S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  2661--A
 
                        2017-2018 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             January 20, 2017
                                ___________
 
 Introduced  by  M.  of  A. GOTTFRIED, ENGLEBRIGHT, GALEF, PAULIN, TITUS,
   HOOPER, JAFFEE, COLTON, WEPRIN, OTIS, MONTESANO, L. ROSENTHAL, ABINAN-
   TI, SEAWRIGHT, D'URSO, ARROYO -- Multi-Sponsored by -- M. of A.  BENE-
   DETTO,  COOK,  CROUCH,  DINOWITZ,  GUNTHER,  LIFTON,  McDONALD, ORTIZ,
   PEOPLES-STOKES, PERRY, RAMOS -- read once and referred to the  Commit-
   tee  on  Health  --  recommitted to the Committee on Ways and Means in
   accordance with Assembly Rule 3, sec. 2 -- committee discharged,  bill
   amended,  ordered reprinted as amended and recommitted to said commit-
   tee
 
 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 Section 280-a of the public health law is  REPEALED  and  a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:
   §  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.
              

                                                            LBD02266-02-8

 A. 2661--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. 2661--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.
   6. NO PHARMACY  BENEFIT  MANAGER  SHALL,  WITH  RESPECT  TO  CONTRACTS
 BETWEEN  SUCH PHARMACY BENEFIT MANAGER AND A PHARMACY OR, ALTERNATIVELY,
 SUCH PHARMACY BENEFIT MANGER AND A PHARMACY'S CONTRACTING AGENT, SUCH AS
 A PHARMACY SERVICES ADMINISTRATIVE ORGANIZATION:
   (A) PROHIBIT OR PENALIZE A PHARMACIST OR PHARMACY FROM  DISCLOSING  TO
 AN  INDIVIDUAL  PURCHASING A PRESCRIPTION MEDICATION INFORMATION REGARD-
 ING:
   (1) THE COST OF THE PRESCRIPTION MEDICATION TO THE INDIVIDUAL, OR
   (2) THE AVAILABILITY OF  ANY  THERAPEUTICALLY  EQUIVALENT  ALTERNATIVE
 MEDICATIONS  OR ALTERNATIVE METHODS OF PURCHASING THE PRESCRIPTION MEDI-
 CATION, INCLUDING BUT NOT LIMITED TO, PAYING A CASH PRICE; OR
   (B) CHARGE OR COLLECT FROM AN INDIVIDUAL A COPAYMENT THAT EXCEEDS  THE
 TOTAL  SUBMITTED CHARGES BY THE PHARMACY FOR WHICH THE PHARMACY IS PAID.
 IF AN INDIVIDUAL PAYS A COPAYMENT, THE PHARMACY SHALL RETAIN THE ADJUDI-

 A. 2661--A                          4
 
 CATED COSTS AND THE PHARMACY BENEFIT MANAGER SHALL NOT REDACT OR  RECOUP
 THE ADJUDICATED COST.
   7.  ANY  PROVISION  OF A CONTRACT THAT VIOLATES THE PROVISIONS OF THIS
 SECTION SHALL BE DEEMED TO BE VOID AND UNENFORCEABLE.
   § 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.
   § 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.