To provide for substantial reductions in the price of prescription drugs for Medicare beneficiaries.

Summary: Prescription Drug Fairness for Seniors Act of 2001 - Requires each participating manufacturer of a covered outpatient drug to make it available for purchase by each pharmacy: (1) in an amount equal to the aggregate amount sold or distributed by the pharmacy to Medicare beneficiaries; and (2) at a price no greater than the manufacturer's average foreign price. Sets forth special provisions with respect to hospice programs.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Prescription Drug Fairness for 
Seniors Act of 2001''.

SEC. 2. FINDINGS AND PURPOSES.

    (a) Findings.--The Congress finds the following:
            (1) Manufacturers of prescription drugs engage in price 
        discrimination practices that compel many older Americans to 
        pay substantially more for prescription drugs than consumers in 
        foreign nations and the drug manufacturers' most favored U.S. 
        customers, such as health insurers, health maintenance 
        organizations, and the Federal Government.
            (2) Older Americans who buy their own prescription drugs 
        often pay twice as much for prescription drugs as consumers in 
        foreign nations and the drug manufacturers' most favored U.S. 
        customers. In some cases, older Americans pay 10 times more for 
        prescription drugs than such customers.
            (3) The discriminatory pricing by major drug manufacturers 
        sustains their high profits (for example, $27,300,000,000 in 
        1999), but causes financial hardship and impairs the health and 
        well-being of millions of older Americans. Many older Americans 
        are forced to choose between buying their food and buying their 
        medicines.
            (4) Foreign nations and U.S. federally funded health care 
        programs use purchasing power to obtain prescription drugs at 
        low prices. Medicare beneficiaries are denied this benefit and 
        cannot obtain their prescription drugs at the lower prices 
        available to such nations and programs.
            (5) Implementation of the policy set forth in this Act will 
        reduce prices for brand name prescription drugs for many 
        Medicare beneficiaries by an average of 40 percent.
            (6) In addition to substantially lowering the costs of 
        prescription drugs for older Americans, implementation of the 
        policy set forth in this Act will significantly improve the 
        health and well-being of older Americans and lower the costs to 
        the Federal taxpayer of the Medicare program.
            (7) Older Americans who are terminally ill and receiving 
        hospice care services represent some of the most vulnerable 
        individuals in our nation. Making prescription drugs available 
        to Medicare beneficiaries under the care of Medicare-certified 
        hospices will assist in extending the benefits of lower 
        prescription drug prices to those most vulnerable and in need.
    (b) Purpose.--The purpose of this Act is to protect Medicare 
beneficiaries from discriminatory pricing by drug manufacturers and to 
make prescription drugs available to Medicare beneficiaries at 
substantially reduced prices.

SEC. 3. PARTICIPATING MANUFACTURERS.

    (a) In General.--Each participating manufacturer of a covered 
outpatient drug shall make available for purchase by each pharmacy such 
covered outpatient drug in the amount described in subsection (b) at 
the price described in subsection (c).
    (b) Description of Amount of Drugs.--The amount of a covered 
outpatient drug that a participating manufacturer shall make available 
for purchase by a pharmacy is an amount equal to the aggregate amount 
of the covered outpatient drug sold or distributed by the pharmacy to 
Medicare beneficiaries.
    (c) Description of Price.--The price at which a participating 
manufacturer shall make a covered outpatient drug available for 
purchase by a pharmacy is a price no greater than the manufacturer's 
average foreign price.
    (d) Enforcement.--The United States shall debar a manufacturer of 
drugs or biologicals that does not comply with the provisions of this 
Act.

SEC. 4. SPECIAL PROVISION WITH RESPECT TO HOSPICE PROGRAMS.

    For purposes of determining the amount of a covered outpatient drug 
that a participating manufacturer shall make available for purchase by 
a pharmacy under section 3, there shall be included in the calculation 
of such amount the amount of the covered outpatient drug sold or 
distributed by a pharmacy to a hospice program. In calculating such 
amount, only amounts of the covered outpatient drug furnished to a 
Medicare beneficiary enrolled in the hospice program shall be included.

SEC. 5. ADMINISTRATION.

    The Secretary shall issue such regulations as may be necessary to 
implement this Act.

SEC. 6. REPORTS TO CONGRESS REGARDING EFFECTIVENESS OF ACT.

    (a) In General.--Not later than 2 years after the date of the 
enactment of this Act, and annually thereafter, the Secretary shall 
report to the Congress regarding the effectiveness of this Act in--
            (1) protecting Medicare beneficiaries from discriminatory 
        pricing by drug manufacturers, and
            (2) making prescription drugs available to Medicare 
        beneficiaries at substantially reduced prices.
    (b) Consultation.--In preparing such reports, the Secretary shall 
consult with public health experts, affected industries, organizations 
representing consumers and older Americans, and other interested 
persons.
    (c) Recommendations.--The Secretary shall include in such reports 
any recommendations the Secretary considers appropriate for changes in 
this Act to further reduce the cost of covered outpatient drugs to 
Medicare beneficiaries.

SEC. 7. DEFINITIONS.

    In this Act:
            (1) Average foreign price.--
                    (A) In general.--The term ``average foreign price'' 
                means, with respect to a covered outpatient drug, the 
                average price that the manufacturer of the drug 
                realizes on the sale of drugs with the same active 
                ingredient or ingredients that are consumed in covered 
                foreign nations, taking into account--
                            (i) any rebate, contract term or condition, 
                        or other arrangement (whether with the 
                        purchaser or other persons) that has the effect 
                        of reducing the amount realized by the 
                        manufacturer on the sale of the drugs; and
                            (ii) adjustments for any differences in 
                        dosage, formulation, or other relevant 
                        characteristics of the drugs.
                    (B) Exempt transactions.--The Secretary may, by 
                regulation, exempt from the calculation of the average 
                foreign price of a drug those prices realized by a 
                manufacturer in transactions that are entered into for 
                charitable purposes, for research purposes, or under 
                other unusual circumstances, if the Secretary 
                determines that the exemption is in the public interest 
                and is consistent with the purposes of this Act.
            (2) Covered foreign nation.--The term ``covered foreign 
        nation' means Canada, France, Germany, Italy, Japan, and the 
        United Kingdom.
            (3) Covered outpatient drug.--The term ``covered outpatient 
        drug'' has the meaning given that term in section 1927(k)(2) of 
        the Social Security Act (42 U.S.C. 1396r-8(k)(2)).
            (4) Debar.--The term ``debar'' means to exclude, pursuant 
        to established administrative procedures, from Government 
        contracting and subcontracting for a specified period of time 
        commensurate with the seriousness of the failure or offense or 
        the inadequacy of performance.
            (5) Hospice program.--The term ``hospice program'' has the 
        meaning given that term under section 1861(dd)(2) of the Social 
        Security Act (42 U.S.C. 1395x(dd)(2)).
            (6) Medicare beneficiary.--The term ``Medicare 
        beneficiary'' means an individual entitled to benefits under 
        part A of title XVIII of the Social Security Act or enrolled 
        under part B of such title, or both.
            (7) Participating manufacturer.--The term ``participating 
        manufacturer'' means any manufacturer of drugs or biologicals 
        that, on or after the date of the enactment of this Act, enters 
        into a contract or agreement with the United States for the 
        sale or distribution of covered outpatient drugs to the United 
        States.
            (8) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.

SEC. 8. EFFECTIVE DATE.

    The Secretary shall implement this Act as expeditiously as 
practicable and in a manner consistent with the obligations of the 
United States.