[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).

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          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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