1453
‘‘(iii) with respect to drugs covered by 
such plan or coverage during such report-
ing period—
‘‘(I) the total net spending by the 
plan or coverage for all such drugs; 
‘‘(II) the total amount received, 
or expected to be received, by the plan 
or issuer 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 
408(b)(2)(B)(ii)(dd)(AA) of the Employee 
Retirement Income Security Act) to bro-
1454
kerage firms, brokers, consultants, advi-
sors, or any other individual or firm, for—
‘‘(I) the referral of the group 
health plan’s or health insurance 
issuer’s business to an entity pro-
viding pharmacy benefit management 
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 health insurance issuer; or 
‘‘(III) the retention of the entity 
by the group health plan or health in-
surance issuer; 
‘‘(v) an explanation of any benefit de-
sign parameters that encourage or require 
participants and beneficiaries in such plan 
or coverage to fill prescriptions at mail 
order, specialty, or retail pharmacies that 
are affiliated with or under common own-
ership with the entity providing pharmacy 
benefit management services under such 
plan or coverage, including mandatory mail 
and specialty home delivery programs, re-
1455
tail and mail auto-refill programs, and 
cost-sharing assistance incentives directly 
or indirectly funded by such entity; and 
‘‘(vi) total gross spending on all drugs 
under the plan or coverage during the re-
porting 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 or a health insur-
1456
ance issuer offering group health insurance cov-
erage shall report information under paragraph 
(1) in a manner consistent with the privacy reg-
ulations promulgated under section 13402(a) of 
the Health Information Technology for Eco-
nomic and Clinical Health Act and consistent 
with the privacy regulations promulgated under 
the Health Insurance Portability and Account-
ability Act of 1996 in part 160 and subparts A 
and E of part 164 of title 45, Code of Federal 
Regulations (or successor regulations) (referred 
to in this paragraph as the ‘HIPAA privacy 
regulations’) and shall restrict the use and dis-
closure of such information according 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 or 
health insurance issuer offering group 
health insurance coverage that submits a 
report under paragraph (1) shall ensure 
that such report contains only summary 
health information, as defined in section
1457
164.504(a) of title 45, Code of Federal 
Regulations (or successor regulations). 
‘‘(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
1458
U.S.C. 794), section 1557 of the Patient 
Protection and Affordable Care Act (42 
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, including with respect to 
group health insurance coverage offered in con-
nection with a group health plan, shall provide 
to each participant or beneficiary written notice 
informing the participant or beneficiary of the 
requirement for entities providing pharmacy 
benefit management services on behalf of the 
group health plan or health insurance issuer of-
fering group health insurance coverage to sub-
mit reports to group health plans under para-
graph (1), as applicable, which may include in-
corporating such notification in plan documents 
provided to the participant or beneficiary, 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
1459
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. 
‘‘(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 or health insurance 
issuer offering group health insurance coverage, 
from placing reasonable restrictions on the pub-
lic disclosure of the information contained in a 
report described in paragraph (1), except that 
such plan, issuer, or entity 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)
1460
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. 
‘‘(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 and health insurance 
issuers offering group health insurance cov-
erage, to submit reports required under para-
graph (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
1461
under this section with the reporting require-
ments under section 2799A–10. 
‘‘(c) REQUIREMENT TO PROVIDE INFORMATION TO 
PARTICIPANTS OR BENEFICIARIES.—A group health plan, 
including with respect to group health insurance coverage 
offered in connection with a group health plan, upon re-
quest 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 
‘‘(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) ENFORCEMENT.—
‘‘(1) IN GENERAL.—The Secretary shall enforce 
this section. The enforcement authority under this 
subsection shall apply only with respect to group 
health plans (including group health insurance cov-
erage offered in connection with such a plan) to 
which the requirements of subparts I and II of part 
A and part D apply in accordance with section 2722, 
and with respect to entities providing pharmacy ben-
efit management services on behalf of such plans 
and applicable entities providing services on behalf 
of such plans.
1462
‘‘(2) FAILURE TO PROVIDE INFORMATION.—A 
group health plan, a health insurance issuer offering 
group health insurance coverage, an entity providing 
pharmacy benefit management services on behalf of 
such a plan or issuer, or an applicable entity pro-
viding services on behalf of such a plan or issuer 
that violates subsection (a); an entity providing 
pharmacy benefit management services on behalf of 
such a plan or issuer that fails to provide the infor-
mation required under subsection (b); or a group 
health plan that fails to provide the information re-
quired under subsection (c), shall be subject to a 
civil monetary penalty in the amount of $10,000 for 
each day during which such violation continues or 
such information is not disclosed or reported. 
‘‘(3) FALSE INFORMATION.—A health insurance 
issuer, an entity providing pharmacy benefit man-
agement services, or a third party administrator pro-
viding services on behalf of such issuer offered by a 
health insurance issuer that knowingly provides false 
information under this section shall be subject to a 
civil monetary penalty in an amount not to exceed 
$100,000 for each item of false information. Such 
civil monetary penalty shall be in addition to other 
penalties as may be prescribed by law.
1463
‘‘(4) PROCEDURE.—The provisions of section 
1128A of the Social Security Act, other than sub-
sections (a) and (b) and the first sentence of sub-
section (c)(1) of such section shall apply to civil 
monetary penalties under this subsection in the 
same manner as such provisions apply to a penalty 
or proceeding under such section. 
‘‘(5) WAIVERS.—The Secretary may waive pen-
alties under paragraph (2), or extend the period of 
time for compliance with a requirement of this sec-
tion, for an entity in violation of this section that 
has made a good-faith effort to comply with the re-
quirements in this section. 
‘‘(e) 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), (c), or (d) 
by such issuer, plan, or entity. 
‘‘(f) DEFINITIONS.—In this section: 
‘‘(1) APPLICABLE ENTITY.—The term ‘applica-
ble entity’ means—
1464
‘‘(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 
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-
1465
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 or health insurance cov-
erage, means the amount spent by a group health 
plan or health insurance issuer on prescription drug 
benefits, calculated before the application of rebates, 
fees, alternative discounts, or other remuneration. 
‘‘(5) NET SPENDING.—The term ‘net spending’, 
with respect to prescription drug benefits under a 
group health plan or health insurance coverage, 
means the amount spent by a group health plan or 
health insurance issuer on prescription drug bene-
fits, calculated after the application of rebates, fees, 
alternative 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. 
‘‘(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.
1466
‘‘(8) SPECIFIED LARGE EMPLOYER.—The term 
‘specified large employer’ means, in connection with 
a group health plan (including group health insur-
ance coverage offered in connection with such a 
plan) established or maintained by a single em-
ployer, with respect to a calendar year or a plan 
year, as applicable, an employer who employed an 
average of at least 100 employees on business 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 (includ-
ing group health insurance coverage offered in con-
nection with such a plan) established or maintained 
by a plan sponsor described in clause (ii) or (iii) of 
section 3(16)(B) of the Employee Retirement In-
come Security Act of 1974 that had an average of 
at least 100 participants on business days during 
the preceding calendar year or plan year, as applica-
ble. 
‘‘(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.’’; and
1467
(2) in section 2723 (42 U.S.C. 300gg–22)—
(A) in subsection (a)—
(i) in paragraph (1), by inserting 
‘‘(other than section 2799A–11)’’ after 
‘‘part D’’; and 
(ii) in paragraph (2), by inserting 
‘‘(other than section 2799A–11)’’ after 
‘‘part D’’; and 
(B) in subsection (b)—
(i) in paragraph (1), by inserting 
‘‘(other than section 2799A–11)’’ after 
‘‘part D’’; 
(ii) in paragraph (2)(A), by inserting 
‘‘(other than section 2799A–11)’’ after 
‘‘part D’’; and 
(iii) in paragraph (2)(C)(ii), by insert-
ing ‘‘(other than section 2799A–11)’’ after 
‘‘part D’’. 
(b) EMPLOYEE RETIREMENT INCOME SECURITY ACT 
OF 1974.—
(1) IN GENERAL.—Subtitle B of title I of the 
Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1021 et seq.) is amended—
1468
(A) in subpart B of part 7 (29 U.S.C. 
1185 et seq.), by adding at the end the fol-
lowing: 
‘‘SEC. 726. OVERSIGHT OF ENTITIES THAT PROVIDE PHAR-
MACY BENEFIT MANAGEMENT SERVICES. 
‘‘(a) IN GENERAL.—For plan years beginning on or 
after the date that is 30 months after the date of enact-
ment of this section (referred to in this subsection and 
subsection (b) as the ‘effective date’), a group health plan 
or a health insurance issuer offering group health insur-
ance coverage, or an entity providing pharmacy benefit 
management services on behalf of such a plan or issuer, 
shall not enter into a contract, including an extension or 
renewal of a contract, entered into on or after the effective 
date, with an applicable entity unless such applicable enti-
ty agrees to—
‘‘(1) not limit or delay the disclosure of infor-
mation to the group health plan (including such a 
plan offered through a health insurance issuer) in 
such a manner that prevents an entity providing 
pharmacy benefit management services on behalf of 
a group health plan or health insurance issuer offer-
ing group health insurance coverage from making 
the reports described in subsection (b); and
1469
‘‘(2) provide the entity providing pharmacy ben-
efit management services on behalf of a group health 
plan or health insurance issuer relevant information 
necessary to make the reports described in sub-
section (b). 
‘‘(b) REPORTS.—
‘‘(1) IN GENERAL.—For plan years beginning 
on or after the effective date, in the case of any con-
tract between a group health plan or a health insur-
ance issuer offering group health insurance coverage 
offered in connection with such a plan and an entity 
providing pharmacy benefit management services on 
behalf of such plan or issuer, including an extension 
or renewal of such a contract, entered into on or 
after the effective date, the entity providing phar-
macy benefit management services on behalf of such 
a group health plan or health insurance issuer, not 
less frequently than every 6 months (or, at the re-
quest of a group health plan, not less frequently 
than quarterly, and under the same conditions, 
terms, and cost of the semiannual report under this 
subsection), shall submit to the group health plan a 
report in accordance with this section. Each such re-
port shall be made available to such group health 
plan in plain language, in a machine-readable for-
1470
mat, and as the Secretary may determine, other for-
mats. Each such report shall include the information 
described in paragraph (2). 
‘‘(2) INFORMATION DESCRIBED.—For purposes 
of paragraph (1), the information described in this 
paragraph is, with respect to drugs covered by a 
group health plan or group health insurance cov-
erage offered by a health insurance issuer in connec-
tion with a group health plan during each reporting 
period—
‘‘(A) in the case of a group health plan 
that is offered by a specified large employer or 
that is a specified large plan, and is not offered 
as health insurance coverage, or in the case of 
health insurance coverage for which the election 
under paragraph (3) is made for the applicable 
reporting period—
‘‘(i) a list of drugs for which a claim 
was filed and, with respect to each such 
drug on such list—
‘‘(I) the contracted compensation 
paid by the group health plan or 
health insurance issuer for each cov-
ered drug (identified by the National 
Drug Code) to the entity providing
1471
pharmacy benefit management serv-
ices or other applicable entity on be-
half of the group health plan or health 
insurance issuer; 
‘‘(II) the contracted compensa-
tion paid to the pharmacy, by any en-
tity providing pharmacy benefit man-
agement services or other applicable 
entity on behalf of the group health 
plan or health insurance issuer, for 
each covered drug (identified by the 
National Drug Code); 
‘‘(III) for each such claim, the 
difference between the amount paid 
under subclause (I) and the amount 
paid under subclause (II); 
‘‘(IV) the proprietary name, es-
tablished name or proper name, and 
the National Drug Code; 
‘‘(V) for each claim for the drug 
(including original prescriptions and 
refills) and for each dosage unit of the 
drug for which a claim was filed, the 
type of dispensing channel used to
1472
furnish the drug, including retail, mail 
order, or specialty pharmacy; 
‘‘(VI) with respect to each drug 
dispensed, for each type of dispensing 
channel (including retail, mail order, 
or specialty pharmacy)—
‘‘(aa) whether such drug is a 
brand name drug or a generic 
drug, and—
‘‘(AA) in the case of a 
brand name drug, the whole-
sale acquisition cost, listed 
as cost per days supply and 
cost per dosage unit, on the 
date such drug was dis-
pensed; and 
‘‘(BB) in the case of a 
generic drug, the average 
wholesale price, listed as 
cost per days supply and 
cost per dosage unit, on the 
date such drug was dis-
pensed; and 
‘‘(bb) the total number of—
1473
‘‘(AA) 
prescription 
claims 
(including 
original 
prescriptions and refills); 
‘‘(BB) participants and 
beneficiaries for whom a 
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 or coverage after rebates, fees, 
alternative discounts, or other remu-
neration received from applicable enti-
ties; 
‘‘(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
1474
including any amounts spent by par-
ticipants and beneficiaries on drugs 
not covered under the plan or cov-
erage, or for which no claim is sub-
mitted under the plan or coverage; 
‘‘(IX) the total net spending on 
the drug; 
‘‘(X) the total amount received, 
or expected to be received, by the plan 
or issuer 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
1475
‘‘(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-
facturer (or entity administering co-
payment assistance on behalf of such 
drug manufacturer), to the partici-
pants and beneficiaries enrolled in 
such plan or coverage; 
‘‘(ii) a list of each therapeutic class 
(as defined by the Secretary) for which a 
claim was filed under the group health 
plan or health insurance coverage 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-
1476
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-
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 or by the issuer 
with respect to such coverage and its 
participants and beneficiaries, among 
all drugs within the therapeutic class 
for which a claim was filed during the 
reporting period; 
‘‘(V) the number of participants 
and beneficiaries who filled a prescrip-
tion for a drug in such class, includ-
1477
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 or coverage 
by participants and beneficiaries, 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 cov-
erage or for which no claim is sub-
mitted under the plan or coverage; 
‘‘(iii) with respect to any drug for 
which gross spending under the group 
health plan or health insurance coverage 
exceeded $10,000 during the reporting pe-
riod or, in the case that gross spending 
under the group health plan or coverage 
exceeded $10,000 during the reporting pe-
riod with respect to fewer than 50 drugs,
1478
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-
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 
issuer (or an entity providing pharmacy 
benefit management services on behalf of 
such plan or issuer) has an affiliated phar-
macy or pharmacy under common owner-
ship, including mandatory mail and spe-
cialty home delivery programs, retail and 
mail auto-refill programs, and cost sharing
1479
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 or coverage to fill 
prescriptions 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 or coverage; and 
‘‘(III) a list of all drugs dis-
pensed by such pharmacies to partici-
pants or beneficiaries enrolled in such 
plan or coverage, 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 or issuer, 
and to participants and bene-
ficiaries; 
‘‘(bb) the median amount 
charged to such plan or issuer,
1480
and the interquartile range of the 
costs, per dosage unit, per 30-
day supply, and per 90-day sup-
ply, including amounts paid by 
the 
participants 
and 
bene-
ficiaries, when the same drug is 
dispensed by other pharmacies 
that are not affiliated with or 
under common ownership with 
the entity and that are included 
in the pharmacy network of such 
plan or coverage; 
‘‘(cc) the lowest cost per 
dosage unit, per 30-day supply 
and per 90-day supply, for each 
such drug, including amounts 
charged to the plan or coverage 
and to participants and bene-
ficiaries, that is available from 
any pharmacy included in the 
network of such plan or coverage; 
and 
‘‘(dd) the net acquisition 
cost per dosage unit, per 30-day 
supply, and per 90-day supply, if
1481
such drug is subject to a max-
imum price discount; and 
‘‘(B) with respect to any group health 
plan, including group health insurance coverage 
offered in connection with such a plan, regard-
less of whether the plan or coverage 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-
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 
and issuers to provide to participants and
1482
beneficiaries, which shall be made available 
to participants or beneficiaries upon re-
quest to their group health plan (including 
in the case of group health insurance cov-
erage offered in connection with such a 
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 coverage or benefits under 
such plan or coverage; 
‘‘(II) contains only aggregate in-
formation; and 
‘‘(III) states that participants 
and beneficiaries may request specific, 
claims-level information required to be 
furnished under subsection (c) from 
the group health plan or health insur-
ance issuer; and
1483
‘‘(iii) with respect to drugs covered by 
such plan or coverage during such report-
ing period—
‘‘(I) the total net spending by the 
plan or coverage for all such drugs; 
‘‘(II) the total amount received, 
or expected to be received, by the plan 
or issuer 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 
408(b)(2)(B)(ii)(dd)(AA)) 
to 
brokerage
1484
firms, brokers, consultants, advisors, or 
any other individual or firm, for—
‘‘(I) the referral of the group 
health plan’s or health insurance 
issuer’s business to an entity pro-
viding pharmacy benefit management 
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 health insurance issuer; or 
‘‘(III) the retention of the entity 
by the group health plan or health in-
surance issuer; 
‘‘(v) an explanation of any benefit de-
sign parameters that encourage or require 
participants and beneficiaries in such plan 
or coverage to fill prescriptions at mail 
order, specialty, or retail pharmacies that 
are affiliated with or under common own-
ership with the entity providing pharmacy 
benefit management services under such 
plan or coverage, including mandatory mail 
and specialty home delivery programs, re-
1485
tail and mail auto-refill programs, and 
cost-sharing assistance incentives directly 
or indirectly funded by such entity; and 
‘‘(vi) total gross spending on all drugs 
under the plan or coverage during the re-
porting 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 or a health insur-
1486
ance issuer offering group health insurance cov-
erage shall report information under paragraph 
(1) in a manner consistent with the privacy reg-
ulations promulgated under section 13402(a) of 
the Health Information Technology for Eco-
nomic and Clinical Health Act (42 U.S.C. 
17932(a)) and consistent with the privacy regu-
lations promulgated under the Health Insur-
ance 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 suc-
cessor regulations) (referred to in this para-
graph as the ‘HIPAA privacy regulations’) and 
shall restrict the use and disclosure of such in-
formation according 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 or 
health insurance issuer offering group 
health insurance coverage that submits a 
report under paragraph (1) shall ensure 
that such report contains only summary 
health information, as defined in section
1487
164.504(a) of title 45, Code of Federal 
Regulations (or successor regulations). 
‘‘(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
1488
U.S.C. 794), section 1557 of the Patient 
Protection and Affordable Care Act (42 
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, including with respect to 
group health insurance coverage offered in con-
nection with a group health plan, shall provide 
to each participant or beneficiary written notice 
informing the participant or beneficiary of the 
requirement for entities providing pharmacy 
benefit management services on behalf of the 
group health plan or health insurance issuer of-
fering group health insurance coverage to sub-
mit reports to group health plans under para-
graph (1), as applicable, which may include in-
corporating such notification in plan documents 
provided to the participant or beneficiary, 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
1489
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. 
‘‘(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 or health insurance 
issuer offering group health insurance coverage, 
from placing reasonable restrictions on the pub-
lic disclosure of the information contained in a 
report described in paragraph (1), except that 
such plan, issuer, or entity 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)
1490
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. 
‘‘(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 and health insurance 
issuers offering group health insurance cov-
erage, to submit reports required under para-
graph (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
1491
under this section with the reporting require-
ments under section 725. 
‘‘(c) REQUIREMENT TO PROVIDE INFORMATION TO 
PARTICIPANTS OR BENEFICIARIES.—A group health plan, 
including with respect to group health insurance coverage 
offered in connection with a group health plan, upon re-
quest 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 
‘‘(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 502(c)(13) by such issuer, plan, or enti-
ty. 
‘‘(e) DEFINITIONS.—In this section:
1492
‘‘(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 
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-
1493
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 or health insurance cov-
erage, means the amount spent by a group health 
plan or health insurance issuer on prescription drug 
benefits, calculated before the application of rebates, 
fees, alternative discounts, or other remuneration. 
‘‘(5) NET SPENDING.—The term ‘net spending’, 
with respect to prescription drug benefits under a 
group health plan or health insurance coverage, 
means the amount spent by a group health plan or 
health insurance issuer on prescription drug bene-
fits, calculated after the application of rebates, fees, 
alternative discounts, or other remuneration. 
‘‘(6) PLAN SPONSOR.—The term ‘plan sponsor’ 
has the meaning given such term in section 
3(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.
1494
‘‘(8) SPECIFIED LARGE EMPLOYER.—The term 
‘specified large employer’ means, in connection with 
a group health plan (including group health insur-
ance coverage offered in connection with such a 
plan) established or maintained by a single em-
ployer, with respect to a calendar year or a plan 
year, as applicable, an employer who employed an 
average of at least 100 employees on business 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 (includ-
ing group health insurance coverage offered in con-
nection with such a plan) established or maintained 
by a plan sponsor described in clause (ii) or (iii) of 
section 3(16)(B) that had an average of at least 100 
participants on business days during the preceding 
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)).’’; 
(B) in section 502 (29 U.S.C. 1132)—
1496
required under section 726(c), in the amount of 
$10,000 for each day during which such viola-
tion continues or such information is not dis-
closed or reported. 
‘‘(B) FALSE
INFORMATION.—The Sec-
retary may impose a penalty against a plan ad-
ministrator of a group health plan, a health in-
surance issuer offering group health insurance 
coverage, an entity providing pharmacy benefit 
management services, or an applicable entity 
(as defined in section 726(e)) that knowingly 
provides false information under section 726, in 
an amount not to exceed $100,000 for each 
item of false information. Such penalty shall be 
in addition to other penalties as may be pre-
scribed by law. 
‘‘(C) WAIVERS.—The Secretary may waive 
penalties under subparagraph (A), or extend 
the period of time for compliance with a re-
quirement of this section, for an entity in viola-
tion of section 726 that has made a good-faith 
effort to comply with the requirements of sec-
tion 726.’’; and
1497
(C) 
in 
section 
732(a) 
(29 
U.S.C. 
1191a(a)), by striking ‘‘section 711’’ and in-
serting ‘‘sections 711 and 726’’. 
(2) CLERICAL AMENDMENT.—The table of con-
tents in section 1 of the Employee Retirement In-
come Security Act of 1974 (29 U.S.C. 1001 et seq.) 
is amended by inserting after the item relating to 
section 725 the following new item:
‘‘Sec. 726. Oversight of entities that provide pharmacy benefit management 
services.’’.
(c) INTERNAL REVENUE CODE OF 1986.—
(1) IN GENERAL.—Chapter 100 of the Internal 
Revenue Code of 1986 is amended—
(A) by adding at the end of subchapter B 
the following: 
‘‘SEC. 9826. OVERSIGHT OF ENTITIES THAT PROVIDE PHAR-
MACY BENEFIT MANAGEMENT SERVICES. 
‘‘(a) IN GENERAL.—For plan years beginning on or 
after the date that is 30 months after the date of enact-
ment of this section (referred to in this subsection and 
subsection (b) as the ‘effective date’), a group health plan, 
or an entity providing pharmacy benefit management serv-
ices on behalf of such a plan, shall not enter into a con-
tract, including an extension or renewal of a contract, en-
tered into on or after the effective date, with an applicable 
entity unless such applicable entity agrees to—
1498
‘‘(1) not limit or delay the disclosure of infor-
mation to the group health plan in such a manner 
that prevents an entity providing pharmacy benefit 
management services on behalf of a group health 
plan from making the reports described in sub-
section (b); and 
‘‘(2) provide the entity providing pharmacy ben-
efit management services on behalf of a group health 
plan relevant information necessary to make the re-
ports described in subsection (b). 
‘‘(b) REPORTS.—
‘‘(1) IN GENERAL.—For plan years beginning 
on or after the effective date, in the case of any con-
tract between a group health plan and an entity pro-
viding pharmacy benefit management services on be-
half of such plan, including an extension or renewal 
of such a contract, entered into on or after the effec-
tive date, the entity providing pharmacy benefit 
management services on behalf of such a group 
health plan, not less frequently than every 6 months 
(or, at the request of a group health plan, not less 
frequently than quarterly, and under the same con-
ditions, terms, and cost of the semiannual report 
under this subsection), shall submit to the group 
health plan a report in accordance with this section.
1499
Each such report shall be made available to such 
group health plan in plain language, in a machine-
readable format, and as the Secretary may deter-
mine, other formats. Each such report shall include 
the information described in paragraph (2). 
‘‘(2) INFORMATION DESCRIBED.—For purposes 
of paragraph (1), the information described in this 
paragraph is, with respect to drugs covered by a 
group health plan during each reporting period—
‘‘(A) in the case of a group health plan 
that is offered by a specified large employer or 
that is a specified large plan, and is not offered 
as health insurance coverage, or in the case of 
health insurance coverage for which the election 
under paragraph (3) is made for the applicable 
reporting period—
‘‘(i) a list of drugs for which a claim 
was filed and, with respect to each such 
drug on such list—
‘‘(I) the contracted compensation 
paid by the group health plan for each 
covered drug (identified by the Na-
tional Drug Code) to the entity pro-
viding pharmacy benefit management
1500
services or other applicable entity on 
behalf of the group health plan; 
‘‘(II) the contracted compensa-
tion paid to the pharmacy, by any en-
tity providing pharmacy benefit man-
agement services or other applicable 
entity on behalf of the group health 
plan, for each covered drug (identified 
by the National Drug Code); 
‘‘(III) for each such claim, the 
difference between the amount paid 
under subclause (I) and the amount 
paid under subclause (II); 
‘‘(IV) the proprietary name, es-
tablished name or proper name, and 
the National Drug Code; 
‘‘(V) for each claim for the drug 
(including original prescriptions and 
refills) and for each dosage unit of the 
drug for which a claim was filed, the 
type of dispensing channel used to 
furnish the drug, including retail, mail 
order, or specialty pharmacy; 
‘‘(VI) with respect to each drug 
dispensed, for each type of dispensing
1501
channel (including retail, mail order, 
or specialty pharmacy)—
‘‘(aa) whether such drug is a 
brand name drug or a generic 
drug, and—
‘‘(AA) in the case of a 
brand name drug, the whole-
sale acquisition cost, listed 
as cost per days supply and 
cost per dosage unit, on the 
date such drug was dis-
pensed; and 
‘‘(BB) in the case of a 
generic drug, the average 
wholesale price, listed as 
cost per days supply and 
cost per dosage unit, on the 
date such drug was dis-
pensed; and 
‘‘(bb) the total number of—
‘‘(AA) 
prescription 
claims 
(including 
original 
prescriptions and refills); 
‘‘(BB) participants and 
beneficiaries for whom a
1502
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;
1503
‘‘(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-
1504
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-
1505
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-
1506
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-
1507
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
1508
‘‘(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
1509
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-
1510
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,
1511
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
1513
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-
1514
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).
1515
‘‘(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
1516
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.
1517
‘‘(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.
1518
‘‘(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
1519
‘‘(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
1520
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
1521
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-
1522
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
1523
(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:
1524
‘‘(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:
1525
‘‘(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
1527
‘‘(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-
1528
ignated by a plan sponsor, indicates that the 
amounts received are in excess of correct 
amounts after such amounts have been paid to 
the group health plan, in the amount of such 
excess; 
‘‘(II) the Secretary may issue regulations gov-
erning—
‘‘(aa) procedures for the remittance of re-
bates, fees, alternative discounts, and other re-
muneration under subclause (I)(aa); 
‘‘(bb) any audit pursuant to this subpara-
graph; and 
‘‘(cc) the timing, manner, and content of 
the disclosure of rebates, fees, alternative dis-
counts, and other remuneration under subclause 
(I)(bb) as well as any other information the 
Secretary determines necessary for the respon-
sible plan fiduciary to consider the reasonable-
ness of the contract or arrangement (provided 
that such information does not include person-
ally identifiable health information or protected 
health information subject to established indi-
vidual privacy and nondiscrimination require-
ments under law); and
1529
‘‘(III) the records of such rebates, fees, alter-
native discounts, other remuneration, and disclo-
sures, shall be available for audit by the plan (or the 
plan sponsor, issuer, or a third party designated by 
a plan sponsor on behalf of the plan), not less than 
once per plan year. 
‘‘(iii) To ensure that an entity providing pharmacy 
benefit management services is able to meet the require-
ments of clause (ii)(I), a rebate aggregator (or other pur-
chasing entity designed to aggregate rebates) and an ap-
plicable group purchasing organization shall remit such re-
bates to the entity providing pharmacy benefit manage-
ment services 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 in-
surance coverage, or a covered service provider for phar-
macy 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, subject to reasonable restrictions 
(as determined by the Secretary) on confidentiality to pre-
vent re-disclosure of such contracts or use of such infor-
mation in audits for purposes unrelated to this section.
1530
‘‘(v) Audits carried out under clauses (ii)(III) and 
(iv) shall be performed by an auditor selected by the re-
sponsible plan fiduciary. Payment for such auditors shall 
not be made, whether directly or indirectly, by the entity 
providing pharmacy benefit management services. 
‘‘(vi) Nothing in this subparagraph shall be construed 
to—
‘‘(I) prohibit reasonable payments to entities of-
fering pharmacy benefit management services for 
bona fide services using a fee structure not described 
in this subparagraph, provided that such fees are 
transparent and quantifiable to group health plans 
and health insurance 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 coverage 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 rebates, 
fees, alternative discounts, and other remuneration 
to the participant or beneficiary; 
‘‘(IV) modify the requirements for the creation, 
receipt, maintenance, or transmission of protected 
health information under the privacy regulations
1531
promulgated under the Health Insurance Portability 
and Accountability Act of 1996 in part 160 and sub-
parts A and E of part 164 of title 45, Code of Fed-
eral Regulations (or successor regulations); or 
‘‘(V) limit any requirement under subparagraph 
(A) or (B). 
‘‘(vii) For purposes of this subparagraph—
‘‘(I) the terms ‘applicable entity’ and ‘applicable 
group purchasing organization’ have the meanings 
given such terms in section 726(e); 
‘‘(II) the terms ‘covered plan’, ‘covered service 
provider’, and ‘responsible plan fiduciary’ have the 
meanings given such terms in subparagraph (B); 
and 
‘‘(III) the terms ‘group health insurance cov-
erage’, ‘health insurance coverage’, and ‘health in-
surance issuer’ have the meanings given such terms 
in section 733.’’. 
(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
1532
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.—Section 408(b)(2)(B)(ii)(I)(bb) 
of the Employee Retirement Income Security Act of 
1974 (29 U.S.C. 1108(b)(2)(B)(ii)(I)(bb)) is amend-
ed—
(A) in subitem (AA) by striking ‘‘Broker-
age services,’’ and inserting ‘‘Services (includ-
ing brokerage services),’’; and 
(B) in subitem (BB)—
(i) by striking ‘‘Consulting,’’ and in-
serting ‘‘Other services,’’; and 
(ii) by striking ‘‘related to the devel-
opment or implementation of plan design’’ 
and all that follows through the period at 
the end and inserting ‘‘including any of the 
following: plan design, insurance or insur-
ance product selection (including vision
1533
and dental), recordkeeping, medical man-
agement, benefits administration selection 
(including vision and dental), stop-loss in-
surance, pharmacy benefit management 
services, wellness design and management 
services, transparency tools, group pur-
chasing organization agreements and serv-
ices, participation in and services from pre-
ferred vendor panels, disease management, 
compliance services, employee assistance 
programs, or third-party administration 
services, or consulting services related to 
any such services.’’. 
(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
1534
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) EXEMPTION.—Section 408(b)(2)(B) 
(29 U.S.C. 1108(b)(2)(B)) of such Act is 
amended by adding at the end the following: 
‘‘(x) A service provider for pharmacy benefit 
management services that is considered to indirectly 
furnish goods, services, or facilities to a covered 
plan, as described in clause (i)(I), is entitled to relief 
with respect to a violation of this section provided
1535
the conditions for receiving such relief are satis-
fied.’’. 
(C) 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)’’. 
(D) 
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’’. 
(E) REGULATORY
AUTHORITY.—Section 
408(b)(2)(B)(iii) of such Act (29 U.S.C. 
1108(b)(2)(B)(iii)) is amended, in the matter 
preceding subclause (I), by inserting ‘‘(in ac-
cordance with regulations issued by the Sec-
retary addressing time, manner, and content of 
such disclosures)’’, after ‘‘following’’.
1536
SEC. 6703. 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 
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—
1537
‘‘(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 identi-
fied 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 reasons of safe-
ty or effectiveness; or 
‘‘(II) the Secretary makes a written determination 
that the prior determination must be changed because an 
error has been identified. 
‘‘(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-
1538
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-
metic Act, as added by subsection (a)), including 
with respect to assessing pH adjusters. 
(2) PROCESS.—In issuing guidance under this 
subsection, the Secretary of Health and Human 
Services shall—
(A) publish draft guidance; 
(B) provide a period of at least 60 days for 
comment on the draft guidance; and
1539
(C) after considering any comments re-
ceived and not later than one year after the 
close of the comment period on the draft guid-
ance, publish final guidance. 
(c) APPLICABILITY.—Section 505(j)(3)(H) of the 
Federal Food, Drug, and Cosmetic Act, as added by sub-
section (a), applies beginning on the date of enactment 
of this Act, irrespective of the date on which the guidance 
required by subsection (b) is finalized. 
Passed the House of Representatives January 22, 
2026. 
Attest:
Clerk.
119TH CONGRESS 
2D SESSION 
H. R. 7148
AN ACT 
Making further consolidated appropriations for the 
fiscal year ending September 30, 2026, and for 
other purposes.