S T A T E O F N E W Y O R K
________________________________________________________________________
805
2011-2012 Regular Sessions
I N A S S E M B L Y
(PREFILED)
January 5, 2011
___________
Introduced by M. of A. GOTTFRIED, SILVER, PAULIN, MAYERSOHN, DINOWITZ,
CAHILL, PEOPLES-STOKES, BING, GALEF, GUNTHER, CYMBROWITZ, J. RIVERA,
ENGLEBRIGHT, ORTIZ, ROBINSON, DESTITO, HOOPER, HOYT, ROSENTHAL,
JAFFEE, MAGNARELLI, MAISEL, LANCMAN, CLARK, TITONE, ZEBROWSKI, RAMOS,
COLTON -- Multi-Sponsored by -- M. of A. BENEDETTO, BOYLAND, BRENNAN,
BROOK-KRASNY, FARRELL, GLICK, HEASTIE, HIKIND, JACOBS, KELLNER, LATIM-
ER, LAVINE, LIFTON, V. LOPEZ, LUPARDO, MAGEE, MARKEY, McENENY, McKEV-
ITT, MILLMAN, MOLINARO, PERRY, PHEFFER, PRETLOW, REILLY, P. RIVERA,
SCARBOROUGH, SPANO, SWEENEY, TITUS, WEISENBERG, WRIGHT -- read once
and referred to the Committee on Health
AN ACT to amend the public health law, in relation to creating the
prescription drug discount program and to repeal certain provisions of
the public health law relating thereto
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Legislative findings and declaration. The legislature
hereby finds and declares that the high and rising cost of prescription
drugs limits access to those of limited means. It makes it more likely
that they will become eligible for Medicaid, imposing increased costs on
Medicaid.
The legislature therefore declares that it is an appropriate public
purpose and in the public interest for New York to exercise the powers
of the state to provide its residents with means and methods of reducing
the high cost of prescription drugs and avoid increased costs to the
Medicaid program, and that the prescription drug assistance program
created by this act is consistent with these public purposes.
The legislature further declares that the purpose of this act is to
help reduce the cost of and improve access to prescription drugs, by
providing a means to organize and thus maximize the market purchasing
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD02361-01-1
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power of consumers to earn revenue from supplier rebates and use that
revenue to make prescription drugs more affordable.
The legislature further declares its intent that the program, as a
state prescription drug assistance program and as a program to help
avoid increased costs to the Medicaid program, shall be able to negoti-
ate rebates that are exempt from the "best price" rule of title XIX of
the federal social security act.
S 2. Sections 270 through 277 of article 2-A of the public health law
are designated title I and a new title heading is added to read as
follows:
PREFERRED DRUG AND CLINICAL DRUG REVIEW PROGRAMS
S 3. Article 2-A of the public health law is amended by adding a new
title II to read as follows:
TITLE II
PRESCRIPTION DRUG DISCOUNT CARD
SECTION 280. DEFINITIONS.
280-A. PRESCRIPTION DRUG DISCOUNT PROGRAM.
280-B. CONTRACTS.
280-C. REBATES.
280-D. RETAIL DISCOUNT PRICES.
280-E. DISTRIBUTION OF REBATE FUNDS.
280-F. REGISTRATION OF PARTICIPANTS.
280-G. EDUCATION AND OUTREACH.
S 280. DEFINITIONS. FOR PURPOSES OF THIS TITLE, THE FOLLOWING TERMS
SHALL HAVE THE FOLLOWING MEANINGS, UNLESS THE CONTEXT REQUIRES OTHER-
WISE:
1. "CONTRACTOR" IS ANY PUBLIC, PRIVATE, OR NOT-FOR-PROFIT ENTITY WITH
WHICH THE COMMISSIONER CONTRACTS FOR THE PURPOSE OF ADMINISTERING ANY
ELEMENT OF THE PROGRAM OR PROVIDING TECHNICAL OR CLINICAL SUPPORT FOR
THE PROGRAM. THERE MAY BE ONE OR MORE CONTRACTORS.
2. "COVERED DRUG" MEANS A PRESCRIPTION DRUG THAT IS DESIGNATED BY THE
COMMISSIONER TO BE SUBJECT TO PURCHASE BY A PARTICIPANT UNDER THE
PROGRAM UNDER SECTION TWO HUNDRED EIGHTY-C OF THIS TITLE.
3. "FIDUCIARY RELATIONSHIP" MEANS A RELATIONSHIP IN WHICH ONE PERSON
OR ENTITY IS UNDER A DUTY TO ACT FOR THE BENEFIT OF THE OTHER PERSON OR
ENTITY IN THE RELATIONSHIP ON MATTERS WITHIN THE SCOPE OF THE RELATION-
SHIP, AND OWES A DUTY OF GOOD FAITH, TRUST, CONFIDENCE, AND CANDOR TO
THE OTHER PERSON OR ENTITY.
4. "MANUFACTURER" HAS THE SAME MEANING ASCRIBED TO SUCH TERM IN
SECTION NINETEEN HUNDRED TWENTY-SEVEN OF THE FEDERAL SOCIAL SECURITY
ACT.
5. "PARTICIPANT" MEANS A NATURAL PERSON WHO MEETS THE ELIGIBILITY
GUIDELINES ESTABLISHED IN SECTION TWO HUNDRED EIGHTY-F OF THIS TITLE AND
REGISTERS TO PARTICIPATE IN THE PROGRAM.
6. "PARTICIPATING RETAILER" MEANS ANY PERSON OR ENTITY SELLING
PRESCRIPTION DRUGS AT RETAIL PRICES THAT IS REGISTERED AS A PARTICIPAT-
ING RETAILER IN THE PROGRAM.
7. "PROGRAM" MEANS THE PRESCRIPTION DRUG DISCOUNT PROGRAM ESTABLISHED
BY THIS TITLE.
8. "REBATE AGREEMENT" MEANS AN AGREEMENT EXECUTED WITH A MANUFACTURER
OR OTHER ENTITY TO PROVIDE REBATES TO THE PROGRAM PURSUANT TO THIS
TITLE.
S 280-A. PRESCRIPTION DRUG DISCOUNT PROGRAM. 1. THE PRESCRIPTION DRUG
DISCOUNT PROGRAM IS HEREBY ESTABLISHED IN THE DEPARTMENT. ITS PURPOSE
SHALL BE TO PROVIDE ACCESS TO PRESCRIPTION DRUGS TO PARTICIPANTS AT
DISCOUNTED COST, AND TO OBTAIN APPROPRIATE REBATES FROM MANUFACTURERS,
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AS AUTHORIZED IN THIS TITLE. FOR THE PURPOSES OF MARKETING AND OTHER
PURPOSES, THE COMMISSIONER MAY CHOOSE ANOTHER NAME FOR THE PROGRAM;
PROVIDED, HOWEVER, THAT ANY SUCH CHANGE OF NAME SHALL NOT AFFECT THE
LEGAL DESCRIPTION OR INTENT OF THE PROGRAM, OR ITS EXEMPTION, IF ANY,
FROM THE "BEST PRICE" RULE OF TITLE XIX OF THE FEDERAL SOCIAL SECURITY
ACT. THE PROGRAM SHALL BE ADMINISTERED IN A MANNER THAT MAXIMIZES
SAVINGS FOR THE PARTICIPANTS CONSISTENT WITH THIS TITLE WHILE MINIMIZING
ANY COST TO THE STATE, INCLUDING COORDINATING OR COMBINING ADMINIS-
TRATION OF ANY ASPECT OF THE PROGRAM WITH MEDICAID OR EPIC TO THE EXTENT
CONSISTENT WITH THE INTERESTS OF THOSE PROGRAMS AND THEIR PARTICIPANTS.
2. THE COMMISSIONER MAY REQUIRE EVERY MANUFACTURER PARTICIPATING IN A
REBATE AGREEMENT, EVERY PARTICIPANT AND EVERY PARTICIPATING RETAILER TO
PROVIDE ANY INFORMATION, AND MAY CONDUCT SUCH AUDITS AND INVESTIGATIONS,
AS REASONABLY NECESSARY FOR EFFECTIVE ADMINISTRATION OF THE PROGRAM. ALL
INDIVIDUAL IDENTIFYING INFORMATION RELATING TO ANY PATIENT OR CONSUMER
ACQUIRED BY THE PROGRAM SHALL BE KEPT CONFIDENTIAL BY THE COMMISSIONER
AND SHALL BE USED SOLELY FOR THE PURPOSE OF ADMINISTERING THE PROGRAM.
ANY MATTER RELATING TO TRADE OR COMPETITIVE SECRETS OF MANUFACTURERS AND
PARTICIPATING RETAILERS, AND ANY MATTER CONCERNING PRICING AND PROFIT,
WHICH IS OBTAINED PURSUANT TO THIS SUBDIVISION, OR PURSUANT TO ANY
INVESTIGATION OR AUDIT AUTHORIZED PURSUANT TO THIS TITLE, OR OBTAINED
INDIRECTLY BY ANY OTHER AUDITS OR INVESTIGATIONS, SHALL BE KEPT CONFI-
DENTIAL.
3. IF THE IMPLEMENTATION OF THE PROGRAM REQUIRES ANY FEDERAL APPROVAL
OR WAIVER, THE COMMISSIONER SHALL EXPEDITIOUSLY APPLY FOR AND USE HIS OR
HER BEST EFFORTS TO OBTAIN SUCH APPROVAL OR WAIVER, CONSISTENT WITH THIS
TITLE AND ANY STATE LAW APPLICABLE TO MEDICAID OR EPIC.
4. THE COMMISSIONER MAY MAKE REGULATIONS AND ESTABLISH TERMS AND
CONDITIONS CONSISTENT WITH THIS TITLE AND OTHER APPLICABLE LAW, FOR
IMPLEMENTATION OF THE PROGRAM.
S 280-B. CONTRACTS. 1. THE COMMISSIONER MAY CONTRACT WITH, OR AMEND AN
EXISTING CONTRACT WITH, ONE OR MORE PUBLIC, PRIVATE, OR NOT-FOR-PROFIT
ENTITIES TO ADMINISTER ANY AND ALL COMPONENTS OF THE PROGRAM OR TO
PROVIDE TECHNICAL OR CLINICAL SUPPORT FOR THE PROGRAM.
2. (A) EVERY CONTRACTOR SHALL HAVE A FIDUCIARY RELATIONSHIP WITH AND
OBLIGATION TO THE COMMISSIONER AND THE PROGRAM.
(B) ALL FUNDS RECEIVED BY ANY CONTRACTOR IN RELATION TO THE PROGRAM
SHALL BE RECEIVED BY THE CONTRACTOR SOLELY ON BEHALF OF THE PROGRAM FOR
USE OR DISTRIBUTION ONLY PURSUANT TO THIS TITLE, INCLUDING THE CONTRAC-
TOR'S CONTRACT WITH THE COMMISSIONER; EXCEPT FOR ANY PAYMENT EXPRESSLY
PROVIDED FOR IN THE CONTRACT TO COMPENSATE THE CONTRACTOR FOR ITS
SERVICES. THE CONTRACTOR SHALL ACCOUNT TO THE COMMISSIONER FOR ALL FUNDS
RECEIVED AND PROCESSED BY THE CONTRACTOR IN RELATION TO THE PROGRAM. THE
COMMISSIONER AND THE COMPTROLLER SHALL HAVE ACCESS TO ALL BOOKS AND
RECORDS OF THE CONTRACTOR IN RELATION TO THE PROGRAM.
(C) THE CONTRACTOR SHALL DISCLOSE TO THE COMMISSIONER AND THE COMP-
TROLLER THE TERMS AND CONDITIONS OF ANY CONTRACT OR ARRANGEMENT BETWEEN
THE CONTRACTOR AND ANY PARTY RELATING TO THE PROGRAM.
S 280-C. REBATES. 1. THE COMMISSIONER SHALL ENTER INTO AGREEMENTS WITH
MANUFACTURERS TO ACHIEVE REBATES FROM MANUFACTURERS FOR THEIR DRUG
PRODUCTS PURCHASED BY PARTICIPANTS THROUGH THE PROGRAM.
2. THE COMMISSIONER SHALL USE BEST EFFORTS TO MAXIMIZE THE LEVEL OF
REBATES OBTAINED FROM MANUFACTURERS TO THE EXTENT ALLOWABLE BY LAW OR
REGULATION. THE COMMISSIONER MAY SEEK ANY FEDERAL APPROVAL NEEDED TO
ENSURE REBATES RECEIVED UNDER THIS PROGRAM ARE EXCLUDED FROM THE DEFI-
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NITION OF "BEST PRICE" UNDER SECTION NINETEEN HUNDRED TWENTY-SEVEN OF
THE FEDERAL SOCIAL SECURITY ACT.
3. TO ADVANCE THE PURPOSES OF THE PROGRAM, THE COMMISSIONER MAY COOR-
DINATE NEGOTIATIONS UNDER THE PROGRAM WITH GOVERNMENTAL AND NON-GOVERN-
MENTAL ENTITIES, IN THIS STATE OR ELSEWHERE.
4. THE COMMISSIONER SHALL DESIGNATE DRUGS TO BE SUBJECT TO PURCHASE BY
PARTICIPANTS UNDER THE PROGRAM. THE COMMISSIONER MAY LIMIT DESIGNATION
UNDER THE PROGRAM TO DRUGS COVERED BY A REBATE AGREEMENT.
5. THE COMMISSIONER MAY SEEK SUPPLEMENTAL REBATES FROM MANUFACTURERS
CONSISTENT WITH THOSE REBATES PROVIDED TO THE MEDICAID PROGRAM FOR DRUGS
ON THE PREFERRED DRUG LIST PURSUANT TO TITLE ONE OF THIS ARTICLE. IN
EXCHANGE FOR THE PROVISION OF SUCH REBATES, THE COMMISSIONER MAY DESIG-
NATE SUCH DRUGS AS PREFERRED DRUGS IN PROGRAM MARKETING AND EDUCATIONAL
ACTIVITIES AND MATERIALS. THE COMMISSIONER IS AUTHORIZED TO LIMIT
PROGRAM COVERAGE OF DRUGS IN THERAPEUTIC CLASSES INCLUDED IN THE
PREFERRED DRUG PROGRAM TO THOSE ON THE PREFERRED DRUG LIST.
S 280-D. RETAIL DISCOUNT PRICES. 1. A PERSON OR ENTITY MAY BECOME A
PARTICIPATING RETAILER BY AGREEING TO THE TERMS AND CONDITIONS OF
PROGRAM PARTICIPATION, AND MEETING QUALIFICATIONS, AS ESTABLISHED BY THE
COMMISSIONER. THE COMMISSIONER MAY REQUIRE PERIODIC RE-REGISTRATION.
2. A PARTICIPATING RETAILER MAY NOT CHARGE A PARTICIPANT A PRICE FOR A
COVERED DRUG WHICH IS HIGHER THAN THE AMOUNT PAID BY THE MEDICAID
PROGRAM PURSUANT TO SECTION THREE HUNDRED SIXTY-SEVEN-A OF THE SOCIAL
SERVICES LAW, LESS THE APPLICABLE REBATE AMOUNT ADVANCED BY THE PROGRAM
IN ACCORDANCE WITH SECTION TWO HUNDRED EIGHTY-E OF THIS TITLE.
S 280-E. DISTRIBUTION OF REBATE FUNDS. 1. THE APPROPRIATE CONTRACTOR
SHALL EXPEDITIOUSLY MAKE PAYMENTS TO PARTICIPATING RETAILERS FOR THE
ESTIMATED REBATE AMOUNTS, RELATING TO COVERED DRUGS DISPENSED BY PARTIC-
IPATING RETAILERS TO PROGRAM PARTICIPANTS, SUBJECT TO SUBSEQUENT RECON-
CILIATION AGAINST ACTUAL REBATES COLLECTED FROM MANUFACTURERS. RECONCIL-
IATION SHALL NOT REQUIRE RECOUPMENT FROM OR PAYMENTS TO PARTICIPANTS OR
PARTICIPATING RETAILERS FOR PREVIOUS PURCHASES UNDER THE PROGRAM, BUT
MAY INCLUDE, AS APPROPRIATE, PROVISION FOR ADJUSTMENT AGAINST ESTIMATED
REBATE AMOUNTS FACTORED INTO FUTURE PRICES TO BE PAID BY PARTICIPANTS.
2. THE COMMISSIONER MAY MAKE ARRANGEMENTS WITH MANUFACTURERS CONCERN-
ING THE TIMING OR STRUCTURE OF THE REBATE PAYMENTS AS IN HIS OR HER
DETERMINATION SHALL BEST FACILITATE LOWER PRICES FOR PARTICIPANTS, EXPE-
DITIOUS PAYMENT OF REBATES AND EFFICIENT ADMINISTRATION OF THE PROGRAM.
S 280-F. REGISTRATION OF PARTICIPANTS. 1. TO BE ELIGIBLE TO BE A
PARTICIPANT, A PERSON SHALL BE A RESIDENT OF NEW YORK, REGARDLESS OF
AGE, WHO HAS A HOUSEHOLD INCOME EQUAL TO OR LESS THAN THE GREATER OF (A)
THREE HUNDRED FIFTY PERCENT OF THE FEDERAL POVERTY LEVEL FOR A HOUSEHOLD
OF THAT SIZE (AS DEFINED AND UPDATED BY THE UNITED STATES DEPARTMENT OF
HEALTH AND HUMAN SERVICES); OR (B) THE INCOME ELIGIBILITY LEVELS ESTAB-
LISHED UNDER SUBDIVISION ONE OR TWO OF SECTION TWO HUNDRED FORTY-TWO OF
THE ELDER LAW, IS NOT IN RECEIPT OF MEDICAID, AND MEETS SUCH OTHER
REQUIREMENTS AS THE COMMISSIONER MAY ESTABLISH CONSISTENT WITH THIS
TITLE. ANY PERSON ENROLLED IN THE PRESCRIPTION DRUG DISCOUNT PROGRAM
UNDER SECTION TWO HUNDRED EIGHTY-H OF THIS TITLE SHALL BE ELIGIBLE TO BE
A PARTICIPANT UNDER THIS PROGRAM.
2. ANY PERSON ELIGIBLE TO BE A PARTICIPANT MAY BECOME A PARTICIPANT IN
THE PROGRAM BY REGISTERING WITH THE PROGRAM. ANY PERSON ENROLLED IN THE
PRESCRIPTION DRUG DISCOUNT PROGRAM UNDER SECTION TWO HUNDRED EIGHTY-H OF
THIS TITLE SHALL AUTOMATICALLY BE REGISTERED BY THE COMMISSIONER IN THIS
PROGRAM.
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3. THE COMMISSIONER SHALL ADVISE EACH APPLICANT THAT THE PROGRAM DOES
NOT APPLY TO ANY PRESCRIPTION DRUG PURCHASE FOR WHICH REIMBURSEMENT (IN
WHOLE OR IN PART) IS PROVIDED BY ANY THIRD-PARTY PAYER. THE COMMISSIONER
MAY REQUIRE PERIODIC RE-REGISTRATION AND MAY REQUIRE THE PARTICIPANT TO
INFORM THE PROGRAM OF ANY CHANGE IN THE INFORMATION PROVIDED. THE
COMMISSIONER SHALL MAKE THE APPLICATION PROCESS AS SIMPLE AS REASONABLY
POSSIBLE TO MAXIMIZE PARTICIPATION IN THE PROGRAM CONSISTENT WITH PROPER
ADMINISTRATION OF THIS TITLE.
4. THE COMMISSIONER SHALL REVIEW ALL APPLICATIONS TO DETERMINE IF THE
APPLICANT APPEARS TO MEET THE ELIGIBILITY REQUIREMENTS FOR THE FAMILY
HEALTH PLUS PROGRAM UNDER SECTION THREE HUNDRED SIXTY-NINE-EE OF THE
SOCIAL SERVICES LAW, THE CHILD HEALTH INSURANCE PROGRAM UNDER SECTION
TWENTY-FIVE HUNDRED TEN AND TWENTY-FIVE HUNDRED ELEVEN OF THIS CHAPTER,
OR MEDICAL ASSISTANCE UNDER ARTICLE FIVE OF THE SOCIAL SERVICES LAW. IF
THE APPLICANT DOES APPEAR TO MEET ELIGIBILITY REQUIREMENTS FOR ANY OF
THOSE PROGRAMS, THE COMMISSIONER SHALL, IN ADDITION TO ANY OTHER ACTIONS
TAKEN UNDER THIS TITLE, PROVIDE THE APPLICANT WITH INFORMATION AND
ENROLLMENT MATERIAL ABOUT SUCH OTHER PROGRAM. HOWEVER, THE COMMISSIONER
SHALL REGISTER THE APPLICANT UNDER THIS SECTION IF THE APPLICANT IS
OTHERWISE ELIGIBLE.
S 280-G. EDUCATION AND OUTREACH. THE COMMISSIONER SHALL CONDUCT EDUCA-
TION AND OUTREACH TO PROMOTE THE PROGRAM AND TO ENCOURAGE ELIGIBLE
PERSONS AND ENTITIES TO BECOME PARTICIPANTS AND PARTICIPATING RETAILERS.
S 4. Section 280 of the public health law, as added by section 75 of
part C of chapter 58 of the laws of 2008, is renumbered section 280-h,
and amended to read as follows:
S 280-h. Prescription drug discount program. 1. The prescription drug
discount program is hereby established in the department. The drug
discount card shall be available to any resident between the ages of
fifty and sixty-four, and any resident of any age who has been deter-
mined to meet the disability criteria in 20 C.F.R. S 404.1505, who:
meets the income eligibility levels established under subdivision one or
two of section two hundred forty-two of the elder law; is not in receipt
of medical assistance under title eleven of article five of the social
services law. The drug discount card shall offer discounts on drug
purchases which are not covered by other public or private third party
payment sources. Provided, however, that participation by a provider
pharmacy and drug manufacturers shall be voluntary and reimbursement to
the provider pharmacy under the drug discount card program shall be
adjudicated and paid within two business days for any rebates, dispens-
ing fees and drug costs not paid by the resident eligible for such
program at the point of sale.
2. THE COMMISSIONER SHALL, AS EXPEDITIOUSLY AS POSSIBLE, INTEGRATE THE
OPERATION OF THE PRESCRIPTION DRUG DISCOUNT PROGRAM UNDER THIS SECTION
WITH THE PRESCRIPTION DRUG DISCOUNT PROGRAM UNDER SECTION TWO HUNDRED
EIGHTY-A OF THIS TITLE. WHEN THE COMMISSIONER BEGINS REGISTERING PARTIC-
IPANTS UNDER SECTION TWO HUNDRED EIGHTY-A OF THIS TITLE, HE OR SHE SHALL
CEASE ENROLLING PARTICIPANTS UNDER THIS SECTION. ANY PERSON ENROLLED IN
THE PROGRAM UNDER THIS SECTION SHALL BE AUTOMATICALLY REGISTERED BY THE
COMMISSIONER IN THE PROGRAM UNDER SECTION TWO HUNDRED EIGHTY-A OF THIS
TITLE.
S 5. Section 280-h of the public health law, as amended by section
four of this act, is REPEALED.
S 6. Severability. If any provision of this act, or any application
of any provision of this act, is held to be invalid, or ruled by any
federal agency to violate or be inconsistent with any applicable federal
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law or regulation, that shall not affect the validity or effectiveness
of any other provision of this act, or of any other application of any
provision of this act.
S 7. This act shall take effect immediately; provided, however that:
(a) the amendments to article 2-A of the public health law made by
sections two and four of this act shall not affect the repeal of such
article and shall be deemed repealed therewith;
(b) section five of this act shall take effect on the one hundred
eightieth day after this act shall have become a law;
(c) any rebate payment due from any drug manufacturer and any
reimbursement due under section 280-h of the public health law shall be
paid notwithstanding the repeal of section 280-h made by section five of
this act; and
(d) the amendments to article 2-A of the public health law made by
section three of this act shall survive the expiration and repeal of
such article as provided in section 79 of part C of chapter 58 of the
laws of 2005, as amended.