Pharmacy Benefit Manager Transparency Act of 2023

Subjects: Health, Civil actions and liability, Congressional oversight, Government information and archives, Government studies and investigations, Health care costs and insurance, Medical ethics, Prescription drugs, State and local government operations

Summary:  <p><b>Pharmacy Benefit Manager Transparency Act of 2023</b></p> <p>This bill generally prohibits pharmacy benefit managers (PBMs) from engaging in certain practices when managing the prescription drug benefits under a health insurance plan, including charging the plan a different amount than the PBM reimburses the pharmacy. </p> <p>The bill also prohibits PBMs from arbitrarily, unfairly, or deceptively (1) clawing back reimbursement payments, or (2) increasing fees or lowering reimbursements to pharmacies to offset changes to federally funded health plans.</p> <p>PBMs are not subject to these prohibitions if they (1) pass along 100% of any price concession or discount to the health plan, and (2) disclose specified costs, prices, reimbursements, fees, markups, discounts, and aggregate payments received with respect to their PBM services.</p> <p>Further, PBMs must report annually to the Federal Trade Commission (FTC) certain information about payments received from health plans and fees charged to pharmacies.</p> <p>The FTC and state attorneys general are authorized to enforce the provisions of the bill.</p>

<html><body><pre>[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 127 Introduced in Senate (IS)]

&lt;DOC&gt;






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.

    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 ``Pharmacy Benefit Manager 
Transparency Act of 2023''.

SEC. 2. PROHIBITION ON UNFAIR OR DECEPTIVE PRESCRIPTION DRUG PRICING 
              PRACTICES.

    (a) Conduct Prohibited.--Except as provided in subsection (b), it 
shall be unlawful for any pharmacy benefit manager (or affiliate, 
subsidiary, or agent of a pharmacy benefit manager), directly or 
indirectly, to engage in any of the following activities related to 
pharmacy benefit management services:
            (1) Charge a health plan or payer a different amount for a 
        prescription drug's ingredient cost or dispensing fee than the 
        amount the pharmacy benefit manager reimburses a pharmacy for 
        the prescription drug's ingredient cost or dispensing fee where 
        the pharmacy benefit manager retains the amount of any such 
        difference.
            (2) Arbitrarily, unfairly, or deceptively, by contract or 
        any other means, reduce, rescind, or otherwise claw back any 
        reimbursement payment, in whole or in part, to a pharmacist or 
        pharmacy for a prescription drug's ingredient cost or 
        dispensing fee.
            (3) Arbitrarily, unfairly, or deceptively, by contract or 
        any other means, increase fees or lower reimbursement to a 
        pharmacy in order to offset reimbursement changes instructed by 
        the Federal Government under any health plan funded by the 
        Federal Government.
    (b) Exceptions.--A pharmacy benefit manager shall not be in 
violation of subsection (a) if the pharmacy benefit manager meets the 
following conditions:
            (1) The pharmacy benefit manager, affiliate, subsidiary, or 
        agent passes along or returns 100 percent of any price 
        concession to a health plan or payer, including any rebate, 
        discount, or other price concession.
            (2) The pharmacy benefit manager, affiliate, subsidiary, or 
        agent provides full and complete disclosure of--
                    (A) the cost, price, and reimbursement of the 
                prescription drug to each health plan, payer, and 
                pharmacy with which the pharmacy benefit manager, 
                affiliate, subsidiary, or agent has a contract or 
                agreement to provide pharmacy benefit management 
                services;
                    (B) each fee, markup, and discount charged or 
                imposed by the pharmacy benefit manager, affiliate, 
                subsidiary, or agent to each health plan, payer, and 
                pharmacy with which the pharmacy benefit manager, 
                affiliate, subsidiary, or agent has a contract or 
                agreement for pharmacy benefit management services; or
                    (C) the aggregate amount of all remuneration the 
                pharmacy benefit manager receives from a prescription 
                drug manufacturer for a prescription drug, including 
                any rebate, discount, administration fee, and any other 
                payment or credit obtained or retained by the pharmacy 
                benefit manager, or affiliate, subsidiary, or agent of 
                the pharmacy benefit manager, pursuant to a contract or 
                agreement for pharmacy benefit management services to a 
                health plan, payer, or any Federal agency (upon the 
                request of the agency).

SEC. 3. PROHIBITION ON FALSE INFORMATION.

    It shall be unlawful for any person to report information related 
to pharmacy benefit management services to a Federal department or 
agency if--
            (1) the person knew, or reasonably should have known, the 
        information to be false or misleading;
            (2) the information was required by law to be reported; and
            (3) the false or misleading information reported by the 
        person would affect analysis or information compiled by the 
        Federal department or agency for statistical or analytical 
        purposes with respect to the market for pharmacy benefit 
        management services.

SEC. 4. TRANSPARENCY.

    (a) Reporting by Pharmacy Benefit Managers.--Not later than 1 year 
after the date of enactment of this Act, and annually thereafter, each 
pharmacy benefit manager (or affiliate, subsidiary, or agent of a 
pharmacy benefit manager) shall report to the Commission the following 
information:
            (1) The aggregate amount of the difference between the 
        amount the pharmacy benefit manager was paid by each health 
        plan and the amount that the pharmacy benefit manager paid each 
        pharmacy on behalf of the health plan for prescription drugs.
            (2) The aggregate amount of any--
                    (A) generic effective rate fee charged to each 
                pharmacy;
                    (B) direct and indirect remuneration fee charged or 
                other price concession to each pharmacy; and
                    (C) payment rescinded or otherwise clawed back from 
                a reimbursement made to each pharmacy.
            (3) If, during the reporting year, the pharmacy benefit 
        manager moved or reassigned a prescription drug to a formulary 
        tier that has a higher cost, higher copayment, higher 
        coinsurance, or higher deductible to a consumer, or a lower 
        reimbursement to a pharmacy, an explanation of the reason why 
        the drug was moved or reassigned from 1 tier to another, 
        including whether the move or reassignment was determined or 
        requested by a prescription drug manufacturer or other entity.
            (4) With respect to any pharmacy benefit manager that owns, 
        controls, or is affiliated with a pharmacy, a report regarding 
        any difference in reimbursement rates or practices, direct and 
        indirect remuneration fees or other price concessions, and 
        clawbacks between a pharmacy that is owned, controlled, or 
        affiliated with the pharmacy benefit manager and any other 
        pharmacy.
    (b) Report to Congress.--
            (1) In general.--Not later than 1 year after the date of 
        enactment of this Act, and annually thereafter, the Commission 
        shall submit to the Committee on Commerce, Science, and 
        Transportation of the Senate and the Committee on Energy and 
        Commerce of the House of Representatives a report that 
        addresses, at a minimum--
                    (A) the number of actions brought by the Commission 
                during the reporting year to enforce this Act and the 
                outcome of each such enforcement action;
                    (B) the number of open investigations or inquiries 
                into potential violations of this Act as of the time 
                the report is submitted;
                    (C) the number and nature of complaints received by 
                the Commission relating to an allegation of a violation 
                of this Act during the reporting year;
                    (D) an anonymized summary of the reports filed with 
                the Commission pursuant to subsection (a) for the 
                reporting year; and
                    (E) policy or legislative recommendations to 
                strengthen any enforcement action relating to a 
                violation of this Act, including recommendations to 
                include additional prohibited conduct in section 2(a).
            (2) Formulary design or placement practices.--Not later 
        than 1 year after the date of enactment of this Act, the 
        Commission shall submit to the Committee on Commerce, Science, 
        and Transportation of the Senate and the Committee on Energy 
        and Commerce of the House of Representatives a report that 
        addresses the policies, practices, and role of pharmacy benefit 
        managers (including their affiliates, subsidiaries, and agents) 
        regarding formulary design or placement, including whether--
                    (A) pharmacy benefit managers (including their 
                affiliates, subsidiaries, and agents) use formulary 
                design or placement to increase their gross revenue 
                without an accompanying increase in patient access or 
                decrease in patient cost; or
                    (B) such policies or practices of pharmacy benefit 
                managers regarding formulary design or placement 
                violate section 5(a) of the Federal Trade Commission 
                Act (15 U.S.C. 45(a)).
            (3) Construction.--Nothing in this section shall be 
        construed as authorizing the Commission to disclose any 
        information that is a trade secret or confidential information 
        described in section 552(b)(4) of title 5, United States Code.
    (c) GAO Study.--Not later than 1 year after the date of enactment 
of this Act, the Comptroller General of the United States shall submit 
to the Committee on Commerce, Science, and Transportation, the 
Committee on Finance, and the Committee on Health, Education, Labor, 
and Pensions of the Senate and to the Committee on Ways and Means and 
the Committee on Energy and Commerce of the House of Representatives a 
report that--
            (1) addresses, at minimum--
                    (A) the role that pharmacy benefit managers play in 
                the pharmaceutical supply chain;
                    (B) the state of competition among pharmacy benefit 
                managers, including the market share for the Nation's 
                10 largest pharmacy benefit managers;
                    (C) the use of rebates and fees by pharmacy benefit 
                managers, including data for each of the 10 largest 
                pharmacy benefit managers that reflects, for each drug 
                in the formulary of each such pharmacy benefit 
                manager--
                            (i) the amount of the rebate passed on to 
                        patients;
                            (ii) the amount of the rebate passed on to 
                        payors;
                            (iii) the amount of the rebate kept by the 
                        pharmacy benefit manager; and
                            (iv) the role of fees charged by the 
                        pharmacy benefit manager;
                    (D) whether pharmacy benefit managers structure 
                their formularies in favor of high-rebate prescription 
                drugs over lower-cost, lower-rebate alternatives;
                    (E) the average prior authorization approval time 
                for each of the 10 largest pharmacy benefit managers;
                    (F) factors affecting the use of step therapy in 
                each of the 10 largest pharmacy benefit managers; and
                    (G) the extent to which the price that pharmacy 
                benefit managers charge payors, such as the Medicare 
                program under title XXVIII of the Social Security Act 
                (42 U.S.C. 1395 et seq.), State Medicaid programs under 
                title XIX of the Social Security Act (42 U.S.C. 1396 et 
                seq.), the Federal Employees Health Benefits Program 
                under chapter 89 of title 5, United States Code, or 
                private payors, for a drug is more than such pharmacy 
                benefit managers pay the pharmacy for the drug; and
            (2) provides recommendations for legislative action to 
        lower the cost of prescription drugs for consumers and payors, 
        improve the efficiency of the pharmaceutical supply chain by 
        lowering intermediary costs, improve competition in pharmacy 
        benefit management, and provide transparency in pharmacy 
        benefit management.

SEC. 5. WHISTLEBLOWER PROTECTIONS.

    (a) In General.--A pharmacy benefit manager, health plan, 
pharmaceutical manufacturer, pharmacy, or any affiliate, subsidiary, or 
agent thereof shall not, directly or indirectly, discharge, demote, 
suspend, diminish, or withdraw benefits from, threaten, harass, or in 
any other manner discriminate against or adversely impact a covered 
individual because--
            (1) the covered individual, or anyone perceived as 
        assisting the covered individual, takes (or is suspected to 
        have taken or will take) a lawful action in providing to 
        Congress, an agency of the Federal Government, the attorney 
        general of a State, a State regulator with authority over the 
        distribution or insurance coverage of prescription drugs, or a 
        law enforcement agency relating to any act or omission that the 
        covered individual reasonably believes to be a violation of 
        this Act;
            (2) the covered individual provides information that the 
        covered individual reasonably believes evidences such a 
        violation to--
                    (A) a person with supervisory authority over the 
                covered individual at the pharmacy benefit manager, 
                health plan, pharmaceutical manufacturer, pharmacy, or 
                any affiliate, subsidiary, or agent thereof; or
                    (B) another individual working for the pharmacy 
                benefit manager, health plan, pharmaceutical 
                manufacturer, pharmacy, or any affiliate, subsidiary, 
                or agent thereof who the covered individual reasonably 
                believes has the authority to investigate, discover, or 
                terminate the violation or to take any other action to 
                address the violation;
            (3) the covered individual testifies (or it is suspected 
        that the covered individual will testify) in an investigation 
        or judicial or administrative proceeding concerning such a 
        violation;
            (4) the covered individual assists or participates (or it 
        is expected that the covered individual will assist or 
        participate) in such an investigation or judicial or 
        administrative proceeding; or
            (5) the covered individual takes any other action to assist 
        in carrying out the purposes of this Act.
    (b) Enforcement.--An individual who alleges any adverse action in 
violation of subsection (a) may bring an action for a jury trial in the 
appropriate district court of the United States for the following 
relief:
            (1) Temporary relief while the case is pending.
            (2) Reinstatement with the same seniority status that the 
        individual would have had, but for the discharge or 
        discrimination.
            (3) Twice the amount of back pay otherwise owed to the 
        individual, with interest.
            (4) Consequential and compensatory damages, and 
        compensation for litigation costs, expert witness fees, and 
        reasonable attorneys' fees.
    (c) Waiver of Rights and Remedies.--The rights and remedies 
provided for in this section shall not be waived by any policy form or 
condition of employment, including by a predispute arbitration 
agreement.
    (d) Predispute Arbitration Agreements.--No predispute arbitration 
agreement shall be valid or enforceable if the agreement requires 
arbitration of a dispute arising under this section.

SEC. 6. ENFORCEMENT.

    (a) Enforcement by the Commission.--
            (1) Unfair and deceptive acts or practices.--A violation of 
        this Act shall be treated as a violation of a rule defining an 
        unfair or deceptive act or practice under section 18(a)(1)(B) 
        of the Federal Trade Commission Act (15 U.S.C. 57a(a)(1)(B)).
            (2) Powers of the commission.--
                    (A) In general.--Except as provided in subparagraph 
                (C), the Commission shall enforce this Act in the same 
                manner, by the same means, and with the same 
                jurisdiction, powers, and duties as though all 
                applicable terms and provisions of the Federal Trade 
                Commission Act (15 U.S.C. 41 et seq.) were incorporated 
                into and made a part of this Act.
                    (B) Privileges and immunities.--Subject to 
                paragraph (3), any person who violates this Act shall 
                be subject to the penalties and entitled to the 
                privileges and immunities provided in the Federal Trade 
                Commission Act (15 U.S.C. 41 et seq.).
                    (C) Nonprofit organizations and insurance.--
                Notwithstanding section 4 or 6 of the Federal Trade 
                Commission Act (15 U.S.C. 44, 46), section 2 of 
                McCarran-Ferguson Act (15 U.S.C. 1012), or any other 
                jurisdictional limitation of the Commission, the 
                Commission shall also enforce this Act, in the same 
                manner provided in subparagraphs (A) and (B) of this 
                paragraph, with respect to--
                            (i) organizations not organized to carry on 
                        business for their own profit or that of their 
                        members; and
                            (ii) the business of insurance, and persons 
                        engaged in such business.
                    (D) Authority preserved.--Nothing in this section 
                shall be construed to limit the authority of the 
                Commission under any other provision of law.
            (3) Penalties.--
                    (A) Additional civil penalty.--In addition to any 
                penalty applicable under the Federal Trade Commission 
                Act (15 U.S.C. 41 et seq.), any person that violates 
                this Act shall be liable for a civil penalty of not 
                more than $1,000,000.
                    (B) Method.--The penalties provided by subparagraph 
                (A) shall be obtained in the same manner as civil 
                penalties imposed under section 18(a)(1)(B) of the 
                Federal Trade Commission Act (15 U.S.C. 57a(a)(1)(B)).
                    (C) Multiple offenses; mitigating factors.--In 
                assessing a penalty under subparagraph (A)--
                            (i) each day of a continuing violation 
                        shall be considered a separate violation; and
                            (ii) the court shall take into 
                        consideration, among other factors--
                                    (I) the seriousness of the 
                                violation;
                                    (II) the efforts of the person 
                                committing the violation to remedy the 
                                harm caused by the violation in a 
                                timely manner; and
                                    (III) whether the violation was 
                                intentional.
    (b) Enforcement by States.--
            (1) In general.--If the attorney general of a State has 
        reason to believe that an interest of the residents of the 
        State has been or is being threatened or adversely affected by 
        a practice that violates this Act, the attorney general of the 
        State may bring a civil action on behalf of the residents of 
        the State in an appropriate district court of the United States 
        to obtain appropriate relief.
            (2) Rights of the commission.--
                    (A) Notice to the commission.--
                            (i) In general.--Except as provided in 
                        clause (iii), the attorney general of a State, 
                        before initiating a civil action under 
                        paragraph (1), shall provide written 
                        notification to the Commission that the 
                        attorney general intends to bring such civil 
                        action.
                            (ii) Contents.--The notification required 
                        under clause (i) shall include a copy of the 
                        complaint to be filed to initiate the civil 
                        action.
                            (iii) Exception.--If it is not feasible for 
                        the attorney general of a State to provide the 
                        notification required under clause (i) before 
                        initiating a civil action under paragraph (1), 
                        the attorney general shall notify the 
                        Commission immediately upon instituting the 
                        civil action.
                    (B) Intervention by the commission.--The Commission 
                may--
                            (i) intervene in any civil action brought 
                        by the attorney general of a State under 
                        paragraph (1); and
                            (ii) upon intervening--
                                    (I) be heard on all matters arising 
                                in the civil action; and
                                    (II) file petitions for appeal of a 
                                decision in the civil action.
            (3) Construction.--Nothing in this subsection may be 
        construed to prevent the attorney general of a State from 
        exercising the powers conferred on the attorney general by the 
        laws of the State to conduct investigations, to administer 
        oaths or affirmations, or to compel the attendance of witnesses 
        or the production of documentary or other evidence.
            (4) Venue; service of process.--
                    (A) Venue.--Any action brought under paragraph (1) 
                may be brought in--
                            (i) the district court of the United States 
                        that meets applicable requirements relating to 
                        venue under section 1391 of title 28, United 
                        States Code; or
                            (ii) another court of competent 
                        jurisdiction.
                    (B) Service of process.--In an action brought under 
                paragraph (1), process may be served in any district in 
                which--
                            (i) the defendant is an inhabitant, may be 
                        found, or transacts business; or
                            (ii) venue is proper under section 1391 of 
                        title 28, United States Code.
            (5) Actions by other state officials.--
                    (A) In general.--If an attorney general lacks 
                appropriate jurisdiction to bring a civil action under 
                paragraph (1), any other officer of a State who is 
                authorized by the State to do so may bring a civil 
                action under paragraph (1), subject to the same 
                requirements and limitations that apply under this 
                subsection to civil actions brought by attorneys 
                general.
                    (B) Clarification of authority.--The authority 
                provided by subparagraph (A) shall supplant, and not 
                supplement, the authorities of State attorneys general 
                under paragraph (1).
                    (C) Savings provision.--Nothing in this subsection 
                may be construed to prohibit an authorized official of 
                a State from initiating or continuing any proceeding in 
                a court of the State for a violation of any civil or 
                criminal law of the State.
    (c) Affirmative Defense.--In an action brought under this section 
to enforce section 2, it shall be an affirmative defense, on which the 
defendant has the burden of persuasion by a preponderance of the 
evidence, that the conduct alleged to be a violation of section 2 was 
nonpretextual and reasonably necessary to--
            (1) prevent a violation of, or comply with, Federal or 
        State law;
            (2) protect patient safety; or
            (3) protect patient access.

SEC. 7. EFFECT ON STATE LAWS.

    Nothing in this Act shall be construed to preempt, displace, or 
supplant any State laws, rules, regulations, or requirements, or the 
enforcement thereof.

SEC. 8. DEFINITIONS.

    In this Act:
            (1) Commission.--The term ``Commission'' means the Federal 
        Trade Commission.
            (2) Covered individual.--The term ``covered individual'' 
        means a current or former employee, contractor, subcontractor, 
        service provider, or agent of a pharmacy benefit manager, 
        health plan, pharmaceutical manufacturer, pharmacy, or any 
        affiliate, subsidiary, or agent thereof.
            (3) Health plan.--The term ``health plan'' means any group 
        or individual health insurance plan or coverage, including any 
        health insurance plan or coverage sponsored or funded by the 
        Federal Government or the government of any State, Territory, 
        or subdivision thereof.
            (4) Pharmacy benefit manager.--The term ``pharmacy benefit 
        manager'' means any entity that provides pharmacy benefit 
        management services on behalf of a health plan, a payer, or 
        health insurance issuer.
            (5) Pharmacy benefit management services.--The term 
        ``pharmacy benefit management services'' means, pursuant to a 
        written agreement with a payer or health plan offering group or 
        individual health insurance coverage, directly or through an 
        intermediary, the service of--
                    (A) negotiating terms and conditions, including 
                rebates and price concessions, with respect to a 
                prescription drug on behalf of the health plan, 
                coverage, or payer; or
                    (B) managing the prescription drug benefits 
                provided by the health plan, coverage, or payer, which 
                may include formulary management the processing and 
                payment of claims for prescription drugs, the 
                performance of drug utilization review, the processing 
                of drug prior authorization requests, the adjudication 
                of appeals or grievances related to the prescription 
                drug benefit, contracting with network pharmacies, or 
                the provision of related services.
            (6) Prescription drug.--The term ``prescription drug'' 
        means--
                    (A) a drug, as that term is defined in section 
                201(g) of the Federal Food, Drug, and Cosmetic Act (21 
                U.S.C. 321(g)), that is--
                            (i) approved by the Food and Drug 
                        Administration under section 505 of such Act 
                        (21 U.S.C. 355); and
                            (ii) subject to the requirements of section 
                        503(b)(1) of such Act (21 U.S.C. 353(b)(1));
                    (B) a biological product as that term is defined in 
                section 351 of the Public Health Service Act (42 U.S.C. 
                262(i)(1)); or
                    (C) a product that is biosimilar to, or 
                interchangeable with, a biologic product under section 
                351 of the Public Health Service Act (42 U.S.C. 
                262(i)).
                                 &lt;all&gt;
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