A05882 Summary:
| BILL NO | A05882C |
| SAME AS | SAME AS S05939-C |
| SPONSOR | McDonald |
| COSPNSR | Woerner, Bologna, Dais, Griffin, Hevesi, Stirpe, Lee, Kay, Brabenec, Buttenschon, Shimsky, Glick, McMahon, Manktelow, Angelino, Brown K, Blankenbush, Romero, Otis, Paulin, Dinowitz, Solages, Sayegh, Gallahan, Jones, Simone, Alvarez, Rajkumar, Reyes, Burdick, Lasher, Lupardo, Barrett, Ra, Rosenthal, Simon, McDonough, Benedetto, Zaccaro, DeStefano, Blumencranz, Miller, Sempolinski, Chludzinski, Palmesano, Lemondes, Beephan, Maher, Lavine, Weprin, Pheffer Amato, Simpson, Hunter, Fitzpatrick, Burroughs, Novakhov, Slater, Stern, Steck, Bailey, De Los Santos, Clark, Shrestha, Wieder, Magnarelli, Seawright, Conrad, Jacobson, Eachus, Gray, Cruz, Williams, Schiavoni, Bendett, Jensen, Lunsford, Kelles, Bronson, Tapia, Davila, Meeks, Gonzalez-Rojas, Bores, Rivera, Mikulin, Santabarbara, Kassay, Hyndman, Gallagher, Rozic, Braunstein, Burke, Carroll P, Lucas, Peoples-Stokes, Yeger, Taylor, Forrest, Anderson, Bichotte Hermelyn, Carroll R, Chandler-Waterman, Colton, Cook, Cunningham, Dilan, Fall, Gibbs, Giglio, Hawley, Hooks, Jackson, Kim, Morinello, O'Pharrow, Ramos, Septimo, Walker, Wright, Zinerman |
| MLTSPNSR | Levenberg |
| Amd §280-a, Pub Health L; amd §2911, Ins L | |
| Requires a pharmacy benefit manager to pay a participating pharmacy at minimum at the national average drug acquisition cost (NADAC) rate, or at the pharmacy acquisition cost rate if greater or there is not a NADAC rate, plus a professional dispensing fee that is at minimum the professional dispensing fee paid under the state medical assistance program. | |
A05882 Actions:
| BILL NO | A05882C | |||||||||||||||||||||||||||||||||||||||||||||||||
| 02/24/2025 | referred to health | |||||||||||||||||||||||||||||||||||||||||||||||||
| 06/09/2025 | amend and recommit to health | |||||||||||||||||||||||||||||||||||||||||||||||||
| 06/09/2025 | print number 5882a | |||||||||||||||||||||||||||||||||||||||||||||||||
| 06/09/2025 | amend and recommit to health | |||||||||||||||||||||||||||||||||||||||||||||||||
| 06/09/2025 | print number 5882b | |||||||||||||||||||||||||||||||||||||||||||||||||
| 07/02/2025 | reference changed to insurance | |||||||||||||||||||||||||||||||||||||||||||||||||
| 01/07/2026 | referred to insurance | |||||||||||||||||||||||||||||||||||||||||||||||||
| 02/24/2026 | amend and recommit to insurance | |||||||||||||||||||||||||||||||||||||||||||||||||
| 02/24/2026 | print number 5882c | |||||||||||||||||||||||||||||||||||||||||||||||||
A05882 Memo:
Go to topNEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
TITLE OF BILL: An act to amend the public health law and the insurance law, in relation to payments by pharmacy benefit managers to participating pharmacies PURPOSE OF THE BILL: The Patient Access to Pharmacy Act (PAPA) seeks to simplify and change the methodology for pharmacy reimbursement for commercial health plans to a Cost-Plus model that is more transparent for patients, payors, and pharmacies while saving costs through the process. SUMMARY OF SPECIFIC PROVISIONS: Section 1: Amends subdivision 1 of section 280-a of the public health law by adding paragraphs (j) and (k). To define the Pharmacy Acquisition Cost Rate as the cost a participating pharmacy pays to acquire drugs, including generic, brand-name, biologics, and those produced through genetic or biopharmaceutical processes, based on pharmacy cost invoices. It also defines the National Average Drug Acquisition Cost as the month- ly survey conducted by the Centers for Medicare and Medicaid Services (CMS) to determine the average acquisition cost of Medicaid-covered outpatient drugs. Section 2: Amends subdivision 3 of section 280-a of the public health law to add a paragraph (b). To prohibit pharmacy benefit managers from substituting or altering prescription drugs without prescriber approval or legal authorization. The superintendent and commissioner may issue regulations on when substitutions are permitted. Additionally, pharmacy benefit managers must reimburse participating pharmacies at least the National Average Drug Acquisition Cost (NADAC) rate or the Pharmacy Acquisition Cost Rate, whichever is higher, plus a professional dispens- ing fee equal to that paid under the state medical assistance program. For medications requiring specialized handling, distribution, adminis- tration, patient education, care coordination, monitoring, special pack- aging, or shipping, pharmacies must receive an additional dispensing fee to ensure they are not reimbursed below their acquisition and dispensing costs. Section 3: Amends the opening paragraph of subdivision 4 of section 280-a of the public health law. To require pharmacy benefit managers to establish a reasonable process for pharmacies or their contracting agents to appeal, investigate, and resolve disputes over drug pricing for multi-source generics, brand-name drugs, biologics, and drugs produced through genetic or biopharmaceutical processes. Section 4: Amends section 2911 of the insurance law to add a new subsection (d) to ensure that pharmacy benefit managers reimburse phar- macies fairly by covering the actual cost of acquiring and dispensing medications. It mandates payment at either the National Average Drug Acquisition Cost (NADAC) rate or the Pharmacy Acquisition Cost Rate, if there is not a NADAC rate, along with a professional dispensing fee. Additional compensation is required for drugs needing special handling, administration, or monitoring. The amendment also establishes a stand- ardized appeals process for pharmacies to dispute pricing issues. This paragraph does not apply to prescriptions or prescription drugs that are distributed or paid for by a trust fund established under the Labor Management Relations Act, or provided through a health, welfare, or pharmaceutical plan that has been created, adopted, or funded as part of a collective bargaining agreement between an employer and a labor organ- ization or certified employee organization. Section 5: Sets Effective Date. JUSTIFICATION: The Patient Access to Pharmacy Act (PAPA) is part of a continued to effort to lower prescription drug costs for patients, stabilize and potentially improve pharmacy access in underserved areas, and provide greater transparency on what plan sponsors/employers are paying for prescription drug costs which will lead to cost savings. This is the same reimbursement methodology adopted by New York State Medicaid in 2023 which has led to consistent patient coverage and enhanced rebate revenues which has' stabilized the cost of, the prescription program. The methodology is known as Cost-Plus. Pharmacy Benefit Managers (PBMs) serve an important part of delivering pharmacy services as they work on behalf of the plan sponsors or employers to manage the pharmacy benefit. Historically their purpose is to process claims; however, over the past 20 years they have negotiated in an opaque environment with the pharma- ceutical companies for rebates which are alleged to lower the cost of prescription benefits. However, the cost-savings is not realized with patients or those paying for the pharmacy benefit cost. Year over year insurance premiums for commercial health plans rise between 8-13% of which pharmaceutical companies being blamed as the main culprit..This is despite the fact that in 2024, average brand-name drugs' list prices grew by only 2.3%. After adjusting for overall inflation, brand-name drug net prices dropped for an unprecedented seventh consecutive year according to industry analysts. This is due to the rebate pumping phenomenon where the PBMs solicit a rebate from the manufacturer, the manufacturer raises the price and the PBM solicits a greater rebate creating the gross-tonet bubbled In light of the fact that PBMs are licensed and monitored by the New York State Department of Financial Services (DFS), it is time to continue to shine light on the true cost of drug costs by using a national standard for determining cost benchmarks for pharmacy reimbursement by using the National Average Drug Acquisition Cost (NADAC) which is a national monthly survey of actual costs incurred by pharmacies to acquire medications. The Cost-Plus methodology moves away from the prior Average Wholesale Price (AWP) - reimbursement which was grossly overinflated as well as the Wholesaler Acquisition Cost (WAC) and Maximum Acquisition Cost (MAC) pricing methodology which were not consistent and did not provide an actual picture of pharmaceutical costs. NADAC is a nationally accepted benchmark, so recognized that the three major PBMs that control over 80% of all pharmacy claims have announced that they are moving to the Cost- Plus model for commercial plans in 2026. The PAPA is also important considering the years of findings established in a bi-partisan manner by the US Congress and the Federal Trade Commis- sion (FTC) which have found that PBMs have established reimbursement methodologies that reimburse their own pharmacies more than traditional independent pharmacies or direct high-cost specialty business to their own operations. Although the big 3 PBMs deny this accusation, the FTC has been highly critical of their activities and the current 119th Congress is pursuing methods to provide greater scrutiny, transparency, and stewardship of public dollars. Passage of the PAPA will provide a very clear guide for reimbursement of pharmaceuticals which will benefit both the patient and the payor while providing stable reimbursement to pharmacies regardless of their owner or location. LEGISLATIVE HISTORY: 2023-2024: A.10327/S.9570 FISCAL IMPLICATIONS: None to the state EFFECTIVE DATE: This act shall take effect January 1, 2026 and apply to all policies and contracts issued, renewed, modified, altered or amended on and after such date.
A05882 Text:
Go to topSTATE OF NEW YORK ________________________________________________________________________ 5882--C 2025-2026 Regular Sessions IN ASSEMBLY February 24, 2025 ___________ Introduced by M. of A. McDONALD, WOERNER, BOLOGNA, DAIS, GRIFFIN, HEVE- SI, STIRPE, LEE, KAY, BRABENEC, BUTTENSCHON, SHIMSKY, GLICK, McMAHON, MANKTELOW, ANGELINO, K. BROWN, BLANKENBUSH, ROMERO, OTIS, PAULIN, DINOWITZ, SOLAGES, SAYEGH, GALLAHAN, SIMONE, ALVAREZ, RAJKUMAR, REYES, BURDICK, LASHER, LUPARDO, BARRETT, RA, ROSENTHAL, SIMON, McDONOUGH, BENEDETTO, ZACCARO, DeSTEFANO, BLUMENCRANZ, MILLER, SEMPOLINSKI, CHLUDZINSKI, PALMESANO, LEMONDES, BEEPHAN, MAHER, LAVINE, WEPRIN, PHEFFER AMATO, SIMPSON, HUNTER, FITZPATRICK, BURROUGHS, NOVAKHOV, SLATER, STERN, STECK, BAILEY, DE LOS SANTOS, CLARK, SHRESTHA, WIEDER, MAGNARELLI, SEAWRIGHT, CONRAD, JACOBSON, EACHUS, GRAY, CRUZ, WILLIAMS, SCHIAVONI, BENDETT, JENSEN, LUNSFORD, KELLES, BRONSON, TAPIA, DAVILA, MEEKS, GONZALEZ-ROJAS, BORES, RIVERA, MIKULIN, SANTABARBARA, KASSAY, HYNDMAN, GALLAGHER, ROZIC, BRAUNSTEIN, BURKE, P. CARROLL, LUCAS, PEOPLES-STOKES, YEGER, TAYLOR, FORREST, R. CARROLL, CUNNINGHAM, DILAN, FALL, HAWLEY, HOOKS, JACKSON, KIM, MORINELLO, O'PHARROW, SEPTIMO, WALKER, WRIGHT, ZINERMAN -- Multi-Sponsored by -- M. of A. LEVENBERG -- read once and referred to the Committee on Health -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee -- again reported from said committee with amend- ments, ordered reprinted as amended and recommitted to said committee -- reference changed to the Committee on Insurance -- recommitted to the Committee on Insurance 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 and the insurance law, in relation to payments by pharmacy benefit managers to participating pharmacies The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Subdivision 1 of section 280-a of the public health law is 2 amended by adding two new paragraphs (j) and (k) to read as follows: EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD01972-10-6A. 5882--C 2 1 (j) "Pharmacy acquisition cost rate" means the cost paid by a partic- 2 ipating pharmacy to acquire generic, brand name drugs, or biologic 3 products, or drugs produced through genetic technology or biopharmaceu- 4 tical processes pursuant to cost invoices from the pharmacy. 5 (k) "National average drug acquisition cost" means the monthly survey 6 of retail pharmacies conducted by the federal Centers for Medicare and 7 Medicaid Services (CMS) to determine average acquisition cost for Medi- 8 caid covered outpatient drugs. 9 § 2. Subdivision 3 of section 280-a of the public health law, as 10 amended by chapter 128 of the laws of 2022, is amended to read as 11 follows: 12 3. Prescriptions. (a) A pharmacy benefit manager may not substitute or 13 cause the substituting of one prescription drug for another in dispens- 14 ing a prescription, or alter or cause the altering of the terms of a 15 prescription, except with the approval of the prescriber or as explicit- 16 ly required or permitted by law, including regulations of the department 17 of financial services or the department of health. The superintendent 18 and commissioner, in coordination with each other, are authorized to 19 promulgate regulations to determine when substitution of prescription 20 drugs may be required or permitted. 21 (b) To the extent permitted under federal law, a pharmacy benefit 22 manager shall pay a participating pharmacy at minimum at the national 23 average drug acquisition cost (NADAC) rate or at the pharmacy acquisi- 24 tion cost rate if there is not a NADAC rate, plus a professional 25 dispensing fee that is at minimum the professional dispensing fee paid 26 under the state medical assistance program. For generic, brand name 27 medications, biologic products, or drugs produced through genetic tech- 28 nology or biopharmaceutical processes as required by a manufacturer, a 29 federal or state regulatory agency, or accrediting body that require 30 unique handling, distribution or administration, in-depth patient teach- 31 ing, coordination of care, or frequent or special monitoring to ensure 32 successful use, special packaging, shipping or other costs to be 33 incurred by the pharmacy for the dispensing process that is greater than 34 the professional dispensing fee paid by the state medical assistance 35 program, participating pharmacies shall be paid a professional dispens- 36 ing fee for these costs to ensure a participating pharmacy is not paid 37 less than its cost to acquire and dispense medications. A pharmacy 38 benefit manager shall not pay a participating pharmacy below its pharma- 39 cy acquisition cost but may require demonstration of such cost through 40 the provision of pharmacy invoices. Provided, however, this paragraph 41 shall not apply to prescriptions, prescription drugs, or payments for 42 prescription drugs, distributed, or paid for in whole or in part, by a 43 trust fund established or maintained under the Labor Management 44 Relations Act (29 U.S. Code § 186), pursuant to coverage required by the 45 terms of a collective bargaining agreement between an employer and a 46 labor organization or certified employee organization; or pursuant to a 47 health plan, welfare fund, pharmaceutical plan, or other form of medical 48 or prescription coverage established, adopted, utilized, funded, or 49 agreed upon by an employer and a labor organization or certified employ- 50 ee organization pursuant to a collective bargaining agreement; or, where 51 the plan, coverage, fund, or program has been collectively bargained and 52 pertains to a sponsored multi-employer plan, including but not limited 53 to, plans developed under article five-G of the general municipal law, 54 articles forty-four and forty-seven of the insurance law, or any plans 55 created pursuant to the Internal Revenue Code, Employee RetirementA. 5882--C 3 1 Income Security Act or any applicable federal statute that provides such 2 benefits to employee and retiree groups. 3 § 3. The opening paragraph of subdivision 4 of section 280-a of the 4 public health law, as added by chapter 828 of the laws of 2021, is 5 amended to read as follows: 6 A pharmacy benefit manager shall, with respect to contracts between a 7 pharmacy benefit manager and a pharmacy or, alternatively, a pharmacy 8 benefit manager and a pharmacy's contracting agent, such as a pharmacy 9 services administrative organization, include a reasonable process to 10 appeal, investigate and resolve disputes regarding multi-source generic, 11 brand name, and biologic product, and drugs produced through genetic 12 technology or biopharmaceutical processes drug pricing. The appeals 13 process shall include the following provisions: 14 § 4. Section 2911 of the insurance law is amended by adding a new 15 subsection (d) to read as follows: 16 (d) To the extent permitted under federal law, a pharmacy benefit 17 manager shall pay a participating pharmacy at minimum at the national 18 average drug acquisition cost (NADAC) rate, as defined in subdivision 19 one of section two hundred eighty-a of the public health law, or at the 20 pharmacy acquisition cost rate, as defined in subdivision one of section 21 two hundred eighty-a of the public health law, if there is not a NADAC 22 rate, plus a professional dispensing fee that is at minimum the profes- 23 sional dispensing fee paid under the state medical assistance program. 24 For generic, brand name medications, biologic products, or drugs 25 produced through genetic technology or biopharmaceutical processes as 26 required by a manufacturer, a federal or state regulatory agency, or 27 accrediting body that require unique handling, distribution or adminis- 28 tration, in-depth patient teaching, coordination of care, or frequent or 29 special monitoring to ensure successful use, special packaging, shipping 30 or other costs to be incurred by the pharmacy for the dispensing process 31 that is greater than the professional dispensing fee paid by the state 32 medical assistance program, participating pharmacies shall be paid a 33 professional dispensing fee for these costs to ensure a participating 34 pharmacy is not paid less than its cost to acquire and dispense medica- 35 tions. A pharmacy benefit manager shall not pay a participating pharmacy 36 below its pharmacy acquisition cost but may require demonstration of 37 such cost through the provision of pharmacy invoices. A pharmacy benefit 38 manager shall, with respect to contracts between a pharmacy benefit 39 manager and a pharmacy or, alternatively, a pharmacy benefit manager and 40 a pharmacy's contracting agent, such as a pharmacy services administra- 41 tive organization, include a reasonable process to appeal, investigate 42 and resolve disputes regarding multi-source generic, brand name, biolog- 43 ic product, and drugs produced through genetic technology or biopharma- 44 ceutical processes drug pricing. The appeals process shall be considered 45 within the existing appeals process under section two hundred eighty-a 46 of the public health law. Provided, however, this paragraph shall not 47 apply to prescriptions, prescription drugs, or payments for prescription 48 drugs, distributed, or paid for in whole or in part, by a trust fund 49 established or maintained under the Labor Management Relations Act (29 50 U.S. Code § 186), pursuant to coverage required by the terms of a 51 collective bargaining agreement between an employer and a labor organ- 52 ization or certified employee organization; or pursuant to a health 53 plan, welfare fund, pharmaceutical plan, or other form of medical or 54 prescription coverage established, adopted, utilized, funded, or agreed 55 upon by an employer and a labor organization or certified employee 56 organization pursuant to a collective bargaining agreement; or, whereA. 5882--C 4 1 the plan, coverage, fund, or program has been collectively bargained and 2 pertains to a sponsored multi-employer plan, including but not limited 3 to, plans developed under article five-G of the general municipal law, 4 articles forty-four and forty-seven of this chapter, or any plans 5 created pursuant to the Internal Revenue Code, Employee Retirement 6 Income Security Act or any applicable federal statute that provides such 7 benefits to employee and retiree groups. 8 § 5. This act shall take effect January 1, 2027 and shall apply to all 9 policies and contracts issued, renewed, modified, altered or amended on 10 and after such date.