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S00398 Text:

                STATE OF NEW YORK
                               2023-2024 Regular Sessions
                    IN SENATE
                                     January 4, 2023
        Introduced  by  Sens. CLEARE, ADDABBO -- 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.
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.

        S. 398                              2
     1    (3) "State entity" means any  agency  of  the  state  government  that
     2  purchases  prescription  drugs on behalf of the state for a person whose
     3  health care is paid for by  the  state,  including  any  agent,  vendor,
     4  fiscal  agent, contractor, or other party acting on behalf of the state.
     5  "State  entity"  shall not include the medical assistance program estab-
     6  lished pursuant to 42 U.S.C. § 1396 et seq.
     7    (4) "Health plan" shall have the same meaning as defined in  paragraph
     8  (a)  of  subdivision  one  of section two hundred eighty-a of the public
     9  health law.
    10    (5) "Referenced rate" means the maximum rate established by the super-
    11  intendent utilizing the wholesale acquisition  cost  and  other  pricing
    12  data described in subsection (e) of this section.
    13    (6) "Referenced drugs" means any prescription drug subject to a refer-
    14  enced rate.
    15    (c) Payment in excess of referenced rate prohibited. (1) It shall be a
    16  violation  of this section for a state entity or health plan to purchase
    17  the referenced drugs subject to this pilot program and  which  shall  be
    18  dispensed  or  delivered to a consumer in the state, whether directly or
    19  through a distributor, for a cost higher than  the  referenced  rate  as
    20  determined pursuant to paragraph two of subsection (e) of this section.
    21    (2)  It shall be a violation of this section for any pharmacy licensed
    22  in this state to purchase for sale or distribution referenced drugs  for
    23  a cost that exceeds the referenced rate to a person whose health care is
    24  provided by a state entity or health plan.
    25    (d)  Costly  prescription  drugs.  As  part of this pilot program, the
    26  director of the employee benefits  division  within  the  department  of
    27  civil  service  shall  identify  the five most costly prescription drugs
    28  based upon net price times utilization.
    29    (e) Referenced drugs determined. (1) Beginning with calendar year  two
    30  thousand  twenty-four, no later than June thirtieth, the director of the
    31  employee benefits division within the department of civil service  shall
    32  transmit to the superintendent the list of prescription drugs referenced
    33  in subsection (d) of this section. For each of these prescription drugs,
    34  such  director  shall  also provide the total net spend on each of those
    35  prescription drugs for the previous calendar year.
    36    (2) Utilizing the information  described  in  paragraph  one  of  this
    37  subsection,  no later than November first, two thousand twenty-four, the
    38  superintendent shall create and  publish  a  list  on  the  department's
    39  website of such drugs that shall be subject to the referenced rate.
    40    (3)  The superintendent shall determine the referenced rate by compar-
    41  ing the wholesale acquisition cost to the cost from all of the following
    42  sources:
    43    (A) Ontario Ministry of Health and long term care  and  most  recently
    44  published on the Ontario Drug Benefit Formulary;
    45    (B) Regie de l'Assurance Maladie du Quebec and most recently published
    46  on the Quebec Public Drug Programs List of Medications;
    47    (C) British Columbia Ministry of Health and most recently published on
    48  the BC Pharmacare Formulary; and
    49    (D)  Alberta  Ministry  of  Health  and most recently published on the
    50  Alberta Drug Benefit List.
    51    (4) The referenced rate for each prescription drug shall be calculated
    52  as the lowest cost among those resources and the  wholesale  acquisition
    53  cost. If a specific referenced drug is not included within the resources
    54  described  in  paragraph three of this subsection, then, for the purpose
    55  of determining the referenced rate for  that  drug,  the  superintendent

        S. 398                              3
     1  shall  utilize the ceiling price for drugs as reported by the government
     2  of Canada Patented Medicine Prices Review Board.
     3    (5)  The  superintendent shall calculate the savings that are expected
     4  to be achieved by subjecting prescription drugs to the  referenced  rate
     5  for one plan year. In making this determination the superintendent shall
     6  consult  with  the director of the employee benefits division within the
     7  department of civil service and the drug accountability board.
     8    (6) The superintendent shall promulgate such rules and regulations  as
     9  may be necessary to carry out this pilot program.
    10    (f)  Application  of savings. (1) Any savings generated because of the
    11  requirements pursuant to subsection (c) of this section shall be used to
    12  reduce costs to consumers. Any state entity or health plan shall  calcu-
    13  late  such savings and utilize such savings directly to reduce costs for
    14  its members or insureds.
    15    (2) No later than April first of the calendar year after  the  conclu-
    16  sion  of  the pilot program, each state entity or health plan subject to
    17  this section shall submit to the superintendent a report describing  the
    18  savings  achieved  for  each  referenced drug and how those savings were
    19  used to achieve the requirements of paragraph one  of  this  subsection.
    20  The  superintendent shall submit a report of the savings, if any, of the
    21  pilot program conducted pursuant to this section, to the  governor,  the
    22  temporary  president of the senate, the speaker of the assembly, and the
    23  minority leaders of the senate and assembly no later  than  one  hundred
    24  eighty  days  following  the conclusion of the plan year subject to this
    25  section. The report shall also include recommendations on the  feasibil-
    26  ity  of  expanding this program to other prescription drugs, recommenda-
    27  tions on improvements to the program, and any other findings,  recommen-
    28  dations, or conclusions the superintendent deems necessary to understand
    29  the broader effects of this pilot program.
    30    (g)  Withdrawal of referenced drugs for sale; prohibited. (1) It shall
    31  be a violation of this section for any manufacturer or distributor of  a
    32  referenced  drug  to withdraw that drug from sale or distribution within
    33  this state for the purpose of avoiding the impact of this pilot program.
    34    (2) Any manufacturer that intends to withdraw a referenced  drug  from
    35  sale  or  distribution  from  within the state shall provide a notice of
    36  withdrawal in writing to the superintendent and to the attorney  general
    37  not less than one hundred eighty days prior to such withdrawal.
    38    (3)  The  superintendent shall assess a penalty on any manufacturer or
    39  distributor that they determine to have withdrawn a referenced drug from
    40  distribution or sale in the state in violation of paragraph one  or  two
    41  of  this  subsection. With respect to each referenced drug for which the
    42  superintendent has determined the manufacturer or distributor has  with-
    43  drawn from the market, the penalty shall be equal to:
    44    (A) five hundred thousand dollars; or
    45    (B)  the  amount of annual savings determined by the superintendent as
    46  described in paragraph five of this subsection, whichever is greater.
    47    (4) It shall be a violation of this section for  any  manufacturer  or
    48  distributor  of  a  referenced drug to refuse to negotiate in good faith
    49  with any payor or seller of prescription drugs a price  that  is  within
    50  the  referenced rate as determined in paragraph two of subsection (e) of
    51  this section.
    52    (5) The superintendent shall assess a penalty on any  manufacturer  or
    53  distributor  that it determines has failed to negotiate in good faith in
    54  violation of paragraph four of this subsection.  With  respect  to  each
    55  referenced drug for which the superintendent has determined the manufac-

        S. 398                              4
     1  turer  or distributor has failed to negotiate in good faith, the penalty
     2  shall be equal to:
     3    (A) five hundred thousand dollars; or
     4    (B)  the  amount of annual savings determined by the superintendent as
     5  described in this subdivision, whichever is greater.
     6    § 2. This act shall take effect June 1, 2023.  Effective  immediately,
     7  the  addition,  amendment and/or repeal of any rule or regulation neces-
     8  sary for the implementation of  this  act  on  its  effective  date  are
     9  authorized to be made and completed on or before such effective date.
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