,,ii #aaith ,,congress #b;d ,session ,s4 #chbb ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,february #aj1 #bjbf,ms4 ,warren 7for herself and ,mr4 ,hawley7 introduced the following bill2 which was read twice and referred to the ,committee on the ,judiciary ,a ,,bill ,to prohibit pharmacy benefit managers1 insurers1 and prescription drug or medical device wholesalers from being under common ownership with certain medical service providers1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,break ,up ,big ,medicine ,act4 #b4 ,findings ,the ,congress finds the following3 7#a7 ,large1 vertically integrated health care platforms dominate the ,american health care system4 ,these corporate entities own or control every part of the health care supply chain1 including upstream business lines1 like health insurance plans1 and downstream suppliers1 like pharmacies and physicians4 ,this is the end result of an unprecedented wave of consolidation4 7#b7 ,large1 publicly traded insurance conglomerates have increasingly engaged in aggressive acquisition strategies1 becoming some of the largest employers of physicians in the country4 ,as of #bjbc1 one conglomerate controls approximately #aj percent of all ,american physicians1 making it the single largest employer of physicians in the nation4 7#c7 ,more than three-quarters of all ,american doctors are employed by corporate entities1 with independent physicians comprising a small and shrinking share of ,america's doctors4 7#d7 ,large wholesalers of drugs and medical devices have similarly engaged in a wave of consolidation4 ,the #c largest drug wholesalers control #ih percent of the ,united ,states drug distribution market4 ,these conglomerates have also engaged in substantial vertical integration1 acquiring downstream suppliers including specialty medical practices and medical supply distributors4 ,since ,january #bjbd1 the #c largest drug wholesalers have proposed or completed acquisitions of downstream suppliers worth approximately #af1jjj1jjj1jjj and spanning more than #a1jjj locations across #ce ,states4 7#e7 ,pharmacy benefit managers are corporate entities that determine what drugs will be covered by health plans1 what prices patients will pay1 and how much pharmacies will be reimbursed4 ,the #c largest pharmacy benefit managers are each integrated into large1 corporate health care platforms4 ,these #c pharmacy benefit managers alone process nearly #hj percent of prescription drug claims4 7#f7 ,ownership of both upstream and downstream businesses creates inherent conflicts of interest for corporate health care platforms4 7,a7 ,the ,federal ,trade ,commission has found that vertically integrated pharmacy benefit managers have both the ability and incentive to steer business to their own affiliated pharmacies1 which reduces competition and increases prescription drug costs for patients4 7,b7 ,in the physician market1 large insurers have the ability and incentive to steer enrollees to providers owned by the same parent company4 7,c7 ,self-preferencing of affiliated pharmacies or physicians may allow large1 vertically integrated health conglomerates to evade statutory limits on profits known as the ,medical ,loss ,ratio4 ,gaming of the profit constraint using transfer pricing techniques may allow affiliated health insurance businesses to hide profits in the unregulated pharmacy or physician business segments1 costing enrollees and taxpayers money4 7,d7 ,extensive evidence supports claims that private insurers issuing ,medicare ,advantage plans use employed physicians to intensively document the medical conditions of their enrollees1 generating inflated payments from the ,federal ,government without improving care quality4 7,e7 ,in the wholesale drug distribution market1 acquisitions of specialty care providers by large wholesalers can create the incentive and ability for the new1 vertically integrated company to steer specialists toward prescribing the most lucrative drugs and devices rather than the best treatment for the patient4 7#g7 ,pursuant to its powers under article ,i1 section #h1 of the ,united ,states ,constitution1 ,congress has the ability to create any law necessary and appropriate to regulate interstate commerce4 ,large1 national health conglomerates operate across state lines and engage in intrastate activities that substantially relate to interstate commerce4 ,congress intends to regulate these corporate health care platforms in the public interest4 7#h7 ,in order to eliminate the conflicts of interest described in paragraphs 7#a7 through 7#g7 and restore competition to the marketplace1 the ,federal ,government should-- 7,a7 protect patients1 physicians1 pharmacies1 and taxpayers by structurally separating vertically integrated health conglomerates2 7,b7 require parent companies that own an insurer or pharmacy benefit manager to divest any medical providers they either directly own or control through management service organizations2 7,c7 require parent companies that own a prescription drug or medical device wholesaler to divest any medical provider or management service organizations they own2 7,d7 enable ,federal agencies1 ,state attorneys general1 and private citizens to bring civil actions to enforce the structural separation of these companies2 and 7,e7 grant the ,federal ,trade ,commission and ,department of ,justice additional authority to review and block future actions that would harm the public interest by re-creating the conflicts of interest described above4 #c4 ,prohibitions relating to anticompetitive ownership and contracts 7a7 ,prohibition on certain common ownership 7#a7 ,involving an insurance company or pharmacy benefit manager 7,a7 ,in general ,it shall be unlawful for any person to both-- 7i7 directly or indirectly own1 operate1 control1 or direct the operation of the whole or any part of-- 7,i7 a provider2 or 7,,ii7 a management services organization2 and 7ii7 directly or indirectly own1 operate1 or control the whole or any part of-- 7,i7 an insurance company2 and 7,,ii7 a pharmacy benefit manager4 7,b7 ,divestment ,not later than #a year after the date of enactment of this ,act1 any person in violation of subparagraph 7,a7 shall divest one of the following3 7i7 ,all entities described in subparagraph 7,a77i74 7ii7 ,all entities described in subparagraph 7,a77ii74 7#b7 ,involving a wholesaler 7,a7 ,in general ,it shall be unlawful for any person to both-- 7i7 directly or indirectly own1 operate1 control1 or direct the operation of the whole or any part of a provider or management services organization2 and 7ii7 directly or indirectly own1 operate1 or control the whole or any part of a prescription drug or medical device wholesaler4 7,b7 ,divestment ,not later than #a year after the date of enactment of this ,act1 any person in violation of subparagraph 7,a7 shall divest one of the following3 7i7 ,all entities described in subparagraph 7,a77i74 7ii7 ,all entities described in subparagraph 7,a77ii74 7b7 ,antitrust enforcement 7#a7 ,in general ,both the ,federal ,trade ,commission and the ,assistant ,attorney ,general in charge of the ,antitrust ,division shall have jurisdiction1 jointly or separately1 to enforce this section4 7#b7 ,penalties for failure to divest 7,a7 ,guidance ,not later than #cj days after the date of enactment of this ,act1 the ,chair of the ,federal ,trade ,commission and the ,assistant ,attorney ,general in charge of the ,antitrust ,division shall issue guidance specifying milestones for divestment within the deadline under subsection 7a74 7,b7 ,penalties 7i7 ,in general ,for any person that does not comply with the milestones specified under subparagraph 7,a71 the ,chair of the ,federal ,trade ,commission or the ,assistant ,attorney ,general in charge of the ,antitrust ,division shall cause #aj percent of the profits of the person to be transferred into escrow on a monthly basis1 to be-- 7,i7 returned to the person if divestment occurs by the deadline under subsection 7a72 or 7,,ii7 deposited into the fund described in subsection 7c77#g7 if divestment does not occur by the deadline under subsection 7a74 7,c7 ,trustee ,if divestiture does not occur by the deadline under subsection 7a71 a divestiture trustee shall oversee the divestiture required under that paragraph4 ,the divestiture trustee shall have the authority to sell the entity to which the divestiture requirement applies4 7c7 ,civil actions 7#a7 ,in general ,when the ,inspector ,general of the ,department of ,health and ,human ,services1 the ,assistant ,attorney ,general in charge of the ,antitrust ,division of the ,department of ,justice1 the ,federal ,trade ,commission1 or an attorney general of a ,state has reason to believe that a person is in violation of subsection 7a71 such ,inspector ,general1 ,assistant ,attorney ,general1 ,federal ,trade ,commission or attorney general of a ,state may bring a civil action in an appropriate district court of the ,united ,states4 7#b7 ,private right of action 7,a7 ,in general ,an individual alleging damages as a result of a violation of this ,act may bring a civil action in any court of competent jurisdiction1 ,state or ,federal4 7,b7 ,relief ,in a civil action brought under subparagraph 7,a7 in which the plaintiff prevails1 the court may award-- 7i7 treble damages2 7ii7 reasonable attorney's fees and litigation costs2 and 7iii7 any other relief1 including equitable or declaratory relief1 that the court determines appropriate4 7#c7 ,actions by state attorneys general ,if the attorney general of a ,state has reason to believe that an interest of the residents of the ,state has been or is being threatened or adversely affected by a practice that violates subsection 7a71 the attorney general of the ,state may1 as parens patriae1 bring a civil action on behalf of the residents of the ,state in an appropriate district court of the ,united ,states to obtain appropriate relief1 including monetary damages4 7#d7 ,injunctive and equitable relief ,in any action described in paragraph 7#a71 7#b71 or 7#c71 the applicable court1 on a finding that a person is in violation of subsection 7a71 shall issue an order requiring such person-- 7,a7 to cease and desist from such violation1 and1 if applicable1 divest an entity of such person in accordance with paragraph 7#a77;,b7 or paragraph 7#b77;,b7 of such subsection 7a71 as applicable2 and 7,b7 to disgorge any revenue received from an entity subject to divestment in accordance with such subsection 7a7 for the period of such violation4 7#e7 ,other relief ,in addition to any relief obtained under paragraph 7#a71 7#b71 7#c71 or 7#d71 the court may grant any other equitable relief necessary to redress and prevent recurrence of the violation4 7#f7 ,right to jury trial ,either party1 upon request1 shall have the right to a jury trial4 7#g7 ,deposit ,any revenue disgorged pursuant to an action under paragraph 7#a7 shall be deposited in a fund created by the ,federal ,trade ,commission and distributed by the ,federal ,trade ,commission to be put to use in the interest of serving the health care needs of the harmed community1 including consumers overcharged for medical services at vertically integrated health care conglomerates4 7d7 ,,ftc and ,,doj review 7#a7 ,reporting required ,any divestment of an entity required under subsection 7a7 shall be reported to the ,federal ,trade ,commission and the ,assistant ,attorney ,general in charge of the ,antitrust ,division of the ,department of ,justice under section #g;,a of the ,clayton ,act 7#ae ,u4,s4,c4 #ah;a7 without respect to the thresholds under subsection 7a77#b7 of that section4 7#b7 ,tolling of divestment period during review ,the divestment period under subsection 7a7 shall be tolled during the pendency of any waiting period required under section #g;,a of the ,clayton ,act 7#ae ,u4,s4,c4 #ah;a74 7#c7 ,review of effect of divestiture ,with respect to each divestiture undertaken pursuant to subsection 7a71 in addition to any applicable review under section #g;,a of the ,clayton ,act 7#ae ,u4,s4,c4 #ah;a71 the ,federal ,trade ,commission and the ,assistant ,attorney ,general in charge of the ,antitrust ,division of the ,department of ,justice shall review the effect on competition1 financial viability1 and the public interest-- 7,a7 of the divestiture2 and 7,b7 of the subsequent acquisition of the divested entity by the acquiring person4 7#d7 ,blocking of actions ,the ,federal ,trade ,commission and the ,assistant ,attorney ,general in charge of the ,antitrust ,division of the ,department of ,justice1 jointly or separately1 may bring a civil action in any court of competent jurisdiction to block any action that would harm competition to the detriment of the public interest with respect to the conflicts of interest described in subsection 7a74 7e7 ,rulemaking authority ,the ,federal ,trade ,commission shall promulgate rules to carry out this section4 ,such rules shall not diminish any obligation under this section4 7f7 ,reports required ,the ,chair of the ,federal ,trade ,commission and the ,assistant ,attorney ,general in charge of the ,antitrust ,division of the ,department of ,justice shall submit to the appropriate congressional committees quarterly reports on compliance with this ,act1 including the status of any divestitures required under this ,act4 7g7 ,rule of construction ,nothing in this section shall be construed to limit the authority of the ,federal ,trade ,commission1 the ,inspector ,general of the ,department of ,justice1 the ,department of ,health and ,human ,services1 or the attorney general of a ,state under any other provision of law4 7h7 ,severability ,if any provision of this ,act or the application thereof to any person or circumstance is held invalid1 the remainder of this ,act1 or the application of that provision to persons or circumstances other than those as to which it is held invalid1 shall not be affected thereby4 7i7 ,definitions ,in this section3 7#a7 ,drug2 device ,the terms drug and device have the meanings given those terms1 respectively1 in section #bja of the ,federal ,food1 ,drug1 and ,cosmetic ,act 7#ba ,u4,s4,c4 #cba74 7#b7 ,health plan ,the term health plan means any public or private health insurance plan4 7#c7 ,management services organization ,the term management services organization means an entity that has entered into an agreement with a provider to furnish services to such provider1 including services relating to payroll1 human resources1 employment screening1 payer contracting1 billing and collection1 coding1 information technology services1 patient scheduling1 property or equipment leasing1 and administrative or business services that do not constitute the practice of medicine4 7#d7 ,person ,the term person has the meaning given the term in section #h of the ,sherman ,act 7#ae ,u4,s4,c4 #g74 7#e7 ,pharmacy benefit manager ,the term pharmacy benefit manager means any person1 business1 or other entity1 such as a third-party administrator1 regardless of whether such person1 business1 or entity identifies itself as a pharmacy benefit manager1 that1 either directly or indirectly through an intermediary 7including an affiliate1 subsidiary1 or agent7 or an arrangement with a third party-- 7,a7 acts as a negotiator of prices1 rebates1 fees1 or discounts for prescription drugs on behalf of a health plan or health plan sponsor2 7,b7 contracts with pharmacies to create pharmacy networks and designs and manages such networks2 or 7,c7 manages or administers the prescription drug benefits provided by a health plan1 including the processing and payment of claims for prescription drugs1 arranging alternative access to or funding for prescription drugs1 the performance of utilization management services1 including 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 prescription drugs1 or the provision of related services4 7#f7 ,prescription drug ,the term prescription drug means a drug approved under section #eje of the ,federal ,food1 ,drug1 and ,cosmetic ,act 7#ba ,u4,s4,c4 #cee7 that is subject to section #ejc7;b77#a7 of such ,act 7#ba ,u4,s4,c4 #cec7;b77#a774 7#g7 ,prescription drug or medical device wholesaler ,the term prescription drug or medical device wholesaler-- 7,a7 means a person engaged in wholesale distribution of a prescription drug or a device2 and 7,b7 includes a parent 7direct or indirect7 of1 a subsidiary 7direct or indirect1 and partial or complete7 of1 and any entity under the common control or ownership of a person described in subparagraph 7,a74 7#h7 ,provider ,the term provider means a practitioner or entity the ,national ,provider ,institute registration of which has #a or more taxonomy codes under the ,national ,uniform ,claim ,committee 7or subsequent organization71 including any in-patient or outpatient pharmacy1 physician practice1 ambulatory surgery center1 urgent care center1 post-acute care facility1 home-health provider1 or hospital4 7#i7 ,wholesale distribution ,the term wholesale distribution-- 7,a7 means a person engaged in the sale1 purchase1 trade1 delivery1 handling1 storage or receipt of a drug or device by a person other than the consumer or patient2 and 7,b7 does not include-- 7i7 dispensing of a drug or device to a consumer or patient by a person having a valid license under ,state law to do so2 7ii7 purchase1 handling1 storage1 receipt1 or other acquisition of a drug or device by a person having a valid license under ,state law to dispense or administer drugs or devices or1 a hospital1 pharmacy1 or other health care entity1 for use by such person1 hospital1 pharmacy1 or other health care entity2 7iii7 sale1 purchase1 trade1 delivery1 handling1 storage1 or receipt of a drug or device by a person holding an application approved under section #eje or #eae of the ,federal ,food1 ,drug1 and ,cosmetic ,act 7#ba ,u4,s4,c4 #cee1 #cfj;e7 or section #cea of the ,public ,health ,service ,act 7#db ,u4,s4,c4 #bfb7 for such drug or device1 a co-licensed partner of any person described in this clause1 or an affiliate of any person described in this clause2 7iv7 possession by1 receipt by1 or transfer to a-- 7,i7 third-party logistics provider that provides or coordinates warehousing or other logistics services in interstate commerce2 or 7,,ii7 repackager who owns or operates an establishment that repacks and relabels drugs or devices for further sale or distribution1 provided that such third-party logistics provider or repackager does not take ownership of the drug or device2 7v7 possession by1 receipt by1 or transfer to a common carrier that transports a drug or device1 provided that the common carrier does not take ownership of the drug2 7vi7 intracompany transfer of any drug or device by an entity described in clause 7i71 7ii71 or 7iii71 including transfers between affiliates thereof1 or warehousing by such person incidental to such intracompany transfer2 or 7vii7 returns or reverse distribution by any person described in clause 7i71 7ii71 7iii71 7iv71 or 7v74