SEC. 
2. 
PHARMACY 
BENEFITS 
MANAGER 
STANDARDS 
UNDER THE MEDICARE PROGRAM. 
(a) IN GENERAL.—Section 1860D–12(b) of the So-
cial Security Act (42 U.S.C. 1395w–112(b)) is amended 
by adding at the end the following new paragraph: 
‘‘(7) PHARMACY
BENEFITS
MANAGER
TRANS-
PARENCY
REQUIREMENTS.—Each contract entered 
into with a PDP sponsor under this part with re-
spect to a prescription drug plan offered by such 
sponsor shall provide that the PDP may not enter 
into a contract with any pharmacy benefits manager 
(referred to in this paragraph as a ‘PBM’) to man-
age the prescription drug coverage provided under 
such plan, or to control the costs of the prescription 
drug coverage under such plan, unless the PBM ad-
heres to the following criteria when handling person-
ally identifiable utilization and claims data or other 
sensitive patient data: 
‘‘(A) The PBM may not transmit any per-
sonally identifiable utilization or claims data, 
with respect to a plan enrollee, to a pharmacy 
owned by a PBM if the plan enrollee has not 
voluntarily elected in writing or via secure elec-
tronic means to fill that particular prescription 
at the PBM-owned pharmacy. 
VerDate Sep 11 2014 
03:35 Jan 15, 2015
Jkt 049200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6201
E:\BILLS\H244.IH
H244
smartinez on DSK4TPTVN1PROD with BILLS
‘‘(B) The PBM may not require that a 
plan enrollee use a retail pharmacy, mail order 
pharmacy, specialty pharmacy, or other phar-
macy entity providing pharmacy services in 
which the PBM has an ownership interest or 
that has an ownership interest in the PBM or 
provide an incentive to a plan enrollee to en-
courage the enrollee to use a retail pharmacy, 
mail order pharmacy, specialty pharmacy, or 
other pharmacy entity providing pharmacy serv-
ices in which the PBM has an ownership inter-
est or that has an ownership interest in the 
PBM, if the incentive is applicable only to such 
pharmacies.’’. 
(b) REGULAR UPDATE
OF PRESCRIPTION DRUG 
PRICING STANDARD.—Paragraph (6) of section 1860D– 
12(b) of the Social Security Act (42 U.S.C. 1395w– 
112(b)) is amended to read as follows: 
‘‘(6) REGULAR
UPDATE
OF
PRESCRIPTION 
DRUG PRICING STANDARD.— 
‘‘(A) IN GENERAL.—If the PDP sponsor of 
a prescription drug plan uses a standard for re-
imbursement (as described in subparagraph 
(B)) of pharmacies based on the cost of a drug, 
each contract entered into with such sponsor 
VerDate Sep 11 2014 
03:35 Jan 15, 2015
Jkt 049200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6201
E:\BILLS\H244.IH
H244
smartinez on DSK4TPTVN1PROD with BILLS
under this part with respect to the plan shall 
provide that the sponsor shall— 
‘‘(i) update such standard not less fre-
quently than once every 7 days, beginning 
with an initial update on January 1 of 
each year, to accurately reflect the market 
price of acquiring the drug; 
‘‘(ii) disclose to applicable pharmacies 
the sources used for making any such up-
date; 
‘‘(iii) if the source for such a standard 
for reimbursement is not publicly available, 
disclose to the applicable pharmacies all in-
dividual drug prices to be so updated in 
advance of the use of such prices for the 
reimbursement of claims; and 
‘‘(iv) establish a process to appeal, in-
vestigate, and resolve disputes regarding 
individual drug prices that are less than 
the pharmacy acquisition price for such 
drug. 
‘‘(B) 
PRESCRIPTION
DRUG
PRICING 
STANDARD
DEFINED.—For purposes of sub-
paragraph (A), a standard for reimbursement 
of a pharmacy is any methodology or formula 
VerDate Sep 11 2014 
03:35 Jan 15, 2015
Jkt 049200
PO 00000
Frm 00004
Fmt 6652
Sfmt 6201
E:\BILLS\H244.IH
H244
smartinez on DSK4TPTVN1PROD with BILLS
for varying the pricing of a drug or drugs dur-
ing the term of the pharmacy reimbursement 
contract that is based on the cost of the drug 
involved, including drug pricing references and 
amounts that are based upon average wholesale 
price, wholesale average cost, average manufac-
turer price, average sales price, maximum al-
lowable cost (MAC), or other costs, whether 
publicly available or not.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to plan years beginning on or after 
January 1, 2016. 
SEC. 3. REGULAR UPDATE OF PRESCRIPTION DRUG PRIC-
ING STANDARD UNDER TRICARE RETAIL 
PHARMACY PROGRAM. 
Section 1074g(d) of title 10, United States Code, is 
amended by adding at the end the following new para-
graph: 
‘‘(3) To the extent practicable, with respect to the 
TRICARE retail pharmacy program described in sub-
section (a)(2)(E)(ii), the Secretary shall ensure that a con-
tract entered into with a TRICARE managed care support 
contractor includes requirements described in section 
1860D–12(b)(6) of the Social Security Act (42 U.S.C. 
VerDate Sep 11 2014 
03:35 Jan 15, 2015
Jkt 049200
PO 00000
Frm 00005
Fmt 6652
Sfmt 6201
E:\BILLS\H244.IH
H244
smartinez on DSK4TPTVN1PROD with BILLS
1395w–112(b)(6)) to ensure the provision of information 
regarding the pricing standard for prescription drugs.’’. 
SEC. 4. PRESCRIPTION DRUG TRANSPARENCY IN THE FED-
ERAL EMPLOYEE HEALTH BENEFITS PRO-
GRAM. 
(a) IN GENERAL.—Section 8902 of title 5, United 
States Code, is amended by adding at the end the fol-
lowing new subsections: 
‘‘(p) A contract may not be made or a plan approved 
under this chapter under which a carrier has an agree-
ment with a pharmacy benefits manager (in this sub-
section referred to as a ‘PBM’) to manage prescription 
drug coverage or to control the costs of the prescription 
drug coverage unless the carrier and PBM adhere to the 
following criteria: 
‘‘(1) The PBM may not transmit any personally 
identifiable utilization or claims data with respect to 
an individual enrolled under such contract or plan to 
a pharmacy owned by the PBM if the individual has 
not voluntarily elected in writing or via secure elec-
tronic means to fill that particular prescription at 
such a pharmacy. 
‘‘(2) The PBM may not require that an indi-
vidual enrolled under such contract or plan use a re-
tail pharmacy, mail order pharmacy, specialty phar-
VerDate Sep 11 2014 
03:35 Jan 15, 2015
Jkt 049200
PO 00000
Frm 00006
Fmt 6652
Sfmt 6201
E:\BILLS\H244.IH
H244
smartinez on DSK4TPTVN1PROD with BILLS
macy, or other pharmacy entity providing pharmacy 
services in which the PBM has an ownership interest 
or that has an ownership interest in the PBM or 
provide an incentive to a plan enrollee to encourage 
the enrollee to use a retail pharmacy, mail order 
pharmacy, specialty pharmacy, or other pharmacy 
entity providing pharmacy services in which the 
PBM has an ownership interest or that has an own-
ership interest in the PBM, if the incentive is appli-
cable only to such pharmacies. 
‘‘(q)(1) If a contract made or plan approved under 
this chapter provides for a standard for reimbursement 
(as described in paragraph (2)) with respect to a prescrip-
tion drug plan, such contract or plan shall provide that 
the applicable carrier— 
‘‘(A) update such standard not less frequently 
than once every 7 days, beginning with an initial up-
date on January 1 of each year, to accurately reflect 
the market price of acquiring the drug; 
‘‘(B) disclose to applicable pharmacies the 
sources used for making any such update; 
‘‘(C) if the source for such a standard for reim-
bursement is not publicly available, disclose to the 
applicable pharmacies all individual drug prices to be 
VerDate Sep 11 2014 
03:35 Jan 15, 2015
Jkt 049200
PO 00000
Frm 00007
Fmt 6652
Sfmt 6201
E:\BILLS\H244.IH
H244
smartinez on DSK4TPTVN1PROD with BILLS