PBM Act

II 118TH CONGRESS 1ST SESSION S. 1967 To amend title XVIII of the Social Security Act to establish requirements relating to the responsibility of pharmacy benefit managers under Medi- care part D. IN THE SENATE OF THE UNITED STATES JUNE 14, 2023 Mr. MENENDEZ (for himself, Mrs. BLACKBURN, Mr. TESTER, Mr. MARSHALL, Mr. WYDEN, and Mr. CRAPO) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend title XVIII of the Social Security Act to establish requirements relating to the responsibility of pharmacy benefit managers under Medicare part D. 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 ‘‘Patients Before Mid- 4 dlemen Act’’ or the ‘‘PBM Act’’. 5 SEC. 2. RESPONSIBILITY OF PHARMACY BENEFIT MAN- 6 AGERS UNDER MEDICARE PART D. 7 (a) PRESCRIPTION DRUG PLANS.—Section 1860D– 8 12(b) of the Social Security Act (42 U.S.C. 1395w– 9 VerDate Sep 11 2014 01:26 Jul 07, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1967.IS S1967 kjohnson on DSK79L0C42PROD with BILLS 2 •S 1967 IS 112(b)) is amended by adding at the end the following 1 new paragraph: 2 ‘‘(9) RESPONSIBILITY OF PHARMACY BENEFIT 3 MANAGERS.— 4 ‘‘(A) IN GENERAL.—Each contract entered 5 into with a PDP sponsor under this part with 6 respect to a prescription drug plan offered by 7 such sponsor shall provide that any pharmacy 8 benefit manager (or affiliate, subsidiary, or 9 agent of a pharmacy benefit manager) acting 10 on behalf of such sponsor— 11 ‘‘(i) derives no income with respect to 12 any services provided in connection with 13 part D utilization from any entity or indi- 14 vidual other than bona fide service fees; 15 and 16 ‘‘(ii) sets forth in an agreement be- 17 tween the pharmacy benefit manager and 18 the PDP sponsor the amount of any bona 19 fide service fee. The bona fide service fee 20 must be a flat dollar amount, cannot be 21 passed on in whole or in part to another 22 party whether or not the pharmacy benefit 23 manager takes title to the drug, and shall 24 VerDate Sep 11 2014 01:26 Jul 07, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1967.IS S1967 kjohnson on DSK79L0C42PROD with BILLS 3 •S 1967 IS not be directly or indirectly based on, or 1 contingent upon— 2 ‘‘(I) drug price, such as wholesale 3 acquisition cost or drug benchmark 4 price (such as average wholesale 5 price); 6 ‘‘(II) discounts, rebates, fees, or 7 other remuneration with respect to 8 prescription drugs prescribed to en- 9 rollees in the plan; or 10 ‘‘(III) any other amounts prohib- 11 ited by the Secretary. 12 ‘‘(B) CLARIFICATION REGARDING PDP 13 SPONSOR ACTING AS PBM.—In the case where a 14 PDP sponsor is acting as a pharmacy benefit 15 manager on behalf of a prescription drug plan 16 offered by the PDP sponsor, the requirements 17 under subparagraph (A) shall not be construed 18 as preventing the PDP sponsor from accepting 19 any rebates, discounts, or price concessions that 20 lower net costs for covered part D drugs. 21 ‘‘(C) CERTIFICATION OF COMPLIANCE.— 22 The PDP sponsor and pharmacy benefit man- 23 ager shall furnish to the Secretary (in a time 24 and manner specified by the Secretary) an an- 25 VerDate Sep 11 2014 01:26 Jul 07, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1967.IS S1967 kjohnson on DSK79L0C42PROD with BILLS 4 •S 1967 IS nual certification of compliance with this para- 1 graph, as well as such information as the Sec- 2 retary determines necessary to carry out this 3 paragraph. 4 ‘‘(D) DISGORGEMENT OF EXCESS 5 AMOUNTS RECEIVED.—A pharmacy benefit 6 manager (or affiliate, subsidiary, or agent of a 7 pharmacy benefit manager) shall disgorge to 8 the Secretary any payment, remuneration, or 9 other amount received in violation of this para- 10 graph or the contract entered into with a PDP 11 sponsor under this part with respect to a pre- 12 scription drug plan. 13 ‘‘(E) CLARIFICATION.—The requirements 14 of this paragraph shall apply regardless of 15 whether the pharmacy benefit manager is a 16 first-tier, downstream, or related entity to the 17 PDP sponsor. 18 ‘‘(F) RULE OF CONSTRUCTION.—Nothing 19 in this paragraph shall be construed as prohib- 20 iting payments related to reimbursement for in- 21 gredient costs to entities that acquire prescrip- 22 tion drugs or pharmacy dispensing fees. 23 ‘‘(G) DEFINITIONS.—For purposes of this 24 paragraph: 25 VerDate Sep 11 2014 01:26 Jul 07, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1967.IS S1967 kjohnson on DSK79L0C42PROD with BILLS 5 •S 1967 IS ‘‘(i) BONA FIDE SERVICE FEE.—The 1 term ‘bona fide service fee’ means fair 2 market value for a bona fide, itemized 3 service actually performed on behalf of an 4 entity, that the entity would otherwise per- 5 form (or contract for) in the absence of the 6 service arrangement and that are not 7 passed on in whole to a client or customer, 8 whether or not the entity takes title to the 9 drug. 10 ‘‘(ii) PHARMACY BENEFIT MAN- 11 AGER.—The term ‘pharmacy benefit man- 12 ager’ means any person, business, or other 13 entity that, pursuant to an agreement with 14 a PDP sponsor or part D plan either di- 15 rectly or through an intermediary acts as 16 a price negotiator or group purchaser on 17 behalf of such sponsor or plan, or manages 18 the prescription drug benefits provided by 19 such sponsor or plan, including the proc- 20 essing and payment of claims for prescrip- 21 tion drugs, the performance of drug utili- 22 zation review, the processing of drug prior 23 authorization requests, the adjudication of 24 appeals or grievances related to the pre- 25 VerDate Sep 11 2014 01:26 Jul 07, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1967.IS S1967 kjohnson on DSK79L0C42PROD with BILLS 6 •S 1967 IS scription drug benefit, contracting with 1 network pharmacies, controlling the cost of 2 covered part D drugs, or the provision of 3 services related thereto. Such term in- 4 cludes— 5 ‘‘(I) any person, business, or 6 other entity that carries out one or 7 more of the activities described in the 8 preceding sentence; and 9 ‘‘(II) any entity that is owned, 10 affiliated, or related under a common 11 ownership structure with such a per- 12 son, business, or entity (including an 13 entity owned by or affiliated with the 14 PDP sponsor) or that acts as a con- 15 tractor or agent to such a person, 16 business, or entity, 17 irrespective of whether such person, busi- 18 ness, or entity calls itself a ‘pharmacy ben- 19 efit manager’.’’. 20 (b) MA–PD PLANS.—Section 1857(f)(3) of the So- 21 cial Security Act (42 U.S.C. 1395w–27(f)(3)) is amended 22 by adding at the end the following new subparagraph: 23 VerDate Sep 11 2014 01:26 Jul 07, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1967.IS S1967 kjohnson on DSK79L0C42PROD with BILLS 7 •S 1967 IS ‘‘(E) RESPONSIBILITY OF PHARMACY BEN- 1 EFIT MANAGERS.—Section 1860D–12(b)(9).’’. 2 Æ VerDate Sep 11 2014 01:26 Jul 07, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6301 E:\BILLS\S1967.IS S1967 kjohnson on DSK79L0C42PROD with BILLS