[Congressional Record Volume 157, Number 36 (Thursday, March 10, 2011)]
[Senate]
[Pages S1561-S1563]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. DURBIN (for himself, Mr. Brown of Ohio, and Mr. Akaka):
  S. 560. 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, this Congress, members from both sides of 
the aisle recognize the need to reduce the national deficit. Today, I 
am introducing the Medicare Prescription Drugs Savings and Choice Act 
of 2011, a bill that would save taxpayer dollars by giving Medicare 
beneficiaries the choice to participate in a Medicare Part D 
prescription drug plan run by Medicare, not private insurance 
companies.
  In 2003, Congress enacted the Medicare Modernization Act, which added 
a long overdue prescription drug benefit to Medicare. Senior citizens 
and people with disabilities were relieved to finally have coverage for 
this important aspect of their healthcare needs.
  The way the Part D program was structured under the original law, it 
included a coverage gap known as the ``donut hole.'' Once an initial 
coverage limit was reached, beneficiaries had to absorb 100 percent of 
their drug costs until catastrophic coverage kicked in. That meant that 
approximately 3.4 million seniors nationwide with the heaviest reliance 
on prescription drugs faced the prospect of paying up to $4,000 out of 
pocket before they qualified for further assistance from Medicare.
  When Congress passed the Affordable Care Act last year, we made 
significant improvements to the Medicare Part D program. Seniors who 
hit the ``donut hole'' in 2010 received a one-time $250 check. This 
helped 109,421 seniors in Illinois pay for their prescriptions during 
the coverage gap. In addition, this year Medicare beneficiaries will 
receive a 50 percent discount on brand name drugs in the donut hole, 
and the donut hole will be fully closed by 2020. This means that 
Illinois seniors will save $1.2 billion in out of pocket costs over the 
next decade.
  The bill I am introducing today would make yet another improvement to 
the Medicare prescription drug benefit. The Part D program is 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.
  In many regions, dozens of plan choices are available and each 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. Anyone who has visited a 
senior center or spoken with an elderly relative knows that the 
complexity of the drug benefit has created confusion.
  Adding to the frustration with the program so far is accumulating 
evidence that private drug plans have not been effective negotiators, 
which means seniors and taxpayers end up paying more than they should.
  We know that drug prices are higher in private Medicare drug plans 
than drug prices available through the Veterans Administration, 
Medicaid, and other countries like Canada.
  The Veterans Administration has authority to directly negotiate with 
drug companies, and as a result it has cut drug prices by as much as 50 
percent. A study published in 2008 found that if Medicare negotiated 
drug prices on behalf of seniors, $21.5 billion could be saved 
annually.
  The Medicare Prescription Drug Savings and Choice Act of 2011 would 
provide a simple and stable way to obtain drug coverage, since the plan 
Medicare-operated prescription drug plan would be available nationwide 
every year, and would charge everyone the same premium.
  It would also save money because the Secretary of Health and Human 
Services would have the tools to design a formulary and negotiate 
prices with drug companies. The best medical evidence would determine 
which drugs are covered in the formulary, and it 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 non-formulary drugs or non-preferred drugs when medically necessary.
  The Secretary would also develop a system for paying pharmacies that 
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.
  A Medicare administered drug plan would create a ``win-win'' 
situation that could save billions of taxpayer dollars and provide a 
high-quality affordable option to seniors.
  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 
printed in the Record, as follows:

                                 S. 560

       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 2011''.

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

       (a) In General.--Subpart 2 of part D of title XVIII 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 
     2012), 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

[[Page S1562]]

     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 2012 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 the 
     United States Pharmacopeia for this part;
       ``(iv) consider evaluations made by--

       ``(I) the Director under section 1013 of the 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;
       ``(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

[[Page S1563]]

     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 Through 2011.--The 
     provisions of this section shall only apply with respect to 
     2006 through 2011.''.
       (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 2011.--A 
     fallback prescription drug plan shall not be available after 
     December 31, 2011.''.
       (3) Section 1860D-13(c)(3) of the Social Security 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 the Social Security 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 the Social Security 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).''.

     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:
       ``(4) Appeals process for medicare operated prescription 
     drug plan.--
       ``(A) 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--
       ``(i) an initial review and determination made by the 
     Secretary; and
       ``(ii) 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.
       ``(B) Consultation in development of process.--In 
     developing the appeals process under subparagraph (A), the 
     Secretary shall consult with consumer and patient groups, as 
     well as other key stakeholders to ensure the goals described 
     in subparagraph (A) are achieved.''.
                                 ______