[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3691 Introduced in House (IH)]







104th CONGRESS
  2d Session
                                H. R. 3691

 To provide for the establishment of a Prescription Drug Price Review 
    Board to identify excessive drug prices, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 20, 1996

 Mr. Johnson of South Dakota introduced the following bill; which was 
                 referred to the Committee on Commerce

_______________________________________________________________________

                                 A BILL


 
 To provide for the establishment of a Prescription Drug Price Review 
    Board to identify excessive drug prices, 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.

    This Act may be cited as the ``Prescription Drug Consumer 
Protection Act of 1996''.

SEC. 2. ESTABLISHMENT OF BOARD.

    (a) Establishment.--There is established in the executive branch 
the Prescription Drug Price Review Board (hereinafter in this Act 
referred to as the ``Board'').
    (b) Membership.--
            (1) Number and appointment.--The Board shall be composed of 
        5 members appointed by the President, by and with the advice 
        and consent of the Senate, from among individuals--
                    (A) who are recognized experts in the fields of 
                consumer advocacy, medicine, pharmacology, pharmacy, 
                and prescription drug reimbursement; and
                    (B) who have not worked in the pharmaceutical 
                manufacturing industry during the 3-year period ending 
                on the date of appointment.
            (2) Initial appointments.--Initial appointments under 
        paragraph (1) shall be made not later than 90 days after the 
        date of the enactment of this Act.
            (3) Terms.--
                    (A) In general.--Except as provided in 
                subparagraphs (B) and (C), each member shall be 
                appointed for a term of 5 years.
                    (B) Terms of initial appointees.--As designated by 
                the President at the time of appointment, of the 
                members first appointed--
                            (i) 1 member shall be appointed for a term 
                        of 1 year;
                            (ii) 1 member shall be appointed for a term 
                        of 2 years;
                            (iii) 1 member shall be appointed for a 
                        term of 3 years;
                            (iv) 1 member shall be appointed for a term 
                        of 4 years; and
                            (v) 1 member shall be appointed for a term 
                        of 5 years.
                    (C) Vacancies.--A vacancy in the Board shall be 
                filled in the manner in which the original appointment 
                was made. Any member appointed to fill a vacancy 
                occurring before the expiration of the term for which 
                the member's predecessor was appointed shall be 
                appointed only for the remainder of that term. A member 
                may serve after the expiration of the member's term 
                until a successor has taken office.
            (4) Initial meeting.--The initial meeting of the Board 
        shall be held not later than 90 days after the date on which 
        the first appointments of the members have been completed.
            (5) Chairperson.--The President shall designate 1 member of 
        the Board to serve as the chairperson.
            (6) Basic pay.--
                    (A) In general.--Members shall be paid at a rate 
                not to exceed the daily equivalent of the maximum 
                annual rate of basic pay payable under section 5376 of 
                title 5, United States Code, for each day during which 
                the members are engaged in the actual performance of 
                the duties of the Board.
                    (B) Travel expenses.--Members shall receive travel 
                expenses, including per diem in lieu of subsistence, in 
                accordance with sections 5702 and 5703 of title 5, 
                United States Code.
    (c) Director and Staff.--
            (1) Director.--The Board shall have a director who shall be 
        appointed by the chairperson, subject to rules prescribed by 
        the Board.
            (2) Staff.--The chairperson may appoint and fix the pay of 
        such additional personnel as the chairperson considers 
        appropriate, subject to rules prescribed by the Board.
            (3) Applicability of certain civil service laws.--The 
        director and staff of the Board shall be appointed subject to 
        the provisions of title 5, United States Code, governing 
        appointments in the competitive service, and shall be paid in 
        accordance with the requirements of chapter 51 and subchapter 
        III of chapter 53 of such title relating to classification and 
        General Schedule pay rates; except that an individual so 
        appointed may not receive pay in excess of the maximum annual 
        rate of basic pay payable for grade GS-15 of the General 
        Schedule.

SEC. 3. POWERS OF BOARD.

    (a) Obtaining Official Data.--The chairperson of the Board may 
secure directly from any Federal agency information necessary to enable 
the Board to carry out its duties. Upon request of the chairperson, the 
head of the agency shall furnish such information to the Board to the 
extent such information is not prohibited from disclosure by law.
    (b) Mails.--The Board may use the United States mails in the same 
manner and under the same conditions as other Federal agencies.
    (c) Administrative Support Services.--Upon the request of the 
chairperson, the Administrator of General Services shall provide to the 
Board on a reimbursable basis the administrative support services 
necessary for the Board to carry out its duties.
    (d) Contract Authority.--The chairperson may contract with and 
compensate government and private agencies or persons for the purpose 
of conducting research, surveys, and other services necessary to enable 
the Board to carry out its duties.
    (e) Investigations.--The Board may make such investigations as it 
considers necessary to determine whether there is or may be a violation 
of any regulation promulgated under this Act and may require or permit 
any person to file with it a statement in writing, under oath or 
otherwise as the Board shall determine, as to all the facts and 
circumstances concerning the matter to be investigated.
    (f) Subpoena Power.--
            (1) In general.--The Board may issue subpoenas requiring 
        the attendance and testimony of witnesses and the production of 
        any evidence relating to any matter under investigation by the 
        Board. The attendance of witnesses and the production of 
        evidence may be required from any place within the United 
        States at any designated place of hearing within the United 
        States.
            (2) Failure to obey a subpoena.--If a person refuses to 
        obey a subpoena issued under paragraph (1), the Board may apply 
        to a United States district court for an order requiring that 
        person to appear before the Board to give testimony, produce 
        evidence, or both, relating to the matter under investigation. 
        The application may be made within the judicial district where 
        the hearing is conducted or where that person is found, 
        resides, or transacts business. Any failure to obey the order 
        of the court may be punished by the court as civil contempt.
            (3) Service of subpoenas.--The subpoenas of the Board shall 
        be served in the manner provided for subpoenas issued by a 
        United States district court under the Federal Rules of Civil 
        Procedure for the United States district courts.
            (4) Service of process.--All process of any court to which 
        application is made under paragraph (2) may be served in the 
        judicial district in which the person required to be served 
        resides or may be found.

SEC. 4. FUNCTIONS OF THE BOARD.

    (a) Guidelines.--The Board shall--
            (1) develop and publish within 9 months of the date of the 
        establishment of the Board the initial guidelines that the 
        Board will use in determining whether an existing price or an 
        increase in the price of any prescription drug is excessive,
            (2) develop and publish within 12 months of the date of the 
        establishment of the Board the initial guidelines that the 
        Board will use in determining whether the initial price at 
which a prescription drug is first sold is excessive, and
            (3) periodically review the guidelines developed under 
        paragraphs (1) and (2) and make appropriate revisions.
    (b) Determinations and Reviews.--The Board shall--
            (1) within 24 months of the date of the establishment of 
        the Board, make an initial determination of whether the price 
        of each prescription drug approved for sale on the date of the 
        enactment of this Act is excessive,
            (2) promptly make an initial determination of whether the 
        price of each prescription drug first approved for sale after 
        the date of the enactment of this Act is excessive,
            (3) review, on an ongoing basis, each increase in the price 
        of a drug reviewed under paragraphs (1) and (2) to determine if 
        the price increase is excessive, and
            (4) consider whether determinations and reviews similar to 
        the ones carried out under paragraphs (1), (2), and (3) should 
        be made for non-prescription drugs and make such determinations 
        and reviews if appropriate.
    (c) Factors.--In making determinations under subsection (b) as to 
whether the price of a prescription drug is excessive, the Board shall 
take into consideration--
            (1) changes in the producer price index (published by the 
        Bureau of Labor Statistics of the Department of Labor),
            (2) changes in the prescription drug component of such 
        producer price index,
            (3) the price at which such drug was sold to wholesalers in 
        the United States during the preceding 10 years,
            (4) the price at which such drug was sold to wholesalers in 
        other countries during the preceding 10 years,
            (5) the price at which other drugs in the same therapeutic 
        class were sold to wholesalers in the United States during the 
        preceding 10 years,
            (6) the therapeutic potential rating of such drug by the 
        Food and Drug Administration,
            (7) the percentage of such drug's research and development 
        costs paid by the United States,
            (8) the cost of manufacturing and marketing such drug, and
            (9) such other factors as the Board considers relevant.
    (d) Reporting.--The Board shall--
            (1) promptly provide to consumers and health care providers 
        the results of the Board's determinations under subsection (b) 
        and the method used in each such determination,
            (2) provide information to consumers and health care 
        providers regarding prescription drug pricing and price 
        increases by therapeutic class and manufacturer,
            (3) provide to consumers and health care providers 
        information regarding the Food and Drug Administration 
        therapeutic potential rating of each prescription drug and the 
        percentage of the research and development of each such drug 
        paid by the United States,
            (4) provide to consumers such other information as the 
        Board determines will assist consumers in reducing their 
        expenses for prescription drugs,
            (5) publish an easy to understand consumer's guide to 
        prescription drug prices, including the information described 
        in paragraphs (1), (2), (3), and (4), within 24 months of the 
        date of the establishment of the Board and update and publish 
        such guide annually thereafter, and
            (6) provide to the President and the Congress a report of 
        its determinations under subsection (b) within 24 months of the 
        date of the establishment of the Board and update and report 
        such determinations annually thereafter.

SEC. 5. SANCTIONS AND REMEDIES.

    (a) Hearings.--After making a determination under section 4(b) that 
the price of a prescription drug or an increase in the price of such a 
drug is excessive, the Board shall--
            (1) notify, in writing, the manufacturer of such drug of 
        such determination,
            (2) fix a date on which a public hearing before the Board 
        respecting such determination shall be held and hold such 
        hearing,
            (3) request from such manufacturer such additional 
        information as the Board deems necessary for such public 
        hearing, and
            (4) notify such manufacturer of the Board's recommendation 
        as to the pricing of the drug at a rate which is not excessive.
    (b) Settlement.--If, after a public hearing under subsection (a), 
the Board finds that the price or an increase in the price of a 
prescription drug is not excessive, the Board shall--
            (1) notify the manufacturer of such drug of the Board's 
        finding, and
            (2) remove from all publications and reports of the Board 
        after the date of such finding any statement that the price or 
        increase in the price of such drug is excessive.
    (c) Patent Revocation.--If, after a public hearing under subsection 
(a), the Board finds that the price or an increase in the price of a 
prescription drug is excessive, the Board shall--
            (1) notify the manufacturer of such drug of the Board's 
        finding,
            (2) notify the manufacturer of such drug of the Board's 
        intent to revoke the patent for such drug if the drug is 
        patented or to revoke the patent of another drug of such 
        manufacturer if such drug is not patented, and
            (3) take such action as may be necessary to revoke a drug 
        patent under paragraph (2) if the manufacturer of such drug 
        does not reduce the price of the drug to a level that is not 
        excessive.

SEC. 6. MANUFACTURERS.

    Each manufacturer of a prescription drug subject to review under 
section 4 shall--
            (1) provide to the Board such information as the Board may 
        require to make the determinations under section 4, including--
                    (A) information identifying such drug,
                    (B) the price at which such drug is being sold or 
                has been sold in any market,
                    (C) the cost of manufacturing and marketing such 
                drug, and
                    (D) such other information as the Board considers 
                necessary to be provided in such form and manner and at 
                such time as the Board prescribes by regulation, and
            (2) notify the Board immediately of any increase in the 
        wholesale price of any prescription drug marketed by the 
        manufacturer.

SEC. 7. STUDY.

    The Board shall engage the Institute of Medicine of the National 
Academy of Sciences to conduct a study of prescription drug research 
and development and pricing practices, the difficulties many Americans 
have in affording prescription drugs, and options for making 
prescription drugs available to all that need them. Such study shall--
            (1) examine Federal incentives for research and development 
        and determine which incentives are most effective and what 
        changes would better encourage the development of low cost, 
        effective drugs,
            (2) examine the Federal regulatory process and identify 
        ways it might be streamlined without jeopardizing consumer 
        safety,
            (3) consider whether the authority of the Food and Drug 
        Administration should be enhanced and whether the funding for 
        such agency should be increased to improve Federal regulation 
        of drugs,
            (4) consider steps the United States might take (including 
        possible trade sanctions) to protect manufacturers of drugs in 
        the United States from product pirating and other unfair trade 
        practices by foreign competitors,
            (5) consider changes in the patent laws (including delaying 
        the start of a product's 17 years patent protection until after 
        the product has been approved under the Federal Food, Drug, and 
        Cosmetic Act) to allow manufacturers to charge lower prices and 
        still recoup their research and development costs,
            (6) consider whether a Board review of non-prescription 
        drug prices would have a positive effect on consumer costs of 
        such drugs,
            (7) consider mechanisms to assist consumers with the high 
        cost of prescription drugs (including providing reimbursement 
        under title XVIII of the Social Security Act for prescription 
        drugs at lower prices negotiated with manufacturers of drugs),
            (8) examine Federal policies regarding the licensing of 
        drugs discovered and developed by federally funded researchers 
        and recommend actions that would allow the United States to 
        recoup its costs or to influence the pricing of such drugs, and
            (9) examine the effects on retail pharmacies of disparities 
        in drug prices wherein the drug manufacturers charge hospitals, 
        mail order pharmacies, and health maintenance organizations 
        significantly lower prices than those charged wholesalers for 
        such drugs.
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