Prohibits price gouging by manufacturers of prescription drugs

1 Co-sponsor

• Susan Serino

Title of bill

An act to amend the public health law and the general business law, in relation to price gouging on prescription drugs

Purpose

To prevent excessive, unjustifiable price increases in prescription medications.

Summary of provisions

Section one adds a new Public Health Law § 278-a which would require any manufacturer of a brand or generic drug to notify the Commissioner of Health and the Drug Utilization Review Board (DURB) if they institute a wholesale acquisition cost increase of 100% or more within a 12 month period. Such notice must be provided not less than 30 days prior to instituting the increase and shall be provided on a form provided by the Commissioner and DURB. The Commissioner is authorized to require prior authorization effective as of the date of the price increase, until such time as a determination is made by the DURB as to whether the price increase was excessive. Should the DURB find that the price increase was excessive, they shall continue to require prior authorization, and may refer the matter to the Attorney General. In the event that the DURB does not find the price increase to be excessive, the DURB shall remove the prior authorization requirement.

Section two adds a new General Business Law § 396-rrr to expressly authorize the Attorney General to prosecute price gouging of prescription drugs upon referral from the DURB.

Section three provides that this act shall take effect immediately.

Justification

A number of recent high profile news stories have highlighted the problem of excessive price increases in prescription drugs. Prescription drug prices are a significant driver of rising health care costs, with reports suggesting prescription drug costs increased more than 10% in 2015 alone. In addition to impacting the state Medicaid program, erratic and severe cost increases impact all citizens, especially the state's growing population of senior citizens, who see increased cost-sharing and/or increased premiums to cover these costs, or worse, lose access to these medications. Millions of residents depend on prescription medications and cannot afford to shoulder the increased burden of sudden, excessive, and unjustifiable price increases.

This bill balances the right of manufacturers to respond to market forces beyond their control, and to conduct business in a manner conducive to pursuing competitive and innovative breakthroughs in medicine, with the right of the public to have access to medications and not be subject to unconscionable price gouging. The bill penalizes manufacturers when they engage in excessive price increases, but only when those price increases are not the result of external economic conditions, development costs, or regulatory burdens. In order to discourage bad actors from taking advantage of the system, engaging in distribution methods or other tactics aimed solely at increasing costs, there must be measures in place to control excessive increases in price when they become unconscionable and unjustifiable.

Legislative history

New bill. FISCAL IMPLICATIONS :

Anticipated savings.

Effective date

Immediately.