I 
112TH CONGRESS 
1ST SESSION H. R. 1971 
To amend the Public Health Service Act to ensure transparency and proper 
operation of pharmacy benefit managers. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 24, 2011 
Mrs. MCMORRIS RODGERS (for herself and Mr. WEINER) introduced the fol-
lowing bill; which was referred to the Committee on Energy and Com-
merce, and in addition to the Committees on Ways and Means and Edu-
cation and the Workforce, for a period to be subsequently determined by 
the Speaker, in each case for consideration of such provisions as fall with-
in the jurisdiction of the committee concerned 
A BILL 
To amend the Public Health Service Act to ensure trans-
parency and proper operation of pharmacy benefit man-
agers. 
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 Competition 
and Consumer Choice Act of 2011’’. 
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SEC. 2. PHARMACY BENEFITS MANAGER TRANSPARENCY 
AND PROPER OPERATION REQUIREMENTS. 
(a) AMENDMENT TO THE PUBLIC HEALTH SERVICE 
ACT RELATING TO THE GROUP MARKET.— 
(1) IN GENERAL.—Subpart 2 of part A of title 
XXVII of the Public Health Service Act (42 U.S.C. 
300gg–4 et seq.) is amended by adding at the end 
the following: 
‘‘SEC. 
2729. 
PHARMACY 
BENEFITS 
MANAGER 
TRANS-
PARENCY 
AND 
PROPER 
OPERATION 
RE-
QUIREMENTS. 
‘‘(a) IN GENERAL.—Notwithstanding any other pro-
vision of law, a group health plan, and a health insurance 
issuer providing health insurance coverage in connection 
with a group health plan (collectively, a ‘plan sponsor’), 
shall not enter into a contract with any pharmacy benefits 
manager (referred to in this section as a ‘PBM’) to man-
age the prescription drug coverage provided under such 
plan or insurance coverage, or to control the costs of such 
prescription drug coverage, unless the PBM satisfies the 
following requirements: 
‘‘(1) REQUIRED DISCLOSURES TO PLAN SPON-
SOR IN ANNUAL REPORT.—The PBM shall provide 
at least annually a report to each plan sponsor, in-
cluding, at a minimum— 
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‘‘(A) information on the number and total 
cost of prescriptions under the contract filled at 
mail order and at retail pharmacies; 
‘‘(B) an estimate of aggregate average 
payments under the contract, per prescription 
(weighted by prescription volume), made to mail 
order and retail pharmacies, and the average 
amount per prescription that the PBM was 
paid by the plan for prescriptions filled at mail 
order and retail pharmacies; 
‘‘(C) an estimate of the aggregate average 
payment per prescription (weighted by prescrip-
tion volume) under the contract received from 
pharmaceutical manufacturers, including all re-
bates, discounts, price concessions, or adminis-
trative and other payments from pharma-
ceutical manufacturers, and a description of the 
types of payments, the amount of such pay-
ments that were shared with the plan, and the 
percentage of prescriptions for which the PBM 
received such payments; 
‘‘(D) information on the overall percentage 
of generic drugs dispensed under the contract 
separately at retail and mail order pharmacies, 
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and the percentage of cases in which a generic 
drug is dispensed when available; and 
‘‘(E) information on the percentage and 
number of cases under the contract in which in-
dividuals who had been receiving a prescribed 
drug that had a lower cost for the plan were 
later given a drug with a higher cost for the 
plan, because of PBM policies or at the direct 
or indirect control of the PBM, and the ration-
ale for such changes and a description of the 
applicable PBM policies. 
‘‘(2) PBM REQUIREMENTS WITH RESPECT TO 
PHARMACIES.—With respect to contracts between a 
PBM and a pharmacy, the PBM shall— 
‘‘(A) include in such contracts, the meth-
odology and resources utilized for the Maximum 
Allowable Cost (referred to in this section as 
‘MAC’) pricing of the PBM, update pricing in-
formation on such list at least weekly, and es-
tablish a process for the prompt notification of 
such pricing updates to network pharmacies; 
‘‘(B) agree to provide timely updates, not 
less than once every 3 business days, to phar-
macy product pricing files used to calculate pre-
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‘‘(F) require each pharmacy to sign a con-
tract before assuming responsibility to fill pre-
scriptions for the PBM. 
‘‘(3) PBM OWNERSHIP INTERESTS AND CON-
FLICTS OF INTEREST; PHARMACY CHOICE.—A PBM 
shall not— 
‘‘(A) mandate that a covered individual use 
a specific retail pharmacy, mail order phar-
macy, specialty pharmacy, or other pharmacy 
practice site or entity if the PBM has an own-
ership interest in such pharmacy, practice site, 
or entity or the pharmacy, practice site, or enti-
ty has an ownership interest in the PBM; or 
‘‘(B) provide incentives to covered plan 
beneficiaries, in the form of variations in pre-
miums, deductibles, co-payments, or co-insur-
ance rates, to encourage plan beneficiaries to 
use a specific pharmacy if such incentives are 
only applicable to a pharmacy, practice site, or 
entity that the PBM has an ownership interest 
in, unless such incentives are applicable to all 
network pharmacies. 
‘‘(4) PBM AUDIT OF PHARMACY PROVIDERS.— 
The following shall apply to audits of pharmacy pro-
viders by a PBM: 
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‘‘(A) The period covered by an audit may 
not exceed 2 years from the date the claim was 
submitted to or adjusted by the PBM. 
‘‘(B) An audit that involves clinical or pro-
fessional judgment shall be conducted by, or in 
consultation with, a pharmacist licensed in the 
State of the audit or the State board of phar-
macy. 
‘‘(C) The PBM may not require more 
stringent recordkeeping than that required by 
State or Federal law. 
‘‘(D) The PBM or the entity conducting 
an audit for the PBM shall establish a written 
appeals process that shall include procedures 
for appeals for preliminary reports and final re-
ports. 
‘‘(E) The pharmacy, practice site, or other 
entity may use the records of a hospital, physi-
cian, or other authorized practitioner to validate 
the pharmacy records and any legal prescription 
(one that complies with State Board of Phar-
macy requirements) may be used to validate 
claims in connection with prescriptions, refills, 
or changes in prescriptions. 
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‘‘(F) Any clerical or recordkeeping error, 
such as a typographical error, scrivener’s error, 
or computer error, regarding a required docu-
ment or record shall not be subject to 
recoupment unless proof of intent to commit 
fraud or unless such discrepancy results in ac-
tual financial harm to an interested party. 
‘‘(G) The entity conducting the audit shall 
not use extrapolation or other statistical expan-
sion techniques in calculating the recoupment 
or penalties for audits. 
‘‘(H) The PBM shall disclose any audit 
recoupment to the group health plan or health 
insurance issuer with a copy to the pharmacy. 
‘‘(5) PBM CONDUCT REGARDING COVERED IN-
DIVIDUALS.—A PBM shall— 
‘‘(A) notify a plan sponsor if such PBM in-
tends to sell utilization or claims data that the 
PBM possesses as a result of an arrangement 
described in this section; 
‘‘(B) notify the plan sponsor in writing at 
least 30 days before selling, leasing, or renting 
such data and shall provide the plan sponsor 
with the name of the potential purchaser of 
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such data and the expected use of any utiliza-
tion or claims data by such purchaser; 
‘‘(C) not sell such data unless the sale 
complies with all Federal and State laws and 
the PBM has received written approval for such 
sale from the plan sponsor; 
‘‘(D) not directly contact a covered indi-
vidual by any means (including via electronic 
delivery, telephonic, SMS text or direct mail) 
without the express written permission of the 
plan sponsor and the covered individual; 
‘‘(E) not transmit any personally identifi-
able utilization or claims data to a pharmacy 
owned by the PBM if the patient has not volun-
tarily elected in writing to fill that particular 
prescription at the PBM-owned pharmacy; and 
‘‘(F) provide each covered individual with 
an opportunity to affirmatively opt out of the 
sale of his or her data prior to entering into 
any arrangement for the lease, rental, or sale of 
such information. 
‘‘(b) DEFINITION.—For purposes of this section, the 
term ‘fraud’ has the meaning given the term ‘health care 
fraud’ in section 1347 of title 18, United States Code.’’. 
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(2) EFFECTIVE DATE.—The amendment made 
by this subsection shall apply to plan sponsors for 
plan years beginning on or after the date of enact-
ment of this Act. 
(b) AMENDMENTS TO THE PUBLIC HEALTH SERVICE 
ACT RELATING TO THE INDIVIDUAL MARKET.— 
(1) IN GENERAL.—Subpart 2 of part B of title 
XXVII of the Public Health Service Act (42 U.S.C. 
300gg–51 et seq.) is amended by adding at the end 
the following: 
‘‘SEC. 
2754. 
PHARMACY 
BENEFITS 
MANAGER 
TRANS-
PARENCY 
AND 
PROPER 
OPERATION 
RE-
QUIREMENTS. 
‘‘The provisions of section 2729 of the Public Health 
Service Act shall apply to health insurance coverage of-
fered by a health insurance issuer in the individual market 
in the same manner as they apply to a group health plan 
and a health insurance issuer providing health insurance 
coverage under that section.’’. 
(2) CONFORMING AMENDMENTS.— 
(A) ERISA AMENDMENT.— 
(i) IN GENERAL.—Subpart B of part 
7 of subtitle B of title I of the Employee 
Retirement Income Security Act of 1974 
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