WASHINGTON, October 18, 2023 – The ERISA Industry Committee (ERIC) submitted public comments this week expressing deep concerns with regulations proposed by the New York State Department of Financial Services in “Proposed Consolidated Rulemaking for Insurance Regulations 219, 224, and 226-229,” which would implement a state statute enacted in 2021 covering pharmacy benefit managers (PBMs) and their network practices.
In its letter, ERIC made clear that the proposed rules would overstep state authority to regulate PBMs by directly impacting the design and administration of self-funded ERISA plans, which is prohibited by federal law, and ultimately the rules would increase the health care costs that New Yorkers face.
“Like many related state policy proposals, provisions of the proposed rules, and the underlying state statute they are designed to implement, are preempted by federal ERISA law. If they are not revised to remove these violations of federal law, ERIC may consider pursuing or supporting litigation to strike them down,” said ERIC Director of State Advocacy and Litigation Dillon Clair.
On behalf of its member companies, ERIC strongly urged the New York Department of Financial Services to revise several key regulatory provisions it believes threaten the quality and affordability of prescription drug benefits across the state, including sections that:
- Explicitly apply regulatory provisions to PBMs administering self-insured ERISA benefit plans
- Attempt to control self-insured plan design and administration by applying network adequacy standards, limiting the use of specialty pharmacies, and restricting prescription drug formulary changes
- Establish minimum dispensing fees not directed by the underlying state statute, drastically increasing statewide health care costs
“If adopted without substantial revision, the proposed rules would threaten to erode the ability of large-employer plan sponsors to effectively operate national benefits plans, likely lead to litigation involving ERISA preemption issues, and undermine the ability of many employers to do business in the state of New York,” Clair added. “ERIC therefore strongly encourages the Department to remove all reference and application to self-insured ERISA plans from the Proposed Rules, or to include an explicit exemption from regulatory provisions for PBMs administering self-insured ERISA plans.”
ERIC’s comment letter may be read here.