[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3 Reported in House (RH)]
<DOC>
Union Calendar No. 264
116th CONGRESS
1st Session
H. R. 3
[Report No. 116-324, Parts I, II and III]
To establish a fair price negotiation program, protect the Medicare
program from excessive price increases, and establish an out-of-pocket
maximum for Medicare part D enrollees, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 19, 2019
Mr. Pallone (for himself, Mr. Neal, and Mr. Scott of Virginia)
introduced the following bill; which was referred to the Committee on
Energy and Commerce, and in addition to the Committees on Ways and
Means, and Education and Labor, for a period to be subsequently
determined by the Speaker, in each case for consideration of such
provisions as fall within the jurisdiction of the committee concerned
December 6, 2019
Reported from the Committee on Energy and Commerce with an amendment
[Strike out all after the enacting clause and insert the part printed
in italic]
December 6, 2019
Reported from the Committee on Ways and Means with an amendment
[Strike out all after the enacting clause and insert the part printed
in boldface roman]
December 6, 2019
Referral to the Committee on Education and Labor extended for a period
ending not later than December 9, 2019
December 9, 2019
Additional sponsors: Mr. Larson of Connecticut, Ms. Kuster of New
Hampshire, Ms. DeGette, Mr. Rush, Ms. Shalala, Mr. Ryan, Mr. Morelle,
Mr. Sablan, Mr. Case, Mr. Engel, Ms. Castor of Florida, Ms. Frankel,
Mr. Evans, Mr. Courtney, Mr. Norcross, Ms. Moore, Mr. Kildee, Ms.
Norton, Mr. McGovern, Mr. Visclosky, Mr. Carbajal, Mr. Pappas, Ms.
Bonamici, Ms. Hill of California, Mrs. Hayes, Mr. Cartwright, Mr.
McNerney, Ms. Blunt Rochester, Mr. Kim, Mr. Trone, Mr. Allred, Mr. Rose
of New York, Mr. Thompson of California, Ms. Meng, Mr. Cohen, Mr.
Suozzi, Ms. Wild, Ms. Eshoo, Mr. Soto, Mr. Horsford, Mr. Vela, Mrs.
Beatty, Ms. Wasserman Schultz, Mr. Keating, Mr. Golden, Mr. Schiff, Ms.
Craig, Mr. Welch, Mr. Michael F. Doyle of Pennsylvania, Ms. Garcia of
Texas, Mr. Danny K. Davis of Illinois, Mr. Ruiz, Ms. Matsui, Ms.
Slotkin, Ms. Wilson of Florida, Mr. Loebsack, Mr. Crist, Mrs. Bustos,
Ms. Mucarsel-Powell, Mr. Casten of Illinois, Ms. Schrier, Mr. Cuellar,
Ms. Wexton, Mr. Cleaver, Ms. Schakowsky, Mr. Sarbanes, Mr. Sean Patrick
Maloney of New York, Mr. Lawson of Florida, Mr. Phillips, Mr.
Schneider, Mr. Meeks, Mr. Espaillat, Mr. Lynch, Mr. Higgins of New
York, Mr. Langevin, Ms. Judy Chu of California, Ms. Stevens, Mr.
Perlmutter, Ms. Davids of Kansas, Mrs. Axne, Mr. Hastings, Mr. Beyer,
Mrs. Lowey, Mr. McEachin, Mrs. Torres of California, Mr. Payne, Ms.
Scanlon, Mr. Deutch, Mr. Yarmuth, Ms. Spanberger, Mr. Jeffries, Mrs.
McBath, Mrs. Dingell, Ms. Finkenauer, Mr. Garamendi, Ms. McCollum, Mr.
Veasey, Mr. Castro of Texas, Mr. Gonzalez of Texas, Ms. Bass, Mr.
Bishop of Georgia, Mr. Smith of Washington, Mr. Lowenthal, and Mrs.
Fletcher
December 9, 2019
Reported from the Committee on Education and Labor with an amendment;
committed to the Committee of the Whole House on the State of the Union
and ordered to be printed
[Strike out all after the enacting clause and insert the part printed
in boldface italic]
[For text of introduced bill, see copy of bill as introduced on
September 19, 2019]
_______________________________________________________________________
A BILL
To establish a fair price negotiation program, protect the Medicare
program from excessive price increases, and establish an out-of-pocket
maximum for Medicare part D enrollees, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) In General.--This Act may be cited as the ``Lower Drug Costs
Now Act of 2019''.
(b) Table of Contents.--The table of contents is as follows:
Sec. 1. Short title; table of contents.
TITLE I--LOWERING PRICES THROUGH FAIR DRUG PRICE NEGOTIATION
Sec. 101. Providing for lower prices for certain high-priced single
source drugs.
Sec. 102. Selected drug manufacturer excise tax imposed during
noncompliance periods.
TITLE II--MEDICARE PARTS B AND D PRESCRIPTION DRUG INFLATION REBATES
Sec. 201. Medicare part B rebate by manufacturers.
Sec. 202. Medicare part D rebate by manufacturers.
TITLE III--PART D IMPROVEMENTS AND MAXIMUM OUT-OF-POCKET CAP FOR
MEDICARE BENEFICIARIES
Sec. 301. Medicare part D benefit redesign.
Sec. 302. Allowing certain enrollees of prescription drugs plans and
MA-PD plans under Medicare program to
spread out cost-sharing under certain
circumstances.
Sec. 303. Establishment of pharmacy quality measures under Medicare
part D.
TITLE IV--PRESCRIPTION DRUG POLICIES FOR LOW-INCOME INDIVIDUALS
Sec. 401. Adjustments to Medicare part D cost-sharing reductions for
low-income individuals.
Sec. 402. Dissemination to Medicare part D subsidy eligible individuals
of information comparing premiums of
certain prescription drug plans.
Sec. 403. Providing for intelligent assignment of certain subsidy
eligible individuals auto-enrolled under
Medicare prescription drug plans and MA-PD
plans.
Sec. 404. Expanding eligibility for low-income subsidies under part D
of the Medicare program.
Sec. 405. Automatic eligibility of certain low-income territorial
residents for premium and cost-sharing
subsidies under the Medicare program;
Sunset of enhanced allotment program.
Sec. 406. Automatic qualification of certain Medicaid beneficiaries for
premium and cost-sharing subsidies under
part D of the Medicare program.
Sec. 407. Eliminating the resource requirement with respect to subsidy
eligible individuals under part D of the
Medicare program.
TITLE V--DRUG PRICE TRANSPARENCY
Sec. 501. Drug price transparency.
TITLE VI--MISCELLANEOUS
Sec. 601. Temporary increase in Medicare part B payment for certain
biosimilar biological products.
TITLE I--LOWERING PRICES THROUGH FAIR DRUG PRICE NEGOTIATION
SEC. 101. PROVIDING FOR LOWER PRICES FOR CERTAIN HIGH-PRICESECTIOND
SINGLE SOURCE DRUGS.
(a) Program To Lower Prices for Certain High-Priced Single Source
Drugs.--Title XI of the Social Security Act (42 U.S.C. 1301 et seq.) is
amended by adding at the end the following new part:
``PART E--FAIR PRICE NEGOTIATION PROGRAM TO LOWER PRICES FOR CERTAIN
HIGH-PRICED SINGLE SOURCE DRUGS
``SEC. 1191. ESTABLISHMENT OF PROGRAM.
``(a) In General.--The Secretary shall establish a Fair Price
Negotiation Program (in this part referred to as the `program'). Under
the program, with respect to each price applicability period, the
Secretary shall--
``(1) publish a list of selected drugs in accordance with
section 1192;
``(2) enter into agreements with manufacturers of selected
drugs with respect to such period, in accordance with section
1193;
``(3) negotiate and, if applicable, renegotiate maximum
fair prices for such selected drugs, in accordance with section
1194; and
``(4) carry out the administrative duties described in
section 1196.
``(b) Definitions Relating to Timing.--For purposes of this part:
``(1) Initial price applicability year.--The term `initial
price applicability year' means a plan year (beginning with
plan year 2023) or, if agreed to in an agreement under section
1193 by the Secretary and manufacturer involved, a period of
more than one plan year (beginning on or after January 1,
2023).
``(2) Price applicability period.--The term `price
applicability period' means, with respect to a drug, the period
beginning with the initial price applicability year with
respect to which such drug is a selected drug and ending with
the last plan year during which the drug is a selected drug.
``(3) Selected drug publication date.--The term `selected
drug publication date' means, with respect to each initial
price applicability year, April 15 of the plan year that begins
2 years prior to such year.
``(4) Voluntary negotiation period.--The term `voluntary
negotiation period' means, with respect to an initial price
applicability year with respect to a selected drug, the
period--
``(A) beginning on the sooner of--
``(i) the date on which the manufacturer of
the drug and the Secretary enter into an
agreement under section 1193 with respect to
such drug; or
``(ii) June 15 following the selected drug
publication date with respect to such selected
drug; and
``(B) ending on March 31 of the year that begins
one year prior to the initial price applicability year.
``(c) Other Definitions.--For purposes of this part:
``(1) Fair price eligible individual.--The term `fair price
eligible individual' means, with respect to a selected drug--
``(A) in the case such drug is furnished or
dispensed to the individual at a pharmacy or by a mail
order service--
``(i) an individual who is enrolled under a
prescription drug plan under part D of title
XVIII or an MA-PD plan under part C of such
title under which coverage is provided for such
drug; and
``(ii) an individual who is enrolled under
a group health plan or health insurance
coverage offered in the group or individual
market (as such terms are defined in section
2791 of the Public Health Service Act) with
respect to which there is in effect an
agreement with the Secretary under section 1197
with respect to such selected drug as so
furnished or dispensed; and
``(B) in the case such drug is furnished or
administered to the individual by a hospital,
physician, or other provider of services or supplier--
``(i) an individual who is entitled to
benefits under part A of title XVIII or
enrolled under part B of such title if such
selected drug is covered under the respective
part; and
``(ii) an individual who is enrolled under
a group health plan or health insurance
coverage offered in the group or individual
market (as such terms are defined in section
2791 of the Public Health Service Act) with
respect to which there is in effect an
agreement with the Secretary under section 1197
with respect to such selected drug as so
furnished or administered.
``(2) Maximum fair price.--The term `maximum fair price'
means, with respect to a plan year during a price applicability
period and with respect to a selected drug (as defined in
section 1192(c)) with respect to such period, the price
published pursuant to section 1195 in the Federal Register for
such drug and year.
``(3) Average international market price defined.--
``(A) In general.--The terms `average international
market price' and `AIM price' mean, with respect to a
drug, the average price (which shall be the net average
price, if practicable, and volume-weighted, if
practicable) for a unit (as defined in paragraph (4))
of the drug for sales of such drug (calculated across
different dosage forms and strengths of the drug and
not based on the specific formulation or package size
or package type), as computed (as of the date of
publication of such drug as a selected drug under
section 1192(a)) in all countries described in clause
(ii) of subparagraph (B) that are applicable countries
(as described in clause (i) of such subparagraph) with
respect to such drug.
``(B) Applicable countries.--
``(i) In general.--For purposes of
subparagraph (A), a country described in clause
(ii) is an applicable country described in this
clause with respect to a drug if there is
available an average price for any unit for the
drug for sales of such drug in such country.
``(ii) Countries described.--For purposes
of this paragraph, the following are countries
described in this clause:
``(I) Australia.
``(II) Canada.
``(III) France.
``(IV) Germany.
``(V) Japan.
``(VI) The United Kingdom.
``(4) Unit.--The term `unit' means, with respect to a drug,
the lowest identifiable quantity (such as a capsule or tablet,
milligram of molecules, or grams) of the drug that is
dispensed.
``SEC. 1192. SELECTION OF NEGOTIATION-ELIGIBLE DRUGS AS SELECTED DRUGS.
``(a) In General.--Not later than the selected drug publication
date with respect to an initial price applicability year, the Secretary
shall select and publish in the Federal Register a list of--
``(1)(A) with respect to an initial price applicability
year during the period beginning with 2023 and ending with
2027, at least 25 negotiation-eligible drugs described in
subparagraphs (A) and (B), but not subparagraph (C), of
subsection (d)(1) (or, with respect to an initial price
applicability year during such period beginning after 2023, the
maximum number (if such number is less than 25) of such
negotiation-eligible drugs for the year) with respect to such
year;
``(B) with respect to an initial price applicability year
during the period beginning with 2028 and ending with 2032, at
least 30 negotiation-eligible drugs described in subparagraphs
(A) and (B), but not subparagraph (C), of subsection (d)(1)
(or, with respect to an initial price applicability year during
such period, the maximum number (if such number is less than
30) of such negotiation-eligible drugs for the year) with
respect to such year; and
``(C) with respect to an initial price applicability year
beginning after 2032, at least 35 negotiation-eligible drugs
described in subparagraphs (A) and (B), but not subparagraph
(C), of subsection (d)(1) (or, with respect to an initial price
applicability year during such period, the maximum number (if
such number is less than 35) of such negotiation-eligible drugs
for the year) with respect to such year;
``(2) all negotiation-eligible drugs described in
subparagraph (C) of such subsection with respect to such year;
and
``(3) all new-entrant negotiation-eligible drugs (as
defined in subsection (g)(1)) with respect to such year.
Each drug published on the list pursuant to the previous sentence shall
be subject to the negotiation process under section 1194 for the
voluntary negotiation period with respect to such initial price
applicability year (and the renegotiation process under such section as
applicable for any subsequent year during the applicable price
applicability period). In applying this subsection, any negotiation-
eligible drug that is selected under this subsection for an initial
price applicability year shall not count toward the required minimum
amount of drugs to be selected under paragraph (1) for any subsequent
year, including such a drug so selected that is subject to
renegotiation under section 1194.
``(b) Selection of Drugs.--In carrying out subsection (a)(1) the
Secretary shall select for inclusion on the published list described in
subsection (a) with respect to a price applicability period, the
negotiation-eligible drugs that the Secretary projects will result in
the greatest savings to the Federal Government or fair price eligible
individuals during the price applicability period. In making this
projection of savings for drugs for which there is an AIM price for a
price applicability period, the savings shall be projected across
different dosage forms and strengths of the drugs and not based on the
specific formulation or package size or package type of the drugs,
taking into consideration both the volume of drugs for which payment is
made, to the extent such data is available, and the amount by which the
net price for the drugs exceeds the AIM price for the drugs.
``(c) Selected Drug.--For purposes of this part, each drug included
on the list published under subsection (a) with respect to an initial
price applicability year shall be referred to as a `selected drug' with
respect to such year and each subsequent plan year beginning before the
first plan year beginning after the date on which the Secretary
determines two or more drug products--
``(1) are approved or licensed (as applicable)--
``(A) under section 505(j) of the Federal Food,
Drug, and Cosmetic Act using such drug as the listed
drug; or
``(B) under section 351(k) of the Public Health
Service Act using such drug as the reference product;
and
``(2) continue to be marketed.
``(d) Negotiation-Eligible Drug.--
``(1) In general.--For purposes of this part, the term
`negotiation-eligible drug' means, with respect to the selected
drug publication date with respect to an initial price
applicability year, a qualifying single source drug, as defined
in subsection (e), that meets any of the following criteria:
``(A) Covered part d drugs.--The drug is among the
125 covered part D drugs (as defined in section 1860D-
2(e)) for which there was an estimated greatest net
spending under parts C and D of title XVIII, as
determined by the Secretary, during the most recent
plan year prior to such drug publication date for which
data are available.
``(B) Other drugs.--The drug is among the 125 drugs
for which there was an estimated greatest net spending
in the United States (including the 50 States, the
District of Columbia, and the territories of the United
States), as determined by the Secretary, during the
most recent plan year prior to such drug publication
date for which data are available.
``(C) Insulin.--The drug is a qualifying single
source drug described in subsection (e)(3).
``(2) Clarification.--In determining whether a qualifying
single source drug satisfies any of the criteria described in
paragraph (1), the Secretary shall, to the extent practicable,
use data that is aggregated across dosage forms and strengths
of the drug and not based on the specific formulation or
package size or package type of the drug.
``(3) Publication.--Not later than the selected drug
publication date with respect to an initial price applicability
year, the Secretary shall publish in the Federal Register a
list of negotiation-eligible drugs with respect to such
selected drug publication date.
``(e) Qualifying Single Source Drug.--For purposes of this part,
the term `qualifying single source drug' means any of the following:
``(1) Drug products.--A drug that--
``(A) is approved under section 505(c) of the
Federal Food, Drug, and Cosmetic Act and continues to
be marketed pursuant to such approval; and
``(B) is not the listed drug for any drug that is
approved and continues to be marketed under section
505(j) of such Act.
``(2) Biological products.--A biological product that--
``(A) is licensed under section 351(a) of the
Public Health Service Act, including any product that
has been deemed to be licensed under section 351 of
such Act pursuant to section 7002(e)(4) of the
Biologics Price Competition and Innovation Act of 2009,
and continues to be marketed under section 351 of such
Act; and
``(B) is not the reference product for any
biological product that is licensed and continues to be
marketed under section 351(k) of such Act.
``(3) Insulin product.--Notwithstanding paragraphs (1) and
(2), any insulin product that is approved under subsection (c)
or (j) of section 505 of the Federal Food, Drug, and Cosmetic
Act or licensed under subsection (a) or (k) of section 351 of
the Public Health Service Act and continues to be marketed
under such section 505 or 351, including any insulin product
that has been deemed to be licensed under section 351(a) of the
Public Health Service Act pursuant to section 7002(e)(4) of the
Biologics Price Competition and Innovation Act of 2009 and
continues to be marketed pursuant to such licensure.
For purposes of applying paragraphs (1) and (2), a drug or biological
product that is marketed by the same sponsor or manufacturer (or an
affiliate thereof or a cross-licensed producer or distributor) as the
listed drug or reference product described in such respective paragraph
shall not be taken into consideration.
``(f) Information on International Drug Prices.--For purposes of
determining which negotiation-eligible drugs to select under subsection
(a) and, in the case of such drugs that are selected drugs, to
determine the maximum fair price for such a drug and whether such
maximum fair price should be renegotiated under section 1194, the
Secretary shall use data relating to the AIM price with respect to such
drug as available or provided to the Secretary and shall on an ongoing
basis request from manufacturers of selected drugs information on the
AIM price of such a drug.
``(g) New-entrant Negotiation-eligible Drugs.--
``(1) In general.--For purposes of this part, the term
`new-entrant negotiation-eligible drug' means, with respect to
the selected drug publication date with respect to an initial
price applicability year, a qualifying single source drug--
``(A) that is first approved or licensed, as
described in paragraph (1), (2), or (3) of subsection
(e), as applicable, during the year preceding such
selected drug publication date; and
``(B) that the Secretary determines under paragraph
(2) is likely to be a negotiation-eligible drug with
respect to the subsequent selected drug publication
date.
``(2) Determination.--In the case of a qualifying single
source drug that meets the criteria described in subparagraphs
(A) and (B) of paragraph (1), with respect to an initial price
applicability year, if the wholesale acquisition cost at which
such drug is first marketed in the United States is equal to or
greater than the median household income (as determined
according to the most recent data collected by the United
States Census Bureau), the Secretary shall determine before the
selected drug publication date with respect to the initial
price applicability year, if the drug is likely to be included
as a negotiation-eligible drug with respect to the subsequent
selected drug publication date, based on the projected spending
under title XVIII or in the United States on such drug. For
purposes of this paragraph the term `United States' includes
the 50 States, the District of Columbia, and the territories of
the United States.
``SEC. 1193. MANUFACTURER AGREEMENTS.
``(a) In General.--For purposes of section 1191(a)(2), the
Secretary shall enter into agreements with manufacturers of selected
drugs with respect to a price applicability period, by not later than
June 15 following the selected drug publication date with respect to
such selected drug, under which--
``(1) during the voluntary negotiation period for the
initial price applicability year for the selected drug, the
Secretary and manufacturer, in accordance with section 1194,
negotiate to determine (and, by not later than the last date of
such period and in accordance with subsection (c), agree to) a
maximum fair price for such selected drug of the manufacturer
in order to provide access to such price--
``(A) to fair price eligible individuals who with
respect to such drug are described in subparagraph (A)
of section 1191(c)(1) and are furnished or dispensed
such drug during, subject to subparagraph (2), the
price applicability period; and
``(B) to hospitals, physicians, and other providers
of services and suppliers with respect to fair price
eligible individuals who with respect to such drug are
described in subparagraph (B) of such section and are
furnished or administered such drug during, subject to
subparagraph (2), the price applicability period;
``(2) the Secretary and the manufacturer shall, in
accordance with a process and during a period specified by the
Secretary pursuant to rulemaking, renegotiate (and, by not
later than the last date of such period and in accordance with
subsection (c), agree to) the maximum fair price for such drug
if the Secretary determines that there is a material change in
any of the factors described in section 1194(d) relating to the
drug, including changes in the AIM price for such drug, in
order to provide access to such maximum fair price (as so
renegotiated)--
``(A) to fair price eligible individuals who with
respect to such drug are described in subparagraph (A)
of section 1191(c)(1) and are furnished or dispensed
such drug during any year during the price
applicability period (beginning after such
renegotiation) with respect to such selected drug; and
``(B) to hospitals, physicians, and other providers
of services and suppliers with respect to fair price
eligible individuals who with respect to such drug are
described in subparagraph (B) of such section and are
furnished or administered such drug during any year
described in subparagraph (A);
``(3) the maximum fair price (including as renegotiated
pursuant to paragraph (2)), with respect to such a selected
drug, shall be provided to fair price eligible individuals, who
with respect to such drug are described in subparagraph (A) of
section 1191(c)(1), at the pharmacy or by a mail order service
at the point-of-sale of such drug;
``(4) the manufacturer, subject to subsection (d), submits
to the Secretary, in a form and manner specified by the
Secretary--
``(A) for the voluntary negotiation period for the
price applicability period (and, if applicable, before
any period of renegotiation specified pursuant to
paragraph (2)) with respect to such drug all
information that the Secretary requires to carry out
the negotiation (or renegotiation process) under this
part, including information described in section
1192(f) and section 1194(d)(1); and
``(B) on an ongoing basis, information on changes
in prices for such drug that would affect the AIM price
for such drug or otherwise provide a basis for
renegotiation of the maximum fair price for such drug
pursuant to paragraph (2);
``(5) the manufacturer agrees that in the case the selected
drug of a manufacturer is a drug described in subsection (c),
the manufacturer will, in accordance with such subsection, make
any payment required under such subsection with respect to such
drug; and
``(6) the manufacturer complies with requirements imposed
by the Secretary for purposes of administering the program,
including with respect to the duties described in section 1196.
``(b) Agreement in Effect Until Drug Is No Longer a Selected
Drug.--An agreement entered into under this section shall be effective,
with respect to a drug, until such drug is no longer considered a
selected drug under section 1192(c).
``(c) Special Rule for Certain Selected Drugs Without AIM Price.--
``(1) In general.--In the case of a selected drug for which
there is no AIM price available with respect to the initial
price applicability year for such drug and for which an AIM
price becomes available beginning with respect to a subsequent
plan year during the price applicability period for such drug,
if the Secretary determines that the amount described in
paragraph (2)(A) for a unit of such drug is greater than the
amount described in paragraph (2)(B) for a unit of such drug,
then by not later than one year after the date of such
determination, the manufacturer of such selected drug shall pay
to the Treasury an amount equal to the product of--
``(A) the difference between such amount described
in paragraph (2)(A) for a unit of such drug and such
amount described in paragraph (2)(B) for a unit of such
drug; and
``(B) the number of units of such drug sold in the
United States, including the 50 States, the District of
Columbia, and the territories of the United States,
during the period described in paragraph (2)(B).
``(2) Amounts described.--
``(A) Weighted average price before aim price
available.--For purposes of paragraph (1), the amount
described in this subparagraph for a selected drug
described in such paragraph, is the amount equal to the
weighted average manufacturer price (as defined in
section 1927(k)(1)) for such dosage strength and form
for the drug during the period beginning with the first
plan year for which the drug is included on the list of
negotiation-eligible drugs published under section
1192(d) and ending with the last plan year during the
price applicability period for such drug with respect
to which there is no AIM price available for such drug.
``(B) Amount multiplier after aim price
available.--For purposes of paragraph (1), the amount
described in this subparagraph for a selected drug
described in such paragraph, is the amount equal to 200
percent of the AIM price for such drug with respect to
the first plan year during the price applicability
period for such drug with respect to which there is an
AIM price available for such drug.
``(d) Confidentiality of Information.--Information submitted to the
Secretary under this part by a manufacturer of a selected drug that is
proprietary information of such manufacturer (as determined by the
Secretary) may be used only by the Secretary or disclosed to and used
by the Comptroller General of the United States or the Medicare Payment
Advisory Commission for purposes of carrying out this part.
``(e) Regulations.--
``(1) In general.--The Secretary shall, pursuant to
rulemaking, specify, in accordance with paragraph (2), the
information that must be submitted under subsection (a)(4).
``(2) Information specified.--Information described in
paragraph (1), with respect to a selected drug, shall include
information on sales of the drug (by the manufacturer of the
drug or by another entity under license or other agreement with
the manufacturer, with respect to the sales of such drug,
regardless of the name under which the drug is sold) in any
foreign country that is part of the AIM price. The Secretary
shall verify, to the extent practicable, such sales from
appropriate officials of the government of the foreign country
involved.
``(f) Compliance With Requirements for Administration of Program.--
Each manufacturer with an agreement in effect under this section shall
comply with requirements imposed by the Secretary or a third party with
a contract under section 1196(c)(1), as applicable, for purposes of
administering the program.
``SEC. 1194. NEGOTIATION AND RENEGOTIATION PROCESS.
``(a) In General.--For purposes of this part, under an agreement
under section 1193 between the Secretary and a manufacturer of a
selected drug, with respect to the period for which such agreement is
in effect and in accordance with subsections (b) and (c), the Secretary
and the manufacturer--
``(1) shall during the voluntary negotiation period with
respect to the initial price applicability year for such drug,
in accordance with this section, negotiate a maximum fair price
for such drug for the purpose described in section 1193(a)(1);
and
``(2) as applicable pursuant to section 1193(a)(2) and in
accordance with the process specified pursuant to such section,
renegotiate such maximum fair price for such drug for the
purpose described in such section.
``(b) Negotiating Methodology and Objective.--
``(1) In general.--The Secretary shall develop and use a
consistent methodology for negotiations under subsection (a)
that, in accordance with paragraph (2) and subject to paragraph
(3), achieves the lowest maximum fair price for each selected
drug while appropriately rewarding innovation.
``(2) Prioritizing factors.--In considering the factors
described in subsection (d) in negotiating (and, as applicable,
renegotiating) the maximum fair price for a selected drug, the
Secretary shall, to the extent practicable, consider all of the
available factors listed but shall prioritize the following
factors:
``(A) Research and development costs.--The factor
described in paragraph (1)(A) of subsection (d).
``(B) Market data.--The factor described in
paragraph (1)(B) of such subsection.
``(C) Unit costs of production and distribution.--
The factor described in paragraph (1)(C) of such
subsection.
``(D) Comparison to existing therapeutic
alternatives.--The factor described in paragraph (2)(A)
of such subsection.
``(3) Requirement.--
``(A) In general.--In negotiating the maximum fair
price of a selected drug, with respect to an initial
price applicability year for the selected drug, and, as
applicable, in renegotiating the maximum fair price for
such drug, with respect to a subsequent year during the
price applicability period for such drug, in the case
that the manufacturer of the selected drug offers under
the negotiation or renegotiation, as applicable, a
price for such drug that is not more than the target
price described in subparagraph (B) for such drug for
the respective year, the Secretary shall agree under
such negotiation or renegotiation, respectively, to
such offered price as the maximum fair price.
``(B) Target price.--
``(i) In general.--Subject to clause (ii),
the target price described in this subparagraph
for a selected drug with respect to a year, is
the average price (which shall be the net
average price, if practicable, and volume-
weighted, if practicable) for a unit of such
drug for sales of such drug, as computed
(across different dosage forms and strengths of
the drug and not based on the specific
formulation or package size or package type of
the drug) in the applicable country described
in section 1191(c)(3)(B) with respect to such
drug that, with respect to such year, has the
lowest average price for such drug as compared
to the average prices (as so computed) of such
drug with respect to such year in the other
applicable countries described in such section
with respect to such drug.
``(ii) Selected drugs without aim price.--
In applying this paragraph in the case of
negotiating the maximum fair price of a
selected drug for which there is no AIM price
available with respect to the initial price
applicability year for such drug, or, as
applicable, renegotiating the maximum fair
price for such drug with respect to a
subsequent year during the price applicability
period for such drug before the first plan year
for which there is an AIM price available for
such drug, the target price described in this
subparagraph for such drug and respective year
is the amount that is 80 percent of the average
manufacturer price (as defined in section
1927(k)(1)) for such drug and year.
``(4) Annual report.--After the completion of each
voluntary negotiation period, the Secretary shall submit to
Congress a report on the maximum fair prices negotiated (or, as
applicable, renegotiated) for such period. Such report shall
include information on how such prices so negotiated (or
renegotiated) meet the requirements of this part, including the
requirements of this subsection.
``(c) Limitation.--
``(1) In general.--Subject to paragraph (2), the maximum
fair price negotiated (including as renegotiated) under this
section for a selected drug, with respect to each plan year
during a price applicability period for such drug, shall not
exceed 120 percent of the AIM price applicable to such drug
with respect to such year.
``(2) Selected drugs without aim price.--In the case of a
selected drug for which there is no AIM price available with
respect to the initial price applicability year for such drug,
for each plan year during the price applicability period before
the first plan year for which there is an AIM price available
for such drug, the maximum fair price negotiated (including as
renegotiated) under this section for the selected drug shall
not exceed the amount equal to 85 percent of the average
manufacturer price for the drug with respect to such year.
``(d) Considerations.--For purposes of negotiating and, as
applicable, renegotiating (including for purposes of determining
whether to renegotiate) the maximum fair price of a selected drug under
this part with the manufacturer of the drug, the Secretary shall,
consistent with subsection (b)(2), take into consideration the
following factors:
``(1) Manufacturer-specific information.--The following
information, including as submitted by the manufacturer:
``(A) Research and development costs of the
manufacturer for the drug and the extent to which the
manufacturer has recouped research and development
costs.
``(B) Market data for the drug, including the
distribution of sales across different programs and
purchasers and projected future revenues for the drug.
``(C) Unit costs of production and distribution of
the drug.
``(D) Prior Federal financial support for novel
therapeutic discovery and development with respect to
the drug.
``(E) Data on patents and on existing and pending
exclusivity for the drug.
``(F) National sales data for the drug.
``(G) Information on clinical trials for the drug
in the United States or in applicable countries
described in section 1191(c)(3)(B).
``(2) Information on alternative products.--The following
information:
``(A) The extent to which the drug represents a
therapeutic advance as compared to existing therapeutic
alternatives and, to the extent such information is
available, the costs of such existing therapeutic
alternatives.
``(B) Information on approval by the Food and Drug
Administration of alternative drug products.
``(C) Information on comparative effectiveness
analysis for such products, taking into consideration
the effects of such products on specific populations,
such as individuals with disabilities, the elderly,
terminally ill, children, and other patient
populations.
In considering information described in subparagraph (C), the
Secretary shall not use evidence or findings from comparative
clinical effectiveness research in a manner that treats
extending the life of an elderly, disabled, or terminally ill
individual as of lower value than extending the life of an
individual who is younger, nondisabled, or not terminally ill.
Nothing in the previous sentence shall affect the application
or consideration of an AIM price for a selected drug.
``(3) Foreign sales information.--To the extent available
on a timely basis, including as provided by a manufacturer of
the selected drug or otherwise, information on sales of the
selected drug in each of the countries described in section
1191(c)(3)(B).
``(4) Additional information.--Information submitted to the
Secretary, in accordance with a process specified by the
Secretary, by other parties that are affected by the
establishment of a maximum fair price for the selected drug.
``(e) Request for Information.--For purposes of negotiating and, as
applicable, renegotiating (including for purposes of determining
whether to renegotiate) the maximum fair price of a selected drug under
this part with the manufacturer of the drug, with respect to a price
applicability period, and other relevant data for purposes of this
section--
``(1) the Secretary shall, not later than the selected drug
publication date with respect to the initial price
applicability year of such period, request drug pricing
information from the manufacturer of such selected drug,
including information described in subsection (d)(1); and
``(2) by not later than October 1 following the selected
drug publication date, the manufacturer of such selected drug
shall submit to the Secretary such requested information in
such form and manner as the Secretary may require.
The Secretary shall request, from the manufacturer or others, such
additional information as may be needed to carry out the negotiation
and renegotiation process under this section.
``SEC. 1195. PUBLICATION OF MAXIMUM FAIR PRICES.
``(a) In General.--With respect to an initial price applicability
year and selected drug with respect to such year, not later than April
1 of the plan year prior to such initial price applicability year, the
Secretary shall publish in the Federal Register the maximum fair price
for such drug negotiated under this part with the manufacturer of such
drug.
``(b) Updates.--
``(1) Subsequent year maximum fair prices.--For a selected
drug, for each plan year subsequent to the initial price
applicability year for such drug with respect to which an
agreement for such drug is in effect under section 1193, the
Secretary shall publish in the Federal Register--
``(A) subject to subparagraph (B), the amount equal
to the maximum fair price published for such drug for
the previous year, increased by the annual percentage
increase in the consumer price index for all urban
consumers (all items; U.S. city average) as of
September of such previous year; or
``(B) in the case the maximum fair price for such
drug was renegotiated, for the first year for which
such price as so renegotiated applies, such
renegotiated maximum fair price.
``(2) Prices negotiated after deadline.--In the case of a
selected drug with respect to an initial price applicability
year for which the maximum fair price is determined under this
part after the date of publication under this section, the
Secretary shall publish such maximum fair price in the Federal
Register by not later than 30 days after the date such maximum
price is so determined.
``SEC. 1196. ADMINISTRATIVE DUTIES; COORDINATION PROVISIONS.
``(a) Administrative Duties.--
``(1) In general.--For purposes of section 1191, the
administrative duties described in this section are the
following:
``(A) The establishment of procedures (including
through agreements with manufacturers under this part,
contracts with prescription drug plans under part D of
title XVIII and MA-PD plans under part C of such title,
and agreements under section 1197 with group health
plans and health insurance issuers of health insurance
coverage offered in the individual or group market)
under which the maximum fair price for a selected drug
is provided to fair price eligible individuals, who
with respect to such drug are described in subparagraph
(A) of section 1191(c)(1), at pharmacies or by mail
order service at the point-of-sale of the drug for the
applicable price period for such drug and providing
that such maximum fair price is used for determining
cost-sharing under such plans or coverage for the
selected drug.
``(B) The establishment of procedures (including
through agreements with manufacturers under this part
and contracts with hospitals, physicians, and other
providers of services and suppliers and agreements
under section 1197 with group health plans and health
insurance issuers of health insurance coverage offered
in the individual or group market) under which, in the
case of a selected drug furnished or administered by
such a hospital, physician, or other provider of
services or supplier to fair price eligible individuals
(who with respect to such drug are described in
subparagraph (B) of section 1191(c)(1)), the maximum
fair price for the selected drug is provided to such
hospitals, physicians, and other providers of services
and suppliers (as applicable) with respect to such
individuals and providing that such maximum fair price
is used for determining cost-sharing under the
respective part, plan, or coverage for the selected
drug.
``(C) The establishment of procedures (including
through agreements and contracts described in
subparagraphs (A) and (B)) to ensure that, not later
than 90 days after the dispensing of a selected drug to
a fair price eligible individual by a pharmacy or mail
order service, the pharmacy or mail order service is
reimbursed for an amount equal to the difference
between--
``(i) the lesser of--
``(I) the wholesale acquisition
cost of the drug;
``(II) the national average drug
acquisition cost of the drug; and
``(III) any other similar
determination of pharmacy acquisition
costs of the drug, as determined by the
Secretary; and
``(ii) the maximum fair price for the drug.
``(D) The establishment of procedures to ensure
that the maximum fair price for a selected drug is
applied before--
``(i) any coverage or financial assistance
under other health benefit plans or programs
that provide coverage or financial assistance
for the purchase or provision of prescription
drug coverage on behalf of fair price eligible
individuals as the Secretary may specify; and
``(ii) any other discounts.
``(E) The establishment of procedures to enter into
appropriate agreements and protocols for the ongoing
computation of AIM prices for selected drugs,
including, to the extent possible, to compute the AIM
price for selected drugs and including by providing
that the manufacturer of such a selected drug should
provide information for such computation not later than
3 months after the first date of the voluntary
negotiation period for such selected drug.
``(F) The establishment of procedures to compute
and apply the maximum fair price across different
strengths and dosage forms of a selected drug and not
based on the specific formulation or package size or
package type of the drug.
``(G) The establishment of procedures to negotiate
and apply the maximum fair price in a manner that does
not include any dispensing or similar fee.
``(H) The establishment of procedures to carry out
the provisions of this part, as applicable, with
respect to--
``(i) fair price eligible individuals who
are enrolled under a prescription drug plan
under part D of title XVIII or an MA-PD plan
under part C of such title;
``(ii) fair price eligible individuals who
are enrolled under a group health plan or
health insurance coverage offered by a health
insurance issuer in the individual or group
market with respect to which there is an
agreement in effect under section 1197; and
``(iii) fair price eligible individuals who
are entitled to benefits under part A of title
XVIII or enrolled under part B of such title.
``(I) The establishment of a negotiation process
and renegotiation process in accordance with section
1194, including a process for acquiring information
described in subsection (d) of such section and
determining amounts described in subsection (b) of such
section.
``(J) The provision of a reasonable dispute
resolution mechanism to resolve disagreements between
manufacturers, fair price eligible individuals, and the
third party with a contract under subsection (c)(1).
``(2) Monitoring compliance.--
``(A) In general.--The Secretary shall monitor
compliance by a manufacturer with the terms of an
agreement under section 1193, including by establishing
a mechanism through which violations of such terms may
be reported.
``(B) Notification.--If a third party with a
contract under subsection (c)(1) determines that the
manufacturer is not in compliance with such agreement,
the third party shall notify the Secretary of such
noncompliance for appropriate enforcement under section
4192 of the Internal Revenue Code of 1986 or section
1198, as applicable.
``(b) Collection of Data.--
``(1) From prescription drug plans and ma-pd plans.--The
Secretary may collect appropriate data from prescription drug
plans under part D of title XVIII and MA-PD plans under part C
of such title in a timeframe that allows for maximum fair
prices to be provided under this part for selected drugs.
``(2) From health plans.--The Secretary may collect
appropriate data from group health plans or health insurance
issuers offering group or individual health insurance coverage
in a timeframe that allows for maximum fair prices to be
provided under this part for selected drugs.
``(c) Contract With Third Parties.--
``(1) In general.--The Secretary may enter into a contract
with 1 or more third parties to administer the requirements
established by the Secretary in order to carry out this part.
At a minimum, the contract with a third party under the
preceding sentence shall require that the third party--
``(A) receive and transmit information between the
Secretary, manufacturers, and other individuals or
entities the Secretary determines appropriate;
``(B) receive, distribute, or facilitate the
distribution of funds of manufacturers to appropriate
individuals or entities in order to meet the
obligations of manufacturers under agreements under
this part;
``(C) provide adequate and timely information to
manufacturers, consistent with the agreement with the
manufacturer under this part, as necessary for the
manufacturer to fulfill its obligations under this
part; and
``(D) permit manufacturers to conduct periodic
audits, directly or through contracts, of the data and
information used by the third party to determine
discounts for applicable drugs of the manufacturer
under the program.
``(2) Performance requirements.--The Secretary shall
establish performance requirements for a third party with a
contract under paragraph (1) and safeguards to protect the
independence and integrity of the activities carried out by the
third party under the program under this part.
``SEC. 1197. VOLUNTARY PARTICIPATION BY OTHER HEALTH PLANS.
``(a) Agreement to Participate Under Program.--
``(1) In general.--Subject to paragraph (2), under the
program under this part the Secretary shall be treated as
having in effect an agreement with a group health plan or
health insurance issuer offering health insurance coverage (as
such terms are defined in section 2791 of the Public Health
Service Act), with respect to a price applicability period and
a selected drug with respect to such period--
``(A) with respect to such selected drug furnished
or dispensed at a pharmacy or by mail order service if
coverage is provided under such plan or coverage during
such period for such selected drug as so furnished or
dispensed; and
``(B) with respect to such selected drug furnished
or administered by a hospital, physician, or other
provider of services or supplier if coverage is
provided under such plan or coverage during such period
for such selected drug as so furnished or administered.
``(2) Opting out of agreement.--The Secretary shall not be
treated as having in effect an agreement under the program
under this part with a group health plan or health insurance
issuer offering health insurance coverage with respect to a
price applicability period and a selected drug with respect to
such period if such a plan or issuer affirmatively elects,
through a process specified by the Secretary, not to
participate under the program with respect to such period and
drug.
``(b) Publication of Election.--With respect to each price
applicability period and each selected drug with respect to such
period, the Secretary and the Secretary of Labor and the Secretary of
the Treasury, as applicable, shall make public a list of each group
health plan and each issuer of health insurance coverage, with respect
to which coverage is provided under such plan or coverage for such
drug, that has elected under subsection (a) not to participate under
the program with respect to such period and drug.
``SEC. 1198. CIVIL MONETARY PENALTY.
``(a) Violations Relating To Offering of Maximum Fair Price.--Any
manufacturer of a selected drug that has entered into an agreement
under section 1193, with respect to a plan year during the price
applicability period for such drug, that does not provide access to a
price that is not more than the maximum fair price (or a lesser price)
for such drug for such year--
``(1) to a fair price eligible individual who with respect
to such drug is described in subparagraph (A) of section
1191(c)(1) and who is furnished or dispensed such drug during
such year; or
``(2) to a hospital, physician, or other provider of
services or supplier with respect to fair price eligible
individuals who with respect to such drug is described in
subparagraph (B) of such section and is furnished or
administered such drug by such hospital, physician, or provider
or supplier during such year;
shall be subject to a civil monetary penalty equal to ten times the
amount equal to the difference between the price for such drug made
available for such year by such manufacturer with respect to such
individual or hospital, physician, provider, or supplier and the
maximum fair price for such drug for such year.
``(b) Violations of Certain Terms of Agreement.--Any manufacturer
of a selected drug that has entered into an agreement under section
1193, with respect to a plan year during the price applicability period
for such drug, that is in violation of a requirement imposed pursuant
to section 1193(a)(6) shall be subject to a civil monetary penalty of
not more than $1,000,000 for each such violation.
``(c) Application.--The provisions of section 1128A (other than
subsections (a) and (b)) shall apply to a civil monetary penalty under
this section in the same manner as such provisions apply to a penalty
or proceeding under section 1128A(a).
``SEC. 1199. MISCELLANEOUS PROVISIONS.
``(a) Paperwork Reduction Act.--Chapter 35 of title 44, United
States Code, shall not apply to data collected under this part.
``(b) National Academy of Medicine Study.--Not later than December
31, 2025, the National Academy of Medicine shall conduct a study, and
submit to Congress a report, on recommendations for improvements to the
program under this part, including the determination of the limits
applied under section 1194(c).
``(c) MedPAC Study.--Not later than December 31, 2025, the Medicare
Payment Advisory Commission shall conduct a study, and submit to
Congress a report, on the program under this part with respect to the
Medicare program under title XVIII, including with respect to the
effect of the program on individuals entitled to benefits or enrolled
under such title.
``(d) Limitation on Judicial Review.--The following shall not be
subject to judicial review:
``(1) The selection of drugs for publication under section
1192(a).
``(2) The determination of whether a drug is a negotiation-
eligible drug under section 1192(d).
``(3) The determination of the maximum fair price of a
selected drug under section 1194.
``(4) The determination of units of a drug for purposes of
section 1191(c)(3).
``(e) Coordination.--In carrying out this part with respect to
group health plans or health insurance coverage offered in the group
market that are subject to oversight by the Secretary of Labor or the
Secretary of the Treasury, the Secretary of Health and Human Services
shall coordinate with such respective Secretary.
``(f) Data Sharing.--The Secretary shall share with the Secretary
of the Treasury such information as is necessary to determine the tax
imposed by section 4192 of the Internal Revenue Code of 1986.''.
(b) Application of Maximum Fair Prices and Conforming Amendments.--
(1) Under medicare.--
(A) Application to payments under part b.--Section
1847A(b)(1)(B) of the Social Security Act (42 U.S.C.
1395w-3a(b)(1)(B)) is amended by inserting ``or in the
case of such a drug or biological that is a selected
drug (as defined in section 1192(c)), with respect to a
price applicability period (as defined in section
1191(b)(2)), 106 percent of the maximum fair price (as
defined in section 1191(c)(2) applicable for such drug
and a plan year during such period'' after ``paragraph
(4)''.
(B) Exception to part d non-interference.--Section
1860D-11(i) of the Social Security Act (42 U.S.C.
1395w-111(i)) is amended by inserting ``, except as
provided under part E of title XI'' after ``the
Secretary''.
(C) Application as negotiated price under part d.--
Section 1860D-2(d)(1) of the Social Security Act (42
U.S.C. 1395w-102(d)(1)) is amended--
(i) in subparagraph (B), by inserting ``,
subject to subparagraph (D),'' after
``negotiated prices''; and
(ii) by adding at the end the following new
subparagraph:
``(D) Application of maximum fair price for
selected drugs.--In applying this section, in the case
of a covered part D drug that is a selected drug (as
defined in section 1192(c)), with respect to a price
applicability period (as defined in section
1191(b)(2)), the negotiated prices used for payment (as
described in this subsection) shall be the maximum fair
price (as defined in section 1191(c)(2)) for such drug
and for each plan year during such period.''.
(D) Information from prescription drug plans and
ma-pd plans required.--
(i) Prescription drug plans.--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:
``(8) Provision of information related to maximum fair
prices.--Each contract entered into with a PDP sponsor under
this part with respect to a prescription drug plan offered by
such sponsor shall require the sponsor to provide information
to the Secretary as requested by the Secretary in accordance
with section 1196(b).''.
(ii) MA-PD plans.--Section 1857(f)(3) of
the Social Security Act (42 U.S.C. 1395w-
27(f)(3)) is amended by adding at the end the
following new subparagraph:
``(E) Provision of information related to maximum
fair prices.--Section 1860D-12(b)(8).''.
(2) Under group health plans and health insurance
coverage.--
(A) PHSA.--Part A of title XXVII of the Public
Health Service Act is amended by inserting after
section 2729 the following new section:
``SEC. 2729A. FAIR PRICE DRUG NEGOTIATION PROGRAM AND APPLICATION OF
MAXIMUM FAIR PRICES.
``(a) In General.--In the case of a group health plan or health
insurance issuer offering health insurance coverage that is treated
under section 1197 of the Social Security Act as having in effect an
agreement with the Secretary under the Fair Price Drug Negotiation
Program under part E of title XI of such Act, with respect to a price
applicability period (as defined in section 1191(b) of such Act) and a
selected drug (as defined in section 1192(c) of such Act) with respect
to such period with respect to which coverage is provided under such
plan or coverage--
``(1) the provisions of such part shall apply--
``(A) if coverage of such selected drug is provided
under such plan or coverage if the drug is furnished or
dispensed at a pharmacy or by a mail order service, to
the plans or coverage offered by such plan or issuer,
and to the individuals enrolled under such plans or
coverage, during such period, with respect to such
selected drug, in the same manner as such provisions
apply to prescription drug plans and MA-PD plans, and
to individuals enrolled under such prescription drug
plans and MA-PD plans during such period; and
``(B) if coverage of such selected drug is provided
under such plan or coverage if the drug is furnished or
administered by a hospital, physician, or other
provider of services or supplier, to the plans or
coverage offered by such plan or issuers, to the
individuals enrolled under such plans or coverage, and
to hospitals, physicians, and other providers of
services and suppliers during such period, with respect
to such drug in the same manner as such provisions
apply to the Secretary, to individuals entitled to
benefits under part A of title XVIII or enrolled under
part B of such title, and to hospitals, physicians, and
other providers and suppliers participating under title
XVIII during such period;
``(2) the plan or issuer shall apply any cost-sharing
responsibilities under such plan or coverage, with respect to
such selected drug, by substituting an amount not more than the
maximum fair price negotiated under such part E of title XI for
such drug in lieu of the drug price upon which the cost-sharing
would have otherwise applied; and
``(3) the Secretary shall apply the provisions of such part
E to such plan, issuer, and coverage, such individuals so
enrolled in such plans and coverage, and such hospitals,
physicians, and other providers and suppliers participating in
such plans and coverage.
``(b) Notification Regarding Nonparticipation in Fair Drug Price
Negotiation Program.--A group health plan or a health insurance issuer
offering group or individual health insurance coverage shall publicly
disclose in a manner and in accordance with a process specified by the
Secretary any election made under section 1197 of the Social Security
Act by the plan or issuer to not participate in the Fair Drug Price
Negotiation Program under part E of title XI of such Act with respect
to a selected drug (as defined in section 1192(c) of such Act) for
which coverage is provided under such plan or coverage before the
beginning of the plan year for which such election was made.''.
(B) ERISA.--
(i) In general.--Subpart B of part 7 of
subtitle B of title I of the Employee
Retirement Income Security Act of 1974 (29
U.S.C. 1181 et. seq.) is amended by adding at
the end the following new section:
``SEC. 716. FAIR PRICE DRUG NEGOTIATION PROGRAM AND APPLICATION OF
MAXIMUM FAIR PRICES.
``(a) In General.--In the case of a group health plan or health
insurance issuer offering group health insurance coverage that is
treated under section 1197 of the Social Security Act as having in
effect an agreement with the Secretary under the Fair Price Drug
Negotiation Program under part E of title XI of such Act, with respect
to a price applicability period (as defined in section 1191(b) of such
Act) and a selected drug (as defined in section 1192(c) of such Act)
with respect to such period with respect to which coverage is provided
under such plan or coverage--
``(1) the provisions of such part shall apply to the plans
or coverage offered by such plan or issuer, and to the
individuals enrolled under such plans or coverage, during such
period, with respect to such selected drug, in the same manner
as such provisions apply to prescription drug plans and MA-PD
plans, and to individuals enrolled under such prescription drug
plans and MA-PD plans;
``(2) the plan or issuer shall apply any cost-sharing
responsibilities under such plan or coverage, with respect to
such selected drug, by substituting the maximum fair price
negotiated under such part for such drug in lieu of the
contracted rate under such plan or coverage for such selected
drug; and
``(3) the Secretary shall apply the provisions of such part
to such plan, issuer, and coverage, and such individuals so
enrolled in such plans.
``(b) Notification Regarding Nonparticipation in Fair Drug Price
Negotiation Program.--A group health plan or a health insurance issuer
offering group health insurance coverage shall publicly disclose in a
manner and in accordance with a process specified by the Secretary any
election made under section 1197 of the Social Security Act by the plan
or issuer to not participate in the Fair Drug Price Negotiation Program
under part E of title XI of such Act with respect to a selected drug
(as defined in section 1192(c) of such Act) for which coverage is
provided under such plan or coverage before the beginning of the plan
year for which such election was made.''.
(ii) Clerical amendment.--The table of
sections for subpart B of part 7 of subtitle B
of title I of the Employee Retirement Income
Security Act of 1974 is amended by adding at
the end the following:
``Sec. 716. Fair Price Drug Negotiation Program and application of
maximum fair prices.''.
(C) IRC.--
(i) In general.--Subchapter B of chapter
100 of the Internal Revenue Code of 1986 is
amended by adding at the end the following new
section:
``SEC. 9816. FAIR PRICE DRUG NEGOTIATION PROGRAM AND APPLICATION OF
MAXIMUM FAIR PRICES.
``(a) In General.--In the case of a group health plan that is
treated under section 1197 of the Social Security Act as having in
effect an agreement with the Secretary under the Fair Price Drug
Negotiation Program under part E of title XI of such Act, with respect
to a price applicability period (as defined in section 1191(b) of such
Act) and a selected drug (as defined in section 1192(c) of such Act)
with respect to such period with respect to which coverage is provided
under such plan--
``(1) the provisions of such part shall apply to the plans
offered by such plan, and to the individuals enrolled under
such plans, during such period, with respect to such selected
drug, in the same manner as such provisions apply to
prescription drug plans and MA-PD plans, and to individuals
enrolled under such prescription drug plans and MA-PD plans;
``(2) the plan shall apply any cost-sharing
responsibilities under such plan, with respect to such selected
drug, by substituting the maximum fair price negotiated under
such part for such drug in lieu of the contracted rate under
such plan for such selected drug; and
``(3) the Secretary shall apply the provisions of such part
to such plan and such individuals so enrolled in such plan.
``(b) Notification Regarding Nonparticipation in Fair Drug Price
Negotiation Program.--A group health plan shall publicly disclose in a
manner and in accordance with a process specified by the Secretary any
election made under section 1197 of the Social Security Act by the plan
to not participate in the Fair Drug Price Negotiation Program under
part E of title XI of such Act with respect to a selected drug (as
defined in section 1192(c) of such Act) for which coverage is provided
under such plan before the beginning of the plan year for which such
election was made.''.
(ii) Clerical amendment.--The table of
sections for subchapter B of chapter 100 of
such Code is amended by adding at the end the
following new item:
``Sec. 9816. Fair Price Drug Negotiation Program and application of
maximum fair prices.''.
SEC. 102. SELECTED DRUG MANUFACTURER EXCISE TAX IMPOSED DURING
NONCOMPLIANCE PERIODS.
(a) In General.--Subchapter E of chapter 32 of the Internal Revenue
Code of 1986 is amended by adding at the end the following new section:
``SEC. 4192. SELECTED DRUGS DURING NONCOMPLIANCE PERIODS.
``(a) In General.--There is hereby imposed on the sale by the
manufacturer, producer, or importer of any selected drug during a day
described in subsection (b) a tax in an amount such that the applicable
percentage is equal to the ratio of--
``(1) such tax, divided by
``(2) the sum of such tax and the price for which so sold.
``(b) Noncompliance Periods.--A day is described in this subsection
with respect to a selected drug if it is a day during one of the
following periods:
``(1) The period beginning on the June 16th immediately
following the selected drug publication date and ending on the
first date during which the manufacturer of the drug has in
place an agreement described in subsection (a) of section 1193
of the Social Security Act with respect to such drug.
``(2) The period beginning on the April 1st immediately
following the June 16th described in paragraph (1) and ending
on the first date during which the manufacturer of the drug has
agreed to a maximum fair price under such agreement.
``(3) In the case of a selected drug with respect to which
the Secretary of Health and Human Services has specified a
renegotiation period under such agreement, the period beginning
on the first date after the last date of such renegotiation
period and ending on the first date during which the
manufacturer of the drug has agreed to a renegotiated maximum
fair price under such agreement.
``(4) With respect to information that is required to be
submitted to the Secretary of Health and Human Services under
such agreement, the period beginning on the date on which such
Secretary certifies that such information is overdue and ending
on the date that such information is so submitted.
``(5) In the case of a selected drug with respect to which
a payment is due under subsection (c) of such section 1193, the
period beginning on the date on which the Secretary of Health
and Human Services certifies that such payment is overdue and
ending on the date that such payment is made in full.
``(c) Applicable Percentage.--The term `applicable percentage'
means--
``(1) in the case of sales of a selected drug during the
first 90 days described in subsection (b) with respect to such
drug, 65 percent,
``(2) in the case of sales of such drug during the 91st day
through the 180th day described in subsection (b) with respect
to such drug, 75 percent,
``(3) in the case of sales of such drug during the 181st
day through the 270th day described in subsection (b) with
respect to such drug, 85 percent, and
``(4) in the case of sales of such drug during any
subsequent day, 95 percent.
``(d) Definitions.--The terms `selected drug publication date' and
`maximum fair price' have the meaning given such terms in section 1191
of the Social Security Act and the term `selected drug' has the meaning
given such term in section 1192 of such Act.
``(e) Anti-Abuse Rule.--In the case of a sale which was timed for
the purpose of avoiding the tax imposed by this section, the Secretary
may treat such sale as occurring during a day described in subsection
(b).''.
(b) No Deduction for Excise Tax Payments.--Section 275 of the
Internal Revenue Code of 1986 is amended by adding ``or by section
4192'' before the period at the end of subsection (a)(6).
(c) Conforming Amendments.--
(1) Section 4221(a) of the Internal Revenue Code of 1986 is
amended by inserting ``or 4192'' after ``section 4191''.
(2) Section 6416(b)(2) of such Code is amended by inserting
``or 4192'' after ``section 4191''.
(d) Clerical Amendments.--
(1) The heading of subchapter E of chapter 32 of the
Internal Revenue Code of 1986 is amended by striking ``Medical
Devices'' and inserting ``Other Medical Products''.
(2) The table of subchapters for chapter 32 of such Code is
amended by striking the item relating to subchapter E and
inserting the following new item:
``subchapter e. other medical products''.
(3) The table of sections for subchapter E of chapter 32 of
such Code is amended by adding at the end the following new
item:
``Sec. 4192. Selected drugs during noncompliance periods.''.
(e) Effective Date.--The amendments made by this section shall
apply to sales after the date of the enactment of this Act.
TITLE II--MEDICARE PARTS B AND D PRESCRIPTION DRUG INFLATION REBATES
SEC. 201. MEDICARE PART B REBATE BY MANUFACTURERS.
(a) In General.--Section 1834 of the Social Security Act (42 U.S.C.
1395m) is amended by adding at the end the following new subsection:
``(x) Rebate by Manufacturers for Single Source Drugs With Prices
Increasing Faster Than Inflation.--
``(1) Requirements.--
``(A) Secretarial provision of information.--Not
later than 6 months after the end of each calendar
quarter beginning on or after July 1, 2021, the
Secretary shall, for each part B rebatable drug, report
to each manufacturer of such part B rebatable drug the
following for such calendar quarter:
``(i) Information on the total number of
units of the billing and payment code described
in subparagraph (A)(i) of paragraph (3) with
respect to such drug and calendar quarter.
``(ii) Information on the amount (if any)
of the excess average sales price increase
described in subparagraph (A)(ii) of such
paragraph for such drug and calendar quarter.
``(iii) The rebate amount specified under
such paragraph for such part B rebatable drug
and calendar quarter.
``(B) Manufacturer requirement.--For each calendar
quarter beginning on or after July 1, 2021, the
manufacturer of a part B rebatable drug shall, for such
drug, not later than 30 days after the date of receipt
from the Secretary of the information described in
subparagraph (A) for such calendar quarter, provide to
the Secretary a rebate that is equal to the amount
specified in paragraph (3) for such drug for such
calendar quarter.
``(2) Part b rebatable drug defined.--
``(A) In general.--In this subsection, the term
`part B rebatable drug' means a single source drug or
biological (as defined in subparagraph (D) of section
1847A(c)(6)), including a biosimilar biological product
(as defined in subparagraph (H) of such section), paid
for under this part, except such term shall not include
such a drug or biological--
``(i) if the average total allowed charges
for a year per individual that uses such a drug
or biological, as determined by the Secretary,
are less than, subject to subparagraph (B),
$100; or
``(ii) that is a vaccine described in
subparagraph (A) or (B) of section 1861(s)(10).
``(B) Increase.--The dollar amount applied under
subparagraph (A)(i)--
``(i) for 2022, shall be the dollar amount
specified under such subparagraph for 2021,
increased by the percentage increase in the
consumer price index for all urban consumers
(United States city average) for the 12 month
period ending with June of the previous year;
and
``(ii) for a subsequent year, shall be the
dollar amount specified in this clause (or
clause (i)) for the previous year, increased by
the percentage increase in the consumer price
index for all urban consumers (United States
city average) for the 12 month period ending
with June of the previous year.
Any dollar amount specified under this subparagraph
that is not a multiple of $10 shall be rounded to the
nearest multiple of $10.
``(3) Rebate amount.--
``(A) In general.--For purposes of paragraph (1),
the amount specified in this paragraph for a part B
rebatable drug assigned to a billing and payment code
for a calendar quarter is, subject to paragraph (4),
the amount equal to the product of--
``(i) subject to subparagraph (B), the
total number of units of the billing and
payment code for such part B rebatable drug
furnished under this part during the calendar
quarter; and
``(ii) the amount (if any) by which--
``(I) the payment amount under
subparagraph (B) or (C) of section
1847A(b)(1), as applicable, for such
part B rebatable drug during the
calendar quarter; exceeds
``(II) the inflation-adjusted
payment amount determined under
subparagraph (C) for such part B
rebatable drug during the calendar
quarter.
``(B) Excluded units.--For purposes of subparagraph
(A)(i), the total number of units of the billing and
payment code for each part B rebatable drug furnished
during a calendar quarter shall not include--
``(i) units packaged into the payment for a
procedure or service under section 1833(t) or
under section 1833(i) (instead of separately
payable under such respective section);
``(ii) units included under the single
payment system for renal dialysis services
under section 1881(b)(14); or
``(iii) units of a part B rebatable drug of
a manufacturer furnished to an individual, if
such manufacturer, with respect to the
furnishing of such units of such drug, provides
for discounts under section 340B of the Public
Health Service Act or for rebates under section
1927.
``(C) Determination of inflation-adjusted payment
amount.--The inflation-adjusted payment amount
determined under this subparagraph for a part B
rebatable drug for a calendar quarter is--
``(i) the payment amount for the billing
and payment code for such drug in the payment
amount benchmark quarter (as defined in
subparagraph (D)); increased by
``(ii) the percentage by which the rebate
period CPI-U (as defined in subparagraph (F))
for the calendar quarter exceeds the benchmark
period CPI-U (as defined in subparagraph (E)).
``(D) Payment amount benchmark quarter.--The term
`payment amount benchmark quarter' means the calendar
quarter beginning January 1, 2016.
``(E) Benchmark period cpi-u.--The term `benchmark
period CPI-U' means the consumer price index for all
urban consumers (United States city average) for July
2015.
``(F) Rebate period cpi-u.--The term `rebate period
CPI-U' means, with respect to a calendar quarter
described in subparagraph (C), the greater of the
benchmark period CPI-U and the consumer price index for
all urban consumers (United States city average) for
the first month of the calendar quarter that is two
calendar quarters prior to such described calendar
quarter.
``(4) Special treatment of certain drugs and exemption.--
``(A) Subsequently approved drugs.--Subject to
subparagraph (B), in the case of a part B rebatable
drug first approved or licensed by the Food and Drug
Administration after July 1, 2015, clause (i) of
paragraph (3)(C) shall be applied as if the term
`payment amount benchmark quarter' were defined under
paragraph (3)(D) as the third full calendar quarter
after the day on which the drug was first marketed and
clause (ii) of paragraph (3)(C) shall be applied as if
the term `benchmark period CPI-U' were defined under
paragraph (3)(E) as if the reference to `July 2015'
under such paragraph were a reference to `the first
month of the first full calendar quarter after the day
on which the drug was first marketed'.
``(B) Timeline for provision of rebates for
subsequently approved drugs.--In the case of a part B
rebatable drug first approved or licensed by the Food
and Drug Administration after July 1, 2015, paragraph
(1)(B) shall be applied as if the reference to `July 1,
2021' under such paragraph were a reference to the
later of the 6th full calendar quarter after the day on
which the drug was first marketed or July 1, 2021.
``(C) Exemption for shortages.--The Secretary may
reduce or waive the rebate amount under paragraph
(1)(B) with respect to a part B rebatable drug that is
described as currently in shortage on the shortage list
in effect under section 506E of the Federal Food, Drug,
and Cosmetic Act or in the case of other exigent
circumstances, as determined by the Secretary.
``(D) Selected drugs.--In the case of a part B
rebatable drug that is a selected drug (as defined in
section 1192(c)) for a price applicability period (as
defined in section 1191(b)(2)) and is determined
(pursuant to such section 1192(c)) to no longer be a
selected drug, for each applicable year beginning after
the price applicability period with respect to such
drug, clause (i) of paragraph (3)(C) shall be applied
as if the term `payment amount benchmark quarter' were
defined under paragraph (3)(D) as the calendar quarter
beginning January 1 of the last year beginning during
such price applicability period with respect to such
selected drug and clause (ii) of paragraph (3)(C) shall
be applied as if the term `benchmark period CPI-U' were
defined under paragraph (3)(E) as if the reference to
`July 2015' under such paragraph were a reference to
the July of the year preceding such last year.
``(5) Application to beneficiary coinsurance.--In the case
of a part B rebatable drug, if the payment amount for a quarter
exceeds the inflation adjusted payment for such quarter--
``(A) in computing the amount of any coinsurance
applicable under this title to an individual with
respect to such drug, the computation of such
coinsurance shall be based on the inflation-adjusted
payment amount determined under paragraph (3)(C) for
such part B rebatable drug; and
``(B) the amount of such coinsurance is equal to 20
percent of such inflation-adjusted payment amount so
determined.
``(6) Rebate deposits.--Amounts paid as rebates under
paragraph (1)(B) shall be deposited into the Federal
Supplementary Medical Insurance Trust Fund established under
section 1841.
``(7) Civil money penalty.--If a manufacturer of a part B
rebatable drug has failed to comply with the requirements under
paragraph (1)(B) for such drug for a calendar quarter, the
manufacturer shall be subject to, in accordance with a process
established by the Secretary pursuant to regulations, a civil
money penalty in an amount equal to at least 125 percent of the
amount specified in paragraph (3) for such drug for such
calendar quarter. The provisions of section 1128A (other than
subsections (a) (with respect to amounts of penalties or
additional assessments) and (b)) shall apply to a civil money
penalty under this paragraph in the same manner as such
provisions apply to a penalty or proceeding under section
1128A(a).
``(8) Study and report.--
``(A) Study.--The Secretary shall conduct a study
of the feasibility of and operational issues involved
with the following:
``(i) Including multiple source drugs (as
defined in section 1847A(c)(6)(C)) in the
rebate system under this subsection.
``(ii) Including drugs and biologicals paid
for under MA plans under part C in the rebate
system under this subsection.
``(iii) Including drugs excluded under
paragraph (2)(A) and units of the billing and
payment code of the drugs excluded under
paragraph (3)(B) in the rebate system under
this subsection.
``(B) Report.--Not later than 3 years after the
date of the enactment of this subsection, the Secretary
shall submit to Congress a report on the study
conducted under subparagraph (A).
``(9) Application to multiple source drugs.--The Secretary
may, based on the report submitted under paragraph (8) and
pursuant to rulemaking, apply the provisions of this subsection
to multiple source drugs (as defined in section
1847A(c)(6)(C)), including, for purposes of determining the
rebate amount under paragraph (3), by calculating manufacturer-
specific average sales prices for the benchmark period and the
rebate period.''.
(b) Amounts Payable; Cost-Sharing.--Section 1833 of the Social
Security Act (42 U.S.C. 1395l) is amended--
(1) in subsection (a)--
(A) in paragraph (1)--
(i) in subparagraph (S), by striking ``with
respect to'' and inserting ``subject to
subparagraph (DD), with respect to'';
(ii) by striking ``and (CC)'' and inserting
``(CC)''; and
(iii) by inserting before the semicolon at
the end the following: ``, and (DD) with
respect to a part B rebatable drug (as defined
in paragraph (2) of section 1834(x)) for which
the payment amount for a calendar quarter under
paragraph (3)(A)(ii)(I) of such section for
such quarter exceeds the inflation adjusted
payment under paragraph (3)(A)(ii)(II) of such
section for such quarter, the amounts paid
shall be the difference between (i) the payment
amount under paragraph (3)(A)(ii)(I) of such
section for such drug, and (ii) 20 percent of
the inflation-adjusted payment amount under
paragraph (3)(A)(ii)(II) of such section for
such drug'';
(B) in paragraph (4), by inserting ``subject to
paragraph (1)(DD),'' before ``the applicable amount'';
and
(C) by adding at the end of the flush left matter
following paragraph (9), the following:
``For purposes of applying paragraph (1)(DD), subsection (t)(23), and
section 1834(x)(5), the Secretary shall make such estimates and use
such data as the Secretary determines appropriate, and notwithstanding
any other provision of law, may do so by program instruction or
otherwise.'';
(2) in subsection (t), by adding at the end the following
new paragraph:
``(23) Part b rebatable drugs.--The amount of payment under
this subsection for a part B rebatable drug (as defined in
paragraph (2) of section 1834(x)) for which the payment amount
for a calendar quarter under paragraph (3)(A)(ii)(I) of such
section for such quarter exceeds the inflation adjusted payment
under paragraph (3)(A)(ii)(II) of such section for such quarter
and that is furnished as part of a covered OPD service (or
group of services), shall be the difference between--
``(A) the payment under paragraph (3)(A)(ii)(I) of
such section for such drug; and
``(B) 20 percent of the inflation-adjusted payment
amount under paragraph (3)(A)(ii)(II) of such section
for such drug.''.
(c) Conforming Amendment to Part B ASP Calculation.--Section
1847A(c)(3) of the Social Security Act (42 U.S.C. 1395w-3a(c)(3)) is
amended by inserting ``or section 1834(x)'' after ``section 1927''.
SEC. 202. MEDICARE PART D REBATE BY MANUFACTURERS.
Part D of title XVIII of the Social Security Act is amended by
inserting after section 1860D-14A (42 U.S.C. 1395w-114a) the following
new section:
``SEC. 1860D-14B. MANUFACTURER REBATE FOR CERTAIN DRUGS WITH PRICES
INCREASING FASTER THAN INFLATION.
``(a) In General.--
``(1) In general.--Subject to the provisions of this
section, in order for coverage to be available under this part
for a part D rebatable drug (as defined in subsection (h)(1))
of a manufacturer (as defined in section 1927(k)(5)) dispensed
during an applicable year, the manufacturer must have entered
into and have in effect an agreement described in subsection
(b).
``(2) Authorizing coverage for drugs not covered under
agreements.--Paragraph (1) shall not apply to the dispensing of
a covered part D drug if--
``(A) the Secretary has made a determination that
the availability of the drug is essential to the health
of beneficiaries under this part; or
``(B) the Secretary determines that in a specified
period (as specified by the Secretary), there were
extenuating circumstances.
``(3) Applicable year.--For purposes of this section the
term `applicable year' means a year beginning with 2022.
``(b) Agreements.--
``(1) Terms of agreement.--An agreement described in this
subsection, with respect to a manufacturer of a part D
rebatable drug, is an agreement under which the following shall
apply:
``(A) Secretarial provision of information.--Not
later than 9 months after the end of each applicable
year with respect to which the agreement is in effect,
the Secretary, for each part D rebatable drug of the
manufacturer, shall report to the manufacturer the
following for such year:
``(i) Information on the total number of
units (as defined in subsection (h)(2)) for
each dosage form and strength with respect to
such part D rebatable drug and year.
``(ii) Information on the amount (if any)
of the excess average manufacturer price
increase described in subsection (c)(1)(B) for
each dosage form and strength with respect to
such drug and year.
``(iii) The rebate amount specified under
subsection (c) for each dosage form and
strength with respect to such drug and year.
``(B) Manufacturer requirements.--For each
applicable year with respect to which the agreement is
in effect, the manufacturer of the part D rebatable
drug, for each dosage form and strength with respect to
such drug, not later than 30 days after the date of
receipt from the Secretary of the information described
in subparagraph (A) for such year, shall provide to the
Secretary a rebate that is equal to the amount
specified in subsection (c) for such dosage form and
strength with respect to such drug for such year.
``(2) Length of agreement.--
``(A) In general.--An agreement under this section,
with respect to a part D rebatable drug, shall be
effective for an initial period of not less than one
year and shall be automatically renewed for a period of
not less than one year unless terminated under
subparagraph (B).
``(B) Termination.--
``(i) By secretary.--The Secretary may
provide for termination of an agreement under
this section for violation of the requirements
of the agreement or other good cause shown.
Such termination shall not be effective earlier
than 30 days after the date of notice of such
termination. The Secretary shall provide, upon
request, a manufacturer with a hearing
concerning such a termination, but such hearing
shall not delay the effective date of the
termination.
``(ii) By a manufacturer.--A manufacturer
may terminate an agreement under this section
for any reason. Any such termination shall be
effective, with respect to a plan year--
``(I) if the termination occurs
before January 30 of the plan year, as
of the day after the end of the plan
year; and
``(II) if the termination occurs on
or after January 30 of the plan year,
as of the day after the end of the
succeeding plan year.
``(C) Effectiveness of termination.--Any
termination under this paragraph shall not affect
rebates due under the agreement under this section
before the effective date of its termination.
``(D) Delay before reentry.--In the case of any
agreement under this section with a manufacturer that
is terminated in a plan year, the Secretary may not
enter into another such agreement with the manufacturer
(or a successor manufacturer) before the subsequent
plan year, unless the Secretary finds good cause for an
earlier reinstatement of such an agreement.
``(c) Rebate Amount.--
``(1) In general.--For purposes of this section, the amount
specified in this subsection for a dosage form and strength
with respect to a part D rebatable drug and applicable year is,
subject to subparagraphs (B) and (C) of paragraph (5), the
amount equal to the product of--
``(A) the total number of units of such dosage form
and strength with respect to such part D rebatable drug
and year; and
``(B) the amount (if any) by which--
``(i) the annual manufacturer price (as
determined in paragraph (2)) paid for such
dosage form and strength with respect to such
part D rebatable drug for the year; exceeds
``(ii) the inflation-adjusted payment
amount determined under paragraph (3) for such
dosage form and strength with respect to such
part D rebatable drug for the year.
``(2) Determination of annual manufacturer price.--The
annual manufacturer price determined under this paragraph for a
dosage form and strength, with respect to a part D rebatable
drug and an applicable year, is the sum of the products of--
``(A) the average manufacturer price (as defined in
subsection (h)(6)) of such dosage form and strength, as
calculated for a unit of such drug, with respect to
each of the calendar quarters of such year; and
``(B) the ratio of--
``(i) the total number of units of such
dosage form and strength dispensed during each
such calendar quarter of such year; to
``(ii) the total number of units of such
dosage form and strength dispensed during such
year.
``(3) Determination of inflation-adjusted payment amount.--
The inflation-adjusted payment amount determined under this
paragraph for a dosage form and strength with respect to a part
D rebatable drug for an applicable year, subject to
subparagraphs (A) and (D) of paragraph (5), is--
``(A) the benchmark year manufacturer price
determined under paragraph (4) for such dosage form and
strength with respect to such drug and an applicable
year; increased by
``(B) the percentage by which the applicable year
CPI-U (as defined in subsection (h)(5)) for the
applicable year exceeds the benchmark period CPI-U (as
defined in subsection (h)(4)).
``(4) Determination of benchmark year manufacturer price.--
The benchmark year manufacturer price determined under this
paragraph for a dosage form and strength, with respect to a
part D rebatable drug and an applicable year, is the sum of the
products of--
``(A) the average manufacturer price (as defined in
subsection (h)(6)) of such dosage form and strength, as
calculated for a unit of such drug, with respect to
each calendar quarter of the payment amount benchmark
year (as defined in subsection (h)(3)); and
``(B) the ratio of--
``(i) the total number of units of such
dosage form and strength dispensed during such
calendar quarter of the payment amount
benchmark year; to
``(ii) the total number of units of such
dosage form and strength dispensed during the
payment amount benchmark year.
``(5) Special treatment of certain drugs and exemption.--
``(A) Subsequently approved drugs.--In the case of
a part D rebatable drug first approved or licensed by
the Food and Drug Administration after January 1, 2016,
subparagraphs (A) and (B) of paragraph (4) shall be
applied as if the term `payment amount benchmark year'
were defined under subsection (h)(3) as the first
calendar year beginning after the day on which the drug
was first marketed by any manufacturer and subparagraph
(B) of paragraph (3) shall be applied as if the term
`benchmark period CPI-U' were defined under subsection
(h)(4) as if the reference to `January 2016' under such
subsection were a reference to `January of the first
year beginning after the date on which the drug was
first marketed by any manufacturer'.
``(B) Exemption for shortages.--The Secretary may
reduce or waive the rebate under paragraph (1) with
respect to a part D rebatable drug that is described as
currently in shortage on the shortage list in effect
under section 506E of the Federal Food, Drug, and
Cosmetic Act or in the case of other exigent
circumstances, as determined by the Secretary.
``(C) Treatment of new formulations.--
``(i) In general.--In the case of a part D
rebatable drug that is a line extension of a
part D rebatable drug that is an oral solid
dosage form, the Secretary shall establish a
formula for determining the amount specified in
this subsection with respect to such part D
rebatable drug and an applicable year with
consideration of the original part D rebatable
drug.
``(ii) Line extension defined.--In this
subparagraph, the term `line extension' means,
with respect to a part D rebatable drug, a new
formulation of the drug (as determined by the
Secretary), such as an extended release
formulation, but does not include an abuse-
deterrent formulation of the drug (as
determined by the Secretary), regardless of
whether such abuse-deterrent formulation is an
extended release formulation.
``(D) Selected drugs.--In the case of a part D
rebatable drug that is a selected drug (as defined in
section 1192(c)) for a price applicability period (as
defined in section 1191(b)(2)) and is determined
(pursuant to such section 1192(c)) to no longer be a
selected drug, for each applicable year beginning after
the price applicability period with respect to such
drug, subparagraphs (A) and (B) of paragraph (4) shall
be applied as if the term `payment amount benchmark
year' were defined under subsection (h)(3) as the last
year beginning during such price applicability period
with respect to such selected drug and subparagraph (B)
of paragraph (3) shall be applied as if the term
`benchmark period CPI-U' were defined under subsection
(h)(4) as if the reference to `January 2016' under such
subsection were a reference to January of the last year
beginning during such price applicability period with
respect to such drug.
``(d) Rebate Deposits.--Amounts paid as rebates under subsection
(c) shall be deposited into the Medicare Prescription Drug Account in
the Federal Supplementary Medical Insurance Trust Fund established
under section 1841.
``(e) Information.--For purposes of carrying out this section, the
Secretary shall use information submitted by manufacturers under
section 1927(b)(3).
``(f) Civil Money Penalty.--In the case of a manufacturer of a part
D rebatable drug with an agreement in effect under this section who has
failed to comply with the terms of the agreement under subsection
(b)(1)(B) with respect to such drug for an applicable year, the
Secretary may impose a civil money penalty on such manufacturer in an
amount equal to 125 percent of the amount specified in subsection (c)
for such drug for such year. The provisions of section 1128A (other
than subsections (a) (with respect to amounts of penalties or
additional assessments) and (b)) shall apply to a civil money penalty
under this subsection in the same manner as such provisions apply to a
penalty or proceeding under section 1128A(a).
``(g) Judicial Review.--There shall be no judicial review of the
following:
``(1) The determination of units under this section.
``(2) The determination of whether a drug is a part D
rebatable drug under this section.
``(3) The calculation of the rebate amount under this
section.
``(h) Definitions.--In this section:
``(1) Part d rebatable drug defined.--
``(A) In general.--The term `part D rebatable drug'
means a drug or biological that would (without
application of this section) be a covered part D drug,
except such term shall, with respect to an applicable
year, not include such a drug or biological if the
average annual total cost under this part for such year
per individual who uses such a drug or biological, as
determined by the Secretary, is less than, subject to
subparagraph (B), $100, as determined by the Secretary
using the most recent data available or, if data is not
available, as estimated by the Secretary.
``(B) Increase.--The dollar amount applied under
subparagraph (A)--
``(i) for 2023, shall be the dollar amount
specified under such subparagraph for 2022,
increased by the percentage increase in the
consumer price index for all urban consumers
(United States city average) for the 12-month
period beginning with January of 2022; and
``(ii) for a subsequent year, shall be the
dollar amount specified in this subparagraph
(or subparagraph (A)) for the previous year,
increased by the percentage increase in the
consumer price index for all urban consumers
(United States city average) for the 12-month
period beginning with January of the previous
year.
Any dollar amount specified under this subparagraph
that is not a multiple of $10 shall be rounded to the
nearest multiple of $10.
``(2) Unit defined.--The term `unit' means, with respect to
a part D rebatable drug, the lowest identifiable quantity (such
as a capsule or tablet, milligram of molecules, or grams) of
the part D rebatable drug that is dispensed to individuals
under this part.
``(3) Payment amount benchmark year.--The term `payment
amount benchmark year' means the year beginning January 1,
2016.
``(4) Benchmark period cpi-u.--The term `benchmark period
CPI-U' means the consumer price index for all urban consumers
(United States city average) for January 2016.
``(5) Applicable year cpi-u.--The term `applicable year
CPI-U' means, with respect to an applicable year, the consumer
price index for all urban consumers (United States city
average) for January of such year.
``(6) Average manufacturer price.--The term `average
manufacturer price' has the meaning, with respect to a part D
rebatable drug of a manufacturer, given such term in section
1927(k)(1), with respect to a covered outpatient drug of a
manufacturer for a rebate period under section 1927.''.
TITLE III--PART D IMPROVEMENTS AND MAXIMUM OUT-OF-POCKET CAP FOR
MEDICARE BENEFICIARIES
SEC. 301. MEDICARE PART D BENEFIT REDESIGN.
(a) Benefit Structure Redesign.--Section 1860D-2(b) of the Social
Security Act (42 U.S.C. 1395w-102(b)) is amended--
(1) in paragraph (2)--
(A) in subparagraph (A), in the matter preceding
clause (i), by inserting ``for a year preceding 2022
and for costs above the annual deductible specified in
paragraph (1) and up to the annual out-of-pocket
threshold specified in paragraph (4)(B) for 2022 and
each subsequent year'' after ``paragraph (3)'';
(B) in subparagraph (C)--
(i) in clause (i), in the matter preceding
subclause (I), by inserting ``for a year
preceding 2022,'' after ``paragraph (4),''; and
(ii) in clause (ii)(III), by striking ``and
each subsequent year'' and inserting ``and
2021''; and
(C) in subparagraph (D)--
(i) in clause (i)--
(I) in the matter preceding
subclause (I), by inserting ``for a
year preceding 2022,'' after
``paragraph (4),''; and
(II) in subclause (I)(bb), by
striking ``a year after 2018'' and
inserting ``each of years 2018 through
2021''; and
(ii) in clause (ii)(V), by striking ``2019
and each subsequent year'' and inserting ``each
of years 2019 through 2021'';
(2) in paragraph (3)(A)--
(A) in the matter preceding clause (i), by
inserting ``for a year preceding 2022,'' after ``and
(4),''; and
(B) in clause (ii), by striking ``for a subsequent
year'' and inserting ``for each of years 2007 through
2021''; and
(3) in paragraph (4)--
(A) in subparagraph (A)--
(i) in clause (i)--
(I) by redesignating subclauses (I)
and (II) as items (aa) and (bb),
respectively, and moving the margin of
each such redesignated item 2 ems to
the right;
(II) in the matter preceding item
(aa), as redesignated by subclause (I),
by striking ``is equal to the greater
of--'' and inserting ``is equal to--
``(I) for a year preceding 2022,
the greater of--'';
(III) by striking the period at the
end of item (bb), as redesignated by
subclause (I), and inserting ``; and'';
and
(IV) by adding at the end the
following:
``(II) for 2022 and each succeeding
year, $0.''; and
(ii) in clause (ii), by striking ``clause
(i)(I)'' and inserting ``clause (i)(I)(aa)'';
(B) in subparagraph (B)--
(i) in clause (i)--
(I) in subclause (V), by striking
``or'' at the end;
(II) in subclause (VI)--
(aa) by striking ``for a
subsequent year'' and inserting
``for 2021''; and
(bb) by striking the period
at the end and inserting a
semicolon; and
(III) by adding at the end the
following new subclauses:
``(VII) for 2022, is equal to
$2,000; or
``(VIII) for a subsequent year, is
equal to the amount specified in this
subparagraph for the previous year,
increased by the annual percentage
increase described in paragraph (6) for
the year involved.''; and
(ii) in clause (ii), by striking ``clause
(i)(II)'' and inserting ``clause (i)'';
(C) in subparagraph (C)(i), by striking ``and for
amounts'' and inserting ``and, for a year preceding
2022, for amounts''; and
(D) in subparagraph (E), by striking ``In
applying'' and inserting ``For each of years 2011
through 2021, in applying''.
(b) Decreasing Reinsurance Payment Amount.--Section 1860D-15(b)(1)
of the Social Security Act (42 U.S.C. 1395w-115(b)(1)) is amended by
inserting after ``80 percent'' the following: ``(or, with respect to a
coverage year after 2021, 20 percent)''.
(c) Manufacturer Discount Program.--
(1) In general.--Part D of title XVIII of the Social
Security Act (42 U.S.C. 1395w-101 et seq.), as amended by
section 202, is further amended by inserting after section
1860D-14B the following new section:
``SEC. 1860D-14C. MANUFACTURER DISCOUNT PROGRAM.
``(a) Establishment.--The Secretary shall establish a manufacturer
discount program (in this section referred to as the `program'). Under
the program, the Secretary shall enter into agreements described in
subsection (b) with manufacturers and provide for the performance of
the duties described in subsection (c). The Secretary shall establish a
model agreement for use under the program by not later than January 1,
2021, in consultation with manufacturers, and allow for comment on such
model agreement.
``(b) Terms of Agreement.--
``(1) In general.--
``(A) Agreement.--An agreement under this section
shall require the manufacturer to provide applicable
beneficiaries access to discounted prices for
applicable drugs of the manufacturer that are dispensed
on or after January 1, 2022.
``(B) Provision of discounted prices at the point-
of-sale.--The discounted prices described in
subparagraph (A) shall be provided to the applicable
beneficiary at the pharmacy or by the mail order
service at the point-of-sale of an applicable drug.
``(C) Timing of agreement.--
``(i) Special rule for 2022.--In order for
an agreement with a manufacturer to be in
effect under this section with respect to the
period beginning on January 1, 2022, and ending
on December 31, 2022, the manufacturer shall
enter into such agreement not later than 30
days after the date of the establishment of a
model agreement under subsection (a).
``(ii) 2023 and subsequent years.--In order
for an agreement with a manufacturer to be in
effect under this section with respect to plan
year 2023 or a subsequent plan year, the
manufacturer shall enter into such agreement
(or such agreement shall be renewed under
paragraph (4)(A)) not later than January 30 of
the preceding year.
``(2) Provision of appropriate data.--Each manufacturer
with an agreement in effect under this section shall collect
and have available appropriate data, as determined by the
Secretary, to ensure that it can demonstrate to the Secretary
compliance with the requirements under the program.
``(3) Compliance with requirements for administration of
program.--Each manufacturer with an agreement in effect under
this section shall comply with requirements imposed by the
Secretary or a third party with a contract under subsection
(d)(3), as applicable, for purposes of administering the
program, including any determination under subparagraph (A) of
subsection (c)(1) or procedures established under such
subsection (c)(1).
``(4) Length of agreement.--
``(A) In general.--An agreement under this section
shall be effective for an initial period of not less
than 12 months and shall be automatically renewed for a
period of not less than 1 year unless terminated under
subparagraph (B).
``(B) Termination.--
``(i) By the secretary.--The Secretary may
provide for termination of an agreement under
this section for a knowing and willful
violation of the requirements of the agreement
or other good cause shown. Such termination
shall not be effective earlier than 30 days
after the date of notice to the manufacturer of
such termination. The Secretary shall provide,
upon request, a manufacturer with a hearing
concerning such a termination, and such hearing
shall take place prior to the effective date of
the termination with sufficient time for such
effective date to be repealed if the Secretary
determines appropriate.
``(ii) By a manufacturer.--A manufacturer
may terminate an agreement under this section
for any reason. Any such termination shall be
effective, with respect to a plan year--
``(I) if the termination occurs
before January 30 of a plan year, as of
the day after the end of the plan year;
and
``(II) if the termination occurs on
or after January 30 of a plan year, as
of the day after the end of the
succeeding plan year.
``(iii) Effectiveness of termination.--Any
termination under this subparagraph shall not
affect discounts for applicable drugs of the
manufacturer that are due under the agreement
before the effective date of its termination.
``(iv) Notice to third party.--The
Secretary shall provide notice of such
termination to a third party with a contract
under subsection (d)(3) within not less than 30
days before the effective date of such
termination.
``(c) Duties Described.--The duties described in this subsection
are the following:
``(1) Administration of program.--Administering the
program, including--
``(A) the determination of the amount of the
discounted price of an applicable drug of a
manufacturer;
``(B) the establishment of procedures under which
discounted prices are provided to applicable
beneficiaries at pharmacies or by mail order service at
the point-of-sale of an applicable drug;
``(C) the establishment of procedures to ensure
that, not later than the applicable number of calendar
days after the dispensing of an applicable drug by a
pharmacy or mail order service, the pharmacy or mail
order service is reimbursed for an amount equal to the
difference between--
``(i) the negotiated price of the
applicable drug; and
``(ii) the discounted price of the
applicable drug;
``(D) the establishment of procedures to ensure
that the discounted price for an applicable drug under
this section is applied before any coverage or
financial assistance under other health benefit plans
or programs that provide coverage or financial
assistance for the purchase or provision of
prescription drug coverage on behalf of applicable
beneficiaries as the Secretary may specify; and
``(E) providing a reasonable dispute resolution
mechanism to resolve disagreements between
manufacturers, applicable beneficiaries, and the third
party with a contract under subsection (d)(3).
``(2) Monitoring compliance.--
``(A) In general.--The Secretary shall monitor
compliance by a manufacturer with the terms of an
agreement under this section.
``(B) Notification.--If a third party with a
contract under subsection (d)(3) determines that the
manufacturer is not in compliance with such agreement,
the third party shall notify the Secretary of such
noncompliance for appropriate enforcement under
subsection (e).
``(3) Collection of data from prescription drug plans and
ma-pd plans.--The Secretary may collect appropriate data from
prescription drug plans and MA-PD plans in a timeframe that
allows for discounted prices to be provided for applicable
drugs under this section.
``(d) Administration.--
``(1) In general.--Subject to paragraph (2), the Secretary
shall provide for the implementation of this section, including
the performance of the duties described in subsection (c).
``(2) Limitation.--In providing for the implementation of
this section, the Secretary shall not receive or distribute any
funds of a manufacturer under the program.
``(3) Contract with third parties.--The Secretary shall
enter into a contract with 1 or more third parties to
administer the requirements established by the Secretary in
order to carry out this section. At a minimum, the contract
with a third party under the preceding sentence shall require
that the third party--
``(A) receive and transmit information between the
Secretary, manufacturers, and other individuals or
entities the Secretary determines appropriate;
``(B) receive, distribute, or facilitate the
distribution of funds of manufacturers to appropriate
individuals or entities in order to meet the
obligations of manufacturers under agreements under
this section;
``(C) provide adequate and timely information to
manufacturers, consistent with the agreement with the
manufacturer under this section, as necessary for the
manufacturer to fulfill its obligations under this
section; and
``(D) permit manufacturers to conduct periodic
audits, directly or through contracts, of the data and
information used by the third party to determine
discounts for applicable drugs of the manufacturer
under the program.
``(4) Performance requirements.--The Secretary shall
establish performance requirements for a third party with a
contract under paragraph (3) and safeguards to protect the
independence and integrity of the activities carried out by the
third party under the program under this section.
``(5) Implementation.--Notwithstanding any other provision
of law, the Secretary may implement the program under this
section by program instruction or otherwise.
``(6) Administration.--Chapter 35 of title 44, United
States Code, shall not apply to the program under this section.
``(e) Enforcement.--
``(1) Audits.--Each manufacturer with an agreement in
effect under this section shall be subject to periodic audit by
the Secretary.
``(2) Civil money penalty.--
``(A) In general.--The Secretary may impose a civil
money penalty on a manufacturer that fails to provide
applicable beneficiaries discounts for applicable drugs
of the manufacturer in accordance with such agreement
for each such failure in an amount the Secretary
determines is equal to the sum of--
``(i) the amount that the manufacturer
would have paid with respect to such discounts
under the agreement, which will then be used to
pay the discounts which the manufacturer had
failed to provide; and
``(ii) 25 percent of such amount.
``(B) Application.--The provisions of section 1128A
(other than subsections (a) and (b)) shall apply to a
civil money penalty under this paragraph in the same
manner as such provisions apply to a penalty or
proceeding under section 1128A(a).
``(f) Clarification Regarding Availability of Other Covered Part D
Drugs.--Nothing in this section shall prevent an applicable beneficiary
from purchasing a covered part D drug that is not an applicable drug
(including a generic drug or a drug that is not on the formulary of the
prescription drug plan or MA-PD plan that the applicable beneficiary is
enrolled in).
``(g) Definitions.--In this section:
``(1) Applicable beneficiary.--The term `applicable
beneficiary' means an individual who, on the date of dispensing
a covered part D drug--
``(A) is enrolled in a prescription drug plan or an
MA-PD plan;
``(B) is not enrolled in a qualified retiree
prescription drug plan; and
``(C) has incurred costs for covered part D drugs
in the year that are equal to or exceed the annual
deductible specified in section 1860D-2(b)(1) for such
year.
``(2) Applicable drug.--The term `applicable drug', with
respect to an applicable beneficiary--
``(A) means a covered part D drug--
``(i) approved under a new drug application
under section 505(c) of the Federal Food, Drug,
and Cosmetic Act or, in the case of a biologic
product, licensed under section 351 of the
Public Health Service Act; and
``(ii)(I) if the PDP sponsor of the
prescription drug plan or the MA organization
offering the MA-PD plan uses a formulary, which
is on the formulary of the prescription drug
plan or MA-PD plan that the applicable
beneficiary is enrolled in;
``(II) if the PDP sponsor of the
prescription drug plan or the MA organization
offering the MA-PD plan does not use a
formulary, for which benefits are available
under the prescription drug plan or MA-PD plan
that the applicable beneficiary is enrolled in;
or
``(III) is provided through an exception or
appeal; and
``(B) does not include a selected drug (as defined
in section 1192(c)) during a price applicability period
(as defined in section 1191(b)(2)) with respect to such
drug.
``(3) Applicable number of calendar days.--The term
`applicable number of calendar days' means--
``(A) with respect to claims for reimbursement
submitted electronically, 14 days; and
``(B) with respect to claims for reimbursement
submitted otherwise, 30 days.
``(4) Discounted price.--
``(A) In general.--The term `discounted price'
means, with respect to an applicable drug of a
manufacturer furnished during a year to an applicable
beneficiary--
``(i) who has not incurred costs for
covered part D drugs in the year that are equal
to or exceed the annual out-of-pocket threshold
specified in section 1860D-2(b)(4)(B)(i) for
the year, 90 percent of the negotiated price of
such drug; and
``(ii) who has incurred such costs in the
year that are equal to or exceed such threshold
for the year, 70 percent of the negotiated
price of such drug.
``(B) Clarification.--Nothing in this section shall
be construed as affecting the responsibility of an
applicable beneficiary for payment of a dispensing fee
for an applicable drug.
``(C) Special case for certain claims.--
``(i) Claims spanning deductible.--In the
case where the entire amount of the negotiated
price of an individual claim for an applicable
drug with respect to an applicable beneficiary
does not fall at or above the annual deductible
specified in section 1860D-2(b)(1) for the
year, the manufacturer of the applicable drug
shall provide the discounted price under this
section on only the portion of the negotiated
price of the applicable drug that falls at or
above such annual deductible.
``(ii) Claims spanning out-of-pocket
threshold.--In the case where the entire amount
of the negotiated price of an individual claim
for an applicable drug with respect to an
applicable beneficiary does not fall entirely
below or entirely above the annual out-of-
pocket threshold specified in section 1860D-
2(b)(4)(B)(i) for the year, the manufacturer of
the applicable drug shall provide the
discounted price--
``(I) in accordance with
subparagraph (A)(i) on the portion of
the negotiated price of the applicable
drug that falls below such threshold;
and
``(II) in accordance with
subparagraph (A)(ii) on the portion of
such price of such drug that falls at
or above such threshold.
``(5) Manufacturer.--The term `manufacturer' means any
entity which is engaged in the production, preparation,
propagation, compounding, conversion, or processing of
prescription drug products, either directly or indirectly by
extraction from substances of natural origin, or independently
by means of chemical synthesis, or by a combination of
extraction and chemical synthesis. Such term does not include a
wholesale distributor of drugs or a retail pharmacy licensed
under State law.
``(6) Negotiated price.--The term `negotiated price' has
the meaning given such term in section 423.100 of title 42,
Code of Federal Regulations (or any successor regulation),
except that such negotiated price shall not include any
dispensing fee for the applicable drug.
``(7) Qualified retiree prescription drug plan.--The term
`qualified retiree prescription drug plan' has the meaning
given such term in section 1860D-22(a)(2).''.
(2) Sunset of medicare coverage gap discount program.--
Section 1860D-14A of the Social Security Act (42 U.S.C. 1395-
114a) is amended--
(A) in subsection (a), in the first sentence, by
striking ``The Secretary'' and inserting ``Subject to
subsection (h), the Secretary''; and
(B) by adding at the end the following new
subsection:
``(h) Sunset of Program.--
``(1) In general.--The program shall not apply with respect
to applicable drugs dispensed on or after January 1, 2022, and,
subject to paragraph (2), agreements under this section shall
be terminated as of such date.
``(2) Continued application for applicable drugs dispensed
prior to sunset.--The provisions of this section (including all
responsibilities and duties) shall continue to apply after
January 1, 2022, with respect to applicable drugs dispensed
prior to such date.''.
(3) Inclusion of actuarial value of manufacturer discounts
in bids.--Section 1860D-11 of the Social Security Act (42
U.S.C. 1395w-111) is amended--
(A) in subsection (b)(2)(C)(iii)--
(i) by striking ``assumptions regarding the
reinsurance'' and inserting ``assumptions
regarding--
``(I) the reinsurance''; and
(ii) by adding at the end the following:
``(II) for 2022 and each subsequent
year, the manufacturer discounts
provided under section 1860D-14C
subtracted from the actuarial value to
produce such bid; and''; and
(B) in subsection (c)(1)(C)--
(i) by striking ``an actuarial valuation of
the reinsurance'' and inserting ``an actuarial
valuation of--
``(i) the reinsurance'';
(ii) in clause (i), as inserted by clause
(i) of this subparagraph, by adding ``and'' at
the end; and
(iii) by adding at the end the following:
``(ii) for 2022 and each subsequent year,
the manufacturer discounts provided under
section 1860D-14C;''.
(d) Conforming Amendments.--
(1) Section 1860D-2 of the Social Security Act (42 U.S.C.
1395w-102) is amended--
(A) in subsection (a)(2)(A)(i)(I), by striking ``,
or an increase in the initial'' and inserting ``or, for
a year preceding 2022, an increase in the initial'';
(B) in subsection (c)(1)(C)--
(i) in the subparagraph heading, by
striking ``at initial coverage limit''; and
(ii) by inserting ``for a year preceding
2022 or the annual out-of-pocket threshold
specified in subsection (b)(4)(B) for the year
for 2022 and each subsequent year'' after
``subsection (b)(3) for the year'' each place
it appears; and
(C) in subsection (d)(1)(A), by striking ``or an
initial'' and inserting ``or, for a year preceding
2022, an initial''.
(2) Section 1860D-4(a)(4)(B)(i) of the Social Security Act
(42 U.S.C. 1395w-104(a)(4)(B)(i)) is amended by striking ``the
initial'' and inserting ``for a year preceding 2022, the
initial''.
(3) Section 1860D-14(a) of the Social Security Act (42
U.S.C. 1395w-114(a)) is amended--
(A) in paragraph (1)--
(i) in subparagraph (C), by striking ``The
continuation'' and inserting ``For a year
preceding 2022, the continuation'';
(ii) in subparagraph (D)(iii), by striking
``1860D-2(b)(4)(A)(i)(I)'' and inserting
``1860D-2(b)(4)(A)(i)(I)(aa)''; and
(iii) in subparagraph (E), by striking
``The elimination'' and inserting ``For a year
preceding 2022, the elimination''; and
(B) in paragraph (2)--
(i) in subparagraph (C), by striking ``The
continuation'' and inserting ``For a year
preceding 2022, the continuation''; and
(ii) in subparagraph (E), by striking
``1860D-2(b)(4)(A)(i)(I)'' and inserting
``1860D-2(b)(4)(A)(i)(I)(aa)''.
(4) Section 1860D-21(d)(7) of the Social Security Act (42
U.S.C. 1395w-131(d)(7)) is amended by striking ``section 1860D-
2(b)(4)(B)(i)'' and inserting ``section 1860D-2(b)(4)(C)(i)''.
(5) Section 1860D-22(a)(2)(A) of the Social Security Act
(42 U.S.C. 1395w-132(a)(2)(A)) is amended--
(A) by striking ``the value of any discount'' and
inserting the following: ``the value of--
``(i) for years prior to 2022, any
discount'';
(B) in clause (i), as inserted by subparagraph (A)
of this paragraph, by striking the period at the end
and inserting ``; and''; and
(C) by adding at the end the following new clause:
``(ii) for 2022 and each subsequent year,
any discount provided pursuant to section
1860D-14C.''.
(6) Section 1860D-41(a)(6) of the Social Security Act (42
U.S.C. 1395w-151(a)(6)) is amended--
(A) by inserting ``for a year before 2022'' after
``1860D-2(b)(3)''; and
(B) by inserting ``for such year'' before the
period.
(7) Section 1860D-43 of the Social Security Act (42 U.S.C.
1395w-153) is amended--
(A) in subsection (a)--
(i) by striking paragraph (1) and inserting
the following:
``(1) participate in--
``(A) for 2011 through 2021, the Medicare coverage
gap discount program under section 1860D-14A; and
``(B) for 2022 and each subsequent year, the
manufacturer discount program under section 1860D-
14C;'';
(ii) by striking paragraph (2) and
inserting the following:
``(2) have entered into and have in effect--
``(A) for 2011 through 2021, an agreement described
in subsection (b) of section 1860D-14A with the
Secretary; and
``(B) for 2022 and each subsequent year, an
agreement described in subsection (b) of section 1860D-
14C with the Secretary; and''; and
(iii) by striking paragraph (3) and
inserting the following:
``(3) have entered into and have in effect, under terms and
conditions specified by the Secretary--
``(A) for 2011 through 2021, a contract with a
third party that the Secretary has entered into a
contract with under subsection (d)(3) of section 1860D-
14A; and
``(B) for 2022 and each subsequent year, a contract
with a third party that the Secretary has entered into
a contract with under subsection (d)(3) of section
1860D-14C.''; and
(B) by striking subsection (b) and inserting the
following:
``(b) Effective Date.--Paragraphs (1)(A), (2)(A), and (3)(A) of
subsection (a) shall apply to covered part D drugs dispensed under this
part on or after January 1, 2011, and before January 1, 2022, and
paragraphs (1)(B), (2)(B), and (3)(B) of such subsection shall apply to
covered part D drugs dispensed under this part on or after January 1,
2022.''.
(e) Effective Date.--The amendments made by this section shall
apply with respect to plan year 2022 and subsequent plan years.
SEC. 302. ALLOWING CERTAIN ENROLLEES OF PRESCRIPTION DRUGS PLANS AND
MA-PD PLANS UNDER MEDICARE PROGRAM TO SPREAD OUT COST-
SHARING UNDER CERTAIN CIRCUMSTANCES.
Section 1860D-2(b)(2) of the Social Security Act (42 U.S.C. 1395w-
102(b)(2)), as amended by section 301, is further amended--
(1) in subparagraph (A), by striking ``Subject to
subparagraphs (C) and (D)'' and inserting ``Subject to
subparagraphs (C), (D), and (E)''; and
(2) by adding at the end the following new subparagraph:
``(E) Enrollee option regarding spreading cost-
sharing.--The Secretary shall establish by regulation a
process under which, with respect to plan year 2022 and
subsequent plan years, a prescription drug plan or an
MA-PD plan shall, in the case of a part D eligible
individual enrolled with such plan for such plan year
who is not a subsidy eligible individual (as defined in
section 1860D-14(a)(3)) and with respect to whom the
plan projects that the dispensing of the first fill of
a covered part D drug to such individual will result in
the individual incurring costs that are equal to or
above the annual out-of-pocket threshold specified in
paragraph (4)(B) for such plan year, provide such
individual with the option to make the coinsurance
payment required under subparagraph (A) (for the
portion of such costs that are not above such annual
out-of-pocket threshold) in the form of periodic
installments over the remainder of such plan year.''.
SEC. 303. ESTABLISHMENT OF PHARMACY QUALITY MEASURES UNDER MEDICARE
PART D.
Section 1860D-4(c) of the Social Security Act (42 U.S.C. 1395w-
104(c)) is amended--
(1) by redesignating the paragraph (6), as added by section
50354 of division E of the Bipartisan Budget Act of 2018
(Public Law 115-123), as paragraph (7); and
(2) by adding at the end the following new paragraph:
``(8) Application of pharmacy quality measures.--
``(A) In general.--A PDP sponsor that implements
incentive payments to a pharmacy or price concessions
paid by a pharmacy based on quality measures shall use
measures established or approved by the Secretary under
subparagraph (B) with respect to payment for covered
part D drugs dispensed by such pharmacy.
``(B) Standard pharmacy quality measures.--The
Secretary shall establish or approve standard quality
measures from a consensus and evidence-based
organization for payments described in subparagraph
(A). Such measures shall focus on patient health
outcomes and be based on proven criteria measuring
pharmacy performance.
``(C) Effective date.--The requirement under
subparagraph (A) shall take effect for plan years
beginning on or after January 1, 2021, or such earlier
date specified by the Secretary if the Secretary
determines there are sufficient measures established or
approved under subparagraph (B) to meet the requirement
under subparagraph (A).''.
TITLE IV--PRESCRIPTION DRUG POLICIES FOR LOW-INCOME INDIVIDUALS
SEC. 401. ADJUSTMENTS TO MEDICARE PART D COST-SHARING REDUCTIONS FOR
LOW-INCOME INDIVIDUALS.
Section 1860D-14(a) of the Social Security Act (42 U.S.C. 1395w-
114(a)), as amended by section 301(d), is further amended--
(1) in paragraph (1)--
(A) in subparagraph (D)--
(i) in clause (ii)--
(I) by striking ``that does not
exceed $1 for'' and all that follows
through the period at the end and
inserting ``that does not exceed--
``(I) for plan years before plan
year 2021--
``(aa) for a generic drug
or a preferred drug that is a
multiple source drug (as
defined in section
1927(k)(7)(A)(i)), $1 or, if
less, the copayment amount
applicable to an individual
under clause (iii); and
``(bb) for any other drug,
$3 or, if less, the copayment
amount applicable to an
individual under clause (iii);
and''; and
(II) by adding at the end the
following new subclauses:
``(II) for plan year 2021--
``(aa) for a generic drug,
$0; and
``(bb) for any other drug,
the dollar amount applied under
this clause (after application
of paragraph (4)(A)) for plan
year 2020 for a drug described
in subclause (I)(bb); and
``(III) for a subsequent year, the
dollar amount applied under this clause
for the previous year for the drug,
increased by the annual percentage
increase in the consumer price index
(all items; U.S. city average) as of
September of such previous year.''; and
(ii) in clause (iii)--
(I) by striking ``does not exceed
the copayment amount specified under''
and inserting ``does not exceed--
``(I) for plan years beginning
before plan year 2021, the copayment
amount specified under'';
(II) by striking the period at the
end and inserting ``; and''; and
(III) by adding at the end the
following new subclause:
``(II) for plan year 2021 and each
subsequent plan year, the copayment
amount applied under clause (ii) for
the drug and year involved.''; and
(B) by adding at the end the following new
subparagraph:
``(F) Rounding.--Any amount established under
clause (ii) of subparagraph (D), including as applied
under clause (iii) of such subparagraph or paragraph
(2)(D), that is based on an increase of $3, that is not
a multiple of 5 cents or 10 cents, respectively, shall
be rounded to the nearest multiple of 5 cents or 10
cents, respectively.'';
(2) in paragraph (2)--
(A) in subparagraph (D)--
(i) by striking ``of coinsurance of'' and
inserting ``of--
``(i) for plan years before plan year 2021,
coinsurance of'';
(ii) by striking the period at the end and
inserting ``; and''; and
(iii) by adding at the end the following
new clause:
``(ii) for plan year 2021 and each
subsequent plan year, a copayment amount that
does not exceed the copayment amount applied
under paragraph (1)(D)(ii) for the drug and
year involved.''; and
(B) in subparagraph (E)--
(i) by striking ``subsection (c), the
substitution for'' and inserting ``subsection
(c)--
``(i) for plan years before plan year 2021,
the substitution for'';
(ii) by striking the period at the end and
inserting ``; and''; and
(iii) by adding at the end the following
new clause:
``(ii) for plan year 2021, the elimination
of any cost-sharing imposed under section
1860D-2(b)(4)(A).''; and
(3) in paragraph (4)(A)(ii), by inserting ``(before 2021)''
after ``subsequent year''.
SEC. 402. DISSEMINATION TO MEDICARE PART D SUBSIDY ELIGIBLE INDIVIDUALS
OF INFORMATION COMPARING PREMIUMS OF CERTAIN PRESCRIPTION
DRUG PLANS.
Section 1860D-1(c)(3) of the Social Security Act (42 U.S.C. 1395w-
101(c)(3)) is amended by adding at the end the following new
subparagraph:
``(C) Information on premiums for subsidy eligible
individuals.--
``(i) In general.--For plan year 2022 and
each subsequent plan year, the Secretary shall
disseminate to each subsidy eligible individual
(as defined in section 1860D-14(a)(3))
information under this paragraph comparing
premiums that would apply to such individual
for prescription drug coverage under LIS
benchmark plans, including, in the case of an
individual enrolled in a prescription drug plan
under this part, information that compares the
premium that would apply if such individual
were to remain enrolled in such plan to
premiums that would apply if the individual
were to enroll in other LIS benchmark plans.
``(ii) LIS benchmark plan.--For purposes of
clause (i), the term `LIS benchmark plan'
means, with respect to an individual, a
prescription drug plan under this part that is
offered in the region in which the individual
resides and--
``(I) that provides for a premium
that is not more than the low-income
benchmark premium amount (as defined in
section 1860D-14(b)(2)) for such
region; or
``(II) with respect to which the
premium would be waived as de minimis
pursuant to section 1860D-14(a)(5) for
such individual.''.
SEC. 403. PROVIDING FOR INTELLIGENT ASSIGNMENT OF CERTAIN SUBSIDY
ELIGIBLE INDIVIDUALS AUTO-ENROLLED UNDER MEDICARE
PRESCRIPTION DRUG PLANS AND MA-PD PLANS.
(a) In General.--Section 1860D-1(b)(1) of the Social Security Act
(42 U.S.C. 1395w-101(b)(1)) is amended--
(1) in subparagraph (C)--
(A) by inserting after ``PDP region'' the
following: ``or through use of an intelligent
assignment process that is designed to maximize the
access of such individual to necessary prescription
drugs while minimizing costs to such individual and to
the program under this part to the greatest extent
possible. In the case the Secretary enrolls such
individuals through use of an intelligent assignment
process, such process shall take into account the
extent to which prescription drugs necessary for the
individual are covered in the case of a PDP sponsor of
a prescription drug plan that uses a formulary, the use
of prior authorization or other restrictions on access
to coverage of such prescription drugs by such a
sponsor, and the overall quality of a prescription drug
plan as measured by quality ratings established by the
Secretary''; and
(B) by striking ``Nothing in the previous
sentence'' and inserting ``Nothing in this
subparagraph''; and
(2) in subparagraph (D)--
(A) by inserting after ``PDP region'' the
following: ``or through use of an intelligent
assignment process that is designed to maximize the
access of such individual to necessary prescription
drugs while minimizing costs to such individual and to
the program under this part to the greatest extent
possible. In the case the Secretary enrolls such
individuals through use of an intelligent assignment
process, such process shall take into account the
extent to which prescription drugs necessary for the
individual are covered in the case of a PDP sponsor of
a prescription drug plan that uses a formulary, the use
of prior authorization or other restrictions on access
to coverage of such prescription drugs by such a
sponsor, and the overall quality of a prescription drug
plan as measured by quality ratings established by the
Secretary''; and
(B) by striking ``Nothing in the previous
sentence'' and inserting ``Nothing in this
subparagraph''.
(b) Effective Date.--The amendments made by subsection (a) shall
apply with respect to plan years beginning with plan year 2022.
SEC. 404. EXPANDING ELIGIBILITY FOR LOW-INCOME SUBSIDIES UNDER PART D
OF THE MEDICARE PROGRAM.
Section 1860D-14(a) of the Social Security Act (42 U.S.C. 1395w-
114(a)), as amended by sections 301(d) and 401, is further amended--
(1) in the subsection heading, by striking ``Individuals''
and all that follows through ``Line'' and inserting ``Certain
Individuals'';
(2) in paragraph (1)--
(A) by striking the paragraph heading and inserting
``Individuals with certain low incomes''; and
(B) in the matter preceding subparagraph (A), by
inserting ``(or, with respect to a plan year beginning
on or after January 1, 2022, 150 percent)'' after ``135
percent'';
(3) in paragraph (2)--
(A) by striking the paragraph heading and inserting
``Other low-income individuals''; and
(B) in subparagraph (A)--
(i) by inserting ``(or, with respect to a
plan year beginning on or after January 1,
2022, 150 percent)'' after ``135 percent''; and
(ii) by inserting ``(or, with respect to a
plan year beginning on or after January 1,
2022, 200 percent)'' after ``150 percent''; and
(4) in paragraph (3)(A)(ii), by inserting ``(or, with
respect to a plan year beginning on or after January 1, 2022,
200 percent)'' after ``150 percent''.
SEC. 405. AUTOMATIC ELIGIBILITY OF CERTAIN LOW-INCOME TERRITORIAL
RESIDENTS FOR PREMIUM AND COST-SHARING SUBSIDIES UNDER
THE MEDICARE PROGRAM; SUNSET OF ENHANCED ALLOTMENT
PROGRAM.
(a) Automatic Eligibility of Certain Low-Income Territorial
Residents for Premium and Cost-Sharing Subsidies Under the Medicare
Program.--
(1) In general.--Section 1860D-14(a)(3) of the Social
Security Act (42 U.S.C. 1395w-114(a)(3)) is amended--
(A) in subparagraph (B)(v)--
(i) in subclause (I), by striking ``and''
at the end;
(ii) in subclause (II), by striking the
period and inserting ``; and''; and
(iii) by inserting after subclause (II) the
following new subclause:
``(III) with respect to plan years
beginning on or after January 1, 2021,
shall provide that any part D eligible
individual who is enrolled for medical
assistance under the State Medicaid
plan of a territory (as defined in
section 1935(f)) under title XIX (or a
waiver of such a plan) shall be treated
as a subsidy eligible individual
described in paragraph (1).''; and
(B) in subparagraph (F), by adding at the end the
following new sentence: ``The previous sentence shall
not apply with respect to eligibility determinations
for premium and cost-sharing subsidies under this
section made on or after January 1, 2021.''.
(2) Conforming amendment.--Section 1860D-31(j)(2)(D) of the
Social Security Act (42 U.S.C. 1395w-141(j)(2)(D)) is amended
by adding at the end the following new sentence: ``The previous
sentence shall not apply with respect to amounts made available
to a State under this paragraph on or after January 1, 2021.''.
(b) Sunset of Enhanced Allotment Program.--
(1) In general.--Section 1935(e) of the Social Security Act
(42 U.S.C. 1396u-5(e)) is amended--
(A) in paragraph (1)(A), by inserting after ``such
State'' the following: ``before January 1, 2021''; and
(B) in paragraph (3)--
(i) in subparagraph (A), in the matter
preceding clause (i), by inserting after ``a
year'' the following: ``(before 2021)''; and
(ii) in subparagraph (B)(iii), by striking
``a subsequent year'' and inserting ``each of
fiscal years 2008 through 2020''.
(2) Territory defined.--Section 1935 of the Social Security
Act (42 U.S.C. 1396u-5) is amended by adding at the end the
following new subsection:
``(f) Territory Defined.--In this section, the term `territory'
means Puerto Rico, the Virgin Islands, Guam, the Northern Mariana
Islands, and American Samoa.''.
SEC. 406. AUTOMATIC QUALIFICATION OF CERTAIN MEDICAID BENEFICIARIES FOR
PREMIUM AND COST-SHARING SUBSIDIES UNDER PART D OF THE
MEDICARE PROGRAM.
Clause (v) of section 1860D-14(a)(3)(B) of the Social Security Act
(42 U.S.C. 1395w-114(a)(3)(B)), as amended by section 405, is further
amended--
(1) in subclause (II), by striking ``and'' at the end;
(2) in subclause (III), by striking the period and
inserting ``; and''; and
(3) by inserting after subclause (III) the following new
subclause:
``(IV) with respect to plan years
beginning on or after January 1, 2022,
shall, notwithstanding the preceding
clauses of this subparagraph, provide
that any part D eligible individual not
described in subclause (I), (II), or
(III) who is enrolled, as of the day
before the date on which such
individual attains the age of 65, for
medical assistance under a State plan
under title XIX (or a waiver of such
plan) pursuant to clause (i)(VIII) or
(ii)(XX) of section 1902(a)(10)(A), and
who has income below 200 percent of the
poverty line applicable to a family of
the size involved, shall be treated as
a subsidy eligible individual described
in paragraph (1) for a limited period
of time, as specified by the
Secretary.''.
SEC. 407. ELIMINATING THE RESOURCE REQUIREMENT WITH RESPECT TO SUBSIDY
ELIGIBLE INDIVIDUALS UNDER PART D OF THE MEDICARE
PROGRAM.
Section 1860D-14(a)(3)(A)(iii) of the Social Security Act (42
U.S.C. 1395w-114(a)(3)(A)(iii)) is amended by inserting ``in the case
of a plan year beginning before January 1, 2022,'' before ``meets''.
TITLE V--DRUG PRICE TRANSPARENCY
SEC. 501. DRUG PRICE TRANSPARENCY.
Part A of title XI of the Social Security Act is amended by adding
at the end the following new sections:
``SEC. 1150C. REPORTING ON DRUG PRICES.
``(a) Definitions.--In this section:
``(1) Manufacturer.--The term `manufacturer' means the
person--
``(A) that holds the application for a drug
approved under section 505 of the Federal Food, Drug,
and Cosmetic Act or licensed under section 351 of the
Public Health Service Act; or
``(B) who is responsible for setting the wholesale
acquisition cost for the drug.
``(2) Qualifying drug.--The term `qualifying drug' means
any drug that is approved under subsection (c) or (j) of
section 505 of the Federal Food, Drug, and Cosmetic Act or
licensed under subsection (a) or (k) of section 351 of the
Public Health Service Act--
``(A) that has a wholesale acquisition cost of $100
or more, adjusted for inflation occurring after the
date of enactment of this section, for a month's supply
or a typical course of treatment that lasts less than a
month, and is--
``(i) subject to section 503(b)(1) of the
Federal Food, Drug, and Cosmetic Act; and
``(ii) not a preventative vaccine; and
``(B) for which, during the previous calendar year,
at least 1 dollar of the total amount of sales were for
individuals enrolled under the Medicare program under
title XVIII or under a State Medicaid plan under title
XIX or under a waiver of such plan.
``(3) Wholesale acquisition cost.--The term `wholesale
acquisition cost' has the meaning given that term in section
1847A(c)(6)(B).
``(b) Report.--
``(1) Report required.--The manufacturer of a qualifying
drug shall submit a report to the Secretary if, with respect to
the qualifying drug--
``(A) there is an increase in the price of the
qualifying drug that results in an increase in the
wholesale acquisition cost of that drug that is equal
to--
``(i) 10 percent or more within a 12-month
period beginning on or after January 1, 2019;
or
``(ii) 25 percent or more within a 36-month
period beginning on or after January 1, 2019;
or
``(B) the estimated price of the qualifying drug or
spending per individual or per user of such drug (as
estimated by the Secretary) for the applicable year (or
per course of treatment in such applicable year as
determined by the Secretary) is at least $26,000
beginning on or after January 1, 2021.
``(2) Report deadline.--Each report described in paragraph
(1) shall be submitted to the Secretary--
``(A) in the case of a report with respect to an
increase in the price of a qualifying drug that occurs
during the period beginning on January 1, 2019, and
ending on the day that is 60 days after the date of the
enactment of this section, not later than 90 days after
such date of enactment;
``(B) in the case of a report with respect to an
increase in the price of a qualifying drug that occurs
after the period described in subparagraph (A), not
later than 30 days prior to the planned effective date
of such price increase for such qualifying drug; and
``(C) in the case of a report with respect to a
qualifying drug that meets the criteria under paragraph
(1)(B), not later than 30 days after such drug meets
such criteria.
``(c) Contents.--A report under subsection (b), consistent with the
standard for disclosures described in section 213.3(d) of title 12,
Code of Federal Regulations (as in effect on the date of enactment of
this section), shall, at a minimum, include--
``(1) with respect to the qualifying drug--
``(A) the percentage by which the manufacturer will
raise the wholesale acquisition cost of the drug within
the 12-month period or 36-month period as described in
subsection (b)(1)(A)(i) or (b)(1)(A)(ii), and the
effective date of such price increase or the cost
associated with a qualifying drug if such drug meets
the criteria under subsection (b)(1)(B) and the
effective date at which such drug meets such criteria;
``(B) an explanation for, and description of, each
price increase for such drug that will occur during the
12-month period or the 36-month period described in
subsection (b)(1)(A)(i) or (b)(1)(A)(ii), as
applicable;
``(C) an explanation for, and description of, the
cost associated with a qualifying drug if such drug
meets the criteria under subsection (b)(1)(B), as
applicable;
``(D) if known and different from the manufacturer
of the qualifying drug, the identity of--
``(i) the sponsor or sponsors of any
investigational new drug applications under
section 505(i) of the Federal Food, Drug, and
Cosmetic Act for clinical investigations with
respect to such drug, for which the full
reports are submitted as part of the
application--
``(I) for approval of the drug
under section 505 of such Act; or
``(II) for licensure of the drug
under section 351 of the Pubic Health
Service Act; and
``(ii) the sponsor of an application for
the drug approved under such section 505 of the
Federal Food, Drug, and Cosmetic Act or
licensed under section 351 of the Public Health
Service Act;
``(E) a description of the history of the
manufacturer's price increases for the drug since the
approval of the application for the drug under section
505 of the Federal Food, Drug, and Cosmetic Act or the
issuance of the license for the drug under section 351
of the Public Health Service Act, or since the
manufacturer acquired such approved application or
license, if applicable;
``(F) the current wholesale acquisition cost of the
drug;
``(G) the total expenditures of the manufacturer
on--
``(i) materials and manufacturing for such
drug;
``(ii) acquiring patents and licensing for
such drug; and
``(iii) purchasing or acquiring such drug
from another manufacturer, if applicable;
``(H) the percentage of total expenditures of the
manufacturer on research and development for such drug
that was derived from Federal funds;
``(I) the total expenditures of the manufacturer on
research and development for such drug that is
necessary to demonstrate that it meets applicable
statutory standards for approval under section 505 of
the Federal Food, Drug, and Cosmetic Act or licensure
under section 351 of the Public Health Service Act, as
applicable;
``(J) the total expenditures of the manufacturer on
pursuing new or expanded indications or dosage changes
for such drug under section 505 of the Federal Food,
Drug, and Cosmetic Act or section 351 of the Public
Health Service Act;
``(K) the total expenditures of the manufacturer on
carrying out postmarket requirements related to such
drug, including under section 505(o)(3) of the Federal
Food, Drug, and Cosmetic Act;
``(L) the total revenue and the net profit
generated from the qualifying drug for each calendar
year since the approval of the application for the drug
under section 505 of the Federal Food, Drug, and
Cosmetic Act or the issuance of the license for the
drug under section 351 of the Public Health Service
Act, or since the manufacturer acquired such approved
application or license; and
``(M) the total costs associated with marketing and
advertising for the qualifying drug;
``(2) with respect to the manufacturer--
``(A) the total revenue and the net profit of the
manufacturer for each of the 12-month period described
in subsection (b)(1)(A)(i) or the 36-month period
described in subsection (b)(1)(A)(ii), as applicable;
``(B) all stock-based performance metrics used by
the manufacturer to determine executive compensation
for each of the 12-month periods described in
subsection (b)(1)(A)(i) or the 36-month periods
described in subsection (b)(1)(A)(ii), as applicable;
and
``(C) any additional information the manufacturer
chooses to provide related to drug pricing decisions,
such as total expenditures on--
``(i) drug research and development; or
``(ii) clinical trials, including on drugs
that failed to receive approval by the Food and
Drug Administration; and
``(3) such other related information as the Secretary
considers appropriate and as specified by the Secretary.
``(d) Information Provided.--The manufacturer of a qualifying drug
that is required to submit a report under subsection (b), shall ensure
that such report and any explanation for, and description of, each
price increase described in subsection (c)(1) shall be truthful, not
misleading, and accurate.
``(e) Civil Monetary Penalty.--Any manufacturer of a qualifying
drug that fails to submit a report for the drug as required by this
section, following notification by the Secretary to the manufacturer
that the manufacturer is not in compliance with this section, shall be
subject to a civil monetary penalty of $75,000 for each day on which
the violation continues.
``(f) False Information.--Any manufacturer that submits a report
for a drug as required by this section that knowingly provides false
information in such report is subject to a civil monetary penalty in an
amount not to exceed $100,000 for each item of false information.
``(g) Public Posting.--
``(1) In general.--Subject to paragraph (4), the Secretary
shall post each report submitted under subsection (b) on the
public website of the Department of Health and Human Services
the day the price increase of a qualifying drug is scheduled to
go into effect.
``(2) Format.--In developing the format in which reports
will be publicly posted under paragraph (1), the Secretary
shall consult with stakeholders, including beneficiary groups,
and shall seek feedback from consumer advocates and readability
experts on the format and presentation of the content of such
reports to ensure that such reports are--
``(A) user-friendly to the public; and
``(B) written in plain language that consumers can
readily understand.
``(3) List.--In addition to the reports submitted under
subsection (b), the Secretary shall also post a list of each
qualifying drug with respect to which the manufacturer was
required to submit such a report in the preceding year and
whether such manufacturer was required to submit such report
based on a qualifying price increase or whether such drug meets
the criteria under subsection (b)(1)(B).
``(4) Protected information.--In carrying out this section,
the Secretary shall enforce applicable law concerning the
protection of confidential commercial information and trade
secrets.
``SEC. 1150D. ANNUAL REPORT TO CONGRESS.
``(a) In General.--Subject to subsection (b), the Secretary shall
submit to the Committees on Energy and Commerce and Ways and Means of
the House of Representatives and the Committees on Health, Education,
Labor, and Pensions and Finance of the Senate, and post on the public
website of the Department of Health and Human Services in a way that is
user-friendly to the public and written in plain language that
consumers can readily understand, an annual report--
``(1) summarizing the information reported pursuant to
section 1150C;
``(2) including copies of the reports and supporting
detailed economic analyses submitted pursuant to such section;
``(3) detailing the costs and expenditures incurred by the
Department of Health and Human Services in carrying out section
1150C; and
``(4) explaining how the Department of Health and Human
Services is improving consumer and provider information about
drug value and drug price transparency.
``(b) Protected Information.--In carrying out this section, the
Secretary shall enforce applicable law concerning the protection of
confidential commercial information and trade secrets.''.
TITLE VI--MISCELLANEOUS
SEC. 601. TEMPORARY INCREASE IN MEDICARE PART B PAYMENT FOR CERTAIN
BIOSIMILAR BIOLOGICAL PRODUCTS.
Section 1847A(b)(8) of the Social Security Act (42 U.S.C. 1395w-
3a(b)(8)) is amended--
(1) by redesignating subparagraphs (A) and (B) as clauses
(i) and (ii), respectively, and moving the margin of each such
redesignated clause 2 ems to the right;
(2) by striking ``product.--The amount'' and inserting the
following: ``product.--
``(A) In general.--Subject to subparagraph (B), the
amount''; and
(3) by adding at the end the following new subparagraph:
``(B) Temporary payment increase.--
``(i) In general.--In the case of a
qualifying biosimilar biological product that
is furnished during the applicable 5-year
period for such product, the amount specified
in this paragraph for such product with respect
to such period is the sum determined under
subparagraph (A), except that clause (ii) of
such subparagraph shall be applied by
substituting `8 percent' for `6 percent'.
``(ii) Applicable 5-year period.--For
purposes of clause (i), the applicable 5-year
period for a biosimilar biological product is--
``(I) in the case of such a product
for which payment was made under this
paragraph as of December 31, 2019, the
5-year period beginning on January 1,
2020; and
``(II) in the case of such a
product for which payment is first made
under this paragraph during a calendar
quarter during the period beginning
January 1, 2020, and ending December
31, 2024, the 5-year period beginning
on the first day of such calendar
quarter during which such payment is
first made.
``(iii) Qualifying biosimilar biological
product defined.--For purposes of this
subparagraph, the term `qualifying biosimilar
biological product' means a biosimilar
biological product described in paragraph
(1)(C) with respect to which--
``(I) in the case of a product
described in clause (ii)(I), the
average sales price is not more than
the average sales price for the
reference biological product; and
``(II) in the case of a product
described in clause (ii)(II), the
wholesale acquisition cost is not more
than the wholesale acquisition cost for
the reference biological product.''.
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Elijah E. Cummings
Lower Drug Costs Now Act''.
(b) Table of Contents.--The table of contents is as follows:
Sec. 1. Short title; table of contents.
TITLE I--LOWERING PRICES THROUGH FAIR DRUG PRICE NEGOTIATION
Sec. 101. Providing for lower prices for certain high-priced single
source drugs.
Sec. 102. Selected drug manufacturer excise tax imposed during
noncompliance periods.
TITLE II--MEDICARE PARTS B AND D PRESCRIPTION DRUG INFLATION REBATES
Sec. 201. Medicare part B rebate by manufacturers.
Sec. 202. Medicare part D rebate by manufacturers.
TITLE III--PART D IMPROVEMENTS AND MAXIMUM OUT-OF-POCKET CAP FOR
MEDICARE BENEFICIARIES
Sec. 301. Medicare part D benefit redesign.
Sec. 302. Allowing certain enrollees of prescription drugs plans and
MA-PD plans under Medicare program to
spread out cost-sharing under certain
circumstances.
Sec. 303. Establishment of pharmacy quality measures under Medicare
part D.
TITLE IV--PRESCRIPTION DRUG POLICIES FOR LOW-INCOME INDIVIDUALS
Sec. 401. Adjustments to Medicare part D cost-sharing reductions for
low-income individuals.
Sec. 402. Dissemination to Medicare part D subsidy eligible individuals
of information comparing premiums of
certain prescription drug plans.
Sec. 403. Providing for intelligent assignment of certain subsidy
eligible individuals auto-enrolled under
Medicare prescription drug plans and MA-PD
plans.
Sec. 404. Expanding eligibility for low-income subsidies under part D
of the Medicare program.
Sec. 405. Automatic eligibility of certain low-income territorial
residents for premium and cost-sharing
subsidies under the Medicare program;
Sunset of enhanced allotment program.
Sec. 406. Automatic qualification of certain Medicaid beneficiaries for
premium and cost-sharing subsidies under
part D of the Medicare program.
Sec. 407. Eliminating the resource requirement with respect to subsidy
eligible individuals under part D of the
Medicare program.
Sec. 408. Providing for certain rules regarding the treatment of
eligible retirement plans in determining
the eligibility of individuals for premium
and cost-sharing subsidies under part D of
the Medicare program.
TITLE V--DRUG PRICE TRANSPARENCY
Sec. 501. Drug price transparency.
TITLE I--LOWERING PRICES THROUGH FAIR DRUG PRICE NEGOTIATION
SEC. 101. PROVIDING FOR LOWER PRICES FOR CERTAIN HIGH-PRICED SINGLE
SOURCE DRUGS.
(a) Program To Lower Prices for Certain High-Priced Single Source
Drugs.--Title XI of the Social Security Act (42 U.S.C. 1301 et seq.) is
amended by adding at the end the following new part:
``PART E--FAIR PRICE NEGOTIATION PROGRAM TO LOWER PRICES FOR CERTAIN
HIGH-PRICED SINGLE SOURCE DRUGS
``SEC. 1191. ESTABLISHMENT OF PROGRAM.
``(a) In General.--The Secretary shall establish a Fair Price
Negotiation Program (in this part referred to as the `program'). Under
the program, with respect to each price applicability period, the
Secretary shall--
``(1) publish a list of selected drugs in accordance with
section 1192;
``(2) enter into agreements with manufacturers of selected
drugs with respect to such period, in accordance with section
1193;
``(3) negotiate and, if applicable, renegotiate maximum
fair prices for such selected drugs, in accordance with section
1194; and
``(4) carry out the administrative duties described in
section 1196.
``(b) Definitions Relating to Timing.--For purposes of this part:
``(1) Initial price applicability year.--The term `initial
price applicability year' means a plan year (beginning with
plan year 2023) or, if agreed to in an agreement under section
1193 by the Secretary and manufacturer involved, a period of
more than one plan year (beginning on or after January 1,
2023).
``(2) Price applicability period.--The term `price
applicability period' means, with respect to a drug, the period
beginning with the initial price applicability year with
respect to which such drug is a selected drug and ending with
the last plan year during which the drug is a selected drug.
``(3) Selected drug publication date.--The term `selected
drug publication date' means, with respect to each initial
price applicability year, April 15 of the plan year that begins
2 years prior to such year.
``(4) Voluntary negotiation period.--The term `voluntary
negotiation period' means, with respect to an initial price
applicability year with respect to a selected drug, the
period--
``(A) beginning on the sooner of--
``(i) the date on which the manufacturer of
the drug and the Secretary enter into an
agreement under section 1193 with respect to
such drug; or
``(ii) June 15 following the selected drug
publication date with respect to such selected
drug; and
``(B) ending on March 31 of the year that begins
one year prior to the initial price applicability year.
``(c) Other Definitions.--For purposes of this part:
``(1) Fair price eligible individual.--The term `fair price
eligible individual' means, with respect to a selected drug--
``(A) in the case such drug is furnished or
dispensed to the individual at a pharmacy or by a mail
order service--
``(i) an individual who is enrolled under a
prescription drug plan under part D of title
XVIII or an MA-PD plan under part C of such
title under which coverage is provided for such
drug; and
``(ii) an individual who is enrolled under
a group health plan or health insurance
coverage offered in the group or individual
market (as such terms are defined in section
2791 of the Public Health Service Act) with
respect to which there is in effect an
agreement with the Secretary under section 1197
with respect to such selected drug as so
furnished or dispensed; and
``(B) in the case such drug is furnished or
administered to the individual by a hospital,
physician, or other provider of services or supplier--
``(i) an individual who is entitled to
benefits under part A of title XVIII or
enrolled under part B of such title if such
selected drug is covered under the respective
part; and
``(ii) an individual who is enrolled under
a group health plan or health insurance
coverage offered in the group or individual
market (as such terms are defined in section
2791 of the Public Health Service Act) with
respect to which there is in effect an
agreement with the Secretary under section 1197
with respect to such selected drug as so
furnished or administered.
``(2) Maximum fair price.--The term `maximum fair price'
means, with respect to a plan year during a price applicability
period and with respect to a selected drug (as defined in
section 1192(c)) with respect to such period, the price
published pursuant to section 1195 in the Federal Register for
such drug and year.
``(3) Average international market price defined.--
``(A) In general.--The terms `average international
market price' and `AIM price' mean, with respect to a
drug, the average price (which shall be the net average
price, if practicable, and volume-weighted, if
practicable) for a unit (as defined in paragraph (4))
of the drug for sales of such drug (calculated across
different dosage forms and strengths of the drug and
not based on the specific formulation or package size
or package type), as computed (as of the date of
publication of such drug as a selected drug under
section 1192(a)) in all countries described in clause
(ii) of subparagraph (B) that are applicable countries
(as described in clause (i) of such subparagraph) with
respect to such drug.
``(B) Applicable countries.--
``(i) In general.--For purposes of
subparagraph (A), a country described in clause
(ii) is an applicable country described in this
clause with respect to a drug if there is
available an average price for any unit for the
drug for sales of such drug in such country.
``(ii) Countries described.--For purposes
of this paragraph, the following are countries
described in this clause:
``(I) Australia.
``(II) Canada.
``(III) France.
``(IV) Germany.
``(V) Japan.
``(VI) The United Kingdom.
``(4) Unit.--The term `unit' means, with respect to a drug,
the lowest identifiable quantity (such as a capsule or tablet,
milligram of molecules, or grams) of the drug that is
dispensed.
``SEC. 1192. SELECTION OF NEGOTIATION-ELIGIBLE DRUGS AS SELECTED DRUGS.
``(a) In General.--Not later than the selected drug publication
date with respect to an initial price applicability year, the Secretary
shall select and publish in the Federal Register a list of--
``(1)(A) with respect to an initial price applicability
year during the period beginning with 2023 and ending with
2027, at least 25 negotiation-eligible drugs described in
subparagraphs (A) and (B), but not subparagraph (C), of
subsection (d)(1) (or, with respect to an initial price
applicability year during such period beginning after 2023, the
maximum number (if such number is less than 25) of such
negotiation-eligible drugs for the year) with respect to such
year;
``(B) with respect to an initial price applicability year
during the period beginning with 2028 and ending with 2032, at
least 30 negotiation-eligible drugs described in subparagraphs
(A) and (B), but not subparagraph (C), of subsection (d)(1)
(or, with respect to an initial price applicability year during
such period, the maximum number (if such number is less than
30) of such negotiation-eligible drugs for the year) with
respect to such year; and
``(C) with respect to an initial price applicability year
beginning after 2032, at least 35 negotiation-eligible drugs
described in subparagraphs (A) and (B), but not subparagraph
(C), of subsection (d)(1) (or, with respect to an initial price
applicability year during such period, the maximum number (if
such number is less than 35) of such negotiation-eligible drugs
for the year) with respect to such year;
``(2) all negotiation-eligible drugs described in
subparagraph (C) of such subsection with respect to such year;
and
``(3) all new-entrant negotiation-eligible drugs (as
defined in subsection (g)(1)) with respect to such year.
Each drug published on the list pursuant to the previous sentence shall
be subject to the negotiation process under section 1194 for the
voluntary negotiation period with respect to such initial price
applicability year (and the renegotiation process under such section as
applicable for any subsequent year during the applicable price
applicability period). In applying this subsection, any negotiation-
eligible drug that is selected under this subsection for an initial
price applicability year shall not count toward the required minimum
amount of drugs to be selected under paragraph (1) for any subsequent
year, including such a drug so selected that is subject to
renegotiation under section 1194.
``(b) Selection of Drugs.--In carrying out subsection (a)(1) the
Secretary shall select for inclusion on the published list described in
subsection (a) with respect to a price applicability period, the
negotiation-eligible drugs that the Secretary projects will result in
the greatest savings to the Federal Government or fair price eligible
individuals during the price applicability period. In making this
projection of savings for drugs for which there is an AIM price for a
price applicability period, the savings shall be projected across
different dosage forms and strengths of the drugs and not based on the
specific formulation or package size or package type of the drugs,
taking into consideration both the volume of drugs for which payment is
made, to the extent such data is available, and the amount by which the
net price for the drugs exceeds the AIM price for the drugs.
``(c) Selected Drug.--For purposes of this part, each drug included
on the list published under subsection (a) with respect to an initial
price applicability year shall be referred to as a `selected drug' with
respect to such year and each subsequent plan year beginning before the
first plan year beginning after the date on which the Secretary
determines two or more drug products--
``(1) are approved or licensed (as applicable)--
``(A) under section 505(j) of the Federal Food,
Drug, and Cosmetic Act using such drug as the listed
drug; or
``(B) under section 351(k) of the Public Health
Service Act using such drug as the reference product;
and
``(2) continue to be marketed.
``(d) Negotiation-Eligible Drug.--
``(1) In general.--For purposes of this part, the term
`negotiation-eligible drug' means, with respect to the selected
drug publication date with respect to an initial price
applicability year, a qualifying single source drug, as defined
in subsection (e), that meets any of the following criteria:
``(A) Covered part d drugs.--The drug is among the
125 covered part D drugs (as defined in section 1860D-
2(e)) for which there was an estimated greatest net
spending under parts C and D of title XVIII, as
determined by the Secretary, during the most recent
plan year prior to such drug publication date for which
data are available.
``(B) Other drugs.--The drug is among the 125 drugs
for which there was an estimated greatest net spending
in the United States (including the 50 States, the
District of Columbia, and the territories of the United
States), as determined by the Secretary, during the
most recent plan year prior to such drug publication
date for which data are available.
``(C) Insulin.--The drug is a qualifying single
source drug described in subsection (e)(3).
``(2) Clarification.--In determining whether a qualifying
single source drug satisfies any of the criteria described in
paragraph (1), the Secretary shall, to the extent practicable,
use data that is aggregated across dosage forms and strengths
of the drug and not based on the specific formulation or
package size or package type of the drug.
``(3) Publication.--Not later than the selected drug
publication date with respect to an initial price applicability
year, the Secretary shall publish in the Federal Register a
list of negotiation-eligible drugs with respect to such
selected drug publication date.
``(e) Qualifying Single Source Drug.--For purposes of this part,
the term `qualifying single source drug' means any of the following:
``(1) Drug products.--A drug that--
``(A) is approved under section 505(c) of the
Federal Food, Drug, and Cosmetic Act and continues to
be marketed pursuant to such approval; and
``(B) is not the listed drug for any drug that is
approved and continues to be marketed under section
505(j) of such Act.
``(2) Biological products.--A biological product that--
``(A) is licensed under section 351(a) of the
Public Health Service Act, including any product that
has been deemed to be licensed under section 351 of
such Act pursuant to section 7002(e)(4) of the
Biologics Price Competition and Innovation Act of 2009,
and continues to be marketed under section 351 of such
Act; and
``(B) is not the reference product for any
biological product that is licensed and continues to be
marketed under section 351(k) of such Act.
``(3) Insulin product.--Notwithstanding paragraphs (1) and
(2), any insulin product that is approved under subsection (c)
or (j) of section 505 of the Federal Food, Drug, and Cosmetic
Act or licensed under subsection (a) or (k) of section 351 of
the Public Health Service Act and continues to be marketed
under such section 505 or 351, including any insulin product
that has been deemed to be licensed under section 351(a) of the
Public Health Service Act pursuant to section 7002(e)(4) of the
Biologics Price Competition and Innovation Act of 2009 and
continues to be marketed pursuant to such licensure.
For purposes of applying paragraphs (1) and (2), a drug or biological
product that is marketed by the same sponsor or manufacturer (or an
affiliate thereof or a cross-licensed producer or distributor) as the
listed drug or reference product described in such respective paragraph
shall not be taken into consideration.
``(f) Information on International Drug Prices.--For purposes of
determining which negotiation-eligible drugs to select under subsection
(a) and, in the case of such drugs that are selected drugs, to
determine the maximum fair price for such a drug and whether such
maximum fair price should be renegotiated under section 1194, the
Secretary shall use data relating to the AIM price with respect to such
drug as available or provided to the Secretary and shall on an ongoing
basis request from manufacturers of selected drugs information on the
AIM price of such a drug.
``(g) New-entrant Negotiation-eligible Drugs.--
``(1) In general.--For purposes of this part, the term
`new-entrant negotiation-eligible drug' means, with respect to
the selected drug publication date with respect to an initial
price applicability year, a qualifying single source drug--
``(A) that is first approved or licensed, as
described in paragraph (1), (2), or (3) of subsection
(e), as applicable, during the year preceding such
selected drug publication date; and
``(B) that the Secretary determines under paragraph
(2) is likely to be included as a negotiation-eligible
drug with respect to the subsequent selected drug
publication date.
``(2) Determination.--In the case of a qualifying single
source drug that meets the criteria described in subparagraph
(A) of paragraph (1), with respect to an initial price
applicability year, if the wholesale acquisition cost at which
such drug is first marketed in the United States is equal to or
greater than the median household income (as determined
according to the most recent data collected by the United
States Census Bureau), the Secretary shall determine before the
selected drug publication date with respect to the initial
price applicability year, if the drug is likely to be included
as a negotiation-eligible drug with respect to the subsequent
selected drug publication date, based on the projected spending
under title XVIII or in the United States on such drug. For
purposes of this paragraph the term `United States' includes
the 50 States, the District of Columbia, and the territories of
the United States.
``SEC. 1193. MANUFACTURER AGREEMENTS.
``(a) In General.--For purposes of section 1191(a)(2), the
Secretary shall enter into agreements with manufacturers of selected
drugs with respect to a price applicability period, by not later than
June 15 following the selected drug publication date with respect to
such selected drug, under which--
``(1) during the voluntary negotiation period for the
initial price applicability year for the selected drug, the
Secretary and manufacturer, in accordance with section 1194,
negotiate to determine (and, by not later than the last date of
such period and in accordance with subsection (c), agree to) a
maximum fair price for such selected drug of the manufacturer
in order to provide access to such price--
``(A) to fair price eligible individuals who with
respect to such drug are described in subparagraph (A)
of section 1191(c)(1) and are furnished or dispensed
such drug during, subject to subparagraph (2), the
price applicability period; and
``(B) to hospitals, physicians, and other providers
of services and suppliers with respect to fair price
eligible individuals who with respect to such drug are
described in subparagraph (B) of such section and are
furnished or administered such drug during, subject to
subparagraph (2), the price applicability period;
``(2) the Secretary and the manufacturer shall, in
accordance with a process and during a period specified by the
Secretary pursuant to rulemaking, renegotiate (and, by not
later than the last date of such period and in accordance with
subsection (c), agree to) the maximum fair price for such drug
if the Secretary determines that there is a material change in
any of the factors described in section 1194(d) relating to the
drug, including changes in the AIM price for such drug, in
order to provide access to such maximum fair price (as so
renegotiated)--
``(A) to fair price eligible individuals who with
respect to such drug are described in subparagraph (A)
of section 1191(c)(1) and are furnished or dispensed
such drug during any year during the price
applicability period (beginning after such
renegotiation) with respect to such selected drug; and
``(B) to hospitals, physicians, and other providers
of services and suppliers with respect to fair price
eligible individuals who with respect to such drug are
described in subparagraph (B) of such section and are
furnished or administered such drug during any year
described in subparagraph (A);
``(3) the maximum fair price (including as renegotiated
pursuant to paragraph (2)), with respect to such a selected
drug, shall be provided to fair price eligible individuals, who
with respect to such drug are described in subparagraph (A) of
section 1191(c)(1), at the pharmacy or by a mail order service
at the point-of-sale of such drug;
``(4) the manufacturer, subject to subsection (d), submits
to the Secretary, in a form and manner specified by the
Secretary--
``(A) for the voluntary negotiation period for the
price applicability period (and, if applicable, before
any period of renegotiation specified pursuant to
paragraph (2)) with respect to such drug all
information that the Secretary requires to carry out
the negotiation (or renegotiation process) under this
part, including information described in section
1192(f) and section 1194(d)(1); and
``(B) on an ongoing basis, information on changes
in prices for such drug that would affect the AIM price
for such drug or otherwise provide a basis for
renegotiation of the maximum fair price for such drug
pursuant to paragraph (2);
``(5) the manufacturer agrees that in the case the selected
drug of a manufacturer is a drug described in subsection (c),
the manufacturer will, in accordance with such subsection, make
any payment required under such subsection with respect to such
drug; and
``(6) the manufacturer complies with requirements imposed
by the Secretary for purposes of administering the program,
including with respect to the duties described in section 1196.
``(b) Agreement in Effect Until Drug Is No Longer a Selected
Drug.--An agreement entered into under this section shall be effective,
with respect to a drug, until such drug is no longer considered a
selected drug under section 1192(c).
``(c) Special Rule for Certain Selected Drugs Without AIM Price.--
``(1) In general.--In the case of a selected drug for which
there is no AIM price available with respect to the initial
price applicability year for such drug and for which an AIM
price becomes available beginning with respect to a subsequent
plan year during the price applicability period for such drug,
if the Secretary determines that the amount described in
paragraph (2)(A) for a unit of such drug is greater than the
amount described in paragraph (2)(B) for a unit of such drug,
then by not later than one year after the date of such
determination, the manufacturer of such selected drug shall pay
to the Treasury an amount equal to the product of--
``(A) the difference between such amount described
in paragraph (2)(A) for a unit of such drug and such
amount described in paragraph (2)(B) for a unit of such
drug; and
``(B) the number of units of such drug sold in the
United States, including the 50 States, the District of
Columbia, and the territories of the United States,
during the period described in paragraph (2)(B).
``(2) Amounts described.--
``(A) Weighted average price before aim price
available.--For purposes of paragraph (1), the amount
described in this subparagraph for a selected drug
described in such paragraph, is the amount equal to the
weighted average manufacturer price (as defined in
section 1927(k)(1)) for such dosage strength and form
for the drug during the period beginning with the first
plan year for which the drug is included on the list of
negotiation-eligible drugs published under section
1192(d) and ending with the last plan year during the
price applicability period for such drug with respect
to which there is no AIM price available for such drug.
``(B) Amount multiplier after aim price
available.--For purposes of paragraph (1), the amount
described in this subparagraph for a selected drug
described in such paragraph, is the amount equal to 200
percent of the AIM price for such drug with respect to
the first plan year during the price applicability
period for such drug with respect to which there is an
AIM price available for such drug.
``(d) Confidentiality of Information.--Information submitted to the
Secretary under this part by a manufacturer of a selected drug that is
proprietary information of such manufacturer (as determined by the
Secretary) may be used only by the Secretary or disclosed to and used
by the Comptroller General of the United States or the Medicare Payment
Advisory Commission for purposes of carrying out this part.
``(e) Regulations.--
``(1) In general.--The Secretary shall, pursuant to
rulemaking, specify, in accordance with paragraph (2), the
information that must be submitted under subsection (a)(4).
``(2) Information specified.--Information described in
paragraph (1), with respect to a selected drug, shall include
information on sales of the drug (by the manufacturer of the
drug or by another entity under license or other agreement with
the manufacturer, with respect to the sales of such drug,
regardless of the name under which the drug is sold) in any
foreign country that is part of the AIM price. The Secretary
shall verify, to the extent practicable, such sales from
appropriate officials of the government of the foreign country
involved.
``(f) Compliance With Requirements for Administration of Program.--
Each manufacturer with an agreement in effect under this section shall
comply with requirements imposed by the Secretary or a third party with
a contract under section 1196(c)(1), as applicable, for purposes of
administering the program.
``SEC. 1194. NEGOTIATION AND RENEGOTIATION PROCESS.
``(a) In General.--For purposes of this part, under an agreement
under section 1193 between the Secretary and a manufacturer of a
selected drug, with respect to the period for which such agreement is
in effect and in accordance with subsections (b) and (c), the Secretary
and the manufacturer--
``(1) shall during the voluntary negotiation period with
respect to the initial price applicability year for such drug,
in accordance with this section, negotiate a maximum fair price
for such drug for the purpose described in section 1193(a)(1);
and
``(2) as applicable pursuant to section 1193(a)(2) and in
accordance with the process specified pursuant to such section,
renegotiate such maximum fair price for such drug for the
purpose described in such section.
``(b) Negotiating Methodology and Objective.--
``(1) In general.--The Secretary shall develop and use a
consistent methodology for negotiations under subsection (a)
that, in accordance with paragraph (2) and subject to paragraph
(3), achieves the lowest maximum fair price for each selected
drug while appropriately rewarding innovation.
``(2) Prioritizing factors.--In considering the factors
described in subsection (d) in negotiating (and, as applicable,
renegotiating) the maximum fair price for a selected drug, the
Secretary shall, to the extent practicable, consider all of the
available factors listed but shall prioritize the following
factors:
``(A) Research and development costs.--The factor
described in paragraph (1)(A) of subsection (d).
``(B) Market data.--The factor described in
paragraph (1)(B) of such subsection.
``(C) Unit costs of production and distribution.--
The factor described in paragraph (1)(C) of such
subsection.
``(D) Comparison to existing therapeutic
alternatives.--The factor described in paragraph (2)(A)
of such subsection.
``(3) Requirement.--
``(A) In general.--In negotiating the maximum fair
price of a selected drug, with respect to an initial
price applicability year for the selected drug, and, as
applicable, in renegotiating the maximum fair price for
such drug, with respect to a subsequent year during the
price applicability period for such drug, in the case
that the manufacturer of the selected drug offers under
the negotiation or renegotiation, as applicable, a
price for such drug that is not more than the target
price described in subparagraph (B) for such drug for
the respective year, the Secretary shall agree under
such negotiation or renegotiation, respectively, to
such offered price as the maximum fair price.
``(B) Target price.--
``(i) In general.--Subject to clause (ii),
the target price described in this subparagraph
for a selected drug with respect to a year, is
the average price (which shall be the net
average price, if practicable, and volume-
weighted, if practicable) for a unit of such
drug for sales of such drug, as computed
(across different dosage forms and strengths of
the drug and not based on the specific
formulation or package size or package type of
the drug) in the applicable country described
in section 1191(c)(3)(B) with respect to such
drug that, with respect to such year, has the
lowest average price for such drug as compared
to the average prices (as so computed) of such
drug with respect to such year in the other
applicable countries described in such section
with respect to such drug.
``(ii) Selected drugs without aim price.--
In applying this paragraph in the case of
negotiating the maximum fair price of a
selected drug for which there is no AIM price
available with respect to the initial price
applicability year for such drug, or, as
applicable, renegotiating the maximum fair
price for such drug with respect to a
subsequent year during the price applicability
period for such drug before the first plan year
for which there is an AIM price available for
such drug, the target price described in this
subparagraph for such drug and respective year
is the amount that is 80 percent of the average
manufacturer price (as defined in section
1927(k)(1)) for such drug and year.
``(4) Annual report.--After the completion of each
voluntary negotiation period, the Secretary shall submit to
Congress a report on the maximum fair prices negotiated (or, as
applicable, renegotiated) for such period. Such report shall
include information on how such prices so negotiated (or
renegotiated) meet the requirements of this part, including the
requirements of this subsection.
``(c) Limitation.--
``(1) In general.--Subject to paragraph (2), the maximum
fair price negotiated (including as renegotiated) under this
section for a selected drug, with respect to each plan year
during a price applicability period for such drug, shall not
exceed 120 percent of the AIM price applicable to such drug
with respect to such year.
``(2) Selected drugs without aim price.--In the case of a
selected drug for which there is no AIM price available with
respect to the initial price applicability year for such drug,
for each plan year during the price applicability period before
the first plan year for which there is an AIM price available
for such drug, the maximum fair price negotiated (including as
renegotiated) under this section for the selected drug shall
not exceed the amount equal to 85 percent of the average
manufacturer price for the drug with respect to such year.
``(d) Considerations.--For purposes of negotiating and, as
applicable, renegotiating (including for purposes of determining
whether to renegotiate) the maximum fair price of a selected drug under
this part with the manufacturer of the drug, the Secretary shall,
consistent with subsection (b)(2), take into consideration the
following factors:
``(1) Manufacturer-specific information.--The following
information, including as submitted by the manufacturer:
``(A) Research and development costs of the
manufacturer for the drug and the extent to which the
manufacturer has recouped research and development
costs.
``(B) Market data for the drug, including the
distribution of sales across different programs and
purchasers and projected future revenues for the drug.
``(C) Unit costs of production and distribution of
the drug.
``(D) Prior Federal financial support for novel
therapeutic discovery and development with respect to
the drug.
``(E) Data on patents and on existing and pending
exclusivity for the drug.
``(F) National sales data for the drug.
``(G) Information on clinical trials for the drug
in the United States or in applicable countries
described in section 1191(c)(3)(B).
``(2) Information on alternative products.--The following
information:
``(A) The extent to which the drug represents a
therapeutic advance as compared to existing therapeutic
alternatives and, to the extent such information is
available, the costs of such existing therapeutic
alternatives.
``(B) Information on approval by the Food and Drug
Administration of alternative drug products.
``(C) Information on comparative effectiveness
analysis for such products, taking into consideration
the effects of such products on specific populations,
such as individuals with disabilities, the elderly,
terminally ill, children, and other patient
populations.
In considering information described in subparagraph (C), the
Secretary shall not use evidence or findings from comparative
clinical effectiveness research in a manner that treats
extending the life of an elderly, disabled, or terminally ill
individual as of lower value than extending the life of an
individual who is younger, nondisabled, or not terminally ill.
Nothing in the previous sentence shall affect the application
or consideration of an AIM price for a selected drug.
``(3) Foreign sales information.--To the extent available
on a timely basis, including as provided by a manufacturer of
the selected drug or otherwise, information on sales of the
selected drug in each of the countries described in section
1191(c)(3)(B).
``(4) Additional information.--Information submitted to the
Secretary, in accordance with a process specified by the
Secretary, by other parties that are affected by the
establishment of a maximum fair price for the selected drug.
``(e) Request for Information.--For purposes of negotiating and, as
applicable, renegotiating (including for purposes of determining
whether to renegotiate) the maximum fair price of a selected drug under
this part with the manufacturer of the drug, with respect to a price
applicability period, and other relevant data for purposes of this
section--
``(1) the Secretary shall, not later than the selected drug
publication date with respect to the initial price
applicability year of such period, request drug pricing
information from the manufacturer of such selected drug,
including information described in subsection (d)(1); and
``(2) by not later than October 1 following the selected
drug publication date, the manufacturer of such selected drug
shall submit to the Secretary such requested information in
such form and manner as the Secretary may require.
The Secretary shall request, from the manufacturer or others, such
additional information as may be needed to carry out the negotiation
and renegotiation process under this section.
``SEC. 1195. PUBLICATION OF MAXIMUM FAIR PRICES.
``(a) In General.--With respect to an initial price applicability
year and selected drug with respect to such year, not later than April
1 of the plan year prior to such initial price applicability year, the
Secretary shall publish in the Federal Register the maximum fair price
for such drug negotiated under this part with the manufacturer of such
drug.
``(b) Updates.--
``(1) Subsequent year maximum fair prices.--For a selected
drug, for each plan year subsequent to the initial price
applicability year for such drug with respect to which an
agreement for such drug is in effect under section 1193, the
Secretary shall publish in the Federal Register--
``(A) subject to subparagraph (B), the amount equal
to the maximum fair price published for such drug for
the previous year, increased by the annual percentage
increase in the consumer price index for all urban
consumers (all items; U.S. city average) as of
September of such previous year; or
``(B) in the case the maximum fair price for such
drug was renegotiated, for the first year for which
such price as so renegotiated applies, such
renegotiated maximum fair price.
``(2) Prices negotiated after deadline.--In the case of a
selected drug with respect to an initial price applicability
year for which the maximum fair price is determined under this
part after the date of publication under this section, the
Secretary shall publish such maximum fair price in the Federal
Register by not later than 30 days after the date such maximum
price is so determined.
``SEC. 1196. ADMINISTRATIVE DUTIES; COORDINATION PROVISIONS.
``(a) Administrative Duties.--
``(1) In general.--For purposes of section 1191, the
administrative duties described in this section are the
following:
``(A) The establishment of procedures (including
through agreements with manufacturers under this part,
contracts with prescription drug plans under part D of
title XVIII and MA-PD plans under part C of such title,
and agreements under section 1197 with group health
plans and health insurance issuers of health insurance
coverage offered in the individual or group market)
under which the maximum fair price for a selected drug
is provided to fair price eligible individuals, who
with respect to such drug are described in subparagraph
(A) of section 1191(c)(1), at pharmacies or by mail
order service at the point-of-sale of the drug for the
applicable price period for such drug and providing
that such maximum fair price is used for determining
cost-sharing under such plans or coverage for the
selected drug.
``(B) The establishment of procedures (including
through agreements with manufacturers under this part
and contracts with hospitals, physicians, and other
providers of services and suppliers and agreements
under section 1197 with group health plans and health
insurance issuers of health insurance coverage offered
in the individual or group market) under which, in the
case of a selected drug furnished or administered by
such a hospital, physician, or other provider of
services or supplier to fair price eligible individuals
(who with respect to such drug are described in
subparagraph (B) of section 1191(c)(1)), the maximum
fair price for the selected drug is provided to such
hospitals, physicians, and other providers of services
and suppliers (as applicable) with respect to such
individuals and providing that such maximum fair price
is used for determining cost-sharing under the
respective part, plan, or coverage for the selected
drug.
``(C) The establishment of procedures (including
through agreements and contracts described in
subparagraphs (A) and (B)) to ensure that, not later
than 90 days after the dispensing of a selected drug to
a fair price eligible individual by a pharmacy or mail
order service, the pharmacy or mail order service is
reimbursed for an amount equal to the difference
between--
``(i) the lesser of--
``(I) the wholesale acquisition
cost of the drug;
``(II) the national average drug
acquisition cost of the drug; and
``(III) any other similar
determination of pharmacy acquisition
costs of the drug, as determined by the
Secretary; and
``(ii) the maximum fair price for the drug.
``(D) The establishment of procedures to ensure
that the maximum fair price for a selected drug is
applied before--
``(i) any coverage or financial assistance
under other health benefit plans or programs
that provide coverage or financial assistance
for the purchase or provision of prescription
drug coverage on behalf of fair price eligible
individuals as the Secretary may specify; and
``(ii) any other discounts.
``(E) The establishment of procedures to enter into
appropriate agreements and protocols for the ongoing
computation of AIM prices for selected drugs,
including, to the extent possible, to compute the AIM
price for selected drugs and including by providing
that the manufacturer of such a selected drug should
provide information for such computation not later than
3 months after the first date of the voluntary
negotiation period for such selected drug.
``(F) The establishment of procedures to compute
and apply the maximum fair price across different
strengths and dosage forms of a selected drug and not
based on the specific formulation or package size or
package type of the drug.
``(G) The establishment of procedures to negotiate
and apply the maximum fair price in a manner that does
not include any dispensing or similar fee.
``(H) The establishment of procedures to carry out
the provisions of this part, as applicable, with
respect to--
``(i) fair price eligible individuals who
are enrolled under a prescription drug plan
under part D of title XVIII or an MA-PD plan
under part C of such title;
``(ii) fair price eligible individuals who
are enrolled under a group health plan or
health insurance coverage offered by a health
insurance issuer in the individual or group
market with respect to which there is an
agreement in effect under section 1197; and
``(iii) fair price eligible individuals who
are entitled to benefits under part A of title
XVIII or enrolled under part B of such title.
``(I) The establishment of a negotiation process
and renegotiation process in accordance with section
1194, including a process for acquiring information
described in subsection (d) of such section and
determining amounts described in subsection (b) of such
section.
``(J) The provision of a reasonable dispute
resolution mechanism to resolve disagreements between
manufacturers, fair price eligible individuals, and the
third party with a contract under subsection (c)(1).
``(2) Monitoring compliance.--
``(A) In general.--The Secretary shall monitor
compliance by a manufacturer with the terms of an
agreement under section 1193, including by establishing
a mechanism through which violations of such terms may
be reported.
``(B) Notification.--If a third party with a
contract under subsection (c)(1) determines that the
manufacturer is not in compliance with such agreement,
the third party shall notify the Secretary of such
noncompliance for appropriate enforcement under section
4192 of the Internal Revenue Code of 1986 or section
1198, as applicable.
``(b) Collection of Data.--
``(1) From prescription drug plans and ma-pd plans.--The
Secretary may collect appropriate data from prescription drug
plans under part D of title XVIII and MA-PD plans under part C
of such title in a timeframe that allows for maximum fair
prices to be provided under this part for selected drugs.
``(2) From health plans.--The Secretary may collect
appropriate data from group health plans or health insurance
issuers offering group or individual health insurance coverage
in a timeframe that allows for maximum fair prices to be
provided under this part for selected drugs.
``(c) Contract With Third Parties.--
``(1) In general.--The Secretary may enter into a contract
with 1 or more third parties to administer the requirements
established by the Secretary in order to carry out this part.
At a minimum, the contract with a third party under the
preceding sentence shall require that the third party--
``(A) receive and transmit information between the
Secretary, manufacturers, and other individuals or
entities the Secretary determines appropriate;
``(B) receive, distribute, or facilitate the
distribution of funds of manufacturers to appropriate
individuals or entities in order to meet the
obligations of manufacturers under agreements under
this part;
``(C) provide adequate and timely information to
manufacturers, consistent with the agreement with the
manufacturer under this part, as necessary for the
manufacturer to fulfill its obligations under this
part; and
``(D) permit manufacturers to conduct periodic
audits, directly or through contracts, of the data and
information used by the third party to determine
discounts for applicable drugs of the manufacturer
under the program.
``(2) Performance requirements.--The Secretary shall
establish performance requirements for a third party with a
contract under paragraph (1) and safeguards to protect the
independence and integrity of the activities carried out by the
third party under the program under this part.
``SEC. 1197. VOLUNTARY PARTICIPATION BY OTHER HEALTH PLANS.
``(a) Agreement to Participate Under Program.--
``(1) In general.--Subject to paragraph (2), under the
program under this part the Secretary shall be treated as
having in effect an agreement with a group health plan or
health insurance issuer offering health insurance coverage (as
such terms are defined in section 2791 of the Public Health
Service Act), with respect to a price applicability period and
a selected drug with respect to such period--
``(A) with respect to such selected drug furnished
or dispensed at a pharmacy or by mail order service if
coverage is provided under such plan or coverage during
such period for such selected drug as so furnished or
dispensed; and
``(B) with respect to such selected drug furnished
or administered by a hospital, physician, or other
provider of services or supplier if coverage is
provided under such plan or coverage during such period
for such selected drug as so furnished or administered.
``(2) Opting out of agreement.--The Secretary shall not be
treated as having in effect an agreement under the program
under this part with a group health plan or health insurance
issuer offering health insurance coverage with respect to a
price applicability period and a selected drug with respect to
such period if such a plan or issuer affirmatively elects,
through a process specified by the Secretary, not to
participate under the program with respect to such period and
drug.
``(b) Publication of Election.--With respect to each price
applicability period and each selected drug with respect to such
period, the Secretary and the Secretary of Labor and the Secretary of
the Treasury, as applicable, shall make public a list of each group
health plan and each issuer of health insurance coverage, with respect
to which coverage is provided under such plan or coverage for such
drug, that has elected under subsection (a) not to participate under
the program with respect to such period and drug.
``SEC. 1198. CIVIL MONETARY PENALTY.
``(a) Violations Relating To Offering of Maximum Fair Price.--Any
manufacturer of a selected drug that has entered into an agreement
under section 1193, with respect to a plan year during the price
applicability period for such drug, that does not provide access to a
price that is not more than the maximum fair price (or a lesser price)
for such drug for such year--
``(1) to a fair price eligible individual who with respect
to such drug is described in subparagraph (A) of section
1191(c)(1) and who is furnished or dispensed such drug during
such year; or
``(2) to a hospital, physician, or other provider of
services or supplier with respect to fair price eligible
individuals who with respect to such drug is described in
subparagraph (B) of such section and is furnished or
administered such drug by such hospital, physician, or provider
or supplier during such year;
shall be subject to a civil monetary penalty equal to ten times the
amount equal to the difference between the price for such drug made
available for such year by such manufacturer with respect to such
individual or hospital, physician, provider, or supplier and the
maximum fair price for such drug for such year.
``(b) Violations of Certain Terms of Agreement.--Any manufacturer
of a selected drug that has entered into an agreement under section
1193, with respect to a plan year during the price applicability period
for such drug, that is in violation of a requirement imposed pursuant
to section 1193(a)(6) shall be subject to a civil monetary penalty of
not more than $1,000,000 for each such violation.
``(c) Application.--The provisions of section 1128A (other than
subsections (a) and (b)) shall apply to a civil monetary penalty under
this section in the same manner as such provisions apply to a penalty
or proceeding under section 1128A(a).
``SEC. 1199. MISCELLANEOUS PROVISIONS.
``(a) Paperwork Reduction Act.--Chapter 35 of title 44, United
States Code, shall not apply to data collected under this part.
``(b) National Academy of Medicine Study.--Not later than December
31, 2025, the National Academy of Medicine shall conduct a study, and
submit to Congress a report, on recommendations for improvements to the
program under this part, including the determination of the limits
applied under section 1194(c).
``(c) MedPAC Study.--Not later than December 31, 2025, the Medicare
Payment Advisory Commission shall conduct a study, and submit to
Congress a report, on the program under this part with respect to the
Medicare program under title XVIII, including with respect to the
effect of the program on individuals entitled to benefits or enrolled
under such title.
``(d) Limitation on Judicial Review.--The following shall not be
subject to judicial review:
``(1) The selection of drugs for publication under section
1192(a).
``(2) The determination of whether a drug is a negotiation-
eligible drug under section 1192(d).
``(3) The determination of the maximum fair price of a
selected drug under section 1194.
``(4) The determination of units of a drug for purposes of
section 1191(c)(3).
``(e) Coordination.--In carrying out this part with respect to
group health plans or health insurance coverage offered in the group
market that are subject to oversight by the Secretary of Labor or the
Secretary of the Treasury, the Secretary of Health and Human Services
shall coordinate with such respective Secretary.
``(f) Data Sharing.--The Secretary shall share with the Secretary
of the Treasury such information as is necessary to determine the tax
imposed by section 4192 of the Internal Revenue Code of 1986.''.
(b) Application of Maximum Fair Prices and Conforming Amendments.--
(1) Under medicare.--
(A) Application to payments under part b.--Section
1847A(b)(1)(B) of the Social Security Act (42 U.S.C.
1395w-3a(b)(1)(B)) is amended by inserting ``or in the
case of such a drug or biological that is a selected
drug (as defined in section 1192(c)), with respect to a
price applicability period (as defined in section
1191(b)(2)), 106 percent of the maximum fair price (as
defined in section 1191(c)(2) applicable for such drug
and a plan year during such period'' after ``paragraph
(4)''.
(B) Exception to part d non-interference.--Section
1860D-11(i) of the Social Security Act (42 U.S.C.
1395w-111(i)) is amended by inserting ``, except as
provided under part E of title XI'' after ``the
Secretary''.
(C) Application as negotiated price under part d.--
Section 1860D-2(d)(1) of the Social Security Act (42
U.S.C. 1395w-102(d)(1)) is amended--
(i) in subparagraph (B), by inserting ``,
subject to subparagraph (D),'' after
``negotiated prices''; and
(ii) by adding at the end the following new
subparagraph:
``(D) Application of maximum fair price for
selected drugs.--In applying this section, in the case
of a covered part D drug that is a selected drug (as
defined in section 1192(c)), with respect to a price
applicability period (as defined in section
1191(b)(2)), the negotiated prices used for payment (as
described in this subsection) shall be the maximum fair
price (as defined in section 1191(c)(2)) for such drug
and for each plan year during such period.''.
(D) Information from prescription drug plans and
ma-pd plans required.--
(i) Prescription drug plans.--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:
``(8) Provision of information related to maximum fair
prices.--Each contract entered into with a PDP sponsor under
this part with respect to a prescription drug plan offered by
such sponsor shall require the sponsor to provide information
to the Secretary as requested by the Secretary in accordance
with section 1196(b).''.
(ii) MA-PD plans.--Section 1857(f)(3) of
the Social Security Act (42 U.S.C. 1395w-
27(f)(3)) is amended by adding at the end the
following new subparagraph:
``(E) Provision of information related to maximum
fair prices.--Section 1860D-12(b)(8).''.
(2) Under group health plans and health insurance
coverage.--
(A) PHSA.--Part A of title XXVII of the Public
Health Service Act is amended by inserting after
section 2729 the following new section:
``SEC. 2729A. FAIR PRICE DRUG NEGOTIATION PROGRAM AND APPLICATION OF
MAXIMUM FAIR PRICES.
``(a) In General.--In the case of a group health plan or health
insurance issuer offering health insurance coverage that is treated
under section 1197 of the Social Security Act as having in effect an
agreement with the Secretary under the Fair Price Drug Negotiation
Program under part E of title XI of such Act, with respect to a price
applicability period (as defined in section 1191(b) of such Act) and a
selected drug (as defined in section 1192(c) of such Act) with respect
to such period with respect to which coverage is provided under such
plan or coverage--
``(1) the provisions of such part shall apply to the plans
or coverage offered by such plan or issuer, and to the
individuals enrolled under such plans or coverage, during such
period, with respect to such selected drug, in the same manner
as such provisions apply to prescription drug plans and MA-PD
plans, and to individuals enrolled under such prescription drug
plans and MA-PD plans;
``(2) the plan or issuer shall apply any cost-sharing
responsibilities under such plan or coverage, with respect to
such selected drug, by substituting the maximum fair price
negotiated under such part for such drug in lieu of the
contracted rate under such plan or coverage for such selected
drug; and
``(3) the Secretary shall apply the provisions of such part
to such plan, issuer, and coverage, and such individuals so
enrolled in such plans.
``(b) Notification Regarding Nonparticipation in Fair Drug Price
Negotiation Program.--A group health plan or a health insurance issuer
offering group or individual health insurance coverage shall publicly
disclose in a manner and in accordance with a process specified by the
Secretary any election made under section 1197 of the Social Security
Act by the plan or issuer to not participate in the Fair Drug Price
Negotiation Program under part E of title XI of such Act with respect
to a selected drug (as defined in section 1192(c) of such Act) for
which coverage is provided under such plan or coverage before the
beginning of the plan year for which such election was made.''.
(B) ERISA.--
(i) In general.--Subpart B of part 7 of
subtitle B of title I of the Employee
Retirement Income Security Act of 1974 (29
U.S.C. 1181 et. seq.) is amended by adding at
the end the following new section:
``SEC. 716. FAIR PRICE DRUG NEGOTIATION PROGRAM AND APPLICATION OF
MAXIMUM FAIR PRICES.
``(a) In General.--In the case of a group health plan or health
insurance issuer offering group health insurance coverage that is
treated under section 1197 of the Social Security Act as having in
effect an agreement with the Secretary under the Fair Price Drug
Negotiation Program under part E of title XI of such Act, with respect
to a price applicability period (as defined in section 1191(b) of such
Act) and a selected drug (as defined in section 1192(c) of such Act)
with respect to such period with respect to which coverage is provided
under such plan or coverage--
``(1) the provisions of such part shall apply to the plans
or coverage offered by such plan or issuer, and to the
individuals enrolled under such plans or coverage, during such
period, with respect to such selected drug, in the same manner
as such provisions apply to prescription drug plans and MA-PD
plans, and to individuals enrolled under such prescription drug
plans and MA-PD plans;
``(2) the plan or issuer shall apply any cost-sharing
responsibilities under such plan or coverage, with respect to
such selected drug, by substituting the maximum fair price
negotiated under such part for such drug in lieu of the
contracted rate under such plan or coverage for such selected
drug; and
``(3) the Secretary shall apply the provisions of such part
to such plan, issuer, and coverage, and such individuals so
enrolled in such plans.
``(b) Notification Regarding Nonparticipation in Fair Drug Price
Negotiation Program.--A group health plan or a health insurance issuer
offering group health insurance coverage shall publicly disclose in a
manner and in accordance with a process specified by the Secretary any
election made under section 1197 of the Social Security Act by the plan
or issuer to not participate in the Fair Drug Price Negotiation Program
under part E of title XI of such Act with respect to a selected drug
(as defined in section 1192(c) of such Act) for which coverage is
provided under such plan or coverage before the beginning of the plan
year for which such election was made.''.
(ii) Clerical amendment.--The table of
sections for part 7 of subtitle B of title I of
the Employee Retirement Income Security Act of
1974 is amended by adding at the end the
following:
``Sec. 716. Fair Price Drug Negotiation Program and application of
maximum fair prices.''.
(C) IRC.--
(i) In general.--Subchapter B of chapter
100 of the Internal Revenue Code of 1986 is
amended by adding at the end the following new
section:
``SEC. 9816. FAIR PRICE DRUG NEGOTIATION PROGRAM AND APPLICATION OF
MAXIMUM FAIR PRICES.
``(a) In General.--In the case of a group health plan that is
treated under section 1197 of the Social Security Act as having in
effect an agreement with the Secretary under the Fair Price Drug
Negotiation Program under part E of title XI of such Act, with respect
to a price applicability period (as defined in section 1191(b) of such
Act) and a selected drug (as defined in section 1192(c) of such Act)
with respect to such period with respect to which coverage is provided
under such plan--
``(1) the provisions of such part shall apply, as
applicable--
``(A) if coverage of such selected drug is provided
under such plan if the drug is furnished or dispensed
at a pharmacy or by a mail order service, to the plan,
and to the individuals enrolled under such plan during
such period, with respect to such selected drug, in the
same manner as such provisions apply to prescription
drug plans and MA-PD plans, and to individuals enrolled
under such prescription drug plans and MA-PD plans
during such period; and
``(B) if coverage of such selected drug is provided
under such plan if the drug is furnished or
administered by a hospital, physician, or other
provider of services or supplier, to the plan, to the
individuals enrolled under such plan, and to hospitals,
physicians, and other providers of services and
suppliers during such period, with respect to such drug
in the same manner as such provisions apply to the
Secretary, to individuals entitled to benefits under
part A of title XVIII or enrolled under part B of such
title, and to hospitals, physicians, and other
providers and suppliers participating under title XVIII
during such period;
``(2) the plan shall apply any cost-sharing
responsibilities under such plan, with respect to such selected
drug, by substituting an amount not more than the maximum fair
price negotiated under such part E of title XI for such drug in
lieu of the drug price upon which the cost-sharing would have
otherwise applied; and
``(3) the Secretary shall apply the provisions of such part
E to such plan and such individuals so enrolled in such plan.
``(b) Notification Regarding Nonparticipation in Fair Drug Price
Negotiation Program.--A group health plan shall publicly disclose in a
manner and in accordance with a process specified by the Secretary any
election made under section 1197 of the Social Security Act by the plan
to not participate in the Fair Drug Price Negotiation Program under
part E of title XI of such Act with respect to a selected drug (as
defined in section 1192(c) of such Act) for which coverage is provided
under such plan before the beginning of the plan year for which such
election was made.''.
(ii) Application to retiree and certain
small group health plans.--Section 9831(a)(2)
of the Internal Revenue Code of 1986 is amended
by inserting ``other than with respect to
section 9816,'' before ``any group health
plan''.
(iii) Clerical amendment.--The table of
sections for subchapter B of chapter 100 of
such Code is amended by adding at the end the
following new item:
``Sec. 9816. Fair Price Drug Negotiation Program and application of
maximum fair prices.''.
SEC. 102. SELECTED DRUG MANUFACTURER EXCISE TAX IMPOSED DURING
NONCOMPLIANCE PERIODS.
(a) In General.--Subchapter E of chapter 32 of the Internal Revenue
Code of 1986 is amended by adding at the end the following new section:
``SEC. 4192. SELECTED DRUGS DURING NONCOMPLIANCE PERIODS.
``(a) In General.--There is hereby imposed on the sale by the
manufacturer, producer, or importer of any selected drug during a day
described in subsection (b) a tax in an amount such that the applicable
percentage is equal to the ratio of--
``(1) such tax, divided by
``(2) the sum of such tax and the price for which so sold.
``(b) Noncompliance Periods.--A day is described in this subsection
with respect to a selected drug if it is a day during one of the
following periods:
``(1) The period beginning on the June 16th immediately
following the selected drug publication date and ending on the
first date during which the manufacturer of the drug has in
place an agreement described in subsection (a) of section 1193
of the Social Security Act with respect to such drug.
``(2) The period beginning on the April 1st immediately
following the June 16th described in paragraph (1) and ending
on the first date during which the manufacturer of the drug has
agreed to a maximum fair price under such agreement.
``(3) In the case of a selected drug with respect to which
the Secretary of Health and Human Services has specified a
renegotiation period under such agreement, the period beginning
on the first date after the last date of such renegotiation
period and ending on the first date during which the
manufacturer of the drug has agreed to a renegotiated maximum
fair price under such agreement.
``(4) With respect to information that is required to be
submitted to the Secretary of Health and Human Services under
such agreement, the period beginning on the date on which such
Secretary certifies that such information is overdue and ending
on the date that such information is so submitted.
``(5) In the case of a selected drug with respect to which
a payment is due under subsection (c) of such section 1193, the
period beginning on the date on which the Secretary of Health
and Human Services certifies that such payment is overdue and
ending on the date that such payment is made in full.
``(c) Applicable Percentage.--For purposes of this section, the
term `applicable percentage' means--
``(1) in the case of sales of a selected drug during the
first 90 days described in subsection (b) with respect to such
drug, 65 percent,
``(2) in the case of sales of such drug during the 91st day
through the 180th day described in subsection (b) with respect
to such drug, 75 percent,
``(3) in the case of sales of such drug during the 181st
day through the 270th day described in subsection (b) with
respect to such drug, 85 percent, and
``(4) in the case of sales of such drug during any
subsequent day, 95 percent.
``(d) Selected Drug.--For purposes of this section--
``(1) In general.--The term `selected drug' means any
selected drug (within the meaning of section 1192 of the Social
Security Act) which is manufactured or produced in the United
States or entered into the United States for consumption, use,
or warehousing.
``(2) United states.--The term `United States' has the
meaning given such term by section 4612(a)(4).
``(3) Coordination with rules for possessions of the united
states.--Rules similar to the rules of paragraphs (2) and (4)
of section 4132(c) shall apply for purposes of this section.
``(e) Other Definitions.--For purposes of this section, the terms
`selected drug publication date' and `maximum fair price' have the
meaning given such terms in section 1191 of the Social Security Act.
``(f) Anti-Abuse Rule.--In the case of a sale which was timed for
the purpose of avoiding the tax imposed by this section, the Secretary
may treat such sale as occurring during a day described in subsection
(b).''.
(b) No Deduction for Excise Tax Payments.--Section 275 of the
Internal Revenue Code of 1986 is amended by adding ``or by section
4192'' before the period at the end of subsection (a)(6).
(c) Conforming Amendments.--
(1) Section 4221(a) of the Internal Revenue Code of 1986 is
amended by inserting ``or 4192'' after ``section 4191''.
(2) Section 6416(b)(2) of such Code is amended by inserting
``or 4192'' after ``section 4191''.
(d) Clerical Amendments.--
(1) The heading of subchapter E of chapter 32 of the
Internal Revenue Code of 1986 is amended by striking ``Medical
Devices'' and inserting ``Other Medical Products''.
(2) The table of subchapters for chapter 32 of such Code is
amended by striking the item relating to subchapter E and
inserting the following new item:
``subchapter e. other medical products''.
(3) The table of sections for subchapter E of chapter 32 of
such Code is amended by adding at the end the following new
item:
``Sec. 4192. Selected drugs during noncompliance periods.''.
(e) Effective Date.--The amendments made by this section shall
apply to sales after the date of the enactment of this Act.
TITLE II--MEDICARE PARTS B AND D PRESCRIPTION DRUG INFLATION REBATES
SEC. 201. MEDICARE PART B REBATE BY MANUFACTURERS.
(a) In General.--Section 1834 of the Social Security Act (42 U.S.C.
1395m) is amended by adding at the end the following new subsection:
``(x) Rebate by Manufacturers for Single Source Drugs With Prices
Increasing Faster Than Inflation.--
``(1) Requirements.--
``(A) Secretarial provision of information.--Not
later than 6 months after the end of each calendar
quarter beginning on or after July 1, 2021, the
Secretary shall, for each part B rebatable drug, report
to each manufacturer of such part B rebatable drug the
following for such calendar quarter:
``(i) Information on the total number of
units of the billing and payment code described
in subparagraph (A)(i) of paragraph (3) with
respect to such drug and calendar quarter.
``(ii) Information on the amount (if any)
of the excess average sales price increase
described in subparagraph (A)(ii) of such
paragraph for such drug and calendar quarter.
``(iii) The rebate amount specified under
such paragraph for such part B rebatable drug
and calendar quarter.
``(B) Manufacturer requirement.--For each calendar
quarter beginning on or after July 1, 2021, the
manufacturer of a part B rebatable drug shall, for such
drug, not later than 30 days after the date of receipt
from the Secretary of the information described in
subparagraph (A) for such calendar quarter, provide to
the Secretary a rebate that is equal to the amount
specified in paragraph (3) for such drug for such
calendar quarter.
``(2) Part b rebatable drug defined.--
``(A) In general.--In this subsection, the term
`part B rebatable drug' means a single source drug or
biological (as defined in subparagraph (D) of section
1847A(c)(6)), including a biosimilar biological product
(as defined in subparagraph (H) of such section), paid
for under this part, except such term shall not include
such a drug or biological--
``(i) if the average total allowed charges
for a year per individual that uses such a drug
or biological, as determined by the Secretary,
are less than, subject to subparagraph (B),
$100; or
``(ii) that is a vaccine described in
subparagraph (A) or (B) of section 1861(s)(10).
``(B) Increase.--The dollar amount applied under
subparagraph (A)(i)--
``(i) for 2022, shall be the dollar amount
specified under such subparagraph for 2021,
increased by the percentage increase in the
consumer price index for all urban consumers
(United States city average) for the 12 month
period ending with June of the previous year;
and
``(ii) for a subsequent year, shall be the
dollar amount specified in this clause (or
clause (i)) for the previous year, increased by
the percentage increase in the consumer price
index for all urban consumers (United States
city average) for the 12 month period ending
with June of the previous year.
Any dollar amount specified under this subparagraph
that is not a multiple of $10 shall be rounded to the
nearest multiple of $10.
``(3) Rebate amount.--
``(A) In general.--For purposes of paragraph (1),
the amount specified in this paragraph for a part B
rebatable drug assigned to a billing and payment code
for a calendar quarter is, subject to paragraph (4),
the amount equal to the product of--
``(i) subject to subparagraphs (B) and (G),
the total number of units of the billing and
payment code for such part B rebatable drug
furnished under this part during the calendar
quarter; and
``(ii) the amount (if any) by which--
``(I) the payment amount under
subparagraph (B) or (C) of section
1847A(b)(1), as applicable, for such
part B rebatable drug during the
calendar quarter; exceeds
``(II) the inflation-adjusted
payment amount determined under
subparagraph (C) for such part B
rebatable drug during the calendar
quarter.
``(B) Excluded units.--For purposes of subparagraph
(A)(i), the total number of units of the billing and
payment code for each part B rebatable drug furnished
during a calendar quarter shall not include--
``(i) units packaged into the payment for a
procedure or service under section 1833(t) or
under section 1833(i) (instead of separately
payable under such respective section);
``(ii) units included under the single
payment system for renal dialysis services
under section 1881(b)(14); or
``(iii) units of a part B rebatable drug of
a manufacturer furnished to an individual, if
such manufacturer, with respect to the
furnishing of such units of such drug, provides
for discounts under section 340B of the Public
Health Service Act or for rebates under section
1927.
``(C) Determination of inflation-adjusted payment
amount.--The inflation-adjusted payment amount
determined under this subparagraph for a part B
rebatable drug for a calendar quarter is--
``(i) the payment amount for the billing
and payment code for such drug in the payment
amount benchmark quarter (as defined in
subparagraph (D)); increased by
``(ii) the percentage by which the rebate
period CPI-U (as defined in subparagraph (F))
for the calendar quarter exceeds the benchmark
period CPI-U (as defined in subparagraph (E)).
``(D) Payment amount benchmark quarter.--The term
`payment amount benchmark quarter' means the calendar
quarter beginning January 1, 2016.
``(E) Benchmark period cpi-u.--The term `benchmark
period CPI-U' means the consumer price index for all
urban consumers (United States city average) for July
2015.
``(F) Rebate period cpi-u.--The term `rebate period
CPI-U' means, with respect to a calendar quarter
described in subparagraph (C), the greater of the
benchmark period CPI-U and the consumer price index for
all urban consumers (United States city average) for
the first month of the calendar quarter that is two
calendar quarters prior to such described calendar
quarter.
``(G) Counting units.--
``(i) Cut-off period to count units.--For
purposes of subparagraph (A)(i), subject to
clause (ii), to count the total number of
billing units for a part B rebatable drug for a
quarter, the Secretary may use a cut-off period
in order to exclude from such total number of
billing units for such quarter claims for
services furnished during such quarter that
were not processed at an appropriate time prior
to the end of the cut-off period.
``(ii) Counting units for claims processed
after cut-off period.--If the Secretary uses a
cut-off period pursuant to clause (i), in the
case of units of a part B rebatable drug
furnished during a quarter but pursuant to
application of such cut-off period excluded for
purposes of subparagraph (A)(i) from the total
number of billing units for the drug for such
quarter, the Secretary shall count such units
of such drug so furnished in the total number
of billing units for such drug for a subsequent
quarter, as the Secretary determines
appropriate.
``(4) Special treatment of certain drugs and exemption.--
``(A) Subsequently approved drugs.--Subject to
subparagraph (B), in the case of a part B rebatable
drug first approved or licensed by the Food and Drug
Administration after July 1, 2015, clause (i) of
paragraph (3)(C) shall be applied as if the term
`payment amount benchmark quarter' were defined under
paragraph (3)(D) as the third full calendar quarter
after the day on which the drug was first marketed and
clause (ii) of paragraph (3)(C) shall be applied as if
the term `benchmark period CPI-U' were defined under
paragraph (3)(E) as if the reference to `July 2015'
under such paragraph were a reference to `the first
month of the first full calendar quarter after the day
on which the drug was first marketed'.
``(B) Timeline for provision of rebates for
subsequently approved drugs.--In the case of a part B
rebatable drug first approved or licensed by the Food
and Drug Administration after July 1, 2015, paragraph
(1)(B) shall be applied as if the reference to `July 1,
2021' under such paragraph were a reference to the
later of the 6th full calendar quarter after the day on
which the drug was first marketed or July 1, 2021.
``(C) Exemption for shortages.--The Secretary may
reduce or waive the rebate amount under paragraph
(1)(B) with respect to a part B rebatable drug that is
described as currently in shortage on the shortage list
in effect under section 506E of the Federal Food, Drug,
and Cosmetic Act or in the case of other exigent
circumstances, as determined by the Secretary.
``(D) Selected drugs.--In the case of a part B
rebatable drug that is a selected drug (as defined in
section 1192(c)) for a price applicability period (as
defined in section 1191(b)(2)) and is determined
(pursuant to such section 1192(c)) to no longer be a
selected drug, for each applicable year beginning after
the price applicability period with respect to such
drug, clause (i) of paragraph (3)(C) shall be applied
as if the term `payment amount benchmark quarter' were
defined under paragraph (3)(D) as the calendar quarter
beginning January 1 of the last year beginning during
such price applicability period with respect to such
selected drug and clause (ii) of paragraph (3)(C) shall
be applied as if the term `benchmark period CPI-U' were
defined under paragraph (3)(E) as if the reference to
`July 2015' under such paragraph were a reference to
the July of the year preceding such last year.
``(5) Application to beneficiary coinsurance.--In the case
of a part B rebatable drug, if the payment amount for a quarter
exceeds the inflation adjusted payment for such quarter--
``(A) in computing the amount of any coinsurance
applicable under this title to an individual with
respect to such drug, the computation of such
coinsurance shall be based on the inflation-adjusted
payment amount determined under paragraph (3)(C) for
such part B rebatable drug; and
``(B) the amount of such coinsurance is equal to 20
percent of such inflation-adjusted payment amount so
determined.
``(6) Rebate deposits.--Amounts paid as rebates under
paragraph (1)(B) shall be deposited into the Federal
Supplementary Medical Insurance Trust Fund established under
section 1841.
``(7) Civil money penalty.--If a manufacturer of a part B
rebatable drug has failed to comply with the requirements under
paragraph (1)(B) for such drug for a calendar quarter, the
manufacturer shall be subject to, in accordance with a process
established by the Secretary pursuant to regulations, a civil
money penalty in an amount equal to at least 125 percent of the
amount specified in paragraph (3) for such drug for such
calendar quarter. The provisions of section 1128A (other than
subsections (a) (with respect to amounts of penalties or
additional assessments) and (b)) shall apply to a civil money
penalty under this paragraph in the same manner as such
provisions apply to a penalty or proceeding under section
1128A(a).
``(8) Study and report.--
``(A) Study.--The Secretary shall conduct a study
of the feasibility of and operational issues involved
with the following:
``(i) Including multiple source drugs (as
defined in section 1847A(c)(6)(C)) in the
rebate system under this subsection.
``(ii) Including drugs and biologicals paid
for under MA plans under part C in the rebate
system under this subsection.
``(iii) Including drugs excluded under
paragraph (2)(A) and units of the billing and
payment code of the drugs excluded under
paragraph (3)(B) in the rebate system under
this subsection.
``(B) Report.--Not later than 3 years after the
date of the enactment of this subsection, the Secretary
shall submit to Congress a report on the study
conducted under subparagraph (A).
``(9) Application to multiple source drugs.--The Secretary
may, based on the report submitted under paragraph (8) and
pursuant to rulemaking, apply the provisions of this subsection
to multiple source drugs (as defined in section
1847A(c)(6)(C)), including, for purposes of determining the
rebate amount under paragraph (3), by calculating manufacturer-
specific average sales prices for the benchmark period and the
rebate period.''.
(b) Amounts Payable; Cost-Sharing.--Section 1833 of the Social
Security Act (42 U.S.C. 1395l) is amended--
(1) in subsection (a)--
(A) in paragraph (1)--
(i) in subparagraph (S), by striking ``with
respect to'' and inserting ``subject to
subparagraph (DD), with respect to'';
(ii) by striking ``and (CC)'' and inserting
``(CC)''; and
(iii) by inserting before the semicolon at
the end the following: ``, and (DD) with
respect to a part B rebatable drug (as defined
in paragraph (2) of section 1834(x)) for which
the payment amount for a calendar quarter under
paragraph (3)(A)(ii)(I) of such section for
such quarter exceeds the inflation-adjusted
payment under paragraph (3)(A)(ii)(II) of such
section for such quarter, the amounts paid
shall be the difference between (i) the payment
amount under paragraph (3)(A)(ii)(I) of such
section for such drug, and (ii) 20 percent of
the inflation-adjusted payment amount under
paragraph (3)(A)(ii)(II) of such section for
such drug'';
(B) by adding at the end of the flush left matter
following paragraph (9), the following:
``For purposes of applying paragraph (1)(DD), subsections (i)(9) and
(t)(3)(H), and section 1834(x)(5), the Secretary shall make such
estimates and use such data as the Secretary determines appropriate,
and notwithstanding any other provision of law, may do so by program
instruction or otherwise.'';
(2) in subsection (i), by adding at the end the following
new paragraph:
``(9) In the case of a part B rebatable drug (as defined in
paragraph (2) of section 1834(x)) furnished on or after July 1, 2021,
under the system under this subsection, in lieu of calculation of
coinsurance and the amount of payment otherwise applicable under this
subsection, the provisions of section 1834(x)(5), paragraph (1)(DD) of
subsection (a), and the flush left matter following paragraph (9) of
subsection (a), shall, as determined appropriate by the Secretary,
apply under this subsection in the same manner as such provisions of
section 1834(x)(5) and subsection (a) apply under such section and
subsection.''; and
(3) in subsection (t)(3), by adding at the end the
following new subparagraph:
``(H) Part b rebatable drugs.--In the case of a
part B rebatable drug (as defined in paragraph (2) of
section 1834(x)) furnished on or after July 1, 2021,
under the system under this subsection, in lieu of
calculation of coinsurance and the amount of payment
otherwise applicable under this subsection, the
provisions of section 1834(x)(5), paragraph (1)(DD) of
subsection (a), and the flush left matter following
paragraph (9) of subsection (a), shall, as determined
appropriate by the Secretary, apply under this
subsection in the same manner as such provisions of
section 1834(x)(5) and subsection (a) apply under such
section and subsection.''.
(c) Conforming Amendment to Part B ASP Calculation.--Section
1847A(c)(3) of the Social Security Act (42 U.S.C. 1395w-3a(c)(3)) is
amended by inserting ``or section 1834(x)'' after ``section 1927''.
SEC. 202. MEDICARE PART D REBATE BY MANUFACTURERS.
(a) In General.--Part D of title XVIII of the Social Security Act
is amended by inserting after section 1860D-14A (42 U.S.C. 1395w-114a)
the following new section:
``SEC. 1860D-14B. MANUFACTURER REBATE FOR CERTAIN DRUGS WITH PRICES
INCREASING FASTER THAN INFLATION.
``(a) In General.--
``(1) In general.--Subject to the provisions of this
section, in order for coverage to be available under this part
for a part D rebatable drug (as defined in subsection (h)(1))
of a manufacturer (as defined in section 1927(k)(5)) dispensed
during an applicable year, the manufacturer must have entered
into and have in effect an agreement described in subsection
(b).
``(2) Authorizing coverage for drugs not covered under
agreements.--Paragraph (1) shall not apply to the dispensing of
a covered part D drug if--
``(A) the Secretary has made a determination that
the availability of the drug is essential to the health
of beneficiaries under this part; or
``(B) the Secretary determines that in the period
beginning on January 1, 2022, and ending on December
31, 2022, there were extenuating circumstances.
``(3) Applicable year.--For purposes of this section the
term `applicable year' means a year beginning with 2022.
``(b) Agreements.--
``(1) Terms of agreement.--An agreement described in this
subsection, with respect to a manufacturer of a part D
rebatable drug, is an agreement under which the following shall
apply:
``(A) Secretarial provision of information.--Not
later than 9 months after the end of each applicable
year with respect to which the agreement is in effect,
the Secretary, for each part D rebatable drug of the
manufacturer, shall report to the manufacturer the
following for such year:
``(i) Information on the total number of
units (as defined in subsection (h)(2)) for
each dosage form and strength with respect to
such part D rebatable drug and year.
``(ii) Information on the amount (if any)
of the excess average manufacturer price
increase described in subsection (c)(1)(B) for
each dosage form and strength with respect to
such drug and year.
``(iii) The rebate amount specified under
subsection (c) for each dosage form and
strength with respect to such drug and year.
``(B) Manufacturer requirements.--For each
applicable year with respect to which the agreement is
in effect, the manufacturer of the part D rebatable
drug, for each dosage form and strength with respect to
such drug, not later than 30 days after the date of
receipt from the Secretary of the information described
in subparagraph (A) for such year, shall provide to the
Secretary a rebate that is equal to the amount
specified in subsection (c) for such dosage form and
strength with respect to such drug for such year.
``(2) Length of agreement.--
``(A) In general.--An agreement under this section,
with respect to a part D rebatable drug, shall be
effective for an initial period of not less than one
year and shall be automatically renewed for a period of
not less than one year unless terminated under
subparagraph (B).
``(B) Termination.--
``(i) By secretary.--The Secretary may
provide for termination of an agreement under
this section for violation of the requirements
of the agreement or other good cause shown.
Such termination shall not be effective earlier
than 30 days after the date of notice of such
termination. The Secretary shall provide, upon
request, a manufacturer with a hearing
concerning such a termination, but such hearing
shall not delay the effective date of the
termination.
``(ii) By a manufacturer.--A manufacturer
may terminate an agreement under this section
for any reason. Any such termination shall be
effective, with respect to a plan year--
``(I) if the termination occurs
before January 30 of the plan year, as
of the day after the end of the plan
year; and
``(II) if the termination occurs on
or after January 30 of the plan year,
as of the day after the end of the
succeeding plan year.
``(C) Effectiveness of termination.--Any
termination under this paragraph shall not affect
rebates due under the agreement under this section
before the effective date of its termination.
``(D) Delay before reentry.--In the case of any
agreement under this section with a manufacturer that
is terminated in a plan year, the Secretary may not
enter into another such agreement with the manufacturer
(or a successor manufacturer) before the subsequent
plan year, unless the Secretary finds good cause for an
earlier reinstatement of such an agreement.
``(c) Rebate Amount.--
``(1) In general.--For purposes of this section, the amount
specified in this subsection for a dosage form and strength
with respect to a part D rebatable drug and applicable year is,
subject to subparagraphs (B) and (C) of paragraph (5), the
amount equal to the product of--
``(A) the total number of units of such dosage form
and strength with respect to such part D rebatable drug
and year; and
``(B) the amount (if any) by which--
``(i) the annual manufacturer price (as
determined in paragraph (2)) paid for such
dosage form and strength with respect to such
part D rebatable drug for the year; exceeds
``(ii) the inflation-adjusted payment
amount determined under paragraph (3) for such
dosage form and strength with respect to such
part D rebatable drug for the year.
``(2) Determination of annual manufacturer price.--The
annual manufacturer price determined under this paragraph for a
dosage form and strength, with respect to a part D rebatable
drug and an applicable year, is the sum of the products of--
``(A) the average manufacturer price (as defined in
subsection (h)(6)) of such dosage form and strength, as
calculated for a unit of such drug, with respect to
each of the calendar quarters of such year; and
``(B) the ratio of--
``(i) the total number of units of such
dosage form and strength dispensed during each
such calendar quarter of such year; to
``(ii) the total number of units of such
dosage form and strength dispensed during such
year.
``(3) Determination of inflation-adjusted payment amount.--
The inflation-adjusted payment amount determined under this
paragraph for a dosage form and strength with respect to a part
D rebatable drug for an applicable year, subject to
subparagraphs (A) and (D) of paragraph (5), is--
``(A) the benchmark year manufacturer price
determined under paragraph (4) for such dosage form and
strength with respect to such drug and an applicable
year; increased by
``(B) the percentage by which the applicable year
CPI-U (as defined in subsection (h)(5)) for the
applicable year exceeds the benchmark period CPI-U (as
defined in subsection (h)(4)).
``(4) Determination of benchmark year manufacturer price.--
The benchmark year manufacturer price determined under this
paragraph for a dosage form and strength, with respect to a
part D rebatable drug and an applicable year, is the sum of the
products of--
``(A) the average manufacturer price (as defined in
subsection (h)(6)) of such dosage form and strength, as
calculated for a unit of such drug, with respect to
each calendar quarter of the payment amount benchmark
year (as defined in subsection (h)(3)); and
``(B) the ratio of--
``(i) the total number of units of such
dosage form and strength dispensed during such
calendar quarter of the payment amount
benchmark year; to
``(ii) the total number of units of such
dosage form and strength dispensed during the
payment amount benchmark year.
``(5) Special treatment of certain drugs and exemption.--
``(A) Subsequently approved drugs.--In the case of
a part D rebatable drug first approved or licensed by
the Food and Drug Administration after January 1, 2016,
subparagraphs (A) and (B) of paragraph (4) shall be
applied as if the term `payment amount benchmark year'
were defined under subsection (h)(3) as the first
calendar year beginning after the day on which the drug
was first marketed by any manufacturer and subparagraph
(B) of paragraph (3) shall be applied as if the term
`benchmark period CPI-U' were defined under subsection
(h)(4) as if the reference to `January 2016' under such
subsection were a reference to `January of the first
year beginning after the date on which the drug was
first marketed by any manufacturer'.
``(B) Exemption for shortages.--The Secretary may
reduce or waive the rebate under paragraph (1) with
respect to a part D rebatable drug that is described as
currently in shortage on the shortage list in effect
under section 506E of the Federal Food, Drug, and
Cosmetic Act or in the case of other exigent
circumstances, as determined by the Secretary.
``(C) Treatment of new formulations.--
``(i) In general.--In the case of a part D
rebatable drug that is a line extension of a
part D rebatable drug that is an oral solid
dosage form, the Secretary shall establish a
formula for determining the amount specified in
this subsection with respect to such part D
rebatable drug and an applicable year with
consideration of the original part D rebatable
drug.
``(ii) Line extension defined.--In this
subparagraph, the term `line extension' means,
with respect to a part D rebatable drug, a new
formulation of the drug (as determined by the
Secretary), such as an extended release
formulation, but does not include an abuse-
deterrent formulation of the drug (as
determined by the Secretary), regardless of
whether such abuse-deterrent formulation is an
extended release formulation.
``(D) Selected drugs.--In the case of a part D
rebatable drug that is a selected drug (as defined in
section 1192(c)) for a price applicability period (as
defined in section 1191(b)(2)) and is determined
(pursuant to such section 1192(c)) to no longer be a
selected drug, for each applicable year beginning after
the price applicability period with respect to such
drug, subparagraphs (A) and (B) of paragraph (4) shall
be applied as if the term `payment amount benchmark
year' were defined under subsection (h)(3) as the last
year beginning during such price applicability period
with respect to such selected drug and subparagraph (B)
of paragraph (3) shall be applied as if the term
`benchmark period CPI-U' were defined under subsection
(h)(4) as if the reference to `January 2016' under such
subsection were a reference to January of the last year
beginning during such price applicability period with
respect to such drug.
``(d) Rebate Deposits.--Amounts paid as rebates under subsection
(c) shall be deposited into the Medicare Prescription Drug Account in
the Federal Supplementary Medical Insurance Trust Fund established
under section 1841.
``(e) Information.--For purposes of carrying out this section, the
Secretary shall use information submitted by manufacturers under
section 1927(b)(3).
``(f) Civil Money Penalty.--In the case of a manufacturer of a part
D rebatable drug with an agreement in effect under this section who has
failed to comply with the terms of the agreement under subsection
(b)(1)(B) with respect to such drug for an applicable year, the
Secretary may impose a civil money penalty on such manufacturer in an
amount equal to 125 percent of the amount specified in subsection (c)
for such drug for such year. The provisions of section 1128A (other
than subsections (a) (with respect to amounts of penalties or
additional assessments) and (b)) shall apply to a civil money penalty
under this subsection in the same manner as such provisions apply to a
penalty or proceeding under section 1128A(a).
``(g) Judicial Review.--There shall be no judicial review of the
following:
``(1) The determination of units under this section.
``(2) The determination of whether a drug is a part D
rebatable drug under this section.
``(3) The calculation of the rebate amount under this
section.
``(h) Definitions.--In this section:
``(1) Part d rebatable drug defined.--
``(A) In general.--The term `part D rebatable drug'
means a drug or biological that would (without
application of this section) be a covered part D drug,
except such term shall, with respect to an applicable
year, not include such a drug or biological if the
average annual total cost under this part for such year
per individual who uses such a drug or biological, as
determined by the Secretary, is less than, subject to
subparagraph (B), $100, as determined by the Secretary
using the most recent data available or, if data is not
available, as estimated by the Secretary.
``(B) Increase.--The dollar amount applied under
subparagraph (A)--
``(i) for 2023, shall be the dollar amount
specified under such subparagraph for 2022,
increased by the percentage increase in the
consumer price index for all urban consumers
(United States city average) for the 12-month
period beginning with January of 2022; and
``(ii) for a subsequent year, shall be the
dollar amount specified in this subparagraph
for the previous year, increased by the
percentage increase in the consumer price index
for all urban consumers (United States city
average) for the 12-month period beginning with
January of the previous year.
Any dollar amount specified under this subparagraph
that is not a multiple of $10 shall be rounded to the
nearest multiple of $10.
``(2) Unit defined.--The term `unit' means, with respect to
a part D rebatable drug, the lowest identifiable quantity (such
as a capsule or tablet, milligram of molecules, or grams) of
the part D rebatable drug that is dispensed to individuals
under this part.
``(3) Payment amount benchmark year.--The term `payment
amount benchmark year' means the year beginning January 1,
2016.
``(4) Benchmark period cpi-u.--The term `benchmark period
CPI-U' means the consumer price index for all urban consumers
(United States city average) for January 2016.
``(5) Applicable year cpi-u.--The term `applicable year
CPI-U' means, with respect to an applicable year, the consumer
price index for all urban consumers (United States city
average) for January of such year.
``(6) Average manufacturer price.--The term `average
manufacturer price' has the meaning, with respect to a part D
rebatable drug of a manufacturer, given such term in section
1927(k)(1), with respect to a covered outpatient drug of a
manufacturer for a rebate period under section 1927.''.
(b) Conforming Amendment to Part B ASP Calculation.--Section
1847A(c)(3) of the Social Security Act (42 U.S.C. 1395w-3a(c)(3)), as
amended by section 201(c), is further amended by striking ``section
1927 or section 1834(x)'' and inserting ``section 1927, section
1834(x), or section 1860D-14B''.
TITLE III--PART D IMPROVEMENTS AND MAXIMUM OUT-OF-POCKET CAP FOR
MEDICARE BENEFICIARIES
SEC. 301. MEDICARE PART D BENEFIT REDESIGN.
(a) Benefit Structure Redesign.--Section 1860D-2(b) of the Social
Security Act (42 U.S.C. 1395w-102(b)) is amended--
(1) in paragraph (2)--
(A) in subparagraph (A), in the matter preceding
clause (i), by inserting ``for a year preceding 2022
and for costs above the annual deductible specified in
paragraph (1) and up to the annual out-of-pocket
threshold specified in paragraph (4)(B) for 2022 and
each subsequent year'' after ``paragraph (3)'';
(B) in subparagraph (C)--
(i) in clause (i), in the matter preceding
subclause (I), by inserting ``for a year
preceding 2022,'' after ``paragraph (4),''; and
(ii) in clause (ii)(III), by striking ``and
each subsequent year'' and inserting ``and
2021''; and
(C) in subparagraph (D)--
(i) in clause (i)--
(I) in the matter preceding
subclause (I), by inserting ``for a
year preceding 2022,'' after
``paragraph (4),''; and
(II) in subclause (I)(bb), by
striking ``a year after 2018'' and
inserting ``each of years 2018 through
2021''; and
(ii) in clause (ii)(V), by striking ``2019
and each subsequent year'' and inserting ``each
of years 2019 through 2021'';
(2) in paragraph (3)(A)--
(A) in the matter preceding clause (i), by
inserting ``for a year preceding 2022,'' after ``and
(4),''; and
(B) in clause (ii), by striking ``for a subsequent
year'' and inserting ``for each of years 2007 through
2021''; and
(3) in paragraph (4)--
(A) in subparagraph (A)--
(i) in clause (i)--
(I) by redesignating subclauses (I)
and (II) as items (aa) and (bb),
respectively, and moving the margin of
each such redesignated item 2 ems to
the right;
(II) in the matter preceding item
(aa), as redesignated by subclause (I),
by striking ``is equal to the greater
of--'' and inserting ``is equal to--
``(I) for a year preceding 2022,
the greater of--'';
(III) by striking the period at the
end of item (bb), as redesignated by
subclause (I), and inserting ``; and'';
and
(IV) by adding at the end the
following:
``(II) for 2022 and each succeeding
year, $0.''; and
(ii) in clause (ii), by striking ``clause
(i)(I)'' and inserting ``clause (i)(I)(aa)'';
(B) in subparagraph (B)--
(i) in clause (i)--
(I) in subclause (V), by striking
``or'' at the end;
(II) in subclause (VI)--
(aa) by striking ``for a
subsequent year'' and inserting
``for 2021''; and
(bb) by striking the period
at the end and inserting a
semicolon; and
(III) by adding at the end the
following new subclauses:
``(VII) for 2022, is equal to
$2,000; or
``(VIII) for a subsequent year, is
equal to the amount specified in this
subparagraph for the previous year,
increased by the annual percentage
increase described in paragraph (6) for
the year involved.''; and
(ii) in clause (ii), by striking ``clause
(i)(II)'' and inserting ``clause (i)'';
(C) in subparagraph (C)(i), by striking ``and for
amounts'' and inserting ``and, for a year preceding
2022, for amounts''; and
(D) in subparagraph (E), by striking ``In
applying'' and inserting ``For each of years 2011
through 2021, in applying''.
(b) Decreasing Reinsurance Payment Amount.--Section 1860D-15(b)(1)
of the Social Security Act (42 U.S.C. 1395w-115(b)(1)) is amended by
inserting after ``80 percent'' the following: ``(or, with respect to a
coverage year after 2021, 20 percent)''.
(c) Manufacturer Discount Program.--
(1) In general.--Part D of title XVIII of the Social
Security Act (42 U.S.C. 1395w-101 et seq.), as amended by
section 202, is further amended by inserting after section
1860D-14B the following new section:
``SEC. 1860D-14C. MANUFACTURER DISCOUNT PROGRAM.
``(a) Establishment.--The Secretary shall establish a manufacturer
discount program (in this section referred to as the `program'). Under
the program, the Secretary shall enter into agreements described in
subsection (b) with manufacturers and provide for the performance of
the duties described in subsection (c). The Secretary shall establish a
model agreement for use under the program by not later than January 1,
2021, in consultation with manufacturers, and allow for comment on such
model agreement.
``(b) Terms of Agreement.--
``(1) In general.--
``(A) Agreement.--An agreement under this section
shall require the manufacturer to provide applicable
beneficiaries access to discounted prices for
applicable drugs of the manufacturer that are dispensed
on or after January 1, 2022.
``(B) Provision of discounted prices at the point-
of-sale.--The discounted prices described in
subparagraph (A) shall be provided to the applicable
beneficiary at the pharmacy or by the mail order
service at the point-of-sale of an applicable drug.
``(C) Timing of agreement.--
``(i) Special rule for 2022.--In order for
an agreement with a manufacturer to be in
effect under this section with respect to the
period beginning on January 1, 2022, and ending
on December 31, 2022, the manufacturer shall
enter into such agreement not later than 30
days after the date of the establishment of a
model agreement under subsection (a).
``(ii) 2023 and subsequent years.--In order
for an agreement with a manufacturer to be in
effect under this section with respect to plan
year 2023 or a subsequent plan year, the
manufacturer shall enter into such agreement
(or such agreement shall be renewed under
paragraph (4)(A)) not later than January 30 of
the preceding year.
``(2) Provision of appropriate data.--Each manufacturer
with an agreement in effect under this section shall collect
and have available appropriate data, as determined by the
Secretary, to ensure that it can demonstrate to the Secretary
compliance with the requirements under the program.
``(3) Compliance with requirements for administration of
program.--Each manufacturer with an agreement in effect under
this section shall comply with requirements imposed by the
Secretary or a third party with a contract under subsection
(d)(3), as applicable, for purposes of administering the
program, including any determination under subparagraph (A) of
subsection (c)(1) or procedures established under such
subsection (c)(1).
``(4) Length of agreement.--
``(A) In general.--An agreement under this section
shall be effective for an initial period of not less
than 12 months and shall be automatically renewed for a
period of not less than 1 year unless terminated under
subparagraph (B).
``(B) Termination.--
``(i) By the secretary.--The Secretary may
provide for termination of an agreement under
this section for a knowing and willful
violation of the requirements of the agreement
or other good cause shown. Such termination
shall not be effective earlier than 30 days
after the date of notice to the manufacturer of
such termination. The Secretary shall provide,
upon request, a manufacturer with a hearing
concerning such a termination, and such hearing
shall take place prior to the effective date of
the termination with sufficient time for such
effective date to be repealed if the Secretary
determines appropriate.
``(ii) By a manufacturer.--A manufacturer
may terminate an agreement under this section
for any reason. Any such termination shall be
effective, with respect to a plan year--
``(I) if the termination occurs
before January 30 of a plan year, as of
the day after the end of the plan year;
and
``(II) if the termination occurs on
or after January 30 of a plan year, as
of the day after the end of the
succeeding plan year.
``(iii) Effectiveness of termination.--Any
termination under this subparagraph shall not
affect discounts for applicable drugs of the
manufacturer that are due under the agreement
before the effective date of its termination.
``(iv) Notice to third party.--The
Secretary shall provide notice of such
termination to a third party with a contract
under subsection (d)(3) within not less than 30
days before the effective date of such
termination.
``(c) Duties Described.--The duties described in this subsection
are the following:
``(1) Administration of program.--Administering the
program, including--
``(A) the determination of the amount of the
discounted price of an applicable drug of a
manufacturer;
``(B) the establishment of procedures under which
discounted prices are provided to applicable
beneficiaries at pharmacies or by mail order service at
the point-of-sale of an applicable drug;
``(C) the establishment of procedures to ensure
that, not later than the applicable number of calendar
days after the dispensing of an applicable drug by a
pharmacy or mail order service, the pharmacy or mail
order service is reimbursed for an amount equal to the
difference between--
``(i) the negotiated price of the
applicable drug; and
``(ii) the discounted price of the
applicable drug;
``(D) the establishment of procedures to ensure
that the discounted price for an applicable drug under
this section is applied before any coverage or
financial assistance under other health benefit plans
or programs that provide coverage or financial
assistance for the purchase or provision of
prescription drug coverage on behalf of applicable
beneficiaries as the Secretary may specify; and
``(E) providing a reasonable dispute resolution
mechanism to resolve disagreements between
manufacturers, applicable beneficiaries, and the third
party with a contract under subsection (d)(3).
``(2) Monitoring compliance.--
``(A) In general.--The Secretary shall monitor
compliance by a manufacturer with the terms of an
agreement under this section.
``(B) Notification.--If a third party with a
contract under subsection (d)(3) determines that the
manufacturer is not in compliance with such agreement,
the third party shall notify the Secretary of such
noncompliance for appropriate enforcement under
subsection (e).
``(3) Collection of data from prescription drug plans and
ma-pd plans.--The Secretary may collect appropriate data from
prescription drug plans and MA-PD plans in a timeframe that
allows for discounted prices to be provided for applicable
drugs under this section.
``(d) Administration.--
``(1) In general.--Subject to paragraph (2), the Secretary
shall provide for the implementation of this section, including
the performance of the duties described in subsection (c).
``(2) Limitation.--In providing for the implementation of
this section, the Secretary shall not receive or distribute any
funds of a manufacturer under the program.
``(3) Contract with third parties.--The Secretary shall
enter into a contract with 1 or more third parties to
administer the requirements established by the Secretary in
order to carry out this section. At a minimum, the contract
with a third party under the preceding sentence shall require
that the third party--
``(A) receive and transmit information between the
Secretary, manufacturers, and other individuals or
entities the Secretary determines appropriate;
``(B) receive, distribute, or facilitate the
distribution of funds of manufacturers to appropriate
individuals or entities in order to meet the
obligations of manufacturers under agreements under
this section;
``(C) provide adequate and timely information to
manufacturers, consistent with the agreement with the
manufacturer under this section, as necessary for the
manufacturer to fulfill its obligations under this
section; and
``(D) permit manufacturers to conduct periodic
audits, directly or through contracts, of the data and
information used by the third party to determine
discounts for applicable drugs of the manufacturer
under the program.
``(4) Performance requirements.--The Secretary shall
establish performance requirements for a third party with a
contract under paragraph (3) and safeguards to protect the
independence and integrity of the activities carried out by the
third party under the program under this section.
``(5) Implementation.--Notwithstanding any other provision
of law, the Secretary may implement the program under this
section by program instruction or otherwise.
``(6) Administration.--Chapter 35 of title 44, United
States Code, shall not apply to the program under this section.
``(e) Enforcement.--
``(1) Audits.--Each manufacturer with an agreement in
effect under this section shall be subject to periodic audit by
the Secretary.
``(2) Civil money penalty.--
``(A) In general.--The Secretary may impose a civil
money penalty on a manufacturer that fails to provide
applicable beneficiaries discounts for applicable drugs
of the manufacturer in accordance with such agreement
for each such failure in an amount the Secretary
determines is equal to the sum of--
``(i) the amount that the manufacturer
would have paid with respect to such discounts
under the agreement, which will then be used to
pay the discounts which the manufacturer had
failed to provide; and
``(ii) 25 percent of such amount.
``(B) Application.--The provisions of section 1128A
(other than subsections (a) and (b)) shall apply to a
civil money penalty under this paragraph in the same
manner as such provisions apply to a penalty or
proceeding under section 1128A(a).
``(f) Clarification Regarding Availability of Other Covered Part D
Drugs.--Nothing in this section shall prevent an applicable beneficiary
from purchasing a covered part D drug that is not an applicable drug
(including a generic drug or a drug that is not on the formulary of the
prescription drug plan or MA-PD plan that the applicable beneficiary is
enrolled in).
``(g) Definitions.--In this section:
``(1) Applicable beneficiary.--The term `applicable
beneficiary' means an individual who, on the date of dispensing
a covered part D drug--
``(A) is enrolled in a prescription drug plan or an
MA-PD plan;
``(B) is not enrolled in a qualified retiree
prescription drug plan; and
``(C) has incurred costs for covered part D drugs
in the year that are equal to or exceed the annual
deductible specified in section 1860D-2(b)(1) for such
year.
``(2) Applicable drug.--The term `applicable drug', with
respect to an applicable beneficiary--
``(A) means a covered part D drug--
``(i) approved under a new drug application
under section 505(c) of the Federal Food, Drug,
and Cosmetic Act or, in the case of a biologic
product, licensed under section 351 of the
Public Health Service Act; and
``(ii)(I) if the PDP sponsor of the
prescription drug plan or the MA organization
offering the MA-PD plan uses a formulary, which
is on the formulary of the prescription drug
plan or MA-PD plan that the applicable
beneficiary is enrolled in;
``(II) if the PDP sponsor of the
prescription drug plan or the MA organization
offering the MA-PD plan does not use a
formulary, for which benefits are available
under the prescription drug plan or MA-PD plan
that the applicable beneficiary is enrolled in;
or
``(III) is provided through an exception or
appeal; and
``(B) does not include a selected drug (as defined
in section 1192(c)) during a price applicability period
(as defined in section 1191(b)(2)) with respect to such
drug.
``(3) Applicable number of calendar days.--The term
`applicable number of calendar days' means--
``(A) with respect to claims for reimbursement
submitted electronically, 14 days; and
``(B) with respect to claims for reimbursement
submitted otherwise, 30 days.
``(4) Discounted price.--
``(A) In general.--The term `discounted price'
means, with respect to an applicable drug of a
manufacturer furnished during a year to an applicable
beneficiary--
``(i) who has not incurred costs for
covered part D drugs in the year that are equal
to or exceed the annual out-of-pocket threshold
specified in section 1860D-2(b)(4)(B)(i) for
the year, 90 percent of the negotiated price of
such drug; and
``(ii) who has incurred such costs in the
year that are equal to or exceed such threshold
for the year, 70 percent of the negotiated
price of such drug.
``(B) Clarification.--Nothing in this section shall
be construed as affecting the responsibility of an
applicable beneficiary for payment of a dispensing fee
for an applicable drug.
``(C) Special case for certain claims.--
``(i) Claims spanning deductible.--In the
case where the entire amount of the negotiated
price of an individual claim for an applicable
drug with respect to an applicable beneficiary
does not fall at or above the annual deductible
specified in section 1860D-2(b)(1) for the
year, the manufacturer of the applicable drug
shall provide the discounted price under this
section on only the portion of the negotiated
price of the applicable drug that falls at or
above such annual deductible.
``(ii) Claims spanning out-of-pocket
threshold.--In the case where the entire amount
of the negotiated price of an individual claim
for an applicable drug with respect to an
applicable beneficiary does not fall entirely
below or entirely above the annual out-of-
pocket threshold specified in section 1860D-
2(b)(4)(B)(i) for the year, the manufacturer of
the applicable drug shall provide the
discounted price--
``(I) in accordance with
subparagraph (A)(i) on the portion of
the negotiated price of the applicable
drug that falls below such threshold;
and
``(II) in accordance with
subparagraph (A)(ii) on the portion of
such price of such drug that falls at
or above such threshold.
``(5) Manufacturer.--The term `manufacturer' means any
entity which is engaged in the production, preparation,
propagation, compounding, conversion, or processing of
prescription drug products, either directly or indirectly by
extraction from substances of natural origin, or independently
by means of chemical synthesis, or by a combination of
extraction and chemical synthesis. Such term does not include a
wholesale distributor of drugs or a retail pharmacy licensed
under State law.
``(6) Negotiated price.--The term `negotiated price' has
the meaning given such term in section 423.100 of title 42,
Code of Federal Regulations (or any successor regulation),
except that, with respect to an applicable drug, such
negotiated price shall not include any dispensing fee for the
applicable drug.
``(7) Qualified retiree prescription drug plan.--The term
`qualified retiree prescription drug plan' has the meaning
given such term in section 1860D-22(a)(2).''.
(2) Sunset of medicare coverage gap discount program.--
Section 1860D-14A of the Social Security Act (42 U.S.C. 1395-
114a) is amended--
(A) in subsection (a), in the first sentence, by
striking ``The Secretary'' and inserting ``Subject to
subsection (h), the Secretary''; and
(B) by adding at the end the following new
subsection:
``(h) Sunset of Program.--
``(1) In general.--The program shall not apply with respect
to applicable drugs dispensed on or after January 1, 2022, and,
subject to paragraph (2), agreements under this section shall
be terminated as of such date.
``(2) Continued application for applicable drugs dispensed
prior to sunset.--The provisions of this section (including all
responsibilities and duties) shall continue to apply after
January 1, 2022, with respect to applicable drugs dispensed
prior to such date.''.
(3) Inclusion of actuarial value of manufacturer discounts
in bids.--Section 1860D-11 of the Social Security Act (42
U.S.C. 1395w-111) is amended--
(A) in subsection (b)(2)(C)(iii)--
(i) by striking ``assumptions regarding the
reinsurance'' and inserting ``assumptions
regarding--
``(I) the reinsurance''; and
(ii) by adding at the end the following:
``(II) for 2022 and each subsequent
year, the manufacturer discounts
provided under section 1860D-14C
subtracted from the actuarial value to
produce such bid; and''; and
(B) in subsection (c)(1)(C)--
(i) by striking ``an actuarial valuation of
the reinsurance'' and inserting ``an actuarial
valuation of--
``(i) the reinsurance'';
(ii) in clause (i), as inserted by clause
(i) of this subparagraph, by adding ``and'' at
the end; and
(iii) by adding at the end the following:
``(ii) for 2022 and each subsequent year,
the manufacturer discounts provided under
section 1860D-14C;''.
(d) Conforming Amendments.--
(1) Section 1860D-2 of the Social Security Act (42 U.S.C.
1395w-102) is amended--
(A) in subsection (a)(2)(A)(i)(I), by striking ``,
or an increase in the initial'' and inserting ``or, for
a year preceding 2022, an increase in the initial'';
(B) in subsection (c)(1)(C)--
(i) in the subparagraph heading, by
striking ``at initial coverage limit''; and
(ii) by inserting ``for a year preceding
2022 or the annual out-of-pocket threshold
specified in subsection (b)(4)(B) for the year
for 2022 and each subsequent year'' after
``subsection (b)(3) for the year'' each place
it appears; and
(C) in subsection (d)(1)(A), by striking ``or an
initial'' and inserting ``or, for a year preceding
2022, an initial''.
(2) Section 1860D-4(a)(4)(B)(i) of the Social Security Act
(42 U.S.C. 1395w-104(a)(4)(B)(i)) is amended by striking ``the
initial'' and inserting ``for a year preceding 2022, the
initial''.
(3) Section 1860D-14(a) of the Social Security Act (42
U.S.C. 1395w-114(a)) is amended--
(A) in paragraph (1)--
(i) in subparagraph (C), by striking ``The
continuation'' and inserting ``For a year
preceding 2022, the continuation'';
(ii) in subparagraph (D)(iii), by striking
``1860D-2(b)(4)(A)(i)(I)'' and inserting
``1860D-2(b)(4)(A)(i)(I)(aa)''; and
(iii) in subparagraph (E), by striking
``The elimination'' and inserting ``For a year
preceding 2022, the elimination''; and
(B) in paragraph (2)--
(i) in subparagraph (C), by striking ``The
continuation'' and inserting ``For a year
preceding 2022, the continuation''; and
(ii) in subparagraph (E), by striking
``1860D-2(b)(4)(A)(i)(I)'' and inserting
``1860D-2(b)(4)(A)(i)(I)(aa)''.
(4) Section 1860D-21(d)(7) of the Social Security Act (42
U.S.C. 1395w-131(d)(7)) is amended by striking ``section 1860D-
2(b)(4)(B)(i)'' and inserting ``section 1860D-2(b)(4)(C)(i)''.
(5) Section 1860D-22(a)(2)(A) of the Social Security Act
(42 U.S.C. 1395w-132(a)(2)(A)) is amended--
(A) by striking ``the value of any discount'' and
inserting the following: ``the value of--
``(i) for years prior to 2022, any
discount'';
(B) in clause (i), as inserted by subparagraph (A)
of this paragraph, by striking the period at the end
and inserting ``; and''; and
(C) by adding at the end the following new clause:
``(ii) for 2022 and each subsequent year,
any discount provided pursuant to section
1860D-14C.''.
(6) Section 1860D-41(a)(6) of the Social Security Act (42
U.S.C. 1395w-151(a)(6)) is amended--
(A) by inserting ``for a year before 2022'' after
``1860D-2(b)(3)''; and
(B) by inserting ``for such year'' before the
period.
(7) Section 1860D-43 of the Social Security Act (42 U.S.C.
1395w-153) is amended--
(A) in subsection (a)--
(i) by striking paragraph (1) and inserting
the following:
``(1) participate in--
``(A) for 2011 through 2021, the Medicare coverage
gap discount program under section 1860D-14A; and
``(B) for 2022 and each subsequent year, the
manufacturer discount program under section 1860D-
14C;'';
(ii) by striking paragraph (2) and
inserting the following:
``(2) have entered into and have in effect--
``(A) for 2011 through 2021, an agreement described
in subsection (b) of section 1860D-14A with the
Secretary; and
``(B) for 2022 and each subsequent year, an
agreement described in subsection (b) of section 1860D-
14C with the Secretary; and''; and
(iii) by striking paragraph (3) and
inserting the following:
``(3) have entered into and have in effect, under terms and
conditions specified by the Secretary--
``(A) for 2011 through 2021, a contract with a
third party that the Secretary has entered into a
contract with under subsection (d)(3) of section 1860D-
14A; and
``(B) for 2022 and each subsequent year, a contract
with a third party that the Secretary has entered into
a contract with under subsection (d)(3) of section
1860D-14C.''; and
(B) by striking subsection (b) and inserting the
following:
``(b) Effective Date.--Paragraphs (1)(A), (2)(A), and (3)(A) of
subsection (a) shall apply to covered part D drugs dispensed under this
part on or after January 1, 2011, and before January 1, 2022, and
paragraphs (1)(B), (2)(B), and (3)(B) of such subsection shall apply to
covered part D drugs dispensed under this part on or after January 1,
2022.''.
(e) Effective Date.--The amendments made by this section shall
apply with respect to plan year 2022 and subsequent plan years.
SEC. 302. ALLOWING CERTAIN ENROLLEES OF PRESCRIPTION DRUGS PLANS AND
MA-PD PLANS UNDER MEDICARE PROGRAM TO SPREAD OUT COST-
SHARING UNDER CERTAIN CIRCUMSTANCES.
Section 1860D-2(b)(2) of the Social Security Act (42 U.S.C. 1395w-
102(b)(2)), as amended by section 301, is further amended--
(1) in subparagraph (A), by striking ``Subject to
subparagraphs (C) and (D)'' and inserting ``Subject to
subparagraphs (C), (D), and (E)''; and
(2) by adding at the end the following new subparagraph:
``(E) Enrollee option regarding spreading cost-
sharing.--The Secretary shall establish by regulation a
process under which, with respect to plan year 2022 and
subsequent plan years, a prescription drug plan or an
MA-PD plan shall, in the case of a part D eligible
individual enrolled with such plan for such plan year
who is not a subsidy eligible individual (as defined in
section 1860D-14(a)(3)) and with respect to whom the
plan projects that the dispensing of the first fill of
a covered part D drug to such individual will result in
the individual incurring costs that are equal to or
above the annual out-of-pocket threshold specified in
paragraph (4)(B) for such plan year, provide such
individual with the option to make the coinsurance
payment required under subparagraph (A) (for the
portion of such costs that are not above such annual
out-of-pocket threshold) in the form of periodic
installments over the remainder of such plan year.''.
SEC. 303. ESTABLISHMENT OF PHARMACY QUALITY MEASURES UNDER MEDICARE
PART D.
Section 1860D-4(c) of the Social Security Act (42 U.S.C. 1395w-
104(c)) is amended--
(1) by redesignating the paragraph (6), as added by section
50354 of division E of the Bipartisan Budget Act of 2018
(Public Law 115-123), as paragraph (7); and
(2) by adding at the end the following new paragraph:
``(8) Application of pharmacy quality measures.--
``(A) In general.--A PDP sponsor that implements
incentive payments to a pharmacy or price concessions
paid by a pharmacy based on quality measures shall use
measures established or approved by the Secretary under
subparagraph (B) with respect to payment for covered
part D drugs dispensed by such pharmacy.
``(B) Standard pharmacy quality measures.--The
Secretary shall establish or approve standard quality
measures from a consensus and evidence-based
organization for payments described in subparagraph
(A). Such measures shall focus on patient health
outcomes and be based on proven criteria measuring
pharmacy performance.
``(C) Effective date.--The requirement under
subparagraph (A) shall take effect for plan years
beginning on or after January 1, 2021, or such earlier
date specified by the Secretary if the Secretary
determines there are sufficient measures established or
approved under subparagraph (B) to meet the requirement
under subparagraph (A).''.
TITLE IV--PRESCRIPTION DRUG POLICIES FOR LOW-INCOME INDIVIDUALS
SEC. 401. ADJUSTMENTS TO MEDICARE PART D COST-SHARING REDUCTIONS FOR
LOW-INCOME INDIVIDUALS.
Section 1860D-14(a) of the Social Security Act (42 U.S.C. 1395w-
114(a)), as amended by section 301(d), is further amended--
(1) in paragraph (1)--
(A) in subparagraph (D)--
(i) in clause (ii)--
(I) by striking ``that does not
exceed $1 for'' and all that follows
through the period at the end and
inserting ``that does not exceed--
``(I) for plan years before plan
year 2021--
``(aa) for a generic drug
or a preferred drug that is a
multiple source drug (as
defined in section
1927(k)(7)(A)(i)), $1 or, if
less, the copayment amount
applicable to an individual
under clause (iii); and
``(bb) for any other drug,
$3 or, if less, the copayment
amount applicable to an
individual under clause (iii);
and''; and
(II) by adding at the end the
following new subclauses:
``(II) for plan year 2021--
``(aa) for a generic drug,
$0; and
``(bb) for any other drug,
the dollar amount applied under
this clause (after application
of paragraph (4)(A)) for plan
year 2020 for a drug described
in subclause (I)(bb); and
``(III) for a subsequent year, the
dollar amount applied under this clause
for the previous year for the drug,
increased by the annual percentage
increase in the consumer price index
(all items; U.S. city average) as of
September of such previous year.''; and
(ii) in clause (iii)--
(I) by striking ``does not exceed
the copayment amount specified under''
and inserting ``does not exceed--
``(I) for plan years beginning
before plan year 2021, the copayment
amount specified under'';
(II) by striking the period at the
end and inserting ``; and''; and
(III) by adding at the end the
following new subclause:
``(II) for plan year 2021 and each
subsequent plan year, the copayment
amount applied under clause (ii) for
the drug and year involved.''; and
(B) by adding at the end the following new
subparagraph:
``(F) Rounding.--Any amount established under
clause (ii) of subparagraph (D), including as applied
under clause (iii) of such subparagraph or paragraph
(2)(D), that is based on an increase of $3, that is not
a multiple of 5 cents or 10 cents, respectively, shall
be rounded to the nearest multiple of 5 cents or 10
cents, respectively.'';
(2) in paragraph (2)--
(A) in subparagraph (D)--
(i) by striking ``of coinsurance of'' and
inserting ``of--
``(i) for plan years before plan year 2021,
coinsurance of'';
(ii) by striking the period at the end and
inserting ``; and''; and
(iii) by adding at the end the following
new clause:
``(ii) for plan year 2021 and each
subsequent plan year, a copayment amount that
does not exceed the copayment amount applied
under paragraph (1)(D)(ii) for the drug and
year involved.''; and
(B) in subparagraph (E)--
(i) by striking ``subsection (c), the
substitution for'' and inserting ``subsection
(c)--
``(i) for plan years before plan year 2021,
the substitution for'';
(ii) by striking the period at the end and
inserting ``; and''; and
(iii) by adding at the end the following
new clause:
``(ii) for plan year 2021, the elimination
of any cost-sharing imposed under section
1860D-2(b)(4)(A).''; and
(3) in paragraph (4)(A)(ii), by inserting ``(before 2021)''
after ``subsequent year''.
SEC. 402. DISSEMINATION TO MEDICARE PART D SUBSIDY ELIGIBLE INDIVIDUALS
OF INFORMATION COMPARING PREMIUMS OF CERTAIN PRESCRIPTION
DRUG PLANS.
Section 1860D-1(c)(3) of the Social Security Act (42 U.S.C. 1395w-
101(c)(3)) is amended by adding at the end the following new
subparagraph:
``(C) Information on premiums for subsidy eligible
individuals.--
``(i) In general.--For plan year 2022 and
each subsequent plan year, the Secretary shall
disseminate to each subsidy eligible individual
(as defined in section 1860D-14(a)(3))
information under this paragraph comparing
premiums that would apply to such individual
for prescription drug coverage under LIS
benchmark plans, including, in the case of an
individual enrolled in a prescription drug plan
under this part, information that compares the
premium that would apply if such individual
were to remain enrolled in such plan to
premiums that would apply if the individual
were to enroll in other LIS benchmark plans.
``(ii) LIS benchmark plan.--For purposes of
clause (i), the term `LIS benchmark plan'
means, with respect to an individual, a
prescription drug plan under this part that is
offered in the region in which the individual
resides and--
``(I) that provides for a premium
that is not more than the low-income
benchmark premium amount (as defined in
section 1860D-14(b)(2)) for such
region; or
``(II) with respect to which the
premium would be waived as de minimis
pursuant to section 1860D-14(a)(5) for
such individual.''.
SEC. 403. PROVIDING FOR INTELLIGENT ASSIGNMENT OF CERTAIN SUBSIDY
ELIGIBLE INDIVIDUALS AUTO-ENROLLED UNDER MEDICARE
PRESCRIPTION DRUG PLANS AND MA-PD PLANS.
(a) In General.--Section 1860D-1(b)(1) of the Social Security Act
(42 U.S.C. 1395w-101(b)(1)) is amended--
(1) in subparagraph (C)--
(A) by inserting after ``PDP region'' the
following: ``or through use of an intelligent
assignment process that is designed to maximize the
access of such individual to necessary prescription
drugs while minimizing costs to such individual and to
the program under this part to the greatest extent
possible. In the case the Secretary enrolls such
individuals through use of an intelligent assignment
process, such process shall take into account the
extent to which prescription drugs necessary for the
individual are covered in the case of a PDP sponsor of
a prescription drug plan that uses a formulary, the use
of prior authorization or other restrictions on access
to coverage of such prescription drugs by such a
sponsor, and the overall quality of a prescription drug
plan as measured by quality ratings established by the
Secretary''; and
(B) by striking ``Nothing in the previous
sentence'' and inserting ``Nothing in this
subparagraph''; and
(2) in subparagraph (D)--
(A) by inserting after ``PDP region'' the
following: ``or through use of an intelligent
assignment process that is designed to maximize the
access of such individual to necessary prescription
drugs while minimizing costs to such individual and to
the program under this part to the greatest extent
possible. In the case the Secretary enrolls such
individuals through use of an intelligent assignment
process, such process shall take into account the
extent to which prescription drugs necessary for the
individual are covered in the case of a PDP sponsor of
a prescription drug plan that uses a formulary, the use
of prior authorization or other restrictions on access
to coverage of such prescription drugs by such a
sponsor, and the overall quality of a prescription drug
plan as measured by quality ratings established by the
Secretary''; and
(B) by striking ``Nothing in the previous
sentence'' and inserting ``Nothing in this
subparagraph''.
(b) Effective Date.--The amendments made by subsection (a) shall
apply with respect to plan years beginning with plan year 2022.
SEC. 404. EXPANDING ELIGIBILITY FOR LOW-INCOME SUBSIDIES UNDER PART D
OF THE MEDICARE PROGRAM.
Section 1860D-14(a) of the Social Security Act (42 U.S.C. 1395w-
114(a)), as amended by sections 301(d) and 401, is further amended--
(1) in the subsection heading, by striking ``Individuals''
and all that follows through ``Line'' and inserting ``Certain
Individuals'';
(2) in paragraph (1)--
(A) by striking the paragraph heading and inserting
``Individuals with certain low incomes''; and
(B) in the matter preceding subparagraph (A), by
inserting ``(or, with respect to a plan year beginning
on or after January 1, 2022, 150 percent)'' after ``135
percent'';
(3) in paragraph (2)--
(A) by striking the paragraph heading and inserting
``Other low-income individuals''; and
(B) in subparagraph (A)--
(i) by inserting ``(or, with respect to a
plan year beginning on or after January 1,
2022, 150 percent)'' after ``135 percent''; and
(ii) by inserting ``(or, with respect to a
plan year beginning on or after January 1,
2022, 200 percent)'' after ``150 percent''; and
(4) in paragraph (3)(A)(ii), by inserting ``(or, with
respect to a plan year beginning on or after January 1, 2022,
200 percent)'' after ``150 percent''.
SEC. 405. AUTOMATIC ELIGIBILITY OF CERTAIN LOW-INCOME TERRITORIAL
RESIDENTS FOR PREMIUM AND COST-SHARING SUBSIDIES UNDER
THE MEDICARE PROGRAM; SUNSET OF ENHANCED ALLOTMENT
PROGRAM.
(a) Automatic Eligibility of Certain Low-Income Territorial
Residents for Premium and Cost-Sharing Subsidies Under the Medicare
Program.--
(1) In general.--Section 1860D-14(a)(3) of the Social
Security Act (42 U.S.C. 1395w-114(a)(3)) is amended--
(A) in subparagraph (B)(v)--
(i) in subclause (I), by striking ``and''
at the end;
(ii) in subclause (II), by striking the
period and inserting ``; and''; and
(iii) by inserting after subclause (II) the
following new subclause:
``(III) with respect to plan years
beginning on or after January 1, 2021,
shall provide that any part D eligible
individual who is enrolled for medical
assistance under the State Medicaid
plan of a territory (as defined in
section 1935(f)) under title XIX (or a
waiver of such a plan) shall be treated
as a subsidy eligible individual
described in paragraph (1).''; and
(B) in subparagraph (F), by adding at the end the
following new sentence: ``The previous sentence shall
not apply with respect to eligibility determinations
for premium and cost-sharing subsidies under this
section made on or after January 1, 2021.''.
(2) Conforming amendment.--Section 1860D-31(j)(2)(D) of the
Social Security Act (42 U.S.C. 1395w-141(j)(2)(D)) is amended
by adding at the end the following new sentence: ``The previous
sentence shall not apply with respect to amounts made available
to a State under this paragraph on or after January 1, 2021.''.
(b) Sunset of Enhanced Allotment Program.--
(1) In general.--Section 1935(e) of the Social Security Act
(42 U.S.C. 1396u-5(e)) is amended--
(A) in paragraph (1)(A), by inserting after ``such
State'' the following: ``before January 1, 2021''; and
(B) in paragraph (3)--
(i) in subparagraph (A), in the matter
preceding clause (i), by inserting after ``a
year'' the following: ``(before 2021)''; and
(ii) in subparagraph (B)(iii), by striking
``a subsequent year'' and inserting ``each of
fiscal years 2008 through 2020''.
(2) Territory defined.--Section 1935 of the Social Security
Act (42 U.S.C. 1396u-5) is amended by adding at the end the
following new subsection:
``(f) Territory Defined.--In this section, the term `territory'
means Puerto Rico, the Virgin Islands, Guam, the Northern Mariana
Islands, and American Samoa.''.
SEC. 406. AUTOMATIC QUALIFICATION OF CERTAIN MEDICAID BENEFICIARIES FOR
PREMIUM AND COST-SHARING SUBSIDIES UNDER PART D OF THE
MEDICARE PROGRAM.
Clause (v) of section 1860D-14(a)(3)(B) of the Social Security Act
(42 U.S.C. 1395w-114(a)(3)(B)), as amended by section 405, is further
amended--
(1) in subclause (II), by striking ``and'' at the end;
(2) in subclause (III), by striking the period and
inserting ``; and''; and
(3) by inserting after subclause (III) the following new
subclause:
``(IV) with respect to plan years
beginning on or after January 1, 2022,
shall, notwithstanding the preceding
clauses of this subparagraph, provide
that any part D eligible individual not
described in subclause (I), (II), or
(III) who is enrolled, as of the day
before the date on which such
individual attains the age of 65, for
medical assistance under a State plan
under title XIX (or a waiver of such
plan) pursuant to clause (i)(VIII) or
(ii)(XX) of section 1902(a)(10)(A), and
who has income below 200 percent of the
poverty line applicable to a family of
the size involved, shall be treated as
a subsidy eligible individual described
in paragraph (1) for a limited period
of time, as specified by the
Secretary.''.
SEC. 407. ELIMINATING THE RESOURCE REQUIREMENT WITH RESPECT TO SUBSIDY
ELIGIBLE INDIVIDUALS UNDER PART D OF THE MEDICARE
PROGRAM.
Section 1860D-14(a)(3)(A)(iii) of the Social Security Act (42
U.S.C. 1395w-114(a)(3)(A)(iii)) is amended by inserting ``in the case
of a plan year beginning before January 1, 2022,'' before ``meets''.
SEC. 408. PROVIDING FOR CERTAIN RULES REGARDING THE TREATMENT OF
ELIGIBLE RETIREMENT PLANS IN DETERMINING THE ELIGIBILITY
OF INDIVIDUALS FOR PREMIUM AND COST-SHARING SUBSIDIES
UNDER PART D OF THE MEDICARE PROGRAM.
Section 1860D-14(a)(3)(C)(i) of the Social Security Act (42 U.S.C.
1395w-114(a)(3)(C)(i)) is amended, by striking ``except that support
and maintenance furnished in kind shall not be counted as income; and''
and inserting ``except that--
``(I) support and maintenance
furnished in kind shall not be counted
as income; and
``(II) for plan years beginning on
or after January 1, 2022, any
distribution or withdrawal from an
eligible retirement plan (as defined in
subparagraph (B) of section 402(c)(8)
of the Internal Revenue Code of 1986,
but excluding any defined benefit plan
described in clause (iv) or (v) of such
subparagraph and any qualified trust
(as defined in subparagraph (A) of such
section) which is part of such a
defined benefit plan) shall be counted
as income; and''.
TITLE V--DRUG PRICE TRANSPARENCY
SEC. 501. DRUG PRICE TRANSPARENCY.
Part A of title XI of the Social Security Act is amended by adding
at the end the following new sections:
``SEC. 1150C. REPORTING ON DRUG PRICES.
``(a) Definitions.--In this section:
``(1) Manufacturer.--The term `manufacturer' means the
person--
``(A) that holds the application for a drug
approved under section 505 of the Federal Food, Drug,
and Cosmetic Act or licensed under section 351 of the
Public Health Service Act; or
``(B) who is responsible for setting the wholesale
acquisition cost for the drug.
``(2) Qualifying drug.--The term `qualifying drug' means
any drug that is approved under subsection (c) or (j) of
section 505 of the Federal Food, Drug, and Cosmetic Act or
licensed under subsection (a) or (k) of section 351 of the
Public Health Service Act--
``(A) that has a wholesale acquisition cost of $100
or more, adjusted for inflation occurring after the
date of enactment of this section, for a month's supply
or a typical course of treatment that lasts less than a
month, and is--
``(i) subject to section 503(b)(1) of the
Federal Food, Drug, and Cosmetic Act; and
``(ii) not a preventative vaccine; and
``(B) for which, during the previous calendar year,
at least 1 dollar of the total amount of sales were for
individuals enrolled under the Medicare program under
title XVIII or under a State Medicaid plan under title
XIX or under a waiver of such plan.
``(3) Wholesale acquisition cost.--The term `wholesale
acquisition cost' has the meaning given that term in section
1847A(c)(6)(B).
``(b) Report.--
``(1) Report required.--The manufacturer of a qualifying
drug shall submit a report to the Secretary if, with respect to
the qualifying drug--
``(A) there is an increase in the price of the
qualifying drug that results in an increase in the
wholesale acquisition cost of that drug that is equal
to--
``(i) 10 percent or more within a 12-month
period beginning on or after January 1, 2019;
or
``(ii) 25 percent or more within a 36-month
period beginning on or after January 1, 2019;
``(B) the estimated price of the qualifying drug or
spending per individual or per user of such drug (as
estimated by the Secretary) for the applicable year (or
per course of treatment in such applicable year as
determined by the Secretary) is at least $26,000
beginning on or after January 1, 2021; or
``(C) there was an increase in the price of the
qualifying drug that resulted in an increase in the
wholesale acquisition cost of that drug that is equal
to--
``(i) 10 percent or more within a 12-month
period that begins and ends during the 5-year
period preceding January 1, 2021; or
``(ii) 25 percent or more within a 36-month
period that begins and ends during the 5-year
period preceding January 1, 2021.
``(2) Report deadline.--Each report described in paragraph
(1) shall be submitted to the Secretary--
``(A) in the case of a report with respect to an
increase in the price of a qualifying drug that occurs
during the period beginning on January 1, 2019, and
ending on the day that is 60 days after the date of the
enactment of this section, not later than 90 days after
such date of enactment;
``(B) in the case of a report with respect to an
increase in the price of a qualifying drug that occurs
after the period described in subparagraph (A), not
later than 30 days prior to the planned effective date
of such price increase for such qualifying drug;
``(C) in the case of a report with respect to a
qualifying drug that meets the criteria under paragraph
(1)(B), not later than 30 days after such drug meets
such criteria; and
``(D) in the case of a report with respect to an
increase in the price of a qualifying drug that occurs
during a 12-month or 36-month period described in
paragraph (1)(C), not later than April 1, 2021.
``(c) Contents.--A report under subsection (b), consistent with the
standard for disclosures described in section 213.3(d) of title 12,
Code of Federal Regulations (as in effect on the date of enactment of
this section), shall, at a minimum, include--
``(1) with respect to the qualifying drug--
``(A) the percentage by which the manufacturer will
raise the wholesale acquisition cost of the drug within
the 12-month period or 36-month period as described in
subsection (b)(1)(A)(i), (b)(1)(A)(ii), (b)(1)(C)(i),
or (b)(1)(C)(ii), as applicable, and the effective date
of such price increase or the cost associated with a
qualifying drug if such drug meets the criteria under
subsection (b)(1)(B) and the effective date at which
such drug meets such criteria;
``(B) an explanation for, and description of, each
price increase for such drug that will occur during the
12-month period or the 36-month period described in
subsection (b)(1)(A)(i), (b)(1)(A)(ii), (b)(1)(C)(i),
or (b)(1)(C)(ii), as applicable;
``(C) an explanation for, and description of, the
cost associated with a qualifying drug if such drug
meets the criteria under subsection (b)(1)(B), as
applicable;
``(D) if known and different from the manufacturer
of the qualifying drug, the identity of--
``(i) the sponsor or sponsors of any
investigational new drug applications under
section 505(i) of the Federal Food, Drug, and
Cosmetic Act for clinical investigations with
respect to such drug, for which the full
reports are submitted as part of the
application--
``(I) for approval of the drug
under section 505 of such Act; or
``(II) for licensure of the drug
under section 351 of the Pubic Health
Service Act; and
``(ii) the sponsor of an application for
the drug approved under such section 505 of the
Federal Food, Drug, and Cosmetic Act or
licensed under section 351 of the Public Health
Service Act;
``(E) a description of the history of the
manufacturer's price increases for the drug since the
approval of the application for the drug under section
505 of the Federal Food, Drug, and Cosmetic Act or the
issuance of the license for the drug under section 351
of the Public Health Service Act, or since the
manufacturer acquired such approved application or
license, if applicable;
``(F) the current wholesale acquisition cost of the
drug;
``(G) the total expenditures of the manufacturer
on--
``(i) materials and manufacturing for such
drug;
``(ii) acquiring patents and licensing for
such drug; and
``(iii) purchasing or acquiring such drug
from another manufacturer, if applicable;
``(H) the percentage of total expenditures of the
manufacturer on research and development for such drug
that was derived from Federal funds;
``(I) the total expenditures of the manufacturer on
research and development for such drug that is
necessary to demonstrate that it meets applicable
statutory standards for approval under section 505 of
the Federal Food, Drug, and Cosmetic Act or licensure
under section 351 of the Public Health Service Act, as
applicable;
``(J) the total expenditures of the manufacturer on
pursuing new or expanded indications or dosage changes
for such drug under section 505 of the Federal Food,
Drug, and Cosmetic Act or section 351 of the Public
Health Service Act;
``(K) the total expenditures of the manufacturer on
carrying out postmarket requirements related to such
drug, including under section 505(o)(3) of the Federal
Food, Drug, and Cosmetic Act;
``(L) the total revenue and the net profit
generated from the qualifying drug for each calendar
year since the approval of the application for the drug
under section 505 of the Federal Food, Drug, and
Cosmetic Act or the issuance of the license for the
drug under section 351 of the Public Health Service
Act, or since the manufacturer acquired such approved
application or license; and
``(M) the total costs associated with marketing and
advertising for the qualifying drug;
``(2) with respect to the manufacturer--
``(A) the total revenue and the net profit of the
manufacturer for each of the 12-month period described
in subsection (b)(1)(A)(i) or (b)(1)(C)(i) or the 36-
month period described in subsection (b)(1)(A)(ii) or
(b)(1)(C)(ii), as applicable;
``(B) all stock-based performance metrics used by
the manufacturer to determine executive compensation
for each of the 12-month periods described in
subsection (b)(1)(A)(i) or (b)(1)(C)(i) or the 36-month
periods described in subsection (b)(1)(A)(ii) or
(b)(1)(C)(ii), as applicable; and
``(C) any additional information the manufacturer
chooses to provide related to drug pricing decisions,
such as total expenditures on--
``(i) drug research and development; or
``(ii) clinical trials, including on drugs
that failed to receive approval by the Food and
Drug Administration; and
``(3) such other related information as the Secretary
considers appropriate and as specified by the Secretary.
``(d) Information Provided.--The manufacturer of a qualifying drug
that is required to submit a report under subsection (b), shall ensure
that such report and any explanation for, and description of, each
price increase described in subsection (c)(1) shall be truthful, not
misleading, and accurate.
``(e) Civil Monetary Penalty.--Any manufacturer of a qualifying
drug that fails to submit a report for the drug as required by this
section, following notification by the Secretary to the manufacturer
that the manufacturer is not in compliance with this section, shall be
subject to a civil monetary penalty of $75,000 for each day on which
the violation continues.
``(f) False Information.--Any manufacturer that submits a report
for a drug as required by this section that knowingly provides false
information in such report is subject to a civil monetary penalty in an
amount not to exceed $100,000 for each item of false information.
``(g) Public Posting.--
``(1) In general.--Subject to paragraph (4), the Secretary
shall post each report submitted under subsection (b) on the
public website of the Department of Health and Human Services
the day the price increase of a qualifying drug is scheduled to
go into effect.
``(2) Format.--In developing the format in which reports
will be publicly posted under paragraph (1), the Secretary
shall consult with stakeholders, including beneficiary groups,
and shall seek feedback from consumer advocates and readability
experts on the format and presentation of the content of such
reports to ensure that such reports are--
``(A) user-friendly to the public; and
``(B) written in plain language that consumers can
readily understand.
``(3) List.--In addition to the reports submitted under
subsection (b), the Secretary shall also post a list of each
qualifying drug with respect to which the manufacturer was
required to submit such a report in the preceding year and
whether such manufacturer was required to submit such report
based on a qualifying price increase or whether such drug meets
the criteria under subsection (b)(1)(B).
``(4) Protected information.--In carrying out this section,
the Secretary shall enforce applicable law concerning the
protection of confidential commercial information and trade
secrets.
``SEC. 1150D. ANNUAL REPORT TO CONGRESS.
``(a) In General.--Subject to subsection (b), the Secretary shall
submit to the Committees on Energy and Commerce and Ways and Means of
the House of Representatives and the Committees on Health, Education,
Labor, and Pensions and Finance of the Senate, and post on the public
website of the Department of Health and Human Services in a way that is
user-friendly to the public and written in plain language that
consumers can readily understand, an annual report--
``(1) summarizing the information reported pursuant to
section 1150C;
``(2) including copies of the reports and supporting
detailed economic analyses submitted pursuant to such section;
``(3) detailing the costs and expenditures incurred by the
Department of Health and Human Services in carrying out section
1150C; and
``(4) explaining how the Department of Health and Human
Services is improving consumer and provider information about
drug value and drug price transparency.
``(b) Protected Information.--In carrying out this section, the
Secretary shall enforce applicable law concerning the protection of
confidential commercial information and trade secrets.''.
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) In General.--This Act may be cited as the ``Lower Drug Costs
Now Act of 2019''.
(b) Table of Contents.--The table of contents is as follows:
Sec. 1. Short title; table of contents.
TITLE I--LOWERING PRICES THROUGH FAIR DRUG PRICE NEGOTIATION
Sec. 101. Providing for lower prices for certain high-priced single
source drugs.
Sec. 102. Selected drug manufacturer excise tax imposed during
noncompliance periods.
TITLE II--MEDICARE PARTS B AND D PRESCRIPTION DRUG INFLATION REBATES
Sec. 201. Medicare part B rebate by manufacturers.
Sec. 202. Medicare part D rebate by manufacturers.
TITLE III--PART D IMPROVEMENTS AND MAXIMUM OUT-OF-POCKET CAP FOR
MEDICARE BENEFICIARIES
Sec. 301. Medicare part D benefit redesign.
TITLE I--LOWERING PRICES THROUGH FAIR DRUG PRICE NEGOTIATION
SEC. 101. PROVIDING FOR LOWER PRICES FOR CERTAIN HIGH-PRICED SINGLE
SOURCE DRUGS.
(a) Program To Lower Prices for Certain High-Priced Single Source
Drugs.--Title XI of the Social Security Act (42 U.S.C. 1301 et seq.) is
amended by adding at the end the following new part:
``PART E--FAIR PRICE NEGOTIATION PROGRAM TO LOWER PRICES FOR CERTAIN
HIGH-PRICED SINGLE SOURCE DRUGS
``SEC. 1191. ESTABLISHMENT OF PROGRAM.
``(a) In General.--The Secretary shall establish a Fair Price
Negotiation Program (in this part referred to as the `program'). Under
the program, with respect to each price applicability period, the
Secretary shall--
``(1) publish a list of selected drugs in accordance with
section 1192;
``(2) enter into agreements with manufacturers of selected
drugs with respect to such period, in accordance with section
1193;
``(3) negotiate and, if applicable, renegotiate maximum
fair prices for such selected drugs, in accordance with section
1194; and
``(4) carry out the administrative duties described in
section 1196.
``(b) Definitions Relating to Timing.--For purposes of this part:
``(1) Initial price applicability year.--The term `initial
price applicability year' means a plan year (beginning with
plan year 2023) or, if agreed to in an agreement under section
1193 by the Secretary and manufacturer involved, a period of
more than one plan year (beginning on or after January 1,
2023).
``(2) Price applicability period.--The term `price
applicability period' means, with respect to a drug, the period
beginning with the initial price applicability year with
respect to which such drug is a selected drug and ending with
the last plan year during which the drug is a selected drug.
``(3) Selected drug publication date.--The term `selected
drug publication date' means, with respect to each initial
price applicability year, April 15 of the plan year that begins
2 years prior to such year.
``(4) Voluntary negotiation period.--The term `voluntary
negotiation period' means, with respect to an initial price
applicability year with respect to a selected drug, the
period--
``(A) beginning on the sooner of--
``(i) the date on which the manufacturer of
the drug and the Secretary enter into an
agreement under section 1193 with respect to
such drug; or
``(ii) June 15 following the selected drug
publication date with respect to such selected
drug; and
``(B) ending on March 31 of the year that begins
one year prior to the initial price applicability year.
``(c) Other Definitions.--For purposes of this part:
``(1) Fair price eligible individual.--The term `fair price
eligible individual' means, with respect to a selected drug--
``(A) in the case such drug is furnished or
dispensed to the individual at a pharmacy or by a mail
order service--
``(i) an individual who is enrolled under a
prescription drug plan under part D of title
XVIII or an MA-PD plan under part C of such
title under which coverage is provided for such
drug; and
``(ii) an individual who is enrolled under
a group health plan or health insurance
coverage offered in the group or individual
market (as such terms are defined in section
2791 of the Public Health Service Act) with
respect to which there is in effect an
agreement with the Secretary under section 1197
with respect to such selected drug as so
furnished or dispensed; and
``(B) in the case such drug is furnished or
administered to the individual by a hospital,
physician, or other provider of services or supplier--
``(i) an individual who is entitled to
benefits under part A of title XVIII or
enrolled under part B of such title if such
selected drug is covered under the respective
part; and
``(ii) an individual who is enrolled under
a group health plan or health insurance
coverage offered in the group or individual
market (as such terms are defined in section
2791 of the Public Health Service Act) with
respect to which there is in effect an
agreement with the Secretary under section 1197
with respect to such selected drug as so
furnished or administered.
``(2) Maximum fair price.--The term `maximum fair price'
means, with respect to a plan year during a price applicability
period and with respect to a selected drug (as defined in
section 1192(c)) with respect to such period, the price
published pursuant to section 1195 in the Federal Register for
such drug and year.
``(3) Average international market price defined.--
``(A) In general.--The terms `average international
market price' and `AIM price' mean, with respect to a
drug, the average price (which shall be the net average
price, if practicable, and volume-weighted, if
practicable) for a unit (as defined in paragraph (4))
of the drug for sales of such drug (calculated across
different dosage forms and strengths of the drug and
not based on the specific formulation or package size
or package type), as computed (as of the date of
publication of such drug as a selected drug under
section 1192(a)) in all countries described in clause
(ii) of subparagraph (B) that are applicable countries
(as described in clause (i) of such subparagraph) with
respect to such drug.
``(B) Applicable countries.--
``(i) In general.--For purposes of
subparagraph (A), a country described in clause
(ii) is an applicable country described in this
clause with respect to a drug if there is
available an average price for any unit for the
drug for sales of such drug in such country.
``(ii) Countries described.--For purposes
of this paragraph, the following are countries
described in this clause:
``(I) Australia.
``(II) Canada.
``(III) France.
``(IV) Germany.
``(V) Japan.
``(VI) The United Kingdom.
``(4) Unit.--The term `unit' means, with respect to a drug,
the lowest identifiable quantity (such as a capsule or tablet,
milligram of molecules, or grams) of the drug that is
dispensed.
``SEC. 1192. SELECTION OF NEGOTIATION-ELIGIBLE DRUGS AS SELECTED DRUGS.
``(a) In General.--Not later than the selected drug publication
date with respect to an initial price applicability year, the Secretary
shall select and publish in the Federal Register a list of--
``(1)(A) with respect to an initial price applicability
year during the period beginning with 2023 and ending with
2027, at least 25 negotiation-eligible drugs described in
subparagraphs (A) and (B), but not subparagraph (C), of
subsection (d)(1) (or, with respect to an initial price
applicability year during such period beginning after 2023, the
maximum number (if such number is less than 25) of such
negotiation-eligible drugs for the year) with respect to such
year;
``(B) with respect to an initial price applicability year
during the period beginning with 2028 and ending with 2032, at
least 30 negotiation-eligible drugs described in subparagraphs
(A) and (B), but not subparagraph (C), of subsection (d)(1)
(or, with respect to an initial price applicability year during
such period, the maximum number (if such number is less than
30) of such negotiation-eligible drugs for the year) with
respect to such year; and
``(C) with respect to an initial price applicability year
beginning after 2032, at least 35 negotiation-eligible drugs
described in subparagraphs (A) and (B), but not subparagraph
(C), of subsection (d)(1) (or, with respect to an initial price
applicability year during such period, the maximum number (if
such number is less than 35) of such negotiation-eligible drugs
for the year) with respect to such year;
``(2) all negotiation-eligible drugs described in
subparagraph (C) of such subsection with respect to such year;
and
``(3) all new-entrant negotiation-eligible drugs (as
defined in subsection (g)(1)) with respect to such year.
Each drug published on the list pursuant to the previous sentence shall
be subject to the negotiation process under section 1194 for the
voluntary negotiation period with respect to such initial price
applicability year (and the renegotiation process under such section as
applicable for any subsequent year during the applicable price
applicability period). In applying this subsection, any negotiation-
eligible drug that is selected under this subsection for an initial
price applicability year shall not count toward the required minimum
amount of drugs to be selected under paragraph (1) for any subsequent
year, including such a drug so selected that is subject to
renegotiation under section 1194.
``(b) Selection of Drugs.--In carrying out subsection (a)(1) the
Secretary shall select for inclusion on the published list described in
subsection (a) with respect to a price applicability period, the
negotiation-eligible drugs that the Secretary projects will result in
the greatest savings to the Federal Government or fair price eligible
individuals during the price applicability period. In making this
projection of savings for drugs for which there is an AIM price for a
price applicability period, the savings shall be projected across
different dosage forms and strengths of the drugs and not based on the
specific formulation or package size or package type of the drugs,
taking into consideration both the volume of drugs for which payment is
made, to the extent such data is available, and the amount by which the
net price for the drugs exceeds the AIM price for the drugs.
``(c) Selected Drug.--For purposes of this part, each drug included
on the list published under subsection (a) with respect to an initial
price applicability year shall be referred to as a `selected drug' with
respect to such year and each subsequent plan year beginning before the
first plan year beginning after the date on which the Secretary
determines two or more drug products--
``(1) are approved or licensed (as applicable)--
``(A) under section 505(j) of the Federal Food,
Drug, and Cosmetic Act using such drug as the listed
drug; or
``(B) under section 351(k) of the Public Health
Service Act using such drug as the reference product;
and
``(2) continue to be marketed.
``(d) Negotiation-Eligible Drug.--
``(1) In general.--For purposes of this part, the term
`negotiation-eligible drug' means, with respect to the selected
drug publication date with respect to an initial price
applicability year, a qualifying single source drug, as defined
in subsection (e), that meets any of the following criteria:
``(A) Covered part d drugs.--The drug is among the
125 covered part D drugs (as defined in section 1860D-
2(e)) for which there was an estimated greatest net
spending under parts C and D of title XVIII, as
determined by the Secretary, during the most recent
plan year prior to such drug publication date for which
data are available.
``(B) Other drugs.--The drug is among the 125 drugs
for which there was an estimated greatest net spending
in the United States (including the 50 States, the
District of Columbia, and the territories of the United
States), as determined by the Secretary, during the
most recent plan year prior to such drug publication
date for which data are available.
``(C) Insulin.--The drug is a qualifying single
source drug described in subsection (e)(3).
``(2) Clarification.--In determining whether a qualifying
single source drug satisfies any of the criteria described in
paragraph (1), the Secretary shall, to the extent practicable,
use data that is aggregated across dosage forms and strengths
of the drug and not based on the specific formulation or
package size or package type of the drug.
``(3) Publication.--Not later than the selected drug
publication date with respect to an initial price applicability
year, the Secretary shall publish in the Federal Register a
list of negotiation-eligible drugs with respect to such
selected drug publication date.
``(e) Qualifying Single Source Drug.--For purposes of this part,
the term `qualifying single source drug' means any of the following:
``(1) Drug products.--A drug that--
``(A) is approved under section 505(c) of the
Federal Food, Drug, and Cosmetic Act and continues to
be marketed pursuant to such approval; and
``(B) is not the listed drug for any drug that is
approved and continues to be marketed under section
505(j) of such Act.
``(2) Biological products.--A biological product that--
``(A) is licensed under section 351(a) of the
Public Health Service Act, including any product that
has been deemed to be licensed under section 351 of
such Act pursuant to section 7002(e)(4) of the
Biologics Price Competition and Innovation Act of 2009,
and continues to be marketed under section 351 of such
Act; and
``(B) is not the reference product for any
biological product that is licensed and continues to be
marketed under section 351(k) of such Act.
``(3) Insulin product.--Notwithstanding paragraphs (1) and
(2), any insulin product that is approved under subsection (c)
or (j) of section 505 of the Federal Food, Drug, and Cosmetic
Act or licensed under subsection (a) or (k) of section 351 of
the Public Health Service Act and continues to be marketed
under such section 505 or 351, including any insulin product
that has been deemed to be licensed under section 351(a) of the
Public Health Service Act pursuant to section 7002(e)(4) of the
Biologics Price Competition and Innovation Act of 2009 and
continues to be marketed pursuant to such licensure.
For purposes of applying paragraphs (1) and (2), a drug or biological
product that is marketed by the same sponsor or manufacturer (or an
affiliate thereof or a cross-licensed producer or distributor) as the
listed drug or reference product described in such respective paragraph
shall not be taken into consideration.
``(f) Information on International Drug Prices.--For purposes of
determining which negotiation-eligible drugs to select under subsection
(a) and, in the case of such drugs that are selected drugs, to
determine the maximum fair price for such a drug and whether such
maximum fair price should be renegotiated under section 1194, the
Secretary shall use data relating to the AIM price with respect to such
drug as available or provided to the Secretary and shall on an ongoing
basis request from manufacturers of selected drugs information on the
AIM price of such a drug.
``(g) New-entrant Negotiation-eligible Drugs.--
``(1) In general.--For purposes of this part, the term
`new-entrant negotiation-eligible drug' means, with respect to
the selected drug publication date with respect to an initial
price applicability year, a qualifying single source drug--
``(A) that is first approved or licensed, as
described in paragraph (1), (2), or (3) of subsection
(e), as applicable, during the year preceding such
selected drug publication date; and
``(B) that the Secretary determines under paragraph
(2) is likely to be a negotiation-eligible drug with
respect to the subsequent selected drug publication
date.
``(2) Determination.--In the case of a qualifying single
source drug that meets the criteria described in subparagraphs
(A) and (B) of paragraph (1), with respect to an initial price
applicability year, if the wholesale acquisition cost at which
such drug is first marketed in the United States is equal to or
greater than the median household income (as determined
according to the most recent data collected by the United
States Census Bureau), the Secretary shall determine before the
selected drug publication date with respect to the initial
price applicability year, if the drug is likely to be included
as a negotiation-eligible drug with respect to the subsequent
selected drug publication date, based on the projected spending
under title XVIII or in the United States on such drug. For
purposes of this paragraph the term `United States' includes
the 50 States, the District of Columbia, and the territories of
the United States.
``SEC. 1193. MANUFACTURER AGREEMENTS.
``(a) In General.--For purposes of section 1191(a)(2), the
Secretary shall enter into agreements with manufacturers of selected
drugs with respect to a price applicability period, by not later than
June 15 following the selected drug publication date with respect to
such selected drug, under which--
``(1) during the voluntary negotiation period for the
initial price applicability year for the selected drug, the
Secretary and manufacturer, in accordance with section 1194,
negotiate to determine (and, by not later than the last date of
such period and in accordance with subsection (c), agree to) a
maximum fair price for such selected drug of the manufacturer
in order to provide access to such price--
``(A) to fair price eligible individuals who with
respect to such drug are described in subparagraph (A)
of section 1191(c)(1) and are furnished or dispensed
such drug during, subject to subparagraph (2), the
price applicability period; and
``(B) to hospitals, physicians, and other providers
of services and suppliers with respect to fair price
eligible individuals who with respect to such drug are
described in subparagraph (B) of such section and are
furnished or administered such drug during, subject to
subparagraph (2), the price applicability period;
``(2) the Secretary and the manufacturer shall, in
accordance with a process and during a period specified by the
Secretary pursuant to rulemaking, renegotiate (and, by not
later than the last date of such period and in accordance with
subsection (c), agree to) the maximum fair price for such drug
if the Secretary determines that there is a material change in
any of the factors described in section 1194(d) relating to the
drug, including changes in the AIM price for such drug, in
order to provide access to such maximum fair price (as so
renegotiated)--
``(A) to fair price eligible individuals who with
respect to such drug are described in subparagraph (A)
of section 1191(c)(1) and are furnished or dispensed
such drug during any year during the price
applicability period (beginning after such
renegotiation) with respect to such selected drug; and
``(B) to hospitals, physicians, and other providers
of services and suppliers with respect to fair price
eligible individuals who with respect to such drug are
described in subparagraph (B) of such section and are
furnished or administered such drug during any year
described in subparagraph (A);
``(3) the maximum fair price (including as renegotiated
pursuant to paragraph (2)), with respect to such a selected
drug, shall be provided to fair price eligible individuals, who
with respect to such drug are described in subparagraph (A) of
section 1191(c)(1), at the pharmacy or by a mail order service
at the point-of-sale of such drug;
``(4) the manufacturer, subject to subsection (c), submits
to the Secretary, in a form and manner specified by the
Secretary--
``(A) for the voluntary negotiation period for the
price applicability period (and, if applicable, before
any period of renegotiation specified pursuant to
paragraph (2)) with respect to such drug all
information that the Secretary requires to carry out
the negotiation (or renegotiation process) under this
part, including information described in section
1192(f) and section 1194(d)(1); and
``(B) on an ongoing basis, information on changes
in prices for such drug that would affect the AIM price
for such drug or otherwise provide a basis for
renegotiation of the maximum fair price for such drug
pursuant to paragraph (2);
``(5) the manufacturer agrees that in the case the selected
drug of a manufacturer is a drug described in subsection (c),
the manufacturer will, in accordance with such subsection, make
any payment required under such subsection with respect to such
drug; and
``(6) the manufacturer complies with requirements imposed
by the Secretary for purposes of administering the program,
including with respect to the duties described in section 1196.
``(b) Agreement in Effect Until Drug Is No Longer a Selected
Drug.--An agreement entered into under this section shall be effective,
with respect to a drug, until such drug is no longer considered a
selected drug under section 1192(c).
``(c) Special Rule for Certain Selected Drugs Without AIM Price.--
``(1) In general.--In the case of a selected drug for which
there is no AIM price available with respect to the initial
price applicability year for such drug and for which an AIM
price becomes available beginning with respect to a subsequent
plan year during the price applicability period for such drug,
if the Secretary determines that the amount described in
paragraph (2)(A) for a unit of such drug is greater than the
amount described in paragraph (2)(B) for a unit of such drug,
then by not later than one year after the date of such
determination, the manufacturer of such selected drug shall pay
to the Treasury an amount equal to the product of--
``(A) the difference between such amount described
in paragraph (2)(A) for a unit of such drug and such
amount described in paragraph (2)(B) for a unit of such
drug; and
``(B) the number of units of such drug sold in the
United States, including the 50 States, the District of
Columbia, and the territories of the United States,
during the period described in paragraph (2)(B).
``(2) Amounts described.--
``(A) Weighted average price before aim price
available.--For purposes of paragraph (1), the amount
described in this subparagraph for a selected drug
described in such paragraph, is the amount equal to the
weighted average manufacturer price (as defined in
section 1927(k)(1)) for such dosage strength and form
for the drug during the period beginning with the first
plan year for which the drug is included on the list of
negotiation-eligible drugs published under section
1192(d) and ending with the last plan year during the
price applicability period for such drug with respect
to which there is no AIM price available for such drug.
``(B) Amount multiplier after aim price
available.--For purposes of paragraph (1), the amount
described in this subparagraph for a selected drug
described in such paragraph, is the amount equal to 200
percent of the AIM price for such drug with respect to
the first plan year during the price applicability
period for such drug with respect to which there is an
AIM price available for such drug.
``(d) Confidentiality of Information.--Information submitted to the
Secretary under this part by a manufacturer of a selected drug that is
proprietary information of such manufacturer (as determined by the
Secretary) may be used only by the Secretary or disclosed to and used
by the Comptroller General of the United States or the Medicare Payment
Advisory Commission for purposes of carrying out this part.
``(e) Regulations.--
``(1) In general.--The Secretary shall, pursuant to
rulemaking, specify, in accordance with paragraph (2), the
information that must be submitted under subsection (a)(4).
``(2) Information specified.--Information described in
paragraph (1), with respect to a selected drug, shall include
information on sales of the drug (by the manufacturer of the
drug or by another entity under license or other agreement with
the manufacturer, with respect to the sales of such drug,
regardless of the name under which the drug is sold) in any
foreign country that is part of the AIM price. The Secretary
shall verify, to the extent practicable, such sales from
appropriate officials of the government of the foreign country
involved.
``(f) Compliance With Requirements for Administration of Program.--
Each manufacturer with an agreement in effect under this section shall
comply with requirements imposed by the Secretary or a third party with
a contract under section 1196(c)(1), as applicable, for purposes of
administering the program.
``SEC. 1194. NEGOTIATION AND RENEGOTIATION PROCESS.
``(a) In General.--For purposes of this part, under an agreement
under section 1193 between the Secretary and a manufacturer of a
selected drug, with respect to the period for which such agreement is
in effect and in accordance with subsections (b) and (c), the Secretary
and the manufacturer--
``(1) shall during the voluntary negotiation period with
respect to the initial price applicability year for such drug,
in accordance with this section, negotiate a maximum fair price
for such drug for the purpose described in section 1193(a)(1);
and
``(2) as applicable pursuant to section 1193(a)(2) and in
accordance with the process specified pursuant to such section,
renegotiate such maximum fair price for such drug for the
purpose described in such section.
``(b) Negotiating Methodology and Objective.--
``(1) In general.--The Secretary shall develop and use a
consistent methodology for negotiations under subsection (a)
that, in accordance with paragraph (2) and subject to paragraph
(3), achieves the lowest maximum fair price for each selected
drug while appropriately rewarding innovation.
``(2) Prioritizing factors.--In considering the factors
described in subsection (d) in negotiating (and, as applicable,
renegotiating) the maximum fair price for a selected drug, the
Secretary shall, to the extent practicable, consider all of the
available factors listed but shall prioritize the following
factors:
``(A) Research and development costs.--The factor
described in paragraph (1)(A) of subsection (d).
``(B) Market data.--The factor described in
paragraph (1)(B) of such subsection.
``(C) Unit costs of production and distribution.--
The factor described in paragraph (1)(C) of such
subsection.
``(D) Comparison to existing therapeutic
alternatives.--The factor described in paragraph (2)(A)
of such subsection.
``(3) Requirement.--
``(A) In general.--In negotiating the maximum fair
price of a selected drug, with respect to an initial
price applicability year for the selected drug, and, as
applicable, in renegotiating the maximum fair price for
such drug, with respect to a subsequent year during the
price applicability period for such drug, in the case
that the manufacturer of the selected drug offers under
the negotiation or renegotiation, as applicable, a
price for such drug that is not more than the target
price described in subparagraph (B) for such drug for
the respective year, the Secretary shall agree under
such negotiation or renegotiation, respectively, to
such offered price as the maximum fair price.
``(B) Target price.--
``(i) In general.--Subject to clause (ii),
the target price described in this subparagraph
for a selected drug with respect to a year, is
the average price (which shall be the net
average price, if practicable, and volume-
weighted, if practicable) for a unit of such
drug for sales of such drug, as computed
(across different dosage forms and strengths of
the drug and not based on the specific
formulation or package size or package type of
the drug) in the applicable country described
in section 1191(c)(3)(B) with respect to such
drug that, with respect to such year, has the
lowest average price for such drug as compared
to the average prices (as so computed) of such
drug with respect to such year in the other
applicable countries described in such section
with respect to such drug.
``(ii) Selected drugs without aim price.--
In applying this paragraph in the case of
negotiating the maximum fair price of a
selected drug for which there is no AIM price
available with respect to the initial price
applicability year for such drug, or, as
applicable, renegotiating the maximum fair
price for such drug with respect to a
subsequent year during the price applicability
period for such drug before the first plan year
for which there is an AIM price available for
such drug, the target price described in this
subparagraph for such drug and respective year
is the amount that is 80 percent of the average
manufacturer price (as defined in section
1927(k)(1)) for such drug and year.
``(4) Annual report.--After the completion of each
voluntary negotiation period, the Secretary shall submit to
Congress a report on the maximum fair prices negotiated (or, as
applicable, renegotiated) for such period. Such report shall
include information on how such prices so negotiated (or
renegotiated) meet the requirements of this part, including the
requirements of this subsection.
``(c) Limitation.--
``(1) In general.--Subject to paragraph (2), the maximum
fair price negotiated (including as renegotiated) under this
section for a selected drug, with respect to each plan year
during a price applicability period for such drug, shall not
exceed 120 percent of the AIM price applicable to such drug
with respect to such year.
``(2) Selected drugs without aim price.--In the case of a
selected drug for which there is no AIM price available with
respect to the initial price applicability year for such drug,
for each plan year during the price applicability period before
the first plan year for which there is an AIM price available
for such drug, the maximum fair price negotiated (including as
renegotiated) under this section for the selected drug shall
not exceed the amount equal to 85 percent of the average
manufacturer price for the drug with respect to such year.
``(d) Considerations.--For purposes of negotiating and, as
applicable, renegotiating (including for purposes of determining
whether to renegotiate) the maximum fair price of a selected drug under
this part with the manufacturer of the drug, the Secretary shall,
consistent with subsection (b)(2), take into consideration the
following factors:
``(1) Manufacturer-specific information.--The following
information, including as submitted by the manufacturer:
``(A) Research and development costs of the
manufacturer for the drug and the extent to which the
manufacturer has recouped research and development
costs.
``(B) Market data for the drug, including the
distribution of sales across different programs and
purchasers and projected future revenues for the drug.
``(C) Unit costs of production and distribution of
the drug.
``(D) Prior Federal financial support for novel
therapeutic discovery and development with respect to
the drug.
``(E) Data on patents and on existing and pending
exclusivity for the drug.
``(F) National sales data for the drug.
``(G) Information on clinical trials for the drug
in the United States or in applicable countries
described in section 1191(c)(3)(B).
``(2) Information on alternative products.--The following
information:
``(A) The extent to which the drug represents a
therapeutic advance as compared to existing therapeutic
alternatives and, to the extent such information is
available, the costs of such existing therapeutic
alternatives.
``(B) Information on approval by the Food and Drug
Administration of alternative drug products.
``(C) Information on comparative effectiveness
analysis for such products, taking into consideration
the effects of such products on specific populations,
such as individuals with disabilities, the elderly,
terminally ill, children, and other patient
populations.
In considering information described in subparagraph (C), the
Secretary shall not use evidence or findings from comparative
clinical effectiveness research in a manner that treats
extending the life of an elderly, disabled, or terminally ill
individual as of lower value than extending the life of an
individual who is younger, nondisabled, or not terminally ill.
Nothing in the previous sentence shall affect the application
or consideration of an AIM price for a selected drug.
``(3) Foreign sales information.--To the extent available
on a timely basis, including as provided by a manufacturer of
the selected drug or otherwise, information on sales of the
selected drug in each of the countries described in section
1191(c)(3)(B).
``(4) Additional information.--Information submitted to the
Secretary, in accordance with a process specified by the
Secretary, by other parties that are affected by the
establishment of a maximum fair price for the selected drug.
``(e) Request for Information.--For purposes of negotiating and, as
applicable, renegotiating (including for purposes of determining
whether to renegotiate) the maximum fair price of a selected drug under
this part with the manufacturer of the drug, with respect to a price
applicability period, and other relevant data for purposes of this
section--
``(1) the Secretary shall, not later than the selected drug
publication date with respect to the initial price
applicability year of such period, request drug pricing
information from the manufacturer of such selected drug,
including information described in subsection (d)(1); and
``(2) by not later than October 1 following the selected
drug publication date, the manufacturer of such selected drug
shall submit to the Secretary such requested information in
such form and manner as the Secretary may require.
The Secretary shall request, from the manufacturer or others, such
additional information as may be needed to carry out the negotiation
and renegotiation process under this section.
``SEC. 1195. PUBLICATION OF MAXIMUM FAIR PRICES.
``(a) In General.--With respect to an initial price applicability
year and selected drug with respect to such year, not later than April
1 of the plan year prior to such initial price applicability year, the
Secretary shall publish in the Federal Register the maximum fair price
for such drug negotiated under this part with the manufacturer of such
drug.
``(b) Updates.--
``(1) Subsequent year maximum fair prices.--For a selected
drug, for each plan year subsequent to the initial price
applicability year for such drug with respect to which an
agreement for such drug is in effect under section 1193, the
Secretary shall publish in the Federal Register--
``(A) subject to subparagraph (B), the amount equal
to the maximum fair price published for such drug for
the previous year, increased by the annual percentage
increase in the consumer price index for all urban
consumers (all items; U.S. city average) as of
September of such previous year; or
``(B) in the case the maximum fair price for such
drug was renegotiated, for the first year for which
such price as so renegotiated applies, such
renegotiated maximum fair price.
``(2) Prices negotiated after deadline.--In the case of a
selected drug with respect to an initial price applicability
year for which the maximum fair price is determined under this
part after the date of publication under this section, the
Secretary shall publish such maximum fair price in the Federal
Register by not later than 30 days after the date such maximum
price is so determined.
``SEC. 1196. ADMINISTRATIVE DUTIES; COORDINATION PROVISIONS.
``(a) Administrative Duties.--
``(1) In general.--For purposes of section 1191, the
administrative duties described in this section are the
following:
``(A) The establishment of procedures (including
through agreements with manufacturers under this part,
contracts with prescription drug plans under part D of
title XVIII and MA-PD plans under part C of such title,
and agreements under section 1197 with group health
plans and health insurance issuers of health insurance
coverage offered in the individual or group market)
under which the maximum fair price for a selected drug
is provided to fair price eligible individuals, who
with respect to such drug are described in subparagraph
(A) of section 1191(c)(1), at pharmacies or by mail
order service at the point-of-sale of the drug for the
applicable price period for such drug and providing
that such maximum fair price is used for determining
cost-sharing under such plans or coverage for the
selected drug.
``(B) The establishment of procedures (including
through agreements with manufacturers under this part
and contracts with hospitals, physicians, and other
providers of services and suppliers and agreements
under section 1197 with group health plans and health
insurance issuers of health insurance coverage offered
in the individual or group market) under which, in the
case of a selected drug furnished or administered by
such a hospital, physician, or other provider of
services or supplier to fair price eligible individuals
(who with respect to such drug are described in
subparagraph (B) of section 1191(c)(1)), the maximum
fair price for the selected drug is provided to such
hospitals, physicians, and other providers of services
and suppliers (as applicable) with respect to such
individuals and providing that such maximum fair price
is used for determining cost-sharing under the
respective part, plan, or coverage for the selected
drug.
``(C) The establishment of procedures (including
through agreements and contracts described in
subparagraphs (A) and (B)) to ensure that, not later
than 90 days after the dispensing of a selected drug to
a fair price eligible individual by a pharmacy or mail
order service, the pharmacy or mail order service is
reimbursed for an amount equal to the difference
between--
``(i) the lesser of--
``(I) the wholesale acquisition
cost of the drug;
``(II) the national average drug
acquisition cost of the drug; and
``(III) any other similar
determination of pharmacy acquisition
costs of the drug, as determined by the
Secretary; and
``(ii) the maximum fair price for the drug.
``(D) The establishment of procedures to ensure
that the maximum fair price for a selected drug is
applied before--
``(i) any coverage or financial assistance
under other health benefit plans or programs
that provide coverage or financial assistance
for the purchase or provision of prescription
drug coverage on behalf of fair price eligible
individuals as the Secretary may specify; and
``(ii) any other discounts.
``(E) The establishment of procedures to enter into
appropriate agreements and protocols for the ongoing
computation of AIM prices for selected drugs,
including, to the extent possible, to compute the AIM
price for selected drugs and including by providing
that the manufacturer of such a selected drug should
provide information for such computation not later than
3 months after the first date of the voluntary
negotiation period for such selected drug.
``(F) The establishment of procedures to compute
and apply the maximum fair price across different
strengths and dosage forms of a selected drug and not
based on the specific formulation or package size or
package type of the drug.
``(G) The establishment of procedures to negotiate
and apply the maximum fair price in a manner that does
not include any dispensing or similar fee.
``(H) The establishment of procedures to carry out
the provisions of this part, as applicable, with
respect to--
``(i) fair price eligible individuals who
are enrolled under a prescription drug plan
under part D of title XVIII or an MA-PD plan
under part C of such title; and
``(ii) fair price eligible individuals who
are enrolled under a group health plan or
health insurance coverage offered by a health
insurance issuer in the individual or group
market with respect to which there is an
agreement in effect under section 1197.
``(I) The establishment of a negotiation process
and renegotiation process in accordance with section
1194, including a process for acquiring information
described in subsection (d) of such section and
determining amounts described in subsection (b) of such
section.
``(J) The provision of a reasonable dispute
resolution mechanism to resolve disagreements between
manufacturers, fair price eligible individuals, and the
third party with a contract under subsection (c)(1).
``(2) Monitoring compliance.--
``(A) In general.--The Secretary shall monitor
compliance by a manufacturer with the terms of an
agreement under section 1193, including by establishing
a mechanism through which violations of such terms may
be reported.
``(B) Notification.--If a third party with a
contract under subsection (c)(1) determines that the
manufacturer is not in compliance with such agreement,
the third party shall notify the Secretary of such
noncompliance for appropriate enforcement under section
4192 of the Internal Revenue Code of 1986 or section
1198, as applicable.
``(b) Collection of Data.--
``(1) From prescription drug plans and ma-pd plans.--The
Secretary may collect appropriate data from prescription drug
plans under part D of title XVIII and MA-PD plans under part C
of such title in a timeframe that allows for maximum fair
prices to be provided under this part for selected drugs.
``(2) From health plans.--The Secretary may collect
appropriate data from group health plans or health insurance
issuers offering group or individual health insurance coverage
in a timeframe that allows for maximum fair prices to be
provided under this part for selected drugs.
``(3) Coordination of data collection.--To the extent
feasible, as determined by the Secretary, the Secretary shall
ensure that data collected pursuant to this subsection is
coordinated with, and not duplicative of, other data collection
efforts.
``(c) Contract With Third Parties.--
``(1) In general.--The Secretary may enter into a contract
with 1 or more third parties to administer the requirements
established by the Secretary in order to carry out this part.
At a minimum, the contract with a third party under the
preceding sentence shall require that the third party--
``(A) receive and transmit information between the
Secretary, manufacturers, and other individuals or
entities the Secretary determines appropriate;
``(B) receive, distribute, or facilitate the
distribution of funds of manufacturers to appropriate
individuals or entities in order to meet the
obligations of manufacturers under agreements under
this part;
``(C) provide adequate and timely information to
manufacturers, consistent with the agreement with the
manufacturer under this part, as necessary for the
manufacturer to fulfill its obligations under this
part; and
``(D) permit manufacturers to conduct periodic
audits, directly or through contracts, of the data and
information used by the third party to determine
discounts for applicable drugs of the manufacturer
under the program.
``(2) Performance requirements.--The Secretary shall
establish performance requirements for a third party with a
contract under paragraph (1) and safeguards to protect the
independence and integrity of the activities carried out by the
third party under the program under this part.
``(d) Coordination With 340B Program.--In the case of a
manufacturer of a selected drug, with respect to an initial price
applicability year, for each year with respect to which a maximum fair
price is applied under this part for such drug, such drug shall not be
considered a covered outpatient drug subject to an agreement under
section 340B of the Public Health Service Act.
``SEC. 1197. VOLUNTARY PARTICIPATION BY OTHER HEALTH PLANS.
``(a) Agreement to Participate Under Program.--
``(1) In general.--Subject to paragraph (2), under the
program under this part the Secretary shall be treated as
having in effect an agreement with a group health plan or
health insurance issuer offering health insurance coverage (as
such terms are defined in section 2791 of the Public Health
Service Act), with respect to a price applicability period and
a selected drug with respect to such period--
``(A) with respect to such selected drug furnished
or dispensed at a pharmacy or by mail order service if
coverage is provided under such plan or coverage during
such period for such selected drug as so furnished or
dispensed; and
``(B) with respect to such selected drug furnished
or administered by a hospital, physician, or other
provider of services or supplier if coverage is
provided under such plan or coverage during such period
for such selected drug as so furnished or administered.
``(2) Opting out of agreement.--The Secretary shall not be
treated as having in effect an agreement under the program
under this part with a group health plan or health insurance
issuer offering health insurance coverage with respect to a
price applicability period and a selected drug with respect to
such period if such a plan or issuer affirmatively elects,
through a process specified by the Secretary, not to
participate under the program with respect to such period and
drug.
``(b) Publication of Election.--With respect to each price
applicability period and each selected drug with respect to such
period, the Secretary and the Secretary of Labor and the Secretary of
the Treasury, as applicable, shall make public a list of each group
health plan and each issuer of health insurance coverage, with respect
to which coverage is provided under such plan or coverage for such
drug, that has elected under subsection (a) not to participate under
the program with respect to such period and drug.
``SEC. 1198. CIVIL MONETARY PENALTY.
``(a) Violations Relating To Offering of Maximum Fair Price.--Any
manufacturer of a selected drug that has entered into an agreement
under section 1193, with respect to a plan year during the price
applicability period for such drug, that does not provide access to a
price that is not more than the maximum fair price (or a lesser price)
for such drug for such year--
``(1) to a fair price eligible individual who with respect
to such drug is described in subparagraph (A) of section
1191(c)(1) and who is furnished or dispensed such drug during
such year; or
``(2) to a hospital, physician, or other provider of
services or supplier with respect to fair price eligible
individuals who with respect to such drug is described in
subparagraph (B) of such section and is furnished or
administered such drug by such hospital, physician, or provider
or supplier during such year;
shall be subject to a civil monetary penalty equal to ten times the
amount equal to the difference between the price for such drug made
available for such year by such manufacturer with respect to such
individual or hospital, physician, provider, or supplier and the
maximum fair price for such drug for such year.
``(b) Violations of Certain Terms of Agreement.--Any manufacturer
of a selected drug that has entered into an agreement under section
1193, with respect to a plan year during the price applicability period
for such drug, that is in violation of a requirement imposed pursuant
to section 1193(a)(6) shall be subject to a civil monetary penalty of
not more than $1,000,000 for each such violation.
``(c) Application.--The provisions of section 1128A (other than
subsections (a) and (b)) shall apply to a civil monetary penalty under
this section in the same manner as such provisions apply to a penalty
or proceeding under section 1128A(a).
``SEC. 1199. MISCELLANEOUS PROVISIONS.
``(a) Paperwork Reduction Act.--Chapter 35 of title 44, United
States Code, shall not apply to data collected under this part.
``(b) National Academy of Medicine Study.--Not later than December
31, 2025, the National Academy of Medicine shall conduct a study, and
submit to Congress a report, on recommendations for improvements to the
program under this part, including the determination of the limits
applied under section 1194(c).
``(c) MedPAC Study.--Not later than December 31, 2025, the Medicare
Payment Advisory Commission shall conduct a study, and submit to
Congress a report, on the program under this part with respect to the
Medicare program under title XVIII, including with respect to the
effect of the program on individuals entitled to benefits or enrolled
under such title.
``(d) Limitation on Judicial Review.--The following shall not be
subject to judicial review:
``(1) The selection of drugs for publication under section
1192(a).
``(2) The determination of whether a drug is a negotiation-
eligible drug under section 1192(d).
``(3) The determination of the maximum fair price of a
selected drug under section 1194.
``(4) The determination of units of a drug for purposes of
section 1191(c)(3).
``(e) Coordination.--In carrying out this part with respect to
group health plans or health insurance coverage offered in the group
market that are subject to oversight by the Secretary of Labor or the
Secretary of the Treasury, the Secretary of Health and Human Services
shall coordinate with such respective Secretary.
``(f) Data Sharing.--The Secretary shall share with the Secretary
of the Treasury such information as is necessary to determine the tax
imposed by section 4192 of the Internal Revenue Code of 1986.
``(g) GAO Study.--Not later than December 31, 2025, the Comptroller
General of the United States shall conduct a study of, and submit to
Congress a report on, the implementation of the Fair Price Negotiation
Program under this part.
``(h) Inflation Rebate for Group Health Plans.--
``(1) In general.--Not later than December 31, 2021, the
Secretary of Labor shall, in consultation with the Secretary of
Health and Human Services and the Secretary of the Treasury,
submit to Congress a report on the feasibility of the Secretary
of Labor--
``(A) establishing an agreement process with
manufacturers of prescription drugs under which
manufacturers provide for inflation rebates (in a
manner similar to rebates under section 1834(x) and
1860D-14B with respect to part B and part D drugs,
respectively) with respect to drugs that are furnished
or dispensed to participants, enrollees, and
beneficiaries of health insurance coverage in
connection with a group health plan; and
``(B) establishing an enforcement mechanism with
respect to such agreement process that ensures that
such inflation rebates are, proportionally distributed,
with respect to costs, to--
``(i) participants, enrollees, and
beneficiaries of health insurance coverage
offered in the group market; and
``(ii) a health insurance issuer offering
health insurance coverage in the group market.
``(2) Regulations.--Not later than December 31, 2022, the
Secretary of Labor shall, in consultation with the Secretary of
Health and Human Services and the Secretary of the Treasury,
promulgate regulations consistent with the information
contained in the report submitted pursuant to paragraph (1)
if--
``(A) the Secretary of Labor determines the prices
of a sufficient number (as determined by the Secretary
of Labor) of drugs described in paragraph (1)(A) have
increased at a percentage that exceeds the percentage
by which the consumer price index for all urban
consumers (United States city average) for a period of
time (as determined by the Secretary of Labor); and
``(B) the Secretary of Labor finds that the
agreement process identified pursuant to subparagraph
(A) of paragraph (1) and the enforcement mechanism
identified pursuant to subparagraph (B) of such
paragraph are feasible.''.
(b) Application of Maximum Fair Prices and Conforming Amendments.--
(1) Under medicare prescription drug program.--
(A) Exception to non-interference.--Section 1860D-
11(i) of the Social Security Act (42 U.S.C. 1395w-
111(i)) is amended by inserting ``, except as provided
under part E of title XI,'' after ``the Secretary''.
(B) Application as negotiated price.--Section
1860D-2(d)(1) of the Social Security Act (42 U.S.C.
1395w-102(d)(1)) is amended--
(i) in subparagraph (B), by inserting ``,
subject to subparagraph (D),'' after
``negotiated prices''; and
(ii) by adding at the end the following new
subparagraph:
``(D) Application of maximum fair price for
selected drugs.--In applying this section, in the case
of a covered part D drug that is a selected drug (as
defined in section 1192(c)), with respect to a price
applicability period (as defined in section
1191(b)(2)), the negotiated price described in this
subsection shall be the maximum fair price (as defined
in section 1191(c)(2)) for such drug and for each plan
year during such period.''.
(C) Information from prescription drug plans and
ma-pd plans required.--
(i) Prescription drug plans.--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:
``(8) Provision of information related to maximum fair
prices.--Each contract entered into with a PDP sponsor under
this part with respect to a prescription drug plan offered by
such sponsor shall require the sponsor to provide information
to the Secretary as requested by the Secretary in accordance
with section 1196(b).''.
(ii) MA-PD plans.--Section 1857(f)(3) of
the Social Security Act (42 U.S.C. 1395w-
27(f)(3)) is amended by adding at the end the
following new subparagraph:
``(E) Provision of information related to maximum
fair prices.--Section 1860D-12(b)(8).''.
(2) Under group health plans and health insurance
coverage.--
(A) PHSA.--Part A of title XXVII of the Public
Health Service Act is amended by inserting after
section 2729 the following new section:
``SEC. 2729A. FAIR PRICE DRUG NEGOTIATION PROGRAM AND APPLICATION OF
MAXIMUM FAIR PRICES.
``(a) In General.--In the case of a group health plan or health
insurance issuer offering health insurance coverage that is treated
under section 1197 of the Social Security Act as having in effect an
agreement with the Secretary under the Fair Price Drug Negotiation
Program under part E of title XI of such Act, with respect to a price
applicability period (as defined in section 1191(b) of such Act) and a
selected drug (as defined in section 1192(c) of such Act) with respect
to such period with respect to which coverage is provided under such
plan or coverage--
``(1) the provisions of such part shall apply to the plans
or coverage offered by such plan or issuer, and to the
individuals enrolled under such plans or coverage, during such
period, with respect to such selected drug, in the same manner
as such provisions apply to prescription drug plans and MA-PD
plans, and to individuals enrolled under such prescription drug
plans and MA-PD plans;
``(2) the plan or issuer shall apply any cost-sharing
responsibilities under such plan or coverage, with respect to
such selected drug, by substituting the maximum fair price
negotiated under such part for such drug in lieu of the
contracted rate under such plan or coverage for such selected
drug; and
``(3) the Secretary shall apply the provisions of such part
to such plan, issuer, and coverage, and such individuals so
enrolled in such plans.
``(b) Notification Regarding Nonparticipation in Fair Drug Price
Negotiation Program.--A group health plan or a health insurance issuer
offering group or individual health insurance coverage shall publicly
disclose in a manner and in accordance with a process specified by the
Secretary any election made under section 1197 of the Social Security
Act by the plan or issuer to not participate in the Fair Drug Price
Negotiation Program under part E of title XI of such Act with respect
to a selected drug (as defined in section 1192(c) of such Act) for
which coverage is provided under such plan or coverage before the
beginning of the plan year for which such election was made.''.
(B) ERISA.--
(i) In general.--Subpart B of part 7 of
subtitle B of title I of the Employee
Retirement Income Security Act of 1974 (29
U.S.C. 1181 et. seq.) is amended by adding at
the end the following new section:
``SEC. 716. FAIR PRICE DRUG NEGOTIATION PROGRAM AND APPLICATION OF
MAXIMUM FAIR PRICES.
``(a) In General.--In the case of a group health plan or health
insurance issuer offering group health insurance coverage that is
treated under section 1197 of the Social Security Act as having in
effect an agreement with the Secretary under the Fair Price Drug
Negotiation Program under part E of title XI of such Act, with respect
to a price applicability period (as defined in section 1191(b) of such
Act) and a selected drug (as defined in section 1192(c) of such Act)
with respect to such period with respect to which coverage is provided
under such plan or coverage--
``(1) the provisions of such part shall apply, as
applicable--
``(A) if coverage of such selected drug is provided
under such plan or coverage if the drug is furnished or
dispensed at a pharmacy or by a mail order service, to
the plans or coverage offered by such plan or issuer,
and to the individuals enrolled under such plans or
coverage, during such period, with respect to such
selected drug, in the same manner as such provisions
apply to prescription drug plans and MA-PD plans, and
to individuals enrolled under such prescription drug
plans and MA-PD plans during such period; and
``(B) if coverage of such selected drug is provided
under such plan or coverage if the drug is furnished or
administered by a hospital, physician, or other
provider of services or supplier, to the plans or
coverage offered by such plan or issuers, to the
individuals enrolled under such plans or coverage, and
to hospitals, physicians, and other providers of
services and suppliers during such period, with respect
to such drug in the same manner as such provisions
apply to the Secretary, to individuals entitled to
benefits under part A of title XVIII or enrolled under
part B of such title, and to hospitals, physicians, and
other providers and suppliers participating under title
XVIII during such period;
``(2) the plan or issuer shall apply any cost-sharing
responsibilities under such plan or coverage, with respect to
such selected drug, by substituting an amount not more than the
maximum fair price negotiated under such part E of title XI for
such drug in lieu of the drug price upon which the cost-sharing
would have otherwise applied, and such cost-sharing
responsibilities with respect to such selected drug may not
exceed such amount; and
``(3) the Secretary shall apply the provisions of such part
E to such plan, issuer, and coverage, and such individuals so
enrolled in such plans.
``(b) Notification Regarding Nonparticipation in Fair Drug Price
Negotiation Program.--A group health plan or a health insurance issuer
offering group health insurance coverage shall publicly disclose in a
manner and in accordance with a process specified by the Secretary any
election made under section 1197 of the Social Security Act by the plan
or issuer to not participate in the Fair Drug Price Negotiation Program
under part E of title XI of such Act with respect to a selected drug
(as defined in section 1192(c) of such Act) for which coverage is
provided under such plan or coverage before the beginning of the plan
year for which such election was made.''.
(ii) Application to retiree and certain
small group health plans.--Section 732(a) of
the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1191a(a)) is amended by
striking ``section 711'' and inserting
``sections 711 and 716''.
(iii) Clerical amendment.--The table of
sections for subpart B of part 7 of subtitle B
of title I of the Employee Retirement Income
Security Act of 1974 is amended by adding at
the end the following:
``Sec. 716. Fair Price Drug Negotiation Program and application of
maximum fair prices.''.
(C) IRC.--
(i) In general.--Subchapter B of chapter
100 of the Internal Revenue Code of 1986 is
amended by adding at the end the following new
section:
``SEC. 9816. FAIR PRICE DRUG NEGOTIATION PROGRAM AND APPLICATION OF
MAXIMUM FAIR PRICES.
``(a) In General.--In the case of a group health plan that is
treated under section 1197 of the Social Security Act as having in
effect an agreement with the Secretary under the Fair Price Drug
Negotiation Program under part E of title XI of such Act, with respect
to a price applicability period (as defined in section 1191(b) of such
Act) and a selected drug (as defined in section 1192(c) of such Act)
with respect to such period with respect to which coverage is provided
under such plan--
``(1) the provisions of such part shall apply to the plans
offered by such plan, and to the individuals enrolled under
such plans, during such period, with respect to such selected
drug, in the same manner as such provisions apply to
prescription drug plans and MA-PD plans, and to individuals
enrolled under such prescription drug plans and MA-PD plans;
``(2) the plan shall apply any cost-sharing
responsibilities under such plan, with respect to such selected
drug, by substituting the maximum fair price negotiated under
such part for such drug in lieu of the contracted rate under
such plan for such selected drug; and
``(3) the Secretary shall apply the provisions of such part
to such plan and such individuals so enrolled in such plan.
``(b) Notification Regarding Nonparticipation in Fair Drug Price
Negotiation Program.--A group health plan shall publicly disclose in a
manner and in accordance with a process specified by the Secretary any
election made under section 1197 of the Social Security Act by the plan
to not participate in the Fair Drug Price Negotiation Program under
part E of title XI of such Act with respect to a selected drug (as
defined in section 1192(c) of such Act) for which coverage is provided
under such plan before the beginning of the plan year for which such
election was made.''.
(ii) Clerical amendment.--The table of
sections for subchapter B of chapter 100 of
such Code is amended by adding at the end the
following new item:
``Sec. 9816. Fair Price Drug Negotiation Program and application of
maximum fair prices.''.
SEC. 102. SELECTED DRUG MANUFACTURER EXCISE TAX IMPOSED DURING
NONCOMPLIANCE PERIODS.
(a) In General.--Subchapter E of chapter 32 of the Internal Revenue
Code of 1986 is amended by adding at the end the following new section:
``SEC. 4192. SELECTED DRUGS DURING NONCOMPLIANCE PERIODS.
``(a) In General.--There is hereby imposed on the sale by the
manufacturer, producer, or importer of any selected drug during a day
described in subsection (b) a tax in an amount such that the applicable
percentage is equal to the ratio of--
``(1) such tax, divided by
``(2) the sum of such tax and the price for which so sold.
``(b) Noncompliance Periods.--A day is described in this subsection
with respect to a selected drug if it is a day during one of the
following periods:
``(1) The period beginning on the June 16th immediately
following the selected drug publication date and ending on the
first date during which the manufacturer of the drug has in
place an agreement described in subsection (a) of section 1193
of the Social Security Act with respect to such drug.
``(2) The period beginning on the April 1st immediately
following the June 16th described in paragraph (1) and ending
on the first date during which the manufacturer of the drug has
agreed to a maximum fair price under such agreement.
``(3) In the case of a selected drug with respect to which
the Secretary of Health and Human Services has specified a
renegotiation period under such agreement, the period beginning
on the first date after the last date of such renegotiation
period and ending on the first date during which the
manufacturer of the drug has agreed to a renegotiated maximum
fair price under such agreement.
``(4) With respect to information that is required to be
submitted to the Secretary of Health and Human Services under
such agreement, the period beginning on the date on which such
Secretary certifies that such information is overdue and ending
on the date that such information is so submitted.
``(5) In the case of a selected drug with respect to which
a payment is due under subsection (c) of such section 1193, the
period beginning on the date on which the Secretary of Health
and Human Services certifies that such payment is overdue and
ending on the date that such payment is made in full.
``(c) Applicable Percentage.--The term `applicable percentage'
means--
``(1) in the case of sales of a selected drug during the
first 90 days described in subsection (b) with respect to such
drug, 65 percent,
``(2) in the case of sales of such drug during the 91st day
through the 180th day described in subsection (b) with respect
to such drug, 75 percent,
``(3) in the case of sales of such drug during the 181st
day through the 270th day described in subsection (b) with
respect to such drug, 85 percent, and
``(4) in the case of sales of such drug during any
subsequent day, 95 percent.
``(d) Definitions.--The terms `selected drug publication date' and
`maximum fair price' have the meaning given such terms in section 1191
of the Social Security Act and the term `selected drug' has the meaning
given such term in section 1192 of such Act.
``(e) Anti-Abuse Rule.--In the case of a sale which was timed for
the purpose of avoiding the tax imposed by this section, the Secretary
may treat such sale as occurring during a day described in subsection
(b).''.
(b) No Deduction for Excise Tax Payments.--Section 275 of the
Internal Revenue Code of 1986 is amended by adding ``or by section
4192'' before the period at the end of subsection (a)(6).
(c) Conforming Amendments.--
(1) Section 4221(a) of the Internal Revenue Code of 1986 is
amended by inserting ``or 4192'' after ``section 4191''.
(2) Section 6416(b)(2) of such Code is amended by inserting
``or 4192'' after ``section 4191''.
(d) Clerical Amendments.--
(1) The heading of subchapter E of chapter 32 of the
Internal Revenue Code of 1986 is amended by striking ``Medical
Devices'' and inserting ``Other Medical Products''.
(2) The table of subchapters for chapter 32 of such Code is
amended by striking the item relating to subchapter E and
inserting the following new item:
``subchapter e. other medical products''.
(3) The table of sections for subchapter E of chapter 32 of
such Code is amended by adding at the end the following new
item:
``Sec. 4192. Selected drugs during noncompliance periods.''.
(e) Effective Date.--The amendments made by this section shall
apply to sales after the date of the enactment of this Act.
TITLE II--MEDICARE PARTS B AND D PRESCRIPTION DRUG INFLATION REBATES
SEC. 201. MEDICARE PART B REBATE BY MANUFACTURERS.
(a) In General.--Section 1834 of the Social Security Act (42 U.S.C.
1395m) is amended by adding at the end the following new subsection:
``(x) Rebate by Manufacturers for Single Source Drugs With Prices
Increasing Faster Than Inflation.--
``(1) Requirements.--
``(A) Secretarial provision of information.--Not
later than 6 months after the end of each calendar
quarter beginning on or after July 1, 2021, the
Secretary shall, for each part B rebatable drug, report
to each manufacturer of such part B rebatable drug the
following for such calendar quarter:
``(i) Information on the total number of
billing units described in subparagraph (A)(i)
of paragraph (3) with respect to such drug and
calendar quarter.
``(ii) Information on the amount (if any)
of the excess average sales price increase
described in subparagraph (A)(ii) of such
paragraph for such drug and calendar quarter.
``(iii) The rebate amount specified under
such paragraph for such part B rebatable drug
and calendar quarter.
``(B) Manufacturer requirement.--For each calendar
quarter beginning on or after July 1, 2021, the
manufacturer of a part B rebatable drug shall, for such
drug, not later than 30 days after the date of receipt
from the Secretary of the information described in
subparagraph (A) for such calendar quarter, provide to
the Secretary a rebate that is equal to the amount
specified in paragraph (3) for such drug for such
calendar quarter.
``(2) Part b rebatable drug defined.--
``(A) In general.--In this subsection, the term
`part B rebatable drug' means a single source drug or
biological (as defined in subparagraph (D) of section
1847A(c)(6)), including a biosimilar biological product
(as defined in subparagraph (H) of such section), paid
for under this part, except such term shall not include
such a drug or biological--
``(i) if the average total allowed charges
for a year per individual that uses such a drug
or biological, as determined by the Secretary,
are less than, subject to subparagraph (B),
$100; or
``(ii) that is a vaccine described in
subparagraph (A) or (B) of section 1861(s)(10).
``(B) Increase.--The dollar amount applied under
subparagraph (A)(i)--
``(i) for 2022, shall be the dollar amount
specified under such subparagraph for 2021,
increased by the percentage increase in the
consumer price index for all urban consumers
(United States city average) as of the first
quarter of the previous year; and
``(ii) for a subsequent year, shall be the
dollar amount specified in this clause (or
clause (i)) for the previous year, increased by
the percentage increase in the consumer price
index for all urban consumers (United States
city average) as of the first quarter of the
previous year.
Any dollar amount specified under this subparagraph
that is not a multiple of $10 shall be rounded to the
nearest multiple of $10.
``(3) Rebate amount.--
``(A) In general.--For purposes of paragraph
(1)(B), the amount specified in this paragraph for a
part B rebatable drug assigned to a billing and payment
code for a calendar quarter is, subject to paragraph
(4), the amount equal to the product of--
``(i) subject to subparagraph (B), the
total number of billing units, as described in
section 1847A(b)(6)(B), for such part B
rebatable drug furnished under this part during
the calendar quarter; and
``(ii) the amount (if any) by which--
``(I) the payment amount under
subparagraph (B) or (C) of section
1847A(b)(1), as applicable, for such
part B rebatable drug during the
calendar quarter; exceeds
``(II) the inflation-adjusted
payment amount determined under
subparagraph (C) for such part B
rebatable drug during the calendar
quarter.
``(B) Excluded units.--For purposes of subparagraph
(A)(i), the total number of billing units for part B
rebatable drugs furnished during a calendar quarter
shall not include--
``(i) units packaged into the payment for a
related procedure or service under section
1833(t) or under section 1833(i) (instead of
separately payable under such respective
section);
``(ii) units included under the single
payment system for renal dialysis services
under section 1881(b)(14); or
``(iii) units of a part B rebatable drug of
a manufacturer that is furnished to an
individual, if such manufacturer, with respect
to the furnishing of such units of such drug,
provides for discounts under section 340B of
the Public Health Service Act or for rebates
under section 1927.
``(C) Determination of inflation-adjusted payment
amount.--The inflation-adjusted payment amount
determined under this subparagraph for a part B
rebatable drug for a calendar quarter is--
``(i) the payment amount for the billing
and payment code for such drug in the payment
amount benchmark quarter (as defined in
subparagraph (D)); increased by
``(ii) the percentage by which the rebate
period CPI-U (as defined in subparagraph (F))
for the calendar quarter exceeds the benchmark
period CPI-U (as defined in subparagraph (E)).
``(D) Payment amount benchmark quarter.--The term
`payment amount benchmark quarter' means the calendar
quarter beginning January 1, 2016.
``(E) Benchmark period cpi-u.--The term `benchmark
period CPI-U' means the consumer price index for all
urban consumers (United States city average) for July
2015.
``(F) Rebate period cpi-u.--The term `rebate period
CPI-U' means, with respect to a calendar quarter
described in subparagraph (C), the greater of the
benchmark period CPI-U and the consumer price index for
all urban consumers (United States city average) for
the first month of the calendar quarter that is two
calendar quarters prior to such described calendar
quarter.
``(4) Special treatment of certain drugs and exemption.--
``(A) Subsequently approved drugs.--Subject to
subparagraph (B), in the case of a part B rebatable
drug first approved by the Food and Drug Administration
after July 1, 2015, clause (i) of paragraph (3)(C)
shall be applied as if the term `payment amount
benchmark quarter' were defined under paragraph (3)(D)
as the third full calendar quarter after the day on
which the drug was first marketed and clause (ii) of
paragraph (3)(C) shall be applied as if the term
`benchmark period CPI-U' were defined under paragraph
(3)(E) as if the reference to `July 2015' under such
paragraph were a reference to `the first month of the
first full calendar quarter after the day on which the
drug was first marketed'.
``(B) Timeline for provision of rebates for new
drugs.--In the case of a part B rebatable drug first
approved by the Food and Drug Administration after July
1, 2015, clause (i) of paragraph (1)(B) shall be
applied as if the reference to `July 1, 2021' under
such paragraph were a reference to the later of the 6th
full calendar quarter after the day on which the drug
was first marketed or July 1, 2021.
``(C) Exemption for shortages.--The Secretary may
reduce or waive the rebate under paragraph (1)(B) with
respect to a part B rebatable drug that appears on the
drug shortage list in effect under section 506(e) of
the Federal Food, Drug, and Cosmetic Act or in the case
of other exigent circumstances, as determined by the
Secretary.
``(D) Selected drugs.--In the case of a part B
rebatable drug that is a selected drug (as defined in
section 1192(c)), for each applicable year beginning
after the price applicability period (as defined in
section 1191(b)(2) with respect to such drug, clause
(i) of paragraph (3)(C) shall be applied as if the term
`payment amount benchmark quarter' were defined under
paragraph (3)(D) as the calendar quarter beginning
January 1 of the last year beginning during such price
applicability period with respect to such selected drug
and clause (ii) of paragraph (3)(C) shall be applied as
if the term `benchmark period CPI-U' were defined under
paragraph (3)(E) as if the reference to `July 2015'
under such paragraph were a reference to the July of
the year preceding such last year.
``(5) Application to beneficiary coinsurance.--In the case
of a part B rebatable drug for which a rebate is payable under
this subsection--
``(A) in computing the amount of any coinsurance
applicable under this title to an individual with
respect to such drug, the computation of such
coinsurance shall be based on the inflation-adjusted
payment amount determined under paragraph (3)(C) for
such part B rebatable drug; and
``(B) the amount of such coinsurance is equal to 20
percent of such inflation-adjusted payment amount so
determined.
``(6) Rebate deposits.--Amounts paid as rebates under
paragraph (1)(B) shall be deposited into the Federal
Supplementary Medical Insurance Trust Fund established under
section 1841.
``(7) Civil money penalty.--If a manufacturer of a part B
rebatable drug has failed to comply with the requirements under
paragraph (1)(B) for such drug for a calendar quarter, the
manufacturer shall be subject to, in accordance with a process
established by the Secretary pursuant to regulations, a civil
money penalty in an amount equal to at least 125 percent of the
amount specified in paragraph (3) for such drug for such
calendar quarter. The provisions of section 1128A (other than
subsections (a) (with respect to amounts of penalties or
additional assessments) and (b)) shall apply to a civil money
penalty under this paragraph in the same manner as such
provisions apply to a penalty or proceeding under section
1128A(a).
``(8) Study and report.--
``(A) Study.--The Secretary shall conduct a study
of the feasibility of and operational issues involved
with the following:
``(i) Including multiple source drugs (as
defined in section 1847A(c)(6)(C)) in the
rebate system under this subsection.
``(ii) Including drugs and biologicals paid
for under MA plans under part C in the rebate
system under this subsection.
``(iii) Including drugs excluded under
paragraph (2)(A) and billing units of drugs
excluded under paragraph (3)(B) in the rebate
system under this subsection.
``(B) Report.--Not later than 3 years after the
date of the enactment of this subsection, the Secretary
shall submit to Congress a report on the study
conducted under subparagraph (A).
``(9) Application to multiple source drugs.--The Secretary
may, based on the report submitted under paragraph (8) and
pursuant to rulemaking, apply the provisions of this subsection
to multiple source drugs (as defined in section
1847A(c)(6)(C)), including, for purposes of determining the
rebate amount under paragraph (3), by calculating manufacturer-
specific average sales prices for the benchmark period and the
rebate period.''.
(b) Amounts Payable; Cost-Sharing.--Section 1833(a) of the Social
Security Act is amended--
(1) in paragraph (1)--
(A) in subparagraph (S), by striking ``with respect
to'' and inserting ``subject to subparagraph (DD), with
respect to'';
(B) by striking ``and (CC)'' and inserting
``(CC)''; and
(C) by inserting before the semicolon at the end
the following: ``, and (DD) with respect to a part B
rebatable drug (as defined in paragraph (2) of section
1834(x)) for which a rebate is payable under such
section, the amounts paid shall be the difference
between (i) the payment amount under paragraph
(3)(A)(ii)(I) of such section for such drug, and (ii)
20 percent of the inflation-adjusted payment amount
under paragraph (3)(A)(ii)(II) of such section for such
drug''; and
(2) by adding at the end of the flush left matter following
paragraph (9), the following:
``For purposes of applying paragraph (1)(DD) and section 1834(x)(5),
the Secretary shall make such estimates and use such data as the
Secretary determines appropriate.''.
(c) Conforming Amendment to Part B ASP Calculation.--Section
1847A(c)(3) of the Social Security Act (42 U.S.C. 1395w-3a(c)(3)) is
amended by inserting ``or section 1834(x)'' after ``section 1927''.
SEC. 202. MEDICARE PART D REBATE BY MANUFACTURERS.
Part D of title XVIII of the Social Security Act is amended by
inserting after section 1860D-14A (42 U.S.C. 1395w-114a) the following
new section:
``SEC. 1860D-14B. MANUFACTURER REBATE FOR CERTAIN DRUGS WITH PRICES
INCREASING FASTER THAN INFLATION.
``(a) In General.--Subject to the provisions of this section, in
order for coverage to be available under this part for a part D
rebatable drug of a manufacturer dispensed during an applicable year,
the manufacturer must have entered into and have in effect an agreement
described in subsection (b). For purposes of this section the term
`applicable year' means a year beginning with 2022.
``(b) Agreements.--
``(1) Terms of agreement.--An agreement described in this
subsection, with respect to a manufacturer of a part D
rebatable drug, is an agreement under which the following
applies:
``(A) Secretarial provision of information.--Not
later than 9 months after the end of each applicable
year with respect to which the agreement is in effect,
the Secretary, for the part D rebatable drug of the
manufacturer, reports to the manufacturer the following
for such year:
``(i) Information on the total units (as
defined in subsection (g)(2)) dispensed for
each dosage form and strength with respect to
such part D rebatable drug and year.
``(ii) Information on the amount (if any)
of the excess average manufacturer price
increase described in subsection (c)(1)(B) for
each dosage form and strength with respect to
such drug and year.
``(iii) The rebate amount specified under
subsection (c) for each dosage form and
strength with respect to such drug and year.
``(B) Manufacturer requirements.--For each
applicable year with respect to which the agreement is
in effect, the manufacturer of the part D rebatable
drug, for each dosage form and strength with respect to
such drug, not later than 30 days after the date of
receipt from the Secretary of the information described
in subparagraph (A) for such year, provides to the
Secretary a rebate that is equal to the amount
specified in subsection (c) for such dosage form and
strength with respect to such drug for such year.
``(2) Length of agreement.--
``(A) In general.--An agreement under this section,
with respect to a part D rebatable drug, shall be
effective for an initial period of not less than one
year and shall be automatically renewed for a period of
not less than one year unless terminated under
subparagraph (B).
``(B) Termination.--
``(i) By secretary.--The Secretary may
provide for termination of an agreement under
this section for violation of the requirements
of the agreement or other good cause shown.
Such termination shall not be effective earlier
than 60 days after the date of notice of such
termination. The Secretary shall provide, upon
request, a manufacturer with a hearing
concerning such a termination, but such hearing
shall not delay the effective date of the
termination.
``(ii) By a manufacturer.--A manufacturer
may terminate an agreement under this section
for any reason. Any such termination shall not
be effective until the year beginning at least
60 days after the date the manufacturer
provides notice to the Secretary.
``(C) Effectiveness of termination.--Any
termination under this paragraph shall not affect
rebates due under the agreement under this section
before the effective date of its termination.
``(D) Delay before reentry.--In the case of any
agreement under this section with a manufacturer which
is terminated in a plan year, another such agreement
with the manufacturer (or a successor manufacturer) may
not be entered into before the subsequent plan year,
unless the Secretary finds good cause for an earlier
reinstatement of such an agreement.
``(3) Information.--For purposes of carrying out this
section, the Secretary shall use information submitted by
manufacturers under section 1927(b)(3).
``(c) Rebate Amount.--
``(1) In general.--For purposes of this section, the amount
specified in this subsection for a dosage form and strength
with respect to a part D rebatable drug and applicable year is,
subject to subparagraphs (B) and (C) of paragraph (3), the
amount equal to the product of--
``(A) the total average number of units weighted
by, and dispensed for, such dosage form and strength
with respect to such part D rebatable drug and year;
and
``(B) the amount (if any) by which--
``(i) the average manufacturer price (as
defined in subsection (g)) paid for such dosage
form and strength with respect to such part D
rebatable drug during the year; exceeds
``(ii) the inflation-adjusted payment
amount determined under paragraph (2) for such
dosage form and strength with respect to such
part D rebatable drug during the year.
``(2) Determination of inflation-adjusted payment amount.--
The inflation-adjusted payment amount determined under this
paragraph for a dosage form and strength with respect to a part
D rebatable drug for an applicable year, subject to
subparagraphs (A) and (D) of paragraph (3), is--
``(A) the average manufacturer price paid for such
dosage form and strength with respect to such drug in
the payment amount benchmark year (as defined in
subsection (g)(3)); increased by
``(B) the percentage by which the rebate period
CPI-U (as defined in subsection (g)(5)) for the
applicable year exceeds the benchmark period CPI-U (as
defined in subsection (g)(4)).
``(3) Special treatment of certain drugs and exemption.--
``(A) Subsequently approved drugs.--In the case of
a part D rebatable drug first approved by the Food and
Drug Administration after January 1, 2016, subparagraph
(A) of paragraph (2) shall be applied as if the term
`payment amount benchmark year' were defined under
subsection (g)(3) as the first year beginning after the
day on which the drug was first marketed and
subparagraph (B) of paragraph (2) shall be applied as
if the term `benchmark period CPI-U' were defined under
subsection (g)(4) as if the reference to `January 2016'
under such subsection were a reference to `January of
the first year beginning after the date on which the
drug was first marketed by any manufacturer'.
``(B) Exemption for shortages.--The Secretary may
reduce or waive the rebate under paragraph (1) with
respect to a part D rebatable drug in the case of a
shortage of such drug or other exigent circumstances,
as determined by the Secretary.
``(C) Treatment of new formulations.--
``(i) In general.--In the case of a part D
rebatable drug that is a line extension of a
single source drug or an innovator multiple
source drug that is an oral solid dosage form,
the Secretary shall establish a formula for
determining the amount specified in this
subsection with respect to such part D
rebatable drug and an applicable year with
consideration of the single source drug or an
innovator multiple source drug.
``(ii) Line extension defined.--In this
subparagraph, the term `line extension' means,
with respect to a part D rebatable drug, a new
formulation of the drug (as determined by the
Secretary), such as an extended release
formulation, but does not include an abuse-
deterrent formulation of the drug (as
determined by the Secretary), regardless of
whether such abuse-deterrent formulation is an
extended release formulation.
``(D) Selected drugs.--In the case of a part D
rebatable drug that is a selected drug (as defined in
section 1192(c)), for each applicable year beginning
after the price applicability period (as defined in
section 1191(b)(2) with respect to such drug,
subparagraph (A) of paragraph (2) shall be applied as
if the term `payment amount benchmark year' were
defined under subsection (g)(3) as the last year
beginning during such price applicability period with
respect to such selected drug and subparagraph (B) of
paragraph (2) shall be applied as if the term
`benchmark period CPI-U' were defined under subsection
(g)(4) as if the reference to `January 2016' under such
subsection were a reference to January of the last year
beginning during such price applicability period with
respect to such drug.
``(d) Rebate Deposits.--Amounts paid as rebates under subsection
(c) shall be deposited into the Medicare Prescription Drug Account in
the Federal Supplementary Medical Insurance Trust Fund established
under section 1841.
``(e) Civil Money Penalty.--In the case of a manufacturer of a part
D rebatable drug with an agreement in effect under this section who has
failed to comply with the terms of the agreement under subsection
(b)(1)(B) with respect to such drug for an applicable year, the
Secretary may impose a civil money penalty on such manufacturer in an
amount equal to 125 percent of the amount specified in subsection (c)
for such drug for such year. The provisions of section 1128A (other
than subsections (a) (with respect to amounts of penalties or
additional assessments) and (b)) shall apply to a civil money penalty
under this subsection in the same manner as such provisions apply to a
penalty or proceeding under section 1128A(a).
``(f) Judicial Review.--There shall be no judicial review of the
following:
``(1) The determination of units under this section.
``(2) The determination of whether a drug is a part D
rebatable drug under this section.
``(3) The calculation of the rebate amount under this
section.
``(g) Definitions.--In this section:
``(1) Part d rebatable drug defined.--
``(A) In general.--The term `part D rebatable drug'
means a drug or biological that would (without
application of this section) be a covered part D drug,
except such term shall, with respect to an applicable
year, not include such a drug or biological if the
average total cost under a prescription drug plan under
this part or MA-PD plan under part C for such year per
individual who uses such a drug or biological, as
determined by the Secretary, are less than, subject to
subparagraph (B), $100, as determined by the Secretary
using the most recent data available or, if data is not
available, as estimated by the Secretary.
``(B) Increase.--The dollar amount applied under
subparagraph (A)--
``(i) for 2023, shall be the dollar amount
specified under such subparagraph for 2022,
increased by the percentage increase in the
consumer price index for all urban consumers
(United States city average) as of January of
2022; and
``(ii) for a subsequent year, shall be the
dollar amount specified in this subparagraph
(or subparagraph (A)) for the previous year,
increased by the percentage increase in the
consumer price index for all urban consumers
(United States city average) as of January of
the previous year.
Any dollar amount specified under this subparagraph
that is not a multiple of $10 shall be rounded to the
nearest multiple of $10.
``(2) Unit defined.--The term `unit' means, with respect to
a part D rebatable drug, the lowest identifiable quantity (such
as a capsule or tablet, milligram of molecules, or grams) of
the part D rebatable drug that is dispensed to individuals
enrolled under a prescription drug plan under this part or an
MA-PD plan under part C.
``(3) Payment amount benchmark year.--The term `payment
amount benchmark year' means the year beginning January 1,
2016.
``(4) Benchmark period cpi-u.--The term `benchmark period
CPI-U' means the consumer price index for all urban consumers
(United States city average) for January 2016.
``(5) Rebate period cpi-u.--The term `rebate period CPI-U'
means, with respect to an applicable year, the consumer price
index for all urban consumers (United States city average) for
January of such year.
``(6) Average manufacturer price.--The term `average
manufacturer price' has the meaning, with respect to a part D
rebatable drug of a manufacturer for an applicable year, given
such term in section 1927(k)(1), with respect to a covered
outpatient drug of a manufacturer for a rebate period under
section 1927. For purposes of applying the previous sentence,
with respect to a part D rebatable drug of a manufacturer and
an applicable year, the Secretary shall use the information
with respect to the average manufacturer price for such drug
reported by the manufacturer under section 1927(b)(3) with
respect to each of the quarters in the applicable year and
calculate an annual average manufacturer price for such
applicable year as the average of such average manufacturer
prices for each such quarter, weighted by units of such drug
sold or dispensed with respect to such applicable year.''.
TITLE III--PART D IMPROVEMENTS AND MAXIMUM OUT-OF-POCKET CAP FOR
MEDICARE BENEFICIARIES
SEC. 301. MEDICARE PART D BENEFIT REDESIGN.
(a) Benefit Structure Redesign.--Section 1860D-2(b) of the Social
Security Act (42 U.S.C. 1395w-102(b)) is amended--
(1) in paragraph (2)--
(A) in subparagraph (A), in the matter preceding
clause (i), by inserting ``for a year preceding 2022
and for costs above the annual deductible specified in
paragraph (1) and up to the annual out-of-pocket
threshold specified in paragraph (4)(B) for 2022 and
each subsequent year'' after ``paragraph (3)'';
(B) in subparagraph (C)--
(i) in clause (i), in the matter preceding
subclause (I), by inserting ``for a year
preceding 2022,'' after ``paragraph (4),''; and
(ii) in clause (ii)(III), by striking ``and
each subsequent year'' and inserting ``and
2021''; and
(C) in subparagraph (D)--
(i) in clause (i)--
(I) in the matter preceding
subclause (I), by inserting ``for a
year preceding 2022,'' after
``paragraph (4),''; and
(II) in subclause (I)(bb), by
striking ``a year after 2018'' and
inserting ``each of years 2018 through
2021''; and
(ii) in clause (ii)(V), by striking ``2019
and each subsequent year'' and inserting ``each
of years 2019 through 2021'';
(2) in paragraph (3)(A)--
(A) in the matter preceding clause (i), by
inserting ``for a year preceding 2022,'' after ``and
(4),''; and
(B) in clause (ii), by striking ``for a subsequent
year'' and inserting ``for each of years 2007 through
2021''; and
(3) in paragraph (4)--
(A) in subparagraph (A)--
(i) in clause (i)--
(I) by redesignating subclauses (I)
and (II) as items (aa) and (bb),
respectively, and moving the margin of
each such redesignated item 2 ems to
the right;
(II) in the matter preceding item
(aa), as redesignated by subclause (I),
by striking ``is equal to the greater
of--'' and inserting ``is equal to--
``(I) for a year preceding 2022,
the greater of--'';
(III) by striking the period at the
end of item (bb), as redesignated by
subclause (I), and inserting ``; and'';
and
(IV) by adding at the end the
following:
``(II) for 2022 and each succeeding
year, $0.''; and
(ii) in clause (ii)--
(I) by striking ``clause (i)(I)''
and inserting ``clause (i)(I)(aa)'';
and
(II) by adding at the end the
following new sentence: ``The Secretary
shall continue to calculate the dollar
amounts specified in clause (i)(I)(aa),
including with the adjustment under
this clause, after 2021 for purposes of
section 1860D-14(a)(1)(D)(iii).'';
(B) in subparagraph (B)--
(i) in clause (i)--
(I) in subclause (V), by striking
``or'' at the end;
(II) in subclause (VI)--
(aa) by striking ``for a
subsequent year'' and inserting
``for 2021''; and
(bb) by striking the period
at the end and inserting a
semicolon; and
(III) by adding at the end the
following new subclauses:
``(VII) for 2022, is equal to
$2,000; or
``(VIII) for a subsequent year, is
equal to the amount specified in this
subparagraph for the previous year,
increased by the annual percentage
increase described in paragraph (6) for
the year involved.''; and
(ii) in clause (ii), by striking ``clause
(i)(II)'' and inserting ``clause (i)'';
(C) in subparagraph (C)(i), by striking ``and for
amounts'' and inserting ``and, for a year preceding
2022, for amounts''; and
(D) in subparagraph (E), by striking ``In
applying'' and inserting ``For each of years 2011
through 2021, in applying''.
(b) Decreasing Reinsurance Payment Amount.--Section 1860D-15(b)(1)
of the Social Security Act (42 U.S.C. 1395w-115(b)(1)) is amended by
inserting after ``80 percent'' the following: ``(or, with respect to a
coverage year after 2021, 20 percent)''.
(c) Manufacturer Discount Program.--
(1) In general.--Part D of title XVIII of the Social
Security Act (42 U.S.C. 1395w-101 et seq.), as amended by
section 202, is further amended by inserting after section
1860D-14B the following new section:
``SEC. 1860D-14C. MANUFACTURER DISCOUNT PROGRAM.
``(a) Establishment.--The Secretary shall establish a manufacturer
discount program (in this section referred to as the `program'). Under
the program, the Secretary shall enter into agreements described in
subsection (b) with manufacturers and provide for the performance of
the duties described in subsection (c). The Secretary shall establish a
model agreement for use under the program by not later than January 1,
2021, in consultation with manufacturers, and allow for comment on such
model agreement.
``(b) Terms of Agreement.--
``(1) In general.--
``(A) Agreement.--An agreement under this section
shall require the manufacturer to provide applicable
beneficiaries access to discounted prices for
applicable drugs of the manufacturer that are dispensed
on or after January 1, 2022.
``(B) Provision of discounted prices at the point-
of-sale.--The discounted prices described in
subparagraph (A) shall be provided to the applicable
beneficiary at the pharmacy or by the mail order
service at the point-of-sale of an applicable drug.
``(C) Timing of agreement.--
``(i) Special rule for 2022.--In order for
an agreement with a manufacturer to be in
effect under this section with respect to the
period beginning on January 1, 2022, and ending
on December 31, 2022, the manufacturer shall
enter into such agreement not later than 30
days after the date of the establishment of a
model agreement under subsection (a).
``(ii) 2023 and subsequent years.--In order
for an agreement with a manufacturer to be in
effect under this section with respect to plan
year 2023 or a subsequent plan year, the
manufacturer shall enter into such agreement
(or such agreement shall be renewed under
paragraph (4)(A)) not later than January 30 of
the preceding year.
``(2) Provision of appropriate data.--Each manufacturer
with an agreement in effect under this section shall collect
and have available appropriate data, as determined by the
Secretary, to ensure that it can demonstrate to the Secretary
compliance with the requirements under the program.
``(3) Compliance with requirements for administration of
program.--Each manufacturer with an agreement in effect under
this section shall comply with requirements imposed by the
Secretary or a third party with a contract under subsection
(d)(3), as applicable, for purposes of administering the
program, including any determination under subparagraph (A) of
subsection (c)(1) or procedures established under such
subsection (c)(1).
``(4) Length of agreement.--
``(A) In general.--An agreement under this section
shall be effective for an initial period of not less
than 12 months and shall be automatically renewed for a
period of not less than 1 year unless terminated under
subparagraph (B).
``(B) Termination.--
``(i) By the secretary.--The Secretary may
provide for termination of an agreement under
this section for a knowing and willful
violation of the requirements of the agreement
or other good cause shown. Such termination
shall not be effective earlier than 30 days
after the date of notice to the manufacturer of
such termination. The Secretary shall provide,
upon request, a manufacturer with a hearing
concerning such a termination, and such hearing
shall take place prior to the effective date of
the termination with sufficient time for such
effective date to be repealed if the Secretary
determines appropriate.
``(ii) By a manufacturer.--A manufacturer
may terminate an agreement under this section
for any reason. Any such termination shall be
effective, with respect to a plan year--
``(I) if the termination occurs
before January 30 of a plan year, as of
the day after the end of the plan year;
and
``(II) if the termination occurs on
or after January 30 of a plan year, as
of the day after the end of the
succeeding plan year.
``(iii) Effectiveness of termination.--Any
termination under this subparagraph shall not
affect discounts for applicable drugs of the
manufacturer that are due under the agreement
before the effective date of its termination.
``(iv) Notice to third party.--The
Secretary shall provide notice of such
termination to a third party with a contract
under subsection (d)(3) within not less than 30
days before the effective date of such
termination.
``(c) Duties Described.--The duties described in this subsection
are the following:
``(1) Administration of program.--Administering the
program, including--
``(A) the determination of the amount of the
discounted price of an applicable drug of a
manufacturer;
``(B) the establishment of procedures under which
discounted prices are provided to applicable
beneficiaries at pharmacies or by mail order service at
the point-of-sale of an applicable drug;
``(C) the establishment of procedures to ensure
that, not later than the applicable number of calendar
days after the dispensing of an applicable drug by a
pharmacy or mail order service, the pharmacy or mail
order service is reimbursed for an amount equal to the
difference between--
``(i) the negotiated price of the
applicable drug; and
``(ii) the discounted price of the
applicable drug;
``(D) the establishment of procedures to ensure
that the discounted price for an applicable drug under
this section is applied before any coverage or
financial assistance under other health benefit plans
or programs that provide coverage or financial
assistance for the purchase or provision of
prescription drug coverage on behalf of applicable
beneficiaries as the Secretary may specify; and
``(E) providing a reasonable dispute resolution
mechanism to resolve disagreements between
manufacturers, applicable beneficiaries, and the third
party with a contract under subsection (d)(3).
``(2) Monitoring compliance.--
``(A) In general.--The Secretary shall monitor
compliance by a manufacturer with the terms of an
agreement under this section.
``(B) Notification.--If a third party with a
contract under subsection (d)(3) determines that the
manufacturer is not in compliance with such agreement,
the third party shall notify the Secretary of such
noncompliance for appropriate enforcement under
subsection (e).
``(3) Collection of data from prescription drug plans and
ma-pd plans.--The Secretary may collect appropriate data from
prescription drug plans and MA-PD plans in a timeframe that
allows for discounted prices to be provided for applicable
drugs under this section.
``(d) Administration.--
``(1) In general.--Subject to paragraph (2), the Secretary
shall provide for the implementation of this section, including
the performance of the duties described in subsection (c).
``(2) Limitation.--In providing for the implementation of
this section, the Secretary shall not receive or distribute any
funds of a manufacturer under the program.
``(3) Contract with third parties.--The Secretary shall
enter into a contract with 1 or more third parties to
administer the requirements established by the Secretary in
order to carry out this section. At a minimum, the contract
with a third party under the preceding sentence shall require
that the third party--
``(A) receive and transmit information between the
Secretary, manufacturers, and other individuals or
entities the Secretary determines appropriate;
``(B) receive, distribute, or facilitate the
distribution of funds of manufacturers to appropriate
individuals or entities in order to meet the
obligations of manufacturers under agreements under
this section;
``(C) provide adequate and timely information to
manufacturers, consistent with the agreement with the
manufacturer under this section, as necessary for the
manufacturer to fulfill its obligations under this
section; and
``(D) permit manufacturers to conduct periodic
audits, directly or through contracts, of the data and
information used by the third party to determine
discounts for applicable drugs of the manufacturer
under the program.
``(4) Performance requirements.--The Secretary shall
establish performance requirements for a third party with a
contract under paragraph (3) and safeguards to protect the
independence and integrity of the activities carried out by the
third party under the program under this section.
``(5) Implementation.--The Secretary may implement the
program under this section by program instruction or otherwise.
``(6) Administration.--Chapter 35 of title 44, United
States Code, shall not apply to the program under this section.
``(e) Enforcement.--
``(1) Audits.--Each manufacturer with an agreement in
effect under this section shall be subject to periodic audit by
the Secretary.
``(2) Civil money penalty.--
``(A) In general.--The Secretary may impose a civil
money penalty on a manufacturer that fails to provide
applicable beneficiaries discounts for applicable drugs
of the manufacturer in accordance with such agreement
for each such failure in an amount the Secretary
determines is commensurate with the sum of--
``(i) the amount that the manufacturer
would have paid with respect to such discounts
under the agreement, which will then be used to
pay the discounts which the manufacturer had
failed to provide; and
``(ii) 25 percent of such amount.
``(B) Application.--The provisions of section 1128A
(other than subsections (a) and (b)) shall apply to a
civil money penalty under this paragraph in the same
manner as such provisions apply to a penalty or
proceeding under section 1128A(a).
``(f) Clarification Regarding Availability of Other Covered Part D
Drugs.--Nothing in this section shall prevent an applicable beneficiary
from purchasing a covered part D drug that is not an applicable drug
(including a generic drug or a drug that is not on the formulary of the
prescription drug plan or MA-PD plan that the applicable beneficiary is
enrolled in).
``(g) Definitions.--In this section:
``(1) Applicable beneficiary.--The term `applicable
beneficiary' means an individual who, on the date of dispensing
a covered part D drug--
``(A) is enrolled in a prescription drug plan or an
MA-PD plan;
``(B) is not enrolled in a qualified retiree
prescription drug plan; and
``(C) has incurred costs for covered part D drugs
in the year that are equal to or exceed the annual
deductible specified in section 1860D-2(b)(1) for such
year.
``(2) Applicable drug.--The term `applicable drug', with
respect to an applicable beneficiary--
``(A) means a covered part D drug--
``(i) approved under a new drug application
under section 505(b) of the Federal Food, Drug,
and Cosmetic Act or, in the case of a biologic
product, licensed under section 351 of the
Public Health Service Act; and
``(ii)(I) if the PDP sponsor of the
prescription drug plan or the MA organization
offering the MA-PD plan uses a formulary, which
is on the formulary of the prescription drug
plan or MA-PD plan that the applicable
beneficiary is enrolled in;
``(II) if the PDP sponsor of the
prescription drug plan or the MA organization
offering the MA-PD plan does not use a
formulary, for which benefits are available
under the prescription drug plan or MA-PD plan
that the applicable beneficiary is enrolled in;
or
``(III) is provided through an exception or
appeal; and
``(B) does not include a selected drug (as defined
in section 1192(c)) during a price applicability period
(as defined in section 1191(b)(2)) with respect to such
drug.
``(3) Applicable number of calendar days.--The term
`applicable number of calendar days' means--
``(A) with respect to claims for reimbursement
submitted electronically, 14 days; and
``(B) with respect to claims for reimbursement
submitted otherwise, 30 days.
``(4) Discounted price.--
``(A) In general.--The term `discounted price'
means, with respect to an applicable drug of a
manufacturer furnished during a year to an applicable
beneficiary--
``(i) who has not incurred costs for
covered part D drugs in the year that are equal
to or exceed the annual out-of-pocket threshold
specified in section 1860D-2(b)(4)(B)(i) for
the year, 90 percent of the negotiated price of
such drug; and
``(ii) who has incurred such costs in the
year that are equal to or exceed such threshold
for the year, 70 percent of the negotiated
price of such drug.
``(B) Clarification.--Nothing in this section shall
be construed as affecting the responsibility of an
applicable beneficiary for payment of a dispensing fee
for an applicable drug.
``(C) Special case for certain claims.--
``(i) Claims spanning deductible.--In the
case where the entire amount of the negotiated
price of an individual claim for an applicable
drug with respect to an applicable beneficiary
does not fall at or above the annual deductible
specified in section 1860D-2(b)(1) for the
year, the manufacturer of the applicable drug
shall provide the discounted price under this
section on only the portion of the negotiated
price of the applicable drug that falls at or
above such annual deductible.
``(ii) Claims spanning out-of-pocket
threshold.--In the case where the entire amount
of the negotiated price of an individual claim
for an applicable drug with respect to an
applicable beneficiary does not fall entirely
below or entirely above the annual out-of-
pocket threshold specified in section 1860D-
2(b)(4)(B)(i) for the year, the manufacturer of
the applicable drug shall provide the
discounted price--
``(I) in accordance with
subparagraph (A)(i) on the portion of
the negotiated price of the applicable
drug that falls below such threshold;
and
``(II) in accordance with
subparagraph (A)(ii) on the portion of
such price of such drug that falls at
or above such threshold.
``(5) Manufacturer.--The term `manufacturer' means any
entity which is engaged in the production, preparation,
propagation, compounding, conversion, or processing of
prescription drug products, either directly or indirectly by
extraction from substances of natural origin, or independently
by means of chemical synthesis, or by a combination of
extraction and chemical synthesis. Such term does not include a
wholesale distributor of drugs or a retail pharmacy licensed
under State law.
``(6) Negotiated price.--The term `negotiated price' has
the meaning given such term in section 423.100 of title 42,
Code of Federal Regulations (as in effect on the date of
enactment of section 1860D-14A), except that such negotiated
price shall not include any dispensing fee for the applicable
drug.
``(7) Qualified retiree prescription drug plan.--The term
`qualified retiree prescription drug plan' has the meaning
given such term in section 1860D-22(a)(2).''.
(2) Sunset of medicare coverage gap discount program.--
Section 1860D-14A of the Social Security Act (42 U.S.C. 1395-
114a) is amended--
(A) in subsection (a), in the first sentence, by
striking ``The Secretary'' and inserting ``Subject to
subsection (h), the Secretary''; and
(B) by adding at the end the following new
subsection:
``(h) Sunset of Program.--
``(1) In general.--The program shall not apply with respect
to applicable drugs dispensed on or after January 1, 2022, and,
subject to paragraph (2), agreements under this section shall
be terminated as of such date.
``(2) Continued application for applicable drugs dispensed
prior to sunset.--The provisions of this section (including all
responsibilities and duties) shall continue to apply after
January 1, 2022, with respect to applicable drugs dispensed
prior to such date.''.
(3) Inclusion of actuarial value of manufacturer discounts
in bids.--Section 1860D-11 of the Social Security Act (42
U.S.C. 1395w-111) is amended--
(A) in subsection (b)(2)(C)(iii)--
(i) by striking ``assumptions regarding the
reinsurance'' an inserting ``assumptions
regarding--
``(I) the reinsurance''; and
(ii) by adding at the end the following:
``(II) for 2022 and each subsequent
year, the manufacturer discounts
provided under section 1860D-14C
subtracted from the actuarial value to
produce such bid; and''; and
(B) in subsection (c)(1)(C)--
(i) by striking ``an actuarial valuation of
the reinsurance'' and inserting ``an actuarial
valuation of--
``(i) the reinsurance'';
(ii) in clause (i), as inserted by clause
(i) of this subparagraph, by adding ``and'' at
the end; and
(iii) by adding at the end the following:
``(ii) for 2022 and each subsequent year,
the manufacturer discounts provided under
section 1860D-14C;''.
(d) Conforming Amendments.--
(1) Section 1860D-2 of the Social Security Act (42 U.S.C.
1395w-102) is amended--
(A) in subsection (a)(2)(A)(i)(I), by striking ``,
or an increase in the initial'' and inserting ``or, for
a year preceding 2022, an increase in the initial'';
(B) in subsection (c)(1)(C)--
(i) in the subparagraph heading, by
striking ``at initial coverage limit''; and
(ii) by inserting ``for a year preceding
2022 or the annual out-of-pocket threshold
specified in subsection (b)(4)(B) for the year
for 2022 and each subsequent year'' after
``subsection (b)(3) for the year'' each place
it appears; and
(C) in subsection (d)(1)(A), by striking ``or an
initial'' and inserting ``or, for a year preceding
2022, an initial''.
(2) Section 1860D-4(a)(4)(B)(i) of the Social Security Act
(42 U.S.C. 1395w-104(a)(4)(B)) is amended by striking ``the
initial'' and inserting ``for a year preceding 2022, the
initial''.
(3) Section 1860D-14(a) of the Social Security Act (42
U.S.C. 1395w-114(a)) is amended--
(A) in paragraph (1)--
(i) in subparagraph (C), by striking ``The
continuation'' and inserting ``For a year
preceding 2022, the continuation'';
(ii) in subparagraph (D)(iii), by striking
``1860D-2(b)(4)(A)(i)(I)'' and inserting
``1860D-2(b)(4)(A)(i)(I)(aa)''; and
(iii) in subparagraph (E), by striking
``The elimination'' and inserting ``For a year
preceding 2022, the elimination''; and
(B) in paragraph (2)--
(i) in subparagraph (C), by striking ``The
continuation'' and inserting ``For a year
preceding 2022, the continuation''; and
(ii) in subparagraph (E)--
(I) by inserting ``for a year
preceding 2022,'' after ``subsection
(c)''; and
(II) by striking ``1860D-
2(b)(4)(A)(i)(I)'' and inserting
``1860D-2(b)(4)(A)(i)(I)(aa)''.
(4) Section 1860D-21(d)(7) of the Social Security Act (42
U.S.C. 1395w-131(d)(7)) is amended by striking ``section 1860D-
2(b)(4)(B)(i)'' and inserting ``section 1860D-2(b)(4)(C)(i)''.
(5) Section 1860D-22(a)(2)(A) of the Social Security Act
(42 U.S.C. 1395w-132(a)(2)(A)) is amended--
(A) by striking ``the value of any discount'' and
inserting the following: ``the value of--
``(i) for years prior to 2022, any
discount''.
(B) in clause (i), as inserted by subparagraph (A)
of this paragraph, by striking the period at the end
and inserting ``; and''; and
(C) by adding at the end the following new clause:
``(ii) for 2022 and each subsequent year,
any discount provided pursuant to section
1860D-14C.''.
(6) Section 1860D-41(a)(6) of the Social Security Act (42
U.S.C. 1395w-151(a)(6)) is amended--
(A) by inserting ``for a year before 2022'' after
``1860D-2(b)(3)''; and
(B) by inserting ``for such year'' before the
period.
(7) Paragraph (1) of section 1860D-43(a) of the Social
Security Act (42 U.S.C. 1395w-153(a)) is amended to read as
follows:
``(1) participate in--
``(A) for 2011 through 2021, the Medicare coverage
gap discount program under section 1860D-14A; and
``(B) for 2022 and each subsequent year, the
manufacturer discount program under section 1860D-
14C;''.
(e) Effective Date.--The amendments made by this section shall
apply with respect to plan year 2022 and subsequent plan years.
Union Calendar No. 264
116th CONGRESS
1st Session
H. R. 3
[Report No. 116-324, Parts I, II and III]
_______________________________________________________________________
A BILL
To establish a fair price negotiation program, protect the Medicare
program from excessive price increases, and establish an out-of-pocket
maximum for Medicare part D enrollees, and for other purposes.
_______________________________________________________________________
December 9, 2019
Reported from the Committee on Education and Labor with an amendment;
committed to the Committee of the Whole House on the State of the Union
and ordered to be printed