Protecting Patients Against PBM Abuses Act

To amend title XVIII of the Social Security Act to establish certain requirements for pharmacy benefit managers under part D of the Medicare program. 1. Short title This Act may be cited as the Protecting Patients Against PBM Abuses Act 2. Establishing certain requirements for pharmacy benefit managers under part D of the Medicare program (a) Prescription drug plans Section 1860D–12(b) of the Social Security Act ( 42 U.S.C. 1395w–112(b) (9) Responsibility of pharmacy benefit managers (A) In general Each contract entered into with a PDP sponsor under this part with respect to a prescription drug plan offered by such sponsor shall provide that any pharmacy benefit manager acting on behalf of such sponsor complies with the following provisions: (i) The pharmacy benefit manager derives no income with respect to any services provided in connection with covered part D drugs furnished under such plan from any entity other than flat dollar amount service fees. (ii) The pharmacy benefit manager receives such service fees only pursuant to a written agreement between the manager and such sponsor that sets forth the amount of any such fees. Any such fee may not be directly or indirectly based on, or contingent upon— (I) the price of any covered part D drug; (II) discounts, rebates, fees, or other remuneration with respect to such drugs; or (III) any other circumstance specified by the Secretary. (iii) With respect to a covered part D drug dispensed by a pharmacy, the pharmacy benefit manager may not charge such sponsor a different amount for such drug’s ingredient cost or dispensing fee than the amount the pharmacy benefit manager reimburses such pharmacy for such drug’s ingredient cost or dispensing fee. (iv) With respect to a covered part D drug dispensed by a network pharmacy, the pharmacy benefit manager may not reimburse such pharmacy an amount less than the amount the pharmacy benefit manager would reimburse an affiliated pharmacy for such drug. (v) With respect to each covered part D drug included on the formulary of such plan for which there is a drug that is not included on such formulary with a therapeutic equivalence rating of AB (as established pursuant to section 505(j)(7) of the Federal Food, Drug, and Cosmetic Act) in the same therapeutic class or category of such covered part D drug, the pharmacy benefit manager shall submit to such plan a report specifying the difference between the national average drug acquisition cost (as published by the Secretary) for such drug not included in such formulary and the negotiated prices for such drug that is included in such formulary. (B) Certification Each PDP sponsor (and each pharmacy benefit manager providing services under a prescription drug plan furnished by such sponsor) shall furnish to the Secretary (in a time and manner specified by the Secretary) an annual certification of compliance with this paragraph, as well as such information as the Secretary determines necessary to carry out this paragraph. (C) Disgorgement of prohibited payments A pharmacy benefit manager shall disgorge to the Secretary any payment, remuneration, or other amount received in violation of this paragraph or the contract entered into with a PDP sponsor under this part with respect to a prescription drug plan. A PDP sponsor shall suspend payments to a pharmacy benefit manager for failure to disgorge such amounts pursuant to the preceding sentence or for other violations of this paragraph. (D) Clarification The requirements of this paragraph shall apply regardless of whether a PDP sponsor is acting as its own pharmacy benefit manager and regardless of whether a pharmacy benefit manager is under common ownership or control of the PDP sponsor with respect to which the manager is furnishing services. (E) Definitions For purposes of this paragraph: (i) Affiliated pharmacy The term affiliated pharmacy (ii) Pharmacy benefit manager The term pharmacy benefit manager (F) Nondisclosure of certain information Nothing in this paragraph shall be construed to require public disclosure of any information that is a trade secret or confidential information (as described in section 552(b)(4) of title 5, United States Code). . (b) MA–PD plans Section 1857(f)(3) of the Social Security Act ( 42 U.S.C. 1395w–27(f)(3) (F) Responsibility of pharmacy benefit managers Section 1860D–12(b)(9). . 3. Conflict of interest Section 1860D–4(b)(3)(A)(ii)(I) of the Social Security Act ( 42 U.S.C. 1395w–104(b)(3)(A)(ii)(I) with respect to the sponsor and plan with respect to the sponsor, plan, and any pharmacy benefit manager furnishing services to such sponsor or plan 4. PBM transparency Section 1150A of the Social Security Act ( 42 U.S.C. 1320b–23 (1) in subsection (b), by adding at the end the following new paragraph: (4) In the case of the provision of information by a PBM that manages prescription drug coverage under a contract with a sponsor described in subsection (a)(1) for a plan so described— (A) the aggregate dollar amount of all rebates that the PBM received with respect to drugs furnished under such plan from drug manufacturers; (B) the aggregate dollar amount of all administrative fees that the PBM received with respect to drugs furnished under such plan from drug manufacturers; (C) the aggregate dollar amount of all rebates described in subparagraph (A) that the PBM did not pass through to such sponsor; (D) the percentage of the aggregate dollar amount of all rebates described in subparagraph (A) that the PBM did not pass through to such sponsor; and (E) with respect to all plans described in subsection (a)(1) for which the PBM manages prescription drug coverage, the highest percentage calculated under subparagraph (D) and the lowest such percentage. ; (2) by redesignating subsections (c) and (d) as subsections (d) and (e), respectively; and (3) by inserting after subsection (b), the following new subsection: (c) Publication of part d information The Secretary shall publish, not less frequently than annually, the information reported under subsection (b) by or on behalf of sponsors described in subsection (a)(1) on a publicly available website, provided that such information shall be made available in a form that does not disclose the identity of a specific plan, the prices charged for specific drugs or classes of drugs, or the amount of any rebates provided for specific drugs or classes of drugs. . 5. Effective date The amendments made by this Act shall take effect January 1, 2024. 6. Regulations Notwithstanding any other provision of law, the Secretary shall initially implement the amendments made by this Act through interim final regulations.

Summary: Protecting Patients Against PBM Abuses Act This bill establishes requirements for Medicare pharmacy benefit managers (PBMs) with respect to remuneration, payments, and fees. Specifically, the bill restricts PBMs that are under contract with plans under the Medicare prescription drug benefit or Medicare Advantage from (1) receiving income for their services other than flat dollar amount service fees; (2) basing any service fees on the prices of covered drugs or any associated discounts, rebates, or other remuneration; (3) charging plan sponsors for ingredient costs or dispensing fees in amounts that are different than what is reimbursed to the pharmacy; or (4) reimbursing network pharmacies for less than that what is reimbursed to PBM-affiliated pharmacies. Such PBMs must also report on the difference between certain costs for drugs on the plan's formulary and those that are not on the formulary but are therapeutically equivalent. PBMs must also report certain information regarding rebates and fees they receive from drug manufacturers; the Centers for Medicare & Medicaid Services must publish this and other information that is currently reported by PBMs online.