A05946 Summary:

Add 396-rrr, Gen Bus L
Prohibits selling a drug subject to a shortage for an unconscionably excessive price.
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A05946 Actions:

02/20/2019referred to consumer affairs and protection
01/08/2020referred to consumer affairs and protection
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A05946 Memo:

submitted in accordance with Assembly Rule III, Sec 1(f)
  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.
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A05946 Text:

                STATE OF NEW YORK
                               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.

        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.
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