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 Section 280-a of the public health law is REPEALED and a 2 new section 280-a is added to read as follows: 3 § 280-a. Pharmacy benefit managers. 1.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. LBD06526-06-0S. 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 passedS. 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 anS. 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 toS. 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 theS. 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 twoS. 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.