II 109th CONGRESS 1st Session S. 1128 IN THE SENATE OF THE UNITED STATES May 26, 2005 Mr. Wyden (for himself and Mr. Sununu) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend title XIX of the Social Security Act to provide for increased rebates under the medicaid program for prescription drugs that are directly advertised to consumers, to require other Federal programs purchasing or reimbursing for such drugs to establish payment and reimbursement mechanisms that reduce the costs of those drugs, and for other purposes.

1.

Short title

This Act may be cited as the Pharmaceutical Advertising and Prudent Purchasing Act.

2.

Increased rebates under the medicaid program for prescription drugs directly advertised to consumers

(a)

In general

Section 1927(b) of the Social Security Act (42 U.S.C. 1396r–8(b)) is amended by adding at the end the following: (5)

Increase in amount of rebate for covered outpatient drugs directly advertised to consumers

(A)

In general

A rebate agreement under this subsection shall provide for an increase in the amount of the rebate determined under subsection (c) with respect to each covered outpatient drug of a manufacturer for which payment is made under the State program under this title if the manufacturer of such drug fails to certify to the Secretary that the drug was not directly advertised to consumers during the rebate period applicable to such agreement. (B)

Adjustment of rebate formula

(i)

In general

Not later than 180 days after the date of enactment of this paragraph, the Secretary shall determine appropriate adjustments to make to the formula used to calculate the amount of a rebate under subsection (c) to determine the increased amount of the rebate required under subparagraph (A), including, to the extent the Secretary determines appropriate, to the application of the average manufacturer price and best price in such formula. (ii)

Requirements

In determining the adjustments required under clause (i), the Secretary shall— (I)take into account the increased costs to the State program established under this title resulting from the purchase of covered outpatient drugs that are directly advertised to consumers; and (II)consult with manufacturers. (C)

Definition of directly advertised to consumers

In this section, the term directly advertised to consumers means a reminder ad or product claim regarding a covered outpatient drug that is disseminated through radio, television, or other electronic media, print media, or outdoor advertising. . (b)

Effective date

The amendment made by this section applies to rebate agreements entered into or renewed under section 1927 of the Social Security Act (42 U.S.C. 1396r–8) on or after the date that is 180 days after the date of enactment of this Act.

3.

Reduced payment and reimbursement mechanisms for other federal programs that purchase or provide reimbursement for prescription drugs that are directly advertised to consumers

(a)

In general

Not later than 180 days after the date of enactment of this Act, the Secretary of Health and Human Services and the Secretary of Veterans Affairs each shall develop and implement procedures under which any master agreement, pricing agreement, or contract entered into on or after that date for the procurement or purchase of a covered drug or a covered outpatient drug by a Federal agency or reimbursement program described in subsection (b) shall provide that the agency or program shall pay a negotiated reduced price for such drug unless the manufacturer has certified to the head of the agency or program that the drug was not directly advertised to consumers during the 12-month period preceding the date of such procurement or purchase. (b)

Federal agencies and programs described

For purposes of subsection (a), the Federal agencies and reimbursement programs described in this subsection are the following: (1)The Public Health Service, including health-related programs administered by the Indian Health Service, and health-related programs funded under the Public Health Service Act, including the drug pricing agreement program established under section 340B of such Act (42 U.S.C. 256b). (2)The Department of Veterans Affairs and the program of medical care furnished by the Secretary of Veterans Affairs. (3)The Department of Defense and the Defense Health Program. (c)

Definitions

In this section: (1)

Covered drug

The term covered drug has the meaning given that term in section 8126(h)(2) of title 38, United States Code. (2)

Covered outpatient drug

The term covered outpatient drug has the meaning given that term in section 1927(k)(2) of the Social Security Act (42 U.S.C. 1396r–8(k)(2)). (3)

Directly advertised to consumers

The term directly advertised to consumers means a reminder ad or product claim regarding a covered drug or a covered outpatient drug that is disseminated through radio, television, or other electronic media, print media, or outdoor advertising. (4)

Manufacturer

The term manufacturer has the meaning given that term in section 8126(h)(4) of title 38, United States Code, and section 1927(k)(5) of the Social Security Act (42 U.S.C. 1936r–8(k)(5)). (d)

Conforming amendments

(1)

Prescription drugs purchased by covered entities under agreements entered into under the public health service act

Section 340B(a) of the Public Health Service Act (42 U.S.C. 256b(a)) is amended— (A)in paragraph (1), by inserting or required under paragraph (11) after as provided by the Secretary; and (B)by adding at the end the following: (11)

Reduced negotiated price for covered drugs advertised directly to consumers

(A)

In general

An agreement entered into under paragraph (1) shall provide that with respect to each covered drug of the manufacturer that is purchased by a covered entity, the price charged shall not exceed the reduced negotiated price for that drug in accordance with the procedures established under section 3(a) of the Pharmaceutical Advertising and Prudent Purchasing Act if the manufacturer fails to certify to the Secretary that the drug was not directly advertised to consumers during the 12-month period preceding the date of such purchase. (B)

Definition of directly advertised to consumers

In subparagraph (A), the term directly advertised to consumers means a reminder ad or product claim regarding a covered outpatient drug that is disseminated through radio, television, or other electronic media, print media, or outdoor advertising. . (2)

Procurement of prescription drugs by the department of veterans affairs, department of defense, the public health service (including the indian health service) and the coast guard

Section 8126 of title 38, United States Code, is amended— (A)in subsection (a)— (i)in paragraph (3), by striking and at the end; (ii)by redesignating paragraph (4) as paragraph (5); (iii)in paragraph (5) (as redesignated by clause (ii)), by striking and (3) and inserting (3), and (4); and (iv)by inserting after paragraph (3), the following: (4)with respect to each covered drug of the manufacturer that is procured by a Federal agency described in subsection (b) under depot contracting systems, a national contract entered into by the Secretary, or under the Federal Supply Schedule, the price charged shall not exceed the reduced negotiated price for that drug in accordance with the procedures established under section 3(a) of the Pharmaceutical Advertising and Prudent Purchasing Act if the manufacturer fails to certify to the Secretary or the head of the Federal agency involved that the drug was not directly advertised to consumers during the 12-month period preceding the date of such procurement; ; and (B)in subsection (h), by adding at the end the following: (7)

Directly advertised to consumers

The term directly advertised to consumers means a reminder ad or product claim regarding a covered drug that is disseminated through radio, television, or other electronic media, print media, or outdoor advertising. . (e)

Effective date

The amendments made by this section apply to master agreements, pricing agreements, and contracts entered into or renewed on or after the date that is 180 days after the date of enactment of this Act.

4.

Report to congress on strategies to reduce the cost of prescription drugs covered under medicare and other federal programs that are directly advertised to consumers

(a)

In general

Not later than January 1, 2007, the Secretary of Health and Human Services, in consultation with the Secretary of Veterans Affairs, shall submit a report to Congress that contains the following information: (1)The percentage of costs for prescription drugs that are directly advertised to consumers that are passed on to Federal agencies and programs that purchase or provide reimbursement for such drugs. (2)The 25 most frequently prescribed drugs that are directly advertised to consumers and are purchased or reimbursed by Federal agencies and programs. (3)The 25 most costly prescription drugs that are directly advertised to consumers and are purchased or reimbursed by Federal agencies and programs. (4)The aggregate amount spent by manufacturers of prescription drugs— (A)to directly advertise to consumers; and (B)for the 25 most costly prescription drugs that are directly advertised to consumers. (5)Mechanisms for Federal agencies and programs to share information concerning— (A)which prescription drugs are directly advertised to consumers; (B)the costs to Federal agencies and programs of such drugs; and (C)utilization, cost, and reimbursement data regarding the purchase of such drugs, separately identified with respect to the medicare program and other Federal agencies and programs, and disaggregated for age cohorts, gender, and diagnoses of the individuals using such drugs. (6)Recommendations for legislative or administrative changes or alternative strategies, separately identified with respect to the medicare program and other Federal agencies and programs, to ensure that Federal payments for prescription drugs are reduced for prescription drugs directly advertised to consumers. (7)Strategies to ensure that prescription drug utilization under Federal agencies and programs is based on health needs. (8)Such other recommendations for legislation or administrative action as the Secretary determines to be appropriate. (b)

Definitions

In this section: (1)

Directly advertised to consumers

The term directly advertised to consumers has the meaning given that term in section 1927(b)(5)(C) of the Social Security Act (as added by section 2(a)). (2)

Federal agency and program

The term Federal agency and program means the Federal agencies and programs described in section 3(b) and includes the medicare program established under title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.). (3)

Manufacturer

The term manufacturer has the meaning given that term in section 8126(h)(4) of title 38, United States Code, and section 1927(k)(5) of the Social Security Act (42 U.S.C. 1396r–8(k)(5)).