I
105TH CONGRESS
1ST SESSION
H. R. 1525
To assure equitable treatment in health care coverage of prescription drugs.
IN THE HOUSE OF REPRESENTATIVES
MAY 1, 1997
Mrs. LOWEY introduced the following bill; which was referred to the Commit-
tee on Commerce, and in addition to the Committees on Ways and
Means, Education and the Workforce, and Government Reform and Over-
sight, for a period to be subsequently 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.
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 1997’’.
SEC. 2. EQUITY IN PROVISION OF PRESCRIPTION DRUG
COVERAGE.
(a) GROUP HEALTH PLANS.—
‘‘(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 mini-
mum 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
713(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)), as amended by section 604(b)(2) of
Public Law 104–204, is amended by striking ‘‘sec-
tion 2704’’ and inserting ‘‘sections 2704 and 2706’’.
(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 (as added by
section 603(a) of the Newborns’ and Mothers’
Health Protection Act of 1996 and amended by sec-
tion 702(a) of the Mental Health Parity Act of
1996) is amended by adding at the end the following
new section:
‘‘SEC. 713. 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 mini-
mum 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)), as amended by section 603(b)(1) of Public
Law 104–204, is amended by striking ‘‘section 711’’
and inserting ‘‘sections 711 and 713’’.
(C) Section 732(a) of such Act (29 U.S.C.
1191a(a)), as amended by section 603(b)(2) of Pub-
lic Law 104–204, is amended by striking ‘‘section
711’’ and inserting ‘‘sections 711 and 713’’.
(D) The table of contents in section 1 of such
Act is amended by inserting after the item relating
to section 712 the following new item:
‘‘Sec. 713. Equity in provision of prescription drug coverage.’’.
(b) INDIVIDUAL HEALTH INSURANCE.—(1) Part B
of title XXVII of the Public Health Service Act (as added
by section 605(a) of the Newborn’s and Mother’s Health
Protection Act of 1996) is amended by inserting after sec-
tion 2751 the following new section:
‘‘SEC. 2752. EQUITY IN PROVISION OF PRESCRIPTION DRUG
COVERAGE.
‘‘(a) IN GENERAL.—The provisions of section 2706
(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 713(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)), as added by section 605(b)(3)(B) of
Public Law 104–204, is amended by striking ‘‘section
2751’’ and inserting ‘‘sections 2751 and 2752’’.
(c) APPLICATION
TO MEDICARE MANAGED CARE
PLANS.—Subparagraph (B) of section 1876(c)(4) of the
Social Security Act (42 U.S.C. 1395mm(c)(4)) is amended
to read as follows:
‘‘(B) meets the requirements of section 2752 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 1908 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 2752 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) of the Social Security Act.’’.
(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:
‘‘(D) An issuer of a medicare supplemental policy (as
defined in section 1882(g)) shall comply with the require-
ments of section 2752 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 2752 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:
‘‘(o) A contract may not be made or a plan approved
which excludes or does not comply with the requirements
of section 2752 of the Public Health Service Act.’’.
(g) EFFECTIVE DATES.—(1)(A) Subject to subpara-
graph (B), the amendments made by subsection (a) shall
apply with respect to group health plans for plan years
beginning on or after January 1, 1998.
(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-
(5) The amendments made by subsection (e) shall
apply with respect to medicare supplemental policies and
medicare select policies offered, sold, issued, renewed, in
effect, or operated on and after January 1, 1998.
(6) The amendment made by subsection (f) shall
apply with respect to contracts for periods beginning on
and after January 1, 1998.
(h) COORDINATED REGULATIONS.—Section 104(1)
of the Health Insurance Portability and Accountability
Act of 1996 is amended by striking ‘‘this subtitle (and
the amendments made by this subtitle and section 401)’’
and inserting ‘‘the provisions of part 7 of subtitle B of
title I of the Employee Retirement Income Security Act
of 1974, and the provisions of parts A and C of title
XXVII of the Public Health Service Act’’.
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