What This Bill Does
This bill changes the rules for how drug manufacturers can pay rebates and fees to health insurance plans and the companies that manage prescription drug benefits. The bill removes certain legal protections that currently allow these payments and creates new, stricter rules for when drug companies can provide discounts or pay fees to insurance middlemen.
##
Who It Affects
- Drug manufacturers
- Health insurance companies offering group or individual coverage
- Pharmacy benefit managers (companies that manage prescription drug benefits for insurance plans)
- Medicare Part D prescription drug plan sponsors
- Medicare Advantage plan organizations
- People enrolled in health insurance plans with prescription drug coverage
##
Key Provisions
- Drug companies can no longer use a legal protection called "safe harbor" to give hidden rebates to Medicare prescription drug plans, Medicare Advantage plans, or pharmacy benefit managers (Sec. 2(a)(1))
- Drug companies can only give price discounts to insurance plans if those discounts show up at the pharmacy counter when patients buy their medications (Sec. 2(b))
- Drug companies can pay flat fees to pharmacy benefit managers only for specific services the pharmacy benefit manager provides to the drug company, and these fees must be transparent to the health plan (Sec. 2(b))
- Health insurance plans and pharmacy benefit managers are prohibited from receiving price reductions or payments from drug manufacturers unless the reductions appear at the point of sale or qualify as transparent flat fee payments (Sec. 2(b))
##
What Changes
If this bill becomes law, drug manufacturers will no longer be able to secretly pay rebates to insurance middlemen that never reach patients at the pharmacy counter. Instead, any price breaks must be visible when patients pay for their prescriptions. Drug companies can still pay pharmacy benefit managers for legitimate services they perform, but these payments must be flat fees that the health plan can see and must relate to specific work the pharmacy benefit manager does for the drug company.
##
Important Definitions
- **Pharmacy benefit manager**: A company that acts as a price negotiator for an insurance plan or manages prescription drug benefits, including processing claims, reviewing medication use, handling authorization requests, managing pharmacy networks, and controlling drug costs
- **Entity that provides pharmacy benefits management services**: Any company or person working under a written agreement with a health plan that negotiates prices or manages prescription drug benefits, plus any company owned by or related to such an entity
- **Reduction in price or other remuneration**: Any discount, payment, or other financial benefit a drug manufacturer gives to an insurance plan, pharmacy benefit manager, or similar entity related to prescription drugs
##
Effective Date
The changes to federal programs become effective on January 1, 2024 (Sec. 2(a)(3)). The changes to private insurance plans become effective on January 1, followed by "TM" in the bill text, which appears to be a placeholder - meaning the specific date is not clearly specified in the bill text.
II
118TH CONGRESS
1ST SESSION
S. 1131
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
MARCH 30, 2023
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 2023’’.
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
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2
•S 1131 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 (M) and (N) 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
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•S 1131 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 (K), by striking
3
‘‘and’’ at the end;
4
(B) in subparagraph (L), by striking the
5
period at the end and inserting a semicolon;
6
and
7
(C) by adding at the end the following:
8
‘‘(M) a reduction in price offered by a
9
manufacturer of prescription drugs to a sponsor
10
of a prescription drug plan under part D of
11
title XVIII, an MA organization offering an
12
MA–PD plan under part C of such title, or a
13
pharmacy benefit manager under contract with
14
such a sponsor or such an organization, that is
15
reflected at the point of sale to the individual
16
and meets such other conditions as the Sec-
17
retary may establish; and
18
‘‘(N) 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
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•S 1131 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
2024.
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
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•S 1131 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
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6
•S 1131 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
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•S 1131 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
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•S 1131 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
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•S 1131 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
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•S 1131 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
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•S 1131 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, TM.
5
Æ
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