I 

108TH CONGRESS 

1ST SESSION H. R. 1400

To provide for substantial reductions in the price of prescription drugs for 

Medicare beneficiaries. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 20, 2003

Mr. ALLEN (for himself, Mr. BROWN of Ohio, Mr. BERRY, Ms. SCHAKOWSKY, 

Mr. CONYERS, Ms. ROYBAL-ALLARD, Mr. STARK, Ms. CORRINE BROWN

of Florida, Mr. SERRANO, Mr. WAXMAN, Mr. KLECZKA, Mr. PALLONE, 

Mrs. MCCARTHY of New York, Ms. NORTON, Mr. KENNEDY of Rhode Island, Mr. HINCHEY, Mr. PASTOR, Mr. CASE, Ms. WOOLSEY, Mr. GREEN

of Texas, Mrs. MALONEY, Mr. OBERSTAR, Mr. FROST, Mr. WEXLER, Mr. 

SABO, Mr. NADLER, Mr. MCNULTY, Mr. MICHAUD, and Mr. KUCINICH) 

introduced the following bill; which was referred to the Committee on Energy and Commerce, and in addition to the Committee on Ways and 

Means, for a period to be subsequently determined by the Speaker, in 

each case for consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL

To provide for substantial reductions in the price of 

prescription drugs for Medicare beneficiaries.

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 ‘‘Prescription Drug 

5 Fairness for Seniors Act of 2003’’. 
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1 SEC. 2. FINDINGS AND PURPOSES. 

2 (a) FINDINGS.—The Congress finds the following: 

3 (1) Manufacturers of prescription drugs engage 

4 in price discrimination practices that compel many 

5 older Americans to pay substantially more for pre6 scription drugs than consumers in foreign nations 

7 and the drug manufacturers’ most favored U.S. cus8 tomers, such as health insurers, health maintenance 

9 organizations, and the Federal Government. 

10 (2) Older Americans who buy their own pre11 scription drugs often pay twice as much for prescrip12 tion drugs as consumers in foreign nations and the 

13 drug manufacturers’ most favored U.S. customers. 

14 In some cases, older Americans pay 10 times more 

15 for prescription drugs than such customers. 

16 (3) The discriminatory pricing by major drug 

17 manufacturers sustains their high profits (for exam18 ple, $27,300,000,000 in 1999), but causes financial 

19 hardship and impairs the health and well-being of 

20 millions of older Americans. Many older Americans 

21 are forced to choose between buying their food and 

22 buying their medicines. 

23 (4) Foreign nations and U.S. federally funded 

24 health care programs use purchasing power to ob25 tain prescription drugs at low prices. Medicare bene26 ficiaries are denied this benefit and cannot obtain 
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1 their prescription drugs at the lower prices available 

2 to such nations and programs. 

3 (5) Implementation of the policy set forth in 

4 this Act will reduce prices for brand name prescrip5 tion drugs for many Medicare beneficiaries by an av6 erage of 40 percent. 

7 (6) In addition to substantially lowering the 

8 costs of prescription drugs for older Americans, im9 plementation of the policy set forth in this Act will 

10 significantly improve the health and well-being of 

11 older Americans and lower the costs to the Federal 

12 taxpayer of the Medicare program. 

13 (7) Older Americans who are terminally ill and 

14 receiving hospice care services represent some of the 

15 most vulnerable individuals in our nation. Making 

16 prescription drugs available to Medicare beneficiaries 

17 under the care of Medicare-certified hospices will as18 sist in extending the benefits of lower prescription 

19 drug prices to those most vulnerable and in need. 

20 (b) PURPOSE.—The purpose of this Act is to protect 

21 Medicare beneficiaries from discriminatory pricing by drug 

22 manufacturers and to make prescription drugs available 

23 to Medicare beneficiaries at substantially reduced prices.
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1 SEC. 3. PARTICIPATING MANUFACTURERS. 

2 (a) IN GENERAL.—Each participating manufacturer 

3 of a covered outpatient drug shall make available for pur4 chase by each pharmacy such covered outpatient drug in 

5 the amount described in subsection (b) at the price de6 scribed in subsection (c). 

7 (b) DESCRIPTION OF AMOUNT OF DRUGS.—The 

8 amount of a covered outpatient drug that a participating 

9 manufacturer shall make available for purchase by a phar10 macy is an amount equal to the aggregate amount of the 

11 covered outpatient drug sold or distributed by the phar12 macy to Medicare beneficiaries. 

13 (c) DESCRIPTION OF PRICE.—The price at which a 

14 participating manufacturer shall make a covered out15 patient drug available for purchase by a pharmacy is a 

16 price no greater than the manufacturer’s average foreign 

17 price. 

18 (d) ENFORCEMENT.—The United States shall debar 

19 a manufacturer of drugs or biologicals that does not com20 ply with the provisions of this Act. 

21 SEC. 4. SPECIAL PROVISION WITH RESPECT TO HOSPICE 

22 PROGRAMS. 

23 For purposes of determining the amount of a covered 

24 outpatient drug that a participating manufacturer shall 

25 make available for purchase by a pharmacy under section 

26 3, there shall be included in the calculation of such 
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1 amount the amount of the covered outpatient drug sold 

2 or distributed by a pharmacy to a hospice program. In 

3 calculating such amount, only amounts of the covered out4 patient drug furnished to a Medicare beneficiary enrolled 

5 in the hospice program shall be included. 

6 SEC. 5. ADMINISTRATION. 

7 The Secretary shall issue such regulations as may be 

8 necessary to implement this Act. 

9 SEC. 6. REPORTS TO CONGRESS REGARDING EFFECTIVE10 NESS OF ACT. 

11 (a) IN GENERAL.—Not later than 2 years after the 

12 date of the enactment of this Act, and annually thereafter, 

13 the Secretary shall report to the Congress regarding the 

14 effectiveness of this Act in—

15 (1) protecting Medicare beneficiaries from dis16 criminatory pricing by drug manufacturers, and 

17 (2) making prescription drugs available to 

18 Medicare beneficiaries at substantially reduced 

19 prices. 

20 (b) CONSULTATION.—In preparing such reports, the 

21 Secretary shall consult with public health experts, affected 

22 industries, organizations representing consumers and 

23 older Americans, and other interested persons. 

24 (c) RECOMMENDATIONS.—The Secretary shall in25 clude in such reports any recommendations the Secretary 
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1 considers appropriate for changes in this Act to further 

2 reduce the cost of covered outpatient drugs to Medicare 

3 beneficiaries. 

4 SEC. 7. DEFINITIONS. 

5 In this Act: 

6 (1) AVERAGE FOREIGN PRICE.—

7 (A) IN GENERAL.—The term ‘‘average for8 eign price’’ means, with respect to a covered 

9 outpatient drug, the average price that the 

10 manufacturer of the drug realizes on the sale of 

11 drugs with the same active ingredient or ingre12 dients that are consumed in covered foreign na13 tions, taking into account—

14 (i) any rebate, contract term or condi15 tion, or other arrangement (whether with 

16 the purchaser or other persons) that has 

17 the effect of reducing the amount realized 

18 by the manufacturer on the sale of the 

19 drugs; and 

20 (ii) adjustments for any differences in 

21 dosage, formulation, or other relevant 

22 characteristics of the drugs. 

23 (B) EXEMPT TRANSACTIONS.—The Sec24 retary may, by regulation, exempt from the cal25 culation of the average foreign price of a drug 
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1 those prices realized by a manufacturer in 

2 transactions that are entered into for charitable 

3 purposes, for research purposes, or under other 

4 unusual circumstances, if the Secretary deter5 mines that the exemption is in the public inter6 est and is consistent with the purposes of this 

7 Act. 

8 (2) COVERED FOREIGN NATION.—The term 

9 ‘‘covered foreign nation’ means Canada, France, 

10 Germany, Italy, Japan, and the United Kingdom. 

11 (3) COVERED OUTPATIENT DRUG.—The term 

12 ‘‘covered outpatient drug’’ has the meaning given 

13 that term in section 1927(k)(2) of the Social Secu14 rity Act (42 U.S.C. 1396r–8(k)(2)). 

15 (4) DEBAR.—The term ‘‘debar’’ means to ex16 clude, pursuant to established administrative proce17 dures, from Government contracting and subcon18 tracting for a specified period of time commensurate 

19 with the seriousness of the failure or offense or the 

20 inadequacy of performance. 

21 (5) HOSPICE PROGRAM.—The term ‘‘hospice 

22 program’’ has the meaning given that term under 

23 section 1861(dd)(2) of the Social Security Act (42 

24 U.S.C. 1395x(dd)(2)). 
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1 (6) MEDICARE BENEFICIARY.—The term 

2 ‘‘Medicare beneficiary’’ means an individual entitled 

3 to benefits under part A of title XVIII of the Social 

4 Security Act or enrolled under part B of such title, 

5 or both. 

6 (7) PARTICIPATING MANUFACTURER.—The 

7 term ‘‘participating manufacturer’’ means any man8 ufacturer of drugs or biologicals that, on or after the 

9 date of the enactment of this Act, enters into a con10 tract or agreement with the United States for the 

11 sale or distribution of covered outpatient drugs to 

12 the United States. 

13 (8) SECRETARY.—The term ‘‘Secretary’’ means 

14 the Secretary of Health and Human Services. 

15 SEC. 8. EFFECTIVE DATE. 

16 The Secretary shall implement this Act as expedi17 tiously as practicable and in a manner consistent with the 

18 obligations of the United States.

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