H. R. 7148—551 
(i) in subsection (a)(6), by striking ‘‘or (9)’’ and 
inserting ‘‘(9), or (13)’’; 
(ii) in subsection (b)(3), by striking ‘‘under sub-
section (c)(9)’’ and inserting ‘‘under paragraphs (9) and 
(13) of subsection (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 INFORMATION.—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 providing 
pharmacy benefit management services on behalf of such 
a plan or issuer, or an applicable entity (as defined in 
section 726(e)) that violates section 726(a); an entity pro-
viding pharmacy benefit management services on behalf 
of such a plan or issuer that fails to provide the information 
required under section 726(b); or any person who causes 
a group health plan to fail to provide the information 
required under section 726(c), in the amount of $10,000 
for each day during which such violation continues or such 
information is not disclosed or reported. 
‘‘(B) FALSE INFORMATION.—The Secretary may impose 
a penalty against a plan administrator of a group health 
plan, a health insurance issuer offering group health insur-
ance coverage, an entity providing pharmacy benefit 
management services, or an applicable entity (as defined 
in section 726(e)) 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 prescribed by 
law. 
‘‘(C) WAIVERS.—The Secretary may waive penalties 
under subparagraph (A), or extend the period of time for 
compliance with a requirement of this section, for an entity 
in violation of section 726 that has made a good-faith 
effort to comply with the requirements of section 726.’’; 
and 
(C) in section 732(a) (29 U.S.C. 1191a(a)), by striking 
‘‘section 711’’ and inserting ‘‘sections 711 and 726’’. 
(2) CLERICAL AMENDMENT.—The table of contents in section 
1 of the Employee Retirement Income 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 serv-
ices.’’. 
(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 PHARMACY BEN-
EFIT MANAGEMENT SERVICES. 
‘‘(a) IN GENERAL.—For plan years beginning on or after the 
date that is 30 months after the date of enactment of this section 
(referred to in this subsection and subsection (b) as the ‘effective
H. R. 7148—552 
date’), a group health plan, or an entity providing pharmacy benefit 
management services on behalf of such a plan, 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 entity agrees to— 
‘‘(1) not limit or delay the disclosure of information 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 subsection (b); and 
‘‘(2) provide the entity providing pharmacy benefit manage-
ment services on behalf of a group health plan relevant informa-
tion necessary to make the reports described in subsection 
(b). 
‘‘(b) REPORTS.— 
‘‘(1) IN GENERAL.—For plan years beginning on or after 
the effective date, in the case of any contract between a group 
health plan and an entity providing pharmacy benefit manage-
ment services on behalf of such plan, including an extension 
or renewal of such a contract, entered into on or after the 
effective date, the entity providing pharmacy benefit manage-
ment 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 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 report 
shall be made available to such group health plan in plain 
language, in a machine-readable format, and as the Secretary 
may determine, 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 National Drug Code) to the entity providing 
pharmacy benefit management services or other 
applicable entity on behalf of the group health 
plan; 
‘‘(II) the contracted compensation paid to the 
pharmacy, by any entity providing pharmacy ben-
efit management 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);
H. R. 7148—553 
‘‘(IV) the proprietary name, established name 
or proper name, and the National Drug Code; 
‘‘(V) for each claim for the drug (including 
original prescriptions and refills) and for each dos-
age 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 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 wholesale acquisition cost, listed 
as cost per days supply and cost per dos-
age 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 dispensed; and 
‘‘(bb) the total number of— 
‘‘(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 after rebates, fees, alternative 
discounts, or other remuneration received from 
applicable entities; 
‘‘(VIII) the total amount of out-of-pocket 
spending by participants and beneficiaries on such 
drug, including spending through copayments, 
coinsurance, and deductibles, but not including any 
amounts spent by participants and beneficiaries 
on drugs not covered under the plan, or for which 
no claim is submitted under the plan; 
‘‘(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 entity providing pharmacy 
benefit management services, from applicable enti-
ties, in rebates, fees, alternative discounts, or other 
remuneration from such entities— 
‘‘(aa) for claims incurred during the 
reporting period; and
H. R. 7148—554 
‘‘(bb) that is related to utilization of such 
drug or spending on such drug; and 
‘‘(XII) to the extent feasible, information on 
the total amount of remuneration for such drug, 
including copayment assistance dollars paid, 
copayment cards applied, or other discounts pro-
vided by each drug manufacturer (or entity admin-
istering copayment assistance on behalf of such 
drug manufacturer), to the participants and bene-
ficiaries 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 
discounts, or other remuneration from applicable 
entities; 
‘‘(II) the net spending in such class after such 
rebates, price concessions, alternative discounts, 
or other remuneration from applicable entities; 
‘‘(III) the total amount received, or expected 
to be received, by the entity providing pharmacy 
benefit management services, from applicable enti-
ties, in rebates, fees, alternative discounts, or other 
remuneration from such entities— 
‘‘(aa) for claims incurred during the 
reporting period; and 
‘‘(bb) that is related to utilization of drugs 
or drug spending; 
‘‘(IV) the average net spending per 30-day 
supply and per 90-day supply by the plan 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 bene-
ficiaries who filled a prescription for a drug in 
such class, including the National Drug Code for 
each such drug; 
‘‘(VI) if applicable, a description of the for-
mulary tiers and utilization mechanisms (such as 
prior authorization or step therapy) employed for 
drugs in that class; and 
‘‘(VII) the total out-of-pocket spending under 
the 
plan 
by 
participants 
and 
beneficiaries, 
including spending through copayments, coinsur-
ance, and deductibles, but not including any 
amounts spent by participants 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 exceeded $10,000 
during the reporting period with respect to fewer than 
50 drugs, with respect to the 50 prescription drugs
H. R. 7148—555 
with the highest spending during the reporting 
period— 
‘‘(I) a list of all other drugs in the same thera-
peutic class as such drug; 
‘‘(II) if applicable, the rationale for the for-
mulary placement of such drug in that therapeutic 
category or class, selected from a list of standard 
rationales established by the Secretary, in con-
sultation with stakeholders; and 
‘‘(III) any change in formulary placement com-
pared to the prior plan year; and 
‘‘(iv) in the case that such plan (or an entity pro-
viding pharmacy benefit management services on 
behalf of such plan) has an affiliated pharmacy or 
pharmacy under common ownership, including manda-
tory mail and specialty home delivery programs, retail 
and mail auto-refill programs, and cost sharing assist-
ance incentives funded by an entity providing phar-
macy benefit services— 
‘‘(I) an explanation of any benefit design 
parameters that encourage or require participants 
and beneficiaries in the plan to fill prescriptions 
at mail order, specialty, or retail pharmacies; 
‘‘(II) the percentage of total prescriptions dis-
pensed by such pharmacies to participants or bene-
ficiaries in such plan; and 
‘‘(III) a list of all drugs dispensed by such 
pharmacies to participants or beneficiaries enrolled 
in such plan, and, with respect to each drug dis-
pensed— 
‘‘(aa) the amount charged, per dosage unit, 
per 30-day supply, or per 90-day supply (as 
applicable) to the plan, and to participants 
and beneficiaries; 
‘‘(bb) the median amount charged to such 
plan, and the interquartile range of the costs, 
per dosage unit, per 30-day supply, and per 
90-day supply, including amounts paid by the 
participants and beneficiaries, 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; 
‘‘(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 and to participants 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 maximum 
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—
H. R. 7148—556 
‘‘(i) a summary document for the group health 
plan that includes such information described in 
clauses (i) through (iv) of subparagraph (A), as specified 
by the Secretary through guidance, program instruc-
tion, or otherwise (with no requirement of notice and 
comment rulemaking), that the Secretary determines 
useful to group health plans for purposes of selecting 
pharmacy benefit management services, such as an 
estimated net price to group health plan and partici-
pant or beneficiary, 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 participants 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, pro-
gram instruction, or otherwise (with no require-
ment of notice and comment rulemaking) that the 
Secretary determines useful to participants or 
beneficiaries in better understanding the plan or 
benefits under such plan; 
‘‘(II) contains only aggregate information; 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; and 
‘‘(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, information on 
the total amount of remuneration for such drugs, 
including copayment assistance dollars paid, 
copayment cards applied, or other discounts pro-
vided by each drug manufacturer (or entity admin-
istering copayment assistance on behalf of such 
drug manufacturer) to participants and bene-
ficiaries; 
‘‘(iv) amounts paid directly or indirectly 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 
(29 
U.S.C. 
1108(b)(2)(B)(ii)(dd)(AA))) to brokerage firms, brokers, 
consultants, advisors, or any other individual or firm, 
for— 
‘‘(I) the referral of the group health plan’s 
business to an entity providing pharmacy benefit 
management services, including the identity of the 
recipient of such amounts;
H. R. 7148—557 
‘‘(II) consideration of the entity providing phar-
macy benefit management services by the group 
health plan; or 
‘‘(III) the retention of the entity by the group 
health plan; 
‘‘(v) an explanation of any benefit design param-
eters that encourage or require participants and bene-
ficiaries in such plan to fill prescriptions at mail order, 
specialty, or retail pharmacies that are affiliated with 
or under common ownership with the entity providing 
pharmacy benefit management services under such 
plan, including mandatory mail and specialty home 
delivery programs, retail 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 during the reporting period. 
‘‘(3) OPT-IN
FOR
GROUP
HEALTH
INSURANCE
COVERAGE 
OFFERED BY A SPECIFIED LARGE EMPLOYER OR THAT IS A SPECI-
FIED LARGE PLAN.—In the case of group health insurance cov-
erage offered in connection with a group health plan that 
is offered by a specified large employer or is a specified large 
plan, such group health plan may, on an annual 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 information 
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 ben-
efit management services on behalf of a group health plan 
shall report information under paragraph (1) in a manner 
consistent with the privacy regulations promulgated under 
section 13402(a) of the Health Information Technology for 
Economic and Clinical Health Act (42 U.S.C. 17932(a)) 
and consistent with the privacy regulations promulgated 
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 
regulations) (referred to in this paragraph as the ‘HIPAA 
privacy regulations’) and shall restrict the use and disclo-
sure of such information according to such privacy regula-
tions and such HIPAA privacy regulations. 
‘‘(B) ADDITIONAL REQUIREMENTS.— 
‘‘(i) IN GENERAL.—An entity providing pharmacy 
benefit management services 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 section 
164.504(a) of title 45, Code of Federal Regulations (or 
successor regulations). 
‘‘(ii) RESTRICTIONS.—In carrying out this sub-
section, a group health plan shall comply with section 
164.504(f) of title 45, Code of Federal Regulations (or 
a successor regulation), and a plan sponsor shall act
H. R. 7148—558 
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 
information 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 regula-
tions, the Genetic Information Nondiscrimination Act 
of 2008 (Public Law 110–233) (including the amend-
ments made by such Act), the Americans with Disabil-
ities 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 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 participant or beneficiary writ-
ten notice informing the participant or beneficiary of the 
requirement for entities providing pharmacy benefit 
management 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 beneficiary, or providing individual notification. 
‘‘(E) LIMITATION
TO
BUSINESS
ASSOCIATES.—A group 
health plan receiving a report under paragraph (1) may 
disclose such information 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 regulations) or as per-
mitted 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 behalf of a group health plan, from placing reasonable 
restrictions on the public disclosure of the information con-
tained in a report described in paragraph (1), except that 
such plan or entity may not— 
‘‘(i) restrict disclosure of such report to the Depart-
ment of Health and Human Services, the Department 
of Labor, or the Department of the Treasury; or 
‘‘(ii) prevent disclosure for the purposes of sub-
section (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 
affiliated with, a drug manufacturer, drug wholesaler, or 
other direct participant in the drug supply chain, in order 
to prevent anti-competitive behavior. 
‘‘(5) STANDARD FORMAT AND REGULATIONS.—
H. R. 7148—559 
‘‘(A) IN GENERAL.—Not later than 18 months after the 
date of enactment of this section, the Secretary shall specify 
through rulemaking a standard format for entities pro-
viding pharmacy benefit management services on behalf 
of group health plans, to submit reports required under 
paragraph (1). 
‘‘(B) ADDITIONAL
REGULATIONS.—Not later than 18 
months after the date of enactment of this section, the 
Secretary shall, through rulemaking, promulgate any other 
final regulations necessary to implement the requirements 
of this section. In promulgating such regulations, the Sec-
retary shall, to the extent practicable, align the reporting 
requirements under this section with the reporting require-
ments under section 9825. 
‘‘(c) REQUIREMENT TO PROVIDE INFORMATION TO PARTICIPANTS 
OR BENEFICIARIES.—A group health plan, upon request of a partici-
pant or beneficiary, shall provide to such participant or bene-
ficiary— 
‘‘(1) the summary document described in subsection 
(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 section shall 
be construed to permit a health insurance issuer, group health 
plan, entity providing pharmacy benefit management services on 
behalf of a group health plan or health insurance issuer, or other 
entity to restrict disclosure to, or otherwise limit the access of, 
the Secretary to a report described in subsection (b)(1) or informa-
tion related to compliance with subsections (a), (b), or (c) of this 
section or section 4980D(g) by such issuer, plan, or entity. 
‘‘(e) DEFINITIONS.—In this section: 
‘‘(1) APPLICABLE
ENTITY.—The term ‘applicable entity’ 
means— 
‘‘(A) an applicable group purchasing organization, drug 
manufacturer, distributor, wholesaler, rebate aggregator (or 
other purchasing entity designed to aggregate rebates), 
or associated third party; 
‘‘(B) any subsidiary, parent, affiliate, or subcontractor 
of a group health plan, health insurance issuer, entity 
that provides pharmacy benefit management services on 
behalf of such a plan or issuer, or any entity described 
in subparagraph (A); or 
‘‘(C) such other entity as the Secretary may specify 
through rulemaking. 
‘‘(2) APPLICABLE GROUP PURCHASING ORGANIZATION.—The 
term ‘applicable group purchasing organization’ 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 ingredient cost and dis-
pensing fee for a drug (inclusive of the out-of-pocket costs 
to the participant or beneficiary), or another analogous com-
pensation structure that the Secretary may specify through 
regulations.
H. R. 7148—560 
‘‘(4) GROSS
SPENDING.—The term ‘gross spending’, with 
respect to prescription drug benefits under a group health 
plan, means the amount spent by a group health plan 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, means 
the amount spent by a group health plan on prescription drug 
benefits, calculated after the application of rebates, fees, alter-
native 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 (29 U.S.C. 1002(16)(B)). 
‘‘(7) REMUNERATION.—The term ‘remuneration’ has the 
meaning given such term by the Secretary, through rulemaking, 
which shall be reevaluated by the Secretary every 5 years. 
‘‘(8) SPECIFIED LARGE EMPLOYER.—The term ‘specified large 
employer’ means, in connection with a group health plan estab-
lished or maintained by a single employer, 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 ‘specified large plan’ 
means a group health plan established or maintained by a 
plan sponsor described in clause (ii) or (iii) of section 3(16)(B) 
of the Employee Retirement Income Security Act of 1974 (29 
U.S.C. 1002(16)(B)) that had an average of at least 100 partici-
pants 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)).’’; 
(2) EXCEPTION FOR CERTAIN GROUP HEALTH PLANS.—Section 
9831(a)(2) of the Internal Revenue Code of 1986 is amended 
by inserting ‘‘other than with respect to section 9826,’’ before 
‘‘any group health plan’’. 
(3) ENFORCEMENT.—Section 4980D of the Internal Revenue 
Code of 1986 is amended by adding at the end the following 
new subsection: 
‘‘(g) APPLICATION TO REQUIREMENTS IMPOSED ON CERTAIN ENTI-
TIES PROVIDING PHARMACY BENEFIT MANAGEMENT SERVICES.—In 
the case of any requirement under section 9826 that applies with 
respect to an entity providing pharmacy benefit management serv-
ices on behalf of a group health plan, any reference in this section 
to such group health plan (and the reference in subsection (e)(1) 
to the employer) shall be treated as including a reference to such 
entity.’’.
H. R. 7148—561 
(4) CLERICAL AMENDMENT.—The table of sections for sub-
chapter B of chapter 100 of the Internal Revenue Code of 
1986 is amended by adding at the end the following new item: 
‘‘Sec. 9826. Oversight of entities that provide pharmacy benefit management serv-
ices.’’. 
SEC. 6702. FULL REBATE PASS THROUGH TO PLAN; EXCEPTION FOR 
INNOCENT PLAN FIDUCIARIES. 
(a) IN GENERAL.—Section 408(b)(2) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1108(b)(2)) is amended— 
(1) in subparagraph (B)(viii)— 
(A) by redesignating subclauses (II) through (IV) as 
subclauses (III) through (V), respectively; 
(B) in subclause (I)— 
(i) by striking ‘‘subclause (II)’’ and inserting ‘‘sub-
clause (III)’’; and 
(ii) by striking ‘‘subclauses (II) and (III)’’ and 
inserting ‘‘subclauses (III) and (IV)’’; and 
(C) by inserting after subclause (I) the following: 
‘‘(II) Pursuant to subsection (a), subparagraphs (C) and 
(D) of section 406(a)(1) shall not apply to a responsible plan 
fiduciary, notwithstanding any failure to remit required 
amounts under subparagraph (C)(i), if the following conditions 
are met: 
‘‘(aa) The responsible plan fiduciary did not know that 
the covered service provider failed or would fail to make 
required remittances and reasonably believed that the cov-
ered service provider remitted such required amounts. 
‘‘(bb) The responsible plan fiduciary, upon discovering 
that the covered service provider failed to remit the 
required amounts, requests in writing that the covered 
service provider remit such amounts. 
‘‘(cc) If the covered service provider fails to comply 
with a written request described in subclause (III) within 
90 days of the request, the responsible plan fiduciary noti-
fies the Secretary of the covered service provider’s failure, 
in accordance with subclauses (III) and (IV).’’; and 
(2) by adding at the end the following: 
‘‘(C)(i)(I) For plan years beginning on or after the date 
that is 30 months after the date of enactment of this subpara-
graph (referred to in this clause as the ‘effective date’), no 
contract or arrangement or renewal or extension of a contract 
or arrangement, entered into on or after the effective date, 
for services between a covered plan and a covered service 
provider (or between a sponsor of a covered plan and a covered 
service provider), through a health insurance issuer offering 
group health insurance coverage, a third-party administrator, 
an entity providing pharmacy benefit management services, 
or other entity, for pharmacy benefit management services, 
is reasonable within the meaning of this paragraph unless 
such entity providing pharmacy benefit management services— 
‘‘(aa) remits 100 percent of rebates, fees, alternative 
discounts, and other remuneration received from any 
applicable entity that are related to utilization of drugs 
or drug spending under such health plan or health insur-
ance coverage, to the group health plan or, in the case 
of a health insurance issuer offering group health insurance
H. R. 7148—562 
coverage in connection with a group health plan, to the 
health insurance issuer offering group health insurance 
coverage on behalf of the plan; and 
‘‘(bb) does not enter into any contract for pharmacy 
benefit management services on behalf of such a plan or 
coverage, with an applicable entity unless 100 percent of 
rebates, fees, alternative discounts, and other remuneration 
received under such contract that are related to the utiliza-
tion of drugs or drug spending under such group health 
plan or health insurance coverage are remitted to the group 
health plan or, in the case of a health insurance issuer 
offering group health insurance coverage in connection with 
a group health plan, to the health insurance issuer on 
behalf of the plan by the entity providing pharmacy benefit 
management services. 
‘‘(II) Nothing in subclause (I) shall be construed to affect 
the term of a contract or arrangement, as in effect on the 
effective date (as described in such subclause), except that 
such subclause shall apply to any renewal or extension of 
such a contract or arrangement entered into on or after such 
effective date, as so described. 
‘‘(ii) With respect to such rebates, fees, alternative discounts, 
and other remuneration— 
‘‘(I) the rebates, fees, alternative discounts, and other remu-
neration under clause (i)(I) shall be— 
‘‘(aa) remitted— 
‘‘(AA) on a quarterly basis, to the group health 
plan or, in the case of a health insurance issuer offering 
group health insurance coverage in connection with 
a group health plan, to the group health insurance 
issuer on behalf of the plan, not later than 90 days 
after the end of each quarter; or 
‘‘(BB) in the case of an underpayment in a remit-
tance for a prior quarter, as soon as practicable, but 
not later than 90 days after notice of the underpayment 
is first given; 
‘‘(bb) fully disclosed and enumerated to the group 
health plan or health insurance issuer; and 
‘‘(cc) returned to the covered service provider for phar-
macy benefit management services on behalf of the group 
health plan if any audit by a plan sponsor, issuer or a 
third party designated by a plan sponsor, indicates that 
the amounts received are in excess of correct amounts 
after such amounts have been paid to the group health 
plan, in the amount of such excess; 
‘‘(II) the Secretary may issue regulations governing— 
‘‘(aa) procedures for the remittance of rebates, fees, 
alternative discounts, and other remuneration under sub-
clause (I)(aa); 
‘‘(bb) any audit pursuant to this subparagraph; and 
‘‘(cc) the timing, manner, and content of the disclosure 
of rebates, fees, alternative discounts, and other remunera-
tion under subclause (I)(bb) as well as any other informa-
tion the Secretary determines necessary for the responsible 
plan fiduciary to consider the reasonableness of the contract 
or arrangement (provided that such information does not
H. R. 7148—563 
include personally identifiable health information or pro-
tected health information subject to established individual 
privacy and nondiscrimination requirements under law); 
and 
‘‘(III) the records of such rebates, fees, alternative dis-
counts, other remuneration, and disclosures, shall be available 
for audit by the plan (or the plan sponsor, issuer, or a third 
party designated by a plan sponsor on behalf of the plan), 
not less than once per plan year. 
‘‘(iii) To ensure that an entity providing pharmacy benefit 
management services is able to meet the requirements of clause 
(ii)(I), a rebate aggregator (or other purchasing entity designed 
to aggregate rebates) and an applicable group purchasing organiza-
tion shall remit such rebates to the entity providing pharmacy 
benefit management services not later than 45 days after the end 
of each quarter. 
‘‘(iv) A third-party administrator of a group health plan, a 
health insurance issuer offering group health insurance coverage, 
or a covered service provider for pharmacy benefit management 
services under such health plan or health insurance coverage shall 
make rebate contracts with rebate aggregators or drug manufactur-
ers available for audit by such plan, subject to reasonable restric-
tions (as determined by the Secretary) on confidentiality to prevent 
re-disclosure of such contracts or use of such information in audits 
for purposes unrelated to this section. 
‘‘(v) Audits carried out under clauses (ii)(III) and (iv) shall 
be performed by an auditor selected by the responsible plan fidu-
ciary. Payment for such auditors shall not be made, whether directly 
or indirectly, by the entity providing pharmacy benefit management 
services. 
‘‘(vi) Nothing in this subparagraph shall be construed to— 
‘‘(I) prohibit reasonable payments to entities offering phar-
macy benefit management services for bona fide services using 
a fee structure not described in this subparagraph, provided 
that such fees are transparent and quantifiable to group health 
plans and health insurance issuers; 
‘‘(II) require a third-party administrator of a group health 
plan or covered service provider for pharmacy benefit manage-
ment services under such health plan or health insurance cov-
erage to remit bona fide service fees to the group health plan; 
‘‘(III) limit the ability of a group health plan or health 
insurance issuer to pass through rebates, fees, alternative dis-
counts, and other remuneration to the participant or bene-
ficiary; 
‘‘(IV) modify the requirements for the creation, receipt, 
maintenance, or transmission of protected health information 
under the privacy regulations promulgated 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 regulations); or 
‘‘(V) limit any requirement under subparagraph (A) or (B). 
‘‘(vii) For purposes of this subparagraph— 
‘‘(I) the terms ‘applicable entity’ and ‘applicable group pur-
chasing organization’ have the meanings given such terms in 
section 726(e);
H. R. 7148—564 
‘‘(II) the terms ‘covered plan’, ‘covered service provider’, 
and ‘responsible plan fiduciary’ have the meanings given such 
terms in subparagraph (B); and 
‘‘(III) the terms ‘group health insurance coverage’, ‘health 
insurance coverage’, and ‘health insurance issuer’ have the 
meanings given such terms in section 733.’’. 
(b) RULE
OF CONSTRUCTION.—Subclause (II)(aa) of section 
408(b)(2)(B)(viii) of the Employee Retirement Income Security Act 
of 1974 (29 U.S.C. 1108(b)(2)(B)(viii)), as amended by subsection 
(a), shall not be construed to relieve or limit a responsible plan 
fiduciary from the duty to monitor the practices of any covered 
service provider that contracts with the applicable covered plan, 
including for the purposes of ensuring the reasonableness of com-
pensation. For purposes of this subsection, the terms ‘‘covered plan’’, 
‘‘covered service provider’’, and ‘‘responsible plan fiduciary’’ have 
the meanings given such terms in section 408(b)(2)(B)(ii) of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 
1108(b)(2)(B)(ii)). 
(c) CLARIFICATION OF COVERED SERVICE PROVIDER.— 
(1) 
SERVICES.—Section 
408(b)(2)(B)(ii)(I)(bb) 
of 
the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 
1108(b)(2)(B)(ii)(I)(bb)) is amended— 
(A) in subitem (AA) by striking ‘‘Brokerage services,’’ 
and inserting ‘‘Services (including brokerage services),’’; 
and 
(B) in subitem (BB)— 
(i) by striking ‘‘Consulting,’’ and inserting ‘‘Other 
services,’’; and 
(ii) by striking ‘‘related to the development or 
implementation of plan design’’ and all that follows 
through the period at the end and inserting ‘‘including 
any of the following: plan design, insurance or insur-
ance product selection (including vision and dental), 
recordkeeping, medical management, benefits adminis-
tration selection (including vision and dental), stop- 
loss insurance, pharmacy benefit management services, 
wellness design and management services, trans-
parency tools, group purchasing organization agree-
ments and services, participation in and services from 
preferred vendor panels, disease management, compli-
ance services, employee assistance programs, or third- 
party administration services, or consulting services 
related to any such services.’’. 
(2) CERTAIN
ARRANGEMENTS
FOR
PHARMACY
BENEFIT 
MANAGEMENT SERVICES CONSIDERED AS INDIRECT.— 
(A) 
IN
GENERAL.—Section 
408(b)(2)(B)(i) 
of 
the 
Employee Retirement Income Security Act of 1974 (29 
U.S.C. 1108(b)(2)(B)(i)) is amended— 
(i) by striking ‘‘requirements of this clause’’ and 
inserting ‘‘requirements of this subparagraph’’; and 
(ii) by adding at the end the following: ‘‘For pur-
poses of applying section 406(a)(1)(C) with respect to 
a transaction described under this subparagraph or 
subparagraph (C), a contract or arrangement for serv-
ices between a covered plan and an entity providing 
services to the plan, including a health insurance issuer 
providing health insurance coverage in connection with
H. R. 7148—565 
the covered plan, in which such entity contracts, in 
connection with such plan, with a service provider 
for pharmacy benefit management services, shall be 
considered an indirect furnishing of goods, services, 
or facilities between the covered plan and the service 
provider for pharmacy benefit management services 
acting as the party in interest.’’. 
(B) 
EXEMPTION.—Section 
408(b)(2)(B) 
(29 
U.S.C. 
1108(b)(2)(B)) of such Act is amended by adding at the 
end the following: 
‘‘(x) A service provider for pharmacy benefit management 
services that is considered to indirectly furnish goods, services, 
or facilities to a covered plan, as described in clause (i)(I), 
is entitled to relief with respect to a violation of this section 
provided the conditions for receiving such relief are satisfied.’’. 
(C) HEALTH INSURANCE ISSUER AND HEALTH INSURANCE 
COVERAGE DEFINED.—Section 408(b)(2)(B)(ii)(I)(aa) of such 
Act (29 U.S.C. 1108(b)(2)(B)(ii)(I)(aa)) is amended by 
inserting before the period at the end ‘‘and the terms 
‘health insurance coverage’ and ‘health insurance issuer’ 
have the meanings given such terms in section 733(b)’’. 
(D) 
TECHNICAL
AMENDMENT.—Section 
408(b)(2)(B)(ii)(I)(aa) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1108(b)(2)(B)(ii)(I)(aa)) is 
amended by inserting ‘‘in’’ after ‘‘defined’’. 
(E) REGULATORY AUTHORITY.—Section 408(b)(2)(B)(iii) 
of such Act (29 U.S.C. 1108(b)(2)(B)(iii)) is amended, in 
the matter preceding subclause (I), by inserting ‘‘(in accord-
ance with regulations issued by the Secretary addressing 
time, manner, and content of such disclosures)’’, after ‘‘fol-
lowing’’. 
SEC. 6703. INCREASING TRANSPARENCY IN GENERIC DRUG APPLICA-
TIONS. 
(a) IN GENERAL.—Section 505(j)(3) of the Federal Food, Drug, 
and Cosmetic Act (21 U.S.C. 355(j)(3)) is amended by adding at 
the end the following: 
‘‘(H)(i) Upon request (in controlled correspondence or an analo-
gous process) by a person that has submitted or intends to submit 
an abbreviated application under this subsection for a drug that 
is required by regulation to contain one or more of the same inactive 
ingredients in the same concentrations as the listed drug referred 
to, or for which the Secretary determines there is a scientific jus-
tification for an approach that is in vitro, in whole or in part, 
to be used to demonstrate bioequivalence for a drug if such a 
drug contains one or more of the same inactive ingredients in 
the same concentrations as the listed drug referred to, the Secretary 
shall inform the person whether such drug is qualitatively and 
quantitatively the same as the listed drug. The Secretary may 
also provide such information to such a person on the Secretary’s 
own initiative during the review of an abbreviated application under 
this subsection for such drug. 
‘‘(ii) Notwithstanding section 301(j), if the Secretary determines 
that such drug is not qualitatively or quantitatively the same as 
the listed drug, the Secretary shall identify and disclose to the 
person—