senate Bill S3270A

2013-2014 Legislative Session

Requires manufacturers and labelers of prescription drugs dispensed in this state to annually report marketing expenses to the department of health

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Archive: Last Bill Status - In Committee


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

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Jan 24, 2014 print number 3270a
amend and recommit to health
Jan 08, 2014 referred to health
Jan 31, 2013 referred to health

Bill Amendments

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A (Active)
Original
A (Active)

S3270 - Bill Details

Current Committee:
Senate Health
Law Section:
Public Health Law
Laws Affected:
Amd §206, Pub Health L; amd §§208 & 612, Tax L
Versions Introduced in Previous Legislative Sessions:
2011-2012: S2855A
2009-2010: A5777

S3270 - Bill Texts

view summary

Requires manufacturers and labelers of prescription drugs dispensed in this state which engage in marketing activities in the state to annually report marketing expenses to the department of health; imposes a $10,000 civil fine for failure to report; eliminates deductibility for certain expenses incurred in the advertising of prescription drugs.

view sponsor memo
BILL NUMBER:S3270

TITLE OF BILL: An act to amend the public health law, in relation to
requiring the manufacturer or labeler of each prescription drug to annu-
ally report the marketing costs of such drug to the department of health
and to amend the tax law, in relation to eliminating deductibility for
certain expenses incurred in the advertising of prescription drugs

PURPOSE: To require manufacturers and labelers of prescription drugs
dispensed in this state to annually report marketing expenses to the
department of health and to eliminate certain tax deductions by pharma-
ceutical companies for costs incurred for advertising.

SUMMARY OF PROVISIONS:

Section 1 sets forth the legislative intent of the bill.

Section 2 of the bill amends section 206 of the public health law by
adding a new subdivision 29.

-Requiring the commissioner to collect marketing data and information
from prescription drug manufacturers marketing their products in New
York.

-Sets forth definitions of terms used in the bill and sets forth the
rules and requirements for reporting and establishes the different
marketing activities that must be reported.

-Requires the commissioner to biannually submit a report on prescription
drug marketing costs to the Governor, speaker of the Assembly, and
Temporary President of the Senate.

-Sets forth the confidentiality of information collected pursuant to
this law and sets forth the penalties for failure of compliance with
this law.

Sections 3 and 4 of the bill amend the tax law to prohibit tax
deductions by manufacturers or distributors of drugs to be distributed
to consumers for costs incurred for the advertising of such drugs.

JUSTIFICATION: Over the past few years, Americans have been exposed to
skyrocketing prescription drug costs. In no small part, the rise in
health care has been driven by the constantly escalating prices of
prescription drugs. While prescription drugs do not make up the largest
category of health care spending, they do represent the category with
the fastest increasing costs. Between 1995 and 2000, the growth in-
prescription drug costs was two to five times faster than the cost
growth in either hospital care or physician services. In 2000 alone,
prescription drug spending increased by 17 percent.

In a recent joint public hearing, the Senate Committees on Investi-
gations and Government Operations, and the Senate Committee on Aging,
probed the factors behind the rising costs of prescription drugs. Two
significant factors contributing to the increase in prescription drug
costs are the large annual profits of drug companies and the dramatic
increase in promotional spending by pharmaceutical manufacturers. Drug
companies, however, argue that prices are high due to the high cost of
research and development (R&D). Although estimates place investment in
R&D by drug companies at only 2 percent of industry revenue. Promotional
advertising by drug manufacturers is a driving factor behind the rising
costs of pharmaceutical drugs.

While there is no question that R&D is important, the industry's
constantly stellar profitability indicates that prescription drug prices
more than cover the costs of research and development and its associated
risks. Additionally, R&D costs are partly paid by taxpayers through tax
credits and government sponsored research through organizations such as
the National Institute of Health (NIH).

In addition to profits, promotional spending by drug manufacturers plays
a major role in keeping drug costs high. According to the Raiser Family
Foundation, since 1996 promotional spending by drug manufacturers has
increased by 60 percent. Promotional spending by drug manufacturers
includes paying for television commercials, giving free drug samples to
physicians, and taking physicians and their staffs on expensive trips.

It is in the best interest of New York State, in its role as a purchaser
of prescription drugs and an administrator of prescription drug
programs, to determine the scope of prescription drug marketing costs
and their effect on the cost, utilization, and delivery of health care
services.

In 1997, the FDA relaxed its guidelines for direct to customer adver-
tisements of pharmaceuticals, since that time, there has been an
onslaught of marketing in an attempt to influence a patient's choice of
a drug. These efforts have become an essential part of manufacturer's
marketing plans, resulting in an increase from $843 million in 1997 to
annual costs in the billions for print and broadcast advertising. This
change has also resulted in an increase in the number of prescriptions
written: fifteen months into the relaxation of the guidelines, one heav-
ily marketed drug saw an increase in sales of more than one hundred
times that of prescriptions written prior to advertisement.

This controversial new marketing technique, opposed by the American
Medical Association, undermines the patient-physician relationship by
encouraging consumers to ask for advertised products by name. As
"patient choice" becomes an increasingly popular concept, physicians are
being relegated to a passive role where, upon demand, the patient
receives a prescription for the advertised drug 73% of the time. The
benefits DTC advertising provides to the public are questionable at
best, as misconceptions about this type of advertising appear to be
extensive. A recent survey reveals that 43% of the individuals polled

believed that only "completely safe" drugs could be advertised directly
to consumers, while 21% thought only "extremely effective" drugs could
by marketed in this way. An AARP Executive Summary notes that most
persons fail to take away key information from the advertising and that
consumers age 60 and over appear to obtain less information from the ads
than others.

Historically, with regard to prescription drugs, our courts have created
an exception to the traditional duty of manufacturers to warn consumers
directly of risks associated with their products because they warned
health care providers of those risks. This made sense in an era of
"doctor knows best," when pharmaceutical manufacturers directed all of
their sales efforts at physicians and never at consumers.

In light of the recent, and expensive, mass marketing of prescription
drugs, manufacturers should no longer be relieved of the duty to proper-
ly warn their advertising targets about the dangers of their products.
Just as the manufacturers can make direct claims about the efficacy of
its products, so should that manufacturer warn of its risks. By adver-
tising directly to the patient, manufacturers make the patient an active
participant in the decision to use the drug and cannot, therefore, claim
the potential adverse effects of using the drug are so complex that they
can only be communicated to physicians.

Advertising prescription drugs is effective. If it were not, manufactur-
ers would not continue to pursue their annual multi-billion dollar
efforts to peddle their wares. It is shameful enough that pharmaceutical
manufacturers continually pass these costs on to customers, one effect
of which is an annual increase in the cost of drug benefits of more than
20%.

Therefore, the state-provided incentive allowing tax deductions for this
type of advertising by pharmaceutical manufacturers should be prohibit-
ed.

FISCAL IMPLICATIONS: Minimal administrative costs associated with data
collection, enforcement, and reporting but an unknown increase in reven-
ue is also expected from the elimination of deductibility.

EFFECTIVE DATE: This act shall take effect 180 days after it shall have
become law, except for any rules which may be necessary for its imple-
mentation.

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

                                  3270

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                            January 31, 2013
                               ___________

Introduced  by  Sen. KRUEGER -- read twice and ordered printed, and when
  printed to be committed to the Committee on Health

AN ACT to amend the public health law,  in  relation  to  requiring  the
  manufacturer  or  labeler of each prescription drug to annually report
  the marketing costs of such drug to the department of  health  and  to
  amend  the  tax  law,  in  relation  to  eliminating deductibility for
  certain expenses incurred in the advertising of prescription drugs

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  Legislative  intent.  The  legislature  hereby  finds and
declares that the price of prescription drugs in this state  and  across
the nation has been increasing at an alarming rate over the past decade.
Prescription  drug  costs are increasing at a faster rate than any other
component of health care and are driving the increase in overall  health
care  cost. As is apparent by the ubiquitous nature of the marketing and
public information campaigns relating to prescription drugs,  pharmaceu-
tical  manufacturers  put a great deal of resources into marketing their
products. This has been especially true since  the  1997  relaxation  of
federal  laws  relating  to  prescription drug advertising. It is in the
interest of  assisting  this  state  in  its  role  as  a  purchaser  of
prescription  drugs  and administrator of prescription drug programs, to
enable the state to determine the scope of prescription  drug  marketing
costs  and  their effect on the cost, utilization and delivery of health
care services, and thus further the role of this state  as  guardian  of
the public interest.
  S  2.  Section 206 of the public health law is amended by adding a new
subdivision 29 to read as follows:
  29. THE COMMISSIONER IS AUTHORIZED AND DIRECTED TO REQUIRE MANUFACTUR-
ERS OR LABELERS OF PRESCRIPTION DRUGS, WHICH DISPENSE SUCH DRUGS IN THIS
STATE AND WHICH EMPLOY, DIRECT OR UTILIZE MARKETING  REPRESENTATIVES  IN

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD01521-01-3

S. 3270                             2

THE  STATE,  TO  REPORT  THE MARKETING COSTS OF EACH OF ITS PRESCRIPTION
DRUGS DISPENSED IN THIS STATE.
  (A)  DEFINITIONS.  AS  USED  IN  THIS  SUBDIVISION, UNLESS THE CONTEXT
CLEARLY INDICATES OTHERWISE, THE FOLLOWING TERMS SHALL HAVE THE  FOLLOW-
ING MEANINGS:
  (I)  "LABELER"  MEANS ANY PERSON OR ENTITY, HAVING A LABELER CODE FROM
THE FEDERAL FOOD AND DRUG ADMINISTRATION, THAT RECEIVES  A  PRESCRIPTION
DRUG  FROM THE MANUFACTURER OR A WHOLESALER OF SUCH DRUG, AND REPACKAGES
SUCH DRUG TO BE DISPENSED IN THIS STATE.
  (II)  "MANUFACTURER"  MEANS  A  MANUFACTURER  OF  PRESCRIPTION   DRUGS
DISPENSED  IN  THIS STATE, AND SHALL INCLUDE THE SUBSIDIARY OR AFFILIATE
OF SUCH MANUFACTURER.
  (III) "MARKETING" MEANS ADVERTISING  AND  PROMOTIONAL  ACTIVITIES  FOR
PRESCRIPTION  DRUGS  DISPENSED  IN THIS STATE INCLUDING, BUT NOT LIMITED
TO, THOSE ACTIVITIES DESCRIBED IN PARAGRAPH (B) OF THIS SUBDIVISION.
  (B) MANNER OF REPORTING. ON OR  BEFORE  JULY  FIRST  EACH  YEAR  EVERY
MANUFACTURER  AND LABELER SHALL FILE A REPORT WITH THE DEPARTMENT ON ITS
MARKETING ACTIVITIES CONDUCTED IN  THIS  STATE.  SUCH  REPORT  SHALL  BE
SUBMITTED IN SUCH FORM AND MANNER, AND INCLUDE THE PAYMENT OF SUCH A FEE
AS  SHALL  BE  DETERMINED  BY  THE  COMMISSIONER. EACH SUCH REPORT SHALL
INCLUDE THE VALUE, NATURE, PURPOSE AND RECIPIENT OF  MARKETING  EXPENSES
INCLUDING, BUT NOT LIMITED TO:
  (I)  ALL  EXPENSES  ASSOCIATED  WITH ADVERTISING, MARKETING AND DIRECT
PROMOTION OF PRESCRIPTION DRUGS THROUGH  RADIO,  TELEVISION,  MAGAZINES,
NEWSPAPERS,  DIRECT MAIL AND TELEPHONE COMMUNICATIONS AS THEY PERTAIN TO
RESIDENTS OF THIS STATE;
  (II) WITH REGARD TO ALL PROVIDERS OF HEALTHCARE SERVICES REGULATED  BY
THE  DEPARTMENT UNDER THE PROVISIONS OF ARTICLE TWENTY-EIGHT, THIRTY-SIX
OR FORTY-FOUR OF THIS CHAPTER, INCLUDING  HEALTH  MAINTENANCE  ORGANIZA-
TIONS  ESTABLISHED PURSUANT TO ARTICLE FORTY-THREE OF THE INSURANCE LAW,
THE FOLLOWING INFORMATION:
  (A)  ALL  EXPENSES  ASSOCIATED  WITH  EDUCATIONAL   OR   INFORMATIONAL
PROGRAMS,  MATERIALS  AND  SEMINARS,  AND  REMUNERATION FOR PROMOTING OR
PARTICIPATING IN EDUCATIONAL OR INFORMATIONAL  SESSIONS,  REGARDLESS  OF
WHETHER THE MANUFACTURER OR LABELER PROVIDES THE EDUCATIONAL OR INFORMA-
TIONAL SESSIONS OR MATERIALS,
  (B)  ALL EXPENSES ASSOCIATED WITH FOOD, ENTERTAINMENT AND GIFTS VALUED
AT MORE THAN SEVENTY-FIVE DOLLARS, AND ANYTHING  PROVIDED  TO  A  HEALTH
CARE PROFESSIONAL FOR LESS THAN MARKET VALUE,
  (C) ALL EXPENSES ASSOCIATED WITH TRIPS AND TRAVEL, AND
  (D)  ALL  EXPENSES ASSOCIATED WITH PRODUCT SAMPLES, EXCEPT FOR SAMPLES
THAT WILL BE DISTRIBUTED FREE OF CHARGE TO PATIENTS; AND
  (III) THE AGGREGATE COST OF  ALL  EMPLOYEES  AND  CONTRACTORS  OF  THE
MANUFACTURER  OR LABELER WHO DIRECTLY OR INDIRECTLY ENGAGE IN THE ADVER-
TISING OR PROMOTIONAL ACTIVITIES LISTED IN SUBPARAGRAPHS (I) AND (II) OF
THIS PARAGRAPH, INCLUDING ALL FORMS OF PAYMENT  TO  SUCH  EMPLOYEES  AND
CONTRACTORS.  THE  COST  REPORTED  PURSUANT  TO  THIS SUBPARAGRAPH SHALL
REFLECT ONLY THAT PORTION OF PAYMENT TO EMPLOYEES AND  CONTRACTORS  THAT
PERTAINS  TO ACTIVITIES WITHIN THIS STATE OR TO RECIPIENTS OF THE ADVER-
TISING OR PROMOTIONAL ACTIVITIES WHO ARE RESIDENTS OF OR ARE EMPLOYED IN
THIS STATE.
  (C) EXCEPTIONS. THE FOLLOWING MARKETING EXPENSES SHALL NOT BE  SUBJECT
TO THE REPORTING REQUIREMENTS OF THIS SUBDIVISION:
  (I) EXPENSES OF SEVENTY-FIVE DOLLARS OR LESS;

S. 3270                             3

  (II)   REASONABLE  COMPENSATION  AND  REIMBURSEMENT  FOR  EXPENSES  IN
CONNECTION WITH A BONA FIDE CLINICAL TRIAL OF A NEW VACCINE, THERAPY  OR
TREATMENT; AND
  (III)  SCHOLARSHIPS  AND  REIMBURSEMENT  OF  EXPENSES  FOR ATTENDING A
SIGNIFICANT EDUCATIONAL, SCIENTIFIC OR POLICY-MAKING CONFERENCE OR SEMI-
NAR OF A NATIONAL, REGIONAL OR SPECIALTY MEDICAL OR  OTHER  PROFESSIONAL
ASSOCIATION IF THE RECIPIENT OF THE SCHOLARSHIP IS CHOSEN BY THE ASSOCI-
ATION SPONSORING THE CONFERENCE OR SEMINAR.
  (D)  DEPARTMENT REPORTS. ANNUALLY ON OR BEFORE NOVEMBER THIRTIETH, THE
DEPARTMENT SHALL SUBMIT A REPORT,  PROVIDING  INFORMATION  IN  AGGREGATE
FORM, ON PRESCRIPTION DRUG MARKETING EXPENSES TO THE GOVERNOR, TEMPORARY
PRESIDENT  OF THE SENATE AND SPEAKER OF THE ASSEMBLY. ON OR BEFORE JANU-
ARY FIRST, TWO THOUSAND FOURTEEN AND EVERY  TWO  YEARS  THEREAFTER,  THE
DEPARTMENT  SHALL  PROVIDE A REPORT TO THE GOVERNOR, TEMPORARY PRESIDENT
OF THE SENATE AND SPEAKER OF  THE  ASSEMBLY,  PROVIDING  INFORMATION  IN
AGGREGATE  FORM,  CONTAINING  AN  ANALYSIS  OF THE DATA SUBMITTED TO THE
DEPARTMENT, INCLUDING THE SCOPE OF PRESCRIPTION  DRUG  MARKETING  ACTIV-
ITIES  AND EXPENSES AND THEIR EFFECT ON THE COST, UTILIZATION AND DELIV-
ERY OF HEALTH CARE SERVICES  AND  ANY  RECOMMENDATIONS  WITH  REGARD  TO
MARKETING ACTIVITIES OF PRESCRIPTION DRUG MANUFACTURERS AND LABELERS.
  (E) CONFIDENTIALITY; PUBLIC INFORMATION. NOTWITHSTANDING ANY PROVISION
OF  LAW  TO  THE  CONTRARY,  ALL INFORMATION SUBMITTED TO THE DEPARTMENT
PURSUANT TO THIS SUBDIVISION SHALL BE  CONFIDENTIAL  AND  NOT  A  PUBLIC
RECORD AS DEFINED IN SECTION EIGHTY-SIX OF THE PUBLIC OFFICERS LAW. DATA
COMPILED IN AGGREGATE FORM BY THE DEPARTMENT FOR THE PURPOSES OF REPORT-
ING  REQUIRED BY THIS SUBDIVISION SHALL BE A PUBLIC RECORD AS DEFINED IN
SECTION EIGHTY-SIX OF THE PUBLIC OFFICERS LAW, AS LONG AS  IT  DOES  NOT
REVEAL TRADE INFORMATION THAT IS PROTECTED BY STATE OR FEDERAL LAW.
  (F) VIOLATIONS. ANY PERSON WHO VIOLATES ANY PROVISION OF THIS SUBDIVI-
SION  SHALL  BE LIABLE TO THE PEOPLE OF THE STATE FOR A CIVIL PENALTY OF
TEN THOUSAND DOLLARS, PLUS COURT COSTS AND ATTORNEYS' FEES, WHICH  SHALL
BE ENFORCED PURSUANT TO TITLE TWO OF THIS ARTICLE.
  (G)  RULES.  ANY  AND ALL RULES AND REGULATIONS NECESSARY TO IMPLEMENT
THE PROVISIONS OF THIS SUBDIVISION SHALL BE PROMULGATED BY  THE  COMMIS-
SIONER.
  S  3.  Paragraph (b) of subdivision 9 of section 208 of the tax law is
amended by adding a new subparagraph 21 to read as follows:
  (21) EXPENSES INCURRED BY A MANUFACTURER OR DISTRIBUTOR OF A DRUG, THE
DISPENSING OF WHICH TO A CONSUMER WITHOUT A PRESCRIPTION  IS  PROHIBITED
BY  EITHER  FEDERAL  OR  STATE  LAW, FOR THE ADVERTISING OF SUCH DRUG TO
CONSUMERS.
  S 4. Subsection (b) of section 612 of the tax law is amended by adding
a new paragraph 40 to read as follows:
  (40) EXPENSES INCURRED BY A MANUFACTURER OR DISTRIBUTOR OF A DRUG, THE
DISPENSING OF WHICH TO A CONSUMER WITHOUT A PRESCRIPTION  IS  PROHIBITED
BY  EITHER  FEDERAL  OR  STATE  LAW, FOR THE ADVERTISING OF SUCH DRUG TO
CONSUMERS.
  S 5. This act shall take effect on the one hundred eightieth day after
it shall have become a law; provided  that  effective  immediately,  any
rules  and regulations necessary to implement the provisions of this act
on its effective date are authorized to be made on or before such effec-
tive date and provided further that the provisions of sections three and
four of this act shall take effect immediately and shall apply to  taxa-
ble  years  beginning  on or after January first of the year in which it
shall have become a law.

S3270A (ACTIVE) - Bill Details

Current Committee:
Senate Health
Law Section:
Public Health Law
Laws Affected:
Amd §206, Pub Health L; amd §§208 & 612, Tax L
Versions Introduced in Previous Legislative Sessions:
2011-2012: S2855A
2009-2010: A5777

S3270A (ACTIVE) - Bill Texts

view summary

Requires manufacturers and labelers of prescription drugs dispensed in this state which engage in marketing activities in the state to annually report marketing expenses to the department of health; imposes a $10,000 civil fine for failure to report; eliminates deductibility for certain expenses incurred in the advertising of prescription drugs.

view sponsor memo
BILL NUMBER:S3270A

TITLE OF BILL: An act to amend the public health law, in relation to
requiring the manufacturer or labeler of each prescription drug to
annually report the marketing costs of such drug to the department of
health and to amend the tax law, in relation to eliminating
deductibility for certain expenses incurred in the advertising of
prescription drugs

PURPOSE: To require manufacturers and labelers of prescription drugs
dispensed in this state to annually report marketing expenses to the
department of health and to eliminate certain tax deductions by
pharmaceutical companies for costs incurred for advertising.

SUMMARY OF PROVISIONS:

Section 1 sets forth the legislative intent of the bill.

Section 2 of the bill amends section 206 of the public health law by
adding a now subdivision 29.

-Requiring the commissioner to collect marketing data and information
from prescription drug manufacturers marketing their products in New
York.

-Sets forth definitions of terms used in the bill and sets forth the
rules and requirements for reporting and establishes the different
marketing activities that must be reported.

-Requires the commissioner to biannually submit a report on
prescription drug marketing costs to the Governor, speaker of the
Assembly, and Temporary President of the Senate.

-Sets forth the confidentiality of information collected pursuant to
this law and sets forth the penalties for failure of compliance with
this law.

Sections 3 and 4 of the bill amend the to law to prohibit tax
deductions by manufacturers or distributors of drugs to be distributed
to consumers for costs incurred for the advertising of such drugs.

JUSTIFICATION: Over the past few years, Americans have been exposed to
skyrocketing prescription drug costs. In no small part, the rise in
health care has been driven by the constantly escalating prices of
prescription drugs. While prescription drugs do not make up the
largest category of health care spending, they do represent the
category with the fastest increasing costs. Between 1995 and 2000, the
growth in prescription drug costs was two to five times faster than
the cost growth in either hospital care or physician services. In 2000
alone, prescription drug spending increased by 17 percent.

In a recent joint public hearing, the Senate Committees on
Investigations and Government Operations, and the Senate Committee on
Aging, probed the factors behind the rising costs of prescription
drugs. Two significant factors contributing to the increase in
prescription drug costs are the large annual profits of drug companies
and the dramatic increase in promotional spending by pharmaceutical


manufacturers. Drug companies, however, argue that prices are high due
to the high cost of research and development (R&D). Although estimates
place investment in R&D by drug companies at only 2 percent of
industry revenue. Promotional advertising by drug manufacturers is a
driving factor behind the rising costs of pharmaceutical drugs.

While there is no question that R&D is important, the industry's
constantly stellar profitability indicates that prescription drug
prices more than cover the costs of research and development and its
associated risks. Additionally, R&D costs are partly paid by taxpayers
through tax credits and government sponsored research through
organizations such as the National Institute or Health (NIH).

In addition to profits, promotional spending by drug manufacturers
plays a major role in keeping drug costs high. According to the Raiser
Family Foundation, since 1996 promotional spending by drug
manufacturers has increased by 63 percent. Promotional spending by
drug manufacturers includes paying for television commercials, giving
free drug samples to physicians, and taking physicians and their
staffs on expensive trips.

It is in the best interest of Now York State, in its role as a
purchaser of prescription drugs and an administrator of prescription
drug programs, to determine the scope of prescription drug marketing
costs and their effect on the cost, utilization, and delivery of
health care services.

In 1997, the FDA relaxed its guidelines for direct to customer
advertisements of pharmaceuticals, since that time, there has been an
onslaught of marketing in an attempt to influence a patient's choice
of a drug. These efforts have become an essential part of
manufacturer's marketing plans, resulting in an increase from $843
million in 1997 to annual costs in the billions for print and
broadcast advertising. This change has also resulted in an increase in
the number of prescriptions written: fifteen months into the
relaxation of the guidelines, one heavily marketed drug saw an
increase in sales of more than one hundred times that of prescriptions
written prior to advertisement.

This controversial new marketing technique, opposed by the American
Medical Association, undermines the patient-physician relationship by
encouraging consumers to ask for advertised products by name. As
"patient choice" becomes an increasingly popular concept, physicians
are being relegated to a passive role where, upon demand, the patient
receives a prescription for the advertised drug 73% of the time. The
benefits DTC advertising provides to the public are questionable at
best, as misconceptions about this type of advertising appear to be
extensive. A recent survey reveals that 43% of the individuals polled
believed that only "completely safe" drugs could be advertised
directly to consumers, while 21% thought only "extremely effective"
drugs could by marketed in this way. An AARP Executive Summary notes
that most persons fail to take away key information from the
advertising and that consumers age GO and over appear to obtain less
information from the ads than others.

Historically, with regard to prescription drugs, our courts have
created an exception to the traditional duty of manufacturers to warn


consumers directly of risks associated with their products because
they warned health care providers of those risks. This made sense in
an era of "doctor knows best," when pharmaceutical manufacturers
directed all of their sales efforts at physicians and never at
consumers.

In light of the recent, and expensive, mass marketing of prescription
drugs, manufacturers should no longer be relieved or the duty to
properly warn their advertising targets about the dangers of their
products. Just as the manufacturers can make direct claims about the
efficacy of its products, so should that manufacturer warn of its
risks. By advertising directly to the patient, manufacturers make the
patient an active participant in the decision to use the drug and
cannot, therefore, claim the potential adverse effects of using the
drug are so complex that they can only be communicated to physicians.

Advertising prescription drugs is effective. If it were not,
manufacturers would not continue to pursue their annual multi-billion
dollar efforts to peddle their wares. It is shameful enough that
pharmaceutical manufacturers continually pass these costs on to
customers, one effect of which is an annual increase in the cost of
drug benefits of more than 20%.

Therefore, the state-provided incentive allowing tax deductions for
this type of advertising by pharmaceutical manufacturers should be
prohibited.

FISCAL IMPLICATIONS: Minimal administrative costs associated with data
collection, enforcement, and reporting but an unknown increase revenue
is also expected from the elimination of deductibility.

EFFECTIVE DATE: This act shall take effect 180 days after it shall
have become law, except for any rules which may be necessary for its
implementation.

view full text
download pdf
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 3270--A

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                            January 31, 2013
                               ___________

Introduced  by  Sen. KRUEGER -- read twice and ordered printed, and when
  printed to be committed to the Committee on Health --  recommitted  to
  the  Committee  on  Health in accordance with Senate Rule 6, sec. 8 --
  committee discharged, bill amended, ordered reprinted as  amended  and
  recommitted to said committee

AN  ACT  to  amend  the  public health law, in relation to requiring the
  manufacturer or labeler of each prescription drug to  annually  report
  the  marketing  costs  of such drug to the department of health and to
  amend the tax  law,  in  relation  to  eliminating  deductibility  for
  certain expenses incurred in the advertising of prescription drugs

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1.  Legislative  intent.  The  legislature  hereby  finds  and
declares  that  the price of prescription drugs in this state and across
the nation has been increasing at an alarming rate over the past decade.
Prescription drug costs are increasing at a faster rate than  any  other
component  of health care and are driving the increase in overall health
care cost. As is apparent by the ubiquitous nature of the marketing  and
public  information campaigns relating to prescription drugs, pharmaceu-
tical manufacturers put a great deal of resources into  marketing  their
products.  This  has  been  especially true since the 1997 relaxation of
federal laws relating to prescription drug advertising.  It  is  in  the
interest  of  assisting  this  state  in  its  role  as  a  purchaser of
prescription drugs and administrator of prescription drug  programs,  to
enable  the  state to determine the scope of prescription drug marketing
costs and their effect on the cost, utilization and delivery  of  health
care  services,  and  thus further the role of this state as guardian of
the public interest.
  S 2.  Section 206 of the public health law is amended by adding a  new
subdivision 29 to read as follows:

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD01521-02-4

S. 3270--A                          2

  29. THE COMMISSIONER IS AUTHORIZED AND DIRECTED TO REQUIRE MANUFACTUR-
ERS OR LABELERS OF PRESCRIPTION DRUGS, WHICH DISPENSE SUCH DRUGS IN THIS
STATE  AND  WHICH EMPLOY, DIRECT OR UTILIZE MARKETING REPRESENTATIVES IN
THE STATE, TO REPORT THE MARKETING COSTS OF  EACH  OF  ITS  PRESCRIPTION
DRUGS DISPENSED IN THIS STATE.
  (A)  DEFINITIONS.  AS  USED  IN  THIS  SUBDIVISION, UNLESS THE CONTEXT
CLEARLY INDICATES OTHERWISE, THE FOLLOWING TERMS SHALL HAVE THE  FOLLOW-
ING MEANINGS:
  (I)  "LABELER"  MEANS ANY PERSON OR ENTITY, HAVING A LABELER CODE FROM
THE FEDERAL FOOD AND DRUG ADMINISTRATION, THAT RECEIVES  A  PRESCRIPTION
DRUG  FROM THE MANUFACTURER OR A WHOLESALER OF SUCH DRUG, AND REPACKAGES
SUCH DRUG TO BE DISPENSED IN THIS STATE.
  (II)  "MANUFACTURER"  MEANS  A  MANUFACTURER  OF  PRESCRIPTION   DRUGS
DISPENSED  IN  THIS STATE, AND SHALL INCLUDE THE SUBSIDIARY OR AFFILIATE
OF SUCH MANUFACTURER.
  (III) "MARKETING" MEANS ADVERTISING  AND  PROMOTIONAL  ACTIVITIES  FOR
PRESCRIPTION  DRUGS  DISPENSED  IN THIS STATE INCLUDING, BUT NOT LIMITED
TO, THOSE ACTIVITIES DESCRIBED IN PARAGRAPH (B) OF THIS SUBDIVISION.
  (B) MANNER OF REPORTING. ON OR  BEFORE  JULY  FIRST  EACH  YEAR  EVERY
MANUFACTURER  AND LABELER SHALL FILE A REPORT WITH THE DEPARTMENT ON ITS
MARKETING ACTIVITIES CONDUCTED IN  THIS  STATE.  SUCH  REPORT  SHALL  BE
SUBMITTED IN SUCH FORM AND MANNER, AND INCLUDE THE PAYMENT OF SUCH A FEE
AS  SHALL  BE  DETERMINED  BY  THE  COMMISSIONER. EACH SUCH REPORT SHALL
INCLUDE THE VALUE, NATURE, PURPOSE AND RECIPIENT OF  MARKETING  EXPENSES
INCLUDING, BUT NOT LIMITED TO:
  (I)  ALL  EXPENSES  ASSOCIATED  WITH ADVERTISING, MARKETING AND DIRECT
PROMOTION OF PRESCRIPTION DRUGS THROUGH  RADIO,  TELEVISION,  MAGAZINES,
NEWSPAPERS,  DIRECT MAIL AND TELEPHONE COMMUNICATIONS AS THEY PERTAIN TO
RESIDENTS OF THIS STATE;
  (II) WITH REGARD TO ALL PROVIDERS OF HEALTHCARE SERVICES REGULATED  BY
THE  DEPARTMENT UNDER THE PROVISIONS OF ARTICLE TWENTY-EIGHT, THIRTY-SIX
OR FORTY-FOUR OF THIS CHAPTER, INCLUDING  HEALTH  MAINTENANCE  ORGANIZA-
TIONS  ESTABLISHED PURSUANT TO ARTICLE FORTY-THREE OF THE INSURANCE LAW,
THE FOLLOWING INFORMATION:
  (A)  ALL  EXPENSES  ASSOCIATED  WITH  EDUCATIONAL   OR   INFORMATIONAL
PROGRAMS,  MATERIALS  AND  SEMINARS,  AND  REMUNERATION FOR PROMOTING OR
PARTICIPATING IN EDUCATIONAL OR INFORMATIONAL  SESSIONS,  REGARDLESS  OF
WHETHER THE MANUFACTURER OR LABELER PROVIDES THE EDUCATIONAL OR INFORMA-
TIONAL SESSIONS OR MATERIALS,
  (B)  ALL EXPENSES ASSOCIATED WITH FOOD, ENTERTAINMENT AND GIFTS VALUED
AT MORE THAN SEVENTY-FIVE DOLLARS, AND ANYTHING  PROVIDED  TO  A  HEALTH
CARE PROFESSIONAL FOR LESS THAN MARKET VALUE,
  (C) ALL EXPENSES ASSOCIATED WITH TRIPS AND TRAVEL, AND
  (D)  ALL  EXPENSES ASSOCIATED WITH PRODUCT SAMPLES, EXCEPT FOR SAMPLES
THAT WILL BE DISTRIBUTED FREE OF CHARGE TO PATIENTS; AND
  (III) THE AGGREGATE COST OF  ALL  EMPLOYEES  AND  CONTRACTORS  OF  THE
MANUFACTURER  OR LABELER WHO DIRECTLY OR INDIRECTLY ENGAGE IN THE ADVER-
TISING OR PROMOTIONAL ACTIVITIES LISTED IN SUBPARAGRAPHS (I) AND (II) OF
THIS PARAGRAPH, INCLUDING ALL FORMS OF PAYMENT  TO  SUCH  EMPLOYEES  AND
CONTRACTORS.  THE  COST  REPORTED  PURSUANT  TO  THIS SUBPARAGRAPH SHALL
REFLECT ONLY THAT PORTION OF PAYMENT TO EMPLOYEES AND  CONTRACTORS  THAT
PERTAINS  TO ACTIVITIES WITHIN THIS STATE OR TO RECIPIENTS OF THE ADVER-
TISING OR PROMOTIONAL ACTIVITIES WHO ARE RESIDENTS OF OR ARE EMPLOYED IN
THIS STATE.
  (C) EXCEPTIONS. THE FOLLOWING MARKETING EXPENSES SHALL NOT BE  SUBJECT
TO THE REPORTING REQUIREMENTS OF THIS SUBDIVISION:

S. 3270--A                          3

  (I) EXPENSES OF SEVENTY-FIVE DOLLARS OR LESS;
  (II)   REASONABLE  COMPENSATION  AND  REIMBURSEMENT  FOR  EXPENSES  IN
CONNECTION WITH A BONA FIDE CLINICAL TRIAL OF A NEW VACCINE, THERAPY  OR
TREATMENT; AND
  (III)  SCHOLARSHIPS  AND  REIMBURSEMENT  OF  EXPENSES  FOR ATTENDING A
SIGNIFICANT EDUCATIONAL, SCIENTIFIC OR POLICY-MAKING CONFERENCE OR SEMI-
NAR OF A NATIONAL, REGIONAL OR SPECIALTY MEDICAL OR  OTHER  PROFESSIONAL
ASSOCIATION IF THE RECIPIENT OF THE SCHOLARSHIP IS CHOSEN BY THE ASSOCI-
ATION SPONSORING THE CONFERENCE OR SEMINAR.
  (D)  DEPARTMENT REPORTS. ANNUALLY ON OR BEFORE NOVEMBER THIRTIETH, THE
DEPARTMENT SHALL SUBMIT A REPORT,  PROVIDING  INFORMATION  IN  AGGREGATE
FORM, ON PRESCRIPTION DRUG MARKETING EXPENSES TO THE GOVERNOR, TEMPORARY
PRESIDENT  OF THE SENATE AND SPEAKER OF THE ASSEMBLY. ON OR BEFORE JANU-
ARY FIRST, TWO THOUSAND FIFTEEN AND  EVERY  TWO  YEARS  THEREAFTER,  THE
DEPARTMENT  SHALL  PROVIDE A REPORT TO THE GOVERNOR, TEMPORARY PRESIDENT
OF THE SENATE AND SPEAKER OF  THE  ASSEMBLY,  PROVIDING  INFORMATION  IN
AGGREGATE  FORM,  CONTAINING  AN  ANALYSIS  OF THE DATA SUBMITTED TO THE
DEPARTMENT, INCLUDING THE SCOPE OF PRESCRIPTION  DRUG  MARKETING  ACTIV-
ITIES  AND EXPENSES AND THEIR EFFECT ON THE COST, UTILIZATION AND DELIV-
ERY OF HEALTH CARE SERVICES  AND  ANY  RECOMMENDATIONS  WITH  REGARD  TO
MARKETING ACTIVITIES OF PRESCRIPTION DRUG MANUFACTURERS AND LABELERS.
  (E) CONFIDENTIALITY; PUBLIC INFORMATION. NOTWITHSTANDING ANY PROVISION
OF  LAW  TO  THE  CONTRARY,  ALL INFORMATION SUBMITTED TO THE DEPARTMENT
PURSUANT TO THIS SUBDIVISION SHALL BE  CONFIDENTIAL  AND  NOT  A  PUBLIC
RECORD AS DEFINED IN SECTION EIGHTY-SIX OF THE PUBLIC OFFICERS LAW. DATA
COMPILED IN AGGREGATE FORM BY THE DEPARTMENT FOR THE PURPOSES OF REPORT-
ING  REQUIRED BY THIS SUBDIVISION SHALL BE A PUBLIC RECORD AS DEFINED IN
SECTION EIGHTY-SIX OF THE PUBLIC OFFICERS LAW, AS LONG AS  IT  DOES  NOT
REVEAL TRADE INFORMATION THAT IS PROTECTED BY STATE OR FEDERAL LAW.
  (F) VIOLATIONS. ANY PERSON WHO VIOLATES ANY PROVISION OF THIS SUBDIVI-
SION  SHALL  BE LIABLE TO THE PEOPLE OF THE STATE FOR A CIVIL PENALTY OF
TEN THOUSAND DOLLARS, PLUS COURT COSTS AND ATTORNEYS' FEES, WHICH  SHALL
BE ENFORCED PURSUANT TO TITLE TWO OF THIS ARTICLE.
  (G)  RULES.  ANY  AND ALL RULES AND REGULATIONS NECESSARY TO IMPLEMENT
THE PROVISIONS OF THIS SUBDIVISION SHALL BE PROMULGATED BY  THE  COMMIS-
SIONER.
  S  3.  Paragraph (b) of subdivision 9 of section 208 of the tax law is
amended by adding a new subparagraph 21 to read as follows:
  (21) EXPENSES INCURRED BY A MANUFACTURER OR DISTRIBUTOR OF A DRUG, THE
DISPENSING OF WHICH TO A CONSUMER WITHOUT A PRESCRIPTION  IS  PROHIBITED
BY  EITHER  FEDERAL  OR  STATE  LAW, FOR THE ADVERTISING OF SUCH DRUG TO
CONSUMERS.
  S 4. Subsection (b) of section 612 of the tax law is amended by adding
a new paragraph 40 to read as follows:
  (40) EXPENSES INCURRED BY A MANUFACTURER OR DISTRIBUTOR OF A DRUG, THE
DISPENSING OF WHICH TO A CONSUMER WITHOUT A PRESCRIPTION  IS  PROHIBITED
BY  EITHER  FEDERAL  OR  STATE  LAW, FOR THE ADVERTISING OF SUCH DRUG TO
CONSUMERS.
  S 5. This act shall take effect on the one hundred eightieth day after
it shall have become a law; provided  that  effective  immediately,  any
rules  and regulations necessary to implement the provisions of this act
on its effective date are authorized to be made on or before such effec-
tive date and provided further that the provisions of sections three and
four of this act shall take effect immediately and shall apply to  taxa-
ble  years  beginning  on or after January first of the year in which it
shall have become a law.

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