What's happening
This bill requires drug manufacturers and labelers to annually report prescription drug marketing costs and eliminates tax deductions for prescription drug advertising expenses.
Why it matters
Increases transparency into drug pricing. By requiring manufacturers and labelers to disclose detailed annual reports of their prescription drug marketing costs—including advertising, gifts to providers, and promotional activities—the bill aims to shed light on how marketing contributes to prescription drug prices and overall healthcare costs.
Enables informed policy decisions. The mandated aggregation and analysis of marketing expense data, reported biannually to state leaders, could help policymakers understand the relationship between drug marketing and healthcare spending, and guide future efforts to control drug costs or regulate marketing practices.
Removes financial incentives for aggressive drug advertising. By eliminating state tax deductions for prescription drug advertising expenses, the bill removes a financial benefit for companies, potentially reducing excessive or misleading marketing that can drive up drug utilization and healthcare spending.
Imposes penalties for noncompliance. The imposition of significant civil penalties (up to $10,000 plus court costs and attorneys’ fees) for failure to report ensures that drug manufacturers and labelers are incentivized to comply with transparency requirements, reinforcing the accountability of the pharmaceutical industry.
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Who cares
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Require Drug Marketing Reports
Plain English, a few words. Used as the page title.
Sponsors
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History
- Referred to health
- Referred to health
Full text
3 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
4001
2017-2018 Regular Sessions
IN SENATE
February 1, 2017
Introduced by Sens. KRUEGER, PERKINS -- 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 requiring the manufacturer or labeler of each prescription drug to annually report the marketing costs of such drug to the department of health and to amend the tax law, in relation to eliminating deductibility for certain expenses incurred in the advertising of prescription drugs
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Legislative intent. The legislature hereby finds and declares that the price of prescription drugs in this state and across the nation has been increasing at an alarming rate over the past decade. Prescription drug costs are increasing at a faster rate than any other component of health care and are driving the increase in overall health care cost. As is apparent by the ubiquitous nature of the marketing and public information campaigns relating to prescription drugs, pharmaceutical manufacturers put a great deal of resources into marketing their products. This has been especially true since the 1997 relaxation of federal laws relating to prescription drug advertising. It is in the interest of assisting this state in its role as a purchaser of prescription drugs and administrator of prescription drug programs, to enable the state to determine the scope of prescription drug marketing costs and their effect on the cost, utilization and delivery of health care services, and thus further the role of this state as guardian of the public interest.
§ 2. Section 206 of the public health law is amended by adding a new subdivision 31 to read as follows:
31. The commissioner is authorized and directed to require manufacturers or labelers of prescription drugs, which dispense such drugs in this state and which employ, direct or utilize marketing representatives in
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD05559-01-7
S. 4001 2
the state, to report the marketing costs of each of its prescription drugs dispensed in this state.
(a) Definitions. As used in this subdivision, unless the context clearly indicates otherwise, the following terms shall have the following meanings:
(i) "Labeler" means any person or entity, having a labeler code from the federal Food and Drug Administration, that receives a prescription drug from the manufacturer or a wholesaler of such drug, and repackages such drug to be dispensed in this state.
(ii) "Manufacturer" means a manufacturer of prescription drugs dispensed in this state, and shall include the subsidiary or affiliate of such manufacturer.
(iii) "Marketing" means advertising and promotional activities for prescription drugs dispensed in this state including, but not limited to, those activities described in paragraph (b) of this subdivision.
(b) Manner of reporting. On or before July first each year every manufacturer and labeler shall file a report with the department on its marketing activities conducted in this state. Such report shall be submitted in such form and manner, and include the payment of such a fee as shall be determined by the commissioner. Each such report shall include the value, nature, purpose and recipient of marketing expenses including, but not limited to:
(i) all expenses associated with advertising, marketing and direct promotion of prescription drugs through radio, television, magazines, newspapers, direct mail and telephone communications as they pertain to residents of this state;
(ii) with regard to all providers of healthcare services regulated by the department under the provisions of article twenty-eight, thirty-six or forty-four of this chapter, including health maintenance organizations established pursuant to article forty-three of the insurance law, the following information:
(A) all expenses associated with educational or informational programs, materials and seminars, and remuneration for promoting or participating in educational or informational sessions, regardless of whether the manufacturer or labeler provides the educational or informational sessions or materials,
(B) all expenses associated with food, entertainment and gifts valued at more than seventy-five dollars, and anything provided to a health care professional for less than market value,
(C) all expenses associated with trips and travel, and
(D) all expenses associated with product samples, except for samples that will be distributed free of charge to patients; and
(iii) the aggregate cost of all employees and contractors of the manufacturer or labeler who directly or indirectly engage in the advertising or promotional activities listed in subparagraphs (i) and (ii) of this paragraph, including all forms of payment to such employees and contractors. The cost reported pursuant to this subparagraph shall reflect only that portion of payment to employees and contractors that pertains to activities within this state or to recipients of the advertising or promotional activities who are residents of or are employed in this state.
(c) Exceptions. The following marketing expenses shall not be subject to the reporting requirements of this subdivision:
(i) expenses of seventy-five dollars or less;
S. 4001 3
(ii) reasonable compensation and reimbursement for expenses in connection with a bona fide clinical trial of a new vaccine, therapy or treatment; and
(iii) scholarships and reimbursement of expenses for attending a significant educational, scientific or policy-making conference or seminar of a national, regional or specialty medical or other professional association if the recipient of the scholarship is chosen by the association sponsoring the conference or seminar.
(d) Department reports. Annually on or before November thirtieth, the department shall submit a report, providing information in aggregate form, on prescription drug marketing expenses to the governor, temporary president of the senate and speaker of the assembly. On or before January first, two thousand nineteen and every two years thereafter, the department shall provide a report to the governor, temporary president of the senate and speaker of the assembly, providing information in aggregate form, containing an analysis of the data submitted to the department, including the scope of prescription drug marketing activities and expenses and their effect on the cost, utilization and delivery of health care services and any recommendations with regard to marketing activities of prescription drug manufacturers and labelers.
(e) Confidentiality; public information. Notwithstanding any provision of law to the contrary, all information submitted to the department pursuant to this subdivision shall be confidential and not a public record as defined in section eighty-six of the public officers law. Data compiled in aggregate form by the department for the purposes of reporting required by this subdivision shall be a public record as defined in section eighty-six of the public officers law, as long as it does not reveal trade information that is protected by state or federal law.
(f) Violations. Any person who violates any provision of this subdivision shall be liable to the people of the state for a civil penalty of ten thousand dollars, plus court costs and attorneys' fees, which shall be enforced pursuant to title two of this article.
(g) Rules. Any and all rules and regulations necessary to implement the provisions of this subdivision shall be promulgated by the commissioner.
§ 3. Paragraph (b) of subdivision 9 of section 208 of the tax law is amended by adding a new subparagraph 22 to read as follows:
(22) Expenses incurred by a manufacturer or distributor of a drug, the dispensing of which to a consumer without a prescription is prohibited by either federal or state law, for the advertising of such drug to consumers.
§ 4. Subsection (b) of section 612 of the tax law is amended by adding a new paragraph 42 to read as follows:
(42) Expenses incurred by a manufacturer or distributor of a drug, the dispensing of which to a consumer without a prescription is prohibited by either federal or state law, for the advertising of such drug to consumers.
§ 5. This act shall take effect on the one hundred eightieth day after it shall have become a law; provided that effective immediately, any rules and regulations necessary to implement the provisions of this act on its effective date are authorized to be made on or before such effective date and provided further that the provisions of sections three and four of this act shall take effect immediately and shall apply to taxable years beginning on or after January first of the year in which it shall have become a law.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the public health law, in relation to requiring the manufacturer or labeler of each prescription drug to annually report the marketing costs of such drug to the department of health and to amend the tax law, in relation to eliminating deductibility for certain expenses incurred in the advertising of prescription drugs
Purpose or general idea of bill
To require the state Department of Health to collect information on pharmaceutical company expenditures incurred in the marketing of prescription drugs and to report to the governor and the legislature the impact of these expenditures on drug utilization, health insurance premiums, and other matters.
Summary of specific provisions
Section one sets out the legislative intent of this measure. Section two adds a new paragraph (w) to subdivision 1 of section 206 of the Public Health Law to require the commissioner of the Department of Health (DOH) to conduct a cost/benefit analysis of the advertising and promotional activities associated with the provisions of prescription drugs in New York State. In performing this function, the commissioner is directed to collect information from pharmaceutical companies (and pharmaceutical companies are directed to provide such information), related to advertising, marketing and so-called "drug detailing" activities, including: 1) funds spent on health care professionals, hospitals, clinics, pharmacy benefits management employees and managed care employees on education materials, food and entertainment, gifts, trips and travel, free samples, seminars and income; and 2) advertising in NYS, including radio, television, the internet and daily and weekly periodicals, billboards, signs, and direct correspondence. After collecting this data, the commissioner is required to analyze it and make recommendations to the Governor and the legislature on the costs associated with advertising and promotional activities, on prescription drug utilization, inpatient admissions, ambulatory care, invasive procedures, health care visits, premium rates, and quality.
Read the full memo (678 words)
Justification
Prescription drug costs represent a growing component in health care. According to the federal Health Care Financing Administration (HCFA, personal spending on prescription drugs rose 228% from 1988 to 1998. Some observers see that as a positive trend, arguing that effective drug regimens prevent inpatient admissions and other costly procedures, and that marketing is necessary to inform consumers and health care practitioners about products.
Critics of the practices, however, believe that the rise in prescription drug spending correlates with the amounts pharmaceutical companies are spending on marketing, advertising and "detailing" drugs in the media and directly with health care professionals, and point to some troubling trends with implications for both the quality and cost of health care:
* The number of sales representatives employed by drug companies nearly doubled since 1996, rising from 41,000 to 83,000;
The drug industry sponsored more than 314,000 physician "events" last year, ranging from catered lunches in hospital conference rooms to weekend getaways at resorts, nearly double the number four years earlier; and of the drugs responsible for the nearly 19% rise in
spending for pharmaceuticals last year, the four top sellers were among the top ten most heavily marketed drugs.
Some observers contend that the massive amounts spent on these promotional activities has led to inappropriate use of some drugs with serious consequences for health care quality, underutilization of less costly generic drugs, conflicts of interest for providers and added unnecessary health care costs. A January study by the Journal of the American Medical Association (JAMA) found that marketing directly influences the drugs that doctors prescribe. And an April 1995 JAMA article concluded that over 10% of the statements marketing representatives made about drugs contradicted information readily available to them.
The purpose of this bill is to authorize the commissioner of health to collect data on the marketing and promotional activities of drug companies, determine impact on utilization of drugs, avoided costs, prescription trends and other matters, and report back to the governor and the legislature on their findings. Furnishing policymakers with up-to-date information on the impact of drug company marketing practices and their effects will help guide decisions on these critical issues.
Fiscal implications
None.
Effective date
Immediate.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.