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S03762 Summary:

S03762 Actions:

S03762 Committee Votes:

S03762 Floor Votes:

S03762 Text:

 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          3762
 
                               2021-2022 Regular Sessions
 
                    IN SENATE
 
                                    January 30, 2021
                                       ___________
 
        Introduced  by  Sens.  BRESLIN,  RIVERA,  ADDABBO,  GAUGHRAN, GOUNARDES,
          KAMINSKY, KAPLAN, KRUEGER, MAYER, SKOUFIS -- read  twice  and  ordered
          printed, and when printed to be committed to the Committee on Health
 
        AN  ACT  to amend the public health law, in relation to pharmacy benefit
          managers; to amend the insurance law, in relation to registration  and
          licensing   of  pharmacy  benefit  managers;  and  to  repeal  certain
          provisions of the public health law relating thereto
 
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
 
     1    Section  1.  Section  280-a of the public health law is REPEALED and a
     2  new section 280-a is added to read as follows:
     3    § 280-a. Pharmacy benefit managers. 1. Definitions.  As used  in  this
     4  section, the following terms shall have the following meanings:
     5    (a)  "Health  plan  or  provider" means an entity for which a pharmacy
     6  benefit manager provides pharmacy benefit management including, but  not
     7  limited  to:  (i)  a  health benefit plan or other entity that approves,
     8  provides, arranges for, or pays for health care items or services, under
     9  which prescription drugs for beneficiaries of the entity  are  purchased
    10  or  which provides or arranges reimbursement in whole or in part for the
    11  purchase of prescription drugs;  or  (ii)  a  health  care  provider  or
    12  professional  that  acquires  prescription  drugs  to use or dispense in
    13  providing health care to patients where the  prescription  drug  is  the
    14  subject  of  the  pharmacy benefit manager's pharmacy benefit management
    15  services.
    16    (b) "Pharmacy benefit management services" means the service  provided
    17  to  a  health  plan or provider, directly or through another entity, and
    18  regardless of whether the pharmacy benefit manager and the  health  plan
    19  or  provider  are related, or associated by ownership, common ownership,
    20  organization or otherwise; including  the  procurement  of  prescription
    21  drugs  to  be dispensed to patients, or the administration or management
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD00570-01-1
        S. 3762                             2
 
     1  of prescription drug benefits, including but not limited to, any of  the
     2  following:
     3    (i) mail service pharmacy;
     4    (ii)  claims  processing,  retail  network  management,  or payment of
     5  claims to pharmacies for dispensing prescription drugs;
     6    (iii) clinical or other formulary or preferred drug  list  development
     7  or management;
     8    (iv)  negotiation  or  administration  of  rebates, discounts, payment
     9  differentials, or other incentives,  for  the  inclusion  of  particular
    10  prescription  drugs  in a particular category or to promote the purchase
    11  of particular prescription drugs;
    12    (v) patient compliance, therapeutic intervention, or  generic  substi-
    13  tution programs;
    14    (vi) disease management;
    15    (vii) drug utilization review or prior authorization;
    16    (viii)  adjudication  of appeals or grievances related to prescription
    17  drug coverage;
    18    (ix) contracting with network pharmacies; and
    19    (x) controlling the cost of covered prescription drugs.
    20    (c) "Pharmacy benefit manager" means any entity that performs pharmacy
    21  benefit management services for a health plan or provider.
    22    (d) "Maximum allowable  cost  price"  means  a  maximum  reimbursement
    23  amount  set  by  the pharmacy benefit manager for therapeutically equiv-
    24  alent multiple source generic drugs.
    25    (e) "Controlling person" means any person or other entity who or which
    26  directly or indirectly has the power to direct or cause to  be  directed
    27  the management, control or activities of a pharmacy benefit manager.
    28    (f)  "Covered  individual"  means  a  member,  participant,  enrollee,
    29  contract holder or policy holder or beneficiary  of  a  health  plan  or
    30  provider.
    31    (g)  "License" means a license to be a pharmacy benefit manager, under
    32  article twenty-nine of the insurance law.
    33    (h) "Spread pricing" means the practice of a pharmacy benefit  manager
    34  retaining  an  additional amount of money in addition to the amount paid
    35  to the pharmacy to fill a prescription.
    36    (i) "Superintendent" means the superintendent of financial services.
    37    2. Duty, accountability and transparency.   (a) The  pharmacy  benefit
    38  manager  shall  have a duty and obligation to the covered individual and
    39  the health plan or provider, and shall perform pharmacy benefit  manage-
    40  ment  services  with care, skill, prudence, diligence, and professional-
    41  ism, and for the best interests  of  the  covered  individual,  and  the
    42  health  plan  or  provider.    Where there is a conflict in the pharmacy
    43  benefit manager's duty or obligation under this paragraph to the covered
    44  individual and any other party, the duty or obligation  to  the  covered
    45  individual shall be primary.
    46    (b)  All funds received by the pharmacy benefit manager in relation to
    47  providing pharmacy benefit management services shall be received by  the
    48  pharmacy  benefit  manager  in trust for the health plan or provider and
    49  shall be used or distributed  only  pursuant  to  the  pharmacy  benefit
    50  manager's  contract  with the health plan or provider or applicable law;
    51  including any administrative fee or  payment  to  the  pharmacy  benefit
    52  manager expressly provided for in the contract to compensate the pharma-
    53  cy benefit manager for its services.  Any funds received by the pharmacy
    54  benefit  manager  through  spread pricing shall be subject to this para-
    55  graph.
        S. 3762                             3
 
     1    (c) The pharmacy benefit  manager  shall  account,  annually  or  more
     2  frequently  to  the  health  plan or provider for any pricing discounts,
     3  rebates of any kind, inflationary payments,  credits,  clawbacks,  fees,
     4  grants,  chargebacks,  reimbursements, or other benefits received by the
     5  pharmacy benefit manager. The pharmacy benefit manager shall ensure that
     6  any  portion  of such income, payments, and financial benefits is passed
     7  through to the health plan or provider in full to reduce the  reportable
     8  ingredient  cost.  The  health plan or provider shall have access to all
     9  financial and utilization information of the pharmacy benefit manager in
    10  relation to pharmacy benefit management services provided to the  health
    11  plan or provider.
    12    (d)  The  pharmacy  benefit  manager  shall disclose in writing to the
    13  health plan or provider the terms and  conditions  of  any  contract  or
    14  arrangement  between the pharmacy benefit manager and any party relating
    15  to pharmacy benefit management services provided to the health  plan  or
    16  provider including but not limited to, dispensing fees paid to the phar-
    17  macies.
    18    (e)  The  pharmacy  benefit  manager  shall disclose in writing to the
    19  health plan or provider any  activity,  policy,  practice,  contract  or
    20  arrangement  of the pharmacy benefit manager that directly or indirectly
    21  presents any conflict of interest with the  pharmacy  benefit  manager's
    22  relationship with or obligation to the health plan or provider.
    23    (f)  Any  information  required  to be disclosed by a pharmacy benefit
    24  manager to a health plan or provider under this section that is  reason-
    25  ably  designated by the pharmacy benefit manager as proprietary or trade
    26  secret information shall be kept confidential  by  the  health  plan  or
    27  provider,  except  as required or permitted by law, including disclosure
    28  necessary to prosecute or defend any legitimate legal claim or cause  of
    29  action.
    30    (g) The superintendent, in consultation with the commissioner:
    31    (i)  may  make  regulations  defining,  limiting,  and relating to the
    32  duties, obligations, requirements and other provisions relating to phar-
    33  macy benefit managers under this subdivision; and
    34    (ii) shall establish, by regulation, minimum  standards  for  pharmacy
    35  benefit  management  services  which  shall  address the elimination of:
    36  conflicts of interest between  pharmacy  benefit  managers  and  covered
    37  individuals,  health  benefit  plans  and  health care providers; spread
    38  pricing; and deceptive practices, anti-competitive practices, and unfair
    39  claims practices.
    40    (h) A health care provider and a covered individual shall be deemed to
    41  be third-party beneficiaries of the duties, obligations and requirements
    42  applicable to the pharmacy benefit manager under this section and  shall
    43  be  entitled  to legal or equitable relief for any injury or loss to the
    44  health care provider or the covered individual caused by  any  violation
    45  of such duties, obligations or requirements.
    46    3.  Prescriptions.    A pharmacy benefit manager may not substitute or
    47  cause the substituting of one prescription drug for another in  dispens-
    48  ing  a  prescription,  or  alter or cause the altering of the terms of a
    49  prescription, except with the approval of the prescriber or as explicit-
    50  ly required or permitted by law.
    51    4. Appeals.   A  pharmacy  benefit  manager  shall,  with  respect  to
    52  contracts between a pharmacy benefit manager and a pharmacy or, alterna-
    53  tively,  a  pharmacy benefit manager and a pharmacy's contracting agent,
    54  such as a  pharmacy  services  administrative  organization,  include  a
    55  reasonable process to appeal, investigate and resolve disputes regarding
        S. 3762                             4
 
     1  multi-source generic drug pricing. The appeals process shall include the
     2  following provisions:
     3    (a)  the  right  to  appeal  by  the  pharmacy  and/or  the pharmacy's
     4  contracting agent shall be limited to thirty days following the  initial
     5  claim submitted for payment;
     6    (b)  a  telephone  number through which a network pharmacy may contact
     7  the pharmacy benefit manager for the purpose of filing an appeal and  an
     8  electronic  mail  address of the individual who is responsible for proc-
     9  essing appeals;
    10    (c) the pharmacy benefit manager shall send an electronic mail message
    11  acknowledging receipt of the appeal. The pharmacy benefit manager  shall
    12  respond  in  an electronic message to the pharmacy and/or the pharmacy's
    13  contracting agent filing the appeal within seven business days  indicat-
    14  ing  its  determination.  If  the  appeal is determined to be valid, the
    15  maximum allowable cost for the drug shall be adjusted for the  appealing
    16  pharmacy effective as of the date of the original claim for payment. The
    17  pharmacy benefit manager shall require the appealing pharmacy to reverse
    18  and  rebill  the  claim  in  question  in  order to obtain the corrected
    19  reimbursement;
    20    (d) if an update to the maximum allowable cost is warranted, the phar-
    21  macy benefit manager or covered entity shall adjust the  maximum  allow-
    22  able cost of the drug effective for all similarly situated pharmacies in
    23  its  network  in  the  state on the date the appeal was determined to be
    24  valid; and
    25    (e) if an appeal is denied, the pharmacy benefit manager shall identi-
    26  fy the national drug code  of  a  therapeutically  equivalent  drug,  as
    27  determined  by  the federal Food and Drug Administration, that is avail-
    28  able for purchase by pharmacies in this state  from  wholesalers  regis-
    29  tered  pursuant to subdivision four of section sixty-eight hundred eight
    30  of the education law at a price which is equal to or less than the maxi-
    31  mum allowable cost for that drug as determined by the  pharmacy  benefit
    32  manager.
    33    5.  Contract  provisions.    No  pharmacy  benefit manager shall, with
    34  respect to contracts between such pharmacy benefit manager and a pharma-
    35  cy or, alternatively, such pharmacy benefit  manager  and  a  pharmacy's
    36  contracting  agent, such as a pharmacy services administrative organiza-
    37  tion:
    38    (a) prohibit or penalize a pharmacist or pharmacy from  disclosing  to
    39  an  individual  purchasing a prescription medication information regard-
    40  ing:
    41    (i) the cost of the prescription medication to the individual, or
    42    (ii) the availability of any  therapeutically  equivalent  alternative
    43  medications  or alternative methods of purchasing the prescription medi-
    44  cation, including but not limited to, paying a cash price;
    45    (b) charge or collect from an individual a copayment that exceeds  the
    46  total  submitted charges by the pharmacy for which the pharmacy is paid.
    47  If an individual pays a copayment, the pharmacy shall retain the adjudi-
    48  cated costs and the pharmacy benefit manager shall not redact or  recoup
    49  the adjudicated cost; or
    50    (c)  require a pharmacy to meet any pharmacy accreditation standard or
    51  recertification requirement inconsistent with, more stringent  than,  or
    52  in addition to federal and state requirements for licensure as a pharma-
    53  cy.
    54    §  2.  The insurance law is amended by adding a new article 29 to read
    55  as follows:
        S. 3762                             5
 
     1                                 ARTICLE 29
     2                          PHARMACY BENEFIT MANAGERS
     3  Section 2901. Definitions.
     4          2902. Acting without a registration.
     5          2903. Registration requirements for pharmacy benefit managers.
     6          2904. Reporting requirements for pharmacy benefit managers.
     7          2905. Acting without a license.
     8          2906. Licensing of a pharmacy benefit manager.
     9          2907. Revocation or suspension of a registration or license of a
    10                  pharmacy benefit manager.
    11          2908. Penalties for violations.
    12          2909. Stay or suspension of superintendent's determination.
    13          2910. Revoked registrations or licenses.
    14          2911. Change of address.
    15          2912. Applicability of other laws.
    16          2913. Assessments.
    17    § 2901. Definitions. For purposes of this article:
    18    (a)  "Controlling  person"  is any person or other entity who or which
    19  directly or indirectly has the power to direct or cause to  be  directed
    20  the management, control or activities of a pharmacy benefit manager.
    21    (b)  The terms "covered individual", "health plan or provider", "phar-
    22  macy benefit manager" and "pharmacy benefit  management  services"  have
    23  the  same  meanings  as  defined  by section two hundred eighty-a of the
    24  public health law.
    25    § 2902. Acting without a registration. (a) No  person,  firm,  associ-
    26  ation, corporation or other entity may act as a pharmacy benefit manager
    27  on  or  after  April first, two thousand twenty-one and prior to January
    28  first, two thousand twenty-three, without having a valid registration as
    29  a pharmacy benefit manager filed with the superintendent  in  accordance
    30  with this article and any regulations promulgated thereunder.
    31    (b)  Any  person,  firm, association, corporation or other entity that
    32  violates this section shall, in addition to any other  penalty  provided
    33  by  law,  be  liable  for  restitution to any health plan or provider or
    34  covered individual harmed by the violation and shall also be subject  to
    35  a  penalty  not exceeding of the greater of (1) one thousand dollars for
    36  the first violation and two  thousand  five  hundred  dollars  for  each
    37  subsequent  violation  or  (2)  the  aggregate  economic  gross receipts
    38  attributable to all violations.
    39    § 2903. Registration requirements for pharmacy benefit  managers.  (a)
    40  Every pharmacy benefit manager that performs pharmacy benefit management
    41  services  on  or after April first, two thousand twenty-one and prior to
    42  January first, two thousand twenty-three shall register with the  super-
    43  intendent  in a manner acceptable to the superintendent, and shall pay a
    44  fee of one thousand dollars for each year or fraction of a year in which
    45  the registration shall be valid.  The  superintendent,  in  consultation
    46  with  the  commissioner of health, may establish, by regulation, minimum
    47  registration standards required for  a  pharmacy  benefit  manager.  The
    48  superintendent can reject a registration application filed by a pharmacy
    49  benefit manager that fails to comply with the minimum registration stan-
    50  dards.
    51    (b)  For each business entity, the officer or officers and director or
    52  directors named in the application shall be designated  responsible  for
    53  the  business entity's compliance with the financial services and insur-
    54  ance laws, rules and regulations of this state.
    55    (c) Every registration will expire on December thirty-first, two thou-
    56  sand twenty-two regardless of when registration was first made.
        S. 3762                             6
 
     1    (d) Every pharmacy benefit  manager  that  performs  pharmacy  benefit
     2  management services at any time prior to April first, two thousand twen-
     3  ty-one,  shall  make  the  registration  and  fee  payment  required  by
     4  subsection (a) of this section on or before  June  first,  two  thousand
     5  twenty-one.  Any other pharmacy benefit manager shall make the registra-
     6  tion and fee payment required by subsection (a) of this section prior to
     7  performing pharmacy benefit management services.
     8    (e) Registrants under this section shall be subject to examination  by
     9  the superintendent as often as the superintendent may deem it necessary.
    10  The  superintendent  may promulgate regulations establishing methods and
    11  procedures for facilitating and verifying compliance with  the  require-
    12  ments of this article and such other regulations as necessary to enforce
    13  the provisions of this article.
    14    §  2904. Reporting requirements for pharmacy benefit managers.  (a)(1)
    15  On or before July first of each year, beginning in two thousand  twenty-
    16  one,  every pharmacy benefit manager shall report to the superintendent,
    17  in a statement subscribed and affirmed as true under penalties of perju-
    18  ry, the information requested by the superintendent  including,  without
    19  limitation,
    20    (i) any pricing discounts, rebates of any kind, inflationary payments,
    21  credits,  clawbacks,  fees,  grants,  chargebacks, reimbursements, other
    22  financial or other reimbursements, incentives, inducements,  refunds  or
    23  other benefits received by the pharmacy benefit manager; and
    24    (ii)  the terms and conditions of any contract or arrangement, includ-
    25  ing other financial or other reimbursements incentives,  inducements  or
    26  refunds  between the pharmacy benefit manager and any other party relat-
    27  ing to pharmacy benefit management services provided to a health plan or
    28  provider including but not limited to, dispensing fees paid  to  pharma-
    29  cies.
    30    The superintendent may require the filing of quarterly or other state-
    31  ments, which shall be in such form and shall contain such matters as the
    32  superintendent shall prescribe.
    33    (2)  The superintendent may address to any pharmacy benefit manager or
    34  its officers any inquiry in relation to its provision of pharmacy  bene-
    35  fit  management services or any matter connected therewith.  Every phar-
    36  macy benefit manager or person so addressed shall reply  in  writing  to
    37  such  inquiry  promptly  and  truthfully,  and  such  reply shall be, if
    38  required by the superintendent, subscribed by  such  individual,  or  by
    39  such  officer or officers of the pharmacy benefit manager, as the super-
    40  intendent shall designate, and affirmed by them as true under the penal-
    41  ties of perjury.
    42    (b) In the event any pharmacy  benefit  manager  or  person  does  not
    43  submit  the  report  required by paragraph one of subsection (a) of this
    44  section or does not provide a good faith response to an inquiry from the
    45  superintendent pursuant to paragraph  two  of  subsection  (a)  of  this
    46  section within a time period specified by the superintendent of not less
    47  than  fifteen  business days, the superintendent is authorized to levy a
    48  civil penalty, after notice and hearing, against such  pharmacy  benefit
    49  manager  or  person  not to exceed one thousand dollars per day for each
    50  day beyond the date the report is due  or  the  date  specified  by  the
    51  superintendent for response to the inquiry.
    52    (c)  All  information,  documents and material disclosed by a pharmacy
    53  benefit manager under this  section  and  in  the  possession  or  under
    54  control  of  the  superintendent  shall  be  deemed confidential and not
    55  subject to public disclosure except (1) by court order when relevant and
    56  material in a civil or criminal action or proceeding, or (2)  where  and
        S. 3762                             7
 
     1  as the superintendent determines that disclosure is in the public inter-
     2  est. This subsection shall not apply to information, documents and mate-
     3  rials where they are in the possession and under the control of a person
     4  or entity other than the superintendent.
     5    §  2905.  Acting  without a license. (a) No person, firm, association,
     6  corporation or other entity may act as a pharmacy benefit manager on  or
     7  after  January first, two thousand twenty-three without having authority
     8  to do so by virtue  of  a  license  issued  in  force  pursuant  to  the
     9  provisions of this article.
    10    (b)  Any  person,  firm, association, corporation or other entity that
    11  violates this section shall, in addition to any other  penalty  provided
    12  by  law,  be  subject  to a penalty not exceeding the greater of (1) one
    13  thousand dollars for the first violation and two thousand  five  hundred
    14  dollars  for  each  subsequent  violation  or (2) the aggregate economic
    15  gross receipts attributable to all violations.
    16    § 2906. Licensing of a pharmacy benefit manager. (a)  The  superinten-
    17  dent may issue a pharmacy benefit manager's license to any person, firm,
    18  association  or  corporation  who or that has complied with the require-
    19  ments of this article, including regulations promulgated by  the  super-
    20  intendent.  The superintendent, in consultation with the commissioner of
    21  health, may establish, by regulation, minimum standards for the issuance
    22  of a license to a pharmacy benefit manager.
    23    (b) The  minimum  standards  established  under  this  subsection  may
    24  address, without limitation:
    25    (1) conflicts of interest between pharmacy benefit managers and health
    26  plans or insurers;
    27    (2) deceptive practices in connection with the performance of pharmacy
    28  benefit management services;
    29    (3)  anti-competitive  practices in connection with the performance of
    30  pharmacy benefit management services;
    31    (4) unfair claims practices in  connection  with  the  performance  of
    32  pharmacy benefit management services; and
    33    (5) protection of consumers.
    34    (c)(1)  Any such license issued to a firm or association shall author-
    35  ize all of the members of the firm or  association  and  any  designated
    36  employees to act as pharmacy benefit managers under the license, and all
    37  such persons shall be named in the application and supplements thereto.
    38    (2)  Any  such  license issued to a corporation shall authorize all of
    39  the officers and any designated employees and directors thereof  to  act
    40  as pharmacy benefit managers on behalf of such corporation, and all such
    41  persons shall be named in the application and supplements thereto.
    42    (3)  For each business entity, the officer or officers and director or
    43  directors named in the application shall be designated  responsible  for
    44  the  business  entity's  compliance  with  the insurance laws, rules and
    45  regulations of this state.
    46    (d)(1) Before a pharmacy benefit manager's license shall be issued  or
    47  renewed,  the  prospective licensee shall properly file in the office of
    48  the superintendent a written application therefor in such form or  forms
    49  and  supplements thereto as the superintendent prescribes, and pay a fee
    50  of two thousand dollars for each year or fraction of a year in  which  a
    51  license shall be valid.
    52    (2)  Every  pharmacy benefit manager's license shall expire thirty-six
    53  months after the date of issue. Every license issued  pursuant  to  this
    54  section  may be renewed for the ensuing period of thirty-six months upon
    55  the filing of an application in conformity with this subsection.
        S. 3762                             8
 
     1    (e)(1) If an application for a renewal license shall have  been  filed
     2  with the superintendent before November first of the year of expiration,
     3  then  the  license sought to be renewed shall continue in full force and
     4  effect either until the issuance by the superintendent  of  the  renewal
     5  license  applied  for  or until five days after the superintendent shall
     6  have refused to issue such renewal license  and  given  notice  of  such
     7  refusal to the applicant.
     8    (2)  Before refusing to renew any license pursuant to this section for
     9  which a renewal application has been filed pursuant to paragraph one  of
    10  this  subsection,  the  superintendent shall notify the applicant of the
    11  superintendent's intention to do so and  shall  give  such  applicant  a
    12  hearing.
    13    (f)  The  superintendent may refuse to issue a pharmacy benefit manag-
    14  er's license if, in the superintendent's judgment, the applicant or  any
    15  member,  principal,  officer or director of the applicant, is not trust-
    16  worthy and competent to act as or in connection with a pharmacy  benefit
    17  manager,  or that any of the foregoing has given cause for revocation or
    18  suspension of such license, or has failed to comply with  any  prerequi-
    19  site for the issuance of such license.
    20    (g) Licensees and applicants for a license under this section shall be
    21  subject to examination by the superintendent as often as the superinten-
    22  dent  may  deem  it  expedient.  The superintendent may promulgate regu-
    23  lations establishing methods and procedures for facilitating and verify-
    24  ing compliance with the requirements of  this  section  and  such  other
    25  regulations as necessary.
    26    (h)  The  superintendent  may  issue  a  replacement  for  a currently
    27  in-force license that has been lost or destroyed. Before the replacement
    28  license shall be issued, there shall be on file in  the  office  of  the
    29  superintendent  a  written  application  for  the  replacement  license,
    30  affirming under penalty of perjury that the original  license  has  been
    31  lost or destroyed, together with a fee of two hundred dollars.
    32    (i) No pharmacy benefit manager shall engage in any practice or action
    33  that  a  health plan or provider is prohibited from engaging in pursuant
    34  to this chapter.
    35    § 2907. Revocation or suspension of a registration  or  license  of  a
    36  pharmacy  benefit  manager.  (a) The superintendent may refuse to renew,
    37  may revoke, or may suspend for a period  the  superintendent  determines
    38  the  registration  or  license of any pharmacy benefit manager if, after
    39  notice and hearing, the superintendent determines that the registrant or
    40  licensee or any member, principal,  officer,  director,  or  controlling
    41  person of the registrant or licensee, has:
    42    (1)  violated  any insurance laws, section two hundred eighty-a of the
    43  public health law or violated any regulation, subpoena or order  of  the
    44  superintendent  or  of  another  state's  insurance commissioner, or has
    45  violated any law in the course of his or her dealings in  such  capacity
    46  after  such  license  has been issued or renewed pursuant to section two
    47  thousand nine hundred six of this article;
    48    (2) provided materially incorrect, materially  misleading,  materially
    49  incomplete  or  materially  untrue  information  in  the registration or
    50  license application;
    51    (3) obtained or attempted to obtain a registration or license  through
    52  misrepresentation or fraud;
    53    (4)(A) used fraudulent, coercive or dishonest practices;
    54    (B) demonstrated incompetence;
    55    (C) demonstrated untrustworthiness; or
        S. 3762                             9
 
     1    (D) demonstrated financial irresponsibility in the conduct of business
     2  in this state or elsewhere;
     3    (5)  improperly  withheld,  misappropriated or converted any monies or
     4  properties received in the course of business in  this  state  or  else-
     5  where;
     6    (6)  intentionally  misrepresented  the terms of an actual or proposed
     7  insurance contract;
     8    (7) admitted or been found to  have  committed  any  insurance  unfair
     9  trade practice or fraud;
    10    (8)  had  a  pharmacy  benefit manager registration or license, or its
    11  equivalent, denied, suspended or revoked in any other  state,  province,
    12  district or territory;
    13    (9)  failed  to pay state income tax or comply with any administrative
    14  or court order directing payment of state income tax; or
    15    (10) ceased to meet the requirements  for  registration  or  licensure
    16  under this article.
    17    (b)  Before  revoking or suspending the registration or license of any
    18  pharmacy benefit manager pursuant to the provisions of this article, the
    19  superintendent shall give notice to the registrant or  licensee  and  to
    20  every  sub-licensee  and  shall hold, or cause to be held, a hearing not
    21  less than ten days after the giving of such notice.
    22    (c) If a registration or license pursuant to the  provisions  of  this
    23  article  is  revoked or suspended by the superintendent, then the super-
    24  intendent shall forthwith give notice to the registrant or licensee.
    25    (d) The revocation or suspension of any registration or license pursu-
    26  ant to the provisions of this article  shall  terminate  forthwith  such
    27  registration  or  license  and  the authority conferred thereby upon all
    28  sub-licensees. For good cause shown, the superintendent  may  delay  the
    29  effective date of a revocation or suspension to permit the registrant or
    30  licensee  to  satisfy  some  or  all  of  its contractual obligations to
    31  perform pharmacy benefit management services in the state.
    32    (e)(1) No individual, corporation, firm or association whose registra-
    33  tion or license as a pharmacy benefit manager has been revoked  pursuant
    34  to  subsection  (a) of this section, and no firm or association of which
    35  such individual is a member, and no corporation of which such individual
    36  is an officer or director, and no controlling person of  the  registrant
    37  or  licensee  shall  be  entitled  to obtain any registration or license
    38  under the provisions of this article for a minimum period  of  one  year
    39  after  such  revocation,  or, if such revocation be judicially reviewed,
    40  for a minimum period of one year after the final  determination  thereof
    41  affirming the action of the superintendent in revoking such license.
    42    (2) If any such registration or license held by a firm, association or
    43  corporation  be  revoked,  no  member of such firm or association and no
    44  officer or director of such corporation or any controlling person of the
    45  registrant or licensee shall be entitled to obtain any  registration  or
    46  license,  or  to  be  named as a sub-licensee in any such license, under
    47  this article for the same period  of  time,  unless  the  superintendent
    48  determines,  after  notice  and  hearing,  that  such member, officer or
    49  director was not personally at fault in the matter on account  of  which
    50  such registration or license was revoked.
    51    (f)  If  any  corporation, firm, association or person aggrieved shall
    52  file with the superintendent a verified complaint  setting  forth  facts
    53  tending  to  show  sufficient ground for the revocation or suspension of
    54  any pharmacy benefit manager's registration or license, and  the  super-
    55  intendent  finds  the complaint credible, then the superintendent shall,
        S. 3762                            10
 
     1  after notice and a  hearing,  determine  whether  such  registration  or
     2  license shall be suspended or revoked.
     3    (g)  The  superintendent  shall  retain  the  authority to enforce the
     4  provisions of and impose any penalty or remedy authorized by this  chap-
     5  ter  against  any  person  or  entity  who is under investigation for or
     6  charged with a violation of this chapter, even if the person's or  enti-
     7  ty's registration or license has been surrendered, or has expired or has
     8  lapsed by operation of law.
     9    (h)  A  registrant or licensee subject to this article shall report to
    10  the superintendent any administrative action taken  against  the  regis-
    11  trant  or  licensee  in  another jurisdiction or by another governmental
    12  agency in this state within thirty days of the final disposition of  the
    13  matter.  This report shall include a copy of the order, consent to order
    14  or other relevant legal documents.
    15    (i)  Within thirty days of the initial pretrial hearing date, a regis-
    16  trant or licensee subject to this article shall  report  to  the  super-
    17  intendent  any  criminal prosecution of the registrant or licensee taken
    18  in any jurisdiction. The report shall include  a  copy  of  the  initial
    19  complaint  filed,  the  order  resulting  from the hearing and any other
    20  relevant legal documents.
    21    § 2908. Penalties for violations. (a) The superintendent, in  lieu  of
    22  revoking  or  suspending  the registration or license of a registrant or
    23  licensee in accordance with the provisions of this article, may  in  any
    24  one  proceeding  by  order, require the registrant or licensee to pay to
    25  the people of this state a penalty in a sum not exceeding the greater of
    26  (1) one thousand dollars for each offense and two thousand five  hundred
    27  dollars  for  each  subsequent  violation  or  (2)  the  aggregate gross
    28  receipts attributable to all offenses.
    29    (b) Upon the failure of such a  registrant  or  licensee  to  pay  the
    30  penalty ordered pursuant to subsection (a) of this section within twenty
    31  days  after  the  mailing of the order, postage prepaid, registered, and
    32  addressed to the last known place of business of  the  licensee,  unless
    33  the  order  is  stayed by an order of a court of competent jurisdiction,
    34  the superintendent may revoke the registration or license of the  regis-
    35  trant  or licensee or may suspend the same for such period as the super-
    36  intendent determines.
    37    § 2909. Stay or  suspension  of  superintendent's  determination.  The
    38  commencement  of  a  proceeding under article seventy-eight of the civil
    39  practice law and rules, to review the action of  the  superintendent  in
    40  suspending  or  revoking or refusing to renew any certificate under this
    41  article, shall stay such action of the superintendent for  a  period  of
    42  thirty  days. Such stay shall not be extended for a longer period unless
    43  the court shall determine, after a  preliminary  hearing  of  which  the
    44  superintendent  is notified forty-eight hours in advance, that a stay of
    45  the superintendent's action pending the final determination  or  further
    46  order of the court will not unduly injure the interests of the people of
    47  the state.
    48    §  2910.  Revoked  registrations  or licenses. (a)(1) No person, firm,
    49  association, corporation or other entity subject to  the  provisions  of
    50  this  article  whose registration or license under this article has been
    51  revoked, or whose registration or license to engage in the  business  of
    52  pharmacy  benefit  management  in  any  capacity has been revoked by any
    53  other state or territory of the United States shall become  employed  or
    54  appointed  by a pharmacy benefit manager as an officer, director, manag-
    55  er, controlling person or for other services, without the prior  written
        S. 3762                            11

     1  approval of the superintendent, unless such services are for maintenance
     2  or are clerical or ministerial in nature.
     3    (2)  No person, firm, association, corporation or other entity subject
     4  to the provisions of this article shall knowingly employ or appoint  any
     5  person or entity whose registration or license issued under this article
     6  has  been  revoked,  or  whose  registration or license to engage in the
     7  business of pharmacy benefit management in any capacity has been revoked
     8  by any other state or territory of the United  States,  as  an  officer,
     9  director, manager, controlling person or for other services, without the
    10  prior  written  approval of the superintendent, unless such services are
    11  for maintenance or are clerical or ministerial in nature.
    12    (3) No corporation or partnership subject to the  provisions  of  this
    13  article  shall knowingly permit any person whose registration or license
    14  issued under this article has been revoked,  or  whose  registration  or
    15  license  to engage in the business of pharmacy benefit management in any
    16  capacity has been revoked by any other state, or territory of the United
    17  States, to be a shareholder or have an interest in such  corporation  or
    18  partnership,  nor  shall any such person become a shareholder or partner
    19  in such corporation or partnership, without the prior  written  approval
    20  of the superintendent.
    21    (b)  The  superintendent  may  approve  the employment, appointment or
    22  participation of any such person whose registration or license has  been
    23  revoked:
    24    (1)  if the superintendent determines that the duties and responsibil-
    25  ities of such person are subject to  appropriate  supervision  and  that
    26  such  duties  and  responsibilities will not have an adverse effect upon
    27  the public, other registrants or licensees, or the registrant or  licen-
    28  see proposing employment or appointment of such person; or
    29    (2)  if  such  person  has  filed an application for reregistration or
    30  relicensing pursuant to this article and the application for reregistra-
    31  tion or relicensing has not been approved or denied within  one  hundred
    32  twenty  days  following  the  filing  thereof, unless the superintendent
    33  determines within the said time that employment or appointment  of  such
    34  person  by a registrant or licensee in the conduct of a pharmacy benefit
    35  management business would not be in the public interest.
    36    (c) The provisions of this section shall not apply to the ownership of
    37  shares of any corporation registered or licensed pursuant to this  arti-
    38  cle  if  the  shares of such corporation are publicly held and traded in
    39  the over-the-counter market or upon any national or regional  securities
    40  exchange.
    41    § 2911. Change of address. A registrant or licensee under this article
    42  shall inform the superintendent by a means acceptable to the superinten-
    43  dent of a change of address within thirty days of the change.
    44    §  2912. Applicability of other laws. Nothing in this article shall be
    45  construed to exempt a pharmacy benefit manager from complying  with  the
    46  provisions  of  articles  twenty-one  and forty-nine of this chapter and
    47  articles forty-four and forty-nine and section two hundred  eighty-a  of
    48  the  public health law, section three hundred sixty-four-j of the social
    49  services law, or any other provision of this chapter  or  the  financial
    50  services law.
    51    §  2913.  Assessments. Pharmacy benefit managers that file a registra-
    52  tion with the department or are licensed  by  the  department  shall  be
    53  assessed by the superintendent for the operating expenses of the depart-
    54  ment  that  are  solely attributable to regulating such pharmacy benefit
    55  managers in such proportions as the superintendent shall deem  just  and
    56  reasonable.
        S. 3762                            12
 
     1    §  3.  Subsection (b) of section 2402 of the insurance law, as amended
     2  by section 71 of part A of chapter 62 of the laws of 2011, is amended to
     3  read as follows:
     4    (b)  "Defined  violation"  means  the commission by a person of an act
     5  prohibited by: subsection (a) of section one thousand one  hundred  two,
     6  section  one  thousand  two  hundred  fourteen, one thousand two hundred
     7  seventeen, one thousand two hundred twenty, one thousand  three  hundred
     8  thirteen, subparagraph (B) of paragraph two of subsection (i) of section
     9  one thousand three hundred twenty-two, subparagraph (B) of paragraph two
    10  of subsection (i) of section one thousand three hundred twenty-four, two
    11  thousand  one hundred two, two thousand one hundred seventeen, two thou-
    12  sand one hundred twenty-two,  two  thousand  one  hundred  twenty-three,
    13  subsection  (p)  of section two thousand three hundred thirteen, section
    14  two thousand three hundred twenty-four, two thousand five  hundred  two,
    15  two  thousand  five  hundred  three, two thousand five hundred four, two
    16  thousand six hundred one, two thousand six hundred two, two thousand six
    17  hundred three, two thousand six hundred four, two thousand  six  hundred
    18  six,  two  thousand  seven hundred three, two thousand nine hundred two,
    19  two thousand nine hundred five, three thousand one hundred  nine,  three
    20  thousand  two hundred twenty-four-a, three thousand four hundred twenty-
    21  nine, three thousand  four  hundred  thirty-three,  paragraph  seven  of
    22  subsection  (e)  of section three thousand four hundred twenty-six, four
    23  thousand two hundred twenty-four, four thousand two hundred twenty-five,
    24  four thousand two hundred twenty-six, seven thousand eight hundred nine,
    25  seven thousand eight hundred ten, seven thousand eight  hundred  eleven,
    26  seven  thousand  eight  hundred  thirteen,  seven thousand eight hundred
    27  fourteen and seven thousand eight hundred fifteen of  this  chapter;  or
    28  section  135.60,  135.65,  175.05,  175.45,  or  190.20,  or article one
    29  hundred five of the penal law.
    30    § 4. Severability.  If any provision of this act, or  any  application
    31  of  any  provision  of  this act, is held to be invalid, or ruled by any
    32  federal agency to violate or be inconsistent with any applicable federal
    33  law or regulation, that shall not affect the validity  or  effectiveness
    34  of  any  other provision of this act, or of any other application of any
    35  provision of this act.
    36    § 5. This act shall take effect on the ninetieth day  after  it  shall
    37  become  a  law  and  shall  apply to any contract for providing pharmacy
    38  benefit management made or renewed on  or  after  that  date.  Effective
    39  immediately,  the  superintendent  of financial services and the commis-
    40  sioner of health shall make regulations and take other  actions  reason-
    41  ably necessary to implement this act on that date.