119-s882

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 882 Introduced in Senate

    (IS) ]

<DOC>

119th CONGRESS
 1st Session
 S. 882

 To amend title XVIII of the Social Security Act to assure pharmacy 
 access and choice for beneficiaries under prescription drug plans and 
MA-PD plans and to establish requirements of pharmacy benefit managers 
 under Medicare part D.

_______________________________________________________________________

 IN THE SENATE OF THE UNITED STATES

 March 6, 2025

Mrs. Blackburn (for herself, Ms. Hassan, Mr. Lankford, Mr. Warner, Mr. 
Marshall, and Mr. Welch) introduced the following bill; which was read 
 twice and referred to the Committee on Finance

_______________________________________________________________________

 A BILL

 To amend title XVIII of the Social Security Act to assure pharmacy 
 access and choice for beneficiaries under prescription drug plans and 
MA-PD plans and to establish requirements of pharmacy benefit managers 
 under Medicare part D.

 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 ``Patients Before Middlemen Act''.

SEC. 2. ASSURING PHARMACY ACCESS AND CHOICE FOR MEDICARE BENEFICIARIES.

    (a) In General.--

Section 1860D-4

    (b)

    (1) of the Social Security Act 
(42 U.S.C. 1395w-104

    (b)

    (1) ) is amended by striking subparagraph
        (A) and 
inserting the following:
 ``
        (A) In general.--
 ``
            (i) Participation of any willing 
 pharmacy.--A PDP sponsor offering a 
 prescription drug plan shall permit any 
 pharmacy that meets the standard contract terms 
 and conditions under such plan to participate 
 as a network pharmacy of such plan.
 ``
            (ii) Contract terms and conditions.--
 ``
            (I) In general.--Notwithstanding 
 any other provision of law, for plan 
 years beginning on or after January 1, 
 2028, in accordance with clause
            (i) , 
 contract terms and conditions offered 
 by such PDP sponsor shall be reasonable 
 and relevant according to standards 
 established by the Secretary under 
 subclause
            (II) .
 ``
            (II) Standards.--Not later than 
 the first Monday in April of 2027, the 
 Secretary shall establish standards for 
 reasonable and relevant contract terms 
 and conditions for purposes of this 
 clause.
 ``
            (III) Request for information.--
 Not later than April 1, 2026, for 
 purposes of establishing the standards 
 under subclause
            (II) , the Secretary 
 shall issue a request for information 
 to seek input on trends in prescription 
 drug plan and network pharmacy contract 
 terms and conditions, current 
 prescription drug plan and network 
 pharmacy contracting practices, whether 
 pharmacy reimbursement and dispensing 
 fees paid by PDP sponsors to network 
 pharmacies sufficiently cover the 
 ingredient and operational costs of 
 such pharmacies, the use and 
 application of pharmacy quality 
 measures by PDP sponsors for network 
 pharmacies, PDP sponsor restrictions or 
 limitations on the dispensing of 
 covered part D drugs by network 
 pharmacies (or any subsets of such 
 pharmacies), PDP sponsor auditing 
 practices for network pharmacies, areas 
 in current regulations or program 
 guidance related to contracting between 
 prescription drug plans and network 
 pharmacies requiring clarification or 
 additional specificity, factors for 
 consideration in determining the 
 reasonableness and relevance of 
 contract terms and conditions between 
 prescription drug plans and network 
 pharmacies, and other issues as 
 determined appropriate by the 
 Secretary.''.

    (b) Essential Retail Pharmacies.--

Section 1860D-42 of the Social 
Security Act (42 U.S.C. 1395w-152) is amended by adding at the end the 
following new subsection:
 ``

    (e) Essential Retail Pharmacies.--
 ``

    (1) In general.--With respect to plan years beginning on 
 or after January 1, 2028, the Secretary shall publish reports, 
 at least once every 2 years until 2034, and periodically 
 thereafter, that provide information, to the extent feasible, 
 on--
 ``
        (A) trends in ingredient cost reimbursement, 
 dispensing fees, incentive payments and other fees paid 
 by PDP sponsors offering prescription drug plans and MA 
 organizations offering MA-PD plans under this part to 
 essential retail pharmacies (as defined in paragraph

    (2) ) with respect to the dispensing of covered part D 
 drugs, including a comparison of such trends between 
 essential retail pharmacies and pharmacies that are not 
 essential retail pharmacies;
 ``
        (B) trends in amounts paid to PDP sponsors 
 offering prescription drug plans and MA organizations 
 offering MA-PD plans under this part by essential 
 retail pharmacies with respect to the dispensing of 
 covered part D drugs, including a comparison of such 
 trends between essential retail pharmacies and 
 pharmacies that are not essential retail pharmacies;
 ``
            (C) trends in essential retail pharmacy 
 participation in pharmacy networks and preferred 
 pharmacy networks for prescription drug plans offered 
 by PDP sponsors and MA-PD plans offered by MA 
 organizations under this part, including a comparison 
 of such trends between essential retail pharmacies and 
 pharmacies that are not essential retail pharmacies;
 ``
            (D) trends in the number of essential retail 
 pharmacies, including variation in such trends by 
 geographic region or other factors;
 ``
        (E) a comparison of cost-sharing for covered part 
 D drugs dispensed by essential retail pharmacies that 
 are network pharmacies for prescription drug plans 
 offered by PDP sponsors and MA-PD plans offered by MA 
 organizations under this part and cost-sharing for 
 covered part D drugs dispensed by other network 
 pharmacies for such plans located in similar geographic 
 areas that are not essential retail pharmacies;
 ``
        (F) a comparison of the volume of covered part D 
 drugs dispensed by essential retail pharmacies that are 
 network pharmacies for prescription drug plans offered 
 by PDP sponsors and MA-PD plans offered by MA 
 organizations under this part and such volume of 
 dispensing by network pharmacies for such plans located 
 in similar geographic areas that are not essential 
 retail pharmacies, including information on any 
 patterns or trends in such comparison specific to 
 certain types of covered part D drugs, such as generic 
 drugs or drugs specified as specialty drugs by a PDP 
 sponsor under a prescription drug plan or an MA 
 organization under an MA-PD plan; and
 ``
        (G) a comparison of the information described in 
 subparagraphs
        (A) through
        (F) between essential retail 
 pharmacies that are network pharmacies for prescription 
 drug plans offered by PDP sponsors under this part and 
 essential retail pharmacies that are network pharmacies 
 for MA-PD plans offered by MA organizations under this 
 part.
 ``

    (2) Definition of essential retail pharmacy.--In this 
 subsection, the term `essential retail pharmacy' means, with 
 respect to a plan year, a retail pharmacy that--
 ``
        (A) is not a pharmacy that is an affiliate as 
 defined in paragraph

    (4) ; and
 ``
        (B) is located in--
 ``
            (i) a medically underserved area (as 
 designated pursuant to 

section 330

    (b)

    (3)
        (A) of 
 the Public Health Service Act);
 ``
            (ii) a rural area in which there is no 
 other retail pharmacy within 10 miles, as 
 determined by the Secretary;
 ``
            (iii) a suburban area in which there is 
 no other retail pharmacy within 2 miles, as 
 determined by the Secretary; or
 ``
            (iv) an urban area in which there is no 
 other retail pharmacy within 1 mile, as 
 determined by the Secretary.
 ``

    (3) List of essential retail pharmacies.--
 ``
        (A) Publication of list of essential retail 
 pharmacies.--For each plan year (beginning with plan 
 year 2028), the Secretary shall publish, on a publicly 
 available internet website of the Centers for Medicare 
 & Medicaid Services, a list of pharmacies that meet the 
 criteria described in subparagraphs
        (A) and
        (B) of 
 paragraph

    (2) to be considered an essential retail 
 pharmacy.
 ``
        (B) Required submissions from pdp sponsors.--For 
 each plan year (beginning with plan year 2028), each 
 PDP sponsor offering a prescription drug plan and each 
 MA organization offering an MA-PD plan shall submit to 
 the Secretary, for the purposes of determining retail 
 pharmacies that meet the criterion specified in 
 subparagraph
        (A) of paragraph

    (2) , a list of retail 
 pharmacies that are affiliates of such sponsor or 
 organization, or are affiliates of a pharmacy benefit 
 manager acting on behalf of such sponsor or 
 organization, at a time, and in a form and manner, 
 specified by the Secretary.
 ``
            (C) Reporting by pdp sponsors and ma 
 organizations.--For each plan year beginning with plan 
 year 2027, each PDP sponsor offering a prescription 
 drug plan and each MA organization offering an MA-PD 
 plan under this part shall submit to the Secretary 
 information on incentive payments and other fees paid 
 by such sponsor or organization to pharmacies, insofar 
 as any such payments or fees are not otherwise 
 reported, at a time, and in a form and manner, 
 specified by the Secretary.
 ``
            (D) Implementation.--Notwithstanding any other 
 provision of law, the Secretary may implement this 
 paragraph by program instruction or otherwise.
 ``
        (E) Nonapplication of paperwork reduction act.--
 Chapter 35 of title 44, United States Code, shall not 
 apply to the implementation of this paragraph.
 ``

    (4) Definition of affiliate.--In this subsection, the 
 term `affiliate' means any entity that is owned by, controlled 
 by, or related under a common ownership structure with a 
 pharmacy benefit manager or a managed care entity or other 
 specified entity (as such terms are defined in 

section 1903
            (m) (9)
            (D) ).''.
            (c) Enforcement.--

    (1) In general.--

Section 1860D-4

    (b)

    (1) of the Social 
 Security Act (42 U.S.C. 1395w-104

    (b)

    (1) ) is amended by adding 
 at the end the following new subparagraph:
 ``
        (F) Enforcement of standards for reasonable and 
 relevant contract terms and conditions.--
 ``
            (i) Allegation submission process.--
 ``
            (I) In general.--Not later than 
 January 1, 2028, the Secretary shall 
 establish a process through which a 
 pharmacy may submit to the Secretary an 
 allegation of a violation by a PDP 
 sponsor offering a prescription drug 
 plan of the standards for reasonable 
 and relevant contract terms and 
 conditions under subparagraph
        (A)
            (ii) , 
 or of subclause
            (VIII) of this clause.
 ``
            (II) Frequency of submission.--
 ``

    (aa) In general.--Except 
 as provided in item

    (bb) , the 
 allegation submission process 
 under this clause shall allow 
 pharmacies to submit any 
 allegations of violations 
 described in subclause
            (I) not 
 more frequently than once per 
 plan year per contract between 
 a pharmacy and a PDP sponsor.
 ``

    (bb) Allegations relating 
 to contract modifications.--In 
 the case where a contract 
 between a pharmacy and a PDP 
 sponsor is modified following 
 the submission of allegations 
 by a pharmacy with respect to 
 such contract and plan year, 
 the allegation submission 
 process under this clause shall 
 allow such pharmacy to submit 
 an additional allegation 
 related to those modifications 
 with respect to such contract 
 and plan year.
 ``
            (III) Access to relevant 
 documents and materials.--A PDP sponsor 
 subject to an allegation under this 
 clause--
 ``

    (aa) shall provide 
 documents or materials, as 
 specified by the Secretary, 
 including contract offers made 
 by such sponsor to such 
 pharmacy or correspondence 
 related to such offers, to the 
 Secretary at a time, and in a 
 form and manner, specified by 
 the Secretary; and
 ``

    (bb) shall not prohibit 
 or otherwise limit the ability 
 of a pharmacy to submit such 
 documents or materials to the 
 Secretary for the purpose of 
 submitting an allegation or 
 providing evidence for such an 
 allegation under this clause.
 ``
            (IV) Standardized template.--The 
 Secretary shall establish a 
 standardized template for pharmacies to 
 use for the submission of allegations 
 described in subclause
            (I) . Such 
 template shall require that the 
 submission include a certification by 
 the pharmacy that the information 
 included is accurate, complete, and 
 true to the best of the knowledge, 
 information, and belief of such 
 pharmacy.
 ``
            (V) Preventing frivolous 
 allegations.--In the case where the 
 Secretary determines that a pharmacy 
 has submitted frivolous allegations 
 under this clause on a routine basis, 
 the Secretary may temporarily prohibit 
 such pharmacy from using the allegation 
 submission process under this clause, 
 as determined appropriate by the 
 Secretary.
 ``
            (VI) Exemption from freedom of 
 information act.--Allegations submitted 
 under this clause shall be exempt from 
 disclosure under 

section 552 of title 
 5, United States Code.
 ``
            (VII) Rule of construction.--
 Nothing in this clause shall be 
 construed as limiting the ability of a 
 pharmacy to pursue other legal actions 
 or remedies, consistent with applicable 
 Federal or State law, with respect to a 
 potential violation of a requirement 
 described in this subparagraph.
 ``
            (VIII) Anti-retaliation and anti-
 coercion.--Consistent with applicable 
 Federal or State law, a PDP sponsor 
 shall not--
 ``

    (aa) retaliate against a 
 pharmacy for submitting any 
 allegations under this clause; 
 or
 ``

    (bb) coerce, intimidate, 
 threaten, or interfere with the 
 ability of a pharmacy to submit 
 any such allegations.
 ``
            (ii) Investigation.--The Secretary shall 
 investigate, as determined appropriate by the 
 Secretary, allegations submitted pursuant to 
 clause
            (i) .
 ``
            (iii) Enforcement.--
 ``
            (I) In general.--In the case 
 where the Secretary determines that a 
 PDP sponsor offering a prescription 
 drug plan has violated the standards 
 for reasonable and relevant contract 
 terms and conditions under subparagraph
        (A)
            (ii) , the Secretary may use 
 authorities under sections 1857

    (g) and 
 1860D-12

    (b)

    (3)
        (E) to impose civil 
 monetary penalties or other 
 intermediate sanctions.
 ``
            (II) Application of civil 
 monetary penalties.--The provisions of 
 

section 1128A (other than subsections

    (a) and

    (b) ) shall apply to a civil 
 monetary penalty under this clause in 
 the same manner as such provisions 
 apply to a penalty or proceeding under 
 

section 1128A

    (a) .''.

    (2) Conforming amendment.--

Section 1857

    (g)

    (1) of the Social 
 Security Act (42 U.S.C. 1395w-27

    (g)

    (1) ) is amended--
        (A) in subparagraph
        (J) , by striking ``or'' after 
 the semicolon;
        (B) by redesignating subparagraph
        (K) as 
 subparagraph
            (L) ;
            (C) by inserting after subparagraph
        (J) , the 
 following new subparagraph:
 ``
        (K) fails to comply with the standards for 
 reasonable and relevant contract terms and conditions 
 under subparagraph
        (A)
            (ii) of 

section 1860D-4

    (b)

    (1) ; 
 or'';
            (D) in subparagraph
            (L) , as redesignated by 
 subparagraph
        (B) , by striking ``through
        (J) '' and 
 inserting ``through
        (K) ''; and
        (E) in the flush matter following subparagraph
            (L) , 
 as so redesignated, by striking ``subparagraphs
        (A) through
        (K) '' and inserting ``subparagraphs
        (A) through
            (L) ''.
            (d) Accountability of Pharmacy Benefit Managers for Violations of 
Reasonable and Relevant Contract Terms and Conditions.--

    (1) In general.--

Section 1860D-12

    (b) of the Social Security 
 Act (42 U.S.C. 1395w-112) is amended by adding at the end the 
 following new paragraph:
 ``

    (9) Accountability of pharmacy benefit managers for 
 violations of reasonable and relevant contract terms and 
 conditions.--For plan years beginning on or after January 1, 
 2028, each contract entered into with a PDP sponsor under this 
 part with respect to a prescription drug plan offered by such 
 sponsor shall provide that any pharmacy benefit manager acting 
 on behalf of such sponsor has a written agreement with the PDP 
 sponsor under which the pharmacy benefit manager agrees to 
 reimburse the PDP sponsor for any amounts paid by such sponsor 
 under 

section 1860D-4

    (b)

    (1)
        (F)
            (iii) 
            (I) to the Secretary as a 
 result of a violation described in such section if such 
 violation is related to a responsibility delegated to the 
 pharmacy benefit manager by such PDP sponsor.''.

    (2) MA-PD plans.--

Section 1857

    (f)

    (3) of the Social Security 
 Act (42 U.S.C. 1395w-27

    (f)

    (3) ) is amended by adding at the end 
 the following new subparagraph:
 ``
        (F) Accountability of pharmacy benefit managers 
 for violations of reasonable and relevant contract 
 terms.--For plan years beginning on or after January 1, 
 2028, 

section 1860D-12

    (b)

    (9) .''.

    (e) Biennial Report on Enforcement and Oversight of Pharmacy Access 
Requirements.--

Section 1860D-42 of the Social Security Act (42 U.S.C. 
1395w-152), as amended by subsection

    (b) , is amended by adding at the 
end the following new subsection:
 ``

    (f) Biennial Report on Enforcement and Oversight of Pharmacy 
Access Requirements.--
 ``

    (1) In general.--Not later than 2 years after the date of 
 enactment of this subsection, and at least once every 2 years 
 thereafter, the Secretary shall publish a report on enforcement 
 and oversight actions and activities undertaken by the 
 Secretary with respect to the requirements under 

section 1860D-
 4

    (b)

    (1) .
 ``

    (2) Limitation.--A report under paragraph

    (1) shall not 
 disclose--
 ``
        (A) identifiable information about individuals or 
 entities unless such information is otherwise publicly 
 available; or
 ``
        (B) trade secrets with respect to any 
 entities.''.

SEC. 3. REQUIREMENTS OF PHARMACY BENEFIT MANAGERS UNDER MEDICARE PART 
 D.

    (a) Prescription Drug Plans.--

Section 1860D-12 of the Social 
Security Act (42 U.S.C. 1395w-112) is amended by adding at the end the 
following new subsection:
 ``

    (h) Requirements Relating to Pharmacy Benefit Managers.--For plan 
years beginning on or after January 1, 2028:
 ``

    (1) Agreements with pharmacy benefit managers.--Each 
 contract entered into with a PDP sponsor under this part with 
 respect to a prescription drug plan offered by such sponsor 
 shall provide that any pharmacy benefit manager acting on 
 behalf of such sponsor has a written agreement with the PDP 
 sponsor under which the pharmacy benefit manager, and any 
 affiliates of such pharmacy benefit manager, as applicable, 
 agree to meet the following requirements:
 ``
        (A) No income other than bona fide service 
 fees.--
 ``
            (i) In general.--The pharmacy benefit 
 manager and any affiliate of such pharmacy 
 benefit manager shall not derive any 
 remuneration with respect to any services 
 provided on behalf of any entity or individual, 
 in connection with the utilization of covered 
 part D drugs, from any such entity or 
 individual other than bona fide service fees, 
 subject to clauses
            (ii) and
            (iii) .
 ``
            (ii) Incentive payments.--For the 
 purposes of this subsection, an incentive 
 payment (as determined by the Secretary) paid 
 by a PDP sponsor to a pharmacy benefit manager 
 that is performing services on behalf of such 
 sponsor shall be deemed a `bona fide service 
 fee' (even if such payment does not otherwise 
 meet the definition of such term under 
 paragraph

    (7)
        (B) ) if such payment is a flat 
 dollar amount, is consistent with fair market 
 value (as specified by the Secretary), is 
 related to services actually performed by the 
 pharmacy benefit manager or affiliate of such 
 pharmacy benefit manager, on behalf of the PDP 
 sponsor making such payment, in connection with 
 the utilization of covered part D drugs, and 
 meets additional requirements, if any, as 
 determined appropriate by the Secretary.
 ``
            (iii) Clarification on rebates and 
 discounts used to lower costs for covered part 
 d drugs.--Rebates, discounts, and other price 
 concessions received by a pharmacy benefit 
 manager or an affiliate of a pharmacy benefit 
 manager from manufacturers, even if such price 
 concessions are calculated as a percentage of a 
 drug's price, shall not be considered a 
 violation of the requirements of clause
            (i) if 
 they are fully passed through to a PDP sponsor 
 and are compliant with all regulatory and 
 subregulatory requirements related to direct 
 and indirect remuneration for manufacturer 
 rebates under this part, including in cases 
 where a PDP sponsor is acting as a pharmacy 
 benefit manager on behalf of a prescription 
 drug plan offered by such PDP sponsor.
 ``
            (iv) Evaluation of remuneration 
 arrangements.--Components of subsets of 
 remuneration arrangements (such as fees or 
 other forms of compensation paid to or retained 
 by the pharmacy benefit manager or affiliate of 
 such pharmacy benefit manager), as determined 
 appropriate by the Secretary, between pharmacy 
 benefit managers or affiliates of such pharmacy 
 benefit managers, as applicable, and other 
 entities involved in the dispensing or 
 utilization of covered part D drugs (including 
 PDP sponsors, manufacturers, pharmacies, and 
 other entities as determined appropriate by the 
 Secretary) shall be subject to review by the 
 Secretary, in consultation with the Office of 
 the Inspector General of the Department of 
 Health and Human Services, as determined 
 appropriate by the Secretary. The Secretary, in 
 consultation with the Office of the Inspector 
 General, shall review whether remuneration 
 under such arrangements is consistent with fair 
 market value (as specified by the Secretary) 
 through reviews and assessments of such 
 remuneration, as determined appropriate.
 ``
            (v) Disgorgement.--The pharmacy benefit 
 manager shall disgorge any remuneration paid to 
 such pharmacy benefit manager or an affiliate 
 of such pharmacy benefit manager in violation 
 of this subparagraph to the PDP sponsor.
 ``
            (vi) Additional requirements.--The 
 pharmacy benefit manager shall--
 ``
            (I) enter into a written 
 agreement with any affiliate of such 
 pharmacy benefit manager, under which 
 the affiliate shall identify and 
 disgorge any remuneration described in 
 clause
            (v) to the pharmacy benefit 
 manager; and
 ``
            (II) attest, subject to any 
 requirements determined appropriate by 
 the Secretary, that the pharmacy 
 benefit manager has entered into a 
 written agreement described in 
 subclause
            (I) with any relevant 
 affiliate of the pharmacy benefit 
 manager.
 ``
        (B) Transparency regarding guarantees and cost 
 performance evaluations.--The pharmacy benefit manager 
 shall--
 ``
            (i) define, interpret, and apply, in a 
 fully transparent and consistent manner for 
 purposes of calculating or otherwise evaluating 
 pharmacy benefit manager performance against 
 pricing guarantees or similar cost performance 
 measurements related to rebates, discounts, 
 price concessions, or net costs, terms such 
 as--
 ``
            (I) `generic drug', in a manner 
 consistent with the definition of the 
 term under 

section 423.4 of title 42, 
 Code of Federal Regulations, or a 
 successor regulation;
 ``
            (II) `brand name drug', in a 
 manner consistent with the definition 
 of the term under 

section 423.4 of 
 title 42, Code of Federal Regulations, 
 or a successor regulation;
 ``
            (III) `specialty drug';
 ``
            (IV) `rebate'; and
 ``
            (V) `discount';
 ``
            (ii) identify any drugs, claims, or price 
 concessions excluded from any pricing guarantee 
 or other cost performance measure in a clear 
 and consistent manner; and
 ``
            (iii) where a pricing guarantee or other 
 cost performance measure is based on a pricing 
 benchmark other than the wholesale acquisition 
 cost (as defined in 

section 1847A
            (c) (6)
        (B) ) of 
 a drug, calculate and provide a wholesale 
 acquisition cost-based equivalent to the 
 pricing guarantee or other cost performance 
 measure.
 ``
            (C) Provision of information.--
 ``
            (i) In general.--Not later than July 1 of 
 each year, beginning in 2028, the pharmacy 
 benefit manager shall submit to the PDP 
 sponsor, and to the Secretary, a report, in 
 accordance with this subparagraph, and shall 
 make such report available to such sponsor at 
 no cost to such sponsor in a format specified 
 by the Secretary under paragraph

    (5) . Each such 
 report shall include, with respect to such PDP 
 sponsor and each plan offered by such sponsor, 
 the following information with respect to the 
 previous plan year:
 ``
            (I) A list of all drugs covered 
 by the plan that were dispensed 
 including, with respect to each such 
 drug--
 ``

    (aa) the brand name, 
 generic or non-proprietary 
 name, and National Drug Code;
 ``

    (bb) the number of plan 
 enrollees for whom the drug was 
 dispensed, the total number of 
 prescription claims for the 
 drug (including original 
 prescriptions and refills, 
 counted as separate claims), 
 and the total number of dosage 
 units of the drug dispensed;
 ``
            (cc) the number of 
 prescription claims described 
 in item

    (bb) by each type of 
 dispensing channel through 
 which the drug was dispensed, 
 including retail, mail order, 
 specialty pharmacy, long term 
 care pharmacy, home infusion 
 pharmacy, or other types of 
 pharmacies or providers;
 ``
            (dd) the average 
 wholesale acquisition cost, 
 listed as cost per day's 
 supply, cost per dosage unit, 
 and cost per typical course of 
 treatment (as applicable);
 ``

    (ee) the average 
 wholesale price for the drug, 
 listed as price per day's 
 supply, price per dosage unit, 
 and price per typical course of 
 treatment (as applicable);
 ``

    (ff) the total out-of-
 pocket spending by plan 
 enrollees on such drug after 
 application of any benefits 
 under the plan, including plan 
 enrollee spending through 
 copayments, coinsurance, and 
 deductibles;
 ``

    (gg) total rebates paid 
 by the manufacturer on the drug 
 as reported under the Detailed 
 DIR Report (or any successor 
 report) submitted by such 
 sponsor to the Centers for 
 Medicare & Medicaid Services;
 ``

    (hh) all other direct or 
 indirect remuneration on the 
 drug as reported under the 
 Detailed DIR Report (or any 
 successor report) submitted by 
 such sponsor to the Centers for 
 Medicare & Medicaid Services;
 ``
            (ii) the average pharmacy 
 reimbursement amount paid by 
 the plan for the drug in the 
 aggregate and disaggregated by 
 dispensing channel identified 
 in item
            (cc) ;
 ``

    (jj) the average National 
 Average Drug Acquisition Cost

    (NADAC) ; and
 ``

    (kk) total manufacturer-
 derived revenue, inclusive of 
 bona fide service fees, 
 attributable to the drug and 
 retained by the pharmacy 
 benefit manager and any 
 affiliate of such pharmacy 
 benefit manager.
 ``
            (II) In the case of a pharmacy 
 benefit manager that has an affiliate 
 that is a retail, mail order, or 
 specialty pharmacy, with respect to 
 drugs covered by such plan that were 
 dispensed, the following information:
 ``

    (aa) The percentage of 
 total prescriptions that were 
 dispensed by pharmacies that 
 are an affiliate of the 
 pharmacy benefit manager for 
 each drug.
 ``

    (bb) The interquartile 
 range of the total combined 
 costs paid by the plan and plan 
 enrollees, per dosage unit, per 
 course of treatment, per 30-day 
 supply, and per 90-day supply 
 for each drug dispensed by 
 pharmacies that are not an 
 affiliate of the pharmacy 
 benefit manager and that are 
 included in the pharmacy 
 network of such plan.
 ``
            (cc) The interquartile 
 range of the total combined 
 costs paid by the plan and plan 
 enrollees, per dosage unit, per 
 course of treatment, per 30-day 
 supply, and per 90-day supply 
 for each drug dispensed by 
 pharmacies that are an 
 affiliate of the pharmacy 
 benefit manager and that are 
 included in the pharmacy 
 network of such plan.
 ``
            (dd) The lowest total 
 combined cost paid by the plan 
 and plan enrollees, per dosage 
 unit, per course of treatment, 
 per 30-day supply, and per 90-
 day supply, for each drug that 
 is available from any pharmacy 
 included in the pharmacy 
 network of such plan.
 ``

    (ee) The difference 
 between the average acquisition 
 cost of the affiliate, such as 
 a pharmacy or other entity that 
 acquires prescription drugs, 
 that initially acquires the 
 drug and the amount reported 
 under subclause
            (I) (jj) for 
 each drug.
 ``

    (ff) A list inclusive of 
 the brand name, generic or non-
 proprietary name, and National 
 Drug Code of covered part D 
 drugs subject to an agreement 
 with a covered entity under 
 

section 340B of the Public 
 Health Service Act for which 
 the pharmacy benefit manager or 
 an affiliate of the pharmacy 
 benefit manager had a contract 
 or other arrangement with such 
 a covered entity in the service 
 area of such plan.
 ``
            (III) Where a drug approved under 
 

section 505
            (c) of the Federal Food, 
 Drug, and Cosmetic Act (referred to in 
 this subclause as the `listed drug') is 
 covered by the plan, the following 
 information:
 ``

    (aa) A list of currently 
 marketed generic drugs approved 
 under 

section 505

    (j) of the 
 Federal Food, Drug, and 
 Cosmetic Act pursuant to an 
 application that references 
 such listed drug that are not 
 covered by the plan, are 
 covered on the same formulary 
 tier or a formulary tier 
 typically associated with 
 higher cost-sharing than the 
 listed drug, or are subject to 
 utilization management that the 
 listed drug is not subject to.
 ``

    (bb) The estimated 
 average beneficiary cost-
 sharing under the plan for a 
 30-day supply of the listed 
 drug.
 ``
            (cc) Where a generic drug 
 listed under item

    (aa) is on a 
 formulary tier typically 
 associated with higher cost-
 sharing than the listed drug, 
 the estimated average cost-
 sharing that a beneficiary 
 would have paid for a 30-day 
 supply of each of the generic 
 drugs described in item

    (aa) , 
 had the plan provided coverage 
 for such drugs on the same 
 formulary tier as the listed 
 drug.
 ``
            (dd) A written 
 justification for providing 
 more favorable coverage of the 
 listed drug than the generic 
 drugs described in item

    (aa) .
 ``

    (ee) The number of 
 currently marketed generic 
 drugs approved under 

section 505

    (j) of the Federal Food, 
 Drug, and Cosmetic Act pursuant 
 to an application that 
 references such listed drug.
 ``
            (IV) Where a reference product 
 (as defined in 

section 351
            (i) of the 
 Public Health Service Act) is covered 
 by the plan, the following information:
 ``

    (aa) A list of currently 
 marketed biosimilar biological 
 products licensed under 

section 351

    (k) of the Public Health 
 Service Act pursuant to an 
 application that refers to such 
 reference product that are not 
 covered by the plan, are 
 covered on the same formulary 
 tier or a formulary tier 
 typically associated with 
 higher cost-sharing than the 
 reference product, or are 
 subject to utilization 
 management that the reference 
 product is not subject to.
 ``

    (bb) The estimated 
 average beneficiary cost-
 sharing under the plan for a 
 30-day supply of the reference 
 product.
 ``
            (cc) Where a biosimilar 
 biological product listed under 
 item

    (aa) is on a formulary 
 tier typically associated with 
 higher cost-sharing than the 
 reference product, the 
 estimated average cost-sharing 
 that a beneficiary would have 
 paid for a 30-day supply of 
 each of the biosimilar 
 biological products described 
 in item

    (aa) , had the plan 
 provided coverage for such 
 products on the same formulary 
 tier as the reference product.
 ``
            (dd) A written 
 justification for providing 
 more favorable coverage of the 
 reference product than the 
 biosimilar biological product 
 described in item

    (aa) .
 ``

    (ee) The number of 
 currently marketed biosimilar 
 biological products licensed 
 under 

section 351

    (k) of the 
 Public Health Service Act, 
 pursuant to an application that 
 refers to such reference 
 product.
 ``
            (V) Total gross spending on 
 covered part D drugs by the plan, not 
 net of rebates, fees, discounts, or 
 other direct or indirect remuneration.
 ``
            (VI) The total amount retained by 
 the pharmacy benefit manager or an 
 affiliate of such pharmacy benefit 
 manager in revenue related to 
 utilization of covered part D drugs 
 under that plan, inclusive of bona fide 
 service fees.
 ``
            (VII) The total spending on 
 covered part D drugs net of rebates, 
 fees, discounts, or other direct and 
 indirect remuneration by the plan.
 ``
            (VIII) An explanation of any 
 benefit design parameters under such 
 plan that encourage plan enrollees to 
 fill prescriptions at pharmacies that 
 are an affiliate of such pharmacy 
 benefit manager, such as mail and 
 specialty home delivery programs, and 
 retail and mail auto-refill programs.
 ``
            (IX) The following information:
 ``

    (aa) A list of all 
 brokers, consultants, advisors, 
 and auditors that receive 
 compensation from the pharmacy 
 benefit manager or an affiliate 
 of such pharmacy benefit 
 manager for referrals, 
 consulting, auditing, or other 
 services offered to PDP 
 sponsors related to pharmacy 
 benefit management services.
 ``

    (bb) The amount of 
 compensation provided by such 
 pharmacy benefit manager or 
 affiliate to each such broker, 
 consultant, advisor, and 
 auditor.
 ``
            (cc) The methodology for 
 calculating the amount of 
 compensation provided by such 
 pharmacy benefit manager or 
 affiliate, for each such 
 broker, consultant, advisor, 
 and auditor.
 ``
            (X) A list of all affiliates of 
 the pharmacy benefit manager.
 ``
            (XI) A summary document submitted 
 in a standardized template developed by 
 the Secretary that includes such 
 information described in subclauses
            (I) through
            (X) .
 ``
            (ii) Written explanation of contracts or 
 agreements with drug manufacturers.--
 ``
            (I) In general.--The pharmacy 
 benefit manager shall, not later than 
 30 days after the finalization of any 
 contract or agreement between such 
 pharmacy benefit manager or an 
 affiliate of such pharmacy benefit 
 manager and a drug manufacturer (or 
 subsidiary, agent, or entity affiliated 
 with such drug manufacturer) that makes 
 rebates, discounts, payments, or other 
 financial incentives related to one or 
 more covered part D drugs or other 
 prescription drugs, as applicable, of 
 the manufacturer directly or indirectly 
 contingent upon coverage, formulary 
 placement, or utilization management 
 conditions on any other covered part D 
 drugs or other prescription drugs, as 
 applicable, submit to the PDP sponsor a 
 written explanation of such contract or 
 agreement.
 ``
            (II) Requirements.--A written 
 explanation under subclause
            (I) shall--
 ``

    (aa) include the 
 manufacturer subject to the 
 contract or agreement, all 
 covered part D drugs and other 
 prescription drugs, as 
 applicable, subject to the 
 contract or agreement and the 
 manufacturers of such drugs, 
 and a high-level description of 
 the terms of such contract or 
 agreement and how such terms 
 apply to such drugs; and
 ``

    (bb) be certified by the 
 Chief Executive Officer, Chief 
 Financial Officer, or General 
 Counsel of such pharmacy 
 benefit manager, or affiliate 
 of such pharmacy benefit 
 manager, as applicable, or an 
 individual delegated with the 
 authority to sign on behalf of 
 one of these officers, who 
 reports directly to the 
 officer.
 ``
            (III) Definition of other 
 prescription drugs.--For purposes of 
 this clause, the term `other 
 prescription drugs' means prescription 
 drugs covered as supplemental benefits 
 under this part or prescription drugs 
 paid outside of this part.
 ``
            (D) Audit rights.--
 ``
            (i) In general.--Not less than once a 
 year, at the request of the PDP sponsor, the 
 pharmacy benefit manager shall allow for an 
 audit of the pharmacy benefit manager to ensure 
 compliance with all terms and conditions under 
 the written agreement described in this 
 paragraph and the accuracy of information 
 reported under subparagraph
            (C) .
 ``
            (ii) Auditor.--The PDP sponsor shall have 
 the right to select an auditor. The pharmacy 
 benefit manager shall not impose any 
 limitations on the selection of such auditor.
 ``
            (iii) Provision of information.--The 
 pharmacy benefit manager shall make available 
 to such auditor all records, data, contracts, 
 and other information necessary to confirm the 
 accuracy of information provided under 
 subparagraph
            (C) , subject to reasonable 
 restrictions on how such information must be 
 reported to prevent redisclosure of such 
 information.
 ``
            (iv) Timing.--The pharmacy benefit 
 manager must provide information under clause
            (iii) and other information, data, and records 
 relevant to the audit to such auditor within 6 
 months of the initiation of the audit and 
 respond to requests for additional information 
 from such auditor within 30 days after the 
 request for additional information.
 ``
            (v) Information from affiliates.--The 
 pharmacy benefit manager shall be responsible 
 for providing to such auditor information 
 required to be reported under subparagraph
            (C) or under clause
            (iii) of this subparagraph that 
 is owned or held by an affiliate of such 
 pharmacy benefit manager.
 ``

    (2) Enforcement.--
 ``
        (A) In general.--Each PDP sponsor shall--
 ``
            (i) disgorge to the Secretary any amounts 
 disgorged to the PDP sponsor by a pharmacy 
 benefit manager under paragraph

    (1)
        (A)
            (v) ;
 ``
            (ii) require, in a written agreement with 
 any pharmacy benefit manager acting on behalf 
 of such sponsor or affiliate of such pharmacy 
 benefit manager, that such pharmacy benefit 
 manager or affiliate reimburse the PDP sponsor 
 for any civil money penalty imposed on the PDP 
 sponsor as a result of the failure of the 
 pharmacy benefit manager or affiliate to meet 
 the requirements of paragraph

    (1) that are 
 applicable to the pharmacy benefit manager or 
 affiliate under the agreement; and
 ``
            (iii) require, in a written agreement 
 with any such pharmacy benefit manager acting 
 on behalf of such sponsor or affiliate of such 
 pharmacy benefit manager, that such pharmacy 
 benefit manager or affiliate be subject to 
 punitive remedies for breach of contract for 
 failure to comply with the requirements 
 applicable under paragraph

    (1) .
 ``
        (B) Reporting of alleged violations.--The 
 Secretary shall make available and maintain a mechanism 
 for manufacturers, PDP sponsors, pharmacies, and other 
 entities that have contractual relationships with 
 pharmacy benefit managers or affiliates of such 
 pharmacy benefit managers to report, on a confidential 
 basis, alleged violations of paragraph

    (1)
        (A) or 
 subparagraph
            (C) .
 ``
            (C) Anti-retaliation and anti-coercion.--
 Consistent with applicable Federal or State law, a PDP 
 sponsor shall not--
 ``
            (i) retaliate against an individual or 
 entity for reporting an alleged violation under 
 subparagraph
        (B) ; or
 ``
            (ii) coerce, intimidate, threaten, or 
 interfere with the ability of an individual or 
 entity to report any such alleged violations.
 ``

    (3) Certification of compliance.--
 ``
        (A) In general.--Each PDP sponsor shall furnish 
 to the Secretary (at a time and in a manner specified 
 by the Secretary) an annual certification of compliance 
 with this subsection, as well as such information as 
 the Secretary determines necessary to carry out this 
 subsection.
 ``
        (B) Implementation.--Notwithstanding any other 
 provision of law, the Secretary may implement this 
 paragraph by program instruction or otherwise.
 ``

    (4) Rule of construction.--Nothing in this subsection 
 shall be construed as--
 ``
        (A) prohibiting flat dispensing fees or 
 reimbursement or payment for ingredient costs 
 (including customary, industry-standard discounts 
 directly related to drug acquisition that are retained 
 by pharmacies or wholesalers) to entities that acquire 
 or dispense prescription drugs; or
 ``
        (B) modifying regulatory requirements or sub-
 regulatory program instruction or guidance related to 
 pharmacy payment, reimbursement, or dispensing fees.
 ``

    (5) Standard formats.--
 ``
        (A) In general.--Not later than June 1, 2027, the 
 Secretary shall specify standard, machine-readable 
 formats for pharmacy benefit managers to submit annual 
 reports required under paragraph

    (1)
            (C) 
            (i) .
 ``
        (B) Implementation.--Notwithstanding any other 
 provision of law, the Secretary may implement this 
 paragraph by program instruction or otherwise.
 ``

    (6) Confidentiality.--
 ``
        (A) In general.--Information disclosed by a 
 pharmacy benefit manager, an affiliate of a pharmacy 
 benefit manager, a PDP sponsor, or a pharmacy under 
 this subsection that is not otherwise publicly 
 available or available for purchase shall not be 
 disclosed by the Secretary or a PDP sponsor receiving 
 the information, except that the Secretary may disclose 
 the information for the following purposes:
 ``
            (i) As the Secretary determines necessary 
 to carry out this part.
 ``
            (ii) To permit the Comptroller General to 
 review the information provided.
 ``
            (iii) To permit the Director of the 
 Congressional Budget Office to review the 
 information provided.
 ``
            (iv) To permit the Executive Director of 
 the Medicare Payment Advisory Commission to 
 review the information provided.
 ``
            (v) To the Attorney General for the 
 purposes of conducting oversight and 
 enforcement under this title.
 ``
            (vi) To the Inspector General of the 
 Department of Health and Human Services in 
 accordance with its authorities under the 
 Inspector General Act of 1978 (

section 406 of 
 title 5, United States Code), and other 
 applicable statutes.
 ``
        (B) Restriction on use of information.--The 
 Secretary, the Comptroller General, the Director of the 
 Congressional Budget Office, and the Executive Director 
 of the Medicare Payment Advisory Commission shall not 
 report on or disclose information disclosed pursuant to 
 subparagraph
        (A) to the public in a manner that would 
 identify--
 ``
            (i) a specific pharmacy benefit manager, 
 affiliate, pharmacy, manufacturer, wholesaler, 
 PDP sponsor, or plan; or
 ``
            (ii) contract prices, rebates, discounts, 
 or other remuneration for specific drugs in a 
 manner that may allow the identification of 
 specific contracting parties or of such 
 specific drugs.
 ``

    (7) === Definitions. ===
-For purposes of this subsection:
 ``
        (A) Affiliate.--The term `affiliate' means, with 
 respect to any pharmacy benefit manager or PDP sponsor, 
 any entity that, directly or indirectly--
 ``
            (i) owns or is owned by, controls or is 
 controlled by, or is otherwise related in any 
 ownership structure to such pharmacy benefit 
 manager or PDP sponsor; or
 ``
            (ii) acts as a contractor, principal, or 
 agent to such pharmacy benefit manager or PDP 
 sponsor, insofar as such contractor, principal, 
 or agent performs any of the functions 
 described under subparagraph
            (C) .
 ``
        (B) Bona fide service fee.--The term `bona fide 
 service fee' means a fee that is reflective of the fair 
 market value (as specified by the Secretary, through 
 notice and comment rulemaking) for a bona fide, 
 itemized service actually performed on behalf of an 
 entity, that the entity would otherwise perform (or 
 contract for) in the absence of the service arrangement 
 and that is not passed on in whole or in part to a 
 client or customer, whether or not the entity takes 
 title to the drug. Such fee must be a flat dollar 
 amount and shall not be directly or indirectly based 
 on, or contingent upon--
 ``
            (i) drug price, such as wholesale 
 acquisition cost or drug benchmark price (such 
 as average wholesale price);
 ``
            (ii) the amount of discounts, rebates, 
 fees, or other direct or indirect remuneration 
 with respect to covered part D drugs dispensed 
 to enrollees in a prescription drug plan, 
 except as permitted pursuant to paragraph

    (1)
        (A)
            (ii) ;
 ``
            (iii) coverage or formulary placement 
 decisions or the volume or value of any 
 referrals or business generated between the 
 parties to the arrangement; or
 ``
            (iv) any other amounts or methodologies 
 prohibited by the Secretary.
 ``
            (C) Pharmacy benefit manager.--The term `pharmacy 
 benefit manager' means any person or entity that, 
 either directly or through an intermediary, acts as a 
 price negotiator or group purchaser on behalf of a PDP 
 sponsor or prescription drug plan, or manages the 
 prescription drug benefits provided by such sponsor or 
 plan, including 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, controlling the 
 cost of covered part D drugs, or the provision of 
 related services. Such term includes any person or 
 entity that carries out one or more of the activities 
 described in the preceding sentence, irrespective of 
 whether such person or entity calls itself a `pharmacy 
 benefit manager'.''.

    (b) MA-PD Plans.--

Section 1857

    (f)

    (3) of the Social Security Act (42 
U.S.C. 1395w-27

    (f)

    (3) ), as amended by 

section 2
            (d) (2) , is amended by 
adding at the end the following new subparagraph:
 ``
        (G) Requirements relating to pharmacy benefit 
 managers.--For plan years beginning on or after January 
 1, 2028, 

section 1860D-12

    (h) .''.
            (c) Nonapplication of Paperwork Reduction Act.--Chapter 35 of title 
44, United States Code, shall not apply to the implementation of this 
subsection.
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