The New York State Senate

 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   8838
 
                           I N  A S S E M B L Y
 
                             January 13, 2022
                                ___________
 
 Introduced  by  M.  of  A.  GOTTFRIED  --  read once and referred to the
   Committee on Health
 
 AN ACT to amend the public health law, in relation to  pharmacy  benefit
   managers;  to amend the insurance law, in relation to registration and
   licensing of pharmacy benefit managers; to  amend  the  state  finance
   law,  in relation to establishing the pharmacy benefit manager regula-
   tory fund; and to amend a chapter of the laws  of  2021  amending  the
   public  health law relating to pharmacy benefit managers; amending the
   insurance law relating to registration and licensing of pharmacy bene-
   fit managers; and repealing certain provisions of  the  public  health
   law  relating thereto, as proposed in legislative bills numbers S.3762
   and A.1396, in relation to the effectiveness thereof
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  Subdivisions 1, 2, 3 and 5 of section 280-a of the public
 health law, as added by a chapter of  the  laws  of  2021  amending  the
 public  health  law  relating to pharmacy benefit managers; amending the
 insurance law relating to registration and licensing of pharmacy benefit
 managers; and repealing certain provisions  of  the  public  health  law
 relating  thereto,  as proposed in legislative bills numbers S. 3762 and
 A. 1396, are amended to read as follows:
   1. Definitions.  As used in this section, the  following  terms  shall
 have the following meanings:
   (a)  "Health  plan [or provider]" means an entity for which a pharmacy
 benefit manager provides pharmacy benefit management [including, but not
 limited to: (i)] SERVICES AND THAT IS a health  benefit  plan  or  other
 entity  that  approves, provides, arranges for, or pays OR REIMBURSES IN
 WHOLE OR IN PART for health care items or  services,  [under  which]  TO
 INCLUDE AT LEAST prescription drugs, for A SUBSTANTIAL NUMBER OF benefi-
 ciaries  [of  the  entity  are  purchased  or which provides or arranges
 reimbursement in whole or in  part  for  the  purchase  of  prescription
 drugs;  or  (ii)  a  health  care provider or professional that acquires
 prescription drugs to use  or  dispense  in  providing  health  care  to
 patients  where  the  prescription  drug  is the subject of the pharmacy

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

                                                            LBD00570-04-2
 A. 8838                             2

 benefit manager's pharmacy benefit  management  services]  WHO  WORK  OR
 RESIDE  IN THIS STATE. THE SUPERINTENDENT SHALL DETERMINE, IN HIS OR HER
 SOLE DISCRETION, BY REGULATION HOW THE PHRASE "A SUBSTANTIAL  NUMBER  OF
 BENEFICIARIES WHO WORK OR RESIDE IN THIS STATE" SHALL BE INTERPRETED.
   (b) "Pharmacy benefit management services" means the [service provided
 to]  MANAGEMENT  OR  ADMINISTRATION  OF PRESCRIPTION DRUG BENEFITS FOR a
 health plan [or provider],  directly  or  through  another  entity,  and
 regardless  of  whether the pharmacy benefit manager and the health plan
 [or provider] are related, or associated by ownership, common ownership,
 organization or otherwise; including  the  procurement  of  prescription
 drugs  to  be dispensed to patients, or the administration or management
 of prescription drug benefits, including but not limited to, any of  the
 following:
   (i) mail service pharmacy;
   (ii)  claims  processing,  retail  network  management,  or payment of
 claims to pharmacies for dispensing prescription drugs;
   (iii) clinical or other formulary or preferred drug  list  development
 or management;
   (iv)  negotiation  or  administration  of  rebates, discounts, payment
 differentials, or other incentives,  for  the  inclusion  of  particular
 prescription  drugs  in a particular category or to promote the purchase
 of particular prescription drugs;
   (v) patient compliance, therapeutic intervention, or  generic  substi-
 tution programs;
   (vi) disease management;
   (vii) drug utilization review or prior authorization;
   (viii)  adjudication  of appeals or grievances related to prescription
 drug coverage;
   (ix) contracting with network pharmacies; and
   (x) controlling the cost of covered prescription drugs.
   (c) "Pharmacy benefit manager" means any entity that performs pharmacy
 benefit management services for a health plan [or provider].
   (d) "Maximum allowable  cost  price"  means  a  maximum  reimbursement
 amount  set  by  the pharmacy benefit manager for therapeutically equiv-
 alent multiple source generic drugs.
   (e) "Controlling person" means any person or other entity who or which
 directly or indirectly has the power to direct or cause to  be  directed
 the management, control or activities of a pharmacy benefit manager.
   (f)  "Covered  individual"  means  a  member,  participant,  enrollee,
 contract holder or policy holder or beneficiary of  a  health  plan  [or
 provider].
   (g)  "License" means a license to be a pharmacy benefit manager, under
 article twenty-nine of the insurance law.
   (h) "Spread pricing" means the practice of a pharmacy benefit  manager
 retaining  an  additional amount of money in addition to the amount paid
 to the pharmacy to fill a prescription.
   (i) "Superintendent" means the superintendent of financial services.
   2. Duty, accountability and transparency.  (a) (I) The pharmacy  bene-
 fit  manager shall have a duty and obligation to [the covered individual
 and the health plan or provider, and  shall]  perform  pharmacy  benefit
 management  services  with care, skill, prudence, diligence, and profes-
 sionalism[, and for the best interests of the  covered  individual,  and
 the  health plan or provider.  Where there is a conflict in the pharmacy
 benefit manager's duty or obligation under this paragraph to the covered
 individual and any other party, the duty or obligation  to  the  covered
 individual shall be primary].
 A. 8838                             3
 
   (II)  IN  ADDITION  TO  THE  DUTIES AS MAY BE PRESCRIBED BY REGULATION
 PURSUANT TO ARTICLE TWENTY-NINE OF THE INSURANCE LAW:
   (1)  A  PHARMACY BENEFIT MANAGER INTERACTING WITH A COVERED INDIVIDUAL
 SHALL HAVE THE SAME DUTY TO A COVERED INDIVIDUAL AS THE HEALTH PLAN  FOR
 WHOM IT IS PERFORMING PHARMACY BENEFIT MANAGEMENT SERVICES.
   (2)  A  PHARMACY  BENEFIT  MANAGER SHALL HAVE A DUTY OF GOOD FAITH AND
 FAIR DEALING WITH ALL PARTIES, INCLUDING  BUT  NOT  LIMITED  TO  COVERED
 INDIVIDUALS AND PHARMACIES, WITH WHOM IT INTERACTS IN THE PERFORMANCE OF
 PHARMACY BENEFIT MANAGEMENT SERVICES.
   (b)  All funds received by the pharmacy benefit manager in relation to
 providing pharmacy benefit management services shall be received by  the
 pharmacy  benefit manager in trust [for the health plan or provider] and
 shall be used or distributed  only  pursuant  to  the  pharmacy  benefit
 manager's contract with the health plan [or provider] or applicable law;
 including  any  administrative  fee  or  payment to the pharmacy benefit
 manager expressly provided for in the contract to compensate the pharma-
 cy benefit manager for its services.  Any funds received by the pharmacy
 benefit manager through spread pricing shall be subject  to  this  para-
 graph.  IN  ADDITION TO ANY OTHER POWER CONFERRED BY LAW THE SUPERINTEN-
 DENT SHALL HAVE THE AUTHORITY TO  PRESCRIBE  RULES  CONCERNING  PHARMACY
 BENEFIT MANAGER ADMINISTRATIVE FEES, INCLUDING LIMITATIONS ON THEIR FORM
 AND USE.
   (c)  The  pharmacy  benefit  manager  shall  account, annually or more
 frequently to the health plan [or provider] for any  pricing  discounts,
 rebates  of  any  kind, inflationary payments, credits, clawbacks, fees,
 grants, chargebacks, reimbursements, or other benefits received  by  the
 pharmacy  benefit  manager.  [The  pharmacy benefit manager shall ensure
 that any portion of such income, payments,  and  financial  benefits  is
 passed  through  to  the  health  plan or provider in full to reduce the
 reportable ingredient cost.] The health plan [or  provider]  shall  have
 access  to  all  financial  and  utilization information of the pharmacy
 benefit manager in relation  to  pharmacy  benefit  management  services
 provided to the health plan [or provider].
   (d)  The  pharmacy  benefit  manager  shall disclose in writing to the
 health plan [or provider] the terms and conditions of  any  contract  or
 arrangement  between the pharmacy benefit manager and any party relating
 to pharmacy benefit management services provided to the health plan  [or
 provider]  including  but  not  limited  to, dispensing fees paid to the
 pharmacies.
   (e) The pharmacy benefit manager shall  disclose  in  writing  to  the
 health  plan  [or  provider] any activity, policy, practice, contract or
 arrangement of the pharmacy benefit manager that directly or  indirectly
 presents  any  conflict  of interest with the pharmacy benefit manager's
 relationship with or obligation to the health plan [or provider].
   (f) Any information required to be disclosed  by  a  pharmacy  benefit
 manager  to  a  health  plan  [or  provider]  under this section that is
 reasonably designated by the pharmacy benefit manager as proprietary  or
 trade  secret  information shall be kept confidential by the health plan
 [or provider], except as required or permitted by law, including disclo-
 sure necessary to prosecute or defend  any  legitimate  legal  claim  or
 cause  of  action.  DESIGNATION  OF  INFORMATION AS PROPRIETARY OR TRADE
 SECRET INFORMATION UNDER THIS SUBDIVISION SHALL HAVE NO  EFFECT  ON  THE
 OBLIGATIONS  OF  ANY  PHARMACY BENEFIT MANAGER OR HEALTH PLAN TO PROVIDE
 THAT INFORMATION TO THE DEPARTMENT OF HEALTH OR THE DEPARTMENT OF FINAN-
 CIAL SERVICES.
   (g) The superintendent, in consultation with the commissioner[:
 A. 8838                             4

   (i)] may make regulations defining,  limiting,  and  relating  to  the
 duties, obligations, requirements and other provisions relating to phar-
 macy benefit managers under this subdivision[; and
   (ii)  shall  establish,  by regulation, minimum standards for pharmacy
 benefit management services which  shall  address  the  elimination  of:
 conflicts  of  interest  between  pharmacy  benefit managers and covered
 individuals, health benefit plans  and  health  care  providers;  spread
 pricing; and deceptive practices, anti-competitive practices, and unfair
 claims practices.
   (h) A health care provider and a covered individual shall be deemed to
 be third-party beneficiaries of the duties, obligations and requirements
 applicable  to the pharmacy benefit manager under this section and shall
 be entitled to legal or equitable relief for any injury or loss  to  the
 health  care  provider or the covered individual caused by any violation
 of such duties, obligations or requirements].
   3. Prescriptions.  A pharmacy benefit manager may  not  substitute  or
 cause  the substituting of one prescription drug for another in dispens-
 ing a prescription, or alter or cause the altering of  the  terms  of  a
 prescription, except with the approval of the prescriber or as explicit-
 ly required or permitted by law, INCLUDING REGULATIONS OF THE DEPARTMENT
 OF  FINANCIAL  SERVICES  OR THE DEPARTMENT OF HEALTH. THE SUPERINTENDENT
 AND COMMISSIONER, IN COORDINATION WITH EACH  OTHER,  ARE  AUTHORIZED  TO
 PROMULGATE  REGULATIONS  TO  DETERMINE WHEN SUBSTITUTION OF PRESCRIPTION
 DRUGS MAY BE REQUIRED OR PERMITTED.
   5. Contract provisions.   No  pharmacy  benefit  manager  shall,  with
 respect to contracts between such pharmacy benefit manager and a pharma-
 cy  or,  alternatively,  such  pharmacy benefit manager and a pharmacy's
 contracting agent, such as a pharmacy services administrative  organiza-
 tion:
   (a)  prohibit  or penalize a pharmacist or pharmacy from disclosing to
 an individual purchasing a prescription medication  information  regard-
 ing:
   (i) the cost of the prescription medication to the individual, or
   (ii)  the  availability  of any therapeutically equivalent alternative
 medications or alternative methods of purchasing the prescription  medi-
 cation, including but not limited to, paying a cash price; OR
   (b)  charge or collect from an individual a copayment that exceeds the
 total submitted charges by the pharmacy for which the pharmacy is  paid.
 If an individual pays a copayment, the pharmacy shall retain the adjudi-
 cated  costs and the pharmacy benefit manager shall not redact or recoup
 the adjudicated cost[; or
   (c) require a pharmacy to meet any pharmacy accreditation standard  or
 recertification  requirement  inconsistent with, more stringent than, or
 in addition to federal and state requirements for licensure as a pharma-
 cy].
   § 2. Article 29 of the insurance law, as added by  a  chapter  of  the
 laws of 2021 amending the public health law relating to pharmacy benefit
 managers;  amending  the  insurance  law  relating  to  registration and
 licensing of pharmacy benefit managers; and repealing certain provisions
 of the public health law relating thereto, as  proposed  in  legislative
 bills numbers S. 3762 and A. 1396, is amended to read as follows:
                                ARTICLE 29
                         PHARMACY BENEFIT MANAGERS
 Section 2901. Definitions.
         2902. Acting without a registration.
         2903. Registration requirements for pharmacy benefit managers.
 A. 8838                             5

         2904. Reporting requirements for pharmacy benefit managers.
         2905. Acting without a license.
         2906. Licensing of a pharmacy benefit manager.
         2907. Revocation or suspension of a registration or license of a
                 pharmacy benefit manager.
         2908. Penalties for violations.
         2909. Stay or suspension of superintendent's determination.
         2910. Revoked registrations or licenses.
         2911. ADDITIONAL OBLIGATIONS.
         2912. Change of address.
         [2912.] 2913. Applicability of other laws.
         [2913.] 2914. Assessments.
   § 2901. Definitions. For purposes of this article:
   (a)  "Controlling  person"  is any person or other entity who or which
 directly or indirectly has the power to direct or cause to  be  directed
 the management, control or activities of a pharmacy benefit manager.
   (b)  The  terms  "covered  individual",  "health  plan [or provider]",
 "pharmacy benefit manager" and "pharmacy  benefit  management  services"
 have the same meanings as defined by section two hundred eighty-a of the
 public health law.  THE SUPERINTENDENT IS EXPRESSLY AUTHORIZED TO INTER-
 PRET THESE TERMS AS IF THE DEFINITIONS WERE STATED WITHIN THIS ARTICLE.
   §  2902.  Acting  without a registration. (a) No person, firm, associ-
 ation, corporation or other entity may act as a pharmacy benefit manager
 on or after [April] JUNE first, two thousand [twenty-one] TWENTY-TWO and
 prior to January first, two thousand [twenty-three] TWENTY-FOUR, without
 having a valid registration as a pharmacy benefit manager filed with the
 superintendent in accordance  with  this  article  and  any  regulations
 promulgated thereunder.
   (b)  Any  person,  firm, association, corporation or other entity that
 violates this section shall, in addition to any other  penalty  provided
 by law, be liable for restitution AND COMPENSATORY DAMAGES to any health
 plan  [or  provider],  PHARMACY  or  covered individual, OR OTHER PERSON
 harmed by the violation and shall also  be  subject  to  a  penalty  not
 exceeding  of  the  greater  of  (1) [one] FOUR thousand dollars for the
 first violation and [two] TEN thousand [five hundred] dollars  for  each
 subsequent  violation  or  (2)  the  aggregate  economic  gross receipts
 attributable to all violations.
   § 2903. Registration requirements for pharmacy benefit  managers.  (a)
 Every pharmacy benefit manager that performs pharmacy benefit management
 services on or after [April] JUNE first, two thousand [twenty-one] TWEN-
 TY-TWO  and  prior to January first, two thousand [twenty-three] TWENTY-
 FOUR shall register with the superintendent in a  manner  acceptable  to
 the  superintendent,  and shall pay a fee of [one] FOUR thousand dollars
 for each year or fraction of a year in which the registration  shall  be
 valid.  The  superintendent,  in  consultation  with the commissioner of
 health, may establish, by  regulation,  minimum  registration  standards
 required for a pharmacy benefit manager. The superintendent can reject a
 registration  application filed by a pharmacy benefit manager that fails
 to comply with the minimum registration standards.
   (b) For each business entity, the officer or officers and director  or
 directors  named  in the application shall be designated responsible for
 the business entity's compliance with the financial services and  insur-
 ance laws, rules and regulations of this state.
   (c) Every registration will expire on December thirty-first, two thou-
 sand [twenty-two] TWENTY-THREE regardless of when registration was first
 made.
 A. 8838                             6
 
   (d)  Every  pharmacy  benefit  manager  that performs pharmacy benefit
 management services at any time prior to [April] JUNE first,  two  thou-
 sand  [twenty-one]  TWENTY-TWO,  shall  make  the  registration  and fee
 payment required by subsection (a) of this section  on  or  before  June
 first, two thousand [twenty-one] TWENTY-TWO.  Any other pharmacy benefit
 manager  shall  make  the  registration  and  fee  payment  required  by
 subsection (a) of this section  prior  to  performing  pharmacy  benefit
 management services.
   (e)  Registrants under this section shall be subject to examination by
 the superintendent as often as the superintendent may deem it necessary.
 The superintendent may promulgate regulations establishing  methods  and
 procedures  for  facilitating and verifying compliance with the require-
 ments of this article and such other regulations as necessary to enforce
 the provisions of this article.
   § 2904. Reporting requirements for pharmacy benefit managers.   (a)(1)
 On  or  before July first of each year, [beginning in two thousand twen-
 ty-one,] every pharmacy benefit manager shall report to the  superinten-
 dent,  in a statement subscribed and affirmed as true under penalties of
 perjury, the information  requested  by  the  superintendent  including,
 without limitation,
   (i) any pricing discounts, rebates of any kind, inflationary payments,
 credits,  clawbacks,  fees,  grants,  chargebacks, reimbursements, other
 financial or other reimbursements, incentives, inducements,  refunds  or
 other benefits received by the pharmacy benefit manager; and
   (ii)  the terms and conditions of any contract or arrangement, includ-
 ing other financial or other reimbursements incentives,  inducements  or
 refunds  between the pharmacy benefit manager and any other party relat-
 ing to pharmacy benefit management services provided to  a  health  plan
 [or  provider]  including  but  not  limited to, dispensing fees paid to
 pharmacies.
   (2) The superintendent may require the filing of  quarterly  or  other
 statements,  which  shall be in such form and shall contain such matters
 as the superintendent shall prescribe.
   [(2)] (3) The superintendent  may  address  to  any  pharmacy  benefit
 manager  or  its  officers  any  inquiry in relation to its provision of
 pharmacy benefit management services or any matter connected  therewith.
 Every  pharmacy  benefit  manager  or person so addressed shall reply in
 writing to such inquiry promptly and truthfully, and  such  reply  shall
 be, if required by the superintendent, subscribed by such individual, or
 by  such  officer  or  officers  of the pharmacy benefit manager, as the
 superintendent shall designate, and affirmed by them as true  under  the
 penalties of perjury.
   (b)  In  the  event  any  pharmacy  benefit manager or person does not
 submit the report required by paragraph one of subsection  (a)  of  this
 section or does not provide a good faith response to an inquiry from the
 superintendent  pursuant  to  paragraph [two] THREE of subsection (a) of
 this section within a time period specified by the superintendent of not
 less than fifteen business days, the  superintendent  is  authorized  to
 levy  a  civil  penalty, after notice and hearing, against such pharmacy
 benefit manager or person not to exceed [one] FOUR thousand dollars  per
 day for each day beyond the date the report is due or the date specified
 by the superintendent for response to the inquiry.
   (c)  All  information,  documents and material disclosed by a pharmacy
 benefit manager under this  section  and  in  the  possession  or  under
 control  of  the  superintendent  shall  be  deemed confidential and not
 subject to [public] disclosure except [(1) by court order when  relevant
 A. 8838                             7

 and  material in a civil or criminal action or proceeding, or (2)] where
 and as the superintendent determines that disclosure is  in  the  public
 interest.  This subsection shall not apply to information, documents and
 materials  where  they  are in the possession and under the control of a
 person or entity other than the superintendent.
   § 2905. Acting without a license. (a) No  person,  firm,  association,
 corporation  or other entity may act as a pharmacy benefit manager on or
 after January first, two  thousand  [twenty-three]  TWENTY-FOUR  without
 having  authority to do so by virtue of a license issued in force pursu-
 ant to the provisions of this article.
   (b) Any person, firm, association, corporation or  other  entity  that
 violates  this  section shall, in addition to any other penalty provided
 by law, BE LIABLE FOR RESTITUTION AND COMPENSATORY DAMAGES TO ANY HEALTH
 PLAN, PHARMACY,  COVERED  INDIVIDUAL  OR  OTHER  PERSON  HARMED  BY  THE
 VIOLATION  AND  FURTHER  SHALL be subject to a penalty not exceeding the
 greater of (1) [one] FOUR thousand dollars for the first  violation  and
 [two]  TEN thousand [five hundred] dollars for each subsequent violation
 or (2)  the  aggregate  economic  gross  receipts  attributable  to  all
 violations, AS DETERMINED BY THE SUPERINTENDENT AT A HEARING.
   §  2906.  Licensing of a pharmacy benefit manager. (a) The superinten-
 dent may issue a pharmacy benefit manager's license to any person, firm,
 association or corporation who or that has complied  with  the  require-
 ments  of  this article, including regulations promulgated by the super-
 intendent. The superintendent, in consultation with the commissioner  of
 health,  [may] SHALL establish, by regulation, minimum standards for the
 issuance of a license to a pharmacy benefit manager.
   (b) The minimum standards  established  under  this  subsection  [may]
 SHALL  CONTAIN  BOTH  PREREQUISITES  FOR  THE  ISSUANCE OF A LICENSE AND
 REQUIREMENTS FOR MAINTENANCE OF A LICENSE  AND  SHALL  address,  without
 limitation:
   (1) conflicts of interest between pharmacy benefit managers and health
 plans or insurers;
   (2) deceptive practices in connection with the performance of pharmacy
 benefit management services;
   (3)  anti-competitive  practices in connection with the performance of
 pharmacy benefit management services;
   (4) unfair claims practices in  connection  with  the  performance  of
 pharmacy benefit management services; [and]
   (5)  PRICING  MODELS  USED BY PHARMACY BENEFIT MANAGERS BOTH FOR THEIR
 SERVICES AND FOR THE PAYMENT OF SERVICES TO THE PHARMACY BENEFIT  MANAG-
 ER;
   (6)  STANDARDS AND PRACTICES USED IN THE CREATION OF PHARMACY NETWORKS
 AND CONTRACTING WITH NETWORK PHARMACIES AND OTHER  PROVIDERS,  INCLUDING
 PROMOTION  AND  USE  OF INDEPENDENT AND COMMUNITY PHARMACIES AND PATIENT
 ACCESS AND MINIMIZING EXCESSIVE CONCENTRATION AND  VERTICAL  INTEGRATION
 OF MARKETS; AND
   (7) protection of consumers.
   (c)[(1) Any such license issued to a firm or association shall author-
 ize  all  of  the  members of the firm or association and any designated
 employees to act as pharmacy benefit managers under the license, and all
 such persons shall be named in the application and supplements thereto.
   (2) Any such license issued to a corporation shall  authorize  all  of
 the  officers  and any designated employees and directors thereof to act
 as pharmacy benefit managers on behalf of such corporation, and all such
 persons shall be named in the application and supplements thereto.
 A. 8838                             8

   (3)] For each business entity, the officer or officers and director or
 directors named in the application shall be designated  responsible  for
 the  business  entity's  compliance  with  the insurance laws, rules and
 regulations of this state.
   (d)(1)  Before a pharmacy benefit manager's license shall be issued or
 renewed, the prospective licensee shall properly file in the  office  of
 the  superintendent  [a written] AN application therefor in such form or
 forms and supplements thereto as the superintendent prescribes, and  pay
 a  fee  of  [two]  EIGHT thousand dollars for each year or fraction of a
 year in which a license shall be valid.
   (2) Every pharmacy benefit manager's license shall  expire  thirty-six
 months  after  the  date of issue. Every license issued pursuant to this
 section may be renewed for the ensuing period of thirty-six months  upon
 the filing of an application in conformity with this subsection.
   (e)[(1)] If an application for a renewal license shall have been filed
 with  the superintendent [before November first of the year of] AT LEAST
 TWO MONTHS BEFORE ITS expiration, then the license sought to be  renewed
 shall continue in full force and effect either until the issuance by the
 superintendent  of  the  renewal  license applied for or until five days
 after the superintendent  shall  have  refused  to  issue  such  renewal
 license and given notice of such refusal to the applicant.
   [(2) Before refusing to renew any license pursuant to this section for
 which  a renewal application has been filed pursuant to paragraph one of
 this subsection, the superintendent shall notify the  applicant  of  the
 superintendent's  intention  to  do  so  and shall give such applicant a
 hearing.]
   (f) The superintendent may refuse to issue a pharmacy  benefit  manag-
 er's  license if, in the superintendent's judgment, the applicant or any
 member, principal, officer or director of the applicant, is  not  trust-
 worthy  and competent to act as or in connection with a pharmacy benefit
 manager, or that any of the foregoing has given cause for revocation  or
 suspension  of  such license, or has failed to comply with any prerequi-
 site for the issuance of such license.
   (g) Licensees and applicants for a license under this section shall be
 subject to examination by the superintendent as often as the superinten-
 dent may deem it expedient.  The  superintendent  may  promulgate  regu-
 lations establishing methods and procedures for facilitating and verify-
 ing  compliance  with  the  requirements  of this section and such other
 regulations as necessary.
   (h) The  superintendent  may  issue  a  replacement  for  a  currently
 in-force license that has been lost or destroyed. Before the replacement
 license  shall  be  issued,  there shall be on file in the office of the
 superintendent  a  written  application  for  the  replacement  license,
 affirming  under  penalty  of perjury that the original license has been
 lost or destroyed, together with a fee of [two] EIGHT hundred dollars.
   (i) No pharmacy benefit manager shall engage in any practice or action
 that a health plan [or provider] is prohibited from engaging in pursuant
 to this chapter.
   § 2907. Revocation or suspension of a registration  or  license  of  a
 pharmacy  benefit manager. (a) The superintendent [may refuse to renew,]
 may revoke, or may suspend for a period  the  superintendent  determines
 the  registration  or  license of any pharmacy benefit manager if, after
 notice and hearing, the superintendent determines that the registrant or
 licensee or any member, principal,  officer,  director,  or  controlling
 person of the registrant or licensee, has:
 A. 8838                             9
 
   (1)  violated  any insurance laws, section two hundred eighty-a of the
 public health law or violated any regulation, subpoena or order  of  the
 superintendent  or  of  another  state's  insurance commissioner, or has
 violated any law in the course of his or her dealings in  such  capacity
 after  such  REGISTRATION OR license has been issued or renewed pursuant
 to [section two thousand nine hundred six of] this article;
   (2) provided materially incorrect, materially  misleading,  materially
 incomplete  or  materially  untrue  information  in  the registration or
 license application;
   (3) obtained or attempted to obtain a registration or license  through
 misrepresentation or fraud;
   (4)(A) used fraudulent, coercive or dishonest practices;
   (B) demonstrated incompetence;
   (C) demonstrated untrustworthiness; or
   (D) demonstrated financial irresponsibility in the conduct of business
 in this state or elsewhere;
   (5)  improperly  withheld,  misappropriated or converted any monies or
 properties received in the course of business in  this  state  or  else-
 where;
   (6)  intentionally  misrepresented  the terms of an actual or proposed
 insurance contract;
   (7) admitted or been found to  have  committed  any  insurance  unfair
 trade practice or fraud;
   (8)  had  a  pharmacy  benefit manager registration or license, or its
 equivalent, denied, suspended or revoked in any other  state,  province,
 district or territory;
   (9)  failed  to pay state income tax or comply with any administrative
 or court order directing payment of state income tax; or
   (10) ceased to meet the requirements  for  registration  or  licensure
 under this article.
   (b)  Before  revoking or suspending the registration or license of any
 pharmacy benefit manager pursuant to the provisions of this article, the
 superintendent shall give notice to the registrant or licensee  [and  to
 every  sub-licensee]  and shall hold, or cause to be held, a hearing not
 less than ten days after the giving of such notice.
   (c) If a registration or license pursuant to the  provisions  of  this
 article  is  revoked or suspended by the superintendent, then the super-
 intendent shall forthwith give notice to the registrant or licensee.
   (d) The revocation or suspension of any registration or license pursu-
 ant to the provisions of this article  shall  terminate  forthwith  such
 registration  or  license  and the authority conferred thereby [upon all
 sub-licensees]. For good cause shown, the superintendent may  delay  the
 effective date of a revocation or suspension to permit the registrant or
 licensee  to  satisfy  some  or  all  of  its contractual obligations to
 perform pharmacy benefit management services in the state.
   (e)(1) No individual, corporation, firm or association whose registra-
 tion or license as a pharmacy benefit manager has been revoked  pursuant
 to  subsection  (a) of this section, and no firm or association of which
 such individual is a member, and no corporation of which such individual
 is an officer or director, and no controlling person of  the  registrant
 or  licensee  shall  be  entitled  to obtain any registration or license
 under the provisions of this article for a minimum period  of  one  year
 after  such  revocation,  or, if such revocation be judicially reviewed,
 for a minimum period of one year after the final  determination  thereof
 affirming the action of the superintendent in revoking such license.
 A. 8838                            10
 
   (2) If any such registration or license held by a firm, association or
 corporation  be  revoked,  no  member of such firm or association and no
 officer or director of such corporation or any controlling person of the
 registrant or licensee shall be entitled to obtain any  registration  or
 license[,  or  to be named as a sub-licensee in any such license,] under
 this article for the same period  of  time,  unless  the  superintendent
 determines,  after  notice  and  hearing,  that  such member, officer or
 director was not personally at fault in the matter on account  of  which
 such registration or license was revoked.
   (f)  If  any  corporation, firm, association or person aggrieved shall
 file with the superintendent a verified complaint  setting  forth  facts
 tending  to  show  sufficient ground for the revocation or suspension of
 any pharmacy benefit manager's registration or license, and  the  super-
 intendent  finds  the complaint credible, then the superintendent shall,
 after notice and a  hearing,  determine  whether  such  registration  or
 license shall be suspended or revoked.
   (g)  The  superintendent  shall  retain  the  authority to enforce the
 provisions of and impose any penalty or remedy authorized by this  chap-
 ter  against  any  person  or  entity  who is under investigation for or
 charged with a violation of this chapter, even if the person's or  enti-
 ty's registration or license has been surrendered, or has expired or has
 lapsed by operation of law.
   (h)  A  registrant or licensee subject to this article shall report to
 the superintendent any administrative action taken  against  the  regis-
 trant  or  licensee  in  another jurisdiction or by another governmental
 agency in this state within thirty days of the final disposition of  the
 matter.  This report shall include a copy of the order, consent to order
 or other relevant legal documents.
   (i)  Within thirty days of the initial pretrial hearing date, a regis-
 trant or licensee subject to this article shall  report  to  the  super-
 intendent  any  criminal prosecution of the registrant or licensee taken
 in any jurisdiction. The report shall include  a  copy  of  the  initial
 complaint  filed,  the  order  resulting  from the hearing and any other
 relevant legal documents.
   § 2908. Penalties for violations. (a) The superintendent, in [lieu  of
 revoking  or  suspending  the registration or license of a registrant or
 licensee in accordance with the provisions of this article] ADDITION  TO
 ANY  OTHER  POWER  CONFERRED BY LAW, may in any one proceeding by order,
 require the registrant or licensee WHO VIOLATES THE PROVISIONS  OF  THIS
 ARTICLE OR SECTION TWO HUNDRED EIGHTY-A OF THE PUBLIC HEALTH LAW, OR ANY
 REGULATION  PROMULGATED THEREUNDER TO MAKE RESTITUTION AND PAY COMPENSA-
 TORY DAMAGES, IN AN AMOUNT TO BE DETERMINED BY  THE  SUPERINTENDENT,  TO
 ANY  PERSON INJURED BY THE UNLAWFUL ACTIONS OF SAID REGISTRANT OR LICEN-
 SEE AND to pay to the people of this  state  a  penalty  in  a  sum  not
 exceeding  the  greater  of  (1)  [one]  FOUR  thousand dollars for each
 offense and [two] TEN thousand [five hundred] dollars  for  each  subse-
 quent  violation or (2) the aggregate gross receipts attributable to all
 offenses.
   (b) Upon the failure of such a  registrant  or  licensee  to  pay  the
 penalty ordered pursuant to subsection (a) of this section within twenty
 days  after  the  mailing of the order, postage prepaid, registered, and
 addressed to the last known place of business of  the  licensee,  unless
 the  order  is  stayed by an order of a court of competent jurisdiction,
 the superintendent may revoke the registration or license of the  regis-
 trant  or licensee or may suspend the same for such period as the super-
 intendent determines.
 A. 8838                            11
 
   § 2909. Stay or  suspension  of  superintendent's  determination.  The
 commencement  of  a  proceeding under article seventy-eight of the civil
 practice law and rules, to review the action of  the  superintendent  in
 suspending  or  revoking or refusing to renew any certificate under this
 article,  shall  stay  such action of the superintendent for a period of
 thirty days. Such stay shall not be extended for a longer period  unless
 the  court  shall  determine,  after  a preliminary hearing of which the
 superintendent is notified forty-eight hours in advance, that a stay  of
 the  superintendent's  action pending the final determination or further
 order of the court will not unduly injure the interests of the people of
 the state.
   § 2910. Revoked registrations or licenses.  (a)(1)  No  person,  firm,
 association,  corporation  or  other entity subject to the provisions of
 this article whose registration or license under this article  has  been
 revoked,  or  whose registration or license to engage in the business of
 pharmacy benefit management in any capacity  has  been  revoked  by  any
 other  state  or territory of the United States shall become employed or
 appointed by a pharmacy benefit manager as an officer, director,  manag-
 er,  controlling person or for other services, without the prior written
 approval of the superintendent, unless such services are for maintenance
 or are clerical or ministerial in nature.
   (2) No person, firm, association, corporation or other entity  subject
 to  the provisions of this article shall knowingly employ or appoint any
 person or entity whose registration or license issued under this article
 has been revoked, or whose registration or  license  to  engage  in  the
 business of pharmacy benefit management in any capacity has been revoked
 by  any  other  state  or territory of the United States, as an officer,
 director, manager, controlling person or for other services, without the
 prior written approval of the superintendent, unless such  services  are
 for maintenance or are clerical or ministerial in nature.
   (3)  No  corporation  or partnership subject to the provisions of this
 article shall knowingly permit any person whose registration or  license
 issued  under  this  article  has been revoked, or whose registration or
 license to engage in the business of pharmacy benefit management in  any
 capacity has been revoked by any other state, or territory of the United
 States,  to  be a shareholder or have an interest in such corporation or
 partnership, nor shall any such person become a shareholder  or  partner
 in  such  corporation or partnership, without the prior written approval
 of the superintendent.
   (b) The superintendent may  approve  the  employment,  appointment  or
 participation  of any such person whose registration or license has been
 revoked:
   (1) if the superintendent determines that the duties and  responsibil-
 ities  of  such  person  are subject to appropriate supervision and that
 such duties and responsibilities will not have an  adverse  effect  upon
 the  public, other registrants or licensees, or the registrant or licen-
 see proposing employment or appointment of such person; or
   (2) if such person has filed  an  application  for  reregistration  or
 relicensing pursuant to this article and the application for reregistra-
 tion  or  relicensing has not been approved or denied within one hundred
 twenty days following the  filing  thereof,  unless  the  superintendent
 determines  within  the said time that employment or appointment of such
 person by a registrant or licensee in the conduct of a pharmacy  benefit
 management business would not be in the public interest.
   (c) The provisions of this section shall not apply to the ownership of
 shares  of any corporation registered or licensed pursuant to this arti-
 A. 8838                            12
 
 cle if the shares of such corporation are publicly held  and  traded  in
 the  over-the-counter market or upon any national or regional securities
 exchange.
   §  2911. ADDITIONAL OBLIGATIONS.  (A) A PHARMACY BENEFIT MANAGER SHALL
 ASSIST A HEALTH PLAN IN ANSWERING ANY INQUIRY MADE UNDER  SECTION  THREE
 HUNDRED EIGHT OF THIS CHAPTER.
   (B)  NO  PHARMACY  BENEFIT MANAGER SHALL VIOLATE ANY PROVISIONS OF THE
 PUBLIC HEALTH LAW APPLICABLE TO PHARMACY BENEFIT MANAGERS.
   (C) NO PHARMACY BENEFIT MANAGER SHALL PERMIT ANY SUBCONTRACTOR, AFFIL-
 IATE, SUBSIDIARY, OR OTHER  INDIVIDUAL  OR  ENTITY  PERFORMING  PHARMACY
 BENEFIT  MANAGEMENT  SERVICES FOR A PHARMACY BENEFIT MANAGER TO TAKE ANY
 ACTION WHICH WOULD VIOLATE ANY PROVISION OF LAW IF TAKEN BY THE PHARMACY
 BENEFIT MANAGER. A PHARMACY BENEFIT MANAGER SHALL BE RESPONSIBLE FOR THE
 ACTIONS OF ANY SUBCONTRACTOR, AFFILIATE, SUBSIDIARY, OR OTHER INDIVIDUAL
 OR ENTITY WHO VIOLATES ANY PROVISION OF THIS ARTICLE IN  PERFORMANCE  OF
 ANY  PHARMACY  BENEFIT  MANAGEMENT  SERVICES  FOR  SUCH PHARMACY BENEFIT
 MANAGER WHETHER OR NOT THE PHARMACY BENEFIT MANAGER  WAS  AWARE  OF,  OR
 SANCTIONED, THE CONDUCT.
   § 2912. Change of address. A registrant or licensee under this article
 shall inform the superintendent by a means acceptable to the superinten-
 dent of a change of address within thirty days of the change.
   §  [2912] 2913.   Applicability of other laws. Nothing in this article
 shall be construed to exempt a pharmacy benefit manager  from  complying
 with  the provisions of articles twenty-one and forty-nine of this chap-
 ter and articles forty-four  and  forty-nine  and  section  two  hundred
 eighty-a of the public health law, section three hundred sixty-four-j of
 the  social  services law, or any other provision of this chapter or the
 financial services law.
   § [2913] 2914.   Assessments. [Pharmacy] NOTWITHSTANDING  SECTION  TWO
 HUNDRED  SIX  OF  THE  FINANCIAL SERVICES LAW, PHARMACY benefit managers
 that file a registration with the department  or  are  licensed  by  the
 department  shall  be  assessed  by the superintendent for the operating
 expenses of the department that are [solely] attributable to  regulating
 such pharmacy benefit managers in such proportions as the superintendent
 shall deem just and reasonable.
   § 3. The state finance law is amended by adding a new section 99-oo to
 read as follows:
   § 99-OO. PHARMACY BENEFIT MANAGER REGULATORY FUND.  1. THERE IS HEREBY
 ESTABLISHED  IN  THE  JOINT  CUSTODY  OF  THE  STATE COMPTROLLER AND THE
 COMMISSIONER OF TAXATION AND FINANCE A SPECIAL FUND TO BE KNOWN  AS  THE
 "PHARMACY BENEFIT MANAGER (PBM) REGULATORY FUND".
   2.  MONEY  ALLOCATED TO THE PBM REGULATORY FUND SHALL BE KEPT SEPARATE
 AND SHALL NOT BE COMMINGLED WITH ANY OTHER FUNDS IN THE CUSTODY  OF  THE
 STATE COMPTROLLER.
   3.  SUCH  FUND  SHALL  CONSIST  OF MONEY RECEIVED BY THE STATE AS FEES
 UNDER ARTICLE TWENTY-NINE OF THE  INSURANCE  LAW  OR  PENALTIES  ORDERED
 UNDER  ARTICLE  TWENTY-NINE  OF  THE  INSURANCE LAW AND ALL OTHER MONIES
 APPROPRIATED, CREDITED, OR TRANSFERRED THERETO FROM ANY  OTHER  FUND  OR
 SOURCE  PURSUANT TO LAW. ALL MONIES SHALL REMAIN IN SUCH FUND UNLESS AND
 UNTIL DIRECTED BY STATUTE OR APPROPRIATION.
   § 4. Section 4 of a chapter of the laws of 2021  amending  the  public
 health law relating to pharmacy benefit managers; amending the insurance
 law relating to registration and licensing of pharmacy benefit managers;
 and repealing certain provisions of the public health law relating ther-
 eto,  as  proposed  in legislative bills numbers S. 3762 and A. 1396, is
 amended to read as follows:
 A. 8838                            13
 
   § 4. 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 feder-
 al law or regulation, that shall not affect the validity  or  effective-
 ness  of any other provision of this act, or of any other application of
 any provision of this act.  IN PARTICULAR, WITH RESPECT TO PARAGRAPH (A)
 OF SUBDIVISION 1 OF SECTION 280-A OF THE PUBLIC HEALTH LAW, AS ADDED  BY
 SECTION  ONE OF THIS ACT, IF IT IS HELD THAT ANY CATEGORY OF HEALTH PLAN
 MAY NOT BE LAWFULLY INCLUDED IN  THE  DEFINITION,  THEN  IT    SHALL  BE
 EXCLUDED  FROM  THE  DEFINITION  AND THAT SHALL NOT EXCLUDE OTHER HEALTH
 PLANS FROM THE DEFINITION.
   § 5. Section 5 of a chapter of the laws of 2021  amending  the  public
 health law relating to pharmacy benefit managers; amending the insurance
 law relating to registration and licensing of pharmacy benefit managers;
 and repealing certain provisions of the public health law relating ther-
 eto,  as  proposed  in legislative bills numbers S. 3762 and A. 1396, is
 amended to read as follows:
   § 5. This act shall take effect [on the ninetieth day after  it  shall
 become  a  law  and  shall  apply to any contract for providing pharmacy
 benefit management made or renewed on  or  after  that  date.  Effective
 immediately,  the  superintendent  of financial services and the commis-
 sioner of health shall make regulations and take other  actions  reason-
 ably necessary to implement this act on that date] IMMEDIATELY.
   §  6.  This  act  shall take effect immediately; provided however that
 sections one, two, three and four of this act shall take effect  on  the
 same date and in the same manner as a chapter of the laws of 2021 amend-
 ing  the public health law relating to pharmacy benefit managers; amend-
 ing the insurance law relating to registration and licensing of pharmacy
 benefit managers; and repealing certain provisions of the public  health
 law  relating thereto, as proposed in legislative bills numbers S.  3762
 and A. 1396, takes effect.