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Independent Pharmacies At Risk

Independent Pharmacies At Risk

Pharmacy Benefit Managers Investigation Recommendations
Soon to Be Delivered To Governor’s Signature

Small businesses have been at risk for years due to the growth of chain stores and mega-companies, but none more than small local pharmacies.  They offer a personal touch and often longstanding knowledge of family needs, often in times of crisis, and frequently go out of their way when big corporations can’t.


In recent years the larger pharmacies have given a “double whammy” to the public by  complicating purchases with multiple conditional discounts, rebates, clawbacks, chargebacks and special fees that they used to gain more and more power, eventually causing the smaller pharmacies to not be able to compete, at which point many have had to sell to the larger companies.  These conditions come from ‘middle man’ brokers called Pharmacy Benefit Managers.


This past year Senator James Skoufis and his colleagues, with their new investigative committee capabilities, began to put pressure, including a PBM bill that has passed both houses and now awaits Governor Cuomo’s signature (it is done but has not been delivered yet), that will pressure reform intended to make the process once again more fair. The legislation would require PBMs to act in the best interests of covered individuals and health plans and to be more transparent in dealings with payers by disclosing more information to them, including -discounts, rebates, clawbacks, chargebacks and the fees PBMs receive on behalf of or in service to the health plan. Under the new law PBMs would be required to pass rebates, discounts and other savings on to the health plan.
Details of “spread pricing” – the difference between the amount PBMs reimburse pharmacies and the amount billed the health plan will be required to be disclosed. Conflicts of interest that may have affected the health plan. In the past, PBMs have included “gag clauses” contractually mandating pharmacists to remain silent when less expensive medications are available, and engaged in patient-steering and self-dealing to PBM-owned pharmacies — activities which directly influence PBM profitability but are in conflict with the best interest of health plans and their enrollees. The new law would prohibit any such conflicting or anticompetitive practices, ensuring patients and their pharmacy providers are afforded a fair and equitable environment in which to receive or deliver care.


Senator Skoufis  said, “Every single day in this state, someone is forced to choose between buying medication that they need and buying groceries for the week. This is an atrocity and a failure of government oversight. Price hiking has plagued consumers for decades and we are currently at a point where it has gotten out of control. This is why back in January, our team of investigators and I started diligently looking into this practice. The purpose of this investigation was to better understand the impact PBM practices have on New York State residents, as well as establish legislative recommendations for further action.”


Legislative recommendations from the investigation include:

-Regulate the practices of spread pricing in all pharmacy benefit contracts

-Enhance the transparency of MAC appeals

-Require the licensing and registration of PBMs to enhance accountability and oversight by instituting a fiduciary duty for their clients

-Prohibit PBMs from mandating that patients use specialty and mail order pharmacies

-Providing for the adequate and transparent reimbursements for pharmacies

-Require PBMs to pass-through all discounts or rebates received from drug manufacturers to its Medicaid managed care clients

For the entire Investigative Report see:

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