[House Report 116-688]
[From the U.S. Government Publishing Office]


116th Congress }                                       { Rept. 116-688
                        HOUSE OF REPRESENTATIVES
  2d Session   }                                       { Part 1

======================================================================
 
PRESCRIPTION DRUG SUNSHINE, TRANSPARENCY, ACCOUNTABILITY AND REPORTING 
                                  ACT

                                _______
                                

 December 24, 2020.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

Mr. Neal, from the Committee on Ways and Means, submitted the following

                              R E P O R T

                        [To accompany H.R. 2113]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Ways and Means, to whom was referred the 
bill (H.R. 2113) to amend titles XI and XVIII of the Social 
Security Act to provide for drug manufacturer price 
transparency, to require certain manufacturers to report on 
product samples provided to certain health care providers, and 
for other purposes, having considered the same, reports 
favorably thereon with an amendment and recommends that the 
bill as amended do pass.

                                CONTENTS

                                                                   Page
 I. SUMMARY AND BACKGROUND............................................8
        A. Purpose and Summary...................................     8
        B. Background and Need for Legislation...................     8
        C. Legislative History...................................     9
II. EXPLANATION OF THE BILL..........................................10
        A. Section 2--Drug Manufacturer Price Transparency.......    10
        B. Section 3--Requirement for manufacturers of certain 
            drugs, devices, biologicals, and medical supplies to 
            report on product samples provided to certain health 
            care providers.......................................    15
        C. Section 4--Analysis and report on inpatient hospital 
            drug costs...........................................    18
        D. Section 5--Public disclosure of drug discounts........    19
        E. Section 6--Requiring certain manufacturers to report 
            drug pricing information with respect to drugs under 
            the Medicare program.................................    21
III.VOTES OF THE COMMITTEE...........................................22

IV. BUDGET EFFECTS OF THE BILL.......................................23
        A. Committee Estimate of Budgetary Effects...............    23
        B. Statement Regarding New Budget Authority and Tax 
            Expenditures Budget Authority........................    23
        C. Cost Estimate Prepared by the Congressional Budget 
            Office...............................................    23
 V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE.......29
        A. Committee Oversight Findings and Recommendations......    29
        B. Statement of General Performance Goals and Objectives.    29
        C. Information Relating to Unfunded Mandates.............    30
        D. Congressional Earmarks, Limited Tax Benefits, and 
            Limited Tariff Benefits..............................    30
        E. Duplication of Federal Programs.......................    30
        F. Hearings..............................................    30
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED............30

    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Prescription Drug Sunshine, 
Transparency, Accountability and Reporting Act'' or the ``Prescription 
Drug STAR Act''.

SEC. 2. DRUG MANUFACTURER PRICE TRANSPARENCY.

  (a) In General.--Title XI of the Social Security Act (42 U.S.C. 1301 
et seq.) is amended by inserting after section 1128K the following new 
section:

``SEC. 1128L. DRUG MANUFACTURER PRICE TRANSPARENCY.

  ``(a) In General.--With respect to each year, beginning with 2021, 
the Secretary shall, at least once during such year, determine if there 
is a triggered SPIKE increase (in accordance with subsection (b)) with 
respect to an applicable drug (as defined in subsection (f)(1)). If the 
Secretary determines, with respect to a year, there is such an increase 
with respect to an applicable drug, the manufacturer of the applicable 
drug shall submit to the Secretary the justification described in 
subsection (c), subject to subsection (b)(4), for each such triggered 
SPIKE increase in accordance with the timing described in subsection 
(d)).
  ``(b) Triggered SPIKE Increase.--
          ``(1) In general.--A triggered SPIKE increase occurs, with 
        respect an applicable drug and year (beginning with 2021 and 
        referred to in this paragraph as the `applicable year'), in any 
        of the following cases:
                  ``(A) If there is at least a 10 percent (or $10,000) 
                cumulative increase with respect to the wholesale 
                acquisition cost (or alternative cost measure specified 
                by the Secretary under paragraph (3)) of such drug 
                during a calendar-year period beginning and ending 
                within the lookback period that is the 5-year period 
                preceding such applicable year.
                  ``(B) If there is at least a 25 percent (or $25,000) 
                cumulative increase with respect to the wholesale 
                acquisition cost (or such alternative cost measure) of 
                such drug during any three-calendar-year period 
                beginning and ending within such lookback period.
                  ``(C) In the case of such a drug that is first 
                covered under title XVIII with respect to such 
                applicable year, if the estimated cost or spending 
                under such title per individual or per user of such 
                drug (as estimated by the Secretary) for such 
                applicable year (or per course of treatment in such 
                applicable year, as defined by the Secretary) is at 
                least $26,000.
          ``(2) Indexing dollar amounts.--The dollar amounts applied 
        under paragraph (1) for 2022 and each subsequent year shall be 
        the dollar amounts specified in such paragraph for the previous 
        year increased by the annual percentage increase in the 
        consumer price index (all items; U.S. city average) as of 
        September of such previous year. If any amount established 
        under paragraph (1), after application of this paragraph, for a 
        year is not a multiple of $10, it shall be rounded to the 
        nearest multiple of $10.
          ``(3) Alternative to wac.--The Secretary may, for purposes of 
        making determinations under paragraph (1), in addition to using 
        the wholesale acquisition cost for an applicable drug, use 
        alternative cost measures of such drug, or use such alternative 
        cost measure if the wholesale acquisition cost is not 
        available.
          ``(4) Exception.--A justification under subsection (c) shall 
        not be required for a triggered SPIKE increase described in 
        paragraph (1) of an applicable drug of a manufacturer if--
                  ``(A) there is any portion of the lookback period 
                described in the respective subparagraph of such 
                paragraph for such increase that is included within the 
                lookback period for another triggered SPIKE increase 
                (or combination of such increases) for which a 
                justification is made under this section for such drug 
                by such manufacturer; or
                  ``(B) such increase is less than the wholesale 
                acquisition cost (or alternative cost measure specified 
                by the Secretary under paragraph (3)) of such drug 
                during the calendar-year period described in paragraph 
                (1)(A) or the three-calendar-year period described in 
                paragraph (1)(B), as applicable, for such increase, 
                increased by the percentage increase in the consumer 
                price index for all urban consumers (all items; United 
                States city average) for the 12-month period ending six 
                months prior to the calendar-year period so described 
                and for the 36-month period ending six months prior to 
                the three-calendar-year period so described, 
                respectively.
          ``(5) Unit determination.--For purposes of determining the 
        wholesale acquisition cost in carrying out this section, the 
        Secretary shall determine a unit (such as a unit size) to 
        apply.
          ``(6) Public posting.--Beginning with respect to 2021, the 
        Secretary shall publicly post on the Internet website of the 
        Department of Health and Human Services--
                  ``(A) alternative percentages, dollar amounts, and 
                lookback periods that, if applied under paragraph (1), 
                would be projected to increase the number of applicable 
                drugs for which a triggered SPIKE increase would occur 
                for such year; and
                  ``(B) the number of applicable drugs for which a 
                triggered SPIKE increase would occur for such year if 
                such an alternative percentage, dollar amount, or 
                period were applied for such year.
  ``(c) Justification Described.--
          ``(1) In general.--The justification described in this 
        subsection, with respect to a triggered SPIKE increase 
        described in subsection (b)(1) of an applicable drug of a 
        manufacturer, is--
                  ``(A) all of the information described in paragraph 
                (2);
                  ``(B) all of the information and supporting 
                documentation described in paragraph (3), as applicable 
                to the increase and drug; and
                  ``(C) a certification described in paragraph (4).
          ``(2) Required information.--For purposes of paragraph (1), 
        the information described in this paragraph is the following:
                  ``(A) The individual factors that have contributed to 
                the increase in the wholesale acquisition cost.
                  ``(B) An explanation of the role of each factor in 
                contributing to such increase.
          ``(3) Information as applicable.--For purposes of paragraph 
        (1), the information and supporting documentation described in 
        this paragraph is the following, as applicable to the increase 
        of the drug:
                  ``(A) Total expenditures of the manufacturer on--
                          ``(i) materials and manufacturing for such 
                        drug;
                          ``(ii) acquiring patents and licensing for 
                        each drug of the manufacturer; and
                          ``(iii) costs to purchase or acquire the drug 
                        from another company, if applicable.
                  ``(B) The percentage of total expenditures of the 
                manufacturer on research and development for such drug 
                that was derived from Federal funds.
                  ``(C) The total expenditures of the manufacturer on 
                research and development for such drug.
                  ``(D) The total revenue and net profit generated from 
                the applicable drug for each calendar year since drug 
                approval.
                  ``(E) The total costs associated with marketing and 
                advertising for the applicable drug.
                  ``(F) Additional information specific to the 
                manufacturer of the applicable drug, such as--
                          ``(i) the total revenue and net profit of the 
                        manufacturer for the period of such increase, 
                        as determined by the Secretary;
                          ``(ii) metrics used to determine executive 
                        compensation;
                          ``(iii) total expenditures on--
                                  ``(I) drug research and development; 
                                or
                                  ``(II) clinical trials on drugs that 
                                failed to receive approval by the Food 
                                and Drug Administration; and
                          ``(iv) any additional information related to 
                        drug pricing decisions of the manufacturer.
                  ``(G) Any other relevant information and supporting 
                documentation necessary to justify the triggering SPIKE 
                increase.
                  ``(H) Any other relevant information and supporting 
                documentation, as specified by the Secretary.
          ``(4) Certification.--For purposes of paragraph (1), the 
        certification described in this paragraph is a certification, 
        that all such information and documentation is accurate and 
        complete, by one of the following:
                  ``(A) The chief executive officer of the 
                manufacturer.
                  ``(B) The chief financial officer of the 
                manufacturer.
                  ``(C) An individual who has delegated authority to 
                sign for, and who reports directly to, such chief 
                executive officer or chief financial officer.
  ``(d) Timing.--
          ``(1) Notification.--Not later than 60 days after the date on 
        which the Secretary makes the determination that there is a 
        triggering SPIKE increase with respect to an applicable drug, 
        the Secretary shall notify the manufacturer of the applicable 
        drug of such determination.
          ``(2) Submission of justification.--Not later than 90 days 
        after the date on which a manufacturer receives a notification 
        under paragraph (1), subject to subsection (b)(4), the 
        manufacturer shall submit to the Secretary the justification 
        required under subsection (a), including a summary of such 
        justification, in a form and manner specified by the Secretary. 
        In specifying such form, with respect to the summary required 
        under the previous sentence, the Secretary shall provide that 
        such summary shall be in an easily understandable format, as 
        specified by the Secretary, and shall permit the manufacturer 
        to exclude proprietary information from such summary.
          ``(3) Posting on internet website.--Not later than 30 days 
        after receiving the complete justification under paragraph (2), 
        the Secretary shall post on the Internet website of the Centers 
        for Medicare & Medicaid Services the summary included for such 
        justification.
  ``(e) Penalties.--
          ``(1) Failure to submit timely justification.--If the 
        Secretary determines that a manufacturer has failed to submit a 
        justification as required under this section, including in 
        accordance with the timing and form required, with respect to 
        an applicable drug, the Secretary shall apply a civil monetary 
        penalty in an amount of $10,000 for each day the manufacturer 
        has failed to submit such justification as so required.
          ``(2) False information.--Any manufacturer that submits a 
        justification under this section that knowingly provides false 
        information in such justification is subject to a civil 
        monetary penalty in an amount not to exceed $100,000 for each 
        item of false information.
          ``(3) Application of procedures.--The provisions of section 
        1128A (other than subsections (a) and (b)) shall apply to a 
        civil monetary penalty under this subsection in the same manner 
        as such provisions apply to a penalty or proceeding under 
        section 1128A(a). Civil monetary penalties imposed under this 
        subsection are in addition to other penalties as may be 
        prescribed by law.
  ``(f) Definitions.--In this section:
          ``(1) Applicable drug.--
                  ``(A) In general.--Subject to subparagraph (B), the 
                term `applicable drug' means, with respect to a 
                lookback period described in subsection (b)(1), a 
                covered outpatient drug (as defined in paragraph (2) of 
                section 1927(k), without application of paragraph (3) 
                of such section) that is covered under title XVIII and 
                is not a low cost drug.
                  ``(B) Exclusion of low cost drugs.--For purposes of 
                subparagraph (A), not later than January 1, 2021, the 
                Secretary shall specify a threshold (such as a cost or 
                spending threshold) for identifying (and shall 
                identify) low cost drugs to be excluded from the 
                definition of the term `applicable drug', such as a 
                drug that has a wholesale acquisition cost of less than 
                $10 per unit or less than $100 in average estimated 
                expenditures under title XVIII per individual per year 
                or per user of such drug per year. For purposes of this 
                section, a drug shall not be considered specified as a 
                low cost drug for a lookback period described in 
                subsection (b)(1) with respect to a year unless such 
                drug is identified as being below the specified 
                threshold for the entirety of the lookback period.
          ``(2) Manufacturer.--The term `manufacturer' has the meaning 
        given that term in section 1847A(c)(6)(A).
          ``(3) Wholesale acquisition cost.--The term `wholesale 
        acquisition cost' has the meaning given that term in section 
        1847A(c)(6)(B).''.
  (b) Reporting to the Secretary of the Treasury.--
          (1) In general.--Subpart A of part III of subchapter A of 
        chapter 61 of the Internal Revenue Code of 1986 is amended by 
        inserting after section 6039J the following new section:

``SEC. 6039K. DRUG PRICE SPIKE INCREASE REPORTING.

  ``Each manufacturer (within the meaning of section 1128L of the 
Social Security Act) shall file a return (at such time and in such form 
and manner as the Secretary may provide) showing for such year with 
respect to which such section applies all information and supporting 
documentation and the certification included within a justification 
reported by the manufacturer under subsection (c)(1) of such 
section.''.
          (2) Clerical amendment.--The table of sections for subpart A 
        of part III of subchapter A of chapter 61 of such Code is 
        amended by inserting after the item relating to section 6039J 
        the following new item:

``Sec. 6039K. Drug price SPIKE increase reporting.''.

SEC. 3. REQUIREMENT FOR MANUFACTURERS OF CERTAIN DRUGS, DEVICES, 
                    BIOLOGICALS, AND MEDICAL SUPPLIES TO REPORT ON 
                    PRODUCT SAMPLES PROVIDED TO CERTAIN HEALTH CARE 
                    PROVIDERS.

  (a) In General.--Section 1128G(a) of the Social Security Act (42 
U.S.C. 1320a-7h(a)) is amended by adding at the end the following new 
paragraph:
          ``(3) Certain product samples.--
                  ``(A) In general.--In addition to the requirements 
                under paragraphs (1)(A) and (2), on the 90th day of 
                each calendar year (beginning with 2023), any 
                applicable manufacturer that provides a payment or 
                other transfer of value that is a product sample 
                described in subparagraph (B) to any covered recipient 
                (or to an entity or individual at the request of, or 
                designated on behalf of, such a covered recipient) 
                shall submit to the Secretary, in such electronic form 
                as the Secretary shall require, the following 
                information (aggregated per each drug, device, 
                biological, or medical supply, as applicable) with 
                respect to the preceding calendar year:
                          ``(i) The total quantity of all such payments 
                        or other transfers of value provided to all 
                        covered recipients.
                          ``(ii) The total value of all such payments 
                        or other transfers of value provided to all 
                        covered recipients.
                          ``(iii) If applicable, information described 
                        in clauses (vii) and (viii) of paragraph (1)(A) 
                        with respect to such a payment or other 
                        transfer of value.
                  ``(B) Product sample described.--For purposes of 
                subparagraph (A), a product sample described in this 
                subparagraph is a product sample that is not intended 
                to be sold and is intended for patient use.''.
  (b) Public Availability of Information.--Section 1128G(c)(1)(C)(ii) 
of the Social Security Act (42 U.S.C. 1320a-7h(c)(1)(C)(ii)) is 
amended--
          (1) by striking ``(ii) contains'' and inserting ``(ii)(I) 
        with respect to information that is not information submitted 
        under paragraph (3) of subsection (a), contains'';
          (2) by striking ``, as applicable;'' and inserting ``, as 
        applicable; and''; and
          (3) by adding at the end the following new subclause:
                          ``(II) with respect to information submitted 
                        under paragraph (3) of subsection (a), contains 
                        information that is presented by the name of 
                        the applicable manufacturer, the total amount 
                        of all payments or other transfers of value 
                        described in such paragraph provided to all 
                        covered recipients, the total value of all such 
                        payments or other transfers of value provided 
                        to all covered recipients, and the name of the 
                        covered drug, device, biological, or medical 
                        supply, as applicable;''.
  (c) Conforming Amendment.--Section 1128G(e)(10)(B)(ii) of the Social 
Security Act (42 U.S.C. 1320a-7h(e)(10)(B)(ii)) is amended by striking 
``Product samples'' and inserting ``Except for purposes of paragraph 
(3) of subsection (a), product samples''.
  (d) Reporting to the Secretary of the Treasury.--
          (1) In general.--Subpart A of part III of subchapter A of 
        chapter 61 of the Internal Revenue Code of 1986, as amended by 
        section 2, is further amended by inserting after section 6039K 
        the following new section:

``SEC. 6039L. PRODUCT SAMPLES OF APPLICABLE MANUFACTURERS.

  ``Each applicable manufacturer (within the meaning of section 
1128G(a)(3) of the Social Security Act) shall file a return (at such 
time and in such form and manner as the Secretary may provide) showing 
for such year to which such section applies--
          ``(1) the amount described in section 1128G(a)(3)(A)(ii) of 
        such Act with respect to such year, and
          ``(2) the portion of such amount for which a deduction was 
        claimed under section 162.''.
          (2) Clerical amendment.--The table of sections for subpart A 
        of part III of subchapter A of chapter 61 of such Code, as 
        amended by section 2, is further amended by inserting after the 
        item relating to section 6039K the following new item:

``Sec. 6039L. Product samples of applicable manufacturers.''.

SEC. 4. ANALYSIS AND REPORT ON INPATIENT HOSPITAL DRUG COSTS.

  (a) Analysis.--The Secretary of Health and Human Services shall 
conduct an analysis that, to the extent practicable--
          (1) focuses on drugs that are furnished in the inpatient 
        setting;
          (2) includes data on inpatient hospital drug costs, Medicare 
        spending, volume, and spending per admission;
          (3) considers trends in inpatient hospital drug costs, such 
        as trends by hospital size, classification of urban or rural, 
        whether the hospital is a teaching hospital, or other 
        categorization; and
          (4) examines the impact of drug shortages on services that 
        are furnished in an inpatient hospital setting.
In conducting such analysis, the Secretary may conduct hospital 
surveys, use data from hospital cost reports, or use other data as 
determined by the Secretary.
  (b) Report.--Not later than January 1, 2021, the Secretary shall 
submit to the Committee on Ways and Means of the House of 
Representatives and the Finance Committee of the Senate a report on 
drug costs in the inpatient hospital setting, including the analyses 
described in paragraphs (1) through (4) of subsection (a).
  (c) Funding.--For purposes of carrying out this section, there shall 
be transferred to the Secretary $3,000,000 from the Federal Hospital 
Insurance Trust Fund under section 1817 of the Social Security Act (42 
U.S.C. 1395i).

SEC. 5. 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, and price concessions 
        and the amount of such rebates, discounts, 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 on rebates, discounts, 
                and price concessions, with respect to an individual 
                drug or an individual plan.
                  ``(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, to ensure confidentiality of 
                proprietary information or other information that is 
                prevented to be disclosed under subparagraph (A).''.

SEC. 6. 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.--In the case of a manufacturer of a 
                drug or biological described in subparagraph (C), (E), 
                or (G) of section 1842(o)(1) or in clause (ii) or (iii) 
                of section 1881(b)(14)(B) that does not have a rebate 
                agreement in effect under 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.
                  ``(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 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 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) 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.

                       I. SUMMARY AND BACKGROUND


                         A. Purpose and Summary

    The bill, H.R. 2113, the ``Prescription Drug Sunshine, 
Transparency, Accountability and Reporting (STAR) Act of 2019'' 
as ordered reported by the Committee on Ways and Means on April 
9, 2019, includes several provisions that amend Titles XI and 
XVIII of the Social Security Act (SSA) and focuses on 
increasing transparency in the pharmaceutical marketplace. 
Specifically, H.R. 2113 requires pharmaceutical manufacturers 
to justify drug price increases or market introduction prices 
that exceed a threshold amount, including reporting 
expenditures for research and development and other costs; adds 
new reporting requirements for medical product samples under 
the existing federal Open Payments program; and requires the 
Secretary of the Department of Health and Human Services (HHS) 
to post on the public HHS website the aggregate rebates and 
discounts that Pharmacy Benefit Managers (PBMs) receive from 
drug manufacturers, by class of drug. The bill also requires 
drug manufacturers that do not currently report Medicare Part B 
drug prices to report those prices, and it requires the 
Secretary to collect additional information on prescription 
drugs used for inpatient hospital care covered under Medicare 
Part A.
    H.R. 2113 incorporates provisions that are substantially 
similar to a number of bills that have been introduced as 
standalone measures this Congress. Notably, section 2 is 
adapted from H.R. 2069, introduced by Representative Horsford 
(D-NV) and Representative Reed (R-NY). In addition, section 3 
is adapted from H.R. 2064, introduced by Representative Chu (D-
CA) and Representative Nunes (R-CA); section 5 is adapted from 
H.R. 2115, introduced by Representative Spanberger (D-VA), 
Arrington, (R-TX), and Boyle (D-PA); and section 6 is adapted 
from H.R. 2087, which was introduced by Subcommittee on Health 
Chairman Doggett (D-TX) and Representative Buchanan (R-FL).

                 B. Background and Need for Legislation

    The United States spent $457 billion on prescription drugs 
in 2016, consisting of $328 billion on retail drugs and $128 
billion on non-retail drugs. This figure represents 
approximately 17 percent of all health care spending.\1\ 
Between 2011 and 2016, drug spending nationwide grew by 27 
percent, more than 2.5 times the rate of growth in 
inflation.\2\ Medicare alone spent nearly $130 billion on 
prescription drugs in 2016, $99.5 billion of which was for Part 
D drugs (drugs at the pharmacy counter) and $29.1 billion of 
which was for Part B drugs (drugs in a physician's office).\3\ 
In total, 20 percent of Medicare spending went to prescription 
drug costs in 2016.\4\
---------------------------------------------------------------------------
    \1\Assistant Secretary for Planning and Evaluation: Department of 
Health and Human Services. Observations on Trends in Prescription Drug 
Spending. March 8, 2016. https://aspe.hhs.gov/system/files/pdf/187586/
Drugspending.pdf.
    \2\Office of the Actuary: Center for Medicare and Medicaid Services 
(CMS). 2016 National Health Expenditures: National Health Prescription 
Drug Spending Data, Table 11, BLS data on CPI-U 2011-2016. December 6, 
2017. https://www.cms.gov/Research-Statistics-Data-and-Systems/
Statistics-Trends-and-Reports/NationalHealthExpendData/
NationalHealthAccountsHistorical.html.
    \3\Kaiser Family Foundation, 10 Essential Facts About Medicare and 
Prescription Drug Spending. Jan 2019.
    \4\Id.
---------------------------------------------------------------------------
    Pharmaceutical spending has risen at an accelerated pace in 
recent years due to increased utilization, price increases for 
existing drugs, high launch prices of new products, and a 
diminishing impact from the introduction of lower cost generic 
drugs to the market. According to National Health Expenditure 
data, spending for outpatient drugs rose 29 percent from 2011 
2017.\5\
---------------------------------------------------------------------------
    \5\Office of the Actuary: Center for Medicare and Medicaid Services 
(CMS). 2016 National Health Expenditures: Historical. December 6, 2017. 
https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-
Trends-and-Reports/NationalHealthExpendData/
NationalHealthAccountsHistorical.html. The rate of spending increase 
has slowed to 0.4% in 2017 from a recent peak of 12.4% in 2014.
---------------------------------------------------------------------------
    Manufacturers set list prices for drugs, which are subject 
to markups and discounts by wholesalers, pharmacies, and other 
entities along the drug distribution chain. Manufacturers also 
negotiate price concessions with PBMs that contract with, or 
are owned by, health plans that pay for health services.\6\ 
Manufacturers may provide rebates or other price concessions to 
PBMs to have their drugs listed on health plan formularies 
(i.e., lists of covered drugs).
---------------------------------------------------------------------------
    \6\Ernst Berndt, National Bureau of Economic Research, Pricing and 
Reimbursement in U.S. Pharmaceutical Markets. Working Paper 16297. 
(September 2010).
---------------------------------------------------------------------------
    Much of the data on pharmaceutical pricing is confidential, 
through either contract or statutory provision. This makes it 
difficult for researchers and policymakers to determine the 
dollar amount of markups and discounts by wholesalers, PBMs, 
and pharmacies, as well as final or net prices of drugs 
purchased through payers, including the Medicare program and 
commercial health plans.\7\ For example, HHS collects 
information about drug prices for the Medicare Part D 
outpatient prescription drug program, but much of the data may 
not be released to the public.\8\
---------------------------------------------------------------------------
    \7\Id.
    \8\42 U.S.C. Sec. 1396r-8(b)(3)(D). (2009).
---------------------------------------------------------------------------
    In a 2017 report on pharmaceutical pricing, the National 
Academies of Sciences, Engineering, and Medicine noted that 
manufacturers, health plans, PBMs and other market participants 
offered contrasting statements about which players bore 
responsibility for rising drug prices, often without relevant 
evidence to support the claims.\9\ According to the report, 
greater disclosure and public reporting of reliable information 
about prescription drug prices could improve market 
performance, as has been the case with data reporting 
requirements for other U.S. industries. Several states have 
enacted legislation requiring pharmaceutical manufacturers to 
publicly disclose drug pricing data.\10\
---------------------------------------------------------------------------
    \9\National Academies of Sciences, Engineering, and Medicine, 
Making Medicines affordable: A National Imperative. The National 
Academies Press, p. 63. (2017) https://doi.org/10.17226/24946.
    \10\ National Academy for State Health Policy, State Laws Help Spur 
Congressional Action on Drug Prices. (February 19, 2019) https://
nashp.org/state-laws-help-spur-congressional-action-on-drug-prices/.
---------------------------------------------------------------------------

                         C. Legislative History


Background

    H.R. 2113 was introduced on April 8, 2019, and was referred 
to the Committee on Ways and Means and additionally to the 
Committee on Energy and Commerce.

Committee hearings

    On February 12, 2019, the Committee on Ways and Means held 
a full committee hearing to examine the cost of rising 
prescription drug prices. Specifically, the hearing focused on: 
rapidly escalating prices of older medications, high launch 
prices, misaligned incentives for responsibly pricing products, 
and high costs to patients. Members discussed the importance of 
price transparency, reforms to Medicare Parts B and D, and 
changes in ASP reporting. Among the Witnesses were Rachel 
Sachs, Professor of Law at Washington University in St. Louis, 
who spoke about the misaligned incentives for pharmaceutical 
payment systems and Alan Reuther, Legislative Consultant at the 
UAW Retiree Medical Benefits Trust who spoke about increased 
pharmaceutical costs for their beneficiaries.
    On March 7, 2019, the Committee on Ways and Means 
Subcommittee on Health held a hearing to examine the 
complicated drug pricing landscape, exploring ways to lower 
prescription drug prices--particularly as they pertain to 
patient out-of-pocket costs--through competition and value-
based payments. Witnesses, such as Mark Miller, Executive Vice 
President at Arnold Ventures, discussed the importance of 
closing tax loopholes in the pharmaceutical market, including 
the implications of reporting free samples.

Committee action

    The Committee on Ways and Means marked up H.R. 2113, the 
Prescription Drug STAR Act, on April 9, 2019, and ordered the 
bill, as amended, favorably reported by a voice vote (with a 
quorum being present).

                      II. EXPLANATION OF THE BILL


           A. Section 2--Drug Manufacturer Price Transparency


                            CURRENT LAW\11\
---------------------------------------------------------------------------

    \11\All discussions of Current Law in this report refer to current 
law as of the date of the markup (i.e., April 9, 2019) and do not 
reflect subsequent law changes.
---------------------------------------------------------------------------
    Under current law, the HHS Secretary has the authority to 
monitor federal health care drug expenditures under Medicare, 
the Veterans Health Administration, Medicaid, the state 
Children's Health Insurance Program, the Public Health Service, 
and other federal agencies. Generally, federal health program 
payments for prescription drugs are statutorily determined and 
often require drug manufacturers to provide price concessions, 
purchase discounts, or rebates. The HHS Secretary uses a 
variety of methods to monitor federal drug purchases to ensure 
compliance with statutory requirements. However, drug 
manufacturers are not required to explain or justify their 
pricing strategies and patients are expected to pay the price 
or risk health complications, bankruptcy, or even death.\12\
---------------------------------------------------------------------------
    \12\D. Herkert, P Vijayakumar, J Luo, et al., Cost-Related Insulin 
Underuse Among Patients with Diabetes. JAMA Intern Med. 179(1):112 114 
(2019); Bram Sable-Smith, Insulin's High Cost Leads To Lethal 
Rationing. NPR. (2018) https://www.npr.org/sections/health-shots/2018/
09/01/641615877/insulins-high-cost-leads-to-lethal-rationing. Micaela 
Marini Higgs, The High Price of Insulin Is Literally Killing People. 
Vice. (2017) https://tonic.vice.com/en_us/article/ezwwze/the-high-
price-of-insulin-is-literally-killing-people. Amanda Gilbert, Dubuque 
County Mom Says Diabetic Son Rationed Insulin, Died. KWWL. (2018) 
https://kwwl.com/news/2018/11/20/dubuque-county-mom-says-diabetic-son-
rationed-insulin-died/.
---------------------------------------------------------------------------
    To comply with federal statute, drug manufacturers and 
other entities, such as health insurers and PBMs, are required 
to regularly report certain drug prices and related information 
to the HHS Secretary. Some statutorily required drug price data 
may be limited to specific programs or agencies, and most 
reported pricing information is statutorily protected and 
confidential as drug manufacturers and other entities consider 
drug prices to be competitive information. Most drug price data 
are limited to use by the HHS Secretary for program 
administration and for review by federal oversight agencies. 
However, some drug price information is publicly available in 
aggregate or in other form provided that an individual drug, 
manufacturer, or payer is not identifiable.

                           REASONS FOR CHANGE

    Drafted into Title XI of the SSA alongside a number of 
other Medicare-related transparency provisions (e.g., Open 
Payments, PBMs), section 2 of H.R. 2113 requires drug 
manufacturers to justify to the Secretary of HHS any drug price 
hikes above 10 percent or $10,000 per year, or 25 percent or 
$25,000 in three years, and for new drugs with a launch price 
at or above $26,000 per year. Section 2 of H.R. 2113 provides 
that the $10,000, $25,000, and $26,000 thresholds will be 
adjusted by the consumer price index for urban customers (CPI-
U) over time.
    Drug prices have been increasing astronomically over the 
past 20 years, and the lack of transparency creates an 
information asymmetry between the buyer and the seller. For 
example, the price of Evzio, an opioid overdose medication, 
increased 508 percent between 2015 and 2016; while the cost of 
the Epipen 2-pack increased more than 28 percent for the third 
year in a row.13}14}15 In addition, per-capita 
retail prescription drug spending has almost tripled since 
2000.\16\ From 2008 to 2016, oral brand name drugs increased 
9.2 percent per year, oral specialty drugs increased 20.6 
percent per year, and generic drugs have increased at twice the 
rate of inflation.\17\ The Congressional Budget Office (CBO) 
recently published a report that pointed to launch prices as 
the culprit in higher prices for specialty drugs in Part D: 
``The much higher prices of specialty drugs . . . was 
attributable to the higher prices at which those drugs were 
introduced, not to more rapid growth in prices following their 
introduction.''\18\
---------------------------------------------------------------------------
    \13\Darrell Hulisz et. al, The Soaring Price of EpiPen. RN. (2016) 
https://www.rn.com/featured-stories/the-soaring-price-of-epipen/.
    \14\C. Koons & R. Langreth, How Marketing Turned the EpiPen into a 
Billion-Dollar Business Bloomberg.com (2015) https://www.bloomberg.com/
news/articles/2015-09-23/how-marketing-turned-the-epipen-into-a-
billion-dollar-business.
    \15\Centers for Medicare & Medicaid Services, Medicare Part D 
Spending Dashboard and Data. (2019) https://www.cms.gov/Research-
Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Information-
on-Prescription-Drugs/MedicarePartD.html.
    \16\Peterson-Kaiser Health System Tracker, What are the recent and 
forecasted trends in prescription drug Spending? (2017) https://
www.healthsystemtracker.org/chart-collection/recent-forecasted-trends-
prescription-drug-spending/#item-nominal-and-inflation-adjusted-
increase-in-rx-spending_2017.
    \17\Hernandez I, Good CB, Cutler DM, et al. The Contribution of New 
Product Entry versus Existing Product Inflation in the Rising Costs of 
Drugs. Health Affairs 38. No. 1: 76 83 (2019).
    \18\Congressional Budget Office, Prices for and Spending on 
Specialty Drugs in Medicare Part D and Medicaid: An In-Depth Analysis, 
Working Paper. (2019) https://www.cbo.gov/publication/5501.
---------------------------------------------------------------------------
    This provision does not outlaw increases in drug prices or 
high launch prices--it simply requires an explanation. This 
provision of the STAR Act requires a public explanation for the 
rationale behind price increases and high launch prices. The 
provision includes certain guardrails for drug companies, 
allowing proprietary information to remain confidential, but it 
requires drug manufacturers to submit all information as 
applicable to justifying the price. Due to the heterogeneity of 
drug pricing across manufacturers and drugs, the bill leaves 
the required elements used to justify price increases to the 
discretion of the Secretary, which will be determined through 
the public comment and rulemaking process. While the elements 
included in a given submission will ultimately be the 
responsibility of the manufacturers, the provision requires 
each manufacturer to attest to the veracity of the 
justification in writing and manufacturers will be subject to a 
civil monetary penalty (CMP) for the provision of false 
information.
    When this provision takes effect in 2021, the first 
reporting period will look back over the preceding five years 
(increases that occurred from 2016 on) to determine whether a 
drug qualifies for reporting under the Act. The provision's 
thresholds and lookback are based on the model law drafted by 
the National Academy of State Health Policy.\19\ Without this 
lookback period, manufacturers could undermine the goal of 
transparency by raising their prices as high as possible until 
2021 to avoid having to report under the provision. Prices have 
been continuing to skyrocket and eliminating the lookback on 
enactment would allow manufacturers to continue their current 
trend of price increases for their products until 2021 with no 
justification and no relief in sight for consumers.
---------------------------------------------------------------------------
    \19\NASHP, Drug Price Transparency Model Legislation and Resources, 
https://nashp.org/drug-price-transparency/.
---------------------------------------------------------------------------
    This provision also would require reporting for any drug 
that launches with an annual price of $26,000 or more. The goal 
of this provision is to shed light on the factors driving high 
launch prices and exert pressure on manufacturers to only set 
high prices when they can be adequately justified. The 
threshold is set at the median annual income of a Medicare 
beneficiary. The majority of seniors and Medicare beneficiaries 
in this country live on fixed income and do not have the 
flexibility needed to absorb the costs of unexpected medical 
expenses and increasing drug prices. Half of Medicare 
beneficiaries have an annual income of less than $26,200.\20\ 
One quarter of Medicare beneficiaries live on less than $15,250 
per year.\21\
---------------------------------------------------------------------------
    \20\Gretchen Jacobson et al., Income and Assets of Medicare 
Beneficiaries, 2016-2035. The Henry J. Kaiser Family Foundation. (2017) 
https://www.kff.org/medicare/issue-brief/income-and-assets-of-medicare-
beneficiaries-2016-2035/.
    \21\Id.
---------------------------------------------------------------------------
    Representative George Holding (R-NC) offered and withdrew 
an amendment that would have exempted price justifications for 
drugs launching at or above the $26,000 threshold if those 
drugs were the first Food and Drug Administration (FDA)-
approved drug for an indication or had fast-track, 
breakthrough, or orphan drug status. This amendment would have 
undercut the provision, creating a loophole for drug companies 
justifying the price of some of the highest cost drugs on the 
market. Seven of the top ten best-selling drugs in the country 
in 2015 were orphan drugs, and the median launch price of 
orphan drugs has doubled every five years since 
1983.22}23
---------------------------------------------------------------------------
    \22\Tribble, SJ & Lupkin, S. Drugmakers Manipulate Orphan Drug 
Rules to Create Prized Monopolies, Kaiser Health News. (January 17, 
2017) https://khn.org/news/drugmakers-manipulate-orphan-drug-rules-to-
create-prized-monopolies/.
    \23\Johnson, CY. High Prices Make Once-neglected `orphan' drugs a 
booming business, The Washington Post. (August 4, 2016) https://
www.washingtonpost.com/business/economy/high-prices-make-once-
neglected-orphan-drugs-a-booming-business/2016/08/04/539d0968-1e10-11e6 
9c81-4be1c14fb8c8_story.html?utm_term=.a5848b6c94f6.
---------------------------------------------------------------------------
    Many drugs with a high launch price represent a new 
treatment or cure for previously unmanageable conditions. This 
law will provide an opportunity for manufacturers to describe 
their achievements and the incredible value of their 
innovation, while discouraging needlessly high launch prices 
for drugs that are not novel cures and may be repackaged as 
generics.

                       EXPLANATION OF PROVISIONS

    This legislation will bring much-needed transparency and 
accountability in drug prices by requiring that manufacturers 
justify certain price increases or price launches in excess of 
the median Medicare beneficiary income.\24\ Specifically, 
section 2 amends the SSA Section 1128 by adding a new section 
that would require the HHS Secretary to determine at least 
annually if drug manufacturers have increased currently 
marketed or newly introduced prescription drug prices by more 
than certain threshold amounts beginning in 2021. If the HHS 
Secretary determines a drug's price increased or an 
introductory price was above the threshold, then drug 
manufacturers will be required to submit information to justify 
drug price increase. (Hereinafter the justification required by 
drug manufacturers that would apply to both drug price 
increases and introductory prices above a threshold is referred 
to as the ``drug price increase justification.'')
---------------------------------------------------------------------------
    \24\Gretchen Jacobson et al., Income and Assets of Medicare 
Beneficiaries, 2016-2035 The Henry J. Kaiser Family Foundation (2017) 
https://www.kff.org/medicare/issue-brief/income-and-assets-of-medicare-
beneficiaries-2016-2035/.
---------------------------------------------------------------------------
    Beginning in 2021, the HHS Secretary would be authorized to 
require drug manufacturers to justify individual drug price 
increases when a drug's wholesale acquisition cost (WAC), or 
list price, had:\25\
---------------------------------------------------------------------------
    \25\1847A(c)(6)(B).
---------------------------------------------------------------------------
          1. a cumulative WAC (or alternative cost measure 
        specified by the HHS Secretary) increase of at least 10 
        percent (or $10,000) within a calendar year period 
        beginning and ending within the five-year lookback 
        period preceding the applicable year;
          2. a cumulative WAC (or alternative cost measure) 
        increase of at least 25 percent (or $25,000) during any 
        three-year period beginning and ending within the 
        lookback period; or
          3. an introductory (launch) price of at least $26,000 
        per individual or per drug user expenditure (as 
        estimated by the HHS Secretary) for an applicable year 
        or per course of treatment (as defined by the HHS 
        Secretary) for a drug first covered by Medicare.
    Beginning with 2022, the drug price thresholds will be 
adjusted annually for inflation based on the CPI-U as of 
September of the previous year and rounded to the nearest $10 
multiple. A price increase justification would not be required 
if: (1) a prior justification occurring within the lookback 
period had already been triggered, or (2) if the increase were 
to be less than the inflation adjustment.
    Beginning in 2021 and annually thereafter, the HHS 
Secretary is required to post on a public HHS website 
information about affected drugs if different price increase or 
introductory price criteria were applied.
    Drug manufacturers will be required to justify drug price 
increases or introductory prices by identifying factors that 
contributed to the drug's price and the role each factor played 
in the increase or introductory price. Section 2 requires drug 
manufacturers to submit the following supporting documentation, 
as relevant:
           total drug manufacturer expenditures on the 
        following: materials and manufacturing for the drug, 
        patents and licensing acquisition for each drug of the 
        manufacturer, and costs of purchasing or acquiring the 
        drug from another company, if applicable;
           the percentage of the manufacturer's total 
        research and development expenditures for the drug that 
        were derived from federal funds;
           the drug manufacturer's total research and 
        development expenditures for the drug;
           the total revenue and net profit generated 
        by the applicable drug for each calendar year since the 
        drug was approved;
           the drug manufacturer's total marketing and 
        advertising costs for the drug;
           the following additional information 
        specific to the manufacturer such as: the drug 
        manufacturer's total revenue and net profit for the 
        reporting period (as determined by the HHS Secretary), 
        metrics used to determine executive compensation, total 
        expenditures on research and development, total 
        expenditures on clinical trials that failed to gain 
        approval, and any information related to the drug 
        pricing decision;
           any other relevant information and 
        supporting documentation necessary to justify a drug's 
        price increase or introductory price; and
           any other relevant information and 
        supporting documentation as specified by the HHS 
        Secretary.
    Drug manufacturers are required to submit a certification 
signed by the manufacturer's officers (or designees) that the 
justification information provided was complete and accurate.
    The HHS Secretary is required to notify a drug manufacturer 
within 60 days from the date the HHS Secretary determined that 
a drug's price increase or introductory price would require 
justification. Drug manufacturers are required to submit the 
drug price increase justification, including a summary, within 
90 days after being notified by the HHS Secretary. In 
specifying the justification, the HHS Secretary will be 
required to permit drug manufacturers to exclude proprietary 
information from the summary. The HHS Secretary is required to 
publicly post the summary of the drug price increase 
justification on the Centers for Medicare & Medicaid Services 
(CMS) website within 30 days after receiving the drug 
manufacturer's complete drug price increase justification.
    The HHS Secretary is required to apply a $10,000 per day 
CMP for each day a drug manufacturer failed to submit a timely 
drug price increase justification, including failure to submit 
the justification in the required form and manner. Drug 
manufacturers that knowingly submitted false price increase 
justification information would be subject to CMPs up to 
$100,000 for each false information item. Other federal health 
care CMPs would also apply to reporting of the drug price 
increase justification.\26\
---------------------------------------------------------------------------
    \26\42 U.S.C. Sec. 1320(a)-7(a).
---------------------------------------------------------------------------
    Section 2 defines applicable drugs as prescription drugs 
(and biologic products), including insulin, but not vaccines, 
drugs covered by Medicare during a lookback period that were 
not low-cost drugs, were approved by the FDA, and were 
inpatient drugs, physician-administered drugs, or drugs that 
could be paid for as part of another service.\27\ By January 1, 
2021, the HHS Secretary would be required to specify a 
threshold, such as a cost or spending threshold, and to
---------------------------------------------------------------------------
    \27\Covered outpatient drugs, as defined under Medicaid.
---------------------------------------------------------------------------
identify low-cost drugs to exclude from the definition of an 
applicable drug. Drug manufacturers and WAC are defined 
consistent with Medicare and Medicaid statute.\28\
---------------------------------------------------------------------------
    \28\ Wholesale Acquisition Cost: 42 U.S.C. Sec. 1395w-3a; 
Manufacturer: 42 U.S.C. Sec. 1396r-8.
---------------------------------------------------------------------------
    Section 2 also requires the Secretary of Treasury to 
establish a tax return for drug manufacturers if they were 
required to submit a drug price increase justification. The 
return would include all the information, supporting 
documentation, and the certification required in the price 
justification.

                             EFFECTIVE DATE

    The effective date of Section 2 is January 1, 2021.

B. Section 3--Requirement for Manufacturers of Certain Drugs, Devices, 
Biologicals, and Medical Supplies to Report on Product Samples Provided 
                    to Certain Health Care Providers


                              CURRENT LAW

    To promote transparency and prevent inappropriate 
relationships, Section 1128G of the Social Security Act (SSA) 
generally requires ``manufacturers of a covered drug, device, 
biological, or medical supply''\29\ (manufacturers) to report 
payments or transfers of value to ``covered recipients''' 
annually to the HHS Secretary.\30\ Under Section 1128G, covered 
recipients include teaching hospitals and physicians but 
exclude manufacturers' employees.\31\ Examples of reportable 
payments and transfers of value include research support, 
gifts, entertainment, consulting fees, grants, meals, or 
travel,\32\ but exclude certain small payments or transfers of 
value and product samples that are not intended to be sold and 
are for patient use.\33\ Additionally, Section 1128G directs 
the HHS Secretary to make submitted information publicly 
available, including through a searchable Internet website,\34\ 
a requirement currently met through the Open Payments 
program.\35\
---------------------------------------------------------------------------
    \29\A ``covered drug, device, biological, or medical supply'' is 
generally defined as ``any drug, biological product, device, or medical 
supply for which payment is available under Medicare, Medicaid, or CHIP 
(or a waiver of such a plan). See 42 U.S.C. Sec. 1320a-7h(e)(5).
    \30\See id. 42 U.S.C. Sec. 1320a-7h(a).
    \31\See id. Sec. 1320a-7h(e)(6). Section 6111 of the Substance Use-
Disorder Prevention that Promotes Opioid Recovery and Treatment for 
Patients and Communities Act (SUPPORT Act) amends Section 1128G(e)(6) 
to expand the definition of covered recipient to encompass physician 
assistants, nurse practitioners, clinical nurse specialists, certified 
registered nurse anesthetists, and certified nurse midwives. Pub. L. 
No. 115-271, Sec. 6011(a). The amendments made by this section apply to 
information required to be submitted on or after January 1, 2022.
    \32\42 U.S.C. Sec. 1320a-7h(a)(1)(A)(vi).
    \33\Id. Sec. 1320a-7h(e)(10)(B).
    \34\See id. Sec. 1320a-7h(c).
    \35\Centers for Medicare and Medicaid Services, Open Payments. 
(2019) https://www.cms.gov/OpenPayments/index.html/.
---------------------------------------------------------------------------
    In addition, Section 162 of the Internal Revenue Code 
permits a deduction for ordinary and necessary expenses paid or 
incurred during the taxable year in carrying on any trade or 
business.\36\ Under this section, the cost of producing 
pharmaceutical product samples may be claimed by a manufacturer 
as an ordinary and necessary business expense deduction to 
lower the manufacturer's federal income tax liability for the 
year in which the samples are distributed to providers.\37\
---------------------------------------------------------------------------
    \36\26 U.S.C. Sec. 162(a).
    \37\Department of the Treasury, I.R.S. Nat'l Office Field Serv. 
Adv. Mem. 199925009. (June 25, 1999) https://www.irs.gov/pub/irs-wd/
9925009.pdf.
---------------------------------------------------------------------------

                           REASONS FOR CHANGE

    In 2016, pharmaceutical companies gave the equivalent of 
$13.5 billion in free samples to medical care 
providers.\38\However, little is known about the quantities of 
products these companies provide. While free drug samples can 
be incredibly important to patients both for the purposes of 
trying a new drug to determine its effectiveness or for helping 
patients afford high-cost drugs, they can also serve as a 
marketing tool and may have the potential to affect the 
behavior of patients and providers.\39\
---------------------------------------------------------------------------
    \38\Schwartz, L. & Woloshin, S. Medical Marketing in the United 
States, 1997-2016. JAMA.  (January 2019) https://jamanetwork.com/
journals/jama/fullarticle/2720029?alert=article&utm_  
source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosvitals&s
tream=top.
    \39\Chew LD, O'Young TS, Hazlet TK, Bradley KA, Maynard C, Lessler 
DS. A Physician Survey of The Effect of Drug Sample Availability on 
Physicians' Behavior. J Gen Intern Med. 15:478--483. (2000). See e.g., 
Lahey, T, The High Costs of ``Free'' Drug Samples. (December 2014) 
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4274368/. See e.g., 
Chimonas, S & Kassirer, J, No more free drug samples? PloS Med. 
(2009).https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2669216/.
---------------------------------------------------------------------------
    Accordingly, the Medicare Payment Advisory Commission 
(MedPAC) recommended that Congress collect data and allow 
public availability of data on free samples. In its report to 
Congress, MedPac, stated:

          ``While free samples may benefit the patient, there 
        are concerns they may influence physicians' prescribing 
        decisions and lead physicians and patients to rely on 
        more expensive drugs when less expensive medications 
        might be equally effective. More information about the 
        distribution of samples would enable researchers to 
        study their impact on prescribing patterns and overall 
        drug costs and could help payers and health plans 
        target their counter detailing programs. Therefore, the 
        Commission recommends that the Congress require 
        pharmaceutical manufacturers to report information 
        about samples and their recipients.''\40\
---------------------------------------------------------------------------
    \40\Medicare Payment Advisory Committee, Report to Congress: 
Medicare Payment Policy. (March 2009) http://www.medpac.gov/docs/
default-source/reports/march-2009-report-to-congress-medicare-payment-
policy.pdf .

    Beyond drugs, transparency is needed for free medical 
devices. Free samples for devices are no different than free 
samples of prescription drugs: they are a marketing tool to 
develop brand loyalty. Little is known, however about the value 
of many of these products or how many of these products are 
given out for ``free'' as a marketing tool to help build brand 
loyalty. Free products can drive consumers to more expensive 
devices, which then increase health costs overall. Current 
physician sunshine reporting shows that device manufacturers 
provide more ``transfers of value'' to physicians and teaching 
hospitals than drug manufacturers: Device donations accounted 
for $1.7 billion of the $2.8 billion in non-research payments 
to physicians in 2015, or 59 percent of the total. However, 
that information has yet to be publicly reported.\41\
---------------------------------------------------------------------------
    \41\Medicare Payment Advisory Committee, Report to Congress--
Medicare and the Healthcare Delivery System: An Overview of the Medical 
Device Industry. (June 2017) http://www.medpac.gov/docs/default-source/
reports/march-2009-report-to-congress-medicare-payment-policy.pdf.
---------------------------------------------------------------------------

                       EXPLANATION OF PROVISIONS

    Section 3 would give the public better insight into the 
number and value of samples, as well as what drug, device, or 
other medical supplies manufacturers give to health care 
providers for patient consumption. Specifically, section 3 
amends SSA Section 1128G to add new reporting requirements for 
medical product samples under the Open Payments program. More 
specifically, beginning in 2023, manufacturers that provide a 
payment or transfer of value that is a product sample to 
covered recipients (or a recipient's designee) would be 
required to electronically submit to the HHS Secretary certain 
information concerning the quantity and value of such samples, 
as well as additional data under specified circumstances. 
Manufacturers would be compelled to report aggregated data for 
the provided samples of each drug, device, biological, or 
medical supply. For purposes of the provision, product samples 
would be those that are not intended to be sold and are for 
patient use.
    Additionally, the Open Payments website is required to 
display the total amount and total value of all samples 
provided to all covered recipients, and the name of covered 
drugs or other medical products, as applicable.
    Section 3 also requires some of the information provided to 
the HHS Secretary to be reported separately to the Secretary of 
Treasury. Specifically, each manufacturer is required to report 
to the Secretary of Treasury the total value of all public 
samples it provided to covered recipients, as well as the 
portion of that amount for which an income tax deduction as an 
ordinary and necessary business expense was claimed by the 
manufacturer.
    Nothing in this provision prevents drug and device 
manufacturers from continuing to provide free samples, nor does 
it add any new burdens to providers under the Open Payments 
Program. It only requires the disclosure of the total value and 
quantity of these samples.

                             EFFECTIVE DATE

    The effective date of Section 3 is January 1, 2023.

   C. Section 4--Analysis and Report on Inpatient Hospital Drug Costs


                              CURRENT LAW

    Under Medicare Part A, HHS pays most hospitals a pre-
determined, per-discharge payment using a prospective payment 
system (or PPS) for covered inpatient services furnished to 
Medicare beneficiaries.\42\ This PPS payment generally includes 
all inpatient hospital services that are furnished during an 
inpatient hospital stay, including drugs and biologicals 
ordinarily furnished by the hospital for the care and treatment 
of inpatients. Medicare PPS payments for drugs made up about 16 
percent of total Medicare spending for pharmaceuticals in 
2016.\43\
---------------------------------------------------------------------------
    \42\Center for Medicare and Medicaid Services, Medicare Benefit 
Policy Manual, Chapter 1, ``Inpatient Hospital Services Covered Under 
Part A,'' Section 30. (Rev. March 10, 2017) https://www.cms.gov/
Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c01.pdf.
    \43\MedPAC, Overview: Medicare Drug Spending, p. 7. (June 16, 2016) 
http://medpac.gov/docs/default-source/fact-sheets/overview-of-medicare-
drug-spending.pdf?sfvrsn=0. Medicare also covered drugs under Part A 
through Medicare Advantage plans (Part C) which provide coverage for 
some Part A and Part B services.
---------------------------------------------------------------------------
    Although Part A payments for hospital inpatient drugs and 
biologicals are generally bundled into the PPS payment, there 
are exceptions for certain qualifying new, high-cost medical 
services or technologies including drugs, hemophilia clotting 
factors, and certain vaccines.\44\
---------------------------------------------------------------------------
    \44\Center for Medicare and Medicaid Services, Medicare Claims 
Policy Manual, Chapter: Inpatient Patient Billing. Section 30 (Rev. 
October 26, 2018) https://www.cms.gov/Regulations-and-Guidance/
Guidance/Manuals/Downloads/clm104c03.pdf.
---------------------------------------------------------------------------

                           REASONS FOR CHANGE

    Drug prices are skyrocketing across the health care sector 
with scrutiny focused on outpatient--and not inpatient--costs. 
Yet, because Medicare typically pays for inpatient prescription 
drugs on a bundled basis, little information is known about the 
costs of individual drugs in this setting because hospitals do 
not report the individual drug costs on their cost reports. 
This provision requires the Secretary of HHS to conduct a study 
to submit to Congress on inpatient (Medicare Part A) drug 
costs, including trends in the use of inpatient drugs by 
hospital type and an analysis of potential limitations in 
reporting such costs on the Medicare Cost Reports.

                       EXPLANATION OF PROVISIONS

    This provision requires the HHS Secretary to submit a 
report to the Committee on Ways and Means and the Senate 
Committee on Finance by January 1, 2021 regarding drug cost 
trends in the hospital inpatient setting. The report would 
include Medicare spending and inpatient drug cost and 
utilization trends by hospital characteristics such as hospital 
size, urban or rural location, teaching hospital status, and 
other hospital characteristics as determined by the HHS 
Secretary. The report is also required to address the effect of 
drug shortages on inpatient services. The HHS Secretary is 
authorized to conduct hospital surveys, and to use existing 
sources such as cost report data, or other data as determined 
appropriate. Section 4 would transfer $3 million from the 
Hospital Insurance (Medicare Part A) Trust Fund to the HHS 
Secretary to carry out Section 4.

                             EFFECTIVE DATE

    The effective date of Section 4 is the date of enactment; 
while the study is required to be transmitted to Congress no 
later than January 1, 2021.

           D. Section 5--Public Disclosure of Drug Discounts


                              CURRENT LAW

    Health plans typically contract with, or own, PBMs that 
perform a range of services including designing health plan 
formularies, creating lists of covered drugs; setting up 
contracted networks of retail pharmacies that dispense drugs to 
health plan enrollees for set reimbursement, and negotiating 
drug price concessions from pharmaceutical manufacturers--
including up-front discounts or rebates after the point of 
sale. PBMs generally set prices for drugs, but in some cases 
PBMs dispense drugs from their own mail-order or specialty 
pharmacies.
    PBM contract terms, and information about net drug prices 
negotiated by PBMs, generally are confidential due to market 
competition considerations. Some states have enacted 
legislation requiring health insurers and PBMs serving the 
commercial market to report aggregate information about drug 
price concessions.\45\ In the Medicare Part D program, private 
insurers that offer Part D plans must report price data to the 
HHS Secretary to allow for benefit administration.\46\ Much of 
the information is confidential, but the HHS Secretary is 
authorized to conduct periodic audits to protect against fraud 
and abuse and to ensure proper program disclosures and 
accounting.
---------------------------------------------------------------------------
    \45\National Academy for State Health Policy, State Laws Help Spur 
Congressional Action on Drug Prices. (February 19, 2019) https://
nashp.org/state-laws-help-spur-congressional-action-on-drug-prices/.
    \46\42 C.F.R. Sec. 423.104(g)(3).
---------------------------------------------------------------------------
    As part of the 2010 Patient Protection and Affordable Care 
Act (ACA, P.L. 111-148, as amended), Congress required PBMs and 
health payers to report additional data about prescription drug 
sales and prices for Part D plans and Qualified Health Plans 
(QHPs) sold on state ACA insurance exchanges. QHPs are 
individual health insurance plans that undergo an additional 
HHS certification process, compared to other plans in the non-
group market.\47\
---------------------------------------------------------------------------
    \47\42 U.S.C. Sec. 18021.
---------------------------------------------------------------------------
    Under the ACA provisions, SSA Section 1150A, a health plan 
or PBM that manages prescription drug coverage for a Part D 
plan or QHP, must report the following information to the HHS 
Secretary for a contract year:\48\
---------------------------------------------------------------------------
    \48\42 C.F.R Sec. 423.514(d); 45 C.F.R Sec. 156.295.
---------------------------------------------------------------------------
           The percentage of prescriptions provided 
        through retail pharmacies as compared to mail order 
        pharmacies.
           The percentage of prescriptions for which a 
        generic drug was available and dispensed by a pharmacy, 
        broken down by pharmacy type: mail order pharmacies, 
        independent pharmacies, supermarket pharmacies, and 
        mass merchandiser pharmacies.
           The aggregate amount of rebates, discounts, 
        or price concessions (excluding certain bona fide 
        service fees), negotiated by a PBM under a health plan 
        that are attributable to patient utilization under the 
        plan; the aggregate amount of rebates, discounts, or 
        price concessions passed through by the PBM to a plan 
        sponsor; and the total number of dispensed 
        prescriptions.
           The aggregate amount of the difference 
        between what a health plan pays a PBM, and what a PBM 
        pays retail pharmacies, mail order pharmacies, and the 
        total prescriptions dispensed.

    The reported data are confidential and may not be disclosed 
by the HHS Secretary or by a plan receiving the information 
from a PBM, with limited exceptions. The HHS Secretary may 
disclose information--in a form that does not disclose the 
identity of a PBM or health plan, or prices charged for 
individual drugs--to administer certain provisions of the ACA, 
to administer Part D, or for review by the Government 
Accountability Office (GAO) or CBO. PBMs and health plans that 
do not comply with the provisions or that provide false 
information are subject to penalties.

                           REASONS FOR CHANGE

    This provision requires the Secretary of HHS to post on the 
public HHS website the aggregate rebates and discounts PBMs 
receive from drug manufacturers, by class of drug. While PBMs 
already report this information to the Secretary under current 
law, transparency will help ensure that all plans, payers, and 
consumers have information to better understand how PBMs work 
and whether the discounts they achieve get passed on to lower 
costs. While PBMs negotiate lower drug prices through rebates, 
consumers still pay coinsurance off the list price, not the 
price the PBM negotiates--meaning that consumer costs remain 
high. Rebates can be used to lower patient premiums but 
policymakers do not understand if the increase in drug prices 
and patient cost-sharing is offset by any decrease in patient 
premiums.
    With more transparency into the discounts PBMs achieve on 
different classes of drugs, insurance companies and large 
purchasers will be able to better evaluate PBM services and 
select PBMs that get the best discounts on the medicines their 
consumers use most. This policy could also help policymakers 
develop strategies to ensure lower drug prices and premiums.
    This public reporting will not reveal proprietary 
information--it simply requires that the Secretary posts to a 
public website aggregate information that the PBMs already 
report. Reporting rebates and discounts in the aggregate (i.e., 
across PBMs) would be insufficient for policymakers and 
consumers to understand the types of discounts PBMs receive and 
the way those rebates impact health care costs.

                       EXPLANATION OF PROVISIONS

    This provision would amend SSA Section 1150A to require the 
HHS Secretary to publicly release data on PBM-negotiated 
rebates, discounts, and other price concessions, as well as 
information on generic drug dispensing rates. Starting in 2020, 
the HHS Secretary would post aggregate data on the HHS website. 
The data, to be provided with a one-year lag, would be 
displayed in a way that would prevent disclosure of price 
information about individual drugs or health plans. The HHS 
Secretary would be allowed to make information available about 
specific drug classes, if the HHS Secretary determined that the 
class contained a sufficient number of drugs to ensure 
confidentiality of proprietary information and did not allow 
for identification of individual drugs or health plans.

                             EFFECTIVE DATE

    The effective date of Section 5 is January 1, 2020.

 E. Section 6--Requiring Certain Manufacturers To Report Drug Pricing 
      Information With Respect to Drugs Under the Medicare Program


                              CURRENT LAW

    In general, as a condition of participation in the Medicaid 
drug rebate program (MDRP), prescription drug and biological 
manufacturers are required to report certain drug price 
information to the HHS Secretary quarterly.\49\ The MDRP 
agreement also requires drug and biological manufacturers to 
provide discounts to other federal programs.\50\ The drug price 
information required from MDRP-participating drug manufacturers 
includes Medicaid ``best price,'' the average manufacturer 
price (AMP), the average sales price (ASP), and, in some 
situations, WAC.\51\
---------------------------------------------------------------------------
    \49\Manufacturer Provision of Price Information: 42 U.S.C. 
Sec. 1396r-8.
    \50\The Veterans Health Administration, the Coast Guard, Department 
of Defense, the Public Health Service Act (Section 340B Drug Pricing 
Program), and other federal agencies [Requirement for a Rebate 
Agreement, 42 U.S.C. Sec. 1396r-8.
    \51\Best Price Defined, Average manufacturer price (AMP): 42 U.S.C. 
Sec. 1396r-8; Manufacturers Average Sales Price: 42 U.S.C. Sec. 1395w-
3a.
---------------------------------------------------------------------------
    Best price and AMP are used in determining the amount of 
statutory rebates drug and biological manufacturers owe for a 
drug during a rebate period. ASP and WAC are used in 
determining Medicare Part B drug payments to providers.\52\ The 
HHS Secretary is authorized to use the required price 
information to administer the programs but otherwise is 
prohibited from disclosing individual drug price information or 
making it public.\53\
---------------------------------------------------------------------------
    \52\Use of Average Sales Price Methodology: 42 U.S.C. Sec. 1395w-
3a.
    \53\Confidentiality of Price Information: 42 U.S.C. Sec. 1396r-8.
---------------------------------------------------------------------------
    Medicare covers most drugs under Medicare Part D, but some 
drugs are only available when administered by a physician under 
Medicare Part B. For Part B drugs, providers buy the 
appropriate drug and then are paid by Medicare after the drug 
is administered to a beneficiary. Even though drug 
manufacturers are required to submit timely ASP information for 
each Part B drug so those prices can be used to calculate what 
Medicare will pay providers for drugs, some drug manufacturers 
fail to submit each drug's ASP or fail to submit the ASP within 
the specified time.\54\ In addition, some drug and biological 
manufacturers do not participate in the MDRP and as a result 
are not required to submit the ASP for their products.\55\
---------------------------------------------------------------------------
    \54\Department of Health and Human Services Office of Inspector 
General, Limitations in Manufacturer Reporting of Average Sales Price 
Data for Part B Drugs: OEI-12-13 00040 (July 2014).
    \55\Ibid.
---------------------------------------------------------------------------

                           REASONS FOR CHANGE

    This provision would make ASP data more accurate by 
requiring all manufacturers of drugs covered by Medicare Part B 
to report ASP data to the Secretary, mirroring the requirements 
and enforcement mechanism to which drug manufacturers with 
Medicaid agreements are currently subject. This provision is a 
commonsense policy recommended by a number of federal agencies: 
MedPAC, the GAO, the HHS Office of Inspector General (OIG), and 
the Administration in the fiscal year (FY) 2019 and 2020 
President's budgets. According to MedPAC:

          ``Failing to report ASPs can impact prices for Part B 
        drugs in several ways. For drugs with partially 
        complete ASP data--that is, drugs for which some 
        manufacturers report ASPs but others do not--payment 
        rates based on only the reported ASP data might not 
        reflect average prices of all manufacturers accurately. 
        For drugs with no ASP data--that is, drugs for which no 
        manufacturer reports ASPs--CMS might resort to pricing 
        drugs using alternative and potentially inflated 
        measures of price such as WACs.''

                       EXPLANATION OF PROVISIONS

    This provision would amend SSA Section 1847A to require 
drug and biological manufacturers that do not participate in 
the MDRP, but have products that are separately payable under 
Medicare Part B, to report specified Medicare Part B drug price 
information to the HHS Secretary beginning January 1, 2020. The 
reported price information would be subject to audit by the HHS 
OIG.
    Section 6 would authorize the HHS Secretary, when 
necessary, to survey wholesalers and drug and biological 
manufacturers that directly distribute Medicare Part B drugs to 
verify specified price information. The HHS Secretary would be 
authorized to impose a not-to-exceed $100,000 CMP on drug 
manufacturers or drug suppliers if they refused a request from 
the HHS Secretary to provide price information or knowingly 
provided false information about charges or prices in 
connection with a verification survey. In addition, the HHS 
Secretary would be authorized to impose additional CMPs 
applicable under federal statute.
    The information that this provision requires drug 
manufacturers or wholesalers to report would be kept 
confidential, and the HHS Secretary would be prohibited from 
disclosing that information in a form that identifies a 
specific manufacturer, wholesaler, or the drug prices charged 
except as necessary for GAO and CBO to review the information.
    The HHS Secretary would be required to submit a report to 
Congress by January 1, 2021, that assesses the accuracy of the 
Medicare Part B ASP information submitted by drug and 
biological manufacturers. The report would be required to 
include recommendations on how to improve the accuracy of the 
ASP information.

                             EFFECTIVE DATE

    The effective date of Section 6 is January 1, 2020.

                      III. VOTES OF THE COMMITTEE

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the following statement is made 
concerning the vote of the Committee on Ways and Means in its 
consideration of H.R. 2113, ``Prescription Drug Sunshine, 
Transparency, Accountability and Reporting (STAR) Act of 2019'' 
on April 9, 2019.
    The Amendment in the Nature of a Substitute was agreed to 
by a roll call vote of 40 yeas to 0 nays. The vote was as 
follows.

----------------------------------------------------------------------------------------------------------------
        Representative            Yea        Nay      Present    Representative     Yea        Nay      Present
----------------------------------------------------------------------------------------------------------------
MR. NEAL.....................         X   .........  .........  MR. BRADY......         X   .........  .........
MR. LEWIS....................         X   .........  .........  MR. NUNES......         X   .........  .........
MR. DOGGETT..................         X   .........  .........  MR. BUCHANAN...         X   .........  .........
MR. THOMPSON.................         X   .........  .........  MR. SMITH (NE).         X   .........  .........
MR. LARSON...................         X   .........  .........  MR. MARCHANT...         X   .........  .........
MR. BLUMENAUER...............  .........  .........  .........  MR. REED.......         X   .........  .........
MR. KIND.....................         X   .........  .........  MR. KELLY......         X   .........  .........
MR. PASCRELL.................         X   .........  .........  MR. HOLDING....         X   .........  .........
MR. DAVIS....................         X   .........  .........  MR. SMITH (MO).         X   .........  .........
MS. SANCHEZ..................  .........  .........  .........  MR. RICE.......         X   .........  .........
MR. HIGGINS..................         X   .........  .........  MR. SCHWEIKERT.         X   .........  .........
MS. SEWELL...................         X   .........  .........  MS. WALORSKI...         X   .........  .........
MS. DELBENE..................         X   .........  .........  MR. LAHOOD.....         X   .........  .........
MS. CHU......................         X   .........  .........  MR. WENSTRUP...         X   .........  .........
MS. MOORE....................         X   .........  .........  MR. ARRINGTON..         X   .........  .........
MR. KILDEE...................         X   .........  .........  MR. FERGUSON...         X   .........  .........
MR. BOYLE....................         X   .........  .........  MR. ESTES......         X   .........  .........
MR. BEYER....................         X   .........  .........
MR. EVANS....................         X   .........  .........
MR. SCHNEIDER................         X   .........  .........
MR. SUOZZI...................         X   .........  .........
MR. PANETTA..................         X   .........  .........
MS. MURPHY...................         X   .........  .........
MR. GOMEZ....................         X   .........  .........
MR. HORSFORD.................         X   .........  .........
----------------------------------------------------------------------------------------------------------------

    H.R. 2113 was ordered favorably reported to the House of 
Representatives by voice vote (with a quorum being present).

                     IV. BUDGET EFFECTS OF THE BILL


               A. Committee Estimate of Budgetary Effects

    In compliance with clause 3(d) of rule XIII of the Rules of 
the House of Representatives, the following statement is made 
concerning the effects on the budget of the bill, H.R. 2113, as 
reported. The Committee agrees with the estimate prepared by 
CBO, which is included below.

B. Statement Regarding New Budget Authority and Tax Expenditures Budget 
                               Authority

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee states that the 
bill involves no new or increased budget authority. The 
Committee states further that the bill involves no new or 
increased tax expenditures.

      C. Cost Estimate Prepared by the Congressional Budget Office

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, requiring a cost estimate 
prepared by the CBO, the following statement by CBO is 
provided.

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, June 24, 2019.
Hon. Richard Neal,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2113, the 
Prescription Drug STAR Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Lara 
Robillard and Rebecca Yip.
            Sincerely,
                                         Phillip L. Swagel,
                                                          Director.
    Enclosure.

    
    

    The bill would
           Require prescription drug manufacturers to 
        provide information to the Secretary of Health and 
        Human Services (HHS) about the factors (including 
        expenditures and revenue items) that contribute to 
        increases in drug prices that exceed thresholds 
        established in the bill
           Require drug manufacturers to disclose 
        information about samples provided to physicians
           Direct the Secretary of HHS to study 
        spending on drugs furnished in hospitals and to publish 
        data about prices and discounts under Medicare Part D
           Require drug manufacturers to report the 
        sales prices used to calculate payments for drugs 
        covered under Medicare Part B
    Estimated budgetary effects would primarily stem from
           Requiring drug manufacturers to report 
        prices used to calculate Medicare payment rates for 
        their products administered in physicians' offices and 
        hospital outpatient departments
           Appropriating $3 million to the Secretary of 
        HHS to study hospitals' drug costs
    Areas of significant uncertainty include accurately 
projecting
           The ways that new disclosure requirements 
        would affect the behavior of drug manufacturers or 
        medical providers
           Drug manufacturers' responses to possible 
        changes in the regulatory status of certain products
    Bill summary: H.R. 2113 would require prescription drug 
manufacturers to submit information--including data about drug 
prices, price increases, and distribution of samples--to the 
Department of Health and Human Services. In addition, the bill 
would direct the Secretary of HHS to publish information about 
prescription drug prices and discounts.
    Estimated Federal cost: The estimated budgetary effect of 
H.R. 2113 is shown in Table 1. The costs of the legislation 
fall within budget function 570 (Medicare).

                                                                       TABLE 1.--ESTIMATED BUDGETARY EFFECTS OF H.R. 2113
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                  By fiscal year, millions of dollars--
                                        --------------------------------------------------------------------------------------------------------------------------------------------------------
                                            2019       2020       2021       2022       2023       2024       2025       2026       2027       2028       2029       2019-2024       2019-2029
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          Increases or Decreases (-) in Direct Spending
 
Require Manufacturers to Report Drug
 Pricing With Respect to Drugs Under
 the Medicare Program:
    Estimated Budget Authority.........          0        -20       -150       -170       -170       -170       -190       -200       -210       -230       -220            -680          -1,730
    Estimated Outlays..................          0        -20       -150       -170       -170       -170       -190       -200       -210       -230       -220            -680          -1,730
Report on Inpatient Hospital Drug
 Costs:
    Budget Authority...................          0          3          0          0          0          0          0          0          0          0          0               3               3
    Estimated Outlays..................          0          3          0          0          0          0          0          0          0          0          0               3               3
 
                                                                                Total Changes in Direct Spending
 
    Estimated Budget Authority.........          0        -17       -150       -170       -170       -170       -190       -200       -210       -230       -220            -677          -1,727
    Estimated Outlays..................          0        -17       -150       -170       -170       -170       -190       -200       -210       -230       -220            -677          -1,727
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  Components may not sum to totals because of rounding.

    Basis of estimate: H.R. 2113 would increase the information 
available to the Secretary of HHS, researchers, and the general 
public about prescription drug prices and spending. For this 
estimate, CBO assumes that the bill will be enacted near the 
end of fiscal year 2019.
    Direct spending: Two provisions of H.R. 2113 would affect 
direct spending.

Require manufacturers to report drug pricing with respect to drugs 
        under the Medicare program

    The bill would enhance reporting requirements for 
manufacturers of products covered under Part B. CMS uses such 
data to calculate average sales prices (ASPs)--the average 
prices at which manufacturers sell their products. ASPs are the 
basis of Medicare's payments for infused and injected drugs. 
When ASP data are not available for a drug--for example, when 
it is first marketed and no sales have occurred--Medicare's 
payments usually are based on the Wholesale Acquisition Cost 
(WAC). WACs are generally higher than ASPs. The bill would make 
changes, as described below, which would have the effect of 
establishing the ASP for some drugs that are currently paid for 
based on the WAC. CBO estimates those changes would reduce 
federal spending by $1.7 billion over the 2019-2029 period.
    To ensure full reporting of ASP data to the Secretary and 
thus enable ASP-based payment, manufacturers with drug rebate 
agreements (as required for drugs that are covered by state 
Medicaid programs) also must report their ASP data to CMS, with 
some exceptions. In particular, under current law, the Medicaid 
rebate applies to products that are approved as drugs under the 
Federal Food, Drug, and Cosmetic Act. Among the products that 
do not require Medicaid rebate agreements and that are 
therefore exempt from ASP reporting are those that incorporate 
hyaluronic acid, which is used to treat osteoarthritis of the 
knee. The Food and Drug Administration (FDA) regulates such 
products as medical devices, not as drugs, although Medicare 
pays for them as drugs. Medicare Part B currently covers 
several such products. Recently, some manufacturers of those 
products stopped reporting ASP data to CMS. As a result, 
Medicare is paying for a subset of hyaluronic acid products 
based on their higher WACs.\1\
---------------------------------------------------------------------------
    \1\For more information, see Medicare Payment Advisory Commission, 
The MedPAC Blog, ``Improving Medicare 's payment for Part B drugs: 
Requiring pharmaceutical manufacturer reporting of sales price data,'' 
June 14, 2019, http://www.medpac.gov/-blog-/requiring-reporting-of-
sales-price-data/2019/06/14/payment-for-part-b-drugs
---------------------------------------------------------------------------
    CBO analyzed data from the CMS website concerning payment 
for and use of hyaluronic acid products, along with information 
on the difference between their ASPs (when they were available) 
and WACs. CBO estimates that requiring manufacturers to report 
ASP data would reduce direct spending by about $3.6 billion 
over the 2019-2029 period, a result of lower, ASP-based 
benchmarks for Part B drug payment.
    However, in December 2018, the FDA published a notice in 
which it indicated that it is considering regulating hyaluronic 
acid products as drugs, not as devices.\2\ The implications of 
that notice for products currently on the market are unclear. 
It is possible that current products would be considered drugs 
and require rebate agreements, thus triggering mandatory ASP 
reporting. Accounting for the possibility that the FDA could 
decide to regulate those products as drugs, CBO has lowered its 
estimated savings of this bill to $1.7 billion over the 2019-
2029 period, to reflect a 50 percent probability that the 
hyaluronic acid products would come to be regulated as drugs 
under current law.
---------------------------------------------------------------------------
    \2\See Food and Drug Administration, ``Intent to Consider the 
Appropriate Classification of Hyaluronic Acid Intra-articular Products 
Intended for the Treatment of Pain in Osteoarthritis of the Knee Based 
on Scientific Evidence,'' Federal Register (December 18, 2018), vol. 
83, no. 242, pp. 64844-64845, https://go.usa.gov/xyx3Q.
---------------------------------------------------------------------------

Report on inpatient hospital drug costs

    The bill also would appropriate $3 million to the Secretary 
of HHS to study spending for drugs used by hospital inpatients. 
CBO estimates that implementing that provision would increase 
direct spending by $3 million over the 2019-2029 period (see 
Table 1).

Reporting and penalties

    Other provisions of the bill would require other reporting 
by pharmaceutical manufacturers:
           Drug manufacturers would have to explain 
        increases in drug prices that exceed a threshold amount 
        established in the bill. The manufacturer also would be 
        obliged to report how much it had spent on 
        manufacturing the drug, its overall investments in 
        research and development, and its net profits for the 
        drug from the time of introduction to the market. 
        Failure to submit that information could subject the 
        manufacturer to a civil monetary penalty of $10,000 for 
        each day that the manufacturer did not report.
           The bill would require drug manufacturers to 
        report data about drug samples they supply to providers 
        to enable providers to start patients on drugs and to 
        save patients from initial costs and pharmacy visits.
           Under current law, health plans and pharmacy 
        benefit managers that participate in Medicare Part D or 
        in the health insurance marketplaces established under 
        the Affordable Care Act (ACA) must report to the 
        Secretary on the aggregated amounts they negotiate in 
        discounts, rebates, and price concessions. The ACA 
        requires the Secretary to keep that information 
        confidential. H.R. 2113 would direct the Secretary to 
        make that information public after two years, with 
        restrictions on plan- or drug-specific information.
    Requiring manufacturers to report on drug samples and 
discounts would not affect Medicare spending or spending by 
other payers. Although the legislation would impose civil 
monetary penalties on manufacturers who fail to meet new 
reporting requirements, CBO expects that all manufacturers 
would meet reporting requirements. Therefore, CBO estimates 
that no penalties would be collected and enacting the bill 
would have no budgetary effect.\3\
---------------------------------------------------------------------------
    \3\In general, however, such penalties, once collected, may be 
spent without further appropriation action. As a result, CBO usually 
estimates new mandatory outlays in an amount that offsets those 
revenues.
---------------------------------------------------------------------------
    Spending subject to appropriation: Many of the activities 
required by H.R. 2113 would add to the responsibilities of the 
Secretary of HHS in managing Medicare and in overseeing the 
health insurance marketplaces. Funding for most program 
management activities is subject to appropriation. In CBO's 
judgment, the new activities required by H.R. 2113 would not 
significantly increase the department's workload and thus 
implementing the bill would not result in significant 
additional discretionary costs.
    Uncertainty: It is possible that the information made 
available under H.R. 2113 could change the behavior of drug 
manufacturers or medical providers in ways that CBO did not 
anticipate. For example, requiring manufacturers to report 
their sample distributions could make them less likely to 
provide samples, or it could make providers less willing to 
accept them. However, CBO estimates that any such behavioral 
effect would be small enough to have no significant budgetary 
effect.
    As noted above, the FDA regulatory status of certain 
products is uncertain, and CBO's estimate reflects the 
possibility that their classification could change in such a 
way that manufacturers would be required to report ASP data 
rather than WAC data. If, however, FDA regulations do not 
change, savings would probably be higher than CBO has 
estimated.
    Pay-As-You-Go considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget-reporting and enforcement 
procedures for legislation affecting direct spending or 
revenues. The net changes in outlays that are subject to those 
pay-as-you-go procedures are shown in Table 1.
    Increase in long-term deficits: None.
    Mandates: H.R. 2113 contains no intergovernmental or 
private-sector mandates as defined in the Unfunded Mandates 
Reform Act (UMRA). Participation in Medicare is voluntary for 
private entities. Therefore, the reporting requirements in the 
bill arising from participation in those programs would not 
constitute private-sector mandates as defined in UMRA.
    Estimate prepared by: Federal costs: Lara Robillard and 
Rebecca Yip; Mandates: Andrew Laughlin.
    Estimate reviewed by: Tom Bradley, Chief, Health Systems 
and Medicare Cost Estimates Unit; Susan Willie, Chief, Mandates 
Unit; Leo Lex, Deputy Assistant Director for Budget Analysis; 
Theresa Gullo, Assistant Director for Budget Analysis.

     V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE


          A. Committee Oversight Findings and Recommendations

    With respect 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 Committee made findings and recommendations that are 
reflected in this report.

        B. Statement of General Performance Goals and Objectives

    With respect to clause 3(c)(4) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that the 
bill contains no measure that authorizes funding, so no 
statement of general performance goals and objectives for which 
any measure authorizes funding is required.

              C. Information Relating to Unfunded Mandates

    This information is provided in accordance with section 423 
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-
4).
    The Committee has determined that the bill does not contain 
Federal mandates on the private sector. The Committee has 
determined that the bill does not impose a Federal 
intergovernmental mandate on State, local, or tribal 
governments.

  D. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff 
                                Benefits

    With respect to clause 9 of rule XXI of the Rules of the 
House of Representatives, the Committee has carefully reviewed 
the provisions of the bill, and states that the provisions of 
the bill do not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits within the meaning of the 
rule.

                   E. Duplication of Federal Programs

    On a bill that establishes or reauthorizes a federal 
program. In compliance with clause 3(c)(5) of rule XIII of the 
Rules of the House of Representatives, the Committee states 
that no provision of the bill establishes or reauthorizes: (1) 
a program of the Federal Government known to be duplicative of 
another Federal program; (2) a program included in any report 
to Congress pursuant to section 21 of Public Law 111-139; or 
(3) a program related to a program identified in the most 
recent Catalog of Federal Domestic Assistance, published 
pursuant section 6104 of title 31, United States Code.

                              F. Hearings

    In compliance with Sec. 103(i) of H. Res. 6 (116th 
Congress) the following hearings were used to develop or 
consider H.R. 2113:
          (1) Committee on Ways and Means Hearing on ``The Cost 
        of Rising Prescription Drug Price,'' held on February 
        12, 2019.
          (2) Committee on Ways and Means Subcommittee on 
        Health Hearing on ``Promoting Competition to Lower 
        Medicare Drug Prices,'' held on March 7, 2019.

       VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    In compliance with clause 3(e)(1)(B) of rule XIII of the 
Rules of the House of Representatives, changes in existing law 
proposed 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 italics, existing law in 
which no change is proposed is shown in roman):

         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 italics, and existing law in which no 
change is proposed is shown in roman):

                          SOCIAL SECURITY ACT




           *       *       *       *       *       *       *
     TITLE XI--GENERAL PROVISIONS, PEER REVIEW, AND ADMINISTRATIVE 
SIMPLIFICATION

           *       *       *       *       *       *       *



Part A--General Provisions

           *       *       *       *       *       *       *



SEC. 1128G. TRANSPARENCY REPORTS AND REPORTING OF PHYSICIAN OWNERSHIP 
                    OR INVESTMENT INTERESTS.

  (a) Transparency Reports.--
          (1) Payments or other transfers of value.--
                  (A) In general.--On March 31, 2013, and on 
                the 90th day of each calendar year beginning 
                thereafter, any applicable manufacturer that 
                provides a payment or other transfer of value 
                to a covered recipient (or to an entity or 
                individual at the request of or designated on 
                behalf of a covered recipient), shall submit to 
                the Secretary, in such electronic form as the 
                Secretary shall require, the following 
                information with respect to the preceding 
                calendar year:
                          (i) The name of the covered 
                        recipient.
                          (ii) The business address of the 
                        covered recipient and, in the case of a 
                        covered recipient who is a physician, 
                        the specialty and National Provider 
                        Identifier of the covered recipient.
                          (iii) The amount of the payment or 
                        other transfer of value.
                          (iv) The dates on which the payment 
                        or other transfer of value was provided 
                        to the covered recipient.
                          (v) A description of the form of the 
                        payment or other transfer of value, 
                        indicated (as appropriate for all that 
                        apply) as--
                                  (I) cash or a cash 
                                equivalent;
                                  (II) in-kind items or 
                                services;
                                  (III) stock, a stock option, 
                                or any other ownership 
                                interest, dividend, profit, or 
                                other return on investment; or
                                  (IV) any other form of 
                                payment or other transfer of 
                                value (as defined by the 
                                Secretary).
                          (vi) A description of the nature of 
                        the payment or other transfer of value, 
                        indicated (as appropriate for all that 
                        apply) as--
                                  (I) consulting fees;
                                  (II) compensation for 
                                services other than consulting;
                                  (III) honoraria;
                                  (IV) gift;
                                  (V) entertainment;
                                  (VI) food;
                                  (VII) travel (including the 
                                specified destinations);
                                  (VIII) education;
                                  (IX) research;
                                  (X) charitable contribution;
                                  (XI) royalty or license;
                                  (XII) current or prospective 
                                ownership or investment 
                                interest;
                                  (XIII) direct compensation 
                                for serving as faculty or as a 
                                speaker for a medical education 
                                program;
                                  (XIV) grant; or
                                  (XV) any other nature of the 
                                payment or other transfer of 
                                value (as defined by the 
                                Secretary).
                          (vii) If the payment or other 
                        transfer of value is related to 
                        marketing, education, or research 
                        specific to a covered drug, device, 
                        biological, or medical supply, the name 
                        of that covered drug, device, 
                        biological, or medical supply.
                          (viii) Any other categories of 
                        information regarding the payment or 
                        other transfer of value the Secretary 
                        determines appropriate.
                  (B) Special rule for certain payments or 
                other transfers of value.--In the case where an 
                applicable manufacturer provides a payment or 
                other transfer of value to an entity or 
                individual at the request of or designated on 
                behalf of a covered recipient, the applicable 
                manufacturer shall disclose that payment or 
                other transfer of value under the name of the 
                covered recipient.
          (2) Physician ownership.--In addition to the 
        requirement under paragraph (1)(A), on March 31, 2013, 
        and on the 90th day of each calendar year beginning 
        thereafter, any applicable manufacturer or applicable 
        group purchasing organization shall submit to the 
        Secretary, in such electronic form as the Secretary 
        shall require, the following information regarding any 
        ownership or investment interest (other than an 
        ownership or investment interest in a publicly traded 
        security and mutual fund, as described in section 
        1877(c)) held by a physician (or an immediate family 
        member of such physician (as defined for purposes of 
        section 1877(a))) in the applicable manufacturer or 
        applicable group purchasing organization during the 
        preceding year:
                  (A) The dollar amount invested by each 
                physician holding such an ownership or 
                investment interest.
                  (B) The value and terms of each such 
                ownership or investment interest.
                  (C) Any payment or other transfer of value 
                provided to a physician holding such an 
                ownership or investment interest (or to an 
                entity or individual at the request of or 
                designated on behalf of a physician holding 
                such an ownership or investment interest), 
                including the information described in clauses 
                (i) through (viii) of paragraph (1)(A), except 
                that in applying such clauses, ``physician'' 
                shall be substituted for ``covered recipient'' 
                each place it appears.
                  (D) Any other information regarding the 
                ownership or investment interest the Secretary 
                determines appropriate.
          (3) Certain product samples.--
                  (A) In general.--In addition to the 
                requirements under paragraphs (1)(A) and (2), 
                on the 90th day of each calendar year 
                (beginning with 2023), any applicable 
                manufacturer that provides a payment or other 
                transfer of value that is a product sample 
                described in subparagraph (B) to any covered 
                recipient (or to an entity or individual at the 
                request of, or designated on behalf of, such a 
                covered recipient) shall submit to the 
                Secretary, in such electronic form as the 
                Secretary shall require, the following 
                information (aggregated per each drug, device, 
                biological, or medical supply, as applicable) 
                with respect to the preceding calendar year:
                          (i) The total quantity of all such 
                        payments or other transfers of value 
                        provided to all covered recipients.
                          (ii) The total value of all such 
                        payments or other transfers of value 
                        provided to all covered recipients.
                          (iii) If applicable, information 
                        described in clauses (vii) and (viii) 
                        of paragraph (1)(A) with respect to 
                        such a payment or other transfer of 
                        value.
                  (B) Product sample described.--For purposes 
                of subparagraph (A), a product sample described 
                in this subparagraph is a product sample that 
                is not intended to be sold and is intended for 
                patient use.
  (b) Penalties for Noncompliance.--
          (1) Failure to report.--
                  (A) In general.--Subject to subparagraph (B) 
                except as provided in paragraph (2), any 
                applicable manufacturer or applicable group 
                purchasing organization that fails to submit 
                information required under subsection (a) 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 payment or other 
                transfer of value or ownership or investment 
                interest not reported as required under such 
                subsection. 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.
                  (B) Limitation.--The total amount of civil 
                money penalties imposed under subparagraph (A) 
                with respect to each annual submission of 
                information under subsection (a) by an 
                applicable manufacturer or applicable group 
                purchasing organization shall not exceed 
                $150,000.
          (2) Knowing failure to report.--
                  (A) In general.--Subject to subparagraph (B), 
                any applicable manufacturer or applicable group 
                purchasing organization that knowingly fails to 
                submit information required under subsection 
                (a) 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 $10,000, but not more 
                than $100,000, for each payment or other 
                transfer of value or ownership or investment 
                interest not reported as required under such 
                subsection. 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.
                  (B) Limitation.--The total amount of civil 
                money penalties imposed under subparagraph (A) 
                with respect to each annual submission of 
                information under subsection (a) by an 
                applicable manufacturer or applicable group 
                purchasing organization shall not exceed 
                $1,000,000.
          (3) Use of funds.--Funds collected by the Secretary 
        as a result of the imposition of a civil money penalty 
        under this subsection shall be used to carry out this 
        section.
  (c) Procedures for Submission of Information and Public 
Availability.--
          (1) In general.--
                  (A) Establishment.--Not later than October 1, 
                2011, the Secretary shall establish 
                procedures--
                          (i) for applicable manufacturers and 
                        applicable group purchasing 
                        organizations to submit information to 
                        the Secretary under subsection (a); and
                          (ii) for the Secretary to make such 
                        information submitted available to the 
                        public.
                  (B) Definition of terms.--The procedures 
                established under subparagraph (A) shall 
                provide for the definition of terms (other than 
                those terms defined in subsection (e)), as 
                appropriate, for purposes of this section.
                  (C) Public availability.--Except as provided 
                in subparagraph (E), the procedures established 
                under subparagraph (A)(ii) shall ensure that, 
                not later than September 30, 2013, and on June 
                30 of each calendar year beginning thereafter, 
                the information submitted under subsection (a) 
                with respect to the preceding calendar year is 
                made available through an Internet website 
                that--
                          (i) is searchable and is in a format 
                        that is clear and understandable;
                          [(ii) contains] (ii)(I)  with respect 
                        to information that is not information 
                        submitted under paragraph (3) of 
                        subsection (a), contains  information 
                        that is presented by the name of the 
                        applicable manufacturer or applicable 
                        group purchasing organization, the name 
                        of the covered recipient, the business 
                        address of the covered recipient, the 
                        specialty of the covered recipient, the 
                        value of the payment or other transfer 
                        of value, the date on which the payment 
                        or other transfer of value was provided 
                        to the covered recipient, the form of 
                        the payment or other transfer of value, 
                        indicated (as appropriate) under 
                        subsection (a)(1)(A)(v), the nature of 
                        the payment or other transfer of value, 
                        indicated (as appropriate) under 
                        subsection (a)(1)(A)(vi), and the name 
                        of the covered drug, device, 
                        biological, or medical supply[, as 
                        applicable;], as applicable; and
                          (II) with respect to information 
                        submitted under paragraph (3) of 
                        subsection (a), contains information 
                        that is presented by the name of the 
                        applicable manufacturer, the total 
                        amount of all payments or other 
                        transfers of value described in such 
                        paragraph provided to all covered 
                        recipients, the total value of all such 
                        payments or other transfers of value 
                        provided to all covered recipients, and 
                        the name of the covered drug, device, 
                        biological, or medical supply, as 
                        applicable;
                          (iii) contains information that is 
                        able to be easily aggregated and 
                        downloaded;
                          (iv) contains a description of any 
                        enforcement actions taken to carry out 
                        this section, including any penalties 
                        imposed under subsection (b), during 
                        the preceding year;
                          (v) contains background information 
                        on industry-physician relationships;
                          (vi) in the case of information 
                        submitted with respect to a payment or 
                        other transfer of value described in 
                        subparagraph (E)(i), lists such 
                        information separately from the other 
                        information submitted under subsection 
                        (a) and designates such separately 
                        listed information as funding for 
                        clinical research;
                          (vii) contains any other information 
                        the Secretary determines would be 
                        helpful to the average consumer;
                          (viii) in the case of information 
                        made available under this subparagraph 
                        prior to January 1, 2022, does not 
                        contain the National Provider 
                        Identifier of the covered recipient, 
                        and
                          (ix) subject to subparagraph (D), 
                        provides the applicable manufacturer, 
                        applicable group purchasing 
                        organization, or covered recipient an 
                        opportunity to review and submit 
                        corrections to the information 
                        submitted with respect to the 
                        applicable manufacturer, applicable 
                        group purchasing organization, or 
                        covered recipient, respectively, for a 
                        period of not less than 45 days prior 
                        to such information being made 
                        available to the public.
                  (D) Clarification of time period for review 
                and corrections.--In no case may the 45-day 
                period for review and submission of corrections 
                to information under subparagraph (C)(ix) 
                prevent such information from being made 
                available to the public in accordance with the 
                dates described in the matter preceding clause 
                (i) in subparagraph (C).
                  (E) Delayed publication for payments made 
                pursuant to product research or development 
                agreements and clinical investigations.--
                          (i) In general.--In the case of 
                        information submitted under subsection 
                        (a) with respect to a payment or other 
                        transfer of value made to a covered 
                        recipient by an applicable manufacturer 
                        pursuant to a product research or 
                        development agreement for services 
                        furnished in connection with research 
                        on a potential new medical technology 
                        or a new application of an existing 
                        medical technology or the development 
                        of a new drug, device, biological, or 
                        medical supply, or by an applicable 
                        manufacturer in connection with a 
                        clinical investigation regarding a new 
                        drug, device, biological, or medical 
                        supply, the procedures established 
                        under subparagraph (A)(ii) shall 
                        provide that such information is made 
                        available to the public on the first 
                        date described in the matter preceding 
                        clause (i) in subparagraph (C) after 
                        the earlier of the following:
                                  (I) The date of the approval 
                                or clearance of the covered 
                                drug, device, biological, or 
                                medical supply by the Food and 
                                Drug Administration.
                                  (II) Four calendar years 
                                after the date such payment or 
                                other transfer of value was 
                                made.
                          (ii) Confidentiality of information 
                        prior to publication.--Information 
                        described in clause (i) shall be 
                        considered confidential and shall not 
                        be subject to disclosure under section 
                        552 of title 5, United States Code, or 
                        any other similar Federal, State, or 
                        local law, until on or after the date 
                        on which the information is made 
                        available to the public under such 
                        clause.
          (2) Consultation.--In establishing the procedures 
        under paragraph (1), the Secretary shall consult with 
        the Inspector General of the Department of Health and 
        Human Services, affected industry, consumers, consumer 
        advocates, and other interested parties in order to 
        ensure that the information made available to the 
        public under such paragraph is presented in the 
        appropriate overall context.
  (d) Annual Reports and Relation to State Laws.--
          (1) Annual report to congress.--Not later than April 
        1 of each year beginning with 2013, the Secretary shall 
        submit to Congress a report that includes the 
        following:
                  (A) The information submitted under 
                subsection (a) during the preceding year, 
                aggregated for each applicable manufacturer and 
                applicable group purchasing organization that 
                submitted such information during such year 
                (except, in the case of information submitted 
                with respect to a payment or other transfer of 
                value described in subsection (c)(1)(E)(i), 
                such information shall be included in the first 
                report submitted to Congress after the date on 
                which such information is made available to the 
                public under such subsection).
                  (B) A description of any enforcement actions 
                taken to carry out this section, including any 
                penalties imposed under subsection (b), during 
                the preceding year.
          (2) Annual reports to states.--Not later than 
        September 30, 2013 and on June 30 of each calendar year 
        thereafter, the Secretary shall submit to States a 
        report that includes a summary of the information 
        submitted under subsection (a) during the preceding 
        year with respect to covered recipients in the State 
        (except, in the case of information submitted with 
        respect to a payment or other transfer of value 
        described in subsection (c)(1)(E)(i), such information 
        shall be included in the first report submitted to 
        States after the date on which such information is made 
        available to the public under such subsection).
          (3) Relation to state laws.--
                  (A) In general.--In the case of a payment or 
                other transfer of value provided by an 
                applicable manufacturer that is received by a 
                covered recipient (as defined in subsection 
                (e)) on or after January 1, 2012, subject to 
                subparagraph (B), the provisions of this 
                section shall preempt any statute or regulation 
                of a State or of a political subdivision of a 
                State that requires an applicable manufacturer 
                (as so defined) to disclose or report, in any 
                format, the type of information (as described 
                in subsection (a)) regarding such payment or 
                other transfer of value.
                  (B) No preemption of additional 
                requirements.--Subparagraph (A) shall not 
                preempt any statute or regulation of a State or 
                of a political subdivision of a State that 
                requires the disclosure or reporting of 
                information--
                          (i) not of the type required to be 
                        disclosed or reported under this 
                        section;
                          (ii) described in subsection 
                        (e)(10)(B), except in the case of 
                        information described in clause (i) of 
                        such subsection;
                          (iii) by any person or entity other 
                        than an applicable manufacturer (as so 
                        defined) or a covered recipient (as 
                        defined in subsection (e)); or
                          (iv) to a Federal, State, or local 
                        governmental agency for public health 
                        surveillance, investigation, or other 
                        public health purposes or health 
                        oversight purposes.
                  (C) Nothing in subparagraph (A) shall be 
                construed to limit the discovery or 
                admissibility of information described in such 
                subparagraph in a criminal, civil, or 
                administrative proceeding.
          (4) Consultation.--The Secretary shall consult with 
        the Inspector General of the Department of Health and 
        Human Services on the implementation of this section.
  (e) Definitions.--In this section:
          (1) Applicable group purchasing organization.--The 
        term ``applicable group purchasing organization'' means 
        a group purchasing organization (as defined by the 
        Secretary) that purchases, arranges for, or negotiates 
        the purchase of a covered drug, device, biological, or 
        medical supply which is operating in the United States, 
        or in a territory, possession, or commonwealth of the 
        United States.
          (2) Applicable manufacturer.--The term ``applicable 
        manufacturer'' means a manufacturer of a covered drug, 
        device, biological, or medical supply which is 
        operating in the United States, or in a territory, 
        possession, or commonwealth of the United States.
          (3) Clinical investigation.--The term ``clinical 
        investigation'' means any experiment involving 1 or 
        more human subjects, or materials derived from human 
        subjects, in which a drug or device is administered, 
        dispensed, or used.
          (4) Covered device.--The term ``covered device'' 
        means any device for which payment is available under 
        title XVIII or a State plan under title XIX or XXI (or 
        a waiver of such a plan).
          (5) Covered drug, device, biological, or medical 
        supply.--The term ``covered drug, device, biological, 
        or medical supply'' means any drug, biological product, 
        device, or medical supply for which payment is 
        available under title XVIII or a State plan under title 
        XIX or XXI (or a waiver of such a plan).
          (6) Covered recipient.--
                  (A) In general.--Except as provided in 
                subparagraph (B), the term ``covered 
                recipient'' means the following:
                          (i) A physician.
                          (ii) A teaching hospital.
                          (iii) A physician assistant, nurse 
                        practitioner, or clinical nurse 
                        specialist (as such terms are defined 
                        in section 1861(aa)(5)).
                          (iv) A certified registered nurse 
                        anesthetist (as defined in section 
                        1861(bb)(2)).
                          (v) A certified nurse-midwife (as 
                        defined in section 1861(gg)(2)).
                  (B) Exclusion.--Such term does not include a 
                physician, physician assistant, nurse 
                practitioner, clinical nurse specialist, 
                certified nurse anesthetist, or certified 
                nurse-midwife who is an employee of the 
                applicable manufacturer that is required to 
                submit information under subsection (a).
          (7) Employee.--The term ``employee'' has the meaning 
        given such term in section 1877(h)(2).
          (8) Knowingly.--The term ``knowingly'' has the 
        meaning given such term in section 3729(b) of title 31, 
        United States Code.
          (9) Manufacturer of a covered drug, device, 
        biological, or medical supply.--The term ``manufacturer 
        of a covered drug, device, biological, or medical 
        supply'' means any entity which is engaged in the 
        production, preparation, propagation, compounding, or 
        conversion of a covered drug, device, biological, or 
        medical supply (or any entity under common ownership 
        with such entity which provides assistance or support 
        to such entity with respect to the production, 
        preparation, propagation, compounding, conversion, 
        marketing, promotion, sale, or distribution of a 
        covered drug, device, biological, or medical supply).
          (10) Payment or other transfer of value.--
                  (A) In general.--The term ``payment or other 
                transfer of value'' means a transfer of 
                anything of value. Such term does not include a 
                transfer of anything of value that is made 
                indirectly to a covered recipient through a 
                third party in connection with an activity or 
                service in the case where the applicable 
                manufacturer is unaware of the identity of the 
                covered recipient.
                  (B) Exclusions.--An applicable manufacturer 
                shall not be required to submit information 
                under subsection (a) with respect to the 
                following:
                          (i) A transfer of anything the value 
                        of which is less than $10, unless the 
                        aggregate amount transferred to, 
                        requested by, or designated on behalf 
                        of the covered recipient by the 
                        applicable manufacturer during the 
                        calendar year exceeds $100. For 
                        calendar years after 2012, the dollar 
                        amounts specified in the preceding 
                        sentence shall be increased by the same 
                        percentage as the percentage increase 
                        in the consumer price index for all 
                        urban consumers (all items; U.S. city 
                        average) for the 12-month period ending 
                        with June of the previous year.
                          (ii) [Product samples] Except for 
                        purposes of paragraph (3) of subsection 
                        (a), product samples that are not 
                        intended to be sold and are intended 
                        for patient use.
                          (iii) Educational materials that 
                        directly benefit patients or are 
                        intended for patient use.
                          (iv) The loan of a covered device for 
                        a short-term trial period, not to 
                        exceed 90 days, to permit evaluation of 
                        the covered device by the covered 
                        recipient.
                          (v) Items or services provided under 
                        a contractual warranty, including the 
                        replacement of a covered device, where 
                        the terms of the warranty are set forth 
                        in the purchase or lease agreement for 
                        the covered device.
                          (vi) A transfer of anything of value 
                        to a covered recipient when the covered 
                        recipient is a patient and not acting 
                        in the professional capacity of a 
                        covered recipient.
                          (vii) Discounts (including rebates).
                          (viii) In-kind items used for the 
                        provision of charity care.
                          (ix) A dividend or other profit 
                        distribution from, or ownership or 
                        investment interest in, a publicly 
                        traded security and mutual fund (as 
                        described in section 1877(c)).
                          (x) In the case of an applicable 
                        manufacturer who offers a self-insured 
                        plan, payments for the provision of 
                        health care to employees under the 
                        plan.
                          (xi) In the case of a covered 
                        recipient who is a licensed non-medical 
                        professional, a transfer of anything of 
                        value to the covered recipient if the 
                        transfer is payment solely for the non-
                        medical professional services of such 
                        licensed non-medical professional.
                          (xii) In the case of a covered 
                        recipient who is a physician, a 
                        transfer of anything of value to the 
                        covered recipient if the transfer is 
                        payment solely for the services of the 
                        covered recipient with respect to a 
                        civil or criminal action or an 
                        administrative proceeding.
          (11) Physician.--The term ``physician'' has the 
        meaning given that term in section 1861(r).

           *       *       *       *       *       *       *


SEC. 1128L. DRUG MANUFACTURER PRICE TRANSPARENCY.

  (a) In General.--With respect to each year, beginning with 
2021, the Secretary shall, at least once during such year, 
determine if there is a triggered SPIKE increase (in accordance 
with subsection (b)) with respect to an applicable drug (as 
defined in subsection (f)(1)). If the Secretary determines, 
with respect to a year, there is such an increase with respect 
to an applicable drug, the manufacturer of the applicable drug 
shall submit to the Secretary the justification described in 
subsection (c), subject to subsection (b)(4), for each such 
triggered SPIKE increase in accordance with the timing 
described in subsection (d)).
  (b) Triggered SPIKE Increase.--
          (1) In general.--A triggered SPIKE increase occurs, 
        with respect an applicable drug and year (beginning 
        with 2021 and referred to in this paragraph as the 
        ``applicable year''), in any of the following cases:
                  (A) If there is at least a 10 percent (or 
                $10,000) cumulative increase with respect to 
                the wholesale acquisition cost (or alternative 
                cost measure specified by the Secretary under 
                paragraph (3)) of such drug during a calendar-
                year period beginning and ending within the 
                lookback period that is the 5-year period 
                preceding such applicable year.
                  (B) If there is at least a 25 percent (or 
                $25,000) cumulative increase with respect to 
                the wholesale acquisition cost (or such 
                alternative cost measure) of such drug during 
                any three-calendar-year period beginning and 
                ending within such lookback period.
                  (C) In the case of such a drug that is first 
                covered under title XVIII with respect to such 
                applicable year, if the estimated cost or 
                spending under such title per individual or per 
                user of such drug (as estimated by the 
                Secretary) for such applicable year (or per 
                course of treatment in such applicable year, as 
                defined by the Secretary) is at least $26,000.
          (2) Indexing dollar amounts.--The dollar amounts 
        applied under paragraph (1) for 2022 and each 
        subsequent year shall be the dollar amounts specified 
        in such paragraph for the previous year increased by 
        the annual percentage increase in the consumer price 
        index (all items; U.S. city average) as of September of 
        such previous year. If any amount established under 
        paragraph (1), after application of this paragraph, for 
        a year is not a multiple of $10, it shall be rounded to 
        the nearest multiple of $10.
          (3) Alternative to wac.--The Secretary may, for 
        purposes of making determinations under paragraph (1), 
        in addition to using the wholesale acquisition cost for 
        an applicable drug, use alternative cost measures of 
        such drug, or use such alternative cost measure if the 
        wholesale acquisition cost is not available.
          (4) Exception.--A justification under subsection (c) 
        shall not be required for a triggered SPIKE increase 
        described in paragraph (1) of an applicable drug of a 
        manufacturer if--
                  (A) there is any portion of the lookback 
                period described in the respective subparagraph 
                of such paragraph for such increase that is 
                included within the lookback period for another 
                triggered SPIKE increase (or combination of 
                such increases) for which a justification is 
                made under this section for such drug by such 
                manufacturer; or
                  (B) such increase is less than the wholesale 
                acquisition cost (or alternative cost measure 
                specified by the Secretary under paragraph (3)) 
                of such drug during the calendar-year period 
                described in paragraph (1)(A) or the three-
                calendar-year period described in paragraph 
                (1)(B), as applicable, for such increase, 
                increased by the percentage increase in the 
                consumer price index for all urban consumers 
                (all items; United States city average) for the 
                12-month period ending six months prior to the 
                calendar-year period so described and for the 
                36-month period ending six months prior to the 
                three-calendar-year period so described, 
                respectively.
          (5) Unit determination.--For purposes of determining 
        the wholesale acquisition cost in carrying out this 
        section, the Secretary shall determine a unit (such as 
        a unit size) to apply.
          (6) Public posting.--Beginning with respect to 2021, 
        the Secretary shall publicly post on the Internet 
        website of the Department of Health and Human 
        Services--
                  (A) alternative percentages, dollar amounts, 
                and lookback periods that, if applied under 
                paragraph (1), would be projected to increase 
                the number of applicable drugs for which a 
                triggered SPIKE increase would occur for such 
                year; and
                  (B) the number of applicable drugs for which 
                a triggered SPIKE increase would occur for such 
                year if such an alternative percentage, dollar 
                amount, or period were applied for such year.
  (c) Justification Described.--
          (1) In general.--The justification described in this 
        subsection, with respect to a triggered SPIKE increase 
        described in subsection (b)(1) of an applicable drug of 
        a manufacturer, is--
                  (A) all of the information described in 
                paragraph (2);
                  (B) all of the information and supporting 
                documentation described in paragraph (3), as 
                applicable to the increase and drug; and
                  (C) a certification described in paragraph 
                (4).
          (2) Required information.--For purposes of paragraph 
        (1), the information described in this paragraph is the 
        following:
                  (A) The individual factors that have 
                contributed to the increase in the wholesale 
                acquisition cost.
                  (B) An explanation of the role of each factor 
                in contributing to such increase.
          (3) Information as applicable.--For purposes of 
        paragraph (1), the information and supporting 
        documentation described in this paragraph is the 
        following, as applicable to the increase of the drug:
                  (A) Total expenditures of the manufacturer 
                on--
                          (i) materials and manufacturing for 
                        such drug;
                          (ii) acquiring patents and licensing 
                        for each drug of the manufacturer; and
                          (iii) costs to purchase or acquire 
                        the drug from another company, if 
                        applicable.
                  (B) The percentage of total expenditures of 
                the manufacturer on research and development 
                for such drug that was derived from Federal 
                funds.
                  (C) The total expenditures of the 
                manufacturer on research and development for 
                such drug.
                  (D) The total revenue and net profit 
                generated from the applicable drug for each 
                calendar year since drug approval.
                  (E) The total costs associated with marketing 
                and advertising for the applicable drug.
                  (F) Additional information specific to the 
                manufacturer of the applicable drug, such as--
                          (i) the total revenue and net profit 
                        of the manufacturer for the period of 
                        such increase, as determined by the 
                        Secretary;
                          (ii) metrics used to determine 
                        executive compensation;
                          (iii) total expenditures on--
                                  (I) drug research and 
                                development; or
                                  (II) clinical trials on drugs 
                                that failed to receive approval 
                                by the Food and Drug 
                                Administration; and
                          (iv) any additional information 
                        related to drug pricing decisions of 
                        the manufacturer.
                  (G) Any other relevant information and 
                supporting documentation necessary to justify 
                the triggering SPIKE increase.
                  (H) Any other relevant information and 
                supporting documentation, as specified by the 
                Secretary.
          (4) Certification.--For purposes of paragraph (1), 
        the certification described in this paragraph is a 
        certification, that all such information and 
        documentation is accurate and complete, by one of the 
        following:
                  (A) The chief executive officer of the 
                manufacturer.
                  (B) The chief financial officer of the 
                manufacturer.
                  (C) An individual who has delegated authority 
                to sign for, and who reports directly to, such 
                chief executive officer or chief financial 
                officer.
  (d) Timing.--
          (1) Notification.--Not later than 60 days after the 
        date on which the Secretary makes the determination 
        that there is a triggering SPIKE increase with respect 
        to an applicable drug, the Secretary shall notify the 
        manufacturer of the applicable drug of such 
        determination.
          (2) Submission of justification.--Not later than 90 
        days after the date on which a manufacturer receives a 
        notification under paragraph (1), subject to subsection 
        (b)(4), the manufacturer shall submit to the Secretary 
        the justification required under subsection (a), 
        including a summary of such justification, in a form 
        and manner specified by the Secretary. In specifying 
        such form, with respect to the summary required under 
        the previous sentence, the Secretary shall provide that 
        such summary shall be in an easily understandable 
        format, as specified by the Secretary, and shall permit 
        the manufacturer to exclude proprietary information 
        from such summary.
          (3) Posting on internet website.--Not later than 30 
        days after receiving the complete justification under 
        paragraph (2), the Secretary shall post on the Internet 
        website of the Centers for Medicare & Medicaid Services 
        the summary included for such justification.
  (e) Penalties.--
          (1) Failure to submit timely justification.--If the 
        Secretary determines that a manufacturer has failed to 
        submit a justification as required under this section, 
        including in accordance with the timing and form 
        required, with respect to an applicable drug, the 
        Secretary shall apply a civil monetary penalty in an 
        amount of $10,000 for each day the manufacturer has 
        failed to submit such justification as so required.
          (2) False information.--Any manufacturer that submits 
        a justification under this section that knowingly 
        provides false information in such justification is 
        subject to a civil monetary penalty in an amount not to 
        exceed $100,000 for each item of false information.
          (3) Application of procedures.--The provisions of 
        section 1128A (other than subsections (a) and (b)) 
        shall apply to a civil monetary penalty under this 
        subsection in the same manner as such provisions apply 
        to a penalty or proceeding under section 1128A(a). 
        Civil monetary penalties imposed under this subsection 
        are in addition to other penalties as may be prescribed 
        by law.
  (f) Definitions.--In this section:
          (1) Applicable drug.--
                  (A) In general.--Subject to subparagraph (B), 
                the term ``applicable drug'' means, with 
                respect to a lookback period described in 
                subsection (b)(1), a covered outpatient drug 
                (as defined in paragraph (2) of section 
                1927(k), without application of paragraph (3) 
                of such section) that is covered under title 
                XVIII and is not a low cost drug.
                  (B) Exclusion of low cost drugs.--For 
                purposes of subparagraph (A), not later than 
                January 1, 2021, the Secretary shall specify a 
                threshold (such as a cost or spending 
                threshold) for identifying (and shall identify) 
                low cost drugs to be excluded from the 
                definition of the term ``applicable drug'', 
                such as a drug that has a wholesale acquisition 
                cost of less than $10 per unit or less than 
                $100 in average estimated expenditures under 
                title XVIII per individual per year or per user 
                of such drug per year. For purposes of this 
                section, a drug shall not be considered 
                specified as a low cost drug for a lookback 
                period described in subsection (b)(1) with 
                respect to a year unless such drug is 
                identified as being below the specified 
                threshold for the entirety of the lookback 
                period.
          (2) Manufacturer.--The term ``manufacturer'' has the 
        meaning given that term in section 1847A(c)(6)(A).
          (3) Wholesale acquisition cost.--The term ``wholesale 
        acquisition cost'' has the meaning given that term in 
        section 1847A(c)(6)(B).

           *       *       *       *       *       *       *


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, and 
        price concessions and the amount of such rebates, 
        discounts, 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 on rebates, discounts, and price 
                concessions, with respect to an individual drug 
                or an individual plan.
                  (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, 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.--In the case of a 
                manufacturer of a drug or biological described 
                in subparagraph (C), (E), or (G) of section 
                1842(o)(1) or in clause (ii) or (iii) of 
                section 1881(b)(14)(B) that does not have a 
                rebate agreement in effect under 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.
                  (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 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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                     INTERNAL REVENUE CODE OF 1986




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Subtitle F--Procedure and Administration

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CHAPTER 61--INFORMATION AND RETURNS

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Subchapter A--RETURNS AND RECORDS

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PART III--INFORMATION RETURNS

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Subpart A--INFORMATION CONCERNING PERSONS SUBJECT TO SPECIAL PROVISIONS



Sec. 6031. Return of partnership income.
     * * * * * * *
Sec. 6039K. Drug price SPIKE increase reporting.
Sec. 6039L. Product samples of applicable manufacturers.

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SEC. 6039K. DRUG PRICE SPIKE INCREASE REPORTING.

  Each manufacturer (within the meaning of section 1128L of the 
Social Security Act) shall file a return (at such time and in 
such form and manner as the Secretary may provide) showing for 
such year with respect to which such section applies all 
information and supporting documentation and the certification 
included within a justification reported by the manufacturer 
under subsection (c)(1) of such section.

SEC. 6039L. PRODUCT SAMPLES OF APPLICABLE MANUFACTURERS.

  Each applicable manufacturer (within the meaning of section 
1128G(a)(3) of the Social Security Act) shall file a return (at 
such time and in such form and manner as the Secretary may 
provide) showing for such year to which such section applies--
          (1) the amount described in section 
        1128G(a)(3)(A)(ii) of such Act with respect to such 
        year, and
          (2) the portion of such amount for which a deduction 
        was claimed under section 162.

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