S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   8165
 
                        2019-2020 Regular Sessions
 
                           I N  A S S E M B L Y
 
                               June 4, 2019
                                ___________
 
 Introduced by M. of A. CAHILL -- read once and referred to the Committee
   on Insurance
 
 AN  ACT  to  amend  the  insurance law, in relation to reducing pharmacy
   benefit manager costs
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:

   Section  1.  The insurance law is amended by adding a new section 3114
 to read as follows:
   § 3114. PHARMACY BENEFIT MANAGEMENT  SERVICES.  (A)  ANY  CONTRACT  OR
 OTHER  ARRANGEMENT  ENTERED  INTO  BY  A  HEALTH INSURER OFFERING HEALTH
 INSURANCE UNDER ARTICLE THIRTY-TWO OR FORTY-THREE OF  THIS  CHAPTER  FOR
 THE PROVISION AND ADMINISTRATION OF PHARMACY BENEFIT MANAGEMENT SERVICES
 SHALL BE BASED ON A PASS-THROUGH PRICING MODEL AND INCLUDE THE FOLLOWING
 REQUIREMENTS:
   (1)  PAYMENT  TO  THE  PHARMACY  BENEFIT  MANAGER FOR PHARMACY BENEFIT
 MANAGEMENT SERVICES SHALL BE LIMITED TO  THE  ACTUAL  INGREDIENT  COSTS,
 DISPENSING  FEES  PAID  TO  PHARMACIES,  AND  AN ADMINISTRATIVE FEE THAT
 COVERS THE COST OF PROVIDING PHARMACY BENEFIT MANAGEMENT SERVICES PURSU-
 ANT TO A CONTRACT DESCRIBED  IN  THIS  SUBSECTION.  THE  DEPARTMENT  MAY
 ESTABLISH A MAXIMUM ADMINISTRATIVE FEE;
   (2)  THE  PHARMACY  BENEFIT  MANAGER  SHALL  IDENTIFY  ALL SOURCES AND
 AMOUNTS OF INCOME, PAYMENTS, AND  FINANCIAL  BENEFITS  TO  THE  PHARMACY
 BENEFIT  MANAGER RELATED TO THE PROVISION AND ADMINISTRATION OF PHARMACY
 BENEFIT MANAGEMENT SERVICES ON BEHALF OF THE HEALTH CARE  PLAN,  INCLUD-
 ING,  BUT  NOT  LIMITED  TO, ANY PRICING DISCOUNTS, REBATES OF ANY KIND,
 INFLATIONARY PAYMENTS, CREDITS, CLAWBACKS,  FEES,  GRANTS,  CHARGEBACKS,
 REIMBURSEMENTS,  OR  OTHER BENEFITS AND SHALL ENSURE THAT ANY PORTION OF
 SUCH INCOME, PAYMENTS, AND FINANCIAL BENEFITS IS PASSED THROUGH  TO  THE
 HEALTH CARE PLAN IN FULL TO REDUCE THE REPORTABLE INGREDIENT COST;
   (3)  THE  PHARMACY BENEFIT MANAGER SHALL FULLY DISCLOSE TO THE DEPART-
 MENT AND TO THE HEALTH CARE PLAN THE SOURCES AND AMOUNTS OF ALL  INCOME,
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD13129-02-9

 A. 8165                             2
 
 PAYMENTS,  AND  FINANCIAL  BENEFITS REFERRED TO IN PARAGRAPH TWO OF THIS
 SUBSECTION RECEIVED BY THE PHARMACY BENEFIT MANAGER;
   (4)  THE  PHARMACY BENEFIT MANAGER SHALL IDENTIFY ALL INGREDIENT COSTS
 AND DISPENSING FEES OR SIMILAR PAYMENTS MADE  BY  THE  PHARMACY  BENEFIT
 MANAGER  TO  ANY  PHARMACY  IN  CONNECTION  WITH  THE  CONTRACT OR OTHER
 ARRANGEMENT;
   (5) THE PHARMACY BENEFIT MANAGER SHALL NOT UTILIZE ANY FORM OF  SPREAD
 PRICING IN ANY CONTRACT OR OTHER ARRANGEMENT WITH HEALTH CARE PLANS. FOR
 PURPOSES OF THIS SUBSECTION "SPREAD PRICING" MEANS ANY AMOUNT CHARGED OR
 CLAIMED  BY THE PHARMACY BENEFIT MANAGER IN EXCESS OF THE AMOUNT PAID TO
 PHARMACIES ON BEHALF OF THE HEALTH CARE PLAN LESS AN ADMINISTRATIVE  FEE
 AS  DESCRIBED IN THIS SUBSECTION. ANY SUCH EXCESS AMOUNT SHALL BE REMIT-
 TED TO THE HEALTH CARE PLAN ON A QUARTERLY BASIS;
   (6) PHARMACY BENEFIT MANAGERS  SHALL  MAKE  THEIR  PAYMENT  MODEL  FOR
 ADMINISTRATIVE FEES AVAILABLE TO THE HEALTH CARE PLAN AND TO THE DEPART-
 MENT.    THE  HEALTH  CARE PLAN SHALL, IF SO DIRECTED BY THE DEPARTMENT,
 MAKE CHANGES TO THE PAYMENT MODEL AND RESUBMIT AN  AMENDED  CONTRACT  OR
 CONTRACTS TO THE DEPARTMENT FOR REVIEW AND APPROVAL.
   (B)  ANY  CHANGES  TO  PREMIUMS RESULTING FROM SUCH CONTRACTS SHALL BE
 SUBJECT TO THE APPROVAL OF THE DEPARTMENT.
   (C) FOR THE PURPOSES OF  THIS  SECTION,  THE  TERM  "PHARMACY  BENEFIT
 MANAGER"  MEANS  AN  ENTITY  THAT  CONTRACTS WITH PHARMACIES OR PHARMACY
 CONTRACTING AGENTS ON BEHALF OF A HEALTH PLAN,  STATE  AGENCY,  INSURER,
 MANAGED CARE ORGANIZATION, OR OTHER THIRD-PARTY PAYOR TO PROVIDE PHARMA-
 CY HEALTH BENEFIT SERVICES OR ADMINISTRATION.
   § 2. This act shall take effect immediately.