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HR 7148 PCS
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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(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. 6702. 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 (or between a sponsor of a covered plan 
and a covered service provider), through a health in-
surance issuer offering group health insurance cov-
erage, a third-party administrator, an entity pro-
viding pharmacy benefit management services, or 
other entity, for pharmacy benefit management serv-
ices, is reasonable within the meaning of this para-
graph 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, in the case 
of a health insurance issuer offering group 
health insurance coverage in connection with a 
group health plan, to the health insurance 
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issuer offering group health insurance coverage 
on behalf of the plan; 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-
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, 
in the case of a health insurance issuer offering 
group health insurance coverage in connection 
with a group health plan, to the health insur-
ance issuer on behalf of the plan by the entity 
providing pharmacy benefit management serv-
ices. 
‘‘(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. 
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‘‘(ii) With respect to such rebates, fees, alternative 
discounts, and other remuneration— 
‘‘(I) the rebates, fees, alternative discounts, and 
other remuneration under clause (i)(I) shall be— 
‘‘(aa) remitted— 
‘‘(AA) on a quarterly basis, to the 
group health plan or, in the case of a 
health insurance issuer offering group 
health insurance coverage in connection 
with a group health plan, to the group 
health insurance issuer on behalf of the 
plan, not later than 90 days after the end 
of each quarter; or 
‘‘(BB) in the case of an under-
payment in a remittance for a prior quar-
ter, as soon as practicable, but not later 
than 90 days after notice of the under-
payment is first given; 
‘‘(bb) fully disclosed and enumerated to 
the group health plan or health insurance 
issuer; and 
‘‘(cc) returned to the covered service pro-
vider for pharmacy benefit management services 
on behalf of the group health plan if any audit 
by a plan sponsor, issuer or a third party des-
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