II 118th CONGRESS 1st Session S. 1217 IN THE SENATE OF THE UNITED STATES April 19, 2023 Mr. Hawley introduced the following bill; which was read twice and referred to the Committee on Health, Education, Labor, and Pensions A BILL To prohibit the distribution and receipt of rebates for prescription drugs.

1. Short title This Act may be cited as the Ending the Prescription Drug Kickback Act of 2023 . 2. Requirements for prescription drug benefits (a) Removal of safe harbor protection for rebates 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 (A) In general The safe harbor described in paragraph (3)(A) shall not apply to a rebate or other remuneration, including a rebate or other remuneration intended to influence formulary tier placement or its equivalent, from a manufacturer of prescription drugs or an entity that provides pharmacy benefits management services. (B) Definitions In this paragraph: (i) Entity that provides pharmacy benefits management services The term entity that provides pharmacy benefits management services means— (I) any person, business, or other entity that provides, directly or through an intermediary, the service of— (aa) negotiating terms and conditions with respect to a prescription drug on behalf of a health plan under a Federal health care program; or (bb) managing the prescription drug benefits provided by the plan, which may include formulary management, 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, or the provision of related services; or (II) any entity that is owned, affiliated, or related under a common ownership structure with a person, business, or entity described in subclause (I). (ii) Rebate The term rebate means any discount the terms of which are fixed and disclosed in writing to the buyer at the time of the purchase to which the discount applies, but which is not given at the time of purchase. . (2) Effective date The amendments made by this subsection shall take effect on January 1, 2025. (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 on its behalf does not, receive from a drug manufacturer a rebate or other remuneration, including a rebate or other remuneration intended to influence formulary tier placement or its equivalent, with respect to any prescription drug received by an enrollee in the plan or coverage and covered by the plan or coverage. (b) Definitions For purposes of this section— (1) the term entity that provides pharmacy benefits management services means— (A) any person, business, or other entity that provides, directly or through an intermediary, the service of— (i) negotiating terms and conditions with respect to a prescription drug on behalf of a group health plan or group or individual health insurance coverage; or (ii) managing the prescription drug benefits provided by the plan or coverage, which may include formulary management, 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, or the provision of related services; or (B) any entity that is owned, affiliated, or related under a common ownership structure with a person, business, or entity described in paragraph (1); and (2) the term rebate means any discount the terms of which are fixed and disclosed in writing to the buyer at the time of the purchase to which the discount applies, but which is not given at the time of purchase. . (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 on its behalf does not, receive from a drug manufacturer a rebate or other remuneration, including a rebate or other remuneration intended to influence formulary tier placement or its equivalent, with respect to any prescription drug received by an enrollee in the plan or coverage and covered by the plan or coverage. (b) Definitions For purposes of this section— (1) the term entity that provides pharmacy benefits management services means— (A) any person, business, or other entity that provides, directly or through an intermediary, the service of— (i) negotiating terms and conditions with respect to a prescription drug on behalf of a group health plan or group health insurance coverage; or (ii) managing the prescription drug benefits provided by the plan or coverage, which may include formulary management, 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, or the provision of related services; or (B) any entity that is owned, affiliated, or related under a common ownership structure with a person, business, or entity described in paragraph (1); and (2) the term rebate means any discount the terms of which are fixed and disclosed in writing to the buyer at the time of the purchase to which the discount applies, but which is not given at the time of purchase. . (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. 726. 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 on its behalf does not, receive from a drug manufacturer a rebate or other remuneration with respect to any prescription drug received by an enrollee in the plan and covered by the plan. (b) Definitions For purposes of this section— (1) the term entity that provides pharmacy benefits management services means— (A) any person, business, or other entity that provides, directly or through an intermediary, the service of— (i) negotiating terms and conditions with respect to a prescription drug on behalf of a group health plan; or (ii) managing the prescription drug benefits provided by the plan, which may include formulary management, 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, or the provision of related services; or (B) any entity that is owned, affiliated, or related under a common ownership structure with a person, business, or entity described in paragraph (1); and (2) the term rebate means any discount the terms of which are fixed and disclosed in writing to the buyer at the time of the purchase to which the discount applies, but which is not given at the time of purchase. . (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. 9826. 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, 2025.