119-s526

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 526 Introduced in Senate

    (IS) ]

<DOC>

119th CONGRESS
 1st Session
 S. 526

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.

_______________________________________________________________________

 IN THE SENATE OF THE UNITED STATES

 February 11, 2025

 Mr. Grassley (for himself, Ms. Cantwell, Ms. Ernst, Mr. Welch, Mrs. 
Capito, Mrs. Shaheen, Mr. Marshall, Mr. Heinrich, Mr. Moran, Mrs. Hyde-
Smith, Mr. Tillis, and Mr. Rounds) introduced the following bill; which 
was read twice and referred to the Committee on Commerce, Science, 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 drugs, and for other purposes.

 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 ``Pharmacy Benefit Manager 
Transparency Act of 2025''.

SEC. 2. PROHIBITION ON UNFAIR OR DECEPTIVE PRESCRIPTION DRUG PRICING 
 PRACTICES.

    (a) Conduct Prohibited.--Except as provided in subsection

    (b) , it 
shall be unlawful for any pharmacy benefit manager (or affiliate, 
subsidiary, or agent of a pharmacy benefit manager), directly or 
indirectly, to engage in any of the following activities related to 
pharmacy benefit management services:

    (1) 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 
 difference.

    (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, 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.

    (3) Arbitrarily, unfairly, or deceptively, by contract or 
 any other means, 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 Government.

    (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:

    (1) The pharmacy benefit manager, affiliate, subsidiary, or 
 agent passes along or returns 100 percent of any price 
 concession to a health plan or payer, including any rebate, 
 discount, or other price concession.

    (2) The pharmacy benefit manager, affiliate, subsidiary, or 
 agent provides full and complete disclosure of--
        (A) the cost, price, and reimbursement of a 
 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;
        (B) each fee, markup, and discount charged or 
 imposed by the pharmacy benefit manager, affiliate, 
 subsidiary, or agent to each health plan, payer, and 
 pharmacy with which the pharmacy benefit manager, 
 affiliate, subsidiary, or agent has a contract or 
 agreement for pharmacy benefit management services; or
            (C) the aggregate amount of all remuneration the 
 pharmacy benefit manager receives from a prescription 
 drug manufacturer for a prescription drug, including 
 any rebate, discount, administration fee, and any other 
 payment or credit obtained or retained by the pharmacy 
 benefit manager, or affiliate, subsidiary, or agent of 
 the pharmacy benefit manager, pursuant to a contract or 
 agreement for pharmacy benefit management services to a 
 health plan, payer, or any Federal agency (upon the 
 request of the agency).

SEC. 3. 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--

    (1) the person knew, or reasonably should have known, the 
 information to be false or misleading;

    (2) the information was required by law to be reported; and

    (3) 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 services.

SEC. 4. TRANSPARENCY.

    (a) Reporting by Pharmacy Benefit Managers.--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:

    (1) 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 drugs.

    (2) The aggregate amount of any--
        (A) generic effective rate fee charged to each 
 pharmacy;
        (B) direct and indirect remuneration fee charged or 
 other price concession to each pharmacy; and
            (C) payment rescinded or otherwise clawed back from 
 a reimbursement made to each pharmacy.

    (3) If, during the reporting year, the pharmacy benefit 
 manager moved or reassigned a prescription drug to a formulary 
 tier that has a higher cost, higher copayment, higher 
 coinsurance, or higher deductible to a consumer, or a lower 
 reimbursement to a pharmacy, an explanation of the reason why 
 the drug was moved or reassigned from 1 tier to another, 
 including whether the move or reassignment was determined or 
 requested by a prescription drug manufacturer or other entity.

    (4) With respect to any pharmacy benefit manager that owns, 
 controls, or is affiliated with a pharmacy, a report regarding 
 any difference in reimbursement rates or practices, direct and 
 indirect remuneration fees or other price concessions, and 
 clawbacks between a pharmacy that is owned, controlled, or 
 affiliated with the pharmacy benefit manager and any other 
 pharmacy.

    (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 actions brought by the Commission 
 during the reporting year to enforce this Act and the 
 outcome of each such enforcement action;
        (B) the number of open investigations or inquiries 
 into potential violations of this Act as of the time 
 the report is submitted;
            (C) the number and nature of complaints received by 
 the Commission relating to an allegation of a violation 
 of this Act during the reporting year;
            (D) an anonymized summary of the reports filed with 
 the Commission pursuant to subsection

    (a) for the 
 reporting year;
        (E) an analysis of the requirements of this Act and 
 whether the implementation of such requirements leads 
 to mergers (including horizontal mergers or vertical 
 mergers) amongst any pharmacy benefit managers, or any 
 pharmacy benefit manager that owns, controls, or is 
 affiliated with a pharmacy, or any pharmacy benefit 
 manager that owns, controls, or is affiliated with a 
 health plan, and the effect of such merger (including 
 the likelihood of a substantial decrease in competition 
 or the potential for a monopoly); and
        (F) policy or legislative recommendations to 
 strengthen any enforcement action relating to a 
 violation of this Act, including recommendations to 
 include additional prohibited conduct in 

section 2

    (a) , 
 and recommendations to encourage more competition and 
 decrease the likelihood of a monopoly in the 
 pharmaceutical supply chain.

    (2) Formulary design or placement practices.--Not later 
 than 1 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 to increase their gross 
 revenue without an accompanying increase in patient 
 access or decrease in patient cost; 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, 
 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.
            (c) GAO Study.--Not later than 1 year after the date of enactment 
of this Act, the Comptroller General of the United States shall submit 
to the Committee on Commerce, Science, and Transportation, the 
Committee on Finance, and the Committee on Health, Education, Labor, 
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--

    (1) addresses, at minimum--
        (A) the role that pharmacy benefit managers play in 
 the pharmaceutical supply chain;
        (B) the state of competition among pharmacy benefit 
 managers, including the market share for the Nation's 
 10 largest pharmacy benefit managers;
            (C) the use of rebates and fees by pharmacy benefit 
 managers, including data for each of the 10 largest 
 pharmacy benefit managers that reflects, for each drug 
 in the formulary of each such pharmacy benefit 
 manager--
            (i) the amount of the rebate passed on to 
 patients;
            (ii) the amount of the rebate passed on to 
 payors;
            (iii) the amount of the rebate kept by the 
 pharmacy benefit manager; and
            (iv) the role of fees charged by the 
 pharmacy benefit manager;
            (D) whether pharmacy benefit managers structure 
 their formularies in favor of high-rebate prescription 
 drugs over lower-cost, lower-rebate alternatives;
        (E) the average prior authorization approval time 
 for each of the 10 largest pharmacy benefit managers;
        (F) factors affecting the use of step therapy in 
 each of the 10 largest pharmacy benefit managers;
        (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. 1395 et seq.), State Medicaid programs under 
 title XIX of the Social Security Act (42 U.S.C. 1396 et 
 seq.), the Federal Employees Health Benefits Program 
 under chapter 89 of title 5, United States Code, or 
 private payors, for a drug is more than such pharmacy 
 benefit managers pay the pharmacy for the drug; 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; and

    (2) provides recommendations for legislative action to 
 lower the cost of prescription drugs for consumers and payors, 
 improve the efficiency of the pharmaceutical supply chain by 
 lowering intermediary costs, improve competition in pharmacy 
 benefit management, and provide transparency in pharmacy 
 benefit management.
            (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.

SEC. 5. WHISTLEBLOWER PROTECTIONS.

    (a) In General.--A pharmacy benefit manager, health plan, 
pharmaceutical manufacturer, pharmacy, or any affiliate, subsidiary, or 
agent thereof shall not, directly or indirectly, discharge, demote, 
suspend, diminish, or withdraw benefits from, threaten, harass, or in 
any other manner discriminate against or adversely impact a covered 
individual because--

    (1) the covered individual, or anyone perceived as 
 assisting the covered individual, takes (or is suspected to 
 have taken or will take) a lawful action in providing to 
 Congress, an agency of the Federal Government, the attorney 
 general of a State, a State regulator with authority over the 
 distribution or insurance coverage of prescription drugs, or a 
 law enforcement agency relating to any act or omission that the 
 covered individual reasonably believes to be a violation of 
 this Act;

    (2) the covered individual provides information that the 
 covered individual reasonably believes evidences such a 
 violation to--
        (A) a person with supervisory authority over the 
 covered individual at the pharmacy benefit manager, 
 health plan, pharmaceutical manufacturer, pharmacy, or 
 any affiliate, subsidiary, or agent thereof; or
        (B) another individual working for the pharmacy 
 benefit manager, health plan, pharmaceutical 
 manufacturer, pharmacy, or any affiliate, subsidiary, 
 or agent thereof who the covered individual reasonably 
 believes has the authority to investigate, discover, or 
 terminate the violation or to take any other action to 
 address the violation;

    (3) the covered individual testifies (or it is suspected 
 that the covered individual will testify) in an investigation 
 or judicial or administrative proceeding concerning such a 
 violation; 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.

    (b) Enforcement.--An individual who alleges any adverse action in 
violation of subsection

    (a) may bring an action for a jury trial in the 
appropriate district court of the United States for the following 
relief:

    (1) Temporary relief while the case is pending.

    (2) Reinstatement with the same seniority status that the 
 individual would have had, but for the discharge or 
 discrimination.

    (3) Twice the amount of back pay otherwise owed to the 
 individual, with interest.

    (4) Consequential and compensatory damages, and 
 compensation for litigation costs, expert witness fees, and 
 reasonable attorneys' fees.
            (c) 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 employment, including by a predispute arbitration 
agreement.
            (d) Predispute Arbitration Agreements.--No predispute arbitration 
agreement shall be valid or enforceable if the agreement requires 
arbitration of a dispute arising under this section.

SEC. 6. ENFORCEMENT.

    (a) Enforcement by the Commission.--

    (1) 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 18

    (a)

    (1)
        (B) of the Federal Trade Commission Act (15 U.S.C. 57a

    (a)

    (1)
        (B) ).

    (2) Powers of the commission.--
        (A) In general.--Except as provided in subparagraph
            (C) , the Commission shall enforce this Act in the same 
 manner, by the same means, and with the same 
 jurisdiction, powers, and duties as though all 
 applicable terms and provisions of the Federal Trade 
 Commission Act (15 U.S.C. 41 et seq.) were incorporated 
 into and made a part of this Act.
        (B) Privileges and immunities.--Subject to 
 paragraph

    (3) , 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 (15 U.S.C. 41 et seq.).
            (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--
            (i) organizations not organized to carry on 
 business for their own profit or that of their 
 members; and
            (ii) the business of insurance, and persons 
 engaged in such business.
            (D) Authority preserved.--Nothing in this section 
 shall be construed to limit the authority of the 
 Commission under any other provision of law.

    (3) Penalties.--
        (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.
        (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) .
            (C) Multiple offenses; mitigating factors.--In 
 assessing a penalty under subparagraph
        (A) --
            (i) each day of a continuing violation 
 shall be considered a separate violation; and
            (ii) the court shall take into 
 consideration, among other factors--
            (I) the seriousness of the 
 violation;
            (II) the efforts of the person 
 committing the violation to remedy the 
 harm caused by the violation in a 
 timely manner; and
            (III) whether the violation was 
 intentional.

    (b) Enforcement by States.--

    (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.

    (2) Rights of the commission.--
        (A) Notice to the commission.--
            (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.
            (ii) Contents.--The notification required 
 under clause
            (i) shall include a copy of the 
 complaint to be filed to initiate the civil 
 action.
            (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.
        (B) Intervention by the commission.--The Commission 
 may--
            (i) intervene in any civil action brought 
 by the attorney general of a State under 
 paragraph

    (1) ; and
            (ii) upon intervening--
            (I) be heard on all matters arising 
 in the civil action; and
            (II) file petitions for appeal of a 
 decision in the civil action.

    (3) Construction.--
        (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.).

    (4) Venue; service of process.--
        (A) Venue.--Any action brought under paragraph

    (1) may be brought in--
            (i) the district court of the United States 
 that meets applicable requirements relating to 
 venue under 

section 1391 of title 28, United 
 States Code; or
            (ii) another court of competent 
 jurisdiction.
        (B) Service of process.--In an action brought under 
 paragraph

    (1) , process may be served in any district in 
 which--
            (i) the defendant is an inhabitant, may be 
 found, or transacts business; or
            (ii) venue is proper under 

section 1391 of 
 title 28, United States Code.

    (5) Actions by other state officials.--
        (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.
        (B) Clarification of authority.--The authority 
 provided by subparagraph
        (A) shall supplant, and not 
 supplement, the authorities of State attorneys general 
 under paragraph

    (1) .
            (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.
            (c) Affirmative Defense.--

    (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--
        (A) prevent a violation of, or comply with, Federal 
 or State law;
        (B) protect patient safety; or
            (C) protect patient access.

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

SEC. 7. 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. EFFECT ON STATE LAWS.

 Nothing in this Act shall be construed to preempt, displace, or 
supplant any State laws, rules, regulations, or requirements, or the 
enforcement thereof.

SEC. 9. DEFINITIONS.

 In this Act:

    (1) Commission.--The term ``Commission'' means the Federal 
 Trade Commission.

    (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.

    (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.

    (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.

    (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--
        (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
        (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.

    (6) Prescription drug.--The term ``prescription drug'' 
 means--
        (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--
            (i) approved by the Food and Drug 
 Administration under 

section 505 of such Act 
 (21 U.S.C. 355); and
            (ii) subject to the requirements of 

section 503

    (b)

    (1) of such Act (21 U.S.C. 353

    (b)

    (1) );
        (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
            (C) a product that is biosimilar to, or 
 interchangeable with, a biologic product under 

section 351 of the Public Health Service Act (42 U.S.C. 
 262
            (i) ).
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