S 127 — Pharmacy Benefit Manager Transparency Act of 2023

41 et seq.).</DELETED> <DELETED> (C) Nonprofit organizations and insurance.--Notwithstanding section 4 or 6 of the Federal Trade Commission Act (15 U.S.C.

44, 46), section 2 of McCarran-Ferguson Act (15 U.S.C.

1012), or any other jurisdictional limitation of the Commission, the Commission shall also enforce this Act, in the same manner provided in subparagraphs (A) and (B) of this paragraph, with respect to--</DELETED> <DELETED> (i) organizations not organized to carry on business for their own profit or that of their members;

and</DELETED> <DELETED> (ii) the business of insurance, and persons engaged in such business.</DELETED> <DELETED> (D) Authority preserved.--Nothing in this section shall be construed to limit the authority of the Commission under any other provision of law.</DELETED> <DELETED> (3) Penalties.--</DELETED> <DELETED> (A) Additional civil penalty.--In addition to any penalty applicable under the Federal Trade Commission Act (15 U.S.C.

41 et seq.), any person that violates this Act shall be liable for a civil penalty of not more than $1,000,000.</DELETED> <DELETED> (B) Method.--The penalties provided by subparagraph (A) shall be obtained in the same manner as civil penalties imposed under section 18(a)(1)(B) of the Federal Trade Commission Act (15 U.S.C.

57a(a)(1)(B)).</DELETED> <DELETED> (C) Multiple offenses;

mitigating factors.--In assessing a penalty under subparagraph (A)--</DELETED> <DELETED> (i) each day of a continuing violation shall be considered a separate violation;

and</DELETED> <DELETED> (ii) the court shall take into consideration, among other factors--</DELETED> <DELETED> (I) the seriousness of the violation;</DELETED> <DELETED> (II) the efforts of the person committing the violation to remedy the harm caused by the violation in a timely manner;

and</DELETED> <DELETED> (III) whether the violation was intentional.</DELETED> <DELETED> (b) Enforcement by States.--</DELETED> <DELETED> (1) 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 Act, 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 relief.</DELETED> <DELETED> (2) Rights of the commission.--</DELETED> <DELETED> (A) Notice to the commission.--</DELETED> <DELETED> (i) In general.--Except as provided in clause (iii), the attorney general of a State, before initiating a civil action under paragraph (1), shall provide written notification to the Commission that the attorney general intends to bring such civil action.</DELETED> <DELETED> (ii) Contents.--The notification required under clause (i) shall include a copy of the complaint to be filed to initiate the civil action.</DELETED> <DELETED> (iii) Exception.--If it is not feasible for the attorney general of a State to provide the notification required under clause (i) before initiating a civil action under paragraph (1), the attorney general shall notify the Commission immediately upon instituting the civil action.</DELETED> <DELETED> (B) Intervention by the commission.--The Commission may--</DELETED> <DELETED> (i) intervene in any civil action brought by the attorney general of a State under paragraph (1);

and</DELETED> <DELETED> (ii) upon intervening--</DELETED> <DELETED> (I) be heard on all matters arising in the civil action;

and</DELETED> <DELETED> (II) file petitions for appeal of a decision in the civil action.</DELETED> <DELETED> (3) Construction.--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 investigations, to administer oaths or affirmations, or to compel the attendance of witnesses or the production of documentary or other evidence.</DELETED> <DELETED> (4) Venue;

service of process.--</DELETED> <DELETED> (A) Venue.--Any action brought under paragraph (1) may be brought in--</DELETED> <DELETED> (i) the district court of the United States that meets applicable requirements relating to venue under section of title 28, United States Code;

or</DELETED> <DELETED> (ii) another court of competent jurisdiction.</DELETED> <DELETED> (B) Service of process.--In an action brought under paragraph (1), process may be served in any district in which--</DELETED> <DELETED> (i) the defendant is an inhabitant, may be found, or transacts business;

or</DELETED> <DELETED> (ii) venue is proper under section of title 28, United States Code.</DELETED> <DELETED> (5) Actions by other state officials.--</DELETED> <DELETED> (A) In general.--If an attorney general lacks appropriate jurisdiction to bring a civil action under paragraph (1), any other officer of a State who is authorized by the State to do so may bring a civil action under paragraph (1), subject to the same requirements and limitations that apply under this subsection to civil actions brought by attorneys general.</DELETED> <DELETED> (B) Clarification of authority.--The authority provided by subparagraph (A) shall supplant, and not supplement, the authorities of State attorneys general under paragraph (1).</DELETED> <DELETED> (C) 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 State.</DELETED> <DELETED> (c) Affirmative Defense.--In an action brought under this section to enforce section 2, it shall be an affirmative defense, on which the defendant has the burden of persuasion by a preponderance of the evidence, that the conduct alleged to be a violation of section 2 was nonpretextual and reasonably necessary to--</DELETED> <DELETED> (1) prevent a violation of, or comply with, Federal or State law;</DELETED> <DELETED> (2) protect patient safety;

or</DELETED> <DELETED> (3) protect patient access.</DELETED> <DELETED>SEC.

7.

EFFECT ON STATE LAWS.</DELETED> <DELETED> Nothing in this Act shall be construed to preempt, displace, or supplant any State laws, rules, regulations, or requirements, or the enforcement thereof.</DELETED> <DELETED>SEC.

8.

DEFINITIONS.</DELETED> <DELETED> In this Act:</DELETED> <DELETED> (1) Commission.--The term ``Commission'' means the Federal Trade Commission.</DELETED> <DELETED> (2) Covered individual.--The term ``covered individual'' means a current or former employee, contractor, subcontractor, service provider, or agent of a pharmacy benefit manager, health plan, pharmaceutical manufacturer, pharmacy, or any affiliate, subsidiary, or agent thereof.</DELETED> <DELETED> (3) Health plan.--The term ``health plan'' means any group or individual health insurance plan or coverage, including any health insurance plan or coverage sponsored or funded by the Federal Government or the government of any State, Territory, or subdivision thereof.</DELETED> <DELETED> (4) Pharmacy benefit manager.--The term ``pharmacy benefit manager'' means any entity that provides pharmacy benefit management services on behalf of a health plan, a payer, or health insurance issuer.</DELETED> <DELETED> (5) Pharmacy benefit management services.--The term ``pharmacy benefit management services'' means, pursuant to a written agreement with a payer or health plan offering group or individual health insurance coverage, directly or through an intermediary, the service of--</DELETED> <DELETED> (A) negotiating terms and conditions, including rebates and price concessions, with respect to a prescription drug on behalf of the health plan, coverage, or payer;

or</DELETED> <DELETED> (B) managing the prescription drug benefits provided by the health plan, coverage, or payer, which may include formulary management the processing and payment of claims for prescription drugs, the performance of drug utilization review, the processing of drug prior authorization requests, the adjudication of appeals or grievances related to the prescription drug benefit, contracting with network pharmacies, or the provision of related services.</DELETED> <DELETED> (6) Prescription drug.--The term ``prescription drug'' means--</DELETED> <DELETED> (A) a drug, as that term is defined in section 201(g) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C.

321(g)), that is--</DELETED> <DELETED> (i) approved by the Food and Drug Administration under section 505 of such Act (21 U.S.C.

355);

and</DELETED> <DELETED> (ii) subject to the requirements of section 503(b)(1) of such Act (21 U.S.C.

353(b)(1));</DELETED> <DELETED> (B) a biological product as that term is defined in section 351 of the Public Health Service Act (42 U.S.C.

262(i)(1));

or</DELETED> <DELETED> (C) a product that is biosimilar to, or interchangeable with, a biologic product under section of the Public Health Service Act (42 U.S.C.

262(i)).</DELETED> SECTION 1.

(2) Arbitrarily, unfairly, or deceptively, by contract or any other means, reduce, rescind, or otherwise claw back any reimbursement payment, in whole or in part, to a pharmacist or pharmacy for a prescription drug's ingredient cost or dispensing fee.fee, unless-- (A) the original claim was submitted fraudulently;

(B) the original claim payment was inconsistent with the reimbursement terms in the contract;

or (C) the pharmacist services were not rendered by the pharmacy or pharmacist.

(b) Exceptions.--A pharmacy benefit manager shall not be in violation of paragraph (1) or (3) of subsection (a) if the pharmacy benefit manager meets the following conditions:

(2) The pharmacy benefit manager, affiliate, subsidiary, or agent provides full and complete disclosure of-- (A) the cost, price, and reimbursement of thea prescription drug to each health plan, payer, and pharmacy with which the pharmacy benefit manager, affiliate, subsidiary, or agent has a contract or agreement to provide pharmacy benefit management services;

(a) Reporting by Pharmacy Benefit Managers.--NotManagers.--Subject to subsection (d), not later than 1 year after the date of enactment of this Act, and annually thereafter, each pharmacy benefit manager (or affiliate, subsidiary, or agent of a pharmacy benefit manager) shall report to the Commission and the Secretary of Health and Human Services the following information:

(b) Report to Congress.-- (1) In general.--Not later than 1 year after the date of enactment of this Act, and annually thereafter, the Commission shall submit to the Committee on Commerce, Science, and Transportation of the Senate and the Committee on Energy and Commerce of the House of Representatives a report that addresses, at a minimum-- (A) the number of actions brought by the Commission during the reporting year to enforce this Act and the outcome of each such enforcement action;

(E) an analysis of the requirements of this Act and (E)whether policythe orimplementation legislativeof recommendationssuch requirements leads to strengthenmergers (including horizontal mergers or vertical mergers) amongst any enforcementpharmacy actionbenefit relatingmanagers, toor any pharmacy benefit manager that owns, controls, or is affiliated with a violationpharmacy, or any pharmacy benefit manager that owns, controls, or is affiliated with a health plan, and the effect of thissuch Act,merger including(including recommendationsthe tolikelihood includeof additionala prohibitedsubstantial conductdecrease in sectioncompetition 2(a).or the potential for a monopoly);

(2)and Formulary(F) designpolicy or placementlegislative practices.--Notrecommendations laterto thanstrengthen 1any yearenforcement afteraction therelating dateto ofa enactmentviolation of this Act, theincluding Commissionrecommendations shall submit to theinclude Committeeadditional onprohibited Commerce,conduct Science,in andsection Transportation2(a), of the Senate and therecommendations Committeeto onencourage Energymore competition and Commercedecrease of the Houselikelihood of Representatives a reportmonopoly thatin addresses the policies,pharmaceutical practices,supply andchain. role of pharmacy benefit managers (including their affiliates, subsidiaries, and agents) regarding formulary design or placement, including whether-- (A) pharmacy benefit managers (including their affiliates, subsidiaries, and agents) use formulary design or placement to increase their gross revenue without an accompanying increase in patient access or decrease in patient cost;

(2) Formulary design or (B)placement suchpractices.--Not policieslater orthan practices1 year after the date of enactment of this Act, the Commission shall submit to the Committee on Commerce, Science, and Transportation of the Senate, the Committee on Finance of the Senate, the Committee on Health, Education, Labor, and Pensions of the Senate, the Committee on Ways and Means of the House of Representatives, and the Committee on Energy and Commerce of the House of Representatives a report that addresses the policies, practices, and role of pharmacy benefit managers (including their affiliates, subsidiaries, and agents) regarding formulary design or placement, including-- (A) whether pharmacy benefit managers (including their affiliates, subsidiaries, and agents) use formulary design or placement violateto sectionincrease 5(a)their ofgross therevenue Federalwithout Tradean Commissionaccompanying Actincrease (15in U.S.C.patient access or decrease in patient cost;

45(a)).or (B) recommendations to Congress for legislative action addressing such policies, practices, and role of pharmacy benefit managers (including their affiliates, subsidiaries, and agents).

(3) 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 552(b)(4) of title 5, United States Code.Code, except as necessary to enforce this Act.

(4) Confidentiality.--The Commission may disclose the information in a form which does not disclose the identity of a specific pharmacy benefit manager, pharmacy, or health plan for the following purposes:

(A) To permit the Comptroller General of the United States to review the information provided to carry out this Act.

(B) To permit the Director of the Congressional Budget Office to review the information provided.

and (G) the extent to which the price that pharmacy benefit managers charge payors, such as the Medicare program under title XXVIII of the Social Security Act (42 U.S.C.

and (H) the competitive impact of pharmacy benefit managers' business practices, including the impact that such business practices have on the cost of health plan premiums or prescription drugs for consumers;

(d) Privacy Requirements.--Any entity shall provide information under subsection (a) in a manner consistent with the privacy, security, and breach notification regulations promulgated under section 264(c) of the Health Insurance Portability and Accountability Act of 1996 (42 U.S.C.

1320d-2 note) (or any successor regulation), and shall restrict the use and disclosure of such information according to such regulations.

or (4) the covered individual assists or participates (or it is expected that the covered individual will assist or participate) in such an investigation or judicial or administrative proceeding;proceeding.

or (5) the covered individual takes any other action to assist in carrying out the purposes of this Act.

41 etet. seq.).

seq.).

57a(a)(1)(B)).57a(a(1)(B).

(3) Construction.--NothingConstruction.-- (A) 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 investigations, to administer oaths or affirmations, or to compel the attendance of witnesses or the production of documentary or other evidence.

(B) ERISA.--No civil action brought pursuant to this subsection shall conflict with the Employee Retirement Income Security Act of 1974 (29 U.S.C.

1001 et seq.).

(c) Affirmative Defense.--InDefense.-- (1) In general.--In an action brought under this section to enforce section 2, it shall be an affirmative defense, on which the defendant has the burden of persuasion by a preponderance of the evidence, that the conduct alleged to be a violation of section 2 was nonpretextual and reasonably necessary to-- (1)(A) prevent a violation of, or comply with, Federal or State law;

(2)(B) protect patient safety;

or (3)(C) protect patient access.

(2) Clarification.--Nothing in this subsection shall be construed to prohibit a defendant from raising any other affirmative defense available.

PROTECTION OF PERSONAL HEALTH INFORMATION.

In making any disclosure or report required by this Act, a pharmacy benefit manager (including their affiliates, subsidiaries, and agents) shall not include any information that would identify a patient or a provider that issued a prescription.

SEC.

8.

8.9.

<all>Calendar No.

283 118th CONGRESS 1st Session S.

127 _______________________________________________________________________ A BILL To prevent unfair and deceptive acts or practices and the dissemination of false information related to pharmacy benefit management services for prescription drugs, and for other purposes.

_______________________________________________________________________ December 13, 2023 Reported with an amendment