Establishes a pilot program on the referenced rate for prescription drugs; relates to reducing the cost of prescription drugs by establishing maximum wholesale drug prices that are the same as the prices in Canada.
This bill creates a three-year pilot program in the Insurance Law to limit what certain state entities, health plans, and participating ERISA plans may pay for selected prescription drugs. The program targets the ten most costly prescription drugs, identified by the Department of Civil Service’s employee benefits division based on net price times utilization, and requires the Superintendent of Financial Services to set a “referenced rate” for each drug using the lowest price among wholesale acquisition cost and comparable public drug prices in Canada (Ontario, Quebec, British Columbia, and Alberta), or, if needed, Canada’s patented medicine ceiling price. The bill also allows ERISA plans to opt in to the pricing restrictions.
The bill requires plans and state entities to report savings, directs the department to ensure those savings benefit purchasers and consumers, and requires annual reporting to state leaders on savings, feasibility of expansion, and program improvements. It also prohibits manufacturers or distributors from withdrawing referenced drugs from the New York market to avoid the program and prohibits refusal to negotiate in good faith at or below the referenced rate, with penalties of at least $500,000 or the amount of annual savings, whichever is greater. The superintendent is authorized to promulgate rules and regulations to implement the pilot program.
The bill’s impact on state law would be to add a new section 111-b to the Insurance Law and create a new regulatory framework for prescription drug pricing in New York. It would directly affect state purchasing arrangements, health plans, pharmacies, drug manufacturers, distributors, and any ERISA plans that choose to participate, while excluding Medicaid from the definition of “state entity.” It also creates new reporting, pricing, and enforcement obligations for the Department of Financial Services and the Department of Civil Service.
The general sentiment reflected in the bill text is strongly supportive of intervention to reduce prescription drug costs. The findings emphasize that high drug prices harm public health, household finances, insurance affordability, and state budgets, including costs for public employee and retiree health programs. No committee transcript or vote record was provided, so there is no additional recorded debate or formal vote sentiment to assess.
The main point of contention inherent in the proposal is whether New York should tie drug prices to Canadian reference pricing and impose penalties on manufacturers and distributors that do not comply. The bill anticipates possible resistance from drug companies by specifically banning market withdrawal to evade the program and by penalizing failures to negotiate in good faith. Another potential issue is the scope and legality of applying the program to ERISA plans only by opt-in, which suggests sensitivity to federal preemption concerns.
The bill would amend the Insurance Law by adding a new section establishing a three-year prescription drug reference pricing pilot program. It would require the Superintendent of Financial Services to set maximum reimbursable prices for the ten most costly prescription drugs using Canadian public drug prices and wholesale acquisition cost, and it would impose compliance, reporting, and penalty obligations on state entities, health plans, pharmacies, manufacturers, and distributors. Medicaid is excluded from the definition of state entity, and ERISA plans may participate only voluntarily.
The bill is framed in strongly pro-consumer, cost-containment terms, with legislative findings asserting that prescription drug prices are excessive and harmful to public health, household budgets, and state finances. The available record contains no committee transcript or vote history, so there is no documented opposition or support beyond the bill’s text and sponsor framing. Overall, the measure appears intended to address a widely recognized affordability problem through direct price regulation.
The central controversy is the use of Canadian reference pricing and the bill’s direct limits on what payors and pharmacies may pay for selected drugs. Pharmaceutical manufacturers and distributors are the likely opponents because the bill restricts pricing, penalizes noncompliance, and bars withdrawal from the New York market to avoid the program. Health plans and ERISA plans may also raise implementation or preemption concerns, although the bill attempts to address this by making ERISA participation voluntary.