II 117th CONGRESS 1st Session S. 1523 IN THE SENATE OF THE UNITED STATES April 29, 2021 Mr. Braun (for himself and Mrs. Hyde-Smith ) introduced the following bill; which was read twice and referred to the Committee on Health, Education, Labor, and Pensions A BILL 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.

1. Short title This Act may be cited as the Drug Price Transparency Act of 2021 . 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: 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: 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: 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.