Drug Price Transparency Act of 2021

II 117TH CONGRESS 1ST SESSION S. 1523 To amend title XI of the Social Security Act and title XXVII of the Public Health Service Act to establish requirements with respect to prescription drug benefits. IN THE SENATE OF THE UNITED STATES APRIL 29, 2021 Mr. BRAUN (for himself and Mrs. HYDE-SMITH) introduced the following bill; which was read twice and referred to the Committee on Health, Edu- cation, Labor, and Pensions A BILL To amend title XI of the Social Security Act and title XXVII of the Public Health Service Act to establish require- ments with respect to prescription drug benefits. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Drug Price Trans- 4 parency Act of 2021’’. 5 SEC. 2. REQUIREMENTS FOR PRESCRIPTION DRUG BENE- 6 FITS. 7 (a) REMOVAL OF SAFE HARBOR PROTECTION FOR 8 REBATES INVOLVING PRESCRIPTION DRUGS AND ESTAB- 9 VerDate Sep 11 2014 01:41 May 25, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1523.IS S1523 kjohnson on DSK79L0C42PROD with BILLS 2 •S 1523 IS LISHMENT OF NEW SAFE HARBOR PROTECTIONS IN- 1 VOLVING PRESCRIPTION DRUGS.— 2 (1) REMOVAL OF SAFE HARBOR PROTECTION 3 FOR REBATES INVOLVING PRESCRIPTION DRUGS.— 4 Section 1128B(b) of the Social Security Act (42 5 U.S.C. 1320a–7b(b)) is amended— 6 (A) in paragraph (3)(A), by striking ‘‘a 7 discount’’ and inserting ‘‘subject to paragraph 8 (5), a discount’’; and 9 (B) by adding at the end the following: 10 ‘‘(5) REMOVAL OF SAFE HARBOR PROTECTION 11 FOR REBATES INVOLVING PRESCRIPTION DRUGS.— 12 The safe harbor described in paragraph (3)(A) shall 13 not apply to a reduction in price or other remunera- 14 tion from a manufacturer of prescription drugs to a 15 sponsor of a prescription drug plan under part D of 16 title XVIII, an MA organization offering an MA–PD 17 plan under part C of such title, or a pharmacy ben- 18 efit manager under contract with such a sponsor or 19 such an organization and, except as provided in sub- 20 paragraphs (L) and (M) of paragraph (3), para- 21 graphs (1) and (2) shall apply to any such reduction 22 in price or other remuneration.’’. 23 (2) ESTABLISHMENT OF NEW SAFE HARBOR 24 PROTECTIONS INVOLVING PRESCRIPTION DRUGS .— 25 VerDate Sep 11 2014 01:41 May 25, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1523.IS S1523 kjohnson on DSK79L0C42PROD with BILLS 3 •S 1523 IS Section 1128B(b)(3) of the Social Security Act (42 1 U.S.C. 1320a–7b(b)(3)) is amended— 2 (A) in subparagraph (J), by striking ‘‘and’’ 3 at the end; 4 (B) in subparagraph (K), by striking the 5 period at the end and inserting a semicolon; 6 and 7 (C) by adding at the end the following: 8 ‘‘(L) a reduction in price offered by a man- 9 ufacturer of prescription drugs to a sponsor of 10 a prescription drug plan under part D of title 11 XVIII, an MA organization offering an MA–PD 12 plan under part C of such title, or a pharmacy 13 benefit manager under contract with such a 14 sponsor or such an organization, that is re- 15 flected at the point of sale to the individual and 16 meets such other conditions as the Secretary 17 may establish; and 18 ‘‘(M) flat fee service fees a manufacturer 19 of prescription drugs pays to a pharmacy ben- 20 efit manager for services rendered to the manu- 21 facturer that relate to arrangements by the 22 pharmacy benefit manager to provide pharmacy 23 benefit management services to a health plan, if 24 certain conditions established by the Secretary 25 VerDate Sep 11 2014 01:41 May 25, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1523.IS S1523 kjohnson on DSK79L0C42PROD with BILLS 4 •S 1523 IS are met, including requirements that the fees 1 are transparent to the health plan.’’. 2 (3) EFFECTIVE DATE.—The amendments made 3 by this subsection shall take effect on January 1, 4 2023. 5 (b) REQUIREMENTS FOR PRIVATE INSURANCE 6 PLANS.— 7 (1) IN GENERAL.—Part D of title XXVII of the 8 Public Health Service Act (42 U.S.C. 300gg–111 et 9 seq.) is amended by adding at the end the following: 10 ‘‘SEC. 2799A–11. REQUIREMENTS WITH RESPECT TO PRE- 11 SCRIPTION DRUG BENEFITS. 12 ‘‘(a) IN GENERAL.—A group health plan or a health 13 insurance issuer offering group or individual health insur- 14 ance coverage shall not, and shall ensure that any entity 15 that provides pharmacy benefits management services 16 under a contract with any such health plan or health in- 17 surance coverage does not, receive from a drug manufac- 18 turer a reduction in price or other remuneration with re- 19 spect to any prescription drug received by an enrollee in 20 the plan or coverage and covered by the plan or coverage, 21 unless— 22 ‘‘(1) any such reduction in price is reflected at 23 the point of sale to the enrollee and meets such 24 other conditions as the Secretary may establish; and 25 VerDate Sep 11 2014 01:41 May 25, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1523.IS S1523 kjohnson on DSK79L0C42PROD with BILLS 5 •S 1523 IS ‘‘(2) any such other remuneration is a flat fee- 1 based service fee that a manufacturer of prescription 2 drugs pays to an entity that provides pharmacy ben- 3 efits management services for services rendered to 4 the manufacturer that relate to arrangements by the 5 pharmacy benefit manager to provide pharmacy ben- 6 efit management services to a health plan or health 7 insurance issuer, if certain conditions established by 8 the Secretary are met, including requirements that 9 the fees are transparent to the health plan or health 10 insurance issuer. 11 ‘‘(b) ENTITY THAT PROVIDES PHARMACY BENEFITS 12 MANAGEMENT SERVICES.—For purposes of this section, 13 the term ‘entity that provides pharmacy benefits manage- 14 ment services’ means— 15 ‘‘(1) any person, business, or other entity that, 16 pursuant to a written agreement with a group health 17 plan or a health insurance issuer offering group or 18 individual health insurance coverage, directly or 19 through an intermediary— 20 ‘‘(A) acts as a price negotiator on behalf of 21 the plan or coverage; or 22 ‘‘(B) manages the prescription drug bene- 23 fits provided by the plan or coverage, which 24 may include the processing and payment of 25 VerDate Sep 11 2014 01:41 May 25, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1523.IS S1523 kjohnson on DSK79L0C42PROD with BILLS 6 •S 1523 IS claims for prescription drugs, the performance 1 of drug utilization review, the processing of 2 drug prior authorization requests, the adjudica- 3 tion of appeals or grievances related to the pre- 4 scription drug benefit, contracting with network 5 pharmacies, controlling the cost of covered pre- 6 scription drugs, or the provision of related serv- 7 ices; or 8 ‘‘(2) any entity that is owned, affiliated, or re- 9 lated under a common ownership structure with a 10 person, business, or entity described in paragraph 11 (1).’’. 12 (2) ERISA.— 13 (A) IN GENERAL.—Subpart B of part 7 of 14 subtitle B of title I of the Employee Retirement 15 Income Security Act of 1974 (29 U.S.C. 1185 16 et seq.) is amended by adding at the end the 17 following: 18 ‘‘SEC. 726. REQUIREMENTS WITH RESPECT TO PRESCRIP- 19 TION DRUG BENEFITS. 20 ‘‘(a) IN GENERAL.—A group health plan or a health 21 insurance issuer offering group health insurance coverage 22 shall not, and shall ensure that any entity that provides 23 pharmacy benefits management services under a contract 24 with any such health plan or health insurance coverage 25 VerDate Sep 11 2014 01:41 May 25, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1523.IS S1523 kjohnson on DSK79L0C42PROD with BILLS 7 •S 1523 IS does not, receive from a drug manufacturer a reduction 1 in price or other remuneration with respect to any pre- 2 scription drug received by an enrollee in the plan or cov- 3 erage and covered by the plan or coverage, unless— 4 ‘‘(1) any such reduction in price is reflected at 5 the point of sale to the enrollee and meets such 6 other conditions as the Secretary may establish; and 7 ‘‘(2) any such other remuneration is a flat fee- 8 based service fee that a manufacturer of prescription 9 drugs pays to an entity that provides pharmacy ben- 10 efits management services for services rendered to 11 the manufacturer that relate to arrangements by the 12 pharmacy benefit manager to provide pharmacy ben- 13 efit management services to a health plan or health 14 insurance issuer, if certain conditions established by 15 the Secretary are met, including requirements that 16 the fees are transparent to the health plan or health 17 insurance issuer. 18 ‘‘(b) ENTITY THAT PROVIDES PHARMACY BENEFITS 19 MANAGEMENT SERVICES.—For purposes of this section, 20 the term ‘entity that provides pharmacy benefits manage- 21 ment services’ means— 22 ‘‘(1) any person, business, or other entity that, 23 pursuant to a written agreement with a group health 24 plan or a health insurance issuer offering group 25 VerDate Sep 11 2014 01:41 May 25, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S1523.IS S1523 kjohnson on DSK79L0C42PROD with BILLS 8 •S 1523 IS health insurance coverage, directly or through an 1 intermediary— 2 ‘‘(A) acts as a price negotiator on behalf of 3 the plan or coverage; or 4 ‘‘(B) manages the prescription drug bene- 5 fits provided by the plan or coverage, which 6 may include the processing and payment of 7 claims for prescription drugs, the performance 8 of drug utilization review, the processing of 9 drug prior authorization requests, the adjudica- 10 tion of appeals or grievances related to the pre- 11 scription drug benefit, contracting with network 12 pharmacies, controlling the cost of covered pre- 13 scription drugs, or the provision of related serv- 14 ices; or 15 ‘‘(2) any entity that is owned, affiliated, or re- 16 lated under a common ownership structure with a 17 person, business, or entity described in paragraph 18 (1).’’. 19 (B) CLERICAL AMENDMENT.—The table of 20 contents of the Employee Retirement Income 21 Security Act of 1974 is amended by inserting 22 after the item relating to section 725 the fol- 23 lowing: 24 ‘‘Sec. 725. Requirements with respect to prescription drug benefits.’’. (3) IRC.— 25 VerDate Sep 11 2014 01:41 May 25, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S1523.IS S1523 kjohnson on DSK79L0C42PROD with BILLS 9 •S 1523 IS (A) IN GENERAL.—Subchapter B of chap- 1 ter 100 of the Internal Revenue Code of 1986 2 is amended by adding at the end the following: 3 ‘‘SEC. 9826. REQUIREMENTS WITH RESPECT TO PRESCRIP- 4 TION DRUG BENEFITS. 5 ‘‘(a) IN GENERAL.—A group health plan shall not, 6 and shall ensure that any entity that provides pharmacy 7 benefits management services under a contract with any 8 such health plan does not, receive from a drug manufac- 9 turer a reduction in price or other remuneration with re- 10 spect to any prescription drug received by an enrollee in 11 the plan and covered by the plan, unless— 12 ‘‘(1) any such reduction in price is reflected at 13 the point of sale to the enrollee and meets such 14 other conditions as the Secretary may establish; and 15 ‘‘(2) any such other remuneration is a flat fee- 16 based service fee that a manufacturer of prescription 17 drugs pays to an entity that provides pharmacy ben- 18 efits management services for services rendered to 19 the manufacturer that relate to arrangements by the 20 pharmacy benefit manager to provide pharmacy ben- 21 efit management services to a health plan, if certain 22 conditions established by the Secretary are met, in- 23 cluding requirements that the fees are transparent 24 to the health plan. 25 VerDate Sep 11 2014 01:41 May 25, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S1523.IS S1523 kjohnson on DSK79L0C42PROD with BILLS 10 •S 1523 IS ‘‘(b) ENTITY THAT PROVIDES PHARMACY BENEFITS 1 MANAGEMENT SERVICES.—For purposes of this section, 2 the term ‘entity that provides pharmacy benefits manage- 3 ment services’ means— 4 ‘‘(1) any person, business, or other entity that, 5 pursuant to a written agreement with a group health 6 plan, directly or through an intermediary— 7 ‘‘(A) acts as a price negotiator on behalf of 8 the plan; or 9 ‘‘(B) manages the prescription drug bene- 10 fits provided by the plan, which may include the 11 processing and payment of claims for prescrip- 12 tion drugs, the performance of drug utilization 13 review, the processing of drug prior authoriza- 14 tion requests, the adjudication of appeals or 15 grievances related to the prescription drug ben- 16 efit, contracting with network pharmacies, con- 17 trolling the cost of covered prescription drugs, 18 or the provision of related services; or 19 ‘‘(2) any entity that is owned, affiliated, or re- 20 lated under a common ownership structure with a 21 person, business, or entity described in paragraph 22 (1).’’. 23 (B) CLERICAL AMENDMENT.—The table of 24 sections for subchapter B of chapter 100 of the 25 VerDate Sep 11 2014 01:41 May 25, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S1523.IS S1523 kjohnson on DSK79L0C42PROD with BILLS 11 •S 1523 IS Internal Revenue Code of 1986 is amended by 1 adding at the end the following: 2 ‘‘Sec. 9816. Requirements with respect to prescription drug benefits.’’. (4) EFFECTIVE DATE.—The amendments made 3 by paragraphs (1), (2), and (3) shall take effect on 4 January 1, 2023. 5 Æ VerDate Sep 11 2014 01:41 May 25, 2021 Jkt 019200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6301 E:\BILLS\S1523.IS S1523 kjohnson on DSK79L0C42PROD with BILLS