New York would set payment limits for Medicare-priced drugs with significant savings

The superintendent would review drugs with federal Medicare prices, estimate possible savings, and publish the estimates. The review covers drugs with a maximum price set through the federal Medicare program. The superintendent may consult state officials and may obtain outside analysis and data. Health plans and participating ERISA plans must provide their own estimates. The superintendent must invite public comments after publishing estimates. Health plans and participating ERISA plans must provide estimates within six months after the section takes effect and each year after that. The superintendent must publish estimates within nine months and each year after that.

Following the public hearing referenced in the bill, the superintendent would set a maximum payment for a covered drug if significant savings are found. The bill does not describe how that hearing would be held. Limits would cover state entities, excluding Medicaid, and health plans, plus ERISA plans that opt in, for covered drugs dispensed, delivered, or administered to people in New York during the federal price period. Pharmacies may still receive separate dispensing fees. A limit cannot be lower than the federal maximum price. If it is higher, the superintendent must explain why. An ERISA plan may opt in by giving written notice at least one month before limits take effect. Licensed pharmacies may not buy covered drugs for sale or distribution above the limit to people whose health care is provided by a state entity, health plan, or participating ERISA plan. Limits would apply during the federal price period for each drug. The pilot would regulate drug prices for three years. The act would take effect 30 days after it becomes law.

Drug makers and distributors would be barred from withdrawing covered drugs to avoid the pilot or refusing to negotiate in good faith within an established limit. These rules apply to makers and distributors of drugs covered by the pilot. A manufacturer planning to withdraw a covered drug must give written notice to the superintendent and attorney general at least 180 days beforehand. For withdrawal violations, the penalty for each drug is the greater of $500,000 or annual savings referenced in paragraph (j)(5). For negotiation violations, it is the greater of $500,000 or annual savings described in subsection (j). Those savings cross-references are unclear. A manufacturer planning to withdraw a covered drug must give notice at least 180 days before the withdrawal.