[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 1542 Introduced in Senate (IS)]
<DOC>
118th CONGRESS
1st Session
S. 1542
To improve services provided by pharmacy benefit managers.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
May 10, 2023
Mr. Marshall (for himself, Mr. Tester, Mr. Braun, Mr. Kaine, and Mrs.
Capito) introduced the following bill; which was read twice and
referred to the Committee on Health, Education, Labor, and Pensions
_______________________________________________________________________
A BILL
To improve services provided by pharmacy benefit managers.
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 ``Delinking Revenue from Unfair
Gouging Act'' or the ``DRUG Act''.
SEC. 2. IMPROVING PHARMACY BENEFIT MANAGER SERVICES.
(a) Public Health Service Act.--Part D of title XXVII of the Public
Health Service Act (42 U.S.C. 300gg-111 et seq.) is amended by adding
at the end the following:
``SEC. 2799A-11. IMPROVING PHARMACY BENEFIT MANAGER SERVICES.
``(a) General.--For plan years beginning on or after January 1,
2026, except as provided in subsection (b), a pharmacy benefit manager
shall not charge or receive fees from any entity for services provided
to such entity.
``(b) Exception for Flat Service Fees.--
``(1) In general.--A pharmacy benefit manager may charge an
entity a flat service fee for the provision of services to such
entity if such fee is set forth in an agreement between the
pharmacy benefit manager and such entity.
``(2) Definitions.--In this section--
``(A) the term `flat service fee' means a flat
dollar amount that is not directly or indirectly based
on, or contingent upon, or otherwise related to--
``(i) a drug price (such as wholesale
acquisition cost) or drug benchmark price (such
as average wholesale price);
``(ii) discounts, rebates, fees, or other
remuneration with respect to prescription drugs
prescribed to the participants, beneficiaries,
or enrollees in the group health plan or
coverage involved; or
``(iii) any other amounts specified by the
Secretary, the Secretary of Labor, and the
Secretary of the Treasury; and
``(B) the term `pharmacy benefit manager' means any
person, business, or other entity such as a third-party
administrator, regardless of whether it identifies
itself as a pharmacy benefit manager, that, either
directly or through an intermediary (including an
affiliate, subsidiary, or agent) or an arrangement with
a third party--
``(i) acts as a price negotiator for
prescription drugs on behalf of a group health
plan or health insurance issuer offering group
or individual health insurance coverage; or
``(ii) manages or administers the
prescription drug benefits provided by a group
health plan or health insurance issuer offering
group or individual health insurance coverage,
including the processing and payment of claims
for prescription drugs, arranging alternative
access to or funding for prescription drugs,
the performance of drug utilization review, the
processing of drug prior authorization
requests, the adjudication of appeals or
grievances related to the prescription drug
benefit, contracting with network pharmacies,
controlling the cost of covered prescription
drugs, or the provision of related services.
``(c) Accountability and Conduct.--
``(1) In general.--A pharmacy benefit manager shall not--
``(A) charge a group health plan or health
insurance issuer offering group or individual health
insurance coverage a different amount for a
prescription drug's ingredient cost or dispensing fee
as compared to the amount the pharmacy benefit manager
reimburses a pharmacy for the prescription drug's
ingredient cost or dispensing fee;
``(B) reimburse a network pharmacy or pharmacist in
an amount less than the amount the pharmacy benefit
manager would reimburse a network pharmacy that is
owned, controlled by, or affiliated with the pharmacy
benefit manager for dispensing the same drug or for
providing the same pharmacist services; or
``(C) directly or indirectly engage in steering (as
defined in paragraph (2)) to a pharmacy that is owned,
controlled by, or affiliated with the pharmacy benefit
manager.
``(2) Steering.--In paragraph (1), the term `steering' with
respect to a pharmacy benefit manager includes--
``(A) providing or implementing a benefit design
that encourages a participant, beneficiary, or enrollee
to utilize a pharmacy that is owned, controlled by, or
affiliated with the pharmacy benefit manager, if such
design increases costs for the plan or the a
participant, beneficiary, or enrollee, including
requiring a participant, beneficiary, or enrollee to
pay higher out-of-pocket costs for a prescription if
the participant, beneficiary, or enrollee chooses not
to use a pharmacy owned, controlled by, or affiliated
with the pharmacy benefit manager;
``(B) requiring a participant, beneficiary, or
enrollee to use only a pharmacy that is owned,
controlled by, or affiliated with the pharmacy benefit
manager;
``(C) retaliating, making further attempts to
influence a participant, beneficiary, or enrollee, or
treating a participant, beneficiary, or enrollee or a
participant, beneficiary, or enrollee's claim any
differently if a participant, beneficiary, or enrollee
chooses to use a pharmacy that is not owned, controlled
by, or affiliated with the pharmacy benefit manager; or
``(D) any other activities as defined by the
Secretary, the Secretary of Labor, and the Secretary of
the Treasury.
``(d) Enforcement.--
``(1) In general.--The Secretary, in consultation with the
Secretary of Labor and the Secretary of the Treasury, shall
enforce this section.
``(2) Penalties.--A pharmacy benefit manager that violates
subsection (a), (b), or (c) shall be subject to a civil
monetary penalty in the amount of $10,000 for each day during
which such violation continues.
``(3) Procedure.--The provisions of section 1128A of the
Social Security Act, other than subsections (a) and (b) and the
first sentence of subsection (c)(1) of such section shall apply
to civil monetary penalties under this subsection in the same
manner as such provisions apply to a penalty or proceeding
under section 1128A of the Social Security Act.
``(e) Regulations.--Notwithstanding any other provision of law, the
Secretary shall implement this section through interim final
regulations.''.
(b) Employee Retirement Income Security Act of 1974.--
(1) In general.--Subpart B of part 7 of subtitle B of title
I of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1185 et seq.) is amended by inserting after section 725
the following:
``SEC. 726. IMPROVING PHARMACY BENEFIT MANAGER SERVICES.
``(a) General.--For plan years beginning on or after January 1,
2026, except as provided in subsection (b), a pharmacy benefit manager
shall not charge or receive fees from any entity for services provided
to such entity.
``(b) Exception for Flat Service Fees.--
``(1) In general.--A pharmacy benefit manager may charge an
entity a flat service fee for the provision of services to such
entity if such fee is set forth in an agreement between the
pharmacy benefit manager and such entity.
``(2) Definitions.--In this section--
``(A) the term `flat service fee' means a flat
dollar amount that is not directly or indirectly based
on, or contingent upon, or otherwise related to--
``(i) a drug price (such as wholesale
acquisition cost) or drug benchmark price (such
as average wholesale price);
``(ii) discounts, rebates, fees, or other
remuneration with respect to prescription drugs
prescribed to participants or beneficiaries in
the group health plan or coverage involved; or
``(iii) any other amounts specified by the
Secretary, the Secretary of Health and Human
Services, and the Secretary of the Treasury;
and
``(B) the term `pharmacy benefit manager' means any
person, business, or other entity such as a third-party
administrator, regardless of whether it identifies
itself as a pharmacy benefit manager, that, either
directly or through an intermediary (including an
affiliate, subsidiary, or agent) or an arrangement with
a third party--
``(i) acts as a price negotiator for
prescription drugs on behalf of a group health
plan or health insurance issuer offering group
health insurance coverage; or
``(ii) manages or administers the
prescription drug benefits provided by a group
health plan or health insurance issuer offering
group health insurance coverage, including the
processing and payment of claims for
prescription drugs, arranging alternative
access to or funding for prescription drugs,
the performance of drug utilization review, the
processing of drug prior authorization
requests, the adjudication of appeals or
grievances related to the prescription drug
benefit, contracting with network pharmacies,
controlling the cost of covered prescription
drugs, or the provision of related services.
``(c) Accountability and Conduct.--
``(1) In general.--A pharmacy benefit manager shall not--
``(A) charge a group health plan or health
insurance issuer offering group health insurance
coverage a different amount for a prescription drug's
ingredient cost or dispensing fee as compared to the
amount the pharmacy benefit manager reimburses a
pharmacy for the prescription drug's ingredient cost or
dispensing fee;
``(B) reimburse a network pharmacy or pharmacist in
an amount less than the amount the pharmacy benefit
manager would reimburse a network pharmacy that is
owned, controlled by, or affiliated with the pharmacy
benefit manager for dispensing the same drug or for
providing the same pharmacist services; or
``(C) directly or indirectly engage in steering (as
defined in paragraph (2)) to a pharmacy that is owned,
controlled by, or affiliated with the pharmacy benefit
manager.
``(2) Steering.--In paragraph (1), the term `steering' with
respect to a pharmacy benefit manager includes--
``(A) providing or implementing a benefit plan
design that encourages a participant or beneficiary to
utilize a pharmacy that is owned, controlled by, or
affiliated with the pharmacy benefit manager, if such
plan design increases costs for the plan or the
participant or beneficiary, including requiring a
participant or beneficiary to pay higher out-of-pocket
costs for a prescription if the participant or
beneficiary chooses not to use a pharmacy owned,
controlled by, or affiliated with the pharmacy benefit
manager;
``(B) requiring a participant or beneficiary to use
only a pharmacy that is owned, controlled by, or
affiliated with the pharmacy benefit manager;
``(C) retaliating, making further attempts to
influence a participant or beneficiary, or treating a
participant or beneficiary or a participant or
beneficiary's claim any differently if a participant or
beneficiary chooses to use a pharmacy that is not
owned, controlled by, or affiliated with the pharmacy
benefit manager; or
``(D) any other activities as defined by the
Secretary, the Secretary of Health and Human Services,
and the Secretary of the Treasury.
``(d) Enforcement.--
``(1) In general.--The Secretary, in consultation with the
Secretary of Health and Human Services and the Secretary of the
Treasury, shall enforce this section.
``(2) Penalties.--A pharmacy benefit manager that violates
subsection (a), (b), or (c) shall be subject to a civil
monetary penalty in the amount of $10,000 for each day during
which such violation continues.
``(3) Procedure.--The provisions of section 1128A of the
Social Security Act, other than subsections (a) and (b) and the
first sentence of subsection (c)(1) of such section shall apply
to civil monetary penalties under this subsection in the same
manner as such provisions apply to a penalty or proceeding
under section 1128A of the Social Security Act.
``(e) Regulations.--Notwithstanding any other provision of law, the
Secretary shall implement this section through interim final
regulations.''.
(2) Clerical amendment.--The table of contents in section 1
of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1001 et seq.) is amended by inserting after the item
relating to section 725 the following new item:
``Sec. 726. Improving pharmacy benefit manager services.''.
(c) Internal Revenue Code of 1986.--
(1) In general.--Subchapter B of chapter 100 of the
Internal Revenue Code of 1986 is amended by adding at the end
the following:
``SEC. 9826. IMPROVING PHARMACY BENEFIT MANAGER SERVICES.
``(a) General.--For plan years beginning on or after January 1,
2026, except as provided in subsection (b), a pharmacy benefit manager
shall not charge or receive fees from any entity for services provided
to such entity.
``(b) Exception for Flat Service Fees.--
``(1) In general.--A pharmacy benefit manager may charge an
entity a flat service fee for the provision of services to such
entity if such fee is set forth in an agreement between the
pharmacy benefit manager and such entity.
``(2) Definitions.--In this section--
``(A) the term `flat service fee' means a flat
dollar amount that is not directly or indirectly based
on, or contingent upon, or otherwise related to--
``(i) a drug price (such as wholesale
acquisition cost) or drug benchmark price (such
as average wholesale price);
``(ii) discounts, rebates, fees, or other
remuneration with respect to prescription drugs
prescribed to participants or beneficiaries in
the group health plan or coverage involved; or
``(iii) any other amounts specified by the
Secretary, the Secretary of Labor, and the
Secretary of Health and Human Services; and
``(B) the term `pharmacy benefit manager' means any
person, business, or other entity such as a third-party
administrator, regardless of whether it identifies
itself as a pharmacy benefit manager, that, either
directly or through an intermediary (including an
affiliate, or agent) or an arrangement with a third
party--
``(i) acts as a price negotiator for
prescription drugs on behalf of a group health
plan; or
``(ii) manages or administers the
prescription drug benefits provided by a group
health plan, including the processing and
payment of claims for prescription drugs,
arranging alternative access to or funding for
prescription drugs, the performance of drug
utilization review, the processing of drug
prior authorization requests, the adjudication
of appeals or grievances related to the
prescription drug benefit, contracting with
network pharmacies, controlling the cost of
covered prescription drugs, or the provision of
related services.
``(c) Accountability and Conduct.--
``(1) In general.--A pharmacy benefit manager shall not--
``(A) charge a group health plan or health
insurance issuer offering group health insurance
coverage a different amount for a prescription drug's
ingredient cost or dispensing fee as compared to the
amount the pharmacy benefit manager reimburses a
pharmacy for the prescription drug's ingredient cost or
dispensing fee;
``(B) reimburse a network pharmacy or pharmacist in
an amount less than the amount the pharmacy benefit
manager would reimburse a network pharmacy that is
owned, controlled by, or affiliated with the pharmacy
benefit manager for dispensing the same drug or for
providing the same pharmacist services; or
``(C) directly or indirectly engage in steering (as
defined in paragraph (2)) to a pharmacy that is owned,
controlled by, or affiliated with the pharmacy benefit
manager.
``(2) Steering.--In paragraph (1), the term `steering' with
respect to a pharmacy benefit manager includes--
``(A) providing or implementing a benefit design
that encourages a participant or beneficiary to utilize
a pharmacy that is owned, controlled by, or affiliated
with the pharmacy benefit manager, if such benefit
design increases costs for the plan or the participant
or beneficiary, including requiring a participant or
beneficiary to pay higher out-of-pocket costs for a
prescription if the participant or beneficiary chooses
not to use a pharmacy owned, controlled by, or
affiliated with the pharmacy benefit manager;
``(B) requiring an enrollee to use only a pharmacy
that is owned, controlled by, or affiliated with the
pharmacy benefit manager; or
``(C) any other activities as defined by the
Secretary, the Secretary of Labor, and the Secretary of
Health and Human Service.
``(d) Enforcement.--
``(1) In general.--The Secretary, in consultation with the
Secretary of Labor and the Secretary of Health and Human
Services, shall enforce this section.
``(2) Penalties.--A pharmacy benefit manager that violates
subsection (a), (b), or (c) shall be subject to a civil
monetary penalty in the amount of $10,000 for each day during
which such violation continues.
``(3) Procedure.--The provisions of section 1128A of the
Social Security Act, other than subsections (a) and (b) and the
first sentence of subsection (c)(1) of such section shall apply
to civil monetary penalties under this subsection in the same
manner as such provisions apply to a penalty or proceeding
under section 1128A of the Social Security Act.
``(e) Regulations.--Notwithstanding any other provision of law, the
Secretary shall implement the amendments made by this Act through
interim final regulations.''.
<all>