To amend titles XVIII and XIX of the Social Security Act to provide for continuity of Medicare prescription drug coverage for full-benefit dual eligible individuals, for Medicare prescription drug coverage of benzodiazepines and off-label uses of certain prescription drugs and biological products, for optional Medicaid coverage of Medicare prescription drug cost-sharing for full-benefit dual eligible individuals, for authorization to the Secretary of Health and Human Services to waive certain determinations denying Medicare prescription drug coverage, and for holding pharmacies harmless for certain costs incurred during implementation of Medicare part D.

SECTION 1. CONTINUITY OF MEDICARE PRESCRIPTION DRUG COVERAGE FOR FULL-
              BENEFIT DUAL ELIGIBLE INDIVIDUALS.

    (a) In General.--Section 1860D-2(a) of the Social Security Act (42 
U.S.C. 1395w-102(a)) is amended--
            (1) in paragraph (1), by inserting ``subject to paragraph 
        (6),'' after ``part C''; and
            (2) by adding at the end the following new paragraph:
            ``(6) Continuation of medicare coverage for certain 
        prescriptions for full-benefit dual eligible individuals.--In 
        the case of an individual who, as of the date the individual is 
        first enrolled under a prescription drug plan under this part 
        (or an MA-PD plan under part D), is a full-benefit dual 
        eligible individual and is being provided medical assistance 
        for a covered part D drug under title XIX, qualified 
        prescription drug coverage must include coverage for such drug 
        unless a prescribing physician certifies that the coverage of 
        such drug is not medically necessary, regardless of whether the 
        individual subsequently remains a full-benefit dual eligible 
        individual.''.
    (b) Effective Date.--The amendments made by subsection (a) shall be 
effective as if included in the enactment of Medicare Prescription 
Drug, Improvement, and Modernization Act of 2003 (Public Law 108-173).

SEC. 2. MEDICARE PRESCRIPTION DRUG COVERAGE OF BENZODIAZEPINES.

    (a) In General.--Section 1860D-2(e)(2)(A) of the Social Security 
Act (42 U.S.C. 1395w-112(e)(2)(A)) is amended by inserting after 
``agents)'' the following: ``and other than subparagraph (J) of such 
section (relating to benzodiazepines)''.
    (b) Effective Date.--The amendment made by subsection (a) shall be 
effective as if included in the enactment of Medicare Prescription 
Drug, Improvement, and Modernization Act of 2003 (Public Law 108-173).

SEC. 3. PERMITTING STATE MEDICAID PROGRAMS TO COVER MEDICARE 
              PRESCRIPTION DRUG COPAYMENTS FOR FULL-BENEFIT DUAL 
              ELIGIBLE INDIVIDUALS.

    (a) In General.--Section 1935(d) of the Social Security Act (42 
U.S.C. 1396u-5(d)) is amended by adding at the end the following new 
paragraph:
            ``(3) Optional coverage of medicare prescription drug cost-
        sharing.--Notwithstanding paragraph (1), a State may, at its 
        option, provide medical assistance under the plan under this 
        title for the deductible and cost-sharing imposed under a 
        prescription drug plan (or an MA-PD plan) for full-benefit dual 
        eligible individuals and payment shall be available under 
        section 1903(a) with respect to such assistance provided. ''.
    (b) Effective Date.--The amendment made by subsection (a) shall be 
effective as if included in the enactment of Medicare Prescription 
Drug, Improvement, and Modernization Act of 2003 (Public Law 108-173).

SEC. 4. MEDICARE COVERAGE OF OFF-LABEL USES OF PRESCRIPTION DRUGS AND 
              BIOLOGICALS.

    (a) In General.--Section 1860D--2(e) of the Social Security Act (42 
U.S.C. 1395w-102(e)) is amended at the end by adding the following new 
paragraph:
    ``(4) Rule of Construction.--Nothing in this subsection shall be 
construed as excluding from the definition of the term `covered part D 
drug'--
            ``(A) a drug described in paragraph (1)(A) on the sole 
        basis that such drug is prescribed by a physician for a use 
        other than a use included in the labeling of such drug pursuant 
        to the approval of the safety and effectiveness of such drug as 
        a prescription drug under section 505 or 507 of the Federal 
        Food, Drug, and Cosmetic Act or approval of such drug under 
        section 505(j) of such Act; or
            ``(B) a biological product described in paragraph (1)(B) on 
        the sole basis that such product is prescribed by a physician 
        for a use other than a use included in the labeling of such 
        product pursuant to the licensure of such product under section 
        351 of the Public Health Service Act;
even if the unlabeled use of the drug or product is not included in a 
standard clinical reference compendia used by clinicians for purposes 
of providing guidance to such clinicians with respect to unlabeled uses 
of such a drug or product.''.
    (b) Effective Date.--The amendment made by subsection (a) shall be 
effective as if included in the enactment of Medicare Prescription 
Drug, Improvement, and Modernization Act of 2003 (Public Law 108-173).

SEC. 5. AUTHORIZATION FOR SECRETARY OF HEALTH AND HUMAN SERVICES TO 
              WAIVE DENIAL OF PRESCRIPTION DRUG COVERAGE.

    (a) In General.--Section 1860D-4(h) of the Social Security Act (42 
U.S.C. 1395w-104(h)) is amended at the end by adding the following new 
paragraph:
    ``(4) Authorization for Secretary to Waive Denial of Prescription 
Drug Coverage.--After a part D eligible individual has exhausted all 
rights of such individual under this subsection and subsection (g), 
with respect to a determination made under this subsection or 
subsection (g) for a prescription drug plan not to provide for coverage 
of a covered part D drug (or a determination related to the application 
of tiered cost-sharing described in subsection (g)(2)), the individual 
may apply to the Secretary for a waiver that requires the prescription 
drug plan to provide for such coverage (or provide for an exception to 
the structure of such tiered cost-sharing). Upon receipt of such 
application, the Secretary may grant such waiver if the prescribing 
physician certifies that the coverage of such prescription drug is 
medically necessary with respect to the individual.''.
    (b) Effective Date.--The amendment made by subsection (a) shall be 
effective as if included in the enactment of Medicare Prescription 
Drug, Improvement, and Modernization Act of 2003 (Public Law 108-173).

SEC. 6. HOLDING PHARMACIES HARMLESS FOR CERTAIN COSTS INCURRED DURING 
              IMPLEMENTATION OF MEDICARE PART D.

    (a) In General.--The Secretary of Health and Human Services shall 
provide for such payments to pharmacies as may be necessary to 
reimburse pharmacies fully for--
            (1) transaction fees associated with any point-of-sale 
        facilitated identification and enrollment process established 
        by the Secretary to facilitate, at point of sale, the 
        identification of drug plan assignment of full-benefit dual 
        eligible individuals (as defined in section 1935(c)(6) of the 
        Social Security Act (42 U.S.C. 1396u-5(c)(6)) or the enrollment 
        of previously unidentified or new full-benefit dual eligible 
        individuals into Medicare prescription drug coverage under part 
        D of title XVIII of the Social Security Act;
            (2) costs associated with technology or software upgrades 
        necessary to make any identification and enrollment inquiries 
        as part of a process described in paragraph (1); and
            (3) costs of providing prescription drugs and biological 
        products to part D eligible individuals (as defined in section 
        1860D-1(a)(3)(A) of such Act (42 U.S.C. 1395w-101(a)(3)(A)) 
        whose prescription drug plans could not be identified, if the 
        pharmacy involved was not reimbursed for such costs upon 
        completion of plan reconciliation.
    (b) Time.--Payments under subsection (a) shall be made with respect 
to fees and costs incurred during the period beginning on December 1, 
2005, and ending on June 1, 2006.
    (c) Payments From Account.--Payments under subsection (a) shall be 
made from the Medicare Prescription Drug Account under section 1860D-16 
of the Social Security Act (42 U.S.C. 1395w-116) and shall be deemed to 
be payments from such Account under subsection (b) of such section.

Summary: Amends part D of title XVIII (Medicare) of the Social Security Act (SSA) to provide for continuity of coverage of prescription drugs under Medicare prescription drug plans for full-benefit dual eligible individuals. Provides for Medicare prescription drug coverage of benzodiazepines and of off-label uses of prescription drugs and biologicals. Amends SSA title XIX (Medicaid) to permit state Medicaid programs to cover Medicare prescription drug copayments for full-benefit dual eligible individuals. Amends SSA title XVIII to authorize the Secretary of Health and Human Services to waive denial of Medicare prescription drug coverage. Directs the Secretary to provide for payments from the Medicare Prescription Drug Account necessary to reimburse pharmacies fully for: (1) transaction fees associated with any point-of-sale facilitated identification and enrollment process established to facilitate, at point of sale, the identification of drug plan assignment of full-benefit dual eligible individuals or the enrollment of previously unidentified or new full-benefit dual eligible individuals into Medicare prescription drug coverage. (2) costs associated with technology or software upgrades necessary to make any inquiries as part of a identification and enrollment process. And (3) costs of providing prescription drugs and biological products to part D eligible individuals whose prescription drug plans could not be identified, if the pharmacy involved as not reimbursed for such costs upon completion of plan reconciliation.