What This Bill Does
This bill makes it illegal for pharmacy benefit managers to use unfair or deceptive pricing practices when managing prescription drug benefits. It requires these managers to report detailed information to government agencies and establishes protections for employees who report violations.
##
Who It Affects
- Pharmacy benefit managers (companies that manage prescription drug benefits for health insurance plans)
- Health insurance companies and health plans
- Pharmacies and pharmacists
- Pharmaceutical manufacturers
- Employees and contractors working for these organizations
- The Federal Trade Commission
- State attorneys general
- Federal employees with health benefits
- Medicare and Medicaid beneficiaries
##
Key Provisions
- Pharmacy benefit managers cannot charge health plans different prices than they pay pharmacies for the same drugs while keeping the difference (Sec. 2(a)(1))
- Pharmacy benefit managers cannot unfairly reduce or take back reimbursement payments to pharmacies unless the original claim was fraudulent or services were not actually provided (Sec. 2(a)(2))
- Pharmacy benefit managers must report annually to the Federal Trade Commission about pricing differences, fees, and drug formulary changes (Sec. 4(a))
- Employees who report violations cannot be fired, demoted, threatened or punished in any way (Sec. 5(a))
- Violations are treated as unfair or deceptive practices under federal law, and the Federal Trade Commission can impose penalties (Sec. 6(a))
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What Changes
If this bill becomes law, pharmacy benefit managers must provide much more transparency about their pricing and fees. They face significant financial penalties and legal action if they engage in unfair pricing practices. Employees gain new legal protections to report suspected violations without fear of retaliation. The Federal Trade Commission gains new enforcement authority specifically over these practices.
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Important Definitions
- **Pharmacy Benefit Manager**: Any company that manages prescription drug benefits for health insurance plans
- **Health Plan**: Any group or individual health insurance plan, including government-funded plans
- **Pharmacy Benefit Management Services**: Managing prescription drug benefits, including negotiating drug prices, processing claims, and deciding which drugs are covered
- **Prescription Drug**: Medicines approved by the Food and Drug Administration that require a prescription, including biological products
- **Covered Individual**: Current or former employees, contractors, or agents of pharmacy benefit managers, health plans, pharmacies, or drug manufacturers
- **Commission**: The Federal Trade Commission
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Effective Date
Not specified in bill text
II
Calendar No. 283
118TH CONGRESS
1ST SESSION
S. 127
To prevent unfair and deceptive acts or practices and the dissemination
of false information related to pharmacy benefit management services
for prescription drugs, and for other purposes.
IN THE SENATE OF THE UNITED STATES
JANUARY 26, 2023
Ms. CANTWELL (for herself, Mr. GRASSLEY, Mrs. HYDE-SMITH, Mr. BRAUN,
Mr. MORAN, Mr. TILLIS, Mr. TESTER, Mrs. CAPITO, Mr. BOOZMAN, Mr.
WELCH, Mr. MARSHALL, Mr. HEINRICH, Ms. ERNST, Mr. ROUNDS, and
Mrs. SHAHEEN) introduced the following bill; which was read twice and
referred to the Committee on Commerce, Science, and Transportation
DECEMBER 13, 2023
Reported by Ms. CANTWELL, with an amendment
[Strike out all after the enacting clause and insert the part printed in italic]
A BILL
To prevent unfair and deceptive acts or practices and the
dissemination of false information related to pharmacy
benefit management services for prescription drugs, 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
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SECTION 1. SHORT TITLE.
1
This Act may be cited as the ‘‘Pharmacy Benefit
2
Manager Transparency Act of 2023’’.
3
SEC. 2. PROHIBITION ON UNFAIR OR DECEPTIVE PRE-
4
SCRIPTION DRUG PRICING PRACTICES.
5
(a) CONDUCT PROHIBITED.—Except as provided in
6
subsection (b), it shall be unlawful for any pharmacy ben-
7
efit manager (or affiliate, subsidiary, or agent of a phar-
8
macy benefit manager), directly or indirectly, to engage
9
in any of the following activities related to pharmacy ben-
10
efit management services:
11
(1) Charge a health plan or payer a different
12
amount for a prescription drug’s ingredient cost or
13
dispensing fee than the amount the pharmacy ben-
14
efit manager reimburses a pharmacy for the pre-
15
scription drug’s ingredient cost or dispensing fee
16
where the pharmacy benefit manager retains the
17
amount of any such difference.
18
(2) Arbitrarily, unfairly, or deceptively, by con-
19
tract or any other means, reduce, rescind, or other-
20
wise claw back any reimbursement payment, in
21
whole or in part, to a pharmacist or pharmacy for
22
a prescription drug’s ingredient cost or dispensing
23
fee.
24
(3) Arbitrarily, unfairly, or deceptively, by con-
25
tract or any other means, increase fees or lower re-
26
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•S 127 RS
imbursement to a pharmacy in order to offset reim-
1
bursement changes instructed by the Federal Gov-
2
ernment under any health plan funded by the Fed-
3
eral Government.
4
(b)
EXCEPTIONS.—A
pharmacy
benefit
manager
5
shall not be in violation of subsection (a) if the pharmacy
6
benefit manager meets the following conditions:
7
(1) The pharmacy benefit manager, affiliate,
8
subsidiary, or agent passes along or returns 100 per-
9
cent of any price concession to a health plan or
10
payer, including any rebate, discount, or other price
11
concession.
12
(2) The pharmacy benefit manager, affiliate,
13
subsidiary, or agent provides full and complete dis-
14
closure of—
15
(A) the cost, price, and reimbursement of
16
the prescription drug to each health plan,
17
payer, and pharmacy with which the pharmacy
18
benefit manager, affiliate, subsidiary, or agent
19
has a contract or agreement to provide phar-
20
macy benefit management services;
21
(B)
each
fee,
markup,
and
discount
22
charged or imposed by the pharmacy benefit
23
manager, affiliate, subsidiary, or agent to each
24
health plan, payer, and pharmacy with which
25
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•S 127 RS
the pharmacy benefit manager, affiliate, sub-
1
sidiary, or agent has a contract or agreement
2
for pharmacy benefit management services; or
3
(C) the aggregate amount of all remunera-
4
tion the pharmacy benefit manager receives
5
from a prescription drug manufacturer for a
6
prescription drug, including any rebate, dis-
7
count, administration fee, and any other pay-
8
ment or credit obtained or retained by the phar-
9
macy benefit manager, or affiliate, subsidiary,
10
or agent of the pharmacy benefit manager, pur-
11
suant to a contract or agreement for pharmacy
12
benefit management services to a health plan,
13
payer, or any Federal agency (upon the request
14
of the agency).
15
SEC. 3. PROHIBITION ON FALSE INFORMATION.
16
It shall be unlawful for any person to report informa-
17
tion related to pharmacy benefit management services to
18
a Federal department or agency if—
19
(1) the person knew, or reasonably should have
20
known, the information to be false or misleading;
21
(2) the information was required by law to be
22
reported; and
23
(3) the false or misleading information reported
24
by the person would affect analysis or information
25
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compiled by the Federal department or agency for
1
statistical or analytical purposes with respect to the
2
market for pharmacy benefit management services.
3
SEC. 4. TRANSPARENCY.
4
(a)
REPORTING
BY
PHARMACY
BENEFIT
MAN-
5
AGERS.—Not later than 1 year after the date of enactment
6
of this Act, and annually thereafter, each pharmacy ben-
7
efit manager (or affiliate, subsidiary, or agent of a phar-
8
macy benefit manager) shall report to the Commission the
9
following information:
10
(1) The aggregate amount of the difference be-
11
tween the amount the pharmacy benefit manager
12
was paid by each health plan and the amount that
13
the pharmacy benefit manager paid each pharmacy
14
on behalf of the health plan for prescription drugs.
15
(2) The aggregate amount of any—
16
(A) generic effective rate fee charged to
17
each pharmacy;
18
(B) direct and indirect remuneration fee
19
charged or other price concession to each phar-
20
macy; and
21
(C) payment rescinded or otherwise clawed
22
back from a reimbursement made to each phar-
23
macy.
24
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(3) If, during the reporting year, the pharmacy
1
benefit manager moved or reassigned a prescription
2
drug to a formulary tier that has a higher cost,
3
higher copayment, higher coinsurance, or higher de-
4
ductible to a consumer, or a lower reimbursement to
5
a pharmacy, an explanation of the reason why the
6
drug was moved or reassigned from 1 tier to an-
7
other, including whether the move or reassignment
8
was determined or requested by a prescription drug
9
manufacturer or other entity.
10
(4) With respect to any pharmacy benefit man-
11
ager that owns, controls, or is affiliated with a phar-
12
macy, a report regarding any difference in reim-
13
bursement rates or practices, direct and indirect re-
14
muneration fees or other price concessions, and
15
clawbacks between a pharmacy that is owned, con-
16
trolled, or affiliated with the pharmacy benefit man-
17
ager and any other pharmacy.
18
(b) REPORT TO CONGRESS.—
19
(1) IN GENERAL.—Not later than 1 year after
20
the date of enactment of this Act, and annually
21
thereafter, the Commission shall submit to the Com-
22
mittee on Commerce, Science, and Transportation of
23
the Senate and the Committee on Energy and Com-
24
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•S 127 RS
merce of the House of Representatives a report that
1
addresses, at a minimum—
2
(A) the number of actions brought by the
3
Commission during the reporting year to en-
4
force this Act and the outcome of each such en-
5
forcement action;
6
(B) the number of open investigations or
7
inquiries into potential violations of this Act as
8
of the time the report is submitted;
9
(C) the number and nature of complaints
10
received by the Commission relating to an alle-
11
gation of a violation of this Act during the re-
12
porting year;
13
(D) an anonymized summary of the re-
14
ports filed with the Commission pursuant to
15
subsection (a) for the reporting year; and
16
(E) policy or legislative recommendations
17
to strengthen any enforcement action relating
18
to
a
violation
of
this
Act,
including
rec-
19
ommendations to include additional prohibited
20
conduct in section 2(a).
21
(2) FORMULARY DESIGN OR PLACEMENT PRAC-
22
TICES.—Not later than 1 year after the date of en-
23
actment of this Act, the Commission shall submit to
24
the Committee on Commerce, Science, and Trans-
25
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portation of the Senate and the Committee on En-
1
ergy and Commerce of the House of Representatives
2
a report that addresses the policies, practices, and
3
role of pharmacy benefit managers (including their
4
affiliates, subsidiaries, and agents) regarding for-
5
mulary design or placement, including whether—
6
(A) pharmacy benefit managers (including
7
their affiliates, subsidiaries, and agents) use
8
formulary design or placement to increase their
9
gross revenue without an accompanying in-
10
crease in patient access or decrease in patient
11
cost; or
12
(B) such policies or practices of pharmacy
13
benefit managers regarding formulary design or
14
placement violate section 5(a) of the Federal
15
Trade Commission Act (15 U.S.C. 45(a)).
16
(3) CONSTRUCTION.—Nothing in this section
17
shall be construed as authorizing the Commission to
18
disclose any information that is a trade secret or
19
confidential
information
described
in
section
20
552(b)(4) of title 5, United States Code.
21
(c) GAO STUDY.—Not later than 1 year after the
22
date of enactment of this Act, the Comptroller General
23
of the United States shall submit to the Committee on
24
Commerce, Science, and Transportation, the Committee
25
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•S 127 RS
on Finance, and the Committee on Health, Education,
1
Labor, and Pensions of the Senate and to the Committee
2
on Ways and Means and the Committee on Energy and
3
Commerce of the House of Representatives a report
4
that—
5
(1) addresses, at minimum—
6
(A) the role that pharmacy benefit man-
7
agers play in the pharmaceutical supply chain;
8
(B) the state of competition among phar-
9
macy benefit managers, including the market
10
share for the Nation’s 10 largest pharmacy
11
benefit managers;
12
(C) the use of rebates and fees by phar-
13
macy benefit managers, including data for each
14
of the 10 largest pharmacy benefit managers
15
that reflects, for each drug in the formulary of
16
each such pharmacy benefit manager—
17
(i) the amount of the rebate passed on
18
to patients;
19
(ii) the amount of the rebate passed
20
on to payors;
21
(iii) the amount of the rebate kept by
22
the pharmacy benefit manager; and
23
(iv) the role of fees charged by the
24
pharmacy benefit manager;
25
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(D) whether pharmacy benefit managers
1
structure their formularies in favor of high-re-
2
bate prescription drugs over lower-cost, lower-
3
rebate alternatives;
4
(E) the average prior authorization ap-
5
proval time for each of the 10 largest pharmacy
6
benefit managers;
7
(F) factors affecting the use of step ther-
8
apy in each of the 10 largest pharmacy benefit
9
managers; and
10
(G) the extent to which the price that
11
pharmacy benefit managers charge payors, such
12
as the Medicare program under title XXVIII of
13
the Social Security Act (42 U.S.C. 1395 et
14
seq.), State Medicaid programs under title XIX
15
of the Social Security Act (42 U.S.C. 1396 et
16
seq.), the Federal Employees Health Benefits
17
Program under chapter 89 of title 5, United
18
States Code, or private payors, for a drug is
19
more than such pharmacy benefit managers pay
20
the pharmacy for the drug; and
21
(2) provides recommendations for legislative ac-
22
tion to lower the cost of prescription drugs for con-
23
sumers and payors, improve the efficiency of the
24
pharmaceutical
supply
chain
by
lowering
inter-
25
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mediary costs, improve competition in pharmacy
1
benefit management, and provide transparency in
2
pharmacy benefit management.
3
SEC. 5. WHISTLEBLOWER PROTECTIONS.
4
(a) IN GENERAL.—A pharmacy benefit manager,
5
health plan, pharmaceutical manufacturer, pharmacy, or
6
any affiliate, subsidiary, or agent thereof shall not, directly
7
or indirectly, discharge, demote, suspend, diminish, or
8
withdraw benefits from, threaten, harass, or in any other
9
manner discriminate against or adversely impact a covered
10
individual because—
11
(1) the covered individual, or anyone perceived
12
as assisting the covered individual, takes (or is sus-
13
pected to have taken or will take) a lawful action in
14
providing to Congress, an agency of the Federal
15
Government, the attorney general of a State, a State
16
regulator with authority over the distribution or in-
17
surance coverage of prescription drugs, or a law en-
18
forcement agency relating to any act or omission
19
that the covered individual reasonably believes to be
20
a violation of this Act;
21
(2) the covered individual provides information
22
that the covered individual reasonably believes evi-
23
dences such a violation to—
24
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(A) a person with supervisory authority
1
over the covered individual at the pharmacy
2
benefit manager, health plan, pharmaceutical
3
manufacturer, pharmacy, or any affiliate, sub-
4
sidiary, or agent thereof; or
5
(B) another individual working for the
6
pharmacy benefit manager, health plan, phar-
7
maceutical manufacturer, pharmacy, or any af-
8
filiate, subsidiary, or agent thereof who the cov-
9
ered individual reasonably believes has the au-
10
thority to investigate, discover, or terminate th
[Text truncated for display. Full text available on Congress.gov.]