To establish an America Rx program to establish fairer pricing for prescription drugs for individuals without access to prescription drugs at discounted prices.

Summary: America Rx Act of 2005 - Directs the Secretary of Health and Human Services to establish the America Rx program to provide U.S. residents who are not covered under any public or private program that provides substantial benefits towards the purchase of outpatient prescription drugs with access to discounted prices for such drugs.

Requires the Secretary to negotiate rebate agreements with drug manufacturers and deny tax deductions for advertising and marketing of drugs of manufacturers choosing not to participate in the program.

Provides for arrangements under the program: (1) for pharmacies to provide qualified residents prescription drugs at discounted prices in exchange for discount reimbursement by the Secretary and reasonable dispensing fees; and (2) for States to provide for program administration in return for payment of reasonable administrative expenses.

SECTION 1. SHORT TITLE; FINDINGS; PURPOSE.

    (a) Short Title.--This Act may be cited as the ``America Rx Act of 
2005''.
    (b) Findings.--Congress finds the following:
            (1) Affordability is critical in providing access to 
        prescription drugs for residents of the United States.
            (2) It is not the intention of the Congress to discourage 
        employers and health insurers from providing coverage for 
        prescription drugs, including discounts for the purchase of 
        those drugs.
    (c) Purpose.--The purpose of this Act is to establish an America Rx 
program that utilizes manufacturer rebates and pharmacy discounts to 
reduce prescription drug prices to those residents who are without 
access to discounted prices for outpatient prescription drugs.

SEC. 2. ESTABLISHMENT OF AMERICA RX PROGRAM.

    (a) Establishment.--
            (1) In general.--The Secretary of Health and Human Services 
        shall establish a program (in this section referred to as the 
        ``America Rx program'') consistent with the provisions of this 
        section to provide qualified residents with access to 
        discounted prices for outpatient prescription drugs.
            (2) Principles.--The Secretary shall design and execute the 
        America Rx program in a manner consistent with the following 
        principles:
                    (A) Medicaid beneficiaries and other low-income 
                individuals, as well as senior citizens and the 
                disabled, are not hurt or disadvantaged as a result of 
                the program's implementation.
                    (B) Pharmacies participating are ensured reasonable 
                and timely payment of discounts they provide to 
                qualified residents under the program.
                    (C) The Federal Government will fully reimburse 
                States for reasonable costs they incur in carrying out 
                the program.
                    (D) Individuals who apply for benefits under the 
                program are screened for eligibility under the medicaid 
                program and other applicable Governmental health care 
                programs and, if found eligible, are enrolled in such 
                program or programs.
                    (E) The Secretary provides for--
                            (i) outreach efforts to build public 
                        awareness of the program and maximize 
                        enrollment of qualified residents; and
                            (ii) simplified eligibility procedures and 
                        uniform eligibility standards for qualified 
                        residents.
            (3) Qualified resident defined.--For purposes of this 
        section, the term ``qualified resident'' means an individual 
        who--
                    (A) a citizen or national of the United States (or 
                an alien lawful residing permanently in the United 
                States); and
                    (B) as determined under regulations of the 
                Secretary, is not covered under any public or private 
                program that provides substantial benefits (which may 
                be discounted prices) towards the purchase of 
                outpatient prescription drugs.
    (b) Rebate Agreements With Manufacturers.--
            (1) In general.--Under the America Rx program the Secretary 
        shall negotiate with manufacturers of outpatient prescription 
        drugs rebate agreements with respect to drugs offered under the 
        program to qualified residents.
            (2) Minimum amount of rebates.--In negotiating the amount 
        of such a rebate under paragraph (1), the Secretary shall take 
        into consideration the amount of the rebate calculated under 
        the medicaid program, the average manufacturer price of 
        prescription drugs, and other information on prescription drug 
        prices and price discounts. The Secretary shall negotiate the 
        amount of such rebates in a manner so that the rebates on 
        average are comparable to the average percentage rebate 
        obtained in outpatient prescription drugs provided under 
        section 1927(c) of the Social Security Act (42 U.S.C. 1396r-
        8(c)).
            (3) Payment.--Such rebates shall be payable to the 
        Secretary according to a schedule (not less often than 
        quarterly) negotiated with manufacturers and shall be paid, 
        directly or through States, to participating pharmacies that 
        provide discounts to qualified residents.
            (4) Incentive.--In order to induce manufacturers of 
        outpatient prescription drugs to enter into such rebate 
        agreements, the Secretary shall, in a manner consistent with 
        the design principle specified in subsection (a)(2), provide, 
        in the case of a manufacturer that has not entered into such an 
        agreement, for a denial of a deduction under chapter 1 of the 
        Internal Revenue Code of 1986 for the amount of expenses of the 
        manufacturer for advertising and marketing of drugs of the 
        manufacturer, other than expenses for free samples of drugs 
        subject to section 503(b)(1) of the Federal Food Drug, and 
        Cosmetic Act intended to be distributed to patients.
            (5) Application of rebates.--Amounts received by the 
        Secretary as rebates under this subsection shall be placed into 
        an appropriate account in the Treasury and shall be available 
        in advance of appropriations to the Secretary for the payment 
        of discounts and other costs of participating pharmacies in 
        carrying out the America Rx program and for the payment of 
        administrative costs in carrying out the program.
    (c) Arrangements With Participating Pharmacies.--
            (1) In general.--Under the America Rx program arrangements 
        are made with pharmacies for the provision of prescription 
        drugs at discounted prices to qualified residents in a 
        reasonably accessible manner. Such arrangements shall provide 
        that--
                    (A) each participating pharmacy shall--
                            (i) provide discounts on prices for 
                        outpatient prescription drugs for qualified 
                        residents in return for prompt reimbursement of 
                        the amount of such discounts and a reasonable 
                        dispensing fee;
                            (ii) not charge qualified residents more 
                        (before such discounts) for outpatient 
                        prescription drugs than the amount that 
                        individuals who are not qualified residents are 
                        charged for such drugs; and
                            (iii) report to the Secretary (or the 
                        Secretary's designee) information regarding the 
                        discounts provided and fees incurred; and
                    (B) the program shall--
                            (i) reimburse a participating retail 
                        pharmacy on a prompt basis (no less promptly 
                        than as provided under the medicare program) 
                        for discounted prices provided to qualified 
                        residents under the program and for reasonable 
                        dispensing fees; and
                            (ii) not impose any additional fees on such 
                        pharmacies in connection with participation in 
                        the program.
            (2) Discounted prices.--The amount of the discount provided 
        to enrolled qualifying residents shall reflect the amount of 
        rebates obtained, reduced by expenses relating to 
        administrative costs of the Federal and State governments and 
        of participating pharmacies. The Secretary shall specify the 
        method for computing and applying discounts, including a method 
        for computing and applying discounts on a uniform, average 
        percentage basis.
    (d) Administration.--
            (1) In general.--Under the America Rx program the Secretary 
        may enter into appropriate arrangements with States under which 
        States provide for the administration of the program in return 
        for payment of the reasonable administrative expenses 
        associated with such administration.
            (2) Administrative functions.--Such administration 
        functions may include--
                    (A) determinations of eligibility of qualified 
                residents;
                    (B) arrangements with participating pharmacies; and
                    (C) such other functions as the Secretary 
                determines appropriate.
            (3) Contractual authority.--In carrying out 
        responsibilities under this section, the Secretary and States 
        may enter into agreements with pharmacy benefit managers and 
        other third parties.
    (e) Definitions.--For purposes of this section:
            (1) The term ``manufacturer'' has the meaning given such 
        term in section 1927(k)(5) of the Social Security Act (42 
        U.S.C. 1396r-8(k)(5)).
            (2) The term ``medicaid program'' means a State program 
        under title XIX of the Social Security Act, including such a 
        program operating under a Statewide waiver under section 1115 
        of such Act.
            (3) The term ``outpatient prescription drug'' has the 
        meaning given the term ``covered outpatient drug'' in section 
        1927(k)(2) of the Social Security Act (42 U.S.C. 1396r-
        8(k)(2)).
            (4) The term ``Secretary'' means the Secretary of Health 
        and Human Services.
            (5) The term ``State'' has the meaning given such term for 
        purposes of title XIX of the Social Security Act.