‘‘(5) PBM AUDIT OF PHARMACIES.—With re-
spect to an audit by a PBM (or an entity acting on 
behalf of the PBM) of a pharmacy or other entity 
(referred to in this paragraph as a ‘dispensing enti-
ty’) that contracts with a PBM to receive reimburse-
ment for dispensing prescription drugs to individuals 
covered by benefits managed by such PBM, the 
audit must comply with the following: 
‘‘(A) The PBM (or an entity acting on be-
half of the PBM) shall give the pharmacy or 
other dispensing entity at least 15 days written 
notice prior to commencing an audit. 
‘‘(B) The time period covered by the audit 
may not exceed one year from the date the 
claim being audited was submitted to or adju-
dicated by the PBM. 
‘‘(C) To the extent that the audit requires 
the application of clinical or professional judg-
ment, such audit shall be conducted by or in 
consultation with a pharmacist who is licensed 
in the State in which the audit is being con-
ducted. 
‘‘(D) The PBM cannot require more strin-
gent record keeping by a pharmacy or dis-
VerDate Mar 15 2010 
02:36 May 07, 2010
Jkt 089200
PO 00000
Frm 00008
Fmt 6652
Sfmt 6201
E:\BILLS\H5234.IH
H5234
pwalker on DSK8KYBLC1PROD with BILLS
pensing entity than is required by State and 
Federal law and regulation. 
‘‘(E) The PBM (or an entity acting on be-
half of the PBM) shall establish a written ap-
peals process that shall include procedures to 
allow pharmacies and other dispensing entities 
to appeal to the PBM the preliminary reports 
and final reports resulting from the audit and 
any resulting recoupment or penalty. 
‘‘(F) The PBM (or an entity acting on be-
half of the PBM) shall accept records of a hos-
pital, physician, or other authorized practitioner 
that are made available to such PBM or entity 
by the pharmacy or dispensing entity to vali-
date pharmacy records and prescriptions with 
respect to confirming the validity of claims in 
connection with prescriptions, refills, or changes 
in prescriptions. 
‘‘(G) To the extent that an audit results in 
the identification of any clerical or record-keep-
ing errors (such as typographical errors, scriv-
ener’s error, or computer error) in a required 
document or record, the pharmacy or dis-
pensing 
entity 
shall 
not 
be 
subject 
to 
recoupment of funds by the PBM unless— 
VerDate Mar 15 2010 
02:36 May 07, 2010
Jkt 089200
PO 00000
Frm 00009
Fmt 6652
Sfmt 6201
E:\BILLS\H5234.IH
H5234
pwalker on DSK8KYBLC1PROD with BILLS
‘‘(i) the PBM can provide proof of in-
tent to commit fraud; or 
‘‘(ii) such error results in actual fi-
nancial harm to the PBM, a health insur-
ance plan managed by the PBM, or a con-
sumer. 
‘‘(H) The PBM (or an entity acting on be-
half of the PBM) shall not use extrapolation or 
other statistical expansion techniques in calcu-
lating the amount of any recoupment or penalty 
resulting from an audit of a pharmacy or dis-
pensing entity. 
‘‘(I) With respect to prescriptions covered 
by a group health plan or health insurance 
issuer, after the conclusion of any appeals 
under subparagraph (E), a PBM shall— 
‘‘(i) disclose any recoupment of funds 
from a pharmacy or dispensing entity 
that— 
‘‘(I) results from an audit; and 
‘‘(II) is related to prescriptions 
covered by such plan or issuer; and 
‘‘(ii) shall provide a copy of such dis-
closure to the pharmacy or dispensing enti-
ty. 
VerDate Mar 15 2010 
02:36 May 07, 2010
Jkt 089200
PO 00000
Frm 00010
Fmt 6652
Sfmt 6201
E:\BILLS\H5234.IH
H5234
pwalker on DSK8KYBLC1PROD with BILLS
‘‘(6) PBM CONDUCT REGARDING COVERED IN-
DIVIDUALS.— 
‘‘(A) TREATMENT OF DATA.— 
‘‘(i) NOTICE
OF
SALE.—The PBM 
shall notify a group health plan or health 
insurance issuer, in writing, at least 30 
days before selling, leasing, or renting any 
utilization or claims data that the PBM 
possesses as a result of a contract between 
such PBM and plan or issuer, of— 
‘‘(I) the PBM’s intent to sell, 
lease, or rent such data; 
‘‘(II) the name of the potential 
buyer, lessor, or renter of such data; 
and 
‘‘(III) the expected use of any 
utilization or claims data by such 
buyer, lessor, or renter. 
‘‘(ii) LIMITATIONS
ON
SALE.—The 
PBM may not sell, lease, or rent utilization 
or claims data that the PBM possesses as 
a result of a contract between such PBM 
and a group health plan or health insur-
ance issuer unless the PBM has received 
VerDate Mar 15 2010 
02:36 May 07, 2010
Jkt 089200
PO 00000
Frm 00011
Fmt 6652
Sfmt 6201
E:\BILLS\H5234.IH
H5234
pwalker on DSK8KYBLC1PROD with BILLS
written approval for such transaction from 
the plan or issuer. 
‘‘(iii) OPT
OUT
FOR
CONSUMERS.— 
Before a PBM sells, leases, or rents utili-
zation or claims data that the PBM pos-
sesses as a result of a contract between 
such PBM and a group health plan or 
health insurance issuer, the PBM shall 
provide each individual who is covered by 
benefits managed by the PBM with an op-
portunity to affirmatively opt out of the 
sale, leasing, or renting of data related to 
such individual. 
‘‘(B) CONTACT WITH BENEFICIARIES.—A 
PBM may not directly contact, by any means 
(including via electronic delivery, telephonic, 
SMS text or direct mail), an individual who is 
covered by benefits managed by the PBM on 
behalf of a group health plan or health insur-
ance issuer unless the PBM has the express 
written permission of the group health plan or 
health insurance issuer and the covered indi-
vidual (through a request by the plan sponsor) 
to engage in such contact. 
VerDate Mar 15 2010 
02:36 May 07, 2010
Jkt 089200
PO 00000
Frm 00012
Fmt 6652
Sfmt 6201
E:\BILLS\H5234.IH
H5234
pwalker on DSK8KYBLC1PROD with BILLS
‘‘(C) LIMITS ON SHARING DATA.—With re-
spect to an individual covered by a benefit man-
aged by a PBM, unless a patient has volun-
tarily elected to fill a prescription at a phar-
macy, a PBM shall not transmit personally 
identifiable utilization or claims data related to 
such individual to such pharmacy if— 
‘‘(i) the PBM has an ownership inter-
est in the pharmacy; or 
‘‘(ii) the pharmacy has an ownership 
interest in the PBM. 
‘‘(b) PHARMACY BENEFIT MANAGER; PBM DE-
FINED.—For purposes of this section, the terms ‘phar-
macy benefit manager’ and ‘PBM’ mean an entity that 
provides pharmacy benefit management services on behalf 
of a group health plan or a health insurance issuer.’’. 
(2) AMENDMENTS
TO
THE
PUBLIC
HEALTH 
SERVICE ACT RELATING TO THE INDIVIDUAL MAR-
KET.— 
(A) IN GENERAL.—The 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: 
VerDate Mar 15 2010 
02:36 May 07, 2010
Jkt 089200
PO 00000
Frm 00013
Fmt 6652
Sfmt 6201
E:\BILLS\H5234.IH
H5234
pwalker on DSK8KYBLC1PROD with BILLS
(ii) 
CLERICAL
AMENDMENT.—The 
table of contents in section 1 of the Em-
ployee Retirement Income Security Act of 
1974 is amended by inserting after the 
item relating to section 714 the following: 
‘‘Sec. 715. Pharmacy benefits manager transparency and proper operation re-
quirements.’’. 
(B) IRC AMENDMENT.— 
(i) IN GENERAL.—Subpart B of chap-
ter 100 of the Internal Revenue Code of 
1986 (26 U.S.C. 9811 et seq.) is amended 
by adding at the end the following: 
‘‘SEC. 
9814. 
PHARMACY 
BENEFITS 
MANAGER 
TRANS-
PARENCY 
AND 
PROPER 
OPERATION 
RE-
QUIREMENTS. 
‘‘The provisions of section 2729 of the Public Health 
Service Act shall apply to a group health plan, and a 
health insurance issuer providing health insurance cov-
erage in connection with a group health plan, in the same 
manner as such provisions apply to a group health plan 
and a health insurance issuer providing health insurance 
coverage under that section.’’. 
(ii) 
CLERICAL
AMENDMENT.—The 
table of sections for subpart B of chapter 
100 of the Internal Revenue Code of 1986 
is amended by inserting after the item re-
VerDate Mar 15 2010 
02:36 May 07, 2010
Jkt 089200
PO 00000
Frm 00015
Fmt 6652
Sfmt 6201
E:\BILLS\H5234.IH
H5234
pwalker on DSK8KYBLC1PROD with BILLS
lating to section 9813 the following new 
item: 
‘‘Sec. 9814. Pharmacy benefits manager transparency and proper operation re-
quirements.’’. 
(b) PBMS AND MEDICARE PART D.—Subpart 2 of 
part D of title XVIII of the Social Security Act is amended 
by adding at the end the following new section: 
‘‘SEC. 1860D–17. 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 prescription drug plan under this part in the 
same manner as such provisions apply to a group health 
plan and a health insurance issuer providing health insur-
ance coverage under that section.’’. 
(c) EFFECTIVE DATES.— 
(1) GROUP
MARKET
AND
MEDICARE.—The 
amendments made by paragraphs (1) and (3) of 
subsection (a) and by subsection (b) shall apply to 
group health plan or health insurance issuers for 
plan years beginning on or after the date of enact-
ment of this Act. 
(2) INDIVIDUAL
MARKET.—The amendment 
made by subsection (a)(2) shall apply with respect to 
health insurance coverage offered, sold, issued, re-
VerDate Mar 15 2010 
02:36 May 07, 2010
Jkt 089200
PO 00000
Frm 00016
Fmt 6652
Sfmt 6201
E:\BILLS\H5234.IH
H5234
pwalker on DSK8KYBLC1PROD with BILLS
newed, in effect, or operated in the individual mar-
ket on or after the date of enactment of this Act. 
Æ 
VerDate Mar 15 2010 
02:36 May 07, 2010
Jkt 089200
PO 00000
Frm 00017
Fmt 6652
Sfmt 6301
E:\BILLS\H5234.IH
H5234
pwalker on DSK8KYBLC1PROD with BILLS