Generic Drug Pricing Fairness Act

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Generic Drug Pricing Fairness Act''.

SEC. 2. PHARMACY BENEFITS MANAGER STANDARDS UNDER THE MEDICARE PROGRAM.

    (a) In General.--Section 1860D-12(b) of the Social Security Act (42 
U.S.C. 1395w-112(b)) is amended by adding at the end the following new 
paragraph:
            ``(7) Pharmacy benefits manager transparency 
        requirements.--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 the PDP may not 
        enter into a contract with any pharmacy benefits manager 
        (referred to in this paragraph as a `PBM') to manage the 
        prescription drug coverage provided under such plan, or to 
        control the costs of the prescription drug coverage under such 
        plan, unless the PBM adheres to the following criteria when 
        handling personally identifiable utilization and claims data or 
        other sensitive patient data:
                    ``(A) The PBM may not transmit any personally 
                identifiable utilization or claims data, with respect 
                to a plan enrollee, to a pharmacy owned by a PBM if the 
                plan enrollee has not voluntarily elected in writing or 
                via secure electronic means to fill that particular 
                prescription at the PBM-owned pharmacy.
                    ``(B) The PBM may not require that a plan enrollee 
                use a retail pharmacy, mail order pharmacy, specialty 
                pharmacy, or other pharmacy entity providing pharmacy 
                services in which the PBM has an ownership interest or 
                that has an ownership interest in the PBM or provide an 
                incentive to a plan enrollee to encourage the enrollee 
                to use a retail pharmacy, mail order pharmacy, 
                specialty pharmacy, or other pharmacy entity providing 
                pharmacy services in which the PBM has an ownership 
                interest or that has an ownership interest in the PBM, 
                if the incentive is applicable only to such 
                pharmacies.''.
    (b) Regular Update of Prescription Drug Pricing Standard.--
Paragraph (6) of section 1860D-12(b) of the Social Security Act (42 
U.S.C. 1395w-112(b)) is amended to read as follows:
            ``(6) Regular update of prescription drug pricing 
        standard.--
                    ``(A) In general.--If the PDP sponsor of a 
                prescription drug plan uses a standard for 
                reimbursement (as described in subparagraph (B)) of 
                pharmacies based on the cost of a drug, each contract 
                entered into with such sponsor under this part with 
                respect to the plan shall provide that the sponsor 
                shall--
                            ``(i) update such standard not less 
                        frequently than once every 7 days, beginning 
                        with an initial update on January 1 of each 
                        year, to accurately reflect the market price of 
                        acquiring the drug;
                            ``(ii) disclose to applicable pharmacies 
                        the sources used for making any such update;
                            ``(iii) if the source for such a standard 
                        for reimbursement is not publicly available, 
                        disclose to the applicable pharmacies all 
                        individual drug prices to be so updated in 
                        advance of the use of such prices for the 
                        reimbursement of claims; and
                            ``(iv) establish a process to appeal, 
                        investigate, and resolve disputes regarding 
                        individual drug prices that are less than the 
                        pharmacy acquisition price for such drug.
                    ``(B) Prescription drug pricing standard defined.--
                For purposes of subparagraph (A), a standard for 
                reimbursement of a pharmacy is any methodology or 
                formula for varying the pricing of a drug or drugs 
                during the term of the pharmacy reimbursement contract 
                that is based on the cost of the drug involved, 
                including drug pricing references and amounts that are 
                based upon average wholesale price, wholesale average 
                cost, average manufacturer price, average sales price, 
                maximum allowable cost (MAC), or other costs, whether 
                publicly available or not.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to plan years beginning on or after January 1, 2015.

SEC. 3. REGULAR UPDATE OF PRESCRIPTION DRUG PRICING STANDARD UNDER 
              TRICARE RETAIL PHARMACY PROGRAM.

    Section 1074g(d) of title 10, United States Code, is amended by 
adding at the end the following new paragraph:
    ``(3) To the extent practicable, with respect to the TRICARE retail 
pharmacy program described in subsection (a)(2)(E)(ii), the Secretary 
shall ensure that a contract entered into with a TRICARE managed care 
support contractor includes requirements described in section 1860D-
12(b)(6) of the Social Security Act (42 U.S.C. 1395w-112(b)(6)) to 
ensure the provision of information regarding the pricing standard for 
prescription drugs.''.

SEC. 4. PRESCRIPTION DRUG TRANSPARENCY IN THE FEDERAL EMPLOYEE HEALTH 
              BENEFITS PROGRAM.

    (a) In General.--Section 8902 of title 5, United States Code, is 
amended by adding at the end the following new subsections:
    ``(p) A contract may not be made or a plan approved under this 
chapter under which a carrier has an agreement with a pharmacy benefits 
manager (in this subsection referred to as a `PBM') to manage 
prescription drug coverage or to control the costs of the prescription 
drug coverage unless the carrier and PBM adhere to the following 
criteria:
            ``(1) The PBM may not transmit any personally identifiable 
        utilization or claims data with respect to an individual 
        enrolled under such contract or plan to a pharmacy owned by the 
        PBM if the individual has not voluntarily elected in writing or 
        via secure electronic means to fill that particular 
        prescription at such a pharmacy.
            ``(2) The PBM may not require that an individual enrolled 
        under such contract or plan use a retail pharmacy, mail order 
        pharmacy, specialty pharmacy, or other pharmacy entity 
        providing pharmacy services in which the PBM has an ownership 
        interest or that has an ownership interest in the PBM or 
        provide an incentive to a plan enrollee to encourage the 
        enrollee to use a retail pharmacy, mail order pharmacy, 
        specialty pharmacy, or other pharmacy entity providing pharmacy 
        services in which the PBM has an ownership interest or that has 
        an ownership interest in the PBM, if the incentive is 
        applicable only to such pharmacies.
    ``(q)(1) If a contract made or plan approved under this chapter 
provides for a standard for reimbursement (as described in paragraph 
(2)) with respect to a prescription drug plan, such contract or plan 
shall provide that the applicable carrier--
            ``(A) update such standard not less frequently than once 
        every 7 days, beginning with an initial update on January 1 of 
        each year, to accurately reflect the market price of acquiring 
        the drug;
            ``(B) disclose to applicable pharmacies the sources used 
        for making any such update;
            ``(C) if the source for such a standard for reimbursement 
        is not publicly available, disclose to the applicable 
        pharmacies all individual drug prices to be so updated in 
        advance of the use of such prices for the reimbursement of 
        claims; and
            ``(D) establish a process to appeal, investigate, and 
        resolve disputes regarding individual drug prices that are less 
        than the pharmacy acquisition price for such drug.
    ``(2) For purposes of paragraph (1), a standard for reimbursement 
of a pharmacy is any methodology or formula for varying the pricing of 
a drug or drugs during the term of the pharmacy reimbursement contract 
that is based on the cost of the drug involved, including drug pricing 
references and amounts that are based upon average wholesale price, 
wholesale average cost, average manufacturer price, average sales 
price, maximum allowable cost, or other costs, whether publicly 
available or not.''.
    (b) Application.--The amendment made by subsection (a) shall apply 
to any contract entered into under section 8902 of title 5, United 
States Code, on or after the date of enactment of this section.

Summary: Generic Drug Pricing Fairness Act - Amends part D of title XVIII (Medicare) of the Social Security Act to require each contract entered into with a prescription drug plan (PDP) sponsor with respect to a PDP the sponsor offers to prohibit the PDP from entering into a contract with any pharmacy benefits manager (PBM) to manage the prescription drug coverage provided under such plan, or to control the costs of the prescription drug coverage under it, unless the PBM adheres to specified criteria when handling personally identifiable utilization and claims data or other sensitive patient data. Revises requirements for contracts with PDP sponsors to require that the PDP sponsor disclose to applicable pharmacies the sources used for making any update of the prescription drug pricing standard, and if the source for such a standard is not publicly available, disclose to such pharmacies all individual drug prices to be so updated in advance of their use for the reimbursement of claims. Requires the PDP sponsor, as well, to establish a process to appeal, investigate, and resolve disputes regarding individual drug prices that are less than the pharmacy acquisition price for a drug. Directs the Secretary of Defense (DOD), with respect to the TRICARE retail pharmacy program, to ensure that a contract entered into with a TRICARE managed care support contractor includes requirements to ensure the provision of information regarding the pricing standard for prescription drugs. Establishes criteria to which a carrier and a PBM must adhere under a contract or an approved plan under which the carrier has an agreement with the PBM to manage prescription drug coverage or to control the costs of such coverage. Prohibits a PBM under such criteria from: (1) transmitting to a pharmacy owned by the PBM any personally identifiable utilization or claims data relating to an enrolled individual who has not voluntarily elected in writing or via secure electronic means to fill that particular prescription at such a pharmacy. Or (2) requiring any enrolled individual to use a retail pharmacy, mail order pharmacy, specialty pharmacy, or other pharmacy entity in which the PBM has an ownership interest, or that has an ownership interest in the PBM, or give an incentive to encourage an enrollee to use the pharmacy if the incentive applies only to those pharmacies. Requires any contract or approved plan providing for a reimbursement standard with respect to a PDP to require the carrier to: (1) update the standard at least once every seven days to reflect the market price of a drug accurately. (2) disclose to pharmacies the sources used for making any such update. (3) make advance disclosure to those pharmacies of all individual drug prices to be updated if the source for a standard is not publicly available. And (4) establish a process to appeal, investigate, and resolve disputes regarding individual drug prices less than the pharmacy acquisition price.