[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 10369 Introduced in House (IH)]
<DOC>
119th CONGRESS
2d Session
H. R. 10369
To amend title XVIII of the Social Security Act, and the Employee
Retirement Income Security Act of 1974, to create certain requirements
with respect to pharmacy benefit managers.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 14, 2026
Mr. Mackenzie (for himself, Mr. Auchincloss, Mr. Allen, Mrs. McBath,
and Mrs. Miller of West Virginia) introduced the following bill; which
was referred to the Committee on Energy and Commerce, and in addition
to the Committees on Ways and Means, and Education and Workforce, for a
period to be subsequently determined by the Speaker, in each case for
consideration of such provisions as fall within the jurisdiction of the
committee concerned
_______________________________________________________________________
A BILL
To amend title XVIII of the Social Security Act, and the Employee
Retirement Income Security Act of 1974, to create certain requirements
with respect to 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 ``Net Effective Cost Transparency and
Prescription Drug Affordability Act of 2026''.
SEC. 2. MEDICARE PART D PHARMACY BENEFIT MANAGER REFORMS.
(a) In General.--Section 1860D-12 of the Social Security Act (42
U.S.C. 1395w-112) is amended--
(1) by adding at the end the following new subsections:
``(i) Requiring Standardized Public Bidding Process for Pharmacy
Benefit Managers.--
``(1) Requiring annual bid solicitation.--For plan years
beginning on or after January 1, 2028, 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 such sponsor may only enter into a contract with a
pharmacy benefit manager to provide pharmacy benefit management
services on behalf of such sponsor during such plan year if
such sponsor--
``(A) solicits bids for such pharmacy benefit
management services in accordance with the process
under paragraph (2); and
``(B) includes in the submission to the Secretary
under section 1860D-11(b) with respect to such plan--
``(i) information sufficient to demonstrate
that the sponsor accepted and considered all
bids submitted by a pharmacy benefit manager
containing the information described in
paragraph (2)(B) in the uniform format
specified by the Secretary;
``(ii) the information described in
paragraph (2)(B) received from each such
pharmacy benefit manager in connection with
each such bid; and
``(iii) in the case that the bid selected
at the conclusion of the process described in
subparagraph (A) is not the bid with the lowest
projected net effective cost, information
sufficient to support a finding under paragraph
(3) that the selection of the bid so selected
is necessary to advance a significant
programmatic interest identified by such
sponsor.
``(2) Pharmacy benefit manager services bidding process.--
``(A) In general.--For purposes of paragraph
(1)(A), a PDP sponsor solicits bids for pharmacy
benefit manager services in accordance with the process
described in this paragraph if the sponsor--
``(i) requires each bid to contain--
``(I) the information described in
subparagraph (B) in a uniform format
specified by the Secretary; and
``(II) an attestation of
completeness and accuracy from an
officer of the PDP sponsor;
``(ii) makes available at no cost to each
pharmacy benefit manager submitting a bid such
information, presented in a uniform format, as
the Secretary determines necessary to enable
the pharmacy benefit manager to submit a
responsive bid, including--
``(I) projected enrollment;
``(II) historical utilization data;
``(III) formulary design
parameters; and
``(IV) benefit design parameters;
``(iii) accepts all bids from pharmacy
benefit managers containing the information
described in paragraph (2)(B) in the uniform
format specified by the Secretary, without
imposing any additional conditions for
participation in the bidding process; and
``(iv) complies with--
``(I) requirements for solicitation
of multiple qualified bidders,
evaluation criteria, justification
procedures for limited competition or
sole-source contracting, contract
duration limits, enforcement
mechanisms, and minimum documentation
standards consistent with part 15 of
subchapter C of chapter 1 of title 48,
Code of Federal Regulations; and
``(II) such other requirements from
the relevant provisions of chapter 33
of subtitle C of subtitle I of title
41, United States Code, and the
regulations under chapter 1 of title
48, Code of Federal Regulations, as the
Secretary determines appropriate.
``(B) Standardized bid contents.--For purposes of
subparagraph (A)(i)(I), the information described in
this subparagraph is, with respect to a prescription
drug plan offered by a PDP sponsor, a pharmacy benefit
manager, and a plan year, the following:
``(i) The total dollar amount that the
pharmacy benefit manager expects to receive in
connection with services performed on behalf of
the sponsor--
``(I) as bona fide service fees (as
defined in section 1860D-12(h)(7)(B));
``(II) as incentive payments (as
described under section 1860D-
12(h)(1)(A)(ii)); and
``(III) as price concessions,
including rebates, discounts, and other
direct or indirect remunerations
received from all pharmacy and non-
pharmacy sources.
``(ii) With respect to covered part D drugs
proposed by the pharmacy benefit manager to be
included on the formulary of the plan--
``(I) the aggregate expected
utilization of all such drugs;
``(II) the aggregate wholesale
acquisition cost for all such drugs;
``(III) the aggregate amount
expected to be received by the pharmacy
benefit manager, from all pharmacy and
non-pharmacy sources, as price
concessions, including rebates,
discounts, and other direct or indirect
remunerations in connection with all
such drugs, displayed as a percentage
of such aggregate wholesale acquisition
cost;
``(IV) of the amount described in
subclause (III), the aggregate amount
expected to be attributable to such
drugs dispensed by a pharmacy that is
an affiliate (as defined in section
1860D-12(h)(7)(A)) of the pharmacy
benefit manager;
``(V) the aggregate net ingredient
cost for all such drugs;
``(VI) the average payment to a
pharmacy for dispensing all such drugs;
and
``(VII) the average cost sharing,
in dollars, for an enrollee in such
plan with respect to all such drugs.
``(iii) The projected net effective cost
for such year.
``(iv) With respect to the most recent 3-
year period for which data is available, a
description of any variation between the
projected net effective cost and the actual net
effective cost.
``(C) Public availability of data on pharmacy
benefit manager bids.--The Secretary shall annually
publish, in an aggregated, deidentified format, the
information described in subparagraph (B) and submitted
to the Secretary in accordance with paragraph
(1)(B)(ii).
``(D) Regulations.--Not later than 180 days after
the date of enactment of this paragraph, the Secretary
shall promulgate regulations to carry out this
paragraph.
``(3) Finding of necessity to advance significant
programmatic interest.--For purposes of paragraph (1)(B)(iii),
in the case that the bid for pharmacy benefit management
services selected by a PDP sponsor is not the bid with the
lowest projected net effective cost received by such sponsor,
the Secretary may find that selection of such bid is necessary
to advance a significant programmatic interest identified by
such sponsor (such as the protection of beneficiary access,
continuity of care, network adequacy, the prevention of service
disruption, program integrity and fraud prevention,
demonstrated operational capability, or demonstrated clinical
outcomes) only if--
``(A) the Secretary determines that--
``(i) the programmatic interest identified
by the sponsor materially benefits enrollees
under the plan, or advances statutory program
objectives;
``(ii) the programmatic interest is not
already reflected in the calculation of the net
effective cost of the plan;
``(iii) the programmatic interest cannot
reasonably be achieved through selection of the
bid with the lowest projected net effective
cost received by the sponsor;
``(iv) the importance of the programmatic
interest clearly outweighs the additional cost
under this part; and
``(v) approval of the bid represents a
reasonable and efficient use of Federal
resources; and
``(B) each determination under subparagraph (A) is
supported by documentation sufficient for congressional
oversight, audit, and program review purposes.
``(4) Treatment of sponsor acting as pbm.--
``(A) In general.--In the case of a PDP sponsor
described in subparagraph (B) that intends to provide
its own pharmacy benefit management services for a
year, the requirements under this subsection shall
apply with respect to such sponsor as if such sponsor
were entering into a contract with a pharmacy benefit
manager to provide such services.
``(B) PDP sponsor described.--For purposes of
subparagraph (A), a PDP sponsor described in this
subparagraph is, with respect to a year, a PDP sponsor
that provides pharmacy benefit management services on
behalf of another PDP sponsor for such year.
``(5) Net effective cost defined.--In this subsection, the
term `net effective cost' means, with respect to a prescription
drug plan offered by a PDP sponsor and a plan year, the total
cost to such sponsor of all covered part D drugs included on
the formulary of the plan that are furnished to all enrollees
in such plan for such year.
``(j) Enhanced Oversight of PDP Sponsors.--
``(1) In general.--For plan years beginning on or after
January 1, 2028, each contract entered into with a PDP sponsor
under this part with respect to a prescription drug plan
offered by such sponsor shall require such sponsor to--
``(A) periodically submit to the Secretary, at such
time and in such form as the Secretary may require,
information sufficient to allow the Secretary to
compare actual cost-sharing for enrollees in the plan
to the cost-sharing described in the bid submitted
under section 1860D-11(b)(2);
``(B) maintain a real-time cost-sharing tool that
reflects, with respect to each covered part D drug
included on the formulary of such plan, the actual cost
of such drug (net of any price concessions, including
rebates, discounts, and other direct or indirect
remunerations negotiated in connection with such drug)
to--
``(i) the sponsor;
``(ii) the Secretary; and
``(iii) the enrollee; and
``(C) maintain in an escrow account sufficient
funds to refund to enrollees in the plan any amounts
incorrectly collected for such year (as required under
section 423.294 of title 42, Code of Federal
Regulations (or a successor regulation)).
``(2) Oversight.--For plan years beginning on or after
January 1, 2028, the Secretary shall carry out the following
oversight activities with respect to PDP sponsors with a
contract to offer a prescription drug plan under this part:
``(A) Annual audits.--
``(i) In general.--The Secretary shall
audit not less than one-third of all PDP
sponsors with a contract to offer a
prescription drug plan under this part to
verify that the prescription drug coverage
provided under the plan reflects the
prescription drug coverage proposed to be
provided under the bid submitted under section
1860D-11(b)(2)(A).
``(ii) Required components.--Each audit
conducted under subparagraph (A) shall include
an evaluation of--
``(I) the cost-sharing amounts paid
by enrollees under the plan, expressed
as dollar amounts, and whether such
amounts are consistent with the cost-
sharing described in the bid submitted
under section 1860D-11(b) and approved
by the Secretary; and
``(II) in the case that such plan
implements tiered cost-sharing, and
provides for such cost-sharing to be
imposed as coinsurance, whether the
cost-sharing amounts paid by enrollees,
expressed as dollar amounts, are
consistent with (and do not exceed) the
maximum allowable cost-sharing
reflected in such bid (and marketed to
enrollees at the time of plan
selection), as determined on the basis
of actual out-of-pocket costs.
``(iii) Methodology.--In conducting the
audits under subparagraph (A), the Secretary
may use sampling and extrapolation
methodologies to the extent that such
methodologies are used in connection with other
audits under this part.
``(B) Bid reconciliation analysis.--The Secretary
shall periodically compare actual costs incurred in
connection with the plan to the projected costs
included in the bid submitted under section 1860D-
11(b)(2). Such comparison shall include--
``(i) a quarterly analysis of any variation
between the projected and actual net effective
cost (as defined in subsection (i)(5)); and
``(ii) an analysis of the impact of any
mid-year formulary changes on the cost-sharing
of enrollees in the plan.
``(C) Risk-based monitoring.--
``(i) In general.--If, pursuant to
subparagraph (B)(i), the Secretary determines
that the actual net effective cost incurred by
a PDP sponsor for a calendar quarter varies
from the projected net effective cost included
in the bid submitted under section 1860D-
11(b)(2)(C)(v) by more than the percentage
established under clause (ii), the Secretary
shall--
``(I) provide notice to the PDP
sponsor of such variation; and
``(II) require the PDP sponsor to
submit, not later than 30 calendar days
after such notice--
``(aa) a written
explanation of such variation;
and
``(bb) a corrective action
plan to address such variation.
``(ii) Percentage.--For purposes of clause
(i), the Secretary shall establish, through
rulemaking, a percentage (not to exceed 10
percent) that represents an acceptable level of
variation between the projected and actual net
effective cost for a year. In establishing such
percentage, the Secretary shall take into
account potential factors affecting the
variation between projected and actual costs,
including--
``(I) historical variation in
spending under this part;
``(II) the impact of high-cost
covered part D drugs on overall
spending under this part;
``(III) changes in drug
utilization, formulary composition, and
clinical practice patterns;
``(IV) variability in price
concessions, including rebates,
discounts, and other direct or indirect
remunerations;
``(V) differences between projected
and actual enrollment, and differences
between projected and actual enrollee
characteristics;
``(VI) plan benefit designs and
cost-sharing structures; and
``(VII) other factors beyond the
control of the PDP sponsor, or the
pharmacy benefit manager providing
pharmacy benefit management services on
behalf of such sponsor, that may
materially affect costs.
``(iii) Item-level audits.--The Secretary
may conduct an item-level audit of a
prescription drug plan under this part,
including an audit on the basis of a specific
covered part D drug, a specific pharmacy, or a
statistically valid sample of individual
claims, for the purpose of--
``(I) identifying the cause of any
variation between the projected and
actual net effective cost for a year;
``(II) verifying that costs
incurred under the plan are consistent
with the assumptions and information
included in the bid submitted under
section 1860D-11(b); and
``(III) assessing whether pricing,
reimbursement, or utilization patterns
result in a differential financial
benefit to a pharmacy benefit manager
or an affiliate (as defined in
subsection (h)(7)(A)) that is not
reasonably reflected in the net
effective cost or other information
submitted in such bid.
``(D) Formulary monitoring.--
``(i) In general.--The Secretary shall
monitor changes to the formulary of a
prescription drug plan under this part
throughout the plan year to identify patterns
that may constitute beneficiary bait-and-switch
practices.
``(ii) Beneficiary bait-and-switch practice
defined.--In this subparagraph, the term
`beneficiary bait-and-switch practice' means a
pattern of formulary changes or related
utilization management practices that, in the
aggregate--
``(I) materially increase enrollee
cost-sharing or overall costs relative
to the coverage described in the bid
submitted under section 1860D-11(b);
``(II) result in a systematic shift
in utilization toward certain covered
part D drugs, pharmacies, or other
arrangements (including through the
preferential placement of drugs or the
use of pharmacies or affiliates of a
pharmacy benefit manager) that were not
reasonably reflected in such bid; or
``(III) otherwise have the effect
of materially altering the prescription
drug coverage offered under the plan in
a manner that would reasonably be
expected to affect an enrollee's plan
selection at the time of enrollment.
``(3) Public reporting.--The Secretary shall make publicly
available a report comparing the actual costs incurred in
connection with a prescription drug plan under this part to the
projected costs included in bids submitted under section 1860D-
11(b)(2). Such comparison shall be aggregated across all PDP
sponsors, and shall describe any aggregate savings attributable
to the bidding process required under subsection (i) (in
relation to pharmacy benefit managers).
``(4) Enforcement and penalties.--
``(A) Civil monetary penalties.--
``(i) False or misleading information.--A
PDP sponsor that provides false or misleading
information (including a material omission) in
a bid submission under section 1860D-11(b)
shall be subject to a civil monetary penalty of
not more than $100,000 per violation.
``(ii) Failure to provide information.--A
PDP sponsor that fails to provide any
information required to be provided under
section 1860D-11(b) or subsection (i) or (j)
shall be subject to a civil monetary penalty of
not more than $25,000 per calendar day until
such failure is corrected.
``(iii) Deviation from bid projection.--In
the case that the actual net effective cost (as
defined in subsection (i)(5)) for a
prescription drug plan under this part and a
plan year exceeds the projected net effective
cost for such plan included in the bid
submitted under section 1860D-11(b) by more
than the percentage established under
subsection (j)(2)(C)(ii), the PDP sponsor
offering such plan shall be subject to a civil
monetary penalty of not more than $10,000 per
violation. In determining the amount of such
penalty, the Secretary shall take into account
the magnitude and duration of such deviation.
``(B) Restitution.--
``(i) In general.--In the case that the
case that actual costs for a prescription drug
plan under this part and a plan year (including
amounts associated with enrollee cost-sharing
and other amounts not directly charged to
enrollees) materially exceeds the projected
costs for such plan included in the bid
submitted under section 1860D-11(b), the
Secretary may require the PDP sponsor offering
such plan to refund plan enrollees for such
amounts retained by the sponsor, a pharmacy
benefit manager providing pharmacy benefit
management services on behalf of such sponsor,
or an affiliate of such pharmacy benefit
manager as are attributable to such disparity.
``(ii) Coordination with refunds of amounts
incorrectly collected.--To the extent feasible,
the Secretary shall coordinate the application
of this subparagraph with the requirements
under section 423.294(b) of title 42, Code of
Federal Regulations (or a successor
regulation).
``(C) Judicial review.--Any penalty imposed under
this paragraph shall be subject to judicial review in
the United States district court for the district in
which the violation occurred, consistent with section
1128A(e).''; and
(2) in subsection (h)--
(A) in the subsection heading, by inserting
``Agreements With'' before ``Pharmacy Benefit
Managers'';
(B) in paragraph (1), by adding at the end the
following new subparagraph:
``(E) Guarantees with respect to net effective cost
and transparency.--
``(i) In general.--The pharmacy benefit
manager--
``(I) guarantees that the actual
net effective cost (as defined in
subsection (i)(5)) for the year will
not exceed the projected net effective
cost by more than the percentage
established under subsection
(j)(2)(C)(ii), with periodic
reconciliation requirements on a
frequency established by the Secretary;
and
``(II) agrees that, in the case
that such actual net effective cost
does exceed such projected net
effective cost by more than such
percentage--
``(aa) the pharmacy benefit
manager will pay to the PDP
sponsor a penalty (not to
exceed $10,000 per violation);
and
``(bb) the PDP sponsor may
terminate the contract without
penalty.
``(ii) Transparency.--The pharmacy benefit
manager agrees--
``(I) to provide to the PDP sponsor
with such information as the sponsor
requires to comply with the
requirements under subsection (j); and
``(II) that, if the pharmacy
benefit manager fails to provide such
information to the PDP sponsor, the PDP
sponsor may terminate the contract
without penalty.''; and
(C) in paragraph (2)(A)--
(i) in clause (ii), by striking ``and'' at
the end;
(ii) in clause (iii), by striking the
period at the end and inserting a semicolon;
and
(iii) by adding at the end the following
new clauses:
``(iv) submit to the Secretary a copy of
each such written agreement not later than the
date that is 30 days after the effective date
of such agreement;
``(v) certify to the Secretary on a
quarterly basis that each pharmacy benefit
manager that has entered into such an agreement
is meeting all the obligations under such
agreement; and
``(vi) in the case that any pharmacy
benefit manager that has entered into such an
agreement fails to meet all the obligations
under such agreement, immediately report such
failure to the Secretary;''.
(b) Conforming Amendment.--Section 1860D-11(b)(2)(C) of the Social
Security Act (42 U.S.C. 1395w-111(b)(2)(C)) is amended--
(1) in clause (iii), by striking ``and'' at the end;
(2) in clause (iv), by striking the period at the end and
inserting ``; and''; and
(3) by adding at the end the following new clause:
``(v) for plan years beginning on or after
January 1, 2028, the information described in
section 1860D-12(i)(1)(B) (with respect to bids
for pharmacy benefit manager services).''.
SEC. 3. MEDICARE ADVANTAGE PHARMACY BENEFIT MANAGER REQUIREMENTS.
(a) MA-PD Compliance.--Section 1857(f)(3)(G) of the Social Security
Act (42 U.S.C. 1395w-27(f)(3)(G)) is amended by inserting ``and section
1860D-12(i)'' before the period at the end.
(b) Quality Rating System for MA-PD Plans.--Section 1853(o) of the
Social Security Act (42 U.S.C. 1395w-23(o)) is amended--
(1) in paragraph (4)(A), by inserting ``and, beginning
January 1, 2028, with respect to an MA-PD plan, incorporating
the pharmacy benefit management services performance measure
described in paragraph (8)'' before the period at the end; and
(2) by adding at the end the following new paragraph:
``(8) Prescription drug cost performance measure.--
``(A) In general.--For purposes of paragraph (4),
the Secretary shall establish a performance measure for
MA-PD plans for purposes of evaluating prescription
drug cost variations.
``(B) Measurement criteria.--The performance
measure established under subparagraph (A) shall
evaluate--
``(i) the percentage variation between the
projected and actual net effective cost (as
defined in section 1860D-12(i)(5)) for a year;
``(ii) the timeliness and adequacy of any
corrective action plans submitted in connection
with such a variation (as required under
section 1860D-12(j)(2)(C)(i)(II)(bb));
``(iii) the extent to which implementing
such corrective actions successfully reduced
such variations in subsequent quarters;
``(iv) the frequency and magnitude of
beneficiary cost-sharing increases attributable
to such a variation or a formulary change; and
``(v) the plan's compliance with the
reconciliation and transparency reporting
requirements under section 1860D-12(j).
``(C) Rating scale.--The Secretary shall establish
a 5-star rating scale for the performance measure under
this paragraph, where--
``(i) 5 stars indicates actual costs within
2 percent of bid projections with no required
corrective actions;
``(ii) 4 stars indicates actual costs
within 5 percent of bid projections with timely
and effective corrective actions;
``(iii) 3 stars indicates actual costs
within 10 percent of bid projections with
adequate corrective actions;
``(iv) 2 stars indicates actual costs
exceeding 10 percent of bid projections or
inadequate corrective actions; and
``(v) 1 star indicates actual costs
exceeding 15 percent of bid projections,
failure to submit corrective action plans, or
repeated noncompliance.
``(D) Integration with overall star ratings.--
``(i) Weighting.--The performance measure
established under this paragraph shall be
weighted at not less than the median weight of
all other measures used in calculating the
overall star rating under this subsection.
``(ii) Bonus payment impact.--Performance
on this measure shall be fully integrated into
the overall star ratings calculation for
purposes of quality bonus payments under
paragraph (4).
``(E) Public reporting.--The Secretary shall
publicly report each MA-PD plan's performance on this
measure as part of the annual star ratings release
under paragraph (3), including--
``(i) specific percentage variation between
projected and actual net effective costs;
``(ii) corrective action outcomes; and
``(iii) comparison to national and regional
benchmarks.
``(F) Beneficiary notification.--
``(i) Low performance notification.--MA-PD
plans receiving ratings of 2 stars or below on
the measure established under this paragraph
shall notify enrollees of their performance and
provide information on alternative plan options
during the annual enrollment period.
``(ii) Notification format.--The Secretary
shall establish standardized formats for
beneficiary notifications that clearly explain
the implications of low ratings on such
measure, including enrollee costs for premiums,
deductibles, cost sharing, and overall taxpayer
burden.
``(G) Implementation timeline.--
``(i) Initial measurement.--The Secretary
shall begin collecting data for the performance
measure established under this paragraph
beginning with the first plan year beginning
after the date that is 1 year after the date of
enactment of the Net Effective Cost
Transparency and Prescription Drug
Affordability Act of 2026.
``(ii) First ratings.--The Secretary shall
publish the first star ratings under this
paragraph not later than the second plan year
following the initial data collection.
``(iii) Bonus payment integration.--
Performance on this measure shall affect
quality bonus payments beginning with the third
plan year following initial data collection.
``(H) Application to standalone part d plans.--The
Secretary shall establish a comparable performance
measurement and public reporting system for
prescription drug plans under part D, using the same
measurement criteria and rating scale established under
this paragraph.''.
SEC. 4. COMMERCIAL HEALTH PLAN TRANSPARENCY REQUIREMENTS.
(a) Net Effective Costs.--
(1) Requirement.--Section 408(b)(2)(B)(iii) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C.
1108(b)(2)(B)(iii)) is amended by adding at the end the
following:
``(VII) A description, in a uniform format, of the
projected net effective cost for the applicable plan
year for each bid received by the covered service
provider on behalf of the covered plan from an entity
providing pharmacy benefit management services.''.
(2) Definition.--Section 3 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1002) is amended by
inserting after paragraph (45) the following:
``(46) Net effective cost.--The term `net effective cost'
means, in relation to a bid provided to a covered plan (as
defined in section 408(b)(2)(B)(ii)) by an entity providing
pharmacy benefit management services, the total annual cost to
the covered plan of all covered drugs in the formulary that
would be furnished to all enrollees in such plan for such year
if such bid were accepted.''.
(b) Bona Fide Service Fees Defined.--Section 3 of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1002), as amended by
subsection (a)(2), is further amended by adding at the end the
following:
``(47) Bona fide service fees.--The term `bona fide service
fees' means fees charged that represent fair-market value for
bona fide, itemized services performed on behalf of a drug
manufacturer or a covered plan (as defined in section
408(b)(2)(B)(ii)) and that the manufacturer would otherwise
perform, or the covered plan would otherwise contract for in
the absence of a service arrangement, and that are not passed
on in whole or in part to the covered plan, whether or not an
entity offering pharmacy benefit management services takes
possession of the drug.''.
(c) Effective Date.--The amendments made by this section shall
apply with respect to plan years beginning after calendar year 2027.
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