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[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5234 Introduced in House (IH)]

111th CONGRESS
  2d Session
                                H. R. 5234

To amend the Public Health Service Act, the Employee Retirement Income 
Security Act, the Internal Revenue Code of 1986, and title XVIII of the 
  Social Security Act to ensure transparency and proper operation of 
                       pharmacy benefit managers.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                              May 6, 2010

    Mr. Weiner (for himself and Mr. Moran of Kansas) introduced the 
   following bill; which was referred to the Committee on Energy and 
   Commerce, and in addition to the Committees on Ways and Means and 
Education and Labor, for a period to be subsequently determined by the 
  Speaker, in each case for consideration of such provisions as fall 
           within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL

 
To amend the Public Health Service Act, the Employee Retirement Income 
Security Act, the Internal Revenue Code of 1986, and title XVIII of the 
  Social Security Act to ensure transparency and proper operation of 
                       pharmacy benefit managers.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``PBM Audit Reform and Transparency 
Act of 2010''.

SEC. 2. PHARMACY BENEFITS MANAGER TRANSPARENCY AND PROPER OPERATION 
              REQUIREMENTS.

    (a) In General.--
            (1) Amendments to the public health service act relating to 
        the group market.--Subpart 2 of part A of title XXVII of the 
        Public Health Service Act (42 U.S.C. 300gg-4 et seq.) is 
        amended by adding at the end the following:

``SEC. 2729. PHARMACY BENEFITS MANAGER TRANSPARENCY AND PROPER 
              OPERATION REQUIREMENTS.

    ``(a) In General.--Notwithstanding any other provision of law, a 
group health plan, and a health insurance issuer providing health 
insurance coverage in connection with a group health plan, shall not 
enter into a contract with any pharmacy benefits manager to manage the 
prescription drug coverage provided under such plan or insurance 
coverage, or to control the costs of such prescription drug coverage, 
unless the PBM satisfies the following requirements:
            ``(1) Required disclosures to group health plan or health 
        insurance issuer in annual report.--
                    ``(A) In general.--The PBM shall provide at least 
                annually a report to each group health plan and health 
                insurance issuer with which the PBM has a contract.
                    ``(B) Contents.--With respect to the contract 
                described under subparagraph (A), the report under 
                subparagraph (A) shall include--
                            ``(i) information on the number and total 
                        cost of prescriptions under the contract filled 
                        at each of the following types of pharmacies: 
                        mail order pharmacies, speciality pharmacies, 
                        and retail pharmacies;
                            ``(ii) the aggregate average payments under 
                        the contract, per prescription (weighted by 
                        prescription volume), made to such pharmacies;
                            ``(iii) the average amount, per 
                        prescription (weighted by prescription volume), 
                        that the PBM was paid by the plan or issuer for 
                        prescriptions filled at such pharmacies;
                            ``(iv) the aggregate average payment per 
                        prescription (weighted by prescription volume) 
                        under the contract received from pharmaceutical 
                        manufacturers, including all rebates, 
                        discounts, price concessions, or administrative 
                        and other payments from pharmaceutical 
                        manufacturers, and a description of the types 
                        of payments, the amount of these payments that 
                        were shared with the plan, and the percentage 
                        of prescriptions for which the PBM received 
                        such payments;
                            ``(v) information on the overall percentage 
                        of generic drugs dispensed under the contract 
                        separately at retail and mail order pharmacies, 
                        and the percentage of cases in which a generic 
                        drug is dispensed when available; and
                            ``(vi) information on the percentage and 
                        number of cases under the contract in which 
                        individuals were switched, because of the 
                        policies of the PBM, from the drug originally 
                        prescribed to such individual by the health 
                        care provider to a drug with a higher cost to 
                        the plan or issuer, the rationale for these 
                        switches, and a description of the policies of 
                        the PBM applicable to such switches.
            ``(2) PBM interactions with pharmacies.--
                    ``(A) Obligations on pbm.--A PBM shall--
                            ``(i) provide to pharmacies that contract 
                        with the PBM--
                                    ``(I) the methodology and resources 
                                that the PBM utilizes to determine 
                                reimbursement (including to calculate 
                                the maximum allowable cost list); and
                                    ``(II) timely updates to pharmacy 
                                product reimbursement benchmarks used 
                                to calculate prescription reimbursement 
                                to pharmacies;
                            ``(ii) not less than one time per week, 
                        update the maximum allowable cost list and the 
                        reimbursement benchmarks;
                            ``(iii) establish a process for providing 
                        prompt notification of the updates under clause 
                        (ii) to the pharmacies; and
                            ``(iv) pay pharmacies promptly for clean 
                        claims, in a manner that is similar to the 
                        manner in which claims are paid under section 
                        1860D-12(b)(4) of the Social Security Act (42 
                        U.S.C. 1395w-112(b)(4)).
                    ``(B) PBM limitations.--A PBM may not--
                            ``(i) require that a pharmacy participate 
                        in one network of pharmacies managed by such 
                        PBM as a condition for the pharmacy to 
                        participate in another network managed by such 
                        PBM;
                            ``(ii) exclude an otherwise qualified 
                        pharmacy from participation in a network of 
                        pharmacies managed by such PBM if the person or 
                        entity that owns the pharmacy accepts the 
                        terms, conditions and reimbursement rates of 
                        the PBM's contract; and
                            ``(iii) automatically--
                                    ``(I) enroll a pharmacy in a 
                                contract with the PBM for participation 
                                in a pharmacy network; or
                                    ``(II) modify an existing contract 
                                regarding participation in a pharmacy 
                                network,
                        without a written agreement of the person or 
                        entity that owns the pharmacy.
                    ``(C) Contract required.--The person or entity that 
                owns a pharmacy shall sign a contract with a PBM before 
                assuming responsibility to participate in a network 
                managed by a PBM.
            ``(3) PBM ownership interests and conflicts of interest.--
        With respect to an individual who is a beneficiary of pharmacy 
        benefits managed by a PBM, the PBM may not mandate that such 
        individual use a specific pharmacy or entity to fill a 
        prescription if--
                    ``(A) the PBM has an ownership interest in the 
                pharmacy or entity; or
                    ``(B) the pharmacy or entity has an ownership 
                interest in the PBM.
            ``(4) Pharmacy choice.--With respect to an individual who 
        is a beneficiary of pharmacy benefits managed by a PBM, such 
        PBM may not provide incentives to such individual (including 
        variations in premiums, deductibles, co-payments, or co-
        insurance rates) to encourage such individual to utilize a 
        specific pharmacy or other entity to fill a prescription, if 
        such incentives only apply--
                    ``(A) to a pharmacy or entity that the PBM has an 
                ownership interest in; or
                    ``(B) to a pharmacy or entity that has an ownership 
                interest in the PBM.
            ``(5) PBM audit of pharmacies.--With respect to an audit by 
        a PBM (or an entity acting on behalf of the PBM) of a pharmacy 
        or other entity (referred to in this paragraph as a `dispensing 
        entity') that contracts with a PBM to receive reimbursement for 
        dispensing prescription drugs to individuals covered by 
        benefits managed by such PBM, the audit must comply with the 
        following:
                    ``(A) The PBM (or an entity acting on behalf of the 
                PBM) shall give the pharmacy or other dispensing entity 
                at least 15 days written notice prior to commencing an 
                audit.
                    ``(B) The time period covered by the audit may not 
                exceed one year from the date the claim being audited 
                was submitted to or adjudicated by the PBM.
                    ``(C) To the extent that the audit requires the 
                application of clinical or professional judgment, such 
                audit shall be conducted by or in consultation with a 
                pharmacist who is licensed in the State in which the 
                audit is being conducted.
                    ``(D) The PBM cannot require more stringent record 
                keeping by a pharmacy or dispensing entity than is 
                required by State and Federal law and regulation.
                    ``(E) The PBM (or an entity acting on behalf of the 
                PBM) shall establish a written appeals process that 
                shall include procedures to allow pharmacies and other 
                dispensing entities to appeal to the PBM the 
                preliminary reports and final reports resulting from 
                the audit and any resulting recoupment or penalty.
                    ``(F) The PBM (or an entity acting on behalf of the 
                PBM) shall accept records of a hospital, physician, or 
                other authorized practitioner that are made available 
                to such PBM or entity by the pharmacy or dispensing 
                entity to validate pharmacy records and prescriptions 
                with respect to confirming the validity of claims in 
                connection with prescriptions, refills, or changes in 
                prescriptions.
                    ``(G) To the extent that an audit results in the 
                identification of any clerical or record-keeping errors 
                (such as typographical errors, scrivener's error, or 
                computer error) in a required document or record, the 
                pharmacy or dispensing entity shall not be subject to 
                recoupment of funds by the PBM unless--
                            ``(i) the PBM can provide proof of intent 
                        to commit fraud; or
                            ``(ii) such error results in actual 
                        financial harm to the PBM, a health insurance 
                        plan managed by the PBM, or a consumer.
                    ``(H) The PBM (or an entity acting on behalf of the 
                PBM) shall not use extrapolation or other statistical 
                expansion techniques in calculating the amount of any 
                recoupment or penalty resulting from an audit of a 
                pharmacy or dispensing entity.
                    ``(I) With respect to prescriptions covered by a 
                group health plan or health insurance issuer, after the 
                conclusion of any appeals under subparagraph (E), a PBM 
                shall--
                            ``(i) disclose any recoupment of funds from 
                        a pharmacy or dispensing entity that--
                                    ``(I) results from an audit; and
                                    ``(II) is related to prescriptions 
                                covered by such plan or issuer; and
                            ``(ii) shall provide a copy of such 
                        disclosure to the pharmacy or dispensing 
                        entity.
            ``(6) PBM conduct regarding covered individuals.--
                    ``(A) Treatment of data.--
                            ``(i) Notice of sale.--The PBM shall notify 
                        a group health plan or health insurance issuer, 
                        in writing, at least 30 days before selling, 
                        leasing, or renting any utilization or claims 
                        data that the PBM possesses as a result of a 
                        contract between such PBM and plan or issuer, 
                        of--
                                    ``(I) the PBM's intent to sell, 
                                lease, or rent such data;
                                    ``(II) the name of the potential 
                                buyer, lessor, or renter of such data; 
                                and
                                    ``(III) the expected use of any 
                                utilization or claims data by such 
                                buyer, lessor, or renter.
                            ``(ii) Limitations on sale.--The PBM may 
                        not sell, lease, or rent utilization or claims 
                        data that the PBM possesses as a result of a 
                        contract between such PBM and a group health 
                        plan or health insurance issuer unless the PBM 
                        has received written approval for such 
                        transaction from the plan or issuer.
                            ``(iii) Opt out for consumers.--Before a 
                        PBM sells, leases, or rents utilization or 
                        claims data that the PBM possesses as a result 
                        of a contract between such PBM and a group 
                        health plan or health insurance issuer, the PBM 
                        shall provide each individual who is covered by 
                        benefits managed by the PBM with an opportunity 
                        to affirmatively opt out of the sale, leasing, 
                        or renting of data related to such individual.
                    ``(B) Contact with beneficiaries.--A PBM may not 
                directly contact, by any means (including via 
                electronic delivery, telephonic, SMS text or direct 
                mail), an individual who is covered by benefits managed 
                by the PBM on behalf of a group health plan or health 
                insurance issuer unless the PBM has the express written 
                permission of the group health plan or health insurance 
                issuer and the covered individual (through a request by 
                the plan sponsor) to engage in such contact.
                    ``(C) Limits on sharing data.--With respect to an 
                individual covered by a benefit managed by a PBM, 
                unless a patient has voluntarily elected to fill a 
                prescription at a pharmacy, a PBM shall not transmit 
                personally identifiable utilization or claims data 
                related to such individual to such pharmacy if--
                            ``(i) the PBM has an ownership interest in 
                        the pharmacy; or
                            ``(ii) the pharmacy has an ownership 
                        interest in the PBM.
    ``(b) Pharmacy Benefit Manager; PBM Defined.--For purposes of this 
section, the terms `pharmacy benefit manager' and `PBM' mean an entity 
that provides pharmacy benefit management services on behalf of a group 
health plan or a health insurance issuer.''.
            (2) Amendments to the public health service act relating to 
        the individual market.--
                    (A) In general.--The subpart 2 of part B of title 
                XXVII of the Public Health Service Act (42 U.S.C. 
                300gg-51 et seq.) is amended by adding at the end the 
                following:

``SEC. 2754. PHARMACY BENEFITS MANAGER TRANSPARENCY AND PROPER 
              OPERATION REQUIREMENTS.

    ``The provisions of section 2729 shall apply to health insurance 
coverage offered by a health insurance issuer in the individual market 
in the same manner as such provisions apply to a group health plan and 
a health insurance issuer providing health insurance coverage under 
that section.''.
            (3)  Conforming amendments.--
                    (A) ERISA amendment.--
                            (i) In general.--Subpart B of part 7 of 
                        subtitle B of title I of the Employee 
                        Retirement Income Security Act of 1974 (29 
                        U.S.C. 1185 et seq.) is amended by adding at 
                        the end the following:

``SEC. 715. PHARMACY BENEFITS MANAGER TRANSPARENCY AND PROPER OPERATION 
              REQUIREMENTS.

    ``The provisions of section 2729 of the Public Health Service Act 
shall apply to a group health plan, and a health insurance issuer 
providing health insurance coverage in connection with a group health 
plan, in the same manner as such provisions apply to a group health 
plan and a health insurance issuer providing health insurance coverage 
under that section.''.
                            (ii) Clerical amendment.--The table of 
                        contents in section 1 of the Employee 
                        Retirement Income Security Act of 1974 is 
                        amended by inserting after the item relating to 
                        section 714 the following:

``Sec. 715. Pharmacy benefits manager transparency and proper operation 
                            requirements.''.
                    (B) IRC amendment.--
                            (i) In general.--Subpart B of chapter 100 
                        of the Internal Revenue Code of 1986 (26 U.S.C. 
                        9811 et seq.) is amended by adding at the end 
                        the following:

``SEC. 9814. PHARMACY BENEFITS MANAGER TRANSPARENCY AND PROPER 
              OPERATION REQUIREMENTS.

    ``The provisions of section 2729 of the Public Health Service Act 
shall apply to a group health plan, and a health insurance issuer 
providing health insurance coverage in connection with a group health 
plan, in the same manner as such provisions apply to a group health 
plan and a health insurance issuer providing health insurance coverage 
under that section.''.
                            (ii) Clerical amendment.--The table of 
                        sections for subpart B of chapter 100 of the 
                        Internal Revenue Code of 1986 is amended by 
                        inserting after the item relating to section 
                        9813 the following new item:

``Sec. 9814. Pharmacy benefits manager transparency and proper 
                            operation requirements.''.
    (b) PBMs and Medicare Part D.--Subpart 2 of part D of title XVIII 
of the Social Security Act is amended by adding at the end the 
following new section:

``SEC. 1860D-17. PHARMACY BENEFITS MANAGER TRANSPARENCY AND PROPER 
              OPERATION REQUIREMENTS.

    ``The provisions of section 2729 of the Public Health Service Act 
shall apply to health insurance coverage offered by a prescription drug 
plan under this part in the same manner as such provisions apply to a 
group health plan and a health insurance issuer providing health 
insurance coverage under that section.''.
    (c) Effective Dates.--
            (1) Group market and medicare.--The amendments made by 
        paragraphs (1) and (3) of subsection (a) and by subsection (b) 
        shall apply to group health plan or health insurance issuers 
        for plan years beginning on or after the date of enactment of 
        this Act.
            (2) Individual market.--The amendment made by subsection 
        (a)(2) shall apply with respect to health insurance coverage 
        offered, sold, issued, renewed, in effect, or operated in the 
        individual market on or after the date of enactment of this 
        Act.
                                 <all>
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