Oversight of Pharmacy Benefit Management Services

What the document says

“shall not enter into a contract, including an extension or renewal of a contract, entered into on or after the effective date, with an applicable entity unless such applicable entity agrees to-- ``(1) not limit or delay the disclosure of information to the group health plan”

Section 6701 adds a new section 2799A-11 to the Public Health Service Act, and the same requirements as section 726 of the Employee Retirement Income Security Act of 1974 and section 9826 of the Internal Revenue Code of 1986. For plan years beginning 30 months or more after enactment, a group health plan, an issuer, or an entity providing pharmacy benefit management services may not enter, extend or renew a contract with an applicable entity unless that entity agrees not to limit or delay disclosure in a way that prevents the required reports, and to provide the information needed to make them.

What the document says

“not less frequently than every 6 months (or, at the request of a group health plan, not less frequently than quarterly, and under the same conditions, terms, and cost of the semiannual report under this subsection), shall submit to the group health plan a report in accordance with this section.”

For plan years beginning on or after the effective date, an entity providing pharmacy benefit management services under a contract entered, extended or renewed on or after that date must report to the group health plan at least every six months, or quarterly at the plan's request on the same terms and cost. Each report must be in plain language, in a machine-readable format, and in such other formats as the Secretary determines.

What the document says

“a list of drugs for which a claim was filed and, with respect to each such drug on such list--”

For a plan offered by a specified large employer or that is a specified large plan and is not insured, or where the opt-in is made, the report must list each drug claimed with what the plan paid the manager, what the pharmacy was paid, the difference between the two, the drug's names and code, the dispensing channel, whether it is brand or generic with its cost, claim and unit counts, net price after rebates, out-of-pocket spending, total net spending, rebates and other remuneration received by the plan and by the manager, and manufacturer copay assistance. It must also give the same picture by therapeutic class, formulary placement rationales for drugs over $10,000 in gross spending, and detail on affiliated pharmacies including prices there against other network pharmacies.

What the document says

“a summary document for plans and issuers to provide to participants and beneficiaries, which shall be made available to participants or beneficiaries upon request to their group health plan”

For every group health plan, whatever its size, the report must include a summary document for the plan holding what the Secretary determines is useful for choosing pharmacy benefit management services, and a second summary document for participants and beneficiaries, available on request, containing only aggregate information and stating that they may request claims level information. It must also give total net spending on drugs, amounts received in rebates and other remuneration, manufacturer copay assistance, payments to brokers and consultants for referring or retaining the business, an explanation of benefit designs steering members to affiliated pharmacies, and total gross spending.

What the document says

“such group health plan may, on an annual basis, for plan years beginning on or after the date that is 30 months after the date of enactment of this section, elect to require an entity providing pharmacy benefit management services on behalf of the health insurance issuer to submit to such group health plan a report that includes all of the information described in paragraph (2)(A), in addition to the information described in paragraph (2)(B).”

Where coverage is offered through an insurance issuer in connection with a plan of a specified large employer or a specified large plan, the plan may elect each year to require the full report, adding the detailed information to the summary information every plan receives.

What the document says

“shall ensure that such report contains only summary health information, as defined in section 164.504(a) of title 45, Code of Federal Regulations (or successor regulations).”

The reports must follow the privacy regulations under section 13402(a) of the Health Information Technology for Economic and Clinical Health Act and under the Health Insurance Portability and Accountability Act of 1996, and must contain only summary health information. Nothing in the section changes those regulations or affects other federal or state privacy or civil rights laws. A plan receiving a report may disclose it only to the entity that sent it or that entity's business associates.

What the document says

“Each plan year, group health plans, including with respect to group health insurance coverage offered in connection with a group health plan, shall provide to each participant or beneficiary written notice informing the participant or beneficiary of the requirement for entities providing pharmacy benefit management services”

Each plan year a group health plan must give every participant or beneficiary written notice of the reporting requirement, which may be done by including it in plan documents or by individual notice.

What the document says

“The Secretary shall define through rulemaking a limited form of the report under paragraph (1) required with respect to any group health plan established by a plan sponsor that is, or is affiliated with, a drug manufacturer, drug wholesaler, or other direct participant in the drug supply chain, in order to prevent anti-competitive behavior.”

The Secretary must define by rulemaking a limited form of the report for a group health plan set up by a sponsor that is, or is affiliated with, a drug manufacturer, wholesaler or other direct participant in the drug supply chain, in order to prevent anti-competitive behavior.

What the document says

“Not later than 18 months after the date of enactment of this section, the Secretary shall specify through rulemaking a standard format for entities providing pharmacy benefit management services on behalf of group health plans and health insurance issuers offering group health insurance coverage, to submit reports required under paragraph (1).”

Within 18 months of enactment the Secretary must set a standard report format by rulemaking, and must issue any other final regulations needed. In doing so the Secretary must, so far as practicable, align these reporting requirements with those under the neighboring transparency section.

What the document says

“upon request of a participant or beneficiary, shall provide to such participant or beneficiary-- ``(1) the summary document described in subsection (b)(2)(B)(ii); and”

On request, a group health plan must give a participant or beneficiary the member summary document, and the difference between what the plan paid the manager and what the pharmacy was paid, for a claim made by or on behalf of that person.

What the document says

“shall be subject to a civil monetary penalty in the amount of $10,000 for each day during which such violation continues or such information is not disclosed or reported.”

A plan, issuer, manager or applicable entity that violates the contract rule, a manager that fails to report, or a plan that fails to give a member the required information, is subject to a civil monetary penalty of $10,000 for each day the violation continues. Knowingly providing false information carries a penalty of up to $100,000 for each item, in addition to other penalties. Section 1128A of the Social Security Act applies to the procedure. Parallel authority is added to section 502(c) of the Employee Retirement Income Security Act of 1974.

What the document says

“Nothing in this section shall be construed to permit a health insurance issuer, group health plan, entity providing pharmacy benefit management services on behalf of a group health plan or health insurance issuer, or other entity to restrict disclosure to, or otherwise limit the access of, the Secretary”

The Secretary may waive the daily penalties, or extend the time for compliance, for an entity that made a good-faith effort to comply. Nothing in the section allows an issuer, plan, manager or other entity to restrict the Secretary's access to a report or to information about compliance. An entity may place reasonable restrictions on public disclosure, but may not restrict disclosure to the Departments of Health and Human Services, Labor or the Treasury.

What the document says

“The term `specified large employer' means, in connection with a group health plan (including group health insurance coverage offered in connection with such a plan) established or maintained by a single employer, with respect to a calendar year or a plan year, as applicable, an employer who employed an average of at least 100 employees on business days during the preceding calendar year or plan year”

The new section defines applicable entity to cover group purchasing organizations affiliated with a manager, drug manufacturers, distributors, wholesalers, rebate aggregators, associated third parties, their subsidiaries, parents, affiliates and subcontractors, and others the Secretary specifies. Contracted compensation is ingredient cost plus dispensing fee. Gross spending is figured before rebates and other remuneration and net spending after. A specified large employer averaged at least 100 employees in the prior year, and a specified large plan averaged at least 100 participants. Remuneration is defined by the Secretary through rulemaking and must be reevaluated every five years.