Title: Phair Relief Act of 2019
Policy area: Health

Summary:
Phair Relief Act of 2019
This bill establishes and otherwise modifies requirements for pharmacy benefit managers (PBMs), particularly with respect to the disclosure of certain drug pricing information.
Among other things, the bill (1) requires PBMs to pass on a minimum percentage of negotiated rebates, discounts, or price concessions to plan sponsors; (2) temporarily requires negotiated prices for covered drugs under the Medicare prescription drug benefit to be provided at the point-of-sale; and (3) requires the Centers for Medicare & Medicaid Services to establish certain quality measures for determining pharmacy incentive payments.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 2247 Introduced in Senate (IS)]

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116th CONGRESS
  1st Session
                                S. 2247

  To amend titles XI and XVIII of the Social Security Act to provide 
 greater transparency of discounts provided by drug manufacturers, to 
     establish requirements relating to pharmacy-negotiated price 
                  concessions, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 24, 2019

   Mr. Kennedy (for himself, Mr. Tester, Mrs. Capito, Mr. Brown, Mr. 
  Cassidy, Mr. Lankford, Mr. Daines, Mr. Cramer, Mrs. Hyde-Smith, Mr. 
Manchin, and Mr. Wicker) introduced the following bill; which was read 
             twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
  To amend titles XI and XVIII of the Social Security Act to provide 
 greater transparency of discounts provided by drug manufacturers, to 
     establish requirements relating to pharmacy-negotiated price 
                  concessions, and for other purposes.

    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 ``Phair Relief Act of 2019''.

SEC. 2. PUBLIC DISCLOSURE OF DRUG DISCOUNTS.

    (a) In General.--Section 1150A of the Social Security Act (42 
U.S.C. 1320b-23) is amended--
            (1) in subsection (c), in the matter preceding paragraph 
        (1), by striking ``this section'' and inserting ``subsection 
        (b)(1)''; and
            (2) by adding at the end the following new subsection:
    ``(e) Public Availability of Certain Information.--In order to 
allow patients and employers to compare PBMs' ability to negotiate 
rebates, discounts, and price concessions and the amount of such 
rebates, discounts, and price concessions that are passed through to 
plan sponsors, beginning January 1, 2020, the Secretary shall make 
available on the Internet website of the Department of Health and Human 
Services the information provided to the Secretary under paragraphs (2) 
and (3) of subsection (b) with respect to each PBM. The Secretary shall 
ensure that such information is displayed in a manner that prevents the 
disclosure of information on rebates, discounts, and price concessions 
with respect to an individual drug or an individual plan.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
take effect on January 1, 2020.

SEC. 3. MINIMUM DRUG DISCOUNTS REQUIRED TO BE PASSED THROUGH TO THE 
              PLAN SPONSOR.

    (a) In General.--Section 1150A of the Social Security Act (42 
U.S.C. 1320b-23), as amended by section 2(a)(2), is amended--
            (1) in the heading, by inserting ``; minimum drug discounts 
        required to be passed through to the plan sponsor'' before the 
        period at the end; and
            (2) by adding at the end the following new subsection:
    ``(f) Minimum Drug Discounts Required To Be Passed Through to the 
Plan Sponsor.--
            ``(1) Requirement.--Beginning January 1, 2022, a PBM that 
        manages prescription drug coverage under a contract with a PDP 
        sponsor or MA organization described in subsection (b)(1) or a 
        qualified health benefits plan described in subsection (b)(2), 
        shall, with respect to the plan sponsor of a health benefits 
        plan, pass through to the plan sponsor a minimum percent (as 
        established by the Secretary) of the aggregate amount of the 
        rebates, discounts, or price concessions that the PBM 
        negotiates that are attributable to patient utilization under 
        the plan.
            ``(2) Establishment.--The Secretary shall establish the 
        minimum percent described in paragraph (1) in such a manner as 
        will ensure that patients receive the maximum benefit of 
        rebates, discounts, or price concessions while taking into 
        account the costs of negotiating such rebates, discounts, and 
        price concessions.
            ``(3) Enforcement.--A PDP sponsor of a prescription drug 
        plan or an MA organization offering an MA-PD plan under part D 
        of title XVIII may not contract with a PBM that is not in 
        compliance with the requirement under paragraph (1).''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
take effect on January 1, 2022.

SEC. 4. REQUIREMENTS RELATING TO PHARMACY-NEGOTIATED PRICE CONCESSIONS 
              AND PHARMACY INCENTIVE PAYMENTS.

    Section 1860D-2(d)(1)(B) of the Social Security Act (42 U.S.C. 
1395w-102(d)(1)(B)) is amended--
            (1) by striking ``prices.--For purposes'' and inserting 
        ``prices.--
                            ``(i) In general.--For purposes''; and
            (2) by adding at the end the following new clauses:
                            ``(ii) Prices negotiated with pharmacy at 
                        point-of-sale.--
                                    ``(I) Temporary freeze on dir 
                                payments.--Subject to subclause (IV), 
                                for plan years beginning on or after 
                                January 1, 2021, and before January 1, 
                                2026, negotiated prices for covered 
                                part D drugs described in clause (i) 
                                provided under all phases of coverage 
                                under a prescription drug plan, 
                                including all contingent and 
                                noncontingent concessions, payments, 
                                and fees negotiated with the pharmacy 
                                dispensing such drug, shall be provided 
                                at the point-of-sale of such drug. For 
                                purposes of the preceding sentence, 
                                such negotiated price shall not include 
                                any incentive payments paid to 
                                pharmacies.
                                    ``(II) Application of price 
                                concessions.--For plan years beginning 
                                on or after January 1, 2026, the 
                                Secretary shall promulgate regulations 
                                prohibiting the application of any 
                                pharmacy price concessions that are not 
                                based on quality measures established 
                                or approved by the Secretary under 
                                subclause (III).
                                    ``(III) Standard pharmacy quality 
                                measures.--Subject to subclause (I), 
                                not later than January 1, 2021, the 
                                Secretary shall establish or approve 
                                standard quality measures for use in 
                                the application of pharmacy price 
                                concessions and incentive payments with 
                                respect to payment for covered part D 
                                drugs dispensed by a pharmacy. Such 
                                measures shall be--
                                            ``(aa) focused on improving 
                                        patient health outcomes;
                                            ``(bb) standardized across 
                                        PDP sponsors;
                                            ``(cc) pharmacy-specific in 
                                        application;
                                            ``(dd) relevant to the type 
                                        of pharmacy concerned (such as 
                                        specialty pharmacies), taking 
                                        into account the items and 
                                        services furnished by the 
                                        pharmacy and the patient 
                                        population served by the 
                                        pharmacy;
                                            ``(ee) applied only when 
                                        relevant to the specific drug 
                                        (or drug class of such drug) 
                                        being furnished by the pharmacy 
                                        or when relevant to management 
                                        of the condition for which such 
                                        drug has been prescribed; and
                                            ``(ff) based on achievable 
                                        and proven criteria measuring 
                                        pharmacy performance over which 
                                        the pharmacy has meaningful 
                                        control and ability to 
                                        influence.
                                In establishing such standards, the 
                                Secretary shall consult with 
                                stakeholders, including PDP sponsors 
                                and MA organizations, pharmacies across 
                                pharmacy practice types, pharmacy 
                                benefit managers, patient advocacy 
                                organizations, drug manufacturers, 
                                appropriate standard-setting 
                                organizations, professional pharmacy 
                                organizations, and other entities 
                                determined appropriate by the 
                                Secretary. The Secretary shall review 
                                and update the standard pharmacy 
                                quality measures on an ongoing basis 
                                with appropriate notice and period for 
                                comments from stakeholders.
                                    ``(IV) No increase in cost sharing 
                                during temporary freeze.--Subclause (I) 
                                shall not apply in the case where 
                                application of such subclause would 
                                increase the amount owed by an 
                                individual in cost sharing above the 
                                amount such individual would have owed 
                                in cost sharing without application of 
                                such subclause.
                                    ``(V) Discrepancies between 
                                negotiated prices and actual 
                                reimbursement.--In the case that the 
                                Secretary determines that the 
                                negotiated price of a PDP sponsor 
                                applied at the point-of-sale with 
                                respect to a covered part D drug for a 
                                year dispensed by a pharmacy was 
                                greater than the total reimbursement 
                                made to such pharmacy for such drug for 
                                such year, such sponsor shall, not 
                                later than 90 days after receiving 
                                notice of such determination, furnish 
                                to the pharmacy that dispensed such 
                                drug and to the Secretary a written 
                                explanation of why such negotiated 
                                price was greater than such 
                                reimbursement.
                                    ``(VI) Specialty pharmacy.--For 
                                purposes of carrying out this clause 
                                (including subclause (III)(dd)), the 
                                Secretary shall, not later than 
                                December 31, 2020, define the term 
                                `specialty pharmacy' in consultation 
                                with relevant stakeholders.
                                    ``(VII) Definitions.--In this 
                                clause:
                                            ``(aa) Quality measure.--
                                        The term `quality measure' 
                                        means criteria used by a PDP 
                                        sponsor (including an entity 
                                        that contracts with such 
                                        sponsor, such as a pharmacy 
                                        benefit manager) to determine 
                                        the amount or applicability of 
                                        incentive payments and pharmacy 
                                        price concessions.
                                            ``(bb) PDP sponsor.--The 
                                        term `PDP sponsor' includes an 
                                        MA organization offering an MA-
                                        PD plan under part C and an 
                                        entity that contracts with such 
                                        sponsor or organization, such 
                                        as a pharmacy benefit manager.
                            ``(iii) Audits of pdp sponsors and 
                        negotiated price.--
                                    ``(I) In general.--Beginning 
                                January 1, 2021, the Secretary shall 
                                conduct annual audits of PDP sponsors 
                                by reviewing a representative sample of 
                                claims between PDP sponsors or other 
                                intermediary contracting organizations 
                                and all pharmacy types and those 
                                pharmacies' lowest actual acquisition 
                                and dispensing costs to assess whether 
                                reimbursement for individual network 
                                pharmacies is below the pharmacy's 
                                lowest actual cost of acquiring and 
                                dispensing covered part D drugs and 
                                providing pharmacy services necessary 
                                for dispensing such drugs. In 
                                conducting such audits, the Secretary 
                                shall focus on determining whether or 
                                not the requirements under clause (ii) 
                                are negatively impacting network 
                                pharmacy participation in the program 
                                under this part and beneficiary access 
                                to pharmacy providers. Such audits 
                                shall occur not less than annually and 
                                when requested by the Medicare 
                                Pharmaceutical and Technology 
                                Ombudsman.
                                    ``(II) Appeal.--If a network 
                                pharmacy believes that a PDP sponsor 
                                has reimbursed for a covered part D 
                                drug below the pharmacy's lowest actual 
                                acquisition and dispensing costs, the 
                                pharmacy may appeal the reimbursement, 
                                in writing, to the Medicare 
                                Pharmaceutical and Technology Ombudsman 
                                within 60 days following notification 
                                of the reimbursement and provide 
                                necessary documentation to support its 
                                claim.
                                    ``(III) Annual report to 
                                congress.--Not later than January 1, 
                                2022, and annually thereafter, the 
                                Secretary shall submit to Congress a 
                                report that contains a summary of the 
                                audits conducted under subclause (I) 
                                and activity under subclause (II), 
                                together with recommendations for such 
                                legislation and administrative action 
                                as the Secretary determines 
                                appropriate.
                            ``(iv) Claim reimbursement disclosure 
                        requirements.--With respect to payment made by 
                        a PDP sponsor to a pharmacy for a covered part 
                        D drug furnished by such pharmacy during a plan 
                        year beginning on or after January 1, 2020, 
                        such sponsor shall promptly furnish all pricing 
                        components including the Network Reimbursement 
                        ID used to price the claim, any fees, pharmacy 
                        price concessions, discounts, incentives or any 
                        other forms of remuneration to or from the 
                        pharmacy that affect payment and pricing of the 
                        claim as part of the claim adjudication 
                        response at the point-of-sale. Each of the 
                        aforementioned data elements shall each be 
                        identified in a predetermined line item in the 
                        remittance advice that is standard across the 
                        industry, which shall include suitable claim-
                        level detail needed to properly identify the 
                        claim, including the Claim Authorization 
                        Number, date of service, date of payment 
                        remittance, ingredient cost reimbursed, 
                        dispensing fee reimbursed, payment amounts 
                        including the specific dollar amounts and the 
                        appropriate qualifier codes for each payment 
                        adjustment including fees, pharmacy price 
                        concessions, or incentives.
                            ``(v) Violation process.--A PDP sponsor 
                        shall participate in any process established by 
                        the Secretary for purposes of determining 
                        whether such sponsor has violated a provision 
                        of clause (ii) or (iii).''.

SEC. 5. PHARMACY BENEFIT MANAGER PROVISION OF INFORMATION.

    (a) In General.--Section 1150A(b)(2) of the Social Security Act (42 
U.S.C. 1320b-23(b)(2)) is amended by striking ``excluding'' and 
inserting ``including''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply with respect to contract years beginning on or after January 1, 
2020.
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