1.Short
title; table of contents
(a)This Act may be cited
as the Prescription Drug Cost
Reduction Act
.
(b)The table of contents for this Act is as follows:
Sec. 1. Short title; table of
contents.
Sec. 2. Medicare part B drug rebate program.
Sec. 3. Negotiation of drug prices under Medicare part
B.
Sec. 4. Payment for least costly alternative for Medicare part
B drugs.
Sec. 5. Study and report on physician reimbursement for drugs
and biologicals under Medicare part B.
Sec. 6. Requirements of pharmacy benefit managers.
Sec. 7. Certification for off-label prescribing of certain
drugs prescribed in a nursing home setting.
Sec. 8. Expansion of 340B program covered entities to include
PACE programs.
2.Medicare part B
drug rebate programSection
1842 of the Social Security Act (42 U.S.C. 1395u) is amended by adding at the
end the following new subsection:
(v)(1)Not later than 2 years
after the date of enactment of this subsection, the Secretary shall establish a
program under which a manufacturer shall provide a rebate to the Secretary for
drugs or biologicals of the manufacturer that are furnished under this
part.
(2)The program established under
paragraph (1)—
(A)shall be similar to rebate agreements
under section 1927 (including the application of an additional rebate for
certain drugs whose costs exceed an annual inflation target as described in
subsection (c)(2) of such section); and
(B)may use the average manufacturer price
(as determined under section 1927(k)(1)) or the average sales price (as defined
in section 1847A(c)) as the basis for calculating the amount of the rebate
under the program.
(3)The Secretary shall promulgate
regulations to carry out this
subsection.
.
3.Negotiation of
drug prices under Medicare part B
(a)Section 1842 of the
Social Security Act (42 U.S.C. 1395u), as amended by section 2, is amended by
adding at the end the following new subsection:
(w)Negotiation of
Prices for Drugs and Biologicals
(1)Notwithstanding any other provision of law, the Secretary
shall negotiate a contract with a manufacturer to establish the amount of
payment under this part for any drug or biological for which the program under
this part is the majority purchaser (as determined under paragraph (2)). The
Secretary shall negotiate such contracts with the goal of ensuring appropriate
and adequate access to necessary drugs and biologicals for individuals enrolled
under this part, while minimizing costs to such individuals and to the program
under this part to the greatest extent possible.
(2)For purposes of paragraph (1), the Secretary shall, by
regulation, establish a method to identify, based upon drug utilization rates,
any drug or biological for which greater than 50 percent of the units sold by
the manufacturer of such drug or biological in the preceding calendar year were
provided to individuals enrolled under this part.
(3)In
this subsection:
(A)The term drug and the term
biological have the same meaning as provided under section
1861(t).
(B)The
term manufacturer has the same meaning as provided under section
1847A(c)(6)(A).
.
(b)The amendments made by this section shall apply to drugs and
biologicals that are furnished on or after July 1, 2012.
4.Payment for
least costly alternative for Medicare part B drugsSection
1847A(b) of the Social Security Act (42 U.S.C. 1395w–3a(b)) is amended—
(1)in paragraph (1),
in the matter preceding subparagraph (A), by striking paragraph
(7)
and inserting paragraphs (7) and (9)
; and
(2)by adding at the
end the following new paragraph:
(9)Treatment of
functionally equivalent drugs and biologicalsIn the case of a
drug or biological furnished on or after the date that is 180 days after the
date of enactment of this paragraph, for which payment is determined under this
section, if the drug or biological is functionally equivalent (as defined by
the Secretary) to another drug or biological for which payment is determined
under this section, the amount of payment for both such drugs or biologicals
shall be equal to the payment amount otherwise determined under this section
(without regard to the application of this paragraph) for the least costly of
such drugs or
biologicals.
.
5.Study and report
on physician reimbursement for drugs and biologicals under Medicare part
B
(a)The
Secretary of Health and Human Services (in this section referred to as the
Secretary
) shall conduct a study on physician reimbursement for
drugs and biologicals furnished under part B of title XVIII of the Social
Security Act (42 U.S.C. 1395j et seq.). Such study shall include an evaluation
and assessment of the following:
(1)The ability of
physicians to afford and profit from drugs and biologicals purchased at the
current reimbursement rate of average sales price plus 6 percent under section
1847A of the Social Security Act (42 U.S.C. 1395w–3a), including any profit
margins with respect to such drugs and biologicals.
(2)The rate at which
physicians furnish the higher priced drug or biological under such part when
there is a cheaper alternative drug or biological.
(3)The feasibility
and merits of other reimbursement structures that are not based on the price of
the drug or biological, such as a flat, universal fee issued for every drug or
biological furnished under such part, or any other relevant reimbursement
structures.
(b)In
conducting the study under subsection (a), the Secretary shall consult with the
Administrator of the Centers for Medicare & Medicaid Services and the
Inspector General of the Department of Health and Human Services.
(c)
(1)Not later than 1 year after the date of enactment of this
Act, the Secretary shall submit to Congress a report containing the results of
the study conducted under subsection (a), together with recommendations for
changing physician reimbursement for drugs and biologicals under Medicare part
B.
(2)Consideration
of recommendations to remove incentives to prescribe higher priced
drugsIn making recommendations under paragraph (1), the
Secretary shall consider including recommendations that would—
(A)move
reimbursement for drugs and biologicals under Medicare part B away from being
based on the price of the drug or biological; and
(B)reduce or
eliminate incentives to furnish higher priced drugs and biologicals under such
part.
6.Requirements of
pharmacy benefit managers
(a)A pharmacy benefit manager (referred to in this section
as a PBM
) shall owe a fiduciary duty, in accordance with this
section, to each covered entity.
(b)In this section, the term covered entity
means the head of each Federal agency with which the PBM contracts,
including—
(1)the Secretary of
Health and Human Services with respect to the programs under part C of title
XVIII of the Social Security Act (42 U.S.C. 1395w–21 et seq.) and part D of
such title;
(2)the Secretary of
Veterans Affairs with respect to health coverage offered through the Department
of Veterans Affairs;
(3)the Secretary of
Defense with respect to the TRICARE program under chapter 55 of title 10,
United States Code; and
(4)the Director of
the Office of Personnel Management with respect to the Federal employee health
benefits program under chapter 89 of title 5, United States Code.
(c)
(1)The fiduciary duty described in subsection (a) shall
include the duty to—
(A)notify each
covered entity, on a quarterly basis, if the PBM substitutes a drug that costs
more than the drug prescribed to an individual by a practitioner, and disclose
the aggregate costs of the drug prescribed and the drug provided by the PBM and
any benefit or payment directly or indirectly received by the PBM as a result
of the substitution for all individuals receiving such substitute drug during
the applicable quarter;
(B)pass through any
benefit, rebate, or payment the PBM receives for promoting a drug that is more
expensive than a drug prescribed;
(C)in the case that
a PBM receives a payment or benefit for increasing volume of sales for a
particular drug, class of drug, or brand of drug, disclose the payment or
benefit with the covered entity; and
(D)disclose to
covered entities all financial terms and arrangements between the PBM and a
pharmaceutical drug company, including formulary management and drug-switch
agreements, educational support, claims processing and pharmacy network fees
that are charged from retail pharmacies, data sales fees, and other direct or
indirect remunerations, including discounts, charge backs or rebates, cash
discounts, free goods contingent on a purchase agreement, up-front payments,
coupons, goods in-kind, free or reduced-price services, grants, or other price
concessions or similar benefits offered to some or all purchasers from any
source, including manufacturers, pharmacies, enrollees, or any other person
that would serve to decrease the costs incurred under the plan.
(2)Reporting of
drug substitutionsThe Secretary of Health and Human Services
shall establish categories that describe reasons, such as a concern about drug
interactions or discretion of the PBM, for a PBM to substitute a drug that
costs more than the drug prescribed to an individual by a practitioner, as
described in paragraph (1)(A). In reporting drug substitutions under such
paragraph, a PBM shall state the category under which each type of substitution
falls.
(3)Direct or
indirect remunerationFor purposes of paragraph (1)(D), the term
direct or indirect remuneration includes discounts, chargebacks or
rebates, cash discounts, free goods contingent on a purchase agreement,
up-front payments, coupons, goods in-kind, free or reduced-price services,
grants, or other price concessions or similar benefits from manufacturers,
pharmacies or similar entities obtained by an intermediary contracting
organization with which the plan sponsor has contracted, regardless of whether
the intermediary contracting organization retains all or a portion of the
direct and indirect remuneration or passes the entire direct and indirect
remuneration to the plan sponsor and regardless of the terms of the contract
between the plan sponsor and the intermediary contracting organization.
(d)
(1)A PBM may require covered entities to keep the
information described in subsection (c)(4) confidential.
(2)Restrictions on
the use of information
(A)Officers, employees, and contractors of the Department of
Health and Human Services may use the information disclosed or obtained in
accordance with the provisions of this Act only for the purposes of, and to the
extent necessary in, carrying out this Act, including determination of
payments, payment-related oversight, and program integrity activities.
(B)
(i)The restriction described in subparagraph (A) does not
limit the authority of the Inspector General of the United States to fulfill
the responsibilities of the Inspector General in accordance with applicable
Federal law.
(ii)The restriction described in subparagraph (A) does not limit
the authority of the Centers for Medicare & Medicaid Services to use data
regarding drug claims in accordance with section 1848(m) of the Social Security
Act (42 U.S.C. 1395w–4(m)).
(e)To
ensure compliance with the requirements of this section, each covered entity
shall conduct audits of the PBMs with which the covered entity
contracts.
7.Certification
for off-label prescribing of certain drugs prescribed in a nursing home
settingTitle XVIII of the
Social Security Act (42 U.S.C. 1395 et seq.) is amended by adding at the end
the following new section:
1899B.Certification for off-label prescribing of certain drugs
prescribed in a nursing home setting(a)The Secretary shall
develop a form for use by physicians and practitioners (as defined in section
1842(b)(18)(C)) to certify that, in the case of an applicable drug prescribed
for an off-label use under this title, such use is for a medically accepted
indication.
(b)In
this section:
(1)The term applicable drug
means an atypical
antipsychotic prescribed for use in a nursing home setting (as defined by the
Secretary).
(2)The term off-label use means a use which has not
been approved by the Food and Drug Administration.
(3)Medically
accepted indicationThe term medically accepted
indication means the applicable drug is included in the compendia
described in section 1861(t)(1) or is approved by a committee described in such
section (or, in the case of an applicable drug that is a covered part D drug
(as defined in section 1860D–2(e)), has the meaning given such term in
paragraph (4) of such section 1860D–2(e)).
(c)The Secretary shall establish by regulation
requirements that, effective not later than 1 year after the date of enactment
of this section, physicians and practitioners use the form developed under
subsection (a) to make the certification under such subsection with respect to
an applicable drug prescribed by the physician or practitioner for an off-label
use under this title. In order to carry out these requirements in a timely
manner, the Secretary shall promulgate regulations that take effect on an
interim basis, after notice and pending opportunity for public
comment.
.
8.Expansion of
340B program covered entities to include PACE programs
(a)Section 340B(a) of the Public Health
Service Act (42 U.S.C. 256b(a)) is amended—
(1)in paragraph (4), by adding at the end the
following:
(P)An entity that is
a PACE provider offering a PACE program under section 1894 and section 1934 of
the Social Security Act.
;
and
(2)in paragraph
(5)(A), by adding at the end the following:
(iii)The Secretary shall establish a mechanism to ensure
that a manufacturer does not pay a duplicate discount with respect to a drug
that is subject to an agreement under this section if the PACE program receives
any rebate (including any negotiated price concessions) for the drug under part
D of title XVIII of the Social Security Act. Such mechanism shall be similar to
the mechanism established under clause
(ii).
.
(b)
(1)Section
1894(e) of the Social Security Act (42 U.S.C. 1395eee(e)) is amended by adding
at the end the following new paragraph:
(9)Participation
in 340B program
(A)In the case of a PACE program that serves part D eligible
individuals who are enrolled under such program, the PACE program agreement for
such program shall require the PACE provider offering the program to
participate in the drug discount program under section 340B of the Public
Health Service Act for purposes of purchasing covered part D drugs with respect
to qualified prescription drug coverage provided to such individuals.
(B)The
Secretary may accept an attestation by a PACE provider, at the time of
submitting a bid pursuant to section 1860D–21(f), as sufficient evidence of
participation in the drug discount program under section 340B of the Public
Health Service Act for purposes of subparagraph (A).
(C)Ensuring timely access to covered
outpatient drugsNothing in
this paragraph shall prevent a PACE program from providing enrollees access to
covered outpatient drugs (including covered part D drugs) through a retail
community pharmacy (as defined in section 1927(k)(10)) that is not a contract
pharmacy under the drug discount program under section 340B of the Public
Health Service Act in the case where such access is necessary to ensure that
such drugs are dispensed to enrollees on a timely basis.
(D)In
this paragraph:
(i)The term covered outpatient drug has
the meaning given such term for purposes of section 340B of the Public Health
Service Act.
(ii)The term covered part D drug has the meaning
given such term in section 1860D–2(e).
(iii)Part D
eligible individualThe term part D eligible
individual has the meaning given such term in section
1860D–1(a)(3)(A).
(iv)Qualified
prescription drug coverageThe term qualified prescription
drug coverage has the meaning given such term in section
1860D–2(a).
.
(2)Section
1934(e) of the Social Security Act (42 U.S.C. 1396u–4(e)) is amended by adding
at the end the following new paragraph:
(9)Participation
in 340B program
(A)In the case of a PACE program that serves part D eligible
individuals who are enrolled under such program, the PACE program agreement for
such program shall require the PACE provider offering the program to
participate in the drug discount program under section 340B of the Public
Health Service Act for purposes of purchasing covered part D drugs with respect
to qualified prescription drug coverage provided to such individuals.
(B)The
Secretary may accept an attestation by a PACE provider, at the time of
submitting a bid pursuant to section 1860D–21(f), as sufficient evidence of
participation in the drug discount program under section 340B of the Public
Health Service Act for purposes of subparagraph (A).
(C)Ensuring timely access to covered
outpatient drugsNothing in
this paragraph shall prevent a PACE program from providing enrollees access to
covered outpatient drugs (including covered part D drugs) through a retail
community pharmacy (as defined in section 1927(k)(10)) that is not a contract
pharmacy under the drug discount program under section 340B of the Public
Health Service Act in the case where such access is necessary to ensure that
such drugs are dispensed to enrollees on a timely basis.
(D)In
this paragraph:
(i)The term covered outpatient drug has
the meaning given such term for purposes of section 340B of the Public Health
Service Act.
(ii)The term covered part D drug has the meaning
given such term in section 1860D–2(e).
(iii)Part D
eligible individualThe term part D eligible
individual has the meaning given such term in section
1860D–1(a)(3)(A).
(iv)Qualified
prescription drug coverageThe term qualified prescription
drug coverage has the meaning given such term in section
1860D–2(a).
.
(3)The amendments made by this subsection shall apply to PACE
program agreements entered into on or after the date that is 2 years after the
date of enactment of this section.
(c)Inclusion of
savings in bids submitted by PACE programs providing qualified prescription
drug coverage
(1)Section 1860D–21(f) of the Social Security Act (42 U.S.C.
1395w–131(f)) is amended by adding at the end the following new
paragraph:
(4)Participation
in 340B program
(A)Inclusion of
savings in bids submitted
(i)An organization offering prescription drug coverage
under this subsection shall determine the estimated annual savings to the
organization as a result of participation in the drug discount program under
section 340B of the Public Health Service Act (as described in sections
1894(e)(2)(C) and 1934(e)(2)(C)).
(ii)Inclusion in
bids submittedThe bid of an organization offering prescription
drug coverage under this subsection shall reflect the estimated savings
determined by the organization under clause (i) for the plan year involved, and
shall take into account any additional costs to the organization as a result of
the implementation and administration of such drug discount program during the
plan year involved. Such bid shall include an attestation by the organization
that such savings are reflected in the bid amount.
(iii)Consideration
of applicable ceiling pricesIn making the determination under
clause (i), the organization shall consider the applicable ceiling prices for
covered outpatient drugs (using the access provided under section
340B(d)(1)(B)(iii) of the Public Health Service Act).
(B)Receipt of
percentage of savings
(i)Subject to clause (ii), an organization offering
prescription drug coverage under this subsection shall be eligible to receive
from the Secretary an amount equal to 10 percent of the estimated annual
savings to the Federal government (as determined by the Secretary under
regulations promulgated under subparagraph (C)) to the organization as a result
of participation in the drug discount program under section 340B of the Public
Health Service Act (as described in sections 1894(e)(2)(C) and 1934(e)(2)(C)).
In making the determination under the preceding sentence, the Secretary shall
consider the determination of the organization under subparagraph
(A)(i).
(ii)An
organization shall only be eligible to receive the amount under clause (i) for
the plan year involved if the organization—
(I)submits to the
Secretary an application in such form and manner, and containing such
information, as the Secretary may specify; and
(II)has in effect a
plan approved by the Secretary for the use of any amounts received under such
clause to—
- (aa)provide to
enrollees enhanced formulary coverage, medication management, or disease
management;
- (bb)invest in the
development of the organization (including through the use of a significant
proportion of the savings to invest in the development and use of qualified
electronic health records (as defined in section 3000(13) of the Public Health
Service Act) or other health information technology); or
- (cc)carry out other
initiatives approved by the Secretary.
(C)The
Secretary shall promulgate regulations to carry out this paragraph and sections
1894(e)(9) and
1934(e)(9).
.
(2)The amendment made by this subsection shall apply to plan
years beginning on or after the date that is 2 years after the date of
enactment of this Act.
(d)Not treated as
change in law for purposes of determining manufacturer
complianceSection 1927(a)(5) of the Social Security Act (42
U.S.C. 1396r–8(a)(5)) is amended—
(1)in subparagraph
(D)—
(A)by striking
amendments.—In determining
and inserting
“amendments.—
(i)Subject to clause (ii), in
determining
;
and
(B)by adding at the
end the following new clause:
(ii)The
Secretary shall take into account the amendments made by section 9 of the
Prescription Drug Cost Reduction
Act for purposes of determining whether an agreement under
subparagraph (A) meets the requirements of section 340B of the Public Health
Service Act and an agreement under such subparagraph shall not be determined to
meet such requirements if it does not meet the requirements under such section
with respect to covered outpatient drugs purchased by a covered entity
described in subsection (a)(4)(P) of such section on or after the date that is
1 year after the date of enactment of such
Act.
;
and
(2)in subparagraph
(E)—
(A)by striking
compliance.—A manufacturer
and inserting
“compliance.—
(i)Subject to clause (ii), a
manufacturer
;
and
(B)by adding at the
end the following new clause:
(ii)The
amendments made by section 9 of the Prescription Drug Cost Reduction Act shall
not be treated as a legislative change for purposes of applying clause (i) and
a manufacturer shall not be deemed to be in compliance with the requirements of
this paragraph if the manufacturer has not entered into an agreement with the
Secretary that meets the requirements under section 340B of the Public Health
Service Act with respect to covered outpatient drugs purchased by a covered
entity described in subsection (a)(4)(P) of such section on or after the date
that is 1 year after the date of enactment of such
Act.
.