II 

109TH CONGRESS 

1ST SESSION S. 239 

To reduce the costs of prescription drugs for medicare beneficiaries, and 

for other purposes. 

IN THE SENATE OF THE UNITED STATES 

FEBRUARY 1, 2005 

Ms. SNOWE (for herself, Mr. WYDEN, Mr. MCCAIN, Mrs. FEINSTEIN, and Mr. 

FEINGOLD) introduced the following bill; which was read twice and referred to the Committee on Finance 

A BILL 

To reduce the costs of prescription drugs for medicare 

beneficiaries, and for other purposes. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Medicare Enhance5 ments for Needed Drugs Act of 2005’’. 

6 SEC. 2. GAO STUDIES AND REPORTS ON PRICES OF PRE7 SCRIPTION DRUGS. 

8 (a) REVIEW AND REPORTS ON RETAIL PRICES OF

9 PRESCRIPTION DRUGS.— 
2 

•S 239 IS

1 (1) INITIAL REVIEW.—The Comptroller General 

2 of the United States shall conduct a review of the 

3 retail cost of prescription drugs in the United States 

4 during 2000 through 2003, with an emphasis on the 

5 prescription drugs most utilized for individuals age 

6 65 or older. 

7 (2) SUBSEQUENT REVIEW.—After conducting 

8 the review under paragraph (1), the Comptroller 

9 General shall continuously review the retail cost of 

10 such drugs through April 1, 2006, to determine the 

11 changes in such costs. 

12 (3) REPORTS.— 

13 (A) INITIAL REVIEW.—Not later than Sep14 tember 1, 2005, the Comptroller General shall 

15 submit to Congress a report on the initial re16 view conducted under paragraph (1). 

17 (B) SUBSEQUENT REVIEW.—Not later 

18 than July 1, 2006, January 1, 2007, and July 

19 1, 2007, the Comptroller General shall submit 

20 to Congress a report on the subsequent review 

21 conducted under paragraph (2). 

22 (b) ANNUAL GAO STUDY AND REPORT ON RETAIL

23 AND ACQUISITION PRICES OF CERTAIN PRESCRIPTION

24 DRUGS.— 
3 

•S 239 IS

1 (1) ONGOING STUDY.—The Comptroller Gen2 eral of the United States shall conduct an ongoing 

3 study that compares the average retail cost in the 

4 United States for each of the 20 most utilized pre5 scription drugs for individuals age 65 or older 

6 with— 

7 (A) the average price at which private 

8 health plans acquire each such drug; 

9 (B) the average price at which the Depart10 ment of Defense under the Defense Health Pro11 gram acquires each such drug; 

12 (C) the average price at which the Depart13 ment of Veterans Affairs under the laws admin14 istered by the Secretary of Veterans Affairs ac15 quires each such drug; and 

16 (D) the average negotiated price for each 

17 such drug that eligible beneficiaries enrolled in 

18 a prescription drug plan under part D of title 

19 XVIII of the Social Security Act, as added by 

20 section 101 of the Medicare Prescription Drug, 

21 Improvement, and Modernization Act of 2003 

22 (Public Law 108–173), that provides only basic 

23 prescription drug coverage have access to under 

24 such plans. 
4 

•S 239 IS

1 (2) ANNUAL REPORT.—Not later than Decem2 ber 1, 2007, and annually thereafter, the Comp3 troller General shall submit to Congress a report on 

4 the study conducted under paragraph (1), together 

5 with such recommendations as the Comptroller Gen6 eral determines appropriate. 

7 SEC. 3. INCLUSION OF AVERAGE AGGREGATE BENEFICIARY 

8 COSTS AND SAVINGS IN COMPARATIVE IN9 FORMATION FOR BASIC MEDICARE PRE10 SCRIPTION DRUG PLANS. 

11 Section 1860D–1(c)(3) of the Social Security Act (42 

12 U.S.C. 1395w–101(c)(3)) is amended— 

13 (1) in subparagraph (A)— 

14 (A) in the matter preceding clause (i), by 

15 striking ‘‘subparagraph (B)’’ and inserting 

16 ‘‘subparagraphs (B) and (C)’’; and 

17 (B) by adding at the end the following new 

18 clause: 

19 ‘‘(vi) AVERAGE AGGREGATE BENE20 FICIARY COSTS AND SAVINGS.—With re21 spect to plan years beginning on or after 

22 January 1, 2007, the average aggregate 

23 costs, including deductibles and other cost24 sharing, that a beneficiary will incur for 

25 covered part D drugs in the year under the 
5 

•S 239 IS

1 plan compared to the average aggregate 

2 costs that an eligible beneficiary with no 

3 prescription drug coverage will incur for 

4 covered part D drugs in the year.’’; and 

5 (2) by adding at the end the following new sub6 paragraph: 

7 ‘‘(C) AVERAGE AGGREGATE BENEFICIARY

8 COSTS AND SAVINGS INFORMATION ONLY FOR

9 BASIC PRESCRIPTION DRUG PLANS.—The Sec10 retary shall not provide comparative informa11 tion under subparagraph (A)(vi) with respect 

12 to— 

13 ‘‘(i) a prescription drug plan that pro14 vides supplemental prescription drug cov15 erage; or 

16 ‘‘(ii) a Medicare Advantage plan.’’. 

17 SEC. 4. NEGOTIATING FAIR PRICES FOR MEDICARE PRE18 SCRIPTION DRUGS. 

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

20 Security Act (42 U.S.C. 1395w–111) is amended by strik21 ing subsection (i) (relating to noninterference) and by in22 serting the following: 

23 ‘‘(i) AUTHORITY TO NEGOTIATE PRICES WITH MAN24 UFACTURERS.— 
6 

•S 239 IS

1 ‘‘(1) IN GENERAL.—In order to ensure that 

2 beneficiaries enrolled under prescription drug plans 

3 and MA–PD plans pay the lowest possible price, the 

4 Secretary shall have authority similar to that of 

5 other Federal entities that purchase prescription 

6 drugs in bulk to negotiate contracts with manufac7 turers of covered part D drugs, consistent with the 

8 requirements and in furtherance of the goals of pro9 viding quality care and containing costs under this 

10 part. 

11 ‘‘(2) MANDATORY RESPONSIBILITIES.—The 

12 Secretary shall be required to— 

13 ‘‘(A) negotiate contracts with manufactur14 ers of covered part D drugs for each fallback 

15 prescription drug plan under subsection (g); 

16 and 

17 ‘‘(B) participate in negotiation of contracts 

18 of any covered part D drug upon request of an 

19 approved prescription drug plan or MA–PD 

20 plan. 

21 ‘‘(3) RULE OF CONSTRUCTION.—Nothing in 

22 paragraph (2) shall be construed to limit the author23 ity of the Secretary under paragraph (1) to the man24 datory responsibilities under paragraph (2).’’. 
7 

•S 239 IS

1 (b) EFFECTIVE DATE.—The amendment made by 

2 this section shall take effect as if included in the enact3 ment of section 101 of the Medicare Prescription Drug, 

4 Improvement, and Modernization Act of 2003 (Public Law 

5 108–173). 

6 SEC. 5. NAIC REVIEW AND REPORT ON CHANGES IN 

7 MEDIGAP POLICIES THAT PROVIDE COV8 ERAGE OF PRESCRIPTION DRUGS CON9 TAINED IN THE MEDICARE PRESCRIPTION 

10 DRUG, IMPROVEMENT, AND MODERNIZATION 

11 ACT OF 2003. 

12 (a) IN GENERAL.—The Secretary of Health and 

13 Human Services shall request the National Association of 

14 Insurance Commissioners to conduct a review of the 

15 changes to the rules relating to medicare supplemental 

16 policies that provide prescription drug coverage contained 

17 in subsection (v) of section 1882 of the Social Security 

18 Act (42 U.S.C. 1395ss), as added by section 104(a) of 

19 the Medicare Prescription Drug, Improvement, and Mod20 ernization Act of 2003 (Public Law 108–173). 

21 (b) IMPACT ON MEDICARE BENEFICIARIES.—The re22 view conducted pursuant to subsection (a) should focus 

23 on the impact the changes described in such subsection 

24 will have on medicare beneficiaries. 
8 

•S 239 IS

1 (c) REPORT.—The Secretary shall request the Na2 tional Association of Insurance Commissioners to submit 

3 to Congress, by not later than January 1, 2006, a report 

4 on the review conducted pursuant to subsection (a), to5 gether with such recommendations as the National Asso6 ciation of Insurance Commissioners determines appro7 priate. 

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