613 
claim for such drug was 
filed through the applicable 
dispensing channel; 
‘‘(CC) dosage units and 
dosage units per fill of such 
drug; and 
‘‘(DD) days supply of 
such drug per fill; 
‘‘(VII) the net price per course of 
treatment or single fill, such as a 30- 
day supply or 90-day supply to the 
plan after rebates, fees, alternative 
discounts, or other remuneration re-
ceived from applicable entities; 
‘‘(VIII) the total amount of out- 
of-pocket spending by participants 
and beneficiaries on such drug, in-
cluding spending through copayments, 
coinsurance, and deductibles, but not 
including any amounts spent by par-
ticipants and beneficiaries on drugs 
not covered under the plan, or for 
which no claim is submitted under the 
plan; 
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‘‘(IX) the total net spending on 
the drug; 
‘‘(X) the total amount received, 
or expected to be received, by the plan 
from any applicable entity in rebates, 
fees, alternative discounts, or other 
remuneration; 
‘‘(XI) the total amount received, 
or expected to be received, by the enti-
ty providing pharmacy benefit man-
agement services, from applicable en-
tities, in rebates, fees, alternative dis-
counts, or other remuneration from 
such entities— 
‘‘(aa) for claims incurred 
during the reporting period; and 
‘‘(bb) that is related to utili-
zation of such drug or spending 
on such drug; and 
‘‘(XII) to the extent feasible, in-
formation on the total amount of re-
muneration for such drug, including 
copayment assistance dollars paid, co-
payment cards applied, or other dis-
counts provided by each drug manu-
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615 
facturer (or entity administering co-
payment assistance on behalf of such 
drug manufacturer), to the partici-
pants and beneficiaries enrolled in 
such plan; 
‘‘(ii) a list of each therapeutic class 
(as defined by the Secretary) for which a 
claim was filed under the group health 
plan during the reporting period, and, with 
respect to each such therapeutic class— 
‘‘(I) the total gross spending on 
drugs in such class before rebates, 
price 
concessions, 
alternative 
dis-
counts, or other remuneration from 
applicable entities; 
‘‘(II) the net spending in such 
class after such rebates, price conces-
sions, alternative discounts, or other 
remuneration from applicable entities; 
‘‘(III) the total amount received, 
or expected to be received, by the enti-
ty providing pharmacy benefit man-
agement services, from applicable en-
tities, in rebates, fees, alternative dis-
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616 
counts, or other remuneration from 
such entities— 
‘‘(aa) for claims incurred 
during the reporting period; and 
‘‘(bb) that is related to utili-
zation of drugs or drug spending; 
‘‘(IV) the average net spending 
per 30-day supply and per 90-day 
supply by the plan and its partici-
pants and beneficiaries, among all 
drugs within the therapeutic class for 
which a claim was filed during the re-
porting period; 
‘‘(V) the number of participants 
and beneficiaries who filled a prescrip-
tion for a drug in such class, includ-
ing the National Drug Code for each 
such drug; 
‘‘(VI) if applicable, a description 
of the formulary tiers and utilization 
mechanisms (such as prior authoriza-
tion or step therapy) employed for 
drugs in that class; and 
‘‘(VII) the total out-of-pocket 
spending under the plan by partici-
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617 
pants and beneficiaries, including 
spending through copayments, coin-
surance, and deductibles, but not in-
cluding any amounts spent by partici-
pants and beneficiaries on drugs not 
covered under the plan or for which 
no claim is submitted under the plan; 
‘‘(iii) with respect to any drug for 
which gross spending under the group 
health plan exceeded $10,000 during the 
reporting period or, in the case that gross 
spending under the group health plan ex-
ceeded $10,000 during the reporting pe-
riod with respect to fewer than 50 drugs, 
with respect to the 50 prescription drugs 
with the highest spending during the re-
porting period— 
‘‘(I) a list of all other drugs in 
the same therapeutic class as such 
drug; 
‘‘(II) if applicable, the rationale 
for the formulary placement of such 
drug in that therapeutic category or 
class, selected from a list of standard 
rationales established by the Sec-
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618 
retary, in consultation with stake-
holders; and 
‘‘(III) any change in formulary 
placement compared to the prior plan 
year; and 
‘‘(iv) in the case that such plan (or an 
entity providing pharmacy benefit manage-
ment services on behalf of such plan) has 
an affiliated pharmacy or pharmacy under 
common ownership, including mandatory 
mail and specialty home delivery programs, 
retail and mail auto-refill programs, and 
cost sharing assistance incentives funded 
by an entity providing pharmacy benefit 
services— 
‘‘(I) an explanation of any ben-
efit design parameters that encourage 
or require participants and bene-
ficiaries in the plan to fill prescrip-
tions at mail order, specialty, or retail 
pharmacies; 
‘‘(II) the percentage of total pre-
scriptions dispensed by such phar-
macies to participants or beneficiaries 
in such plan; and 
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‘‘(III) a list of all drugs dis-
pensed by such pharmacies to partici-
pants or beneficiaries enrolled in such 
plan, and, with respect to each drug 
dispensed— 
‘‘(aa) the amount charged, 
per dosage unit, per 30-day sup-
ply, or per 90-day supply (as ap-
plicable) to the plan, and to par-
ticipants and beneficiaries; 
‘‘(bb) the median amount 
charged to such plan, and the 
interquartile range of the costs, 
per dosage unit, per 30-day sup-
ply, and per 90-day supply, in-
cluding amounts paid by the par-
ticipants and beneficiaries, when 
the same drug is dispensed by 
other pharmacies that are not af-
filiated with or under common 
ownership with the entity and 
that are included in the phar-
macy network of such plan; 
‘‘(cc) the lowest cost per 
dosage unit, per 30-day supply 
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and per 90-day supply, for each 
such drug, including amounts 
charged to the plan and to par-
ticipants and beneficiaries, that 
is available from any pharmacy 
included in the network of such 
plan; and 
‘‘(dd) the net acquisition 
cost per dosage unit, per 30-day 
supply, and per 90-day supply, if 
such drug is subject to a max-
imum price discount; and 
‘‘(B) with respect to any group health 
plan, regardless of whether the plan is offered 
by a specified large employer or whether it is a 
specified large plan— 
‘‘(i) a summary document for the 
group health plan that includes such infor-
mation described in clauses (i) through (iv) 
of subparagraph (A), as specified by the 
Secretary through guidance, program in-
struction, or otherwise (with no require-
ment of notice and comment rulemaking), 
that the Secretary determines useful to 
group health plans for purposes of select-
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621 
ing pharmacy benefit management serv-
ices, such as an estimated net price to 
group health plan and participant or bene-
ficiary, a cost per claim, the fee structure 
or reimbursement model, and estimated 
cost per participant or beneficiary; 
‘‘(ii) a summary document for plans 
to provide to participants and beneficiaries, 
which shall be made available to partici-
pants or beneficiaries upon request to their 
group health plan, that— 
‘‘(I) contains such information 
described in clauses (iii), (iv), (v), and 
(vi), as applicable, as specified by the 
Secretary through guidance, program 
instruction, or otherwise (with no re-
quirement of notice and comment 
rulemaking) that the Secretary deter-
mines useful to participants or bene-
ficiaries in better understanding the 
plan or benefits under such plan; 
‘‘(II) contains only aggregate in-
formation; and 
‘‘(III) states that participants 
and beneficiaries may request specific, 
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622 
claims-level information required to be 
furnished under subsection (c) from 
the group health plan; and 
‘‘(iii) with respect to drugs covered by 
such plan during such reporting period— 
‘‘(I) the total net spending by the 
plan for all such drugs; 
‘‘(II) the total amount received, 
or expected to be received, by the plan 
from any applicable entity in rebates, 
fees, alternative discounts, or other 
remuneration; and 
‘‘(III) to the extent feasible, in-
formation on the total amount of re-
muneration for such drugs, including 
copayment assistance dollars paid, co-
payment cards applied, or other dis-
counts provided by each drug manu-
facturer (or entity administering co-
payment assistance on behalf of such 
drug manufacturer) to participants 
and beneficiaries; 
‘‘(iv) amounts paid directly or indi-
rectly in rebates, fees, or any other type of 
compensation 
(as 
defined 
in 
section 
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623 
408(b)(2)(B)(ii)(dd)(AA) of the Employee 
Retirement 
Income 
Security 
Act 
(29 
U.S.C. 1108(b)(2)(B)(ii)(dd)(AA))) to bro-
kerage firms, brokers, consultants, advi-
sors, or any other individual or firm, for— 
‘‘(I) the referral of the group 
health plan’s business to an entity 
providing pharmacy benefit manage-
ment services, including the identity 
of the recipient of such amounts; 
‘‘(II) consideration of the entity 
providing pharmacy benefit manage-
ment services by the group health 
plan; or 
‘‘(III) the retention of the entity 
by the group health plan; 
‘‘(v) an explanation of any benefit de-
sign parameters that encourage or require 
participants and beneficiaries in such plan 
to fill prescriptions at mail order, specialty, 
or retail pharmacies that are affiliated with 
or under common ownership with the enti-
ty providing pharmacy benefit management 
services under such plan, including manda-
tory mail and specialty home delivery pro-
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624 
grams, retail and mail auto-refill pro-
grams, and cost-sharing assistance incen-
tives directly or indirectly funded by such 
entity; and 
‘‘(vi) total gross spending on all drugs 
under the plan during the reporting period. 
‘‘(3) OPT-IN FOR GROUP HEALTH INSURANCE 
COVERAGE OFFERED BY A SPECIFIED LARGE EM-
PLOYER OR THAT IS A SPECIFIED LARGE PLAN.—In 
the case of group health insurance coverage offered 
in connection with a group health plan that is of-
fered by a specified large employer or is a specified 
large plan, such group health plan may, on an an-
nual basis, for plan years beginning on or after the 
date that is 30 months after the date of enactment 
of this section, elect to require an entity providing 
pharmacy benefit management services on behalf of 
the health insurance issuer to submit to such group 
health plan a report that includes all of the informa-
tion described in paragraph (2)(A), in addition to 
the information described in paragraph (2)(B). 
‘‘(4) PRIVACY REQUIREMENTS.— 
‘‘(A) IN
GENERAL.—An entity providing 
pharmacy benefit management services on be-
half of a group health plan shall report infor-
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625 
mation under paragraph (1) in a manner con-
sistent with the privacy regulations promul-
gated under section 13402(a) of the Health In-
formation Technology for Economic and Clin-
ical Health Act (42 U.S.C. 17932(a)) and con-
sistent with the privacy regulations promul-
gated under the Health Insurance Portability 
and Accountability Act of 1996 in part 160 and 
subparts A and E of part 164 of title 45, Code 
of Federal Regulations (or successor regula-
tions) (referred to in this paragraph as the 
‘HIPAA privacy regulations’) and shall restrict 
the use and disclosure of such information ac-
cording to such privacy regulations and such 
HIPAA privacy regulations. 
‘‘(B) ADDITIONAL REQUIREMENTS.— 
‘‘(i) IN
GENERAL.—An entity pro-
viding pharmacy benefit management serv-
ices on behalf of a group health plan that 
submits a report under paragraph (1) shall 
ensure that such report contains only sum-
mary health information, as defined in sec-
tion 164.504(a) of title 45, Code of Fed-
eral Regulations (or successor regulations). 
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626 
‘‘(ii) RESTRICTIONS.—In carrying out 
this subsection, a group health plan shall 
comply with section 164.504(f) of title 45, 
Code of Federal Regulations (or a suc-
cessor regulation), and a plan sponsor shall 
act in accordance with the terms of the 
agreement described in such section. 
‘‘(C) RULE OF CONSTRUCTION.— 
‘‘(i) Nothing in this section shall be 
construed to modify the requirements for 
the creation, receipt, maintenance, or 
transmission of protected health informa-
tion under the HIPAA privacy regulations. 
‘‘(ii) Nothing in this section shall be 
construed to affect the application of any 
Federal or State privacy or civil rights law, 
including the HIPAA privacy regulations, 
the Genetic Information Nondiscrimination 
Act of 2008 (Public Law 110–233) (in-
cluding the amendments made by such 
Act), the Americans with Disabilities Act 
of 1990 (42 U.S.C. 12101 et seq.), section 
504 of the Rehabilitation Act of 1973 (29 
U.S.C. 794), section 1557 of the Patient 
Protection and Affordable Care Act (42 
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627 
U.S.C. 18116), title VI of the Civil Rights 
Act of 1964 (42 U.S.C. 2000d), and title 
VII of the Civil Rights Act of 1964 (42 
U.S.C. 2000e). 
‘‘(D) WRITTEN NOTICE.—Each plan year, 
group health plans shall provide to each partici-
pant or beneficiary written notice informing the 
participant or beneficiary of the requirement for 
entities providing pharmacy benefit manage-
ment services on behalf of the group health 
plan to submit reports to group health plans 
under paragraph (1), as applicable, which may 
include incorporating such notification in plan 
documents provided to the participant or bene-
ficiary, or providing individual notification. 
‘‘(E) LIMITATION
TO
BUSINESS
ASSOCI-
ATES.—A group health plan receiving a report 
under paragraph (1) may disclose such informa-
tion only to the entity from which the report 
was received or to that entity’s business associ-
ates as defined in section 160.103 of title 45, 
Code of Federal Regulations (or successor regu-
lations) or as permitted by the HIPAA privacy 
regulations. 
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628 
‘‘(F) CLARIFICATION REGARDING PUBLIC 
DISCLOSURE
OF
INFORMATION.—Nothing in 
this section shall prevent an entity providing 
pharmacy benefit management services on be-
half of a group health plan, from placing rea-
sonable restrictions on the public disclosure of 
the information contained in a report described 
in paragraph (1), except that such plan or enti-
ty may not— 
‘‘(i) restrict disclosure of such report 
to the Department of Health and Human 
Services, the Department of Labor, or the 
Department of the Treasury; or 
‘‘(ii) prevent disclosure for the pur-
poses of subsection (c), or any other public 
disclosure requirement under this section. 
‘‘(G) LIMITED
FORM
OF
REPORT.—The 
Secretary shall define through rulemaking a 
limited form of the report under paragraph (1) 
required with respect to any group health plan 
established by a plan sponsor that is, or is af-
filiated with, a drug manufacturer, drug whole-
saler, or other direct participant in the drug 
supply chain, in order to prevent anti-competi-
tive behavior. 
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629 
‘‘(5) STANDARD FORMAT AND REGULATIONS.— 
‘‘(A) IN
GENERAL.—Not later than 18 
months after the date of enactment of this sec-
tion, the Secretary shall specify through rule-
making a standard format for entities providing 
pharmacy benefit management services on be-
half of group health plans, to submit reports re-
quired under paragraph (1). 
‘‘(B) 
ADDITIONAL
REGULATIONS.—Not 
later than 18 months after the date of enact-
ment of this section, the Secretary shall, 
through rulemaking, promulgate any other final 
regulations necessary to implement the require-
ments of this section. In promulgating such 
regulations, the Secretary shall, to the extent 
practicable, align the reporting requirements 
under this section with the reporting require-
ments under section 9825. 
‘‘(c) REQUIREMENT TO PROVIDE INFORMATION TO 
PARTICIPANTS OR BENEFICIARIES.—A group health plan, 
upon request of a participant or beneficiary, shall provide 
to such participant or beneficiary— 
‘‘(1) the summary document described in sub-
section (b)(2)(B)(ii); and 
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630 
‘‘(2) the information described in subsection 
(b)(2)(A)(i)(III) with respect to a claim made by or 
on behalf of such participant or beneficiary. 
‘‘(d) RULE OF CONSTRUCTION.—Nothing in this sec-
tion shall be construed to permit a health insurance issuer, 
group health plan, entity providing pharmacy benefit man-
agement services on behalf of a group health plan or 
health insurance issuer, or other entity to restrict disclo-
sure to, or otherwise limit the access of, the Secretary to 
a report described in subsection (b)(1) or information re-
lated to compliance with subsections (a), (b), or (c) of this 
section or section 4980D(g) by such issuer, plan, or entity. 
‘‘(e) DEFINITIONS.—In this section: 
‘‘(1) APPLICABLE ENTITY.—The term ‘applica-
ble entity’ means— 
‘‘(A) an applicable group purchasing orga-
nization, drug manufacturer, distributor, whole-
saler, rebate aggregator (or other purchasing 
entity designed to aggregate rebates), or associ-
ated third party; 
‘‘(B) any subsidiary, parent, affiliate, or 
subcontractor of a group health plan, health in-
surance issuer, entity that provides pharmacy 
benefit management services on behalf of such 
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631 
a plan or issuer, or any entity described in sub-
paragraph (A); or 
‘‘(C) such other entity as the Secretary 
may specify through rulemaking. 
‘‘(2) APPLICABLE GROUP PURCHASING ORGANI-
ZATION.—The term ‘applicable group purchasing or-
ganization’ means a group purchasing organization 
that is affiliated with or under common ownership 
with an entity providing pharmacy benefit manage-
ment services. 
‘‘(3) CONTRACTED COMPENSATION.—The term 
‘contracted compensation’ means the sum of any in-
gredient cost and dispensing fee for a drug (inclusive 
of the out-of-pocket costs to the participant or bene-
ficiary), or another analogous compensation struc-
ture that the Secretary may specify through regula-
tions. 
‘‘(4) GROSS
SPENDING.—The term ‘gross 
spending’, with respect to prescription drug benefits 
under a group health plan, means the amount spent 
by a group health plan on prescription drug benefits, 
calculated before the application of rebates, fees, al-
ternative discounts, or other remuneration. 
‘‘(5) NET SPENDING.—The term ‘net spending’, 
with respect to prescription drug benefits under a 
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632 
group health plan, means the amount spent by a 
group health plan on prescription drug benefits, cal-
culated after the application of rebates, fees, alter-
native discounts, or other remuneration. 
‘‘(6) PLAN SPONSOR.—The term ‘plan sponsor’ 
has the meaning given such term in section 3(16)(B) 
of the Employee Retirement Income Security Act of 
1974 (29 U.S.C. 1002(16)(B)). 
‘‘(7) REMUNERATION.—The term ‘remunera-
tion’ has the meaning given such term by the Sec-
retary, through rulemaking, which shall be reevalu-
ated by the Secretary every 5 years. 
‘‘(8) SPECIFIED LARGE EMPLOYER.—The term 
‘specified large employer’ means, in connection with 
a group health plan established or maintained by a 
single employer, with respect to a calendar year or 
a plan year, as applicable, an employer who em-
ployed an average of at least 100 employees on busi-
ness days during the preceding calendar year or plan 
year and who employs at least 1 employee on the 
first day of the calendar year or plan year. 
‘‘(9) SPECIFIED LARGE PLAN.—The term ‘spec-
ified large plan’ means a group health plan estab-
lished or maintained by a plan sponsor described in 
clause (ii) or (iii) of section 3(16)(B) of the Em-
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633 
ployee Retirement Income Security Act of 1974 (29 
U.S.C. 1002(16)(B)) that had an average of at least 
100 participants on business days during the pre-
ceding calendar year or plan year, as applicable. 
‘‘(10) WHOLESALE
ACQUISITION
COST.—The 
term ‘wholesale acquisition cost’ has the meaning 
given such term in section 1847A(c)(6)(B) of the 
Social 
Security 
Act 
(42 
U.S.C. 
1395w– 
3a(c)(6)(B)).’’; 
(2) EXCEPTION FOR CERTAIN GROUP HEALTH 
PLANS.—Section 9831(a)(2) of the Internal Revenue 
Code of 1986 is amended by inserting ‘‘other than 
with respect to section 9826,’’ before ‘‘any group 
health plan’’. 
(3) ENFORCEMENT.—Section 4980D of the In-
ternal Revenue Code of 1986 is amended by adding 
at the end the following new subsection: 
‘‘(g) APPLICATION TO REQUIREMENTS IMPOSED ON 
CERTAIN
ENTITIES
PROVIDING
PHARMACY
BENEFIT 
MANAGEMENT SERVICES.—In the case of any requirement 
under section 9826 that applies with respect to an entity 
providing pharmacy benefit management services on be-
half of a group health plan, any reference in this section 
to such group health plan (and the reference in subsection 
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634 
(e)(1) to the employer) shall be treated as including a ref-
erence to such entity.’’. 
(4) CLERICAL AMENDMENT.—The table of sec-
tions for subchapter B of chapter 100 of the Inter-
nal Revenue Code of 1986 is amended by adding at 
the end the following new item: 
‘‘Sec. 9826. Oversight of entities that provide pharmacy benefit management 
services.’’. 
SEC. 902. FULL REBATE PASS THROUGH TO PLAN; EXCEP-
TION FOR INNOCENT PLAN FIDUCIARIES. 
(a) IN GENERAL.—Section 408(b)(2) of the Em-
ployee Retirement Income Security Act of 1974 (29 
U.S.C. 1108(b)(2)) is amended— 
(1) in subparagraph (B)(viii)— 
(A) 
by 
redesignating 
subclauses 
(II) 
through (IV) as subclauses (III) through (V), 
respectively; 
(B) in subclause (I)— 
(i) by striking ‘‘subclause (II)’’ and 
inserting ‘‘subclause (III)’’; and 
(ii) by striking ‘‘subclauses (II) and 
(III)’’ and inserting ‘‘subclauses (III) and 
(IV)’’; and 
(C) by inserting after subclause (I) the fol-
lowing: 
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‘‘(II) Pursuant to subsection (a), subpara-
graphs (C) and (D) of section 406(a)(1) shall not 
apply to a responsible plan fiduciary, notwith-
standing any failure to remit required amounts 
under subparagraph (C)(i), if the following condi-
tions are met: 
‘‘(aa) The responsible plan fiduciary did 
not know that the covered service provider 
failed or would fail to make required remit-
tances and reasonably believed that the covered 
service 
provider 
remitted 
such 
required 
amounts. 
‘‘(bb) The responsible plan fiduciary, upon 
discovering that the covered service provider 
failed to remit the required amounts, requests 
in writing that the covered service provider 
remit such amounts. 
‘‘(cc) If the covered service provider fails 
to comply with a written request described in 
subclause (III) within 90 days of the request, 
the responsible plan fiduciary notifies the Sec-
retary of the covered service provider’s failure, 
in accordance with subclauses (III) and (IV).’’; 
and 
(2) by adding at the end the following: 
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‘‘(C)(i)(I) For plan years beginning on or after 
the date that is 30 months after the date of enact-
ment of this subparagraph (referred to in this clause 
as the ‘effective date’), no contract or arrangement 
or renewal or extension of a contract or arrange-
ment, entered into on or after the effective date, for 
services between a covered plan and a covered serv-
ice provider, through a health insurance issuer offer-
ing group health insurance coverage, a third party 
administrator, an entity providing pharmacy benefit 
management services, or other entity, for pharmacy 
benefit management services, is reasonable within 
the meaning of this paragraph unless such entity 
providing pharmacy benefit management services— 
‘‘(aa) remits 100 percent of rebates, fees, 
alternative discounts, and other remuneration 
received from any applicable entity that are re-
lated to utilization of drugs or drug spending 
under such health plan or health insurance cov-
erage, to the group health plan or health insur-
ance issuer offering group health insurance cov-
erage; and 
‘‘(bb) does not enter into any contract for 
pharmacy benefit management services on be-
half of such a plan or coverage, with an applica-
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ble entity unless 100 percent of rebates, fees, 
alternative discounts, and other remuneration 
received under such contract that are related to 
the utilization of drugs or drug spending under 
such group health plan or health insurance cov-
erage are remitted to the group health plan or 
health insurance issuer by the entity providing 
pharmacy benefit management services. 
‘‘(II) Nothing in subclause (I) shall be con-
strued to affect the term of a contract or arrange-
ment, as in effect on the effective date (as described 
in such subclause), except that such subclause shall 
apply to any renewal or extension of such a contract 
or arrangement entered into on or after such effec-
tive date, as so described. 
‘‘(ii) With respect to such rebates, fees, alter-
native discounts, and other remuneration— 
‘‘(I) the rebates, fees, alternative dis-
counts, and other remuneration under clause 
(i)(I) shall be— 
‘‘(aa) remitted— 
‘‘(AA) on a quarterly basis, to 
the group health plan or the group 
health insurance issuer, not later than 
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90 days after the end of each quarter; 
or 
‘‘(BB) in the case of an under-
payment in a remittance for a prior 
quarter, as soon as practicable, but 
not later than 90 days after notice of 
the underpayment is first given; 
‘‘(bb) fully disclosed and enumerated 
to the group health plan or health insur-
ance issuer; and 
‘‘(cc) returned to the covered service 
provider for pharmacy benefit management 
services on behalf of the group health plan 
if any audit by a plan sponsor, issuer or a 
third party designated by a plan sponsor, 
indicates that the amounts received are in-
correct after such amounts have been paid 
to the group health plan or health insur-
ance issuer; 
‘‘(II) the Secretary may establish proce-
dures for the remittance of rebates fees, alter-
native discounts, and other remuneration under 
subclause (I)(aa) and the disclosure of rebates, 
fees, alternative discounts, and other remunera-
tion under subclause (I)(bb); and 
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‘‘(III) the records of such rebates, fees, al-
ternative discounts, and other remuneration 
shall be available for audit by the plan sponsor, 
issuer, or a third party designated by a plan 
sponsor, not less than once per plan year. 
‘‘(iii) To ensure that an entity providing phar-
macy benefit management services is able to meet 
the 
requirements 
of 
clause 
(ii)(I), 
a 
rebate 
aggregator (or other purchasing entity designed to 
aggregate rebates) and an applicable group pur-
chasing organization shall remit such rebates to the 
entity providing pharmacy benefit management serv-
ices not later than 45 days after the end of each 
quarter. 
‘‘(iv) A third-party administrator of a group 
health plan, a health insurance issuer offering group 
health insurance coverage, or a covered service pro-
vider for pharmacy benefit management services 
under such health plan or health insurance coverage 
shall make rebate contracts with rebate aggregators 
or drug manufacturers available for audit by such 
plan sponsor or designated third party, subject to 
reasonable restrictions (as determined by the Sec-
retary) on confidentiality to prevent re-disclosure of 
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such contracts or use of such information in audits 
for purposes unrelated to this section. 
‘‘(v) Audits carried out under clauses (ii)(III) 
and (iv) shall be performed by an auditor selected by 
the responsible plan fiduciary. Payment for such au-
dits shall not be made, whether directly or indirectly, 
by the entity providing pharmacy benefit manage-
ment services. 
‘‘(vi) Nothing in this subparagraph shall be 
construed to— 
‘‘(I) prohibit reasonable payments to enti-
ties offering pharmacy benefit management 
services for bona fide services using a fee struc-
ture not described in this subparagraph, pro-
vided that such fees are transparent and quan-
tifiable to group health plans and health insur-
ance issuers; 
‘‘(II) require a third-party administrator of 
a group health plan or covered service provider 
for pharmacy benefit management services 
under such health plan or health insurance cov-
erage to remit bona fide service fees to the 
group health plan; 
‘‘(III) limit the ability of a group health 
plan or health insurance issuer to pass through 
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641 
rebates, fees, alternative discounts, and other 
remuneration to the participant or beneficiary; 
or 
‘‘(IV) modify the requirements for the cre-
ation, receipt, maintenance, or transmission of 
protected health information under the privacy 
regulations promulgated under the Health In-
surance Portability and Accountability Act of 
1996 in part 160 and subparts A and E of part 
164 of title 45, Code of Federal Regulations (or 
successor regulations). 
‘‘(vii) For purposes of this subparagraph— 
‘‘(I) the terms ‘applicable entity’ and ‘ap-
plicable group purchasing organization’ have 
the meanings given such terms in section 
726(e); 
‘‘(II) the terms ‘covered plan’, ‘covered 
service provider’, and ‘responsible plan fidu-
ciary’ have the meanings given such terms in 
subparagraph (B); and 
‘‘(III) the terms ‘group health insurance 
coverage’, ‘health insurance coverage’, and 
‘health insurance issuer’ have the meanings 
given such terms in section 733.’’. 
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642 
(b) RULE OF CONSTRUCTION.—Subclause (II)(aa) of 
section 408(b)(2)(B)(viii) of the Employee Retirement In-
come 
Security 
Act 
of 
1974 
(29 
U.S.C. 
1108(b)(2)(B)(viii)), as amended by subsection (a), shall 
not be construed to relieve or limit a responsible plan fidu-
ciary from the duty to monitor the practices of any covered 
service provider that contracts with the applicable covered 
plan, including for the purposes of ensuring the reason-
ableness of compensation. For purposes of this subsection, 
the terms ‘‘covered plan’’, ‘‘covered service provider’’, and 
‘‘responsible plan fiduciary’’ have the meanings given such 
terms in section 408(b)(2)(B)(ii) of the Employee Retire-
ment Income Security Act of 1974 (29 U.S.C. 
1108(b)(2)(B)(ii)). 
(c) CLARIFICATION
OF COVERED SERVICE PRO-
VIDER.— 
(1) SERVICES.— 
(A) 
IN
GENERAL.—Section 
408(b)(2)(B)(ii)(I)(bb) of the Employee Retire-
ment Income Security Act of 1974 (29 U.S.C. 
1108(b)(2)(B)(ii)(I)(bb)) is amended— 
(i) in subitem (AA) by striking ‘‘Bro-
kerage services,’’ and inserting ‘‘Services 
(including brokerage services),’’; and 
(ii) in subitem (BB)— 
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643 
(I) by striking ‘‘Consulting,’’ and 
inserting ‘‘Other services,’’; and 
(II) by striking ‘‘related to the 
development or implementation of 
plan design’’ and all that follows 
through the period at the end and in-
serting ‘‘including any of the fol-
lowing: plan design, insurance or in-
surance product selection (including 
vision and dental), recordkeeping, 
medical management, benefits admin-
istration selection (including vision 
and dental), stop-loss insurance, phar-
macy benefit management services, 
wellness design and management serv-
ices, transparency tools, group pur-
chasing organization agreements and 
services, participation in and services 
from preferred vendor panels, disease 
management, compliance services, em-
ployee assistance programs, or third 
party administration services, or con-
sulting services related to any such 
services.’’. 
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644 
(B) SENSE OF CONGRESS.—It is the sense 
of Congress that the amendment made by sub-
paragraph (A) clarifies the existing requirement 
of covered service providers with respect to 
services 
described 
in 
section 
408(b)(2)(B)(ii)(I)(bb)(BB) of the Employee 
Retirement Income Security Act of 1974 (29 
U.S.C. 1108(b)(2)(B)(ii)(I)(bb)(BB)) that were 
in effect since the application date described in 
section 202(e) of the No Surprises Act (Public 
Law 116–260; 29 U.S.C. 1108 note), and does 
not impose any additional requirement under 
section 408(b)(2)(B) of such Act. 
(2) CERTAIN ARRANGEMENTS FOR PHARMACY 
BENEFIT MANAGEMENT SERVICES CONSIDERED AS 
INDIRECT.— 
(A) IN GENERAL.—Section 408(b)(2)(B)(i) 
of the Employee Retirement Income Security 
Act of 1974 (29 U.S.C. 1108(b)(2)(B)(i)) is 
amended— 
(i) by striking ‘‘requirements of this 
clause’’ and inserting ‘‘requirements of this 
subparagraph’’; and 
(ii) by adding at the end the fol-
lowing: ‘‘For purposes of applying section 
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406(a)(1)(C) with respect to a transaction 
described under this subparagraph or sub-
paragraph (C), a contract or arrangement 
for services between a covered plan and an 
entity providing services to the plan, in-
cluding a health insurance issuer providing 
health insurance coverage in connection 
with the covered plan, in which such entity 
contracts, in connection with such plan, 
with a service provider for pharmacy ben-
efit management services, shall be consid-
ered an indirect furnishing of goods, serv-
ices, or facilities between the covered plan 
and the service provider for pharmacy ben-
efit management services acting as the 
party in interest.’’. 
(B) HEALTH
INSURANCE
ISSUER
AND 
HEALTH
INSURANCE
COVERAGE
DEFINED.— 
Section 408(b)(2)(B)(ii)(I)(aa) of such Act (29 
U.S.C. 1108(b)(2)(B)(ii)(I)(aa)) is amended by 
inserting before the period at the end ‘‘and the 
terms ‘health insurance coverage’ and ‘health 
insurance issuer’ have the meanings given such 
terms in section 733(b)’’. 
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(C) 
TECHNICAL
AMENDMENT.—Section 
408(b)(2)(B)(ii)(I)(aa) of the Employee Retire-
ment Income Security Act of 1974 (29 U.S.C. 
1108(b)(2)(B)(ii)(I)(aa)) is amended by insert-
ing ‘‘in’’ after ‘‘defined’’. 
SEC. 903. INCREASING TRANSPARENCY IN GENERIC DRUG 
APPLICATIONS. 
(a) IN GENERAL.—Section 505(j)(3) of the Federal 
Food, Drug, and Cosmetic Act (21 U.S.C. 355(j)(3)) is 
amended by adding at the end the following: 
‘‘(H)(i) Upon request (in controlled correspondence 
or an analogous process) by a person that has submitted 
or intends to submit an abbreviated application under this 
subsection for a drug that is required by regulation to con-
tain one or more of the same inactive ingredients in the 
same concentrations as the listed drug referred to, or for 
which the Secretary determines there is a scientific jus-
tification for an approach that is in vitro, in whole or in 
part, to be used to demonstrate bioequivalence for a drug 
if such a drug contains one or more of the same inactive 
ingredients in the same concentrations as the listed drug 
referred to, the Secretary shall inform the person whether 
such drug is qualitatively and quantitatively the same as 
the listed drug. The Secretary may also provide such infor-
mation to such a person on the Secretary’s own initiative 
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during the review of an abbreviated application under this 
subsection for such drug. 
‘‘(ii) Notwithstanding section 301(j), if the Secretary 
determines that such drug is not qualitatively or quan-
titatively the same as the listed drug, the Secretary shall 
identify and disclose to the person— 
‘‘(I) the ingredient or ingredients that cause 
such drug not to be qualitatively or quantitatively 
the same as the listed drug; and 
‘‘(II) for any ingredient for which there is an 
identified quantitative deviation, the amount of such 
deviation. 
‘‘(iii) If the Secretary determines that such drug is 
qualitatively and quantitatively the same as the listed 
drug, the Secretary shall not change or rescind such deter-
mination after the submission of an abbreviated applica-
tion for such drug under this subsection unless— 
‘‘(I) the formulation of the listed drug has been 
changed and the Secretary has determined that the 
prior listed drug formulation was withdrawn for rea-
sons of safety or effectiveness; or 
‘‘(II) the Secretary makes a written determina-
tion that the prior determination must be changed 
because an error has been identified. 
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‘‘(iv) If the Secretary makes a written determination 
described in clause (iii)(II), the Secretary shall provide no-
tice and a copy of the written determination to the person 
making the request under clause (i). 
‘‘(v) The disclosures authorized under clauses (i) and 
(ii) are disclosures authorized by law, including for pur-
poses of section 1905 of title 18, United States Code. This 
subparagraph shall not otherwise be construed to author-
ize the disclosure of nonpublic qualitative or quantitative 
information about the ingredients in a listed drug, or to 
affect the status, if any, of such information as trade se-
cret or confidential commercial information for purposes 
of section 301(j) of this Act, section 552 of title 5, United 
States Code, or section 1905 of title 18, United States 
Code.’’. 
(b) GUIDANCE.— 
(1) IN
GENERAL.—Not later than one year 
after the date of enactment of this Act, the Sec-
retary of Health and Human Services shall issue 
draft guidance, or update guidance, describing how 
the Secretary will determine whether a drug is quali-
tatively and quantitatively the same as the listed 
drug 
(as 
such 
terms 
are 
used 
in 
section 
505(j)(3)(H) of the Federal Food, Drug, and Cos-
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