A bill to reduce the costs of prescription drugs for medicare beneficiaries, and for other purposes.

Summary: Medicare Enhancements for Needed Drugs Act of 2005 - Directs the Comptroller General to review and report to Congress on the retail cost of prescription drugs in the United States during 2000 and 2003, and through April 1, 2006, with an emphasis on the prescription drugs most utilized for individuals age 65 or older.

Requires the Comptroller General to conduct an ongoing study that compares the average retail cost in the United States for each of the 20 most utilized prescription drugs for individuals age 65 or older with: (1) the average prices at which private health plans, the Department of Defense under the Defense Health Program, and the Department of Veterans Affairs acquire each such drug; and (2) the average negotiated price for each such drug that eligible beneficiaries have access to under a Medicare prescription drug plan providing only basic prescription drug coverage.

Amends title XVIII (Medicare) of the Social Security Act (SSA) to include in the comparative plan information for beneficiaries under new Medicare part D (Voluntary Prescription Drug Benefit Program) a comparison of average aggregate prescription drug plan beneficiary costs and savings with such costs for a beneficiary with no prescription drug plan.

Repeals the prohibition against interference by the Secretary with the negotiations between drug manufacturers and pharmacies and prescription drug plan sponsors, as well as the requirement of a particular formulary to institute a price structure for the reimbursement of Medicare part D covered drugs. Authorizes the Secretary instead, like other Federal entities that purchase prescription drugs in bulk, to negotiate contracts with manufacturers of covered part D drugs.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medicare Enhancements for Needed 
Drugs Act of 2005''.

SEC. 2. GAO STUDIES AND REPORTS ON PRICES OF PRESCRIPTION DRUGS.

    (a) Review and Reports on Retail Prices of Prescription Drugs.--
            (1) Initial review.--The Comptroller General of the United 
        States shall conduct a review of the retail cost of 
        prescription drugs in the United States during 2000 through 
        2003, with an emphasis on the prescription drugs most utilized 
        for individuals age 65 or older.
            (2) Subsequent review.--After conducting the review under 
        paragraph (1), the Comptroller General shall continuously 
        review the retail cost of such drugs through April 1, 2006, to 
        determine the changes in such costs.
            (3) Reports.--
                    (A) Initial review.--Not later than September 1, 
                2005, the Comptroller General shall submit to Congress 
                a report on the initial review conducted under 
                paragraph (1).
                    (B) Subsequent review.--Not later than July 1, 
                2006, January 1, 2007, and July 1, 2007, the 
                Comptroller General shall submit to Congress a report 
                on the subsequent review conducted under paragraph (2).
    (b) Annual GAO Study and Report on Retail and Acquisition Prices of 
Certain Prescription Drugs.--
            (1) Ongoing study.--The Comptroller General of the United 
        States shall conduct an ongoing study that compares the average 
        retail cost in the United States for each of the 20 most 
        utilized prescription drugs for individuals age 65 or older 
        with--
                    (A) the average price at which private health plans 
                acquire each such drug;
                    (B) the average price at which the Department of 
                Defense under the Defense Health Program acquires each 
                such drug;
                    (C) the average price at which the Department of 
                Veterans Affairs under the laws administered by the 
                Secretary of Veterans Affairs acquires each such drug; 
                and
                    (D) the average negotiated price for each such drug 
                that eligible beneficiaries enrolled in a prescription 
                drug plan under part D of title XVIII of the Social 
                Security Act, as added by section 101 of the Medicare 
                Prescription Drug, Improvement, and Modernization Act 
                of 2003 (Public Law 108-173), that provides only basic 
                prescription drug coverage have access to under such 
                plans.
            (2) Annual report.--Not later than December 1, 2007, and 
        annually thereafter, the Comptroller General shall submit to 
        Congress a report on the study conducted under paragraph (1), 
        together with such recommendations as the Comptroller General 
        determines appropriate.

SEC. 3. INCLUSION OF AVERAGE AGGREGATE BENEFICIARY COSTS AND SAVINGS IN 
              COMPARATIVE INFORMATION FOR BASIC MEDICARE PRESCRIPTION 
              DRUG PLANS.

    Section 1860D-1(c)(3) of the Social Security Act (42 U.S.C. 1395w-
101(c)(3)) is amended--
            (1) in subparagraph (A)--
                    (A) in the matter preceding clause (i), by striking 
                ``subparagraph (B)'' and inserting ``subparagraphs (B) 
                and (C)''; and
                    (B) by adding at the end the following new clause:
                            ``(vi) Average aggregate beneficiary costs 
                        and savings.--With respect to plan years 
                        beginning on or after January 1, 2007, the 
                        average aggregate costs, including deductibles 
                        and other cost-sharing, that a beneficiary will 
                        incur for covered part D drugs in the year 
                        under the plan compared to the average 
                        aggregate costs that an eligible beneficiary 
                        with no prescription drug coverage will incur 
                        for covered part D drugs in the year.''; and
            (2) by adding at the end the following new subparagraph:
                    ``(C) Average aggregate beneficiary costs and 
                savings information only for basic prescription drug 
                plans.--The Secretary shall not provide comparative 
                information under subparagraph (A)(vi) with respect 
                to--
                            ``(i) a prescription drug plan that 
                        provides supplemental prescription drug 
                        coverage; or
                            ``(ii) a Medicare Advantage plan.''.

SEC. 4. NEGOTIATING FAIR PRICES FOR MEDICARE PRESCRIPTION DRUGS.

    (a) In General.--Section 1860D-11 of the Social Security Act (42 
U.S.C. 1395w-111) is amended by striking subsection (i) (relating to 
noninterference) and by inserting the following:
    ``(i) Authority To Negotiate Prices With Manufacturers.--
            ``(1) In general.--In order to ensure that beneficiaries 
        enrolled under prescription drug plans and MA-PD plans pay the 
        lowest possible price, the Secretary shall have authority 
        similar to that of other Federal entities that purchase 
        prescription drugs in bulk to negotiate contracts with 
        manufacturers of covered part D drugs, consistent with the 
        requirements and in furtherance of the goals of providing 
        quality care and containing costs under this part.
            ``(2) Mandatory responsibilities.--The Secretary shall be 
        required to--
                    ``(A) negotiate contracts with manufacturers of 
                covered part D drugs for each fallback prescription 
                drug plan under subsection (g); and
                    ``(B) participate in negotiation of contracts of 
                any covered part D drug upon request of an approved 
                prescription drug plan or MA-PD plan.
            ``(3) Rule of construction.--Nothing in paragraph (2) shall 
        be construed to limit the authority of the Secretary under 
        paragraph (1) to the mandatory responsibilities under paragraph 
        (2).''.
    (b) Effective Date.--The amendment made by this section shall take 
effect as if included in the enactment of section 101 of the Medicare 
Prescription Drug, Improvement, and Modernization Act of 2003 (Public 
Law 108-173).

SEC. 5. NAIC REVIEW AND REPORT ON CHANGES IN MEDIGAP POLICIES THAT 
              PROVIDE COVERAGE OF PRESCRIPTION DRUGS CONTAINED IN THE 
              MEDICARE PRESCRIPTION DRUG, IMPROVEMENT, AND 
              MODERNIZATION ACT OF 2003.

    (a) In General.--The Secretary of Health and Human Services shall 
request the National Association of Insurance Commissioners to conduct 
a review of the changes to the rules relating to medicare supplemental 
policies that provide prescription drug coverage contained in 
subsection (v) of section 1882 of the Social Security Act (42 U.S.C. 
1395ss), as added by section 104(a) of the Medicare Prescription Drug, 
Improvement, and Modernization Act of 2003 (Public Law 108-173).
    (b) Impact on Medicare Beneficiaries.--The review conducted 
pursuant to subsection (a) should focus on the impact the changes 
described in such subsection will have on medicare beneficiaries.
    (c) Report.--The Secretary shall request the National Association 
of Insurance Commissioners to submit to Congress, by not later than 
January 1, 2006, a report on the review conducted pursuant to 
subsection (a), together with such recommendations as the National 
Association of Insurance Commissioners determines appropriate.