Drug Price Transparency Act of 2021
Bill: S.1523 | Sponsor: Sen. Braun, Mike (R-IN)
Policy area: Health

Summary:
Drug Price Transparency Act of 2021
This bill provides statutory authority for the limitation on which type of prescription drug rebates are exempt from federal anti-kickback laws.  Specifically, a rebate from a drug manufacturer to a health insurer or pharmacy benefit manager is exempt only if the rebate (1) is disclosed to the consumer at the point of sale, or (2) is a flat fee paid for pharmacy benefit management services.

To amend title XI of the Social Security Act and title XXVII of the 
  Public Health Service Act to establish requirements with respect to 
                      prescription drug benefits.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Drug Price Transparency Act of 
2021''.

SEC. 2. REQUIREMENTS FOR PRESCRIPTION DRUG BENEFITS.

    (a) Removal of Safe Harbor Protection for Rebates Involving 
Prescription Drugs and Establishment of New Safe Harbor Protections 
Involving Prescription Drugs.--
            (1) Removal of safe harbor protection for rebates involving 
        prescription drugs.--Section 1128B(b) of the Social Security 
        Act (42 U.S.C. 1320a-7b(b)) is amended--
                    (A) in paragraph (3)(A), by striking ``a discount'' 
                and inserting ``subject to paragraph (5), a discount''; 
                and
                    (B) by adding at the end the following:
            ``(5) Removal of safe harbor protection for rebates 
        involving prescription drugs.--The safe harbor described in 
        paragraph (3)(A) shall not apply to a reduction in price or 
        other remuneration from a manufacturer of prescription drugs to 
        a sponsor of a prescription drug plan under part D of title 
        XVIII, an MA organization offering an MA-PD plan under part C 
        of such title, or a pharmacy benefit manager under contract 
        with such a sponsor or such an organization and, except as 
        provided in subparagraphs (L) and (M) of paragraph (3), 
        paragraphs (1) and (2) shall apply to any such reduction in 
        price or other remuneration.''.
            (2) Establishment of new safe harbor protections involving 
        prescription drugs .--Section 1128B(b)(3) of the Social 
        Security Act (42 U.S.C. 1320a-7b(b)(3)) is amended--
                    (A) in subparagraph (J), by striking ``and'' at the 
                end;
                    (B) in subparagraph (K), by striking the period at 
                the end and inserting a semicolon; and
                    (C) by adding at the end the following:
                    ``(L) a reduction in price offered by a 
                manufacturer of prescription drugs to a sponsor of a 
                prescription drug plan under part D of title XVIII, an 
                MA organization offering an MA-PD plan under part C of 
                such title, or a pharmacy benefit manager under 
                contract with such a sponsor or such an organization, 
                that is reflected at the point of sale to the 
                individual and meets such other conditions as the 
                Secretary may establish; and
                    ``(M) flat fee service fees a manufacturer of 
                prescription drugs pays to a pharmacy benefit manager 
                for services rendered to the manufacturer that relate 
                to arrangements by the pharmacy benefit manager to 
                provide pharmacy benefit management services to a 
                health plan, if certain conditions established by the 
                Secretary are met, including requirements that the fees 
                are transparent to the health plan.''.
            (3) Effective date.--The amendments made by this subsection 
        shall take effect on January 1, 2023.
    (b) Requirements for Private Insurance Plans.--
            (1) In general.--Part D of title XXVII of the Public Health 
        Service Act (42 U.S.C. 300gg-111 et seq.) is amended by adding 
        at the end the following:

``SEC. 2799A-11. REQUIREMENTS WITH RESPECT TO PRESCRIPTION DRUG 
              BENEFITS.

    ``(a) In General.--A group health plan or a health insurance issuer 
offering group or individual health insurance coverage shall not, and 
shall ensure that any entity that provides pharmacy benefits management 
services under a contract with any such health plan or health insurance 
coverage does not, receive from a drug manufacturer a reduction in 
price or other remuneration with respect to any prescription drug 
received by an enrollee in the plan or coverage and covered by the plan 
or coverage, unless--
            ``(1) any such reduction in price is reflected at the point 
        of sale to the enrollee and meets such other conditions as the 
        Secretary may establish; and
            ``(2) any such other remuneration is a flat fee-based 
        service fee that a manufacturer of prescription drugs pays to 
        an entity that provides pharmacy benefits management services 
        for services rendered to the manufacturer that relate to 
        arrangements by the pharmacy benefit manager to provide 
        pharmacy benefit management services to a health plan or health 
        insurance issuer, if certain conditions established by the 
        Secretary are met, including requirements that the fees are 
        transparent to the health plan or health insurance issuer.
    ``(b) Entity That Provides Pharmacy Benefits Management Services.--
For purposes of this section, the term `entity that provides pharmacy 
benefits management services' means--
            ``(1) any person, business, or other entity that, pursuant 
        to a written agreement with a group health plan or a health 
        insurance issuer offering group or individual health insurance 
        coverage, directly or through an intermediary--
                    ``(A) acts as a price negotiator on behalf of the 
                plan or coverage; or
                    ``(B) manages the prescription drug benefits 
                provided by the plan or coverage, which may include the 
                processing and payment of claims for prescription 
                drugs, the performance of drug utilization review, the 
                processing of drug prior authorization requests, the 
                adjudication of appeals or grievances related to the 
                prescription drug benefit, contracting with network 
                pharmacies, controlling the cost of covered 
                prescription drugs, or the provision of related 
                services; or
            ``(2) any entity that is owned, affiliated, or related 
        under a common ownership structure with a person, business, or 
        entity described in paragraph (1).''.
            (2) ERISA.--
                    (A) In general.--Subpart B of part 7 of subtitle B 
                of title I of the Employee Retirement Income Security 
                Act of 1974 (29 U.S.C. 1185 et seq.) is amended by 
                adding at the end the following:

``SEC. 726. REQUIREMENTS WITH RESPECT TO PRESCRIPTION DRUG BENEFITS.

    ``(a) In General.--A group health plan or a health insurance issuer 
offering group health insurance coverage shall not, and shall ensure 
that any entity that provides pharmacy benefits management services 
under a contract with any such health plan or health insurance coverage 
does not, receive from a drug manufacturer a reduction in price or 
other remuneration with respect to any prescription drug received by an 
enrollee in the plan or coverage and covered by the plan or coverage, 
unless--
            ``(1) any such reduction in price is reflected at the point 
        of sale to the enrollee and meets such other conditions as the 
        Secretary may establish; and
            ``(2) any such other remuneration is a flat fee-based 
        service fee that a manufacturer of prescription drugs pays to 
        an entity that provides pharmacy benefits management services 
        for services rendered to the manufacturer that relate to 
        arrangements by the pharmacy benefit manager to provide 
        pharmacy benefit management services to a health plan or health 
        insurance issuer, if certain conditions established by the 
        Secretary are met, including requirements that the fees are 
        transparent to the health plan or health insurance issuer.
    ``(b) Entity That Provides Pharmacy Benefits Management Services.--
For purposes of this section, the term `entity that provides pharmacy 
benefits management services' means--
            ``(1) any person, business, or other entity that, pursuant 
        to a written agreement with a group health plan or a health 
        insurance issuer offering group health insurance coverage, 
        directly or through an intermediary--
                    ``(A) acts as a price negotiator on behalf of the 
                plan or coverage; or
                    ``(B) manages the prescription drug benefits 
                provided by the plan or coverage, which may include the 
                processing and payment of claims for prescription 
                drugs, the performance of drug utilization review, the 
                processing of drug prior authorization requests, the 
                adjudication of appeals or grievances related to the 
                prescription drug benefit, contracting with network 
                pharmacies, controlling the cost of covered 
                prescription drugs, or the provision of related 
                services; or
            ``(2) any entity that is owned, affiliated, or related 
        under a common ownership structure with a person, business, or 
        entity described in paragraph (1).''.
                    (B) Clerical amendment.--The table of contents of 
                the Employee Retirement Income Security Act of 1974 is 
                amended by inserting after the item relating to section 
                725 the following:

``Sec. 725. Requirements with respect to prescription drug benefits.''.
            (3) IRC.--
                    (A) In general.--Subchapter B of chapter 100 of the 
                Internal Revenue Code of 1986 is amended by adding at 
                the end the following:

``SEC. 9826. REQUIREMENTS WITH RESPECT TO PRESCRIPTION DRUG BENEFITS.

    ``(a) In General.--A group health plan shall not, and shall ensure 
that any entity that provides pharmacy benefits management services 
under a contract with any such health plan does not, receive from a 
drug manufacturer a reduction in price or other remuneration with 
respect to any prescription drug received by an enrollee in the plan 
and covered by the plan, unless--
            ``(1) any such reduction in price is reflected at the point 
        of sale to the enrollee and meets such other conditions as the 
        Secretary may establish; and
            ``(2) any such other remuneration is a flat fee-based 
        service fee that a manufacturer of prescription drugs pays to 
        an entity that provides pharmacy benefits management services 
        for services rendered to the manufacturer that relate to 
        arrangements by the pharmacy benefit manager to provide 
        pharmacy benefit management services to a health plan, if 
        certain conditions established by the Secretary are met, 
        including requirements that the fees are transparent to the 
        health plan.
    ``(b) Entity That Provides Pharmacy Benefits Management Services.--
For purposes of this section, the term `entity that provides pharmacy 
benefits management services' means--
            ``(1) any person, business, or other entity that, pursuant 
        to a written agreement with a group health plan, directly or 
        through an intermediary--
                    ``(A) acts as a price negotiator on behalf of the 
                plan; or
                    ``(B) manages the prescription drug benefits 
                provided by the plan, which may include the processing 
                and payment of claims for prescription drugs, the 
                performance of drug utilization review, the processing 
                of drug prior authorization requests, the adjudication 
                of appeals or grievances related to the prescription 
                drug benefit, contracting with network pharmacies, 
                controlling the cost of covered prescription drugs, or 
                the provision of related services; or
            ``(2) any entity that is owned, affiliated, or related 
        under a common ownership structure with a person, business, or 
        entity described in paragraph (1).''.
                    (B) Clerical amendment.--The table of sections for 
                subchapter B of chapter 100 of the Internal Revenue 
                Code of 1986 is amended by adding at the end the 
                following:

``Sec. 9816. Requirements with respect to prescription drug 
                            benefits.''.
            (4) Effective date.--The amendments made by paragraphs (1), 
        (2), and (3) shall take effect on January 1, 2023.
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