II 

116TH CONGRESS 

1ST SESSION S. 99 

To amend title XVIII of the Social Security Act to provide for the negotiation 

of lower covered part D drug prices on behalf of Medicare beneficiaries 

and the establishment and application of a formulary by the Secretary 

of Health and Human Services under Medicare part D, and for other 

purposes. 

IN THE SENATE OF THE UNITED STATES 

JANUARY 10, 2019 

Mr. SANDERS (for himself, Mr. BOOKER, Mrs. GILLIBRAND, Ms. HARRIS, Mr. 

LEAHY, Mr. REED, Ms. SMITH, and Ms. WARREN) introduced the following bill; which was read twice and referred to the Committee on Finance 

A BILL 

To amend title XVIII of the Social Security Act to provide 

for the negotiation of lower covered part D drug prices 

on behalf of Medicare beneficiaries and the establishment 

and application of a formulary by the Secretary of 

Health and Human Services under Medicare part D, 

and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Medicare Drug Price 

5 Negotiation Act’’. 


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1 SEC. 2. NEGOTIATION OF LOWER COVERED PART D DRUG 

2 PRICES ON BEHALF OF MEDICARE BENE3 FICIARIES; ESTABLISHMENT AND APPLICA4 TION OF FORMULARY BY THE SECRETARY OF 

5 HEALTH AND HUMAN SERVICES UNDER 

6 MEDICARE PART D. 

7 (a) IN GENERAL.—Section 1860D–11 of the Social 

8 Security Act (42 U.S.C. 1395w–111) is amended by strik9 ing subsection (i) (relating to noninterference) and insert10 ing the following: 

11 ‘‘(i) NEGOTIATION OF LOWER DRUG PRICES; ESTAB12 LISHMENT AND APPLICATION OF FORMULARY.— 

13 ‘‘(1) NEGOTIATION.— 

14 ‘‘(A) IN GENERAL.—Notwithstanding any 

15 other provision of law, subject to subparagraph 

16 (B), the Secretary shall, with respect to an ap17 plicable period (as defined in subparagraph 

18 (H))— 

19 ‘‘(i) during the negotiation year (as 

20 defined in such subparagraph) for such pe21 riod, negotiate with pharmaceutical manu22 facturers the prices (including discounts, 

23 rebates, and all other price concessions) 

24 that may be charged to PDP sponsors and 

25 MA organizations for applicable covered 

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1 graph) furnished to enrollees during such 

2 period; and 

3 ‘‘(ii) complete such negotiations not 

4 less than 30 days before the first day of 

5 the application review process for the first 

6 plan year during the applicable period for 

7 new contracts or expanding existing con8 tracts with PDP sponsors and MA organi9 zations to offer prescription drug plans or 

10 MA–PD plans, respectively. 

11 ‘‘(B) USE OF FALLBACK IF NEGOTIATIONS

12 FAIL.— 

13 ‘‘(i) IN GENERAL.—If, after negotia14 tions under subparagraph (A) with respect 

15 to an applicable period, the Secretary is 

16 not successful in obtaining an appropriate 

17 price for applicable covered part D drugs 

18 in accordance with clause (ii), the price 

19 that may be charged to PDP sponsors and 

20 MA organizations for applicable covered 

21 part D drugs furnished to enrollees during 

22 such period shall be the lowest of the fol23 lowing: 

24 ‘‘(I) The contract price applied 

25 pursuant to section 8126 of title 38, 


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1 United States Code, for such drug for 

2 the contract year (as defined in such 

3 section 8126). 

4 ‘‘(II) The average of the prices 

5 available, during the most recent 12- 

6 month period for which data is avail7 able from the manufacturer to any 

8 wholesaler, retailer, provider, health 

9 maintenance organization, nonprofit 

10 entity, or governmental entity in Can11 ada, the United Kingdom, Germany, 

12 France, and Japan. 

13 ‘‘(III) The best price determined 

14 under section 1927(c)(1)(C) for such 

15 drug for the most recent rebate period 

16 (as defined in section 1927(k)(8)) ap17 plicable to such first plan year of the 

18 applicable period. 

19 ‘‘(ii) GUIDANCE.—Not later than 6 

20 months before the Secretary begins nego21 tiations under subparagraph (A) with re22 spect to the first applicable period, the 

23 Secretary shall issue guidance on criteria 

24 to be considered for purposes of deter25 mining under clause (i) whether or not the 


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1 Secretary is successful in obtaining an ap2 propriate price for an applicable covered 

3 part D drug. Such criteria shall include at 

4 least the following: 

5 ‘‘(I) The comparative clinical ef6 fectiveness and cost effectiveness, if 

7 available, of such covered part D 

8 drug. 

9 ‘‘(II) The budgetary impact of 

10 providing coverage under this part for 

11 such covered part D drug. 

12 ‘‘(III) The number of similarly 

13 effective drug or alternative treatment 

14 regimens for each approved use of 

15 such covered part D drug. 

16 ‘‘(IV) Associated unmet need or 

17 severity of illness. 

18 ‘‘(C) IDENTIFICATION OF APPLICABLE

19 COVERED PART D DRUGS.— 

20 ‘‘(i) IN GENERAL.—The Secretary 

21 shall, for each applicable period, in accord22 ance with the subsequent clauses of this 

23 subparagraph, and pursuant to rule24 making, identify applicable covered part D 

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1 paragraph (A) shall be conducted during 

2 the negotiation year for such period. In 

3 this paragraph, all such covered part D 

4 drugs so identified for an applicable period 

5 are collectively referred to as applicable 

6 covered part D drugs with respect to such 

7 period. 

8 ‘‘(ii) IDENTIFICATION OF PRIORITIZED

9 DRUGS.—In carrying out clause (i), except 

10 as provided under clause (iii), the Sec11 retary may not identify a covered part D 

12 drug that is not a drug prioritized pursu13 ant to subparagraph (D) as an applicable 

14 covered part D drug until all covered part 

15 D drugs that are so prioritized have been 

16 identified as an applicable covered part D 

17 drug for the applicable period or for a pre18 vious applicable period for which the nego19 tiated price of such drug has not expired. 

20 ‘‘(iii) DRUG INCLUSIONS FOR PRICE

21 RENEGOTIATIONS.—In the case of a cov22 ered part D drug that is identified as an 

23 applicable covered part D drug for an ap24 plicable period, such covered part D drug 

25 shall be identified as an applicable covered 


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1 part D drug for each subsequent third ne2 gotiation year. 

3 ‘‘(iv) REASONABLE NOTIFICATION.— 

4 The Secretary shall carry out this subpara5 graph in such manner as to provide for 

6 public notification of applicable covered 

7 part D drugs for the applicable period 

8 within a reasonable period before the be9 ginning of the negotiation year for such 

10 period. 

11 ‘‘(D) PRIORITIZATION OF CERTAIN COV12 ERED PART D DRUGS.—For purposes of sub13 paragraph (C)(ii), the Secretary shall prioritize 

14 covered part D drugs— 

15 ‘‘(i) that are among— 

16 ‘‘(I) the 40 covered part D drugs 

17 that are utilized by at least 1,000 

18 Medicare part D beneficiaries and 

19 with respect to which there were the 

20 highest total expenditures under this 

21 part during the most recent 12-month 

22 period for which data is available; 

23 ‘‘(II) the 40 covered part D 

24 drugs that are utilized by at least 

25 1,000 Medicare part D beneficiaries 


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1 with respect to whom the total annual 

2 spending per such a beneficiary under 

3 this part for coverage of such a drug 

4 is at least $10,000; or 

5 ‘‘(III) the 20 covered part D 

6 drugs that are utilized by at least 

7 1,000 Medicare part D beneficiaries 

8 and with respect to which there are 

9 unit cost increases at or above the 

10 95th percentile of overall covered part 

11 D drug unit cost increases during the 

12 most recent 12-month period prior to 

13 the beginning of such negotiation year 

14 for which data is available; 

15 ‘‘(ii) with respect to which the cost of 

16 such a drug to the part D eligible indi17 vidual involved would exceed the annual 

18 out-of-pocket threshold applicable under 

19 section 1860D–2(b)(4)(B) for such nego20 tiation year, if the drug were prescribed to 

21 the individual for the period of the year or 

22 with respect to which a single treatment 

23 regimen is priced above such annual out24 of-pocket threshold applicable under such 

25 section 1860D–2(b)(4)(B) for the year; or 


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1 ‘‘(iii) that are single-source drugs or 

2 biologicals (as defined in section 

3 1847A(c)(6)(D)) and that satisfy at least 

4 one other criterion described in a previous 

5 clause of this subparagraph. 

6 ‘‘(E) ANNUAL REPORT TO CONGRESS.— 

7 Not later than 30 days after the date on which 

8 the Secretary completes negotiations under this 

9 paragraph for the first negotiation year and 

10 each year thereafter, the Secretary shall submit 

11 to Congress and make available to the public a 

12 report describing the negotiations during the 

13 preceding negotiation year, including— 

14 ‘‘(i) the number of applicable covered 

15 part D drug prices negotiated; 

16 ‘‘(ii) the magnitude of savings 

17 achieved as a result of such negotiations; 

18 ‘‘(iii) the number of times price nego19 tiations failed (based on the criteria in20 cluded in the guidance issued pursuant to 

21 clause (ii) of subparagraph (B)) and re22 sulted in the use of fallback prices under 

23 clause (i) of such subparagraph, and the 

24 rationale for any such decisions; 


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1 ‘‘(iv) the progress made toward nego2 tiating the prices of covered part D drugs 

3 that are prioritized under subparagraph 

4 (D); and 

5 ‘‘(v) the barriers, if any, to achieving 

6 savings through negotiations. 

7 ‘‘(F) GAO REPORT.—Not later than De8 cember 31, 2024, the Comptroller General of 

9 the United States shall submit to Congress a 

10 report on the negotiations conducted by the 

11 Secretary under this paragraph, including a de12 scription and analysis of— 

13 ‘‘(i) the extent to which such price ne14 gotiations are achieving lower prices for 

15 covered part D drugs for enrollees; 

16 ‘‘(ii) the parties benefitting from such 

17 lower prices, such as enrollees, the Federal 

18 Government, States, prescription drug 

19 plans and MA–PD plans, or other entities; 

20 ‘‘(iii) how such price negotiations are 

21 affecting— 

22 ‘‘(I) the list price of covered part 

23 D drugs; and 

24 ‘‘(II) drug prices in the private 

25 market; and 


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1 ‘‘(iv) recommendations for improving 

2 price negotiations, if applicable. 

3 ‘‘(G) DEFINITIONS.—For purposes of this 

4 paragraph: 

5 ‘‘(i) APPLICABLE COVERED PART D

6 DRUGS.—The term ‘applicable covered part 

7 D drugs’ means, for an applicable period, 

8 covered part D drugs identified by the Sec9 retary under subparagraph (C) for such 

10 period. 

11 ‘‘(ii) APPLICABLE PERIOD.—The term 

12 ‘applicable period’ means, with respect to a 

13 negotiation year and applicable covered 

14 part D drugs, the 3-plan year period be15 ginning with the first plan year beginning 

16 after the negotiation year for such covered 

17 part D drugs. 

18 ‘‘(iii) NEGOTIATION YEAR.—The term 

19 ‘negotiation year’ means, with respect to 

20 an applicable period, a plan year, begin21 ning with 2020, prior to the first plan year 

22 of the applicable period. 

23 ‘‘(2) ESTABLISHMENT AND APPLICATION OF

24 FORMULARY BY THE SECRETARY OR CHANGES IN

25 FORMULARIES TO BE REQUIRED BY SECRETARY.— 


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1 ‘‘(A) IN GENERAL.—The Secretary shall, 

2 for plan years beginning with plan year 2020— 

3 ‘‘(i) subject to subparagraphs (B) and 

4 (C), establish and apply a formulary for 

5 required use by sponsors of prescription 

6 drug plans and organizations offering MA– 

7 PD plans under this part; or 

8 ‘‘(ii) require changes, as necessary, in 

9 the covered part D drugs included on 

10 formularies of PDP sponsors of prescrip11 tion drug plans (including changes, as nec12 essary, in the preferred or tiered cost-shar13 ing status of such a drug) to take into ac14 count negotiations carried out by the Sec15 retary pursuant to paragraph (1), regard16 less of whether such a covered part D drug 

17 is the subject of such negotiations. 

18 ‘‘(B) REQUIRED INCLUSION OF DRUGS IN

19 ALL THERAPEUTIC CATEGORIES.—A formulary 

20 established and applied under subparagraph 

21 (A)(i) shall include at least two covered part D 

22 drugs in each category and class of covered part 

23 D drugs as described in section 

24 423.120(b)(2)(i) of title 42, Code of Federal 

25 Regulations (as in effect on January 1, 2017). 


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1 ‘‘(C) APPLICATION OF DEVELOPMENT AND

2 REVISION REQUIREMENTS AND REQUIRED IN3 CLUSION OF ALL DRUGS IN CERTAIN CAT4 EGORIES AND CLASSES.—The requirements de5 scribed in subparagraphs (A) and (B) of section 

6 1860D–4(b)(3) (relating to development and re7 vision requirements of the formulary) and sub8 paragraph (G) of such section (relating to re9 quired inclusion of all drugs in certain cat10 egories and classes) shall apply to a formulary 

11 established and applied under subparagraph 

12 (A)(i) of this paragraph. 

13 ‘‘(3) PLAN FLEXIBILITY TO NEGOTIATE GREAT14 ER DISCOUNTS.—Nothing in this subsection shall be 

15 construed as preventing the sponsor of a prescrip16 tion drug plan, or an organization offering an MA– 

17 PD plan, from obtaining a discount or reduction of 

18 the price for a covered part D drug below the price 

19 negotiated under paragraph (1), if applicable, in20 cluding through the use of preferred or tiered cost21 sharing status. 

22 ‘‘(4) ENSURING BENEFICIARY ACCESS TO

23 NEEDED DRUGS.—Beginning with plan year 2020, 

24 each PDP sponsor of a prescription drug plan and 

25 organization offering an MA–PD plan shall have in 


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1 place a process under which an enrollee in the plan 

2 may request coverage under the plan for a covered 

3 part D drug that is not on the formulary, or is sub4 ject to utilization management controls, such as 

5 tiered pricing, prior authorization, or step therapy.’’. 

6 (b) CONFORMING AMENDMENTS.— 

7 (1) IN GENERAL.—Section 1860D–4 of the So8 cial Security Act (42 U.S.C. 1395w–104) is amend9 ed— 

10 (A) in subsection (b)(3), in the matter pre11 ceding subparagraph (A), by striking ‘‘If a 

12 PDP’’ and inserting ‘‘Subject to section 

13 1860D–11(i)(2), if a PDP’’; 

14 (B) in subsection (g)— 

15 (i) in paragraph (1), by inserting be16 fore the period at the end the following: ‘‘, 

17 except that the PDP sponsor of a prescrip18 tion drug plan shall treat the presentation 

19 of a prescription to a participating phar20 macy, which is transmitted to the plan by 

21 the pharmacy, as a request for a coverage 

22 determination (including with respect to 

23 prior authorization, step therapy, or quan24 tity limits) and, in applying such para25 graphs of section 1852(g), the response to 


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1 such transmittal shall be treated as a de2 termination by the sponsor’’; and 

3 (ii) in paragraph (2), in the first sen4 tence, by inserting ‘‘(or a participating 

5 pharmacy, on behalf of such individual, 

6 through transmission of a prescription as 

7 described in paragraph (1))’’ after ‘‘a part 

8 D eligible individual who is enrolled in the 

9 plan’’; and 

10 (C) in subsection (h)— 

11 (i) in paragraph (1), in the second 

12 sentence, by inserting ‘‘(or a participating 

13 pharmacy, on behalf of such individual)’’ 

14 after ‘‘the part D eligible individual’’; and 

15 (ii) in paragraph (2), by inserting 

16 ‘‘(or a participating pharmacy, on behalf of 

17 such individual)’’ after ‘‘A part D eligible 

18 individual who is enrolled in a prescription 

19 drug plan offered by a PDP sponsor’’. 

20 (2) EFFECTIVE DATE.—The amendments made 

21 by subparagraphs (B) and (C) of paragraph (1) 

22 shall apply to plans years beginning on or after Jan23 uary 1, 2020. 


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1 SEC. 3. REQUIRING DRUG MANUFACTURERS TO PROVIDE 

2 DRUG REBATES FOR DRUGS DISPENSED TO 

3 LOW-INCOME INDIVIDUALS. 

4 (a) IN GENERAL.—Section 1860D–2 of the Social 

5 Security Act (42 U.S.C. 1395w–102) is amended— 

6 (1) in subsection (e)(1), in the matter preceding 

7 subparagraph (A), by inserting ‘‘and subsection (f)’’ 

8 after ‘‘this subsection’’; and 

9 (2) by adding at the end the following new sub10 section: 

11 ‘‘(f) PRESCRIPTION DRUG REBATE AGREEMENT FOR

12 REBATE ELIGIBLE INDIVIDUALS.— 

13 ‘‘(1) REQUIREMENT.— 

14 ‘‘(A) IN GENERAL.—For plan years begin15 ning on or after January 1, 2020, in this part, 

16 the term ‘covered part D drug’ does not include 

17 any drug or biological product that is manufac18 tured by a manufacturer that has not entered 

19 into and have in effect a rebate agreement de20 scribed in paragraph (2). 

21 ‘‘(B) 2020 PLAN YEAR REQUIREMENT.— 

22 Any drug or biological product manufactured by 

23 a manufacturer that declines to enter into a re24 bate agreement described in paragraph (2) for 

25 the period beginning on January 1, 2020, and 

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1 cluded as a ‘covered part D drug’ for the subse2 quent plan year. 

3 ‘‘(2) REBATE AGREEMENT.—A rebate agree4 ment under this subsection shall require the manu5 facturer to provide to the Secretary a rebate for 

6 each rebate period (as defined in paragraph (6)(B)) 

7 ending after December 31, 2019, in the amount 

8 specified in paragraph (3) for any covered part D 

9 drug of the manufacturer dispensed after December 

10 31, 2019, to any rebate eligible individual (as de11 fined in paragraph (6)(A)) for which payment was 

12 made by a PDP sponsor or MA organization under 

13 this part for such period, including payments passed 

14 through the low-income and reinsurance subsidies 

15 under sections 1860D–14 and 1860D–15(b), respec16 tively. Such rebate shall be paid by the manufac17 turer to the Secretary not later than 30 days after 

18 the date of receipt of the information described in 

19 section 1860D–12(b)(8), including as such section is 

20 applied under section 1857(f)(3), or 30 days after 

21 the receipt of information under subparagraph (D) 

22 of paragraph (3), as determined by the Secretary. 

23 Insofar as not inconsistent with this subsection, the 

24 Secretary shall establish terms and conditions of 

25 such agreement relating to compliance, penalties, 


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1 and program evaluations, investigations, and audits 

2 that are similar to the terms and conditions for re3 bate agreements under paragraphs (3) and (4) of 

4 section 1927(b). 

5 ‘‘(3) REBATE FOR REBATE ELIGIBLE MEDICARE

6 DRUG PLAN ENROLLEES.— 

7 ‘‘(A) IN GENERAL.—The amount of the re8 bate specified under this paragraph for a manu9 facturer for a rebate period, with respect to 

10 each dosage form and strength of any covered 

11 part D drug provided by such manufacturer 

12 and dispensed to a rebate eligible individual, 

13 shall be equal to the product of— 

14 ‘‘(i) the total number of units of such 

15 dosage form and strength of the drug so 

16 provided and dispensed for which payment 

17 was made by a PDP sponsor or an MA or18 ganization under this part for the rebate 

19 period, including payments passed through 

20 the low-income and reinsurance subsidies 

21 under sections 1860D–14 and 1860D– 

22 15(b), respectively; and 

23 ‘‘(ii) the amount (if any) by which— 

24 ‘‘(I) the Medicaid rebate amount 

25 (as defined in subparagraph (B)) for 


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1 such form, strength, and period, ex2 ceeds 

3 ‘‘(II) the average Medicare drug 

4 program rebate eligible rebate amount 

5 (as defined in subparagraph (C)) for 

6 such form, strength, and period. 

7 ‘‘(B) MEDICAID REBATE AMOUNT.—For 

8 purposes of this paragraph, the term ‘Medicaid 

9 rebate amount’ means, with respect to each 

10 dosage form and strength of a covered part D 

11 drug provided by the manufacturer for a rebate 

12 period— 

13 ‘‘(i) in the case of a single source 

14 drug or an innovator multiple source drug, 

15 the amount specified in paragraph 

16 (1)(A)(ii)(II) or (2)(C) of section 1927(c) 

17 plus the amount, if any, specified in sub18 paragraph (A)(ii) of paragraph (2) of such 

19 section, for such form, strength, and pe20 riod; or 

21 ‘‘(ii) in the case of any other covered 

22 outpatient drug, the amount specified in 

23 paragraph (3)(A)(i) of such section for 

24 such form, strength, and period. 


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1 ‘‘(C) AVERAGE MEDICARE DRUG PROGRAM

2 REBATE ELIGIBLE REBATE AMOUNT.—For pur3 poses of this subsection, the term ‘average 

4 Medicare drug program rebate eligible rebate 

5 amount’ means, with respect to each dosage 

6 form and strength of a covered part D drug 

7 provided by a manufacturer for a rebate period, 

8 the sum, for all PDP sponsors under part D 

9 and MA organizations administering an MA– 

10 PD plan under part C, of— 

11 ‘‘(i) the product, for each such spon12 sor or organization, of— 

13 ‘‘(I) the sum of all rebates, dis14 counts, or other price concessions (not 

15 taking into account any rebate pro16 vided under paragraph (2) or any dis17 counts under the program under sec18 tion 1860D–14A) for such dosage 

19 form and strength of the drug dis20 pensed, calculated on a per-unit basis, 

21 but only to the extent that any such 

22 rebate, discount, or other price con23 cession applies equally to drugs dis24 pensed to rebate eligible Medicare 

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1 pensed to PDP and MA–PD enrollees 

2 who are not rebate eligible individuals; 

3 and 

4 ‘‘(II) the number of the units of 

5 such dosage and strength of the drug 

6 dispensed during the rebate period to 

7 rebate eligible individuals enrolled in 

8 the prescription drug plans adminis9 tered by the PDP sponsor or the MA– 

10 PD plans administered by the MA or11 ganization; divided by 

12 ‘‘(ii) the total number of units of such 

13 dosage and strength of the drug dispensed 

14 during the rebate period to rebate eligible 

15 individuals enrolled in all prescription drug 

16 plans administered by PDP sponsors and 

17 all MA–PD plans administered by MA or18 ganizations. 

19 ‘‘(D) USE OF ESTIMATES.—The Secretary 

20 may establish a methodology for estimating the 

21 average Medicare drug program rebate eligible 

22 rebate amounts for each rebate period based on 

23 bid and utilization information under this part 

24 and may use these estimates as the basis for 

25 determining the rebates under this section. If 


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1 the Secretary elects to estimate the average 

2 Medicare drug program rebate eligible rebate 

3 amounts, the Secretary shall establish a rec4 onciliation process for adjusting manufacturer 

5 rebate payments not later than 3 months after 

6 the date that manufacturers receive the infor7 mation collected under section 1860D– 

8 12(b)(8)(B). 

9 ‘‘(4) LENGTH OF AGREEMENT.—The provisions 

10 of paragraph (4) of section 1927(b) (other than 

11 clauses (iv) and (v) of subparagraph (B)) shall apply 

12 to rebate agreements under this subsection in the 

13 same manner as such paragraph applies to a rebate 

14 agreement under such section. 

15 ‘‘(5) OTHER TERMS AND CONDITIONS.—The 

16 Secretary shall establish other terms and conditions 

17 of the rebate agreement under this subsection, in18 cluding terms and conditions related to compliance, 

19 that are consistent with this subsection. 

20 ‘‘(6) DEFINITIONS.—In this subsection and sec21 tion 1860D–12(b)(8): 

22 ‘‘(A) REBATE ELIGIBLE INDIVIDUAL.—The 

23 term ‘rebate eligible individual’ means— 

24 ‘‘(i) a subsidy eligible individual (as 

25 defined in section 1860D–14(a)(3)(A)); 


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1 ‘‘(ii) a Medicaid beneficiary treated as 

2 a subsidy eligible individual under clause 

3 (v) of section 1860D–14(a)(3)(B); and 

4 ‘‘(iii) any part D eligible individual 

5 not described in clause (i) or (ii) who is de6 termined for purposes of the State plan 

7 under title XIX to be eligible for medical 

8 assistance under clause (i), (iii), or (iv) of 

9 section 1902(a)(10)(E). 

10 ‘‘(B) REBATE PERIOD.—The term ‘rebate 

11 period’ has the meaning given such term in sec12 tion 1927(k)(8).’’. 

13 (b) REPORTING REQUIREMENT FOR THE DETER14 MINATION AND PAYMENT OF REBATES BY MANUFACTUR15 ERS RELATED TO REBATE FOR REBATE ELIGIBLE MEDI16 CARE DRUG PLAN ENROLLEES.— 

17 (1) REQUIREMENTS FOR PDP SPONSORS.—Sec18 tion 1860D–12(b) of the Social Security Act (42 

19 U.S.C. 1395w–112(b)) is amended by adding at the 

20 end the following new paragraph: 

21 ‘‘(8) REPORTING REQUIREMENT FOR THE DE22 TERMINATION AND PAYMENT OF REBATES BY MANU23 FACTURERS RELATED TO REBATE FOR REBATE ELI24 GIBLE MEDICARE DRUG PLAN ENROLLEES.— 


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1 ‘‘(A) IN GENERAL.—For purposes of the 

2 rebate under section 1860D–2(f) for contract 

3 years beginning on or after January 1, 2020, 

4 each contract entered into with a PDP sponsor 

5 under this part with respect to a prescription 

6 drug plan shall require that the sponsor comply 

7 with subparagraphs (B) and (C). 

8 ‘‘(B) REPORT FORM AND CONTENTS.—Not 

9 later than a date specified by the Secretary, a 

10 PDP sponsor of a prescription drug plan under 

11 this part shall report to each manufacturer— 

12 ‘‘(i) information (by National Drug 

13 Code number) on the total number of units 

14 of each dosage, form, and strength of each 

15 drug of such manufacturer dispensed to re16 bate eligible Medicare drug plan enrollees 

17 under any prescription drug plan operated 

18 by the PDP sponsor during the rebate pe19 riod; 

20 ‘‘(ii) information on the price dis21 counts, price concessions, and rebates for 

22 such drugs for such form, strength, and 

23 period; 

24 ‘‘(iii) information on the extent to 

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1 sions, and rebates apply equally to rebate 

2 eligible Medicare drug plan enrollees and 

3 PDP enrollees who are not rebate eligible 

4 Medicare drug plan enrollees; and 

5 ‘‘(iv) any additional information that 

6 the Secretary determines is necessary to 

7 enable the Secretary to calculate the aver8 age Medicare drug program rebate eligible 

9 rebate amount (as defined in paragraph 

10 (3)(C) of such section), and to determine 

11 the amount of the rebate required under 

12 this section, for such form, strength, and 

13 period. 

14 Such report shall be in a form consistent with 

15 a standard reporting format established by the 

16 Secretary. 

17 ‘‘(C) SUBMISSION TO SECRETARY.—Each 

18 PDP sponsor shall promptly transmit a copy of 

19 the information reported under subparagraph 

20 (B) to the Secretary for the purpose of audit 

21 oversight and evaluation. 

22 ‘‘(D) CONFIDENTIALITY OF INFORMA23 TION.—The provisions of subparagraph (D) of 

24 section 1927(b)(3), relating to confidentiality of 

25 information, shall apply to information reported 


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1 by PDP sponsors under this paragraph in the 

2 same manner that such provisions apply to in3 formation disclosed by manufacturers or whole4 salers under such section, except— 

5 ‘‘(i) that any reference to ‘this sec6 tion’ in clause (i) of such subparagraph 

7 shall be treated as being a reference to this 

8 section; 

9 ‘‘(ii) the reference to the Director of 

10 the Congressional Budget Office in clause 

11 (iii) of such subparagraph shall be treated 

12 as including a reference to the Medicare 

13 Payment Advisory Commission; and 

14 ‘‘(iii) clause (iv) of such subparagraph 

15 shall not apply. 

16 ‘‘(E) OVERSIGHT.—Information reported 

17 under this paragraph may be used by the In18 spector General of the Department of Health 

19 and Human Services for the statutorily author20 ized purposes of audit, investigation, and eval21 uations. 

22 ‘‘(F) PENALTIES FOR FAILURE TO PRO23 VIDE TIMELY INFORMATION AND PROVISION OF

24 FALSE INFORMATION.—In the case of a PDP 

25 sponsor— 


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1 ‘‘(i) that fails to provide information 

2 required under subparagraph (B) on a 

3 timely basis, the sponsor is subject to a 

4 civil money penalty in the amount of 

5 $10,000 for each day in which such infor6 mation has not been provided; or 

7 ‘‘(ii) that knowingly (as defined in 

8 section 1128A(i)) provides false informa9 tion under such subparagraph, the sponsor 

10 is subject to a civil money penalty in an 

11 amount not to exceed $100,000 for each 

12 item of false information. 

13 Such civil money penalties are in addition to 

14 other penalties as may be prescribed by law. 

15 The provisions of section 1128A (other than 

16 subsections (a) and (b)) shall apply to a civil 

17 money penalty under this subparagraph in the 

18 same manner as such provisions apply to a pen19 alty or proceeding under section 1128A(a).’’. 

20 (2) APPLICATION TO MA ORGANIZATIONS.—Sec21 tion 1857(f)(3) of the Social Security Act (42 

22 U.S.C. 1395w–27(f)(3)) is amended by adding at 

23 the end the following: 

24 ‘‘(E) REPORTING REQUIREMENT RELATED

25 TO REBATE FOR REBATE ELIGIBLE MEDICARE


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1 DRUG PLAN ENROLLEES.—Section 1860D– 

2 12(b)(8).’’. 

3 (c) DEPOSIT OF REBATES INTO MEDICARE PRE4 SCRIPTION DRUG ACCOUNT.—Section 1860D–16(c) of the 

5 Social Security Act (42 U.S.C. 1395w–116(c)) is amended 

6 by adding at the end the following new paragraph: 

7 ‘‘(6) REBATE FOR REBATE ELIGIBLE MEDICARE

8 DRUG PLAN ENROLLEES.—Amounts paid under a re9 bate agreement under section 1860D–2(f) shall be 

10 deposited into the Account.’’. 

11 (d) EXCLUSION FROM DETERMINATION OF BEST

12 PRICE AND AVERAGE MANUFACTURER PRICE UNDER

13 MEDICAID.— 

14 (1) EXCLUSION FROM BEST PRICE DETERMINA15 TION.—Section 1927(c)(1)(C)(ii)(I) of the Social Se16 curity Act (42 U.S.C. 1396r–8(c)(1)(C)(ii)(I)) is 

17 amended by inserting ‘‘and amounts paid under a 

18 rebate agreement under section 1860D–2(f)’’ after 

19 ‘‘this section’’. 

20 (2) EXCLUSION FROM AVERAGE MANUFAC21 TURER PRICE DETERMINATION.—Section 

22 1927(k)(1)(B)(i) of the Social Security Act (42 

23 U.S.C. 1396r–8(k)(1)(B)(i)) is amended— 

24 (A) in subclause (IV), by striking ‘‘and’’ 

25 after the semicolon; 


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1 (B) in subclause (V), by striking the period 

2 at the end and inserting ‘‘; and’’; and 

3 (C) by adding at the end the following: 

4 ‘‘(VI) amounts paid under a re5 bate agreement under section 1860D– 

6 2(f).’’. 

Æ 


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