[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 2219 Introduced in Senate (IS)]







110th CONGRESS
  1st Session
                                S. 2219

To amend title XVIII of the Social Security Act to deliver a meaningful 
 benefit and lower prescription drug prices under the Medicare Program.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            October 23, 2007

 Mr. Durbin (for himself, Mr. Akaka, Ms. Stabenow, Mrs. Boxer, and Mr. 
Obama) 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.

    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 ``Medicare Prescription Drug Savings 
and Choice Act of 2007''.

SEC. 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 (42 U.S.C. 1395w-111) the 
following new section:

           ``medicare operated prescription drug plan option

    ``Sec. 1860D-11A.  (a) In General.--Notwithstanding any other 
provision of this part, for each year (beginning with 2009), 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 in accordance 
with subsection (b) with pharmaceutical manufacturers to reduce the 
purchase cost of covered part D drugs for eligible part D individuals 
who enroll in such a plan.
    ``(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 in a Medicare operated prescription drug plan 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, including the use of a formulary and formulary 
incentives in subsection (e), 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 2009 and each succeeding year 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).
    ``(e) Use of a Formulary and Formulary Incentives.--
            ``(1) In general.--With respect to the operation of a 
        medicare operated prescription drug plan, the Secretary shall 
        establish and apply a formulary (and may include formulary 
        incentives described in paragraph (2)(C)(ii)) in accordance 
        with this subsection in order to--
                    ``(A) increase patient safety;
                    ``(B) increase appropriate use and reduce 
                inappropriate use of drugs; and
                    ``(C) reward value.
            ``(2) Development of initial formulary.--
                    ``(A) In general.--In selecting covered part D 
                drugs for inclusion in a formulary. the Secretary shall 
                consider clinical benefit and price.
                    ``(B) Role of ahrq.--The Director of the Agency for 
                Healthcare Research and Quality shall be responsible 
                for assessing the clinical benefit of covered part D 
                drugs and making recommendations to the Secretary 
                regarding which drugs should be included in the 
                formulary. In conducting such assessments and making 
                such recommendations, the Director shall--
                            ``(i) consider safety concerns including 
                        those identified by the Federal Food and Drug 
                        Administration;
                            ``(ii) use available data and evaluations, 
                        with priority given to randomized controlled 
                        trials, to examine clinical effectiveness, 
                        comparative effectiveness, safety, and enhanced 
                        compliance with a drug regimen;
                            ``(iii) use the same classes of drugs 
                        developed by United States Pharmacopeia for 
                        this part;
                            ``(iv) consider evaluations made by--
                                    ``(I) the Director under section 
                                1013 of Medicare Prescription Drug, 
                                Improvement, and Modernization Act of 
                                2003;
                                    ``(II) other Federal entities, such 
                                as the Secretary of Veterans Affairs; 
                                and
                                    ``(III) other private and public 
                                entities, such as the Drug 
                                Effectiveness Review Project and 
                                Medicaid programs; and
                            ``(v) recommend to the Secretary--
                                    ``(I) those drugs in a class that 
                                provide a greater clinical benefit, 
                                including fewer safety concerns or less 
                                risk of side-effects, than another drug 
                                in the same class that should be 
                                included in the formulary;
                                    ``(II) those drugs in a class that 
                                provide less clinical benefit, 
                                including greater safety concerns or a 
                                greater risk of side-effects, than 
                                another drug in the same class that 
                                should be excluded from the formulary; 
                                and
                                    ``(III) drugs in a class with same 
                                or similar clinical benefit for which 
                                it would be appropriate for the 
                                Secretary to competitively bid (or 
                                negotiate) for placement on the 
                                formulary.
                    ``(C) Consideration of ahrq recommendations.--
                            ``(i) In general.--The Secretary, after 
                        taking into consideration the recommendations 
                        under subparagraph (B)(v), shall establish a 
                        formulary, and formulary incentives, to 
                        encourage use of covered part D drugs that--
                                    ``(I) have a lower cost and provide 
                                a greater clinical benefit than other 
                                drugs;
                                    ``(II) have a lower cost than other 
                                drugs with same or similar clinical 
                                benefit; and
                                    ``(III) drugs that have the same 
                                cost but provide greater clinical 
                                benefit than other drugs.
                            ``(ii) Formulary incentives.--The formulary 
                        incentives under clause (i) may be in the form 
                        of one or more of the following:
                                    ``(I) Tiered copayments.
                                    ``(II) Reference pricing.
                                    ``(III) Prior authorization.
                                    ``(IV) Step therapy.
                                    ``(V) Medication therapy 
                                management.
                                    ``(VI) Generic drug substitution.
                            ``(iii) Flexibility.--In applying such 
                        formulary incentives the Secretary may decide 
                        not to impose any cost-sharing for a covered 
                        part D drug for which--
                                    ``(I) the elimination of cost 
                                sharing would be expected to increase 
                                compliance with a drug regimen; and
                                    ``(II) compliance would be expected 
                                to produce savings under part A or B or 
                                both.
            ``(3) Limitations on formulary.--In any formulary 
        established under this subsection, the formulary may not be 
        changed during a year, except--
                    ``(A) to add a generic version of a covered part D 
                drug that entered the market;
                    ``(B) to remove such a drug for which a safety 
                problem is found; and
                    ``(C) to add a drug that the Secretary identifies 
                as a drug which treats a condition for which there has 
                not previously been a treatment option or for which a 
                clear and significant benefit has been demonstrated 
                over other covered part D drugs.
            ``(4) Adding drugs to the initial formulary.--
                    ``(A) Use of advisory committee.--The Secretary 
                shall establish and appoint an advisory committee (in 
                this paragraph referred to as the `advisory 
                committee')--
                            ``(i) to review petitions from drug 
                        manufacturers, health care provider 
                        organizations, patient groups, and other 
                        entities for inclusion of a drug in, or other 
                        changes to, such formulary; and
                            ``(ii) to recommend any changes to the 
                        formulary established under this subsection.
                    ``(B) Composition.--The advisory committee shall be 
                composed of 9 members and shall include representatives 
                of physicians, pharmacists, and consumers and others 
                with expertise in evaluating prescription drugs. The 
                Secretary shall select members based on their knowledge 
                of pharmaceuticals and the Medicare population. Members 
                shall be deemed to be special Government employees for 
                purposes of applying the conflict of interest 
                provisions under section 208 of title 18, United States 
                Code, and no waiver of such provisions for such a 
                member shall be permitted.
                    ``(C) Consultation.--The advisory committee shall 
                consult, as necessary, with physicians who are 
                specialists in treating the disease for which a drug is 
                being considered.
                    ``(D) Request for studies.--The advisory committee 
                may request the Agency for Healthcare Research and 
                Quality or an academic or research institution to study 
                and make a report on a petition described in 
                subparagraph (A)(ii) in order to assess--
                            ``(i) clinical effectiveness;
                            ``(ii) comparative effectiveness;
                            ``(iii) safety; and
                            ``(iv) enhanced compliance with a drug 
                        regimen.
                    ``(E) Recommendations.--The advisory committee 
                shall make recommendations to the Secretary regarding--
                            ``(i) whether a covered part D drug is 
                        found to provide a greater clinical benefit, 
                        including fewer safety concerns or less risk of 
                        side-effects, than another drug in the same 
                        class that is currently included in the 
                        formulary and should be included in the 
                        formulary;
                            ``(ii) whether a covered part D drug is 
                        found to provide less clinical benefit, 
                        including greater safety concerns or a greater 
                        risk of side-effects, than another drug in the 
                        same class that is currently included in the 
                        formulary and should not be included in the 
                        formulary; and
                            ``(iii) whether a covered part D drug has 
                        the same or similar clinical benefit to a drug 
                        in the same class that is currently included in 
                        the formulary and whether the drug should be 
                        included in the formulary.
                    ``(F) Limitations on review of manufacturer 
                petitions.--The advisory committee shall not review a 
                petition of a drug manufacturer under subparagraph 
                (A)(ii) with respect to a covered part D drug unless 
                the petition is accompanied by the following:
                            ``(i) Raw data from clinical trials on the 
                        safety and effectiveness of the drug.
                            ``(ii) Any data from clinical trials 
                        conducted using active controls on the drug or 
                        drugs that are the current standard of care.
                            ``(iii) Any available data on comparative 
                        effectiveness of the drug.
                            ``(iv) Any other information the Secretary 
                        requires for the advisory committee to complete 
                        its review.
                    ``(G) Response to recommendations.--The Secretary 
                shall review the recommendations of the advisory 
                committee and if the Secretary accepts such 
                recommendations the Secretary shall modify the 
                formulary established under this subsection 
                accordingly. Nothing in this section shall preclude the 
                Secretary from adding to the formulary a drug for which 
                the Director of the Agency for Healthcare Research and 
                Quality or the advisory committee has not made a 
                recommendation.
                    ``(H) Notice of changes.--The Secretary shall 
                provide timely notice to beneficiaries and health 
                professionals about changes to the formulary or 
                formulary incentives.
    ``(f) Informing Beneficiaries.--The Secretary shall take steps to 
inform beneficiaries about the availability of a Medicare operated drug 
plan or plans including providing information in the annual handbook 
distributed to all beneficiaries and adding information to the official 
public Medicare website related to prescription drug coverage available 
through this part.
    ``(g) Application of All Other Requirements for Prescription Drug 
Plans.--Except as specifically provided in this section, any Medicare 
operated drug plan shall meet the same requirements as apply to any 
other prescription drug plan, including the requirements of section 
1860D-4(b)(1) relating to assuring pharmacy access).''.
    (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 medicare operated prescription drug plan (as 
        defined in section 1860D-11A(c)) shall be offered nationally in 
        accordance with section 1860D-11A.''.
            (2)(A) 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, 2007, and 2008.--The 
provisions of this section shall only apply with respect to 2006, 2007, 
and 2008.''.
            (B) 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 2008.--A 
        fallback prescription drug plan shall not be available after 
        December 31, 2008.''.
            (3) 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''.
            (4) 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.''.
            (5) Section 1860D-41(a) of such Act (42 U.S.C. 1395w-
        151(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.

SEC. 3. IMPROVED APPEALS PROCESS UNDER THE MEDICARE OPERATED 
              PRESCRIPTION DRUG PLAN.

    Section 1860D-4(h) of the Social Security Act (42 U.S.C. 1305w-
104(h)) is amended by adding at the end the following new paragraph:
    ``(h) Appeals Process for Medicare Operated Prescription Drug 
Plan.--
            ``(1) In general.--The Secretary shall develop a well-
        defined process for appeals for denials of benefits under this 
        part under the medicare operated prescription drug plan. Such 
        process shall be efficient, impose minimal administrative 
        burdens, and ensure the timely procurement of non-formulary 
        drugs or exemption from formulary incentives when medically 
        necessary. Medical necessity shall be based on professional 
        medical judgment, the medical condition of the beneficiary, and 
        other medical evidence. Such appeals process shall include--
                    ``(A) an initial review and determination made by 
                the Secretary; and
                    ``(B) for appeals denied during the initial review 
                and determination, the option of an external review and 
                determination by an independent entity selected by the 
                Secretary.
            ``(2) Consultation in development of process.--In 
        developing the appeals process under paragraph (1), the 
        Secretary shall consult with consumer and patient groups, as 
        well as other key stakeholders to ensure the goals described in 
        paragraph (1) are achieved.''.

SEC. 4. PHARMACY PAYMENT UNDER THE MEDICARE OPERATED PRESCRIPTION DRUG 
              PLAN.

    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:
            ``(4) Pharmacy payment under the medicare operated 
        prescription drug plan.--
                    ``(A) In general.--Under the medicare operated 
                prescription drug plan, the Secretary shall develop a 
                system for payment to pharmacies. Such a system shall 
                include a requirement that the plan shall issue, mail, 
                or otherwise transmit payment for all clean claims 
                submitted under this part within the applicable number 
                of calendar days after the date on which the claim is 
                received.
                    ``(B) Definitions.--In this paragraph:
                            ``(i) Clean claim.--The term `clean claim' 
                        means a claim, with respect to a covered part D 
                        drug, that has no apparent defect or 
                        impropriety (including any lack of any required 
                        substantiating documentation) or particular 
                        circumstance requiring special treatment that 
                        prevents timely payment from being made on the 
                        claim under this part.
                            ``(ii) Applicable number of calendar 
                        days.--The term `applicable number of calendar 
                        days' means--
                                    ``(I) with respect to claims 
                                submitted electronically, 14 calendar 
                                days; and
                                    ``(II) with respect to claims 
                                submitted otherwise, 30 calendar days.
                    ``(C) Procedures involving claims.--
                            ``(i) Claims deemed to be clean claims.--
                                    ``(I) In general.--A claim for a 
                                covered part D drug shall be deemed to 
                                be a clean claim for purposes of this 
                                paragraph if the Secretary does not 
                                provide a notification of deficiency to 
                                the claimant by the 10th day that 
                                begins after the date on which the 
                                claim is submitted.
                                    ``(II) Notification of 
                                deficiency.--For purposes of subclause 
                                (I), the term `notification of 
                                deficiency' means a notification that 
                                specifies all defects or improprieties 
                                in the claim involved and that lists 
                                all additional information or documents 
                                necessary for the proper processing and 
                                payment of the claim.
                            ``(ii) Payment of clean portions of 
                        claims.--The Secretary shall, as appropriate, 
                        pay any portion of a claim for a covered part D 
                        drug under the medicare operated prescription 
                        drug plan that would be a clean claim but for a 
                        defect or impropriety in a separate portion of 
                        the claim in accordance with subparagraph (A).
                            ``(iii) Obligation to pay.--A claim for a 
                        covered part D drug submitted to the Secretary 
                        that is not paid or contested by the provider 
                        within the applicable number of calendar days 
                        (as defined in subparagraph (B)) shall be 
                        deemed to be a clean claim and shall be paid by 
                        the Secretary in accordance with subparagraph 
                        (A).
                            ``(iv) Date of payment of claim.--Payment 
                        of a clean claim under subparagraph (A) is 
                        considered to have been made on the date on 
                        which full payment is received by the provider.
                    ``(D) Electronic transfer of funds.--The Secretary 
                shall pay all clean claims submitted electronically by 
                an electronic funds transfer mechanism.''.
                                 <all>