NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A5946
SPONSOR: Crespo 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 and provides right of action to
impacted consumer.
JUSTIFICATION:
After workshops on improving health care access for Latinos by the NYS
Assembly Puerto Rican Hispanic Task Force during its annual legislative
conference and after data uncovered by the Associated Press on the price
gouging of medicines on short supply was made public on September 23,
2011, Legislation on to ban the practice was introduced by the PRHTF.
The AP report clearly documented that there was an ongoing and "severe
shortage of drugs for chemotherapy, infections and other serious
ailments is endangering patients and forcing hospitals to buy life-sav-
ing 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 at least 15 deaths in the past 15 months
blamed on the shortages, either because the right drug wasn't available
or because of dosing errors or 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. That's 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.
"Hospital pharmacists "are really looking at this as a crisis. They are
scrambling to find drugs," the AP article read.
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 secondary market companies called "gray market" 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 and
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, at least 15 recent
deaths to drug shortages based on reports by medical personnel, but many
deaths and injuries go unreported.
So far this year, 210 drugs 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:
A8801 of 2012, Passed Assembly every year since 2012 thru 2018. Died in
Senate each and every year since 2012 thru 2018.
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENT:
None
EFFECTIVE DATE:
This bill will take effect immediately.
STATE OF NEW YORK
________________________________________________________________________
5946
2019-2020 Regular Sessions
IN ASSEMBLY
February 20, 2019
___________
Introduced by M. of A. CRESPO -- read once and referred to the Committee
on Consumer Affairs and Protection
AN ACT to amend the general business law, in relation to the price goug-
ing of medicine
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. The general business law is amended by adding a new section
2 396-rrr to read as follows:
3 § 396-rrr. Price gouging of medicine. 1. For the purposes of this
4 section, "drug subject to a shortage" shall mean any drug or medical
5 product intended for human use publicly reported as being subject to a
6 shortage by the U.S. food and drug administration on its website,
7 provided, however, that a drug or medical product shall only be consid-
8 ered a "drug subject to a shortage" during the period of time that such
9 drug or medical product is listed as being subject to a shortage on such
10 website.
11 2. No party within the chain of distribution of any drug subject to a
12 shortage shall sell or offer to sell any such drug subject to a shortage
13 for an amount which represents an unconscionably excessive price.
14 3. Whether a price is unconscionably excessive is a question of law
15 for the court.
16 (a) The court's determination that a violation of this section has
17 occurred shall be based on any of the following factors:
18 (i) that the amount of the excess in price is unconscionably extreme;
19 (ii) that there was an exercise of unfair leverage or unconscionable
20 means; or
21 (iii) a combination of both factors in subparagraphs (i) and (ii) of
22 this paragraph.
23 (b) In any proceeding commenced pursuant to subdivision four of this
24 section, prima facie proof that a violation of this section has occurred
25 shall include evidence that:
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD09882-01-9
A. 5946 2
1 (i) the amount charged represents a gross disparity between the price
2 of the drug subject to a shortage which was the subject of the trans-
3 action and their value measured by the price at which such drug was sold
4 or offered for sale by the defendant in the usual course of business
5 immediately prior to the onset of the shortage; and
6 (ii) the amount charged grossly exceeded the price at which the same
7 or similar drug subject to a shortage was readily obtainable by other
8 purchasers in the trade area. A defendant may rebut a prima facie case
9 with evidence that additional costs not within the control of the
10 defendant were imposed on the defendant for the drug subject to a short-
11 age.
12 4. (a) Where a violation of this section is alleged to have occurred,
13 the attorney general may apply in the name of the People of the State of
14 New York to the supreme court within the judicial district in which such
15 violation is alleged to have occurred, on notice of five days, for an
16 order enjoining or restraining commission or continuance of the alleged
17 unlawful acts. In any such proceeding, the court shall impose a civil
18 penalty in an amount not to exceed one hundred thousand dollars and,
19 where appropriate, order restitution to aggrieved consumers.
20 (b) In addition to any action brought by the attorney general pursuant
21 to paragraph (a) of this subdivision, a person injured by a violation of
22 this section may bring an action to recover damages. The court may also
23 award reasonable attorneys fees to a prevailing plaintiff.
24 § 2. This act shall take effect immediately.
