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.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Energy and Commerce.
Referred to the Subcommittee on Health.
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