SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medicare-Guaranteed Prescription 
Drug Act of 2006''.

SEC. 2. ESTABLISHMENT OF MEDICARE-GUARANTEED PRESCRIPTION DRUG PLAN 
              OPTION.

    (a) In General.--Subpart 2 of part D of the Social Security Act (42 
U.S.C. 1395w-111 et seq.) is amended by inserting after section 1860D-
11 the following new section:

          ``medicare-guaranteed prescription drug plan option

    ``Sec. 1860D-11A. (a) In General.--Notwithstanding any other 
provision of this part, for each year (beginning with 2007), the 
Secretary shall--
            ``(1) in addition to any plans offered under section 1860D-
        11, offer a Medicare-Guaranteed Prescription Drug Plan (as 
        defined in subsection (c)) with a service area that consists of 
        the entire United States; and
            ``(2) enter into negotiations with pharmaceutical 
        manufacturers to reduce the purchase cost of covered part D 
        drugs under such Plan for eligible part D individuals in 
        accordance with subsection (b).
    ``(b) Negotiations.--Notwithstanding section 1860D-11(i), for 
purposes of offering the Medicare-Guaranteed Prescription Drug Plan 
under this section, the Secretary shall negotiate with pharmaceutical 
manufacturers with respect to the purchase price of covered part D 
drugs and shall encourage the use of more affordable therapeutic 
equivalents to the extent such practices do not override medical 
necessity as determined by the prescribing physician. To the extent 
practicable and consistent with the previous sentence, the Secretary 
shall implement strategies similar to those used by other Federal 
purchasers of prescription drugs, and other strategies, to reduce the 
purchase cost of covered part D drugs.
    ``(c) Medicare-Guaranteed Prescription Drug Plan Defined.--For 
purposes of this part, the term `Medicare-Guaranteed Prescription Drug 
Plan' means a prescription drug plan that offers standard prescription 
drug coverage and access to negotiated prices described in section 
1860D-2(a)(1)(A).
    ``(d) Monthly Beneficiary Premium.--The monthly beneficiary premium 
to be charged under a Medicare-Guaranteed Prescription Drug Plan shall 
be uniform nationally and shall be equal to the base beneficiary 
premium (computed under section 1860D-13(a)(2)) applicable for the 
year.''.
    (b) Sunset of Unnecessary Plan Requirement and Fallback Plan 
Provisions.--
            (1) Plan requirement.--Section 1860D-3 of the Social 
        Security Act (42 U.S.C. 1395w-103) is amended by adding at the 
        end the following new subsection:
    ``(c) Provisions Only Applicable in 2006.--The provisions of this 
section shall only apply with respect to 2006.''.
            (2) Fallback.--Section 1860D-11(g) of such Act (42 U.S.C. 
        1395w-111(g)) is amended by adding at the end the following new 
        paragraph:
            ``(8) No authority for fallback plans after 2006.--A 
        fallback prescription drug plan shall not be available after 
        December 31, 2006.''.
    (c) Conforming Amendments.--
            (1) Application of limited risk plans.--Section 1860D-11(f) 
        of the Social Security Act (42 U.S.C. 1395w-111(f)) is amended 
        by adding at the end the following new paragraph:
            ``(5) No authority for limited risk plans after 2006.--A 
        limited risk plan shall not be available after December 31, 
        2006.''.
            (2) Annual report.--Section 1860D-11(h) of such Act (42 
        U.S.C. 1395w-111(h)) is amended--
                    (A) in the heading, by striking ``Annual'';
                    (B) in the first sentence--
                            (i) by striking ``an annual'' and inserting 
                        ``a''; and
                            (ii) by inserting ``during 2006'' before 
                        the period at the end; and
                    (C) by striking the second sentence.
            (3) Collection of monthly beneficiary premiums.--Section 
        1860D-13(c)(3) of such Act (42 U.S.C. 1395w-113(c)(3)) is 
        amended--
                    (A) in the heading, by inserting ``and medicare-
                guaranteed prescription drug plans'' after ``Fallback 
                plans''; and
                    (B) by inserting ``or a Medicare-Guaranteed 
                Prescription Drug Plan'' after ``a fallback 
                prescription drug plan''.
            (4) Payments from medicare prescription drug account.--
        Section 1860D-16(b)(1) of such Act (42 U.S.C. 1395w-116(b)(1)) 
        is amended--
                    (A) in subparagraph (C), by striking ``and'' after 
                the semicolon at the end;
                    (B) in subparagraph (D), by striking the period at 
                the end and inserting ``; and''; and
                    (C) by adding at the end the following new 
                subparagraph:
                    ``(E) payments for expenses incurred with respect 
                to the operation of Medicare-Guaranteed Prescription 
                Drug Plans under section 1860D-11A.''.
            (5) Definitions.--Section 1860D-41(a) of such Act (42 
        U.S.C. 141(a)) is amended by adding at the end the following 
        new paragraph:
            ``(19) Medicare-guaranteed prescription drug plan.--The 
        term `Medicare-Guaranteed Prescription Drug Plan' has the 
        meaning given such term in section 1860D-11A(c).''.
    (d) Effective Date.--The amendments made by this section shall take 
effect on the date of enactment of this Act.

SEC. 3. IMPROVEMENT OF PART D STANDARD PRESCRIPTION DRUG COVERAGE.

    (a) Deductible Same as Part B.--
            (1) In general.--Section 1860D-2(b)(1) of the Social 
        Security Act (42 U.S.C. 1395w-102(b)(1)) is amended to read as 
        follows:
            ``(1) Deductible.--The coverage has an annual deductible 
        that is equal to amount of the deductible applicable for the 
        year under the first sentence of section 1833(b).''.
            (2) Conforming amendment.--Section 1860D-22(a)(3)(B)(ii) of 
        such Act (42 U.S.C. 1395w-132(a)(3)(B)(ii)) is amended by 
        striking ``as the annual deductible'' and all that follows 
        through the period and inserting ``the annual out-of-pocket 
        threshold is annually adjusted under section 1860D-2(b)(4)(B), 
        except that in the case of the cost threshold, if such amount 
        is not a multiple of $5, it shall be rounded to the nearest 
        $5.''
    (b) Reduced Coinsurance.--
            (1) In general.--Section 1860D-2(b)(2) of the Social 
        Security Act (42 U.S.C. 1395w-102(b)(2))--
                    (A) in the heading, by striking ``25 percent'' and 
                inserting ``20 percent''; and
                    (B) in clauses (i) and (ii), by striking ``25 
                percent'' and inserting ``20 percent''.
            (2) Low-income subsidy.--Section 1860D-14(a)(2)(D) of such 
        Act (42 U.S.C. 1395w-114(a)(2)(D)) is amended--
                    (A) by striking ``15 percent'' and inserting ``10 
                percent''; and
                    (B) by striking ``25 percent'' and inserting ``20 
                percent''.
    (c) Elimination of Coverage Gap.--
            (1) In general.--
                    (A) In general.--Paragraph (3) of section 1860D-
                2(b) of the Social Security Act (42 U.S.C. 1395w-
                102(b)) is repealed.
                    (B) Revision of benefit structure.--Section 1860D-
                2(b)(2)(A) of such Act (42 U.S.C. 1395w-102(b)(2)(A)) 
                is amended by striking ``and up to the initial coverage 
                limit under paragraph (3)'' and inserting ``and up to 
                the point at which the annual out-of-pocket threshold 
                is reached under paragraph (4)'' in the matter 
                preceding clause (i).
            (2) Conforming amendments.--
                    (A) Supplemental prescription drug coverage.--
                Section 1860D-2(a)(2)(A)(i)(I) of such Act (42 U.S.C. 
                1395w-102(a)(2)(A)(i)(I)) is amended--
                            (i) by striking ``deductible,'' and 
                        inserting ``deductible or'';
                            (ii) by striking ``, or an increase in the 
                        initial coverage limit''; and
                            (iii) by striking ``or increase''.
                    (B) Catastrophic.--Section 1860D-2(b)(4)(C)(i) of 
                such Act (42 U.S.C. 1395w-102(b)(4)(C)(i)) is amended--
                            (i) by striking ``paragraph (1),'' and 
                        inserting ``paragraph (1) or''; and
                            (ii) by striking ``and for amounts for 
                        which benefits are not provided because of the 
                        application of the initial coverage limit 
                        described in paragraph (3),''.
                    (C) Alternative prescription drug coverage.--
                Section 1860D-2(c)(1)(C) of such Act (42 U.S.C. 1395w-
                102(c)(1)(C)) is amended--
                            (i) in the heading by striking ``initial 
                        coverage limit'' and inserting ``out-of-pocket 
                        threshold''; and
                            (ii) by striking ``the initial coverage 
                        limit under subsection (b)(3)'' each place it 
                        appears and inserting ``the out-of-pocket 
                        threshold under subsection (b)(4)''.
                    (D) Access to negotiated prices.--Section 1860D-
                2(d)(1)(A) of such Act (42 U.S.C. 1395w-102(d)(1)(A)) 
                is amended by striking ``or an initial coverage limit 
                (described in subsection (b)(3))''.
                    (E) Claims information.--Section 1860D-
                4(a)(4)(B)(i) of such Act (42 U.S.C. 1395w-
                104(a)(4)(B)(i)) is amended by striking ``relation to--
                '' and all that follows through ``the annual'' and 
                inserting ``relation to the annual''.
                    (F) Low-income subsidies.--Section 1860D-14(a) of 
                such Act (42 U.S.C. 1395w-114(a)) is amended by 
                striking subparagraph (C) of paragraphs (1) and (2).
                    (G) Definition.--Section 1860D-41(a)(6) of such Act 
                (42 U.S.C. 1395w-151(a)(6)) is repealed.
    (d) Elimination of Cost-Sharing Above Annual Out-of-Pocket 
Threshold.--
            (1) In general.--Section 1860D-2(b)(4)(A) of the Social 
        Security Act (42 U.S.C. 1395w-102(b)(4)(A)) is amended to read 
        as follows:
                    ``(A) In general.--The coverage provides benefits, 
                after the part D eligible individual has incurred costs 
                (as described in subparagraph (C)) for covered part D 
                drugs in a year equal to the annual out-of-pocket 
                threshold specified in subparagraph (B), without any 
                cost-sharing.''.
            (2) Conforming amendments.--Paragraphs (1) and (2) of 
        section 1860D-14(a) of such Act (42 U.S.C. 1395w-114(a)) are 
        each amended by striking subparagraph (E).
    (e) Effective Date.--The amendments made by this section shall take 
effect on January 1, 2007.
Medicare-Guaranteed Prescription Drug Act of 2006 - Amends part D (Voluntary Prescription Drug Benefit Program) of title XVIII (Medicare) of the Social Security Act to provide for a Medicare-guaranteed prescription drug plan option that offers standard prescription drug coverage and access to negotiated prices.

Revises requirements for part D standard prescription drug coverage. Provides for an annual deductible equal to the deductible for Medicare part B (Supplementary Medical Insurance) and for reduced coinsurance.
A bill to amend title XVIII of the Social Security Act to deliver a meaningful benefit and lower prescription drug prices under the Medicare program.