I 

116TH CONGRESS 

1ST SESSION H. R. 5304 

To amend title XXVII of the Public Health Service Act to require health 

plan oversight of pharmacy benefit manager services, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

DECEMBER 4, 2019 

Mr. SCHRADER (for himself and Mr. GIANFORTE) introduced the following 

bill; which was referred to the Committee on Energy and Commerce 

A BILL 

To amend title XXVII of the Public Health Service Act 

to require health plan oversight of pharmacy benefit 

manager services, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘PBM Transparency 

5 in Prescription Drug Costs Act’’. 

6 SEC. 2. HEALTH PLAN OVERSIGHT OF PHARMACY BENEFIT 

7 MANAGER SERVICES. 

8 Subpart II of part A of title XXVII of the Public 

9 Health Service Act (42 U.S.C. 300gg–11 et seq.) is 

10 amended by adding at the end the following: 


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1 ‘‘SEC. 2729A. HEALTH PLAN OVERSIGHT OF PHARMACY 

2 BENEFIT MANAGER SERVICES. 

3 ‘‘(a) IN GENERAL.—A group health plan or health 

4 insurance issuer offering group or individual health insur5 ance coverage or an entity or subsidiary providing phar6 macy benefits management services shall not enter into 

7 a contract with a drug manufacturer, distributor, whole8 saler, subcontractor, rebate aggregator, or any associated 

9 third party that limits the disclosure of information to 

10 plan sponsors in such a manner that prevents the plan 

11 or coverage, or an entity or subsidiary providing pharmacy 

12 benefits management services on behalf of a plan or cov13 erage from making the reports described in subsection (b). 

14 ‘‘(b) REPORTS TO GROUP PLAN SPONSORS.— 

15 ‘‘(1) IN GENERAL.—Beginning with the first 

16 plan year that begins after the date of enactment of 

17 this section, not less frequently than once every six 

18 months, a health insurance issuer offering group 

19 health insurance coverage or an entity providing 

20 pharmacy benefits management services on behalf of 

21 a group health plan shall submit to the self-funded 

22 group health plan and at the request of any other 

23 group health plan a report in accordance with this 

24 subsection and make such report available to the 

25 plan sponsor in a machine-readable format. Each 


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1 such report shall include, with respect to the applica2 ble group health plan or health insurance coverage— 

3 ‘‘(A) information collected from drug man4 ufacturers by such issuer or entity on the total 

5 amount of copayment assistance dollars paid, or 

6 copayment cards applied, that were funded by 

7 the drug manufacturer with respect to the en8 rollees in such plan or coverage; 

9 ‘‘(B) a list of each covered drug dispensed 

10 during the reporting period, including, with re11 spect to each such drug during the reporting 

12 period— 

13 ‘‘(i) the brand name, chemical entity, 

14 and National Drug Code; 

15 ‘‘(ii) the number of enrollees for 

16 whom the drug was filled during the plan 

17 year, the total number of prescription fills 

18 for the drug (including original prescrip19 tions and refills), and the total number of 

20 dosage units of the drug dispensed across 

21 the plan year, including whether the dis22 pensing channel was by retail, mail order, 

23 or specialty pharmacy; 

24 ‘‘(iii) the wholesale acquisition cost, 

25 listed as cost per days supply and cost per 


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1 pill, or in the case of a drug in another 

2 form, per dose; 

3 ‘‘(iv) the total out-of-pocket spending 

4 by enrollees on such drug, including en5 rollee spending through copayments, coin6 surance, and deductibles; and 

7 ‘‘(v) for any drug for which gross 

8 spending of the group health plan or 

9 health insurance coverage exceeded 

10 $10,000 during the reporting period— 

11 ‘‘(I) a list of all other available 

12 drugs in the same therapeutic cat13 egory or class, including brand name 

14 drugs and biological products and ge15 neric drugs or biosimilar biological 

16 products that are in the same thera17 peutic category or class; and 

18 ‘‘(II) the rationale for preferred 

19 formulary placement of a particular 

20 drug or drugs in that therapeutic cat21 egory or class; 

22 ‘‘(C) a list of each therapeutic category or 

23 class of drugs that were dispensed under the 

24 health plan or health insurance coverage during 

25 the reporting period, and, with respect to each 


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1 such therapeutic category or class of drugs, 

2 during the reporting period— 

3 ‘‘(i) total gross spending by the plan, 

4 before manufacturer rebates, fees, or other 

5 manufacturer remuneration; 

6 ‘‘(ii) the number of enrollees who 

7 filled a prescription for a drug in that cat8 egory or class; 

9 ‘‘(iii) if applicable to that category or 

10 class, a description of the formulary tiers 

11 and utilization mechanisms (such as prior 

12 authorization or step therapy) employed 

13 for drugs in that category or class; 

14 ‘‘(iv) the total out-of-pocket spending 

15 by enrollees, including enrollee spending 

16 through copayments, coinsurance, and 

17 deductibles; and 

18 ‘‘(v) for each therapeutic category or 

19 class under which three or more drugs are 

20 marketed and available— 

21 ‘‘(I) the amount received, or ex22 pected to be received, from drug man23 ufacturers in rebates, fees, alternative 

24 discounts, or other remuneration— 


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1 ‘‘(aa) to be paid by drug 

2 manufacturers for claims in3 curred during the reporting pe4 riod; or 

5 ‘‘(bb) that is related to utili6 zation of drugs, in such thera7 peutic category or class; 

8 ‘‘(II) the total net spending by 

9 the health plan or health insurance 

10 coverage on that category or class of 

11 drugs; and 

12 ‘‘(III) the net price per dosage 

13 unit or course of treatment incurred 

14 by the health plan or health insurance 

15 coverage and its enrollees, after man16 ufacturer rebates, fees, and other re17 muneration for drugs dispensed within 

18 such therapeutic category or class 

19 during the reporting period; 

20 ‘‘(D) total gross spending on prescription 

21 drugs by the plan or coverage during the re22 porting period, before rebates and other manu23 facturer fees or remuneration; 

24 ‘‘(E) total amount received, or expected to 

25 be received, by the health plan or health insurVerDate Sep 11 2014 03:44 Dec 11, 2019 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H5304.IH H5304

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1 ance coverage in drug manufacturer rebates, 

2 fees, alternative discounts, and all other remu3 neration received from the manufacturer or any 

4 third party related to utilization of drug or 

5 drug spending under that health plan or health 

6 insurance coverage during the reporting period; 

7 ‘‘(F) the total net spending on prescription 

8 drugs by the health plan or health insurance 

9 coverage during the reporting period; and 

10 ‘‘(G) amounts paid directly or indirectly in 

11 rebates, fees, or any other type of remuneration 

12 to brokers, consultants, advisors, or any other 

13 individual or firm who referred the group health 

14 plan’s or health insurance issuer’s business to 

15 the pharmacy benefit manager. 

16 ‘‘(2) PRIVACY REQUIREMENTS.—Health insur17 ance issuers offering group health insurance cov18 erage and entities providing pharmacy benefits man19 agement services on behalf of a group health plan 

20 shall provide information under paragraph (1) in a 

21 manner consistent with the privacy, security, and 

22 breach notification regulations promulgated under 

23 section 264(c) of the Health Insurance Portability 

24 and Accountability Act of 1996 (or successor regula25 tions), and shall restrict the use and disclosure of 


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1 such information according to such privacy regula2 tions. 

3 ‘‘(3) DISCLOSURE AND REDISCLOSURE.— 

4 ‘‘(A) LIMITATION TO BUSINESS ASSOCI5 ATES.—A group health plan receiving a report 

6 under paragraph (1) may disclose such informa7 tion only to business associates of such plan as 

8 defined in section 160.103 of title 45, Code of 

9 Federal Regulations (or successor regulations). 

10 ‘‘(B) CLARIFICATION REGARDING PUBLIC

11 DISCLOSURE OF INFORMATION.—Nothing in 

12 this section prevents a health insurance issuer 

13 offering group health insurance coverage or an 

14 entity providing pharmacy benefits management 

15 services on behalf of a group health plan from 

16 placing reasonable restrictions on the public dis17 closure of the information contained in a report 

18 described in paragraph (1). 

19 ‘‘(c) LIMITATIONS ON SPREAD PRICING.— 

20 ‘‘(1) PASS-THROUGH OFFERING TO PLAN.—A 

21 designated plan administrator of an applicable self22 insured health plan, or an entity providing pharmacy 

23 benefit management services to such health plan 

24 shall offer at least one contractual arrangement that 

25 does not charge the plan or enrollee, a price for a 


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1 prescription drug that exceeds the price paid to the 

2 pharmacy, excluding penalties or fees paid by phar3 macies to such plan, issuer, or entity. 

4 ‘‘(2) DEFAULT TO PASS-THROUGH PRICING.— 

5 For purposes of paragraph (1), a designated plan 

6 administrator of an applicable self-insured health 

7 plan, or an entity providing pharmacy benefit man8 agement services to such health plan shall not 

9 charge the plan or enrollee an amount for a 

10 presciption drug that exceeds the price paid to the 

11 pharmacy, excluding penalties paid by pharmacies to 

12 such plan or entity, without the express permission 

13 of the health plan sponsor. 

14 ‘‘(3) SUPPLEMENTARY REPORTING FOR INTRA15 COMPANY PRESCRIPTION DRUG TRANSACTIONS.—A 

16 health insurance issuer of group health insurance 

17 coverage or an entity providing pharmacy benefits 

18 management services under a group health plan or 

19 group health insurance coverage that conducts 

20 transactions with a wholly or partially owned phar21 macy, as described in paragraph (2), shall submit, 

22 together with the report under subsection (b), a sup23 plementary quarterly report to the plan sponsor that 

24 includes— 


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1 ‘‘(A) an explanation of any benefit design 

2 parameters that encourage enrollees in the plan 

3 or coverage to fill prescriptions at mail order, 

4 specialty, or retail pharmacies that are wholly 

5 or partially owned by that issuer or entity; 

6 ‘‘(B) the percentage of total prescriptions 

7 charged to the plan, coverage, or enrollees in 

8 the plan or coverage, that were dispensed by 

9 mail order, specialty, or retail pharmacies that 

10 are wholly or partially owned by the issuer or 

11 entity providing pharmacy benefits management 

12 services; and 

13 ‘‘(C) a list of all drugs dispensed by such 

14 wholly or partially owned pharmacy and 

15 charged to the plan or coverage, or enrollees of 

16 the plan or coverage, during the applicable 

17 quarter, and, with respect to each drug— 

18 ‘‘(i) the amount charged per dosage 

19 unit or course of treatment with respect to 

20 enrollees in the plan or coverage, including 

21 amounts charged to the plan or coverage 

22 and amounts charged to the enrollee; 

23 ‘‘(ii) the median amount charged to 

24 the plan or coverage, per dosage unit or 

25 course of treatment, and including 


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1 amounts paid by the enrollee, when the 

2 same drug is dispensed by other phar3 macies that are not wholly or partially 

4 owned by the issuer or entity and that are 

5 included in the pharmacy network of that 

6 plan or coverage; 

7 ‘‘(iii) the interquartile range of the 

8 costs, per dosage unit or course of treat9 ment, and including amounts paid by the 

10 enrollee, when the same drug is dispensed 

11 by other pharmacies that are not wholly or 

12 partially owned by the issuer or entity and 

13 that are included in the pharmacy network 

14 of that plan or coverage; and 

15 ‘‘(iv) the lowest cost per dosage unit 

16 or course of treatment, for such drug, in17 cluding amounts charged to the plan or 

18 issuer and enrollee, that is available from 

19 any pharmacy included in the network of 

20 the plan or coverage. 

21 ‘‘(d) FULL REBATE PASS-THROUGH TO PLAN.— 

22 ‘‘(1) IN GENERAL.—A pharmacy benefits man23 ager, a third-party administrator of a group health 

24 plan, a health insurance issuer offering group health 

25 insurance coverage, or an entity providing pharmacy 


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1 benefits management services under such health 

2 plan or health insurance coverage shall remit 100 

3 percent of rebates, fees, alternative discounts, and 

4 all other remuneration received from a pharma5 ceutical manufacturer, distributor or any other third 

6 party, that are related to utilization of drugs under 

7 such health plan or health insurance coverage, to the 

8 health plan issuer. 

9 ‘‘(2) FORM AND MANNER OF REMITTANCE.— 

10 Such rebates, fees, alternative discounts, and other 

11 remuneration shall be— 

12 ‘‘(A) remitted to the group health plan in 

13 a timely fashion after the period for which such 

14 rebates, fees, or other remuneration is cal15 culated, and in no case later than 120 days 

16 after the end of such period; 

17 ‘‘(B) fully disclosed and enumerated to the 

18 group health plan sponsor, as described in 

19 (b)(1); 

20 ‘‘(C) available for audit by the plan spon21 sor, or a third party designated by a plan spon22 sor no less than once per plan year; and 

23 ‘‘(D) returned to the issuer or entity pro24 viding pharmaceutical benefit management 

25 services by the group health plan if audits by 


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1 such issuer or entity indicate that the amounts 

2 received are incorrect after such amounts have 

3 been paid to the group health plan. 

4 ‘‘(3) AUDIT OF REBATE CONTRACTS.—A phar5 macy benefits manager, a third-party administrator 

6 of a group health plan, a health insurance issuer of7 fering a group health insurance coverage, or an enti8 ty providing pharmacy benefits management services 

9 under such health plan or health insurance coverage 

10 shall make rebate contracts with drug manufactur11 ers available for audit by such plan sponsor or des12 ignated third party, subject to confidentiality agree13 ments to prevent re-disclosure of such contracts. 

14 ‘‘(e) ENFORCEMENT.— 

15 ‘‘(1) IN GENERAL.—The Secretary, in consulta16 tion with the Secretary of Labor and the Secretary 

17 of the Treasury, shall enforce this section. 

18 ‘‘(2) FAILURE TO PROVIDE TIMELY INFORMA19 TION.—A health insurance issuer or an entity pro20 viding pharmacy benefit management services that 

21 violates subsection (a), fails to provide information 

22 required under subsection (b), engages in spread 

23 pricing as defined in subsection (c), or fails to com24 ply with the requirements of subsection (d), or a 

25 drug manufacturer that fails to provide information 


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1 under subsection (b)(1)(A), in a timely manner shall 

2 be subject to a civil monetary penalty in the amount 

3 of $10,000 for each day during which such violation 

4 continues or such information is not disclosed or re5 ported. 

6 ‘‘(3) FALSE INFORMATION.—A health insurance 

7 issuer, entity providing pharmacy benefit manage8 ment services, or drug manufacturer that knowingly 

9 provides false information under this section shall be 

10 subject to a civil money penalty in an amount not 

11 to exceed $100,000 for each item of false informa12 tion. Such civil money penalty shall be in addition to 

13 other penalties as may be prescribed by law. 

14 ‘‘(4) PROCEDURE.—The provisions of section 

15 1128A of the Social Security Act, other than sub16 sections (a) and (b) and the first sentence of sub17 section (c)(1) of such section shall apply to civil 

18 monetary penalties under this subsection in the 

19 same manner as such provisions apply to a penalty 

20 or proceeding under section 1128A of the Social Se21 curity Act. 

22 ‘‘(5) SAFE HARBOR.—The Secretary may waive 

23 penalties under paragraph (2), or extend the period 

24 of time for compliance with a requirement of this 

25 section, for an entity in violation of this section that 


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1 has made a good-faith effort to comply with this sec2 tion. 

3 ‘‘(f) RULE OF CONSTRUCTION.—Nothing in this sec4 tion shall be construed to prohibit entities providing phar5 macy benefits management services from retaining bona 

6 fide service fees, provided that such fees are transparent 

7 to group health plans and health insurance issuers and 

8 are not linked directly to the price or formulary placement 

9 or position of a drug. 

10 ‘‘(g) DEFINITIONS.—In this section— 

11 ‘‘(1) the term ‘similarly situated pharmacy’ 

12 means, with respect to a particular pharmacy, an13 other pharmacy that is approximately the same size 

14 (as measured by the number of prescription drugs 

15 dispensed), and that serves patients in the same geo16 graphical area, whether through physical locations or 

17 mail order; 

18 ‘‘(2) the term ‘wholesale acquisition cost’ has 

19 the meaning given such term in section 

20 1847A(c)(6)(B) of the Social Security Act; and 

21 ‘‘(3) the term ‘bona fide service fees’ means 

22 fees paid by a manufacturer, customer, or client 

23 (other than a group health plan or health insurance 

24 issuer) of an entity providing pharmacy benefit man25 agement services, to an entity providing pharmacy 


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1 benefit management services, that represent fair 

2 market value for bona fide, itemized services actually 

3 performed on behalf of the manufacturer, customer, 

4 or client would otherwise perform or contract for in 

5 the absence of the service arrangement, without 

6 prior consent for any specific arrangements.’’. 

7 SEC. 3. THIRD-PARTY ADMINISTRATORS. 

8 Any obligation on a third-party administrator under 

9 this Act (including the amendment made by this Act) shall 

10 not affect any other direct or indirect requirement under 

11 any other provision of Federal law that applies to third12 party administrators offering services to group health 

13 plans. 

Æ 


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