To amend title XVIII of the Social Security Act to provide for a Medicare operated prescription drug plan option to deliver a meaningful drug benefit and lower prescription drug prices under the Medicare Program.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medicare Drug Savings Through Choice 
Act of 2007''.

SEC. 2. ESTABLISHMENT OF MEDICARE OPERATED PRESCRIPTION DRUG PLAN 
              OPTION.

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

           ``medicare operated prescription drug plan option

    ``Sec. 1860D-11A.  (a) In General.--Notwithstanding any other 
provision of this part, for each year (beginning with 2008), in 
addition to any plans offered under section 1860D-11, the Secretary 
shall offer a Medicare operated prescription drug plan (as defined in 
subsection (b)) with a service area that consists of the entire United 
States.
    ``(b) Medicare Operated Prescription Drug Plan Defined.--For 
purposes of this part, the term `Medicare operated prescription drug 
plan' means a prescription drug plan that offers qualified prescription 
drug coverage and access described in section 1860D-2(d) to the prices 
negotiated under subsection (c)(1). Such plan may offer supplemental 
prescription drug coverage in the same manner as other qualified 
prescription drug coverage offered by other prescription drug plans.
    ``(c) Enhanced Affordability Through Negotiations.--
            ``(1) In general.--Notwithstanding section 1860D-11(i), for 
        purposes of offering the Medicare operated prescription drug 
        plan under this section, the Secretary shall negotiate with 
        pharmaceutical manufacturers with respect to the purchase price 
        of such 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.
            ``(2) Implementation of other cost savings strategies.--To 
        the extent practicable and consistent with paragraph (1), the 
        Secretary shall implement strategies similar to those used by 
        the Department of Veterans Affairs or other Federal purchasers 
        of prescription drugs, and other strategies, to reduce the 
        purchase cost of covered part D drugs.
            ``(3) Conditioning use of formularies.--Insofar as the 
        Medicare operated prescription drug plan uses a formulary, such 
        plan shall inform, consistent with section 1860D-4(a)(3)(B), 
        enrollees of changes in such formulary, including changes in 
        covered drugs and the prices of such drugs.
            ``(4) Savings used to fill gaps in prescription drug 
        coverage.--Any savings to the Medicare operated prescription 
        drug plan resulting from actions take under this subsection 
        shall be used by the plan to extend coverage under the plan to 
        individuals who have reached the initial coverage limit 
        applicable under the plan but who have not reached the annual 
        out-of-pocket threshold specified in section 1860D-2(b)(4)(B).
    ``(d) Monthly Premiums.--
            ``(1) For qualified prescription drug coverage.--
                    ``(A) Nationally uniform monthly beneficiary 
                premium.--The monthly beneficiary premium for qualified 
                prescription drug coverage and access to negotiated 
                prices described in section 1860D-2(a)(1)(A) to be 
                charged under the Medicare operated prescription drug 
                plan shall be uniform nationally.
                    ``(B) Bid based on costs.--The bid submitted under 
                section 1860D-11(b)(2)(C) for the Medicare operated 
                prescription drug plan shall be based on the average 
                monthly per capita actuarial cost of offering such plan 
                for the year involved, including administrative 
                expenses.
            ``(2) Supplemental prescription drug coverage.--Insofar as 
        the Medicare operated prescription drug plan offers 
        supplemental prescription drug coverage, the Secretary shall 
        adjust the amount of the bid submitted under section 1860D-
        11(b)(2)(C) (and the premium charged under paragraph (1)) to 
        reflect the additional benefits offered under such coverage.
    ``(e) Open Enrollment.--A part D eligible individual may enroll in 
the Medicare operated prescription drug plan at any time.''.
    (b) No Late Enrollment Penalty for Individuals Enrolled in Medicare 
Operated Prescription Drug Plan.--Section 1860D-13(b)(2) of such Act 
(42 U.S.C. 1395w-113(b)(2)) is amended by adding at the end the 
following new sentence: ``A part D eligible individual described in 
this paragraph does not include an individual enrolled in the Medicare 
operated prescription drug plan during the period in which the 
individual is so enrolled.''.
    (c) Conforming Amendments.--
            (1) Section 1860D-1(b)(1)(B)(iii) of the Social Security 
        Act (42 U.S.C. 1395w-101(b)(1)(B)(iii)) is amended by inserting 
        ``and section 1860D-11A(e)'' after ``paragraphs (2) and (3) of 
        this subsection''.
            (2) Section 1860D-2(b)(3)(A) of such Act (42 U.S.C. 1395w-
        102(b)(3)(A)) is amended by inserting ``and section 1860D-
        11A(c)(4)'' after ``paragraph (4)''.
            (3) Section 1860D-3(a) of such Act (42 U.S.C. 1395w-103(a)) 
        is amended by adding at the end the following new paragraph:
            ``(4) Availability of the medicare operated prescription 
        drug plan.--
                    ``(A) In general.--The Medicare operated 
                prescription drug plan shall be offered nationally in 
                accordance with section 1860D-11A.
                    ``(B) Relationship to other plans.--
                            ``(i) In general.--Subject to clause (ii), 
                        the Medicare operated prescription drug plan 
                        shall be offered in addition to any qualifying 
                        plan or fallback prescription drug plan offered 
                        in a PDP region and shall not be considered to 
                        be such a plan for purposes of meeting the 
                        requirements of this subsection.
                            ``(ii) Designation as a fallback plan.--
                        Notwithstanding any other provision of this 
                        part, the Secretary may designate the Medicare 
                        operated prescription drug plan as the fallback 
                        prescription drug plan for any fallback service 
                        area (as defined in section 1860D-11(g)(3)) 
                        determined to be appropriate by the 
                        Secretary.''.
            (4) 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 the Medicare 
                operated prescription drug plan'' after ``Fallback 
                plans''; and
                    (B) by inserting ``or the Medicare operated 
                prescription drug plan'' after ``a fallback 
                prescription drug plan''.
            (5) 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; and
                    (B) in subparagraph (D), by striking the period at 
                the end and inserting ``; and''; and
                    ``(E) payments for expenses incurred with respect 
                to the operation of the Medicare operated prescription 
                drug plan under section 1860D-11A.''.
            (6) Section 1860D-41(a) of such Act (42 U.S.C. 1395w-
        151(a)) is amended by adding at the end the following new 
        paragraph:
            ``(19) Medicare operated prescription drug plan.--The term 
        `Medicare operated prescription drug plan' has the meaning 
        given such term in section 1860D-11A(b).''.

Summary: Medicare Drug Savings Through Choice Act of 2007 - Amends part D of title XVIII (Medicare) of the Social Security Act to direct the Secretary of Health and Human Services to: (1) offer a Medicare operated prescription drug plan with a service area that consists of the entire United States. (2) negotiate with pharmaceutical manufacturers to reduce the purchase cost of covered Medicare part D drugs. And (3) encourage the use of more affordable therapeutic equivalents. Requires the monthly beneficiary premium charged under such a plan to be uniform nationally. Requires adjustment of such premium amount in case of supplemental prescription drug coverage.