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[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3 Introduced in House (IH)]
<DOC>
116th CONGRESS
1st Session
H. R. 3
To establish a fair price negotiation program, protect the Medicare
program from excessive price increases, and establish an out-of-pocket
maximum for Medicare part D enrollees, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 19, 2019
Mr. Pallone (for himself, Mr. Neal, and Mr. Scott of Virginia)
introduced the following bill; which was referred to the Committee on
Energy and Commerce, and in addition to the Committees on Ways and
Means, and Education and Labor, for a period to be subsequently
determined by the Speaker, in each case for consideration of such
provisions as fall within the jurisdiction of the committee concerned
_______________________________________________________________________
A BILL
To establish a fair price negotiation program, protect the Medicare
program from excessive price increases, and establish an out-of-pocket
maximum for Medicare part D enrollees, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) In General.--This Act may be cited as the ``Lower Drug Costs
Now Act of 2019''.
(b) Table of Contents.--The table of contents is as follows:
Sec. 1. Short title; table of contents.
TITLE I--LOWERING PRICES THROUGH FAIR DRUG PRICE NEGOTIATION
Sec. 101. Providing for lower prices for certain high-priced single
source drugs.
Sec. 102. Selected drug manufacturer excise tax imposed during
noncompliance periods.
TITLE II--MEDICARE PARTS B AND D PRESCRIPTION DRUG INFLATION REBATES
Sec. 201. Medicare part B rebate by manufacturers.
Sec. 202. Medicare part D rebate by manufacturers.
TITLE III--PART D IMPROVEMENTS AND MAXIMUM OUT-OF-POCKET CAP FOR
MEDICARE BENEFICIARIES
Sec. 301. Medicare part D benefit redesign.
TITLE I--LOWERING PRICES THROUGH FAIR DRUG PRICE NEGOTIATION
SEC. 101. PROVIDING FOR LOWER PRICES FOR CERTAIN HIGH-PRICED SINGLE
SOURCE DRUGS.
(a) Program To Lower Prices for Certain High-Priced Single Source
Drugs.--Title XI of the Social Security Act (42 U.S.C. 1301 et seq.) is
amended by adding at the end the following new part:
``PART E--FAIR PRICE NEGOTIATION PROGRAM TO LOWER PRICES FOR CERTAIN
HIGH-PRICED SINGLE SOURCE DRUGS
``SEC. 1191. ESTABLISHMENT OF PROGRAM.
``(a) In General.--The Secretary shall establish a Fair Price
Negotiation Program (in this part referred to as the `program'). Under
the program, with respect to each price applicability period, the
Secretary shall--
``(1) publish a list of selected drugs in accordance with
section 1192;
``(2) enter into agreements with manufacturers of selected
drugs with respect to such period, in accordance with section
1193;
``(3) negotiate and, if applicable, renegotiate maximum
fair prices for such selected drugs, in accordance with section
1194; and
``(4) carry out the administrative duties described in
section 1196.
``(b) Definitions Relating to Timing.--For purposes of this part:
``(1) Initial price applicability year.--The term `initial
price applicability year' means a plan year (beginning with
plan year 2023) or, if agreed to in an agreement under section
1193 by the Secretary and manufacturer involved, a period of
more than one plan year (beginning on or after January 1,
2023).
``(2) Price applicability period.--The term `price
applicability period' means, with respect to a drug, the period
beginning with the initial price applicability year with
respect to which such drug is a selected drug and ending with
the last plan year during which the drug is a selected drug.
``(3) Selected drug publication date.--The term `selected
drug publication date' means, with respect to each initial
price applicability year, April 15 of the plan year that begins
2 years prior to such year.
``(4) Voluntary negotiation period.--The term `voluntary
negotiation period' means, with respect to an initial price
applicability year with respect to a selected drug, the
period--
``(A) beginning on the sooner of--
``(i) the date on which the manufacturer of
the drug and the Secretary enter into an
agreement under section 1193 with respect to
such drug; or
``(ii) June 15 following the selected drug
publication date with respect to such selected
drug; and
``(B) ending on March 31 of the year that begins
one year prior to the initial price applicability year.
``(c) Other Definitions.--For purposes of this part:
``(1) Fair price eligible individual.--The term `fair price
eligible individual' means, with respect to a selected drug, an
individual who is--
``(A) enrolled under a prescription drug plan under
part D of title XVIII or an MA-PD plan under part C of
such title under which coverage is provided for such
drug;
``(B) enrolled under a group health plan or health
insurance coverage offered in the group or individual
market (as such terms are defined in section 2791 of
the Public Health Service Act) with respect to which
there is in effect an agreement with the Secretary
under section 1197 with respect to such selected drug;
or
``(C) entitled to benefits under part A of title
XVIII or enrolled under part B of such title.
``(2) Maximum fair price.--The term `maximum fair price'
means, with respect to a plan year during a price applicability
period and with respect to a selected drug (as defined in
section 1192(c)) with respect to such period, the price
published pursuant to section 1195 in the Federal Register for
such drug and year.
``(3) Average international market price defined.--
``(A) In general.--The terms `average international
market price' and `AIM price' mean, with respect to a
drug, the average price (which shall be the net average
price, if practicable, and volume-weighted, if
practicable) for any dosage form and strength of a unit
(as defined in subparagraph (C)) for the drug for sales
of such drug, as computed (as of the date of
publication of such drug as a selected drug under
section 1192(a)) in all countries described in clause
(ii) of subparagraph (B) that are applicable countries
(as described in clause (i) of such subparagraph) with
respect to such drug.
``(B) Applicable countries.--
``(i) In general.--For purposes of
subparagraph (A), a country described in clause
(ii) is an applicable country described in this
clause with respect to a drug if there is
available an average price for any unit for the
drug for sales of such drug in such country.
``(ii) Countries described.--For purposes
of this paragraph, the following are countries
described in this clause:
``(I) Australia.
``(II) Canada.
``(III) France.
``(IV) Germany.
``(V) Japan.
``(VI) The United Kingdom.
``(C) Unit.--The term `unit' means, with respect to
a drug, the lowest identifiable quantity (such as a
capsule or tablet, milligram of molecules, or grams) of
the drug that is dispensed.
``SEC. 1192. SELECTION OF NEGOTIATION-ELIGIBLE DRUGS AS SELECTED DRUGS.
``(a) In General.--Not later than the selected drug publication
date with respect to an initial price applicability year, the Secretary
shall select and publish in the Federal Register a list of--
``(1) at least 25 negotiation-eligible drugs described in
subparagraphs (A) and (B), but not subparagraph (C), of
subsection (d)(1) (or, with respect to an initial price
applicability year beginning after 2023, the maximum number (if
such number is less than 25) of such negotiation-eligible drugs
for the year) with respect to such year; and
``(2) all negotiation-eligible drugs described in
subparagraph (C) of such subsection with respect to such year.
Each drug published on the list pursuant to the previous sentence shall
be subject to the negotiation process under section 1194 for the
voluntary negotiation period with respect to such initial price
applicability year (and the renegotiation process under such section as
applicable for any subsequent year during the applicable price
applicability period). In applying this subsection, any negotiation-
eligible drug that is selected under this subsection for an initial
price applicability year shall not count toward the required minimum
amount of drugs to be selected under paragraph (1) for any subsequent
year, including such a drug so selected that is subject to
renegotiation under section 1194.
``(b) Selection of Drugs.--In carrying out subsection (a)(1) the
Secretary shall select for inclusion on the published list described in
subsection (a) with respect to a price applicability period, the
negotiation-eligible drugs that the Secretary projects will result in
the greatest savings to the Federal Government or fair price eligible
individuals during the price applicability period. In making this
projection of savings for drugs for which there is an AIM price for a
price applicability period, the savings shall be projected taking into
consideration both the volume of drugs for which payment is made, to
the extent such data is available, and the amount by which the net
price for the drugs exceeds the AIM price for the drugs.
``(c) Selected Drug.--For purposes of this part, each drug included
on the list published under subsection (a) with respect to an initial
price applicability year shall be referred to as a `selected drug' with
respect to such year and each subsequent plan year beginning before the
first plan year beginning after the date on which the Secretary
determines the drug is no longer a qualifying single source drug.
``(d) Negotiation-Eligible Drug.--
``(1) In general.--For purposes of this part, the term
`negotiation-eligible drug' means, with respect to the selected
drug publication date with respect to an initial price
applicability year, a qualifying single source drug, as defined
in subsection (e), that meets any of the following criteria:
``(A) Covered part d drugs.--The drug is among the
125 covered part D drugs (as defined in section 1860D-
2(e)) for which there was an estimated greatest net
spending under parts C and D of title XVIII, as
determined by the Secretary, during the most recent
plan year prior to such drug publication date for which
data are available.
``(B) Other drugs.--The drug is among the 125 drugs
for which there was an estimated greatest net spending
in the United States, as determined by the Secretary,
during the most recent plan year prior to such drug
publication date for which data are available.
``(C) Insulin.--The drug is a qualifying single
source drug described in subsection (e)(3).
``(2) Clarification.--In determining whether a qualifying
single source drug satisfies any of the criteria described in
paragraph (1), the Secretary shall, to the extent practicable,
use data that is aggregated across strengths and dosage forms
and routes of administration of the drug.
``(3) Publication.--Not later than the selected drug
publication date with respect to an initial price applicability
year, the Secretary shall publish in the Federal Register a
list of negotiation-eligible drugs with respect to such
selected drug publication date.
``(e) Qualifying Single Source Drug.--For purposes of this part,
the term `qualifying single source drug' means any of the following:
``(1) Drug products.--A drug that--
``(A) is approved under section 505(c) of the
Federal Food, Drug, and Cosmetic Act and continues to
be marketed pursuant to such approval; and
``(B) is not the listed drug for any drug that is
approved and continues to be marketed under section
505(j) of such Act.
``(2) Biological products.--A biological product that--
``(A) is licensed under section 351(a) of the
Public Health Service Act, including any product that
has been deemed to be licensed under section 351 of
such Act pursuant to section 7002(e)(4) of the
Biologics Price Competition and Innovation Act of 2009,
and continues to be marketed under section 351 of such
Act; and
``(B) is not the reference product for any
biological product that is licensed and continues to be
marketed under section 351(k) of such Act.
``(3) Insulin product.--Notwithstanding paragraphs (1) and
(2), any insulin product that is approved under subsection (c)
or (j) of section 505 of the Federal Food, Drug, and Cosmetic
Act or licensed under subsection (a) or (k) of section 351 of
the Public Health Service Act and continues to be marketed
under such section 505 or 351.
For purposes of applying paragraphs (1)(B) and (2)(B), a drug or
biological product that is marketed by the same sponsor or manufacturer
(or an affiliate thereof or a cross-licensed producer or distributor)
as the listed drug or reference product described in such respective
paragraph shall not be taken into consideration.
``(f) Information on International Drug Prices.--For purposes of
determining which negotiation-eligible drugs to select under subsection
(a) and, in the case of such drugs that are selected drugs, to
determine the maximum fair price of such drug and whether such maximum
fair price should be renegotiated under section 1194, the Secretary
shall use data relating to the AIM price with respect to such drugs as
available or provided to the Secretary and shall on an ongoing basis
request from manufacturers of selected drugs information on the AIM
price of such drugs.
``SEC. 1193. MANUFACTURER AGREEMENTS.
``(a) In General.--For purposes of section 1191(a)(2), the
Secretary shall enter into agreements with manufacturers of selected
drugs with respect to a price applicability period, by not later than
June 15 following the selected drug publication date with respect to
such selected drug, under which--
``(1) during the voluntary negotiation period for the
initial price applicability year for the selected drug, the
Secretary and manufacturer, in accordance with section 1194,
negotiate to determine (and, by not later than the last date of
such period and in accordance with subsection (c), agree to) a
maximum fair price for the selected drug of the manufacturer in
order to provide access to such price--
``(A) to fair price eligible individuals described
in subparagraph (A) or (B) of section 1191(c)(1)
furnished such drug during, subject to subparagraph
(2), the price applicability period; and
``(B) to hospitals, physicians, and other providers
of services and suppliers with respect to fair price
eligible individuals described in subparagraph (C) of
such section administered such drug during, subject to
subparagraph (2), the price applicability period;
``(2) the Secretary and the manufacturer shall, in
accordance with a process and during a period specified by the
Secretary pursuant to rulemaking, renegotiate (and, by not
later than the last date of such period and in accordance with
subsection (c), agree to) the maximum fair price for the drug
if the Secretary determines that there is a material change in
any of the factors described in section 1194(d) relating to the
drug, including changes in the AIM price for the drug, in order
to provide access to such maximum fair price (as so
renegotiated)--
``(A) to fair price eligible individuals described
in subparagraph (A) or (B) of section 1191(c)(1)
furnished such drug during any year during the price
applicability period (beginning after such
renegotiation) with respect to such selected drug; and
``(B) to hospitals, physicians, and other providers
of services and suppliers with respect to fair price
eligible individuals described in subparagraph (C) of
such section administered such drug during any year
described in subparagraph (A);
``(3) the maximum fair price (including as renegotiated
pursuant to paragraph (2)), with respect to such a selected
drug, shall be provided to fair price eligible individuals
described in subparagraph (A) or (B) of section 1191(c)(1) at
the pharmacy or by the mail order service at the point-of-sale
of such drug;
``(4) the manufacturer, subject to subsection (c), submits
to the Secretary, in a form and manner specified by the
Secretary--
``(A) for the voluntary negotiation period for the
price applicability period (and, if applicable, before
any period of renegotiation specified pursuant to
paragraph (2)) with respect to such drug all
information that the Secretary requires to carry out
the negotiation (or renegotiation process) under this
part, including information described in section
1192(f) and section 1194(d)(1); and
``(B) on an ongoing basis, information on changes
in prices for the drug that would affect the AIM price
for the drug or otherwise provide a basis for
renegotiation of the maximum fair price of such drug
pursuant to paragraph (2);
``(5) the manufacturer agrees that in the case the selected
drug of a manufacturer is a drug described in subsection (c),
the manufacturer will, in accordance with such subsection, make
any payment required under such subsection with respect to such
drug; and
``(6) the manufacturer complies with requirements imposed
by the Secretary for purposes of administering the program,
including with respect to the duties described in section 1196.
``(b) Agreement in Effect Until Drug Is No Longer a Selected
Drug.--An agreement entered into under this section shall be effective,
with respect to a drug, until such drug is no longer considered a
selected drug under section 1192(c).
``(c) Special Rule for Certain Selected Drugs Without AIM Price.--
``(1) In general.--In the case of a selected drug for which
there is no AIM price available with respect to the initial
price applicability year for such drug and for which an AIM
price becomes available beginning with respect to a subsequent
plan year during the price applicability period for such drug,
if the Secretary determines that the amount described in
paragraph (2)(A) for such drug is greater than the amount
described in paragraph (2)(B) for such drug, then by not later
than one year after the date of such determination, the
manufacturer of such selected drug shall pay to the Treasury an
amount equal to the difference between such amount described in
paragraph (2)(A) for such drug and such amount described in
paragraph (2)(B) for such drug.
``(2) Amounts described.--
``(A) Weighted average price before aim price
available.--For purposes of paragraph (1), the amount
described in this subparagraph for a selected drug
described in such paragraph, is the amount equal to the
weighted average manufacturer price for such dosage
strength and form for the drug during the period
beginning with the first plan year for which the drug
is included on the list of negotiation-eligible drugs
published under section 1192(d) and ending with the
last plan year during the price applicability period
for such drug with respect to which there is no AIM
price available for such drug.
``(B) Amount multiplier after aim price
available.--For purposes of paragraph (1), the amount
described in this subparagraph for a selected drug
described in such paragraph, is the amount equal to 200
percent of the AIM price for such drug with respect to
the first plan year during the price applicability
period for such drug with respect to which there is an
AIM price available for such drug.
``(d) Confidentiality of Information.--Information submitted to the
Secretary under this part by a manufacturer of a selected drug that is
proprietary information of such manufacturer (as determined by the
Secretary) may be used only by the Secretary or disclosed to and used
by the Comptroller General of the United States or the Medicare Payment
Advisory Commission for purposes of carrying out this part.
``(e) Regulations.--
``(1) In general.--The Secretary shall, pursuant to
rulemaking, specify, in accordance with paragraph (2), the
information that must be submitted under subsection (a)(4).
``(2) Information specified.--Information described in
paragraph (1), with respect to a selected drug, shall include
information on sales of the drug (by the manufacturer of the
drug or by another entity under license or other agreement with
the manufacturer, with respect to the sales of such drug,
regardless of the name under which the drug is sold) in any
foreign country that is part of the AIM price. The Secretary
shall verify, to the extent practicable, such sales from
appropriate officials of the government of the foreign country
involved.
``(f) Compliance With Requirements for Administration of Program.--
Each manufacturer with an agreement in effect under this section shall
comply with requirements imposed by the Secretary or a third party with
a contract under section 1196(c)(1), as applicable, for purposes of
administering the program.
``SEC. 1194. NEGOTIATION AND RENEGOTIATION PROCESS.
``(a) In General.--For purposes of this part, under an agreement
under section 1193 between the Secretary and a manufacturer of a
selected drug, with respect to the period for which such agreement is
in effect and in accordance with subsections (b) and (c), the Secretary
and the manufacturer--
``(1) shall during the voluntary negotiation period with
respect to the initial price applicability year for such drug,
in accordance with this section, negotiate a maximum fair price
for such drug for the purpose described in section 1193(a)(1);
and
``(2) as applicable pursuant to section 1193(a)(2) and in
accordance with the process specified pursuant to such section,
renegotiate such maximum fair price for such drug for the
purpose described in such section.
``(b) Negotiating Methodology and Objective.--
``(1) In general.--The Secretary shall develop and use a
consistent methodology for negotiations under subsection (a)
that, in accordance with paragraph (2) and subject to paragraph
(3), achieves the lowest maximum fair price for each selected
drug while appropriately rewarding innovation.
``(2) Prioritizing factors.--In considering the factors
described in subsection (d) in negotiating (and, as applicable,
renegotiating) the maximum fair price for a selected drug, the
Secretary shall, to the extent practicable, consider all of the
available factors listed but shall prioritize the following
factors:
``(A) Research and development costs.--The factor
described in paragraph (1)(A) of subsection (d).
``(B) Market data.--The factor described in
paragraph (1)(B) of such subsection.
``(C) Unit costs of production and distribution.--
The factor described in paragraph (1)(C) of such
subsection.
``(D) Comparison to existing therapeutic
alternatives.--The factor described in paragraph (2)(A)
of such subsection.
``(3) Requirement.--
``(A) In general.--In negotiating the maximum fair
price of a selected drug, with respect to an initial
price applicability year for the selected drug, and, as
applicable, in renegotiating the maximum fair price for
such drug, with respect to a subsequent year during the
price applicability period for such drug, in the case
that the manufacturer of the selected drug offers under
the negotiation or renegotiation, as applicable, a
price for such drug that is not more than the target
price described in subparagraph (B) for such drug for
the respective year, the Secretary shall agree under
such negotiation or renegotiation, respectively, to
such offered price as the maximum fair price.
``(B) Target price.--
``(i) In general.--Subject to clause (ii),
the target price described in this subparagraph
for a selected drug with respect to a year, is
the average price (which shall be the net
average price, if practicable, and volume-
weighted, if practicable) for any dosage form
and strength of a unit for the drug for sales
of such drug, as computed in the applicable
country described in section 1191(c)(3)(B) with
respect to such drug that, with respect to such
year, has the lowest average price for such
drug as compared to the average prices (as so
computed) for such drug with respect to such
year in the other applicable countries
described in such section with respect to such
drug.
``(ii) Selected drugs without aim price.--
In applying this paragraph in the case of
negotiating the maximum fair price of a
selected drug for which there is no AIM price
available with respect to the initial price
applicability year for such drug, or, as
applicable, renegotiating the maximum fair
price for such drug with respect to a
subsequent year during the price applicability
period for such drug before the first plan year
for which there is an AIM price available for
such drug, the target price described in this
subparagraph for such drug and respective year
is the amount that is 80 percent of the average
manufacturer price for such drug and year.
``(4) Annual report.--After the completion of each
voluntary negotiation period, the Secretary shall submit to
Congress a report on the maximum fair prices negotiated (or, as
applicable, renegotiated) for such period. Such report shall
include information on how such prices so negotiated (or
renegotiated) meet the requirements of this part, including the
requirements of this subsection.
``(c) Limitation.--
``(1) In general.--Subject to paragraph (2), the maximum
fair price negotiated (including as renegotiated) under this
section for a selected drug, with respect to each plan year
during a price applicability period for such drug, shall not
exceed 120 percent of the AIM price applicable to such drug
with respect to such year.
``(2) Selected drugs without aim price.--In the case of a
selected drug for which there is no AIM price available with
respect to the initial price applicability year for such drug,
for each plan year during the price applicability period before
the first plan year for which there is an AIM price available
for such drug, the maximum fair price negotiated (including as
renegotiated) under this section for the selected drug shall
not exceed the amount equal to 85 percent of the average
manufacturer price for the drug with respect to such year.
``(d) Considerations.--For purposes of negotiating and, as
applicable, renegotiating (including for purposes of determining
whether to renegotiate) the maximum fair price of a selected drug under
this part with the manufacturer of the drug, the Secretary shall,
consistent with subsection (b)(2), take into consideration the
following factors:
``(1) Manufacturer-specific information.--The following
information, including as submitted by the manufacturer:
``(A) Research and development costs of the
manufacturer for the drug and the extent to which the
manufacturer has recouped research and development
costs.
``(B) Market data for the drug, including the
distribution of sales across different programs and
purchasers and projected future revenues for the drug.
``(C) Unit costs of production and distribution of
the drug.
``(D) Prior Federal financial support for novel
therapeutic discovery and development with respect to
the drug.
``(E) Data on patent and on existing and pending
exclusivity for the drug.
``(F) National sales data for the drug.
``(G) Information on clinical trials for the drug
in the United States or in applicable countries
described in section 1191(c)(3)(B).
``(2) Information on alternative products.--The following
information:
``(A) The extent to which the drug represents a
therapeutic advance as compared to existing therapeutic
alternatives and, to the extent such information is
available, the costs of such existing therapeutic
alternatives.
``(B) Information on approval by the Food and Drug
Administration of alternative drug products.
``(C) Information on comparative effectiveness
analysis for such products.
``(3) Foreign sales information.--To the extent available
on a timely basis, including as provided by a manufacturer of
the selected drug or otherwise, information on sales of the
selected drug in each of the countries described in section
1191(c)(3)(B).
``(4) Additional information.--Information submitted to the
Secretary, in accordance with a process specified by the
Secretary, by other parties that are affected by the
establishment of a maximum fair price for the selected drug.
``(e) Request for Information.--For purposes of negotiating and, as
applicable, renegotiating (including for purposes of determining
whether to renegotiate) the maximum fair price of a selected drug under
this part with the manufacturer of the drug, with respect to a price
applicability period, and other relevant data for purposes of this
section--
``(1) the Secretary shall, not later than the selected drug
publication date with respect to the initial price
applicability year of such period, request drug pricing
information from the manufacturer of such selected drug,
including information described in subsection (d)(1); and
``(2) by not later than October 1 following the selected
drug publication date, the manufacturer of such selected drug
shall submit to the Secretary such requested information in
such form and manner as the Secretary may require.
The Secretary shall request, from the manufacturer or others, such
additional information as may be needed to carry out the negotiation
and renegotiation process under this section.
``SEC. 1195. PUBLICATION OF MAXIMUM FAIR PRICES.
``(a) In General.--With respect to an initial price applicability
year and selected drug with respect to such year, not later than May 1
of the plan year prior to such initial price applicability year, the
Secretary shall publish in the Federal Register the maximum fair price
negotiated under this part with the manufacturer of such drug.
``(b) Updates.--
``(1) Subsequent year maximum fair prices.--For a selected
drug, for each plan year subsequent to the initial price
applicability year for such drug with respect to which an
agreement for such drug is in effect under section 1193, the
Secretary shall publish in the Federal Register--
``(A) subject to subparagraph (B), the amount equal
to the maximum fair price published for such drug for
the previous year, increased by the annual percentage
increase in the consumer price index for all urban
consumers (all items; U.S. city average) as of
September of such previous year; or
``(B) in the case the maximum fair price for such
drug was renegotiated, for the first year for which
such price as so renegotiated applies, such
renegotiated maximum fair price.
``(2) Prices negotiated after deadline.--In the case of a
selected drug with respect to an initial price applicability
year for which the maximum fair price is determined under this
part after the date of publication under this section, the
Secretary shall publish such maximum fair price in the Federal
Register by not later than 30 days after the date such maximum
price is so determined.
``SEC. 1196. ADMINISTRATIVE DUTIES; COORDINATION PROVISIONS.
``(a) Administrative Duties.--
``(1) In general.--For purposes of section 1191, the
administrative duties described in this section are the
following:
``(A) The establishment of procedures (including
through agreements with manufacturers under this part,
contracts with prescription drug plans under part D of
title XVIII and MA-PD plans under part C of such title,
and agreements under section 1197 with group health
plans and health insurance issuers of health insurance
coverage offered in the individual or group market)
under which the maximum fair price for a selected drug
is provided to fair price eligible individuals
described in subparagraph (A) or (B) of section
1191(c)(1) at pharmacies or by mail order service at
the point-of-sale of the drug for the applicable price
period for such drug and providing that such maximum
fair price is used for determining cost-sharing under
such plans or coverage for the selected drug.
``(B) The establishment of procedures (including
through agreements with manufacturers under this part
and contracts with hospitals, physicians, and other
providers of services and suppliers) under which, in
the case of a selected drug administered by such a
hospital, physician, or other provider of services or
supplier to fair price eligible individuals described
in subparagraph (C) of section 1191(c)(1) and if
payment for such drug may be made under part A of title
XVIII or part B of such title, the maximum fair price
for the selected drug is provided to such hospitals,
physicians, and other providers of services and
suppliers (as applicable) and providing that such
maximum fair price is used for determining cost-sharing
under the respective part, for the selected drug.
``(C) The establishment of procedures (including
through agreements and contracts described in
subparagraphs (A) and (B)) to ensure that, not later
than 90 days after the dispensing of a selected drug to
a fair price eligible individual by a pharmacy or mail
order service, the pharmacy or mail order service is
reimbursed for an amount equal to the difference
between--
``(i) the lesser of--
``(I) the wholesale acquisition
cost of the drug;
``(II) the national average drug
acquisition cost of the drug; and
``(III) any other similar
determination of pharmacy acquisition
costs of the drug, as determined by the
Secretary; and
``(ii) the maximum fair price for the drug.
``(D) The establishment of procedures to ensure
that the maximum fair price for a selected drug is
applied before--
``(i) any coverage or financial assistance
under other health benefit plans or programs
that provide coverage or financial assistance
for the purchase or provision of prescription
drug coverage on behalf of fair price eligible
individuals as the Secretary may specify; and
``(ii) any other discounts.
``(E) The establishment of procedures to enter into
appropriate agreements and protocols for the ongoing
computation of AIM prices for selected drugs,
including, to the extent possible, to compute the AIM
price for selected drugs and including by providing
that the manufacturer of such a selected drug should
provide information for such computation not later than
3 months after the first date of the voluntary
negotiation period for such selected drug.
``(F) The establishment of procedures to compute
and apply the maximum fair price across different
strengths and dosage forms of a selected drug that are
not based on the specific formulation, dosage or
strength, packaging, or form of administration.
``(G) The establishment of procedures to negotiate
and apply the maximum fair price in a manner that does
not include any dispensing or similar fee.
``(H) The establishment of procedures to carry out
the provisions of this part with respect to--
``(i) fair price eligible individuals who
are enrolled under a prescription drug plan
under part D of title XVIII or an MA-PD plan
under part C of such title; and
``(ii) fair price eligible individuals who
are enrolled under a group health plan or
health insurance coverage offered by a health
insurance issuer in the individual or group
market with respect to which there is an
agreement in effect under section 1197.
``(I) The establishment of a negotiation process
and renegotiation process in accordance with section
1194, including a process for acquiring information
described in subsection (d) of such section and
determining amounts described in subsection (b) of such
section.
``(J) The provision of a reasonable dispute
resolution mechanism to resolve disagreements between
manufacturers, fair price eligible individuals, and the
third party with a contract under subsection (c)(1).
``(2) Monitoring compliance.--
``(A) In general.--The Secretary shall monitor
compliance by a manufacturer with the terms of an
agreement under section 1193, including by establishing
a mechanism through which violations of such terms may
be reported.
``(B) Notification.--If a third party with a
contract under subsection (c)(1) determines that the
manufacturer is not in compliance with such agreement,
the third party shall notify the Secretary of such
noncompliance for appropriate enforcement under section
4192 of the Internal Revenue Code of 1986 or section
1198, as applicable.
``(b) Collection of Data.--
``(1) From prescription drug plans and ma-pd plans.--The
Secretary may collect appropriate data from prescription drug
plans under part D of title XVIII and MA-PD plans under part C
of such title in a timeframe that allows for maximum fair
prices to be provided under this part for selected drugs.
``(2) From health plans.--The Secretary may collect
appropriate data from group health plans or health insurance
issuers offering group or individual health insurance coverage
in a timeframe that allows for maximum fair prices to be
provided under this part for selected drugs.
``(c) Contract With Third Parties.--
``(1) In general.--The Secretary shall enter into a
contract with 1 or more third parties to administer the
requirements established by the Secretary in order to carry out
this part. At a minimum, the contract with a third party under
the preceding sentence shall require that the third party--
``(A) receive and transmit information between the
Secretary, manufacturers, and other individuals or
entities the Secretary determines appropriate;
``(B) receive, distribute, or facilitate the
distribution of funds of manufacturers to appropriate
individuals or entities in order to meet the
obligations of manufacturers under agreements under
this part;
``(C) provide adequate and timely information to
manufacturers, consistent with the agreement with the
manufacturer under this part, as necessary for the
manufacturer to fulfill its obligations under this
part; and
``(D) permit manufacturers to conduct periodic
audits, directly or through contracts, of the data and
information used by the third party to determine
discounts for applicable drugs of the manufacturer
under the program.
``(2) Performance requirements.--The Secretary shall
establish performance requirements for a third party with a
contract under paragraph (1) and safeguards to protect the
independence and integrity of the activities carried out by the
third party under the program under this part.
``(d) Coordination With 340B Program.--In the case of a
manufacturer of a selected drug, with respect to an initial price
applicability year, for each year with respect to which a maximum fair
price is applied under this part for such drug, such drug shall not be
considered a covered outpatient drug subject to an agreement under
section 340B of the Public Health Service Act.
``SEC. 1197. VOLUNTARY PARTICIPATION BY OTHER HEALTH PLANS.
``(a) In General.--Under the program under this part the Secretary
shall be treated as having in effect an agreement with a group health
plan or health insurance issuer offering health insurance coverage (as
such terms are defined in section 2791 of the Public Health Service
Act), except in the case that such a plan or issuer affirmatively
elects not to participate under the program, through a process
specified by the Secretary, with respect to a price applicability
period and a selected drug with respect to such period with respect to
which coverage is provided under such plan or coverage.
``(b) Publication of Election.--With respect to each price
applicability period and each selected drug with respect to such
period, the Secretary and the Secretary of Labor and the Secretary of
the Treasury, as applicable, shall make public a list of each group
health plan and each issuer of health insurance coverage, with respect
to which coverage is provided under such plan or coverage for such
drug, that has elected under subsection (a) not to participate under
the program with respect to such period and drug.
``SEC. 1198. CIVIL MONETARY PENALTY.
``(a) Violations Relating To Offering of Maximum Fair Price.--Any
manufacturer of a selected drug that has entered into an agreement
under section 1193, with respect to a plan year during the price
applicability period for such drug, that does not provide access to a
price that is not more than the maximum fair price (or a lesser price)
for such drug for such year--
``(1) to a fair price eligible individual described in
subparagraph (A) or (B) of section 1191(c)(1) furnished such
drug during such year; or
``(2) to a hospital, physician, or other provider of
services or supplier with respect to fair price eligible
individuals described in subparagraph (C) of such section
administered such drug during such year;
shall be subject to a civil monetary penalty equal to ten times the
amount equal to the difference between the price for such drug made
available by such manufacturer with respect to such individual or
hospital, physician, provider, or supplier and the maximum fair price
for such drug for such year.
``(b) Violations of Certain Terms of Agreement.--Any manufacturer
of a selected drug that has entered into an agreement under section
1193, with respect to a plan year during the price applicability period
for such drug, that is in violation of a requirement imposed pursuant
to section 1193(a)(6) shall be subject to a civil monetary penalty of
not more than $1,000,000 for each such violation.
``(c) Application.--The provisions of section 1128A (other than
subsections (a) and (b)) shall apply to a civil monetary penalty under
this section in the same manner as such provisions apply to a penalty
or proceeding under section 1128A(a).
``SEC. 1199. MISCELLANEOUS PROVISIONS.
``(a) Paperwork Reduction Act.--Chapter 35 of title 44, United
States Code, shall not apply to data collected under this part.
``(b) National Academy of Medicine Study.--Not later than December
31, 2025, the National Academy of Medicine shall conduct a study, and
submit to Congress a report, on recommendations for improvements to the
program under this part, including the determination of the limits
applied under section 1194(c).
``(c) MedPAC Study.--Not later than December 31, 2025, the Medicare
Payment Advisory Commission shall conduct a study, and submit to
Congress a report, on the program under this part with respect to the
Medicare program under title XVIII, including with respect to the
effect of the program on individuals entitled to benefits or enrolled
under such title.
``(d) Limitation on Judicial Review.--The following shall not be
subject to judicial review:
``(1) The selection of drugs for publication under section
1192(a).
``(2) The determination of whether a drug is a negotiation-
eligible drug under section 1192(d).
``(3) The determination of the maximum fair price of a
selected drug under section 1194.
``(4) The determination of units of a drug for purposes of
section 1191(c)(3).
``(e) Coordination.--In carrying out this part with respect to
group health plans or health insurance coverage offered in the group
market that are subject to oversight by the Secretary of Labor or the
Secretary of the Treasury, the Secretary of Health and Human Services
shall coordinate with such respective Secretary.
``(f) Data Sharing.--The Secretary shall share with the Secretary
of the Treasury such information as is necessary to determine the tax
imposed by section 4192 of the Internal Revenue Code of 1986.''.
(b) Application of Maximum Fair Prices and Conforming Amendments.--
(1) Under medicare prescription drug program.--
(A) Exception to non-interference.--Section 1860D-
11(i) of the Social Security Act (42 U.S.C. 1395w-
111(i)) is amended by inserting ``, except as provided
under part E of title XI,'' after ``the Secretary''.
(B) Application as negotiated price.--Section
1860D-2(d)(1) of the Social Security Act (42 U.S.C.
1395w-102(d)(1)) is amended--
(i) in subparagraph (B), by inserting ``,
subject to subparagraph (D),'' after
``negotiated prices''; and
(ii) by adding at the end the following new
subparagraph:
``(D) Application of maximum fair price for
selected drugs.--In applying this section, in the case
of a covered part D drug that is a selected drug (as
defined in section 1192(c)), with respect to a price
applicability period (as defined in section
1191(b)(2)), the negotiated price described in this
subsection shall be the maximum fair price (as defined
in section 1191(c)(2)) for such drug and for each plan
year during such period.''.
(C) Information from prescription drug plans and
ma-pd plans required.--
(i) Prescription drug plans.--Section
1860D-12(b) of the Social Security Act (42
U.S.C. 1395w-112(b)) is amended by adding at
the end the following new paragraph:
``(8) Provision of information related to maximum fair
prices.--Each contract entered into with a PDP sponsor under
this part with respect to a prescription drug plan offered by
such sponsor shall require the sponsor to provide information
to the Secretary as requested by the Secretary in accordance
with section 1196(b).''.
(ii) 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:
``(E) Provision of information related to maximum
fair prices.--Section 1860D-12(b)(8).''.
(2) Under group health plans and health insurance
coverage.--
(A) PHSA.--Part A of title XXVII of the Public
Health Service Act is amended by inserting after
section 2729 the following new section:
``SEC. 2729A. FAIR PRICE DRUG NEGOTIATION PROGRAM AND APPLICATION OF
MAXIMUM FAIR PRICES.
``(a) In General.--In the case of a group health plan or health
insurance issuer offering health insurance coverage that is treated
under section 1197 of the Social Security Act as having in effect an
agreement with the Secretary under the Fair Price Drug Negotiation
Program under part E of title XI of such Act, with respect to a price
applicability period (as defined in section 1191(b) of such Act) and a
selected drug (as defined in section 1192(c) of such Act) with respect
to such period with respect to which coverage is provided under such
plan or coverage--
``(1) the provisions of such part shall apply to the plans
or coverage offered by such plan or issuer, and to the
individuals enrolled under such plans or coverage, during such
period, with respect to such selected drug, in the same manner
as such provisions apply to prescription drug plans and MA-PD
plans, and to individuals enrolled under such prescription drug
plans and MA-PD plans;
``(2) the plan or issuer shall apply any cost-sharing
responsibilities under such plan or coverage, with respect to
such selected drug, by substituting the maximum fair price
negotiated under such part for such drug in lieu of the
contracted rate under such plan or coverage for such selected
drug; and
``(3) the Secretary shall apply the provisions of such part
to such plan, issuer, and coverage, and such individuals so
enrolled in such plans.
``(b) Notification Regarding Nonparticipation in Fair Drug Price
Negotiation Program.--A group health plan or a health insurance issuer
offering group or individual health insurance coverage shall publicly
disclose in a manner and in accordance with a process specified by the
Secretary any election made under section 1197 of the Social Security
Act by the plan or issuer to not participate in the Fair Drug Price
Negotiation Program under part E of title XI of such Act with respect
to a selected drug (as defined in section 1192(c) of such Act) for
which coverage is provided under such plan or coverage before the
beginning of the plan year for which such election was made.''.
(B) ERISA.--
(i) In general.--Subpart B of part 7 of
subtitle B of title I of the Employee
Retirement Income Security Act of 1974 (29
U.S.C. 1181 et. seq.) is amended by adding at
the end the following new section:
``SEC. 716. FAIR PRICE DRUG NEGOTIATION PROGRAM AND APPLICATION OF
MAXIMUM FAIR PRICES.
``(a) In General.--In the case of a group health plan or health
insurance issuer offering group health insurance coverage that is
treated under section 1197 of the Social Security Act as having in
effect an agreement with the Secretary under the Fair Price Drug
Negotiation Program under part E of title XI of such Act, with respect
to a price applicability period (as defined in section 1191(b) of such
Act) and a selected drug (as defined in section 1192(c) of such Act)
with respect to such period with respect to which coverage is provided
under such plan or coverage--
``(1) the provisions of such part shall apply to the plans
or coverage offered by such plan or issuer, and to the
individuals enrolled under such plans or coverage, during such
period, with respect to such selected drug, in the same manner
as such provisions apply to prescription drug plans and MA-PD
plans, and to individuals enrolled under such prescription drug
plans and MA-PD plans;
``(2) the plan or issuer shall apply any cost-sharing
responsibilities under such plan or coverage, with respect to
such selected drug, by substituting the maximum fair price
negotiated under such part for such drug in lieu of the
contracted rate under such plan or coverage for such selected
drug; and
``(3) the Secretary shall apply the provisions of such part
to such plan, issuer, and coverage, and such individuals so
enrolled in such plans.
``(b) Notification Regarding Nonparticipation in Fair Drug Price
Negotiation Program.--A group health plan or a health insurance issuer
offering group health insurance coverage shall publicly disclose in a
manner and in accordance with a process specified by the Secretary any
election made under section 1197 of the Social Security Act by the plan
or issuer to not participate in the Fair Drug Price Negotiation Program
under part E of title XI of such Act with respect to a selected drug
(as defined in section 1192(c) of such Act) for which coverage is
provided under such plan or coverage before the beginning of the plan
year for which such election was made.''.
(ii) Clerical amendment.--The table of
sections for part 7 of subtitle B of title I of
the Employee Retirement Income Security Act of
1974 is amended by adding at the end the
following:
``Sec. 716. Fair Price Drug Negotiation Program and application of
maximum fair prices.''.
(C) IRC.--
(i) In general.--Subchapter B of chapter
100 of the Internal Revenue Code of 1986 is
amended by adding at the end the following new
section:
``SEC. 9816. FAIR PRICE DRUG NEGOTIATION PROGRAM AND APPLICATION OF
MAXIMUM FAIR PRICES.
``(a) In General.--In the case of a group health plan that is
treated under section 1197 of the Social Security Act as having in
effect an agreement with the Secretary under the Fair Price Drug
Negotiation Program under part E of title XI of such Act, with respect
to a price applicability period (as defined in section 1191(b) of such
Act) and a selected drug (as defined in section 1192(c) of such Act)
with respect to such period with respect to which coverage is provided
under such plan--
``(1) the provisions of such part shall apply to the plans
offered by such plan, and to the individuals enrolled under
such plans, during such period, with respect to such selected
drug, in the same manner as such provisions apply to
prescription drug plans and MA-PD plans, and to individuals
enrolled under such prescription drug plans and MA-PD plans;
``(2) the plan shall apply any cost-sharing
responsibilities under such plan, with respect to such selected
drug, by substituting the maximum fair price negotiated under
such part for such drug in lieu of the contracted rate under
such plan for such selected drug; and
``(3) the Secretary shall apply the provisions of such part
to such plan and such individuals so enrolled in such plan.
``(b) Notification Regarding Nonparticipation in Fair Drug Price
Negotiation Program.--A group health plan shall publicly disclose in a
manner and in accordance with a process specified by the Secretary any
election made under section 1197 of the Social Security Act by the plan
to not participate in the Fair Drug Price Negotiation Program under
part E of title XI of such Act with respect to a selected drug (as
defined in section 1192(c) of such Act) for which coverage is provided
under such plan before the beginning of the plan year for which such
election was made.''.
(ii) Clerical amendment.--The table of
sections for subchapter B of chapter 100 of
such Code is amended by adding at the end the
following new item:
``Sec. 9816. Fair Price Drug Negotiation Program and application of
maximum fair prices.''.
SEC. 102. SELECTED DRUG MANUFACTURER EXCISE TAX IMPOSED DURING
NONCOMPLIANCE PERIODS.
(a) In General.--Subchapter E of chapter 32 of the Internal Revenue
Code of 1986 is amended by adding at the end the following new section:
``SEC. 4192. SELECTED DRUGS DURING NONCOMPLIANCE PERIODS.
``(a) In General.--There is hereby imposed on the sale by the
manufacturer, producer, or importer of any selected drug during a day
described in subsection (b) a tax in an amount such that the applicable
percentage is equal to the ratio of--
``(1) such tax, divided by
``(2) the sum of such tax and the price for which so sold.
``(b) Noncompliance Periods.--A day is described in this subsection
with respect to a selected drug if it is a day during one of the
following periods:
``(1) The period beginning on the June 16th immediately
following the selected drug publication date and ending on the
first date during which the manufacturer of the drug has in
place an agreement described in subsection (a) of section 1193
of the Social Security Act with respect to such drug.
``(2) The period beginning on the April 1st immediately
following the June 16th described in paragraph (1) and ending
on the first date during which the manufacturer of the drug has
agreed to a maximum fair price under such agreement.
``(3) In the case of a selected drug with respect to which
the Secretary of Health and Human Services has specified a
renegotiation period under such agreement, the period beginning
on the first date after the last date of such renegotiation
period and ending on the first date during which the
manufacturer of the drug has agreed to a renegotiated maximum
fair price under such agreement.
``(4) With respect to information that is required to be
submitted to the Secretary of Health and Human Services under
such agreement, the period beginning on the date on which such
Secretary certifies that such information is overdue and ending
on the date that such information is so submitted.
``(5) In the case of a selected drug with respect to which
a payment is due under subsection (c) of such section 1193, the
period beginning on the date on which the Secretary of Health
and Human Services certifies that such payment is overdue and
ending on the date that such payment is made in full.
``(c) Applicable Percentage.--The term `applicable percentage'
means--
``(1) in the case of sales of a selected drug during the
first 90 days described in subsection (b) with respect to such
drug, 65 percent,
``(2) in the case of sales of such drug during the 91st day
through the 180th day described in subsection (b) with respect
to such drug, 75 percent,
``(3) in the case of sales of such drug during the 181st
day through the 270th day described in subsection (b) with
respect to such drug, 85 percent, and
``(4) in the case of sales of such drug during any
subsequent day, 95 percent.
``(d) Definitions.--The terms `selected drug publication date' and
`maximum fair price' have the meaning given such terms in section 1191
of the Social Security Act and the term `selected drug' has the meaning
given such term in section 1192 of such Act.
``(e) Anti-Abuse Rule.--In the case of a sale which was timed for
the purpose of avoiding the tax imposed by this section, the Secretary
may treat such sale as occurring during a day described in subsection
(b).''.
(b) No Deduction for Excise Tax Payments.--Section 275 of the
Internal Revenue Code of 1986 is amended by adding ``or by section
4192'' before the period at the end of subsection (a)(6).
(c) Conforming Amendments.--
(1) Section 4221(a) of the Internal Revenue Code of 1986 is
amended by inserting ``or 4192'' after ``section 4191''.
(2) Section 6416(b)(2) of such Code is amended by inserting
``or 4192'' after ``section 4191''.
(d) Clerical Amendments.--
(1) The heading of subchapter E of chapter 32 of the
Internal Revenue Code of 1986 is amended by striking ``Medical
Devices'' and inserting ``Other Medical Products''.
(2) The table of subchapters for chapter 32 of such Code is
amended by striking the item relating to subchapter E and
inserting the following new item:
``subchapter e. other medical products''.
(3) The table of sections for subchapter E of chapter 32 of
such Code is amended by adding at the end the following new
item:
``Sec. 4192. Selected drugs during noncompliance periods.''.
(e) Effective Date.--The amendments made by this section shall
apply to sales after the date of the enactment of this Act.
TITLE II--MEDICARE PARTS B AND D PRESCRIPTION DRUG INFLATION REBATES
SEC. 201. MEDICARE PART B REBATE BY MANUFACTURERS.
(a) In General.--Section 1834 of the Social Security Act (42 U.S.C.
1395m) is amended by adding at the end the following new subsection:
``(x) Rebate by Manufacturers for Single Source Drugs With Prices
Increasing Faster Than Inflation.--
``(1) Requirements.--
``(A) Secretarial provision of information.--Not
later than 6 months after the end of each calendar
quarter beginning on or after July 1, 2021, the
Secretary shall, for each part B rebatable drug, report
to each manufacturer of such part B rebatable drug the
following for such calendar quarter:
``(i) Information on the total number of
billing units described in subparagraph (A)(i)
of paragraph (3) with respect to such drug and
calendar quarter.
``(ii) Information on the amount (if any)
of the excess average sales price increase
described in subparagraph (A)(ii) of such
paragraph for such drug and calendar quarter.
``(iii) The rebate amount specified under
such paragraph for such part B rebatable drug
and calendar quarter.
``(B) Manufacturer requirement.--For each calendar
quarter beginning on or after July 1, 2021, the
manufacturer of a part B rebatable drug shall, for such
drug, not later than 30 days after the date of receipt
from the Secretary of the information described in
subparagraph (A) for such calendar quarter, provide to
the Secretary a rebate that is equal to the amount
specified in paragraph (3) for such drug for such
calendar quarter.
``(2) Part b rebatable drug defined.--
``(A) In general.--In this subsection, the term
`part B rebatable drug' means a single source drug or
biological (as defined in subparagraph (D) of section
1847A(c)(6)), including a biosimilar biological product
(as defined in subparagraph (H) of such section), paid
for under this part, except such term shall not include
such a drug or biological--
``(i) if the average total allowed charges
for a year per individual that uses such a drug
or biological, as determined by the Secretary,
are less than, subject to subparagraph (B),
$100; or
``(ii) that is a vaccine described in
subparagraph (A) or (B) of section 1861(s)(10).
``(B) Increase.--The dollar amount applied under
subparagraph (A)(i)--
``(i) for 2022, shall be the dollar amount
specified under such subparagraph for 2021,
increased by the percentage increase in the
consumer price index for all urban consumers
(United States city average) as of the first
quarter of the previous year; and
``(ii) for a subsequent year, shall be the
dollar amount specified in this clause (or
clause (i)) for the previous year, increased by
the percentage increase in the consumer price
index for all urban consumers (United States
city average) as of the first quarter of the
previous year.
Any dollar amount specified under this subparagraph
that is not a multiple of $10 shall be rounded to the
nearest multiple of $10.
``(3) Rebate amount.--
``(A) In general.--For purposes of paragraph
(1)(B), the amount specified in this paragraph for a
part B rebatable drug assigned to a billing and payment
code for a calendar quarter is, subject to paragraph
(4), the amount equal to the product of--
``(i) subject to subparagraph (B), the
total number of billing units, as described in
section 1847A(b)(6)(B), for such part B
rebatable drug furnished under this part during
the calendar quarter; and
``(ii) the amount (if any) by which--
``(I) the payment amount under
subparagraph (B) or (C) of section
1847A(b)(1), as applicable, for such
part B rebatable drug during the
calendar quarter; exceeds
``(II) the inflation-adjusted
payment amount determined under
subparagraph (C) for such part B
rebatable drug during the calendar
quarter.
``(B) Excluded units.--For purposes of subparagraph
(A)(i), the total number of billing units for part B
rebatable drugs furnished during a calendar quarter
shall not include--
``(i) units packaged into the payment for a
related procedure or service under section
1833(t) or under section 1833(i) (instead of
separately payable under such respective
section);
``(ii) units included under the single
payment system for renal dialysis services
under section 1881(b)(14); or
``(iii) units of a part B rebatable drug of
a manufacturer that is furnished to an
individual, if such manufacturer, with respect
to the furnishing of such units of such drug,
provides for discounts under section 340B of
the Public Health Service Act or for rebates
under section 1927.
``(C) Determination of inflation-adjusted payment
amount.--The inflation-adjusted payment amount
determined under this subparagraph for a part B
rebatable drug for a calendar quarter is--
``(i) the payment amount for the billing
and payment code for such drug in the payment
amount benchmark quarter (as defined in
subparagraph (D)); increased by
``(ii) the percentage by which the rebate
period CPI-U (as defined in subparagraph (F))
for the calendar quarter exceeds the benchmark
period CPI-U (as defined in subparagraph (E)).
``(D) Payment amount benchmark quarter.--The term
`payment amount benchmark quarter' means the calendar
quarter beginning January 1, 2016.
``(E) Benchmark period cpi-u.--The term `benchmark
period CPI-U' means the consumer price index for all
urban consumers (United States city average) for July
2015.
``(F) Rebate period cpi-u.--The term `rebate period
CPI-U' means, with respect to a calendar quarter
described in subparagraph (C), the greater of the
benchmark period CPI-U and the consumer price index for
all urban consumers (United States city average) for
the first month of the calendar quarter that is two
calendar quarters prior to such described calendar
quarter.
``(4) Special treatment of certain drugs and exemption.--
``(A) Subsequently approved drugs.--Subject to
subparagraph (B), in the case of a part B rebatable
drug first approved by the Food and Drug Administration
after July 1, 2015, clause (i) of paragraph (3)(C)
shall be applied as if the term `payment amount
benchmark quarter' were defined under paragraph (3)(D)
as the third full calendar quarter after the day on
which the drug was first marketed and clause (ii) of
paragraph (3)(C) shall be applied as if the term
`benchmark period CPI-U' were defined under paragraph
(3)(E) as if the reference to `July 2015' under such
paragraph were a reference to `the first month of the
first full calendar quarter after the day on which the
drug was first marketed'.
``(B) Timeline for provision of rebates for new
drugs.--In the case of a part B rebatable drug first
approved by the Food and Drug Administration after July
1, 2015, clause (i) of paragraph (1)(B) shall be
applied as if the reference to `July 1, 2021' under
such paragraph were a reference to the later of the 6th
full calendar quarter after the day on which the drug
was first marketed or July 1, 2021.
``(C) Exemption for shortages.--The Secretary may
reduce or waive the rebate under paragraph (1)(B) with
respect to a part B rebatable drug that appears on the
drug shortage list in effect under section 506(e) of
the Federal Food, Drug, and Cosmetic Act or in the case
of other exigent circumstances, as determined by the
Secretary.
``(D) Selected drugs.--In the case of a part B
rebatable drug that is a selected drug (as defined in
section 1192(c)), for each applicable year beginning
after the price applicability period (as defined in
section 1191(b)(2) with respect to such drug, clause
(i) of paragraph (3)(C) shall be applied as if the term
`payment amount benchmark quarter' were defined under
paragraph (3)(D) as the calendar quarter beginning
January 1 of the last year beginning during such price
applicability period with respect to such selected drug
and clause (ii) of paragraph (3)(C) shall be applied as
if the term `benchmark period CPI-U' were defined under
paragraph (3)(E) as if the reference to `July 2015'
under such paragraph were a reference to the July of
the year preceding such last year.
``(5) Application to beneficiary coinsurance.--In the case
of a part B rebatable drug for which a rebate is payable under
this subsection--
``(A) in computing the amount of any coinsurance
applicable under this title to an individual with
respect to such drug, the computation of such
coinsurance shall be based on the inflation-adjusted
payment amount determined under paragraph (3)(C) for
such part B rebatable drug; and
``(B) the amount of such coinsurance is equal to 20
percent of such inflation-adjusted payment amount so
determined.
``(6) Rebate deposits.--Amounts paid as rebates under
paragraph (1)(B) shall be deposited into the Federal
Supplementary Medical Insurance Trust Fund established under
section 1841.
``(7) Civil money penalty.--If a manufacturer of a part B
rebatable drug has failed to comply with the requirements under
paragraph (1)(B) for such drug for a calendar quarter, the
manufacturer shall be subject to, in accordance with a process
established by the Secretary pursuant to regulations, a civil
money penalty in an amount equal to at least 125 percent of the
amount specified in paragraph (3) for such drug for such
calendar quarter. The provisions of section 1128A (other than
subsections (a) (with respect to amounts of penalties or
additional assessments) and (b)) shall apply to a civil money
penalty under this paragraph in the same manner as such
provisions apply to a penalty or proceeding under section
1128A(a).
``(8) Study and report.--
``(A) Study.--The Secretary shall conduct a study
of the feasibility of and operational issues involved
with the following:
``(i) Including multiple source drugs (as
defined in section 1847A(c)(6)(C)) in the
rebate system under this subsection.
``(ii) Including drugs and biologicals paid
for under MA plans under part C in the rebate
system under this subsection.
``(iii) Including drugs excluded under
paragraph (2)(A) and billing units of drugs
excluded under paragraph (3)(B) in the rebate
system under this subsection.
``(B) Report.--Not later than 3 years after the
date of the enactment of this subsection, the Secretary
shall submit to Congress a report on the study
conducted under subparagraph (A).
``(9) Application to multiple source drugs.--The Secretary
may, based on the report submitted under paragraph (8) and
pursuant to rulemaking, apply the provisions of this subsection
to multiple source drugs (as defined in section
1847A(c)(6)(C)), including, for purposes of determining the
rebate amount under paragraph (3), by calculating manufacturer-
specific average sales prices for the benchmark period and the
rebate period.''.
(b) Amounts Payable; Cost-Sharing.--Section 1833(a) of the Social
Security Act is amended--
(1) in paragraph (1)--
(A) in subparagraph (S), by striking ``with respect
to'' and inserting ``subject to subparagraph (DD), with
respect to'';
(B) by striking ``and (CC)'' and inserting
``(CC)''; and
(C) by inserting before the semicolon at the end
the following: ``, and (DD) with respect to a part B
rebatable drug (as defined in paragraph (2) of section
1834(x)) for which a rebate is payable under such
section, the amounts paid shall be the difference
between (i) the payment amount under paragraph
(3)(A)(ii)(I) of such section for such drug, and (ii)
20 percent of the inflation-adjusted payment amount
under paragraph (3)(A)(ii)(II) of such section for such
drug''; and
(2) by adding at the end of the flush left matter following
paragraph (9), the following:
``For purposes of applying paragraph (1)(DD) and section 1834(x)(5),
the Secretary shall make such estimates and use such data as the
Secretary determines appropriate.''.
(c) Conforming Amendment to Part B ASP Calculation.--Section
1847A(c)(3) of the Social Security Act (42 U.S.C. 1395w-3a(c)(3)) is
amended by inserting ``or section 1834(x)'' after ``section 1927''.
SEC. 202. MEDICARE PART D REBATE BY MANUFACTURERS.
Part D of title XVIII of the Social Security Act is amended by
inserting after section 1860D-14A (42 U.S.C. 1395w-114a) the following
new section:
``SEC. 1860D-14B. MANUFACTURER REBATE FOR CERTAIN DRUGS WITH PRICES
INCREASING FASTER THAN INFLATION.
``(a) In General.--Subject to the provisions of this section, in
order for coverage to be available under this part for a part D
rebatable drug of a manufacturer dispensed during an applicable year,
the manufacturer must have entered into and have in effect an agreement
described in subsection (b). For purposes of this section the term
`applicable year' means a year beginning with 2022.
``(b) Agreements.--
``(1) Terms of agreement.--An agreement described in this
subsection, with respect to a manufacturer of a part D
rebatable drug, is an agreement under which the following
applies:
``(A) Secretarial provision of information.--Not
later than 9 months after the end of each applicable
year with respect to which the agreement is in effect,
the Secretary, for the part D rebatable drug of the
manufacturer, reports to the manufacturer the following
for such year:
``(i) Information on the total units (as
defined in subsection (g)(2)) dispensed for
each dosage form and strength with respect to
such part D rebatable drug and year.
``(ii) Information on the amount (if any)
of the excess average manufacturer price
increase described in subsection (c)(1)(B) for
each dosage form and strength with respect to
such drug and year.
``(iii) The rebate amount specified under
subsection (c) for each dosage form and
strength with respect to such drug and year.
``(B) Manufacturer requirements.--For each
applicable year with respect to which the agreement is
in effect, the manufacturer of the part D rebatable
drug, for each dosage form and strength with respect to
such drug, not later than 30 days after the date of
receipt from the Secretary of the information described
in subparagraph (A) for such year, provides to the
Secretary a rebate that is equal to the amount
specified in subsection (c) for such dosage form and
strength with respect to such drug for such year.
``(2) Length of agreement.--
``(A) In general.--An agreement under this section,
with respect to a part D rebatable drug, shall be
effective for an initial period of not less than one
year and shall be automatically renewed for a period of
not less than one year unless terminated under
subparagraph (B).
``(B) Termination.--
``(i) By secretary.--The Secretary may
provide for termination of an agreement under
this section for violation of the requirements
of the agreement or other good cause shown.
Such termination shall not be effective earlier
than 60 days after the date of notice of such
termination. The Secretary shall provide, upon
request, a manufacturer with a hearing
concerning such a termination, but such hearing
shall not delay the effective date of the
termination.
``(ii) By a manufacturer.--A manufacturer
may terminate an agreement under this section
for any reason. Any such termination shall not
be effective until the year beginning at least
60 days after the date the manufacturer
provides notice to the Secretary.
``(C) Effectiveness of termination.--Any
termination under this paragraph shall not affect
rebates due under the agreement under this section
before the effective date of its termination.
``(D) Delay before reentry.--In the case of any
agreement under this section with a manufacturer which
is terminated in a plan year, another such agreement
with the manufacturer (or a successor manufacturer) may
not be entered into before the subsequent plan year,
unless the Secretary finds good cause for an earlier
reinstatement of such an agreement.
``(3) Information.--For purposes of carrying out this
section, the Secretary shall use information submitted by
manufacturers under section 1927(b)(3).
``(c) Rebate Amount.--
``(1) In general.--For purposes of this section, the amount
specified in this subsection for a dosage form and strength
with respect to a part D rebatable drug and applicable year is,
subject to subparagraphs (B) and (C) of paragraph (3), the
amount equal to the product of--
``(A) the total average number of units weighted
by, and dispensed for, such dosage form and strength
with respect to such part D rebatable drug and year;
and
``(B) the amount (if any) by which--
``(i) the average manufacturer price (as
defined in subsection (g)) paid for such dosage
form and strength with respect to such part D
rebatable drug during the year; exceeds
``(ii) the inflation-adjusted payment
amount determined under paragraph (2) for such
dosage form and strength with respect to such
part D rebatable drug during the year.
``(2) Determination of inflation-adjusted payment amount.--
The inflation-adjusted payment amount determined under this
paragraph for a dosage form and strength with respect to a part
D rebatable drug for an applicable year, subject to
subparagraphs (A) and (D) of paragraph (3), is--
``(A) the average manufacturer price paid for such
dosage form and strength with respect to such drug in
the payment amount benchmark year (as defined in
subsection (g)(3)); increased by
``(B) the percentage by which the rebate period
CPI-U (as defined in subsection (g)(5)) for the
applicable year exceeds the benchmark period CPI-U (as
defined in subsection (g)(4)).
``(3) Special treatment of certain drugs and exemption.--
``(A) Subsequently approved drugs.--In the case of
a part D rebatable drug first approved by the Food and
Drug Administration after January 1, 2016, subparagraph
(A) of paragraph (2) shall be applied as if the term
`payment amount benchmark year' were defined under
subsection (g)(3) as the first year beginning after the
day on which the drug was first marketed and
subparagraph (B) of paragraph (2) shall be applied as
if the term `benchmark period CPI-U' were defined under
subsection (g)(4) as if the reference to `January 2016'
under such subsection were a reference to `January of
the first year beginning after the date on which the
drug was first marketed by any manufacturer'.
``(B) Exemption for shortages.--The Secretary may
reduce or waive the rebate under paragraph (1) with
respect to a part D rebatable drug in the case of a
shortage of such drug or other exigent circumstances,
as determined by the Secretary.
``(C) Treatment of new formulations.--
``(i) In general.--In the case of a part D
rebatable drug that is a line extension of a
single source drug or an innovator multiple
source drug that is an oral solid dosage form,
the Secretary shall establish a formula for
determining the amount specified in this
subsection with respect to such part D
rebatable drug and an applicable year with
consideration of the single source drug or an
innovator multiple source drug.
``(ii) Line extension defined.--In this
subparagraph, the term `line extension' means,
with respect to a part D rebatable drug, a new
formulation of the drug (as determined by the
Secretary), such as an extended release
formulation, but does not include an abuse-
deterrent formulation of the drug (as
determined by the Secretary), regardless of
whether such abuse-deterrent formulation is an
extended release formulation.
``(D) Selected drugs.--In the case of a part D
rebatable drug that is a selected drug (as defined in
section 1192(c)), for each applicable year beginning
after the price applicability period (as defined in
section 1191(b)(2) with respect to such drug,
subparagraph (A) of paragraph (2) shall be applied as
if the term `payment amount benchmark year' were
defined under subsection (g)(3) as the last year
beginning during such price applicability period with
respect to such selected drug and subparagraph (B) of
paragraph (2) shall be applied as if the term
`benchmark period CPI-U' were defined under subsection
(g)(4) as if the reference to `January 2016' under such
subsection were a reference to January of the last year
beginning during such price applicability period with
respect to such drug.
``(d) Rebate Deposits.--Amounts paid as rebates under subsection
(c) shall be deposited into the Medicare Prescription Drug Account in
the Federal Supplementary Medical Insurance Trust Fund established
under section 1841.
``(e) Civil Money Penalty.--In the case of a manufacturer of a part
D rebatable drug with an agreement in effect under this section who has
failed to comply with the terms of the agreement under subsection
(b)(1)(B) with respect to such drug for an applicable year, the
Secretary may impose a civil money penalty on such manufacturer in an
amount equal to 125 percent of the amount specified in subsection (c)
for such drug for such year. The provisions of section 1128A (other
than subsections (a) (with respect to amounts of penalties or
additional assessments) and (b)) shall apply to a civil money penalty
under this subsection in the same manner as such provisions apply to a
penalty or proceeding under section 1128A(a).
``(f) Judicial Review.--There shall be no judicial review of the
following:
``(1) The determination of units under this section.
``(2) The determination of whether a drug is a part D
rebatable drug under this section.
``(3) The calculation of the rebate amount under this
section.
``(g) Definitions.--In this section:
``(1) Part d rebatable drug defined.--
``(A) In general.--The term `part D rebatable drug'
means a drug or biological that would (without
application of this section) be a covered part D drug,
except such term shall, with respect to an applicable
year, not include such a drug or biological if the
average total cost under a prescription drug plan under
this part or MA-PD plan under part C for such year per
individual who uses such a drug or biological, as
determined by the Secretary, are less than, subject to
subparagraph (B), $100, as determined by the Secretary
using the most recent data available or, if data is not
available, as estimated by the Secretary.
``(B) Increase.--The dollar amount applied under
subparagraph (A)--
``(i) for 2023, shall be the dollar amount
specified under such subparagraph for 2022,
increased by the percentage increase in the
consumer price index for all urban consumers
(United States city average) as of January of
2022; and
``(ii) for a subsequent year, shall be the
dollar amount specified in this subparagraph
(or subparagraph (A)) for the previous year,
increased by the percentage increase in the
consumer price index for all urban consumers
(United States city average) as of January of
the previous year.
Any dollar amount specified under this subparagraph
that is not a multiple of $10 shall be rounded to the
nearest multiple of $10.
``(2) Unit defined.--The term `unit' means, with respect to
a part D rebatable drug, the lowest identifiable quantity (such
as a capsule or tablet, milligram of molecules, or grams) of
the part D rebatable drug that is dispensed to individuals
enrolled under a prescription drug plan under this part or an
MA-PD plan under part C.
``(3) Payment amount benchmark year.--The term `payment
amount benchmark year' means the year beginning January 1,
2016.
``(4) Benchmark period cpi-u.--The term `benchmark period
CPI-U' means the consumer price index for all urban consumers
(United States city average) for January 2016.
``(5) Rebate period cpi-u.--The term `rebate period CPI-U'
means, with respect to an applicable year, the consumer price
index for all urban consumers (United States city average) for
January of such year.
``(6) Average manufacturer price.--The term `average
manufacturer price' has the meaning, with respect to a part D
rebatable drug of a manufacturer for an applicable year, given
such term in section 1927(k)(1), with respect to a covered
outpatient drug of a manufacturer for a rebate period under
section 1927. For purposes of applying the previous sentence,
with respect to a part D rebatable drug of a manufacturer and
an applicable year, the Secretary shall use the information
with respect to the average manufacturer price for such drug
reported by the manufacturer under section 1927(b)(3) with
respect to each of the quarters in the applicable year and
calculate an annual average manufacturer price for such
applicable year as the average of such average manufacturer
prices for each such quarter, weighted by units of such drug
sold or dispensed with respect to such applicable year.''.
TITLE III--PART D IMPROVEMENTS AND MAXIMUM OUT-OF-POCKET CAP FOR
MEDICARE BENEFICIARIES
SEC. 301. MEDICARE PART D BENEFIT REDESIGN.
(a) Benefit Structure Redesign.--Section 1860D-2(b) of the Social
Security Act (42 U.S.C. 1395w-102(b)) is amended--
(1) in paragraph (2)--
(A) in subparagraph (A), in the matter preceding
clause (i), by inserting ``for a year preceding 2022
and for costs above the annual deductible specified in
paragraph (1) and up to the annual out-of-pocket
threshold specified in paragraph (4)(B) for 2022 and
each subsequent year'' after ``paragraph (3)'';
(B) in subparagraph (C)--
(i) in clause (i), in the matter preceding
subclause (I), by inserting ``for a year
preceding 2022,'' after ``paragraph (4),''; and
(ii) in clause (ii)(III), by striking ``and
each subsequent year'' and inserting ``and
2021''; and
(C) in subparagraph (D)--
(i) in clause (i)--
(I) in the matter preceding
subclause (I), by inserting ``for a
year preceding 2022,'' after
``paragraph (4),''; and
(II) in subclause (I)(bb), by
striking ``a year after 2018'' and
inserting ``each of years 2018 through
2021''; and
(ii) in clause (ii)(V), by striking ``2019
and each subsequent year'' and inserting ``each
of years 2019 through 2021'';
(2) in paragraph (3)(A)--
(A) in the matter preceding clause (i), by
inserting ``for a year preceding 2022,'' after ``and
(4),''; and
(B) in clause (ii), by striking ``for a subsequent
year'' and inserting ``for each of years 2007 through
2021''; and
(3) in paragraph (4)--
(A) in subparagraph (A)--
(i) in clause (i)--
(I) by redesignating subclauses (I)
and (II) as items (aa) and (bb),
respectively, and moving the margin of
each such redesignated item 2 ems to
the right;
(II) in the matter preceding item
(aa), as redesignated by subclause (I),
by striking ``is equal to the greater
of--'' and inserting ``is equal to--
``(I) for a year preceding 2022,
the greater of--'';
(III) by striking the period at the
end of item (bb), as redesignated by
subclause (I), and inserting ``; and'';
and
(IV) by adding at the end the
following:
``(II) for 2022 and each succeeding
year, $0.''; and
(ii) in clause (ii)--
(I) by striking ``clause (i)(I)''
and inserting ``clause (i)(I)(aa)'';
and
(II) by adding at the end the
following new sentence: ``The Secretary
shall continue to calculate the dollar
amounts specified in clause (i)(I)(aa),
including with the adjustment under
this clause, after 2021 for purposes of
section 1860D-14(a)(1)(D)(iii).'';
(B) in subparagraph (B)--
(i) in clause (i)--
(I) in subclause (V), by striking
``or'' at the end;
(II) in subclause (VI)--
(aa) by striking ``for a
subsequent year'' and inserting
``for 2021''; and
(bb) by striking the period
at the end and inserting a
semicolon; and
(III) by adding at the end the
following new subclauses:
``(VII) for 2022, is equal to
$2,000; or
``(VIII) for a subsequent year, is
equal to the amount specified in this
subparagraph for the previous year,
increased by the annual percentage
increase described in paragraph (6) for
the year involved.''; and
(ii) in clause (ii), by striking ``clause
(i)(II)'' and inserting ``clause (i)'';
(C) in subparagraph (C)(i), by striking ``and for
amounts'' and inserting ``and, for a year preceding
2022, for amounts''; and
(D) in subparagraph (E), by striking ``In
applying'' and inserting ``For each of years 2011
through 2021, in applying''.
(b) Decreasing Reinsurance Payment Amount.--Section 1860D-15(b)(1)
of the Social Security Act (42 U.S.C. 1395w-115(b)(1)) is amended by
inserting after ``80 percent'' the following: ``(or, with respect to a
coverage year after 2021, 20 percent)''.
(c) Manufacturer Discount Program.--
(1) In general.--Part D of title XVIII of the Social
Security Act (42 U.S.C. 1395w-101 et seq.), as amended by
section 202, is further amended by inserting after section
1860D-14B the following new section:
``SEC. 1860D-14C. MANUFACTURER DISCOUNT PROGRAM.
``(a) Establishment.--The Secretary shall establish a manufacturer
discount program (in this section referred to as the `program'). Under
the program, the Secretary shall enter into agreements described in
subsection (b) with manufacturers and provide for the performance of
the duties described in subsection (c). The Secretary shall establish a
model agreement for use under the program by not later than January 1,
2021, in consultation with manufacturers, and allow for comment on such
model agreement.
``(b) Terms of Agreement.--
``(1) In general.--
``(A) Agreement.--An agreement under this section
shall require the manufacturer to provide applicable
beneficiaries access to discounted prices for
applicable drugs of the manufacturer that are dispensed
on or after January 1, 2022.
``(B) Provision of discounted prices at the point-
of-sale.--The discounted prices described in
subparagraph (A) shall be provided to the applicable
beneficiary at the pharmacy or by the mail order
service at the point-of-sale of an applicable drug.
``(C) Timing of agreement.--
``(i) Special rule for 2022.--In order for
an agreement with a manufacturer to be in
effect under this section with respect to the
period beginning on January 1, 2022, and ending
on December 31, 2022, the manufacturer shall
enter into such agreement not later than 30
days after the date of the establishment of a
model agreement under subsection (a).
``(ii) 2023 and subsequent years.--In order
for an agreement with a manufacturer to be in
effect under this section with respect to plan
year 2023 or a subsequent plan year, the
manufacturer shall enter into such agreement
(or such agreement shall be renewed under
paragraph (4)(A)) not later than January 30 of
the preceding year.
``(2) Provision of appropriate data.--Each manufacturer
with an agreement in effect under this section shall collect
and have available appropriate data, as determined by the
Secretary, to ensure that it can demonstrate to the Secretary
compliance with the requirements under the program.
``(3) Compliance with requirements for administration of
program.--Each manufacturer with an agreement in effect under
this section shall comply with requirements imposed by the
Secretary or a third party with a contract under subsection
(d)(3), as applicable, for purposes of administering the
program, including any determination under subparagraph (A) of
subsection (c)(1) or procedures established under such
subsection (c)(1).
``(4) Length of agreement.--
``(A) In general.--An agreement under this section
shall be effective for an initial period of not less
than 12 months and shall be automatically renewed for a
period of not less than 1 year unless terminated under
subparagraph (B).
``(B) Termination.--
``(i) By the secretary.--The Secretary may
provide for termination of an agreement under
this section for a knowing and willful
violation of the requirements of the agreement
or other good cause shown. Such termination
shall not be effective earlier than 30 days
after the date of notice to the manufacturer of
such termination. The Secretary shall provide,
upon request, a manufacturer with a hearing
concerning such a termination, and such hearing
shall take place prior to the effective date of
the termination with sufficient time for such
effective date to be repealed if the Secretary
determines appropriate.
``(ii) By a manufacturer.--A manufacturer
may terminate an agreement under this section
for any reason. Any such termination shall be
effective, with respect to a plan year--
``(I) if the termination occurs
before January 30 of a plan year, as of
the day after the end of the plan year;
and
``(II) if the termination occurs on
or after January 30 of a plan year, as
of the day after the end of the
succeeding plan year.
``(iii) Effectiveness of termination.--Any
termination under this subparagraph shall not
affect discounts for applicable drugs of the
manufacturer that are due under the agreement
before the effective date of its termination.
``(iv) Notice to third party.--The
Secretary shall provide notice of such
termination to a third party with a contract
under subsection (d)(3) within not less than 30
days before the effective date of such
termination.
``(c) Duties Described.--The duties described in this subsection
are the following:
``(1) Administration of program.--Administering the
program, including--
``(A) the determination of the amount of the
discounted price of an applicable drug of a
manufacturer;
``(B) the establishment of procedures under which
discounted prices are provided to applicable
beneficiaries at pharmacies or by mail order service at
the point-of-sale of an applicable drug;
``(C) the establishment of procedures to ensure
that, not later than the applicable number of calendar
days after the dispensing of an applicable drug by a
pharmacy or mail order service, the pharmacy or mail
order service is reimbursed for an amount equal to the
difference between--
``(i) the negotiated price of the
applicable drug; and
``(ii) the discounted price of the
applicable drug;
``(D) the establishment of procedures to ensure
that the discounted price for an applicable drug under
this section is applied before any coverage or
financial assistance under other health benefit plans
or programs that provide coverage or financial
assistance for the purchase or provision of
prescription drug coverage on behalf of applicable
beneficiaries as the Secretary may specify; and
``(E) providing a reasonable dispute resolution
mechanism to resolve disagreements between
manufacturers, applicable beneficiaries, and the third
party with a contract under subsection (d)(3).
``(2) Monitoring compliance.--
``(A) In general.--The Secretary shall monitor
compliance by a manufacturer with the terms of an
agreement under this section.
``(B) Notification.--If a third party with a
contract under subsection (d)(3) determines that the
manufacturer is not in compliance with such agreement,
the third party shall notify the Secretary of such
noncompliance for appropriate enforcement under
subsection (e).
``(3) Collection of data from prescription drug plans and
ma-pd plans.--The Secretary may collect appropriate data from
prescription drug plans and MA-PD plans in a timeframe that
allows for discounted prices to be provided for applicable
drugs under this section.
``(d) Administration.--
``(1) In general.--Subject to paragraph (2), the Secretary
shall provide for the implementation of this section, including
the performance of the duties described in subsection (c).
``(2) Limitation.--In providing for the implementation of
this section, the Secretary shall not receive or distribute any
funds of a manufacturer under the program.
``(3) Contract with third parties.--The Secretary shall
enter into a contract with 1 or more third parties to
administer the requirements established by the Secretary in
order to carry out this section. At a minimum, the contract
with a third party under the preceding sentence shall require
that the third party--
``(A) receive and transmit information between the
Secretary, manufacturers, and other individuals or
entities the Secretary determines appropriate;
``(B) receive, distribute, or facilitate the
distribution of funds of manufacturers to appropriate
individuals or entities in order to meet the
obligations of manufacturers under agreements under
this section;
``(C) provide adequate and timely information to
manufacturers, consistent with the agreement with the
manufacturer under this section, as necessary for the
manufacturer to fulfill its obligations under this
section; and
``(D) permit manufacturers to conduct periodic
audits, directly or through contracts, of the data and
information used by the third party to determine
discounts for applicable drugs of the manufacturer
under the program.
``(4) Performance requirements.--The Secretary shall
establish performance requirements for a third party with a
contract under paragraph (3) and safeguards to protect the
independence and integrity of the activities carried out by the
third party under the program under this section.
``(5) Implementation.--The Secretary may implement the
program under this section by program instruction or otherwise.
``(6) Administration.--Chapter 35 of title 44, United
States Code, shall not apply to the program under this section.
``(e) Enforcement.--
``(1) Audits.--Each manufacturer with an agreement in
effect under this section shall be subject to periodic audit by
the Secretary.
``(2) Civil money penalty.--
``(A) In general.--The Secretary may impose a civil
money penalty on a manufacturer that fails to provide
applicable beneficiaries discounts for applicable drugs
of the manufacturer in accordance with such agreement
for each such failure in an amount the Secretary
determines is commensurate with the sum of--
``(i) the amount that the manufacturer
would have paid with respect to such discounts
under the agreement, which will then be used to
pay the discounts which the manufacturer had
failed to provide; and
``(ii) 25 percent of such amount.
``(B) Application.--The provisions of section 1128A
(other than subsections (a) and (b)) shall apply to a
civil money penalty under this paragraph in the same
manner as such provisions apply to a penalty or
proceeding under section 1128A(a).
``(f) Clarification Regarding Availability of Other Covered Part D
Drugs.--Nothing in this section shall prevent an applicable beneficiary
from purchasing a covered part D drug that is not an applicable drug
(including a generic drug or a drug that is not on the formulary of the
prescription drug plan or MA-PD plan that the applicable beneficiary is
enrolled in).
``(g) Definitions.--In this section:
``(1) Applicable beneficiary.--The term `applicable
beneficiary' means an individual who, on the date of dispensing
a covered part D drug--
``(A) is enrolled in a prescription drug plan or an
MA-PD plan;
``(B) is not enrolled in a qualified retiree
prescription drug plan; and
``(C) has incurred costs for covered part D drugs
in the year that are equal to or exceed the annual
deductible specified in section 1860D-2(b)(1) for such
year.
``(2) Applicable drug.--The term `applicable drug', with
respect to an applicable beneficiary--
``(A) means a covered part D drug--
``(i) approved under a new drug application
under section 505(b) of the Federal Food, Drug,
and Cosmetic Act or, in the case of a biologic
product, licensed under section 351 of the
Public Health Service Act; and
``(ii)(I) if the PDP sponsor of the
prescription drug plan or the MA organization
offering the MA-PD plan uses a formulary, which
is on the formulary of the prescription drug
plan or MA-PD plan that the applicable
beneficiary is enrolled in;
``(II) if the PDP sponsor of the
prescription drug plan or the MA organization
offering the MA-PD plan does not use a
formulary, for which benefits are available
under the prescription drug plan or MA-PD plan
that the applicable beneficiary is enrolled in;
or
``(III) is provided through an exception or
appeal; and
``(B) does not include a selected drug (as defined
in section 1192(c)) during a price applicability period
(as defined in section 1191(b)(2)) with respect to such
drug.
``(3) Applicable number of calendar days.--The term
`applicable number of calendar days' means--
``(A) with respect to claims for reimbursement
submitted electronically, 14 days; and
``(B) with respect to claims for reimbursement
submitted otherwise, 30 days.
``(4) Discounted price.--
``(A) In general.--The term `discounted price'
means, with respect to an applicable drug of a
manufacturer furnished during a year to an applicable
beneficiary--
``(i) who has not incurred costs for
covered part D drugs in the year that are equal
to or exceed the annual out-of-pocket threshold
specified in section 1860D-2(b)(4)(B)(i) for
the year, 90 percent of the negotiated price of
such drug; and
``(ii) who has incurred such costs in the
year that are equal to or exceed such threshold
for the year, 70 percent of the negotiated
price of such drug.
``(B) Clarification.--Nothing in this section shall
be construed as affecting the responsibility of an
applicable beneficiary for payment of a dispensing fee
for an applicable drug.
``(C) Special case for certain claims.--
``(i) Claims spanning deductible.--In the
case where the entire amount of the negotiated
price of an individual claim for an applicable
drug with respect to an applicable beneficiary
does not fall at or above the annual deductible
specified in section 1860D-2(b)(1) for the
year, the manufacturer of the applicable drug
shall provide the discounted price under this
section on only the portion of the negotiated
price of the applicable drug that falls at or
above such annual deductible.
``(ii) Claims spanning out-of-pocket
threshold.--In the case where the entire amount
of the negotiated price of an individual claim
for an applicable drug with respect to an
applicable beneficiary does not fall entirely
below or entirely above the annual out-of-
pocket threshold specified in section 1860D-
2(b)(4)(B)(i) for the year, the manufacturer of
the applicable drug shall provide the
discounted price--
``(I) in accordance with
subparagraph (A)(i) on the portion of
the negotiated price of the applicable
drug that falls below such threshold;
and
``(II) in accordance with
subparagraph (A)(ii) on the portion of
such price of such drug that falls at
or above such threshold.
``(5) Manufacturer.--The term `manufacturer' means any
entity which is engaged in the production, preparation,
propagation, compounding, conversion, or processing of
prescription drug products, either directly or indirectly by
extraction from substances of natural origin, or independently
by means of chemical synthesis, or by a combination of
extraction and chemical synthesis. Such term does not include a
wholesale distributor of drugs or a retail pharmacy licensed
under State law.
``(6) Negotiated price.--The term `negotiated price' has
the meaning given such term in section 423.100 of title 42,
Code of Federal Regulations (as in effect on the date of
enactment of section 1860D-14A), except that such negotiated
price shall not include any dispensing fee for the applicable
drug.
``(7) Qualified retiree prescription drug plan.--The term
`qualified retiree prescription drug plan' has the meaning
given such term in section 1860D-22(a)(2).''.
(2) Sunset of medicare coverage gap discount program.--
Section 1860D-14A of the Social Security Act (42 U.S.C. 1395-
114a) is amended--
(A) in subsection (a), in the first sentence, by
striking ``The Secretary'' and inserting ``Subject to
subsection (h), the Secretary''; and
(B) by adding at the end the following new
subsection:
``(h) Sunset of Program.--
``(1) In general.--The program shall not apply with respect
to applicable drugs dispensed on or after January 1, 2022, and,
subject to paragraph (2), agreements under this section shall
be terminated as of such date.
``(2) Continued application for applicable drugs dispensed
prior to sunset.--The provisions of this section (including all
responsibilities and duties) shall continue to apply after
January 1, 2022, with respect to applicable drugs dispensed
prior to such date.''.
(3) Inclusion of actuarial value of manufacturer discounts
in bids.--Section 1860D-11 of the Social Security Act (42
U.S.C. 1395w-111) is amended--
(A) in subsection (b)(2)(C)(iii)--
(i) by striking ``assumptions regarding the
reinsurance'' an inserting ``assumptions
regarding--
``(I) the reinsurance''; and
(ii) by adding at the end the following:
``(II) for 2022 and each subsequent
year, the manufacturer discounts
provided under section 1860D-14C
subtracted from the actuarial value to
produce such bid; and''; and
(B) in subsection (c)(1)(C)--
(i) by striking ``an actuarial valuation of
the reinsurance'' and inserting ``an actuarial
valuation of--
``(i) the reinsurance'';
(ii) in clause (i), as inserted by clause
(i) of this subparagraph, by adding ``and'' at
the end; and
(iii) by adding at the end the following:
``(ii) for 2022 and each subsequent year,
the manufacturer discounts provided under
section 1860D-14C;''.
(d) Conforming Amendments.--
(1) Section 1860D-2 of the Social Security Act (42 U.S.C.
1395w-102) is amended--
(A) in subsection (a)(2)(A)(i)(I), by striking ``,
or an increase in the initial'' and inserting ``or, for
a year preceding 2022, an increase in the initial'';
(B) in subsection (c)(1)(C)--
(i) in the subparagraph heading, by
striking ``at initial coverage limit''; and
(ii) by inserting ``for a year preceding
2022 or the annual out-of-pocket threshold
specified in subsection (b)(4)(B) for the year
for 2022 and each subsequent year'' after
``subsection (b)(3) for the year'' each place
it appears; and
(C) in subsection (d)(1)(A), by striking ``or an
initial'' and inserting ``or, for a year preceding
2022, an initial''.
(2) Section 1860D-4(a)(4)(B)(i) of the Social Security Act
(42 U.S.C. 1395w-104(a)(4)(B)) is amended by striking ``the
initial'' and inserting ``for a year preceding 2022, the
initial''.
(3) Section 1860D-14(a) of the Social Security Act (42
U.S.C. 1395w-114(a)) is amended--
(A) in paragraph (1)--
(i) in subparagraph (C), by striking ``The
continuation'' and inserting ``For a year
preceding 2022, the continuation'';
(ii) in subparagraph (D)(iii), by striking
``1860D-2(b)(4)(A)(i)(I)'' and inserting
``1860D-2(b)(4)(A)(i)(I)(aa)''; and
(iii) in subparagraph (E), by striking
``The elimination'' and inserting ``For a year
preceding 2022, the elimination''; and
(B) in paragraph (2)--
(i) in subparagraph (C), by striking ``The
continuation'' and inserting ``For a year
preceding 2022, the continuation''; and
(ii) in subparagraph (E)--
(I) by inserting ``for a year
preceding 2022,'' after ``subsection
(c)''; and
(II) by striking ``1860D-
2(b)(4)(A)(i)(I)'' and inserting
``1860D-2(b)(4)(A)(i)(I)(aa)''.
(4) Section 1860D-21(d)(7) of the Social Security Act (42
U.S.C. 1395w-131(d)(7)) is amended by striking ``section 1860D-
2(b)(4)(B)(i)'' and inserting ``section 1860D-2(b)(4)(C)(i)''.
(5) Section 1860D-22(a)(2)(A) of the Social Security Act
(42 U.S.C. 1395w-132(a)(2)(A)) is amended--
(A) by striking ``the value of any discount'' and
inserting the following: ``the value of--
``(i) for years prior to 2022, any
discount''.
(B) in clause (i), as inserted by subparagraph (A)
of this paragraph, by striking the period at the end
and inserting ``; and''; and
(C) by adding at the end the following new clause:
``(ii) for 2022 and each subsequent year,
any discount provided pursuant to section
1860D-14C.''.
(6) Section 1860D-41(a)(6) of the Social Security Act (42
U.S.C. 1395w-151(a)(6)) is amended--
(A) by inserting ``for a year before 2022'' after
``1860D-2(b)(3)''; and
(B) by inserting ``for such year'' before the
period.
(7) Paragraph (1) of section 1860D-43(a) of the Social
Security Act (42 U.S.C. 1395w-153(a)) is amended to read as
follows:
``(1) participate in--
``(A) for 2011 through 2021, the Medicare coverage
gap discount program under section 1860D-14A; and
``(B) for 2022 and each subsequent year, the
manufacturer discount program under section 1860D-
14C;''.
(e) Effective Date.--The amendments made by this section shall
apply with respect to plan year 2022 and subsequent plan years.
<all>
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发表于 2019-11-13 15:09:56
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