[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 937 Introduced in House (IH)]
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116th CONGRESS
1st Session
H. R. 937
To amend title XIX of the Social Security Act to prevent the
misclassification of drugs for purposes of the Medicaid drug rebate
program.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
January 31, 2019
Mr. Schrader (for himself and Mr. Welch) introduced the following bill;
which was referred to the Committee on Energy and Commerce, and in
addition to the Committee on Ways and Means, 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
_______________________________________________________________________
A BILL
To amend title XIX of the Social Security Act to prevent the
misclassification of drugs for purposes of the Medicaid drug rebate
program.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Right Rebate Act of 2019''.
SEC. 2. PREVENTING THE MISCLASSIFICATION OF DRUGS UNDER THE MEDICAID
DRUG REBATE PROGRAM.
(a) Application of Civil Money Penalty for Misclassification of
Covered Outpatient Drugs.--
(1) In general.--Section 1927(b)(3) of the Social Security
Act (42 U.S.C. 1396r-8(b)(3)) is amended--
(A) in the paragraph heading, by inserting ``and
drug product'' after ``price'';
(B) in subparagraph (A)--
(i) in clause (ii), by striking ``; and''
at the end and inserting a semicolon;
(ii) in clause (iii), by striking the
period at the end and inserting a semicolon;
(iii) in clause (iv), by striking the
semicolon at the end and inserting ``; and'';
and
(iv) by inserting after clause (iv) the
following new clause:
``(v) not later than 30 days after the last
day of each month of a rebate period under the
agreement, such drug product information as the
Secretary shall require for each of the
manufacturer's covered outpatient drugs.''; and
(C) in subparagraph (C)--
(i) in clause (ii), by inserting ``,
including information related to drug pricing,
drug product information, and data related to
drug pricing or drug product information,''
after ``provides false information''; and
(ii) by adding at the end the following new
clauses:
``(iii) Misclassified or misreported
information.--
``(I) In general.--Any manufacturer
with an agreement under this section
that knowingly (as defined in section
1003.110 of title 42, Code of Federal
Regulations (or any successor
regulation)) misclassifies a covered
outpatient drug, such as by knowingly
submitting incorrect drug category
information, is subject to a civil
money penalty for each covered
outpatient drug that is misclassified
in an amount not to exceed 2 times the
amount of the difference, as determined
by the Secretary, between--
``(aa) the total amount of
rebates that the manufacturer
paid with respect to the drug
to all States for all rebate
periods during which the drug
was misclassified; and
``(bb) the total amount of
rebates that the manufacturer
would have been required to
pay, as determined by the
Secretary, with respect to the
drug to all States for all
rebate periods during which the
drug was misclassified if the
drug had been correctly
classified.
``(II) Other penalties and recovery
of underpaid rebates.--The civil money
penalties described in subclause (I)
are in addition to other penalties as
may be prescribed by law and any other
recovery of the underlying underpayment
for rebates due under this section or
the terms of the rebate agreement as
determined by the Secretary.
``(iv) Increasing oversight and
enforcement.--Each year the Secretary shall
retain, in addition to any amount retained by
the Secretary to recoup investigation and
litigation costs related to the enforcement of
the civil money penalties under this
subparagraph and subsection (c)(4)(B)(ii)(III),
an amount equal to 25 percent of the total
amount of civil money penalties collected under
this subparagraph and subsection
(c)(4)(B)(ii)(III) for the year, and such
retained amount shall be available to the
Secretary, without further appropriation and
until expended, for activities related to the
oversight and enforcement of this section and
agreements under this section, including--
``(I) improving drug data reporting
systems;
``(II) evaluating and ensuring
manufacturer compliance with rebate
obligations; and
``(III) oversight and enforcement
related to ensuring that manufacturers
accurately and fully report drug
information, including data related to
drug classification.''; and
(iii) in subparagraph (D)--
(I) in clause (iv), by striking ``,
and'' and inserting a comma;
(II) in clause (v), by striking
``subsection (f).'' and inserting
``subsection (f), and''; and
(III) by inserting after clause (v)
the following new clause:
``(vi) in the case of categories of drug
product or classification information that were
not considered confidential by the Secretary on
the day before the date of the enactment of
this clause.''.
(2) Technical amendments.--
(A) Section 1903(i)(10) of the Social Security Act
(42 U.S.C. 1396b(i)(10)) is amended--
(i) in subparagraph (C)--
(I) by adjusting the left margin so
as to align with the left margin of
subparagraph (B); and
(II) by striking ``, and'' and
inserting a semicolon;
(ii) in subparagraph (D), by striking ``;
or'' and inserting ``; and''; and
(iii) by adding at the end the following
new subparagraph:
``(E) with respect to any amount expended for a
covered outpatient drug for which a suspension under
section 1927(c)(4)(B)(ii)(II) is in effect; or''.
(B) Section 1927(b)(3)(C)(ii) of the Social
Security Act (42 U.S.C. 1396r-8(b)(3)(C)(ii)) is
amended by striking ``subsections (a) and (b)'' and
inserting ``subsections (a), (b), (f)(3), and (f)(4)''.
(b) Recovery of Unpaid Rebate Amounts Due to Misclassification of
Covered Outpatient Drugs.--
(1) In general.--Section 1927(c) of the Social Security Act
(42 U.S.C. 1396r-8(c)) is amended by adding at the end the
following new paragraph:
``(4) Recovery of unpaid rebate amounts due to
misclassification of covered outpatient drugs.--
``(A) In general.--If the Secretary determines that
a manufacturer with an agreement under this section
paid a lower per-unit rebate amount to a State for a
rebate period as a result of the misclassification by
the manufacturer of a covered outpatient drug (without
regard to whether the manufacturer knowingly made the
misclassification or should have known that the
misclassification would be made) than the per-unit
rebate amount that the manufacturer would have paid to
the State if the drug had been correctly classified,
the manufacturer shall pay to the State an amount equal
to the product of--
``(i) the difference between--
``(I) the per-unit rebate amount
paid to the State for the period; and
``(II) the per-unit rebate amount
that the manufacturer would have paid
to the State for the period, as
determined by the Secretary, if the
drug had been correctly classified; and
``(ii) the total units of the drug paid for
under the State plan in the period.
``(B) Authority to correct misclassifications.--
``(i) In general.--If the Secretary
determines that a manufacturer with an
agreement under this section has misclassified
a covered outpatient drug (without regard to
whether the manufacturer knowingly made the
misclassification or should have known that the
misclassification would be made), the Secretary
shall notify the manufacturer of the
misclassification and require the manufacturer
to correct the misclassification in a timely
manner.
``(ii) Enforcement.--If, after receiving
notice of a misclassification from the
Secretary under clause (i), a manufacturer
fails to correct the misclassification by such
time as the Secretary shall require, until the
manufacturer makes such correction, the
Secretary may--
``(I) correct the misclassification
on behalf of the manufacturer;
``(II) suspend the misclassified
drug and the drug's status as a covered
outpatient drug under the
manufacturer's national rebate
agreement; or
``(III) impose a civil money
penalty (which shall be in addition to
any other recovery or penalty which may
be available under this section or any
other provision of law) for each rebate
period during which the drug is
misclassified not to exceed an amount
equal to the product of--
``(aa) the total number of
units of each dosage form and
strength of such misclassified
drug paid for under any State
plan during such a rebate
period; and
``(bb) 23.1 percent of the
average manufacturer price for
the dosage form and strength of
such misclassified drug.
``(C) Reporting and transparency.--
``(i) In general.--The Secretary shall
submit a report to Congress on at least an
annual basis that includes information on the
covered outpatient drugs that have been
identified as misclassified, the steps taken to
reclassify such drugs, the actions the
Secretary has taken to ensure the payment of
any rebate amounts which were unpaid as a
result of such misclassification, and a
disclosure of expenditures from the fund
created in subsection (b)(3)(C)(iv), including
an accounting of how such funds have been
allocated and spent in accordance with such
subsection.
``(ii) Public access.--The Secretary shall
make the information contained in the report
required under clause (i) available to the
public on a timely basis.
``(D) Other penalties and actions.--Actions taken
and penalties imposed under this clause shall be in
addition to other remedies available to the Secretary
including terminating the manufacturer's rebate
agreement for noncompliance with the terms of such
agreement and shall not exempt a manufacturer from, or
preclude the Secretary from pursuing, any civil money
penalty under this title or title XI, or any other
penalty or action as may be prescribed by law.''.
(2) Offset of recovered amounts against medical
assistance.--Section 1927(b)(1)(B) of the Social Security Act
(42 U.S.C. 1396r-8(b)(1)(B)) is amended by inserting ``,
including amounts received by a State under subsection
(c)(4),'' after ``in any quarter''.
(c) Clarifying Definitions.--Section 1927(k)(7)(A) of the Social
Security Act (42 U.S.C. 1396r-8(k)(7)(A)) is amended--
(1) by striking ``an original new drug application'' and
inserting ``a new drug application'' each place it appears;
(2) in clause (i), by inserting ``but including a drug
product approved for marketing as a non-prescription drug that
is regarded as a covered outpatient drug under paragraph (4)''
after ``drug described in paragraph (5)'';
(3) in clause (ii), by striking ``was originally marketed''
and inserting ``is marketed''; and
(4) in clause (iv)--
(A) by inserting ``, including a drug product
approved for marketing as a non-prescription drug that
is regarded as a covered outpatient drug under
paragraph (4),'' after ``covered outpatient drug''; and
(B) by adding at the end the following new
sentence: ``Such term also includes a covered
outpatient drug that is a biological product licensed,
produced, or distributed under a biologics license
application approved by the Food and Drug
Administration.''
(d) Exclusion of Manufacturers for Knowing Misclassification of
Covered Outpatient Drugs.--Section 1128(b) of the Social Security Act
(42 U.S.C. 1320a-7(b)) is amended by adding at the end the following
new paragraph:
``(17) Knowingly misclassifying covered outpatient drugs.--
Any manufacturer or officer, director, agent, or managing
employee of such manufacturer that knowingly misclassifies a
covered outpatient drug under an agreement under section 1927,
knowingly fails to correct such misclassification, or knowingly
provides false information related to drug pricing, drug
product information, or data related to drug pricing or drug
product information.''.
(e) Effective Date.--The amendments made by this section shall take
effect on the date of the enactment of this Act, and shall apply to
covered outpatient drugs supplied by manufacturers under agreements
under section 1927 of the Social Security Act (42 U.S.C. 1396r-8) on or
after such date.
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