PBM Transparency in Prescription Drug Costs Act

I 116TH CONGRESS 1ST SESSION H. R. 5304 To amend title XXVII of the Public Health Service Act to require health plan oversight of pharmacy benefit manager services, and for other purposes. IN THE HOUSE OF REPRESENTATIVES DECEMBER 4, 2019 Mr. SCHRADER (for himself and Mr. GIANFORTE) introduced the following bill; which was referred to the Committee on Energy and Commerce A BILL To amend title XXVII of the Public Health Service Act to require health plan oversight of pharmacy benefit manager services, 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 ‘‘PBM Transparency 4 in Prescription Drug Costs Act’’. 5 SEC. 2. HEALTH PLAN OVERSIGHT OF PHARMACY BENEFIT 6 MANAGER SERVICES. 7 Subpart II of part A of title XXVII of the Public 8 Health Service Act (42 U.S.C. 300gg–11 et seq.) is 9 amended by adding at the end the following: 10 VerDate Sep 11 2014 03:44 Dec 11, 2019 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H5304.IH H5304 kjohnson on DSK79L0C42 with BILLS 2 •HR 5304 IH ‘‘SEC. 2729A. HEALTH PLAN OVERSIGHT OF PHARMACY 1 BENEFIT MANAGER SERVICES. 2 ‘‘(a) IN GENERAL.—A group health plan or health 3 insurance issuer offering group or individual health insur- 4 ance coverage or an entity or subsidiary providing phar- 5 macy benefits management services shall not enter into 6 a contract with a drug manufacturer, distributor, whole- 7 saler, subcontractor, rebate aggregator, or any associated 8 third party that limits the disclosure of information to 9 plan sponsors in such a manner that prevents the plan 10 or coverage, or an entity or subsidiary providing pharmacy 11 benefits management services on behalf of a plan or cov- 12 erage from making the reports described in subsection (b). 13 ‘‘(b) REPORTS TO GROUP PLAN SPONSORS.— 14 ‘‘(1) IN GENERAL.—Beginning with the first 15 plan year that begins after the date of enactment of 16 this section, not less frequently than once every six 17 months, a health insurance issuer offering group 18 health insurance coverage or an entity providing 19 pharmacy benefits management services on behalf of 20 a group health plan shall submit to the self-funded 21 group health plan and at the request of any other 22 group health plan a report in accordance with this 23 subsection and make such report available to the 24 plan sponsor in a machine-readable format. Each 25 VerDate Sep 11 2014 03:44 Dec 11, 2019 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H5304.IH H5304 kjohnson on DSK79L0C42 with BILLS 3 •HR 5304 IH such report shall include, with respect to the applica- 1 ble group health plan or health insurance coverage— 2 ‘‘(A) information collected from drug man- 3 ufacturers by such issuer or entity on the total 4 amount of copayment assistance dollars paid, or 5 copayment cards applied, that were funded by 6 the drug manufacturer with respect to the en- 7 rollees in such plan or coverage; 8 ‘‘(B) a list of each covered drug dispensed 9 during the reporting period, including, with re- 10 spect to each such drug during the reporting 11 period— 12 ‘‘(i) the brand name, chemical entity, 13 and National Drug Code; 14 ‘‘(ii) the number of enrollees for 15 whom the drug was filled during the plan 16 year, the total number of prescription fills 17 for the drug (including original prescrip- 18 tions and refills), and the total number of 19 dosage units of the drug dispensed across 20 the plan year, including whether the dis- 21 pensing channel was by retail, mail order, 22 or specialty pharmacy; 23 ‘‘(iii) the wholesale acquisition cost, 24 listed as cost per days supply and cost per 25 VerDate Sep 11 2014 03:44 Dec 11, 2019 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H5304.IH H5304 kjohnson on DSK79L0C42 with BILLS 4 •HR 5304 IH pill, or in the case of a drug in another 1 form, per dose; 2 ‘‘(iv) the total out-of-pocket spending 3 by enrollees on such drug, including en- 4 rollee spending through copayments, coin- 5 surance, and deductibles; and 6 ‘‘(v) for any drug for which gross 7 spending of the group health plan or 8 health insurance coverage exceeded 9 $10,000 during the reporting period— 10 ‘‘(I) a list of all other available 11 drugs in the same therapeutic cat- 12 egory or class, including brand name 13 drugs and biological products and ge- 14 neric drugs or biosimilar biological 15 products that are in the same thera- 16 peutic category or class; and 17 ‘‘(II) the rationale for preferred 18 formulary placement of a particular 19 drug or drugs in that therapeutic cat- 20 egory or class; 21 ‘‘(C) a list of each therapeutic category or 22 class of drugs that were dispensed under the 23 health plan or health insurance coverage during 24 the reporting period, and, with respect to each 25 VerDate Sep 11 2014 03:44 Dec 11, 2019 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H5304.IH H5304 kjohnson on DSK79L0C42 with BILLS 5 •HR 5304 IH such therapeutic category or class of drugs, 1 during the reporting period— 2 ‘‘(i) total gross spending by the plan, 3 before manufacturer rebates, fees, or other 4 manufacturer remuneration; 5 ‘‘(ii) the number of enrollees who 6 filled a prescription for a drug in that cat- 7 egory or class; 8 ‘‘(iii) if applicable to that category or 9 class, a description of the formulary tiers 10 and utilization mechanisms (such as prior 11 authorization or step therapy) employed 12 for drugs in that category or class; 13 ‘‘(iv) the total out-of-pocket spending 14 by enrollees, including enrollee spending 15 through copayments, coinsurance, and 16 deductibles; and 17 ‘‘(v) for each therapeutic category or 18 class under which three or more drugs are 19 marketed and available— 20 ‘‘(I) the amount received, or ex- 21 pected to be received, from drug man- 22 ufacturers in rebates, fees, alternative 23 discounts, or other remuneration— 24 VerDate Sep 11 2014 03:44 Dec 11, 2019 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H5304.IH H5304 kjohnson on DSK79L0C42 with BILLS 6 •HR 5304 IH ‘‘(aa) to be paid by drug 1 manufacturers for claims in- 2 curred during the reporting pe- 3 riod; or 4 ‘‘(bb) that is related to utili- 5 zation of drugs, in such thera- 6 peutic category or class; 7 ‘‘(II) the total net spending by 8 the health plan or health insurance 9 coverage on that category or class of 10 drugs; and 11 ‘‘(III) the net price per dosage 12 unit or course of treatment incurred 13 by the health plan or health insurance 14 coverage and its enrollees, after man- 15 ufacturer rebates, fees, and other re- 16 muneration for drugs dispensed within 17 such therapeutic category or class 18 during the reporting period; 19 ‘‘(D) total gross spending on prescription 20 drugs by the plan or coverage during the re- 21 porting period, before rebates and other manu- 22 facturer fees or remuneration; 23 ‘‘(E) total amount received, or expected to 24 be received, by the health plan or health insur- 25 VerDate Sep 11 2014 03:44 Dec 11, 2019 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H5304.IH H5304 kjohnson on DSK79L0C42 with BILLS 7 •HR 5304 IH ance coverage in drug manufacturer rebates, 1 fees, alternative discounts, and all other remu- 2 neration received from the manufacturer or any 3 third party related to utilization of drug or 4 drug spending under that health plan or health 5 insurance coverage during the reporting period; 6 ‘‘(F) the total net spending on prescription 7 drugs by the health plan or health insurance 8 coverage during the reporting period; and 9 ‘‘(G) amounts paid directly or indirectly in 10 rebates, fees, or any other type of remuneration 11 to brokers, consultants, advisors, or any other 12 individual or firm who referred the group health 13 plan’s or health insurance issuer’s business to 14 the pharmacy benefit manager. 15 ‘‘(2) PRIVACY REQUIREMENTS.—Health insur- 16 ance issuers offering group health insurance cov- 17 erage and entities providing pharmacy benefits man- 18 agement services on behalf of a group health plan 19 shall provide information under paragraph (1) in a 20 manner consistent with the privacy, security, and 21 breach notification regulations promulgated under 22 section 264(c) of the Health Insurance Portability 23 and Accountability Act of 1996 (or successor regula- 24 tions), and shall restrict the use and disclosure of 25 VerDate Sep 11 2014 03:44 Dec 11, 2019 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H5304.IH H5304 kjohnson on DSK79L0C42 with BILLS 8 •HR 5304 IH such information according to such privacy regula- 1 tions. 2 ‘‘(3) DISCLOSURE AND REDISCLOSURE.— 3 ‘‘(A) LIMITATION TO BUSINESS ASSOCI- 4 ATES.—A group health plan receiving a report 5 under paragraph (1) may disclose such informa- 6 tion only to business associates of such plan as 7 defined in section 160.103 of title 45, Code of 8 Federal Regulations (or successor regulations). 9 ‘‘(B) CLARIFICATION REGARDING PUBLIC 10 DISCLOSURE OF INFORMATION.—Nothing in 11 this section prevents a health insurance issuer 12 offering group health insurance coverage or an 13 entity providing pharmacy benefits management 14 services on behalf of a group health plan from 15 placing reasonable restrictions on the public dis- 16 closure of the information contained in a report 17 described in paragraph (1). 18 ‘‘(c) LIMITATIONS ON SPREAD PRICING.— 19 ‘‘(1) PASS-THROUGH OFFERING TO PLAN.—A 20 designated plan administrator of an applicable self- 21 insured health plan, or an entity providing pharmacy 22 benefit management services to such health plan 23 shall offer at least one contractual arrangement that 24 does not charge the plan or enrollee, a price for a 25 VerDate Sep 11 2014 03:44 Dec 11, 2019 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H5304.IH H5304 kjohnson on DSK79L0C42 with BILLS 9 •HR 5304 IH prescription drug that exceeds the price paid to the 1 pharmacy, excluding penalties or fees paid by phar- 2 macies to such plan, issuer, or entity. 3 ‘‘(2) DEFAULT TO PASS-THROUGH PRICING.— 4 For purposes of paragraph (1), a designated plan 5 administrator of an applicable self-insured health 6 plan, or an entity providing pharmacy benefit man- 7 agement services to such health plan shall not 8 charge the plan or enrollee an amount for a 9 presciption drug that exceeds the price paid to the 10 pharmacy, excluding penalties paid by pharmacies to 11 such plan or entity, without the express permission 12 of the health plan sponsor. 13 ‘‘(3) SUPPLEMENTARY REPORTING FOR INTRA- 14 COMPANY PRESCRIPTION DRUG TRANSACTIONS.—A 15 health insurance issuer of group health insurance 16 coverage or an entity providing pharmacy benefits 17 management services under a group health plan or 18 group health insurance coverage that conducts 19 transactions with a wholly or partially owned phar- 20 macy, as described in paragraph (2), shall submit, 21 together with the report under subsection (b), a sup- 22 plementary quarterly report to the plan sponsor that 23 includes— 24 VerDate Sep 11 2014 03:44 Dec 11, 2019 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H5304.IH H5304 kjohnson on DSK79L0C42 with BILLS 10 •HR 5304 IH ‘‘(A) an explanation of any benefit design 1 parameters that encourage enrollees in the plan 2 or coverage to fill prescriptions at mail order, 3 specialty, or retail pharmacies that are wholly 4 or partially owned by that issuer or entity; 5 ‘‘(B) the percentage of total prescriptions 6 charged to the plan, coverage, or enrollees in 7 the plan or coverage, that were dispensed by 8 mail order, specialty, or retail pharmacies that 9 are wholly or partially owned by the issuer or 10 entity providing pharmacy benefits management 11 services; and 12 ‘‘(C) a list of all drugs dispensed by such 13 wholly or partially owned pharmacy and 14 charged to the plan or coverage, or enrollees of 15 the plan or coverage, during the applicable 16 quarter, and, with respect to each drug— 17 ‘‘(i) the amount charged per dosage 18 unit or course of treatment with respect to 19 enrollees in the plan or coverage, including 20 amounts charged to the plan or coverage 21 and amounts charged to the enrollee; 22 ‘‘(ii) the median amount charged to 23 the plan or coverage, per dosage unit or 24 course of treatment, and including 25 VerDate Sep 11 2014 03:44 Dec 11, 2019 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H5304.IH H5304 kjohnson on DSK79L0C42 with BILLS 11 •HR 5304 IH amounts paid by the enrollee, when the 1 same drug is dispensed by other phar- 2 macies that are not wholly or partially 3 owned by the issuer or entity and that are 4 included in the pharmacy network of that 5 plan or coverage; 6 ‘‘(iii) the interquartile range of the 7 costs, per dosage unit or course of treat- 8 ment, and including amounts paid by the 9 enrollee, when the same drug is dispensed 10 by other pharmacies that are not wholly or 11 partially owned by the issuer or entity and 12 that are included in the pharmacy network 13 of that plan or coverage; and 14 ‘‘(iv) the lowest cost per dosage unit 15 or course of treatment, for such drug, in- 16 cluding amounts charged to the plan or 17 issuer and enrollee, that is available from 18 any pharmacy included in the network of 19 the plan or coverage. 20 ‘‘(d) FULL REBATE PASS-THROUGH TO PLAN.— 21 ‘‘(1) IN GENERAL.—A pharmacy benefits man- 22 ager, a third-party administrator of a group health 23 plan, a health insurance issuer offering group health 24 insurance coverage, or an entity providing pharmacy 25 VerDate Sep 11 2014 03:44 Dec 11, 2019 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H5304.IH H5304 kjohnson on DSK79L0C42 with BILLS 12 •HR 5304 IH benefits management services under such health 1 plan or health insurance coverage shall remit 100 2 percent of rebates, fees, alternative discounts, and 3 all other remuneration received from a pharma- 4 ceutical manufacturer, distributor or any other third 5 party, that are related to utilization of drugs under 6 such health plan or health insurance coverage, to the 7 health plan issuer. 8 ‘‘(2) FORM AND MANNER OF REMITTANCE.— 9 Such rebates, fees, alternative discounts, and other 10 remuneration shall be— 11 ‘‘(A) remitted to the group health plan in 12 a timely fashion after the period for which such 13 rebates, fees, or other remuneration is cal- 14 culated, and in no case later than 120 days 15 after the end of such period; 16 ‘‘(B) fully disclosed and enumerated to the 17 group health plan sponsor, as described in 18 (b)(1); 19 ‘‘(C) available for audit by the plan spon- 20 sor, or a third party desi [Text truncated for display. 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