II 109th CONGRESS 1st Session S. 345 IN THE SENATE OF THE UNITED STATES February 10, 2005 Mr. Durbin 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 Prescription Drug Savings and Choice Act of 2005.

2.

Establishment of medicare operated prescription drug plan option

(a)

In general

Subpart 2 of part D of the Social Security Act is amended by inserting after section 1860D–11 the following new section:

1860D–11A.

Medicare operated prescription drug plan option

(a)

In general

Notwithstanding any other provision of this part, for each year (beginning with 2006), in addition to any plans offered under section 1860D–11, the Secretary shall offer one or more medicare operated prescription drug plans (as defined in subsection (c)) with a service area that consists of the entire United States and shall enter into negotiations with pharmaceutical manufacturers to reduce the purchase cost of covered part D drugs for eligible part D individuals in accordance with subsection (b). (b)

Negotiations

Notwithstanding section 1860D–11(i), for purposes of offering a medicare operated 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 operated prescription drug plan defined

For purposes of this part, the term medicare operated prescription drug plan means a prescription drug plan that offers qualified prescription drug coverage and access to negotiated prices described in section 1860D–2(a)(1)(A). Such a plan may offer supplemental prescription drug coverage in the same manner as other qualified prescription drug coverage offered by other prescription drug plans. (d)

Monthly beneficiary premium

(1)

Qualified prescription drug coverage

The monthly beneficiary premium for qualified prescription drug coverage and access to negotiated prices described in section 1860D–2(a)(1)(A) to be charged under a medicare operated prescription drug plan shall be uniform nationally. Such premium for months in 2006 shall be $35 and for months in succeeding years shall be based on the average monthly per capita actuarial cost of offering the medicare operated prescription drug plan for the year involved, including administrative expenses. (2)

Supplemental prescription drug coverage

Insofar as a medicare operated prescription drug plan offers supplemental prescription drug coverage, the Secretary may adjust the amount of the premium charged under paragraph (1). (3)

Requirement for at least one plan with a $35 premium in 2006

The Secretary shall ensure that at least one medicare operated prescription drug plan offered in 2006 has a monthly premium of $35.

. (b)

Conforming amendments

(1)Section 1860D–3(a) of the Social Security Act (42 U.S.C. 1395w–103(a)) is amended by adding at the end the following new paragraph: (4)

Availability of the medicare operated prescription drug plan

(A)

In general

A medicare operated prescription drug plan (as defined in section 1860D–11A(c)) shall be offered nationally in accordance with section 1860D–11A. (B)

Relationship to other plans

(i)

In general

Subject to clause (ii), a medicare operated prescription drug plan shall be offered in addition to any qualifying plan or fallback prescription drug plan offered in a PDP region and shall not be considered to be such a plan for purposes of meeting the requirements of this subsection. (ii)

Designation as a Fallback plan

Notwithstanding any other provision of this part, the Secretary may designate the medicare operated prescription drug plan as the fallback prescription drug plan for any fallback service area (as defined in section 1860D–11(g)(3)) determined to be appropriate by the Secretary. . (2)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 operated prescription drug plans after Fallback plans; and (B)by inserting or a medicare operated prescription drug plan after a fallback prescription drug plan. (3)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 operated prescription drug plans under section 1860D–11A. . (4)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 operated prescription drug plan

The term medicare operated prescription drug plan has the meaning given such term in section 1860D–11A(c). . (c)

Effective date

The amendments made by this section shall take effect as if included in the enactment of section 101 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Public Law 108–173; 117 Stat. 2071).