Sec. 1302. EXEMPTION
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## SEC. 1302 EXEMPTION ###
(a)In General Section 408 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1108) is amended by adding at the end the following: > > ### “(h) Provision of Pharmacy Benefit Services > > > #### “(1) In general > > Provided that all of the conditions described in paragraph
(2)are met, the restrictions imposed by subsections (a), (b)(1), and (b)(2) of section 406 shall not apply to— > > > ##### “(A) > > the offering of pharmacy benefit services to a group health plan that is sponsored by an entity described in section 3(37)(G)(vi) or to any other group health plan that is sponsored by a regional council, local union, or other labor organization affiliated with such entity; > > > ##### “(B) > > the purchase of pharmacy benefit services by plan participants and beneficiaries of a group health plan that is sponsored by an entity described in section 3(37)(G)(vi) or of any other group health plan that is sponsored by a regional council, local union, or other labor organization affiliated with such entity; or > > > ##### “(C) > > the operation or implementation of pharmacy benefit services by an entity described in section 3(37)(G)(vi) or by any other group health plan that is sponsored by a regional council, local union, or other labor organization affiliated with such entity, > > in any arrangement where such entity described in section 3(37)(G)(vi) or any related organization or subsidiary of such entity provides pharmacy benefit services that include prior authorization and appeals, a retail pharmacy network, pharmacy benefit administration, mail order fulfillment, formulary support, manufacturer payments, audits, and specialty pharmacy and goods, to any such group health plan. > > > #### “(2) Conditions > > The conditions described in this paragraph are the following: > > > ##### “(A) > > The terms of the arrangement are at least as favorable to the group health plan as such group health plan could obtain in a similar arm’s length arrangement with an unrelated third party. > > > ##### “(B) > > At least 50 percent of the providers participating in the pharmacy benefit services offered by the arrangement are unrelated to the contributing employers or any other party in interest with respect to the group health plan. > > > ##### “(C) > > The group health plan retains an independent fiduciary who will be responsible for monitoring the group health plan’s consultants, contractors, subcontractors, and other service providers for purposes of pharmacy benefit services described in paragraph
(1)offered by such entity or any of its related organizations or subsidiaries and monitors the transactions of such entity and any of its related organizations or subsidiaries to ensure that all conditions of this exemption are satisfied during each plan year. > > > ##### “(D) > > Any decisions regarding the provision of pharmacy benefit services described in paragraph
(1)are made by the group health plan’s independent fiduciary, based on objective standards developed by the independent fiduciary in reliance on information provided by the arrangement. > > > ##### “(E) > > The independent fiduciary of the group health plan provides an annual report to the Secretary and the congressional committees of jurisdiction attesting that the conditions described in subparagraphs
(C)and
(D)have been met for the applicable plan year, together with a statement that use of the arrangement’s services are in the best interest of the participants and beneficiaries in the aggregate for that plan year compared to other similar arrangements the group health plan could have obtained in transactions with an unrelated third party. > > > ##### “(F) > > The arrangement is not designed to benefit any party in interest with respect to the group health plan. > > > #### “(3) Violations > > In the event an entity described in section 3(37)(G)(vi) or any affiliate of such entity violates any of the conditions of such exemption, such exemption shall not apply with respect to such entity or affiliate and all enforcement and claims available under this Act shall apply with respect to such entity or affiliate. > > > #### “(4) Rule of construction > > Nothing in this subsection shall be construed to modify any obligation of a group health plan otherwise set forth in this Act. > > > #### “(5) Group health plan > > In this subsection, the term ‘group health plan’ has the meaning given such term in section 733(a).” > . ###
(b)Amendment to Internal Revenue Code of 1986 **[**[26 U.S.C. 4975](/us/usc/t26/s4975)**]** Subsection
(c)of section 4975 of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph: > > #### “(7) Special rule for provision of pharmacy benefit services > > Any party to an arrangement which satisfies the requirements of section 408(h) of the Employee Retirement Income Security Act of 1974 shall be exempt from the tax imposed by this section with respect to such arrangement.” > . ###
(c)Applicability **[**[26 U.S.C. 4975 note](/us/usc/t26/s4975)**]** With respect to a group health plan subject to subsection
(h)of section 408 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1108) (as amended by subsection (a)) and subsection
(c)of section 4975 of the Internal Revenue Code of 1986 (as amended by subsection (b)), beginning at the end of the fifth plan year of such group health plan that begins after the date of enactment of this Act, such subsection
(h)of such section 408 and such subsection
(c)of such shall have no force or effect. # TITLE XIV LIBRARY OF CONGRESS TECHNICAL CORRECTIONS
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