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Such information shall also be made available upon 
request to prospective enrollees. 
‘‘(2) DISCLOSURE UPON REQUEST OF GENERAL 
COVERAGE, UTILIZATION, AND GRIEVANCE INFORMA-
TION.—Upon request of an individual eligible to en-
roll under a prescription drug plan, the PDP spon-
sor shall provide the information described in section 
1852(c)(2) (other than subparagraph (D)) to such 
individual. 
‘‘(3) RESPONSE TO BENEFICIARY QUESTIONS.—
Each PDP sponsor offering a prescription drug plan 
shall have a mechanism for providing specific infor-
mation to enrollees upon request. The sponsor shall 
make available on a timely basis, through an Inter-
net website and in writing upon request, information 
on specific changes in its formulary. 
‘‘(4) CLAIMS INFORMATION.—Each PDP spon-
sor offering a prescription drug plan must furnish to 
each enrollee in a form easily understandable to such 
enrollees an explanation of benefits (in accordance 
with section 1806(a) or in a comparable manner) 
and a notice of the benefits in relation to initial cov-
erage limit and the annual out-of-pocket threshold 
applicable to such enrollee for the current year, 
whenever prescription drug benefits are provided
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under this part (except that such notice need not be 
provided more often than monthly).
‘‘(c) ACCESS TO COVERED BENEFITS.—
‘‘(1) ASSURING PHARMACY ACCESS.—
‘‘(A) PARTICIPATION
OF
ANY
WILLING 
PHARMACY.—A PDP sponsor and an entity of-
fering a MA-EFFS Rx plan shall permit the 
participation of any pharmacy that meets terms 
and conditions that the plan has established. 
‘‘(B) DISCOUNTS ALLOWED FOR NETWORK 
PHARMACIES.—A prescription drug plan and a 
MA-EFFS Rx plan may, notwithstanding sub-
paragraph (A), reduce coinsurance or copay-
ments for its enrolled beneficiaries below the 
level otherwise provided for covered outpatient 
drugs dispensed through in-network phar-
macies, but in no case shall such a reduction re-
sult in an increase in payments made by the 
Administrator under section 1860D–8 to a 
plan. 
‘‘(C) CONVENIENT ACCESS FOR NETWORK 
PHARMACIES.—The PDP sponsor of the pre-
scription drug plan and the entity offering a 
MA-EFFS Rx plan shall secure the participa-
tion in its network of a sufficient number of
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pharmacies that dispense (other than by mail 
order) drugs directly to patients to ensure con-
venient access (consistent with rules of the Ad-
ministrator). The Administrator shall establish 
convenient access rules under this subpara-
graph that are no less favorable to enrollees 
than the rules for convenient access to phar-
macies of the Secretary of Defense established 
as of June 1, 2003, for purposes of the 
TRICARE Retail Pharmacy (TRRx) program. 
Such rules shall include adequate emergency ac-
cess for enrolled beneficiaries. 
‘‘(D) LEVEL
PLAYING
FIELD.—Such a 
sponsor shall permit enrollees to receive benefits 
(which may include a 90-day supply of drugs or 
biologicals) through a community pharmacy, 
rather than through mail order, with any dif-
ferential in charge paid by such enrollees. 
‘‘(E) NOT REQUIRED TO ACCEPT INSUR-
ANCE RISK.—The terms and conditions under 
subparagraph (A) may not require participating 
pharmacies to accept insurance risk as a condi-
tion of participation. 
‘‘(2) USE OF STANDARDIZED TECHNOLOGY.—
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‘‘(A) IN GENERAL.—The PDP sponsor of 
a prescription drug plan and an entity offering 
a MA-EFFS Rx plan shall issue (and reissue, 
as appropriate) such a card (or other tech-
nology) that may be used by an enrollee to as-
sure access to negotiated prices under section 
1860D–2(d) for the purchase of prescription 
drugs for which coverage is not otherwise pro-
vided under the plan. 
‘‘(B) STANDARDS.—
‘‘(i) DEVELOPMENT.—The Adminis-
trator shall provide for the development or 
utilization of uniform standards relating to 
a standardized format for the card or 
other technology referred to in subpara-
graph (A). Such standards shall be com-
patible with standards established under 
part C of title XI. 
‘‘(ii) APPLICATION OF ADVISORY TASK 
FORCE.—The advisory task force estab-
lished under subsection (d)(3)(B)(ii) shall 
provide recommendations to the Adminis-
trator under such subsection regarding the 
standards developed under clause (i).
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‘‘(3) REQUIREMENTS
ON
DEVELOPMENT
AND 
APPLICATION OF FORMULARIES.—If a PDP sponsor 
of a prescription drug plan or an entity offering a 
MA-EFFS Rx plan uses a formulary, the following 
requirements must be met: 
‘‘(A) PHARMACY AND THERAPEUTIC (P&T) 
COMMITTEE.—The sponsor or entity must es-
tablish a pharmacy and therapeutic committee 
that develops and reviews the formulary. Such 
committee shall include at least one practicing 
physician and at least one practicing phar-
macist independent and free of conflict with re-
spect to the committee both with expertise in 
the care of elderly or disabled persons and a 
majority of its members shall consist of individ-
uals who are practicing physicians or practicing 
pharmacists (or both). 
‘‘(B) FORMULARY DEVELOPMENT.—In de-
veloping and reviewing the formulary, the com-
mittee shall—
‘‘(i) base clinical decisions on the 
strength of scientific evidence and stand-
ards of practice, including assessing peer-
reviewed medical literature, such as ran-
domized clinical trials, pharmacoeconomic
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studies, outcomes research data, and on 
such other information as the committee 
determines to be appropriate; and 
‘‘(ii) shall take into account whether 
including in the formulary particular cov-
ered outpatient drugs has therapeutic ad-
vantages in terms of safety and efficacy. 
‘‘(C) INCLUSION OF DRUGS IN ALL THERA-
PEUTIC CATEGORIES.—The formulary must in-
clude drugs within each therapeutic category 
and class of covered outpatient drugs (although 
not necessarily for all drugs within such cat-
egories and classes). In establishing such class-
es, the committee shall take into account the 
standards published in the United States Phar-
macopeia-Drug Information. The committee 
shall make available to the enrollees under the 
plan through the Internet or otherwise the 
bases for the exclusion of coverage of any drug 
from the formulary. 
‘‘(D) 
PROVIDER
AND
PATIENT
EDU-
CATION.—The committee shall establish policies 
and procedures to educate and inform health 
care providers and enrollees concerning the for-
mulary.
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‘‘(E) NOTICE
BEFORE
REMOVING
DRUG 
FROM FORMULARY FOR CHANGING PREFERRED 
OR TIER STATUS OF DRUG.—Any removal of a 
covered outpatient drug from a formulary and 
any change in the preferred or tier cost-sharing 
status of such a drug shall take effect only 
after appropriate notice is made available to 
beneficiaries and physicians. 
‘‘(F) PERIODIC
EVALUATION
OF
PROTO-
COLS.—In connection with the formulary, a pre-
scription drug plan shall provide for the peri-
odic evaluation and analysis of treatment proto-
cols and procedures. 
‘‘(G) GRIEVANCES AND APPEALS RELAT-
ING TO APPLICATION OF FORMULARIES.—For 
provisions relating to grievances and appeals of 
coverage, see subsections (e) and (f). 
‘‘(d) COST AND UTILIZATION MANAGEMENT; QUAL-
ITY ASSURANCE; MEDICATION THERAPY MANAGEMENT 
PROGRAM.—
‘‘(1) IN GENERAL.—The PDP sponsor or entity 
offering a MA-EFFS Rx plan shall have in place, di-
rectly or through appropriate arrangements, with re-
spect to covered outpatient drugs—
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‘‘(A) an effective cost and drug utilization 
management program, including medically ap-
propriate incentives to use generic drugs and 
therapeutic interchange, when appropriate; 
‘‘(B) quality assurance measures and sys-
tems to reduce medical errors and adverse drug 
interactions, including side-effects, and improve 
medication use, including a medication therapy 
management program described in paragraph 
(2) and for years beginning with 2007, an elec-
tronic prescription program described in para-
graph (3); and 
‘‘(C) a program to control fraud, abuse, 
and waste. 
Nothing in this section shall be construed as impair-
ing a PDP sponsor or entity from utilizing cost 
management tools (including differential payments) 
under all methods of operation. 
‘‘(2) MEDICATION THERAPY MANAGEMENT PRO-
GRAM.—
‘‘(A) IN GENERAL.—A medication therapy 
management program described in this para-
graph is a program of drug therapy manage-
ment and medication administration that may 
be furnished by a pharmacy provider and that
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is designed to assure, with respect to bene-
ficiaries at risk for potential medication prob-
lems, such as beneficiaries with complex or 
chronic diseases (such as diabetes, asthma, hy-
pertension, and congestive heart failure) or 
multiple prescriptions, that covered outpatient 
drugs under the prescription drug plan are ap-
propriately used to optimize therapeutic out-
comes through improved medication use and re-
duce the risk of adverse events, including ad-
verse drug interactions. Such programs may 
distinguish between services in ambulatory and 
institutional settings. 
‘‘(B) ELEMENTS.—Such program may in-
clude—
‘‘(i) 
enhanced 
beneficiary 
under-
standing to promote the appropriate use of 
medications by beneficiaries and to reduce 
the risk of potential adverse events associ-
ated with medications, through beneficiary 
education, counseling, case management, 
disease state management programs, and 
other appropriate means; 
‘‘(ii) increased beneficiary adherence 
with 
prescription 
medication 
regimens
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through medication refill reminders, special 
packaging, and other compliance programs 
and other appropriate means; and 
‘‘(iii) detection of patterns of overuse 
and underuse of prescription drugs. 
‘‘(C) DEVELOPMENT OF PROGRAM IN CO-
OPERATION
WITH
LICENSED
PHARMACISTS.—
The program shall be developed in cooperation 
with licensed and practicing pharmacists and 
physicians. 
‘‘(D) 
CONSIDERATIONS
IN
PHARMACY 
FEES.—The PDP sponsor of a prescription 
drug program and an entity offering a MA-
EFFS Rx plan shall take into account, in es-
tablishing fees for pharmacists and others pro-
viding services under the medication therapy 
management program, the resources and time 
used in implementing the program. Each such 
sponsor or entity shall disclose to the Adminis-
trator upon request the amount of any such 
management or dispensing fees and such fees 
shall be confidential in the same manner as pro-
vided under section 1927(b)(3)(D) for informa-
tion disclosed under section 1927(b)(3)(A). 
‘‘(3) ELECTRONIC PRESCRIPTION PROGRAM.—
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‘‘(A) IN GENERAL.—An electronic prescrip-
tion drug program described in this paragraph 
is a program that includes at least the following 
components, consistent with uniform standards 
established under subparagraph (B): 
‘‘(i) ELECTRONIC
TRANSMITTAL
OF 
PRESCRIPTIONS.—Prescriptions must be 
written 
and 
transmitted 
electronically 
(other than by facsimile), except in emer-
gency cases and other exceptional cir-
cumstances recognized by the Adminis-
trator. 
‘‘(ii) PROVISION OF INFORMATION TO 
PRESCRIBING
HEALTH
CARE
PROFES-
SIONAL.—The program provides for the 
electronic transmittal to the prescribing 
health care professional of information 
that includes—
‘‘(I) information (to the extent 
available and feasible) on the drug or 
drugs being prescribed for that pa-
tient and other information relating to 
the medical history or condition of the 
patient that may be relevant to the
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appropriate prescription for that pa-
tient; 
‘‘(II) cost-effective alternatives (if 
any) for the use of the drug pre-
scribed; and 
‘‘(III) information on the drugs 
included in the applicable formulary. 
To the extent feasible, such program shall 
permit the prescribing health care profes-
sional to provide (and be provided) related 
information on an interactive, real-time 
basis. 
‘‘(B) STANDARDS.—
‘‘(i) DEVELOPMENT.—The Adminis-
trator shall provide for the development of 
uniform standards relating to the elec-
tronic prescription drug program described 
in subparagraph (A). Such standards shall 
be compatible with standards established 
under part C of title XI. 
‘‘(ii) ADVISORY TASK FORCE.—In de-
veloping such standards and the standards 
described in subsection (c)(2)(B)(i) the Ad-
ministrator shall establish a task force that 
includes representatives of physicians, hos-
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pitals, pharmacies, beneficiaries, pharmacy 
benefit managers, individuals with exper-
tise in information technology, and phar-
macy benefit experts of the Departments 
of Veterans Affairs and Defense and other 
appropriate Federal agencies to provide 
recommendations to the Administrator on 
such standards, including recommenda-
tions relating to the following: 
‘‘(I) The range of available com-
puterized prescribing software and 
hardware and their costs to develop 
and implement. 
‘‘(II) The extent to which such 
standards and systems reduce medica-
tion errors and can be readily imple-
mented by physicians, pharmacies, 
and hospitals. 
‘‘(III) Efforts to develop uniform 
standards and a common software 
platform for the secure electronic 
communication of medication history, 
eligibility, benefit, and prescription in-
formation.
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‘‘(IV) Efforts to develop and pro-
mote universal connectivity and inter-
operability for the secure electronic 
exchange of such information.
‘‘(V) The cost of implementing 
such systems in the range of hospital 
and physician office settings and 
pharmacies, including hardware, soft-
ware, and training costs. 
‘‘(VI) Implementation issues as 
they relate to part C of title XI, and 
current Federal and State prescribing 
laws and regulations and their impact 
on implementation of computerized 
prescribing. 
‘‘(iii) DEADLINES.—
‘‘(I) The Administrator shall con-
stitute the task force under clause (ii) 
by not later than April 1, 2004. 
‘‘(II) Such task force shall sub-
mit recommendations to Adminis-
trator by not later than January 1, 
2005. 
‘‘(III) The Administrator shall 
provide for the development and pro-
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mulgation, by not later than January 
1, 2006, of national standards relat-
ing to the electronic prescription drug 
program described in clause (ii). Such 
standards shall be issued by a stand-
ards organization accredited by the 
American National Standards Insti-
tute (ANSI) and shall be compatible 
with standards established under part 
C of title XI. 
‘‘(4) TREATMENT OF ACCREDITATION.—Section 
1852(e)(4) (relating to treatment of accreditation) 
shall apply to prescription drug plans under this 
part with respect to the following requirements, in 
the same manner as they apply to plans under part 
C with respect to the requirements described in a 
clause of section 1852(e)(4)(B): 
‘‘(A) Paragraph (1) (including quality as-
surance), including medication therapy manage-
ment program under paragraph (2). 
‘‘(B) Subsection (c)(1) (relating to access 
to covered benefits). 
‘‘(C) Subsection (g) (relating to confiden-
tiality and accuracy of enrollee records).
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‘‘(5) PUBLIC DISCLOSURE OF PHARMACEUTICAL 
PRICES FOR EQUIVALENT DRUGS.—Each PDP spon-
sor and each entity offering a MA-EFFS Rx plan 
shall provide that each pharmacy or other dispenser 
that arranges for the dispensing of a covered out-
patient drug shall inform the beneficiary at the time 
of purchase of the drug of any differential between 
the price of the prescribed drug to the enrollee and 
the price of the lowest cost available generic drug 
covered under the plan that is therapeutically equiv-
alent and bioequivalent.
‘‘(e) GRIEVANCE MECHANISM, COVERAGE DETER-
MINATIONS, AND RECONSIDERATIONS.—
‘‘(1) IN GENERAL.—Each PDP sponsor shall 
provide meaningful procedures for hearing and re-
solving grievances between the organization (includ-
ing any entity or individual through which the spon-
sor provides covered benefits) and enrollees with pre-
scription drug plans of the sponsor under this part 
in accordance with section 1852(f). 
‘‘(2) APPLICATION OF COVERAGE DETERMINA-
TION AND RECONSIDERATION PROVISIONS.—A PDP 
sponsor shall meet the requirements of paragraphs 
(1) through (3) of section 1852(g) with respect to 
covered benefits under the prescription drug plan it
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offers under this part in the same manner as such 
requirements apply to an organization with respect 
to benefits it offers under a plan under part C. 
‘‘(3) REQUEST FOR REVIEW OF TIERED FOR-
MULARY DETERMINATIONS.—In the case of a pre-
scription drug plan offered by a PDP sponsor or a 
MA-EFFS Rx plan that provides for tiered cost-
sharing for drugs included within a formulary and 
provides lower cost-sharing for preferred drugs in-
cluded within the formulary, an individual who is en-
rolled in the plan may request coverage of a nonpre-
ferred drug under the terms applicable for preferred 
drugs if the prescribing physician determines that 
the preferred drug for treatment of the same condi-
tion either would not be as effective for the indi-
vidual or would have adverse effects for the indi-
vidual or both.
‘‘(f) APPEALS.—
‘‘(1) IN GENERAL.—Subject to paragraph (2), a 
PDP sponsor shall meet the requirements of para-
graphs (4) and (5) of section 1852(g) with respect 
to drugs (including a determination related to the 
application of tiered cost-sharing described in sub-
section (e)(3)) in the same manner as such require-
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ments apply to an organization with respect to bene-
fits it offers under a plan under part C. 
‘‘(2) FORMULARY DETERMINATIONS.—An indi-
vidual who is enrolled in a prescription drug plan of-
fered by a PDP sponsor or in a MA-EFFS Rx plan 
may appeal to obtain coverage for a covered out-
patient drug that is not on a formulary of the spon-
sor or entity offering the plan if the prescribing phy-
sician determines that the formulary drug for treat-
ment of the same condition either would not be as 
effective for the individual or would have adverse ef-
fects for the individual or both. 
‘‘(g) CONFIDENTIALITY
AND ACCURACY
OF EN-
ROLLEE RECORDS.—A PDP sponsor that offers a pre-
scription drug plan shall meet the requirements of section 
1852(h) with respect to enrollees under the plan in the 
same manner as such requirements apply to an organiza-
tion with respect to enrollees under part C. A PDP spon-
sor shall be treated as a business associate for purposes 
of the provisions of subpart E of part 164 of title 45, Code 
of Federal Regulations, adopted pursuant to the authority 
of the Secretary under section 264(c) of the Health Insur-
ance Portability and Accountability Act of 1996 (42 U.S. 
C. 1320d-2 note).
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‘‘SEC. 1860D–4. REQUIREMENTS FOR AND CONTRACTS WITH 
PRESCRIPTION DRUG PLAN (PDP) SPONSORS. 
‘‘(a) GENERAL REQUIREMENTS.—Each PDP sponsor 
of a prescription drug plan shall meet the following re-
quirements: 
‘‘(1) LICENSURE.—Subject to subsection (c), 
the sponsor is organized and licensed under State 
law as a risk-bearing entity eligible to offer health 
insurance or health benefits coverage in each State 
in which it offers a prescription drug plan. 
‘‘(2) ASSUMPTION OF FINANCIAL RISK FOR UN-
SUBSIDIZED COVERAGE.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B) and section 1860D–5(d)(2), the enti-
ty assumes full financial risk on a prospective 
basis for qualified prescription drug coverage 
that it offers under a prescription drug plan 
and that is not covered under section 1860D–
8. 
‘‘(B) REINSURANCE PERMITTED.—The en-
tity may obtain insurance or make other ar-
rangements for the cost of coverage provided to 
any enrollee. 
‘‘(3) SOLVENCY FOR UNLICENSED SPONSORS.—
In the case of a sponsor that is not described in 
paragraph (1), the sponsor shall meet solvency