[Congressional Record Volume 152, Number 25 (Thursday, March 2, 2006)]
[Senate]
[Pages S1645-S1646]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. NELSON of Florida (for himself, Ms. Collins, Mr. 
        Rockefeller, Mrs. Boxer, Mr. Kerry, Ms. Mikulski, Mr. Feingold, 
        Mr. Dorgan, and Mr. Kohl):
  S. 2354. A bill to amend title XVIII of the Social Security Act to 
reduce the coverage gap in prescription drug coverage under part D of 
such title based on savings to the Medicare program resulting from the 
negotiation of prescription drug prices; to the Committee on Finance.
  Mr. NELSON of Florida. Mr. President, I am pleased to be joined by my 
colleague and cosponsor Senator Susan Collins as we introduce the 
Medicare Prescription Drug Gap Reduction Act of 2006.
  For years now, I have advocated for providing seniors with meaningful 
prescription drug coverage. Seniors in this country should never have 
to choose between their meals and their medications.
  Unfortunately, Congress created a Medicare prescription drug plan 
that is confusing and contains a huge coverage gap. These are some of 
the reasons that I did not support the legislation that created this 
program. But this flawed plan is what passed. Our job now is to help 
seniors by fixing the underlying law. I have spoken with Medicare 
beneficiaries across Florida and they are understandably concerned 
about the new prescription drug benefit. One issue of great concern to 
Floridians is the large gap in coverage called the ``doughnut hole.''
  The Medicare drug benefit contains a large coverage gap during which 
beneficiaries continue to pay premiums but get no drug coverage at all. 
For most plans, Medicare will pay 75 percent of initial drug costs up 
to $2,250 after a $250 deductible. But then the program pays nothing 
until drug expenses reach $5,100. This lack of coverage for drug 
spending is often called Medicare's doughnut hole.
  More than one-third of all Medicare beneficiaries are projected to 
have drug spending that falls in the doughnut hole's range, according 
to the Congressional Budget Office (CBO). Millions of beneficiaries 
will pay premiums yet receive no coverage during this time. This is 
simply unacceptable.
  In response, we are introducing the Medicare Prescription Drug Gap 
Reduction Act of 2006 which will reduce the impact of the doughnut hole 
on Medicare beneficiaries.
  Our bill allows the Secretary of Health and Human Services (HHS) to 
negotiate on behalf of Medicare beneficiaries for lower drug prices. 
Unfortunately, the law that created the new Medicare drug program 
actually prohibits the Secretary from using the purchasing power of 
over 40 million seniors to negotiate for lowers prescription drug 
prices. The savings generated from allowing negotiations would then be 
applied towards reducing the doughnut hole, providing more drug 
coverage for Medicare beneficiaries.
  A recent analysis was conducted by researchers at the Johns Hopkins 
Center for Hospital Finance and Management on the Medicare doughnut 
hole. They concluded that ``the gap in coverage could be completely 
eliminated if Medicare paid the same prices as the Veterans' 
Administration, or Department of Defense and 75 percent of the gap 
could be eliminated if Medicare paid the same prices as the Federal 
Ceiling Price.'' Our bill gives the Secretary authority similar to 
entities like the Veterans' Administration and the Department of 
Defense, to negotiate contracts and obtain the lowest possible 
prescription drug prices for Medicare beneficiaries.
  Allowing the Federal Government to utilize market forces to negotiate 
for lower prescription drug prices and using these savings to alleviate 
the impact of the doughnut hole is a common-sense approach to providing 
Medicare beneficiaries with affordable prescription drugs.
  This issue boils down to just one goal--helping seniors. We urge all 
of our colleagues, from both sides of the aisle, to join us in this 
effort to help lower prescription drug costs for Medicare 
beneficiaries.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 2354

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Medicare Prescription Drug 
     Gap Reduction Act of 2006''.

     SEC. 2. REDUCING COVERAGE GAP.

       Section 1860D-2(b) of the Social Security Act (42 U.S.C. 
     1395w-102(b)) is amended--
       (1) in paragraph (3)(A), by striking ``paragraph (4)'' and 
     inserting ``paragraph (4), subject to the increase described 
     in paragraph (7)''; and
       (2) by adding at the end the following new paragraph:
       ``(7) Increase of initial coverage limit based on medicare 
     savings due to negotiation of drug prices.--For each year 
     (beginning with 2006), the Secretary shall increase the 
     initial coverage limit for the year specified in paragraph 
     (3) so that the aggregate amount of increased expenditures 
     from the Medicare Prescription Drug Account as a result of 
     such increase under this paragraph in the year (as estimated 
     by the Office of the Actuary of the Centers for Medicare & 
     Medicaid Services) is equal to the aggregate amount of 
     reduced expenditures from such Account that the Office of the 
     Actuary estimates will result in the year as a result of

[[Page S1646]]

     the application of the amendment made by section 3(a) of the 
     Medicare Prescription Drug Gap Reduction Act of 2006.''.

     SEC. 3. NEGOTIATING FAIR PRICES FOR MEDICARE PRESCRIPTION 
                   DRUGS.

       (a) In General.--Section 1860D-11 of the Social Security 
     Act (42 U.S.C. 1395w-111) is amended by striking subsection 
     (i) (relating to noninterference) and inserting the 
     following:
       ``(i) Authority To Negotiate Prices With Manufacturers.--
       ``(1) In general.--Subject to paragraph (4), in order to 
     ensure that beneficiaries enrolled under prescription drug 
     plans and MA-PD plans pay the lowest possible price, the 
     Secretary shall have authority similar to that of other 
     Federal entities that purchase prescription drugs in bulk to 
     negotiate contracts with manufacturers of covered part D 
     drugs, consistent with the requirements and in furtherance of 
     the goals of providing quality care and containing costs 
     under this part.
       ``(2) Mandatory responsibilities.--The Secretary shall be 
     required to--
       ``(A) negotiate contracts with manufacturers of covered 
     part D drugs for each fallback prescription drug plan under 
     subsection (g); and
       ``(B) participate in negotiation of contracts of any 
     covered part D drug upon request of an approved prescription 
     drug plan or MA-PD plan.
       ``(3) Rule of construction.--Nothing in paragraph (2) shall 
     be construed to limit the authority of the Secretary under 
     paragraph (1) to the mandatory responsibilities under 
     paragraph (2).
       ``(4) No particular formulary or price structure.--In order 
     to promote competition under this part and in carrying out 
     this part, the Secretary may not require a particular 
     formulary or institute a price structure for the 
     reimbursement of covered part D drugs.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect as if included in the enactment of section 
     101 of the Medicare Prescription Drug, Improvement, and 
     Modernization Act of 2003 (Public Law 108-173).
                                 ______