Establishes a pilot program on the referenced rate for prescription drugs; relates to reducing the cost of prescription drugs by establishing maximum wholesale drug prices that are the same as the prices in Canada.
STATE OF NEW YORK
________________________________________________________________________
1351--A
2025-2026 Regular Sessions
IN SENATE
January 9, 2025
___________
Introduced by Sens. CLEARE, ADDABBO, BRISPORT, SALAZAR -- read twice and
ordered printed, and when printed to be committed to the Committee on
Insurance -- recommitted to the Committee on Insurance 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 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:
1 Section 1. The insurance law is amended by adding a new section 111-b
2 to read as follows:
3 § 111-b. Pilot program on referenced rate for prescription drugs.
4 (a) Legislative findings and declaration; statement of policy. The
5 legislature hereby finds and declares that access to prescription drugs
6 is necessary for the public health, general welfare, and economy of the
7 state:
8 (1) New Yorkers pay as much as three times more than what Canadians
9 pay for prescription drugs, and such excessive prices negatively impact
10 the ability of New York residents to obtain prescription drugs, thereby
11 endangering the health and safety of New Yorkers to maintain or achieve
12 good health;
13 (2) Excessive prices for prescription drugs threaten the economic
14 well-being of New York residents and endanger their ability to pay for
15 other necessary and essential goods and services including housing, food
16 and utilities;
17 (3) Excessive prices for prescription drugs contribute significantly
18 to a dramatic and unsustainable rise in health care costs and health
19 insurance that threaten the overall ability of New York residents to
20 obtain health coverage and maintain or achieve good health;
21 (4) Excessive prices for prescription drugs contribute significantly
22 to rising state costs for health care provided and paid for through
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD00232-05-6
S. 1351--A 2
1 health insurance programs for public employees, including employees of
2 the state, municipalities and counties, school districts, institutions
3 of higher education, and retirees whose health care costs are funded by
4 public programs, thereby threatening the ability of the state to fund
5 those programs adequately and further threatening the ability of the
6 state to fund other programs necessary for the public good and safety,
7 such as public education; and
8 (5) Based on findings of paragraphs 1, 2, 3 and 4 of this subsection,
9 the legislature finds that excessive prices for prescription drugs
10 threaten the safety and well-being of New York residents and find it is
11 necessary to act in order to protect New York residents from the nega-
12 tive impact of excessive costs.
13 (b) Program creation. A pilot program is hereby created to study the
14 possibility of controlling excessive and unconscionable prices for
15 prescription drugs.
16 (c) Definitions. As used in this section, unless otherwise expressly
17 stated or the context or subject matter otherwise requires, the follow-
18 ing terms shall have the following meanings:
19 (1) "Prescription drug" shall have the same meaning as "prescription
20 medication or device" as defined in section 178.00 of the penal law.
21 (2) "Wholesale acquisition cost" shall have the same meaning as
22 defined in subdivision (g) of section four hundred ninety-seven of the
23 tax law.
24 (3) "State entity" means any agency of the state government that
25 purchases prescription drugs on behalf of the state for a person whose
26 health care is paid for by the state, including any agent, vendor,
27 fiscal agent, contractor, or other party acting on behalf of the state.
28 "State entity" shall not include Medicaid.
29 (4) "Health plan" shall have the same meaning as defined in paragraph
30 (a) of subdivision one of section two hundred eighty-a of the public
31 health law.
32 (5) "ERISA plan" means a plan qualified under the Employee Retirement
33 Income Security Act of 1974.
34 (6) "Participating ERISA plan" means an ERISA plan that has elected to
35 participate in the requirements and restrictions of this section as
36 described in subsection (e) of this section.
37 (7) "Referenced rate" means the maximum rate established by the super-
38 intendent utilizing the wholesale acquisition cost and other pricing
39 data described in subsection (f) of this section.
40 (8) "Referenced drugs" means any prescription drug subject to a refer-
41 enced rate.
42 (d) Payment in excess of referenced rate prohibited. (1) It shall be a
43 violation of this section for a state entity or health plan to purchase
44 the referenced drugs subject to this pilot program and which shall be
45 dispensed or delivered to a consumer in the state, whether directly or
46 through a distributor, for a cost higher than the referenced rate as
47 determined pursuant to paragraph two of subsection (f) of this section.
48 (2) It shall be a violation of this section for any pharmacy licensed
49 in this state to purchase for sale or distribution referenced drugs for
50 a cost that exceeds the referenced rate to a person whose health care is
51 provided by a state entity or health plan.
52 (e) ERISA plan opt-in. An ERISA plan may elect to participate in the
53 provisions of this section. Any ERISA plan that desires its purchase of
54 prescription drugs to be subject to the prohibition described in
55 subsection (d) of this section shall notify the superintendent in writ-
S. 1351--A 3
1 ing at least one month before reference rates go into effect as
2 described in paragraph three of subsection (g) of this section.
3 (f) Costly prescription drugs. As part of this pilot program, the
4 director of the employee benefits division within the department of
5 civil service shall identify the ten most costly prescription drugs
6 based upon net price times utilization. Such list of ten drugs shall
7 stay the same over the course of the pilot program.
8 (g) Referenced drugs determined. (1) Beginning no later than one year
9 after the effective date of this section, the director of the employee
10 benefits division within the department of civil service shall transmit
11 to the superintendent the list of prescription drugs referenced in
12 subsection (f) of this section. For each of these prescription drugs,
13 such director shall also provide the total net spend on each of those
14 prescription drugs for the previous calendar year.
15 (2) Utilizing the information described in paragraph one of this
16 subsection, no later than one year and five months after the effective
17 date of this section, the superintendent shall create and publish a list
18 on the department's website of such drugs that shall be subject to the
19 referenced rate.
20 (3) The reference rates go into effect six months from the date that
21 the superintendent publishes the list described in paragraph two of this
22 subsection and annually thereafter during the three-year pilot program.
23 (4) The superintendent shall determine the referenced rate annually by
24 comparing the wholesale acquisition cost to the cost from all of the
25 following sources:
26 (A) Ontario Ministry of Health and long term care and most recently
27 published on the Ontario Drug Benefit Formulary;
28 (B) Regie de l'Assurance Maladie du Quebec and most recently published
29 on the Quebec Public Drug Programs List of Medications;
30 (C) British Columbia Ministry of Health and most recently published on
31 the BC Pharmacare Formulary; and
32 (D) Alberta Ministry of Health and most recently published on the
33 Alberta Drug Benefit List.
34 (5) The referenced rate for each prescription drug shall be calculated
35 as the lowest cost among those resources and the wholesale acquisition
36 cost. If a specific referenced drug is not included within the resources
37 described in paragraph four of this subsection, then, for the purpose of
38 determining the referenced rate for that drug, the superintendent shall
39 utilize the ceiling price for drugs as reported by the government of
40 Canada Patented Medicine Prices Review Board.
41 (6) The superintendent shall calculate the savings that are expected
42 to be achieved by subjecting prescription drugs to the referenced rate
43 for each year of the pilot program. In making this determination the
44 superintendent shall consult with the director of the employee benefits
45 division within the department of civil service and the drug account-
46 ability board.
47 (7) The superintendent shall promulgate such rules and regulations as
48 may be necessary to carry out this pilot program. The pilot program
49 shall regulate drug prices for three years.
50 (h) Application of savings. (1) The department shall require plans to
51 report savings from this program in their annual rate review applica-
52 tions.
53 (2) In reviewing and approving rates, the department shall ensure that
54 savings from this program are used to benefit purchasers and consumers
55 of health care.
S. 1351--A 4
1 (3) No later than sixty days after the conclusion of each year subject
2 to this pilot program, each state entity or health plan subject to this
3 section shall submit to the superintendent a report describing the
4 savings achieved for each referenced drug and how those savings were
5 used to achieve the requirements of paragraph two of this subsection.
6 The superintendent in coordination with the department's drug account-
7 ability board shall submit a report of the savings, if any, of the pilot
8 program conducted pursuant to this section, to the governor, the tempo-
9 rary president of the senate, the speaker of the assembly, and the
10 minority leaders of the senate and assembly no later than one hundred
11 eighty days following the conclusion of each year of the pilot subject
12 to this section. The report shall also include recommendations on the
13 feasibility of expanding this program to other prescription drugs,
14 recommendations on improvements to the program, and any other findings,
15 recommendations, or conclusions the superintendent deems necessary to
16 understand the broader effects of this pilot program.
17 (i) Withdrawal of referenced drugs for sale; prohibited. (1) It shall
18 be a violation of this section for any manufacturer or distributor of a
19 referenced drug to withdraw that drug from sale or distribution within
20 this state for the purpose of avoiding the impact of this pilot program.
21 (2) Any manufacturer that intends to withdraw a referenced drug from
22 sale or distribution from within the state shall provide a notice of
23 withdrawal in writing to the superintendent and to the attorney general
24 not less than one hundred eighty days prior to such withdrawal.
25 (3) The superintendent shall assess a penalty on any manufacturer or
26 distributor that they determine to have withdrawn a referenced drug from
27 distribution or sale in the state in violation of paragraph one or two
28 of this subsection. With respect to each referenced drug for which the
29 superintendent has determined the manufacturer or distributor has with-
30 drawn from the market, the penalty shall be equal to:
31 (A) five hundred thousand dollars; or
32 (B) the amount of annual savings determined by the superintendent as
33 described in paragraph five of this subsection, whichever is greater.
34 (4) It shall be a violation of this section for any manufacturer or
35 distributor of a referenced drug to refuse to negotiate in good faith
36 with any payor or seller of prescription drugs a price that is within
37 the referenced rate as determined in paragraph five of subsection (g) of
38 this section.
39 (5) The superintendent shall assess a penalty on any manufacturer or
40 distributor that it determines has failed to negotiate in good faith in
41 violation of paragraph four of this subsection. With respect to each
42 referenced drug for which the superintendent has determined the manufac-
43 turer or distributor has failed to negotiate in good faith, the penalty
44 shall be equal to:
45 (A) five hundred thousand dollars; or
46 (B) the amount of annual savings determined by the superintendent as
47 described in this subsection, whichever is greater.
48 § 2. This act shall take effect on the thirtieth day after it shall
49 have become a law. Effective immediately, the addition, amendment and/or
50 repeal of any rule or regulation necessary for the implementation of
51 this act on its effective date are authorized to be made and completed
52 on or before such effective date.
