SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Fairness in Prescription Drug Prices 
Act''.

SEC. 2. FINDINGS AND PURPOSES.

    (a) Findings.--The Congress finds the following:
            (1) Senior citizens are the major consumers of prescription 
        drugs in the United States and are paying the highest prices 
        for prescription drugs.
            (2) The discriminatory pricing practices of major drug 
        manufacturers results in senior citizens paying over twice the 
        price that drug manufacturers charge their most-favored 
        customers, such as Health Maintenance Organizations (HMOs) and 
        hospital chains.
            (3) Medicare beneficiaries without prescription drug 
        coverage represent the most vulnerable segment of prescription 
        drug customers. Making prescription drugs available to them at 
        lower prices would lower the health care costs for this 
        population, improve the health and well-being of this 
        population and consequently, lower the cost to the taxpayers of 
        the Medicare program.
            (4) Authorizing the wholesale purchase of prescription 
        drugs at the Federal Supply Schedule prices plus administrative 
        costs will result in a benefit to the Medicare population 
        without cost to the taxpayers.
            (5) Authorizing similar benefits through hospice programs 
        will assist in extending the benefits of lower prescription 
        drug prices to those with terminal illnesses.
    (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, by allowing pharmacies to purchase drugs 
for Medicare beneficiaries at the substantially reduced price available 
under the Federal Supply Schedule.

SEC. 3. PARTICIPATING PHARMACIES.

    (a) Agreements To Participate.--Any qualified pharmacy may enter 
into an agreement with the Secretary that enables the pharmacy to sell 
covered outpatient drugs to Medicare beneficiaries at a reduced price, 
by authorizing the pharmacy to operate as a participating pharmacy 
under this Act.
    (b) Right of Participating Pharmacies To Obtain Drugs.--An 
agreement under this section shall entitle the participating pharmacy 
to purchase any covered outpatient drug that is listed on the Federal 
Supply Schedule of the General Services Administration at the 
participating pharmacy discount price for that drug determined under 
subsection (d).
    (c) Quantity of Drugs Purchased.--An agreement under this section 
shall permit the participating pharmacy to purchase under this Act as 
much of a covered outpatient drug as is sold by the pharmacy to 
Medicare beneficiaries.
    (d) Participating Pharmacy Discount Price.--
            (1) In general.--The Secretary shall determine a 
        participating pharmacy discount price for each covered 
        outpatient drug.
            (2) Determination.--The participating pharmacy discount 
        price for a covered outpatient drug shall be determined by 
        adding--
                    (A) the price at which the drug is available to 
                Federal agencies from the Federal Supply Schedule under 
                section 8126 of title 38, United States Code; plus
                    (B) an amount that reflects the administrative 
                costs incurred by the Secretary in administering this 
                Act.
    (e) Special Rule for Medicare Beneficiaries Enrolled in a Hospice 
Program.--In the case of a Medicare beneficiary who makes an election 
to receive hospice care under section 1812(d)(1) of the Social Security 
Act (42 U.S.C. 1395d(d)(1)) provided by, or under arrangements made by, 
a particular hospice program under part A of title XVIII of such Act, 
the hospice program may enter into agreements with a participating 
pharmacy to procure for and deliver to such a Medicare beneficiary 
covered outpatient drugs at a reduced price under this section.

SEC. 4. ADMINISTRATION.

    (a) In General.--The Secretary shall administer this Act in a 
manner that uses existing methods of obtaining and distributing drugs 
to the maximum extent possible, consistent with efficiency and cost 
effectiveness.
    (b) Regulations.--The Secretary shall issue such regulations as may 
be necessary to implement this Act.

SEC. 5. 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 they consider appropriate for changes in this Act 
to further reduce the cost of covered outpatient drugs to Medicare 
beneficiaries.

SEC. 6. DEFINITIONS.

    In this Act:
            (1) 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)).
            (2) 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.
            (3) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.

SEC. 7. EFFECTIVE DATE.

    The Secretary shall implement this Act as expeditiously as 
practicable and in a manner consistent with the obligations of the 
United States.
Fairness in Prescription Drug Prices Act - Allows any qualified pharmacy to enter into an agreement with the Secretary of Health and Human Services to enable it to sell covered outpatient drugs to Medicare beneficiaries (under title XVIII of the Social Security Act) at a reduced price.  Requires such an agreement to:  (1) entitle the participating pharmacy to purchase any covered outpatient drug listed on the Federal Supply Schedule of the General Services Administration at the participating pharmacy discount price for that drug; and (2) permit the participating pharmacy to purchase under this Act as much of a covered outpatient drug as it sells to Medicare beneficiaries. Sets forth guidelines for determining the participating pharmacy discount price and a special rule for Medicare beneficiaries enrolled in a hospice program. 
Directs the Secretary to:  (1) administer this Act in a manner that uses existing methods of obtaining and distributing drugs to the maximum extent possible, consistent with efficiency and cost effectiveness; and (2) report to the Congress annually regarding the effectiveness of this Act in protecting Medicare beneficiaries from discriminatory pricing by drug manufacturers, along with any appropriate legislative recommendations to further reduce the cost of covered outpatient drugs to such beneficiaries.
Fairness in Prescription Drug Prices Act