II 

115TH CONGRESS 

1ST SESSION S. 771 

To improve access to affordable prescription drugs. 

IN THE SENATE OF THE UNITED STATES 

MARCH 29, 2017 

Mr. FRANKEN (for himself, Mr. SANDERS, Mr. WHITEHOUSE, Mr. BROWN, 

Ms. KLOBUCHAR, Ms. WARREN, Ms. BALDWIN, Mr. REED, Mrs. GILLIBRAND, Ms. HASSAN, Mr. DURBIN, Mr. VAN HOLLEN, Mr. MERKLEY, 

Mr. UDALL, Mr. BLUMENTHAL, and Mr. BOOKER) introduced the following bill; which was read twice and referred to the Committee on Finance 

A BILL 

To improve access to affordable prescription drugs. 

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; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Improving Access To Affordable Prescription Drugs 

6 Act’’. 

7 (b) TABLE OF CONTENTS.—The table of contents for 

8 this Act is as follows: 

Sec. 1. Short title; table of contents. 

TITLE I—TRANSPARENCY 


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Sec. 101. Drug manufacturer reporting. 

Sec. 102. Determining the public and private benefit of copayment coupons and 

other patient assistance programs. 

TITLE II—ACCESS AND AFFORDABILITY 

Sec. 201. Negotiating fair prices for Medicare prescription drugs. 

Sec. 202. Prescription drug price spikes. 

Sec. 203. Acceleration of the closing of the Medicare Part D coverage gap. 

Sec. 204. Importing affordable and safe drugs. 

Sec. 205. Requiring drug manufacturers to provide drug rebates for drugs dispensed to low-income individuals. 

Sec. 206. Cap on prescription drug cost-sharing. 

TITLE III—INNOVATION 

Sec. 301. Prize fund for new and more effective treatments of bacterial infections. 

Sec. 302. Public funding for clinical trials. 

Sec. 303. Rewarding innovative drug development. 

Sec. 304. Improving program integrity. 

TITLE IV—CHOICE AND COMPETITION 

Sec. 401. Preserving access to affordable generics. 

Sec. 402. 180-day exclusivity period amendments regarding first applicant status. 

Sec. 403. 180-day exclusivity period amendments regarding agreements to defer 

commercial marketing. 

Sec. 404. Increasing generic drug competition. 

Sec. 405. Disallowance of deduction for advertising for prescription drugs. 

Sec. 406. Product hopping. 

1 TITLE I—TRANSPARENCY 

2 SEC. 101. DRUG MANUFACTURER REPORTING. 

3 Part P of title III of the Public Health Service Act 

4 (42 U.S.C. 280g et seq.) is amended by adding at the end 

5 the following: 

6 ‘‘SEC. 399V–7. DRUG MANUFACTURER REPORTING. 

7 ‘‘(a) DEFINITIONS.—In this section: 

8 ‘‘(1) INDEPENDENT CHARITY PATIENT ASSIST9 ANCE PROGRAM.—The term ‘independent charity pa10 tient assistance program’ means any organization 

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1 enue Code of 1986 and exempt from taxation under 

2 section 501(a) of such Code and which is not a pri3 vate foundation (as defined in section 509(a) of such 

4 Code) that offers patient assistance. 

5 ‘‘(2) MANUFACTURER PATIENT ASSISTANCE

6 PROGRAM.—The term ‘manufacturer patient assist7 ance program’ means an organization, including a 

8 private foundation (as so defined), that is sponsored 

9 by, or receives funding from, a manufacturer and 

10 that offers patient assistance. Such term does not 

11 include an independent charity patient assistance 

12 program. 

13 ‘‘(3) PATIENT ASSISTANCE.—The term ‘patient 

14 assistance’ means assistance provided to offset the 

15 cost of drugs for individuals. Such term includes free 

16 products, coupons, rebates, copay or discount cards, 

17 and other means of providing assistance to individ18 uals related to drug costs, as determined by the Sec19 retary. 

20 ‘‘(b) REPORTING ON DOMESTIC SALES.—An applica21 ble manufacturer of an approved drug (including a drug 

22 approved under subsection (c) or (j) of section 505 of the 

23 Federal Food, Drug, and Cosmetic Act and a biological 

24 product licensed under subsection (a) or (k) of section 351 

25 of this Act) shall submit to the Secretary and to Congress 


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1 an annual report, in such format as the Secretary shall 

2 require, outlining with respect to the previous calendar 

3 year (except as provided in subsection (c)(3))— 

4 ‘‘(1) with respect to each such drug— 

5 ‘‘(A) the total expenditures of the manu6 facturer on— 

7 ‘‘(i) domestic and foreign drug re8 search and development, including an 

9 itemized description of— 

10 ‘‘(I) basic and preclinical re11 search; 

12 ‘‘(II) clinical research, broken out 

13 by clinical trial phase; 

14 ‘‘(III) development of alternative 

15 dosage forms and strengths for the 

16 drug molecule or combinations, in17 cluding the molecule; 

18 ‘‘(IV) other drug development ac19 tivities, such as nonclinical laboratory 

20 studies and record and report mainte21 nance; 

22 ‘‘(V) pursuing new or expanded 

23 indications for such drug through sup24 plemental applications under section 


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1 505 of the Federal Food, Drug, and 

2 Cosmetic Act; 

3 ‘‘(VI) carrying out postmarket 

4 requirements related to such drug, in5 cluding under section 505(o)(3) of 

6 such Act; 

7 ‘‘(VII) carrying out risk evalua8 tion and mitigation strategies in ac9 cordance with section 505–1 of such 

10 Act; and 

11 ‘‘(VIII) marketing research; 

12 ‘‘(ii) cost of goods sold, broken out by 

13 source and cost of each component and 

14 identifying specific costs that reflect inter15 nal transfers within the manufacturer’s 

16 company; 

17 ‘‘(iii) acquisition costs in total and per 

18 unit sold, including costs for the purchase 

19 of patents and licensing; and 

20 ‘‘(iv) marketing and advertising for 

21 the promotion of the drug, including a 

22 breakdown of amounts aimed at con23 sumers, prescribers, managed care organi24 zations, and others; 


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1 ‘‘(B) the gross revenue, net revenue, gross 

2 profit, and net profit to the manufacturer; 

3 ‘‘(C) the total number of units of the pre4 scription drug that were sold in interstate com5 merce in the most recently completed calendar 

6 year; 

7 ‘‘(D) pricing information, including— 

8 ‘‘(i) wholesale acquisition cost; 

9 ‘‘(ii) net average price realized by 

10 pharmacy benefit managers for drugs pro11 vided to individuals in the United States, 

12 after accounting for any rebates or other 

13 payments from the manufacturer to the 

14 pharmacy benefit manager and from the 

15 pharmacy benefit manager to the manufac16 turer; and 

17 ‘‘(iii) the net price of the drug, after 

18 accounting for discounts, rebates, or other 

19 financial considerations, charged to pur20 chasers in each applicable country of the 

21 Organisation for Economic Co-operation 

22 and Development; 

23 ‘‘(E) information, including the dollar 

24 value to the recipient of manufacturer patient 

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1 turer or a manufacturer patient assistance pro2 gram sponsored by or associated with the man3 ufacturer, per patient, including— 

4 ‘‘(i) the specific forms of such patient 

5 assistance available, such as coupons, re6 bates, discount codes, or copayment cards; 

7 ‘‘(ii) the total dollar value of each 

8 manufacturer patient assistance program 

9 and the dollar value of each program to 

10 the patient, including the basis used to as11 sign value to the manufacturer patient as12 sistance program; 

13 ‘‘(iii) the duration of each type of 

14 such patient assistance available; and 

15 ‘‘(iv) any requirements, such as in16 come thresholds, for how to qualify for 

17 such patient assistance; and 

18 ‘‘(F) information on usage of patient as19 sistance offered by the manufacturer or a man20 ufacturer patient assistance program sponsored 

21 by or associated with the manufacturer, includ22 ing— 

23 ‘‘(i) the number of transactions of 

24 each type of patient assistance used; 


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1 ‘‘(ii) the number of individuals receiv2 ing each type of patient assistance; 

3 ‘‘(iii) the total value of each type of 

4 patient assistance that was used; 

5 ‘‘(iv) the average length of time that 

6 each individual received each type of pa7 tient assistance; 

8 ‘‘(v) the number of individuals who 

9 were discontinued from receiving each type 

10 of patient assistance; and 

11 ‘‘(vi) complete documentation of the 

12 terms and conditions for an individual 

13 agreeing to participate in the program for 

14 each type of patient assistance provided; 

15 ‘‘(G) any Federal benefits received by the 

16 manufacturer, including the amounts and peri17 ods of impact for each such benefit, including 

18 tax credits, patent applications that benefitted 

19 from a grant from the National Institutes of 

20 Health, patent extensions, exclusivity periods, 

21 and other Federal benefits with respect to such 

22 drug; and 

23 ‘‘(H) the percentage of research and devel24 opment expenditures on— 


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1 ‘‘(i) activities conducted by the manu2 facturer; 

3 ‘‘(ii) activities funded by Federal enti4 ties; and 

5 ‘‘(iii) activities conducted by other en6 tities such as academic institutions or 

7 other drug manufacturers; 

8 ‘‘(2) executive compensation for the chief execu9 tive officer, chief financial officer, and the 3 other 

10 most highly compensated executive officers, includ11 ing bonuses, paid by such manufacturer, and stock 

12 options affiliated with the manufacturer that were 

13 offered to or accrued by such officers; 

14 ‘‘(3) any additional information the manufac15 turer chooses to provide related to drug pricing deci16 sions, such as total expenditures on drug research, 

17 drug development, and clinical trials on drugs that 

18 failed to receive approval by the Food and Drug Ad19 ministration, a list of drugs and drug prices against 

20 which the manufacturer compared the applicable 

21 drug, and other relevant information; and 

22 ‘‘(4) any other information as the Secretary 

23 may require. 

24 ‘‘(c) SUBMISSION OF REPORTS.— 

25 ‘‘(1) IN GENERAL.— 


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1 ‘‘(A) SUBMISSION BY DRUG MANUFACTUR2 ERS.—Drug manufacturers shall submit the an3 nual reports required under this section sub4 mitted to the Secretary in a usable format, as 

5 the Secretary may require. 

6 ‘‘(B) COLLATION BY THE SECRETARY.— 

7 The Secretary shall collate the reports received 

8 as described in subparagraph (A) and submit 

9 such collated reports to Congress, together with 

10 an analysis of the reports by the Secretary that 

11 includes— 

12 ‘‘(i) a summary of data from the re13 ports; 

14 ‘‘(ii) consideration of factors such as 

15 trends on research and development costs, 

16 Federal benefits, and manufacturer patient 

17 assistance programs; and 

18 ‘‘(iii) the relationship between the fac19 tors described in clause (ii) and prescrip20 tion drug prices. 

21 ‘‘(C) PUBLIC AVAILABILITY.—The Sec22 retary shall make the reports submitted by 

23 manufacturers as described in subparagraph 

24 (A) and the collated reports together with the 

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1 graph (B) publicly available, including by post2 ing such reports to the Internet website of the 

3 Department of Health and Human Services, in 

4 a searchable format. 

5 ‘‘(2) SINGLE REPORTS.—A drug manufacturer 

6 shall submit all information required under sub7 section (b) with respect to each applicable drug, in 

8 a single, annual report. 

9 ‘‘(3) INITIAL REPORT.— 

10 ‘‘(A) IN GENERAL.—An applicable drug 

11 manufacturer shall submit a report pursuant to 

12 this section one year after the date of enact13 ment of the Improving Access To Affordable 

14 Prescription Drugs Act (except as provided in 

15 subparagraph (B)) that includes the informa16 tion required under subsection (b)(1) with re17 spect to each calendar year since the drug for 

18 which the report is required was approved 

19 under section 505 of the Federal Food, Drug, 

20 and Cosmetic Act, licensed under section 351 of 

21 this Act, or received an exemption under section 

22 505(i) of the Federal Food, Drug, and Cos23 metic Act or section 351(a)(3) of this Act, or 

24 the calendar year in which the manufacturer ac25 quired the drug. 


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1 ‘‘(B) SMALL BUSINESSES.—In the case of 

2 an applicable drug manufacturer that has fewer 

3 than 500 employees, the initial report described 

4 in subparagraph (A) shall be submitted by a 

5 date determined by the Secretary, which shall 

6 be not earlier than the date described in sub7 paragraph (A) and not later than the date that 

8 is 3 years after the date of enactment of the 

9 Improving Access To Affordable Prescription 

10 Drugs Act. 

11 ‘‘(d) PENALTY FOR NONCOMPLIANCE.—The Sec12 retary shall report to the Office of the Inspector General 

13 any manufacturer’s failure to submit a complete report as 

14 required under this section. Any manufacturer that fails 

15 to submit a complete report required under this section 

16 shall be subject to a civil penalty of up to $200,000 for 

17 each day on which the violation continues. The Secretary 

18 shall collect the civil penalties under this subsection, and 

19 without further appropriation, shall use such funds to sup20 port the programs under sections 409K and 485E, and, 

21 at the discretion of the Secretary, research of the National 

22 Institutes of Health and other activities authorized under 

23 the Improving Access To Affordable Prescription Drugs 

24 Act, including any amendments made by such Act.’’. 


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1 SEC. 102. DETERMINING THE PUBLIC AND PRIVATE BEN2 EFIT OF COPAYMENT COUPONS AND OTHER 

3 PATIENT ASSISTANCE PROGRAMS. 

4 (a) INFORMATION REPORTING BY INDEPENDENT

5 CHARITY PATIENT ASSISTANCE PROGRAMS.—Section 

6 6033(b) of the Internal Revenue Code of 1986 is amended 

7 by striking the period at the end of paragraph (16) and 

8 inserting ‘‘, and’’ and by inserting after paragraph (16) 

9 the following new paragraph: 

10 ‘‘(17) the total amount of patient assistance 

11 (within the meaning of section 399V–7 of the Public 

12 Health Service Act) provided to individuals who are 

13 prescribed drugs manufactured by any contributor to 

14 the organization.’’. 

15 (b) GAO STUDY AND REPORT ON IMPACT OF COPAY16 MENT COUPONS AND OTHER PATIENT ASSISTANCE PRO17 GRAMS ON PRESCRIPTION DRUG PRICING AND EXPENDI18 TURES.— 

19 (1) STUDY.—The Comptroller General of the 

20 United States shall conduct a study on the impact 

21 of copayment coupons and other patient assistance 

22 programs on prescription drug pricing and expendi23 tures. Such study shall include an analysis of the 

24 following: 

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1 tribute to inflated prescription drug prices and 

2 health insurance premiums, including with re3 spect to— 

4 (i) the Medicaid program under title 

5 XIX of the Social Security Act (42 U.S.C. 

6 1396 et seq.); 

7 (ii) the Medicare program under title 

8 XVIII of such Act (42 U.S.C. 1395 et 

9 seq.); 

10 (iii) the TRICARE program under 

11 chapter 55 of title 10, United States Code; 

12 (iv) health care under the laws admin13 istered by the Secretary of Veterans Af14 fairs; 

15 (v) the commercial health insurance 

16 market; and 

17 (vi) the cash pay health market. 

18 (B) The extent to which manufacturers of19 fering copayment coupons and other patient as20 sistance programs or sponsoring manufacturer 

21 patient assistance programs obtain tax deduc22 tions for offering or sponsoring such assistance 

23 (either as business expenses or charitable de24 ductions), including— 


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1 (i) the total value of the tax deduc2 tions claimed by manufacturers for offer3 ing or sponsoring patient assistance pro4 grams during the 10 years preceding the 

5 date of enactment of this Act; 

6 (ii) a description of the methodology 

7 for assigning a value to the tax deduction 

8 claimed by manufacturers for offering or 

9 sponsoring patient assistance programs; 

10 and 

11 (iii) an analysis of the extent to which 

12 the activities of independent charity pa13 tient assistance programs, which are spon14 sored by, or receive funding from, pharma15 ceutical manufacturers (as determined 

16 using tax returns, sales data, and other 

17 public disclosures) provide a financial ben18 efit to the manufacturers that sponsor 

19 them. 

20 (C) The extent to which independent char21 ity patient assistance programs adhere to guid22 ance from the Office of the Inspector General 

23 of the Department of Health and Human Serv24 ices on avoiding waste, fraud, and abuse. 


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1 (2) DEFINITIONS.—In this subsection, the 

2 terms ‘‘patient assistance’’, ‘‘independent charity pa3 tient assistance program’’, ‘‘manufacturer’’, and 

4 ‘‘manufacturer patient assistance program’’ have the 

5 meaning given those terms under section 399V–7 of 

6 the Public Health Service Act, as added by section 

7 101. 

8 (3) REPORT.—Not later than 2 years after the 

9 date of the enactment of this Act, the Comptroller 

10 General of the United States shall submit to Con11 gress a report describing the findings of the study 

12 required under this subsection. 

13 TITLE II—ACCESS AND 

14 AFFORDABILITY 

15 SEC. 201. NEGOTIATING FAIR PRICES FOR MEDICARE PRE16 SCRIPTION DRUGS. 

17 (a) NEGOTIATING FAIR PRICES.— 

18 (1) IN GENERAL.—Section 1860D–11 of the 

19 Social Security Act (42 U.S.C. 1395w–111) is 

20 amended by striking subsection (i) (relating to non21 interference) and by inserting the following: 

22 ‘‘(i) NEGOTIATING FAIR PRICES WITH DRUG MANU23 FACTURERS.— 

24 ‘‘(1) IN GENERAL.—Notwithstanding any other 

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1 viding quality care and containing costs under this 

2 part, the Secretary shall, with respect to applicable 

3 covered part D drugs, and may, with respect to 

4 other covered part D drugs, negotiate, using the ne5 gotiation technique or techniques that the Secretary 

6 determines will maximize savings and value to the 

7 government for prescription drug plans and MA–PD 

8 plans and for plan enrollees (in a manner that may 

9 be similar to Federal entities and that may include, 

10 but is not limited to, formularies, reference pricing, 

11 discounts, rebates, other price concessions, and cov12 erage determinations), with drug manufacturers the 

13 prices that may be charged to PDP sponsors and 

14 MA organizations for such drugs for part D eligible 

15 individuals who are enrolled in a prescription drug 

16 plan or in an MA–PD plan. In conducting such ne17 gotiations, the Secretary shall consider the drug’s 

18 current price, initial launch price, prevalence of dis19 ease and usage, and approved indications, the num20 ber of similarly effective alternative treatments for 

21 each approved use of the drug, the budgetary impact 

22 of providing coverage under this part for such drug 

23 for all individuals who would likely benefit from the 

24 drug, evidence on the drug’s effectiveness and safety 

25 compared to similar drugs, and the quality and 


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1 quantity of clinical data and rigor of the applicable 

2 process of approval of a drug under section 505 of 

3 the Federal Food, Drug, and Cosmetic Act or a bio4 logical product under section 351 of the Public 

5 Health Service Act. 

6 ‘‘(2) USE OF LOWER OF VA OR BIG FOUR PRICE

7 IF NEGOTIATIONS FAIL.—If, after attempting to ne8 gotiate for a price with respect to a covered part D 

9 drug under paragraph (1) for a period of 1 year, the 

10 Secretary is not successful in obtaining an appro11 priate price for the drug (as determined by the Sec12 retary), the Secretary shall establish the price that 

13 may be charged to PDP sponsors and MA organiza14 tions for such drug for part D eligible individuals 

15 who are enrolled in a prescription drug plan or in 

16 an MA–PD plan at an amount equal to the lesser 

17 of— 

18 ‘‘(A) the price paid by the Secretary of 

19 Veterans Affairs to procure the drug under the 

20 laws administered by the Secretary of Veterans 

21 Affairs; or 

22 ‘‘(B) the price paid to procure the drug 

23 under section 8126 of title 38, United States 

24 Code. 


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1 ‘‘(3) APPLICABLE COVERED PART D DRUG DE2 FINED.—For purposes of this subsection, the term 

3 ‘applicable covered part D drug’ means a covered 

4 part D drug that the Secretary determines to be ap5 propriate for negotiation under paragraph (1) based 

6 on one or more of the following factors as applied 

7 to such drug: 

8 ‘‘(A) Spending on a per beneficiary basis. 

9 ‘‘(B) The proportion of total spending 

10 under this title. 

11 ‘‘(C) Unit price increases over the pre12 ceding 5 years. 

13 ‘‘(D) Initial launch price. 

14 ‘‘(E) Availability of less expensive, simi15 larly effective alternative treatments. 

16 ‘‘(F) Status of the drug as a follow-on to 

17 previously approved drugs. 

18 ‘‘(G) Any other criteria determined by the 

19 Secretary. 

20 ‘‘(4) PDP SPONSORS AND MA ORGANIZATION

21 MAY NEGOTIATE LOWER PRICES.—Nothing in this 

22 subsection shall be construed as preventing the spon23 sor of a prescription drug plan, or an organization 

24 offering an MA–PD plan, from obtaining a discount 

25 or reduction of the price for a covered part D drug 


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1 below the price negotiated under paragraph (1) or 

2 the price established under paragraph (2). 

3 ‘‘(5) NO EFFECT ON EXISTING APPEALS PROC4 ESS.—Nothing in this subsection shall be construed 

5 to affect the appeals procedures under subsections 

6 (g) and (h) of section 1860D–4.’’. 

7 (2) EFFECTIVE DATE.—The amendments made 

8 by this subsection shall take effect on the date of the 

9 enactment of this Act and shall first apply to nego10 tiations and prices for plan years beginning on Jan11 uary 1, 2019. 

12 (b) REQUIREMENT TO INCLUDE A LINK TO THE

13 MEDICARE DRUG SPENDING DASHBOARD ON THE MEDI14 CARE PLAN FINDER.—Beginning not later than October 

15 1, 2017, the Secretary of Health and Human Services 

16 shall ensure that the Medicare Plan Finder on the Medi17 care.gov Internet website includes a link to the Medicare 

18 Drug Spending Dashboard on the CMS.gov Internet 

19 website. Such link shall be easily accessible on the Medi20 care Plan Finder. 

21 (c) REPORTS TO CONGRESS.— 

22 (1) SECRETARY OF HHS.— 

23 (A) IN GENERAL.—Not later than 3 years 

24 after the date of the enactment of this Act, and 

25 every 6 months thereafter, the Secretary of 


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1 Health and Human Services shall submit to 

2 Congress a report on the following: 

3 (i) The price negotiations conducted 

4 by the Secretary under section 1860D– 

5 11(i) of the Social Security Act (42 U.S.C. 

6 1395w–111(i)), as amended by subsection 

7 (a), including a description of— 

8 (I) how such price negotiations 

9 are achieving lower prices for covered 

10 part D drugs (as defined in section 

11 1860D–2(e) of the Social Security Act 

12 (42 U.S.C. 1395w–102(e))) for Medi13 care beneficiaries; 

14 (II) how such lower prices are 

15 passed through to Medicare bene16 ficiaries; 

17 (III) how such price negotiations 

18 are affecting drug prices in the pri19 vate market; and 

20 (IV) how such price negotiations 

21 are affecting the list price of covered 

22 part D drugs. 

23 (ii) Data on spending under part D of 

24 the Medicare program on covered part D 


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1 drugs, including data on covered part D 

2 drugs with— 

3 (I) spending on a per beneficiary 

4 basis that is above the median spend5 ing on other drugs in the same class 

6 or above the median spending of other 

7 drug classes; and 

8 (II) high unit cost increases over 

9 the past five years, especially where 

10 such increases are greater than the 

11 increases for covered part D drugs in 

12 general. 

13 (iii) A list of the covered part D drugs 

14 with no therapeutic substitute and data on 

15 spending under part D of the Medicare 

16 program on such drugs. 

17 (iv) Access to covered part D drugs 

18 and, where available, compliance rates and 

19 health outcomes associated with compli20 ance rates. 

21 (v) Appeals by enrollees with respect 

22 to covered part D drugs not included on 

23 plan formularies. 

24 (B) PUBLIC AVAILABILITY OF REPORT.— 

25 The Secretary of Health and Human Services 


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1 shall publish on the Internet website of the 

2 Centers for Medicare & Medicaid Services a 

3 copy of each report submitted under subpara4 graph (A), including the detailed tables, figures, 

5 and data published in the report and its appen6 dices. 

7 (2) MEDPAC.— 

8 (A) STUDY.—The Comptroller General of 

9 the United States shall conduct a study on the 

10 price negotiations conducted by the Secretary 

11 under section 1860D–11(i) of the Social Secu12 rity Act (42 U.S.C. 1395w–111(i)), as amended 

13 by subsection (a), including an analysis of— 

14 (i) how such price negotiations are 

15 achieving lower prices for covered part D 

16 drugs (as defined in section 1860D–2(e) of 

17 the Social Security Act (42 U.S.C. 1395w– 

18 102(e))) for Medicare beneficiaries; 

19 (ii) who is benefitting from such lower 

20 prices, such as Medicare beneficiaries, the 

21 Federal Government, States, prescription 

22 drug plans and MA–PD plans, or other en23 tities; 


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1 (iii) how such price negotiations are 

2 affecting drug prices in the private market; 

3 and 

4 (iv) how such price negotiations are 

5 affecting the list price of covered part D 

6 drugs. 

7 (B) REPORT.—Not later than January 1, 

8 2021, the Comptroller General of the United 

9 States shall submit to Congress a report on the 

10 study conducted under subparagraph (A), to11 gether with recommendations for improving 

12 such price negotiations. 

13 (d) CMI TESTING OF NEGOTIATING DRUG AND BIO14 LOGICAL PRICES TO IMPROVE VALUE.—Section 

15 1115A(b)(2) of the Social Security Act (42 U.S.C. 

16 1315a(b)(2)) is amended— 

17 (1) in subparagraph (A), by adding at the end 

18 the following new sentence: ‘‘The models selected 

19 under this subparagraph shall include at least 3 of 

20 the models described in subparagraph (D), which 

21 shall be implemented by not later than 18 months 

22 after the date of the enactment of the Improving Ac23 cess To Affordable Prescription Drugs Act’’; and 

24 (2) by adding at the end the following new sub25 paragraph: 


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1 ‘‘(D) MODELS OF NEGOTIATING DRUG AND

2 BIOLOGICAL PRICES TO IMPROVE VALUE.—The 

3 models described in this subparagraph are the 

4 following models for negotiating drug and bio5 logical prices under the applicable titles (includ6 ing under both parts B and D of title XVIII) 

7 in order to improve the value of payments for 

8 such drugs and biologicals under such titles: 

9 ‘‘(i) Discounting or eliminating pa10 tient cost-sharing on high-value drugs and 

11 biologicals. 

12 ‘‘(ii) Value-based formularies. 

13 ‘‘(iii) Indications-based pricing. 

14 ‘‘(iv) Reference pricing. 

15 ‘‘(v) Risk-sharing agreements based 

16 on outcomes. 

17 ‘‘(vi) Pricing based on comparative ef18 fectiveness research. 

19 ‘‘(vii) Episode-based payments for 

20 chemotherapy and other conditions deter21 mined appropriate by the Secretary. 

22 ‘‘(viii) Alternative ways of paying for 

23 drugs and biologicals under part B of title 

24 XVIII. 


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1 ‘‘(ix) Other models determined appro2 priate by the Secretary.’’. 

3 SEC. 202. PRESCRIPTION DRUG PRICE SPIKES. 

4 (a) IDENTIFICATION OF PRESCRIPTION DRUG PRICE

5 SPIKES.— 

6 (1) DEFINITIONS.—In this subsection: 

7 (A) APPLICABLE ENTITY.—The term ‘‘ap8 plicable entity’’ means the holder of an applica9 tion approved under subsection (c) or (j) of sec10 tion 505 of the Federal Food, Drug, and Cos11 metic Act (21 U.S.C. 355) or of a license issued 

12 under subsection (a) or (k) of section 351 of 

13 the Public Health Service Act (42 U.S.C. 262) 

14 for a prescription drug. 

15 (B) AVERAGE PRICE.—The term ‘‘average 

16 price’’ means— 

17 (i) the average manufacturer price, as 

18 defined in section 1927(k)(1) of the Social 

19 Security Act (42 U.S.C. 1396r–8(k)(1)); or 

20 (ii) in the case of a drug for which the 

21 average manufacturer price is not avail22 able, the manufacturer’s average sales 

23 price (as defined in section 1847A(c)(1) of 

24 the Social Security Act (42 U.S.C. 1395w– 

25 3a(c)(1)). 


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1 (C) COMMERCE.—The term ‘‘commerce’’ 

2 has the meaning given such term in section 4 

3 of the Federal Trade Commission Act (15 

4 U.S.C. 44). 

5 (D) PRESCRIPTION DRUG.—The term 

6 ‘‘prescription drug’’ means any drug subject to 

7 section 503(b)(1) of the Federal Food, Drug, 

8 and Cosmetic Act (21 U.S.C. 353(b)(1)) which 

9 is covered by a Federal health care program (as 

10 defined in section 1128B(f) of the Social Secu11 rity Act (42 U.S.C. 1320a–7b(f))). 

12 (E) PRICE SPIKE.— 

13 (i) IN GENERAL.—The term ‘‘price 

14 spike’’ means an increase in the average 

15 price in commerce of a prescription drug 

16 for which the price spike percentage is 

17 equal to or greater than the applicable 

18 price increase allowance. 

19 (ii) PRICE SPIKE PERCENTAGE.—The 

20 price spike percentage is the percentage (if 

21 any) by which— 

22 (I) the average price of a pre23 scription drug in commerce for the 

24 most recently completed calendar 

25 year; exceeds 


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1 (II) the average price of such 

2 drug in commerce for the calendar 

3 year preceding such year. 

4 (iii) APPLICABLE PRICE INCREASE AL5 LOWANCE.—The applicable price increase 

6 allowance for any calendar year is the per7 centage (rounded to the nearest one-tenth 

8 of 1 percent) by which the medical care 

9 component of the consumer price index for 

10 all urban consumers (as published by the 

11 Bureau of Labor Statistics) for that year 

12 exceeds such component for the preceding 

13 calendar year. 

14 (F) PRICE SPIKE REVENUE.— 

15 (i) IN GENERAL.—The price spike rev16 enue for any calendar year is an amount 

17 equal to— 

18 (I) the gross price spike revenue; 

19 minus 

20 (II) the adjustment amount. 

21 (ii) GROSS PRICE SPIKE REVENUE.— 

22 The gross price spike revenue for any cal23 endar year is an amount equal to the prod24 uct of— 


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1 (I) an amount equal to the dif2 ference between subclause (I) of sub3 paragraph (E)(ii) and subclause (II) 

4 of such subparagraph; and 

5 (II) the total number of units of 

6 the prescription drug which were sold 

7 in commerce in such calendar year. 

8 (iii) ADJUSTMENT AMOUNT.—The ad9 justment amount is the amount, if any, of 

10 the gross price spike revenue which the In11 spector General has determined is due sole12 ly to an increase in the cost of the goods 

13 sold (excluding any increase in costs which 

14 are related to internal transfers within the 

15 applicable entity) which are necessary to 

16 manufacture the prescription drug subject 

17 to the price spike. 

18 (G) INSPECTOR GENERAL.—The term ‘‘In19 spector General’’ means the Inspector General 

20 of the Department of Health and Human Serv21 ices. 

22 (2) SUBMISSION BY PHARMACEUTICAL COMPA23 NIES OF INFORMATION.— 

24 (A) IN GENERAL.—For each prescription 

25 drug, the applicable entity shall submit to the 


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1 Inspector General a quarterly report that in2 cludes the following: 

3 (i) For each prescription drug of the 

4 applicable entity— 

5 (I) the total number of units of 

6 the prescription drug which were sold 

7 in commerce in the most recently 

8 completed calendar quarter; and 

9 (II) the gross revenues from sales 

10 of such prescription drug in commerce 

11 in the most recently completed cal12 endar quarter. 

13 (ii) Such information related to in14 creased input costs as the applicable entity 

15 may wish the Inspector General to consider 

16 in making a determination under subclause 

17 (II) of paragraph (3)(B)(ii) or an assess18 ment in subclause (III) of such paragraph 

19 for the most recently completed calendar 

20 quarter. 

21 (iii) Such information related to any 

22 anticipated increased input costs for the 

23 subsequent calendar quarter as the appli24 cable entity may wish the Inspector Gen25 eral to consider in making a determination 


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1 under subclause (II) of paragraph 

2 (3)(B)(ii) or an assessment in subclause 

3 (III) of such paragraph for such calendar 

4 quarter. 

5 (B) PENALTY FOR FAILURE TO SUBMIT.— 

6 (i) IN GENERAL.—An applicable enti7 ty described in subparagraph (A) that fails 

8 to submit information to the Inspector 

9 General regarding a prescription drug, as 

10 required by such paragraph, before the 

11 date specified in subparagraph (C) shall be 

12 liable for a civil penalty, as determined 

13 under clause (ii). 

14 (ii) AMOUNT OF PENALTY.—The 

15 amount of the civil penalty shall be equal 

16 to the product of— 

17 (I) an amount, as determined ap18 propriate by the Inspector General; 

19 which is— 

20 (aa) not less than 0.5 per21 cent of the gross revenues from 

22 sales of the prescription drug de23 scribed in clause (i) for the most 

24 recently completed calendar year; 

25 and 


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1 (bb) not greater than 1 per2 cent of the gross revenues from 

3 sales of such drug for the most 

4 recently completed calendar year; 

5 and 

6 (II) the number of days in the 

7 period between— 

8 (aa) the applicable date 

9 specified in subparagraph (C); 

10 and 

11 (bb) the date on which the 

12 Inspector General receives the in13 formation described in subpara14 graph (A) from the applicable en15 tity. 

16 (C) SUBMISSION DEADLINE.—An applica17 ble entity shall submit each quarterly report de18 scribed in subparagraph (A) not later than Jan19 uary 17, April 18, June 15, and September 15 

20 of each calendar year. 

21 (3) ASSESSMENT.— 

22 (A) IN GENERAL.—Not later than the last 

23 day in February of each year, the Inspector 

24 General, in consultation with the Federal Trade 

25 Commission, shall complete an assessment of 


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1 the information the Inspector General received 

2 pursuant to paragraph (2)(A) with respect to 

3 sales of prescription drugs in the most recently 

4 completed calendar year. 

5 (B) ELEMENTS.—The assessment required 

6 by subparagraph (A) shall include the following: 

7 (i) Identification of each price spike 

8 relating to a prescription drug in the most 

9 recently completed calendar year. 

10 (ii) For each price spike identified 

11 under clause (i)— 

12 (I) a determination of the price 

13 spike percentage and price spike rev14 enue; 

15 (II) a determination regarding 

16 the accuracy of the information sub17 mitted by the applicable entity regard18 ing increased input costs; and 

19 (III) an assessment of the ration20 ale of the applicable entity for the 

21 price spike. 

22 (4) REPORT TO INTERNAL REVENUE SERV23 ICE.— 

24 (A) IN GENERAL.—Not later than the last 

25 day in February of each year, the Inspector 


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1 General shall transmit to the Internal Revenue 

2 Service a report on the findings of the Inspector 

3 General with respect to the information the In4 spector General received under paragraph 

5 (2)(A) with respect to the most recently com6 pleted calendar year and the assessment carried 

7 out by the Inspector General under paragraph 

8 (3)(A) with respect to such information. 

9 (B) CONTENTS.—The report transmitted 

10 under subparagraph (A) shall include the fol11 lowing: 

12 (i) The information received under 

13 paragraph (2)(A) with respect to the most 

14 recently completed calendar year. 

15 (ii) The price spikes identified under 

16 clause (i) of paragraph (3)(B). 

17 (iii) The price spike revenue deter18 minations made under clause (ii)(I) of 

19 such paragraph. 

20 (iv) The average price of the prescrip21 tion drug for each month during the most 

22 recently completed calendar year. 

23 (v) The determinations and assess24 ments made under subclauses (II) and 

25 (III) of clause (ii) of such paragraph. 


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1 (C) PUBLICATION.—Not later than the last 

2 day in February of each year, the Inspector 

3 General shall make the report transmitted 

4 under subparagraph (A) available to the public, 

5 including on the Internet website of the Inspec6 tor General. 

7 (5) NOTIFICATION.—The Secretary of the 

8 Treasury, in conjunction with the Inspector General, 

9 shall notify, at such time and in such manner as the 

10 Secretary of the Treasury shall provide, each appli11 cable entity in regard to any prescription drug which 

12 has been determined to have been subject to a price 

13 spike during the most recently completed calendar 

14 year and the amount of the tax imposed on such ap15 plicable entity pursuant to section 4192 of the Inter16 nal Revenue Code of 1986 (as added by subsection 

17 (b) of this section). 

18 (b) EXCISE TAX ON PRESCRIPTION DRUGS SUBJECT

19 TO PRICE SPIKES.— 

20 (1) IN GENERAL.—Subchapter E of chapter 32 

21 of the Internal Revenue Code of 1986 is amended by 

22 adding at the end the following new section: 

23 ‘‘SEC. 4192. PRESCRIPTION DRUGS SUBJECT TO PRICE 

24 SPIKES. 

25 ‘‘(a) IMPOSITION OF TAX.— 


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1 ‘‘(1) IN GENERAL.—For each taxable prescrip2 tion drug sold by an applicable entity during the cal3 endar year, there is hereby imposed on such entity 

4 a tax equal to the greater of— 

5 ‘‘(A) the annual price spike tax for such 

6 drug, or 

7 ‘‘(B) subject to paragraph (2), the cumu8 lative price spike tax for such drug. 

9 ‘‘(2) LIMITATION.—In the case of a taxable 

10 prescription drug for which the applicable period (as 

11 determined under subsection (c)(2)(E)(i)) is less 

12 than 2 completed calendar years, the cumulative 

13 price spike tax shall not apply. 

14 ‘‘(b) ANNUAL PRICE SPIKE TAX.— 

15 ‘‘(1) IN GENERAL.—The amount of the annual 

16 price spike tax shall be equal to the applicable per17 centage of the price spike revenue received by the 

18 applicable entity on the sale of the taxable prescrip19 tion drug during the calendar year. 

20 ‘‘(2) APPLICABLE PERCENTAGE.—For purposes 

21 of paragraph (1), the applicable percentage shall be 

22 equal to— 

23 ‘‘(A) in the case of a taxable prescription 

24 drug which has been subject to a price spike 

25 percentage equal to or greater than the applicaVerDate Sep 11 2014 02:21 Apr 01, 2017 Jkt 069200 PO 00000 Frm 00036 Fmt 6652 Sfmt 6201 E:\BILLS\S771.IS S771

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1 ble price increase allowance (as defined in sec2 tion 202(a)(1)(E)(iii) of the Improving Access 

3 To Affordable Prescription Drugs Act) but less 

4 than 15 percent, 50 percent, 

5 ‘‘(B) in the case of a taxable prescription 

6 drug which has been subject to a price spike 

7 percentage equal to or greater than 15 percent 

8 but less than 20 percent, 75 percent, and 

9 ‘‘(C) in the case of a taxable prescription 

10 drug which has been subject to a price spike 

11 percentage equal to or greater than 20 percent, 

12 100 percent. 

13 ‘‘(c) CUMULATIVE PRICE SPIKE TAX.— 

14 ‘‘(1) IN GENERAL.—The amount of the cumu15 lative price spike tax shall be equal to the applicable 

16 percentage of the cumulative price spike revenue re17 ceived by the applicable entity on the sale of the tax18 able prescription drug during the calendar year. 

19 ‘‘(2) APPLICABLE PERCENTAGE.— 

20 ‘‘(A) IN GENERAL.—For purposes of para21 graph (1), the applicable percentage shall be 

22 equal to— 

23 ‘‘(i) in the case of a taxable prescrip24 tion drug which has been subject to a cu25 mulative price spike percentage equal to or 


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1 greater than the cumulative price increase 

2 allowance but less than the first com3 pounded percentage, 50 percent, 

4 ‘‘(ii) in the case of a taxable prescrip5 tion drug which has been subject to a cu6 mulative price spike percentage equal to or 

7 greater than the first compounded percent8 age but less than the second compounded 

9 percentage, 75 percent, and 

10 ‘‘(iii) in the case of a taxable prescrip11 tion drug which has been subject to a cu12 mulative price spike percentage equal to or 

13 greater than the second compounded per14 centage, 100 percent. 

15 ‘‘(B) CUMULATIVE PRICE SPIKE PERCENT16 AGE.—The cumulative price spike percentage is 

17 the percentage (if any) by which— 

18 ‘‘(i) the average price of the taxable 

19 prescription drug in commerce for the 

20 most recently completed calendar year, ex21 ceeds 

22 ‘‘(ii) the average price of such drug in 

23 commerce for the base year. 

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1 paragraph (A), the cumulative price increase al2 lowance for any calendar year is the percentage 

3 (rounded to the nearest one-tenth of 1 percent) 

4 by which the medical care component of the 

5 consumer price index for all urban consumers 

6 (as published by the Bureau of Labor Statis7 tics) for that year exceeds such component for 

8 the base year. 

9 ‘‘(D) COMPOUNDED PERCENTAGES.—For 

10 purposes of subparagraph (A), the first com11 pounded percentage and second compounded 

12 percentage shall be determined in accordance 

13 with the following table: 

‘‘Number of years in applicable period 

First 

compounded 

percentage 

Second 

compounded 

percentage 

2 years .................................................................... 32.35 44.00

3 years .................................................................... 52.09 72.80

4 years .................................................................... 74.90 107.36

5 years .................................................................... 101.14 148.83. 

14 ‘‘(E) APPLICABLE PERIOD AND BASE

15 YEAR.— 

16 ‘‘(i) APPLICABLE PERIOD.—The appli17 cable period shall be the lesser of— 

18 ‘‘(I) the 5 most recently com19 pleted calendar years, 


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1 ‘‘(II) any completed calendar 

2 years beginning after March 29, 2017, 

3 or 

4 ‘‘(III) any completed calendar 

5 years in which the taxable prescrip6 tion drug was sold in commerce. 

7 ‘‘(ii) BASE YEAR.—The base year 

8 shall be the calendar year immediately pre9 ceding the applicable period. 

10 ‘‘(3) CUMULATIVE PRICE SPIKE REVENUE.— 

11 For purposes of paragraph (1), the cumulative price 

12 spike revenue for any taxable prescription drug shall 

13 be an amount equal to— 

14 ‘‘(A) an amount equal to the product of— 

15 ‘‘(i) an amount (not less than zero) 

16 equal to— 

17 ‘‘(I) the average price of such 

18 drug in commerce for the most re19 cently completed calendar year, minus 

20 ‘‘(II) the average price of such 

21 drug in commerce for the base year, 

22 and 

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

24 drug which were sold in commerce in the 


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1 most recently completed calendar year, 

2 minus 

3 ‘‘(B) the adjustment amount, if any, deter4 mined under section 202(a)(1)(F)(iii) of the 

5 Improving Access To Affordable Prescription 

6 Drugs Act for such calendar year. 

7 ‘‘(d) DEFINITIONS.—For purposes of this section— 

8 ‘‘(1) TAXABLE PRESCRIPTION DRUG.—The 

9 term ‘taxable prescription drug’ means a prescrip10 tion drug (as defined in section 202(a)(1)(D) of the 

11 Improving Access To Affordable Prescription Drugs 

12 Act) which has been identified by the Inspector Gen13 eral of the Department of Health and Human Serv14 ices, under section 202(a)(3)(B)(i) of such Act, as 

15 being subject to a price spike. 

16 ‘‘(2) OTHER TERMS.—The terms ‘applicable en17 tity’, ‘average price’, ‘price spike’, ‘price spike per18 centage’, and ‘price spike revenue’ have the same 

19 meaning given such terms under section 202(a)(1) 

20 of the Improving Access To Affordable Prescription 

21 Drugs Act.’’. 

22 (2) CLERICAL AMENDMENTS.— 

23 (A) The heading of subchapter E of chap24 ter 32 of the Internal Revenue Code of 1986 is 

25 amended by striking ‘‘Medical Devices’’ 


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1 and inserting ‘‘Certain Medical Devices 

2 and Prescription Drugs’’. 

3 (B) The table of subchapters for chapter 

4 32 of such Code is amended by striking the 

5 item relating to subchapter E and inserting the 

6 following new item: 

‘‘SUBCHAPTER E. CERTAIN MEDICAL DEVICES AND PRESCRIPTION DRUGS’’. 

7 (3) The table of sections for subchapter E of 

8 chapter 32 of such Code is amended by adding at 

9 the end the following new item: 

‘‘Sec. 4192. Prescription drugs subject to price spikes.’’. 

10 (4) EFFECTIVE DATE.—The amendments made 

11 by this section shall apply to sales after the date of 

12 the enactment of this Act. 

13 (c) REVENUES COLLECTED.—There are authorized 

14 to be appropriated to the Secretary of Health and Human 

15 Services such sums as are equal to any increase in revenue 

16 to the Treasury by reason of the provisions of this section 

17 or the amendments made by this section for the purposes 

18 of— 

19 (1) funding or conducting research on the eco20 nomic and policy implications of price patterns of 

21 prescription drugs; or 

22 (2) increasing amounts available to the Na23 tional Institutes of Health for research and develop24 ment of drugs. 


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1 SEC. 203. ACCELERATION OF THE CLOSING OF THE MEDI2 CARE PART D COVERAGE GAP. 

3 (a) REDUCTION IN COINSURANCE.—Section 1860D– 

4 2(b)(2) of the Social Security Act (42 U.S.C. 1395w– 

5 102(b)(2)) is amended— 

6 (1) in each of subclauses (II) and (III) of sub7 paragraph (C)(ii), by striking ‘‘2020’’ and inserting 

8 ‘‘2018’’; and 

9 (2) in subparagraph (D)(ii)— 

10 (A) in subclause (II), by inserting ‘‘and’’ 

11 at the end; and 

12 (B) by striking subclauses (III) through 

13 (VI) and inserting the following: 

14 ‘‘(III) 2018 is 100 percent.’’. 

15 (b) INCREASE IN MANUFACTURER REBATE.—Section 

16 1860D–14A(g)(4)(A) of the Social Security Act (42 

17 U.S.C. 1395w–114a(g)(4)(A)) is amended by inserting 

18 ‘‘(or, for 2018 and subsequent years, 75 percent)’’ after 

19 ‘‘50 percent’’. 

20 SEC. 204. IMPORTING AFFORDABLE AND SAFE DRUGS. 

21 (a) IN GENERAL.—Section 804 of the Federal Food, 

22 Drug, and Cosmetic Act (21 U.S.C. 384) is amended to 

23 read as follows: 


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1 ‘‘SEC. 804. IMPORTATION OF SAFE AND AFFORDABLE 

2 DRUGS BY WHOLESALE DISTRIBUTORS, 

3 PHARMACIES, AND INDIVIDUALS. 

4 ‘‘(a) IN GENERAL.—Not later than 180 days after 

5 the date of enactment of the Improving Access To Afford6 able Prescription Drugs Act, the Secretary shall promul7 gate regulations permitting the importation of qualifying 

8 prescription drugs into the United States, in accordance 

9 with this section. 

10 ‘‘(b) DEFINITIONS.—For purposes of this section: 

11 ‘‘(1) CERTIFIED FOREIGN SELLER.—The term 

12 ‘certified foreign seller’ means a licensed foreign 

13 pharmacy or foreign wholesale distributor that the 

14 Secretary certifies under subsection (d)(1)(B), that 

15 pays the fee required under subsection (d)(1)(C), 

16 and that is included on the list described in sub17 section (c). 

18 ‘‘(2) FOREIGN WHOLESALE DISTRIBUTOR.— 

19 The term ‘foreign wholesale distributor’ means a 

20 person (other than a manufacturer, a manufactur21 er’s co-licensed partner, a third-party logistics pro22 vider, or a repackager) engaged in wholesale dis23 tribution. 

24 ‘‘(3) IMPORTER.—The term ‘importer’ means a 

25 dispenser (as defined in section 581(3)) or wholesale 

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1 ports prescription drugs into the United States in 

2 accordance with this section. 

3 ‘‘(4) LICENSED FOREIGN PHARMACY.—The 

4 term ‘licensed foreign pharmacy’ means a pharmacy 

5 located in Canada, or subject to subsection (e), an6 other applicable country, that— 

7 ‘‘(A) operates in accordance with applica8 ble pharmacy standards set forth by the provin9 cial pharmacy rules and regulations enacted in 

10 Canada, or, subject to subsection (e), such ap11 plicable rules and regulations of the permitted 

12 country in which such seller is located; and 

13 ‘‘(B) is licensed to operate and dispense 

14 prescription drugs to individuals in Canada, or, 

15 subject to subsection (e), the permitted country 

16 in which the pharmacy is located. 

17 ‘‘(5) QUALIFYING PRESCRIPTION DRUG.—The 

18 term ‘qualifying prescription drug’— 

19 ‘‘(A) means a prescription drug that— 

20 ‘‘(i) is approved for use in patients, 

21 and marketed, in Canada, or subject to 

22 subsection (e), approved for use in pa23 tients, and marketed, in another permitted 

24 country; 


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1 ‘‘(ii) is manufactured in a facility reg2 istered under subsection (b)(1) or (i) of 

3 section 510 that is in compliance with good 

4 manufacturing practices regulations of the 

5 Food and Drug Administration; 

6 ‘‘(iii) has the same active ingredient 

7 or ingredients, route of administration, and 

8 strength as a prescription drug approved 

9 under chapter V, or, for purposes of sub10 paragraph (B)(iv), is biosimilar to an ap11 proved biological product and has the same 

12 route of administration and strength as the 

13 approved biological product; and 

14 ‘‘(iv) is labeled in accordance with— 

15 ‘‘(I) the laws of Canada, or an16 other country from which importation 

17 is permitted pursuant to subsection 

18 (e); and 

19 ‘‘(II) the requirements promul20 gated by the Secretary, which shall in21 clude labeling in English; 

22 ‘‘(B) with respect to importers only, in23 cludes— 

24 ‘‘(i) peritoneal dialysis solution; 

25 ‘‘(ii) insulin; 


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1 ‘‘(iii) a drug for which a risk evalua2 tion and mitigation strategy is required 

3 under section 505–1; 

4 ‘‘(iv) biological products, as defined in 

5 section 351 of the Public Health Service 

6 Act that are proteins (except any chemi7 cally synthesized polypeptides) or analo8 gous products; and 

9 ‘‘(v) intravenously infused drugs; and 

10 ‘‘(C) does not include— 

11 ‘‘(i) a controlled substance (as defined 

12 in section 102 of the Controlled Sub13 stances Act); 

14 ‘‘(ii) an anesthetic drug inhaled dur15 ing surgery; or 

16 ‘‘(iii) a compounded drug. 

17 ‘‘(6) VALID PRESCRIPTION.—The term ‘valid 

18 prescription’ means a prescription that is issued for 

19 a legitimate medical purpose in the usual course of 

20 professional practice by— 

21 ‘‘(A) a practitioner who has conducted at 

22 least one in-person medical evaluation of the 

23 patient; or 

24 ‘‘(B) a covering practitioner. 


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1 ‘‘(c) PUBLICATION OF CERTIFIED FOREIGN SELL2 ERS.—The Secretary shall publish on a dedicated Internet 

3 Web site a list of certified foreign sellers, including the 

4 Internet Web site address, physical address, and telephone 

5 number of each such certified foreign seller. 

6 ‘‘(d) ADDITIONAL CRITERIA.— 

7 ‘‘(1) CERTIFIED FOREIGN SELLERS.— 

8 ‘‘(A) IN GENERAL.—To be a certified for9 eign seller, such seller shall— 

10 ‘‘(i) be certified by the Secretary in 

11 accordance with subparagraph (B); 

12 ‘‘(ii) pay the registration fee estab13 lished under subparagraph (C); and 

14 ‘‘(iii) sell only qualifying prescription 

15 drugs to importers or individuals who im16 port prescription drugs into the United 

17 States in accordance with this section. 

18 ‘‘(B) CERTIFICATION.—To be a certified 

19 foreign seller, the Secretary shall certify that 

20 such seller— 

21 ‘‘(i) is a foreign wholesale distributor 

22 or licensed foreign pharmacy operating an 

23 establishment, which may include an online 

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1 ada, or, subject to subsection (e), another 

2 permitted country; 

3 ‘‘(ii) is engaged in the distribution or 

4 dispensing of a prescription drug that is 

5 imported or offered for importation into 

6 the United States; 

7 ‘‘(iii) has been in existence for a pe8 riod of at least 5 years preceding the date 

9 of such certification and has a purpose 

10 other than to participate in the program 

11 established under this section; 

12 ‘‘(iv) in the case of a certified foreign 

13 seller that is a licensed foreign pharmacy, 

14 agrees to dispense a qualifying prescription 

15 drug to an individual in the United States 

16 only after receiving a valid prescription, as 

17 described in paragraph (2)(C); 

18 ‘‘(v) has processes established by the 

19 seller, or participates in another estab20 lished process, to certify that the physical 

21 premises and data reporting procedures 

22 and licenses are in compliance with all ap23 plicable laws and regulations of Canada, 

24 or, subject to subsection (e), the permitted 

25 country in which the seller is located, and 


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1 has implemented policies designed to mon2 itor ongoing compliance with such laws 

3 and regulations; 

4 ‘‘(vi) conducts or commits to partici5 pate in ongoing and comprehensive quality 

6 assurance programs and implements such 

7 quality assurance measures, including 

8 blind testing, to ensure the veracity and re9 liability of the findings of the quality as10 surance program; 

11 ‘‘(vii) agrees that, pursuant to sub12 section (g), laboratories approved by the 

13 Secretary may be authorized to conduct 

14 product testing to determine the chemical 

15 authenticity of sample pharmaceutical 

16 products; 

17 ‘‘(viii) agrees to notify the Secretary, 

18 importers, and individuals of product re19 calls in Canada, or pursuant to subsection 

20 (e), the permitted country in which the 

21 seller is located, and agrees to cease, or re22 frain from, exporting such product; 

23 ‘‘(ix) has established, or will establish 

24 or participate in, a process for resolving 

25 grievances, as defined by the Secretary, 


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1 and will be held accountable for violations 

2 of established guidelines and rules; 

3 ‘‘(x) except as otherwise permitted 

4 under this section, does not sell products 

5 that the seller could not otherwise legally 

6 sell in Canada, or, subject to subsection 

7 (e), the permitted country in which such 

8 seller is located to customers in the United 

9 States; and 

10 ‘‘(xi) meets any other criteria estab11 lished by the Secretary. 

12 ‘‘(C) CERTIFICATION FEE.—Not later than 

13 30 days before the start of each fiscal year, the 

14 Secretary shall establish a fee to be collected 

15 from foreign sellers for such fiscal year that are 

16 certified under subparagraph (B), in an amount 

17 that is sufficient, and not more than necessary, 

18 to pay the costs of administering the program 

19 under this section, and enforcing this section 

20 pursuant to section 303(h), for that fiscal year. 

21 ‘‘(D) RECERTIFICATION.—A certification 

22 under subparagraph (B) shall be in effect for a 

23 period of 2 years, or until there is a material 

24 change in the circumstances under which the 

25 foreign seller meets the requirements under 


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1 such subparagraph, whichever occurs earlier. A 

2 foreign seller may reapply for certification 

3 under such subparagraph (B), in accordance 

4 with a process established by the Secretary. 

5 ‘‘(2) INDIVIDUALS.—An individual may import 

6 a qualifying prescription drug described in sub7 section (b) from Canada or another country pursu8 ant to subsection (e) if such drug— 

9 ‘‘(A) is dispensed, including through an 

10 online pharmacy, by a certified foreign seller 

11 that is a licensed foreign pharmacy; 

12 ‘‘(B) is purchased for personal use by the 

13 individual, not for resale, in quantities that do 

14 not exceed a 90-day supply; and 

15 ‘‘(C) is filled only after providing to the li16 censed foreign pharmacy a valid prescription 

17 issued by a health care practitioner licensed to 

18 practice in a State in the United States. 

19 ‘‘(e) IMPORTATION FROM OTHER COUNTRIES.—Be20 ginning on the date that is 2 years after the date on which 

21 final regulations are promulgated to carry out this section, 

22 if, based on a review of the evidence obtained after such 

23 effective date, including the reports submitted under sec24 tion 2(d) of the Improving Access To Affordable Prescrip25 tion Drugs Act , that importation of qualifying prescripVerDate Sep 11 2014 02:21 Apr 01, 2017 Jkt 069200 PO 00000 Frm 00052 Fmt 6652 Sfmt 6201 E:\BILLS\S771.IS S771

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1 tion drugs from Canada under this section resulted in cost 

2 savings for consumers in the United States and increased 

3 access to safe medication, the Secretary shall have the au4 thority to permit importation of qualifying prescription 

5 drugs by importers and individuals from, in addition to 

6 Canada, any country that— 

7 ‘‘(1) is a member of the Organisation for Eco8 nomic Co-operation and Development; and 

9 ‘‘(2) has statutory or regulatory standards for 

10 the approval and sale of prescription drugs that are 

11 comparable to the standards in the United States 

12 and that— 

13 ‘‘(A) authorizes the approval of drugs only 

14 if a drug has been determined to be safe and 

15 effective by experts employed by or acting on 

16 behalf of a governmental entity and qualified by 

17 scientific training and experience to evaluate 

18 the safety and effectiveness of drugs; 

19 ‘‘(B) requires that any determination of 

20 safety and effectiveness described in subpara21 graph (A) be made on the basis of adequate 

22 and well-controlled investigations, including 

23 clinical investigations, as appropriate, con24 ducted by experts qualified by scientific training 


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1 and experience to evaluate the safety and effec2 tiveness of drugs; 

3 ‘‘(C) requires the methods used in, and the 

4 facilities and controls used for, the manufac5 ture, processing, and packing of drugs in the 

6 country to be adequate to preserve the identity, 

7 quality, purity, and strength of the drugs; and 

8 ‘‘(D) requires the reporting of adverse re9 actions to drugs and establish procedures to re10 call, and withdraw approval of, drugs found not 

11 to be safe or effective. 

12 ‘‘(f) LABELING.—Any qualifying prescription drug 

13 imported that meets the labeling requirements described 

14 in subsection (b)(5)(A)(iv) is deemed not misbranded for 

15 purposes of section 502. 

16 ‘‘(g) DRUG TESTING LABORATORIES.—The Sec17 retary may approve one or more laboratories to conduct 

18 random testing of prescription drugs sold by certified for19 eign sellers to assess the chemical authenticity of such 

20 drugs. 

21 ‘‘(h) UNFAIR AND DISCRIMINATORY ACTS AND PRAC22 TICES.—It is unlawful for a manufacturer, directly or indi23 rectly (including by being a party to a licensing agreement 

24 or other agreement)— 


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1 ‘‘(1) to discriminate by charging a higher price 

2 for a prescription drug sold to a certified foreign 

3 seller that sells such drug to an importer in accord4 ance with this section than the price that is charged, 

5 inclusive of rebates or other incentives to the coun6 try from which the drug is exported, to another per7 son that is in the same country and that does not 

8 import such a drug into the United States in accord9 ance with this section; 

10 ‘‘(2) except with respect to a prescription drug 

11 on the drug shortage list under section 506E, dis12 criminate by denying, restricting, or delaying sup13 plies of a prescription drug to a certified foreign sell14 er, on account of such seller’s status as a certified 

15 foreign seller, that sells such drug to an importer in 

16 accordance with this section, or by publicly, pri17 vately, or otherwise refusing to do business with 

18 such a certified foreign seller on account of such 

19 seller’s status as a certified foreign seller; 

20 ‘‘(3) cause there to be a difference (including a 

21 difference in active ingredient, route of administra22 tion, bioequivalence, strength, formulation, manufac23 turing establishment, manufacturing process, or per24 son that manufactures the drug) between a prescrip25 tion drug for distribution in the United States and 


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1 the drug for distribution in Canada or another per2 mitted country, subject to subsection (e), for the 

3 purpose of avoiding sales by certified foreign sellers; 

4 or 

5 ‘‘(4) except with respect to a prescription drug 

6 on the drug shortage list under section 506E, en7 gage in any other action to restrict, prohibit, or 

8 delay the importation of a prescription drug under 

9 this section. 

10 ‘‘(i) INFORMATION AND RECORDS.— 

11 ‘‘(1) BIANNUAL REPORTS.—Each importer shall 

12 submit biannual reports to the Secretary which shall 

13 contain, for each qualifying prescription drug im14 ported into the United States— 

15 ‘‘(A) the unique facility identifier of the 

16 manufacturer of the drug, described in section 

17 510; 

18 ‘‘(B) the transaction information described 

19 in section 581(26) (other than the information 

20 described in subparagraph (C)); and 

21 ‘‘(C) the price paid by the importer for the 

22 drug. 

23 ‘‘(2) MAINTENANCE OF RECORDS BY SEC24 RETARY.—The Secretary shall maintain information 

25 and documentation submitted under paragraph (1) 


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1 for such period of time as the Secretary determines 

2 to be appropriate. 

3 ‘‘(j) SUSPENSION OF IMPORTATION.— 

4 ‘‘(1) PATTERNS OF NONCOMPLIANCE.—The 

5 Secretary shall require that importation of a specific 

6 qualifying prescription drug or importation by a spe7 cific certified foreign seller or importer pursuant to 

8 this section be immediately suspended if the Sec9 retary determines that there is a pattern of importa10 tion of such specific drug or by such specific seller 

11 or importer that involves counterfeit drugs, drugs 

12 that have been recalled or withdrawn, or drugs in 

13 violation of any requirement of this section, until an 

14 investigation is completed and the Secretary deter15 mines that importation of such drug or by such sell16 er or importer does not endanger the public health. 

17 ‘‘(2) TEMPORARY SUSPENSION.—The Secretary 

18 may require that importation of a specific qualifying 

19 prescription drug or importation by a specific cer20 tified foreign seller or importer pursuant to this sec21 tion be temporarily suspended if, with respect to 

22 such drug, seller, or importer, there is a violation of 

23 any requirement of this section or if the Secretary 

24 determines that importation of such drug or by such 

25 seller or importer might endanger the public health. 


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1 Such temporary suspension shall apply until the Sec2 retary completes an investigation and determines 

3 that importation of such drug or by such seller or 

4 importer does not endanger the public health. 

5 ‘‘(k) SUPPLY CHAIN SECURITY.— 

6 ‘‘(1) PURCHASE FROM REGISTERED FACILITIES

7 AND CERTIFIED FOREIGN SELLERS.— 

8 ‘‘(A) IN GENERAL.—Except as provided in 

9 subparagraph (B), certified foreign sellers who 

10 sell qualifying prescription drugs for importa11 tion into the United States pursuant to this 

12 section may purchase such drugs only from 

13 manufacturers or entities registered under sec14 tion 510 or other certified foreign sellers. 

15 ‘‘(B) EXCEPTION.—Certified foreign sellers 

16 who sell qualifying prescription drugs for im17 portation into the United States pursuant to 

18 this section may purchase such drugs from for19 eign sellers in Canada or another permitted 

20 country, even if such foreign seller is not a 

21 manufacturer registered under section 510 or a 

22 certified foreign seller, if the Secretary enters 

23 into a memorandum of understanding or coop24 erative agreement with Canada, or such other 

25 permitted country, to ensure compliance, to the 


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1 extent appropriate and feasible, with subchapter 

2 H of chapter V. The Secretary shall seek to 

3 enter into such a memorandum of under4 standing or cooperative agreement with Canada 

5 and each country from which importation is 

6 permitted under subsection (e). 

7 ‘‘(2) IMPORTATION TRACING.—Certified foreign 

8 sellers shall provide importers with the unique facil9 ity identifier associated with the manufacturer reg10 istered under section 510 of the qualifying prescrip11 tion drug and the information under paragraph 

12 (25), paragraph (26) (other than subparagraph (C)), 

13 and subparagraphs (D), (F), and (G) of paragraph 

14 (27) of section 581. Certified foreign sellers shall 

15 provide such information to individuals purchasing 

16 such drugs, upon request. 

17 ‘‘(l) REMS.—In the case of an importer that imports 

18 a qualifying prescription drug, where the drug with the 

19 same active ingredient or ingredients (or that is biosimilar 

20 to an approved biological product), route of administra21 tion, and strength that is approved under chapter V or 

22 section 351 of the Public Health Service Act is subject 

23 to elements to assure safe use under section 505–1, such 

24 importer shall be subject to such elements to assure safe 

25 use, as applicable and appropriate. 


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1 ‘‘(m) CONSTRUCTION.—Nothing in this section limits 

2 the authority of the Secretary relating to the importation 

3 of prescription drugs, other than with respect to section 

4 801(d)(1) as provided in this section.’’. 

5 (b) PENALTIES WITH RESPECT TO ONLINE PHAR6 MACIES.—Section 303 of the Federal Food, Drug, and 

7 Cosmetic Act (21 U.S.C. 333) is amended by adding at 

8 the end the following: 

9 ‘‘(h) In the case of person operating an Internet 

10 website, whether in the United States or in another coun11 try, that violates section 301(aa) by— 

12 ‘‘(1) selling, by means of the Internet, with the 

13 intent to defraud or mislead or with reckless dis14 regard for safety of the public, an adulterated or 

15 counterfeit drug to an individual in the United 

16 States; or 

17 ‘‘(2) dispenses, by means of the Internet, a 

18 drug to an individual in the United States who the 

19 person knows or has reasonable cause to believe, 

20 does not possess a valid prescription for that drug, 

21 such person shall be imprisoned for not more than 

22 10 years or fined not more than $250,000.’’. 

23 (c) NO PREEMPTION.—Nothing in this section, in24 cluding the amendments made by this section, shall be 

25 construed to preempt, alter, displace, abridge, or supplant 


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1 any remedy available under any State or Federal law, in2 cluding common law, that provides a remedy for civil re3 lief. 

4 (d) REPORTS.— 

5 (1) HHS.—Not later than 1 year after the date 

6 on which final regulations are promulgated to carry 

7 out section 804 of the Federal Food, Drug, and Cos8 metic Act (21 U.S.C. 384), as amended by sub9 section (a), and every 2 years thereafter, the Sec10 retary of Health and Human Services, after con11 sultation with appropriate Federal agencies, shall 

12 submit to Congress and make public a report on the 

13 importation of drugs into the United States. 

14 (2) GAO REPORT.—Not later than 18 months 

15 after the date on which final regulations are promul16 gated to carry out section 804 of the Federal Food, 

17 Drug, and Cosmetic Act (21 U.S.C. 384), as amend18 ed by subsection (a), the Comptroller General of the 

19 United States shall submit to Congress a report con20 taining an analysis of the implementation of the 

21 amendments made by this section, including a review 

22 of drug safety and cost-savings and expenses, includ23 ing cost-savings to consumers in the United States 

24 and trans-shipment and importation tracing proc25 esses, resulting from such implementation. 


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1 SEC. 205. 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, 2019, 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) 2018 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, 2018, 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, 2017, in the amount 

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

9 drug of the manufacturer dispensed after December 

10 31, 2017, 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)(7), 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)(7)(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)(7): 

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 ‘‘(7) 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, 2019, 

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 ‘‘(D) REPORTING REQUIREMENT RELATED

25 TO REBATE FOR REBATE ELIGIBLE MEDICARE


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1 DRUG PLAN ENROLLEES.—Section 1860D– 

2 12(b)(7).’’. 

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).’’. 

7 SEC. 206. CAP ON PRESCRIPTION DRUG COST-SHARING. 

8 (a) QUALIFIED HEALTH PLANS.—Section 1302(c) of 

9 the Patient Protection and Affordable Care Act (42 

10 U.S.C. 18022(c)) is amended— 

11 (1) in paragraph (3)(A)(i), by inserting ‘‘(in12 cluding cost-sharing with respect to prescription 

13 drugs covered by the plan)’’ after ‘‘copayments’’; 

14 and 

15 (2) by adding at the end the following: 

16 ‘‘(5) PRESCRIPTION DRUG COST-SHARING.— 

17 ‘‘(A) 2019.—For plan years beginning in 

18 2019 or later, the cost-sharing incurred under 

19 a health plan with respect to prescription drugs 

20 covered by the plan shall not exceed $250 per 

21 month for each enrolled individual, or $500 for 

22 each family. 

23 ‘‘(B) 2020 AND LATER.— 

24 ‘‘(i) IN GENERAL.—In the case of any 

25 plan year beginning in a calendar year 


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1 after 2019, the limitation under this para2 graph shall be equal to the applicable dol3 lar amount under subparagraph (A) for 

4 plan years beginning in 2019, increased by 

5 an amount equal to the product of that 

6 amount and the medical care component of 

7 the consumer price index for all urban con8 sumers (as published by the Bureau of 

9 Labor Statistics) for that year. 

10 ‘‘(ii) ADJUSTMENT TO AMOUNT.—If 

11 the amount of any increase under clause 

12 (i) is not a multiple of $5, such increase 

13 shall be rounded to the next lowest mul14 tiple of $5.’’. 

15 (b) GROUP HEALTH PLANS.—Section 2707(b) of the 

16 Public Health Service Act (42 U.S.C. 300gg–6(b)) is 

17 amended by striking ‘‘paragraph (1) of section 1302(c)’’ 

18 and inserting ‘‘paragraphs (1) and (5) of section 1302(c) 

19 of the Patient Protection and Affordable Care Act’’. 

20 (c) EFFECTIVE DATE.—The amendments made by 

21 subsections (a) and (b) shall take effect with respect to 

22 the first plan year that begins after the date on which 

23 initial reports are required to be submitted under section 

24 399V–7(c)(3) of the Public Health Service Act, as added 

25 by section 101. 


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1 TITLE III—INNOVATION 

2 SEC. 301. PRIZE FUND FOR NEW AND MORE EFFECTIVE 

3 TREATMENTS OF BACTERIAL INFECTIONS. 

4 Part B of title IV of the Public Health Service Act 

5 (42 U.S.C. 284 et seq.) is amended by adding at the end 

6 the following: 

7 ‘‘SEC. 409K. PRIZE FUND FOR NEW AND MORE EFFECTIVE 

8 TREATMENTS OF BACTERIAL INFECTIONS. 

9 ‘‘(a) ESTABLISHMENT OF FUND.—There is hereby 

10 established in the Treasury of the United States a revolv11 ing fund to be known as the ‘Antibiotics Prize Fund’, 

12 which shall consist of funds transferred under subsection 

13 (b). 

14 ‘‘(b) AMOUNTS CREDITED TO THE FUND.—There 

15 are hereby authorized to be appropriated, and appro16 priated, to the Antibiotics Prize Fund, for fiscal year 

17 2018, out of any monies in the Treasury not otherwise 

18 appropriated, $2,000,000,000. Such funds shall remain 

19 available until expended. 

20 ‘‘(c) AWARDS.— 

21 ‘‘(1) IN GENERAL.—During the 10-year period 

22 following the date of enactment of the Improving 

23 Access To Affordable Prescription Drugs Act, the 

24 Director of the NIH, in accordance with the criteria 


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1 under subsection (d) and the goals under subsection 

2 (e), shall award— 

3 ‘‘(A) up to 3 prizes for qualifying products 

4 that provide added benefit for patients over ex5 isting therapies in the treatment of serious and 

6 life-threatening bacterial infections dem7 onstrating in superiority trials; and 

8 ‘‘(B) award open source dividend prizes for 

9 contributions that significantly advance the 

10 field of antibiotic research with openly sourced 

11 materials, technology, data, and knowledge. 

12 ‘‘(2) AWARD AMOUNT REQUIREMENTS.—No 

13 more than 5 percent of the amount available in the 

14 Antibiotics Prize Fund shall be dedicated to open 

15 source dividend prizes. 

16 ‘‘(d) CRITERIA AND STRUCTURE OF PRIZES.— 

17 ‘‘(1) ESTABLISHMENT OF CRITERIA.—Not later 

18 than 120 days after the date of enactment of the 

19 Improving Access To Affordable Prescription Drugs 

20 Act, the Director of NIH shall establish criteria for 

21 the selection of recipients and eligibility of persons 

22 for prizes under this section and criteria for deter23 mining the amounts of such prizes, through notice 

24 and comment rulemaking. 


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1 ‘‘(2) CONSIDERATIONS IN ESTABLISHING CRI2 TERIA FOR QUALIFYING PRODUCTS.—In establishing 

3 the criteria for selection of recipients and amounts 

4 of prizes under paragraph (1), the Director of NIH, 

5 in consultation with other agencies as appropriate, 

6 shall consider the following: 

7 ‘‘(A) The number of patients in the United 

8 States and in other countries who would benefit 

9 from the qualifying product that treats a seri10 ous or life-threatening bacterial infection, and 

11 the number of patients in the United States 

12 and in other countries projected to benefit dur13 ing the upcoming 10-year period. 

14 ‘‘(B) Whether the qualifying product 

15 treats, or has the potential to treat, a serious 

16 or life-threatening bacterial infection for which 

17 no other treatment is currently available or for 

18 which there is a high threat of resistance to ex19 isting treatments. 

20 ‘‘(C) The incremental and additional thera21 peutic benefit to human in the United States 

22 and other countries of the qualifying product as 

23 compared to other treatments available to treat 

24 the bacterial infection, evaluating the increVerDate Sep 11 2014 02:21 Apr 01, 2017 Jkt 069200 PO 00000 Frm 00079 Fmt 6652 Sfmt 6201 E:\BILLS\S771.IS S771

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1 mental therapeutic benefit in comparison to 

2 treatments that were not recently developed. 

3 ‘‘(D) The transmissibility of the bacterial 

4 infection the qualifying product would treat, 

5 and barriers to prevention of that infection. 

6 ‘‘(E) The extent to which knowledge, data, 

7 materials, and technology that are openly 

8 sourced have contributed to the successful de9 velopment of new treatments that provide an 

10 added benefit to patients, such as decreasing 

11 mortality or irreversible morbidity on patient12 centered outcomes, significantly advancing the 

13 field of antibiotic research, or improving proc14 esses for manufacturing products used for the 

15 treatment. 

16 ‘‘(F) Other criteria that the Director of 

17 NIH determines to be relevant and useful in 

18 ensuring that the prizes provide appropriate in19 centives. 

20 ‘‘(3) CRITERIA FOR OPEN SOURCE DIVIDEND

21 PRIZES.—An open source dividend prize under this 

22 section shall reward persons that openly shared on 

23 a royalty-free, not-for-profit and non-discriminatory 

24 basis, materials, technology, data, and knowledge 

25 that contribute in a significant way to the successful 


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1 development of a qualifying product or significantly 

2 advanced the field of antibiotic research. 

3 ‘‘(e) GOALS.—With respect to each year for which the 

4 Director of NIH awards prizes under subsection (c), the 

5 Director of NIH shall establish a framework of goals that 

6 a qualifying product or contribution that significantly ad7 vances the field of antibiotic research is required to show 

8 promise to help meet in order for a person to be eligible 

9 to receive a prize with respect to such product or such 

10 contribution. Such goals may include— 

11 ‘‘(1) reduced hospital admissions or readmis12 sions; 

13 ‘‘(2) use of diagnostics prior to prescribing of 

14 drugs; and 

15 ‘‘(3) use of innovative programs for antibiotic 

16 stewardship. 

17 ‘‘(f) CONDITION ON RECEIPT OF PRIZE.— 

18 ‘‘(1) IN GENERAL.—Each prize for a qualifying 

19 product offered under this section shall be condi20 tioned on the following: 

21 ‘‘(A) The recipient shall agree to offer the 

22 qualifying product at a reasonable price as de23 scribed in paragraph (3). 

24 ‘‘(B) Subject to applicable patient privacy 

25 protections, the recipient shall agree to publicly 


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1 disclose all pre-clinical and clinical trial data 

2 with respect to the qualifying product. 

3 ‘‘(C) The recipient shall agree to submit to 

4 the Director of NIH, for review and approval 

5 by such director, in collaboration with the Com6 missioner of Food and Drugs and the Director 

7 of the Centers for Disease Control and Preven8 tion, all marketing, sales, and other promotional 

9 and educational activities associated with the 

10 qualifying product, to ensure that such activi11 ties align with, and advance the goals of, re12 source conserving stewardship, protecting the 

13 utility of antibiotics, and encouraging and en14 suring the correct use of antibiotics. 

15 ‘‘(D) The recipient shall irrevocably 

16 waive— 

17 ‘‘(i) all periods of exclusivity available 

18 to the product under chapter V of the Fed19 eral Food, Drug, and Cosmetic Act or sec20 tion 351 of this Act; and 

21 ‘‘(ii) all applicable patent rights under 

22 title 35, United States Code. 

23 ‘‘(E) Any other conditions the Director of 

24 NIH determines appropriate. 


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1 ‘‘(2) APPLICABILITY.—All conditions described 

2 in paragraph (1) shall apply to subsequent owners, 

3 licensees, producers, and manufacturers, and assign4 ees of the product or any chemical component of the 

5 qualifying product for which the prize was awarded. 

6 ‘‘(3) REASONABLE PRICE.— 

7 ‘‘(A) IN GENERAL.—A recipient may sat8 isfy the requirement to offer a qualifying prod9 uct or contribution at a ‘reasonable price’ for 

10 purposes of paragraph (1)(A) by— 

11 ‘‘(i)(I) providing open licensing of all 

12 necessary rights to patents, manufacturing 

13 processes, rights in data, and other intel14 lectual property rights needed to make and 

15 sell the product to manufacturers of the 

16 generic version of such product; or 

17 ‘‘(II) selling such product at a price 

18 that is no more than twice the price of an19 tibiotic drugs approved under section 

20 505(j) of the Federal Food, Drug, and 

21 Cosmetic Act with similar manufacturing 

22 costs; and 

23 ‘‘(ii) selling such product at a price 

24 that is not higher than the median price 

25 charged, at the time of such sale, in the 


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1 applicable 7 countries, as determined 

2 under in subparagraph (B). 

3 ‘‘(B) CRITERIA.—For purposes of subpara4 graph (A)(ii), the Director of NIH shall iden5 tify, on an annual basis, the countries that have 

6 a per capita income that is not less than half 

7 the per capita income of the United States, se8 lect the 7 of such countries that have the larg9 est gross domestic product, and determine the 

10 median price charged for each qualifying prod11 uct for which an award has been granted under 

12 subsection (c). 

13 ‘‘(g) ENFORCEMENT.—If the prize recipient, or sub14 sequent owner, licensee, or assignee of the qualifying prod15 uct, does not fulfill the conditions described subsection 

16 (f)(1), the Secretary, in collaboration with the Attorney 

17 General, shall take all necessary action to clawback the 

18 prize. 

19 ‘‘(h) TRANSPARENCY.—With respect to each prize 

20 awarded under this section, the Director of NIH shall 

21 make public— 

22 ‘‘(1) the methodology used and criteria analyzed 

23 in determining the prize recipient; and 

24 ‘‘(2) a complete analysis of the recipient’s ful25 fillment of award conditions under subsection (e)(1). 


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1 ‘‘(i) QUALIFYING PRODUCT.—For purposes of this 

2 section, the term ‘qualifying product’ means a drug (as 

3 defined in section 201(g) of the Federal Food, Drug, and 

4 Cosmetic Act) subject to section 503(b)(1) of the Federal 

5 Food, Drug, and Cosmetic Act. 

6 ‘‘(j) STUDY.— 

7 ‘‘(1) IN GENERAL.—The Director of NIH shall 

8 seek to enter into an agreement with the National 

9 Academies of Sciences, Engineering, and Medicine to 

10 conduct a study to examine— 

11 ‘‘(A) the use of innovation inducement 

12 prize funds and push financing mechanisms as 

13 ways to stimulate investments in biomedical re14 search and development that de-links costs from 

15 product prices; 

16 ‘‘(B) models of different possible means of 

17 de-linking research and development costs from 

18 drug prices, including the replacement of the 

19 monopoly on new products as an incentive, with 

20 innovation inducement prize funds and push fi21 nancing mechanisms as new incentives to stim22 ulate the development of drugs, including drugs 

23 to treat bacterial infections, rare diseases, HIV/ 

24 AIDS, and cancer; and 


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1 ‘‘(C) the size of prizes awarded under this 

2 section and the effectiveness of such prizes in 

3 stimulating innovation. 

4 ‘‘(2) AUTHORIZATION OF APPROPRIATIONS.— 

5 For the purpose of carrying out this subsection, 

6 there are authorized to be appropriated, and there 

7 are appropriated, $3,000,000 for fiscal year 2018. 

8 Such funds shall remain available until expended.’’. 

9 SEC. 302. PUBLIC FUNDING FOR CLINICAL TRIALS. 

10 (a) IN GENERAL.—Part E of title IV of the Public 

11 Health Service Act (42 U.S.C. 287 et seq.) is amended 

12 by adding at the end the following: 

13 ‘‘Subpart 6—Center for Clinical Research 

14 ‘‘SEC. 485E. CENTER FOR CLINICAL RESEARCH. 

15 ‘‘(a) IN GENERAL.—There is established within the 

16 National Institutes of Health the Center for Clinical Re17 search, for the purpose of conducting clinical trials on 

18 drugs, as described in subsection (b), with the intention 

19 of obtaining approval of such drug under section 505 of 

20 the Federal Food, Drug, and Cosmetic Act or section 351 

21 of this Act. The Director of NIH shall appoint a Director 

22 of the Center for Clinical Research referred to in this sec23 tion as the ‘Director’) not later than 90 days after the 

24 date of enactment of the Improving Access To Affordable 

25 Prescription Drugs Act. 


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1 ‘‘(b) CLINICAL TRIALS.— 

2 ‘‘(1) IN GENERAL.—Each year, beginning not 

3 later than 1 year after the date of enactment of the 

4 Improving Access To Affordable Prescription Drugs 

5 Act, the Director shall select at least 2 molecules, 

6 compounds, drugs, or biological products and con7 duct clinical trials on such molecules, compounds, 

8 drugs, or biological products, or enter into contracts 

9 with other entities to conduct such clinical trials. 

10 ‘‘(2) SELECTION OF DRUGS.— 

11 ‘‘(A) CRITERIA.—The Director shall estab12 lish criteria, which shall be made public, for ac13 quiring the patent rights for, and selecting, 

14 drugs under paragraph (1) to ensure that the 

15 drugs selected for clinical trials through the 

16 Center— 

17 ‘‘(i) have the potential to address an 

18 existing or emerging need, including drugs 

19 that can be repurposed to treat a new con20 dition in the case of a national emergency; 

21 and 

22 ‘‘(ii) are not solely drugs that private 

23 sector researchers with access to all avail24 able information on such drugs chose not 

25 to develop. 


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1 ‘‘(B) PROCESS.—The Director shall secure 

2 all patent rights to each drug selected under 

3 paragraph (1), as applicable, and perform the 

4 clinical trials at NIH or subcontract with an5 other entity to conduct the clinical trials. 

6 ‘‘(c) TREATMENT OF APPROVED DRUGS.—If a drug 

7 for which clinical trials have been conducted by the Center 

8 for Clinical Research is approved by the Food and Drug 

9 Administration under section 505 of the Federal Food, 

10 Drug, and Cosmetic Act or section 351 of this Act, the 

11 Director shall— 

12 ‘‘(1) execute non-exclusive licenses to allow 

13 drug manufacturers to manufacture the drug; or 

14 ‘‘(2) in collaboration with other Federal agen15 cies as appropriate, enter into purchasing contracts. 

16 ‘‘(d) PUBLIC INFORMATION.— 

17 ‘‘(1) RESEARCH DATA AND FINDINGS.—Subject 

18 to applicable patient privacy protections, the Sec19 retary shall— 

20 ‘‘(A)(i) submit all completed studies (and 

21 terminated studies, if terminated for safety or 

22 ethical reasons) for publication in a peer-re23 viewed publication within 180 days of comple24 tion or termination; and 


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1 ‘‘(ii) if a study submitted as described in 

2 clause (i) is not selected for publication, pub3 licly disclose all de-identified primary clinical 

4 data not later than 180 days after the Sec5 retary’s final decision not to pursue further 

6 submissions for publication; and 

7 ‘‘(B) publicly disclose all de-identified pri8 mary clinical data upon publication of a study 

9 as described in subparagraph (A)(i). 

10 ‘‘(2) FINANCIAL INFORMATION.—The Director 

11 shall make public all costs to the Federal Govern12 ment associated with carrying out clinical trials by 

13 the Center for Clinical Research and with sub14 contract agreements under this section. 

15 ‘‘(e) DEFINITION.—In this section, the term ‘drug’ 

16 has the meaning given such term in section 201(g) of the 

17 Federal Food, Drug, and Cosmetic Act. 

18 ‘‘(f) APPROPRIATIONS.—For the purpose of carrying 

19 out this section, in addition to any other funds available 

20 for such purpose, there are authorized to be appropriated, 

21 and there are appropriated, $1,000,000,000 for each of 

22 fiscal years 2017 through 2027, to remain available until 

23 expended.’’. 


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1 (b) CLERICAL AMENDMENT.—Section 401(b) of the 

2 Public Health Service Act (42 U.S.C. 281(b)) is amend3 ed— 

4 (1) by redesignating paragraph (25) as para5 graph (26); and 

6 (2) by inserting after paragraph (24) the fol7 lowing: 

8 ‘‘(25) The Center for Clinical Research.’’. 

9 SEC. 303. REWARDING INNOVATIVE DRUG DEVELOPMENT. 

10 (a) DRUG EXCLUSIVITY.— 

11 (1) NEW CHEMICAL ENTITY EXCLUSIVITY.— 

12 (A) IN GENERAL.—Section 505(j)(5) of 

13 the Federal Food, Drug, and Cosmetic Act (21 

14 U.S.C. 355(j)(5)) is amended— 

15 (i) in subparagraph (B)— 

16 (I) in clause (i), by inserting ‘‘ex17 cept that such approval may not be 

18 made effective before the date that is 

19 5 years after the date on which the 

20 drug to which the application refers 

21 was approved under subsection (c)’’ 

22 before the period; and 

23 (II) in clause (ii), by inserting 

24 ‘‘except that such approval may not 

25 be made effective before the date that 


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1 is 5 years after the date on which the 

2 drug to which the application refers 

3 was approved under subsection (c)’’ 

4 before the period; and 

5 (ii) in subparagraph (F)(ii)— 

6 (I) by striking ‘‘expiration of five 

7 years’’ and inserting ‘‘expiration of 3 

8 years’’; 

9 (II) by striking ‘‘, except that 

10 such an application may be submitted 

11 under this subsection after the expira12 tion of four years from the date of the 

13 approval of the subsection (b) applica14 tion if it contains a certification of 

15 patent invalidity or noninfringement 

16 described in subclause (IV) of para17 graph (2)(A)(vii)’’; and 

18 (III) by striking ‘‘seven and one19 half years’’ and inserting ‘‘6 and one20 half years’’. 

21 (B) CONFORMING AMENDMENTS.—Chapter 

22 V of the Federal Food, Drug, and Cosmetic Act 

23 (21 U.S.C. 351 et seq.) is amended— 

24 (i) in subsection (v)(2)(A)(i)(II) of 

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1 sivity period referred to’’ before ‘‘under 

2 clause (ii) of subsection (j)(5)(F)’’; 

3 (ii) in subsections (b)(1)(A)(i)(I) and 

4 (c)(1)(A)(i)(I) of section 505A— 

5 (I) by striking ‘‘five years’’ each 

6 place such term appears and inserting 

7 ‘‘3 years’’; 

8 (II) by striking ‘‘seven and one9 half years’’ each place such term ap10 pears and inserting ‘‘6 and one-half 

11 years’’; and 

12 (III) by striking ‘‘eight years’’ 

13 each place such term appears and in14 serting ‘‘7 years’’; and 

15 (iii) in section 505E, by striking ‘‘the 

16 4- and 5-year periods described in sub17 sections (c)(3)(E)(ii) and (j)(5)(F)(ii) of 

18 section 505, the 3-year periods described 

19 in clauses (iii) and (iv) of subsection 

20 (c)(3)(E) and clauses (iii) and (iv) of sub21 section (j)(5)(F)’’ and inserting ‘‘the 4- 

22 and 5-year periods described in subsection 

23 (c)(3)(E)(ii) of section 505, the 3-year pe24 riods described in clauses (iii) and (iv) of 


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1 subsection (c)(3)(E) and clauses (ii), (iii), 

2 and (iv) of subsection (j)(5)(F)’’; 

3 (2) NEW CLINICAL INVESTIGATION EXCLU4 SIVITY.—Section 505(c)(3)(E)(iv) of the Federal 

5 Food, Drug, and Cosmetic Act (21 U.S.C. 

6 355(c)(3)(E)(iv)) is amended by inserting ‘‘, and the 

7 supplement shows a significant clinical benefit over 

8 existing therapies manufactured by the applicant in 

9 the 5-year period preceding the submission of the 

10 application,’’ before ‘‘the Secretary’’. 

11 (3) BIOLOGICAL PRODUCT EXCLUSIVITY.— 

12 (A) IN GENERAL.—Section 351(k)(7)(A) of 

13 the Public Health Service Act (42 U.S.C. 

14 262(k)(7)(A)) is amended by striking ‘‘12 

15 years’’ and inserting ‘‘7 years’’. 

16 (B) CONFORMING AMENDMENTS.—Para17 graphs (2)(A) and (3)(A) of section 351(m) of 

18 the Public Health Service Act (42 U.S.C. 

19 262(m)) is amended by striking ‘‘12 years’’ 

20 each place it appears and inserting ‘‘7 years’’. 

21 (b) APPLICABILITY.—The amendments made by sub22 section (a) apply only with respect to a drug or biological 

23 product for which the listed drug (as described in section 

24 505(j)(7) of the Federal Food, Drug, and Cosmetic Act 

25 (21 U.S.C. 355(j)(7)) or reference product (as such term 


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1 is used in section 351 of the Public Health Service Act 

2 (42 U.S.C. 262)) is approved under section 505(c) of the 

3 Federal Food, Drug, and Cosmetic Act or licensed under 

4 section 351(a) of the Public Health Service Act, as appli5 cable, on or after the date of enactment of this Act. 

6 (c) GAO STUDY.—Not later than 1 year after the 

7 date of enactment of this Act, the Comptroller General 

8 of the United States shall conduct a study and submit to 

9 Congress a report that includes— 

10 (1)(A) the number of requests for designation 

11 as a drug for a rare disease or condition under sec12 tion 526 of the Federal Food, Drug, and Cosmetic 

13 Act (21 U.S.C. 360bb) the Food and Drug Adminis14 tration receives each year in the previous 10-year pe15 riod; 

16 (B) the number of such requests granted, de17 nied, and pending; 

18 (C) the names of all drugs receiving such des19 ignation during such period, including the date of 

20 approval and indication for which market exclusivity 

21 was granted; and 

22 (D) any drugs for which such designation has 

23 been revoked or amended during such period; 

24 (2) for each drug so designated as a drug for 

25 a rare disease or condition in the previous 10-year 


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1 period, the total annual expenditures for such drugs 

2 under the Medicare program under title XVIII of 

3 the Social Security Act (42 U.S.C. 1395 et seq.) and 

4 the Medicaid program under title XIX of the Social 

5 Security Act (42 U.S.C. 1396 et seq.), the number 

6 of Medicare and Medicaid beneficiaries who used 

7 each such drug each year during such time period, 

8 and any changes in price per unit during such time 

9 period; and 

10 (3) for a sample of drugs (selected by the 

11 Comptroller General) so designated in the previous 

12 10-year period, to the extent feasible— 

13 (A) gross revenues of the manufacturers 

14 with respect to each such drug, and manufac15 turer spending for marketing and patient as16 sistance programs; 

17 (B) the average price per drug and how 

18 those prices changed over time for the selected 

19 drugs based on industry drug pricing bench20 marks; and 

21 (C) the indications that were the basis of 

22 such designation and other approved indications 

23 for the drugs, and the indications for which 

24 each drug has most commonly been used, in25 cluding non-approved indications for which the 


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1 drug may be recommended by external organi2 zations such as physician or patient organiza3 tions. 

4 SEC. 304. IMPROVING PROGRAM INTEGRITY. 

5 (a) IN GENERAL.—Subchapter E of chapter V of the 

6 Federal Food, Drug, and Cosmetic Act (21 U.S.C. 360bbb 

7 et seq.) is amended by adding at the end the following: 

8 ‘‘SEC. 569D. CONDITIONS ON AWARD OF DRUG EXCLU9 SIVITY. 

10 ‘‘(a) TERMINATION OF EXCLUSIVITY.—Notwith11 standing any other provision of this Act, any period of 

12 exclusivity described in subsection (b) granted to a person 

13 or assigned to a person on or after the date of enactment 

14 of this section with respect to a drug shall be terminated 

15 if the person to which such exclusivity was granted or any 

16 person to which such exclusivity is assigned commits a vio17 lation described in subsection (c)(1) with respect to such 

18 drug. 

19 ‘‘(b) EXCLUSIVITIES AFFECTED.—The periods of ex20 clusivity described in this subsection are those periods of 

21 exclusivity granted under any of the following sections: 

22 ‘‘(1) Clause (ii), (iii), or (iv) of section 

23 505(c)(3)(E). 

24 ‘‘(2) Clause (iv) of section 505(j)(5)(B). 


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1 ‘‘(3) Clause (ii), (iii), or (iv) of section 

2 505(j)(5)(F). 

3 ‘‘(4) Section 505A. 

4 ‘‘(5) Section 505E. 

5 ‘‘(6) Section 527. 

6 ‘‘(7) Section 351(k)(7) of the Public Health 

7 Service Act. 

8 ‘‘(8) Any other provision of this Act that pro9 vides for market exclusivity (or extension of market 

10 exclusivity) with respect to a drug. 

11 ‘‘(c) VIOLATIONS.— 

12 ‘‘(1) IN GENERAL.—A violation described in 

13 this subsection is a violation of a law described in 

14 paragraph (2), enforced by a Federal or State gov15 ernmental entity that results in— 

16 ‘‘(A) a criminal conviction of a person de17 scribed in subsection (a); 

18 ‘‘(B) a civil judgment against a person de19 scribed in subsection (a); or 

20 ‘‘(C) a settlement agreement in which a 

21 person described in subsection (a) admits to 

22 fault. 

23 ‘‘(2) LAWS DESCRIBED.—The laws described in 

24 this paragraph are the following: 


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1 ‘‘(A) The provisions of this Act that pro2 hibit— 

3 ‘‘(i) the adulteration or misbranding 

4 of a drug; 

5 ‘‘(ii) the making of false statements to 

6 the Secretary or committing fraud; or 

7 ‘‘(iii) the illegal marketing of a drug. 

8 ‘‘(B) Section 3729 of title 31, United 

9 States Code. 

10 ‘‘(C) Section 286 or 287 of title 18, United 

11 States Code. 

12 ‘‘(D) The Medicare and Medicaid Patient 

13 Protection and Program Act of 1987 (com14 monly known as the ‘Antikickback Statute’). 

15 ‘‘(E) Section 1927 of the Social Security 

16 Act. 

17 ‘‘(F) A State law against fraud comparable 

18 to a law described in subparagraphs (A) 

19 through (E). 

20 ‘‘(d) DATE OF EXCLUSIVITY TERMINATION.—The 

21 date on which the exclusivity shall be terminated as de22 scribed in subsection (a) is the date on which, as applica23 ble— 


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1 ‘‘(1) a final judgment is entered relating to a 

2 violation described in subparagraph (A) or (B) of 

3 subsection (c)(1); or 

4 ‘‘(2)(A) a settlement agreement described in 

5 subsection (c)(1)(C) is approved by a court order 

6 that is or becomes final and nonappealable; or 

7 ‘‘(B) if there is no court order approving a set8 tlement agreement described in subsection (c)(1)(C), 

9 a court order dismissing the applicable case, issued 

10 after the settlement agreement, is or becomes final 

11 and nonappealable. 

12 ‘‘(e) REPORTING OF INFORMATION.— 

13 ‘‘(1) IN GENERAL.—A person described in sub14 section (a) that commits a violation described in 

15 subsection (c)(1) shall report such violation to the 

16 Secretary no later than 30 days after the date 

17 that— 

18 ‘‘(A) a final judgment is entered relating 

19 to a violation described in subparagraph (A) or 

20 (B) of subsection (c)(1); or 

21 ‘‘(B)(i) a settlement agreement described 

22 in subsection (c)(1)(C) is approved by a court 

23 order that is or becomes final and nonappeal24 able; or 


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1 ‘‘(ii) if there is no court order approving a 

2 settlement agreement described in subsection 

3 (c)(1)(C), a court order dismissing the applica4 ble case, issued after the settlement agreement, 

5 is or becomes final and nonappealable. 

6 ‘‘(2) CIVIL PENALTY.—A person who fails to re7 port a violation as required under paragraph (1) 

8 shall be subject to a civil penalty in the amount of 

9 $200,000 for each day the failure to report con10 tinues, beginning with the day after the date on 

11 which such report is due as described in paragraph 

12 (1).’’. 

13 (b) FTC.—There are authorized to be appropriated 

14 to the Federal Trade Commission such sums as may be 

15 necessary for the purpose of carrying out activities related 

16 to addressing criminal activity and anticompetitive prac17 tices by pharmaceutical companies. 

18 TITLE IV—CHOICE AND 

19 COMPETITION 

20 SEC. 401. PRESERVING ACCESS TO AFFORDABLE 

21 GENERICS. 

22 (a) IN GENERAL.—The Federal Trade Commission 

23 Act (15 U.S.C. 44 et seq.) is amended by inserting after 

24 section 26 (15 U.S.C. 57c–2) the following: 


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1 ‘‘SEC. 27. PRESERVING ACCESS TO AFFORDABLE 

2 GENERICS. 

3 ‘‘(a) IN GENERAL.— 

4 ‘‘(1) ENFORCEMENT PROCEEDING.—The Com5 mission may initiate a proceeding to enforce the pro6 visions of this section against the parties to any 

7 agreement resolving or settling, on a final or interim 

8 basis, a patent infringement claim, in connection 

9 with the sale of a drug product. 

10 ‘‘(2) PRESUMPTION AND VIOLATION.— 

11 ‘‘(A) IN GENERAL.—Subject to subpara12 graph (B), in such a proceeding, an agreement 

13 shall be presumed to have anticompetitive ef14 fects and be a violation of this section if— 

15 ‘‘(i) an ANDA filer receives anything 

16 of value, including an exclusive license; and 

17 ‘‘(ii) the ANDA filer agrees to limit or 

18 forego research, development, manufac19 turing, marketing, or sales of the ANDA 

20 product for any period of time. 

21 ‘‘(B) EXCEPTION.—Subparagraph (A) 

22 shall not apply if the parties to such agreement 

23 demonstrate by clear and convincing evidence 

24 that— 

25 ‘‘(i) the value described in subpara26 graph (A)(i) is compensation solely for 


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1 other goods or services that the ANDA 

2 filer has promised to provide; or 

3 ‘‘(ii) the procompetitive benefits of the 

4 agreement outweigh the anticompetitive ef5 fects of the agreement. 

6 ‘‘(b) LIMITATIONS.—In determining whether the set7 tling parties have met their burden under subsection 

8 (a)(2)(B), the fact finder shall not presume— 

9 ‘‘(1) that entry would not have occurred until 

10 the expiration of the relevant patent or statutory ex11 clusivity; or 

12 ‘‘(2) that the agreement’s provision for entry of 

13 the ANDA product prior to the expiration of the rel14 evant patent or statutory exclusivity means that the 

15 agreement is procompetitive. 

16 ‘‘(c) EXCLUSIONS.—Nothing in this section shall pro17 hibit a resolution or settlement of a patent infringement 

18 claim in which the consideration granted by the NDA 

19 holder to the ANDA filer as part of the resolution or set20 tlement includes only one or more of the following: 

21 ‘‘(1) The right to market the ANDA product in 

22 the United States prior to the expiration of— 

23 ‘‘(A) any patent that is the basis for the 

24 patent infringement claim; or 


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1 ‘‘(B) any patent right or other statutory 

2 exclusivity that would prevent the marketing of 

3 such drug. 

4 ‘‘(2) A payment for reasonable litigation ex5 penses not to exceed $7,500,000. 

6 ‘‘(3) A covenant not to sue on any claim that 

7 the ANDA product infringes a United States patent. 

8 ‘‘(d) ENFORCEMENT.— 

9 ‘‘(1) ENFORCEMENT.—A violation of this sec10 tion shall be treated as a violation of section 5. 

11 ‘‘(2) JUDICIAL REVIEW.— 

12 ‘‘(A) IN GENERAL.—Any party that is sub13 ject to a final order of the Commission, issued 

14 in an administrative adjudicative proceeding 

15 under the authority of subsection (a)(1), may, 

16 within 30 days of the issuance of such order, 

17 petition for review of such order in— 

18 ‘‘(i) the United States Court of Ap19 peals for the District of Columbia Circuit; 

20 ‘‘(ii) the United States Court of Ap21 peals for the circuit in which the ultimate 

22 parent entity, as defined in section 

23 801.1(a)(3) of title 16, Code of Federal 

24 Regulations, or any successor thereto, of 

25 the NDA holder is incorporated as of the 


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1 date that the NDA is filed with the Com2 missioner of Food and Drugs; or 

3 ‘‘(iii) the United States Court of Ap4 peals for the circuit in which the ultimate 

5 parent entity of the ANDA filer is incor6 porated as of the date that the ANDA is 

7 filed with the Commissioner of Food and 

8 Drugs. 

9 ‘‘(B) TREATMENT OF FINDINGS.—In a 

10 proceeding for judicial review of a final order of 

11 the Commission, the findings of the Commis12 sion as to the facts, if supported by evidence, 

13 shall be conclusive. 

14 ‘‘(e) ANTITRUST LAWS.—Nothing in this section 

15 shall be construed to modify, impair, or supersede the ap16 plicability of the antitrust laws as defined in subsection 

17 (a) of the first section of the Clayton Act (15 U.S.C. 

18 12(a)), and of section 5 of this Act to the extent that sec19 tion 5 applies to unfair methods of competition. Nothing 

20 in this section shall modify, impair, limit, or supersede the 

21 right of an ANDA filer to assert claims or counterclaims 

22 against any person, under the antitrust laws or other laws 

23 relating to unfair competition. 

24 ‘‘(f) PENALTIES.— 


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1 ‘‘(1) FORFEITURE.—Each party that violates or 

2 assists in the violation of this section shall forfeit 

3 and pay to the United States a civil penalty suffi4 cient to deter violations of this section, but in no 

5 event greater than 3 times the value received by the 

6 party that is reasonably attributable to the violation 

7 of this section. If no such value has been received by 

8 the NDA holder, the penalty to the NDA holder 

9 shall be sufficient to deter violations, but in no event 

10 greater than 3 times the value given to the ANDA 

11 filer reasonably attributable to the violation of this 

12 section. Such penalty shall accrue to the United 

13 States and may be recovered in a civil action 

14 brought by the Commission, in its own name by any 

15 of its attorneys designated by it for such purpose, in 

16 a district court of the United States against any 

17 party that violates this section. In such actions, the 

18 United States district courts are empowered to grant 

19 mandatory injunctions and such other and further 

20 equitable relief as they deem appropriate. 

21 ‘‘(2) CEASE AND DESIST.— 

22 ‘‘(A) IN GENERAL.—If the Commission has 

23 issued a cease and desist order with respect to 

24 a party in an administrative adjudicative pro25 ceeding under the authority of subsection 


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1 (a)(1), an action brought pursuant to para2 graph (1) may be commenced against such 

3 party at any time before the expiration of 1 

4 year after such order becomes final pursuant to 

5 section 5(g). 

6 ‘‘(B) EXCEPTION.—In an action under 

7 subparagraph (A), the findings of the Commis8 sion as to the material facts in the administra9 tive adjudicative proceeding with respect to the 

10 violation of this section by a party shall be con11 clusive unless— 

12 ‘‘(i) the terms of such cease and de13 sist order expressly provide that the Com14 mission’s findings shall not be conclusive; 

15 or 

16 ‘‘(ii) the order became final by reason 

17 of section 5(g)(1), in which case such find18 ing shall be conclusive if supported by evi19 dence. 

20 ‘‘(3) CIVIL PENALTY.—In determining the 

21 amount of the civil penalty described in this section, 

22 the court shall take into account— 

23 ‘‘(A) the nature, circumstances, extent, 

24 and gravity of the violation; 


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1 ‘‘(B) with respect to the violator, the de2 gree of culpability, any history of violations, the 

3 ability to pay, any effect on the ability to con4 tinue doing business, profits earned by the 

5 NDA holder, compensation received by the 

6 ANDA filer, and the amount of commerce af7 fected; and 

8 ‘‘(C) other matters that justice requires. 

9 ‘‘(4) REMEDIES IN ADDITION.—Remedies pro10 vided in this subsection are in addition to, and not 

11 in lieu of, any other remedy provided by Federal 

12 law. Nothing in this paragraph shall be construed to 

13 affect any authority of the Commission under any 

14 other provision of law. 

15 ‘‘(g) DEFINITIONS.—In this section: 

16 ‘‘(1) AGREEMENT.—The term ‘agreement’ 

17 means anything that would constitute an agreement 

18 under section 1 of the Sherman Act (15 U.S.C. 1) 

19 or section 5 of this Act. 

20 ‘‘(2) AGREEMENT RESOLVING OR SETTLING A

21 PATENT INFRINGEMENT CLAIM.—The term ‘agree22 ment resolving or settling a patent infringement 

23 claim’ includes any agreement that is entered into 

24 within 30 days of the resolution or the settlement of 

25 the claim, or any other agreement that is contingent 


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1 upon, provides a contingent condition for, or is oth2 erwise related to the resolution or settlement of the 

3 claim. 

4 ‘‘(3) ANDA.—The term ‘ANDA’ means an ab5 breviated new drug application filed under section 

6 505(j) of the Federal Food, Drug, and Cosmetic Act 

7 (21 U.S.C. 355(j)) or a new drug application filed 

8 under section 505(b)(2) of the Federal Food, Drug, 

9 and Cosmetic Act (21 U.S.C. 355(b)(2)). 

10 ‘‘(4) ANDA FILER.—The term ‘ANDA filer’ 

11 means a party that owns or controls an ANDA filed 

12 with the Commission of Food and Drugs or has the 

13 exclusive rights under such ANDA to distribute the 

14 ANDA product. 

15 ‘‘(5) ANDA PRODUCT.—The term ‘ANDA 

16 product’ means the product to be manufactured 

17 under the ANDA that is the subject of the patent 

18 infringement claim. 

19 ‘‘(6) DRUG PRODUCT.—The term ‘drug prod20 uct’ has the meaning given such term in section 

21 314.3(b) of title 21, Code of Federal Regulations (or 

22 any successor regulation). 

23 ‘‘(7) NDA.—The term ‘NDA’ means a new 

24 drug application filed under section 505(b) of the 


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1 Federal Food, Drug, and Cosmetic Act (21 U.S.C. 

2 355(b)). 

3 ‘‘(8) NDA HOLDER.—The term ‘NDA holder’ 

4 means— 

5 ‘‘(A) the holder of an approved NDA appli6 cation for a drug product; 

7 ‘‘(B) a person owning or controlling en8 forcement of the patent listed in the Approved 

9 Drug Products With Therapeutic Equivalence 

10 Evaluations (commonly known as the ‘FDA Or11 ange Book’) in connection with the NDA; or 

12 ‘‘(C) the predecessors, subsidiaries, divi13 sions, groups, and affiliates controlled by, con14 trolling, or under common control with any of 

15 the entities described in subparagraphs (A) and 

16 (B) (such control to be presumed by direct or 

17 indirect share ownership of 50 percent or great18 er), as well as the licensees, licensors, succes19 sors, and assigns of each of the entities. 

20 ‘‘(9) PARTY.—The term ‘party’ means any per21 son, partnership, corporation, or other legal entity. 

22 ‘‘(10) PATENT INFRINGEMENT.—The term 

23 ‘patent infringement’ means infringement of any 

24 patent or of any filed patent application, extension, 

25 reissue, renewal, division, continuation, continuation 


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1 in part, reexamination, patent term restoration, pat2 ents of addition, and extensions thereof. 

3 ‘‘(11) PATENT INFRINGEMENT CLAIM.—The 

4 term ‘patent infringement claim’ means any allega5 tion made to an ANDA filer, whether or not in6 cluded in a complaint filed with a court of law, that 

7 its ANDA or ANDA product may infringe any pat8 ent held by, or exclusively licensed to, the NDA 

9 holder of the drug product. 

10 ‘‘(12) STATUTORY EXCLUSIVITY.—The term 

11 ‘statutory exclusivity’ means those prohibitions on 

12 the approval of drug applications under clauses (ii) 

13 through (iv) of section 505(c)(3)(E) (5- and 3-year 

14 data exclusivity), section 527 (orphan drug exclu15 sivity), or section 505A (pediatric exclusivity) of the 

16 Federal Food, Drug, and Cosmetic Act (21 U.S.C. 

17 355(c)(3)(E), 360cc, 355a).’’. 

18 (b) EFFECTIVE DATE.—Section 27 of the Federal 

19 Trade Commission Act, as added by this section, shall 

20 apply to all agreements described in section 27(a)(1) of 

21 that Act entered into after June 17, 2013. Section 27(f) 

22 of the Federal Trade Commission Act, as added by this 

23 section, shall apply to agreements entered into on or after 

24 the date of enactment of this Act. 


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1 SEC. 402. 180-DAY EXCLUSIVITY PERIOD AMENDMENTS RE2 GARDING FIRST APPLICANT STATUS. 

3 (a) AMENDMENTS TO FEDERAL FOOD, DRUG, AND

4 COSMETIC ACT.— 

5 (1) IN GENERAL.—Section 505(j)(5)(B) of the 

6 Federal Food, Drug, and Cosmetic Act (21 U.S.C. 

7 355(j)(5)(B)) is amended— 

8 (A) in clause (iv)(II)— 

9 (i) by striking item (bb); and 

10 (ii) by redesignating items (cc) and 

11 (dd) as items (bb) and (cc), respectively; 

12 and 

13 (B) by adding at the end the following: 

14 ‘‘(v) FIRST APPLICANT DEFINED.—As used in 

15 this subsection, the term ‘first applicant’ means an 

16 applicant— 

17 ‘‘(I)(aa) that, on the first day on which a 

18 substantially complete application containing a 

19 certification described in paragraph 

20 (2)(A)(vii)(IV) is submitted for approval of a 

21 drug, submits a substantially complete applica22 tion that contains and lawfully maintains a cer23 tification described in paragraph (2)(A)(vii)(IV) 

24 for the drug; and 


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1 ‘‘(bb) that has not entered into a disquali2 fying agreement described under clause 

3 (vii)(II); or 

4 ‘‘(II)(aa) for the drug that is not described 

5 in subclause (I) and that, with respect to the 

6 applicant and drug, each requirement described 

7 in clause (vi) is satisfied; and 

8 ‘‘(bb) that has not entered into a disquali9 fying agreement described under clause 

10 (vii)(II). 

11 ‘‘(vi) REQUIREMENT.—The requirements de12 scribed in this clause are the following: 

13 ‘‘(I) The applicant described in clause 

14 (v)(II) submitted and lawfully maintains a cer15 tification described in paragraph (2)(A)(vii)(IV) 

16 or a statement described in paragraph 

17 (2)(A)(viii) for each unexpired patent for which 

18 a first applicant described in clause (v)(I) had 

19 submitted a certification described in paragraph 

20 (2)(A)(vii)(IV) on the first day on which a sub21 stantially complete application containing such 

22 a certification was submitted. 

23 ‘‘(II) With regard to each such unexpired 

24 patent for which the applicant described in 

25 clause (v)(II) submitted a certification deVerDate Sep 11 2014 02:21 Apr 01, 2017 Jkt 069200 PO 00000 Frm 00112 Fmt 6652 Sfmt 6201 E:\BILLS\S771.IS S771

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1 scribed in paragraph (2)(A)(vii)(IV), no action 

2 for patent infringement was brought against 

3 such applicant within the 45-day period speci4 fied in paragraph (5)(B)(iii); or if an action 

5 was brought within such time period, such an 

6 action was withdrawn or dismissed by a court 

7 (including a district court) without a decision 

8 that the patent was valid and infringed; or if an 

9 action was brought within such time period and 

10 was not withdrawn or so dismissed, such appli11 cant has obtained the decision of a court (in12 cluding a district court) that the patent is in13 valid or not infringed (including any substantive 

14 determination that there is no cause of action 

15 for patent infringement or invalidity, and in16 cluding a settlement order or consent decree 

17 signed and entered by the court stating that the 

18 patent is invalid or not infringed). 

19 ‘‘(III) If an applicant described in clause 

20 (v)(I) has begun commercial marketing of such 

21 drug, the applicant described in clause (v)(II) 

22 does not begin commercial marketing of such 

23 drug until the date that is 30 days after the 

24 date on which the applicant described in clause 

25 (v)(I) began such commercial marketing.’’. 


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1 (2) CONFORMING AMENDMENT.—Section 

2 505(j)(5)(D)(i)(IV) of the Federal Food, Drug, and 

3 Cosmetic Act (21 U.S.C. 355(j)(5)(D)(i)(IV)) is 

4 amended by striking ‘‘The first applicant’’ and in5 serting ‘‘The first applicant, as defined in subpara6 graph (B)(v)(I),’’. 

7 (b) APPLICABILITY.—The amendments made by sub8 section (a) shall apply only with respect to an application 

9 filed under section 505(j) of the Federal Food, Drug, and 

10 Cosmetic Act (21 U.S.C. 355(j)) to which the amendments 

11 made by section 1102(a) of the Medicare Prescription 

12 Drug, Improvement, and Modernization Act of 2003 (Pub13 lic Law 108–173) apply. 

14 SEC. 403. 180-DAY EXCLUSIVITY PERIOD AMENDMENTS RE15 GARDING AGREEMENTS TO DEFER COMMER16 CIAL MARKETING. 

17 (a) AMENDMENTS TO FEDERAL FOOD, DRUG, AND

18 COSMETIC ACT.— 

19 (1) LIMITATIONS ON AGREEMENTS TO DEFER

20 COMMERCIAL MARKETING DATE.—Section 

21 505(j)(5)(B) of the Federal Food, Drug, and Cos22 metic Act (21 U.S.C. 355(j)(5)(B)), as amended by 

23 section 402, is further amended by adding at the 

24 end the following: 


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1 ‘‘(vii) AGREEMENT BY FIRST APPLICANT TO

2 DEFER COMMERCIAL MARKETING; LIMITATION ON

3 ACCELERATION OF DEFERRED COMMERCIAL MAR4 KETING DATE.— 

5 ‘‘(I) AGREEMENT TO DEFER APPROVAL OR

6 COMMERCIAL MARKETING DATE.—An agree7 ment described in this subclause is an agree8 ment between a first applicant and the holder 

9 of the application for the listed drug or an 

10 owner of one or more of the patents as to which 

11 any applicant submitted a certification quali12 fying such applicant for the 180-day exclusivity 

13 period whereby that applicant agrees, directly 

14 or indirectly, (aa) not to seek an approval of its 

15 application that is made effective on the earliest 

16 possible date under this subparagraph, subpara17 graph (F) of this paragraph, section 505A, or 

18 section 527, (bb) not to begin the commercial 

19 marketing of its drug on the earliest possible 

20 date after receiving an approval of its applica21 tion that is made effective under this subpara22 graph, subparagraph (F) of this paragraph, sec23 tion 505A, or section 527, or (cc) to both items 

24 (aa) and (bb). 


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1 ‘‘(II) AGREEMENT THAT DISQUALIFIES AP2 PLICANT FROM FIRST APPLICANT STATUS.—An 

3 agreement described in this subclause is an 

4 agreement between an applicant and the holder 

5 of the application for the listed drug or an 

6 owner of one or more of the patents as to which 

7 any applicant submitted a certification quali8 fying such applicant for the 180-day exclusivity 

9 period whereby that applicant agrees, directly 

10 or indirectly, not to seek an approval of its ap11 plication or not to begin the commercial mar12 keting of its drug until a date that is after the 

13 expiration of the 180-day exclusivity period 

14 awarded to another applicant with respect to 

15 such drug (without regard to whether such 180- 

16 day exclusivity period is awarded before or after 

17 the date of the agreement). 

18 ‘‘(viii) LIMITATION ON ACCELERATION.—If an 

19 agreement described in clause (vii)(I) includes more 

20 than 1 possible date when an applicant may seek an 

21 approval of its application or begin the commercial 

22 marketing of its drug— 

23 ‘‘(I) the applicant may seek an approval of 

24 its application or begin such commercial mar25 keting on the date that is the earlier of— 


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1 ‘‘(aa) the latest date set forth in the 

2 agreement on which that applicant can re3 ceive an approval that is made effective 

4 under this subparagraph, subparagraph 

5 (F) of this paragraph, section 505A, or 

6 section 527, or begin the commercial mar7 keting of such drug, without regard to any 

8 other provision of such agreement pursu9 ant to which the commercial marketing 

10 could begin on an earlier date; or 

11 ‘‘(bb) 180 days after another first ap12 plicant begins commercial marketing of 

13 such drug; and 

14 ‘‘(II) the latest date set forth in the agree15 ment on which that applicant can receive an ap16 proval that is made effective under this sub17 paragraph, subparagraph (F) of this paragraph, 

18 section 505A, or section 527, or begin the com19 mercial marketing of such drug, without regard 

20 to any other provision of such agreement pursu21 ant to which commercial marketing could begin 

22 on an earlier date, shall be the date used to de23 termine whether an applicant is disqualified 

24 from first applicant status pursuant to clause 

25 (vii)(II).’’. 


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1 (2) NOTIFICATION OF FDA.—Section 505(j) of 

2 the Federal Food, Drug, and Cosmetic Act (21 

3 U.S.C. 355(j)) is amended by adding at the end the 

4 following: 

5 ‘‘(11)(A) The holder of an abbreviated application 

6 under this subsection shall submit to the Secretary a noti7 fication that includes— 

8 ‘‘(i)(I) the text of any agreement entered into 

9 by such holder described under paragraph 

10 (5)(B)(vii)(I); or 

11 ‘‘(II) if such an agreement has not been re12 duced to text, a written detailed description of such 

13 agreement that is sufficient to disclose all the terms 

14 and conditions of the agreement; and 

15 ‘‘(ii) the text, or a written detailed description 

16 in the event of an agreement that has not been re17 duced to text, of any other agreements that are con18 tingent upon, provide a contingent condition for, or 

19 are otherwise related to an agreement described in 

20 clause (i). 

21 ‘‘(B) The notification described under subparagraph 

22 (A) shall be submitted not later than 10 business days 

23 after execution of the agreement described in subpara24 graph (A)(i). Such notification is in addition to any notifi25 cation required under section 1112 of the Medicare PreVerDate Sep 11 2014 02:21 Apr 01, 2017 Jkt 069200 PO 00000 Frm 00118 Fmt 6652 Sfmt 6201 E:\BILLS\S771.IS S771

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1 scription Drug, Improvement, and Modernization Act of 

2 2003. 

3 ‘‘(C) Any information or documentary material filed 

4 with the Secretary pursuant to this paragraph shall be ex5 empt from disclosure under section 552 of title 5, United 

6 States Code, and no such information or documentary ma7 terial may be made public, except as may be relevant to 

8 any administrative or judicial action or proceeding. Noth9 ing in this paragraph is intended to prevent disclosure to 

10 either body of the Congress or to any duly authorized com11 mittee or subcommittee of the Congress.’’. 

12 (3) PROHIBITED ACTS.—Section 301(e) of the 

13 Federal Food, Drug, and Cosmetic Act (21 U.S.C. 

14 331(e)) is amended by striking ‘‘505 (i) or (k)’’ and 

15 inserting ‘‘505 (i), (j)(11), or (k)’’. 

16 (b) INFRINGEMENT OF PATENT.—Section 271(e) of 

17 title 35, United States Code, is amended by adding at the 

18 end the following: 

19 ‘‘(7) The exclusive remedy under this section for an 

20 infringement of a patent for which the Secretary of Health 

21 and Human Services has published information pursuant 

22 to subsection (b)(1) or (c)(2) of section 505 of the Federal 

23 Food, Drug, and Cosmetic Act shall be an action brought 

24 under this subsection within the 45-day period described 


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1 in subsection (j)(5)(B)(iii) or (c)(3)(C) of section 505 of 

2 the Federal Food, Drug, and Cosmetic Act.’’. 

3 (c) APPLICABILITY.— 

4 (1) LIMITATIONS ON ACCELERATION OF DE5 FERRED COMMERCIAL MARKETING DATE.—The 

6 amendment made by subsection (a)(1) shall apply 

7 only with respect to— 

8 (A) an application filed under section 

9 505(j) of the Federal Food, Drug, and Cos10 metic Act (21 U.S.C. 355(j)) to which the 

11 amendments made by section 1102(a) of the 

12 Medicare Prescription Drug, Improvement, and 

13 Modernization Act of 2003 (Public Law 108– 

14 173) apply; and 

15 (B) an agreement described under section 

16 505(j)(5)(B)(vii)(I) of the Federal Food, Drug, 

17 and Cosmetic Act (as added by subsection 

18 (a)(1)) executed after the date of enactment of 

19 this Act. 

20 (2) NOTIFICATION OF FDA.—The amendments 

21 made by paragraphs (2) and (3) of subsection (a) 

22 shall apply only with respect to an agreement de23 scribed under section 505(j)(5)(B)(vii)(I) of the 

24 Federal Food, Drug, and Cosmetic Act (as added by 


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1 subsection (a)(1)) executed after the date of enact2 ment of this Act. 

3 SEC. 404. INCREASING GENERIC DRUG COMPETITION. 

4 (a) LISTING OF GENERIC DRUGS AT LIST OF BEING

5 IN SHORTAGE.—Chapter V of the Federal Food, Drug, 

6 and Cosmetic Act (21 U.S.C. 351 et seq.) is amended by 

7 inserting after section 506E the following: 

8 ‘‘SEC. 506E–1. LISTING OF GENERIC DRUGS. 

9 ‘‘(a) DATABASE FOR MANUFACTURERS OF GENERIC

10 DRUGS.—The Commissioner shall— 

11 ‘‘(1) not later than 9 months after the date of 

12 enactment of the Improving Access To Affordable 

13 Prescription Drugs Act, publish a complete, up-to14 date list on the Internet website of the Food and 

15 Drug Administration of all generic drugs (including 

16 drug trade name, active pharmaceutical ingredient 

17 manufacturer, active finished dosage form manufac18 turer, any contract manufacturing organization, the 

19 date the authorized generic drug entered the market, 

20 and marketing status); 

21 ‘‘(2) designate each drug on the list that is a 

22 sole-source drug; and 

23 ‘‘(3) maintain a confidential list of the identity 

24 and address of each manufacturer and labeler asso25 ciated with a drug reported under this section, and 


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1 publicly report on the Web site only the city and 

2 State or country of each such manufacturer and la3 beler. 

4 ‘‘(b) PUBLIC HEALTH EXCEPTION.—The Commis5 sioner may choose not to make information collected under 

6 subsection (a) publicly available if the Secretary deter7 mines that disclosure of such information would adversely 

8 affect the public health (such as by increasing the possi9 bility of hoarding or other disruption of the availability 

10 of drug products to patients). 

11 ‘‘(c) NOTIFICATION.—The Commissioner shall notify 

12 relevant Federal agencies, including the Centers for Medi13 care & Medicaid Services and the Federal Trade Commis14 sion, when the Commissioner first publishes the informa15 tion under subsection (a) that the information has been 

16 published and will be updated regularly. 

17 ‘‘(d) DEFINITIONS.—In this section: 

18 ‘‘(1) The term ‘manufacturer’ means a person 

19 engaged in the manufacture of an active pharma20 ceutical ingredient or finished dosage form, as de21 fined in section 744A. 

22 ‘‘(2) The term ‘sole-source’ means— 

23 ‘‘(A) A drug for which there is only one 

24 approved manufacturer listed in the active sec25 tion of the Approved Drug Products With 


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1 Therapeutic Equivalence Evaluations (com2 monly known as the ‘FDA Orange Book’); and 

3 ‘‘(B) for which there are no blocking pat4 ents or exclusivities that may receive expedited 

5 review, except where the drug was approved 

6 pursuant to a suitability petition under section 

7 505(j)(2)(C).’’. 

8 (b) REPORT ON CONTRACTS.—Section 510(j) of the 

9 Federal Food, Drug, and Cosmetic Act (21 U.S.C. 360(j)) 

10 is amended by adding at the end the following: 

11 ‘‘(5) Each person who registers with the Secretary 

12 under this section shall report to the Secretary any con13 tract with a contract manufacturing organization with re14 spect to any drug such person manufacturers, distributes, 

15 or compounds, including the start date and end date of 

16 such contract.’’. 

17 (c) DISCONTINUANCE OR INTERRUPTION IN THE

18 PRODUCTION OF LIFE-SAVING DRUGS.—Section 506C(a) 

19 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 

20 356c(a)) is amended by striking ‘‘of a drug—’’ and all 

21 that follows through the end of paragraph (2) and insert22 ing ‘‘of a drug’’. 

23 (d) DECREASE IN MANUFACTURERS OF DRUGS.— 

24 Chapter V of the Federal Food, Drug, and Cosmetic Act 


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1 (21 U.S.C. 351 et seq.) is amended by inserting after sec2 tion 506C–1 the following: 

3 ‘‘SEC. 506C–2. DECREASE IN MANUFACTURERS OF GENERIC 

4 DRUGS. 

5 ‘‘(a) IN GENERAL.—If the Secretary determines that 

6 the number of manufacturers of a drug approved under 

7 section 505 or a biological product licensed under section 

8 351 is less than 2, the Secretary may— 

9 ‘‘(1) with respect to a manufacturer with fewer 

10 than 500 employees, including employees of affiliates 

11 of the manufacturer, waive the prescription drug ap12 plication fees under sections 736(a), 744B(a), or 

13 744H(a); 

14 ‘‘(2) expedite the review of applications for the 

15 drug under section 505(j) or section 351(k) of the 

16 Public Health Service Act until the number of man17 ufacturers of the drug is at least 4; and 

18 ‘‘(3) after consultation with the Federal Trade 

19 Commission to ensure that the manufacturer has not 

20 engaged in anticompetitive tactics to remove other 

21 manufacturers from the market in order to 

22 incentivize such a contract, establish and prioritize 

23 purchase contracts with manufacturers who are 

24 holders of applications approved under section 

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1 ice Act for the drug but who are not currently man2 ufacturing such drug. 

3 ‘‘(b) GUIDELINES FOR PURCHASE CONTRACTS.— 

4 ‘‘(1) IN GENERAL.—The Secretary shall pro5 mulgate regulations to establish guidelines for the 

6 drugs with respect to which the Secretary may es7 tablish purchase contracts in accordance with sub8 section (a)(3). Such guidelines shall provide that any 

9 such purchase contract may be only with respect to 

10 a drug that is listed as an essential medicine by the 

11 World Health Organization, or another external enti12 ty, as the Secretary may specify, that meets evi13 dence-based standards as the Secretary may require. 

14 ‘‘(2) PRICING.—If a manufacturer enters into 

15 purchase contract in accordance with subsection 

16 (a)(3), the Secretary, in cooperation with the Office 

17 of the Inspector General, shall establish a limit on 

18 the retail price at which the drug may be made 

19 available to consumers in the United States.’’. 

20 SEC. 405. DISALLOWANCE OF DEDUCTION FOR ADVER21 TISING FOR PRESCRIPTION DRUGS. 

22 (a) IN GENERAL.—Part IX of subchapter B of chap23 ter 1 of subtitle A of the Internal Revenue Code of 1986 

24 (relating to items not deductible) is amended by adding 

25 at the end the following new section: 


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1 ‘‘SEC. 280I. DISALLOWANCE OF DEDUCTION FOR DIRECT2 TO-CONSUMER ADVERTISING OF PRESCRIP3 TION DRUGS. 

4 ‘‘(a) IN GENERAL.—No deduction shall be allowed 

5 under this chapter for expenses relating to direct-to-con6 sumer advertising of prescription drugs for any taxable 

7 year. 

8 ‘‘(b) DIRECT-TO-CONSUMER ADVERTISING.—For 

9 purposes of this section, the term ‘direct-to-consumer ad10 vertising’ means any dissemination, by or on behalf of a 

11 sponsor of a prescription drug product (as such term is 

12 defined in section 735(3) of the Federal Food, Drug, and 

13 Cosmetic Act), of an advertisement which— 

14 ‘‘(1) is in regard to such prescription drug 

15 product, and 

16 ‘‘(2) primarily targeted to the general public, 

17 including through— 

18 ‘‘(A) publication in journals, magazines, 

19 other periodicals, and newspapers, 

20 ‘‘(B) broadcasting through media such as 

21 radio, television, telephone communication sys22 tems, direct mail, and billboards, 

23 ‘‘(C) dissemination on the Internet (includ24 ing social media); and 


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1 ‘‘(D) manufacturer patient assistance pro2 grams, as defined in section 399V–7 of the 

3 Public Health Service Act.’’. 

4 (b) CONFORMING AMENDMENT.—The table of sec5 tions for such part IX of the Internal Revenue Code of 

6 1986 is amended by adding after the item relating to sec7 tion 280H the following new item: 

‘‘Sec. 280I. Disallowance of deduction for direct-to-consumer advertising of prescription drugs.’’. 

8 (c) EFFECTIVE DATE.—The amendments made by 

9 this section shall apply to amounts paid or incurred after 

10 the date of the enactment of this Act, in taxable years 

11 ending after such date. 

12 SEC. 406. PRODUCT HOPPING. 

13 (a) DEFINITIONS.—In this section— 

14 (1) the term ‘‘biological product’’ has the mean15 ing given that term in section 351 of the Public 

16 Health Service Act (42 U.S.C. 262); 

17 (2) the term ‘‘drug’’ has the meaning given that 

18 term in section 201 of the Federal Food, Drug, and 

19 Cosmetic Act (21 U.S.C. 321); and 

20 (3) the term ‘‘product hopping’’ means a cir21 cumstance in which— 

22 (A) a manufacturer reformulates a drug or 

23 biological product in such a way that allows the 

24 manufacturer to submit a new drug application 


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1 under section 505(b) of the Federal Food, 

2 Drug, and Cosmetic Act (21 U.S.C. 355(b)) or 

3 new application for a license under section 

4 351(a) of the Public Health Service Act (42 

5 U.S.C. 262(a)) with respect to such new formu6 lation; 

7 (B) the new formulation described in sub8 paragraph (A) is intended for the treatment of 

9 the same medical condition as the drug or bio10 logical product that was reformulated; and 

11 (C) actions are taken to reduce or elimi12 nate demand for the original drug or biological 

13 product. 

14 (b) REPORT.—The Federal Trade Commission shall 

15 submit to Congress a report on the extent to which— 

16 (1) manufacturers of drugs and biological prod17 ucts engage in product hopping, including an anal18 ysis of the timing of the introduction of the reformu19 lated product relative to the market entry of a drug 

20 approved under section 505(j) of the Federal Food, 

21 Drug, and Cosmetic Act or biological product li22 censed under section 351(k) of the Public Health 

23 Service Act, the types of changes made in the new 

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1 ed to reformulated products, and the various forms 

2 of product hopping manufacturers employ; 

3 (2) manufacturers assess the profitability of a 

4 new product based whether it launches before (or 

5 how long before) generic entry occurs on the original 

6 product; 

7 (3) the effect of product-hopping behavior on 

8 consumers, including the total estimated annual cost 

9 to consumers of physicians prescribing the sub10 stituted drug in place of a generic version of the 

11 original product; 

12 (4) the effect of product-hopping on insurance 

13 prices and availability, including cost increases and 

14 coverage reductions attributable to the economic 

15 losses described in paragraph (3); 

16 (5) product hopping affects manufacturer prof17 its, revenues, unit sales, and prices; and 

18 (6) product hopping affects the unit sales, man19 ufacturer profits, and prices of the generic version of 

20 the original product. 

Æ 


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