II 

Calendar No. 131 

116TH CONGRESS 

1ST SESSION S. 1227 

To require the Federal Trade Commission to study the role of intermediaries 

in the pharmaceutical supply chain and provide Congress with appropriate policy recommendations, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

APRIL 29, 2019 

Mr. GRASSLEY (for himself, Ms. CANTWELL, Mr. DAINES, Mr. BLUMENTHAL, 

Mr. LANKFORD, Ms. ERNST, Mr. TILLIS, Mrs. BLACKBURN, and Mr. 

WHITEHOUSE) introduced the following bill; which was read twice and referred to the Committee on the Judiciary 

JUNE 28 (legislative day, JUNE 27), 2019 

Reported by Mr. GRAHAM, with an amendment 

[Strike out all after the enacting clause and insert the part printed in italic] 

A BILL 

To require the Federal Trade Commission to study the role 

of intermediaries in the pharmaceutical supply chain and 

provide Congress with appropriate policy recommendations, 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, 


pamtmann on DSKBFK8HB2PROD with BILLS
2 

•S 1227 RS

1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘Prescription Pricing 

3 for the People Act of 2019’’. 

4 SEC. 2. DEFINITIONS. 

5 In this Act: 

6 (1) APPROPRIATE COMMITTEES OF CON7 GRESS.—The term ‘‘appropriate committees of Con8 gress’’ means— 

9 (A) the Committee on the Judiciary of the 

10 Senate; and 

11 (B) the Committee on the Judiciary of the 

12 House of Representatives. 

13 (2) COMMISSION.—The term ‘‘Commission’’ 

14 means the Federal Trade Commission. 

15 SEC. 3. STUDY OF PHARMACEUTICAL SUPPLY CHAIN 

16 INTERMEDIARIES AND MERGER ACTIVITY. 

17 (a) REPORT.—Not later than 1 year after the date 

18 of enactment of this Act, the Commission shall submit to 

19 the appropriate committees of Congress a report that— 

20 (1) addresses at minimum— 

21 (A) whether pharmacy benefit managers— 

22 (i) charge payers (including Medicare 

23 and Medicaid) a higher price than the re24 imbursement rate at which the pharmacy 

25 benefit managers reimburses competing 

26 pharmacies while reimbursing pharmacies 


pamtmann on DSKBFK8HB2PROD with BILLS
3 

•S 1227 RS

1 in which the pharmacy benefit managers 

2 have an ownership interest at the rate 

3 charged to payers; 

4 (ii) steer patients to pharmacies in 

5 which the pharmacy benefit managers have 

6 an ownership interest; 

7 (iii) audit or review proprietary data, 

8 including acquisition costs, patient infor9 mation, or dispensing information, of com10 peting pharmacies that can be used for 

11 anticompetitive purposes; or 

12 (iv) use formulary designs to depress 

13 the market share of low-cost, lower-rebate 

14 prescription drugs; 

15 (B) the current state of competition in the 

16 pharmaceutical supply chain, particularly with 

17 regard to intermediaries and the recent vertical 

18 integrations of pharmacy benefit managers with 

19 insurance companies or other payers of pre20 scription drug benefits; 

21 (C) how companies and payers assess the 

22 benefits, costs, and risks of contracting with 

23 intermediaries, including pharmacy services ad24 ministrative organizations, and whether more 

25 information about the roles of intermediaries 


pamtmann on DSKBFK8HB2PROD with BILLS
4 

•S 1227 RS

1 should be available to consumers and payers; 

2 and 

3 (D) whether there are any specific legal or 

4 regulatory obstacles the Commission currently 

5 faces in ensuring a competitive and transparent 

6 marketplace in the pharmaceutical supply 

7 chain, including the pharmacy benefit manager 

8 marketplace and pharmacy services administra9 tive organizations; and 

10 (2) provides— 

11 (A) observations or conclusions drawn 

12 from the November 2017 roundtable entitled 

13 ‘‘Understanding Competition in Prescription 

14 Drug Markets: Entry and Supply Chain Dy15 namics’’, and any similar efforts; 

16 (B) specific actions the Commission in17 tends to take as a result of the November 2017 

18 roundtable, and any similar efforts, including a 

19 detailed description of relevant forthcoming ac20 tions, additional research or roundtable discus21 sions, consumer education efforts, or enforce22 ment actions; and 

23 (C) policy or legislative recommendations 

24 to— 


pamtmann on DSKBFK8HB2PROD with BILLS
5 

•S 1227 RS

1 (i) improve transparency and competi2 tion in the pharmaceutical supply chain; 

3 (ii) prevent and deter anticompetitive 

4 behavior in the pharmaceutical supply 

5 chain; and 

6 (iii) best ensure that consumers ben7 efit from any cost savings or efficiencies 

8 that may result from mergers and consoli9 dations. 

10 (b) INTERIM REPORT.—Not later than 180 days 

11 after the date of enactment of this Act, the Commission 

12 shall submit to the appropriate committees of Congress 

13 an interim report on the progress of the report required 

14 by subsection (a), along with preliminary findings and 

15 conclusions based on information collected to that date. 

16 SECTION 1. SHORT TITLE. 

17 This Act may be cited as the ‘‘Prescription Pricing 

18 for the People Act of 2019’’. 

19 SEC. 2. DEFINITIONS. 

20 In this Act: 

21 (1) APPROPRIATE COMMITTEES OF CONGRESS.— 

22 The term ‘‘appropriate committees of Congress’’ 

23 means— 

24 (A) the Committee on the Judiciary of the 

25 Senate; and 


pamtmann on DSKBFK8HB2PROD with BILLS
6 

•S 1227 RS

1 (B) the Committee on the Judiciary of the 

2 House of Representatives. 

3 (2) COMMISSION.—The term ‘‘Commission’’ 

4 means the Federal Trade Commission. 

5 SEC. 3. STUDY OF PHARMACEUTICAL SUPPLY CHAIN INTER6 MEDIARIES AND MERGER ACTIVITY. 

7 (a) REPORT.—Not later than 1 year after the date of 

8 enactment of this Act, the Commission shall submit to the 

9 appropriate committees of Congress a report that— 

10 (1) addresses at minimum— 

11 (A) whether pharmacy benefit managers— 

12 (i) charge payers a higher price than 

13 the reimbursement rate at which the phar14 macy benefit managers reimburse phar15 macies owned by the pharmacy benefit 

16 manager and pharmacies not owned by the 

17 pharmacy benefit manager; 

18 (ii) steer patients for competitive ad19 vantage to any pharmacy, including a re20 tail, mail-order, or any other type of phar21 macy, in which the pharmacy benefit man22 agers have an ownership interest; 

23 (iii) audit or review proprietary data, 

24 including acquisition costs, patient infor25 mation, or dispensing information, of pharVerDate Sep 11 2014 21:08 Jun 28, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6203 E:\BILLS\S1227.RS S1227

pamtmann on DSKBFK8HB2PROD with BILLS
7 

•S 1227 RS

1 macies not owned by the pharmacy benefit 

2 manager and use such proprietary data to 

3 increase revenue or market share for com4 petitive advantage; or 

5 (iv) use formulary designs to increase 

6 the market share of higher cost prescription 

7 drugs or depress the market share of lower 

8 cost prescription drugs (each net of rebates 

9 and discounts); 

10 (B) trends or observations on the state of 

11 competition in the healthcare supply chain, par12 ticularly with regard to intermediaries and their 

13 integration with other intermediaries, suppliers, 

14 or payers of prescription drug benefits; 

15 (C) how companies and payers assess the 

16 benefits, costs, and risks of contracting with 

17 intermediaries, including pharmacy services ad18 ministrative organizations, and whether more 

19 information about the roles of intermediaries 

20 should be available to consumers and payers; 

21 and 

22 (D) whether there are any specific legal or 

23 regulatory obstacles the Commission currently 

24 faces in enforcing the antitrust and consumer 

25 protection laws in the pharmaceutical supply 


pamtmann on DSKBFK8HB2PROD with BILLS
8 

•S 1227 RS

1 chain, including the pharmacy benefit manager 

2 marketplace and pharmacy services administra3 tive organizations; and 

4 (2) provides— 

5 (A) observations or conclusions drawn from 

6 the November 2017 roundtable entitled ‘‘Under7 standing Competition in Prescription Drug Mar8 kets: Entry and Supply Chain Dynamics,’’ and 

9 any similar efforts; 

10 (B) specific actions the Commission intends 

11 to take as a result of the November 2017 round12 table, and any similar efforts, including a de13 tailed description of relevant forthcoming ac14 tions, additional research or roundtable discus15 sions, consumer education efforts, or enforcement 

16 actions; and 

17 (C) policy or legislative recommendations 

18 to— 

19 (i) improve transparency and competi20 tion in the pharmaceutical supply chain; 

21 (ii) prevent and deter anticompetitive 

22 behavior in the pharmaceutical supply 

23 chain; and 

24 (iii) best ensure that consumers benefit 

25 from any cost savings or efficiencies that 


pamtmann on DSKBFK8HB2PROD with BILLS
9 

•S 1227 RS

1 may result from mergers and consolida2 tions. 

3 (b) INTERIM REPORT.—Not later than 180 days after 

4 the date of enactment of this Act, the Commission shall sub5 mit to the appropriate committees of Congress an interim 

6 report on the progress of the report required by subsection 

7 (a), along with preliminary findings and conclusions based 

8 on information collected to that date. 

9 SEC. 4. REPORT. 

10 The Commission shall submit to the appropriate com11 mittees of Congress a report that includes— 

12 (1) the number and nature of complaints re13 ceived by the Commission relating to an allegation of 

14 anticompetitive conduct by a manufacturer of a sole15 source drug; 

16 (2) the ability of the Commission to bring an en17 forcement action against a manufacturer of a sole18 source drug; and 

19 (3) policy or legislative recommendations to 

20 strengthen enforcement actions relating to anti21 competitive behavior. 


pamtmann on DSKBFK8HB2PROD with BILLS
Calendar No. 131 

116TH CONGRESS 

1ST SESSION S. 1227 

A BILL 

To require the Federal Trade Commission to study 

purposes. priate policy recommendations, and for other supply chain and provide Congress with approthe role of intermediaries in the pharmaceutical 

JUNE 28 (legislative day, JUNE 27), 2019 

Reported with an amendment 


pamtmann on DSKBFK8HB2PROD with BILLS