Assemblymember Linda B. Rosenthal’s Bill to Protect Pharmacies and Consumers Included in Final New York State Budget

May 7, 2018

Albany, NY – Assemblymember Linda B. Rosenthal (D/WF-Manhattan), Chair of the Assembly Committee on Alcoholism and Drug Abuse, announced today that her bill (A. 8781) to prohibit pharmacy benefit managers from strong-arming pharmacies and harming consumers in the process will be included in the 2018-19 New York State Budget.

“Consumers are in desperate need of prescription drug cost relief,” said Assemblymember Linda B. Rosenthal. “Freeing pharmacist to discuss prescription drug costs with their clients will help ensure that New Yorkers are getting the best deal and will help protect them against predatory practices that hurt them and help drive up the costs of prescription drugs.

Pharmacy benefit managers, or PBMS, are shadowy, largely unregulated figures in the pharmaceutical world who manage the drug benefit portion of health insurance coverage. PBMs determine which drugs are available on a particular health insurance plan, how much consumers pay for the drugs and the amount that individual pharmacies get reimbursed for dispensing certain drugs.

PBM's prohibit pharmacies they contract with from telling consumers the true price of medication or that the drug might cost less if the consumers paid out of pocket rather than using insurance and paying what is often the higher copay.

These gag clauses benefit PBMs, which recoup the difference between the actual drug price and the higher price paid by the consumer through a copay as pure profit. In addition to prohibiting gag clauses in contracts between PBMs and New York pharmacies, the legislation will also prohibit PBMs from clawing back consumer copays as profit.

The bill, which was sponsored in the Senate by Kemp Hannon, Chair of the Committee on Health, and passed that house today, passed the Assembly in early February and the State Senate in March. In 2016, Assemblymember Rosenthal passed into law legislation to provide pharmacies with the right to appeal drug prices set by PBMs. In 2017, she introduced legislation, Assembly bill A.4717-A, to impose severe penalties on PBMs that refuse to comply with the new appeal law.