To amend title XVIII of the Social Security Act to promote public notification and provide incentives to reduce drug shortages, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Patient Access to Drugs in Shortage 
Act of 2012''.

SEC. 2. MARKET STABILITY INCENTIVES.

    (a) Medicare.--
            (1) In general.--Section 1847A(b) of the Social Security 
        Act (42 U.S.C. 1395w-3a(b)) is amended--
                    (A) in paragraph (1), in the matter preceding 
                subparagraph (A), by striking ``paragraph (7)'' and 
                inserting ``paragraphs (7) and (9)''; and
                    (B) by adding at the end the following new 
                paragraph:
            ``(9) Sterile injectable products with 3 or fewer active 
        manufacturers.--
                    ``(A) In general.--The payment amount for a drug 
                described in subparagraph (B) that is furnished on or 
                after July 1, 2013, and before January 1, 2020, shall 
                be equal to--
                            ``(i) in the case of a drug described in 
                        subparagraph (B)(i), the volume-weighted 
                        wholesale acquisition cost determined under 
                        subparagraph (C) for the drug; and
                            ``(ii) in the case of a drug described in 
                        subparagraph (B)(ii), the wholesale acquisition 
                        cost (as defined in subsection (c)) of the 
                        drug.
                    ``(B) Drug described.--
                            ``(i) In general.--A drug described in this 
                        subparagraph is a sterile injectable drug 
                        product that is manufactured by 3 or fewer 
                        active manufacturers (as determined by the 
                        Secretary) and is--
                                    ``(I) a multiple source drug (as 
                                described in subsection (c)(6)(C)) for 
                                which there is no period of exclusivity 
                                in effect or available under section 
                                505(j), 505A, or 527 of the Federal 
                                Food, Drug, and Cosmetic Act; or
                                    ``(II) a single source drug (as 
                                described in subsection (c)(6)(D)(ii)) 
                                for which there is no period of 
                                exclusivity in effect or available 
                                under section 505(c), 505A, or 527 of 
                                the Federal Food, Drug, and Cosmetic 
                                Act.
                            ``(ii) Sterile injectable drug defined.--In 
                        this paragraph, the term `sterile injectable 
                        drug' means a drug approved by the Food & Drug 
                        Administration that is injected into the body.
                    ``(C) Use of volume-weighted average wholesale 
                acquisition costs for multiple source drugs.--The 
                volume-weighted average wholesale acquisition costs 
                under this paragraph shall be determined under this 
                subparagraph in the same manner as the volume-weighted 
                average of the average sales prices is determined under 
                paragraph (6) except that, for purposes of this 
                paragraph, any reference in such paragraph (6) to the 
                average sale prices for a drug is deemed a reference to 
                wholesale acquisition cost (as defined in subsection 
                (c)(6)(B)) for the drug.''.
            (2) HOPD prospective payment system.--Section 1833(t)(14) 
        of the Social Security Act (42 U.S.C. 1395l(t)(14)) is 
        amended--
                    (A) in subparagraph (A)(iii), in the matter 
                preceding subclause (I), by striking ``subparagraph 
                (E)'' and inserting ``subparagraphs (E) and (I)''; and
                    (B) by adding at the end the following new 
                subparagraph:
                    ``(I) Sterile injectable products with 3 or fewer 
                active manufacturers.--The amount of payment for a drug 
                described in section 1847A(b)(9)(B) that is furnished 
                on or after July 1, 2013, and before January 1, 2020, 
                shall be equal to--
                            ``(i) in the case of a drug described in 
                        clause (i) of such section, the volume-weighted 
                        wholesale acquisition costs amount determined 
                        under section 1847A(b)(9)(C) for the drug; and
                            ``(ii) in the case of a drug described in 
                        clause (ii) of section 1847A(b)(9)(B), the 
                        wholesale acquisition cost (as defined in 
                        section 1847A(c)) of the drug.''.
    (b) Medicaid.--
            (1) In general.--Section 1927(a) of the Social Security Act 
        (42 U.S.C. 1396r-8(a)) is amended by adding at the end the 
        following new paragraph:
            ``(8) Sterile injectable products with 3 or fewer active 
        manufacturers.--
                    ``(A) In general.--Paragraph (1) of this subsection 
                and section 1903(i)(10)(A) shall not apply to a drug 
                that is described in section 1847A(b)(9)(C), that is 
                furnished on or after July 1, 2013, and before January 
                1, 2020, and for which payment may be made under part B 
                of title XVIII.
                    ``(B) Guidance.--Not later than July 1, 2013, the 
                Secretary shall publish guidance on the exclusion of 
                certain sterile injectable products under subparagraph 
                (A).''.
            (2) Conforming amendment.--Section 1903(i)(10)(A) of the 
        Social Security Act (42 U.S.C. 1396b(i)(10)(A)) is amended by 
        striking ``unless section 1927(a)(3) applies'' and inserting 
        ``unless paragraph (3) or (9) of section 1927(a) applies''.
    (c) 340B Program.--
            (1) In general.--Section 340B of the Public Health Service 
        Act (42 U.S.C. 256b) is amended by inserting after subsection 
        (e) the following:
    ``(f) Exclusion of Certain Sterile Injectable Products.--
            ``(1) In general.--For purposes of this section (including 
        with respect to the prohibition described in subsection 
        (a)(5)(L)(iii)), the term `covered outpatient drug' shall not 
        include a drug that is described in section 1847A(b)(9)(C) of 
        the Social Security Act, that is furnished on or after July 1, 
        2013, and before January 1, 2020, and for which payment may be 
        made under part B of title XVIII of such Act.
            ``(2) Guidance.--Not later than July 1, 2013, the Secretary 
        shall publish guidance on the exclusion of certain sterile 
        injectable products under paragraph (1).''.
    (d) Study and Report.--
            (1) In general.--The Secretary of Health and Human Services 
        shall contract with an independent entity to study the effects 
        of the amendments made by this section on patient access to 
        sterile injectable products.
            (2) Report.--As a condition of the contract described under 
        paragraph (1), the independent entity shall agree to submit to 
        Congress and such Secretary, not later than 3 years after the 
        date of enactment of this Act, a report that describes the 
        results of the study conducted under paragraph (1).

SEC. 3. EXCLUSION OF BRANDED PRESCRIPTION DRUGS FROM ANNUAL FEE DURING 
              PERIODS OF SHORTAGE.

    (a) In General.--Subsection (e) of section 9008 of the Patient 
Protection and Affordable Care Act is amended by redesignating 
paragraph (4) as paragraph (5) and by inserting after paragraph (3) the 
following new paragraph:
            ``(4) Exclusion during shortage.--The term `branded 
        prescription drug sales' shall not include sales of any branded 
        prescription drug that--
                    ``(A) is on the drug shortage list maintained under 
                section 506E of the Federal Food, Drug, and Cosmetic 
                Act (21 U.S.C. 356e), and
                    ``(B)(i) is the listed drug (as defined in section 
                505(j)(2)(A)(i) of the Federal Food, Drug, and Cosmetic 
                Act (21 U.S.C. 355(j)(2)(A)(i)) for a drug for which 
                the approval of an application under section 505(j) of 
                such Act (21 U.S.C. 355(j)) is in effect, or
                    ``(ii) is the reference product (as defined in 
                section 351(i) of the Public Health Service Act (42 
                U.S.C. 262(i)) for a biological product for which the 
                approval of an application under section 351(k) of such 
                Act (42 U.S.C. 262(j)) is in effect.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to sales after the date of the enactment of this Act.

Summary: Patient Access to Drugs in Shortage Act of 2012 - Amends title XVIII (Medicare) of the Social Security Act (SSA), with respect to use of average sales price payment methodology for drugs and biologicals, to prescribe a formula for determining the payment amount, using the volume-weighted wholesale acquisition cost, for a multiple source or a single source sterile injectable drug product with three or fewer active manufacturers, if there is no period of exclusivity in effect or available. Incorporates such payment methodology under the hospital outpatient department prospective payment system for any such drug furnished between July 1, 2013, and January 1, 2020. Amends SSA title XIX (Medicaid) to exempt from the rebate agreement requirement a multiple source drug furnished between July 1, 2013, and January 1, 2020, and for which payment may be made under Medicare part B . Amends the Public Health Service Act to exclude such multiple source drugs from the term covered outpatient drug subject to specified price limitations under the 340B drug pricing program. Directs the Secretary to contract with an independent entity to study the effects of this Act on patient access to sterile products. Amends the Patient Protection and Affordable Care Act to exclude certain branded prescription drugs on a specified drug shortage list from the annual fee imposed on branded prescription pharmaceutical manufacturers and importers.