Prescription Drug Transparency and Affordability Act
- Sponsor
- Rep. McDonald Rivet, Kristen [D-MI-8]
- Committees
- Ways and Means Committee (primary)
- Last action
- Mar 27, 2025
Bottom line
The bill seeks to shed light on PBM practices and drug pricing by requiring comprehensive data disclosure to health plans and beneficiaries, with the goal of fostering competition and lowering drug costs.
What it actually does
This bill, the "Prescription Drug Transparency and Affordability Act," mandates extensive new reporting requirements for Pharmacy Benefit Managers (PBMs) and other applicable entities to group health plans and health insurance issuers. It requires detailed disclosure of drug costs, compensation, rebates, and dispensing channel information, aiming to increase transparency in the prescription drug supply chain. It also establishes civil monetary penalties for non-compliance and knowingly providing false information.
Proponents argue
Supporters argue that increased transparency in the opaque PBM industry is crucial to understanding and combating rising prescription drug costs. By requiring PBMs to disclose detailed financial information, including rebates and compensation structures, health plans can better negotiate contracts, identify hidden fees, and ultimately reduce costs for employers and consumers. This bill empowers plans and beneficiaries with the information needed to make informed decisions and hold PBMs accountable.
Opponents contend
Opponents, likely PBMs and some drug manufacturers, might argue that such extensive reporting requirements are overly burdensome, proprietary, and could inadvertently lead to higher drug costs by revealing sensitive negotiating strategies. They may contend that the data is complex and could be misinterpreted, or that it could stifle innovation and competition by forcing disclosure of trade secrets. Some might also raise concerns about the administrative burden on smaller plans or the potential for data breaches.
The bill is moderately complex due to its detailed reporting requirements and legal amendments. An informed reader would need about 45-60 minutes to fully grasp its provisions, which is a reasonable time investment given its potential impact on healthcare costs.
Section 2(a)(1), adding new Section 2799A-11(a) to the Public Health Service Act (PHSA), and mirrored in ERISA and IRC.
Prohibition on Limiting Information Disclosure
This provision prohibits group health plans, health insurance issuers, or PBMs acting on their behalf from entering into contracts with "applicable entities" (like drug manufacturers, wholesalers, or rebate aggregators) that limit or delay the disclosure of information necessary for PBMs to make required reports to health plans. It ensures that PBMs can obtain the data they need from other supply chain participants.
Supporters argue
This provision is essential to prevent other supply chain actors from obstructing transparency efforts. It ensures PBMs have the necessary data to fulfill their reporting obligations, closing potential loopholes.
Critics contend
Applicable entities might argue this infringes on their contractual freedom and could force disclosure of commercially sensitive information to PBMs, potentially harming their competitive position.
Tradeoffs
Balances the need for comprehensive data disclosure against concerns about contractual autonomy and proprietary information within the drug supply chain.
Section 2(a)(1), adding new Section 2799A-11(b)(1)-(2)(A) to PHSA, and mirrored in ERISA and IRC.
Detailed Drug-Level Reporting for Large Plans
For "specified large employers" or "specified large plans" (generally those with 100+ employees/participants), PBMs must submit detailed reports every 6 months (or quarterly upon request) to group health plans. These reports must include drug-specific information such as contracted compensation paid by the plan to the PBM, compensation paid to the pharmacy, the difference between these amounts, National Drug Codes, dispensing channel, brand/generic status, wholesale acquisition cost (WAC) or average wholesale price (AWP), total claims, participant numbers, dosage units, net price after rebates, total out-of-pocket spending, total net spending, and all remuneration received by the plan or PBM from applicable entities.
Section 2(a)(1), adding new Section 2799A-11(b)(2)(A)(ii) to PHSA, and mirrored in ERISA and IRC.
Therapeutic Class-Level Reporting for Large Plans
For specified large plans, PBMs must also report on each therapeutic class of drugs. This includes total gross and net spending for the class, remuneration received by the PBM from applicable entities related to drugs in that class, average net spending per 30/90-day supply, number of participants, formulary tiers and utilization mechanisms (like prior authorization), and total out-of-pocket spending by beneficiaries for drugs in that class.
Section 2(a)(1), adding new Section 2799A-11(b)(2)(A)(iv) to PHSA, and mirrored in ERISA and IRC.
Reporting on Affiliated Pharmacies
If a PBM has an affiliated pharmacy (e.g., mail order, specialty pharmacy under common ownership), the report must explain benefit design parameters that encourage or require participants to use these pharmacies. It must also disclose the percentage of total prescriptions dispensed by such pharmacies, and for each drug dispensed, the amount charged to the plan and beneficiaries, the median and interquartile range of costs from non-affiliated network pharmacies, the lowest cost available from any network pharmacy, and the net acquisition cost if subject to a maximum price discount.
Section 2(a)(1), adding new Section 2799A-11(b)(2)(B) to PHSA, and mirrored in ERISA and IRC.
Summary Documents and General Reporting for All Plans
For all group health plans (regardless of size), PBMs must provide a summary document for the plan, including information useful for selecting PBM services (e.g., estimated net price, cost per claim, fee structure). They must also provide a summary document for participants and beneficiaries (upon request) containing aggregate information to help them understand their benefits. Additionally, PBMs must report total net spending, total remuneration received by the plan, and (to the extent feasible) copayment assistance from drug manufacturers. It also requires reporting on compensation paid to brokers/consultants for PBM referrals or retention, and an explanation of benefit design parameters encouraging use of affiliated pharmacies.
Section 2(a)(1), adding new Section 2799A-11(b)(4) to PHSA, and mirrored in ERISA and IRC.
Privacy Requirements for Reported Information
The bill mandates that all reported information must be consistent with HIPAA privacy regulations and the Health Information Technology for Economic and Clinical Health Act (HITECH Act). Reports must contain only "summary health information" (as defined by HIPAA), and group health plans must comply with specific HIPAA rules regarding the use and disclosure of this information. It clarifies that the section does not modify existing privacy laws and requires plans to provide written notice to participants about the reporting requirements. It also restricts disclosure of reports to the entity from which it was received or its business associates, but explicitly allows disclosure to HHS, Labor, Treasury, and for public disclosure requirements.
Section 2(a)(1), adding new Section 2799A-11(d) to PHSA, and mirrored in ERISA and IRC.
Enforcement and Penalties
The Secretary (of HHS, Labor, or Treasury, depending on the Act) is granted enforcement authority. Violations of contract requirements (subsection (a)), failure to provide required reports (subsection (b)), or failure to provide information to participants (subsection (c)) are subject to a civil monetary penalty of $10,000 per day. Knowingly providing false information incurs a penalty of up to $100,000 per item of false information. The Secretary may waive penalties for good-faith efforts to comply.
Requires the Secretary to define a "limited form of report" for group health plans established by a plan sponsor that is affiliated with a drug manufacturer, wholesaler, or other direct participant in the drug supply chain, in order to prevent anti-competitive behavior.
Section 2(a)(1), adding new Section 2799A-11(b)(4)(G) to PHSA, and mirrored in ERISA and IRC.
Why it matters:This is a technical carve-out designed to prevent anti-competitive behavior, which is a common legislative practice to address specific industry concerns.
Case for: Prevents entities with direct ties to drug manufacturing or distribution from using the transparency reports to gain unfair competitive intelligence on their rivals' pricing or strategies, thereby protecting competition.
Case against: Could be argued that any limitation on transparency, even for anti-competitive reasons, slightly undermines the overall goal of full disclosure. However, the intent is to prevent a different form of market distortion.
Estimated impact: Prevents potential misuse of detailed PBM data by vertically integrated drug supply chain companies, impacting competitive dynamics for a specific subset of plans.
Broadly defines "applicable entity" to include group purchasing organizations, drug manufacturers, distributors, wholesalers, rebate aggregators, associated third parties, AND any subsidiary, parent, affiliate, or subcontractor of a group health plan, health insurance issuer, PBM, or any of the aforementioned entities. It also allows the Secretary to specify other entities through rulemaking.
Section 2(a)(1), adding new Section 2799A-11(f)(1) ("Applicable entity" definition) to PHSA, and mirrored in ERISA and IRC.
Why it matters:Definitions are inherently technical, but this one is crucial as it significantly expands the scope of entities subject to the information disclosure requirements.
Case for: Ensures comprehensive transparency by capturing all relevant actors in the complex drug supply chain, preventing entities from hiding behind corporate structures or contractual arrangements to avoid disclosure. The Secretary's ability to add entities provides future flexibility.
Case against: The broadness, especially including "any subsidiary, parent, affiliate, or subcontractor," could be seen as overly expansive, potentially capturing entities not directly involved in PBM services or creating unforeseen compliance burdens.
Estimated impact: Significantly expands the universe of entities that must agree not to limit information disclosure, ensuring a more complete picture of drug pricing and remuneration.