Cuomo nixes bill to regulate health care middlemen

Village Apothecary, an independent pharmacy in the West Village. (Google Maps)

BY GABE HERMAN | Governor Andrew Cuomo on Dec. 26 vetoed a bill that independent pharmacists said would protect them and patients against health care middlemen causing higher fees.

The bill would have required Pharmacy Benefit Managers (PBMs) to be regulated and licensed. Advocates for the bill have said PBMs effect the health care system from every angle, and can charge insurers a higher rate for claims and then reimburse pharmacies at lower levels, in a method called “spread pricing.” The method cost New York State about $300 million last year in its Medicaid managed care program, according to Pharmacists Society of the State of New York (PSSNY).

Cuomo wrote in his veto message that he has made regulation of the pharmaceutical sector a priority, including recently announcing a three part plan to lower prescription drug costs by capping insulin co-pays, empowering the State Dept. of Financial Services to hold drug makers accountable for excessive drug price increases, and establishing a commission to study the feasibility and benefits of a program to import drugs from Canada. “I have also proposed registering and regulating PBMs, and continue to support such measures,” Cuomo wrote.

However, Cuomo added that although he appreciates the bill’s intent, among his objections were that it was “likely to increase administrative costs, facilitate anti-competitive conduct, and generate scrutiny from the Federal Trade Commission (FTC) and the Department of Justice (DOJ) and sweep in plans that are not true PBMs, but rather health benefit funds only.”

Cuomo also wrote that this bill would be preempted by the Federal Employee Retirement Income Security Act (ERISA) and the Medicare Prescription Drug, Improvement, and Modernization Act (“MMA”) as applied to the Medicare Part D Program.

“For these reasons,” Cuomo concluded, “I am constrained to veto this bill.”

Supporters of the bill were very disappointed with Cuomo’s decision.

“By vetoing a bill that would have provided vulnerable patients, taxpayers, and community pharmacies with desperately needed protections from abusive prescription drug middlemen known as pharmacy benefit managers (PBMs),” said John Kaliabakos, Director of Pharmacy Services at Village Apothecary, an independent pharmacy in the West Village, “Governor Cuomo has failed to resolve what has become a national healthcare crisis.”

In a joint statement, Steve Moore, president of PSSNY, and Michael Duteau, president of the Community Pharmacy Association of New York State, thanked supporters in the state Senate and Assembly, each of which passed the legislation this past June.

“Vetoing this absolutely necessary legislation,” Moore and Duteau said, “will allow PBMs to continue to steal more money from taxpayers, resulting in the closure of pharmacies and jeopardizing patients’ access to life-saving medications and pharmacist services. Special interests have been served, pharmacies and patients remain victims of PBM greed, and New York will literally pay as a result of this decision. Pharmacy stands united and our fight will not end until all PBMs are truly regulated and New Yorkers are protected from their harmful practices.”

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