Request for Information
Request for Comments and Data on Additional Market Conduct Practices by Pharmacy Benefit Managers in New York State
The Department is inviting submissions of comments, data, or documented evidence from the public related to pharmacy benefit manager (PBM) practices in New York State.
Responses should be emailed to [email protected], with “PBM2024-01” included in the subject line. Failure to include “PBM2024-01” in the subject line may result in your comment not being considered. The deadline for responses is May 1, 2024.
Proposed Regulation
Read the proposed draft regulations in the Proposed Outreach section of our Regulatory Activity - Insurance Law page.
Overview
Pharmacy benefit managers (PBM) operating in New York must be licensed by the Department of Financial Services to perform pharmacy benefit management services on behalf of health plans.
- See a list of PBMs currently licensed in New York.
Statutes and Regulations
Statutes
Insurance Law Article 29 (NYSenate.gov) and Section 280-a of the Public Health Law (NYSenate.gov) authorize the Department of Financial Services to regulate Pharmacy Benefit Managers operating in New York.
Regulations
To view recently proposed and adopted regulations, visit our Regulatory and Legislative Activities section.
A pharmacy benefit manager (PBM) is any entity that performs PBM services for a health plan. The requirement does not include individual employees of a PBM or units/groups/divisions or other groups of employees of a health plan that perform PBM services for that health plan. A health plan that performs PBM services for another health plan meets the definition of pharmacy benefit manager and is required to obtain a license.
A health plan 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.” A “substantial number of beneficiaries who work or reside in this state” means “50% or more of the beneficiaries of the plan work or reside in New York.
Pharmacy benefit management (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:
- claims processing, retail network management, or payment of claims to pharmacies for dispensing prescription drugs
- clinical or other formulary or preferred drug list development or management
- 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
- patient compliance, therapeutic intervention, or generic substitution programs
- disease management for prescription drug benefits
- drug utilization review or prior authorization for drug benefits
- adjudication of appeals or grievances related to prescription drug coverage
- contracting with and or managing the relationship with network pharmacies including mail service pharmacy agreements
- 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.
Annual Reporting
Annual Reports
An Annual Report must be completed and submitted to the Department by no later than July 1 each year.
The 2024 Annual Report consists of three separate documents that must be reviewed and/or completed:
- 2024 Annual Report Instructions
- 2024 Annual Report Spreadsheet (.xlsm)
- 2024 Annual Report Attestation (PDF)
Every licensed PBM must read the Instructions.
Every Licensed PBM must complete and submit the Spreadsheet and Attestation.
The Spreadsheet includes various requests for supplemental documentation. All requested supplemental documents should be included in a single "zipped" file as part of the Annual Report submission.
The CEO/President (or equivalent) must sign the Attestation.
How to Submit the 2024 Annual Report
To submit a the 2024 Annual Report, combine your submission documents into one "zipped" file, visit the Pharmacy Benefit Managers dropbox on the New York State MySend platform, and follow the 2024 Annual Report Instructions.
Note: Follow the instructions for each question carefully, including the naming convention.
If you have any questions, check our FAQs About PBM Annual Reporting. If you still need help email [email protected].
Licensing Requirements
A PBM must apply for and obtain a license from the Department to begin or continue performing PBM services in New York.
How to Apply for a License
Obtaining a license to operate as a PBM in New York is a three-step process that includes an application, submission of an additional documentation, and the payment of a licensing fee.
PBMs must complete the following steps to submit a license application:
- Submit a license application through the DFS Portal Pharmacy Benefit Managers Application. The application can be completed in multiple sessions.
- Submit additional documentation through the PBM mySend link.
- Pay a non-refundable fee of $24,000. Payments may now be made through the DFS ePay application.
Read our November 10, 2023 Industry Letter for guidance on completing steps 1 and 2.
Once a license application is filed, including payment of the license application fee, the license will be deemed to be in full force and effect either until the license is issued, or until five days after the Department declines to issue a license and gives notice of the decision to the applicant.
License Term and Renewal
Every license is valid for 3 years (36 months) from the date it is issued.
Licenses may be renewed after an application has been filed and approved. If an application for renewal is filed with the Department at least 60 days before it expires, the existing license continues in full force and effect until the issuance of the new license, or until five days after the Department declines to issue a license and gives notice of the decision to the applicant.
Billing and Assessment
Assessment
PBMs licensed by the Department are assessed for the operating expenses of the Department that are attributable to the regulation of these entities.
Each PBM submits the aggregate number of claims adjudicated for pharmacies located in New York for the preceding calendar year. The total operating cost is divided pro rata among licensees based upon each licensee’s share of the aggregate number of claims.
A PBM that is licensed for any part of a quarter is assessed for the full quarter.
Billing Schedule
The New York State fiscal year begins April 1 and ends March 31 of the following calendar year. Each licensed PBM is billed five times for a fiscal year: four quarterly assessments (each approximately 25 percent of the anticipated annual amount) and a final assessment (or true-up), based on actual total operating cost for the fiscal year.
Invoices are emailed to the contact person identified by each PBM for such purpose.
Questions?
Read our FAQs About PBM Licensing in New York. If you still have questions, email [email protected].
If any health plan, person, pharmacy, or other entity believes they have been harmed by a PBM, they should notify the Department by email at [email protected]. The Department will review and may take enforcement action when appropriate. A copy of the complaint may be shared with the PBM.