This bill would require health insurers in New York that use pharmacy benefit managers (PBMs) for pharmacy benefit management services to do so under a pass-through pricing model. Under that model, PBM compensation would be limited to actual ingredient costs, dispensing fees paid to pharmacies, and an administrative fee, with the Department of Financial Services authorized to set a maximum administrative fee. The bill also requires PBMs to disclose all sources and amounts of income and financial benefits tied to their services, including rebates, discounts, clawbacks, fees, and similar payments, and to pass those amounts through to the health care plan in full.
The bill further prohibits spread pricing, which it defines as charging a health plan more than the amount paid to pharmacies plus the allowed administrative fee. Any excess spread would have to be remitted to the health care plan quarterly. PBMs would also need to disclose ingredient costs and dispensing fees paid to pharmacies, and make their administrative fee payment model available to both the health care plan and the department. If the department directs changes, the health plan would need to revise and resubmit the contract for approval. The bill applies to health insurance under Articles 32 and 43 and takes effect immediately.
Impact
The bill would amend the New York Insurance Law by adding a new section governing pharmacy benefit management services for certain health insurers. It would impose new disclosure, pricing, and contract-approval requirements on PBMs and health plans, and would give the Department of Financial Services oversight authority over administrative fees, premium changes resulting from these contracts, and contract revisions. The measure would affect insurers, PBMs, pharmacies, and health care plans by limiting PBM revenue mechanisms and requiring pass-through of rebates and other financial benefits.
Sentiment
No committee transcript or vote history was provided, so there is no recorded floor or committee sentiment to assess. Based on the bill text, the measure appears aimed at lowering prescription drug costs and increasing transparency in PBM contracting, which typically draws support from consumer advocates, insurers seeking cost clarity, and policymakers focused on drug pricing. The absence of recorded opposition or amendments in the provided materials means the overall sentiment cannot be determined from legislative proceedings.
Contention
The main points of contention are likely to be the bill’s prohibition on spread pricing, the requirement that all rebates and similar PBM income be passed through to health plans, and the disclosure obligations imposed on PBMs. PBMs may object to limits on compensation and the administrative burden of detailed reporting, while health plans and regulators may support the added transparency and cost controls. Another likely issue is the Department of Financial Services’ authority to set maximum administrative fees and require contract resubmission, which could be viewed as stronger state oversight of private contracting.