UPDATE: The proposal discussed below passed the Assembly Friday evening by an unofficial vote of 133-0. Having previously been approved by the Senate, the bill will head to Governor Hochul’s desk for her signature or veto.

Legislation that would potentially increase New York’s pharmacy costs by hundreds of millions of dollars annually is moving toward final passage in Albany’s end-of-session rush.

The bill would require the companies that process prescription drug claims on behalf of most health plans – known as pharmacy benefit managers or PBMs – to pay pharmacies minimum prices for drugs, including a dispensing fee of $10.18 for each prescription filled.

That represents a roughly 400 percent increase over current dispensing fees, which average about $2, which would add about $570 million per year to drug costs for health plans, employers and consumers, according to an estimate from the Pharmaceutical Care Management Association, which represents PBMs.

Sponsored by Assemblyman John McDonald of Albany County, a former pharmacy owner, and Sen. James Skoufis of Orange County, the so-called Patient Access to Pharmacy Act passed the Senate last week by a vote of 58-2.

In the Assembly, the bill moved through the Ways and Means and Rules committees on Thursday, setting it up for a possible vote by the full house before lawmakers adjourn for the summer, which is scheduled to happen Friday.

The Senate previously approved the legislation at the end of last year’s session, but it was never taken up by the Assembly.

The bill mirrors a regulatory proposal put forward by the Department of Financial Services in the fall of 2023 – but which the department dropped in the face of widespread opposition from insurers, employers and labor unions.

In response to that opposition, the bill’s sponsors amended the bill to exempt the “collectively bargained” health plans covering union members. It also does not apply to Medicare or the “self-insured” health plans offered by most large employers, which are exempt from state regulation by federal law.

As a result, the bill primarily targets the health plans purchased from insurance companies by small and medium-sized employers – where it will add to premium costs that are already among the highest in the U.S.

Critics have also argued that the mandate would apply to the state-run Essential Plan and Child Health Plus, although Skoufis said that had not been the intent.

The bill would not affect the state’s Medicaid health plan for the low-income and disabled, because it already pays a dispensing fee of $10.18 – which is the basis for the fee in the McDonald-Skoufis legislation.

Supporters of the legislation contend the measure is necessary to protect pharmacists from underpayment by the few large PBMs that control most of the prescription drug market.

However, New York’s pharmacy industry is relatively robust. According to figures from the National Community Pharmacists Association, New York has more pharmacies per capita than any state other than West Virginia. Almost two-thirds of its pharmacies are independently owned, which is the second-highest share behind North Dakota, and the number of independent pharmacies has been growing here even as it has declined nationwide.