Department of Financial Services to Set Standards to Protect Consumers – Spotlight News – The home of The Spot 518

ALBANY – Governor Kathy Hochul last week announced the nation’s first approach to bringing much-needed oversight to drug benefit managers with the creation of the Department of Financial Services’ Office of Drug Benefits.

The new office, announced on Wednesday, May 11, will be responsible for licensing and overseeing the industry, keeping a watchful eye on the impact of pharmacy benefit managers on consumers and the cost of health care.

Pharmacy benefit managers are key intermediaries in the prescription drug supply chain who, without regulatory oversight, have long controlled drug prices for health plans and reimbursement rates for pharmacies.

“As we continue to come back from the COVID-19 pandemic, it’s critical that we seize every opportunity to improve the healthcare system and reduce costs for New Yorkers,” Hochul said. “This landmark regulator will provide careful oversight to protect consumers from predatory practices in the largely unregulated industry of pharmacy benefit managers. My administration remains committed to doing everything in its power to reduce the burden of health insurance and prescription drug costs for New Yorkers.

Earlier this year, Hochul enacted the most comprehensive regulatory regime for pharmacy benefit managers in the nation, giving DFS new authority to license and oversee the industry. DFS now has the power to address widely reported problematic practices in the PBM industry, which will help reduce drug and health insurance costs, protect New Yorkers with access to these drugs, and support New York pharmacies, many of which are small, independent businesses.

Additionally, with the passage of the enacted 2023 state budget, Hochul secured an appropriation of $5 million to fund and staff the new office. As the program grows, the costs of administering this initiative will be offset by the application of fees, assessments and penalties directly to the PBM industry, ensuring that the cost of regulating this industry will fall on PBMs, not taxpayers.

“The PBM industry hasn’t been regulated long enough,” said State Sen. Neil D. Breslin. “PBMs, here in New York and across the country, have taken advantage of the lack of transparency to the detriment of patient well-being.”

In addition to PBM regulation, the DFS’s current authority to investigate drug price spikes now falls under the oversight of the new Pharmacy Benefits Bureau. DFS will continue to review reports, monitor market conduct and ensure the proper enforcement of consumer protections in New York.

“The health and well-being of New Yorkers depends on access to prescription drugs at a reasonable price. Through regulatory oversight of the pharmacy benefits industry, DFS will increase transparency and accountability in the entire industry, ultimately putting more money in the pockets of New Yorkers,” said Superintendent of Financial Services Adrienne A. Harris.

DFS met with external stakeholders in preparation for the registration deadlines. The DFS reminds all PBMs of their obligation to register with the Office by Wednesday, June 1 and submit their first annual report by Friday, July 1.

DFS will soon file regulatory amendments reflecting the creation of this Office.

More information will be available in the national register.

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