I 115th CONGRESS 2d Session H. R. 5958 IN THE HOUSE OF REPRESENTATIVES May 24, 2018 Mr. Collins of Georgia (for himself, Mr. Carter of Georgia , Mr. Duncan of Tennessee , and Mr. Gonzalez of Texas ) introduced the following bill; which was referred to the Committee on Energy and Commerce , and in addition to the Committee on Ways and Means , 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 amend title XVIII of the Social Security Act to require pharmacy-negotiated price concessions and pharmacy incentive payments and adjustments to be included in negotiated prices at the point-of-sale under part D of the Medicare program, and for other purposes.

1. Short title This Act may be cited as the Phair Pricing Act of 2018 . 2. Requiring pharmacy-negotiated price concessions and pharmacy incentive payments and adjustments to be included in negotiated prices at the point-of-sale under part D of the Medicare program 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) In general Subject to subclause (III), for plan years beginning on or after January 1, 2019, negotiated prices for covered part D drugs described in clause (i) provided under a prescription drug plan, including all pharmacy price concessions and all incentive payments and adjustments negotiated with the pharmacy dispensing such drug, shall be provided at the point-of-sale of the covered part D drug. If the negotiated price of such drug, including all pharmacy price concessions and all incentive payments and adjustments negotiated with such pharmacy, is not possible to calculate at the point-of-sale, the PDP sponsor of such plan shall use an estimated negotiated price, including all estimated pharmacy negotiated price concessions and incentive payments and adjustments and taking into account the negotiated price of such drug in the prior year (if available). (II) Application of incentive payments and adjustments For plan years beginning on or after January 1, 2019, in the case that a PDP sponsor uses incentive payments and adjustments with respect to payment to a pharmacy for a covered part D drug, such payments and adjustments shall be determined through the use of a quality measure approved by the Secretary and established by the working group established under clause (iii). (III) No increase in cost sharing 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. (IV) 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 not equal to the total reimbursement made to such pharmacy for such drug for such year (taking into account any incentive payments and adjustments and pharmacy price concessions, regardless of when such payments and adjustments or price concessions were applied), 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 not equal to such reimbursement. (V) Definitions In this clause: (aa) Incentive payments and adjustments The term incentive payments and adjustments means, with respect to payment to a pharmacy by a PDP sponsor for a covered part D drug, any prospective or retrospective price concessions, rebates, discounts, fees, reconciliation adjustments, bonuses, performance payments, incentives, and any other adjustment to such payment determined through the use of a quality measure, and any other adjustment made with respect to such payment, regardless of when such payments and adjustments are applied. Such term does not include any manufacturer rebates or concessions made with respect to such drug. (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. (cc) Quality measure The term quality measure means performance criteria established 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 adjustments. (iii) Quality measure working group (I) In general Not later than September 1, 2018, the Secretary shall convene a quality measures working group (in this clause referred to as the working group ) for purposes of establishing quality measures (as defined in clause (ii)(IV)) that may be used by a PDP sponsor (as defined in clause (ii)) under this part. (II) Composition The working group shall consist of representatives from each the following: (aa) PDP sponsors. (bb) Pharmacies representing all pharmacy practice types. (cc) Pharmacy benefit managers. (dd) Patient advocacy organizations. (ee) Such other entities as the Secretary determines appropriate. (III) Duties The working group shall provide for the establishment of quality measures that may be used by a PDP sponsor (as defined in clause (ii)) with respect to incentive payments and adjustments (as defined in clause (ii)(IV)) for a pharmacy under this part. Such measures established by such group shall include only such measures that— (aa) are reasonable and relevant with respect to the practice type of the applicable pharmacy; and (bb) evaluate criteria over which the pharmacy has meaningful control and ability to influence, consistent with the pharmacy’s practice type. . 3. 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, 2019.