Pharmacists protested this week in Albany, NY ahead of the State of the State Address because the Governor has vetoed proposed legislation to regulate Pharmacy Benefit Management companies (PBMs).

The bill, A. 2836/S. 6531, was intended to establish major oversight of PBMs’ powerful role as middlemen of sorts, in setting drug prices and availability of drugs in complex transactions between drug manufacturers, health insurance companies, and pharmacies. It is a role fraught with opportunities for self-dealing at the expense of independent pharmacies and patients.

Explanation for the veto was not given. However, several sources have identified problems in the language of the Bill as drafted, including internal editing conflicts and unspecified rules.

For example, the Bill included regulation of  PBMs’ dealings with all types of health plans and that could present a legal flaw, since self-insured plans operated by large businesses and labor unions are exempt by federal law from state regulation.

In the Bill, PBMs in NY would be licensed and subject to oversight by the State Department of Financial Services, formerly the Insurance Department. The Governor proposed this oversight earlier last year, but it was not included in the final budget. 

PBMs would have important reporting requirements, and the licensing section includes other regulations, all of which overlap and were seen by critics to sometimes conflict with rules spelled out elsewhere in the Bill, which could lead to confusion in enforcement.

The Bill allows an important provision that providers and patients could sue a PB for a broad range of claims including for any injury or loss caused by any violation of its duties, obligations or requirements. This was seen by some as overbroad.

The Bill calls for PBMs to act “primarily in the best interests of the individual, and the health plan, and the provider.” Criticism suggested these interests might sometimes be in conflict.

There is a sense of hope among supporters of this legislation that, if edited and cleaned up, a better revision of this legislation to regulate PBMs, as there are in other states, will be signed In NY.