Bill Text: NY S06738 | 2023-2024 | General Assembly | Amended
Bill Title: Establishes the prescription drug supply chain transparency act; requires pharmacy services administrative organizations, pharmacy switch companies and rebate aggregators to register with the insurance department and to provide certain disclosures relating to the ownership and activities of such entities; relates to deposits into the pharmacy benefit manager regulatory fund.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Engrossed) 2024-01-30 - referred to insurance [S06738 Detail]
Download: New_York-2023-S06738-Amended.html
STATE OF NEW YORK ________________________________________________________________________ 6738--A 2023-2024 Regular Sessions IN SENATE May 8, 2023 ___________ Introduced by Sen. MYRIE -- read twice and ordered printed, and when printed to be committed to the Committee on Insurance -- recommitted to the Committee on Insurance in accordance with Senate Rule 6, sec. 8 -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee AN ACT to amend the insurance law, in relation to prescription drug supply chain transparency; and to amend the state finance law, in relation to deposits into the pharmacy benefit manager regulatory fund The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. This act shall be known and may be cited as the 2 "prescription drug supply chain transparency act". 3 § 2. The insurance law is amended by adding a new article 30 to read 4 as follows: 5 ARTICLE 30 6 PRESCRIPTION DRUG SUPPLY CHAIN TRANSPARENCY 7 Section 3001. Definitions. 8 3002. Electronic filing requirement. 9 3003. Special reports and other powers. 10 3004. Registration of pharmacy services administrative organiza- 11 tions. 12 3005. Required disclosures by pharmacy services administrative 13 organizations. 14 3006. Registration of pharmacy switch companies. 15 3007. Required disclosures by pharmacy switch companies. 16 3008. Registration of rebate aggregators. 17 3009. Required disclosures by rebate aggregators. 18 3010. Deposit of penalties and fees. 19 § 3001. Definitions. (a) For the purposes of this article, the defi- 20 nitions contained in section two hundred eighty-a of the public health 21 law shall apply to this article as if specifically set forth herein. EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD11150-04-4S. 6738--A 2 1 (b) For the purposes of this article, the following words or phrases 2 shall have the following meanings, unless the context otherwise 3 requires: 4 (1) "Manufacturer" means an entity engaged in the manufacture of 5 prescription drugs sold in this state. 6 (2) "Pharmacy services administrative organization" or "PSAO" means an 7 entity that is operating in this state and that contracts with a pharma- 8 cy for the purpose of conducting business on the pharmacy's behalf with 9 wholesalers, distributors, health plans or pharmacy benefit managers. 10 (3) "Rebate aggregator" means an entity that provides formulary rebate 11 administrative services for pharmacy benefit managers or otherwise nego- 12 tiates rebates with manufacturers on behalf of pharmacy benefit manag- 13 ers. 14 (4) "Switch company" means an entity that acts as an intermediary 15 between a pharmacy and a pharmacy benefit manager or health plan for the 16 purpose of routing insurance claims data to or from a pharmacy. 17 § 3002. Electronic filing requirement. Notwithstanding any law to the 18 contrary, any filing or submission required under this article shall be 19 made electronically unless the entity required to make such filing or 20 submission demonstrates undue hardship, impracticability or good cause 21 as required by section three hundred sixteen of this chapter. 22 § 3003. Special reports and other powers. (a) The superintendent may 23 address to any entity required to register or report information under 24 this article, or its officers, or any agent or employee thereof any 25 inquiry in relation to its business or any matter connected therewith. 26 Every individual or entity so addressed shall reply in writing to such 27 inquiry promptly and truthfully, and such reply shall be, if required by 28 the superintendent, subscribed by such individual, or by such officer or 29 officers of the entity, or by such agent or employee of the entity as 30 the superintendent shall designate, and affirmed by them as true under 31 the penalties of perjury. 32 (b) In the event any individual or entity does not submit a good faith 33 response to an inquiry from the superintendent pursuant to subsection 34 (a) of this section within a time period specified by the superintendent 35 of not less than fifteen business days, the superintendent is authorized 36 to levy a civil penalty, after notice and hearing, against such person 37 not to exceed one thousand dollars per day for each day beyond the date 38 specified by the superintendent for response to the inquiry. 39 (c) In addition to all other powers granted by law, the superintendent 40 is hereby empowered to order any person or entity required to register 41 or report information under this article to cease and desist from 42 violations of this article and, following issuance of such an order, may 43 bring and maintain an action in any court of competent jurisdiction for 44 an injunction or other appropriate relief to enjoin threatened or exist- 45 ing violations of this article, or of the superintendent's orders or 46 regulations. Such action may specifically seek restitution on behalf of 47 persons aggrieved by a violation of this article or orders or regu- 48 lations of the superintendent. 49 (d) In addition to all other powers granted by law, whenever it shall 50 appear to the superintendent, either upon complaint or otherwise, that 51 in the course of its business within or from this state that any entity 52 shall have employed, or employs, or is about to employ any business 53 practice or shall have performed, or is performing, or is about to 54 perform any act in violation of this article or orders or regulations of 55 the superintendent, or the superintendent believes it to be in the 56 public interest that an investigation be made, the superintendent may,S. 6738--A 3 1 in the superintendent's discretion, either require or permit such entity 2 or any agent or employee thereof, to file with the department a state- 3 ment in writing under oath or otherwise as to all the facts and circum- 4 stances concerning the subject matter that the superintendent believes 5 is in the public interest to investigate and for such purpose may 6 prescribe forms upon which such statements shall be made. The super- 7 intendent may also require such other data and information as the super- 8 intendent may deem relevant and may make such special and independent 9 investigations as the superintendent may deem necessary in connection 10 with the matter. It shall be the duty of all public officers, their 11 deputies, assistants, subordinates, clerks or employees and all other 12 persons to render and furnish to the superintendent, when requested in 13 connection with an investigation under this subsection, all information 14 and assistance in their possession or within their power. 15 (e) Any entity who violates an order under subsection (c) or (d) of 16 this section shall be subject to a civil penalty, after notice and a 17 hearing, of not more than ten thousand dollars per act in violation, in 18 addition to any other penalty provided by law. 19 (f) Any communications or documents sent or received in connection 20 with an investigation under this article and any materials referring to 21 such information in the possession of the superintendent shall be confi- 22 dential and not subject to disclosure. Notwithstanding the foregoing, 23 the superintendent may release such confidential communications or docu- 24 ments to the extent necessary to address criminal or other unlawful 25 behavior. This subsection shall not apply to information, documents and 26 materials in the possession and under the control of an entity other 27 than the superintendent. 28 § 3004. Registration of pharmacy services administrative organiza- 29 tions. (a) No PSAO shall operate in this state after March thirty-first, 30 two thousand twenty-five without first registering with the department. 31 (b) A PSAO seeking registration shall file, in a form and manner 32 determined by the superintendent, information that includes at a mini- 33 mum: 34 (1) the legal name of the entity; 35 (2) any trade or other names used by the entity; 36 (3) the organizational structure of the entity; 37 (4) the pharmacies located within this state with which the entity 38 provides services; 39 (5) the persons who exercise control of the entity; 40 (6) a primary point of contact for the entity; 41 (7) an agent for service of process; 42 (8) a set of audited financials for the prior fiscal year; and 43 (9) such other information as the superintendent shall require. 44 (c) The superintendent shall accept a registration only if the super- 45 intendent determines that all the required information has been provided 46 in a satisfactory form and has received payment of a nonrefundable 47 registration fee of five thousand dollars. Notwithstanding the require- 48 ments of this subsection the superintendent may, in his or her sole 49 discretion and upon good cause shown, reduce the registration fee for 50 any PSAO to an amount not less than one-tenth of one percent of the fees 51 earned by the PSAO from all pharmacies located in New York in the prior 52 calendar year. 53 (d) If any of the information contained in the registration shall 54 change, the PSAO shall notify the department of such change in a form 55 and manner prescribed by the superintendent for such purpose within 56 twenty-one days of the change. The requirement to update shall includeS. 6738--A 4 1 the filing of a new set of audited financials upon adoption. For any 2 change other than new audited financials, the filing shall not be deemed 3 complete unless accompanied by a payment of a fee of fifty dollars. 4 (e) Every PSAO registration issued pursuant to this section shall 5 expire twelve months after the date of issue. A PSAO may renew its 6 registration for another twelve months upon the filing of an application 7 in conformity with this section. 8 (f) Before a PSAO registration shall be renewed, the PSAO shall file 9 an application for renewal in such form as the superintendent prescribes 10 and pay a fee of five thousand dollars. Notwithstanding the requirements 11 of this subsection, the superintendent may, in his or her sole 12 discretion and upon good cause shown, reduce the registration fee for 13 any PSAO to an amount not less than one-tenth of one percent of the fees 14 earned by the PSAO from all pharmacies located in New York in the prior 15 calendar year. 16 (g) If a PSAO files a renewal application with the superintendent at 17 least one month before its expiration, then the registration sought to 18 be renewed shall continue in full force and effect either until the 19 issuance by the superintendent of the renewal registration applied for 20 or until five days after the superintendent shall have refused to issue 21 such renewal registration and given notice of such refusal to the appli- 22 cant, otherwise the PSAO registration shall expire and the registrant 23 shall have no expectation of renewal. 24 § 3005. Required disclosures by pharmacy services administrative 25 organizations. (a) (1) Each PSAO shall at the time of registration 26 pursuant to section three thousand four of this article disclose to the 27 department the extent of any ownership or control of the PSAO or by the 28 PSAO of any parent company, subsidiary, or affiliate that: 29 (A) provides pharmacy services; 30 (B) provides prescription drug or device services; or 31 (C) manufactures, sells, or distributes prescription drugs, biolog- 32 icals, or medical devices. 33 (2) A PSAO shall furnish a copy of the disclosure made at the time of 34 registration to all pharmacies located in this state with which it has a 35 contract in place at the time of the registration. A PSAO shall not 36 collect any fee for any services provided to a pharmacy for any period 37 beginning five days after the filing of a registration with the depart- 38 ment until such disclosure is sent to the pharmacy. 39 (3) Not later than April first, two thousand twenty-six, the depart- 40 ment shall publish all disclosures received under this section on a 41 publicly accessible online database, which shall be searchable at least 42 by PSAO name. All disclosures shall be posted not later than ten busi- 43 ness days after a registration is accepted and shall remain on the data- 44 base for the duration of the registration of the PSAO. 45 (b) (1) Prior to entering into any contract with any pharmacy located 46 in this state, including a contract with a group of pharmacies at least 47 one of which is in this state, a PSAO shall furnish to the pharmacy a 48 written disclosure of the information required to be disclosed in 49 subsection (a) of this section. No contract with a pharmacy shall be 50 enforceable against the pharmacy by a PSAO unless such PSAO makes such 51 disclosure prior to the agreement. In addition to any other power 52 conferred by law, the superintendent may prescribe the form and manner 53 of such disclosures. 54 (2) A PSAO that owns, is owned by, in whole or in part, or controls 55 any entity that manufactures, sells, or distributes prescription drugs, 56 biologicals, or medical devices shall not, as a condition of enteringS. 6738--A 5 1 into a contract with a pharmacy, require that the pharmacy purchase any 2 drugs or medical devices from an entity with which the PSAO has a finan- 3 cial interest, or an entity with an ownership interest in the PSAO. 4 (3) No PSAO shall enter into a contract with a pharmacy in this state 5 unless such contract shall provide that all remittances for claims 6 submitted by a pharmacy benefit manager or third-party payer on behalf 7 of a pharmacy to the PSAO shall be passed through by the PSAO to the 8 pharmacy within a reasonable amount of time, established in the 9 contract, after receipt of the remittance by the PSAO from the pharmacy 10 benefit manager or third-party payer. 11 (c) (1) A PSAO that provides, accepts, or processes a discount, 12 concession, or product voucher, to reduce, directly or indirectly, a 13 covered individual's out-of-pocket expense for the order, dispensing, 14 substitution, sale, or purchase of a prescription drug shall make avail- 15 able to each pharmacy in this state that it contracts with or which it 16 contracted with in the prior calendar year, an annual report that 17 includes: 18 (A) an aggregated total of all such transactions, by the pharmacy; and 19 (B) an aggregated total of any payments received by the PSAO itself 20 for providing, processing, or accepting any discount, concession, or 21 product voucher on behalf of a pharmacy. 22 (2) A pharmacy in this state that is a party to a contract with a PSAO 23 shall have a right to an accounting of the funds received by the PSAO 24 for goods or services provided by the pharmacy to patients and custom- 25 ers. 26 § 3006. Registration of pharmacy switch companies. (a) No switch 27 company may do business in this state after June thirtieth, two thousand 28 twenty-five without first registering with the department. 29 (b) A switch company seeking registration shall file with the depart- 30 ment, in a form and manner determined by the superintendent, information 31 including but not limited to: 32 (1) the legal name of the entity; 33 (2) any trade or other names used by the entity; 34 (3) the organizational structure of the entity; 35 (4) the pharmacies located within this state and the pharmacy benefit 36 managers licensed in this state with which the entity provides services; 37 (5) the persons who exercise control of the entity; 38 (6) a primary point of contact for the entity; 39 (7) an agent for service of process; 40 (8) a set of audited financials for the prior fiscal year; and 41 (9) such other information or documents as the superintendent shall 42 require. 43 (c) The superintendent shall accept a registration only if he or she 44 deems that all the required information has been provided in a satisfac- 45 tory form and manner and has received payment of a nonrefundable regis- 46 tration fee of one thousand dollars. 47 (d) If any of the information contained in the registration shall 48 change, the switch company shall notify the department of the change in 49 a form and manner prescribed by the superintendent for such purpose 50 within twenty-one days of the change. Such requirement to update shall 51 include the filing of a new set of audited financials upon adoption. For 52 any change other than new audited financials, the filing shall not be 53 deemed complete unless accompanied by a payment of a fee of fifty 54 dollars. 55 (e) Every pharmacy switch company's registration shall expire twelve 56 months after the date of issue. Every registration issued pursuant toS. 6738--A 6 1 this section may be renewed for the ensuing period of twelve months upon 2 the filing of an application in conformity with this section. 3 (f) Before a pharmacy switch company's registration shall be renewed, 4 the pharmacy switch company shall properly file in the office of the 5 superintendent an application for renewal in such form as the super- 6 intendent prescribes and pay a fee of one thousand dollars. 7 (g) If an application for a renewal registration shall have been filed 8 with the superintendent at least one month before its expiration, then 9 the registration sought to be renewed shall continue in full force and 10 effect either until the issuance by the superintendent of the renewal 11 registration applied for or until five days after the superintendent 12 shall have refused to issue such renewal registration and given notice 13 of such refusal to the applicant, otherwise the registration shall 14 expire and the registrant shall have no expectation of renewal. 15 § 3007. Required disclosures by pharmacy switch companies. (a) Each 16 switch company shall annually disclose to the department, in a form and 17 manner prescribed by the superintendent, such information as the super- 18 intendent deems necessary for the proper supervision of the industry. 19 Such information shall include: 20 (1) a list of services the switch company provides and the industries 21 to which they are provided; 22 (2) information on electronic voucher services provided by the switch 23 company, including: 24 (A) a list of manufacturers that the switch company has contracts with 25 or for which it transmits electronic vouchers; 26 (B) a list of medications and the National Drug Codes (NDCs) for which 27 the switch company may apply electronic vouchers; and 28 (C) the total amount of money collected from manufacturers related to 29 transmission of electronic vouchers; and 30 (3) the number of transactions processed in this state and the total 31 amount of revenue attributable to those transactions. 32 (b) A switch company shall disclose to each pharmacy benefit manager 33 with which it does business any instance in which an electronic voucher 34 was applied in the course of routing the claim. 35 § 3008. Registration of rebate aggregators. (a) No rebate aggregator 36 may do business in this state after September thirtieth, two thousand 37 twenty-five without first registering with the department. 38 (b) A rebate aggregator seeking registration shall file, in a form and 39 manner determined by the superintendent, information including but not 40 limited to: 41 (1) the legal name of the entity; 42 (2) any trade or other names used by the entity; 43 (3) the organizational structure of the entity; 44 (4) the health plans and the pharmacy benefit managers licensed in 45 this state for which the entity provides services; 46 (5) the persons who exercise control of the entity; 47 (6) a primary point of contact for the entity; 48 (7) an agent for service of process; 49 (8) a set of audited financials for the prior fiscal year; and 50 (9) such other information or documents as the superintendent shall 51 require. 52 (c) The superintendent shall accept a registration only if he or she 53 deems that all the required information has been provided in a satisfac- 54 tory form and manner and has received payment of a nonrefundable regis- 55 tration fee of one thousand dollars.S. 6738--A 7 1 (d) If any of the information contained in the registration shall 2 change the rebate aggregator shall notify the department of such change 3 in a form and manner prescribed by the superintendent for such purpose 4 within twenty-one days of the change. Such requirement to update shall 5 include the filing of a new set of audited financials upon adoption. For 6 any change other than new audited financials, the filing shall not be 7 deemed complete unless accompanied by a payment of a fee of fifty 8 dollars. 9 (e) Every rebate aggregator's registration shall expire twelve months 10 after the date of issue. Every registration issued pursuant to this 11 section may be renewed for the ensuing period of twelve months upon the 12 filing of an application in conformity with this section. 13 (f) Before a rebate aggregator's registration shall be renewed, the 14 rebate aggregator shall properly file in the office of the superinten- 15 dent an application for renewal in such form as the superintendent 16 prescribes and pay a fee of one thousand dollars. 17 (g) If an application for a renewal registration shall have been filed 18 with the superintendent at least one month before its expiration, then 19 the registration sought to be renewed shall continue in full force and 20 effect either until the issuance by the superintendent of the renewal 21 registration applied for or until five days after the superintendent 22 shall have refused to issue such renewal registration and given notice 23 of such refusal to the applicant, otherwise the registration shall 24 expire and the registrant shall have no expectation of renewal. 25 § 3009. Required disclosures by rebate aggregators. (a) Each rebate 26 aggregator that has a contract or arrangement with a pharmacy benefit 27 manager serving a health plan shall, on an annual basis, disclose in 28 writing to the health plan the following: 29 (1) fee structure provisions of any contract or arrangement between 30 the rebate aggregator and pharmacy benefit manager or drug manufacturer, 31 including: 32 (A) fees collected for aggregating rebates due to the health plan; and 33 (B) such other information as the superintendent may require by regu- 34 lation; and 35 (2) quantification of inflationary payments, credits, grants, 36 reimbursements, other financial or other reimbursements, incentives, 37 inducements, refunds or other benefits received by the rebate aggregator 38 from the drug manufacturer and retained by the rebate aggregator, wheth- 39 er referred to as a rebate, a discount, or otherwise. 40 (b) (1) Each rebate aggregator shall, at the time of registration, 41 disclose to the department the extent of any ownership or control of the 42 rebate aggregator or by the rebate aggregator of any parent company, 43 subsidiary, or other affiliated organization that provides pharmacy 44 benefit management services. 45 (2) Each rebate aggregator shall on an annual basis disclose to the 46 department the information requested by the superintendent, including: 47 (A) any payments made to a rebate aggregator by a drug manufacturer 48 relating to a drug's utilization, including inflationary payments, cred- 49 its, grants, reimbursements, other financial or other reimbursements, 50 incentives, inducements, refunds or other benefits received by the 51 rebate aggregator, whether referred to as a rebate, a discount, or 52 otherwise; 53 (B) any payments made, including those described in subparagraph (A) 54 of this paragraph and subsequently retained by a rebate aggregator; 55 (C) any fees charged by the rebate aggregator to the pharmacy benefit 56 manager or drug manufacturer relating to a drug's utilization;S. 6738--A 8 1 (D) any payments made to a rebate aggregator from a program adminis- 2 tered by a drug manufacturer for the purpose of assisting patients with 3 the cost of prescription drugs, including copayment assistance programs, 4 discount cards, and coupons; and 5 (E) the terms and conditions of any contract or arrangement between 6 the rebate aggregator and a pharmacy benefit manager or drug manufactur- 7 er. 8 § 3010. Deposit of penalties and fees. Penalties and fees collected 9 pursuant to this article shall be deposited into the pharmacy benefit 10 manager regulatory fund established pursuant to section ninety-nine-oo 11 of the state finance law. 12 § 3. Subdivision 3 of section 99-oo of the state finance law, as added 13 by chapter 128 of the laws of 2022, is amended to read as follows: 14 3. Such fund shall consist of money received by the state as fees 15 under [article] articles twenty-nine and thirty of the insurance law or 16 penalties ordered under [article] articles twenty-nine and thirty of the 17 insurance law and all other monies appropriated, credited, or trans- 18 ferred thereto from any other fund or source pursuant to law. All monies 19 shall remain in such fund unless and until directed by statute or appro- 20 priation. 21 § 4. This act shall take effect on the one hundred fiftieth day after 22 it shall have become a law.
