[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 1967 Introduced in Senate (IS)]

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118th CONGRESS
  1st Session
                                S. 1967

     To amend title XVIII of the Social Security Act to establish 
    requirements relating to the responsibility of pharmacy benefit 
                    managers under Medicare part D.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             June 14, 2023

 Mr. Menendez (for himself, Mrs. Blackburn, Mr. Tester, Mr. Marshall, 
Mr. Wyden, and Mr. Crapo) 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 establish 
    requirements relating to the responsibility of pharmacy benefit 
                    managers under Medicare part D.

    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 ``Patients Before Middlemen Act'' or 
the ``PBM Act''.

SEC. 2. RESPONSIBILITY OF PHARMACY BENEFIT MANAGERS UNDER MEDICARE PART 
              D.

    (a) Prescription Drug Plans.--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:
            ``(9) Responsibility of pharmacy benefit managers.--
                    ``(A) In general.--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 any pharmacy benefit manager (or 
                affiliate, subsidiary, or agent of a pharmacy benefit 
                manager) acting on behalf of such sponsor--
                            ``(i) derives no income with respect to any 
                        services provided in connection with part D 
                        utilization from any entity or individual other 
                        than bona fide service fees; and
                            ``(ii) sets forth in an agreement between 
                        the pharmacy benefit manager and the PDP 
                        sponsor the amount of any bona fide service 
                        fee. The bona fide service fee must be a flat 
                        dollar amount, cannot be passed on in whole or 
                        in part to another party whether or not the 
                        pharmacy benefit manager takes title to the 
                        drug, and shall not be directly or indirectly 
                        based on, or contingent upon--
                                    ``(I) 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 
                                enrollees in the plan; or
                                    ``(III) any other amounts 
                                prohibited by the Secretary.
                    ``(B) Clarification regarding pdp sponsor acting as 
                pbm.--In the case where a PDP sponsor is acting as a 
                pharmacy benefit manager on behalf of a prescription 
                drug plan offered by the PDP sponsor, the requirements 
                under subparagraph (A) shall not be construed as 
                preventing the PDP sponsor from accepting any rebates, 
                discounts, or price concessions that lower net costs 
                for covered part D drugs.
                    ``(C) Certification of compliance.--The PDP sponsor 
                and pharmacy benefit manager shall furnish to the 
                Secretary (in a time and manner specified by the 
                Secretary) an annual certification of compliance with 
                this paragraph, as well as such information as the 
                Secretary determines necessary to carry out this 
                paragraph.
                    ``(D) Disgorgement of excess amounts received.--A 
                pharmacy benefit manager (or affiliate, subsidiary, or 
                agent of a pharmacy benefit manager) shall disgorge to 
                the Secretary any payment, remuneration, or other 
                amount received in violation of this paragraph or the 
                contract entered into with a PDP sponsor under this 
                part with respect to a prescription drug plan.
                    ``(E) Clarification.--The requirements of this 
                paragraph shall apply regardless of whether the 
                pharmacy benefit manager is a first-tier, downstream, 
                or related entity to the PDP sponsor.
                    ``(F) Rule of construction.--Nothing in this 
                paragraph shall be construed as prohibiting payments 
                related to reimbursement for ingredient costs to 
                entities that acquire prescription drugs or pharmacy 
                dispensing fees.
                    ``(G) Definitions.--For purposes of this paragraph:
                            ``(i) Bona fide service fee.--The term 
                        `bona fide service fee' means fair market value 
                        for a bona fide, itemized service actually 
                        performed on behalf of an entity, that the 
                        entity would otherwise perform (or contract 
                        for) in the absence of the service arrangement 
                        and that are not passed on in whole to a client 
                        or customer, whether or not the entity takes 
                        title to the drug.
                            ``(ii) Pharmacy benefit manager.--The term 
                        `pharmacy benefit manager' means any person, 
                        business, or other entity that, pursuant to an 
                        agreement with a PDP sponsor or part D plan 
                        either directly or through an intermediary acts 
                        as a price negotiator or group purchaser on 
                        behalf of such sponsor or plan, or manages the 
                        prescription drug benefits provided by such 
                        sponsor or plan, including the processing and 
                        payment of claims 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 part D drugs, 
                        or the provision of services related thereto. 
                        Such term includes--
                                    ``(I) any person, business, or 
                                other entity that carries out one or 
                                more of the activities described in the 
                                preceding sentence; and
                                    ``(II) any entity that is owned, 
                                affiliated, or related under a common 
                                ownership structure with such a person, 
                                business, or entity (including an 
                                entity owned by or affiliated with the 
                                PDP sponsor) or that acts as a 
                                contractor or agent to such a person, 
                                business, or entity,
                        irrespective of whether such person, business, 
                        or entity calls itself a `pharmacy benefit 
                        manager'.''.
    (b) MA-PD Plans.--Section 1857(f)(3) of the Social Security Act (42 
U.S.C. 1395w-27(f)(3)) is amended by adding at the end the following 
new subparagraph:
                    ``(E) Responsibility of pharmacy benefit 
                managers.--Section 1860D-12(b)(9).''.
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