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Cuomo says drug prices could come down with tighter regulations

Howard Jacobson, owner of three pharmacies in Rockville

Howard Jacobson, owner of three pharmacies in Rockville Centre and West Hempstead, says new regulations should stop PBMs from limiting where patients can get prescriptions filled.  Credit: Anthony Lanzilote

Gov. Andrew M. Cuomo said he will push for tighter state regulations on pharmacy benefits managers such as CVS Caremark and Express Scripts in a push to control skyrocketing drug prices. 

PBMs act as the middleman between health insurers and pharmacies. When a patient fills a prescription, he or she pays a copay. The PBM collects the balance of the payment from the insurer, passes a portion of that on to the pharmacy that dispensed the drug, and pockets the rest. The difference between what the PBM collected and what it passed on is the spread. PBMs — which set both amounts — do not have to disclose to insurers how much they pass on to pharmacies, or disclose to pharmacies how much they collect from insurers.

The governor's pitch comes less than a month after he vetoed a bill that advocates said would have placed limits on how PBMs operate. 

Cuomo said in his State of the State address last week that PBMs should be required to register with the state’s department of financial services and be forced to disclose financial incentives they receive for promoting specific drugs as well as other financial arrangements affecting customers.

“Governor Cuomo has championed the regulation and oversight of pharmacy benefit managers to bring transparency to their operations and control to skyrocketing prescription drug costs," said Jason Conwall, the governor's spokesman. "The governor will again propose a more tailored, legally defensible approach to regulating PBMs."

The president of the Pharmaceutical Care Management Association, a PBM lobbying group in Washington, said it would work with the governor to lower drug prices.

JC  Scott, PCMA's president, said in a statement that the governor's "focus on reducing prescription drug prices is an important public health priority. While we have concerns regarding some proposals to regulate pharmacy benefit managers (PBMs) by the administration, we stand ready to work with the governor on solutions to reduce prescription drug costs for all New Yorkers."

Cuomo said he vetoed last year’s bill because it would have been preempted by federal regulations including Medicare rules.  In the veto, Cuomo added the bill would likely increase administrative costs and lead to anti-competitive conduct. 

Independent area pharmacists, who have long been critics of PBMs, said they’re cautiously optimistic the state will pass regulations. But they said any regulation must include aspects of the bill Cuomo vetoed in December.

For example, the Pharmacists Society of the State of New York, which advocates for pharmacists and pharmacies, said the bill the governor vetoed would have stopped PBMs from being able to impose expensive accreditation requirements on pharmacies that they said go beyond what’s required by the state pharmacy board.

“Some of the accreditations cost up to $30,000 or $40,000 per year,” said Steve Moore, president of the Albany-based pharmacists’ group. 

Howard Jacobson, who owns three pharmacies in Rockville Centre and West Hempstead, said any regulation should stop PBMs from limiting where patients get prescriptions filled. Patients are sometimes forced to fill maintenance medicines at mail-order pharmacies, he said. 

“Guess who owns the mail-order pharmacies?” Jacobson said. “It’s the PBMs. It’s an unfair business practice. At least give people a freedom of choice.”

The three largest PBMs are CVS Caremark, Express Scripts and UnitedHealthcare’s OptumRx, according to the Drug Channels Institute, a subsidiary of Philadelphia-based Pembroke Consulting, a business consulting group.

Jacobson said without price transparency, "how do we know who is doing the right thing for patients? All we know is copays go up, deductibles go up, and our costs are going up."

Nathan Mohan, who operates New Island Pharmacy in Deer Park, said some older customers of his haven't consistently taken their medicine because of mail-order requirements.

"The process of setting up a mail-order supply and getting it in an efficient and economical manner is a very confusing process," Mohan said. "It's not something everyone can follow and can keep patients, especially in the elderly population, from getting proper treatment."

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