What's happening
This bill prohibits price gouging on medicines in shortage by making excessive pricing illegal and enforceable by civil penalties.
Why it matters
Directly targets price spikes during FDA-declared shortages. By tying the law to the FDA’s public shortage list, this bill ensures protections are activated precisely when drugs are most scarce and patients are vulnerable, making it harder for suppliers to exploit emergencies for profit.
Establishes clear legal standards for excessive pricing. The bill defines “unconscionably excessive” pricing and sets out specific criteria for courts to evaluate, providing a more predictable legal framework for enforcement and reducing ambiguity for both businesses and consumers.
Empowers the Attorney General with enforcement tools and consumer restitution. The law allows for swift legal action and significant civil penalties (up to $100,000), and it explicitly authorizes restitution for consumers harmed by gouging, increasing both deterrence and potential redress for affected individuals.
Considers the impact on small and independent distributors. Before pursuing enforcement, the Attorney General must consult with the Department of Health to assess whether independent dispensers are unfairly targeted, helping to avoid unintended harm to small businesses that may face genuine cost increases during shortages.
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Who cares
Headline styles
Stop Medicine Price Gouging
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Referred to consumer protection
- Referred to consumer protection
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
256
2019-2020 Regular Sessions
IN SENATE (Prefiled)
January 9, 2019
Introduced by Sen. KENNEDY -- read twice and ordered printed, and when printed to be committed to the Committee on Consumer Protection
AN ACT to amend the general business law, in relation to the price gouging of medicine
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. The general business law is amended by adding a new section 396-rrr to read as follows:
§ 396-rrr. Price gouging of medicine. 1. For the purposes of this section, "drug subject to a shortage" shall mean any drug or medical product intended for human use publicly reported as being subject to a shortage by the U.S. food and drug administration on its website, provided, however, that a drug or medical product shall only be considered a "drug subject to a shortage" during the period of time that such drug or medical product is listed as being subject to a shortage on such website.
2. No party within the chain of distribution of any drug subject to a shortage shall sell or offer to sell any such drug subject to a shortage for an amount which represents an unconscionably excessive price.
3. Whether a price is unconscionably excessive is a question of law for the court.
(a) The court's determination that a violation of this section has occurred shall be based on any of the following factors:
(i) that the amount of the excess in price is unconscionably extreme;
(ii) that there was an exercise of unfair leverage or unconscionable means; or
(iii) a combination of both factors in subparagraphs (i) and (ii) of this paragraph.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD05721-01-9
S. 256 2
(b) In any proceeding commenced pursuant to subdivision four of this section, prima facie proof that a violation of this section has occurred shall include evidence that:
(i) the amount charged represents a gross disparity between the price of the drug subject to a shortage which was the subject of the transaction and their value measured by the price at which such drug was sold or offered for sale by the defendant in the usual course of business immediately prior to the onset of the shortage; and
(ii) the amount charged grossly exceeded the price at which the same or similar drug subject to a shortage was readily obtainable by other purchasers in the trade area. A defendant may rebut a prima facie case with evidence that additional costs not within the control of the defendant were imposed on the defendant for the drug subject to a shortage.
4. Where a violation of this section is alleged to have occurred, the attorney general may apply in the name of the People of the State of New York to the supreme court within the judicial district in which such violation is alleged to have occurred, on notice of five days, for an order enjoining or restraining commission or continuance of the alleged unlawful acts. In any such proceeding, the court shall impose a civil penalty in an amount not to exceed one hundred thousand dollars and, where appropriate, order restitution to aggrieved consumers.
5. Prior to applying for an order from the supreme court pursuant to subdivision four of this section, the attorney general, in consultation with the department of health, shall consider the pricing dynamics unique to the small and independent distributors within the supply chain including, but not limited to, the price charged by the end use dispenser relative to its acquisition cost.
§ 2. This act shall take effect immediately.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the general business law, in relation to the price goug- ing of medicine
Purpose or general idea of the bill
This legislation adds medicine to the list of goods and services that can be classified as possibly being subject to price gouging.
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 short- ages 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 to 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" that is "endan- gering 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 near- ly two dozen experts found that at least 15 deaths in recent years were blamed on the shortages, either because the right drug wasn't available or because of dosing errors and 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 unneces- sary pain and forcing hospitals to give less effective treatments. This has resulted in complications and longer hospital stays.
Just over half of the 549 U.S. hospitals responding to a survey 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.
According to pharmacy industry representatives, there are at least 15 deaths to drug shortages in recent years based on reports by medical personnel, but many deaths and injuries go unreported.
At least 210 drugs in recent years 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, normal- ly priced at $25.90 per dose, for $1,200.
Prior legislative history
2017-18: S.5262 - Referred to Consumer Protection /A.7087 - Passed Assembly 2016: S.4508 - Referred to Consumer Protection /A.6731 - Passed Assembly 2015: S.4508 - Referred to Consumer Protection /A.6731 - Passed Assembly 2014: S.2138-B - Referred to Consumer Protection/ A.3751-B - Passed Assembly 2013: S.2138-B - Referred to Consumer Protection/ A.3751-B - Passed Assembly
Fiscal implications for state and local government
None.
Effective date
This bill will take effect immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.