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A02836 Summary:

BILL NOA02836A
 
SAME ASSAME AS S06531
 
SPONSORGottfried (MS)
 
COSPNSRGunther, Abinanti, Kim, Sayegh, Steck, McDonald, Reilly, Fahy, Cahill, Simotas, Jones, Montesano, Schmitt, Cymbrowitz, Rosenthal L, Quart, Jean-Pierre, Miller ML, Salka, Tague, Malliotakis
 
MLTSPNSR
 
Rpld & add 280-a, Pub Health L; add Art 29 2901 - 2913, amd 2402, Ins L
 
Provides for pharmacy benefit management and the procurement of prescription drugs to be dispensed to patients, or the administration or management of prescription drug benefits; sets forth definitions; provides for funds received by a pharmacy in trust for the health plan or provider and provides for accountability of such funds; further provides for an appeals process to investigate and resolve disputes regarding multi-source generic drug pricing.
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A02836 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                         2836--A
 
                               2019-2020 Regular Sessions
 
                   IN ASSEMBLY
 
                                    January 25, 2019
                                       ___________
 
        Introduced by M. of A. GOTTFRIED, GUNTHER, ABINANTI, KIM, SAYEGH, STECK,
          McDONALD,  REILLY,  FAHY,  CAHILL  --  read  once  and referred to the
          Committee on Health -- reported and referred to the Committee on Codes
          -- reported and referred to the Committee on Ways and Means -- commit-
          tee discharged, bill amended, ordered reprinted as amended and  recom-
          mitted to said committee
 
        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  Section  280-a of the public health law is REPEALED and a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,
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD06526-03-9

        A. 2836--A                          2
 
     1  organization or otherwise; including  the  procurement  of  prescription
     2  drugs  to  be dispensed to patients, or the administration or management
     3  of prescription drug benefits, including but not limited to, any of  the
     4  following:
     5    (i) mail service pharmacy;
     6    (ii)  claims  processing,  retail  network  management,  or payment of
     7  claims to pharmacies for dispensing prescription drugs;
     8    (iii) clinical or other formulary or preferred drug  list  development
     9  or management;
    10    (iv)  negotiation  or  administration  of  rebates, discounts, payment
    11  differentials, or other incentives,  for  the  inclusion  of  particular
    12  prescription  drugs  in a particular category or to promote the purchase
    13  of particular prescription drugs;
    14    (v) patient compliance, therapeutic intervention, or  generic  substi-
    15  tution programs;
    16    (vi) disease management;
    17    (vii) drug utilization review or prior authorization;
    18    (viii)  adjudication  of appeals or grievances related to prescription
    19  drug coverage;
    20    (ix) contracting with network pharmacies; and
    21    (x) controlling the cost of covered prescription drugs.
    22    (c) "Pharmacy benefit manager" means any entity that performs pharmacy
    23  benefit management services for a health plan or provider.
    24    (d) "Maximum allowable  cost  price"  means  a  maximum  reimbursement
    25  amount  set  by  the pharmacy benefit manager for therapeutically equiv-
    26  alent multiple source generic drugs.
    27    (e) "Controlling person" means any person or other entity who or which
    28  directly or indirectly has the power to direct or cause to  be  directed
    29  the management, control or activities of a pharmacy benefit manager.
    30    (f)  "Covered  individual"  means  a  member,  participant,  enrollee,
    31  contract holder or policy holder or beneficiary  of  a  health  plan  or
    32  provider.
    33    (g)  "License" means a license to be a pharmacy benefit manager, under
    34  article twenty-nine of the insurance law.
    35    (h) "Spread pricing" means the practice of a pharmacy benefit  manager
    36  retaining  an  additional amount of money in addition to the amount paid
    37  to the pharmacy to fill a prescription.
    38    2. Duty, accountability and transparency.   (a) The  pharmacy  benefit
    39  manager  shall  have a duty and obligation to the covered individual and
    40  the health plan or provider, and shall perform pharmacy benefit  manage-
    41  ment  services  with care, skill, prudence, diligence, and professional-
    42  ism, and for the best interests primarily of the covered individual, and
    43  the health plan or provider.
    44    (b) All funds received by the pharmacy benefit manager in relation  to
    45  providing  pharmacy benefit management services shall be received by the
    46  pharmacy benefit manager in trust for the health plan  or  provider  and
    47  shall  be  used  or  distributed  only  pursuant to the pharmacy benefit
    48  manager's contract with the health plan or provider or  applicable  law;
    49  including  any  administrative  fee or payment expressly provided for in
    50  the contract between the pharmacy benefit manager and the health plan or
    51  provider to compensate the pharmacy benefit manager  for  its  services.
    52  Any  funds received by the pharmacy benefit manager through spread pric-
    53  ing shall be subject to this paragraph.
    54    (c) The pharmacy benefit manager shall  periodically  account  to  the
    55  health  plan or provider for any pricing discounts, rebates of any kind,
    56  inflationary payments, credits, clawbacks,  fees,  grants,  chargebacks,

        A. 2836--A                          3
 
     1  reimbursements,  or  other  benefits  received  by  the pharmacy benefit
     2  manager. The pharmacy benefit manager shall ensure that any  portion  of
     3  such  income,  payments, and financial benefits is passed through to the
     4  health  plan  or  provider  in  full to reduce the reportable ingredient
     5  cost. The health plan or provider shall have access to all financial and
     6  utilization information of the pharmacy benefit manager in  relation  to
     7  pharmacy  benefit  management  services  provided  to the health plan or
     8  provider.
     9    (d) The pharmacy benefit manager shall  disclose  in  writing  to  the
    10  health  plan  or  provider  the  terms and conditions of any contract or
    11  arrangement between the pharmacy benefit manager and any party  relating
    12  to  pharmacy  benefit management services provided to the health plan or
    13  provider including but not limited to, dispensing fees paid to the phar-
    14  macies.
    15    (e) The pharmacy benefit manager shall  disclose  in  writing  to  the
    16  health  plan  or  provider  any  activity, policy, practice, contract or
    17  arrangement of the pharmacy benefit manager that directly or  indirectly
    18  presents  any  conflict  of interest with the pharmacy benefit manager's
    19  relationship with or obligation to the health plan or provider.
    20    (f) Any information required to be disclosed  by  a  pharmacy  benefit
    21  manager  to a health plan or provider under this section that is reason-
    22  ably designated by the pharmacy benefit manager as proprietary or  trade
    23  secret  information  shall  be  kept  confidential by the health plan or
    24  provider, except as required or permitted by law,  including  disclosure
    25  necessary  to prosecute or defend any legitimate legal claim or cause of
    26  action.
    27    (g) The commissioner shall establish, by regulation, minimum standards
    28  for pharmacy benefit management services which shall address the  elimi-
    29  nation  of  conflicts  of interest between pharmacy benefit managers and
    30  health benefit plans and health care providers; and the  elimination  of
    31  deceptive practices, anti-competitive practices, and unfair claims prac-
    32  tices.
    33    (h) A health care provider and a covered individual shall be deemed to
    34  be third-party beneficiaries of the duties, obligations and requirements
    35  applicable  to the pharmacy benefit manager under this section and shall
    36  be entitled to legal or equitable relief for any injury or loss  to  the
    37  health  care  provider or the covered individual caused by any violation
    38  of such duties, obligations or requirements.
    39    3. Prescriptions.  A pharmacy benefit manager may  not  substitute  or
    40  cause  the substituting of one prescription drug for another in dispens-
    41  ing a prescription, or alter or cause the altering of  the  terms  of  a
    42  prescription, except with the approval of the prescriber or as explicit-
    43  ly required or permitted by law.
    44    4.  Appeals.    A  pharmacy  benefit  manager  shall,  with respect to
    45  contracts between a pharmacy benefit manager and a pharmacy or, alterna-
    46  tively, a pharmacy benefit manager and a pharmacy's  contracting  agent,
    47  such  as  a  pharmacy  services  administrative  organization, include a
    48  reasonable process to appeal, investigate and resolve disputes regarding
    49  multi-source generic drug pricing. The appeals process shall include the
    50  following provisions:
    51    (a) the  right  to  appeal  by  the  pharmacy  and/or  the  pharmacy's
    52  contracting  agent shall be limited to thirty days following the initial
    53  claim submitted for payment;
    54    (b) a telephone number through which a network  pharmacy  may  contact
    55  the  pharmacy benefit manager for the purpose of filing an appeal and an

        A. 2836--A                          4
 
     1  electronic mail address of the individual who is responsible  for  proc-
     2  essing appeals;
     3    (c) the pharmacy benefit manager shall send an electronic mail message
     4  acknowledging  receipt of the appeal. The pharmacy benefit manager shall
     5  respond in an electronic message to the pharmacy and/or  the  pharmacy's
     6  contracting  agent filing the appeal within seven business days indicat-
     7  ing its determination. If the appeal is  determined  to  be  valid,  the
     8  maximum  allowable cost for the drug shall be adjusted for the appealing
     9  pharmacy effective as of the date of the original claim for payment. The
    10  pharmacy benefit manager shall require the appealing pharmacy to reverse
    11  and rebill the claim in  question  in  order  to  obtain  the  corrected
    12  reimbursement;
    13    (d) if an update to the maximum allowable cost is warranted, the phar-
    14  macy  benefit  manager or covered entity shall adjust the maximum allow-
    15  able cost of the drug effective for all similarly situated pharmacies in
    16  its network in the state on the date the appeal  was  determined  to  be
    17  valid; and
    18    (e) if an appeal is denied, the pharmacy benefit manager shall identi-
    19  fy  the  national  drug  code  of  a therapeutically equivalent drug, as
    20  determined by the federal Food and Drug Administration, that  is  avail-
    21  able  for  purchase  by pharmacies in this state from wholesalers regis-
    22  tered pursuant to subdivision four of section sixty-eight hundred  eight
    23  of the education law at a price which is equal to or less than the maxi-
    24  mum  allowable  cost for that drug as determined by the pharmacy benefit
    25  manager.
    26    5. Contract provisions.   No  pharmacy  benefit  manager  shall,  with
    27  respect to contracts between such pharmacy benefit manager and a pharma-
    28  cy  or,  alternatively,  such  pharmacy benefit manager and a pharmacy's
    29  contracting agent, such as a pharmacy services administrative  organiza-
    30  tion:
    31    (a)  prohibit  or penalize a pharmacist or pharmacy from disclosing to
    32  an individual purchasing a prescription medication  information  regard-
    33  ing:
    34    (1) the cost of the prescription medication to the individual, or
    35    (2)  the  availability  of  any therapeutically equivalent alternative
    36  medications or alternative methods of purchasing the prescription  medi-
    37  cation, including but not limited to, paying a cash price;
    38    (b)  charge or collect from an individual a copayment that exceeds the
    39  total submitted charges by the pharmacy for which the pharmacy is  paid.
    40  If an individual pays a copayment, the pharmacy shall retain the adjudi-
    41  cated  costs and the pharmacy benefit manager shall not redact or recoup
    42  the adjudicated cost; or
    43    (c) require a pharmacy to meet any pharmacy accreditation standard  or
    44  recertification  requirement  inconsistent with, more stringent than, or
    45  in addition to federal and state requirements for licensure as a pharma-
    46  cy.
    47    § 2. The insurance law is amended by adding a new article 29  to  read
    48  as follows:
    49                                 ARTICLE 29
    50                          PHARMACY BENEFIT MANAGERS
    51  Section 2901. Definitions.
    52          2902. Acting without a registration.
    53          2903. Registration requirements for pharmacy benefit managers.
    54          2904. Reporting requirements for pharmacy benefit managers.
    55          2905. Acting without a license.
    56          2906. Licensing of a pharmacy benefit manager.

        A. 2836--A                          5
 
     1          2907. Revocation or suspension of a registration or license of a
     2                  pharmacy benefit manager.
     3          2908. Penalties for violations.
     4          2909. Stay or suspension of superintendent's determination.
     5          2910. Revoked registrations or licenses.
     6          2911. Change of address.
     7          2912. Applicability of other laws.
     8          2913. Assessments.
     9    § 2901. Definitions. For purposes of this article:
    10    (a)  "Controlling  person"  is any person or other entity who or which
    11  directly or indirectly has the power to direct or cause to  be  directed
    12  the management, control or activities of a pharmacy benefit manager.
    13    (b)  The  terms  "health plan or provider", "pharmacy benefit manager"
    14  and "pharmacy benefit management services" have  the  same  meanings  as
    15  defined by section two hundred eighty-a of the public health law.
    16    §  2902.  Acting  without a registration. (a) No person, firm, associ-
    17  ation, corporation or other entity may act as a pharmacy benefit manager
    18  on or after April first, two thousand twenty and prior to January first,
    19  two thousand twenty-one, without having a valid registration as a  phar-
    20  macy  benefit  manager  filed with the superintendent in accordance with
    21  this article and any regulations promulgated thereunder.
    22    (b) Any person, firm, association, corporation or  other  entity  that
    23  violates  this  section shall, in addition to any other penalty provided
    24  by law, be liable for restitution to any  health  plan  or  provider  or
    25  covered  individual harmed by the violation and shall also be subject to
    26  a penalty not exceeding of the greater of (1) one thousand  dollars  for
    27  the  first  violation  and  two  thousand  five hundred dollars for each
    28  subsequent violation  or  (2)  the  aggregate  economic  gross  receipts
    29  attributable to all violations.
    30    §  2903.  Registration requirements for pharmacy benefit managers. (a)
    31  Every pharmacy benefit manager that performs pharmacy benefit management
    32  services on or after April first, two thousand twenty and prior to Janu-
    33  ary first, two thousand twenty-one shall register with  the  superinten-
    34  dent  in  a manner acceptable to the superintendent, and shall pay a fee
    35  of one thousand dollars for each year or fraction of a year in which the
    36  registration shall be valid. The superintendent,  in  consultation  with
    37  the commissioner of health, may establish, by regulation, minimum regis-
    38  tration  standards  required  for a pharmacy benefit manager. The super-
    39  intendent can reject a registration  application  filed  by  a  pharmacy
    40  benefit manager that fails to comply with the minimum registration stan-
    41  dards.
    42    (b)  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 financial services and insur-
    45  ance laws, rules and regulations of this state.
    46    (c) Every registration will expire on December thirty-first, two thou-
    47  sand twenty regardless of when registration was first made.
    48    (d) Every pharmacy benefit  manager  that  performs  pharmacy  benefit
    49  management services at any time prior to April first, two thousand twen-
    50  ty,  shall  make the registration and fee payment required by subsection
    51  (a) of this section on or before April first, two thousand  twenty.  Any
    52  other  pharmacy  benefit  manager  shall  make  the registration and fee
    53  payment required by subsection (a) of this section prior  to  performing
    54  pharmacy benefit management services.
    55    (e)  Registrants under this section shall be subject to examination by
    56  the superintendent as often as the superintendent may deem it necessary.

        A. 2836--A                          6
 
     1  The superintendent may promulgate regulations establishing  methods  and
     2  procedures  for  facilitating and verifying compliance with the require-
     3  ments of this article and such other regulations as necessary to enforce
     4  the provisions of this article.
     5    §  2904. Reporting requirements for pharmacy benefit managers.  (a)(1)
     6  On or before July first of each year, beginning in two thousand  twenty,
     7  every  pharmacy benefit manager shall report to the superintendent, in a
     8  statement subscribed and affirmed as true under  penalties  of  perjury,
     9  the information requested by the superintendent including, without limi-
    10  tation,
    11    (i) any pricing discounts, rebates of any kind, inflationary payments,
    12  credits,  clawbacks,  fees,  grants,  chargebacks, reimbursements, other
    13  financial or other reimbursements, incentives, inducements,  refunds  or
    14  other benefits received by the pharmacy benefit manager; and
    15    (ii)  the terms and conditions of any contract or arrangement, includ-
    16  ing other financial or other reimbursements incentives,  inducements  or
    17  refunds  between the pharmacy benefit manager and any other party relat-
    18  ing to pharmacy benefit management services provided to a health plan or
    19  provider including but not limited to, dispensing fees paid  to  pharma-
    20  cies.
    21    The superintendent may require the filing of quarterly or other state-
    22  ments, which shall be in such form and shall contain such matters as the
    23  superintendent shall prescribe.
    24    (2)  The superintendent may address to any pharmacy benefit manager or
    25  its officers any inquiry in relation to its provision of pharmacy  bene-
    26  fit  management services or any matter connected therewith.  Every phar-
    27  macy benefit manager or person so addressed shall reply  in  writing  to
    28  such  inquiry  promptly  and  truthfully,  and  such  reply shall be, if
    29  required by the superintendent, subscribed by  such  individual,  or  by
    30  such  officer or officers of the pharmacy benefit manager, as the super-
    31  intendent shall designate, and affirmed by them as true under the penal-
    32  ties of perjury.
    33    (b) In the event any pharmacy  benefit  manager  or  person  does  not
    34  submit  the  report  required by paragraph one of subsection (a) of this
    35  section or does not provide a good faith response to an inquiry from the
    36  superintendent pursuant to paragraph  two  of  subsection  (a)  of  this
    37  section within a time period specified by the superintendent of not less
    38  than  fifteen  business days, the superintendent is authorized to levy a
    39  civil penalty, after notice and hearing, against such  pharmacy  benefit
    40  manager  or  person  not to exceed one thousand dollars per day for each
    41  day beyond the date the report is due  or  the  date  specified  by  the
    42  superintendent for response to the inquiry.
    43    (c) All information disclosed by a pharmacy benefit manager under this
    44  section  shall  be deemed confidential and not subject to public disclo-
    45  sure except by court order.
    46    § 2905. Acting without a license. (a) No  person,  firm,  association,
    47  corporation  or other entity may act as a pharmacy benefit manager on or
    48  after January first, two thousand twenty-one without having authority to
    49  do so by virtue of a license issued in force pursuant to the  provisions
    50  of this article.
    51    (b)  Any  person,  firm, association, corporation or other entity that
    52  violates this section shall, in addition to any other  penalty  provided
    53  by  law,  be  subject  to a penalty not exceeding the greater of (1) one
    54  thousand dollars for the first violation and two thousand  five  hundred
    55  dollars  for  each  subsequent  violation  or (2) the aggregate economic
    56  gross receipts attributable to all violations.

        A. 2836--A                          7
 
     1    § 2906. Licensing of a pharmacy benefit manager. (a)  The  superinten-
     2  dent may issue a pharmacy benefit manager's license to any person, firm,
     3  association  or  corporation  who or that has complied with the require-
     4  ments of this article, including regulations promulgated by  the  super-
     5  intendent.  The superintendent, in consultation with the commissioner of
     6  health, may establish, by regulation, minimum standards for the issuance
     7  of a license to a pharmacy benefit manager.
     8    (b) The  minimum  standards  established  under  this  subsection  may
     9  address, without limitation:
    10    (1) conflicts of interest between pharmacy benefit managers and health
    11  plans or insurers;
    12    (2) deceptive practices in connection with the performance of pharmacy
    13  benefit management services;
    14    (3)  anti-competitive  practices in connection with the performance of
    15  pharmacy benefit management services;
    16    (4) unfair claims practices in  connection  with  the  performance  of
    17  pharmacy benefit management services; and
    18    (5) protection of consumers.
    19    (c)(1)  Any such license issued to a firm or association shall author-
    20  ize all of the members of the firm or  association  and  any  designated
    21  employees to act as pharmacy benefit managers under the license, and all
    22  such persons shall be named in the application and supplements thereto.
    23    (2)  Any  such  license issued to a corporation shall authorize all of
    24  the officers and any designated employees and directors thereof  to  act
    25  as pharmacy benefit managers on behalf of such corporation, and all such
    26  persons shall be named in the application and supplements thereto.
    27    (3)  For each business entity, the officer or officers and director or
    28  directors named in the application shall be designated  responsible  for
    29  the  business  entity's  compliance  with  the insurance laws, rules and
    30  regulations of this state.
    31    (d)(1) Before a pharmacy benefit manager's license shall be issued  or
    32  renewed,  the  prospective licensee shall properly file in the office of
    33  the superintendent a written application therefor in such form or  forms
    34  and  supplements thereto as the superintendent prescribes, and pay a fee
    35  of two thousand dollars for each year or fraction of a year in  which  a
    36  license shall be valid.
    37    (2)  Every  pharmacy benefit manager's license shall expire thirty-six
    38  months after the date of issue. Every license issued  pursuant  to  this
    39  section  may be renewed for the ensuing period of thirty-six months upon
    40  the filing of an application in conformity with this subsection.
    41    (e)(1) If an application for a renewal license shall have  been  filed
    42  with the superintendent before November first of the year of expiration,
    43  then  the  license sought to be renewed shall continue in full force and
    44  effect either until the issuance by the superintendent  of  the  renewal
    45  license  applied  for  or until five days after the superintendent shall
    46  have refused to issue such renewal license  and  given  notice  of  such
    47  refusal to the applicant.
    48    (2)  Before refusing to renew any license pursuant to this section for
    49  which a renewal application has been filed pursuant to paragraph one  of
    50  this  subsection,  the  superintendent shall notify the applicant of the
    51  superintendent's intention to do so and  shall  give  such  applicant  a
    52  hearing.
    53    (f)  The  superintendent may refuse to issue a pharmacy benefit manag-
    54  er's license if, in the superintendent's judgment, the applicant or  any
    55  member,  principal,  officer or director of the applicant, is not trust-
    56  worthy and competent to act as or in connection with a pharmacy  benefit

        A. 2836--A                          8
 
     1  manager,  or that any of the foregoing has given cause for revocation or
     2  suspension of such license, or has failed to comply with  any  prerequi-
     3  site for the issuance of such license.
     4    (g) Licensees and applicants for a license under this section shall be
     5  subject to examination by the superintendent as often as the superinten-
     6  dent  may  deem  it  expedient.  The superintendent may promulgate regu-
     7  lations establishing methods and procedures for facilitating and verify-
     8  ing compliance with the requirements of  this  section  and  such  other
     9  regulations as necessary.
    10    (h)  The  superintendent  may  issue  a  replacement  for  a currently
    11  in-force license that has been lost or destroyed. Before the replacement
    12  license shall be issued, there shall be on file in  the  office  of  the
    13  superintendent  a  written  application  for  the  replacement  license,
    14  affirming under penalty of perjury that the original  license  has  been
    15  lost or destroyed, together with a fee of two hundred dollars.
    16    (i) No pharmacy benefit manager shall engage in any practice or action
    17  that  a  health plan or provider is prohibited from engaging in pursuant
    18  to this chapter.
    19    § 2907. Revocation or suspension of a registration  or  license  of  a
    20  pharmacy  benefit  manager.  (a) The superintendent may refuse to renew,
    21  may revoke, or may suspend for a period  the  superintendent  determines
    22  the  registration  or  license of any pharmacy benefit manager if, after
    23  notice and hearing, the superintendent determines that the registrant or
    24  licensee or any member, principal,  officer,  director,  or  controlling
    25  person of the registrant or licensee, has:
    26    (1)  violated  any insurance laws, section two hundred eighty-a of the
    27  public health law or violated any regulation, subpoena or order  of  the
    28  superintendent  or  of  another  state's  insurance commissioner, or has
    29  violated any law in the course of his or her dealings in  such  capacity
    30  after  such  license  has been issued or renewed pursuant to section two
    31  thousand nine hundred six of this article;
    32    (2) provided materially incorrect, materially  misleading,  materially
    33  incomplete  or  materially  untrue  information  in  the registration or
    34  license application;
    35    (3) obtained or attempted to obtain a registration or license  through
    36  misrepresentation or fraud;
    37    (4)(A) used fraudulent, coercive or dishonest practices;
    38    (B) demonstrated incompetence;
    39    (C) demonstrated untrustworthiness; or
    40    (D) demonstrated financial irresponsibility in the conduct of business
    41  in this state or elsewhere;
    42    (5)  improperly  withheld,  misappropriated or converted any monies or
    43  properties received in the course of business in  this  state  or  else-
    44  where;
    45    (6)  intentionally  misrepresented  the terms of an actual or proposed
    46  insurance contract;
    47    (7) admitted or been found to  have  committed  any  insurance  unfair
    48  trade practice or fraud;
    49    (8)  had  a  pharmacy  benefit manager registration or license, or its
    50  equivalent, denied, suspended or revoked in any other  state,  province,
    51  district or territory;
    52    (9)  failed  to pay state income tax or comply with any administrative
    53  or court order directing payment of state income tax; or
    54    (10) ceased to meet the requirements  for  registration  or  licensure
    55  under this article.

        A. 2836--A                          9
 
     1    (b)  Before  revoking or suspending the registration or license of any
     2  pharmacy benefit manager pursuant to the provisions of this article, the
     3  superintendent shall give notice to the registrant or  licensee  and  to
     4  every  sub-licensee  and  shall hold, or cause to be held, a hearing not
     5  less than ten days after the giving of such notice.
     6    (c)  If  a  registration or license pursuant to the provisions of this
     7  article is revoked or suspended by the superintendent, then  the  super-
     8  intendent shall forthwith give notice to the registrant or licensee.
     9    (d) The revocation or suspension of any registration or license pursu-
    10  ant  to  the  provisions  of this article shall terminate forthwith such
    11  registration or license and the authority  conferred  thereby  upon  all
    12  sub-licensees.  For  good  cause shown, the superintendent may delay the
    13  effective date of a revocation or suspension to permit the registrant or
    14  licensee to satisfy some  or  all  of  its  contractual  obligations  to
    15  perform pharmacy benefit management services in the state.
    16    (e)(1) No individual, corporation, firm or association whose registra-
    17  tion  or license as a pharmacy benefit manager has been revoked pursuant
    18  to subsection (a) of this section, and no firm or association  of  which
    19  such individual is a member, and no corporation of which such individual
    20  is  an  officer or director, and no controlling person of the registrant
    21  or licensee shall be entitled to  obtain  any  registration  or  license
    22  under  the  provisions  of this article for a minimum period of one year
    23  after such revocation, or, if such revocation  be  judicially  reviewed,
    24  for  a  minimum period of one year after the final determination thereof
    25  affirming the action of the superintendent in revoking such license.
    26    (2) If any such registration or license held by a firm, association or
    27  corporation be revoked, no member of such firm  or  association  and  no
    28  officer or director of such corporation or any controlling person of the
    29  registrant  or  licensee shall be entitled to obtain any registration or
    30  license, or to be named as a sub-licensee in  any  such  license,  under
    31  this  article  for  the  same  period of time, unless the superintendent
    32  determines, after notice and  hearing,  that  such  member,  officer  or
    33  director  was  not personally at fault in the matter on account of which
    34  such registration or license was revoked.
    35    (f) If any corporation, firm, association or  person  aggrieved  shall
    36  file  with  the  superintendent a verified complaint setting forth facts
    37  tending to show sufficient ground for the revocation  or  suspension  of
    38  any  pharmacy benefit manager's registration or license, then the super-
    39  intendent shall, after notice and  a  hearing,  determine  whether  such
    40  registration or license shall be suspended or revoked.
    41    (g)  The  superintendent  shall  retain  the  authority to enforce the
    42  provisions of and impose any penalty or remedy authorized by this  chap-
    43  ter  against  any  person  or  entity  who is under investigation for or
    44  charged with a violation of this chapter, even if the person's or  enti-
    45  ty's registration or license has been surrendered, or has expired or has
    46  lapsed by operation of law.
    47    (h)  A  registrant or licensee subject to this article shall report to
    48  the superintendent any administrative action taken  against  the  regis-
    49  trant  or  licensee  in  another jurisdiction or by another governmental
    50  agency in this state within thirty days of the final disposition of  the
    51  matter.  This report shall include a copy of the order, consent to order
    52  or other relevant legal documents.
    53    (i)  Within thirty days of the initial pretrial hearing date, a regis-
    54  trant or licensee subject to this article shall  report  to  the  super-
    55  intendent  any  criminal prosecution of the registrant or licensee taken
    56  in any jurisdiction. The report shall include  a  copy  of  the  initial

        A. 2836--A                         10
 
     1  complaint  filed,  the  order  resulting  from the hearing and any other
     2  relevant legal documents.
     3    §  2908.  Penalties for violations. (a) The superintendent, in lieu of
     4  revoking or suspending the registration or license of  a  registrant  or
     5  licensee  in  accordance with the provisions of this article, may in any
     6  one proceeding by order, require the registrant or licensee  to  pay  to
     7  the people of this state a penalty in a sum not exceeding the greater of
     8  (1)  one thousand dollars for each offense and two thousand five hundred
     9  dollars for  each  subsequent  violation  or  (2)  the  aggregate  gross
    10  receipts attributable to all offenses.
    11    (b)  Upon  the  failure  of  such  a registrant or licensee to pay the
    12  penalty ordered pursuant to subsection (a) of this section within twenty
    13  days after the mailing of the order, postage  prepaid,  registered,  and
    14  addressed  to  the  last known place of business of the licensee, unless
    15  the order is stayed by an order of a court  of  competent  jurisdiction,
    16  the  superintendent may revoke the registration or license of the regis-
    17  trant or licensee or may suspend the same for such period as the  super-
    18  intendent determines.
    19    §  2909.  Stay  or  suspension  of superintendent's determination. The
    20  commencement of a proceeding under article seventy-eight  of  the  civil
    21  practice  law  and  rules, to review the action of the superintendent in
    22  suspending or revoking or refusing to renew any certificate  under  this
    23  article,  shall  stay  such action of the superintendent for a period of
    24  thirty days. Such stay shall not be extended for a longer period  unless
    25  the  court  shall  determine,  after  a preliminary hearing of which the
    26  superintendent is notified forty-eight hours in advance, that a stay  of
    27  the  superintendent's  action pending the final determination or further
    28  order of the court will not unduly injure the interests of the people of
    29  the state.
    30    § 2910. Revoked registrations or licenses.  (a)(1)  No  person,  firm,
    31  association,  corporation  or  other entity subject to the provisions of
    32  this article whose registration or license under this article  has  been
    33  revoked,  or  whose registration or license to engage in the business of
    34  pharmacy benefit management in any capacity  has  been  revoked  by  any
    35  other  state  or territory of the United States shall become employed or
    36  appointed by a pharmacy benefit manager as an officer, director,  manag-
    37  er,  controlling person or for other services, without the prior written
    38  approval of the superintendent, unless such services are for maintenance
    39  or are clerical or ministerial in nature.
    40    (2) No person, firm, association, corporation or other entity  subject
    41  to  the provisions of this article shall knowingly employ or appoint any
    42  person or entity whose registration or license issued under this article
    43  has been revoked, or whose registration or  license  to  engage  in  the
    44  business of pharmacy benefit management in any capacity has been revoked
    45  by  any  other  state  or territory of the United States, as an officer,
    46  director, manager, controlling person or for other services, without the
    47  prior written approval of the superintendent, unless such  services  are
    48  for maintenance or are clerical or ministerial in nature.
    49    (3)  No  corporation  or partnership subject to the provisions of this
    50  article shall knowingly permit any person whose registration or  license
    51  issued  under  this  article  has been revoked, or whose registration or
    52  license to engage in the business of pharmacy benefit management in  any
    53  capacity has been revoked by any other state, or territory of the United
    54  States,  to  be a shareholder or have an interest in such corporation or
    55  partnership, nor shall any such person become a shareholder  or  partner

        A. 2836--A                         11
 
     1  in  such  corporation or partnership, without the prior written approval
     2  of the superintendent.
     3    (b)  The  superintendent  may  approve  the employment, appointment or
     4  participation of any such person whose registration or license has  been
     5  revoked:
     6    (1)  if the superintendent determines that the duties and responsibil-
     7  ities of such person are subject to  appropriate  supervision  and  that
     8  such  duties  and  responsibilities will not have an adverse effect upon
     9  the public, other registrants or licensees, or the registrant or  licen-
    10  see proposing employment or appointment of such person; or
    11    (2)  if  such  person  has  filed an application for reregistration or
    12  relicensing pursuant to this article and the application for reregistra-
    13  tion or relicensing has not been approved or denied within  one  hundred
    14  twenty  days  following  the  filing  thereof, unless the superintendent
    15  determines within the said time that employment or appointment  of  such
    16  person  by a registrant or licensee in the conduct of a pharmacy benefit
    17  management business would not be in the public interest.
    18    (c) The provisions of this section shall not apply to the ownership of
    19  shares of any corporation registered or licensed pursuant to this  arti-
    20  cle  if  the  shares of such corporation are publicly held and traded in
    21  the over-the-counter market or upon any national or regional  securities
    22  exchange.
    23    § 2911. Change of address. A registrant or licensee under this article
    24  shall inform the superintendent by a means acceptable to the superinten-
    25  dent of a change of address within thirty days of the change.
    26    §  2912. Applicability of other laws. Nothing in this article shall be
    27  construed to exempt a pharmacy benefit manager from complying  with  the
    28  provisions  of  articles  twenty-one  and forty-nine of this chapter and
    29  articles forty-four and forty-nine and section two hundred  eighty-a  of
    30  the  public health law, section three hundred sixty-four-j of the social
    31  services law, or any other provision of this chapter  or  the  financial
    32  services law.
    33    §  2913.  Assessments. Pharmacy benefit managers that file a registra-
    34  tion with the department or are licensed  by  the  department  shall  be
    35  assessed by the superintendent for the operating expenses of the depart-
    36  ment  that  are  solely attributable to regulating such pharmacy benefit
    37  managers in such proportions as the superintendent shall deem  just  and
    38  reasonable.
    39    §  3.  Subsection (b) of section 2402 of the insurance law, as amended
    40  by section 71 of part A of chapter 62 of the laws of 2011, is amended to
    41  read as follows:
    42    (b) "Defined violation" means the commission by a  person  of  an  act
    43  prohibited  by:  subsection (a) of section one thousand one hundred two,
    44  section one thousand two hundred  fourteen,  one  thousand  two  hundred
    45  seventeen,  one  thousand two hundred twenty, one thousand three hundred
    46  thirteen, subparagraph (B) of paragraph two of subsection (i) of section
    47  one thousand three hundred twenty-two, subparagraph (B) of paragraph two
    48  of subsection (i) of section one thousand three hundred twenty-four, two
    49  thousand one hundred two, two thousand one hundred seventeen, two  thou-
    50  sand  one  hundred  twenty-two,  two  thousand one hundred twenty-three,
    51  subsection (p) of section two thousand three hundred  thirteen,  section
    52  two  thousand  three hundred twenty-four, two thousand five hundred two,
    53  two thousand five hundred three, two thousand  five  hundred  four,  two
    54  thousand six hundred one, two thousand six hundred two, two thousand six
    55  hundred  three,  two thousand six hundred four, two thousand six hundred
    56  six, two thousand seven hundred three, two thousand  nine  hundred  two,

        A. 2836--A                         12
 
     1  two  thousand  nine hundred five, three thousand one hundred nine, three
     2  thousand two hundred twenty-four-a, three thousand four hundred  twenty-
     3  nine,  three  thousand  four  hundred  thirty-three,  paragraph seven of
     4  subsection  (e)  of section three thousand four hundred twenty-six, four
     5  thousand two hundred twenty-four, four thousand two hundred twenty-five,
     6  four thousand two hundred twenty-six, seven thousand eight hundred nine,
     7  seven thousand eight hundred ten, seven thousand eight  hundred  eleven,
     8  seven  thousand  eight  hundred  thirteen,  seven thousand eight hundred
     9  fourteen and seven thousand eight hundred fifteen of  this  chapter;  or
    10  section  135.60,  135.65,  175.05,  175.45,  or  190.20,  or article one
    11  hundred five of the penal law.
    12    § 4. Severability.  If any provision of this act, or  any  application
    13  of  any  provision  of  this act, is held to be invalid, or ruled by any
    14  federal agency to violate or be inconsistent with any applicable federal
    15  law or regulation, that shall not affect the validity  or  effectiveness
    16  of  any  other provision of this act, or of any other application of any
    17  provision of this act.
    18    § 5. This act shall take effect on the ninetieth day  after  it  shall
    19  become  a  law  and  shall  apply to any contract for providing pharmacy
    20  benefit management made or renewed on  or  after  that  date.  Effective
    21  immediately,  the commissioner of health shall make regulations and take
    22  other actions reasonably necessary to implement this act on that date.
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