A.9764/S.9040 – Pharmacy Penalties

This legislation, A.9764/S.9040, would prohibit pharmacy benefit managers (PBMs) from penalizing pharmacies from sharing information on the cost of prescription medications.  The sponsor’s memo notes that greater transparency measures are needed to ensure pharmacies can continue to operate and would permit pharmacies to share the cost and reimbursement rate of prescription medicine.  However, the bill is unnecessary as transparency tools are available to assist consumers in comparing drug prices among pharmacies and protections are in place to protect pharmacies when sharing cost information on prescription drug costs.

State law prohibits “gag clauses” that forbid a pharmacist from providing information to health plan members, including information about the price of a drug and out-of-pocket cost for the individual to understand their rights and obligations related to payment for their prescription drugs.  For example, federal requirements for Medicare and private insurance prohibit health plans from penalizing a pharmacy for informing a patient about the difference between the patient’s out-of-pocket costs for a drug obtained on insurance and a patient’s out-of-pocket costs for a drug obtained off insurance.  Additionally, health plans must ensure that the contracts with their PBMs do not restrict or penalize a pharmacy for informing a patient about these price differences.

Further, Chapter 57 of the Laws of 2018 added two new subdivisions that specifically prohibit a pharmacy benefit manager from prohibiting or penalizing a pharmacist or pharmacy from disclosing to an individual purchasing a prescription medication information regarding the cost of the prescription medication to the individual, or the availability of any therapeutically equivalent alternative medications or alternative methods of purchasing the prescription medication, including paying a cash price.  Additionally, in 2019, the Department of Financial Services issued a circular letter reminding health plans and their PBMs that they are prohibited from taking retaliatory actions against pharmacists for complying with these provisions.

The bill would broaden these provisions by allowing pharmacies to share information on the prices they acquisition costs or the level of reimbursement they receive.  However, this does nothing to provide meaningful information for consumers in comparing their out-of-pocket costs, fails to address the high cost of prescription drugs, and has the potential to encourage anti-competitive behavior among pharmacies in sharing reimbursement rates that will lead to higher prices for consumers and employers.

For all these reasons, we urge you to reject A.9764/S.9040.