Stopping the Pharmaceutical Industry from Keeping Drugs Expensive (SPIKE) Act of 2017

Summary: Stopping the Pharmaceutical Industry from Keeping Drugs Expensive (SPIKE) Act of 2017 This bill amends title XI (General Provisions) of the Social Security Act to require manufacturers of&nbsp; drugs with specified percentage increases in their wholesale costs to submit to the Centers for Medicare &amp; Medicaid Services (CMS) written justification&nbsp;for&nbsp;certain increases in drug prices. The CMS shall&nbsp;publish each&nbsp;submission, together with an&nbsp;easily understandable summary, on its website. Certain proprietary information may be excluded from publication, as specified by the bill. A manufacturer that does not comply with the bill's requirements&nbsp;shall be&nbsp;subject to civil monetary penalties.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Stopping the Pharmaceutical Industry 
from Keeping Drugs Expensive (SPIKE) Act of 2017''.

SEC. 2. DRUG MANUFACTURER PRICE TRANSPARENCY.

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

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

    ``(a) In General.--Effective beginning on January 1, 2018, subject 
to subsection (e), the Secretary shall require a manufacturer of an 
applicable drug to submit to the Secretary the justification described 
in subsection (c) in accordance with the timing described in subsection 
(d).
    ``(b) Definitions.--In this section:
            ``(1) Applicable drug.--Subject to paragraph (2), the term 
        `applicable drug' means a drug, as defined in section 201(g) of 
        the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321(g)), 
        that is subject to section 503(b)(1) of such Act (21 U.S.C. 
        353(b)(1)), and that the Secretary determines is described in 
        either of the following subparagraphs:
                    ``(A) The drug (per dose)--
                            ``(i) has a wholesale acquisition cost of 
                        at least $10 dollars; and
                            ``(ii) had an increase in the wholesale 
                        acquisition cost of the drug, with respect to 
                        determinations made--
                                    ``(I) during 2019, of at least 100 
                                percent since the date of the enactment 
                                of this section;
                                    ``(II) during 2020, of at least 100 
                                percent in the preceding 12 months or 
                                of at least 150 percent in the 
                                preceding 2 years;
                                    ``(III) during 2021, of at least 
                                100 percent in the preceding 12 months 
                                or of at least 200 percent in the 
                                preceding 3 years;
                                    ``(IV) during 2022, of at least 100 
                                percent in the preceding 12 months or 
                                of at least 250 percent in the 
                                preceding 4 years; or
                                    ``(V) on or after January 1, 2023, 
                                of at least 100 percent in the 
                                preceding 12 months or of at least 300 
                                percent in the preceding 5 years.
                    ``(B) The drug (per dose)--
                            ``(i) is in the top 50th percentile of net 
                        spending under title XVIII or XIX in at least 
                        one of the preceding 5 years; and
                            ``(ii) had an increase in the wholesale 
                        acquisition cost of the drug, with respect to 
                        determinations made--
                                    ``(I) during 2019, of at least 15 
                                percent since the date of the enactment 
                                of this section;
                                    ``(II) during 2020, of at least 15 
                                percent in the preceding 12 months or 
                                of at least 20 percent in the preceding 
                                2 years;
                                    ``(III) during 2021, of at least 15 
                                percent in the preceding 12 months or 
                                of at least 30 percent in the preceding 
                                3 years;
                                    ``(IV) during 2022, of at least 15 
                                percent in the preceding 12 months or 
                                of at least 40 percent in the preceding 
                                4 years; or
                                    ``(V) on or after January 1, 2023, 
                                of at least 15 percent in the preceding 
                                12 months or of at least 50 percent in 
                                the preceding 5 years.
            ``(2) Special rule.--For purposes of applying paragraph 
        (1), the Secretary may substitute for each percentage described 
        in subparagraph (A) or (B) of such paragraph (other than the 
        percentile described subparagraph (B)(i) of such paragraph) a 
        percentage within a de minimis range specified by the Secretary 
        below the percentage so described.
            ``(3) Manufacturer.--The term `manufacturer' has the 
        meaning given that term in section 581(10) of the Federal Food, 
        Drug, and Cosmetic Act (21 U.S.C. 360eee(10)).
            ``(4) Wholesale acquisition cost.--The term `wholesale 
        acquisition cost' has the meaning given that term in section 
        1847A(c)(6)(B).
    ``(c) Justification Described.--The justification described in this 
subsection is all relevant information and supporting documentation 
necessary to justify the increase in the wholesale acquisition cost of 
the applicable drug of the manufacturer, which may include the 
following:
            ``(1) The individual factors that have contributed to the 
        increase in the wholesale acquisition cost.
            ``(2) An explanation of the role of each factor in 
        contributing to such increase.
            ``(3) Total expenditures of the manufacturer on--
                    ``(A) materials and manufacturing for such drug;
                    ``(B) acquiring patents and licensing for each drug 
                of the manufacturer; and
                    ``(C) costs to purchase or acquire the drug from 
                another company, if applicable.
            ``(4) The percentage of total expenditures of the 
        manufacturer on research and development for such drug that was 
        derived from Federal funds.
            ``(5) The total expenditures of the manufacturer on 
        research and development for such drug.
            ``(6) The total revenue and net profit generated from the 
        applicable drug for each calendar year since drug approval.
            ``(7) The total costs associated with marketing and 
        advertising for the applicable drug.
            ``(8) Additional information specific to the manufacturer 
        of the applicable drug, such as--
                    ``(A) the total revenue and net profit of the 
                manufacturer for the period of such increase, as 
                determined by the Secretary;
                    ``(B) metrics used to determine executive 
                compensation;
                    ``(C) any additional information related to drug 
                pricing decisions of the manufacturer, such as 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.
    ``(d) Timing.--
            ``(1) Notification.--Not later than 60 days after the date 
        on which the Secretary makes the determination that a drug is 
        an applicable drug under subsection (b), the Secretary shall 
        notify the manufacturer of the applicable drug of such 
        determination.
            ``(2) Submission of justification.--Not later than 180 days 
        after the date on which a manufacturer receives a notification 
        under paragraph (1), the manufacturer shall submit to the 
        Secretary the justification required under subsection (a).
            ``(3) Posting on internet website.--
                    ``(A) In general.--Subject to subparagraph (B), not 
                later than 30 days after receiving the justification 
                under paragraph (2), the Secretary shall post on the 
                Internet website of the Centers for Medicare & Medicaid 
                Services the justification, together with a summary of 
                such justification that is written and formatted using 
                language that is easily understandable by beneficiaries 
                under titles XVIII and XIX.
                    ``(B) Exception.--The Secretary shall establish a 
                process under which a manufacturer of an applicable 
                drug may submit a request to the Secretary that certain 
                proprietary information disclosed as part of 
                justification in subsection (c) be excluded from the 
                posting described in subparagraph (A) if, as determined 
                by the Secretary (in consultation with the Inspector 
                General of the Department of Health and Human 
                Services), the public disclosure of such information 
                would directly lead to increased prices of prescription 
                drugs. If proprietary information is excluded from the 
                posting pursuant to the preceding sentence, to the 
                extent feasible, the summary of the information 
                described in subparagraph (A) shall include a summary 
                of such proprietary information.
    ``(e) Exception to Requirement for Submission.--The requirement to 
submit a justification under subsection (a) shall not apply in the case 
where the manufacturer, after receiving the notification under 
subsection (d)(1) with respect to an applicable drug of the 
manufacturer, reduces the wholesale acquisition cost of a drug so that 
it no longer meets the definition of an applicable drug under 
subsection (b) for at least a 6-month period, as determined by the 
Secretary.
    ``(f) Penalties.--The provisions of subsection (b)(3)(C) of section 
1927 shall apply to a manufacturer that fails to submit the 
justification 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.''.