‘‘(ii) UPDATES.—Not later than 30 
days after making a change to the reim-
bursement basis or methodology under 
clause (i), the PBM shall disclose such 
change to the carrier and the Office. 
‘‘(iii) TRANSITION
RULE.—Under a 
PBM carrier arrangement under this chap-
ter that is in effect on the effective date of 
the FEHBP Prescription Drug Integrity, 
Transparency, and Cost Savings Act, the 
PBM shall disclose the information under 
clause (i) not later than 1 year after such 
date. 
‘‘(2) MAXIMUM
PRICE
FOR
PRESCRIPTION 
DRUGS.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), a carrier under a PBM carrier ar-
rangement under this chapter may not pay a 
PBM an amount for a prescription drug that is 
more than an amount that is equal to the aver-
age manufacturer price for the drug minus any 
cost-sharing for such drug that is the responsi-
bility of an enrollee. 
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‘‘(B) RULE OF CONSTRUCTION.—Subpara-
graph (A) shall not be construed to affect the 
payment— 
‘‘(i) of any applicable cost-sharing to 
a pharmacy by an enrollee; or 
‘‘(ii) subject to paragraph (3), the 
payment of any dispensing fee to a phar-
macy by a PBM. 
‘‘(3) MAXIMUM DISPENSING FEE.— 
‘‘(A) IN GENERAL.—Under a PBM carrier 
arrangement, a PBM may not pay to a phar-
macy a dispensing fee that exceeds the max-
imum dispensing fee determined under subpara-
graph (B). 
‘‘(B) DETERMINATION OF MAXIMUM DIS-
PENSING FEE.—The Office shall, with respect 
to each drug covered by a health benefits plan 
under this chapter, determine the maximum 
dispensing fee. 
‘‘(f) RIGHT TO EXPLANATION OF BENEFITS.—Under 
a PBM carrier arrangement under this chapter, not later 
than 90 days after the date on which a pharmacy dis-
penses a prescription drug covered under the arrange-
ment, the PBM shall provide (by mail or electronically) 
to the enrollee to whom such drug was dispensed an expla-
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nation of benefits statement that contains the following 
information: 
‘‘(1) The date the claim for such prescription 
drug was made by the pharmacy. 
‘‘(2) The name of such drug and the strength 
and quantity dispensed to the enrollee. 
‘‘(3) The amount paid by the enrollee for the 
prescription drug. 
‘‘(4) The amount paid to the pharmacy by the 
PBM to reimburse such pharmacy for the prescrip-
tion drug and the provision of any covered service 
related to dispensing such drug. 
‘‘(5) The amount paid by the carrier to the 
PBM for such prescription drug. 
‘‘(g) NON-DISCRIMINATORY CONTRACT.—Under a 
PBM carrier arrangement under this chapter, a PBM may 
not require that a pharmacy participate in a pharmacy 
network managed by such PBM in order for the pharmacy 
to participate in another network managed by such PBM. 
‘‘(h) ACCESS TO PBM CONTRACT INFORMATION.— 
‘‘(1) IN GENERAL.—Under a PBM carrier ar-
rangement under this chapter, on the request of the 
Office of Personnel Management, a PBM shall pro-
vide to the Office and to the Office of Inspector 
General of the Office of Personnel Management full 
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access to information relating to contracts entered 
into by such PBM under such arrangement (such as 
PBM manufacturer arrangements and contracts 
with pharmacies). Such information shall include— 
‘‘(A) corporate-wide rebate receipt aging 
reports that cover all of the PBM’s lines of 
business; 
‘‘(B) information and methodology used to 
calculate and allocate rebates between the 
PBM’s lines of business; 
‘‘(C) information on average wholesale 
prices, wholesale acquisition costs, and max-
imum allowable costs; 
‘‘(D) information on dispensing fees paid; 
and 
‘‘(E) information and methodologies used 
to calculate additional administrative and serv-
ice fees charged to the carrier. 
‘‘(2) CONFIDENTIALITY.—Information disclosed 
by a health benefits plan or PBM under this sub-
section is confidential and shall not be disclosed by 
the Office or by a plan receiving the information, ex-
cept that nothing in this paragraph shall prevent— 
‘‘(A) a disclosure requird under the Inspec-
tor General Act of 1978; or 
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‘‘(B) any disclosure which the Office, in its 
sole discretion, considers necessary in order to 
carry out this section, if such disclosure is made 
in a form which does not disclose the identity 
of a specific PBM or plan or the price charged 
for a particular drug. 
‘‘(3) EXEMPTION FROM FOIA.—Any information 
obtained under this subsection shall be exempt from 
disclosure under section 552 (commonly referred to 
as the ‘Freedom of Information Act’). 
‘‘(i) CIVIL MONETARY PENALTIES.— 
‘‘(1) IN GENERAL.—A PBM or a carrier that 
makes a false statement or false claim to the Gov-
ernment of the United States with respect to the 
disclosure of information required under this section 
shall be considered in violation of section 3729 of 
title 31. 
‘‘(2) USE
OF
COLLECTIONS.—Any monetary 
penalty collected under paragraph (1) shall be de-
posited into the Employees Health Benefits Fund 
under section 8909. 
‘‘(j) COLLECTION OF DATA ON AVERAGE MANUFAC-
TURER PRICE.— 
‘‘(1) MASTER AGREEMENT.—For quarters be-
ginning on or after January 1, 2011— 
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‘‘(A) each manufacturer of covered drugs 
shall enter into a master agreement with the 
Office under which, not later than 60 days after 
the last day of each quarter for which the 
agreement is in effect, the manufacturer reports 
to the Office the average manufacturer price for 
the drug during such quarter; and 
‘‘(B) unless the manufacturer meets the 
requirement of subparagraph (A) for a quarter, 
the manufacturer may not receive payment 
from a carrier under this chapter or from a 
PBM under a PBM carrier arrangement under 
this chapter for the purchase of such drugs dis-
pensed during the period— 
‘‘(i) beginning with the second subse-
quent quarter; and 
‘‘(ii) ending with the second quarter 
after the next quarter for which such re-
quirement is met). 
‘‘(2) APPLICATION OF PROVISIONS.—The provi-
sions of subparagraphs (B), (C), and (D) of section 
1927(b)(3) of the Social Security Act shall apply to 
covered drugs and the Office under this section with 
respect to information required to be reported under 
paragraph (1)(A) in the same manner as such provi-
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sions apply to covered outpatient drugs and the Sec-
retary of Health and Human Services with respect 
to information required to be reported under sub-
paragraph (A) of such section 1927(b)(3). 
‘‘(3) COVERED DRUG DEFINED.—For purposes 
of this subsection, the term ‘covered drug’ means a 
covered outpatient drug (as defined in section 
1927(k) of the Social Security Act) for which bene-
fits are payable under a health benefits plan under 
this chapter. 
‘‘(k) DEFINITIONS.—For purposes of this section and 
section 8902(p): 
‘‘(1) AVERAGE
MANUFACTURER
PRICE.—The 
term ‘average manufacturer price’ means the aver-
age price for a drug that is paid to a manufacturer 
by wholesalers, retail pharmacies, and mail order 
pharmacies that buy directly from the manufacturer. 
‘‘(2) AVERAGE WHOLESALE PRICE.—The term 
‘average wholesale price’ means a publicly available, 
suggested list price for a prescription drug that is 
provided by a wholesaler to a pharmacy or other en-
tity that provides prescription drugs directly to con-
sumers. 
‘‘(3) CONTROLLING INTEREST.—An entity that 
has a ‘controlling interest’ in a second entity owns 
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or otherwise controls at least 20 percent of the sec-
ond entity. 
‘‘(4) DISPENSING FEE.—The term ‘dispensing 
fee’ means a fee paid to a pharmacy for the service 
of filling or dispensing prescriptions (excluding the 
cost of the drug dispensed). 
‘‘(5) DRUG
SUBSTITUTION.—The term ‘drug 
substitution’ means any change from one prescrip-
tion drug to another prescription drug that is in-
tended to address or treat the same illness or condi-
tion. 
‘‘(6) MAXIMUM ALLOWABLE COST.—The term 
‘maximum allowable cost’ means a cost that is set 
by a PBM as the upper payment limit on the ingre-
dient costs for a multiple source drug. 
‘‘(7) MULTIPLE
SOURCE
DRUG.—The term 
‘multiple source drug’ has the meaning given such 
term in section 1927(k)(7) of the Social Security 
Act. 
‘‘(8) NET COST.—The term ‘net cost’ means 
the final cost of the drug to the carrier (or an en-
rollee) after all adjustments (including discounts, re-
bates, associated dispensing fees and administrative 
fees, and enrollee cost sharing). 
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‘‘(9) PBM.—The term ‘PBM’ means a phar-
macy benefit manager. 
‘‘(10) PBM 
CARRIER
ARRANGEMENT.—The 
term ‘PBM carrier arrangement’ means a contract 
between a PBM and a carrier for the provision or 
administration of a program of prescription drug 
coverage under a health benefits plan under this 
chapter. Such a contract may provide, among other 
duties, for the PBM to— 
‘‘(A) process and pay prescription drug 
claims; 
‘‘(B) provide programs and services de-
signed to— 
‘‘(i) maximize the effectiveness of 
drugs dispensed under such plan; or 
‘‘(ii) contain drug expenditures under 
such plan; and 
‘‘(C) engage in other activities related to 
the administration of such prescription drug 
coverage. 
‘‘(11) PBM MANUFACTURER ARRANGEMENT.— 
The term ‘PBM manufacturer arrangement’ means 
a contract between a PBM and a drug manufacturer 
for the provision of prescription drugs to enrollees of 
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health benefits plans with prescription drug coverage 
that is administered or provided by the PBM. 
‘‘(12) PHARMACY
BENEFIT
MANAGER.—The 
term ‘pharmacy benefit manager’ means an entity 
that contracts with a carrier to provide or admin-
ister prescription drug coverage under a health bene-
fits plan under this chapter. 
‘‘(13) PRESCRIBER.—The term ‘prescriber’ 
means an individual who is authorized under State 
and Federal law to prescribe drugs and who pre-
scribes a drug to an enrollee of a health benefits 
plan under this chapter. 
‘‘(14) RETAIL
PHARMACY.—The term ‘retail 
pharmacy’ excludes any mail order pharmacy. 
‘‘(15) SINGLE SOURCE DRUG.—The term ‘single 
source drug’ has the meaning given such term in 
section 1927(k)(7) of the Social Security Act. 
‘‘(16) WHOLESALE
ACQUISITION
COST.—The 
term ‘wholesale acquisition cost’ means a publicly 
available list price for sales of a drug by a manufac-
turer to a wholesaler.’’. 
(c) CLERICAL AMENDMENT.—The table of sections 
for chapter 89 of title 5, United States Code, is amended 
by adding at the end the following: 
‘‘8915. Requirements for PBM arrangements.’’. 
(d) EFFECTIVE DATE; WAIVER; REGULATIONS.— 
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(1) EFFECTIVE DATE.—The amendments made 
by this section shall apply to contract years begin-
ning on or after January 1, 2011. 
(2) WAIVER.—The Office of Personnel Manage-
ment may waive the application of 1 or more of the 
requirements of section 8915 of title 5, United 
States Code, but only for contract year 2011. 
(3) EXPEDITING IMPLEMENTATION OF REGULA-
TIONS.—Not later than 6 months after the date of 
the enactment of this Act, the Office of Personnel 
Management shall issue interim final regulations to 
carry out this section which may be effective and 
final immediately on an interim basis as of the date 
of publication of such regulations. If the Office of 
Personnel Management provides for an interim final 
regulation, the Office of Personnel Management 
shall provide for a period of public comment on such 
regulation after the date of publication. The Office 
of Personnel Management may change or revise such 
regulation after completion of the period of public 
comment. 
Æ 
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