I 

110TH CONGRESS 

1ST SESSION H. R. 2606 

To amend section 340B of the Public Health Service Act to revise and 

expand the drug discount program under that section to improve the 

provision of discounts on drug purchases for certain safety net providers. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 7, 2007 

Mr. RUSH (for himself, Mrs. EMERSON, and Mr. STUPAK) introduced the 

following bill; which was referred to the Committee on Energy and Commerce 

A BILL 

To amend section 340B of the Public Health Service Act 

to revise and expand the drug discount program under 

that section to improve the provision of discounts on 

drug purchases for certain safety net providers. 

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 ‘‘340B Program Improvement and Integrity Act of 2007’’. 

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

7 this Act is as follows: 

Sec. 1. Short title; table of contents. 

Sec. 2. Expanded participation in 340B program. 

Sec. 3. Extension of discounts to inpatient drugs. 

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Sec. 4. Improvements to 340B program integrity. 

Sec. 5. Other improvements in 340B program. 

Sec. 6. Effective dates. 

1 SEC. 2. EXPANDED PARTICIPATION IN 340B PROGRAM. 

2 (a) EXPANSION OF COVERED ENTITIES RECEIVING

3 DISCOUNTED PRICES.—Section 340B(a)(4) of the Public 

4 Health Service Act (42 U.S.C. 256b(a)(4)) is amended by 

5 adding at the end the following new subparagraphs: 

6 ‘‘(M) A children’s hospital excluded from 

7 the Medicare prospective payment system pur8 suant to section 1886(d)(1)(B)(iii) of the Social 

9 Security Act (42 U.S.C. 1395ww(d)(1)(B)(iii)) 

10 which would meet the requirements of sub11 section (a)(4)(L), including the disproportionate 

12 share adjustment percentage requirement under 

13 clause (ii), if the hospital were a subsection (d) 

14 hospital as defined by Section 1886(d)(1)(B) of 

15 the Social Security Act. 

16 ‘‘(N) An entity that is a critical access hos17 pital (as determined under section 1820(c)(2) 

18 of the Social Security Act (42 U.S.C. 1395i– 

19 4(c)(2)). 

20 ‘‘(O) An entity receiving funds under title 

21 V of the Social Security Act (relating to mater22 nal and child health) for the provision of health 

23 services. 

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1 ‘‘(P) An entity receiving funds under sub2 part I of part B of title XIX of the Public 

3 Health Service Act (relating to comprehensive 

4 mental health services) for the provision of com5 munity mental health services. 

6 ‘‘(Q) An entity receiving funds under sub7 part II of such part B (relating to the preven8 tion and treatment of substance abuse) for the 

9 provision of treatment services for substance 

10 abuse. 

11 ‘‘(R) An entity that is a medicare-depend12 ent, small rural hospital (as defined in section 

13 1886(d)(5)(G)(iv) of the Social Security Act). 

14 ‘‘(S) An entity that is a sole community 

15 hospital (as defined in section 

16 1886(d)(5)(D)(iii) of the Social Security Act). 

17 ‘‘(T) An entity that is classified as a rural 

18 referral center under section 1886(d)(5)(C) of 

19 the Social Security Act.’’. 

20 (b) PROHIBITION ON GROUP PURCHASING ARRANGE21 MENTS.—Section 340B(a) of such Act (42 U.S.C. 

22 256b(a)) is amended— 

23 (1) in paragraph (4)(L)— 

24 (A) by adding ‘‘and’’ at the end of clause 

25 (i); 

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1 (B) by striking ‘‘; and’’ at the end of 

2 clause (ii) and inserting a period; and 

3 (C) by striking clause (iii); 

4 (2) in subsection (a)(5), by redesignating the 

5 subparagraphs (C) and (D) as subparagraphs (D) 

6 and (E), respectively, and by inserting after sub7 paragraph (B) the following new subparagraph: 

8 ‘‘(C) PROHIBITING USE OF GROUP PUR9 CHASING ARRANGEMENTS.— 

10 ‘‘(i) A hospital described in subpara11 graph (L), (M), (N), (R), (S), or (T) of 

12 subsection (a)(4) shall not obtain covered 

13 outpatient drugs through a group pur14 chasing organization or other group pur15 chasing arrangement, except as permitted 

16 or provided pursuant to clause (ii) or (iii). 

17 ‘‘(ii) Clause (i) shall not apply to 

18 drugs purchased for inpatient use. 

19 ‘‘(iii) The Secretary shall establish 

20 reasonable exceptions to the requirement of 

21 clause (i)— 

22 ‘‘(I) with respect to a covered 

23 outpatient drug that is unavailable to 

24 be purchased through the program 

25 under this section due to a drug 

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1 shortage problem, manufacturer non2 compliance, or any other reason be3 yond the hospital’s control; 

4 ‘‘(II) to facilitate generic substi5 tution when a generic covered out6 patient drug is available at a lower 

7 price; or 

8 ‘‘(III) to reduce in other ways 

9 the administrative burdens of man10 aging both inventories of drugs ob11 tained under this section and not 

12 under this section, if such exception 

13 does not create a duplicate discount 

14 problem in violation of subparagraph 

15 (A) or a diversion problem in violation 

16 of subparagraph (B).’’. 

17 SEC. 3. EXTENSION OF DISCOUNTS TO INPATIENT DRUGS. 

18 (a) IN GENERAL.—Section 340B of the Public 

19 Health Service Act (42 U.S.C. 256b) is amended— 

20 (1) in subsection (b)— 

21 (A) by designating the matter beginning 

22 ‘‘In this section’’ as a paragraph (1) with the 

23 heading ‘‘IN GENERAL’’ ; and 

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

25 paragraph: 

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1 ‘‘(2) COVERED DRUG.—In this section, the term 

2 ‘covered drug’— 

3 ‘‘(A) means a covered outpatient drug (as 

4 defined in section 1927(k)(2) of the Social Se5 curity Act); and 

6 ‘‘(B) includes, notwithstanding the section 

7 1927(k)(3)(A) of such Act, a drug used in con8 nection with an inpatient or outpatient service 

9 provided by a hospital described in subpara10 graph (L), (M), (N), (R), (S), or (T) of sub11 section (a)(4) that is enrolled to participate in 

12 the drug discount program under this section.’’; 

13 and 

14 (2) in paragraphs (5), (7), and (9), by striking 

15 ‘‘outpatient’’ each place it appears. 

16 (b) MEDICAID CREDITS ON INPATIENT DRUGS.— 

17 Subsection (c) of section 340B of the Public Health Serv18 ice Act (42 U.S.C. 256b(c)) is amended to read as follows: 

19 ‘‘(c) MEDICAID CREDITS ON INPATIENT DRUGS.— 

20 ‘‘(1) IN GENERAL.—For the cost reporting pe21 riod covered by the most recently filed Medicare cost 

22 report under title XVIII of the Social Security Act, 

23 a hospital described in subparagraph (L), (M), (N), 

24 (R), (S), or (T) of subsection (a)(4) and enrolled to 

25 participate in the drug discount program under this 

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1 section shall provide to each State under its plan 

2 under title XIX of such Act — 

3 ‘‘(A) a credit on the estimated annual 

4 costs to such hospital of single source and inno5 vator multiple source drugs provided to Med6 icaid recipients for inpatient use; and 

7 ‘‘(B) a credit on the estimated annual 

8 costs to such hospital of noninnovator multiple 

9 source drugs provided to Medicaid recipients for 

10 inpatient use. 

11 ‘‘(2) CALCULATION OF CREDITS.— 

12 ‘‘(A) SINGLE SOURCE AND INNOVATOR

13 MULTIPLE SOURCE DRUGS.—For purposes of 

14 paragraph (1)(A)— 

15 ‘‘(i) the credit under such paragraph 

16 shall be equal to the product of— 

17 ‘‘(I) the estimated annual costs 

18 of single source and innovator mul19 tiple source drugs provided by the 

20 hospital to Medicaid recipients for in21 patient use; 

22 ‘‘(II) the average manufacturer 

23 price adjustment; and 

24 ‘‘(III) the minimum rebate per25 centage described in section 

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1 1927(c)(1)(B) of the Social Security 

2 Act; 

3 ‘‘(ii) the estimated annual costs of 

4 single source drugs and innovator multiple 

5 source drugs provided by the hospital to 

6 Medicaid recipients for inpatient use under 

7 clause (i)(I) shall be equal to the product 

8 of— 

9 ‘‘(I) the hospital’s actual acquisi10 tion costs of all drugs purchased dur11 ing the cost reporting period for inpa12 tient use; 

13 ‘‘(II) the Medicaid inpatient drug 

14 charges as reported on the hospital’s 

15 most recently filed Medicare cost re16 port divided by total inpatient drug 

17 charges reported on the cost report; 

18 and 

19 ‘‘(III) the percent of the hos20 pital’s annual inpatient drug costs de21 scribed in subclause (I) arising out of 

22 the purchase of single source and in23 novator multiple source drugs; 

24 ‘‘(iii) the average manufacturer price 

25 adjustment referenced in clause (i)(II) 

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1 shall be determined annually by the Sec2 retary for single source and innovator mul3 tiple source drugs by dividing on an aggre4 gate basis the average manufacturer price 

5 as defined in section 1927(k)(1)(D) of the 

6 Social Security Act, averaged across all 

7 covered drugs reported to the Secretary 

8 pursuant to section 1927(b)(3) of such Act 

9 by the average 340B ceiling price for cov10 ered drugs calculated pursuant to sub11 section (a)(1); and 

12 ‘‘(iv) the terms ‘single source drug’ 

13 and ‘innovator multiple source drug’ have 

14 the meanings given such terms in section 

15 1927(k)(7) of the Social Security Act. 

16 ‘‘(B) NONINNOVATOR MULTIPLE SOURCE

17 DRUGS.—For purposes of subparagraph 

18 (1)(B)— 

19 ‘‘(i) the credit under such paragraph 

20 shall be calculated by multiplying— 

21 ‘‘(I) the estimated annual costs 

22 to the hospital of noninnovator mul23 tiple source drugs provided to Med24 icaid recipients for inpatient use, 

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1 ‘‘(II) the average manufacturer 

2 price adjustment, and 

3 ‘‘(III) the applicable percentage 

4 as defined in section 1927(c)(3)(B) of 

5 the Social Security Act; 

6 ‘‘(ii) the estimated annual costs to a 

7 hospital of noninnovator multiple source 

8 drugs provided to Medicaid recipients for 

9 inpatient use under clause (i)(I) shall be 

10 equal to the product of— 

11 ‘‘(I) the hospital’s actual acquisi12 tion cost of all drugs purchased dur13 ing the cost reporting period for inpa14 tient use; 

15 ‘‘(II) the Medicaid inpatient drug 

16 charges as reported on the hospital’s 

17 most recently filed Medicare cost re18 port divided by total inpatient drug 

19 charges reported on the cost report; 

20 ‘‘(III) the percent of the hos21 pital’s annual inpatient drug costs de22 scribed in subclause (I) arising out of 

23 the purchase of noninnovator multiple 

24 source drugs; 

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1 ‘‘(iii) the average manufacturer price 

2 adjustment referenced in clause (i)(II) 

3 shall be determined annually by the Sec4 retary for noninnovator multiple source 

5 drugs by dividing on an aggregate basis 

6 the average manufacturer price as defined 

7 in Section 1927(k)(1)(D) of the Social Se8 curity Act, averaged across all covered 

9 drugs reported to the Secretary pursuant 

10 to Section 1927(b)(3) of such Act by the 

11 average 340B ceiling price for covered 

12 drugs calculated pursuant to section 

13 340B(a)(1) of the Public Health Service 

14 Act; and 

15 ‘‘(iv) the term ‘noninnovator multiple 

16 source drug’ has the meaning given such 

17 term in section 1927(k)(7) of the Social 

18 Security Act. 

19 ‘‘(3) PAYMENT DEADLINE.—The credits pro20 vided by a hospital under paragraph (1) shall be 

21 paid within 90 days of the filing of the hospital’s 

22 most recently filed Medicare cost report. 

23 ‘‘(4) OPT OUT.—A hospital shall not be re24 quired to provide the Medicaid credit required under 

25 paragraph (1) if— 

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1 ‘‘(A) it can demonstrate to the State that 

2 the amount of the credit would not exceed the 

3 loss of reimbursement under the State plan re4 sulting from the extension of discounts to inpa5 tient drugs under subsection (b)(2); or 

6 ‘‘(B) the hospital and State agree to an al7 ternative arrangement. 

8 Any dispute between the hospital and the State 

9 under this paragraph shall be adjudicated through 

10 the administrative dispute resolution process under 

11 this section. 

12 ‘‘(5) OFFSET AGAINST MEDICAL ASSISTANCE.— 

13 Amounts received by a State under this subsection 

14 in any quarter shall be considered to be a reduction 

15 in the amount expended under the State plan in the 

16 quarter for medical assistance for purposes of sec17 tion 1903(a)(1) of the Social Security Act. 

18 ‘‘(6) REFERENCES TO SOCIAL SECURITY ACT

19 PROVISIONS.—Notwithstanding any other provision 

20 of law, all references to provisions of the Social Se21 curity Act in this section shall be deemed to be ref22 erences to the Social Security Act as in effect on the 

23 effective date of the 340B Program Improvement 

24 Act of 2007.’’. 

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1 (c) CONFORMING AMENDMENTS.—Section 1927 of 

2 the Social Security Act (42 U.S.C. 1396r-8), is amend3 ed— 

4 (1) in subsection (a)(5)(A), by striking ‘‘covered 

5 outpatient drugs’’ and inserting ‘‘covered drugs (as 

6 defined in section 340B(b)(2) of the Public Health 

7 Service Act)’’; 

8 (2) in subsection (a)(5)(D), by striking ‘‘title 

9 VI of the Veterans Health Care Act of 1992’’ and 

10 inserting ‘‘the 340B Program Improvement and In11 tegrity Act of 2007’’; 

12 (3) in subsection (c)(1)(C)(i), by redesignating 

13 subclauses (II) through (IV) as subclauses (III) 

14 through (V), respectively and by inserting after sub15 clause (I) the following new subclause: 

16 ‘‘(II) any prices charged for a 

17 covered drug as defined in section 

18 340B(b)(2) of the Public Health Serv19 ice Act;’’; and 

20 (4) in subsection (k)(1)— 

21 (A) in subparagraph (A), by striking ‘‘sub22 paragraph (B)’’ and inserting ‘‘subparagraph 

23 (B) and (D)’’; and 

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

25 subparagraph: 

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1 ‘‘(D) CALCULATION FOR COVERED

2 DRUGS.—With respect to a covered drug (as de3 fined in section 340B(b)(2) of the Public 

4 Health Service Act), the average manufacturer 

5 price is the average price paid to the manufac6 turer for the drug in the United States by 

7 wholesalers for drugs distributed to both the re8 tail pharmacy and acute care classes of trade, 

9 after deducting customary prompt pay dis10 counts.’’. 

11 SEC. 4. IMPROVEMENTS TO 340B PROGRAM INTEGRITY. 

12 (a) INTEGRITY IMPROVEMENTS.—Section 340B of 

13 the Public Health Service Act (42 U.S.C. 256b) is amend14 ed by adding at the end the following: 

15 ‘‘(e) IMPROVEMENTS IN PROGRAM INTEGRITY.— 

16 ‘‘(1) MANUFACTURER COMPLIANCE.— 

17 ‘‘(A) IN GENERAL.—From amounts appro18 priated under paragraph (4), the Secretary 

19 shall provide for improvements in compliance by 

20 manufacturers with the requirements of this 

21 section in order to prevent overcharges and 

22 other violations of the discounted pricing re23 quirements specified in this section. 

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1 ‘‘(B) IMPROVEMENTS.—The improvements 

2 described in subparagraph (A) shall include the 

3 following: 

4 ‘‘(i) The development of a system to 

5 enable the Secretary to verify the accuracy 

6 of ceiling prices calculated by manufactur7 ers under subsection (a)(1) and charged to 

8 covered entities, which shall include the 

9 following: 

10 ‘‘(I) Developing and publishing 

11 through an appropriate policy or regu12 latory issuance, precisely defined 

13 standards and methodology for the 

14 calculation of ceiling prices under 

15 such subsection. 

16 ‘‘(II) Comparing regularly the 

17 ceiling prices calculated by the Sec18 retary with the quarterly pricing data 

19 that is reported by manufacturers to 

20 the Secretary. 

21 ‘‘(III) Performing spot checks of 

22 sales transactions by covered entities. 

23 ‘‘(IV) Inquiring into the cause of 

24 any pricing discrepancies that may be 

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1 ing manufacturers to take, such cor2 rective action as is appropriate in re3 sponse to such price discrepancies. 

4 ‘‘(ii) The establishment of procedures 

5 for manufacturers to issue refunds to cov6 ered entities in the event that there is an 

7 overcharge by the manufacturers, including 

8 the following: 

9 ‘‘(I) Providing the Secretary with 

10 an explanation of why and how the 

11 overcharge occurred, how the refunds 

12 will be calculated, and to whom the 

13 refunds will be issued. 

14 ‘‘(II) Oversight by the Secretary 

15 to ensure that the refunds are issued 

16 accurately and within a reasonable pe17 riod of time, both in routine instances 

18 of retroactive adjustment to relevant 

19 pricing data and exceptional cir20 cumstances such as erroneous or in21 tentional overcharging for covered 

22 drugs. 

23 ‘‘(iii) The provision of access through 

24 the Internet website of the Department of 

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1 ble ceiling prices for covered drugs as cal2 culated and verified by the Secretary in ac3 cordance with this section, in a manner 

4 (such as through the use of password pro5 tection) that limits such access to covered 

6 entities and adequately assures security 

7 and protection of privileged pricing data 

8 from unauthorized re-disclosure. 

9 ‘‘(iv) The development of a mecha10 nism by which— 

11 ‘‘(I) rebates and other discounts 

12 provided by manufacturers to other 

13 purchasers subsequent to the sale of 

14 covered drugs to covered entities are 

15 reported to the Secretary, and 

16 ‘‘(II) appropriate credits and re17 funds are issued to covered entities if 

18 such discounts or rebates have the ef19 fect of lowering the applicable ceiling 

20 price for the relevant quarter for the 

21 drugs involved. 

22 ‘‘(v) Selective auditing of manufactur23 ers and wholesalers to ensure the integrity 

24 of the drug discount program under this 

25 section. 

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1 ‘‘(vi) The imposition of sanctions in 

2 the form of civil monetary penalties, 

3 which— 

4 ‘‘(I) shall be assessed according 

5 to standards established in regulations 

6 to be promulgated by the Secretary 

7 within 180 days of enactment of this 

8 subsection; 

9 ‘‘(II) shall not exceed $5,000 for 

10 each instance of overcharging a cov11 ered entity that may have occurred; 

12 and 

13 ‘‘(III) shall apply to any manu14 facturer with an agreement under this 

15 section that knowingly and inten16 tionally charges a covered entity a 

17 price for purchase of a drug that ex18 ceeds the maximum applicable price 

19 under subsection (a)(1). 

20 ‘‘(2) COVERED ENTITY COMPLIANCE.— 

21 ‘‘(A) IN GENERAL.—From amounts appro22 priated under paragraph (4), the Secretary 

23 shall provide for improvements in compliance by 

24 covered entities with the requirements of this 

25 section in order to prevent diversion and other 

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1 violations of the duplicate discount require2 ments specified under subsection (a)(5). 

3 ‘‘(B) IMPROVEMENTS.—The improvements 

4 described in subparagraph (A) shall include the 

5 following: 

6 ‘‘(i) The development of procedures to 

7 enable and require covered entities to regu8 larly update (at least annually) the infor9 mation on the Internet website of the De10 partment of Health and Human Services 

11 relating to this section. 

12 ‘‘(ii) The development of a system for 

13 the Secretary to verify the accuracy of in14 formation regarding covered entities that is 

15 listed on the website described in clause 

16 (i). 

17 ‘‘(iii) The development of more de18 tailed guidance describing methodologies 

19 and options available to covered entities for 

20 billing covered drugs to State Medicaid 

21 agencies in a manner that avoids duplicate 

22 discounts pursuant to subsection (a)(5)(A). 

23 ‘‘(iv) The establishment of a single, 

24 universal, and standardized identification 

25 system by which each covered entity site 

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1 can be identified by manufacturers, dis2 tributors, covered entities, and the Sec3 retary for purposes of facilitating the or4 dering, purchasing, and delivery of covered 

5 drugs under this section, including the 

6 processing of chargebacks for such drugs. 

7 ‘‘(v) The imposition of sanctions, in 

8 appropriate cases as determined by the 

9 Secretary, additional to those to which cov10 ered entities are subject under subpara11 graph (a)(5)(D), through one or more of 

12 the following actions: 

13 ‘‘(I) Where a covered entity 

14 knowingly and intentionally violates 

15 subparagraph (a)(5)(E), the covered 

16 entity shall be required to pay a mon17 etary penalty to a manufacturer or 

18 manufacturers in the form of interest 

19 on sums for which the covered entity 

20 is found liable under paragraph 

21 (a)(5)(E), such interest to be com22 pounded monthly and equal to the 

23 current short term interest rate as de24 termined by the Federal Reserve for 

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1 the time period for which the covered 

2 entity is liable. 

3 ‘‘(II) Where the Secretary deter4 mines a violation of subparagraph 

5 (a)(5)(B) was systematic and egre6 gious as well as knowing and inten7 tional, removing the covered entity 

8 from the drug discount program 

9 under this section and disqualifying 

10 the entity from re-entry into such pro11 gram for a reasonable period of time 

12 to be determined by the Secretary. 

13 ‘‘(III) Referring matters to ap14 propriate Federal authorities within 

15 the Food and Drug Administration, 

16 the Office of Inspector General of De17 partment of Health and Human Serv18 ices, or other Federal agencies for 

19 consideration of appropriate action 

20 under other Federal statutes, such as 

21 the Prescription Drug Marketing Act 

22 (21 U.S.C. 353). 

23 ‘‘(3) ADMINISTRATIVE DISPUTE RESOLUTION

24 PROCESS.— 

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1 ‘‘(A) IN GENERAL.—Not later than 180 

2 days after the date of enactment of this sub3 section, the Secretary shall promulgate regula4 tions to establish and implement an administra5 tive process for the resolution of claims by cov6 ered entities that they have been overcharged 

7 for drugs purchased under this section, and 

8 claims by manufacturers, after the conduct of 

9 audits as authorized by subsection (a)(5)(D), of 

10 violations of subsections (a)(5)(A) or (a)(5)(B), 

11 including appropriate procedures for the provi12 sion of remedies and enforcement of determina13 tions made pursuant to such process through 

14 mechanisms and sanctions described in para15 graphs (1)(B) and (2)(B). 

16 ‘‘(B) DEADLINES AND PROCEDURES.— 

17 Regulations promulgated by the Secretary 

18 under subparagraph (A) shall— 

19 ‘‘(i) designate or establish a decision20 making official or decision-making body 

21 within the Department of Health and 

22 Human Services to be responsible for re23 viewing and finally resolving claims by cov24 ered entities that they have been charged 

25 prices for covered drugs in excess of the 

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1 ceiling price described in subsection (a)(1), 

2 and claims by manufacturers that viola3 tions of subsection (a)(5)(A) or (a)(5)(B) 

4 have occurred; 

5 ‘‘(ii) establish such deadlines and pro6 cedures as may be necessary to ensure that 

7 claims shall be resolved fairly, efficiently, 

8 and expeditiously; 

9 ‘‘(iii) establish procedures by which a 

10 covered entity may discover and obtain 

11 such information and documents from 

12 manufacturers and third parties as may be 

13 relevant to demonstrate the merits of a 

14 claim that charges for a manufacturer’s 

15 product have exceeded the applicable ceil16 ing price under this section, and may sub17 mit such documents and information to the 

18 administrative official or body responsible 

19 for adjudicating such claim; 

20 ‘‘(iv) require that a manufacturer 

21 must conduct an audit of a covered entity 

22 pursuant to subsection (a)(5)(D) as a pre23 requisite to initiating administrative dis24 pute resolution proceedings against a cov25 ered entity; 

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1 ‘‘(v) permit the official or body des2 ignated in clause (i), at the request of a 

3 manufacturer or manufacturers, to consoli4 date claims brought by more than one 

5 manufacturer against the same covered en6 tity where, in the judgment of such official 

7 or body, consolidation is appropriate and 

8 consistent with the goals of fairness and 

9 economy of resources; and 

10 ‘‘(vi) include provisions and proce11 dures to permit multiple covered entities to 

12 jointly assert claims of overcharges by the 

13 same manufacturer for the same drug or 

14 drugs in one administrative proceeding, 

15 and permit such claims to be asserted on 

16 behalf of covered entities by associations or 

17 organizations representing the interests of 

18 such covered entities and of which the cov19 ered entities are members. 

20 ‘‘(C) FINALITY OF ADMINISTRATIVE RESO21 LUTION.—The administrative resolution of a 

22 claim or claims under the regulations promul23 gated under subparagraph (A) shall be a final 

24 agency decision and shall be binding upon the 

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1 parties involved, unless invalidated by an order 

2 of a court of competent jurisdiction. 

3 ‘‘(4) AUTHORIZATION OF APPROPRIATIONS.— 

4 There are authorized to be appropriated to carry out 

5 this subsection, such sums as may be necessary for 

6 fiscal year 2008 and each succeeding fiscal year.’’. 

7 (b) CONFORMING AMENDMENTS.—Section 340B(a) 

8 of such Act (42 U.S.C. 256b(a)) is amended— 

9 (1) in subsection (a)(1), by adding at the end 

10 the following: ‘‘Each such agreement shall require 

11 that the manufacturer furnish the Secretary with re12 ports, on a quarterly basis, of the price for each cov13 ered drug subject to the agreement that, according 

14 to the manufacturer, represents the maximum price 

15 that covered entities may permissibly be required to 

16 pay for the drug (referred to in this section as the 

17 ‘ceiling price’), and shall require that the manufac18 turer offer each covered entity covered drugs for 

19 purchase at or below the applicable ceiling price if 

20 such drug is made available to any other purchaser 

21 at any price.’’; and 

22 (2) in the first sentence of subsection (a)(5)(E), 

23 as redesignated by section 2(b), by inserting ‘‘after 

24 audit as described in subparagraph (D) and’’ after 

25 ‘‘finds,’’. 

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1 SEC. 5. OTHER IMPROVEMENTS IN 340B PROGRAM. 

2 Section 340B of the Public Health Service Act (42 

3 U.S.C. 256b), as amended by section 4(a), is further 

4 amended by adding at the end the following new sub5 sections: 

6 ‘‘(f) USE OF MULTIPLE CONTRACT PHARMACIES

7 PERMITTED.—Nothing in this section shall be construed 

8 as prohibiting a covered entity from entering into con9 tracts with more than one pharmacy for the provision of 

10 covered drugs, including such a contract that supplements 

11 the use of an in-house pharmacy arrangement or as re12 quiring the approval of the Secretary for entering into 

13 such a contract. 

14 ‘‘(g) INTRA-AGENCY COORDINATION.—The Secretary 

15 shall establish specific measures, policies, and procedures 

16 to ensure effective communication and coordination be17 tween the Centers for Medicare & Medicaid Services and 

18 the Health Resources and Services Administration with 

19 respect to all agency actions and all aspects of policy and 

20 administration affecting or pertaining to the drug discount 

21 program under this section and in which the functions and 

22 responsibilities of those agency components are inter23 related or interdependent, including by establishment of 

24 a permanent working group, composed of representatives 

25 of both the Health Resources and Services Administration 

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1 and the Centers for Medicare & Medicaid Services, to iden2 tify and oversee matters requiring such coordination.’’. 

3 SEC. 6. EFFECTIVE DATES. 

4 (a) IN GENERAL.—The amendments made by this 

5 Act shall take effect on January 1, 2008, and shall apply 

6 to drugs purchased on or after January 1, 2008. 

7 (b) GENERAL CONFORMING REFERENCE.—Section 

8 340B(d) of the Public Health Service Act (42 U.S.C. 

9 256b(d)) is amended by striking ‘‘Veterans Health Care 

10 Act of 1992’’ and inserting ‘‘the effective date of the 340B 

11 Program Improvement and Integrity Act of 2007’’. 

12 (c) EFFECTIVENESS.—The amendments made by 

13 this Act shall be effective, and shall be taken into account 

14 in determining whether a manufacturer is deemed to meet 

15 the requirements of section 340B(a) of the Public Health 

16 Service Act (42 U.S.C. 256b(a)) and of section 1927(a)(5) 

17 of the Social Security Act (42 U.S.C. 1396r–8(a)(5)), not18 withstanding any other provision of law. 

Æ 

mstockstill on PROD1PC66 with BILLS