Bill Text: NY S06531 | 2019-2020 | General Assembly | Introduced


Bill Title: Provides for pharmacy benefit management and the procurement of prescription drugs to be dispensed to patients, or the administration or management of prescription drug benefits; sets forth definitions; provides for funds received by a pharmacy in trust for the health plan or provider and provides for accountability of such funds; further provides for an appeals process to investigate and resolve disputes regarding multi-source generic drug pricing.

Spectrum: Partisan Bill (Democrat 4-0)

Status: (Engrossed) 2019-06-20 - returned to senate [S06531 Detail]

Download: New_York-2019-S06531-Introduced.html



                STATE OF NEW YORK
        ________________________________________________________________________

                                          6531

                               2019-2020 Regular Sessions

                    IN SENATE

                                      June 14, 2019
                                       ___________

        Introduced  by  Sens. BRESLIN, RIVERA -- read twice and ordered printed,
          and when printed to be committed to the Committee on Rules

        AN ACT to amend the public health law, in relation to  pharmacy  benefit
          managers;  to amend the insurance law, in relation to registration and
          licensing  of  pharmacy  benefit  managers;  and  to  repeal   certain
          provisions of the public health law relating thereto

          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:

     1    Section 1. Section 280-a of the public health law is  REPEALED  and  a
     2  new section 280-a is added to read as follows:
     3    §  280-a.  Pharmacy benefit managers. 1. Definitions.  As used in this
     4  section, the following terms shall have the following meanings:
     5    (a) "Health plan or provider" means an entity  for  which  a  pharmacy
     6  benefit  manager provides pharmacy benefit management including, but not
     7  limited to: (i) a health benefit plan or  other  entity  that  approves,
     8  provides, arranges for, or pays for health care items or services, under
     9  which  prescription  drugs for beneficiaries of the entity are purchased
    10  or which provides or arranges reimbursement in whole or in part for  the
    11  purchase  of  prescription  drugs;  or  (ii)  a  health care provider or
    12  professional that acquires prescription drugs  to  use  or  dispense  in
    13  providing  health  care  to  patients where the prescription drug is the
    14  subject of the pharmacy benefit manager's  pharmacy  benefit  management
    15  services.
    16    (b)  "Pharmacy benefit management services" means the service provided
    17  to a health plan or provider, directly or through  another  entity,  and
    18  regardless  of  whether the pharmacy benefit manager and the health plan
    19  or provider are related, or associated by ownership,  common  ownership,
    20  organization  or  otherwise;  including  the procurement of prescription
    21  drugs to be dispensed to patients, or the administration  or  management
    22  of  prescription drug benefits, including but not limited to, any of the
    23  following:

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD06526-05-9

        S. 6531                             2

     1    (i) mail service pharmacy;
     2    (ii)  claims  processing,  retail  network  management,  or payment of
     3  claims to pharmacies for dispensing prescription drugs;
     4    (iii) clinical or other formulary or preferred drug  list  development
     5  or management;
     6    (iv)  negotiation  or  administration  of  rebates, discounts, payment
     7  differentials, or other incentives,  for  the  inclusion  of  particular
     8  prescription  drugs  in a particular category or to promote the purchase
     9  of particular prescription drugs;
    10    (v) patient compliance, therapeutic intervention, or  generic  substi-
    11  tution programs;
    12    (vi) disease management;
    13    (vii) drug utilization review or prior authorization;
    14    (viii)  adjudication  of appeals or grievances related to prescription
    15  drug coverage;
    16    (ix) contracting with network pharmacies; and
    17    (x) controlling the cost of covered prescription drugs.
    18    (c) "Pharmacy benefit manager" means any entity that performs pharmacy
    19  benefit management services for a health plan or provider.
    20    (d) "Maximum allowable  cost  price"  means  a  maximum  reimbursement
    21  amount  set  by  the pharmacy benefit manager for therapeutically equiv-
    22  alent multiple source generic drugs.
    23    (e) "Controlling person" means any person or other entity who or which
    24  directly or indirectly has the power to direct or cause to  be  directed
    25  the management, control or activities of a pharmacy benefit manager.
    26    (f)  "Covered  individual"  means  a  member,  participant,  enrollee,
    27  contract holder or policy holder or beneficiary  of  a  health  plan  or
    28  provider.
    29    (g)  "License" means a license to be a pharmacy benefit manager, under
    30  article twenty-nine of the insurance law.
    31    (h) "Spread pricing" means the practice of a pharmacy benefit  manager
    32  retaining  an  additional amount of money in addition to the amount paid
    33  to the pharmacy to fill a prescription.
    34    2. Duty, accountability and transparency.   (a) The  pharmacy  benefit
    35  manager  shall  have a duty and obligation to the covered individual and
    36  the health plan or provider, and shall perform pharmacy benefit  manage-
    37  ment  services  with care, skill, prudence, diligence, and professional-
    38  ism, and for the best interests primarily of the covered individual, and
    39  the health plan or provider.
    40    (b) All funds received by the pharmacy benefit manager in relation  to
    41  providing  pharmacy benefit management services shall be received by the
    42  pharmacy benefit manager in trust for the health plan  or  provider  and
    43  shall  be  used  or  distributed  only  pursuant to the pharmacy benefit
    44  manager's contract with the health plan or provider or  applicable  law;
    45  including  any  administrative  fee or payment expressly provided for in
    46  the contract between the pharmacy benefit manager and the health plan or
    47  provider to compensate the pharmacy benefit manager  for  its  services.
    48  Any  funds received by the pharmacy benefit manager through spread pric-
    49  ing shall be subject to this paragraph.
    50    (c) The pharmacy benefit manager shall  periodically  account  to  the
    51  health  plan or provider for any pricing discounts, rebates of any kind,
    52  inflationary payments, credits, clawbacks,  fees,  grants,  chargebacks,
    53  reimbursements,  or  other  benefits  received  by  the pharmacy benefit
    54  manager. The pharmacy benefit manager shall ensure that any  portion  of
    55  such  income,  payments, and financial benefits is passed through to the
    56  health plan or provider in full  to  reduce  the  reportable  ingredient

        S. 6531                             3

     1  cost. The health plan or provider shall have access to all financial and
     2  utilization  information  of the pharmacy benefit manager in relation to
     3  pharmacy benefit management services provided  to  the  health  plan  or
     4  provider.
     5    (d)  The  pharmacy  benefit  manager  shall disclose in writing to the
     6  health plan or provider the terms and  conditions  of  any  contract  or
     7  arrangement  between the pharmacy benefit manager and any party relating
     8  to pharmacy benefit management services provided to the health  plan  or
     9  provider including but not limited to, dispensing fees paid to the phar-
    10  macies.
    11    (e)  The  pharmacy  benefit  manager  shall disclose in writing to the
    12  health plan or provider any  activity,  policy,  practice,  contract  or
    13  arrangement  of the pharmacy benefit manager that directly or indirectly
    14  presents any conflict of interest with the  pharmacy  benefit  manager's
    15  relationship with or obligation to the health plan or provider.
    16    (f)  Any  information  required  to be disclosed by a pharmacy benefit
    17  manager to a health plan or provider under this section that is  reason-
    18  ably  designated by the pharmacy benefit manager as proprietary or trade
    19  secret information shall be kept confidential  by  the  health  plan  or
    20  provider,  except  as required or permitted by law, including disclosure
    21  necessary to prosecute or defend any legitimate legal claim or cause  of
    22  action.
    23    (g) The commissioner shall establish, by regulation, minimum standards
    24  for  pharmacy benefit management services which shall address the elimi-
    25  nation of conflicts of interest between pharmacy  benefit  managers  and
    26  health  benefit  plans and health care providers; and the elimination of
    27  deceptive practices, anti-competitive practices, and unfair claims prac-
    28  tices.
    29    (h) A health care provider and a covered individual shall be deemed to
    30  be third-party beneficiaries of the duties, obligations and requirements
    31  applicable to the pharmacy benefit manager under this section and  shall
    32  be  entitled  to legal or equitable relief for any injury or loss to the
    33  health care provider or the covered individual caused by  any  violation
    34  of such duties, obligations or requirements.
    35    3.  Prescriptions.    A pharmacy benefit manager may not substitute or
    36  cause the substituting of one prescription drug for another in  dispens-
    37  ing  a  prescription,  or  alter or cause the altering of the terms of a
    38  prescription, except with the approval of the prescriber or as explicit-
    39  ly required or permitted by law.
    40    4. Appeals.   A  pharmacy  benefit  manager  shall,  with  respect  to
    41  contracts between a pharmacy benefit manager and a pharmacy or, alterna-
    42  tively,  a  pharmacy benefit manager and a pharmacy's contracting agent,
    43  such as a  pharmacy  services  administrative  organization,  include  a
    44  reasonable process to appeal, investigate and resolve disputes regarding
    45  multi-source generic drug pricing. The appeals process shall include the
    46  following provisions:
    47    (a)  the  right  to  appeal  by  the  pharmacy  and/or  the pharmacy's
    48  contracting agent shall be limited to thirty days following the  initial
    49  claim submitted for payment;
    50    (b)  a  telephone  number through which a network pharmacy may contact
    51  the pharmacy benefit manager for the purpose of filing an appeal and  an
    52  electronic  mail  address of the individual who is responsible for proc-
    53  essing appeals;
    54    (c) the pharmacy benefit manager shall send an electronic mail message
    55  acknowledging receipt of the appeal. The pharmacy benefit manager  shall
    56  respond  in  an electronic message to the pharmacy and/or the pharmacy's

        S. 6531                             4

     1  contracting agent filing the appeal within seven business days  indicat-
     2  ing  its  determination.  If  the  appeal is determined to be valid, the
     3  maximum allowable cost for the drug shall be adjusted for the  appealing
     4  pharmacy effective as of the date of the original claim for payment. The
     5  pharmacy benefit manager shall require the appealing pharmacy to reverse
     6  and  rebill  the  claim  in  question  in  order to obtain the corrected
     7  reimbursement;
     8    (d) if an update to the maximum allowable cost is warranted, the phar-
     9  macy benefit manager or covered entity shall adjust the  maximum  allow-
    10  able cost of the drug effective for all similarly situated pharmacies in
    11  its  network  in  the  state on the date the appeal was determined to be
    12  valid; and
    13    (e) if an appeal is denied, the pharmacy benefit manager shall identi-
    14  fy the national drug code  of  a  therapeutically  equivalent  drug,  as
    15  determined  by  the federal Food and Drug Administration, that is avail-
    16  able for purchase by pharmacies in this state  from  wholesalers  regis-
    17  tered  pursuant to subdivision four of section sixty-eight hundred eight
    18  of the education law at a price which is equal to or less than the maxi-
    19  mum allowable cost for that drug as determined by the  pharmacy  benefit
    20  manager.
    21    5.  Contract  provisions.    No  pharmacy  benefit manager shall, with
    22  respect to contracts between such pharmacy benefit manager and a pharma-
    23  cy or, alternatively, such pharmacy benefit  manager  and  a  pharmacy's
    24  contracting  agent, such as a pharmacy services administrative organiza-
    25  tion:
    26    (a) prohibit or penalize a pharmacist or pharmacy from  disclosing  to
    27  an  individual  purchasing a prescription medication information regard-
    28  ing:
    29    (1) the cost of the prescription medication to the individual, or
    30    (2) the availability of  any  therapeutically  equivalent  alternative
    31  medications  or alternative methods of purchasing the prescription medi-
    32  cation, including but not limited to, paying a cash price;
    33    (b) charge or collect from an individual a copayment that exceeds  the
    34  total  submitted charges by the pharmacy for which the pharmacy is paid.
    35  If an individual pays a copayment, the pharmacy shall retain the adjudi-
    36  cated costs and the pharmacy benefit manager shall not redact or  recoup
    37  the adjudicated cost; or
    38    (c)  require a pharmacy to meet any pharmacy accreditation standard or
    39  recertification requirement inconsistent with, more stringent  than,  or
    40  in addition to federal and state requirements for licensure as a pharma-
    41  cy.
    42    §  2.  The insurance law is amended by adding a new article 29 to read
    43  as follows:
    44                                 ARTICLE 29
    45                          PHARMACY BENEFIT MANAGERS
    46  Section 2901. Definitions.
    47          2902. Acting without a registration.
    48          2903. Registration requirements for pharmacy benefit managers.
    49          2904. Reporting requirements for pharmacy benefit managers.
    50          2905. Acting without a license.
    51          2906. Licensing of a pharmacy benefit manager.
    52          2907. Revocation or suspension of a registration or license of a
    53                  pharmacy benefit manager.
    54          2908. Penalties for violations.
    55          2909. Stay or suspension of superintendent's determination.
    56          2910. Revoked registrations or licenses.

        S. 6531                             5

     1          2911. Change of address.
     2          2912. Applicability of other laws.
     3          2913. Assessments.
     4    § 2901. Definitions. For purposes of this article:
     5    (a)  "Controlling  person"  is any person or other entity who or which
     6  directly or indirectly has the power to direct or cause to  be  directed
     7  the management, control or activities of a pharmacy benefit manager.
     8    (b)  The  terms  "health plan or provider", "pharmacy benefit manager"
     9  and "pharmacy benefit management services" have  the  same  meanings  as
    10  defined by section two hundred eighty-a of the public health law.
    11    §  2902.  Acting  without a registration. (a) No person, firm, associ-
    12  ation, corporation or other entity may act as a pharmacy benefit manager
    13  on or after April first, two thousand twenty and prior to January first,
    14  two thousand twenty-one, without having a valid registration as a  phar-
    15  macy  benefit  manager  filed with the superintendent in accordance with
    16  this article and any regulations promulgated thereunder.
    17    (b) Any person, firm, association, corporation or  other  entity  that
    18  violates  this  section shall, in addition to any other penalty provided
    19  by law, be liable for restitution to any  health  plan  or  provider  or
    20  covered  individual harmed by the violation and shall also be subject to
    21  a penalty not exceeding of the greater of (1) one thousand  dollars  for
    22  the  first  violation  and  two  thousand  five hundred dollars for each
    23  subsequent violation  or  (2)  the  aggregate  economic  gross  receipts
    24  attributable to all violations.
    25    §  2903.  Registration requirements for pharmacy benefit managers. (a)
    26  Every pharmacy benefit manager that performs pharmacy benefit management
    27  services on or after April first, two thousand twenty and prior to Janu-
    28  ary first, two thousand twenty-one shall register with  the  superinten-
    29  dent  in  a manner acceptable to the superintendent, and shall pay a fee
    30  of one thousand dollars for each year or fraction of a year in which the
    31  registration shall be valid. The superintendent,  in  consultation  with
    32  the commissioner of health, may establish, by regulation, minimum regis-
    33  tration  standards  required  for a pharmacy benefit manager. The super-
    34  intendent can reject a registration  application  filed  by  a  pharmacy
    35  benefit manager that fails to comply with the minimum registration stan-
    36  dards.
    37    (b)  For each business entity, the officer or officers and director or
    38  directors named in the application shall be designated  responsible  for
    39  the  business entity's compliance with the financial services and insur-
    40  ance laws, rules and regulations of this state.
    41    (c) Every registration will expire on December thirty-first, two thou-
    42  sand twenty regardless of when registration was first made.
    43    (d) Every pharmacy benefit  manager  that  performs  pharmacy  benefit
    44  management services at any time prior to April first, two thousand twen-
    45  ty,  shall  make the registration and fee payment required by subsection
    46  (a) of this section on or before April first, two thousand  twenty.  Any
    47  other  pharmacy  benefit  manager  shall  make  the registration and fee
    48  payment required by subsection (a) of this section prior  to  performing
    49  pharmacy benefit management services.
    50    (e)  Registrants under this section shall be subject to examination by
    51  the superintendent as often as the superintendent may deem it necessary.
    52  The superintendent may promulgate regulations establishing  methods  and
    53  procedures  for  facilitating and verifying compliance with the require-
    54  ments of this article and such other regulations as necessary to enforce
    55  the provisions of this article.

        S. 6531                             6

     1    § 2904. Reporting requirements for pharmacy benefit managers.   (a)(1)
     2  On  or before July first of each year, beginning in two thousand twenty,
     3  every pharmacy benefit manager shall report to the superintendent, in  a
     4  statement  subscribed  and  affirmed as true under penalties of perjury,
     5  the information requested by the superintendent including, without limi-
     6  tation,
     7    (i) any pricing discounts, rebates of any kind, inflationary payments,
     8  credits,  clawbacks,  fees,  grants,  chargebacks, reimbursements, other
     9  financial or other reimbursements, incentives, inducements,  refunds  or
    10  other benefits received by the pharmacy benefit manager; and
    11    (ii)  the terms and conditions of any contract or arrangement, includ-
    12  ing other financial or other reimbursements incentives,  inducements  or
    13  refunds  between the pharmacy benefit manager and any other party relat-
    14  ing to pharmacy benefit management services provided to a health plan or
    15  provider including but not limited to, dispensing fees paid  to  pharma-
    16  cies.
    17    The superintendent may require the filing of quarterly or other state-
    18  ments, which shall be in such form and shall contain such matters as the
    19  superintendent shall prescribe.
    20    (2)  The superintendent may address to any pharmacy benefit manager or
    21  its officers any inquiry in relation to its provision of pharmacy  bene-
    22  fit  management services or any matter connected therewith.  Every phar-
    23  macy benefit manager or person so addressed shall reply  in  writing  to
    24  such  inquiry  promptly  and  truthfully,  and  such  reply shall be, if
    25  required by the superintendent, subscribed by  such  individual,  or  by
    26  such  officer or officers of the pharmacy benefit manager, as the super-
    27  intendent shall designate, and affirmed by them as true under the penal-
    28  ties of perjury.
    29    (b) In the event any pharmacy  benefit  manager  or  person  does  not
    30  submit  the  report  required by paragraph one of subsection (a) of this
    31  section or does not provide a good faith response to an inquiry from the
    32  superintendent pursuant to paragraph  two  of  subsection  (a)  of  this
    33  section within a time period specified by the superintendent of not less
    34  than  fifteen  business days, the superintendent is authorized to levy a
    35  civil penalty, after notice and hearing, against such  pharmacy  benefit
    36  manager  or  person  not to exceed one thousand dollars per day for each
    37  day beyond the date the report is due  or  the  date  specified  by  the
    38  superintendent for response to the inquiry.
    39    (c) All information disclosed by a pharmacy benefit manager under this
    40  section  shall  be deemed confidential and not subject to public disclo-
    41  sure except by court order.
    42    § 2905. Acting without a license. (a) No  person,  firm,  association,
    43  corporation  or other entity may act as a pharmacy benefit manager on or
    44  after January first, two thousand twenty-one without having authority to
    45  do so by virtue of a license issued in force pursuant to the  provisions
    46  of this article.
    47    (b)  Any  person,  firm, association, corporation or other entity that
    48  violates this section shall, in addition to any other  penalty  provided
    49  by  law,  be  subject  to a penalty not exceeding the greater of (1) one
    50  thousand dollars for the first violation and two thousand  five  hundred
    51  dollars  for  each  subsequent  violation  or (2) the aggregate economic
    52  gross receipts attributable to all violations.
    53    § 2906. Licensing of a pharmacy benefit manager. (a)  The  superinten-
    54  dent may issue a pharmacy benefit manager's license to any person, firm,
    55  association  or  corporation  who or that has complied with the require-
    56  ments of this article, including regulations promulgated by  the  super-

        S. 6531                             7

     1  intendent.  The superintendent, in consultation with the commissioner of
     2  health, may establish, by regulation, minimum standards for the issuance
     3  of a license to a pharmacy benefit manager.
     4    (b)  The  minimum  standards  established  under  this  subsection may
     5  address, without limitation:
     6    (1) conflicts of interest between pharmacy benefit managers and health
     7  plans or insurers;
     8    (2) deceptive practices in connection with the performance of pharmacy
     9  benefit management services;
    10    (3) anti-competitive practices in connection with the  performance  of
    11  pharmacy benefit management services;
    12    (4)  unfair  claims  practices  in  connection with the performance of
    13  pharmacy benefit management services; and
    14    (5) protection of consumers.
    15    (c)(1) Any such license issued to a firm or association shall  author-
    16  ize  all  of  the  members of the firm or association and any designated
    17  employees to act as pharmacy benefit managers under the license, and all
    18  such persons shall be named in the application and supplements thereto.
    19    (2) Any such license issued to a corporation shall  authorize  all  of
    20  the  officers  and any designated employees and directors thereof to act
    21  as pharmacy benefit managers on behalf of such corporation, and all such
    22  persons shall be named in the application and supplements thereto.
    23    (3) For each business entity, the officer or officers and director  or
    24  directors  named  in the application shall be designated responsible for
    25  the business entity's compliance with  the  insurance  laws,  rules  and
    26  regulations of this state.
    27    (d)(1)  Before a pharmacy benefit manager's license shall be issued or
    28  renewed, the prospective licensee shall properly file in the  office  of
    29  the  superintendent a written application therefor in such form or forms
    30  and supplements thereto as the superintendent prescribes, and pay a  fee
    31  of  two  thousand dollars for each year or fraction of a year in which a
    32  license shall be valid.
    33    (2) Every pharmacy benefit manager's license shall  expire  thirty-six
    34  months  after  the  date of issue. Every license issued pursuant to this
    35  section may be renewed for the ensuing period of thirty-six months  upon
    36  the filing of an application in conformity with this subsection.
    37    (e)(1)  If  an application for a renewal license shall have been filed
    38  with the superintendent before November first of the year of expiration,
    39  then the license sought to be renewed shall continue in full  force  and
    40  effect  either  until  the issuance by the superintendent of the renewal
    41  license applied for or until five days after  the  superintendent  shall
    42  have  refused  to  issue  such  renewal license and given notice of such
    43  refusal to the applicant.
    44    (2) Before refusing to renew any license pursuant to this section  for
    45  which  a renewal application has been filed pursuant to paragraph one of
    46  this subsection, the superintendent shall notify the  applicant  of  the
    47  superintendent's  intention  to  do  so  and shall give such applicant a
    48  hearing.
    49    (f) The superintendent may refuse to issue a pharmacy  benefit  manag-
    50  er's  license if, in the superintendent's judgment, the applicant or any
    51  member, principal, officer or director of the applicant, is  not  trust-
    52  worthy  and competent to act as or in connection with a pharmacy benefit
    53  manager, or that any of the foregoing has given cause for revocation  or
    54  suspension  of  such license, or has failed to comply with any prerequi-
    55  site for the issuance of such license.

        S. 6531                             8

     1    (g) Licensees and applicants for a license under this section shall be
     2  subject to examination by the superintendent as often as the superinten-
     3  dent may deem it expedient.  The  superintendent  may  promulgate  regu-
     4  lations establishing methods and procedures for facilitating and verify-
     5  ing  compliance  with  the  requirements  of this section and such other
     6  regulations as necessary.
     7    (h) The  superintendent  may  issue  a  replacement  for  a  currently
     8  in-force license that has been lost or destroyed. Before the replacement
     9  license  shall  be  issued,  there shall be on file in the office of the
    10  superintendent  a  written  application  for  the  replacement  license,
    11  affirming  under  penalty  of perjury that the original license has been
    12  lost or destroyed, together with a fee of two hundred dollars.
    13    (i) No pharmacy benefit manager shall engage in any practice or action
    14  that a health plan or provider is prohibited from engaging  in  pursuant
    15  to this chapter.
    16    §  2907.  Revocation  or  suspension of a registration or license of a
    17  pharmacy benefit manager. (a) The superintendent may  refuse  to  renew,
    18  may  revoke,  or  may suspend for a period the superintendent determines
    19  the registration or license of any pharmacy benefit  manager  if,  after
    20  notice and hearing, the superintendent determines that the registrant or
    21  licensee  or  any  member,  principal, officer, director, or controlling
    22  person of the registrant or licensee, has:
    23    (1) violated any insurance laws, section two hundred eighty-a  of  the
    24  public  health  law or violated any regulation, subpoena or order of the
    25  superintendent or of another  state's  insurance  commissioner,  or  has
    26  violated  any  law in the course of his or her dealings in such capacity
    27  after such license has been issued or renewed pursuant  to  section  two
    28  thousand nine hundred six of this article;
    29    (2)  provided  materially incorrect, materially misleading, materially
    30  incomplete or materially  untrue  information  in  the  registration  or
    31  license application;
    32    (3)  obtained or attempted to obtain a registration or license through
    33  misrepresentation or fraud;
    34    (4)(A) used fraudulent, coercive or dishonest practices;
    35    (B) demonstrated incompetence;
    36    (C) demonstrated untrustworthiness; or
    37    (D) demonstrated financial irresponsibility in the conduct of business
    38  in this state or elsewhere;
    39    (5) improperly withheld, misappropriated or converted  any  monies  or
    40  properties  received  in  the  course of business in this state or else-
    41  where;
    42    (6) intentionally misrepresented the terms of an  actual  or  proposed
    43  insurance contract;
    44    (7)  admitted  or  been  found  to have committed any insurance unfair
    45  trade practice or fraud;
    46    (8) had a pharmacy benefit manager registration  or  license,  or  its
    47  equivalent,  denied,  suspended or revoked in any other state, province,
    48  district or territory;
    49    (9) failed to pay state income tax or comply with  any  administrative
    50  or court order directing payment of state income tax; or
    51    (10)  ceased  to  meet  the requirements for registration or licensure
    52  under this article.
    53    (b) Before revoking or suspending the registration or license  of  any
    54  pharmacy benefit manager pursuant to the provisions of this article, the
    55  superintendent  shall  give  notice to the registrant or licensee and to

        S. 6531                             9

     1  every sub-licensee and shall hold, or cause to be held,  a  hearing  not
     2  less than ten days after the giving of such notice.
     3    (c)  If  a  registration or license pursuant to the provisions of this
     4  article is revoked or suspended by the superintendent, then  the  super-
     5  intendent shall forthwith give notice to the registrant or licensee.
     6    (d) The revocation or suspension of any registration or license pursu-
     7  ant  to  the  provisions  of this article shall terminate forthwith such
     8  registration or license and the authority  conferred  thereby  upon  all
     9  sub-licensees.  For  good  cause shown, the superintendent may delay the
    10  effective date of a revocation or suspension to permit the registrant or
    11  licensee to satisfy some  or  all  of  its  contractual  obligations  to
    12  perform pharmacy benefit management services in the state.
    13    (e)(1) No individual, corporation, firm or association whose registra-
    14  tion  or license as a pharmacy benefit manager has been revoked pursuant
    15  to subsection (a) of this section, and no firm or association  of  which
    16  such individual is a member, and no corporation of which such individual
    17  is  an  officer or director, and no controlling person of the registrant
    18  or licensee shall be entitled to  obtain  any  registration  or  license
    19  under  the  provisions  of this article for a minimum period of one year
    20  after such revocation, or, if such revocation  be  judicially  reviewed,
    21  for  a  minimum period of one year after the final determination thereof
    22  affirming the action of the superintendent in revoking such license.
    23    (2) If any such registration or license held by a firm, association or
    24  corporation be revoked, no member of such firm  or  association  and  no
    25  officer or director of such corporation or any controlling person of the
    26  registrant  or  licensee shall be entitled to obtain any registration or
    27  license, or to be named as a sub-licensee in  any  such  license,  under
    28  this  article  for  the  same  period of time, unless the superintendent
    29  determines, after notice and  hearing,  that  such  member,  officer  or
    30  director  was  not personally at fault in the matter on account of which
    31  such registration or license was revoked.
    32    (f) If any corporation, firm, association or  person  aggrieved  shall
    33  file  with  the  superintendent a verified complaint setting forth facts
    34  tending to show sufficient ground for the revocation  or  suspension  of
    35  any  pharmacy benefit manager's registration or license, then the super-
    36  intendent shall, after notice and  a  hearing,  determine  whether  such
    37  registration or license shall be suspended or revoked.
    38    (g)  The  superintendent  shall  retain  the  authority to enforce the
    39  provisions of and impose any penalty or remedy authorized by this  chap-
    40  ter  against  any  person  or  entity  who is under investigation for or
    41  charged with a violation of this chapter, even if the person's or  enti-
    42  ty's registration or license has been surrendered, or has expired or has
    43  lapsed by operation of law.
    44    (h)  A  registrant or licensee subject to this article shall report to
    45  the superintendent any administrative action taken  against  the  regis-
    46  trant  or  licensee  in  another jurisdiction or by another governmental
    47  agency in this state within thirty days of the final disposition of  the
    48  matter.  This report shall include a copy of the order, consent to order
    49  or other relevant legal documents.
    50    (i)  Within thirty days of the initial pretrial hearing date, a regis-
    51  trant or licensee subject to this article shall  report  to  the  super-
    52  intendent  any  criminal prosecution of the registrant or licensee taken
    53  in any jurisdiction. The report shall include  a  copy  of  the  initial
    54  complaint  filed,  the  order  resulting  from the hearing and any other
    55  relevant legal documents.

        S. 6531                            10

     1    § 2908. Penalties for violations. (a) The superintendent, in  lieu  of
     2  revoking  or  suspending  the registration or license of a registrant or
     3  licensee in accordance with the provisions of this article, may  in  any
     4  one  proceeding  by  order, require the registrant or licensee to pay to
     5  the people of this state a penalty in a sum not exceeding the greater of
     6  (1)  one thousand dollars for each offense and two thousand five hundred
     7  dollars for  each  subsequent  violation  or  (2)  the  aggregate  gross
     8  receipts attributable to all offenses.
     9    (b)  Upon  the  failure  of  such  a registrant or licensee to pay the
    10  penalty ordered pursuant to subsection (a) of this section within twenty
    11  days after the mailing of the order, postage  prepaid,  registered,  and
    12  addressed  to  the  last known place of business of the licensee, unless
    13  the order is stayed by an order of a court  of  competent  jurisdiction,
    14  the  superintendent may revoke the registration or license of the regis-
    15  trant or licensee or may suspend the same for such period as the  super-
    16  intendent determines.
    17    §  2909.  Stay  or  suspension  of superintendent's determination. The
    18  commencement of a proceeding under article seventy-eight  of  the  civil
    19  practice  law  and  rules, to review the action of the superintendent in
    20  suspending or revoking or refusing to renew any certificate  under  this
    21  article,  shall  stay  such action of the superintendent for a period of
    22  thirty days. Such stay shall not be extended for a longer period  unless
    23  the  court  shall  determine,  after  a preliminary hearing of which the
    24  superintendent is notified forty-eight hours in advance, that a stay  of
    25  the  superintendent's  action pending the final determination or further
    26  order of the court will not unduly injure the interests of the people of
    27  the state.
    28    § 2910. Revoked registrations or licenses.  (a)(1)  No  person,  firm,
    29  association,  corporation  or  other entity subject to the provisions of
    30  this article whose registration or license under this article  has  been
    31  revoked,  or  whose registration or license to engage in the business of
    32  pharmacy benefit management in any capacity  has  been  revoked  by  any
    33  other  state  or territory of the United States shall become employed or
    34  appointed by a pharmacy benefit manager as an officer, director,  manag-
    35  er,  controlling person or for other services, without the prior written
    36  approval of the superintendent, unless such services are for maintenance
    37  or are clerical or ministerial in nature.
    38    (2) No person, firm, association, corporation or other entity  subject
    39  to  the provisions of this article shall knowingly employ or appoint any
    40  person or entity whose registration or license issued under this article
    41  has been revoked, or whose registration or  license  to  engage  in  the
    42  business of pharmacy benefit management in any capacity has been revoked
    43  by  any  other  state  or territory of the United States, as an officer,
    44  director, manager, controlling person or for other services, without the
    45  prior written approval of the superintendent, unless such  services  are
    46  for maintenance or are clerical or ministerial in nature.
    47    (3)  No  corporation  or partnership subject to the provisions of this
    48  article shall knowingly permit any person whose registration or  license
    49  issued  under  this  article  has been revoked, or whose registration or
    50  license to engage in the business of pharmacy benefit management in  any
    51  capacity has been revoked by any other state, or territory of the United
    52  States,  to  be a shareholder or have an interest in such corporation or
    53  partnership, nor shall any such person become a shareholder  or  partner
    54  in  such  corporation or partnership, without the prior written approval
    55  of the superintendent.

        S. 6531                            11

     1    (b) The superintendent may  approve  the  employment,  appointment  or
     2  participation  of any such person whose registration or license has been
     3  revoked:
     4    (1)  if the superintendent determines that the duties and responsibil-
     5  ities of such person are subject to  appropriate  supervision  and  that
     6  such  duties  and  responsibilities will not have an adverse effect upon
     7  the public, other registrants or licensees, or the registrant or  licen-
     8  see proposing employment or appointment of such person; or
     9    (2)  if  such  person  has  filed an application for reregistration or
    10  relicensing pursuant to this article and the application for reregistra-
    11  tion or relicensing has not been approved or denied within  one  hundred
    12  twenty  days  following  the  filing  thereof, unless the superintendent
    13  determines within the said time that employment or appointment  of  such
    14  person  by a registrant or licensee in the conduct of a pharmacy benefit
    15  management business would not be in the public interest.
    16    (c) The provisions of this section shall not apply to the ownership of
    17  shares of any corporation registered or licensed pursuant to this  arti-
    18  cle  if  the  shares of such corporation are publicly held and traded in
    19  the over-the-counter market or upon any national or regional  securities
    20  exchange.
    21    § 2911. Change of address. A registrant or licensee under this article
    22  shall inform the superintendent by a means acceptable to the superinten-
    23  dent of a change of address within thirty days of the change.
    24    §  2912. Applicability of other laws. Nothing in this article shall be
    25  construed to exempt a pharmacy benefit manager from complying  with  the
    26  provisions  of  articles  twenty-one  and forty-nine of this chapter and
    27  articles forty-four and forty-nine and section two hundred  eighty-a  of
    28  the  public health law, section three hundred sixty-four-j of the social
    29  services law, or any other provision of this chapter  or  the  financial
    30  services law.
    31    §  2913.  Assessments. Pharmacy benefit managers that file a registra-
    32  tion with the department or are licensed  by  the  department  shall  be
    33  assessed by the superintendent for the operating expenses of the depart-
    34  ment  that  are  solely attributable to regulating such pharmacy benefit
    35  managers in such proportions as the superintendent shall deem  just  and
    36  reasonable.
    37    §  3.  Subsection (b) of section 2402 of the insurance law, as amended
    38  by section 71 of part A of chapter 62 of the laws of 2011, is amended to
    39  read as follows:
    40    (b) "Defined violation" means the commission by a  person  of  an  act
    41  prohibited  by:  subsection (a) of section one thousand one hundred two,
    42  section one thousand two hundred  fourteen,  one  thousand  two  hundred
    43  seventeen,  one  thousand two hundred twenty, one thousand three hundred
    44  thirteen, subparagraph (B) of paragraph two of subsection (i) of section
    45  one thousand three hundred twenty-two, subparagraph (B) of paragraph two
    46  of subsection (i) of section one thousand three hundred twenty-four, two
    47  thousand one hundred two, two thousand one hundred seventeen, two  thou-
    48  sand  one  hundred  twenty-two,  two  thousand one hundred twenty-three,
    49  subsection (p) of section two thousand three hundred  thirteen,  section
    50  two  thousand  three hundred twenty-four, two thousand five hundred two,
    51  two thousand five hundred three, two thousand  five  hundred  four,  two
    52  thousand six hundred one, two thousand six hundred two, two thousand six
    53  hundred  three,  two thousand six hundred four, two thousand six hundred
    54  six, two thousand seven hundred three, two thousand  nine  hundred  two,
    55  two  thousand  nine hundred five, three thousand one hundred nine, three
    56  thousand two hundred twenty-four-a, three thousand four hundred  twenty-

        S. 6531                            12

     1  nine,  three  thousand  four  hundred  thirty-three,  paragraph seven of
     2  subsection (e) of section three thousand four hundred  twenty-six,  four
     3  thousand two hundred twenty-four, four thousand two hundred twenty-five,
     4  four thousand two hundred twenty-six, seven thousand eight hundred nine,
     5  seven  thousand  eight hundred ten, seven thousand eight hundred eleven,
     6  seven thousand eight hundred  thirteen,  seven  thousand  eight  hundred
     7  fourteen  and  seven  thousand eight hundred fifteen of this chapter; or
     8  section 135.60, 135.65,  175.05,  175.45,  or  190.20,  or  article  one
     9  hundred five of the penal law.
    10    §  4. Severability.   If any provision of this act, or any application
    11  of any provision of this act, is held to be invalid,  or  ruled  by  any
    12  federal agency to violate or be inconsistent with any applicable federal
    13  law  or  regulation, that shall not affect the validity or effectiveness
    14  of any other provision of this act, or of any other application  of  any
    15  provision of this act.
    16    §  5.  This  act shall take effect on the ninetieth day after it shall
    17  become a law and shall apply to  any  contract  for  providing  pharmacy
    18  benefit  management  made  or  renewed  on or after that date. Effective
    19  immediately, the commissioner of health shall make regulations and  take
    20  other actions reasonably necessary to implement this act on that date.
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