II 

116TH CONGRESS 

1ST SESSION S. 377 

To amend title XVIII of the Social Security Act to require the Secretary 

of Health and Human Services to negotiate prices of prescription drugs 

furnished under part D of the Medicare program. 

IN THE SENATE OF THE UNITED STATES 

FEBRUARY 7, 2019 

Mr. BROWN (for himself, Ms. BALDWIN, and Ms. KLOBUCHAR) 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 require 

the Secretary of Health and Human Services to negotiate 

prices of prescription drugs furnished under part D of 

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 Negotiation 

5 and Competitive Licensing Act of 2019’’. 


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1 SEC. 2. REQUIRING THE SECRETARY OF HEALTH AND 

2 HUMAN SERVICES TO NEGOTIATE PRICES OF 

3 PRESCRIPTION DRUGS FURNISHED UNDER 

4 PART D OF THE MEDICARE PROGRAM. 

5 Section 1860D–11 of the Social Security Act (42 

6 U.S.C. 1395w–111) is amended by striking subsection (i) 

7 and inserting the following new subsection: 

8 ‘‘(i) NEGOTIATION OF LOWER DRUG PRICES.— 

9 ‘‘(1) IN GENERAL.—Notwithstanding any other 

10 provision of law, the Secretary shall, for plan years 

11 beginning on or after the date of the enactment of 

12 this subsection, negotiate with pharmaceutical man13 ufacturers the prices (including discounts, rebates, 

14 and other price concessions) that may be charged to 

15 PDP sponsors and MA organizations during a nego16 tiated price period (as specified by the Secretary) for 

17 covered part D drugs for part D eligible individuals 

18 who are enrolled under a prescription drug plan or 

19 under an MA–PD plan. In negotiating such prices 

20 under this section, the Secretary shall take into ac21 count the following factors: 

22 ‘‘(A) The comparative clinical effectiveness 

23 and cost effectiveness, when available from an 

24 impartial source, of such drug. 

25 ‘‘(B) The budgetary impact of providing 

26 coverage of such drug. 


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1 ‘‘(C) The number of similarly effective 

2 drugs or alternative treatment regimens for 

3 each approved use of such drug. 

4 ‘‘(D) The associated financial burden on 

5 patients that utilize such drug. 

6 ‘‘(E) The associated unmet patient need 

7 for such drug. 

8 ‘‘(F) The total revenues from global sales 

9 obtained by the manufacturer for such drug 

10 and the associated investment in research and 

11 development of such drug by the manufacturer. 

12 ‘‘(2) FINALIZATION OF NEGOTIATED PRICE.— 

13 The negotiated price of each covered part D drug for 

14 a negotiated price period shall be finalized not later 

15 than 30 days before a PDP sponsor is required to 

16 submit information described in subsection (b)(2) 

17 for the first plan year in such negotiated price pe18 riod. 

19 ‘‘(3) COMPETITIVE LICENSING AUTHORITY.— 

20 ‘‘(A) IN GENERAL.—Notwithstanding any 

21 exclusivity under clause (iii) or (iv) of section 

22 505(j)(5)(F) of the Federal Food, Drug, and 

23 Cosmetic Act, clause (iii) or (iv) of section 

24 505(c)(3)(E) of such Act, section 351(k)(7)(A) 

25 of the Public Health Service Act, or section 


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1 527(a) of the Federal Food, Drug, and Cos2 metic Act, or by an extension of such exclusivity 

3 under section 505A of such Act or section 505E 

4 of such Act, and any other provision of law that 

5 provides for market exclusivity (or extension of 

6 market exclusivity) with respect to a drug, in 

7 the case that the Secretary is unable to success8 fully negotiate an appropriate price for a cov9 ered part D drug for a negotiated price period, 

10 the Secretary shall authorize the use of any 

11 patent, clinical trial data, or other exclusivity 

12 granted by the Federal Government with re13 spect to such drug as the Secretary determines 

14 appropriate for purposes of manufacturing such 

15 drug for sale under a prescription drug plan or 

16 MA–PD plan. Any entity making use of a com17 petitive license to use patent, clinical trial data, 

18 or other exclusivity under this section shall pro19 vide to the manufacturer holding such exclu20 sivity reasonable compensation, as determined 

21 by the Secretary based on the following factors: 

22 ‘‘(i) The risk-adjusted value of any 

23 Federal Government subsidies and invest24 ments in research and development used to 

25 support the development of such drug. 


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1 ‘‘(ii) The risk-adjusted value of any 

2 investment made by such manufacturer in 

3 the research and development of such 

4 drug. 

5 ‘‘(iii) The impact of the price, includ6 ing license compensation payments, on 

7 meeting the medical need of all patients. 

8 ‘‘(iv) The relationship between the 

9 price of such drug, including compensation 

10 payments, and the health benefits of such 

11 drug. 

12 ‘‘(v) Other relevant factors determined 

13 appropriate by the Secretary to provide 

14 reasonable compensation. 

15 ‘‘(B) REASONABLE COMPENSATION.—The 

16 manufacturer described in subparagraph (A) 

17 may seek recovery against the United States in 

18 the United States Court of Federal Claims. 

19 ‘‘(C) INTERIM PERIOD.— 

20 ‘‘(i) IN GENERAL.—Until 1 year after 

21 a drug described in subparagraph (A) is 

22 approved under section 505(j) of the Fed23 eral Food, Drug, and Cosmetic Act or sec24 tion 351(k) of the Public Health Service 

25 Act and is provided under license issued by 


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1 the Secretary under such subparagraph, 

2 PDP plans and MA–PD plans shall not 

3 pay more for such drug than the average 

4 of the prices available, during the most re5 cent 12-month period for which data is 

6 available prior to the beginning of such ne7 gotiated price period, from the manufac8 turer to any wholesaler, retailer, provider, 

9 health maintenance organization, nonprofit 

10 entity, or governmental entity in the ten 

11 OECD (Organization for Economic Co12 operation and Development) countries that 

13 have the largest gross domestic product 

14 with a per capita income that is not less 

15 than half the per capita income of the 

16 United States, as reported by the manufac17 turer to the Secretary. 

18 ‘‘(ii) FEDERAL PROGRAM LICENS19 ING.—If such drug is not made available 

20 at the price determined, the Secretary shall 

21 authorize such entities to use any patent, 

22 clinical trial data, or other exclusivity 

23 granted by the Federal Government with 

24 respect to such drug as the Secretary de25 termines appropriate for purposes of manVerDate Sep 11 2014 03:17 Feb 16, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S377.IS S377

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1 ufacturing such drug for sale under any 

2 Federal program, including those provided 

3 by Medicare, Medicaid, Veterans Affairs, 

4 the Department of Defense, and the Coast 

5 Guard. 

6 ‘‘(D) AUTHORIZATION FOR SECRETARY TO

7 PROCURE DRUGS DIRECTLY.— 

8 ‘‘(i) IN GENERAL.—The Secretary 

9 may procure a drug manufactured pursu10 ant to a competitive license under subpara11 graph (A) for purposes of this part or pur12 suant to a Federal program license under 

13 subparagraph (C)(ii) for purposes of a 

14 Federal program directly from the entity 

15 manufacturing the drug pursuant to such 

16 a license. 

17 ‘‘(ii) CLARIFICATION REGARDING AP18 PLICATION OF BUY AMERICAN ACT.—In 

19 the case where the Secretary procures a 

20 drug under this subparagraph, the provi21 sions of chapter 83 of title 41, United 

22 States Code (commonly referred to as the 

23 ‘Buy American Act’) shall apply. 

24 ‘‘(E) PRIORITY FOR U.S. MANUFACTURERS

25 IN AUTHORIZING COMPETITIVE LICENSES.—In 


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1 authorizing a competitive license under this 

2 paragraph, the Secretary— 

3 ‘‘(i) shall give preference to entities 

4 that the Secretary determines have the 

5 highest safety and security standards; and 

6 ‘‘(ii) may give priority to entities that 

7 will manufacture such drug in the United 

8 States. 

9 ‘‘(4) FDA REVIEW OF LICENSED DRUG APPLI10 CATIONS.—The Secretary shall prioritize review of 

11 applications under section 505(j) of the Federal 

12 Food, Drug, and Cosmetic Act for drugs licensed 

13 under paragraph (3)(A). 

14 ‘‘(5) PROHIBITION OF ANTICOMPETITIVE BE15 HAVIOR.—No drug manufacturer may engage in 

16 anticompetitive behavior with another manufacturer 

17 that may interfere with the issuance and implemen18 tation of a competitive license or run contrary to 

19 public policy. 

20 ‘‘(6) REQUIRED REPORTING.—The Secretary 

21 may require drug manufacturers to disclose to the 

22 Secretary such information that the Secretary deter23 mines necessary for purposes of carrying out this 

24 subsection. 


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1 ‘‘(7) CLARIFICATION.—Nothing in this sub2 section shall be construed as preventing the sponsor 

3 of a prescription drug plan or an organization offer4 ing an MA–PD plan from obtaining a discount or 

5 reduction of the price for a covered part D drug 

6 below the price negotiated by the Secretary.’’. 

Æ 


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