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Another Voice: Pharmacy benefit manager legislation needs retooling

By Heather Briccetti

For almost a decade as head of the Business Council of New York State, I’ve witnessed many instances in which reasonable state or regulatory proposals are manipulated and modified far beyond the intent of the original idea.

Such is the case with a bill that will have serious consequences for the state’s budget, employers and prescription drug consumers.

Gov. Andrew M. Cuomo initially advanced reasonable regulations for pharmacy benefit managers – frequently referred to as PBMs. However, after rejecting the original measure during budget negotiations, legislative sponsors expanded its scope, ultimately reducing flexibility and imposing additional complexities to New York’s health care system.

The bill, with additional tinkering by the Legislature, passed both houses – and by year’s end will be on the governor’s desk.
PBMs impact us by using cost-saving tools to keep costs down. In fact, PBMs saved the state’s Medicaid program $3.8 billion from 2011 through 2016. PBMs play an important role in New York’s health care system and their actions can curb increases in health insurance premiums.

In September, state budget director Robert Mujica told our annual meeting that in order to close a multi-billion-dollar budget gap, the state will need to find ways to reduce expenses. He said that in anticipation of potential cuts from Washington to programs such as Medicaid, New York is seeking to make midyear policy changes to reduce the costs-drivers of health care.

Keeping this in mind, consider the uncertain impact new legislation brings. Included in this proposal is a tangled clause opening the door to third party legal actions against PBMs by pharmacists and others based on conflicting expectations contained in the bill. These provisions are counterproductive to the state’s efforts to rein in health care costs and should be removed from the potential law.

If this measure moves ahead as written, the cost of health care will undoubtedly rise. One alarming analysis estimated that over the next 10 years, it could increase costs by $28 billion. Pharmacy benefit managers’ cost controls, which provide savings to New York’s employees and retirees, will be seriously jeopardized.

The 2020 legislative session will certainly present many challenges. Elected officials will push for increased funding for infrastructure, workforce development, education and many other important programs. However, if this bill is signed into law in its current form, the state’s health care budget, among its largest elements, will demand more dollars, leaving fewer resources for other budget priorities.

Heather Briccetti is president and CEO of the Business Council of New York.

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