[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 640 Introduced in Senate (IS)]

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116th CONGRESS
  1st Session
                                 S. 640

  To amend title XVIII of the Social Security Act to require pharmacy-
negotiated price concessions to be included in negotiated prices at the 
   point-of-sale under part D of the Medicare program, and for other 
                               purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 4, 2019

  Mr. Kennedy introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
  To amend title XVIII of the Social Security Act to require pharmacy-
negotiated price concessions to be included in negotiated prices at the 
   point-of-sale under part D of the Medicare program, and for other 
                               purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Phair Pricing Act of 2019''.

SEC. 2. REQUIRING PHARMACY-NEGOTIATED PRICE CONCESSIONS AND PHARMACY 
              INCENTIVE PAYMENTS AND ADJUSTMENTS TO BE INCLUDED IN 
              NEGOTIATED PRICES AT THE POINT-OF-SALE UNDER PART D OF 
              THE MEDICARE PROGRAM.

    Section 1860D-2(d)(1)(B) of the Social Security Act (42 U.S.C. 
1395w-102(d)(1)(B)) is amended--
            (1) by striking ``prices.--For purposes'' and inserting 
        ``prices.--
                            ``(i) In general.--For purposes''; and
            (2) by adding at the end the following new clauses:
                            ``(ii) Prices negotiated with pharmacy at 
                        point-of-sale.--
                                    ``(I) In general.--Subject to 
                                subclause (III), for plan years 
                                beginning on or after January 1, 2020, 
                                negotiated prices for covered part D 
                                drugs described in clause (i) provided 
                                under a prescription drug plan, 
                                including all contingent and 
                                noncontingent concessions, adjustments, 
                                payments, and fees (including 
                                dispensing fees) negotiated with the 
                                pharmacy dispensing such drug, shall be 
                                provided at the point-of-sale of such 
                                drug. Such negotiated price shall not 
                                include any incentive payments and 
                                adjustments or any other contingent 
                                concessions, adjustments, payments, or 
                                fees that increase the amount of such 
                                negotiated price.
                                    ``(II) Application of pharmacy 
                                incentive payments and adjustments.--
                                            ``(aa) In general.--For 
                                        plan years beginning on or 
                                        after January 1, 2020, a PDP 
                                        sponsor--

                                                    ``(AA) shall apply 
                                                a system under which 
                                                incentive payments and 
                                                adjustments using only 
                                                quality measures 
                                                established by the 
                                                Secretary under item 
                                                (bb) are made to a 
                                                pharmacy with respect 
                                                to payment for covered 
                                                part D drugs dispensed 
                                                by such pharmacy; and

                                                    ``(BB) may not 
                                                apply any other 
                                                incentive payments and 
                                                adjustments with 
                                                respect to such payment 
                                                outside of such system.

                                        Application of such system may 
                                        not result in a decrease in 
                                        reimbursement to such pharmacy 
                                        for such drug after the point-
                                        of-sale of such drug.
                                            ``(bb) Standard pharmacy 
                                        quality measures.--The 
                                        Secretary shall establish 
                                        standard quality measures that 
                                        may be used in a system 
                                        described in item (aa). Such 
                                        measures shall be--

                                                    ``(AA) focused on 
                                                improving patient 
                                                health outcomes;

                                                    ``(BB) standardized 
                                                across PDP sponsors;

                                                    ``(CC) pharmacy-
                                                specific in 
                                                application;

                                                    ``(DD) relevant to 
                                                the type of pharmacy 
                                                concerned (such as 
                                                specialty pharmacies), 
                                                taking into account the 
                                                items and services 
                                                furnished by the 
                                                pharmacy and the 
                                                patient population 
                                                served by the pharmacy;

                                                    ``(EE) applied only 
                                                when relevant to the 
                                                specific drug (or drug 
                                                class of such drug) 
                                                being furnished by the 
                                                pharmacy or when 
                                                relevant to management 
                                                of the condition for 
                                                which such drug has 
                                                been prescribed; and

                                                    ``(FF) based on 
                                                achievable and proven 
                                                criteria measuring 
                                                pharmacy performance 
                                                over which the pharmacy 
                                                has meaningful control 
                                                and ability to 
                                                influence.

                                        In establishing such standards, 
                                        the Secretary shall consult 
                                        with stakeholders, including 
                                        PDP sponsors and MA 
                                        organizations, pharmacies 
                                        across pharmacy practice types, 
                                        pharmacy benefit managers, 
                                        patient advocacy organizations, 
                                        drug manufacturers, appropriate 
                                        standard-setting organizations, 
                                        and other entities determined 
                                        appropriate by the Secretary.
                                    ``(III) No increase in cost 
                                sharing.--Subclause (I) shall not apply 
                                in the case where application of such 
                                subclause would increase the amount 
                                owed by an individual in cost sharing 
                                above the amount such individual would 
                                have owed in cost sharing without 
                                application of such subclause.
                                    ``(IV) Discrepancies between 
                                negotiated prices and actual 
                                reimbursement.--In the case that the 
                                Secretary determines that the 
                                negotiated price of a PDP sponsor 
                                applied at the point-of-sale with 
                                respect to a covered part D drug for a 
                                year dispensed by a pharmacy was 
                                greater than the total reimbursement 
                                made to such pharmacy for such drug for 
                                such year, such sponsor shall, not 
                                later than 90 days after receiving 
                                notice of such determination, furnish 
                                to the pharmacy that dispensed such 
                                drug and to the Secretary a written 
                                explanation of why such negotiated 
                                price was greater than such 
                                reimbursement.
                                    ``(V) Specialty pharmacy.--For 
                                purposes of carrying out this clause 
                                (including subclause (II)(bb)(DD)), the 
                                Secretary shall, not later than 
                                December 31, 2019, define the term 
                                `specialty pharmacy' in consultation 
                                with relevant stakeholders.
                                    ``(VI) Definitions.--In this 
                                clause:
                                            ``(aa) Incentive payments 
                                        and adjustments.--The term 
                                        `incentive payments and 
                                        adjustments' means, with 
                                        respect to payment to a 
                                        pharmacy by a PDP sponsor for a 
                                        covered part D drug, any 
                                        prospective or retrospective 
                                        price concessions, rebates, 
                                        discounts, fees, reconciliation 
                                        adjustments, bonuses, 
                                        performance payments, 
                                        incentives, and any other 
                                        adjustment to such payment 
                                        determined through the use of a 
                                        quality measure, regardless of 
                                        when such payments and 
                                        adjustments are applied. Such 
                                        term does not include any 
                                        manufacturer rebates or 
                                        concessions made with respect 
                                        to such drug.
                                            ``(bb) Quality measure.--
                                        The term `quality measure' 
                                        means performance criteria used 
                                        by a PDP sponsor (including an 
                                        entity that contracts with such 
                                        sponsor, such as a pharmacy 
                                        benefit manager) to determine 
                                        the amount or applicability of 
                                        incentive payments and 
                                        adjustments.
                                            ``(cc) PDP sponsor.--The 
                                        term `PDP sponsor' includes an 
                                        MA organization offering an MA-
                                        PD plan under part C and an 
                                        entity that contracts with such 
                                        sponsor or organization, such 
                                        as a pharmacy benefit manager.
                            ``(iii) Reasonable reimbursement 
                        requirement.--In no case may a negotiated price 
                        (as described in clause (ii)(I)) for a covered 
                        part D drug furnished by a pharmacy during a 
                        plan year beginning on or after January 1, 
                        2020, be less than such pharmacy's cost of 
                        purchasing and dispensing such drug and 
                        providing such other services associated with 
                        furnishing such drug as may be specified by the 
                        Secretary.
                            ``(iv) Claim reimbursement disclosure 
                        requirements.--With respect to payment made by 
                        a PDP sponsor to a pharmacy for a covered part 
                        D drug furnished by such pharmacy during a plan 
                        year beginning on or after January 1, 2020, 
                        such sponsor shall promptly furnish all pricing 
                        components including the Network Reimbursement 
                        ID used to price the claim, any fees, pharmacy 
                        price concessions, discounts, incentives or any 
                        other forms of remuneration that affect payment 
                        and pricing of the claim as part of the claim 
                        adjudication response at the point-of-sale. All 
                        aforementioned items, including Network 
                        Reimbursement ID, fees, pharmacy price 
                        concessions, discounts, incentives, or any 
                        other forms of remuneration that affect payment 
                        and pricing of the claim shall each be 
                        identified in a predetermined line item in the 
                        remittance advice that is standard across the 
                        industry. The Part D sponsor shall include 
                        suitable claim-level detail on the electronic 
                        remittance advice that accompanies each 
                        payment. This claim-level detail shall include, 
                        in an industry standardized format, all fields 
                        needed to properly identify the claim, 
                        including the Claim Authorization Number, date 
                        of service, date of payment remittance, 
                        ingredient cost reimbursed, dispensing fee 
                        reimbursed, payment amounts including the 
                        Network ID used to price the claim, the 
                        specific dollar amounts and the appropriate 
                        qualifier codes for each payment adjustment 
                        including fees, pharmacy price concessions, or 
                        incentives.
                            ``(v) Violation process.--A PDP sponsor 
                        shall participate in any process established by 
                        the Secretary for purposes of determining 
                        whether such sponsor has violated a provision 
                        of clauses (ii) through (iv).''.

SEC. 3. PHARMACY BENEFIT MANAGER PROVISION OF INFORMATION.

    (a) In General.--Section 1150A(b)(2) of the Social Security Act (42 
U.S.C. 1320b-23(b)(2)) is amended by striking ``excluding'' and 
inserting ``including''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply with respect to contract years beginning on or after January 1, 
2020.
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