,,ii #aaith ,,congress #ast ,session ,s4 #ccde ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,december #d1 #bjbe,mr4 ,crapo 7for himself1 ,mr4 ,wyden1 ,mr4 ,grassley1 ,mr4 ,bennet1 ,mr4 ,cornyn1 ,mr4 ,warner1 ,mr4 ,thune1 ,mr4 ,whitehouse1 ,mr4 ,cassidy1 ,ms4 ,hassan1 ,mr4 ,lankford1 ,ms4 ,cortez ,masto1 ,mr4 ,daines1 ,ms4 ,smith1 ,mr4 ,barrasso1 ,mr4 ,lujn1 ,mr4 ,tillis1 ,mr4 ,warnock1 ,mrs4 ,blackburn1 ,mr4 ,welch1 and ,mr4 ,marshall7 introduced the following bill2 which was read twice and referred to the ,committee on ,finance ,a ,,bill ,to amend titles ,,xviii and ,,xix of the ,social ,security ,act to ensure accurate payments to pharmacies under ,medicaid and prevent the use of abusive spread pricing in ,medicaid1 and to assure pharmacy access and choice for ,medicare beneficiaries and modernize and ensure ,,pbm accountability under ,medicare4 #a4 ,short title ,this ,act may be cited as the ,,pbm ,price ,transparency and ,accountability ,act4 #b4 ,ensuring accurate payments to pharmacies under ,medicaid and preventing the use of abusive spread pricing in ,medicaid 7a7 ,ensuring accurate payments to pharmacies under ,medicaid 7#a7 ,in general ,section #aibg7;f7 of the ,social ,security ,act 7#db ,u4,s4,c4 #acifr-#h7;f77 is amended-- 7,a7 in paragraph 7#a77;,a7-- 7i7 by redesignating clause 7ii7 as clause 7iii72 and 7ii7 by striking and after the semicolon at the end of clause 7i7 and all that precedes it through 7#a7 and inserting the following3 7#a7 ,determining pharmacy actual acquisition costs ,the ,secretary shall conduct a survey of retail community pharmacy drug prices and applicable non-retail pharmacy drug prices to determine national average drug acquisition cost benchmarks 7as such term is defined by the ,secretary7 as follows3 7,a7 ,use of vendor ,the ,secretary may contract services for-- 7i7 with respect to retail community pharmacies1 the determination of retail survey prices of the national average drug acquisition cost for covered outpatient drugs that represent a nationwide average of consumer purchase prices for such drugs1 net of all discounts1 rebates1 and other price concessions 7to the extent any information with respect to such discounts1 rebates1 and other price concessions is available7 based on a monthly survey of such pharmacies2 7ii7 with respect to applicable non-retail pharmacies-- 7,i7 the determination of survey prices1 separate from the survey prices described in clause 7i71 of the non-retail national average drug acquisition cost for covered outpatient drugs that represent a nationwide average of consumer purchase prices for such drugs1 net of all discounts1 rebates1 and other price concessions 7to the extent any information with respect to such discounts1 rebates1 and other price concessions is available7 based on a monthly survey of such pharmacies2 and 7,,ii7 at the discretion of the ,secretary1 for each type of applicable non-retail pharmacy1 the determination of survey prices1 separate from the survey prices described in clause 7i7 or subclause 7,i7 of this clause1 of the national average drug acquisition cost for such type of pharmacy for covered outpatient drugs that represent a nationwide average of consumer purchase prices for such drugs1 net of all discounts1 rebates1 and other price concessions 7to the extent any information with respect to such discounts1 rebates1 and other price concessions is available7 based on a monthly survey of such pharmacies2 and 2 7,b7 in subparagraph 7,b7 of paragraph 7#a71 by striking subparagraph 7,a77ii7 and inserting subparagraph 7,a77iii72 7,c7 in subparagraph 7,d7 of paragraph 7#a71 by striking clauses 7ii7 and 7iii7 and inserting the following3 7ii7 ,the vendor must update the ,secretary no less often than monthly on the survey prices for covered outpatient drugs4 7iii7 ,the vendor must differentiate1 in collecting and reporting survey data1 for all cost information collected1 whether a pharmacy is a retail community pharmacy or an applicable non-retail pharmacy1 including whether such pharmacy is an affiliate 7as defined in subsection 7k77#ac771 and1 in the case of an applicable non-retail pharmacy1 which type of applicable non-retail pharmacy it is using the relevant pharmacy type indicators included in the guidance required by subsection 7a77#d77;,a7 of section #b of the ,,pbm ,price ,transparency and ,accountability ,act4 2 7,d7 by adding at the end of paragraph 7#a7 the following3 7,f7 ,survey reporting ,in order to meet the requirement of section #aijb7;a77#ed71 a ,state shall require that any retail community pharmacy or applicable non-retail pharmacy in the ,state that receives any payment1 reimbursement1 administrative fee1 discount1 rebate1 or other price concession related to the dispensing of covered outpatient drugs to individuals receiving benefits under this title1 regardless of whether such payment1 reimbursement1 administrative fee1 discount1 rebate1 or other price concession is received from the ,state or a managed care entity or other specified entity 7as such terms are defined in section #aijc7m77#i77;,d77 directly or from a pharmacy benefit manager or another entity that has a contract with the ,state or a managed care entity or other specified entity 7as so defined71 shall respond to surveys conducted under this paragraph4 7,g7 ,survey information ,information on national drug acquisition prices obtained under this paragraph shall be made publicly available in a form and manner to be determined by the ,secretary and shall include at least the following3 7i7 ,the monthly response rate to the survey including a list of pharmacies not in compliance with subparagraph 7,f74 7ii7 ,the sampling methodology and number of pharmacies sampled monthly4 7iii7 ,information on price concessions to pharmacies1 including discounts1 rebates1 and other price concessions1 to the extent that such information may be publicly released and has been collected by the ,secretary as part of the survey4 7,h7 ,penalties 7i7 ,in general ,subject to clauses 7ii71 7iii71 and 7iv71 the ,secretary shall enforce the provisions of this paragraph with respect to a pharmacy through the establishment of civil money penalties applicable to a retail community pharmacy or an applicable non-retail pharmacy4 7ii7 ,basis for penalties ,the ,secretary shall impose a civil money penalty established under this subparagraph on a retail community pharmacy or applicable non-retail pharmacy if-- 7,i7 the retail pharmacy or applicable non-retail pharmacy refuses or otherwise fails to respond to a request for information about prices in connection with a survey under this subsection2 7,,ii7 knowingly provides false information in response to such a survey2 or 7,,iii7 otherwise fails to comply with the requirements established under this paragraph4 7iii7 ,parameters for penalties 7,i7 ,in general ,a civil money penalty established under this subparagraph may be assessed with respect to each violation1 and with respect to each non-compliant retail community pharmacy 7including a pharmacy that is part of a chain7 or non-compliant applicable non-retail pharmacy 7including a pharmacy that is part of a chain71 in an amount not to exceed #ajj1jjj for each such violation4 7,,ii7 ,considerations ,in determining the amount of a civil money penalty imposed under this subparagraph1 the ,secretary may consider the size1 business structure1 and type of pharmacy involved1 as well as the type of violation and other relevant factors1 as determined appropriate by the ,secretary4 7iv7 ,rule of application ,the provisions of section #aabh;,a 7other than subsections 7a7 and 7b77 shall apply to a civil money penalty under this subparagraph in the same manner as such provisions apply to a civil money penalty or proceeding under section #aabh;,a7a74 7,i7 ,limitation on use of applicable non-retail pharmacy pricing information ,no ,state shall use pricing information reported by applicable non-retail pharmacies under subparagraph 7,a77ii7 to develop or inform payment methodologies for retail community pharmacies4 2 7,e7 in paragraph 7#b7-- 7i7 in subparagraph 7,a71 by inserting 1 including payment rates and methodologies for determining ingredient cost reimbursement under managed care entities or other specified entities 7as such terms are defined in section #aijc7m77#i77;,d771 after under this title2 and 7ii7 in subparagraph 7,b71 by inserting and the basis for such dispensing fees before the semicolon2 7,f7 by redesignating paragraph 7#d7 as paragraph 7#e72 7,g7 by inserting after paragraph 7#c7 the following new paragraph3 7#d7 ,oversight 7,a7 ,in general ,the ,inspector ,general of the ,department of ,health and ,human ,services shall conduct periodic studies of the survey data reported under this subsection1 as appropriate1 including with respect to substantial variations in acquisition costs or other applicable costs1 as well as with respect to how internal transfer prices and related party transactions may influence the costs reported by pharmacies that are affiliates 7as defined in subsection 7k77#ac77 or are owned by1 controlled by1 or related under a common ownership structure with a wholesaler1 distributor1 or other entity that acquires covered outpatient drugs relative to costs reported by pharmacies not affiliated with such entities4 ,the ,inspector ,general shall provide periodic updates to ,congress on the results of such studies1 as appropriate1 in a manner that does not disclose trade secrets or other proprietary information4 7,b7 ,appropriation ,there is appropriated to the ,inspector ,general of the ,department of ,health and ,human ,services1 out of any money in the ,treasury not otherwise appropriated1 #e1jjj1jjj for fiscal year #bjbf1 to remain available until expended1 to carry out this paragraph4 2 and 7,h7 in paragraph 7#e71 as so redesignated-- 7i7 by inserting 1 and #i1jjj1jjj for fiscal year #bjbf and each fiscal year thereafter1 after #bjaj2 and 7ii7 by inserting ,funds appropriated under this paragraph for fiscal year #bjbf and any subsequent fiscal year shall remain available until expended4 after the period4 7#b7 ,definitions ,section #aibg7k7 of the ,social ,security ,act 7#db ,u4,s4,c4 #acifr-#h7k77 is amended-- 7,a7 in the matter preceding paragraph 7#a71 by striking ,in the section and inserting ,in this section2 and 7,b7 by adding at the end the following new paragraphs3 7#ab7 ,applicable non-retail pharmacy ,the term applicable non-retail pharmacy means a pharmacy that is licensed as a pharmacy by the ,state and that is not a retail community pharmacy1 including a pharmacy that dispenses prescription medications to patients primarily through mail and specialty pharmacies4 ,such term does not include nursing home pharmacies1 long-term care facility pharmacies1 hospital pharmacies1 clinics1 charitable or not-for-profit pharmacies1 government pharmacies1 or low dispensing pharmacies 7as defined by the ,secretary74 7#ac7 ,affiliate ,the term affiliate means any entity that is owned by1 controlled by1 or related under a common ownership structure with a pharmacy benefit manager or a managed care entity or other specified entity 7as such terms are defined in section #aijc7m77#i77;,d774 4 7#c7 ,effective date 7,a7 ,in general ,subject to subparagraph 7,b71 the amendments made by this subsection shall take effect on the first day of the first quarter that begins on or after the date that is #f months after the date of enactment of this ,act4 7,b7 ,delayed application to applicable non-retail pharmacies ,the pharmacy survey requirements established by the amendments to section #aibg7;f7 of the ,social ,security ,act 7#db ,u4,s4,c4 #acifr-#h7;f77 made by this subsection shall apply to retail community pharmacies beginning on the effective date described in subparagraph 7,a71 but shall not apply to applicable non-retail pharmacies until the first day of the first quarter that begins on or after the date that is #ah months after the date of enactment of this ,act4 7#d7 ,identification of applicable non-retail pharmacies 7,a7 ,in general ,not later than ,january #a1 #bjbg1 the ,secretary of ,health and ,human ,services shall1 in consultation with stakeholders as appropriate1 publish guidance specifying pharmacies that meet the definition of applicable non-retail pharmacies 7as such term is defined in subsection 7k77#ab7 of section #aibg of the ,social ,security ,act 7#db ,u4,s4,c4 #acifr-#h71 as added by paragraph 7#b771 and that will be subject to the survey requirements under subsection 7f77#a7 of such section1 as amended by paragraph 7#a74 7,b7 ,inclusion of pharmacy type indicators ,the guidance published under subparagraph 7,a7 shall include pharmacy type indicators to distinguish between different types of applicable non-retail pharmacies1 such as pharmacies that dispense prescriptions primarily through the mail and pharmacies that dispense prescriptions that require special handling or distribution4 ,an applicable non-retail pharmacy may be identified through multiple pharmacy type indicators4 7#e7 ,implementation 7,a7 ,in general ,notwithstanding any other provision of law1 the ,secretary of ,health and ,human ,services may implement the amendments made by this subsection by program instruction or otherwise4 7,b7 ,nonapplication of ,administrative ,procedure ,act ,implementation of the amendments made by this subsection shall be exempt from the requirements of section #eec of title #e1 ,united ,states ,code4 7#f7 ,nonapplication of paperwork reduction act ,chapter #ce of title #dd1 ,united ,states ,code1 shall not apply to any data collection undertaken by the ,secretary of ,health and ,human ,services under section #aibg7;f7 of the ,social ,security ,act 7#db ,u4,s4,c4 #acifr-#h7;f771 as amended by this subsection4 7b7 ,preventing the use of abusive spread pricing in ,medicaid 7#a7 ,in general ,section #aibg of the ,social ,security ,act 7#db ,u4,s4,c4 #acifr-#h7 is amended-- 7,a7 in subsection 7e71 by adding at the end the following new paragraph3 7#f7 ,transparent prescription drug pass-through pricing required 7,a7 ,in general ,a contract between the ,state and a pharmacy benefit manager 7referred to in this paragraph as a ,,pbm71 or a contract between the ,state and a managed care entity or other specified entity 7as such terms are defined in section #aijc7m77#i77;,d7 and collectively referred to in this paragraph as the entity7 that includes provisions making the entity responsible for coverage of covered outpatient drugs dispensed to individuals enrolled with the entity1 shall require that payment for such drugs and related administrative services 7as applicable71 including payments made by a ,,pbm on behalf of the ,state or entity1 is based on a transparent prescription drug pass-through pricing model under which-- 7i7 any payment made by the entity or the ,,pbm 7as applicable7 for such a drug-- 7,i7 is limited to-- 7aa7 ingredient cost2 and 7bb7 a professional dispensing fee that is not less than the professional dispensing fee that the ,state would pay if the ,state were making the payment directly in accordance with the ,state plan2 7,,ii7 is passed through in its entirety 7except as reduced under ,federal or ,state laws and regulations in response to instances of waste1 fraud1 or abuse7 by the entity or ,,pbm to the pharmacy or provider that dispenses the drug2 and 7,,iii7 is made in a manner that is consistent with sections #ddg4ejb1 #ddg4eab1 #ddg4ead1 and #ddg4eah of title #db1 ,code of ,federal ,regulations 7or any successor regulation7 as if such requirements applied directly to the entity or the ,,pbm1 except that any payment by the entity or the ,,pbm for the ingredient cost of such drug purchased by a covered entity 7as defined in subsection 7a77#e77;,b77 may exceed the actual acquisition cost 7as defined in #ddg4ejb of title #db1 ,code of ,federal ,regulations1 or any successor regulation7 for such drug if-- 7aa7 such drug was subject to an agreement under section #cdj;,b of the ,public ,health ,service ,act2 7bb7 such payment for the ingredient cost of such drug does not exceed the maximum payment that would have been made by the entity or the ,,pbm for the ingredient cost of such drug if such drug had not been purchased by such covered entity2 and 7cc7 such covered entity reports to the ,secretary 7in a form and manner specified by the ,secretary71 on an annual basis and with respect to payments for the ingredient costs of such drugs so purchased by such covered entity that are in excess of the actual acquisition costs for such drugs1 the aggregate amount of such excess2 7ii7 payment to the entity or the ,,pbm 7as applicable7 for administrative services performed by the entity or ,,pbm is limited to an administrative fee that reflects the fair market value 7as defined by the ,secretary7 of such services2 7iii7 the entity or the ,,pbm 7as applicable7 makes available to the ,state1 and the ,secretary upon request in a form and manner specified by the ,secretary1 all costs and payments related to covered outpatient drugs and accompanying administrative services 7as described in clause 7ii77 incurred1 received1 or made by the entity or the ,,pbm1 broken down 7as specified by the ,secretary71 to the extent such costs and payments are attributable to an individual covered outpatient drug1 by each such drug1 including any ingredient costs1 professional dispensing fees1 administrative fees 7as described in clause 7ii771 post-sale and post-invoice fees1 discounts1 or related adjustments such as direct and indirect remuneration fees1 and any and all other remuneration1 as defined by the ,secretary2 and 7iv7 any form of spread pricing whereby any amount charged or claimed by the entity or the ,,pbm 7as applicable7 that exceeds the amount paid to the pharmacies or providers on behalf of the ,state or entity1 including any post-sale or post-invoice fees1 discounts1 or related adjustments such as direct and indirect remuneration fees or assessments1 as defined by the ,secretary 7after allowing for an administrative fee as described in clause 7ii77 is not allowable for purposes of claiming ,federal matching payments under this title4 7,b7 ,publication of information ,the ,secretary shall publish1 not less frequently than on an annual basis and in a manner that does not disclose the identity of a particular covered entity or organization1 information received by the ,secretary pursuant to subparagraph 7,a77iii77,,iii7 that is broken out by ,state and by each of the following categories of covered entity within each such ,state3 7i7 ,covered entities described in subparagraph 7,a7 of section #cdj;,b7a77#d7 of the ,public ,health ,service ,act4 7ii7 ,covered entities described in subparagraphs 7,b7 through 7,k7 of such section4 7iii7 ,covered entities described in subparagraph 7,l7 of such section4 7iv7 ,covered entities described in subparagraph 7,m7 of such section4 7v7 ,covered entities described in subparagraph 7,n7 of such section4 7vi7 ,covered entities described in subparagraph 7,o7 of such section4 2 and 7,b7 in subsection 7k71 as amended by subsection 7a77#b71 by adding at the end the following new paragraph3 7#ad7 ,pharmacy benefit manager ,the term pharmacy benefit manager means any person or entity that1 either directly or through an intermediary1 acts as a price negotiator or group purchaser on behalf of a ,state1 managed care entity 7as defined in section #aijc7m77#i77;,d771 or other specified entity 7as so defined71 or manages the prescription drug benefits provided by a ,state1 managed care entity1 or other specified entity1 including the processing and payment of claims for prescription drugs1 the performance of drug utilization review1 the processing of drug prior authorization requests1 the managing of appeals or grievances related to the prescription drug benefits1 contracting with pharmacies1 controlling the cost of covered outpatient drugs1 or the provision of services related thereto4 ,such term includes any person or entity that acts as a price negotiator 7with regard to payment amounts to pharmacies and providers for a covered outpatient drug or the net cost of the drug7 or group purchaser on behalf of a ,state1 managed care entity1 or other specified entity or that carries out #a or more of the other activities described in the preceding sentence1 irrespective of whether such person or entity calls itself a pharmacy benefit manager4 4 7#b7 ,conforming amendments ,section #aijc7m7 of such ,act 7#db ,u4,s4,c4 #acif;b7m77 is amended-- 7,a7 in paragraph 7#b77;,a77xiii7-- 7i7 by striking and 7,,iii7 and inserting 7,,iii72 7ii7 by inserting before the period at the end the following3 1 and 7,,iv7 if the contract includes provisions making the entity responsible for coverage of covered outpatient drugs1 the entity shall comply with the requirements of section #aibg7;e77#f72 and 7iii7 by moving the margin #b ems to the left2 and 7,b7 by adding at the end the following new paragraph3 7#aj7 ,no payment shall be made under this title to a ,state with respect to expenditures incurred by the ,state for payment for services provided by an other specified entity 7as defined in paragraph 7#i77;,d77iii77 unless such services are provided in accordance with a contract between the ,state and such entity which satisfies the requirements of paragraph 7#b77;,a77xiii74 4 7#c7 ,effective date ,the amendments made by this subsection shall apply to contracts between ,states and managed care entities1 other specified entities1 or pharmacy benefit managers that have an effective date beginning on or after the date that is #ah months after the date of enactment of this ,act4 7#d7 ,implementation 7,a7 ,in general ,notwithstanding any other provision of law1 the ,secretary of ,health and ,human ,services may implement the amendments made by this subsection by program instruction or otherwise4 7,b7 ,nonapplication of ,administrative ,procedure ,act ,implementation of the amendments made by this subsection shall be exempt from the requirements of section #eec of title #e1 ,united ,states ,code4 7#e7 ,nonapplication of ,paperwork ,reduction ,act ,chapter #ce of title #dd1 ,united ,states ,code1 shall not apply to any data collection undertaken by the ,secretary of ,health and ,human ,services under section #aibg7;e7 of the ,social ,security ,act 7#db ,u4,s4,c4 #acifr-#h7;e771 as amended by this subsection4 #c4 ,assuring pharmacy access and choice for ,medicare beneficiaries and modernizing and ensuring ,,pbm accountability under ,medicare 7a7 ,assuring pharmacy access and choice for medicare beneficiaries 7#a7 ,in general ,section #ahfj;,d-#d7;b77#a7 of the ,social ,security ,act 7#db ,u4,s4,c4 #aciew-#ajd7;b77#a77 is amended by striking subparagraph 7,a7 and inserting the following3 7,a7 ,in general 7i7 ,participation of any willing pharmacy ,a ,,pdp sponsor offering a prescription drug plan shall permit any pharmacy that meets the standard contract terms and conditions under such plan to participate as a network pharmacy of such plan4 7ii7 ,contract terms and conditions 7,i7 ,in general ,notwithstanding any other provision of law1 for plan years beginning on or after ,january #a1 #bjbh1 in accordance with clause 7i71 contract terms and conditions offered by such ,,pdp sponsor shall be reasonable and relevant according to standards established by the ,secretary under subclause 7,,ii74 7,,ii7 ,standards ,not later than the first ,monday in ,april of #bjbg1 the ,secretary shall establish standards for reasonable and relevant contract terms and conditions for purposes of this clause4 7,,iii7 ,request for information ,not later than ,april #a1 #bjbf1 for purposes of establishing the standards under subclause 7,,ii71 the ,secretary shall issue a request for information to seek input on trends in prescription drug plan and network pharmacy contract terms and conditions1 current prescription drug plan and network pharmacy contracting practices1 whether pharmacy reimbursement and dispensing fees paid by ,,pdp sponsors to network pharmacies sufficiently cover the ingredient and operational costs of such pharmacies1 the use and application of pharmacy quality measures by ,,pdp sponsors for network pharmacies1 ,,pdp sponsor restrictions or limitations on the dispensing of covered part ,d drugs by network pharmacies 7or any subsets of such pharmacies71 ,,pdp sponsor auditing practices for network pharmacies1 areas in current regulations or program guidance related to contracting between prescription drug plans and network pharmacies requiring clarification or additional specificity1 factors for consideration in determining the reasonableness and relevance of contract terms and conditions between prescription drug plans and network pharmacies1 and other issues as determined appropriate by the ,secretary4 4 7#b7 ,essential retail pharmacies ,section #ahfj;,d-#db of the ,social ,security ,act 7#db ,u4,s4,c4 #aciew-#aeb7 is amended by adding at the end the following new subsection3 7e7 ,essential retail pharmacies 7#a7 ,in general ,with respect to plan years beginning on or after ,january #a1 #bjbh1 the ,secretary shall publish reports1 at least once every #b years until #bjcd1 and periodically thereafter1 that provide information1 to the extent feasible1 on-- 7,a7 trends in ingredient cost reimbursement1 dispensing fees1 incentive payments and other fees paid by ,,pdp sponsors offering prescription drug plans and ,,ma organizations offering ,,ma-,,pd plans under this part to essential retail pharmacies 7as defined in paragraph 7#b77 with respect to the dispensing of covered part ,d drugs1 including a comparison of such trends between essential retail pharmacies and pharmacies that are not essential retail pharmacies2 7,b7 trends in amounts paid to ,,pdp sponsors offering prescription drug plans and ,,ma organizations offering ,,ma-,,pd plans under this part by essential retail pharmacies with respect to the dispensing of covered part ,d drugs1 including a comparison of such trends between essential retail pharmacies and pharmacies that are not essential retail pharmacies2 7,c7 trends in essential retail pharmacy participation in pharmacy networks and preferred pharmacy networks for prescription drug plans offered by ,,pdp sponsors and ,,ma-,,pd plans offered by ,,ma organizations under this part1 including a comparison of such trends between essential retail pharmacies and pharmacies that are not essential retail pharmacies2 7,d7 trends in the number of essential retail pharmacies1 including variation in such trends by geographic region or other factors2 7,e7 a comparison of cost-sharing for covered part ,d drugs dispensed by essential retail pharmacies that are network pharmacies for prescription drug plans offered by ,,pdp sponsors and ,,ma-,,pd plans offered by ,,ma organizations under this part and cost-sharing for covered part ,d drugs dispensed by other network pharmacies for such plans located in similar geographic areas that are not essential retail pharmacies2 7,f7 a comparison of the volume of covered part ,d drugs dispensed by essential retail pharmacies that are network pharmacies for prescription drug plans offered by ,,pdp sponsors and ,,ma-,,pd plans offered by ,,ma organizations under this part and such volume of dispensing by network pharmacies for such plans located in similar geographic areas that are not essential retail pharmacies1 including information on any patterns or trends in such comparison specific to certain types of covered part ,d drugs1 such as generic drugs or drugs specified as specialty drugs by a ,,pdp sponsor under a prescription drug plan or an ,,ma organization under an ,,ma-,,pd plan2 and 7,g7 a comparison of the information described in subparagraphs 7,a7 through 7,f7 between essential retail pharmacies that are network pharmacies for prescription drug plans offered by ,,pdp sponsors under this part and essential retail pharmacies that are network pharmacies for ,,ma-,,pd plans offered by ,,ma organizations under this part4 7#b7 ,definition of essential retail pharmacy ,in this subsection1 the term essential retail pharmacy means1 with respect to a plan year1 a retail pharmacy that-- 7,a7 is not a pharmacy that is an affiliate as defined in paragraph 7#d72 and 7,b7 is located in-- 7i7 a rural area in which there is no other retail pharmacy within #aj miles1 as determined by the ,secretary2 7ii7 a suburban area in which there is no other retail pharmacy within #b miles1 as determined by the ,secretary2 or 7iii7 an urban area in which there is no other retail pharmacy within #a mile1 as determined by the ,secretary4 7#c7 ,list of essential retail pharmacies 7,a7 ,publication of list of essential retail pharmacies ,for each plan year 7beginning with plan year #bjbh71 the ,secretary shall publish1 on a publicly available internet website of the ,centers for ,medicare ,medicaid ,services1 a list of pharmacies that meet the criteria described in subparagraphs 7,a7 and 7,b7 of paragraph 7#b7 to be considered an essential retail pharmacy4 7,b7 ,required submissions from pdp sponsors ,for each plan year 7beginning with plan year #bjbh71 each ,,pdp sponsor offering a prescription drug plan and each ,,ma organization offering an ,,ma-,,pd plan shall submit to the ,secretary1 for the purposes of determining retail pharmacies that meet the criterion specified in subparagraph 7,a7 of paragraph 7#b71 a list of retail pharmacies that are affiliates of such sponsor or organization1 or are affiliates of a pharmacy benefit manager acting on behalf of such sponsor or organization1 at a time1 and in a form and manner1 specified by the ,secretary4 7,c7 ,reporting by pdp sponsors and ma organizations ,for each plan year beginning with plan year #bjbg1 each ,,pdp sponsor offering a prescription drug plan and each ,,ma organization offering an ,,ma-,,pd plan under this part shall submit to the ,secretary information on incentive payments and other fees paid by such sponsor or organization to pharmacies1 insofar as any such payments or fees are not otherwise reported1 at a time1 and in a form and manner1 specified by the ,secretary4 7,d7 ,implementation ,notwithstanding any other provision of law1 the ,secretary may implement this paragraph by program instruction or otherwise4 7,e7 ,nonapplication of paperwork reduction ,act ,chapter #ce of title #dd1 ,united ,states ,code1 shall not apply to the implementation of this paragraph4 7#d7 ,definition of affiliate2 pharmacy benefit manager ,in this subsection1 the terms affiliate and pharmacy benefit manager have the meaning given those terms in section #ahfj;,d-#ab7;h77#g74 4 7#c7 ,enforcement 7,a7 ,in general ,section #ahfj;,d-#d7;b77#a7 of the ,social ,security ,act 7#db ,u4,s4,c4 #aciew-#ajd7;b77#a77 is amended by adding at the end the following new subparagraph3 7,f7 ,enforcement of standards for reasonable and relevant contract terms and conditions 7i7 ,allegation submission process 7,i7 ,in general ,not later than ,january #a1 #bjbh1 the ,secretary shall establish a process through which a pharmacy may submit to the ,secretary an allegation of a violation by a ,,pdp sponsor offering a prescription drug plan of the standards for reasonable and relevant contract terms and conditions under subparagraph 7,a77ii71 or of subclause 7,,viii7 of this clause4 7,,ii7 ,frequency of submission 7aa7 ,in general ,except as provided in item 7bb71 the allegation submission process under this clause shall allow pharmacies to submit any allegations of violations described in subclause 7,i7 not more frequently than once per plan year per contract between a pharmacy and a ,,pdp sponsor4 7bb7 ,allegations relating to contract modifications ,in the case where a contract between a pharmacy and a ,,pdp sponsor is modified following the submission of allegations by a pharmacy with respect to such contract and plan year1 the allegation submission process under this clause shall allow such pharmacy to submit an additional allegation related to those modifications with respect to such contract and plan year4 7,,iii7 ,access to relevant documents and materials ,a ,,pdp sponsor subject to an allegation under this clause-- 7aa7 shall provide documents or materials1 as specified by the ,secretary1 including contract offers made by such sponsor to such pharmacy or correspondence related to such offers1 to the ,secretary at a time1 and in a form and manner1 specified by the ,secretary2 and 7bb7 shall not prohibit or otherwise limit the ability of a pharmacy to submit such documents or materials to the ,secretary for the purpose of submitting an allegation or providing evidence for such an allegation under this clause4 7,,iv7 ,standardized template ,the ,secretary shall establish a standardized template for pharmacies to use for the submission of allegations described in subclause 7,i74 ,such template shall require that the submission include a certification by the pharmacy that the information included is accurate1 complete1 and true to the best of the knowledge1 information1 and belief of such pharmacy4 7,v7 ,preventing frivolous allegations ,in the case where the ,secretary determines that a pharmacy has submitted frivolous allegations under this clause on a routine basis1 the ,secretary may temporarily prohibit such pharmacy from using the allegation submission process under this clause1 as determined appropriate by the ,secretary4 7,,vi7 ,exemption from freedom of information ,act ,allegations submitted under this clause shall be exempt from disclosure under section #eeb of title #e1 ,united ,states ,code4 7,,vii7 ,rule of construction ,nothing in this clause shall be construed as limiting the ability of a pharmacy to pursue other legal actions or remedies1 consistent with applicable ,federal or ,state law1 with respect to a potential violation of a requirement described in this subparagraph4 7,,viii7 ,anti-retaliation and anti-coercion ,consistent with applicable ,federal or ,state law1 a ,,pdp sponsor shall not-- 7aa7 retaliate against a pharmacy for submitting any allegations under this clause2 or 7bb7 coerce1 intimidate1 threaten1 or interfere with the ability of a pharmacy to submit any such allegations4 7ii7 ,investigation ,the ,secretary shall investigate1 as determined appropriate by the ,secretary1 allegations submitted pursuant to clause 7i74 7iii7 ,enforcement 7,i7 ,in general ,in the case where the ,secretary determines that a ,,pdp sponsor offering a prescription drug plan has violated the standards for reasonable and relevant contract terms and conditions under subparagraph 7,a77ii71 the ,secretary may use authorities under sections #aheg7;g7 and #ahfj;,d-#ab7;b77#c77;,e7 to impose civil monetary penalties or other intermediate sanctions4 7,,ii7 ,application of civil monetary penalties ,the provisions of section #aabh;,a 7other than subsections 7a7 and 7b77 shall apply to a civil monetary penalty under this clause in the same manner as such provisions apply to a penalty or proceeding under section #aabh;,a7a74 4 7,b7 ,conforming amendment ,section #aheg7;g77#a7 of the ,social ,security ,act 7#db ,u4,s4,c4 #aciew-#bg7;g77#a77 is amended-- 7i7 in subparagraph 7,j71 by striking or after the semicolon2 7ii7 by redesignating subparagraph 7,k7 as subparagraph 7,l72 7iii7 by inserting after subparagraph 7,j71 the following new subparagraph3 7,k7 fails to comply with the standards for reasonable and relevant contract terms and conditions under subparagraph 7,a77ii7 of section #ahfj;,d-#d7;b77#a72 or 2 7iv7 in subparagraph 7,l71 as redesignated by clause 7ii71 by striking through 7,j7 and inserting through 7,k72 and 7v7 in the flush matter following subparagraph 7,l71 as so redesignated1 by striking subparagraphs 7,a7 through 7,k7 and inserting subparagraphs 7,a7 through 7,l74 7#d7 ,accountability of pharmacy benefit managers for violations of reasonable and relevant contract terms and conditions 7,a7 ,in general ,section #ahfj;,d-#ab7;b7 of the ,social ,security ,act 7#db ,u4,s4,c4 #aciew-#aab7 is amended by adding at the end the following new paragraph3 7#i7 ,accountability of pharmacy benefit managers for violations of reasonable and relevant contract terms and conditions ,for plan years beginning on or after ,january #a1 #bjbh1 each contract entered into with a ,,pdp sponsor under this part with respect to a prescription drug plan offered by such sponsor shall provide that any pharmacy benefit manager acting on behalf of such sponsor has a written agreement with the ,,pdp sponsor under which the pharmacy benefit manager agrees to reimburse the ,,pdp sponsor for any amounts paid by such sponsor under section #ahfj;,d-#d7;b77#a77;,f77iii77,i7 to the ,secretary as a result of a violation described in such section if such violation is related to a responsibility delegated to the pharmacy benefit manager by such ,,pdp sponsor4 4 7,b7 ,,ma-,,pd plans ,section #aheg7;f77#c7 of the ,social ,security ,act 7#db ,u4,s4,c4 #aciew-#bg7;f77#c77 is amended by adding at the end the following new subparagraph3 7,f7 ,accountability of pharmacy benefit managers for violations of reasonable and relevant contract terms ,for plan years beginning on or after ,january #a1 #bjbh1 section #ahfj;,d-#ab7;b77#i74 4 7#e7 ,biennial report on enforcement and oversight of pharmacy access requirements ,section #ahfj;,d-#db of the ,social ,security ,act 7#db ,u4,s4,c4 #aciew-#aeb71 as amended by paragraph 7#b71 is amended by adding at the end the following new subsection3 7f7 ,biennial report on enforcement and oversight of pharmacy access requirements 7#a7 ,in general ,not later than #b years after the date of enactment of this subsection1 and at least once every #b years thereafter1 the ,secretary shall publish a report on enforcement and oversight actions and activities undertaken by the ,secretary with respect to the requirements under section #ahfj;,d-#d7;b77#a74 7#b7 ,limitation ,a report under paragraph 7#a7 shall not disclose-- 7,a7 identifiable information about individuals or entities unless such information is otherwise publicly available2 or 7,b7 trade secrets with respect to any entities4 4 7#f7 ,funding ,in addition to amounts otherwise available1 there is appropriated to the ,centers for ,medicare ,medicaid ,services ,program ,management ,account1 out of any money in the ,treasury not otherwise appropriated1 #ahh1jjj1jjj for fiscal year #bjbf1 to remain available until expended1 to carry out this subsection4 7b7 ,modernizing and ensuring ,,pbm accountability 7#a7 ,in general 7,a7 ,prescription drug plans ,section #ahfj;,d-#ab of the ,social ,security ,act 7#db ,u4,s4,c4 #aciew-#aab7 is amended by adding at the end the following new subsection3 7h7 ,requirements relating to pharmacy benefit managers ,for plan years beginning on or after ,january #a1 #bjbh3 7#a7 ,agreements with pharmacy benefit managers ,each contract entered into with a ,,pdp sponsor under this part with respect to a prescription drug plan offered by such sponsor shall provide that any pharmacy benefit manager acting on behalf of such sponsor has a written agreement with the ,,pdp sponsor under which the pharmacy benefit manager1 and any affiliates of such pharmacy benefit manager1 as applicable1 agree to meet the following requirements3 7,a7 ,no income other than bona fide service fees 7i7 ,in general ,the pharmacy benefit manager and any affiliate of such pharmacy benefit manager shall not derive any remuneration with respect to any services provided on behalf of any entity or individual1 in connection with the utilization of covered part ,d drugs1 from any such entity or individual other than bona fide service fees1 subject to clauses 7ii7 and 7iii74 7ii7 ,incentive payments ,for the purposes of this subsection1 an incentive payment 7as determined by the ,secretary7 paid by a ,,pdp sponsor to a pharmacy benefit manager that is performing services on behalf of such sponsor shall be deemed a bona fide service fee 7even if such payment does not otherwise meet the definition of such term under paragraph 7#g77;,b77 if such payment is a flat dollar amount1 is consistent with fair market value 7as specified by the ,secretary71 is related to services actually performed by the pharmacy benefit manager or affiliate of such pharmacy benefit manager1 on behalf of the ,,pdp sponsor making such payment1 in connection with the utilization of covered part ,d drugs1 and meets additional requirements1 if any1 as determined appropriate by the ,secretary4 7iii7 ,clarification on rebates and discounts used to lower costs for covered part d drugs ,rebates1 discounts1 and other price concessions received by a pharmacy benefit manager or an affiliate of a pharmacy benefit manager from manufacturers1 even if such price concessions are calculated as a percentage of a drug's price1 shall not be considered a violation of the requirements of clause 7i7 if they are fully passed through to a ,,pdp sponsor and are compliant with all regulatory and subregulatory requirements related to direct and indirect remuneration for manufacturer rebates under this part1 including in cases where a ,,pdp sponsor is acting as a pharmacy benefit manager on behalf of a prescription drug plan offered by such ,,pdp sponsor4 7iv7 ,evaluation of remuneration arrangements ,components of subsets of remuneration arrangements 7such as fees or other forms of compensation paid to or retained by the pharmacy benefit manager or affiliate of such pharmacy benefit manager71 as determined appropriate by the ,secretary1 between pharmacy benefit managers or affiliates of such pharmacy benefit managers1 as applicable1 and other entities involved in the dispensing or utilization of covered part ,d drugs 7including ,,pdp sponsors1 manufacturers1 pharmacies1 and other entities as determined appropriate by the ,secretary7 shall be subject to review by the ,secretary1 in consultation with the ,office of the ,inspector ,general of the ,department of ,health and ,human ,services1 as determined appropriate by the ,secretary4 ,the ,secretary1 in consultation with the ,office of the ,inspector ,general1 shall review whether remuneration under such arrangements is consistent with fair market value 7as specified by the ,secretary7 through reviews and assessments of such remuneration1 as determined appropriate4 7v7 ,disgorgement ,the pharmacy benefit manager shall disgorge any remuneration paid to such pharmacy benefit manager or an affiliate of such pharmacy benefit manager in violation of this subparagraph to the ,,pdp sponsor4 7vi7 ,additional requirements ,the pharmacy benefit manager shall-- 7,i7 enter into a written agreement with any affiliate of such pharmacy benefit manager1 under which the affiliate shall identify and disgorge any remuneration described in clause 7v7 to the pharmacy benefit manager2 and 7,,ii7 attest1 subject to any requirements determined appropriate by the ,secretary1 that the pharmacy benefit manager has entered into a written agreement described in subclause 7,i7 with any relevant affiliate of the pharmacy benefit manager4 7,b7 ,transparency regarding guarantees and cost performance evaluations ,the pharmacy benefit manager shall-- 7i7 define1 interpret1 and apply1 in a fully transparent and consistent manner for purposes of calculating or otherwise evaluating pharmacy benefit manager performance against pricing guarantees or similar cost performance measurements related to rebates1 discounts1 price concessions1 or net costs1 terms such as-- 7,i7 generic drug1 in a manner consistent with the definition of the term under section #dbc4d of title #db1 ,code of ,federal ,regulations1 or a successor regulation2 7,,ii7 brand name drug1 in a manner consistent with the definition of the term under section #dbc4d of title #db1 ,code of ,federal ,regulations1 or a successor regulation2 7,,iii7 specialty drug2 7,,iv7 rebate2 and 7,v7 discount2 7ii7 identify any drugs1 claims1 or price concessions excluded from any pricing guarantee or other cost performance measure in a clear and consistent manner2 and 7iii7 where a pricing guarantee or other cost performance measure is based on a pricing benchmark other than the wholesale acquisition cost 7as defined in section #ahdg;,a7c77#f77;,b77 of a drug1 calculate and provide a wholesale acquisition cost-based equivalent to the pricing guarantee or other cost performance measure4 7,c7 ,provision of information 7i7 ,in general ,not later than ,july #a of each year1 beginning in #bjbh1 the pharmacy benefit manager shall submit to the ,,pdp sponsor1 and to the ,secretary1 a report1 in accordance with this subparagraph1 and shall make such report available to such sponsor at no cost to such sponsor in a format specified by the ,secretary under paragraph 7#e74 ,each such report shall include1 with respect to such ,,pdp sponsor and each plan offered by such sponsor1 the following information with respect to the previous plan year3 7,i7 ,a list of all drugs covered by the plan that were dispensed including1 with respect to each such drug-- 7aa7 the brand name1 generic or non-proprietary name1 and ,national ,drug ,code2 7bb7 the number of plan enrollees for whom the drug was dispensed1 the total number of prescription claims for the drug 7including original prescriptions and refills1 counted as separate claims71 and the total number of dosage units of the drug dispensed2 7cc7 the number of prescription claims described in item 7bb7 by each type of dispensing channel through which the drug was dispensed1 including retail1 mail order1 specialty pharmacy1 long term care pharmacy1 home infusion pharmacy1 or other types of pharmacies or providers2 7dd7 the average wholesale acquisition cost1 listed as cost per day's supply1 cost per dosage unit1 and cost per typical course of treatment 7as applicable72 7ee7 the average wholesale price for the drug1 listed as price per day's supply1 price per dosage unit1 and price per typical course of treatment 7as applicable72 7ff7 the total out-of-pocket spending by plan enrollees on such drug after application of any benefits under the plan1 including plan enrollee spending through copayments1 coinsurance1 and deductibles2 7gg7 total rebates paid by the manufacturer on the drug as reported under the ,detailed ,,dir ,report 7or any successor report7 submitted by such sponsor to the ,centers for ,medicare ,medicaid ,services2 7hh7 all other direct or indirect remuneration on the drug as reported under the ,detailed ,,dir ,report 7or any successor report7 submitted by such sponsor to the ,centers for ,medicare ,medicaid ,services2 7ii7 the average pharmacy reimbursement amount paid by the plan for the drug in the aggregate and disaggregated by dispensing channel identified in item 7cc72 7jj7 the average ,national ,average ,drug ,acquisition ,cost 7,,nadac72 and 7kk7 total manufacturer-derived revenue1 inclusive of bona fide service fees1 attributable to the drug and retained by the pharmacy benefit manager and any affiliate of such pharmacy benefit manager4 7,,ii7 ,in the case of a pharmacy benefit manager that has an affiliate that is a retail1 mail order1 or specialty pharmacy1 with respect to drugs covered by such plan that were dispensed1 the following information3 7aa7 ,the percentage of total prescriptions that were dispensed by pharmacies that are an affiliate of the pharmacy benefit manager for each drug4 7bb7 ,the interquartile range of the total combined costs paid by the plan and plan enrollees1 per dosage unit1 per course of treatment1 per #cj-;day supply1 and per #ij-;day supply for each drug dispensed by pharmacies that are not an affiliate of the pharmacy benefit manager and that are included in the pharmacy network of such plan4 7cc7 ,the interquartile range of the total combined costs paid by the plan and plan enrollees1 per dosage unit1 per course of treatment1 per #cj-;day supply1 and per #ij-;day supply for each drug dispensed by pharmacies that are an affiliate of the pharmacy benefit manager and that are included in the pharmacy network of such plan4 7dd7 ,the lowest total combined cost paid by the plan and plan enrollees1 per dosage unit1 per course of treatment1 per #cj-;day supply1 and per #ij-;day supply1 for each drug that is available from any pharmacy included in the pharmacy network of such plan4 7ee7 ,the difference between the average acquisition cost of the affiliate1 such as a pharmacy or other entity that acquires prescription drugs1 that initially acquires the drug and the amount reported under subclause 7,i77jj7 for each drug4 7ff7 ,a list inclusive of the brand name1 generic or non-proprietary name1 and ,national ,drug ,code of covered part ,d drugs subject to an agreement with a covered entity under section #cdj;,b of the ,public ,health ,service ,act for which the pharmacy benefit manager or an affiliate of the pharmacy benefit manager had a contract or other arrangement with such a covered entity in the service area of such plan4 7,,iii7 ,where a drug approved under section #eje7;c7 of the ,federal ,food1 ,drug1 and ,cosmetic ,act 7referred to in this subclause as the listed drug7 is covered by the plan1 the following information3 7aa7 ,a list of currently marketed generic drugs approved under section #eje7;j7 of the ,federal ,food1 ,drug1 and ,cosmetic ,act pursuant to an application that references such listed drug that are not covered by the plan1 are covered on the same formulary tier or a formulary tier typically associated with higher cost-sharing than the listed drug1 or are subject to utilization management that the listed drug is not subject to4 7bb7 ,the estimated average beneficiary cost-sharing under the plan for a #cj-;day supply of the listed drug4 7cc7 ,where a generic drug listed under item 7aa7 is on a formulary tier typically associated with higher cost-sharing than the listed drug1 the estimated average cost-sharing that a beneficiary would have paid for a #cj-;day supply of each of the generic drugs described in item 7aa71 had the plan provided coverage for such drugs on the same formulary tier as the listed drug4 7dd7 ,a written justification for providing more favorable coverage of the listed drug than the generic drugs described in item 7aa74 7ee7 ,the number of currently marketed generic drugs approved under section #eje7;j7 of the ,federal ,food1 ,drug1 and ,cosmetic ,act pursuant to an application that references such listed drug4 7,,iv7 ,where a reference product 7as defined in section #cea7;i7 of the ,public ,health ,service ,act7 is covered by the plan1 the following information3 7aa7 ,a list of currently marketed biosimilar biological products licensed under section #cea7k7 of the ,public ,health ,service ,act pursuant to an application that refers to such reference product that are not covered by the plan1 are covered on the same formulary tier or a formulary tier typically associated with higher cost-sharing than the reference product1 or are subject to utilization management that the reference product is not subject to4 7bb7 ,the estimated average beneficiary cost-sharing under the plan for a #cj-;day supply of the reference product4 7cc7 ,where a biosimilar biological product listed under item 7aa7 is on a formulary tier typically associated with higher cost-sharing than the reference product1 the estimated average cost-sharing that a beneficiary would have paid for a #cj-;day supply of each of the biosimilar biological products described in item 7aa71 had the plan provided coverage for such products on the same formulary tier as the reference product4 7dd7 ,a written justification for providing more favorable coverage of the reference product than the biosimilar biological product described in item 7aa74 7ee7 ,the number of currently marketed biosimilar biological products licensed under section #cea7k7 of the ,public ,health ,service ,act1 pursuant to an application that refers to such reference product4 7,v7 ,total gross spending on covered part ,d drugs by the plan1 not net of rebates1 fees1 discounts1 or other direct or indirect remuneration4 7,,vi7 ,the total amount retained by the pharmacy benefit manager or an affiliate of such pharmacy benefit manager in revenue related to utilization of covered part ,d drugs under that plan1 inclusive of bona fide service fees4 7,,vii7 ,the total spending on covered part ,d drugs net of rebates1 fees1 discounts1 or other direct and indirect remuneration by the plan4 7,,viii7 ,an explanation of any benefit design parameters under such plan that encourage plan enrollees to fill prescriptions at pharmacies that are an affiliate of such pharmacy benefit manager1 such as mail and specialty home delivery programs1 and retail and mail auto-refill programs4 7,,ix7 ,the following information3 7aa7 ,a list of all brokers1 consultants1 advisors1 and auditors that receive compensation from the pharmacy benefit manager or an affiliate of such pharmacy benefit manager for referrals1 consulting1 auditing1 or other services offered to ,,pdp sponsors related to pharmacy benefit management services4 7bb7 ,the amount of compensation provided by such pharmacy benefit manager or affiliate to each such broker1 consultant1 advisor1 and auditor4 7cc7 ,the methodology for calculating the amount of compensation provided by such pharmacy benefit manager or affiliate1 for each such broker1 consultant1 advisor1 and auditor4 7,x7 ,a list of all affiliates of the pharmacy benefit manager4 7,,xi7 ,a summary document submitted in a standardized template developed by the ,secretary that includes such information described in subclauses 7,i7 through 7,x74 7ii7 ,written explanation of contracts or agreements with drug manufacturers 7,i7 ,in general ,the pharmacy benefit manager shall1 not later than #cj days after the finalization of any contract or agreement between such pharmacy benefit manager or an affiliate of such pharmacy benefit manager and a drug manufacturer 7or subsidiary1 agent1 or entity affiliated with such drug manufacturer7 that makes rebates1 discounts1 payments1 or other financial incentives related to one or more covered part ,d drugs or other prescription drugs1 as applicable1 of the manufacturer directly or indirectly contingent upon coverage1 formulary placement1 or utilization management conditions on any other covered part ,d drugs or other prescription drugs1 as applicable1 submit to the ,,pdp sponsor a written explanation of such contract or agreement4 7,,ii7 ,requirements ,a written explanation under subclause 7,i7 shall-- 7aa7 include the manufacturer subject to the contract or agreement1 all covered part ,d drugs and other prescription drugs1 as applicable1 subject to the contract or agreement and the manufacturers of such drugs1 and a high-level description of the terms of such contract or agreement and how such terms apply to such drugs2 and 7bb7 be certified by the ,chief ,executive ,officer1 ,chief ,financial ,officer1 or ,general ,counsel of such pharmacy benefit manager1 or affiliate of such pharmacy benefit manager1 as applicable1 or an individual delegated with the authority to sign on behalf of one of these officers1 who reports directly to the officer4 7,,iii7 ,definition of other prescription drugs ,for purposes of this clause1 the term other prescription drugs means prescription drugs covered as supplemental benefits under this part or prescription drugs paid outside of this part4 7,d7 ,audit rights 7i7 ,in general ,not less than once a year1 at the request of the ,,pdp sponsor1 the pharmacy benefit manager shall allow for an audit of the pharmacy benefit manager to ensure compliance with all terms and conditions under the written agreement described in this paragraph and the accuracy of information reported under subparagraph 7,c74 7ii7 ,auditor ,the ,,pdp sponsor shall have the right to select an auditor4 ,the pharmacy benefit manager shall not impose any limitations on the selection of such auditor4 7iii7 ,provision of information ,the pharmacy benefit manager shall make available to such auditor all records1 data1 contracts1 and other information necessary to confirm the accuracy of information provided under subparagraph 7,c71 subject to reasonable restrictions on how such information must be reported to prevent redisclosure of such information4 7iv7 ,timing ,the pharmacy benefit manager must provide information under clause 7iii7 and other information1 data1 and records relevant to the audit to such auditor within #f months of the initiation of the audit and respond to requests for additional information from such auditor within #cj days after the request for additional information4 7v7 ,information from affiliates ,the pharmacy benefit manager shall be responsible for providing to such auditor information required to be reported under subparagraph 7,c7 or under clause 7iii7 of this subparagraph that is owned or held by an affiliate of such pharmacy benefit manager4 7#b7 ,enforcement 7,a7 ,in general ,each ,,pdp sponsor shall-- 7i7 disgorge to the ,secretary any amounts disgorged to the ,,pdp sponsor by a pharmacy benefit manager under paragraph 7#a77;,a77v72 7ii7 require1 in a written agreement with any pharmacy benefit manager acting on behalf of such sponsor or affiliate of such pharmacy benefit manager1 that such pharmacy benefit manager or affiliate reimburse the ,,pdp sponsor for any civil money penalty imposed on the ,,pdp sponsor as a result of the failure of the pharmacy benefit manager or affiliate to meet the requirements of paragraph 7#a7 that are applicable to the pharmacy benefit manager or affiliate under the agreement2 and 7iii7 require1 in a written agreement with any such pharmacy benefit manager acting on behalf of such sponsor or affiliate of such pharmacy benefit manager1 that such pharmacy benefit manager or affiliate be subject to punitive remedies for breach of contract for failure to comply with the requirements applicable under paragraph 7#a74 7,b7 ,reporting of alleged violations ,the ,secretary shall make available and maintain a mechanism for manufacturers1 ,,pdp sponsors1 pharmacies1 and other entities that have contractual relationships with pharmacy benefit managers or affiliates of such pharmacy benefit managers to report1 on a confidential basis1 alleged violations of paragraph 7#a77;,a7 or subparagraph 7,c74 7,c7 ,anti-retaliation and anti-coercion ,consistent with applicable ,federal or ,state law1 a ,,pdp sponsor shall not-- 7i7 retaliate against an individual or entity for reporting an alleged violation under subparagraph 7,b72 or 7ii7 coerce1 intimidate1 threaten1 or interfere with the ability of an individual or entity to report any such alleged violations4 7#c7 ,certification of compliance 7,a7 ,in general ,each ,,pdp sponsor shall furnish to the ,secretary 7at a time and in a manner specified by the ,secretary7 an annual certification of compliance with this subsection1 as well as such information as the ,secretary determines necessary to carry out this subsection4 7,b7 ,implementation ,notwithstanding any other provision of law1 the ,secretary may implement this paragraph by program instruction or otherwise4 7#d7 ,rule of construction ,nothing in this subsection shall be construed as-- 7,a7 prohibiting flat dispensing fees or reimbursement or payment for ingredient costs 7including customary1 industry-standard discounts directly related to drug acquisition that are retained by pharmacies or wholesalers7 to entities that acquire or dispense prescription drugs2 or 7,b7 modifying regulatory requirements or sub-regulatory program instruction or guidance related to pharmacy payment1 reimbursement1 or dispensing fees4 7#e7 ,standard formats 7,a7 ,in general ,not later than ,june #a1 #bjbg1 the ,secretary shall specify standard1 machine-readable formats for pharmacy benefit managers to submit annual reports required under paragraph 7#a77;,c77i74 7,b7 ,implementation ,notwithstanding any other provision of law1 the ,secretary may implement this paragraph by program instruction or otherwise4 7#f7 ,confidentiality 7,a7 ,in general ,information disclosed by a pharmacy benefit manager1 an affiliate of a pharmacy benefit manager1 a ,,pdp sponsor1 or a pharmacy under this subsection that is not otherwise publicly available or available for purchase shall not be disclosed by the ,secretary or a ,,pdp sponsor receiving the information1 except that the ,secretary may disclose the information for the following purposes3 7i7 ,as the ,secretary determines necessary to carry out this part4 7ii7 ,to permit the ,comptroller ,general to review the information provided4 7iii7 ,to permit the ,director of the ,congressional ,budget ,office to review the information provided4 7iv7 ,to permit the ,executive ,director of the ,medicare ,payment ,advisory ,commission to review the information provided4 7v7 ,to the ,attorney ,general for the purposes of conducting oversight and enforcement under this title4 7vi7 ,to the ,inspector ,general of the ,department of ,health and ,human ,services in accordance with its authorities under the ,inspector ,general ,act of #aigh 7section #djf of title #e1 ,united ,states ,code71 and other applicable statutes4 7,b7 ,restriction on use of information ,the ,secretary1 the ,comptroller ,general1 the ,director of the ,congressional ,budget ,office1 and the ,executive ,director of the ,medicare ,payment ,advisory ,commission shall not report on or disclose information disclosed pursuant to subparagraph 7,a7 to the public in a manner that would identify-- 7i7 a specific pharmacy benefit manager1 affiliate1 pharmacy1 manufacturer1 wholesaler1 ,,pdp sponsor1 or plan2 or 7ii7 contract prices1 rebates1 discounts1 or other remuneration for specific drugs in a manner that may allow the identification of specific contracting parties or of such specific drugs4 7#g7 ,definitions ,for purposes of this subsection3 7,a7 ,affiliate ,the term affiliate means1 with respect to any pharmacy benefit manager or ,,pdp sponsor1 any entity that1 directly or indirectly-- 7i7 owns or is owned by1 controls or is controlled by1 or is otherwise related in any ownership structure to such pharmacy benefit manager or ,,pdp sponsor2 or 7ii7 acts as a contractor1 principal1 or agent to such pharmacy benefit manager or ,,pdp sponsor1 insofar as such contractor1 principal1 or agent performs any of the functions described under subparagraph 7,c74 7,b7 ,bona fide service fee ,the term bona fide service fee means a fee that is reflective of the fair market value 7as specified by the ,secretary1 through notice and comment rulemaking7 for a bona fide1 itemized service actually performed on behalf of an entity1 that the entity would otherwise perform 7or contract for7 in the absence of the service arrangement and that is not passed on in whole or in part to a client or customer1 whether or not the entity takes title to the drug4 ,such fee must be a flat dollar amount and shall not be directly or indirectly based on1 or contingent upon-- 7i7 drug price1 such as wholesale acquisition cost or drug benchmark price 7such as average wholesale price72 7ii7 the amount of discounts1 rebates1 fees1 or other direct or indirect remuneration with respect to covered part ,d drugs dispensed to enrollees in a prescription drug plan1 except as permitted pursuant to paragraph 7#a77;,a77ii72 7iii7 coverage or formulary placement decisions or the volume or value of any referrals or business generated between the parties to the arrangement2 or 7iv7 any other amounts or methodologies prohibited by the ,secretary4 7,c7 ,pharmacy benefit manager ,the term pharmacy benefit manager means any person or entity that1 either directly or through an intermediary1 acts as a price negotiator or group purchaser on behalf of a ,,pdp sponsor or prescription drug plan1 or manages the prescription drug benefits provided by such sponsor or plan1 including the processing and payment of claims for prescription drugs1 the performance of drug utilization review1 the processing of drug prior authorization requests1 the adjudication of appeals or grievances related to the prescription drug benefit1 contracting with network pharmacies1 controlling the cost of covered part ,d drugs1 or the provision of related services4 ,such term includes any person or entity that carries out one or more of the activities described in the preceding sentence1 irrespective of whether such person or entity calls itself a pharmacy benefit manager4 4 7,b7 ,,ma-,,pd plans ,section #aheg7;f77#c7 of the ,social ,security ,act 7#db ,u4,s4,c4 #aciew-#bg7;f77#c771 as amended by subsection 7a77#d77;,b71 is amended by adding at the end the following new subparagraph3 7,g7 ,requirements relating to pharmacy benefit managers ,for plan years beginning on or after ,january #a1 #bjbh1 section #ahfj;,d-#ab7;h74 4 7,c7 ,nonapplication of paperwork reduction ,act ,chapter #ce of title #dd1 ,united ,states ,code1 shall not apply to the implementation of this paragraph4 7,d7 ,funding 7i7 ,secretary ,in addition to amounts otherwise available1 there is appropriated to the ,centers for ,medicare ,medicaid ,services ,program ,management ,account1 out of any money in the ,treasury not otherwise appropriated1 #aac1jjj1jjj for fiscal year #bjbf1 to remain available until expended1 to carry out this paragraph4 7ii7 ,,oig ,in addition to amounts otherwise available1 there is appropriated to the ,inspector ,general of the ,department of ,health and ,human ,services1 out of any money in the ,treasury not otherwise appropriated1 #bj1jjj1jjj for fiscal year #bjbf1 to remain available until expended1 to carry out this paragraph4 7#b7 ,,gao study and report on price-related compensation across the supply chain 7,a7 ,study ,the ,comptroller ,general of the ,united ,states 7in this paragraph referred to as the ,comptroller ,general7 shall conduct a study describing the use of compensation and payment structures related to a prescription drug's price within the retail prescription drug supply chain in part ,d of title ,,xviii of the ,social ,security ,act 7#db ,u4,s4,c4 #aciew-#aja et seq474 ,such study shall summarize information from ,federal agencies and industry experts1 to the extent available1 with respect to the following3 7i7 ,the type1 magnitude1 other features 7such as the pricing benchmarks used71 and prevalence of compensation and payment structures related to a prescription drug's price1 such as calculating fee amounts as a percentage of a prescription drug's price1 between intermediaries in the prescription drug supply chain1 including-- 7,i7 pharmacy benefit managers2 7,,ii7 ,,pdp sponsors offering prescription drug plans and ,medicare ,advantage organizations offering ,,ma-,,pd plans2 7,,iii7 drug wholesalers2 7,,iv7 pharmacies2 7,v7 manufacturers2 7,,vi7 pharmacy services administrative organizations2 7,,vii7 brokers1 auditors1 consultants1 and other entities that-- 7aa7 advise ,,pdp sponsors offering prescription drug plans and ,medicare ,advantage organizations offering ,,ma-,,pd plans regarding pharmacy benefits2 or 7bb7 review ,,pdp sponsor and ,medicare ,advantage organization contracts with pharmacy benefit managers2 and 7,,viii7 other service providers that contract with any of the entities described in subclauses 7,i7 through 7,,vii7 that may use price-related compensation and payment structures1 such as rebate aggregators 7or other entities that negotiate or process price concessions on behalf of pharmacy benefit managers1 plan sponsors1 or pharmacies74 7ii7 ,the primary business models and compensation structures for each category of intermediary described in clause 7i74 7iii7 ,variation in price-related compensation structures between affiliated entities 7such as entities with common ownership1 either full or partial1 and subsidiary relationships7 and unaffiliated entities4 7iv7 ,potential conflicts of interest among contracting entities related to the use of prescription drug price-related compensation structures1 such as the potential for fees or other payments set as a percentage of a prescription drug's price to advantage formulary selection1 distribution1 or purchasing of prescription drugs with higher prices4 7v7 ,notable differences1 if any1 in the use and level of price-based compensation structures over time and between different market segments1 such as under part ,d of title ,,xviii of the ,social ,security ,act 7#db ,u4,s4,c4 #aciew-#aja et seq47 and the ,medicaid program under title ,,xix of such ,act 7#db ,u4,s4,c4 #acif et seq474 7vi7 ,the effects of drug price-related compensation structures and alternative compensation structures on ,federal health care programs and program beneficiaries1 including with respect to cost-sharing1 premiums1 ,federal outlays1 biosimilar and generic drug adoption and utilization1 drug shortage risks1 and the potential for fees set as a percentage of a drug's price to advantage the formulary selection1 distribution1 or purchasing of drugs with higher prices4 7vii7 ,other issues determined to be relevant and appropriate by the ,comptroller ,general4 7,b7 ,report ,not later than #b years after the date of enactment of this paragraph1 the ,comptroller ,general shall submit to ,congress a report containing the results of the study conducted under subparagraph 7,a71 together with recommendations for such legislation and administrative action as the ,comptroller ,general determines appropriate4 7#c7 ,med,p,a,c reports on agreements with pharmacy benefit managers with respect to prescription drug plans and ma-pd plans 7,a7 ,in general ,the ,medicare ,payment ,advisory ,commission shall submit to ,congress the following reports3 7i7 ,initial report ,not later than the first ,march #ae occurring after the date that is #b years after the date on which the ,secretary makes the data available to the ,commission1 a report regarding agreements with pharmacy benefit managers with respect to prescription drug plans and ,,ma-,,pd plans4 ,such report shall include1 to the extent practicable-- 7,i7 a description of trends and patterns1 including relevant averages1 totals1 and other figures for the types of information submitted2 7,,ii7 an analysis of any differences in agreements and their effects on plan enrollee out-of-pocket spending and average pharmacy reimbursement1 and other impacts2 and 7,,iii7 any recommendations the ,commission determines appropriate4 7ii7 ,final report ,not later than #b years after the date on which the ,commission submits the initial report under clause 7i71 a report describing any changes with respect to the information described in clause 7i7 over time1 together with any recommendations the ,commission determines appropriate4 7,b7 ,funding ,in addition to amounts otherwise available1 there is appropriated to the ,medicare ,payment ,advisory ,commission1 out of any money in the ,treasury not otherwise appropriated1 #a1jjj1jjj for fiscal year #bjbf1 to remain available until expended1 to carry out this paragraph4