A bill to amend title XVIII of the Social Security Act to deliver a meaningful benefit and lower prescription drug prices under the medicare program.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medicare Prescription Drug Savings 
Act of 2003''.

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

    (a) In General.--Subpart 2 of part D of the Social Security Act, as 
added by section 101 of the Medicare Prescription Drug, Improvement, 
and Modernization Act of 2003, is amended by inserting after section 
1860D-11 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 2006), in 
addition to any plans offered under section 1860D-11, the Secretary 
shall offer a medicare operated prescription drug plan (as defined in 
subsection (c)) with a service area that consists of the entire United 
States and shall enter into negotiations with pharmaceutical 
manufacturers to reduce the purchase cost of covered part D drugs for 
eligible part D individuals in accordance with subsection (b).
    ``(b) Negotiations.--Notwithstanding section 1860D-11(i), for 
purposes of offering a medicare operated prescription drug plan under 
this section, the Secretary shall negotiate with pharmaceutical 
manufacturers with respect to the purchase price of 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. To the extent 
practicable and consistent with the previous sentence, the Secretary 
shall implement strategies similar to those used by other Federal 
purchasers of prescription drugs, and other strategies, to reduce the 
purchase cost of covered part D drugs.
    ``(c) Medicare Operated Prescription Drug Plan Defined.--For 
purposes of this part, the term `medicare operated prescription drug 
plan' means a prescription drug plan that only offers the standard 
prescription drug coverage and access to negotiated prices described in 
section 1860D-2(a)(1)(A) and does not include any supplemental 
prescription drug coverage.
    ``(d) Monthly Beneficiary Premium.--The monthly beneficiary premium 
to be charged under a medicare operated prescription drug plan shall be 
uniform nationally and shall be determined by the Secretary related to 
the Secretary's estimate of the average monthly per capita actuarial 
cost, including administrative expenses, under the medicare operated 
prescription drug plan of providing coverage in the region, as 
calculated by the Chief Actuary of the Centers for Medicare & Medicaid 
Services. In calculating such administrative expenses, the Chief 
Actuary shall use a factor that is based on similar expenses of 
prescription drug plans that are not medicare operated prescription 
drug plans.''.
    (b) Conforming Amendments.--
            (1) Section 1860D-3(a) of the Social Security Act, as added 
        by section 101 of the Medicare Prescription Drug, Improvement, 
        and Modernization Act of 2003, is amended by adding at the end 
        the following new paragraph:
            ``(4) Availability of the medicare operated prescription 
        drug plan.--
                    ``(A) In general.--A medicare operated prescription 
                drug plan (as defined in section 1860D-11A(c)) shall be 
                offered nationally in accordance with section 1860D-
                11A.
                    ``(B) Relationship to other plans.--
                            ``(i) In general.--Subject to clause (ii), 
                        a 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 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.''.
            (2) Section 1860D-13(c)(3) of such Act, as added by such 
        section, is amended--
                    (A) in the heading, by inserting ``and medicare 
                operated prescription drug plans'' after ``Fallback 
                plans''; and
                    (B) by inserting ``or a medicare operated 
                prescription drug plan'' after ``a fallback 
                prescription drug plan''.
            (3) Section 1860D-16(b)(1) of such Act, as added by such 
        section, is amended--
                    (A) in subparagraph (C), by striking ``and'' after 
                the semicolon at the end;
                    (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 medicare operated prescription drug 
                plans under section 1860D-11A.''.
            (4) Section 1860D-41(a) of such Act, as added by such 
        section, 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(c).''.
    (c) Effective Date.--The amendments made by this section shall take 
effect as if included in the enactment of section 101 of the Medicare 
Prescription Drug, Improvement, and Modernization Act of 2003.

Summary: Medicare Prescription Drug Savings Act of 2003 - Amends part D of title XVIII (Medicare) of the Social Security Act, as added by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, to direct the Secretary of Health and Human Services, for each year beginning with 2006, to: (1) offer a Medicare operated prescription drug plan nationally that only offers standard prescription drug coverage and access to negotiated prices, but not any supplemental prescription drug coverage. And (2) enter into negotiations with pharmaceutical manufacturers to reduce the purchase cost of covered Medicare part D drugs for eligible part D individuals, and encourage use of more affordable therapeutic equivalents. Requires the monthly beneficiary premium charged under such a plan to be uniform nationally and determined by the Secretary.