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.

Every PBM operating in New York prior to December 31, 2023 is required to register with the Department.

Under the statute a “pharmacy benefit manager” 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 register.

Under the statute PBM services means 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”.

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 register.

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

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

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.

After notice and a hearing, the superintendent is authorized to enforce the violations, penalty and damages provision located in § 2902(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 registered under this section, they should notify the Department by email at [email protected] and the Department will review and take any appropriate enforcement action.

PBMs operating in New York on or after January 1, 2024 will be required to obtain a license to continue or begin performing pharmacy benefit management services in New York. PBMs currently operating in New York are only required to be registered with the Department from now through December 31, 2023, and are not currently required to be licensed with the Department. All registrations expire on December 31, 2023.

The Department plans to issue further guidance prior to the time that PBMs are required to be licensed in New York. Such guidance will detail what will be required during the licensing process, and the Department will be publishing regulations clarifying what will be required for issuance and maintenance of a license from the Department. The Department intends to provide the opportunity to apply for and obtain a license well in advance of the January 1, 2024 deadline.

Each entity seeking licensure as a PBM must submit an application to the Department electronically. The Department will provide access to the electronic license application on or about September 1, 2023. If you would like an email notification when the system becomes live, email [email protected] and request notification.

Every license expires 36 months from the date it was issued and may be renewed for an additional 36 months upon the filing and approval of an application to renew. Every license expires 36 months from the date it was issued and may be renewed for an additional 36 months upon the filing and approval of an application to renew.

Yes, a PBM applying for licensure shall pay to the superintendent a non-refundable license application fee of $24,000.