I 

108TH CONGRESS 

1ST SESSION H. R. 2700

To amend title XVIII of the Social Security Act to revise the methodology 

by which payment for orphan drugs and biologicals is made under program prospective payment system for hospital outpatient department 

services under the Medicare Program. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 10, 2003

Mr. COX (for himself, Mr. NORWOOD, Mr. ISSA, Mr. ENGEL, Mr. BOUCHER, 

Mr. BERMAN, and Mr. POMEROY) introduced the following bill; which was 

referred to the Committee on Energy and Commerce, and in addition to 

the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions 

as fall within the jurisdiction of the committee concerned 

A BILL

To amend title XVIII of the Social Security Act to revise 

the methodology by which payment for orphan drugs 

and biologicals is made under program prospective payment system for hospital outpatient department services 

under the Medicare Program.

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 Patient Ac5 cess to Drugs for Rare Diseases Act of 2003’’. 
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1 SEC. 2. FINDINGS AND PURPOSES. 

2 (a) FINDINGS.—Congress makes the following find3 ings: 

4 (1) Rare diseases and disorders are those which 

5 affect small patient populations, defined as fewer 

6 than 200,000 individuals in the United States. 

7 Taken together, 25,000,000 Americans suffer from 

8 one of the 6,000 rare diseases and disorders. 

9 (2) Because prescription drug manufacturers 

10 could not make a profit from marketing drugs for 

11 such small patient populations, very little ‘‘rare dis12 ease’’ research was conducted prior to 1983. Only 

13 10 orphan drugs existed at that time. 

14 (3) The Orphan Drug Act, signed into law in 

15 1983, created financial incentives for the research, 

16 development, production and distribution of such or17 phan drugs. 

18 (4) Since 1983, more than 240 new orphan 

19 drugs have been developed, approved, and marketed 

20 in the United States and more than 800 additional 

21 drugs are in the research pipeline. 

22 (5) The tremendous success of the Orphan 

23 Drug Act cannot be taken for granted because—

24 (A) patient access to the more expensive 

25 orphan drugs is a continuing problem; and 
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1 (B) there is a need to stimulate more re2 search for the millions of Americans and thou3 sands of rare diseases for which there are not 

4 yet effective therapies. 

5 (6) When Congress adopted the medicare hos6 pital outpatient prospective payment system 

7 (HOPPS) in 1999, it defined orphan drugs based on 

8 the Federal Food, Drug and Cosmetic (FFD&C) Act 

9 and placed such orphan drugs in a category that 

10 provided sufficient reimbursement to assure con11 tinuing access for rare disease patients. 

12 (7) Despite expressions of concern from Con13 gress, the HOPPS regulation for 2003 does not con14 tinue this policy and, instead, uses a definition of or15 phan drugs that is not supported by the history of 

16 the Orphan Drug Act and forces most orphan drugs 

17 into categories in which they are reimbursed at lev18 els significantly below hospital acquisition costs. 

19 (8) Unless medicare provides adequate reim20 bursement for orphan drugs, hospitals are much less 

21 likely to have them available for beneficiaries with 

22 rare diseases, such as cervical dystonia, alpha–1 

23 antitripsin deficiency, rare cancers, porphyria, sickle 

24 cell anemia, Tourette syndrome, cystic fibrosis, and 

25 amyotrophic lateral sclerosis (Lou Gehrig’s disease). 
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1 (b) PURPOSE.—The purpose of this Act is to assure 

2 that medicare beneficiaries with rare diseases have contin3 ued access to orphan drugs in the hospital outpatient set4 ting and that the FFD&C Act definition of rare diseases 

5 is used by the medicare program. 

6 SEC. 3. PAYMENT FOR ORPHAN DRUGS AND BIOLOGICALS 

7 UNDER THE PROSPECTIVE PAYMENT SYSTEM 

8 FOR HOSPITAL OUTPATIENT DEPARTMENT 

9 SERVICES. 

10 (a) PAYMENT FOR ORPHAN DRUGS AND

11 BIOLOGICALS.—

12 (1) IN GENERAL.—Section 1833(t)(1)(B) of the 

13 Social Security Act (42 U.S.C. 1395l(t)(1)(B)) is 

14 amended—

15 (A) by striking the period at the end of 

16 clause (iv) and inserting a semi-colon; and 

17 (B) by inserting at the end the following 

18 new clauses: 

19 ‘‘(v) for periods before January 1, 

20 2007, does not include a drug or biological 

21 that has been designated as an orphan 

22 drug under section 526 of the Federal 

23 Food, Drug and Cosmetic Act or a drug or 

24 biological which is described under the 

25 same Healthcare Procedure Coding System 
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1 product code (or product code under a suc2 cessor coding system designated in regula3 tions promulgated under section 1173(c)), 

4 has the same non-proprietary name, or is 

5 the ‘same drug’ as that term is defined by 

6 the Food and Drug Administration under 

7 regulations promulgated under section 527 

8 of the Federal, Food, Drug and Cosmetic 

9 Act; and 

10 ‘‘(vi) for periods before January 1, 

11 2007, does not include blood clotting fac12 tors for individuals with hemophilia for 

13 which a biologics license application under 

14 subsection (a) of section 351 of the Public 

15 Health Service Act has been submitted on 

16 or before December 31, 2002.’’. 

17 (2) CONSIDERATIONS IN APPLYING EXEMPTION

18 RULES.—

19 (A) IN GENERAL.—In determining whether 

20 a drug or biological is excluded from the pro21 spective payment system under section 1833(t) 

22 of the Social Security Act (42 U.S.C. 1395l(t)) 

23 for hospital outpatient department services by 

24 reason of the amendment made by paragraph 

25 (1), the Secretary shall not take into account
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1 the fact that a drug or biological may have uses 

2 that have not been designated as an orphan 

3 drug under section 526 of the Federal Food, 

4 Drug and Cosmetic Act. 

5 (B) EXCEPTION FOR HIGH VOLUME

6 CLAIMS.—Notwithstanding subparagraph (A), 

7 for any drug or biological that would otherwise 

8 be covered by the amendment made by para9 graph (1), if the number of claims submitted by 

10 hospitals for covered OPD services (as defined 

11 in section 1833(t)(1)(B) of such Act (42 U.S.C. 

12 1395l(t)(1)(B)) without regard to clauses (v) 

13 and (vi) of such section) for such drug or bio14 logical administered exceeds 30,000 for the year 

15 from which claims are reviewed to determine 

16 payment rates for a given year, the exclusion 

17 under such amendments shall apply only to the 

18 indications for which the drug has been des19 ignated under section 526 of the Food, Drug 

20 and Cosmetic Act or which are included on the 

21 Rare Diseases List maintained by the Office of 

22 Rare Diseases of the National Institutes of 

23 Health. 

24 (C) TREATMENT FOR HIGH VOLUME

25 CLAIMS.—In the case of a drug or biological 
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1 that, with respect to which the Secretary deter2 mines that more than 30,000 claims for the 

3 drug or biological has been submitted in a year 

4 for covered OPD services as described in sub5 paragraph (B), that drug or biological shall be 

6 considered to exceed 30,000 claims for all suc7 ceeding years. 

8 (3) PAYMENT METHODOLOGY.—In the case of a 

9 drug or biological covered by the amendment made 

10 by paragraph (1), payment for the drug or biological 

11 shall be made under section 1842(o)(1) of the Social 

12 Security Act (42 U.S.C. 1395u(o)(1)). 

13 (4) EXEMPTION FROM INHERENT REASONABLE14 NESS AUTHORITY.—Section 1842(b)(8)(A)(i)(I) of 

15 the Social Security Act (42 U.S.C. 

16 1395u(b)(8)(A)(i)(I)) is amended by inserting after 

17 ‘‘paid under section 1848’’ the following: ‘‘and other 

18 than drugs and biologicals and blood clotting factors 

19 for individuals with hemophilia excluded from the 

20 prospective payment system for covered OPD serv21 ices under clauses (v) or (vi) of section 

22 1833(t)(1)(B).’’. 

23 (b) REPORT.—Not later than July 1, 2006, the Sec24 retary shall submit to the Committees on Ways and Means 

25 and Energy and Commerce of the House of Representa-
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1 tives and the Committee on Finance of the Senate a report 

2 on payment for orphan drugs and biologicals and blood 

3 clotting factors for individuals with hemophilia in the hos4 pital outpatient setting including recommendations for ei5 ther continuing or discontinuing the exclusion of such 

6 drugs and biologicals from payment under section 1833(t) 

7 of the Social Security Act (42 U.S.C. 1395l(t)). Such re8 port shall include the following: 

9 (1) Recommendations for methods to appro10 priately reflect the actual costs of orphan drugs and 

11 biologicals and blood clotting factors for individuals 

12 with hemophilia under such section. Such methods 

13 shall be designed to ensure that the payment rate 

14 established for each drug and biological adequately 

15 reimburses hospitals for the costs associated with ac16 quiring and dispensing such product, including phar17 macy service and overhead costs. 

18 (2) The impact of making payment for orphan 

19 drugs and biologicals and blood clotting factors for 

20 individuals with hemophilia under such section 

21 1833(t) on access to such drugs and biologicals by 

22 patients with rare diseases. 

23 In preparing this report, the Secretary shall consult with 

24 patients, physicians, providers of services and suppliers of 

25 orphan drugs and biologicals and blood clotting factors for 
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1 individuals with hemophilia as well as other organizations 

2 involved in the distribution of such drugs and biologicals 

3 to such patients, physicians, providers of services and sup4 pliers. 

5 (c) MORATORIUM ON DECREASES IN PAYMENT

6 RATES.—Notwithstanding any other provision of law, ef7 fective for orphan drugs and biologicals and blood clotting 

8 factors for individuals with hemophilia furnished by hos9 pital outpatient departments on or after January 1, 2007, 

10 the Secretary may not directly or indirectly decrease the 

11 rates of reimbursement in effect on December 31, 2006 

12 for such orphan drugs and biologicals and blood clotting 

13 factors for individuals with hemophilia any earlier than six 

14 months after the date that the Secretary has submitted 

15 to Congress the report required under section (b). 

16 (d) EFFECTIVE DATE.—The amendments made by 

17 subsection (a) shall apply with respect to items furnished 

18 on or after January 1, 2004.

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