Amd §§178.00 - 178.25, add §178.30, Art 178-A §§178.50 - 178.65, Title M Art 219 §§219.00 - 219.30, Pen L
Relates to criminal diversion of prescription medications and prescriptions; establishes the offense of fraudulent prescription, dispensing and procurement of non-controlled substance prescription medications and devices; establishes the offense of unlawful possession of non-controlled substance prescription medications and devices.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A2790
SPONSOR: McDonald TITLE OF BILL:
An act to amend the penal law, in relation to criminal diversion of
prescription medications and prescriptions, establishing the offense of
fraudulent prescription, dispensing and procurement of non-controlled
substance prescription medications and devices, and establishing the
offense of unlawful possession of non-controlled substance prescription
medications and devices
PURPOSE OR GENERAL IDEA OF BILL:
The goal is analyze drug prices and underlying costs that drive drug
pricing to inform the development of policies that will ensure access to
affordable medications. By enhancing transparency in prescription drug
pricing policymakers and purchasers can deliver on the promise of health
care coverage and affordability.
SUMMARY OF SPECIFIC PROVISIONS:
Sections 1 through 7 of the bill restructure the existing crime of crim-
inal diversion of prescription medications and prescriptions by amending
Penal Law ("PL") §§ 178.00, 178.05, 178.10, 178.15, 178.20 and
178.25,and by adding a new section 178.30. This restructuring enhances
sanctions when unlawful criminal diversion acts are committed on multi-
ple occasions within a given period of time and when such acts are
committed by a physician, pharmacist or other person authorized to issue
a prescription or to dispense prescription medications and devices.
Section 178.00 is amended to clarify that transactions with undercover
agents may also be also be prosecuted under this section if the dealer
believes, or has reasonable basis to believe, that the officer is some-
one who is not authorized by law to sell or transfer the prescription
form, prescription medication or device. Section 178.05 is amended to
clarify that those seeking to obtain a lawful prescription or
prescription medication, and those seeking to assist such persons, are
exempt from prosecution for criminal diversion.
Section 8 of the bill adds a new PL Article 178-A entitled Fraudulent
Prescription, Dispensing and Procurement of Non-controlled substance
Prescription Medications and Devices. This Article New PL § 178-A estab-
lishes the crime of fraudulent prescription, dispensing and procurement
of non-controlled substance prescription medications and devices in the
first, second and third degree. Generally, this crime prohibits:
*Issuance of a prescription; 1) when the issuer is not duly licensed and
authorized to do so, 2) with knowledge or reasonable grounds to know
that the prescription is not medically necessary, or 3) when issued
other than good faith;
*Dispensing of a non-controlled substance; 1) with knowledge or reason-
able grounds to know that the person for whom the medication has been
prescribed has no medical need, 2) when the prescription was not issued
by a duly licensed physician or other person authorized, 3) when the
prescription was forged, or 4) when the prescription was written by a
physician or other authorized individual not acting in good faith; and,
*Presenting or submitting a prescription, or receiving a non-controlled
substance or device from a pharmacist with knowledge or reasonable
grounds to know that the prescription was not duly issued and authorized
to an individual with a medical need for prescription.
Fraudulent prescription, dispensing and procurement of a non-controlled
substance prescription in the first degree is a class B felony, in the
second degree is a class C felony, and in the third degree is a class D
felony.
Section 9 of the bill adds a new PL Article 219 entitled Unlawful
Possession of Non-Controlled Substance Prescription Medications and
Devices. This Article defines terms for purposes therein, sets out limi-
tations its applicability, and establishes the crime of unlawful
possession of non-controlled substance prescription medications and
devices in the fifth to first degrees.
Section 10 provides an effective date.
JUSTIFICATION:
Expensive non-controlled substance prescription medications such as AIDS
medication, asthma medication, and anti-psychotic medication have
obtained a high street value, making, them particularly popular on the
black-market in the last few years. This exploding black market in
non-controlled substance prescription medications is well documented.
Last April, New York authorities arrested four individuals heading a
black market HIV/AIDS prescription drug scam which cost the Medicaid
program an estimated $150 million. These individuals were charged with
grand larceny, criminal diversion, money laundering and conspiracy,
among other felonies. In May, 14 individuals in Manhattan were charged
in a massive illegal prescription pill diversion and distribution scheme
that distributed over 10,000 pills weekly. In July, the U.S. Attorney
announced charges against 48 individuals in a prescription fraud ring.
One of the primary drugs targeted by this group was the HIV drug Atri-
pla, which has a Medicaid reimbursement value of $1,635 per bottle. Then
this October, Attorney General Eric T. Schneiderman announced a $1.2
million dollar settlement with NYC pharmacist who sold these black
market medications.
As the New York Times reports, these "different sort of drug deals"
usually occur on the street or at the train station when an individual,
pharmacy bag in hand, passes through - either intentionally, or uninten-
tionally - a gantlet of dealers. The individuals are approached and
asked if they have prescription drugs to sell. The sought after, expen-
sive medications with a high street value are most often paid for with
Medicaid dollars and sold on the street for a fraction of their actual
value. The purchasers of these medications bring the medications to a
stash house where they are collected and re-sold back to unscrupulous
pharmacies or shipped overseas.
There are many negative and severe consequences resulting from these
black market deals, which include: sick patients not taking their medi-
cations; unsuspecting patients purchasing black market drugs from their
pharmacy which have not been properly stored and maintained; and, Medi-
caid paying huge sums for medications that are dispensed under these
fraudulent circumstances.
An unscrupulous pharmacy can charge Medicaid for medicine that it has
purchased at a significantly lower price through the black market Most
likely Medicaid has already paid for this same medicine on an earlier
occasion when it was originally dispensed to the patient who subsequent-
ly sold the medicine on the street.
Current law does not contemplate a large-scale illegal market of these
drugs. As a result, there is either no penalty or insufficient penalties
for the following conduct:
* repeated purchases of non-controlled substance prescription medica-
tions from someone not authorized to sell or transfer the medication
(the dealers who buy the medications and enter them into the black
market);
* possession of large quantities of non-controlled substance
prescription medications by someone with no lawful basis for the
prescription (the people who have the stash houses for the black market
medicine);
* the writing of fraudulent prescriptions by physicians to "patients"
with no medical need for the medication; and
* the purchasing or dispensing of medications by pharmacists who have
obtained the medication through the black market.
The gaps in existing law and the growth of this black market make it
self-evident that change is necessary. This legislation will address
this by increasing, or establishing, criminal penalties that better fit
these crimes. In addition to making sure sick patients take necessary
medication and that pharmacies are not selling black market drugs, this
bill will save the Medicaid program millions a year. It is estimated
that the prosecution of just 5 doctors who are unlawfully prescribing
non-controlled substances could save Medicaid $3.5 million a year.
PRIOR LEGISLATIVE HISTORY:
2015-2016 (A10069/S5396)
2014: S.2942 Passed Senate
2012: S.5260-C passed Senate
2011: S.5260-B passed Senate
FISCAL IMPLICATIONS:
Savings to State Medicaid Program
EFFECTIVE DATE:
This act shall take effect 90 days after becoming a law.
