BILL NUMBER: S5262             Revised 01/24/18

SPONSOR: LANZA
 
TITLE OF BILL:

An act to amend the general business law, in relation to the price goug-
ing of medicine

 
PURPOSE OR GENERAL IDEA OF THE BILL:

This legislation adds medicine to the list of goods and services that
can be classified as possibly being subject to price gouging.

 
SUMMARY OF SPECIFIC PROVISIONS:

Section 1: Section 396-rrr of the general business law is amended to add
medicine to the list of consumer goods that can be classified as subject
to price gouging. The classification of medicines falling under this
section of law will be determined by the publicly reported drug short-
ages reported by the U.S. Food and Drug Administration.

              

Section 2: Bans the price gouging of medicines listed as been in short
supply by the US FDA.

Section 3: Allows for the courts to determine if the price established
for a drug in short supply is unconscionably excessive and establishes
the criteria for the court to consider such determination.

Section 4: Extends medicine price gouging prosecution powers to the
Attorney General of New York State.

 
JUSTIFICATION:

According to data uncovered by the Associated Press and made public on
September 23, 2011, there is an ongoing and "severe shortage of drugs
for chemotherapy, infections and other serious ailments" that is "endan-
gering patients and forcing hospitals to buy life-saving medications
from secondary suppliers at huge markups because they can't get them any
other way."

An Associated Press review of industry reports and interviews with near-
ly two dozen experts found that at least 15 deaths in recent years were
blamed on the shortages, either because the right drug wasn't available
or because of dosing errors and other problems in administering or
preparing alternative medications.

The shortages, mainly involving widely-used generic injected drugs that
ordinarily are cheap, have been delaying surgeries and cancer treat-
ments, leaving patients in unnecessary pain and forcing hospitals to
give less effective treatments. This has resulted in complications and
longer hospital stays.

Just over half of the 549 U.S. hospitals responding to a survey this
summer by the Institute for Safe Medication Practices, a patient safety
group, said they had purchased one or more prescription drugs from
so-called "gray market vendors" - companies other than their normal
wholesalers. Most also said they've had to do so more often of late, and
7 percent reported side effects or other problems.

The AP article read: "Hospital pharmacists 'are really looking at this
as a crisis. They are scrambling to find drugs'". The Associated Press
found that among the reasons for drug shortages was price gouging by
secondary market vendors. It is obvious that the owners of these second-
ary market companies called "gray markets" are placing profit over lives
and Americans have been found to be dying due to this practice.

"Secondary, 'gray market' vendors are business firms that buy scarce
drugs from small regional wholesalers, pharmacies or other sources aid
then market them to hospitals, often at many times the normal price.
These sellers may not be licensed authorized distributors," appeared in
the AP news story.

According to pharmacy industry representatives, there are at least 15
deaths to drug shortages in recent years based on reports by medical
personnel, but many deaths and injuries go unreported.

At least 210 drugs in recent years have been added to the list of drugs
in short supply. The average price markup on drugs sold by secondary
distributors was 650 percent, according to an Aug. 16 report by the
Premier Healthcare Alliance, a group that helps U.S.  hospitals and
other health providers improve their patient care and finances.

The Associated Press also reported that, in an extreme case, one vendor
was offering a generic drug for dangerously high blood pressure, normal-
ly priced at $25.90 per dose, for $1,200.

 
PRIOR LEGISLATIVE HISTORY:

2017: S.5262 - Referred to Consumer Protection /A.7087 - Passed Assembly
2016: S.4508 - Referred to Consumer Protection /A.6731 - Passed Assembly
2015: S.4508 - Referred to Consumer Protection /A.6731 - Passed Assembly
2014: S.2138-B - Referred to Consumer Protection/ A.3751-B - Passed
Assembly
2013: S.2138-B - Referred to Consumer Protection/ A.3751-B - Passed
Assembly

 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENT:

None.

 
EFFECTIVE DATE:
This bill will take effect immediately.