Ending the Prescription Drug Kickback Act of 2023

II 118TH CONGRESS 1ST SESSION S. 1217 To prohibit the distribution and receipt of rebates for prescription drugs. IN THE SENATE OF THE UNITED STATES APRIL 19, 2023 Mr. HAWLEY introduced the following bill; which was read twice and referred to the Committee on Health, Education, Labor, and Pensions A BILL To prohibit the distribution and receipt of rebates for prescription drugs. 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 ‘‘Ending the Prescrip- 4 tion Drug Kickback 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.— 9 (1) REMOVAL OF SAFE HARBOR PROTECTION 10 FOR REBATES INVOLVING PRESCRIPTION DRUGS.— 11 VerDate Sep 11 2014 00:05 Apr 22, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1217.IS S1217 kjohnson on DSK79L0C42PROD with BILLS 2 •S 1217 IS Section 1128B(b) of the Social Security Act (42 1 U.S.C. 1320a–7b(b)) is amended— 2 (A) in paragraph (3)(A), by striking ‘‘a 3 discount’’ and inserting ‘‘subject to paragraph 4 (5), a discount’’; and 5 (B) by adding at the end the following: 6 ‘‘(5) REMOVAL OF SAFE HARBOR PROTECTION 7 FOR REBATES INVOLVING PRESCRIPTION DRUGS.— 8 ‘‘(A) IN GENERAL.—The safe harbor de- 9 scribed in paragraph (3)(A) shall not apply to 10 a rebate or other remuneration, including a re- 11 bate or other remuneration intended to influ- 12 ence formulary tier placement or its equivalent, 13 from a manufacturer of prescription drugs or 14 an entity that provides pharmacy benefits man- 15 agement services. 16 ‘‘(B) DEFINITIONS.—In this paragraph: 17 ‘‘(i) ENTITY THAT PROVIDES PHAR- 18 MACY BENEFITS MANAGEMENT SERV- 19 ICES.—The term ‘entity that provides 20 pharmacy benefits management services’ 21 means— 22 ‘‘(I) any person, business, or 23 other entity that provides, directly or 24 VerDate Sep 11 2014 00:05 Apr 22, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1217.IS S1217 kjohnson on DSK79L0C42PROD with BILLS 3 •S 1217 IS through an intermediary, the service 1 of— 2 ‘‘(aa) negotiating terms and 3 conditions with respect to a pre- 4 scription drug on behalf of a 5 health plan under a Federal 6 health care program; or 7 ‘‘(bb) managing the pre- 8 scription drug benefits provided 9 by the plan, which may include 10 formulary management, the proc- 11 essing and payment of claims for 12 prescription drugs, the perform- 13 ance of drug utilization review, 14 the processing of drug prior au- 15 thorization requests, the adju- 16 dication of appeals or grievances 17 related to the prescription drug 18 benefit, contracting with network 19 pharmacies, or the provision of 20 related services; or 21 ‘‘(II) any entity that is owned, 22 affiliated, or related under a common 23 ownership structure with a person, 24 VerDate Sep 11 2014 00:05 Apr 22, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1217.IS S1217 kjohnson on DSK79L0C42PROD with BILLS 4 •S 1217 IS business, or entity described in sub- 1 clause (I). 2 ‘‘(ii) REBATE.—The term ‘rebate’ 3 means any discount the terms of which are 4 fixed and disclosed in writing to the buyer 5 at the time of the purchase to which the 6 discount applies, but which is not given at 7 the time of purchase.’’. 8 (2) EFFECTIVE DATE.—The amendments made 9 by this subsection shall take effect on January 1, 10 2025. 11 (b) REQUIREMENTS FOR PRIVATE INSURANCE 12 PLANS.— 13 (1) IN GENERAL.—Part D of title XXVII of the 14 Public Health Service Act (42 U.S.C. 300gg–111 et 15 seq.) is amended by adding at the end the following: 16 ‘‘SEC. 2799A–11. REQUIREMENTS WITH RESPECT TO PRE- 17 SCRIPTION DRUG BENEFITS. 18 ‘‘(a) IN GENERAL.—A group health plan or a health 19 insurance issuer offering group or individual health insur- 20 ance coverage shall not, and shall ensure that any entity 21 that provides pharmacy benefits management services on 22 its behalf does not, receive from a drug manufacturer a 23 rebate or other remuneration, including a rebate or other 24 remuneration intended to influence formulary tier place- 25 VerDate Sep 11 2014 00:05 Apr 22, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1217.IS S1217 kjohnson on DSK79L0C42PROD with BILLS 5 •S 1217 IS ment or its equivalent, with respect to any prescription 1 drug received by an enrollee in the plan or coverage and 2 covered by the plan or coverage. 3 ‘‘(b) DEFINITIONS.—For purposes of this section— 4 ‘‘(1) the term ‘entity that provides pharmacy 5 benefits management services’ means— 6 ‘‘(A) any person, business, or other entity 7 that provides, directly or through an inter- 8 mediary, the service of— 9 ‘‘(i) negotiating terms and conditions 10 with respect to a prescription drug on be- 11 half of a group health plan or group or in- 12 dividual health insurance coverage; or 13 ‘‘(ii) managing the prescription drug 14 benefits provided by the plan or coverage, 15 which may include formulary management, 16 the processing and payment of claims for 17 prescription drugs, the performance of 18 drug utilization review, the processing of 19 drug prior authorization requests, the ad- 20 judication of appeals or grievances related 21 to the prescription drug benefit, con- 22 tracting with network pharmacies, or the 23 provision of related services; or 24 VerDate Sep 11 2014 00:05 Apr 22, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1217.IS S1217 kjohnson on DSK79L0C42PROD with BILLS 6 •S 1217 IS ‘‘(B) any entity that is owned, affiliated, or 1 related under a common ownership structure 2 with a person, business, or entity described in 3 paragraph (1); and 4 ‘‘(2) the term ‘rebate’ means any discount the 5 terms of which are fixed and disclosed in writing to 6 the buyer at the time of the purchase to which the 7 discount applies, but which is not given at the time 8 of purchase.’’. 9 (2) ERISA.— 10 (A) IN GENERAL.—Subpart B of part 7 of 11 subtitle B of title I of the Employee Retirement 12 Income Security Act of 1974 (29 U.S.C. 1185 13 et seq.) is amended by adding at the end the 14 following: 15 ‘‘SEC. 726. REQUIREMENTS WITH RESPECT TO PRESCRIP- 16 TION DRUG BENEFITS. 17 ‘‘(a) IN GENERAL.—A group health plan or a health 18 insurance issuer offering group health insurance coverage 19 shall not, and shall ensure that any entity that provides 20 pharmacy benefits management services on its behalf does 21 not, receive from a drug manufacturer a rebate or other 22 remuneration, including a rebate or other remuneration 23 intended to influence formulary tier placement or its 24 equivalent, with respect to any prescription drug received 25 VerDate Sep 11 2014 00:05 Apr 22, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1217.IS S1217 kjohnson on DSK79L0C42PROD with BILLS 7 •S 1217 IS by an enrollee in the plan or coverage and covered by the 1 plan or coverage. 2 ‘‘(b) DEFINITIONS.—For purposes of this section— 3 ‘‘(1) the term ‘entity that provides pharmacy 4 benefits management services’ means— 5 ‘‘(A) any person, business, or other entity 6 that provides, directly or through an inter- 7 mediary, the service of— 8 ‘‘(i) negotiating terms and conditions 9 with respect to a prescription drug on be- 10 half of a group health plan or group health 11 insurance coverage; or 12 ‘‘(ii) managing the prescription drug 13 benefits provided by the plan or coverage, 14 which may include formulary management, 15 the processing and payment of claims for 16 prescription drugs, the performance of 17 drug utilization review, the processing of 18 drug prior authorization requests, the ad- 19 judication of appeals or grievances related 20 to the prescription drug benefit, con- 21 tracting with network pharmacies, or the 22 provision of related services; or 23 ‘‘(B) any entity that is owned, affiliated, or 24 related under a common ownership structure 25 VerDate Sep 11 2014 00:05 Apr 22, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S1217.IS S1217 kjohnson on DSK79L0C42PROD with BILLS 8 •S 1217 IS with a person, business, or entity described in 1 paragraph (1); and 2 ‘‘(2) the term ‘rebate’ means any discount the 3 terms of which are fixed and disclosed in writing to 4 the buyer at the time of the purchase to which the 5 discount applies, but which is not given at the time 6 of purchase.’’. 7 (B) CLERICAL AMENDMENT.—The table of 8 contents of the Employee Retirement Income 9 Security Act of 1974 is amended by inserting 10 after the item relating to section 725 the fol- 11 lowing: 12 ‘‘Sec. 726. Requirements with respect to prescription drug benefits.’’. (3) IRC.— 13 (A) IN GENERAL.—Subchapter B of chap- 14 ter 100 of the Internal Revenue Code of 1986 15 is amended by adding at the end the following: 16 ‘‘SEC. 9826. REQUIREMENTS WITH RESPECT TO PRESCRIP- 17 TION DRUG BENEFITS. 18 ‘‘(a) IN GENERAL.—A group health plan shall not, 19 and shall ensure that any entity that provides pharmacy 20 benefits management services on its behalf does not, re- 21 ceive from a drug manufacturer a rebate or other remu- 22 neration with respect to any prescription drug received by 23 an enrollee in the plan and covered by the plan. 24 ‘‘(b) DEFINITIONS.—For purposes of this section— 25 VerDate Sep 11 2014 00:05 Apr 22, 2023 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S1217.IS S1217 kjohnson on DSK79L0C42PROD with BILLS 9 •S 1217 IS ‘‘(1) the term ‘entity that provides pharmacy 1 benefits management services’ means— 2 ‘‘(A) any person, business, or other entity 3 that provides, directly or through an inter- 4 mediary, the service of— 5 ‘‘(i) negotiating terms and conditions 6 with respect to a prescription drug on be- 7 half of a group health plan; or 8 ‘‘(ii) managing the prescription drug 9 benefits provided by the plan, which may 10 include formulary management, the proc- 11 essing and payment of claims for prescrip- 12 tion drugs, the performance of drug utili- 13 zation review, the processing of drug prior 14 authorization requests, the adjudication of 15 appeals or grievances related to the pre- 16 scription drug benefit, contracting with 17 network pharmacies, or the provision of re- 18 lated services; or 19 ‘‘(B) any entity that is owned, affiliated, or 20 related under a common ownership structure 21 with a person, business, or entity described in 22 paragraph (1); and 23 ‘‘(2) the term ‘rebate’ means any discount the 24 terms of which are fixed and disclosed in writing to 25 VerDate Sep 11 2014 00:05 Apr 22, 2023 Jkt 039200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S1217.IS S1217 kjohnson on DSK79L0C42PROD with BILLS 10 •S 1217 IS the buyer at the time of the purchase to which the 1 discount applies, but which is not given at the time 2 of purchase.’’. 3 (B) CLERICAL AMENDMENT.—The table of 4 sections for subchapter B of chapter 100 of the 5 Internal Revenue Code of 1986 is amended by 6 adding at the end the following: 7 ‘‘Sec. 9826. Requirements with respect to prescription drug benefits.’’. (4) EFFECTIVE DATE.—The amendments made 8 by paragraphs (1), (2), and (3) shall take effect on 9 January 1, 2025. 10 Æ VerDate Sep 11 2014 00:05 Apr 22, 2023 Jkt 039200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6301 E:\BILLS\S1217.IS S1217 kjohnson on DSK79L0C42PROD with BILLS