Pharmacy Benefit Manager Transparency Act of 2023
This bill generally prohibits pharmacy benefit managers (PBMs) from engaging in certain practices when managing the prescription drug benefits under a health insurance plan, including charging the plan a different amount than the PBM reimburses the pharmacy.
The bill also prohibits PBMs from arbitrarily, unfairly, or deceptively (1) clawing back reimbursement payments, or (2) increasing fees or lowering reimbursements to pharmacies to offset changes to federally funded health plans.
PBMs are not subject to these prohibitions if they (1) pass along 100% of any price concession or discount to the health plan, and (2) disclose specified costs, prices, reimbursements, fees, markups, discounts, and aggregate payments received with respect to their PBM services.
Further, PBMs must report annually to the Federal Trade Commission (FTC) certain information about payments received from health plans and fees charged to pharmacies.
The FTC and state attorneys general are authorized to enforce the provisions of the bill.
[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 127 Introduced in Senate (IS)]
<DOC>
118th CONGRESS
1st Session
S. 127
To prevent unfair and deceptive acts or practices and the dissemination
of false information related to pharmacy benefit management services
for prescription drugs, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
January 26, 2023
Ms. Cantwell (for herself, Mr. Grassley, Mrs. Hyde-Smith, Mr. Braun,
Mr. Moran, Mr. Tillis, Mr. Tester, and Mrs. Capito) introduced the
following bill; which was read twice and referred to the Committee on
Commerce, Science, and Transportation
_______________________________________________________________________
A BILL
To prevent unfair and deceptive acts or practices and the dissemination
of false information related to pharmacy benefit management services
for prescription drugs, 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 ``Pharmacy Benefit Manager
Transparency Act of 2023''.
SEC. 2. PROHIBITION ON UNFAIR OR DECEPTIVE PRESCRIPTION DRUG PRICING
PRACTICES.
(a) Conduct Prohibited.--Except as provided in subsection (b), it
shall be unlawful for any pharmacy benefit manager (or affiliate,
subsidiary, or agent of a pharmacy benefit manager), directly or
indirectly, to engage in any of the following activities related to
pharmacy benefit management services:
(1) Charge a health plan or payer a different amount for a
prescription drug's ingredient cost or dispensing fee than the
amount the pharmacy benefit manager reimburses a pharmacy for
the prescription drug's ingredient cost or dispensing fee where
the pharmacy benefit manager retains the amount of any such
difference.
(2) Arbitrarily, unfairly, or deceptively, by contract or
any other means, reduce, rescind, or otherwise claw back any
reimbursement payment, in whole or in part, to a pharmacist or
pharmacy for a prescription drug's ingredient cost or
dispensing fee.
(3) Arbitrarily, unfairly, or deceptively, by contract or
any other means, increase fees or lower reimbursement to a
pharmacy in order to offset reimbursement changes instructed by
the Federal Government under any health plan funded by the
Federal Government.
(b) Exceptions.--A pharmacy benefit manager shall not be in
violation of subsection (a) if the pharmacy benefit manager meets the
following conditions:
(1) The pharmacy benefit manager, affiliate, subsidiary, or
agent passes along or returns 100 percent of any price
concession to a health plan or payer, including any rebate,
discount, or other price concession.
(2) The pharmacy benefit manager, affiliate, subsidiary, or
agent provides full and complete disclosure of--
(A) the cost, price, and reimbursement of the
prescription drug to each health plan, payer, and
pharmacy with which the pharmacy benefit manager,
affiliate, subsidiary, or agent has a contract or
agreement to provide pharmacy benefit management
services;
(B) each fee, markup, and discount charged or
imposed by the pharmacy benefit manager, affiliate,
subsidiary, or agent to each health plan, payer, and
pharmacy with which the pharmacy benefit manager,
affiliate, subsidiary, or agent has a contract or
agreement for pharmacy benefit management services; or
(C) the aggregate amount of all remuneration the
pharmacy benefit manager receives from a prescription
drug manufacturer for a prescription drug, including
any rebate, discount, administration fee, and any other
payment or credit obtained or retained by the pharmacy
benefit manager, or affiliate, subsidiary, or agent of
the pharmacy benefit manager, pursuant to a contract or
agreement for pharmacy benefit management services to a
health plan, payer, or any Federal agency (upon the
request of the agency).
SEC. 3. PROHIBITION ON FALSE INFORMATION.
It shall be unlawful for any person to report information related
to pharmacy benefit management services to a Federal department or
agency if--
(1) the person knew, or reasonably should have known, the
information to be false or misleading;
(2) the information was required by law to be reported; and
(3) the false or misleading information reported by the
person would affect analysis or information compiled by the
Federal department or agency for statistical or analytical
purposes with respect to the market for pharmacy benefit
management services.
SEC. 4. TRANSPARENCY.
(a) Reporting by Pharmacy Benefit Managers.--Not later than 1 year
after the date of enactment of this Act, and annually thereafter, each
pharmacy benefit manager (or affiliate, subsidiary, or agent of a
pharmacy benefit manager) shall report to the Commission the following
information:
(1) The aggregate amount of the difference between the
amount the pharmacy benefit manager was paid by each health
plan and the amount that the pharmacy benefit manager paid each
pharmacy on behalf of the health plan for prescription drugs.
(2) The aggregate amount of any--
(A) generic effective rate fee charged to each
pharmacy;
(B) direct and indirect remuneration fee charged or
other price concession to each pharmacy; and
(C) payment rescinded or otherwise clawed back from
a reimbursement made to each pharmacy.
(3) If, during the reporting year, the pharmacy benefit
manager moved or reassigned a prescription drug to a formulary
tier that has a higher cost, higher copayment, higher
coinsurance, or higher deductible to a consumer, or a lower
reimbursement to a pharmacy, an explanation of the reason why
the drug was moved or reassigned from 1 tier to another,
including whether the move or reassignment was determined or
requested by a prescription drug manufacturer or other entity.
(4) With respect to any pharmacy benefit manager that owns,
controls, or is affiliated with a pharmacy, a report regarding
any difference in reimbursement rates or practices, direct and
indirect remuneration fees or other price concessions, and
clawbacks between a pharmacy that is owned, controlled, or
affiliated with the pharmacy benefit manager and any other
pharmacy.
(b) Report to Congress.--
(1) In general.--Not later than 1 year after the date of
enactment of this Act, and annually thereafter, the Commission
shall submit to the Committee on Commerce, Science, and
Transportation of the Senate and the Committee on Energy and
Commerce of the House of Representatives a report that
addresses, at a minimum--
(A) the number of actions brought by the Commission
during the reporting year to enforce this Act and the
outcome of each such enforcement action;
(B) the number of open investigations or inquiries
into potential violations of this Act as of the time
the report is submitted;
(C) the number and nature of complaints received by
the Commission relating to an allegation of a violation
of this Act during the reporting year;
(D) an anonymized summary of the reports filed with
the Commission pursuant to subsection (a) for the
reporting year; and
(E) policy or legislative recommendations to
strengthen any enforcement action relating to a
violation of this Act, including recommendations to
include additional prohibited conduct in section 2(a).
(2) Formulary design or placement practices.--Not later
than 1 year after the date of enactment of this Act, the
Commission shall submit to the Committee on Commerce, Science,
and Transportation of the Senate and the Committee on Energy
and Commerce of the House of Representatives a report that
addresses the policies, practices, and role of pharmacy benefit
managers (including their affiliates, subsidiaries, and agents)
regarding formulary design or placement, including whether--
(A) pharmacy benefit managers (including their
affiliates, subsidiaries, and agents) use formulary
design or placement to increase their gross revenue
without an accompanying increase in patient access or
decrease in patient cost; or
(B) such policies or practices of pharmacy benefit
managers regarding formulary design or placement
violate section 5(a) of the Federal Trade Commission
Act (15 U.S.C. 45(a)).
(3) Construction.--Nothing in this section shall be
construed as authorizing the Commission to disclose any
information that is a trade secret or confidential information
described in section 552(b)(4) of title 5, United States Code.
(c) GAO Study.--Not later than 1 year after the date of enactment
of this Act, the Comptroller General of the United States shall submit
to the Committee on Commerce, Science, and Transportation, the
Committee on Finance, and the Committee on Health, Education, Labor,
and Pensions of the Senate and to the Committee on Ways and Means and
the Committee on Energy and Commerce of the House of Representatives a
report that--
(1) addresses, at minimum--
(A) the role that pharmacy benefit managers play in
the pharmaceutical supply chain;
(B) the state of competition among pharmacy benefit
managers, including the market share for the Nation's
10 largest pharmacy benefit managers;
(C) the use of rebates and fees by pharmacy benefit
managers, including data for each of the 10 largest
pharmacy benefit managers that reflects, for each drug
in the formulary of each such pharmacy benefit
manager--
(i) the amount of the rebate passed on to
patients;
(ii) the amount of the rebate passed on to
payors;
(iii) the amount of the rebate kept by the
pharmacy benefit manager; and
(iv) the role of fees charged by the
pharmacy benefit manager;
(D) whether pharmacy benefit managers structure
their formularies in favor of high-rebate prescription
drugs over lower-cost, lower-rebate alternatives;
(E) the average prior authorization approval time
for each of the 10 largest pharmacy benefit managers;
(F) factors affecting the use of step therapy in
each of the 10 largest pharmacy benefit managers; and
(G) the extent to which the price that pharmacy
benefit managers charge payors, such as the Medicare
program under title XXVIII of the Social Security Act
(42 U.S.C. 1395 et seq.), State Medicaid programs under
title XIX of the Social Security Act (42 U.S.C. 1396 et
seq.), the Federal Employees Health Benefits Program
under chapter 89 of title 5, United States Code, or
private payors, for a drug is more than such pharmacy
benefit managers pay the pharmacy for the drug; and
(2) provides recommendations for legislative action to
lower the cost of prescription drugs for consumers and payors,
improve the efficiency of the pharmaceutical supply chain by
lowering intermediary costs, improve competition in pharmacy
benefit management, and provide transparency in pharmacy
benefit management.
SEC. 5. WHISTLEBLOWER PROTECTIONS.
(a) In General.--A pharmacy benefit manager, health plan,
pharmaceutical manufacturer, pharmacy, or any affiliate, subsidiary, or
agent thereof shall not, directly or indirectly, discharge, demote,
suspend, diminish, or withdraw benefits from, threaten, harass, or in
any other manner discriminate against or adversely impact a covered
individual because--
(1) the covered individual, or anyone perceived as
assisting the covered individual, takes (or is suspected to
have taken or will take) a lawful action in providing to
Congress, an agency of the Federal Government, the attorney
general of a State, a State regulator with authority over the
distribution or insurance coverage of prescription drugs, or a
law enforcement agency relating to any act or omission that the
covered individual reasonably believes to be a violation of
this Act;
(2) the covered individual provides information that the
covered individual reasonably believes evidences such a
violation to--
(A) a person with supervisory authority over the
covered individual at the pharmacy benefit manager,
health plan, pharmaceutical manufacturer, pharmacy, or
any affiliate, subsidiary, or agent thereof; or
(B) another individual working for the pharmacy
benefit manager, health plan, pharmaceutical
manufacturer, pharmacy, or any affiliate, subsidiary,
or agent thereof who the covered individual reasonably
believes has the authority to investigate, discover, or
terminate the violation or to take any other action to
address the violation;
(3) the covered individual testifies (or it is suspected
that the covered individual will testify) in an investigation
or judicial or administrative proceeding concerning such a
violation;
(4) the covered individual assists or participates (or it
is expected that the covered individual will assist or
participate) in such an investigation or judicial or
administrative proceeding; or
(5) the covered individual takes any other action to assist
in carrying out the purposes of this Act.
(b) Enforcement.--An individual who alleges any adverse action in
violation of subsection (a) may bring an action for a jury trial in the
appropriate district court of the United States for the following
relief:
(1) Temporary relief while the case is pending.
(2) Reinstatement with the same seniority status that the
individual would have had, but for the discharge or
discrimination.
(3) Twice the amount of back pay otherwise owed to the
individual, with interest.
(4) Consequential and compensatory damages, and
compensation for litigation costs, expert witness fees, and
reasonable attorneys' fees.
(c) Waiver of Rights and Remedies.--The rights and remedies
provided for in this section shall not be waived by any policy form or
condition of employment, including by a predispute arbitration
agreement.
(d) Predispute Arbitration Agreements.--No predispute arbitration
agreement shall be valid or enforceable if the agreement requires
arbitration of a dispute arising under this section.
SEC. 6. ENFORCEMENT.
(a) Enforcement by the Commission.--
(1) Unfair and deceptive acts or practices.--A violation of
this Act shall be treated as a violation of a rule defining an
unfair or deceptive act or practice under section 18(a)(1)(B)
of the Federal Trade Commission Act (15 U.S.C. 57a(a)(1)(B)).
(2) Powers of the commission.--
(A) In general.--Except as provided in subparagraph
(C), the Commission shall enforce this Act in the same
manner, by the same means, and with the same
jurisdiction, powers, and duties as though all
applicable terms and provisions of the Federal Trade
Commission Act (15 U.S.C. 41 et seq.) were incorporated
into and made a part of this Act.
(B) Privileges and immunities.--Subject to
paragraph (3), any person who violates this Act shall
be subject to the penalties and entitled to the
privileges and immunities provided in the Federal Trade
Commission Act (15 U.S.C. 41 et seq.).
(C) Nonprofit organizations and insurance.--
Notwithstanding section 4 or 6 of the Federal Trade
Commission Act (15 U.S.C. 44, 46), section 2 of
McCarran-Ferguson Act (15 U.S.C. 1012), or any other
jurisdictional limitation of the Commission, the
Commission shall also enforce this Act, in the same
manner provided in subparagraphs (A) and (B) of this
paragraph, with respect to--
(i) organizations not organized to carry on
business for their own profit or that of their
members; and
(ii) the business of insurance, and persons
engaged in such business.
(D) Authority preserved.--Nothing in this section
shall be construed to limit the authority of the
Commission under any other provision of law.
(3) Penalties.--
(A) Additional civil penalty.--In addition to any
penalty applicable under the Federal Trade Commission
Act (15 U.S.C. 41 et seq.), any person that violates
this Act shall be liable for a civil penalty of not
more than $1,000,000.
(B) Method.--The penalties provided by subparagraph
(A) shall be obtained in the same manner as civil
penalties imposed under section 18(a)(1)(B) of the
Federal Trade Commission Act (15 U.S.C. 57a(a)(1)(B)).
(C) Multiple offenses; mitigating factors.--In
assessing a penalty under subparagraph (A)--
(i) each day of a continuing violation
shall be considered a separate violation; and
(ii) the court shall take into
consideration, among other factors--
(I) the seriousness of the
violation;
(II) the efforts of the person
committing the violation to remedy the
harm caused by the violation in a
timely manner; and
(III) whether the violation was
intentional.
(b) Enforcement by States.--
(1) In general.--If the attorney general of a State has
reason to believe that an interest of the residents of the
State has been or is being threatened or adversely affected by
a practice that violates this Act, the attorney general of the
State may bring a civil action on behalf of the residents of
the State in an appropriate district court of the United States
to obtain appropriate relief.
(2) Rights of the commission.--
(A) Notice to the commission.--
(i) In general.--Except as provided in
clause (iii), the attorney general of a State,
before initiating a civil action under
paragraph (1), shall provide written
notification to the Commission that the
attorney general intends to bring such civil
action.
(ii) Contents.--The notification required
under clause (i) shall include a copy of the
complaint to be filed to initiate the civil
action.
(iii) Exception.--If it is not feasible for
the attorney general of a State to provide the
notification required under clause (i) before
initiating a civil action under paragraph (1),
the attorney general shall notify the
Commission immediately upon instituting the
civil action.
(B) Intervention by the commission.--The Commission
may--
(i) intervene in any civil action brought
by the attorney general of a State under
paragraph (1); and
(ii) upon intervening--
(I) be heard on all matters arising
in the civil action; and
(II) file petitions for appeal of a
decision in the civil action.
(3) Construction.--Nothing in this subsection may be
construed to prevent the attorney general of a State from
exercising the powers conferred on the attorney general by the
laws of the State to conduct investigations, to administer
oaths or affirmations, or to compel the attendance of witnesses
or the production of documentary or other evidence.
(4) Venue; service of process.--
(A) Venue.--Any action brought under paragraph (1)
may be brought in--
(i) the district court of the United States
that meets applicable requirements relating to
venue under section 1391 of title 28, United
States Code; or
(ii) another court of competent
jurisdiction.
(B) Service of process.--In an action brought under
paragraph (1), process may be served in any district in
which--
(i) the defendant is an inhabitant, may be
found, or transacts business; or
(ii) venue is proper under section 1391 of
title 28, United States Code.
(5) Actions by other state officials.--
(A) In general.--If an attorney general lacks
appropriate jurisdiction to bring a civil action under
paragraph (1), any other officer of a State who is
authorized by the State to do so may bring a civil
action under paragraph (1), subject to the same
requirements and limitations that apply under this
subsection to civil actions brought by attorneys
general.
(B) Clarification of authority.--The authority
provided by subparagraph (A) shall supplant, and not
supplement, the authorities of State attorneys general
under paragraph (1).
(C) Savings provision.--Nothing in this subsection
may be construed to prohibit an authorized official of
a State from initiating or continuing any proceeding in
a court of the State for a violation of any civil or
criminal law of the State.
(c) Affirmative Defense.--In an action brought under this section
to enforce section 2, it shall be an affirmative defense, on which the
defendant has the burden of persuasion by a preponderance of the
evidence, that the conduct alleged to be a violation of section 2 was
nonpretextual and reasonably necessary to--
(1) prevent a violation of, or comply with, Federal or
State law;
(2) protect patient safety; or
(3) protect patient access.
SEC. 7. EFFECT ON STATE LAWS.
Nothing in this Act shall be construed to preempt, displace, or
supplant any State laws, rules, regulations, or requirements, or the
enforcement thereof.
SEC. 8. DEFINITIONS.
In this Act:
(1) Commission.--The term ``Commission'' means the Federal
Trade Commission.
(2) Covered individual.--The term ``covered individual''
means a current or former employee, contractor, subcontractor,
service provider, or agent of a pharmacy benefit manager,
health plan, pharmaceutical manufacturer, pharmacy, or any
affiliate, subsidiary, or agent thereof.
(3) Health plan.--The term ``health plan'' means any group
or individual health insurance plan or coverage, including any
health insurance plan or coverage sponsored or funded by the
Federal Government or the government of any State, Territory,
or subdivision thereof.
(4) Pharmacy benefit manager.--The term ``pharmacy benefit
manager'' means any entity that provides pharmacy benefit
management services on behalf of a health plan, a payer, or
health insurance issuer.
(5) Pharmacy benefit management services.--The term
``pharmacy benefit management services'' means, pursuant to a
written agreement with a payer or health plan offering group or
individual health insurance coverage, directly or through an
intermediary, the service of--
(A) negotiating terms and conditions, including
rebates and price concessions, with respect to a
prescription drug on behalf of the health plan,
coverage, or payer; or
(B) managing the prescription drug benefits
provided by the health plan, coverage, or payer, 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.
(6) Prescription drug.--The term ``prescription drug''
means--
(A) a drug, as that term is defined in section
201(g) of the Federal Food, Drug, and Cosmetic Act (21
U.S.C. 321(g)), that is--
(i) approved by the Food and Drug
Administration under section 505 of such Act
(21 U.S.C. 355); and
(ii) subject to the requirements of section
503(b)(1) of such Act (21 U.S.C. 353(b)(1));
(B) a biological product as that term is defined in
section 351 of the Public Health Service Act (42 U.S.C.
262(i)(1)); or
(C) a product that is biosimilar to, or
interchangeable with, a biologic product under section
351 of the Public Health Service Act (42 U.S.C.
262(i)).
<all>
Introduced in Senate
Read twice and referred to the Committee on Commerce, Science, and Transportation.
Committee on Commerce, Science, and Transportation. Ordered to be reported with an amendment in the nature of a substitute favorably.
Committee on Commerce, Science, and Transportation. Reported by Senator Cantwell with an amendment in the nature of a substitute. Without written report.
Committee on Commerce, Science, and Transportation. Reported by Senator Cantwell with an amendment in the nature of a substitute. Without written report.
Placed on Senate Legislative Calendar under General Orders. Calendar No. 283.
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