Short title

This Act may be cited as the

Generic Drug Pricing Fairness Act

Pharmacy benefits manager standards under the Medicare program

(a)

In general

Section 1860D–12(b) of the Social Security Act (42 U.S.C. 1395w–112(b)) is amended by adding at the end the following new paragraph:

(7)

Pharmacy benefits manager transparency requirements

Each contract entered into with a PDP sponsor under this part with respect to a prescription drug plan offered by such sponsor shall provide that the PDP may not enter into a contract with any pharmacy benefits manager (referred to in this paragraph as a PBM) to manage the prescription drug coverage provided under such plan, or to control the costs of the prescription drug coverage under such plan, unless the PBM adheres to the following criteria when handling personally identifiable utilization and claims data or other sensitive patient data: (A)The PBM may not transmit any personally identifiable utilization or claims data, with respect to a plan enrollee, to a pharmacy owned by a PBM if the plan enrollee has not voluntarily elected in writing or via secure electronic means to fill that particular prescription at the PBM-owned pharmacy. (B)The PBM may not require that a plan enrollee use a retail pharmacy, mail order pharmacy, specialty pharmacy, or other pharmacy entity providing pharmacy services in which the PBM has an ownership interest or that has an ownership interest in the PBM or provide an incentive to a plan enrollee to encourage the enrollee to use a retail pharmacy, mail order pharmacy, specialty pharmacy, or other pharmacy entity providing pharmacy services in which the PBM has an ownership interest or that has an ownership interest in the PBM, if the incentive is applicable only to such pharmacies.

(b)

Regular update of prescription drug pricing standard

Paragraph (6) of section 1860D–12(b) of the Social Security Act (42 U.S.C. 1395w–112(b)) is amended to read as follows:

(6)

Regular update of prescription drug pricing standard

(A)

In general

If the PDP sponsor of a prescription drug plan uses a standard for reimbursement (as described in subparagraph (B)) of pharmacies based on the cost of a drug, each contract entered into with such sponsor under this part with respect to the plan shall provide that the sponsor shall— (i)update such standard not less frequently than once every 7 days, beginning with an initial update on January 1 of each year, to accurately reflect the market price of acquiring the drug; (ii)disclose to applicable pharmacies the sources used for making any such update; (iii)if the source for such a standard for reimbursement is not publicly available, disclose to the applicable pharmacies all individual drug prices to be so updated in advance of the use of such prices for the reimbursement of claims; and (iv)establish a process to appeal, investigate, and resolve disputes regarding individual drug prices that are less than the pharmacy acquisition price for such drug. (B)

Prescription drug pricing standard defined

For purposes of subparagraph (A), a standard for reimbursement of a pharmacy is any methodology or formula for varying the pricing of a drug or drugs during the term of the pharmacy reimbursement contract that is based on the cost of the drug involved, including drug pricing references and amounts that are based upon average wholesale price, wholesale average cost, average manufacturer price, average sales price, maximum allowable cost (MAC), or other costs, whether publicly available or not.

(c)

Effective date

The amendments made by this section shall apply to plan years beginning on or after January 1, 2015.

Regular update of prescription drug pricing standard under TRICARE retail pharmacy program

Section 1074g(d) of title 10, United States Code, is amended by adding at the end the following new paragraph:

(3)To the extent practicable, with respect to the TRICARE retail pharmacy program described in subsection (a)(2)(E)(ii), the Secretary shall ensure that a contract entered into with a TRICARE managed care support contractor includes requirements described in section 1860D–12(b)(6) of the Social Security Act (42 U.S.C. 1395w–112(b)(6)) to ensure the provision of information regarding the pricing standard for prescription drugs.

Prescription drug transparency in the Federal Employee Health Benefits program

(a)

In general

Section 8902 of title 5, United States Code, is amended by adding at the end the following new subsections:

(p)A contract may not be made or a plan approved under this chapter under which a carrier has an agreement with a pharmacy benefits manager (in this subsection referred to as a PBM) to manage prescription drug coverage or to control the costs of the prescription drug coverage unless the carrier and PBM adhere to the following criteria: (1)The PBM may not transmit any personally identifiable utilization or claims data with respect to an individual enrolled under such contract or plan to a pharmacy owned by the PBM if the individual has not voluntarily elected in writing or via secure electronic means to fill that particular prescription at such a pharmacy. (2)The PBM may not require that an individual enrolled under such contract or plan use a retail pharmacy, mail order pharmacy, specialty pharmacy, or other pharmacy entity providing pharmacy services in which the PBM has an ownership interest or that has an ownership interest in the PBM or provide an incentive to a plan enrollee to encourage the enrollee to use a retail pharmacy, mail order pharmacy, specialty pharmacy, or other pharmacy entity providing pharmacy services in which the PBM has an ownership interest or that has an ownership interest in the PBM, if the incentive is applicable only to such pharmacies. (q) (1)If a contract made or plan approved under this chapter provides for a standard for reimbursement (as described in paragraph (2)) with respect to a prescription drug plan, such contract or plan shall provide that the applicable carrier— (A)update such standard not less frequently than once every 7 days, beginning with an initial update on January 1 of each year, to accurately reflect the market price of acquiring the drug; (B)disclose to applicable pharmacies the sources used for making any such update; (C)if the source for such a standard for reimbursement is not publicly available, disclose to the applicable pharmacies all individual drug prices to be so updated in advance of the use of such prices for the reimbursement of claims; and (D)establish a process to appeal, investigate, and resolve disputes regarding individual drug prices that are less than the pharmacy acquisition price for such drug. (2)For purposes of paragraph (1), a standard for reimbursement of a pharmacy is any methodology or formula for varying the pricing of a drug or drugs during the term of the pharmacy reimbursement contract that is based on the cost of the drug involved, including drug pricing references and amounts that are based upon average wholesale price, wholesale average cost, average manufacturer price, average sales price, maximum allowable cost, or other costs, whether publicly available or not.

(b)

Application

The amendment made by subsection (a) shall apply to any contract entered into under section 8902 of title 5, United States Code, on or after the date of enactment of this section.