S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   8901
 
                             I N  S E N A T E
 
                              April 27, 2022
                                ___________
 
 Introduced  by  Sen.  CLEARE -- read twice and ordered printed, and when
   printed to be committed to the Committee on Insurance
 
 AN ACT to amend the insurance law, in relation to requiring a referenced
   rate for prescription drugs
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:

   Section  1. The insurance law is amended by adding a new section 111-a
 to read as follows:
   § 111-A. PILOT PROGRAM ON REFERENCED RATE FOR PRESCRIPTION DRUGS.  (A)
 A  PILOT  PROGRAM IS HEREBY CREATED TO STUDY THE POSSIBILITY OF CONTROL-
 LING EXCESSIVE AND UNCONSCIONABLE PRICES FOR PRESCRIPTION DRUGS.
   (B) DEFINITIONS. AS USED IN THIS SECTION, THE  FOLLOWING  TERMS  SHALL
 HAVE THE FOLLOWING MEANINGS:
   (1)  "PRESCRIPTION DRUG" SHALL HAVE THE SAME MEANING AS IN SUBDIVISION
 SEVEN OF SECTION SIXTY-EIGHT HUNDRED TWO OF THE EDUCATION LAW, FOR WHICH
 A PRESCRIPTION IS REQUIRED UNDER THE FEDERAL  FOOD,  DRUG  AND  COSMETIC
 ACT.  ANY  DRUG THAT DOES NOT REQUIRE A PRESCRIPTION UNDER SUCH ACT, BUT
 WHICH WOULD OTHERWISE MEET THE  CRITERIA  UNDER  ARTICLE  TWO-A  OF  THE
 PUBLIC  HEALTH LAW FOR INCLUSION ON THE PREFERRED DRUG LIST MAY BE ADDED
 TO THE PREFERRED DRUG LIST UNDER ARTICLE TWO-A OF THE PUBLIC HEALTH LAW;
 AND, IF SO INCLUDED, SHALL BE CONSIDERED TO BE A PRESCRIPTION  DRUG  FOR
 PURPOSES  OF  THIS  SECTION;  PROVIDED  THAT  IT  SHALL  BE ELIGIBLE FOR
 REIMBURSEMENT UNDER A STATE PUBLIC HEALTH PLAN WHEN ORDERED BY  A  PRES-
 CRIBER  AUTHORIZED  TO  PRESCRIBE UNDER THE STATE PUBLIC HEALTH PLAN AND
 THE PRESCRIPTION IS SUBJECT TO THE APPLICABLE PROVISIONS OF THIS SECTION
 AND PARAGRAPH (A) OF SUBDIVISION FOUR OF SECTION  THREE  HUNDRED  SIXTY-
 FIVE-A OF THE SOCIAL SERVICES LAW.
   (2)  "WHOLESALE  ACQUISITION  COST"  SHALL  HAVE  THE  SAME MEANING AS
 DEFINED IN 42 U.S.C. § 1395W-3A.
   (3) "STATE ENTITY" MEANS ANY  AGENCY  OF  THE  STATE  GOVERNMENT  THAT
 PURCHASES  PRESCRIPTION  DRUGS ON BEHALF OF THE STATE FOR A PERSON WHOSE
 HEALTH CARE IS PAID FOR BY  THE  STATE,  INCLUDING  ANY  AGENT,  VENDOR,
 FISCAL  AGENT, CONTRACTOR, OR OTHER PARTY ACTING ON BEHALF OF THE STATE.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD14279-03-2
              

 S. 8901                             2
 
 "STATE ENTITY" SHALL NOT INCLUDE THE MEDICAL ASSISTANCE  PROGRAM  ESTAB-
 LISHED PURSUANT TO 42 U.S.C. § 1396 ET SEQ.
   (4)  "HEALTH PLAN" SHALL HAVE THE SAME MEANING AS DEFINED IN PARAGRAPH
 (A) OF SUBDIVISION ONE OF SECTION TWO HUNDRED  EIGHTY-A  OF  THE  PUBLIC
 HEALTH LAW.
   (5) "REFERENCED RATE" MEANS THE MAXIMUM RATE ESTABLISHED BY THE SUPER-
 INTENDENT  UTILIZING  THE  WHOLESALE  ACQUISITION COST AND OTHER PRICING
 DATA DESCRIBED IN SUBSECTION (E) OF THIS SECTION.
   (6) "REFERENCED DRUGS" MEANS ANY PRESCRIPTION DRUG SUBJECT TO A REFER-
 ENCED RATE.
   (C) PAYMENT IN EXCESS OF REFERENCED RATE PROHIBITED. (1) IT SHALL BE A
 VIOLATION OF THIS SECTION FOR A STATE ENTITY OR HEALTH PLAN TO  PURCHASE
 THE  REFERENCED  DRUGS  SUBJECT TO THIS PILOT PROGRAM AND WHICH SHALL BE
 DISPENSED OR DELIVERED TO A CONSUMER IN THE STATE, WHETHER  DIRECTLY  OR
 THROUGH  A  DISTRIBUTOR,  FOR  A COST HIGHER THAN THE REFERENCED RATE AS
 DETERMINED PURSUANT TO PARAGRAPH TWO OF SUBSECTION (E) OF THIS SECTION.
   (2) IT SHALL BE A VIOLATION OF THIS SECTION FOR ANY PHARMACY  LICENSED
 IN  THIS STATE TO PURCHASE FOR SALE OR DISTRIBUTION REFERENCED DRUGS FOR
 A COST THAT EXCEEDS THE REFERENCED RATE TO A PERSON WHOSE HEALTH CARE IS
 PROVIDED BY A STATE ENTITY OR HEALTH PLAN.
   (D) COSTLY PRESCRIPTION DRUGS. AS PART  OF  THIS  PILOT  PROGRAM,  THE
 DIRECTOR  OF  THE  EMPLOYEE  BENEFITS  DIVISION WITHIN THE DEPARTMENT OF
 CIVIL SERVICE SHALL IDENTIFY THE FIVE  MOST  COSTLY  PRESCRIPTION  DRUGS
 BASED UPON NET PRICE TIMES UTILIZATION.
   (E)  REFERENCED DRUGS DETERMINED. (1) BEGINNING WITH CALENDAR YEAR TWO
 THOUSAND TWENTY-THREE, NO LATER THAN JUNE THIRTIETH, THE DIRECTOR OF THE
 EMPLOYEE BENEFITS DIVISION WITHIN THE DEPARTMENT OF CIVIL SERVICE  SHALL
 TRANSMIT TO THE SUPERINTENDENT THE LIST OF PRESCRIPTION DRUGS REFERENCED
 IN SUBSECTION (D) OF THIS SECTION. FOR EACH OF THESE PRESCRIPTION DRUGS,
 SUCH  DIRECTOR  SHALL  ALSO PROVIDE THE TOTAL NET SPEND ON EACH OF THOSE
 PRESCRIPTION DRUGS FOR THE PREVIOUS CALENDAR YEAR.
   (2) UTILIZING THE INFORMATION  DESCRIBED  IN  PARAGRAPH  ONE  OF  THIS
 SUBSECTION, NO LATER THAN NOVEMBER FIRST, TWO THOUSAND TWENTY-THREE, THE
 SUPERINTENDENT  SHALL  CREATE  AND  PUBLISH  A  LIST ON THE DEPARTMENT'S
 WEBSITE OF SUCH DRUGS THAT SHALL BE SUBJECT TO THE REFERENCED RATE.
   (3) THE SUPERINTENDENT SHALL DETERMINE THE REFERENCED RATE BY  COMPAR-
 ING THE WHOLESALE ACQUISITION COST TO THE COST FROM ALL OF THE FOLLOWING
 SOURCES:
   (A)  ONTARIO  MINISTRY  OF HEALTH AND LONG TERM CARE AND MOST RECENTLY
 PUBLISHED ON THE ONTARIO DRUG BENEFIT FORMULARY;
   (B) REGIE DE L'ASSURANCE MALADIE DU QUEBEC AND MOST RECENTLY PUBLISHED
 ON THE QUEBEC PUBLIC DRUG PROGRAMS LIST OF MEDICATIONS;
   (C) BRITISH COLUMBIA MINISTRY OF HEALTH AND MOST RECENTLY PUBLISHED ON
 THE BC PHARMACARE FORMULARY; AND
   (D) ALBERTA MINISTRY OF HEALTH AND  MOST  RECENTLY  PUBLISHED  ON  THE
 ALBERTA DRUG BENEFIT LIST.
   (4) THE REFERENCED RATE FOR EACH PRESCRIPTION DRUG SHALL BE CALCULATED
 AS  THE  LOWEST COST AMONG THOSE RESOURCES AND THE WHOLESALE ACQUISITION
 COST. IF A SPECIFIC REFERENCED DRUG IS NOT INCLUDED WITHIN THE RESOURCES
 DESCRIBED IN PARAGRAPH THREE OF THIS SUBSECTION, THEN, FOR  THE  PURPOSE
 OF  DETERMINING  THE  REFERENCED  RATE FOR THAT DRUG, THE SUPERINTENDENT
 SHALL UTILIZE THE CEILING PRICE FOR DRUGS AS REPORTED BY THE  GOVERNMENT
 OF CANADA PATENTED MEDICINE PRICES REVIEW BOARD.
   (5)  THE  SUPERINTENDENT SHALL CALCULATE THE SAVINGS THAT ARE EXPECTED
 TO BE ACHIEVED BY SUBJECTING PRESCRIPTION DRUGS TO THE  REFERENCED  RATE
 FOR ONE PLAN YEAR. IN MAKING THIS DETERMINATION THE SUPERINTENDENT SHALL
 S. 8901                             3
 
 CONSULT  WITH  THE DIRECTOR OF THE EMPLOYEE BENEFITS DIVISION WITHIN THE
 DEPARTMENT OF CIVIL SERVICE AND THE DRUG ACCOUNTABILITY BOARD.
   (6)  THE SUPERINTENDENT SHALL PROMULGATE SUCH RULES AND REGULATIONS AS
 MAY BE NECESSARY TO CARRY OUT THIS PILOT PROGRAM.
   (F) APPLICATION OF SAVINGS. (1) ANY SAVINGS GENERATED BECAUSE  OF  THE
 REQUIREMENTS PURSUANT TO SUBSECTION (C) OF THIS SECTION SHALL BE USED TO
 REDUCE  COSTS TO CONSUMERS. ANY STATE ENTITY OR HEALTH PLAN SHALL CALCU-
 LATE SUCH SAVINGS AND UTILIZE SUCH SAVINGS DIRECTLY TO REDUCE COSTS  FOR
 ITS MEMBERS OR INSUREDS.
   (2)  NO  LATER THAN APRIL FIRST OF THE CALENDAR YEAR AFTER THE CONCLU-
 SION OF THE PILOT PROGRAM, EACH STATE ENTITY OR HEALTH PLAN  SUBJECT  TO
 THIS  SECTION SHALL SUBMIT TO THE SUPERINTENDENT A REPORT DESCRIBING THE
 SAVINGS ACHIEVED FOR EACH REFERENCED DRUG AND  HOW  THOSE  SAVINGS  WERE
 USED  TO  ACHIEVE  THE REQUIREMENTS OF PARAGRAPH ONE OF THIS SUBSECTION.
 THE SUPERINTENDENT SHALL SUBMIT A REPORT OF THE SAVINGS, IF ANY, OF  THE
 PILOT  PROGRAM  CONDUCTED PURSUANT TO THIS SECTION, TO THE GOVERNOR, THE
 TEMPORARY PRESIDENT OF THE SENATE, THE SPEAKER OF THE ASSEMBLY, AND  THE
 MINORITY  LEADERS  OF  THE SENATE AND ASSEMBLY NO LATER THAN ONE HUNDRED
 EIGHTY DAYS FOLLOWING THE CONCLUSION OF THE PLAN YEAR  SUBJECT  TO  THIS
 SECTION.  THE REPORT SHALL ALSO INCLUDE RECOMMENDATIONS ON THE FEASIBIL-
 ITY OF EXPANDING THIS PROGRAM TO OTHER PRESCRIPTION  DRUGS,  RECOMMENDA-
 TIONS  ON IMPROVEMENTS TO THE PROGRAM, AND ANY OTHER FINDINGS, RECOMMEN-
 DATIONS, OR CONCLUSIONS THE SUPERINTENDENT DEEMS NECESSARY TO UNDERSTAND
 THE BROADER EFFECTS OF THIS PILOT PROGRAM.
   (G) WITHDRAWAL OF REFERENCED DRUGS FOR SALE; PROHIBITED. (1) IT  SHALL
 BE  A VIOLATION OF THIS SECTION FOR ANY MANUFACTURER OR DISTRIBUTOR OF A
 REFERENCED DRUG TO WITHDRAW THAT DRUG FROM SALE OR  DISTRIBUTION  WITHIN
 THIS STATE FOR THE PURPOSE OF AVOIDING THE IMPACT OF THIS PILOT PROGRAM.
   (2)  ANY  MANUFACTURER THAT INTENDS TO WITHDRAW A REFERENCED DRUG FROM
 SALE OR DISTRIBUTION FROM WITHIN THE STATE SHALL  PROVIDE  A  NOTICE  OF
 WITHDRAWAL  IN WRITING TO THE SUPERINTENDENT AND TO THE ATTORNEY GENERAL
 NOT LESS THAN ONE HUNDRED EIGHTY DAYS PRIOR TO SUCH WITHDRAWAL.
   (3) THE SUPERINTENDENT SHALL ASSESS A PENALTY ON ANY  MANUFACTURER  OR
 DISTRIBUTOR THAT THEY DETERMINE TO HAVE WITHDRAWN A REFERENCED DRUG FROM
 DISTRIBUTION  OR  SALE IN THE STATE IN VIOLATION OF PARAGRAPH ONE OR TWO
 OF THIS SUBSECTION. WITH RESPECT TO EACH REFERENCED DRUG FOR  WHICH  THE
 SUPERINTENDENT  HAS DETERMINED THE MANUFACTURER OR DISTRIBUTOR HAS WITH-
 DRAWN FROM THE MARKET, THE PENALTY SHALL BE EQUAL TO:
   (A) FIVE HUNDRED THOUSAND DOLLARS; OR
   (B) THE AMOUNT OF ANNUAL SAVINGS DETERMINED BY THE  SUPERINTENDENT  AS
 DESCRIBED IN PARAGRAPH FIVE OF THIS SUBSECTION, WHICHEVER IS GREATER.
   (4)  IT  SHALL  BE A VIOLATION OF THIS SECTION FOR ANY MANUFACTURER OR
 DISTRIBUTOR OF A REFERENCED DRUG TO REFUSE TO NEGOTIATE  IN  GOOD  FAITH
 WITH  ANY  PAYOR  OR SELLER OF PRESCRIPTION DRUGS A PRICE THAT IS WITHIN
 THE REFERENCED RATE AS DETERMINED IN PARAGRAPH TWO OF SUBSECTION (E)  OF
 THIS SECTION.
   (5)  THE  SUPERINTENDENT SHALL ASSESS A PENALTY ON ANY MANUFACTURER OR
 DISTRIBUTOR THAT IT DETERMINES HAS FAILED TO NEGOTIATE IN GOOD FAITH  IN
 VIOLATION  OF  PARAGRAPH  FOUR  OF THIS SUBSECTION. WITH RESPECT TO EACH
 REFERENCED DRUG FOR WHICH THE SUPERINTENDENT HAS DETERMINED THE MANUFAC-
 TURER OR DISTRIBUTOR HAS FAILED TO NEGOTIATE IN GOOD FAITH, THE  PENALTY
 SHALL BE EQUAL TO:
   (A) FIVE HUNDRED THOUSAND DOLLARS; OR
   (B)  THE  AMOUNT OF ANNUAL SAVINGS DETERMINED BY THE SUPERINTENDENT AS
 DESCRIBED IN THIS SUBDIVISION, WHICHEVER IS GREATER.
 S. 8901                             4
 
   § 2. This act shall take effect June 1, 2022.  Effective  immediately,
 the  addition,  amendment and/or repeal of any rule or regulation neces-
 sary for the implementation of  this  act  on  its  effective  date  are
 authorized to be made and completed on or before such effective date.