S. 3345

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 3345 Introduced in Senate (IS)]

<DOC>

119th CONGRESS
1st Session
S. 3345

To amend titles XVIII and XIX of the Social Security Act to ensure 
accurate payments to pharmacies under Medicaid and prevent the use of 
abusive spread pricing in Medicaid, and to assure pharmacy access and 
choice for Medicare beneficiaries and modernize and ensure PBM 
accountability under Medicare.

_______________________________________________________________________

IN THE SENATE OF THE UNITED STATES

December 4, 2025

Mr. Crapo (for himself, Mr. Wyden, Mr. Grassley, Mr. Bennet, Mr. 
Cornyn, Mr. Warner, Mr. Thune, Mr. Whitehouse, Mr. Cassidy, Ms. Hassan, 
Mr. Lankford, Ms. Cortez Masto, Mr. Daines, Ms. Smith, Mr. Barrasso, 
Mr. Lujan, Mr. Tillis, Mr. Warnock, Mrs. Blackburn, Mr. Welch, and Mr. 
Marshall) introduced the following bill; which was read twice and 
referred to the Committee on Finance

_______________________________________________________________________

A BILL

To amend titles XVIII and XIX of the Social Security Act to ensure 
accurate payments to pharmacies under Medicaid and prevent the use of 
abusive spread pricing in Medicaid, and to assure pharmacy access and 
choice for Medicare beneficiaries and modernize and ensure PBM 
accountability under Medicare.

Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ``PBM Price Transparency and 
Accountability Act''.

SEC. 2. ENSURING ACCURATE PAYMENTS TO PHARMACIES UNDER MEDICAID AND 
PREVENTING THE USE OF ABUSIVE SPREAD PRICING IN MEDICAID.

(a) Ensuring Accurate Payments to Pharmacies Under Medicaid.--
(1) In general.--Section 1927(f) of the Social Security Act 
(42 U.S.C. 1396r-8(f)) is amended--
(A) in paragraph (1)(A)--
(i) by redesignating clause (ii) as clause 
(iii); and
(ii) by striking ``and'' after the 
semicolon at the end of clause (i) and all that 
precedes it through ``(1)'' and inserting the 
following:
``(1) Determining pharmacy actual acquisition costs.--The 
Secretary shall conduct a survey of retail community pharmacy 
drug prices and applicable non-retail pharmacy drug prices to 
determine national average drug acquisition cost benchmarks (as 
such term is defined by the Secretary) as follows:
``(A) Use of vendor.--The Secretary may contract 
services for--
``(i) with respect to retail community 
pharmacies, the determination of retail survey 
prices of the national average drug acquisition 
cost for covered outpatient drugs that 
represent a nationwide average of consumer 
purchase prices for such drugs, net of all 
discounts, rebates, and other price concessions 
(to the extent any information with respect to 
such discounts, rebates, and other price 
concessions is available) based on a monthly 
survey of such pharmacies;
``(ii) with respect to applicable non-
retail pharmacies--
``(I) the determination of survey 
prices, separate from the survey prices 
described in clause (i), of the non-
retail national average drug 
acquisition cost for covered outpatient 
drugs that represent a nationwide 
average of consumer purchase prices for 
such drugs, net of all discounts, 
rebates, and other price concessions 
(to the extent any information with 
respect to such discounts, rebates, and 
other price concessions is available) 
based on a monthly survey of such 
pharmacies; and
``(II) at the discretion of the 
Secretary, for each type of applicable 
non-retail pharmacy, the determination 
of survey prices, separate from the 
survey prices described in clause (i) 
or subclause (I) of this clause, of the 
national average drug acquisition cost 
for such type of pharmacy for covered 
outpatient drugs that represent a 
nationwide average of consumer purchase 
prices for such drugs, net of all 
discounts, rebates, and other price 
concessions (to the extent any 
information with respect to such 
discounts, rebates, and other price 
concessions is available) based on a 
monthly survey of such pharmacies; 
and'';
(B) in subparagraph (B) of paragraph (1), by 
striking ``subparagraph (A)(ii)'' and inserting 
``subparagraph (A)(iii)'';
(C) in subparagraph (D) of paragraph (1), by 
striking clauses (ii) and (iii) and inserting the 
following:
``(ii) The vendor must update the Secretary 
no less often than monthly on the survey prices 
for covered outpatient drugs.
``(iii) The vendor must differentiate, in 
collecting and reporting survey data, for all 
cost information collected, whether a pharmacy 
is a retail community pharmacy or an applicable 
non-retail pharmacy, including whether such 
pharmacy is an affiliate (as defined in 
subsection (k)(13)), and, in the case of an 
applicable non-retail pharmacy, which type of 
applicable non-retail pharmacy it is using the 
relevant pharmacy type indicators included in 
the guidance required by subsection (a)(4)(A) 
of section 2 of the PBM Price Transparency and 
Accountability Act.'';
(D) by adding at the end of paragraph (1) the 
following:
``(F) Survey reporting.--In order to meet the 
requirement of section 1902(a)(54), a State shall 
require that any retail community pharmacy or 
applicable non-retail pharmacy in the State that 
receives any payment, reimbursement, administrative 
fee, discount, rebate, or other price concession 
related to the dispensing of covered outpatient drugs 
to individuals receiving benefits under this title, 
regardless of whether such payment, reimbursement, 
administrative fee, discount, rebate, or other price 
concession is received from the State or a managed care 
entity or other specified entity (as such terms are 
defined in section 1903(m)(9)(D)) directly or from a 
pharmacy benefit manager or another entity that has a 
contract with the State or a managed care entity or 
other specified entity (as so defined), shall respond 
to surveys conducted under this paragraph.
``(G) Survey information.--Information on national 
drug acquisition prices obtained under this paragraph 
shall be made publicly available in a form and manner 
to be determined by the Secretary and shall include at 
least the following:
``(i) The monthly response rate to the 
survey including a list of pharmacies not in 
compliance with subparagraph (F).
``(ii) The sampling methodology and number 
of pharmacies sampled monthly.
``(iii) Information on price concessions to 
pharmacies, including discounts, rebates, and 
other price concessions, to the extent that 
such information may be publicly released and 
has been collected by the Secretary as part of 
the survey.
``(H) Penalties.--
``(i) In general.--Subject to clauses (ii), 
(iii), and (iv), the Secretary shall enforce 
the provisions of this paragraph with respect 
to a pharmacy through the establishment of 
civil money penalties applicable to a retail 
community pharmacy or an applicable non-retail 
pharmacy.
``(ii) Basis for penalties.--The Secretary 
shall impose a civil money penalty established 
under this subparagraph on a retail community 
pharmacy or applicable non-retail pharmacy if--
``(I) the retail pharmacy or 
applicable non-retail pharmacy refuses 
or otherwise fails to respond to a 
request for information about prices in 
connection with a survey under this 
subsection;
``(II) knowingly provides false 
information in response to such a 
survey; or
``(III) otherwise fails to comply 
with the requirements established under 
this paragraph.
``(iii) Parameters for penalties.--
``(I) In general.--A civil money 
penalty established under this 
subparagraph may be assessed with 
respect to each violation, and with 
respect to each non-compliant retail 
community pharmacy (including a 
pharmacy that is part of a chain) or 
non-compliant applicable non-retail 
pharmacy (including a pharmacy that is 
part of a chain), in an amount not to 
exceed $100,000 for each such 
violation.
``(II) Considerations.--In 
determining the amount of a civil money 
penalty imposed under this 
subparagraph, the Secretary may 
consider the size, business structure, 
and type of pharmacy involved, as well 
as the type of violation and other 
relevant factors, as determined 
appropriate by the Secretary.
``(iv) Rule of application.--The provisions 
of section 1128A (other than subsections (a) 
and (b)) shall apply to a civil money penalty 
under this subparagraph in the same manner as 
such provisions apply to a civil money penalty 
or proceeding under section 1128A(a).
``(I) Limitation on use of applicable non-retail 
pharmacy pricing information.--No State shall use 
pricing information reported by applicable non-retail 
pharmacies under subparagraph (A)(ii) to develop or 
inform payment methodologies for retail community 
pharmacies.'';
(E) in paragraph (2)--
(i) in subparagraph (A), by inserting ``, 
including payment rates and methodologies for 
determining ingredient cost reimbursement under 
managed care entities or other specified 
entities (as such terms are defined in section 
1903(m)(9)(D)),'' after ``under this title''; 
and
(ii) in subparagraph (B), by inserting 
``and the basis for such dispensing fees'' 
before the semicolon;
(F) by redesignating paragraph (4) as paragraph 
(5);
(G) by inserting after paragraph (3) the following 
new paragraph:
``(4) Oversight.--
``(A) In general.--The Inspector General of the 
Department of Health and Human Services shall conduct 
periodic studies of the survey data reported under this 
subsection, as appropriate, including with respect to 
substantial variations in acquisition costs or other 
applicable costs, as well as with respect to how 
internal transfer prices and related party transactions 
may influence the costs reported by pharmacies that are 
affiliates (as defined in subsection (k)(13)) or are 
owned by, controlled by, or related under a common 
ownership structure with a wholesaler, distributor, or 
other entity that acquires covered outpatient drugs 
relative to costs reported by pharmacies not affiliated 
with such entities. The Inspector General shall provide 
periodic updates to Congress on the results of such 
studies, as appropriate, in a manner that does not 
disclose trade secrets or other proprietary 
information.
``(B) Appropriation.--There is appropriated to the 
Inspector General of the Department of Health and Human 
Services, out of any money in the Treasury not 
otherwise appropriated, $5,000,000 for fiscal year 
2026, to remain available until expended, to carry out 
this paragraph.''; and
(H) in paragraph (5), as so redesignated--
(i) by inserting ``, and $9,000,000 for 
fiscal year 2026 and each fiscal year 
thereafter,'' after ``2010''; and
(ii) by inserting ``Funds appropriated 
under this paragraph for fiscal year 2026 and 
any subsequent fiscal year shall remain 
available until expended.'' after the period.
(2) Definitions.--Section 1927(k) of the Social Security 
Act (42 U.S.C. 1396r-8(k)) is amended--
(A) in the matter preceding paragraph (1), by 
striking ``In the section'' and inserting ``In this 
section''; and
(B) by adding at the end the following new 
paragraphs:
``(12) Applicable non-retail pharmacy.--The term 
`applicable non-retail pharmacy' means a pharmacy that is 
licensed as a pharmacy by the State and that is not a retail 
community pharmacy, including a pharmacy that dispenses 
prescription medications to patients primarily through mail and 
specialty pharmacies. Such term does not include nursing home 
pharmacies, long-term care facility pharmacies, hospital 
pharmacies, clinics, charitable or not-for-profit pharmacies, 
government pharmacies, or low dispensing pharmacies (as defined 
by the Secretary).
``(13) Affiliate.--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)).''.
(3) Effective date.--
(A) In general.--Subject to subparagraph (B), the 
amendments made by this subsection shall take effect on 
the first day of the first quarter that begins on or 
after the date that is 6 months after the date of 
enactment of this Act.
(B) Delayed application to applicable non-retail 
pharmacies.--The pharmacy survey requirements 
established by the amendments to section 1927(f) of the 
Social Security Act (42 U.S.C. 1396r-8(f)) made by this 
subsection shall apply to retail community pharmacies 
beginning on the effective date described in 
subparagraph (A), but shall not apply to applicable 
non-retail pharmacies until the first day of the first 
quarter that begins on or after the date that is 18 
months after the date of enactment of this Act.
(4) Identification of applicable non-retail pharmacies.--
(A) In general.--Not later than January 1, 2027, 
the Secretary of Health and Human Services shall, in 
consultation with stakeholders as appropriate, publish 
guidance specifying pharmacies that meet the definition 
of applicable non-retail pharmacies (as such term is 
defined in subsection (k)(12) of section 1927 of the 
Social Security Act (42 U.S.C. 1396r-8), as added by 
paragraph (2)), and that will be subject to the survey 
requirements under subsection (f)(1) of such section, 
as amended by paragraph (1).
(B) Inclusion of pharmacy type indicators.--The 
guidance published under subparagraph (A) shall include 
pharmacy type indicators to distinguish between 
different types of applicable non-retail pharmacies, 
such as pharmacies that dispense prescriptions 
primarily through the mail and pharmacies that dispense 
prescriptions that require special handling or 
distribution. An applicable non-retail pharmacy may be 
identified through multiple pharmacy type indicators.
(5) Implementation.--
(A) In general.--Notwithstanding any other 
provision of law, the Secretary of Health and Human 
Services may implement the amendments made by this 
subsection by program instruction or otherwise.
(B) Nonapplication of administrative procedure 
act.--Implementation of the amendments made by this 
subsection shall be exempt from the requirements of 
section 553 of title 5, United States Code.
(6) Nonapplication of paperwork reduction act.--Chapter 35 
of title 44, United States Code, shall not apply to any data 
collection undertaken by the Secretary of Health and Human 
Services under section 1927(f) of the Social Security Act (42 
U.S.C. 1396r-8(f)), as amended by this subsection.
(b) Preventing the Use of Abusive Spread Pricing in Medicaid.--
(1) In general.--Section 1927 of the Social Security Act 
(42 U.S.C. 1396r-8) is amended--
(A) in subsection (e), by adding at the end the 
following new paragraph:
``(6) Transparent prescription drug pass-through pricing 
required.--
``(A) In general.--A contract between the State and 
a pharmacy benefit manager (referred to in this 
paragraph as a `PBM'), or a contract between the State 
and a managed care entity or other specified entity (as 
such terms are defined in section 1903(m)(9)(D) and 
collectively referred to in this paragraph as the 
`entity') that includes provisions making the entity 
responsible for coverage of covered outpatient drugs 
dispensed to individuals enrolled with the entity, 
shall require that payment for such drugs and related 
administrative services (as applicable), including 
payments made by a PBM on behalf of the State or 
entity, is based on a transparent prescription drug 
pass-through pricing model under which--
``(i) any payment made by the entity or the 
PBM (as applicable) for such a drug--
``(I) is limited to--
``(aa) ingredient cost; and
``(bb) a professional 
dispensing fee that is not less 
than the professional 
dispensing fee that the State 
would pay if the State were 
making the payment directly in 
accordance with the State plan;
``(II) is passed through in its 
entirety (except as reduced under 
Federal or State laws and regulations 
in response to instances of waste, 
fraud, or abuse) by the entity or PBM 
to the pharmacy or provider that 
dispenses the drug; and
``(III) is made in a manner that is 
consistent with sections 447.502, 
447.512, 447.514, and 447.518 of title 
42, Code of Federal Regulations (or any 
successor regulation) as if such 
requirements applied directly to the 
entity or the PBM, except that any 
payment by the entity or the PBM for 
the ingredient cost of such drug 
purchased by a covered entity (as 
defined in subsection (a)(5)(B)) may 
exceed the actual acquisition cost (as 
defined in 447.502 of title 42, Code of 
Federal Regulations, or any successor 
regulation) for such drug if--
``(aa) such drug was 
subject to an agreement under 
section 340B of the Public 
Health Service Act;
``(bb) such payment for the 
ingredient cost of such drug 
does not exceed the maximum 
payment that would have been 
made by the entity or the PBM 
for the ingredient cost of such 
drug if such drug had not been 
purchased by such covered 
entity; and
``(cc) such covered entity 
reports to the Secretary (in a 
form and manner specified by 
the Secretary), on an annual 
basis and with respect to 
payments for the ingredient 
costs of such drugs so 
purchased by such covered 
entity that are in excess of 
the actual acquisition costs 
for such drugs, the aggregate 
amount of such excess;
``(ii) payment to the entity or the PBM (as 
applicable) for administrative services 
performed by the entity or PBM is limited to an 
administrative fee that reflects the fair 
market value (as defined by the Secretary) of 
such services;
``(iii) the entity or the PBM (as 
applicable) makes available to the State, and 
the Secretary upon request in a form and manner 
specified by the Secretary, all costs and 
payments related to covered outpatient drugs 
and accompanying administrative services (as 
described in clause (ii)) incurred, received, 
or made by the entity or the PBM, broken down 
(as specified by the Secretary), to the extent 
such costs and payments are attributable to an 
individual covered outpatient drug, by each 
such drug, including any ingredient costs, 
professional dispensing fees, administrative 
fees (as described in clause (ii)), post-sale 
and post-invoice fees, discounts, or related 
adjustments such as direct and indirect 
remuneration fees, and any and all other 
remuneration, as defined by the Secretary; and
``(iv) any form of spread pricing whereby 
any amount charged or claimed by the entity or 
the PBM (as applicable) that exceeds the amount 
paid to the pharmacies or providers on behalf 
of the State or entity, including any post-sale 
or post-invoice fees, discounts, or related 
adjustments such as direct and indirect 
remuneration fees or assessments, as defined by 
the Secretary (after allowing for an 
administrative fee as described in clause (ii)) 
is not allowable for purposes of claiming 
Federal matching payments under this title.
``(B) Publication of information.--The Secretary 
shall publish, not less frequently than on an annual 
basis and in a manner that does not disclose the 
identity of a particular covered entity or 
organization, information received by the Secretary 
pursuant to subparagraph (A)(iii)(III) that is broken 
out by State and by each of the following categories of 
covered entity within each such State:
``(i) Covered entities described in 
subparagraph (A) of section 340B(a)(4) of the 
Public Health Service Act.
``(ii) Covered entities described in 
subparagraphs (B) through (K) of such section.
``(iii) Covered entities described in 
subparagraph (L) of such section.
``(iv) Covered entities described in 
subparagraph (M) of such section.
``(v) Covered entities described in 
subparagraph (N) of such section.
``(vi) Covered entities described in 
subparagraph (O) of such section.''; and
(B) in subsection (k), as amended by subsection 
(a)(2), by adding at the end the following new 
paragraph:
``(14) 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 State, managed care entity 
(as defined in section 1903(m)(9)(D)), or other specified 
entity (as so defined), or manages the prescription drug 
benefits provided by a State, managed care entity, or other 
specified entity, including the processing and payment of 
claims for prescription drugs, the performance of drug 
utilization review, the processing of drug prior authorization 
requests, the managing of appeals or grievances related to the 
prescription drug benefits, contracting with pharmacies, 
controlling the cost of covered outpatient drugs, or the 
provision of services related thereto. Such term includes any 
person or entity that acts as a price negotiator (with regard 
to payment amounts to pharmacies and providers for a covered 
outpatient drug or the net cost of the drug) or group purchaser 
on behalf of a State, managed care entity, or other specified 
entity or that carries out 1 or more of the other activities 
described in the preceding sentence, irrespective of whether 
such person or entity calls itself a pharmacy benefit 
manager.''.
(2) Conforming amendments.--Section 1903(m) of such Act (42 
U.S.C. 1396b(m)) is amended--
(A) in paragraph (2)(A)(xiii)--
(i) by striking ``and (III)'' and inserting 
``(III)'';
(ii) by inserting before the period at the 
end the following: ``, and (IV) if the contract 
includes provisions making the entity 
responsible for coverage of covered outpatient 
drugs, the entity shall comply with the 
requirements of section 1927(e)(6)''; and
(iii) by moving the margin 2 ems to the 
left; and
(B) by adding at the end the following new 
paragraph:
``(10) No payment shall be made under this title to a State 
with respect to expenditures incurred by the State for payment 
for services provided by an other specified entity (as defined 
in paragraph (9)(D)(iii)) unless such services are provided in 
accordance with a contract between the State and such entity 
which satisfies the requirements of paragraph (2)(A)(xiii).''.
(3) Effective date.--The amendments made by this subsection 
shall apply to contracts between States and managed care 
entities, other specified entities, or pharmacy benefit 
managers that have an effective date beginning on or after the 
date that is 18 months after the date of enactment of this Act.
(4) Implementation.--
(A) In general.--Notwithstanding any other 
provision of law, the Secretary of Health and Human 
Services may implement the amendments made by this 
subsection by program instruction or otherwise.
(B) Nonapplication of administrative procedure 
act.--Implementation of the amendments made by this 
subsection shall be exempt from the requirements of 
section 553 of title 5, United States Code.
(5) Nonapplication of paperwork reduction act.--Chapter 35 
of title 44, United States Code, shall not apply to any data 
collection undertaken by the Secretary of Health and Human 
Services under section 1927(e) of the Social Security Act (42 
U.S.C. 1396r-8(e)), as amended by this subsection.

SEC. 3. ASSURING PHARMACY ACCESS AND CHOICE FOR MEDICARE BENEFICIARIES 
AND MODERNIZING AND ENSURING PBM ACCOUNTABILITY UNDER 
MEDICARE.

(a) Assuring Pharmacy Access and Choice for Medicare 
Beneficiaries.--
(1) 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.''.
(2) 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 rural area in which there is no 
other retail pharmacy within 10 miles, as 
determined by the Secretary;
``(ii) a suburban area in which there is no 
other retail pharmacy within 2 miles, as 
determined by the Secretary; or
``(iii) 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; pharmacy benefit manager.--
In this subsection, the terms `affiliate' and `pharmacy benefit 
manager' have the meaning given those terms in section 1860D-
12(h)(7).''.
(3) Enforcement.--
(A) 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).''.
(B) Conforming amendment.--Section 1857(g)(1) of 
the Social Security Act (42 U.S.C. 1395w-27(g)(1)) is 
amended--
(i) in subparagraph (J), by striking ``or'' 
after the semicolon;
(ii) by redesignating subparagraph (K) as 
subparagraph (L);
(iii) 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'';
(iv) in subparagraph (L), as redesignated 
by clause (ii), by striking ``through (J)'' and 
inserting ``through (K)''; and
(v) in the flush matter following 
subparagraph (L), as so redesignated, by 
striking ``subparagraphs (A) through (K)'' and 
inserting ``subparagraphs (A) through (L)''.
(4) Accountability of pharmacy benefit managers for 
violations of reasonable and relevant contract terms and 
conditions.--
(A) 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.''.
(B) 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).''.
(5) 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 paragraph 
(2), 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.''.
(6) Funding.--In addition to amounts otherwise available, 
there is appropriated to the Centers for Medicare & Medicaid 
Services Program Management Account, out of any money in the 
Treasury not otherwise appropriated, $188,000,000 for fiscal 
year 2026, to remain available until expended, to carry out 
this subsection.
(b) Modernizing and Ensuring PBM Accountability.--
(1) In general.--
(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 
subsection (a)(4)(B), 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 paragraph.
(D) Funding.--
(i) Secretary.--In addition to amounts 
otherwise available, there is appropriated to 
the Centers for Medicare & Medicaid Services 
Program Management Account, out of any money in 
the Treasury not otherwise appropriated, 
$113,000,000 for fiscal year 2026, to remain 
available until expended, to carry out this 
paragraph.
(ii) OIG.--In addition to amounts otherwise 
available, there is appropriated to the 
Inspector General of the Department of Health 
and Human Services, out of any money in the 
Treasury not otherwise appropriated, 
$20,000,000 for fiscal year 2026, to remain 
available until expended, to carry out this 
paragraph.
(2) GAO study and report on price-related compensation 
across the supply chain.--
(A) Study.--The Comptroller General of the United 
States (in this paragraph referred to as the 
``Comptroller General'') shall conduct a study 
describing the use of compensation and payment 
structures related to a prescription drug's price 
within the retail prescription drug supply chain in 
part D of title XVIII of the Social Security Act (42 
U.S.C. 1395w-101 et seq.). Such study shall summarize 
information from Federal agencies and industry experts, 
to the extent available, with respect to the following:
(i) The type, magnitude, other features 
(such as the pricing benchmarks used), and 
prevalence of compensation and payment 
structures related to a prescription drug's 
price, such as calculating fee amounts as a 
percentage of a prescription drug's price, 
between intermediaries in the prescription drug 
supply chain, including--
(I) pharmacy benefit managers;
(II) PDP sponsors offering 
prescription drug plans and Medicare 
Advantage organizations offering MA-PD 
plans;
(III) drug wholesalers;
(IV) pharmacies;
(V) manufacturers;
(VI) pharmacy services 
administrative organizations;
(VII) brokers, auditors, 
consultants, and other entities that--
(aa) advise PDP sponsors 
offering prescription drug 
plans and Medicare Advantage 
organizations offering MA-PD 
plans regarding pharmacy 
benefits; or
(bb) review PDP sponsor and 
Medicare Advantage organization 
contracts with pharmacy benefit 
managers; and
(VIII) other service providers that 
contract with any of the entities 
described in subclauses (I) through 
(VII) that may use price-related 
compensation and payment structures, 
such as rebate aggregators (or other 
entities that negotiate or process 
price concessions on behalf of pharmacy 
benefit managers, plan sponsors, or 
pharmacies).
(ii) The primary business models and 
compensation structures for each category of 
intermediary described in clause (i).
(iii) Variation in price-related 
compensation structures between affiliated 
entities (such as entities with common 
ownership, either full or partial, and 
subsidiary relationships) and unaffiliated 
entities.
(iv) Potential conflicts of interest among 
contracting entities related to the use of 
prescription drug price-related compensation 
structures, such as the potential for fees or 
other payments set as a percentage of a 
prescription drug's price to advantage 
formulary selection, distribution, or 
purchasing of prescription drugs with higher 
prices.
(v) Notable differences, if any, in the use 
and level of price-based compensation 
structures over time and between different 
market segments, such as under part D of title 
XVIII of the Social Security Act (42 U.S.C. 
1395w-101 et seq.) and the Medicaid program 
under title XIX of such Act (42 U.S.C. 1396 et 
seq.).
(vi) The effects of drug price-related 
compensation structures and alternative 
compensation structures on Federal health care 
programs and program beneficiaries, including 
with respect to cost-sharing, premiums, Federal 
outlays, biosimilar and generic drug adoption 
and utilization, drug shortage risks, and the 
potential for fees set as a percentage of a 
drug's price to advantage the formulary 
selection, distribution, or purchasing of drugs 
with higher prices.
(vii) Other issues determined to be 
relevant and appropriate by the Comptroller 
General.
(B) Report.--Not later than 2 years after the date 
of enactment of this paragraph, the Comptroller General 
shall submit to Congress a report containing the 
results of the study conducted under subparagraph (A), 
together with recommendations for such legislation and 
administrative action as the Comptroller General 
determines appropriate.
(3) MedPAC reports on agreements with pharmacy benefit 
managers with respect to prescription drug plans and ma-pd 
plans.--
(A) In general.--The Medicare Payment Advisory 
Commission shall submit to Congress the following 
reports:
(i) Initial report.--Not later than the 
first March 15 occurring after the date that is 
2 years after the date on which the Secretary 
makes the data available to the Commission, a 
report regarding agreements with pharmacy 
benefit managers with respect to prescription 
drug plans and MA-PD plans. Such report shall 
include, to the extent practicable--
(I) a description of trends and 
patterns, including relevant averages, 
totals, and other figures for the types 
of information submitted;
(II) an analysis of any differences 
in agreements and their effects on plan 
enrollee out-of-pocket spending and 
average pharmacy reimbursement, and 
other impacts; and
(III) any recommendations the 
Commission determines appropriate.
(ii) Final report.--Not later than 2 years 
after the date on which the Commission submits 
the initial report under clause (i), a report 
describing any changes with respect to the 
information described in clause (i) over time, 
together with any recommendations the 
Commission determines appropriate.
(B) Funding.--In addition to amounts otherwise 
available, there is appropriated to the Medicare 
Payment Advisory Commission, out of any money in the 
Treasury not otherwise appropriated, $1,000,000 for 
fiscal year 2026, to remain available until expended, 
to carry out this paragraph.
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