New York’s Patient Access to Pharmacy Act (PAPA, S.5939/A.5882) cleared the Assembly in June and is expected to reach Governor Kathy Hochul’s desk in November, starting a 10-business-day signing clock. The bill requires pharmacy benefit managers (PBMs) to reimburse pharmacies at the greater of the National Average Drug Acquisition Cost or documented actual acquisition cost, plus a dispensing fee at least equal to New York Medicaid’s rate, with an enhanced fee for specialty drugs (Spectrum News, October 20, 2026; Barclay Damon alert).
Who it affects. Self-funded employers with New York-based workforces, especially those concentrated in finance, healthcare, and higher education, along with the TPAs and PBMs administering their plans. The standard applies to PBM contracts issued, renewed, modified, or amended after enactment, so plans renewing in early 2027 see the new floor before plans locked into multi-year contracts do.
The reserve mechanism. This is a severity story, not a frequency one. The floor sets a per-script cost independent of utilization: a pharmacy that was reimbursed below acquisition cost now gets paid at NADAC or actual cost plus a Medicaid-level dispensing fee, raising the expected claim ratio for New York Rx spend regardless of how many scripts are filled. The Pharmaceutical Care Management Association (PCMA), the PBM trade group, estimates the mandate would add $576 million to statewide drug spending in year one; the Pharmacists Society of New York points to Georgia’s experience, where a PBM’s $17 million cost projection became a $15 million state savings instead. Either way, the number moves, and it moves on the renewal date, not gradually.
That timing is the part completion factors don’t handle well. A triangle built on pre-mandate unit costs will understate paid claims the moment a New York-domiciled contract reprices, and actuaries won’t have a full accident year of post-mandate experience to recalibrate development patterns until well into 2027. This is also not the first state to do this: Arkansas and Georgia enacted similar PBM reimbursement floors before New York, and self-funded sponsors in both states learned the mandate applied to them only after a renewal landed with an unexplained trend jump. Rutledge v. Pharmaceutical Care Management Association (592 U.S. 80, 2020) is why: the Supreme Court held that state reimbursement-rate mandates for PBMs are not automatically preempted by ERISA, so funding structure alone does not shield a self-funded plan the way it does from state benefit-design mandates.
What this means for your next review. Ask whether any PBM contract covering New York enrollees renews, is modified, or is amended after PAPA’s effective date, and flag that contract for a separate completion-factor track rather than blending it into the national Rx trend. If your actuary is already modeling a national PBM reform trend from the 2026 federal rebate pass-through mandate, confirm New York’s reimbursement floor is layered on top of that, not assumed away by it, since the two operate on different cost levers entirely.
For background on how unpaid-claim estimates get built from claims data, see How Actuaries Estimate Your Unpaid Claims. Related coverage: DOL PBM Fee Rule Targets Hidden Costs in Self-Insured Plans and Federal Law Now Requires Full PBM Rebate Pass-Through to Plans.
Sources
- Spectrum News, “Pharmacists push for Gov. Hochul to sign PBM transparency bill,” October 20, 2026: https://spectrumlocalnews.com/nys/central-ny/news/2026/10/20/patients-accessing-pharmacy-act-pbms
- Barclay Damon, “NYS Legislators Advance Patient Access to Pharmacy Act, Establishing New PBM Reimbursement Standards”: https://www.barclaydamon.com/alerts/nys-legislators-advance-patient-access-to-pharmacy-act-establishing-new-pbm-reimbursement-standards
- NY State Senate Bill S.5939, nysenate.gov: https://www.nysenate.gov/legislation/bills/2025/S5939
- AMCP, “Patient Access to Pharmacy Act (PAPA) Would Establish Minimum Pharmacy Reimbursement and Dispensing Fee Requirements”: https://www.amcp.org/letters-statements-analysis/patient-access-pharmacy-act-papa-would-establish-minimum-pharmacy-reimbursement-and-dispensing-fee
- Rutledge v. Pharmaceutical Care Management Association, 592 U.S. 80 (2020)