,i #aacth ,,congress #ast ,session ,h4 ,r4 #acfg ,,in ,,the ,,house ,,of ,,representatives ,march #ba1 #bjac ,mr4 ,lynch 7for himself1 ,mr4 ,cummings1 ,mr4 ,moran1 and ,ms4 ,norton7 introduced the following bill2 which was referred to the ,committee on ,oversight and ,government ,reform ,a ,,bill ,to amend chapter #hi of title #e1 ,united ,states ,code1 to ensure program integrity1 transparency1 and cost savings in the pricing and contracting of prescription drug benefits under the ,federal ,employees ,health ,benefits ,program4 #a4 ,short title ,this ,act may be cited as the ,,fehbp ,prescription ,drug ,integrity1 ,transparency1 and ,cost ,savings ,act4 #b4 ,improved program integrity1 transparency1 and cost savings for prescription drug benefits in the ,federal ,employees ,health ,benefits ,program 7a7 ,change in contracting requirements ,section #hijb of title #e1 ,united ,states ,code1 is amended by adding at the end the following3 7p7 ,a contract may not be made or a plan approved under this chapter1 with respect to a carrier that is a party to a ,,pbm carrier arrangement1 unless the ,,pbm and such carrier comply with the requirements of section #hiae4 ,the ,office shall terminate such contract or discontinue such plan for failure to comply with such requirements4 4 7b7 ,requirements for ,p,b,ms and related requirements for carriers ,chapter #hi of title #e1 ,united ,states ,code1 is amended by adding at the end the following3 #hiae4 ,requirements for ,,pbm arrangements 7a7 ,limitations on ,cross-,ownership 7#a7 ,in general ,under a ,,pbm carrier arrangement a ,,pbm may not be under common corporate control with-- 7,a7 a prescription drug manufacturer2 or 7,b7 a retail pharmacy4 7#b7 ,profit restriction on corporately affiliated carriers and ,p,b,ms ,with respect to a ,,pbm carrier arrangement related to a contract under this chapter1 the ,office may not permit a carrier under common corporate control with a ,,pbm to earn a profit resulting from such control4 7#c7 ,certification ,each carrier shall certify annually to the ,office of ,personnel ,management that any ,,pbm with which it has a ,,pbm carrier arrangement meets the requirements of this subsection4 7#d7 ,definitions ,for purposes of this subsection-- 7,a7 ,common corporate control ,the term common corporate control means that #b entities are part of a controlled group of corporations 7as such term is defined in section #aefc of the ,internal ,revenue ,code of #aihf74 7,b7 ,retail pharmacy ,the term retail pharmacy excludes any mail order pharmacy4 7b7 ,restrictions on brand name prescription drug substitutions 7#a7 ,in general ,under a ,,pbm carrier arrangement1 and with respect to a prescription drug prescribed to an enrollee covered under such arrangement1 a ,,pbm may not request payment from a carrier for a brand name prescription drug that was dispensed to the enrollee1 at the request of the ,,pbm1 in substitution for the drug that was originally prescribed to such enrollee1 unless each of the following requirements is met3 7,a7 ,lower net cost ,the substitute drug has a lower net cost than the drug originally prescribed to such enrollee4 7,b7 ,authorization by prescriber ,the prescriber of the originally prescribed drug submits an express1 verifiable authorization of the substitution to the pharmacist and such authorization includes a determination by the prescriber that the drug substitution will not endanger the health of the enrollee for whom the drug is prescribed4 7,c7 ,additional requirements ,each of the requirements described in paragraph 7#b7 are met4 7#b7 ,additional requirements ,the requirements described in this paragraph are1 with respect to a brand name prescription drug that was dispensed to an enrollee1 at the request of the ,,pbm1 in substitution for the drug that was originally prescribed to such enrollee1 the following3 7,a7 ,to the extent appropriate1 the ,,pbm consults the enrollee concerning such drug substitution4 7,b7 ,the ,,pbm discloses to the prescriber of the originally prescribed drug1 the carrier1 and the enrollee for whom such drug was prescribed-- 7i7 the reason why the ,,pbm proposed a drug substitution for such drug2 and 7ii7 the financial impact of the drug substitution on the ,,pbm1 the carrier1 and the enrollee4 7,c7 ,in the case of a mail order pharmacy1 the ,,pbm ensures that1 at the time the drug is dispensed1 the enrollee receives a written notice that such drug substitution occurred and that such substitution occurred with the approval of the prescriber4 7#c7 ,definitions ,for purposes of this subsection-- 7,a7 ,brand name prescription drug ,the term brand name prescription drug means a drug approved pursuant to an application submitted under section #eje7;b7 of the ,federal ,food1 ,drug1 and ,cosmetic ,act 7#ba ,u4,s4,c4 #cee7;b774 7,b7 ,net cost ,the term net cost means1 with respect to a drug1 a carrier1 and an enrollee1 the sum of-- 7i7 the final cost of the drug to the carrier after all adjustments 7including discounts1 rebates1 associated dispensing fees and administrative fees1 and enrollee cost sharing72 and 7ii7 the final cost of the drug to the enrollee 7including cost-sharing74 7,c7 ,prescriber ,the term prescriber means an individual who is authorized under ,state and ,federal law to prescribe drugs and who prescribes a drug to an enrollee of a health benefits plan under this chapter4 7c7 ,reimbursement of carriers ,under a ,,pbm carrier arrangement1 not later than the last day of each quarter of the contract year-- 7#a7 the ,,pbm shall pay to a carrier an amount that is at least #ii percent of the sum of-- 7,a7 all compensation that the ,,pbm received during the previous quarter from a prescription drug manufacturer under a ,,pbm manufacturer contract 7to the extent such arrangement relates to the ,,pbm carrier arrangement7 including compensation 7but excluding rebates7 that the ,office of ,personnel ,management categorizes 7regardless of how such compensation is categorized by the ,,pbm7 as-- 7i7 market share incentives2 7ii7 prescription drug substitution programs2 7iii7 educational support2 7iv7 commissions2 7v7 mail service purchase discounts2 7vi7 administrative or management fees2 or 7vii7 any other form of compensation2 7,b7 all compensation received by the ,,pbm during the previous quarter for sales of utilization or claims data that the ,,pbm possesses as a result of the ,,pbm carrier arrangement2 and 7,c7 all rebates paid to the ,,pbm during the previous quarter by a prescription drug manufacturer to the extent that such rebates are based on prescription drugs dispensed under the ,,pbm carrier arrangement2 and 7#b7 the ,,pbm shall disclose to the carrier and the ,office1 in a form and manner specified by the ,office-- 7,a7 the compensation described in paragraph 7#a77;,a71 by the amount of compensation for each category under such paragraph2 7,b7 the compensation described in paragraph 7#a77;,b72 and 7,c7 the rebates described in paragraph 7#a77;,c71 on a drug-by-drug basis4 7d7 ,sale of utilization and claims data ,under a ,,pbm carrier arrangement1 if the ,,pbm intends to sell utilization or claims data that the ,,pbm possesses as a result of such arrangement-- 7#a7 the ,,pbm shall notify the ,office of ,personnel ,management before selling such data and shall provide the ,office with the name of the potential purchaser of such data and the expected use of such data by such purchaser2 and 7#b7 the ,,pbm may not sell such data unless the sale complies with all ,federal and ,state laws and the ,,pbm has received approval for such sale from the ,office4 7e7 ,pricing 7#a7 ,spread pricing 7,a7 ,limitation on charges to a carrier ,a ,,pbm under a ,,pbm carrier arrangement shall not charge a carrier an amount for a prescription drug that is covered under such arrangement 7and is dispensed by a pharmacy7 that is more than the amount 7including the ingredient cost and the dispensing fee7 that the ,,pbm reimburses the pharmacy for the drug4 7,b7 ,disclosures 7i7 ,initial disclosure ,before entering into a ,,pbm carrier arrangement1 the ,,pbm shall disclose to the carrier and the ,office of ,personnel ,management the reimbursement basis 7including the type of benchmark price and the source of the data for determining such price7 and methodology that the ,,pbm uses to compute reimbursement amounts for retail and mail order pharmacies4 7ii7 ,updates ,not later than #cj days after making a change to the reimbursement basis or methodology under clause 7i71 the ,,pbm shall disclose such change to the carrier and the ,office4 7iii7 ,transition rule ,in the case of a ,,pbm carrier arrangement that is in effect on the effective date of the ,,fehbp ,prescription ,drug ,integrity1 ,transparency1 and ,cost ,savings ,act1 the ,,pbm shall disclose the information under clause 7i7 not later than #a year after such date4 7#b7 ,maximum for mail order prescription drugs prices and dispensing fees 7,a7 ,in general ,if a prescription drug is supplied by a mail order pharmacy to an enrollee1 under a ,,pbm carrier arrangement1 a ,,pbm may not charge a carrier an amount for the ingredient cost for such prescription drug that is greater than an amount that is equal to the actual acquisition cost for the drug minus any cost sharing for such drug that is the responsibility of the enrollee4 7,b7 ,dispensing fee ,under a ,,pbm carrier arrangement1 a ,,pbm may not charge a carrier an amount for a dispensing fee related to a prescription drug dispensed by a mail order pharmacy to an enrollee that is greater than the amount that the ,,pbm charges health plans for similar services that are not covered under a ,,pbm carrier arrangement4 7,c7 ,transparency ,under a ,,pbm carrier arrangement1 a ,,pbm shall provide the carrier and the ,office of ,personnel ,management1 at the request of such carrier or ,office1 information on the method used to determine the amount of-- 7i7 the ingredient cost under subparagraph 7,a72 and 7ii7 the dispensing fee under subparagraph 7,b74 7,d7 ,actual acquisition cost defined ,for purposes of this paragraph1 the term actual acquisition cost means the amount a pharmacy pays for a prescription drug1 net of discounts1 rebates1 charge backs1 and other adjustments to the price of the drug4 7f7 ,right to explanation of benefits ,under a ,,pbm carrier arrangement1 not later than #ij days after the date on which a pharmacy dispenses a prescription drug covered under the arrangement1 the ,,pbm shall provide 7by mail or electronically7 to the enrollee to whom such drug was dispensed an explanation of benefits statement that contains the following information3 7#a7 ,the date the claim for such drug was made by the pharmacy4 7#b7 ,the name of such drug and the strength and quantity dispensed to the enrollee4 7#c7 ,the amount paid by the enrollee for such drug4 7#d7 ,the total amount paid to the pharmacy by the ,,pbm for such drug4 ,such amount shall include all amounts paid to the pharmacy with respect to dispensing such drug1 including fees4 7#e7 ,the amount paid by the carrier to the ,,pbm for such drug4 7g7 ,nondiscriminatory contract 7#a7 ,in general ,under a ,,pbm carrier arrangement1 a ,,pbm may not require that a pharmacy participate in a pharmacy network managed by such ,,pbm as a condition of the pharmacy participating in another network managed by such ,,pbm4 7#b7 ,pharmacy network defined ,for purposes of this subsection1 the term pharmacy network means a group of pharmacies that have agreed1 through a contract with a ,,pbm or carrier1 to provide prescription medications to enrollees at rates and with discounts that are specified in such contract4 7h7 ,access to ,,pbm contract information 7#a7 ,in general ,under a ,,pbm carrier arrangement1 at the request of the ,office of ,personnel ,management1 a ,,pbm shall provide to the ,office and to the ,inspector ,general of the ,office of ,personnel ,management full access to information relating to contracts entered into by such ,,pbm under such arrangement 7such as ,,pbm manufacturer contracts and ,,pbm contracts with pharmacies74 ,such information shall include-- 7,a7 companywide rebate receipt aging reports that cover all of the ,,pbm's lines of business2 7,b7 information and methodology used to calculate and allocate rebates between the ,,pbm's lines of business2 7,c7 information on average wholesale prices1 wholesale acquisition costs1 and maximum allowable costs2 7,d7 information on dispensing fees paid2 and 7,e7 information and methodologies used to calculate additional administrative and service fees charged to the carrier4 7#b7 ,confidentiality ,information provided by a ,,pbm under this subsection is confidential and shall not be disclosed by the ,office1 except that nothing in this paragraph shall prevent-- 7,a7 a disclosure required under the ,inspector ,general ,act of #aigh2 or 7,b7 any disclosure which the ,office1 in its sole discretion1 considers necessary in order to carry out this section1 if such disclosure is made in a form which does not disclose the identity of a specific ,,pbm or carrier or the price charged for a particular prescription drug4 7#c7 ,exemption from ,,foia ,any information obtained under this subsection shall be exempt from disclosure under section #eeb4 7#d7 ,definitions ,for purposes of this subsection-- 7,a7 ,generic drug ,the term generic drug means a drug approved pursuant to an abbreviated application submitted under section #eje7;j7 of the ,federal ,food1 ,drug1 and ,cosmetic ,act 7#ba ,u4,s4,c4 #cee7;j774 7,b7 ,maximum allowable cost ,the term maximum allowable cost means a cost that is set by a ,,pbm as the upper payment limit on the ingredient costs for a generic drug4 7,c7 ,wholesale acquisition cost ,the term wholesale acquisition cost means a publicly available list price for sales of a drug by a manufacturer to a wholesaler4 7i7 ,treatment of non-,compliance 7#a7 ,in general ,under a ,,pbm carrier arrangement1 a ,,pbm that knowingly provides false information to a carrier related to a claim made to such carrier by the ,,pbm under such arrangement shall be treated1 for purposes of chapter #cg of title #ca1 in the same manner as a person that makes a false claim to the ,united ,states ,government under section #cgbi of such chapter4 7#b7 ,use of collections ,any monetary penalty collected under paragraph 7#a7 shall be deposited into the ,employees ,health ,benefits ,fund under section #hiji4 7#c7 ,additional penalties ,any penalties resulting from the application of paragraph 7#a7 shall be in addition to any other penalties available to the ,office of ,personnel ,management under law or regulation4 7j7 ,no application to community-,rated carriers ,the provisions of this section and section #hijb7p7 of this title-- 7#a7 shall apply to experience-rated carriers2 and 7#b7 shall not apply to carriers that use rates based on a per member per month capitation amount4 7k7 ,limitation of application to prescription drugs ,the provisions of this section and section #hijb7p7 of this title shall not be construed to apply to drugs that are not prescription drugs4 7l7 ,general definitions ,for purposes of this section and section #hijb7p7 of this title3 7#a7 ,dispensing fee ,the term dispensing fee means a fee paid to a pharmacy for the service of filling or dispensing prescriptions and excludes any payment for the cost of the drug dispensed4 7#b7 ,drug substitution ,the term drug substitution means any change from one prescription drug to another prescription drug that is intended to address or treat the same illness or condition4 7#c7 ,,pbm carrier arrangement ,the term ,,pbm carrier arrangement means a contract between a ,,pbm and a carrier for the provision or administration of a program of prescription drug coverage under a health benefits plan under this chapter4 ,such a contract may provide1 among other duties1 for the ,,pbm to-- 7,a7 process and pay prescription drug claims2 7,b7 provide programs and services designed to-- 7i7 maximize the effectiveness of prescription drugs dispensed under such plan2 or 7ii7 contain prescription drug expenditures under such plan2 and 7,c7 engage in other activities related to the administration of such prescription drug coverage4 7#d7 ,,pbm manufacturer contract ,the term ,,pbm manufacturer contract means a contract between a ,,pbm and a prescription drug manufacturer for the provision of prescription drugs to enrollees of health benefits plans with prescription drug coverage that is administered or provided by the ,,pbm4 7#e7 ,pharmacy benefit manager2 ,,pbm ,the terms pharmacy benefit manager and ,,pbm mean an entity that contracts with a carrier to provide or administer prescription drug coverage under a health benefits plan under this chapter4 4 7c7 ,clerical amendment ,the table of sections for chapter #hi of title #e1 ,united ,states ,code1 is amended by adding at the end the following3 #hiae4 ,requirements for ,,pbm arrangements4 4 7d7 ,effective ,date2 waiver2 regulations 7#a7 ,effective date ,the amendments made by this section shall apply to contract years beginning on or after ,january #a1 #bjad4 7#b7 ,waiver ,the ,office of ,personnel ,management may waive the application of #a or more of the requirements of section #hiae of title #e1 ,united ,states ,code1 but only for contract year #bjad4 7#c7 ,expediting implementation of regulations ,not later than #f months after the date of the enactment of this ,act1 the ,office of ,personnel ,management shall issue interim final regulations to carry out this section which may be effective and final immediately on an interim basis as of the date of publication of such regulations4 ,if the ,office provides for an interim final regulation1 the ,office shall provide for a period of public comment on such regulation after the date of publication4 ,the ,office may change or revise such regulation after completion of the period of public comment4