[Congressional Record Volume 153, Number 161 (Tuesday, October 23, 2007)]
[Senate]
[Pages S13263-S13265]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. DURBIN (for himself, Mr. Akaka, Ms. Stabenow, Mrs. Boxer, 
        and Mr. Obama):
  S. 2219: A bill to amend title XVIII of the Social Security Act to 
deliver a meaningful benefit and lower prescription drug prices under 
the Medicare Program; to the Committee on Finance.
  Mr. DURBIN. Mr. President, nearly 4 years have passed since Congress 
enacted the Medicare Modernization Act. Adding a prescription drug 
benefit to Medicare was long overdue, and many senior citizens and 
people with disabilities are relieved to finally have drug coverage.
  But the drug benefit was not structured like the rest of Medicare. 
For all other Medicare benefits, seniors can choose whether to receive 
benefits directly through Medicare or through a private insurance plan. 
The overwhelming majority choose the Medicare-run option for their 
hospital and physician coverage.
  No such choice is available for prescription drugs. Medicare 
beneficiaries must enroll in a private insurance plan to obtain drug 
coverage.
  A report released today by the Medicare Rights Center, with the 
support of Consumers Union, identifies the problems this decision to 
rely exclusively on private drug plans has created.
  Seniors are having trouble identifying which of the dozens of private 
drug plans works best for them. Anyone who has visited a senior center 
or spoken with an elderly relative knows that the complexity of the 
drug benefit has created much confusion.
  Each drug plan has its own premium, cost-sharing requirements, list 
of covered drugs, and pharmacy network. After you have identified the 
right drug plan, you have to go through the whole process again at the 
end of the year because your plan may have changed the drugs it covers 
or added new restrictions on how to access covered drugs.
  Medicare beneficiaries often cannot obtain the drugs they need 
because they are trapped in an appeals process that the Medicare Rights 
Center calls ``hopelessly dysfunctional.'' Drug plans often do not tell 
beneficiaries that they can appeal a drug plan's decision to deny 
coverage of a drug, even though they are required to do so. 
Beneficiaries who do appeal soon find that it is a long and difficult 
process.
  The complexity of the Medicare drug benefit also has made 
beneficiaries more vulnerable to aggressive and deceptive marketing 
practices. Some insurers try to steer seniors into more profitable 
Medicare Advantage plans. Some seniors have been signed up for Medicare 
Advantage plans without their knowledge, and, unfortunately, there have 
also been unscrupulous insurance agents who have misrepresented what 
benefits would be covered.
  Adding to the frustration with the program so far is accumulating 
evidence that private drug plans have not been effective negotiators, 
which means seniors end up paying more than they should.
  Drug prices are higher in private Medicare drug plans than drug 
prices available through the Veterans Administration, Medicaid, and 
other countries like Canada.
  A report by the House Oversight and Government Reform Committee 
estimated that taxpayers and Medicare beneficiaries would have saved 
almost $15 billion in 2007 if administrative expenses in the drug 
program were as low as the traditional government-run Medicare program 
and if drug prices were the same as Medicaid levels.
  It should come as no surprise then that the average beneficiary who 
stays in their current Medicare drug plan will see their monthly 
premiums increase 21 percent in 2008.
  Today, I am introducing the Medicare Prescription Drug Savings and 
Choice Act. The bill would create a Medicare-operated drug plan that 
would compete with private drug plans and would require the Health and 
Human Services Secretary to negotiate with drug companies to lower drug 
prices.
  This is the kind of drug plan that Medicare beneficiaries are looking 
for. According to a survey by the Kaiser Family Foundation, \2/3\ of 
seniors want the option of getting drug coverage directly from 
Medicare, and over 80 percent favor allowing the government to 
negotiate with drug companies for lower prices.
  The Health and Human Services Secretary would have the tools to 
negotiate with drug companies, including the use of drug formulary. The 
best medical evidence would determine which drugs are covered in the 
formulary, and the formulary would be used to promote safety, 
appropriate use of drugs, and value.
  The bill would establish an appeals process that is efficient, 
imposes minimal administrative burdens, and ensures timely procurement 
of nonformulary drugs or nonpreferred drugs when medically necessary.
  The Secretary would also develop a system for paying pharmacies that

[[Page S13264]]

would include the prompt payment of claims.
  Seniors want the ability to choose a Medicare-administered drug plan. 
Let us give them this option, just as they have this choice with every 
other benefit covered by Medicare. Many seniors will find direct 
Medicare coverage to be a simpler, more dependable, and less costly 
option than private drug plans.
  Mr. President, 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 
placed in the Record, as follows:

                                S. 2219

       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 
     Savings and Choice Act of 2007''.

     SEC. 2. ESTABLISHMENT OF MEDICARE OPERATED PRESCRIPTION DRUG 
                   PLAN OPTION.

       (a) In General.--Subpart 2 of part D of the Social Security 
     Act is amended by inserting after section 1860D-11 (42 U.S.C. 
     1395w-111) the following new section:


           ``MEDICARE OPERATED PRESCRIPTION DRUG PLAN OPTION

       ``Sec. 1860D-11A.  (a) In General.--Notwithstanding any 
     other provision of this part, for each year (beginning with 
     2009), in addition to any plans offered under section 1860D-
     11, the Secretary shall offer one or more medicare operated 
     prescription drug plans (as defined in subsection (c)) with a 
     service area that consists of the entire United States and 
     shall enter into negotiations in accordance with subsection 
     (b) with pharmaceutical manufacturers to reduce the purchase 
     cost of covered part D drugs for eligible part D individuals 
     who enroll in such a plan.
       ``(b) Negotiations.--Notwithstanding section 1860D-11(i), 
     for purposes of offering a medicare operated prescription 
     drug plan under this section, the Secretary shall negotiate 
     with pharmaceutical manufacturers with respect to the 
     purchase price of covered part D drugs in a Medicare operated 
     prescription drug plan and shall encourage the use of more 
     affordable therapeutic equivalents to the extent such 
     practices do not override medical necessity as determined by 
     the prescribing physician. To the extent practicable and 
     consistent with the previous sentence, the Secretary shall 
     implement strategies similar to those used by other Federal 
     purchasers of prescription drugs, and other strategies, 
     including the use of a formulary and formulary incentives in 
     subsection (e), to reduce the purchase cost of covered part D 
     drugs.
       ``(c) Medicare Operated Prescription Drug Plan Defined.--
     For purposes of this part, the term `medicare operated 
     prescription drug plan' means a prescription drug plan that 
     offers qualified prescription drug coverage and access to 
     negotiated prices described in section 1860D-2(a)(1)(A). Such 
     a plan may offer supplemental prescription drug coverage in 
     the same manner as other qualified prescription drug coverage 
     offered by other prescription drug plans.
       ``(d) Monthly Beneficiary Premium.--
       ``(1) Qualified prescription drug coverage.--The monthly 
     beneficiary premium for qualified prescription drug coverage 
     and access to negotiated prices described in section 1860D-
     2(a)(1)(A) to be charged under a medicare operated 
     prescription drug plan shall be uniform nationally. Such 
     premium for months in 2009 and each succeeding year shall be 
     based on the average monthly per capita actuarial cost of 
     offering the medicare operated prescription drug plan for the 
     year involved, including administrative expenses.
       ``(2) Supplemental prescription drug coverage.--Insofar as 
     a medicare operated prescription drug plan offers 
     supplemental prescription drug coverage, the Secretary may 
     adjust the amount of the premium charged under paragraph (1).
       ``(e) Use of a Formulary and Formulary Incentives.--
       ``(1) In general.--With respect to the operation of a 
     medicare operated prescription drug plan, the Secretary shall 
     establish and apply a formulary (and may include formulary 
     incentives described in paragraph (2)(C)(ii)) in accordance 
     with this subsection in order to--
       ``(A) increase patient safety;
       ``(B) increase appropriate use and reduce inappropriate use 
     of drugs; and
       ``(C) reward value.
       ``(2) Development of initial formulary.--
       ``(A) In general.--In selecting covered part D drugs for 
     inclusion in a formulary. the Secretary shall consider 
     clinical benefit and price.
       ``(B) Role of ahrq.--The Director of the Agency for 
     Healthcare Research and Quality shall be responsible for 
     assessing the clinical benefit of covered part D drugs and 
     making recommendations to the Secretary regarding which drugs 
     should be included in the formulary. In conducting such 
     assessments and making such recommendations, the Director 
     shall--
       ``(i) consider safety concerns including those identified 
     by the Federal Food and Drug Administration;
       ``(ii) use available data and evaluations, with priority 
     given to randomized controlled trials, to examine clinical 
     effectiveness, comparative effectiveness, safety, and 
     enhanced compliance with a drug regimen;
       ``(iii) use the same classes of drugs developed by United 
     States Pharmacopeia for this part;
       ``(iv) consider evaluations made by--

       ``(I) the Director under section 1013 of Medicare 
     Prescription Drug, Improvement, and Modernization Act of 
     2003;
       ``(II) other Federal entities, such as the Secretary of 
     Veterans Affairs; and
       ``(III) other private and public entities, such as the Drug 
     Effectiveness Review Project and Medicaid programs; and

       ``(v) recommend to the Secretary--

       ``(I) those drugs in a class that provide a greater 
     clinical benefit, including fewer safety concerns or less 
     risk of side-effects, than another drug in the same class 
     that should be included in the formulary;
       ``(II) those drugs in a class that provide less clinical 
     benefit, including greater safety concerns or a greater risk 
     of side-effects, than another drug in the same class that 
     should be excluded from the formulary; and
       ``(III) drugs in a class with same or similar clinical 
     benefit for which it would be appropriate for the Secretary 
     to competitively bid (or negotiate) for placement on the 
     formulary.

       ``(C) Consideration of ahrq recommendations.--
       ``(i) In general.--The Secretary, after taking into 
     consideration the recommendations under subparagraph (B)(v), 
     shall establish a formulary, and formulary incentives, to 
     encourage use of covered part D drugs that--

       ``(I) have a lower cost and provide a greater clinical 
     benefit than other drugs;
       ``(II) have a lower cost than other drugs with same or 
     similar clinical benefit; and
       ``(III) drugs that have the same cost but provide greater 
     clinical benefit than other drugs.

       ``(ii) Formulary incentives.--The formulary incentives 
     under clause (i) may be in the form of one or more of the 
     following:

       ``(I) Tiered copayments.
       ``(II) Reference pricing.
       ``(III) Prior authorization.
       ``(IV) Step therapy.
       ``(V) Medication therapy management.
       ``(VI) Generic drug substitution.

       ``(iii) Flexibility.--In applying such formulary incentives 
     the Secretary may decide not to impose any cost-sharing for a 
     covered part D drug for which--

       ``(I) the elimination of cost sharing would be expected to 
     increase compliance with a drug regimen; and
       ``(II) compliance would be expected to produce savings 
     under part A or B or both.

       ``(3) Limitations on formulary.--In any formulary 
     established under this subsection, the formulary may not be 
     changed during a year, except--
       ``(A) to add a generic version of a covered part D drug 
     that entered the market;
       ``(B) to remove such a drug for which a safety problem is 
     found; and
       ``(C) to add a drug that the Secretary identifies as a drug 
     which treats a condition for which there has not previously 
     been a treatment option or for which a clear and significant 
     benefit has been demonstrated over other covered part D 
     drugs.
       ``(4) Adding drugs to the initial formulary.--
       ``(A) Use of advisory committee.--The Secretary shall 
     establish and appoint an advisory committee (in this 
     paragraph referred to as the `advisory committee')--
       ``(i) to review petitions from drug manufacturers, health 
     care provider organizations, patient groups, and other 
     entities for inclusion of a drug in, or other changes to, 
     such formulary; and
       ``(ii) to recommend any changes to the formulary 
     established under this subsection.
       ``(B) Composition.--The advisory committee shall be 
     composed of 9 members and shall include representatives of 
     physicians, pharmacists, and consumers and others with 
     expertise in evaluating prescription drugs. The Secretary 
     shall select members based on their knowledge of 
     pharmaceuticals and the Medicare population. Members shall be 
     deemed to be special Government employees for purposes of 
     applying the conflict of interest provisions under section 
     208 of title 18, United States Code, and no waiver of such 
     provisions for such a member shall be permitted.
       ``(C) Consultation.--The advisory committee shall consult, 
     as necessary, with physicians who are specialists in treating 
     the disease for which a drug is being considered.
       ``(D) Request for studies.--The advisory committee may 
     request the Agency for Healthcare Research and Quality or an 
     academic or research institution to study and make a report 
     on a petition described in subparagraph (A)(ii) in order to 
     assess--
       ``(i) clinical effectiveness;
       ``(ii) comparative effectiveness;
       ``(iii) safety; and
       ``(iv) enhanced compliance with a drug regimen.
       ``(E) Recommendations.--The advisory committee shall make 
     recommendations to the Secretary regarding--
       ``(i) whether a covered part D drug is found to provide a 
     greater clinical benefit, including fewer safety concerns or 
     less risk of side-effects, than another drug in the same 
     class that is currently included in the formulary and should 
     be included in the formulary;

[[Page S13265]]

       ``(ii) whether a covered part D drug is found to provide 
     less clinical benefit, including greater safety concerns or a 
     greater risk of side-effects, than another drug in the same 
     class that is currently included in the formulary and should 
     not be included in the formulary; and
       ``(iii) whether a covered part D drug has the same or 
     similar clinical benefit to a drug in the same class that is 
     currently included in the formulary and whether the drug 
     should be included in the formulary.
       ``(F) Limitations on review of manufacturer petitions.--The 
     advisory committee shall not review a petition of a drug 
     manufacturer under subparagraph (A)(ii) with respect to a 
     covered part D drug unless the petition is accompanied by the 
     following:
       ``(i) Raw data from clinical trials on the safety and 
     effectiveness of the drug.
       ``(ii) Any data from clinical trials conducted using active 
     controls on the drug or drugs that are the current standard 
     of care.
       ``(iii) Any available data on comparative effectiveness of 
     the drug.
       ``(iv) Any other information the Secretary requires for the 
     advisory committee to complete its review.
       ``(G) Response to recommendations.--The Secretary shall 
     review the recommendations of the advisory committee and if 
     the Secretary accepts such recommendations the Secretary 
     shall modify the formulary established under this subsection 
     accordingly. Nothing in this section shall preclude the 
     Secretary from adding to the formulary a drug for which the 
     Director of the Agency for Healthcare Research and Quality or 
     the advisory committee has not made a recommendation.
       ``(H) Notice of changes.--The Secretary shall provide 
     timely notice to beneficiaries and health professionals about 
     changes to the formulary or formulary incentives.
       ``(f) Informing Beneficiaries.--The Secretary shall take 
     steps to inform beneficiaries about the availability of a 
     Medicare operated drug plan or plans including providing 
     information in the annual handbook distributed to all 
     beneficiaries and adding information to the official public 
     Medicare website related to prescription drug coverage 
     available through this part.
       ``(g) Application of All Other Requirements for 
     Prescription Drug Plans.--Except as specifically provided in 
     this section, any Medicare operated drug plan shall meet the 
     same requirements as apply to any other prescription drug 
     plan, including the requirements of section 1860D-4(b)(1) 
     relating to assuring pharmacy access).''.
       (b) Conforming Amendments.--
       (1) Section 1860D-3(a) of the Social Security Act (42 
     U.S.C. 1395w-103(a)) is amended by adding at the end the 
     following new paragraph:
       ``(4) Availability of the medicare operated prescription 
     drug plan.--A medicare operated prescription drug plan (as 
     defined in section 1860D-11A(c)) shall be offered nationally 
     in accordance with section 1860D-11A.''.
       (2)(A) Section 1860D-3 of the Social Security Act (42 
     U.S.C. 1395w-103) is amended by adding at the end the 
     following new subsection:
       ``(c) Provisions Only Applicable in 2006, 2007, and 2008.--
     The provisions of this section shall only apply with respect 
     to 2006, 2007, and 2008.''.
       (B) Section 1860D-11(g) of such Act (42 U.S.C. 1395w-
     111(g)) is amended by adding at the end the following new 
     paragraph:
       ``(8) No authority for fallback plans after 2008.--A 
     fallback prescription drug plan shall not be available after 
     December 31, 2008.''.
       (3) Section 1860D-13(c)(3) of such Act (42 U.S.C. 1395w-
     113(c)(3)) is amended--
       (A) in the heading, by inserting ``and medicare operated 
     prescription drug plans'' after ``Fallback plans''; and
       (B) by inserting ``or a medicare operated prescription drug 
     plan'' after ``a fallback prescription drug plan''.
       (4) Section 1860D-16(b)(1) of such Act (42 U.S.C.1395w-
     116(b)(1)) is amended--
       (A) in subparagraph (C), by striking ``and'' after the 
     semicolon at the end;
       (B) in subparagraph (D), by striking the period at the end 
     and inserting ``; and''; and
       (C) by adding at the end the following new subparagraph:
       ``(E) payments for expenses incurred with respect to the 
     operation of medicare operated prescription drug plans under 
     section 1860D-11A.''.
       (5) Section 1860D-41(a) of such Act (42 U.S.C. 1395w-
     151(a)) is amended by adding at the end the following new 
     paragraph:
       ``(19) Medicare operated prescription drug plan.--The term 
     `medicare operated prescription drug plan' has the meaning 
     given such term in section 1860D-11A(c).''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect as if included in the enactment of section 
     101 of the Medicare Prescription Drug, Improvement, and 
     Modernization Act of 2003.

     SEC. 3. IMPROVED APPEALS PROCESS UNDER THE MEDICARE OPERATED 
                   PRESCRIPTION DRUG PLAN.

       Section 1860D-4(h) of the Social Security Act (42 U.S.C. 
     1305w-104(h)) is amended by adding at the end the following 
     new paragraph:
       ``(h) Appeals Process for Medicare Operated Prescription 
     Drug Plan.--
       ``(1) In general.--The Secretary shall develop a well-
     defined process for appeals for denials of benefits under 
     this part under the medicare operated prescription drug plan. 
     Such process shall be efficient, impose minimal 
     administrative burdens, and ensure the timely procurement of 
     non-formulary drugs or exemption from formulary incentives 
     when medically necessary. Medical necessity shall be based on 
     professional medical judgment, the medical condition of the 
     beneficiary, and other medical evidence. Such appeals process 
     shall include--
       ``(A) an initial review and determination made by the 
     Secretary; and
       ``(B) for appeals denied during the initial review and 
     determination, the option of an external review and 
     determination by an independent entity selected by the 
     Secretary.
       ``(2) Consultation in development of process.--In 
     developing the appeals process under paragraph (1), the 
     Secretary shall consult with consumer and patient groups, as 
     well as other key stakeholders to ensure the goals described 
     in paragraph (1) are achieved.''.

     SEC. 4. PHARMACY PAYMENT UNDER THE MEDICARE OPERATED 
                   PRESCRIPTION DRUG PLAN.

       Section 1860D-12(b) of the Social Security Act (42 U.S.C. 
     1395w-112 (b)) is amended by adding at the end the following 
     new paragraph:
       ``(4) Pharmacy payment under the medicare operated 
     prescription drug plan.--
       ``(A) In general.--Under the medicare operated prescription 
     drug plan, the Secretary shall develop a system for payment 
     to pharmacies. Such a system shall include a requirement that 
     the plan shall issue, mail, or otherwise transmit payment for 
     all clean claims submitted under this part within the 
     applicable number of calendar days after the date on which 
     the claim is received.
       ``(B) Definitions.--In this paragraph:
       ``(i) Clean claim.--The term `clean claim' means a claim, 
     with respect to a covered part D drug, that has no apparent 
     defect or impropriety (including any lack of any required 
     substantiating documentation) or particular circumstance 
     requiring special treatment that prevents timely payment from 
     being made on the claim under this part.
       ``(ii) Applicable number of calendar days.--The term 
     `applicable number of calendar days' means--

       ``(I) with respect to claims submitted electronically, 14 
     calendar days; and
       ``(II) with respect to claims submitted otherwise, 30 
     calendar days.

       ``(C) Procedures involving claims.--
       ``(i) Claims deemed to be clean claims.--

       ``(I) In general.--A claim for a covered part D drug shall 
     be deemed to be a clean claim for purposes of this paragraph 
     if the Secretary does not provide a notification of 
     deficiency to the claimant by the 10th day that begins after 
     the date on which the claim is submitted.
       ``(II) Notification of deficiency.--For purposes of 
     subclause (I), the term `notification of deficiency' means a 
     notification that specifies all defects or improprieties in 
     the claim involved and that lists all additional information 
     or documents necessary for the proper processing and payment 
     of the claim.

       ``(ii) Payment of clean portions of claims.--The Secretary 
     shall, as appropriate, pay any portion of a claim for a 
     covered part D drug under the medicare operated prescription 
     drug plan that would be a clean claim but for a defect or 
     impropriety in a separate portion of the claim in accordance 
     with subparagraph (A).
       ``(iii) Obligation to pay.--A claim for a covered part D 
     drug submitted to the Secretary that is not paid or contested 
     by the provider within the applicable number of calendar days 
     (as defined in subparagraph (B)) shall be deemed to be a 
     clean claim and shall be paid by the Secretary in accordance 
     with subparagraph (A).
       ``(iv) Date of payment of claim.--Payment of a clean claim 
     under subparagraph (A) is considered to have been made on the 
     date on which full payment is received by the provider.
       ``(D) Electronic transfer of funds.--The Secretary shall 
     pay all clean claims submitted electronically by an 
     electronic funds transfer mechanism.''.
                                 ______