I 118TH CONGRESS 1ST SESSION H. R. 2880 To amend title XVIII of the Social Security Act to establish certain require- ments for pharmacy benefit managers under part D of the Medicare program. IN THE HOUSE OF REPRESENTATIVES APRIL 26, 2023 Mr. CARTER of Georgia (for himself, Ms. BLUNT ROCHESTER, Ms. MALLIOTAKIS, and Mr. AUCHINCLOSS) introduced the following bill; which was referred to the Committee on Energy and Commerce, and in addition to the Committee on Ways and Means, for a period to be subse- quently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned A BILL To amend title XVIII of the Social Security Act to establish certain requirements for pharmacy benefit managers under part D of the Medicare program. 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 ‘‘Protecting Patients 4 Against PBM Abuses Act’’. 5 VerDate Sep 11 2014 02:38 May 05, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H2880.IH H2880 pbinns on DSKJLVW7X2PROD with $$_JOB 2 •HR 2880 IH SEC. 2. ESTABLISHING CERTAIN REQUIREMENTS FOR 1 PHARMACY BENEFIT MANAGERS UNDER 2 PART D OF THE MEDICARE PROGRAM. 3 (a) PRESCRIPTION DRUG PLANS.—Section 1860D– 4 12(b) of the Social Security Act (42 U.S.C. 1395w– 5 112(b)) is amended by adding at the end the following 6 new paragraph: 7 ‘‘(9) RESPONSIBILITY OF PHARMACY BENEFIT 8 MANAGERS.— 9 ‘‘(A) IN GENERAL.—Each contract entered 10 into with a PDP sponsor under this part with 11 respect to a prescription drug plan offered by 12 such sponsor shall provide that any pharmacy 13 benefit manager acting on behalf of such spon- 14 sor complies with the following provisions: 15 ‘‘(i) The pharmacy benefit manager 16 derives no income with respect to any serv- 17 ices provided in connection with covered 18 part D drugs furnished under such plan 19 from any entity other than flat dollar 20 amount service fees. 21 ‘‘(ii) The pharmacy benefit manager 22 receives such service fees only pursuant to 23 a written agreement between the manager 24 and such sponsor that sets forth the 25 amount of any such fees. Any such fee 26 VerDate Sep 11 2014 02:38 May 05, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2880.IH H2880 pbinns on DSKJLVW7X2PROD with $$_JOB 3 •HR 2880 IH may not be directly or indirectly based on, 1 or contingent upon— 2 ‘‘(I) the price of any covered part 3 D drug; 4 ‘‘(II) discounts, rebates, fees, or 5 other remuneration with respect to 6 such drugs; or 7 ‘‘(III) any other circumstance 8 specified by the Secretary. 9 ‘‘(iii) With respect to a covered part 10 D drug dispensed by a pharmacy, the 11 pharmacy benefit manager may not charge 12 such sponsor a different amount for such 13 drug’s ingredient cost or dispensing fee 14 than the amount the pharmacy benefit 15 manager reimburses such pharmacy for 16 such drug’s ingredient cost or dispensing 17 fee. 18 ‘‘(iv) With respect to a covered part D 19 drug dispensed by a network pharmacy, 20 the pharmacy benefit manager may not re- 21 imburse such pharmacy an amount less 22 than the amount the pharmacy benefit 23 manager would reimburse an affiliated 24 pharmacy for such drug. 25 VerDate Sep 11 2014 02:38 May 05, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H2880.IH H2880 pbinns on DSKJLVW7X2PROD with $$_JOB 4 •HR 2880 IH ‘‘(v) With respect to each covered part 1 D drug included on the formulary of such 2 plan for which there is a drug that is not 3 included on such formulary with a thera- 4 peutic equivalence rating of AB (as estab- 5 lished pursuant to section 505(j)(7) of the 6 Federal Food, Drug, and Cosmetic Act) in 7 the same therapeutic class or category of 8 such covered part D drug, the pharmacy 9 benefit manager shall submit to such plan 10 a report specifying the difference between 11 the national average drug acquisition cost 12 (as published by the Secretary) for such 13 drug not included in such formulary and 14 the negotiated prices for such drug that is 15 included in such formulary. 16 ‘‘(B) CERTIFICATION.—Each PDP sponsor 17 (and each pharmacy benefit manager providing 18 services under a prescription drug plan fur- 19 nished by such sponsor) shall furnish to the 20 Secretary (in a time and manner specified by 21 the Secretary) an annual certification of compli- 22 ance with this paragraph, as well as such infor- 23 mation as the Secretary determines necessary 24 to carry out this paragraph. 25 VerDate Sep 11 2014 02:38 May 05, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H2880.IH H2880 pbinns on DSKJLVW7X2PROD with $$_JOB 5 •HR 2880 IH ‘‘(C) DISGORGEMENT OF PROHIBITED PAY- 1 MENTS.—A pharmacy benefit manager shall 2 disgorge to the Secretary any payment, remu- 3 neration, or other amount received in violation 4 of this paragraph or the contract entered into 5 with a PDP sponsor under this part with re- 6 spect to a prescription drug plan. A PDP spon- 7 sor shall suspend payments to a pharmacy ben- 8 efit manager for failure to disgorge such 9 amounts pursuant to the preceding sentence or 10 for other violations of this paragraph. 11 ‘‘(D) CLARIFICATION.—The requirements 12 of this paragraph shall apply regardless of 13 whether a PDP sponsor is acting as its own 14 pharmacy benefit manager and regardless of 15 whether a pharmacy benefit manager is under 16 common ownership or control of the PDP spon- 17 sor with respect to which the manager is fur- 18 nishing services. 19 ‘‘(E) DEFINITIONS.—For purposes of this 20 paragraph: 21 ‘‘(i) AFFILIATED PHARMACY.—The 22 term ‘affiliated pharmacy’ means, with re- 23 spect to a pharmacy benefit manager, a 24 pharmacy that directly or indirectly 25 VerDate Sep 11 2014 02:38 May 05, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H2880.IH H2880 pbinns on DSKJLVW7X2PROD with $$_JOB 6 •HR 2880 IH through one or more intermediaries is 1 owned by, controlled by, or is under com- 2 mon ownership or control of such manager, 3 or a pharmacy in which such manager has 4 a financial interest. 5 ‘‘(ii) PHARMACY BENEFIT MAN- 6 AGER.—The term ‘pharmacy benefit man- 7 ager’ means any entity (and any affiliate, 8 subsidiary, or agent of such entity) that, 9 pursuant to an agreement with a PDP 10 sponsor either directly or through an inter- 11 mediary acts as a price negotiator or group 12 purchaser on behalf of such sponsor, or 13 manages the prescription drug benefits 14 provided by such sponsor, including by 15 processing and paying claims for covered 16 part D drugs, performing drug utilization 17 review, processing drug prior authorization 18 requests, adjudicating appeals or griev- 19 ances related to covered part D drugs, con- 20 tracting with network pharmacies, control- 21 ling the cost of such drugs, or providing 22 any related services. 23 ‘‘(F) NONDISCLOSURE OF CERTAIN INFOR- 24 MATION.—Nothing in this paragraph shall be 25 VerDate Sep 11 2014 02:38 May 05, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H2880.IH H2880 pbinns on DSKJLVW7X2PROD with $$_JOB 7 •HR 2880 IH construed to require public disclosure of any in- 1 formation that is a trade secret or confidential 2 information (as described in section 552(b)(4) 3 of title 5, United States Code).’’. 4 (b) MA–PD PLANS.—Section 1857(f)(3) of the So- 5 cial Security Act (42 U.S.C. 1395w–27(f)(3)) is amended 6 by adding at the end the following new subparagraph: 7 ‘‘(F) RESPONSIBILITY OF PHARMACY BEN- 8 EFIT MANAGERS.—Section 1860D–12(b)(9).’’. 9 SEC. 3. CONFLICT OF INTEREST. 10 Section 1860D–4(b)(3)(A)(ii)(I) of the Social Secu- 11 rity Act (42 U.S.C. 1395w–104(b)(3)(A)(ii)(I)) is amend- 12 ed by striking ‘‘with respect to the sponsor and plan’’ and 13 replacing it with ‘‘with respect to the sponsor, plan, and 14 any pharmacy benefit manager furnishing services to such 15 sponsor or plan’’. 16 SEC. 4. PBM TRANSPARENCY. 17 Section 1150A of the Social Security Act (42 U.S.C. 18 1320b–23) is amended— 19 (1) in subsection (b), by adding at the end the 20 following new paragraph: 21 ‘‘(4) In the case of the provision of information 22 by a PBM that manages prescription drug coverage 23 under a contract with a sponsor described in sub- 24 section (a)(1) for a plan so described— 25 VerDate Sep 11 2014 02:38 May 05, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H2880.IH H2880 pbinns on DSKJLVW7X2PROD with $$_JOB 8 •HR 2880 IH ‘‘(A) the aggregate dollar amount of all re- 1 bates that the PBM received with respect to 2 drugs furnished under such plan from drug 3 manufacturers; 4 ‘‘(B) the aggregate dollar amount of all 5 administrative fees that the PBM received with 6 respect to drugs furnished under such plan 7 from drug manufacturers; 8 ‘‘(C) the aggregate dollar amount of all re- 9 bates described in subparagraph (A) that the 10 PBM did not pass through to such sponsor; 11 ‘‘(D) the percentage of the aggregate dol- 12 lar amount of all rebates described in subpara- 13 graph (A) that the PBM did not pass through 14 to such sponsor; and 15 ‘‘(E) with respect to all plans described in 16 subsection (a)(1) for which the PBM manages 17 prescription drug coverage, the highest percent- 18 age calculated under subparagraph (D) and the 19 lowest such percentage.’’; 20 (2) by redesignating subsections (c) and (d) as 21 subsections (d) and (e), respectively; and 22 (3) by inserting after subsection (b), the fol- 23 lowing new subsection: 24 VerDate Sep 11 2014 02:38 May 05, 2023 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H2880.IH H2880 pbinns on DSKJLVW7X2PROD with $$_JOB 9 •HR 2880 IH ‘‘(c) PUBLICATION OF PART D INFORMATION.—The 1 Secretary shall publish, not less frequently than annually, 2 the information reported under subsection (b) by or on 3 behalf of sponsors described in subsection (a)(1) on a pub- 4 licly available website, provided that such information 5 shall be made available in a form that does not disclose 6 the identity of a specific plan, the prices charged for spe- 7 cific drugs or classes of drugs, or the amount of any re- 8 bates provided for specific drugs or classes of drugs.’’. 9 SEC. 5. EFFECTIVE DATE. 10 The amendments made by this Act shall take effect 11 January 1, 2024. 12 SEC. 6. REGULATIONS. 13 Notwithstanding any other provision of law, the Sec- 14 retary shall initially implement the amendments made by 15 this Act through interim final regulations. 16 Æ VerDate Sep 11 2014 02:38 May 05, 2023 Jkt 039200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6301 E:\BILLS\H2880.IH H2880 pbinns on DSKJLVW7X2PROD with $$_JOB