Title: PBM Transparency in Prescription Drug Costs Act
Policy area: Health

Summary:
PBM Transparency in Prescription Drug Costs Act
This bill requires group health plans or the pharmacy benefits manager (PBM) for the plans to periodically report certain prescription drug pricing and utilization data; it also requires PBMs to pass on to health plans all rebates and discounts received from drug manufacturers.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5304 Introduced in House (IH)]

<DOC>






116th CONGRESS
  1st Session
                                H. R. 5304

To amend title XXVII of the Public Health Service Act to require health 
  plan oversight of pharmacy benefit manager services, and for other 
                               purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            December 4, 2019

 Mr. Schrader (for himself and Mr. Gianforte) introduced the following 
    bill; which was referred to the Committee on Energy and Commerce

_______________________________________________________________________

                                 A BILL


 
To amend title XXVII of the Public Health Service Act to require health 
  plan oversight of pharmacy benefit manager services, 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 ``PBM Transparency in Prescription 
Drug Costs Act''.

SEC. 2. HEALTH PLAN OVERSIGHT OF PHARMACY BENEFIT MANAGER SERVICES.

    Subpart II of part A of title XXVII of the Public Health Service 
Act (42 U.S.C. 300gg-11 et seq.) is amended by adding at the end the 
following:

``SEC. 2729A. HEALTH PLAN OVERSIGHT OF PHARMACY BENEFIT MANAGER 
              SERVICES.

    ``(a) In General.--A group health plan or health insurance issuer 
offering group or individual health insurance coverage or an entity or 
subsidiary providing pharmacy benefits management services shall not 
enter into a contract with a drug manufacturer, distributor, 
wholesaler, subcontractor, rebate aggregator, or any associated third 
party that limits the disclosure of information to plan sponsors in 
such a manner that prevents the plan or coverage, or an entity or 
subsidiary providing pharmacy benefits management services on behalf of 
a plan or coverage from making the reports described in subsection (b).
    ``(b) Reports to Group Plan Sponsors.--
            ``(1) In general.--Beginning with the first plan year that 
        begins after the date of enactment of this section, not less 
        frequently than once every six months, a health insurance 
        issuer offering group health insurance coverage or an entity 
        providing pharmacy benefits management services on behalf of a 
        group health plan shall submit to the self-funded group health 
        plan and at the request of any other group health plan a report 
        in accordance with this subsection and make such report 
        available to the plan sponsor in a machine-readable format. 
        Each such report shall include, with respect to the applicable 
        group health plan or health insurance coverage--
                    ``(A) information collected from drug manufacturers 
                by such issuer or entity on the total amount of 
                copayment assistance dollars paid, or copayment cards 
                applied, that were funded by the drug manufacturer with 
                respect to the enrollees in such plan or coverage;
                    ``(B) a list of each covered drug dispensed during 
                the reporting period, including, with respect to each 
                such drug during the reporting period--
                            ``(i) the brand name, chemical entity, and 
                        National Drug Code;
                            ``(ii) the number of enrollees for whom the 
                        drug was filled during the plan year, the total 
                        number of prescription fills for the drug 
                        (including original prescriptions and refills), 
                        and the total number of dosage units of the 
                        drug dispensed across the plan year, including 
                        whether the dispensing channel was by retail, 
                        mail order, or specialty pharmacy;
                            ``(iii) the wholesale acquisition cost, 
                        listed as cost per days supply and cost per 
                        pill, or in the case of a drug in another form, 
                        per dose;
                            ``(iv) the total out-of-pocket spending by 
                        enrollees on such drug, including enrollee 
                        spending through copayments, coinsurance, and 
                        deductibles; and
                            ``(v) for any drug for which gross spending 
                        of the group health plan or health insurance 
                        coverage exceeded $10,000 during the reporting 
                        period--
                                    ``(I) a list of all other available 
                                drugs in the same therapeutic category 
                                or class, including brand name drugs 
                                and biological products and generic 
                                drugs or biosimilar biological products 
                                that are in the same therapeutic 
                                category or class; and
                                    ``(II) the rationale for preferred 
                                formulary placement of a particular 
                                drug or drugs in that therapeutic 
                                category or class;
                    ``(C) a list of each therapeutic category or class 
                of drugs that were dispensed under the health plan or 
                health insurance coverage during the reporting period, 
                and, with respect to each such therapeutic category or 
                class of drugs, during the reporting period--
                            ``(i) total gross spending by the plan, 
                        before manufacturer rebates, fees, or other 
                        manufacturer remuneration;
                            ``(ii) the number of enrollees who filled a 
                        prescription for a drug in that category or 
                        class;
                            ``(iii) if applicable to that category or 
                        class, a description of the formulary tiers and 
                        utilization mechanisms (such as prior 
                        authorization or step therapy) employed for 
                        drugs in that category or class;
                            ``(iv) the total out-of-pocket spending by 
                        enrollees, including enrollee spending through 
                        copayments, coinsurance, and deductibles; and
                            ``(v) for each therapeutic category or 
                        class under which three or more drugs are 
                        marketed and available--
                                    ``(I) the amount received, or 
                                expected to be received, from drug 
                                manufacturers in rebates, fees, 
                                alternative discounts, or other 
                                remuneration--
                                            ``(aa) to be paid by drug 
                                        manufacturers for claims 
                                        incurred during the reporting 
                                        period; or
                                            ``(bb) that is related to 
                                        utilization of drugs, in such 
                                        therapeutic category or class;
                                    ``(II) the total net spending by 
                                the health plan or health insurance 
                                coverage on that category or class of 
                                drugs; and
                                    ``(III) the net price per dosage 
                                unit or course of treatment incurred by 
                                the health plan or health insurance 
                                coverage and its enrollees, after 
                                manufacturer rebates, fees, and other 
                                remuneration for drugs dispensed within 
                                such therapeutic category or class 
                                during the reporting period;
                    ``(D) total gross spending on prescription drugs by 
                the plan or coverage during the reporting period, 
                before rebates and other manufacturer fees or 
                remuneration;
                    ``(E) total amount received, or expected to be 
                received, by the health plan or health insurance 
                coverage in drug manufacturer rebates, fees, 
                alternative discounts, and all other remuneration 
                received from the manufacturer or any third party 
                related to utilization of drug or drug spending under 
                that health plan or health insurance coverage during 
                the reporting period;
                    ``(F) the total net spending on prescription drugs 
                by the health plan or health insurance coverage during 
                the reporting period; and
                    ``(G) amounts paid directly or indirectly in 
                rebates, fees, or any other type of remuneration to 
                brokers, consultants, advisors, or any other individual 
                or firm who referred the group health plan's or health 
                insurance issuer's business to the pharmacy benefit 
                manager.
            ``(2) Privacy requirements.--Health insurance issuers 
        offering group health insurance coverage and entities providing 
        pharmacy benefits management services on behalf of a group 
        health plan shall provide information under paragraph (1) in a 
        manner consistent with the privacy, security, and breach 
        notification regulations promulgated under section 264(c) of 
        the Health Insurance Portability and Accountability Act of 1996 
        (or successor regulations), and shall restrict the use and 
        disclosure of such information according to such privacy 
        regulations.
            ``(3) Disclosure and redisclosure.--
                    ``(A) Limitation to business associates.--A group 
                health plan receiving a report under paragraph (1) may 
                disclose such information only to business associates 
                of such plan as defined in section 160.103 of title 45, 
                Code of Federal Regulations (or successor regulations).
                    ``(B) Clarification regarding public disclosure of 
                information.--Nothing in this section prevents a health 
                insurance issuer offering group health insurance 
                coverage or an entity providing pharmacy benefits 
                management services on behalf of a group health plan 
                from placing reasonable restrictions on the public 
                disclosure of the information contained in a report 
                described in paragraph (1).
    ``(c) Limitations on Spread Pricing.--
            ``(1) Pass-through offering to plan.--A designated plan 
        administrator of an applicable self-insured health plan, or an 
        entity providing pharmacy benefit management services to such 
        health plan shall offer at least one contractual arrangement 
        that does not charge the plan or enrollee, a price for a 
        prescription drug that exceeds the price paid to the pharmacy, 
        excluding penalties or fees paid by pharmacies to such plan, 
        issuer, or entity.
            ``(2) Default to pass-through pricing.--For purposes of 
        paragraph (1), a designated plan administrator of an applicable 
        self-insured health plan, or an entity providing pharmacy 
        benefit management services to such health plan shall not 
        charge the plan or enrollee an amount for a presciption drug 
        that exceeds the price paid to the pharmacy, excluding 
        penalties paid by pharmacies to such plan or entity, without 
        the express permission of the health plan sponsor.
            ``(3) Supplementary reporting for intra-company 
        prescription drug transactions.--A health insurance issuer of 
        group health insurance coverage or an entity providing pharmacy 
        benefits management services under a group health plan or group 
        health insurance coverage that conducts transactions with a 
        wholly or partially owned pharmacy, as described in paragraph 
        (2), shall submit, together with the report under subsection 
        (b), a supplementary quarterly report to the plan sponsor that 
        includes--
                    ``(A) an explanation of any benefit design 
                parameters that encourage enrollees in the plan or 
                coverage to fill prescriptions at mail order, 
                specialty, or retail pharmacies that are wholly or 
                partially owned by that issuer or entity;
                    ``(B) the percentage of total prescriptions charged 
                to the plan, coverage, or enrollees in the plan or 
                coverage, that were dispensed by mail order, specialty, 
                or retail pharmacies that are wholly or partially owned 
                by the issuer or entity providing pharmacy benefits 
                management services; and
                    ``(C) a list of all drugs dispensed by such wholly 
                or partially owned pharmacy and charged to the plan or 
                coverage, or enrollees of the plan or coverage, during 
                the applicable quarter, and, with respect to each 
                drug--
                            ``(i) the amount charged per dosage unit or 
                        course of treatment with respect to enrollees 
                        in the plan or coverage, including amounts 
                        charged to the plan or coverage and amounts 
                        charged to the enrollee;
                            ``(ii) the median amount charged to the 
                        plan or coverage, per dosage unit or course of 
                        treatment, and including amounts paid by the 
                        enrollee, when the same drug is dispensed by 
                        other pharmacies that are not wholly or 
                        partially owned by the issuer or entity and 
                        that are included in the pharmacy network of 
                        that plan or coverage;
                            ``(iii) the interquartile range of the 
                        costs, per dosage unit or course of treatment, 
                        and including amounts paid by the enrollee, 
                        when the same drug is dispensed by other 
                        pharmacies that are not wholly or partially 
                        owned by the issuer or entity and that are 
                        included in the pharmacy network of that plan 
                        or coverage; and
                            ``(iv) the lowest cost per dosage unit or 
                        course of treatment, for such drug, including 
                        amounts charged to the plan or issuer and 
                        enrollee, that is available from any pharmacy 
                        included in the network of the plan or 
                        coverage.
    ``(d) Full Rebate Pass-Through to Plan.--
            ``(1) In general.--A pharmacy benefits manager, a third-
        party administrator of a group health plan, a health insurance 
        issuer offering group health insurance coverage, or an entity 
        providing pharmacy benefits management services under such 
        health plan or health insurance coverage shall remit 100 
        percent of rebates, fees, alternative discounts, and all other 
        remuneration received from a pharmaceutical manufacturer, 
        distributor or any other third party, that are related to 
        utilization of drugs under such health plan or health insurance 
        coverage, to the health plan issuer.
            ``(2) Form and manner of remittance.--Such rebates, fees, 
        alternative discounts, and other remuneration shall be--
                    ``(A) remitted to the group health plan in a timely 
                fashion after the period for which such rebates, fees, 
                or other remuneration is calculated, and in no case 
                later than 120 days after the end of such period;
                    ``(B) fully disclosed and enumerated to the group 
                health plan sponsor, as described in (b)(1);
                    ``(C) available for audit by the plan sponsor, or a 
                third party designated by a plan sponsor no less than 
                once per plan year; and
                    ``(D) returned to the issuer or entity providing 
                pharmaceutical benefit management services by the group 
                health plan if audits by such issuer or entity indicate 
                that the amounts received are incorrect after such 
                amounts have been paid to the group health plan.
            ``(3) Audit of rebate contracts.--A pharmacy benefits 
        manager, a third-party administrator of a group health plan, a 
        health insurance issuer offering a group health insurance 
        coverage, or an entity providing pharmacy benefits management 
        services under such health plan or health insurance coverage 
        shall make rebate contracts with drug manufacturers available 
        for audit by such plan sponsor or designated third party, 
        subject to confidentiality agreements to prevent re-disclosure 
        of such contracts.
    ``(e) Enforcement.--
            ``(1) In general.--The Secretary, in consultation with the 
        Secretary of Labor and the Secretary of the Treasury, shall 
        enforce this section.
            ``(2) Failure to provide timely information.--A health 
        insurance issuer or an entity providing pharmacy benefit 
        management services that violates subsection (a), fails to 
        provide information required under subsection (b), engages in 
        spread pricing as defined in subsection (c), or fails to comply 
        with the requirements of subsection (d), or a drug manufacturer 
        that fails to provide information under subsection (b)(1)(A), 
        in a timely manner shall be subject to a civil monetary penalty 
        in the amount of $10,000 for each day during which such 
        violation continues or such information is not disclosed or 
        reported.
            ``(3) False information.--A health insurance issuer, entity 
        providing pharmacy benefit management services, or drug 
        manufacturer that knowingly provides false information under 
        this section shall be subject to a civil money penalty in an 
        amount not to exceed $100,000 for each item of false 
        information. Such civil money penalty shall be in addition to 
        other penalties as may be prescribed by law.
            ``(4) Procedure.--The provisions of section 1128A of the 
        Social Security Act, other than subsections (a) and (b) and the 
        first sentence of subsection (c)(1) of such section shall apply 
        to civil monetary penalties under this subsection in the same 
        manner as such provisions apply to a penalty or proceeding 
        under section 1128A of the Social Security Act.
            ``(5) Safe harbor.--The Secretary may waive penalties under 
        paragraph (2), or extend the period of time for compliance with 
        a requirement of this section, for an entity in violation of 
        this section that has made a good-faith effort to comply with 
        this section.
    ``(f) Rule of Construction.--Nothing in this section shall be 
construed to prohibit entities providing pharmacy benefits management 
services from retaining bona fide service fees, provided that such fees 
are transparent to group health plans and health insurance issuers and 
are not linked directly to the price or formulary placement or position 
of a drug.
    ``(g) Definitions.--In this section--
            ``(1) the term `similarly situated pharmacy' means, with 
        respect to a particular pharmacy, another pharmacy that is 
        approximately the same size (as measured by the number of 
        prescription drugs dispensed), and that serves patients in the 
        same geographical area, whether through physical locations or 
        mail order;
            ``(2) the term `wholesale acquisition cost' has the meaning 
        given such term in section 1847A(c)(6)(B) of the Social 
        Security Act; and
            ``(3) the term `bona fide service fees' means fees paid by 
        a manufacturer, customer, or client (other than a group health 
        plan or health insurance issuer) of an entity providing 
        pharmacy benefit management services, to an entity providing 
        pharmacy benefit management services, that represent fair 
        market value for bona fide, itemized services actually 
        performed on behalf of the manufacturer, customer, or client 
        would otherwise perform or contract for in the absence of the 
        service arrangement, without prior consent for any specific 
        arrangements.''.

SEC. 3. THIRD-PARTY ADMINISTRATORS.

    Any obligation on a third-party administrator under this Act 
(including the amendment made by this Act) shall not affect any other 
direct or indirect requirement under any other provision of Federal law 
that applies to third-party administrators offering services to group 
health plans.
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