New York Bill Targets PBMs, Would Extend Medicaid FFS Program
"The study found that due to a lack of oversight and transparency, PBMs have engaged in "self-dealing to the detriment of consumers." It also recommended State Comptroller Thomas DiNapoli regulate the practice of spread pricing-in which payments for prescription drugs from health plans to pharmacies filter through PBMs-and conduct a full audit of dollars paid to PBMs through this practice."
Senate Bill 653l:
Community Pharmacists Rally to Advocate for Patients Rights
November 1, 2019
By John Kaliabakos
Hundreds of community pharmacists held rallies across New York State on October 23 to stand with Governor Cuomo and support legislation containing the nation's toughest protections from prescription drug middlemen known as pharmacy benefit managers (PBMs). Village Apothecary was proud to stand alongside other independent pharmacies in the quest for fairness in pharmacy care that could impact millions of patients.
At a rally on the steps of City Hall in New York City, hundreds of independent pharmacists gathered alongside supporters and elected officials to thank Governor Cuomo and members of the New York State Senate and Assembly for their leadership in the fight against PBMs.
Pharmacists demonstrated support for Senate Bill 6531 and Assembly Bill 2836, the legislation passed in June by the New York State Legislature that would require licensure and regulation of PBMs and provide increased protections for patients, taxpayers, and pharmacies.
"The legislation would be a major step forward in the fight against PBMs. We need to ensure that pharmacists, patients, and taxpayers alike are being guarded against their abusive and deceptive practices. It is time to shine the light brightly on these greedy corporate middlemen," said Parthiv Shah, Chairman of the New York City Pharmacists Society.
PHARMACISTS DEMONSTRATE SUPPORT FOR SENATE BILL 6531 AND ASSEMBLY BILL 2836. Senator Diane Savino (front row, far left), next to Roger Paganelli, a leader of the FixRx campaign. Village Apothecary representatives were present as well (first row, far right). Photo courtesy of Tom Corsillo.
"We applaud the Governor for his leadership over the last few years and for taking the steps to make real change in the way that PBMs are able to operate," said Steve Moore, President of the Pharmacists Society of the State of New York. "We look forward to the increased PBM oversight and transparency that this legislation makes possible."
The demonstrations were organized by FixRx, a joint effort by the Pharmacists Society of the State of New York (PSSNY) and the New York City Pharmacists Society (NYCPS) to improve the quality of healthcare provided by pharmacists, protect patient choice, save taxpayers money and restore fairness to the distribution of prescription drugs.
The activities today came on the heels of two successful rallies held in Albany in March and May, which led to several victories for neighborhood pharmacists, their patients and taxpayers. Among these were the elimination of "spread pricing" in Medicaid managed care, the tool that PBMs used to purloin $300 million from New Yorkers in 2018, and the bills under discussion today.
According to pharmacy organization studies, pharmacies actually lose money when filling prescriptions under Medicare Managed Care plans almost 50% of the time. Consequently, 70% of pharmacies in New York have been forced to lay off employees or reduce store hours in 2019. In 2020 it is expected that 90% of pharmacies may be forced into these measures if there is no change in the reimbursement system.
Village Apothecary and other independent pharmacies are fighting hard behind the scenes every day to ensure that patients receive the highest quality care and we ask for the community's support in the ongoing battle against the questionable practices of these PBMs and insurance companies.
New York Bill Targets PBMs, Would Extend Medicaid FFS Program
By Jack O'Brien June 13, 2019
Empire State lawmakers are considering legislation that would implement a fee-for-service program and effectively cut out PBMs.
Independent pharmacy owners are hoping two companion bills targeting pharmacy benefit managers (PBM) get passed before the legislative session ends on June 19.
A recent Senate report charged that PBMs have engaged in "self-dealing to the detriment of consumers."
The push for greater oversight and regulation has been opposed by the New York Health Plan Association, who say the legislative proposals will "merely reinstate a failed system," referring to the state fee-for-service program.
As the 2019 New York State legislative session nears its mid-June conclusion, lawmakers are considering bills in both the Assembly and Senate that aims to eliminate spread pricing, a major component of the business model for pharmacy benefit managers (PBM).
The pieces of legislation, sponsored by Assembly Health Committee Chair Richard Gottfried and Senate Health Committee Chairman Gustavo Rivera, would mandate that Medicaid managed care (MMC) plans adopt a fee-for-service (FFS) program, effectively cutting out PBMs entirely.
Gottfried told HealthLeaders that he is optimistic the Assembly will be able to get his bill out of the Ways and Means Committee for a floor vote, noting that the chamber included the bill as part of its fiscal year 2020 budget proposal earlier this spring.
However, he says he does not know what the odds are that the Democratic-controlled Senate will take action on the bill and deliver it to Governor Andrew Cuomo.
Still, Gottfried says that the legislative proposals coming out of Albany are examples of interest by state and federal lawmakers across the nation applying greater regulations to PBMs in an effort to combat high prescription drug prices.
"There's a growing body of evidence that PBMs are one of the major culprits in the skyrocketing cost of drugs," Gottfried says. "They are black boxes that operate with little if any protection for the public interest and they are an industry with a heavy concentration in the market. That kind of secrecy and economic power is a recipe for disaster."
In a regulatory move last August, Ohio's Department of Medicaid eliminated PBM contracts for MMC plans based on spread pricing in favor of a fixed fee rate for filling prescriptions.
In a different approach, New York and Massachusetts are targeting the PBM business model at the statehouse level. If passed, these bills could represent the first legislative attempts to cut out PBMs from MMC plans.
Pressure to act in Albany
While the two bills are considered in their respective chambers, a recent report on high prescription drug prices in New York places the blame squarely on PBMs.
Last week, the Senate Investigations and Government Operations Committee released a report about PBM practices and recommended legislative action to introduce safeguards on high prescription drug prices for New Yorkers.
"Although the steps taken during the budget were certainly important, this report makes it clear that new legislation is necessary to address additional parts of the business model that are being exploited -- often times to the detriment of patients in terms of cost and treatment access," Rivera, a coauthor of the report, wrote.
The study found that due to a lack of oversight and transparency, PBMs have engaged in "self-dealing to the detriment of consumers." It also recommended State Comptroller Thomas DiNapoli regulate the practice of spread pricing-in which payments for prescription drugs from health plans to pharmacies filter through PBMs-and conduct a full audit of dollars paid to PBMs through this practice.
The report urged the legislature to regulate spread pricing in pharmacy benefit contracts, block PBMs from mandating patients use mail order and specialty pharmacies, and require PBMs to pass-through all drugmaker rebates to MMC clients.
Jake Frenz, CEO of SmithRx, a San Francisco-based PBM, shares his thoughts with HealthLeaders on the recent discussions about PBM pricing practices at the state and federal level and what he thinks could make the business model work better for healthcare.
"I think that if you eliminate spread pricing, you're taking away how these PBMs make money," Frenz says. "If [lawmakers] start removing these pieces, then PBMs have to figure out a different business model to operate. I don't think that they need to eliminate spread pricing, I'm an advocate for removing rebates. There are a lot of pieces that will need to change to control those costs on a go-forward basis, but rebates are not an aspect of the market that I believe are necessary to deliver a cost-competitive drug target."
Plans and pharmacies exchange views
The proposed changes to the way PBMs operate have been met with a split reaction across New York, as independent pharmacies applauded the proposal while others have been less enthusiastic.
The New York Health Plan Association (NYHPA), which represents 29 managed care health plans, issued a memorandum of opposition to Gottfried's legislation in March, saying that the proposal will "merely reinstate a failed system," referring to the state FFS program.
Gottfried says that NYHPA's argument does not "have any relation to the facts," adding that people are realizing PBMs are not adequately serving patients.
"There's just no basis as to why the individual insurance companies would think they can do better to negotiate prices than the state can with its 6 million customers," Gottfried says. "It is now clear that the preferred drug program was getting substantially better discounts than the individual MMC plans."
Roger Paganelli is owner of Mt. Carmel Pharmacy in the Bronx, who says he has seen the effects of PBMs on his business.
He is involved as spokesperson for the FixRx campaign, which was launched as a joint effort between the New York City Pharmacists Society and
the Pharmacists Society of the State of New York in November 2018.
Paganelli says independent pharmacies have faced a "difficult time over the last year and a half," due to PBMs "ratcheting down on generic [prescription drug] reimbursements." He adds that 85% of what pharmacies dispense to patients are generic prescription drugs.
Due to lower reimbursements, independent pharmacies are losing money, and Paganelli says it could force businesses to close or eliminate staff.
Paganelli says a survey of FixRx members found that over 70% of 500 New York-based pharmacies had to eliminate staff or reduce hours in 2018, with more than 90% considering similar action in 2019.
Paganelli says he is upbeat about the likelihood that the legislature will pass Gottfried and Rivera's bills, adding that New York has the "opportunity to use its own formulary" on brand and generic drugs while also recouping 100% of the rebates passed through PBMs.
"We're moving in the right direction. We've got a lot energy behind taking PBMs out of [MMC] and carving [them] back into the Medicaid's FFS Department of Health charge," Paganelli says. "I think there's a lot of merit in that move."
'Circling down the drain'
The New York State legislative session is slated to end next Wednesday, and unless the governor and legislative leaders convene a special session to address outstanding issues, no legislative business will be handled until January 2020.
Another independent pharmacy owner, Stephen Cilento, who founded Bridge Pharmacy in Brooklyn in 1998, tells HealthLeaders that he has already had to cut back hours for his workers and laid off one tech position.
Unlike Paganelli, Cilento is "not very optimistic" about either piece of legislation passing, noting that independent pharmacists face an "uphill battle" in Albany.
"I've had these discussions with other pharmacy owners and it seems to be like circling down the drain," Cilento says. "[The situation] started with a little bit, then it ratcheted up. [Pharmacists] used to be able to make a decent living filling prescriptions, and then that gets taken away. It's going further and further down the spiral, and I don't know how much longer it will be sustainable."