II 

115TH CONGRESS 

1ST SESSION S. 1131 

To require reporting regarding certain drug price increases, and for other 

purposes. 

IN THE SENATE OF THE UNITED STATES 

MAY 16, 2017 

Ms. BALDWIN (for herself and Mr. MCCAIN) introduced the following bill; 

which was read twice and referred to the Committee on Health, Education, Labor, and Pensions 

A BILL 

To require reporting regarding certain drug price increases, 

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 ‘‘Fair Accountability 

5 and Innovative Research Drug Pricing Act of 2017’’. 

6 SEC. 2. REPORTING ON JUSTIFICATION FOR DRUG PRICE 

7 INCREASES. 

8 Title III of the Public Health Service Act (42 U.S.C. 

9 241 et seq.) is amended by adding at the end the fol10 lowing: 


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1 ‘‘PART W—DRUG PRICE REPORTING; DRUG 

2 VALUE FUND 

3 ‘‘SEC. 399OO. REPORTING ON JUSTIFICATION FOR DRUG 

4 PRICE INCREASES. 

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

6 ‘‘(1) MANUFACTURER.—The term ‘manufac7 turer’ means the person— 

8 ‘‘(A) that holds the application for a drug 

9 approved under section 505 of the Federal 

10 Food, Drug, and Cosmetic Act or the license 

11 issued under section 351 of the Public Health 

12 Service Act; or 

13 ‘‘(B) who is responsible for setting the 

14 price for the drug. 

15 ‘‘(2) QUALIFYING DRUG.—The term ‘qualifying 

16 drug’ means any drug that is approved under sub17 section (c) or (j) of section 505 of the Federal Food, 

18 Drug, and Cosmetic Act or licensed under subsection 

19 (a) or (k) of section 351 of this Act— 

20 ‘‘(A) that has a wholesale acquisition cost 

21 of $100 or more per month supply, or per a 

22 course of treatment that lasts less than a 

23 month, and is— 

24 ‘‘(i)(I) subject to section 503(b)(1) of 

25 the Federal Food, Drug, and Cosmetic 

26 Act; or 


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1 ‘‘(II) commonly administered by hos2 pitals (as determined by the Secretary); 

3 ‘‘(ii) not designated as a drug for a 

4 rare disease or condition under section 526 

5 of the Federal Food, Drug, and Cosmetic 

6 Act; and 

7 ‘‘(iii) not designated by the Secretary 

8 as a vaccine; and 

9 ‘‘(B) for which, during the previous cal10 endar year, at least 1 dollar of the total amount 

11 of sales were for individuals enrolled under the 

12 Medicare program under title XVIII of the So13 cial Security Act (42 U.S.C. 1395 et seq.) or 

14 under a State Medicaid plan under title XIX of 

15 such Act (42 U.S.C. 1396 et seq.) or under a 

16 waiver of such plan. 

17 ‘‘(3) WHOLESALE ACQUISITION COST.—The 

18 term ‘wholesale acquisition cost’ has the meaning 

19 given that term in section 1847A(c)(6)(B) of the So20 cial Security Act (42 U.S.C. 1395w–3a(c)(6)(B)). 

21 ‘‘(b) REPORT.— 

22 ‘‘(1) REPORT REQUIRED.—The manufacturer of 

23 a qualifying drug shall submit a report to the Sec24 retary for each price increase of a qualifying drug 


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1 that will result in an increase in the wholesale acqui2 sition cost of that drug that is equal to— 

3 ‘‘(A) 10 percent or more over a 12-month 

4 period; or 

5 ‘‘(B) 25 percent or more over a 36-month 

6 period. 

7 ‘‘(2) REPORT DEADLINE.—Each report de8 scribed in paragraph (1) shall be submitted to the 

9 Secretary not later than 30 days prior to the 

10 planned effective date of such price increase. 

11 ‘‘(c) CONTENTS.—A report under subsection (b) 

12 shall, at a minimum, include— 

13 ‘‘(1) with respect to the qualifying drug— 

14 ‘‘(A) the percentage by which the manufac15 turer will raise the wholesale acquisition cost of 

16 the drug on the planned effective date of such 

17 price increase; 

18 ‘‘(B) a justification for, and description of, 

19 each manufacturer’s price increase that oc20 curred during the 12-month period described in 

21 subsection (b)(1)(A) or the 36-month period de22 scribed in subsection (b)(1)(B), as applicable; 

23 ‘‘(C) the identity of the initial developer of 

24 the drug; 


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1 ‘‘(D) a description of the history of the 

2 manufacturer’s price increases for the drug 

3 since the approval of the application for the 

4 drug under section 505 of the Federal Food, 

5 Drug, and Cosmetic Act or the issuance of the 

6 license for the drug under section 351, or since 

7 the manufacturer acquired such approved appli8 cation or license; 

9 ‘‘(E) the current list price of the drug; 

10 ‘‘(F) the total expenditures of the manu11 facturer on— 

12 ‘‘(i) materials and manufacturing for 

13 such drug; and 

14 ‘‘(ii) acquiring patents and licensing 

15 for such drug; 

16 ‘‘(G) the percentage of total expenditures 

17 of the manufacturer on research and develop18 ment for such drug that was derived from Fed19 eral funds; 

20 ‘‘(H) the total expenditures of the manu21 facturer on research and development for such 

22 drug that is used for— 

23 ‘‘(i) basic and preclinical research; 

24 ‘‘(ii) clinical research; 

25 ‘‘(iii) new drug development; 


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1 ‘‘(iv) pursuing new or expanded indi2 cations for such drug through supple3 mental applications under section 505 of 

4 the Federal Food, Drug, and Cosmetic 

5 Act; and 

6 ‘‘(v) carrying out postmarket require7 ments related to such drug, including those 

8 under section 505(o)(3) of such Act; 

9 ‘‘(I) the total revenue and the net profit 

10 generated from the qualifying drug for each cal11 endar year since the approval of the application 

12 for the drug under section 505 of the Federal 

13 Food, Drug, and Cosmetic Act or the issuance 

14 of the license for the drug under section 351, 

15 or since the manufacturer acquired such ap16 proved application or license; and 

17 ‘‘(J) the total costs associated with mar18 keting and advertising for the qualifying drug; 

19 ‘‘(2) with respect to the manufacturer— 

20 ‘‘(A) the total revenue and the net profit 

21 of the manufacturer for the 12-month period 

22 described in subsection (b)(1)(A) or the 36- 

23 month period described in subsection (b)(1)(B), 

24 as applicable; 


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1 ‘‘(B) all stock-based performance metrics 

2 used by the manufacturer to determine execu3 tive compensation for the 12-month period de4 scribed in subsection (b)(1)(A) or the 36-month 

5 period described in subsection (b)(1)(B), as ap6 plicable; and 

7 ‘‘(C) any additional information the manu8 facturer chooses to provide related to drug pric9 ing decisions, such as total expenditures on— 

10 ‘‘(i) drug research and development; 

11 or 

12 ‘‘(ii) clinical trials on drugs that failed 

13 to receive approval by the Food and Drug 

14 Administration; and 

15 ‘‘(3) such other related information as the Sec16 retary considers appropriate. 

17 ‘‘(d) CIVIL PENALTY.—Any manufacturer of a quali18 fying drug that fails to submit a report for the drug as 

19 required by this section shall be subject to a civil penalty 

20 of $100,000 for each day on which the violation continues. 

21 ‘‘(e) PUBLIC POSTING.— 

22 ‘‘(1) IN GENERAL.—Subject to paragraph (3), 

23 not later than 30 days after the submission of a re24 port under subsection (b), the Secretary shall post 


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1 the report on the public Web site of the Department 

2 of Health and Human Services. 

3 ‘‘(2) FORMAT.—In developing the format of 

4 such report for public posting, the Secretary shall 

5 consult stakeholders, including beneficiary groups, 

6 and shall seek feedback on the content and format 

7 from consumer advocates and readability experts to 

8 ensure such public reports are user-friendly to the 

9 public and are written in plain language that con10 sumers can readily understand. 

11 ‘‘(3) TRADE SECRETS AND CONFIDENTIAL IN12 FORMATION.—In carrying out this section the Sec13 retary shall enforce current law concerning the pro14 tection of confidential commercial information and 

15 trade secrets.’’. 

16 ‘‘SEC. 399OO–1. USE OF CIVIL PENALTY AMOUNTS. 

17 ‘‘The Secretary shall collect the civil penalties under 

18 section 399OO, in addition to any other amounts avail19 able, and without further appropriation, and shall use 

20 such funds to carry out activities described in this part 

21 and to improve consumer and provider information about 

22 drug value and drug price transparency. 

23 ‘‘SEC. 399OO–2. ANNUAL REPORT TO CONGRESS. 

24 ‘‘(a) IN GENERAL.—Subject to subsection (b), the 

25 Secretary shall submit to Congress, and post on the public 


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1 Web site of the Department of Health and Human Serv2 ices in a way that is easy to find, use, and understand, 

3 an annual report— 

4 ‘‘(1) summarizing the information reported pur5 suant to section 399OO; and 

6 ‘‘(2) including copies of the reports and sup7 porting detailed economic analyses submitted pursu8 ant to such section. 

9 ‘‘(b) TRADE SECRETS AND CONFIDENTIAL INFORMA10 TION.—In carrying out this section the Secretary shall en11 force current law concerning the protection of confidential 

12 commercial information and trade secrets.’’. 

Æ 


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