II 

118TH CONGRESS 

1ST SESSION S. 127 

To prevent unfair and deceptive acts or practices and the dissemination 

of false information related to pharmacy benefit management services 

for prescription drugs, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JANUARY 26, 2023 

Ms. CANTWELL (for herself, Mr. GRASSLEY, Mrs. HYDE-SMITH, Mr. BRAUN, 

Mr. MORAN, Mr. TILLIS, Mr. TESTER, and Mrs. CAPITO) introduced the 

following bill; which was read twice and referred to the Committee on 

Commerce, Science, and Transportation 

A BILL 

To prevent unfair and deceptive acts or practices and the 

dissemination of false information related to pharmacy 

benefit management services for prescription drugs, 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 ‘‘Pharmacy Benefit 

5 Manager Transparency Act of 2023’’. 


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1 SEC. 2. PROHIBITION ON UNFAIR OR DECEPTIVE PRE2 SCRIPTION DRUG PRICING PRACTICES. 

3 (a) CONDUCT PROHIBITED.—Except as provided in 

4 subsection (b), it shall be unlawful for any pharmacy ben5 efit manager (or affiliate, subsidiary, or agent of a phar6 macy benefit manager), directly or indirectly, to engage 

7 in any of the following activities related to pharmacy ben8 efit management services: 

9 (1) Charge a health plan or payer a different 

10 amount for a prescription drug’s ingredient cost or 

11 dispensing fee than the amount the pharmacy ben12 efit manager reimburses a pharmacy for the pre13 scription drug’s ingredient cost or dispensing fee 

14 where the pharmacy benefit manager retains the 

15 amount of any such difference. 

16 (2) Arbitrarily, unfairly, or deceptively, by con17 tract or any other means, reduce, rescind, or other18 wise claw back any reimbursement payment, in 

19 whole or in part, to a pharmacist or pharmacy for 

20 a prescription drug’s ingredient cost or dispensing 

21 fee. 

22 (3) Arbitrarily, unfairly, or deceptively, by con23 tract or any other means, increase fees or lower re24 imbursement to a pharmacy in order to offset reim25 bursement changes instructed by the Federal GovVerDate Sep 11 2014 00:00 Feb 07, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S127.IS S127

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1 ernment under any health plan funded by the Fed2 eral Government. 

3 (b) EXCEPTIONS.—A pharmacy benefit manager 

4 shall not be in violation of subsection (a) if the pharmacy 

5 benefit manager meets the following conditions: 

6 (1) The pharmacy benefit manager, affiliate, 

7 subsidiary, or agent passes along or returns 100 per8 cent of any price concession to a health plan or 

9 payer, including any rebate, discount, or other price 

10 concession. 

11 (2) The pharmacy benefit manager, affiliate, 

12 subsidiary, or agent provides full and complete dis13 closure of— 

14 (A) the cost, price, and reimbursement of 

15 the prescription drug to each health plan, 

16 payer, and pharmacy with which the pharmacy 

17 benefit manager, affiliate, subsidiary, or agent 

18 has a contract or agreement to provide phar19 macy benefit management services; 

20 (B) each fee, markup, and discount 

21 charged or imposed by the pharmacy benefit 

22 manager, affiliate, subsidiary, or agent to each 

23 health plan, payer, and pharmacy with which 

24 the pharmacy benefit manager, affiliate, subVerDate Sep 11 2014 00:00 Feb 07, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S127.IS S127

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1 sidiary, or agent has a contract or agreement 

2 for pharmacy benefit management services; or 

3 (C) the aggregate amount of all remunera4 tion the pharmacy benefit manager receives 

5 from a prescription drug manufacturer for a 

6 prescription drug, including any rebate, dis7 count, administration fee, and any other pay8 ment or credit obtained or retained by the phar9 macy benefit manager, or affiliate, subsidiary, 

10 or agent of the pharmacy benefit manager, pur11 suant to a contract or agreement for pharmacy 

12 benefit management services to a health plan, 

13 payer, or any Federal agency (upon the request 

14 of the agency). 

15 SEC. 3. PROHIBITION ON FALSE INFORMATION. 

16 It shall be unlawful for any person to report informa17 tion related to pharmacy benefit management services to 

18 a Federal department or agency if— 

19 (1) the person knew, or reasonably should have 

20 known, the information to be false or misleading; 

21 (2) the information was required by law to be 

22 reported; and 

23 (3) the false or misleading information reported 

24 by the person would affect analysis or information 

25 compiled by the Federal department or agency for 


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1 statistical or analytical purposes with respect to the 

2 market for pharmacy benefit management services. 

3 SEC. 4. TRANSPARENCY. 

4 (a) REPORTING BY PHARMACY BENEFIT MAN5 AGERS.—Not later than 1 year after the date of enactment 

6 of this Act, and annually thereafter, each pharmacy ben7 efit manager (or affiliate, subsidiary, or agent of a phar8 macy benefit manager) shall report to the Commission the 

9 following information: 

10 (1) The aggregate amount of the difference be11 tween the amount the pharmacy benefit manager 

12 was paid by each health plan and the amount that 

13 the pharmacy benefit manager paid each pharmacy 

14 on behalf of the health plan for prescription drugs. 

15 (2) The aggregate amount of any— 

16 (A) generic effective rate fee charged to 

17 each pharmacy; 

18 (B) direct and indirect remuneration fee 

19 charged or other price concession to each phar20 macy; and 

21 (C) payment rescinded or otherwise clawed 

22 back from a reimbursement made to each phar23 macy. 

24 (3) If, during the reporting year, the pharmacy 

25 benefit manager moved or reassigned a prescription 


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1 drug to a formulary tier that has a higher cost, 

2 higher copayment, higher coinsurance, or higher de3 ductible to a consumer, or a lower reimbursement to 

4 a pharmacy, an explanation of the reason why the 

5 drug was moved or reassigned from 1 tier to an6 other, including whether the move or reassignment 

7 was determined or requested by a prescription drug 

8 manufacturer or other entity. 

9 (4) With respect to any pharmacy benefit man10 ager that owns, controls, or is affiliated with a phar11 macy, a report regarding any difference in reim12 bursement rates or practices, direct and indirect re13 muneration fees or other price concessions, and 

14 clawbacks between a pharmacy that is owned, con15 trolled, or affiliated with the pharmacy benefit man16 ager and any other pharmacy. 

17 (b) REPORT TO CONGRESS.— 

18 (1) IN GENERAL.—Not later than 1 year after 

19 the date of enactment of this Act, and annually 

20 thereafter, the Commission shall submit to the Com21 mittee on Commerce, Science, and Transportation of 

22 the Senate and the Committee on Energy and Com23 merce of the House of Representatives a report that 

24 addresses, at a minimum— 


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1 (A) the number of actions brought by the 

2 Commission during the reporting year to en3 force this Act and the outcome of each such en4 forcement action; 

5 (B) the number of open investigations or 

6 inquiries into potential violations of this Act as 

7 of the time the report is submitted; 

8 (C) the number and nature of complaints 

9 received by the Commission relating to an alle10 gation of a violation of this Act during the re11 porting year; 

12 (D) an anonymized summary of the re13 ports filed with the Commission pursuant to 

14 subsection (a) for the reporting year; and 

15 (E) policy or legislative recommendations 

16 to strengthen any enforcement action relating 

17 to a violation of this Act, including rec18 ommendations to include additional prohibited 

19 conduct in section 2(a). 

20 (2) FORMULARY DESIGN OR PLACEMENT PRAC21 TICES.—Not later than 1 year after the date of en22 actment of this Act, the Commission shall submit to 

23 the Committee on Commerce, Science, and Trans24 portation of the Senate and the Committee on En25 ergy and Commerce of the House of Representatives 


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1 a report that addresses the policies, practices, and 

2 role of pharmacy benefit managers (including their 

3 affiliates, subsidiaries, and agents) regarding for4 mulary design or placement, including whether— 

5 (A) pharmacy benefit managers (including 

6 their affiliates, subsidiaries, and agents) use 

7 formulary design or placement to increase their 

8 gross revenue without an accompanying in9 crease in patient access or decrease in patient 

10 cost; or 

11 (B) such policies or practices of pharmacy 

12 benefit managers regarding formulary design or 

13 placement violate section 5(a) of the Federal 

14 Trade Commission Act (15 U.S.C. 45(a)). 

15 (3) CONSTRUCTION.—Nothing in this section 

16 shall be construed as authorizing the Commission to 

17 disclose any information that is a trade secret or 

18 confidential information described in section 

19 552(b)(4) of title 5, United States Code. 

20 (c) GAO STUDY.—Not later than 1 year after the 

21 date of enactment of this Act, the Comptroller General 

22 of the United States shall submit to the Committee on 

23 Commerce, Science, and Transportation, the Committee 

24 on Finance, and the Committee on Health, Education, 

25 Labor, and Pensions of the Senate and to the Committee 


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1 on Ways and Means and the Committee on Energy and 

2 Commerce of the House of Representatives a report 

3 that— 

4 (1) addresses, at minimum— 

5 (A) the role that pharmacy benefit man6 agers play in the pharmaceutical supply chain; 

7 (B) the state of competition among phar8 macy benefit managers, including the market 

9 share for the Nation’s 10 largest pharmacy 

10 benefit managers; 

11 (C) the use of rebates and fees by phar12 macy benefit managers, including data for each 

13 of the 10 largest pharmacy benefit managers 

14 that reflects, for each drug in the formulary of 

15 each such pharmacy benefit manager— 

16 (i) the amount of the rebate passed on 

17 to patients; 

18 (ii) the amount of the rebate passed 

19 on to payors; 

20 (iii) the amount of the rebate kept by 

21 the pharmacy benefit manager; and 

22 (iv) the role of fees charged by the 

23 pharmacy benefit manager; 

24 (D) whether pharmacy benefit managers 

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1 bate prescription drugs over lower-cost, lower2 rebate alternatives; 

3 (E) the average prior authorization ap4 proval time for each of the 10 largest pharmacy 

5 benefit managers; 

6 (F) factors affecting the use of step ther7 apy in each of the 10 largest pharmacy benefit 

8 managers; and 

9 (G) the extent to which the price that 

10 pharmacy benefit managers charge payors, such 

11 as the Medicare program under title XXVIII of 

12 the Social Security Act (42 U.S.C. 1395 et 

13 seq.), State Medicaid programs under title XIX 

14 of the Social Security Act (42 U.S.C. 1396 et 

15 seq.), the Federal Employees Health Benefits 

16 Program under chapter 89 of title 5, United 

17 States Code, or private payors, for a drug is 

18 more than such pharmacy benefit managers pay 

19 the pharmacy for the drug; and 

20 (2) provides recommendations for legislative ac21 tion to lower the cost of prescription drugs for con22 sumers and payors, improve the efficiency of the 

23 pharmaceutical supply chain by lowering inter24 mediary costs, improve competition in pharmacy 


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1 benefit management, and provide transparency in 

2 pharmacy benefit management. 

3 SEC. 5. WHISTLEBLOWER PROTECTIONS. 

4 (a) IN GENERAL.—A pharmacy benefit manager, 

5 health plan, pharmaceutical manufacturer, pharmacy, or 

6 any affiliate, subsidiary, or agent thereof shall not, directly 

7 or indirectly, discharge, demote, suspend, diminish, or 

8 withdraw benefits from, threaten, harass, or in any other 

9 manner discriminate against or adversely impact a covered 

10 individual because— 

11 (1) the covered individual, or anyone perceived 

12 as assisting the covered individual, takes (or is sus13 pected to have taken or will take) a lawful action in 

14 providing to Congress, an agency of the Federal 

15 Government, the attorney general of a State, a State 

16 regulator with authority over the distribution or in17 surance coverage of prescription drugs, or a law en18 forcement agency relating to any act or omission 

19 that the covered individual reasonably believes to be 

20 a violation of this Act; 

21 (2) the covered individual provides information 

22 that the covered individual reasonably believes evi23 dences such a violation to— 

24 (A) a person with supervisory authority 

25 over the covered individual at the pharmacy 


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1 benefit manager, health plan, pharmaceutical 

2 manufacturer, pharmacy, or any affiliate, sub3 sidiary, or agent thereof; or 

4 (B) another individual working for the 

5 pharmacy benefit manager, health plan, phar6 maceutical manufacturer, pharmacy, or any af7 filiate, subsidiary, or agent thereof who the cov8 ered individual reasonably believes has the au9 thority to investigate, discover, or terminate the 

10 violation or to take any other action to address 

11 the violation; 

12 (3) the covered individual testifies (or it is sus13 pected that the covered individual will testify) in an 

14 investigation or judicial or administrative proceeding 

15 concerning such a violation; 

16 (4) the covered individual assists or participates 

17 (or it is expected that the covered individual will as18 sist or participate) in such an investigation or judi19 cial or administrative proceeding; or 

20 (5) the covered individual takes any other ac21 tion to assist in carrying out the purposes of this 

22 Act. 

23 (b) ENFORCEMENT.—An individual who alleges any 

24 adverse action in violation of subsection (a) may bring an 


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1 action for a jury trial in the appropriate district court of 

2 the United States for the following relief: 

3 (1) Temporary relief while the case is pending. 

4 (2) Reinstatement with the same seniority sta5 tus that the individual would have had, but for the 

6 discharge or discrimination. 

7 (3) Twice the amount of back pay otherwise 

8 owed to the individual, with interest. 

9 (4) Consequential and compensatory damages, 

10 and compensation for litigation costs, expert witness 

11 fees, and reasonable attorneys’ fees. 

12 (c) WAIVER OF RIGHTS AND REMEDIES.—The rights 

13 and remedies provided for in this section shall not be 

14 waived by any policy form or condition of employment, in15 cluding by a predispute arbitration agreement. 

16 (d) PREDISPUTE ARBITRATION AGREEMENTS.—No 

17 predispute arbitration agreement shall be valid or enforce18 able if the agreement requires arbitration of a dispute 

19 arising under this section. 

20 SEC. 6. ENFORCEMENT. 

21 (a) ENFORCEMENT BY THE COMMISSION.— 

22 (1) UNFAIR AND DECEPTIVE ACTS OR PRAC23 TICES.—A violation of this Act shall be treated as 

24 a violation of a rule defining an unfair or deceptive 

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1 eral Trade Commission Act (15 U.S.C. 

2 57a(a)(1)(B)). 

3 (2) POWERS OF THE COMMISSION.— 

4 (A) IN GENERAL.—Except as provided in 

5 subparagraph (C), the Commission shall enforce 

6 this Act in the same manner, by the same 

7 means, and with the same jurisdiction, powers, 

8 and duties as though all applicable terms and 

9 provisions of the Federal Trade Commission 

10 Act (15 U.S.C. 41 et seq.) were incorporated 

11 into and made a part of this Act. 

12 (B) PRIVILEGES AND IMMUNITIES.—Sub13 ject to paragraph (3), any person who violates 

14 this Act shall be subject to the penalties and 

15 entitled to the privileges and immunities pro16 vided in the Federal Trade Commission Act (15 

17 U.S.C. 41 et seq.). 

18 (C) NONPROFIT ORGANIZATIONS AND IN19 SURANCE.—Notwithstanding section 4 or 6 of 

20 the Federal Trade Commission Act (15 U.S.C. 

21 44, 46), section 2 of McCarran-Ferguson Act 

22 (15 U.S.C. 1012), or any other jurisdictional 

23 limitation of the Commission, the Commission 

24 shall also enforce this Act, in the same manner 


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1 provided in subparagraphs (A) and (B) of this 

2 paragraph, with respect to— 

3 (i) organizations not organized to 

4 carry on business for their own profit or 

5 that of their members; and 

6 (ii) the business of insurance, and 

7 persons engaged in such business. 

8 (D) AUTHORITY PRESERVED.—Nothing in 

9 this section shall be construed to limit the au10 thority of the Commission under any other pro11 vision of law. 

12 (3) PENALTIES.— 

13 (A) ADDITIONAL CIVIL PENALTY.—In ad14 dition to any penalty applicable under the Fed15 eral Trade Commission Act (15 U.S.C. 41 et 

16 seq.), any person that violates this Act shall be 

17 liable for a civil penalty of not more than 

18 $1,000,000. 

19 (B) METHOD.—The penalties provided by 

20 subparagraph (A) shall be obtained in the same 

21 manner as civil penalties imposed under section 

22 18(a)(1)(B) of the Federal Trade Commission 

23 Act (15 U.S.C. 57a(a)(1)(B)). 


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1 (C) MULTIPLE OFFENSES; MITIGATING

2 FACTORS.—In assessing a penalty under sub3 paragraph (A)— 

4 (i) each day of a continuing violation 

5 shall be considered a separate violation; 

6 and 

7 (ii) the court shall take into consider8 ation, among other factors— 

9 (I) the seriousness of the viola10 tion; 

11 (II) the efforts of the person 

12 committing the violation to remedy 

13 the harm caused by the violation in a 

14 timely manner; and 

15 (III) whether the violation was 

16 intentional. 

17 (b) ENFORCEMENT BY STATES.— 

18 (1) IN GENERAL.—If the attorney general of a 

19 State has reason to believe that an interest of the 

20 residents of the State has been or is being threat21 ened or adversely affected by a practice that violates 

22 this Act, the attorney general of the State may bring 

23 a civil action on behalf of the residents of the State 

24 in an appropriate district court of the United States 

25 to obtain appropriate relief. 


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1 (2) RIGHTS OF THE COMMISSION.— 

2 (A) NOTICE TO THE COMMISSION.— 

3 (i) IN GENERAL.—Except as provided 

4 in clause (iii), the attorney general of a 

5 State, before initiating a civil action under 

6 paragraph (1), shall provide written notifi7 cation to the Commission that the attorney 

8 general intends to bring such civil action. 

9 (ii) CONTENTS.—The notification re10 quired under clause (i) shall include a copy 

11 of the complaint to be filed to initiate the 

12 civil action. 

13 (iii) EXCEPTION.—If it is not feasible 

14 for the attorney general of a State to pro15 vide the notification required under clause 

16 (i) before initiating a civil action under 

17 paragraph (1), the attorney general shall 

18 notify the Commission immediately upon 

19 instituting the civil action. 

20 (B) INTERVENTION BY THE COMMIS21 SION.—The Commission may— 

22 (i) intervene in any civil action 

23 brought by the attorney general of a State 

24 under paragraph (1); and 

25 (ii) upon intervening— 


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1 (I) be heard on all matters aris2 ing in the civil action; and 

3 (II) file petitions for appeal of a 

4 decision in the civil action. 

5 (3) CONSTRUCTION.—Nothing in this sub6 section may be construed to prevent the attorney 

7 general of a State from exercising the powers con8 ferred on the attorney general by the laws of the 

9 State to conduct investigations, to administer oaths 

10 or affirmations, or to compel the attendance of wit11 nesses or the production of documentary or other 

12 evidence. 

13 (4) VENUE; SERVICE OF PROCESS.— 

14 (A) VENUE.—Any action brought under 

15 paragraph (1) may be brought in— 

16 (i) the district court of the United 

17 States that meets applicable requirements 

18 relating to venue under section 1391 of 

19 title 28, United States Code; or 

20 (ii) another court of competent juris21 diction. 

22 (B) SERVICE OF PROCESS.—In an action 

23 brought under paragraph (1), process may be 

24 served in any district in which— 


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1 (i) the defendant is an inhabitant, 

2 may be found, or transacts business; or 

3 (ii) venue is proper under section 

4 1391 of title 28, United States Code. 

5 (5) ACTIONS BY OTHER STATE OFFICIALS.— 

6 (A) IN GENERAL.—If an attorney general 

7 lacks appropriate jurisdiction to bring a civil ac8 tion under paragraph (1), any other officer of 

9 a State who is authorized by the State to do so 

10 may bring a civil action under paragraph (1), 

11 subject to the same requirements and limita12 tions that apply under this subsection to civil 

13 actions brought by attorneys general. 

14 (B) CLARIFICATION OF AUTHORITY.—The 

15 authority provided by subparagraph (A) shall 

16 supplant, and not supplement, the authorities of 

17 State attorneys general under paragraph (1). 

18 (C) SAVINGS PROVISION.—Nothing in this 

19 subsection may be construed to prohibit an au20 thorized official of a State from initiating or 

21 continuing any proceeding in a court of the 

22 State for a violation of any civil or criminal law 

23 of the State. 

24 (c) AFFIRMATIVE DEFENSE.—In an action brought 

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1 firmative defense, on which the defendant has the burden 

2 of persuasion by a preponderance of the evidence, that the 

3 conduct alleged to be a violation of section 2 was 

4 nonpretextual and reasonably necessary to— 

5 (1) prevent a violation of, or comply with, Fed6 eral or State law; 

7 (2) protect patient safety; or 

8 (3) protect patient access. 

9 SEC. 7. EFFECT ON STATE LAWS. 

10 Nothing in this Act shall be construed to preempt, 

11 displace, or supplant any State laws, rules, regulations, 

12 or requirements, or the enforcement thereof. 

13 SEC. 8. DEFINITIONS. 

14 In this Act: 

15 (1) COMMISSION.—The term ‘‘Commission’’ 

16 means the Federal Trade Commission. 

17 (2) COVERED INDIVIDUAL.—The term ‘‘covered 

18 individual’’ means a current or former employee, 

19 contractor, subcontractor, service provider, or agent 

20 of a pharmacy benefit manager, health plan, phar21 maceutical manufacturer, pharmacy, or any affiliate, 

22 subsidiary, or agent thereof. 

23 (3) HEALTH PLAN.—The term ‘‘health plan’’ 

24 means any group or individual health insurance plan 

25 or coverage, including any health insurance plan or 


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1 coverage sponsored or funded by the Federal Gov2 ernment or the government of any State, Territory, 

3 or subdivision thereof. 

4 (4) PHARMACY BENEFIT MANAGER.—The term 

5 ‘‘pharmacy benefit manager’’ means any entity that 

6 provides pharmacy benefit management services on 

7 behalf of a health plan, a payer, or health insurance 

8 issuer. 

9 (5) PHARMACY BENEFIT MANAGEMENT SERV10 ICES.—The term ‘‘pharmacy benefit management 

11 services’’ means, pursuant to a written agreement 

12 with a payer or health plan offering group or indi13 vidual health insurance coverage, directly or through 

14 an intermediary, the service of— 

15 (A) negotiating terms and conditions, in16 cluding rebates and price concessions, with re17 spect to a prescription drug on behalf of the 

18 health plan, coverage, or payer; or 

19 (B) managing the prescription drug bene20 fits provided by the health plan, coverage, or 

21 payer, which may include formulary manage22 ment the processing and payment of claims for 

23 prescription drugs, the performance of drug uti24 lization review, the processing of drug prior au25 thorization requests, the adjudication of appeals 


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1 or grievances related to the prescription drug 

2 benefit, contracting with network pharmacies, 

3 or the provision of related services. 

4 (6) PRESCRIPTION DRUG.—The term ‘‘prescrip5 tion drug’’ means— 

6 (A) a drug, as that term is defined in sec7 tion 201(g) of the Federal Food, Drug, and 

8 Cosmetic Act (21 U.S.C. 321(g)), that is— 

9 (i) approved by the Food and Drug 

10 Administration under section 505 of such 

11 Act (21 U.S.C. 355); and 

12 (ii) subject to the requirements of sec13 tion 503(b)(1) of such Act (21 U.S.C. 

14 353(b)(1)); 

15 (B) a biological product as that term is de16 fined in section 351 of the Public Health Serv17 ice Act (42 U.S.C. 262(i)(1)); or 

18 (C) a product that is biosimilar to, or 

19 interchangeable with, a biologic product under 

20 section 351 of the Public Health Service Act 

21 (42 U.S.C. 262(i)). 

Æ 


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