I 
119TH CONGRESS 
1ST SESSION H. R. 4317 
To assure pharmacy access and choice for Medicare beneficiaries, and for 
other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 10, 2025 
Mr. CARTER of Georgia (for himself, Mrs. DINGELL, Mr. MURPHY, Ms. ROSS, 
Mr. ARRINGTON, Mrs. HARSHBARGER, Mr. VICENTE GONZALEZ of 
Texas, Mr. ALLEN, Mr. KRISHNAMOORTHI, Mr. ROSE, Mr. TRAN, and 
Ms. MALLIOTAKIS) introduced the following bill; which was referred to 
the Committee on Energy and Commerce, and in addition to the Commit-
tees on Education and Workforce, and Ways and Means, for a period to 
be subsequently determined by the Speaker, in each case for consider-
ation of such provisions as fall within the jurisdiction of the committee 
concerned 
A BILL 
To assure pharmacy access and choice for Medicare 
beneficiaries, and for other purposes. 
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 ‘‘Pharmacy Benefit 
Manager Reform Act of 2025’’ or the ‘‘PBM Reform Act 
of 2025’’. 
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SEC. 2. ASSURING PHARMACY ACCESS AND CHOICE FOR 
MEDICARE BENEFICIARIES. 
(a) IN GENERAL.—Section 1860D–4(b)(1) of the So-
cial Security Act (42 U.S.C. 1395w–104(b)(1)) is amend-
ed by striking subparagraph (A) and inserting the fol-
lowing: 
‘‘(A) IN GENERAL.— 
‘‘(i) PARTICIPATION OF ANY WILLING 
PHARMACY.—A PDP sponsor offering a 
prescription drug plan shall permit any 
pharmacy that meets the standard contract 
terms and conditions under such plan to 
participate as a network pharmacy of such 
plan. 
‘‘(ii) CONTRACT TERMS AND CONDI-
TIONS.— 
‘‘(I) 
IN
GENERAL.—Notwith-
standing any other provision of law, 
for plan years beginning on or after 
January 1, 2029, in accordance with 
clause (i), contract terms and condi-
tions offered by such PDP sponsor 
shall be reasonable and relevant ac-
cording to standards established by 
the Secretary under subclause (II). 
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‘‘(II) 
STANDARDS.—Not 
later 
than the first Monday in April of 
2028, the Secretary shall establish 
standards for reasonable and relevant 
contract terms and conditions for pur-
poses of this clause. 
‘‘(III) REQUEST
FOR
INFORMA-
TION.—Not later than April 1, 2027, 
for purposes of establishing the stand-
ards under subclause (II), the Sec-
retary shall issue a request for infor-
mation to seek input on trends in pre-
scription drug plan and network phar-
macy contract terms and conditions, 
current prescription drug plan and 
network pharmacy contracting prac-
tices, whether pharmacy reimburse-
ment and dispensing fees paid by 
PDP sponsors to network pharmacies 
sufficiently cover the ingredient and 
operational costs of such pharmacies, 
the use and application of pharmacy 
quality measures by PDP sponsors for 
network pharmacies, PDP sponsor re-
strictions or limitations on the dis-
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pensing of covered part D drugs by 
network pharmacies (or any subsets of 
such pharmacies), PDP sponsor au-
diting practices for network phar-
macies, areas in current regulations or 
program guidance related to con-
tracting between prescription drug 
plans and network pharmacies requir-
ing clarification or additional speci-
ficity, factors for consideration in de-
termining the reasonableness and rel-
evance of contract terms and condi-
tions between prescription drug plans 
and network pharmacies, and other 
issues as determined appropriate by 
the Secretary.’’. 
(b) 
ESSENTIAL
RETAIL
PHARMACIES.—Section 
1860D–42 of the Social Security Act (42 U.S.C. 1395w– 
152) is amended by adding at the end the following new 
subsection: 
‘‘(e) ESSENTIAL RETAIL PHARMACIES.— 
‘‘(1) IN GENERAL.—With respect to plan years 
beginning on or after January 1, 2028, the Sec-
retary shall publish reports, at least once every 2 
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years until 2034, and periodically thereafter, that 
provide information, to the extent feasible, on— 
‘‘(A) trends in ingredient cost reimburse-
ment, dispensing fees, incentive payments and 
other fees paid by PDP sponsors offering pre-
scription drug plans and MA organizations of-
fering MA–PD plans under this part to essen-
tial retail pharmacies (as defined in paragraph 
(2)) with respect to the dispensing of covered 
part D drugs, including a comparison of such 
trends between essential retail pharmacies and 
pharmacies that are not essential retail phar-
macies; 
‘‘(B) trends in amounts paid to PDP spon-
sors offering prescription drug plans and MA 
organizations offering MA–PD plans under this 
part by essential retail pharmacies with respect 
to the dispensing of covered part D drugs, in-
cluding a comparison of such trends between 
essential retail pharmacies and pharmacies that 
are not essential retail pharmacies; 
‘‘(C) trends in essential retail pharmacy 
participation in pharmacy networks and pre-
ferred pharmacy networks for prescription drug 
plans offered by PDP sponsors and MA–PD 
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plans offered by MA organizations under this 
part, including a comparison of such trends be-
tween essential retail pharmacies and phar-
macies that are not essential retail pharmacies; 
‘‘(D) trends in the number of essential re-
tail pharmacies, including variation in such 
trends by geographic region or other factors; 
‘‘(E) a comparison of cost-sharing for cov-
ered part D drugs dispensed by essential retail 
pharmacies that are network pharmacies for 
prescription drug plans offered by PDP spon-
sors and MA–PD plans offered by MA organi-
zations under this part and cost-sharing for 
covered part D drugs dispensed by other net-
work pharmacies for such plans located in simi-
lar geographic areas that are not essential retail 
pharmacies; 
‘‘(F) a comparison of the volume of cov-
ered part D drugs dispensed by essential retail 
pharmacies that are network pharmacies for 
prescription drug plans offered by PDP spon-
sors and MA–PD plans offered by MA organi-
zations under this part and such volume of dis-
pensing by network pharmacies for such plans 
located in similar geographic areas that are not 
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essential retail pharmacies, including informa-
tion on any patterns or trends in such compari-
son specific to certain types of covered part D 
drugs, such as generic drugs or drugs specified 
as specialty drugs by a PDP sponsor under a 
prescription drug plan or an MA organization 
under an MA–PD plan; and 
‘‘(G) a comparison of the information de-
scribed in subparagraphs (A) through (F) be-
tween essential retail pharmacies that are net-
work pharmacies for prescription drug plans of-
fered by PDP sponsors under this part and es-
sential retail pharmacies that are network phar-
macies for MA–PD plans offered by MA organi-
zations under this part. 
‘‘(2) DEFINITION OF ESSENTIAL RETAIL PHAR-
MACY.—In this subsection, the term ‘essential retail 
pharmacy’ means, with respect to a plan year, a re-
tail pharmacy that— 
‘‘(A) is not a pharmacy that is an affiliate 
as defined in paragraph (4); and 
‘‘(B) is located in— 
‘‘(i) a medically underserved area (as 
designated 
pursuant 
to 
section 
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330(b)(3)(A) of the Public Health Service 
Act); 
‘‘(ii) a rural area in which there is no 
other retail pharmacy within 10 miles, as 
determined by the Secretary; 
‘‘(iii) a suburban area in which there 
is no other retail pharmacy within 2 miles, 
as determined by the Secretary; or 
‘‘(iv) an urban area in which there is 
no other retail pharmacy within 1 mile, as 
determined by the Secretary. 
‘‘(3) LIST
OF
ESSENTIAL
RETAIL
PHAR-
MACIES.— 
‘‘(A) PUBLICATION OF LIST OF ESSENTIAL 
RETAIL PHARMACIES.—For each plan year (be-
ginning with plan year 2028), the Secretary 
shall publish, on a publicly available internet 
website of the Centers for Medicare & Medicaid 
Services, a list of pharmacies that meet the cri-
teria described in subparagraphs (A) and (B) of 
paragraph (2) to be considered an essential re-
tail pharmacy. 
‘‘(B) REQUIRED SUBMISSIONS FROM PDP 
SPONSORS.—For each plan year (beginning 
with plan year 2028), each PDP sponsor offer-
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ing a prescription drug plan and each MA orga-
nization offering an MA–PD plan shall submit 
to the Secretary, for the purposes of deter-
mining retail pharmacies that meet the criterion 
specified in subparagraph (A) of paragraph (2), 
a list of retail pharmacies that are affiliates of 
such sponsor or organization, or are affiliates of 
a pharmacy benefit manager acting on behalf of 
such sponsor or organization, at a time, and in 
a form and manner, specified by the Secretary. 
‘‘(C) REPORTING BY PDP SPONSORS AND 
MA ORGANIZATIONS.—For each plan year be-
ginning with plan year 2027, each PDP sponsor 
offering a prescription drug plan and each MA 
organization offering an MA–PD plan under 
this part shall submit to the Secretary informa-
tion on incentive payments and other fees paid 
by such sponsor or organization to pharmacies, 
insofar as any such payments or fees are not 
otherwise reported, at a time, and in a form 
and manner, specified by the Secretary. 
‘‘(D) IMPLEMENTATION.—Notwithstanding 
any other provision of law, the Secretary may 
implement this paragraph by program instruc-
tion or otherwise. 
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‘‘(E) NONAPPLICATION
OF
PAPERWORK 
REDUCTION
ACT.—Chapter 35 of title 44, 
United States Code, shall not apply to the im-
plementation of this paragraph. 
‘‘(4) DEFINITION
OF
AFFILIATE; PHARMACY 
BENEFIT MANAGER.—In this subsection, the terms 
‘affiliate’ and ‘pharmacy benefit manager’ have the 
meaning given those terms in section 1860D– 
12(h)(7).’’. 
(c) ENFORCEMENT.— 
(1) IN
GENERAL.—Section 1860D–4(b)(1) of 
the Social Security Act (42 U.S.C. 1395w– 
104(b)(1)) is amended by adding at the end the fol-
lowing new subparagraph: 
‘‘(F) ENFORCEMENT OF STANDARDS FOR 
REASONABLE AND RELEVANT CONTRACT TERMS 
AND CONDITIONS.— 
‘‘(i) ALLEGATION SUBMISSION PROC-
ESS.— 
‘‘(I) IN
GENERAL.—Not later 
than January 1, 2028, the Secretary 
shall establish a process through 
which a pharmacy may submit to the 
Secretary an allegation of a violation 
by a PDP sponsor offering a prescrip-
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tion drug plan of the standards for 
reasonable 
and 
relevant 
contract 
terms and conditions under subpara-
graph (A)(ii), or of subclause (VIII) 
of this clause. 
‘‘(II) FREQUENCY
OF
SUBMIS-
SION.— 
‘‘(aa) IN GENERAL.—Except 
as provided in item (bb), the alle-
gation submission process under 
this clause shall allow pharmacies 
to submit any allegations of vio-
lations described in subclause (I) 
not more frequently than once 
per plan year per contract be-
tween a pharmacy and a PDP 
sponsor. 
‘‘(bb) ALLEGATIONS RELAT-
ING
TO
CONTRACT
MODIFICA-
TIONS.—In the case where a con-
tract between a pharmacy and a 
PDP sponsor is modified fol-
lowing the submission of allega-
tions by a pharmacy with respect 
to such contract and plan year, 
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the allegation submission process 
under this clause shall allow such 
pharmacy to submit an additional 
allegation related to those modi-
fications with respect to such 
contract and plan year. 
‘‘(III) ACCESS
TO
RELEVANT 
DOCUMENTS
AND
MATERIALS.—A 
PDP sponsor subject to an allegation 
under this clause— 
‘‘(aa) shall provide docu-
ments or materials, as specified 
by the Secretary, including con-
tract offers made by such spon-
sor to such pharmacy or cor-
respondence related to such of-
fers, to the Secretary at a time, 
and in a form and manner, speci-
fied by the Secretary; and 
‘‘(bb) shall not prohibit or 
otherwise limit the ability of a 
pharmacy to submit such docu-
ments or materials to the Sec-
retary for the purpose of submit-
ting an allegation or providing 
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evidence for such an allegation 
under this clause. 
‘‘(IV) 
STANDARDIZED
TEM-
PLATE.—The Secretary shall establish 
a standardized template for phar-
macies to use for the submission of al-
legations described in subclause (I). 
Such template shall require that the 
submission include a certification by 
the pharmacy that the information in-
cluded is accurate, complete, and true 
to the best of the knowledge, informa-
tion, and belief of such pharmacy. 
‘‘(V) PREVENTING
FRIVOLOUS 
ALLEGATIONS.—In the case where the 
Secretary determines that a pharmacy 
has submitted frivolous allegations 
under this clause on a routine basis, 
the Secretary may temporarily pro-
hibit such pharmacy from using the 
allegation submission process under 
this clause, as determined appropriate 
by the Secretary. 
‘‘(VI) EXEMPTION
FROM
FREE-
DOM OF INFORMATION ACT.—Allega-
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tions submitted under this clause shall 
be exempt from disclosure under sec-
tion 552 of title 5, United States 
Code. 
‘‘(VII) 
RULE
OF
CONSTRUC-
TION.—Nothing in this clause shall be 
construed as limiting the ability of a 
pharmacy to pursue other legal ac-
tions or remedies, consistent with ap-
plicable Federal or State law, with re-
spect to a potential violation of a re-
quirement described in this subpara-
graph. 
‘‘(VIII) ANTI-RETALIATION
AND 
ANTI-COERCION.—Consistent with ap-
plicable Federal or State law, a PDP 
sponsor shall not— 
‘‘(aa) retaliate against a 
pharmacy for submitting any al-
legations under this clause; or 
‘‘(bb) 
coerce, 
intimidate, 
threaten, or interfere with the 
ability of a pharmacy to submit 
any such allegations. 
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‘‘(ii) INVESTIGATION.—The Secretary 
shall investigate, as determined appro-
priate by the Secretary, allegations sub-
mitted pursuant to clause (i). 
‘‘(iii) ENFORCEMENT.— 
‘‘(I) IN GENERAL.—In the case 
where the Secretary determines that a 
PDP sponsor offering a prescription 
drug plan has violated the standards 
for reasonable and relevant contract 
terms and conditions under subpara-
graph (A)(ii), the Secretary may use 
authorities under sections 1857(g) 
and 1860D–12(b)(3)(E) to impose 
civil monetary penalties or other inter-
mediate sanctions. 
‘‘(II) 
APPLICATION
OF
CIVIL 
MONETARY
PENALTIES.—The provi-
sions of section 1128A (other than 
subsections (a) and (b)) shall apply to 
a civil monetary penalty under this 
clause in the same manner as such 
provisions apply to a penalty or pro-
ceeding under section 1128A(a).’’. 
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(2) 
CONFORMING
AMENDMENT.—Section 
1857(g)(1) of the Social Security Act (42 U.S.C. 
1395w–27(g)(1)) is amended— 
(A) in subparagraph (J), by striking ‘‘or’’ 
after the semicolon; 
(B) by redesignating subparagraph (K) as 
subparagraph (L); 
(C) by inserting after subparagraph (J), 
the following new subparagraph: 
‘‘(K) fails to comply with the standards for 
reasonable and relevant contract terms and con-
ditions under subparagraph (A)(ii) of section 
1860D–4(b)(1); or’’; 
(D) in subparagraph (L), as redesignated 
by subparagraph (B), by striking ‘‘through (J)’’ 
and inserting ‘‘through (K)’’; and 
(E) in the flush matter following subpara-
graph (L), as so redesignated, by striking ‘‘sub-
paragraphs (A) through (K)’’ and inserting 
‘‘subparagraphs (A) through (L)’’. 
(d) ACCOUNTABILITY OF PHARMACY BENEFIT MAN-
AGERS FOR VIOLATIONS OF REASONABLE AND RELEVANT 
CONTRACT TERMS AND CONDITIONS.— 
(1) IN GENERAL.—Section 1860D–12(b) of the 
Social Security Act (42 U.S.C. 1395w–112) is 
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amended by adding at the end the following new 
paragraph: 
‘‘(9) ACCOUNTABILITY OF PHARMACY BENEFIT 
MANAGERS FOR VIOLATIONS OF REASONABLE AND 
RELEVANT
CONTRACT
TERMS
AND
CONDITIONS.— 
For plan years beginning on or after January 1, 
2028, each contract entered into with a PDP spon-
sor under this part with respect to a prescription 
drug plan offered by such sponsor shall provide that 
any pharmacy benefit manager acting on behalf of 
such sponsor has a written agreement with the PDP 
sponsor under which the pharmacy benefit manager 
agrees to reimburse the PDP sponsor for any 
amounts paid by such sponsor under section 1860D– 
4(b)(1)(F)(iii)(I) to the Secretary as a result of a 
violation described in such section if such violation 
is related to a responsibility delegated to the phar-
macy benefit manager by such PDP sponsor.’’. 
(2) MA–PD PLANS.—Section 1857(f)(3) of the 
Social Security Act (42 U.S.C. 1395w–27(f)(3)) is 
amended by adding at the end the following new 
subparagraph: 
‘‘(F) 
ACCOUNTABILITY
OF
PHARMACY 
BENEFIT MANAGERS FOR VIOLATIONS OF REA-
SONABLE AND RELEVANT CONTRACT TERMS.— 
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For plan years beginning on or after January 
1, 2028, section 1860D–12(b)(9).’’. 
(e) BIENNIAL
REPORT
ON
ENFORCEMENT
AND 
OVERSIGHT OF PHARMACY ACCESS REQUIREMENTS.— 
Section 1860D–42 of the Social Security Act (42 U.S.C. 
1395w–152), as amended by subsection (b), is amended 
by adding at the end the following new subsection: 
‘‘(f) BIENNIAL REPORT
ON ENFORCEMENT
AND 
OVERSIGHT OF PHARMACY ACCESS REQUIREMENTS.— 
‘‘(1) IN
GENERAL.—Not later than 2 years 
after the date of enactment of this subsection, and 
at least once every 2 years thereafter, the Secretary 
shall publish a report on enforcement and oversight 
actions and activities undertaken by the Secretary 
with respect to the requirements under section 
1860D–4(b)(1). 
‘‘(2) LIMITATION.—A report under paragraph 
(1) shall not disclose— 
‘‘(A) identifiable information about individ-
uals or entities unless such information is oth-
erwise publicly available; or 
‘‘(B) trade secrets with respect to any enti-
ties.’’. 
(f) FUNDING.—In addition to amounts otherwise 
available, there is appropriated to the Centers for Medi-
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care & Medicaid Services Program Management Account, 
out of any money in the Treasury not otherwise appro-
priated, $188,000,000 for fiscal year 2025, to remain 
available until expended, to carry out this section. 
SEC. 3. MODERNIZING AND ENSURING PBM ACCOUNT-
ABILITY. 
(a) IN GENERAL.— 
(1) 
PRESCRIPTION
DRUG
PLANS.—Section 
1860D–12 of the Social Security Act (42 U.S.C. 
1395w–112) is amended by adding at the end the 
following new subsection: 
‘‘(h) REQUIREMENTS RELATING TO PHARMACY BEN-
EFIT MANAGERS.—For plan years beginning on or after 
January 1, 2028: 
‘‘(1) AGREEMENTS WITH PHARMACY BENEFIT 
MANAGERS.—Each contract entered into with a 
PDP sponsor under this part with respect to a pre-
scription drug plan offered by such sponsor shall 
provide that any pharmacy benefit manager acting 
on behalf of such sponsor has a written agreement 
with the PDP sponsor under which the pharmacy 
benefit manager, and any affiliates of such phar-
macy benefit manager, as applicable, agree to meet 
the following requirements: 
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‘‘(A) NO INCOME OTHER THAN BONA FIDE 
SERVICE FEES.— 
‘‘(i) IN
GENERAL.—The pharmacy 
benefit manager and any affiliate of such 
pharmacy benefit manager shall not derive 
any remuneration with respect to any serv-
ices provided on behalf of any entity or in-
dividual, in connection with the utilization 
of covered part D drugs, from any such en-
tity or individual other than bona fide serv-
ice fees, subject to clauses (ii) and (iii). 
‘‘(ii) INCENTIVE PAYMENTS.—For the 
purposes of this subsection, an incentive 
payment (as determined by the Secretary) 
paid by a PDP sponsor to a pharmacy 
benefit manager that is performing serv-
ices on behalf of such sponsor shall be 
deemed a ‘bona fide service fee’ (even if 
such payment does not otherwise meet the 
definition of such term under paragraph 
(7)(B)) if such payment is a flat dollar 
amount, is consistent with fair market 
value (as specified by the Secretary), is re-
lated to services actually performed by the 
pharmacy benefit manager or affiliate of 
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such pharmacy benefit manager, on behalf 
of the PDP sponsor making such payment, 
in connection with the utilization of cov-
ered part D drugs, and meets additional 
requirements, if any, as determined appro-
priate by the Secretary. 
‘‘(iii) CLARIFICATION
ON
REBATES 
AND DISCOUNTS USED TO LOWER COSTS 
FOR COVERED PART D DRUGS.—Rebates, 
discounts, and other price concessions re-
ceived by a pharmacy benefit manager or 
an affiliate of a pharmacy benefit manager 
from manufacturers, even if such price 
concessions are calculated as a percentage 
of a drug’s price, shall not be considered a 
violation of the requirements of clause (i) 
if they are fully passed through to a PDP 
sponsor and are compliant with all regu-
latory and subregulatory requirements re-
lated to direct and indirect remuneration 
for manufacturer rebates under this part, 
including in cases where a PDP sponsor is 
acting as a pharmacy benefit manager on 
behalf of a prescription drug plan offered 
by such PDP sponsor. 
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‘‘(iv) EVALUATION OF REMUNERATION 
ARRANGEMENTS.—Components of subsets 
of remuneration arrangements (such as 
fees or other forms of compensation paid 
to or retained by the pharmacy benefit 
manager or affiliate of such pharmacy ben-
efit manager), as determined appropriate 
by the Secretary, between pharmacy ben-
efit managers or affiliates of such phar-
macy benefit managers, as applicable, and 
other entities involved in the dispensing or 
utilization of covered part D drugs (includ-
ing PDP sponsors, manufacturers, and 
pharmacies) shall be subject to review by 
the Secretary, in consultation with the Of-
fice of the Inspector General of the De-
partment of Health and Human Services, 
as determined appropriate by the Sec-
retary. The Secretary, in consultation with 
the Office of the Inspector General, shall 
review whether remuneration under such 
arrangements is consistent with fair mar-
ket value (as specified by the Secretary) 
through reviews and assessments of such 
remuneration, as determined appropriate. 
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‘‘(v) DISGORGEMENT.—The pharmacy 
benefit manager shall disgorge any remu-
neration paid to such pharmacy benefit 
manager or an affiliate of such pharmacy 
benefit manager in violation of this sub-
paragraph to the PDP sponsor. 
‘‘(vi) ADDITIONAL REQUIREMENTS.— 
The pharmacy benefit manager shall— 
‘‘(I) enter into a written agree-
ment with any affiliate of such phar-
macy benefit manager, under which 
the affiliate shall identify and disgorge 
any remuneration described in clause 
(v) to the pharmacy benefit manager; 
and 
‘‘(II) attest, subject to any re-
quirements determined appropriate by 
the Secretary, that the pharmacy ben-
efit manager has entered into a writ-
ten agreement described in subclause 
(I) with any relevant affiliate of the 
pharmacy benefit manager. 
‘‘(B) TRANSPARENCY REGARDING GUARAN-
TEES
AND
COST
PERFORMANCE
EVALUA-
TIONS.—The pharmacy benefit manager shall— 
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‘‘(i) define, interpret, and apply, in a 
fully transparent and consistent manner 
for purposes of calculating or otherwise 
evaluating pharmacy benefit manager per-
formance against pricing guarantees or 
similar cost performance measurements re-
lated to rebates, discounts, price conces-
sions, or net costs, terms such as— 
‘‘(I) ‘generic drug’, in a manner 
consistent with the definition of the 
term under section 423.4 of title 42, 
Code of Federal Regulations, or a suc-
cessor regulation; 
‘‘(II) ‘brand name drug’, in a 
manner consistent with the definition 
of the term under section 423.4 of 
title 42, Code of Federal Regulations, 
or a successor regulation; 
‘‘(III) ‘specialty drug’; 
‘‘(IV) ‘rebate’; and 
‘‘(V) ‘discount’; 
‘‘(ii) identify any drugs, claims, or 
price concessions excluded from any pric-
ing guarantee or other cost performance 
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measure in a clear and consistent manner; 
and 
‘‘(iii) where a pricing guarantee or 
other cost performance measure is based 
on a pricing benchmark other than the 
wholesale acquisition cost (as defined in 
section 1847A(c)(6)(B)) of a drug, cal-
culate and provide a wholesale acquisition 
cost-based equivalent to the pricing guar-
antee or other cost performance measure. 
‘‘(C) PROVISION OF INFORMATION.— 
‘‘(i) IN
GENERAL.—Not later than 
July 1 of each year, beginning in 2028, the 
pharmacy benefit manager shall submit to 
the PDP sponsor, and to the Secretary, a 
report, in accordance with this subpara-
graph, and shall make such report avail-
able to such sponsor at no cost to such 
sponsor in a format specified by the Sec-
retary under paragraph (5). Each such re-
port shall include, with respect to such 
PDP sponsor and each plan offered by 
such sponsor, the following information 
with respect to the previous plan year: 
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‘‘(I) A list of all drugs covered by 
the plan that were dispensed includ-
ing, with respect to each such drug— 
‘‘(aa) the brand name, ge-
neric or non-proprietary name, 
and National Drug Code; 
‘‘(bb) the number of plan 
enrollees for whom the drug was 
dispensed, the total number of 
prescription claims for the drug 
(including original prescriptions 
and refills, counted as separate 
claims), and the total number of 
dosage units of the drug dis-
pensed; 
‘‘(cc) the number of pre-
scription claims described in item 
(bb) by each type of dispensing 
channel through which the drug 
was dispensed, including retail, 
mail order, specialty pharmacy, 
long-term care pharmacy, home 
infusion pharmacy, or other types 
of pharmacies or providers; 
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‘‘(dd) the average wholesale 
acquisition cost, listed as cost per 
day’s supply, cost per dosage 
unit, and cost per typical course 
of treatment (as applicable); 
‘‘(ee) the average wholesale 
price for the drug, listed as price 
per day’s supply, price per dos-
age unit, and price per typical 
course of treatment (as applica-
ble); 
‘‘(ff) the total out-of-pocket 
spending by plan enrollees on 
such drug after application of 
any benefits under the plan, in-
cluding plan enrollee spending 
through copayments, coinsurance, 
and deductibles; 
‘‘(gg) total rebates paid by 
the manufacturer on the drug as 
reported under the Detailed DIR 
Report (or any successor report) 
submitted by such sponsor to the 
Centers for Medicare & Medicaid 
Services; 
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‘‘(hh) all other direct or in-
direct remuneration on the drug 
as reported under the Detailed 
DIR Report (or any successor re-
port) submitted by such sponsor 
to the Centers for Medicare & 
Medicaid Services; 
‘‘(ii) the average pharmacy 
reimbursement amount paid by 
the plan for the drug in the ag-
gregate and disaggregated by dis-
pensing channel identified in item 
(cc); 
‘‘(jj) the average National 
Average Drug Acquisition Cost 
(NADAC); and 
‘‘(kk) total manufacturer-de-
rived revenue, inclusive of bona 
fide service fees, attributable to 
the drug and retained by the 
pharmacy benefit manager and 
any affiliate of such pharmacy 
benefit manager. 
‘‘(II) In the case of a pharmacy 
benefit manager that has an affiliate 
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and per 90-day supply for each 
drug dispensed by pharmacies 
that are an affiliate of the phar-
macy benefit manager and that 
are included in the pharmacy 
network of such plan. 
‘‘(dd) The lowest total com-
bined cost paid by the plan and 
plan enrollees, per dosage unit, 
per course of treatment, per 30- 
day supply, and per 90-day sup-
ply, for each drug that is avail-
able from any pharmacy included 
in the pharmacy network of such 
plan. 
‘‘(ee) The difference between 
the average acquisition cost of 
the affiliate, such as a pharmacy 
or other entity that acquires pre-
scription drugs, that initially ac-
quires the drug and the amount 
reported under subclause (I)(jj) 
for each drug. 
‘‘(ff) A list inclusive of the 
brand name, generic or non-pro-
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prietary 
name, 
and 
National 
Drug Code of covered part D 
drugs subject to an agreement 
with a covered entity under sec-
tion 340B of the Public Health 
Service Act for which the phar-
macy benefit manager or an affil-
iate of the pharmacy benefit 
manager had a contract or other 
arrangement with such a covered 
entity in the service area of such 
plan. 
‘‘(III) Where a drug approved 
under section 505(c) of the Federal 
Food, Drug, and Cosmetic Act (re-
ferred to in this subclause as the ‘list-
ed drug’) is covered by the plan, the 
following information: 
‘‘(aa) A list of currently 
marketed generic drugs approved 
under section 505(j) of the Fed-
eral Food, Drug, and Cosmetic 
Act pursuant to an application 
that references such listed drug 
that are not covered by the plan, 
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are covered on the same for-
mulary tier or a formulary tier 
typically associated with higher 
cost-sharing than the listed drug, 
or are subject to utilization man-
agement that the listed drug is 
not subject to. 
‘‘(bb) The estimated average 
beneficiary 
cost-sharing 
under 
the plan for a 30-day supply of 
the listed drug. 
‘‘(cc) Where a generic drug 
listed under item (aa) is on a for-
mulary tier typically associated 
with higher cost-sharing than the 
listed drug, the estimated aver-
age cost-sharing that a bene-
ficiary would have paid for a 30- 
day supply of each of the generic 
drugs described in item (aa), had 
the plan provided coverage for 
such drugs on the same for-
mulary tier as the listed drug. 
‘‘(dd) A written justification 
for providing more favorable cov-
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erage of the listed drug than the 
generic drugs described in item 
(aa). 
‘‘(ee) The number of cur-
rently marketed generic drugs 
approved under section 505(j) of 
the Federal Food, Drug, and 
Cosmetic Act pursuant to an ap-
plication that references such 
listed drug. 
‘‘(IV) Where a reference product 
(as defined in section 351(i) of the 
Public Health Service Act) is covered 
by the plan, the following information: 
‘‘(aa) A list of currently 
marketed 
biosimilar 
biological 
products licensed under section 
351(k) of the Public Health 
Service Act pursuant to an appli-
cation that refers to such ref-
erence product that are not cov-
ered by the plan, are covered on 
the same formulary tier or a for-
mulary tier typically associated 
with higher cost-sharing than the 
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reference product, or are subject 
to utilization management that 
the reference product is not sub-
ject to. 
‘‘(bb) The estimated average 
beneficiary 
cost-sharing 
under 
the plan for a 30-day supply of 
the reference product. 
‘‘(cc) Where a biosimilar bi-
ological product listed under item 
(aa) is on a formulary tier typi-
cally associated with higher cost- 
sharing than the reference prod-
uct, the estimated average cost- 
sharing that a beneficiary would 
have paid for a 30-day supply of 
each of the biosimilar biological 
products described in item (aa), 
had the plan provided coverage 
for such products on the same 
formulary tier as the reference 
product. 
‘‘(dd) A written justification 
for providing more favorable cov-
erage of the reference product 
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than the biosimilar biological 
product described in item (aa). 
‘‘(ee) The number of cur-
rently marketed biosimilar bio-
logical products licensed under 
section 351(k) of the Public 
Health Service Act, pursuant to 
an application that refers to such 
reference product. 
‘‘(V) Total gross spending on 
covered part D drugs by the plan, not 
net of rebates, fees, discounts, or 
other direct or indirect remuneration. 
‘‘(VI) The total amount retained 
by the pharmacy benefit manager or 
an affiliate of such pharmacy benefit 
manager in revenue related to utiliza-
tion of covered part D drugs under 
that plan, inclusive of bona fide serv-
ice fees. 
‘‘(VII) The total spending on cov-
ered part D drugs net of rebates, fees, 
discounts, or other direct and indirect 
remuneration by the plan. 
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‘‘(VIII) An explanation of any 
benefit design parameters under such 
plan that encourage plan enrollees to 
fill prescriptions at pharmacies that 
are an affiliate of such pharmacy ben-
efit manager, such as mail and spe-
cialty home delivery programs, and re-
tail and mail auto-refill programs. 
‘‘(IX) The following information: 
‘‘(aa) A list of all brokers, 
consultants, advisors, and audi-
tors that receive compensation 
from the pharmacy benefit man-
ager or an affiliate of such phar-
macy benefit manager for refer-
rals, 
consulting, 
auditing, 
or 
other services offered to PDP 
sponsors related to pharmacy 
benefit management services. 
‘‘(bb) The amount of com-
pensation provided by such phar-
macy benefit manager or affiliate 
to each such broker, consultant, 
advisor, and auditor. 
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‘‘(cc) The methodology for 
calculating the amount of com-
pensation provided by such phar-
macy benefit manager or affil-
iate, for each such broker, con-
sultant, advisor, and auditor. 
‘‘(X) A list of all affiliates of the 
pharmacy benefit manager. 
‘‘(XI) A summary document sub-
mitted in a standardized template de-
veloped by the Secretary that includes 
such information described in sub-
clauses (I) through (X). 
‘‘(ii) WRITTEN EXPLANATION OF CON-
TRACTS
OR
AGREEMENTS
WITH
DRUG 
MANUFACTURERS.— 
‘‘(I) IN
GENERAL.—The phar-
macy benefit manager shall, not later 
than 30 days after the finalization of 
any contract or agreement between 
such pharmacy benefit manager or an 
affiliate of such pharmacy benefit 
manager and a drug manufacturer (or 
subsidiary, agent, or entity affiliated 
with such drug manufacturer) that 
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makes rebates, discounts, payments, 
or other financial incentives related to 
one or more covered part D drugs or 
other prescription drugs, as applica-
ble, of the manufacturer directly or 
indirectly contingent upon coverage, 
formulary placement, or utilization 
management conditions on any other 
covered part D drugs or other pre-
scription drugs, as applicable, submit 
to the PDP sponsor a written expla-
nation of such contract or agreement. 
‘‘(II) REQUIREMENTS.—A writ-
ten explanation under subclause (I) 
shall— 
‘‘(aa) include the manufac-
turer subject to the contract or 
agreement, all covered part D 
drugs 
and 
other 
prescription 
drugs, as applicable, subject to 
the contract or agreement and 
the manufacturers of such drugs, 
and a high-level description of 
the terms of such contract or 
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agreement and how such terms 
apply to such drugs; and 
‘‘(bb) be certified by the 
Chief Executive Officer, Chief Fi-
nancial Officer, or General Coun-
sel of such pharmacy benefit 
manager, or affiliate of such 
pharmacy benefit manager, as 
applicable, or an individual dele-
gated with the authority to sign 
on behalf of one of these officers, 
who reports directly to the offi-
cer. 
‘‘(III) DEFINITION
OF
OTHER 
PRESCRIPTION DRUGS.—For purposes 
of this clause, the term ‘other pre-
scription drugs’ means prescription 
drugs covered as supplemental bene-
fits under this part or prescription 
drugs paid outside of this part. 
‘‘(D) AUDIT RIGHTS.— 
‘‘(i) IN GENERAL.—Not less than once 
a year, at the request of the PDP sponsor, 
the pharmacy benefit manager shall allow 
for an audit of the pharmacy benefit man-
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ager to ensure compliance with all terms 
and conditions under the written agree-
ment described in this paragraph and the 
accuracy of information reported under 
subparagraph (C). 
‘‘(ii) AUDITOR.—The PDP sponsor 
shall have the right to select an auditor. 
The pharmacy benefit manager shall not 
impose any limitations on the selection of 
such auditor. 
‘‘(iii) PROVISION OF INFORMATION.— 
The pharmacy benefit manager shall make 
available to such auditor all records, data, 
contracts, and other information necessary 
to confirm the accuracy of information 
provided under subparagraph (C), subject 
to reasonable restrictions on how such in-
formation must be reported to prevent re-
disclosure of such information. 
‘‘(iv) TIMING.—The pharmacy benefit 
manager must provide information under 
clause (iii) and other information, data, 
and records relevant to the audit to such 
auditor within 6 months of the initiation of 
the audit and respond to requests for addi-
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tional information from such auditor with-
in 30 days after the request for additional 
information. 
‘‘(v) INFORMATION
FROM
AFFILI-
ATES.—The pharmacy benefit manager 
shall be responsible for providing to such 
auditor information required to be reported 
under subparagraph (C) or under clause 
(iii) of this subparagraph that is owned or 
held by an affiliate of such pharmacy ben-
efit manager. 
‘‘(2) ENFORCEMENT.— 
‘‘(A) IN
GENERAL.—Each PDP sponsor 
shall— 
‘‘(i) disgorge to the Secretary any 
amounts disgorged to the PDP sponsor by 
a pharmacy benefit manager under para-
graph (1)(A)(v); 
‘‘(ii) require, in a written agreement 
with any pharmacy benefit manager acting 
on behalf of such sponsor or affiliate of 
such pharmacy benefit manager, that such 
pharmacy benefit manager or affiliate re-
imburse the PDP sponsor for any civil 
money penalty imposed on the PDP spon-
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sor as a result of the failure of the phar-
macy benefit manager or affiliate to meet 
the requirements of paragraph (1) that are 
applicable to the pharmacy benefit man-
ager or affiliate under the agreement; and 
‘‘(iii) require, in a written agreement 
with any such pharmacy benefit manager 
acting on behalf of such sponsor or affil-
iate of such pharmacy benefit manager, 
that such pharmacy benefit manager or af-
filiate be subject to punitive remedies for 
breach of contract for failure to comply 
with the requirements applicable under 
paragraph (1). 
‘‘(B) REPORTING
OF
ALLEGED
VIOLA-
TIONS.—The Secretary shall make available and 
maintain a mechanism for manufacturers, PDP 
sponsors, pharmacies, and other entities that 
have contractual relationships with pharmacy 
benefit managers or affiliates of such pharmacy 
benefit managers to report, on a confidential 
basis, alleged violations of paragraph (1)(A) or 
subparagraph (C). 
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‘‘(C) ANTI-RETALIATION AND ANTI-COER-
CION.—Consistent with applicable Federal or 
State law, a PDP sponsor shall not— 
‘‘(i) retaliate against an individual or 
entity for reporting an alleged violation 
under subparagraph (B); or 
‘‘(ii) coerce, intimidate, threaten, or 
interfere with the ability of an individual 
or entity to report any such alleged viola-
tions. 
‘‘(3) CERTIFICATION OF COMPLIANCE.— 
‘‘(A) IN
GENERAL.—Each PDP sponsor 
shall furnish to the Secretary (at a time and in 
a manner specified by the Secretary) an annual 
certification of compliance with this subsection, 
as well as such information as the Secretary de-
termines necessary to carry out this subsection. 
‘‘(B) IMPLEMENTATION.—The Secretary 
may implement this paragraph by program in-
struction or otherwise. 
‘‘(4) RULE
OF
CONSTRUCTION.—Nothing in 
this subsection shall be construed as— 
‘‘(A) prohibiting flat dispensing fees or re-
imbursement or payment for ingredient costs 
(including customary, industry-standard dis-
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counts directly related to drug acquisition that 
are retained by pharmacies or wholesalers) to 
entities that acquire or dispense prescription 
drugs; or 
‘‘(B) modifying regulatory requirements or 
sub-regulatory program instruction or guidance 
related to pharmacy payment, reimbursement, 
or dispensing fees. 
‘‘(5) STANDARD FORMATS.— 
‘‘(A) IN GENERAL.—Not later than June 
1, 2027, the Secretary shall specify standard, 
machine-readable formats for pharmacy benefit 
managers to submit annual reports required 
under paragraph (1)(C)(i). 
‘‘(B) IMPLEMENTATION.—The Secretary 
may implement this paragraph by program in-
struction or otherwise. 
‘‘(6) CONFIDENTIALITY.— 
‘‘(A) IN GENERAL.—Information disclosed 
by a pharmacy benefit manager, an affiliate of 
a pharmacy benefit manager, a PDP sponsor, 
or a pharmacy under this subsection that is not 
otherwise publicly available or available for pur-
chase shall not be disclosed by the Secretary or 
a PDP sponsor receiving the information, ex-
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cept that the Secretary may disclose the infor-
mation for the following purposes: 
‘‘(i) As the Secretary determines nec-
essary to carry out this part. 
‘‘(ii) To permit the Comptroller Gen-
eral to review the information provided. 
‘‘(iii) To permit the Director of the 
Congressional Budget Office to review the 
information provided. 
‘‘(iv) To permit the Executive Direc-
tor of the Medicare Payment Advisory 
Commission to review the information pro-
vided. 
‘‘(v) To the Attorney General for the 
purposes of conducting oversight and en-
forcement under this title. 
‘‘(vi) To the Inspector General of the 
Department of Health and Human Serv-
ices in accordance with its authorities 
under the Inspector General Act of 1978 
(section 406 of title 5, United States 
Code), and other applicable statutes. 
‘‘(B) RESTRICTION ON USE OF INFORMA-
TION.—The Secretary, the Comptroller General, 
the Director of the Congressional Budget Of-
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fice, and the Executive Director of the Medicare 
Payment Advisory Commission shall not report 
on or disclose information disclosed pursuant to 
subparagraph (A) to the public in a manner 
that would identify— 
‘‘(i) a specific pharmacy benefit man-
ager, affiliate, pharmacy, manufacturer, 
wholesaler, PDP sponsor, or plan; or 
‘‘(ii) contract prices, rebates, dis-
counts, or other remuneration for specific 
drugs in a manner that may allow the 
identification of specific contracting parties 
or of such specific drugs. 
‘‘(7) DEFINITIONS.—For purposes of this sub-
section: 
‘‘(A) AFFILIATE.—The term ‘affiliate’ 
means, with respect to any pharmacy benefit 
manager or PDP sponsor, any entity that, di-
rectly or indirectly— 
‘‘(i) owns or is owned by, controls or 
is controlled by, or is otherwise related in 
any ownership structure to such pharmacy 
benefit manager or PDP sponsor; or 
‘‘(ii) acts as a contractor, principal, or 
agent to such pharmacy benefit manager 
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or PDP sponsor, insofar as such con-
tractor, principal, or agent performs any of 
the functions described under subpara-
graph (C). 
‘‘(B) BONA FIDE SERVICE FEE.—The term 
‘bona fide service fee’ means a fee that is reflec-
tive of the fair market value (as specified by the 
Secretary, through notice and comment rule-
making) for a bona fide, itemized service actu-
ally performed on behalf of an entity, that the 
entity would otherwise perform (or contract for) 
in the absence of the service arrangement and 
that is not passed on in whole or in part to a 
client or customer, whether or not the entity 
takes title to the drug. Such fee must be a flat 
dollar amount and shall not be directly or indi-
rectly based on, or contingent upon— 
‘‘(i) drug price, such as wholesale ac-
quisition cost or drug benchmark price 
(such as average wholesale price); 
‘‘(ii) the amount of discounts, rebates, 
fees, or other direct or indirect remunera-
tion with respect to covered part D drugs 
dispensed to enrollees in a prescription 
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drug plan, except as permitted pursuant to 
paragraph (1)(A)(ii); 
‘‘(iii) coverage or formulary placement 
decisions or the volume or value of any re-
ferrals or business generated between the 
parties to the arrangement; or 
‘‘(iv) any other amounts or meth-
odologies prohibited by the Secretary. 
‘‘(C) PHARMACY BENEFIT MANAGER.—The 
term ‘pharmacy benefit manager’ means any 
person or entity that, either directly or through 
an intermediary, acts as a price negotiator or 
group purchaser on behalf of a PDP sponsor or 
prescription drug plan, or manages the pre-
scription drug benefits provided by such spon-
sor or plan, including the processing and pay-
ment of claims for prescription drugs, the per-
formance of drug utilization review, the proc-
essing of drug prior authorization requests, the 
adjudication of appeals or grievances related to 
the prescription drug benefit, contracting with 
network pharmacies, controlling the cost of cov-
ered part D drugs, or the provision of related 
services. Such term includes any person or enti-
ty that carries out one or more of the activities 
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described in the preceding sentence, irrespective 
of whether such person or entity calls itself a 
‘pharmacy benefit manager’.’’. 
(2) MA–PD PLANS.—Section 1857(f)(3) of the 
Social Security Act (42 U.S.C. 1395w–27(f)(3)) is 
amended by adding at the end the following new 
subparagraph: 
‘‘(F) REQUIREMENTS RELATING TO PHAR-
MACY BENEFIT MANAGERS.—For plan years be-
ginning on or after January 1, 2028, section 
1860D–12(h).’’. 
(3) NONAPPLICATION OF PAPERWORK REDUC-
TION ACT.—Chapter 35 of title 44, United States 
Code, shall not apply to the implementation of this 
subsection. 
(4) FUNDING.— 
(A) SECRETARY.—In addition to amounts 
otherwise available, there is appropriated to the 
Centers for Medicare & Medicaid Services Pro-
gram Management Account, out of any money 
in the Treasury not otherwise appropriated, 
$113,000,000 for fiscal year 2025, to remain 
available until expended, to carry out this sub-
section. 
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(B) OIG.—In addition to amounts other-
wise available, there is appropriated to the In-
spector General of the Department of Health 
and Human Services, out of any money in the 
Treasury 
not 
otherwise 
appropriated, 
$20,000,000 for fiscal year 2025, to remain 
available until expended, to carry out this sub-
section. 
(b) GAO STUDY AND REPORT ON PRICE-RELATED 
COMPENSATION ACROSS THE SUPPLY CHAIN.— 
(1) STUDY.—The Comptroller General of the 
United States (in this subsection referred to as the 
‘‘Comptroller General’’) shall conduct a study de-
scribing the use of compensation and payment struc-
tures related to a prescription drug’s price within 
the retail prescription drug supply chain in part D 
of title XVIII of the Social Security Act (42 U.S.C. 
1395w–101 et seq.). Such study shall summarize in-
formation from Federal agencies and industry ex-
perts, to the extent available, with respect to the fol-
lowing: 
(A) The type, magnitude, other features 
(such as the pricing benchmarks used), and 
prevalence of compensation and payment struc-
tures related to a prescription drug’s price, 
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such as calculating fee amounts as a percentage 
of a prescription drug’s price, between inter-
mediaries in the prescription drug supply chain, 
including— 
(i) pharmacy benefit managers; 
(ii) PDP sponsors offering prescrip-
tion drug plans and Medicare Advantage 
organizations offering MA–PD plans; 
(iii) drug wholesalers; 
(iv) pharmacies; 
(v) manufacturers; 
(vi) pharmacy services administrative 
organizations; 
(vii) brokers, auditors, consultants, 
and other entities that— 
(I) advise PDP sponsors offering 
prescription drug plans and Medicare 
Advantage organizations offering MA– 
PD plans regarding pharmacy bene-
fits; or 
(II) review PDP sponsor and 
Medicare Advantage organization con-
tracts with pharmacy benefit man-
agers; and 
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(viii) other service providers that con-
tract with any of the entities described in 
clauses (i) through (vii) that may use 
price-related compensation and payment 
structures, such as rebate aggregators (or 
other entities that negotiate or process 
price concessions on behalf of pharmacy 
benefit managers, plan sponsors, or phar-
macies). 
(B) The primary business models and com-
pensation structures for each category of inter-
mediary described in subparagraph (A). 
(C) Variation in price-related compensation 
structures between affiliated entities (such as 
entities with common ownership, either full or 
partial, and subsidiary relationships) and unaf-
filiated entities. 
(D) Potential conflicts of interest among 
contracting entities related to the use of pre-
scription drug price-related compensation struc-
tures, such as the potential for fees or other 
payments set as a percentage of a prescription 
drug’s price to advantage formulary selection, 
distribution, or purchasing of prescription drugs 
with higher prices. 
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(E) Notable differences, if any, in the use 
and level of price-based compensation struc-
tures over time and between different market 
segments, such as under part D of title XVIII 
of the Social Security Act (42 U.S.C. 1395w– 
101 et seq.) and the Medicaid program under 
title XIX of such Act (42 U.S.C. 1396 et seq.). 
(F) The effects of drug price-related com-
pensation structures and alternative compensa-
tion structures on Federal health care programs 
and program beneficiaries, including with re-
spect to cost-sharing, premiums, Federal out-
lays, biosimilar and generic drug adoption and 
utilization, drug shortage risks, and the poten-
tial for fees set as a percentage of a drug’s 
price to advantage the formulary selection, dis-
tribution, or purchasing of drugs with higher 
prices. 
(G) Other issues determined to be relevant 
and appropriate by the Comptroller General. 
(2) REPORT.—Not later than 2 years after the 
date of enactment of this section, the Comptroller 
General shall submit to Congress a report containing 
the results of the study conducted under paragraph 
(1), together with recommendations for such legisla-
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tion and administrative action as the Comptroller 
General determines appropriate. 
(c) MEDPAC REPORTS
ON AGREEMENTS WITH 
PHARMACY BENEFIT MANAGERS WITH RESPECT TO PRE-
SCRIPTION DRUG PLANS AND MA–PD PLANS.— 
(1) IN GENERAL.—The Medicare Payment Ad-
visory Commission shall submit to Congress the fol-
lowing reports: 
(A) INITIAL REPORT.—Not later than the 
first March 15 occurring after the date that is 
2 years after the date on which the Secretary 
makes the data available to the Commission, a 
report regarding agreements with pharmacy 
benefit managers with respect to prescription 
drug plans and MA–PD plans. Such report 
shall include, to the extent practicable— 
(i) a description of trends and pat-
terns, including relevant averages, totals, 
and other figures for the types of informa-
tion submitted; 
(ii) an analysis of any differences in 
agreements and their effects on plan en-
rollee out-of-pocket spending and average 
pharmacy reimbursement, and other im-
pacts; and 
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(iii) any recommendations the Com-
mission determines appropriate. 
(B) FINAL
REPORT.—Not later than 2 
years after the date on which the Commission 
submits the initial report under subparagraph 
(A), a report describing any changes with re-
spect to the information described in subpara-
graph (A) over time, together with any rec-
ommendations the Commission determines ap-
propriate. 
(2) FUNDING.—In addition to amounts other-
wise available, there is appropriated to the Medicare 
Payment Advisory Commission, out of any money in 
the 
Treasury 
not 
otherwise 
appropriated, 
$1,000,000 for fiscal year 2025, to remain available 
until expended, to carry out this subsection. 
SEC. 4. OVERSIGHT OF PHARMACY BENEFIT MANAGEMENT 
SERVICES. 
(a) PUBLIC HEALTH SERVICE ACT.—Title XXVII of 
the Public Health Service Act (42 U.S.C. 300gg et seq.) 
is amended— 
(1) in part D (42 U.S.C. 300gg–111 et seq.), 
by adding at the end the following new section: 
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‘‘SEC. 2799A–11. OVERSIGHT OF ENTITIES THAT PROVIDE 
PHARMACY BENEFIT MANAGEMENT SERV-
ICES. 
‘‘(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 
‘‘(2) provide the entity providing pharmacy ben-
efit management services on behalf of a group health 
plan or health insurance issuer relevant information 
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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-
mat, and as the Secretary may determine, other for-
mats. Each such report shall include the information 
described in paragraph (2). 
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‘‘(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 
pharmacy benefit management serv-
ices or other applicable entity on be-
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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 
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; 
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‘‘(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— 
‘‘(AA) 
prescription 
claims 
(including 
original 
prescriptions and refills); 
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‘‘(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 
including any amounts spent by par-
ticipants and beneficiaries on drugs 
not covered under the plan or cov-
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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 
‘‘(XII) to the extent feasible, in-
formation on the total amount of re-
muneration for such drug, including 
copayment assistance dollars paid, co-
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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-
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-
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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-
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-
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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, 
with respect to the 50 prescription drugs 
with the highest spending during the re-
porting period— 
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‘‘(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 
assistance incentives funded by an entity 
providing pharmacy benefit services— 
‘‘(I) an explanation of any ben-
efit design parameters that encourage 
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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, 
and the interquartile range of the 
costs, per dosage unit, per 30- 
day supply, and per 90-day sup-
ply, including amounts paid by 
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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 
such drug is subject to a max-
imum price discount; and 
‘‘(B) with respect to any group health 
plan, including group health insurance coverage 
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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 
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-
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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; 
‘‘(iii) with respect to drugs covered by 
such plan or coverage during such report-
ing period— 
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‘‘(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-
kerage firms, brokers, consultants, advi-
sors, or any other individual or firm, for— 
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‘‘(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-
tail and mail auto-refill programs, and 
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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-
ance issuer offering group health insurance cov-
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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 
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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 
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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 
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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) 
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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 
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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. 
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‘‘(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. 
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‘‘(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— 
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‘‘(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-
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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. 
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‘‘(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 
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(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— 
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(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 
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‘‘(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-
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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 
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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 
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 
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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— 
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‘‘(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 
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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 
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‘‘(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-
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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-
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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, 
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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 
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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, 
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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 
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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 
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100 
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; 
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101 
‘‘(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 
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102 
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-
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103 
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-
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104 
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 
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105 
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 
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106 
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 
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107 
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) 
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108 
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 
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109 
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: 
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110 
‘‘(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-
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111 
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. 
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112 
‘‘(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)— 
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113 
(i) in subsection (a)(6), by striking 
‘‘or (9)’’ and inserting ‘‘(9), or (13)’’; 
(ii) in subsection (b)(3), by striking 
‘‘under subsection (c)(9)’’ and inserting 
‘‘under paragraphs (9) and (13) of sub-
section (c)’’; and 
(iii) in subsection (c), by adding at 
the end the following: 
‘‘(13) SECRETARIAL ENFORCEMENT AUTHORITY 
RELATING TO OVERSIGHT OF PHARMACY BENEFIT 
MANAGEMENT SERVICES.— 
‘‘(A) FAILURE
TO
PROVIDE
INFORMA-
TION.—The Secretary may impose a penalty 
against a plan administrator of a group health 
plan, a health insurance issuer offering group 
health insurance coverage, or an entity pro-
viding pharmacy benefit management services 
on behalf of such a plan or issuer, or an appli-
cable entity (as defined in section 726(f)) that 
violates section 726(a); an entity providing 
pharmacy benefit management services on be-
half of such a plan or issuer that fails to pro-
vide the information required under section 
726(b); or any person who causes a group 
health plan to fail to provide the information 
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114 
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(f)) 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 
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115 
(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— 
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116 
‘‘(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. 
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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 
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118 
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 
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 
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119 
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 
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120 
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; 
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121 
‘‘(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-
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122 
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-
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123 
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-
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124 
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-
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125 
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 
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126 
‘‘(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 
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127 
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-
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128 
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, 
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claims-level information required to be 
furnished under subsection (c) from 
the group health plan; 
‘‘(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 
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130 
408(b)(2)(B)(ii)(dd)(AA) of the Employee 
Retirement 
Income 
Security 
Act 
(29 
U.S.C. 1108(b)(2)(B)(ii)(dd)(AA))) to bro-
kerage firms, brokers, consultants, advi-
sors, or any other individual or firm, for— 
‘‘(I) the referral of the group 
health plan’s business to an entity 
providing pharmacy benefit manage-
ment 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 
‘‘(III) the retention of the entity 
by the group health plan; 
‘‘(v) an explanation of any benefit de-
sign parameters that encourage or require 
participants and beneficiaries in such plan 
to fill prescriptions at mail order, specialty, 
or retail pharmacies that are affiliated with 
or under common ownership with the enti-
ty providing pharmacy benefit management 
services under such plan, including manda-
tory mail and specialty home delivery pro-
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131 
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-
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132 
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). 
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‘‘(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 
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134 
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. 
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135 
‘‘(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. 
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