senate Bill S2138B

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

See Assembly Version of this Bill:
A3751B
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, A8801C

Sponsor Memo

BILL NUMBER:S2138B

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

JUSTIFICATION: According data uncovered by the Associated Press and
made public on 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 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, normally priced at $25.90 per dose, for $1,200.

PRIOR LEGISLATIVE HISTORY: A8801 of 2011, Passed Assembly 2012

FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENT: 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--B

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                            January 11, 2013
                               ___________

Introduced  by Sens. LANZA, RANZENHOFER -- read twice and ordered print-
  ed, and when printed to be committed  to  the  Committee  on  Consumer
  Protection -- committee discharged, bill amended, ordered reprinted as
  amended  and  recommitted  to  said committee -- committee discharged,
  bill amended, ordered reprinted as amended  and  recommitted  to  said
  committee

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

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD02559-05-3

S. 2138--B                          2

  (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:
  (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.  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 WITHIN THE JUDICIAL  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.
  5.  PRIOR  TO APPLYING FOR AN ORDER FROM THE SUPREME COURT PURSUANT TO
SUBDIVISION FOUR OF THIS SECTION, THE ATTORNEY GENERAL, IN  CONSULTATION
WITH  THE  DEPARTMENT  OF  HEALTH,  SHALL  CONSIDER THE PRICING DYNAMICS
UNIQUE TO THE SMALL AND INDEPENDENT DISTRIBUTORS WITHIN THE SUPPLY CHAIN
INCLUDING, BUT NOT LIMITED TO, THE PRICE CHARGED BY THE END USE  DISPEN-
SER RELATIVE TO ITS ACQUISITION COST.
  S 2. This act shall take effect immediately.

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