[House Report 116-215]
[From the U.S. Government Publishing Office]
116th Congress } { Report
HOUSE OF REPRESENTATIVES
1st Session } { 116-215
======================================================================
MORE EFFICIENT TOOLS TO REALIZE INFORMATION FOR CONSUMERS ACT
_______
September 24, 2019.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Pallone, from the Committee on Energy and Commerce, submitted the
following
R E P O R T
[To accompany H.R. 2296]
The Committee on Energy and Commerce, to whom was referred
the bill (H.R. 2296) to require reporting regarding certain
drug price increases, and for other purposes, having considered
the same, report favorably thereon with amendments and
recommend that the bill as amended do pass.
CONTENTS
Page
I. Purpose and Summary..............................................9
II. Background and Need for the Legislation.........................10
III. Committee Hearings..............................................12
IV. Committee Consideration.........................................13
V. Committee Votes.................................................13
VI. Oversight Findings..............................................13
VII. New Budget Authority, Entitlement Authority, and Tax Expenditure13
VIII.Federal Mandates Statement......................................14
IX. Statement of General Performance Goals and Objectives...........14
X. Duplication of Federal Programs.................................14
XI. Committee Cost Estimate.........................................14
XII. Earmarks, Limited Tax Benefits, and Limited Tariff Benefits.....14
XIII.Advisory Committee Statement....................................14
XIV. Applicability to Legislative Branch.............................14
XV. Section-by-Section Analysis of the Legislation..................14
XVI. Changes in Existing Law Made by the Bill, as Reported...........17
The amendments are as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``More Efficient Tools
to Realize Information for Consumers Act'' or the ``METRIC Act''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Reporting on explanation for drug price increases.
Sec. 3. Public disclosure of drug discounts.
Sec. 4. Study of pharmaceutical supply chain intermediaries and merger
activity.
Sec. 5. Requiring certain manufacturers to report drug pricing
information with respect to drugs under the Medicare program.
Sec. 6. Making prescription drug marketing sample information reported
by manufacturers available to certain individuals and entities.
Sec. 7. Requiring prescription drug plan sponsors to include real-time
benefit information as part of such sponsor's electronic prescription
program under the Medicare program.
Sec. 8. Sense of Congress regarding the need to expand commercially
available drug pricing comparison platforms.
Sec. 9. Technical corrections.
SEC. 2. REPORTING ON EXPLANATION FOR DRUG PRICE INCREASES.
(a) In General.--Title III of the Public Health Service Act (42
U.S.C. 241 et seq.) is amended by adding at the end the following:
``PART W--DRUG PRICE REPORTING; DRUG VALUE FUND
``SEC. 399OO. REPORTING ON EXPLANATION FOR DRUG PRICE INCREASES.
``(a) Definitions.--In this section:
``(1) Manufacturer.--The term `manufacturer' means the
person--
``(A) that holds the application for a drug approved
under section 505 of the Federal Food, Drug, and
Cosmetic Act or licensed under section 351 of this Act;
or
``(B) who is responsible for setting the wholesale
acquisition cost for the drug.
``(2) Qualifying drug.--The term `qualifying drug' means any
drug that is approved under subsection (c) or (j) of section
505 of the Federal Food, Drug, and Cosmetic Act or licensed
under subsection (a) or (k) of section 351 of this Act--
``(A) that has a wholesale acquisition cost of $100
or more, adjusted for inflation occurring after the
date of enactment of the More Efficient Tools to
Realize Information for Consumers Act, for a month's
supply or a typical course of treatment that lasts less
than a month, and is--
``(i) subject to section 503(b)(1) of the
Federal Food, Drug, and Cosmetic Act;
``(ii) administered or otherwise dispensed to
treat a disease or condition affecting more
than 200,000 persons in the United States; and
``(iii) not a vaccine; and
``(B) for which, during the previous calendar year,
at least 1 dollar of the total amount of sales were for
individuals enrolled under the Medicare program under
title XVIII of the Social Security Act (42 U.S.C. 1395
et seq.) or under a State Medicaid plan under title XIX
of such Act (42 U.S.C. 1396 et seq.) or under a waiver
of such plan.
``(3) Wholesale acquisition cost.--The term `wholesale
acquisition cost' has the meaning given that term in section
1847A(c)(6)(B) of the Social Security Act (42 U.S.C. 1395w-
3a(c)(6)(B)).
``(b) Report.--
``(1) Report required.--The manufacturer of a qualifying drug
shall submit a report to the Secretary for each increase in the
price of a qualifying drug that results in an increase in the
wholesale acquisition cost of that drug that is equal to--
``(A) 10 percent or more within a single calendar
year beginning on or after January 1, 2019; or
``(B) 25 percent or more within three consecutive
calendar years for which the first such calendar year
begins on or after January 1, 2019.
``(2) Report deadline.--Each report described in paragraph
(1) shall be submitted to the Secretary--
``(A) in the case of a report with respect to an
increase in the price of a qualifying drug that occurs
during the period beginning on January 1, 2019, and
ending on the day that is 60 days after the date of the
enactment of the More Efficient Tools to Realize
Information for Consumers Act, not later than 90 days
after such date of enactment; and
``(B) in the case of a report with respect to an
increase in the price of a qualifying drug that occurs
after the period described in subparagraph (A), not
later than 30 days prior to the planned effective date
of such price increase for such qualifying drug.
``(c) Contents.--A report under subsection (b), consistent with the
standard for disclosures described in section 213.3(d) of title 12,
Code of Federal Regulations (as in effect on the date of enactment of
the More Efficient Tools to Realize Information for Consumers Act),
shall, at a minimum, include--
``(1) with respect to the qualifying drug--
``(A) the percentage by which the manufacturer will
raise the wholesale acquisition cost of the drug within
the calendar year or three consecutive calendar years
as described in subsection (b)(1)(A) or (b)(1)(B), and
the effective date of such price increase;
``(B) an explanation for, and description of, each
price increase for such drug that will occur during the
calendar year period described in subsection (b)(1)(A)
or the three consecutive calendar year period described
in subsection (b)(1)(B), as applicable;
``(C) if known and different from the manufacturer of
the qualifying drug, the identity of--
``(i) the sponsor or sponsors of any
investigational new drug applications under
section 505(i) of the Federal Food, Drug, and
Cosmetic Act for clinical investigations with
respect to such drug, for which the full
reports are submitted as part of the
application--
``(I) for approval of the drug under
section 505 of such Act; or
``(II) for licensure of the drug
under section 351 of this Act; and
``(ii) the sponsor of an application for the
drug approved under such section 505 of the
Federal Food, Drug, and Cosmetic Act or
licensed under section 351 of this Act;
``(D) a description of the history of the
manufacturer's price increases for the drug since the
approval of the application for the drug under section
505 of the Federal Food, Drug, and Cosmetic Act or the
issuance of the license for the drug under section 351
of this Act, or since the manufacturer acquired such
approved application or license, if applicable;
``(E) the current wholesale acquisition cost of the
drug;
``(F) the total expenditures of the manufacturer on--
``(i) materials and manufacturing for such
drug; and
``(ii) acquiring patents and licensing for
such drug;
``(G) the percentage of total expenditures of the
manufacturer on research and development for such drug
that was derived from Federal funds;
``(H) the total expenditures of the manufacturer on
research and development for such drug that is
necessary to demonstrate that it meets applicable
statutory standards for approval under section 505 of
the Federal Food, Drug, and Cosmetic Act or licensure
under section 351 of this Act, as applicable;
``(I) the total expenditures of the manufacturer on
pursuing new or expanded indications or dosage changes
for such drug under section 505 of the Federal Food,
Drug, and Cosmetic Act or section 351 of this Act;
``(J) the total expenditures of the manufacturer on
carrying out postmarket requirements related to such
drug, including under section 505(o)(3) of the Federal
Food, Drug, and Cosmetic Act;
``(K) the total revenue and the net profit generated
from the qualifying drug for each calendar year since
the approval of the application for the drug under
section 505 of the Federal Food, Drug, and Cosmetic Act
or the issuance of the license for the drug under
section 351, or since the manufacturer acquired such
approved application or license; and
``(L) the total costs associated with marketing and
advertising for the qualifying drug;
``(2) with respect to the manufacturer--
``(A) the total revenue and the net profit of the
manufacturer for each of the 1-year period described in
subsection (b)(1)(A) or the 3-year period described in
subsection (b)(1)(B), as applicable;
``(B) all stock-based performance metrics used by the
manufacturer to determine executive compensation for
each of the 1-year period described in subsection
(b)(1)(A) or the 3-year period described in subsection
(b)(1)(B), as applicable; and
``(C) any additional information the manufacturer
chooses to provide related to drug pricing decisions,
such as total expenditures on--
``(i) drug research and development; or
``(ii) clinical trials, including on drugs
that failed to receive approval by the Food and
Drug Administration; and
``(3) such other related information as the Secretary
considers appropriate and as specified by the Secretary through
notice-and-comment rulemaking.
``(d) Information Provided.--The manufacturer of a qualifying drug
that is required to submit a report under subsection (b), shall ensure
that such report and any explanation for, and description of, each
price increase described in subsection (c)(1)(B) shall be truthful, not
misleading, and accurate.
``(e) Civil Monetary Penalty.--Any manufacturer of a qualifying drug
that fails to submit a report for the drug as required by this section,
following notification by the Secretary to the manufacturer that the
manufacturer is not in compliance with this section, shall be subject
to a civil monetary penalty of $75,000 for each day on which the
violation continues.
``(f) False Information.--Any manufacturer that submits a report for
a drug as required by this section that knowingly provides false
information in such report is subject to a civil monetary penalty in an
amount not to exceed $75,000 for each item of false information.
``(g) Public Posting.--
``(1) In general.--Subject to paragraph (3), the Secretary
shall post each report submitted under subsection (b) on the
public website of the Department of Health and Human Services
the day the price increase of a qualifying drug is scheduled to
go into effect.
``(2) Format.--In developing the format in which reports will
be publicly posted under paragraph (1), the Secretary shall
consult with stakeholders, including beneficiary groups, and
shall seek feedback from consumer advocates and readability
experts on the format and presentation of the content of such
reports to ensure that such reports are--
``(A) user-friendly to the public; and
``(B) written in plain language that consumers can
readily understand.
``(3) Protected information.--Nothing in this section shall
be construed to authorize the public disclosure of information
submitted by a manufacturer that is prohibited from disclosure
by applicable laws concerning the protection of trade secrets,
commercial information, and other information covered under
such laws.
``SEC. 399OO-1. ANNUAL REPORT TO CONGRESS.
``(a) In General.--Subject to subsection (b), the Secretary shall
submit to Congress, and post on the public website of the Department of
Health and Human Services in a way that is user-friendly to the public
and written in plain language that consumers can readily understand, an
annual report--
``(1) summarizing the information reported pursuant to
section 399OO;
``(2) including copies of the reports and supporting detailed
economic analyses submitted pursuant to such section;
``(3) detailing the costs and expenditures incurred by the
Department of Health and Human Services in carrying out section
399OO; and
``(4) explaining how the Department of Health and Human
Services is improving consumer and provider information about
drug value and drug price transparency.
``(b) Protected Information.--Nothing in this section shall be
construed to authorize the public disclosure of information submitted
by a manufacturer that is prohibited from disclosure by applicable laws
concerning the protection of trade secrets, commercial information, and
other information covered under such laws.''.
(b) Effective Date.--The amendment made by subsection (a) takes
effect on the date of enactment of this Act.
SEC. 3. PUBLIC DISCLOSURE OF DRUG DISCOUNTS.
Section 1150A of the Social Security Act (42 U.S.C. 1320b-23) is
amended--
(1) in subsection (c), in the matter preceding paragraph (1),
by inserting ``(other than as permitted under subsection (e))''
after ``disclosed by the Secretary''; and
(2) by adding at the end the following new subsection:
``(e) Public Availability of Certain Information.--
``(1) In general.--In order to allow the comparison of PBMs'
ability to negotiate rebates, discounts, direct and indirect
remuneration fees, administrative fees, and price concessions
and the amount of such rebates, discounts, direct and indirect
remuneration fees, administrative fees, and price concessions
that are passed through to plan sponsors, beginning January 1,
2020, the Secretary shall make available on the Internet
website of the Department of Health and Human Services the
information with respect to the second preceding calendar year
provided to the Secretary on generic dispensing rates (as
described in paragraph (1) of subsection (b)) and information
provided to the Secretary under paragraphs (2) and (3) of such
subsection that, as determined by the Secretary, is with
respect to each PBM.
``(2) Availability of data.--In carrying out paragraph (1),
the Secretary shall ensure the following:
``(A) Confidentiality.--The information described in
such paragraph is displayed in a manner that prevents
the disclosure of information, with respect to an
individual drug or an individual plan, on rebates,
discounts, direct and indirect remuneration fees,
administrative fees, and price concessions.
``(B) Class of drug.--The information described in
such paragraph is made available by class of drug,
using an existing classification system, but only if
the class contains such number of drugs, as specified
by the Secretary (but not fewer than three drugs), to
ensure confidentiality of proprietary information or
other information that is prevented to be disclosed
under subparagraph (A).''.
SEC. 4. STUDY OF PHARMACEUTICAL SUPPLY CHAIN INTERMEDIARIES AND MERGER
ACTIVITY.
(a) Initial Report.--Not later than 1 year after the date of
enactment of this Act, the Commission shall submit to the appropriate
committees of Congress a report that--
(1) addresses at minimum--
(A) whether pharmacy benefit managers--
(i) charge payers a higher price than the
reimbursement rate at which the pharmacy
benefit managers reimburse competing
pharmacies;
(ii) steer patients for anticompetitive
purposes to any pharmacies, including retail,
mail-order, or any other type of pharmacy, in
which the pharmacy benefit manager has an
ownership interest;
(iii) audit or review proprietary data,
including acquisition costs, patient
information, or dispensing information, of
competing pharmacies that can be used for
anticompetitive purposes; or
(iv) use formulary designs to increase the
market share of higher cost prescription drugs
and depress the market share of lower cost
prescription drugs (each net of rebates and
discounts);
(B) how companies and payers assess the benefits,
costs, and risks of contracting with intermediaries,
including pharmacy services administrative
organizations, and whether more information about the
roles of intermediaries should be available to
consumers and payers; and
(C) whether there are any specific legal or
regulatory obstacles the Commission currently faces in
ensuring a competitive and transparent marketplace in
the pharmaceutical supply chain, including the pharmacy
benefit manager marketplace and pharmacy services
administrative organizations; and
(2) provides--
(A) observations or conclusions drawn from the
November 2017 roundtable entitled ``Understanding
Competition in Prescription Drug Markets: Entry and
Supply Chain Dynamics'', and any similar efforts;
(B) specific actions the Commission intends to take
as a result of the November 2017 roundtable, and any
similar efforts, including a detailed description of
relevant forthcoming actions, additional research or
roundtable discussions, consumer education efforts, or
enforcement actions; and
(C) policy or legislative recommendations to--
(i) improve transparency and competition in
the pharmaceutical supply chain;
(ii) prevent and deter anticompetitive
behavior in the pharmaceutical supply chain;
and
(iii) best ensure that consumers benefit from
any cost savings or efficiencies that may
result from mergers and consolidations.
(b) Interim Report.--Not later than 180 days after the date of
enactment of this Act, the Commission shall submit to the appropriate
committees of Congress an interim report on the progress of the report
required by subsection (a), along with preliminary findings and
conclusions based on information collected to that date.
(c) Definitions.--In this section:
(1) Appropriate committees of congress.--The term
``appropriate committees of Congress'' means--
(A) the Committee on Energy and Commerce of the House
of Representatives;
(B) the Committee on the Judiciary of the Senate; and
(C) the Committee on the Judiciary of the House of
Representatives.
(2) Commission.--The term ``Commission'' means the Federal
Trade Commission.
SEC. 5. REQUIRING CERTAIN MANUFACTURERS TO REPORT DRUG PRICING
INFORMATION WITH RESPECT TO DRUGS UNDER THE
MEDICARE PROGRAM.
(a) In General.--Section 1847A of the Social Security Act (42 U.S.C.
1395w-3a) is amended--
(1) in subsection (b)--
(A) in paragraph (2)(A), by inserting ``or subsection
(f)(2), as applicable'' before the period at the end;
(B) in paragraph (3), in the matter preceding
subparagraph (A), by inserting ``or subsection (f)(2),
as applicable,'' before ``determined by''; and
(C) in paragraph (6)(A), in the matter preceding
clause (i), by inserting ``or subsection (f)(2), as
applicable,'' before ``determined by''; and
(2) in subsection (f)--
(A) by striking ``For requirements'' and inserting
the following:
``(1) In general.--For requirements''; and
(B) by adding at the end the following new paragraph:
``(2) Manufacturers without a rebate agreement under title
xix.--
``(A) In general.--If the manufacturer of a drug or
biological described in subparagraph (C), (E), or (G)
of section 1842(o)(1) or in section 1881(b)(14)(B) that
is payable under this part has not entered into and
does not have in effect a rebate agreement described in
subsection (b) of section 1927, for calendar quarters
beginning on or after January 1, 2020, such
manufacturer shall report to the Secretary the
information described in subsection (b)(3)(A)(iii) of
such section 1927 with respect to such drug or
biological in a time and manner specified by the
Secretary. For purposes of applying this paragraph, a
drug or biological described in the previous sentence
includes items, services, supplies, and products that
are payable under this part as a drug or biological.
``(B) Audit.--Information reported under subparagraph
(A) is subject to audit by the Inspector General of the
Department of Health and Human Services.
``(C) Verification.--The Secretary may survey
wholesalers and manufacturers that directly distribute
drugs described in subparagraph (A), when necessary, to
verify manufacturer prices and manufacturer's average
sales prices (including wholesale acquisition cost) if
required to make payment reported under subparagraph
(A). The Secretary may impose a civil monetary penalty
in an amount not to exceed $100,000 on a wholesaler,
manufacturer, or direct seller, if the wholesaler,
manufacturer, or direct seller of such a drug refuses a
request for information about charges or prices by the
Secretary in connection with a survey under this
subparagraph or knowingly provides false information.
The provisions of section 1128A (other than subsections
(a) (with respect to amounts of penalties or additional
assessments) and (b)) shall apply to a civil money
penalty under this subparagraph in the same manner as
such provisions apply to a penalty or proceeding under
section 1128A(a).
``(D) Confidentiality.--Notwithstanding any other
provision of law, information disclosed by
manufacturers or wholesalers under this paragraph
(other than the wholesale acquisition cost for purposes
of carrying out this section) is confidential and shall
not be disclosed by the Secretary in a form which
discloses the identity of a specific manufacturer or
wholesaler or prices charged for drugs by such
manufacturer or wholesaler, except--
``(i) as the Secretary determines to be
necessary to carry out this section (including
the determination and implementation of the
payment amount), or to carry out section 1847B;
``(ii) to permit the Comptroller General of
the United States to review the information
provided; and
``(iii) to permit the Director of the
Congressional Budget Office to review the
information provided.''.
(b) Enforcement.--Section 1847A of such Act (42 U.S.C. 1395w-3a) is
further amended--
(1) in subsection (d)(4)--
(A) in subparagraph (A), by striking ``In general''
and inserting ``Misrepresentation'';
(B) in subparagraph (B), by striking ``subparagraph
(B)'' and inserting ``subparagraph (A), (B), or (C)'';
(C) by redesignating subparagraph (B) as subparagraph
(D); and
(D) by inserting after subparagraph (A) the following
new subparagraphs:
``(B) Failure to provide timely information.--If the
Secretary determines that a manufacturer described in
subsection (f)(2) has failed to report on information
described in section 1927(b)(3)(A)(iii) with respect to
a drug or biological in accordance with such
subsection, the Secretary shall apply a civil money
penalty in an amount of $10,000 for each day the
manufacturer has failed to report such information and
such amount shall be paid to the Treasury.
``(C) False information.--Any manufacturer required
to submit information under subsection (f)(2) that
knowingly provides false information is subject to a
civil money penalty in an amount not to exceed $100,000
for each item of false information. Such civil money
penalties are in addition to other penalties as may be
prescribed by law.''; and
(2) in subsection (c)(6)(A), by striking the period at the
end and inserting ``, except that, for purposes of subsection
(f)(2), the Secretary may, if the Secretary determines
appropriate, exclude repackagers of a drug or biological from
such term.''.
(c) Manufacturers With a Rebate Agreement.--
(1) In general.--Section 1927(b)(3)(A) of the Social Security
Act (42 U.S.C. 1396r-8(b)(3)(A)) is amended by adding at the
end the following new sentence: ``For purposes of applying
clause (iii), a drug or biological described in the flush
matter following such clause includes items, services,
supplies, and products that are payable under this part as a
drug or biological.''.
(2) Technical amendment.--Section 1927(b)(3)(A)(iii) of the
Social Security Act (42 U.S.C. 1396r-8(b)(3)(A)(iii)) is
amended by striking ``section 1881(b)(13)(A)(ii)'' and
inserting ``section 1881(b)(14)(B)''.
(d) Report.--Not later than January 1, 2021, the Inspector General of
the Department of Health and Human Services shall assess and submit to
Congress a report on the accuracy of average sales price information
submitted by manufacturers under section 1847A of the Social Security
Act (42 U.S.C. 1395w-3a). Such report shall include any recommendations
on how to improve the accuracy of such information.
SEC. 6. MAKING PRESCRIPTION DRUG MARKETING SAMPLE INFORMATION REPORTED
BY MANUFACTURERS AVAILABLE TO CERTAIN INDIVIDUALS
AND ENTITIES.
(a) In General.--Section 1128H of the Social Security Act (42 U.S.C.
1320a-7i) is amended--
(1) by redesignating subsection (b) as subsection (e); and
(2) by inserting after subsection (a) the following new
subsections:
``(b) Data Sharing Agreements.--
``(1) In general.--The Secretary shall enter into agreements
with the specified data sharing individuals and entities
described in paragraph (2) under which--
``(A) upon request of such an individual or entity,
as applicable, the Secretary makes available to such
individual or entity the information submitted under
subsection (a) by manufacturers and authorized
distributors of record; and
``(B) such individual or entity agrees to not
disclose publicly or to another individual or entity
any information that identifies a particular
practitioner or health care facility.
``(2) Specified data sharing individuals and entities.--For
purposes of paragraph (1), the specified data sharing
individuals and entities described in this paragraph are the
following:
``(A) Oversight agencies.--Health oversight agencies
(as defined in section 164.501 of title 45, Code of
Federal Regulations), including the Centers for
Medicare & Medicaid Services, the Office of the
Inspector General of the Department of Health and Human
Services, the Government Accountability Office, the
Congressional Budget Office, the Medicare Payment
Advisory Commission, and the Medicaid and CHIP Payment
and Access Commission.
``(B) Researchers.--Individuals who conduct
scientific research (as defined in section 164.501 of
title 45, Code of Federal Regulations) in relevant
areas as determined by the Secretary.
``(C) Payers.--Private and public health care payers,
including group health plans, health insurance coverage
offered by health insurance issuers, Federal health
programs, and State health programs.
``(3) Exemption from freedom of information act.--Except as
described in paragraph (1), the Secretary may not be compelled
to disclose the information submitted under subsection (a) to
any individual or entity. For purposes of section 552 of title
5, United States Code (commonly referred to as the Freedom of
Information Act), this paragraph shall be considered a statute
described in subsection (b)(3)(B) of such section.
``(c) Penalties.--
``(1) Data sharing agreements.--Subject to paragraph (3), any
specified data sharing individual or entity described in
subsection (b)(2) that violates the terms of a data sharing
agreement the individual or entity has with the Secretary under
subsection (b)(1) shall be subject to a civil money penalty of
not less than $1,000, but not more than $10,000, for each such
violation. Such penalty shall be imposed and collected in the
same manner as civil money penalties under subsection (a) of
section 1128A are imposed and collected under that section.
``(2) Failure to report.--Subject to paragraph (3), any
manufacturer or authorized distributor of record of an
applicable drug under subsection (a) that fails to submit
information required under such subsection in a timely manner
in accordance with rules or regulations promulgated to carry
out such subsection shall be subject to a civil money penalty
of not less than $1,000, but not more than $10,000, for each
such failure. Such penalty shall be imposed and collected in
the same manner as civil money penalties under subsection (a)
of section 1128A are imposed and collected under that section.
``(3) Limitation.--The total amount of civil money penalties
imposed under paragraph (1) or (2) with respect to a year and
an individual or entity described in subparagraph (A) or a
manufacturer or distributor described in subparagraph (B),
respectively, shall not exceed $150,000.
``(d) Drug Sample Distribution Information.--
``(1) In general.--Not later than January 1 of each year
(beginning with 2021), the Secretary shall maintain a list
containing information related to the distribution of samples
of applicable drugs. Such list shall provide the following
information with respect to the preceding year:
``(A) The name of the manufacturer or authorized
distributor of record of an applicable drug for which
samples were requested or distributed under this
section.
``(B) The quantity and class of drug samples
requested.
``(C) The quantity and class of drug samples
distributed.
``(2) Public availability.--The Secretary shall make the
information in such list available to the public on the
Internet Web site of the Food and Drug Administration.''.
(b) FDA Maintenance of Information.--The Food and Drug Administration
shall maintain information available to affected reporting companies to
ensure their ability to fully comply with the requirements of section
1128H of the Social Security Act.
(c) Prohibition on Distribution of Samples of Opioids.--Section
503(d) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 353(d))
is amended--
(1) by moving the margin of paragraph (4) 2 ems to the left;
and
(2) by adding at the end the following:
``(5) No person may distribute a drug sample of a drug that is--
``(A) an applicable drug (as defined in section 1128H(d) of
the Social Security Act);
``(B) a controlled substance (as defined in section 102 of
the Controlled Substances Act) for which the findings required
under section 202(b)(2) of such Act have been made; and
``(C) approved under section 505 for use in the management or
treatment of pain (other than for the management or treatment
of a substance use disorder).''.
(d) MedPAC Report.--Not later than 3 years after the date of the
enactment of this Act, the Medicare Payment Advisory Commission shall
conduct a study on the impact of drug samples on provider prescribing
practices and health care costs and may, as the Commission deems
appropriate, make recommendations on such study.
SEC. 7. REQUIRING PRESCRIPTION DRUG PLAN SPONSORS TO INCLUDE REAL-TIME
BENEFIT INFORMATION AS PART OF SUCH SPONSOR'S
ELECTRONIC PRESCRIPTION PROGRAM UNDER THE MEDICARE
PROGRAM.
Section 1860D-4(e)(2) of the Social Security Act (42 U.S.C. 1395w-
104(e)(2)) is amended--
(1) in subparagraph (D), by striking ``To the extent'' and
inserting ``Except as provided in subparagraph (F), to the
extent''; and
(2) by adding at the end the following new subparagraph:
``(F) Real-time benefit information.--
``(i) In general.--Not later than January 1,
2021, the program shall implement real-time
benefit tools that are capable of integrating
with a prescribing health care professional's
electronic prescribing or electronic health
record system for the transmission of formulary
and benefit information in real time to
prescribing health care professionals. With
respect to a covered part D drug, such tools
shall be capable of transmitting such
information specific to an individual enrolled
in a prescription drug plan. Such information
shall include the following:
``(I) A list of any clinically-
appropriate alternatives to such drug
included in the formulary of such plan.
``(II) Cost-sharing information for
such drug and such alternatives,
including a description of any variance
in cost sharing based on the pharmacy
dispensing such drug or such
alternatives.
``(III) Information relating to
whether such drug is included in the
formulary of such plan and any prior
authorization or other utilization
management requirements applicable to
such drug and such alternatives so
included.
``(ii) Electronic transmission.--The
provisions of subclauses (I) and (II) of clause
(ii) of subparagraph (E) shall apply to an
electronic transmission described in clause (i)
in the same manner as such provisions apply
with respect to an electronic transmission
described in clause (i) of such subparagraph.
``(iii) Special rule for 2021.--The program
shall be deemed to be in compliance with clause
(i) for 2021 if the program complies with the
provisions of section 423.160(b)(7) of title
42, Code of Federal Regulations (or a successor
regulation), for such year.
``(iv) Rule of construction.--Nothing in this
subparagraph shall be construed as to allow a
real time benefits tool to steer an individual,
without the consent of the individual, to a
particular pharmacy or pharmacy setting over
their preferred pharmacy setting nor prohibit
the designation of a preferred pharmacy under
such tool.''.
SEC. 8. SENSE OF CONGRESS REGARDING THE NEED TO EXPAND COMMERCIALLY
AVAILABLE DRUG PRICING COMPARISON PLATFORMS.
It is the sense of Congress that--
(1) commercially available drug pricing comparison platforms
can, at no cost, help patients find the lowest price for their
medications at their local pharmacy;
(2) such platforms should be integrated, to the maximum
extent possible, in the health care delivery ecosystem; and
(3) pharmacy benefit managers should work to disclose generic
and brand name drug prices to such platforms to ensure that--
(A) patients can benefit from the lowest possible
price available to them; and
(B) overall drug prices can be reduced as more
educated purchasing decisions are made based on price
transparency.
SEC. 9. TECHNICAL CORRECTIONS.
(a) In General.--Section 3022(b) of the Public Health Service Act (42
U.S.C. 300jj-52(b)) is amended by adding at the end the following new
paragraph:
``(4) Application of authorities under inspector general act
of 1978.--In carrying out this subsection, the Inspector
General shall have the same authorities as provided under
section 6 of the Inspector General Act of 1978 (5 U.S.C.
App.).''.
(b) Effective Date.--The amendment made by subsection (a) shall take
effect as if included in the enactment of the 21st Century Cures Act
(Public Law 114-255).
Amend the title so as to read:
A bill to require reporting for certain drug price
information, and for other purposes.
I. Purpose and Summary
H.R. 2296, the ``More Efficient Tools to Realize
Information for Consumers Act'' or the ``METRIC Act'', was
introduced in the House on April 12, 2019, by Reps. Jan
Schakowsky (D-IL) and Francis Rooney (R-FL), originally with
the short title of the ``FAIR Drug Pricing Act of 2019''. The
bill was referred to the Committee on Energy and Commerce. H.R.
2296 increases consumer transparency of the prescription drug
supply chain by requiring qualifying pharmaceutical
manufacturers to report specific information to the Department
of Health and Human Services (HHS) prior to certain drug price
increases. The legislation also makes public more information
concerning rebates, discounts, and other price concessions that
are negotiated by pharmacy benefit managers. Additionally, H.R.
2296 requires all pharmaceutical manufacturers to report
average sales price (ASP) data to HHS and requires prescription
drug plan sponsors to include real-time benefit information for
electronic prescribing. The legislation also ensures greater
transparency of pharmaceutical supply chain intermediaries and
merger activity, as well as information on drug samples that
are distributed by pharmaceutical manufacturers to providers or
healthcare facilities.
Ultimately, H.R. 2296 increases the information available
to consumers to better understand how prescription drugs are
developed, distributed, priced, and covered throughout the
pharmaceutical drug supply chain.
II. Background and Need for Legislation
Retail prescription drug spending in the United States,
adjusted for inflation, increased on a per capita basis from
$90 in 1960 to $1,025 in 2017.\1\ In the Medicare program,
prescription drugs covered under Medicare Part B and Part D
account for nearly 20 percent ($129 billion) of total Medicare
spending, with the majority of that spending occurring in Part
D (13 percent).\2\ In 2010, 33,000 Part D enrollees filled a
prescription for which a single claim would have been
sufficient to meet the Part D out-of-pocket threshold. By 2016,
however, that number had jumped to 360,000.\3\ The Medicare
Payment Advisory Commission (MedPAC) recently found that nearly
all growth in spending among high-cost Part D enrollees between
2007 and 2017 was due to increases in the average price per
prescription filled.\4\
---------------------------------------------------------------------------
\1\ Kamal, Rabah, et al, Kaiser Family Foundation, What are the
recent and forecasted trends in prescription drug spending? (2017)
(www.healthsystemtracker.org/chart-collection/recentforecasted-trends-
prescription-drug-spending/#item-start).
\2\MedPAC, The Medicare prescription drug program (Part D): Status
Report (March 2019) (medpac.gov/docs/default-source/reports/
mar19_medpac_ch14_sec.pdf?sfvrsn=0).
\3\Id.
\4\Id.
---------------------------------------------------------------------------
A recent analysis has found that prescription drug cost
increases are primarily attributable to price increases for
drugs already on the market.\5\ The cost of brand name
prescription drugs rose more than nine percent a year from 2008
to 2016, and the cost of injectable drugs rose more than 15
percent annually over that same period.\6\ Independent experts
have suggested that greater transparency across the drug supply
chain may provide insight into why drug prices are continuing
to grow and help address the price increases that are leading
to higher out-of-pocket costs for consumers.\7\
---------------------------------------------------------------------------
\5\Inmaculada Hernandez, et al. The Contribution of New Product
Entry Versus Existing Product Inflation in the Rising Costs of Drugs,
Health Affairs (Jan. 2019) (www.healthaffairs.org/doi/abs/10.1377/
hlthaff.2018.05147).
\6\ Id.
\7\National Academies of Sciences, Engineering, and Medicine,
Making Medicines Affordable: A National Imperative, (Nov. 2017)
(www.nationalacademies.org/hmd/Reports/2017/making-medicines-
affordable-a-nationalimperative.aspx).
---------------------------------------------------------------------------
To that end, H.R. 2296 contains a number of provisions
aimed at providing greater transparency and insight into the
drug supply chain and how entities in the supply chain affect
the price of prescription drugs. Similar to various efforts to
increase drug pricing transparency at the state level\8\,
section 2 of the METRIC Act includes Federal reporting
requirements for manufacturers of qualifying drugs that
increase in price by 10 percent or more within a single
calendar year, or 25 percent or more within three consecutive
calendar years, based on changes in wholesale acquisition cost
(WAC). The manufacturers of a qualifying drug that exceeds such
price thresholds are required to submit a report that includes
specific documentation to the Secretary of HHS prior to the
price increase of the qualifying drug.
---------------------------------------------------------------------------
\8\See Recent Approaches and Innovations in State Prescription Drug
Laws, National Conference of State Legislatures, (May 2019)
(www.ncsl.org/research/health/rx-costs.aspx).
---------------------------------------------------------------------------
In addition to section 2, section 3 of H.R. 2296 requires
HHS to make publicly available the aggregated number of
rebates, discounts, or price concessions that pharmacy benefit
managers (PBMs) negotiate in order to allow the comparison of
these fees across PBMs for consumers. Section 4 of H.R. 2296
requires the Federal Trade Commission (FTC) to issue a report
that addresses PBM market practices and whether there are legal
or regulatory obstacles to ensuring a competitive marketplace
in the pharmaceutical supply chain.
Section 5 of the legislation provides for greater
transparency regarding the prices of drugs in the Medicare Part
B program by requiring all manufacturers of drugs covered under
Medicare Part B to report ASP data to the Centers for Medicare
and Medicaid Services (CMS). ASP is defined as a manufacturer's
quarterly sales of a drug to all U.S. purchasers, divided by
the drug's total units sold for the same quarter. Current law
requires only manufacturers with Medicaid drug rebate
agreements to report ASP data to CMS. Drugs that lack ASP data
may use a payment methodology that results in higher
reimbursement (such as the wholesale acquisition cost or
average wholesale price). In its June 2017 report to Congress,
MedPAC recommended that all manufacturers be required to report
ASP data to help ensure the Medicare program is not overpaying
for drugs as a result of the lack of ASP data.
Additionally, section 6 of H.R. 2296 increases drug sample
transparency by allowing the Secretary to share through data
use agreements the information on drug samples currently
reported to the Food and Drug Administration (FDA) by drug
manufacturers with researchers, insurers, and oversight
agencies for the purposes of research. Section 6004 of the
Affordable Care Act (ACA) required drug manufacturers and
distributors to report to FDA information on product samples
requested and distributed, including information on the
physicians receiving such samples. In 2017, MedPAC recommended
that Congress ``authorize and require the Secretary to make
this information available to researchers, payers, and plans
that sign confidentiality and data use agreements'' to bring
greater transparency to the potential effects of samples on
provider prescribing practices.\9\
---------------------------------------------------------------------------
\9\MedPAC, Report to the Congress: Medicare and the Health Care
Delivery System, Chapter 6 (June 2017) (www.medpac.gov/docs/default-
source/reports/jun17_ch6.pdf?sfvrsn=0).
---------------------------------------------------------------------------
Section 7 of H.R. 2296 ensures consumers have the
information they need at the point of prescribing on cost-
sharing requirements for a given drug and drug alternatives, as
well as real-time information on prior authorization and other
utilization management requirements. This will enable consumers
to know their out-of-pocket expenditures and other information
before reaching the pharmacy counter. Section 8 of the
legislation provides a sense of Congress that more price
information should be made available to patients to inform drug
purchasing decisions.
Finally, section 9 of the legislation includes a provision
to help improve interoperability and ensure that individuals
are able to easily access their health records. It makes
technical corrections to ensure that the HHS Office of the
Inspector General has the authority necessary to enforce the
information blocking provisions enacted under section 4004 of
the 21st Century Cures Act.
III. Committee Hearings
For the purposes of section 103(i) of H. Res. 6 of the
116th Congress--the following hearings were used to develop or
consider H.R. 2296:
The Subcommittee on Health held a hearing on April 30,
2019, entitled ``Prescription Drug Coverage in the Medicare
Program.'' The Subcommittee received testimony from the
following witness:
James E. Mathews, Ph.D., Executive Director,
Medicare Payment Advisory Commission.
The Subcommittee on Health held a related hearing
on May 9, 2019, entitled ``Lowering Prescription Drug Prices:
Deconstructing the Drug Supply Chain.'' The Subcommittee
received testimony from the following witnesses:
Justin McCarthy, Senior Vice President, Patient &
Health Impact Group, Pfizer;
Kave Niksefat, Vice President, Value and Access,
Amgen;
Jeffrey Hessekiel, Executive Vice President &
General Counsel, Exelixis;
Amy Bricker, Senior Vice President, Supply Chain,
Express Scripts;
Brent Eberle, Chief Pharmacy Officer, Navitus
Health Solutions;
Estay Greene, Vice President of Pharmacy Services,
Blue Cross Blue Shield of North Carolina;
Lynn Eschenbacher, Chief Pharmacy Officer,
Ascension;
Jack Resneck, M.D., Chair, Board of Trustees,
American Medical Association;
Richard Ashworth, President of Pharmacy,
Walgreens; and
Leigh Purvis, Director of Health Services
Research, AARP.
The Subcommittee on Health held a hearing on May 21, 2019,
entitled ``Improving Drug Pricing Transparency and Lowering
Prices for American Consumers.'' The Subcommittee received
testimony from the following witnesses:
Lisa Joldersma, Senior Vice President, Insurance
and State Issues, Pharmaceutical Research and Manufacturers of
America;
Kristin Bass, Chief Policy and External Affairs
Officer, Pharmaceutical Care Management Association;
Madelaine Feldman, President, Coalition of State
Rheumatology Organizations, Alliance of Specialty Medicine;
Frederick Isasi, Executive Director, Families USA;
Mark Miller, Executive Vice President of Health
Care, Arnold Ventures; and
Douglas Holtz-Eakin, President, American Action
Forum.
IV. Committee Consideration
H.R. 2296, the ``More Efficient Tools to Realize
Information for Consumers Act'' or the ``METRIC Act'', was
introduced in the House on April 12, 2019, by Reps. Schakowsky
(D-IL) and Rooney (R-FL), originally with the short title of
the ``FAIR Drug Pricing Act of 2019''. The bill was referred to
the Committee on Energy and Commerce. Subsequently, H.R. 2296
was referred to the Subcommittee on Health on April 15, 2019.
Following a series of hearings, on July 11, 2019, the
Subcommittee met in open markup session, pursuant to notice,
for consideration of the bill H.R. 2296. An amendment in the
nature of a substitute offered by Mr. Carter of Georgia, # 1,
was agreed to by a voice vote. Subsequently, the Subcommittee
on Health agreed to a motion by Ms. Eshoo, Chairwoman of the
Subcommittee, that H.R. 2296 be forwarded favorably to the full
Committee on Energy and Commerce, amended, by a voice vote.
On July 17, 2019, the full Committee met in open markup
session, pursuant to notice, to consider the bill H.R. 2296 as
amended by the Subcommittee on Health on July 11, 2019
(Committee Print of H.R. 2296). During consideration of the
bill, an amendment was offered by Ms. Schakowsky, # 1, and was
agreed to by a voice vote. Subsequently, the full Committee on
Energy and Commerce agreed to a motion offered by Mr. Pallone,
Chairman of the Committee, that H.R. 2296 be ordered reported
favorably to the House, amended, by a voice vote, a quorum
being present.
V. Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list each record vote
on the motion to report legislation and amendments thereto. The
Committee advises that there were no record votes taken on
final passage of H.R. 2296 or any amendments to the bill.
VI. Oversight Findings
Pursuant to clause 3(c)(1) of rule XIII and clause 2(b)(1)
of rule X of the Rules of the House of Representatives, the
oversight findings and recommendations of the Committee are
reflected in the descriptive portion of the report.
VII. New Budget Authority, Entitlement Authority, and Tax Expenditures
Pursuant to 3(c)(2) of rule XIII of the Rules of the House
of Representatives, the Committee adopts as its own the
estimate of new budget authority, entitlement authority, or tax
expenditures or revenues contained in the cost estimate
prepared by the Director of the Congressional Budget Office
pursuant to section 402 of the Congressional Budget Act of
1974.
The Committee has requested but not received from the
Director of the Congressional Budget Office a statement as to
whether this bill contains any new budget authority, credit
authority, or an increase or decrease in revenues or tax
expenditures.
VIII. Federal Mandates Statement
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act.
IX. Statement of General Performance Goals and Objectives
Pursuant to clause 3(c)(4) of rule XIII, the general
performance goal or objective of this legislation is to
increase transparency and the availability of information
provided to consumers concerning certain drug price increases,
rebates, costs, and other drug price information.
X. Duplication of Federal Programs
Pursuant to clause 3(c)(5) of rule XIII, no provision of
H.R. 2296 is known to be duplicative of another Federal
program, including any program that was included in a report to
Congress pursuant to section 21 of Public Law 111-139 or the
most recent Catalog of Federal Domestic Assistance.
XI. Committee Cost Estimate
Pursuant to clause 3(d)(1) of rule XIII, the Committee
adopts as its own the cost estimate prepared by the Director of
the Congressional Budget Office pursuant to section 402 of the
Congressional Budget Act of 1974.
XII. Earmarks, Limited Tax Benefits, and Limited Tariff Benefits
Pursuant to clause 9(e), 9(f), and 9(g) of rule XXI, the
Committee finds that H.R. 2296 contains no earmarks, limited
tax benefits, or limited tariff benefits.
XIII. Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
XIV. Applicability to Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
XV. Section-by-Section Analysis of the Legislation
Section 1. Short title; table of contents
Section 1 designates that the short title may be cited as
the ``More Efficient Tools to Realize Information for Consumers
Act'' or the ``METRIC Act''.
Sec. 2. Reporting on explanation for drug price increases
Section 2 requires the manufacturer of a qualifying drug to
submit an explanation and specific documentation to the
Secretary of HHS in the event of a price increase in the
wholesale acquisition cost that is equal to 10 percent or more
within a single calendar year beginning on or after January 1,
2019, or 25 percent or more within three consecutive calendars
years for which the first such calendar year begins on or after
January 1, 2019. With respect to the qualifying drug, the
manufacturer must include in the report an explanation for the
price increase, a description of the price increase that will
occur during the calendar year or years implicated, and a
description of the history of the manufacturer's price
increases for the qualifying drug since its approval, in
addition to other requirements. The manufacturer of a
qualifying drug is also required to provide documentation on
the total expenditures on research and development for the
qualifying drug in order to have gained approval or licensure
by the FDA, pursue new or expanded indications or dosage
changes, and carry out post-market requirements. Additionally,
the manufacturer of a qualifying drug is required to provide to
the Secretary the total revenue and net profit generated from
the qualifying drug for each calendar year since its approval
or licensure by the FDA, as well as the total costs associated
with the marketing and advertising for the qualifying drug.
Finally, the manufacturer of the qualifying drug is required to
provide to the Secretary the total revenue and net profit
overall for the manufacturer for calendar year or years
implicated as well as all stock-based performance metrics
utilized to determine executive compensation for the calendar
year or years implicated and any additional information the
manufacturer chooses to provide related to drug pricing
decisions. The Secretary of HHS may also specify additional
information to be disclosed by rulemaking.
The manufacturer of a qualifying drug that is required to
submit a report shall ensure that all documentation provided to
the Secretary is truthful, not misleading, and accurate. Should
a manufacturer of a qualifying drug fail to comply or knowingly
provide false information, the manufacturer shall be subject to
a civil monetary penalty of $75,000 for each day the violation
continues or for each item of false information.
Following the disclosure of the report by a manufacturer of
a qualifying drug to the Secretary, the Secretary shall post
each report submitted in full on the public website of HHS the
day the price increase is scheduled to go into effect. The
Secretary shall not disclose information that would be
prohibited from disclosure under current law.
The Secretary shall submit an annual report to Congress
summarizing the information submitted pursuant to the bill, as
well as how HHS is improving consumer and provider information
about drug value and drug price transparency.
Sec. 3. Public disclosure of drug discounts
Section 3 requires the Secretary to make publicly available
on the HHS website information on aggregate rebates, discounts,
and other price concessions negotiated by PBMs, as well as the
price concessions that are passed through to plan sponsors
beginning January 1, 2020.
Sec. 4. Study of pharmaceutical supply chain intermediaries and merger
activity
Section 4 requires the FTC not later than 1 year after the
date of enactment to submit a report to the appropriate
committees of Congress on pharmaceutical supply chain
intermediaries and merger activity, including whether PBMs
charge payers a higher price than the reimbursement rate at
which the PBM reimburses competing pharmacies, as well as other
actions. The report is required to also include policy or
legislative recommendations to improve transparency and
competition in the pharmaceutical supply chain.
Sec. 5. Requiring certain manufacturers to report drug pricing
information with respect to drugs under the Medicare program
Section 5 requires all manufacturers to report ASP data to
CMS for all drugs covered under Medicare Part B, authorizes
civil money penalties against manufacturers who fail to report
the data or report false data, and improves oversight related
to the accuracy of the ASP data reported.
Sec. 6. Making prescription drug marketing sample information reported
by manufacturers available to certain individuals and entities
Section 6 allows the Secretary to share through data use
agreements the information on drug samples currently reported
to the FDA by drug manufacturers (under section 1128H of the
Social Security Act) with researchers, payers, and oversight
agencies for the purposes of research. The findings of any such
research on drug samples may be made publicly available so long
as the individual or entity does not disclose information
identifying individual providers or health care facilities. It
also requires the FDA to publicly post on its website each year
a list that contains the following information: (1) The name of
the manufacturer or authorized distributor of record of an
applicable drug for which samples were requested or
distributed; (2) The quantity and class of drug samples
requested; and (3) The quantity and class of drug samples
distributed. This section would also prohibit the distribution
of opioid samples, excluding those opioid samples used for the
purposes of medication assisted treatment (MAT) for a substance
use disorder.
Sec. 7. Requiring prescription drug plan sponsors to include real-time
benefit information as part of such sponsor's electronic
prescription program under the Medicare program
Section 7 requires Medicare Part D drug plan sponsors to
provide formulary and benefit information to beneficiaries at
the point of prescribing in order for beneficiaries and
prescribers to know: a description of clinically appropriate
alternatives to a prescribed drug included in the formulary;
information on cost-sharing requirements for a given drug and
alternatives; and information on prior authorization or other
utilization management requirements for a given drug and
alternatives within the formulary.
Sec. 8. Sense of Congress regarding the need to expand commercially
available drug pricing comparison platforms
Section 8 expresses the sense of Congress that more price
information should be made available to patients to inform drug
purchasing decisions.
Sec. 9. Technical corrections
Section 9 makes technical corrections to ensure that the
HHS Office of the Inspector General has the authority necessary
to enforce the information blocking provisions enacted under
section 4004 of the 21st Century Cures Act.
XVI. Changes in Existing Law Made by the Bill, as Reported
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, and existing law in which no
change is proposed is shown in roman):
PUBLIC HEALTH SERVICE ACT
* * * * * * *
TITLE III--GENERAL POWERS AND DUTIES OF PUBLIC HEALTH SERVICE
* * * * * * *
PART W--DRUG PRICE REPORTING; DRUG VALUE FUND
SEC. 399OO. REPORTING ON EXPLANATION FOR DRUG PRICE INCREASES.
(a) Definitions.--In this section:
(1) Manufacturer.--The term ``manufacturer'' means
the person--
(A) that holds the application for a drug
approved under section 505 of the Federal Food,
Drug, and Cosmetic Act or licensed under
section 351 of this Act; or
(B) who is responsible for setting the
wholesale acquisition cost for the drug.
(2) Qualifying drug.--The term ``qualifying drug''
means any drug that is approved under subsection (c) or
(j) of section 505 of the Federal Food, Drug, and
Cosmetic Act or licensed under subsection (a) or (k) of
section 351 of this Act--
(A) that has a wholesale acquisition cost of
$100 or more, adjusted for inflation occurring
after the date of enactment of the More
Efficient Tools to Realize Information for
Consumers Act, for a month's supply or a
typical course of treatment that lasts less
than a month, and is--
(i) subject to section 503(b)(1) of
the Federal Food, Drug, and Cosmetic
Act;
(ii) administered or otherwise
dispensed to treat a disease or
condition affecting more than 200,000
persons in the United States; and
(iii) not a vaccine; and
(B) for which, during the previous calendar
year, at least 1 dollar of the total amount of
sales were for individuals enrolled under the
Medicare program under title XVIII of the
Social Security Act (42 U.S.C. 1395 et seq.) or
under a State Medicaid plan under title XIX of
such Act (42 U.S.C. 1396 et seq.) or under a
waiver of such plan.
(3) Wholesale acquisition cost.--The term ``wholesale
acquisition cost'' has the meaning given that term in
section 1847A(c)(6)(B) of the Social Security Act (42
U.S.C. 1395w-3a(c)(6)(B)).
(b) Report.--
(1) Report required.--The manufacturer of a
qualifying drug shall submit a report to the Secretary
for each increase in the price of a qualifying drug
that results in an increase in the wholesale
acquisition cost of that drug that is equal to--
(A) 10 percent or more within a single
calendar year beginning on or after January 1,
2019; or
(B) 25 percent or more within three
consecutive calendar years for which the first
such calendar year begins on or after January
1, 2019.
(2) Report deadline.--Each report described in
paragraph (1) shall be submitted to the Secretary--
(A) in the case of a report with respect to
an increase in the price of a qualifying drug
that occurs during the period beginning on
January 1, 2019, and ending on the day that is
60 days after the date of the enactment of the
More Efficient Tools to Realize Information for
Consumers Act, not later than 90 days after
such date of enactment; and
(B) in the case of a report with respect to
an increase in the price of a qualifying drug
that occurs after the period described in
subparagraph (A), not later than 30 days prior
to the planned effective date of such price
increase for such qualifying drug.
(c) Contents.--A report under subsection (b), consistent with
the standard for disclosures described in section 213.3(d) of
title 12, Code of Federal Regulations (as in effect on the date
of enactment of the More Efficient Tools to Realize Information
for Consumers Act), shall, at a minimum, include--
(1) with respect to the qualifying drug--
(A) the percentage by which the manufacturer
will raise the wholesale acquisition cost of
the drug within the calendar year or three
consecutive calendar years as described in
subsection (b)(1)(A) or (b)(1)(B), and the
effective date of such price increase;
(B) an explanation for, and description of,
each price increase for such drug that will
occur during the calendar year period described
in subsection (b)(1)(A) or the three
consecutive calendar year period described in
subsection (b)(1)(B), as applicable;
(C) if known and different from the
manufacturer of the qualifying drug, the
identity of--
(i) the sponsor or sponsors of any
investigational new drug applications
under section 505(i) of the Federal
Food, Drug, and Cosmetic Act for
clinical investigations with respect to
such drug, for which the full reports
are submitted as part of the
application--
(I) for approval of the drug
under section 505 of such Act;
or
(II) for licensure of the
drug under section 351 of this
Act; and
(ii) the sponsor of an application
for the drug approved under such
section 505 of the Federal Food, Drug,
and Cosmetic Act or licensed under
section 351 of this Act;
(D) a description of the history of the
manufacturer's price increases for the drug
since the approval of the application for the
drug under section 505 of the Federal Food,
Drug, and Cosmetic Act or the issuance of the
license for the drug under section 351 of this
Act, or since the manufacturer acquired such
approved application or license, if applicable;
(E) the current wholesale acquisition cost of
the drug;
(F) the total expenditures of the
manufacturer on--
(i) materials and manufacturing for
such drug; and
(ii) acquiring patents and licensing
for such drug;
(G) the percentage of total expenditures of
the manufacturer on research and development
for such drug that was derived from Federal
funds;
(H) the total expenditures of the
manufacturer on research and development for
such drug that is necessary to demonstrate that
it meets applicable statutory standards for
approval under section 505 of the Federal Food,
Drug, and Cosmetic Act or licensure under
section 351 of this Act, as applicable;
(I) the total expenditures of the
manufacturer on pursuing new or expanded
indications or dosage changes for such drug
under section 505 of the Federal Food, Drug,
and Cosmetic Act or section 351 of this Act;
(J) the total expenditures of the
manufacturer on carrying out postmarket
requirements related to such drug, including
under section 505(o)(3) of the Federal Food,
Drug, and Cosmetic Act;
(K) the total revenue and the net profit
generated from the qualifying drug for each
calendar year since the approval of the
application for the drug under section 505 of
the Federal Food, Drug, and Cosmetic Act or the
issuance of the license for the drug under
section 351, or since the manufacturer acquired
such approved application or license; and
(L) the total costs associated with marketing
and advertising for the qualifying drug;
(2) with respect to the manufacturer--
(A) the total revenue and the net profit of
the manufacturer for each of the 1-year period
described in subsection (b)(1)(A) or the 3-year
period described in subsection (b)(1)(B), as
applicable;
(B) all stock-based performance metrics used
by the manufacturer to determine executive
compensation for each of the 1-year period
described in subsection (b)(1)(A) or the 3-year
period described in subsection (b)(1)(B), as
applicable; and
(C) any additional information the
manufacturer chooses to provide related to drug
pricing decisions, such as total expenditures
on--
(i) drug research and development; or
(ii) clinical trials, including on
drugs that failed to receive approval
by the Food and Drug Administration;
and
(3) such other related information as the Secretary
considers appropriate and as specified by the Secretary
through notice-and-comment rulemaking.
(d) Information Provided.--The manufacturer of a qualifying
drug that is required to submit a report under subsection (b),
shall ensure that such report and any explanation for, and
description of, each price increase described in subsection
(c)(1)(B) shall be truthful, not misleading, and accurate.
(e) Civil Monetary Penalty.--Any manufacturer of a qualifying
drug that fails to submit a report for the drug as required by
this section, following notification by the Secretary to the
manufacturer that the manufacturer is not in compliance with
this section, shall be subject to a civil monetary penalty of
$75,000 for each day on which the violation continues.
(f) False Information.--Any manufacturer that submits a
report for a drug as required by this section that knowingly
provides false information in such report is subject to a civil
monetary penalty in an amount not to exceed $75,000 for each
item of false information.
(g) Public Posting.--
(1) In general.--Subject to paragraph (3), the
Secretary shall post each report submitted under
subsection (b) on the public website of the Department
of Health and Human Services the day the price increase
of a qualifying drug is scheduled to go into effect.
(2) Format.--In developing the format in which
reports will be publicly posted under paragraph (1),
the Secretary shall consult with stakeholders,
including beneficiary groups, and shall seek feedback
from consumer advocates and readability experts on the
format and presentation of the content of such reports
to ensure that such reports are--
(A) user-friendly to the public; and
(B) written in plain language that consumers
can readily understand.
(3) Protected information.--Nothing in this section
shall be construed to authorize the public disclosure
of information submitted by a manufacturer that is
prohibited from disclosure by applicable laws
concerning the protection of trade secrets, commercial
information, and other information covered under such
laws.
SEC. 399OO-1. ANNUAL REPORT TO CONGRESS.
(a) In General.--Subject to subsection (b), the Secretary
shall submit to Congress, and post on the public website of the
Department of Health and Human Services in a way that is user-
friendly to the public and written in plain language that
consumers can readily understand, an annual report--
(1) summarizing the information reported pursuant to
section 399OO;
(2) including copies of the reports and supporting
detailed economic analyses submitted pursuant to such
section;
(3) detailing the costs and expenditures incurred by
the Department of Health and Human Services in carrying
out section 399OO; and
(4) explaining how the Department of Health and Human
Services is improving consumer and provider information
about drug value and drug price transparency.
(b) Protected Information.--Nothing in this section shall be
construed to authorize the public disclosure of information
submitted by a manufacturer that is prohibited from disclosure
by applicable laws concerning the protection of trade secrets,
commercial information, and other information covered under
such laws.
* * * * * * *
TITLE XXX--HEALTH INFORMATION TECHNOLOGY AND QUALITY
* * * * * * *
Subtitle C--Other Provisions
* * * * * * *
SEC. 3022. INFORMATION BLOCKING.
(a) Definition.--
(1) In general.--In this section, the term
``information blocking'' means a practice that--
(A) except as required by law or specified by
the Secretary pursuant to rulemaking under
paragraph (3), is likely to interfere with,
prevent, or materially discourage access,
exchange, or use of electronic health
information; and
(B)(i) if conducted by a health information
technology developer, exchange, or network,
such developer, exchange, or network knows, or
should know, that such practice is likely to
interfere with, prevent, or materially
discourage the access, exchange, or use of
electronic health information; or
(ii) if conducted by a health care provider,
such provider knows that such practice is
unreasonable and is likely to interfere with,
prevent, or materially discourage access,
exchange, or use of electronic health
information.
(2) Practices described.--The information blocking
practices described in paragraph (1) may include--
(A) practices that restrict authorized
access, exchange, or use under applicable State
or Federal law of such information for
treatment and other permitted purposes under
such applicable law, including transitions
between certified health information
technologies;
(B) implementing health information
technology in nonstandard ways that are likely
to substantially increase the complexity or
burden of accessing, exchanging, or using
electronic health information; and
(C) implementing health information
technology in ways that are likely to--
(i) restrict the access, exchange, or
use of electronic health information
with respect to exporting complete
information sets or in transitioning
between health information technology
systems; or
(ii) lead to fraud, waste, or abuse,
or impede innovations and advancements
in health information access, exchange,
and use, including care delivery
enabled by health information
technology.
(3) Rulemaking.--The Secretary, through rulemaking,
shall identify reasonable and necessary activities that
do not constitute information blocking for purposes of
paragraph (1).
(4) No enforcement before exception identified.--The
term ``information blocking'' does not include any
practice or conduct occurring prior to the date that is
30 days after the date of enactment of the 21st Century
Cures Act.
(5) Consultation.--The Secretary may consult with the
Federal Trade Commission in promulgating regulations
under this subsection, to the extent that such
regulations define practices that are necessary to
promote competition and consumer welfare.
(6) Application.--The term ``information blocking'',
with respect to an individual or entity, shall not
include an act or practice other than an act or
practice committed by such individual or entity.
(7) Clarification.--In carrying out this section, the
Secretary shall ensure that health care providers are
not penalized for the failure of developers of health
information technology or other entities offering
health information technology to such providers to
ensure that such technology meets the requirements to
be certified under this title.
(b) Inspector General Authority.--
(1) In general.--The inspector general of the
Department of Health and Human Services (referred to in
this section as the ``Inspector General'') may
investigate any claim that--
(A) a health information technology developer
of certified health information technology or
other entity offering certified health
information technology--
(i) submitted a false attestation
under section 3001(c)(5)(D)(vii); or
(ii) engaged in information blocking;
(B) a health care provider engaged in
information blocking; or
(C) a health information exchange or network
engaged in information blocking.
(2) Penalties.--
(A) Developers, networks, and exchanges.--Any
individual or entity described in subparagraph
(A) or (C) of paragraph (1) that the Inspector
General, following an investigation conducted
under this subsection, determines to have
committed information blocking shall be subject
to a civil monetary penalty determined by the
Secretary for all such violations identified
through such investigation, which may not
exceed $1,000,000 per violation. Such
determination shall take into account factors
such as the nature and extent of the
information blocking and harm resulting from
such information blocking, including, where
applicable, the number of patients affected,
the number of providers affected, and the
number of days the information blocking
persisted.
(B) Providers.--Any individual or entity
described in subparagraph (B) of paragraph (1)
determined by the Inspector General to have
committed information blocking shall be
referred to the appropriate agency to be
subject to appropriate disincentives using
authorities under applicable Federal law, as
the Secretary sets forth through notice and
comment rulemaking.
(C) Procedure.--The provisions of section
1128A of the Social Security Act (other than
subsections (a) and (b) of such section) shall
apply to a civil money penalty applied under
this paragraph in the same manner as such
provisions apply to a civil money penalty or
proceeding under such section 1128A(a).
(D) Recovered penalty funds.--The amounts
recovered under this paragraph shall be
allocated as follows:
(i) Annual operating expenses.--Each
year following the establishment of the
authority under this subsection, the
Office of the Inspector General shall
provide to the Secretary an estimate of
the costs to carry out investigations
under this section. Such estimate may
include reasonable reserves to account
for variance in annual amounts
recovered under this paragraph. There
is authorized to be appropriated for
purposes of carrying out this section
an amount equal to the amount specified
in such estimate for the fiscal year.
(ii) Application to other programs.--
The amounts recovered under this
paragraph and remaining after amounts
are made available under clause (i)
shall be transferred to the Federal
Hospital Insurance Trust Fund under
section 1817 of the Social Security Act
and the Federal Supplementary Medical
Insurance Trust Fund under section 1841
of such Act, in such proportion as the
Secretary determines appropriate.
(E) Authorization of appropriations.--There
is authorized to be appropriated to the Office
of the Inspector General to carry out this
section $10,000,000, to remain available until
expended.
(3) Resolution of claims.--
(A) In general.--The Office of the Inspector
General, if such Office determines that a
consultation regarding the health privacy and
security rules promulgated under section 264(c)
of the Health Insurance Portability and
Accountability Act of 1996 (42 U.S.C. 1320d-2
note) will resolve an information blocking
claim, may refer such instances of information
blocking to the Office for Civil Rights of the
Department of Health and Human Services for
resolution.
(B) Limitation on liability.--If a health
care provider or health information technology
developer makes information available based on
a good faith reliance on consultations with the
Office for Civil Rights of the Department of
Health and Human Services pursuant to a
referral under subparagraph (A), with respect
to such information, the health care provider
or developer shall not be liable for such
disclosure or disclosures made pursuant to
subparagraph (A).
(4) Application of authorities under inspector
general act of 1978.--In carrying out this subsection,
the Inspector General shall have the same authorities
as provided under section 6 of the Inspector General
Act of 1978 (5 U.S.C. App.).
(c) Identifying Barriers To Exchange of Certified Health
Information Technology.--
(1) Trusted exchange defined.--In this section, the
term ``trusted exchange'' with respect to certified
electronic health records means that the certified
electronic health record technology has the technical
capability to enable secure health information exchange
between users and multiple certified electronic health
record technology systems.
(2) Guidance.--The National Coordinator, in
consultation with the Office for Civil Rights of the
Department of Health and Human Services, shall issue
guidance on common legal, governance, and security
barriers that prevent the trusted exchange of
electronic health information.
(3) Referral.--The National Coordinator and the
Office for Civil Rights of the Department of Health and
Human Services may refer to the Inspector General
instances or patterns of refusal to exchange health
information with an individual or entity using
certified electronic health record technology that is
technically capable of trusted exchange and under
conditions when exchange is legally permissible.
(d) Additional Provisions.--
(1) Information sharing provisions.--The National
Coordinator may serve as a technical consultant to the
Inspector General and the Federal Trade Commission for
purposes of carrying out this section. The National
Coordinator may, notwithstanding any other provision of
law, share information related to claims or
investigations under subsection (b) with the Federal
Trade Commission for purposes of such investigations
and shall share information with the Inspector General,
as required by law.
(2) Protection from disclosure of information.--Any
information that is received by the National
Coordinator in connection with a claim or suggestion of
possible information blocking and that could reasonably
be expected to facilitate identification of the source
of the information--
(A) shall not be disclosed by the National
Coordinator except as may be necessary to carry
out the purpose of this section;
(B) shall be exempt from mandatory disclosure
under section 552 of title 5, United States
Code, as provided by subsection (b)(3) of such
section; and
(C) may be used by the Inspector General or
Federal Trade Commission for reporting purposes
to the extent that such information could not
reasonably be expected to facilitate
identification of the source of such
information.
(3) Standardized process.--
(A) In general.--The National Coordinator
shall implement a standardized process for the
public to submit reports on claims of--
(i) health information technology
products or developers of such products
(or other entities offering such
products to health care providers) not
being interoperable or resulting in
information blocking;
(ii) actions described in subsection
(b)(1) that result in information
blocking as described in subsection
(a); and
(iii) any other act described in
subsection (a).
(B) Collection of information.--The
standardized process implemented under
subparagraph (A) shall provide for the
collection of such information as the
originating institution, location, type of
transaction, system and version, timestamp,
terminating institution, locations, system and
version, failure notice, and other related
information.
(4) Nonduplication of penalty structures.--In
carrying out this subsection, the Secretary shall, to
the extent possible, ensure that penalties do not
duplicate penalty structures that would otherwise apply
with respect to information blocking and the type of
individual or entity involved as of the day before the
date of the enactment of this section.
----------
SOCIAL SECURITY ACT
* * * * * * *
TITLE XI--GENERAL PROVISIONS, PEER REVIEW, AND ADMINISTRATIVE
SIMPLIFICATION
* * * * * * *
Part A--General Provisions
* * * * * * *
SEC. 1128H. REPORTING OF INFORMATION RELATING TO DRUG SAMPLES.
(a) In General.--Not later than April 1 of each year
(beginning with 2012), each manufacturer and authorized
distributor of record of an applicable drug shall submit to the
Secretary (in a form and manner specified by the Secretary) the
following information with respect to the preceding year:
(1) In the case of a manufacturer or authorized
distributor of record which makes distributions by mail
or common carrier under subsection (d)(2) of section
503 of the Federal Food, Drug, and Cosmetic Act (21
U.S.C. 353), the identity and quantity of drug samples
requested and the identity and quantity of drug samples
distributed under such subsection during that year,
aggregated by--
(A) the name, address, professional
designation, and signature of the practitioner
making the request under subparagraph (A)(i) of
such subsection, or of any individual who makes
or signs for the request on behalf of the
practitioner; and
(B) any other category of information
determined appropriate by the Secretary.
(2) In the case of a manufacturer or authorized
distributor of record which makes distributions by
means other than mail or common carrier under
subsection (d)(3) of such section 503, the identity and
quantity of drug samples requested and the identity and
quantity of drug samples distributed under such
subsection during that year, aggregated by--
(A) the name, address, professional
designation, and signature of the practitioner
making the request under subparagraph (A)(i) of
such subsection, or of any individual who makes
or signs for the request on behalf of the
practitioner; and
(B) any other category of information
determined appropriate by the Secretary.
(b) Data Sharing Agreements.--
(1) In general.--The Secretary shall enter into
agreements with the specified data sharing individuals
and entities described in paragraph (2) under which--
(A) upon request of such an individual or
entity, as applicable, the Secretary makes
available to such individual or entity the
information submitted under subsection (a) by
manufacturers and authorized distributors of
record; and
(B) such individual or entity agrees to not
disclose publicly or to another individual or
entity any information that identifies a
particular practitioner or health care
facility.
(2) Specified data sharing individuals and
entities.--For purposes of paragraph (1), the specified
data sharing individuals and entities described in this
paragraph are the following:
(A) Oversight agencies.--Health oversight
agencies (as defined in section 164.501 of
title 45, Code of Federal Regulations),
including the Centers for Medicare & Medicaid
Services, the Office of the Inspector General
of the Department of Health and Human Services,
the Government Accountability Office, the
Congressional Budget Office, the Medicare
Payment Advisory Commission, and the Medicaid
and CHIP Payment and Access Commission.
(B) Researchers.--Individuals who conduct
scientific research (as defined in section
164.501 of title 45, Code of Federal
Regulations) in relevant areas as determined by
the Secretary.
(C) Payers.--Private and public health care
payers, including group health plans, health
insurance coverage offered by health insurance
issuers, Federal health programs, and State
health programs.
(3) Exemption from freedom of information act.--
Except as described in paragraph (1), the Secretary may
not be compelled to disclose the information submitted
under subsection (a) to any individual or entity. For
purposes of section 552 of title 5, United States Code
(commonly referred to as the Freedom of Information
Act), this paragraph shall be considered a statute
described in subsection (b)(3)(B) of such section.
(c) Penalties.--
(1) Data sharing agreements.--Subject to paragraph
(3), any specified data sharing individual or entity
described in subsection (b)(2) that violates the terms
of a data sharing agreement the individual or entity
has with the Secretary under subsection (b)(1) shall be
subject to a civil money penalty of not less than
$1,000, but not more than $10,000, for each such
violation. Such penalty shall be imposed and collected
in the same manner as civil money penalties under
subsection (a) of section 1128A are imposed and
collected under that section.
(2) Failure to report.--Subject to paragraph (3), any
manufacturer or authorized distributor of record of an
applicable drug under subsection (a) that fails to
submit information required under such subsection in a
timely manner in accordance with rules or regulations
promulgated to carry out such subsection shall be
subject to a civil money penalty of not less than
$1,000, but not more than $10,000, for each such
failure. Such penalty shall be imposed and collected in
the same manner as civil money penalties under
subsection (a) of section 1128A are imposed and
collected under that section.
(3) Limitation.--The total amount of civil money
penalties imposed under paragraph (1) or (2) with
respect to a year and an individual or entity described
in subparagraph (A) or a manufacturer or distributor
described in subparagraph (B), respectively, shall not
exceed $150,000.
(d) Drug Sample Distribution Information.--
(1) In general.--Not later than January 1 of each
year (beginning with 2021), the Secretary shall
maintain a list containing information related to the
distribution of samples of applicable drugs. Such list
shall provide the following information with respect to
the preceding year:
(A) The name of the manufacturer or
authorized distributor of record of an
applicable drug for which samples were
requested or distributed under this section.
(B) The quantity and class of drug samples
requested.
(C) The quantity and class of drug samples
distributed.
(2) Public availability.--The Secretary shall make
the information in such list available to the public on
the Internet Web site of the Food and Drug
Administration.
[(b)] (e) Definitions.--In this section:
(1) Applicable drug.--The term ``applicable drug''
means a drug--
(A) which is subject to subsection (b) of
such section 503; and
(B) for which payment is available under
title XVIII or a State plan under title XIX or
XXI (or a waiver of such a plan).
(2) Authorized distributor of record.--The term
``authorized distributor of record'' has the meaning
given that term in subsection (e)(3)(A) of such
section.
(3) Manufacturer.--The term ``manufacturer'' has the
meaning given that term for purposes of subsection (d)
of such section.
* * * * * * *
SEC. 1150A. PHARMACY BENEFIT MANAGERS TRANSPARENCY REQUIREMENTS.
(a) Provision of Information.--A health benefits plan or any
entity that provides pharmacy benefits management services on
behalf of a health benefits plan (in this section referred to
as a ``PBM'') that manages prescription drug coverage under a
contract with--
(1) a PDP sponsor of a prescription drug plan or an
MA organization offering an MA-PD plan under part D of
title XVIII; or
(2) a qualified health benefits plan offered through
an exchange established by a State under section 1311
of the Patient Protection and Affordable Care Act,
shall provide the information described in subsection (b) to
the Secretary and, in the case of a PBM, to the plan with which
the PBM is under contract with, at such times, and in such form
and manner, as the Secretary shall specify.
(b) Information Described.--The information described in this
subsection is the following with respect to services provided
by a health benefits plan or PBM for a contract year:
(1) The percentage of all prescriptions that were
provided through retail pharmacies compared to mail
order pharmacies, and the percentage of prescriptions
for which a generic drug was available and dispensed
(generic dispensing rate), by pharmacy type (which
includes an independent pharmacy, chain pharmacy,
supermarket pharmacy, or mass merchandiser pharmacy
that is licensed as a pharmacy by the State and that
dispenses medication to the general public), that is
paid by the health benefits plan or PBM under the
contract.
(2) The aggregate amount, and the type of rebates,
discounts, or price concessions (excluding bona fide
service fees, which include but are not limited to
distribution service fees, inventory management fees,
product stocking allowances, and fees associated with
administrative services agreements and patient care
programs (such as medication compliance programs and
patient education programs)) that the PBM negotiates
that are attributable to patient utilization under the
plan, and the aggregate amount of the rebates,
discounts, or price concessions that are passed through
to the plan sponsor, and the total number of
prescriptions that were dispensed.
(3) The aggregate amount of the difference between
the amount the health benefits plan pays the PBM and
the amount that the PBM pays retail pharmacies, and
mail order pharmacies, and the total number of
prescriptions that were dispensed.
(c) Confidentiality.--Information disclosed by a health
benefits plan or PBM under this section is confidential and
shall not be disclosed by the Secretary (other than as
permitted under subsection (e)) or by a plan receiving the
information, except that the Secretary may disclose the
information in a form which does not disclose the identity of a
specific PBM, plan, or prices charged for drugs, for the
following purposes:
(1) As the Secretary determines to be necessary to
carry out this section or part D of title XVIII.
(2) To permit the Comptroller General to review the
information provided.
(3) To permit the Director of the Congressional
Budget Office to review the information provided.
(4) To States to carry out section 1311 of the
Patient Protection and Affordable Care Act.
(d) Penalties.--The provisions of subsection (b)(3)(C) of
section 1927 shall apply to a health benefits plan or PBM that
fails to provide information required under subsection (a) on a
timely basis or that knowingly provides false information in
the same manner as such provisions apply to a manufacturer with
an agreement under that section.
(e) Public Availability of Certain Information.--
(1) In general.--In order to allow the comparison of
PBMs' ability to negotiate rebates, discounts, direct
and indirect remuneration fees, administrative fees,
and price concessions and the amount of such rebates,
discounts, direct and indirect remuneration fees,
administrative fees, and price concessions that are
passed through to plan sponsors, beginning January 1,
2020, the Secretary shall make available on the
Internet website of the Department of Health and Human
Services the information with respect to the second
preceding calendar year provided to the Secretary on
generic dispensing rates (as described in paragraph (1)
of subsection (b)) and information provided to the
Secretary under paragraphs (2) and (3) of such
subsection that, as determined by the Secretary, is
with respect to each PBM.
(2) Availability of data.--In carrying out paragraph
(1), the Secretary shall ensure the following:
(A) Confidentiality.--The information
described in such paragraph is displayed in a
manner that prevents the disclosure of
information, with respect to an individual drug
or an individual plan, on rebates, discounts,
direct and indirect remuneration fees,
administrative fees, and price concessions.
(B) Class of drug.--The information described
in such paragraph is made available by class of
drug, using an existing classification system,
but only if the class contains such number of
drugs, as specified by the Secretary (but not
fewer than three drugs), to ensure
confidentiality of proprietary information or
other information that is prevented to be
disclosed under subparagraph (A).
* * * * * * *
TITLE XVIII--HEALTH INSURANCE FOR THE AGED AND DISABLED
* * * * * * *
Part B--Supplementary Medical Insurance Benefits for the Aged and
Disabled
* * * * * * *
use of average sales price payment methodology
Sec. 1847A. (a) Application.--
(1) In general.--Except as provided in paragraph (2),
this section shall apply to payment for drugs and
biologicals that are described in section 1842(o)(1)(C)
and that are furnished on or after January 1, 2005.
(2) Election.--This section shall not apply in the
case of a physician who elects under subsection
(a)(1)(A)(ii) of section 1847B for that section to
apply instead of this section for the payment for drugs
and biologicals.
(b) Payment Amount.--
(1) In general.--Subject to paragraph (7) and
subsections (d)(3)(C) and (e), the amount of payment
determined under this section for the billing and
payment code for a drug or biological (based on a
minimum dosage unit) is, subject to applicable
deductible and coinsurance--
(A) in the case of a multiple source drug (as
defined in subsection (c)(6)(C)), 106 percent
of the amount determined under paragraph (3)
for a multiple source drug furnished before
April 1, 2008, or 106 percent of the amount
determined under paragraph (6) for a multiple
source drug furnished on or after April 1,
2008;
(B) in the case of a single source drug or
biological (as defined in subsection
(c)(6)(D)), 106 percent of the amount
determined under paragraph (4); or
(C) in the case of a biosimilar biological
product (as defined in subsection (c)(6)(H)),
the amount determined under paragraph (8).
(2) Specification of unit.--
(A) Specification by manufacturer.--The
manufacturer of a drug or biological shall
specify the unit associated with each National
Drug Code (including package size) as part of
the submission of data under section
1927(b)(3)(A)(iii) or subsection (f)(2), as
applicable.
(B) Unit defined.--In this section, the term
``unit'' means, with respect to each National
Drug Code (including package size) associated
with a drug or biological, the lowest
identifiable quantity (such as a capsule or
tablet, milligram of molecules, or grams) of
the drug or biological that is dispensed,
exclusive of any diluent without reference to
volume measures pertaining to liquids. For
years after 2004, the Secretary may establish
the unit for a manufacturer to report and
methods for counting units as the Secretary
determines appropriate to implement this
section.
(3) Multiple source drug.--For all drug products
included within the same multiple source drug billing
and payment code, the amount specified in this
paragraph is the volume-weighted average of the average
sales prices reported under section 1927(b)(3)(A)(iii)
or subsection (f)(2), as applicable, determined by--
(A) computing the sum of the products (for
each National Drug Code assigned to such drug
products) of--
(i) the manufacturer's average sales
price (as defined in subsection (c));
and
(ii) the total number of units
specified under paragraph (2) sold; and
(B) dividing the sum determined under
subparagraph (A) by the sum of the total number
of units under subparagraph (A)(ii) for all
National Drug Codes assigned to such drug
products.
(4) Single source drug or biological.--The amount
specified in this paragraph for a single source drug or
biological is the lesser of the following:
(A) Average sales price.--The average sales
price as determined using the methodology
applied under paragraph (3) for single source
drugs and biologicals furnished before April 1,
2008, and using the methodology applied under
paragraph (6) for single source drugs and
biologicals furnished on or after April 1,
2008, for all National Drug Codes assigned to
such drug or biological product.
(B) Wholesale acquisition cost (wac).--The
wholesale acquisition cost (as defined in
subsection (c)(6)(B)) using the methodology
applied under paragraph (3) for single source
drugs and biologicals furnished before April 1,
2008, and using the methodology applied under
paragraph (6) for single source drugs and
biologicals furnished on or after April 1,
2008, for all National Drug Codes assigned to
such drug or biological product.
(5) Basis for payment amount.--The payment amount
shall be determined under this subsection based on
information reported under subsection (f) and without
regard to any special packaging, labeling, or
identifiers on the dosage form or product or package.
(6) Use of volume-weighted average sales prices in
calculation of average sales price.--
(A) In general.--For all drug products
included within the same multiple source drug
billing and payment code, the amount specified
in this paragraph is the volume-weighted
average of the average sales prices reported
under section 1927(b)(3)(A)(iii) or subsection
(f)(2), as applicable, determined by--
(i) computing the sum of the products
(for each National Drug Code assigned
to such drug products) of--
(I) the manufacturer's
average sales price (as defined
in subsection (c)), determined
by the Secretary without
dividing such price by the
total number of billing units
for the National Drug Code for
the billing and payment code;
and
(II) the total number of
units specified under paragraph
(2) sold; and
(ii) dividing the sum determined
under clause (i) by the sum of the
products (for each National Drug Code
assigned to such drug products) of--
(I) the total number of units
specified under paragraph (2)
sold; and
(II) the total number of
billing units for the National
Drug Code for the billing and
payment code.
(B) Billing unit defined.--For purposes of
this subsection, the term ``billing unit''
means the identifiable quantity associated with
a billing and payment code, as established by
the Secretary.
(7) Special rule.--Beginning with April 1, 2008, the
payment amount for--
(A) each single source drug or biological
described in section 1842(o)(1)(G) that is
treated as a multiple source drug because of
the application of subsection (c)(6)(C)(ii) is
the lower of--
(i) the payment amount that would be
determined for such drug or biological
applying such subsection; or
(ii) the payment amount that would
have been determined for such drug or
biological if such subsection were not
applied; and
(B) a multiple source drug described in
section 1842(o)(1)(G) (excluding a drug or
biological that is treated as a multiple source
drug because of the application of such
subsection) is the lower of--
(i) the payment amount that would be
determined for such drug or biological
taking into account the application of
such subsection; or
(ii) the payment amount that would
have been determined for such drug or
biological if such subsection were not
applied.
(8) Biosimilar biological product.--The amount
specified in this paragraph for a biosimilar biological
product described in paragraph (1)(C) is the sum of--
(A) the average sales price as determined
using the methodology described under paragraph
(6) applied to a biosimilar biological product
for all National Drug Codes assigned to such
product in the same manner as such paragraph is
applied to drugs described in such paragraph;
and
(B) 6 percent of the amount determined under
paragraph (4) for the reference biological
product (as defined in subsection (c)(6)(I)).
(c) Manufacturer's Average Sales Price.--
(1) In general.--For purposes of this section,
subject to paragraphs (2) and (3), the manufacturer's
``average sales price'' means, of a drug or biological
for a National Drug Code for a calendar quarter for a
manufacturer for a unit--
(A) the manufacturer's sales to all
purchasers (excluding sales exempted in
paragraph (2)) in the United States for such
drug or biological in the calendar quarter;
divided by
(B) the total number of such units of such
drug or biological sold by the manufacturer in
such quarter.
(2) Certain sales exempted from computation.--In
calculating the manufacturer's average sales price
under this subsection, the following sales shall be
excluded:
(A) Sales exempt from best price.--Sales
exempt from the inclusion in the determination
of ``best price' under section
1927(c)(1)(C)(i).
(B) Sales at nominal charge.--Such other
sales as the Secretary identifies as sales to
an entity that are merely nominal in amount (as
applied for purposes of section
1927(c)(1)(C)(ii)(III), except as the Secretary
may otherwise provide).
(3) Sale price net of discounts.--In calculating the
manufacturer's average sales price under this
subsection, such price shall include volume discounts,
prompt pay discounts, cash discounts, free goods that
are contingent on any purchase requirement,
chargebacks, and rebates (other than rebates under
section 1927). For years after 2004, the Secretary may
include in such price other price concessions, which
may be based on recommendations of the Inspector
General, that would result in a reduction of the cost
to the purchaser.
(4) Payment methodology in cases where average sales
price during first quarter of sales is unavailable.--In
the case of a drug or biological during an initial
period (not to exceed a full calendar quarter) in which
data on the prices for sales for the drug or biological
is not sufficiently available from the manufacturer to
compute an average sales price for the drug or
biological, the Secretary may determine the amount
payable under this section for the drug or biological
based on--
(A) the wholesale acquisition cost; or
(B) the methodologies in effect under this
part on November 1, 2003, to determine payment
amounts for drugs or biologicals.
(5) Frequency of determinations.--
(A) In general on a quarterly basis.--The
manufacturer's average sales price, for a drug
or biological of a manufacturer, shall be
calculated by such manufacturer under this
subsection on a quarterly basis. In making such
calculation insofar as there is a lag in the
reporting of the information on rebates and
chargebacks under paragraph (3) so that
adequate data are not available on a timely
basis, the manufacturer shall apply a
methodology based on a 12-month rolling average
for the manufacturer to estimate costs
attributable to rebates and chargebacks. For
years after 2004, the Secretary may establish a
uniform methodology under this subparagraph to
estimate and apply such costs.
(B) Updates in payment amounts.--The payment
amounts under subsection (b) shall be updated
by the Secretary on a quarterly basis and shall
be applied based upon the manufacturer's
average sales price calculated for the most
recent calendar quarter for which data is
available.
(C) Use of contractors; implementation.--The
Secretary may contract with appropriate
entities to calculate the payment amount under
subsection (b). Notwithstanding any other
provision of law, the Secretary may implement,
by program instruction or otherwise, any of the
provisions of this section.
(6) Definitions and other rules.--In this section:
(A) Manufacturer.--The term ``manufacturer''
means, with respect to a drug or biological,
the manufacturer (as defined in section
1927(k)(5))[.], except that, for purposes of
subsection (f)(2), the Secretary may, if the
Secretary determines appropriate, exclude
repackagers of a drug or biological from such
term.
(B) Wholesale acquisition cost.--The term
``wholesale acquisition cost'' means, with
respect to a drug or biological, the
manufacturer's list price for the drug or
biological to wholesalers or direct purchasers
in the United States, not including prompt pay
or other discounts, rebates or reductions in
price, for the most recent month for which the
information is available, as reported in
wholesale price guides or other publications of
drug or biological pricing data.
(C) Multiple source drug.--
(i) In general.--The term ``multiple
source drug'' means, for a calendar
quarter, a drug for which there are 2
or more drug products which--
(I) are rated as
therapeutically equivalent
(under the Food and Drug
Administration's most recent
publication of ``Approved Drug
Products with Therapeutic
Equivalence Evaluations''),
(II) except as provided in
subparagraph (E), are
pharmaceutically equivalent and
bioequivalent, as determined
under subparagraph (F) and as
determined by the Food and Drug
Administration, and
(III) are sold or marketed in
the United States during the
quarter.
(ii) Exception.--With respect to
single source drugs or biologicals that
are within the same billing and payment
code as of October 1, 2003, the
Secretary shall treat such single
source drugs or biologicals as if the
single source drugs or biologicals were
multiple source drugs.
(D) Single source drug or biological.--The
term ``single source drug or biological''
means--
(i) a biological; or
(ii) a drug which is not a multiple
source drug and which is produced or
distributed under a new drug
application approved by the Food and
Drug Administration, including a drug
product marketed by any cross-licensed
producers or distributors operating
under the new drug application.
(E) Exception from pharmaceutical equivalence
and bioequivalence requirement.--Subparagraph
(C)(ii) shall not apply if the Food and Drug
Administration changes by regulation the
requirement that, for purposes of the
publication described in subparagraph (C)(i),
in order for drug products to be rated as
therapeutically equivalent, they must be
pharmaceutically equivalent and bioequivalent,
as defined in subparagraph (F).
(F) Determination of pharmaceutical
equivalence and bioequivalence.--For purposes
of this paragraph--
(i) drug products are
pharmaceutically equivalent if the
products contain identical amounts of
the same active drug ingredient in the
same dosage form and meet compendial or
other applicable standards of strength,
quality, purity, and identity; and
(ii) drugs are bioequivalent if they
do not present a known or potential
bioequivalence problem, or, if they do
present such a problem, they are shown
to meet an appropriate standard of
bioequivalence.
(G) Inclusion of vaccines.--In applying
provisions of section 1927 under this section,
``other than a vaccine'' is deemed deleted from
section 1927(k)(2)(B).
(H) Biosimilar biological product.--The term
``biosimilar biological product'' means a
biological product approved under an
abbreviated application for a license of a
biological product that relies in part on data
or information in an application for another
biological product licensed under section 351
of the Public Health Service Act.
(I) Reference biological product.--The term
``reference biological product'' means the
biological product licensed under such section
351 that is referred to in the application
described in subparagraph (H) of the biosimilar
biological product.
(d) Monitoring of Market Prices.--
(1) In general.--The Inspector General of the
Department of Health and Human Services shall conduct
studies, which may include surveys, to determine the
widely available market prices of drugs and biologicals
to which this section applies, as the Inspector
General, in consultation with the Secretary, determines
to be appropriate.
(2) Comparison of prices.--Based upon such studies
and other data for drugs and biologicals, the Inspector
General shall compare the average sales price under
this section for drugs and biologicals with--
(A) the widely available market price for
such drugs and biologicals (if any); and
(B) the average manufacturer price (as
determined under section 1927(k)(1)) for such
drugs and biologicals.
(3) Limitation on average sales price.--
(A) In general.--The Secretary may disregard
the average sales price for a drug or
biological that exceeds the widely available
market price or the average manufacturer price
for such drug or biological by the applicable
threshold percentage (as defined in
subparagraph (B)).
(B) Applicable threshold percentage
defined.--In this paragraph, the term
``applicable threshold percentage'' means--
(i) in 2005, in the case of an
average sales price for a drug or
biological that exceeds widely
available market price or the average
manufacturer price, 5 percent; and
(ii) in 2006 and subsequent years,
the percentage applied under this
subparagraph subject to such adjustment
as the Secretary may specify for the
widely available market price or the
average manufacturer price, or both.
(C) Authority to adjust average sales
price.--If the Inspector General finds that the
average sales price for a drug or biological
exceeds such widely available market price or
average manufacturer price for such drug or
biological by the applicable threshold
percentage, the Inspector General shall inform
the Secretary (at such times as the Secretary
may specify to carry out this subparagraph) and
the Secretary shall, effective as of the next
quarter, substitute for the amount of payment
otherwise determined under this section for
such drug or biological the lesser of--
(i) the widely available market price
for the drug or biological (if any); or
(ii) 103 percent of the average
manufacturer price (as determined under
section 1927(k)(1)) for the drug or
biological.
(4) Civil money penalty.--
(A) [In general] Misrepresentation.--If the
Secretary determines that a manufacturer has
made a misrepresentation in the reporting of
the manufacturer's average sales price for a
drug or biological, the Secretary may apply a
civil money penalty in an amount of up to
$10,000 for each such price misrepresentation
and for each day in which such price
misrepresentation was applied.
(B) Failure to provide timely information.--
If the Secretary determines that a manufacturer
described in subsection (f)(2) has failed to
report on information described in section
1927(b)(3)(A)(iii) with respect to a drug or
biological in accordance with such subsection,
the Secretary shall apply a civil money penalty
in an amount of $10,000 for each day the
manufacturer has failed to report such
information and such amount shall be paid to
the Treasury.
(C) False information.--Any manufacturer
required to submit information under subsection
(f)(2) that knowingly provides false
information is subject to a civil money penalty
in an amount not to exceed $100,000 for each
item of false information. Such civil money
penalties are in addition to other penalties as
may be prescribed by law.
[(B)] (D) Procedures.--The provisions of
section 1128A (other than subsections (a) and
(b)) shall apply to civil money penalties under
[subparagraph (B)] subparagraph (A), (B), or
(C) in the same manner as they apply to a
penalty or proceeding under section 1128A(a).
(5) Widely available market price.--
(A) In general.--In this subsection, the term
``widely available market price'' means the
price that a prudent physician or supplier
would pay for the drug or biological. In
determining such price, the Inspector General
shall take into account the discounts, rebates,
and other price concessions routinely made
available to such prudent physicians or
suppliers for such drugs or biologicals.
(B) Considerations.--In determining the price
under subparagraph (A), the Inspector General
shall consider information from one or more of
the following sources:
(i) Manufacturers.
(ii) Wholesalers.
(iii) Distributors.
(iv) Physician supply houses.
(v) Specialty pharmacies.
(vi) Group purchasing arrangements.
(vii) Surveys of physicians.
(viii) Surveys of suppliers.
(ix) Information on such market
prices from insurers.
(x) Information on such market prices
from private health plans.
(e) Authority To Use Alternative Payment in Response to
Public Health Emergency.--In the case of a public health
emergency under section 319 of the Public Health Service Act in
which there is a documented inability to access drugs and
biologicals, and a concomitant increase in the price, of a drug
or biological which is not reflected in the manufacturer's
average sales price for one or more quarters, the Secretary may
use the wholesale acquisition cost (or other reasonable measure
of drug or biological price) instead of the manufacturer's
average sales price for such quarters and for subsequent
quarters until the price and availability of the drug or
biological has stabilized and is substantially reflected in the
applicable manufacturer's average sales price.
(f) Quarterly Report on Average Sales Price.--[For
requirements]
(1) In general._For requirements for reporting the
manufacturer's average sales price (and, if required to
make payment, the manufacturer's wholesale acquisition
cost) for the drug or biological under this section,
see section 1927(b)(3).
(2) Manufacturers without a rebate agreement under
title xix.--
(A) In general.--If the manufacturer of a
drug or biological described in subparagraph
(C), (E), or (G) of section 1842(o)(1) or in
section 1881(b)(14)(B) that is payable under
this part has not entered into and does not
have in effect a rebate agreement described in
subsection (b) of section 1927, for calendar
quarters beginning on or after January 1, 2020,
such manufacturer shall report to the Secretary
the information described in subsection
(b)(3)(A)(iii) of such section 1927 with
respect to such drug or biological in a time
and manner specified by the Secretary. For
purposes of applying this paragraph, a drug or
biological described in the previous sentence
includes items, services, supplies, and
products that are payable under this part as a
drug or biological.
(B) Audit.--Information reported under
subparagraph (A) is subject to audit by the
Inspector General of the Department of Health
and Human Services.
(C) Verification.--The Secretary may survey
wholesalers and manufacturers that directly
distribute drugs described in subparagraph (A),
when necessary, to verify manufacturer prices
and manufacturer's average sales prices
(including wholesale acquisition cost) if
required to make payment reported under
subparagraph (A). The Secretary may impose a
civil monetary penalty in an amount not to
exceed $100,000 on a wholesaler, manufacturer,
or direct seller, if the wholesaler,
manufacturer, or direct seller of such a drug
refuses a request for information about charges
or prices by the Secretary in connection with a
survey under this subparagraph or knowingly
provides false information. The provisions of
section 1128A (other than subsections (a) (with
respect to amounts of penalties or additional
assessments) and (b)) shall apply to a civil
money penalty under this subparagraph in the
same manner as such provisions apply to a
penalty or proceeding under section 1128A(a).
(D) Confidentiality.--Notwithstanding any
other provision of law, information disclosed
by manufacturers or wholesalers under this
paragraph (other than the wholesale acquisition
cost for purposes of carrying out this section)
is confidential and shall not be disclosed by
the Secretary in a form which discloses the
identity of a specific manufacturer or
wholesaler or prices charged for drugs by such
manufacturer or wholesaler, except--
(i) as the Secretary determines to be
necessary to carry out this section
(including the determination and
implementation of the payment amount),
or to carry out section 1847B;
(ii) to permit the Comptroller
General of the United States to review
the information provided; and
(iii) to permit the Director of the
Congressional Budget Office to review
the information provided.
(g) Judicial Review.--There shall be no administrative or
judicial review under section 1869, section 1878, or otherwise,
of--
(1) determinations of payment amounts under this
section, including the assignment of National Drug
Codes to billing and payment codes;
(2) the identification of units (and package size)
under subsection (b)(2);
(3) the method to allocate rebates, chargebacks, and
other price concessions to a quarter if specified by
the Secretary;
(4) the manufacturer's average sales price when it is
used for the determination of a payment amount under
this section; and
(5) the disclosure of the average manufacturer price
by reason of an adjustment under subsection (d)(3)(C)
or (e).
* * * * * * *
Part D--Voluntary Prescription Drug Benefit Program
Subpart 1--Part D Eligible Individuals and Prescription Drug Benefits
* * * * * * *
beneficiary protections for qualified prescription drug coverage
Sec. 1860D-4. (a) Dissemination of Information.--
(1) General information.--
(A) Application of ma information.--A PDP
sponsor shall disclose, in a clear, accurate,
and standardized form to each enrollee with a
prescription drug plan offered by the sponsor
under this part at the time of enrollment and
at least annually thereafter, the information
described in section 1852(c)(1) relating to
such plan, insofar as the Secretary determines
appropriate with respect to benefits provided
under this part, and, subject to subparagraph
(C), including the information described in
subparagraph (B).
(B) Drug specific information.--The
information described in this subparagraph is
information concerning the following:
(i) Access to specific covered part D
drugs, including access through
pharmacy networks.
(ii) How any formulary (including any
tiered formulary structure) used by the
sponsor functions, including a
description of how a part D eligible
individual may obtain information on
the formulary consistent with paragraph
(3).
(iii) Beneficiary cost-sharing
requirements and how a part D eligible
individual may obtain information on
such requirements, including tiered or
other copayment level applicable to
each drug (or class of drugs),
consistent with paragraph (3).
(iv) The medication therapy
management program required under
subsection (c).
(v) The drug management program for
at-risk beneficiaries under subsection
(c)(5).
(vi) For plan year 2021 and each
subsequent plan year, subject to
subparagraph (C), with respect to the
treatment of pain--
(I) the risks associated with
prolonged opioid use; and
(II) coverage of
nonpharmacological therapies,
devices, and nonopioid
medications--
(aa) in the case of
an MA-PD plan under
part C, under such
plan; and
(bb) in the case of a
prescription drug plan,
under such plan and
under parts A and B.
(C) Targeted provision of information.--A PDP
sponsor of a prescription drug plan may, in
lieu of disclosing the information described in
subparagraph (B)(vi) to each enrollee under the
plan, disclose such information through mail or
electronic communications to a subset of
enrollees under the plan, such as enrollees who
have been prescribed an opioid in the previous
2-year period.
(2) Disclosure upon request of general coverage,
utilization, and grievance information.--Upon request
of a part D eligible individual who is eligible to
enroll in a prescription drug plan, the PDP sponsor
offering such plan shall provide information similar
(as determined by the Secretary) to the information
described in subparagraphs (A), (B), and (C) of section
1852(c)(2) to such individual.
(3) Provision of specific information.--
(A) Response to beneficiary questions.--Each
PDP sponsor offering a prescription drug plan
shall have a mechanism for providing specific
information on a timely basis to enrollees upon
request. Such mechanism shall include access to
information through the use of a toll-free
telephone number and, upon request, the
provision of such information in writing.
(B) Availability of information on changes in
formulary through the internet.--A PDP sponsor
offering a prescription drug plan shall make
available on a timely basis through an Internet
website information on specific changes in the
formulary under the plan (including changes to
tiered or preferred status of covered part D
drugs).
(4) Claims information.--A PDP sponsor offering a
prescription drug plan must furnish to each enrollee in
a form easily understandable to such enrollees--
(A) an explanation of benefits (in accordance
with section 1806(a) or in a comparable
manner); and
(B) when prescription drug benefits are
provided under this part, a notice of the
benefits in relation to--
(i) the initial coverage limit for
the current year; and
(ii) the annual out-of-pocket
threshold for the current year.
Notices under subparagraph (B) need not be
provided more often than as specified by the
Secretary and notices under subparagraph
(B)(ii) shall take into account the application
of section 1860D-2(b)(4)(C) to the extent
practicable, as specified by the Secretary.
(b) Access to Covered Part D Drugs.--
(1) Assuring pharmacy access.--
(A) Participation of any willing pharmacy.--A
prescription drug plan shall permit the
participation of any pharmacy that meets the
terms and conditions under the plan.
(B) Discounts allowed for network
pharmacies.--For covered part D drugs dispensed
through in-network pharmacies, a prescription
drug plan may, notwithstanding subparagraph
(A), reduce coinsurance or copayments for part
D eligible individuals enrolled in the plan
below the level otherwise required. In no case
shall such a reduction result in an increase in
payments made by the Secretary under section
1860D-15 to a plan.
(C) Convenient access for network
pharmacies.--
(i) In general.--The PDP sponsor of
the prescription drug plan shall secure
the participation in its network of a
sufficient number of pharmacies that
dispense (other than by mail order)
drugs directly to patients to ensure
convenient access (consistent with
rules established by the Secretary).
(ii) Application of tricare
standards.--The Secretary shall
establish rules for convenient access
to in-network pharmacies under this
subparagraph that are no less favorable
to enrollees than the rules for
convenient access to pharmacies
included in the statement of work of
solicitation (#MDA906-03-R-0002) of the
Department of Defense under the TRICARE
Retail Pharmacy (TRRx) as of March 13,
2003.
(iii) Adequate emergency access.--
Such rules shall include adequate
emergency access for enrollees.
(iv) Convenient access in long-term
care facilities.--Such rules may
include standards with respect to
access for enrollees who are residing
in long-term care facilities and for
pharmacies operated by the Indian
Health Service, Indian tribes and
tribal organizations, and urban Indian
organizations (as defined in section 4
of the Indian Health Care Improvement
Act).
(D) Level playing field.--Such a sponsor
shall permit enrollees to receive benefits
(which may include a 90-day supply of drugs or
biologicals) through a pharmacy (other than a
mail order pharmacy), with any differential in
charge paid by such enrollees.
(E) Not required to accept insurance risk.--
The terms and conditions under subparagraph (A)
may not require participating pharmacies to
accept insurance risk as a condition of
participation.
(2) Use of standardized technology.--
(A) In general.--The PDP sponsor of a
prescription drug plan shall issue (and
reissue, as appropriate) such a card (or other
technology) that may be used by an enrollee to
assure access to negotiated prices under
section 1860D-2(d).
(B) Standards.--
(i) In general.--The Secretary shall
provide for the development, adoption,
or recognition of standards relating to
a standardized format for the card or
other technology required under
subparagraph (A). Such standards shall
be compatible with part C of title XI
and may be based on standards developed
by an appropriate standard setting
organization.
(ii) Consultation.--In developing the
standards under clause (i), the
Secretary shall consult with the
National Council for Prescription Drug
Programs and other standard setting
organizations determined appropriate by
the Secretary.
(iii) Implementation.--The Secretary
shall develop, adopt, or recognize the
standards under clause (i) by such date
as the Secretary determines shall be
sufficient to ensure that PDP sponsors
utilize such standards beginning
January 1, 2006.
(3) Requirements on development and application of
formularies.--If a PDP sponsor of a prescription drug
plan uses a formulary (including the use of tiered
cost-sharing), the following requirements must be met:
(A) Development and revision by a pharmacy
and therapeutic (p&t) committee.--
(i) In general.--The formulary must
be developed and reviewed by a pharmacy
and therapeutic committee. A majority
of the members of such committee shall
consist of individuals who are
practicing physicians or practicing
pharmacists (or both).
(ii) Inclusion of independent
experts.--Such committee shall include
at least one practicing physician and
at least one practicing pharmacist,
each of whom--
(I) is independent and free
of conflict with respect to the
sponsor and plan; and
(II) has expertise in the
care of elderly or disabled
persons.
(B) Formulary development.--In developing and
reviewing the formulary, the committee shall--
(i) base clinical decisions on the
strength of scientific evidence and
standards of practice, including
assessing peer-reviewed medical
literature, such as randomized clinical
trials, pharmacoeconomic studies,
outcomes research data, and on such
other information as the committee
determines to be appropriate; and
(ii) take into account whether
including in the formulary (or in a
tier in such formulary) particular
covered part D drugs has therapeutic
advantages in terms of safety and
efficacy.
(C) Inclusion of drugs in all therapeutic
categories and classes.--
(i) In general.--Subject to
subparagraph (G), the formulary must
include drugs within each therapeutic
category and class of covered part D
drugs, although not necessarily all
drugs within such categories and
classes.
(ii) Model guidelines.--The Secretary
shall request the United States
Pharmacopeia to develop, in
consultation with pharmaceutical
benefit managers and other interested
parties, a list of categories and
classes that may be used by
prescription drug plans under this
paragraph and to revise such
classification from time to time to
reflect changes in therapeutic uses of
covered part D drugs and the additions
of new covered part D drugs.
(iii) Limitation on changes in
therapeutic classification.--The PDP
sponsor of a prescription drug plan may
not change the therapeutic categories
and classes in a formulary other than
at the beginning of each plan year
except as the Secretary may permit to
take into account new therapeutic uses
and newly approved covered part D
drugs.
(D) Provider and patient education.--The PDP
sponsor shall establish policies and procedures
to educate and inform health care providers and
enrollees concerning the formulary.
(E) Notice before removing drug from
formulary or changing preferred or tier status
of drug.--Any removal of a covered part D drug
from a formulary and any change in the
preferred or tiered cost-sharing status of such
a drug shall take effect only after appropriate
notice is made available (such as under
subsection (a)(3)) to the Secretary, affected
enrollees, physicians, pharmacies, and
pharmacists.
(F) Periodic evaluation of protocols.--In
connection with the formulary, the sponsor of a
prescription drug plan shall provide for the
periodic evaluation and analysis of treatment
protocols and procedures.
(G) Required inclusion of drugs in certain
categories and classes.--
(i) Formulary requirements.--
(I) In general.--Subject to
subclause (II), a PDP sponsor
offering a prescription drug
plan shall be required to
include all covered part D
drugs in the categories and
classes identified by the
Secretary under clause (ii)(I).
(II) Exceptions.--The
Secretary may establish
exceptions that permit a PDP
sponsor offering a prescription
drug plan to exclude from its
formulary a particular covered
part D drug in a category or
class that is otherwise
required to be included in the
formulary under subclause (I)
(or to otherwise limit access
to such a drug, including
through prior authorization or
utilization management).
(ii) Identification of drugs in
certain categories and classes.--
(I) In general.--Subject to
clause (iv), the Secretary
shall identify, as appropriate,
categories and classes of drugs
for which the Secretary
determines are of clinical
concern.
(II) Criteria.--The Secretary
shall use criteria established
by the Secretary in making any
determination under subclause
(I).
(iii) Implementation.--The Secretary
shall establish the criteria under
clause (ii)(II) and any exceptions
under clause (i)(II) through the
promulgation of a regulation which
includes a public notice and comment
period.
(iv) Requirement for certain
categories and classes until criteria
established.--Until such time as the
Secretary establishes the criteria
under clause (ii)(II) the following
categories and classes of drugs shall
be identified under clause (ii)(I):
(I) Anticonvulsants.
(II) Antidepressants.
(III) Antineoplastics.
(IV) Antipsychotics.
(V) Antiretrovirals.
(VI) Immunosuppressants for
the treatment of transplant
rejection.
(H) Use of single, uniform exceptions and
appeals process.--Notwithstanding any other
provision of this part, each PDP sponsor of a
prescription drug plan shall--
(i) use a single, uniform exceptions
and appeals process (including, to the
extent the Secretary determines
feasible, a single, uniform model form
for use under such process) with
respect to the determination of
prescription drug coverage for an
enrollee under the plan; and
(ii) provide instant access to such
process by enrollees through a toll-
free telephone number and an Internet
website.
(c) Cost and Utilization Management; Quality Assurance;
Medication Therapy Management Program.--
(1) In general.--The PDP sponsor shall have in place,
directly or through appropriate arrangements, with
respect to covered part D drugs, the following:
(A) A cost-effective drug utilization
management program, including incentives to
reduce costs when medically appropriate, such
as through the use of multiple source drugs (as
defined in section 1927(k)(7)(A)(i)).
(B) Quality assurance measures and systems to
reduce medication errors and adverse drug
interactions and improve medication use.
(C) A medication therapy management program
described in paragraph (2).
(D) A program to control fraud, abuse, and
waste.
(E) A utilization management tool to prevent
drug abuse (as described in paragraph (6)(A)).
(F) With respect to plan years beginning on
or after January 1, 2022, a drug management
program for at-risk beneficiaries described in
paragraph (5).
Nothing in this section shall be construed as impairing
a PDP sponsor from utilizing cost management tools
(including differential payments) under all methods of
operation.
(2) Medication therapy management program.--
(A) Description.--
(i) In general.--A medication therapy
management program described in this
paragraph is a program of drug therapy
management that may be furnished by a
pharmacist and that is designed to
assure, with respect to targeted
beneficiaries described in clause (ii),
that covered part D drugs under the
prescription drug plan are
appropriately used to optimize
therapeutic outcomes through improved
medication use, and to reduce the risk
of adverse events, including adverse
drug interactions. Such a program may
distinguish between services in
ambulatory and institutional settings.
(ii) Targeted beneficiaries
described.--Targeted beneficiaries
described in this clause are the
following:
(I) Part D eligible
individuals who--
(aa) have multiple
chronic diseases (such
as diabetes, asthma,
hypertension,
hyperlipidemia, and
congestive heart
failure);
(bb) are taking
multiple covered part D
drugs; and
(cc) are identified
as likely to incur
annual costs for
covered part D drugs
that exceed a level
specified by the
Secretary.
(II) Beginning January 1,
2021, at-risk beneficiaries for
prescription drug abuse (as
defined in paragraph (5)(C)).
(B) Elements.--Such program--
(i) may include elements that
promote--
(I) enhanced enrollee
understanding to promote the
appropriate use of medications
by enrollees and to reduce the
risk of potential adverse
events associated with
medications, through
beneficiary education,
counseling, and other
appropriate means;
(II) increased enrollee
adherence with prescription
medication regimens through
medication refill reminders,
special packaging, and other
compliance programs and other
appropriate means; and
(III) detection of adverse
drug events and patterns of
overuse and underuse of
prescription drugs; and
(ii) with respect to plan years
beginning on or after January 1, 2021,
shall provide for--
(I) the provision of
information to the enrollee on
the safe disposal of
prescription drugs that are
controlled substances that
meets the criteria established
under section 1852(n)(2),
including information on drug
takeback programs that meet
such requirements determined
appropriate by the Secretary
and information on in-home
disposal; and
(II) cost-effective means by
which an enrollee may so safely
dispose of such drugs.
(C) Required interventions.--For plan years
beginning on or after the date that is 2 years
after the date of the enactment of the Patient
Protection and Affordable Care Act,
prescription drug plan sponsors shall offer
medication therapy management services to
targeted beneficiaries described in
subparagraph (A)(ii) that include, at a
minimum, the following to increase adherence to
prescription medications or other goals deemed
necessary by the Secretary:
(i) An annual comprehensive
medication review furnished person-to-
person or using telehealth technologies
(as defined by the Secretary) by a
licensed pharmacist or other qualified
provider. The comprehensive medication
review--
(I) shall include a review of
the individual's medications
and may result in the creation
of a recommended medication
action plan or other actions in
consultation with the
individual and with input from
the prescriber to the extent
necessary and practicable; and
(II) shall include providing
the individual with a written
or printed summary of the
results of the review.
The Secretary, in consultation with
relevant stakeholders, shall develop a
standardized format for the action plan
under subclause (I) and the summary
under subclause (II).
(ii) Follow-up interventions as
warranted based on the findings of the
annual medication review or the
targeted medication enrollment and
which may be provided person-to-person
or using telehealth technologies (as
defined by the Secretary).
(D) Assessment.--The prescription drug plan
sponsor shall have in place a process to
assess, at least on a quarterly basis, the
medication use of individuals who are at risk
but not enrolled in the medication therapy
management program, including individuals who
have experienced a transition in care, if the
prescription drug plan sponsor has access to
that information.
(E) Automatic enrollment with ability to opt-
out.--The prescription drug plan sponsor shall
have in place a process to--
(i) subject to clause (ii),
automatically enroll targeted
beneficiaries described in subparagraph
(A)(ii), including beneficiaries
identified under subparagraph (D), in
the medication therapy management
program required under this subsection;
and
(ii) permit such beneficiaries to
opt-out of enrollment in such program.
(E) Development of program in cooperation
with licensed pharmacists.--Such program shall
be developed in cooperation with licensed and
practicing pharmacists and physicians.
(F) Coordination with care management
plans.--The Secretary shall establish
guidelines for the coordination of any
medication therapy management program under
this paragraph with respect to a targeted
beneficiary with any care management plan
established with respect to such beneficiary
under a chronic care improvement program under
section 1807.
(G) Considerations in pharmacy fees.--The PDP
sponsor of a prescription drug plan shall take
into account, in establishing fees for
pharmacists and others providing services under
such plan, the resources used, and time
required to, implement the medication therapy
management program under this paragraph. Each
such sponsor shall disclose to the Secretary
upon request the amount of any such management
or dispensing fees. The provisions of section
1927(b)(3)(D) apply to information disclosed
under this subparagraph.
(3) Reducing wasteful dispensing of outpatient
prescription drugs in long-term care facilities.--The
Secretary shall require PDP sponsors of prescription
drug plans to utilize specific, uniform dispensing
techniques, as determined by the Secretary, in
consultation with relevant stakeholders (including
representatives of nursing facilities, residents of
nursing facilities, pharmacists, the pharmacy industry
(including retail and long-term care pharmacy),
prescription drug plans, MA-PD plans, and any other
stakeholders the Secretary determines appropriate),
such as weekly, daily, or automated dose dispensing,
when dispensing covered part D drugs to enrollees who
reside in a long-term care facility in order to reduce
waste associated with 30-day fills.
(4) Requiring valid prescriber national provider
identifiers on pharmacy claims.--
(A) In general.--For plan year 2016 and
subsequent plan years, the Secretary shall
require a claim for a covered part D drug for a
part D eligible individual enrolled in a
prescription drug plan under this part or an
MA-PD plan under part C to include a prescriber
National Provider Identifier that is determined
to be valid under the procedures established
under subparagraph (B)(i).
(B) Procedures.--
(i) Validity of prescriber national
provider identifiers.--The Secretary,
in consultation with appropriate
stakeholders, shall establish
procedures for determining the validity
of prescriber National Provider
Identifiers under subparagraph (A).
(ii) Informing beneficiaries of
reason for denial.--The Secretary shall
establish procedures to ensure that, in
the case that a claim for a covered
part D drug of an individual described
in subparagraph (A) is denied because
the claim does not meet the
requirements of this paragraph, the
individual is properly informed at the
point of service of the reason for the
denial.
(C) Report.--Not later than January 1, 2018,
the Inspector General of the Department of
Health and Human Services shall submit to
Congress a report on the effectiveness of the
procedures established under subparagraph
(B)(i).
(D) Notification and additional requirements
with respect to outlier prescribers of
opioids.--
(i) Notification.--Not later than
January 1, 2021, the Secretary shall,
in the case of a prescriber identified
by the Secretary under clause (ii) to
be an outlier prescriber of opioids,
provide, subject to clause (iv), an
annual notification to such prescriber
that such prescriber has been so
identified and that includes resources
on proper prescribing methods and other
information as specified in accordance
with clause (iii).
(ii) Identification of outlier
prescribers of opioids.--
(I) In general.--The
Secretary shall, subject to
subclause (III), using the
valid prescriber National
Provider Identifiers included
pursuant to subparagraph (A) on
claims for covered part D drugs
for part D eligible individuals
enrolled in prescription drug
plans under this part or MA-PD
plans under part C and based on
the thresholds established
under subclause (II), identify
prescribers that are outlier
opioids prescribers for a
period of time specified by the
Secretary.
(II) Establishment of
thresholds.--For purposes of
subclause (I) and subject to
subclause (III), the Secretary
shall, after consultation with
stakeholders, establish
thresholds, based on prescriber
specialty and geographic area,
for identifying whether a
prescriber in a specialty and
geographic area is an outlier
prescriber of opioids as
compared to other prescribers
of opioids within such
specialty and area.
(III) Exclusions.--The
following shall not be included
in the analysis for identifying
outlier prescribers of opioids
under this clause:
(aa) Claims for
covered part D drugs
for part D eligible
individuals who are
receiving hospice care
under this title.
(bb) Claims for
covered part D drugs
for part D eligible
individuals who are
receiving oncology
services under this
title.
(cc) Prescribers who
are the subject of an
investigation by the
Centers for Medicare &
Medicaid Services or
the Inspector General
of the Department of
Health and Human
Services.
(iii) Contents of notification.--The
Secretary shall include the following
information in the notifications
provided under clause (i):
(I) Information on how such
prescriber compares to other
prescribers within the same
specialty and geographic area.
(II) Information on opioid
prescribing guidelines, based
on input from stakeholders,
that may include the Centers
for Disease Control and
Prevention guidelines for
prescribing opioids for chronic
pain and guidelines developed
by physician organizations.
(III) Other information
determined appropriate by the
Secretary.
(iv) Modifications and expansions.--
(I) Frequency.--Beginning 5
years after the date of the
enactment of this subparagraph,
the Secretary may change the
frequency of the notifications
described in clause (i) based
on stakeholder input and
changes in opioid prescribing
utilization and trends.
(II) Expansion to other
prescriptions.--The Secretary
may expand notifications under
this subparagraph to include
identifications and
notifications with respect to
concurrent prescriptions of
covered Part D drugs used in
combination with opioids that
are considered to have adverse
side effects when so used in
such combination, as determined
by the Secretary.
(v) Additional requirements for
persistent outlier prescribers.--In the
case of a prescriber who the Secretary
determines is persistently identified
under clause (ii) as an outlier
prescriber of opioids, the following
shall apply:
(I) Such prescriber may be
required to enroll in the
program under this title under
section 1866(j) if such
prescriber is not otherwise
required to enroll, but only
after other appropriate
remedies have been provided,
such as the provision of
education funded through
section 6052 of the SUPPORT for
Patients and Communities Act,
for a period determined by the
Secretary as sufficient to
correct the prescribing
patterns that lead to
identification of such
prescriber as a persistent
outlier prescriber of opioids.
The Secretary shall determine
the length of the period for
which such prescriber is
required to maintain such
enrollment, which shall be the
minimum period necessary to
correct such prescribing
patterns.
(II) Not less frequently than
annually (and in a form and
manner determined appropriate
by the Secretary), the
Secretary, consistent with
clause(iv)(I), shall
communicate information on such
prescribers to sponsors of a
prescription drug plan and
Medicare Advantage
organizations offering an MA-PD
plan.
(vi) Public availability of
information.--The Secretary shall make
aggregate information under this
subparagraph available on the internet
website of the Centers for Medicare &
Medicaid Services. Such information
shall be in a form and manner
determined appropriate by the Secretary
and shall not identify any specific
prescriber. In carrying out this
clause, the Secretary shall consult
with interested stakeholders.
(vii) Opioids defined.--For purposes
of this subparagraph, the term
``opioids'' has such meaning as
specified by the Secretary.
(viii) Other activities.--Nothing in
this subparagraph shall preclude the
Secretary from conducting activities
that provide prescribers with
information as to how they compare to
other prescribers that are in addition
to the activities under this
subparagraph, including activities that
were being conducted as of the date of
the enactment of this subparagraph.
(5) Drug management program for at-risk
beneficiaries.--
(A) Authority to establish.--A PDP sponsor
may (and for plan years beginning on or after
January 1, 2022, a PDP sponsor shall) establish
a drug management program for at-risk
beneficiaries under which, subject to
subparagraph (B), the PDP sponsor may, in the
case of an at-risk beneficiary for prescription
drug abuse who is an enrollee in a prescription
drug plan of such PDP sponsor, limit such
beneficiary's access to coverage for frequently
abused drugs under such plan to frequently
abused drugs that are prescribed for such
beneficiary by one or more prescribers selected
under subparagraph (D), and dispensed for such
beneficiary by one or more pharmacies selected
under such subparagraph.
(B) Requirement for notices.--
(i) In general.--A PDP sponsor may
not limit the access of an at-risk
beneficiary for prescription drug abuse
to coverage for frequently abused drugs
under a prescription drug plan until
such sponsor--
(I) provides to the
beneficiary an initial notice
described in clause (ii) and a
second notice described in
clause (iii); and
(II) verifies with the
providers of the beneficiary
that the beneficiary is an at-
risk beneficiary for
prescription drug abuse.
(ii) Initial notice.--An initial
notice described in this clause is a
notice that provides to the
beneficiary--
(I) notice that the PDP
sponsor has identified the
beneficiary as potentially
being an at-risk beneficiary
for prescription drug abuse;
(II) information describing
all State and Federal public
health resources that are
designed to address
prescription drug abuse to
which the beneficiary has
access, including mental health
services and other counseling
services;
(III) notice of, and
information about, the right of
the beneficiary to appeal such
identification under subsection
(h), including notice that if
on reconsideration a PDP
sponsor affirms its denial, in
whole or in part, the case
shall be automatically
forwarded to the independent,
outside entity contracted with
the Secretary for review and
resolution;
(IV) a request for the
beneficiary to submit to the
PDP sponsor preferences for
which prescribers and
pharmacies the beneficiary
would prefer the PDP sponsor to
select under subparagraph (D)
in the case that the
beneficiary is identified as an
at-risk beneficiary for
prescription drug abuse as
described in clause (iii)(I);
(V) an explanation of the
meaning and consequences of the
identification of the
beneficiary as potentially
being an at-risk beneficiary
for prescription drug abuse,
including an explanation of the
drug management program
established by the PDP sponsor
pursuant to subparagraph (A);
(VI) clear instructions that
explain how the beneficiary can
contact the PDP sponsor in
order to submit to the PDP
sponsor the preferences
described in subclause (IV) and
any other communications
relating to the drug management
program for at-risk
beneficiaries established by
the PDP sponsor; and
(VII) contact information for
other organizations that can
provide the beneficiary with
assistance regarding such drug
management program (similar to
the information provided by the
Secretary in other standardized
notices provided to part D
eligible individuals enrolled
in prescription drug plans
under this part).
(iii) Second notice.--A second notice
described in this clause is a notice
that provides to the beneficiary
notice--
(I) that the PDP sponsor has
identified the beneficiary as
an at-risk beneficiary for
prescription drug abuse;
(II) that such beneficiary is
subject to the requirements of
the drug management program for
at-risk beneficiaries
established by such PDP sponsor
for such plan;
(III) of the prescriber (or
prescribers) and pharmacy (or
pharmacies) selected for such
individual under subparagraph
(D);
(IV) of, and information
about, the beneficiary's right
to appeal such identification
under subsection (h), including
notice that if on
reconsideration a PDP sponsor
affirms its denial, in whole or
in part, the case shall be
automatically forwarded to the
independent, outside entity
contracted with the Secretary
for review and resolution;
(V) that the beneficiary can,
in the case that the
beneficiary has not previously
submitted to the PDP sponsor
preferences for which
prescribers and pharmacies the
beneficiary would prefer the
PDP sponsor select under
subparagraph (D), submit such
preferences to the PDP sponsor;
and
(VI) that includes clear
instructions that explain how
the beneficiary can contact the
PDP sponsor.
(iv) Timing of notices.--
(I) In general.--Subject to
subclause (II), a second notice
described in clause (iii) shall
be provided to the beneficiary
on a date that is not less than
30 days after an initial notice
described in clause (ii) is
provided to the beneficiary.
(II) Exception.--In the case
that the PDP sponsor, in
conjunction with the Secretary,
determines that concerns
identified through rulemaking
by the Secretary regarding the
health or safety of the
beneficiary or regarding
significant drug diversion
activities require the PDP
sponsor to provide a second
notice described in clause
(iii) to the beneficiary on a
date that is earlier than the
date described in subclause
(I), the PDP sponsor may
provide such second notice on
such earlier date.
(C) At-risk beneficiary for prescription drug
abuse.--
(i) In general.--Except as provided
in clause (v), for purposes of this
paragraph, the term ``at-risk
beneficiary for prescription drug
abuse'' means a part D eligible
individual who is not an exempted
individual described in clause (ii)
and--
(I) who is identified as such
an at-risk beneficiary through
the use of clinical guidelines
that indicate misuse or abuse
of prescription drugs described
in subparagraph (G) and that
are developed by the Secretary
in consultation with PDP
sponsors and other
stakeholders, including
individuals entitled to
benefits under part A or
enrolled under part B, advocacy
groups representing such
individuals, physicians,
pharmacists, and other
clinicians, retail pharmacies,
plan sponsors, entities
delegated by plan sponsors, and
biopharmaceutical
manufacturers; or
(II) with respect to whom the
PDP sponsor of a prescription
drug plan, upon enrolling such
individual in such plan,
received notice from the
Secretary that such individual
was identified under this
paragraph to be an at-risk
beneficiary for prescription
drug abuse under the
prescription drug plan in which
such individual was most
recently previously enrolled
and such identification has not
been terminated under
subparagraph (F).
(ii) Exempted individual described.--
An exempted individual described in
this clause is an individual who--
(I) receives hospice care
under this title;
(II) is a resident of a long-
term care facility, of a
facility described in section
1905(d), or of another facility
for which frequently abused
drugs are dispensed for
residents through a contract
with a single pharmacy; or
(III) the Secretary elects to
treat as an exempted individual
for purposes of clause (i).
(iii) Program size.--The Secretary
shall establish policies, including the
guidelines developed under clause
(i)(I) and the exemptions under clause
(ii)(III), to ensure that the
population of enrollees in a drug
management program for at-risk
beneficiaries operated by a
prescription drug plan can be
effectively managed by such plans.
(iv) Clinical contact.--With respect
to each at-risk beneficiary for
prescription drug abuse enrolled in a
prescription drug plan offered by a PDP
sponsor, the PDP sponsor shall contact
the beneficiary's providers who have
prescribed frequently abused drugs
regarding whether prescribed
medications are appropriate for such
beneficiary's medical conditions.
(v) Treatment of enrollees with a
history of opioid-related overdose.--
(I) In general.--For plan
years beginning not later than
January 1, 2021, a part D
eligible individual who is not
an exempted individual
described in clause (ii) and
who is identified under this
clause as a part D eligible
individual with a history of
opioid-related overdose (as
defined by the Secretary) shall
be included as a potentially
at-risk beneficiary for
prescription drug abuse under
the drug management program
under this paragraph.
(II) Identification and
notice.--For purposes of this
clause, the Secretary shall--
(aa) identify part D
eligible individuals
with a history of
opioid-related overdose
(as so defined); and
(bb) notify the PDP
sponsor of the
prescription drug plan
in which such an
individual is enrolled
of such identification.
(D) Selection of prescribers and
pharmacies.--
(i) In general.--With respect to each
at-risk beneficiary for prescription
drug abuse enrolled in a prescription
drug plan offered by such sponsor, a
PDP sponsor shall, based on the
preferences submitted to the PDP
sponsor by the beneficiary pursuant to
clauses (ii)(IV) and (iii)(V) of
subparagraph (B) (except as otherwise
provided in this subparagraph) select--
(I) one, or, if the PDP
sponsor reasonably determines
it necessary to provide the
beneficiary with reasonable
access under clause (ii), more
than one, individual who is
authorized to prescribe
frequently abused drugs
(referred to in this paragraph
as a ``prescriber'') who may
write prescriptions for such
drugs for such beneficiary; and
(II) one, or, if the PDP
sponsor reasonably determines
it necessary to provide the
beneficiary with reasonable
access under clause (ii), more
than one, pharmacy that may
dispense such drugs to such
beneficiary.
For purposes of subclause (II), in the
case of a pharmacy that has multiple
locations that share real-time
electronic data, all such locations of
the pharmacy shall collectively be
treated as one pharmacy.
(ii) Reasonable access.--In making
the selections under this
subparagraph--
(I) a PDP sponsor shall
ensure that the beneficiary
continues to have reasonable
access to frequently abused
drugs (as defined in
subparagraph (G)), taking into
account geographic location,
beneficiary preference, impact
on costsharing, and reasonable
travel time; and
(II) a PDP sponsor shall
ensure such access (including
access to prescribers and
pharmacies with respect to
frequently abused drugs) in the
case of individuals with
multiple residences, in the
case of natural disasters and
similar situations, and in the
case of the provision of
emergency services.
(iii) Beneficiary preferences.--If an
at-risk beneficiary for prescription
drug abuse submits preferences for
which in-network prescribers and
pharmacies the beneficiary would prefer
the PDP sponsor select in response to a
notice under subparagraph (B), the PDP
sponsor shall--
(I) review such preferences;
(II) select or change the
selection of prescribers and
pharmacies for the beneficiary
based on such preferences; and
(III) inform the beneficiary
of such selection or change of
selection.
(iv) Exception regarding beneficiary
preferences.--In the case that the PDP
sponsor determines that a change to the
selection of prescriber or pharmacy
under clause (iii)(II) by the PDP
sponsor is contributing or would
contribute to prescription drug abuse
or drug diversion by the beneficiary,
the PDP sponsor may change the
selection of prescriber or pharmacy for
the beneficiary without regard to the
preferences of the beneficiary
described in clause (iii). If the PDP
sponsor changes the selection pursuant
to the preceding sentence, the PDP
sponsor shall provide the beneficiary
with--
(I) at least 30 days written
notice of the change of
selection; and
(II) a rationale for the
change.
(v) Confirmation.--Before selecting a
prescriber or pharmacy under this
subparagraph, a PDP sponsor must notify
the prescriber and pharmacy that the
beneficiary involved has been
identified for inclusion in the drug
management program for at-risk
beneficiaries and that the prescriber
and pharmacy has been selected as the
beneficiary's designated prescriber and
pharmacy.
(E) Terminations and appeals.--The
identification of an individual as an at-risk
beneficiary for prescription drug abuse under
this paragraph, a coverage determination made
under a drug management program for at-risk
beneficiaries, the selection of prescriber or
pharmacy under subparagraph (D), and
information to be shared under subparagraph
(I), with respect to such individual, shall be
subject to reconsideration and appeal under
subsection (h) and if on reconsideration a PDP
sponsor affirms its denial, in whole or in
part, the case shall be automatically forwarded
to the independent, outside entity contracted
with the Secretary for review and resolution.
(F) Termination of identification.--
(i) In general.--The Secretary shall
develop standards for the termination
of identification of an individual as
an at-risk beneficiary for prescription
drug abuse under this paragraph. Under
such standards such identification
shall terminate as of the earlier of--
(I) the date the individual
demonstrates that the
individual is no longer likely,
in the absence of the
restrictions under this
paragraph, to be an at-risk
beneficiary for prescription
drug abuse described in
subparagraph (C)(i); and
(II) the end of such maximum
period of identification as the
Secretary may specify.
(ii) Rule of construction.--Nothing
in clause (i) shall be construed as
preventing a plan from identifying an
individual as an at-risk beneficiary
for prescription drug abuse under
subparagraph (C)(i) after such
termination on the basis of additional
information on drug use occurring after
the date of notice of such termination.
(G) Frequently abused drug.--For purposes of
this subsection, the term ``frequently abused
drug'' means a drug that is a controlled
substance that the Secretary determines to be
frequently abused or diverted.
(H) Data disclosure.--
(i) Data on decision to impose
limitation.--In the case of an at-risk
beneficiary for prescription drug abuse
(or an individual who is a potentially
at-risk beneficiary for prescription
drug abuse) whose access to coverage
for frequently abused drugs under a
prescription drug plan has been limited
by a PDP sponsor under this paragraph,
the Secretary shall establish rules and
procedures to require the PDP sponsor
to disclose data, including any
necessary individually identifiable
health information, in a form and
manner specified by the Secretary,
about the decision to impose such
limitations and the limitations imposed
by the sponsor under this part.
(ii) Data to reduce fraud, abuse, and
waste.--The Secretary shall establish
rules and procedures to require PDP
sponsors operating a drug management
program for at-risk beneficiaries under
this paragraph to provide the Secretary
with such data as the Secretary
determines appropriate for purposes of
identifying patterns of prescription
drug utilization for plan enrollees
that are outside normal patterns and
that may indicate fraudulent, medically
unnecessary, or unsafe use.
(I) Sharing of information for subsequent
plan enrollments.--The Secretary shall
establish procedures under which PDP sponsors
who offer prescription drug plans shall share
information with respect to individuals who are
at-risk beneficiaries for prescription drug
abuse (or individuals who are potentially at-
risk beneficiaries for prescription drug abuse)
and enrolled in a prescription drug plan and
who subsequently disenroll from such plan and
enroll in another prescription drug plan
offered by another PDP sponsor.
(J) Privacy issues.--Prior to the
implementation of the rules and procedures
under this paragraph, the Secretary shall
clarify privacy requirements, including
requirements under the regulations promulgated
pursuant to section 264(c) of the Health
Insurance Portability and Accountability Act of
1996 (42 U.S.C. 1320d-2 note), related to the
sharing of data under subparagraphs (H) and (I)
by PDP sponsors. Such clarification shall
provide that the sharing of such data shall be
considered to be protected health information
in accordance with the requirements of the
regulations promulgated pursuant to such
section 264(c).
(K) Education.--The Secretary shall provide
education to enrollees in prescription drug
plans of PDP sponsors and providers regarding
the drug management program for at-risk
beneficiaries described in this paragraph,
including education--
(i) provided by Medicare
administrative contractors through the
improper payment outreach and education
program described in section 1874A(h);
and
(ii) through current education
efforts (such as State health insurance
assistance programs described in
subsection (a)(1)(A) of section 119 of
the Medicare Improvements for Patients
and Providers Act of 2008 (42 U.S.C.
1395b-3 note)) and materials directed
toward such enrollees.
(L) Application under ma-pd plans.--Pursuant
to section 1860D-21(c)(1), the provisions of
this paragraph apply under part D to MA
organizations offering MA-PD plans to MA
eligible individuals in the same manner as such
provisions apply under this part to a PDP
sponsor offering a prescription drug plan to a
part D eligible individual.
(M) CMS compliance review.--The Secretary
shall ensure that existing plan sponsor
compliance reviews and audit processes include
the drug management programs for at-risk
beneficiaries under this paragraph, including
appeals processes under such programs.
(6) Utilization management tool to prevent drug
abuse.--
(A) In general.--A tool described in this
paragraph is any of the following:
(i) A utilization tool designed to
prevent the abuse of frequently abused
drugs by individuals and to prevent the
diversion of such drugs at pharmacies.
(ii) Retrospective utilization review
to identify--
(I) individuals that receive
frequently abused drugs at a
frequency or in amounts that
are not clinically appropriate;
and
(II) providers of services or
suppliers that may facilitate
the abuse or diversion of
frequently abused drugs by
beneficiaries.
(iii) Consultation with the
contractor described in subparagraph
(B) to verify if an individual
enrolling in a prescription drug plan
offered by a PDP sponsor has been
previously identified by another PDP
sponsor as an individual described in
clause (ii)(I).
(B) Reporting.--A PDP sponsor offering a
prescription drug plan (and an MA organization
offering an MA-PD plan) in a State shall submit
to the Secretary and the Medicare drug
integrity contractor with which the Secretary
has entered into a contract under section 1893
with respect to such State a report, on a
monthly basis, containing information on--
(i) any provider of services or
supplier described in subparagraph
(A)(ii)(II) that is identified by such
plan sponsor (or organization) during
the 30-day period before such report is
submitted; and
(ii) the name and prescription
records of individuals described in
paragraph (5)(C).
(C) CMS compliance review.--The Secretary
shall ensure that plan sponsor compliance
reviews and program audits biennially include a
certification that utilization management tools
under this paragraph are in compliance with the
requirements for such tools.
(6) Providing prescription drug plans with parts a
and b claims data to promote the appropriate use of
medications and improve health outcomes.--
(A) Process.--Subject to subparagraph (B),
the Secretary shall establish a process under
which a PDP sponsor of a prescription drug plan
may submit a request for the Secretary to
provide the sponsor, on a periodic basis and in
an electronic format, beginning in plan year
2020, data described in subparagraph (D) with
respect to enrollees in such plan. Such data
shall be provided without regard to whether
such enrollees are described in clause (ii) of
paragraph (2)(A).
(B) Purposes.--A PDP sponsor may use the data
provided to the sponsor pursuant to
subparagraph (A) for any of the following
purposes:
(i) To optimize therapeutic outcomes
through improved medication use, as
such phrase is used in clause (i) of
paragraph (2)(A).
(ii) To improving care coordination
so as to prevent adverse health
outcomes, such as preventable emergency
department visits and hospital
readmissions.
(iii) For any other purpose
determined appropriate by the
Secretary.
(C) Limitations on data use.--A PDP sponsor
shall not use data provided to the sponsor
pursuant to subparagraph (A) for any of the
following purposes:
(i) To inform coverage determinations
under this part.
(ii) To conduct retroactive reviews
of medically accepted indications
determinations.
(iii) To facilitate enrollment
changes to a different prescription
drug plan or an MA-PD plan offered by
the same parent organization.
(iv) To inform marketing of benefits.
(v) For any other purpose that the
Secretary determines is necessary to
include in order to protect the
identity of individuals entitled to, or
enrolled for, benefits under this title
and to protect the security of personal
health information.
(D) Data described.--The data described in
this clause are standardized extracts (as
determined by the Secretary) of claims data
under parts A and B for items and services
furnished under such parts for time periods
specified by the Secretary. Such data shall
include data as current as practicable.
(d) Consumer Satisfaction Surveys.--In order to provide for
comparative information under section 1860D-1(c)(3)(A)(v), the
Secretary shall conduct consumer satisfaction surveys with
respect to PDP sponsors and prescription drug plans in a manner
similar to the manner such surveys are conducted for MA
organizations and MA plans under part C.
(e) Electronic Prescription Program.--
(1) Application of standards.--As of such date as the
Secretary may specify, but not later than 1 year after
the date of promulgation of final standards under
paragraph (4)(D), prescriptions and other information
described in paragraph (2)(A) for covered part D drugs
prescribed for part D eligible individuals that are
transmitted electronically shall be transmitted only in
accordance with such standards under an electronic
prescription drug program that meets the requirements
of paragraph (2).
(2) Program requirements.--Consistent with uniform
standards established under paragraph (3)--
(A) Provision of information to prescribing
health care professional and dispensing
pharmacies and pharmacists.--An electronic
prescription drug program shall provide for the
electronic transmittal to the prescribing
health care professional and to the dispensing
pharmacy and pharmacist of the prescription and
information on eligibility and benefits
(including the drugs included in the applicable
formulary, any tiered formulary structure, and
any requirements for prior authorization) and
of the following information with respect to
the prescribing and dispensing of a covered
part D drug:
(i) Information on the drug being
prescribed or dispensed and other drugs
listed on the medication history,
including information on drug-drug
interactions, warnings or cautions,
and, when indicated, dosage
adjustments.
(ii) Information on the availability
of lower cost, therapeutically
appropriate alternatives (if any) for
the drug prescribed.
(B) Application to medical history
information.--Effective on and after such date
as the Secretary specifies and after the
establishment of appropriate standards to carry
out this subparagraph, the program shall
provide for the electronic transmittal in a
manner similar to the manner under subparagraph
(A) of information that relates to the medical
history concerning the individual and related
to a covered part D drug being prescribed or
dispensed, upon request of the professional or
pharmacist involved.
(C) Limitations.--Information shall only be
disclosed under subparagraph (A) or (B) if the
disclosure of such information is permitted
under the Federal regulations (concerning the
privacy of individually identifiable health
information) promulgated under section 264(c)
of the Health Insurance Portability and
Accountability Act of 1996.
(D) Timing.--[To the extent] Except as
provided in subparagraph (F), to the extent
feasible, the information exchanged under this
paragraph shall be on an interactive, real-time
basis.
(E) Electronic prior authorization.--
(i) In general.--Not later than
January 1, 2021, the program shall
provide for the secure electronic
transmission of--
(I) a prior authorization
request from the prescribing
health care professional for
coverage of a covered part D
drug for a part D eligible
individual enrolled in a part D
plan (as defined in section
1860D-23(a)(5)) to the PDP
sponsor or Medicare Advantage
organization offering such
plan; and
(II) a response, in
accordance with this
subparagraph, from such PDP
sponsor or Medicare Advantage
organization, respectively, to
such professional.
(ii) Electronic transmission.--
(I) Exclusions.--For purposes
of this subparagraph, a
facsimile, a proprietary payer
portal that does not meet
standards specified by the
Secretary, or an electronic
form shall not be treated as an
electronic transmission
described in clause (i).
(II) Standards.--In order to
be treated, for purposes of
this subparagraph, as an
electronic transmission
described in clause (i), such
transmission shall comply with
technical standards adopted by
the Secretary in consultation
with the National Council for
Prescription Drug Programs,
other standard setting
organizations determined
appropriate by the Secretary,
and stakeholders including PDP
sponsors, Medicare Advantage
organizations, health care
professionals, and health
information technology software
vendors.
(III) Application.--
Notwithstanding any other
provision of law, for purposes
of this subparagraph, the
Secretary may require the use
of such standards adopted under
subclause (II) in lieu of any
other applicable standards for
an electronic transmission
described in clause (i) for a
covered part D drug for a part
D eligible individual.
(F) Real-time benefit information.--
(i) In general.--Not later than
January 1, 2021, the program shall
implement real-time benefit tools that
are capable of integrating with a
prescribing health care professional's
electronic prescribing or electronic
health record system for the
transmission of formulary and benefit
information in real time to prescribing
health care professionals. With respect
to a covered part D drug, such tools
shall be capable of transmitting such
information specific to an individual
enrolled in a prescription drug plan.
Such information shall include the
following:
(I) A list of any clinically-
appropriate alternatives to
such drug included in the
formulary of such plan.
(II) Cost-sharing information
for such drug and such
alternatives, including a
description of any variance in
cost sharing based on the
pharmacy dispensing such drug
or such alternatives.
(III) Information relating to
whether such drug is included
in the formulary of such plan
and any prior authorization or
other utilization management
requirements applicable to such
drug and such alternatives so
included.
(ii) Electronic transmission.--The
provisions of subclauses (I) and (II)
of clause (ii) of subparagraph (E)
shall apply to an electronic
transmission described in clause (i) in
the same manner as such provisions
apply with respect to an electronic
transmission described in clause (i) of
such subparagraph.
(iii) Special rule for 2021.--The
program shall be deemed to be in
compliance with clause (i) for 2021 if
the program complies with the
provisions of section 423.160(b)(7) of
title 42, Code of Federal Regulations
(or a successor regulation), for such
year.
(iv) Rule of construction.--Nothing
in this subparagraph shall be construed
as to allow a real time benefits tool
to steer an individual, without the
consent of the individual, to a
particular pharmacy or pharmacy setting
over their preferred pharmacy setting
nor prohibit the designation of a
preferred pharmacy under such tool.
(3) Standards.--
(A) In general.--The Secretary shall provide
consistent with this subsection for the
promulgation of uniform standards relating to
the requirements for electronic prescription
drug programs under paragraph (2).
(B) Objectives.--Such standards shall be
consistent with the objectives of improving--
(i) patient safety;
(ii) the quality of care provided to
patients; and
(iii) efficiencies, including cost
savings, in the delivery of care.
(C) Design criteria.--Such standards shall--
(i) be designed so that, to the
extent practicable, the standards do
not impose an undue administrative
burden on prescribing health care
professionals and dispensing pharmacies
and pharmacists;
(ii) be compatible with standards
established under part C of title XI,
standards established under subsection
(b)(2)(B)(i), and with general health
information technology standards; and
(iii) be designed so that they permit
electronic exchange of drug labeling
and drug listing information maintained
by the Food and Drug Administration and
the National Library of Medicine.
(D) Permitting use of appropriate
messaging.--Such standards shall allow for the
messaging of information only if it relates to
the appropriate prescribing of drugs, including
quality assurance measures and systems referred
to in subsection (c)(1)(B).
(E) Permitting patient designation of
dispensing pharmacy.--
(i) In general.--Consistent with
clause (ii), such standards shall
permit a part D eligible individual to
designate a particular pharmacy to
dispense a prescribed drug.
(ii) No change in benefits.--Clause
(i) shall not be construed as
affecting--
(I) the access required to be
provided to pharmacies by a
prescription drug plan; or
(II) the application of any
differences in benefits or
payments under such a plan
based on the pharmacy
dispensing a covered part D
drug.
(4) Development, promulgation, and modification of
standards.--
(A) Initial standards.--Not later than
September 1, 2005, the Secretary shall develop,
adopt, recognize, or modify initial uniform
standards relating to the requirements for
electronic prescription drug programs described
in paragraph (2) taking into consideration the
recommendations (if any) from the National
Committee on Vital and Health Statistics (as
established under section 306(k) of the Public
Health Service Act (42 U.S.C. 242k(k))) under
subparagraph (B).
(B) Role of ncvhs.--The National Committee on
Vital and Health Statistics shall develop
recommendations for uniform standards relating
to such requirements in consultation with the
following:
(i) Standard setting organizations
(as defined in section 1171(8))
(ii) Practicing physicians.
(iii) Hospitals.
(iv) Pharmacies.
(v) Practicing pharmacists.
(vi) Pharmacy benefit managers.
(vii) State boards of pharmacy.
(viii) State boards of medicine.
(ix) Experts on electronic
prescribing.
(x) Other appropriate Federal
agencies.
(C) Pilot project to test initial
standards.--
(i) In general.--During the 1-year
period that begins on January 1, 2006,
the Secretary shall conduct a pilot
project to test the initial standards
developed under subparagraph (A) prior
to the promulgation of the final
uniform standards under subparagraph
(D) in order to provide for the
efficient implementation of the
requirements described in paragraph
(2).
(ii) Exception.--Pilot testing of
standards is not required under clause
(i) where there already is adequate
industry experience with such
standards, as determined by the
Secretary after consultation with
effected standard setting organizations
and industry users.
(iii) Voluntary participation of
physicians and pharmacies.--In order to
conduct the pilot project under clause
(i), the Secretary shall enter into
agreements with physicians, physician
groups, pharmacies, hospitals, PDP
sponsors, MA organizations, and other
appropriate entities under which health
care professionals electronically
transmit prescriptions to dispensing
pharmacies and pharmacists in
accordance with such standards.
(iv) Evaluation and report.--
(I) Evaluation.--The
Secretary shall conduct an
evaluation of the pilot project
conducted under clause (i).
(II) Report to congress.--Not
later than April 1, 2007, the
Secretary shall submit to
Congress a report on the
evaluation conducted under
subclause (I).
(D) Final standards.--Based upon the
evaluation of the pilot project under
subparagraph (C)(iv)(I) and not later than
April 1, 2008, the Secretary shall promulgate
uniform standards relating to the requirements
described in paragraph (2).
(5) Relation to state laws.--The standards
promulgated under this subsection shall supersede any
State law or regulation that--
(A) is contrary to the standards or restricts
the ability to carry out this part; and
(B) pertains to the electronic transmission
of medication history and of information on
eligibility, benefits, and prescriptions with
respect to covered part D drugs under this
part.
(6) Establishment of safe harbor.--The Secretary, in
consultation with the Attorney General, shall
promulgate regulations that provide for a safe harbor
from sanctions under paragraphs (1) and (2) of section
1128B(b) and an exception to the prohibition under
subsection (a)(1) of section 1877 with respect to the
provision of nonmonetary remuneration (in the form of
hardware, software, or information technology and
training services) necessary and used solely to receive
and transmit electronic prescription information in
accordance with the standards promulgated under this
subsection--
(A) in the case of a hospital, by the
hospital to members of its medical staff;
(B) in the case of a group practice (as
defined in section 1877(h)(4)), by the practice
to prescribing health care professionals who
are members of such practice; and
(C) in the case of a PDP sponsor or MA
organization, by the sponsor or organization to
pharmacists and pharmacies participating in the
network of such sponsor or organization, and to
prescribing health care professionals.
(7) Requirement of e-prescribing for controlled
substances.--
(A) In general.--Subject to subparagraph (B),
a prescription for a covered part D drug under
a prescription drug plan (or under an MA-PD
plan) for a schedule II, III, IV, or V
controlled substance shall be transmitted by a
health care practitioner electronically in
accordance with an electronic prescription drug
program that meets the requirements of
paragraph (2).
(B) Exception for certain circumstances.--The
Secretary shall, through rulemaking, specify
circumstances and processes by which the
Secretary may waive the requirement under
subparagraph (A), with respect to a covered
part D drug, including in the case of--
(i) a prescription issued when the
practitioner and dispensing pharmacy
are the same entity;
(ii) a prescription issued that
cannot be transmitted electronically
under the most recently implemented
version of the National Council for
Prescription Drug Programs SCRIPT
Standard;
(iii) a prescription issued by a
practitioner who received a waiver or a
renewal thereof for a period of time as
determined by the Secretary, not to
exceed one year, from the requirement
to use electronic prescribing due to
demonstrated economic hardship,
technological limitations that are not
reasonably within the control of the
practitioner, or other exceptional
circumstance demonstrated by the
practitioner;
(iv) a prescription issued by a
practitioner under circumstances in
which, notwithstanding the
practitioner's ability to submit a
prescription electronically as required
by this subsection, such practitioner
reasonably determines that it would be
impractical for the individual involved
to obtain substances prescribed by
electronic prescription in a timely
manner, and such delay would adversely
impact the individual's medical
condition involved;
(v) a prescription issued by a
practitioner prescribing a drug under a
research protocol;
(vi) a prescription issued by a
practitioner for a drug for which the
Food and Drug Administration requires a
prescription to contain elements that
are not able to be included in
electronic prescribing, such as a drug
with risk evaluation and mitigation
strategies that include elements to
assure safe use;
(vii) a prescription issued by a
practitioner--
(I) for an individual who
receives hospice care under
this title; and
(II) that is not covered
under the hospice benefit under
this title; and
(viii) a prescription issued by a
practitioner for an individual who is--
(I) a resident of a nursing
facility (as defined in section
1919(a)); and
(II) dually eligible for
benefits under this title and
title XIX.
(C) Dispensing.--(i) Nothing in this
paragraph shall be construed as requiring a
sponsor of a prescription drug plan under this
part, MA organization offering an MA-PD plan
under part C, or a pharmacist to verify that a
practitioner, with respect to a prescription
for a covered part D drug, has a waiver (or is
otherwise exempt) under subparagraph (B) from
the requirement under subparagraph (A).
(ii) Nothing in this paragraph shall be
construed as affecting the ability of the plan
to cover or the pharmacists' ability to
continue to dispense covered part D drugs from
otherwise valid written, oral, or fax
prescriptions that are consistent with laws and
regulations.
(iii) Nothing in this paragraph shall be
construed as affecting the ability of an
individual who is being prescribed a covered
part D drug to designate a particular pharmacy
to dispense the covered part D drug to the
extent consistent with the requirements under
subsection (b)(1) and under this paragraph.
(D) Enforcement.--The Secretary shall,
through rulemaking, have authority to enforce
and specify appropriate penalties for non-
compliance with the requirement under
subparagraph (A).
(f) Grievance Mechanism.--Each PDP sponsor shall provide
meaningful procedures for hearing and resolving grievances
between the sponsor (including any entity or individual through
which the sponsor provides covered benefits) and enrollees with
prescription drug plans of the sponsor under this part in
accordance with section 1852(f).
(g) Coverage Determinations and Reconsiderations.--
(1) Application of coverage determination and
reconsideration provisions.--A PDP sponsor shall meet
the requirements of paragraphs (1) through (3) of
section 1852(g) with respect to covered benefits under
the prescription drug plan it offers under this part in
the same manner as such requirements apply to an MA
organization with respect to benefits it offers under
an MA plan under part C.
(2) Request for a determination for the treatment of
tiered formulary drug.--In the case of a prescription
drug plan offered by a PDP sponsor that provides for
tiered cost-sharing for drugs included within a
formulary and provides lower cost-sharing for preferred
drugs included within the formulary, a part D eligible
individual who is enrolled in the plan may request an
exception to the tiered cost-sharing structure. Under
such an exception, a nonpreferred drug could be covered
under the terms applicable for preferred drugs if the
prescribing physician determines that the preferred
drug for treatment of the same condition either would
not be as effective for the individual or would have
adverse effects for the individual or both. A PDP
sponsor shall have an exceptions process under this
paragraph consistent with guidelines established by the
Secretary for making a determination with respect to
such a request. Denial of such an exception shall be
treated as a coverage denial for purposes of applying
subsection (h).
(h) Appeals.--
(1) In general.--Subject to paragraph (2), a PDP
sponsor shall meet the requirements of paragraphs (4)
and (5) of section 1852(g) with respect to benefits
(including a determination related to the application
of tiered cost-sharing described in subsection (g)(2))
in a manner similar (as determined by the Secretary) to
the manner such requirements apply to an MA
organization with respect to benefits under the
original medicare fee-for-service program option it
offers under an MA plan under part C. In applying this
paragraph only the part D eligible individual shall be
entitled to bring such an appeal.
(2) Limitation in cases on nonformulary
determinations.--A part D eligible individual who is
enrolled in a prescription drug plan offered by a PDP
sponsor may appeal under paragraph (1) a determination
not to provide for coverage of a covered part D drug
that is not on the formulary under the plan only if the
prescribing physician determines that all covered part
D drugs on any tier of the formulary for treatment of
the same condition would not be as effective for the
individual as the nonformulary drug, would have adverse
effects for the individual, or both.
(3) Treatment of nonformulary determinations.--If a
PDP sponsor determines that a plan provides coverage
for a covered part D drug that is not on the formulary
of the plan, the drug shall be treated as being
included on the formulary for purposes of section
1860D-2(b)(4)(C)(i).
(i) Privacy, Confidentiality, and Accuracy of Enrollee
Records.--The provisions of section 1852(h) shall apply to a
PDP sponsor and prescription drug plan in the same manner as it
applies to an MA organization and an MA plan.
(j) Treatment of Accreditation.--Subparagraph (A) of section
1852(e)(4) (relating to treatment of accreditation) shall apply
to a PDP sponsor under this part with respect to the following
requirements, in the same manner as it applies to an MA
organization with respect to the requirements in subparagraph
(B) (other than clause (vii) thereof) of such section:
(1) Subsection (b) of this section (relating to
access to covered part D drugs).
(2) Subsection (c) of this section (including quality
assurance and medication therapy management).
(3) Subsection (i) of this section (relating to
confidentiality and accuracy of enrollee records).
(k) Public Disclosure of Pharmaceutical Prices for Equivalent
Drugs.--
(1) In general.--A PDP sponsor offering a
prescription drug plan shall provide that each pharmacy
that dispenses a covered part D drug shall inform an
enrollee of any differential between the price of the
drug to the enrollee and the price of the lowest priced
generic covered part D drug under the plan that is
therapeutically equivalent and bioequivalent and
available at such pharmacy.
(2) Timing of notice.--
(A) In general.--Subject to subparagraph (B),
the information under paragraph (1) shall be
provided at the time of purchase of the drug
involved, or, in the case of dispensing by mail
order, at the time of delivery of such drug.
(B) Waiver.--The Secretary may waive
subparagraph (A) in such circumstances as the
Secretary may specify.
(l) Requirements with Respect to Sales and Marketing
Activities.--The following provisions shall apply to a PDP
sponsor (and the agents, brokers, and other third parties
representing such sponsor) in the same manner as such
provisions apply to a Medicare Advantage organization (and the
agents, brokers, and other third parties representing such
organization):
(1) The prohibition under section 1851(h)(4)(C) on
conducting activities described in section 1851(j)(1).
(2) The requirement under section 1851(h)(4)(D) to
conduct activities described in section 1851(j)(2) in
accordance with the limitations established under such
subsection.
(3) The inclusion of the plan type in the plan name
under section 1851(h)(6).
(4) The requirements regarding the appointment of
agents and brokers and compliance with State
information requests under subparagraphs (A) and (B),
respectively, of section 1851(h)(7).
(m) Prohibition on Limiting Certain Information on Drug
Prices.--A PDP sponsor and a Medicare Advantage organization
shall ensure that each prescription drug plan or MA-PD plan
offered by the sponsor or organization does not restrict a
pharmacy that dispenses a prescription drug or biological from
informing, nor penalize such pharmacy for informing, an
enrollee in such plan of any differential between the
negotiated price of, or copayment or coinsurance for, the drug
or biological to the enrollee under the plan and a lower price
the individual would pay for the drug or biological if the
enrollee obtained the drug without using any health insurance
coverage.
(m) Program Integrity Transparency Measures.--For program
integrity transparency measures applied with respect to
prescription drug plan and MA plans, see section 1859(i).
* * * * * * *
TITLE XIX--GRANTS TO STATES FOR MEDICAL ASSISTANCE PROGRAMS
* * * * * * *
payment for covered outpatient drugs
Sec. 1927. (a) Requirement for Rebate Agreement.--
(1) In general.--In order for payment to be available
under section 1903(a) or under part B of title XVIII
for covered outpatient drugs of a manufacturer, the
manufacturer must have entered into and have in effect
a rebate agreement described in subsection (b) with the
Secretary, on behalf of States (except that, the
Secretary may authorize a State to enter directly into
agreements with a manufacturer), and must meet the
requirements of paragraph (5) (with respect to drugs
purchased by a covered entity on or after the first day
of the first month that begins after the date of the
enactment of title VI of the Veterans Health Care Act
of 1992) and paragraph (6). Any agreement between a
State and a manufacturer prior to April 1, 1991, shall
be deemed to have been entered into on January 1, 1991,
and payment to such manufacturer shall be retroactively
calculated as if the agreement between the manufacturer
and the State had been entered into on January 1, 1991.
If a manufacturer has not entered into such an
agreement before March 1, 1991, such an agreement,
subsequently entered into, shall become effective as of
the date on which the agreement is entered into or, at
State option, on any date thereafter on or before the
first day of the calendar quarter that begins more than
60 days after the date the agreement is entered into.
(2) Effective date.--Paragraph (1) shall first apply
to drugs dispensed under this title on or after January
1, 1991.
(3) Authorizing payment for drugs not covered under
rebate agreements.--Paragraph (1), and section
1903(i)(10)(A), shall not apply to the dispensing of a
single source drug or innovator multiple source drug if
(A)(i) the State has made a determination that the
availability of the drug is essential to the health of
beneficiaries under the State plan for medical
assistance; (ii) such drug has been given a rating of
1-A by the Food and Drug Administration; and (iii)(I)
the physician has obtained approval for use of the drug
in advance of its dispensing in accordance with a prior
authorization program described in subsection (d), or
(II) the Secretary has reviewed and approved the
State's determination under subparagraph (A); or (B)
the Secretary determines that in the first calendar
quarter of 1991, there were extenuating circumstances.
(4) Effect on existing agreements.--In the case of a
rebate agreement in effect between a State and a
manufacturer on the date of the enactment of this
section, such agreement, for the initial agreement
period specified therein, shall be considered to be a
rebate agreement in compliance with this section with
respect to that State, if the State agrees to report to
the Secretary any rebates paid pursuant to the
agreement and such agreement provides for a minimum
aggregate rebate of 10 percent of the State's total
expenditures under the State plan for coverage of the
manufacturer's drugs under this title. If, after the
initial agreement period, the State establishes to the
satisfaction of the Secretary that an agreement in
effect on the date of the enactment of this section
provides for rebates that are at least as large as the
rebates otherwise required under this section, and the
State agrees to report any rebates under the agreement
to the Secretary, the agreement shall be considered to
be a rebate agreement in compliance with the section
for the renewal periods of such agreement.
(5) Limitation on prices of drugs purchased by
covered entities.--
(A) Agreement with secretary.--A manufacturer
meets the requirements of this paragraph if the
manufacturer has entered into an agreement with
the Secretary that meets the requirements of
section 340B of the Public Health Service Act
with respect to covered outpatient drugs
purchased by a covered entity on or after the
first day of the first month that begins after
the date of the enactment of this paragraph.
(B) Covered entity defined.--In this
subsection, the term ``covered entity'' means
an entity described in section 340B(a)(4) of
the Public Health Service Act.
(C) Establishment of alternative mechanism to
ensure against duplicate discounts or
rebates.--If the Secretary does not establish a
mechanism under section 340B(a)(5)(A) of the
Public Health Service Act within 12 months of
the date of the enactment of such section, the
following requirements shall apply:
(i) Entities.--Each covered entity
shall inform the single State agency
under section 1902(a)(5) when it is
seeking reimbursement from the State
plan for medical assistance described
in section 1905(a)(12) with respect to
a unit of any covered outpatient drug
which is subject to an agreement under
section 340B(a) of such Act.
(ii) State agency.--Each such single
State agency shall provide a means by
which a covered entity shall indicate
on any drug reimbursement claims form
(or format, where electronic claims
management is used) that a unit of the
drug that is the subject of the form is
subject to an agreement under section
340B of such Act, and not submit to any
manufacturer a claim for a rebate
payment under subsection (b) with
respect to such a drug.
(D) Effect of subsequent amendments.--In
determining whether an agreement under
subparagraph (A) meets the requirements of
section 340B of the Public Health Service Act,
the Secretary shall not take into account any
amendments to such section that are enacted
after the enactment of title VI of the Veterans
Health Care Act of 1992.
(E) Determination of compliance.--A
manufacturer is deemed to meet the requirements
of this paragraph if the manufacturer
establishes to the satisfaction of the
Secretary that the manufacturer would comply
(and has offered to comply) with the provisions
of section 340B of the Public Health Service
Act (as in effect immediately after the
enactment of this paragraph, and would have
entered into an agreement under such section
(as such section was in effect at such time),
but for a legislative change in such section
after the date of the enactment of this
paragraph.
(6) Requirements relating to master
agreements for drugs procured by department of
veterans affairs and certain other federal
agencies.--
(A) In general.--A manufacturer meets
the requirements of this paragraph if
the manufacturer complies with the
provisions of section 8126 of title 38,
United States Code, including the
requirement of entering into a master
agreement with the Secretary of
Veterans Affairs under such section.
(B) Effect of subsequent
amendments.--In determining whether a
master agreement described in
subparagraph (A) meets the requirements
of section 8126 of title 38, United
States Code, the Secretary shall not
take into account any amendments to
such section that are enacted after the
enactment of title VI of the Veterans
Health Care Act of 1992.
(C) Determination of compliance.--A
manufacturer is deemed to meet the
requirements of this paragraph if the
manufacturer establishes to the
satisfaction of the Secretary that the
manufacturer would comply (and has
offered to comply) with the provisions
of section 8126 of title 38, United
States Code (as in effect immediately
after the enactment of this paragraph)
and would have entered into an
agreement under such section (as such
section was in effect at such time),
but for a legislative change in such
section after the date of the enactment
of this paragraph.
(7) Requirement for submission of utilization data
for certain physician administered drugs.--
(A) Single source drugs.--In order for
payment to be available under section 1903(a)
for a covered outpatient drug that is a single
source drug that is physician administered
under this title (as determined by the
Secretary), and that is administered on or
after January 1, 2006, the State shall provide
for the collection and submission of such
utilization data and coding (such as J-codes
and National Drug Code numbers) for each such
drug as the Secretary may specify as necessary
to identify the manufacturer of the drug in
order to secure rebates under this section for
drugs administered for which payment is made
under this title.
(B) Multiple source drugs.--
(i) Identification of most frequently
physician administered multiple source
drugs.--Not later than January 1, 2007,
the Secretary shall publish a list of
the 20 physician administered multiple
source drugs that the Secretary
determines have the highest dollar
volume of physician administered drugs
dispensed under this title. The
Secretary may modify such list from
year to year to reflect changes in such
volume.
(ii) Requirement.--In order for
payment to be available under section
1903(a) for a covered outpatient drug
that is a multiple source drug that is
physician administered (as determined
by the Secretary), that is on the list
published under clause (i), and that is
administered on or after January 1,
2008, the State shall provide for the
submission of such utilization data and
coding (such as J-codes and National
Drug Code numbers) for each such drug
as the Secretary may specify as
necessary to identify the manufacturer
of the drug in order to secure rebates
under this section.
(C) Use of ndc codes.--Not later than January
1, 2007, the information shall be submitted
under subparagraphs (A) and (B)(ii) using
National Drug Code codes unless the Secretary
specifies that an alternative coding system
should be used.
(D) Hardship waiver.--The Secretary may delay
the application of subparagraph (A) or (B)(ii),
or both, in the case of a State to prevent
hardship to States which require additional
time to implement the reporting system required
under the respective subparagraph.
(b) Terms of Rebate Agreement.--
(1) Periodic rebates.--
(A) In general.--A rebate agreement under
this subsection shall require the manufacturer
to provide, to each State plan approved under
this title, a rebate for a rebate period in an
amount specified in subsection (c) for covered
outpatient drugs of the manufacturer dispensed
after December 31, 1990, for which payment was
made under the State plan for such period,
including such drugs dispensed to individuals
enrolled with a medicaid managed care
organization if the organization is responsible
for coverage of such drugs. Such rebate shall
be paid by the manufacturer not later than 30
days after the date of receipt of the
information described in paragraph (2) for the
period involved.
(B) Offset against medical assistance.--
Amounts received by a State under this section
(or under an agreement authorized by the
Secretary under subsection (a)(1) or an
agreement described in subsection (a)(4)) in
any quarter, including amounts received by a
State under subsection (c)(4), shall be
considered to be a reduction in the amount
expended under the State plan in the quarter
for medical assistance for purposes of section
1903(a)(1).
(C) Special rule for increased minimum rebate
percentage.--
(i) In general.--In addition to the
amounts applied as a reduction under
subparagraph (B), for rebate periods
beginning on or after January 1, 2010,
during a fiscal year, the Secretary
shall reduce payments to a State under
section 1903(a) in the manner specified
in clause (ii), in an amount equal to
the product of--
(I) 100 percent minus the
Federal medical assistance
percentage applicable to the
rebate period for the State;
and
(II) the amounts received by
the State under such
subparagraph that are
attributable (as estimated by
the Secretary based on
utilization and other data) to
the increase in the minimum
rebate percentage effected by
the amendments made by
subsections (a)(1), (b), and
(d) of section 2501 of the
Patient Protection and
Affordable Care Act, taking
into account the additional
drugs included under the
amendments made by subsection
(c) of section 2501 of such
Act.
The Secretary shall adjust such payment
reduction for a calendar quarter to the
extent the Secretary determines, based
upon subsequent utilization and other
data, that the reduction for such
quarter was greater or less than the
amount of payment reduction that should
have been made.
(ii) Manner of payment reduction.--
The amount of the payment reduction
under clause (i) for a State for a
quarter shall be deemed an overpayment
to the State under this title to be
disallowed against the State's regular
quarterly draw for all Medicaid
spending under section 1903(d)(2). Such
a disallowance is not subject to a
reconsideration under section 1116(d).
(2) State provision of information.--
(A) State responsibility.--Each State agency
under this title shall report to each
manufacturer not later than 60 days after the
end of each rebate period and in a form
consistent with a standard reporting format
established by the Secretary, information on
the total number of units of each dosage form
and strength and package size of each covered
outpatient drug dispensed after December 31,
1990, for which payment was made under the plan
during the period, including such information
reported by each medicaid managed care
organization, and shall promptly transmit a
copy of such report to the Secretary.
(B) Audits.--A manufacturer may audit the
information provided (or required to be
provided) under subparagraph (A). Adjustments
to rebates shall be made to the extent that
information indicates that utilization was
greater or less than the amount previously
specified.
(3) Manufacturer provision of price and drug product
information.--
(A) In general.--Each manufacturer with an
agreement in effect under this section shall
report to the Secretary--
(i) not later than 30 days after the
last day of each rebate period under
the agreement--
(I) on the average manufacturer price
(as defined in subsection (k)(1)) for
covered outpatient drugs for the rebate
period under the agreement (including
for all such drugs that are sold under
a new drug application approved under
section 505(c) of the Federal Food,
Drug, and Cosmetic Act); and
(II) for single source drugs and
innovator multiple source drugs
(including all such drugs that are sold
under a new drug application approved
under section 505(c) of the Federal
Food, Drug, and Cosmetic Act), on the
manufacturer's best price (as defined
in subsection (c)(1)(C)) for such drugs
for the rebate period under the
agreement;
(ii) not later than 30 days after the
date of entering into an agreement
under this section on the average
manufacturer price (as defined in
subsection (k)(1)) as of October 1,
1990 for each of the manufacturer's
covered outpatient drugs (including for
such drugs that are sold under a new
drug application approved under section
505(c) of the Federal Food, Drug, and
Cosmetic Act);
(iii) for calendar quarters beginning
on or after January 1, 2004, in
conjunction with reporting required
under clause (i) and by National Drug
Code (including package size)--
(I) the manufacturer's
average sales price (as defined
in section 1847A(c)) and the
total number of units specified
under section 1847A(b)(2)(A);
(II) if required to make
payment under section 1847A,
the manufacturer's wholesale
acquisition cost, as defined in
subsection (c)(6) of such
section; and
(III) information on those
sales that were made at a
nominal price or otherwise
described in section
1847A(c)(2)(B);
for a drug or biological described in
subparagraph (C), (D), (E), or (G) of
section 1842(o)(1) or [section
1881(b)(13)(A)(ii)] section
1881(b)(14)(B), and, for calendar
quarters beginning on or after January
1, 2007 and only with respect to the
information described in subclause
(III), for covered outpatient drugs;
(iv) not later than 30 days after the
last day of each month of a rebate
period under the agreement, on the
manufacturer's total number of units
that are used to calculate the monthly
average manufacturer price for each
covered outpatient drug; and
(v) not later than 30 days after the
last day of each month of a rebate
period under the agreement, such drug
product information as the Secretary
shall require for each of the
manufacturer's covered outpatient
drugs.
Information reported under this subparagraph is
subject to audit by the Inspector General of
the Department of Health and Human Services.
Beginning July 1, 2006, the Secretary shall
provide on a monthly basis to States under
subparagraph (D)(iv) the most recently reported
average manufacturer prices for single source
drugs and for multiple source drugs and shall,
on at least a quarterly basis, update the
information posted on the website under
subparagraph (D)(v) (relating to the weighted
average of the most recently reported monthly
average manufacturer prices). For purposes of
applying clause (iii), a drug or biological
described in the flush matter following such
clause includes items, services, supplies, and
products that are payable under this part as a
drug or biological.
(B) Verification surveys of average
manufacturer price and manufacturer's average
sales price.--The Secretary may survey
wholesalers and manufacturers that directly
distribute their covered outpatient drugs, when
necessary, to verify manufacturer prices and
manufacturer's average sales prices (including
wholesale acquisition cost) if required to make
payment reported under subparagraph (A). The
Secretary may impose a civil monetary penalty
in an amount not to exceed $100,000 on a
wholesaler, manufacturer, or direct seller, if
the wholesaler, manufacturer, or direct seller
of a covered outpatient drug refuses a request
for information about charges or prices by the
Secretary in connection with a survey under
this subparagraph or knowingly provides false
information. The provisions of section 1128A
(other than subsections (a) (with respect to
amounts of penalties or additional assessments)
and (b)) shall apply to a civil money penalty
under this subparagraph in the same manner as
such provisions apply to a penalty or
proceeding under section 1128A(a).
(C) Penalties.--
(i) Failure to provide timely
information.--In the case of a
manufacturer with an agreement under
this section that fails to provide
information required under subparagraph
(A) on a timely basis, the amount of
the penalty shall be increased by
$10,000 for each day in which such
information has not been provided and
such amount shall be paid to the
Treasury, and, if such information is
not reported within 90 days of the
deadline imposed, the agreement shall
be suspended for services furnished
after the end of such 90-day period and
until the date such information is
reported (but in no case shall such
suspension be for a period of less than
30 days).
(ii) False information.--Any
manufacturer with an agreement under
this section that knowingly provides
false information, including
information related to drug pricing,
drug product information, and data
related to drug pricing or drug product
information, is subject to a civil
money penalty in an amount not to
exceed $100,000 for each item of false
information. Such civil money penalties
are in addition to other penalties as
may be prescribed by law. The
provisions of section 1128A (other than
subsections (a), (b), (f)(3), and
(f)(4)) shall apply to a civil money
penalty under this subparagraph in the
same manner as such provisions apply to
a penalty or proceeding under section
1128A(a).
(iii) Misclassified drug product or
misreported information.--
(I) In general.--Any
manufacturer with an agreement
under this section that
knowingly (as defined in
section 1003.110 of title 42,
Code of Federal Regulations (or
any successor regulation))
misclassifies a covered
outpatient drug, such as by
knowingly submitting incorrect
drug product information, is
subject to a civil money
penalty for each covered
outpatient drug that is
misclassified in an amount not
to exceed 2 times the amount of
the difference between--
(aa) the total amount
of rebates that the
manufacturer paid with
respect to the drug to
all States for all
rebate periods during
which the drug was
misclassified; and
(bb) the total amount
of rebates that the
manufacturer would have
been required to pay,
as determined by the
Secretary using drug
product information
provided by the
manufacturer, with
respect to the drug to
all States for all
rebate periods during
which the drug was
misclassified if the
drug had been correctly
classified.
(II) Other penalties and
recovery of underpaid
rebates.--The civil money
penalties described in
subclause (I) are in addition
to other penalties as may be
prescribed by law and any other
recovery of the underlying
underpayment for rebates due
under this section or the terms
of the rebate agreement as
determined by the Secretary.
(iv) Increasing oversight and
enforcement.--Each year the Secretary
shall retain, in addition to any amount
retained by the Secretary to recoup
investigation and litigation costs
related to the enforcement of the civil
money penalties under this subparagraph
and subsection (c)(4)(B)(ii)(III), an
amount equal to 25 percent of the total
amount of civil money penalties
collected under this subparagraph and
subsection (c)(4)(B)(ii)(III) for the
year, such retained amount shall be
available to the Secretary, without
further appropriation and until
expended, for activities related to the
oversight and enforcement of this
section and agreements under this
section, including--
(I) improving drug data
reporting systems;
(II) evaluating and ensuring
manufacturer compliance with
rebate obligations; and
(III) oversight and
enforcement related to ensuring
that manufacturers accurately
and fully report drug
information, including data
related to drug classification.
(D) Confidentiality of information.--
Notwithstanding any other provision of law,
information disclosed by manufacturers or
wholesalers under this paragraph or under an
agreement with the Secretary of Veterans
Affairs described in subsection (a)(6)(A)(ii)
(other than the wholesale acquisition cost for
purposes of carrying out section 1847A) is
confidential and shall not be disclosed by the
Secretary or the Secretary of Veterans Affairs
or a State agency (or contractor therewith) in
a form which discloses the identity of a
specific manufacturer or wholesaler, prices
charged for drugs by such manufacturer or
wholesaler, except--
(i) as the Secretary determines to be
necessary to carry out this section, to
carry out section 1847A (including the
determination and implementation of the
payment amount), or to carry out
section 1847B,
(ii) to permit the Comptroller
General to review the information
provided,
(iii) to permit the Director of the
Congressional Budget Office to review
the information provided,
(iv) to States to carry out this
title,
(v) to the Secretary to disclose
(through a website accessible to the
public) the weighted average of the
most recently reported monthly average
manufacturer prices and the average
retail survey price determined for each
multiple source drug in accordance with
subsection (f), and
(vi) in the case of categories of
drug product or classification
information that were not considered
confidential by the Secretary on the
day before the date of the enactment of
this clause.
The previous sentence shall also apply to
information disclosed under section 1860D-
2(d)(2) or 1860D-4(c)(2)(E) and drug pricing
data reported under the first sentence of
section 1860D-31(i)(1).
(4) Length of agreement.--
(A) In general.--A rebate agreement shall be
effective for an initial period of not less
than 1 year and shall be automatically renewed
for a period of not less than one year unless
terminated under subparagraph (B).
(B) Termination.--
(i) By the secretary.--The Secretary
may provide for termination of a rebate
agreement for violation of the
requirements of the agreement or other
good cause shown. Such termination
shall not be effective earlier than 60
days after the date of notice of such
termination. The Secretary shall
provide, upon request, a manufacturer
with a hearing concerning such a
termination, but such hearing shall not
delay the effective date of the
termination.
(ii) By a manufacturer.--A
manufacturer may terminate a rebate
agreement under this section for any
reason. Any such termination shall not
be effective until the calendar quarter
beginning at least 60 days after the
date the manufacturer provides notice
to the Secretary.
(iii) Effectiveness of termination.--
Any termination under this subparagraph
shall not affect rebates due under the
agreement before the effective date of
its termination.
(iv) Notice to states.--In the case
of a termination under this
subparagraph, the Secretary shall
provide notice of such termination to
the States within not less than 30 days
before the effective date of such
termination.
(v) Application to terminations of
other agreements.--The provisions of
this subparagraph shall apply to the
terminations of agreements described in
section 340B(a)(1) of the Public Health
Service Act and master agreements
described in section 8126(a) of title
38, United States Code.
(C) Delay before reentry.--In the case of any
rebate agreement with a manufacturer under this
section which is terminated, another such
agreement with the manufacturer (or a successor
manufacturer) may not be entered into until a
period of 1 calendar quarter has elapsed since
the date of the termination, unless the
Secretary finds good cause for an earlier
reinstatement of such an agreement.
(c) Determination of Amount of Rebate.--
(1) Basic rebate for single source drugs and
innovator multiple source drugs.--
(A) In general.--Except as provided in
paragraph (2), the amount of the rebate
specified in this subsection for a rebate
period (as defined in subsection (k)(8)) with
respect to each dosage form and strength of a
single source drug or an innovator multiple
source drug shall be equal to the product of--
(i) the total number of units of each
dosage form and strength paid for under
the State plan in the rebate period (as
reported by the State); and
(ii) subject to subparagraph (B)(ii),
the greater of--
(I) the difference between
the average manufacturer price
and the best price (as defined
in subparagraph (C)) for the
dosage form and strength of the
drug, or
(II) the minimum rebate
percentage (specified in
subparagraph (B)(i)) of such
average manufacturer price,
of or the rebate period.
(B) Range of rebates required.--
(i) Minimum rebate percentage.--For
purposes of subparagraph (A)(ii)(II),
the ``minimum rebate percentage'' for
rebate periods beginning--
(I) after December 31, 1990,
and before October 1, 1992, is
12.5 percent;
(II) after September 30,
1992, and before January 1,
1994, is 15.7 percent;
(III) after December 31,
1993, and before January 1,
1995, is 15.4 percent;
(IV) after December 31, 1994,
and before January 1, 1996, is
15.2 percent;
(V) after December 31, 1995,
and before January 1, 2010 is
15.1 percent;and
(VI) except as provided in
clause (iii), after December
31, 2009, 23.1 percent.
(ii) Temporary limitation on maximum
rebate amount.--In no case shall the
amount applied under subparagraph
(A)(ii) for a rebate period beginning--
(I) before January 1, 1992,
exceed 25 percent of the
average manufacturer price; or
(II) after December 31, 1991,
and before January 1, 1993,
exceed 50 percent of the
average manufacturer price.
(iii) Minimum rebate percentage for
certain drugs.--
(I) In general.--In the case
of a single source drug or an
innovator multiple source drug
described in subclause (II),
the minimum rebate percentage
for rebate periods specified in
clause (i)(VI) is 17.1 percent.
(II) Drug described.--For
purposes of subclause (I), a
single source drug or an
innovator multiple source drug
described in this subclause is
any of the following drugs:
(aa) A clotting
factor for which a
separate furnishing
payment is made under
section 1842(o)(5) and
which is included on a
list of such factors
specified and updated
regularly by the
Secretary.
(bb) A drug approved
by the Food and Drug
Administration
exclusively for
pediatric indications.
(C) Best price defined.--For purposes of this
section--
(i) In general.--The term ``best
price'' means, with respect to a single
source drug or innovator multiple
source drug of a manufacturer
(including the lowest price available
to any entity for any such drug of a
manufacturer that is sold under a new
drug application approved under section
505(c) of the Federal Food, Drug, and
Cosmetic Act), the lowest price
available from the manufacturer during
the rebate period to any wholesaler,
retailer, provider, health maintenance
organization, nonprofit entity, or
governmental entity within the United
States, excluding--
(I) any prices charged on or
after October 1, 1992, to the
Indian Health Service, the
Department of Veterans Affairs,
a State home receiving funds
under section 1741 of title 38,
United States Code, the
Department of Defense, the
Public Health Service, or a
covered entity described in
subsection (a)(5)(B) (including
inpatient prices charged to
hospitals described in section
340B(a)(4)(L) of the Public
Health Service Act);
(II) any prices charged under
the Federal Supply Schedule of
the General Services
Administration;
(III) any prices used under a
State pharmaceutical assistance
program;
(IV) any depot prices and
single award contract prices,
as defined by the Secretary, of
any agency of the Federal
Government;
(V) the prices negotiated
from drug manufacturers for
covered discount card drugs
under an endorsed discount card
program under section 1860D-31;
and
(VI) any prices charged which
are negotiated by a
prescription drug plan under
part D of title XVIII, by an
MA-PD plan under part C of such
title with respect to covered
part D drugs or by a qualified
retiree prescription drug plan
(as defined in section 1860D-
22(a)(2)) with respect to such
drugs on behalf of individuals
entitled to benefits under part
A or enrolled under part B of
such title, or any discounts
provided by manufacturers under
the Medicare coverage gap
discount program under section
1860D-14A.
(ii) Special rules.--The term ``best
price''--
(I) shall be inclusive of
cash discounts, free goods that
are contingent on any purchase
requirement, volume discounts,
and rebates (other than rebates
under this section);
(II) shall be determined
without regard to special
packaging, labeling, or
identifiers on the dosage form
or product or package;
(III) shall not take into
account prices that are merely
nominal in amount; and
(IV) in the case of a manufacturer
that approves, allows, or otherwise
permits any other drug of the
manufacturer to be sold under a new
drug application approved under section
505(c) of the Federal Food, Drug, and
Cosmetic Act, shall be inclusive of the
lowest price for such authorized drug
available from the manufacturer during
the rebate period to any manufacturer,
wholesaler, retailer, provider, health
maintenance organization, nonprofit
entity, or governmental entity within
the United States, excluding those
prices described in subclauses (I)
through (IV) of clause (i).
(iii) Application of auditing and
recordkeeping requirements.--With
respect to a covered entity described
in section 340B(a)(4)(L) of the Public
Health Service Act, any drug purchased
for inpatient use shall be subject to
the auditing and recordkeeping
requirements described in section
340B(a)(5)(C) of the Public Health
Service Act.
(D) Limitation on sales at a nominal price.--
(i) In general.--For purposes of
subparagraph (C)(ii)(III) and
subsection (b)(3)(A)(iii)(III), only
sales by a manufacturer of covered
outpatient drugs at nominal prices to
the following shall be considered to be
sales at a nominal price or merely
nominal in amount:
(I) A covered entity
described in section 340B(a)(4)
of the Public Health Service
Act.
(II) An intermediate care
facility for the mentally
retarded.
(III) A State-owned or
operated nursing facility.
(IV) An entity that--
(aa) is described in
section 501(c)(3) of
the Internal Revenue
Code of 1986 and exempt
from tax under section
501(a) of such Act or
is State-owned or
operated; and
(bb) would be a
covered entity
described in section
340(B)(a)(4) of the
Public Health Service
Act insofar as the
entity provides the
same type of services
to the same type of
populations as a
covered entity
described in such
section provides, but
does not receive
funding under a
provision of law
referred to in such
section;
(V) A public or nonprofit
entity, or an entity based at
an institution of higher
learning whose primary purpose
is to provide health care
services to students of that
institution, that provides a
service or services described
under section 1001(a) of the
Public Health Service Act, 42
U.S.C. 300.
(VI) Any other facility or
entity that the Secretary
determines is a safety net
provider to which sales of such
drugs at a nominal price would
be appropriate based on the
factors described in clause
(ii).
(ii) Factors.--The factors described
in this clause with respect to a
facility or entity are the following:
(I) The type of facility or
entity.
(II) The services provided by
the facility or entity.
(III) The patient population
served by the facility or
entity.
(IV) The number of other
facilities or entities eligible
to purchase at nominal prices
in the same service area.
(iii) Nonapplication.--Clause (i)
shall not apply with respect to sales
by a manufacturer at a nominal price of
covered outpatient drugs pursuant to a
master agreement under section 8126 of
title 38, United States Code.
(iv) Rule of Construction.--Nothing
in this subparagraph shall be construed
to alter any existing statutory or
regulatory prohibition on services with
respect to an entity described in
clause (i)(IV), including the
prohibition set forth in section 1008
of the Public Health Service Act.
(2) Additional rebate for single source and innovator
multiple source drugs.--
(A) In general.--The amount of the rebate
specified in this subsection for a rebate
period, with respect to each dosage form and
strength of a single source drug or an
innovator multiple source drug, shall be
increased by an amount equal to the product
of--
(i) the total number of units of such
dosage form and strength dispensed
after December 31, 1990, for which
payment was made under the State plan
for the rebate period; and
(ii) the amount (if any) by which--
(I) the average manufacturer
price for the dosage form and
strength of the drug for the
period, exceeds
(II) the average manufacturer
price for such dosage form and
strength for the calendar
quarter beginning July 1, 1990
(without regard to whether or
not the drug has been sold or
transferred to an entity,
including a division or
subsidiary of the manufacturer,
after the first day of such
quarter), increased by the
percentage by which the
consumer price index for all
urban consumers (United States
city average) for the month
before the month in which the
rebate period begins exceeds
such index for September 1990.
(B) Treatment of subsequently approved
drugs.--In the case of a covered outpatient
drug approved by the Food and Drug
Administration after October 1, 1990, clause
(ii)(II) of subparagraph (A) shall be applied
by substituting ``the first full calendar
quarter after the day on which the drug was
first marketed'' for ``the calendar quarter
beginning July 1, 1990'' and ``the month prior
to the first month of the first full calendar
quarter after the day on which the drug was
first marketed'' for ``September 1990''.
(C) Treatment of new formulations.--
(i) In general.--In the case of a
drug that is a line extension of a
single source drug or an innovator
multiple source drug that is an oral
solid dosage form, the rebate
obligation for a rebate period with
respect to such drug under this
subsection shall be the greater of the
amount described in clause (ii) for
such drug or the amount described in
clause (iii) for such drug.
(ii) Amount 1.--For purposes of
clause (i), the amount described in
this clause with respect to a drug
described in clause (i) and rebate
period is the amount computed under
paragraph (1) for such drug, increased
by the amount computed under
subparagraph (A) and, as applicable,
subparagraph (B) for such drug and
rebate period.
(iii) Amount 2.--For purposes of
clause (i), the amount described in
this clause with respect to a drug
described in clause (i) and rebate
period is the amount computed under
paragraph (1) for such drug, increased
by the product of--
(I) the average manufacturer
price for the rebate period of
the line extension of a single
source drug or an innovator
multiple source drug that is an
oral solid dosage form;
(II) the highest additional
rebate (calculated as a
percentage of average
manufacturer price) under this
paragraph for the rebate period
for any strength of the
original single source drug or
innovator multiple source drug;
and
(III) the total number of
units of each dosage form and
strength of the line extension
product paid for under the
State plan in the rebate period
(as reported by the State).
In this subparagraph, the term ``line
extension'' means, with respect to a drug, a
new formulation of the drug, such as an
extended release formulation, but does not
include an abuse-deterrent formulation of the
drug (as determined by the Secretary),
regardless of whether such abuse-deterrent
formulation is an extended release formulation.
(D) Maximum rebate amount.--In no case shall
the sum of the amounts applied under paragraph
(1)(A)(ii) and this paragraph with respect to
each dosage form and strength of a single
source drug or an innovator multiple source
drug for a rebate period beginning after
December 31, 2009, exceed 100 percent of the
average manufacturer price of the drug.
(3) Rebate for other drugs.--
(A) In general.--Except as provided in
subparagraph (C), the amount of the rebate paid
to a State for a rebate period with respect to
each dosage form and strength of covered
outpatient drugs (other than single source
drugs and innovator multiple source drugs)
shall be equal to the product of--
(i) the applicable percentage (as
described in subparagraph (B)) of the
average manufacturer price for the
dosage form and strength for the rebate
period, and
(ii) the total number of units of
such dosage form and strength dispensed
after December 31, 1990, for which
payment was made under the State plan
for the rebate period.
(B) Applicable percentage defined.--For
purposes of subparagraph (A)(i), the
``applicable percentage'' for rebate periods
beginning--
(i) before January 1, 1994, is 10
percent,
(ii) after December 31, 1993, and
before January 1, 2010, is 11 percent;
and
(iii) after December 31, 2009, is 13
percent.
(C) Additional rebate.--
(i) In general.--The amount of the
rebate specified in this paragraph for
a rebate period, with respect to each
dosage form and strength of a covered
outpatient drug other than a single
source drug or an innovator multiple
source drug of a manufacturer, shall be
increased in the manner that the rebate
for a dosage form and strength of a
single source drug or an innovator
multiple source drug is increased under
subparagraphs (A) and (D) of paragraph
(2), except as provided in clause (ii).
(ii) Special rules for application of
provision.--In applying subparagraphs
(A) and (D) of paragraph (2) under
clause (i)--
(I) the reference in
subparagraph (A)(i) of such
paragraph to ``1990'' shall be
deemed a reference to ``2014'';
(II) subject to clause (iii),
the reference in subparagraph
(A)(ii) of such paragraph to
``the calendar quarter
beginning July 1, 1990'' shall
be deemed a reference to ``the
calendar quarter beginning July
1, 2014''; and
(III) subject to clause
(iii), the reference in
subparagraph (A)(ii) of such
paragraph to ``September 1990''
shall be deemed a reference to
``September 2014'';
(IV) the references in
subparagraph (D) of such
paragraph to ``paragraph
(1)(A)(ii)'', ``this
paragraph'', and ``December 31,
2009'' shall be deemed
references to ``subparagraph
(A)'', ``this subparagraph'',
and ``December 31, 2014'',
respectively; and
(V) any reference in such
paragraph to a ``single source
drug or an innovator multiple
source drug'' shall be deemed
to be a reference to a drug to
which clause (i) applies.
(iii) Special rule for certain
noninnovator multiple source drugs.--In
applying paragraph (2)(A)(ii)(II) under
clause (i) with respect to a covered
outpatient drug that is first marketed
as a drug other than a single source
drug or an innovator multiple source
drug after April 1, 2013, such
paragraph shall be applied--
(I) by substituting ``the
applicable quarter'' for ``the
calendar quarter beginning July
1, 1990''; and
(II) by substituting ``the
last month in such applicable
quarter'' for ``September
1990''.
(iv) Applicable quarter defined.--In
this subsection, the term ``applicable
quarter'' means, with respect to a drug
described in clause (iii), the fifth
full calendar quarter after which the
drug is marketed as a drug other than a
single source drug or an innovator
multiple source drug.
(4) Recovery of unpaid rebate amounts due to
misclassification of covered outpatient drugs.--
(A) In general.--If the Secretary determines
that a manufacturer with an agreement under
this section paid a lower per-unit rebate
amount to a State for a rebate period as a
result of the misclassification by the
manufacturer of a covered outpatient drug
(without regard to whether the manufacturer
knowingly made the misclassification or should
have known that the misclassification would be
made) than the per-unit rebate amount that the
manufacturer would have paid to the State if
the drug had been correctly classified, the
manufacturer shall pay to the State an amount
equal to the product of--
(i) the difference between--
(I) the per-unit rebate
amount paid to the State for
the period; and
(II) the per-unit rebate
amount that the manufacturer
would have paid to the State
for the period, as determined
by the Secretary, if the drug
had been correctly classified;
and
(ii) the total units of the drug paid
for under the State plan in the period.
(B) Authority to correct
misclassifications.--
(i) In general.--If the Secretary
determines that a manufacturer with an
agreement under this section has
misclassified a covered outpatient drug
(without regard to whether the
manufacturer knowingly made the
misclassification or should have known
that the misclassification would be
made), the Secretary shall notify the
manufacturer of the misclassification
and require the manufacturer to correct
the misclassification in a timely
manner.
(ii) Enforcement.--If, after
receiving notice of a misclassification
from the Secretary under clause (i), a
manufacturer fails to correct the
misclassification by such time as the
Secretary shall require, until the
manufacturer makes such correction, the
Secretary may do any or all of the
following:
(I) Correct the
misclassification, using drug
product information provided by
the manufacturer, on behalf of
the manufacturer.
(II) Suspend the
misclassified drug and the
drug's status as a covered
outpatient drug under the
manufacturer's national rebate
agreement, and exclude the
misclassified drug from Federal
financial participation in
accordance with section
1903(i)(10)(E).
(III) Impose a civil money
penalty (which shall be in
addition to any other recovery
or penalty which may be
available under this section or
any other provision of law) for
each rebate period during which
the drug is misclassified not
to exceed an amount equal to
the product of--
(aa) the total number
of units of each dosage
form and strength of
such misclassified drug
paid for under any
State plan during such
a rebate period; and
(bb) 23.1 percent of
the average
manufacturer price for
the dosage form and
strength of such
misclassified drug.
(C) Reporting and transparency.--
(i) In general.--The Secretary shall
submit a report to Congress on at least
an annual basis that includes
information on the covered outpatient
drugs that have been identified as
misclassified, any steps taken to
reclassify such drugs, the actions the
Secretary has taken to ensure the
payment of any rebate amounts which
were unpaid as a result of such
misclassification, and a disclosure of
expenditures from the fund created in
subsection (b)(3)(C)(iv), including an
accounting of how such funds have been
allocated and spent in accordance with
such subsection.
(ii) Public access.--The Secretary
shall make the information contained in
the report required under clause (i)
available to the public on a timely
basis.
(D) Other penalties and actions.--Actions
taken and penalties imposed under this clause
shall be in addition to other remedies
available to the Secretary including
terminating the manufacturer's rebate agreement
for noncompliance with the terms of such
agreement and shall not exempt a manufacturer
from, or preclude the Secretary from pursuing,
any civil money penalty under this title or
title XI, or any other penalty or action as may
be prescribed by law.
(d) Limitations on Coverage of Drugs.--
(1) Permissible restrictions.--(A) A State may
subject to prior authorization any covered outpatient
drug. Any such prior authorization program shall comply
with the requirements of paragraph (5).
(B) A State may exclude or otherwise restrict
coverage of a covered outpatient drug if--
(i) the prescribed use is not for a medically
accepted indication (as defined in subsection
(k)(6));
(ii) the drug is contained in the list
referred to in paragraph (2);
(iii) the drug is subject to such
restrictions pursuant to an agreement between a
manufacturer and a State authorized by the
Secretary under subsection (a)(1) or in effect
pursuant to subsection (a)(4); or
(iv) the State has excluded coverage of the
drug from its formulary established in
accordance with paragraph (4).
(2) List of drugs subject to restriction.--The
following drugs or classes of drugs, or their medical
uses, may be excluded from coverage or otherwise
restricted:
(A) Agents when used for anorexia, weight
loss, or weight gain.
(B) Agents when used to promote fertility.
(C) Agents when used for cosmetic purposes or
hair growth.
(D) Agents when used for the symptomatic
relief of cough and colds.
(E) Prescription vitamins and mineral
products, except prenatal vitamins and fluoride
preparations.
(F) Nonprescription drugs, except, in the
case of pregnant women when recommended in
accordance with the Guideline referred to in
section 1905(bb)(2)(A), agents approved by the
Food and Drug Administration under the over-
the-counter monograph process for purposes of
promoting, and when used to promote, tobacco
cessation.
(G) Covered outpatient drugs which the
manufacturer seeks to require as a condition of
sale that associated tests or monitoring
services be purchased exclusively from the
manufacturer or its designee.
(H) Agents when used for the treatment of
sexual or erectile dysfunction, unless such
agents are used to treat a condition, other
than sexual or erectile dysfunction, for which
the agents have been approved by the Food and
Drug Administration.
(3) Update of drug listings.--The Secretary shall, by
regulation, periodically update the list of drugs or
classes of drugs described in paragraph (2) or their
medical uses, which the Secretary has determined, based
on data collected by surveillance and utilization
review programs of State medical assistance programs,
to be subject to clinical abuse or inappropriate use.
(4) Requirements for formularies.--A State may
establish a formulary if the formulary meets the
following requirements:
(A) The formulary is developed by a committee
consisting of physicians, pharmacists, and
other appropriate individuals appointed by the
Governor of the State (or, at the option of the
State, the State's drug use review board
established under subsection (g)(3)).
(B) Except as provided in subparagraph (C),
the formulary includes the covered outpatient
drugs of any manufacturer which has entered
into and complies with an agreement under
subsection (a) (other than any drug excluded
from coverage or otherwise restricted under
paragraph (2)).
(C) A covered outpatient drug may be excluded
with respect to the treatment of a specific
disease or condition for an identified
population (if any) only if, based on the
drug's labeling (or, in the case of a drug the
prescribed use of which is not approved under
the Federal Food, Drug, and Cosmetic Act but is
a medically accepted indication, based on
information from the appropriate compendia
described in subsection (k)(6)), the excluded
drug does not have a significant, clinically
meaningful therapeutic advantage in terms of
safety, effectiveness, or clinical outcome of
such treatment for such population over other
drugs included in the formulary and there is a
written explanation (available to the public)
of the basis for the exclusion.
(D) The State plan permits coverage of a drug
excluded from the formulary (other than any
drug excluded from coverage or otherwise
restricted under paragraph (2)) pursuant to a
prior authorization program that is consistent
with paragraph (5).
(E) The formulary meets such other
requirements as the Secretary may impose in
order to achieve program savings consistent
with protecting the health of program
beneficiaries.
A prior authorization program established by a State
under paragraph (5) is not a formulary subject to the
requirements of this paragraph.
(5) Requirements of prior authorization programs.--A
State plan under this title may require, as a condition
of coverage or payment for a covered outpatient drug
for which Federal financial participation is available
in accordance with this section, with respect to drugs
dispensed on or after July 1, 1991, the approval of the
drug before its dispensing for any medically accepted
indication (as defined in subsection (k)(6)) only if
the system providing for such approval--
(A) provides response by telephone or other
telecommunication device within 24 hours of a
request for prior authorization; and
(B) except with respect to the drugs on the
list referred to in paragraph (2), provides for
the dispensing of at least 72-hour supply of a
covered outpatient prescription drug in an
emergency situation (as defined by the
Secretary).
(6) Other permissible restrictions.--A State may
impose limitations, with respect to all such drugs in a
therapeutic class, on the minimum or maximum quantities
per prescription or on the number of refills, if such
limitations are necessary to discourage waste, and may
address instances of fraud or abuse by individuals in
any manner authorized under this Act.
(7) Non-excludable drugs.--The following drugs or
classes of drugs, or their medical uses, shall not be
excluded from coverage:
(A) Agents when used to promote smoking
cessation, including agents approved by the
Food and Drug Administration under the over-
the-counter monograph process for purposes of
promoting, and when used to promote, tobacco
cessation.
(B) Barbiturates.
(C) Benzodiazepines.
(e) Treatment of Pharmacy Reimbursement Limits.--
(1) In general.--During the period beginning on
January 1, 1991, and ending on December 31, 1994--
(A) a State may not reduce the payment limits
established by regulation under this title or
any limitation described in paragraph (3) with
respect to the ingredient cost of a covered
outpatient drug or the dispensing fee for such
a drug below the limits in effect as of January
1, 1991, and
(B) except as provided in paragraph (2), the
Secretary may not modify by regulation the
formula established under sections 447.331
through 447.334 of title 42, Code of Federal
Regulations, in effect on November 5, 1990, to
reduce the limits described in subparagraph
(A).
(2) Special rule.--If a State is not in compliance
with the regulations described in paragraph (1)(B),
paragraph (1)(A) shall not apply to such State until
such State is in compliance with such regulations.
(3) Effect on state maximum allowable cost
limitations.--This section shall not supersede or
affect provisions in effect prior to January 1, 1991,
or after December 31, 1994, relating to any maximum
allowable cost limitation established by a State for
payment by the State for covered outpatient drugs, and
rebates shall be made under this section without regard
to whether or not payment by the State for such drugs
is subject to such a limitation or the amount of such a
limitation.
(4) Establishment of upper payment Limits.--Subject
to paragraph (5), the Secretary shall establish a
Federal upper reimbursement limit for each multiple
source drug for which the FDA has rated three or more
products therapeutically and pharmaceutically
equivalent, regardless of whether all such additional
formulations are rated as such and shall use only such
formulations when determining any such upper limit.
(5) Use of amp in upper payment limits.--The
Secretary shall calculate the Federal upper
reimbursement limit established under paragraph (4) as
no less than 175 percent of the weighted average
(determined on the basis of utilization) of the most
recently reported monthly average manufacturer prices
for pharmaceutically and therapeutically equivalent
multiple source drug products that are available for
purchase by retail community pharmacies on a nationwide
basis. The Secretary shall implement a smoothing
process for average manufacturer prices. Such process
shall be similar to the smoothing process used in
determining the average sales price of a drug or
biological under section 1847A.
(f) Survey of Retail Prices; State Payment and Utilization
Rates; and Performance Rankings.--
(1) Survey of retail prices.--
(A) Use of vendor.--The Secretary may
contract services for--
(i) with respect to a retail
community pharmacy, the determination
on a monthly basis of retail survey
prices for covered outpatient drugs
that represent a nationwide average of
consumer purchase prices for such
drugs, net of all discounts and rebates
(to the extent any information with
respect to such discounts and rebates
is available); and
(ii) the notification of the
Secretary when a drug product that is
therapeutically and pharmaceutically
equivalent and bioequivalent becomes
generally available.
(B) Secretary response to notification of
availability of multiple source products.--If
contractor notifies the Secretary under
subparagraph (A)(ii) that a drug product
described in such subparagraph has become
generally available, the Secretary shall make a
determination, within 7 days after receiving
such notification, as to whether the product is
now described in subsection (e)(4).
(C) Use of competitive bidding.--In
contracting for such services, the Secretary
shall competitively bid for an outside vendor
that has a demonstrated history in--
(i) surveying and determining, on a
representative nationwide basis, retail
prices for ingredient costs of
prescription drugs;
(ii) working with retail community
pharmacies, commercial payers, and
States in obtaining and disseminating
such price information; and
(iii) collecting and reporting such
price information on at least a monthly
basis.
In contracting for such services, the Secretary
may waive such provisions of the Federal
Acquisition Regulation as are necessary for the
efficient implementation of this subsection,
other than provisions relating to
confidentiality of information and such other
provisions as the Secretary determines
appropriate.
(D) Additional provisions.--A contract with a
vendor under this paragraph shall include such
terms and conditions as the Secretary shall
specify, including the following:
(i) The vendor must monitor the
marketplace and report to the Secretary
each time there is a new covered
outpatient drug generally available.
(ii) The vendor must update the
Secretary no less often than monthly on
the retail survey prices for covered
outpatient drugs.
(iii) The contract shall be effective
for a term of 2 years.
(E) Availability of information to states.--
Information on retail survey prices obtained
under this paragraph, including applicable
information on single source drugs, shall be
provided to States on at least a monthly basis.
The Secretary shall devise and implement a
means for providing access to each State agency
designated under section 1902(a)(5) with
responsibility for the administration or
supervision of the administration of the State
plan under this title of the retail survey
price determined under this paragraph.
(2) Annual state report.--Each State shall annually
report to the Secretary information on--
(A) the payment rates under the State plan
under this title for covered outpatient drugs;
(B) the dispensing fees paid under such plan
for such drugs; and
(C) utilization rates for noninnovator
multiple source drugs under such plan.
(3) Annual state performance rankings.--
(A) Comparative analysis.--The Secretary
annually shall compare, for the 50 most widely
prescribed drugs identified by the Secretary,
the national retail sales price data (collected
under paragraph (1)) for such drugs with data
on prices under this title for each such drug
for each State.
(B) Availability of information.--The
Secretary shall submit to Congress and the
States full information regarding the annual
rankings made under subparagraph (A).
(4) Appropriation.--Out of any funds in the Treasury
not otherwise appropriated, there is appropriated to
the Secretary of Health and Human Services $5,000,000
for each of fiscal years 2006 through 2010 to carry out
this subsection.
(g) Drug Use Review.--
(1) In general.--
(A) In order to meet the requirement of
section 1903(i)(10)(B), a State shall provide,
by not later than January 1, 1993, for a drug
use review program described in paragraph (2)
for covered outpatient drugs in order to assure
that prescriptions (i) are appropriate, (ii)
are medically necessary, and (iii) are not
likely to result in adverse medical results.
The program shall be designed to educate
physicians and pharmacists to identify and
reduce the frequency of patterns of fraud,
abuse, gross overuse, or inappropriate or
medically unnecessary care, among physicians,
pharmacists, and patients, or associated with
specific drugs or groups of drugs, as well as
potential and actual severe adverse reactions
to drugs including education on therapeutic
appropriateness, overutilization and
underutilization, appropriate use of generic
products, therapeutic duplication, drug-disease
contraindications, drug-drug interactions,
incorrect drug dosage or duration of drug
treatment, drug-allergy interactions, and
clinical abuse/misuse.
(B) The program shall assess data on drug use
against predetermined standards, consistent
with the following:
(i) compendia which shall consist of
the following:
(I) American Hospital
Formulary Service Drug
Information;
(II) United States
Pharmacopeia-Drug Information
(or its successor
publications); and
(III) the DRUGDEX Information
System; and
(ii) the peer-reviewed medical
literature.
(C) The Secretary, under the procedures
established in section 1903, shall pay to each
State an amount equal to 75 per centum of so
much of the sums expended by the State plan
during calendar years 1991 through 1993 as the
Secretary determines is attributable to the
statewide adoption of a drug use review program
which conforms to the requirements of this
subsection.
(D) States shall not be required to perform
additional drug use reviews with respect to
drugs dispensed to residents of nursing
facilities which are in compliance with the
drug regimen review procedures prescribed by
the Secretary for such facilities in
regulations implementing section 1919,
currently at section 483.60 of title 42, Code
of Federal Regulations.
(2) Description of program.--Each drug use review
program shall meet the following requirements for
covered outpatient drugs:
(A) Prospective drug review.--(i) The State
plan shall provide for a review of drug therapy
before each prescription is filled or delivered
to an individual receiving benefits under this
title, typically at the point-of-sale or point
of distribution. The review shall include
screening for potential drug therapy problems
due to therapeutic duplication, drug-disease
contraindications, drug-drug interactions
(including serious interactions with
nonprescription or over-the-counter drugs),
incorrect drug dosage or duration of drug
treatment, drug-allergy interactions, and
clinical abuse/misuse. Each State shall use the
compendia and literature referred to in
paragraph (1)(B) as its source of standards for
such review.
(ii) As part of the State's prospective drug
use review program under this subparagraph
applicable State law shall establish standards
for counseling of individuals receiving
benefits under this title by pharmacists which
includes at least the following:
(I) The pharmacist must offer to
discuss with each individual receiving
benefits under this title or caregiver
of such individual (in person, whenever
practicable, or through access to a
telephone service which is toll-free
for long-distance calls) who presents a
prescription, matters which in the
exercise of the pharmacist's
professional judgment (consistent with
State law respecting the provision of
such information), the pharmacist deems
significant including the following:
(aa) The name and description
of the medication.
(bb) The route, dosage form,
dosage, route of
administration, and duration of
drug therapy.
(cc) Special directions and
precautions for preparation,
administration and use by the
patient.
(dd) Common severe side or
adverse effects or interactions
and therapeutic
contraindications that may be
encountered, including their
avoidance, and the action
required if they occur.
(ee) Techniques for self-
monitoring drug therapy.
(ff) Proper storage.
(gg) Prescription refill
information.
(hh) Action to be taken in
the event of a missed dose.
(II) A reasonable effort must be made
by the pharmacist to obtain, record,
and maintain at least the following
information regarding individuals
receiving benefits under this title:
(aa) Name, address, telephone
number, date of birth (or age)
and gender.
(bb) Individual history where
significant, including disease
state or states, known
allergies and drug reactions,
and a comprehensive list of
medications and relevant
devices.
(cc) Pharmacist comments
relevant to the individual's
drug therapy.
Nothing in this clause shall be construed as
requiring a pharmacist to provide consultation
when an individual receiving benefits under
this title or caregiver of such individual
refuses such consultation, or to require
verification of the offer to provide
consultation or a refusal of such offer.
(B) Retrospective drug use review.--The
program shall provide, through its mechanized
drug claims processing and information
retrieval systems (approved by the Secretary
under section 1903(r)) or otherwise, for the
ongoing periodic examination of claims data and
other records in order to identify patterns of
fraud, abuse, gross overuse, or inappropriate
or medically unnecessary care, among
physicians, pharmacists and individuals
receiving benefits under this title, or
associated with specific drugs or groups of
drugs.
(C) Application of standards.--The program
shall, on an ongoing basis, assess data on drug
use against explicit predetermined standards
(using the compendia and literature referred to
in subsection (1)(B) as the source of standards
for such assessment) including but not limited
to monitoring for therapeutic appropriateness,
overutilization and underutilization,
appropriate use of generic products,
therapeutic duplication, drug-disease
contraindications, drug-drug interactions,
incorrect drug dosage or duration of drug
treatment, and clinical abuse/misuse and, as
necessary, introduce remedial strategies, in
order to improve the quality of care and to
conserve program funds or personal
expenditures.
(D) Educational program.--The program shall,
through its State drug use review board
established under paragraph (3), either
directly or through contracts with accredited
health care educational institutions, State
medical societies or State pharmacists
associations/societies or other organizations
as specified by the State, and using data
provided by the State drug use review board on
common drug therapy problems, provide for
active and ongoing educational outreach
programs (including the activities described in
paragraph (3)(C)(iii) of this subsection) to
educate practitioners on common drug therapy
problems with the aim of improving prescribing
or dispensing practices.
(3) State drug use review board.--
(A) Establishment.--Each State shall provide
for the establishment of a drug use review
board (hereinafter referred to as the ``DUR
Board'') either directly or through a contract
with a private organization.
(B) Membership.--The membership of the DUR
Board shall include health care professionals
who have recognized knowledge and expertise in
one or more of the following:
(i) The clinically appropriate
prescribing of covered outpatient
drugs.
(ii) The clinically appropriate
dispensing and monitoring of covered
outpatient drugs.
(iii) Drug use review, evaluation,
and intervention.
(iv) Medical quality assurance.
The membership of the DUR Board shall be made
up at least \1/3\ but no more than 51 percent
licensed and actively practicing physicians and
at least \1/3\ licensed and actively practicing
pharmacists.
(C) Activities.--The activities of the DUR
Board shall include but not be limited to the
following:
(i) Retrospective DUR as defined in
section (2)(B).
(ii) Application of standards as
defined in section (2)(C).
(iii) Ongoing interventions for
physicians and pharmacists, targeted
toward therapy problems or individuals
identified in the course of
retrospective drug use reviews
performed under this subsection.
Intervention programs shall include, in
appropriate instances, at least:
(I) information dissemination
sufficient to ensure the ready
availability to physicians and
pharmacists in the State of
information concerning its
duties, powers, and basis for
its standards;
(II) written, oral, or
electronic reminders containing
patient-specific or drug-
specific (or both) information
and suggested changes in
prescribing or dispensing
practices, communicated in a
manner designed to ensure the
privacy of patient-related
information;
(III) use of face-to-face
discussions between health care
professionals who are experts
in rational drug therapy and
selected prescribers and
pharmacists who have been
targeted for educational
intervention, including
discussion of optimal
prescribing, dispensing, or
pharmacy care practices, and
follow-up face-to-face
discussions; and
(IV) intensified review or
monitoring of selected
prescribers or dispensers.
The Board shall re-evaluate interventions after
an appropriate period of time to determine if
the intervention improved the quality of drug
therapy, to evaluate the success of the
interventions and make modifications as
necessary.
(D) Annual report.--Each State shall require
the DUR Board to prepare a report on an annual
basis. The State shall submit a report on an
annual basis to the Secretary which shall
include a description of the activities of the
Board, including the nature and scope of the
prospective and retrospective drug use review
programs, a summary of the interventions used,
an assessment of the impact of these
educational interventions on quality of care,
and an estimate of the cost savings generated
as a result of such program. The Secretary
shall utilize such report in evaluating the
effectiveness of each State's drug use review
program.
(h) Electronic Claims Management.--
(1) In general.--In accordance with chapter 35 of
title 44, United States Code (relating to coordination
of Federal information policy), the Secretary shall
encourage each State agency to establish, as its
principal means of processing claims for covered
outpatient drugs under this title, a point-of-sale
electronic claims management system, for the purpose of
performing on-line, real time eligibility
verifications, claims data capture, adjudication of
claims, and assisting pharmacists (and other authorized
persons) in applying for and receiving payment.
(2) Encouragement.--In order to carry out paragraph
(1)--
(A) for calendar quarters during fiscal years
1991 and 1992, expenditures under the State
plan attributable to development of a system
described in paragraph (1) shall receive
Federal financial participation under section
1903(a)(3)(A)(i) (at a matching rate of 90
percent) if the State acquires, through
applicable competitive procurement process in
the State, the most cost-effective
telecommunications network and automatic data
processing services and equipment; and
(B) the Secretary may permit, in the
procurement described in subparagraph (A) in
the application of part 433 of title 42, Code
of Federal Regulations, and parts 95, 205, and
307 of title 45, Code of Federal Regulations,
the substitution of the State's request for
proposal in competitive procurement for advance
planning and implementation documents otherwise
required.
(i) Annual Report.--
(1) In general.--Not later than May 1 of each year
the Secretary shall transmit to the Committee on
Finance of the Senate, the Committee on Energy and
Commerce of the House of Representatives, and the
Committees on Aging of the Senate and the House of
Representatives a report on the operation of this
section in the preceding fiscal year.
(2) Details.--Each report shall include information
on--
(A) ingredient costs paid under this title
for single source drugs, multiple source drugs,
and nonprescription covered outpatient drugs;
(B) the total value of rebates received and
number of manufacturers providing such rebates;
(C) how the size of such rebates compare with
the size or rebates offered to other purchasers
of covered outpatient drugs;
(D) the effect of inflation on the value of
rebates required under this section;
(E) trends in prices paid under this title
for covered outpatient drugs; and
(F) Federal and State administrative costs
associated with compliance with the provisions
of this title.
(j) Exemption of Organized Health Care Settings.--
(1) Covered outpatient drugs are not subject to the
requirements of this section if such drugs are--
(A) dispensed by health maintenance
organizations, including Medicaid managed care
organizations that contract under section
1903(m); and
(B) subject to discounts under section 340B
of the Public Health Service Act.
(2) The State plan shall provide that a hospital (providing
medical assistance under such plan) that dispenses covered
outpatient drugs using drug formulary systems, and bills the
plan no more than the hospital's purchasing costs for covered
outpatient drugs (as determined under the State plan) shall not
be subject to the requirements of this section.
(3) Nothing in this subsection shall be construed as
providing that amounts for covered outpatient drugs paid by the
institutions described in this subsection should not be taken
into account for purposes of determining the best price as
described in subsection (c).
(k) Definitions.--In the section--
(1) Average manufacturer price.--
(A) In general.--Subject to subparagraph (B),
the term ``average manufacturer price'' means,
with respect to a covered outpatient drug of a
manufacturer for a rebate period, the average
price paid to the manufacturer for the drug in
the United States by--
(i) wholesalers for drugs distributed
to retail community pharmacies; and
(ii) retail community pharmacies that
purchase drugs directly from the
manufacturer.
(B) Exclusion of customary prompt pay
discounts and other payments.--
(i) In general.--The average
manufacturer price for a covered
outpatient drug shall exclude--
(I) customary prompt pay
discounts extended to
wholesalers;
(II) bona fide service fees
paid by manufacturers to
wholesalers or retail community
pharmacies, including (but not
limited to) distribution
service fees, inventory
management fees, product
stocking allowances, and fees
associated with administrative
services agreements and patient
care programs (such as
medication compliance programs
and patient education
programs);
(III) reimbursement by
manufacturers for recalled,
damaged, expired, or otherwise
unsalable returned goods,
including (but not limited to)
reimbursement for the cost of
the goods and any reimbursement
of costs associated with return
goods handling and processing,
reverse logistics, and drug
destruction;
(IV) payments received from,
and rebates or discounts
provided to, pharmacy benefit
managers, managed care
organizations, health
maintenance organizations,
insurers, hospitals, clinics,
mail order pharmacies, long
term care providers,
manufacturers, or any other
entity that does not conduct
business as a wholesaler or a
retail community pharmacy,
unless the drug is an
inhalation, infusion,
instilled, implanted, or
injectable drug that is not
generally dispensed through a
retail community pharmacy; and
(V) discounts provided by
manufacturers under section
1860D-14A.
(ii) Inclusion of other discounts and
payments.--Notwithstanding clause (i),
any other discounts, rebates, payments,
or other financial transactions that
are received by, paid by, or passed
through to, retail community pharmacies
shall be included in the average
manufacturer price for a covered
outpatient drug.
(C) Inclusion of section 505(c) drugs.--In
the case of a manufacturer that approves,
allows, or otherwise permits any drug of the
manufacturer to be sold under a new drug
application approved under section 505(c) of
the Federal Food, Drug, and Cosmetic Act, such
term shall be inclusive of the average price
paid for such drug by wholesalers for drugs
distributed to retail community pharmacies.
(2) Covered outpatient drug.--Subject to the
exceptions in paragraph (3), the term ``covered
outpatient drug'' means--
(A) of those drugs which are treated as
prescribed drugs for purposes of section
1905(a)(12), a drug which may be dispensed only
upon prescription (except as provided in
paragraph (4)), and--
(i) which is approved for safety and
effectiveness as a prescription drug
under section 505 or 507 of the Federal
Food, Drug, and Cosmetic Act or which
is approved under section 505(j) of
such Act;
(ii)(I) which was commercially used
or sold in the United States before the
date of the enactment of the Drug
Amendments of 1962 or which is
identical, similar, or related (within
the meaning of section 310.6(b)(1) of
title 21 of the Code of Federal
Regulations) to such a drug, and (II)
which has not been the subject of a
final determination by the Secretary
that it is a ``new drug'' (within the
meaning of section 201(p) of the
Federal Food, Drug, and Cosmetic Act)
or an action brought by the Secretary
under section 301, 302(a), or 304(a) of
such Act to enforce section 502(f) or
505(a) of such Act; or
(iii)(I) which is described in
section 107(c)(3) of the Drug
Amendments of 1962 and for which the
Secretary has determined there is a
compelling justification for its
medical need, or is identical, similar,
or related (within the meaning of
section 310.6(b)(1) of title 21 of the
Code of Federal Regulations) to such a
drug, and (II) for which the Secretary
has not issued a notice of an
opportunity for a hearing under section
505(e) of the Federal Food, Drug, and
Cosmetic Act on a proposed order of the
Secretary to withdraw approval of an
application for such drug under such
section because the Secretary has
determined that the drug is less than
effective for some or all conditions of
use prescribed, recommended, or
suggested in its labeling; and
(B) a biological product, other than a
vaccine which--
(i) may only be dispensed upon
prescription,
(ii) is licensed under section 351 of
the Public Health Service Act, and
(iii) is produced at an establishment
licensed under such section to produce
such product; and
(C) insulin certified under section 506 of
the Federal Food, Drug, and Cosmetic Act.
(3) Limiting definition.--The term ``covered
outpatient drug'' does not include any drug, biological
product, or insulin provided as part of, or as incident
to and in the same setting as, any of the following
(and for which payment may be made under this title as
part of payment for the following and not as direct
reimbursement for the drug):
(A) Inpatient hospital services.
(B) Hospice services.
(C) Dental services, except that drugs for
which the State plan authorizes direct
reimbursement to the dispensing dentist are
covered outpatient drugs.
(D) Physicians' services.
(E) Outpatient hospital services.
(F) Nursing facility services and services
provided by an intermediate care facility for
the mentally retarded.
(G) Other laboratory and x-ray services.
(H) Renal dialysis.
Such term also does not include any such drug or
product for which a National Drug Code number is not
required by the Food and Drug Administration or a drug
or biological used for a medical indication which is
not a medically accepted indication. Any drug,
biological product, or insulin excluded from the
definition of such term as a result of this paragraph
shall be treated as a covered outpatient drug for
purposes of determining the best price (as defined in
subsection (c)(1)(C)) for such drug, biological
product, or insulin.
(4) Nonprescription drugs.--If a State plan for
medical assistance under this title includes coverage
of prescribed drugs as described in section 1905(a)(12)
and permits coverage of drugs which may be sold without
a prescription (commonly referred to as ``over-the-
counter'' drugs), if they are prescribed by a physician
(or other person authorized to prescribe under State
law), such a drug shall be regarded as a covered
outpatient drug.
(5) Manufacturer.--The term ``manufacturer'' means
any entity which is engaged in--
(A) the production, preparation, propagation,
compounding, conversion, or processing of
prescription drug products, either directly or
indirectly by extraction from substances of
natural origin, or independently by means of
chemical synthesis, or by a combination of
extraction and chemical synthesis, or
(B) in the packaging, repackaging, labeling,
relabeling, or distribution of prescription
drug products.
Such term does not include a wholesale distributor of
drugs or a retail pharmacy licensed under State law.
(6) Medically accepted indication.--The term
``medically accepted indication'' means any use for a
covered outpatient drug which is approved under the
Federal Food, Drug, and Cosmetic Act, or the use of
which is supported by one or more citations included or
approved for inclusion in any of the compendia
described in subsection (g)(1)(B)(i).
(7) Multiple source drug; innovator multiple source
drug; noninnovator multiple source drug; single source
drug.--
(A) Defined.--
(i) Multiple source drug.--The term
``multiple source drug'' means, with
respect to a rebate period, a covered
outpatient drug, including a drug
product approved for marketing as a
non-prescription drug that is regarded
as a covered outpatient drug under
paragraph (4), for which there at least
1 other drug product which--
(I) is rated as
therapeutically equivalent
(under the Food and Drug
Administration's most recent
publication of ``Approved Drug
Products with Therapeutic
Equivalence Evaluations''),
(II) except as provided in
subparagraph (B), is
pharmaceutically equivalent and
bioequivalent, as defined in
subparagraph (C) and as
determined by the Food and Drug
Administration, and
(III) is sold or marketed in
the United States during the
period.
(ii) Innovator multiple source
drug.--The term ``innovator multiple
source drug'' means a multiple source
drug that is marketed under a new drug
application approved by the Food and
Drug Administration, unless the
Secretary determines that a narrow
exception applies (as described in
section 447.502 of title 42, Code of
Federal Regulations (or any successor
regulation)).
(iii) Noninnovator multiple source
drug.--The term ``noninnovator multiple
source drug'' means a multiple source
drug that is not an innovator multiple
source drug.
(iv) Single source drug.--The term
``single source drug'' means a covered
outpatient drug, including a drug
product approved for marketing as a
non-prescription drug that is regarded
as a covered outpatient drug under
paragraph (4), which is produced or
distributed under a new drug
application approved by the Food and
Drug Administration, including a drug
product marketed by any cross-licensed
producers or distributors operating
under the new drug application unless
the Secretary determines that a narrow
exception applies (as described in
section 447.502 of title 42, Code of
Federal Regulations (or any successor
regulation)). Such term also includes a
covered outpatient drug that is a
biological product licensed, produced,
or distributed under a biologics
license application approved by the
Food and Drug Administration.
(B) Exception.--Subparagraph (A)(i)(II) shall
not apply if the Food and Drug Administration
changes by regulation the requirement that, for
purposes of the publication described in
subparagraph (A)(i)(I), in order for drug
products to be rated as therapeutically
equivalent, they must be pharmaceutically
equivalent and bioequivalent, as defined in
subparagraph (C).
(C) Definitions.--For purposes of this
paragraph--
(i) drug products are
pharmaceutically equivalent if the
products contain identical amounts of
the same active drug ingredient in the
same dosage form and meet compendial or
other applicable standards of strength,
quality, purity, and identity; and
(ii) drugs are bioequivalent if they
do not present a known or potential
bioequivalence problem, or, if they do
present such a problem, they are shown
to meet an appropriate standard of
bioequivalence.
(8) Rebate period.--The term ``rebate period'' means,
with respect to an agreement under subsection (a), a
calendar quarter or other period specified by the
Secretary with respect to the payment of rebates under
such agreement.
(9) State agency.--The term ``State agency'' means
the agency designated under section 1902(a)(5) to
administer or supervise the administration of the State
plan for medical assistance.
(10) Retail community pharmacy.--The term ``retail
community pharmacy'' means an independent pharmacy, a
chain pharmacy, a supermarket pharmacy, or a mass
merchandiser pharmacy that is licensed as a pharmacy by
the State and that dispenses medications to the general
public at retail prices. Such term does not include a
pharmacy that dispenses prescription medications to
patients primarily through the mail, nursing home
pharmacies, long-term care facility pharmacies,
hospital pharmacies, clinics, charitable or not-for-
profit pharmacies, government pharmacies, or pharmacy
benefit managers.
(11) Wholesaler.--The term ``wholesaler'' means a
drug wholesaler that is engaged in wholesale
distribution of prescription drugs to retail community
pharmacies, including (but not limited to)
manufacturers, repackers, distributors, own-label
distributors, private-label distributors, jobbers,
brokers, warehouses (including manufacturer's and
distributor's warehouses, chain drug warehouses, and
wholesale drug warehouses) independent wholesale drug
traders, and retail community pharmacies that conduct
wholesale distributions.
* * * * * * *
----------
FEDERAL FOOD, DRUG, AND COSMETIC ACT
* * * * * * *
exemptions and consideration for certain drugs, devices, and biological
products
Sec. 503. (a) The Secretary is hereby directed to promulgate
regulations exempting from any labeling or packaging
requirement of this Act drugs and devices which are, in
accordance with the practice of the trade, to be processed,
labeled, or repacked in substantial quantities at
establishments other than those where originally processed or
packed, on condition that such drugs and devices are not
adulterated or misbranded, under the provisions of this Act
upon removal from such processing, labeling, or repacking
establishment.
(b)(1) A drug intended for use by man which--
(A) because of its toxicity or other potentiality for
harmful effect, or the method of its use, or the
collateral measures necessary to its use, is not safe
for use except under the supervision of a practitioner
licensed by law to administer such drug; or
(B) is limited by an approved application under
section 505 to use under the professional supervision
of a practitioner licensed by law to administer such
drug;
shall be dispensed only (i) upon a written prescription of a
practitioner licensed by law to administer such drug, or (ii)
upon an oral prescription of such practitioner which is reduced
promptly to writing and filed by the pharmacist, or (iii) by
refilling any such written or oral prescription if such
refilling is authorized by the prescriber either in the
original prescription or by oral order which is reduced
promptly to writing and filed by the pharmacist. The act of
dispensing a drug contrary to the provisions of this paragraph
shall be deemed to be an act which results in the drug being
misbranded while held for sale.
(2) Any drug dispensed by filling or refilling a written or
oral prescription of a practitioner licensed by law to
administer such drug shall be exempt from the requirements of
section 502, except paragraphs (a), (i) (2) and (3), (k), and
(l), and the packaging requirements of paragraphs (g), (h), and
(p), if the drug bears a label containing the name and address
of the dispenser, the serial number and date of the
prescription or of its filling, the name of the prescriber,
and, if stated in the prescription, the name of the patient,
and the directions for use and cautionary statements, if any,
contained in such prescription. This exemption shall not apply
to any drug dispensed in the course of the conduct of a
business of dispensing drugs pursuant to diagnosis by mail, or
to a drug dispensed in violation of paragraph (1) of this
subsection.
(3) The Secretary may by regulation remove drugs subject to
section 505 from the requirements of paragraph (1) of this
subsection when such requirements are not necessary for the
protection of the public health.
(4)(A) A drug that is subject to paragraph (1) shall be
deemed to be misbranded if at any time prior to dispensing the
label of the drug fails to bear, at a minimum, the symbol ``Rx
only''.
(B) A drug to which paragraph (1) does not apply shall be
deemed to be misbranded if at any time prior to dispensing the
label of the drug bears the symbol described in subparagraph
(A).
(5) Nothing in this subsection shall be construed to relieve
any person from any requirement prescribed by or under
authority of law with respect to drugs now included or which
may hereafter be included within the classifications stated in
section 3220 of the Internal Revenue Code (26 U.S.C. 3220), or
to marihuana as defined in section 3238(b) of the Internal
Revenue Code (26 U.S.C. 3238(b)).
(c)(1) No person may sell, purchase, or trade or offer to
sell, purchase, or trade any drug sample. For purposes of this
paragraph and subsection (d), the term ``drug sample'' means a
unit of a drug, subject to subsection (b), which is not
intended to be sold and is intended to promote the sale of the
drug. Nothing in this paragraph shall subject an officer or
executive of a drug manufacturer or distributor to criminal
liability solely because of a sale, purchase, trade, or offer
to sell, purchase, or trade in violation of this paragraph by
other employees of the manufacturer or distributor.
(2) No person may sell, purchase, or trade, offer to sell,
purchase, or trade, or counterfeit any coupon. For purposes of
this paragraph, the term ``coupon'' means a form which may be
redeemed, at no cost or at a reduced cost, for a drug which is
prescribed in accordance with subsection (b).
(3)(A) No person may sell, purchase, or trade, or offer to
sell, purchase, or trade, any drug--
(i) which is subject to subsection (b), and
(ii)(I) which was purchased by a public or private
hospital or other health care entity, or
(II) which was donated or supplied at a reduced price
to a charitable organization described in section
501(c)(3) of the Internal Revenue Code of 1954.
(B) Subparagraph (A) does not apply to--
(i) the purchase or other acquisition by a hospital
or other health care entity which is a member of a
group purchasing organization of a drug for its own use
from the group purchasing organization or from other
hospitals or health care entities which are members of
such organization,
(ii) the sale, purchase, or trade of a drug or an
offer to sell, purchase, or trade a drug by an
organization described in subparagraph (A)(ii)(II) to a
nonprofit affiliate of the organization to the extent
otherwise permitted by law,
(iii) a sale, purchase, or trade of a drug or an
offer to sell, purchase, or trade a drug among
hospitals or other health care entities which are under
common control,
(iv) a sale, purchase, or trade of a drug or an offer
to sell, purchase, or trade a drug for emergency
medical reasons, or
(v) a sale, purchase, or trade of a drug, an offer to
sell, purchase, or trade a drug, or the dispensing of a
drug pursuant to a prescription executed in accordance
with subsection (b).
For purposes of this paragraph, the term ``entity'' does not
include a wholesale distributor of drugs or a retail pharmacy
licensed under State law and the term ``emergency medical
reasons'' includes transfers of a drug between health care
entities or from a health care entity to a retail pharmacy
undertaken to alleviate temporary shortages of the drug arising
from delays in or interruptions of regular distribution
schedules.
(d)(1) Except as provided in paragraphs (2) and (3), no
person may distribute any drug sample. For purposes of this
subsection, the term ``distribute'' does not include the
providing of a drug sample to a patient by a--
(A) practitioner licensed to prescribe such drug,
(B) health care professional acting at the direction
and under the supervision of such a practitioner, or
(C) pharmacy of a hospital or of another health care
entity that is acting at the direction of such a
practitioner and that received such sample pursuant to
paragraph (2) or (3).
(2)(A) The manufacturer or authorized distributor of record
of a drug subject to subsection (b) may, in accordance with
this paragraph, distribute drug samples by mail or common
carrier to practitioners licensed to prescribe such drugs or,
at the request of a licensed practitioner, to pharmacies of
hospitals or other health care entities. Such a distribution of
drug samples may only be made--
(i) in response to a written request for drug samples
made on a form which meets the requirements of
subparagraph (B), and
(ii) under a system which requires the recipient of
the drug sample to execute a written receipt for the
drug sample upon its delivery and the return of the
receipt to the manufacturer or authorized distributor
of record.
(B) A written request for a drug sample required by
subparagraph (A)(i) shall contain--
(i) the name, address, professional designation, and
signature of the practitioner making the request,
(ii) the identity of the drug sample requested and
the quantity requested,
(iii) the name of the manufacturer of the drug sample
requested, and
(iv) the date of the request.
(C) Each drug manufacturer or authorized distributor of
record which makes distributions by mail or common carrier
under this paragraph shall maintain, for a period of 3 years,
the request forms submitted for such distributions and the
receipts submitted for such distributions and shall maintain a
record of distributions of drug samples which identifies the
drugs distributed and the recipients of the distributions.
Forms, receipts, and records required to be maintained under
this subparagraph shall be made available by the drug
manufacturer or authorized distributor of record to Federal and
State officials engaged in the regulation of drugs and in the
enforcement of laws applicable to drugs.
(3) The manufacturer or authorized distributor of record of a
drug subject to subsection (b) may, by means other than mail or
common carrier, distribute drug samples only if the
manufacturer or authorized distributor of record makes the
distributions in accordance with subparagraph (A) and carries
out the activities described in subparagraphs (B) through (F)
as follows:
(A) Drug samples may only be distributed--
(i) to practitioners licensed to prescribe
such drugs if they make a written request for
the drug samples, or
(ii) at the written request of such a
licensed practitioner, to pharmacies of
hospitals or other health care entities.
A written request for drug samples shall be made on a
form which contains the practitioner's name, address,
and professional designation, the identity of the drug
sample requested, the quantity of drug samples
requested, the name of the manufacturer or authorized
distributor of record of the drug sample, the date of
the request and signature of the practitioner making
the request.
(B) Drug manufacturers or authorized distributors of
record shall store drug samples under conditions that
will maintain their stability, integrity, and
effectiveness and will assure that the drug samples
will be free of contamination, deterioration, and
adulteration.
(C) Drug manufacturers or authorized distributors of
record shall conduct, at least annually, a complete and
accurate inventory of all drug samples in the
possession of representatives of the manufacturer or
authorized distributor of record. Drug manufacturers or
authorized distributors of record shall maintain lists
of the names and address of each of their
representatives who distribute drug samples and of the
sites where drug samples are stored. Drug manufacturers
or authorized distributors of record shall maintain
records for at least 3 years of all drug samples
distributed, destroyed, or returned to the manufacturer
or authorized distributor of record, of all inventories
maintained under this subparagraph, of all thefts or
significant losses of drug samples, and of all requests
made under subparagraph (A) for drug samples. Records
and lists maintained under this subparagraph shall be
made available by the drug manufacturer or authorized
distributor of record to the Secretary upon request.
(D) Drug manufacturers or authorized distributors of
record shall notify the Secretary of any significant
loss of drug samples and any known theft of drug
samples.
(E) Drug manufacturers or authorized distributors of
record shall report to the Secretary any conviction of
their representatives for violations of subsection
(c)(1) or a State law because of the sale, purchase, or
trade of a drug sample or the offer to sell, purchase,
or trade a drug sample.
(F) Drug manufacturers or authorized distributors of
record shall provide to the Secretary the name and
telephone number of the individual responsible for
responding to a request for information respecting drug
samples.
(4) In this subsection, the term ``authorized distributors of
record'' means those distributors with whom a manufacturer has
established an ongoing relationship to distribute such
manufacturer's products.
(5) No person may distribute a drug sample of a drug that
is--
(A) an applicable drug (as defined in section
1128H(d) of the Social Security Act);
(B) a controlled substance (as defined in section 102
of the Controlled Substances Act) for which the
findings required under section 202(b)(2) of such Act
have been made; and
(C) approved under section 505 for use in the
management or treatment of pain (other than for the
management or treatment of a substance use disorder).
(e)
(1) Requirement.--Subject to section 583:
(A) In general.--No person may engage in
wholesale distribution of a drug subject to
subsection (b)(1) in any State unless such
person--
(i)(I) is licensed by the State from
which the drug is distributed; or
(II) if the State from which the drug
is distributed has not established a
licensure requirement, is licensed by
the Secretary; and
(ii) if the drug is distributed
interstate, is licensed by the State
into which the drug is distributed if
the State into which the drug is
distributed requires the licensure of a
person that distributes drugs into the
State.
(B) Standards.--Each Federal and State
license described in subparagraph (A) shall
meet the standards, terms, and conditions
established by the Secretary under section 583.
(2) Reporting and database.--
(A) Reporting.--Beginning January 1, 2015,
any person who owns or operates an
establishment that engages in wholesale
distribution shall--
(i) report to the Secretary, on an
annual basis pursuant to a schedule
determined by the Secretary--
(I) each State by which the
person is licensed and the
appropriate identification
number of each such license;
and
(II) the name, address, and
contact information of each
facility at which, and all
trade names under which, the
person conducts business; and
(ii) report to the Secretary within a
reasonable period of time and in a
reasonable manner, as determined by the
Secretary, any significant disciplinary
actions, such as the revocation or
suspension of a wholesale distributor
license, taken by a State or the
Federal Government during the reporting
period against the wholesale
distributor.
(B) Database.--Not later than January 1,
2015, the Secretary shall establish a database
of authorized wholesale distributors. Such
database shall--
(i) identify each authorized
wholesale distributor by name, contact
information, and each State where such
wholesale distributor is appropriately
licensed to engage in wholesale
distribution;
(ii) be available to the public on
the Internet Web site of the Food and
Drug Administration; and
(iii) be regularly updated on a
schedule determined by the Secretary.
(C) Coordination.--The Secretary shall
establish a format and procedure for
appropriate State officials to access the
information provided pursuant to subparagraph
(A) in a prompt and secure manner.
(D) Confidentiality.--Nothing in this
paragraph shall be construed as authorizing the
Secretary to disclose any information that is a
trade secret or confidential information
subject to section 552(b)(4) of title 5, United
States Code, or section 1905 of title 18,
United States Code.
(3) Costs.--
(A) Authorized fees of secretary.--If a State
does not establish a licensing program for
persons engaged in the wholesale distribution
of a drug subject to subsection (b), the
Secretary shall license a person engaged in
wholesale distribution located in such State
and may collect a reasonable fee in such amount
necessary to reimburse the Secretary for costs
associated with establishing and administering
the licensure program and conducting periodic
inspections under this section. The Secretary
shall adjust fee rates as needed on an annual
basis to generate only the amount of revenue
needed to perform this service. Fees authorized
under this paragraph shall be collected and
available for obligation only to the extent and
in the amount provided in advance in
appropriations Acts. Such fees are authorized
to remain available until expended. Such sums
as may be necessary may be transferred from the
Food and Drug Administration salaries and
expenses appropriation account without fiscal
year limitation to such appropriation account
for salaries and expenses with such fiscal year
limitation.
(B) State licensing fees.--Nothing in this
Act shall prohibit States from collecting fees
from wholesale distributors in connection with
State licensing of such distributors.
(4) For the purposes of this subsection and
subsection (d), the term ``wholesale distribution''
means the distribution of a drug subject to subsection
(b) to a person other than a consumer or patient, or
receipt of a drug subject to subsection (b) by a person
other than the consumer or patient, but does not
include--
(A) intracompany distribution of any drug
between members of an affiliate or within a
manufacturer;
(B) the distribution of a drug, or an offer
to distribute a drug among hospitals or other
health care entities which are under common
control;
(C) the distribution of a drug or an offer to
distribute a drug for emergency medical
reasons, including a public health emergency
declaration pursuant to section 319 of the
Public Health Service Act, except that, for
purposes of this paragraph, a drug shortage not
caused by a public health emergency shall not
constitute an emergency medical reason;
(D) the dispensing of a drug pursuant to a
prescription executed in accordance with
subsection (b)(1);
(E) the distribution of minimal quantities of
drug by a licensed retail pharmacy to a
licensed practitioner for office use;
(F) the distribution of a drug or an offer to
distribute a drug by a charitable organization
to a nonprofit affiliate of the organization to
the extent otherwise permitted by law;
(G) the purchase or other acquisition by a
dispenser, hospital, or other health care
entity of a drug for use by such dispenser,
hospital, or other health care entity;
(H) the distribution of a drug by the
manufacturer of such drug;
(I) the receipt or transfer of a drug by an
authorized third-party logistics provider
provided that such third-party logistics
provider does not take ownership of the drug;
(J) a common carrier that transports a drug,
provided that the common carrier does not take
ownership of the drug;
(K) the distribution of a drug, or an offer
to distribute a drug by an authorized
repackager that has taken ownership or
possession of the drug and repacks it in
accordance with section 582(e);
(L) salable drug returns when conducted by a
dispenser;
(M) the distribution of a collection of
finished medical devices, which may include a
product or biological product, assembled in kit
form strictly for the convenience of the
purchaser or user (referred to in this
subparagraph as a ``medical convenience kit'')
if--
(i) the medical convenience kit is
assembled in an establishment that is
registered with the Food and Drug
Administration as a device manufacturer
in accordance with section 510(b)(2);
(ii) the medical convenience kit does
not contain a controlled substance that
appears in a schedule contained in the
Comprehensive Drug Abuse Prevention and
Control Act of 1970;
(iii) in the case of a medical
convenience kit that includes a
product, the person that manufacturers
the kit--
(I) purchased such product
directly from the
pharmaceutical manufacturer or
from a wholesale distributor
that purchased the product
directly from the
pharmaceutical manufacturer;
and
(II) does not alter the
primary container or label of
the product as purchased from
the manufacturer or wholesale
distributor; and
(iv) in the case of a medical
convenience kit that includes a
product, the product is--
(I) an intravenous solution
intended for the replenishment
of fluids and electrolytes;
(II) a product intended to
maintain the equilibrium of
water and minerals in the body;
(III) a product intended for
irrigation or reconstitution;
(IV) an anesthetic;
(V) an anticoagulant;
(VI) a vasopressor; or
(VII) a sympathomimetic;
(N) the distribution of an intravenous drug
that, by its formulation, is intended for the
replenishment of fluids and electrolytes (such
as sodium, chloride, and potassium) or calories
(such as dextrose and amino acids);
(O) the distribution of an intravenous drug
used to maintain the equilibrium of water and
minerals in the body, such as dialysis
solutions;
(P) the distribution of a drug that is
intended for irrigation, or sterile water,
whether intended for such purposes or for
injection;
(Q) the distribution of medical gas, as
defined in section 575;
(R) facilitating the distribution of a
product by providing solely administrative
services, including processing of orders and
payments; or
(S) the transfer of a product by a hospital
or other health care entity, or by a wholesale
distributor or manufacturer operating at the
direction of the hospital or other health care
entity, to a repackager described in section
581(16)(B) and registered under section 510 for
the purpose of repackaging the drug for use by
that hospital, or other health care entity and
other health care entities that are under
common control, if ownership of the drug
remains with the hospital or other health care
entity at all times.
(5) Third-party logistics providers.--Notwithstanding
paragraphs (1) through (4), each entity that meets the
definition of a third-party logistics provider under
section 581(22) shall obtain a license as a third-party
logistics provider as described in section 584(a) and
is not required to obtain a license as a wholesale
distributor if the entity never assumes an ownership
interest in the product it handles.
(6) Affiliate.--For purposes of this subsection, the
term ``affiliate'' means a business entity that has a
relationship with a second business entity if, directly
or indirectly--
(A) one business entity controls, or has the
power to control, the other business entity; or
(B) a third party controls, or has the power
to control, both of the business entities.
(f)(1)(A) A drug intended for use by animals other than man,
other than a veterinary feed directive drug intended for use in
animal feed or an animal feed bearing or containing a
veterinary feed directive drug, which--
(i) because of its toxicity or other potentiality for
harmful effect, or the method of its use, or the
collateral measures necessary for its use, is not safe
for animal use except under the professional
supervision of a licensed veterinarian, or
(ii) is limited by an approved application under
subsection (b) of section 512, a conditionally-approved
application under section 571, or an index listing
under section 572 to use under the professional
supervision of a licensed veterinarian,
shall be dispensed only by or upon the lawful written or oral
order of a licensed veterinarian in the course of the
veterinarian's professional practice.
(B) For purposes of subparagraph (A), an order is lawful if
the order--
(i) is a prescription or other order authorized by
law,
(ii) is, if an oral order, promptly reduced to
writing by the person lawfully filling the order, and
filed by that person, and
(iii) is refilled only if authorized in the original
order or in a subsequent oral order promptly reduced to
writing by the person lawfully filling the order, and
filed by that person.
(C) The act of dispensing a drug contrary to the provisions
of this paragraph shall be deemed to be an act which results in
the drug being misbranded while held for sale.
(2) Any drug when dispensed in accordance with paragraph (1)
of this subsection--
(A) Shall be exempt from the requirements of section
502, except subsections (a), (g), (h), (i)(2), (i)(3),
and (p) of such section, and
(B) shall be exempt from the packaging requirements
of subsections (g), (h), and (p) of such section, if--
(i) when dispensed by a licensed
veterinarian, the drug bears a label containing
the name and address of the practitioner and
any directions for use and cautionary
statements specified by the practitioner, or
(ii) when dispensed by filling the lawful
order of a licensed veterinarian, the drug
bears a label containing the name and address
of the dispenser, the serial number and date of
the order or of its filing, the name of the
licensed veterinarian, and the directions for
use and cautionary statements, if any,
contained in such order.
The preceding sentence shall not apply to any drug dispensed in
the course of the conduct of a business of dispensing drugs
pursuant to diagnosis by mail.
(3) The Secretary may by regulation exempt drugs for animals
other than man subject to section 512, 571, or 572 from the
requirements of paragraph (1) when such requirements are not
necessary for the protection of the public health.
(4) A drug which is subject to paragraph (1) shall be deemed
to be misbranded if at any time prior to dispensing its label
fails to bear the statement ``Caution: Federal law restricts
this drug to use by or on the order of a licensed
veterinarian.''. A drug to which paragraph (1) does not apply
shall be deemed to be misbranded if at any time prior to
dispensing its label bears the statement specified in the
preceding sentence.
(g)(1)(A) The Secretary shall, in accordance with this
subsection, assign a primary agency center to regulate products
that constitute a combination of a drug, device, or biological
product.
(B) The Secretary shall conduct the premarket review of any
combination product under a single application, whenever
appropriate.
(C) For purposes of this subsection, the term ``primary mode
of action'' means the single mode of action of a combination
product expected to make the greatest contribution to the
overall intended therapeutic effects of the combination
product.
(D) The Secretary shall determine the primary mode of action
of the combination product. If the Secretary determines that
the primary mode of action is that of--
(i) a drug (other than a biological product), the
agency center charged with premarket review of drugs
shall have primary jurisdiction;
(ii) a device, the agency center charged with
premarket review of devices shall have primary
jurisdiction; or
(iii) a biological product, the agency center charged
with premarket review of biological products shall have
primary jurisdiction.
(E) In determining the primary mode of action of a
combination product, the Secretary shall not determine that the
primary mode of action is that of a drug or biological product
solely because the combination product has any chemical action
within or on the human body.
(F) If a sponsor of a combination product disagrees with the
determination under subparagraph (D)--
(i) such sponsor may request, and the Secretary shall
provide, a substantive rationale to such sponsor that
references scientific evidence provided by the sponsor
and any other scientific evidence relied upon by the
Secretary to support such determination; and
(ii)(I) the sponsor of the combination product may
propose one or more studies (which may be nonclinical,
clinical, or both) to establish the relevance, if any,
of the chemical action in achieving the primary mode of
action of such product;
(II) if the sponsor proposes any such studies, the
Secretary and the sponsor of such product shall
collaborate and seek to reach agreement, within a
reasonable time of such proposal, not to exceed 90
calendar days, on the design of such studies; and
(III) if an agreement is reached under subclause (II)
and the sponsor conducts one or more of such studies,
the Secretary shall consider the data resulting from
any such study when reevaluating the determination of
the primary mode of action of such product, and unless
and until such reevaluation has occurred and the
Secretary issues a new determination, the determination
of the Secretary under subparagraph (D) shall remain in
effect.
(2)(A)(i) To establish clarity and certainty for the sponsor,
the sponsor of a combination product may request a meeting on
such combination product. If the Secretary concludes that a
determination of the primary mode of action pursuant to
paragraph (1)(D) is necessary, the sponsor may request such
meeting only after the Secretary makes such determination. If
the sponsor submits a written meeting request, the Secretary
shall, not later than 75 calendar days after receiving such
request, meet with the sponsor of such combination product.
(ii) A meeting under clause (i) may--
(I) address the standards and requirements for market
approval or clearance of the combination product;
(II) address other issues relevant to such
combination product, such as requirements related to
postmarket modification of such combination product and
good manufacturing practices applicable to such
combination product; and
(III) identify elements under subclauses (I) and (II)
that may be more appropriate for discussion and
agreement with the Secretary at a later date given that
scientific or other information is not available, or
agreement is otherwise not feasible regarding such
elements, at the time a request for such meeting is
made.
(iii) Any agreement under this subparagraph shall be in
writing and made part of the administrative record by the
Secretary.
(iv) Any such agreement shall remain in effect, except--
(I) upon the written agreement of the Secretary and
the sponsor or applicant; or
(II) pursuant to a decision by the director of the
reviewing division of the primary agency center, or a
person more senior than such director, in consultation
with consulting centers and the Office, as appropriate,
that an issue essential to determining whether the
standard for market clearance or other applicable
standard under this Act or the Public Health Service
Act applicable to the combination product has been
identified since the agreement was reached, or that
deviating from the agreement is otherwise justifiable
based on scientific evidence, for public health
reasons.
(3) For purposes of conducting the premarket review of a
combination product that contains an approved constituent part
described in paragraph (4), the Secretary may require that the
sponsor of such combination product submit to the Secretary
only data or information that the Secretary determines is
necessary to meet the standard for clearance or approval, as
applicable, under this Act or the Public Health Service Act,
including any incremental risks and benefits posed by such
combination product, using a risk-based approach and taking
into account any prior finding of safety and effectiveness or
substantial equivalence for the approved constituent part
relied upon by the applicant in accordance with paragraph (5).
(4) For purposes of paragraph (3), an approved constituent
part is--
(A) a drug constituent part of a combination product
being reviewed in a single application or request under
section 515, 510(k), or 513(f)(2) (submitted in
accordance with paragraph (5)), that is an approved
drug, provided such application or request complies
with paragraph (5);
(B) a device constituent part approved under section
515 that is referenced by the sponsor and that is
available for use by the Secretary under section
520(h)(4); or
(C) any constituent part that was previously
approved, cleared, or classified under section 505,
510(k), 513(f)(2), or 515 of this Act for which the
sponsor has a right of reference or any constituent
part that is a nonprescription drug, as defined in
section 760(a)(2).
(5)(A) If an application is submitted under section 515 or
510(k) or a request is submitted under section 513(f)(2),
consistent with any determination made under paragraph (1)(D),
for a combination product containing as a constituent part an
approved drug--
(i) the application or request shall include the
certification or statement described in section
505(b)(2); and
(ii) the applicant or requester shall provide notice
as described in section 505(b)(3).
(B) For purposes of this paragraph and paragraph (4), the
term ``approved drug'' means an active ingredient--
(i) that was in an application previously approved
under section 505(c);
(ii) where such application is relied upon by the
applicant submitting the application or request
described in subparagraph (A);
(iii) for which full reports of investigations that
have been made to show whether such drug is safe for
use and whether such drug is effective in use were not
conducted by or for the applicant submitting the
application or request described in subparagraph (A);
and
(iv) for which the applicant submitting the
application or request described in subparagraph (A)
has not obtained a right of reference or use from the
person by or for whom the investigations described in
clause (iii) were conducted.
(C) The following provisions shall apply with respect to an
application or request described in subparagraph (A) to the
same extent and in the same manner as if such application or
request were an application described in section 505(b)(2) that
referenced the approved drug:
(i) Subparagraphs (A), (B), (C), and (D) of section
505(c)(3).
(ii) Clauses (ii), (iii), and (iv) of section
505(c)(3)(E).
(iii) Subsections (b) and (c) of section 505A.
(iv) Section 505E(a).
(v) Section 527(a).
(D) Notwithstanding any other provision of this subsection,
an application or request for classification for a combination
product described in subparagraph (A) shall be considered an
application submitted under section 505(b)(2) for purposes of
section 271(e)(2)(A) of title 35, United States Code.
(6) Nothing in this subsection shall be construed as
prohibiting a sponsor from submitting separate applications for
the constituent parts of a combination product, unless the
Secretary determines that a single application is necessary.
(7) Nothing in this subsection shall prevent the Secretary
from using any agency resources of the Food and Drug
Administration necessary to ensure adequate review of the
safety, effectiveness, or substantial equivalence of an
article.
(8)(A) Not later than 60 days after the date of the enactment
of this paragraph, the Secretary shall establish within the
Office of the Commissioner of Food and Drugs an office to
ensure the prompt assignment of combination products to agency
centers, the timely and effective premarket review of such
products, and consistent and appropriate postmarket regulation
of like products subject to the same statutory requirements to
the extent permitted by law. Additionally, the office shall, in
determining whether a product is to be designated a combination
product, consult with the component within the Office of the
Commissioner of Food and Drugs that is responsible for such
determinations. Such office (referred to in this paragraph as
the ``Office'') shall have appropriate scientific and medical
expertise, and shall be headed by a director.
(B) In carrying out this subsection, the Office shall, for
each combination product, promptly assign an agency center with
primary jurisdiction in accordance with paragraph (1) for the
premarket review of such product.
(C)(i) In carrying out this subsection, the Office shall help
to ensure timely and effective premarket review that involves
more than one agency center by coordinating such reviews,
overseeing the timeliness of such reviews, and overseeing the
alignment of feedback regarding such reviews.
(ii) In order to ensure the timeliness and alignment of the
premarket review of a combination product, the agency center
with primary jurisdiction for the product, and the consulting
agency center, shall be responsible to the Office with respect
to the timeliness and alignment of the premarket review.
(iii) The Office shall ensure that, with respect to a
combination product, a designated person or persons in the
primary agency center is the primary point or points of contact
for the sponsor of such combination product. The Office shall
also coordinate communications to and from any consulting
center involved in such premarket review, if requested by such
primary agency center or any such consulting center. Agency
communications and commitments, to the extent consistent with
other provisions of law and the requirements of all affected
agency centers, from the primary agency center shall be
considered as communication from the Secretary on behalf of all
agency centers involved in the review.
(iv) The Office shall, with respect to the premarket review
of a combination product--
(I) ensure that any meeting between the Secretary and
the sponsor of such product is attended by each agency
center involved in the review, as appropriate;
(II) ensure that each consulting agency center has
completed its premarket review and provided the results
of such review to the primary agency center in a timely
manner; and
(III) ensure that each consulting center follows the
guidance described in clause (vi) and advises, as
appropriate, on other relevant regulations, guidances,
and policies.
(v) In seeking agency action with respect to a combination
product, the sponsor of such product--
(I) shall identify the product as a combination
product; and
(II) may request in writing the participation of
representatives of the Office in meetings related to
such combination product, or to have the Office
otherwise engage on such regulatory matters concerning
the combination product.
(vi) Not later than 4 years after the date of enactment of
the 21st Century Cures Act, and after a public comment period
of not less than 60 calendar days, the Secretary shall issue a
final guidance that describes--
(I) the structured process for managing pre-
submission interactions with sponsors developing
combination products;
(II) the best practices for ensuring that the
feedback in such pre-submission interactions represents
the Agency's best advice based on the information
provided during such pre-submission interactions;
(III) the information that is required to be
submitted with a meeting request under paragraph (2),
how such meetings relate to other types of meetings in
the Food and Drug Administration, and the form and
content of any agreement reached through a meeting
under such paragraph (2);
(D) In carrying out this subsection, the Office shall ensure
the consistency and appropriateness of postmarket regulation of
like products subject to the same statutory requirements to the
extent permitted by law.
(E)(i) Any dispute regarding the timeliness of the premarket
review of a combination product may be presented to the Office
for resolution, unless the dispute is clearly premature.
(ii) During the review process, any dispute regarding the
substance of the premarket review may be presented to the
Commissioner of Food and Drugs after first being considered by
the agency center with primary jurisdiction of the premarket
review, under the scientific dispute resolution procedures for
such center. The Commissioner of Food and Drugs shall consult
with the Director of the Office in resolving the substantive
dispute.
(F) The Secretary, acting through the Office, shall review
each agreement, guidance, or practice of the Secretary that is
specific to the assignment of combination products to agency
centers and shall determine whether the agreement, guidance, or
practice is consistent with the requirements of this
subsection. In carrying out such review, the Secretary shall
consult with stakeholders and the directors of the agency
centers. After such consultation, the Secretary shall determine
whether to continue in effect, modify, revise, or eliminate
such agreement, guidance, or practice, and shall publish in the
Federal Register a notice of the availability of such modified
or revised agreement, guidance or practice. Nothing in this
paragraph shall be construed as preventing the Secretary from
following each agreement, guidance, or practice until
continued, modified, revised, or eliminated.
(G) Not later than one year after the date of the enactment
of this paragraph (except with respect to clause (iv),
beginning not later than one year after the date of the
enactment of the 21st Century Cures Act) and annually
thereafter, the Secretary shall report to the appropriate
committees of Congress on the activities and impact of the
Office. The report shall include provisions--
(i) describing the numbers and types of combination
products under review and the timeliness in days of
such assignments, reviews, and dispute resolutions;
(ii) identifying the number of premarket reviews of
such products that involved a consulting agency center;
(iii) describing improvements in the consistency of
postmarket regulation of combination products; and
(iv) identifying the percentage of combination
products for which a dispute resolution, with respect
to premarket review, was requested by the combination
product's sponsor.
(H) Nothing in this paragraph shall be construed to limit the
regulatory authority of any agency center.
(9) As used in this subsection:
(A) The term ``agency center'' means a center or
alternative organizational component of the Food and
Drug Administration.
(B) The term ``biological product'' has the meaning
given the term in section 351(i) of the Public Health
Service Act (42 U.S.C. 262(i)).
(C) The term ``market clearance'' includes--
(i) approval of an application under section
505, 507, 515, or 520(g);
(ii) a finding of substantial equivalence
under this subchapter;
(iii) approval of a biologics license
application under subsection (a) of section 351
of the Public Health Service Act (42 U.S.C.
262); and
(iv) de novo classification under section
513(a)(1).
(D) The terms ``premarket review'' and ``reviews''
include all activities of the Food and Drug
Administration conducted prior to approval or clearance
of an application, notification, or request for
classification submitted under section 505, 510(k),
513(f)(2), 515, or 520 of this Act or under section 351
of the Public Health Service Act, including with
respect to investigational use of the product.
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