Bill would tighten oversight of pharmacy benefit managers

A bill passed by state lawmakers in Albany in the final days of the legislative session last month echoed the findings of an investigation by a committee led by Sen. James Skoufis into the opaque practices of pharmacy benefit managers, the middlemen in the prescription-drug industry.

A couple weeks before the Senate and Assembly passed the bill, the Senate Investigations and Government Operations Committee released a 67-page report declaring too little state oversight of pharmacy benefit managers and too little transparency about how they operate, including their use of “spread pricing” – the gap between what they charge health insurers and what they pay pharmacies for drugs – to run up their profits.

“Every single day in this state, someone is forced to choose between buying medication that they need and buying groceries for the week,” Skoufis, a Woodbury Democrat and chairman of the committee, said in a statement then. “This is an atrocity and a failure of government oversight. Price hiking has plagued consumers for decades and we are currently at a point where it has gotten out of control.”

The ensuing legislation was passed by the Senate by 49-13 on June 17 and by the Assembly by 147-0 on June 20. Among other things, the bill – if signed by Gov. Andrew Cuomo – will require pharmacy benefit managers to register with the state and disclose their “spread pricing” and any rebates or other savings they receive, which must be passed on to the health plans.

The Pharmacists Society of the State of New York praised the legislation, calling it “the toughest bill passed to date in the U.S. regulating PBMs.”

The report by the Senate investigations committee last month was its first since Skoufis took office and became its chairman in January, promising a more aggressive watchdog role for what had been a toothless panel.

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