Relates to price gouging of medicine

Summary of specific provisions

Section 1: Section 396-rrr of the general business law is amended to add medicine to the list of consumer goods that can be classified as subject to price gouging. The classification of medicines falling under this section of law will be determined by the publicly reported drug shortages reported by the U.S. Food and Drug Administration.

Section 2: Bans the price gouging of medicines listed as been in short supply by the US FDA.

Section 3: Allows for the courts to determine if the price established for a drug in short supply is unconscionably excessive and establishes the criteria for the court to consider such determination.

Section 4: Extends medicine price gouging prosecution powers to the Attorney General of New York State.

Justification

According data uncovered by the Associated Press and made public on September 23, 2011, there is an ongoing and "severe shortage of drugs for chemotherapy, infections and other serious ailments is endangering patients and forcing hospitals to buy life-saving medications from secondary suppliers at huge markups because they can't get them any other way."

An Associated Press review of industry reports and interviews with nearly two dozen experts found at least 15 deaths in the past 15 months blamed on the shortages, either because the right drug wasn't available or because of dosing errors or other problems in administering or preparing alternative medications.

The shortages, mainly involving widely-used generic injected drugs that ordinarily are cheap, have been delaying surgeries and cancer treatments, leaving patients in unnecessary pain and forcing hospitals to give less effective treatments. That's resulted in complications and longer hospital stays.

Just over half of the 549 U.S. hospitals responding to a survey this summer by the Institute for Safe Medication Practices, a patient safety group, said they had purchased one or more prescription drugs from so-called "gray market vendors" - companies other than their normal wholesalers. Most also said they've had to do so more often of late, and 7 percent reported side effects or other problems.

"Hospital pharmacists "are really looking at this as a crisis. They are scrambling to find drugs," the AP article read.

The Associated Press found that among the reasons for drug shortages was price gouging by secondary market vendors. It is obvious that the owners of these secondary market companies called "gray market" are placing profit over lives and Americans have been found to be dying due to this practice.

"Secondary, "gray market" vendors are business firms that buy scarce drugs from small regional wholesalers, pharmacies or other sources aid then market them to hospitals, often at many times the normal price, These sellers may not be licensed, authorized distributors," appeared in the AP news story.

According to pharmacy industry representatives, at least 15 recent deaths to drug shortages based on reports by medical personnel, but many deaths and injuries go unreported.

So far this year, 210 drugs have been added to the list of drugs in short supply. The average price markup on drugs sold by secondary distributors was 650 percent, according to an Aug. 16 report by the Premier Healthcare Alliance, a group that helps U.S. hospitals and other health providers improve their patient care and finances.

The Associated Press also reported that, in an extreme case, one vendor was offering a generic drug for dangerously high blood pressure, normally priced at $25.90 per dose, for $1,200.

Prior legislative history

2014: S2138B Referred to Consumer Protection / A3751-B Passed Assembly. A8801 of 2011, Passed Assembly 2012

Fiscal implications for state and local government

None

Effective date

This bill will take effect immediately.