H.R. 2214 — DRUG Act

This section prohibits pharmacy benefit managers (PBMs) from deriving any remuneration from entities for services, benefit administration, or other activities related to prescription drug benefits under group health plans or group or individual health insurance coverage beginning January 1, 2027, except for bona fide service fees. A bona fide service fee must be a flat dollar amount set forth in a written agreement, reflect fair market value for actual itemized services the entity would otherwise perform, not be passed on to clients, and not be based on or contingent upon drug prices (e.g., wholesale acquisition cost), rebates, or other amounts specified by the Secretaries of HHS, Labor, and Treasury. The section defines PBMs broadly to include entities that negotiate prescription drug prices or manage drug benefits (e.g., formularies, claims processing, prior authorizations) for plans or insurers. The section directs the Secretaries of HHS, Labor, and Treasury to enforce the prohibitions through interim final regulations, including disgorgement of improper payments and civil monetary penalties of $10,000 for each day of violation (using specified procedures from Social Security Act §1128A). It includes rules of construction clarifying that the prohibitions do not affect payments for drug ingredient costs or pharmacy dispensing fees or passing through rebates and price concessions to plans or insurers to reduce net drug costs. The requirements apply by adding new §2799A-11 to the Public Health Service Act and new §726 to ERISA and amend ERISA §502(a)(6) (29 U.S.C. 1132(a)(6)) to authorize the Secretary of Labor to collect civil penalties under the new ERISA provision's subsection (c)(13). (As background, PBMs administer prescription drug benefits for most employer-sponsored and commercial health coverage; these changes limit PBM revenue models such as spread pricing and certain manufacturer payments. Thus, plans and insurers may receive greater pass-through of pharmacy reimbursements and drug rebates.)