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S08901 Text:

                STATE OF NEW YORK
                    IN SENATE
                                     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:

     1    Section  1. The insurance law is amended by adding a new section 111-a
     2  to read as follows:
     3    § 111-a. Pilot program on referenced rate for prescription drugs.  (a)
     4  A  pilot  program is hereby created to study the possibility of control-
     5  ling excessive and unconscionable prices for prescription drugs.
     6    (b) Definitions. As used in this section, the  following  terms  shall
     7  have the following meanings:
     8    (1)  "Prescription drug" shall have the same meaning as in subdivision
     9  seven of section sixty-eight hundred two of the education law, for which
    10  a prescription is required under the federal  food,  drug  and  cosmetic
    11  act.  Any  drug that does not require a prescription under such act, but
    12  which would otherwise meet the  criteria  under  article  two-A  of  the
    13  public  health law for inclusion on the preferred drug list may be added
    14  to the preferred drug list under article two-A of the public health law;
    15  and, if so included, shall be considered to be a prescription  drug  for
    16  purposes  of  this  section;  provided  that  it  shall  be eligible for
    17  reimbursement under a state public health plan when ordered by  a  pres-
    18  criber  authorized  to  prescribe under the state public health plan and
    19  the prescription is subject to the applicable provisions of this section
    20  and paragraph (a) of subdivision four of section  three  hundred  sixty-
    21  five-a of the social services law.
    22    (2)  "Wholesale  acquisition  cost"  shall  have  the  same meaning as
    23  defined in 42 U.S.C. § 1395w-3a.
    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.
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.

        S. 8901                             2
     1  "State entity" shall not include the medical assistance  program  estab-
     2  lished pursuant to 42 U.S.C. § 1396 et seq.
     3    (4)  "Health plan" shall have the same meaning as defined in paragraph
     4  (a) of subdivision one of section two hundred  eighty-a  of  the  public
     5  health law.
     6    (5) "Referenced rate" means the maximum rate established by the super-
     7  intendent  utilizing  the  wholesale  acquisition cost and other pricing
     8  data described in subsection (e) of this section.
     9    (6) "Referenced drugs" means any prescription drug subject to a refer-
    10  enced rate.
    11    (c) Payment in excess of referenced rate prohibited. (1) It shall be a
    12  violation of this section for a state entity or health plan to  purchase
    13  the  referenced  drugs  subject to this pilot program and which shall be
    14  dispensed or delivered to a consumer in the state, whether  directly  or
    15  through  a  distributor,  for  a cost higher than the referenced rate as
    16  determined pursuant to paragraph two of subsection (e) of this section.
    17    (2) It shall be a violation of this section for any pharmacy  licensed
    18  in  this state to purchase for sale or distribution referenced drugs for
    19  a cost that exceeds the referenced rate to a person whose health care is
    20  provided by a state entity or health plan.
    21    (d) Costly prescription drugs. As part  of  this  pilot  program,  the
    22  director  of  the  employee  benefits  division within the department of
    23  civil service shall identify the five  most  costly  prescription  drugs
    24  based upon net price times utilization.
    25    (e)  Referenced drugs determined. (1) Beginning with calendar year two
    26  thousand twenty-three, no later than June thirtieth, the director of the
    27  employee benefits division within the department of civil service  shall
    28  transmit to the superintendent the list of prescription drugs referenced
    29  in subsection (d) of this section. For each of these prescription drugs,
    30  such  director  shall  also provide the total net spend on each of those
    31  prescription drugs for the previous calendar year.
    32    (2) Utilizing the information  described  in  paragraph  one  of  this
    33  subsection, no later than November first, two thousand twenty-three, the
    34  superintendent  shall  create  and  publish  a  list on the department's
    35  website of such drugs that shall be subject to the referenced rate.
    36    (3) The superintendent shall determine the referenced rate by  compar-
    37  ing the wholesale acquisition cost to the cost from all of the following
    38  sources:
    39    (A)  Ontario  Ministry  of Health and long term care and most recently
    40  published on the Ontario Drug Benefit Formulary;
    41    (B) Regie de l'Assurance Maladie du Quebec and most recently published
    42  on the Quebec Public Drug Programs List of Medications;
    43    (C) British Columbia Ministry of Health and most recently published on
    44  the BC Pharmacare Formulary; and
    45    (D) Alberta Ministry of Health and  most  recently  published  on  the
    46  Alberta Drug Benefit List.
    47    (4) The referenced rate for each prescription drug shall be calculated
    48  as  the  lowest cost among those resources and the wholesale acquisition
    49  cost. If a specific referenced drug is not included within the resources
    50  described in paragraph three of this subsection, then, for  the  purpose
    51  of  determining  the  referenced  rate for that drug, the superintendent
    52  shall utilize the ceiling price for drugs as reported by the  government
    53  of Canada Patented Medicine Prices Review Board.
    54    (5)  The  superintendent shall calculate the savings that are expected
    55  to be achieved by subjecting prescription drugs to the  referenced  rate
    56  for one plan year. In making this determination the superintendent shall

        S. 8901                             3
     1  consult  with  the director of the employee benefits division within the
     2  department of civil service and the drug accountability board.
     3    (6)  The superintendent shall promulgate such rules and regulations as
     4  may be necessary to carry out this pilot program.
     5    (f) Application of savings. (1) Any savings generated because  of  the
     6  requirements pursuant to subsection (c) of this section shall be used to
     7  reduce  costs to consumers. Any state entity or health plan shall calcu-
     8  late such savings and utilize such savings directly to reduce costs  for
     9  its members or insureds.
    10    (2)  No  later than April first of the calendar year after the conclu-
    11  sion of the pilot program, each state entity or health plan  subject  to
    12  this  section shall submit to the superintendent a report describing the
    13  savings achieved for each referenced drug and  how  those  savings  were
    14  used  to  achieve  the requirements of paragraph one of this subsection.
    15  The superintendent shall submit a report of the savings, if any, of  the
    16  pilot  program  conducted pursuant to this section, to the governor, the
    17  temporary president of the senate, the speaker of the assembly, and  the
    18  minority  leaders  of  the senate and assembly no later than one hundred
    19  eighty days following the conclusion of the plan year  subject  to  this
    20  section.  The report shall also include recommendations on the feasibil-
    21  ity of expanding this program to other prescription  drugs,  recommenda-
    22  tions  on improvements to the program, and any other findings, recommen-
    23  dations, or conclusions the superintendent deems necessary to understand
    24  the broader effects of this pilot program.
    25    (g) Withdrawal of referenced drugs for sale; prohibited. (1) It  shall
    26  be  a violation of this section for any manufacturer or distributor of a
    27  referenced drug to withdraw that drug from sale or  distribution  within
    28  this state for the purpose of avoiding the impact of this pilot program.
    29    (2)  Any  manufacturer that intends to withdraw a referenced drug from
    30  sale or distribution from within the state shall  provide  a  notice  of
    31  withdrawal  in writing to the superintendent and to the attorney general
    32  not less than one hundred eighty days prior to such withdrawal.
    33    (3) The superintendent shall assess a penalty on any  manufacturer  or
    34  distributor that they determine to have withdrawn a referenced drug from
    35  distribution  or  sale in the state in violation of paragraph one or two
    36  of this subsection. With respect to each referenced drug for  which  the
    37  superintendent  has determined the manufacturer or distributor has with-
    38  drawn from the market, the penalty shall be equal to:
    39    (A) five hundred thousand dollars; or
    40    (B) the amount of annual savings determined by the  superintendent  as
    41  described in paragraph five of this subsection, whichever is greater.
    42    (4)  It  shall  be a violation of this section for any manufacturer or
    43  distributor of a referenced drug to refuse to negotiate  in  good  faith
    44  with  any  payor  or seller of prescription drugs a price that is within
    45  the referenced rate as determined in paragraph two of subsection (e)  of
    46  this section.
    47    (5)  The  superintendent shall assess a penalty on any manufacturer or
    48  distributor that it determines has failed to negotiate in good faith  in
    49  violation  of  paragraph  four  of this subsection. With respect to each
    50  referenced drug for which the superintendent has determined the manufac-
    51  turer or distributor has failed to negotiate in good faith, the  penalty
    52  shall be equal to:
    53    (A) five hundred thousand dollars; or
    54    (B)  the  amount of annual savings determined by the superintendent as
    55  described in this subdivision, whichever is greater.

        S. 8901                             4
     1    § 2. This act shall take effect June 1, 2022.  Effective  immediately,
     2  the  addition,  amendment and/or repeal of any rule or regulation neces-
     3  sary for the implementation of  this  act  on  its  effective  date  are
     4  authorized to be made and completed on or before such effective date.
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