Phair Relief Act of 2019

II 116TH CONGRESS 1ST SESSION S. 2247 To amend titles XI and XVIII of the Social Security Act to provide greater transparency of discounts provided by drug manufacturers, to establish requirements relating to pharmacy-negotiated price concessions, and for other purposes. IN THE SENATE OF THE UNITED STATES JULY 24, 2019 Mr. KENNEDY (for himself, Mr. TESTER, Mrs. CAPITO, Mr. BROWN, Mr. CAS- SIDY, Mr. LANKFORD, Mr. DAINES, Mr. CRAMER, Mrs. HYDE-SMITH, Mr. MANCHIN, and Mr. WICKER) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend titles XI and XVIII of the Social Security Act to provide greater transparency of discounts provided by drug manufacturers, to establish requirements relat- ing to pharmacy-negotiated price concessions, 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 Relief Act of 4 2019’’. 5 VerDate Sep 11 2014 03:56 Jul 27, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S2247.IS S2247 kjohnson on DSK79L0C42 with BILLS 2 •S 2247 IS SEC. 2. PUBLIC DISCLOSURE OF DRUG DISCOUNTS. 1 (a) IN GENERAL.—Section 1150A of the Social Secu- 2 rity Act (42 U.S.C. 1320b–23) is amended— 3 (1) in subsection (c), in the matter preceding 4 paragraph (1), by striking ‘‘this section’’ and insert- 5 ing ‘‘subsection (b)(1)’’; and 6 (2) by adding at the end the following new sub- 7 section: 8 ‘‘(e) PUBLIC AVAILABILITY OF CERTAIN INFORMA- 9 TION.—In order to allow patients and employers to com- 10 pare PBMs’ ability to negotiate rebates, discounts, and 11 price concessions and the amount of such rebates, dis- 12 counts, and price concessions that are passed through to 13 plan sponsors, beginning January 1, 2020, the Secretary 14 shall make available on the Internet website of the Depart- 15 ment of Health and Human Services the information pro- 16 vided to the Secretary under paragraphs (2) and (3) of 17 subsection (b) with respect to each PBM. The Secretary 18 shall ensure that such information is displayed in a man- 19 ner that prevents the disclosure of information on rebates, 20 discounts, and price concessions with respect to an indi- 21 vidual drug or an individual plan.’’. 22 (b) EFFECTIVE DATE.—The amendments made by 23 subsection (a) shall take effect on January 1, 2020. 24 VerDate Sep 11 2014 03:56 Jul 27, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S2247.IS S2247 kjohnson on DSK79L0C42 with BILLS 3 •S 2247 IS SEC. 3. MINIMUM DRUG DISCOUNTS REQUIRED TO BE 1 PASSED THROUGH TO THE PLAN SPONSOR. 2 (a) IN GENERAL.—Section 1150A of the Social Secu- 3 rity Act (42 U.S.C. 1320b–23), as amended by section 4 2(a)(2), is amended— 5 (1) in the heading, by inserting ‘‘; MINIMUM 6 DRUG DISCOUNTS REQUIRED TO BE PASSED 7 THROUGH TO THE PLAN SPONSOR’’ before the 8 period at the end; and 9 (2) by adding at the end the following new sub- 10 section: 11 ‘‘(f) MINIMUM DRUG DISCOUNTS REQUIRED TO BE 12 PASSED THROUGH TO THE PLAN SPONSOR.— 13 ‘‘(1) REQUIREMENT.—Beginning January 1, 14 2022, a PBM that manages prescription drug cov- 15 erage under a contract with a PDP sponsor or MA 16 organization described in subsection (b)(1) or a 17 qualified health benefits plan described in subsection 18 (b)(2), shall, with respect to the plan sponsor of a 19 health benefits plan, pass through to the plan spon- 20 sor a minimum percent (as established by the Sec- 21 retary) of the aggregate amount of the rebates, dis- 22 counts, or price concessions that the PBM nego- 23 tiates that are attributable to patient utilization 24 under the plan. 25 VerDate Sep 11 2014 03:56 Jul 27, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S2247.IS S2247 kjohnson on DSK79L0C42 with BILLS 4 •S 2247 IS ‘‘(2) ESTABLISHMENT.—The Secretary shall es- 1 tablish the minimum percent described in paragraph 2 (1) in such a manner as will ensure that patients re- 3 ceive the maximum benefit of rebates, discounts, or 4 price concessions while taking into account the costs 5 of negotiating such rebates, discounts, and price 6 concessions. 7 ‘‘(3) ENFORCEMENT.—A PDP sponsor of a 8 prescription drug plan or an MA organization offer- 9 ing an MA–PD plan under part D of title XVIII 10 may not contract with a PBM that is not in compli- 11 ance with the requirement under paragraph (1).’’. 12 (b) EFFECTIVE DATE.—The amendments made by 13 subsection (a) shall take effect on January 1, 2022. 14 SEC. 4. REQUIREMENTS RELATING TO PHARMACY-NEGO- 15 TIATED PRICE CONCESSIONS AND PHAR- 16 MACY INCENTIVE PAYMENTS. 17 Section 1860D–2(d)(1)(B) of the Social Security Act 18 (42 U.S.C. 1395w–102(d)(1)(B)) is amended— 19 (1) by striking ‘‘PRICES.—For purposes’’ and 20 inserting ‘‘PRICES.— 21 ‘‘(i) IN GENERAL.—For purposes’’; 22 and 23 (2) by adding at the end the following new 24 clauses: 25 VerDate Sep 11 2014 03:56 Jul 27, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S2247.IS S2247 kjohnson on DSK79L0C42 with BILLS 5 •S 2247 IS ‘‘(ii) PRICES NEGOTIATED WITH 1 PHARMACY AT POINT-OF-SALE.— 2 ‘‘(I) TEMPORARY FREEZE ON DIR 3 PAYMENTS.—Subject to subclause 4 (IV), for plan years beginning on or 5 after January 1, 2021, and before 6 January 1, 2026, negotiated prices for 7 covered part D drugs described in 8 clause (i) provided under all phases of 9 coverage under a prescription drug 10 plan, including all contingent and 11 noncontingent concessions, payments, 12 and fees negotiated with the phar- 13 macy dispensing such drug, shall be 14 provided at the point-of-sale of such 15 drug. For purposes of the preceding 16 sentence, such negotiated price shall 17 not include any incentive payments 18 paid to pharmacies. 19 ‘‘(II) APPLICATION OF PRICE 20 CONCESSIONS.—For plan years begin- 21 ning on or after January 1, 2026, the 22 Secretary shall promulgate regulations 23 prohibiting the application of any 24 pharmacy price concessions that are 25 VerDate Sep 11 2014 03:56 Jul 27, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S2247.IS S2247 kjohnson on DSK79L0C42 with BILLS 6 •S 2247 IS not based on quality measures estab- 1 lished or approved by the Secretary 2 under subclause (III). 3 ‘‘(III) STANDARD PHARMACY 4 QUALITY MEASURES.—Subject to sub- 5 clause (I), not later than January 1, 6 2021, the Secretary shall establish or 7 approve standard quality measures for 8 use in the application of pharmacy 9 price concessions and incentive pay- 10 ments with respect to payment for 11 covered part D drugs dispensed by a 12 pharmacy. Such measures shall be— 13 ‘‘(aa) focused on improving 14 patient health outcomes; 15 ‘‘(bb) standardized across 16 PDP sponsors; 17 ‘‘(cc) pharmacy-specific in 18 application; 19 ‘‘(dd) relevant to the type of 20 pharmacy concerned (such as 21 specialty pharmacies), taking into 22 account the items and services 23 furnished by the pharmacy and 24 VerDate Sep 11 2014 03:56 Jul 27, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S2247.IS S2247 kjohnson on DSK79L0C42 with BILLS 7 •S 2247 IS the patient population served by 1 the pharmacy; 2 ‘‘(ee) applied only when rel- 3 evant to the specific drug (or 4 drug class of such drug) being 5 furnished by the pharmacy or 6 when relevant to management of 7 the condition for which such drug 8 has been prescribed; and 9 ‘‘(ff) based on achievable 10 and proven criteria measuring 11 pharmacy performance over 12 which the pharmacy has mean- 13 ingful control and ability to influ- 14 ence. 15 In establishing such standards, the 16 Secretary shall consult with stake- 17 holders, including PDP sponsors and 18 MA organizations, pharmacies across 19 pharmacy practice types, pharmacy 20 benefit managers, patient advocacy or- 21 ganizations, drug manufacturers, ap- 22 propriate standard-setting organiza- 23 tions, professional pharmacy organiza- 24 tions, and other entities determined 25 VerDate Sep 11 2014 03:56 Jul 27, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S2247.IS S2247 kjohnson on DSK79L0C42 with BILLS 8 •S 2247 IS appropriate by the Secretary. The 1 Secretary shall review and update the 2 standard pharmacy quality measures 3 on an ongoing basis with appropriate 4 notice and period for comments from 5 stakeholders. 6 ‘‘(IV) NO INCREASE IN COST 7 SHARING DURING TEMPORARY 8 FREEZE.—Subclause (I) shall not 9 apply in the case where application of 10 such subclause would increase the 11 amount owed by an individual in cost 12 sharing above the amount such indi- 13 vidual would have owed in cost shar- 14 ing without application of such sub- 15 clause. 16 ‘‘(V) DISCREPANCIES BETWEEN 17 NEGOTIATED PRICES AND ACTUAL RE- 18 IMBURSEMENT.—In the case that the 19 Secretary determines that the nego- 20 tiated price of a PDP sponsor applied 21 at the point-of-sale with respect to a 22 covered part D drug for a year dis- 23 pensed by a pharmacy was greater 24 than the total reimbursement made to 25 VerDate Sep 11 2014 03:56 Jul 27, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S2247.IS S2247 kjohnson on DSK79L0C42 with BILLS 9 •S 2247 IS such pharmacy for such drug for such 1 year, such sponsor shall, not later 2 than 90 days after receiving notice of 3 such determination, furnish to the 4 pharmacy that dispensed such drug 5 and to the Secretary a written expla- 6 nation of why such negotiated price 7 was greater than such reimbursement. 8 ‘‘(VI) SPECIALTY PHARMACY.— 9 For purposes of carrying out this 10 clause (including subclause (III)(dd)), 11 the Secretary shall, not later than De- 12 cember 31, 2020, define the term 13 ‘specialty pharmacy’ in consultation 14 with relevant stakeholders. 15 ‘‘(VII) DEFINITIONS.—In this 16 clause: 17 ‘‘(aa) QUALITY MEASURE.— 18 The term ‘quality measure’ 19 means criteria used by a PDP 20 sponsor (including an entity that 21 contracts with such sponsor, such 22 as a pharmacy benefit manager) 23 to determine the amount or ap- 24 VerDate Sep 11 2014 03:56 Jul 27, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S2247.IS S2247 kjohnson on DSK79L0C42 with BILLS 10 •S 2247 IS plicability of incentive payments 1 and pharmacy price concessions. 2 ‘‘(bb) 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) AUDITS OF PDP SPONSORS AND 11 NEGOTIATED PRICE.— 12 ‘‘(I) IN GENERAL.—Beginning 13 January 1, 2021, the Secretary shall 14 conduct annual audits of PDP spon- 15 sors by reviewing a representative 16 sample of claims between PDP spon- 17 sors or other intermediary contracting 18 organizations and all pharmacy types 19 and those pharmacies’ lowest actual 20 acquisition and dispensing costs to as- 21 sess whether reimbursement for indi- 22 vidual network pharmacies is below 23 the pharmacy’s lowest actual cost of 24 acquiring and dispensing covered part 25 VerDate Sep 11 2014 03:56 Jul 27, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S2247.IS S2247 kjohnson on DSK79L0C42 with BILLS 11 •S 2247 IS D drugs and providing pharmacy 1 services necessary for dispensing such 2 drugs. In conducting such audits, the 3 Secretary shall focus on determining 4 whether or not the requirements 5 under clause (ii) are negatively im- 6 pacting network pharmacy participa- 7 tion in the program under this part 8 and beneficiary access to pharmacy 9 providers. Such audits shall occur not 10 less than annually and when re- 11 quested by the Medicare Pharma- 12 ceutical and Technology Ombudsman. 13 ‘‘(II) APPEAL.—If a network 14 pharmacy believes that a PDP spon- 15 sor has reimbursed for a covered part 16 D drug below the pharmacy’s lowest 17 actual acquisition and dispensing 18 costs, the pharmacy may appeal the 19 reimbursement, in writing, to the 20 Medicare Pharmaceutical and Tech- 21 nology Ombudsman within 60 days 22 following notification of the reim- 23 bursement and provide necessary doc- 24 umentation to support its claim. 25 VerDate Sep 11 2014 03:56 Jul 27, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S2247.IS S2247 kjohnson on DSK79L0C42 with BILLS 12 •S 2247 IS ‘‘(III) ANNUAL REPORT TO CON- 1 GRESS.—Not later than January 1, 2 2022, and annually thereafter, the 3 Secretary shall submit to Congress a 4 report that contains a summary of the 5 audits conducted under subclause (I) 6 and activity under subclause (II), to- 7 gether with recommendations for such 8 legislation and administrative action 9 as the Secretary determines appro- 10 priate. 11 ‘‘(iv) CLAIM REIMBURSEMENT DIS- 12 CLOSURE REQUIREMENTS.—With respect 13 to payment made by a PDP sponsor to a 14 pharmacy for a covered part D drug fur- 15 nished by such pharmacy during a plan 16 year beginning on or after January 1, 17 2020, such sponsor shall promptly furnish 18 all pricing components including the Net- 19 work Reimbursement ID used to price the 20 claim, any fees, pharmacy price conces- 21 sions, discounts, incentives or any other 22 forms of remuneration to or from the 23 pharmacy that affect payment and pricing 24 of the claim as part of the claim adjudica- 25 VerDate Sep 11 2014 03:56 Jul 27, 2019 Jkt 089200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S2247.IS S2247 kjohnson on DSK79L0C42 with BILLS 13 •S 2247 IS tion response at the point-of-sale. Each of 1 the aforementioned data elements shall 2 each be identified in a predetermined line 3 item in the remittance advice that is stand- 4 ard across the industry, which shall include 5 suitable claim-level detail needed to prop- 6 erly identify the claim, including the Claim 7 Authorization Number, date of service, 8 date of payment remittance, ingredient 9 cost reimbursed, dispensing fee reim- 10 bursed, payment amounts including the 11 specific dollar amounts and the appro- 12 priate qualifier codes for each payment ad- 13 justment including fees, pharmacy price 14 concessions, or incentives. 15 ‘‘(v) VIOLATION PROCESS.—A PDP 16 sponsor shall participate in any process es- 17 tablished by the Secretary for purposes of 18 determining whether such sponsor has vio- 19 lated a provision of clause (ii) or (iii).’’. 20 SEC. 5. PHARMACY BENEFIT MANAGER PROVISION OF IN- 21 FORMATION. 22 (a) IN GENERAL.—Section 1150A(b)(2) of the Social 23 Security Act (42 U.S.C. 1320b–23(b)(2)) is amended by 24 striking ‘‘excluding’’ and inserting ‘‘including’’. 25 VerDate Sep 11 2014 03:56 Jul 27, 2019 Jkt 089200 PO 00000 Frm 00013 Fmt 6652 Sfmt 6201 E:\BILLS\S2247.IS S2247 kjohnson on DSK79L0C42 with BILLS [Text truncated for display. Full text available on Congress.gov.]