STATE OF NEW YORK ________________________________________________________________________ 7304--A 2023-2024 Regular Sessions IN ASSEMBLY May 17, 2023 ___________ Introduced by M. of A. McDONALD, WEPRIN -- read once and referred to the Committee on Insurance -- reported and referred to the Committee on Codes -- 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 of 2023". 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. LBD11150-02-3
A. 7304--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 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 written inquiry in relation to matters connected to the requirements 26 outlined in this article. Every individual or entity so addressed shall 27 reply in writing to such inquiry promptly and truthfully, and such reply 28 shall be, if required by the superintendent, subscribed by such individ- 29 ual, or by such officer or officers of the entity, or by such agent or 30 employee of the entity as the superintendent shall designate, and 31 affirmed by them as true under 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,
A. 7304--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-four 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 to 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; and 42 (8) the most recent set of audited financials for the PSAO. 43 (c) The superintendent shall accept a registration only if the super- 44 intendent determines that all the required information has been provided 45 in a satisfactory form and has received payment of a nonrefundable 46 registration fee of five hundred dollars. 47 (d) If any of the information contained in the registration, except 48 for the information contained in paragraph four of subsection (b) of 49 this section, shall change, the PSAO shall notify the department of such 50 change in a form and manner prescribed by the superintendent for such 51 purpose within thirty days of the change. The requirement to update 52 shall include the filing of a new set of audited financials upon 53 adoption. For any change other than new audited financials, the filing 54 shall not be deemed complete unless accompanied by a payment of a fee of 55 fifty dollars.
A. 7304--A 4 1 (e) Every PSAO registration issued pursuant to this section shall 2 expire twelve months after the date of issue. A PSAO may renew its 3 registration for another twelve months upon the filing of an application 4 in conformity with this section. 5 (f) Before a PSAO registration shall be renewed, the PSAO shall file 6 an application for renewal in such form as the superintendent prescribes 7 and pay a fee of five hundred dollars. 8 (g) If a PSAO files a renewal application with the superintendent at 9 least one month before its expiration, then the registration sought to 10 be renewed shall continue in full force and effect either until the 11 issuance by the superintendent of the renewal registration applied for 12 or until five days after the superintendent shall have refused to issue 13 such renewal registration and given notice of such refusal to the appli- 14 cant, otherwise the PSAO registration shall expire and the registrant 15 shall have no expectation of renewal. 16 § 3005. Required disclosures by pharmacy services administrative 17 organizations. (a) (1) Each PSAO shall at the time of registration 18 pursuant to section three thousand four of this article disclose to the 19 department the extent of any ownership or control of the PSAO or by the 20 PSAO of any parent company, subsidiary, or affiliate that: 21 (A) provides pharmacy services; 22 (B) provides prescription drug or device services; or 23 (C) manufactures, sells, or distributes prescription drugs, biolog- 24 icals, or medical devices. 25 (2) A PSAO shall furnish a copy of the disclosure made at the time of 26 registration to all pharmacies located in this state with which it has a 27 contract in place at the time of the registration. A PSAO shall not 28 collect any fee for any services provided to a pharmacy for any period 29 beginning five days after the filing of a registration with the depart- 30 ment until such disclosure is sent to the pharmacy. 31 (3) Not later than April first, two thousand twenty-five, the depart- 32 ment shall publish all disclosures received under this section on a 33 publicly accessible online database, which shall be searchable at least 34 by PSAO name. All disclosures shall be posted not later than ten busi- 35 ness days after a registration is accepted and shall remain on the data- 36 base for the duration of the registration of the PSAO. 37 (b) (1) Prior to entering into any contract with any pharmacy located 38 in this state, including a contract with a group of pharmacies at least 39 one of which is in this state, a PSAO shall furnish to the pharmacy a 40 written disclosure of the information required to be disclosed in 41 subsection (a) of this section. No contract with a pharmacy shall be 42 enforceable against the pharmacy by a PSAO unless such PSAO makes such 43 disclosure prior to the agreement. In addition to any other power 44 conferred by law, the superintendent may prescribe the form and manner 45 of such disclosures. 46 (2) A PSAO that owns, is owned by, in whole or in part, or controls 47 any entity that manufactures, sells, or distributes prescription drugs, 48 biologicals, or medical devices shall not, as a condition of entering 49 into a contract with a pharmacy, require that the pharmacy purchase any 50 drugs or medical devices from an entity with which the PSAO has a finan- 51 cial interest, or an entity with an ownership interest in the PSAO. 52 (3) No PSAO shall enter into a contract with a pharmacy in this state 53 unless such contract shall provide that all remittances for claims 54 submitted by a pharmacy benefit manager or third-party payer on behalf 55 of a pharmacy to the PSAO shall be passed through by the PSAO to the 56 pharmacy within a reasonable amount of time, established in the
A. 7304--A 5 1 contract, after receipt of the remittance by the PSAO from the pharmacy 2 benefit manager or third-party payer. 3 (c) (1) If a PSAO provides, accepts, or processes a discount, conces- 4 sion, or product voucher, to reduce, directly or indirectly, a covered 5 individual's out-of-pocket expense for the order, dispensing, substi- 6 tution, sale, or purchase of a prescription drug shall make available to 7 each pharmacy in this state that it contracts with or which it 8 contracted with in the prior calendar year, an annual report that 9 includes: 10 (A) an aggregated total of all such transactions, by the pharmacy; and 11 (B) an aggregated total of any payments received by the PSAO itself 12 for providing, processing, or accepting any discount, concession, or 13 product voucher on behalf of a pharmacy. 14 (2) A PSAO that does not provide, accept, or process a discount, 15 concession, or product voucher to reduce, directly or indirectly, a 16 covered individual's out-of-pocket expense for the order, dispensing, 17 substitution, sale, or purchase of a prescription drug may indicate "not 18 applicable" when filing for registration and will subsequently be exempt 19 from providing such reports. 20 (3) A pharmacy in this state that is a party to a contract with a PSAO 21 shall have a right to an accounting of the funds received by the PSAO 22 for goods or services provided by the pharmacy to patients and custom- 23 ers. 24 § 3006. Registration of pharmacy switch companies. (a) No switch 25 company may do business in this state after June thirtieth, two thousand 26 twenty-four without first registering with the department. 27 (b) A switch company seeking registration shall file with the depart- 28 ment, in a form and manner determined by the superintendent, information 29 including but not limited to: 30 (1) the legal name of the entity; 31 (2) any trade or other names used by the entity; 32 (3) the organizational structure of the entity; 33 (4) the pharmacies located within this state and the pharmacy benefit 34 managers licensed in this state to which the entity provides services; 35 (5) the persons who exercise control of the entity; 36 (6) a primary point of contact for the entity; 37 (7) an agent for service of process; and 38 (8) the most recent set of audited financials for the pharmacy switch 39 company. 40 (c) The superintendent shall accept a registration only if he or she 41 deems that all the required information has been provided in a satisfac- 42 tory form and manner and has received payment of a nonrefundable regis- 43 tration fee of five hundred dollars. 44 (d) If any of the information contained in the registration shall 45 change, the switch company shall notify the department of the change in 46 a form and manner prescribed by the superintendent for such purpose 47 within thirty days of the change. Such requirement to update shall 48 include the filing of a new set of audited financials upon adoption. For 49 any change other than new audited financials, the filing shall not be 50 deemed complete unless accompanied by a payment of a fee of fifty 51 dollars. 52 (e) Every pharmacy switch company's registration shall expire twelve 53 months after the date of issue. Every registration issued pursuant to 54 this section may be renewed for the ensuing period of twelve months upon 55 the filing of an application in conformity with this section.
A. 7304--A 6 1 (f) Before a pharmacy switch company's registration shall be renewed, 2 the pharmacy switch company shall properly file in the office of the 3 superintendent an application for renewal in such form as the super- 4 intendent prescribes and pay a fee of five hundred dollars. 5 (g) If an application for a renewal registration shall have been filed 6 with the superintendent at least one month before its expiration, then 7 the registration sought to be renewed shall continue in full force and 8 effect either until the issuance by the superintendent of the renewal 9 registration applied for or until five days after the superintendent 10 shall have refused to issue such renewal registration and given notice 11 of such refusal to the applicant, otherwise the registration shall 12 expire and the registrant shall have no expectation of renewal. 13 § 3007. Required disclosures by pharmacy switch companies. Each switch 14 company shall annually disclose to the department, in a form and manner 15 prescribed by the superintendent, such information as the superintendent 16 deems necessary for the proper supervision of the industry. Such infor- 17 mation shall include: 18 (a) a list of services the switch company provides and the industries 19 to which they are provided; 20 (b) information on electronic voucher services provided by the switch 21 company, including: 22 (1) a list of manufacturers that the switch company has contracts with 23 or for which it transmits electronic vouchers; 24 (2) a list of medications and the National Drug Codes (NDCs) for which 25 the switch company may apply electronic vouchers; and 26 (3) the total amount of money collected from manufacturers related to 27 transmission of electronic vouchers; and 28 (c) the number of transactions processed in this state and the total 29 amount of revenue attributable to those transactions. 30 § 3008. Registration of rebate aggregators. (a) No rebate aggregator 31 may do business in this state after September thirtieth, two thousand 32 twenty-four without first registering with the department. 33 (b) A rebate aggregator seeking registration shall file, in a form and 34 manner determined by the superintendent, information including but not 35 limited to: 36 (1) the legal name of the entity; 37 (2) any trade or other names used by the entity; 38 (3) the organizational structure of the entity; 39 (4) the health plans and the pharmacy benefit managers licensed in 40 this state to which the entity provides services; 41 (5) the persons who exercise control of the entity; 42 (6) a primary point of contact for the entity; 43 (7) an agent for service of process; and 44 (8) the most recent set of audited financials for the rebate aggrega- 45 tor. 46 (c) The superintendent shall accept a registration only if he or she 47 deems that all the required information has been provided in a satisfac- 48 tory form and manner and has received payment of a nonrefundable regis- 49 tration fee of five hundred dollars. 50 (d) If any of the information contained in the registration shall 51 change, the rebate aggregator shall notify the department of such change 52 in a form and manner prescribed by the superintendent for such purpose 53 within thirty days of the change. Such requirement to update shall 54 include the filing of a new set of audited financials upon adoption. For 55 any change other than new audited financials, the filing shall not be
A. 7304--A 7 1 deemed complete unless accompanied by a payment of a fee of fifty 2 dollars. 3 (e) Every rebate aggregator's registration shall expire twelve months 4 after the date of issue. Every registration issued pursuant to this 5 section may be renewed for the ensuing period of twelve months upon the 6 filing of an application in conformity with this section. 7 (f) Before a rebate aggregator's registration shall be renewed, the 8 rebate aggregator shall properly file in the office of the superinten- 9 dent an application for renewal in such form as the superintendent 10 prescribes and pay a fee of five hundred dollars. 11 (g) If an application for a renewal registration shall have been filed 12 with the superintendent at least one month before its expiration, then 13 the registration sought to be renewed shall continue in full force and 14 effect either until the issuance by the superintendent of the renewal 15 registration applied for or until five days after the superintendent 16 shall have refused to issue such renewal registration and given notice 17 of such refusal to the applicant, otherwise the registration shall 18 expire and the registrant shall have no expectation of renewal. 19 § 3009. Required disclosures by rebate aggregators. (a) Each rebate 20 aggregator that has a contract or arrangement with a pharmacy benefit 21 manager serving a health plan shall, on an annual basis, disclose in 22 writing to the health plan the following: 23 (1) fee structure provisions of any contract or arrangement between 24 the rebate aggregator and pharmacy benefit manager or drug manufacturer, 25 including: 26 (A) fees collected for aggregating rebates due to the health plan; and 27 (B) such other information as the superintendent may require by regu- 28 lation; and 29 (2) quantification of inflationary payments, credits, grants, 30 reimbursements, other financial or other reimbursements, incentives, 31 inducements, refunds or other benefits received by the rebate aggregator 32 from the drug manufacturer and retained by the rebate aggregator, wheth- 33 er referred to as a rebate, a discount, or otherwise. 34 (b) (1) Each rebate aggregator shall, at the time of registration, 35 disclose to the department the extent of any ownership or control of the 36 rebate aggregator or by the rebate aggregator of any parent company, 37 subsidiary, or other affiliated organization that provides pharmacy 38 benefit management services. 39 (2) Each rebate aggregator shall on an annual basis disclose to the 40 department the information requested by the superintendent, including: 41 (A) any payments made to a rebate aggregator by a drug manufacturer 42 relating to a drug's utilization, including inflationary payments, cred- 43 its, grants, reimbursements, other financial or other reimbursements, 44 incentives, inducements, refunds or other benefits received by the 45 rebate aggregator, whether referred to as a rebate, a discount, or 46 otherwise; 47 (B) any payments made, including those described in subparagraph (A) 48 of this paragraph and subsequently retained by a rebate aggregator; 49 (C) any fees charged by the rebate aggregator to the pharmacy benefit 50 manager or drug manufacturer relating to a drug's utilization; 51 (D) any payments made to a rebate aggregator from a program adminis- 52 tered by a drug manufacturer for the purpose of assisting patients with 53 the cost of prescription drugs, including copayment assistance programs, 54 discount cards, and coupons; and
A. 7304--A 8 1 (E) the terms and conditions of any contract or arrangement between 2 the rebate aggregator and a pharmacy benefit manager or drug manufactur- 3 er. 4 § 3010. Deposit of penalties and fees. Penalties and fees collected 5 pursuant to this article shall be deposited into the pharmacy benefit 6 manager regulatory fund established pursuant to section ninety-nine-oo 7 of the state finance law. 8 § 3. Subdivision 3 of section 99-oo of the state finance law, as added 9 by chapter 128 of the laws of 2022, is amended to read as follows: 10 3. Such fund shall consist of money received by the state as fees 11 under [article] articles twenty-nine and thirty of the insurance law or 12 penalties ordered under [article] articles twenty-nine and thirty of the 13 insurance law and all other monies appropriated, credited, or trans- 14 ferred thereto from any other fund or source pursuant to law. All monies 15 shall remain in such fund unless and until directed by statute or appro- 16 priation. 17 § 4. This act shall take effect immediately.