S T A T E   O F   N E W   Y O R K
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                                   5733
 
                        2017-2018 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             February 14, 2017
                                ___________
 
 Introduced by M. of A. McDONALD -- read once and referred to the Commit-
   tee on Health
 
 AN  ACT  to amend the public health law and the general business law, in
   relation to price gouging on prescription drugs
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:

   Section  1.  The  public health law is amended by adding a new section
 278-a to read as follows:
   § 278-A. LIMITATION ON EXCESSIVE PRICE INCREASES; PRESCRIPTION  DRUGS:
 1.  IN THE EVENT A MANUFACTURER, AS DEFINED IN SUBDIVISION TWENTY-ONE OF
 SECTION SIXTY-EIGHT HUNDRED TWO OF THE EDUCATION  LAW,  OF  A  BRAND  OR
 GENERIC DRUG, MADE AVAILABLE IN NEW YORK, INCREASES THE WHOLESALE ACQUI-
 SITION  COST  (WAC)  OF A DRUG BY A PERCENT EQUAL TO OR GREATER THAN ONE
 HUNDRED PERCENT AT ANY ONE TIME OR IN THE AGGREGATE IN ANY TWELVE  MONTH
 PERIOD:
   (A)  THE MANUFACTURER SHALL, NOT LESS THAN THIRTY DAYS PRIOR TO INSTI-
 TUTING SUCH INCREASE, NOTIFY THE COMMISSIONER AND THE  DRUG  UTILIZATION
 REVIEW  BOARD  ESTABLISHED  UNDER SECTION THREE HUNDRED SIXTY-NINE-BB OF
 THE SOCIAL SERVICES LAW. NOTICE SHALL BE PROVIDED  ON  THE  FORM  ESTAB-
 LISHED PURSUANT TO SUBDIVISION TWO OF THIS SECTION; AND
   (B)  THE  COMMISSIONER SHALL REQUIRE PRIOR AUTHORIZATION AND AUTHORIZE
 MEDICAID MANAGED CARE PLANS TO REQUIRE PRIOR AUTHORIZATION FOR THE  DRUG
 EFFECTIVE  AS  OF  THE DATE OF THE PRICE INCREASE AND CONTINUING UNTIL A
 DETERMINATION IS MADE BY THE DRUG UTILIZATION REVIEW BOARD.
   2. THE COMMISSIONER, IN CONSULTATION WITH THE DRUG UTILIZATION  REVIEW
 BOARD,  SHALL  PRODUCE  AND  MAKE  AVAILABLE  TO  MANUFACTURERS  A PRICE
 INCREASE NOTIFICATION FORM THAT SHALL ELICIT:
   (A) THE MOST RECENT WHOLESALE ACQUISITION COST (WAC) OF THE DRUG PRIOR
 TO AN INCREASE EQUAL TO OR GREATER THAN ONE HUNDRED PERCENT AT  ANY  ONE
 TIME  OR  IN  THE AGGREGATE IN ANY TWELVE MONTH PERIOD IN EITHER PRICING
 MEASURE. FOR THE PURPOSES OF THIS  SECTION  WHOLESALE  ACQUISITION  COST
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD08165-01-7

 A. 5733                             2
 
 (WAC) SHALL INCLUDE THE PRICES FOR EACH DOSAGE, SIZE OR CONCENTRATION OF
 THE DRUG OFFERED OR SOLD BY THE MANUFACTURER;
   (B)  THE  WHOLESALE  ACQUISITION COST (WAC) OF THE DRUG WHEN EXCEEDING
 THE ONE HUNDRED PERCENT THRESHOLD;
   (C) ANY MATERIAL CHANGE IN INGREDIENT,  PRODUCTION,  OR  MANUFACTURING
 COSTS RESULTING IN THE PRICE INCREASE;
   (D) IN THE CASE OF A BRAND DRUG, THE EXPIRATION DATE OF THE PATENT;
   (E)  IN  THE CASE OF A GENERIC DRUG, WHETHER THE DRUG IS A SOLE SOURCE
 DRUG; AND
   (F) ANY OTHER INFORMATION  THE  MANUFACTURER  DEEMS  RELEVANT  TO  THE
 BOARD'S REVIEW.
   3. UPON RECEIPT OF A PRICE INCREASE NOTIFICATION FORM, THE DRUG UTILI-
 ZATION  REVIEW BOARD SHALL REVIEW THE PRICE INCREASE AND MAKE A DETERMI-
 NATION AS TO WHETHER THE PRICE INCREASE IS EXCESSIVE. IN MAKING A DETER-
 MINATION THE BOARD SHALL CONSIDER:
   (A) THE WHOLESALE ACQUISITION COST (WAC) OF THE DRUG IN COMPARISON  TO
 ANY GENERIC EQUIVALENT OR THERAPEUTICALLY EQUIVALENT DRUG;
   (B) THE FDA APPROVED OR COMPENDIUM SUPPORTED USE OF THE DRUG AND CRIT-
 ICAL NEED TO THE PATIENT;
   (C)  ANY KNOWN MARKET FACTORS JUSTIFYING THE PRICE INCREASE, INCLUDING
 BUT NOT LIMITED TO:
   (I) WHETHER THE DRUG HAS BEEN ABSENT FROM THE MARKET FOR ANY PERIOD OF
 TIME; AND
   (II) CHANGES IN MANUFACTURING OR REGULATORY REQUIREMENTS OR COSTS.
   (D) ANY MATERIAL CHANGE IN THE PREVALENCE OR SEVERITY OF  THE  DISEASE
 OR MEDICAL CONDITION OR CONDITIONS THAT THE DRUG IS APPROVED TO TREAT;
   (E)  IN  THE  CASE OF A BRAND DRUG, THE EXPIRATION DATE OF THE PATENT;
 AND
   (F) IN THE CASE OF A GENERIC DRUG, WHETHER THE DRUG IS A  SOLE  SOURCE
 DRUG.
   4. UPON A FINDING BY THE DRUG UTILIZATION REVIEW BOARD THAT A MANUFAC-
 TURER  HAS  INSTITUTED  AN EXCESSIVE PRICE INCREASE, (A) THE BOARD SHALL
 REQUIRE PRIOR AUTHORIZATION FOR THE DRUG AND AUTHORIZE MEDICAID  MANAGED
 CARE  PLANS  TO  REQUIRE  PRIOR AUTHORIZATION UNTIL THE BOARD DETERMINES
 OTHERWISE; AND (B) THE BOARD MAY REFER THE MATTER TO THE ATTORNEY GENER-
 AL WITH ANY INFORMATION NECESSARY FOR THE INVESTIGATION AND  PROSECUTION
 OF  PRICE  GOUGING VIOLATIONS UNDER SECTION THREE HUNDRED NINETY-SIX-RRR
 OF THE GENERAL BUSINESS LAW. IN THE EVENT THE BOARD DOES NOT  FIND  THAT
 THE  MANUFACTURER  HAS ENGAGED IN AN EXCESSIVE PRICE INCREASE, THE BOARD
 SHALL REMOVE THE REQUIREMENT FOR PRIOR AUTHORIZATION AND SUCH  AUTHORITY
 GRANTED  TO MEDICAID MANAGED CARE PLANS TO INSTITUTE PRIOR AUTHORIZATION
 UNDER THIS SECTION SHALL CEASE.
   § 2. The general business law is amended by adding a new section  396-
 rrr to read as follows:
   §  396-RRR. PRICE GOUGING; PRESCRIPTION DRUGS. 1. LEGISLATIVE FINDINGS
 AND DECLARATION. THE  LEGISLATURE  HEREBY  FINDS  THAT  EXCESSIVE  PRICE
 INCREASES  TO PRESCRIPTION DRUGS THAT LACK JUSTIFICATION BASED ON MARKET
 FORCES CREATE A PUBLIC HEALTH RISK  TO  CONSUMERS  THAT  RELY  ON  THESE
 PRESCRIPTION  DRUGS.  IN  ORDER TO PREVENT A MANUFACTURER, AS DEFINED IN
 SUBDIVISION TWENTY-ONE OF SECTION SIXTY-EIGHT HUNDRED TWO OF THE  EDUCA-
 TION  LAW,  FROM  TAKING UNFAIR ADVANTAGE OF CONSUMERS WHO RELY UPON AND
 MAY LOSE ACCESS TO THE PRESCRIPTION DRUGS IF THE MEDICATION HAS A SUDDEN
 AND EXCESSIVE PRICE INCREASE, THE LEGISLATURE DECLARES THAT  THE  PUBLIC
 INTEREST  REQUIRES  THAT  SUCH CONDUCT BE PROHIBITED AND MADE SUBJECT TO
 CIVIL PENALTIES.

 A. 5733                             3
 
   2. IN ORDER TO PREVENT A DRUG MANUFACTURER, AS DEFINED IN  SUBDIVISION
 TWENTY-ONE OF SECTION SIXTY-EIGHT HUNDRED TWO OF THE EDUCATION LAW, FROM
 IMPOSING UNCONSCIONABLY AND UNJUSTIFIABLY EXCESSIVE PRICE INCREASES, THE
 ATTORNEY  GENERAL  MAY,  UPON  REFERRAL FROM THE DRUG UTILIZATION REVIEW
 BOARD  AS  CODIFIED IN SECTION TWO HUNDRED SEVENTY-EIGHT-A OF THE PUBLIC
 HEALTH LAW, 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 UNLAW-
 FUL  ACTS.  IN ANY SUCH PROCEEDING, THE COURT MAY IMPOSE A CIVIL PENALTY
 IN AN AMOUNT NOT TO  EXCEED  TWENTY-FIVE  THOUSAND  DOLLARS  AND,  WHERE
 APPROPRIATE, ORDER RESTITUTION TO AGGRIEVED CONSUMERS.
   3.  WHETHER A PRICE IS UNCONSCIONABLY AND UNJUSTIFIABLY EXCESSIVE IS A
 QUESTION OF  LAW  FOR  THE  COURT.  THE  COURT'S  DETERMINATION  THAT  A
 VIOLATION OF THIS SECTION HAS OCCURRED SHALL BE BASED UPON THE FOLLOWING
 FACTORS:
   (A) THE INCREASE IN PRICE IS UNCONSCIONABLY EXTREME;
   (B)  THE  DRUG  IS  VITAL AND MEDICALLY NECESSARY TO THE HEALTH OF THE
 CONSUMER;
   (C) THE DRUG IS A SOLE SOURCE DRUG WITHOUT A  THERAPEUTIC  EQUIVALENT;
 AND
   (D)  THE PRICE INCREASE WAS WITHIN THE CONTROL OF THE MANUFACTURER AND
 NOT CAUSED BY COSTS IMPOSED ON OR FACTORS  BEYOND  THE  CONTROL  OF  THE
 MANUFACTURER.
   § 3. This act shall take effect immediately.