State Creation Office of Pharmacy Benefits | News, Sports, Jobs

New York creates new oversight for drug benefit managers with the establishment of the Department of Financial Services’ Office of Drug Benefits.

Pharmacy benefit managers are intermediaries in the prescription drug supply chain who, without regulatory oversight, have long controlled drug prices for health plans and reimbursement rates for pharmacies. The new office will be responsible for licensing and overseeing the industry, monitoring the impact of drug benefit managers on consumers and the cost of health care.

“As we continue to come back from the COVID-19 pandemic, it is crucial that we seize every opportunity to improve the healthcare system and reduce costs for New Yorkers,” said Governor Kathy Hochul. “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. The administration costs of this initiative will be offset through the application of fees, assessments and penalties directly to industry. The state Department of Financial Services also has the authority to investigate drug price spikes, with this authority falling 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.

Pharmacy benefit managers will need to register with the office by June 1 and submit their first annual report by July 1. The office has posted registration and annual reporting guidelines on the DFS website.

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