|SAME AS||SAME AS S02544|
|Add §278-a, Pub Health L; add §396-rrr, Gen Bus L|
|Prohibits price gouging by manufacturers of prescription drugs.|
|02/14/2017||referred to health|
|01/03/2018||referred to health|
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NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A5733 SPONSOR: McDonald
TITLE OF BILL: An act to amend the public health law and the general business law, in relation to price gouging on prescription drugs   PURPOSE OR GENERAL IDEA OF BILL: To prevent excessive, unjustifiable price increases in prescription medications.   SUMMARY OF PROVISIONS: Section one adds a new Public Health Law §278-a which would require any manufacturer of a brand or generic drug to notify the Commissioner of Health and the Drug Utilization Review Board (DURB) if they institute a wholesale acquisition cost increase of 100% or more within a 12 month period. Such notice must be provided not less than 30 days prior to instituting the increase and shall be provided on a form provided by the Commissioner and DURB. The Commissioner is authorized to require prior authorization effective as of the date of the price increase, until such time as a determination is made by the DURB as to whether the price increase was excessive. Should the DURB find that the price increase was excessive, they shall continue to require prior authorization, and may refer the matter to the Attorney General. In the event that the DURB does not find the price increase to be excessive, the DURB shall remove the prior authorization requirement. Section three provides that this act shall take effect immediately.   DIFFERENCE BETWEEN ORIGINAL AND AMENDED VERSION (IF APPLICABLE):   JUSTIFICATION: A number of recent high profile news stories have highlighted the prob- lem of excessive price increases in prescription drugs. Prescription drug prices are a significant driver of rising health care costs, with reports suggesting prescription drug costs increased more than 10% in 2015 alone. In addition to impacting the state Medicaid program', errat- ic and severe cost increases impact all citizens, especially the state's growing population of senior citizens, who see increased cost-sharing and/or increased premiums to cover these costs, or worse, lose access to these medications. Millions of residents depend on prescription medica- tions and cannot afford to shoulder the increased burden of sudden, excessive, and unjustifiable price increases. This bill balances the right of manufacturers to respond to market forces beyond their control, and to conduct business in a manner conducive to pursuing competitive and innovative breakthroughs in medicine, with the right of the public to have access to medications and not be subject to unconscionable price gouging. The bill penalizes manufacturers when they engage in excessive price increases, but only when those price increases are not the result of external economic conditions, development costs, or regulatory burdens. In order to discourage bad actors from taking advantage of the system, engaging in distribution methods or other tactics aimed solely at increasing costs, there must be measures in place to control exces- sive increases in price when they become unconscionable and unjustifia- ble.   PRIOR LEGISLATIVE HISTORY: 2016: S.7022   FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS: Anticipated savings.   EFFECTIVE DATE: Immediately.
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STATE OF NEW YORK ________________________________________________________________________ 5733 2017-2018 Regular Sessions IN ASSEMBLY February 14, 2017 ___________ Introduced by M. of A. McDONALD -- read once and referred to the Commit- tee 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: 1 Section 1. The public health law is amended by adding a new section 2 278-a to read as follows: 3 § 278-a. Limitation on excessive price increases; prescription drugs: 4 1. In the event a manufacturer, as defined in subdivision twenty-one of 5 section sixty-eight hundred two of the education law, of a brand or 6 generic drug, made available in New York, increases the wholesale acqui- 7 sition cost (WAC) of a drug by a percent equal to or greater than one 8 hundred percent at any one time or in the aggregate in any twelve month 9 period: 10 (a) The manufacturer shall, not less than thirty days prior to insti- 11 tuting such increase, notify the commissioner and the drug utilization 12 review board established under section three hundred sixty-nine-bb of 13 the social services law. Notice shall be provided on the form estab- 14 lished pursuant to subdivision two of this section; and 15 (b) The commissioner shall require prior authorization and authorize 16 Medicaid managed care plans to require prior authorization for the drug 17 effective as of the date of the price increase and continuing until a 18 determination is made by the drug utilization review board. 19 2. The commissioner, in consultation with the drug utilization review 20 board, shall produce and make available to manufacturers a price 21 increase notification form that shall elicit: 22 (a) The most recent wholesale acquisition cost (WAC) of the drug prior 23 to an increase equal to or greater than one hundred percent at any one 24 time or in the aggregate in any twelve month period in either pricing 25 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. LBD08165-01-7A. 5733 2 1 (WAC) shall include the prices for each dosage, size or concentration of 2 the drug offered or sold by the manufacturer; 3 (b) The wholesale acquisition cost (WAC) of the drug when exceeding 4 the one hundred percent threshold; 5 (c) Any material change in ingredient, production, or manufacturing 6 costs resulting in the price increase; 7 (d) In the case of a brand drug, the expiration date of the patent; 8 (e) In the case of a generic drug, whether the drug is a sole source 9 drug; and 10 (f) Any other information the manufacturer deems relevant to the 11 board's review. 12 3. Upon receipt of a price increase notification form, the drug utili- 13 zation review board shall review the price increase and make a determi- 14 nation as to whether the price increase is excessive. In making a deter- 15 mination the board shall consider: 16 (a) The wholesale acquisition cost (WAC) of the drug in comparison to 17 any generic equivalent or therapeutically equivalent drug; 18 (b) The FDA approved or compendium supported use of the drug and crit- 19 ical need to the patient; 20 (c) Any known market factors justifying the price increase, including 21 but not limited to: 22 (i) whether the drug has been absent from the market for any period of 23 time; and 24 (ii) changes in manufacturing or regulatory requirements or costs. 25 (d) Any material change in the prevalence or severity of the disease 26 or medical condition or conditions that the drug is approved to treat; 27 (e) In the case of a brand drug, the expiration date of the patent; 28 and 29 (f) In the case of a generic drug, whether the drug is a sole source 30 drug. 31 4. Upon a finding by the drug utilization review board that a manufac- 32 turer has instituted an excessive price increase, (a) the board shall 33 require prior authorization for the drug and authorize Medicaid managed 34 care plans to require prior authorization until the board determines 35 otherwise; and (b) the board may refer the matter to the attorney gener- 36 al with any information necessary for the investigation and prosecution 37 of price gouging violations under section three hundred ninety-six-rrr 38 of the general business law. In the event the board does not find that 39 the manufacturer has engaged in an excessive price increase, the board 40 shall remove the requirement for prior authorization and such authority 41 granted to Medicaid managed care plans to institute prior authorization 42 under this section shall cease. 43 § 2. The general business law is amended by adding a new section 396- 44 rrr to read as follows: 45 § 396-rrr. Price gouging; prescription drugs. 1. Legislative findings 46 and declaration. The legislature hereby finds that excessive price 47 increases to prescription drugs that lack justification based on market 48 forces create a public health risk to consumers that rely on these 49 prescription drugs. In order to prevent a manufacturer, as defined in 50 subdivision twenty-one of section sixty-eight hundred two of the educa- 51 tion law, from taking unfair advantage of consumers who rely upon and 52 may lose access to the prescription drugs if the medication has a sudden 53 and excessive price increase, the legislature declares that the public 54 interest requires that such conduct be prohibited and made subject to 55 civil penalties.A. 5733 3 1 2. In order to prevent a drug manufacturer, as defined in subdivision 2 twenty-one of section sixty-eight hundred two of the education law, from 3 imposing unconscionably and unjustifiably excessive price increases, the 4 attorney general may, upon referral from the drug utilization review 5 board as codified in section two hundred seventy-eight-a of the public 6 health law, apply in the name of the people of the state of New York to 7 the supreme court within the judicial district in which such violations 8 are alleged to have occurred, on notice of five days, for an order 9 enjoining or restraining commission or continuance of the alleged unlaw- 10 ful acts. In any such proceeding, the court may impose a civil penalty 11 in an amount not to exceed twenty-five thousand dollars and, where 12 appropriate, order restitution to aggrieved consumers. 13 3. Whether a price is unconscionably and unjustifiably excessive is a 14 question of law for the court. The court's determination that a 15 violation of this section has occurred shall be based upon the following 16 factors: 17 (a) the increase in price is unconscionably extreme; 18 (b) the drug is vital and medically necessary to the health of the 19 consumer; 20 (c) the drug is a sole source drug without a therapeutic equivalent; 21 and 22 (d) the price increase was within the control of the manufacturer and 23 not caused by costs imposed on or factors beyond the control of the 24 manufacturer. 25 § 3. This act shall take effect immediately.