[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>