The New York State Department of Financial Services (“DFS”) has instructed health insurers to make certain that the cost of a consumer's co-payment does not exceed the retail price of a prescription drug.
“DFS expects insurers to take immediate steps to make sure that consumers are being treated fairly and that they are not being ripped off when they buy prescription medication,” Linda A. Lacewell, the acting DFS superintendent, said. “Consumers should not be penalized when buying medications with a retail price that is lower than the amount of the co-pay and should only be paying the lower retail price.”
The DFS said in a statement that it acted after being contacted by pharmacists who complained that, in some cases, copayments being charged to consumers exceeded the retail prices of drugs. A copayment is the fixed out-of-pocket charge paid by a consumer for a health care service.
New York law prohibits insurers from requiring consumers to pay a copayment that exceeds the price of a drug. New York law also requires a pharmacist to notify consumers when a copayment exceeds the price of a drug and to charge consumers the pharmacy's retail price, when the retail price is lower than the copayment. However, pharmacists have complained that “gag clauses” in contracts between pharmacy benefit managers and insurers prevented pharmacists from disclosing actual drug prices to consumers. Pharmacy benefit managers are third-party administrators used by insurance plans to develop drug formularies, negotiate discounts and rebates from drug manufacturers, and process and pay for drug claims.
“Insurers are responsible for complying with New York State laws regardless of whether they contract with third-parties, such as pharmacy benefit managers, to administer policy benefits,” Acting Superintendent Lacewell said. “Consumers have every right to ask about and receive information about prescription drug pricing and to be charged fairly.”
The DFS said that it also is concerned by reports that pharmacy benefit managers are threatening or taking retaliatory action against pharmacists who are fulfilling their obligations under New York law. In the circular letter issued today, the DFS reminded insurers that it will take all appropriate action in response to retaliatory actions by any insurer, its contracted pharmacy benefit manager, or any other agents against pharmacists for complying with the law.
Learn more: DFS letter.
Victoria Spears
Victoria Prussen Spears is senior vice president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. A graduate of Sarah Lawrence College and Brooklyn Law School, Ms. Spears was an attorney at a leading New York City law firm before joining Meyerowitz Communications. She may be contacted at [email protected].