New York now has a Department of Financial Services Office of Pharmacy Benefits to provide oversight to pharmacy benefit managers or administrators who are key intermediaries in the prescription drug supply chain, who, without this oversight, have controlled for drug prices for health plans and reimbursement rates for pharmacies have been a long time coming, Governor Kathy Hochul announced Wednesday.
The new office will be tasked with licensing and overseeing the industry, keeping an eye on pharmacy benefit managers’ impact on consumers and the cost of health care.
“As we continue our comeback from the COVID-19 pandemic, it is critical that we seize every opportunity to improve the health care system and lower costs for New Yorkers,” Governor Hochul said. “This historic regulatory body will provide careful oversight to protect consumers from predatory practices in the largely unregulated pharmacy benefit manager industry. My administration remains committed to doing everything in its power to reduce the burden of health insurance and prescription drug costs for New Yorkers.
Earlier this year, Governor Kathy Hochul signed into law the regulatory regime for Pharmaceutical Benefit Managers (PBMs) in the country, giving DFS new authority to license and oversee the industry. DFS now has the power to address widely reported problematic practices in the PBM industry, which in turn will help reduce drug and health insurance costs, protect New Yorkers who access those drugs, and support New York pharmacies, many of which are small independent businesses.
Additionally, with the passage of the enacted state budget for 2023, the Democrat secured a $5 million appropriation to fund and staff the new office. As the program fully develops, the costs to administer this initiative will be offset by applying fees, assessments, and sanctions directly to the PBM industry, ensuring that the cost of regulating this industry falls on PBMs, not about taxpayers.
In addition to regulating PBMs, DFS’s existing authority to investigate drug price spikes is now under the supervision of the new Office of Pharmaceutical Benefits. DFS will continue to review reports, monitor market conduct, and ensure proper application of consumer protections in New York.
DFS has met with external stakeholders in preparation for registration deadlines. DFS reminds all PBMs of its requirement to register with the Office by June 1, 2022 and to file their first annual report by July 1, 2022. The office has posted registration and annual report guidance at the DFS website.
The DFS will soon present regulatory amendments that reflect the creation of this Bureau. More information will be available in the State Register.