II 

116TH CONGRESS 

1ST SESSION S. 2247 

To amend titles XI and XVIII of the Social Security Act to provide greater 

transparency of discounts provided by drug manufacturers, to establish 

requirements relating to pharmacy-negotiated price concessions, and for 

other purposes. 

IN THE SENATE OF THE UNITED STATES 

JULY 24, 2019 

Mr. KENNEDY (for himself, Mr. TESTER, Mrs. CAPITO, Mr. BROWN, Mr. CASSIDY, Mr. LANKFORD, Mr. DAINES, Mr. CRAMER, Mrs. HYDE-SMITH, 

Mr. MANCHIN, and Mr. WICKER) introduced the following bill; which was 

read twice and referred to the Committee on Finance 

A BILL 

To amend titles XI and XVIII of the Social Security Act 

to provide greater transparency of discounts provided 

by drug manufacturers, to establish requirements relating to pharmacy-negotiated price concessions, 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 ‘‘Phair Relief Act of 

5 2019’’. 


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1 SEC. 2. PUBLIC DISCLOSURE OF DRUG DISCOUNTS. 

2 (a) IN GENERAL.—Section 1150A of the Social Secu3 rity Act (42 U.S.C. 1320b–23) is amended— 

4 (1) in subsection (c), in the matter preceding 

5 paragraph (1), by striking ‘‘this section’’ and insert6 ing ‘‘subsection (b)(1)’’; and 

7 (2) by adding at the end the following new sub8 section: 

9 ‘‘(e) PUBLIC AVAILABILITY OF CERTAIN INFORMA10 TION.—In order to allow patients and employers to com11 pare PBMs’ ability to negotiate rebates, discounts, and 

12 price concessions and the amount of such rebates, dis13 counts, and price concessions that are passed through to 

14 plan sponsors, beginning January 1, 2020, the Secretary 

15 shall make available on the Internet website of the Depart16 ment of Health and Human Services the information pro17 vided to the Secretary under paragraphs (2) and (3) of 

18 subsection (b) with respect to each PBM. The Secretary 

19 shall ensure that such information is displayed in a man20 ner that prevents the disclosure of information on rebates, 

21 discounts, and price concessions with respect to an indi22 vidual drug or an individual plan.’’. 

23 (b) EFFECTIVE DATE.—The amendments made by 

24 subsection (a) shall take effect on January 1, 2020. 


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1 SEC. 3. MINIMUM DRUG DISCOUNTS REQUIRED TO BE 

2 PASSED THROUGH TO THE PLAN SPONSOR. 

3 (a) IN GENERAL.—Section 1150A of the Social Secu4 rity Act (42 U.S.C. 1320b–23), as amended by section 

5 2(a)(2), is amended— 

6 (1) in the heading, by inserting ‘‘; MINIMUM

7 DRUG DISCOUNTS REQUIRED TO BE PASSED

8 THROUGH TO THE PLAN SPONSOR’’ before the 

9 period at the end; and 

10 (2) by adding at the end the following new sub11 section: 

12 ‘‘(f) MINIMUM DRUG DISCOUNTS REQUIRED TO BE

13 PASSED THROUGH TO THE PLAN SPONSOR.— 

14 ‘‘(1) REQUIREMENT.—Beginning January 1, 

15 2022, a PBM that manages prescription drug cov16 erage under a contract with a PDP sponsor or MA 

17 organization described in subsection (b)(1) or a 

18 qualified health benefits plan described in subsection 

19 (b)(2), shall, with respect to the plan sponsor of a 

20 health benefits plan, pass through to the plan spon21 sor a minimum percent (as established by the Sec22 retary) of the aggregate amount of the rebates, dis23 counts, or price concessions that the PBM nego24 tiates that are attributable to patient utilization 

25 under the plan. 


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1 ‘‘(2) ESTABLISHMENT.—The Secretary shall es2 tablish the minimum percent described in paragraph 

3 (1) in such a manner as will ensure that patients re4 ceive the maximum benefit of rebates, discounts, or 

5 price concessions while taking into account the costs 

6 of negotiating such rebates, discounts, and price 

7 concessions. 

8 ‘‘(3) ENFORCEMENT.—A PDP sponsor of a 

9 prescription drug plan or an MA organization offer10 ing an MA–PD plan under part D of title XVIII 

11 may not contract with a PBM that is not in compli12 ance with the requirement under paragraph (1).’’. 

13 (b) EFFECTIVE DATE.—The amendments made by 

14 subsection (a) shall take effect on January 1, 2022. 

15 SEC. 4. REQUIREMENTS RELATING TO PHARMACY-NEGO16 TIATED PRICE CONCESSIONS AND PHAR17 MACY INCENTIVE PAYMENTS. 

18 Section 1860D–2(d)(1)(B) of the Social Security Act 

19 (42 U.S.C. 1395w–102(d)(1)(B)) is amended— 

20 (1) by striking ‘‘PRICES.—For purposes’’ and 

21 inserting ‘‘PRICES.— 

22 ‘‘(i) IN GENERAL.—For purposes’’; 

23 and 

24 (2) by adding at the end the following new 

25 clauses: 


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1 ‘‘(ii) PRICES NEGOTIATED WITH

2 PHARMACY AT POINT-OF-SALE.— 

3 ‘‘(I) TEMPORARY FREEZE ON DIR

4 PAYMENTS.—Subject to subclause 

5 (IV), for plan years beginning on or 

6 after January 1, 2021, and before 

7 January 1, 2026, negotiated prices for 

8 covered part D drugs described in 

9 clause (i) provided under all phases of 

10 coverage under a prescription drug 

11 plan, including all contingent and 

12 noncontingent concessions, payments, 

13 and fees negotiated with the phar14 macy dispensing such drug, shall be 

15 provided at the point-of-sale of such 

16 drug. For purposes of the preceding 

17 sentence, such negotiated price shall 

18 not include any incentive payments 

19 paid to pharmacies. 

20 ‘‘(II) APPLICATION OF PRICE

21 CONCESSIONS.—For plan years begin22 ning on or after January 1, 2026, the 

23 Secretary shall promulgate regulations 

24 prohibiting the application of any 

25 pharmacy price concessions that are 


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1 not based on quality measures estab2 lished or approved by the Secretary 

3 under subclause (III). 

4 ‘‘(III) STANDARD PHARMACY

5 QUALITY MEASURES.—Subject to sub6 clause (I), not later than January 1, 

7 2021, the Secretary shall establish or 

8 approve standard quality measures for 

9 use in the application of pharmacy 

10 price concessions and incentive pay11 ments with respect to payment for 

12 covered part D drugs dispensed by a 

13 pharmacy. Such measures shall be— 

14 ‘‘(aa) focused on improving 

15 patient health outcomes; 

16 ‘‘(bb) standardized across 

17 PDP sponsors; 

18 ‘‘(cc) pharmacy-specific in 

19 application; 

20 ‘‘(dd) relevant to the type of 

21 pharmacy concerned (such as 

22 specialty pharmacies), taking into 

23 account the items and services 

24 furnished by the pharmacy and 


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1 the patient population served by 

2 the pharmacy; 

3 ‘‘(ee) applied only when rel4 evant to the specific drug (or 

5 drug class of such drug) being 

6 furnished by the pharmacy or 

7 when relevant to management of 

8 the condition for which such drug 

9 has been prescribed; and 

10 ‘‘(ff) based on achievable 

11 and proven criteria measuring 

12 pharmacy performance over 

13 which the pharmacy has mean14 ingful control and ability to influ15 ence. 

16 In establishing such standards, the 

17 Secretary shall consult with stake18 holders, including PDP sponsors and 

19 MA organizations, pharmacies across 

20 pharmacy practice types, pharmacy 

21 benefit managers, patient advocacy or22 ganizations, drug manufacturers, ap23 propriate standard-setting organiza24 tions, professional pharmacy organiza25 tions, and other entities determined 


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1 appropriate by the Secretary. The 

2 Secretary shall review and update the 

3 standard pharmacy quality measures 

4 on an ongoing basis with appropriate 

5 notice and period for comments from 

6 stakeholders. 

7 ‘‘(IV) NO INCREASE IN COST

8 SHARING DURING TEMPORARY

9 FREEZE.—Subclause (I) shall not 

10 apply in the case where application of 

11 such subclause would increase the 

12 amount owed by an individual in cost 

13 sharing above the amount such indi14 vidual would have owed in cost shar15 ing without application of such sub16 clause. 

17 ‘‘(V) DISCREPANCIES BETWEEN

18 NEGOTIATED PRICES AND ACTUAL RE19 IMBURSEMENT.—In the case that the 

20 Secretary determines that the nego21 tiated price of a PDP sponsor applied 

22 at the point-of-sale with respect to a 

23 covered part D drug for a year dis24 pensed by a pharmacy was greater 

25 than the total reimbursement made to 


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1 such pharmacy for such drug for such 

2 year, such sponsor shall, not later 

3 than 90 days after receiving notice of 

4 such determination, furnish to the 

5 pharmacy that dispensed such drug 

6 and to the Secretary a written expla7 nation of why such negotiated price 

8 was greater than such reimbursement. 

9 ‘‘(VI) SPECIALTY PHARMACY.— 

10 For purposes of carrying out this 

11 clause (including subclause (III)(dd)), 

12 the Secretary shall, not later than De13 cember 31, 2020, define the term 

14 ‘specialty pharmacy’ in consultation 

15 with relevant stakeholders. 

16 ‘‘(VII) DEFINITIONS.—In this 

17 clause: 

18 ‘‘(aa) QUALITY MEASURE.— 

19 The term ‘quality measure’ 

20 means criteria used by a PDP 

21 sponsor (including an entity that 

22 contracts with such sponsor, such 

23 as a pharmacy benefit manager) 

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1 plicability of incentive payments 

2 and pharmacy price concessions. 

3 ‘‘(bb) PDP SPONSOR.—The 

4 term ‘PDP sponsor’ includes an 

5 MA organization offering an 

6 MA–PD plan under part C and 

7 an entity that contracts with 

8 such sponsor or organization, 

9 such as a pharmacy benefit man10 ager. 

11 ‘‘(iii) AUDITS OF PDP SPONSORS AND

12 NEGOTIATED PRICE.— 

13 ‘‘(I) IN GENERAL.—Beginning 

14 January 1, 2021, the Secretary shall 

15 conduct annual audits of PDP spon16 sors by reviewing a representative 

17 sample of claims between PDP spon18 sors or other intermediary contracting 

19 organizations and all pharmacy types 

20 and those pharmacies’ lowest actual 

21 acquisition and dispensing costs to as22 sess whether reimbursement for indi23 vidual network pharmacies is below 

24 the pharmacy’s lowest actual cost of 

25 acquiring and dispensing covered part 


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1 D drugs and providing pharmacy 

2 services necessary for dispensing such 

3 drugs. In conducting such audits, the 

4 Secretary shall focus on determining 

5 whether or not the requirements 

6 under clause (ii) are negatively im7 pacting network pharmacy participa8 tion in the program under this part 

9 and beneficiary access to pharmacy 

10 providers. Such audits shall occur not 

11 less than annually and when re12 quested by the Medicare Pharma13 ceutical and Technology Ombudsman. 

14 ‘‘(II) APPEAL.—If a network 

15 pharmacy believes that a PDP spon16 sor has reimbursed for a covered part 

17 D drug below the pharmacy’s lowest 

18 actual acquisition and dispensing 

19 costs, the pharmacy may appeal the 

20 reimbursement, in writing, to the 

21 Medicare Pharmaceutical and Tech22 nology Ombudsman within 60 days 

23 following notification of the reim24 bursement and provide necessary doc25 umentation to support its claim. 


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1 ‘‘(III) ANNUAL REPORT TO CON2 GRESS.—Not later than January 1, 

3 2022, and annually thereafter, the 

4 Secretary shall submit to Congress a 

5 report that contains a summary of the 

6 audits conducted under subclause (I) 

7 and activity under subclause (II), to8 gether with recommendations for such 

9 legislation and administrative action 

10 as the Secretary determines appro11 priate. 

12 ‘‘(iv) CLAIM REIMBURSEMENT DIS13 CLOSURE REQUIREMENTS.—With respect 

14 to payment made by a PDP sponsor to a 

15 pharmacy for a covered part D drug fur16 nished by such pharmacy during a plan 

17 year beginning on or after January 1, 

18 2020, such sponsor shall promptly furnish 

19 all pricing components including the Net20 work Reimbursement ID used to price the 

21 claim, any fees, pharmacy price conces22 sions, discounts, incentives or any other 

23 forms of remuneration to or from the 

24 pharmacy that affect payment and pricing 

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1 tion response at the point-of-sale. Each of 

2 the aforementioned data elements shall 

3 each be identified in a predetermined line 

4 item in the remittance advice that is stand5 ard across the industry, which shall include 

6 suitable claim-level detail needed to prop7 erly identify the claim, including the Claim 

8 Authorization Number, date of service, 

9 date of payment remittance, ingredient 

10 cost reimbursed, dispensing fee reim11 bursed, payment amounts including the 

12 specific dollar amounts and the appro13 priate qualifier codes for each payment ad14 justment including fees, pharmacy price 

15 concessions, or incentives. 

16 ‘‘(v) VIOLATION PROCESS.—A PDP 

17 sponsor shall participate in any process es18 tablished by the Secretary for purposes of 

19 determining whether such sponsor has vio20 lated a provision of clause (ii) or (iii).’’. 

21 SEC. 5. PHARMACY BENEFIT MANAGER PROVISION OF IN22 FORMATION. 

23 (a) IN GENERAL.—Section 1150A(b)(2) of the Social 

24 Security Act (42 U.S.C. 1320b–23(b)(2)) is amended by 

25 striking ‘‘excluding’’ and inserting ‘‘including’’. 


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1 (b) EFFECTIVE DATE.—The amendment made by 

2 subsection (a) shall apply with respect to contract years 

3 beginning on or after January 1, 2020. 

Æ 


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