[Congressional Record Volume 163, Number 194 (Wednesday, November 29, 2017)]
[Senate]
[Pages S7481-S7484]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SA 1656. Mr. BROWN submitted an amendment intended to be proposed by
him to the bill H.R. 1, to provide for reconciliation pursuant to
titles II and V of the concurrent resolution on the budget for fiscal
year 2018; which was ordered to lie on the table; as follows:
At the end of part IX of subtitle C of title I, insert the
following:
Subpart C--Stop Price Gouging Act
SEC. 13831. SHORT TITLE.
This subpart may be cited as the ``Stop Price Gouging
Act''.
SEC. 13832. IDENTIFICATION OF PRESCRIPTION DRUG PRICE SPIKES.
(a) Definitions.--In this section:
(1) Applicable entity.--The term ``applicable entity''
means the holder of an application approved under subsection
(c) or (j) of section 505 of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 355) or of a license issued under
subsection (a) or (k) of section 351 of the Public Health
Service Act (42 U.S.C. 262) for a drug described in paragraph
(5)(A).
(2) Average manufacturer price.--The term ``average
manufacturer price''--
(A) has the same meaning given such term under section
1927(k)(1) of the Social Security Act (42 U.S.C. 1396r-
8(k)(1)); or
(B) with respect to a drug for which there is no average
manufacturer price as so defined, such term shall mean the
wholesale acquisition cost of the drug.
(3) Commerce.--The term ``commerce'' has the meaning given
such term in section 4 of the Federal Trade Commission Act
(15 U.S.C. 44).
(4) Inspector general.--The term ``Inspector General''
means the Inspector General of the Department of Health and
Human Services.
(5) Prescription drug.--
(A) In general.--The term ``prescription drug'' means any
drug (as defined in section 201(g) of the Federal Food, Drug,
and Cosmetic Act (21 U.S.C. 321(g))), including a combination
product whose primary mode of action is determined under
section 503(g) of such Act (21 U.S.C. 353(g)) to be that of a
drug, and that--
(i) is subject to section 503(b)(1) of the Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 353(b)(1)); and
(ii) is covered by a Federal health care program (as
defined in section 1128B(f) of the Social Security Act (42
U.S.C. 1320a-7b(f))).
(B) Treatment of reformulated drugs.--For purposes of this
section, a prescription drug with respect to which the
Secretary of Health and Human Services has approved any minor
reformulation that does not produce a meaningful therapeutic
benefit, the drug that was approved prior to any such
reformulation and the drug with any such reformulation shall
be considered one prescription drug.
(6) Price spike.--
(A) In general.--The term ``price spike'' means an increase
in the average manufacturer price in commerce of a
prescription drug for which the price spike percentage is
equal to or greater than applicable price increase allowance.
(B) Price spike percentage.--The price spike percentage is
the percentage (if any) by which--
(i) the average manufacturer price of a prescription drug
in commerce for the calendar year; exceeds
(ii) the average manufacturer price of such prescription
drug in commerce for the calendar year preceding such year.
[[Page S7482]]
(C) Applicable price increase allowance.--The applicable
price increase allowance for any calendar year is the
percentage (rounded to the nearest one-tenth of 1 percent) by
which the medical care consumer price index detailed
expenditure category for all urban consumers (United States
city average) for that year exceed such index for the
preceding calendar year.
(7) Price spike revenue.--
(A) In general.--The price spike revenue for any calendar
year is an amount equal to--
(i) the gross price spike revenue, minus
(ii) the adjustment amount.
(B) Gross price spike revenue.--The gross price spike
revenue for any calendar year is an amount equal to the
product of--
(i) an amount equal to the difference between clause (i) of
paragraph (6)(B) and clause (ii) of such paragraph; and
(ii) the total number of units of the prescription drug
which were sold in commerce in such calendar year.
(C) Adjustment amount.--The adjustment amount is the
amount, if any, of the gross price spike revenue which the
Inspector General has determined is due solely to an increase
in the cost of the inputs necessary to manufacture the
prescription drug subject to the price spike.
(b) Submission by Pharmaceutical Companies of Information
to Inspector General.--
(1) In general.--For each prescription drug, the applicable
entity shall submit to the Inspector General a quarterly
report that includes the following:
(A) For each prescription drug of the applicable entity--
(i) the total number of units of the prescription drug
which were sold in commerce in the preceding calendar
quarter;
(ii) the average and median price per unit of such
prescription drug in commerce in the preceding calendar
quarter, disaggregated by month; and
(iii) the gross revenues from sales of such prescription
drug in commerce in the preceding calendar quarter.
(B) Such information related to increased input costs or
public health considerations as the applicable entity may
wish the Inspector General to consider in making a
determination under clause (ii) of subsection (c)(2)(B) or an
assessment in clause (iii) of such subsection for the
preceding calendar quarter.
(C) Such information related to any anticipated increased
input costs for the subsequent calendar quarter as the
applicable entity may wish the Inspector General to consider
in making a determination under clause (ii) of subsection
(c)(2)(B) or an assessment in clause (iii) of such subsection
for such calendar quarter.
(2) Penalty for failure to submit.--
(A) In general.--An applicable entity described in
paragraph (1) that fails to submit information to the
Inspector General regarding a prescription drug, as required
by such paragraph, before the date specified in paragraph (3)
shall be liable for a civil penalty, as determined under
subparagraph (B).
(B) Amount of penalty.--The amount of the civil penalty
shall be equal to the product of--
(i) an amount, as determined appropriate by the Inspector
General, which is--
(I) not less than 0.5 percent of the gross revenues from
sales of the prescription drug described in subparagraph (A)
for the preceding calendar year, and
(II) not greater than 1 percent of the gross revenues from
sales of such prescription drug for the preceding calendar
year, and
(ii) the number of days in the period between--
(I) the applicable date specified in paragraph (3), and
(II) the date on which the Inspector General receives the
information described in paragraph (1) from the applicable
entity.
(3) Submission deadline.--An applicable entity shall submit
each quarterly report described in paragraph (1) not later
than January 17, April 18, June 15, and September 15 of each
calendar year.
(c) Assessment by Inspector General.--
(1) In general.--Not later than the last day in February of
each year, the Inspector General, in consultation with other
relevant Federal agencies (including the Federal Trade
Commission), shall--
(A) complete an assessment of the information the Inspector
General received pursuant to subsection (b)(1) with respect
to sales of prescription drugs in the preceding calendar
year; and
(B) in the case of any prescription drug which satisfies
the conditions described in paragraph (1) or (2) of
subsection (d), submit a recommendation to the Secretary of
Health and Human Services that such drug be exempted from
application of the tax imposed under section 4192 of the
Internal Revenue Code of 1986 (as added by section 13833 of
this Act) for such year.
(2) Elements.--The assessment required by paragraph (1)(A)
shall include the following:
(A) Identification of each price spike relating to a
prescription drug in the preceding calendar year.
(B) For each price spike identified under subparagraph
(A)--
(i) a determination of the price spike revenue;
(ii) a determination regarding the accuracy of the
information submitted by the applicable entity regarding
increased input costs; and
(iii) an assessment of the rationale of the applicable
entity for the price spike.
(d) Exemption of Certain Drugs.--
(1) In general.--The Secretary of Health and Human
Services, upon recommendation of the Inspector General
pursuant to subsection (c)(1)(B), may exempt any prescription
drug which has been subject to a price spike during the
preceding calendar year from application of the tax imposed
under section 4192 of the Internal Revenue Code of 1986 for
such year, if the Secretary determines that--
(A) based on information submitted pursuant to subsection
(b)(1)(B), a for-cause price increase exemption should apply;
or
(B)(i) the prescription drug which has been subject to a
price spike has an average manufacturer price of not greater
than $10 for a 30 day supply; and
(ii) such drug is marketed by not less than 3 other holders
of applications approved under subsection (c) or (j) of
section 505 of the Federal Food, Drug, and Cosmetic Act (21
U.S.C. 355), where such applications approved under such
subsection (j) use as a reference drug the drug so approved
under such subsection (c).
(2) Clarification.--In considering, under paragraph (1)(A),
information submitted pursuant to subsection (b)(1)(B), the
Secretary--
(A) has the discretion to determine that such information
does not warrant a for-cause price increase exemption; and
(B) shall exclude from such consideration any information
submitted by the applicable entity threatening to curtail or
limit production of the prescription drug if the Secretary
does not grant an exemption from the application of the tax
under section 4192 of the Internal Revenue Code of 1986.
(e) Inspector General Report to Internal Revenue Service.--
(1) In general.--Subject to paragraph (3), not later than
the last day in February of each year, the Inspector General
shall transmit to the Internal Revenue Service a report on
the findings of the Inspector General with respect to the
information the Inspector General received under subsection
(b)(1) with respect to the preceding calendar year and the
assessment carried out by the Inspector General under
subsection (c)(1)(A) with respect to such information.
(2) Contents.--The report transmitted under paragraph (1)
shall include the following:
(A) The information received under subsection (b)(1) with
respect to the preceding calendar year.
(B) The price spikes identified under subparagraph (A) of
subsection (c)(2).
(C) The price spike revenue determinations made under
subparagraph (B)(i) of such subsection.
(D) The determinations and assessments made under clauses
(ii) and (iii) of subparagraph (B) of such subsection.
(3) Notice and opportunity for hearing.--
(A) In general.--No report shall be transmitted to the
Internal Revenue Service under paragraph (1) in regards to a
prescription drug unless the Inspector General has provided
the applicable entity with--
(i) the assessment of such drug under subsection (c)(1)(A);
and
(ii) notice of their right to a hearing in regards to such
assessment.
(B) Notice.--The notice required under subparagraph (A)
shall be provided to the applicable entity not later than 30
days after completion of the assessment under subsection
(c)(1)(A).
(C) Request for hearing.--Subject to subparagraph (E), an
applicable entity may request a hearing before the Secretary
of Health and Human Services not later than 30 days after the
date on which the notice under subparagraph (B) is received.
(D) Completion of hearing.--In the case of an applicable
entity which requests a hearing pursuant to subparagraph (C),
the Secretary of Health and Human Services shall, not later
than 12 months after the date on which the assessment under
subsection (c)(1)(A) was completed by the Inspector General--
(i) make a final determination in regards the accuracy of
such assessment; and
(ii) provide the report described in paragraph (2) to the
Internal Revenue Service.
(E) Limitation.--An applicable entity may request a hearing
under subparagraph (C) with respect to a particular
prescription drug only once within a 5-year period.
(4) Publication.--
(A) In general.--Not later than the last day in February of
each year, subject to subparagraph (B), the Inspector General
shall make the report transmitted under paragraph (1)
available to the public, including on the Internet website of
the Inspector General, subject to subparagraph (B).
(B) Proprietary information.--The Inspector General shall
ensure that any information made public in accordance with
subparagraph (A) excludes trade secrets and confidential
commercial information.
(f) Notification.--The Secretary of the Treasury, in
conjunction with the Inspector General, shall notify, at such
time and in such manner as the Secretary of the Treasury
shall provide, each applicable entity in regard to any
prescription drug which has been determined to have been
subject to a price spike during the preceding calendar year
and the amount of the tax imposed on such applicable entity
pursuant to section 4192 of the Internal Revenue Code of
1986.
[[Page S7483]]
SEC. 13833. EXCISE TAX ON PRESCRIPTION DRUGS SUBJECT TO PRICE
SPIKES.
(a) In General.--Subchapter E of chapter 32 is amended by
adding at the end the following new section:
``SEC. 4192. PRESCRIPTION DRUGS SUBJECT TO PRICE SPIKES.
``(a) Imposition of Tax.--
``(1) In general.--Subject to paragraph (3), for each
taxable prescription drug sold by an applicable entity during
the calendar year, there is hereby imposed on such entity a
tax equal to the greater of--
``(A) the annual price spike tax for such prescription
drug, or
``(B) subject to paragraph (2), the cumulative price spike
tax for such prescription drug.
``(2) Limitation.--In the case of a taxable prescription
drug for which the applicable period (as determined under
subsection (c)(2)(E)(i)) is less than 2 calendar years, the
cumulative price spike tax shall not apply.
``(3) Exemption.--For any calendar year in which the
Secretary of Health and Human Services has provided an
exemption for a taxable prescription drug pursuant to section
13832(d) of the Stop Price Gouging Act, the amount of the tax
determined under paragraph (1) for such drug or device for
such calendar year shall be reduced to zero.
``(b) Annual Price Spike Tax.--
``(1) In general.--The amount of the annual price spike tax
shall be equal to the applicable percentage of the price
spike revenue received by the applicable entity on the sale
of the taxable prescription drug during the calendar year.
``(2) Applicable percentage.--For purposes of paragraph
(1), the applicable percentage shall be equal to--
``(A) in the case of a taxable prescription drug which has
been subject to a price spike percentage greater than the
applicable price increase allowance (as defined in section
13832(a)(6)(C) of the Stop Price Gouging Act) but less than
15 percent, 50 percent,
``(B) in the case of a taxable prescription drug which has
been subject to a price spike percentage equal to or greater
than 15 percent but less than 20 percent, 75 percent, and
``(C) in the case of a taxable prescription drug which has
been subject to a price spike percentage equal to or greater
than 20 percent, 100 percent.
``(c) Cumulative Price Spike Tax.--
``(1) In general.--The amount of the cumulative price spike
tax shall be equal to the applicable percentage of the
cumulative price spike revenue received by the applicable
entity on the sale of the taxable prescription drug during
the calendar year.
``(2) Applicable percentage.--
``(A) In general.--For purposes of paragraph (1), the
applicable percentage shall be equal to--
``(i) in the case of a taxable prescription drug which has
been subject to a cumulative price spike percentage greater
than the cumulative price increase allowance but less than
the first compounded percentage, 50 percent,
``(ii) in the case of a taxable prescription drug which has
been subject to a cumulative price spike percentage equal to
or greater than the first compounded percentage but less than
the second compounded percentage, 75 percent, and
``(iii) in the case of a taxable prescription drug which
has been subject to a cumulative price spike percentage equal
to or greater than the second compounded percentage, 100
percent.
``(B) Cumulative price spike percentage.--The cumulative
price spike percentage is the percentage (if any) by which--
``(i) the average manufacturer price of the taxable
prescription drug in commerce for the preceding calendar
year, exceeds
``(ii) the average manufacturer price of such prescription
drug in commerce for the base year.
``(C) Cumulative price increase allowance.--For purposes of
clause (i) of subparagraph (A), the cumulative price increase
allowance for any calendar year is the percentage (rounded to
the nearest one-tenth of 1 percent) by which the medical care
consumer price index detailed expenditure category for all
urban consumers (United States city average) for that year
exceeds such index for the preceding calendar year.
``(D) Compounded percentages.--For purposes of subparagraph
(A), the first compounded percentage and second compounded
percentage shall be determined in accordance with the
following table:
------------------------------------------------------------------------
First Second
``Number of years in applicable period compounded compounded
percentage percentage
------------------------------------------------------------------------
2 years....................................... 32.25 44.00
3 years....................................... 52.09 72.80
4 years....................................... 74.90 107.36
5 years....................................... 101.14 148.83.
------------------------------------------------------------------------
``(E) Applicable period and base year.--
``(i) Applicable period.--The applicable period shall be
the lesser of--
``(I) the 5 preceding calendar years,
``(II) all calendar years beginning after the date of
enactment of this section, or
``(III) all calendar years in which the taxable
prescription drug was sold in commerce.
``(ii) Base year.--The base year shall be the calendar year
immediately preceding the applicable period.
``(3) Cumulative price spike revenue.--For purposes of
paragraph (1), the cumulative price spike revenue for any
taxable prescription drug shall be an amount equal to--
``(A) an amount equal to the product of--
``(i) an amount (not less than zero) equal to--
``(I) the average manufacturer price of such prescription
drug in commerce for the preceding calendar year, minus
``(II) the average manufacturer price of such prescription
drug in commerce for the base year, and
``(ii) the total number of units of such prescription drug
which were sold in commerce in the preceding calendar year,
minus
``(B) an amount equal to the sum of the adjustment amounts,
if any, determined under section 13832(a)(7)(C) of the Stop
Price Gouging Act for each calendar year during the
applicable period.
``(d) Definitions.--For purposes of this section--
``(1) Taxable prescription drug.--The term `taxable
prescription drug' means a prescription drug (as defined in
section 13832(a)(5) of the Stop Price Gouging Act) which has
been identified by the Inspector General of the Department of
Health and Human Services, under section 13832(c)(2)(A) of
such Act, as being subject to a price spike.
``(2) Other terms.--The terms `applicable entity', `average
manufacturer price', `price spike', `price spike percentage',
and `price spike revenue' have the same meaning given such
terms under section 13832(a) of the Stop Price Gouging
Act.''.
(b) Clerical Amendments.--
(1) The heading of subchapter E of chapter 32 is amended by
striking ``Medical Devices'' and inserting ``Certain Medical
Devices and Prescription Drugs''.
(2) The table of subchapters for chapter 32 is amended by
striking the item relating to subchapter E and inserting the
following new item:
``subchapter e. certain medical devices and prescription drugs''.
(3) The table of sections for subchapter E of chapter 32 is
amended by adding at the end the following new item:
``Sec. 4192. Prescription drugs subject to price spikes.''.
(c) Effective Date.--The amendments made by this section
shall apply to sales after the date of the enactment of this
Act.
SEC. 13834. STUDY ON MONOPOLY MEDICAL PRODUCTS.
(a) In General.--The Comptroller General of the United
States shall conduct a study that examines--
(1) how drug manufacturers and health plans (including
private insurers, the Medicare program, and State Medicaid
programs) establish initial launch prices for newly approved
drugs; and
(2) alternative methods that have been proposed for setting
the price of new drugs.
(b) Study of Specific Drugs.--As part of the study
described in subsection (a), the Comptroller General shall
examine drug pricing with respect to several drugs approved
within the 5-year period immediately preceding the date of
enactment of this Act and explore potential alternative
approaches to establish new drug prices that could help make
new drugs more affordable, better reflect the clinical value
of such drugs in treating patients, and maintain incentives
for innovation.
(c) Factors.--In conducting the study described in
subsection (a), the Comptroller General shall consider--
(1) what factors drug manufacturers and health plans
consider in establishing initial launch prices;
(2) how initial pricing decisions by drug manufacturers and
health plans affect costs and use of services for patients
and public programs such as the Medicare and Medicaid
programs;
(3) efforts by health plans to limit costs, including
through benefit design or coverage limitations;
(4) how prices change in the first few years following a
new drug's launch; and
(5) recommendations manufacturers, health plans, and other
experts have for alternative approaches to establishing new
drug prices and the benefits and challenges associated with
such alternative approaches.
SEC. 13835. REVENUES COLLECTED.
There are authorized to be appropriated to the Secretary of
Health and Human Services such sums as are equal to any
increase in
[[Page S7484]]
revenue to the Treasury by reason of the provisions of this
Act or the amendments made by this Act for the purposes of
increasing amounts available to the National Institutes of
Health for research and development of drugs.
______