S02625 Summary:

Amd 206, Pub Health L; amd 208 & 612, Tax L
Requires manufacturers and labelers of prescription drugs dispensed in this state which engage in marketing activities in the state to annually report marketing expenses to the department of health; imposes a $10,000 civil fine for failure to report; eliminates deductibility for certain expenses incurred in the advertising of prescription drugs.
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S02625 Actions:

02/01/2016PRINT NUMBER 2625A
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S02625 Text:

                STATE OF NEW YORK
                               2015-2016 Regular Sessions
                    IN SENATE
                                    January 27, 2015
        Introduced  by Sens. KRUEGER, PERKINS -- read twice and ordered printed,
          and when printed to be committed to the Committee on Health --  recom-
          mitted  to  the  Committee on Health in accordance with Senate Rule 6,
          sec. 8 -- committee discharged, bill  amended,  ordered  reprinted  as
          amended and recommitted to said committee

        AN  ACT  to  amend  the  public health law, in relation to requiring the
          manufacturer or labeler of each prescription drug to  annually  report
          the  marketing  costs  of such drug to the department of health and to
          amend the tax  law,  in  relation  to  eliminating  deductibility  for
          certain expenses incurred in the advertising of prescription drugs
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
     1    Section 1.  Legislative  intent.  The  legislature  hereby  finds  and
     2  declares  that  the price of prescription drugs in this state and across
     3  the nation has been increasing at an alarming rate over the past decade.
     4  Prescription drug costs are increasing at a faster rate than  any  other
     5  component  of health care and are driving the increase in overall health
     6  care cost. As is apparent by the ubiquitous nature of the marketing  and
     7  public  information campaigns relating to prescription drugs, pharmaceu-
     8  tical manufacturers put a great deal of resources into  marketing  their
     9  products.  This  has  been  especially true since the 1997 relaxation of
    10  federal laws relating to prescription drug advertising.  It  is  in  the
    11  interest  of  assisting  this  state  in  its  role  as  a  purchaser of
    12  prescription drugs and administrator of prescription drug  programs,  to
    13  enable  the  state to determine the scope of prescription drug marketing
    14  costs and their effect on the cost, utilization and delivery  of  health
    15  care  services,  and  thus further the role of this state as guardian of
    16  the public interest.
    17    § 2.  Section 206 of the public health law is amended by adding a  new
    18  subdivision 30 to read as follows:

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.

        S. 2625--A                          2
     1    30. The commissioner is authorized and directed to require manufactur-
     2  ers or labelers of prescription drugs, which dispense such drugs in this
     3  state  and  which employ, direct or utilize marketing representatives in
     4  the state, to report the marketing costs of  each  of  its  prescription
     5  drugs dispensed in this state.
     6    (a)  Definitions.  As  used  in  this  subdivision, unless the context
     7  clearly indicates otherwise, the following terms shall have the  follow-
     8  ing meanings:
     9    (i)  "Labeler"  means any person or entity, having a labeler code from
    10  the federal Food and Drug Administration, that receives  a  prescription
    11  drug  from the manufacturer or a wholesaler of such drug, and repackages
    12  such drug to be dispensed in this state.
    13    (ii)  "Manufacturer"  means  a  manufacturer  of  prescription   drugs
    14  dispensed  in  this state, and shall include the subsidiary or affiliate
    15  of such manufacturer.
    16    (iii) "Marketing" means advertising  and  promotional  activities  for
    17  prescription  drugs  dispensed  in this state including, but not limited
    18  to, those activities described in paragraph (b) of this subdivision.
    19    (b) Manner of reporting. On or  before  July  first  each  year  every
    20  manufacturer  and labeler shall file a report with the department on its
    21  marketing activities conducted in  this  state.  Such  report  shall  be
    22  submitted in such form and manner, and include the payment of such a fee
    23  as  shall  be  determined  by  the  commissioner. Each such report shall
    24  include the value, nature, purpose and recipient of  marketing  expenses
    25  including, but not limited to:
    26    (i)  all  expenses  associated  with advertising, marketing and direct
    27  promotion of prescription drugs through  radio,  television,  magazines,
    28  newspapers,  direct mail and telephone communications as they pertain to
    29  residents of this state;
    30    (ii) with regard to all providers of healthcare services regulated  by
    31  the  department under the provisions of article twenty-eight, thirty-six
    32  or forty-four of this chapter, including  health  maintenance  organiza-
    33  tions  established pursuant to article forty-three of the insurance law,
    34  the following information:
    35    (A)  all  expenses  associated  with  educational   or   informational
    36  programs,  materials  and  seminars,  and  remuneration for promoting or
    37  participating in educational or informational  sessions,  regardless  of
    38  whether the manufacturer or labeler provides the educational or informa-
    39  tional sessions or materials,
    40    (B)  all expenses associated with food, entertainment and gifts valued
    41  at more than seventy-five dollars, and anything  provided  to  a  health
    42  care professional for less than market value,
    43    (C) all expenses associated with trips and travel, and
    44    (D)  all  expenses associated with product samples, except for samples
    45  that will be distributed free of charge to patients; and
    46    (iii) the aggregate cost of  all  employees  and  contractors  of  the
    47  manufacturer  or labeler who directly or indirectly engage in the adver-
    48  tising or promotional activities listed in subparagraphs (i) and (ii) of
    49  this paragraph, including all forms of payment  to  such  employees  and
    50  contractors.  The  cost  reported  pursuant  to  this subparagraph shall
    51  reflect only that portion of payment to employees and  contractors  that
    52  pertains  to activities within this state or to recipients of the adver-
    53  tising or promotional activities who are residents of or are employed in
    54  this state.
    55    (c) Exceptions. The following marketing expenses shall not be  subject
    56  to the reporting requirements of this subdivision:

        S. 2625--A                          3
     1    (i) expenses of seventy-five dollars or less;
     2    (ii)   reasonable  compensation  and  reimbursement  for  expenses  in
     3  connection with a bona fide clinical trial of a new vaccine, therapy  or
     4  treatment; and
     5    (iii)  scholarships  and  reimbursement  of  expenses  for attending a
     6  significant educational, scientific or policy-making conference or semi-
     7  nar of a national, regional or specialty medical or  other  professional
     8  association if the recipient of the scholarship is chosen by the associ-
     9  ation sponsoring the conference or seminar.
    10    (d)  Department reports. Annually on or before November thirtieth, the
    11  department shall submit a report,  providing  information  in  aggregate
    12  form, on prescription drug marketing expenses to the governor, temporary
    13  president  of the senate and speaker of the assembly. On or before Janu-
    14  ary first, two thousand seventeen and every two  years  thereafter,  the
    15  department  shall  provide a report to the governor, temporary president
    16  of the senate and speaker of  the  assembly,  providing  information  in
    17  aggregate  form,  containing  an  analysis  of the data submitted to the
    18  department, including the scope of prescription  drug  marketing  activ-
    19  ities  and expenses and their effect on the cost, utilization and deliv-
    20  ery of health care services  and  any  recommendations  with  regard  to
    21  marketing activities of prescription drug manufacturers and labelers.
    22    (e) Confidentiality; public information. Notwithstanding any provision
    23  of  law  to  the  contrary,  all information submitted to the department
    24  pursuant to this subdivision shall be  confidential  and  not  a  public
    25  record as defined in section eighty-six of the public officers law. Data
    26  compiled in aggregate form by the department for the purposes of report-
    27  ing  required by this subdivision shall be a public record as defined in
    28  section eighty-six of the public officers law, as long as  it  does  not
    29  reveal trade information that is protected by state or federal law.
    30    (f) Violations. Any person who violates any provision of this subdivi-
    31  sion  shall  be liable to the people of the state for a civil penalty of
    32  ten thousand dollars, plus court costs and attorneys' fees, which  shall
    33  be enforced pursuant to title two of this article.
    34    (g)  Rules.  Any  and all rules and regulations necessary to implement
    35  the provisions of this subdivision shall be promulgated by  the  commis-
    36  sioner.
    37    §  3.  Paragraph (b) of subdivision 9 of section 208 of the tax law is
    38  amended by adding a new subparagraph 22 to read as follows:
    39    (22) Expenses incurred by a manufacturer or distributor of a drug, the
    40  dispensing of which to a consumer without a prescription  is  prohibited
    41  by  either  federal  or  state  law, for the advertising of such drug to
    42  consumers.
    43    § 4. Subsection (b) of section 612 of the tax law is amended by adding
    44  a new paragraph 43 to read as follows:
    45    (43) Expenses incurred by a manufacturer or distributor of a drug, the
    46  dispensing of which to a consumer without a prescription  is  prohibited
    47  by  either  federal  or  state  law, for the advertising of such drug to
    48  consumers.
    49    § 5. This act shall take effect on the one hundred eightieth day after
    50  it shall have become a law; provided  that  effective  immediately,  any
    51  rules  and regulations necessary to implement the provisions of this act
    52  on its effective date are authorized to be made on or before such effec-
    53  tive date and provided further that the provisions of sections three and
    54  four of this act shall take effect immediately and shall apply to  taxa-
    55  ble  years  beginning  on or after January first of the year in which it
    56  shall have become a law.
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