senate Bill S2138

Amended

Relates to price gouging of medicine

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Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
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actions

  • 11 / Jan / 2013
    • REFERRED TO CONSUMER PROTECTION
  • 10 / Jun / 2013
    • AMEND AND RECOMMIT TO CONSUMER PROTECTION
  • 10 / Jun / 2013
    • PRINT NUMBER 2138A
  • 17 / Jun / 2013
    • AMEND AND RECOMMIT TO CONSUMER PROTECTION
  • 17 / Jun / 2013
    • PRINT NUMBER 2138B
  • 08 / Jan / 2014
    • REFERRED TO CONSUMER PROTECTION

Summary

Relates to price gouging of medicine.

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Bill Details

Versions:
S2138
S2138A
S2138B
Legislative Cycle:
2013-2014
Current Committee:
Senate Consumer Protection
Law Section:
General Business Law
Laws Affected:
Add ยง396-rrr, Gen Bus L
Versions Introduced in 2011-2012 Legislative Cycle:
A8801C, S6514A

Sponsor Memo

BILL NUMBER:S2138

TITLE OF BILL: An act to amend the general business law, in relation
to the price gouging of medicine

PURPOSE: This legislation adds medicine to the list of goods and
services that can be classified as possibly being subject to price
gouging. This legislation provides a right of action to an individual
or family of an individual hurt by such practice.

SUMMARY OF 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 shortages 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 USFDA.

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 allows injured Person to bring
action to recover damages.

JUSTIFICATION: According data uncovered by the Associated Press and
made public on to a September 23, 2011, there is an ongoing and
"severe shortage of drugs for chemotherapy, infections and other
serious ailments is endangering patients and forcing hospitals to buy
life-saving 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
nearly 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
treatments, 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 August 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, normally priced at $25.90 per dose, for $1,200.

LEGISLATIVE HISTORY: 2012: S.6514 Referred to Consumer
Protection/A.8801-C - Referred to Rules.

FISCAL IMPLICATIONS: None.

EFFECTIVE DATE: This bill will take effect immediately.

view bill text
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  2138

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                            January 11, 2013
                               ___________

Introduced  by  Sen.  LANZA  -- read twice and ordered printed, and when
  printed to be committed to the Committee on Consumer 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:

  Section 1. The general business law is amended by adding a new section
396-rrr to read as follows:
  S  396-RRR.  PRICE  GOUGING  OF  MEDICINE. 1. FOR THE PURPOSES OF THIS
SECTION, "DRUG SUBJECT TO A SHORTAGE" SHALL MEAN  ANY  DRUG  OR  MEDICAL
PRODUCT  INTENDED  FOR HUMAN USE PUBLICLY REPORTED AS BEING SUBJECT TO A
SHORTAGE BY THE U.S.  FOOD  AND  DRUG  ADMINISTRATION  ON  ITS  WEBSITE,
PROVIDED,  HOWEVER, THAT A DRUG OR MEDICAL PRODUCT SHALL ONLY BE CONSID-
ERED A "DRUG SUBJECT TO A SHORTAGE" DURING THE PERIOD OF TIME THAT  SUCH
DRUG OR MEDICAL PRODUCT IS LISTED AS BEING SUBJECT TO A SHORTAGE ON SUCH
WEBSITE.
  2.  NO PARTY WITHIN THE CHAIN OF DISTRIBUTION OF ANY DRUG SUBJECT TO A
SHORTAGE SHALL SELL OR OFFER TO SELL ANY SUCH DRUG SUBJECT TO A SHORTAGE
FOR AN AMOUNT WHICH REPRESENTS AN UNCONSCIONABLY EXCESSIVE PRICE.
  3. WHETHER A PRICE IS UNCONSCIONABLY EXCESSIVE IS A  QUESTION  OF  LAW
FOR THE COURT.
  (A)  THE  COURT'S  DETERMINATION  THAT A VIOLATION OF THIS SECTION HAS
OCCURRED SHALL BE BASED ON ANY OF THE FOLLOWING FACTORS:
  (I) THAT THE AMOUNT OF THE EXCESS IN PRICE IS UNCONSCIONABLY EXTREME;
  (II) THAT THERE WAS AN EXERCISE OF UNFAIR LEVERAGE  OR  UNCONSCIONABLE
MEANS; OR
  (III)  A  COMBINATION OF BOTH FACTORS IN SUBPARAGRAPHS (I) AND (II) OF
THIS PARAGRAPH.
  (B) IN ANY PROCEEDING COMMENCED PURSUANT TO SUBDIVISION FOUR  OF  THIS
SECTION, PRIMA FACIE PROOF THAT A VIOLATION OF THIS SECTION HAS OCCURRED
SHALL INCLUDE EVIDENCE THAT:

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD02559-01-3

S. 2138                             2

  (I)  THE AMOUNT CHARGED REPRESENTS A GROSS DISPARITY BETWEEN THE PRICE
OF THE DRUG SUBJECT TO A SHORTAGE WHICH WAS THE SUBJECT  OF  THE  TRANS-
ACTION AND THEIR VALUE MEASURED BY THE PRICE AT WHICH SUCH DRUG WAS SOLD
OR  OFFERED  FOR  SALE  BY THE DEFENDANT IN THE USUAL COURSE OF BUSINESS
IMMEDIATELY PRIOR TO THE ONSET OF THE SHORTAGE; AND
  (II)  THE  AMOUNT CHARGED GROSSLY EXCEEDED THE PRICE AT WHICH THE SAME
OR SIMILAR DRUG SUBJECT TO A SHORTAGE WAS READILY  OBTAINABLE  BY  OTHER
PURCHASERS  IN  THE TRADE AREA. A DEFENDANT MAY REBUT A PRIMA FACIE CASE
WITH EVIDENCE THAT ADDITIONAL  COSTS  NOT  WITHIN  THE  CONTROL  OF  THE
DEFENDANT WERE IMPOSED ON THE DEFENDANT FOR THE DRUG SUBJECT TO A SHORT-
AGE.
  4.  (A) WHERE A VIOLATION OF THIS SECTION IS ALLEGED TO HAVE OCCURRED,
THE ATTORNEY GENERAL MAY APPLY IN THE NAME OF THE PEOPLE OF THE STATE OF
NEW YORK TO THE SUPREME COURT OF THE STATE OF NEW YORK WITHIN THE  JUDI-
CIAL  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 UNLAWFUL ACTS. IN ANY  SUCH  PROCEEDING,  THE
COURT  SHALL  IMPOSE  A  CIVIL  PENALTY  IN  AN AMOUNT NOT TO EXCEED ONE
HUNDRED THOUSAND DOLLARS AND, WHERE APPROPRIATE,  ORDER  RESTITUTION  TO
AGGRIEVED CONSUMERS.
  (B) IN ADDITION TO ANY ACTION BROUGHT BY THE ATTORNEY GENERAL PURSUANT
TO PARAGRAPH (A) OF THIS SUBDIVISION, A PERSON INJURED BY A VIOLATION OF
THIS  SECTION MAY BRING AN ACTION TO RECOVER DAMAGES. THE COURT MAY ALSO
AWARD REASONABLE ATTORNEYS FEES TO A PREVAILING PLAINTIFF.
  S 2. This act shall take effect immediately.

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