[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4317 Introduced in House (IH)]
<DOC>
119th CONGRESS
1st Session
H. R. 4317
To assure pharmacy access and choice for Medicare beneficiaries, and
for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 10, 2025
Mr. Carter of Georgia (for himself, Mrs. Dingell, Mr. Murphy, Ms. Ross,
Mr. Arrington, Mrs. Harshbarger, Mr. Vicente Gonzalez of Texas, Mr.
Allen, Mr. Krishnamoorthi, Mr. Rose, Mr. Tran, and Ms. Malliotakis)
introduced the following bill; which was referred to the Committee on
Energy and Commerce, and in addition to the Committees on Education and
Workforce, and Ways and Means, 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 assure pharmacy access and choice for Medicare beneficiaries, and
for other purposes.
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 ``Pharmacy Benefit Manager Reform Act
of 2025'' or the ``PBM Reform Act of 2025''.
SEC. 2. ASSURING PHARMACY ACCESS AND CHOICE FOR MEDICARE BENEFICIARIES.
(a) In General.--Section 1860D-4(b)(1) of the Social Security Act
(42 U.S.C. 1395w-104(b)(1)) is amended by striking subparagraph (A) and
inserting the following:
``(A) In general.--
``(i) Participation of any willing
pharmacy.--A PDP sponsor offering a
prescription drug plan shall permit any
pharmacy that meets the standard contract terms
and conditions under such plan to participate
as a network pharmacy of such plan.
``(ii) Contract terms and conditions.--
``(I) In general.--Notwithstanding
any other provision of law, for plan
years beginning on or after January 1,
2029, in accordance with clause (i),
contract terms and conditions offered
by such PDP sponsor shall be reasonable
and relevant according to standards
established by the Secretary under
subclause (II).
``(II) Standards.--Not later than
the first Monday in April of 2028, the
Secretary shall establish standards for
reasonable and relevant contract terms
and conditions for purposes of this
clause.
``(III) Request for information.--
Not later than April 1, 2027, for
purposes of establishing the standards
under subclause (II), the Secretary
shall issue a request for information
to seek input on trends in prescription
drug plan and network pharmacy contract
terms and conditions, current
prescription drug plan and network
pharmacy contracting practices, whether
pharmacy reimbursement and dispensing
fees paid by PDP sponsors to network
pharmacies sufficiently cover the
ingredient and operational costs of
such pharmacies, the use and
application of pharmacy quality
measures by PDP sponsors for network
pharmacies, PDP sponsor restrictions or
limitations on the dispensing of
covered part D drugs by network
pharmacies (or any subsets of such
pharmacies), PDP sponsor auditing
practices for network pharmacies, areas
in current regulations or program
guidance related to contracting between
prescription drug plans and network
pharmacies requiring clarification or
additional specificity, factors for
consideration in determining the
reasonableness and relevance of
contract terms and conditions between
prescription drug plans and network
pharmacies, and other issues as
determined appropriate by the
Secretary.''.
(b) Essential Retail Pharmacies.--Section 1860D-42 of the Social
Security Act (42 U.S.C. 1395w-152) is amended by adding at the end the
following new subsection:
``(e) Essential Retail Pharmacies.--
``(1) In general.--With respect to plan years beginning on
or after January 1, 2028, the Secretary shall publish reports,
at least once every 2 years until 2034, and periodically
thereafter, that provide information, to the extent feasible,
on--
``(A) trends in ingredient cost reimbursement,
dispensing fees, incentive payments and other fees paid
by PDP sponsors offering prescription drug plans and MA
organizations offering MA-PD plans under this part to
essential retail pharmacies (as defined in paragraph
(2)) with respect to the dispensing of covered part D
drugs, including a comparison of such trends between
essential retail pharmacies and pharmacies that are not
essential retail pharmacies;
``(B) trends in amounts paid to PDP sponsors
offering prescription drug plans and MA organizations
offering MA-PD plans under this part by essential
retail pharmacies with respect to the dispensing of
covered part D drugs, including a comparison of such
trends between essential retail pharmacies and
pharmacies that are not essential retail pharmacies;
``(C) trends in essential retail pharmacy
participation in pharmacy networks and preferred
pharmacy networks for prescription drug plans offered
by PDP sponsors and MA-PD plans offered by MA
organizations under this part, including a comparison
of such trends between essential retail pharmacies and
pharmacies that are not essential retail pharmacies;
``(D) trends in the number of essential retail
pharmacies, including variation in such trends by
geographic region or other factors;
``(E) a comparison of cost-sharing for covered part
D drugs dispensed by essential retail pharmacies that
are network pharmacies for prescription drug plans
offered by PDP sponsors and MA-PD plans offered by MA
organizations under this part and cost-sharing for
covered part D drugs dispensed by other network
pharmacies for such plans located in similar geographic
areas that are not essential retail pharmacies;
``(F) a comparison of the volume of covered part D
drugs dispensed by essential retail pharmacies that are
network pharmacies for prescription drug plans offered
by PDP sponsors and MA-PD plans offered by MA
organizations under this part and such volume of
dispensing by network pharmacies for such plans located
in similar geographic areas that are not essential
retail pharmacies, including information on any
patterns or trends in such comparison specific to
certain types of covered part D drugs, such as generic
drugs or drugs specified as specialty drugs by a PDP
sponsor under a prescription drug plan or an MA
organization under an MA-PD plan; and
``(G) a comparison of the information described in
subparagraphs (A) through (F) between essential retail
pharmacies that are network pharmacies for prescription
drug plans offered by PDP sponsors under this part and
essential retail pharmacies that are network pharmacies
for MA-PD plans offered by MA organizations under this
part.
``(2) Definition of essential retail pharmacy.--In this
subsection, the term `essential retail pharmacy' means, with
respect to a plan year, a retail pharmacy that--
``(A) is not a pharmacy that is an affiliate as
defined in paragraph (4); and
``(B) is located in--
``(i) a medically underserved area (as
designated pursuant to section 330(b)(3)(A) of
the Public Health Service Act);
``(ii) a rural area in which there is no
other retail pharmacy within 10 miles, as
determined by the Secretary;
``(iii) a suburban area in which there is
no other retail pharmacy within 2 miles, as
determined by the Secretary; or
``(iv) an urban area in which there is no
other retail pharmacy within 1 mile, as
determined by the Secretary.
``(3) List of essential retail pharmacies.--
``(A) Publication of list of essential retail
pharmacies.--For each plan year (beginning with plan
year 2028), the Secretary shall publish, on a publicly
available internet website of the Centers for Medicare
& Medicaid Services, a list of pharmacies that meet the
criteria described in subparagraphs (A) and (B) of
paragraph (2) to be considered an essential retail
pharmacy.
``(B) Required submissions from pdp sponsors.--For
each plan year (beginning with plan year 2028), each
PDP sponsor offering a prescription drug plan and each
MA organization offering an MA-PD plan shall submit to
the Secretary, for the purposes of determining retail
pharmacies that meet the criterion specified in
subparagraph (A) of paragraph (2), a list of retail
pharmacies that are affiliates of such sponsor or
organization, or are affiliates of a pharmacy benefit
manager acting on behalf of such sponsor or
organization, at a time, and in a form and manner,
specified by the Secretary.
``(C) Reporting by pdp sponsors and ma
organizations.--For each plan year beginning with plan
year 2027, each PDP sponsor offering a prescription
drug plan and each MA organization offering an MA-PD
plan under this part shall submit to the Secretary
information on incentive payments and other fees paid
by such sponsor or organization to pharmacies, insofar
as any such payments or fees are not otherwise
reported, at a time, and in a form and manner,
specified by the Secretary.
``(D) Implementation.--Notwithstanding any other
provision of law, the Secretary may implement this
paragraph by program instruction or otherwise.
``(E) Nonapplication of paperwork reduction act.--
Chapter 35 of title 44, United States Code, shall not
apply to the implementation of this paragraph.
``(4) Definition of affiliate; pharmacy benefit manager.--
In this subsection, the terms `affiliate' and `pharmacy benefit
manager' have the meaning given those terms in section 1860D-
12(h)(7).''.
(c) Enforcement.--
(1) In general.--Section 1860D-4(b)(1) of the Social
Security Act (42 U.S.C. 1395w-104(b)(1)) is amended by adding
at the end the following new subparagraph:
``(F) Enforcement of standards for reasonable and
relevant contract terms and conditions.--
``(i) Allegation submission process.--
``(I) In general.--Not later than
January 1, 2028, the Secretary shall
establish a process through which a
pharmacy may submit to the Secretary an
allegation of a violation by a PDP
sponsor offering a prescription drug
plan of the standards for reasonable
and relevant contract terms and
conditions under subparagraph (A)(ii),
or of subclause (VIII) of this clause.
``(II) Frequency of submission.--
``(aa) In general.--Except
as provided in item (bb), the
allegation submission process
under this clause shall allow
pharmacies to submit any
allegations of violations
described in subclause (I) not
more frequently than once per
plan year per contract between
a pharmacy and a PDP sponsor.
``(bb) Allegations relating
to contract modifications.--In
the case where a contract
between a pharmacy and a PDP
sponsor is modified following
the submission of allegations
by a pharmacy with respect to
such contract and plan year,
the allegation submission
process under this clause shall
allow such pharmacy to submit
an additional allegation
related to those modifications
with respect to such contract
and plan year.
``(III) Access to relevant
documents and materials.--A PDP sponsor
subject to an allegation under this
clause--
``(aa) shall provide
documents or materials, as
specified by the Secretary,
including contract offers made
by such sponsor to such
pharmacy or correspondence
related to such offers, to the
Secretary at a time, and in a
form and manner, specified by
the Secretary; and
``(bb) shall not prohibit
or otherwise limit the ability
of a pharmacy to submit such
documents or materials to the
Secretary for the purpose of
submitting an allegation or
providing evidence for such an
allegation under this clause.
``(IV) Standardized template.--The
Secretary shall establish a
standardized template for pharmacies to
use for the submission of allegations
described in subclause (I). Such
template shall require that the
submission include a certification by
the pharmacy that the information
included is accurate, complete, and
true to the best of the knowledge,
information, and belief of such
pharmacy.
``(V) Preventing frivolous
allegations.--In the case where the
Secretary determines that a pharmacy
has submitted frivolous allegations
under this clause on a routine basis,
the Secretary may temporarily prohibit
such pharmacy from using the allegation
submission process under this clause,
as determined appropriate by the
Secretary.
``(VI) Exemption from freedom of
information act.--Allegations submitted
under this clause shall be exempt from
disclosure under section 552 of title
5, United States Code.
``(VII) Rule of construction.--
Nothing in this clause shall be
construed as limiting the ability of a
pharmacy to pursue other legal actions
or remedies, consistent with applicable
Federal or State law, with respect to a
potential violation of a requirement
described in this subparagraph.
``(VIII) Anti-retaliation and anti-
coercion.--Consistent with applicable
Federal or State law, a PDP sponsor
shall not--
``(aa) retaliate against a
pharmacy for submitting any
allegations under this clause;
or
``(bb) coerce, intimidate,
threaten, or interfere with the
ability of a pharmacy to submit
any such allegations.
``(ii) Investigation.--The Secretary shall
investigate, as determined appropriate by the
Secretary, allegations submitted pursuant to
clause (i).
``(iii) Enforcement.--
``(I) In general.--In the case
where the Secretary determines that a
PDP sponsor offering a prescription
drug plan has violated the standards
for reasonable and relevant contract
terms and conditions under subparagraph
(A)(ii), the Secretary may use
authorities under sections 1857(g) and
1860D-12(b)(3)(E) to impose civil
monetary penalties or other
intermediate sanctions.
``(II) Application of civil
monetary penalties.--The provisions of
section 1128A (other than subsections
(a) and (b)) shall apply to a civil
monetary penalty under this clause in
the same manner as such provisions
apply to a penalty or proceeding under
section 1128A(a).''.
(2) Conforming amendment.--Section 1857(g)(1) of the Social
Security Act (42 U.S.C. 1395w-27(g)(1)) is amended--
(A) in subparagraph (J), by striking ``or'' after
the semicolon;
(B) by redesignating subparagraph (K) as
subparagraph (L);
(C) by inserting after subparagraph (J), the
following new subparagraph:
``(K) fails to comply with the standards for
reasonable and relevant contract terms and conditions
under subparagraph (A)(ii) of section 1860D-4(b)(1);
or'';
(D) in subparagraph (L), as redesignated by
subparagraph (B), by striking ``through (J)'' and
inserting ``through (K)''; and
(E) in the flush matter following subparagraph (L),
as so redesignated, by striking ``subparagraphs (A)
through (K)'' and inserting ``subparagraphs (A) through
(L)''.
(d) Accountability of Pharmacy Benefit Managers for Violations of
Reasonable and Relevant Contract Terms and Conditions.--
(1) In general.--Section 1860D-12(b) of the Social Security
Act (42 U.S.C. 1395w-112) is amended by adding at the end the
following new paragraph:
``(9) Accountability of pharmacy benefit managers for
violations of reasonable and relevant contract terms and
conditions.--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 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
reimburse the PDP sponsor for any amounts paid by such sponsor
under section 1860D-4(b)(1)(F)(iii)(I) to the Secretary as a
result of a violation described in such section if such
violation is related to a responsibility delegated to the
pharmacy benefit manager by such PDP sponsor.''.
(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) Accountability of pharmacy benefit managers
for violations of reasonable and relevant contract
terms.--For plan years beginning on or after January 1,
2028, section 1860D-12(b)(9).''.
(e) Biennial Report on Enforcement and Oversight of Pharmacy Access
Requirements.--Section 1860D-42 of the Social Security Act (42 U.S.C.
1395w-152), as amended by subsection (b), is amended by adding at the
end the following new subsection:
``(f) Biennial Report on Enforcement and Oversight of Pharmacy
Access Requirements.--
``(1) In general.--Not later than 2 years after the date of
enactment of this subsection, and at least once every 2 years
thereafter, the Secretary shall publish a report on enforcement
and oversight actions and activities undertaken by the
Secretary with respect to the requirements under section 1860D-
4(b)(1).
``(2) Limitation.--A report under paragraph (1) shall not
disclose--
``(A) identifiable information about individuals or
entities unless such information is otherwise publicly
available; or
``(B) trade secrets with respect to any
entities.''.
(f) Funding.--In addition to amounts otherwise available, there is
appropriated to the Centers for Medicare & Medicaid Services Program
Management Account, out of any money in the Treasury not otherwise
appropriated, $188,000,000 for fiscal year 2025, to remain available
until expended, to carry out this section.
SEC. 3. MODERNIZING AND ENSURING PBM ACCOUNTABILITY.
(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) Requirements Relating to Pharmacy Benefit Managers.--For plan
years beginning on or after January 1, 2028:
``(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, and any
affiliates of such pharmacy benefit manager, as applicable,
agree to meet the following requirements:
``(A) No income other than bona fide service
fees.--
``(i) In general.--The pharmacy benefit
manager and any affiliate of such pharmacy
benefit manager shall not derive any
remuneration with respect to any services
provided on behalf of any entity or individual,
in connection with the utilization of covered
part D drugs, from any such entity or
individual other than bona fide service fees,
subject to clauses (ii) and (iii).
``(ii) Incentive payments.--For the
purposes of this subsection, an incentive
payment (as determined by the Secretary) paid
by a PDP sponsor to a pharmacy benefit manager
that is performing services on behalf of such
sponsor shall be deemed a `bona fide service
fee' (even if such payment does not otherwise
meet the definition of such term under
paragraph (7)(B)) if such payment is a flat
dollar amount, is consistent with fair market
value (as specified by the Secretary), is
related to services actually performed by the
pharmacy benefit manager or affiliate of such
pharmacy benefit manager, on behalf of the PDP
sponsor making such payment, in connection with
the utilization of covered part D drugs, and
meets additional requirements, if any, as
determined appropriate by the Secretary.
``(iii) Clarification on rebates and
discounts used to lower costs for covered part
d drugs.--Rebates, discounts, and other price
concessions received by a pharmacy benefit
manager or an affiliate of a pharmacy benefit
manager from manufacturers, even if such price
concessions are calculated as a percentage of a
drug's price, shall not be considered a
violation of the requirements of clause (i) if
they are fully passed through to a PDP sponsor
and are compliant with all regulatory and
subregulatory requirements related to direct
and indirect remuneration for manufacturer
rebates under this part, including in cases
where a PDP sponsor is acting as a pharmacy
benefit manager on behalf of a prescription
drug plan offered by such PDP sponsor.
``(iv) Evaluation of remuneration
arrangements.--Components of subsets of
remuneration arrangements (such as fees or
other forms of compensation paid to or retained
by the pharmacy benefit manager or affiliate of
such pharmacy benefit manager), as determined
appropriate by the Secretary, between pharmacy
benefit managers or affiliates of such pharmacy
benefit managers, as applicable, and other
entities involved in the dispensing or
utilization of covered part D drugs (including
PDP sponsors, manufacturers, and pharmacies)
shall be subject to review by the Secretary, in
consultation with the Office of the Inspector
General of the Department of Health and Human
Services, as determined appropriate by the
Secretary. The Secretary, in consultation with
the Office of the Inspector General, shall
review whether remuneration under such
arrangements is consistent with fair market
value (as specified by the Secretary) through
reviews and assessments of such remuneration,
as determined appropriate.
``(v) Disgorgement.--The pharmacy benefit
manager shall disgorge any remuneration paid to
such pharmacy benefit manager or an affiliate
of such pharmacy benefit manager in violation
of this subparagraph to the PDP sponsor.
``(vi) Additional requirements.--The
pharmacy benefit manager shall--
``(I) enter into a written
agreement with any affiliate of such
pharmacy benefit manager, under which
the affiliate shall identify and
disgorge any remuneration described in
clause (v) to the pharmacy benefit
manager; and
``(II) attest, subject to any
requirements determined appropriate by
the Secretary, that the pharmacy
benefit manager has entered into a
written agreement described in
subclause (I) with any relevant
affiliate of the pharmacy benefit
manager.
``(B) Transparency regarding guarantees and cost
performance evaluations.--The pharmacy benefit manager
shall--
``(i) define, interpret, and apply, 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, terms such
as--
``(I) `generic drug', in a manner
consistent with the definition of the
term under section 423.4 of title 42,
Code of Federal Regulations, or a
successor regulation;
``(II) `brand name drug', in a
manner consistent with the definition
of the term under section 423.4 of
title 42, Code of Federal Regulations,
or a successor regulation;
``(III) `specialty drug';
``(IV) `rebate'; and
``(V) `discount';
``(ii) identify any drugs, claims, or price
concessions excluded from any pricing guarantee
or other cost performance measure 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.
``(C) Provision of information.--
``(i) In general.--Not later than July 1 of
each year, beginning in 2028, the pharmacy
benefit manager shall submit to the PDP
sponsor, and to the Secretary, a report, in
accordance with this subparagraph, and shall
make such report available to such sponsor at
no cost to such sponsor in a format specified
by the Secretary under paragraph (5). 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
prescription claims described
in item (bb) by each type of
dispensing channel through
which the drug was dispensed,
including retail, mail order,
specialty pharmacy, long-term
care pharmacy, home infusion
pharmacy, or other types of
pharmacies or providers;
``(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 price per day's
supply, price per dosage unit,
and price 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 paid by
the plan for the drug in the
aggregate and disaggregated by
dispensing channel identified
in item (cc);
``(jj) the average National
Average Drug Acquisition Cost
(NADAC); and
``(kk) total manufacturer-
derived revenue, inclusive of
bona fide service fees,
attributable to the drug and
retained by the pharmacy
benefit manager and any
affiliate of such pharmacy
benefit manager.
``(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 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 and 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 pharmacy
network of such plan.
``(ee) The difference
between the average acquisition
cost of the affiliate, such as
a pharmacy or other entity that
acquires prescription drugs,
that initially acquires the
drug and the amount reported
under subclause (I)(jj) for
each drug.
``(ff) A list inclusive of
the brand name, generic or non-
proprietary name, and National
Drug Code of covered part D
drugs subject to an agreement
with a covered entity under
section 340B of the Public
Health Service Act for which
the pharmacy benefit manager or
an affiliate of the pharmacy
benefit manager had a contract
or other arrangement with such
a covered entity 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 the same formulary
tier or 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) Where a generic drug
listed under item (aa) is on a
formulary tier typically
associated with higher cost-
sharing than the listed drug,
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).
``(ee) The number 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.
``(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 the same formulary
tier or 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) Where a biosimilar
biological product listed under
item (aa) is on a formulary
tier typically associated with
higher cost- sharing than the
reference product, 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).
``(ee) The number 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.
``(V) Total gross spending on
covered part D 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 covered part D drugs
under that plan, inclusive of bona fide
service fees.
``(VII) The total spending on
covered part D 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) The following information:
``(aa) 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.
``(bb) The amount of
compensation provided by such
pharmacy benefit manager or
affiliate to each such broker,
consultant, advisor, and
auditor.
``(cc) The methodology for
calculating the amount of
compensation provided by such
pharmacy benefit manager or
affiliate, for each such
broker, consultant, advisor,
and auditor.
``(X) A list of all affiliates 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) Written explanation of contracts or
agreements with drug manufacturers.--
``(I) In general.--The pharmacy
benefit manager shall, not later than
30 days after the finalization of any
contract or agreement between such
pharmacy benefit manager or an
affiliate of such pharmacy benefit
manager and a drug manufacturer (or
subsidiary, agent, or entity affiliated
with such drug manufacturer) that makes
rebates, discounts, payments, or other
financial incentives related to one or
more covered part D drugs or other
prescription drugs, as applicable, of
the manufacturer directly or indirectly
contingent upon coverage, formulary
placement, or utilization management
conditions on any other covered part D
drugs or other prescription drugs, as
applicable, submit to the PDP sponsor a
written explanation of such contract or
agreement.
``(II) Requirements.--A written
explanation under subclause (I) shall--
``(aa) include the
manufacturer subject to the
contract or agreement, all
covered part D drugs and other
prescription drugs, as
applicable, subject to the
contract or agreement and the
manufacturers of such drugs,
and a high-level description of
the terms of such contract or
agreement and how such terms
apply to such drugs; and
``(bb) be certified by the
Chief Executive Officer, Chief
Financial Officer, or General
Counsel of such pharmacy
benefit manager, or affiliate
of such pharmacy benefit
manager, as applicable, or an
individual delegated with the
authority to sign on behalf of
one of these officers, who
reports directly to the
officer.
``(III) Definition of other
prescription drugs.--For purposes of
this clause, the term `other
prescription drugs' means prescription
drugs covered as supplemental benefits
under this part or prescription drugs
paid outside of this part.
``(D) 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 written agreement described in this
paragraph and the accuracy of information
reported under subparagraph (C).
``(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 (C), subject to reasonable
restrictions on how such information must be
reported 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 (C)
or under clause (iii) of this subparagraph that
is owned or held by an affiliate of such
pharmacy benefit manager.
``(2) Enforcement.--
``(A) In general.--Each PDP sponsor shall--
``(i) disgorge to the Secretary any amounts
disgorged to the PDP sponsor by a pharmacy
benefit manager under paragraph (1)(A)(v);
``(ii) require, in a written agreement with
any pharmacy benefit manager acting on behalf
of such sponsor or affiliate of such pharmacy
benefit manager, that such pharmacy benefit
manager or affiliate 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 or affiliate to meet
the requirements of paragraph (1) that are
applicable to the pharmacy benefit manager or
affiliate under the agreement; and
``(iii) require, in a written agreement
with any such pharmacy benefit manager acting
on behalf of such sponsor or affiliate of such
pharmacy benefit manager, that such pharmacy
benefit manager or affiliate be subject to
punitive remedies for breach of contract for
failure to comply with the requirements
applicable under paragraph (1).
``(B) Reporting of alleged violations.--The
Secretary shall make available and maintain a mechanism
for manufacturers, PDP sponsors, pharmacies, and other
entities that have contractual relationships with
pharmacy benefit managers or affiliates of such
pharmacy benefit managers to report, on a confidential
basis, alleged violations of paragraph (1)(A) or
subparagraph (C).
``(C) Anti-retaliation and anti-coercion.--
Consistent with applicable Federal or State law, a PDP
sponsor shall not--
``(i) retaliate against an individual or
entity for reporting an alleged violation under
subparagraph (B); or
``(ii) coerce, intimidate, threaten, or
interfere with the ability of an individual or
entity to report any such alleged violations.
``(3) Certification of compliance.--
``(A) In general.--Each PDP sponsor shall furnish
to the Secretary (at a time and in a 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.
``(B) Implementation.--The Secretary may implement
this paragraph by program instruction or otherwise.
``(4) Rule of construction.--Nothing in this subsection
shall be construed as--
``(A) prohibiting flat dispensing fees or
reimbursement or payment for ingredient costs
(including customary, industry-standard discounts
directly related to drug acquisition that are retained
by pharmacies or wholesalers) to entities that acquire
or dispense prescription drugs; or
``(B) modifying regulatory requirements or sub-
regulatory program instruction or guidance related to
pharmacy payment, reimbursement, or dispensing fees.
``(5) Standard formats.--
``(A) In general.--Not later than June 1, 2027, the
Secretary shall specify standard, machine-readable
formats for pharmacy benefit managers to submit annual
reports required under paragraph (1)(C)(i).
``(B) Implementation.--The Secretary may implement
this paragraph by program instruction or otherwise.
``(6) Confidentiality.--
``(A) In general.--Information disclosed by a
pharmacy benefit manager, an affiliate of a pharmacy
benefit manager, a PDP sponsor, or a pharmacy under
this subsection that is not otherwise publicly
available or available for purchase 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:
``(i) As the Secretary determines necessary
to carry out this part.
``(ii) To permit the Comptroller General to
review the information provided.
``(iii) To permit the Director of the
Congressional Budget Office to review the
information provided.
``(iv) To permit the Executive Director of
the Medicare Payment Advisory Commission to
review the information provided.
``(v) To the Attorney General for the
purposes of conducting oversight and
enforcement under this title.
``(vi) To the Inspector General of the
Department of Health and Human Services in
accordance with its authorities under the
Inspector General Act of 1978 (section 406 of
title 5, United States Code), and other
applicable statutes.
``(B) 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
subparagraph (A) to the public in a manner that would
identify--
``(i) a specific pharmacy benefit manager,
affiliate, pharmacy, manufacturer, wholesaler,
PDP sponsor, or plan; or
``(ii) contract prices, rebates, discounts,
or other remuneration for specific drugs in a
manner that may allow the identification of
specific contracting parties or of such
specific drugs.
``(7) Definitions.--For purposes of this subsection:
``(A) Affiliate.--The term `affiliate' means, with
respect to any pharmacy benefit manager or PDP sponsor,
any entity that, directly or indirectly--
``(i) owns or is owned by, controls or is
controlled by, or is otherwise related in any
ownership structure to such pharmacy benefit
manager or PDP sponsor; or
``(ii) acts as a contractor, principal, or
agent to such pharmacy benefit manager or PDP
sponsor, insofar as such contractor, principal,
or agent performs any of the functions
described under subparagraph (C).
``(B) Bona fide service fee.--The term `bona fide
service fee' means a fee that is reflective of the fair
market value (as specified by the Secretary, through
notice and comment rulemaking) 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 is not passed on in whole or in part to a
client or customer, whether or not the entity takes
title to the drug. Such fee must be a flat dollar
amount 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) the amount of discounts, rebates,
fees, or other direct or indirect remuneration
with respect to covered part D drugs dispensed
to enrollees in a prescription drug plan,
except as permitted pursuant to paragraph
(1)(A)(ii);
``(iii) coverage or formulary placement
decisions or the volume or value of any
referrals or business generated between the
parties to the arrangement; or
``(iv) any other amounts or methodologies
prohibited by the Secretary.
``(C) 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
related services. 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) Requirements relating to pharmacy benefit
managers.--For plan years beginning on or after January
1, 2028, section 1860D-12(h).''.
(3) Nonapplication of paperwork reduction act.--Chapter 35
of title 44, United States Code, shall not apply to the
implementation of this subsection.
(4) Funding.--
(A) Secretary.--In addition to amounts otherwise
available, there is appropriated to the Centers for
Medicare & Medicaid Services Program Management
Account, out of any money in the Treasury not otherwise
appropriated, $113,000,000 for fiscal year 2025, to
remain available until expended, to carry out this
subsection.
(B) OIG.--In addition to amounts otherwise
available, there is appropriated to the Inspector
General of the Department of Health and Human Services,
out of any money in the Treasury not otherwise
appropriated, $20,000,000 for fiscal year 2025, to
remain available until expended, to carry out this
subsection.
(b) Gao Study and Report on Price-Related Compensation Across the
Supply Chain.--
(1) Study.--The Comptroller General of the United States
(in this subsection referred to as the ``Comptroller General'')
shall conduct a study describing the use of compensation and
payment structures related to a prescription drug's price
within the retail prescription drug supply chain in part D of
title XVIII of the Social Security Act (42 U.S.C. 1395w-101 et
seq.). Such study shall summarize information from Federal
agencies and industry experts, to the extent available, with
respect to the following:
(A) The type, magnitude, other features (such as
the pricing benchmarks used), and prevalence of
compensation and payment structures related to a
prescription drug's price, such as calculating fee
amounts as a percentage of a prescription drug's price,
between intermediaries in the prescription drug supply
chain, including--
(i) pharmacy benefit managers;
(ii) PDP sponsors offering prescription
drug plans and Medicare Advantage organizations
offering MA-PD plans;
(iii) drug wholesalers;
(iv) pharmacies;
(v) manufacturers;
(vi) pharmacy services administrative
organizations;
(vii) brokers, auditors, consultants, and
other entities that--
(I) advise PDP sponsors offering
prescription drug plans and Medicare
Advantage organizations offering MA-PD
plans regarding pharmacy benefits; or
(II) review PDP sponsor and
Medicare Advantage organization
contracts with pharmacy benefit
managers; and
(viii) other service providers that
contract with any of the entities described in
clauses (i) through (vii) that may use price-
related compensation and payment structures,
such as rebate aggregators (or other entities
that negotiate or process price concessions on
behalf of pharmacy benefit managers, plan
sponsors, or pharmacies).
(B) The primary business models and compensation
structures for each category of intermediary described
in subparagraph (A).
(C) Variation in price-related compensation
structures between affiliated entities (such as
entities with common ownership, either full or partial,
and subsidiary relationships) and unaffiliated
entities.
(D) Potential conflicts of interest among
contracting entities related to the use of prescription
drug price-related compensation structures, such as the
potential for fees or other payments set as a
percentage of a prescription drug's price to advantage
formulary selection, distribution, or purchasing of
prescription drugs with higher prices.
(E) Notable differences, if any, in the use and
level of price-based compensation structures over time
and between different market segments, such as under
part D of title XVIII of the Social Security Act (42
U.S.C. 1395w-101 et seq.) and the Medicaid program
under title XIX of such Act (42 U.S.C. 1396 et seq.).
(F) The effects of drug price-related compensation
structures and alternative compensation structures on
Federal health care programs and program beneficiaries,
including with respect to cost-sharing, premiums,
Federal outlays, biosimilar and generic drug adoption
and utilization, drug shortage risks, and the potential
for fees set as a percentage of a drug's price to
advantage the formulary selection, distribution, or
purchasing of drugs with higher prices.
(G) Other issues determined to be relevant and
appropriate by the Comptroller General.
(2) Report.--Not later than 2 years after the date of
enactment of this section, the Comptroller General shall submit
to Congress a report containing the results of the study
conducted under paragraph (1), together with recommendations
for such legislation and administrative action as the
Comptroller General determines appropriate.
(c) MedPAC Reports on Agreements With Pharmacy Benefit Managers
With Respect to Prescription Drug Plans and MA-PD Plans.--
(1) In general.--The Medicare Payment Advisory Commission
shall submit to Congress the following reports:
(A) Initial report.--Not later than the first March
15 occurring after the date that is 2 years after the
date on which the Secretary makes the data available to
the Commission, a report regarding agreements with
pharmacy benefit managers with respect to prescription
drug plans and MA-PD plans. Such report shall include,
to the extent practicable--
(i) a description of trends and patterns,
including relevant averages, totals, and other
figures for the types of information submitted;
(ii) an analysis of any differences in
agreements and their effects on plan enrollee
out-of-pocket spending and average pharmacy
reimbursement, and other impacts; and
(iii) any recommendations the Commission
determines appropriate.
(B) Final report.--Not later than 2 years after the
date on which the Commission submits the initial report
under subparagraph (A), a report describing any changes
with respect to the information described in
subparagraph (A) over time, together with any
recommendations the Commission determines appropriate.
(2) Funding.--In addition to amounts otherwise available,
there is appropriated to the Medicare Payment Advisory
Commission, out of any money in the Treasury not otherwise
appropriated, $1,000,000 for fiscal year 2025, to remain
available until expended, to carry out this subsection.
SEC. 4. OVERSIGHT OF PHARMACY BENEFIT MANAGEMENT SERVICES.
(a) Public Health Service Act.--Title XXVII of the Public Health
Service Act (42 U.S.C. 300gg et seq.) is amended--
(1) in part D (42 U.S.C. 300gg-111 et seq.), by adding at
the end the following new section:
``SEC. 2799A-11. OVERSIGHT OF ENTITIES THAT PROVIDE PHARMACY BENEFIT
MANAGEMENT SERVICES.
``(a) In General.--For plan years beginning on or after the date
that is 30 months after the date of enactment of this section (referred
to in this subsection and subsection (b) as the `effective date'), a
group health plan or a health insurance issuer offering group health
insurance coverage, or an entity providing pharmacy benefit management
services on behalf of such a plan or issuer, shall not enter into a
contract, including an extension or renewal of a contract, entered into
on or after the effective date, with an applicable entity unless such
applicable entity agrees to--
``(1) not limit or delay the disclosure of information to
the group health plan (including such a plan offered through a
health insurance issuer) in such a manner that prevents an
entity providing pharmacy benefit management services on behalf
of a group health plan or health insurance issuer offering
group health insurance coverage from making the reports
described in subsection (b); and
``(2) provide the entity providing pharmacy benefit
management services on behalf of a group health plan or health
insurance issuer relevant information necessary to make the
reports described in subsection (b).
``(b) Reports.--
``(1) In general.--For plan years beginning on or after the
effective date, in the case of any contract between a group
health plan or a health insurance issuer offering group health
insurance coverage offered in connection with such a plan and
an entity providing pharmacy benefit management services on
behalf of such plan or issuer, including an extension or
renewal of such a contract, entered into on or after the
effective date, the entity providing pharmacy benefit
management services on behalf of such a group health plan or
health insurance issuer, not less frequently than every 6
months (or, at the request of a group health plan, not less
frequently than quarterly, and under the same conditions,
terms, and cost of the semiannual report under this
subsection), shall submit to the group health plan a report in
accordance with this section. Each such report shall be made
available to such group health plan in plain language, in a
machine-readable format, and as the Secretary may determine,
other formats. Each such report shall include the information
described in paragraph (2).
``(2) Information described.--For purposes of paragraph
(1), the information described in this paragraph is, with
respect to drugs covered by a group health plan or group health
insurance coverage offered by a health insurance issuer in
connection with a group health plan during each reporting
period--
``(A) in the case of a group health plan that is
offered by a specified large employer or that is a
specified large plan, and is not offered as health
insurance coverage, or in the case of health insurance
coverage for which the election under paragraph (3) is
made for the applicable reporting period--
``(i) a list of drugs for which a claim was
filed and, with respect to each such drug on
such list--
``(I) the contracted compensation
paid by the group health plan or health
insurance issuer for each covered drug
(identified by the National Drug Code)
to the entity providing pharmacy
benefit management services or other
applicable entity on behalf of the
group health plan or health insurance
issuer;
``(II) the contracted compensation
paid to the pharmacy, by any entity
providing pharmacy benefit management
services or other applicable entity on
behalf of the group health plan or
health insurance issuer, for each
covered drug (identified by the
National Drug Code);
``(III) for each such claim, the
difference between the amount paid
under subclause (I) and the amount paid
under subclause (II);
``(IV) the proprietary name,
established name or proper name, and
National Drug Code;
``(V) for each claim for the drug
(including original prescriptions and
refills) and for each dosage unit of
the drug for which a claim was filed,
the type of dispensing channel used to
furnish the drug, including retail,
mail order, or specialty pharmacy;
``(VI) with respect to each drug
dispensed, for each type of dispensing
channel (including retail, mail order,
or specialty pharmacy)--
``(aa) whether such drug is
a brand name drug or a generic
drug, and--
``(AA) in the case
of a brand name drug,
the wholesale
acquisition cost,
listed as cost per days
supply and cost per
dosage unit, on the
date such drug was
dispensed; and
``(BB) in the case
of a generic drug, the
average wholesale
price, listed as cost
per days supply and
cost per dosage unit,
on the date such drug
was dispensed; and
``(bb) the total number
of--
``(AA) prescription
claims (including
original prescriptions
and refills);
``(BB) participants
and beneficiaries for
whom a claim for such
drug was filed through
the applicable
dispensing channel;
``(CC) dosage units
and dosage units per
fill of such drug; and
``(DD) days supply
of such drug per fill;
``(VII) the net price per course of
treatment or single fill, such as a 30-
day supply or 90-day supply to the plan
or coverage after rebates, fees,
alternative discounts, or other
remuneration received from applicable
entities;
``(VIII) the total amount of out-
of-pocket spending by participants and
beneficiaries on such drug, including
spending through copayments,
coinsurance, and deductibles, but not
including any amounts spent by
participants and beneficiaries on drugs
not covered under the plan or coverage,
or for which no claim is submitted
under the plan or coverage;
``(IX) the total net spending on
the drug;
``(X) the total amount received, or
expected to be received, by the plan or
issuer from any applicable entity in
rebates, fees, alternative discounts,
or other remuneration;
``(XI) the total amount received,
or expected to be received, by the
entity providing pharmacy benefit
management services, from applicable
entities, in rebates, fees, alternative
discounts, or other remuneration from
such entities--
``(aa) for claims incurred
during the reporting period;
and
``(bb) that is related to
utilization of such drug or
spending on such drug; and
``(XII) to the extent feasible,
information on the total amount of
remuneration for such drug, including
copayment assistance dollars paid,
copayment cards applied, or other
discounts provided by each drug
manufacturer (or entity administering
copayment assistance on behalf of such
drug manufacturer), to the participants
and beneficiaries enrolled in such plan
or coverage;
``(ii) a list of each therapeutic class (as
defined by the Secretary) for which a claim was
filed under the group health plan or health
insurance coverage during the reporting period,
and, with respect to each such therapeutic
class--
``(I) the total gross spending on
drugs in such class before rebates,
price concessions, alternative
discounts, or other remuneration from
applicable entities;
``(II) the net spending in such
class after such rebates, price
concessions, alternative discounts, or
other remuneration from applicable
entities;
``(III) the total amount received,
or expected to be received, by the
entity providing pharmacy benefit
management services, from applicable
entities, in rebates, fees, alternative
discounts, or other remuneration from
such entities--
``(aa) for claims incurred
during the reporting period;
and
``(bb) that is related to
utilization of drugs or drug
spending;
``(IV) the average net spending per
30-day supply and per 90-day supply by
the plan or by the issuer with respect
to such coverage and its participants
and beneficiaries, among all drugs
within the therapeutic class for which
a claim was filed during the reporting
period;
``(V) the number of participants
and beneficiaries who filled a
prescription for a drug in such class,
including the National Drug Code for
each such drug;
``(VI) if applicable, a description
of the formulary tiers and utilization
mechanisms (such as prior authorization
or step therapy) employed for drugs in
that class; and
``(VII) the total out-of-pocket
spending under the plan or coverage by
participants and beneficiaries,
including spending through copayments,
coinsurance, and deductibles, but not
including any amounts spent by
participants and beneficiaries on drugs
not covered under the plan or coverage
or for which no claim is submitted
under the plan or coverage;
``(iii) with respect to any drug for which
gross spending under the group health plan or
health insurance coverage exceeded $10,000
during the reporting period or, in the case
that gross spending under the group health plan
or coverage exceeded $10,000 during the
reporting period with respect to fewer than 50
drugs, with respect to the 50 prescription
drugs with the highest spending during the
reporting period--
``(I) a list of all other drugs in
the same therapeutic class as such
drug;
``(II) if applicable, the rationale
for the formulary placement of such
drug in that therapeutic category or
class, selected from a list of standard
rationales established by the
Secretary, in consultation with
stakeholders; and
``(III) any change in formulary
placement compared to the prior plan
year; and
``(iv) in the case that such plan or issuer
(or an entity providing pharmacy benefit
management services on behalf of such plan or
issuer) has an affiliated pharmacy or pharmacy
under common ownership, including mandatory
mail and specialty home delivery programs,
retail and mail auto-refill programs, and cost-
sharing assistance incentives funded by an
entity providing pharmacy benefit services--
``(I) an explanation of any benefit
design parameters that encourage or
require participants and beneficiaries
in the plan or coverage to fill
prescriptions at mail order, specialty,
or retail pharmacies;
``(II) the percentage of total
prescriptions dispensed by such
pharmacies to participants or
beneficiaries in such plan or coverage;
and
``(III) a list of all drugs
dispensed by such pharmacies to
participants or beneficiaries enrolled
in such plan or coverage, and, with
respect to each drug dispensed--
``(aa) the amount charged,
per dosage unit, per 30-day
supply, or per 90-day supply
(as applicable) to the plan or
issuer, and to participants and
beneficiaries;
``(bb) the median amount
charged to such plan or issuer,
and the interquartile range of
the costs, per dosage unit, per
30-day supply, and per 90-day
supply, including amounts paid
by the participants and
beneficiaries, when the same
drug is dispensed by other
pharmacies that are not
affiliated with or under common
ownership with the entity and
that are included in the
pharmacy network of such plan
or coverage;
``(cc) the lowest cost per
dosage unit, per 30-day supply
and per 90-day supply, for each
such drug, including amounts
charged to the plan or coverage
and to participants and
beneficiaries, that is
available from any pharmacy
included in the network of such
plan or coverage; and
``(dd) the net acquisition
cost per dosage unit, per 30-
day supply, and per 90-day
supply, if such drug is subject
to a maximum price discount;
and
``(B) with respect to any group health plan,
including group health insurance coverage offered in
connection with such a plan, regardless of whether the
plan or coverage is offered by a specified large
employer or whether it is a specified large plan--
``(i) a summary document for the group
health plan that includes such information
described in clauses (i) through (iv) of
subparagraph (A), as specified by the Secretary
through guidance, program instruction, or
otherwise (with no requirement of notice and
comment rulemaking), that the Secretary
determines useful to group health plans for
purposes of selecting pharmacy benefit
management services, such as an estimated net
price to group health plan and participant or
beneficiary, a cost per claim, the fee
structure or reimbursement model, and estimated
cost per participant or beneficiary;
``(ii) a summary document for plans and
issuers to provide to participants and
beneficiaries, which shall be made available to
participants or beneficiaries upon request to
their group health plan (including in the case
of group health insurance coverage offered in
connection with such a plan), that--
``(I) contains such information
described in clauses (iii), (iv), (v),
and (vi), as applicable, as specified
by the Secretary through guidance,
program instruction, or otherwise (with
no requirement of notice and comment
rulemaking) that the Secretary
determines useful to participants or
beneficiaries in better understanding
the plan or coverage or benefits under
such plan or coverage;
``(II) contains only aggregate
information; and
``(III) states that participants
and beneficiaries may request specific,
claims-level information required to be
furnished under subsection (c) from the
group health plan or health insurance
issuer;
``(iii) with respect to drugs covered by
such plan or coverage during such reporting
period--
``(I) the total net spending by the
plan or coverage for all such drugs;
``(II) the total amount received,
or expected to be received, by the plan
or issuer from any applicable entity in
rebates, fees, alternative discounts,
or other remuneration; and
``(III) to the extent feasible,
information on the total amount of
remuneration for such drugs, including
copayment assistance dollars paid,
copayment cards applied, or other
discounts provided by each drug
manufacturer (or entity administering
copayment assistance on behalf of such
drug manufacturer) to participants and
beneficiaries;
``(iv) amounts paid directly or indirectly
in rebates, fees, or any other type of
compensation (as defined in section
408(b)(2)(B)(ii)(dd)(AA) of the Employee
Retirement Income Security Act) to brokerage
firms, brokers, consultants, advisors, or any
other individual or firm, for--
``(I) the referral of the group
health plan's or health insurance
issuer's business to an entity
providing pharmacy benefit management
services, including the identity of the
recipient of such amounts;
``(II) consideration of the entity
providing pharmacy benefit management
services by the group health plan or
health insurance issuer; or
``(III) the retention of the entity
by the group health plan or health
insurance issuer;
``(v) an explanation of any benefit design
parameters that encourage or require
participants and beneficiaries in such plan or
coverage to fill prescriptions at mail order,
specialty, or retail pharmacies that are
affiliated with or under common ownership with
the entity providing pharmacy benefit
management services under such plan or
coverage, including mandatory mail and
specialty home delivery programs, retail and
mail auto-refill programs, and cost-sharing
assistance incentives directly or indirectly
funded by such entity; and
``(vi) total gross spending on all drugs
under the plan or coverage during the reporting
period.
``(3) Opt-in for group health insurance coverage offered by
a specified large employer or that is a specified large plan.--
In the case of group health insurance coverage offered in
connection with a group health plan that is offered by a
specified large employer or is a specified large plan, such
group health plan may, on an annual basis, for plan years
beginning on or after the date that is 30 months after the date
of enactment of this section, elect to require an entity
providing pharmacy benefit management services on behalf of the
health insurance issuer to submit to such group health plan a
report that includes all of the information described in
paragraph (2)(A), in addition to the information described in
paragraph (2)(B).
``(4) Privacy requirements.--
``(A) In general.--An entity providing pharmacy
benefit management services on behalf of a group health
plan or a health insurance issuer offering group health
insurance coverage shall report information under
paragraph (1) in a manner consistent with the privacy
regulations promulgated under section 13402(a) of the
Health Information Technology for Economic and Clinical
Health Act and consistent with the privacy regulations
promulgated under the Health Insurance Portability and
Accountability Act of 1996 in part 160 and subparts A
and E of part 164 of title 45, Code of Federal
Regulations (or successor regulations) (referred to in
this paragraph as the `HIPAA privacy regulations') and
shall restrict the use and disclosure of such
information according to such privacy regulations and
such HIPAA privacy regulations.
``(B) Additional requirements.--
``(i) In general.--An entity providing
pharmacy benefit management services on behalf
of a group health plan or health insurance
issuer offering group health insurance coverage
that submits a report under paragraph (1) shall
ensure that such report contains only summary
health information, as defined in section
164.504(a) of title 45, Code of Federal
Regulations (or successor regulations).
``(ii) Restrictions.--In carrying out this
subsection, a group health plan shall comply
with section 164.504(f) of title 45, Code of
Federal Regulations (or a successor
regulation), and a plan sponsor shall act in
accordance with the terms of the agreement
described in such section.
``(C) Rule of construction.--
``(i) Nothing in this section shall be
construed to modify the requirements for the
creation, receipt, maintenance, or transmission
of protected health information under the HIPAA
privacy regulations.
``(ii) Nothing in this section shall be
construed to affect the application of any
Federal or State privacy or civil rights law,
including the HIPAA privacy regulations, the
Genetic Information Nondiscrimination Act of
2008 (Public Law 110-233) (including the
amendments made by such Act), the Americans
with Disabilities Act of 1990 (42 U.S.C. 12101
et seq.), section 504 of the Rehabilitation Act
of 1973 (29 U.S.C. 794), section 1557 of the
Patient Protection and Affordable Care Act (42
U.S.C. 18116), title VI of the Civil Rights Act
of 1964 (42 U.S.C. 2000d), and title VII of the
Civil Rights Act of 1964 (42 U.S.C. 2000e).
``(D) Written notice.--Each plan year, group health
plans, including with respect to group health insurance
coverage offered in connection with a group health
plan, shall provide to each participant or beneficiary
written notice informing the participant or beneficiary
of the requirement for entities providing pharmacy
benefit management services on behalf of the group
health plan or health insurance issuer offering group
health insurance coverage to submit reports to group
health plans under paragraph (1), as applicable, which
may include incorporating such notification in plan
documents provided to the participant or beneficiary,
or providing individual notification.
``(E) Limitation to business associates.--A group
health plan receiving a report under paragraph (1) may
disclose such information only to the entity from which
the report was received or to that entity's business
associates as defined in section 160.103 of title 45,
Code of Federal Regulations (or successor regulations)
or as permitted by the HIPAA privacy regulations.
``(F) Clarification regarding public disclosure of
information.--Nothing in this section shall prevent an
entity providing pharmacy benefit management services
on behalf of a group health plan or health insurance
issuer offering group health insurance coverage, from
placing reasonable restrictions on the public
disclosure of the information contained in a report
described in paragraph (1), except that such plan,
issuer, or entity may not--
``(i) restrict disclosure of such report to
the Department of Health and Human Services,
the Department of Labor, or the Department of
the Treasury; or
``(ii) prevent disclosure for the purposes
of subsection (c), or any other public
disclosure requirement under this section.
``(G) Limited form of report.--The Secretary shall
define through rulemaking a limited form of the report
under paragraph (1) required with respect to any group
health plan established by a plan sponsor that is, or
is affiliated with, a drug manufacturer, drug
wholesaler, or other direct participant in the drug
supply chain, in order to prevent anti-competitive
behavior.
``(5) Standard format and regulations.--
``(A) In general.--Not later than 18 months after
the date of enactment of this section, the Secretary
shall specify through rulemaking a standard format for
entities providing pharmacy benefit management services
on behalf of group health plans and health insurance
issuers offering group health insurance coverage, to
submit reports required under paragraph (1).
``(B) Additional regulations.--Not later than 18
months after the date of enactment of this section, the
Secretary shall, through rulemaking, promulgate any
other final regulations necessary to implement the
requirements of this section. In promulgating such
regulations, the Secretary shall, to the extent
practicable, align the reporting requirements under
this section with the reporting requirements under
section 2799A-10.
``(c) Requirement To Provide Information to Participants or
Beneficiaries.--A group health plan, including with respect to group
health insurance coverage offered in connection with a group health
plan, upon request of a participant or beneficiary, shall provide to
such participant or beneficiary--
``(1) the summary document described in subsection
(b)(2)(B)(ii); and
``(2) the information described in subsection
(b)(2)(A)(i)(III) with respect to a claim made by or on behalf
of such participant or beneficiary.
``(d) Enforcement.--
``(1) In general.--The Secretary shall enforce this
section. The enforcement authority under this subsection shall
apply only with respect to group health plans (including group
health insurance coverage offered in connection with such a
plan) to which the requirements of subparts I and II of part A
and part D apply in accordance with section 2722, and with
respect to entities providing pharmacy benefit management
services on behalf of such plans and applicable entities
providing services on behalf of such plans.
``(2) Failure to provide information.--A group health plan,
a health insurance issuer offering group health insurance
coverage, an entity providing pharmacy benefit management
services on behalf of such a plan or issuer, or an applicable
entity providing services on behalf of such a plan or issuer
that violates subsection (a); an entity providing pharmacy
benefit management services on behalf of such a plan or issuer
that fails to provide the information required under subsection
(b); or a group health plan that fails to provide the
information required under subsection (c), shall be subject to
a civil monetary penalty in the amount of $10,000 for each day
during which such violation continues or such information is
not disclosed or reported.
``(3) False information.--A health insurance issuer, an
entity providing pharmacy benefit management services, or a
third party administrator providing services on behalf of such
issuer offered by a health insurance issuer that knowingly
provides false information under this section shall be subject
to a civil monetary penalty in an amount not to exceed $100,000
for each item of false information. Such civil monetary penalty
shall be in addition to other penalties as may be prescribed by
law.
``(4) 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 such section.
``(5) Waivers.--The Secretary may waive penalties under
paragraph (2), or extend the period of time for compliance with
a requirement of this section, for an entity in violation of
this section that has made a good-faith effort to comply with
the requirements in this section.
``(e) Rule of Construction.--Nothing in this section shall be
construed to permit a health insurance issuer, group health plan,
entity providing pharmacy benefit management services on behalf of a
group health plan or health insurance issuer, or other entity to
restrict disclosure to, or otherwise limit the access of, the Secretary
to a report described in subsection (b)(1) or information related to
compliance with subsections (a), (b), (c), or (d) by such issuer, plan,
or entity.
``(f) Definitions.--In this section:
``(1) Applicable entity.--The term `applicable entity'
means--
``(A) an applicable group purchasing organization,
drug manufacturer, distributor, wholesaler, rebate
aggregator (or other purchasing entity designed to
aggregate rebates), or associated third party;
``(B) any subsidiary, parent, affiliate, or
subcontractor of a group health plan, health insurance
issuer, entity that provides pharmacy benefit
management services on behalf of such a plan or issuer,
or any entity described in subparagraph (A); or
``(C) such other entity as the Secretary may
specify through rulemaking.
``(2) Applicable group purchasing organization.--The term
`applicable group purchasing organization' means a group
purchasing organization that is affiliated with or under common
ownership with an entity providing pharmacy benefit management
services.
``(3) Contracted compensation.--The term `contracted
compensation' means the sum of any ingredient cost and
dispensing fee for a drug (inclusive of the out-of-pocket costs
to the participant or beneficiary), or another analogous
compensation structure that the Secretary may specify through
regulations.
``(4) Gross spending.--The term `gross spending', with
respect to prescription drug benefits under a group health plan
or health insurance coverage, means the amount spent by a group
health plan or health insurance issuer on prescription drug
benefits, calculated before the application of rebates, fees,
alternative discounts, or other remuneration.
``(5) Net spending.--The term `net spending', with respect
to prescription drug benefits under a group health plan or
health insurance coverage, means the amount spent by a group
health plan or health insurance issuer on prescription drug
benefits, calculated after the application of rebates, fees,
alternative discounts, or other remuneration.
``(6) Plan sponsor.--The term `plan sponsor' has the
meaning given such term in section 3(16)(B) of the Employee
Retirement Income Security Act of 1974.
``(7) Remuneration.--The term `remuneration' has the
meaning given such term by the Secretary through rulemaking,
which shall be reevaluated by the Secretary every 5 years.
``(8) Specified large employer.--The term `specified large
employer' means, in connection with a group health plan
(including group health insurance coverage offered in
connection with such a plan) established or maintained by a
single employer, with respect to a calendar year or a plan
year, as applicable, an employer who employed an average of at
least 100 employees on business days during the preceding
calendar year or plan year and who employs at least 1 employee
on the first day of the calendar year or plan year.
``(9) Specified large plan.--The term `specified large
plan' means a group health plan (including group health
insurance coverage offered in connection with such a plan)
established or maintained by a plan sponsor described in clause
(ii) or (iii) of section 3(16)(B) of the Employee Retirement
Income Security Act of 1974 that had an average of at least 100
participants on business days during the preceding calendar
year or plan year, as applicable.
``(10) Wholesale acquisition cost.--The term `wholesale
acquisition cost' has the meaning given such term in section
1847A(c)(6)(B) of the Social Security Act.''; and
(2) in section 2723 (42 U.S.C. 300gg-22)--
(A) in subsection (a)--
(i) in paragraph (1), by inserting ``(other
than section 2799A-11)'' after ``part D''; and
(ii) in paragraph (2), by inserting
``(other than section 2799A-11)'' after ``part
D''; and
(B) in subsection (b)--
(i) in paragraph (1), by inserting ``(other
than section 2799A-11)'' after ``part D'';
(ii) in paragraph (2)(A), by inserting
``(other than section 2799A-11)'' after ``part
D''; and
(iii) in paragraph (2)(C)(ii), by inserting
``(other than section 2799A-11)'' after ``part
D''.
(b) Employee Retirement Income Security Act of 1974.--
(1) In general.--Subtitle B of title I of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1021 et seq.)
is amended--
(A) in subpart B of part 7 (29 U.S.C. 1185 et
seq.), by adding at the end the following:
``SEC. 726. OVERSIGHT OF ENTITIES THAT PROVIDE PHARMACY BENEFIT
MANAGEMENT SERVICES.
``(a) In General.--For plan years beginning on or after the date
that is 30 months after the date of enactment of this section (referred
to in this subsection and subsection (b) as the `effective date'), a
group health plan or a health insurance issuer offering group health
insurance coverage, or an entity providing pharmacy benefit management
services on behalf of such a plan or issuer, shall not enter into a
contract, including an extension or renewal of a contract, entered into
on or after the effective date, with an applicable entity unless such
applicable entity agrees to--
``(1) not limit or delay the disclosure of information to
the group health plan (including such a plan offered through a
health insurance issuer) in such a manner that prevents an
entity providing pharmacy benefit management services on behalf
of a group health plan or health insurance issuer offering
group health insurance coverage from making the reports
described in subsection (b); and
``(2) provide the entity providing pharmacy benefit
management services on behalf of a group health plan or health
insurance issuer relevant information necessary to make the
reports described in subsection (b).
``(b) Reports.--
``(1) In general.--For plan years beginning on or after the
effective date, in the case of any contract between a group
health plan or a health insurance issuer offering group health
insurance coverage offered in connection with such a plan and
an entity providing pharmacy benefit management services on
behalf of such plan or issuer, including an extension or
renewal of such a contract, entered into on or after the
effective date, the entity providing pharmacy benefit
management services on behalf of such a group health plan or
health insurance issuer, not less frequently than every 6
months (or, at the request of a group health plan, not less
frequently than quarterly, and under the same conditions,
terms, and cost of the semiannual report under this
subsection), shall submit to the group health plan a report in
accordance with this section. Each such report shall be made
available to such group health plan in plain language, in a
machine-readable format, and as the Secretary may determine,
other formats. Each such report shall include the information
described in paragraph (2).
``(2) Information described.--For purposes of paragraph
(1), the information described in this paragraph is, with
respect to drugs covered by a group health plan or group health
insurance coverage offered by a health insurance issuer in
connection with a group health plan during each reporting
period--
``(A) in the case of a group health plan that is
offered by a specified large employer or that is a
specified large plan, and is not offered as health
insurance coverage, or in the case of health insurance
coverage for which the election under paragraph (3) is
made for the applicable reporting period--
``(i) a list of drugs for which a claim was
filed and, with respect to each such drug on
such list--
``(I) the contracted compensation
paid by the group health plan or health
insurance issuer for each covered drug
(identified by the National Drug Code)
to the entity providing pharmacy
benefit management services or other
applicable entity on behalf of the
group health plan or health insurance
issuer;
``(II) the contracted compensation
paid to the pharmacy, by any entity
providing pharmacy benefit management
services or other applicable entity on
behalf of the group health plan or
health insurance issuer, for each
covered drug (identified by the
National Drug Code);
``(III) for each such claim, the
difference between the amount paid
under subclause (I) and the amount paid
under subclause (II);
``(IV) the proprietary name,
established name or proper name, and
National Drug Code;
``(V) for each claim for the drug
(including original prescriptions and
refills) and for each dosage unit of
the drug for which a claim was filed,
the type of dispensing channel used to
furnish the drug, including retail,
mail order, or specialty pharmacy;
``(VI) with respect to each drug
dispensed, for each type of dispensing
channel (including retail, mail order,
or specialty pharmacy)--
``(aa) whether such drug is
a brand name drug or a generic
drug, and--
``(AA) in the case
of a brand name drug,
the wholesale
acquisition cost,
listed as cost per days
supply and cost per
dosage unit, on the
date such drug was
dispensed; and
``(BB) in the case
of a generic drug, the
average wholesale
price, listed as cost
per days supply and
cost per dosage unit,
on the date such drug
was dispensed; and
``(bb) the total number
of--
``(AA) prescription
claims (including
original prescriptions
and refills);
``(BB) participants
and beneficiaries for
whom a claim for such
drug was filed through
the applicable
dispensing channel;
``(CC) dosage units
and dosage units per
fill of such drug; and
``(DD) days supply
of such drug per fill;
``(VII) the net price per course of
treatment or single fill, such as a 30-
day supply or 90-day supply to the plan
or coverage after rebates, fees,
alternative discounts, or other
remuneration received from applicable
entities;
``(VIII) the total amount of out-
of-pocket spending by participants and
beneficiaries on such drug, including
spending through copayments,
coinsurance, and deductibles, but not
including any amounts spent by
participants and beneficiaries on drugs
not covered under the plan or coverage,
or for which no claim is submitted
under the plan or coverage;
``(IX) the total net spending on
the drug;
``(X) the total amount received, or
expected to be received, by the plan or
issuer from any applicable entity in
rebates, fees, alternative discounts,
or other remuneration;
``(XI) the total amount received,
or expected to be received, by the
entity providing pharmacy benefit
management services, from applicable
entities, in rebates, fees, alternative
discounts, or other remuneration from
such entities--
``(aa) for claims incurred
during the reporting period;
and
``(bb) that is related to
utilization of such drug or
spending on such drug; and
``(XII) to the extent feasible,
information on the total amount of
remuneration for such drug, including
copayment assistance dollars paid,
copayment cards applied, or other
discounts provided by each drug
manufacturer (or entity administering
copayment assistance on behalf of such
drug manufacturer), to the participants
and beneficiaries enrolled in such plan
or coverage;
``(ii) a list of each therapeutic class (as
defined by the Secretary) for which a claim was
filed under the group health plan or health
insurance coverage during the reporting period,
and, with respect to each such therapeutic
class--
``(I) the total gross spending on
drugs in such class before rebates,
price concessions, alternative
discounts, or other remuneration from
applicable entities;
``(II) the net spending in such
class after such rebates, price
concessions, alternative discounts, or
other remuneration from applicable
entities;
``(III) the total amount received,
or expected to be received, by the
entity providing pharmacy benefit
management services, from applicable
entities, in rebates, fees, alternative
discounts, or other remuneration from
such entities--
``(aa) for claims incurred
during the reporting period;
and
``(bb) that is related to
utilization of drugs or drug
spending;
``(IV) the average net spending per
30-day supply and per 90-day supply by
the plan or by the issuer with respect
to such coverage and its participants
and beneficiaries, among all drugs
within the therapeutic class for which
a claim was filed during the reporting
period;
``(V) the number of participants
and beneficiaries who filled a
prescription for a drug in such class,
including the National Drug Code for
each such drug;
``(VI) if applicable, a description
of the formulary tiers and utilization
mechanisms (such as prior authorization
or step therapy) employed for drugs in
that class; and
``(VII) the total out-of-pocket
spending under the plan or coverage by
participants and beneficiaries,
including spending through copayments,
coinsurance, and deductibles, but not
including any amounts spent by
participants and beneficiaries on drugs
not covered under the plan or coverage
or for which no claim is submitted
under the plan or coverage;
``(iii) with respect to any drug for which
gross spending under the group health plan or
health insurance coverage exceeded $10,000
during the reporting period or, in the case
that gross spending under the group health plan
or coverage exceeded $10,000 during the
reporting period with respect to fewer than 50
drugs, with respect to the 50 prescription
drugs with the highest spending during the
reporting period--
``(I) a list of all other drugs in
the same therapeutic class as such
drug;
``(II) if applicable, the rationale
for the formulary placement of such
drug in that therapeutic category or
class, selected from a list of standard
rationales established by the
Secretary, in consultation with
stakeholders; and
``(III) any change in formulary
placement compared to the prior plan
year; and
``(iv) in the case that such plan or issuer
(or an entity providing pharmacy benefit
management services on behalf of such plan or
issuer) has an affiliated pharmacy or pharmacy
under common ownership, including mandatory
mail and specialty home delivery programs,
retail and mail auto-refill programs, and cost
sharing assistance incentives funded by an
entity providing pharmacy benefit services--
``(I) an explanation of any benefit
design parameters that encourage or
require participants and beneficiaries
in the plan or coverage to fill
prescriptions at mail order, specialty,
or retail pharmacies;
``(II) the percentage of total
prescriptions dispensed by such
pharmacies to participants or
beneficiaries in such plan or coverage;
and
``(III) a list of all drugs
dispensed by such pharmacies to
participants or beneficiaries enrolled
in such plan or coverage, and, with
respect to each drug dispensed--
``(aa) the amount charged,
per dosage unit, per 30-day
supply, or per 90-day supply
(as applicable) to the plan or
issuer, and to participants and
beneficiaries;
``(bb) the median amount
charged to such plan or issuer,
and the interquartile range of
the costs, per dosage unit, per
30-day supply, and per 90-day
supply, including amounts paid
by the participants and
beneficiaries, when the same
drug is dispensed by other
pharmacies that are not
affiliated with or under common
ownership with the entity and
that are included in the
pharmacy network of such plan
or coverage;
``(cc) the lowest cost per
dosage unit, per 30-day supply
and per 90-day supply, for each
such drug, including amounts
charged to the plan or coverage
and to participants and
beneficiaries, that is
available from any pharmacy
included in the network of such
plan or coverage; and
``(dd) the net acquisition
cost per dosage unit, per 30-
day supply, and per 90-day
supply, if such drug is subject
to a maximum price discount;
and
``(B) with respect to any group health plan,
including group health insurance coverage offered in
connection with such a plan, regardless of whether the
plan or coverage is offered by a specified large
employer or whether it is a specified large plan--
``(i) a summary document for the group
health plan that includes such information
described in clauses (i) through (iv) of
subparagraph (A), as specified by the Secretary
through guidance, program instruction, or
otherwise (with no requirement of notice and
comment rulemaking), that the Secretary
determines useful to group health plans for
purposes of selecting pharmacy benefit
management services, such as an estimated net
price to group health plan and participant or
beneficiary, a cost per claim, the fee
structure or reimbursement model, and estimated
cost per participant or beneficiary;
``(ii) a summary document for plans and
issuers to provide to participants and
beneficiaries, which shall be made available to
participants or beneficiaries upon request to
their group health plan (including in the case
of group health insurance coverage offered in
connection with such a plan), that--
``(I) contains such information
described in clauses (iii), (iv), (v),
and (vi), as applicable, as specified
by the Secretary through guidance,
program instruction, or otherwise (with
no requirement of notice and comment
rulemaking) that the Secretary
determines useful to participants or
beneficiaries in better understanding
the plan or coverage or benefits under
such plan or coverage;
``(II) contains only aggregate
information; and
``(III) states that participants
and beneficiaries may request specific,
claims-level information required to be
furnished under subsection (c) from the
group health plan or health insurance
issuer;
``(iii) with respect to drugs covered by
such plan or coverage during such reporting
period--
``(I) the total net spending by the
plan or coverage for all such drugs;
``(II) the total amount received,
or expected to be received, by the plan
or issuer from any applicable entity in
rebates, fees, alternative discounts,
or other remuneration; and
``(III) to the extent feasible,
information on the total amount of
remuneration for such drugs, including
copayment assistance dollars paid,
copayment cards applied, or other
discounts provided by each drug
manufacturer (or entity administering
copayment assistance on behalf of such
drug manufacturer) to participants and
beneficiaries;
``(iv) amounts paid directly or indirectly
in rebates, fees, or any other type of
compensation (as defined in section
408(b)(2)(B)(ii)(dd)(AA)) to brokerage firms,
brokers, consultants, advisors, or any other
individual or firm, for--
``(I) the referral of the group
health plan's or health insurance
issuer's business to an entity
providing pharmacy benefit management
services, including the identity of the
recipient of such amounts;
``(II) consideration of the entity
providing pharmacy benefit management
services by the group health plan or
health insurance issuer; or
``(III) the retention of the entity
by the group health plan or health
insurance issuer;
``(v) an explanation of any benefit design
parameters that encourage or require
participants and beneficiaries in such plan or
coverage to fill prescriptions at mail order,
specialty, or retail pharmacies that are
affiliated with or under common ownership with
the entity providing pharmacy benefit
management services under such plan or
coverage, including mandatory mail and
specialty home delivery programs, retail and
mail auto-refill programs, and cost-sharing
assistance incentives directly or indirectly
funded by such entity; and
``(vi) total gross spending on all drugs
under the plan or coverage during the reporting
period.
``(3) Opt-in for group health insurance coverage offered by
a specified large employer or that is a specified large plan.--
In the case of group health insurance coverage offered in
connection with a group health plan that is offered by a
specified large employer or is a specified large plan, such
group health plan may, on an annual basis, for plan years
beginning on or after the date that is 30 months after the date
of enactment of this section, elect to require an entity
providing pharmacy benefit management services on behalf of the
health insurance issuer to submit to such group health plan a
report that includes all of the information described in
paragraph (2)(A), in addition to the information described in
paragraph (2)(B).
``(4) Privacy requirements.--
``(A) In general.--An entity providing pharmacy
benefit management services on behalf of a group health
plan or a health insurance issuer offering group health
insurance coverage shall report information under
paragraph (1) in a manner consistent with the privacy
regulations promulgated under section 13402(a) of the
Health Information Technology for Economic and Clinical
Health Act (42 U.S.C. 17932(a)) and consistent with the
privacy regulations promulgated under the Health
Insurance Portability and Accountability Act of 1996 in
part 160 and subparts A and E of part 164 of title 45,
Code of Federal Regulations (or successor regulations)
(referred to in this paragraph as the `HIPAA privacy
regulations') and shall restrict the use and disclosure
of such information according to such privacy
regulations and such HIPAA privacy regulations.
``(B) Additional requirements.--
``(i) In general.--An entity providing
pharmacy benefit management services on behalf
of a group health plan or health insurance
issuer offering group health insurance coverage
that submits a report under paragraph (1) shall
ensure that such report contains only summary
health information, as defined in section
164.504(a) of title 45, Code of Federal
Regulations (or successor regulations).
``(ii) Restrictions.--In carrying out this
subsection, a group health plan shall comply
with section 164.504(f) of title 45, Code of
Federal Regulations (or a successor
regulation), and a plan sponsor shall act in
accordance with the terms of the agreement
described in such section.
``(C) Rule of construction.--
``(i) Nothing in this section shall be
construed to modify the requirements for the
creation, receipt, maintenance, or transmission
of protected health information under the HIPAA
privacy regulations.
``(ii) Nothing in this section shall be
construed to affect the application of any
Federal or State privacy or civil rights law,
including the HIPAA privacy regulations, the
Genetic Information Nondiscrimination Act of
2008 (Public Law 110-233) (including the
amendments made by such Act), the Americans
with Disabilities Act of 1990 (42 U.S.C. 12101
et seq.), section 504 of the Rehabilitation Act
of 1973 (29 U.S.C. 794), section 1557 of the
Patient Protection and Affordable Care Act (42
U.S.C. 18116), title VI of the Civil Rights Act
of 1964 (42 U.S.C. 2000d), and title VII of the
Civil Rights Act of 1964 (42 U.S.C. 2000e).
``(D) Written notice.--Each plan year, group health
plans, including with respect to group health insurance
coverage offered in connection with a group health
plan, shall provide to each participant or beneficiary
written notice informing the participant or beneficiary
of the requirement for entities providing pharmacy
benefit management services on behalf of the group
health plan or health insurance issuer offering group
health insurance coverage to submit reports to group
health plans under paragraph (1), as applicable, which
may include incorporating such notification in plan
documents provided to the participant or beneficiary,
or providing individual notification.
``(E) Limitation to business associates.--A group
health plan receiving a report under paragraph (1) may
disclose such information only to the entity from which
the report was received or to that entity's business
associates as defined in section 160.103 of title 45,
Code of Federal Regulations (or successor regulations)
or as permitted by the HIPAA privacy regulations.
``(F) Clarification regarding public disclosure of
information.--Nothing in this section shall prevent an
entity providing pharmacy benefit management services
on behalf of a group health plan or health insurance
issuer offering group health insurance coverage, from
placing reasonable restrictions on the public
disclosure of the information contained in a report
described in paragraph (1), except that such plan,
issuer, or entity may not--
``(i) restrict disclosure of such report to
the Department of Health and Human Services,
the Department of Labor, or the Department of
the Treasury; or
``(ii) prevent disclosure for the purposes
of subsection (c), or any other public
disclosure requirement under this section.
``(G) Limited form of report.--The Secretary shall
define through rulemaking a limited form of the report
under paragraph (1) required with respect to any group
health plan established by a plan sponsor that is, or
is affiliated with, a drug manufacturer, drug
wholesaler, or other direct participant in the drug
supply chain, in order to prevent anti-competitive
behavior.
``(5) Standard format and regulations.--
``(A) In general.--Not later than 18 months after
the date of enactment of this section, the Secretary
shall specify through rulemaking a standard format for
entities providing pharmacy benefit management services
on behalf of group health plans and health insurance
issuers offering group health insurance coverage, to
submit reports required under paragraph (1).
``(B) Additional regulations.--Not later than 18
months after the date of enactment of this section, the
Secretary shall, through rulemaking, promulgate any
other final regulations necessary to implement the
requirements of this section. In promulgating such
regulations, the Secretary shall, to the extent
practicable, align the reporting requirements under
this section with the reporting requirements under
section 725.
``(c) Requirement To Provide Information to Participants or
Beneficiaries.--A group health plan, including with respect to group
health insurance coverage offered in connection with a group health
plan, upon request of a participant or beneficiary, shall provide to
such participant or beneficiary--
``(1) the summary document described in subsection
(b)(2)(B)(ii); and
``(2) the information described in subsection
(b)(2)(A)(i)(III) with respect to a claim made by or on behalf
of such participant or beneficiary.
``(d) Rule of Construction.--Nothing in this section shall be
construed to permit a health insurance issuer, group health plan,
entity providing pharmacy benefit management services on behalf of a
group health plan or health insurance issuer, or other entity to
restrict disclosure to, or otherwise limit the access of, the Secretary
to a report described in subsection (b)(1) or information related to
compliance with subsections (a), (b), or (c) of this section or section
502(c)(13) by such issuer, plan, or entity.
``(e) Definitions.--In this section:
``(1) Applicable entity.--The term `applicable entity'
means--
``(A) an applicable group purchasing organization,
drug manufacturer, distributor, wholesaler, rebate
aggregator (or other purchasing entity designed to
aggregate rebates), or associated third party;
``(B) any subsidiary, parent, affiliate, or
subcontractor of a group health plan, health insurance
issuer, entity that provides pharmacy benefit
management services on behalf of such a plan or issuer,
or any entity described in subparagraph (A); or
``(C) such other entity as the Secretary may
specify through rulemaking.
``(2) Applicable group purchasing organization.--The term
`applicable group purchasing organization' means a group
purchasing organization that is affiliated with or under common
ownership with an entity providing pharmacy benefit management
services.
``(3) Contracted compensation.--The term `contracted
compensation' means the sum of any ingredient cost and
dispensing fee for a drug (inclusive of the out-of-pocket costs
to the participant or beneficiary), or another analogous
compensation structure that the Secretary may specify through
regulations.
``(4) Gross spending.--The term `gross spending', with
respect to prescription drug benefits under a group health plan
or health insurance coverage, means the amount spent by a group
health plan or health insurance issuer on prescription drug
benefits, calculated before the application of rebates, fees,
alternative discounts, or other remuneration.
``(5) Net spending.--The term `net spending', with respect
to prescription drug benefits under a group health plan or
health insurance coverage, means the amount spent by a group
health plan or health insurance issuer on prescription drug
benefits, calculated after the application of rebates, fees,
alternative discounts, or other remuneration.
``(6) Plan sponsor.--The term `plan sponsor' has the
meaning given such term in section 3(16)(B).
``(7) Remuneration.--The term `remuneration' has the
meaning given such term by the Secretary through rulemaking,
which shall be reevaluated by the Secretary every 5 years.
``(8) Specified large employer.--The term `specified large
employer' means, in connection with a group health plan
(including group health insurance coverage offered in
connection with such a plan) established or maintained by a
single employer, with respect to a calendar year or a plan
year, as applicable, an employer who employed an average of at
least 100 employees on business days during the preceding
calendar year or plan year and who employs at least 1 employee
on the first day of the calendar year or plan year.
``(9) Specified large plan.--The term `specified large
plan' means a group health plan (including group health
insurance coverage offered in connection with such a plan)
established or maintained by a plan sponsor described in clause
(ii) or (iii) of section 3(16)(B) that had an average of at
least 100 participants on business days during the preceding
calendar year or plan year, as applicable.
``(10) Wholesale acquisition cost.--The term `wholesale
acquisition cost' has the meaning given such term in section
1847A(c)(6)(B) of the Social Security Act (42 U.S.C. 1395w-
3a(c)(6)(B)).'';
(B) in section 502 (29 U.S.C. 1132)--
(i) in subsection (a)(6), by striking ``or
(9)'' and inserting ``(9), or (13)'';
(ii) in subsection (b)(3), by striking
``under subsection (c)(9)'' and inserting
``under paragraphs (9) and (13) of subsection
(c)''; and
(iii) in subsection (c), by adding at the
end the following:
``(13) Secretarial enforcement authority relating to
oversight of pharmacy benefit management services.--
``(A) Failure to provide information.--The
Secretary may impose a penalty against a plan
administrator of a group health plan, a health
insurance issuer offering group health insurance
coverage, or an entity providing pharmacy benefit
management services on behalf of such a plan or issuer,
or an applicable entity (as defined in section 726(f))
that violates section 726(a); an entity providing
pharmacy benefit management services on behalf of such
a plan or issuer that fails to provide the information
required under section 726(b); or any person who causes
a group health plan to fail to provide the information
required under section 726(c), in the amount of $10,000
for each day during which such violation continues or
such information is not disclosed or reported.
``(B) False information.--The Secretary may impose
a penalty against a plan administrator of a group
health plan, a health insurance issuer offering group
health insurance coverage, an entity providing pharmacy
benefit management services, or an applicable entity
(as defined in section 726(f)) that knowingly provides
false information under section 726, in an amount not
to exceed $100,000 for each item of false information.
Such penalty shall be in addition to other penalties as
may be prescribed by law.
``(C) Waivers.--The Secretary may waive penalties
under subparagraph (A), or extend the period of time
for compliance with a requirement of this section, for
an entity in violation of section 726 that has made a
good-faith effort to comply with the requirements of
section 726.''; and
(C) in section 732(a) (29 U.S.C. 1191a(a)), by
striking ``section 711'' and inserting ``sections 711
and 726''.
(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. Oversight of entities that provide pharmacy benefit
management services.''.
(c) Internal Revenue Code of 1986.--
(1) In general.--Chapter 100 of the Internal Revenue Code
of 1986 is amended--
(A) by adding at the end of subchapter B the
following:
``SEC. 9826. OVERSIGHT OF ENTITIES THAT PROVIDE PHARMACY BENEFIT
MANAGEMENT SERVICES.
``(a) In General.--For plan years beginning on or after the date
that is 30 months after the date of enactment of this section (referred
to in this subsection and subsection (b) as the `effective date'), a
group health plan, or an entity providing pharmacy benefit management
services on behalf of such a plan, shall not enter into a contract,
including an extension or renewal of a contract, entered into on or
after the effective date, with an applicable entity unless such
applicable entity agrees to--
``(1) not limit or delay the disclosure of information to
the group health plan in such a manner that prevents an entity
providing pharmacy benefit management services on behalf of a
group health plan from making the reports described in
subsection (b); and
``(2) provide the entity providing pharmacy benefit
management services on behalf of a group health plan relevant
information necessary to make the reports described in
subsection (b).
``(b) Reports.--
``(1) In general.--For plan years beginning on or after the
effective date, in the case of any contract between a group
health plan and an entity providing pharmacy benefit management
services on behalf of such plan, including an extension or
renewal of such a contract, entered into on or after the
effective date, the entity providing pharmacy benefit
management services on behalf of such a group health plan, not
less frequently than every 6 months (or, at the request of a
group health plan, not less frequently than quarterly, and
under the same conditions, terms, and cost of the semiannual
report under this subsection), shall submit to the group health
plan a report in accordance with this section. Each such report
shall be made available to such group health plan in plain
language, in a machine-readable format, and as the Secretary
may determine, other formats. Each such report shall include
the information described in paragraph (2).
``(2) Information described.--For purposes of paragraph
(1), the information described in this paragraph is, with
respect to drugs covered by a group health plan during each
reporting period--
``(A) in the case of a group health plan that is
offered by a specified large employer or that is a
specified large plan, and is not offered as health
insurance coverage, or in the case of health insurance
coverage for which the election under paragraph (3) is
made for the applicable reporting period--
``(i) a list of drugs for which a claim was
filed and, with respect to each such drug on
such list--
``(I) the contracted compensation
paid by the group health plan for each
covered drug (identified by the
National Drug Code) to the entity
providing pharmacy benefit management
services or other applicable entity on
behalf of the group health plan;
``(II) the contracted compensation
paid to the pharmacy, by any entity
providing pharmacy benefit management
services or other applicable entity on
behalf of the group health plan, for
each covered drug (identified by the
National Drug Code);
``(III) for each such claim, the
difference between the amount paid
under subclause (I) and the amount paid
under subclause (II);
``(IV) the proprietary name,
established name or proper name, and
National Drug Code;
``(V) for each claim for the drug
(including original prescriptions and
refills) and for each dosage unit of
the drug for which a claim was filed,
the type of dispensing channel used to
furnish the drug, including retail,
mail order, or specialty pharmacy;
``(VI) with respect to each drug
dispensed, for each type of dispensing
channel (including retail, mail order,
or specialty pharmacy)--
``(aa) whether such drug is
a brand name drug or a generic
drug, and--
``(AA) in the case
of a brand name drug,
the wholesale
acquisition cost,
listed as cost per days
supply and cost per
dosage unit, on the
date such drug was
dispensed; and
``(BB) in the case
of a generic drug, the
average wholesale
price, listed as cost
per days supply and
cost per dosage unit,
on the date such drug
was dispensed; and
``(bb) the total number
of--
``(AA) prescription
claims (including
original prescriptions
and refills);
``(BB) participants
and beneficiaries for
whom a claim for such
drug was filed through
the applicable
dispensing channel;
``(CC) dosage units
and dosage units per
fill of such drug; and
``(DD) days supply
of such drug per fill;
``(VII) the net price per course of
treatment or single fill, such as a 30-
day supply or 90-day supply to the plan
after rebates, fees, alternative
discounts, or other remuneration
received from applicable entities;
``(VIII) the total amount of out-
of-pocket spending by participants and
beneficiaries on such drug, including
spending through copayments,
coinsurance, and deductibles, but not
including any amounts spent by
participants and beneficiaries on drugs
not covered under the plan, or for
which no claim is submitted under the
plan;
``(IX) the total net spending on
the drug;
``(X) the total amount received, or
expected to be received, by the plan
from any applicable entity in rebates,
fees, alternative discounts, or other
remuneration;
``(XI) the total amount received,
or expected to be received, by the
entity providing pharmacy benefit
management services, from applicable
entities, in rebates, fees, alternative
discounts, or other remuneration from
such entities--
``(aa) for claims incurred
during the reporting period;
and
``(bb) that is related to
utilization of such drug or
spending on such drug; and
``(XII) to the extent feasible,
information on the total amount of
remuneration for such drug, including
copayment assistance dollars paid,
copayment cards applied, or other
discounts provided by each drug
manufacturer (or entity administering
copayment assistance on behalf of such
drug manufacturer), to the participants
and beneficiaries enrolled in such
plan;
``(ii) a list of each therapeutic class (as
defined by the Secretary) for which a claim was
filed under the group health plan during the
reporting period, and, with respect to each
such therapeutic class--
``(I) the total gross spending on
drugs in such class before rebates,
price concessions, alternative
discounts, or other remuneration from
applicable entities;
``(II) the net spending in such
class after such rebates, price
concessions, alternative discounts, or
other remuneration from applicable
entities;
``(III) the total amount received,
or expected to be received, by the
entity providing pharmacy benefit
management services, from applicable
entities, in rebates, fees, alternative
discounts, or other remuneration from
such entities--
``(aa) for claims incurred
during the reporting period;
and
``(bb) that is related to
utilization of drugs or drug
spending;
``(IV) the average net spending per
30-day supply and per 90-day supply by
the plan and its participants and
beneficiaries, among all drugs within
the therapeutic class for which a claim
was filed during the reporting period;
``(V) the number of participants
and beneficiaries who filled a
prescription for a drug in such class,
including the National Drug Code for
each such drug;
``(VI) if applicable, a description
of the formulary tiers and utilization
mechanisms (such as prior authorization
or step therapy) employed for drugs in
that class; and
``(VII) the total out-of-pocket
spending under the plan by participants
and beneficiaries, including spending
through copayments, coinsurance, and
deductibles, but not including any
amounts spent by participants and
beneficiaries on drugs not covered
under the plan or for which no claim is
submitted under the plan;
``(iii) with respect to any drug for which
gross spending under the group health plan
exceeded $10,000 during the reporting period
or, in the case that gross spending under the
group health plan exceeded $10,000 during the
reporting period with respect to fewer than 50
drugs, with respect to the 50 prescription
drugs with the highest spending during the
reporting period--
``(I) a list of all other drugs in
the same therapeutic class as such
drug;
``(II) if applicable, the rationale
for the formulary placement of such
drug in that therapeutic category or
class, selected from a list of standard
rationales established by the
Secretary, in consultation with
stakeholders; and
``(III) any change in formulary
placement compared to the prior plan
year; and
``(iv) in the case that such plan (or an
entity providing pharmacy benefit management
services on behalf of such plan) has an
affiliated pharmacy or pharmacy under common
ownership, including mandatory mail and
specialty home delivery programs, retail and
mail auto-refill programs, and cost sharing
assistance incentives funded by an entity
providing pharmacy benefit services--
``(I) an explanation of any benefit
design parameters that encourage or
require participants and beneficiaries
in the plan to fill prescriptions at
mail order, specialty, or retail
pharmacies;
``(II) the percentage of total
prescriptions dispensed by such
pharmacies to participants or
beneficiaries in such plan; and
``(III) a list of all drugs
dispensed by such pharmacies to
participants or beneficiaries enrolled
in such plan, and, with respect to each
drug dispensed--
``(aa) the amount charged,
per dosage unit, per 30-day
supply, or per 90-day supply
(as applicable) to the plan,
and to participants and
beneficiaries;
``(bb) the median amount
charged to such plan, and the
interquartile range of the
costs, per dosage unit, per 30-
day supply, and per 90- day
supply, including amounts paid
by the participants and
beneficiaries, when the same
drug is dispensed by other
pharmacies that are not
affiliated with or under common
ownership with the entity and
that are included in the
pharmacy network of such plan;
``(cc) the lowest cost per
dosage unit, per 30-day supply
and per 90-day supply, for each
such drug, including amounts
charged to the plan and to
participants and beneficiaries,
that is available from any
pharmacy included in the
network of such plan; and
``(dd) the net acquisition
cost per dosage unit, per 30-
day supply, and per 90-day
supply, if such drug is subject
to a maximum price discount;
and
``(B) with respect to any group health plan,
regardless of whether the plan is offered by a
specified large employer or whether it is a specified
large plan--
``(i) a summary document for the group
health plan that includes such information
described in clauses (i) through (iv) of
subparagraph (A), as specified by the Secretary
through guidance, program instruction, or
otherwise (with no requirement of notice and
comment rulemaking), that the Secretary
determines useful to group health plans for
purposes of selecting pharmacy benefit
management services, such as an estimated net
price to group health plan and participant or
beneficiary, a cost per claim, the fee
structure or reimbursement model, and estimated
cost per participant or beneficiary;
``(ii) a summary document for plans to
provide to participants and beneficiaries,
which shall be made available to participants
or beneficiaries upon request to their group
health plan, that--
``(I) contains such information
described in clauses (iii), (iv), (v),
and (vi), as applicable, as specified
by the Secretary through guidance,
program instruction, or otherwise (with
no requirement of notice and comment
rulemaking) that the Secretary
determines useful to participants or
beneficiaries in better understanding
the plan or benefits under such plan;
``(II) contains only aggregate
information; and
``(III) states that participants
and beneficiaries may request specific,
claims-level information required to be
furnished under subsection (c) from the
group health plan;
``(iii) with respect to drugs covered by
such plan during such reporting period--
``(I) the total net spending by the
plan for all such drugs;
``(II) the total amount received,
or expected to be received, by the plan
from any applicable entity in rebates,
fees, alternative discounts, or other
remuneration; and
``(III) to the extent feasible,
information on the total amount of
remuneration for such drugs, including
copayment assistance dollars paid,
copayment cards applied, or other
discounts provided by each drug
manufacturer (or entity administering
copayment assistance on behalf of such
drug manufacturer) to participants and
beneficiaries;
``(iv) amounts paid directly or indirectly
in rebates, fees, or any other type of
compensation (as defined in section
408(b)(2)(B)(ii)(dd)(AA) of the Employee
Retirement Income Security Act (29 U.S.C.
1108(b)(2)(B)(ii)(dd)(AA))) to brokerage firms,
brokers, consultants, advisors, or any other
individual or firm, for--
``(I) the referral of the group
health plan's business to an entity
providing pharmacy benefit management
services, including the identity of the
recipient of such amounts;
``(II) consideration of the entity
providing pharmacy benefit management
services by the group health plan; or
``(III) the retention of the entity
by the group health plan;
``(v) an explanation of any benefit design
parameters that encourage or require
participants and beneficiaries in such plan to
fill prescriptions at mail order, specialty, or
retail pharmacies that are affiliated with or
under common ownership with the entity
providing pharmacy benefit management services
under such plan, including mandatory mail and
specialty home delivery programs, retail and
mail auto-refill programs, and cost-sharing
assistance incentives directly or indirectly
funded by such entity; and
``(vi) total gross spending on all drugs
under the plan during the reporting period.
``(3) Opt-in for group health insurance coverage offered by
a specified large employer or that is a specified large plan.--
In the case of group health insurance coverage offered in
connection with a group health plan that is offered by a
specified large employer or is a specified large plan, such
group health plan may, on an annual basis, for plan years
beginning on or after the date that is 30 months after the date
of enactment of this section, elect to require an entity
providing pharmacy benefit management services on behalf of the
health insurance issuer to submit to such group health plan a
report that includes all of the information described in
paragraph (2)(A), in addition to the information described in
paragraph (2)(B).
``(4) Privacy requirements.--
``(A) In general.--An entity providing pharmacy
benefit management services on behalf of a group health
plan shall report information under paragraph (1) in a
manner consistent with the privacy regulations
promulgated under section 13402(a) of the Health
Information Technology for Economic and Clinical Health
Act (42 U.S.C. 17932(a)) and consistent with the
privacy regulations promulgated under the Health
Insurance Portability and Accountability Act of 1996 in
part 160 and subparts A and E of part 164 of title 45,
Code of Federal Regulations (or successor regulations)
(referred to in this paragraph as the `HIPAA privacy
regulations') and shall restrict the use and disclosure
of such information according to such privacy
regulations and such HIPAA privacy regulations.
``(B) Additional requirements.--
``(i) In general.--An entity providing
pharmacy benefit management services on behalf
of a group health plan that submits a report
under paragraph (1) shall ensure that such
report contains only summary health
information, as defined in section 164.504(a)
of title 45, Code of Federal Regulations (or
successor regulations).
``(ii) Restrictions.--In carrying out this
subsection, a group health plan shall comply
with section 164.504(f) of title 45, Code of
Federal Regulations (or a successor
regulation), and a plan sponsor shall act in
accordance with the terms of the agreement
described in such section.
``(C) Rule of construction.--
``(i) Nothing in this section shall be
construed to modify the requirements for the
creation, receipt, maintenance, or transmission
of protected health information under the HIPAA
privacy regulations.
``(ii) Nothing in this section shall be
construed to affect the application of any
Federal or State privacy or civil rights law,
including the HIPAA privacy regulations, the
Genetic Information Nondiscrimination Act of
2008 (Public Law 110-233) (including the
amendments made by such Act), the Americans
with Disabilities Act of 1990 (42 U.S.C. 12101
et seq.), section 504 of the Rehabilitation Act
of 1973 (29 U.S.C. 794), section 1557 of the
Patient Protection and Affordable Care Act (42
U.S.C. 18116), title VI of the Civil Rights Act
of 1964 (42 U.S.C. 2000d), and title VII of the
Civil Rights Act of 1964 (42 U.S.C. 2000e).
``(D) Written notice.--Each plan year, group health
plans shall provide to each participant or beneficiary
written notice informing the participant or beneficiary
of the requirement for entities providing pharmacy
benefit management services on behalf of the group
health plan to submit reports to group health plans
under paragraph (1), as applicable, which may include
incorporating such notification in plan documents
provided to the participant or beneficiary, or
providing individual notification.
``(E) Limitation to business associates.--A group
health plan receiving a report under paragraph (1) may
disclose such information only to the entity from which
the report was received or to that entity's business
associates as defined in section 160.103 of title 45,
Code of Federal Regulations (or successor regulations)
or as permitted by the HIPAA privacy regulations.
``(F) Clarification regarding public disclosure of
information.--Nothing in this section shall prevent an
entity providing pharmacy benefit management services
on behalf of a group health plan, from placing
reasonable restrictions on the public disclosure of the
information contained in a report described in
paragraph (1), except that such plan or entity may
not--
``(i) restrict disclosure of such report to
the Department of Health and Human Services,
the Department of Labor, or the Department of
the Treasury; or
``(ii) prevent disclosure for the purposes
of subsection (c), or any other public
disclosure requirement under this section.
``(G) Limited form of report.--The Secretary shall
define through rulemaking a limited form of the report
under paragraph (1) required with respect to any group
health plan established by a plan sponsor that is, or
is affiliated with, a drug manufacturer, drug
wholesaler, or other direct participant in the drug
supply chain, in order to prevent anti-competitive
behavior.
``(5) Standard format and regulations.--
``(A) In general.--Not later than 18 months after
the date of enactment of this section, the Secretary
shall specify through rulemaking a standard format for
entities providing pharmacy benefit management services
on behalf of group health plans, to submit reports
required under paragraph (1).
``(B) Additional regulations.--Not later than 18
months after the date of enactment of this section, the
Secretary shall, through rulemaking, promulgate any
other final regulations necessary to implement the
requirements of this section. In promulgating such
regulations, the Secretary shall, to the extent
practicable, align the reporting requirements under
this section with the reporting requirements under
section 9825.
``(c) Requirement To Provide Information to Participants or
Beneficiaries.--A group health plan, upon request of a participant or
beneficiary, shall provide to such participant or beneficiary--
``(1) the summary document described in subsection
(b)(2)(B)(ii); and
``(2) the information described in subsection
(b)(2)(A)(i)(III) with respect to a claim made by or on behalf
of such participant or beneficiary.
``(d) Rule of Construction.--Nothing in this section shall be
construed to permit a health insurance issuer, group health plan,
entity providing pharmacy benefit management services on behalf of a
group health plan or health insurance issuer, or other entity to
restrict disclosure to, or otherwise limit the access of, the Secretary
to a report described in subsection (b)(1) or information related to
compliance with subsections (a), (b), or (c) of this section or section
4980D(g) by such issuer, plan, or entity.
``(e) Definitions.--In this section:
``(1) Applicable entity.--The term `applicable entity'
means--
``(A) an applicable group purchasing organization,
drug manufacturer, distributor, wholesaler, rebate
aggregator (or other purchasing entity designed to
aggregate rebates), or associated third party;
``(B) any subsidiary, parent, affiliate, or
subcontractor of a group health plan, health insurance
issuer, entity that provides pharmacy benefit
management services on behalf of such a plan or issuer,
or any entity described in subparagraph (A); or
``(C) such other entity as the Secretary may
specify through rulemaking.
``(2) Applicable group purchasing organization.--The term
`applicable group purchasing organization' means a group
purchasing organization that is affiliated with or under common
ownership with an entity providing pharmacy benefit management
services.
``(3) Contracted compensation.--The term `contracted
compensation' means the sum of any ingredient cost and
dispensing fee for a drug (inclusive of the out-of-pocket costs
to the participant or beneficiary), or another analogous
compensation structure that the Secretary may specify through
regulations.
``(4) Gross spending.--The term `gross spending', with
respect to prescription drug benefits under a group health
plan, means the amount spent by a group health plan on
prescription drug benefits, calculated before the application
of rebates, fees, alternative discounts, or other remuneration.
``(5) Net spending.--The term `net spending', with respect
to prescription drug benefits under a group health plan, means
the amount spent by a group health plan on prescription drug
benefits, calculated after the application of rebates, fees,
alternative discounts, or other remuneration.
``(6) Plan sponsor.--The term `plan sponsor' has the
meaning given such term in section 3(16)(B) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1002(16)(B)).
``(7) Remuneration.--The term `remuneration' has the
meaning given such term by the Secretary, through rulemaking,
which shall be reevaluated by the Secretary every 5 years.
``(8) Specified large employer.--The term `specified large
employer' means, in connection with a group health plan
established or maintained by a single employer, with respect to
a calendar year or a plan year, as applicable, an employer who
employed an average of at least 100 employees on business days
during the preceding calendar year or plan year and who employs
at least 1 employee on the first day of the calendar year or
plan year.
``(9) Specified large plan.--The term `specified large
plan' means a group health plan established or maintained by a
plan sponsor described in clause (ii) or (iii) of section
3(16)(B) of the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1002(16)(B)) that had an average of at least 100
participants on business days during the preceding calendar
year or plan year, as applicable.
``(10) Wholesale acquisition cost.--The term `wholesale
acquisition cost' has the meaning given such term in section
1847A(c)(6)(B) of the Social Security Act (42 U.S.C. 1395w-
3a(c)(6)(B)).''.
(2) Exception for certain group health plans.--Section
9831(a)(2) of the Internal Revenue Code of 1986 is amended by
inserting ``other than with respect to section 9826,'' before
``any group health plan''.
(3) Enforcement.--Section 4980D of the Internal Revenue
Code of 1986 is amended by adding at the end the following new
subsection:
``(g) Application to Requirements Imposed on Certain Entities
Providing Pharmacy Benefit Management Services.--In the case of any
requirement under section 9826 that applies with respect to an entity
providing pharmacy benefit management services on behalf of a group
health plan, any reference in this section to such group health plan
(and the reference in subsection (e)(1) to the employer) shall be
treated as including a reference to such entity.''.
(4) Clerical amendment.--The table of sections for
subchapter B of chapter 100 of the Internal Revenue Code of
1986 is amended by adding at the end the following new item:
``Sec. 9826. Oversight of entities that provide pharmacy benefit
management services.''.
SEC. 5. ENSURING ACCURATE PAYMENTS TO PHARMACIES UNDER MEDICAID.
(a) In General.--Section 1927(f) of the Social Security Act (42
U.S.C. 1396r-8(f)) is amended--
(1) in paragraph (1)(A)--
(A) by redesignating clause (ii) as clause (iii);
and
(B) by striking ``and'' after the semicolon at the
end of clause (i) and all that precedes it through
``(1)'' and inserting the following:
``(1) Determining pharmacy actual acquisition costs.--The
Secretary shall conduct a survey of retail community pharmacy
drug prices and applicable non-retail pharmacy drug prices to
determine national average drug acquisition cost benchmarks (as
such term is defined by the Secretary) as follows:
``(A) Use of vendor.--The Secretary may contract
services for--
``(i) with respect to retail community
pharmacies, the determination of retail survey
prices of the national average drug acquisition
cost for covered outpatient drugs that
represent a nationwide average of consumer
purchase prices for such drugs, net of all
discounts, rebates, and other price concessions
(to the extent any information with respect to
such discounts, rebates, and other price
concessions is available) based on a monthly
survey of such pharmacies;
``(ii) with respect to applicable non-
retail pharmacies--
``(I) the determination of survey
prices, separate from the survey prices
described in clause (i), of the non-
retail national average drug
acquisition cost for covered outpatient
drugs that represent a nationwide
average of consumer purchase prices for
such drugs, net of all discounts,
rebates, and other price concessions
(to the extent any information with
respect to such discounts, rebates, and
other price concessions is available)
based on a monthly survey of such
pharmacies; and
``(II) at the discretion of the
Secretary, for each type of applicable
non-retail pharmacy, the determination
of survey prices, separate from the
survey prices described in clause (i)
or subclause (I) of this clause, of the
national average drug acquisition cost
for such type of pharmacy for covered
outpatient drugs that represent a
nationwide average of consumer purchase
prices for such drugs, net of all
discounts, rebates, and other price
concessions (to the extent any
information with respect to such
discounts, rebates, and other price
concessions is available) based on a
monthly survey of such pharmacies;
and'';
(2) in subparagraph (B) of paragraph (1), by striking
``subparagraph (A)(ii)'' and inserting ``subparagraph
(A)(iii)'';
(3) in subparagraph (D) of paragraph (1), by striking
clauses (ii) and (iii) and inserting the following:
``(ii) The vendor must update the Secretary
no less often than monthly on the survey prices
for covered outpatient drugs.
``(iii) The vendor must differentiate, in
collecting and reporting survey data, for all
cost information collected, whether a pharmacy
is a retail community pharmacy or an applicable
non-retail pharmacy, including whether such
pharmacy is an affiliate (as defined in
subsection (k)(14)), and, in the case of an
applicable non-retail pharmacy, which type of
applicable non-retail pharmacy it is using the
relevant pharmacy type indicators included in
the guidance required by subsection (d)(2) of
section 44123 of the Act titled `An Act to
provide for reconciliation pursuant to title II
of H. Con. Res. 14.''';
(4) by adding at the end of paragraph (1) the following:
``(F) Survey reporting.--In order to meet the
requirement of section 1902(a)(54), a State shall
require that any retail community pharmacy or
applicable non-retail pharmacy in the State that
receives any payment, reimbursement, administrative
fee, discount, rebate, or other price concession
related to the dispensing of covered outpatient drugs
to individuals receiving benefits under this title,
regardless of whether such payment, reimbursement,
administrative fee, discount, rebate, or other price
concession is received from the State or a managed care
entity or other specified entity (as such terms are
defined in section 1903(m)(9)(D)) directly or from a
pharmacy benefit manager or another entity that has a
contract with the State or a managed care entity or
other specified entity (as so defined), shall respond
to surveys conducted under this paragraph.
``(G) Survey information.--Information on national
drug acquisition prices obtained under this paragraph
shall be made publicly available in a form and manner
to be determined by the Secretary and shall include at
least the following:
``(i) The monthly response rate to the
survey including a list of pharmacies not in
compliance with subparagraph (F).
``(ii) The sampling methodology and number
of pharmacies sampled monthly.
``(iii) Information on price concessions to
pharmacies, including discounts, rebates, and
other price concessions, to the extent that
such information may be publicly released and
has been collected by the Secretary as part of
the survey.
``(H) Penalties.--
``(i) In general.--Subject to clauses (ii),
(iii), and (iv), the Secretary shall enforce
the provisions of this paragraph with respect
to a pharmacy through the establishment of
civil money penalties applicable to a retail
community pharmacy or an applicable non-retail
pharmacy.
``(ii) Basis for penalties.--The Secretary
shall impose a civil money penalty established
under this subparagraph on a retail community
pharmacy or applicable non-retail pharmacy if--
``(I) the retail pharmacy or
applicable non-retail pharmacy refuses
or otherwise fails to respond to a
request for information about prices in
connection with a survey under this
subsection;
``(II) knowingly provides false
information in response to such a
survey; or
``(III) otherwise fails to comply
with the requirements established under
this paragraph.
``(iii) Parameters for penalties.--
``(I) In general.--A civil money
penalty established under this
subparagraph may be assessed with
respect to each violation, and with
respect to each non-compliant retail
community pharmacy (including a
pharmacy that is part of a chain) or
non-compliant applicable non-retail
pharmacy (including a pharmacy that is
part of a chain), in an amount not to
exceed $100,000 for each such
violation.
``(II) Considerations.--In
determining the amount of a civil money
penalty imposed under this
subparagraph, the Secretary may
consider the size, business structure,
and type of pharmacy involved, as well
as the type of violation and other
relevant factors, as determined
appropriate by the Secretary.
``(iv) Rule of application.--The provisions
of section 1128A (other than subsections (a)
and (b)) shall apply to a civil money penalty
under this subparagraph in the same manner as
such provisions apply to a civil money penalty
or proceeding under section 1128A(a).
``(I) Limitation on use of
applicable non-retail pharmacy pricing
information.--No State shall use
pricing information reported by
applicable non-retail pharmacies under
subparagraph (A)(ii) to develop or
inform payment methodologies for retail
community pharmacies.'';
(5) in paragraph (2)--
(A) in subparagraph (A), by inserting ``, including
payment rates and methodologies for determining
ingredient cost reimbursement under managed care
entities or other specified entities (as such terms are
defined in section 1903(m)(9)(D)),'' after ``under this
title''; and
(B) in subparagraph (B), by inserting ``and the
basis for such dispensing fees'' before the semicolon;
(6) by redesignating paragraph (4) as paragraph (5);
(7) by inserting after paragraph (3) the following new
paragraph:
``(4) Oversight.--
``(A) In general.--The Inspector General of the
Department of Health and Human Services shall conduct
periodic studies of the survey data reported under this
subsection, as appropriate, including with respect to
substantial variations in acquisition costs or other
applicable costs, as well as with respect to how
internal transfer prices and related party transactions
may influence the costs reported by pharmacies that are
affiliates (as defined in subsection (k)(14)) or are
owned by, controlled by, or related under a common
ownership structure with a wholesaler, distributor, or
other entity that acquires covered outpatient drugs
relative to costs reported by pharmacies not affiliated
with such entities. The Inspector General shall provide
periodic updates to Congress on the results of such
studies, as appropriate, in a manner that does not
disclose trade secrets or other proprietary
information.
``(B) Appropriation.--There is appropriated to the
Inspector General of the Department of Health and Human
Services, out of any money in the Treasury not
otherwise appropriated, $5,000,000 for fiscal year
2025, to remain available until expended, to carry out
this paragraph.''; and
(8) in paragraph (5), as so redesignated--
(A) by inserting ``, and $9,000,000 for fiscal year
2025 and each fiscal year thereafter,'' after ``2010'';
and
(B) by inserting ``Funds appropriated under this
paragraph for fiscal year 2025 and any subsequent
fiscal year shall remain available until expended.''
after the period.
(b) Definitions.--Section 1927(k) of the Social Security Act (42
U.S.C. 1396r-8(k)) is amended--
(1) in the matter preceding paragraph (1), by striking ``In
the section'' and inserting ``In this section''; and
(2) by adding at the end the following new paragraphs:
``(12) Applicable non-retail pharmacy.--The term
`applicable non-retail pharmacy' means a pharmacy that is
licensed as a pharmacy by the State and that is not a retail
community pharmacy, including a pharmacy that dispenses
prescription medications to patients primarily through mail and
specialty pharmacies. Such term does not include nursing home
pharmacies, long-term care facility pharmacies, hospital
pharmacies, clinics, charitable or not-for-profit pharmacies,
government pharmacies, or low dispensing pharmacies (as defined
by the Secretary).
``(13) 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 or a
managed care entity or other specified entity (as such terms
are defined in section 1903(m)(9)(D)).''.
(c) Effective Date.--
(1) In general.--Subject to paragraph (2), the amendments
made by this section shall take effect on the first day of the
first quarter that begins on or after the date that is 6 months
after the date of enactment of this Act.
(2) Delayed application to applicable non-retail
pharmacies.--The pharmacy survey requirements established by
the amendments to section 1927(f) of the Social Security Act
(42 U.S.C. 1396r-8(f)) made by this section shall apply to
retail community pharmacies beginning on the effective date
described in paragraph (1), but shall not apply to applicable
non-retail pharmacies until the first day of the first quarter
that begins on or after the date that is 18 months after the
date of enactment of this Act.
(d) Identification of Applicable Non-Retail Pharmacies.--
(1) In general.--Not later than January 1, 2027, the
Secretary of Health and Human Services shall publish guidance
specifying pharmacies that meet the definition of applicable
non-retail pharmacies (as such term is defined in subsection
(k)(12) of section 1927 of the Social Security Act (42 U.S.C.
1396r-8), as added by subsection (b)), and that will be subject
to the survey requirements under subsection (f)(1) of such
section, as amended by subsection (a).
(2) Inclusion of pharmacy type indicators.--The guidance
published under paragraph (1) shall include pharmacy type
indicators to distinguish between different types of applicable
non-retail pharmacies, such as pharmacies that dispense
prescriptions primarily through the mail and pharmacies that
dispense prescriptions that require special handling or
distribution. An applicable non-retail pharmacy may be
identified through multiple pharmacy type indicators.
(e) Implementation.--
(1) Implementation of the amendments made by this section
shall be exempt from the requirements of section 553 of title
5, United States Code.
(f) Nonapplication of Paperwork Reduction Act.--Chapter 35 of title
44, United States Code, shall not apply to any data collection
undertaken by the Secretary of Health and Human Services under section
1927(f) of the Social Security Act (42 U.S.C. 1396r-8(f)), as amended
by this section.
SEC. 6. PREVENTING THE USE OF ABUSIVE SPREAD PRICING IN MEDICAID.
(a) In General.--Section 1927 of the Social Security Act (42 U.S.C.
1396r-8) is amended--
(1) in subsection (e), by adding at the end the following
new paragraph:
``(6) Transparent prescription drug pass- through pricing
required.--
``(A) In general.--A contract between the State and
a pharmacy benefit manager (referred to in this
paragraph as a `PBM'), or a contract between the State
and a managed care entity or other specified entity (as
such terms are defined in section 1903(m)(9)(D) and
collectively referred to in this paragraph as the
`entity') that includes provisions making the entity
responsible for coverage of covered outpatient drugs
dispensed to individuals enrolled with the entity,
shall require that payment for such drugs and related
administrative services (as applicable), including
payments made by a PBM on behalf of the State or
entity, is based on a transparent prescription drug
pass-through pricing model under which--
``(i) any payment made by the entity or the
PBM (as applicable) for such a drug--
``(I) is limited to--
``(aa) ingredient cost; and
``(bb) a professional
dispensing fee that is not less
than the professional
dispensing fee that the State
would pay if the State were
making the payment directly in
accordance with the State plan;
``(II) is passed through in its
entirety (except as reduced under
Federal or State laws and regulations
in response to instances of waste,
fraud, or abuse) by the entity or PBM
to the pharmacy or provider that
dispenses the drug; and
``(III) is made in a manner that is
consistent with sections 447.502,
447.512, 447.514, and 447.518 of title
42, Code of Federal Regulations (or any
successor regulation) as if such
requirements applied directly to the
entity or the PBM, except that any
payment by the entity or the PBM for
the ingredient cost of such drug
purchased by a covered entity (as
defined in subsection (a)(5)(B)) may
exceed the actual acquisition cost (as
defined in 447.502 of title 42, Code of
Federal Regulations, or any successor
regulation) for such drug if--
``(aa) such drug was
subject to an agreement under
section 340B of the Public
Health Service Act;
``(bb) such payment for the
ingredient cost of such drug
does not exceed the maximum
payment that would have been
made by the entity or the PBM
for the ingredient cost of such
drug if such drug had not been
purchased by such covered
entity; and
``(cc) such covered entity
reports to the Secretary (in a
form and manner specified by
the Secretary), on an annual
basis and with respect to
payments for the ingredient
costs of such drugs so
purchased by such covered
entity that are in excess of
the actual acquisition costs
for such drugs, the aggregate
amount of such excess;
``(ii) payment to the entity or the PBM (as
applicable) for administrative services
performed by the entity or PBM is limited to an
administrative fee that reflects the fair
market value (as defined by the Secretary) of
such services;
``(iii) the entity or the PBM (as
applicable) makes available to the State, and
the Secretary upon request in a form and manner
specified by the Secretary, all costs and
payments related to covered outpatient drugs
and accompanying administrative services (as
described in clause (ii)) incurred, received,
or made by the entity or the PBM, broken down
(as specified by the Secretary), to the extent
such costs and payments are attributable to an
individual covered outpatient drug, by each
such drug, including any ingredient costs,
professional dispensing fees, administrative
fees (as described in clause (ii)), post-sale
and post-invoice fees, discounts, or related
adjustments such as direct and indirect
remuneration fees, and any and all other
remuneration, as defined by the Secretary; and
``(iv) any form of spread pricing whereby
any amount charged or claimed by the entity or
the PBM (as applicable) that exceeds the amount
paid to the pharmacies or providers on behalf
of the State or entity, including any post-sale
or post-invoice fees, discounts, or related
adjustments such as direct and indirect
remuneration fees or assessments, as defined by
the Secretary, (after allowing for an
administrative fee as described in clause (ii))
is not allowable for purposes of claiming
Federal matching payments under this title.
``(B) Publication of information.--The Secretary
shall publish, not less frequently than on an annual
basis and in a manner that does not disclose the
identity of a particular covered entity or
organization, information received by the Secretary
pursuant to subparagraph (A)(iii)(III) that is broken
out by State and by each of the following categories of
covered entity within each such State:
``(i) Covered entities described in
subparagraph (A) of section 340B(a)(4) of the
Public Health Service Act.
``(ii) Covered entities described in
subparagraphs (B) through (K) of such section.
``(iii) Covered entities described in
subparagraph (L) of such section.
``(iv) Covered entities described in
subparagraph (M) of such section.
``(v) Covered entities described in
subparagraph (N) of such section.
``(vi) Covered entities described in
subparagraph (O) of such section.''; and
(2) in subsection (k), as previously amended by this title,
by adding at the end the following new paragraph:
``(14) 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 State, managed care entity
(as defined in section 1903(m)(9)(D)), or other specified
entity (as so defined), or manages the prescription drug
benefits provided by a State, managed care entity, or other
specified entity, including the processing and payment of
claims for prescription drugs, the performance of drug
utilization review, the processing of drug prior authorization
requests, the managing of appeals or grievances related to the
prescription drug benefits, contracting with pharmacies,
controlling the cost of covered outpatient drugs, or the
provision of services related thereto. Such term includes any
person or entity that acts as a price negotiator (with regard
to payment amounts to pharmacies and providers for a covered
outpatient drug or the net cost of the drug) or group purchaser
on behalf of a State, managed care entity, or other specified
entity or that carries out 1 or more of the other activities
described in the preceding sentence, irrespective of whether
such person or entity calls itself a pharmacy benefit
manager.''.
(b) Conforming Amendments.--Section 1903(m) of such Act (42 U.S.C.
1396b(m)) is amended--
(1) in paragraph (2)(A)(xiii)--
(A) by striking ``and (III)'' and inserting
``(III)'';
(B) by inserting before the period at the end the
following: ``, and (IV) if the contract includes
provisions making the entity responsible for coverage
of covered outpatient drugs, the entity shall comply
with the requirements of section 1927(e)(6)''; and
(C) by moving the margin 2 ems to the left; and
(2) by adding at the end the following new paragraph:
``(10) No payment shall be made under this title to
a State with respect to expenditures incurred by the
State for payment for services provided by an other
specified entity (as defined in paragraph (9)(D)(iii))
unless such services are provided in accordance with a
contract between the State and such entity which
satisfies the requirements of paragraph
(2)(A)(xiii).''.
(c) Effective Date.--The amendments made by this section shall
apply to contracts between States and managed care entities, other
specified entities, or pharmacy benefit managers that have an effective
date beginning on or after the date that is 18 months after the date of
enactment of this Act.
(d) Implementation.--
(1) Implementation of the amendments made by this section
shall be exempt from the requirements of section 553 of title
5, United States Code.
(e) Nonapplication of Paperwork Reduction Act.--Chapter 35 of title
44, United States Code, shall not apply to any data collection
undertaken by the Secretary of Health and Human Services under section
1927(e) of the Social Security Act (42 U.S.C. 1396r-8(e)), as amended
by this section.
<all>