Bill Text: NY S07828 | 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 9-0)

Status: (Introduced) 2020-03-11 - 2ND REPORT CAL. [S07828 Detail]

Download: New_York-2019-S07828-Introduced.html



                STATE OF NEW YORK
        ________________________________________________________________________

                                          7828

                    IN SENATE

                                    February 25, 2020
                                       ___________

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

        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 Section 280-a of the public health law is  REPEALED  and  a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:
    24    (i) mail service pharmacy;
    25    (ii) claims processing,  retail  network  management,  or  payment  of
    26  claims to pharmacies for dispensing prescription drugs;

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD06526-06-0

        S. 7828                             2

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

        S. 7828                             3

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

        S. 7828                             4

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

        S. 7828                             5

     1          2907. Revocation or suspension of a registration or license of a
     2                  pharmacy benefit manager.
     3          2908. Penalties for violations.
     4          2909. Stay or suspension of superintendent's determination.
     5          2910. Revoked registrations or licenses.
     6          2911. Change of address.
     7          2912. Applicability of other laws.
     8          2913. Assessments.
     9    § 2901. Definitions. For purposes of this article:
    10    (a)  "Controlling  person"  is any person or other entity who or which
    11  directly or indirectly has the power to direct or cause to  be  directed
    12  the management, control or activities of a pharmacy benefit manager.
    13    (b)  The terms "covered individual", "health plan or provider", "phar-
    14  macy benefit manager" and "pharmacy benefit  management  services"  have
    15  the  same  meanings  as  defined  by section two hundred eighty-a of the
    16  public health law.
    17    § 2902. Acting without a registration. (a) No  person,  firm,  associ-
    18  ation, corporation or other entity may act as a pharmacy benefit manager
    19  on or after April first, two thousand twenty and prior to January first,
    20  two  thousand twenty-two, without having a valid registration as a phar-
    21  macy benefit manager filed with the superintendent  in  accordance  with
    22  this article and any regulations promulgated thereunder.
    23    (b)  Any  person,  firm, association, corporation or other entity that
    24  violates this section shall, in addition to any other  penalty  provided
    25  by  law,  be  liable  for  restitution to any health plan or provider or
    26  covered individual harmed by the violation and shall also be subject  to
    27  a  penalty  not exceeding of the greater of (1) one thousand dollars for
    28  the first violation and two  thousand  five  hundred  dollars  for  each
    29  subsequent  violation  or  (2)  the  aggregate  economic  gross receipts
    30  attributable to all violations.
    31    § 2903. Registration requirements for pharmacy benefit  managers.  (a)
    32  Every pharmacy benefit manager that performs pharmacy benefit management
    33  services on or after April first, two thousand twenty and prior to Janu-
    34  ary  first,  two thousand twenty-two shall register with the superinten-
    35  dent in a manner acceptable to the superintendent, and shall pay  a  fee
    36  of one thousand dollars for each year or fraction of a year in which the
    37  registration  shall  be  valid. The superintendent, in consultation with
    38  the commissioner of health, may establish, by regulation, minimum regis-
    39  tration standards required for a pharmacy benefit  manager.  The  super-
    40  intendent  can  reject  a  registration  application filed by a pharmacy
    41  benefit manager that fails to comply with the minimum registration stan-
    42  dards.
    43    (b) For each business entity, the officer or officers and director  or
    44  directors  named  in the application shall be designated responsible for
    45  the business entity's compliance with the financial services and  insur-
    46  ance laws, rules and regulations of this state.
    47    (c) Every registration will expire on December thirty-first, two thou-
    48  sand twenty-one regardless of when registration was first made.
    49    (d)  Every  pharmacy  benefit  manager  that performs pharmacy benefit
    50  management services at any time prior to April first, two thousand twen-
    51  ty, shall make the registration and fee payment required  by  subsection
    52  (a)  of  this  section on or before June first, two thousand twenty. Any
    53  other pharmacy benefit manager  shall  make  the  registration  and  fee
    54  payment  required  by subsection (a) of this section prior to performing
    55  pharmacy benefit management services.

        S. 7828                             6

     1    (e) Registrants under this section shall be subject to examination  by
     2  the superintendent as often as the superintendent may deem it necessary.
     3  The  superintendent  may promulgate regulations establishing methods and
     4  procedures for facilitating and verifying compliance with  the  require-
     5  ments of this article and such other regulations as necessary to enforce
     6  the provisions of this article.
     7    §  2904. Reporting requirements for pharmacy benefit managers.  (a)(1)
     8  On or before July first of each year, beginning in two thousand  twenty,
     9  every  pharmacy benefit manager shall report to the superintendent, in a
    10  statement subscribed and affirmed as true under  penalties  of  perjury,
    11  the information requested by the superintendent including, without limi-
    12  tation,
    13    (i) any pricing discounts, rebates of any kind, inflationary payments,
    14  credits,  clawbacks,  fees,  grants,  chargebacks, reimbursements, other
    15  financial or other reimbursements, incentives, inducements,  refunds  or
    16  other benefits received by the pharmacy benefit manager; and
    17    (ii)  the terms and conditions of any contract or arrangement, includ-
    18  ing other financial or other reimbursements incentives,  inducements  or
    19  refunds  between the pharmacy benefit manager and any other party relat-
    20  ing to pharmacy benefit management services provided to a health plan or
    21  provider including but not limited to, dispensing fees paid  to  pharma-
    22  cies.
    23    The superintendent may require the filing of quarterly or other state-
    24  ments, which shall be in such form and shall contain such matters as the
    25  superintendent shall prescribe.
    26    (2)  The superintendent may address to any pharmacy benefit manager or
    27  its officers any inquiry in relation to its provision of pharmacy  bene-
    28  fit  management services or any matter connected therewith.  Every phar-
    29  macy benefit manager or person so addressed shall reply  in  writing  to
    30  such  inquiry  promptly  and  truthfully,  and  such  reply shall be, if
    31  required by the superintendent, subscribed by  such  individual,  or  by
    32  such  officer or officers of the pharmacy benefit manager, as the super-
    33  intendent shall designate, and affirmed by them as true under the penal-
    34  ties of perjury.
    35    (b) In the event any pharmacy  benefit  manager  or  person  does  not
    36  submit  the  report  required by paragraph one of subsection (a) of this
    37  section or does not provide a good faith response to an inquiry from the
    38  superintendent pursuant to paragraph  two  of  subsection  (a)  of  this
    39  section within a time period specified by the superintendent of not less
    40  than  fifteen  business days, the superintendent is authorized to levy a
    41  civil penalty, after notice and hearing, against such  pharmacy  benefit
    42  manager  or  person  not to exceed one thousand dollars per day for each
    43  day beyond the date the report is due  or  the  date  specified  by  the
    44  superintendent for response to the inquiry.
    45    (c)  All  information,  documents and material disclosed by a pharmacy
    46  benefit manager under this  section  and  in  the  possession  or  under
    47  control  of  the  superintendent  shall  be  deemed confidential and not
    48  subject to public disclosure except (1) by court order when relevant and
    49  material in a civil or criminal action or proceeding, or (2)  where  and
    50  as the superintendent determines that disclosure is in the public inter-
    51  est. This subsection shall not apply to information, documents and mate-
    52  rials where they are in the possession and under the control of a person
    53  or entity other than the superintendent.
    54    §  2905.  Acting  without a license. (a) No person, firm, association,
    55  corporation or other entity may act as a pharmacy benefit manager on  or
    56  after January first, two thousand twenty-two without having authority to

        S. 7828                             7

     1  do  so by virtue of a license issued in force pursuant to the provisions
     2  of this article.
     3    (b)  Any  person,  firm, association, corporation or other entity that
     4  violates this section shall, in addition to any other  penalty  provided
     5  by  law,  be  subject  to a penalty not exceeding the greater of (1) one
     6  thousand dollars for the first violation and two thousand  five  hundred
     7  dollars  for  each  subsequent  violation  or (2) the aggregate economic
     8  gross receipts attributable to all violations.
     9    § 2906. Licensing of a pharmacy benefit manager. (a)  The  superinten-
    10  dent may issue a pharmacy benefit manager's license to any person, firm,
    11  association  or  corporation  who or that has complied with the require-
    12  ments of this article, including regulations promulgated by  the  super-
    13  intendent.  The superintendent, in consultation with the commissioner of
    14  health, may establish, by regulation, minimum standards for the issuance
    15  of a license to a pharmacy benefit manager.
    16    (b) The  minimum  standards  established  under  this  subsection  may
    17  address, without limitation:
    18    (1) conflicts of interest between pharmacy benefit managers and health
    19  plans or insurers;
    20    (2) deceptive practices in connection with the performance of pharmacy
    21  benefit management services;
    22    (3)  anti-competitive  practices in connection with the performance of
    23  pharmacy benefit management services;
    24    (4) unfair claims practices in  connection  with  the  performance  of
    25  pharmacy benefit management services; and
    26    (5) protection of consumers.
    27    (c)(1)  Any such license issued to a firm or association shall author-
    28  ize all of the members of the firm or  association  and  any  designated
    29  employees to act as pharmacy benefit managers under the license, and all
    30  such persons shall be named in the application and supplements thereto.
    31    (2)  Any  such  license issued to a corporation shall authorize all of
    32  the officers and any designated employees and directors thereof  to  act
    33  as pharmacy benefit managers on behalf of such corporation, and all such
    34  persons shall be named in the application and supplements thereto.
    35    (3)  For each business entity, the officer or officers and director or
    36  directors named in the application shall be designated  responsible  for
    37  the  business  entity's  compliance  with  the insurance laws, rules and
    38  regulations of this state.
    39    (d)(1) Before a pharmacy benefit manager's license shall be issued  or
    40  renewed,  the  prospective licensee shall properly file in the office of
    41  the superintendent a written application therefor in such form or  forms
    42  and  supplements thereto as the superintendent prescribes, and pay a fee
    43  of two thousand dollars for each year or fraction of a year in  which  a
    44  license shall be valid.
    45    (2)  Every  pharmacy benefit manager's license shall expire thirty-six
    46  months after the date of issue. Every license issued  pursuant  to  this
    47  section  may be renewed for the ensuing period of thirty-six months upon
    48  the filing of an application in conformity with this subsection.
    49    (e)(1) If an application for a renewal license shall have  been  filed
    50  with the superintendent before November first of the year of expiration,
    51  then  the  license sought to be renewed shall continue in full force and
    52  effect either until the issuance by the superintendent  of  the  renewal
    53  license  applied  for  or until five days after the superintendent shall
    54  have refused to issue such renewal license  and  given  notice  of  such
    55  refusal to the applicant.

        S. 7828                             8

     1    (2)  Before refusing to renew any license pursuant to this section for
     2  which a renewal application has been filed pursuant to paragraph one  of
     3  this  subsection,  the  superintendent shall notify the applicant of the
     4  superintendent's intention to do so and  shall  give  such  applicant  a
     5  hearing.
     6    (f)  The  superintendent may refuse to issue a pharmacy benefit manag-
     7  er's license if, in the superintendent's judgment, the applicant or  any
     8  member,  principal,  officer or director of the applicant, is not trust-
     9  worthy and competent to act as or in connection with a pharmacy  benefit
    10  manager,  or that any of the foregoing has given cause for revocation or
    11  suspension of such license, or has failed to comply with  any  prerequi-
    12  site for the issuance of such license.
    13    (g) Licensees and applicants for a license under this section shall be
    14  subject to examination by the superintendent as often as the superinten-
    15  dent  may  deem  it  expedient.  The superintendent may promulgate regu-
    16  lations establishing methods and procedures for facilitating and verify-
    17  ing compliance with the requirements of  this  section  and  such  other
    18  regulations as necessary.
    19    (h)  The  superintendent  may  issue  a  replacement  for  a currently
    20  in-force license that has been lost or destroyed. Before the replacement
    21  license shall be issued, there shall be on file in  the  office  of  the
    22  superintendent  a  written  application  for  the  replacement  license,
    23  affirming under penalty of perjury that the original  license  has  been
    24  lost or destroyed, together with a fee of two hundred dollars.
    25    (i) No pharmacy benefit manager shall engage in any practice or action
    26  that  a  health plan or provider is prohibited from engaging in pursuant
    27  to this chapter.
    28    § 2907. Revocation or suspension of a registration  or  license  of  a
    29  pharmacy  benefit  manager.  (a) The superintendent may refuse to renew,
    30  may revoke, or may suspend for a period  the  superintendent  determines
    31  the  registration  or  license of any pharmacy benefit manager if, after
    32  notice and hearing, the superintendent determines that the registrant or
    33  licensee or any member, principal,  officer,  director,  or  controlling
    34  person of the registrant or licensee, has:
    35    (1)  violated  any insurance laws, section two hundred eighty-a of the
    36  public health law or violated any regulation, subpoena or order  of  the
    37  superintendent  or  of  another  state's  insurance commissioner, or has
    38  violated any law in the course of his or her dealings in  such  capacity
    39  after  such  license  has been issued or renewed pursuant to section two
    40  thousand nine hundred six of this article;
    41    (2) provided materially incorrect, materially  misleading,  materially
    42  incomplete  or  materially  untrue  information  in  the registration or
    43  license application;
    44    (3) obtained or attempted to obtain a registration or license  through
    45  misrepresentation or fraud;
    46    (4)(A) used fraudulent, coercive or dishonest practices;
    47    (B) demonstrated incompetence;
    48    (C) demonstrated untrustworthiness; or
    49    (D) demonstrated financial irresponsibility in the conduct of business
    50  in this state or elsewhere;
    51    (5)  improperly  withheld,  misappropriated or converted any monies or
    52  properties received in the course of business in  this  state  or  else-
    53  where;
    54    (6)  intentionally  misrepresented  the terms of an actual or proposed
    55  insurance contract;

        S. 7828                             9

     1    (7) admitted or been found to  have  committed  any  insurance  unfair
     2  trade practice or fraud;
     3    (8)  had  a  pharmacy  benefit manager registration or license, or its
     4  equivalent, denied, suspended or revoked in any other  state,  province,
     5  district or territory;
     6    (9)  failed  to pay state income tax or comply with any administrative
     7  or court order directing payment of state income tax; or
     8    (10) ceased to meet the requirements  for  registration  or  licensure
     9  under this article.
    10    (b)  Before  revoking or suspending the registration or license of any
    11  pharmacy benefit manager pursuant to the provisions of this article, the
    12  superintendent shall give notice to the registrant or  licensee  and  to
    13  every  sub-licensee  and  shall hold, or cause to be held, a hearing not
    14  less than ten days after the giving of such notice.
    15    (c) If a registration or license pursuant to the  provisions  of  this
    16  article  is  revoked or suspended by the superintendent, then the super-
    17  intendent shall forthwith give notice to the registrant or licensee.
    18    (d) The revocation or suspension of any registration or license pursu-
    19  ant to the provisions of this article  shall  terminate  forthwith  such
    20  registration  or  license  and  the authority conferred thereby upon all
    21  sub-licensees. For good cause shown, the superintendent  may  delay  the
    22  effective date of a revocation or suspension to permit the registrant or
    23  licensee  to  satisfy  some  or  all  of  its contractual obligations to
    24  perform pharmacy benefit management services in the state.
    25    (e)(1) No individual, corporation, firm or association whose registra-
    26  tion or license as a pharmacy benefit manager has been revoked  pursuant
    27  to  subsection  (a) of this section, and no firm or association of which
    28  such individual is a member, and no corporation of which such individual
    29  is an officer or director, and no controlling person of  the  registrant
    30  or  licensee  shall  be  entitled  to obtain any registration or license
    31  under the provisions of this article for a minimum period  of  one  year
    32  after  such  revocation,  or, if such revocation be judicially reviewed,
    33  for a minimum period of one year after the final  determination  thereof
    34  affirming the action of the superintendent in revoking such license.
    35    (2) If any such registration or license held by a firm, association or
    36  corporation  be  revoked,  no  member of such firm or association and no
    37  officer or director of such corporation or any controlling person of the
    38  registrant or licensee shall be entitled to obtain any  registration  or
    39  license,  or  to  be  named as a sub-licensee in any such license, under
    40  this article for the same period  of  time,  unless  the  superintendent
    41  determines,  after  notice  and  hearing,  that  such member, officer or
    42  director was not personally at fault in the matter on account  of  which
    43  such registration or license was revoked.
    44    (f)  If  any  corporation, firm, association or person aggrieved shall
    45  file with the superintendent a verified complaint  setting  forth  facts
    46  tending  to  show  sufficient ground for the revocation or suspension of
    47  any pharmacy benefit manager's registration or license, and  the  super-
    48  intendent  finds  the complaint credible, then the superintendent shall,
    49  after notice and a  hearing,  determine  whether  such  registration  or
    50  license shall be suspended or revoked.
    51    (g)  The  superintendent  shall  retain  the  authority to enforce the
    52  provisions of and impose any penalty or remedy authorized by this  chap-
    53  ter  against  any  person  or  entity  who is under investigation for or
    54  charged with a violation of this chapter, even if the person's or  enti-
    55  ty's registration or license has been surrendered, or has expired or has
    56  lapsed by operation of law.

        S. 7828                            10

     1    (h)  A  registrant or licensee subject to this article shall report to
     2  the superintendent any administrative action taken  against  the  regis-
     3  trant  or  licensee  in  another jurisdiction or by another governmental
     4  agency in this state within thirty days of the final disposition of  the
     5  matter.  This report shall include a copy of the order, consent to order
     6  or other relevant legal documents.
     7    (i)  Within thirty days of the initial pretrial hearing date, a regis-
     8  trant or licensee subject to this article shall  report  to  the  super-
     9  intendent  any  criminal prosecution of the registrant or licensee taken
    10  in any jurisdiction. The report shall include  a  copy  of  the  initial
    11  complaint  filed,  the  order  resulting  from the hearing and any other
    12  relevant legal documents.
    13    § 2908. Penalties for violations. (a) The superintendent, in  lieu  of
    14  revoking  or  suspending  the registration or license of a registrant or
    15  licensee in accordance with the provisions of this article, may  in  any
    16  one  proceeding  by  order, require the registrant or licensee to pay to
    17  the people of this state a penalty in a sum not exceeding the greater of
    18  (1) one thousand dollars for each offense and two thousand five  hundred
    19  dollars  for  each  subsequent  violation  or  (2)  the  aggregate gross
    20  receipts attributable to all offenses.
    21    (b) Upon the failure of such a  registrant  or  licensee  to  pay  the
    22  penalty ordered pursuant to subsection (a) of this section within twenty
    23  days  after  the  mailing of the order, postage prepaid, registered, and
    24  addressed to the last known place of business of  the  licensee,  unless
    25  the  order  is  stayed by an order of a court of competent jurisdiction,
    26  the superintendent may revoke the registration or license of the  regis-
    27  trant  or licensee or may suspend the same for such period as the super-
    28  intendent determines.
    29    § 2909. Stay or  suspension  of  superintendent's  determination.  The
    30  commencement  of  a  proceeding under article seventy-eight of the civil
    31  practice law and rules, to review the action of  the  superintendent  in
    32  suspending  or  revoking or refusing to renew any certificate under this
    33  article, shall stay such action of the superintendent for  a  period  of
    34  thirty  days. Such stay shall not be extended for a longer period unless
    35  the court shall determine, after a  preliminary  hearing  of  which  the
    36  superintendent  is notified forty-eight hours in advance, that a stay of
    37  the superintendent's action pending the final determination  or  further
    38  order of the court will not unduly injure the interests of the people of
    39  the state.
    40    §  2910.  Revoked  registrations  or licenses. (a)(1) No person, firm,
    41  association, corporation or other entity subject to  the  provisions  of
    42  this  article  whose registration or license under this article has been
    43  revoked, or whose registration or license to engage in the  business  of
    44  pharmacy  benefit  management  in  any  capacity has been revoked by any
    45  other state or territory of the United States shall become  employed  or
    46  appointed  by a pharmacy benefit manager as an officer, director, manag-
    47  er, controlling person or for other services, without the prior  written
    48  approval of the superintendent, unless such services are for maintenance
    49  or are clerical or ministerial in nature.
    50    (2)  No person, firm, association, corporation or other entity subject
    51  to the provisions of this article shall knowingly employ or appoint  any
    52  person or entity whose registration or license issued under this article
    53  has  been  revoked,  or  whose  registration or license to engage in the
    54  business of pharmacy benefit management in any capacity has been revoked
    55  by any other state or territory of the United  States,  as  an  officer,
    56  director, manager, controlling person or for other services, without the

        S. 7828                            11

     1  prior  written  approval of the superintendent, unless such services are
     2  for maintenance or are clerical or ministerial in nature.
     3    (3)  No  corporation  or partnership subject to the provisions of this
     4  article shall knowingly permit any person whose registration or  license
     5  issued  under  this  article  has been revoked, or whose registration or
     6  license to engage in the business of pharmacy benefit management in  any
     7  capacity has been revoked by any other state, or territory of the United
     8  States,  to  be a shareholder or have an interest in such corporation or
     9  partnership, nor shall any such person become a shareholder  or  partner
    10  in  such  corporation or partnership, without the prior written approval
    11  of the superintendent.
    12    (b) The superintendent may  approve  the  employment,  appointment  or
    13  participation  of any such person whose registration or license has been
    14  revoked:
    15    (1) if the superintendent determines that the duties and  responsibil-
    16  ities  of  such  person  are subject to appropriate supervision and that
    17  such duties and responsibilities will not have an  adverse  effect  upon
    18  the  public, other registrants or licensees, or the registrant or licen-
    19  see proposing employment or appointment of such person; or
    20    (2) if such person has filed  an  application  for  reregistration  or
    21  relicensing pursuant to this article and the application for reregistra-
    22  tion  or  relicensing has not been approved or denied within one hundred
    23  twenty days following the  filing  thereof,  unless  the  superintendent
    24  determines  within  the said time that employment or appointment of such
    25  person by a registrant or licensee in the conduct of a pharmacy  benefit
    26  management business would not be in the public interest.
    27    (c) The provisions of this section shall not apply to the ownership of
    28  shares  of any corporation registered or licensed pursuant to this arti-
    29  cle if the shares of such corporation are publicly held  and  traded  in
    30  the  over-the-counter market or upon any national or regional securities
    31  exchange.
    32    § 2911. Change of address. A registrant or licensee under this article
    33  shall inform the superintendent by a means acceptable to the superinten-
    34  dent of a change of address within thirty days of the change.
    35    § 2912. Applicability of other laws. Nothing in this article shall  be
    36  construed  to  exempt a pharmacy benefit manager from complying with the
    37  provisions of articles twenty-one and forty-nine  of  this  chapter  and
    38  articles  forty-four  and forty-nine and section two hundred eighty-a of
    39  the public health law, section three hundred sixty-four-j of the  social
    40  services  law,  or  any other provision of this chapter or the financial
    41  services law.
    42    § 2913. Assessments. Pharmacy benefit managers that file  a  registra-
    43  tion  with  the  department  or  are licensed by the department shall be
    44  assessed by the superintendent for the operating expenses of the depart-
    45  ment that are solely attributable to regulating  such  pharmacy  benefit
    46  managers  in  such proportions as the superintendent shall deem just and
    47  reasonable.
    48    § 3. Subsection (b) of section 2402 of the insurance law,  as  amended
    49  by section 71 of part A of chapter 62 of the laws of 2011, is amended to
    50  read as follows:
    51    (b)  "Defined  violation"  means  the commission by a person of an act
    52  prohibited by: subsection (a) of section one thousand one  hundred  two,
    53  section  one  thousand  two  hundred  fourteen, one thousand two hundred
    54  seventeen, one thousand two hundred twenty, one thousand  three  hundred
    55  thirteen, subparagraph (B) of paragraph two of subsection (i) of section
    56  one thousand three hundred twenty-two, subparagraph (B) of paragraph two

        S. 7828                            12

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