUG, AS
DETERMINED BY THE FEDERAL FOOD AND DRUG ADMINISTRATION, THAT  IS  AVAIL-
ABLE  FOR  PURCHASE  BY PHARMACIES IN THIS STATE FROM WHOLESALERS REGIS-
TERED PURSUANT TO SUBDIVISION FOUR OF SECTION SIXTY-EIGHT HUNDRED  EIGHT
OF THE EDUCATION LAW AT A PRICE WHICH IS EQUAL TO OR LESS THAN THE MAXI-
MUM  ALLOWABLE  COST FOR THAT DRUG AS DETERMINED BY THE PHARMACY BENEFIT
MANAGER.
  S 2. Severability.  If any provision of this act, or  any  application
of  any  provision  of  this act, is held to be invalid, or ruled by any
federal agency to violate or be inconsistent with any applicable federal
law or regulation, that shall not affect the validity  or  effectiveness
of  any  other provision of this act, or of any other application of any
provision of this act.
  S 3. This act shall take effect on the ninetieth day  after  it  shall
become  a  law  and  shall  apply to any contract for providing pharmacy
benefit management made or renewed on or after that date.