Prescription Drug Transparency and Affordability Act
The Prescription Drug Transparency and Affordability Act would substantially expand federal oversight of pharmacy benefit management (PBM) services. By amending the Public Health Service Act, the Employee Retirement Income Security Act (ERISA), and the Internal Revenue Code, the bill requires PBMs and health plans to disclose detailed pricing and spending information, rebates, and formulary decisions to group health plans and health insurance issuers. The goal is to increase transparency around drug pricing and the financial flows between plans, PBMs, pharmacies, and manufacturers, enabling better-informed plan selections and potential reductions in net plan costs and patient out-of-pocket spending. The act introduces reporting requirements, privacy safeguards, and penalties for noncompliance, and it includes rulemaking to standardize formats and align with other reporting provisions. Key elements include a 30-month-delayed effective date for new reporting obligations, mandatory six-month (or quarterly upon request) reports, extensive data fields on drug spending and rebates, summary documents for plans and participants, privacy protections modeled on HIPAA, and civil penalties for violations. The bill also allows for an opt-in up-front expansion of reporting for group health insurance coverage offered by specified large employers, and it creates parallel provisions in ERISA to cover self-insured or insured group plans. Importantly, the act directs the Secretary to issue standard formats and additional regulations within 18 months of enactment and to ensure reporting efforts align with existing PBM reporting requirements.
Key Points
- 1New oversight section added to the Public Health Service Act (Sec. 2799A-11) requiring PBMs and related entities to disclose detailed reporting data to group health plans and issuers for plan years beginning after a 30-month enactment window; contracts with PBMs entered into or renewed after the effective date must include agreement to disclose information and provide necessary data for reporting.
- 2Reports must be submitted at least every six months (quarterly if requested) and delivered in plain language, machine-readable formats, and other secretary-determined formats; reports cover extensive data on drug spending, pricing, rebates, channel of dispensing, formulary status, and patient cost-sharing.
- 3For each covered drug, the reports require information on contracted and pharmacy payments, price differentials, National Drug Codes, dispensing channels (retail, mail-order, specialty), brand vs. generic status, and various spend and utilization metrics (claims, participants, dosage units, days supply, net and gross spending, rebates, and manufacturer-associated copayment support data where feasible).
- 4Class-level data and top-drug analyses: therapeutic-class spending, average net spending per 30- and 90-day supply, formulary placement rationales, and out-of-pocket costs; additional drill-down on high-spend drugs (top 50) with formulary and changes in placement.
- 5Provisions on affiliated or common-ownership mail and specialty programs, including disclosures on benefit designs that promote mail-order or specialty dispensing and related cost data.
- 6Privacy protections: reports must follow HIPAA privacy rules, contain only summary information (where required), and limit disclosures to designated entities; plans must provide participant-friendly summary documents and allow participants to request detailed claims-level information.
- 7Enforcement and penalties: the Secretary enforces compliance; civil penalties of $10,000 per day for violations and up to $100,000 per item of false information; processes mirror SSA 1128A procedures; waivers may be granted for good-faith compliance efforts.
- 8Rulemaking timeline: standard data formats to be set within 18 months of enactment, with additional regulations to implement the section; Secretary encouraged to align PBM reporting with the existing section 2799A-10 reporting framework where feasible.
- 9ERISA parallelism: similar reporting and disclosure requirements apply to plan years after the effective date under Subtitle B, part 7 of ERISA (Sec. 726); includes an identical reporting and enforcement structure.
- 10Opt-in mechanism for specified large employers/plans: these groups may annually elect to require PBMs to submit the full set of (A) reporting data plus (B) plan-level and participant-facing summaries.