I 

108TH CONGRESS 

2D SESSION H. R. 5278 

To ensure and foster continued patient safety and quality of care by making 

the antitrust laws apply to negotiations between groups of independent 

pharmacies and health plans and health insurance issuers in the same 

manner as such laws apply to collective bargaining by labor organizations 

under the National Labor Relations Act, to ensure integrity in the 

operation of pharmacy benefit managers, and to preserve access standards to community pharmacies under the Medicare outpatient prescription drug program. 

IN THE HOUSE OF REPRESENTATIVES 

OCTOBER 7, 2004 

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 the Judiciary and Ways and Means, 

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 ensure and foster continued patient safety and quality 

of care by making the antitrust laws apply to negotiations between groups of independent pharmacies and 

health plans and health insurance issuers in the same 

manner as such laws apply to collective bargaining by 

labor organizations under the National Labor Relations 

Act, to ensure integrity in the operation of pharmacy 

benefit managers, and to preserve access standards to 
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community pharmacies under the Medicare outpatient 

prescription drug program. 

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 ‘‘Community Pharmacy 

5 Preservation Act of 2004’’. 

6 SEC. 2. APPLICATION OF THE ANTITRUST LAWS TO INDE7 PENDENT PHARMACIES NEGOTIATING WITH 

8 HEALTH PLANS. 

9 (a) IN GENERAL.—Any independent pharmacies who 

10 are engaged in negotiations with a health plan regarding 

11 the terms of any contract under which the pharmacies pro12 vide health care items or services for which benefits are 

13 provided under such plan shall, in connection with such 

14 negotiations, be entitled to the same treatment under the 

15 antitrust laws as the treatment to which bargaining units 

16 which are recognized under the National Labor Relations 

17 Act are entitled in connection with such collective bar18 gaining. Such a pharmacy shall, only in connection with 

19 such negotiations, be treated as an employee engaged in 

20 concerted activities and shall not be regarded as having 

21 the status of an employer, independent contractor, mana22 gerial employee, or supervisor. 

23 (b) PROTECTION FOR GOOD FAITH ACTIONS.—Ac24 tions taken in good faith reliance on subsection (a) shall 
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1 not be the subject under the antitrust laws of criminal 

2 sanctions nor of any civil damages, fees, or penalties be3 yond actual damages incurred. 

4 (c) LIMITATION.— 

5 (1) NO NEW RIGHT FOR COLLECTIVE CES6 SATION OF SERVICE.—The exemption provided in 

7 subsection (a) shall not confer any new right to par8 ticipate in any collective cessation of service to pa9 tients not already permitted by existing law. 

10 (2) NO CHANGE IN NATIONAL LABOR RELA11 TIONS ACT.—This section applies only to inde12 pendent pharmacies excluded from the National 

13 Labor Relations Act. Nothing in this section shall be 

14 construed as changing or amending any provision of 

15 the National Labor Relations Act, or as affecting 

16 the status of any group of persons under that Act. 

17 (d) EFFECTIVE DATE.—The exemption provided in 

18 subsection (a) shall apply to conduct occurring beginning 

19 on the date of the enactment of this Act. 

20 (e) LIMITATION ON EXEMPTION.—Nothing in this 

21 section shall exempt from the application of the antitrust 

22 laws any agreement or otherwise unlawful conspiracy that 

23 excludes, limits the participation or reimbursement of, or 

24 otherwise limits the scope of services to be provided by 

25 any independent pharmacy or group of independent phar-
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1 macies with respect to the performance of services that 

2 are within their scope of practice as defined or permitted 

3 by relevant law or regulation. 

4 (f) NO EFFECT ON TITLE VI OF CIVIL RIGHTS ACT

5 OF 1964.—Nothing in this section shall be construed to 

6 affect the application of title VI of the Civil Rights Act 

7 of 1964. 

8 (g) NO APPLICATION TO FEDERAL PROGRAMS.— 

9 Nothing in this section shall apply to negotiations between 

10 independent pharmacies and health plans pertaining to 

11 benefits provided under any of the following: 

12 (1) The Medicaid Program under title XIX of 

13 the Social Security Act (42 U.S.C. 1396 et seq.). 

14 (2) The SCHIP program under title XXI of the 

15 Social Security Act (42 U.S.C. 1397aa et seq.). 

16 (3) Chapter 55 of title 10, United States Code 

17 (relating to medical and dental care for members of 

18 the uniformed services). 

19 (4) Chapter 17 of title 38, United States Code 

20 (relating to Veterans’ medical care). 

21 (5) Chapter 89 of title 5, United States Code 

22 (relating to the Federal employees’ health benefits 

23 program). 

24 (6) The Indian Health Care Improvement Act 

25 (25 U.S.C. 1601 et seq.). 
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1 (h) DEFINITIONS.—For purposes of this section: 

2 (1) ANTITRUST LAWS.—The term ‘‘antitrust 

3 laws’’— 

4 (A) has the meaning given it in subsection 

5 (a) of the first section of the Clayton Act (15 

6 U.S.C. 12(a)), except that such term includes 

7 section 5 of the Federal Trade Commission Act 

8 (15 U.S.C. 45) to the extent such section 5 ap9 plies to unfair methods of competition; and 

10 (B) includes any State law similar to the 

11 laws referred to in subparagraph (A). 

12 (2) HEALTH PLAN AND RELATED TERMS.— 

13 (A) IN GENERAL.—The term ‘‘health plan’’ 

14 means a group health plan or a health insur15 ance issuer that is offering health insurance 

16 coverage. 

17 (B) HEALTH INSURANCE COVERAGE; 

18 HEALTH INSURANCE ISSUER.—The terms 

19 ‘‘health insurance coverage’’ and ‘‘health insur20 ance issuer’’ have the meanings given such 

21 terms under paragraphs (1) and (2), respec22 tively, of section 733(b) of the Employee Retire23 ment Income Security Act of 1974 (29 U.S.C. 

24 1191b(b)). 
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1 (C) GROUP HEALTH PLAN.—The term 

2 ‘‘group health plan’’ has the meaning given that 

3 term in section 733(a)(1) of the Employee Re4 tirement Income Security Act of 1974 (29 

5 U.S.C. 1191b(a)(1)). 

6 (3) INDEPENDENT PHARMACY.—The term 

7 ‘‘independent pharmacy’’ means a pharmacy which 

8 is not owned (or operated) by a publicly traded com9 pany. For purposes of the previous sentence, the 

10 term ‘‘publicly traded company’’ means a company 

11 that is an issuer within the meaning of section 

12 2(a)(7) of the Sarbanes-Oxley Act of 2002 (15 

13 U.S.C. 7201(a)(7)). 

14 SEC. 3. REQUIREMENTS RELATING TO PHARMACY BENEFIT 

15 MANAGERS. 

16 (a) PROHIBITION ON CROSS OWNERSHIP.— 

17 (1) IN GENERAL.—No pharmaceutical drug 

18 manufacturer may have a controlling interest in an 

19 entity that is a pharmacy benefit manager. 

20 (2) PENALTY.—The Secretary of Health and 

21 Human Services may issue such civil penalties for a 

22 violation of paragraph (1) as the Secretary of 

23 Health and Human Services determines necessary. 

24 (b) DRUG INTERCHANGE.— 

25 (1) PROHIBITIONS.— 
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1 (A) COST INCREASE.—A pharmacy benefit 

2 manager shall not make any drug interchange 

3 proposal for an individual who is served by such 

4 manager where the net cost of the drug to 

5 which the prescription would be changed ex6 ceeds that of the drug from which the prescrip7 tion would be changed. 

8 (B) DISCLOSURE TO INDIVIDUAL.—A 

9 pharmacy benefit manager shall not make any 

10 drug interchange for an individual who is 

11 served by such manager unless the pharmacy 

12 benefit manager discloses to the individual, in a 

13 clear and conspicuous manner, the savings to 

14 the individual associated with such interchange. 

15 (C) GENERICS.—A pharmacy benefit man16 ager shall not make any drug interchange pro17 posal for an individual who is served by such 

18 manager if the drug from which the prescrip19 tion would be changed has generic equivalents 

20 and the drug to which the prescription would be 

21 changed has no generic equivalents, unless the 

22 drug to which the prescription would be 

23 changed has a lower net cost to the individual 

24 than does each of the generic equivalents of the 
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1 drug from which the prescription would be 

2 changed. 

3 (2) PENALTY.—A pharmacy benefit manager 

4 that violates subparagraph (A), (B), or (C) of para5 graph (1) with respect to an individual and presents 

6 a claim for payment to the United States Govern7 ment as reimbursement for services to such indi8 vidual, shall be considered in violation of section 

9 3729 of title 31, United States Code. 

10 (c) DISCLOSURE OF COMPENSATION FROM DRUG

11 MANUFACTURERS.— 

12 (1) QUARTERLY AND ANNUAL DISCLOSURES.— 

13 At the end of each fiscal year quarter, each phar14 macy benefit manager shall disclose— 

15 (A) to the client plans of such manager 

16 and to the Antitrust Division of the Depart17 ment of Justice, all compensation and remu18 neration that the pharmacy benefit manager re19 ceived during such fiscal year quarter from a 

20 pharmaceutical drug manufacturer, including, 

21 regardless of how categorized, market share in22 centives, commissions, mail service purchase 

23 discounts, and administrative or management 

24 fees; and 
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1 (B) to the client plans of such manager, 

2 any fees received for sales of utilization data to 

3 a pharmaceutical drug manufacturer. 

4 (2) DISCLOSURE AT CONTRACTING STAGE.— 

5 Each pharmacy benefit manager shall disclose to 

6 each client plan and prospective client plan of such 

7 manager, in advance of executing an agreement with 

8 such plan, information relating to the pharmacy ben9 efit manager’s methodology of soliciting and receiv10 ing payments from pharmaceutical drug manufac11 turers. 

12 (d) DEFINITIONS.—For purposes of this section: 

13 (1) CLIENT PLAN.—The term ‘‘client plan’’ 

14 means a pharmaceutical plan in which the entity 

15 that offers such plan to its beneficiaries contracts di16 rectly with a pharmacy benefit manager to provide 

17 or administer such plan. 

18 (2) DRUG INTERCHANGE.—The term ‘‘drug 

19 interchange’’ means any change from one prescrip20 tion drug to another prescription drug that is in21 tended to address or treat the same illness or condi22 tion. 
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1 SEC. 4. COMMUNITY PHARMACY ACCESS STANDARDS 

2 UNDER THE MEDICARE OUTPATIENT PRE3 SCRIPTION DRUG PROGRAM. 

4 In establishing rules under subparagraph (C) of sec5 tion 1860D–4(b)(1) of the Social Security Act, as added 

6 by the Medicare Prescription Drug, Improvement, and 

7 Modernization Act of 2003 (Public Law 108–173), for 

8 convenient access to non-mail-order pharmacies consistent 

9 with the application of standards under clause (ii) of such 

10 subparagraph, the Secretary of Health and Human Serv11 ices shall provide for application of the following stand12 ards: 

13 (1)(A) In each urban area, at least 90 percent 

14 of Medicare beneficiaries in a plan’s service area, on 

15 average, live within 2 miles of a retail pharmacy par16 ticipation in the prescription drug plan’s or MA–PD 

17 plan’s network. 

18 (B) In each suburban area, at least 90 percent 

19 of Medicare beneficiaries in a plan’s service area, on 

20 average, live within 5 miles of a retail pharmacy par21 ticipation in the prescription drug plan’s or MA–PD 

22 plan’s network. 

23 (C) In each rural area, at least 70 percent of 

24 Medicare beneficiaries in a plan’s service area, on 

25 average, live within 15 miles of a retail pharmacy 
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1 participation in the prescription drug plan’s or MA– 

2 PD plan’s network. 

3 (D) There shall be no averaging of such dis4 tances across or among urban, suburban, and rural 

5 areas. 

6 (2) The rules shall require plans to measure 

7 traveling distances from beneficiaries’ homes to com8 munity pharmacies based on commonly traveled 

9 routes. 

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