II 109th CONGRESS 2d Session S. 2342 IN THE SENATE OF THE UNITED STATES March 1, 2006 Ms. Stabenow (for herself, Mr. Kennedy, Mr. Levin, Mrs. Clinton, Mr. Akaka, Mr. Lautenberg, Mrs. Boxer, and Mr. Dayton) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend title XVIII of the Social Security Act to deliver a meaningful benefit and lower prescription drug prices under the Medicare program.

1.

Short title

This Act may be cited as the Medicare-Guaranteed Prescription Drug Act of 2006.

2.

Establishment of Medicare-Guaranteed Prescription Drug Plan option

(a)

In general

Subpart 2 of part D of the Social Security Act (42 U.S.C. 1395w–111 et seq.) is amended by inserting after section 1860D–11 the following new section:

1860D–11A.

medicare-guaranteed prescription drug plan option

(a)

In general

Notwithstanding any other provision of this part, for each year (beginning with 2007), the Secretary shall— (1)in addition to any plans offered under section 1860D–11, offer a Medicare-Guaranteed Prescription Drug Plan (as defined in subsection (c)) with a service area that consists of the entire United States; and (2)enter into negotiations with pharmaceutical manufacturers to reduce the purchase cost of covered part D drugs under such Plan for eligible part D individuals in accordance with subsection (b). (b)

Negotiations

Notwithstanding section 1860D–11(i), for purposes of offering the Medicare-Guaranteed Prescription Drug Plan under this section, the Secretary shall negotiate with pharmaceutical manufacturers with respect to the purchase price of covered part D drugs and shall encourage the use of more affordable therapeutic equivalents to the extent such practices do not override medical necessity as determined by the prescribing physician. To the extent practicable and consistent with the previous sentence, the Secretary shall implement strategies similar to those used by other Federal purchasers of prescription drugs, and other strategies, to reduce the purchase cost of covered part D drugs. (c)

Medicare-Guaranteed Prescription Drug Plan defined

For purposes of this part, the term Medicare-Guaranteed Prescription Drug Plan means a prescription drug plan that offers standard prescription drug coverage and access to negotiated prices described in section 1860D–2(a)(1)(A). (d)

Monthly beneficiary premium

The monthly beneficiary premium to be charged under a Medicare-Guaranteed Prescription Drug Plan shall be uniform nationally and shall be equal to the base beneficiary premium (computed under section 1860D–13(a)(2)) applicable for the year.

. (b)

Sunset of unnecessary plan requirement and fallback plan provisions

(1)

Plan requirement

Section 1860D–3 of the Social Security Act (42 U.S.C. 1395w–103) is amended by adding at the end the following new subsection: (c)

Provisions only applicable in 2006

The provisions of this section shall only apply with respect to 2006. . (2)

Fallback

Section 1860D–11(g) of such Act (42 U.S.C. 1395w–111(g)) is amended by adding at the end the following new paragraph: (8)

No authority for fallback plans after 2006

A fallback prescription drug plan shall not be available after December 31, 2006. . (c)

Conforming amendments

(1)

Application of limited risk plans

Section 1860D–11(f) of the Social Security Act (42 U.S.C. 1395w–111(f)) is amended by adding at the end the following new paragraph: (5)

No authority for limited risk plans after 2006

A limited risk plan shall not be available after December 31, 2006. . (2)

Annual report

Section 1860D–11(h) of such Act (42 U.S.C. 1395w–111(h)) is amended— (A)in the heading, by striking Annual; (B)in the first sentence— (i)by striking an annual and inserting a; and (ii)by inserting during 2006 before the period at the end; and (C)by striking the second sentence. (3)

Collection of monthly beneficiary premiums

Section 1860D–13(c)(3) of such Act (42 U.S.C. 1395w–113(c)(3)) is amended— (A)in the heading, by inserting and Medicare-Guaranteed Prescription Drug Plans after Fallback plans; and (B)by inserting or a Medicare-Guaranteed Prescription Drug Plan after a fallback prescription drug plan. (4)

Payments from medicare prescription drug account

Section 1860D–16(b)(1) of such Act (42 U.S.C. 1395w–116(b)(1)) is amended— (A)in subparagraph (C), by striking and after the semicolon at the end; (B)in subparagraph (D), by striking the period at the end and inserting ; and; and (C)by adding at the end the following new subparagraph: (E)payments for expenses incurred with respect to the operation of Medicare-Guaranteed Prescription Drug Plans under section 1860D–11A. . (5)

Definitions

Section 1860D–41(a) of such Act (42 U.S.C. 141(a)) is amended by adding at the end the following new paragraph: (19)

Medicare-guaranteed prescription drug plan

The term Medicare-Guaranteed Prescription Drug Plan has the meaning given such term in section 1860D–11A(c). . (d)

Effective date

The amendments made by this section shall take effect on the date of enactment of this Act.

3.

Improvement of part D standard prescription drug coverage

(a)

Deductible same as part B

(1)

In general

Section 1860D–2(b)(1) of the Social Security Act (42 U.S.C. 1395w–102(b)(1)) is amended to read as follows: (1)

Deductible

The coverage has an annual deductible that is equal to amount of the deductible applicable for the year under the first sentence of section 1833(b). . (2)

Conforming amendment

Section 1860D–22(a)(3)(B)(ii) of such Act (42 U.S.C. 1395w–132(a)(3)(B)(ii)) is amended by striking as the annual deductible and all that follows through the period and inserting the annual out-of-pocket threshold is annually adjusted under section 1860D–2(b)(4)(B), except that in the case of the cost threshold, if such amount is not a multiple of $5, it shall be rounded to the nearest $5. (b)

Reduced coinsurance

(1)

In general

Section 1860D–2(b)(2) of the Social Security Act (42 U.S.C. 1395w–102(b)(2))— (A)in the heading, by striking 25 percent and inserting 20 percent; and (B)in clauses (i) and (ii), by striking 25 percent and inserting 20 percent. (2)

Low-income subsidy

Section 1860D–14(a)(2)(D) of such Act (42 U.S.C. 1395w–114(a)(2)(D)) is amended— (A)by striking 15 percent and inserting 10 percent; and (B)by striking 25 percent and inserting 20 percent. (c)

Elimination of coverage gap

(1)

In general

(A)

In general

Paragraph (3) of section 1860D–2(b) of the Social Security Act (42 U.S.C. 1395w–102(b)) is repealed. (B)

Revision of benefit structure

Section 1860D–2(b)(2)(A) of such Act (42 U.S.C. 1395w–102(b)(2)(A)) is amended by striking and up to the initial coverage limit under paragraph (3) and inserting and up to the point at which the annual out-of-pocket threshold is reached under paragraph (4) in the matter preceding clause (i). (2)

Conforming amendments

(A)

Supplemental prescription drug coverage

Section 1860D–2(a)(2)(A)(i)(I) of such Act (42 U.S.C. 1395w–102(a)(2)(A)(i)(I)) is amended— (i)by striking deductible, and inserting deductible or; (ii)by striking , or an increase in the initial coverage limit; and (iii)by striking or increase. (B)

Catastrophic

Section 1860D–2(b)(4)(C)(i) of such Act (42 U.S.C. 1395w–102(b)(4)(C)(i)) is amended— (i)by striking paragraph (1), and inserting paragraph (1) or; and (ii)by striking and for amounts for which benefits are not provided because of the application of the initial coverage limit described in paragraph (3),. (C)

Alternative prescription drug coverage

Section 1860D–2(c)(1)(C) of such Act (42 U.S.C. 1395w–102(c)(1)(C)) is amended— (i)in the heading by striking initial coverage limit and inserting out-of-pocket threshold; and (ii)by striking the initial coverage limit under subsection (b)(3) each place it appears and inserting the out-of-pocket threshold under subsection (b)(4). (D)

Access to negotiated prices

Section 1860D–2(d)(1)(A) of such Act (42 U.S.C. 1395w–102(d)(1)(A)) is amended by striking or an initial coverage limit (described in subsection (b)(3)). (E)

Claims information

Section 1860D–4(a)(4)(B)(i) of such Act (42 U.S.C. 1395w–104(a)(4)(B)(i)) is amended by striking relation to— and all that follows through the annual and inserting relation to the annual. (F)

Low-income subsidies

Section 1860D–14(a) of such Act (42 U.S.C. 1395w–114(a)) is amended by striking subparagraph (C) of paragraphs (1) and (2). (G)

Definition

Section 1860D–41(a)(6) of such Act (42 U.S.C. 1395w–151(a)(6)) is repealed. (d)

Elimination of cost-sharing above annual out-of-pocket threshold

(1)

In general

Section 1860D–2(b)(4)(A) of the Social Security Act (42 U.S.C. 1395w–102(b)(4)(A)) is amended to read as follows: (A)

In general

The coverage provides benefits, after the part D eligible individual has incurred costs (as described in subparagraph (C)) for covered part D drugs in a year equal to the annual out-of-pocket threshold specified in subparagraph (B), without any cost-sharing. . (2)

Conforming amendments

Paragraphs (1) and (2) of section 1860D–14(a) of such Act (42 U.S.C. 1395w–114(a)) are each amended by striking subparagraph (E). (e)

Effective Date

The amendments made by this section shall take effect on January 1, 2007.