I 

109TH CONGRESS 

1ST SESSION H. R. 2685 

To provide for prescription drugs at reduced prices to Medicare beneficiaries. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 26, 2005 

Mr. LARSON of Connecticut (for himself, Mr. GRIJALVA, and Mr. HINCHEY) 

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 prescription drugs at reduced prices to 

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 ‘‘Medicare Prescription 

5 Drug Price Negotiation Act’’. 
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1 SEC. 2. AVAILABILITY OF PRESCRIPTION DRUGS FROM 

2 PARTICIPATING MANUFACTURERS AT NEGO3 TIATED PRICES. 

4 (a) IN GENERAL.—Each participating manufacturer 

5 of a covered outpatient drug shall make available for pur6 chase by any qualified Federal health care provider, by 

7 each pharmacy, and by each provider of services, physi8 cian, practitioner, and supplier under the medicare pro9 gram such covered outpatient drug in the amount de10 scribed in subsection (b) at the price described in sub11 section (c). 

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

13 amount of a covered outpatient drug that a participating 

14 manufacturer shall make available for purchase under 

15 subsection (a) is the sum of— 

16 (1) an amount equal to the aggregate amount 

17 of the covered outpatient drug dispensed by phar18 macies to Medicare beneficiaries; and 

19 (2) an amount equal to the aggregate amount 

20 of the covered outpatient drug dispensed through 

21 qualified Federal health care providers. 

22 (c) DESCRIPTION OF PRICE.— 

23 (1) IN GENERAL.—The price at which a partici24 pating manufacturer shall make a covered outpatient 

25 drug available for purchase under subsection (a) is 

26 a price that the Secretary, in conjunction with the 
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1 Secretary of Defense and the Secretary of Veterans 

2 Affairs, negotiate with the manufacturer. 

3 (2) PROMOTION OF BREAKTHROUGH DRUGS.— 

4 (A) IN GENERAL.—In conducting negotia5 tions with participating manufacturers under 

6 paragraph (1), the Secretary shall take into ac7 count the goal of promoting the development of 

8 breakthrough drugs. 

9 (B) DEFINITION.—For purposes of this 

10 paragraph, a drug is a ‘‘breakthrough drug’’ if 

11 the Secretary determines it is a new product 

12 that will make a significant and major improve13 ment by reducing physical or mental illness, re14 ducing mortality, or reducing disability, and 

15 that no other product is available to enrollees 

16 that achieves similar results for the same condi17 tion. 

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 (e) DISPUTE RESOLUTION MECHANISM.—The Sec22 retary shall establish a mechanism (such as an ombuds23 man) for the resolution of disputes between Medicare 

24 beneficiaries and prescription drug resellers and drug 
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1 manufacturers in order to protect such beneficiaries and 

2 to ensure that— 

3 (1) prescription drug resellers are not artifically 

4 increasing prices charged to Medicare beneficiaries 

5 (above those negotiated under subsection (c)) in 

6 places where there is less competition (such as in 

7 rural areas); and 

8 (2) such resellers are not colluding on prices in 

9 areas with more potential significant competition. 

10 SEC. 3. ADMINISTRATION. 

11 The Secretary shall issue such regulations as may be 

12 necessary to implement this Act. 

13 SEC. 4. REPORTS TO CONGRESS REGARDING EFFECTIVE14 NESS OF ACT. 

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

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

17 the Secretary shall report to the Congress regarding the 

18 effectiveness of this Act in— 

19 (1) protecting Medicare beneficiaries from dis20 criminatory pricing by drug manufacturers, and 

21 (2) making prescription drugs available to 

22 Medicare beneficiaries at substantially reduced 

23 prices. 

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

25 Secretary shall consult with public health experts, affected 
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1 industries, organizations representing consumers and 

2 older Americans, and other interested persons. 

3 (c) RECOMMENDATIONS.—The Secretary shall in4 clude in such reports any recommendations the Secretary 

5 considers appropriate for changes in this Act to further 

6 reduce the cost of covered outpatient drugs to Medicare 

7 beneficiaries. 

8 SEC. 5. DEFINITIONS. 

9 In this Act: 

10 (1) PROVIDER OF SERVICES.—The term ‘‘pro11 vider of services’’ has the meaning given that term 

12 in section 1861(u) of the Social Security Act (42 

13 U.S.C. 1395x(u)). 

14 (2) PHYSICIAN.—The term ‘‘physician’’ has the 

15 meaning given that term in section 1861(r) of the 

16 Social Security Act (42 U.S.C. 1395x(r)). 

17 (3) PRACTITIONER.—The term ‘‘practitioner’’ 

18 has the meaning given that term in section 

19 1842(b)(18)(C) of the Social Security Act (42 

20 U.S.C. 1395u(b)(18)(C)). 

21 (4) SUPPLIER.—The term ‘‘supplier’’ has the 

22 meaning given that term under section 1842(o) of 

23 the Social Security Act (42 U.S.C. 1395u(o)). 

24 (5) COVERED OUTPATIENT DRUG.—The term 

25 ‘‘covered outpatient drug’’ has the meaning given 
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1 that term in section 1927(k)(2) of the Social Secu2 rity Act (42 U.S.C. 1396r–8(k)(2)). 

3 (6) DEBAR.—The term ‘‘debar’’ means to ex4 clude, pursuant to established administrative proce5 dures, from Government contracting and subcon6 tracting for a specified period of time commensurate 

7 with the seriousness of the failure or offense or the 

8 inadequacy of performance. 

9 (7) MEDICARE BENEFICIARY.—The term 

10 ‘‘Medicare beneficiary’’ means an individual entitled 

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

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

13 or both. 

14 (8) PARTICIPATING MANUFACTURER.—The 

15 term ‘‘participating manufacturer’’ means any man16 ufacturer of drugs or biologicals that, on or after the 

17 date of the enactment of this title, enters into a con18 tract or agreement with the United States for the 

19 sale or distribution of covered outpatient drugs to 

20 the United States. 

21 (9) SECRETARY.—The term ‘‘Secretary’’ means 

22 the Secretary of Health and Human Services. 
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1 SEC. 6. EFFECTIVE DATE. 

2 The Secretary shall implement this Act as expedi3 tiously as practicable and in a manner consistent with the 

4 obligations of the United States. 

5 SEC. 7. CONFORMING AMENDMENT. 

6 Section 1860D–11 of the Social Security Act (42 

7 U.S.C. 1395w–111) is amended by striking subsection (i) 

8 (relating to noninterference). 

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