In the final days of October, a significant development occurred in the legal landscape concerning pharmacy benefit managers (PBMs). The New York Department of Financial Services (DFS) announced new regulations to expand its oversight of PBMs. The new regulations cover assessing, licensing, and recordkeeping for PBMs, and also include revisions to existing regulations pertaining to PBMs. Moreover, DFS released fresh guidance on the license application process for PBMs.
Of note to legal professionals is DFS’s stance on the potential preemption of its actions by the Employee Retirement Income Security Act (ERISA). The DFS asserted that ERISA does not preempt its regulation maneuvers, nor is the regulation hindered by the directives issued by the Centers for Medicare & Medicaid Services.
DFS’s advancement of these regulations points to an enhanced regulatory environment for PBMs in New York. This development, in no way insignificant, is part of DFS’s continued efforts in strengthening its oversight and regulatory powers regarding health insurers and similar entities within its jurisdiction.
However, there remains an element of uncertainty surrounding the impact of these regulations due to questions surrounding ERISA preemption. While DFS maintains its position that ERISA does not preempt its actions, there is yet to be a clarity on this issue from higher authorities. This uncertainty leaves room for potential legal clashes in the future.
For legal professionals working with or representing PBMs or insurance companies, staying informed about developments in this area is of obvious critical importance. Adjusting to this evolving regulatory landscape poses challenges and demands keen anticipation of potential changes to remain compliant and strategic.
Further details about the new regulations and other aspects of the DFS’s recent moves can be found here.