Joint Press Release: Gov. Cuomo Vetoes Bill to Regulate Pharmacy Benefit Managers and Protect Consumers

Bill would have added accountability, increased fiscal disclosure, and addressed deceptive and anti-competitive practices

(December 26, 2019) Governor Cuomo this evening vetoed legislation to increase oversight, transparency, and accountability of pharmacy benefit managers (PBMs).  PBMs are companies that manage prescription drug benefits for health plans.  Their negotiations, discounts, and rebate structures are highly secretive and PBMs have been accused of practices including profiteering by overcharging health plans more than they subsequently reimburse pharmacists and pocketing the difference, a practice known as “spread pricing.”

In response to these and other concerns, New York’s 2019 State budget included language eliminating spread pricing and implementing other regulations on PBMs that work with Medicaid.  This bill would have applied similar rules to private health plans.

“The PBM industry spent a lot of money lobbying against this consumer protection bill,” said Assembly Health Committee Chair and bill sponsor Richard N. Gottfried.  “PBMs are widely recognized as major players in driving up drug costs and profiteering at the expense of people who pay health insurance premiums, patients, and pharmacists.  They’re a black box, operating in secret with no effective regulation.  There is plenty of evidence, including an analysis by the State Senate, showing what happens when regulators can’t see into this growing segment of the health care economy.  This veto means higher drug prices, higher costs for health plans and the people who pay their premiums, and lost income for pharmacies.”

“New York was on the cusp of becoming the leading state in protecting consumers, bringing questionable practices to light and saving millions of dollars with the bold proposal by Assemblyman Richard Gottfried and Senator Neil Breslin to finally join over two thirds of the states in regulating pharmacy benefit management companies,” said Assembly Insurance Committee Chair and bill co-sponsor Kevin Cahill.  Instead, with the stroke of his veto pen, Governor Andrew Cuomo leaves New Yorkers unprotected and these shadowy corporate behemoths free to plunder the sick, over-burdened health insurance public.”

“In this past budget, the Governor supported some protections for the Medicaid program in its dealing with PBMs,” added Gottfried.  “But he now insists that the only way he would’ve signed this bill is if we agreed to gut the bill by taking out key consumer protections, including those that parallel what we did for Medicaid.   The Governor even wanted us to take out a requirement that PBMs operate ‘with care, skill, prudence, diligence, and professionalism, and for the best interests’ of the consumer and health plans. It is incomprehensible to me.  I will be re-introducing the bill shortly and resuming the fight to get it passed and signed.”

Cahill added:  “While we remain only one of about a dozen states without any regulation of this shadow industry and with no adequate recourse for their secretive decisions, impacting millions of patients and professionals and costing millions of dollars, there is a consolation here in that we stood up to the governor’s bald attempt to substitute a fake regulatory schema that protects PBMs instead of consumers.” 

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