Phair Pricing Act of 2019

II 116TH CONGRESS 1ST SESSION S. 640 To amend title XVIII of the Social Security Act to require pharmacy-nego- tiated price concessions to be included in negotiated prices at the point- of-sale under part D of the Medicare program, and for other purposes. IN THE SENATE OF THE UNITED STATES MARCH 4, 2019 Mr. KENNEDY introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend title XVIII of the Social Security Act to require pharmacy-negotiated price concessions to be included in negotiated prices at the point-of-sale under part D of the Medicare program, 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 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Phair Pricing Act of 4 2019’’. 5 VerDate Sep 11 2014 01:58 Mar 09, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S640.IS S640 pamtmann on DSKBFK8HB2PROD with BILLS 2 •S 640 IS SEC. 2. REQUIRING PHARMACY-NEGOTIATED PRICE CON- 1 CESSIONS AND PHARMACY INCENTIVE PAY- 2 MENTS AND ADJUSTMENTS TO BE INCLUDED 3 IN NEGOTIATED PRICES AT THE POINT-OF- 4 SALE UNDER PART D OF THE MEDICARE PRO- 5 GRAM. 6 Section 1860D–2(d)(1)(B) of the Social Security Act 7 (42 U.S.C. 1395w–102(d)(1)(B)) is amended— 8 (1) by striking ‘‘PRICES.—For purposes’’ and 9 inserting ‘‘PRICES.— 10 ‘‘(i) IN GENERAL.—For purposes’’; 11 and 12 (2) by adding at the end the following new 13 clauses: 14 ‘‘(ii) PRICES NEGOTIATED WITH 15 PHARMACY AT POINT-OF-SALE.— 16 ‘‘(I) IN GENERAL.—Subject to 17 subclause (III), for plan years begin- 18 ning on or after January 1, 2020, ne- 19 gotiated prices for covered part D 20 drugs described in clause (i) provided 21 under a prescription drug plan, in- 22 cluding all contingent and noncontin- 23 gent concessions, adjustments, pay- 24 ments, and fees (including dispensing 25 fees) negotiated with the pharmacy 26 VerDate Sep 11 2014 01:58 Mar 09, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S640.IS S640 pamtmann on DSKBFK8HB2PROD with BILLS 3 •S 640 IS dispensing such drug, shall be pro- 1 vided at the point-of-sale of such 2 drug. Such negotiated price shall not 3 include any incentive payments and 4 adjustments or any other contingent 5 concessions, adjustments, payments, 6 or fees that increase the amount of 7 such negotiated price. 8 ‘‘(II) APPLICATION OF PHAR- 9 MACY INCENTIVE PAYMENTS AND AD- 10 JUSTMENTS.— 11 ‘‘(aa) IN GENERAL.—For 12 plan years beginning on or after 13 January 1, 2020, a PDP spon- 14 sor— 15 ‘‘(AA) shall apply a 16 system under which incen- 17 tive payments and adjust- 18 ments using only quality 19 measures established by the 20 Secretary under item (bb) 21 are made to a pharmacy 22 with respect to payment for 23 covered part D drugs dis- 24 VerDate Sep 11 2014 01:58 Mar 09, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S640.IS S640 pamtmann on DSKBFK8HB2PROD with BILLS 4 •S 640 IS pensed by such pharmacy; 1 and 2 ‘‘(BB) may not apply 3 any other incentive pay- 4 ments and adjustments with 5 respect to such payment 6 outside of such system. 7 Application of such system may 8 not result in a decrease in reim- 9 bursement to such pharmacy for 10 such drug after the point-of-sale 11 of such drug. 12 ‘‘(bb) STANDARD PHARMACY 13 QUALITY MEASURES.—The Sec- 14 retary shall establish standard 15 quality measures that may be 16 used in a system described in 17 item (aa). Such measures shall 18 be— 19 ‘‘(AA) focused on im- 20 proving patient health out- 21 comes; 22 ‘‘(BB) standardized 23 across PDP sponsors; 24 VerDate Sep 11 2014 01:58 Mar 09, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S640.IS S640 pamtmann on DSKBFK8HB2PROD with BILLS 5 •S 640 IS ‘‘(CC) pharmacy-spe- 1 cific in application; 2 ‘‘(DD) relevant to the 3 type of pharmacy concerned 4 (such as specialty phar- 5 macies), taking into account 6 the items and services fur- 7 nished by the pharmacy and 8 the patient population 9 served by the pharmacy; 10 ‘‘(EE) applied only 11 when relevant to the specific 12 drug (or drug class of such 13 drug) being furnished by the 14 pharmacy or when relevant 15 to management of the condi- 16 tion for which such drug has 17 been prescribed; and 18 ‘‘(FF) based on achiev- 19 able and proven criteria 20 measuring pharmacy per- 21 formance over which the 22 pharmacy has meaningful 23 control and ability to influ- 24 ence. 25 VerDate Sep 11 2014 01:58 Mar 09, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S640.IS S640 pamtmann on DSKBFK8HB2PROD with BILLS 6 •S 640 IS In establishing such standards, 1 the Secretary shall consult with 2 stakeholders, including PDP 3 sponsors and MA organizations, 4 pharmacies across pharmacy 5 practice types, pharmacy benefit 6 managers, patient advocacy orga- 7 nizations, drug manufacturers, 8 appropriate standard-setting or- 9 ganizations, and other entities 10 determined appropriate by the 11 Secretary. 12 ‘‘(III) NO INCREASE IN COST 13 SHARING.—Subclause (I) shall not 14 apply in the case where application of 15 such subclause would increase the 16 amount owed by an individual in cost 17 sharing above the amount such indi- 18 vidual would have owed in cost shar- 19 ing without application of such sub- 20 clause. 21 ‘‘(IV) DISCREPANCIES BETWEEN 22 NEGOTIATED PRICES AND ACTUAL RE- 23 IMBURSEMENT.—In the case that the 24 Secretary determines that the nego- 25 VerDate Sep 11 2014 01:58 Mar 09, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S640.IS S640 pamtmann on DSKBFK8HB2PROD with BILLS 7 •S 640 IS tiated price of a PDP sponsor applied 1 at the point-of-sale with respect to a 2 covered part D drug for a year dis- 3 pensed by a pharmacy was greater 4 than the total reimbursement made to 5 such pharmacy for such drug for such 6 year, such sponsor shall, not later 7 than 90 days after receiving notice of 8 such determination, furnish to the 9 pharmacy that dispensed such drug 10 and to the Secretary a written expla- 11 nation of why such negotiated price 12 was greater than such reimbursement. 13 ‘‘(V) SPECIALTY PHARMACY.— 14 For purposes of carrying out this 15 clause (including subclause 16 (II)(bb)(DD)), the Secretary shall, not 17 later than December 31, 2019, define 18 the term ‘specialty pharmacy’ in con- 19 sultation with relevant stakeholders. 20 ‘‘(VI) DEFINITIONS.—In this 21 clause: 22 ‘‘(aa) INCENTIVE PAYMENTS 23 AND ADJUSTMENTS.—The term 24 ‘incentive payments and adjust- 25 VerDate Sep 11 2014 01:58 Mar 09, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S640.IS S640 pamtmann on DSKBFK8HB2PROD with BILLS 8 •S 640 IS ments’ means, with respect to 1 payment to a pharmacy by a 2 PDP sponsor for a covered part 3 D drug, any prospective or retro- 4 spective price concessions, re- 5 bates, discounts, fees, reconcili- 6 ation adjustments, bonuses, per- 7 formance payments, incentives, 8 and any other adjustment to 9 such payment determined 10 through the use of a quality 11 measure, regardless of when such 12 payments and adjustments are 13 applied. Such term does not in- 14 clude any manufacturer rebates 15 or concessions made with respect 16 to such drug. 17 ‘‘(bb) QUALITY MEASURE.— 18 The term ‘quality measure’ 19 means performance criteria used 20 by a PDP sponsor (including an 21 entity that contracts with such 22 sponsor, such as a pharmacy ben- 23 efit manager) to determine the 24 VerDate Sep 11 2014 01:58 Mar 09, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S640.IS S640 pamtmann on DSKBFK8HB2PROD with BILLS 9 •S 640 IS amount or applicability of incen- 1 tive payments and adjustments. 2 ‘‘(cc) PDP SPONSOR.—The 3 term ‘PDP sponsor’ includes an 4 MA organization offering an 5 MA–PD plan under part C and 6 an entity that contracts with 7 such sponsor or organization, 8 such as a pharmacy benefit man- 9 ager. 10 ‘‘(iii) REASONABLE REIMBURSEMENT 11 REQUIREMENT.—In no case may a nego- 12 tiated price (as described in clause (ii)(I)) 13 for a covered part D drug furnished by a 14 pharmacy during a plan year beginning on 15 or after January 1, 2020, be less than 16 such pharmacy’s cost of purchasing and 17 dispensing such drug and providing such 18 other services associated with furnishing 19 such drug as may be specified by the Sec- 20 retary. 21 ‘‘(iv) CLAIM REIMBURSEMENT DIS- 22 CLOSURE REQUIREMENTS.—With respect 23 to payment made by a PDP sponsor to a 24 pharmacy for a covered part D drug fur- 25 VerDate Sep 11 2014 01:58 Mar 09, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S640.IS S640 pamtmann on DSKBFK8HB2PROD with BILLS 10 •S 640 IS nished by such pharmacy during a plan 1 year beginning on or after January 1, 2 2020, such sponsor shall promptly furnish 3 all pricing components including the Net- 4 work Reimbursement ID used to price the 5 claim, any fees, pharmacy price conces- 6 sions, discounts, incentives or any other 7 forms of remuneration that affect payment 8 and pricing of the claim as part of the 9 claim adjudication response at the point-of- 10 sale. All aforementioned items, including 11 Network Reimbursement ID, fees, phar- 12 macy price concessions, discounts, incen- 13 tives, or any other forms of remuneration 14 that affect payment and pricing of the 15 claim shall each be identified in a predeter- 16 mined line item in the remittance advice 17 that is standard across the industry. The 18 Part D sponsor shall include suitable 19 claim-level detail on the electronic remit- 20 tance advice that accompanies each pay- 21 ment. This claim-level detail shall include, 22 in an industry standardized format, all 23 fields needed to properly identify the claim, 24 including the Claim Authorization Number, 25 VerDate Sep 11 2014 01:58 Mar 09, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S640.IS S640 pamtmann on DSKBFK8HB2PROD with BILLS 11 •S 640 IS date of service, date of payment remit- 1 tance, ingredient cost reimbursed, dis- 2 pensing fee reimbursed, payment amounts 3 including the Network ID used to price the 4 claim, the specific dollar amounts and the 5 appropriate qualifier codes for each pay- 6 ment adjustment including fees, pharmacy 7 price concessions, or incentives. 8 ‘‘(v) VIOLATION PROCESS.—A PDP 9 sponsor shall participate in any process es- 10 tablished by the Secretary for purposes of 11 determining whether such sponsor has vio- 12 lated a provision of clauses (ii) through 13 (iv).’’. 14 SEC. 3. PHARMACY BENEFIT MANAGER PROVISION OF IN- 15 FORMATION. 16 (a) IN GENERAL.—Section 1150A(b)(2) of the Social 17 Security Act (42 U.S.C. 1320b–23(b)(2)) is amended by 18 striking ‘‘excluding’’ and inserting ‘‘including’’. 19 (b) EFFECTIVE DATE.—The amendment made by 20 subsection (a) shall apply with respect to contract years 21 beginning on or after January 1, 2020. 22 Æ VerDate Sep 11 2014 01:58 Mar 09, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6301 E:\BILLS\S640.IS S640 pamtmann on DSKBFK8HB2PROD with BILLS