II 

109TH CONGRESS 

2D SESSION S. 2664 

To amend title XVIII of the Social Security Act to improve access to 

pharmacies under part D. 

IN THE SENATE OF THE UNITED STATES 

APRIL 27, 2006 

Mr. BAUCUS (for himself, Mrs. LINCOLN, and Mr. CONRAD) introduced the 

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

A BILL 

To amend title XVIII of the Social Security Act to improve 

access to pharmacies under part D. 

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 ‘‘Pharmacy Access Im5 provement (PhAIm) Act of 2006’’. 

6 SEC. 2. STRENGTHENING STANDARDS FOR ACCESS TO 

7 PHARMACIES. 

8 (a) IN GENERAL.—Section 1860D–4(b)(1)(C) of the 

9 Social Security Act (42 U.S.C. 1395w–104(b)(1)(C)) is 

10 amended— 


jlentini on PROD1PC65 with BILLS
2 

•S 2664 IS

1 (1) in clause (i)— 

2 (A) by inserting ‘‘that are accessible to the 

3 general public (not including closed pharmacies, 

4 such as pharmacies that dispense drugs by mail 

5 order only or are located in a hospital or nurs6 ing home, except that a closed pharmacy shall 

7 be included if the pharmacy is operated by the 

8 Indian Health Service, an Indian tribe or tribal 

9 organization, or an urban Indian organization 

10 (as defined in section 4 of the Indian Health 

11 Care Improvement Act))’’ after ‘‘sufficient 

12 number of pharmacies’’; and 

13 (B) by striking ‘‘(other than by mail 

14 order)’’; and 

15 (2) in clause (ii), by adding at the end the fol16 lowing new sentence: ‘‘If the PDP sponsor of a pre17 scription drug plan designates in-network phar18 macies as either preferred or non-preferred phar19 macies (or any designation other than preferred or 

20 any other distinction between or among pharmacies 

21 with respect to participation status), only in-network 

22 preferred pharmacies shall be counted in deter23 mining if the requirements of such rules are met.’’. 


jlentini on PROD1PC65 with BILLS
3 

•S 2664 IS

1 (b) EXPANDING PARTICIPATION BY ANY WILLING

2 PHARMACY.—Section 1860D–4(b)(1)(A) of the Social Se3 curity Act (42 U.S.C. 1395w–104(b)(1)(A)) is amended— 

4 (1) by striking ‘‘PHARMACY.—A prescription 

5 drug plan’’ and inserting ‘‘PHARMACY.— 

6 ‘‘(i) IN GENERAL.—Subject to clause 

7 (ii), a prescription drug plan’’; 

8 (2) in clause (i), as added by paragraph (1), by 

9 adding at the end the following new sentence: ‘‘A 

10 previous refusal by a pharmacy of an offer to par11 ticipate, or the expiration of such an offer, shall not 

12 be grounds to exclude a pharmacy from participation 

13 under this subparagraph.’’; and 

14 (3) by adding at the end the following new 

15 clause: 

16 ‘‘(ii) PARTICIPATION OF 340B ENTI17 TIES.— 

18 ‘‘(I) IN GENERAL.—A prescrip19 tion drug plan shall not exclude a 

20 pharmacy from participation solely on 

21 the basis that such pharmacy is a cov22 ered entity under section 340B of the 

23 Public Health Service Act. 

24 ‘‘(II) REASONABLE TERMS AND

25 CONDITIONS FOR 340B ENTITIES.—In 


jlentini on PROD1PC65 with BILLS
4 

•S 2664 IS

1 the case of a pharmacy that is a cov2 ered entity under such section 340B, 

3 if such an entity requests that the 

4 terms and conditions of the appro5 priate version (as determined by the 

6 Secretary) of the Model Safety Net 

7 Pharmacy Addendum to Pharmacy 

8 Contract apply to a contract to dis9 pense covered part D drugs under 

10 such plan, subject to subclause (III), 

11 the terms and conditions of such Con12 tract shall be the terms and condi13 tions for participation of such phar14 macy under clause (i). 

15 ‘‘(III) PERMITTING WAIVER OF

16 COST-SHARING.—In the case of a 

17 pharmacy that is a covered entity 

18 under such section 340B, if such an 

19 entity requests that the terms and 

20 conditions of a contract to dispense 

21 covered part D drugs under such plan 

22 permit the pharmacy to waive or re23 duce cost-sharing under this part, 

24 consistent with the requirements of 

25 section 1128B(b)(3)(G), such permisVerDate Aug 31 2005 22:45 Apr 30, 2006 Jkt 049200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S2664.IS S2664

jlentini on PROD1PC65 with BILLS
5 

•S 2664 IS

1 sion shall be included in the terms 

2 and conditions for participation of 

3 such pharmacy under clause (i).’’. 

4 (c) STRENGTHENING CONVENIENT ACCESS STAND5 ARDS.—Section 1860D–4(b)(1)(C) of the Social Security 

6 Act (42 U.S.C. 1395w–104(b)(1)(C)) is amended by strik7 ing clause (iv) and inserting the following new clauses: 

8 ‘‘(iv) CONVENIENT ACCESS IN LONG9 TERM CARE FACILITIES.—Such rules shall 

10 include standards with respect to access 

11 for enrollees who are residing in long-term 

12 care facilities to ensure that such enrollees 

13 have access to a long-term care network 

14 pharmacy. 

15 ‘‘(v) CONVENIENT ACCESS TO PHAR16 MACIES SERVING INDIANS.—Such rules 

17 may include standards with respect to ac18 cess for enrollees to pharmacies operated 

19 by the Indian Health Service, Indian tribes 

20 and tribal organizations, and urban Indian 

21 organizations (as defined in section 4 of 

22 the Indian Health Care Improvement 

23 Act.’’. 

24 (d) REFERENCE TO PROVISIONS RELATING TO REA25 SONABLE DISPENSING FEES.—Section 1860D–4(b) of the 


jlentini on PROD1PC65 with BILLS
6 

•S 2664 IS

1 Social Security Act (42 U.S.C. 1395w–104(b)) is amended 

2 by adding at the end the following new paragraph: 

3 ‘‘(4) REFERENCE TO REASONABLE DISPENSING

4 FEE PROVISIONS.—For provisions relating to reason5 able dispensing fees, see section 1860D–12(b)(7).’’. 

6 (e) EFFECTIVE DATE.—The amendments made by 

7 this section shall apply to plan years beginning on or after 

8 January 1, 2007. 

9 SEC. 3. PROMPT PAYMENT BY PRESCRIPTION DRUG PLANS 

10 AND MA–PD PLANS UNDER PART D. 

11 (a) PROMPT PAYMENT BY PRESCRIPTION DRUG

12 PLANS.—Section 1860D–12(b) of the Social Security Act 

13 (42 U.S.C. 1395w–112(b)) is amended by adding at the 

14 end the following new paragraph: 

15 ‘‘(4) PROMPT PAYMENT OF CLEAN CLAIMS.— 

16 ‘‘(A) PROMPT PAYMENT.— 

17 ‘‘(i) IN GENERAL.—Each contract en18 tered into with a PDP sponsor under this 

19 section with respect to a prescription drug 

20 plan offered by such sponsor shall provide 

21 that payment shall be issued, mailed, or 

22 otherwise transmitted with respect to all 

23 clean claims submitted by pharmacies 

24 (other than pharmacies that dispense 

25 drugs by mail order only or are located in, 


jlentini on PROD1PC65 with BILLS
7 

•S 2664 IS

1 or contract with, a long-term care facility) 

2 under this part within the applicable num3 ber of calendar days after the date on 

4 which the claim is received. 

5 ‘‘(ii) CLEAN CLAIM DEFINED.—In this 

6 paragraph, the term ‘clean claim’ means a 

7 claim that has no defect or impropriety 

8 (including any lack of any required sub9 stantiating documentation) or particular 

10 circumstance requiring special treatment 

11 that prevents timely payment from being 

12 made on the claim under this part. 

13 ‘‘(B) APPLICABLE NUMBER OF CALENDAR

14 DAYS DEFINED.—In this paragraph, the term 

15 ‘applicable number of calendar days’ means— 

16 ‘‘(i) with respect to claims submitted 

17 electronically, 14 days; and 

18 ‘‘(ii) with respect to claims submitted 

19 otherwise, 30 days. 

20 ‘‘(C) INTEREST PAYMENT.—If payment is 

21 not issued, mailed, or otherwise transmitted 

22 within the applicable number of calendar days 

23 (as defined in subparagraph (B)) after a clean 

24 claim is received, interest shall be paid at a rate 

25 equal to the weighted average of interest on 3- 


jlentini on PROD1PC65 with BILLS
8 

•S 2664 IS

1 month marketable Treasury securities deter2 mined for such period, increased by 0.1 percent3 age point for the period beginning on the day 

4 after the required payment date and ending on 

5 the date on which payment is made. Interest 

6 amounts paid under this subparagraph shall not 

7 be counted against the administrative costs of a 

8 prescription drug plan. 

9 ‘‘(D) PROCEDURES INVOLVING CLAIMS.— 

10 ‘‘(i) IN GENERAL.—A contract entered 

11 into with a PDP sponsor under this sec12 tion with respect to a prescription drug 

13 plan offered by such sponsor shall provide 

14 that, not later than 10 days after the date 

15 on which a clean claim is submitted, the 

16 PDP sponsor shall provide the claimant 

17 with a notice that acknowledges receipt of 

18 the claim by such sponsor. Such notice 

19 shall be considered to have been provided 

20 on the date on which the notice is mailed 

21 or electronically transferred. 

22 ‘‘(ii) CLAIM DEEMED TO BE CLEAN.— 

23 A claim is deemed to be a clean claim if 

24 the PDP sponsor involved does not provide 

25 notice to the claimant of any deficiency in 


jlentini on PROD1PC65 with BILLS
9 

•S 2664 IS

1 the claim within 10 days of the date on 

2 which the claim is submitted. 

3 ‘‘(iii) CLAIM DETERMINED TO NOT BE

4 A CLEAN CLAIM.— 

5 ‘‘(I) IN GENERAL.—If a PDP 

6 sponsor determines that a submitted 

7 claim is not a clean claim, the PDP 

8 sponsor shall, not later than the end 

9 of the period described in clause (ii), 

10 notify the claimant of such determina11 tion. Such notification shall specify all 

12 defects or improprieties in the claim 

13 and shall list all additional informa14 tion or documents necessary for the 

15 proper processing and payment of the 

16 claim. 

17 ‘‘(II) DETERMINATION AFTER

18 SUBMISSION OF ADDITIONAL INFOR19 MATION.—A claim is deemed to be a 

20 clean claim under this paragraph if 

21 the PDP sponsor involved does not 

22 provide notice to the claimant of any 

23 defect or impropriety in the claim 

24 within 10 days of the date on which 


jlentini on PROD1PC65 with BILLS
10 

•S 2664 IS

1 additional information is received 

2 under subclause (I). 

3 ‘‘(III) PAYMENT OF CLEAN POR4 TION OF A CLAIM.—A PDP sponsor 

5 shall, as appropriate, pay any portion 

6 of a claim that would be a clean claim 

7 but for a defect or impropriety in a 

8 separate portion of the claim in ac9 cordance with subparagraph (A). 

10 ‘‘(iv) OBLIGATION TO PAY.—A claim 

11 submitted to a PDP sponsor that is not 

12 paid or contested by the provider within 

13 the applicable number of days (as defined 

14 in subparagraph (B)) shall be deemed to 

15 be a clean claim and shall be paid by the 

16 PDP sponsor in accordance with subpara17 graph (A). 

18 ‘‘(v) DATE OF PAYMENT OF CLAIM.— 

19 Payment of a clean claim under such sub20 paragraph is considered to have been made 

21 on the date on which— 

22 ‘‘(I) with respect to claims paid 

23 electronically, the payment is trans24 ferred; and 


jlentini on PROD1PC65 with BILLS
11 

•S 2664 IS

1 ‘‘(II) with respect to claims paid 

2 otherwise, the payment is submitted 

3 to the United States Postal Service or 

4 common carrier for delivery. 

5 ‘‘(E) ELECTRONIC TRANSFER OF

6 FUNDS.—A PDP sponsor shall pay all clean 

7 claims submitted electronically by electronic 

8 transfer of funds if the pharmacy so requests or 

9 has so requested previously. 

10 ‘‘(F) PRIVATE RIGHT OF ACTION.— 

11 ‘‘(i) IN GENERAL.—Nothing in this 

12 paragraph shall be construed to prohibit or 

13 limit a claim or action not covered by the 

14 subject matter of this section that any in15 dividual or organization has against a pro16 vider or a PDP sponsor. 

17 ‘‘(ii) ANTI-RETALIATION.—Consistent 

18 with applicable Federal or State law, a 

19 PDP sponsor shall not retaliate against an 

20 individual or provider for exercising a right 

21 of action under this subparagraph.’’. 

22 (b) PROMPT PAYMENT BY MA–PD PLANS.—Section 

23 1857(f) of the Social Security Act (42 U.S.C. 1395w–27) 

24 is amended by adding at the end the following new para25 graph: 


jlentini on PROD1PC65 with BILLS
12 

•S 2664 IS

1 ‘‘(3) INCORPORATION OF CERTAIN PRESCRIP2 TION DRUG PLAN CONTRACT REQUIREMENTS.—The 

3 following provisions shall apply to contracts with a 

4 Medicare Advantage organization in the same man5 ner as they apply to contracts with a PDP sponsor 

6 offering a prescription drug plan under part D: 

7 ‘‘(A) PROMPT PAYMENT.—Section 1860D– 

8 12(b)(4).’’. 

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

10 this section shall apply to plan years beginning on or after 

11 January 1, 2007. 

12 SEC. 4. MEDICARE PART D INFORMATIONAL RESOURCES 

13 AND CUSTOMER SERVICE. 

14 (a) HEALTH AND HUMAN SERVICES PHARMACY

15 HOTLINE.—The Secretary of Health and Human Services 

16 shall— 

17 (1) establish a toll-free telephone number that 

18 is dedicated to providing information regarding the 

19 Medicare prescription drug benefit under part D of 

20 title XVIII of the Social Security Act to pharmacists 

21 and pharmacy staff; and 

22 (2) staff such telephone number in order to en23 sure that the toll-free number is available to answer 

24 calls 24-hours each day. 


jlentini on PROD1PC65 with BILLS
13 

•S 2664 IS

1 (b) CUSTOMER SERVICE PROVIDED BY PRESCRIP2 TION DRUG PLANS AND MA–PD PLANS.— 

3 (1) IN GENERAL.—Section 1860D–4 of the So4 cial Security Act (42 U.S.C. 1395w–104) is amend5 ed by adding at the end the following new sub6 section: 

7 ‘‘(l) CUSTOMER SERVICE.— 

8 ‘‘(1) PHARMACY HOTLINE.—A PDP sponsor of 

9 a prescription drug plan shall— 

10 ‘‘(A) establish a toll-free telephone number 

11 that is dedicated to providing information re12 garding the plan to pharmacists and pharmacy 

13 staff; and 

14 ‘‘(B) staff such telephone number in order 

15 to ensure compliance with customer service 

16 standards (as established by the Secretary). 

17 ‘‘(2) PHYSICIAN AND PROVIDER HOTLINE.—A 

18 PDP sponsor of a prescription drug plan shall— 

19 ‘‘(A) establish a toll-free telephone number 

20 that is dedicated to providing information re21 garding the plan to physicians and providers; 

22 and 

23 ‘‘(B) staff such telephone number in order 

24 to ensure compliance with customer service 

25 standards (as established by the Secretary).’’. 


jlentini on PROD1PC65 with BILLS
14 

•S 2664 IS

1 (2) EFFECTIVE DATE.—The amendments made 

2 by this subsection shall apply to plan years begin3 ning on or after January 1, 2007. 

4 SEC. 5. TRANSACTION STANDARDS FOR PRESCRIPTION 

5 DRUG PLANS AND MA–PD PLANS. 

6 (a) IN GENERAL.—Section 1860D–4(b)(2) of the So7 cial Security Act is amended— 

8 (1) in subparagraph (A)— 

9 (A) by striking ‘‘IN GENERAL.—The PDP’’ 

10 and inserting ‘‘IN GENERAL.— 

11 ‘‘(i) STANDARDIZED TECHNOLOGY

12 FOR BENEFIT ACCESS.—Subject to sub13 section (m), the PDP’’; and 

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

15 clause: 

16 ‘‘(ii) STANDARDIZED TECHNOLOGY

17 FOR COMMUNICATIONS AND TRANS18 ACTIONS.—The PDP sponsor of a pre19 scription drug plan shall utilize standard20 ized technology for any communication or 

21 transaction (including a billing or coding 

22 transaction) occurring between such plan 

23 and a participating pharmacy.’’; and 

24 (2) by amending subparagraph (B) to read as 

25 follows: 


jlentini on PROD1PC65 with BILLS
15 

•S 2664 IS

1 ‘‘(B) STANDARDS.—The card or tech2 nology required under subparagraph (A) shall 

3 comply with the most recent standards adopted 

4 by the Secretary under section 1173(c).’’. 

5 (b) EFFECTIVE DATE.—The amendments made by 

6 subsection (a) shall apply to cards issued, and communica7 tions or transactions conducted, on or after the date that 

8 is 60 days after the date of enactment of this Act. 

9 SEC. 6. RESTRICTIONS ON PHARMACY CO-BRANDING BY 

10 PRESCRIPTION DRUG PLANS AND MA–PD 

11 PLANS. 

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

13 Security Act (42 U.S.C. 1395w–104), as amended by sec14 tion 4(b), is amended by adding at the end the following 

15 new subsection: 

16 ‘‘(m) CO-BRANDING.— 

17 ‘‘(1) PROHIBITION OF CO-BRANDING ON PRE18 SCRIPTION DRUG CARD.—A card that is issued 

19 under subsection (b)(2)(A) for use under a prescrip20 tion drug plan offered by a PDP sponsor shall not 

21 display the name, brand, logo, or trademark of any 

22 pharmacy. 

23 ‘‘(2) MARKETING MATERIALS.—Marketing ma24 terials distributed by a PDP sponsor that has a co25 branding relationship with a pharmacy with respect 


jlentini on PROD1PC65 with BILLS
16 

•S 2664 IS

1 to such a plan shall include a disclaimer in large, 

2 off-set, bold-face type of the following: Other phar3 macies are also available in our network.’’. 

4 (b) EFFECTIVE DATE.—The amendments made by 

5 this section shall apply to cards and marketing materials 

6 distributed on or after the date that is 60 days after the 

7 date of enactment of this Act. 

8 SEC. 7. SUBMISSION OF CLAIMS BY PHARMACIES LOCATED 

9 IN OR CONTRACTING WITH LONG-TERM CARE 

10 FACILITIES. 

11 (a) SUBMISSION OF CLAIMS BY PHARMACIES LO12 CATED IN OR CONTRACTING WITH LONG-TERM CARE FA13 CILITIES.— 

14 (1) SUBMISSION OF CLAIMS TO PRESCRIPTION

15 DRUG PLANS.—Section 1860D–12(b) of the Social 

16 Security Act (42 U.S.C. 1395w–112(b)), as amend17 ed by section 3(a), is amended by adding at the end 

18 the following new paragraph: 

19 ‘‘(5) SUBMISSION OF CLAIMS BY PHARMACIES

20 LOCATED IN OR CONTRACTING WITH LONG-TERM

21 CARE FACILITIES.—Each contract entered into with 

22 a PDP sponsor under this section with respect to a 

23 prescription drug plan offered by such sponsor shall 

24 provide that a pharmacy located in, or having a con25 tract with, a long-term care facility shall have not 


jlentini on PROD1PC65 with BILLS
17 

•S 2664 IS

1 less than 30 days (but not more than 90 days) to 

2 submit claims to the sponsor for reimbursement 

3 under the plan.’’. 

4 (2) SUBMISSION OF CLAIMS TO MA–PD

5 PLANS.—Section 1857(f)(3) of the Social Security 

6 Act, as added by section 3(b), is amended by adding 

7 at the end the following new subparagraph: 

8 ‘‘(B) SUBMISSION OF CLAIMS BY PHAR9 MACIES LOCATED IN OR CONTRACTING WITH

10 LONG-TERM CARE FACILITIES.—Section 

11 1860D–12(b)(5).’’. 

12 (b) EFFECTIVE DATE.—The amendments made by 

13 this section shall apply to plan years beginning on or after 

14 January 1, 2007. 

15 SEC. 8. ASSURING PHARMACY ACCESS BY REQUIRING REA16 SONABLE PAYMENT OF PHARMACIES. 

17 (a) REASONABLE DISPENSING FEES REQUIRED.— 

18 (1) REQUIREMENT FOR PRESCRIPTION DRUG

19 PLANS.—Section 1860D–12(b) of the Social Secu20 rity Act (42 U.S.C. 1395w–104(b)(1)), as amended 

21 by section 7(a)(1), is amended by adding at the end 

22 the following new paragraph: 

23 ‘‘(6) REASONABLE DISPENSING FEES RE24 QUIRED.— 


jlentini on PROD1PC65 with BILLS
18 

•S 2664 IS

1 ‘‘(A) REASONABLE DISPENSING FEE RE2 QUIRED.—In the case of plan years beginning 

3 on or after January 1, 2009, subject to sub4 paragraph (E), each contract entered into with 

5 a PDP sponsor under this section with respect 

6 to a prescription drug plan offered by such 

7 sponsor shall provide that such sponsor shall 

8 pay a reasonable dispensing fee (as determined 

9 under subparagraph (B)) for covered part D 

10 drugs dispensed through a participating phar11 macy (other than such a pharmacy that dis12 penses drugs by mail order only or is located in, 

13 or contracts with, a long-term care facility). 

14 ‘‘(B) ESTABLISHMENT OF REASONABLE

15 DISPENSING FEES FOR PRESCRIPTION DRUG

16 PLANS.— 

17 ‘‘(i) IN GENERAL.—The Secretary 

18 shall establish, on an expedited basis and 

19 using a negotiated rulemaking process 

20 under subchapter III of chapter 5 of title 

21 5, United States Code, reasonable dis22 pensing fees for covered part D drugs dis23 pensed through participating pharmacies. 

24 ‘‘(ii) CONSIDERATION OF OIG REC25 OMMENDATIONS.—In establishing such 


jlentini on PROD1PC65 with BILLS
19 

•S 2664 IS

1 reasonable dispensing fees, the Secretary 

2 shall consider the recommendations in3 cluded in the report submitted under sec4 tion 8(b)(2) of the Pharmacy Access Im5 provement (PhAIm) Act of 2006 with re6 spect to the geographic area in which a 

7 prescription drug plan is offered, including 

8 any adjustment recommended in such re9 port for dispensing an extended supply of 

10 a covered part D drug. 

11 ‘‘(iii) PUBLICATION OF NOTICE.—In 

12 carrying out the rulemaking process under 

13 this subparagraph, the Secretary, after 

14 consultation with pharmacists, pharmacies 

15 (including long-term care, independent, 

16 chain, and mass market retail pharmacies), 

17 part D eligible individuals, beneficiary ad18 vocates, PDP sponsors of prescription drug 

19 plans, Medicare Advantage organizations 

20 offering MA–PD plans, and any other in21 terested parties the Secretary determines 

22 appropriate, shall publish the notice pro23 vided under section 564(a) of title 5, 

24 United States Code, by not later than 60 

25 days after the date of enactment of the 


jlentini on PROD1PC65 with BILLS
20 

•S 2664 IS

1 Pharmacy Access Improvement (PhAIm) 

2 Act of 2006. 

3 ‘‘(iv) TARGET DATE FOR PUBLICA4 TION OF RULE.—As part of the notice pro5 vided under clause (iii), and for purposes 

6 of this subparagraph, the ‘target date for 

7 publication’ (referred to in section 

8 564(a)(5) of such title) shall be March 1, 

9 2008. 

10 ‘‘(v) ABBREVIATED PERIOD FOR SUB11 MISSION OF COMMENTS.—In applying sec12 tion 564(c) of such title under this sub13 paragraph, ‘15 days’ shall be substituted 

14 for ‘30 days’. 

15 ‘‘(vi) APPOINTMENT OF NEGOTIATED

16 RULEMAKING COMMITTEE AND

17 FACILITATOR.—The Secretary shall pro18 vide for— 

19 ‘‘(I) the appointment of a nego20 tiated rulemaking committee under 

21 section 565(a) of such title by not 

22 later than 20 days after the end of 

23 the comment period provided for 

24 under section 564(c) of such title (as 

25 shortened under clause (v)); and 


jlentini on PROD1PC65 with BILLS
21 

•S 2664 IS

1 ‘‘(II) the nomination of a 

2 facilitator under section 566(c) of 

3 such title by not later than 10 days 

4 after the date of appointment of the 

5 committee. 

6 ‘‘(vii) PRELIMINARY COMMITTEE RE7 PORT.—The negotiated rulemaking com8 mittee appointed under clause (vi)(I) shall 

9 report to the Secretary, by not later than 

10 December 1, 2007, regarding the commit11 tee’s progress on achieving a consensus 

12 with regard to the rulemaking proceeding 

13 and whether such consensus is likely to 

14 occur before 1 month before the target 

15 date for publication of the rule. If the com16 mittee reports that the committee has 

17 failed to make significant progress towards 

18 such consensus or is unlikely to reach such 

19 consensus by the target date, the Secretary 

20 may terminate such process and provide 

21 for the publication of a rule under this 

22 subsection through such other methods as 

23 the Secretary may provide. 

24 ‘‘(viii) FINAL COMMITTEE REPORT.— 

25 If the committee is not terminated under 


jlentini on PROD1PC65 with BILLS
22 

•S 2664 IS

1 clause (vii), the rulemaking committee 

2 shall submit a report containing a pro3 posed rule by not later than 1 month be4 fore the target date of publication. 

5 ‘‘(ix) INTERIM, FINAL EFFECT.—The 

6 Secretary shall publish a rule under this 

7 subparagraph in the Federal Register by 

8 not later than the target date of publica9 tion. Such rule shall be effective and final 

10 immediately on an interim basis, but is 

11 subject to a change and revision after pub12 lic notice and opportunity for a period (of 

13 not less than 60 days) for public comment. 

14 In connection with such rule, the Secretary 

15 shall specify the process for the timely re16 view and approval of contracts with PDP 

17 sponsors of prescription drug plans to be 

18 certified as paying reasonable dispensing 

19 fees for covered part D drugs dispensed 

20 through participating pharmacies pursuant 

21 to such rules and consistent with this sub22 paragraph. 

23 ‘‘(x) PUBLICATION OF RULE AFTER

24 PUBLIC COMMENT.—The Secretary shall 

25 provide for consideration of such comments 


jlentini on PROD1PC65 with BILLS
23 

•S 2664 IS

1 and republication of such rule by not later 

2 than 1 year after the target date of publi3 cation. 

4 ‘‘(C) ANNUAL REVIEW.—The Secretary 

5 shall annually review the rule published under 

6 subparagraph (C) and revise such rule as ap7 propriate based on the following considerations: 

8 ‘‘(i) Any reasonable costs associated 

9 with a pharmacist’s time in— 

10 ‘‘(I) checking for information 

11 about an individual’s coverage; and 

12 ‘‘(II) performing necessary clin13 ical review and quality assurance ac14 tivities. 

15 ‘‘(ii) Costs incurred by the pharmacist 

16 that are associated with— 

17 ‘‘(I) the measurement or mixing 

18 of a covered part D drug; 

19 ‘‘(II) filling the container for 

20 such a drug; 

21 ‘‘(III) physically providing the 

22 completed prescription to an indi23 vidual enrolled in such a plan; 

24 ‘‘(IV) delivery; 

25 ‘‘(V) special packaging; 


jlentini on PROD1PC65 with BILLS
24 

•S 2664 IS

1 ‘‘(VI) overhead related to the fa2 cility and its maintenance, and the 

3 equipment necessary to operate the 

4 pharmacy, including the salaries of 

5 pharmacists and other pharmacy 

6 workers; and 

7 ‘‘(VII) geographic factors that 

8 impact operational costs. 

9 ‘‘(iii) The reasonable variation in 

10 costs described in clause (ii) based on 

11 whether the pharmacist is dispensing a 

12 standard or extended supply of a covered 

13 part D drug. 

14 ‘‘(iv) The annual National Industry15 Specific Occupational Employment and 

16 Wage Estimates published by the Bureau 

17 of Labor Statistics of the Department of 

18 Labor, as determined with respect to phar19 macists. 

20 ‘‘(D) SPECIAL RULE FOR PLAN YEAR

21 2008.—In the case of the plan year beginning on 

22 January 1, 2008, subject to subparagraph (E), 

23 each contract entered into with a PDP sponsor 

24 under this section with respect to a prescription 

25 drug plan offered by such sponsor shall provide 


jlentini on PROD1PC65 with BILLS
25 

•S 2664 IS

1 that such sponsor shall pay a reasonable dis2 pensing fee for covered part D drugs dispensed 

3 through a participating pharmacy (other than 

4 such a pharmacy that dispenses drugs by mail 

5 order only or is located in, or contracts with, a 

6 long-term care facility) based on the following 

7 considerations: 

8 ‘‘(i) Any reasonable costs associated 

9 with a pharmacist’s time in— 

10 ‘‘(I) checking for information 

11 about an individual’s coverage; and 

12 ‘‘(II) performing necessary clin13 ical review and quality assurance ac14 tivities. 

15 ‘‘(ii) Costs incurred by the pharmacist 

16 that are associated with— 

17 ‘‘(I) the measurement or mixing 

18 of a covered part D drug; 

19 ‘‘(II) filling the container for 

20 such a drug; 

21 ‘‘(III) physically providing the 

22 completed prescription to an indi23 vidual enrolled in such a plan; 

24 ‘‘(IV) delivery; 

25 ‘‘(V) special packaging; 


jlentini on PROD1PC65 with BILLS
26 

•S 2664 IS

1 ‘‘(VI) overhead related to the fa2 cility and its maintenance, and the 

3 equipment necessary to operate the 

4 pharmacy, including the salaries of 

5 pharmacists and other pharmacy 

6 workers; and 

7 ‘‘(VII) geographic factors that 

8 impact operational costs. 

9 ‘‘(iii) The reasonable variation in 

10 costs described in clause (ii) based on 

11 whether the pharmacist is dispensing a 

12 standard or extended supply of a covered 

13 part D drug. 

14 ‘‘(E) MINIMUM DISPENSING FEES FOR

15 PARTICIPATING PHARMACIES.—In the case of a 

16 PDP sponsor of a prescription drug plan that 

17 sets separate rates for in-network pharmacies 

18 based on whether the pharmacy is a preferred 

19 or non-preferred pharmacy (or any designation 

20 other than preferred or any other distinction 

21 between or among pharmacies with respect to 

22 participation status), the dispensing fee estab23 lished by such sponsor for a participating phar24 macy that is not so designated as a preferred 

25 or non-preferred pharmacy shall be at a rate 


jlentini on PROD1PC65 with BILLS
27 

•S 2664 IS

1 that is not less than the rate at which the PDP 

2 sponsor reimburses such non-preferred phar3 macies.’’. 

4 (2) REQUIREMENT FOR MA–PD PLANS.—Sec5 tion 1857(f)(3) of the Social Security Act, as 

6 amended by section 7(a)(2), is amended by adding 

7 at the end the following new subparagraph: 

8 ‘‘(C) REASONABLE DISPENSING FEES RE9 QUIRED.—Section 1860D–12(b)(6).’’. 

10 (b) OIG STUDY AND REPORT ON REASONABLE DIS11 PENSING FEES.— 

12 (1) STUDY.—The Inspector General of the De13 partment of Health and Human Services shall con14 duct an analysis of the cost of dispensing covered 

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

16 the Social Security Act (42 U.S.C. 1395w–102(e)) 

17 under a prescription drug plan under part D of title 

18 XVIII or an MA–PD plan under part C of such title 

19 that takes into consideration the following: 

20 (A) Any reasonable costs associated with a 

21 pharmacist’s time in— 

22 (i) checking for information about an 

23 individual’s coverage; and 

24 (ii) performing necessary clinical re25 view and quality assurance activities. 


jlentini on PROD1PC65 with BILLS
28 

•S 2664 IS

1 (B) Costs incurred by the pharmacist that 

2 are associated with— 

3 (i) the measurement or mixing of a 

4 covered part D drug; 

5 (ii) filling the container for such a 

6 drug; 

7 (iii) physically providing the com8 pleted prescription to an individual en9 rolled in such a plan; 

10 (iv) delivery; 

11 (v) special packaging; 

12 (vi) overhead related to the facility 

13 and its maintenance, and the equipment 

14 necessary to operate the pharmacy, includ15 ing the salaries of pharmacists and other 

16 pharmacy workers; and 

17 (vii) geographic factors that impact 

18 operational costs. 

19 (C) The reasonable variation in costs de20 scribed in subparagraph (B) based on whether 

21 the pharmacist is dispensing a standard or ex22 tended supply of a covered part D drug. 

23 (D) The reasonable variation in dispensing 

24 fees, taking into consideration the costs de25 scribed in subparagraphs (A), (B), and (C), 


jlentini on PROD1PC65 with BILLS
29 

•S 2664 IS

1 that is sufficient to encourage the use of cov2 ered generic alternative therapies. 

3 (2) REPORT.—By not later than March 1, 

4 2007, the Inspector General of the Department of 

5 Health and Human Services shall submit a report to 

6 the Secretary of Health and Human Services on the 

7 study conducted under paragraph (1). The report 

8 shall include recommendations on the following: 

9 (A) What the minimum reasonable dis10 pensing fee should be with respect to a pre11 scription drug plan under part D of title XVIII 

12 or an MA–PD plan under part C of such title 

13 determined with respect to the area in which 

14 such plan is offered, including with respect to 

15 each PDP region (as determined under section 

16 1860D–11(a)(2) of the Social Security Act (42 

17 U.S.C. 1395w–111(a)(2)) and each MA region 

18 (as determined under section 1858(a) of such 

19 Act (42 U.S.C. 1395w–27(a)). 

20 (i) The extent to which the dispensing 

21 fee described in subparagraph (A) can rea22 sonably be increased when an extended 

23 supply of a covered part D drug (as so de24 fined) is dispensed (depending on the numVerDate Aug 31 2005 22:45 Apr 30, 2006 Jkt 049200 PO 00000 Frm 00029 Fmt 6652 Sfmt 6201 E:\BILLS\S2664.IS S2664

jlentini on PROD1PC65 with BILLS
30 

•S 2664 IS

1 ber of days worth of such a drug being 

2 supplied to the beneficiary). 

3 (c) ENCOURAGING UTILIZATION OF GENERIC

4 DRUGS.—Section 1860D–4(b) of the Social Security Act 

5 (42 U.S.C. 1395w–104(b)), as amended by section 2(d), 

6 is amended by adding at the end the following new para7 graph: 

8 ‘‘(5) ENCOURAGING UTILIZATION OF GENERIC

9 DRUGS.—With respect to prescriptions filled on or 

10 after January 1, 2008, the PDP sponsor of a pre11 scription drug plan shall encourage generic utiliza12 tion by paying an increased dispensing fee for ge13 neric drugs.’’. 

14 (d) REGULAR UPDATE OF PRESCRIPTION DRUG

15 PRICING STANDARD REQUIRED.— 

16 (1) REQUIREMENT FOR PRESCRIPTION DRUG

17 PLANS.—Section 1860D–12(b) of the Social Secu18 rity Act (42 U.S.C. 1395w–104(b)(1)), as amended 

19 by subsection (a), is amended by adding at the end 

20 the following new paragraph: 

21 ‘‘(7) REGULAR UPDATE OF PRESCRIPTION

22 DRUG PRICING STANDARD.—If the PDP sponsor of 

23 a prescription drug plan uses a standard for reim24 bursement of pharmacies based on the cost of a 

25 drug, each contract entered into with such sponsor 


jlentini on PROD1PC65 with BILLS
31 

•S 2664 IS

1 under this section with respect to the plan shall pro2 vide that the sponsor shall update such standard not 

3 less frequently than every 7 days, beginning with an 

4 initial update on January 1 of each year, to accu5 rately reflect the market price of acquiring the 

6 drug.’’. 

7 (2) REQUIREMENT FOR MA–PD PLANS.—Sec8 tion 1857(f)(3) of the Social Security Act, as 

9 amended by subsection (a)(2), is amended by adding 

10 at the end the following new subparagraph: 

11 ‘‘(D) REGULAR UPDATE OF PRESCRIPTION

12 DRUG PRICING STANDARD.—Section 1860D– 

13 12(b)(7).’’. 

14 (3) EFFECTIVE DATE.—The amendments made 

15 by this subsection shall apply to plan years begin16 ning on or after January 1, 2007. 

Æ 


jlentini on PROD1PC65 with BILLS