[Congressional Record Volume 148, Number 79 (Friday, June 14, 2002)]
[Senate]
[Pages S5584-S5613]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
By Mr. GRAHAM (for himself, Mr. Miller, Mr. Kennedy, Mr.
Rockefeller, Mr. Daschle, Mr. Cleland, Mr. Inouye, Mr. Reid,
Ms. Mikulski, Mr. Johnson, Mr. Leahy, Mrs. Clinton, Mr. Nelson
of Florida, Mr. Sarbanes, Mr. Bingaman, Ms.
[[Page S5585]]
Stabenow, Mr. Wellstone, Mr. Hollings, Mrs. Murray, Mr.
Schumer, Mr. Akaka, Mrs. Boxer, Mr. Reed, Mr. Dodd, Mr. Levin,
Mrs. Carnahan, Ms. Cantwell, Mr. Durbin, and Mr. Dayton):
S. 2625. A bill to amend title XVIII of the Social Security Act to
provide coverage of outpatient prescription drugs under the Medicare
Program; to the Committee on Finance.
Mr. GRAHAM. Madam President, along with my colleagues, Senators,
Miller and Kennedy, I am very pleased to announce the introduction of
the Medicare Outpatient Prescription Drug Act of 2002.
A prescription drug benefit is the most fundamental shift we can make
in the health care of older Americans. Adding a prescription drug
benefit to Medicare will represent a 180 degree turn, a change in the
focus of how we deliver health care to our Nation's seniors.
Quite simply, including prescription drugs will transform Medicare
from a sickness program to a wellness program. Failure to provide a
prescription drug benefit will continue to confine millions of elderly
Americans to a system that is antiquated, one that only looks backward,
not forward.
The sponsors of this legislation do not buy the conventional wisdom
that nothing significant can be enacted in an election year. We are
committed to meeting our goal this year: passage of a universal,
comprehensive, and affordable prescription drug benefit.
To be sure, there are questions in this debate which still remain.
But, the most important question, ``will our drug benefit meet seniors'
needs?'', can be answered with a resounding ``YES.''
The voluntary benefit we are offering to all seniors is very simple,
no gimmicks, gotchas or ``gaps'' to fall into. With our benefit, ``what
you see is what you get.'' Seniors will know exactly what they will
pay, and exactly what they will get: the monthly premium is $25, no
matter where a person lives; all beneficiaries get assistance from the
very first prescription of the year.
For the first two years, seniors will pay $10 for each generic
prescription, and no more than $40 for all medically-necessary brand-
name medicines. All other drugs would cost no more than $60. After two
years, the co-pay will be indexed to the increase in prescription drug
prices.
Seniors who either pay $4,000 out of their own pocket or have a third
party contribute towards this $4,000 spending level would pay no more.
Seniors with very low incomes, below 135 percent of poverty, would
pay no premiums. Seniors with incomes between 135 and 150 percent of
the poverty level would pay reduced premiums.
And no senior will be faced with a burdensome ``asset test'' that
could deny them the very drugs they need.
This kind of certainty, and this kind of help, is what beneficiaries
need. Take, for example a 68-year-old man with two conditions very
common among the elderly, congestive heart failure and diabetes, and no
drug coverage. He would have to spend over $5,100 annually for a
typical medication regimen. Under our plan, this gentleman would get
the medicines he needs to stay healthy, and would save nearly $3,300.
In addition to being affordable, comprehensive, and universally
available to all of America's seniors, we need a drug benefit that will
be attractive to beneficiaries. Why? Because voluntary participation of
all seniors will ensure that we will have a program that is sustainable
for the long run. A program that attracts only the sickest
beneficiaries is doomed to fail.
The Congressional Budget Office has evaluated our plan and has stated
that it does not leave a single Medicare beneficiary without access to
drug coverage.
How does this bill achieve this goal? By following the principle that
the drug benefit should track the prescription drug benefits that
seniors have been accustomed to in their working years. We have an
attractive benefit with an affordable premium and a catastrophic
provision that is an insurance policy for all elderly, in particular,
for those seniors who are healthy right now, but who may face health
problems later in life. We have modeled our bill after what works for
most Americans right now. Our benefit includes tiered copayments, and
we use as our delivery system the private sector model in place today
in every part of the country.
Addition of a prescription drug benefit will be the largest expansion
of the Medicare program since it was initiated in 1965. This fact
challenges Congress to be sure that we get it right. In light of the
scope of the changes we are making, we are suggesting that, after seven
years, Congress should examine how well the benefit is working and to
make whatever modifications are necessary and appropriate. Not only
will we learn about how our delivery system has worked, but we can
discover that access to prescription drugs will save Medicare money.
How? By doctors prescribing medications instead of performing costly
medical procedures. A physician on my staff recently told me that his
students had never seen an ulcer operation. Why? Because prescription
drugs have ended the need for this surgery.
Improving Medicare by including a prescription drug benefit is a
serious and critical undertaking, and deserves our most serious
efforts. We all know that our seniors cannot afford to wait out another
election cycle.
I am pleased to announce that the American Association of Retired
Persons, America Federation of State and County Municipal Employees,
the National Council on the Aging, Families USA, the AFL-CIO, the
Alliance for Retired Americans, the National Committee to Preserve
Social Security and Medicare, and the Generic Pharmaceutical
Association support our legislation. I ask unanimous consent that their
letters of support be printed in the Record. With their help, we can
get this done this year.
There being no objection, the letters were ordered to be printed in
the Record, as follows:
AARP,
Washington, DC, June 12, 2002.
Hon. Bob Graham and Hon. Zell Miller,
U.S. Senate,
Washington, DC.
Dear Senators: We are pleased to restate our position on
your revised Medicare prescription drug proposal. Action on a
bipartisan prescription drug benefit is a top priority for
AARP, our members and the nation.
Medicare beneficiaries have waited long enough for access
to meaningful, affordable prescription drug coverage. We know
from our membership that in order for a Medicare prescription
drug benefit to provide comprehensive coverage it must
include:
An affordable premium and coinsurance;
Meaningful catastrophic stop-loss that limits out-of-pocket
costs;
A benefit that does not expose beneficiaries to a gap in
insurance coverage;
Additional assistance for low-income beneficiaries; and
Quality and safety features to curb unnecessary costs and
prevent dangerous drug interactions.
AARP supports your initiative in incorporate these goals.
We commend you for including key elements in your proposal
that Medicare beneficiaries and our members have indicated
they find valuable. For instance, your proposal includes a
premium that many Medicare beneficiaries view as affordable
and a benefit design that does not include a gap in insurance
coverage. Your proposal also now includes co-payments
specified as dollar amounts, an approach that our research
shows our members prefer to coinsurance. In our view, this
plan could provide real value to beneficiaries in protecting
them against the high costs of prescription drugs.
It is important that any prescription drug benefit be made
a permanent and stable part of Medicare, and we want to work
with you to achieve this before enactment.
Thank you for your leadership on this issue. We look
forward to working with you and your colleagues as the
legislation moves forward. AARP will continue to urge
Congress to work in a bipartisan manner to enact affordable,
meaningful Medicare prescription drug coverage.
Sincerely,
William D. Novelli,
Executive Director and CEO.
____
The National Council on the Aging,
Washington, DC, June 11, 2002.
Hon. Bob Graham,
Hart Senate Office Building,
Washington, DC.
Dear Senator Graham: On behalf of the National Council on
the Aging (NCOA)--the nation's first organization formed to
represent America's seniors and those who serve them--I write
to commend and thank you for your proposal to provide
meaningful Medicare prescription drug coverage to America's
seniors. The Medicare Outpatient Prescription Drug Act of
2002 is consistent with the principles supported by the vast
majority of
[[Page S5586]]
organizations representing Medicare beneficiaries. It
provides the foundation for a vehicle that we hope can
achieve bipartisan consensus on this issue this year.
NCOA is particularly pleased that your legislation would
provide prescription drug coverage that is universal,
voluntary, reliable, and continuous. Other proposals being
offered include significant coverage gaps and would fail to
solve the problem. Under such bills, a significant number of
beneficiaries would not want to participate in the program,
and many of those who do participate would continue to be
forced to choose between buying food and essential medicines.
We commend many of the modifications you have made to your
Medicare bill from last year. These improvements include a
significantly lower premium, the option to provide a flat
copayment, an earlier effective date, and assistance with the
very first prescription. We believe these changes will make
the coverage affordable and attractive to the vast majority
of beneficiaries, which is so critical to making a voluntary
prescription drug program work. While we have concerns about
the need to reauthorize the program after 2010, we understand
the budget trade-offs needed to provide meaningful and
attractive coverage, and fully expect that the Congress would
reauthorize the program.
NCOA is also pleased that your proposal does not include
price controls and that the program would promote stability
and efficiency through administration by multiple, competing
Pharmacy Benefit Managers (PBMs), using management tools
available in the private sector in which PBMs would be at
risk of their performance, including effective cost
containment.
NCOA deeply appreciates your efforts to move this critical
debate in a direction that guarantees access to meaningful
coverage--even in rural and frontier areas of the country--
and responds in a constructive manner to many of the specific
concerns that have been raised regarding other Medicare
prescription drug proposals.
It is impossible to have real health security without
coverage for prescription drugs. Prescription drug coverage
is the number one legislative priority for America's seniors.
Virtually every member of Congress has made campaign promises
to try to pass a good prescription drug bill. The time has
come to get serious and to work together to achieve consensus
on the issues in controversy. Your proposal provides us with
an excellent starting point.
NCOA looks forward to working on a bipartisan basis with
you and other members of Congress to pass legislation this
year that provides meaningful, continuous, affordable
prescription drug coverage to all Medicare beneficiaries.
Sincerely,
James Firman,
President and CEO.
____
National Committee to Preserve
Social Security and Medicare,
Washington, DC, June 12, 2002.
Sen. Bob Graham,
Senate Hart Office Building,
Washington, DC.
Dear Senator Graham: On behalf of the millions of members
and supporters of the National Committee to Preserve Social
Security and Medicare, I write in support of your Medicare
prescription drug legislation that will provide much needed
relief to seniors. Your bill contains all of the elements
that seniors need in a comprehensive drug benefit under
Medicare, such as universal, voluntary, affordable, not means
tested and most importantly, with a defined benefit, so that
seniors can plan accordingly. Prescription drug prices are
increasing over 17% per year (faster than inflation) and
seniors are spending more on out-of-pocket drug expenditures
than ever. The time is now to enact a drug benefit that will
provide the Medicare beneficiary with some assistance.
We are pleased that your plan would be available for
seniors, no matter where they live. Our members have
expressed to us that a prescription drug benefit must be
affordable. We believe that a plan such as yours, with no
annual deductible and a $4,000 cap on out of pocket
expenditures, is reasonable and one that most seniors would
be able to afford.
We applaud you for your leadership in this area. Please let
me know how we can further support your efforts.
Sincerely,
Barbara Kennelly,
President.
____
Families USA,
Washington, DC, June 13, 2002.
Sen. Bob Graham,
Hart Senate Office Building,
Washington, DC.
Dear Senator Graham: We congratulate you and Senators
Miller, Kennedy and Rockefeller on the introduction of your
bill, ``The Medicare Outpatient Prescription Drug Act,''
which provides a prescription drug benefit for Medicare
beneficiaries.
This is an issue of utmost importance to all Americans who
need prescription drugs, especially to seniors and people
with disabilities. As you well know, seniors' ability to
afford prescription drugs is a particularly difficult problem
today. In our 2001 report entitled, ``Enough to Make You
Sick: Prescription Drug Prices for the Elderly,'' we
concluded that the 50 top drugs used by seniors rose 2.3
times the rate of inflation between 2000 and 2001. We are in
the process of updating this report for last year, and our
preliminary data shows that this devastating rate of price
increases continues. Millions of seniors have limited income
and no, or limited, drug coverage and will find themselves
deciding whether to buy drugs or to pay for other essentials.
Your bill addresses many important design issues that we
care about in a Medicare prescription drug benefit. The
benefit is universal, comprehensive, and is delivered through
the Medicare program, ensuring that seniors know it will be
available to them when it is needed. Low-income people get
extra assistance. Also, there are provisions to assure that
costs will be contained and quality maintained.
Please let us know how we can assist you to move this bill
toward enactment so that all Medicare beneficiaries can have
access to the prescription drugs they need.
Sincerely,
Ronald F. Pollack,
Executive Director.
____
American Federation of State, County and Municipal
Employees, AFL-CIO,
Washington, DC, June 12, 2002.
Senators Edward Kennedy, Bob Graham, and Zell Miller,
U.S. Senate,
Washington, DC.
Dear Senators: On behalf of the 1.3 million members of the
American Federation of State, County and Municipal Employees
(AFSCME), I am writing to express our support for the
Medicare prescription drug benefit proposal you unveiled
today.
AFSCME has long supported the creation of a Medicare
prescription drug benefit that is comprehensive in coverage,
affordable and voluntary for all Medicare beneficiaries. We
believe that your proposal is a solid step forward in meeting
these standards.
In particular, we applaud your proposal's provisions for
continuous coverage. We believe that it is one of the most
critical components of a meaningful prescription drug
benefit. Beneficiaries must have coverage they can count on,
with no gaps in coverage. Doing anything less would force our
seniors to pay all prescription costs out of their own pocket
when they will need the coverage the most.
Since Medicare was started over 35 years ago, many
illnesses that were once only treatable in a hospital can now
be effectively treated with prescription drugs. Adding a drug
benefit to the program is the most urgently needed Medicare
reform. We applaud you for not holding the prescription drug
benefit hostage to force radical privatization proposals that
would cut benefits and increase costs for retirees.
We look forward to working with you and the other sponsors
of this important legislation. A Medicare prescription drug
benefit is long overdue, and our nation's seniors deserve no
less.
Sincerely,
Charles M. Loveless,
Director of Legislation.
____
American Federation of Labor and Congress of Industrial
Organizations,
Washington, DC, June 12, 2002.
Hon. Bob Graham,
U.S. Senate, Hart Senate Office Building, Washington, DC.
Dear Senator Graham: On behalf of the 13 million members of
the AFL-CIO, I am writing to commend you for your efforts to
provide much-needed relief to Medicare beneficiaries. Your
proposal to create a voluntary drug benefit within the
Medicare program represents an encouraging and solid step
toward enacting the one reform most urgently needed for
Medicare.
Seniors need a real benefit that provides comprehensive,
continuous and certain coverage. The Graham-Miller-Kennedy
bill provides that benefit, giving seniors coverage they can
count on. A Medicare drug benefit must also be affordable for
beneficiaries. The $25 monthly premium and zero deductible in
your proposal means seniors need only pay an affordable
premium to begin getting coverage immediately. And no senior
will have to pay more than $40 for the drugs they need and
often will pay less.
In addition, your proposal would not put at risk those
retirees who currently have some prescription drug coverage
through an employer. Retiree health care is the primary
source of prescription drug coverage for seniors, and your
proposal rightly provides some relief for employers that
choose to continue that coverage.
A proposal widely reported under consideration by House
Republican leaders offers only unreliable, expensive and
unworkable coverage through private plans, with an enormous
gap in coverage that leaves seniors without any coverage at
all for drug costs between $2000 and $4500. And the only
relief for employers is if they drop the coverage they now
offer. Such a proposal will not move us any closer to a real
benefit.
As this debate moves forward, we want to work with you and
your co-sponsors to enact the best possible Medicare drug
benefit. We appreciate your role in advancing that process.
Sincerely,
William Samuel,
Director of Legislation.
[[Page S5587]]
____
Alliance for Retired Americans,
Washington, DC, June 12, 2002.
Sen. Edward M. Kennedy,
U.S. Senate,
Washington, DC.
Dear Senator Kennedy: On behalf of the over 2.7 million
members of the Alliance for Retired Americans, I want to
thank you for your tireless work on behalf of older and
disabled Americans to create a Medicare prescription drug
benefit program. I also want to express our views on the
Medicare prescription drug legislation proposed by you and
Senators Graham and Miller. The Alliance supports this
proposal as a positive step forward in the effort to create a
Medicare prescription drug benefit program.
The Alliance for Retired Americans believes that all older
and disabled Americans need an affordable, comprehensive, and
voluntary Medicare prescription drug benefit now. Such a
benefit program should have low monthly premiums, annual
deductibles, and be administered as part of the Medicare
program. Your proposed legislation meets these Alliance
principles. Unlike other proposals that would begin in 2005,
your plan would start in 2004, which gives beneficiaries the
coverage they need a full year earlier.
The Alliance will work to enact your legislation. During
legislative deliberations, the Alliance will seek to improve
benefits because we believe that an 80/20 co-insurance
payment system, like the rest of Medicare, will provide the
best benefits for older and disabled Americans. The Alliance
also supports a $2,000 annual catastrophic cap. We will
continue to work to improve any legislation that moves
through Congress in order to reach these goals.
Older Americans will spend $1.8 trillion on prescription
drugs during the next decade. The inflation rate for
prescription drugs will continue at an annual double digit
pace as well. Our members and indeed all Americans simply
cannot afford these costs. We look forward to working with
you and Senators Graham and Miller to enact a comprehensive
Medicare prescription drug benefit as soon as possible.
Sincerely yours,
Edward F. Coyle,
Executive Director.
____
Generic Pharmaceutical Association,
Washington, DC, June 12, 2002.
Hon. Bob Graham,
Hart Senate Office Building,
Washington, DC.
Dear Senator Graham: On behalf of the Generic
Pharmaceutical Association (GPhA), we would like to commend
you and Senators Miller and Kennedy for your leadership
introducing legislation to create a Medicare prescription
drug benefit for our nation's seniors. We agree with you that
the passage and enactment of a voluntary Medicare
prescription drug benefit is long overdue. We are strongly
supportive of your innovative tiered co-pay structure, as
well as the other provisions advocated by you and your
colleagues, that are designed to increase the utilization of
high-quality, affordable generic medicines.
Generic pharmaceuticals have a proven track record of
substantially lowering drug costs. Studies have shown that
for every 1 percent increase in generic drug utilization,
consumer, business, and health plan purchasers save over $1
billion. The increased use of generics can play an invaluable
role in helping Medicare, Medicaid, the Federal Employees
Health Benefit Plan (FEHBP) and other Federal and private
plans assure that beneficiaries have access to quality,
affordable medications. A tiered co-pay system with a
significant differential between brand and generic
pharmaceuticals will ensure an appropriate incentive is in
place for seniors to consider more cost-effective options
when making choices about pharmaceutical therapies. We
believe an explicit dollar co-pay will also provide seniors
with the comfort of knowing they will pay a fixed cost to
have their prescriptions filled.
With your leadership, the Graham/Miller/Kennedy bill
employs a number of private sector best practices that are
now widely used to assure access to cost-effective, quality
affordable medications. These provisions not only encourage
the appropriate and beneficial use of these products, but
provide unbiased and greatly needed educational information
to the public about the benefits of these medicines.
The Graham/Miller/Kennedy bill adheres to GPhA's principles
for creating a Medicare prescription drug benefit and steers
the Medicare reform debate down a prudent public policy path.
We look forward to working with you, your cosponsors and with
other Members of the House and Senate of both parties to
further our common objective of providing our nation's nearly
40 million Medicare beneficiaries and the taxpayers who help
support them with the most affordable and highest quality
prescription drug benefit possible. If the rest of the
Congress and the Administration follow your lead in
recognizing the role generics must play in reaching this
objective, we are confident we will achieve this goal.
Thank you again for your efforts. If we can be of any
assistance to you, please do not hesitate to call.
Sincerely,
Kathleen Jaeger,
President and CEO.
Mr. GRAHAM. I want to thank Senators Miller and Kennedy for their
leadership and commitment to this issue, and urge all of our colleagues
to join us in ensuring passage of this critical legislation this year.
I ask unanimous consent that the text of the legislation be printed
in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 2625
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) Short Title.--This Act may be cited as the ``Medicare
Outpatient Prescription Drug Act of 2002''.
(b) Table of Contents.--The table of contents of this Act
is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Medicare outpatient prescription drug benefit program.
``Part D--Outpatient Prescription Drug Benefit Program
``Sec. 1860. Definitions.
``Sec. 1860A. Establishment of outpatient prescription drug benefit
program.
``Sec. 1860B. Enrollment under program.
``Sec. 1860C. Enrollment in a plan.
``Sec. 1860D. Providing information to beneficiaries.
``Sec. 1860E. Premiums.
``Sec. 1860F. Outpatient prescription drug benefits.
``Sec. 1860G. Entities eligible to provide outpatient drug benefit.
``Sec. 1860H. Minimum standards for eligible entities.
``Sec. 1860I. Payments.
``Sec. 1860J. Employer incentive program for employment-based retiree
drug coverage.
``Sec. 1860K. Prescription Drug Account in the Federal Supplementary
Medical Insurance Trust Fund.
``Sec. 1860L. Medicare Prescription Drug Advisory Committee.''.
Sec. 3. Part D benefits under Medicare+Choice plans.
Sec. 4. Additional assistance for low-income beneficiaries.
Sec. 5. Medigap revisions.
Sec. 6. HHS studies and report on uniform pharmacy benefit cards and
systems for transferring prescriptions electronically.
Sec. 7. GAO study and biennial reports on competition and savings.
Sec. 8. Expansion of membership and duties of Medicare Payment Advisory
Commission (MedPAC).
SEC. 2. MEDICARE OUTPATIENT PRESCRIPTION DRUG BENEFIT
PROGRAM.
(a) Establishment.--Title XVIII of the Social Security Act
(42 U.S.C. 1395 et seq.) is amended by redesignating part D
as part E and by inserting after part C the following new
part:
``Part D--Outpatient Prescription Drug Benefit Program
``definitions
``Sec. 1860. In this part:
``(1) Covered outpatient drug.--
``(A) In general.--Except as provided in subparagraph (B),
the term `covered outpatient drug' means any of the following
products:
``(i) A drug which may be dispensed only upon prescription,
and--
``(I) which is approved for safety and effectiveness as a
prescription drug under section 505 of the Federal Food,
Drug, and Cosmetic Act;
``(II)(aa) which was commercially used or sold in the
United States before the date of enactment of the Drug
Amendments of 1962 or which is identical, similar, or related
(within the meaning of section 310.6(b)(1) of title 21 of the
Code of Federal Regulations) to such a drug, and (bb) which
has not been the subject of a final determination by the
Secretary that it is a `new drug' (within the meaning of
section 201(p) of the Federal Food, Drug, and Cosmetic Act)
or an action brought by the Secretary under section 301,
302(a), or 304(a) of such Act to enforce section 502(f) or
505(a) of such Act; or
``(III)(aa) which is described in section 107(c)(3) of the
Drug Amendments of 1962 and for which the Secretary has
determined there is a compelling justification for its
medical need, or is identical, similar, or related (within
the meaning of section 310.6(b)(1) of title 21 of the Code of
Federal Regulations) to such a drug, and (bb) for which the
Secretary has not issued a notice of an opportunity for a
hearing under section 505(e) of the Federal Food, Drug, and
Cosmetic Act on a proposed order of the Secretary to withdraw
approval of an application for such drug under such section
because the Secretary has determined that the drug is less
than effective for all conditions of use prescribed,
recommended, or suggested in its labeling.
``(ii) A biological product which--
``(I) may only be dispensed upon prescription;
``(II) is licensed under section 351 of the Public Health
Service Act; and
``(III) is produced at an establishment licensed under such
section to produce such product.
``(iii) Insulin approved under appropriate Federal law,
including needles, syringes, and disposable pumps for the
administration of such insulin.
``(iv) A prescribed drug or biological product that would
meet the requirements of
[[Page S5588]]
clause (i) or (ii) except that it is available over-the-
counter in addition to being available upon prescription.
``(B) Exclusion.--The term `covered outpatient drug' does
not include any product--
``(i) except as provided in subparagraph (A)(iv), which may
be distributed to individuals without a prescription;
``(ii) for which payment is available under part A or B or
would be available under part B but for the application of a
deductible under such part (unless payment for such product
is not available because benefits under part A or B have been
exhausted), determined, except as provided in subparagraph
(C), without regard to whether the beneficiary involved is
entitled to benefits under part A or enrolled under part B;
or
``(iii) except for agents used to promote smoking cessation
and agents used for the treatment of obesity, for which
coverage may be excluded or restricted under section
1927(d)(2).
``(C) Clarification regarding immunosuppressive drugs.--In
the case of a beneficiary who is not eligible for any
coverage under part B of drugs described in section
1861(s)(2)(J) because of the requirements under such section
(and would not be so eligible if the individual were enrolled
under such part), the term `covered outpatient drug' shall
include such drugs if the drugs would otherwise be described
in subparagraph (A).
``(2) Eligible beneficiary.--The term `eligible
beneficiary' means an individual that is entitled to benefits
under part A or enrolled under part B.
``(3) Eligible entity.--The term `eligible entity' means
any entity that the Secretary determines to be appropriate to
provide eligible beneficiaries with covered outpatient drugs
under a plan under this part, including--
``(A) a pharmacy benefit management company;
``(B) a retail pharmacy delivery system;
``(C) a health plan or insurer;
``(D) a State (through mechanisms established under a State
plan under title XIX);
``(E) any other entity approved by the Secretary; or
``(F) any combination of the entities described in
subparagraphs (A) through (E) if the Secretary determines
that such combination--
``(i) increases the scope or efficiency of the provision of
benefits under this part; and
``(ii) is not anticompetitive.
``(4) Medicare+choice organization; medicare+choice plan.--
The terms `Medicare+Choice organization' and `Medicare+Choice
plan' have the meanings given such terms in subsections
(a)(1) and (b)(1), respectively, of section 1859 (relating to
definitions relating to Medicare+Choice organizations).
``(5) Prescription drug account.--The term `Prescription
Drug Account' means the Prescription Drug Account (as
established under section 1860K) in the Federal Supplementary
Medical Insurance Trust Fund under section 1841.
``establishment of outpatient prescription drug benefit program
``Sec. 1860A. (a) Provision of Benefit.--
``(1) In general.--Beginning in 2004, the Secretary shall
provide for and administer an outpatient prescription drug
benefit program under which each eligible beneficiary
enrolled under this part shall be provided with coverage of
covered outpatient drugs as follows:
``(A) Medicare+choice plan.--If the eligible beneficiary is
eligible to enroll in a Medicare+Choice plan, the
beneficiary--
``(i) may enroll in such a plan; and
``(ii) if so enrolled, shall obtain coverage of covered
outpatient drugs through such plan.
``(B) Medicare prescription drug plan.--If the eligible
beneficiary is not enrolled in a Medicare+Choice plan, the
beneficiary shall obtain coverage of covered outpatient drugs
through enrollment in a plan offered by an eligible entity
with a contract under this part.
``(2) Voluntary nature of program.--Nothing in this part
shall be construed as requiring an eligible beneficiary to
enroll in the program established under this part.
``(3) Scope of benefits.--The program established under
this part shall provide for coverage of all therapeutic
classes of covered outpatient drugs.
``(b) Access to Alternative Prescription Drug Coverage.--In
the case of an eligible beneficiary who has creditable
prescription drug coverage (as defined in section
1860B(b)(1)(F)), such beneficiary--
``(1) may continue to receive such coverage and not enroll
under this part; and
``(2) pursuant to section 1860B(b)(1)(C), is permitted to
subsequently enroll under this part without any penalty and
obtain coverage of covered outpatient drugs in the manner
described in subsection (a) if the beneficiary involuntarily
loses such coverage.
``(c) Financing.--The costs of providing benefits under
this part shall be payable from the Prescription Drug
Account.
``enrollment under program
``Sec. 1860B. (a) Establishment of Process.--
``(1) Process similar to enrollment under part b.--The
Secretary shall establish a process through which an eligible
beneficiary (including an eligible beneficiary enrolled in a
Medicare+Choice plan offered by a Medicare+Choice
organization) may make an election to enroll under this part.
Such process shall be similar to the process for enrollment
in part B under section 1837, including the deeming
provisions of such section.
``(2) Requirement of enrollment.--An eligible beneficiary
must enroll under this part in order to be eligible to
receive covered outpatient drugs under this title.
``(b) Special Enrollment Procedures.--
``(1) Late enrollment penalty.--
``(A) Increase in premium.--Subject to the succeeding
provisions of this paragraph, in the case of an eligible
beneficiary whose coverage period under this part began
pursuant to an enrollment after the beneficiary's initial
enrollment period under part B (determined pursuant to
section 1837(d)) and not pursuant to the open enrollment
period described in paragraph (2), the Secretary shall
establish procedures for increasing the amount of the monthly
part D premium under section 1860E(a) applicable to such
beneficiary--
``(i) by an amount that is equal to 10 percent of such
premium for each full 12-month period (in the same continuous
period of eligibility) in which the eligible beneficiary
could have been enrolled under this part but was not so
enrolled; or
``(ii) if determined appropriate by the Secretary, by an
amount that the Secretary determines is actuarily sound for
each such period.
``(B) Periods taken into account.--For purposes of
calculating any 12-month period under subparagraph (A), there
shall be taken into account--
``(i) the months which elapsed between the close of the
eligible beneficiary's initial enrollment period and the
close of the enrollment period in which the beneficiary
enrolled; and
``(ii) in the case of an eligible beneficiary who reenrolls
under this part, the months which elapsed between the date of
termination of a previous coverage period and the close of
the enrollment period in which the beneficiary reenrolled.
``(C) Periods not taken into account.--
``(i) In general.--For purposes of calculating any 12-month
period under subparagraph (A), subject to clause (ii), there
shall not be taken into account months for which the eligible
beneficiary can demonstrate that the beneficiary had
creditable prescription drug coverage (as defined in
subparagraph (F)).
``(ii) Application.--This subparagraph shall only apply
with respect to a coverage period the enrollment for which
occurs before the end of the 60-day period that begins on the
first day of the month which includes--
``(I) in the case of a beneficiary with coverage described
in clause (ii) of subparagraph (F), the date on which the
plan terminates, ceases to provide, or reduces the value of
the prescription drug coverage under such plan to below the
actuarial value of the coverage provided under the program
under this part; or
``(II) in the case of a beneficiary with coverage described
in clause (i), (iii), or (iv) of subparagraph (F), the date
on which the beneficiary loses eligibility for such coverage.
``(D) Periods treated separately.--Any increase in an
eligible beneficiary's monthly part D premium under
subparagraph (A) with respect to a particular continuous
period of eligibility shall not be applicable with respect to
any other continuous period of eligibility which the
beneficiary may have.
``(E) Continuous period of eligibility.--
``(i) In general.--Subject to clause (ii), for purposes of
this paragraph, an eligible beneficiary's `continuous period
of eligibility' is the period that begins with the first day
on which the beneficiary is eligible to enroll under section
1836 and ends with the beneficiary's death.
``(ii) Separate period.--Any period during all of which an
eligible beneficiary satisfied paragraph (1) of section 1836
and which terminated in or before the month preceding the
month in which the beneficiary attained age 65 shall be a
separate `continuous period of eligibility' with respect to
the beneficiary (and each such period which terminates shall
be deemed not to have existed for purposes of subsequently
applying this paragraph).
``(F) Creditable prescription drug coverage defined.--For
purposes of this part, the term `creditable prescription drug
coverage' means any of the following:
``(i) Medicaid prescription drug coverage.--Prescription
drug coverage under a medicaid plan under title XIX,
including through the Program of All-inclusive Care for the
Elderly (PACE) under section 1934 and through a social health
maintenance organization (referred to in section 4104(c) of
the Balanced Budget Act of 1997).
``(ii) Prescription drug coverage under a group health
plan.--Prescription drug coverage under a group health plan,
including a health benefits plan under the Federal Employees
Health Benefit Program under chapter 89 of title 5, United
States Code, and a qualified retiree prescription drug plan
(as defined in section 1860J(e)(3)), that provides coverage
of the cost of prescription drugs the actuarial value of
which (as defined by the Secretary) to the beneficiary equals
or exceeds the actuarial value of the benefits provided to an
individual enrolled in the outpatient prescription drug
benefit program under this part.
``(iii) State pharmaceutical assistance program.--Coverage
of prescription drugs under a State pharmaceutical assistance
program.
[[Page S5589]]
``(iv) Veterans' coverage of prescription drugs.--Coverage
of prescription drugs for veterans, and survivors and
dependents of veterans, under chapter 17 of title 38, United
States Code.
``(2) Open enrollment period for current beneficiaries in
which late enrollment procedures do not apply.--
``(A) In general.--The Secretary shall establish an
applicable period, which shall begin on the date on which the
Secretary first begins to accept elections for enrollment
under this part, during which any eligible beneficiary may
enroll under this part without the application of the late
enrollment procedures established under paragraph (1)(A).
``(B) Open enrollment period to begin prior to january 1,
2004.--The Secretary shall ensure that eligible beneficiaries
are permitted to enroll under this part prior to January 1,
2004, in order to ensure that coverage under this part is
effective as of such date.
``(3) Special enrollment period for beneficiaries who
involuntarily lose creditable prescription drug coverage.--
The Secretary shall establish a special open enrollment
period for an eligible beneficiary that loses creditable
prescription drug coverage.
``(c) Period of Coverage.--
``(1) In general.--Except as provided in paragraph (2) and
subject to paragraph (3), an eligible beneficiary's coverage
under the program under this part shall be effective for the
period provided in section 1838, as if that section applied
to the program under this part.
``(2) Open and special enrollment.--Subject to paragraph
(3), an eligible beneficiary who enrolls under the program
under this part pursuant to paragraph (2) or (3) of
subsection (b) shall be entitled to the benefits under this
part beginning on the first day of the month following the
month in which such enrollment occurs.
``(3) Limitation.--Coverage under this part shall not begin
prior to January 1, 2004.
``(d) Termination.--
``(1) In general.--The causes of termination specified in
section 1838 shall apply to this part in the same manner as
such causes apply to part B.
``(2) Coverage terminated by termination of coverage under
parts a and b.--
``(A) In general.--In addition to the causes of termination
specified in paragraph (1), the Secretary shall terminate an
individual's coverage under this part if the individual is no
longer enrolled in either part A or B.
``(B) Effective date.--The termination described in
subparagraph (A) shall be effective on the effective date of
termination of coverage under part A or (if later) under part
B.
``(3) Procedures regarding termination of a beneficiary
under a plan.--The Secretary shall establish procedures for
determining the status of an eligible beneficiary's
enrollment under this part if the beneficiary's enrollment in
a plan offered by an eligible entity under this part is
terminated by the entity for cause (pursuant to procedures
established by the Secretary under section 1860C(a)(1)).
``enrollment in a plan
``Sec. 1860C. (a) Process.--
``(1) Establishment.--
``(A) In general.--The Secretary shall establish a process
through which an eligible beneficiary who is enrolled under
this part but not enrolled in a Medicare+Choice plan offered
by a Medicare+Choice organization shall make an annual
election to enroll in any plan offered by an eligible entity
that has been awarded a contract under this part and serves
the geographic area in which the beneficiary resides. Such
process shall include for the default enrollment in such a
plan in the case of an eligible beneficiary who is enrolled
under this part but who has failed to make an election of
such a plan.
``(B) Rules.--In establishing the process under
subparagraph (A), the Secretary shall--
``(i) use rules similar to the rules for enrollment,
disenrollment, and termination of enrollment with a
Medicare+Choice plan under section 1851, including--
``(I) the establishment of special election periods under
subsection (e)(4) of such section; and
``(II) the application of the guaranteed issue and renewal
provisions of subsection (g) of such section (other than
paragraph (3)(C)(i), relating to default enrollment); and
``(ii) coordinate enrollments, disenrollments, and
terminations of enrollment under part C with enrollments,
disenrollments, and terminations of enrollment under this
part.
``(2) First enrollment period for plan enrollment.--The
process developed under paragraph (1) shall--
``(A) ensure that eligible beneficiaries who choose to
enroll under this part are permitted to enroll with an
eligible entity prior to January 1, 2004, in order to ensure
that coverage under this part is effective as of such date;
and
``(B) be coordinated with the open enrollment period under
section 1860B(b)(2)(A).
``(b) Medicare+Choice Enrollees.--
``(1) In general.--An eligible beneficiary who is enrolled
under this part and enrolled in a Medicare+Choice plan
offered by a Medicare+Choice organization shall receive
coverage of covered outpatient drugs under this part through
such plan.
``(2) Rules.--Enrollment in a Medicare+Choice plan is
subject to the rules for enrollment in such a plan under
section 1851.
``providing information to beneficiaries
``Sec. 1860D. (a) Activities.--
``(1) In general.--The Secretary shall conduct activities
that are designed to broadly disseminate information to
eligible beneficiaries (and prospective eligible
beneficiaries) regarding the coverage provided under this
part.
``(2) Special rule for first enrollment under the
program.--To the extent practicable, the activities described
in paragraph (1) shall ensure that eligible beneficiaries are
provided with such information at least 30 days prior to the
open enrollment period described in section 1860B(b)(2)(A).
``(b) Requirements.--
``(1) In general.--The activities described in subsection
(a) shall--
``(A) be similar to the activities performed by the
Secretary under section 1851(d);
``(B) be coordinated with the activities performed by the
Secretary under such section and under section 1804; and
``(C) provide for the dissemination of information
comparing the plans offered by eligible entities under this
part that are available to eligible beneficiaries residing in
an area.
``(2) Comparative information.--The comparative information
described in paragraph (1)(C) shall include a comparison of
the following:
``(A) Benefits.--The benefits provided under the plan,
including the prices beneficiaries will be charged for
covered outpatient drugs, any preferred pharmacy networks
used by the eligible entity under the plan, and the
formularies and appeals processes under the plan.
``(B) Quality and performance.--To the extent available,
the quality and performance of the eligible entity offering
the plan.
``(C) Beneficiary cost-sharing.--The cost-sharing required
of eligible beneficiaries under the plan.
``(D) Consumer satisfaction surveys.--To the extent
available, the results of consumer satisfaction surveys
regarding the plan and the eligible entity offering such
plan.
``(E) Additional information.--Such additional information
as the Secretary may prescribe.
``(3) Information standards.--The Secretary shall develop
standards to ensure that the information provided to eligible
beneficiaries under this part is complete, accurate, and
uniform.
``(c) Use of Medicare Consumer Coalitions To Provide
Information.--
``(1) In general.--The Secretary may contract with Medicare
Consumer Coalitions to conduct the informational activities
under--
``(A) this section;
``(B) section 1851(d); and
``(C) section 1804.
``(2) Selection of coalitions.--If the Secretary determines
the use of Medicare Consumer Coalitions to be appropriate,
the Secretary shall--
``(A) develop and disseminate, in such areas as the
Secretary determines appropriate, a request for proposals for
Medicare Consumer Coalitions to contract with the Secretary
in order to conduct any of the informational activities
described in paragraph (1); and
``(B) select a proposal of a Medicare Consumer Coalition to
conduct the informational activities in each such area, with
a preference for broad participation by organizations with
experience in providing information to beneficiaries under
this title.
``(3) Payment to medicare consumer coalitions.--The
Secretary shall make payments to Medicare Consumer Coalitions
contracting under this subsection in such amounts and in such
manner as the Secretary determines appropriate.
``(4) Authorization of appropriations.--There are
authorized to be appropriated to the Secretary such sums as
may be necessary to contract with Medicare Consumer
Coalitions under this section.
``(5) Medicare consumer coalition defined.--In this
subsection, the term `Medicare Consumer Coalition' means an
entity that is a nonprofit organization operated under the
direction of a board of directors that is primarily composed
of beneficiaries under this title.
``premiums
``Sec. 1860E. (a) Annual Establishment of Monthly Part D
Premium Rates.--
``(1) In general.--The Secretary shall, during September of
each year (beginning in 2003), determine and promulgate a
monthly part D premium rate for the succeeding year.
``(2) Amount.--The Secretary shall determine the monthly
part D premium rate for the succeeding year as follows:
``(A) Premium for 2004.--The monthly part D premium rate
for 2004 shall be $25.
``(B) Inflation adjustment of premium for 2005 and
subsequent years.--
``(i) In general.--Subject to clause (ii), in the case of
any calendar year beginning after 2004, the monthly part D
premium rate for the year shall be the amount described in
subparagraph (A) increased by an amount equal to--
``(I) such dollar amount, multiplied by
``(II) the percentage (if any) by which the amount of the
average annual per capita aggregate expenditures payable from
the Prescription Drug Account for the year (as estimated
under section 1860J(c)(2)(C)) exceeds the amount of such
expenditures in 2004.
[[Page S5590]]
``(ii) Rounding.--If the monthly part D premium rate
determined under clause (i) is not a multiple of $1, such
rate shall be rounded to the nearest multiple of $1.
``(b) Collection of Part D Premium.--The monthly part D
premium applicable to an eligible beneficiary under this part
(after application of any increase under section 1860B(b)(1))
shall be collected and credited to the Prescription Drug
Account in the same manner as the monthly premium determined
under section 1839 is collected and credited to the Federal
Supplementary Medical Insurance Trust Fund under section
1840.
``outpatient prescription drug benefits
``Sec. 1860F. (a) Requirement.--A plan offered by an
eligible entity under this part shall provide eligible
beneficiaries enrolled in such plan with--
``(1) coverage of covered outpatient drugs--
``(A) without the application of any deductible; and
``(B) with the cost-sharing described in subsection (b);
and
``(2) access to negotiated prices for such drugs under
subsection (c).
``(b) Cost-Sharing.--
``(1) Three-tiered copayment structure for drugs included
in the formulary.--
``(A) In general.--Subject to the succeeding provisions of
this subsection, in the case of a covered outpatient drug
that is dispensed in a year to an eligible beneficiary and
that is included in the formulary established by the eligible
entity (pursuant to section 1860H(c)) for the plan, the
beneficiary shall be responsible for a copayment for the drug
in an amount equal to the following:
``(i) Generic drugs.--In the case of a generic covered
outpatient drug, $10 for each prescription (as defined by the
Secretary in consultation with the Medicare Prescription Drug
Advisory Committee established under section 1860L) of such
drug.
``(ii) Preferred brand name drugs.--In the case of a
preferred brand name covered outpatient drug (including a
drug treated as a preferred brand name drug under
subparagraph (C)), $40 for each prescription (as so defined)
of such drug.
``(iii) Nonpreferred brand name drug.--In the case of a
nonpreferred brand name covered outpatient drug (that is not
treated as a preferred brand name drug under subparagraph
(C)), $60 for each prescription (as so defined) of such drug.
``(B) Reduction by eligible entity.--An eligible entity
offering a plan under this part may reduce the applicable
copayment amount that an eligible beneficiary enrolled in the
plan is subject to under subparagraph (A) if the Secretary
determines that such reduction--
``(i) is tied to the performance requirements described in
section 1860I(b)(1)(C); and
``(ii) will not result in an increase in the expenditures
made from the Prescription Drug Account.
``(C) Treatment of medically necessary nonpreferred and
nonformulary drugs.--The eligible entity shall treat a
nonpreferred brand name drug and a nonformulary drug as a
preferred brand name drug under subparagraph (A)(ii) if such
nonpreferred or nonformulary drug, as the case may be, is
determined (pursuant to subparagraph (D) or (E) of section
1860H(a)(3)) to be medically necessary.
``(2) Authority for increased cost-sharing for nonformulary
drugs.--Pursuant to section 1860H(c)(3)(A), an eligible
entity offering a plan under this part may require cost-
sharing for a nonformulary drug that is higher than the
copayment amount described in paragraph (1)(A)(iii).
``(3) Cost-sharing may not exceed negotiated price.--
``(A) In general.--If the amount of cost-sharing for a
covered outpatient drug that would otherwise be required
under this subsection (but for this paragraph) is greater
than the applicable amount, then the amount of such cost-
sharing shall be reduced to an amount equal to such
applicable amount.
``(B) Applicable amount defined.--For purposes of
subparagraph (A), the term `applicable amount' means an
amount equal to--
``(i) in the case of generic drugs and preferred brand name
drugs, the negotiated price for the drug (as reported to the
Secretary pursuant to section 1860H(a)(5)(A)) less $5; and
``(ii) in the case of nonpreferred brand name drugs and
nonformulary drugs, the negotiated price for the drug (as so
reported).
``(4) No cost-sharing once expenses equal annual out-of-
pocket limit.--
``(A) In general.--An eligible entity offering a plan under
this part shall provide coverage of covered outpatient drugs
without any cost-sharing if the individual has incurred costs
(as described in subparagraph (C)) for covered outpatient
drugs in a year equal to the annual out-of-pocket limit
specified in subparagraph (B).
``(B) Annual out-of-pocket limit.--Subject to paragraph
(5), for purposes of this part, the `annual out-of-pocket
limit' specified in this subparagraph is equal to $4,000.
``(C) Application.--In applying subparagraph (A)--
``(i) incurred costs shall only include costs incurred for
the cost-sharing described in this subsection; but
``(ii) such costs shall be treated as incurred without
regard to whether the individual or another person, including
a State program or other third-party coverage, has paid for
such costs.
``(5) Inflation adjustment for copayment amounts and annual
out-of-pocket limit.--
``(A) In general.--For any year after 2005--
``(i) the copayment amounts described in clauses (i), (ii),
and (iii) of paragraph (1)(A) are equal to the copayment
amounts determined under such paragraph (or this paragraph)
for the previous year increased by the annual percentage
increase described in subparagraph (B); and
``(ii) the annual out-of-pocket limit specified in
paragraph (4)(B) is equal to the annual out-of-pocket limit
determined under such paragraph (or this paragraph) for the
previous year increased by the annual percentage increase
described in subparagraph (B).
``(B) Annual percentage increase.--The annual percentage
increase specified in this subparagraph for a year is equal
to the annual percentage increase in the prices of covered
outpatient drugs (including both price inflation and price
changes due to changes in therapeutic mix), as determined by
the Secretary for the 12-month period ending in July of the
previous year.
``(C) Rounding.--If any amount determined under
subparagraph (A) is not a multiple of $1, such amount shall
be rounded to the nearest multiple of $1.
``(c) Access to Negotiated Prices.--Under a plan offered by
an eligible entity with a contract under this part, the
eligible entity offering such plan shall provide eligible
beneficiaries enrolled in such plan with access to negotiated
prices (including applicable discounts) used for payment for
covered outpatient drugs, regardless of the fact that only
partial benefits may be payable under the coverage with
respect to such drugs because of the application of the cost-
sharing under subsection (b).
``entities eligible to provide outpatient drug benefit
``Sec. 1860G. (a) Establishment of Panels of Plans
Available in an Area.--
``(1) In general.--The Secretary shall establish procedures
under which the Secretary--
``(A) accepts bids submitted by eligible entities for the
plans which such entities intend to offer in an area
established under subsection (b); and
``(B) awards contracts to such entities to provide such
plans to eligible beneficiaries in the area.
``(2) Competitive procedures.--Competitive procedures (as
defined in section 4(5) of the Office of Federal Procurement
Policy Act (41 U.S.C. 403(5))) shall be used to enter into
contracts under this part.
``(b) Area for Contracts.--
``(1) Regional basis.--
``(A) In general.--Except as provided in subparagraph (B)
and subject to paragraph (2), the contract entered into
between the Secretary and an eligible entity with respect to
a plan shall require the eligible entity to provide coverage
of covered outpatient drugs under the plan in a region
determined by the Secretary under paragraph (2).
``(B) Partial regional basis.--
``(i) In general.--If determined appropriate by the
Secretary, the Secretary may permit the coverage described in
subparagraph (A) to be provided in a partial region
determined appropriate by the Secretary.
``(ii) Requirements.--If the Secretary permits coverage
pursuant to clause (i), the Secretary shall ensure that the
partial region in which coverage is provided is--
``(I) at least the size of the commercial service area of
the eligible entity for that area; and
``(II) not smaller than a State.
``(2) Determination.--
``(A) In general.--In determining regions for contracts
under this part, the Secretary shall--
``(i) take into account the number of eligible
beneficiaries in an area in order to encourage participation
by eligible entities; and
``(ii) ensure that there are at least 10 different regions
in the United States.
``(B) No administrative or judicial review.--The
determination of coverage areas under this part shall not be
subject to administrative or judicial review.
``(c) Submission of Bids.--
``(1) Submission.--
``(A) In general.--Subject to subparagraph (B), each
eligible entity desiring to offer a plan under this part in
an area shall submit a bid with respect to such plan to the
Secretary at such time, in such manner, and accompanied by
such information as the Secretary may reasonably require.
``(B) Bid that covers multiple areas.--The Secretary shall
permit an eligible entity to submit a single bid for multiple
areas if the bid is applicable to all such areas.
``(2) Required information.--The bids described in
paragraph (1) shall include--
``(A) a proposal for the estimated prices of covered
outpatient drugs and the projected annual increases in such
prices, including differentials between formulary and
nonformulary prices, if applicable;
``(B) a statement regarding the amount that the entity will
charge the Secretary for managing, administering, and
delivering the benefits under the contract;
``(C) a statement regarding whether the entity will reduce
the applicable cost-sharing amount pursuant to section
1860F(b)(1)(B) and if so, the amount of such reduction and
how such reduction is tied to the performance requirements
described in section 1860I(b)(1)(C);
[[Page S5591]]
``(D) a detailed description of the performance
requirements for which the payments to the entity will be
subject to risk pursuant to section 1860I(b)(1)(C);
``(E) a detailed description of access to pharmacy services
provided under the plan, including information regarding--
``(i) whether the entity will use a preferred pharmacy
network under the plan; and
``(ii) if a preferred pharmacy network is used, whether the
entity will offer access to pharmacies that are outside such
network and if such access is provided, rules for accessing
such pharmacies;
``(F) with respect to the formulary used by the entity, a
detailed description of the procedures and standards the
entity will use for--
``(i) adding new drugs to a therapeutic class within the
formulary; and
``(ii) determining when and how often the formulary should
be modified;
``(G) a detailed description of any ownership or shared
financial interests with other entities involved in the
delivery of the benefit as proposed under the plan;
``(H) a detailed description of the entity's estimated
marketing and advertising expenditures related to enrolling
eligible beneficiaries under the plan and retaining such
enrollment; and
``(I) such other information that the Secretary determines
is necessary in order to carry out this part, including
information relating to the bidding process under this part.
``(d) Access to Benefits in Certain Areas.--
``(1) Areas not covered by contracts.--The Secretary shall
develop procedures for the provision of covered outpatient
drugs under this part to each eligible beneficiary enrolled
under this part that resides in an area that is not covered
by any contract under this part.
``(2) Beneficiaries residing in different locations.--The
Secretary shall develop procedures to ensure that each
eligible beneficiary enrolled under this part that resides in
different areas in a year is provided the benefits under this
part throughout the entire year.
``(e) Awarding of Contracts.--
``(1) Number of contracts.--The Secretary shall, consistent
with the requirements of this part and the goal of containing
costs under this title, award in a competitive manner at
least 2 contracts to offer a plan in an area, unless only 1
bidding entity (and the plan offered by the entity) meets the
minimum standards specified under this part and by the
Secretary.
``(2) Determination.--In determining which of the eligible
entities that submitted bids that meet the minimum standards
specified under this part and by the Secretary to award a
contract, the Secretary shall consider the comparative merits
of each bid, as determined on the basis of the past
performance of the entity and other relevant factors, with
respect to--
``(A) how well the entity (and the plan offered by the
entity) meet such minimum standards;
``(B) the amount that the entity will charge the Secretary
for managing, administering, and delivering the benefits
under the contract;
``(C) the performance requirements for which the payments
to the entity will be subject to risk pursuant to section
1860I(b)(1)(C);
``(D) the proposed negotiated prices of covered outpatient
drugs and annual increases in such prices;
``(E) the factors described in section 1860D(b)(2);
``(F) prior experience of the entity in managing,
administering, and delivering a prescription drug benefit
program;
``(G) effectiveness of the entity and plan in containing
costs through pricing incentives and utilization management;
and
``(H) such other factors as the Secretary deems necessary
to evaluate the merits of each bid.
``(3) Exception to conflict of interest rules.--In awarding
contracts under this part, the Secretary may waive conflict
of interest laws generally applicable to Federal acquisitions
(subject to such safeguards as the Secretary may find
necessary to impose) in circumstances where the Secretary
finds that such waiver--
``(A) is not inconsistent with the--
``(i) purposes of the programs under this title; or
``(ii) best interests of beneficiaries enrolled under this
part; and
``(B) permits a sufficient level of competition for such
contracts, promotes efficiency of benefits administration, or
otherwise serves the objectives of the program under this
part.
``(4) No administrative or judicial review.--The
determination of the Secretary to award or not award a
contract to an eligible entity with respect to a plan under
this part shall not be subject to administrative or judicial
review.
``(f) Approval of Marketing Material and Application
Forms.--The provisions of section 1851(h) shall apply to
marketing material and application forms under this part in
the same manner as such provisions apply to marketing
material and application forms under part C.
``(g) Duration of Contracts.--Each contract awarded under
this part shall be for a term of at least 2 years but not
more than 5 years, as determined by the Secretary.
``minimum standards for eligible entities
``Sec. 1860H. (a) In General.--The Secretary shall not
award a contract to an eligible entity under this part unless
the Secretary finds that the eligible entity agrees to comply
with such terms and conditions as the Secretary shall
specify, including the following:
``(1) Quality and financial standards.--The eligible entity
meets the quality and financial standards specified by the
Secretary.
``(2) Procedures to ensure proper utilization, compliance,
and avoidance of adverse drug reactions.--
``(A) In general.--The eligible entity has in place drug
utilization review procedures to ensure--
``(i) the appropriate utilization by eligible beneficiaries
enrolled in the plan covered by the contract of the benefits
to be provided under the plan;
``(ii) the avoidance of adverse drug reactions among such
beneficiaries, including problems due to therapeutic
duplication, drug-disease contraindications, drug-drug
interactions (including serious interactions with
nonprescription or over-the-counter drugs), incorrect drug
dosage or duration of drug treatment, drug-allergy
interactions, and clinical abuse and misuse; and
``(iii) the reasonable application of peer-reviewed medical
literature pertaining to improvements in pharmaceutical
safety and appropriate use of drugs.
``(B) Authority to use certain compendia and literature.--
The eligible entity may use the compendia and literature
referred to in clauses (i) and (ii), respectively, of section
1927(g)(1)(B) as a source for the utilization review under
subparagraph (A).
``(3) Patient protections.--
``(A) Access.--
``(i) In general.--The eligible entity ensures that the
covered outpatient drugs are accessible and convenient to
eligible beneficiaries enrolled in the plan covered by the
contract, including by offering the services 24 hours a day
and 7 days a week for emergencies.
``(ii) Agreements with pharmacies.--The eligible entity
shall enter into a participation agreement with any pharmacy
that meets the requirements of subsection (d) to furnish
covered prescription drugs to eligible beneficiaries under
this part. Such agreements shall include the payment of a
reasonable dispensing fee for covered outpatient drugs
dispensed to a beneficiary under the agreement.
``(iii) Preferred pharmacy networks.--If the eligible
entity utilizes a preferred pharmacy network, the network
complies with the standards under subsection (e).
``(B) Ensuring that beneficiaries are not overcharged.--The
eligible entity has procedures in place to ensure that each
pharmacy with a participation agreement under this part with
the entity complies with the requirements under subsection
(d)(1)(C) (relating to adherence to negotiated prices).
``(C) Continuity of care.--
``(i) In general.--The eligible entity ensures that, in the
case of an eligible beneficiary who loses coverage under this
part with such entity under circumstances that would permit a
special election period (as established by the Secretary
under section 1860C(a)(1)), the entity will continue to
provide coverage under this part to such beneficiary until
the beneficiary enrolls and receives such coverage with
another eligible entity under this part or, if eligible, with
a Medicare+Choice organization.
``(ii) Limited period.--In no event shall an eligible
entity be required to provide the extended coverage required
under clause (i) beyond the date which is 30 days after the
coverage with such entity would have terminated but for this
subparagraph.
``(D) Procedures regarding the determination of drugs that
are medically necessary.--
``(i) In general.--The eligible entity has in place
procedures on a case-by-case basis to treat a nonpreferred
brand name drug as a preferred brand name drug and a
nonformulary drug as a preferred brand name drug under this
part if the nonpreferred brand name drug or the nonformulary
drug, as the case may be, is determined--
``(I) to be not as effective for the enrollee in preventing
or slowing the deterioration of, or improving or maintaining,
the health of the enrollee; or
``(II) to have a significant adverse effect on the
enrollee.
``(ii) Requirement.--The procedures under clause (i) shall
require that determinations under such clause are based on
professional medical judgment, the medical condition of the
enrollee, and other medical evidence.
``(E) Procedures regarding appeal rights with respect to
denials of care.--The eligible entity has in place procedures
to ensure--
``(i) a timely internal review for resolution of denials of
coverage (in whole or in part and including those regarding
the coverage of nonpreferred brand name drugs and
nonformulary drugs as preferred brand name drugs) in
accordance with the medical exigencies of the case and a
timely resolution of complaints, by enrollees in the plan, or
by providers, pharmacists, and other individuals acting on
behalf of each such enrollee (with the enrollee's consent) in
accordance with requirements (as established by the
Secretary) that are comparable to such requirements for
Medicare+Choice organizations under part C (and are not less
favorable to the enrollee than such requirements under
[[Page S5592]]
such part as in effect on the date of enactment of the
Medicare Outpatient Prescription Drug Act of 2002);
``(ii) that the entity complies in a timely manner with
requirements established by the Secretary that (I) provide
for an external review by an independent entity selected by
the Secretary of denials of coverage described in clause (i)
not resolved in the favor of the beneficiary (or other
complainant) under the process described in such clause, and
(II) are comparable to the external review requirements
established for Medicare+Choice organizations under part C
(and are not less favorable to the enrollee than such
requirements under such part as in effect on the date of
enactment of the Medicare Outpatient Prescription Drug Act of
2002); and
``(iii) that enrollees are provided with information
regarding the appeals procedures under this part at the time
of enrollment with the entity and upon request thereafter.
``(F) Procedures regarding patient confidentiality.--
Insofar as an eligible entity maintains individually
identifiable medical records or other health information
regarding eligible beneficiaries enrolled in the plan that is
covered by the contract, the entity has in place procedures
to--
``(i) safeguard the privacy of any individually
identifiable beneficiary information;
``(ii) maintain such records and information in a manner
that is accurate and timely;
``(iii) ensure timely access by such beneficiaries to such
records and information; and
``(iv) otherwise comply with applicable laws relating to
patient confidentiality.
``(G) Procedures regarding transfer of medical records.--
``(i) In general.--The eligible entity has in place
procedures for the timely transfer of records and information
described in subparagraph (F) (with respect to a beneficiary
who loses coverage under this part with the entity and
enrolls with another entity (including a Medicare+Choice
organization) under this part) to such other entity.
``(ii) Patient confidentiality.--The procedures described
in clause (i) shall comply with the patient confidentiality
procedures described in subparagraph (F).
``(H) Procedures regarding medical errors.--The eligible
entity has in place procedures for--
``(i) working with the Secretary to deter medical errors
related to the provision of covered outpatient drugs; and
``(ii) ensuring that pharmacies with a contract with the
entity have in place procedures to deter medical errors
related to the provision of covered outpatient drugs.
``(4) Procedures to control fraud, abuse, and waste.--The
eligible entity has in place procedures to control fraud,
abuse, and waste.
``(5) Reporting requirements.--
``(A) In general.--The eligible entity provides the
Secretary with reports containing information regarding the
following:
``(i) The negotiated prices that the eligible entity is
paying for covered outpatient drugs.
``(ii) The prices that eligible beneficiaries enrolled in
the plan that is covered by the contract will be charged for
covered outpatient drugs.
``(iii) The management costs of providing such benefits.
``(iv) Utilization of such benefits.
``(v) Marketing and advertising expenditures related to
enrolling and retaining eligible beneficiaries.
``(B) Timeframe for submitting reports.--
``(i) In general.--The eligible entity shall submit a
report described in subparagraph (A) to the Secretary within
3 months after the end of each 12-month period in which the
eligible entity has a contract under this part. Such report
shall contain information concerning the benefits provided
during such 12-month period.
``(ii) Last year of contract.--In the case of the last year
of a contract under this part, the Secretary may require that
a report described in subparagraph (A) be submitted 3 months
prior to the end of the contract. Such report shall contain
information concerning the benefits provided between the
period covered by the most recent report under this
subparagraph and the date that a report is submitted under
this clause.
``(C) Confidentiality of information.--
``(i) In general.--Notwithstanding any other provision of
law and subject to clause (ii), information disclosed by an
eligible entity pursuant to subparagraph (A) (except for
information described in clause (ii) of such subparagraph) is
confidential and shall only be used by the Secretary for the
purposes of, and to the extent necessary, to carry out this
part.
``(ii) Utilization data.--Subject to patient
confidentiality laws, the Secretary shall make information
disclosed by an eligible entity pursuant to subparagraph
(A)(iv) (regarding utilization data) available for research
purposes. The Secretary may charge a reasonable fee for
making such information available.
``(6) Approval of marketing material and application
forms.--The eligible entity complies with the requirements
described in section 1860G(f).
``(7) Records and audits.--The eligible entity maintains
adequate records related to the administration of the
benefits under this part and affords the Secretary access to
such records for auditing purposes.
``(b) Special Rules Regarding Cost-Effective Provision of
Benefits.--In providing the benefits under a contract under
this part, an eligible entity shall--
``(1) employ mechanisms to provide the benefits
economically, such as through the use of--
``(A) alternative methods of distribution;
``(B) preferred pharmacy networks (pursuant to subsection
(e)); and
``(C) generic drug substitution;
``(2) use mechanisms to encourage eligible beneficiaries to
select cost-effective drugs or less costly means of receiving
drugs, such as through the use of--
``(A) pharmacy incentive programs;
``(B) therapeutic interchange programs; and
``(C) disease management programs;
``(3) encourage pharmacy providers to--
``(A) inform beneficiaries of the differentials in price
between generic and brand name drug equivalents; and
``(B) provide medication therapy management programs in
order to enhance beneficiaries' understanding of the
appropriate use of medications and to reduce the risk of
potential adverse events associated with medications; and
``(4) develop and implement a formulary in accordance with
subsection (c).
``(c) Requirements for Formularies.--
``(1) In general.--The formulary developed and implemented
by the eligible entity shall comply with standards
established by the Secretary in consultation with the
Medicare Prescription Drug Advisory Committee established
under section 1860L.
``(2) Requirements for standards.--The standards
established under paragraph (1) shall require that the
eligible entity--
``(A) use a pharmacy and therapeutic committee (that meets
the standards for a pharmacy and therapeutic committee
established by the Secretary in consultation with such
Medicare Prescription Drug Advisory Committee) to develop and
implement the formulary;
``(B) assign all brand name drugs included in the formulary
to either the preferred category or nonpreferred category of
drugs;
``(C) include--
``(i) all generic covered outpatient drugs in the
formulary;
``(ii) at least 1 brand name covered outpatient drug from
each therapeutic class (as defined by the Secretary in
consultation with such Medicare Prescription Drug Advisory
Committee) as a preferred brand name drug in the formulary;
and
``(iii) if there is more than 1 brand name covered
outpatient drug available in a therapeutic class, at least 1
such drug as a preferred brand name drug in the formulary and
at least 1 such drug as a nonpreferred brand name drug in the
formulary;
``(D) develop procedures for the modification of the
formulary, including for the addition of new drugs to an
existing therapeutic class;
``(E) pursuant to section 1860F(b)(1)(C), provide for
coverage of nonpreferred brand name drugs and nonformulary
drugs at the preferred rate when determined under
subparagraph (D) or (E) of subsection (a)(3) to be medically
necessary;
``(F) disclose to current and prospective beneficiaries and
to providers in the service area the nature of the formulary
restrictions, including information regarding the drugs
included in the formulary and any difference in the cost-
sharing for--
``(i) drugs included in the formulary; and
``(ii) for drugs not included in the formulary; and
``(G) provide a reasonable amount of notice to
beneficiaries enrolled in the plan that is covered by the
contract under this part of any change in the formulary.
``(3) Construction.--Nothing in this part shall be
construed as precluding an eligible entity from--
``(A) except as provided in section 1860F(b)(1)(C)
(relating to the coverage of medically necessary drugs at the
preferred rate), requiring cost-sharing for nonformulary
drugs that is higher than the copayment amount established in
section 1860F(b)(1)(A)(iii);
``(B) educating prescribing providers, pharmacists, and
beneficiaries about the medical and cost benefits of drugs
included in the formulary (including generic drugs); or
``(C) requesting prescribing providers to consider a drug
included in the formulary prior to dispensing of a drug not
so included or a preferred brand name drug prior to
dispensing of a nonpreferred brand name drug, as long as such
a request does not unduly delay the provision of the drug.
``(d) Terms of Participation Agreement With Pharmacies.--
``(1) In general.--A participation agreement between an
eligible entity and a pharmacy under this part (pursuant to
subsection (a)(3)(A)(ii)) shall include the following terms
and conditions:
``(A) Applicable requirements.--The pharmacy shall meet
(and throughout the contract period continue to meet) all
applicable Federal requirements and State and local licensing
requirements.
``(B) Access and quality standards.--The pharmacy shall
comply with such standards as the Secretary (and the eligible
entity) shall establish concerning the quality of, and
enrolled beneficiaries' access to, pharmacy services under
this part. Such standards shall require the pharmacy--
[[Page S5593]]
``(i) not to refuse to dispense covered outpatient drugs to
any eligible beneficiary enrolled under this part;
``(ii) to keep patient records (including records on
expenses) for all covered outpatient drugs dispensed to such
enrolled beneficiaries;
``(iii) to submit information (in a manner specified by the
Secretary to be necessary to administer this part) on all
purchases of such drugs dispensed to such enrolled
beneficiaries; and
``(iv) to comply with periodic audits to assure compliance
with the requirements of this part and the accuracy of
information submitted.
``(C) Ensuring that beneficiaries are not overcharged.--
``(i) Adherence to negotiated prices.--The total charge for
each covered outpatient drug dispensed by the pharmacy to a
beneficiary enrolled in the plan, without regard to whether
the individual is financially responsible for any or all of
such charge, shall not exceed the negotiated price for the
drug (as reported to the Secretary pursuant to subsection
(a)(5)(A)).
``(ii) Adherence to beneficiary obligation.--The pharmacy
may not charge (or collect from) such beneficiary an amount
that exceed's the cost-sharing that the beneficiary is
responsible for under this part (as determined under section
1860F(b) using the negotiated price of the drug).
``(D) Additional requirements.--The pharmacy shall meet
such additional contract requirements as the eligible entity
specifies under this section.
``(2) Applicability of fraud and abuse provisions.--The
provisions of section 1128 through 1128C (relating to fraud
and abuse) apply to pharmacies participating in the program
under this part.
``(e) Preferred Pharmacy Networks.--
``(1) In general.--If an eligible entity uses a preferred
pharmacy network to deliver benefits under this part, such
network shall meet minimum access standards established by
the Secretary.
``(2) Standards.--In establishing standards under paragraph
(1), the Secretary shall take into account reasonable
distances to pharmacy services in both urban and rural areas.
``payments
``Sec. 1860I. (a) Procedures for Payments to Eligible
Entities.--The Secretary shall establish procedures for
making payments to each eligible entity with a contract under
this part for the management, administration, and delivery of
the benefits under this part.
``(b) Requirements for Procedures.--
``(1) In general.--The procedures established under
subsection (a) shall provide for the following:
``(A) Management payment.--Payment for the management,
administration, and delivery of the benefits under this part.
``(B) Reimbursement for negotiated costs of drugs
provided.--Payments for the negotiated costs of covered
outpatient drugs provided to eligible beneficiaries enrolled
under this part and in a plan offered by the eligible entity,
reduced by any applicable cost-sharing under section
1860F(b).
``(C) Risk requirement to ensure pursuit of performance
requirements.--An adjustment of a percentage (as determined
under paragraph (2)) of the payments made to an entity under
subparagraph (A) to ensure that the entity, in managing,
administering, and delivering the benefits under this part,
pursues performance requirements established by the
Secretary, including the following:
``(i) Control of medicare and beneficiary costs.--The
entity contains costs to the Prescription Drug Account and to
eligible beneficiaries enrolled under this part and in the
plan offered by the entity, as measured by generic
substitution rates, price discounts, and other factors
determined appropriate by the Secretary that do not reduce
the access of such beneficiaries to medically necessary
covered outpatient drugs.
``(ii) Quality clinical care.--The entity provides such
beneficiaries with quality clinical care, as measured by such
factors as--
``(I) the level of adverse drug reactions and medical
errors among such beneficiaries; and
``(II) providing specific clinical suggestions to improve
health and patient and prescriber education as appropriate.
``(iii) Quality service.--The entity provides such
beneficiaries with quality services, as measured by such
factors as sustained pharmacy network access, timeliness and
accuracy of service delivery in claims processing and card
production, pharmacy and member service support access,
response time in mail delivery service, and timely action
with regard to appeals and current beneficiary service
surveys.
``(2) Percentage of payment tied to risk.--
``(A) In general.--Subject to subparagraph (B), the
Secretary shall determine the percentage (which may be up to
100 percent) of the payments made to an entity under
subparagraph (A) that will be tied to the performance
requirements described in paragraph (1)(C).
``(B) Limitation on risk to ensure program stability.--In
order to provide for program stability, the Secretary may not
establish a percentage to be adjusted under this subsection
at a level that jeopardizes the ability of an eligible entity
to administer and deliver the benefits under this part or
administer and deliver such benefits in a quality manner.
``(3) Risk adjustment of payments based on enrollees in
plan.--To the extent that an eligible entity is at risk under
this subsection, the procedures established under subsection
(a) may include a methodology for risk adjusting the payments
made to such entity based on the differences in actuarial
risk of different enrollees being served if the Secretary
determines such adjustments to be necessary and appropriate.
``(4) Pass-through of rebates and price concessions
obtained by the eligible entity.--The Secretary, if
determined by the Secretary to be in the best interests of
the medicare program or eligible beneficiaries, may establish
procedures for reducing the amount of payments to an eligible
entity under subsection (a) to take into account any rebates
or price concessions obtained by the entity from
manufacturers of covered outpatient drugs.
``(c) Payments to Medicare+Choice Organizations.--For
provisions related to payments to Medicare+Choice
organizations for the administration and delivery of benefits
under this part to eligible beneficiaries enrolled in a
Medicare+Choice plan offered by the organization, see section
1853(c)(8).
``(d) Secondary Payer Provisions.--The provisions of
section 1862(b) shall apply to the benefits provided under
this part.
``employer incentive program for employment-based retiree drug coverage
``Sec. 1860J. (a) Program Authority.--The Secretary is
authorized to develop and implement a program under this
section to be known as the `Employer Incentive Program' that
encourages employers and other sponsors of employment-based
health care coverage to provide adequate prescription drug
benefits to retired individuals by subsidizing, in part, the
sponsor's cost of providing coverage under qualifying plans.
``(b) Sponsor Requirements.--In order to be eligible to
receive an incentive payment under this section with respect
to coverage of an individual under a qualified retiree
prescription drug plan (as defined in subsection (e)(3)), a
sponsor shall meet the following requirements:
``(1) Assurances.--The sponsor shall--
``(A) annually attest, and provide such assurances as the
Secretary may require, that the coverage offered by the
sponsor is a qualified retiree prescription drug plan, and
will remain such a plan for the duration of the sponsor's
participation in the program under this section; and
``(B) guarantee that it will give notice to the Secretary
and covered retirees--
``(i) at least 120 days before terminating its plan; and
``(ii) immediately upon determining that the actuarial
value of the prescription drug benefit under the plan falls
below the actuarial value of the outpatient prescription drug
benefit under this part.
``(2) Beneficiary information.--The sponsor shall report to
the Secretary, for each calendar quarter for which it seeks
an incentive payment under this section, the names and social
security numbers of all retirees (and their spouses and
dependents) covered under such plan during such quarter and
the dates (if less than the full quarter) during which each
such individual was covered.
``(3) Audits.--The sponsor and the employment-based retiree
health coverage plan seeking incentive payments under this
section shall agree to maintain, and to afford the Secretary
access to, such records as the Secretary may require for
purposes of audits and other oversight activities necessary
to ensure the adequacy of prescription drug coverage, the
accuracy of incentive payments made, and such other matters
as may be appropriate.
``(4) Other requirements.--The sponsor shall provide such
other information, and comply with such other requirements,
as the Secretary may find necessary to administer the program
under this section.
``(c) Incentive Payments.--
``(1) In general.--A sponsor that meets the requirements of
subsection (b) with respect to a quarter in a calendar year
shall be entitled to have payment made by the Secretary on a
quarterly basis (to the sponsor or, at the sponsor's
direction, to the appropriate employment-based health plan)
of an incentive payment, in the amount determined in
paragraph (2), for each retired individual (or spouse or
dependent) who--
``(A) was covered under the sponsor's qualified retiree
prescription drug plan during such quarter; and
``(B) was eligible for, but was not enrolled in, the
outpatient prescription drug benefit program under this part.
``(2) Amount of payment.--
``(A) In general.--The amount of the payment for a quarter
shall be, for each individual described in paragraph (1), \2/
3\ of the sum of the monthly Government contribution amounts
(computed under subparagraph (B)) for each of the 3 months in
the quarter.
``(B) Computation of monthly government contribution
amount.--For purposes of subparagraph (A), the monthly
Government contribution amount for a month in a year is equal
to the amount by which--
``(i) \1/12\ of the amount estimated under subparagraph (C)
for the year involved; exceeds
``(ii) the monthly Part D premium under section 1860E(a)
(determined without regard to any increase under section
1860B(b)(1)) for the month involved.
``(C) Estimate of average annual per capita aggregate
expenditures.--
``(i) In general.--The Secretary shall for each year after
2003 estimate for that year
[[Page S5594]]
an amount equal to average annual per capita aggregate
expenditures payable from the Prescription Drug Account for
that year.
``(ii) Timeframe for estimation.--The Secretary shall make
the estimate described in clause (i) for a year before the
beginning of that year.
``(3) Payment date.--The payment under this section with
respect to a calendar quarter shall be payable as of the end
of the next succeeding calendar quarter.
``(d) Civil Money Penalties.--A sponsor, health plan, or
other entity that the Secretary determines has, directly or
through its agent, provided information in connection with a
request for an incentive payment under this section that the
entity knew or should have known to be false shall be subject
to a civil monetary penalty in an amount up to 3 times the
total incentive amounts under subsection (c) that were paid
(or would have been payable) on the basis of such
information.
``(e) Definitions.--In this section:
``(1) Employment-based retiree health coverage.--The term
`employment-based retiree health coverage' means health
insurance or other coverage, whether provided by voluntary
insurance coverage or pursuant to statutory or contractual
obligation, of health care costs for retired individuals (or
for such individuals and their spouses and dependents) based
on their status as former employees or labor union members.
``(2) Employer.--The term `employer' has the meaning given
the term in section 3(5) of the Employee Retirement Income
Security Act of 1974 (except that such term shall include
only employers of 2 or more employees).
``(3) Qualified retiree prescription drug plan.--The term
`qualified retiree prescription drug plan' means health
insurance coverage included in employment-based retiree
health coverage that--
``(A) provides coverage of the cost of prescription drugs
with an actuarial value (as defined by the Secretary) to each
retired beneficiary that equals or exceeds the actuarial
value of the benefits provided to an individual enrolled in
the outpatient prescription drug benefit program under this
part; and
``(B) does not deny, limit, or condition the coverage or
provision of prescription drug benefits for retired
individuals based on age or any health status-related factor
described in section 2702(a)(1) of the Public Health Service
Act.
``(4) Sponsor.--The term `sponsor' has the meaning given
the term `plan sponsor' in section 3(16)(B) of the Employer
Retirement Income Security Act of 1974.
``(f) Authorization of Appropriations.--There are
authorized to be appropriated from time to time, out of any
moneys in the Treasury not otherwise appropriated, such sums
as may be necessary to carry out the program under this
section.
``prescription drug account in the federal supplementary medical
insurance trust fund
``Sec. 1860K. (a) Establishment.--
``(1) In general.--There is created within the Federal
Supplementary Medical Insurance Trust Fund established by
section 1841 an account to be known as the `Prescription Drug
Account' (in this section referred to as the `Account').
``(2) Funds.--The Account shall consist of such gifts and
bequests as may be made as provided in section 201(i)(1), and
such amounts as may be deposited in, or appropriated to, the
account as provided in this part.
``(3) Separate from rest of trust fund.--Funds provided
under this part to the Account shall be kept separate from
all other funds within the Federal Supplementary Medical
Insurance Trust Fund.
``(b) Payments From Account.--
``(1) In general.--The Managing Trustee shall pay from time
to time from the Account such amounts as the Secretary
certifies are necessary to make payments to operate the
program under this part, including payments to eligible
entities under section 1860I, payments to Medicare+Choice
organizations under section 1853(c)(8), and payments with
respect to administrative expenses under this part in
accordance with section 201(g).
``(2) Treatment in relation to part b premium.--Amounts
payable from the Account shall not be taken into account in
computing actuarial rates or premium amounts under section
1839.
``(c) Appropriations To Cover Benefits and Administrative
Costs.--
``(1) In general.--Subject to paragraph (2), there are
appropriated to the Account in a fiscal year, out of any
moneys in the Treasury not otherwise appropriated, an amount
equal to the amount by which the benefits and administrative
costs of providing the benefits under this part in the year
exceed the premiums collected under section 1860E(b) for the
year.
``(2) Limitation.--No amounts shall be appropriated, and no
amounts expended, for expenses incurred for providing
coverage of covered outpatient drugs after January 1, 2011.
The Secretary may make payments on or after such date for
expenses incurred to the extent such expenses were incurred
for providing coverage of covered outpatient drugs prior to
such date.
``medicare prescription drug advisory committee
``Sec. 1860L. (a) Establishment of Committee.--There is
established a Medicare Prescription Drug Advisory Committee
(in this section referred to as the `Committee').
``(b) Functions of Committee.--On and after March 1, 2003,
the Committee shall advise the Secretary on policies related
to--
``(1) the development of guidelines for the implementation
and administration of the outpatient prescription drug
benefit program under this part; and
``(2) the development of--
``(A) standards for a pharmacy and therapeutics committee
required of eligible entities under section 1860H(c)(2)(A);
``(B) standards required under subparagraphs (D) and (E) of
section 1860H(a)(3) for determining if a drug is medically
necessary;
``(C) standards for--
``(i) establishing therapeutic classes;
``(ii) adding new therapeutic classes to a formulary; and
``(iii) defining a prescription of covered outpatient drugs
for purposes of applying cost-sharing under section 1860F(b);
``(D) procedures to evaluate the bids submitted by eligible
entities under this part; and
``(E) procedures to ensure that eligible entities with a
contract under this part are in compliance with the
requirements under this part.
``(c) Structure and Membership of the Committee.--
``(1) Structure.--The Committee shall be composed of 19
members who shall be appointed by the Secretary.
``(2) Membership.--
``(A) In general.--The members of the Committee shall be
chosen on the basis of their integrity, impartiality, and
good judgment, and shall be individuals who are, by reason of
their education, experience, attainments, and understanding
of pharmaceutical cost control and quality enhancement,
exceptionally qualified to perform the duties of members of
the Committee.
``(B) Specific members.--Of the members appointed under
paragraph (1)--
``(i) five shall be chosen to represent physicians, 2 of
whom shall be geriatricians;
``(ii) two shall be chosen to represent nurse
practitioners;
``(iii) four shall be chosen to represent pharmacists;
``(iv) one shall be chosen to represent the Centers for
Medicare & Medicaid Services;
``(v) four shall be chosen to represent actuaries,
pharmacoeconomists, researchers, and other appropriate
experts;
``(vi) one shall be chosen to represent emerging drug
technologies;
``(vii) one shall be closed to represent the Food and Drug
Administration; and
``(viii) one shall be chosen to represent individuals
enrolled under this part.
``(d) Terms of Appointment.--Each member of the Committee
shall serve for a term determined appropriate by the
Secretary. The terms of service of the members initially
appointed shall begin on January 1, 2003.
``(e) Chairperson.--The Secretary shall designate a member
of the Committee as Chairperson. The term as Chairperson
shall be for a 1-year period.
``(f) Committee Personnel Matters.--
``(1) Members.--
``(A) Compensation.--Each member of the Committee who is
not an officer or employee of the Federal Government shall be
compensated at a rate equal to the daily equivalent of the
annual rate of basic pay prescribed for level IV of the
Executive Schedule under section 5315 of title 5, United
States Code, for each day (including travel time) during
which such member is engaged in the performance of the duties
of the Committee. All members of the Committee who are
officers or employees of the United States shall serve
without compensation in addition to that received for their
services as officers or employees of the United States.
``(B) Travel expenses.--The members of the Committee shall
be allowed travel expenses, including per diem in lieu of
subsistence, at rates authorized for employees of agencies
under subchapter I of chapter 57 of title 5, United States
Code, while away from their homes or regular places of
business in the performance of services for the Committee.
``(2) Staff.--The Committee may appoint such personnel as
the Committee considers appropriate.
``(g) Operation of the Committee.--
``(1) Meetings.--The Committee shall meet at the call of
the Chairperson (after consultation with the other members of
the Committee) not less often than quarterly to consider a
specific agenda of issues, as determined by the Chairperson
after such consultation.
``(2) Quorum.--Ten members of the Committee shall
constitute a quorum for purposes of conducting business.
``(h) Federal Advisory Committee Act.--Section 14 of the
Federal Advisory Committee Act (5 U.S.C. App.) shall not
apply to the Committee.
``(i) Transfer of Personnel, Resources, and Assets.--For
purposes of carrying out its duties, the Secretary and the
Committee may provide for the transfer to the Committee of
such civil service personnel in the employ of the Department
of Health and Human Services (including the Centers for
Medicare & Medicaid Services), and such resources and assets
of the Department used in carrying out this title, as the
Committee requires.
``(j) Authorization of Appropriations.--There are
authorized to be appropriated such
[[Page S5595]]
sums as may be necessary to carry out the purposes of this
section.''.
(b) Exclusions From Coverage.--
(1) Application to part d.--Section 1862(a) of the Social
Security Act (42 U.S.C. 1395y(a)) is amended in the matter
preceding paragraph (1) by striking ``part A or part B'' and
inserting ``part A, B, or D''.
(2) Prescription drugs not excluded from coverage if
reasonable and necessary.--Section 1862(a)(1) of the Social
Security Act (42 U.S.C. 1395y(a)(1)) is amended--
(A) in subparagraph (H), by striking ``and'' at the end;
(B) in subparagraph (I), by striking the semicolon at the
end and inserting ``, and''; and
(C) by adding at the end the following new subparagraph:
``(J) in the case of prescription drugs covered under part
D, which are not reasonable and necessary to prevent or slow
the deterioration of, or improve or maintain, the health of
eligible beneficiaries;''.
(c) Conforming Amendments to Federal Supplementary Medical
Insurance Trust Fund.--Section 1841 of the Social Security
Act (42 U.S.C. 1395t) is amended--
(1) in the last sentence of subsection (a)--
(A) by striking ``and'' before ``such amounts''; and
(B) by inserting before the period the following: ``, and
such amounts as may be deposited in, or appropriated to, the
Prescription Drug Account established by section 1860K'';
(2) in subsection (g), by inserting after ``by this part,''
the following: ``the payments provided for under part D (in
which case the payments shall be made from the Prescription
Drug Account in the Trust Fund),'';
(3) in subsection (h), by inserting after ``1840(d)'' the
following: ``and section 1860E(b) (in which case the payments
shall be made from the Prescription Drug Account in the Trust
Fund)''; and
(4) in subsection (i), by inserting after ``section
1840(b)(1)'' the following: ``, section 1860E(b) (in which
case the payments shall be made from the Prescription Drug
Account in the Trust Fund),''.
(d) Conforming References to Previous Part D.--
(1) In general.--Any reference in law (in effect before the
date of enactment of this Act) to part D of title XVIII of
the Social Security Act is deemed a reference to part E of
such title (as in effect after such date).
(2) Secretarial submission of legislative proposal.--Not
later than 6 months after the date of enactment of this Act,
the Secretary of Health and Human Services shall submit to
Congress a legislative proposal providing for such technical
and conforming amendments in the law as are required by the
provisions of this Act.
SEC. 3. PART D BENEFITS UNDER MEDICARE+CHOICE PLANS.
(a) Eligibility, Election, and Enrollment.--Section 1851 of
the Social Security Act (42 U.S.C. 1395w-21) is amended--
(1) in subsection (a)(1)(A), by striking ``parts A and B''
and inserting ``parts A, B, and D''; and
(2) in subsection (i)(1), by striking ``parts A and B'' and
inserting ``parts A, B, and D''.
(b) Voluntary Beneficiary Enrollment for Drug Coverage.--
Section 1852(a)(1)(A) of the Social Security Act (42 U.S.C.
1395w-22(a)(1)(A)) is amended by inserting ``(and under part
D to individuals also enrolled under that part)'' after
``parts A and B''.
(c) Access to Services.--Section 1852(d)(1) of the Social
Security Act (42 U.S.C. 1395w-22(d)(1)) is amended--
(1) in subparagraph (D), by striking ``and'' at the end;
(2) in subparagraph (E), by striking the period at the end
and inserting ``; and''; and
(3) by adding at the end the following new subparagraph:
``(F) in the case of covered outpatient drugs (as defined
in section 1860(1)) provided to individuals enrolled under
part D, the organization complies with the access
requirements applicable under part D.''.
(d) Payments to Organizations for Part D Benefits.--
(1) In general.--Section 1853(a)(1)(A) of the Social
Security Act (42 U.S.C. 1395w-23(a)(1)(A)) is amended--
(A) by inserting ``determined separately for the benefits
under parts A and B and under part D (for individuals
enrolled under that part)'' after ``as calculated under
subsection (c)'';
(B) by striking ``that area, adjusted for such risk
factors'' and inserting ``that area. In the case of payment
for the benefits under parts A and B, such payment shall be
adjusted for such risk factors as''; and
(C) by inserting before the last sentence the following:
``In the case of the payments under subsection (c)(8) for the
provision of coverage of covered outpatient drugs to
individuals enrolled under part D, such payment shall be
adjusted for the risk factors of each enrollee as the
Secretary determines to be feasible and appropriate to ensure
actuarial equivalence.''.
(2) Amount.--Section 1853(c) of the Social Security Act (42
U.S.C. 1395w-23(c)) is amended--
(A) in paragraph (1), in the matter preceding subparagraph
(A), by inserting ``for benefits under parts A and B'' after
``capitation rate''; and
(B) by adding at the end the following new paragraph:
``(8) Capitation rate for part d benefits.--
``(A) In general.--In the case of a Medicare+Choice plan
that provides coverage of covered outpatient drugs to an
individual enrolled under part D, the capitation rate for
such coverage shall be the amount described in subparagraph
(B). Such payments shall be made in the same manner and at
the same time as the payments to the Medicare+Choice
organization offering the plan for benefits under parts A and
B are otherwise made, but such payments shall be payable from
the Prescription Drug Account in the Federal Supplementary
Medical Insurance Trust Fund under section 1841.
``(B) Amount.--The amount described in this paragraph is an
amount equal to \1/12\ of the average annual per capita
aggregate expenditures payable from the Prescription Drug
Account for the year (as estimated under section
1860J(c)(2)(C)).''.
(e) Limitation on Enrollee Liability.--Section 1854(e) of
the Social Security Act (42 U.S.C. 1395w-24(e)) is amended by
adding at the end the following new paragraph:
``(5) Special rule for part d benefits.--With respect to
outpatient prescription drug benefits under part D, a
Medicare+Choice organization may not require that an enrollee
pay any deductible or pay a cost-sharing amount that exceeds
the amount of cost-sharing applicable for such benefits for
an eligible beneficiary under part D.''.
(f) Requirement for Additional Benefits.--Section
1854(f)(1) of the Social Security Act (42 U.S.C. 1395w-
24(f)(1)) is amended by adding at the end the following new
sentence: ``Such determination shall be made separately for
the benefits under parts A and B and for prescription drug
benefits under part D.''.
(g) Effective Date.--The amendments made by this section
shall apply to items and services provided under a
Medicare+Choice plan on or after January 1, 2004.
SEC. 4. ADDITIONAL ASSISTANCE FOR LOW-INCOME BENEFICIARIES.
(a) Inclusion in Medicare Cost-Sharing.--Section 1905(p)(3)
of the Social Security Act (42 U.S.C. 1396d(p)(3)) is
amended--
(1) in subparagraph (A)--
(A) in clause (i), by striking ``and'' at the end;
(B) in clause (ii), by inserting ``and'' at the end; and
(C) by adding at the end the following new clause:
``(iii) premiums under section 1860E(a).''; and
(2) in subparagraph (B), by inserting ``and cost-sharing
described in section 1860F(b)'' after ``section 1813''.
(b) Expansion of Medical Assistance.--Section
1902(a)(10)(E) of the Social Security Act (42 U.S.C.
1396a(a)(10)(E)) is amended--
(1) in clause (iii)--
(A) by striking ``section 1905(p)(3)(A)(ii)'' and inserting
``clauses (ii) and (iii) of section 1905(p)(3)(A) and for
medicare cost-sharing described in section 1905(p)(3)(B) (but
only insofar as it relates to benefits provided under part D
of title XVIII),''; and
(B) by striking ``and'' at the end;
(2) by redesignating clause (iv) as clause (vi); and
(3) by inserting after clause (iii) the following new
clauses:
``(iv) for making medical assistance available for medicare
cost-sharing described in section 1905(p)(3)(A)(iii) and for
medicare cost-sharing described in section 1905(p)(3)(B) (but
only insofar as it relates to benefits provided under part D
of title XVIII) for individuals who would be qualified
medicare beneficiaries described in section 1905(p)(1) but
for the fact that their income exceeds 120 percent but does
not exceed 135 percent of such official poverty line for a
family of the size involved;
``(v) for making medical assistance available for medicare
cost-sharing described in section 1905(p)(3)(A)(iii) on a
linear sliding scale based on the income of such individuals
for individuals who would be qualified medicare beneficiaries
described in section 1905(p)(1) but for the fact that their
income exceeds 135 percent but does not exceed 150 percent of
such official poverty line for a family of the size involved;
and''.
(c) Nonapplicability of Resource Requirements to Medicare
Part D Cost-Sharing.--Section 1905(p)(1) of the Social
Security Act (42 U.S.C. 1396d(p)(1)) is amended by adding at
the end the following flush sentence:
``In determining if an individual is a qualified medicare
beneficiary under this paragraph, subparagraph (C) shall not
be applied for purposes of providing the individual with
medicare cost-sharing described in section 1905(p)(3)(A)(iii)
or for medicare cost-sharing described in section
1905(p)(3)(B) (but only insofar as it relates to benefits
provided under part D of title XVIII).''.
(d) Nonapplicability of Payment Differential Requirements
to Medicare Part D Cost-Sharing.--Section 1902(n)(2) of the
Social Security Act (42 U.S.C. 1396a(n)(2)) is amended by
adding at the end the following new sentence: ``The preceding
sentence shall not apply to the cost-sharing described in
section 1860F(b).''.
(e) 100 Percent Federal Medical Assistance Percentage.--The
first sentence of section 1905(b) of the Social Security Act
(42 U.S.C. 1396d(b)) is amended--
(1) by striking ``and'' before ``(4)''; and
(2) by inserting before the period at the end the
following: ``, and (5) the Federal medical assistance
percentage shall be 100 percent
[[Page S5596]]
with respect to medical assistance provided under clauses
(iv) and (v) of section 1902(a)(10)(E)''.
(f) Treatment of Territories.--Section 1108(g) of the
Social Security Act (42 U.S.C. 1308(g)) is amended by adding
at the end the following new paragraph:
``(3) Notwithstanding the preceding provisions of this
subsection, with respect to fiscal year 2004 and any fiscal
year thereafter, the amount otherwise determined under this
subsection (and subsection (f)) for the fiscal year for a
Commonwealth or territory shall be increased by the ratio (as
estimated by the Secretary) of--
``(A) the aggregate amount of payments made to the 50
States and the District of Columbia for the fiscal year under
title XIX that are attributable to making medical assistance
available for individuals described in clauses (i), (iii),
(iv), and (v) of section 1902(a)(10)(E) for payment of
medicare cost-sharing described in section 1905(p)(3)(A)(iii)
and for medicare cost-sharing described in section
1905(p)(3)(B) (but only insofar as it relates to benefits
provided under part D of title XVIII); to
``(B) the aggregate amount of total payments made to such
States and District for the fiscal year under such title.''.
(g) Conforming Amendments.--Section 1933 of the Social
Security Act (42 U.S.C. 1396u-3) is amended--
(1) in subsection (a), by striking ``section
1902(a)(10)(E)(iv)'' and inserting ``section
1902(a)(10)(E)(vi)'';
(2) in subsection (c)(2)(A)--
(A) in clause (i), by striking ``section
1902(a)(10)(E)(iv)(I)'' and inserting ``section
1902(a)(10)(E)(vi)(I)''; and
(B) in clause (ii), by striking ``section
1902(a)(10)(E)(iv)(II)'' and inserting ``section
1902(a)(10)(E)(vi)(II)'';
(3) in subsection (d), by striking ``section
1902(a)(10)(E)(iv)'' and inserting ``section
1902(a)(10)(E)(vi)''; and
(4) in subsection (e), by striking ``section
1902(a)(10)(E)(iv)'' and inserting ``section
1902(a)(10)(E)(vi)''.
(h) Effective Date.--The amendments made by this section
shall apply for medical assistance provided under section
1902(a)(10)(E) of the Social Security Act (42 U.S.C.
1396a(a)(10)(E)) on and after January 1, 2004.
SEC. 5. MEDIGAP REVISIONS.
Section 1882 of the Social Security Act (42 U.S.C. 1395ss)
is amended by adding at the end the following new subsection:
``(v) Modernized Benefit Packages for Medicare Supplemental
Policies.--
``(1) Revision of benefit packages.--
``(A) In general.--Notwithstanding subsection (p), the
benefit packages classified as `H', `I', and `J' under the
standards established by subsection (p)(2) (including the
benefit package classified as `J' with a high deductible
feature, as described in subsection (p)(11)) shall be revised
so that--
``(i) the coverage of outpatient prescription drugs
available under such benefit packages is replaced with
coverage of outpatient prescription drugs that complements
but does not duplicate the coverage of outpatient
prescription drugs that is otherwise available under this
title;
``(ii) the revised benefit packages provide a range of
coverage options for outpatient prescription drugs for
beneficiaries, but do not provide coverage for more than 90
percent of the cost-sharing amount applicable to an
individual under section 1860F(b);
``(iii) uniform language and definitions are used with
respect to such revised benefits;
``(iv) uniform format is used in the policy with respect to
such revised benefits;
``(v) such revised standards meet any additional
requirements imposed by the amendments made by the Medicare
Outpatient Prescription Drug Act of 2002; and
``(vi) except as revised under the preceding clauses or as
provided under subsection (p)(1)(E), the benefit packages are
identical to the benefit packages that were available on the
date of enactment of the Medicare Outpatient Prescription
Drug Act of 2002.
``(B) Manner of revision.--The benefit packages revised
under this section shall be revised in the manner described
in subparagraph (E) of subsection (p)(1), except that for
purposes of subparagraph (C) of such subsection, the
standards established under this subsection shall take effect
not later than January 1, 2004.
``(2) Construction of benefits in other medicare
supplemental policies.--Nothing in the benefit packages
classified as `A' through `G' under the standards established
by subsection (p)(2) (including the benefit package
classified as `F' with a high deductible feature, as
described in subsection (p)(11)) shall be construed as
providing coverage for benefits for which payment may be made
under part D.
``(3) Guaranteed issuance and renewal of revised
policies.--The provisions of subsections (q) and (s),
including provisions of subsection (s)(3) (relating to
special enrollment periods in cases of termination or
disenrollment), shall apply to medicare supplemental policies
revised under this subsection in the same manner as such
provisions apply to medicare supplemental policies issued
under the standards established under subsection (p).
``(4) Opportunity of current policyholders to purchase
revised policies.--
``(A) In general.--No medicare supplemental policy of an
issuer with a benefit package that is revised under paragraph
(1) shall be deemed to meet the standards in subsection (c)
unless the issuer--
``(i) provides written notice during the 60-day period
immediately preceding the period established for the open
enrollment period established under section 1860B(b)(2)(A),
to each individual who is a policyholder or certificate
holder of a medicare supplemental policy issued by that
issuer (at the most recent available address of that
individual) of the offer described in clause (ii) and of the
fact that such individual will no longer be covered under
such policy as of January 1, 2004; and
``(ii) offers the policyholder or certificate holder under
the terms described in subparagraph (B), during at least the
period established under section 1860B(b)(2)(A), a medicare
supplemental policy with the benefit package that the
Secretary determines is most comparable to the policy in
which the individual is enrolled with coverage effective as
of the date on which the individual is first entitled to
benefits under part D.
``(B) Terms of offer described.--The terms described in
this subparagraph are terms which do not--
``(i) deny or condition the issuance or effectiveness of a
medicare supplemental policy described in subparagraph
(A)(ii) that is offered and is available for issuance to new
enrollees by such issuer;
``(ii) discriminate in the pricing of such policy because
of health status, claims experience, receipt of health care,
or medical condition; or
``(iii) impose an exclusion of benefits based on a
preexisting condition under such policy.
``(5) Elimination of obsolete policies with no
grandfathering.--No person may sell, issue, or renew a
medicare supplemental policy with a benefit package that is
classified as `H', `I', or `J' (or with a benefit package
classified as `J' with a high deductible feature) that has
not been revised under this subsection on or after January 1,
2004.
``(6) Penalties.--Each penalty under this section shall
apply with respect to policies revised under this subsection
as if such policies were issued under the standards
established under subsection (p), including the penalties
under subsections (a), (d), (p)(8), (p)(9), (q)(5),
(r)(6)(A), (s)(4), and (t)(2)(D).''.
SEC. 6. HHS STUDIES AND REPORT ON UNIFORM PHARMACY BENEFIT
CARDS AND SYSTEMS FOR TRANSFERRING
PRESCRIPTIONS ELECTRONICALLY.
(a) Studies.--The Secretary of Health and Human Services
shall conduct a study to determine the feasibility and
advisability of--
(1) establishing a uniform format for pharmacy benefit
cards provided to beneficiaries by eligible entities under
the outpatient prescription drug benefit program under part D
of title XVIII of the Social Security Act (as added by
section 2); and
(2) developing systems to electronically transfer
prescriptions under such program from the prescriber to the
pharmacist.
(b) Report.--Not later than 2 years after the date of
enactment of this Act, the Secretary of Health and Human
Services shall submit to Congress a report on the results of
the studies conducted under subsection (a) together with any
recommendations for legislation that the Secretary determines
to be appropriate as a result of such studies.
SEC. 7. GAO STUDY AND BIENNIAL REPORTS ON COMPETITION AND
SAVINGS.
(a) Ongoing Study.--The Comptroller General of the United
States shall conduct an ongoing study and analysis of the
outpatient prescription drug benefit program under part D of
title XVIII of the Social Security Act (as added by section
2), including an analysis of--
(1) the extent to which the competitive bidding process
under such program fosters maximum competition and
efficiency; and
(2) the savings to the medicare program resulting from such
outpatient prescription drug benefit program, including the
reduction in the number or length of hospital visits.
(b) Initial Report on Competitive Bidding Process.--Not
later than 9 months after the date of enactment of this Act,
the Comptroller General of the United States shall submit to
Congress a report on the results of the portion of the study
conducted pursuant to subsection (a)(1).
(c) Biennial Reports.--Not later than January 1, 2005, and
biennially thereafter, the Comptroller General of the United
States shall submit to Congress a report on the results of
the study conducted under subsection (a) together with such
recommendations for legislation and administrative action as
the Comptroller General determines appropriate.
SEC. 8. EXPANSION OF MEMBERSHIP AND DUTIES OF MEDICARE
PAYMENT ADVISORY COMMISSION (MEDPAC).
(a) Expansion of Membership.--
(1) In general.--Section 1805(c) of the Social Security Act
(42 U.S.C. 1395b-6(c)) is amended--
(A) in paragraph (1), by striking ``17'' and inserting
``19''; and
(B) in paragraph (2)(B), by inserting ``experts in the area
of pharmacology and prescription drug benefit programs,''
after ``other health professionals,''.
(2) Initial terms of additional members.--
(A) In general.--For purposes of staggering the initial
terms of members of the Medicare Payment Advisory Commission
under section 1805(c)(3) of the Social Security Act (42
U.S.C. 1395b-6(c)(3)), the initial terms of the 2 additional
members of the Commission provided for by the amendment under
paragraph (1)(A) are as follows:
(i) One member shall be appointed for 1 year.
[[Page S5597]]
(ii) One member shall be appointed for 2 years.
(B) Commencement of terms.--Such terms shall begin on
January 1, 2003.
(b) Expansion of Duties.--Section 1805(b)(2) of the Social
Security Act (42 U.S.C. 1395b-6(b)(2)) is amended by adding
at the end the following new subparagraph:
``(D) Prescription medicine benefit program.--Specifically,
the Commission shall review, with respect to the outpatient
prescription drug benefit program under part D, the impact of
such program on--
``(i) the pharmaceutical market, including costs and
pricing of pharmaceuticals, beneficiary access to such
pharmaceuticals, and trends in research and development;
``(ii) franchise, independent, and rural pharmacies; and
``(iii) beneficiary access to outpatient prescription
drugs, including an assessment of out-of-pocket spending,
generic and brand name drug utilization, and pharmacists'
services.''.
Mr. MILLER. Madam President, I am proud to tell America's seniors who
have been waiting in line for a long time that, finally, they have
reached the front of the line. Their time has come. This Senate is
ready to take action on prescription drugs.
Our action cannot come soon enough. Most of our elderly in this
country are not wealthy. Many live on fixed incomes. They are the ones
who are hurt first and hurt most by rising health care costs.
Our elderly have been waiting a long time. Waiting for Congress to do
something. Waiting for Congress to help them with the skyrocketing
costs of their prescription drugs.
Our bill provides an affordable prescription drug benefit under
Medicare for all seniors for the first time. Coverage begins with the
first prescription filled because there is no deductible.
For the roughly 12 million seniors in this country who earn less than
$11,900 a year, there is no premium and no copayment. For our neediest
seniors, our bill gives them their medicine for free.
For those who earn more, our plan has an affordable a $25 monthly
premium and a copayment of $10 for generic drugs and $40 for brand-name
drugs. Also, our bill has no gap in coverage and an out-of-pocket
maximum of $4,000 a year.
We realize it is a huge, complex and complicated undertaking. And
that is why this bill provides that in 2011, we will come back and re-
evaluate this program, just like we do with other complicated
legislation.
We believe that is the wise and judicious thing to do. In fact, if
the original Medicare program had required such a reauthorization, we
probably would have had a prescription drug benefit added to it long
ago.
But since Medicare was permanently authorized from the beginning,
there was no requirement for Congress to re-evaluate and therefore
modernize the program as circumstances changed over the years.
And, reauthorization is not anything new or different. We re-evaluate
many programs on a regular basis: We just did it with the Farm Bill.
Welfare Reform, the Elementary and Secondary Education program, Head
Start, all of them are re-evaluated at regular intervals.
I hope that all members of the Senate will come together and pass
this bill in the next few weeks so that our elderly across this land of
plenty, those folks who have played by the rules and worked hard, can
have some hope and some dignity in the last few years they are on this
earth.
Mr. KENNEDY. Madam President, Medicare is a solemn promise between
government and its citizens and between the generations. It says,
``Contribute to the system during your working years and we will assure
you health security in your retirement years.'' But that promise is
broken every day, because Medicare does not cover prescription drugs.
The Graham-Miller-Kennedy Medicare Prescription Drug Act of 2002 sends
the message loud and clear: it is time to mend Medicare's broken
promise.
There is no domestic issue that is more important to the American
people than assuring that senior citizens can afford the prescription
drugs they need. Senior citizens have an average income of $15,000, and
they spend an average of $2,000 of that limited income on prescription
drugs. Too many of our elderly citizens must choose between food on the
table and the medicine their doctors prescribe. Too many of the elderly
are taking half the drugs their doctor prescribes, or none at all,
because they simply can't afford them.
Every day we delay, the problem becomes worse. Prescription drugs
costs are escalating at double-digit rates. One-third of all senior
citizens don't have a dime of prescription drug coverage, and those who
do have coverage are in danger of losing it. The sad fact is that the
only senior citizens who have reliable, affordable, adequate coverage
are the very poor on Medicaid. That is not good enough, and we are here
today to say that America owes it to its senior citizens to do better.
Every politician understands that senior citizens, and their
children, and their grandchildren want action. Every politician
understands that opposition to a prescription drug benefit is not a
sustainable position. The question is not whether Congress will pass a
bill; the question is whether we will pass a bill that truly provides
the protection senior citizens need. The elderly do not need a
prescription drug benefit that cannot pass the truth in advertising
test. They don't need a benefit that pays pennies on the dollar for the
medicines the elderly need to survive. They do not need a benefit that
offers the pretence of relief but not the performance.
The bill we are offering today mends the broken promise of Medicare.
It offers real benefits at a price the elderly can afford. It is a
lifeline for every senior citizen who needs prescription drugs. It is a
priority for the American people.
It is time to pass a Medicare prescription drug benefit. It is time
for Congress to listen to the American people instead of the powerful
special interests.
______
By Mr. CLELAND:
S. 2627. A bill to protect marine species off the coast of Georgia;
to the Committee on Commerce, Science, and Transportation.
Mr. CLELAND. Madam President, I rise today to introduce legislation
to help protect marine species in the exclusive economic zone off the
coast of Georgia. Shark gillnetting causes bycatch of many marine
species, including valuable gamefish such as tarpon, red drum, king
mackerel, and cobia and leatherback sea turtles, a protected species.
Gillnets are already prohibited in Georgia's State waters, and my
legislation would also prohibit this gear from being used in the
Federal waters off the coast of Georgia. This legislation is supported
by the Georgia Department of Natural Resources, which has jurisdiction
over the State's coastal resources.
My proposal does not prohibit shark fishing but rather affects the
means of fishing. Shark fishers can use other methods for fishing such
as long-lines or hook and line as alternatives. Additionally, this bill
only affects the waters off the coast of Georgia. The neighboring
States are still allowed to handle the bycatch, enforcement, and other
issues as they believe is appropriate.
The waters affected by the legislation are home to many types of
marine life that are vitally important to Georgia's traditional and
expanding charter fishery, as well as the state's coastal communities
and tourism industry. These businesses are negatively impacted by the
shark gillnetting bycatch rates and its impacts on gamefish
populations, including some already overfished stocks. In August 2000,
I was contacted by some of these Georgia business people who are
concerned over what they see as a dramatic decrease in the fish
population and about the future viability of their businesses. These
citizens work to create a delicate balance between the environment and
their livelihood by limiting their catches and releasing fish to help
insure the sustained health of local fish stocks and their habitats.
Shark gillnetting has disrupted this balance. My legislation is the
first step to bringing this balance back in line.
As the Commerce Committee, of which I am a member, begins the
reauthorization of the Magnuson-Stevens Fishery Conservation Management
Act, I will work with Chairman Hollings to address this issue. It is at
once an environmental issue, a small business issue, a state
sovereignty issue, and it is the right thing to do.
______
By Mr. KENNEDY (for himself, Mr. DeWine, Mr. Harkin, Mr. McCain,
Mr. Durbin, Mr.
[[Page S5598]]
Graham, Mr. Wellstone, Ms. Collins, Mrs. Feinstein, and Mr.
Reed):
S. 2626. A bill to protect the public health by providing the Food
and Drug Administration with certain authority to regulate tobacco
products; to the Committee on Health, Education, Labor, and Pensions.
Mr. DeWINE. Madam President, today Senator Kennedy, my colleague from
Massachusetts, and I, Senator Durbin, and others are introducing a bill
designed to help protect children from the dangers of tobacco. Quite
simply, our bill would finally give the Food and Drug Administration
the authority it needs to effectively regulate both the manufacture and
the sale of tobacco products.
My colleagues will all remember that we visited this issue a few
years ago, in 1998, when our colleague from Arizona, Senator McCain,
and others introduced the Universal Tobacco Settlement Act, which
included a major section that provided the FDA with the authority to
regulate tobacco products. Also, of course, during 1998, 46 States
entered into an agreement known as the Master Settlement Agreement,
MSA. They entered into that agreement with the major tobacco companies
to settle all State lawsuits seeking to recover the Medicaid costs of
treating smokers.
Fast forward from 1998 until today. Tobacco proponents would have you
believe this master settlement resolved the issue of tobacco use by
imposing all these restrictions. But the truth is, it did not. Smoking
among young people remains a huge national problem.
Every day in this country, nearly 5,000 young people under the age of
18 try their first cigarette. In my own home State of Ohio, 33
percent--one-third--of children 18 and under smoke. These kids in Ohio,
by themselves, go through 45 million packs of cigarettes each year.
If that is not bad enough, look at it another way: 90 percent of
smokers start smoking before the age of 19. More than 6.4 million
children across this country will die prematurely because of a decision
they will make as children, as adolescents--a decision to start smoking
cigarettes.
In my home State of Ohio, as I indicated, one-third of the children
smoke. We know the statistics are that one-third of people who smoke in
this country will die prematurely because of an alcohol-related
illness. One-third of the one-third, therefore, in the State of Ohio
will die prematurely.
While States have limited options available for tobacco advertising
under this 1998 Master Settlement Agreement, the reality is that the
tobacco companies still are able to choose the contents of their
advertisements. They are still able to get around this settlement. They
are still able to run ads like this: ``Skol, A Pinch Better.'' Guess
where that ad ran? In Sports Illustrated.
How many young people in this country every week wait for that Sports
Illustrated to come in the mail, or buy it when it comes to the store?
The companies are savvy. They have really changed their marketing
strategies. They have concentrated more money into different
advertising markets. As a result, more than 3 years after the major
tobacco companies agreed to stop marketing to children as part of this
tobacco settlement, children are still twice as likely as adults to be
exposed to tobacco advertising.
Let me repeat that. Children are still twice as likely as adults to
be exposed to tobacco advertising.
This chart shows and represents a poll which was done. The question
asked was: Have you seen any advertising for cigarettes or tobacco in
the last 2 weeks? Among teens, 64 percent said yes; adults, only 27
percent.
In spite of the claim that tobacco companies are not targeting
children, for whatever reason that is the market that is hearing it;
that is who is seeing the message; that is who is hearing the message;
that is whom the message is affecting.
According to the Federal Trade Commission's annual report on
cigarette sales and advertising, the year 2000 represented the largest
increase ever in tobacco companies' spending on ``promotional
allowances''; that is, the money tobacco companies pay retailers to
promote their products in prominent locations in stores, or for high
visible shelf space. We know that is one of the greatest marketing
techniques--put it somewhere I can see it when I walk in the store. It
is right at eye level for kids near the cash register, in an aisle
where the customer must walk by to pay the cashier.
That same year--the year 2000--cigarette manufacturers spent a record
$9.5 billion on advertising and promotion. That is an increase of 16
percent from the year 1999.
Tobacco companies also spend billions of dollars advertising through
enticing promotional items--lighters, hats, and other products--they
give away for free at the ``point of sale,'' or, in other words, at the
cash register or the place of checkout in the grocery store or the
convenience store.
In fact, spending on such promotional or value-added items increased
by 37 percent between 1999 and the year 2000.
Let us not fool ourselves. These promotional strategies and
advertisements reach our children. Statistics show that 75 percent of
our children visit a convenience store at least once a week.
I ask my colleagues. The next time you walk into a convenience store,
look at how many different times you see an advertisement for tobacco
products. They are everywhere. You walk in the store, and it may be on
the clock--a little promotional clock that says when the store is open
and when the store is closed. They will be at eye level. They will be
by the cashier when you check out. They will be everywhere--image after
image after image. It is calculated, and it works. Convenience stores
are a place--right or wrong--where kids go. Seventy-five percent of
kids visit convenience stores, as I said, at least once a week. That is
a target area.
This isn't just about advertising and marketing schemes. It is also
about to be manufacturers' failure to disclose the specific ingredients
in their products.
I realize full well that tobacco users and nonusers alike recognize
and understand that tobacco products are hazardous to their health.
Everybody knows that. That is not what I am talking about. I am talking
about requiring the tobacco companies to list the ingredients in their
products. They do not have to do that today. Tobacco is an unregulated
product. I believe it makes common sense that tobacco companies should
be required to list when they put arsenic--and they do--or put
formaldehyde or ammonia in the cigarettes. They should have to at least
list it. It just makes common sense. Yet the law today does not require
them to do that.
While simply listing the ingredients, toxic as they may be, might not
seem like much, think about it this way. Current law makes sure that we
know what is in products designed to help people quit smoking--products
such as the patch or the Nicorette gum, which are regulated, but not
the very product that gets people addicted in the first place, the
cigarettes. Doesn't that seem absurd?
Think about it this way: Right now, the Food and Drug Administration
requires Philip Morris to print the ingredients in its Kraft Macaroni
and Cheese. They have to print all of the ingredients. Pick up a box.
Every single ingredient that is in there they have to print but not the
ingredients in cigarettes, a product, by the way, that contributes to
the deaths of more than 440,000 people a year.
Right now the FDA requires Philip Morris, which owns Nabisco, to
print the ingredients contained in Oreo cookies and Ritz crackers but
not the ingredients in Camel or Winston cigarettes, even though
cigarettes cause one-third of all cancer deaths and 90 percent of lung
cancer deaths. It is unfathomable to me--and I think it is unfathomable
to everybody--that we would require the listing of ingredients on these
products. We even require the listing of the ingredients on bottled
water. Yet we do not require the listing of ingredients for one of the
leading causes of death and disease in this country.
Right now, the FDA requires printed ingredients for chewing gum,
lipstick, bottled water, and ice cream, but not for cigarettes--a
product that causes 20 percent of all heart disease deaths, 90 percent
of lung cancer, which is the leading cause of cancer deaths among
women, and the leading cause of preventable death in the United States.
Another way to look at it is if a company wants to market a food
product
[[Page S5599]]
as ``fat-free'' or ``reduced-fat'' or ``lite,'' that company is
required to meet certain standards regarding the number of calories or
the amount of fat grams in that product. You can look right on that
package and find it. Yet cigarette companies can call a cigarette a
``Camel Light'' or a ``Marlboro Light'' and not reveal a thing about
the amount of tar or nicotine or arsenic in that supposedly ``light''
cigarette.
Not having access to all of the information about this deadly product
just makes no sense. It is something we need to change. With the bill
we are introducing, we can change it.
It is time we finally give the FDA the authority it needs to fix
these problems. The legislation that Senator Kennedy and Senator Durbin
and I are introducing will do just that.
First, the bill would make changes regarding tobacco advertising. It
would give the FDA authority to restrict tobacco industry marketing--
consistent with the first amendment--that targets our children.
Additionally, our bill would require advertisements to be in black
and white text only, unless they are in adult publications, and would
define adult publications in terms of readership.
Next, our legislation would give consumers more information about the
ingredients in tobacco products. Specifically, the bill would provide
the FDA with the ability to publish the ingredients of tobacco
products.
It would require a listing of all ingredients, substances, and
compounds added by the manufacturer to the tobacco, to the paper, or to
the filter.
It would require a description of the content, delivery, and form of
nicotine in each tobacco product.
It would require information on the health, behavioral, or
physiologic effects of the tobacco products.
Further, it would require tobacco companies to provide information on
the reduction of risk to health available through technology.
And finally, it would establish an approval process for all new
tobacco products entering the market--new products such as advance with
its ``trionic filter'', which claims to have--and I quote--``all of the
taste . . . less of the toxins'' of other cigarettes.
Obviously, we already know that smoking is a health risk. We all know
that. But, what we don't know about is the harm caused by or what
adverse health effects are created by the other ingredients in tobacco
products or by how the tobacco is burned. We do not know all the
details about that. Tobacco companies should share that. There are
tobacco products on the market that are not conventional cigarettes.
They have carbon filters running down the center of them. They are
sophisticated products that burn tobacco differently, that affect the
body differently, and that may cause people to smoke them differently.
These are all things that should be examined, they should be reviewed,
and they should be commented on by the Food and Drug Administration, so
the public knows what they are choosing to consume.
Here we have a pack of Eclipse cigarettes, which claims it will--and
I quote--``Change the way you smoke.'' It also claims that it--and
again I quote--``may present less risk of cancer, bronchitis, and
possibly emphysema.'' This is what they say in the bold print. I don't
know who ``they'' are, and I don't know where they got their
information, but the public should know.
Below the bold print in this same pack is the following, smaller
print:
Evidence suggests that smokers who already have
cardiovascular disease and who switch to Eclipse may further
increase their health risk.
So in the bold print we have a statement that is not cited and not
supported, and then in the fine print we have a statement that is
supported by numerous studies. Which claim are you more likely to
believe? And which statement should be broadcast in bold lettering to
the consumer?
By introducing this bill, we are finally saying we are not going to
let tobacco manufacturers have free rein over markets and consumers
anymore.
Today, we are taking a step towards making sure the public gets
adequate information about whether to continue to smoke or even to
start smoking in the first place. We all know it is dangerous. But the
tobacco companies no longer should be able to hide all the facts.
With this bill, we are not just saying, ``Buyer beware''--we all know
there are dangers--but what we are saying is, ``Tobacco companies, be
honest.'' We are saying, ``Tobacco companies, stop marketing to our
kids.'' We are saying, ``Tobacco companies, tell consumers about what
they are really buying.''
Madam President, it is time we hold these companies to the same
standards we expect from other producers. It is time to give kids a
fighting chance when it comes to resisting cigarettes. It is time to
finally just do the right thing.
I thank the Chair and yield the floor.
The PRESIDING OFFICER. The Senator from Massachusetts is recognized.
Mr. KENNEDY. Madam President, I join my friend and colleague from
Ohio, Senator DeWine, in expressing our appreciation to all of our
cosponsors for this legislation that we have introduced. And I commend
him for the excellent presentation and description of the legislation
that he has just given to the Senate this morning.
We indicate to our friends and colleagues that this legislation is
very similar to the legislation that was included in the larger tobacco
legislation the Senate considered several years ago. It was not really
subject to any amendments that I remember during that period of time.
That overall legislation, I believe, gained 58 votes on the floor of
the Senate. So we had broad support for the legislation. In many
respects, I think there is even broader support for this particular
legislation.
So we are very hopeful we will be able to make progress in
considering this legislation favorably in the Senate, and in the House,
and have it become law. We have every intention of holding hearings
and, hopefully a markup in July. I believe we will have very broad
support from our colleagues for the reasons Senator DeWine has
outlined.
This legislation is focused on children and what we can do to
discourage children from becoming addicted to tobacco in this country.
I will just take a very few moments to review the highlights.
Just very quickly, every day, 5,000 children try their first
cigarette. More than 2,000 become new daily smokers. A third will die
prematurely.
If the current trend continues, 6.4 million children, who are under
18 years of age, will die prematurely from smoking related illness.
400,000 people a year die from smoke related illness. We are telling
the youth of America their lives are going to be greatly shortened as a
result of this kind of addiction.
As I mentioned, 400,000 Americans die each year from smoke-caused
disease, and tobacco costs $75 billion in annual health care costs.
These are costs that are spent by Medicare, Medicaid, veterans
hospitals, and expended privately.
Again, to give the focus of where the advertising is going, this
chart shows the number of teens between 12 and 17 who were reached five
or more times by tobacco advertising in the year 1999.
A March 2002 study asked teenagers and adults, ``have you seen any
advertising for cigarettes or spit tobacco in the last 2 weeks?'' For
the teenagers, 64 percent had seen advertising; while for adults, just
27 percent.
What we are maintaining is that the industry is targeting children.
These are commercial surveys, and they substantiate our point.
The money that is being expended for these extraordinary advertising
budgets is targeted to teenagers, to effectively hook them and addict
them.
This chart shows the very substantial increase in promotional
expenditures from 1997 to the year 2000. As the chart showed,
expenditures totaled $5.660 billion in 1997 and increased to $9.5
billion in the year 2000.
Over the last 5 years, it has virtually doubled. Where is it being
targeted? The children. Are the children seeing it? Yes. Are they
becoming more addicted? Yes. Is this really a national problem? Yes.
Can we do something about it? Yes. Will this legislation do something
about it? Yes, because it incorporates many of the recommendations made
by former heads of the FDA as well as from the many experts we have
heard from at a range of hearings we have held.
[[Page S5600]]
The bottom line: If smoking rates do not decline, over 6 million
children who are alive today under the age of 18 will suffer premature
death.
This is a matter of enormous importance. It is of importance to
families, to parents, to children, and to our country. We have
targeted, responsible legislation to deal with this issue. We are
serious about presenting it to the Senate, which we will do. We are
looking for broad support from the American people.
We are grateful for all of the public health agencies that support
it: cancer, heart, lung, all of the various health-related agencies
that support this legislation. They are going to be strong allies.
Mr. Myers, who is with Tobacco Free Children, has done such an
extraordinary job and has made this a high priority. We are serious
about it, and we hope to be able to help the families in this country
by doing something about children being addicted to cigarettes.
This bill will give the Food and Drug Administration broad authority
to regulate tobacco products for the protection of the public health.
We cannot in good conscience allow the federal agency most responsible
for protecting the public health to remain powerless to deal with the
enormous risks of tobacco, the most deadly of all consumer products.
The provisions in this bill closely track those in the bipartisan
compromise reached during Senate consideration of comprehensive tobacco
control legislation in 1998. Fifty-eight Senators supported it at that
time. That legislation was never enacted because of disputes over
tobacco taxation and litigation, not over FDA authority.
This FDA provision is a fair and balanced approach to FDA regulation.
It creates a new section in FDA jurisdiction for the regulation of
tobacco products, with standards that allow for consideration of the
unique issues raised by tobacco use. It is sensitive to the concerns of
tobacco farmers, small businesses, and nicotine-dependent smokers. But,
it clearly gives FDA the authority it needs in order to prevent youth
smoking and to reduce addiction to this highly lethal product.
I believe that any attempt to weaken the 1998 language would
undermine the FDA's ability to deal effectively with the enormous
health risks posed by smoking. This concern is shared by a number of
independent public health experts. The bipartisan compromise agreed to
in 1998 is still the best opportunity for Senators to come together and
grant FDA the regulatory authority it needs to substantially reduce the
number of children who start smoking and to help addicted smokers quit.
Nothing less will do the job.
The stakes are vast. Five thousand children have their first
cigarette every day, and two thousand of them become daily smokers.
Nearly a thousand of them will die prematurely from tobacco-induced
diseases. Smoking is the number one preventable cause of death in the
nation today. Cigarettes kill well over four hundred thousand Americans
each year. That is more lives lost than from automobile accidents,
alcohol abuse, illegal drugs, AIDS, murder, suicide, and fires
combined. Our response to a public health problem of this magnitude
must consist of more than half-way measures.
We must deal firmly with tobacco company marketing practices that
target children and mislead the public. The Food and Drug
Administration needs broad authority to regulate the sale,
distribution, and advertising of cigarettes and smokeless tobacco.
The tobacco industry currently spends over nine billion dollars a
year to promote its products. Much of that money is spent in ways
designed to tempt children to start smoking, before they are mature
enough to appreciate the enormity of the health risk. The industry
knows that more than 90 percent of smokers begin as children and are
addicted by the time they reach adulthood.
Documents obtained from tobacco companies prove, in the companies'
own words, the magnitude of the industry's efforts to trap children
into dependency on their deadly product. Recent studies by the
Institute of Medicine and the Centers for Disease Control show the
substantial role of industry advertising in decisions by young people
to use tobacco products. If we are serious about reducing youth
smoking, FDA must have the power to prevent industry advertising
designed to appeal to children wherever it will be seen by children.
This legislation will give FDA the ability to stop tobacco advertising
which glamorizes smoking from appearing where it will be seen by
significant numbers of children.
FDA authority must also extend to the sale of tobacco products.
Nearly every state makes it illegal to sell cigarettes to children
under 18, but surveys show that those laws are rarely enforced and
frequently violated. FDA must have the power to limit the sale of
cigarettes to face-to-face transactions in which the age of the
purchaser can be verified by identification. This means an end to self-
service displays and vending machine sales. There must also be serious
enforcement efforts with real penalties for those caught selling
tobacco products to children. This is the only way to ensure that
children under 18 are not able to buy cigarettes.
The FDA conducted the longest rulemaking proceeding in its history,
studying which regulations would most effectively reduce the number of
children who smoke. Seven hundred thousand public comments were
received in the course of that rulemaking. At the conclusion of its
proceeding, the Agency promulgated rules on the manner in which
cigarettes are advertised and sold. Due to litigation, most of those
regulations were never implemented. If we are serious about curbing
youth smoking as much as possible, as soon as possible; it makes no
sense to require FDA to reinvent the wheel by conducting a new multi-
year rulemaking process on the same issues. This legislation will give
the youth access and advertising restrictions already developed by FDA
the immediate force of law, as if they had been issued under the new
statute.
The legislation also provides for stronger warnings on all cigarette
and smokeless tobacco packages, and in all print advertisements. These
warnings will be more explicit in their description of the medical
problems which can result from tobacco use. The FDA is given the
authority to change the text of these warning labels periodically, to
keep their impact strong.
Nicotine in cigarettes is highly addictive. Medical experts say that
it is as addictive as heroin or cocaine. Yet for decades, tobacco
companies have vehemently denied the addictiveness of their products.
No one can forget the parade of tobacco executives who testified under
oath before Congress as recently as 1994 that smoking cigarettes is not
addictive. Overwhelming evidence in industry documents obtained through
the discovery process proves that the companies not only knew of this
addictiveness for decades, but actually relied on it as the basis for
their marketing strategy. As we now know, cigarette manufacturers
chemically manipulated the nicotine in their products to make it even
more addictive.
The tobacco industry has a long, dishonorable history of providing
misleading information about the health consequences of smoking. These
companies have repeatedly sought to characterize their products as far
less hazardous than they are. They made minor innovations in product
design seem far more significant for the health of the user than they
actually were. It is essential that FDA have clear and unambiguous
authority to prevent such misrepresentations in the future. The largest
disinformation campaign in the history of the corporate world must end.
Given the addictiveness of tobacco products, it is essential that the
FDA regulate them for the protection of the public health. Over forty
million Americans are currently addicted to cigarettes. No responsible
public health official believes that cigarettes should be banned. A ban
would leave forty million people without a way to satisfy their drug
dependency. FDA should be able to take the necessary steps to help
addicted smokers overcome their addiction, and to make the product less
toxic for smokers who are unable or unwilling to stop. To do so, FDA
must have the authority to reduce or remove hazardous ingredients from
cigarettes, to the extent that it becomes scientifically feasible. The
inherent risk in smoking should not be unnecessarily compounded.
[[Page S5601]]
Recent statements by several tobacco companies make clear that they
plan to develop what they characterize as ``reduced risk'' cigarettes.
This legislation will require manufacturers to submit such ``reduced
risk'' products to the FDA for analysis before they can be marketed. No
health-related claims will be permitted until they have been verified
to the FDA's satisfaction. These safeguards are essential to prevent
deceptive industry marketing campaigns, which could lull the public
into a false sense of health safety.
Smoking is the number one preventable cause of death in America.
Congress must vest FDA not only with the responsibility for regulating
tobacco products, but with full authority to do the job effectively.
This legislation will give the FDA the legal authority it needs: To
reduce youth smoking by preventing tobacco advertising which targets
children; to prevent the sale of tobacco products to minors; to help
smokers overcome their addiction; to make tobacco products less toxic
for those who continue to use them; and to prevent the tobacco industry
from misleading the public about the dangers of smoking.
We cannot allow the tobacco industry to stop us from doing what we
know is right for America's children. I intend to do all I can to see
that Congress enacts this legislation this year. The public health
demands it.
Mrs. FEINSTEIN. Mr. President, I rise today with Senators Kennedy and
DeWine in support of legislation to empower the Food and Drug
Administration, FDA, to regulate tobacco products.
During my time in the Senate, I have become very involved with
cancer. I am the Co-Chair of the Senate Cancer Caucus and the Vice-
Chair of the National Dialogue on Cancer, which is Chaired by former
President and Barbara Bush.
The cancer community is united in the belief that the single most
important preventive measure is to place tobacco products under the
regulatory control of the FDA. I stand behind the cancer community and
express the same belief.
Smoking causes one-third of all cancers, and is the cause of
approximately 165,000 deaths annually.
I firmly believe that cancer cannot be conquered without addressing
smoking and the use of tobacco products.
Smoking results in death or disability for over half of tobacco
users, according to the Centers for Disease Control, CDC. Smoking costs
the health care system over $70 billion annually.
Over the past two decades, we have learned that tobacco companies
have manipulated the level of nicotine in cigarettes to increase the
number of people addicted to their product.
There are more than 40 chemicals in tobacco smoke that cause cancer
in humans and animals, according to the CDC. Tobacco smoke has toxic
components, as well as tar, carbon monoxide and other dangerous
additives.
It is long past time to reduce the addictive nature of cigarettes and
curtail the marketing of these products to young people. I believe that
empowering the FDA to regulate tobacco will help do that.
The U.S. Surgeon General and the Centers for Disease Control and
Prevention have unequivocally demonstrated that, for example, anti-
smoking campaigns can reduce smoking, a major cause of cancer.
California is a good example: My state started an aggressive tobacco
control program in 1989 and throughout the 1990s, tobacco use dropped
at two to three times faster than the rest of the country.
Ninety percent of adult smokers begin before age 18 and every day,
3,000 young people become smokers.
This bill will provide meaningful regulation by the Food and Drug
Administration of the content and marketing of tobacco products,
especially the addicting and carcinogenic components.
Dr. C. Everett Koop, former US Surgeon General, and Dr. David
Kessler, former Commissioner of the Food and Drug Administration, in
1997 report, cited FDA and other studies and said:
Nicotine in cigarettes and smokeless tobacco has the same
pharmacological effects as other drugs that FDA has
traditionally regulated . . . nicotine is extremely addictive
. . . and the vast majority of people who use nicotine-
containing cigarettes and smokeless tobacco do so to satisfy
their craving for the pharmacological effects of nicotine;
that is, to satisfy their drug-dependence or addiction.
They go to recommend that the ``FDA should continue to have authority
to regulate all areas of nicotine, as well as other constituents and
ingredients, and that authority should be made completely explicit.''
I am pleased that to note that even the Philip Morris Companies has
acknowledged the need for FDA to regulate tobacco. On their website,
they say:
We believe federal legislation that includes granting FDA
authority to regulate tobacco products could effectively
address many of the complex tobacco issues that concern the
public, the public health community and us.
It is long past time to reduce the addictive nature of cigarettes and
curtail the marketing of these products to young people. This bill
gives FDA the power to regulate tobacco products' content, design,
sale, and marketing.
I ask unanimous consent that the text of the bill be printed in the
Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 2626
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) Short Title.--This Act may be cited as the ``Youth
Smoking Prevention and Public Health Protection Act''.
(b) Table of Contents.--The table of contents of this Act
is as follows:
Sec. 1. Short title.
Sec. 2. Findings.
Sec. 3. Purpose.
Sec. 4. Scope and effect.
TITLE I--AUTHORITY OF THE FOOD AND DRUG ADMINISTRATION
Sec. 101. Amendment of Federal Food, Drug, and Cosmetic Act.
``CHAPTER IX--TOBACCO PRODUCTS
``Sec. 900. Definitions.
``Sec. 901. FDA authority over tobacco products
``Sec. 902. Adulterated tobacco products.
``Sec. 903. Misbranded tobacco products.
``Sec. 904. Submission of health information to the Secretary.
``Sec. 905. Annual registration.
``Sec. 906. General provisions respecting control of tobacco products.
``Sec. 907. Performance standards.
``Sec. 908. Notification and other remedies
``Sec. 909. Records and reports on tobacco products.
``Sec. 910. Premarket review of certain tobacco products.
``Sec. 911. Judicial review.
``Sec. 912. Postmarket surveillance
``Sec. 913. Reduced risk tobacco products.
``Sec. 914. Equal treatment of retail outlets.
``Sec. 915. Jurisdiction of and coordination with the Federal Trade
Commission.
``Sec. 916. Congressional review provisions.
``Sec. 917. Regulation requirement.
``Sec. 918. Preservation of State and local authority.
``Sec. 919. Tobacco Products Scientific Advisory Committee.
Sec. 102. Construction of current regulations.
Sec. 103. Conforming and other amendments to general provisions.
TITLE II--TOBACCO PRODUCT WARNINGS AND SMOKE CONSTITUENT DISCLOSURE
Sec. 201. Cigarette label and advertising warnings.
Sec. 202. Authority to revise cigarette warning label Statements.
Sec. 203. Smokeless tobacco labels and advertising warnings.
Sec. 204. Authority to revise smokeless tobacco product warning label
Statements.
Sec. 205. Tar, nicotine, and other smoke constituent disclosure to the
public.
Sec. 206. Unlawful advertisements.
SEC. 2. FINDINGS.
The Congress finds the following:
(1) The use of tobacco products by the Nation's children is
a pediatric disease of epic and worsening proportions that
results in new generations of tobacco-dependent children and
adults.
(2) A consensus exists within the scientific and medical
communities that tobacco products are inherently dangerous
and cause cancer, heart disease, and other serious adverse
health effects.
(3) Nicotine is an addictive drug.
(4) Virtually all new users of tobacco products are under
the minimum legal age to purchase such products.
(5) Tobacco advertising and marketing contribute
significantly to the use of nicotine-containing tobacco
products by adolescents.
(6) Because past efforts to restrict advertising and
marketing of tobacco products have failed adequately to curb
tobacco use
[[Page S5602]]
by adolescents, comprehensive restrictions on the sale,
promotion, and distribution of such products are needed.
(7) Federal and State governments have lacked the legal and
regulatory authority and resources they need to address
comprehensively the public health and societal problems
caused by the use of tobacco products.
(8) Federal and State public health officials, the public
health community, and the public at large recognize that the
tobacco industry should be subject to ongoing oversight.
(9) Under Article I, Section 8 of the Constitution, the
Congress is vested with the responsibility for regulating
interstate commerce and commerce with Indian tribes.
(10) The sale, distribution, marketing, advertising, and
use of tobacco products are activities in and substantially
affecting interstate commerce because they are sold,
marketed, advertised, and distributed in interstate commerce
on a nationwide basis, and have a substantial effect on the
Nation's economy.
(11) The sale, distribution, marketing, advertising, and
use of such products substantially affect interstate commerce
through the health care and other costs attributable to the
use of tobacco products.
(12) It is in the public interest for Congress to enact
legislation that provides the Food and Drug Administration
with the authority to regulate tobacco products. The benefits
to the American people from enacting such legislation would
be significant in human and economic terms.
(13) Tobacco use is the foremost preventable cause of
premature death in America. It causes over 400,000 deaths in
the United States each year.
(14) Reducing the use of tobacco by minors by 50 percent
would prevent well over 10,000,000 of today's children from
becoming regular, daily smokers, saving over 3,000,000 of
them from premature death due to tobacco induced disease.
Such a reduction in youth smoking would also result in
approximately $110,000,000,000 in savings attributable to
reduced health care costs.
(15) Advertising, marketing, and promotion of tobacco
products have been especially directed to attract young
persons to use tobacco products and these efforts have
resulted in increased use of such products by youth. Past
efforts to oversee these activities have not been successful
in adequately preventing such increased use.
(16) In 1999, the tobacco industry spent close to
$8,240,000,000 to attract new users, retain current users,
increase current consumption, and generate favorable long-
term attitudes toward smoking and tobacco use.
(17) Tobacco product advertising often misleadingly
portrays the use of tobacco as socially acceptable and
healthful to minors.
(18) Tobacco product advertising is regularly seen by
persons under the age of 18, and persons under the age of 18
are regularly exposed to tobacco product promotional efforts.
(19) Through advertisements during and sponsorship of
sporting events, tobacco has become strongly associated with
sports and has become portrayed as an integral part of sports
and the healthy lifestyle associated with rigorous sporting
activity.
(20) Children are exposed to substantial and unavoidable
tobacco advertising that leads to favorable beliefs about
tobacco use, plays a role in leading young people to
overestimate the prevalence of tobacco use, and increases the
number of young people who begin to use tobacco.
(21) The use of tobacco products in motion pictures and
other mass media glamorizes its use for young people and
encourages them to use tobacco products.
(22) Tobacco advertising expands the size of the tobacco
market by increasing consumption of tobacco products
including tobacco use by young people.
(23) Children are more influenced by tobacco advertising
than adults, they smoke the most advertised brands, and
children as young as 3 to 6 years old can recognize a
character associated with smoking at the same rate as they
recognize cartoons and fast food characters.
(24) Tobacco company documents indicate that young people
are an important and often crucial segment of the tobacco
market.
(25) Comprehensive advertising restrictions will have a
positive effect on the smoking rates of young people.
(26) Restrictions on advertising are necessary to prevent
unrestricted tobacco advertising from undermining legislation
prohibiting access to young people and providing for
education about tobacco use.
(27) International experience shows that advertising
regulations that are stringent and comprehensive have a
greater impact on overall tobacco use and young people's use
than weaker or less comprehensive ones.
(28) Text-only requirements, while not as stringent as a
ban, will help reduce underage use of tobacco products while
preserving the informational function of advertising.
(29) It is in the public interest for Congress to adopt
legislation to address the public health crisis created by
actions of the tobacco industry.
(30) The final regulations promulgated by the Secretary of
Health and Human Services in the August 28, 1996, issue of
the Federal Register (62 Fed. Reg. 44615-44618) for inclusion
as part 897 of title 21, Code of Federal Regulations, are
consistent with the standards set forth in the amendments
made by this Act for the regulation of tobacco products by
the Food and Drug Administration and the restriction on the
sale and distribution, including access to and the
advertising and promotion of, tobacco products contained in
such regulations are substantially related to accomplishing
the public health goals of this Act.
(31) The regulations described in paragraph (30) will
directly and materially advance the Federal Government's
substantial interest in reducing the number of children and
adolescents who use cigarettes and smokeless tobacco and in
preventing the life-threatening health consequences
associated with tobacco use. An overwhelming majority of
Americans who use tobacco products begin using such products
while they are minors and become addicted to the nicotine in
those product before reaching the age of 18. Tobacco
advertising and promotion plays a crucial role in the
decision of these minors to begin using tobacco products.
Less restrictive and less comprehensive approaches have not
and will not be effective in reducing the problems addressed
by such regulations. The reasonable restrictions on the
advertising and promotion of tobacco products contained in
such regulations will lead to a significant decrease in the
number of minors using and becoming addicted to those
products.
(32) The regulations described in paragraph (30) impose no
more extensive restrictions on communication by tobacco
manufacturers and sellers than are necessary to reduce the
number of children and adolescents who use cigarettes and
smokeless tobacco and to prevent the life-threatening health
consequences associated with tobacco use. Such regulations
are narrowly tailored to restrict those advertising and
promotional practices which are most likely to be seen or
heard by youth and most likely to entice them into tobacco
use, while affording tobacco manufacturers and sellers ample
opportunity to convey information about their products to
adult consumers.
SEC. 3. PURPOSE.
The purposes of this Act are--
(1) to provide authority to the Food and Drug
Administration to regulate tobacco products under the Federal
Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.), by
recognizing it as the primary Federal regulatory authority
with respect to the manufacture, marketing, and distribution
of tobacco products;
(2) to ensure that the Food and Drug Administration has the
authority to address issues of particular concern to public
health officials, especially the use of tobacco by young
people and dependence on tobacco;
(3) to authorize the Food and Drug Administration to set
national standards controlling the manufacture of tobacco
products and the identity, public disclosure, and amount of
ingredients used in such products;
(4) to provide new and flexible enforcement authority to
ensure that there is effective oversight of the tobacco
industry's efforts to develop and introduce less harmful
tobacco products;
(5) to vest the Food and Drug Administration with the
authority to regulate the levels of tar, nicotine, and other
harmful components of tobacco products;
(6) in order to ensure that adults are better informed, to
require tobacco product manufacturers to disclose research
which has not previously been made available, as well as
research generated in the future, relating to the health and
dependency effects or safety of tobacco products;
(7) to continue to permit the sale of tobacco products to
adults in conjunction with measures to ensure that they are
not sold or accessible to underage purchasers; and
(8) to impose appropriate regulatory controls on the
tobacco industry
SEC. 4. SCOPE AND EFFECT.
(a) Intended Effect.--Nothing in this Act (or an amendment
made by this Act) shall be construed to--
(1) establish a precedent with regard to any other
industry, situation, circumstance, or legal action; or
(2) affect any action pending in State, Tribal, or Federal
court, or any agreement, consent decree, or contract of any
kind.
(b) Agricultural Activities.--The provisions of this Act
(or an amendment made by this Act) which authorize the
Secretary to take certain actions with regard to tobacco and
tobacco products shall not be construed to affect any
authority of the Secretary of Agriculture under existing law
regarding the growing, cultivation, or curing of raw tobacco.
TITLE I--AUTHORITY OF THE FOOD AND DRUG ADMINISTRATION
SEC. 101. AMENDMENT OF FEDERAL FOOD, DRUG, AND COSMETIC ACT.
(a) Definition of Tobacco Products.--Section 201 of the
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321) is
amended by adding at the end the following:
``(kk) The term `tobacco product' means any product made or
derived from tobacco that is intended for human consumption,
including any component, part, or accessory of a tobacco
product (except for raw materials other than tobacco used in
manufacturing a component, part, or accessory of a tobacco
product).''.
(b) FDA Authority Over Tobacco Products.--The Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 301 et seq.) is amended--
(1) by redesignating chapter IX as chapter X;
(2) by redesignating sections 901 through 907 as sections
1001 through 1007; and
[[Page S5603]]
(3) by inserting after section 803 the following:
``CHAPTER IX--TOBACCO PRODUCTS
``SEC. 900. DEFINITIONS.
``In this chapter:
``(1) Brand.--The term `brand' means a variety of tobacco
product distinguished by the tobacco used, tar content,
nicotine content, flavoring used, size, filtration, or
packaging, logo, registered trademark or brand name,
identifiable pattern of colors, or any combination of such
attributes.
``(2) Cigarette.--The term `cigarette' has the meaning
given that term by section 3(1) of the Federal Cigarette
Labeling and Advertising Act (15 U.S.C. 1332(1)), but also
includes tobacco, in any form, that is functional in the
product, which, because of its appearance, the type of
tobacco used in the filler, or its packaging and labeling, is
likely to be offered to, or purchased by, consumers as a
cigarette or as roll-your-own tobacco.
``(3) Cigarette tobacco.--The term `cigarette tobacco'
means any product that consists of loose tobacco that is
intended for use by consumers in a cigarette. Unless
otherwise stated, the requirements for cigarettes shall also
apply to cigarette tobacco.
``(4) Commerce.--The term `commerce' has the meaning given
that term by section 3(2) of the Federal Cigarette Labeling
and Advertising Act (15 U.S.C. 1332(2)).
``(5) Distributor.--The term `distributor' as regards a
tobacco product means any person who furthers the
distribution of cigarette or smokeless tobacco, whether
domestic or imported, at any point from the original place of
manufacture to the person who sells or distributes the
product to individuals for personal consumption. Common
carriers are not considered distributors for purposes of this
chapter.
``(6) Indian tribe.--The term `Indian tribe' has the
meaning given such term in section 4(e) of the Indian Self
Determination and Education Assistance Act (25 U.S.C.
450b(e)).
``(7) Little cigar.--The term `little cigar' has the
meaning given that term by section 3(7) of the Federal
Cigarette Labeling and Advertising Act (15 U.S.C. 1332(7)).
``(8) Nicotine.--The term `nicotine' means the chemical
substance named 3-(1-Methyl-2-pyrrolidinyl) pyridine or
C[10]H[14]N[2], including any salt or complex of nicotine.
``(9) Package.--The term `package' means a pack, box,
carton, or container of any kind or, if no other container,
any wrapping (including cellophane), in which cigarettes or
smokeless tobacco are offered for sale, sold, or otherwise
distributed to consumers.
``(10) Retailer.--The term `retailer' means any person who
sells cigarettes or smokeless tobacco to individuals for
personal consumption, or who operates a facility where self-
service displays of tobacco products are permitted.
``(11) Roll-your-own tobacco.--The term `roll-your-own
tobacco' means any tobacco which, because of its appearance,
type, packaging, or labeling, is suitable for use and likely
to be offered to, or purchased by, consumers as tobacco for
making cigarettes.
``(12) Smokeless tobacco.--The term `smokeless tobacco'
means any product that consists of cut, ground, powdered, or
leaf tobacco and that is intended to be placed in the oral or
nasal cavity.
``(13) State.--The term `State' means any State of the
United States and, for purposes of this chapter, includes the
District of Columbia, the Commonwealth of Puerto Rico, Guam,
the Virgin Islands, American Samoa, Wake Island, Midway
Islands, Kingman Reef, Johnston Atoll, the Northern Mariana
Islands, and any other trust territory or possession of the
United States.
``(14) Tobacco product manufacturer.--Term `tobacco product
manufacturer' means any person, including any repacker or
relabeler, who--
``(A) manufactures, fabricates, assembles, processes, or
labels a finished cigarette or smokeless tobacco product; or
``(B) imports a finished cigarette or smokeless tobacco
product for sale or distribution in the United States.
``(15) United states.--The term `United States' means the
50 States of the United States of America and the District of
Columbia, the Commonwealth of Puerto Rico, Guam, the Virgin
Islands, American Samoa, Wake Island, Midway Islands, Kingman
Reef, Johnston Atoll, the Northern Mariana Islands, and any
other trust territory or possession of the United States.
``SEC. 901. FDA AUTHORITY OVER TOBACCO PRODUCTS.
``(a) In General.--Tobacco products shall be regulated by
the Secretary under this chapter and shall not be subject to
the provisions of chapter V, unless--
``(1) such products are intended for use in the diagnosis,
cure, mitigation, treatment, or prevention of disease (within
the meaning of section 201(g)(1)(B) or section 201(h)(2)); or
``(2) a health claim is made for such products under
section 201(g)(1)(C) or 201(h)(3).
``(b) Applicability.--This chapter shall apply to all
tobacco products subject to the regulations referred to in
section 102 of the Youth Smoking Prevention and Public Health
Protection Act, and to any other tobacco products that the
Secretary by regulation deems to be subject to this chapter.
``(c) Scope.--
``(1) In general.--Nothing in this chapter, or any policy
issued or regulation promulgated thereunder, or the Youth
Smoking Prevention and Public Health Protection Act, shall be
construed to affect the Secretary's authority over, or the
regulation of, products under this Act that are not tobacco
products under chapter V or any other chapter.
``(2) Tobacco leaf.--
``(A) In general.--The provisions of this chapter shall not
apply to tobacco leaf that is not in the possession of the
manufacturer, or to the producers of tobacco leaf, including
tobacco growers, tobacco warehouses, and tobacco grower
cooperatives, nor shall any employee of the Food and Drug
Administration have any authority to enter onto a farm owned
by a producer of tobacco leaf without the written consent of
such producer.
``(B) Exception.--Notwithstanding any other provision of
this subparagraph, if a producer of tobacco leaf is also a
tobacco product manufacturer or controlled by a tobacco
product manufacturer, the producer shall be subject to this
chapter in the producer's capacity as a manufacturer.
``(C) Rule of construction.--Nothing in this chapter shall
be construed to grant the Secretary authority to promulgate
regulations on any matter that involves the production of
tobacco leaf or a producer thereof, other than activities by
a manufacturer affecting production. For purposes of the
preceding sentence, the term `controlled by' means a member
of the same controlled group of corporations as that term is
used in section 52(a) of the Internal Revenue Code of 1986,
or under common control within the meaning of the regulations
promulgated under section 52(b) of such Code.
``SEC. 902. ADULTERATED TOBACCO PRODUCTS.
``A tobacco product shall be deemed to be adulterated if--
``(1) it consists in whole or in part of any filthy,
putrid, or decomposed substance, or is otherwise contaminated
by any poisonous or deleterious substance that may render the
product injurious to health;
``(2) it has been prepared, packed, or held under
insanitary conditions whereby it may have been contaminated
with filth, or whereby it may have been rendered injurious to
health;
``(3) its container is composed, in whole or in part, of
any poisonous or deleterious substance which may render the
contents injurious to health;
``(4) it is, or purports to be or is represented as, a
tobacco product which is subject to a performance standard
established under section 907 unless such tobacco product is
in all respects in conformity with such standard;
``(5) it is required by section 910(a) to have premarket
approval, is not exempt under section 906(f), and does not
have an approved application in effect;
``(6) the methods used in, or the facilities or controls
used for, its manufacture, packing or storage are not in
conformity with applicable requirements under section
906(e)(1) or an applicable condition prescribed by an order
under section 906(e)(2); or
``(7) it is a tobacco product for which an exemption has
been granted under section 906(f) for investigational use and
the person who was granted such exemption or any investigator
who uses such tobacco product under such exemption fails
to comply with a requirement prescribed by or under such
section.
``SEC. 903. MISBRANDED TOBACCO PRODUCTS.
``(a) In General.--A tobacco product shall be deemed to be
misbranded--
``(1) if its labeling is false or misleading in any
particular;
``(2) if in package form unless it bears a label
containing--
``(A) the name and place of business of the tobacco product
manufacturer, packer, or distributor;
``(B) an accurate statement of the quantity of the contents
in terms of weight, measure, or numerical count; and
``(C) an accurate statement of the percentage of the
tobacco used in the product that is domestically grown
tobacco and the percentage that is foreign grown tobacco,
except that under subparagraph (B) reasonable variations
shall be permitted, and exemptions as to small packages shall
be established, by regulations prescribed by the Secretary;
``(3) if any word, statement, or other information required
by or under authority of this chapter to appear on the label
or labeling is not prominently placed thereon with such
conspicuousness (as compared with other words, statements or
designs in the labeling) and in such terms as to render it
likely to be read and understood by the ordinary individual
under customary conditions of purchase and use;
``(4) if it has an established name, unless its label
bears, to the exclusion of any other nonproprietary name, its
established name prominently printed in type as required by
the Secretary by regulation;
``(5) if the Secretary has issued regulations requiring
that its labeling bear adequate directions for use, or
adequate warnings against use by children, that are necessary
for the protection of users unless its labeling conforms in
all respects to such regulations;
``(6) if it was manufactured, prepared, propagated,
compounded, or processed in any State in an establishment not
duly registered under section 905(b), if it was not included
in a list required by section 905(i), if a notice or other
information respecting it was not provided as required by
such section or section 905(j), or if it does not bear such
symbols from the uniform system for identification of tobacco
products prescribed under section 905(e) as the Secretary by
regulation requires;
[[Page S5604]]
``(7) if, in the case of any tobacco product distributed or
offered for sale in any State--
``(A) its advertising is false or misleading in any
particular; or
``(B) it is sold or distributed in violation of regulations
prescribed under section 906(d);
``(8) unless, in the case of any tobacco product
distributed or offered for sale in any State, the
manufacturer, packer, or distributor thereof includes in all
advertisements and other descriptive printed matter issued or
caused to be issued by the manufacturer, packer, or
distributor with respect to that tobacco product--
``(A) a true statement of the tobacco product's established
name as defined in paragraph (4), printed prominently; and
``(B) a brief statement of--
``(i) the uses of the tobacco product and relevant
warnings, precautions, side effects, and contraindications;
and
``(ii) in the case of specific tobacco products made
subject to a finding by the Secretary after notice and
opportunity for comment that such action is necessary to
protect the public health, a full description of the
components of such tobacco product or the formula showing
quantitatively each ingredient of such tobacco product to the
extent required in regulations which shall be issued by the
Secretary after an opportunity for a hearing;
``(9) if it is a tobacco product subject to a performance
standard established under section 907, unless it bears such
labeling as may be prescribed in such performance standard;
or
``(10) if there was a failure or refusal--
``(A) to comply with any requirement prescribed under
section 904 or 908;
``(B) to furnish any material or information required by or
under section 909; or
``(C) to comply with a requirement under section 912.
``(b) Prior Approval of Label Statements.--The Secretary
may, by regulation, require prior approval of statements made
on the label of a tobacco product. No regulation issued under
this subsection may require prior approval by the Secretary
of the content of any advertisement. No advertisement of a
tobacco product, published after the date of enactment of the
Youth Smoking Prevention and Public Health Protection Act
shall, with respect to the language of label statements as
prescribed under section 4 of the Cigarette Labeling and
Advertising Act and section 3 of the Comprehensive Smokeless
Tobacco Health Education Act of 1986 or the regulations
issued under such sections, be subject to the provisions of
sections 12 through 15 of the Federal Trade Commission Act
(15 U.S.C. 52 through 55).
``SEC. 904. SUBMISSION OF HEALTH INFORMATION TO THE
SECRETARY.
``(a) Requirement.--Not later than 6 months after the date
of enactment of the Youth Smoking Prevention and Public
Health Protection Act, each tobacco product manufacturer or
importer of tobacco products, or agents thereof, shall submit
to the Secretary the following information:
``(1) A listing of all tobacco ingredients, substances and
compounds that are, on such date, added by the manufacturer
to the tobacco, paper, filter, or other component of each
tobacco product by brand and by quantity in each brand and
subbrand.
``(2) A description of the content, delivery, and form of
nicotine in each tobacco product measured in milligrams of
nicotine.
``(3) All documents (including underlying scientific
information) relating to research activities, and research
findings, conducted, supported, or possessed by the
manufacturer (or agents thereof) on the health, behavioral,
or physiologic effects of tobacco products, their
constituents, ingredients, and components, and tobacco
additives, described in paragraph (1).
``(4) All documents (including underlying scientific
information) relating to research activities, and research
findings, conducted, supported, or possessed by the
manufacturer (or agents thereof) that relate to the issue of
whether a reduction in risk to health from tobacco products
can occur upon the employment of technology available or
known to the manufacturer.
``(5) All documents (including underlying scientific
information) relating to marketing research involving the use
of tobacco products.
An importer of a tobacco product not manufactured in the
United States shall supply the information required of a
tobacco product manufacturer under this subsection.
``(b) Annual Submission.--A tobacco product manufacturer or
importer that is required to submit information under
subsection (a) shall update such information on an annual
basis under a schedule determined by the Secretary.
``(c) Time for Submission.--
``(1) New products.--At least 90 days prior to the delivery
for introduction into interstate commerce of a tobacco
product not on the market on the date of enactment of the
Youth Smoking Prevention and Public Health Protection Act,
the manufacturer of such product shall provide the
information required under subsection (a) and such product
shall be subject to the annual submission under subsection
(b).
``(2) Modification of existing products.--If at any time a
tobacco product manufacturer adds to its tobacco products a
new tobacco additive, increases or decreases the quantity of
an existing tobacco additive or the nicotine content,
delivery, or form, or eliminates a tobacco additive from any
tobacco product, the manufacturer shall within 60 days of
such action so advise the Secretary in writing and reference
such modification in submissions made under subsection (b).
``SEC. 905. ANNUAL REGISTRATION.
``(a) Definitions.--In this section:
``(1) Manufacture, preparation, compounding, or
processing.--The term `manufacture, preparation, compounding,
or processing' shall include repackaging or otherwise
changing the container, wrapper, or labeling of any tobacco
product package in furtherance of the distribution of the
tobacco product from the original place of manufacture to the
person who makes final delivery or sale to the ultimate
consumer or user.
``(2) Name.--The term `name' shall include in the case of a
partnership the name of each partner and, in the case of a
corporation, the name of each corporate officer and director,
and the State of incorporation.
``(b) Registration by Owners and Operators.--On or before
December 31 of each year every person who owns or operates
any establishment in any State engaged in the manufacture,
preparation, compounding, or processing of a tobacco product
or tobacco products shall register with the Secretary the
name, places of business, and all such establishments of that
person.
``(c) Registration of New Owners and Operators.--Every
person upon first engaging in the manufacture, preparation,
compounding, or processing of a tobacco product or tobacco
products in any establishment owned or operated in any State
by that person shall immediately register with the Secretary
that person's name, place of business, and such
establishment.
``(d) Registration of Added Establishments.--Every person
required to register under subsection (b) or (c) shall
immediately register with the Secretary any additional
establishment which that person owns or operates in any State
and in which that person begins the manufacture, preparation,
compounding, or processing of a tobacco product or tobacco
products.
``(e) Uniform Product Identification System.--The Secretary
may by regulation prescribe a uniform system for the
identification of tobacco products and may require that
persons who are required to list such tobacco products under
subsection (i) shall list such tobacco products in accordance
with such system.
``(f) Public Access to Registration Information.--The
Secretary shall make available for inspection, to any person
so requesting, any registration filed under this section.
``(g) Biennial Inspection of Registered Establishments.--
Every establishment in any State registered with the
Secretary under this section shall be subject to inspection
under section 704, and every such establishment engaged in
the manufacture, compounding, or processing of a tobacco
product or tobacco products shall be so inspected by one or
more officers or employees duly designated by the Secretary
at least once in the 2-year period beginning with the date of
registration of such establishment under this section and at
least once in every successive 2-year period thereafter.
``(h) Foreign Establishments May Register.--Any
establishment within any foreign country engaged in the
manufacture, preparation, compounding, or processing of a
tobacco product or tobacco products, may register under this
section under regulations promulgated by the Secretary. Such
regulations shall require such establishment to provide the
information required by subsection (i) of this section and
shall include provisions for registration of any such
establishment upon condition that adequate and effective
means are available, by arrangement with the government of
such foreign country or otherwise, to enable the Secretary to
determine from time to time whether tobacco products
manufactured, prepared, compounded, or processed in such
establishment, if imported or offered for import into the
United States, shall be refused admission on any of the
grounds set forth in section 801(a).
``(i) Registration Information.--
``(1) Product list.--Every person who registers with the
Secretary under subsection (b), (c), or (d) shall, at the
time of registration under any such subsection, file with
the Secretary a list of all tobacco products which are
being manufactured, prepared, compounded, or processed by
that person for commercial distribution and which has not
been included in any list of tobacco products filed by
that person with the Secretary under this paragraph or
paragraph (2) before such time of registration. Such list
shall be prepared in such form and manner as the Secretary
may prescribe and shall be accompanied by--
``(A) in the case of a tobacco product contained in the
applicable list with respect to which a performance standard
has been established under section 907 or which is subject to
section 910, a reference to the authority for the marketing
of such tobacco product and a copy of all labeling for such
tobacco product;
``(B) in the case of any other tobacco product contained in
an applicable list, a copy of all consumer information and
other labeling for such tobacco product, a representative
sampling of advertisements for such tobacco product, and,
upon request made by the Secretary for good cause, a copy of
all advertisements for a particular tobacco product; and
``(C) if the registrant filing a list has determined that a
tobacco product contained in
[[Page S5605]]
such list is not subject to a performance standard
established under section 907, a brief statement of the basis
upon which the registrant made such determination if the
Secretary requests such a statement with respect to that
particular tobacco product.
``(2) Biannual report of any change in product list.--Each
person who registers with the Secretary under this section
shall report to the Secretary once during the month of June
of each year and once during the month of December of each
year the following:
``(A) A list of each tobacco product introduced by the
registrant for commercial distribution which has not been
included in any list previously filed by that person with the
Secretary under this subparagraph or paragraph (1). A list
under this subparagraph shall list a tobacco product by its
established name and shall be accompanied by the other
information required by paragraph (1).
``(B) If since the date the registrant last made a report
under this paragraph that person has discontinued the
manufacture, preparation, compounding, or processing for
commercial distribution of a tobacco product included in a
list filed under subparagraph (A) or paragraph (1), notice of
such discontinuance, the date of such discontinuance, and the
identity of its established name.
``(C) If since the date the registrant reported under
subparagraph (B) a notice of discontinuance that person has
resumed the manufacture, preparation, compounding, or
processing for commercial distribution of the tobacco product
with respect to which such notice of discontinuance was
reported, notice of such resumption, the date of such
resumption, the identity of such tobacco product by
established name, and other information required by paragraph
(1), unless the registrant has previously reported such
resumption to the Secretary under this subparagraph.
``(D) Any material change in any information previously
submitted under this paragraph or paragraph (1).
``(j) Report Preceding Introduction of Certain
Substantially-equivalent Products Into Interstate Commerce.--
``(1) In general.--Each person who is required to register
under this section and who proposes to begin the introduction
or delivery for introduction into interstate commerce for
commercial distribution of a tobacco product intended for
human use that was not commercially marketed (other than for
test marketing) in the United States as of June 1, 2002, as
defined by the Secretary by regulation shall, at least 90
days before making such introduction or delivery, report to
the Secretary (in such form and manner as the Secretary shall
by regulation prescribe)--
``(A) the basis for such person's determination that the
tobacco product is substantially equivalent, within the
meaning of section 910, to a tobacco product commercially
marketed (other than for test marketing) in the United States
as of June 1, 2002, that is in compliance with the
requirements of this Act; and
``(B) action taken by such person to comply with the
requirements under section 907 that are applicable to the
tobacco product.
``(2) Application to certain post-june 1, 2002 products.--A
report under this subsection for a tobacco product that was
first introduced or delivered for introduction into
interstate commerce for commercial distribution in the United
States after June 1, 2002, and before the date of enactment
of the Youth Smoking Prevention and Public Health Protection
Act shall be submitted to the Secretary within 6 months
after the date of enactment of that Act.
``SEC. 906. GENERAL PROVISIONS RESPECTING CONTROL OF TOBACCO
PRODUCTS.
``(a) In General.--Any requirement established by or under
section 902, 903, 905, or 909 applicable to a tobacco product
shall apply to such tobacco product until the applicability
of the requirement to the tobacco product has been changed by
action taken under section 907, section 910, or subsection
(d) of this section, and any requirement established by or
under section 902, 903, 905, or 909 which is inconsistent
with a requirement imposed on such tobacco product under
section 907, section 910, or subsection (d) of this section
shall not apply to such tobacco product.
``(b) Information on Public Access and Comment.--Each
notice of proposed rulemaking under section 907, 908, 909,
or 910, or under this section, any other notice which is
published in the Federal Register with respect to any
other action taken under any such section and which states
the reasons for such action, and each publication of
findings required to be made in connection with rulemaking
under any such section shall set forth--
``(1) the manner in which interested persons may examine
data and other information on which the notice or findings is
based; and
``(2) the period within which interested persons may
present their comments on the notice or findings (including
the need therefore) orally or in writing, which period shall
be at least 60 days but may not exceed 90 days unless the
time is extended by the Secretary by a notice published in
the Federal Register stating good cause therefore.
``(c) Limited Confidentiality of Information.--Any
information reported to or otherwise obtained by the
Secretary or the Secretary's representative under section
904, 907, 908, 909, or 910 or 704, or under subsection (e) or
(f) of this section, which is exempt from disclosure under
subsection (a) of section 552 of title 5, United States Code,
by reason of subsection (b)(4) of that section shall be
considered confidential and shall not be disclosed, except
that the information may be disclosed to other officers or
employees concerned with carrying out this chapter, or when
relevant in any proceeding under this chapter.
``(d) Restrictions.--
``(1) In general.--The Secretary may by regulation require
restrictions on the sale and distribution of a tobacco
product, including restrictions on the access to, and the
advertising and promotion of, the tobacco product, if the
Secretary determines that such regulation would be
appropriate for the protection of the public health. The
Secretary may by regulation impose restrictions on the
advertising and promotion of tobacco products consistent with
and to full extent permitted by the first amendment to the
Constitution. The finding as to whether such regulation would
be appropriate for the protection of the public health shall
be determined with respect to the risks and benefits to the
population as a whole, including users and non-users of the
tobacco product, and taking into account--
``(A) the increased or decreased likelihood that existing
users of tobacco products will stop using such products; and
``(B) the increased or decreased likelihood that those who
do not use tobacco products will start using such products.
No such regulation may require that the sale or distribution
of a tobacco product be limited to the written or oral
authorization of a practitioner licensed by law to prescribe
medical products.
``(2) Label statements.--The label of a tobacco product
shall bear such appropriate statements of the restrictions
required by a regulation under subsection (a) as the
Secretary may in such regulation prescribe.
``(3) Limitation.--No restriction under paragraph (1) may
prohibit the sale of any tobacco product in face-to face
transactions by a specific category of retail outlets.
``(e) Good Manufacturing Practice Requirements.--
``(1) Methods, facilities, and controls to conform.--
``(A) In general.--The Secretary may, in accordance with
subparagraph (B), prescribe regulations requiring that the
methods used in, and the facilities and controls used for,
the manufacture, pre-production design validation (including
a process to assess the performance of a tobacco product),
packing and storage of a tobacco product, conform to current
good manufacturing practice, as prescribed in such
regulations, to assure that the public health is protected
and that the tobacco product is in compliance with this
chapter.
``(B) Requirements.--The Secretary shall--
``(i) before promulgating any regulation under subparagraph
(A), afford an advisory committee an opportunity to submit
recommendations with respect to the regulation proposed to be
promulgated;
``(ii) before promulgating any regulation under
subparagraph (A), afford opportunity for an oral hearing;
``(iii) provide the advisory committee a reasonable time to
make its recommendation with respect to proposed regulations
under subparagraph (A); and
``(iv) in establishing the effective date of a regulation
promulgated under this subsection, take into account the
differences in the manner in which the different types of
tobacco products have historically been produced, the
financial resources of the different tobacco product
manufacturers, and the state of their existing manufacturing
facilities, and shall provide for a reasonable period of time
for such manufacturers to conform to good manufacturing
practices.
``(2) Exemptions; variances.--
``(A) Petition.--Any person subject to any requirement
prescribed under paragraph (1) may petition the Secretary for
a permanent or temporary exemption or variance from such
requirement. Such a petition shall be submitted to the
Secretary in such form and manner as the Secretary shall
prescribe and shall--
``(i) in the case of a petition for an exemption from a
requirement, set forth the basis for the petitioner's
determination that compliance with the requirement is not
required to assure that the tobacco product will be in
compliance with this chapter;
``(ii) in the case of a petition for a variance from a
requirement, set forth the methods proposed to be used in,
and the facilities and controls proposed to be used for, the
manufacture, packing, and storage of the tobacco product in
lieu of the methods, facilities, and controls prescribed by
the requirement; and
``(iii) contain such other information as the Secretary
shall prescribe.
``(B) Referral to advisory committee.--The Secretary may
refer to an advisory committee any petition submitted under
subparagraph (A). The advisory committee shall report its
recommendations to the Secretary with respect to a petition
referred to it within 60 days after the date of the
petition's referral. Within 60 days after--
``(i) the date the petition was submitted to the Secretary
under subparagraph (A); or
``(ii) the day after the petition was referred to an
advisory committee,
whichever occurs later, the Secretary shall by order either
deny the petition or approve it.
[[Page S5606]]
``(C) Approval.--The Secretary may approve--
``(i) a petition for an exemption for a tobacco product
from a requirement if the Secretary determines that
compliance with such requirement is not required to assure
that the tobacco product will be in compliance with this
chapter; and
``(ii) a petition for a variance for a tobacco product from
a requirement if the Secretary determines that the methods to
be used in, and the facilities and controls to be used for,
the manufacture, packing, and storage of the tobacco product
in lieu of the methods, controls, and facilities prescribed
by the requirement are sufficient to assure that the tobacco
product will be in compliance with this chapter.
``(D) Conditions.--An order of the Secretary approving a
petition for a variance shall prescribe such conditions
respecting the methods used in, and the facilities and
controls used for, the manufacture, packing, and storage of
the tobacco product to be granted the variance under the
petition as may be necessary to assure that the tobacco
product will be in compliance with this chapter.
``(E) Hearing.--After the issuance of an order under
subparagraph (B) respecting a petition, the petitioner shall
have an opportunity for an informal hearing on such order.
``(3) Compliance.--Compliance with requirements under this
subsection shall not be required before the period ending 3
years after the date of enactment of the Youth Smoking
Prevention and Public Health Protection Act.
``(f) Exemption for Investigational Use.--The Secretary may
exempt tobacco products intended for investigational use from
this chapter under such conditions as the Secretary may
prescribe by regulation.
``(g) Research and Development.--The Secretary may enter
into contracts for research, testing, and demonstrations
respecting tobacco products and may obtain tobacco products
for research, testing, and demonstration purposes without
regard to section 3324(a) and (b) of title 31, United States
Code, and section 5 of title 41, United States Code.
``SEC. 907. PERFORMANCE STANDARDS.
``(a) In General.--
``(1) Finding required.--The Secretary may adopt
performance standards for a tobacco product if the Secretary
finds that a performance standard is appropriate for the
protection of the public health. This finding shall be
determined with respect to the risks and benefits to the
population as a whole, including users and non-users of the
tobacco product, and taking into account--
``(A) the increased or decreased likelihood that existing
users of tobacco products will stop using such products; and
``(B) the increased or decreased likelihood that those who
do not use tobacco products will start using such products.
``(2) Content of performance standards.--A performance
standard established under this section for a tobacco
product--
``(A) shall include provisions to provide performance that
is appropriate for the protection of the public health,
including provisions, where appropriate--
``(i) for the reduction or elimination of nicotine yields
of the product;
``(ii) for the reduction or elimination of other
constituents or harmful components of the product; or
``(iii) relating to any other requirement under (B);
``(B) shall, where necessary to be appropriate for the
protection of the public health, include--
``(i) provisions respecting the construction, components,
ingredients, and properties of the tobacco product;
``(ii) provisions for the testing (on a sample basis or, if
necessary, on an individual basis) of the tobacco product;
``(iii) provisions for the measurement of the performance
characteristics of the tobacco product;
``(iv) provisions requiring that the results of each or of
certain of the tests of the tobacco product required to be
made under clause (ii) show that the tobacco product is in
conformity with the portions of the standard for which the
test or tests were required; and
``(v) a provision requiring that the sale and distribution
of the tobacco product be restricted but only to the extent
that the sale and distribution of a tobacco product may be
restricted under a regulation under section 906(d); and
``(C) shall, where appropriate, require the use and
prescribe the form and content of labeling for the proper use
of the tobacco product.
``(3) Periodic re-evaluation of performance standards.--The
Secretary shall provide for periodic evaluation of
performance standards established under this section to
determine whether such standards should be changed to reflect
new medical, scientific, or other technological data. The
Secretary may provide for testing under paragraph (2) by any
person.
``(4) Involvement of other agencies; informed persons.--In
carrying out duties under this section, the Secretary shall,
to the maximum extent practicable--
``(A) use personnel, facilities, and other technical
support available in other Federal agencies;
``(B) consult with other Federal agencies concerned with
standard-setting and other nationally or internationally
recognized standard-setting entities; and
``(C) invite appropriate participation, through joint or
other conferences, workshops, or other means, by informed
persons representative of scientific, professional, industry,
or consumer organizations who in the Secretary's judgment can
make a significant contribution.
``(b) Establishment of Standards.--
``(1) Notice.--
``(A) In general.--The Secretary shall publish in the
Federal Register a notice of proposed rulemaking for the
establishment, amendment, or revocation of any performance
standard for a tobacco product.
``(B) Requirements of notice.--A notice of proposed
rulemaking for the establishment or amendment of a
performance standard for a tobacco product shall--
``(i) set forth a finding with supporting justification
that the performance standard is appropriate for the
protection of the public health;
``(ii) set forth proposed findings with respect to the risk
of illness or injury that the performance standard is
intended to reduce or eliminate; and
``(iii) invite interested persons to submit an existing
performance standard for the tobacco product, including a
draft or proposed performance standard, for consideration by
the Secretary.
``(C) Finding.--A notice of proposed rulemaking for the
revocation of a performance standard shall set forth a
finding with supporting justification that the performance
standard is no longer necessary to be appropriate for the
protection of the public health.
``(D) Consideration by secretary.--The Secretary shall
consider all information submitted in connection with a
proposed standard, including information concerning the
countervailing effects of the performance standard on the
health of adolescent tobacco users, adult tobacco users, or
non-tobacco users, such as the creation of a significant
demand for contraband or other tobacco products that do not
meet the requirements of this chapter and the significance of
such demand, and shall issue the standard if the Secretary
determines that the standard would be appropriate for the
protection of the public health.
``(E) Comment.--The Secretary shall provide for a comment
period of not less than 60 days.
``(2) Promulgation.--
``(A) In general.--After the expiration of the period for
comment on a notice of proposed rulemaking published under
paragraph (1) respecting a performance standard and after
consideration of such comments and any report from an
advisory committee, the Secretary shall--
``(i) promulgate a regulation establishing a performance
standard and publish in the Federal Register findings on the
matters referred to in paragraph (1); or
``(ii) publish a notice terminating the proceeding for the
development of the standard together with the reasons for
such termination.
``(B) Effective date.--A regulation establishing a
performance standard shall set forth the date or dates upon
which the standard shall take effect, but no such regulation
may take effect before one year after the date of its
publication unless the Secretary determines that an earlier
effective date is necessary for the protection of the public
health. Such date or dates shall be established so as to
minimize, consistent with the public health, economic loss
to, and disruption or dislocation of, domestic and
international trade.
``(3) Special rule for standard banning class of product or
eliminating nicotine content.--Because of the importance of a
decision of the Secretary to issue a regulation establishing
a performance standard--
``(A) eliminating all cigarettes, all smokeless tobacco
products, or any similar class of tobacco products, or
``(B) requiring the reduction of nicotine yields of a
tobacco product to zero,
it is appropriate for the Congress to have the opportunity to
review such a decision. Therefore, any such standard may not
take effect before a date that is 2 years after the President
notifies the Congress that a final regulation imposing the
restriction has been issued.
``(4) Amendment; revocation.--
``(A) Authority.--The Secretary, upon the Secretary's own
initiative or upon petition of an interested person may by a
regulation, promulgated in accordance with the requirements
of paragraphs (1) and (2)(B), amend or revoke a performance
standard.
``(B) Effective date.--The Secretary may declare a proposed
amendment of a performance standard to be effective on and
after its publication in the Federal Register and until the
effective date of any final action taken on such amendment if
the Secretary determines that making it so effective is in
the public interest.
``(5) Reference to Advisory Committee.--The Secretary--
``(A) may, on the Secretary's own initiative, refer a
proposed regulation for the establishment, amendment, or
revocation of a performance standard; or
``(B) shall, upon the request of an interested person which
demonstrates good cause for referral and which is made before
the expiration of the period for submission of comments on
such proposed regulation,
refer such proposed regulation to an advisory committee, for
a report and recommendation
[[Page S5607]]
with respect to any matter involved in the proposed
regulation which requires the exercise of scientific
judgment. If a proposed regulation is referred under this
paragraph to the advisory committee, the Secretary shall
provide the advisory committee with the data and information
on which such proposed regulation is based. The advisory
committee shall, within 60 days after the referral of a
proposed regulation and after independent study of the data
and information furnished to it by the Secretary and other
data and information before it, submit to the Secretary a
report and recommendation respecting such regulation,
together with all underlying data and information and a
statement of the reason or basis for the recommendation. A
copy of such report and recommendation shall be made public
by the Secretary.
``SEC. 908. NOTIFICATION AND OTHER REMEDIES.
``(a) Notification.--If the Secretary determines that--
``(1) a tobacco product which is introduced or delivered
for introduction into interstate commerce for commercial
distribution presents an unreasonable risk of substantial
harm to the public health; and
``(2) notification under this subsection is necessary to
eliminate the unreasonable risk of such harm and no more
practicable means is available under the provisions of this
chapter (other than this section) to eliminate such risk,
the Secretary may issue such order as may be necessary to
assure that adequate notification is provided in an
appropriate form, by the persons and means best suited under
the circumstances involved, to all persons who should
properly receive such notification in order to eliminate such
risk. The Secretary may order notification by any appropriate
means, including public service announcements. Before issuing
an order under this subsection, the Secretary shall consult
with the persons who are to give notice under the order.
``(b) No Exemption From Other Liability.--Compliance with
an order issued under this section shall not relieve any
person from liability under Federal or State law. In awarding
damages for economic loss in an action brought for the
enforcement of any such liability, the value to the plaintiff
in such action of any remedy provided under such order shall
be taken into account.
``(c) Recall Authority.--
``(1) In general.--If the Secretary finds that there is a
reasonable probability that a tobacco product contains a
manufacturing or other defect not ordinarily contained in
tobacco products on the market that would cause serious,
adverse health consequences or death, the Secretary shall
issue an order requiring the appropriate person (including
the manufacturers, importers, distributors, or retailers of
the tobacco product) to immediately cease distribution of
such tobacco product. The order shall provide the person
subject to the order with an opportunity for an informal
hearing, to be held not later than 10 days after the date of
the issuance of the order, on the actions required by the
order and on whether the order should be amended to require a
recall of such tobacco product. If, after providing an
opportunity for such a hearing, the Secretary determines that
inadequate grounds exist to support the actions required by
the order, the Secretary shall vacate the order.
``(2) Amendment of order to require recall.--
``(A) In general.--If, after providing an opportunity for
an informal hearing under paragraph (1), the Secretary
determines that the order should be amended to include a
recall of the tobacco product with respect to which the order
was issued, the Secretary shall, except as provided in
subparagraph (B), amend the order to require a recall. The
Secretary shall specify a timetable in which the tobacco
product recall will occur and shall require periodic reports
to the Secretary describing the progress of the recall.
``(B) Notice.--An amended order under subparagraph (A)--
``(i) shall not include recall of a tobacco product from
individuals; and
``(ii) shall provide for notice to persons subject to the
risks associated with the use of such tobacco product.
In providing the notice required by clause (ii), the
Secretary may use the assistance of retailers and other
persons who distributed such tobacco product. If a
significant number of such persons cannot be identified, the
Secretary shall notify such persons under section 705(b).
``(3) Remedy not exclusive.--The remedy provided by this
subsection shall be in addition to remedies provided by
subsection (a) of this section.
``SEC. 909. RECORDS AND REPORTS ON TOBACCO PRODUCTS.
``(a) In General.--Every person who is a tobacco product
manufacturer or importer of a tobacco product shall establish
and maintain such records, make such reports, and provide
such information, as the Secretary may by regulation
reasonably require to assure that such tobacco product is not
adulterated or misbranded and to otherwise protect public
health. Regulations prescribed under the preceding sentence--
``(1) may require a tobacco product manufacturer or
importer to report to the Secretary whenever the manufacturer
or importer receives or otherwise becomes aware of
information that reasonably suggests that one of its marketed
tobacco products may have caused or contributed to a serious
unexpected adverse experience associated with the use of the
product or any significant increase in the frequency of a
serious, expected adverse product experience;
``(2) shall require reporting of other significant adverse
tobacco product experiences as determined by the Secretary to
be necessary to be reported;
``(3) shall not impose requirements unduly burdensome to a
tobacco product manufacturer or importer, taking into account
the cost of complying with such requirements and the need for
the protection of the public health and the implementation of
this chapter;
``(4) when prescribing the procedure for making requests
for reports or information, shall require that each request
made under such regulations for submission of a report or
information to the Secretary state the reason or purpose for
such request and identify to the fullest extent practicable
such report or information;
``(5) when requiring submission of a report or information
to the Secretary, shall state the reason or purpose for the
submission of such report or information and identify to the
fullest extent practicable such report or information; and
``(6) may not require that the identity of any patient or
user be disclosed in records, reports, or information
required under this subsection unless required for the
medical welfare of an individual, to determine risks to
public health of a tobacco product, or to verify a record,
report, or information submitted under this chapter.
In prescribing regulations under this subsection, the
Secretary shall have due regard for the professional ethics
of the medical profession and the interests of patients. The
prohibitions of paragraph (6) continue to apply to records,
reports, and information concerning any individual who has
been a patient, irrespective of whether or when he ceases to
be a patient.
``(b) Reports of Removals and Corrections.--
``(1) In general.--Except as provided in paragraph (2), the
Secretary shall by regulation require a tobacco product
manufacturer or importer of a tobacco product to report
promptly to the Secretary any corrective action taken or
removal from the market of a tobacco product undertaken by
such manufacturer or importer if the removal or correction
was undertaken--
``(A) to reduce a risk to health posed by the tobacco
product; or
``(B) to remedy a violation of this chapter caused by the
tobacco product which may present a risk to health.
A tobacco product manufacturer or importer of a tobacco
product who undertakes a corrective action or removal from
the market of a tobacco product which is not required to be
reported under this subsection shall keep a record of such
correction or removal.
``(2) Exception.--No report of the corrective action or
removal of a tobacco product may be required under paragraph
(1) if a report of the corrective action or removal is
required and has been submitted under subsection (a).
``SEC. 910. PREMARKET REVIEW OF CERTAIN TOBACCO PRODUCTS.
``(a) In General.--
``(1) Premarket approval required.--
``(A) New products.--Approval under this section of an
application for premarket approval for any tobacco product
that is not commercially marketed (other than for test
marketing) in the United States as of June 1, 2002, is
required unless the manufacturer has submitted a report under
section 905(j), and the Secretary has issued an order that
the tobacco product is substantially equivalent to a tobacco
product commercially marketed (other than for test marketing)
in the United States as of June 1, 2002, that is in
compliance with the requirements of this Act.
``(B) Products introduced between June 1, 2002, and
enactment of this chapter.--Subparagraph (A) does not apply
to a tobacco product that--
``(i) was first introduced or delivered for introduction
into interstate commerce for commercial distribution in the
United States after June 1, 2002, and before the date of
enactment of the Youth Smoking Prevention and Public Health
Protection Act; and
``(ii) for which a report was submitted under section
905(j) within 6 months after such date,
until the Secretary issues an order that the tobacco product
is substantially equivalent for purposes of this section or
requires premarket approval.
``(2) Substantially equivalent defined.--
``(A) In general.--For purposes of this section and section
905(j), the terms `substantially equivalent' or `substantial
equivalence' mean, with respect to the tobacco product being
compared to the predicate tobacco product, that the Secretary
by order has found that the tobacco product--
``(i) has the same characteristics as the predicate tobacco
product; or
``(ii) has different characteristics and the information
submitted contains information, including clinical data if
deemed necessary by the Secretary, that demonstrates that it
is not appropriate to regulate the product under this section
because the product does not raise different questions of
public health.
``(B) Characteristics.--For purposes of subparagraph (A),
the term `characteristics' means the materials, ingredients,
design, composition, heating source, or other features of a
tobacco product.
[[Page S5608]]
``(C) Limitation.--A tobacco product may not be found to be
substantially equivalent to a predicate tobacco product that
has been removed from the market at the initiative of the
Secretary or that has been determined by a judicial order to
be misbranded or adulterated.
``(3) Health information.--
``(A) Summary.--As part of a submission under section
905(j) respecting a tobacco product, the person required to
file a premarket notification under such section shall
provide an adequate summary of any health information related
to the tobacco product or state that such information will be
made available upon request by any person.
``(B) Required information.--Any summary under subparagraph
(A) respecting a tobacco product shall contain detailed
information regarding data concerning adverse health effects
and shall be made available to the public by the Secretary
within 30 days of the issuance of a determination that such
tobacco product is substantially equivalent to another
tobacco product.
``(b) Application.--
``(1) Contents.--An application for premarket approval
shall contain--
``(A) full reports of all information, published or known
to, or which should reasonably be known to, the applicant,
concerning investigations which have been made to show the
health risks of such tobacco product and whether such tobacco
product presents less risk than other tobacco products;
``(B) a full statement of the components, ingredients, and
properties, and of the principle or principles of operation,
of such tobacco product;
``(C) a full description of the methods used in, and the
facilities and controls used for, the manufacture,
processing, and, when relevant, packing and installation of,
such tobacco product;
``(D) an identifying reference to any performance standard
under section 907 which would be applicable to any aspect of
such tobacco product, and either adequate information to show
that such aspect of such tobacco product fully meets such
performance standard or adequate information to justify any
deviation from such standard;
``(E) such samples of such tobacco product and of
components thereof as the Secretary may reasonably require;
``(F) specimens of the labeling proposed to be used for
such tobacco product; and
``(G) such other information relevant to the subject matter
of the application as the Secretary may require.
``(2) Reference to advisory committee.--Upon receipt of an
application meeting the requirements set forth in paragraph
(1), the Secretary--
``(A) may, on the Secretary's own initiative; or
``(B) shall, upon the request of an applicant,
refer such application to an advisory committee and for
submission (within such period as the Secretary may
establish) of a report and recommendation respecting
approval of the application, together with all underlying
data and the reasons or basis for the recommendation.
``(c) Action on Application.--
``(1) Deadline.--
``(A) In general.--As promptly as possible, but in no event
later than 180 days after the receipt of an application under
subsection (b), the Secretary, after considering the report
and recommendation submitted under paragraph (2) of such
subsection, shall--
``(i) issue an order approving the application if the
Secretary finds that none of the grounds for denying approval
specified in paragraph (2) of this subsection applies; or
``(ii) deny approval of the application if the Secretary
finds (and sets forth the basis for such finding as part of
or accompanying such denial) that one or more grounds for
denial specified in paragraph (2) of this subsection apply.
``(B) Restrictions on sale and distribution.--An order
approving an application for a tobacco product may require as
a condition to such approval that the sale and distribution
of the tobacco product be restricted but only to the extent
that the sale and distribution of a tobacco product may be
restricted under a regulation under section 906(d).
``(2) Denial of approval.--The Secretary shall deny
approval of an application for a tobacco product if, upon the
basis of the information submitted to the Secretary as part
of the application and any other information before the
Secretary with respect to such tobacco product, the Secretary
finds that--
``(A) there is a lack of a showing that permitting such
tobacco product to be marketed would be appropriate for the
protection of the public health;
``(B) the methods used in, or the facilities or controls
used for, the manufacture, processing, or packing of such
tobacco product do not conform to the requirements of section
906(e);
``(C) based on a fair evaluation of all material facts, the
proposed labeling is false or misleading in any particular;
or
``(D) such tobacco product is not shown to conform in all
respects to a performance standard in effect under section
907, compliance with which is a condition to approval of the
application, and there is a lack of adequate information to
justify the deviation from such standard.
``(3) Denial information.--Any denial of an application
shall, insofar as the Secretary determines to be practicable,
be accompanied by a statement informing the applicant of the
measures required to place such application in approvable
form (which measures may include further research by the
applicant in accordance with one or more protocols prescribed
by the Secretary).
``(4) Basis for finding.--For purposes of this section, the
finding as to whether approval of a tobacco product is
appropriate for the protection of the public health shall be
determined with respect to the risks and benefits to the
population as a whole, including users and non-users of the
tobacco product, and taking into account--
``(A) the increased or decreased likelihood that existing
users of tobacco products will stop using such products; and
``(B) the increased or decreased likelihood that those who
do not use tobacco products will start using such products.
``(5) Basis for action.--
``(A) Investigations.--For purposes of paragraph (2)(A),
whether permitting a tobacco product to be marketed would be
appropriate for the protection of the public health shall,
when appropriate, be determined on the basis of well-
controlled investigations, which may include one or more
clinical investigations by experts qualified by training and
experience to evaluate the tobacco product.
``(B) Other evidence.--If the Secretary determines that
there exists valid scientific evidence (other than evidence
derived from investigations described in subparagraph (A))
which is sufficient to evaluate the tobacco product the
Secretary may authorize that the determination for purposes
of paragraph (2)(A) be made on the basis of such evidence.
``(d) Withdrawal and Temporary Suspension.--
``(1) In general.--The Secretary shall, upon obtaining,
where appropriate, advice on scientific matters from an
advisory committee, and after due notice and opportunity for
informal hearing to the holder of an approved application for
a tobacco product, issue an order withdrawing approval of the
application if the Secretary finds--
``(A) that the continued marketing of such tobacco product
no longer is appropriate for the protection of the public
health;
``(B) that the application contained or was accompanied by
an untrue statement of a material fact;
``(C) that the applicant--
``(i) has failed to establish a system for maintaining
records, or has repeatedly or deliberately failed to maintain
records or to make reports, required by an applicable
regulation under section 909;
``(ii) has refused to permit access to, or copying or
verification of, such records as required by section 704; or
``(iii) has not complied with the requirements of section
905;
``(D) on the basis of new information before the Secretary
with respect to such tobacco product, evaluated together with
the evidence before the Secretary when the application was
approved, that the methods used in, or the facilities and
controls used for, the manufacture, processing, packing,
or installation of such tobacco product do not conform
with the requirements of section 906(e) and were not
brought into conformity with such requirements within a
reasonable time after receipt of written notice from the
Secretary of nonconformity;
``(E) on the basis of new information before the Secretary,
evaluated together with the evidence before the Secretary
when the application was approved, that the labeling of such
tobacco product, based on a fair evaluation of all material
facts, is false or misleading in any particular and was not
corrected within a reasonable time after receipt of written
notice from the Secretary of such fact; or
``(F) on the basis of new information before the Secretary,
evaluated together with the evidence before the Secretary
when the application was approved, that such tobacco product
is not shown to conform in all respects to a performance
standard which is in effect under section 907, compliance
with which was a condition to approval of the application,
and that there is a lack of adequate information to justify
the deviation from such standard.
``(2) Appeal.--The holder of an application subject to an
order issued under paragraph (1) withdrawing approval of the
application may, by petition filed on or before the 30th day
after the date upon which such holder receives notice of such
withdrawal, obtain review thereof in accordance with
subsection (e).
``(3) Temporary suspension.--If, after providing an
opportunity for an informal hearing, the Secretary determines
there is reasonable probability that the continuation of
distribution of a tobacco product under an approved
application would cause serious, adverse health consequences
or death, that is greater than ordinarily caused by tobacco
products on the market, the Secretary shall by order
temporarily suspend the approval of the application approved
under this section. If the Secretary issues such an order,
the Secretary shall proceed expeditiously under paragraph (1)
to withdraw such application.
``(e) Service of Order.--An order issued by the Secretary
under this section shall be served--
``(1) in person by any officer or employee of the
department designated by the Secretary; or
[[Page S5609]]
``(2) by mailing the order by registered mail or certified
mail addressed to the applicant at the applicant's last known
address in the records of the Secretary.
``SEC. 911. JUDICIAL REVIEW.
``(a) Right To Review.--
``(1) In general.--Not later than 30 days after--
``(A) the promulgation of a regulation under section 907
establishing, amending, or revoking a performance standard
for a tobacco product; or
``(B) a denial of an application for approval under section
910(c),
any person adversely affected by such regulation or order may
file a petition with the United States Court of Appeals for
the District of Columbia or for the circuit wherein such
person resides or has his or her principal place of business
for judicial review of such regulation or order.
``(2) Requirements.--
``(A) Copy of petition.--A copy of the petition filed under
paragraph (1) shall be transmitted by the clerk of the court
to the Secretary or other officer designated by the Secretary
for that purpose.
``(B) Record of proceedings.--With respect to an action
under paragraph (1), the Secretary shall file in the court
the record of the proceedings on which the Secretary based
the Secretary's regulation or order and each record or order
shall contain a statement of the reasons for its issuance and
the basis, on the record, for its issuance.
``(C) Definition.--For purposes of this section, the term
`record' means all notices and other matter published in the
Federal Register with respect to the regulation or order
reviewed, all information submitted to the Secretary with
respect to such regulation or order, proceedings of any panel
or advisory committee with respect to such regulation or
order, any hearing held with respect to such regulation or
order, and any other information identified by the Secretary,
in the administrative proceeding held with respect to such
regulation or order, as being relevant to such regulation or
order.
``(b) Court May Order Secretary To Make Additional
Findings.--
``(1) In general.--If the petitioner in an action under
subsection (a)(1) applies to the court for leave to adduce
additional data, views, or arguments respecting the
regulation or order being reviewed and shows to the
satisfaction of the court that such additional data, views,
or arguments are material and that there were reasonable
grounds for the petitioner's failure to adduce such data,
views, or arguments in the proceedings before the Secretary,
the court may order the Secretary to provide additional
opportunity for the oral presentation of data, views, or
arguments and for written submissions.
``(2) Modification of or additional findings.--The
Secretary may modify the Secretary's findings, or make new
findings by reason of the additional data, views, or
arguments under paragraph (1) and shall file with the court
such modified or new findings, and the Secretary's
recommendation, if any, for the modification or setting aside
of the regulation or order being reviewed, with the return of
such additional data, views, or arguments.
``(c) Standard of Review.--Upon the filing of the petition
under subsection (a) for judicial review of a regulation or
order, the court shall have jurisdiction to review the
regulation or order in accordance with chapter 7 of title 5,
United States Code, and to grant appropriate relief,
including interim relief, as provided in such chapter. A
regulation or order described in paragraph (1) or (2) of
subsection (a) shall not be affirmed if it is found to be
unsupported by substantial evidence on the record taken as a
whole.
``(d) Finality of Judgment.--The judgment of the court
affirming or setting aside, in whole or in part, any
regulation or order shall be final, subject to review by the
Supreme Court of the United States upon certiorari or
certification, as provided in section 1254 of title 28,
United States Code.
``(e) Other Remedies.--The remedies provided for in this
section shall be in addition to and not in lieu of any other
remedies provided by law.
``(f) Regulations and Orders Must Recite Basis in Record.--
To facilitate judicial review under this section or under any
other provision of law or a regulation or order issued under
section 906, 907, 908, 909, 910, or 914, each such regulation
or order shall contain a statement of the reasons for its
issuance and the basis, in the record of the proceedings held
in connection with its issuance, for its issuance.
``SEC. 912. POSTMARKET SURVEILLANCE.
``(a) Discretionary Surveillance.--The Secretary may
require a tobacco product manufacturer to conduct postmarket
surveillance for a tobacco product of the manufacturer if the
Secretary determines that postmarket surveillance of the
tobacco product is necessary to protect the public health or
is necessary to provide information regarding the health
risks and other safety issues involving the tobacco product.
``(b) Surveillance Approval.--Each tobacco product
manufacturer required to conduct a surveillance of a tobacco
product under subsection (a) shall, within 30 days after
receiving notice that the manufacturer is required to conduct
such surveillance, submit, for the approval of the Secretary,
a protocol for the required surveillance. The Secretary,
within 60 days of the receipt of such protocol, shall
determine if the principal investigator proposed to be used
in the surveillance has sufficient qualifications and
experience to conduct such surveillance and if such protocol
will result in collection of useful data or other information
necessary to protect the public health. The Secretary may not
approve such a protocol until it has been reviewed by an
appropriately qualified scientific and technical review
committee established by the Secretary.
``SEC. 913. REDUCED RISK TOBACCO PRODUCTS.
``(a) Requirements.--
``(1) In general.--For purposes of this section, the term
`reduced risk tobacco product' means a tobacco product
designated by the Secretary under paragraph (2).
``(2) Designation.--
``(A) In general.--A product may be designated by the
Secretary as a reduced risk tobacco product if the Secretary
finds that the product will significantly reduce harm to
individuals caused by a tobacco product and is otherwise
appropriate to protect public health, based on an application
submitted by the manufacturer of the product (or other
responsible person) that--
``(i) demonstrates through testing on animals and short-
term human testing that use of such product results in
ingestion or inhalation of a substantially lower yield of
toxic substances than use of conventional tobacco products;
and
``(ii) if required by the Secretary, includes studies of
the long-term health effects of the product.
If such studies are required, the manufacturer may consult
with the Secretary regarding protocols for conducting the
studies.
``(B) Basis for finding.--In making the finding under
subparagraph (A), the Secretary shall take into account--
``(i) the risks and benefits to the population as a whole,
including both users of tobacco products and non-users of
tobacco products;
``(ii) the increased or decreased likelihood that existing
users of tobacco products will stop using such products
including reduced risk tobacco products;
``(iii) the increased or decreased likelihood that those
who do not use tobacco products will start to use such
products, including reduced risk tobacco products; and
``(iv) the risks and benefits to consumers from the use of
a reduced risk tobacco product as compared to the use of
products approved under chapter V to reduce exposure to
tobacco.
``(3) Marketing requirements.--A tobacco product may be
marketed and labeled as a reduced risk tobacco product if
it--
``(A) has been designated as a reduced risk tobacco product
by the Secretary under paragraph (2);
``(B) bears a label prescribed by the Secretary concerning
the product's contribution to reducing harm to health; and
``(C) complies with requirements prescribed by the
Secretary relating to marketing and advertising of the
product, and other provisions of this chapter as prescribed
by the Secretary.
``(b) Revocation of Designation.--At any time after the
date on which a tobacco product is designated as a reduced
risk tobacco product under this section the Secretary may,
after providing an opportunity for an informal hearing,
revoke such designation if the Secretary determines, based on
information not available at the time of the designation,
that--
``(1) the finding made under subsection (a)(2) is no longer
valid; or
``(2) the product is being marketed in violation of
subsection (a)(3).
``(c) Limitation.--A tobacco product that is designated as
a reduced risk tobacco product that is in compliance with
subsection (a) shall not be regulated as a drug or device.
``(d) Development of Reduced Risk Tobacco Product
Technology.--A tobacco product manufacturer shall provide
written notice to the Secretary upon the development or
acquisition by the manufacturer of any technology that would
reduce the risk of a tobacco product to the health of the
user for which the manufacturer is not seeking designation as
a `reduced risk tobacco product' under subsection (a).
``SEC. 914. EQUAL TREATMENT OF RETAIL OUTLETS.
``The Secretary shall issue regulations to require that
retail establishments for which the predominant business is
the sale of tobacco products comply with any advertising
restrictions applicable to retail establishments accessible
to individuals under the age of 18.
``SEC. 915. JURISDICTION OF AND COORDINATION WITH THE FEDERAL
TRADE COMMISSION.
``(a) Jurisdiction.--
``(1) In general.--Except where expressly provided in this
chapter, nothing in this chapter shall be construed as
limiting or diminishing the authority of the Federal Trade
Commission to enforce the laws under its jurisdiction with
respect to the advertising, sale, or distribution of tobacco
products.
``(2) Enforcement.--Any advertising that violates this
chapter or a provision of the regulations referred to in
section 102 of the Youth Smoking Prevention and Public Health
Protection Act, is an unfair or deceptive act or practice
under section 5(a) of the Federal Trade Commission Act (15
U.S.C. 45(a)) and shall be considered a violation of a rule
promulgated under section 18 of that Act (15 U.S.C. 57a).
``(b) Coordination.--With respect to the requirements of
section 4 of the Federal Cigarette Labeling and Advertising
Act (15 U.S.C.
[[Page S5610]]
1333) and section 3 of the Comprehensive Smokeless Tobacco
Health Education Act of 1986 (15 U.S.C. 4402)--
``(1) the Chairman of the Federal Trade Commission shall
coordinate with the Secretary concerning the enforcement of
such Act as such enforcement relates to unfair or deceptive
acts or practices in the advertising of cigarettes or
smokeless tobacco; and
``(2) the Secretary shall consult with the Chairman of such
Commission in revising the label statements and requirements
under such sections.
``SEC. 916. CONGRESSIONAL REVIEW PROVISIONS.
``In accordance with section 801 of title 5, United States
Code, the Congress shall review, and may disapprove, any rule
under this chapter that is subject to section 801. This
section does not apply to the regulations referred to in
section 102 of the Youth Smoking Prevention and Public Health
Protection Act.
``SEC. 917. REGULATION REQUIREMENT.
``(a) Testing, Reporting, and Disclosure.--Not later than
24 months after the date of enactment of the Youth Smoking
Prevention and Public Health Protection Act, the Secretary,
acting through the Commissioner of the Food and Drug
Administration, shall promulgate regulations under this Act
that meet the requirements of subsection (b).
``(b) Contents of Rules.--The regulations promulgated under
subsection (a) shall require the testing, reporting, and
disclosure of tobacco product smoke constituents and
ingredients that the Secretary determines should be disclosed
to the public in order to protect the public health. Such
constituents shall include tar, nicotine, carbon monoxide,
and such other smoke constituents or ingredients as the
Secretary may determine to be appropriate. The regulations
may require that tobacco product manufacturers, packagers, or
importers make such disclosures relating to tar and nicotine
through labels or advertising, and make such disclosures
regarding other smoke constituents or ingredients as the
Secretary determines are necessary to protect the public
health.
``(c) Authority.--The Food and Drug Administration shall
have the authority under this chapter to conduct or to
require the testing, reporting, or disclosure of tobacco
product smoke constituents.
``SEC. 918. PRESERVATION OF STATE AND LOCAL AUTHORITY.
``(a) Additional Requirements.--
``(1) In general.--Except as provided in paragraph (2),
nothing in this chapter, or rules promulgated under this
chapter, shall be construed to limit the authority of a
Federal agency (including the Armed Forces), a State or
political subdivision of a State, or the government of an
Indian tribe to enact, adopt, promulgate, and enforce any
law, rule, regulation, or other measure with respect to
tobacco products, including laws, rules, regulations, or
other measures relating to or prohibiting the sale,
distribution, possession, exposure to, or use of tobacco
products by individuals of any age that are in addition to,
or more stringent than, requirements established under this
chapter. No provision of this chapter shall limit or
otherwise affect any State, Tribal, or local taxation of
tobacco products.
``(2) Preemption of certain state and local requirements.--
``(A) In general.--Except as provided in subparagraph (B),
no State or political subdivision of a State may establish or
continue in effect with respect to a tobacco product any
requirement which is different from, or in addition to, any
requirement applicable under the provisions of this chapter
relating to performance standards, premarket approval,
adulteration, misbranding, registration, reporting, good
manufacturing standards, or reduced risk products.
``(B) Exception.--Subparagraph (A) does not apply to
requirements relating to the sale, use, or distribution of a
tobacco product including requirements related to the access
to, and the advertising and promotion of, a tobacco product.
``(b) Additional Restrictions on Underage Usage.--Nothing
in this chapter shall be construed to prevent a Federal
agency (including the Armed Forces), a State or a political
subdivision of a State, or the government of an Indian tribe
from adopting and enforcing additional measures that further
restrict or prohibit tobacco product sale to, use by, and
accessibility to individuals under the legal age of
purchase established by such agency, State, subdivision,
or government of an Indian tribe.
``(c) No Less Stringent.--Nothing in this chapter is
intended to supersede any State, local, or Tribal law that is
not less stringent than this chapter.
``(d) Rule of Construction Regarding Product Liability.--No
provision of this chapter relating to a tobacco product shall
be construed to modify or otherwise affect any action or the
liability of any person under the product liability law of
any State.
``(e) Waivers.--Upon the application of a State or
political subdivision thereof, the Secretary may, by
regulation promulgated after notice and an opportunity for an
oral hearing, exempt from subsection (a), under such
conditions as may be prescribed in such regulation, a
requirement of such State or political subdivision applicable
to a tobacco product if--
``(1) the requirement is more stringent than a requirement
applicable under the provisions described in subsection
(a)(1) which would be applicable to the tobacco product if an
exemption were not in effect under this subsection; or
``(2) the requirement--
``(A) is required by compelling local conditions; and
``(B) compliance with the requirement would not cause the
tobacco product to be in violation of any applicable
requirement of this chapter.
``SEC. 919. TOBACCO PRODUCTS SCIENTIFIC ADVISORY COMMITTEE.
``(a) Establishment.--Not later than 1 year after the date
of enactment of the Youth Smoking Prevention and Public
Health Protection Act, the Secretary shall establish a 9-
member advisory committee, to be known as the `Tobacco
Products Scientific Advisory Committee'.
``(b) Membership.--
``(1) In general.--The Secretary shall appoint as members
of the Tobacco Products Scientific Advisory Committee
individuals who are technically qualified by training and
experience in the medicine, medical ethics, science, or
technology involving the manufacture, evaluation, or use of
tobacco products, who are of appropriately diversified
professional backgrounds. The committee shall be composed
of--
``(A) 3 individuals who are officers or employees of a
State or local government, or of the Federal government;
``(B) 2 individuals as representatives of interests of the
tobacco manufacturing industry;
``(C) 2 individuals as representatives of interests of
physicians and other health care professionals; and
``(D) 2 individuals as representatives of the general
public.
``(2) Limitation.--The Secretary may not appoint to the
Advisory Committee any individual who is in the regular full-
time employ of the Food and Drug Administration or any agency
responsible for the enforcement of this Act. The Secretary
may appoint Federal officials as ex-officio members.
``(3) Chairperson.--The Secretary shall designate 1 of the
members of the Advisory Committee to serve as chairperson.
``(c) Duties.--The Tobacco Products Scientific Advisory
Committee shall provide advice, information, and
recommendations to the Secretary--
``(1) as provided in this chapter;
``(2) on the effects of the alteration of the nicotine
yields from tobacco products;
``(3) on whether there is a threshold level below which
nicotine yields do not produce dependence on the tobacco
product involved; and
``(4) on its review of other safety, dependence, or health
issues relating to tobacco products as requested by the
Secretary.
``(d) Compensation; Support; FACA.--
``(1) Compensation and travel.--Members of the Advisory
Committee who are not officers or employees of the United
States, while attending conferences or meetings of the
committee or otherwise engaged in its business, shall be
entitled to receive compensation at rates to be fixed by the
Secretary, which may not exceed the daily equivalent of the
rate in effect for level 4 of the Senior Executive Schedule
under section 5382 of title 5, United States Code, for each
day (including travel time) they are so engaged; and while so
serving away from their homes or regular places of business
each member may be allowed travel expenses, including per
diem in lieu of subsistence, as authorized by section 5703 of
title 5, United States Code, for persons in the Government
service employed intermittently.
``(2) Administrative support.--The Secretary shall furnish
the Advisory Committee clerical and other assistance.
``(3) Nonapplication of faca.--Section 14 of the Federal
Advisory Committee Act (5 U.S.C. App.) does not apply to the
Advisory Committee.
``(e) Proceedings of Advisory Panels and Committees.--The
Advisory Committee shall make and maintain a transcript of
any proceeding of the panel or committee. Each such panel and
committee shall delete from any transcript made under this
subsection information which is exempt from disclosure under
section 552(b) of title 5, United States Code.''.
SEC. 102. CONSTRUCTION OF CURRENT REGULATIONS.
(a) In General.--The final regulations promulgated by the
Secretary of Health and Human Services in the August 28,
1996, issue of the Federal Register (62 Fed. Reg. 44615-44618
beginning at ``part 897'') are hereby deemed to be lawful and
shall have the same legal force and effect as if such
regulations had been lawfully promulgated by the Secretary
under chapter IX and section 701 of the Federal Food, Drug,
and Cosmetic Act (as amended by this Act). Not later than 30
days after the date of enactment of this Act, the Secretary
shall republish such regulations in the Federal Register.
Such regulations shall take effect on the date that is 12
months after such date of enactment, except that the
Secretary may designate an earlier effective date. The
Secretary shall amend the designation of authority in such
regulations in accordance with this subsection.
(b) Limitation on Advisory Opinions.--As of the date of
enactment of this Act, the following documents issued by the
Food and Drug Administration shall not constitute advisory
opinions under section 10.85(d)(1) of title 21, Code of
Federal Regulations, except as they apply to tobacco
products, and shall not be cited by the Secretary of Health
and Human Services or the Food and Drug Administration as
binding precedent:
[[Page S5611]]
(1) The preamble to the proposed rule in the document
entitled ``Regulations Restricting the Sale and Distribution
of Cigarettes and Smokeless Tobacco Products to Protect
Children and Adolescents'' (60 Fed. Reg. 41314-41372 (August
11, 1995)).
(2) The document entitled ``Nicotine in Cigarettes and
Smokeless Tobacco Products is a Drug and These Products Are
Nicotine Delivery Devices Under the Federal Food, Drug, and
Cosmetic Act'' (60 Fed. Reg. 41453-41787 (August 11, 1995)).
(3) The preamble to the final rule in the document entitled
``Regulations Restricting the Sale and Distribution of
Cigarettes and Smokeless Tobacco to Protect Children and
Adolescents'' (61 Fed. Reg. 44396-44615 (August 28, 1996)).
(4) The document entitled ``Nicotine in Cigarettes and
Smokeless Tobacco is a Drug and These Products are Nicotine
Delivery Devices Under the Federal Food, Drug, and Cosmetic
Act; Jurisdictional Determination'' (61 Fed. Reg. 44619-45318
(August 28, 1996)).
SEC. 103. CONFORMING AND OTHER AMENDMENTS TO GENERAL
PROVISIONS.
(a) Amendment of Federal Food, Drug, and Cosmetic Act.--
Except as otherwise expressly provided, whenever in this
section an amendment is expressed in terms of an amendment
to, or repeal of, a section or other provision, the reference
is to a section or other provision of the Federal Food, Drug,
and Cosmetic Act (21 U.S.C. 301 et seq.).
(b) Section 301.--Section 301 (21 U.S.C. 331) is amended--
(1) in subsection (a), by inserting ``tobacco product,''
after ``device,'';
(2) in subsection (b), by inserting ``tobacco product,''
after ``device,'';
(3) in subsection (c), by inserting ``tobacco product,''
after ``device,'';
(4) in subsection (e), by striking ``515(f), or 519'' and
inserting ``515(f), 519, or 909'';
(5) in subsection (g), by inserting ``tobacco product,''
after ``device,'';
(6) in subsection (h), by inserting ``tobacco product,''
after ``device,'';
(7) in subsection (j), by striking ``708, or 721'' and
inserting ``708, 721, 904, 905, 906, 907, 908, or 909'';
(8) in subsection (k), by inserting ``tobacco product,''
after ``device,'';
(9) by striking subsection (p) and inserting the following:
``(p) The failure to register in accordance with section
510 or 905, the failure to provide any information required
by section 510(j), 510(k), 905(i), or 905(j), or the failure
to provide a notice required by section 510(j)(2) or
905(j)(2).'';
(10) by striking subsection (q)(1) and inserting the
following:
``(q)(1) The failure or refusal--
``(A) to comply with any requirement prescribed under
section 518, 520(g), 906(f), or 908;
``(B) to furnish any notification or other material or
information required by or under section 519, 520(g), 904,
906(f), or 909; or
``(C) to comply with a requirement under section 522 or
912.'';
(11) in subsection (q)(2), by striking ``device,'' and
inserting ``device or tobacco product,'';
(12) in subsection (r), by inserting ``or tobacco product''
after ``device'' each time that it appears; and
(13) by adding at the end the following:
``(aa) The sale of tobacco products in violation of a no-
tobacco-sale order issued under section 303(f).''.
(c) Section 303.--Section 303(f) (21 U.S.C. 333(f)) is
amended--
(1) by striking the subsection heading and inserting the
following:
``(f) Civil Penalties; No-Tobacco-Sale Orders.--'';
(2) in paragraph (1)(A), by inserting ``or tobacco
products'' after ``devices'';
(3) by redesignating paragraphs (3), (4), and (5) as
paragraphs (4), (5), and (6), and inserting after paragraph
(2) the following:
``(3) If the Secretary finds that a person has committed
repeated violations of restrictions promulgated under section
906(d) at a particular retail outlet then the Secretary may
impose a no-tobacco-sale order on that person prohibiting the
sale of tobacco products in that outlet. A no-tobacco-sale
order may be imposed with a civil penalty under paragraph
(1).'';
(4) in paragraph (4) as so redesignated--
(A) in subparagraph (A)--
(i) by striking ``assessed'' the first time it appears and
inserting ``assessed, or a no-tobacco-sale order may be
imposed,''; and
(ii) by striking ``penalty'' and inserting ``penalty, or
upon whom a no-tobacco-order is to be imposed,'';
(B) in subparagraph (B)--
(i) by inserting after ``penalty,'' the following: ``or the
period to be covered by a no-tobacco-sale order,''; and
(ii) by adding at the end the following: ``A no-tobacco-
sale order permanently prohibiting an individual retail
outlet from selling tobacco products shall include provisions
that allow the outlet, after a specified period of time, to
request that the Secretary compromise, modify, or terminate
the order.''; and
(C) by adding at the end, the following:
``(D) The Secretary may compromise, modify, or terminate,
with or without conditions, any no-tobacco-sale order.'';
(5) in paragraph (5) as so redesignated--
(A) by striking ``(3)(A)'' as redesignated, and inserting
``(4)(A)'';
(B) by inserting ``or the imposition of a no-tobacco-sale
order'' after ``penalty'' the first 2 places it appears; and
(C) by striking ``issued.'' and inserting ``issued, or on
which the no-tobacco-sale order was imposed, as the case may
be.''; and
(6) in paragraph (6), as so redesignated, by striking
``paragraph (4)'' each place it appears and inserting
``paragraph (5)''.
(d) Section 304.--Section 304 (21 U.S.C. 334) is amended--
(1) in subsection (a)(2)--
(A) by striking ``and'' before ``(D)''; and
(B) by striking ``device.'' and inserting the following:
``, (E) Any adulterated or misbranded tobacco product.'';
(2) in subsection (d)(1), by inserting ``tobacco product,''
after ``device,'';
(3) in subsection (g)(1), by inserting ``or tobacco
product'' after ``device'' each place it appears; and
(4) in subsection (g)(2)(A), by inserting ``or tobacco
product'' after ``device'' each place it appears.
(e) Section 702.--Section 702(a) (21 U.S.C. 372(a)) is
amended--
(1) by inserting ``(1)'' after ``(a)''; and
(2) by adding at the end thereof the following:
``(2) For a tobacco product, to the extent feasible, the
Secretary shall contract with the States in accordance with
paragraph (1) to carry out inspections of retailers in
connection with the enforcement of this Act.''.
(f) Section 703.--Section 703 (21 U.S.C. 373) is amended--
(1) by inserting ``tobacco product,'' after ``device,''
each place it appears; and
(2) by inserting ``tobacco products,'' after ``devices,''
each place it appears.
(g) Section 704.--Section 704 (21 U.S.C. 374) is amended--
(1) in subsection (a)(1)(A), by inserting ``tobacco
products,'' after ``devices,'' each place it appears;
(2) in subsection (a)(1)(B), by inserting ``or tobacco
product'' after ``restricted devices'' each place it appears;
and
(3) in subsection (b), by inserting ``tobacco product,''
after ``device,''.
(h) Section 705.--Section 705(b) (21 U.S.C. 375(b)) is
amended by inserting ``tobacco products,'' after
``devices,''.
(i) Section 709.--Section 709 (21 U.S.C. 379) is amended by
inserting ``or tobacco product'' after ``device''.
(j) Section 801.--Section 801 (21 U.S.C. 381) is amended--
(1) in subsection (a)--
(A) by inserting ``tobacco products,'' after ``devices,''
the first time it appears;
(B) by inserting ``or subsection (j) of section 905'' after
``section 510''; and
(C) by striking ``drugs or devices'' each time it appears
and inserting ``drugs, devices, or tobacco products'';
(2) in subsection (e)--
(A) in paragraph (1), by inserting ``tobacco product,''
after ``device,''; and
(B) by redesignating paragraph (4) as paragraph (5) and
inserting after paragraph (3), the following:
``(4) Paragraph (1) does not apply to any tobacco product--
``(A) which does not comply with an applicable requirement
of section 907 or 910; or
``(B) which under section 906(f) is exempt from either such
section.
This paragraph does not apply if the Secretary has determined
that the exportation of the tobacco product is not contrary
to the public health and safety and has the approval of the
country to which it is intended for export or the tobacco
product is eligible for export under section 802.''.
(k) Section 802.--Section 802 (21 U.S.C. 382) is amended--
(1) in subsection (a), by striking ``device--'' and
inserting ``device or tobacco product--'';
(2) in subsection (a)(1)(C), by striking ``and'' after the
semicolon;
(3) in subsection (a)(2), by striking subparagraph (C) and
all that follows in that subsection and inserting the
following:
``(C) is a banned device under section 516; or
``(3) which, in the case of a tobacco product--
``(A) does not comply with an applicable requirement of
section 907 or 910; or
``(B) under section 906(f) is exempt from either such
section,
is adulterated, misbranded, and in violation of such sections
or Act unless the export of the drug, device, or tobacco
product is, except as provided in subsection (f), authorized
under subsection (b), (c), (d), or (e) of this section or
section 801(e)(2) or 801(e)(4). If a drug, device, or tobacco
product described in paragraph (1), (2), or (3) may be
exported under subsection (b) and if an application for such
drug or device under section 505, 515, or 910 of this Act or
section 351 of the Public Health Service Act (42 U.S.C. 262)
was disapproved, the Secretary shall notify the appropriate
public health official of the country to which such drug,
device, or tobacco product will be exported of such
disapproval.'';
(4) in subsection (b)(1)(A), by inserting ``or tobacco
product'' after ``device'' each time it appears;
(5) in subsection (c), by inserting ``or tobacco product''
after ``device'' and inserting ``or section 906(f)'' after
``520(g).'';
(6) in subsection (f), by inserting ``or tobacco product''
after ``device'' each time it appears; and
(7) in subsection (g), by inserting ``or tobacco product''
after ``device'' each time it appears.
[[Page S5612]]
(l) Section 1003.--Section 1003(d)(2)(C) (as redesignated
by section 101(a)) is amended--
(1) by striking ``and'' after ``cosmetics,''; and
(2) inserting a comma and ``and tobacco products'' after
``devices''.
(m) Effective Date for No-Tobacco-Sale Order Amendments.--
The amendments made by subsection (c), other than the
amendment made by paragraph (2) of such subsection, shall
take effect only upon the promulgation of final regulations
by the Secretary of Health and Human Services--
(1) defining the term ``repeated violation'', as used in
section 303(f) of the Federal Food, Drug, and Cosmetic Act
(21 U.S.C. 333(f)) as amended by subsection (c), by
identifying the number of violations of particular
requirements over a specified period of time that constitute
a repeated violation;
(2) providing for notice to the retailer of each violation
at a particular retail outlet;
(3) providing that a person may not be charged with a
violation at a particular retail outlet unless the Secretary
has provided notice to the retailer of all previous
violations at that outlet;
(4) establishing a period of time during which, if there
are no violations by a particular retail outlet, that outlet
will not considered to have been the site of repeated
violations when the next violation occurs; and
(5) providing that good faith reliance on false
identification does not constitute a violation of any minimum
age requirement for the sale of tobacco products.
TITLE II--TOBACCO PRODUCT WARNINGS AND SMOKE CONSTITUENT DISCLOSURE
SEC. 201. CIGARETTE LABEL AND ADVERTISING WARNINGS.
(a) In General.--Section 4 of the Federal Cigarette
Labeling and Advertising Act (15 U.S.C. 1333) is amended to
read as follows:
``SEC. 4. LABELING.
``(a) Label Requirements.--
``(1) In general.--It shall be unlawful for any person to
manufacture, package, or import for sale or distribution
within the United States any cigarettes the package of which
fails to bear, in accordance with the requirements of this
section, one of the following labels:
``WARNING: Cigarettes are addictive''
``WARNING: Tobacco smoke can harm your children''
``WARNING: Cigarettes cause fatal lung disease''
``WARNING: Cigarettes cause cancer''
``WARNING: Cigarettes cause strokes and heart disease''
``WARNING: Smoking during pregnancy can harm your baby''
``WARNING: Smoking can kill you''
``WARNING: Tobacco smoke causes fatal lung disease in non-
smokers''
``WARNING: Quitting smoking now greatly reduces serious risks
to your health''
``(2) Placement; typography; etc.--
``(A) In general.--Each label statement required by
paragraph (1) shall be located in the upper portion of the
front and rear panels of the package, directly on the package
underneath the cellophane or other clear wrapping. Except as
provided in subparagraph (B), each label statement shall
comprise at least the top 25 percent of the front and rear
panels of the package. The word ``WARNING'' shall appear in
capital letters and all text shall be in conspicuous and
legible 17-point type, unless the text of the label statement
would occupy more than 70 percent of such area, in which case
the text may be in a smaller conspicuous and legible type
size, provided that at least 60 percent of such area is
occupied by required text. The text shall be black on a white
background, or white on a black background, in a manner that
contrasts, by typography, layout, or color, with all other
printed material on the package, in an alternating fashion
under the plan submitted under subsection (b)(4).
``(B) Flip-top boxes.--For any cigarette brand package
manufactured or distributed before January 1, 2000, which
employs a flip-top style (if such packaging was used for that
brand in commerce prior to June 21, 1997), the label
statement required by paragraph (1) shall be located on the
flip-top area of the package, even if such area is less than
25 percent of the area of the front panel. Except as provided
in this paragraph, the provisions of this subsection shall
apply to such packages.
``(3) Does not apply to foreign distribution.--The
provisions of this subsection do not apply to a tobacco
product manufacturer or distributor of cigarettes which does
not manufacture, package, or import cigarettes for sale or
distribution within the United States.
``(b) Advertising Requirements.--
``(1) In general.--It shall be unlawful for any tobacco
product manufacturer, importer, distributor, or retailer of
cigarettes to advertise or cause to be advertised within the
United States any cigarette unless its advertising bears, in
accordance with the requirements of this section, one of the
labels specified in subsection (a) of this section.
``(2) Typography, etc.--Each label statement required by
subsection (a) of this section in cigarette advertising shall
comply with the standards set forth in this paragraph. For
press and poster advertisements, each such statement and
(where applicable) any required statement relating to tar,
nicotine, or other constituent yield shall comprise at least
20 percent of the area of the advertisement and shall appear
in a conspicuous and prominent format and location at the top
of each advertisement within the trim area. The Secretary may
revise the required type sizes in such area in such manner as
the Secretary determines appropriate. The word ``WARNING''
shall appear in capital letters, and each label statement
shall appear in conspicuous and legible type. The text of the
label statement shall be black if the background is white and
white if the background is black, under the plan submitted
under paragraph (4) of this subsection. The label statements
shall be enclosed by a rectangular border that is the same
color as the letters of the statements and that is the width
of the first downstroke of the capital ``W'' of the word
``WARNING'' in the label statements. The text of such label
statements shall be in a typeface pro rata to the following
requirements: 45-point type for a whole-page broadsheet
newspaper advertisement; 39-point type for a half-page
broadsheet newspaper advertisement; 39-point type for a
whole-page tabloid newspaper advertisement; 27-point type for
a half-page tabloid newspaper advertisement; 31.5-point type
for a double page spread magazine or whole-page magazine
advertisement; 22.5-point type for a 28 centimeter by 3
column advertisement; and 15-point type for a 20 centimeter
by 2 column advertisement. The label statements shall be in
English, except that in the case of--
``(A) an advertisement that appears in a newspaper,
magazine, periodical, or other publication that is not in
English, the statements shall appear in the predominant
language of the publication; and
``(B) in the case of any other advertisement that is not in
English, the statements shall appear in the same language as
that principally used in the advertisement.
``(3) Adjustment by secretary.--The Secretary may, through
a rulemaking under section 553 of title 5, United States
Code, adjust the format and type sizes for the label
statements required by this section or the text, format, and
type sizes of any required tar, nicotine yield, or other
constituent disclosures, or to establish the text, format,
and type sizes for any other disclosures required under the
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 et.
seq.). The text of any such label statements or disclosures
shall be required to appear only within the 20 percent area
of cigarette advertisements provided by paragraph (2) of
this subsection. The Secretary shall promulgate
regulations which provide for adjustments in the format
and type sizes of any text required to appear in such area
to ensure that the total text required to appear by law
will fit within such area.
``(4) Marketing requirements.--
``(A) The label statements specified in subsection (a)(1)
shall be randomly displayed in each 12-month period, in as
equal a number of times as is possible on each brand of the
product and be randomly distributed in all areas of the
United States in which the product is marketed in accordance
with a plan submitted by the tobacco product manufacturer,
importer, distributor, or retailer and approved by the
Secretary.
``(B) The label statements specified in subsection (a)(1)
shall be rotated quarterly in alternating sequence in
advertisements for each brand of cigarettes in accordance
with a plan submitted by the tobacco product manufacturer,
importer, distributor, or retailer to, and approved by, the
Secretary.
``(C) The Secretary shall review each plan submitted under
subparagraph (B) and approve it if the plan--
``(i) will provide for the equal distribution and display
on packaging and the rotation required in advertising under
this subsection; and
``(ii) assures that all of the labels required under this
section will be displayed by the tobacco product
manufacturer, importer, distributor, or retailer at the same
time.''.
(b) Repeal of Prohibition on State Restriction.--Section 5
of the Federal Cigarette Labeling and Advertising Act (15
U.S.C. 1334) is amended--
(1) by striking ``(a) Additional Statements.--'' in
subsection (a); and
(2) by striking subsection (b).
SEC. 202. AUTHORITY TO REVISE CIGARETTE WARNING LABEL
STATEMENTS.
Section 4 of the Federal Cigarette Labeling and Advertising
Act ( 15 U.S.C. 1333), as amended by section 301 of this
title, is further amended by adding at the end the following:
``(c) Change in Required Statements.--The Secretary may, by
a rulemaking conducted under section 553 of title 5, United
States Code, adjust the format, type size, and text of any of
the warning label statements required by subsection (a) of
this section, or establish the format, type size, and text of
any other disclosures required under the Federal Food, Drug,
and Cosmetic Act (21 U.S.C. 301 et seq.), if the Secretary
finds that such a change would promote greater public
understanding of the risks associated with the use of tobacco
products.''.
SEC. 203. SMOKELESS TOBACCO LABELS AND ADVERTISING WARNINGS.
Section 3 of the Comprehensive Smokeless Tobacco Health
Education Act of 1986 (15 U.S.C. 4402) is amended to read as
follows:
``SEC. 3. SMOKELESS TOBACCO WARNING.
``(a) General Rule.--
``(1) It shall be unlawful for any person to manufacture,
package, or import for sale or distribution within the United
States any smokeless tobacco product unless the product
package bears, in accordance with the requirements of this
Act, one of the following labels:
[[Page S5613]]
``WARNING: This product can cause mouth cancer''
``WARNING: This product can cause gum disease and tooth
loss''
``WARNING: This product is not a safe alternative to
cigarettes''
``WARNING: Smokeless tobacco is addic-tive''
``(2) Each label statement required by paragraph (1) shall
be--
``(A) located on the 2 principal display panels of the
package, and each label statement shall comprise at least 25
percent of each such display panel; and
``(B) in 17-point conspicuous and legible type and in black
text on a white background, or white text on a black
background, in a manner that contrasts by typography, layout,
or color, with all other printed material on the package, in
an alternating fashion under the plan submitted under
subsection (b)(3), except that if the text of a label
statement would occupy more than 70 percent of the area
specified by subparagraph (A), such text may appear in a
smaller type size, so long as at least 60 percent of such
warning area is occupied by the label statement.
``(3) The label statements required by paragraph (1) shall
be introduced by each tobacco product manufacturer, packager,
importer, distributor, or retailer of smokeless tobacco
products concurrently into the distribution chain of such
products.
``(4) The provisions of this subsection do not apply to a
tobacco product manufacturer or distributor of any smokeless
tobacco product that does not manufacture, package, or import
smokeless tobacco products for sale or distribution within
the United States.
``(b) Required Labels.--
``(1) It shall be unlawful for any tobacco product
manufacturer, packager, importer, distributor, or retailer of
smokeless tobacco products to advertise or cause to be
advertised within the United States any smokeless tobacco
product unless its advertising bears, in accordance with the
requirements of this section, one of the labels specified in
subsection (a).
``(2) Each label statement required by subsection (a) in
smokeless tobacco advertising shall comply with the standards
set forth in this paragraph. For press and poster
advertisements, each such statement and (where applicable)
any required statement relating to tar, nicotine, or other
constituent yield shall--
``(A) comprise at least 20 percent of the area of the
advertisement, and the warning area shall be delineated by a
dividing line of contrasting color from the advertisement;
and
``(B) the word ``WARNING'' shall appear in capital letters
and each label statement shall appear in conspicuous and
legible type. The text of the label statement shall be black
on a white background, or white on a black background, in an
alternating fashion under the plan submitted under paragraph
(3).
``(3)(A) The label statements specified in subsection
(a)(1) shall be randomly displayed in each 12-month period,
in as equal a number of times as is possible on each brand of
the product and be randomly distributed in all areas of the
United States in which the product is marketed in accordance
with a plan submitted by the tobacco product manufacturer,
importer, distributor, or retailer and approved by the
Secretary.
``(B) The label statements specified in subsection (a)(1)
shall be rotated quarterly in alternating sequence in
advertisements for each brand of smokeless tobacco product in
accordance with a plan submitted by the tobacco product
manufacturer, importer, distributor, or retailer to, and
approved by, the Secretary.
``(C) The Secretary shall review each plan submitted under
subparagraph (B) and approve it if the plan--
``(i) will provide for the equal distribution and display
on packaging and the rotation required in advertising under
this subsection; and
``(ii) assures that all of the labels required under this
section will be displayed by the tobacco product
manufacturer, importer, distributor, or retailer at the same
time.
``(c) Television and Radio Advertising.--It is unlawful to
advertise smokeless tobacco on any medium of electronic
communications subject to the jurisdiction of the Federal
Communications Commission.''.
SEC. 204. AUTHORITY TO REVISE SMOKELESS TOBACCO PRODUCT
WARNING LABEL STATEMENTS.
Section 3 of, as amended by section 303 of this title, is
further amended by adding at the end the following:
``(d) Authority To Revise Warning Label Statements.--The
Secretary may, by a rulemaking conducted under section 553 of
title 5, United States Code, adjust the format, type size,
and text of any of the warning label statements required by
subsection (a) of this section, or establish the format, type
size, and text of any other disclosures required under the
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.),
if the Secretary finds that such a change would promote
greater public understanding of the risks associated with the
use of smokeless tobacco products.''.
SEC. 205. TAR, NICOTINE, AND OTHER SMOKE CONSTITUENT
DISCLOSURE TO THE PUBLIC.
Section 4(a) of the Federal Cigarette Labeling and
Advertising Act (15 U.S.C. 1333 (a)), as amended by section
301 of this title, is further amended by adding at the end
the following:
``(4)(A) The Secretary shall, by a rulemaking conducted
under section 553 of title 5, United States Code, determine
(in the Secretary's sole discretion) whether cigarette and
other tobacco product manufacturers shall be required to
include in the area of each cigarette advertisement specified
by subsection (b) of this section, or on the package label,
or both, the tar and nicotine yields of the advertised or
packaged brand. Any such disclosure shall be in accordance
with the methodology established under such regulations,
shall conform to the type size requirements of subsection (b)
of this section, and shall appear within the area specified
in subsection (b) of this section.
``(B) Any differences between the requirements established
by the Secretary under subparagraph (A) and tar and nicotine
yield reporting requirements established by the Federal Trade
Commission shall be resolved by a memorandum of understanding
between the Secretary and the Federal Trade Commission.
``(C) In addition to the disclosures required by
subparagraph (A) of this paragraph, the Secretary may, under
a rulemaking conducted under section 553 of title 5, United
States Code, prescribe disclosure requirements regarding the
level of any cigarette or other tobacco product smoke
constituent. Any such disclosure may be required if the
Secretary determines that disclosure would be of benefit to
the public health, or otherwise would increase consumer
awareness of the health consequences of the use of tobacco
products, except that no such prescribed disclosure shall be
required on the face of any cigarette package or
advertisement. Nothing in this section shall prohibit the
Secretary from requiring such prescribed disclosure through a
cigarette or other tobacco product package or advertisement
insert, or by any other means under the Federal Food, Drug,
and Cosmetic Act (21 U.S.C. 301 et seq.).''.
____________________