,,ii #aaith ,,congress #ast ,session ,s4 #ebf ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,february #aa1 #bjbe,mr4 ,grassley 7for himself1 ,ms4 ,cantwell1 ,ms4 ,ernst1 ,mr4 ,welch1 ,mrs4 ,capito1 ,mrs4 ,shaheen1 ,mr4 ,marshall1 ,mr4 ,heinrich1 ,mr4 ,moran1 ,mrs4 ,hyde-,smith1 ,mr4 ,tillis1 and ,mr4 ,rounds7 introduced the following bill2 which was read twice and referred to the ,committee on ,commerce1 ,science1 and ,transportation ,a ,,bill ,to prevent unfair and deceptive acts or practices and the dissemination of false information related to pharmacy benefit management services for prescription drugs1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,pharmacy ,benefit ,manager ,transparency ,act of #bjbe4 #b4 ,prohibition on unfair or deceptive prescription drug pricing practices 7a7 ,conduct prohibited ,except as provided in subsection 7b71 it shall be unlawful for any pharmacy benefit manager 7or affiliate1 subsidiary1 or agent of a pharmacy benefit manager71 directly or indirectly1 to engage in any of the following activities related to pharmacy benefit management services3 7#a7 ,charge a health plan or payer a different amount for a prescription drug's ingredient cost or dispensing fee than the amount the pharmacy benefit manager reimburses a pharmacy for the prescription drug's ingredient cost or dispensing fee where the pharmacy benefit manager retains the amount of any such difference4 7#b7 ,arbitrarily1 unfairly1 or deceptively1 by contract or any other means1 reduce1 rescind1 or otherwise claw back any reimbursement payment1 in whole or in part1 to a pharmacist or pharmacy for a prescription drug's ingredient cost or dispensing fee1 unless-- 7,a7 the original claim was submitted fraudulently2 7,b7 the original claim payment was inconsistent with the reimbursement terms in the contract2 or 7,c7 the pharmacist services were not rendered by the pharmacy or pharmacist4 7#c7 ,arbitrarily1 unfairly1 or deceptively1 by contract or any other means1 increase fees or lower reimbursement to a pharmacy in order to offset reimbursement changes instructed by the ,federal ,government under any health plan funded by the ,federal ,government4 7b7 ,exceptions ,a pharmacy benefit manager shall not be in violation of paragraph 7#a7 or 7#c7 of subsection 7a7 if the pharmacy benefit manager meets the following conditions3 7#a7 ,the pharmacy benefit manager1 affiliate1 subsidiary1 or agent passes along or returns #ajj percent of any price concession to a health plan or payer1 including any rebate1 discount1 or other price concession4 7#b7 ,the pharmacy benefit manager1 affiliate1 subsidiary1 or agent provides full and complete disclosure of-- 7,a7 the cost1 price1 and reimbursement of a prescription drug to each health plan1 payer1 and pharmacy with which the pharmacy benefit manager1 affiliate1 subsidiary1 or agent has a contract or agreement to provide pharmacy benefit management services2 7,b7 each fee1 markup1 and discount charged or imposed by the pharmacy benefit manager1 affiliate1 subsidiary1 or agent to each health plan1 payer1 and pharmacy with which the pharmacy benefit manager1 affiliate1 subsidiary1 or agent has a contract or agreement for pharmacy benefit management services2 or 7,c7 the aggregate amount of all remuneration the pharmacy benefit manager receives from a prescription drug manufacturer for a prescription drug1 including any rebate1 discount1 administration fee1 and any other payment or credit obtained or retained by the pharmacy benefit manager1 or affiliate1 subsidiary1 or agent of the pharmacy benefit manager1 pursuant to a contract or agreement for pharmacy benefit management services to a health plan1 payer1 or any ,federal agency 7upon the request of the agency74 #c4 ,prohibition on false information ,it shall be unlawful for any person to report information related to pharmacy benefit management services to a ,federal department or agency if-- 7#a7 the person knew1 or reasonably should have known1 the information to be false or misleading2 7#b7 the information was required by law to be reported2 and 7#c7 the false or misleading information reported by the person would affect analysis or information compiled by the ,federal department or agency for statistical or analytical purposes with respect to the market for pharmacy benefit management services4 #d4 ,transparency 7a7 ,reporting by pharmacy benefit managers ,subject to subsection 7d71 not later than #a year after the date of enactment of this ,act1 and annually thereafter1 each pharmacy benefit manager 7or affiliate1 subsidiary1 or agent of a pharmacy benefit manager7 shall report to the ,commission and the ,secretary of ,health and ,human ,services the following information3 7#a7 ,the aggregate amount of the difference between the amount the pharmacy benefit manager was paid by each health plan and the amount that the pharmacy benefit manager paid each pharmacy on behalf of the health plan for prescription drugs4 7#b7 ,the aggregate amount of any-- 7,a7 generic effective rate fee charged to each pharmacy2 7,b7 direct and indirect remuneration fee charged or other price concession to each pharmacy2 and 7,c7 payment rescinded or otherwise clawed back from a reimbursement made to each pharmacy4 7#c7 ,if1 during the reporting year1 the pharmacy benefit manager moved or reassigned a prescription drug to a formulary tier that has a higher cost1 higher copayment1 higher coinsurance1 or higher deductible to a consumer1 or a lower reimbursement to a pharmacy1 an explanation of the reason why the drug was moved or reassigned from #a tier to another1 including whether the move or reassignment was determined or requested by a prescription drug manufacturer or other entity4 7#d7 ,with respect to any pharmacy benefit manager that owns1 controls1 or is affiliated with a pharmacy1 a report regarding any difference in reimbursement rates or practices1 direct and indirect remuneration fees or other price concessions1 and clawbacks between a pharmacy that is owned1 controlled1 or affiliated with the pharmacy benefit manager and any other pharmacy4 7b7 ,report to ,congress 7#a7 ,in general ,not later than #a year after the date of enactment of this ,act1 and annually thereafter1 the ,commission shall submit to the ,committee on ,commerce1 ,science1 and ,transportation of the ,senate and the ,committee on ,energy and ,commerce of the ,house of ,representatives a report that addresses1 at a minimum-- 7,a7 the number actions brought by the ,commission during the reporting year to enforce this ,act and the outcome of each such enforcement action2 7,b7 the number of open investigations or inquiries into potential violations of this ,act as of the time the report is submitted2 7,c7 the number and nature of complaints received by the ,commission relating to an allegation of a violation of this ,act during the reporting year2 7,d7 an anonymized summary of the reports filed with the ,commission pursuant to subsection 7a7 for the reporting year2 7,e7 an analysis of the requirements of this ,act and whether the implementation of such requirements leads to mergers 7including horizontal mergers or vertical mergers7 amongst any pharmacy benefit managers1 or any pharmacy benefit manager that owns1 controls1 or is affiliated with a pharmacy1 or any pharmacy benefit manager that owns1 controls1 or is affiliated with a health plan1 and the effect of such merger 7including the likelihood of a substantial decrease in competition or the potential for a monopoly72 and 7,f7 policy or legislative recommendations to strengthen any enforcement action relating to a violation of this ,act1 including recommendations to include additional prohibited conduct in section #b7;a71 and recommendations to encourage more competition and decrease the likelihood of a monopoly in the pharmaceutical supply chain4 7#b7 ,formulary design or placement practices ,not later than #a year after the date of enactment of this ,act1 the ,commission shall submit to the ,committee on ,commerce1 ,science1 and ,transportation of the ,senate1 the ,committee on ,finance of the ,senate1 the ,committee on ,health1 ,education1 ,labor1 and ,pensions of the ,senate1 the ,committee on ,ways and ,means of the ,house of ,representatives1 and the ,committee on ,energy and ,commerce of the ,house of ,representatives a report that addresses the policies1 practices1 and role of pharmacy benefit managers 7including their affiliates1 subsidiaries1 and agents7 regarding formulary design or placement1 including-- 7,a7 whether pharmacy benefit managers 7including their affiliates1 subsidiaries1 and agents7 use formulary design or placement to increase their gross revenue without an accompanying increase in patient access or decrease in patient cost2 or 7,b7 recommendations to ,congress for legislative action addressing such policies1 practices1 and role of pharmacy benefit managers 7including their affiliates1 subsidiaries1 and agents74 7#c7 ,construction ,nothing in this section shall be construed as authorizing the ,commission to disclose any information that is a trade secret or confidential information described in section #eeb7;b77#d7 of title #e1 ,united ,states ,code1 except as necessary to enforce this ,act4 7#d7 ,confidentiality ,the ,commission may disclose the information in a form which does not disclose the identity of a specific pharmacy benefit manager1 pharmacy1 or health plan for the following purposes3 7,a7 ,to permit the ,comptroller ,general of the ,united ,states to review the information provided to carry out this ,act4 7,b7 ,to permit the ,director of the ,congressional ,budget ,office to review the information provided4 7c7 ,,gao study ,not later than #a year after the date of enactment of this ,act1 the ,comptroller ,general of the ,united ,states shall submit to the ,committee on ,commerce1 ,science1 and ,transportation1 the ,committee on ,finance1 and the ,committee on ,health1 ,education1 ,labor1 and ,pensions of the ,senate and to the ,committee on ,ways and ,means and the ,committee on ,energy and ,commerce of the ,house of ,representatives a report that-- 7#a7 addresses1 at minimum-- 7,a7 the role that pharmacy benefit managers play in the pharmaceutical supply chain2 7,b7 the state of competition among pharmacy benefit managers1 including the market share for the ,nation's #aj largest pharmacy benefit managers2 7,c7 the use of rebates and fees by pharmacy benefit managers1 including data for each of the #aj largest pharmacy benefit managers that reflects1 for each drug in the formulary of each such pharmacy benefit manager-- 7i7 the amount of the rebate passed on to patients2 7ii7 the amount of the rebate passed on to payors2 7iii7 the amount of the rebate kept by the pharmacy benefit manager2 and 7iv7 the role of fees charged by the pharmacy benefit manager2 7,d7 whether pharmacy benefit managers structure their formularies in favor of high-rebate prescription drugs over lower-cost1 lower-rebate alternatives2 7,e7 the average prior authorization approval time for each of the #aj largest pharmacy benefit managers2 7,f7 factors affecting the use of step therapy in each of the #aj largest pharmacy benefit managers2 7,g7 the extent to which the price that pharmacy benefit managers charge payors1 such as the ,medicare program under title ,,xxviii of the ,social ,security ,act 7#db ,u4,s4,c4 #acie et seq471 ,state ,medicaid programs under title ,,xix of the ,social ,security ,act 7#db ,u4,s4,c4 #acif et seq471 the ,federal ,employees ,health ,benefits ,program under chapter #hi of title #e1 ,united ,states ,code1 or private payors1 for a drug is more than such pharmacy benefit managers pay the pharmacy for the drug2 and 7,h7 the competitive impact of pharmacy benefit managers' business practices1 including the impact that such business practices have on the cost of health plan premiums or prescription drugs for consumers2 and 7#b7 provides recommendations for legislative action to lower the cost of prescription drugs for consumers and payors1 improve the efficiency of the pharmaceutical supply chain by lowering intermediary costs1 improve competition in pharmacy benefit management1 and provide transparency in pharmacy benefit management4 7d7 ,privacy requirements ,any entity shall provide information under subsection 7a7 in a manner consistent with the privacy1 security1 and breach notification regulations promulgated under section #bfd7;c7 of the ,health ,insurance ,portability and ,accountability ,act of #aiif 7#db ,u4,s4,c4 #acbj;d-#b note7 7or any successor regulation71 and shall restrict the use and disclosure of such information according to such regulations4 #e4 ,whistleblower protections 7a7 ,in general ,a pharmacy benefit manager1 health plan1 pharmaceutical manufacturer1 pharmacy1 or any affiliate1 subsidiary1 or agent thereof shall not1 directly or indirectly1 discharge1 demote1 suspend1 diminish1 or withdraw benefits from1 threaten1 harass1 or in any other manner discriminate against or adversely impact a covered individual because-- 7#a7 the covered individual1 or anyone perceived as assisting the covered individual1 takes 7or is suspected to have taken or will take7 a lawful action in providing to ,congress1 an agency of the ,federal ,government1 the attorney general of a ,state1 a ,state regulator with authority over the distribution or insurance coverage of prescription drugs1 or a law enforcement agency relating to any act or omission that the covered individual reasonably believes to be a violation of this ,act2 7#b7 the covered individual provides information that the covered individual reasonably believes evidences such a violation to-- 7,a7 a person with supervisory authority over the covered individual at the pharmacy benefit manager1 health plan1 pharmaceutical manufacturer1 pharmacy1 or any affiliate1 subsidiary1 or agent thereof2 or 7,b7 another individual working for the pharmacy benefit manager1 health plan1 pharmaceutical manufacturer1 pharmacy1 or any affiliate1 subsidiary1 or agent thereof who the covered individual reasonably believes has the authority to investigate1 discover1 or terminate the violation or to take any other action to address the violation2 7#c7 the covered individual testifies 7or it is suspected that the covered individual will testify7 in an investigation or judicial or administrative proceeding concerning such a violation2 or 7#d7 the covered individual assists or participates 7or it is expected that the covered individual will assist or participate7 in such an investigation or judicial or administrative proceeding4 7b7 ,enforcement ,an individual who alleges any adverse action in violation of subsection 7a7 may bring an action for a jury trial in the appropriate district court of the ,united ,states for the following relief3 7#a7 ,temporary relief while the case is pending4 7#b7 ,reinstatement with the same seniority status that the individual would have had1 but for the discharge or discrimination4 7#c7 ,twice the amount of back pay otherwise owed to the individual1 with interest4 7#d7 ,consequential and compensatory damages1 and compensation for litigation costs1 expert witness fees1 and reasonable attorneys' fees4 7c7 ,waiver of rights and remedies ,the rights and remedies provided for in this section shall not be waived by any policy form or condition of employment1 including by a predispute arbitration agreement4 7d7 ,predispute arbitration agreements ,no predispute arbitration agreement shall be valid or enforceable if the agreement requires arbitration of a dispute arising under this section4 #f4 ,enforcement 7a7 ,enforcement by the ,commission 7#a7 ,unfair and deceptive acts or practices ,a violation of this ,act shall be treated as a violation of a rule defining an unfair or deceptive act or practice under section #ah7;a77#a77;,b7 of the ,federal ,trade ,commission ,act 7#ae ,u4,s4,c4 #eg;a7a77#a77;,b774 7#b7 ,powers of the ,commission 7,a7 ,in general ,except as provided in subparagraph 7,c71 the ,commission shall enforce this ,act in the same manner1 by the same means1 and with the same jurisdiction1 powers1 and duties as though all applicable terms and provisions of the ,federal ,trade ,commission ,act 7#ae ,u4,s4,c4 #da et seq47 were incorporated into and made a part of this ,act4 7,b7 ,privileges and immunities ,subject to paragraph 7#c71 any person who violates this ,act shall be subject to the penalties and entitled to the privileges and immunities provided in the ,federal ,trade ,commission ,act 7#ae ,u4,s4,c4 #da et seq474 7,c7 ,nonprofit organizations and insurance ,notwithstanding section #d or #f of the ,federal ,trade ,commission ,act 7#ae ,u4,s4,c4 #dd1 #df71 section #b of ,mc,carran-,ferguson ,act 7#ae ,u4,s4,c4 #ajab71 or any other jurisdictional limitation of the ,commission1 the ,commission shall also enforce this ,act1 in the same manner provided in subparagraphs 7,a7 and 7,b7 of this paragraph1 with respect to-- 7i7 organizations not organized to carry on business for their own profit or that of their members2 and 7ii7 the business of insurance1 and persons engaged in such business4 7,d7 ,authority preserved ,nothing in this section shall be construed to limit the authority of the ,commission under any other provision of law4 7#c7 ,penalties 7,a7 ,additional civil penalty ,in addition to any penalty applicable under the ,federal ,trade ,commission ,act 7#ae ,u4,s4,c4 #da et seq471 any person that violates this ,act shall be liable for a civil penalty of not more than #a1jjj1jjj4 7,b7 ,method ,the penalties provided by subparagraph 7,a7 shall be obtained in the same manner as civil penalties imposed under section #ah7;a77#a77;,b7 of the ,federal ,trade ,commission ,act 7#ae ,u4,s4,c4 #eg;a7a7#a77;,b74 7,c7 ,multiple offenses2 mitigating factors ,in assessing a penalty under subparagraph 7,a7-- 7i7 each day of a continuing violation shall be considered a separate violation2 and 7ii7 the court shall take into consideration1 among other factors-- 7,i7 the seriousness of the violation2 7,,ii7 the efforts of the person committing the violation to remedy the harm caused by the violation in a timely manner2 and 7,,iii7 whether the violation was intentional4 7b7 ,enforcement by ,states 7#a7 ,in 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 this ,act1 the attorney general of the ,state may bring a civil action on behalf of the residents of the ,state in an appropriate district court of the ,united ,states to obtain appropriate relief4 7#b7 ,rights of the ,commission 7,a7 ,notice to the ,commission 7i7 ,in general ,except as provided in clause 7iii71 the attorney general of a ,state1 before initiating a civil action under paragraph 7#a71 shall provide written notification to the ,commission that the attorney general intends to bring such civil action4 7ii7 ,contents ,the notification required under clause 7i7 shall include a copy of the complaint to be filed to initiate the civil action4 7iii7 ,exception ,if it is not feasible for the attorney general of a ,state to provide the notification required under clause 7i7 before initiating a civil action under paragraph 7#a71 the attorney general shall notify the ,commission immediately upon instituting the civil action4 7,b7 ,intervention by the ,commission ,the ,commission may-- 7i7 intervene in any civil action brought by the attorney general of a ,state under paragraph 7#a72 and 7ii7 upon intervening-- 7,i7 be heard on all matters arising in the civil action2 and 7,,ii7 file petitions for appeal of a decision in the civil action4 7#c7 ,construction 7,a7 ,powers conferred on the attorney general of a ,state ,nothing in this subsection may be construed to prevent the attorney general of a ,state from exercising the powers conferred on the attorney general by the laws of the ,state to conduct investigations1 to administer oaths or affirmations1 or to compel the attendance of witnesses or the production of documentary or other evidence4 7,b7 ,,erisa ,no civil action brought pursuant to this subsection shall conflict with the ,employee ,retirement ,income ,security ,act of #aigd 7#bi ,u4,s4,c4 #ajja et seq474 7#d7 ,venue2 service of process 7,a7 ,venue ,any action brought under paragraph 7#a7 may be brought in-- 7i7 the district court of the ,united ,states that meets applicable requirements relating to venue under section #acia of title #bh1 ,united ,states ,code2 or 7ii7 another court of competent jurisdiction4 7,b7 ,service of process ,in an action brought under paragraph 7#a71 process may be served in any district in which-- 7i7 the defendant is an inhabitant1 may be found1 or transacts business2 or 7ii7 venue is proper under section #acia of title #bh1 ,united ,states ,code4 7#e7 ,actions by other ,state officials 7,a7 ,in general ,if an attorney general lacks appropriate jurisdiction to bring a civil action under paragraph 7#a71 any other officer of a ,state who is authorized by the ,state to do so may bring a civil action under paragraph 7#a71 subject to the same requirements and limitations that apply under this subsection to civil actions brought by attorneys general4 7,b7 ,clarification of authority ,the authority provided by subparagraph 7,a7 shall supplant1 and not supplement1 the authorities of ,state attorneys general under paragraph 7#a74 7,c7 ,savings provision ,nothing in this subsection may be construed to prohibit an authorized official of a ,state from initiating or continuing any proceeding in a court of the ,state for a violation of any civil or criminal law of the ,state4 7c7 ,affirmative defense 7#a7 ,in general ,in an action brought under this section to enforce section #b1 it shall be an affirmative defense1 on which the defendant has the burden of persuasion by a preponderance of the evidence1 that the conduct alleged to be a violation of section #b was nonpretextual and reasonably necessary to-- 7,a7 prevent a violation of1 or comply with1 ,federal or ,state law2 7,b7 protect patient safety2 or 7,c7 protect patient access4 7#b7 ,clarification ,nothing in this subsection shall be construed to prohibit a defendant from raising any other affirmative defense available4 #g4 ,protection of personal health information ,in making any disclosure or report required by this ,act1 a pharmacy benefit manager 7including their affiliates1 subsidiaries1 and agents7 shall not include any information that would identify a patient or a provider that issued a prescription4 #h4 ,effect on ,state laws ,nothing in this ,act shall be construed to preempt1 displace1 or supplant any ,state laws1 rules1 regulations1 or requirements1 or the enforcement thereof4 #i4 ,definitions ,in this ,act3 7#a7 ,commission ,the term ,commission means the ,federal ,trade ,commission4 7#b7 ,covered individual ,the term covered individual means a current or former employee1 contractor1 subcontractor1 service provider1 or agent of a pharmacy benefit manager1 health plan1 pharmaceutical manufacturer1 pharmacy1 or any affiliate1 subsidiary1 or agent thereof4 7#c7 ,health plan ,the term health plan means any group or individual health insurance plan or coverage1 including any health insurance plan or coverage sponsored or funded by the ,federal ,government or the government of any ,state1 ,territory1 or subdivision thereof4 7#d7 ,pharmacy benefit manager ,the term pharmacy benefit manager means any entity that provides pharmacy benefit management services on behalf of a health plan1 a payer1 or health insurance issuer4 7#e7 ,pharmacy benefit management services ,the term pharmacy benefit management services means1 pursuant to a written agreement with a payer or health plan offering group or individual health insurance coverage1 directly or through an intermediary1 the service of-- 7,a7 negotiating terms and conditions1 including rebates and price concessions1 with respect to a prescription drug on behalf of the health plan1 coverage1 or payer2 or 7,b7 managing the prescription drug benefits provided by the health plan1 coverage1 or payer1 which may include formulary management 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 or the provision of related services4 7#f7 ,prescription drug ,the term prescription drug means-- 7,a7 a drug1 as that term is defined in section #bja7;g7 of the ,federal ,food1 ,drug1 and ,cosmetic ,act 7#ba ,u4,s4,c4 #cba7;g771 that is-- 7i7 approved by the ,food and ,drug ,administration under section #eje of such ,act 7#ba ,u4,s4,c4 #cee72 and 7ii7 subject to the requirements of section #ejc7;b77#a7 of such ,act 7#ba ,u4,s4,c4 #cec7;b77#a772 7,b7 a biological product as that term is defined in section #cea of the ,public ,health ,service ,act 7#db ,u4,s4,c4 #bfb7;i77#a772 or 7,c7 a product that is biosimilar to1 or interchangeable with1 a biologic product under section #cea of the ,public ,health ,service ,act 7#db ,u4,s4,c4 #bfb7;i774