To amend part D of title XVIII of the Social Security Act to provide for the offering of a Federal national prescription drug discount card program.

SECTION 1. SHORT TITLE; FINDINGS.

    (a) Short Title.--This Act may be cited as the ``Medicare Drug Card 
Guaranteed Savings Act''.
    (b) Findings.--Congress finds the following:
            (1) Americans who buy their own prescription drugs often 
        pay twice as much for prescription drugs as consumers in 
        foreign nations or as the price the Department of Veterans 
        Affairs obtains by negotiating directly with the pharmaceutical 
        manufacturers. In some cases, older Americans pay 10 times more 
        for prescription drugs than such customers. Prescription drug 
        prices have increased 3.4 percent during the first quarter of 
        2004, nearly three times the rate of inflation.
            (2) The Medicare Prescription Drug, Improvement, and 
        Modernization Act of 2003 (Public Law No: 108-173) established 
        a program for the endorsement of medicare drug discount card 
        programs in order to provide for reduced prices for drugs for 
        medicare beneficiaries and provide a subsidy for low-income 
        medicare beneficiaries.
            (3) There are currently more than 70 endorsed medicare drug 
        discount card programs. Medicare drug discount card programs 
        can change the drugs that they offer and the size of the 
        discounts every seven days. Medicare beneficiaries are allowed 
        to change their current medicare drug discount card program 
        only once, during an annual enrollment period between November 
        15 and December 31, 2004.
            (4) Enrollment in medicare drug discount card programs has 
        been less than projected due to the complexity of the programs, 
        the limited number of drugs covered under most programs, the 
        changing prescription drug needs of beneficiaries, and 
        beneficiaries' concern that the programs do not guarantee real 
        savings on prescription drug purchases. As of July 19, 2004, 
        fewer than 14 percent of low-income medicare beneficiaries who 
        qualify for the $600 subsidy under the law have enrolled in a 
        medicare drug discount card program.
            (5) Currently, medicare discount drug card sponsors are 
        required to pass on to enrollees only an undefined ``share'' of 
        the rebates they secure from drug manufacturers and card 
        sponsors can use the remaining savings for administrative costs 
        and profit. The law does not require the sponsors to reveal to 
        enrollees the size of the rebates secured from drug 
        manufacturers or to disclose what portion of those rebates are 
        kept by the sponsors and not passed on to enrollees.
            (6) There is a need for a Federal national medicare 
        prescription drug discount card program that offers guaranteed 
        discounts on all prescription drugs and that aggregates the 
        buying power of all medicare beneficiaries in order to 
        negotiate significant reductions in price.

SEC. 2. OFFERING OF FEDERAL NATIONAL PRESCRIPTION DRUG DISCOUNT CARD 
              PROGRAM.

    (a) Offering of Program.--
            (1) In general.--Subsection (a)(1) of section 1860D-31 of 
        the Social Security Act (42 U.S.C. 1395w-141) is amended--
                    (A) by striking ``and'' at the end of subparagraph 
                (A);
                    (B) by striking the period at the end of 
                subparagraph (B) and inserting ``; and''; and
                    (C) by adding at the end the following new 
                subparagraph:
                    ``(C) to provide for the offering of a Federal 
                national prescription drug discount card program that 
                is available for discount card eligible individuals 
                throughout the United States (including the 
                territories) and that meets the requirements under 
                subsection (l)(1) in addition to the requirements 
                otherwise applicable to an endorsed discount card 
                program.''.
            (2) Exclusive program in 2005.--Subsection (c)(1)(C) of 
        such section is amended--
                    (A) in clause (i), by striking ``clauses (ii) and 
                (iii)'' and inserting ``clauses (ii) through (iv)''; 
                and
                    (B) by adding at the end the following new clause:
                            ``(iv) Limitation to enrollment in federal 
                        national prescription drug discount card 
                        program in 2005.--Notwithstanding any other 
                        provision of this section, for periods 
                        beginning with January 1, 2005, the only 
                        discount card program in which an individual 
                        may be enrolled under this section shall be the 
                        Federal national prescription drug discount 
                        card program described in subsection (l). 
                        Individuals enrolled in another program as of 
                        December 31, 2004, who do not affirmatively 
                        disenroll from all discount card programs under 
                        this section are deemed to be enrolled in such 
                        Federal national prescription drug discount 
                        card program.''.
    (b) Additional Program Requirements.--Such section is further 
amended by adding at the end the following new subsection:
    ``(l) Provisions Relating to Federal National Prescription Drug 
Discount Card Program.--
            ``(1) Additional requirements.--The Federal national 
        prescription drug discount card program described in subsection 
        (a)(1)(C) shall also meet the following requirements:
                    ``(A) Discounted prices.--Through direct 
                negotiations with prescription drug manufacturers, the 
                discounted prices offered under the program shall be 
                less than prices otherwise available in the retail 
                market. Through such negotiations, the Secretary shall 
                obtain discounted prices that are at least as low as 
                the manufacturer's average foreign price (as defined in 
                paragraph (3)) for the drug involved.
                    ``(B) Passing through all savings.--The full amount 
                of discounted savings are passed through to enrollees.
                    ``(C) Fee for card.--The annual fee for enrollment 
                in the program shall be $30 (except as provided under 
                subparagraphs (E) through (G) of subsection (c)(1)), 
                which fees shall be available to the Secretary for 
                administrative expenses in offering such program.
                    ``(D) National availability.--The program shall be 
                made available to individuals residing anyplace in the 
                United States.
                    ``(E) Handling fee for pharmacists.--The program 
                shall be designed to provide for a reasonable handling 
                fee for pharmacists in connection with the provision of 
                drugs obtained under the program and shall be 
                approximately equal to the average handling fee for 
                pharmacists of other large insurance plans that 
                administer drug benefits.
            ``(2) Oversight.--The oversight authority of the Secretary 
        under subsection (i)(2) with respect to such Federal national 
        prescription drug discount card program shall be exercised by 
        the Inspector General of the Department of Health and Human 
        Services.
            ``(3) Average foreign price defined.--
                    ``(A) In general.--For purposes of this subsection, 
                the term `average foreign price' means, with respect to 
                a covered discount card 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 Canada, France, Germany, Italy, 
                Japan, and the United Kingdom, 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;
                            ``(ii) adjustments for any differences in 
                        dosage, formulation, or other relevant 
                        characteristics of the drugs; and
                            ``(iii) any other contract or side 
                        agreement that has the effect of adjusting the 
                        effective price of the drug, including 
                        agreements to purchase non-drug products.
                    ``(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 section.''.
    (c) Conforming Amendments.--Such section is further amended--
            (1) in subsection (h)(1)(A), by adding after and below 
        clause (v) the following new sentence:
                ``Such term also includes the Secretary with respect to 
                the offering of the Federal national prescription drug 
                discount card program described in subsection 
                (a)(1)(C).'';
            (2) in subsection (h)(2)(A), by adding at the end the 
        following: ``The Secretary shall establish a separate procedure 
        for the qualification of the Federal national prescription drug 
        discount card program described in subsection (a)(1)(C).''; and
            (3) in subsection (k)(6), by inserting before the period at 
        the end the following: ``, except in the case of the Federal 
        national prescription drug discount card program described in 
        subsection (a)(1)(C)''.
    (d) Implementation.--
            (1) Availability of funds.--Notwithstanding any other 
        provision of law, funds provided under section 1015 of the 
        Medicare Prescription Drug, Improvement, and Modernization Act 
        of 2003 (Public Law 108-173) shall be available to the 
        Secretary of Health and Human Services for reasonable 
        administrative costs in offering the Federal national 
        prescription drug discount card program described in section 
        1860D-31(a)(1)(C) of the Social Security Act, as added by 
        subsection (a).
            (2) Timely implementation.--The Secretary shall take such 
        steps as may be required to provide for the offering of such 
        program during the annual open enrollment period occurring in 
        November, 2004.

Summary: Medicare Drug Card Guaranteed Savings Act - Amends part D of title XVIII (Medicare) of the Social Security Act to provide for the offering of a Federal national prescription drug discount card program. Charges a $30 fee for the card under the program. Provides for direct negotiations by the Secretary of Health and Human Services with prescription drug manufacturers to obtain discount prices that are to be less than prices otherwise available in the retail market. Provides that: (1) for periods beginning with January 1, 2005, the only discount card program in which an individual may be enrolled shall be the Federal national prescription drug discount card program. And (2) individuals enrolled in another program as of December 31, 2004, who do not affirmatively disenroll from all discount card programs are deemed to be enrolled in such Federal national prescription drug discount card program.