Until December 31, 2023, PBMs are required to apply and obtain a registration prior to performing pharmacy benefit management services on behalf of New York health plans. All registrations expire on December 31, 2023, regardless of when the registration was made. Thereafter, a PBM must apply for and obtain a license from the Department to begin or continue performing pharmacy benefit management services in New York.

Each entity seeking to register as a PBM must submit an application via the DFS Portal (see “Registration” section above).

Yes, a PBM applying to register shall pay to the superintendent a non-refundable registration application fee of $4,000 with its registration application.

Under the statute, a “pharmacy benefit manager” (“PBM”) is any entity that performs pharmacy benefit management services (“PBM services”) for a health plan. Critically, the definition applies to entities acting “for a health plan.” The requirement, therefore, does not include individual employees of a PBM nor does it include units/groups/divisions or other groups of employees of a health plan which perform PBM services for that health plan. A health plan that performs PBM services for another health plan, however, would meet the definition of pharmacy benefit manager and would be required to obtain a license.

License applications must be submitted through the existing registration portal. The portal has been modified to provide instructions on how to submit the additional documentation required for a license application. All PBMs who are registered with the Department received an email with instructions for submitting a license application. Email [email protected] if you did not receive that email or if you have any questions concerning the application process.

Every license is valid for 36 months from the date it was issued. Licenses may be renewed upon the filing and approval of an application that meets the standards for licensing.

Yes, the Insurance Law requires a PBM applying for licensure to pay a fee of $24,000. This fee covers the three-year period for which the license is valid.

Under the statute, PBM services mean the management or administration of prescription drug benefits for a health plan, directly or through another entity.
Any of the following services, individually or in combination, constitute PBM services:

1. claims processing, retail network management, or payment of claims to pharmacies for dispensing prescription drugs;
2. clinical or other formulary or preferred drug list development or management;
3. negotiation or administration of rebates, discounts, payment differentials, or other incentives, for the inclusion of particular prescription drugs in a particular category or to promote the purchase of particular prescription drugs;
4. patient compliance, therapeutic intervention, or generic substitution programs;
5. disease management for prescription drug benefits;
6. drug utilization review or prior authorization for drug benefits;
7. adjudication of appeals or grievances related to prescription drug coverage;
8. contracting with and or managing the relationship with network pharmacies including mail service pharmacy agreements; and
9. drug benefit design, including methods for the controlling of cost of covered prescription drugs.

Therefore, if you have agreed to perform at least one of those functions for a health plan you are performing PBM services.

“Health plan” is defined broadly under the statute. It includes any entity that approves, provides, arranges for, or pays or reimburses for prescription drugs. To be covered under the statute a health plan must cover a “substantial number of beneficiaries who work or reside in this state.”

The Department has clarified by regulation that “a substantial number of beneficiaries who work or reside in this state” means “50 percent or more of the beneficiaries of the plan work or reside in New York”.

A beneficiary of a health plan is considered a New York beneficiary (i.e., someone who works or resides in New York) for purposes of Insurance Law Article 29, Public Health Law section 280-a, and the applicable regulations promulgated thereunder, when any of the following are true:

1. The health plan is issued by an insurance company that is an authorized insurer under the insurance law, a company organized pursuant to article forty-three of the insurance law, a municipal cooperative health benefit plan established pursuant to article forty-seven of the insurance law, an entity certified pursuant to article forty-four of the public health law, an institution of higher education certified pursuant to section one thousand one hundred twenty-four of the insurance law, the state insurance fund, or the New York state health insurance plan established under article eleven of the civil service law;
2. The beneficiary’s primary participant of the health plan has or had access to that health plan as a result of working in New York; or
3. The beneficiary resides in New York.

For purposes of calculating the total number of beneficiaries under a health plan, each primary participant of the health plan and all beneficiaries under each primary participant should be counted as beneficiaries for purposes of calculating the total number of New York and non-New York beneficiaries under the health plan.

Once you have determined which beneficiaries are considered New York beneficiaries, you can then calculate what percentage of the total beneficiaries work or reside in New York.

Yes. Workers’ compensation plans provide benefits which include payment for prescription drugs. Therefore, the broad definition of health plan in the law which includes any policy or plan that provides prescription drug coverage includes workers’ compensation plans. PBMs that provide services only for workers’ compensation plans in New York must obtain a license.

Yes, self-insured plans are health plans under the statute, therefore an entity that provides PBM services to a self-insured health plan must obtain a license.

Yes, the term “health plan” covers Medicare Part D plans.

After notice and a hearing, the superintendent is authorized to enforce the violations, penalty, and damages provision located in § 2905(b) of the Insurance Law. This provision does not create a private cause of action.

If any health plan, pharmacy or covered individual, or other person believes they have been harmed by a PBM as a result of that PBM acting without being licensed under this section, they should notify the Department by email at [email protected] and the Department will review and take any appropriate enforcement action.