[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2450 Introduced in House (IH)]
<DOC>
119th CONGRESS
1st Session
H. R. 2450
To amend the Public Health Service Act, the Employee Retirement Income
Security Act of 1974, and the Internal Revenue Code of 1984 to increase
oversight of pharmacy benefit management services, and for other
purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 27, 2025
Ms. McDonald Rivet (for herself, Mr. Carter of Georgia, Mr. Menendez,
and Mr. James) introduced the following bill; which was referred to the
Committee on Energy and Commerce, and in addition to the Committees on
Education and Workforce, and 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 the Public Health Service Act, the Employee Retirement Income
Security Act of 1974, and the Internal Revenue Code of 1984 to increase
oversight of pharmacy benefit management 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 ``Prescription Drug Transparency and
Affordability Act''.
SEC. 2. OVERSIGHT OF PHARMACY BENEFIT MANAGEMENT SERVICES.
(a) Public Health Service Act.--Title XXVII of the Public Health
Service Act (42 U.S.C. 300gg et seq.) is amended--
(1) in part D (42 U.S.C. 300gg-111 et seq.), by adding at
the end the following new section:
``SEC. 2799A-11. OVERSIGHT OF ENTITIES THAT PROVIDE PHARMACY BENEFIT
MANAGEMENT SERVICES.
``(a) In General.--For plan years beginning on or after the date
that is 30 months after the date of enactment of this section (referred
to in this subsection and subsection (b) as the `effective date'), a
group health plan or a health insurance issuer offering group health
insurance coverage, or an entity providing pharmacy benefit management
services on behalf of such a plan or issuer, shall not enter into a
contract, including an extension or renewal of a contract, entered into
on or after the effective date, with an applicable entity unless such
applicable entity agrees to--
``(1) not limit or delay the disclosure of information to
the group health plan (including such a plan offered through a
health insurance issuer) in such a manner that prevents an
entity providing pharmacy benefit management services on behalf
of a group health plan or health insurance issuer offering
group health insurance coverage from making the reports
described in subsection (b); and
``(2) provide the entity providing pharmacy benefit
management services on behalf of a group health plan or health
insurance issuer relevant information necessary to make the
reports described in subsection (b).
``(b) Reports.--
``(1) In general.--For plan years beginning on or after the
effective date, in the case of any contract between a group
health plan or a health insurance issuer offering group health
insurance coverage offered in connection with such a plan and
an entity providing pharmacy benefit management services on
behalf of such plan or issuer, including an extension or
renewal of such a contract, entered into on or after the
effective date, the entity providing pharmacy benefit
management services on behalf of such a group health plan or
health insurance issuer, not less frequently than every 6
months (or, at the request of a group health plan, not less
frequently than quarterly, and under the same conditions,
terms, and cost of the semiannual report under this
subsection), shall submit to the group health plan a report in
accordance with this section. Each such report shall be made
available to such group health plan in plain language, in a
machine-readable format, and as the Secretary may determine,
other formats. Each such report shall include the information
described in paragraph (2).
``(2) Information described.--For purposes of paragraph
(1), the information described in this paragraph is, with
respect to drugs covered by a group health plan or group health
insurance coverage offered by a health insurance issuer in
connection with a group health plan during each reporting
period--
``(A) in the case of a group health plan that is
offered by a specified large employer or that is a
specified large plan, and is not offered as health
insurance coverage, or in the case of health insurance
coverage for which the election under paragraph (3) is
made for the applicable reporting period--
``(i) a list of drugs for which a claim was
filed and, with respect to each such drug on
such list--
``(I) the contracted compensation
paid by the group health plan or health
insurance issuer for each covered drug
(identified by the National Drug Code)
to the entity providing pharmacy
benefit management services or other
applicable entity on behalf of the
group health plan or health insurance
issuer;
``(II) the contracted compensation
paid to the pharmacy, by any entity
providing pharmacy benefit management
services or other applicable entity on
behalf of the group health plan or
health insurance issuer, for each
covered drug (identified by the
National Drug Code);
``(III) for each such claim, the
difference between the amount paid
under subclause (I) and the amount paid
under subclause (II);
``(IV) the proprietary name,
established name or proper name, and
National Drug Code;
``(V) for each claim for the drug
(including original prescriptions and
refills) and for each dosage unit of
the drug for which a claim was filed,
the type of dispensing channel used to
furnish the drug, including retail,
mail order, or specialty pharmacy;
``(VI) with respect to each drug
dispensed, for each type of dispensing
channel (including retail, mail order,
or specialty pharmacy)--
``(aa) whether such drug is
a brand name drug or a generic
drug, and--
``(AA) in the case
of a brand name drug,
the wholesale
acquisition cost,
listed as cost per days
supply and cost per
dosage unit, on the
date such drug was
dispensed; and
``(BB) in the case
of a generic drug, the
average wholesale
price, listed as cost
per days supply and
cost per dosage unit,
on the date such drug
was dispensed; and
``(bb) the total number
of--
``(AA) prescription
claims (including
original prescriptions
and refills);
``(BB) participants
and beneficiaries for
whom a claim for such
drug was filed through
the applicable
dispensing channel;
``(CC) dosage units
and dosage units per
fill of such drug; and
``(DD) days supply
of such drug per fill;
``(VII) the net price per course of
treatment or single fill, such as a 30-
day supply or 90-day supply to the plan
or coverage after rebates, fees,
alternative discounts, or other
remuneration received from applicable
entities;
``(VIII) the total amount of out-
of-pocket spending by participants and
beneficiaries on such drug, including
spending through copayments,
coinsurance, and deductibles, but not
including any amounts spent by
participants and beneficiaries on drugs
not covered under the plan or coverage,
or for which no claim is submitted
under the plan or coverage;
``(IX) the total net spending on
the drug;
``(X) the total amount received, or
expected to be received, by the plan or
issuer from any applicable entity in
rebates, fees, alternative discounts,
or other remuneration;
``(XI) the total amount received,
or expected to be received, by the
entity providing pharmacy benefit
management services, from applicable
entities, in rebates, fees, alternative
discounts, or other remuneration from
such entities--
``(aa) for claims incurred
during the reporting period;
and
``(bb) that is related to
utilization of such drug or
spending on such drug; and
``(XII) to the extent feasible,
information on the total amount of
remuneration for such drug, including
copayment assistance dollars paid,
copayment cards applied, or other
discounts provided by each drug
manufacturer (or entity administering
copayment assistance on behalf of such
drug manufacturer), to the participants
and beneficiaries enrolled in such plan
or coverage;
``(ii) a list of each therapeutic class (as
defined by the Secretary) for which a claim was
filed under the group health plan or health
insurance coverage during the reporting period,
and, with respect to each such therapeutic
class--
``(I) the total gross spending on
drugs in such class before rebates,
price concessions, alternative
discounts, or other remuneration from
applicable entities;
``(II) the net spending in such
class after such rebates, price
concessions, alternative discounts, or
other remuneration from applicable
entities;
``(III) the total amount received,
or expected to be received, by the
entity providing pharmacy benefit
management services, from applicable
entities, in rebates, fees, alternative
discounts, or other remuneration from
such entities--
``(aa) for claims incurred
during the reporting period;
and
``(bb) that is related to
utilization of drugs or drug
spending;
``(IV) the average net spending per
30-day supply and per 90-day supply by
the plan or by the issuer with respect
to such coverage and its participants
and beneficiaries, among all drugs
within the therapeutic class for which
a claim was filed during the reporting
period;
``(V) the number of participants
and beneficiaries who filled a
prescription for a drug in such class,
including the National Drug Code for
each such drug;
``(VI) if applicable, a description
of the formulary tiers and utilization
mechanisms (such as prior authorization
or step therapy) employed for drugs in
that class; and
``(VII) the total out-of-pocket
spending under the plan or coverage by
participants and beneficiaries,
including spending through copayments,
coinsurance, and deductibles, but not
including any amounts spent by
participants and beneficiaries on drugs
not covered under the plan or coverage
or for which no claim is submitted
under the plan or coverage;
``(iii) with respect to any drug for which
gross spending under the group health plan or
health insurance coverage exceeded $10,000
during the reporting period or, in the case
that gross spending under the group health plan
or coverage exceeded $10,000 during the
reporting period with respect to fewer than 50
drugs, with respect to the 50 prescription
drugs with the highest spending during the
reporting period--
``(I) a list of all other drugs in
the same therapeutic class as such
drug;
``(II) if applicable, the rationale
for the formulary placement of such
drug in that therapeutic category or
class, selected from a list of standard
rationales established by the
Secretary, in consultation with
stakeholders; and
``(III) any change in formulary
placement compared to the prior plan
year; and
``(iv) in the case that such plan or issuer
(or an entity providing pharmacy benefit
management services on behalf of such plan or
issuer) has an affiliated pharmacy or pharmacy
under common ownership, including mandatory
mail and specialty home delivery programs,
retail and mail auto-refill programs, and cost
sharing assistance incentives funded by an
entity providing pharmacy benefit services--
``(I) an explanation of any benefit
design parameters that encourage or
require participants and beneficiaries
in the plan or coverage to fill
prescriptions at mail order, specialty,
or retail pharmacies;
``(II) the percentage of total
prescriptions dispensed by such
pharmacies to participants or
beneficiaries in such plan or coverage;
and
``(III) a list of all drugs
dispensed by such pharmacies to
participants or beneficiaries enrolled
in such plan or coverage, and, with
respect to each drug dispensed--
``(aa) the amount charged,
per dosage unit, per 30-day
supply, or per 90-day supply
(as applicable) to the plan or
issuer, and to participants and
beneficiaries;
``(bb) the median amount
charged to such plan or issuer,
and the interquartile range of
the costs, per dosage unit, per
30-day supply, and per 90-day
supply, including amounts paid
by the participants and
beneficiaries, when the same
drug is dispensed by other
pharmacies that are not
affiliated with or under common
ownership with the entity and
that are included in the
pharmacy network of such plan
or coverage;
``(cc) the lowest cost per
dosage unit, per 30-day supply
and per 90-day supply, for each
such drug, including amounts
charged to the plan or coverage
and to participants and
beneficiaries, that is
available from any pharmacy
included in the network of such
plan or coverage; and
``(dd) the net acquisition
cost per dosage unit, per 30-
day supply, and per 90-day
supply, if such drug is subject
to a maximum price discount;
and
``(B) with respect to any group health plan,
including group health insurance coverage offered in
connection with such a plan, regardless of whether the
plan or coverage is offered by a specified large
employer or whether it is a specified large plan--
``(i) a summary document for the group
health plan that includes such information
described in clauses (i) through (iv) of
subparagraph (A), as specified by the Secretary
through guidance, program instruction, or
otherwise (with no requirement of notice and
comment rulemaking), that the Secretary
determines useful to group health plans for
purposes of selecting pharmacy benefit
management services, such as an estimated net
price to group health plan and participant or
beneficiary, a cost per claim, the fee
structure or reimbursement model, and estimated
cost per participant or beneficiary;
``(ii) a summary document for plans and
issuers to provide to participants and
beneficiaries, which shall be made available to
participants or beneficiaries upon request to
their group health plan (including in the case
of group health insurance coverage offered in
connection with such a plan), that--
``(I) contains such information
described in clauses (iii), (iv), (v),
and (vi), as applicable, as specified
by the Secretary through guidance,
program instruction, or otherwise (with
no requirement of notice and comment
rulemaking) that the Secretary
determines useful to participants or
beneficiaries in better understanding
the plan or coverage or benefits under
such plan or coverage;
``(II) contains only aggregate
information; and
``(III) states that participants
and beneficiaries may request specific,
claims-level information required to be
furnished under subsection (c) from the
group health plan or health insurance
issuer; and
``(iii) with respect to drugs covered by
such plan or coverage during such reporting
period--
``(I) the total net spending by the
plan or coverage for all such drugs;
``(II) the total amount received,
or expected to be received, by the plan
or issuer from any applicable entity in
rebates, fees, alternative discounts,
or other remuneration; and
``(III) to the extent feasible,
information on the total amount of
remuneration for such drugs, including
copayment assistance dollars paid,
copayment cards applied, or other
discounts provided by each drug
manufacturer (or entity administering
copayment assistance on behalf of such
drug manufacturer) to participants and
beneficiaries;
``(iv) amounts paid directly or indirectly
in rebates, fees, or any other type of
compensation (as defined in section
408(b)(2)(B)(ii)(dd)(AA) of the Employee
Retirement Income Security Act) to brokerage
firms, brokers, consultants, advisors, or any
other individual or firm, for--
``(I) the referral of the group
health plan's or health insurance
issuer's business to an entity
providing pharmacy benefit management
services, including the identity of the
recipient of such amounts;
``(II) consideration of the entity
providing pharmacy benefit management
services by the group health plan or
health insurance issuer; or
``(III) the retention of the entity
by the group health plan or health
insurance issuer;
``(v) an explanation of any benefit design
parameters that encourage or require
participants and beneficiaries in such plan or
coverage to fill prescriptions at mail order,
specialty, or retail pharmacies that are
affiliated with or under common ownership with
the entity providing pharmacy benefit
management services under such plan or
coverage, including mandatory mail and
specialty home delivery programs, retail and
mail auto-refill programs, and cost-sharing
assistance incentives directly or indirectly
funded by such entity; and
``(vi) total gross spending on all drugs
under the plan or coverage during the reporting
period.
``(3) Opt-in for group health insurance coverage offered by
a specified large employer or that is a specified large plan.--
In the case of group health insurance coverage offered in
connection with a group health plan that is offered by a
specified large employer or is a specified large plan, such
group health plan may, on an annual basis, for plan years
beginning on or after the date that is 30 months after the date
of enactment of this section, elect to require an entity
providing pharmacy benefit management services on behalf of the
health insurance issuer to submit to such group health plan a
report that includes all of the information described in
paragraph (2)(A), in addition to the information described in
paragraph (2)(B).
``(4) Privacy requirements.--
``(A) In general.--An entity providing pharmacy
benefit management services on behalf of a group health
plan or a health insurance issuer offering group health
insurance coverage shall report information under
paragraph (1) in a manner consistent with the privacy
regulations promulgated under section 13402(a) of the
Health Information Technology for Economic and Clinical
Health Act and consistent with the privacy regulations
promulgated under the Health Insurance Portability and
Accountability Act of 1996 in part 160 and subparts A
and E of part 164 of title 45, Code of Federal
Regulations (or successor regulations) (referred to in
this paragraph as the `HIPAA privacy regulations') and
shall restrict the use and disclosure of such
information according to such privacy regulations and
such HIPAA privacy regulations.
``(B) Additional requirements.--
``(i) In general.--An entity providing
pharmacy benefit management services on behalf
of a group health plan or health insurance
issuer offering group health insurance coverage
that submits a report under paragraph (1) shall
ensure that such report contains only summary
health information, as defined in section
164.504(a) of title 45, Code of Federal
Regulations (or successor regulations).
``(ii) Restrictions.--In carrying out this
subsection, a group health plan shall comply
with section 164.504(f) of title 45, Code of
Federal Regulations (or a successor
regulation), and a plan sponsor shall act in
accordance with the terms of the agreement
described in such section.
``(C) Rule of construction.--
``(i) Nothing in this section shall be
construed to modify the requirements for the
creation, receipt, maintenance, or transmission
of protected health information under the HIPAA
privacy regulations.
``(ii) Nothing in this section shall be
construed to affect the application of any
Federal or State privacy or civil rights law,
including the HIPAA privacy regulations, the
Genetic Information Nondiscrimination Act of
2008 (Public Law 110-233) (including the
amendments made by such Act), the Americans
with Disabilities Act of 1990 (42 U.S.C. 12101
et sec), section 504 of the Rehabilitation Act
of 1973 (29 U.S.C. 794), section 1557 of the
Patient Protection and Affordable Care Act (42
U.S.C. 18116), title VI of the Civil Rights Act
of 1964 (42 U.S.C. 2000d), and title VII of the
Civil Rights Act of 1964 (42 U.S.C. 2000e).
``(D) Written notice.--Each plan year, group health
plans, including with respect to group health insurance
coverage offered in connection with a group health
plan, shall provide to each participant or beneficiary
written notice informing the participant or beneficiary
of the requirement for entities providing pharmacy
benefit management services on behalf of the group
health plan or health insurance issuer offering group
health insurance coverage to submit reports to group
health plans under paragraph (1), as applicable, which
may include incorporating such notification in plan
documents provided to the participant or beneficiary,
or providing individual notification.
``(E) Limitation to business associates.--A group
health plan receiving a report under paragraph (1) may
disclose such information only to the entity from which
the report was received or to that entity's business
associates as defined in section 160.103 of title 45,
Code of Federal Regulations (or successor regulations)
or as permitted by the HIPAA privacy regulations.
``(F) Clarification regarding public disclosure of
information.--Nothing in this section shall prevent an
entity providing pharmacy benefit management services
on behalf of a group health plan or health insurance
issuer offering group health insurance coverage, from
placing reasonable restrictions on the public
disclosure of the information contained in a report
described in paragraph (1), except that such plan,
issuer, or entity may not--
``(i) restrict disclosure of such report to
the Department of Health and Human Services,
the Department of Labor, or the Department of
the Treasury; or
``(ii) prevent disclosure for the purposes
of subsection (c), or any other public
disclosure requirement under this section.
``(G) Limited form of report.--The Secretary shall
define through rulemaking a limited form of the report
under paragraph (1) required with respect to any group
health plan established by a plan sponsor that is, or
is affiliated with, a drug manufacturer, drug
wholesaler, or other direct participant in the drug
supply chain, in order to prevent anti-competitive
behavior.
``(5) Standard format and regulations.--
``(A) In general.--Not later than 18 months after
the date of enactment of this section, the Secretary
shall specify through rulemaking a standard format for
entities providing pharmacy benefit management services
on behalf of group health plans and health insurance
issuers offering group health insurance coverage, to
submit reports required under paragraph (1).
``(B) Additional regulations.--Not later than 18
months after the date of enactment of this section, the
Secretary shall, through rulemaking, promulgate any
other final regulations necessary to implement the
requirements of this section. In promulgating such
regulations, the Secretary shall, to the extent
practicable, align the reporting requirements under
this section with the reporting requirements under
section 2799A-10.
``(c) Requirement To Provide Information to Participants or
Beneficiaries.--A group health plan, including with respect to group
health insurance coverage offered in connection with a group health
plan, upon request of a participant or beneficiary, shall provide to
such participant or beneficiary--
``(1) the summary document described in subsection
(b)(2)(B)(ii); and
``(2) the information described in subsection
(b)(2)(A)(i)(III) with respect to a claim made by or on behalf
of such participant or beneficiary.
``(d) Enforcement.--
``(1) In general.--The Secretary shall enforce this
section. The enforcement authority under this subsection shall
apply only with respect to group health plans (including group
health insurance coverage offered in connection with such a
plan) to which the requirements of subparts I and II of part A
and part D apply in accordance with section 2722, and with
respect to entities providing pharmacy benefit management
services on behalf of such plans and applicable entities
providing services on behalf of such plans.
``(2) Failure to provide information.--A group health plan,
a health insurance issuer offering group health insurance
coverage, an entity providing pharmacy benefit management
services on behalf of such a plan or issuer, or an applicable
entity providing services on behalf of such a plan or issuer
that violates subsection (a); an entity providing pharmacy
benefit management services on behalf of such a plan or issuer
that fails to provide the information required under subsection
(b); or a group health plan that fails to provide the
information required under subsection (c), 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, an
entity providing pharmacy benefit management services, or a
third party administrator providing services on behalf of such
issuer offered by a health insurance issuer that knowingly
provides false information under this section shall be subject
to a civil monetary penalty in an amount not to exceed $100,000
for each item of false information. Such civil monetary 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 such section.
``(5) Waivers.--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
the requirements in this section.
``(e) Rule of Construction.--Nothing in this section shall be
construed to permit a health insurance issuer, group health plan,
entity providing pharmacy benefit management services on behalf of a
group health plan or health insurance issuer, or other entity to
restrict disclosure to, or otherwise limit the access of, the Secretary
to a report described in subsection (b)(1) or information related to
compliance with subsections (a), (b), (c), or (d) by such issuer, plan,
or entity.
``(f) Definitions.--In this section:
``(1) Applicable entity.--The term `applicable entity'
means--
``(A) an applicable group purchasing organization,
drug manufacturer, distributor, wholesaler, rebate
aggregator (or other purchasing entity designed to
aggregate rebates), or associated third party;
``(B) any subsidiary, parent, affiliate, or
subcontractor of a group health plan, health insurance
issuer, entity that provides pharmacy benefit
management services on behalf of such a plan or issuer,
or any entity described in subparagraph (A); or
``(C) such other entity as the Secretary may
specify through rulemaking.
``(2) Applicable group purchasing organization.--The term
`applicable group purchasing organization' means a group
purchasing organization that is affiliated with or under common
ownership with an entity providing pharmacy benefit management
services.
``(3) Contracted compensation.--The term `contracted
compensation' means the sum of any ingredient cost and
dispensing fee for a drug (inclusive of the out-of-pocket costs
to the participant or beneficiary), or another analogous
compensation structure that the Secretary may specify through
regulations.
``(4) Gross spending.--The term `gross spending', with
respect to prescription drug benefits under a group health plan
or health insurance coverage, means the amount spent by a group
health plan or health insurance issuer on prescription drug
benefits, calculated before the application of rebates, fees,
alternative discounts, or other remuneration.
``(5) Net spending.--The term `net spending', with respect
to prescription drug benefits under a group health plan or
health insurance coverage, means the amount spent by a group
health plan or health insurance issuer on prescription drug
benefits, calculated after the application of rebates, fees,
alternative discounts, or other remuneration.
``(6) Plan sponsor.--The term `plan sponsor' has the
meaning given such term in section 3(16)(B) of the Employee
Retirement Income Security Act of 1974.
``(7) Remuneration.--The term `remuneration' has the
meaning given such term by the Secretary through rulemaking,
which shall be reevaluated by the Secretary every 5 years.
``(8) Specified large employer.--The term `specified large
employer' means, in connection with a group health plan
(including group health insurance coverage offered in
connection with such a plan) established or maintained by a
single employer, with respect to a calendar year or a plan
year, as applicable, an employer who employed an average of at
least 100 employees on business days during the preceding
calendar year or plan year and who employs at least 1 employee
on the first day of the calendar year or plan year.
``(9) Specified large plan.--The term `specified large
plan' means a group health plan (including group health
insurance coverage offered in connection with such a plan)
established or maintained by a plan sponsor described in clause
(ii) or (iii) of section 3(16)(B) of the Employee Retirement
Income Security Act of 1974 that had an average of at least 100
participants on business days during the preceding calendar
year or plan year, as applicable.
``(10) Wholesale acquisition cost.--The term `wholesale
acquisition cost' has the meaning given such term in section
1847A(c)(6)(B) of the Social Security Act.''; and
(2) in section 2723 (42 U.S.C. 300gg-22)--
(A) in subsection (a)--
(i) in paragraph (1), by inserting ``(other
than section 2799A-11)'' after ``part D''; and
(ii) in paragraph (2), by inserting
``(other than section 2799A-11)'' after ``part
D''; and
(B) in subsection (b)--
(i) in paragraph (1), by inserting ``(other
than section 2799A-11)'' after ``part D'';
(ii) in paragraph (2)(A), by inserting
``(other than section 2799A-11)'' after ``part
D''; and
(iii) in paragraph (2)(C)(ii), by inserting
``(other than section 2799A-11)'' after ``part
D''.
(b) Employee Retirement Income Security Act of 1974.--
(1) In general.--Subtitle B of title I of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1021 et seq.)
is amended--
(A) in subpart B of part 7 (29 U.S.C. 1185 et
seq.), by adding at the end the following:
``SEC. 726. OVERSIGHT OF ENTITIES THAT PROVIDE PHARMACY BENEFIT
MANAGEMENT SERVICES.
``(a) In General.--For plan years beginning on or after the date
that is 30 months after the date of enactment of this section (referred
to in this subsection and subsection (b) as the `effective date'), a
group health plan or a health insurance issuer offering group health
insurance coverage, or an entity providing pharmacy benefit management
services on behalf of such a plan or issuer, shall not enter into a
contract, including an extension or renewal of a contract, entered into
on or after the effective date, with an applicable entity unless such
applicable entity agrees to--
``(1) not limit or delay the disclosure of information to
the group health plan (including such a plan offered through a
health insurance issuer) in such a manner that prevents an
entity providing pharmacy benefit management services on behalf
of a group health plan or health insurance issuer offering
group health insurance coverage from making the reports
described in subsection (b); and
``(2) provide the entity providing pharmacy benefit
management services on behalf of a group health plan or health
insurance issuer relevant information necessary to make the
reports described in subsection (b).
``(b) Reports.--
``(1) In general.--For plan years beginning on or after the
effective date, in the case of any contract between a group
health plan or a health insurance issuer offering group health
insurance coverage offered in connection with such a plan and
an entity providing pharmacy benefit management services on
behalf of such plan or issuer, including an extension or
renewal of such a contract, entered into on or after the
effective date, the entity providing pharmacy benefit
management services on behalf of such a group health plan or
health insurance issuer, not less frequently than every 6
months (or, at the request of a group health plan, not less
frequently than quarterly, and under the same conditions,
terms, and cost of the semiannual report under this
subsection), shall submit to the group health plan a report in
accordance with this section. Each such report shall be made
available to such group health plan in plain language, in a
machine-readable format, and as the Secretary may determine,
other formats. Each such report shall include the information
described in paragraph (2).
``(2) Information described.--For purposes of paragraph
(1), the information described in this paragraph is, with
respect to drugs covered by a group health plan or group health
insurance coverage offered by a health insurance issuer in
connection with a group health plan during each reporting
period--
``(A) in the case of a group health plan that is
offered by a specified large employer or that is a
specified large plan, and is not offered as health
insurance coverage, or in the case of health insurance
coverage for which the election under paragraph (3) is
made for the applicable reporting period--
``(i) a list of drugs for which a claim was
filed and, with respect to each such drug on
such list--
``(I) the contracted compensation
paid by the group health plan or health
insurance issuer for each covered drug
(identified by the National Drug Code)
to the entity providing pharmacy
benefit management services or other
applicable entity on behalf of the
group health plan or health insurance
issuer;
``(II) the contracted compensation
paid to the pharmacy, by any entity
providing pharmacy benefit management
services or other applicable entity on
behalf of the group health plan or
health insurance issuer, for each
covered drug (identified by the
National Drug Code);
``(III) for each such claim, the
difference between the amount paid
under subclause (I) and the amount paid
under subclause (II);
``(IV) the proprietary name,
established name or proper name, and
National Drug Code;
``(V) for each claim for the drug
(including original prescriptions and
refills) and for each dosage unit of
the drug for which a claim was filed,
the type of dispensing channel used to
furnish the drug, including retail,
mail order, or specialty pharmacy;
``(VI) with respect to each drug
dispensed, for each type of dispensing
channel (including retail, mail order,
or specialty pharmacy)--
``(aa) whether such drug is
a brand name drug or a generic
drug, and--
``(AA) in the case
of a brand name drug,
the wholesale
acquisition cost,
listed as cost per days
supply and cost per
dosage unit, on the
date such drug was
dispensed; and
``(BB) in the case
of a generic drug, the
average wholesale
price, listed as cost
per days supply and
cost per dosage unit,
on the date such drug
was dispensed; and
``(bb) the total number
of--
``(AA) prescription
claims (including
original prescriptions
and refills);
``(BB) participants
and beneficiaries for
whom a claim for such
drug was filed through
the applicable
dispensing channel;
``(CC) dosage units
and dosage units per
fill of such drug; and
``(DD) days supply
of such drug per fill;
``(VII) the net price per course of
treatment or single fill, such as a 30-
day supply or 90-day supply to the plan
or coverage after rebates, fees,
alternative discounts, or other
remuneration received from applicable
entities;
``(VIII) the total amount of out-
of-pocket spending by participants and
beneficiaries on such drug, including
spending through copayments,
coinsurance, and deductibles, but not
including any amounts spent by
participants and beneficiaries on drugs
not covered under the plan or coverage,
or for which no claim is submitted
under the plan or coverage;
``(IX) the total net spending on
the drug;
``(X) the total amount received, or
expected to be received, by the plan or
issuer from any applicable entity in
rebates, fees, alternative discounts,
or other remuneration;
``(XI) the total amount received,
or expected to be received, by the
entity providing pharmacy benefit
management services, from applicable
entities, in rebates, fees, alternative
discounts, or other remuneration from
such entities--
``(aa) for claims incurred
during the reporting period;
and
``(bb) that is related to
utilization of such drug or
spending on such drug; and
``(XII) to the extent feasible,
information on the total amount of
remuneration for such drug, including
copayment assistance dollars paid,
copayment cards applied, or other
discounts provided by each drug
manufacturer (or entity administering
copayment assistance on behalf of such
drug manufacturer), to the participants
and beneficiaries enrolled in such plan
or coverage;
``(ii) a list of each therapeutic class (as
defined by the Secretary) for which a claim was
filed under the group health plan or health
insurance coverage during the reporting period,
and, with respect to each such therapeutic
class--
``(I) the total gross spending on
drugs in such class before rebates,
price concessions, alternative
discounts, or other remuneration from
applicable entities;
``(II) the net spending in such
class after such rebates, price
concessions, alternative discounts, or
other remuneration from applicable
entities;
``(III) the total amount received,
or expected to be received, by the
entity providing pharmacy benefit
management services, from applicable
entities, in rebates, fees, alternative
discounts, or other remuneration from
such entities--
``(aa) for claims incurred
during the reporting period;
and
``(bb) that is related to
utilization of drugs or drug
spending;
``(IV) the average net spending per
30-day supply and per 90-day supply by
the plan or by the issuer with respect
to such coverage and its participants
and beneficiaries, among all drugs
within the therapeutic class for which
a claim was filed during the reporting
period;
``(V) the number of participants
and beneficiaries who filled a
prescription for a drug in such class,
including the National Drug Code for
each such drug;
``(VI) if applicable, a description
of the formulary tiers and utilization
mechanisms (such as prior authorization
or step therapy) employed for drugs in
that class; and
``(VII) the total out-of-pocket
spending under the plan or coverage by
participants and beneficiaries,
including spending through copayments,
coinsurance, and deductibles, but not
including any amounts spent by
participants and beneficiaries on drugs
not covered under the plan or coverage
or for which no claim is submitted
under the plan or coverage;
``(iii) with respect to any drug for which
gross spending under the group health plan or
health insurance coverage exceeded $10,000
during the reporting period or, in the case
that gross spending under the group health plan
or coverage exceeded $10,000 during the
reporting period with respect to fewer than 50
drugs, with respect to the 50 prescription
drugs with the highest spending during the
reporting period--
``(I) a list of all other drugs in
the same therapeutic class as such
drug;
``(II) if applicable, the rationale
for the formulary placement of such
drug in that therapeutic category or
class, selected from a list of standard
rationales established by the
Secretary, in consultation with
stakeholders; and
``(III) any change in formulary
placement compared to the prior plan
year; and
``(iv) in the case that such plan or issuer
(or an entity providing pharmacy benefit
management services on behalf of such plan or
issuer) has an affiliated pharmacy or pharmacy
under common ownership, including mandatory
mail and specialty home delivery programs,
retail and mail auto-refill programs, and cost
sharing assistance incentives funded by an
entity providing pharmacy benefit services--
``(I) an explanation of any benefit
design parameters that encourage or
require participants and beneficiaries
in the plan or coverage to fill
prescriptions at mail order, specialty,
or retail pharmacies;
``(II) the percentage of total
prescriptions dispensed by such
pharmacies to participants or
beneficiaries in such plan or coverage;
and
``(III) a list of all drugs
dispensed by such pharmacies to
participants or beneficiaries enrolled
in such plan or coverage, and, with
respect to each drug dispensed--
``(aa) the amount charged,
per dosage unit, per 30-day
supply, or per 90-day supply
(as applicable) to the plan or
issuer, and to participants and
beneficiaries;
``(bb) the median amount
charged to such plan or issuer,
and the interquartile range of
the costs, per dosage unit, per
30-day supply, and per 90-day
supply, including amounts paid
by the participants and
beneficiaries, when the same
drug is dispensed by other
pharmacies that are not
affiliated with or under common
ownership with the entity and
that are included in the
pharmacy network of such plan
or coverage;
``(cc) the lowest cost per
dosage unit, per 30-day supply
and per 90-day supply, for each
such drug, including amounts
charged to the plan or coverage
and to participants and
beneficiaries, that is
available from any pharmacy
included in the network of such
plan or coverage; and
``(dd) the net acquisition
cost per dosage unit, per 30-
day supply, and per 90-day
supply, if such drug is subject
to a maximum price discount;
and
``(B) with respect to any group health plan,
including group health insurance coverage offered in
connection with such a plan, regardless of whether the
plan or coverage is offered by a specified large
employer or whether it is a specified large plan--
``(i) a summary document for the group
health plan that includes such information
described in clauses (i) through (iv) of
subparagraph (A), as specified by the Secretary
through guidance, program instruction, or
otherwise (with no requirement of notice and
comment rulemaking), that the Secretary
determines useful to group health plans for
purposes of selecting pharmacy benefit
management services, such as an estimated net
price to group health plan and participant or
beneficiary, a cost per claim, the fee
structure or reimbursement model, and estimated
cost per participant or beneficiary;
``(ii) a summary document for plans and
issuers to provide to participants and
beneficiaries, which shall be made available to
participants or beneficiaries upon request to
their group health plan (including in the case
of group health insurance coverage offered in
connection with such a plan), that--
``(I) contains such information
described in clauses (iii), (iv), (v),
and (vi), as applicable, as specified
by the Secretary through guidance,
program instruction, or otherwise (with
no requirement of notice and comment
rulemaking) that the Secretary
determines useful to participants or
beneficiaries in better understanding
the plan or coverage or benefits under
such plan or coverage;
``(II) contains only aggregate
information; and
``(III) states that participants
and beneficiaries may request specific,
claims-level information required to be
furnished under subsection (c) from the
group health plan or health insurance
issuer;
``(iii) with respect to drugs covered by
such plan or coverage during such reporting
period--
``(I) the total net spending by the
plan or coverage for all such drugs;
``(II) the total amount received,
or expected to be received, by the plan
or issuer from any applicable entity in
rebates, fees, alternative discounts,
or other remuneration; and
``(III) to the extent feasible,
information on the total amount of
remuneration for such drugs, including
copayment assistance dollars paid,
copayment cards applied, or other
discounts provided by each drug
manufacturer (or entity administering
copayment assistance on behalf of such
drug manufacturer) to participants and
beneficiaries;
``(iv) amounts paid directly or indirectly
in rebates, fees, or any other type of
compensation (as defined in section
408(b)(2)(B)(ii)(dd)(AA)) to brokerage firms,
brokers, consultants, advisors, or any other
individual or firm, for--
``(I) the referral of the group
health plan's or health insurance
issuer's business to an entity
providing pharmacy benefit management
services, including the identity of the
recipient of such amounts;
``(II) consideration of the entity
providing pharmacy benefit management
services by the group health plan or
health insurance issuer; or
``(III) the retention of the entity
by the group health plan or health
insurance issuer;
``(v) an explanation of any benefit design
parameters that encourage or require
participants and beneficiaries in such plan or
coverage to fill prescriptions at mail order,
specialty, or retail pharmacies that are
affiliated with or under common ownership with
the entity providing pharmacy benefit
management services under such plan or
coverage, including mandatory mail and
specialty home delivery programs, retail and
mail auto-refill programs, and cost-sharing
assistance incentives directly or indirectly
funded by such entity; and
``(vi) total gross spending on all drugs
under the plan or coverage during the reporting
period.
``(3) Opt-in for group health insurance coverage offered by
a specified large employer or that is a specified large plan.--
In the case of group health insurance coverage offered in
connection with a group health plan that is offered by a
specified large employer or is a specified large plan, such
group health plan may, on an annual basis, for plan years
beginning on or after the date that is 30 months after the date
of enactment of this section, elect to require an entity
providing pharmacy benefit management services on behalf of the
health insurance issuer to submit to such group health plan a
report that includes all of the information described in
paragraph (2)(A), in addition to the information described in
paragraph (2)(B).
``(4) Privacy requirements.--
``(A) In general.--An entity providing pharmacy
benefit management services on behalf of a group health
plan or a health insurance issuer offering group health
insurance coverage shall report information under
paragraph (1) in a manner consistent with the privacy
regulations promulgated under section 13402(a) of the
Health Information Technology for Economic and Clinical
Health Act (42 U.S.C. 17932(a)) and consistent with the
privacy regulations promulgated under the Health
Insurance Portability and Accountability Act of 1996 in
part 160 and subparts A and E of part 164 of title 45,
Code of Federal Regulations (or successor regulations)
(referred to in this paragraph as the `HIPAA privacy
regulations') and shall restrict the use and disclosure
of such information according to such privacy
regulations and such HIPAA privacy regulations.
``(B) Additional requirements.--
``(i) In general.--An entity providing
pharmacy benefit management services on behalf
of a group health plan or health insurance
issuer offering group health insurance coverage
that submits a report under paragraph (1) shall
ensure that such report contains only summary
health information, as defined in section
164.504(a) of title 45, Code of Federal
Regulations (or successor regulations).
``(ii) Restrictions.--In carrying out this
subsection, a group health plan shall comply
with section 164.504(f) of title 45, Code of
Federal Regulations (or a successor
regulation), and a plan sponsor shall act in
accordance with the terms of the agreement
described in such section.
``(C) Rule of construction.--
``(i) Nothing in this section shall be
construed to modify the requirements for the
creation, receipt, maintenance, or transmission
of protected health information under the HIPAA
privacy regulations.
``(ii) Nothing in this section shall be
construed to affect the application of any
Federal or State privacy or civil rights law,
including the HIPAA privacy regulations, the
Genetic Information Nondiscrimination Act of
2008 (Public Law 110-233) (including the
amendments made by such Act), the Americans
with Disabilities Act of 1990 (42 U.S.C. 12101
et sec), section 504 of the Rehabilitation Act
of 1973 (29 U.S.C. 794), section 1557 of the
Patient Protection and Affordable Care Act (42
U.S.C. 18116), title VI of the Civil Rights Act
of 1964 (42 U.S.C. 2000d), and title VII of the
Civil Rights Act of 1964 (42 U.S.C. 2000e).
``(D) Written notice.--Each plan year, group health
plans, including with respect to group health insurance
coverage offered in connection with a group health
plan, shall provide to each participant or beneficiary
written notice informing the participant or beneficiary
of the requirement for entities providing pharmacy
benefit management services on behalf of the group
health plan or health insurance issuer offering group
health insurance coverage to submit reports to group
health plans under paragraph (1), as applicable, which
may include incorporating such notification in plan
documents provided to the participant or beneficiary,
or providing individual notification.
``(E) Limitation to business associates.--A group
health plan receiving a report under paragraph (1) may
disclose such information only to the entity from which
the report was received or to that entity's business
associates as defined in section 160.103 of title 45,
Code of Federal Regulations (or successor regulations)
or as permitted by the HIPAA privacy regulations.
``(F) Clarification regarding public disclosure of
information.--Nothing in this section shall prevent an
entity providing pharmacy benefit management services
on behalf of a group health plan or health insurance
issuer offering group health insurance coverage, from
placing reasonable restrictions on the public
disclosure of the information contained in a report
described in paragraph (1), except that such plan,
issuer, or entity may not--
``(i) restrict disclosure of such report to
the Department of Health and Human Services,
the Department of Labor, or the Department of
the Treasury; or
``(ii) prevent disclosure for the purposes
of subsection (c), or any other public
disclosure requirement under this section.
``(G) Limited form of report.--The Secretary shall
define through rulemaking a limited form of the report
under paragraph (1) required with respect to any group
health plan established by a plan sponsor that is, or
is affiliated with, a drug manufacturer, drug
wholesaler, or other direct participant in the drug
supply chain, in order to prevent anti-competitive
behavior.
``(5) Standard format and regulations.--
``(A) In general.--Not later than 18 months after
the date of enactment of this section, the Secretary
shall specify through rulemaking a standard format for
entities providing pharmacy benefit management services
on behalf of group health plans and health insurance
issuers offering group health insurance coverage, to
submit reports required under paragraph (1).
``(B) Additional regulations.--Not later than 18
months after the date of enactment of this section, the
Secretary shall, through rulemaking, promulgate any
other final regulations necessary to implement the
requirements of this section. In promulgating such
regulations, the Secretary shall, to the extent
practicable, align the reporting requirements under
this section with the reporting requirements under
section 725.
``(c) Requirement To Provide Information to Participants or
Beneficiaries.--A group health plan, including with respect to group
health insurance coverage offered in connection with a group health
plan, upon request of a participant or beneficiary, shall provide to
such participant or beneficiary--
``(1) the summary document described in subsection
(b)(2)(B)(ii); and
``(2) the information described in subsection
(b)(2)(A)(i)(III) with respect to a claim made by or on behalf
of such participant or beneficiary.
``(d) Rule of Construction.--Nothing in this section shall be
construed to permit a health insurance issuer, group health plan,
entity providing pharmacy benefit management services on behalf of a
group health plan or health insurance issuer, or other entity to
restrict disclosure to, or otherwise limit the access of, the Secretary
to a report described in subsection (b)(1) or information related to
compliance with subsections (a), (b), or (c) of this section or section
502(c)(13) by such issuer, plan, or entity.
``(e) Definitions.--In this section:
``(1) Applicable entity.--The term `applicable entity'
means--
``(A) an applicable group purchasing organization,
drug manufacturer, distributor, wholesaler, rebate
aggregator (or other purchasing entity designed to
aggregate rebates), or associated third party;
``(B) any subsidiary, parent, affiliate, or
subcontractor of a group health plan, health insurance
issuer, entity that provides pharmacy benefit
management services on behalf of such a plan or issuer,
or any entity described in subparagraph (A); or
``(C) such other entity as the Secretary may
specify through rulemaking.
``(2) Applicable group purchasing organization.--The term
`applicable group purchasing organization' means a group
purchasing organization that is affiliated with or under common
ownership with an entity providing pharmacy benefit management
services.
``(3) Contracted compensation.--The term `contracted
compensation' means the sum of any ingredient cost and
dispensing fee for a drug (inclusive of the out-of-pocket costs
to the participant or beneficiary), or another analogous
compensation structure that the Secretary may specify through
regulations.
``(4) Gross spending.--The term `gross spending', with
respect to prescription drug benefits under a group health plan
or health insurance coverage, means the amount spent by a group
health plan or health insurance issuer on prescription drug
benefits, calculated before the application of rebates, fees,
alternative discounts, or other remuneration.
``(5) Net spending.--The term `net spending', with respect
to prescription drug benefits under a group health plan or
health insurance coverage, means the amount spent by a group
health plan or health insurance issuer on prescription drug
benefits, calculated after the application of rebates, fees,
alternative discounts, or other remuneration.
``(6) Plan sponsor.--The term `plan sponsor' has the
meaning given such term in section 3(16)(B).
``(7) Remuneration.--The term `remuneration' has the
meaning given such term by the Secretary through rulemaking,
which shall be reevaluated by the Secretary every 5 years.
``(8) Specified large employer.--The term `specified large
employer' means, in connection with a group health plan
(including group health insurance coverage offered in
connection with such a plan) established or maintained by a
single employer, with respect to a calendar year or a plan
year, as applicable, an employer who employed an average of at
least 100 employees on business days during the preceding
calendar year or plan year and who employs at least 1 employee
on the first day of the calendar year or plan year.
``(9) Specified large plan.--The term `specified large
plan' means a group health plan (including group health
insurance coverage offered in connection with such a plan)
established or maintained by a plan sponsor described in clause
(ii) or (iii) of section 3(16)(B) that had an average of at
least 100 participants on business days during the preceding
calendar year or plan year, as applicable.
``(10) Wholesale acquisition cost.--The term `wholesale
acquisition cost' has the meaning given such term in section
1847A(c)(6)(B) of the Social Security Act (42 U.S.C. 1395w-
3a(c)(6)(B)).'';
(B) in section 502 (29 U.S.C. 1132)--
(i) in subsection (a)(6), by striking ``or
(9)'' and inserting ``(9), or (13)'';
(ii) in subsection (b)(3), by striking
``under subsection (c)(9)'' and inserting
``under paragraphs (9) and (13) of subsection
(c)''; and
(iii) in subsection (c), by adding at the
end the following:
``(13) Secretarial enforcement authority relating to
oversight of pharmacy benefit management services.--
``(A) Failure to provide information.--The
Secretary may impose a penalty against a plan
administrator of a group health plan, a health
insurance issuer offering group health insurance
coverage, or an entity providing pharmacy benefit
management services on behalf of such a plan or issuer,
or an applicable entity (as defined in section 726(f))
that violates section 726(a); an entity providing
pharmacy benefit management services on behalf of such
a plan or issuer that fails to provide the information
required under section 726(b); or any person who causes
a group health plan to fail to provide the information
required under section 726(c), in the amount of $10,000
for each day during which such violation continues or
such information is not disclosed or reported.
``(B) False information.--The Secretary may impose
a penalty against a plan administrator of a group
health plan, a health insurance issuer offering group
health insurance coverage, an entity providing pharmacy
benefit management services, or an applicable entity
(as defined in section 726(f)) that knowingly provides
false information under section 726, in an amount not
to exceed $100,000 for each item of false information.
Such penalty shall be in addition to other penalties as
may be prescribed by law.
``(C) Waivers.--The Secretary may waive penalties
under subparagraph (A), or extend the period of time
for compliance with a requirement of this section, for
an entity in violation of section 726 that has made a
good-faith effort to comply with the requirements of
section 726.''; and
(C) in section 732(a) (29 U.S.C. 1191a(a)), by
striking ``section 711'' and inserting ``sections 711
and 726''.
(2) Clerical amendment.--The table of contents in section 1
of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1001 et seq.) is amended by inserting after the item
relating to section 725 the following new item:
``Sec. 726. Oversight of entities that provide pharmacy benefit
management services.''.
(c) Internal Revenue Code of 1986.--
(1) In general.--Chapter 100 of the Internal Revenue Code
of 1986 is amended--
(A) by adding at the end of subchapter B the
following:
``SEC. 9826. OVERSIGHT OF ENTITIES THAT PROVIDE PHARMACY BENEFIT
MANAGEMENT SERVICES.
``(a) In General.--For plan years beginning on or after the date
that is 30 months after the date of enactment of this section (referred
to in this subsection and subsection (b) as the `effective date'), a
group health plan, or an entity providing pharmacy benefit management
services on behalf of such a plan, shall not enter into a contract,
including an extension or renewal of a contract, entered into on or
after the effective date, with an applicable entity unless such
applicable entity agrees to--
``(1) not limit or delay the disclosure of information to
the group health plan in such a manner that prevents an entity
providing pharmacy benefit management services on behalf of a
group health plan from making the reports described in
subsection (b); and
``(2) provide the entity providing pharmacy benefit
management services on behalf of a group health plan relevant
information necessary to make the reports described in
subsection (b).
``(b) Reports.--
``(1) In general.--For plan years beginning on or after the
effective date, in the case of any contract between a group
health plan and an entity providing pharmacy benefit management
services on behalf of such plan, including an extension or
renewal of such a contract, entered into on or after the
effective date, the entity providing pharmacy benefit
management services on behalf of such a group health plan, not
less frequently than every 6 months (or, at the request of a
group health plan, not less frequently than quarterly, and
under the same conditions, terms, and cost of the semiannual
report under this subsection), shall submit to the group health
plan a report in accordance with this section. Each such report
shall be made available to such group health plan in plain
language, in a machine-readable format, and as the Secretary
may determine, other formats. Each such report shall include
the information described in paragraph (2).
``(2) Information described.--For purposes of paragraph
(1), the information described in this paragraph is, with
respect to drugs covered by a group health plan during each
reporting period--
``(A) in the case of a group health plan that is
offered by a specified large employer or that is a
specified large plan, and is not offered as health
insurance coverage, or in the case of health insurance
coverage for which the election under paragraph (3) is
made for the applicable reporting period--
``(i) a list of drugs for which a claim was
filed and, with respect to each such drug on
such list--
``(I) the contracted compensation
paid by the group health plan for each
covered drug (identified by the
National Drug Code) to the entity
providing pharmacy benefit management
services or other applicable entity on
behalf of the group health plan;
``(II) the contracted compensation
paid to the pharmacy, by any entity
providing pharmacy benefit management
services or other applicable entity on
behalf of the group health plan, for
each covered drug (identified by the
National Drug Code);
``(III) for each such claim, the
difference between the amount paid
under subclause (I) and the amount paid
under subclause (II);
``(IV) the proprietary name,
established name or proper name, and
National Drug Code;
``(V) for each claim for the drug
(including original prescriptions and
refills) and for each dosage unit of
the drug for which a claim was filed,
the type of dispensing channel used to
furnish the drug, including retail,
mail order, or specialty pharmacy;
``(VI) with respect to each drug
dispensed, for each type of dispensing
channel (including retail, mail order,
or specialty pharmacy)--
``(aa) whether such drug is
a brand name drug or a generic
drug, and--
``(AA) in the case
of a brand name drug,
the wholesale
acquisition cost,
listed as cost per days
supply and cost per
dosage unit, on the
date such drug was
dispensed; and
``(BB) in the case
of a generic drug, the
average wholesale
price, listed as cost
per days supply and
cost per dosage unit,
on the date such drug
was dispensed; and
``(bb) the total number
of--
``(AA) prescription
claims (including
original prescriptions
and refills);
``(BB) participants
and beneficiaries for
whom a claim for such
drug was filed through
the applicable
dispensing channel;
``(CC) dosage units
and dosage units per
fill of such drug; and
``(DD) days supply
of such drug per fill;
``(VII) the net price per course of
treatment or single fill, such as a 30-
day supply or 90-day supply to the plan
after rebates, fees, alternative
discounts, or other remuneration
received from applicable entities;
``(VIII) the total amount of out-
of-pocket spending by participants and
beneficiaries on such drug, including
spending through copayments,
coinsurance, and deductibles, but not
including any amounts spent by
participants and beneficiaries on drugs
not covered under the plan, or for
which no claim is submitted under the
plan;
``(IX) the total net spending on
the drug;
``(X) the total amount received, or
expected to be received, by the plan
from any applicable entity in rebates,
fees, alternative discounts, or other
remuneration;
``(XI) the total amount received,
or expected to be received, by the
entity providing pharmacy benefit
management services, from applicable
entities, in rebates, fees, alternative
discounts, or other remuneration from
such entities--
``(aa) for claims incurred
during the reporting period;
and
``(bb) that is related to
utilization of such drug or
spending on such drug; and
``(XII) to the extent feasible,
information on the total amount of
remuneration for such drug, including
copayment assistance dollars paid,
copayment cards applied, or other
discounts provided by each drug
manufacturer (or entity administering
copayment assistance on behalf of such
drug manufacturer), to the participants
and beneficiaries enrolled in such
plan;
``(ii) a list of each therapeutic class (as
defined by the Secretary) for which a claim was
filed under the group health plan during the
reporting period, and, with respect to each
such therapeutic class--
``(I) the total gross spending on
drugs in such class before rebates,
price concessions, alternative
discounts, or other remuneration from
applicable entities;
``(II) the net spending in such
class after such rebates, price
concessions, alternative discounts, or
other remuneration from applicable
entities;
``(III) the total amount received,
or expected to be received, by the
entity providing pharmacy benefit
management services, from applicable
entities, in rebates, fees, alternative
discounts, or other remuneration from
such entities--
``(aa) for claims incurred
during the reporting period;
and
``(bb) that is related to
utilization of drugs or drug
spending;
``(IV) the average net spending per
30-day supply and per 90-day supply by
the plan and its participants and
beneficiaries, among all drugs within
the therapeutic class for which a claim
was filed during the reporting period;
``(V) the number of participants
and beneficiaries who filled a
prescription for a drug in such class,
including the National Drug Code for
each such drug;
``(VI) if applicable, a description
of the formulary tiers and utilization
mechanisms (such as prior authorization
or step therapy) employed for drugs in
that class; and
``(VII) the total out-of-pocket
spending under the plan by participants
and beneficiaries, including spending
through copayments, coinsurance, and
deductibles, but not including any
amounts spent by participants and
beneficiaries on drugs not covered
under the plan or for which no claim is
submitted under the plan;
``(iii) with respect to any drug for which
gross spending under the group health plan
exceeded $10,000 during the reporting period
or, in the case that gross spending under the
group health plan exceeded $10,000 during the
reporting period with respect to fewer than 50
drugs, with respect to the 50 prescription
drugs with the highest spending during the
reporting period--
``(I) a list of all other drugs in
the same therapeutic class as such
drug;
``(II) if applicable, the rationale
for the formulary placement of such
drug in that therapeutic category or
class, selected from a list of standard
rationales established by the
Secretary, in consultation with
stakeholders; and
``(III) any change in formulary
placement compared to the prior plan
year; and
``(iv) in the case that such plan (or an
entity providing pharmacy benefit management
services on behalf of such plan) has an
affiliated pharmacy or pharmacy under common
ownership, including mandatory mail and
specialty home delivery programs, retail and
mail auto-refill programs, and cost sharing
assistance incentives funded by an entity
providing pharmacy benefit services--
``(I) an explanation of any benefit
design parameters that encourage or
require participants and beneficiaries
in the plan to fill prescriptions at
mail order, specialty, or retail
pharmacies;
``(II) the percentage of total
prescriptions dispensed by such
pharmacies to participants or
beneficiaries in such plan; and
``(III) a list of all drugs
dispensed by such pharmacies to
participants or beneficiaries enrolled
in such plan, and, with respect to each
drug dispensed--
``(aa) the amount charged,
per dosage unit, per 30-day
supply, or per 90-day supply
(as applicable) to the plan,
and to participants and
beneficiaries;
``(bb) the median amount
charged to such plan, and the
interquartile range of the
costs, per dosage unit, per 30-
day supply, and per 90-day
supply, including amounts paid
by the participants and
beneficiaries, when the same
drug is dispensed by other
pharmacies that are not
affiliated with or under common
ownership with the entity and
that are included in the
pharmacy network of such plan;
``(cc) the lowest cost per
dosage unit, per 30-day supply
and per 90-day supply, for each
such drug, including amounts
charged to the plan and to
participants and beneficiaries,
that is available from any
pharmacy included in the
network of such plan; and
``(dd) the net acquisition
cost per dosage unit, per 30-
day supply, and per 90-day
supply, if such drug is subject
to a maximum price discount;
and
``(B) with respect to any group health plan,
regardless of whether the plan is offered by a
specified large employer or whether it is a specified
large plan--
``(i) a summary document for the group
health plan that includes such information
described in clauses (i) through (iv) of
subparagraph (A), as specified by the Secretary
through guidance, program instruction, or
otherwise (with no requirement of notice and
comment rulemaking), that the Secretary
determines useful to group health plans for
purposes of selecting pharmacy benefit
management services, such as an estimated net
price to group health plan and participant or
beneficiary, a cost per claim, the fee
structure or reimbursement model, and estimated
cost per participant or beneficiary;
``(ii) a summary document for plans to
provide to participants and beneficiaries,
which shall be made available to participants
or beneficiaries upon request to their group
health plan, that--
``(I) contains such information
described in clauses (iii), (iv), (v),
and (vi), as applicable, as specified
by the Secretary through guidance,
program instruction, or otherwise (with
no requirement of notice and comment
rulemaking) that the Secretary
determines useful to participants or
beneficiaries in better understanding
the plan or benefits under such plan;
``(II) contains only aggregate
information; and
``(III) states that participants
and beneficiaries may request specific,
claims-level information required to be
furnished under subsection (c) from the
group health plan; and
``(iii) with respect to drugs covered by
such plan during such reporting period--
``(I) the total net spending by the
plan for all such drugs;
``(II) the total amount received,
or expected to be received, by the plan
from any applicable entity in rebates,
fees, alternative discounts, or other
remuneration; and
``(III) to the extent feasible,
information on the total amount of
remuneration for such drugs, including
copayment assistance dollars paid,
copayment cards applied, or other
discounts provided by each drug
manufacturer (or entity administering
copayment assistance on behalf of such
drug manufacturer) to participants and
beneficiaries;
``(iv) amounts paid directly or indirectly
in rebates, fees, or any other type of
compensation (as defined in section
408(b)(2)(B)(ii)(dd)(AA) of the Employee
Retirement Income Security Act (29 U.S.C.
1108(b)(2)(B)(ii)(dd)(AA))) to brokerage firms,
brokers, consultants, advisors, or any other
individual or firm, for--
``(I) the referral of the group
health plan's business to an entity
providing pharmacy benefit management
services, including the identity of the
recipient of such amounts;
``(II) consideration of the entity
providing pharmacy benefit management
services by the group health plan; or
``(III) the retention of the entity
by the group health plan;
``(v) an explanation of any benefit design
parameters that encourage or require
participants and beneficiaries in such plan to
fill prescriptions at mail order, specialty, or
retail pharmacies that are affiliated with or
under common ownership with the entity
providing pharmacy benefit management services
under such plan, including mandatory mail and
specialty home delivery programs, retail and
mail auto-refill programs, and cost-sharing
assistance incentives directly or indirectly
funded by such entity; and
``(vi) total gross spending on all drugs
under the plan during the reporting period.
``(3) Opt-in for group health insurance coverage offered by
a specified large employer or that is a specified large plan.--
In the case of group health insurance coverage offered in
connection with a group health plan that is offered by a
specified large employer or is a specified large plan, such
group health plan may, on an annual basis, for plan years
beginning on or after the date that is 30 months after the date
of enactment of this section, elect to require an entity
providing pharmacy benefit management services on behalf of the
health insurance issuer to submit to such group health plan a
report that includes all of the information described in
paragraph (2)(A), in addition to the information described in
paragraph (2)(B).
``(4) Privacy requirements.--
``(A) In general.--An entity providing pharmacy
benefit management services on behalf of a group health
plan shall report information under paragraph (1) in a
manner consistent with the privacy regulations
promulgated under section 13402(a) of the Health
Information Technology for Economic and Clinical Health
Act (42 U.S.C. 17932(a)) and consistent with the
privacy regulations promulgated under the Health
Insurance Portability and Accountability Act of 1996 in
part 160 and subparts A and E of part 164 of title 45,
Code of Federal Regulations (or successor regulations)
(referred to in this paragraph as the `HIPAA privacy
regulations') and shall restrict the use and disclosure
of such information according to such privacy
regulations and such HIPAA privacy regulations.
``(B) Additional requirements.--
``(i) In general.--An entity providing
pharmacy benefit management services on behalf
of a group health plan that submits a report
under paragraph (1) shall ensure that such
report contains only summary health
information, as defined in section 164.504(a)
of title 45, Code of Federal Regulations (or
successor regulations).
``(ii) Restrictions.--In carrying out this
subsection, a group health plan shall comply
with section 164.504(f) of title 45, Code of
Federal Regulations (or a successor
regulation), and a plan sponsor shall act in
accordance with the terms of the agreement
described in such section.
``(C) Rule of construction.--
``(i) Nothing in this section shall be
construed to modify the requirements for the
creation, receipt, maintenance, or transmission
of protected health information under the HIPAA
privacy regulations.
``(ii) Nothing in this section shall be
construed to affect the application of any
Federal or State privacy or civil rights law,
including the HIPAA privacy regulations, the
Genetic Information Nondiscrimination Act of
2008 (Public Law 110-233) (including the
amendments made by such Act), the Americans
with Disabilities Act of 1990 (42 U.S.C. 12101
et sec), section 504 of the Rehabilitation Act
of 1973 (29 U.S.C. 794), section 1557 of the
Patient Protection and Affordable Care Act (42
U.S.C. 18116), title VI of the Civil Rights Act
of 1964 (42 U.S.C. 2000d), and title VII of the
Civil Rights Act of 1964 (42 U.S.C. 2000e).
``(D) Written notice.--Each plan year, group health
plans shall provide to each participant or beneficiary
written notice informing the participant or beneficiary
of the requirement for entities providing pharmacy
benefit management services on behalf of the group
health plan to submit reports to group health plans
under paragraph (1), as applicable, which may include
incorporating such notification in plan documents
provided to the participant or beneficiary, or
providing individual notification.
``(E) Limitation to business associates.--A group
health plan receiving a report under paragraph (1) may
disclose such information only to the entity from which
the report was received or to that entity's business
associates as defined in section 160.103 of title 45,
Code of Federal Regulations (or successor regulations)
or as permitted by the HIPAA privacy regulations.
``(F) Clarification regarding public disclosure of
information.--Nothing in this section shall prevent an
entity providing pharmacy benefit 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), except that such plan or entity may
not--
``(i) restrict disclosure of such report to
the Department of Health and Human Services,
the Department of Labor, or the Department of
the Treasury; or
``(ii) prevent disclosure for the purposes
of subsection (c), or any other public
disclosure requirement under this section.
``(G) Limited form of report.--The Secretary shall
define through rulemaking a limited form of the report
under paragraph (1) required with respect to any group
health plan established by a plan sponsor that is, or
is affiliated with, a drug manufacturer, drug
wholesaler, or other direct participant in the drug
supply chain, in order to prevent anti-competitive
behavior.
``(5) Standard format and regulations.--
``(A) In general.--Not later than 18 months after
the date of enactment of this section, the Secretary
shall specify through rulemaking a standard format for
entities providing pharmacy benefit management services
on behalf of group health plans, to submit reports
required under paragraph (1).
``(B) Additional regulations.--Not later than 18
months after the date of enactment of this section, the
Secretary shall, through rulemaking, promulgate any
other final regulations necessary to implement the
requirements of this section. In promulgating such
regulations, the Secretary shall, to the extent
practicable, align the reporting requirements under
this section with the reporting requirements under
section 9825.
``(c) Requirement To Provide Information to Participants or
Beneficiaries.--A group health plan, upon request of a participant or
beneficiary, shall provide to such participant or beneficiary--
``(1) the summary document described in subsection
(b)(2)(B)(ii); and
``(2) the information described in subsection
(b)(2)(A)(i)(III) with respect to a claim made by or on behalf
of such participant or beneficiary.
``(d) Rule of Construction.--Nothing in this section shall be
construed to permit a health insurance issuer, group health plan,
entity providing pharmacy benefit management services on behalf of a
group health plan or health insurance issuer, or other entity to
restrict disclosure to, or otherwise limit the access of, the Secretary
to a report described in subsection (b)(1) or information related to
compliance with subsections (a), (b), or (c) of this section or section
4980D(g) by such issuer, plan, or entity.
``(e) Definitions.--In this section:
``(1) Applicable entity.--The term `applicable entity'
means--
``(A) an applicable group purchasing organization,
drug manufacturer, distributor, wholesaler, rebate
aggregator (or other purchasing entity designed to
aggregate rebates), or associated third party;
``(B) any subsidiary, parent, affiliate, or
subcontractor of a group health plan, health insurance
issuer, entity that provides pharmacy benefit
management services on behalf of such a plan or issuer,
or any entity described in subparagraph (A); or
``(C) such other entity as the Secretary may
specify through rulemaking.
``(2) Applicable group purchasing organization.--The term
`applicable group purchasing organization' means a group
purchasing organization that is affiliated with or under common
ownership with an entity providing pharmacy benefit management
services.
``(3) Contracted compensation.--The term `contracted
compensation' means the sum of any ingredient cost and
dispensing fee for a drug (inclusive of the out-of-pocket costs
to the participant or beneficiary), or another analogous
compensation structure that the Secretary may specify through
regulations.
``(4) Gross spending.--The term `gross spending', with
respect to prescription drug benefits under a group health
plan, means the amount spent by a group health plan on
prescription drug benefits, calculated before the application
of rebates, fees, alternative discounts, or other remuneration.
``(5) Net spending.--The term `net spending', with respect
to prescription drug benefits under a group health plan, means
the amount spent by a group health plan on prescription drug
benefits, calculated after the application of rebates, fees,
alternative discounts, or other remuneration.
``(6) Plan sponsor.--The term `plan sponsor' has the
meaning given such term in section 3(16)(B) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1002(16)(B)).
``(7) Remuneration.--The term `remuneration' has the
meaning given such term by the Secretary, through rulemaking,
which shall be reevaluated by the Secretary every 5 years.
``(8) Specified large employer.--The term `specified large
employer' means, in connection with a group health plan
established or maintained by a single employer, with respect to
a calendar year or a plan year, as applicable, an employer who
employed an average of at least 100 employees on business days
during the preceding calendar year or plan year and who employs
at least 1 employee on the first day of the calendar year or
plan year.
``(9) Specified large plan.--The term `specified large
plan' means a group health plan established or maintained by a
plan sponsor described in clause (ii) or (iii) of section
3(16)(B) of the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1002(16)(B)) that had an average of at least 100
participants on business days during the preceding calendar
year or plan year, as applicable.
``(10) Wholesale acquisition cost.--The term `wholesale
acquisition cost' has the meaning given such term in section
1847A(c)(6)(B) of the Social Security Act (42 U.S.C. 1395w-
3a(c)(6)(B)).'';
(2) Exception for certain group health plans.--Section
9831(a)(2) of the Internal Revenue Code of 1986 is amended by
inserting ``other than with respect to section 9826,'' before
``any group health plan''.
(3) Enforcement.--Section 4980D of the Internal Revenue
Code of 1986 is amended by adding at the end the following new
subsection:
``(g) Application to Requirements Imposed on Certain Entities
Providing Pharmacy Benefit Management Services.--In the case of any
requirement under section 9826 that applies with respect to an entity
providing pharmacy benefit management services on behalf of a group
health plan, any reference in this section to such group health plan
(and the reference in subsection (e)(1) to the employer) shall be
treated as including a reference to such entity.''.
(4) 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 new item:
``Sec. 9826. Oversight of entities that provide pharmacy benefit
management services.''.
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