II 110th CONGRESS 1st Session S. 250 IN THE SENATE OF THE UNITED STATES January 10, 2007 Ms. Snowe (for herself and Mr. Wyden) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To reduce the costs of prescription drugs for Medicare beneficiaries and to guarantee access to comprehensive prescription drug coverage under part D of the Medicare program, and for other purposes.

1.

Short title

This Act may be cited as the Medicare Enhancements for Needed Drugs Act of 2007.

2.

GAO studies and reports on prices of prescription drugs

(a)

Review and reports on retail prices of prescription drugs

(1)

Initial review

The Comptroller General of the United States shall conduct a review of the retail cost of prescription drugs in the United States during 2000 through 2006, with an emphasis on the prescription drugs most utilized for individuals age 65 or older. (2)

Subsequent review

After conducting the review under paragraph (1), the Comptroller General shall continuously review the retail cost of such drugs through December 31, 2010, to determine the changes in such costs. (3)

Reports

(A)

Initial review

Not later than 90 days after the date of enactment of this Act, the Comptroller General shall submit to Congress a report on the initial review conducted under paragraph (1). (B)

Subsequent review

Not later than April 1 of 2008, 2009, 2010, and 2011, the Comptroller General shall submit to Congress a report on the subsequent review conducted under paragraph (2). (b)

Annual GAO study and report on retail and acquisition prices of certain prescription drugs

(1)

Ongoing study

The Comptroller General of the United States shall conduct an ongoing study that compares the average retail cost in the United States for each of the 20 most utilized prescription drugs for individuals age 65 or older with— (A)the average price at which private health plans acquire each such drug; (B)the average price at which the Department of Defense under the Defense Health Program acquires each such drug; (C)the average price at which the Department of Veterans Affairs under the laws administered by the Secretary of Veterans Affairs acquires each such drug; and (D)the average negotiated price for each such drug that eligible beneficiaries enrolled in a prescription drug plan under part D of title XVIII of the Social Security Act that provides only basic prescription drug coverage have access to under such plans. (2)

Annual report

Not later than October 1, 2007, and annually thereafter, the Comptroller General shall submit to Congress a report on the study conducted under paragraph (1), together with such recommendations as the Comptroller General determines appropriate.

3.

Inclusion of average aggregate beneficiary costs and savings in comparative information for basic medicare prescription drug plans

Section 1860D–1(c)(3) of the Social Security Act (42 U.S.C. 1395w–101(c)(3)) is amended— (1)in subparagraph (A)— (A)in the matter preceding clause (i), by striking subparagraph (B) and inserting subparagraphs (B) and (C); and (B)by adding at the end the following new clause: (vi)

Average aggregate beneficiary costs and savings

With respect to plan years beginning on or after January 1, 2008, the average aggregate costs, including deductibles and other cost-sharing, that a beneficiary will incur for covered part D drugs in the year under the plan compared to the average aggregate costs that an eligible beneficiary with no prescription drug coverage will incur for covered part D drugs in the year. ; and (2)by adding at the end the following new subparagraph: (C)

Average aggregate beneficiary costs and savings information only for basic prescription drug plans

The Secretary shall not provide comparative information under subparagraph (A)(vi) with respect to— (i)a prescription drug plan that provides supplemental prescription drug coverage; or (ii)a Medicare Advantage plan. .

4.

Negotiating fair prices for medicare prescription drugs

(a)

In general

Section 1860D–11 of the Social Security Act (42 U.S.C. 1395w–111) is amended by striking subsection (i) (relating to noninterference) and by inserting the following: (i)

Authority To negotiate prices with manufacturers

(1)

In general

In order to ensure that beneficiaries enrolled under prescription drug plans and MA–PD plans pay the lowest possible price, the Secretary shall have authority similar to that of other Federal entities that purchase prescription drugs in bulk to negotiate contracts with manufacturers of covered part D drugs, consistent with the requirements and in furtherance of the goals of providing quality care and containing costs under this part. (2)

Mandatory responsibilities

The Secretary shall be required to— (A)negotiate contracts with manufacturers of covered part D drugs when the drug is a single source drug without a therapeutic equivalent; (B)participate in the negotiation of contracts with respect to any covered part D drug upon the request of an approved prescription drug plan or MA–PD plan; (C)participate in the negotiation of contracts for any covered part D drugs for which there is a substantial amount of Federal research funding in the development of the drug; and (D)negotiate contracts with manufacturers of covered part D drugs for each standard fallback prescription drug plan under subsection (g) and each comprehensive fallback prescription drug plan under subsection (k). (3)

Rule of construction

Nothing in paragraph (2) shall be construed to limit the authority of the Secretary under paragraph (1) to the mandatory responsibilities under paragraph (2). (4)

No particular formulary or price structure

In order to promote competition under this part and in carrying out this part, the Secretary may not require a particular formulary or institute a price structure for the reimbursement of covered part D drugs. (5)

Use of savings

The savings to the Medicare Prescription Drug Account through the use of the authority provided under this subsection (including the mandatory responsibilities under paragraph (2)) shall be used to strengthen the program under this part and to reduce the Federal deficit. . (b)

Effective date

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

5.

Access to a comprehensive Medicare prescription drug plan

(a)

Requirement for access

Section 1860D–3(a) of the Social Security Act (42 U.S.C. 1395w–103(a)) is amended— (1)in paragraph (1)— (A)by striking Choice of at least two plans in each area.—The Secretary and inserting “Choice (A)

Choice of at least two plans in each area

The Secretary ; and (B)by adding at the end the following new subparagraph: (B)

Choice of a comprehensive prescription drug plan

In addition to the requirement under subparagraph (A), the Secretary shall ensure that each part D eligible individual has available a choice of enrollment in a comprehensive prescription drug plan (as defined in paragraph (4)) in the area in which the individual resides. In any such case in which such a plan is not available, the part D eligible individual shall be given the opportunity to enroll in a comprehensive fallback prescription drug plan. ; and (2)by adding at the end the following new paragraph: (4)

Comprehensive prescription drug plan

For purposes of this section, the term comprehensive prescription drug plan means a prescription drug plan that provides coverage of covered part D drugs after an individual has reached the initial coverage limit under paragraph (3) of section 1860D–2(b) but has not reached the annual out-of-pocket threshold under paragraph (4)(B) of such section that is the same as the coverage for such drugs that is provided under the plan after the individual has met the deductible under paragraph (1) of such section but has not reached such initial coverage limit. . (b)

Comprehensive fallback prescription drug plan

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

Guaranteeing access to comprehensive coverage

(1)

Solicitation of bids

Separate from the bidding process under subsections (b) and (g), the Secretary shall provide for a process for the solicitation of bids from eligible comprehensive fallback entities (as defined in paragraph (2)) for the offering in all comprehensive fallback service areas (as defined in paragraph (3)) in one or more PDP regions of a comprehensive fallback prescription drug plan (as defined in paragraph (4)) during the contract period specified in subsection (g)(5) (as made applicable to this subsection under paragraph (6)). (2)

Eligible comprehensive fallback entity

For purposes of this section, the term eligible comprehensive fallback entity means, with respect to all comprehensive fallback service areas in a PDP region for a contract period, an entity that— (A)meets the requirements to be a PDP sponsor (or would meet such requirements but for the fact that the entity is not a risk-bearing entity); and (B)does not submit a bid under section 1860D–11(b) for any prescription drug plan for any PDP region for the first year of such contract period. For purposes of subparagraph (B), an entity shall be treated as submitting a bid with respect to a prescription drug plan if the entity is acting as a subcontractor of a PDP sponsor that is offering such a plan. The previous sentence shall not apply to entities that are subcontractors of an MA organization except insofar as such organization is acting as a PDP sponsor with respect to a prescription drug plan.(3)

Fallback service area

For purposes of this subsection, the term comprehensive fallback service area means, for a PDP region with respect to a year, any area within such region for which the Secretary determines before the beginning of the year that the access requirements of the first sentence of section 1860D–3(a)(1)(B) will not be met for part D eligible individuals residing in the area for the year. (4)

Comprehensive fallback prescription drug plan

For purposes of this part, the term comprehensive fallback prescription drug plan means a prescription drug plan that— (A)offers the standard prescription drug coverage and access to negotiated prices described in section 1860D–2(a)(1)(A); (B)offers coverage of covered part D drugs after an individual has reached the initial coverage limit under paragraph (3) of section 1860D–2(b) but has not reached the annual out-of-pocket threshold under paragraph (4)(B) of such section that is the same as the coverage for such drugs that is offered after the individual has met the deductible under paragraph (1) of such section but has not reached such initial coverage limit; and (C)meets such other requirements as the Secretary may specify. (5)

Monthly beneficiary premium

Except as provided in section 1860D–13(b) (relating to late enrollment penalty) and subject to section 1860D–14 (relating to low-income assistance), the monthly beneficiary premium to be charged under a comprehensive fallback prescription drug plan offered in all comprehensive fallback service areas in a PDP region shall be uniform and shall be an amount equal to— (A)25.5 percent of an amount equal to the Secretary’s estimate of the average monthly per capita actuarial cost, including administrative expenses, under the comprehensive fallback prescription drug plan of providing the coverage described in paragraph (4)(A) in the region, as calculated by the Chief Actuary of the Centers for Medicare & Medicaid Services; and (B)100 percent of an amount equal to the Secretary’s estimate of the average monthly per capita actuarial cost, including administrative expenses, under the comprehensive fallback prescription drug plan of providing the coverage described in paragraph (4)(B) in the region, as calculated by the Chief Actuary of the Centers for Medicare & Medicaid Services. In calculating such administrative expenses, the Chief Actuary shall use a factor that is based on similar expenses of prescription drug plans that are not standard or comprehensive fallback prescription drug plans.(6)

Incorporation of standard fallback prescription drug plan provisions

The provisions of paragraphs (1)(B), (5), and (7) of subsection (g) shall apply to comprehensive fallback prescription drug plans and entities offering such plans in the same manner as such provisions apply to standard fallback prescription drug plans and entities offering such plans. (7)

Same entity may offer both fallback prescription drug plans in an area

The Secretary may award a contract to an entity under this subsection with respect to an area and period and a contract under subsection (g) with respect to the same area and period. . (c)

Conforming amendments

(1)

Access

Section 1860D–3 of the Social Security Act (42 U.S.C. 1395w–103) is amended— (A)in subsection (a)— (i)in paragraph (1)(A) of subsection (a), as redesignated by subsection (a), by inserting standard before fallback; (ii)in paragraph (2), by striking paragraph (1) and inserting paragraph (1)(A); and (B)in subsection (b)(2), by striking fallback prescription drug plan for that area under section 1860D–11(g) and inserting standard or comprehensive fallback prescription drug plan for that area under subsections (g) and (k) of section 1860D–11, as applicable. (2)

Limited risk plans

Section 1860D–11(f) of the Social Security Act (42 U.S.C. 1395w–111(f)) is amended— (A)in paragraph (1)— (i)by striking 1860D–3(a) and inserting 1860D–3(a)(1)(A); and (ii)by inserting standard before fallback; and (B)in paragraph (2)(A), by striking 1860D–3(a) and inserting 1860D–3(a)(1)(A); and (C)in each of subparagraphs (A) and (B) of paragraph (4), by striking a fallback and inserting a standard or comprehensive fallback. (3)

Standard fallback prescription drug plan

Section 1860D–11(g) of the Social Security Act (42 U.S.C. 1395w–111(g)) is amended— (A)in the heading, by inserting standard prescription drug after access to; (B)by inserting standard before fallback each place it appears; (C)by striking Fallback each place it appears and inserting Standard fallback; (D)by inserting standard before fallback each place it appears; and (E)in paragraph (3), by striking 1860D–3(a) and inserting 1860D–3(a)(1)(A). (4)

Annual report

Section 1860D–11(h) of the Social Security Act (42 U.S.C. 1395w–111(h)) is amended by striking (f) and (g) and inserting (f), (g), and (k). (5)

Limitation on entities offering fallback prescription drug plans

Section 1860D–12(b)(2) of the Social Security Act (42 U.S.C. 1395w–112(b)(2)) is amended— (A)in the matter preceding subparagraph (A), by striking a fallback and inserting a standard or comprehensive fallback; (B)in subparagraph (A)— (i)by striking section 1860D–11(g) and inserting subsection (g) or (k) of section 1860D–11; (ii)by striking such section and inserting such subsections, as applicable; and (iii)by striking a fallback and inserting a standard or comprehensive fallback; (C)in subparagraph (B), by striking a fallback and inserting a standard or comprehensive fallback; (D)in subparagraph (C), by striking a fallback and inserting a standard or comprehensive fallback and (E)in the flush matter following subparagraph (C), by striking a fallback and inserting a standard or comprehensive fallback. (6)

Collection of premium

Section 1860D–13(c)(3) of the Social Security Act (42 U.S.C. 1395w–113(c)(3)) is amended by striking a fallback and inserting a standard or comprehensive fallback. (7)

Payment

Section 1860D–15(g) of the Social Security Act (42 U.S.C. 1395w–115(g)) is amended by striking offering and all that follows and inserting the following: “offering.— (1)a standard prescription drug plan (as defined in paragraph (4) of section 1860D–11(g)), the amount payable shall be the amounts determined under the contract for such plan pursuant to paragraph (5) of such section; and (2)a comprehensive prescription drug plan (as defined in paragraph (4) of section 1860D–11(k)), the amount payable shall be the amounts determined under the contract for such plan pursuant to such paragraph (5) (as made applicable to section 1860D–11(k) under paragraph (6) of such section). . (8)

Payment from account

Section 1860D–16(b)(1)(B) of the Social Security Act (42 U.S.C. 1395w–116(b)(1)(B)) is amended by inserting standard and comprehensive before fallback. (9)

Definition

Section 1860D–41(a)(5) of the Social Security Act (42 U.S.C. 1395w–151(a)(5)) is amended to read as follows: (5)

Standard fallback prescription drug plan; comprehensive fallback prescription drug plan

The terms standard fallback prescription drug plan and comprehensive fallback prescription drug plan have the meaning given those terms in subsection (g)(4) and (k)(4), respectively, of section 1860D–11. . (d)

Effective date

The amendments made by this section shall take effect on January 1, 2008.