[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5234 Introduced in House (IH)]
111th CONGRESS
2d Session
H. R. 5234
To amend the Public Health Service Act, the Employee Retirement Income
Security Act, the Internal Revenue Code of 1986, and title XVIII of the
Social Security Act to ensure transparency and proper operation of
pharmacy benefit managers.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 6, 2010
Mr. Weiner (for himself and Mr. Moran of Kansas) introduced the
following bill; which was referred to the Committee on Energy and
Commerce, and in addition to the Committees on Ways and Means and
Education and Labor, for a period to be subsequently determined by the
Speaker, in each case for consideration of such provisions as fall
within the jurisdiction of the committee concerned
_______________________________________________________________________
A BILL
To amend the Public Health Service Act, the Employee Retirement Income
Security Act, the Internal Revenue Code of 1986, and title XVIII of the
Social Security Act to ensure transparency and proper operation of
pharmacy benefit managers.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``PBM Audit Reform and Transparency
Act of 2010''.
SEC. 2. PHARMACY BENEFITS MANAGER TRANSPARENCY AND PROPER OPERATION
REQUIREMENTS.
(a) In General.--
(1) Amendments to the public health service act relating to
the group market.--Subpart 2 of part A of title XXVII of the
Public Health Service Act (42 U.S.C. 300gg-4 et seq.) is
amended by adding at the end the following:
``SEC. 2729. PHARMACY BENEFITS MANAGER TRANSPARENCY AND PROPER
OPERATION REQUIREMENTS.
``(a) In General.--Notwithstanding any other provision of law, a
group health plan, and a health insurance issuer providing health
insurance coverage in connection with a group health plan, shall not
enter into a contract with any pharmacy benefits manager to manage the
prescription drug coverage provided under such plan or insurance
coverage, or to control the costs of such prescription drug coverage,
unless the PBM satisfies the following requirements:
``(1) Required disclosures to group health plan or health
insurance issuer in annual report.--
``(A) In general.--The PBM shall provide at least
annually a report to each group health plan and health
insurance issuer with which the PBM has a contract.
``(B) Contents.--With respect to the contract
described under subparagraph (A), the report under
subparagraph (A) shall include--
``(i) information on the number and total
cost of prescriptions under the contract filled
at each of the following types of pharmacies:
mail order pharmacies, speciality pharmacies,
and retail pharmacies;
``(ii) the aggregate average payments under
the contract, per prescription (weighted by
prescription volume), made to such pharmacies;
``(iii) the average amount, per
prescription (weighted by prescription volume),
that the PBM was paid by the plan or issuer for
prescriptions filled at such pharmacies;
``(iv) the aggregate average payment per
prescription (weighted by prescription volume)
under the contract received from pharmaceutical
manufacturers, including all rebates,
discounts, price concessions, or administrative
and other payments from pharmaceutical
manufacturers, and a description of the types
of payments, the amount of these payments that
were shared with the plan, and the percentage
of prescriptions for which the PBM received
such payments;
``(v) information on the overall percentage
of generic drugs dispensed under the contract
separately at retail and mail order pharmacies,
and the percentage of cases in which a generic
drug is dispensed when available; and
``(vi) information on the percentage and
number of cases under the contract in which
individuals were switched, because of the
policies of the PBM, from the drug originally
prescribed to such individual by the health
care provider to a drug with a higher cost to
the plan or issuer, the rationale for these
switches, and a description of the policies of
the PBM applicable to such switches.
``(2) PBM interactions with pharmacies.--
``(A) Obligations on pbm.--A PBM shall--
``(i) provide to pharmacies that contract
with the PBM--
``(I) the methodology and resources
that the PBM utilizes to determine
reimbursement (including to calculate
the maximum allowable cost list); and
``(II) timely updates to pharmacy
product reimbursement benchmarks used
to calculate prescription reimbursement
to pharmacies;
``(ii) not less than one time per week,
update the maximum allowable cost list and the
reimbursement benchmarks;
``(iii) establish a process for providing
prompt notification of the updates under clause
(ii) to the pharmacies; and
``(iv) pay pharmacies promptly for clean
claims, in a manner that is similar to the
manner in which claims are paid under section
1860D-12(b)(4) of the Social Security Act (42
U.S.C. 1395w-112(b)(4)).
``(B) PBM limitations.--A PBM may not--
``(i) require that a pharmacy participate
in one network of pharmacies managed by such
PBM as a condition for the pharmacy to
participate in another network managed by such
PBM;
``(ii) exclude an otherwise qualified
pharmacy from participation in a network of
pharmacies managed by such PBM if the person or
entity that owns the pharmacy accepts the
terms, conditions and reimbursement rates of
the PBM's contract; and
``(iii) automatically--
``(I) enroll a pharmacy in a
contract with the PBM for participation
in a pharmacy network; or
``(II) modify an existing contract
regarding participation in a pharmacy
network,
without a written agreement of the person or
entity that owns the pharmacy.
``(C) Contract required.--The person or entity that
owns a pharmacy shall sign a contract with a PBM before
assuming responsibility to participate in a network
managed by a PBM.
``(3) PBM ownership interests and conflicts of interest.--
With respect to an individual who is a beneficiary of pharmacy
benefits managed by a PBM, the PBM may not mandate that such
individual use a specific pharmacy or entity to fill a
prescription if--
``(A) the PBM has an ownership interest in the
pharmacy or entity; or
``(B) the pharmacy or entity has an ownership
interest in the PBM.
``(4) Pharmacy choice.--With respect to an individual who
is a beneficiary of pharmacy benefits managed by a PBM, such
PBM may not provide incentives to such individual (including
variations in premiums, deductibles, co-payments, or co-
insurance rates) to encourage such individual to utilize a
specific pharmacy or other entity to fill a prescription, if
such incentives only apply--
``(A) to a pharmacy or entity that the PBM has an
ownership interest in; or
``(B) to a pharmacy or entity that has an ownership
interest in the PBM.
``(5) PBM audit of pharmacies.--With respect to an audit by
a PBM (or an entity acting on behalf of the PBM) of a pharmacy
or other entity (referred to in this paragraph as a `dispensing
entity') that contracts with a PBM to receive reimbursement for
dispensing prescription drugs to individuals covered by
benefits managed by such PBM, the audit must comply with the
following:
``(A) The PBM (or an entity acting on behalf of the
PBM) shall give the pharmacy or other dispensing entity
at least 15 days written notice prior to commencing an
audit.
``(B) The time period covered by the audit may not
exceed one year from the date the claim being audited
was submitted to or adjudicated by the PBM.
``(C) To the extent that the audit requires the
application of clinical or professional judgment, such
audit shall be conducted by or in consultation with a
pharmacist who is licensed in the State in which the
audit is being conducted.
``(D) The PBM cannot require more stringent record
keeping by a pharmacy or dispensing entity than is
required by State and Federal law and regulation.
``(E) The PBM (or an entity acting on behalf of the
PBM) shall establish a written appeals process that
shall include procedures to allow pharmacies and other
dispensing entities to appeal to the PBM the
preliminary reports and final reports resulting from
the audit and any resulting recoupment or penalty.
``(F) The PBM (or an entity acting on behalf of the
PBM) shall accept records of a hospital, physician, or
other authorized practitioner that are made available
to such PBM or entity by the pharmacy or dispensing
entity to validate pharmacy records and prescriptions
with respect to confirming the validity of claims in
connection with prescriptions, refills, or changes in
prescriptions.
``(G) To the extent that an audit results in the
identification of any clerical or record-keeping errors
(such as typographical errors, scrivener's error, or
computer error) in a required document or record, the
pharmacy or dispensing entity shall not be subject to
recoupment of funds by the PBM unless--
``(i) the PBM can provide proof of intent
to commit fraud; or
``(ii) such error results in actual
financial harm to the PBM, a health insurance
plan managed by the PBM, or a consumer.
``(H) The PBM (or an entity acting on behalf of the
PBM) shall not use extrapolation or other statistical
expansion techniques in calculating the amount of any
recoupment or penalty resulting from an audit of a
pharmacy or dispensing entity.
``(I) With respect to prescriptions covered by a
group health plan or health insurance issuer, after the
conclusion of any appeals under subparagraph (E), a PBM
shall--
``(i) disclose any recoupment of funds from
a pharmacy or dispensing entity that--
``(I) results from an audit; and
``(II) is related to prescriptions
covered by such plan or issuer; and
``(ii) shall provide a copy of such
disclosure to the pharmacy or dispensing
entity.
``(6) PBM conduct regarding covered individuals.--
``(A) Treatment of data.--
``(i) Notice of sale.--The PBM shall notify
a group health plan or health insurance issuer,
in writing, at least 30 days before selling,
leasing, or renting any utilization or claims
data that the PBM possesses as a result of a
contract between such PBM and plan or issuer,
of--
``(I) the PBM's intent to sell,
lease, or rent such data;
``(II) the name of the potential
buyer, lessor, or renter of such data;
and
``(III) the expected use of any
utilization or claims data by such
buyer, lessor, or renter.
``(ii) Limitations on sale.--The PBM may
not sell, lease, or rent utilization or claims
data that the PBM possesses as a result of a
contract between such PBM and a group health
plan or health insurance issuer unless the PBM
has received written approval for such
transaction from the plan or issuer.
``(iii) Opt out for consumers.--Before a
PBM sells, leases, or rents utilization or
claims data that the PBM possesses as a result
of a contract between such PBM and a group
health plan or health insurance issuer, the PBM
shall provide each individual who is covered by
benefits managed by the PBM with an opportunity
to affirmatively opt out of the sale, leasing,
or renting of data related to such individual.
``(B) Contact with beneficiaries.--A PBM may not
directly contact, by any means (including via
electronic delivery, telephonic, SMS text or direct
mail), an individual who is covered by benefits managed
by the PBM on behalf of a group health plan or health
insurance issuer unless the PBM has the express written
permission of the group health plan or health insurance
issuer and the covered individual (through a request by
the plan sponsor) to engage in such contact.
``(C) Limits on sharing data.--With respect to an
individual covered by a benefit managed by a PBM,
unless a patient has voluntarily elected to fill a
prescription at a pharmacy, a PBM shall not transmit
personally identifiable utilization or claims data
related to such individual to such pharmacy if--
``(i) the PBM has an ownership interest in
the pharmacy; or
``(ii) the pharmacy has an ownership
interest in the PBM.
``(b) Pharmacy Benefit Manager; PBM Defined.--For purposes of this
section, the terms `pharmacy benefit manager' and `PBM' mean an entity
that provides pharmacy benefit management services on behalf of a group
health plan or a health insurance issuer.''.
(2) Amendments to the public health service act relating to
the individual market.--
(A) In general.--The subpart 2 of part B of title
XXVII of the Public Health Service Act (42 U.S.C.
300gg-51 et seq.) is amended by adding at the end the
following:
``SEC. 2754. PHARMACY BENEFITS MANAGER TRANSPARENCY AND PROPER
OPERATION REQUIREMENTS.
``The provisions of section 2729 shall apply to health insurance
coverage offered by a health insurance issuer in the individual market
in the same manner as such provisions apply to a group health plan and
a health insurance issuer providing health insurance coverage under
that section.''.
(3) Conforming amendments.--
(A) ERISA amendment.--
(i) In general.--Subpart B of part 7 of
subtitle B of title I of the Employee
Retirement Income Security Act of 1974 (29
U.S.C. 1185 et seq.) is amended by adding at
the end the following:
``SEC. 715. PHARMACY BENEFITS MANAGER TRANSPARENCY AND PROPER OPERATION
REQUIREMENTS.
``The provisions of section 2729 of the Public Health Service Act
shall apply to a group health plan, and a health insurance issuer
providing health insurance coverage in connection with a group health
plan, in the same manner as such provisions apply to a group health
plan and a health insurance issuer providing health insurance coverage
under that section.''.
(ii) Clerical amendment.--The table of
contents in section 1 of the Employee
Retirement Income Security Act of 1974 is
amended by inserting after the item relating to
section 714 the following:
``Sec. 715. Pharmacy benefits manager transparency and proper operation
requirements.''.
(B) IRC amendment.--
(i) In general.--Subpart B of chapter 100
of the Internal Revenue Code of 1986 (26 U.S.C.
9811 et seq.) is amended by adding at the end
the following:
``SEC. 9814. PHARMACY BENEFITS MANAGER TRANSPARENCY AND PROPER
OPERATION REQUIREMENTS.
``The provisions of section 2729 of the Public Health Service Act
shall apply to a group health plan, and a health insurance issuer
providing health insurance coverage in connection with a group health
plan, in the same manner as such provisions apply to a group health
plan and a health insurance issuer providing health insurance coverage
under that section.''.
(ii) Clerical amendment.--The table of
sections for subpart B of chapter 100 of the
Internal Revenue Code of 1986 is amended by
inserting after the item relating to section
9813 the following new item:
``Sec. 9814. Pharmacy benefits manager transparency and proper
operation requirements.''.
(b) PBMs and Medicare Part D.--Subpart 2 of part D of title XVIII
of the Social Security Act is amended by adding at the end the
following new section:
``SEC. 1860D-17. PHARMACY BENEFITS MANAGER TRANSPARENCY AND PROPER
OPERATION REQUIREMENTS.
``The provisions of section 2729 of the Public Health Service Act
shall apply to health insurance coverage offered by a prescription drug
plan under this part in the same manner as such provisions apply to a
group health plan and a health insurance issuer providing health
insurance coverage under that section.''.
(c) Effective Dates.--
(1) Group market and medicare.--The amendments made by
paragraphs (1) and (3) of subsection (a) and by subsection (b)
shall apply to group health plan or health insurance issuers
for plan years beginning on or after the date of enactment of
this Act.
(2) Individual market.--The amendment made by subsection
(a)(2) shall apply with respect to health insurance coverage
offered, sold, issued, renewed, in effect, or operated in the
individual market on or after the date of enactment of this
Act.
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