[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 2254 Introduced in Senate (IS)]

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118th CONGRESS
  1st Session
                                S. 2254

 To amend title XVIII of the Social Security Act to establish pharmacy 
  benefit manager reporting requirements with respect to prescription 
           drug plans and MA-PD plans under Medicare part D.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 12, 2023

 Ms. Cortez Masto (for herself, Mr. Tillis, 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 pharmacy 
  benefit manager reporting requirements with respect to prescription 
           drug plans and MA-PD plans 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 ``Medicare PBM Accountability Act''.

SEC. 2. PHARMACY BENEFIT MANAGER REPORTING REQUIREMENTS WITH RESPECT TO 
              PRESCRIPTION DRUG PLANS AND MA-PD PLANS.

    (a) In General.--
            (1) Prescription drug plans.--Section 1860D-12 of the 
        Social Security Act (42 U.S.C. 1395w-112) is amended by adding 
        at the end the following new subsection:
    ``(h) Pharmacy Benefit Manager Reporting Requirements.--For plan 
years beginning on or after January 1, 2026:
            ``(1) Agreements with pharmacy benefit managers.--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 acting on 
        behalf of such sponsor has a written agreement with the PDP 
        sponsor under which the pharmacy benefit manager agrees to meet 
        the following requirements:
                    ``(A) Transparency regarding guarantees and cost 
                performance evaluations.--The pharmacy benefit manager 
                shall--
                            ``(i) define, interpret, and apply terms 
                        (such as generic drug, brand name drug 
                        (consistent with the definition of those terms 
                        under section 423.4 of title 42, Code of 
                        Federal Regulations, or a successor 
                        regulation), specialty drug, rebate, and 
                        discount) in a fully transparent and consistent 
                        manner for purposes of calculating or otherwise 
                        evaluating pharmacy benefit manager performance 
                        against pricing guarantees or similar cost 
                        performance measurements related to rebates, 
                        discounts, price concessions, or net costs;
                            ``(ii) identify any drugs, claims, or price 
                        concessions excluded from any pricing guarantee 
                        or other cost performance calculation or 
                        evaluation in a clear and consistent manner; 
                        and
                            ``(iii) where a pricing guarantee or other 
                        cost performance measure is based on a pricing 
                        benchmark other than the wholesale acquisition 
                        cost (as defined in section 1847A(c)(6)(B)) of 
                        a drug, calculate and provide a wholesale 
                        acquisition cost-based equivalent to the 
                        pricing guarantee or other cost performance 
                        measure in the contract.
                    ``(B) Provision of information.--
                            ``(i) In general.--Not later than July 1 of 
                        each year, the pharmacy benefit manager shall 
                        submit to the PDP sponsor, and to the Secretary 
                        upon request, a report, in accordance with this 
                        subparagraph, and shall make such report 
                        available to the sponsor at no cost to such 
                        sponsor in a machine-readable format and, as 
                        the Secretary may determine, other formats. 
                        Each such report shall include, with respect to 
                        such PDP sponsor and each plan offered by such 
                        sponsor, the following information with respect 
                        to the previous plan year:
                                    ``(I) A list of all drugs covered 
                                by the plan that were dispensed 
                                including, with respect to each such 
                                drug--
                                            ``(aa) the brand name, 
                                        generic or non-proprietary 
                                        name, and National Drug Code;
                                            ``(bb) the number of plan 
                                        enrollees for whom the drug was 
                                        dispensed, the total number of 
                                        prescription claims for the 
                                        drug (including original 
                                        prescriptions and refills, 
                                        counted as separate claims), 
                                        and the total number of dosage 
                                        units of the drug dispensed;
                                            ``(cc) the number of claims 
                                        described in item (bb) that 
                                        were dispensed using each type 
                                        of dispensing channel, 
                                        including retail, mail order, 
                                        specialty pharmacy, or other 
                                        types of pharmacies or 
                                        providers as defined by the 
                                        pharmacy benefit manager;
                                            ``(dd) the average 
                                        wholesale acquisition cost, 
                                        listed as cost per day's 
                                        supply, cost per dosage unit, 
                                        and cost per typical course of 
                                        treatment (as applicable);
                                            ``(ee) the average 
                                        wholesale price for the drug, 
                                        listed as cost per day's 
                                        supply, cost per dosage unit, 
                                        and cost per typical course of 
                                        treatment (as applicable);
                                            ``(ff) the total out-of-
                                        pocket spending by plan 
                                        enrollees on such drug after 
                                        application of any benefits 
                                        under the plan, including plan 
                                        enrollee spending through 
                                        copayments, coinsurance, and 
                                        deductibles;
                                            ``(gg) total rebates paid 
                                        by the manufacturer on the drug 
                                        as reported under the Detailed 
                                        DIR Report (or any successor 
                                        report) submitted by such 
                                        sponsor to the Centers for 
                                        Medicare & Medicaid Services;
                                            ``(hh) all other direct or 
                                        indirect remuneration on the 
                                        drug as reported under the 
                                        Detailed DIR Report (or any 
                                        successor report) submitted by 
                                        such sponsor to the Centers for 
                                        Medicare & Medicaid Services;
                                            ``(ii) the average pharmacy 
                                        reimbursement amount charged to 
                                        the plan for the drug by 
                                        dispensing channel identified 
                                        in item (cc);
                                            ``(jj) the average National 
                                        Average Drug Acquisition Cost 
                                        (NADAC) for retail community 
                                        pharmacies; and
                                            ``(kk) total manufacturer-
                                        derived revenue, inclusive of 
                                        bona fide service fees, 
                                        retained by the pharmacy 
                                        benefit manager and any 
                                        affiliate of such pharmacy 
                                        benefit manager attributable to 
                                        the drug.
                                    ``(II) In the case of a pharmacy 
                                benefit manager that has an affiliate 
                                that is a retail, mail order, or 
                                specialty pharmacy, with respect to 
                                drugs covered by such plan that were 
                                dispensed, the following information:
                                            ``(aa) The percentage of 
                                        total prescriptions that were 
                                        dispensed by pharmacies that 
                                        are an affiliate of the 
                                        pharmacy benefit manager for 
                                        each drug.
                                            ``(bb) The interquartile 
                                        range of the total combined 
                                        costs paid by the plan and plan 
                                        enrollees, per dosage unit, per 
                                        course of treatment, per 30-day 
                                        supply, and per 90-day supply 
                                        for each drug dispensed by 
                                        pharmacies that are not with an 
                                        affiliate of the pharmacy 
                                        benefit manager and that are 
                                        included in the pharmacy 
                                        network of such plan.
                                            ``(cc) The interquartile 
                                        range of the total combined 
                                        costs paid by the plan and plan 
                                        enrollees, per dosage unit, per 
                                        course of treatment, per 30-day 
                                        supply, and per 90-day supply 
                                        for each drug dispensed by 
                                        pharmacies that are an 
                                        affiliate of the pharmacy 
                                        benefit manager that are 
                                        included in the pharmacy 
                                        network of such plan.
                                            ``(dd) The lowest total 
                                        combined cost paid by the plan 
                                        and plan enrollees, per dosage 
                                        unit, per course of treatment, 
                                        per 30-day supply, and per 90-
                                        day supply, for each drug that 
                                        is available from any pharmacy 
                                        included in the network of the 
                                        plan.
                                            ``(ee) The difference 
                                        between the average acquisition 
                                        cost of the affiliate that 
                                        initially acquires the drug and 
                                        the amount reported under 
                                        subclause (I)(jj) for each 
                                        drug.
                                            ``(ff) A list of 
                                        prescription drugs for which 
                                        the pharmacy benefit manager or 
                                        an affiliate of the pharmacy 
                                        benefit manager had a contract 
                                        or other arrangement with a 
                                        covered entity under section 
                                        340B of the Public Health 
                                        Service Act in the service area 
                                        of such plan.
                                    ``(III) Where a drug approved under 
                                section 505(c) of the Federal Food, 
                                Drug, and Cosmetic Act (referred to in 
                                this subclause as the `listed drug') is 
                                covered by the plan, the following 
                                information:
                                            ``(aa) A list of currently 
                                        marketed generic drugs approved 
                                        under section 505(j) of the 
                                        Federal Food, Drug, and 
                                        Cosmetic Act pursuant to an 
                                        application that references 
                                        such listed drug that are not 
                                        covered by the plan, are 
                                        covered on a formulary tier 
                                        typically associated with 
                                        higher cost-sharing than the 
                                        listed drug, or are subject to 
                                        utilization management that the 
                                        listed drug is not subject to.
                                            ``(bb) The estimated 
                                        average beneficiary cost-
                                        sharing under the plan for a 
                                        30-day supply of the listed 
                                        drug.
                                            ``(cc) The estimated 
                                        average cost-sharing that a 
                                        beneficiary would have paid for 
                                        a 30-day supply of each of the 
                                        generic drugs described in item 
                                        (aa), had the plan provided 
                                        coverage for such drugs on the 
                                        same formulary tier as the 
                                        listed drug.
                                            ``(dd) A written 
                                        justification for providing 
                                        more favorable coverage of the 
                                        listed drug than the generic 
                                        drugs described in item (aa).
                                    ``(IV) Where a reference product 
                                (as defined in section 351(i) of the 
                                Public Health Service Act) is covered 
                                by the plan, the following information:
                                            ``(aa) a list of currently 
                                        marketed biosimilar biological 
                                        products licensed under section 
                                        351(k) of the Public Health 
                                        Service Act pursuant to an 
                                        application that refers to such 
                                        reference product that are not 
                                        covered by the plan, are 
                                        covered on a formulary tier 
                                        typically associated with 
                                        higher cost-sharing than the 
                                        reference product, or are 
                                        subject to utilization 
                                        management that the reference 
                                        product is not subject to.
                                            ``(bb) The estimated 
                                        average beneficiary cost-
                                        sharing under the plan for a 
                                        30-day supply of the reference 
                                        product.
                                            ``(cc) The estimated 
                                        average cost-sharing that a 
                                        beneficiary would have paid for 
                                        a 30-day supply of each of the 
                                        biosimilar biological products 
                                        described in item (aa), had the 
                                        plan provided coverage for such 
                                        products on the same formulary 
                                        tier as the reference product.
                                            ``(dd) A written 
                                        justification for providing 
                                        more favorable coverage of the 
                                        reference product than the 
                                        biosimilar biological product 
                                        described in item (aa).
                                    ``(V) Total gross spending on 
                                prescription drugs by the plan, not net 
                                of rebates, fees, discounts, or other 
                                direct or indirect remuneration.
                                    ``(VI) The total amount retained by 
                                the pharmacy benefit manager or an 
                                affiliate of such pharmacy benefit 
                                manager in revenue related to 
                                utilization of prescription drugs under 
                                that plan, inclusive of bona fide 
                                service fees.
                                    ``(VII) The total spending on 
                                prescription drugs net of rebates, 
                                fees, discounts, or other direct and 
                                indirect remuneration by the plan.
                                    ``(VIII) An explanation of any 
                                benefit design parameters under such 
                                plan that encourage plan enrollees to 
                                fill prescriptions at pharmacies that 
                                are an affiliate of such pharmacy 
                                benefit manager, such as mail and 
                                specialty home delivery programs, and 
                                retail and mail auto-refill programs.
                                    ``(IX) A list of all brokers, 
                                consultants, advisors, and auditors 
                                that receive compensation from the 
                                pharmacy benefit manager or an 
                                affiliate of such pharmacy benefit 
                                manager for referrals, consulting, 
                                auditing, or other services offered to 
                                PDP sponsors related to pharmacy 
                                benefit management services.
                                    ``(X) A list of all pharmacies, 
                                wholesalers, distributors, private 
                                labelers, providers, group purchasing 
                                organizations, health plans, or any 
                                other entity that is an affiliate of 
                                the pharmacy benefit manager.
                                    ``(XI) A summary document submitted 
                                in a standardized template developed by 
                                the Secretary that includes such 
                                information described in subclauses (I) 
                                through (X).
                            ``(ii) Standard formats.--Not later than 
                        June 1, 2025, the Secretary shall specify 
                        standard formats for pharmacy benefit managers 
                        to submit annual reports required under clause 
                        (i).
                            ``(iii) Confidentiality.--
                                    ``(I) In general.--Information 
                                disclosed by a pharmacy benefit manager 
                                or PDP sponsor under this subsection 
                                that is not otherwise publicly 
                                available shall not be disclosed by the 
                                Secretary or a PDP sponsor receiving 
                                the information, except that the 
                                Secretary may disclose the information 
                                for the following purposes:
                                            ``(aa) As the Secretary 
                                        determines to be necessary to 
                                        carry out this part.
                                            ``(bb) To permit the 
                                        Comptroller General to review 
                                        the information provided.
                                            ``(cc) To permit the 
                                        Director of the Congressional 
                                        Budget Office to review the 
                                        information provided.
                                            ``(dd) To permit the 
                                        Executive Director of the 
                                        Medicare Payment Advisory 
                                        Commission to review the 
                                        information provided.
                                            ``(ee) To the Attorney 
                                        General for the purposes of 
                                        conducting oversight and 
                                        enforcement under this title.
                                    ``(II) Restriction on use of 
                                information.--The Secretary, the 
                                Comptroller General, the Director of 
                                the Congressional Budget Office, and 
                                the Executive Director of the Medicare 
                                Payment Advisory Commission shall not 
                                report on or disclose information 
                                disclosed pursuant to subclause (I) to 
                                the public in a manner that would 
                                identify a specific pharmacy benefit 
                                manager, affiliate, PDP sponsor, or 
                                plan, or prices charged for specific 
                                drugs.
                    ``(C) Audit rights.--
                            ``(i) In general.--Not less than once a 
                        year, at the request of the PDP sponsor, the 
                        pharmacy benefit manager shall allow for an 
                        audit of the pharmacy benefit manager to ensure 
                        compliance with all terms and conditions under 
                        the contract and the accuracy of information 
                        reported under subparagraph (B).
                            ``(ii) Auditor.--The PDP sponsor shall have 
                        the right to select an auditor. The pharmacy 
                        benefit manager shall not impose any 
                        limitations on the selection of such auditor.
                            ``(iii) Provision of information.--The 
                        pharmacy benefit manager shall make available 
                        to such auditor all records, data, contracts, 
                        and other information necessary to confirm the 
                        accuracy of information provided under 
                        subparagraph (B), subject to reasonable 
                        restrictions on how such information must be 
                        reported (as determined by the Secretary) to 
                        prevent redisclosure of such information.
                            ``(iv) Timing.--The pharmacy benefit 
                        manager must provide information under clause 
                        (iii) and other information, data, and records 
                        relevant to the audit to such auditor within 6 
                        months of the initiation of the audit and 
                        respond to requests for additional information 
                        from such auditor within 30 days after the 
                        request for additional information.
                            ``(v) Information from affiliates.--The 
                        pharmacy benefit manager shall be responsible 
                        for providing to such auditor information 
                        required to be reported under subparagraph (B) 
                        that is owned or held by an affiliate of such 
                        pharmacy benefit manager.
                    ``(D) Enforcement.--The pharmacy benefit manager 
                shall--
                            ``(i) reimburse the PDP sponsor for any 
                        civil money penalty imposed on the PDP sponsor 
                        as a result of the failure of the pharmacy 
                        benefit manager to meet the requirements of 
                        this paragraph that are applicable to the 
                        pharmacy benefit manager under the agreement; 
                        and
                            ``(ii) be subject to punitive remedies for 
                        breach of contract for failure to comply with 
                        the requirements applicable under this 
                        paragraph.
            ``(2) Certification of compliance.--Each PDP sponsor shall 
        furnish to the Secretary (in a time and manner specified by the 
        Secretary) an annual certification of compliance with this 
        subsection, as well as such information as the Secretary 
        determines necessary to carry out this subsection.
            ``(3) Definitions.--For purposes of this subsection:
                    ``(A) Affiliate.--The term `affiliate' means any 
                entity that is owned by, controlled by, or related 
                under a common ownership structure with a pharmacy 
                benefit manager (including an entity owned or 
                controlled by the PDP sponsor) or that acts as a 
                contractor or agent to such pharmacy benefit manager, 
                insofar as such contractor or agent performs any of the 
                functions described under subparagraph (B).
                    ``(B) Pharmacy benefit manager.--The term `pharmacy 
                benefit manager' means any person or entity that, 
                either directly or through an intermediary, acts as a 
                price negotiator or group purchaser on behalf of a PDP 
                sponsor or prescription drug 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 any person 
                or entity that carries out one or more of the 
                activities described in the preceding sentence, 
                irrespective of whether such person or entity calls 
                itself a `pharmacy benefit manager'.''.
            (2) 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:
                    ``(F) Pharmacy benefit manager reporting 
                requirements.--For plan years beginning on or after 
                January 1, 2026, section 1860D-12(h).''.
    (b) GAO Study and Report on Certain Reporting Requirements.--
            (1) Study.--The Comptroller General of the United States 
        (in this subsection referred to as the ``Comptroller General'') 
        shall conduct a study on Federal and State reporting 
        requirements for health plans and pharmacy benefit managers 
        related to the transparency of prescription drug costs and 
        prices. Such study shall include an analysis of the following:
                    (A) Federal statutory and regulatory reporting 
                requirements for health plans and pharmacy benefit 
                managers related to prescription drug costs and prices.
                    (B) State statutory and regulatory reporting 
                requirements for health plans and pharmacy benefit 
                managers related to prescription drug costs and prices.
                    (C) The extent to which the statutory and 
                regulatory reporting requirements identified in clauses 
                (i) and (ii) overlap and conflict.
                    (D) The resources required by health plans and 
                pharmacy benefit managers to comply with the reporting 
                requirements described in clauses (i) and (ii).
                    (E) Other items determined appropriate by the 
                Comptroller General.
            (2) Report.--Not later than 2 years after enactment, the 
        Comptroller General shall submit to Congress a report 
        containing the results of the study conducted under paragraph 
        (1), together with recommendations for legislation and 
        administrative actions that would streamline and reduce the 
        burden associated with the reporting requirements for health 
        plans and pharmacy benefit managers described in paragraph (1).
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