[Congressional Record Volume 157, Number 48 (Tuesday, April 5, 2011)]
[Senate]
[Pages S2135-S2140]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. ROBERTS (for himself and Ms. Stabenow):
  S. 733. A bill to amend part B of title XVIII of the Social Security 
Act to exclude customary prompt pay discounts from manufacturers to 
wholesalers from the average sales price for drugs and biologicals 
under Medicare; to the Committee on Finance.
  Mr. ROBERTS. Mr. President, I rise today to address a health care 
concern that impacts all of us--access to health care.
  When you or your loved one is sick--the most important thing on earth 
is

[[Page S2140]]

to fight for the very best medical care possible. And when the 
diagnosis is cancer--a disease far too many of our friends and family 
have faced--it becomes all the more important and all the more time 
sensitive.
  Unfortunately, in some cases, access to care--as well as the life-
saving drugs needed to treat a variety of forms of this disease--are 
being negatively impacted by the current reimbursement structure for 
Medicare Part B drugs and biologicals. In layman's terms, it's one more 
hurdle that doctors have to fight for their patients.
  That is why I am introducing today legislation that would end the 
hurdle. My bill would exclude customary prompt pay discounts from the 
manufacturer's average sales price for purposes of Medicare Part B 
drugs and biologicals.
  In Hillsboro, Kansas we have already seen cancer clinics begin to 
close as a direct result of the current reimbursement structure which 
limits patient access to care that they desperately need. Currently the 
prompt pay discounts artificially reduce Medicare Part B drug 
reimbursement rates for community oncology clinics, jeopardizing the 
viability of these providers. The closing of the clinic in Hillsboro 
can be directly attributed to this reimbursement structure. 
Additionally, prompt pay discounts also reduce the payment rates of 
private payers that use Average Sales Price. My legislation is a step 
forward in addressing problems with Medicare reimbursement for cancer 
drugs.
  Primary Healthcare Distributors, PHDs, act as a middle man between 
providers and drug and product manufacturers. Most healthcare providers 
must receive daily deliveries of products from many different 
manufacturers. PHDs streamline the system and provide efficiencies by 
aggregating the ordering and shipping logistics. Some 80 percent of 
prescription medicines in the U.S. are stored, managed and delivered by 
PHDs. These PHDs receive prompt pay discounts from drug manufacturers 
in recognition of the efficiencies they provide.
  However, these efficiencies are threatened by the Medicare 
Modernization Act's, MMA's, inappropriate inclusion of these prompt pay 
discounts in the calculation of the Average Sales Price for Medicare 
Part B drugs, those administered in a doctor's office. The inclusion of 
these discounts ultimately reduces reimbursements to providers, who are 
not the actual beneficiaries of the discounts. It provides a perverse 
incentive for manufacturers to go around the PHD to offer prompt pay 
discounts directly to the providers, thereby eliminating the 
efficiencies of the current system and potentially creating another 
burden for providers.
  Congress has recognized the importance of excluding prompt pay 
discounts from providers' payment formulas in the Medicaid program. 
This bill would extend that exclusion to Medicare Part B.
  I believe that the policy is right; that is why today I, along with 
Senator Stabenow, am introducing legislation to amend Part B of Title 
XVII of the Social Security Act to exclude customary prompt pay 
discounts from manufacturers to wholesalers from the average sales 
price for drugs and biologicals under Medicare.
  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. 733

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

     SECTION 1. EXCLUDING CUSTOMARY PROMPT PAY DISCOUNTS FROM 
                   MANUFACTURERS TO WHOLESALERS FROM THE AVERAGE 
                   SALES PRICE FOR MEDICARE PAYMENTS FOR DRUGS AND 
                   BIOLOGICALS.

       (a) In General.--Section 1847A(c)(3) of the Social Security 
     Act (42 U.S.C. 1395w-3a(c)(3)) is amended--
       (1) in the first sentence, by inserting ``(other than 
     customary prompt pay discounts extended to wholesalers)'' 
     after ``prompt pay discounts''; and
       (2) in the second sentence, by inserting ``(other than 
     customary prompt pay discounts extended to wholesalers)'' 
     after ``other price concessions''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to drugs and biologicals that are furnished on or 
     after January 1, 2012.

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