I 
108TH CONGRESS 
1ST SESSION H. R. 1243
To assure equitable treatment in health care coverage of prescription drugs 
under group health plans, health insurance coverage, Medicare and Med-
icaid managed care arrangements, Medigap insurance coverage, and 
health plans under the Federal employees’ health benefits program 
(FEHBP). 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 12, 2003
Mrs. LOWEY (for herself, Mr. MCNULTY, Mr. BERRY, Ms. WOOLSEY, Mr. 
ROTHMAN, Mr. DAVIS of Illinois, Ms. WATSON, Mr. SANDERS, Mr. 
EMANUEL, Ms. CARSON of Indiana, and Mr. PALLONE) introduced the 
following bill; which was referred to the Committee on Energy and Com-
merce, and in addition to the Committees on Ways and Means, Education 
and the Workforce, and Government Reform, for a period to be subse-
quently determined by the Speaker, in each case for consideration of such 
provisions as fall within the jurisdiction of the committee concerned 
A BILL 
To assure equitable treatment in health care coverage of 
prescription drugs under group health plans, health in-
surance coverage, Medicare and Medicaid managed care 
arrangements, Medigap insurance coverage, and health 
plans under the Federal employees’ health benefits pro-
gram (FEHBP).
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 ‘‘Prescription Drug 
Benefit Equity Act of 2003’’. 
SEC. 2. EQUITY IN PROVISION OF PRESCRIPTION DRUG 
COVERAGE. 
(a) GROUP HEALTH PLANS.—
(1) PUBLIC
HEALTH
SERVICE
ACT
AMEND-
MENTS.—(A) Subpart 2 of part A of title XXVII of 
the Public Health Service Act is amended by adding 
at the end the following new section: 
‘‘SEC. 2707. EQUITY IN PROVISION OF PRESCRIPTION DRUG 
COVERAGE. 
‘‘(a) EQUITY IN PROVISION OF PRESCRIPTION DRUG 
COVERAGE.—
‘‘(1) IN GENERAL.—A group health plan, and a 
health insurance issuer offering group health insur-
ance coverage, that provides for mail-order prescrip-
tion drug coverage (as defined in paragraph (3)(A)) 
shall also provide non-mail-order prescription drug 
coverage consistent with paragraph (2). 
‘‘(2) EQUITABLE COVERAGE.—A plan or cov-
erage provides non-mail-order prescription drug cov-
erage consistent with this paragraph only if—
‘‘(A) benefits under the non-mail-order 
prescription coverage are provided for in the 
case of all drugs and all circumstances under
which benefits are provided under the mail-
order prescription drug coverage; 
‘‘(B) no deductible or similar cost-sharing 
is imposed with respect to benefits under the 
non-mail-order prescription drug coverage un-
less such a deductible or similar cost-sharing is 
imposed with respect to benefits under the mail-
order prescription drug coverage; and 
‘‘(C) the benefits for the non-mail-order 
coverage assures payments consistent with ei-
ther (or both) of the following clauses: 
‘‘(i) The dollar amount of payment for 
prescription drug coverage is not less than 
the dollar amount of benefits provided with 
respect to the mail-order coverage for that 
same coverage. 
‘‘(ii) 
The 
cost-sharing 
(including 
deductibles, copayments, or coinsurance) 
imposed with respect to non-mail-order 
coverage is not greater (as a percentage of 
charges or dollar amount, as specified 
under the coverage) than the cost-sharing 
imposed with respect to the mail-order cov-
erage.
‘‘(3) DEFINITIONS.—For purposes of this sub-
section: 
‘‘(A) MAIL-ORDER
PRESCRIPTION
DRUG 
COVERAGE.—The term ‘mail-order prescription 
drug coverage’ means provision of benefits for 
prescription drugs and biologicals that are de-
livered directly to participants and beneficiaries 
through the mail or similar means. 
‘‘(B) 
NON-MAIL-ORDER
PRESCRIPTION 
DRUG
COVERAGE.—The term ‘non-mail-order 
prescription drug coverage’ means the provision 
of 
benefits 
for 
prescription 
drugs 
and 
biologicals through one or more local phar-
macies. 
‘‘(C) LOCAL PHARMACY.—The term ‘local 
pharmacy’ means, with respect to a prescription 
drug or biological and a participant or bene-
ficiary, an establishment that is authorized to 
dispense such drug or biological and that is lo-
cated within such distance (not to exceed 5 
miles in the case of a participant or beneficiary 
residing in an urban area or 10 miles in the 
case of a participant or beneficiary residing in 
a non-urban area) of the residence of such par-
ticipant or beneficiary, as the Secretary of 
Health and Human Services shall prescribe. 
‘‘(b) PROHIBITIONS.—A group health plan, and a 
health insurance issuer offering group health insurance 
coverage in connection with a group health plan, may not 
provide monetary payments or rebates to an individual to 
encourage such individual to accept less than the min-
imum protections available under this section. 
‘‘(c) CONSTRUCTION.—Nothing in this section shall 
be construed as preventing a plan or issuer from—
‘‘(1) restricting the drugs for which benefits are 
provided under the plan or health insurance cov-
erage, or 
‘‘(2) imposing a limitation on the amount of 
benefits provided with respect to such coverage or 
the cost-sharing that may be imposed with respect to 
such coverage, 
so long as such restrictions and limitations are consistent 
with subsection (a). 
‘‘(d) NOTICE.—A group health plan under this part 
shall comply with the notice requirement under section 
714(d) of the Employee Retirement Income Security Act 
of 1974 with respect to the requirements of this section 
as if such section applied to such plan.’’.
(B) Section 2723(c) of such Act (42 U.S.C. 
300gg–23(c)) is amended by striking ‘‘section 2704’’ 
and inserting ‘‘sections 2704 and 2707’’. 
(2) ERISA AMENDMENTS.—(A) Subpart B of 
part 7 of subtitle B of title I of the Employee Re-
tirement Income Security Act of 1974 is amended by 
adding at the end the following new section: 
‘‘SEC. 714. EQUITY IN PROVISION OF PRESCRIPTION DRUG 
COVERAGE. 
‘‘(a) EQUITY IN PROVISION OF PRESCRIPTION DRUG 
COVERAGE.—
‘‘(1) IN GENERAL.—A group health plan, and a 
health insurance issuer offering group health insur-
ance coverage, that provides for mail-order prescrip-
tion drug coverage (as defined in paragraph (3)(A)) 
shall also provide non-mail-order prescription drug 
coverage consistent with paragraph (2). 
‘‘(2) EQUITABLE COVERAGE.—A plan or cov-
erage provides non-mail-order prescription drug cov-
erage consistent with this paragraph only if—
‘‘(A) benefits under the non-mail-order 
prescription coverage are provided for in the 
case of all drugs and all circumstances under 
which benefits are provided under the mail-
order prescription drug coverage;
‘‘(B) no deductible or similar cost-sharing 
is imposed with respect to benefits under the 
non-mail-order prescription drug coverage un-
less such a deductible or similar cost-sharing is 
imposed with respect to benefits under the mail-
order prescription drug coverage; and 
‘‘(C) the benefits for the non-mail-order 
coverage assures payments consistent with ei-
ther (or both) of the following clauses: 
‘‘(i) The dollar amount of payment for 
prescription drug coverage is not less than 
the dollar amount of benefits provided with 
respect to the mail-order coverage for that 
same coverage. 
‘‘(ii) 
The 
cost-sharing 
(including 
deductibles, copayments, or coinsurance) 
imposed with respect to non-mail-order 
coverage is not greater (as a percentage of 
charges or dollar amount, as specified 
under the coverage) than the cost-sharing 
imposed with respect to the mail-order cov-
erage. 
‘‘(3) DEFINITIONS.—For purposes of this sub-
section:
‘‘(A) MAIL-ORDER
PRESCRIPTION
DRUG 
COVERAGE.—The term ‘mail-order prescription 
drug coverage’ means provision of benefits for 
prescription drugs and biologicals that are de-
livered directly to participants and beneficiaries 
through the mail or similar means. 
‘‘(B) 
NON-MAIL-ORDER
PRESCRIPTION 
DRUG
COVERAGE.—The term ‘non-mail-order 
prescription drug coverage’ means the provision 
of 
benefits 
for 
prescription 
drugs 
and 
biologicals through one or more local phar-
macies. 
‘‘(C) LOCAL PHARMACY.—The term ‘local 
pharmacy’ means, with respect to a prescription 
drug or biological and a participant or bene-
ficiary, an establishment that is authorized to 
dispense such drug or biological and that is lo-
cated within such distance (not to exceed 5 
miles in the case of a participant or beneficiary 
residing in an urban area or 10 miles in the 
case of a participant or beneficiary residing in 
a non-urban area) of the residence of such par-
ticipant or beneficiary, as the Secretary of 
Health and Human Services shall prescribe.
‘‘(b) PROHIBITIONS.—A group health plan, and a 
health insurance issuer offering group health insurance 
coverage in connection with a group health plan, may not 
provide monetary payments or rebates to an individual to 
encourage such individual to accept less than the min-
imum protections available under this section. 
‘‘(c) CONSTRUCTION.—Nothing in this section shall 
be construed as preventing a plan or issuer from—
‘‘(1) restricting the drugs for which benefits are 
provided under the plan or health insurance cov-
erage, or 
‘‘(2) imposing a limitation on the amount of 
benefits provided with respect to such coverage or 
the cost-sharing that may be imposed with respect to 
such coverage, 
so long as such restrictions and limitations are consistent 
with subsection (a). 
‘‘(d) NOTICE UNDER GROUP HEALTH PLAN.—The 
imposition of the requirements of this section shall be 
treated as a material modification in the terms of the plan 
described in section 102(a)(1), for purposes of assuring 
notice of such requirements under the plan; except that 
the summary description required to be provided under the 
last sentence of section 104(b)(1) with respect to such 
modification shall be provided by not later than 60 days
after the first day of the first plan year in which such 
requirements apply.’’. 
(B) Section 731(c) of such Act (29 U.S.C. 
1191(c)) is amended by striking ‘‘section 711’’ and 
inserting ‘‘sections 711 and 714’’. 
(C) Section 732(a) of such Act (29 U.S.C. 
1191a(a)) is amended by striking ‘‘section 711’’ and 
inserting ‘‘sections 711 and 714’’. 
(D) The table of contents in section 1 of such 
Act is amended by inserting after the item relating 
to section 713 the following new item:
‘‘Sec. 714. Equity in provision of prescription drug coverage.’’.
(3) 
INTERNAL
REVENUE
CODE
AMEND-
MENTS.—Subchapter B of chapter 100 of the Inter-
nal Revenue Code of 1986 is amended—
(A) in the table of sections, by inserting 
after the item relating to section 9812 the fol-
lowing new item:
‘‘Sec. 9813. Equity in provision of prescription drug coverage.’’;
and 
(B) by inserting after section 9812 the fol-
lowing: 
‘‘SEC. 9813. EQUITY IN PROVISION OF PRESCRIPTION DRUG 
COVERAGE. 
‘‘(a) EQUITY IN PROVISION OF PRESCRIPTION DRUG 
COVERAGE.—
‘‘(1) IN GENERAL.—A group health plan that 
provides for mail-order prescription drug coverage 
(as defined in paragraph (3)(A)) shall also provide 
non-mail-order prescription drug coverage consistent 
with paragraph (2). 
‘‘(2) EQUITABLE COVERAGE.—A plan provides 
non-mail-order prescription drug coverage consistent 
with this paragraph only if—
‘‘(A) benefits under the non-mail-order 
prescription coverage are provided for in the 
case of all drugs and all circumstances under 
which benefits are provided under the mail-
order prescription drug coverage; 
‘‘(B) no deductible or similar cost-sharing 
is imposed with respect to benefits under the 
non-mail-order prescription drug coverage un-
less such a deductible or similar cost-sharing is 
imposed with respect to benefits under the mail-
order prescription drug coverage; and 
‘‘(C) the benefits for the non-mail-order 
coverage assures payments consistent with ei-
ther (or both) of the following clauses: 
‘‘(i) The dollar amount of payment for 
prescription drug coverage is not less than 
the dollar amount of benefits provided with
respect to the mail-order coverage for that 
same coverage. 
‘‘(ii) 
The 
cost-sharing 
(including 
deductibles, copayments, or coinsurance) 
imposed with respect to non-mail-order 
coverage is not greater (as a percentage of 
charges or dollar amount, as specified 
under the coverage) than the cost-sharing 
imposed with respect to the mail-order cov-
erage. 
‘‘(3) DEFINITIONS.—For purposes of this sub-
section: 
‘‘(A) MAIL-ORDER
PRESCRIPTION
DRUG 
COVERAGE.—The term ‘mail-order prescription 
drug coverage’ means provision of benefits for 
prescription drugs and biologicals that are de-
livered directly to participants and beneficiaries 
through the mail or similar means. 
‘‘(B) 
NON-MAIL-ORDER
PRESCRIPTION 
DRUG
COVERAGE.—The term ‘non-mail-order 
prescription drug coverage’ means the provision 
of 
benefits 
for 
prescription 
drugs 
and 
biologicals through one or more local phar-
macies.
‘‘(C) LOCAL PHARMACY.—The term ‘local 
pharmacy’ means, with respect to a prescription 
drug or biological and a participant or bene-
ficiary, an establishment that is authorized to 
dispense such drug or biological and that is lo-
cated within such distance (not to exceed 5 
miles in the case of a participant or beneficiary 
residing in an urban area or 10 miles in the 
case of a participant or beneficiary residing in 
a non-urban area) of the residence of such par-
ticipant or beneficiary, as the Secretary of 
Health and Human Services shall prescribe. 
‘‘(b) PROHIBITIONS.—A group health plan may not 
provide monetary payments or rebates to an individual to 
encourage such individual to accept less than the min-
imum protections available under this section. 
‘‘(c) CONSTRUCTION.—Nothing in this section shall 
be construed as preventing a plan from—
‘‘(1) restricting the drugs for which benefits are 
provided under the plan; or 
‘‘(2) imposing a limitation on the amount of 
benefits provided with respect to such coverage or 
the cost-sharing that may be imposed with respect to 
such coverage,
so long as such restrictions and limitations are consistent 
with subsection (a).’’. 
(b) INDIVIDUAL HEALTH INSURANCE.—(1) Part B 
of title XXVII of the Public Health Service Act is amend-
ed by inserting after section 2752 the following new sec-
tion: 
‘‘SEC. 2753. EQUITY IN PROVISION OF PRESCRIPTION DRUG 
COVERAGE. 
‘‘(a) IN GENERAL.—The provisions of section 2707 
(other than subsection (d)) shall apply to health insurance 
coverage offered by a health insurance issuer in the indi-
vidual market in the same manner as it applies to health 
insurance coverage offered by a health insurance issuer 
in connection with a group health plan in the small or 
large group market. 
‘‘(b) NOTICE.—A health insurance issuer under this 
part shall comply with the notice requirement under sec-
tion 714(d) of the Employee Retirement Income Security 
Act of 1974 with respect to the requirements referred to 
in subsection (a) as if such section applied to such issuer 
and such issuer were a group health plan.’’. 
(2) Section 2762(b)(2) of such Act (42 U.S.C. 
300gg–62(b)(2)) is amended by striking ‘‘section 2751’’ 
and inserting ‘‘sections 2751 and 2753’’.
(c) APPLICATION
TO MEDICARE MANAGED CARE 
PLANS.—
(1) 
MEDICARE+CHOICE
PLANS.—Section 
1852(d)(1) of the Social Security Act (42 U.S.C. 
1395w–22(d)(1)) is amended—
(A) by striking ‘‘and’’ at the end of sub-
paragraph (D); 
(B) by striking the period at the end of 
subparagraph (E) and inserting ‘‘; and’’; and 
(C) by adding at the end the following new 
subparagraph: 
‘‘(F) meets the requirements of section 
2753 of the Public Health Service Act with re-
spect to individuals enrolled with the organiza-
tion under this part.’’. 
(2) SECTION 1876.—Section 1876(c)(4) of the 
Social Security Act (42 U.S.C. 1395mm(c)(4)) is 
amended—
(A) by striking ‘‘and’’ at the end of sub-
paragraph (A); 
(B) by striking the period at the end of 
subparagraph (B) and inserting ‘‘, and’’; and 
(C) by adding at the end the following new 
subparagraph:
‘‘(C) meets the requirements of section 2753 of 
the Public Health Service Act with respect to indi-
viduals enrolled with the organization under this sec-
tion.’’. 
(d) APPLICATION
TO MEDICAID MANAGED CARE 
PLANS.—Title XIX of such Act (42 U.S.C. 1396 et seq.) 
is amended by inserting after section 1908A the following 
new section: 
‘‘EQUITY IN PROVISION OF PRESCRIPTION DRUG 
COVERAGE 
‘‘SEC. 1909. (a) IN GENERAL.—A State plan may 
not be approved under this title, and Federal financial 
participation not available under section 1903(a) with re-
spect to such a plan, unless the plan requires each health 
insurance issuer or other entity with a contract with such 
plan to provide coverage or benefits to individuals eligible 
for medical assistance under the plan to comply with the 
provisions of section 2753 of the Public Health Service 
Act with respect to such coverage or benefits. 
‘‘(b) WAIVERS PROHIBITED.—The requirement of 
subsection (a) may not be waived under section 1115 or 
section 1915(b).’’. 
(e) MEDIGAP AND MEDICARE SELECT POLICIES.—
Section 1882 of such Act (42 U.S.C. 1395ss) is amend-
ed—
(1) in subsection (s)(2), by adding at the end 
the following new subparagraph: 
‘‘(E) An issuer of a medicare supplemental policy (as 
defined in section 1882(g)) shall comply with the require-
ments of section 2753 of the Public Health Service Act 
with respect to benefits offered under such policy.’’; and 
(2) in subsection (t)(1)—
(A) in subparagraph (B), by inserting 
‘‘subject to subparagraph (G),’’ after ‘‘(B)’’, 
(B) by striking ‘‘and’’ at the end of sub-
paragraph (E), 
(C) by striking the period at the end of 
subparagraph (F) and inserting ‘‘; and’’, and 
(D) by adding at the end the following new 
subparagraph: 
‘‘(G) the issuer of the policy complies with the 
requirements of section 2753 of the Public Health 
Service Act with respect to enrollees under this sub-
section.’’. 
(f) FEHBP.—Section 8902 of title 5, United States 
Code, is amended by adding at the end the following new 
subsection: 
‘‘(p) A contract may not be made or a plan approved 
which excludes does not comply with the requirements of 
section 2753 of the Public Health Service Act.’’.
(g) EFFECTIVE DATES.—(1)(A) Subject to subpara-
graph (B), the amendments made by subsection (a) apply 
with respect to group health plans for plan years begin-
ning on or after January 1, 2004. 
(B) In the case of a group health plan maintained 
pursuant to 1 or more collective bargaining agreements 
between employee representatives and 1 or more employ-
ers ratified before the date of enactment of this Act, the 
amendments made by subsection (a) do not apply to plan 
years beginning before the later of—
(i) the date on which the last collective bar-
gaining agreements relating to the plan terminates 
(determined without regard to any extension thereof 
agreed to after the date of enactment of this Act), 
or 
(ii) January 1, 2004. 
For purposes of clause (i), any plan amendment made pur-
suant to a collective bargaining agreement relating to the 
plan which amends the plan solely to conform to any re-
quirement added by subsection (a) shall not be treated as 
a termination of such collective bargaining agreement. 
(2) The amendments made by subsection (b) apply 
with respect to health insurance coverage offered, sold, 
issued, renewed, in effect, or operated in the individual 
market on or after January 1, 2004.
(3) The amendment made by subsection (c) apply to 
contracts for contract periods beginning on or after Janu-
ary 1, 2004. 
(4) The amendment made by subsection (d) apply to 
Federal financial participation for State plan expenditures 
made on or after January 1, 2004. 
(5) The amendments made by subsection (e) apply 
with respect to medicare supplemental policies and medi-
care select policies offered, sold, issued, renewed, in effect, 
or operated on and after January 1, 2004. 
(6) The amendment made by subsection (f) apply 
with respect to contracts for periods beginning on and 
after January 1, 2004. 
(h) COORDINATION OF ADMINISTRATION.—The Sec-
retary of Labor, the Secretary of the Treasury, and the 
Secretary of Health and Human Services shall ensure, 
through the execution of an interagency memorandum of 
understanding among such Secretaries, that—
(1) regulations, rulings, and interpretations 
issued by such Secretaries relating to the same mat-
ter over which two or more such Secretaries have re-
sponsibility under the provisions of this Act (and the 
amendments made thereby) are administered so as 
to have the same effect at all times; and
(2) coordination of policies relating to enforcing 
the same requirements through such Secretaries in 
order to have a coordinated enforcement strategy 
that avoids duplication of enforcement efforts and 
assigns priorities in enforcement.
Æ