Prescription Drug Price Transparency Act

I 116TH CONGRESS 1ST SESSION H. R. 1035 To amend title XVIII of the Social Security Act to provide for pharmacy benefits manager standards under the Medicare prescription drug pro- gram and Medicare Advantage program to further transparency of pay- ment methodologies to pharmacies, and for other purposes. IN THE HOUSE OF REPRESENTATIVES FEBRUARY 7, 2019 Mr. COLLINS of Georgia (for himself, Mr. LOEBSACK, Mr. DAVID P. ROE of Tennessee, Mr. WESTERMAN, Miss RICE of New York, Mr. KING of Iowa, Ms. CLARKE of New York, Mr. AUSTIN SCOTT of Georgia, Mr. HICE of Georgia, Mr. VELA, Mr. RASKIN, Mrs. RODGERS of Washington, Mr. WELCH, Mr. CARTER of Georgia, Mr. CRAWFORD, Mr. PETERSON, and Mr. BYRNE) introduced the following bill; which was referred to the Com- mittee on Energy and Commerce, and in addition to the Committees on Ways and Means, and Oversight and Reform, for a period to be subse- quently 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 title XVIII of the Social Security Act to provide for pharmacy benefits manager standards under the Medicare prescription drug program and Medicare Ad- vantage program to further transparency of payment methodologies to pharmacies, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 VerDate Sep 11 2014 00:48 Feb 20, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H1035.IH H1035 pamtmann on DSKBFK8HB2PROD with BILLS 2 •HR 1035 IH SECTION 1. SHORT TITLE. 1 This Act may be cited as the ‘‘Prescription Drug 2 Price Transparency Act’’. 3 SEC. 2. PHARMACY BENEFITS MANAGER STANDARDS 4 UNDER THE MEDICARE PROGRAM FOR PRE- 5 SCRIPTION DRUG PLANS AND MA–PD PLANS. 6 (a) IN GENERAL.—Section 1860D–12(b) of the So- 7 cial Security Act (42 U.S.C. 1395w–112(b)) is amended 8 by adding at the end the following new paragraph: 9 ‘‘(8) PHARMACY BENEFITS MANAGER TRANS- 10 PARENCY REQUIREMENTS.—Each contract entered 11 into with a PDP sponsor under this part with re- 12 spect to a prescription drug plan offered by such 13 sponsor or with an MA organization offering an 14 MA–PD plan under part C shall provide that the 15 sponsor or organization, respectively, may not enter 16 into a contract with any pharmacy benefits manager 17 (referred to in this paragraph as a ‘PBM’) to man- 18 age the prescription drug coverage provided under 19 such plan, or to control the costs of the prescription 20 drug coverage under such plan, if the PBM— 21 ‘‘(A) requires that a plan enrollee use a re- 22 tail pharmacy, mail order pharmacy, specialty 23 pharmacy, or other pharmacy entity providing 24 pharmacy services in which the PBM has an 25 VerDate Sep 11 2014 00:48 Feb 20, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H1035.IH H1035 pamtmann on DSKBFK8HB2PROD with BILLS 3 •HR 1035 IH ownership interest or that has an ownership in- 1 terest in the PBM; or 2 ‘‘(B) provides an incentive (including a re- 3 duced copayment or coinsurance) to a plan en- 4 rollee to encourage the enrollee to use a retail 5 pharmacy, mail order pharmacy, specialty phar- 6 macy, or other pharmacy entity providing phar- 7 macy services in which the PBM has an owner- 8 ship interest or that has an ownership interest 9 in the PBM, if the incentive is applicable only 10 to such pharmacies.’’. 11 (b) REGULAR UPDATE OF PRESCRIPTION DRUG 12 PRICING STANDARD.—Paragraph (6) of section 1860D– 13 12(b) of the Social Security Act (42 U.S.C. 1395w– 14 112(b)) is amended to read as follows: 15 ‘‘(6) REGULAR UPDATE OF PRESCRIPTION 16 DRUG PRICING STANDARD.— 17 ‘‘(A) IN GENERAL.—If the PDP sponsor of 18 a prescription drug plan (or MA organization 19 offering an MA–PD plan) uses a standard for 20 reimbursement (as described in subparagraph 21 (B)) of pharmacies based on the cost of a drug, 22 each contract entered into with such sponsor 23 under this part (or organization under part C) 24 VerDate Sep 11 2014 00:48 Feb 20, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H1035.IH H1035 pamtmann on DSKBFK8HB2PROD with BILLS 4 •HR 1035 IH with respect to the plan shall provide that the 1 sponsor (or organization) shall— 2 ‘‘(i) update such standard not less fre- 3 quently than once every 7 days, beginning 4 with an initial update on January 1 of 5 each year, to accurately reflect the market 6 price of acquiring the drug; 7 ‘‘(ii) disclose to applicable pharmacies 8 and the respective contracting entities of 9 such pharmacies the sources used for mak- 10 ing any such update immediately without 11 requirement of request; 12 ‘‘(iii) if the source for such a standard 13 for reimbursement is not publicly available, 14 disclose to the applicable pharmacies and 15 the respective contracting entities of such 16 pharmacies all individual drug prices to be 17 so updated in advance of the use of such 18 prices for the reimbursement of claims; 19 ‘‘(iv) establish a process for applicable 20 pharmacies and respective contracting enti- 21 ties to appeal, investigate, and resolve dis- 22 putes regarding individual drug prices that 23 are less than the pharmacy acquisition 24 price for such drug, which must be adju- 25 VerDate Sep 11 2014 00:48 Feb 20, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H1035.IH H1035 pamtmann on DSKBFK8HB2PROD with BILLS 5 •HR 1035 IH dicated within 7 days of the pharmacy fil- 1 ing its appeal; and 2 ‘‘(v) provide to applicable pharmacies 3 and respective contracting entities all such 4 pricing data in an .xml spreadsheet format 5 or a comparable easily accessible and com- 6 plete spreadsheet format. 7 ‘‘(B) PRESCRIPTION DRUG PRICING 8 STANDARD DEFINED.—For purposes of sub- 9 paragraph (A), a standard for reimbursement 10 of a pharmacy is any methodology or formula 11 for varying the pricing of a drug or drugs dur- 12 ing the term of the pharmacy reimbursement 13 contract that is based on the cost of the drug 14 involved, including drug pricing references and 15 amounts that are based upon average wholesale 16 price, wholesale average cost, average manufac- 17 turer price, average sales price, maximum al- 18 lowable cost (MAC), or other costs, whether 19 publicly available or not.’’. 20 (c) EFFECTIVE DATE.—The amendments made by 21 this section shall apply to plan years beginning on or after 22 January 1, 2020. 23 VerDate Sep 11 2014 00:48 Feb 20, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H1035.IH H1035 pamtmann on DSKBFK8HB2PROD with BILLS 6 •HR 1035 IH SEC. 3. PRESCRIPTION DRUG TRANSPARENCY IN THE FED- 1 ERAL EMPLOYEES HEALTH BENEFITS PRO- 2 GRAM. 3 (a) IN GENERAL.—Section 8902 of title 5, United 4 States Code, is amended by adding at the end the fol- 5 lowing new subsections: 6 ‘‘(p) A contract may not be made or a plan approved 7 under this chapter under which a carrier has an agree- 8 ment with a pharmacy benefits manager (in this sub- 9 section referred to as a ‘PBM’) to manage prescription 10 drug coverage or to control the costs of the prescription 11 drug coverage if the PBM— 12 ‘‘(1) requires that an individual enrolled under 13 such contract or plan use a retail pharmacy, mail 14 order pharmacy, specialty pharmacy, or other phar- 15 macy entity providing pharmacy services in which 16 the PBM has an ownership interest or that has an 17 ownership interest in the PBM; or 18 ‘‘(2) provides an incentive (including a reduced 19 copayment or coinsurance) to a plan enrollee to en- 20 courage the enrollee to use a retail pharmacy, mail 21 order pharmacy, specialty pharmacy, or other phar- 22 macy entity providing pharmacy services in which 23 the PBM has an ownership interest or that has an 24 ownership interest in the PBM, if the incentive is 25 applicable only to such pharmacies. 26 VerDate Sep 11 2014 00:48 Feb 20, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H1035.IH H1035 pamtmann on DSKBFK8HB2PROD with BILLS 7 •HR 1035 IH ‘‘(q)(1) If a contract made or plan approved under 1 this chapter provides for a standard for reimbursement 2 (as described in paragraph (2)) with respect to a prescrip- 3 tion drug plan, such contract or plan shall provide that 4 the applicable carrier— 5 ‘‘(A) update such standard not less frequently 6 than once every 7 days, beginning with an initial up- 7 date on January 1 of each year, to accurately reflect 8 the market price of acquiring the drug; 9 ‘‘(B) disclose to applicable pharmacies and the 10 respective contracting entities of such pharmacies 11 the sources used for making any such update imme- 12 diately without requirement of request; 13 ‘‘(C) if the source for such a standard for reim- 14 bursement is not publicly available, disclose to the 15 applicable pharmacies and respective contracting en- 16 tities of such pharmacies all individual drug prices 17 to be so updated in advance of the use of such prices 18 for the reimbursement of claims; 19 ‘‘(D) establish a process for applicable phar- 20 macies and respective contracting entities to appeal, 21 investigate, and resolve disputes regarding individual 22 drug prices that are less than the pharmacy acquisi- 23 tion price for such drug, which must be adjudicated 24 within 7 days of the pharmacy filing its appeal; and 25 VerDate Sep 11 2014 00:48 Feb 20, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H1035.IH H1035 pamtmann on DSKBFK8HB2PROD with BILLS 8 •HR 1035 IH ‘‘(E) provide to applicable pharmacies and re- 1 spective contracting entities all such pricing data in 2 an .xml spreadsheet format or a comparable easily 3 accessible and complete spreadsheet format. 4 ‘‘(2) For purposes of paragraph (1), a standard for 5 reimbursement of a pharmacy is any methodology or for- 6 mula for varying the pricing of a drug or drugs during 7 the term of the pharmacy reimbursement contract that is 8 based on the cost of the drug involved, including drug pric- 9 ing references and amounts that are based upon average 10 wholesale price, wholesale average cost, average manufac- 11 turer price, average sales price, maximum allowable cost, 12 or other costs, whether publicly available or not.’’. 13 (b) APPLICATION.—The amendment made by sub- 14 section (a) shall apply to any contract entered into under 15 section 8902 of title 5, United States Code, on or after 16 the date of enactment of this section. 17 Æ VerDate Sep 11 2014 00:48 Feb 20, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6301 E:\BILLS\H1035.IH H1035 pamtmann on DSKBFK8HB2PROD with BILLS