Require Drug Deal Disclosure

Section 2 requires each pharmaceutical manufacturer doing business in this state that manufactures a brand-name prescription drug and enters into an agreement with another pharmaceutical manufacturer for the purpose of delaying or preventing another manufacturer from introducing a generic substitute for a brand-name drug to, no later than thirty days after entering into such agreement, send notice to the Attorney General with the name of the drug, the wholesale price, the disease it is commonly prescribed to treat, the manufacturer of such drug, the name of the generic manufacturer and the length of the delay. The Attorney General is then required to share that information with the New York State Drug Utilization Review Board, all Medicaid managed care plans, health carriers and pharmacy benefit managers doing business in the state. The Attorney General's office shall also post on its website all the notices required in section 2 searchable by drug, cost, disease and manufacturer both for the brand-name and generic drug for public review. A manufacturer of a brand-name drug who fails to notify the Attorney General of any agreement specified in the act shall be fined by the Attorney General no less than five-thousand dollars for a first violation and no less than ten-thousand dollars for each violation ther- eafter for each day such manufacturer fails to properly notify the attorney general pursuant to the requirements of the section. Addi- tionally, the Attorney General is authorized to promulgate rules and regulations necessary for the implementation of this section.

Section 3 establishes the effective date.

Justification

The Manufacturer Disclosure and Transparency Act would bring transparen- cy and disclosure to the pay-for-delay deals that harm consumers by delaying generic drug competition with brand-name drugs. Rising prescription drug prices have been devastating to New Yorkers who depend on prescription drugs to keep them healthy. The growing number of brand- name and specialty drugs with prices of $100,000 or more has led many to question whether the costs associated with these products are defensible or sustainable. The timely availability of generic and biosimilar drugs, which will increase competition and help lower prices - will play an important role in addressing these concerns.

Brand-name drug manufacturers often file patent infringement lawsuits against the first generic drug manufacturers to seek FDA approval for competing generic drugs. Rather than face the costs and uncertainty associated with litigation, some brand-name and generic drug manufactur- ers choose to enter into what is known as a "pay-for-delay" agreement where the brand-name drug manufacturers compensates the generic drug manufacturer for keeping its product off the market for a certain amount of time. Such agreements can be particularly problematic when they involve the first-to-file generic manufacturer, because no other generic manufacturer can enter the market until the first-to-file manufacturer has marketed its product for 180 days.

These pay-for-delay agreements provide financial benefits to drug manufacturers at the expense of consumers; the brand-name manufacturer can continue to charge monopoly prices, and the generic company is compensated for its inaction. The Federal Trade Commission (FTC) esti- mates that pay-for delay agreements cost American consumers $3.5 billion per year.

The FTC has found that pay-for-delay agreements prohibit generic entry for an average of nearly 17 months longer than patent settlement agree- ments without such payments. In the meantime, consumers must continue paying brand-name drug prices, which can be as much as 85 percent higher than the prices of their generic drug counterparts. Any delay in gener- ic entry results in a longer period of purchases at the full brand price and correspondingly fewer purchases at less expensive generic prices. This negatively impacts both consumers and other payers, including taxpayer-funded health programs such as Medicaid.

Generic drugs have proven to be one of the safest and most effective ways for consumers to lower their prescription drug costs, and the use of generic drugs has been steadily increasing. These drugs should not be delayed from entering the marketplace.

Prior legislative history

New bill.

Fiscal implications

None.

Effective date

This act shall take effect on the one hundred eightieth day after it shall have become a law.