I 
112TH CONGRESS 
2D SESSION 
H. R. 4215 
To amend title XVIII of the Social Security Act to provide for pharmacy 
benefits manager standards under the Medicare prescription drug pro-
gram to further fair audits of and payments to pharmacies. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 20, 2012 
Mrs. MCMORRIS RODGERS introduced the following bill; which was referred 
to the Committee on Energy and Commerce, and in addition to the Com-
mittee on Ways and Means, for a period to be subsequently determined 
by the Speaker, in each case for consideration of such provisions as fall 
within the jurisdiction of the committee concerned 
A BILL 
To amend title XVIII of the Social Security Act to provide 
for pharmacy benefits manager standards under the 
Medicare prescription drug program to further fair au-
dits of and payments to pharmacies. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Medicare Pharmacy 
Transparency and Fair Auditing Act’’. 
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SEC. 
2. 
PHARMACY 
BENEFITS 
MANAGER 
STANDARDS 
UNDER MEDICARE FOR FAIR AUDITS AND 
PAYMENTS TO PHARMACIES. 
Section 1860D–12(b) of the Social Security Act (42 
U.S.C. 1395w–112(b)) is amended by adding at the end 
the following new paragraphs: 
‘‘(7) PHARMACY
BENEFITS
MANAGER
TRANS-
PARENCY
AND
PROPER
OPERATIONS
REQUIRE-
MENTS.—Each contract entered into with a PDP 
sponsor for the offering of a prescription drug plan 
under this part for a plan year beginning after 2013 
shall provide that the PDP sponsor may not enter 
into a contract with any pharmacy benefits manager 
to manage the prescription drug coverage provided 
under such plan, or to control the costs of the pre-
scription drug coverage under such plan, unless the 
pharmacy benefits manager satisfies the following 
requirements: 
‘‘(A) PBM AUDIT
REQUIREMENTS.—The 
following shall apply to each audit of a phar-
macy conducted by or for the pharmacy benefits 
manager with respect to such prescription drug 
plan: 
‘‘(i) The period covered by the audit 
may not exceed 2 years from the date the 
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claim involved was submitted to or ad-
justed by the pharmacy benefits manager. 
‘‘(ii) In the case the audit involves 
clinical or professional judgment, the audit 
shall be conducted by, or in consultation 
with, a pharmacist licensed in the State of 
the audit or the State board of pharmacy. 
‘‘(iii) The pharmacy benefits manager 
may not apply recordkeeping requirements 
on the pharmacy that are more stringent 
than such requirements applied under Fed-
eral law or the State law involved. 
‘‘(iv) The pharmacy benefits manager, 
or the entity conducting the audit for the 
pharmacy benefits manager, shall have in 
place a written appeals process that shall 
include procedures for appeals for prelimi-
nary reports and final reports related to 
such audit. 
‘‘(v) The pharmacy, practice site, or 
other entity may use the records of a hos-
pital, physician, or other authorized practi-
tioner to validate the pharmacy records 
and any legal prescription (one that com-
plies with State Board of Pharmacy re-
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quirements) may be used to validate claims 
submitted by the pharmacy in connection 
with prescriptions, refills, or changes in 
prescriptions. 
‘‘(vi) The pharmacy benefits manager 
may not, pursuant to the audit, disallow or 
reduce payment with respect to a claim 
submitted by the pharmacy because of a 
clerical or recordkeeping error (such as a 
typographical error, scrivener’s error, or 
computer error) if there is an absence of 
intent to commit fraud. 
‘‘(vii) The pharmacy benefits manager 
or other entity conducting the audit may 
not use extrapolation or other statistical 
expansion techniques in calculating any 
recoupment or penalty pursuant to the 
audit. 
‘‘(viii) The pharmacy benefits man-
ager shall disclose the amount of each pay-
ment recovered pursuant to the audit to 
the PDP sponsor with a copy to the phar-
macy. 
‘‘(ix) Any payment recovered by the 
pharmacy benefit manager pursuant to the 
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audit shall be returned to the PDP spon-
sor. 
‘‘(B) 
DISCLOSURE
REQUIREMENTS.—In 
the case of a pharmacy benefits manager that 
uses a maximum allowable cost list with respect 
to determining reimbursements to pharmacies 
for multiple source drugs (as defined in section 
1927(k)), with respect to any contract between 
the pharmacy benefits manager and a phar-
macy, with respect to the prescription drug plan 
offered by the PDP sponsor, the pharmacy ben-
efits manager shall— 
‘‘(i) include in such contract the 
methodology and resources utilized for 
such maximum allowable cost list; 
‘‘(ii) update pricing information on 
such list at least weekly, starting on Janu-
ary 1 of each calendar year; and 
‘‘(iii) establish a process to provide 
prompt notification of such pricing infor-
mation updates to the pharmacy.’’. 
Æ 
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