S T A T E O F N E W Y O R K
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1798
2019-2020 Regular Sessions
I N S E N A T E
January 16, 2019
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Introduced by Sen. RIVERA -- read twice and ordered printed, and when
printed to be committed to the Committee on Health
AN ACT to amend the public health law and the general business law, in
relation to price gouging on prescription drugs
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. The public health law is amended by adding a new section
278-a to read as follows:
§ 278-A. LIMITATION ON EXCESSIVE PRICE INCREASES; PRESCRIPTION DRUGS:
1. IN THE EVENT A MANUFACTURER, AS DEFINED IN SUBDIVISION TWENTY-ONE OF
SECTION SIXTY-EIGHT HUNDRED TWO OF THE EDUCATION LAW, OF A BRAND OR
GENERIC DRUG, MADE AVAILABLE IN NEW YORK, INCREASES THE WHOLESALE ACQUI-
SITION COST (WAC) OF A DRUG BY A PERCENT EQUAL TO OR GREATER THAN ONE
HUNDRED PERCENT AT ANY ONE TIME OR IN THE AGGREGATE IN ANY TWELVE MONTH
PERIOD:
(A) THE MANUFACTURER SHALL, NOT LESS THAN THIRTY DAYS PRIOR TO INSTI-
TUTING SUCH INCREASE, NOTIFY THE COMMISSIONER AND THE DRUG UTILIZATION
REVIEW BOARD ESTABLISHED UNDER SECTION THREE HUNDRED SIXTY-NINE-BB OF
THE SOCIAL SERVICES LAW. NOTICE SHALL BE PROVIDED ON THE FORM ESTAB-
LISHED PURSUANT TO SUBDIVISION TWO OF THIS SECTION; AND
(B) THE COMMISSIONER SHALL REQUIRE PRIOR AUTHORIZATION AND AUTHORIZE
MEDICAID MANAGED CARE PLANS TO REQUIRE PRIOR AUTHORIZATION FOR THE DRUG
EFFECTIVE AS OF THE DATE OF THE PRICE INCREASE AND CONTINUING UNTIL A
DETERMINATION IS MADE BY THE DRUG UTILIZATION REVIEW BOARD.
2. THE COMMISSIONER, IN CONSULTATION WITH THE DRUG UTILIZATION REVIEW
BOARD, SHALL PRODUCE AND MAKE AVAILABLE TO MANUFACTURERS A PRICE
INCREASE NOTIFICATION FORM THAT SHALL ELICIT:
(A) THE MOST RECENT WHOLESALE ACQUISITION COST (WAC) OF THE DRUG PRIOR
TO AN INCREASE EQUAL TO OR GREATER THAN ONE HUNDRED PERCENT AT ANY ONE
TIME OR IN THE AGGREGATE IN ANY TWELVE MONTH PERIOD IN EITHER PRICING
MEASURE. FOR THE PURPOSES OF THIS SECTION WHOLESALE ACQUISITION COST
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD00512-01-9
S. 1798 2
(WAC) SHALL INCLUDE THE PRICES FOR EACH DOSAGE, SIZE OR CONCENTRATION OF
THE DRUG OFFERED OR SOLD BY THE MANUFACTURER;
(B) THE WHOLESALE ACQUISITION COST (WAC) OF THE DRUG WHEN EXCEEDING
THE ONE HUNDRED PERCENT THRESHOLD;
(C) ANY MATERIAL CHANGE IN INGREDIENT, PRODUCTION, OR MANUFACTURING
COSTS RESULTING IN THE PRICE INCREASE;
(D) IN THE CASE OF A BRAND DRUG, THE EXPIRATION DATE OF THE PATENT;
(E) IN THE CASE OF A GENERIC DRUG, WHETHER THE DRUG IS A SOLE SOURCE
DRUG; AND
(F) ANY OTHER INFORMATION THE MANUFACTURER DEEMS RELEVANT TO THE
BOARD'S REVIEW.
3. UPON RECEIPT OF A PRICE INCREASE NOTIFICATION FORM, THE DRUG UTILI-
ZATION REVIEW BOARD SHALL REVIEW THE PRICE INCREASE AND MAKE A DETERMI-
NATION AS TO WHETHER THE PRICE INCREASE IS EXCESSIVE. IN MAKING A DETER-
MINATION THE BOARD SHALL CONSIDER:
(A) THE WHOLESALE ACQUISITION COST (WAC) OF THE DRUG IN COMPARISON TO
ANY GENERIC EQUIVALENT OR THERAPEUTICALLY EQUIVALENT DRUG;
(B) THE FDA APPROVED OR COMPENDIUM SUPPORTED USE OF THE DRUG AND CRIT-
ICAL NEED TO THE PATIENT;
(C) ANY KNOWN MARKET FACTORS JUSTIFYING THE PRICE INCREASE, INCLUDING
BUT NOT LIMITED TO:
(I) WHETHER THE DRUG HAS BEEN ABSENT FROM THE MARKET FOR ANY PERIOD OF
TIME; AND
(II) CHANGES IN MANUFACTURING OR REGULATORY REQUIREMENTS OR COSTS.
(D) ANY MATERIAL CHANGE IN THE PREVALENCE OR SEVERITY OF THE DISEASE
OR MEDICAL CONDITION OR CONDITIONS THAT THE DRUG IS APPROVED TO TREAT;
(E) IN THE CASE OF A BRAND DRUG, THE EXPIRATION DATE OF THE PATENT;
AND
(F) IN THE CASE OF A GENERIC DRUG, WHETHER THE DRUG IS A SOLE SOURCE
DRUG.
4. UPON A FINDING BY THE DRUG UTILIZATION REVIEW BOARD THAT A MANUFAC-
TURER HAS INSTITUTED AN EXCESSIVE PRICE INCREASE, (A) THE BOARD SHALL
REQUIRE PRIOR AUTHORIZATION FOR THE DRUG AND AUTHORIZE MEDICAID MANAGED
CARE PLANS TO REQUIRE PRIOR AUTHORIZATION UNTIL THE BOARD DETERMINES
OTHERWISE; AND (B) THE BOARD MAY REFER THE MATTER TO THE ATTORNEY GENER-
AL WITH ANY INFORMATION NECESSARY FOR THE INVESTIGATION AND PROSECUTION
OF PRICE GOUGING VIOLATIONS UNDER SECTION THREE HUNDRED NINETY-SIX-RRR
OF THE GENERAL BUSINESS LAW. IN THE EVENT THE BOARD DOES NOT FIND THAT
THE MANUFACTURER HAS ENGAGED IN AN EXCESSIVE PRICE INCREASE, THE BOARD
SHALL REMOVE THE REQUIREMENT FOR PRIOR AUTHORIZATION AND SUCH AUTHORITY
GRANTED TO MEDICAID MANAGED CARE PLANS TO INSTITUTE PRIOR AUTHORIZATION
UNDER THIS SECTION SHALL CEASE.
§ 2. The general business law is amended by adding a new section 396-
rrr to read as follows:
§ 396-RRR. PRICE GOUGING; PRESCRIPTION DRUGS. 1. LEGISLATIVE FINDINGS
AND DECLARATION. THE LEGISLATURE HEREBY FINDS THAT EXCESSIVE PRICE
INCREASES TO PRESCRIPTION DRUGS THAT LACK JUSTIFICATION BASED ON MARKET
FORCES CREATE A PUBLIC HEALTH RISK TO CONSUMERS THAT RELY ON THESE
PRESCRIPTION DRUGS. IN ORDER TO PREVENT A MANUFACTURER, AS DEFINED IN
SUBDIVISION TWENTY-ONE OF SECTION SIXTY-EIGHT HUNDRED TWO OF THE EDUCA-
TION LAW, FROM TAKING UNFAIR ADVANTAGE OF CONSUMERS WHO RELY UPON AND
MAY LOSE ACCESS TO THE PRESCRIPTION DRUGS IF THE MEDICATION HAS A SUDDEN
AND EXCESSIVE PRICE INCREASE, THE LEGISLATURE DECLARES THAT THE PUBLIC
INTEREST REQUIRES THAT SUCH CONDUCT BE PROHIBITED AND MADE SUBJECT TO
CIVIL PENALTIES.
S. 1798 3
2. IN ORDER TO PREVENT A DRUG MANUFACTURER, AS DEFINED IN SUBDIVISION
TWENTY-ONE OF SECTION SIXTY-EIGHT HUNDRED TWO OF THE EDUCATION LAW, FROM
IMPOSING UNCONSCIONABLY AND UNJUSTIFIABLY EXCESSIVE PRICE INCREASES, THE
ATTORNEY GENERAL MAY, UPON REFERRAL FROM THE DRUG UTILIZATION REVIEW
BOARD AS CODIFIED IN SECTION TWO HUNDRED SEVENTY-EIGHT-A OF THE PUBLIC
HEALTH LAW, APPLY IN THE NAME OF THE PEOPLE OF THE STATE OF NEW YORK TO
THE SUPREME COURT WITHIN THE JUDICIAL DISTRICT IN WHICH SUCH VIOLATIONS
ARE ALLEGED TO HAVE OCCURRED, ON NOTICE OF FIVE DAYS, FOR AN ORDER
ENJOINING OR RESTRAINING COMMISSION OR CONTINUANCE OF THE ALLEGED UNLAW-
FUL ACTS. IN ANY SUCH PROCEEDING, THE COURT MAY IMPOSE A CIVIL PENALTY
IN AN AMOUNT NOT TO EXCEED TWENTY-FIVE THOUSAND DOLLARS AND, WHERE
APPROPRIATE, ORDER RESTITUTION TO AGGRIEVED CONSUMERS.
3. WHETHER A PRICE IS UNCONSCIONABLY AND UNJUSTIFIABLY EXCESSIVE IS A
QUESTION OF LAW FOR THE COURT. THE COURT'S DETERMINATION THAT A
VIOLATION OF THIS SECTION HAS OCCURRED SHALL BE BASED UPON THE FOLLOWING
FACTORS:
(A) THE INCREASE IN PRICE IS UNCONSCIONABLY EXTREME;
(B) THE DRUG IS VITAL AND MEDICALLY NECESSARY TO THE HEALTH OF THE
CONSUMER;
(C) THE DRUG IS A SOLE SOURCE DRUG WITHOUT A THERAPEUTIC EQUIVALENT;
AND
(D) THE PRICE INCREASE WAS WITHIN THE CONTROL OF THE MANUFACTURER AND
NOT CAUSED BY COSTS IMPOSED ON OR FACTORS BEYOND THE CONTROL OF THE
MANUFACTURER.
§ 3. This act shall take effect immediately.
