II 

116TH CONGRESS 

2D SESSION S. 4199 

To amend titles XI, XVIII, and XIX of the Social Security Act to lower 

prescription drug prices in the Medicare and Medicaid programs, to 

improve transparency related to pharmaceutical prices and transactions, 

to lower patients’ out-of-pocket costs, and to ensure accountability to 

taxpayers, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JULY 2, 2020 

Mr. GRASSLEY (for himself, Mr. PORTMAN, Mr. CASSIDY, Mr. DAINES, Ms. 

COLLINS, Ms. ERNST, Ms. MCSALLY, Mr. BRAUN, Mrs. HYDE-SMITH, 

and Ms. MURKOWSKI) introduced the following bill; which was read twice 

and referred to the Committee on Finance 

A BILL 

To amend titles XI, XVIII, and XIX of the Social Security 

Act to lower prescription drug prices in the Medicare 

and Medicaid programs, to improve transparency related 

to pharmaceutical prices and transactions, to lower patients’ out-of-pocket costs, and to ensure accountability 

to taxpayers, 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; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Prescription Drug Pricing Reduction Act of 2020’’. 


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

2 this Act is as follows: 

Sec. 1. Short title; table of contents. 

TITLE I—MEDICARE 

Subtitle A—Part B 

Sec. 101. Improving manufacturers’ reporting of average sales prices to set accurate payment rates. 

Sec. 102. Inclusion of value of coupons in determination of average sales price 

for drugs and biologicals under Medicare part B. 

Sec. 103. Payment for biosimilar biological products during initial period. 

Sec. 104. Temporary increase in Medicare part B payment for biosimilar biological products. 

Sec. 105. Improvements to Medicare site-of-service transparency. 

Sec. 106. Medicare part B rebate by manufacturers for drugs or biologicals 

with prices increasing faster than inflation. 

Sec. 107. Requiring manufacturers of certain single-dose container or single-use 

package drugs payable under part B of the Medicare program 

to provide refunds with respect to discarded amounts of such 

drugs. 

Sec. 108. HHS Inspector General study and report on bona fide service fees. 

Sec. 109. Establishment of maximum add-on payment for drugs and 

biologicals. 

Sec. 110. Treatment of drug administration services furnished by certain excepted off-campus outpatient departments of a provider. 

Sec. 111. GAO study and report on average sales price. 

Sec. 112. Authority to use alternative payment for drugs and biologicals to prevent potential drug shortages. 

Subtitle B—Part D 

Sec. 121. Medicare part D modernization redesign. 

Sec. 121A. Maximum monthly cap on cost-sharing payments under prescription 

drug plans and MA–PD plans. 

Sec. 121B. Requiring pharmacy-negotiated price concessions, payment, and fees 

to be included in negotiated prices at the point-of-sale under 

part D of the medicare program. 

Sec. 122. Providing the Medicare Payment Advisory Commission and Medicaid 

and CHIP Payment and Access Commission with access to certain drug payment information, including certain rebate information. 

Sec. 123. Public disclosure of drug discounts and other pharmacy benefit manager (PBM) provisions. 

Sec. 124. Public disclosure of direct and indirect remuneration review and audit 

results. 

Sec. 125. Increasing the use of real-time benefit tools to lower beneficiary costs. 

Sec. 126. Improvements to provision of parts A and B claims data to prescription drug plans. 

Sec. 127. Permanently authorize a successful pilot on retroactive Medicare part 

D coverage for low-income beneficiaries. 

Sec. 128. Medicare part D rebate by manufacturers for certain drugs with 

prices increasing faster than inflation. 


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Sec. 129. Prohibiting branding on part D benefit cards. 

Sec. 130. Requiring prescription drug plans and MA–PD plans to report potential fraud, waste, and abuse to the Secretary of HHS. 

Sec. 131. Establishment of pharmacy quality measures under Medicare part D. 

Sec. 132. Addition of new measures based on access to biosimilar biological 

products to the 5-star rating system under Medicare Advantage. 

Sec. 133. Fairness in the calculation of the part D premium. 

Sec. 134. HHS study and report on the influence of pharmaceutical manufacturer third-party reimbursement hubs on health care providers 

who prescribe their drugs and biologicals. 

Subtitle C—Miscellaneous 

Sec. 141. Drug manufacturer price transparency. 

Sec. 142. Strengthening and expanding pharmacy benefit managers transparency requirements. 

Sec. 143. Prescription drug pricing dashboards. 

Sec. 144. Improving coordination between the Food and Drug Administration 

and the Centers for Medicare & Medicaid Services. 

Sec. 145. Patient consultation in Medicare national and local coverage determinations in order to mitigate barriers to inclusion of such perspectives. 

Sec. 146. GAO study on increases to Medicare and Medicaid spending due to 

copayment coupons and other patient assistance programs. 

Sec. 147. MedPAC report on shifting coverage of certain Medicare part B 

drugs to Medicare part D. 

Sec. 148. Taking steps to fulfill treaty obligations to tribal communities. 

TITLE II—MEDICAID DRUG PRICING REFORMS 

Sec. 201. Medicaid pharmacy and therapeutics committee improvements. 

Sec. 202. Improving reporting requirements and developing standards for the 

use of drug use review boards in State Medicaid programs. 

Sec. 203. GAO report on conflicts of interest in State Medicaid program drug 

use review boards and pharmacy and therapeutics (P&T) committees. 

Sec. 204. Ensuring the accuracy of manufacturer price and drug product information under the Medicaid drug rebate program. 

Sec. 205. Applying Medicaid drug rebate requirement to drugs provided as part 

of outpatient hospital services. 

Sec. 206. Improving transparency and preventing the use of abusive spread 

pricing and related practices in Medicaid. 

Sec. 207. T–MSIS drug data analytics reports. 

Sec. 208. Risk-sharing value-based payment agreements for covered outpatient 

drugs under Medicaid. 

Sec. 209. Modification of maximum rebate amount under Medicaid drug rebate 

program. 


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1 TITLE I—MEDICARE 

2 Subtitle A—Part B 

3 SEC. 101. IMPROVING MANUFACTURERS’ REPORTING OF 

4 AVERAGE SALES PRICES TO SET ACCURATE 

5 PAYMENT RATES. 

6 (a) IN GENERAL.—Section 1847A(f) of the Social Se7 curity Act (42 U.S.C. 1395w–3a(f)) is amended— 

8 (1) by striking ‘‘PRICE.—For requirements’’ 

9 and inserting ‘‘PRICE.— 

10 ‘‘(1) IN GENERAL.—For requirements’’; and 

11 (2) by adding at the end the following new 

12 paragraph: 

13 ‘‘(2) MANUFACTURERS THAT DO NOT HAVE A

14 REBATE AGREEMENT.— 

15 ‘‘(A) IN GENERAL.—For calendar quarters 

16 beginning with the second calendar quarter 

17 after the date of the enactment of this para18 graph, the following provisions shall apply with 

19 respect to a manufacturer of an applicable drug 

20 or biological (as defined in subparagraph (B)) 

21 that has not entered into and does not have in 

22 effect a rebate agreement described in sub23 section (b) of section 1927 in the same manner 

24 and to the same extent as such provisions apply 


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1 with respect to a manufacturer that has entered 

2 into and has in effect such a rebate agreement: 

3 ‘‘(i) Section 1927(b)(3)(A)(iii). 

4 ‘‘(ii) Subparagraphs (B) and (C) 

5 (other than the rebate agreement suspen6 sion described in such subparagraph (C)) 

7 of section 1927(b)(3). 

8 ‘‘(B) APPLICABLE DRUG OR BIOLOGICAL

9 DEFINED.—For purposes of subparagraph (A), 

10 the term ‘applicable drug or biological’ means a 

11 drug or biological described in subparagraph 

12 (C), (E), or (G) of section 1842(o)(1) or in sec13 tion 1881(b)(14)(B) that is payable under this 

14 part. For purposes of applying this paragraph, 

15 a drug or biological described in the previous 

16 sentence includes an item, service, supply, or 

17 product that is payable under this part as a 

18 drug or biological.’’. 

19 (b) CONFORMING AMENDMENTS.— 

20 (1) TITLE XVIII.—Section 1847A(b) of the So21 cial Security Act (42 U.S.C. 1395w–3a(b)) is 

22 amended— 

23 (A) in paragraph (2)(A), by inserting ‘‘or 

24 subsection (f)(2), as applicable’’ after ‘‘under 

25 section 1927(b)(3)(A)(iii)’’; and 


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1 (B) in each of paragraphs (3) and (6)(A), 

2 in the matter preceding subparagraph (A) and 

3 clause (i), respectively, by inserting ‘‘or sub4 section (f)(2), as applicable,’’ after ‘‘under sec5 tion 1927(b)(3)(A)(iii)’’. 

6 (2) TITLE XIX.—Section 1927(b)(3) of the So7 cial Security Act (42 U.S.C. 1396r–8(b)(3)) is 

8 amended— 

9 (A) in subparagraph (A), in the flush mat10 ter following clause (iv), by inserting ‘‘or sec11 tion 1847A(f)(2)’’ after ‘‘Information reported 

12 under this subparagraph’’; and 

13 (B) in subparagraph (D), in the matter 

14 preceding clause (i), by striking ‘‘or wholesalers 

15 under this paragraph or under’’ and inserting 

16 ‘‘or wholesalers under this paragraph, under 

17 section 1847A(f)(2), or under’’. 

18 (3) TECHNICAL CORRECTION.—Section 

19 1927(b)(3)(A)(iii) of such Act (42 U.S.C. 1396r– 

20 8(b)(3)(A)(iii)) is amended by striking ‘‘section 

21 1881(b)(13)(A)(ii)’’ and inserting ‘‘section 

22 1881(b)(14)(B)’’. 


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1 SEC. 102. INCLUSION OF VALUE OF COUPONS IN DETER2 MINATION OF AVERAGE SALES PRICE FOR 

3 DRUGS AND BIOLOGICALS UNDER MEDICARE 

4 PART B. 

5 Section 1847A(c) of the Social Security Act (42 

6 U.S.C. 1395w–3a(c)) is amended— 

7 (1) in paragraph (3)— 

8 (A) by striking ‘‘DISCOUNTS.—In calcu9 lating’’ and inserting ‘‘DISCOUNTS TO PUR10 CHASERS AND COUPONS PROVIDED TO PRI11 VATELY INSURED INDIVIDUALS.— 

12 ‘‘(A) DISCOUNTS TO PURCHASERS.—In 

13 calculating’’; and 

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

15 subparagraph: 

16 ‘‘(B) COUPONS PROVIDED TO REDUCE

17 COST-SHARING.—For calendar quarters begin18 ning on or after July 1, 2022, in calculating the 

19 manufacturer’s average sales price under this 

20 subsection, such price shall include the value 

21 (as defined in paragraph (6)(J)) of any coupons 

22 provided under a drug coupon program of a 

23 manufacturer (as those terms are defined in 

24 subparagraphs (K) and (L), respectively, of 

25 paragraph (6)).’’; and 


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1 (2) in paragraph (6), by adding at the end the 

2 following new subparagraphs: 

3 ‘‘(J) VALUE.—The term ‘value’ means, 

4 with respect to a coupon (as defined in sub5 paragraph (K)), the difference, if any, be6 tween— 

7 ‘‘(i) the amount of any reduction or 

8 elimination of cost-sharing or other out-of9 pocket costs described in such subpara10 graph to a patient as a result of the use 

11 of such coupon; and 

12 ‘‘(ii) any charge to the patient for the 

13 use of such coupon. 

14 ‘‘(K) COUPON.—The term ‘coupon’ means 

15 any financial support that is provided to a pa16 tient, either directly to the patient or indirectly 

17 to the patient through a physician, prescriber, 

18 pharmacy, or other provider, under a drug cou19 pon program of a manufacturer (as defined in 

20 subparagraph (L)) that is used to reduce or 

21 eliminate cost-sharing or other out-of-pocket 

22 costs of the patient, including costs related to 

23 a deductible, coinsurance, or copayment, with 

24 respect to a drug or biological, including a bio25 similar biological product, of the manufacturer. 


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1 ‘‘(L) DRUG COUPON PROGRAM.— 

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

3 (ii), the term ‘drug coupon program’ 

4 means, with respect to a manufacturer, a 

5 program through which the manufacturer 

6 provides coupons to patients as described 

7 in subparagraph (K). 

8 ‘‘(ii) EXCLUSIONS.—Such term does 

9 not include— 

10 ‘‘(I) a patient assistance program 

11 operated by a manufacturer that pro12 vides free or discounted drugs or 

13 biologicals, including biosimilar bio14 logical products, (through in-kind do15 nations) to patients of low income; or 

16 ‘‘(II) a contribution by a manu17 facturer to a nonprofit or Foundation 

18 that provides free or discounted drugs 

19 or biologicals, including biosimilar bio20 logical products, (through in-kind do21 nations) to patients of low income.’’. 

22 SEC. 103. PAYMENT FOR BIOSIMILAR BIOLOGICAL PROD23 UCTS DURING INITIAL PERIOD. 

24 Section 1847A(c)(4) of the Social Security Act (42 

25 U.S.C. 1395w–3a(c)(4)) is amended— 


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1 (1) in each of subparagraphs (A) and (B), by 

2 redesignating clauses (i) and (ii) as subclauses (I) 

3 and (II), respectively, and moving such subclauses 2 

4 ems to the right; 

5 (2) by redesignating subparagraphs (A) and 

6 (B) as clauses (i) and (ii) and moving such clauses 

7 2 ems to the right; 

8 (3) by striking ‘‘UNAVAILABLE.—In the case’’ 

9 and inserting ‘‘UNAVAILABLE.— 

10 ‘‘(A) IN GENERAL.—Subject to subpara11 graph (B), in the case’’; and 

12 (4) by adding at the end the following new sub13 paragraph: 

14 ‘‘(B) LIMITATION ON PAYMENT AMOUNT

15 FOR BIOSIMILAR BIOLOGICAL PRODUCTS DUR16 ING INITIAL PERIOD.—In the case of a bio17 similar biological product furnished on or after 

18 January 1, 2021, in lieu of applying subpara19 graph (A) during the initial period described in 

20 such subparagraph with respect to the bio21 similar biological product, the amount payable 

22 under this section for the biosimilar biological 

23 product is the lesser of the following: 


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1 ‘‘(i) The amount determined under 

2 clause (ii) of such subparagraph for the 

3 biosimilar biological product. 

4 ‘‘(ii) The amount determined under 

5 subsection (b)(1)(B) for the reference bio6 logical product.’’. 

7 SEC. 104. TEMPORARY INCREASE IN MEDICARE PART B 

8 PAYMENT FOR BIOSIMILAR BIOLOGICAL 

9 PRODUCTS. 

10 Section 1847A(b)(8) of the Social Security Act (42 

11 U.S.C. 1395w–3a(b)(8)) is amended— 

12 (1) by redesignating subparagraphs (A) and 

13 (B) as clauses (i) and (ii), respectively, and indent14 ing appropriately; 

15 (2) by striking ‘‘PRODUCT.—The amount’’ and 

16 inserting the following: ‘‘PRODUCT.— 

17 ‘‘(A) IN GENERAL.—Subject to subpara18 graph (B), the amount’’; and 

19 (3) by adding at the end the following new sub20 paragraph: 

21 ‘‘(B) TEMPORARY PAYMENT INCREASE FOR

22 BIOSIMILAR BIOLOGICAL PRODUCTS.— 

23 ‘‘(i) IN GENERAL.—Beginning Janu24 ary 1, 2021, in the case of a biosimilar bio25 logical product described in paragraph 


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1 (1)(C) that is furnished during the applica2 ble 5-year period for such product, the 

3 amount specified in this paragraph for 

4 such product is an amount equal to the 

5 lesser of the following: 

6 ‘‘(I) The amount specified in sub7 paragraph (A) for such product if 

8 clause (ii) of such subparagraph was 

9 applied by substituting ‘8 percent’ for 

10 ‘6 percent’. 

11 ‘‘(II) The amount determined 

12 under subsection (b)(1)(B) for the 

13 reference biological product. 

14 ‘‘(ii) APPLICABLE 5-YEAR PERIOD.— 

15 For purposes of clause (i), the applicable 

16 5-year period for a biosimilar biological 

17 product is— 

18 ‘‘(I) in the case of such a product 

19 for which payment was made under 

20 this paragraph as of December 31, 

21 2020, the 5-year period beginning on 

22 January 1, 2021; and 

23 ‘‘(II) in the case of such a prod24 uct that is not described in subclause 

25 (I), the 5-year period beginning on the 


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1 first day of the first calendar quarter 

2 in which payment was made for such 

3 product under this paragraph.’’. 

4 SEC. 105. IMPROVEMENTS TO MEDICARE SITE-OF-SERVICE 

5 TRANSPARENCY. 

6 Section 1834(t) of the Social Security Act (42 U.S.C. 

7 1395m(t)) is amended— 

8 (1) in paragraph (1)— 

9 (A) in the heading, by striking ‘‘IN GEN10 ERAL’’ and inserting ‘‘SITE PAYMENT’’; 

11 (B) in the matter preceding subparagraph 

12 (A)— 

13 (i) by striking ‘‘or to’’ and inserting ‘‘, 

14 to’’; 

15 (ii) by inserting ‘‘, or to a physician 

16 for services furnished in a physician’s of17 fice’’ after ‘‘surgical center’’; and 

18 (iii) by inserting ‘‘(or 2022 with re19 spect to a physician for services furnished 

20 in a physician’s office)’’ after ‘‘2018’’; and 

21 (C) in subparagraph (A)— 

22 (i) by striking ‘‘and the’’ and insert23 ing ‘‘, the’’; and 

24 (ii) by inserting ‘‘, and the physician 

25 fee schedule under section 1848 (with reVerDate Sep 11 2014 19:48 Jul 14, 2020 Jkt 099200 PO 00000 Frm 00013 Fmt 6652 Sfmt 6201 E:\BILLS\S4199.IS S4199

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1 spect to the practice expense component of 

2 such payment amount)’’ after ‘‘such sec3 tion’’; 

4 (2) by redesignating paragraphs (2) through 

5 (4) and paragraphs (3) through (5), respectively; 

6 and 

7 (3) by inserting after paragraph (1) the fol8 lowing new paragraph: 

9 ‘‘(2) PHYSICIAN PAYMENT.—Beginning in 

10 2022, the Secretary may expand the information in11 cluded on the Internet website described in para12 graph (1) to include— 

13 ‘‘(A) the amount paid to a physician under 

14 section 1848 for an item or service for the set15 tings described in paragraph (1); and 

16 ‘‘(B) the estimated amount of beneficiary 

17 liability applicable to the item or service.’’. 

18 SEC. 106. MEDICARE PART B REBATE BY MANUFACTURERS 

19 FOR DRUGS OR BIOLOGICALS WITH PRICES 

20 INCREASING FASTER THAN INFLATION. 

21 (a) IN GENERAL.—Section 1847A of the Social Secu22 rity Act (42 U.S.C. 1395w–3a) is amended by adding at 

23 the end the following new subsection: 


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1 ‘‘(h) REBATE BY MANUFACTURERS FOR DRUGS OR

2 BIOLOGICALS WITH PRICES INCREASING FASTER THAN

3 INFLATION.— 

4 ‘‘(1) REQUIREMENTS.— 

5 ‘‘(A) SECRETARIAL PROVISION OF INFOR6 MATION.—Not later than 6 months after the 

7 end of each rebate period (as defined in para8 graph (2)(A)) beginning on or after January 1, 

9 2022, the Secretary shall, for each rebatable 

10 drug (as defined in paragraph (2)(B)), report 

11 to each manufacturer of such rebatable drug 

12 the following for such rebate period: 

13 ‘‘(i) Information on the total number 

14 of units of the billing and payment code 

15 described in subparagraph (A)(i) of para16 graph (3) with respect to such rebatable 

17 drug and rebate period. 

18 ‘‘(ii) Information on the amount (if 

19 any) of the excess average sales price in20 crease described in subparagraph (A)(ii) of 

21 such paragraph for such rebatable drug 

22 and rebate period. 

23 ‘‘(iii) The rebate amount specified 

24 under such paragraph for such rebatable 

25 drug and rebate period. 


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1 ‘‘(B) MANUFACTURER REBATE.— 

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

3 (ii), for each rebate period beginning on or 

4 after January 1, 2022, the manufacturer 

5 of a rebatable drug shall, for such drug, 

6 not later than 30 days after the date of re7 ceipt from the Secretary of the information 

8 and rebate amount pursuant to subpara9 graph (A) for such rebate period, provide 

10 to the Secretary a rebate that is equal to 

11 the amount specified in paragraph (3) for 

12 such drug for such rebate period. 

13 ‘‘(ii) EXEMPTION FOR SHORTAGES.— 

14 The Secretary may reduce or waive the re15 bate under this subparagraph with respect 

16 to a rebatable drug that is listed on the 

17 drug shortage list maintained by the Food 

18 and Drug Administration pursuant to sec19 tion 506E of the Federal Food, Drug, and 

20 Cosmetic Act. 

21 ‘‘(C) REQUEST FOR RECONSIDERATION.— 

22 The Secretary shall establish procedures under 

23 which a manufacturer of a rebatable drug may 

24 request a reconsideration by the Secretary of 

25 the rebate amount specified under paragraph 


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1 (3) for such rebatable drug and rebate period, 

2 as reported to the manufacturer pursuant to 

3 subparagraph (A)(iii). 

4 ‘‘(2) REBATE PERIOD AND REBATABLE DRUG

5 DEFINED.—In this subsection: 

6 ‘‘(A) REBATE PERIOD.—The term ‘rebate 

7 period’ means a calendar quarter beginning on 

8 or after January 1, 2022. 

9 ‘‘(B) REBATABLE DRUG.—The term 

10 ‘rebatable drug’ means a single source drug or 

11 biological (other than a biosimilar biological 

12 product)— 

13 ‘‘(i) described in section 

14 1842(o)(1)(C) for which the payment 

15 amount is provided under this section; or 

16 ‘‘(ii) for which payment is made sepa17 rately under section 1833(i) or section 

18 1833(t) and for which the payment 

19 amount is calculated based on the payment 

20 amount under this section. 

21 ‘‘(3) REBATE AMOUNT.— 

22 ‘‘(A) IN GENERAL.—For purposes of para23 graph (1)(B), the amount specified in this para24 graph for a rebatable drug assigned to a billing 

25 and payment code for a rebate period is, subject 


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1 to paragraph (4), the amount equal to the prod2 uct of— 

3 ‘‘(i) subject to subparagraph (B), the 

4 total number of units of the billing and 

5 payment code for such rebatable drug fur6 nished during the rebate period; and 

7 ‘‘(ii) the amount (if any) by which— 

8 ‘‘(I) the amount determined 

9 under subsection (b)(4) for such 

10 rebatable drug during the rebate pe11 riod; exceeds 

12 ‘‘(II) the inflation-adjusted base 

13 payment amount determined under 

14 subparagraph (C) of this paragraph 

15 for such rebatable drug during the re16 bate period. 

17 ‘‘(B) EXCLUDED UNITS.—For purposes of 

18 subparagraph (A)(i), the total number of units 

19 of the billing and payment code for rebatable 

20 drugs furnished during a rebate period shall not 

21 include units with respect to which the manu22 facturer provides a discount under the program 

23 under section 340B of the Public Health Serv24 ice Act or a rebate under section 1927. 


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1 ‘‘(C) DETERMINATION OF INFLATION-AD2 JUSTED PAYMENT AMOUNT.—The inflation-ad3 justed payment amount determined under this 

4 subparagraph for a rebatable drug for a rebate 

5 period is— 

6 ‘‘(i) the amount determined under 

7 subsection (b)(4) for such rebatable drug 

8 in the payment amount benchmark quarter 

9 (as defined in subparagraph (D)); in10 creased by 

11 ‘‘(ii) the percentage by which the re12 bate period CPI–U (as defined in subpara13 graph (F)) for the rebate period exceeds 

14 the benchmark period CPI–U (as defined 

15 in subparagraph (E)). 

16 ‘‘(D) PAYMENT AMOUNT BENCHMARK

17 QUARTER.—The term ‘payment amount bench18 mark quarter’ means the calendar quarter be19 ginning July 1, 2019. 

20 ‘‘(E) BENCHMARK PERIOD CPI–U.—The 

21 term ‘benchmark period CPI–U’ means the con22 sumer price index for all urban consumers 

23 (United States city average) for July 2019. 

24 ‘‘(F) REBATE PERIOD CPI–U.—The term 

25 ‘rebate period CPI–U’ means, with respect to a 


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1 rebate period, the consumer price index for all 

2 urban consumers (United States city average) 

3 for the last month of the calendar quarter that 

4 is two calendar quarters prior to the rebate pe5 riod. 

6 ‘‘(4) APPLICATION TO NEW DRUGS.—In the 

7 case of a rebatable drug first approved or licensed 

8 by the Food and Drug Administration after July 1, 

9 2019, the following shall apply: 

10 ‘‘(A) DURING INITIAL PERIOD.—For quar11 ters during the initial period in which the pay12 ment amount for such drug is determined using 

13 the methodology described in subsection 

14 (c)(4)— 

15 ‘‘(i) clause (ii)(I) of paragraph (3)(A) 

16 shall be applied as if the reference to ‘the 

17 amount determined under subsection 

18 (b)(4),’ were a reference to ‘the wholesale 

19 acquisition cost applicable under subsection 

20 (c)(4)’; 

21 ‘‘(ii) clause (i) of paragraph (3)(C) 

22 shall be applied— 

23 ‘‘(I) as if the reference to ‘the 

24 amount determined under subsection 

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1 sale acquisition cost applicable under 

2 subsection (c)(4)’; and 

3 ‘‘(II) as if the term ‘payment 

4 amount benchmark quarter’ were de5 fined under paragraph (3)(D) as the 

6 first full calendar quarter after the 

7 day on which the drug was first mar8 keted; and 

9 ‘‘(iii) clause (ii) of paragraph (3)(C) 

10 shall be applied as if the term ‘benchmark 

11 period CPI–U’ were defined under para12 graph (4)(E) as if the reference to ‘July 

13 2019’ under such paragraph were a ref14 erence to ‘the first month of the first full 

15 calendar quarter after the day on which 

16 the drug was first marketed’. 

17 ‘‘(B) AFTER INITIAL PERIOD.—For quar18 ters beginning after such initial period— 

19 ‘‘(i) clause (i) of paragraph (3)(C) 

20 shall be applied as if the term ‘payment 

21 amount benchmark quarter’ were defined 

22 under paragraph (3)(D) as the first full 

23 calendar quarter for which the Secretary is 

24 able to compute an average sales price for 

25 the rebatable drug; and 


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1 ‘‘(ii) clause (ii) of paragraph (3)(C) 

2 shall be applied as if the term ‘benchmark 

3 period CPI–U’ were defined under para4 graph (4)(E) as if the reference to ‘July 

5 2019’ under such paragraph were a ref6 erence to ‘the first month of the first full 

7 calendar quarter for which the Secretary is 

8 able to compute an average sales price for 

9 the rebatable drug’. 

10 ‘‘(5) REBATE DEPOSITS.—Amounts paid as re11 bates under paragraph (1)(B) shall be deposited into 

12 the Federal Supplementary Medical Insurance Trust 

13 Fund established under section 1841. 

14 ‘‘(6) ENFORCEMENT.— 

15 ‘‘(A) CIVIL MONEY PENALTY.— 

16 ‘‘(i) IN GENERAL.—The Secretary 

17 shall impose a civil money penalty on a 

18 manufacturer that fails to comply with the 

19 requirements under paragraph (1)(B) with 

20 respect to providing a rebate for a 

21 rebatable drug for a rebate period for each 

22 such failure in an amount equal to the sum 

23 of— 


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1 ‘‘(I) the rebate amount specified 

2 pursuant to paragraph (3) for such 

3 drug for such rebate period; and 

4 ‘‘(II) 25 percent of such amount. 

5 ‘‘(ii) APPLICATION.—The provisions 

6 of section 1128A (other than subsections 

7 (a) (with respect to amounts of penalties 

8 or additional assessments) and (b)) shall 

9 apply to a civil money penalty under this 

10 subparagraph in the same manner as such 

11 provisions apply to a penalty or proceeding 

12 under section 1128A(a). 

13 ‘‘(B) NO PAYMENT FOR MANUFACTURERS

14 WHO FAIL TO PAY PENALTY.—If the manufac15 turer of a rebatable drug fails to pay a civil 

16 money penalty under subparagraph (A) with re17 spect to the failure to provide a rebate for a 

18 rebatable drug for a rebate period by a date 

19 specified by the Secretary after the imposition 

20 of such penalty, no payment shall be available 

21 under this part for such rebatable drug for cal22 endar quarters beginning on or after such date 

23 until the Secretary determines the manufac24 turer has paid the penalty due under such sub25 paragraph.’’. 


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1 (b) IMPLEMENTATION.—Section 1847A(g) of the So2 cial Security Act (42 U.S.C. 1395w–3(g)) is amended— 

3 (1) in paragraph (4), by striking ‘‘and’’ at the 

4 end; 

5 (2) in paragraph (5), by striking the period at 

6 the end and inserting ‘‘; and’’; and 

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

8 paragraph: 

9 ‘‘(6) determination of the rebate amount for a 

10 rebatable drug under paragraph (3) of subsection 

11 (h), including with respect to a new drug pursuant 

12 to paragraph (4) of such subsection, including— 

13 ‘‘(A) a decision by the Secretary with re14 spect to a request for reconsideration under 

15 paragraph (1)(C); and 

16 ‘‘(B) the determination of— 

17 ‘‘(i) the total number of units of the 

18 billing and payment code under paragraph 

19 (3)(A)(i); and 

20 ‘‘(ii) the inflation-adjusted payment 

21 amount under paragraph (3)(C).’’. 

22 (c) CONFORMING AMENDMENT TO PART B ASP CAL23 CULATION.—Section 1847A(c)(3) of the Social Security 

24 Act (42 U.S.C. 1395w–3a(c)(3)) is amended by inserting 

25 ‘‘or subsection (h)’’ after ‘‘section 1927’’. 


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1 SEC. 107. REQUIRING MANUFACTURERS OF CERTAIN SIN2 GLE-DOSE CONTAINER OR SINGLE-USE PACK3 AGE DRUGS PAYABLE UNDER PART B OF THE 

4 MEDICARE PROGRAM TO PROVIDE REFUNDS 

5 WITH RESPECT TO DISCARDED AMOUNTS OF 

6 SUCH DRUGS. 

7 Section 1847A of the Social Security Act (42 U.S.C. 

8 1395–3a), as amended by section 106, is amended by add9 ing at the end the following new subsection: 

10 ‘‘(i) REFUND FOR CERTAIN DISCARDED SINGLE11 DOSE CONTAINER OR SINGLE-USE PACKAGE DRUGS.— 

12 ‘‘(1) SECRETARIAL PROVISION OF INFORMA13 TION.— 

14 ‘‘(A) IN GENERAL.—For each calendar 

15 quarter beginning on or after January 1, 2022, 

16 the Secretary shall, with respect to a refundable 

17 single-dose container or single-use package drug 

18 (as defined in paragraph (8)), report to each 

19 manufacturer (as defined in subsection 

20 (c)(6)(A)) of such refundable single-dose con21 tainer or single-use package drug the following 

22 for the calendar quarter: 

23 ‘‘(i) Subject to subparagraph (C), in24 formation on the total number of units of 

25 the billing and payment code of such drug, 

26 if any, that were discarded during such 


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•S 4199 IS

1 quarter, as determined using a mechanism 

2 such as the JW modifier used as of the 

3 date of enactment of this subsection (or 

4 any such successor modifier that includes 

5 such data as determined appropriate by 

6 the Secretary). 

7 ‘‘(ii) The refund amount that the 

8 manufacturer is liable for pursuant to 

9 paragraph (3). 

10 ‘‘(B) DETERMINATION OF DISCARDED

11 AMOUNTS.—For purposes of subparagraph 

12 (A)(i), with respect to a refundable single-dose 

13 container or single-use package drug furnished 

14 during a quarter, the amount of such drug that 

15 was discarded shall be determined based on the 

16 amount of such drug that was unused and dis17 carded for each drug on the date of service. 

18 ‘‘(C) EXCLUSION OF UNITS OF PACKAGED

19 DRUGS.—The total number of units of the bill20 ing and payment code of a refundable single21 dose container or single-use package drug of a 

22 manufacturer furnished during a calendar quar23 ter for purposes of subparagraph (A)(i), and 

24 the determination of the estimated total allowed 

25 charges for the drug in the quarter for purposes 


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1 of paragraph (3)(A)(ii), shall not include such 

2 units that are packaged into the payment 

3 amount for an item or service and are not sepa4 rately payable. 

5 ‘‘(2) MANUFACTURER REQUIREMENT.—For 

6 each calendar quarter beginning on or after January 

7 1, 2022, the manufacturer of a refundable single8 dose container or single-use package drug shall, for 

9 such drug, provide to the Secretary a refund that is 

10 equal to the amount specified in paragraph (3) for 

11 such drug for such quarter. 

12 ‘‘(3) REFUND AMOUNT.— 

13 ‘‘(A) IN GENERAL.—The amount of the re14 fund specified in this paragraph is, with respect 

15 to a refundable single-dose container or single16 use package drug of a manufacturer assigned to 

17 a billing and payment code for a calendar quar18 ter beginning on or after January 1, 2022, an 

19 amount equal to the estimated amount (if any) 

20 by which— 

21 ‘‘(i) the product of— 

22 ‘‘(I) the total number of units of 

23 the billing and payment code for such 

24 drug that were discarded during such 


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1 quarter (as determined under para2 graph (1)); and 

3 ‘‘(II)(aa) in the case of a refund4 able single-dose container or single5 use package drug that is a single 

6 source drug or biological, the amount 

7 determined for such drug under sub8 section (b)(4); or 

9 ‘‘(bb) in the case of a refundable 

10 single-dose container or single-use 

11 package drug that is a biosimilar bio12 logical product, the average sales price 

13 determined under subsection 

14 (b)(8)(A); exceeds 

15 ‘‘(ii) an amount equal to the applica16 ble percentage (as defined in subparagraph 

17 (B)) of the estimated total allowed charges 

18 for such drug during the quarter. 

19 ‘‘(B) APPLICABLE PERCENTAGE DE20 FINED.— 

21 ‘‘(i) IN GENERAL.—For purposes of 

22 subparagraph (A)(ii), the term ‘applicable 

23 percentage’ means— 

24 ‘‘(I) subject to subclause (II), 10 

25 percent; and 


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1 ‘‘(II) in the case of a refundable 

2 single-dose container or single-use 

3 package drug described in subclause 

4 (I) of clause (iii) and, if applicable, a 

5 refundable single-dose container or 

6 single-use package drug described in 

7 subclause (II) of such clause, a per8 centage specified by the Secretary 

9 pursuant to clause (ii). 

10 ‘‘(ii) TREATMENT OF DRUGS THAT

11 REQUIRE FILTRATION OR OTHER UNIQUE

12 CIRCUMSTANCES.—The Secretary, through 

13 notice and comment rulemaking— 

14 ‘‘(I) in the case of a refundable 

15 single-dose container or single-use 

16 package drug described in subclause 

17 (I) of clause (iii), shall increase the 

18 applicable percentage otherwise appli19 cable under clause (i)(I) as deter20 mined appropriate by the Secretary; 

21 and 

22 ‘‘(II) in the case of a refundable 

23 single-dose container or single-use 

24 package drug described in subclause 

25 (II) of clause (iii), may increase the 


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1 applicable percentage otherwise appli2 cable under clause (i)(I) as deter3 mined appropriate by the Secretary. 

4 ‘‘(iii) DRUG DESCRIBED.—For pur5 poses of clause (ii), a refundable single6 dose container or single-use package drug 

7 described in this clause is either of the fol8 lowing: 

9 ‘‘(I) A refundable single-dose 

10 container or single-use package drug 

11 for which preparation instructions re12 quired and approved by the Commis13 sioner of the Food and Drug Adminis14 tration include filtration during the 

15 drug preparation process, prior to di16 lution and administration, and require 

17 that any unused portion of such drug 

18 after the filtration process be dis19 carded after the completion of such 

20 filtration process. 

21 ‘‘(II) Any other refundable sin22 gle-dose container or single-use pack23 age drug that has unique cir24 cumstances involving similar loss of 

25 product. 


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1 ‘‘(4) FREQUENCY.—Amounts required to be re2 funded pursuant to paragraph (2) shall be paid in 

3 regular intervals (as determined appropriate by the 

4 Secretary). 

5 ‘‘(5) REFUND DEPOSITS.—Amounts paid as re6 funds pursuant to paragraph (2) shall be deposited 

7 into the Federal Supplementary Medical Insurance 

8 Trust Fund established under section 1841. 

9 ‘‘(6) ENFORCEMENT.— 

10 ‘‘(A) AUDITS.— 

11 ‘‘(i) MANUFACTURER AUDITS.—Each 

12 manufacturer of a refundable single-dose 

13 container or single-use package drug that 

14 is required to provide a refund under this 

15 subsection shall be subject to periodic 

16 audit with respect to such drug and such 

17 refunds by the Secretary. 

18 ‘‘(ii) PROVIDER AUDITS.—The Sec19 retary shall conduct periodic audits of 

20 claims submitted under this part with re21 spect to refundable single-dose container or 

22 single-use package drugs in accordance 

23 with the authority under section 1833(e) to 

24 ensure compliance with the requirements 

25 applicable under this subsection. 


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1 ‘‘(B) CIVIL MONEY PENALTY.— 

2 ‘‘(i) IN GENERAL.—The Secretary 

3 shall impose a civil money penalty on a 

4 manufacturer of a refundable single-dose 

5 container or single-use package drug who 

6 has failed to comply with the requirement 

7 under paragraph (2) for such drug for a 

8 calendar quarter in an amount equal to the 

9 sum of— 

10 ‘‘(I) the amount that the manu11 facturer would have paid under such 

12 paragraph with respect to such drug 

13 for such quarter; and 

14 ‘‘(II) 25 percent of such amount. 

15 ‘‘(ii) APPLICATION.—The provisions 

16 of section 1128A (other than subsections 

17 (a) and (b)) shall apply to a civil money 

18 penalty under this subparagraph in the 

19 same manner as such provisions apply to a 

20 penalty or proceeding under section 

21 1128A(a). 

22 ‘‘(7) IMPLEMENTATION.—The Secretary shall 

23 implement this subsection through notice and com24 ment rulemaking. 


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1 ‘‘(8) DEFINITION OF REFUNDABLE SINGLE2 DOSE CONTAINER OR SINGLE-USE PACKAGE DRUG.— 

3 ‘‘(A) IN GENERAL.—Except as provided in 

4 subparagraph (B), in this subsection, the term 

5 ‘refundable single-dose container or single-use 

6 package drug’ means a single source drug or bi7 ological (as defined in section 1847A(c)(6)(D)) 

8 or a biosimilar biological product (as defined in 

9 section 1847A(c)(6)(H)) for which payment is 

10 established under this part and that is fur11 nished from a single-dose container or single12 use package. 

13 ‘‘(B) EXCLUSIONS.—The term ‘refundable 

14 single-dose container or single-use package 

15 drug’ does not include a drug or biological that 

16 is either a radiopharmaceutical or an imaging 

17 agent.’’. 

18 SEC. 108. HHS INSPECTOR GENERAL STUDY AND REPORT 

19 ON BONA FIDE SERVICE FEES. 

20 (a) STUDY.—The Inspector General of the Depart21 ment of Health and Human Services (in this section re22 ferred to as the ‘‘Inspector General’’) shall conduct a 

23 study on the effect of the use of bona fide service fee con24 tracting arrangements by drug manufacturers and other 

25 entities on Medicare payments for drugs and biologicals 


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1 furnished under part B of title XVIII of the Social Secu2 rity Act (42 U.S.C. 1395j et seq.). Such study shall in3 clude an analysis of— 

4 (1) the various types of entities that enter into 

5 contracting arrangements that use bona fide service 

6 fees, such as group purchasing organizations, whole7 salers, providers, and pharmacies; 

8 (2) the various types of bona fide service fee 

9 contracting arrangements used by such entities; 

10 (3) the types of services that are paid for 

11 through such arrangements; 

12 (4) whether manufacturers define bona fide 

13 service fees differently across different entities; 

14 (5) how such arrangements are structured; 

15 (6) whether the structure or use of such ar16 rangements has changed over time; 

17 (7) the extent, if any, to which there is consist18 ency across manufacturers in what they consider to 

19 be a bona fide service fee as opposed to a discount 

20 or rebate that should be excluded from the deter21 mination of average sales price pursuant to the 

22 methodology under section 1847A of the Social Se23 curity Act (42 U.S.C. 1395w–3a); 

24 (8) the overall magnitude of bona fide service 

25 fees; 


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1 (9) what share of bona fide service fees are paid 

2 to various entities; 

3 (10) how the magnitude of bona fide service 

4 fees compares to other fees and rebates that are in5 cluded in the determination of average sales price; 

6 (11) whether and, if so, how much, the mag7 nitude of bona fide service fees has grown over time 

8 and how such growth compares to growth in the 

9 magnitude of other fees and rebates; and 

10 (12) what share of bona fide service fees are 

11 based on a percentage of sales. 

12 (b) REPORT.—Not later than 18 months after the 

13 date of enactment of this Act, the Inspector General shall 

14 submit to Congress a report containing the results of the 

15 study conducted under subsection (a), together with rec16 ommendations for such legislation and administrative ac17 tion as the Inspector General determines appropriate. 

18 SEC. 109. ESTABLISHMENT OF MAXIMUM ADD-ON PAYMENT 

19 FOR DRUGS AND BIOLOGICALS. 

20 (a) IN GENERAL.—Section 1847A of the Social Secu21 rity Act (42 U.S.C. 1395w–3a) is amended— 

22 (1) in subsection (b)— 

23 (A) in paragraph (1), in the matter pre24 ceding subparagraph (A), by striking ‘‘paraVerDate Sep 11 2014 19:48 Jul 14, 2020 Jkt 099200 PO 00000 Frm 00035 Fmt 6652 Sfmt 6201 E:\BILLS\S4199.IS S4199

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1 graph (7)’’ and inserting ‘‘paragraphs (7) and 

2 (9)’’; and 

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

4 paragraph: 

5 ‘‘(9) MAXIMUM ADD-ON PAYMENT AMOUNT.— 

6 ‘‘(A) IN GENERAL.—In determining the 

7 payment amount under the provisions of sub8 paragraph (A), (B), or (C) of paragraph (1) of 

9 this subsection, subsection (c)(4)(A)(ii), or sub10 section (d)(3)(C) for a drug or biological fur11 nished on or after January 1, 2022, if the ap12 plicable add-on payment (as defined in subpara13 graph (B)) for each drug or biological on a 

14 claim for a date of service exceeds the max15 imum add-on payment amount specified under 

16 subparagraph (C) for the drug or biological, 

17 then the payment amount otherwise determined 

18 for the drug or biological under those provi19 sions, as applicable, shall be reduced by the 

20 amount of such excess. 

21 ‘‘(B) APPLICABLE ADD-ON PAYMENT DE22 FINED.—In this paragraph, the term ‘applicable 

23 add-on payment’ means the following amounts, 

24 determined without regard to the application of 

25 subparagraph (A): 


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1 ‘‘(i) In the case of a multiple source 

2 drug, an amount equal to the difference 

3 between— 

4 ‘‘(I) the amount that would oth5 erwise be applied under paragraph 

6 (1)(A); and 

7 ‘‘(II) the amount that would be 

8 applied under such paragraph if ‘100 

9 percent’ were substituted for ‘106 per10 cent’. 

11 ‘‘(ii) In the case of a single source 

12 drug or biological, an amount equal to the 

13 difference between— 

14 ‘‘(I) the amount that would oth15 erwise be applied under paragraph 

16 (1)(B); and 

17 ‘‘(II) the amount that would be 

18 applied under such paragraph if ‘100 

19 percent’ were substituted for ‘106 per20 cent’. 

21 ‘‘(iii) In the case of a biosimilar bio22 logical product, the amount otherwise de23 termined under paragraph (8)(B). 

24 ‘‘(iv) In the case of a drug or biologi25 cal during the initial period described in 


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1 subsection (c)(4)(A), an amount equal to 

2 the difference between— 

3 ‘‘(I) the amount that would oth4 erwise be applied under subsection 

5 (c)(4)(A)(ii); and 

6 ‘‘(II) the amount that would be 

7 applied under such subsection if ‘100 

8 percent’ were substituted, as applica9 ble, for— 

10 ‘‘(aa) ‘103 percent’ in sub11 clause (I) of such subsection; or 

12 ‘‘(bb) any percent in excess 

13 of 100 percent applied under 

14 subclause (II) of such subsection. 

15 ‘‘(v) In the case of a drug or biologi16 cal to which subsection (d)(3)(C) applies, 

17 an amount equal to the difference be18 tween— 

19 ‘‘(I) the amount that would oth20 erwise be applied under such sub21 section; and 

22 ‘‘(II) the amount that would be 

23 applied under such subsection if ‘100 

24 percent’ were substituted, as applica25 ble, for— 


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•S 4199 IS

1 ‘‘(aa) any percent in excess 

2 of 100 percent applied under 

3 clause (i) of such subsection; or 

4 ‘‘(bb) ‘103 percent’ in clause 

5 (ii) of such subsection. 

6 ‘‘(C) MAXIMUM ADD-ON PAYMENT AMOUNT

7 SPECIFIED.—For purposes of subparagraph 

8 (A), the maximum add-on payment amount 

9 specified in this subparagraph is— 

10 ‘‘(i) for each of 2022 through 2029, 

11 $1,000; and 

12 ‘‘(ii) for a subsequent year, the 

13 amount specified in this subparagraph for 

14 the preceding year increased by the per15 centage increase in the consumer price 

16 index for all urban consumers (all items; 

17 United States city average) for the 12- 

18 month period ending with June of the pre19 vious year. 

20 Any amount determined under this subpara21 graph that is not a multiple of $10 shall be 

22 rounded to the nearest multiple of $10.’’; and 

23 (2) in subsection (c)(4)(A)(ii), by striking ‘‘in 

24 the case’’ and inserting ‘‘subject to subsection 

25 (b)(9), in the case’’. 


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1 (b) CONFORMING AMENDMENTS RELATING TO SEPA2 RATELY PAYABLE DRUGS.— 

3 (1) OPPS.—Section 1833(t)(14) of the Social 

4 Security Act (42 U.S.C. 1395l(t)(14)) is amended— 

5 (A) in subparagraph (A)(iii)(II), by insert6 ing ‘‘, subject to subparagraph (I)’’ after ‘‘are 

7 not available’’; and 

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

9 subparagraph: 

10 ‘‘(I) APPLICATION OF MAXIMUM ADD-ON

11 PAYMENT FOR SEPARATELY PAYABLE DRUGS

12 AND BIOLOGICALS.—In establishing the amount 

13 of payment under subparagraph (A) for a speci14 fied covered outpatient drug that is furnished 

15 as part of a covered OPD service (or group of 

16 services) on or after January 1, 2022, if such 

17 payment is determined based on the average 

18 price for the year established under section 

19 1847A pursuant to clause (iii)(II) of such sub20 paragraph, the provisions of subsection (b)(9) 

21 of section 1847A shall apply to the amount of 

22 payment so established in the same manner as 

23 such provisions apply to the amount of payment 

24 under section 1847A.’’. 


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1 (2) ASC.—Section 1833(i)(2)(D) of the Social 

2 Security Act (42 U.S.C. 1395l(i)(2)(D)) is amend3 ed— 

4 (A) by moving clause (v) 6 ems to the left; 

5 (B) by redesignating clause (vi) as clause 

6 (vii); and 

7 (C) by inserting after clause (v) the fol8 lowing new clause: 

9 ‘‘(vi) If there is a separate payment under the system 

10 described in clause (i) for a drug or biological furnished 

11 on or after January 1, 2022, the provisions of subsection 

12 (t)(14)(I) shall apply to the establishment of the amount 

13 of payment for the drug or biological under such system 

14 in the same manner in which such provisions apply to the 

15 establishment of the amount of payment under subsection 

16 (t)(14)(A).’’. 

17 SEC. 110. TREATMENT OF DRUG ADMINISTRATION SERV18 ICES FURNISHED BY CERTAIN EXCEPTED 

19 OFF-CAMPUS OUTPATIENT DEPARTMENTS OF 

20 A PROVIDER. 

21 Section 1833(t)(16) of the Social Security Act (42 

22 U.S.C. 1395l(t)(16)) is amended by adding at the end the 

23 following new subparagraph: 


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1 ‘‘(G) SPECIAL PAYMENT RULE FOR DRUG

2 ADMINISTRATION SERVICES FURNISHED BY AN

3 EXCEPTED DEPARTMENT OF A PROVIDER.— 

4 ‘‘(i) IN GENERAL.—In the case of a 

5 covered OPD service that is a drug admin6 istration service (as defined by the Sec7 retary) furnished by a department of a 

8 provider described in clause (ii) or (iv) of 

9 paragraph (21)(B), the payment amount 

10 for such service furnished on or after Jan11 uary 1, 2022, shall be the same payment 

12 amount (as determined in paragraph 

13 (21)(C)) that would apply if the drug ad14 ministration service was furnished by an 

15 off-campus outpatient department of a pro16 vider (as defined in paragraph (21)(B)). 

17 ‘‘(ii) APPLICATION WITHOUT REGARD

18 TO BUDGET NEUTRALITY.—The reductions 

19 made under this subparagraph— 

20 ‘‘(I) shall not be considered an 

21 adjustment under paragraph (2)(E); 

22 and 

23 ‘‘(II) shall not be implemented in 

24 a budget neutral manner.’’. 


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1 SEC. 111. GAO STUDY AND REPORT ON AVERAGE SALES 

2 PRICE. 

3 (a) STUDY.— 

4 (1) IN GENERAL.—The Comptroller General of 

5 the United States (in this section referred to as the 

6 ‘‘Comptroller General’’) shall conduct a study on 

7 spending for applicable drugs under part B of title 

8 XVIII of the Social Security Act. 

9 (2) APPLICABLE DRUGS DEFINED.—In this sec10 tion, the term ‘‘applicable drugs’’ means drugs and 

11 biologicals— 

12 (A) for which reimbursement under such 

13 part B is based on the average sales price of 

14 the drug or biological; and 

15 (B) that account for the largest percentage 

16 of total spending on drugs and biologicals under 

17 such part B (as determined by the Comptroller 

18 General, but in no case less that 25 drugs or 

19 biologicals). 

20 (3) REQUIREMENTS.—The study under para21 graph (1) shall include an analysis of the following: 

22 (A) The extent to which each applicable 

23 drug is paid for— 

24 (i) under such part B for Medicare 

25 beneficiaries; or 


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•S 4199 IS

1 (ii) by private payers in the commer2 cial market. 

3 (B) Any change in Medicare spending or 

4 Medicare beneficiary cost-sharing that would 

5 occur if the average sales price of an applicable 

6 drug was based solely on payments by private 

7 payers in the commercial market. 

8 (C) The extent to which drug manufactur9 ers provide rebates, discounts, or other price 

10 concessions to private payers in the commercial 

11 market for applicable drugs, which the manu12 facturer includes in its average sales price cal13 culation, for— 

14 (i) formulary placement; 

15 (ii) utilization management consider16 ations; or 

17 (iii) other purposes. 

18 (D) Barriers to drug manufacturers pro19 viding such price concessions for applicable 

20 drugs. 

21 (E) Other areas determined appropriate by 

22 the Comptroller General. 

23 (b) REPORT.—Not later than 2 years after the date 

24 of the enactment of this Act, the Comptroller General shall 

25 submit to Congress a report on the study conducted under 


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•S 4199 IS

1 subsection (a), together with recommendations for such 

2 legislation and administrative action as the Secretary de3 termines appropriate. 

4 SEC. 112. AUTHORITY TO USE ALTERNATIVE PAYMENT FOR 

5 DRUGS AND BIOLOGICALS TO PREVENT PO6 TENTIAL DRUG SHORTAGES. 

7 (a) IN GENERAL.—Section 1847A(e) of the Social 

8 Security Act (42 U.S.C. 1395w–3a(e)) is amended— 

9 (1) by striking ‘‘PAYMENT IN RESPONSE TO

10 PUBLIC HEALTH EMERGENCY.—In the case’’ and 

11 inserting ‘‘PAYMENTS.— 

12 ‘‘(1) IN RESPONSE TO PUBLIC HEALTH EMER13 GENCY.—In the case’’; and 

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

15 paragraph: 

16 ‘‘(2) PREVENTING POTENTIAL DRUG SHORT17 AGES.— 

18 ‘‘(A) IN GENERAL.—In the case of a drug 

19 or biological that the Secretary determines is 

20 described in subparagraph (B) for one or more 

21 quarters beginning on or after January 1, 

22 2021, the Secretary may use wholesale acquisi23 tion cost (or other reasonable measure of a 

24 drug or biological price) instead of the manu25 facturer’s average sales price for such quarters 


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•S 4199 IS

1 and for subsequent quarters until the end of 

2 the quarter in which such drug or biological is 

3 removed from the drug shortage list under sec4 tion 506E of the Federal Food, Drug, and Cos5 metic Act, or in the case of a drug or biological 

6 described in subparagraph (B)(ii), the date on 

7 which the Secretary determines that the total 

8 manufacturing capacity or the total number of 

9 manufacturers of such drug or biological is suf10 ficient to mitigate a potential shortage of the 

11 drug or biological. 

12 ‘‘(B) DRUG OR BIOLOGICAL DESCRIBED.— 

13 For purposes of subparagraph (A), a drug or 

14 biological described in this subparagraph is a 

15 drug or biological— 

16 ‘‘(i) that is listed on the drug shortage 

17 list maintained by the Food and Drug Ad18 ministration pursuant to section 506E of 

19 the Federal Food, Drug, and Cosmetic 

20 Act, and with respect to which any manu21 facturer of such drug or biological notifies 

22 the Secretary of a permanent discontinu23 ance or an interruption that is likely to 

24 lead to a meaningful disruption in the 


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•S 4199 IS

1 manufacturer’s supply of that drug pursu2 ant to section 506C(a) of such Act; or 

3 ‘‘(ii) that— 

4 ‘‘(I) is described in section 

5 506C(a) of such Act; 

6 ‘‘(II) was listed on the drug 

7 shortage list maintained by the Food 

8 and Drug Administration pursuant to 

9 section 506E of such Act within the 

10 preceding 5 years; and 

11 ‘‘(III) for which the total manu12 facturing capacity of all manufactur13 ers with an approved application for 

14 such drug or biological that is cur15 rently marketed or total number of 

16 manufacturers with an approved ap17 plication for such drug or biological 

18 that is currently marketed declines 

19 during a 6-month period, as deter20 mined by the Secretary. 

21 ‘‘(C) PROVISION OF ADDITIONAL INFORMA22 TION.—For each quarter in which the amount 

23 of payment for a drug or biological described in 

24 subparagraph (B) pursuant to subparagraph 

25 (A) exceeds the amount of payment for the 


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1 drug or biological otherwise applicable under 

2 this section, each manufacturer of such drug or 

3 biological shall provide to the Secretary infor4 mation related to the potential cause or causes 

5 of the shortage and the expected duration of 

6 the shortage with respect to such drug.’’. 

7 (b) TRACKING SHORTAGE DRUGS THROUGH

8 CLAIMS.—The Secretary of Health and Human Services 

9 (referred to in this section as the ‘‘Secretary’’) shall estab10 lish a mechanism (such as a modifier) for purposes of 

11 tracking utilization under title XVIII of the Social Secu12 rity Act (42 U.S.C. 1395 et seq.) of drugs and biologicals 

13 listed on the drug shortage list maintained by the Food 

14 and Drug Administration pursuant to section 506E of the 

15 Federal Food, Drug, and Cosmetic Act (21 U.S.C. 356e). 

16 (c) HHS REPORT AND RECOMMENDATIONS.— 

17 (1) IN GENERAL.—Not later than 18 months 

18 after the date of the enactment of this Act, the Sec19 retary shall submit to Congress a report on short20 ages of drugs within the Medicare program under 

21 title XVIII of the Social Security Act (42 U.S.C. 

22 1395 et seq.). The report shall include— 

23 (A) an analysis of— 


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1 (i) the effect of drug shortages on 

2 Medicare beneficiary access, quality, safe3 ty, and out-of-pocket costs; 

4 (ii) the effect of drug shortages on 

5 health providers, including hospitals and 

6 physicians, across the Medicare program; 

7 (iii) the current role of the Centers for 

8 Medicare & Medicaid Services (CMS) in 

9 addressing drug shortages, including 

10 CMS’s working relationship and commu11 nication with other Federal agencies and 

12 stakeholders; 

13 (iv) the role of all actors in the drug 

14 supply chain (including drug manufactur15 ers, distributors, wholesalers, secondary 

16 wholesalers, group purchasing organiza17 tions, hospitals, and physicians) on drug 

18 shortages within the Medicare program; 

19 and 

20 (v) payment structures and incentives 

21 under parts A, B, C, and D of the Medi22 care program and their effect, if any, on 

23 drug shortages; and 

24 (B) relevant findings and recommendations 

25 to Congress. 


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1 (2) PUBLIC AVAILABILITY.—The report under 

2 this subsection shall be made available to the public. 

3 (3) CONSULTATION.—The Secretary shall con4 sult with the drug shortage task force authorized 

5 under section 506D(a)(1)(A) of the Federal Food, 

6 Drug, and Cosmetic Act (21 U.S.C. 356d(a)(1)(A)) 

7 in preparing the report under this subsection, as ap8 propriate. 

9 Subtitle B—Part D 

10 SEC. 121. MEDICARE PART D MODERNIZATION REDESIGN. 

11 (a) BENEFIT STRUCTURE REDESIGN.—Section 

12 1860D–2(b) of the Social Security Act (42 U.S.C. 1395w– 

13 102(b)) is amended— 

14 (1) in paragraph (2)— 

15 (A) in subparagraph (A), in the matter 

16 preceding clause (i), by inserting ‘‘for a year 

17 preceding 2023 and for costs above the annual 

18 deductible specified in paragraph (1) and up to 

19 the annual out-of-pocket threshold specified in 

20 paragraph (4)(B) for 2023 and each subsequent 

21 year’’ after ‘‘paragraph (3)’’; 

22 (B) in subparagraph (C)— 

23 (i) in clause (i), in the matter pre24 ceding subclause (I), by inserting ‘‘for a 


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1 year preceding 2023,’’ after ‘‘paragraph 

2 (4),’’; and 

3 (ii) in clause (ii)(III), by striking 

4 ‘‘and each subsequent year’’ and inserting 

5 ‘‘, 2021, and 2022’’; and 

6 (C) in subparagraph (D)— 

7 (i) in clause (i)— 

8 (I) in the matter preceding sub9 clause (I), by inserting ‘‘for a year 

10 preceding 2023,’’ after ‘‘paragraph 

11 (4),’’; and 

12 (II) in subclause (I)(bb), by 

13 striking ‘‘a year after 2018’’ and in14 serting ‘‘each of years 2018 through 

15 2022’’; and 

16 (ii) in clause (ii)(V), by striking 

17 ‘‘2019 and each subsequent year’’ and in18 serting ‘‘each of years 2019 through 

19 2022’’; 

20 (2) in paragraph (3)(A)— 

21 (A) in the matter preceding clause (i), by 

22 inserting ‘‘for a year preceding 2023,’’ after 

23 ‘‘and (4),’’; and 


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1 (B) in clause (ii), by striking ‘‘for a subse2 quent year’’ and inserting ‘‘for each of years 

3 2007 through 2022’’; 

4 (3) in paragraph (4)— 

5 (A) in subparagraph (A)— 

6 (i) in clause (i)— 

7 (I) by redesignating subclauses 

8 (I) and (II) as items (aa) and (bb), 

9 respectively, and indenting appro10 priately; 

11 (II) in the matter preceding item 

12 (aa), as redesignated by subclause (I), 

13 by striking ‘‘is equal to the greater 

14 of—’’ and inserting ‘‘is equal to— 

15 ‘‘(I) for a year preceding 2023, 

16 the greater of—’’; 

17 (III) by striking the period at the 

18 end of item (bb), as redesignated by 

19 subclause (I), and inserting ‘‘; and’’; 

20 and 

21 (IV) by adding at the end the fol22 lowing: 

23 ‘‘(II) for 2023 and each suc24 ceeding year, $0.’’; and 

25 (ii) in clause (ii)— 


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1 (I) by striking ‘‘clause (i)(I)’’ and 

2 inserting ‘‘clause (i)(I)(aa)’’; and 

3 (II) by adding at the end the fol4 lowing new sentence: ‘‘The Secretary 

5 shall continue to calculate the dollar 

6 amounts specified in clause (i)(I)(aa), 

7 including with the adjustment under 

8 this clause, after 2022 for purposes of 

9 section 1860D–14(a)(1)(D)(iii).’’; 

10 (B) in subparagraph (B)— 

11 (i) in clause (i)— 

12 (I) in subclause (V), by striking 

13 ‘‘or’’ at the end; 

14 (II) in subclause (VI)— 

15 (aa) by striking ‘‘for a sub16 sequent year’’ and inserting ‘‘for 

17 2021 and 2022’’; and 

18 (bb) by striking the period 

19 at the end and inserting a semi20 colon; and 

21 (III) by adding at the end the 

22 following new subclauses: 

23 ‘‘(VII) for 2023, is equal to 

24 $3,100; or 


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1 ‘‘(VIII) for a subsequent year, is 

2 equal to the amount specified in this 

3 subparagraph for the previous year, 

4 increased by the annual percentage in5 crease described in paragraph (6) for 

6 the year involved.’’; and 

7 (ii) in clause (ii), by striking ‘‘clause 

8 (i)(II)’’ and inserting ‘‘clause (i)’’; 

9 (C) in subparagraph (C)(i), by striking 

10 ‘‘and for amounts’’ and inserting ‘‘and for a 

11 year preceding 2023 for amounts’’; and 

12 (D) in subparagraph (E), by striking ‘‘In 

13 applying’’ and inserting ‘‘For each of 2011 

14 through 2022, in applying’’. 

15 (b) REDUCTION IN BENEFICIARY COINSURANCE.— 

16 (1) IN GENERAL.—Section 1860D–2(b)(2)(A) 

17 of the Social Security Act (42 U.S.C. 1395w– 

18 102(b)(2)(A)), as amended by subsection (a), is 

19 amended— 

20 (A) by redesignating clauses (i) and (ii) as 

21 subclauses (I) and (II) and moving such sub22 clauses 2 ems to the right; 

23 (B) by striking ‘‘25 PERCENT COINSUR24 ANCE.—Subject to’’ and inserting ‘‘COINSUR25 ANCE.— 


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1 ‘‘(i) IN GENERAL.—Subject to’’; 

2 (C) in each of subclauses (I) and (II), as 

3 redesignated by subparagraph (A), by striking 

4 ‘‘25 percent’’ and inserting ‘‘the applicable per5 centage (as defined in clause (ii))’’; and 

6 (D) by adding at the end the following new 

7 clause: 

8 ‘‘(ii) APPLICABLE PERCENTAGE DE9 FINED.—For purposes of clause (i), the 

10 term ‘applicable percentage’ means— 

11 ‘‘(I) for a year preceding 2023, 

12 25 percent; and 

13 ‘‘(II) for 2023 and each subse14 quent year, 20 percent.’’. 

15 (2) CONFORMING AMENDMENT.—Section 

16 1860D–14(a)(2)(D) of the Social Security Act (42 

17 U.S.C. 1395w–114(a)(2)(D)) is amended by striking 

18 ‘‘25 percent’’ and inserting ‘‘the applicable percent19 age’’. 

20 (c) DECREASING REINSURANCE PAYMENT

21 AMOUNT.—Section 1860D–15(b) of the Social Security 

22 Act (42 U.S.C. 1395w–115(b)) is amended— 

23 (1) in paragraph (1)— 

24 (A) by striking ‘‘equal to 80 percent’’ and 

25 inserting ‘‘equal to— 


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1 ‘‘(A) for a year preceding 2023, 80 per2 cent’’; 

3 (B) in subparagraph (A), as added by 

4 paragraph (1), by striking the period at the end 

5 and inserting ‘‘; and’’; and 

6 (C) by adding at the end the following new 

7 subparagraph: 

8 ‘‘(B) for 2023 and each subsequent year, 

9 the sum of— 

10 ‘‘(i) an amount equal to the applicable 

11 percentage specified in paragraph (5)(A) of 

12 such allowable reinsurance costs attrib13 utable to that portion of gross prescription 

14 drug costs as specified in paragraph (3) in15 curred in the coverage year after such indi16 vidual has incurred costs that exceed the 

17 annual out-of-pocket threshold specified in 

18 section 1860D–2(b)(4)(B) with respect to 

19 applicable drugs (as defined in section 

20 1860D–14B(g)(2)); and 

21 ‘‘(ii) an amount equal to the applica22 ble percentage specified in paragraph 

23 (5)(B) of allowable reinsurance costs at24 tributable to that portion of gross prescrip25 tion drug costs as specified in paragraph 


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1 (3) incurred in the coverage year after 

2 such individual has incurred costs that ex3 ceed the annual out-of-pocket threshold 

4 specified in section 1860D–2(b)(4)(B) with 

5 respect to covered part D drugs that are 

6 not applicable drugs (as so defined).’’; and 

7 (2) by adding at the end the following new 

8 paragraph: 

9 ‘‘(5) APPLICABLE PERCENTAGE SPECIFIED.— 

10 For purposes of paragraph (1)(B), the applicable 

11 percentage specified in this paragraph is— 

12 ‘‘(A) with respect to applicable drugs (as 

13 defined in section 1860D–14B(g)(2))— 

14 ‘‘(i) for 2023, 60 percent; 

15 ‘‘(ii) for 2024, 40 percent; and 

16 ‘‘(iii) for 2025 and each subsequent 

17 year, 20 percent; and 

18 ‘‘(B) with respect to covered part D drugs 

19 that are not applicable drugs (as so defined)— 

20 ‘‘(i) for 2023, 80 percent; 

21 ‘‘(ii) for 2024, 60 percent; and 

22 ‘‘(iii) for 2025 and each subsequent 

23 year, 40 percent.’’. 

24 (d) MANUFACTURER DISCOUNT PROGRAM DURING

25 INITIAL AND CATASTROPHIC PHASES OF COVERAGE.— 


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1 (1) IN GENERAL.—Part D of title XVIII of the 

2 Social Security Act is amended by inserting after 

3 section 1860D–14A (42 U.S.C. 1495w–114) the fol4 lowing new section: 

5 ‘‘SEC. 1860D–14B. MANUFACTURER DISCOUNT PROGRAM. 

6 ‘‘(a) ESTABLISHMENT.—The Secretary shall estab7 lish a manufacturer discount program (in this section re8 ferred to as the ‘program’). Under the program, the Sec9 retary shall enter into agreements described in subsection 

10 (b) with manufacturers and provide for the performance 

11 of the duties described in subsection (c). The Secretary 

12 shall establish a model agreement for use under the pro13 gram by not later than January 1, 2022, in consultation 

14 with manufacturers, and allow for comment on such model 

15 agreement. 

16 ‘‘(b) TERMS OF AGREEMENT.— 

17 ‘‘(1) IN GENERAL.— 

18 ‘‘(A) AGREEMENT.—An agreement under 

19 this section shall require the manufacturer to 

20 provide applicable beneficiaries access to dis21 counted prices for applicable drugs of the man22 ufacturer that are dispensed on or after Janu23 ary 1, 2023. 

24 ‘‘(B) PROVISION OF DISCOUNTED PRICES

25 AT THE POINT-OF-SALE.—The discounted prices 


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1 described in subparagraph (A) shall be provided 

2 to the applicable beneficiary at the pharmacy or 

3 by the mail order service at the point-of-sale of 

4 an applicable drug. 

5 ‘‘(2) PROVISION OF APPROPRIATE DATA.—Each 

6 manufacturer with an agreement in effect under this 

7 section shall collect and have available appropriate 

8 data, as determined by the Secretary, to ensure that 

9 it can demonstrate to the Secretary compliance with 

10 the requirements under the program. 

11 ‘‘(3) COMPLIANCE WITH REQUIREMENTS FOR

12 ADMINISTRATION OF PROGRAM.—Each manufac13 turer with an agreement in effect under this section 

14 shall comply with requirements imposed by the Sec15 retary or a third party with a contract under sub16 section (d)(3), as applicable, for purposes of admin17 istering the program, including any determination 

18 under subparagraph (A) of subsection (c)(1) or pro19 cedures established under such subsection (c)(1). 

20 ‘‘(4) LENGTH OF AGREEMENT.— 

21 ‘‘(A) IN GENERAL.—An agreement under 

22 this section shall be effective for an initial pe23 riod of not less than 12 months and shall be 

24 automatically renewed for a period of not less 


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1 than 1 year unless terminated under subpara2 graph (B). 

3 ‘‘(B) TERMINATION.— 

4 ‘‘(i) BY THE SECRETARY.—The Sec5 retary may provide for termination of an 

6 agreement under this section for a knowing 

7 and willful violation of the requirements of 

8 the agreement or other good cause shown. 

9 Such termination shall not be effective ear10 lier than 30 days after the date of notice 

11 to the manufacturer of such termination. 

12 The Secretary shall provide, upon request, 

13 a manufacturer with a hearing concerning 

14 such a termination, and such hearing shall 

15 take place prior to the effective date of the 

16 termination with sufficient time for such 

17 effective date to be repealed if the Sec18 retary determines appropriate. 

19 ‘‘(ii) BY A MANUFACTURER.—A man20 ufacturer may terminate an agreement 

21 under this section for any reason. Any 

22 such termination shall be effective, with re23 spect to a plan year— 

24 ‘‘(I) if the termination occurs be25 fore January 30 of a plan year, as of 


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1 the day after the end of the plan year; 

2 and 

3 ‘‘(II) if the termination occurs on 

4 or after January 30 of a plan year, as 

5 of the day after the end of the suc6 ceeding plan year. 

7 ‘‘(iii) EFFECTIVENESS OF TERMI8 NATION.—Any termination under this sub9 paragraph shall not affect discounts for 

10 applicable drugs of the manufacturer that 

11 are due under the agreement before the ef12 fective date of its termination. 

13 ‘‘(iv) NOTICE TO THIRD PARTY.—The 

14 Secretary shall provide notice of such ter15 mination to a third party with a contract 

16 under subsection (d)(3) within not less 

17 than 30 days before the effective date of 

18 such termination. 

19 ‘‘(5) EFFECTIVE DATE OF AGREEMENT.—An 

20 agreement under this section shall take effect on a 

21 date determined appropriate by the Secretary, which 

22 may be at the start of a calendar quarter. 

23 ‘‘(c) DUTIES DESCRIBED.—The duties described in 

24 this subsection are the following: 


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1 ‘‘(1) ADMINISTRATION OF PROGRAM.—Admin2 istering the program, including— 

3 ‘‘(A) the determination of the amount of 

4 the discounted price of an applicable drug of a 

5 manufacturer; 

6 ‘‘(B) the establishment of procedures 

7 under which discounted prices are provided to 

8 applicable beneficiaries at pharmacies or by 

9 mail order service at the point-of-sale of an ap10 plicable drug; 

11 ‘‘(C) the establishment of procedures to 

12 ensure that, not later than the applicable num13 ber of calendar days after the dispensing of an 

14 applicable drug by a pharmacy or mail order 

15 service, the pharmacy or mail order service is 

16 reimbursed for an amount equal to the dif17 ference between— 

18 ‘‘(i) the negotiated price of the appli19 cable drug; and 

20 ‘‘(ii) the discounted price of the appli21 cable drug; 

22 ‘‘(D) the establishment of procedures to 

23 ensure that the discounted price for an applica24 ble drug under this section is applied before any 

25 coverage or financial assistance under other 


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1 health benefit plans or programs that provide 

2 coverage or financial assistance for the pur3 chase or provision of prescription drug coverage 

4 on behalf of applicable beneficiaries as the Sec5 retary may specify; and 

6 ‘‘(E) providing a reasonable dispute resolu7 tion mechanism to resolve disagreements be8 tween manufacturers, applicable beneficiaries, 

9 and the third party with a contract under sub10 section (d)(3). 

11 ‘‘(2) MONITORING COMPLIANCE.— 

12 ‘‘(A) IN GENERAL.—The Secretary shall 

13 monitor compliance by a manufacturer with the 

14 terms of an agreement under this section. 

15 ‘‘(B) NOTIFICATION.—If a third party 

16 with a contract under subsection (d)(3) deter17 mines that the manufacturer is not in compli18 ance with such agreement, the third party shall 

19 notify the Secretary of such noncompliance for 

20 appropriate enforcement under subsection (e). 

21 ‘‘(3) COLLECTION OF DATA FROM PRESCRIP22 TION DRUG PLANS AND MA–PD PLANS.—The Sec23 retary may collect appropriate data from prescrip24 tion drug plans and MA–PD plans in a timeframe 


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1 that allows for discounted prices to be provided for 

2 applicable drugs under this section. 

3 ‘‘(d) ADMINISTRATION.— 

4 ‘‘(1) IN GENERAL.—Subject to paragraph (2), 

5 the Secretary shall provide for the implementation of 

6 this section, including the performance of the duties 

7 described in subsection (c). 

8 ‘‘(2) LIMITATION.—In providing for the imple9 mentation of this section, the Secretary shall not re10 ceive or distribute any funds of a manufacturer 

11 under the program. 

12 ‘‘(3) CONTRACT WITH THIRD PARTIES.—The 

13 Secretary shall enter into a contract with 1 or more 

14 third parties to administer the requirements estab15 lished by the Secretary in order to carry out this 

16 section. At a minimum, the contract with a third 

17 party under the preceding sentence shall require 

18 that the third party— 

19 ‘‘(A) receive and transmit information be20 tween the Secretary, manufacturers, and other 

21 individuals or entities the Secretary determines 

22 appropriate; 

23 ‘‘(B) receive, distribute, or facilitate the 

24 distribution of funds of manufacturers to ap25 propriate individuals or entities in order to 


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1 meet the obligations of manufacturers under 

2 agreements under this section; 

3 ‘‘(C) provide adequate and timely informa4 tion to manufacturers, consistent with the 

5 agreement with the manufacturer under this 

6 section, as necessary for the manufacturer to 

7 fulfill its obligations under this section; and 

8 ‘‘(D) permit manufacturers to conduct 

9 periodic audits, directly or through contracts, of 

10 the data and information used by the third 

11 party to determine discounts for applicable 

12 drugs of the manufacturer under the program. 

13 ‘‘(4) PERFORMANCE REQUIREMENTS.—The 

14 Secretary shall establish performance requirements 

15 for a third party with a contract under paragraph 

16 (3) and safeguards to protect the independence and 

17 integrity of the activities carried out by the third 

18 party under the program under this section. 

19 ‘‘(5) ADMINISTRATION.—Chapter 35 of title 44, 

20 United States Code, shall not apply to the program 

21 under this section. 

22 ‘‘(6) FUNDING.—For purposes of carrying out 

23 this section, the Secretary shall provide for the 

24 transfer, from the Federal Supplementary Medical 

25 Insurance Trust Fund under section 1841 to the 


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1 Centers for Medicare & Medicaid Services Program 

2 Management Account, of $4,000,000 for each of fis3 cal years 2020 through 2023, to remain available 

4 until expended.’’. 

5 ‘‘(e) ENFORCEMENT.— 

6 ‘‘(1) AUDITS.—Each manufacturer with an 

7 agreement in effect under this section shall be sub8 ject to periodic audit by the Secretary. 

9 ‘‘(2) CIVIL MONEY PENALTY.— 

10 ‘‘(A) IN GENERAL.—The Secretary shall 

11 impose a civil money penalty on a manufacturer 

12 that fails to provide applicable beneficiaries dis13 counts for applicable drugs of the manufacturer 

14 in accordance with such agreement for each 

15 such failure in an amount the Secretary deter16 mines is commensurate with the sum of— 

17 ‘‘(i) the amount that the manufac18 turer would have paid with respect to such 

19 discounts under the agreement, which will 

20 then be used to pay the discounts which 

21 the manufacturer had failed to provide; 

22 and 

23 ‘‘(ii) 25 percent of such amount. 

24 ‘‘(B) APPLICATION.—The provisions of 

25 section 1128A (other than subsections (a) and 


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1 (b)) shall apply to a civil money penalty under 

2 this paragraph in the same manner as such 

3 provisions apply to a penalty or proceeding 

4 under section 1128A(a). 

5 ‘‘(f) CLARIFICATION REGARDING AVAILABILITY OF

6 OTHER COVERED PART D DRUGS.—Nothing in this sec7 tion shall prevent an applicable beneficiary from pur8 chasing a covered part D drug that is not an applicable 

9 drug (including a generic drug or a drug that is not on 

10 the formulary of the prescription drug plan or MA–PD 

11 plan that the applicable beneficiary is enrolled in). 

12 ‘‘(g) DEFINITIONS.—In this section: 

13 ‘‘(1) APPLICABLE BENEFICIARY.—The term 

14 ‘applicable beneficiary’ means an individual who, on 

15 the date of dispensing a covered part D drug— 

16 ‘‘(A) is enrolled in a prescription drug plan 

17 or an MA–PD plan; 

18 ‘‘(B) is not enrolled in a qualified retiree 

19 prescription drug plan; and 

20 ‘‘(C) has incurred costs for covered part D 

21 drugs in the year that are above the annual de22 ductible specified in section 1860D–2(b)(1) for 

23 such year. 


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1 ‘‘(2) APPLICABLE DRUG.—The term ‘applicable 

2 drug’ means, with respect to an applicable bene3 ficiary, a covered part D drug— 

4 ‘‘(A) approved under a new drug applica5 tion under section 505(c) of the Federal Food, 

6 Drug, and Cosmetic Act or, in the case of a bio7 logic product, licensed under section 351 of the 

8 Public Health Service Act (including a product 

9 licensed under subsection (k) of such section 

10 351); and 

11 ‘‘(B)(i) if the PDP sponsor of the prescrip12 tion drug plan or the MA organization offering 

13 the MA–PD plan uses a formulary, which is on 

14 the formulary of the prescription drug plan or 

15 MA–PD plan that the applicable beneficiary is 

16 enrolled in; 

17 ‘‘(ii) if the PDP sponsor of the prescrip18 tion drug plan or the MA organization offering 

19 the MA–PD plan does not use a formulary, for 

20 which benefits are available under the prescrip21 tion drug plan or MA–PD plan that the appli22 cable beneficiary is enrolled in; or 

23 ‘‘(iii) is provided through an exception or 

24 appeal. 


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1 ‘‘(3) APPLICABLE NUMBER OF CALENDAR

2 DAYS.—The term ‘applicable number of calendar 

3 days’ means— 

4 ‘‘(A) with respect to claims for reimburse5 ment submitted electronically, 14 days; and 

6 ‘‘(B) with respect to claims for reimburse7 ment submitted otherwise, 30 days. 

8 ‘‘(4) DISCOUNTED PRICE.— 

9 ‘‘(A) IN GENERAL.—The term ‘discounted 

10 price’ means— 

11 ‘‘(i) with respect to an applicable drug 

12 dispensed for an applicable beneficiary who 

13 has incurred costs that are below the an14 nual out-of-pocket threshold specified in 

15 section 1860D–2(b)(4)(B) for the year, 93 

16 percent of the negotiated price of the ap17 plicable drug of a manufacturer; and 

18 ‘‘(ii) with respect to an applicable 

19 drug dispensed for an applicable bene20 ficiary who has incurred costs for covered 

21 part D drugs in the year that are equal to 

22 or exceed the annual out-of-pocket thresh23 old specified in section 1860D–2(b)(4)(B) 

24 for the year, 86 percent of the negotiated 


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1 price of the applicable drug of a manufac2 turer. 

3 ‘‘(B) CLARIFICATION.—Nothing in this 

4 section shall be construed as affecting the re5 sponsibility of an applicable beneficiary for pay6 ment of a dispensing fee for an applicable drug. 

7 ‘‘(C) CLARIFICATION FOR CERTAIN

8 CLAIMS.—With respect to the amount of the ne9 gotiated price of an individual claim for an ap10 plicable drug with respect to an applicable bene11 ficiary, the manufacturer of the applicable drug 

12 shall provide— 

13 ‘‘(i) the discounted price under clause 

14 (i) of subparagraph (A) only on the portion 

15 of the negotiated price of the applicable 

16 drug that falls above the deductible speci17 fied in section 1860D–2(b)(1) for the year 

18 and below the annual out-of-pocket thresh19 old specified in section 1860D–2(b)(4)(B) 

20 for the year; and 

21 ‘‘(ii) the discounted price under clause 

22 (ii) of subparagraph (A) only on the por23 tion of the negotiated price of the applica24 ble drug that falls at or above such annual 

25 out-of-pocket threshold. 


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1 ‘‘(5) MANUFACTURER.—The term ‘manufac2 turer’ means any entity which is engaged in the pro3 duction, preparation, propagation, compounding, 

4 conversion, or processing of prescription drug prod5 ucts, either directly or indirectly by extraction from 

6 substances of natural origin, or independently by 

7 means of chemical synthesis, or by a combination of 

8 extraction and chemical synthesis. Such term does 

9 not include a wholesale distributor of drugs or a re10 tail pharmacy licensed under State law. 

11 ‘‘(6) NEGOTIATED PRICE.—The term ‘nego12 tiated price’ has the meaning given such term in sec13 tion 1860D–2(d)(1)(B), except that such negotiated 

14 price shall not include any dispensing fee for the ap15 plicable drug. 

16 ‘‘(7) QUALIFIED RETIREE PRESCRIPTION DRUG

17 PLAN.—The term ‘qualified retiree prescription drug 

18 plan’ has the meaning given such term in section 

19 1860D–22(a)(2).’’. 

20 (2) SUNSET OF MEDICARE COVERAGE GAP DIS21 COUNT PROGRAM.—Section 1860D–14A of the So22 cial Security Act (42 U.S.C. 1395–114a) is amend23 ed— 


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1 (A) in subsection (a), in the first sentence, 

2 by striking ‘‘The Secretary’’ and inserting 

3 ‘‘Subject to subsection (h), the Secretary’’; and 

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

5 subsection: 

6 ‘‘(h) SUNSET OF PROGRAM.— 

7 ‘‘(1) IN GENERAL.—The program shall not 

8 apply to applicable drugs dispensed on or after Jan9 uary 1, 2023, and, subject to paragraph (2), agree10 ments under this section shall be terminated as of 

11 such date. 

12 ‘‘(2) CONTINUED APPLICATION FOR APPLICA13 BLE DRUGS DISPENSED PRIOR TO SUNSET.—The 

14 provisions of this section (including all responsibil15 ities and duties) shall continue to apply after Janu16 ary 1, 2023, with respect to applicable drugs dis17 pensed prior to such date.’’. 

18 (3) INCLUSION OF ACTUARIAL VALUE OF MANU19 FACTURER DISCOUNTS IN BIDS.—Section 1860D–11 

20 of the Social Security Act (42 U.S.C. 1395w–111) 

21 is amended— 

22 (A) in subsection (b)(2)(C)(iii)— 

23 (i) by striking ‘‘assumptions regarding 

24 the reinsurance’’ and inserting ‘‘assump25 tions regarding— 


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1 ‘‘(I) the reinsurance’’; and 

2 (ii) by adding at the end the fol3 lowing: 

4 ‘‘(II) for 2023 and each subse5 quent year, the manufacturer dis6 counts provided under section 1860D– 

7 14B subtracted from the actuarial 

8 value to produce such bid; and’’; and 

9 (B) in subsection (c)(1)(C)— 

10 (i) by striking ‘‘an actuarial valuation 

11 of the reinsurance’’ and inserting ‘‘an ac12 tuarial valuation of— 

13 ‘‘(i) the reinsurance’’; 

14 (ii) in clause (i), as added by clause 

15 (i) of this subparagraph, by adding ‘‘and’’ 

16 at the end; and 

17 (iii) by adding at the end the fol18 lowing: 

19 ‘‘(ii) for 2023 and each subsequent 

20 year, the manufacturer discounts provided 

21 under section 1860D–14B;’’. 

22 (4) CLARIFICATION REGARDING EXCLUSION OF

23 MANUFACTURER DISCOUNTS FROM TROOP.—Section 

24 1860D–2(b)(4) of the Social Security Act (42 

25 U.S.C. 1395w–102(b)(4)) is amended— 


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1 (A) in subparagraph (C), by inserting ‘‘and 

2 subject to subparagraph (F)’’ after ‘‘subpara3 graph (E)’’; and 

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

5 subparagraph: 

6 ‘‘(F) CLARIFICATION REGARDING EXCLU7 SION OF MANUFACTURER DISCOUNTS.—In ap8 plying subparagraph (A), incurred costs shall 

9 not include any manufacturer discounts pro10 vided under section 1860D–14B.’’. 

11 (e) DETERMINATION OF ALLOWABLE REINSURANCE

12 COSTS.—Section 1860D–15(b) of the Social Security Act 

13 (42 U.S.C. 1395w–115(b)) is amended— 

14 (1) in paragraph (2)— 

15 (A) by striking ‘‘COSTS.—For purposes’’ 

16 and inserting ‘‘COSTS.— 

17 ‘‘(A) IN GENERAL.—Subject to subpara18 graph (B), for purposes’’; and 

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

20 subparagraph: 

21 ‘‘(B) INCLUSION OF MANUFACTURER DIS22 COUNTS ON APPLICABLE DRUGS.—For purposes 

23 of applying subparagraph (A), the term ‘allow24 able reinsurance costs’ shall include the portion 

25 of the negotiated price (as defined in section 


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1 1860D–14B(g)(6)) of an applicable drug (as 

2 defined in section 1860D–14B(g)(2)) that was 

3 paid by a manufacturer under the manufacturer 

4 discount program under section 1860D–14B.’’; 

5 and 

6 (2) in paragraph (3)— 

7 (A) in the first sentence, by striking ‘‘For 

8 purposes’’ and inserting ‘‘Subject to paragraph 

9 (2)(B), for purposes’’; and 

10 (B) in the second sentence, by inserting 

11 ‘‘or, in the case of an applicable drug, by a 

12 manufacturer’’ after ‘‘by the individual or 

13 under the plan’’. 

14 (f) UPDATING RISK ADJUSTMENT METHODOLOGIES

15 TO ACCOUNT FOR PART D MODERNIZATION REDE16 SIGN.—Section 1860D–15(c) of the Social Security Act 

17 (42 U.S.C. 1395w–115(c)) is amended by adding at the 

18 end the following new paragraph: 

19 ‘‘(3) UPDATING RISK ADJUSTMENT METH20 ODOLOGIES TO ACCOUNT FOR PART D MODERNIZA21 TION REDESIGN.—The Secretary shall update the 

22 risk adjustment methodologies used to adjust bid 

23 amounts pursuant to this subsection as appropriate 

24 to take into account changes in benefits under this 

25 part pursuant to the amendments made by section 


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1 121 of the Prescription Drug Pricing Reduction Act 

2 of 2020.’’. 

3 (g) CONDITIONS FOR COVERAGE OF DRUGS UNDER

4 THIS PART.—Section 1860D–43 of the Social Security 

5 Act (42 U.S.C. 1395w–153) is amended— 

6 (1) in subsection (a)— 

7 (A) in paragraph (2), by striking ‘‘and’’ at 

8 the end; 

9 (B) in paragraph (3), by striking the pe10 riod at the end and inserting a semicolon; and 

11 (C) by adding at the end the following new 

12 paragraphs: 

13 ‘‘(4) participate in the manufacturer discount 

14 program under section 1860D–14B; 

15 ‘‘(5) have entered into and have in effect an 

16 agreement described in subsection (b) of such sec17 tion 1860D–14B with the Secretary; and 

18 ‘‘(6) have entered into and have in effect, under 

19 terms and conditions specified by the Secretary, a 

20 contract with a third party that the Secretary has 

21 entered into a contract with under subsection (d)(3) 

22 of such section 1860D–14B.’’; 

23 (2) by striking subsection (b) and inserting the 

24 following: 


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1 ‘‘(b) EFFECTIVE DATE.—Paragraphs (1) through (3) 

2 of subsection (a) shall apply to covered part D drugs dis3 pensed under this part on or after January 1, 2011, and 

4 before January 1, 2023, and paragraphs (4) through (6) 

5 of such subsection shall apply to covered part D drugs 

6 dispensed on or after January 1, 2023.’’; and 

7 (3) in subsection (c), by striking paragraph (2) 

8 and inserting the following: 

9 ‘‘(2) the Secretary determines that in the period 

10 beginning on January 1, 2011, and ending on De11 cember 31, 2011 (with respect to paragraphs (1) 

12 through (3) of subsection (a)), or the period begin13 ning on January 1, 2023, and ending December 31, 

14 2023 (with respect to paragraphs (4) through (6) of 

15 such subsection), there were extenuating cir16 cumstances.’’. 

17 (h) CONFORMING AMENDMENTS.— 

18 (1) Section 1860D–2 of the Social Security Act 

19 (42 U.S.C. 1395w–102) is amended— 

20 (A) in subsection (a)(2)(A)(i)(I), by strik21 ing ‘‘, or an increase in the initial’’ and insert22 ing ‘‘or for a year preceding 2023 an increase 

23 in the initial’’; 

24 (B) in subsection (c)(1)(C)— 


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1 (i) in the subparagraph heading, by 

2 striking ‘‘AT INITIAL COVERAGE LIMIT’’; 

3 and 

4 (ii) by inserting ‘‘for a year preceding 

5 2023 or the annual out-of-pocket threshold 

6 specified in subsection (b)(4)(B) for the 

7 year for 2023 and each subsequent year’’ 

8 after ‘‘subsection (b)(3) for the year’’ each 

9 place it appears; and 

10 (C) in subsection (d)(1)(A), by striking ‘‘or 

11 an initial’’ and inserting ‘‘or for a year pre12 ceding 2023 an initial’’. 

13 (2) Section 1860D–4(a)(4)(B)(i) of the Social 

14 Security Act (42 U.S.C. 1395w–104(a)(4)(B)(i)) is 

15 amended by striking ‘‘the initial’’ and inserting ‘‘for 

16 a year preceding 2023, the initial’’. 

17 (3) Section 1860D–14(a) of the Social Security 

18 Act (42 U.S.C. 1395w–114(a)) is amended— 

19 (A) in paragraph (1)— 

20 (i) in subparagraph (C), by striking 

21 ‘‘The continuation’’ and inserting ‘‘For a 

22 year preceding 2023, the continuation’’; 

23 (ii) in subparagraph (D)(iii), by strik24 ing ‘‘1860D–2(b)(4)(A)(i)(I)’’ and insert25 ing ‘‘1860D–2(b)(4)(A)(i)(I)(aa)’’; and 


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1 (iii) in subparagraph (E), by striking 

2 ‘‘The elimination’’ and inserting ‘‘For a 

3 year preceding 2023, the elimination’’; and 

4 (B) in paragraph (2)— 

5 (i) in subparagraph (C), by striking 

6 ‘‘The continuation’’ and inserting ‘‘For a 

7 year preceding 2023, the continuation’’; 

8 and 

9 (ii) in subparagraph (E)— 

10 (I) by inserting ‘‘for a year pre11 ceding 2023,’’ after ‘‘subsection (c)’’; 

12 and 

13 (II) by striking ‘‘1860D– 

14 2(b)(4)(A)(i)(I)’’ and inserting 

15 ‘‘1860D–2(b)(4)(A)(i)(I)(aa)’’. 

16 (4) Section 1860D–21(d)(7) of the Social Secu17 rity Act (42 U.S.C. 1395w–131(d)(7)) is amended 

18 by striking ‘‘section 1860D–2(b)(B)(4)(B)(i)’’ and 

19 inserting ‘‘section 1860D–2(b)(B)(4)(C)(i)’’. 

20 (5) Section 1860D–22(a)(2)(A) of the Social 

21 Security Act (42 U.S.C. 1395w–132(a)(2)(A)) is 

22 amended— 

23 (A) by striking ‘‘the value of any discount’’ 

24 and inserting the following: ‘‘the value of— 


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1 ‘‘(i) for years prior to 2023, any dis2 count’’; 

3 (B) in clause (i), as inserted by subpara4 graph (A) of this paragraph, by striking the pe5 riod at the end and inserting ‘‘; and’’; and 

6 (C) by adding at the end the following new 

7 clause: 

8 ‘‘(ii) for 2023 and each subsequent 

9 year, any discount provided pursuant to 

10 section 1860D–14B.’’. 

11 (6) Section 1860D–41(a)(6) of the Social Secu12 rity Act (42 U.S.C. 1395w–151(a)(6)) is amended— 

13 (A) by inserting ‘‘for a year before 2023’’ 

14 after ‘‘1860D–2(b)(3)’’; and 

15 (B) by inserting ‘‘for such year’’ before the 

16 period. 

17 (i) EFFECTIVE DATE.—The amendments made by 

18 this section shall apply to plan year 2023 and subsequent 

19 plan years. 

20 SEC. 121A. MAXIMUM MONTHLY CAP ON COST-SHARING 

21 PAYMENTS UNDER PRESCRIPTION DRUG 

22 PLANS AND MA–PD PLANS. 

23 (a) IN GENERAL.—Section 1860D–2(b) of the Social 

24 Security Act (42 U.S.C. 1395w–102(b)), as amended by 

25 section 121, is amended— 


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1 (1) in paragraph (2)— 

2 (A) in subparagraph (A), by striking ‘‘and 

3 (D)’’ and inserting ‘‘, (D), and (E)’’; and 

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

5 subparagraph: 

6 ‘‘(E) MAXIMUM MONTHLY CAP ON COST7 SHARING PAYMENTS.— 

8 ‘‘(i) IN GENERAL.—For plan years be9 ginning on or after January 1, 2023, the 

10 Secretary shall, through notice and com11 ment rulemaking, establish a process under 

12 which each PDP sponsor offering a pre13 scription drug plan and each MA organiza14 tion offering an MA–PD plan shall provide 

15 to any enrollee, including an enrollee who 

16 is a subsidy eligible individual (as defined 

17 in paragraph (3) of section 1860D–14(a)), 

18 the option to elect with respect to a plan 

19 year to have their monthly cost-sharing 

20 payments under the plan capped in accord21 ance with this subparagraph. 

22 ‘‘(ii) DETERMINATION OF MAXIMUM

23 MONTHLY CAP.—For each month in the 

24 plan year after an enrollee in a prescrip25 tion drug plan or an MA–PD plan has 


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1 made an election pursuant to clause (i), 

2 the PDP sponsor or MA organization shall 

3 determine a maximum monthly cap (as de4 fined in clause (iv)) for such enrollee. 

5 ‘‘(iii) BENEFICIARY MONTHLY PAY6 MENTS.—With respect to an enrollee who 

7 has made an election pursuant to clause 

8 (i), for each month described in clause (ii), 

9 the PDP sponsor or MA organization shall 

10 bill such enrollee an amount (not to exceed 

11 the maximum monthly cap) for the out-of12 pocket costs of such enrollee in such 

13 month. 

14 ‘‘(iv) MAXIMUM MONTHLY CAP DE15 FINED.—In this subparagraph, the term 

16 ‘maximum monthly cap’ means, with re17 spect to an enrollee— 

18 ‘‘(I) for the first month in which 

19 this subparagraph applies, an amount 

20 determined by calculating— 

21 ‘‘(aa) the annual out-of22 pocket threshold specified in 

23 paragraph (4)(B) minus the in24 curred costs of the enrollee as deVerDate Sep 11 2014 19:48 Jul 14, 2020 Jkt 099200 PO 00000 Frm 00082 Fmt 6652 Sfmt 6201 E:\BILLS\S4199.IS S4199

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1 scribed in paragraph (4)(C); di2 vided by 

3 ‘‘(bb) the number of months 

4 remaining in the plan year; and 

5 ‘‘(II) for a subsequent month, an 

6 amount determined by calculating— 

7 ‘‘(aa) the sum of any re8 maining out-of-pocket costs owed 

9 by the enrollee from a previous 

10 month that have not yet been 

11 billed to the enrollee and any ad12 ditional costs incurred by the en13 rollee; divided by 

14 ‘‘(bb) the number of months 

15 remaining in the plan year. 

16 ‘‘(v) ADDITIONAL REQUIREMENTS.— 

17 The following requirements shall apply 

18 with respect to the option to make an elec19 tion pursuant to clause (i) under this sub20 paragraph: 

21 ‘‘(I) SECRETARIAL RESPONSIBIL22 ITIES.—The Secretary shall provide 

23 information to part D eligible individ24 uals on the option to make such elec25 tion through educational materials, inVerDate Sep 11 2014 19:48 Jul 14, 2020 Jkt 099200 PO 00000 Frm 00083 Fmt 6652 Sfmt 6201 E:\BILLS\S4199.IS S4199

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1 cluding through the notices provided 

2 under section 1804(a). 

3 ‘‘(II) TIMING OF ELECTION.—An 

4 enrollee in a prescription drug plan or 

5 an MA–PD plan may make such an 

6 election— 

7 ‘‘(aa) prior to the beginning 

8 of the plan year; or 

9 ‘‘(bb) in any month during 

10 the plan year. 

11 ‘‘(III) PDP SPONSOR AND MA

12 ORGANIZATION RESPONSIBILITIES.— 

13 Each PDP sponsor offering a pre14 scription drug plan or MA organiza15 tion offering an MA–PD plan— 

16 ‘‘(aa) may not limit the op17 tion for an enrollee to make such 

18 an election to certain covered 

19 part D drugs; 

20 ‘‘(bb) shall, prior to the plan 

21 year, notify prospective enrollees 

22 of the option to make such an 

23 election in promotional materials; 


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1 ‘‘(cc) shall include informa2 tion on such option in enrollee 

3 educational materials; 

4 ‘‘(dd) shall have in place a 

5 mechanism to notify a pharmacy 

6 during the plan year when an en7 rollee incurs out-of-pocket costs 

8 with respect to covered part D 

9 drugs that make it likely the en10 rollee may benefit from making 

11 such an election; 

12 ‘‘(ee) shall provide that a 

13 pharmacy, after receiving a noti14 fication described in item (dd) 

15 with respect to an enrollee, in16 forms the enrollee of such notifi17 cation; 

18 ‘‘(ff) shall ensure that such 

19 an election by an enrollee has no 

20 effect on the amount paid to 

21 pharmacies (or the timing of 

22 such payments) with respect to 

23 covered part D drugs dispensed 

24 to the enrollee; and 


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1 ‘‘(gg) shall have in place a 

2 financial reconciliation process to 

3 correct inaccuracies in payments 

4 made by an enrollee under this 

5 subparagraph with respect to 

6 covered part D drugs during the 

7 plan year. 

8 ‘‘(IV) FAILURE TO PAY AMOUNT

9 BILLED.—If an enrollee fails to pay 

10 the amount billed for a month as re11 quired under this subparagraph, the 

12 election of the enrollee pursuant to 

13 clause (i) shall be terminated and en14 rollee shall pay the cost-sharing other15 wise applicable for any covered part D 

16 drugs subsequently dispensed to the 

17 enrollee up to the annual out-of-pock18 et threshold specified in paragraph 

19 (4)(B). 

20 ‘‘(V) CLARIFICATION REGARDING

21 PAST DUE AMOUNTS.—Nothing in this 

22 subparagraph shall be construed as 

23 prohibiting a PDP sponsor or an MA 

24 organization from billing an enrollee 


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1 for an amount owed under this sub2 paragraph. 

3 ‘‘(VI) TREATMENT OF UNSET4 TLED BALANCES.—Any unsettled bal5 ances with respect to amounts owed 

6 under this subparagraph shall be 

7 treated as plan losses and the Sec8 retary shall not be liable for any such 

9 balances outside of those assumed as 

10 losses estimated in plan bids.’’; and 

11 (2) in paragraph (4)— 

12 (A) in subparagraph (C), by striking ‘‘and 

13 subject to subparagraph (F)’’ and inserting 

14 ‘‘and subject to subparagraphs (F) and (G)’’; 

15 and 

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

17 subparagraph: 

18 ‘‘(G) INCLUSION OF COSTS PAID UNDER

19 MAXIMUM MONTHLY CAP OPTION.—In applying 

20 subparagraph (A), with respect to an enrollee 

21 who has made an election pursuant to clause (i) 

22 of paragraph (2)(E), costs shall be treated as 

23 incurred if such costs are paid by a PDP spon24 sor or an MA organization under the process 

25 provided under such paragraph.’’. 


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1 (b) APPLICATION TO ALTERNATIVE PRESCRIPTION

2 DRUG COVERAGE.—Section 1860D–2(c) of the Social Se3 curity Act (42 U.S.C. 1395w–102(c)) is amended by add4 ing at the end the following new paragraph: 

5 ‘‘(4) SAME MAXIMUM MONTHLY CAP ON COST6 SHARING.—For plan years beginning on or after 

7 January 1, 2023, the maximum monthly cap on 

8 cost-sharing payments under the process provided 

9 under subsection (b)(2)(E) shall apply to such cov10 erage.’’. 

11 SEC. 121B. REQUIRING PHARMACY-NEGOTIATED PRICE 

12 CONCESSIONS, PAYMENT, AND FEES TO BE 

13 INCLUDED IN NEGOTIATED PRICES AT THE 

14 POINT-OF-SALE UNDER PART D OF THE MEDI15 CARE PROGRAM. 

16 Section 1860D–2(d)(1)(B) of the Social Security Act 

17 (42 U.S.C. 1395w–102(d)(1)(B)) is amended— 

18 (1) by striking ‘‘PRICES.—For purposes’’ and 

19 inserting ‘‘PRICES.— 

20 ‘‘(i) IN GENERAL.—For purposes’’; 

21 and 

22 (2) by adding at the end the following new 

23 clause: 

24 ‘‘(ii) PRICES NEGOTIATED WITH

25 PHARMACY AT POINT-OF-SALE.—For plan 


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1 years beginning on or after January 1, 

2 2022, a negotiated price for a covered part 

3 D drug described in clause (i) shall be the 

4 approximate lowest possible reimbursement 

5 for such drug negotiated with the phar6 macy dispensing such drug, and shall in7 clude all contingent and noncontingent 

8 price concessions, payments, and fees nego9 tiated with such pharmacy, but shall not 

10 include positive incentive payments paid or 

11 to be paid to such pharmacy. Such nego12 tiated price shall be provided at the point13 of-sale of such drug.’’. 

14 SEC. 122. PROVIDING THE MEDICARE PAYMENT ADVISORY 

15 COMMISSION AND MEDICAID AND CHIP PAY16 MENT AND ACCESS COMMISSION WITH AC17 CESS TO CERTAIN DRUG PAYMENT INFORMA18 TION, INCLUDING CERTAIN REBATE INFOR19 MATION. 

20 (a) ACCESS TO CERTAIN PART D PAYMENT DATA.— 

21 Section 1860D–15(f) of the Social Security Act (42 

22 U.S.C. 1395w–115(f)) is amended— 

23 (1) in paragraph (2)— 

24 (A) in subparagraph (A)(ii), by striking 

25 ‘‘and’’ at the end; 


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1 (B) in subparagraph (B), by striking the 

2 period at the end and inserting ‘‘; and’’; and 

3 (C) by inserting at the end the following 

4 new subparagraph: 

5 ‘‘(C) by the Executive Director of the 

6 Medicare Payment Advisory Commission for 

7 purposes of monitoring, making recommenda8 tions, and analysis of the program under this 

9 title and by the Executive Director of the Med10 icaid and CHIP Payment and Access Commis11 sion for purposes of monitoring, making rec12 ommendations, and analysis of the Medicaid 

13 program established under title XIX and the 

14 Children’s Health Insurance Program estab15 lished under title XXI.’’; and 

16 (2) by adding at the end the following new 

17 paragraph: 

18 ‘‘(3) ADDITIONAL RESTRICTIONS ON DISCLO19 SURE OF INFORMATION.—The Executive Directors 

20 described in paragraph (2)(C) shall not disclose any 

21 of the following information disclosed to such Execu22 tive Directors or obtained by such Executive Direc23 tors pursuant to such paragraph, with respect to a 

24 prescription drug plan offered by a PDP sponsor or 

25 an MA–PD plan offered by an MA organization: 


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1 ‘‘(A) The specific amounts or the identity 

2 of the source of any rebates, price concessions, 

3 or other forms of direct or indirect remunera4 tion under such prescription drug plan or such 

5 MA–PD plan. 

6 ‘‘(B) Information submitted with the bid 

7 submitted under section 1860D–11 by such 

8 PDP sponsor or section 1854 by such MA orga9 nization. 

10 ‘‘(C) In the case of such information from 

11 prescription drug event records, in a form that 

12 would not be permitted under section 

13 423.505(m) of title 42, Code of Federal Regula14 tions, or any successor regulation, if made by 

15 the Centers for Medicare & Medicaid Services.’’. 

16 (b) ACCESS TO CERTAIN REBATE AND PAYMENT

17 DATA UNDER MEDICARE AND MEDICAID.—Section 

18 1927(b)(3)(D) of the Social Security Act (42 U.S.C. 

19 1396r–8(b)(3)(D)) is amended— 

20 (1) in the matter before clause (i), by striking 

21 ‘‘subsection (a)(6)(A)(ii)’’ and inserting ‘‘subsection 

22 (a)(6)(A)’’; 

23 (2) in clause (v), by striking ‘‘and’’ at the end; 

24 (3) in clause (vi), by striking the period at the 

25 end and inserting ‘‘, and’’; 


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1 (4) by inserting after clause (vi) the following 

2 new clause: 

3 ‘‘(vii) to permit the Executive Direc4 tor of the Medicare Payment Advisory 

5 Commission and the Executive Director of 

6 the Medicaid and CHIP Payment and Ac7 cess Commission to review the information 

8 provided.’’; 

9 (5) in the matter at the end, by striking 

10 ‘‘1860D–4(c)(2)(E)’’ and inserting ‘‘1860D– 

11 4(c)(2)(G)’’; and 

12 (6) by adding at the end the following new sen13 tence: ‘‘Any information disclosed to the Executive 

14 Director of the Medicare Payment Advisory Commis15 sion or the Executive Director of the Medicaid and 

16 CHIP Payment and Access Commission pursuant to 

17 this subparagraph shall not be disclosed by either 

18 such Executive Director in a form which discloses 

19 the identity of a specific manufacturer or wholesaler 

20 or prices charged for drugs by such manufacturer or 

21 wholesaler.’’. 

22 SEC. 123. PUBLIC DISCLOSURE OF DRUG DISCOUNTS AND 

23 OTHER PHARMACY BENEFIT MANAGER (PBM) 

24 PROVISIONS. 

25 (a) PUBLIC DISCLOSURE OF DRUG DISCOUNTS.— 


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1 (1) IN GENERAL.—Section 1150A of the Social 

2 Security Act (42 U.S.C. 1320b–23) is amended— 

3 (A) in subsection (c), in the matter pre4 ceding paragraph (1), by striking ‘‘this section’’ 

5 and inserting ‘‘subsection (b)(1)’’; and 

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

7 subsection: 

8 ‘‘(e) PUBLIC AVAILABILITY OF CERTAIN INFORMA9 TION.— 

10 ‘‘(1) IN GENERAL.—Subject to paragraphs (2) 

11 and (3), in order to allow patients and employers to 

12 compare PBMs’ ability to negotiate rebates, dis13 counts, and price concessions and the amount of 

14 such rebates, discounts, and price concessions that 

15 are passed through to plan sponsors, not later than 

16 July 1, 2022, the Secretary shall make available on 

17 the Internet website of the Department of Health 

18 and Human Services the information provided to the 

19 Secretary and described in paragraphs (2) and (3) 

20 of subsection (b) with respect to each PBM. 

21 ‘‘(2) LAG IN DATA.—The information made 

22 available in a plan year under paragraph (1) shall 

23 not include information with respect to such plan 

24 year or the two preceding plan years. 


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1 ‘‘(3) CONFIDENTIALITY.—The Secretary shall 

2 ensure that such information is displayed in a man3 ner that prevents the disclosure of information on 

4 rebates, discounts, and price concessions with re5 spect to an individual drug or an individual PDP 

6 sponsor, MA organization, or qualified health bene7 fits plan.’’. 

8 (2) EFFECTIVE DATE.—The amendment made 

9 by paragraph (1)(A) shall take effect on January 1, 

10 2022. 

11 (b) PLAN AUDIT OF PHARMACY BENEFIT MANAGER

12 DATA.—Section 1860D–2(d)(3) of the Social Security Act 

13 (42 U.S.C. 1395w–102(d)(3)) is amended— 

14 (1) by striking ‘‘AUDITS.—To protect’’ and in15 serting the following: ‘‘AUDITS.— 

16 ‘‘(A) AUDITS OF PLANS BY THE SEC17 RETARY.—To protect’’; and 

18 (2) by adding at the end the following new sub19 paragraph: 

20 ‘‘(B) AUDITS OF PHARMACY BENEFIT

21 MANAGERS BY PDP SPONSORS AND MA ORGANI22 ZATIONS.— 

23 ‘‘(i) IN GENERAL.—Beginning Janu24 ary 1, 2022, in order to ensure that— 


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1 ‘‘(I) contracting terms between a 

2 PDP sponsor offering a prescription 

3 drug plan or an MA organization of4 fering an MA–PD plan and its con5 tracted or owned pharmacy benefit 

6 manager are met; and 

7 ‘‘(II) the PDP sponsor and MA 

8 organization can account for the cost 

9 of each covered part D drug net of all 

10 direct and indirect remuneration; 

11 the PDP sponsor or MA organization shall 

12 conduct financial audits. 

13 ‘‘(ii) INDEPENDENT THIRD PARTY.— 

14 An audit described in clause (i) shall— 

15 ‘‘(I) be conducted by an inde16 pendent third party; and 

17 ‘‘(II) account and reconcile flows 

18 of funds that determine the net cost 

19 of covered part D drugs, including di20 rect and indirect remuneration from 

21 drug manufacturers and pharmacies 

22 or provided to pharmacies. 

23 ‘‘(iii) REBATE AGREEMENTS.—A PDP 

24 sponsor and an MA organization shall re25 quire pharmacy benefit managers to make 


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1 rebate contracts with drug manufacturers 

2 made on their behalf available under audits 

3 described in clause (i). 

4 ‘‘(iv) CONFIDENTIALITY AGREE5 MENTS.—Audits described in clause (i) 

6 shall be subject to confidentiality agree7 ments to prevent, except as required under 

8 clause (vii), the redisclosure of data trans9 mitted under the audit. 

10 ‘‘(v) FREQUENCY.—A financial audit 

11 under clause (i) shall be conducted periodi12 cally (but in no case less frequently than 

13 once every 2 years). 

14 ‘‘(vi) TIMEFRAME FOR PBM TO PRO15 VIDE INFORMATION.—A PDP sponsor and 

16 an MA organization shall require that a 

17 pharmacy benefit manager that is being 

18 audited under clause (i) provide (as part of 

19 their contracting agreement) the requested 

20 information to the independent third party 

21 conducting the audit within 45 days of the 

22 date of the request. 

23 ‘‘(vii) SUBMISSION OF AUDIT REPORTS

24 TO THE SECRETARY.— 


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1 ‘‘(I) IN GENERAL.—A PDP spon2 sor and an MA organization shall sub3 mit to the Secretary the final report 

4 on any audit conducted under clause 

5 (i) within 30 days of the PDP sponsor 

6 or MA organization receiving the re7 port from the independent third party 

8 conducting the audit. 

9 ‘‘(II) REVIEW.—The Secretary 

10 shall review final reports submitted 

11 under clause (i) to determine the ex12 tent to which the goals specified in 

13 subclauses (I) and (II) of subpara14 graph (B)(i) are met. 

15 ‘‘(III) CONFIDENTIALITY.—Not16 withstanding any other provision of 

17 law, information disclosed in a report 

18 submitted under clause (i) related to 

19 the net cost of a covered part D drug 

20 is confidential and shall not be dis21 closed by the Secretary or a Medicare 

22 contractor. 

23 ‘‘(viii) NOTICE OF NONCOMPLI24 ANCE.—A PDP sponsor and an MA orga25 nization shall notify the Secretary if any 


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1 pharmacy benefit manager is not com2 plying with requests for access to informa3 tion required under an audit under clause 

4 (i). 

5 ‘‘(ix) CIVIL MONETARY PENALTIES.— 

6 ‘‘(I) IN GENERAL.—Subject to 

7 subclause (II), if the Secretary deter8 mines that a PDP sponsor or an MA 

9 organization has failed to conduct an 

10 audit under clause (i), the Secretary 

11 may impose a civil monetary penalty 

12 of not more than $10,000 for each 

13 day of such noncompliance. 

14 ‘‘(II) PROCEDURE.—The provi15 sions of section 1128A, other than 

16 subsections (a) and (b) and the first 

17 sentence of subsection (c)(1) of such 

18 section, shall apply to civil monetary 

19 penalties under this clause in the 

20 same manner as such provisions apply 

21 to a penalty or proceeding under sec22 tion 1128A.’’. 

23 (c) DISCLOSURE TO PHARMACY OF POST-POINT-OF24 SALE PHARMACY PRICE CONCESSIONS AND INCENTIVE


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1 PAYMENTS.—Section 1860D–2(d)(2) of the Social Secu2 rity Act (42 U.S.C. 1395w–102(d)(2)) is amended— 

3 (1) by striking ‘‘DISCLOSURE.—A PDP spon4 sor’’ and inserting the following: ‘‘DISCLOSURE.— 

5 ‘‘(A) TO THE SECRETARY.—A PDP spon6 sor’’; and 

7 (2) by adding at the end the following new sub8 paragraph: 

9 ‘‘(B) TO PHARMACIES.— 

10 ‘‘(i) IN GENERAL.—For plan year 

11 2022 and subsequent plan years, a PDP 

12 sponsor offering a prescription drug plan 

13 and an MA organization offering an MA– 

14 PD plan shall report any pharmacy price 

15 concession or incentive payment that oc16 curs with respect to a pharmacy after pay17 ment for covered part D drugs at the 

18 point-of-sale, including by an intermediary 

19 organization with which a PDP sponsor or 

20 MA organization has contracted, to the 

21 pharmacy. 

22 ‘‘(ii) TIMING.—The reporting of price 

23 concessions and incentive payments to a 

24 pharmacy under clause (i) shall be made 


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1 on a periodic basis (but in no case less fre2 quently than annually). 

3 ‘‘(iii) CLAIM LEVEL.—The reporting 

4 of price concessions and incentive pay5 ments to a pharmacy under clause (i) shall 

6 be at the claim level or approximated at 

7 the claim level if the price concession or in8 centive payment was applied at a level 

9 other than at the claim level.’’. 

10 (d) DISCLOSURE OF P&T COMMITTEE CONFLICTS OF

11 INTEREST.— 

12 (1) IN GENERAL.—Section 1860D–4(b)(3)(A) 

13 of the Social Security Act (42 U.S.C. 1395w– 

14 104(b)(3)(A)) is amended by adding at the end the 

15 following new clause: 

16 ‘‘(iii) DISCLOSURE OF CONFLICTS OF

17 INTEREST.—With respect to plan year 

18 2022 and subsequent plan years, a PDP 

19 sponsor of a prescription drug plan and an 

20 MA organization offering an MA–PD plan 

21 shall, as part of its bid submission under 

22 section 1860D–11(b), provide the Sec23 retary with a completed statement of fi24 nancial conflicts of interest, including with 

25 manufacturers, from each member of any 


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1 pharmacy and therapeutic committee used 

2 by the sponsor or organization pursuant to 

3 this paragraph.’’. 

4 (2) INCLUSION IN BID.—Section 1860D– 

5 11(b)(2) of the Social Security Act (42 U.S.C. 

6 1395w–111(b)(2)) is amended— 

7 (A) by redesignating subparagraph (F) as 

8 subparagraph (G); and 

9 (B) by inserting after subparagraph (E) 

10 the following new subparagraph: 

11 ‘‘(F) P&T COMMITTEE CONFLICTS OF IN12 TEREST.—The information required to be dis13 closed under section 1860D–4(b)(3)(A)(iii).’’. 

14 (e) INFORMATION ON DIRECT AND INDIRECT REMU15 NERATION REQUIRED TO BE INCLUDED IN BID.—Section 

16 1860D–11(b) of the Social Security Act (42 U.S.C. 

17 1395w–111(b)) is amended— 

18 (1) in paragraph (1), by adding at the end the 

19 following new sentence: ‘‘With respect to actual 

20 amounts of direct and indirect remuneration sub21 mitted pursuant to clause (v) of paragraph (2), such 

22 amounts shall be consistent with data reported to 

23 the Secretary in a prior year.’’; and 

24 (2) in paragraph (2)(C)— 


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1 (A) in clause (iii), by striking ‘‘and’’ at the 

2 end; 

3 (B) in clause (iv), by striking the period at 

4 the end and inserting the following: ‘‘, and, with 

5 respect to plan year 2022 and subsequent plan 

6 years, actual and projected administrative ex7 penses assumed in the bid, categorized by the 

8 type of such expense, including actual and pro9 jected price concessions retained by a pharmacy 

10 benefit manager; and’’; and 

11 (C) by adding at the end the following new 

12 clause: 

13 ‘‘(v) with respect to plan year 2022 

14 and subsequent plan years, actual and pro15 jected direct and indirect remuneration, 

16 categorized as received from each of the 

17 following: 

18 ‘‘(I) A pharmacy. 

19 ‘‘(II) A manufacturer. 

20 ‘‘(III) A pharmacy benefit man21 ager. 

22 ‘‘(IV) Other entities, as deter23 mined by the Secretary.’’. 


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1 SEC. 124. PUBLIC DISCLOSURE OF DIRECT AND INDIRECT 

2 REMUNERATION REVIEW AND AUDIT RE3 SULTS. 

4 Section 1860D–42 of the Social Security Act (42 

5 U.S.C. 1395w–152) is amended by adding at the end the 

6 following new subsection: 

7 ‘‘(e) PUBLIC DISCLOSURE OF DIRECT AND INDIRECT

8 REMUNERATION REVIEW AND FINANCIAL AUDIT RE9 SULTS.— 

10 ‘‘(1) DIRECT AND INDIRECT REMUNERATION

11 REVIEW RESULTS.— 

12 ‘‘(A) IN GENERAL.—Except as provided in 

13 subparagraph (B), in 2021 and each subse14 quent year, the Secretary shall make available 

15 to the public on the Internet website of the 

16 Centers for Medicare & Medicaid Services infor17 mation on discrepancies related to summary 

18 and detailed direct and indirect remuneration 

19 reports submitted by PDP sponsors pursuant to 

20 section 1860D–15 across all prescription drug 

21 plans based on the most recent data available. 

22 Information made available under this subpara23 graph shall include the following: 

24 ‘‘(i) The number of potential discrep25 ancies in summary and detailed direct and 


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1 indirect remuneration identified by the 

2 Secretary for PDP sponsors to review. 

3 ‘‘(ii) The extent to which PDP spon4 sors resubmitted summary direct and indi5 rect remuneration reports to make changes 

6 for previous contract years. 

7 ‘‘(iii) The extent to which resubmitted 

8 summary direct and indirect remuneration 

9 reports resulted in an increase or decrease 

10 in direct and indirect remuneration in a 

11 previous contract year. 

12 ‘‘(B) EXCLUSION OF CERTAIN SUBMIS13 SIONS IN CALCULATION.—The Secretary shall 

14 exclude any information in direct and indirect 

15 remuneration reports submitted with respect to 

16 PACE programs under section 1894 (pursuant 

17 to section 1860D–21(f)) and qualified retiree 

18 prescription drug plans (as defined in section 

19 1860D–22(a)(2)) from the information that is 

20 made available to the public under subpara21 graph (A). 

22 ‘‘(2) FINANCIAL AUDIT RESULTS.—In 2021 and 

23 each subsequent year, the Secretary shall make 

24 available to the public on the Internet website of the 

25 Centers for Medicare & Medicaid Services data on 


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1 the results of financial audits required under section 

2 1860D–12(b)(3)(C). Information made available 

3 under this paragraph shall include the following: 

4 ‘‘(A) With respect to a year, the number of 

5 PDP sponsors that received each of the fol6 lowing (or successor categories), with an indica7 tion of the number that pertain to direct and 

8 indirect remuneration: 

9 ‘‘(i) A notice of observations or find10 ings. 

11 ‘‘(ii) An unqualified audit opinion that 

12 renders the audit closed. 

13 ‘‘(iii) A qualified audit opinion that 

14 requires the sponsor to submit a corrective 

15 action plan to the Secretary. 

16 ‘‘(iv) An adverse opinion, with a de17 scription of the types of actions that the 

18 Secretary takes when issuing an adverse 

19 opinion. 

20 ‘‘(v) A disclaimed opinion. 

21 ‘‘(B) With respect to a year, the number of 

22 PDP sponsors— 

23 ‘‘(i) that reopened a previously closed 

24 reconciliation as a result of an audit, indiVerDate Sep 11 2014 19:48 Jul 14, 2020 Jkt 099200 PO 00000 Frm 00105 Fmt 6652 Sfmt 6201 E:\BILLS\S4199.IS S4199

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1 cating those that pertain to direct and in2 direct remuneration changes; and 

3 ‘‘(ii) for which the Secretary recouped 

4 a payment or made a payment as a result 

5 of a reopening of a previously closed rec6 onciliation, indicating when such 

7 recoupment or payment pertains to direct 

8 and indirect remuneration. 

9 ‘‘(3) NO IDENTIFICATION OF SPECIFIC PDP

10 SPONSORS.—The information to be made available 

11 on the Internet website of the Centers for Medicare 

12 & Medicaid Services described in paragraph (1) and 

13 paragraph (2) shall not identity the specific PDP 

14 sponsor to which any determination or action per15 tains. 

16 ‘‘(4) DEFINITION OF DIRECT AND INDIRECT

17 REMUNERATION.—For purposes of this subsection, 

18 the term ‘direct and indirect remuneration’ means 

19 direct and indirect remuneration as described in sec20 tion 423.308 of title 42, Code of Federal Regula21 tions, or any successor regulation.’’. 

22 SEC. 125. INCREASING THE USE OF REAL-TIME BENEFIT 

23 TOOLS TO LOWER BENEFICIARY COSTS. 

24 (a) REQUIRING PRESCRIPTION DRUG PLAN SPON25 SORS AND MEDICARE ADVANTAGE ORGANIZATIONS TO


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1 INCLUDE REAL-TIME BENEFIT INFORMATION UNDER

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

4 (1) by redesignating subsection (m) (relating to 

5 program integrity transparency measures), as added 

6 by section 6063(c) of the Substance Use-Disorder 

7 Prevention that Promotes Opioid Recovery and 

8 Treatment for Patients and Communities Act (Pub9 lic Law 115–271), as subsection (n); and 

10 (2) by adding at the end the following new sub11 section: 

12 ‘‘(o) REAL-TIME BENEFIT INFORMATION.— 

13 ‘‘(1) IN GENERAL.—After the Secretary has 

14 adopted a standard under paragraph (3) for elec15 tronic real-time benefit tools, and at a time deter16 mined appropriate by the Secretary, a PDP sponsor 

17 of a prescription drug plan shall implement one or 

18 more of such tools that meet the requirements de19 scribed in paragraph (2). 

20 ‘‘(2) REQUIREMENTS.—For purposes of para21 graph (1), the requirements described in this para22 graph, with respect to an electronic real-time benefit 

23 tool, are that the tool is capable of— 

24 ‘‘(A) integrating with electronic prescribing 

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1 scribing health care professionals for the trans2 mission of eligibility and formulary and benefit 

3 information in real time to such professionals; 

4 and 

5 ‘‘(B) with respect to a covered part D 

6 drug, transmitting such information specific to 

7 an individual enrolled in a prescription drug 

8 plan, including the following: 

9 ‘‘(i) A list of any clinically-appropriate 

10 alternatives to such drug included in the 

11 formulary of such plan. 

12 ‘‘(ii) Cost-sharing information and the 

13 negotiated price for such drug and such al14 ternatives at— 

15 ‘‘(I) multiple pharmacy options, 

16 including the individual’s preferred 

17 pharmacy and, as applicable, other re18 tail pharmacies and a mail order 

19 pharmacy; and 

20 ‘‘(II) the formulary status of 

21 such drug and such alternatives and 

22 any prior authorization or other utili23 zation management requirements ap24 plicable to such drug and such alterVerDate Sep 11 2014 19:48 Jul 14, 2020 Jkt 099200 PO 00000 Frm 00108 Fmt 6652 Sfmt 6201 E:\BILLS\S4199.IS S4199

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1 natives included in the formulary of 

2 such plan. 

3 ‘‘(3) STANDARDS.—In order to be treated (for 

4 purposes of this subsection) as an electronic real5 time benefit tool described in paragraph (1), such 

6 tool shall comply with technical standards adopted 

7 by the Secretary in consultation with the National 

8 Coordinator for Health Information Technology, the 

9 National Council for Prescription Drug Programs, 

10 other standard setting organizations determined ap11 propriate by the Secretary, and stakeholders includ12 ing PDP sponsors, Medicare Advantage organiza13 tions, health care professionals, and health informa14 tion technology software vendors. 

15 ‘‘(4) RULE OF CONSTRUCTION.—Nothing in 

16 this subsection shall be construed to prohibit the ap17 plication of paragraph (b)(7) of section 423.160 of 

18 title 42, Code of Federal Regulations, as is to be 

19 added to such section pursuant to the final rule pub20 lished in the Federal Register on May 23, 2019, and 

21 titled ‘Modernizing Part D and Medicare Advantage 

22 To Lower Drug Prices and Reduce Out-of-Pocket 

23 Expenses’ (84 Fed. Reg. 23832 through 23884).’’. 

24 (b) REQUIRING QUALIFIED ELECTRONIC HEALTH

25 RECORDS TO INCLUDE REAL-TIME BENEFIT TOOLS.— 


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1 Section 3000(13) of the Public Health Service Act (42 

2 U.S.C. 300jj(13)) is amended— 

3 (1) in subparagraph (A), by striking ‘‘and’’ at 

4 the end; 

5 (2) in subparagraph (B), by striking the period 

6 and inserting ‘‘; and’’; and 

7 (3) by adding at the end the following: 

8 ‘‘(C) includes, or is capable of including, a 

9 real-time benefit tool that conveys patient-spe10 cific real-time cost and coverage information 

11 with respect to prescription drugs that, with re12 spect to any health information technology cer13 tified for electronic prescribing, the technology 

14 shall be capable of incorporating the informa15 tion described in clauses (i) and (ii) of para16 graph (2)(B) of section 1860D–4(o) of the So17 cial Security Act at a time specified by the Sec18 retary but not before the Secretary adopts a 

19 standard for such tools as described in para20 graph (1) of such section.’’. 

21 (c) INCLUSION OF USE OF REAL-TIME ELECTRONIC

22 INFORMATION IN SHARED DECISION-MAKING UNDER

23 MIPS.—Section 1848(q)(2)(B)(iii)(IV) of the Social Se24 curity Act (42 U.S.C. 1395w–4(q)(2)(B)(iii)(IV)) is 

25 amended by adding at the end the following new sentence: 


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1 ‘‘This subcategory shall include as an activity option, be2 ginning with the performance period starting on January 

3 1, 2021, use of a real-time benefit tool as described in 

4 1860D–4(o).’’. 

5 SEC. 126. IMPROVEMENTS TO PROVISION OF PARTS A AND 

6 B CLAIMS DATA TO PRESCRIPTION DRUG 

7 PLANS. 

8 (a) DATA USE.— 

9 (1) IN GENERAL.—Paragraph (6) of section 

10 1860D–4(c) of the Social Security Act (42 U.S.C. 

11 1395w–104(c)), as added by section 50354 of divi12 sion E of the Bipartisan Budget Act of 2018 (Public 

13 Law 115–123), relating to providing prescription 

14 drug plans with parts A and B claims data to pro15 mote the appropriate use of medications and im16 prove health outcomes, is amended— 

17 (A) in subparagraph (B)— 

18 (i) by redesignating clauses (i), (ii), 

19 and (iii) as subclauses (I), (II), and (III), 

20 respectively, and moving such subclauses 2 

21 ems to the right; 

22 (ii) by striking ‘‘PURPOSES.—A PDP 

23 sponsor’’ and inserting PURPOSES— 

24 ‘‘(i) IN GENERAL.—A PDP sponsor.’’; 

25 and 


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1 (iii) by adding at the end the fol2 lowing new clause: 

3 ‘‘(ii) CLARIFICATION.—The limitation 

4 on data use under subparagraph (C)(i) 

5 shall not apply to the extent that the PDP 

6 sponsor is using the data provided to carry 

7 out any of the purposes described in clause 

8 (i).’’; and 

9 (B) in subparagraph (C)(i), by striking 

10 ‘‘To inform’’ and inserting ‘‘Subject to subpara11 graph (B)(ii), to inform’’. 

12 (2) EFFECTIVE DATE.—The amendments made 

13 by this subsection shall apply to plan years begin14 ning on or after January 1, 2022. 

15 (b) MANNER OF PROVISION.—Subparagraph (D) of 

16 such paragraph (6) is amended— 

17 (1) by striking ‘‘DESCRIBED.—The data de18 scribed in this clause’’ and inserting ‘‘DESCRIBED.— 

19 ‘‘(i) IN GENERAL.—The data de20 scribed in this subparagraph’’; and 

21 (2) by adding at the end the following new 

22 clause: 

23 ‘‘(ii) MANNER OF PROVISION.— 

24 ‘‘(I) IN GENERAL.—Such data 

25 may be provided pursuant to this 


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1 paragraph in the same manner as 

2 data under the Part D Enhanced 

3 Medication Therapy Management 

4 model tested under section 1115A, 

5 through Application Programming 

6 Interface, or in another manner as de7 termined by the Secretary. 

8 ‘‘(II) IMPLEMENTATION.—Not9 withstanding any other provision of 

10 law, the Secretary may implement this 

11 clause by program instruction or oth12 erwise.’’. 

13 (c) TECHNICAL CORRECTION.—Such paragraph (6) 

14 is redesignated as paragraph (7). 

15 SEC. 127. PERMANENTLY AUTHORIZE A SUCCESSFUL PILOT 

16 ON RETROACTIVE MEDICARE PART D COV17 ERAGE FOR LOW-INCOME BENEFICIARIES. 

18 Section 1860D–14 of the Social Security Act (42 

19 U.S.C. 1395w–114) is amended— 

20 (1) by redesignating subsection (e) as sub21 section (f); and 

22 (2) by inserting after subsection (d) the fol23 lowing new subsection: 

24 ‘‘(e) LIMITED INCOME NEWLY ELIGIBLE TRANSI25 TION (LI NET) PROGRAM.— 


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1 ‘‘(1) IN GENERAL.—By not later than 2022, 

2 the Secretary shall establish a program to provide 

3 transitional coverage for covered part D drugs for 

4 LI NET eligible individuals in accordance with this 

5 subsection. 

6 ‘‘(2) LI NET ELIGIBLE INDIVIDUAL DEFINED.— 

7 For purposes of this subsection, the term ‘LI NET 

8 eligible individual’ means a part D eligible individual 

9 who— 

10 ‘‘(A) meets the requirements of clauses (ii) 

11 and (iii) of subsection (a)(3)(A); and 

12 ‘‘(B) has not yet enrolled in a prescription 

13 drug plan or an MA–PD plan, or, who has so 

14 enrolled, but with respect to whom coverage 

15 under such plan has not yet taken effect. 

16 ‘‘(3) TRANSITIONAL COVERAGE DEFINED.—For 

17 purposes of this subsection, the term ‘transitional 

18 coverage’ means the following with respect to a LI 

19 NET eligible individual: 

20 ‘‘(A) ALL LI NET ELIGIBLE INDIVID21 UALS.—Immediate access to covered part D 

22 drugs at the point of sale during the period 

23 that begins on the first day of the month such 

24 individual is determined to meet the require25 ments of clauses (ii) and (iii) of subsection 


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1 (a)(3)(A) and ends on the date that coverage 

2 under a prescription drug plan or an MA–PD 

3 plan takes effect with respect to such indi4 vidual. 

5 ‘‘(B) FULL-BENEFIT DUAL ELIGIBLES AND

6 SSI RECIPIENTS.—In the case of a LI NET eli7 gible individual who is a full-benefit dual eligi8 ble individual (as defined in section 1935(c)(6)) 

9 or recipient of supplemental security income 

10 benefits under title XVI, retroactive coverage 

11 (in the form of reimbursement of the amounts 

12 that would have been paid under this part had 

13 such individual been enrolled in a prescription 

14 drug plan or an MA–PD plan) of covered part 

15 D drugs purchased by such individual during 

16 the period that— 

17 ‘‘(i) begins on the date that is the 

18 later of the date that— 

19 ‘‘(I) such individual was first eli20 gible for a low income subsidy under 

21 this part; or 

22 ‘‘(II) is 36 months prior to the 

23 date such individual enrolls in a pre24 scription drug plan or an MA–PD 

25 plan; and 


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1 ‘‘(ii) ends on the date that coverage 

2 under such plan takes effect. 

3 ‘‘(4) PROGRAM ADMINISTRATION.— 

4 ‘‘(A) SINGLE POINT OF CONTACT.—The 

5 Secretary shall, to the extent feasible, admin6 ister the program under this subsection through 

7 a contract with a single program administrator 

8 who will provide for a single point of contact for 

9 LI NET eligible individuals. 

10 ‘‘(B) BENEFIT DESIGN.—The Secretary 

11 shall ensure that the transitional coverage pro12 vided to LI NET eligible individuals under this 

13 subsection— 

14 ‘‘(i) provides access to all covered part 

15 D drugs under an open formulary; 

16 ‘‘(ii) permits all pharmacies deter17 mined by the Secretary to be in good 

18 standing to process claims under the pro19 gram; 

20 ‘‘(iii) is consistent with such require21 ments as the Secretary considers necessary 

22 to improve patient safety and ensure ap23 propriate dispensing of medication; and 

24 ‘‘(iv) meets such other requirements 

25 as the Secretary may establish. 


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1 ‘‘(5) RELATIONSHIP TO OTHER PROVISIONS OF

2 THIS TITLE; WAIVER AUTHORITY.— 

3 ‘‘(A) IN GENERAL.—The following provi4 sions shall not apply to the program under this 

5 subsection: 

6 ‘‘(i) Paragraphs (1) and (3)(B) of sec7 tion 1860D–4(a) (dissemination of general 

8 information; availability of information on 

9 changes in formulary through the inter10 net). 

11 ‘‘(ii) Subparagraphs (A) and (B) of 

12 section 1860D–4(b)(3) (development and 

13 revision by a pharmacy and therapeutic 

14 committee; formulary development). 

15 ‘‘(iii) Paragraphs (1)(C) and (2) of 

16 section 1860D–4(c) (medication therapy 

17 management program). 

18 ‘‘(B) WAIVER AUTHORITY.—The Secretary 

19 may waive such other requirements of title XI 

20 and this title as may be necessary to carry out 

21 the purposes of the program established under 

22 this subsection.’’. 


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1 SEC. 128. MEDICARE PART D REBATE BY MANUFACTURERS 

2 FOR CERTAIN DRUGS WITH PRICES INCREAS3 ING FASTER THAN INFLATION. 

4 (a) IN GENERAL.—Subpart 2 of part D of title XVIII 

5 of the Social Security Act is amended by inserting after 

6 section 1860D–14B, as added by section 121, the fol7 lowing new section: 

8 ‘‘SEC. 1860D–14C. MANUFACTURER REBATE FOR CERTAIN 

9 DRUGS WITH PRICES INCREASING FASTER 

10 THAN INFLATION. 

11 ‘‘(a) REQUIREMENTS.— 

12 ‘‘(1) SECRETARIAL PROVISION OF INFORMA13 TION.— 

14 ‘‘(A) IN GENERAL.—Subject to subpara15 graph (B), not later than 6 months after the 

16 end of each rebate period (as defined in para17 graph (4)(A)) beginning on or after January 1, 

18 2023, the Secretary shall, for each rebatable 

19 covered part D drug (as defined in paragraph 

20 (4)(B)), report to each manufacturer (as de21 fined in paragraph (4)(C)) of such rebatable 

22 covered part D drug the following for the rebate 

23 period: 

24 ‘‘(i) Information on the total number 

25 of units (as defined in paragraph (4)(D)) 

26 of each dosage form and strength deVerDate Sep 11 2014 19:48 Jul 14, 2020 Jkt 099200 PO 00000 Frm 00118 Fmt 6652 Sfmt 6201 E:\BILLS\S4199.IS S4199

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1 scribed in paragraph (1)(A) of subsection 

2 (b) for such rebatable covered part D drug 

3 and rebate period. 

4 ‘‘(ii) Information on the amount (if 

5 any) of the excess price described in para6 graph (1)(B) of such subsection for such 

7 rebatable covered part D drug and rebate 

8 period. 

9 ‘‘(iii) The rebate amount specified 

10 under such subsection for such rebatable 

11 covered part D drug and rebate period. 

12 ‘‘(iv) Other information determined 

13 appropriate by the Secretary. 

14 ‘‘(B) TRANSITION RULE FOR INFORMATION

15 IN 2023.—Notwithstanding subparagraph (A), 

16 the Secretary may, for each rebatable covered 

17 part D drug, delay the timeframe for reporting 

18 the information and rebate amount described in 

19 clauses (i), (ii), (iii), and (iv) of such subpara20 graph for rebate periods in 2023 until not later 

21 than December 31, 2024. 

22 ‘‘(2) MANUFACTURER REBATE.— 

23 ‘‘(A) IN GENERAL.—Subject to subpara24 graph (B), for each rebate period beginning on 

25 or after January 1, 2023, each manufacturer of 


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1 a rebatable covered part D drug shall, not later 

2 than 30 days after the date of receipt from the 

3 Secretary of the information and rebate amount 

4 pursuant to paragraph (1), provide to the Sec5 retary a rebate that is equal to the amount 

6 specified in subsection (b) for such drug for 

7 such rebate period. 

8 ‘‘(B) EXEMPTION FOR SHORTAGES.—The 

9 Secretary may reduce or waive the rebate under 

10 this paragraph with respect to a rebatable cov11 ered part D drug that is listed on the drug 

12 shortage list maintained by the Food and Drug 

13 Administration pursuant to section 506E of the 

14 Federal Food, Drug, and Cosmetic Act. 

15 ‘‘(3) REQUEST FOR RECONSIDERATION.—The 

16 Secretary shall establish procedures under which a 

17 manufacturer of a rebatable covered part D drug 

18 may request a reconsideration by the Secretary of 

19 the rebate amount specified under subsection (b) for 

20 such drug and rebate period, as reported to the 

21 manufacturer pursuant to paragraph (1). Timing for 

22 a reconsideration shall be coordinated with the tim23 ing of reconciliation, as described in subsection 

24 (b)(6) and as determined appropriate by the Sec25 retary. 


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1 ‘‘(4) DEFINITIONS.—In this section: 

2 ‘‘(A) REBATE PERIOD.— 

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

4 (ii), the term ‘rebate period’ means, with 

5 respect to a year, each of the six month 

6 periods that begin on January 1 and July 

7 1 of the year. 

8 ‘‘(ii) INITIAL REBATE PERIOD FOR

9 SUBSEQUENTLY APPROVED DRUGS.—In 

10 the case of a rebatable covered part D 

11 drug described in subsection (c), the initial 

12 rebate period for which a rebate amount is 

13 determined for such rebatable covered part 

14 D drug pursuant to such subsection shall 

15 be the period beginning with the first 

16 month after the last day of the six month 

17 period that begins on the day on which the 

18 drug was first marketed and ending on the 

19 last day of the first full rebate period 

20 under clause (i) that follows the last day of 

21 such six month period. 

22 ‘‘(B) REBATABLE COVERED PART D

23 DRUG.—The term ‘rebatable covered part D 

24 drug’ means a covered part D drug approved 

25 under a new drug application under section 


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1 505(c) of the Federal Food, Drug, and Cos2 metic Act or, in the case of a biologic product, 

3 licensed under section 351(a) of the Public 

4 Health Service Act. 

5 ‘‘(C) MANUFACTURER.—The term ‘manu6 facturer’ has the meaning given such term in 

7 section 1860D—14A(g). 

8 ‘‘(D) UNITS.—The term ‘units’ means, 

9 with respect to a rebatable covered part D 

10 drug, the lowest common quantity (such as the 

11 number of capsules or tablets, milligrams of 

12 molecules, or grams) of such drug dispensed to 

13 individuals under this part. 

14 ‘‘(E) PRICE.—The term ‘price’ means, 

15 with respect to a rebatable covered part D 

16 drug, the wholesale acquisition cost (as defined 

17 in section 1847A(c)(6)(B)) for such drug. 

18 ‘‘(b) REBATE AMOUNT.— 

19 ‘‘(1) IN GENERAL.—Subject to subsection 

20 (e)(2), the amount of the rebate specified in this 

21 subsection for a rebate period, with respect to each 

22 dosage form and strength of a rebatable covered 

23 part D drug, is the amount equal to the product 

24 of— 


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1 ‘‘(A) the total number of units of such dos2 age form and strength for each rebatable cov3 ered part D drug during the rebate period; and 

4 ‘‘(B) the amount (if any) by which— 

5 ‘‘(i) the unit-weighted average price 

6 for such dosage form and strength of the 

7 drug determined under paragraph (2) for 

8 the rebate period; exceeds 

9 ‘‘(ii) the inflation-adjusted price for 

10 such dosage form and strength determined 

11 under paragraph (3) for the rebate period. 

12 ‘‘(2) DETERMINATION OF UNIT-WEIGHTED AV13 ERAGE PRICE.— 

14 ‘‘(A) IN GENERAL.—The unit-weighted av15 erage price determined under this paragraph 

16 for a rebate period, with respect to each dosage 

17 form and strength of a rebatable covered Part 

18 D drug, is the sum of the products of— 

19 ‘‘(i) the weighted average price deter20 mined under subparagraph (B) with re21 spect to each package size of such dosage 

22 form and strength dispensed during the re23 bate period; and 

24 ‘‘(ii) the ratio of— 


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1 ‘‘(I) the total number of units of 

2 such package size dispensed during 

3 the rebate period; to 

4 ‘‘(II) the total number of units of 

5 such dosage form and strength of 

6 such drug dispensed during such re7 bate period. 

8 ‘‘(B) COMPUTATION OF WEIGHTED AVER9 AGE PRICE.—The weighted average price, with 

10 respect to each package size of such dosage 

11 form and strength of a rebatable covered part 

12 D drug dispensed during a rebate period, is the 

13 sum of the products of— 

14 ‘‘(i) each price, as calculated for a 

15 unit of such drug, applicable to each pack16 age size of such dosage form and strength 

17 of such drug during the rebate period; and 

18 ‘‘(ii) the ratio of— 

19 ‘‘(I) the number of days for 

20 which each such price is applicable 

21 during the rebate period; to 

22 ‘‘(II) the total number of days in 

23 such rebate period. 

24 ‘‘(3) DETERMINATION OF INFLATION-ADJUSTED

25 PRICE.— 


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1 ‘‘(A) IN GENERAL.—The inflation-adjusted 

2 price determined under this paragraph for a re3 bate period, with respect to each dosage form 

4 and strength of a rebatable covered part D 

5 drug, is— 

6 ‘‘(i) the benchmark unit-weighted 

7 price determined under subparagraph (B) 

8 for the rebate period; increased by 

9 ‘‘(ii) the percentage by which the re10 bate period CPI–U (as defined in para11 graph (4)) for the rebate period exceeds 

12 the benchmark CPI–U (as defined in para13 graph (5)). 

14 ‘‘(B) DETERMINATION OF BENCHMARK

15 UNIT-WEIGHTED PRICE.—The benchmark unit16 weighted price determined under this subpara17 graph for a rebate period, with respect to each 

18 dosage form and strength of a rebatable cov19 ered part D drug, is the sum of the products 

20 of— 

21 ‘‘(i) each price, as calculated for a 

22 unit of such drug, applicable to each pack23 age size of such dosage form and strength 

24 of such drug on July 1, 2019; and 

25 ‘‘(ii) the ratio of— 


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1 ‘‘(I) the total number of units of 

2 such package size dispensed on July 

3 1, 2019; to 

4 ‘‘(II) the total number of units of 

5 such dosage form and strength dis6 pensed on July 1, 2019. 

7 ‘‘(4) BENCHMARK CPI–U.—The term ‘bench8 mark CPI–U’ means the consumer price index for 

9 all urban consumers (United States city average) for 

10 July 2019. 

11 ‘‘(5) REBATE PERIOD CPI–U.—The term ‘rebate 

12 period CPI–U’ means, with respect to a rebate pe13 riod, the consumer price index for all urban con14 sumers (United States city average) for the last 

15 month of the rebate period. 

16 ‘‘(6) ANNUAL RECONCILIATION OF REBATE

17 AMOUNT.—The Secretary shall, on an annual basis, 

18 conduct a one-time reconciliation of the rebate 

19 amounts owed by a manufacturer under this section 

20 based on any changes submitted by a PDP sponsor 

21 of a prescription drug plan or an MA organization 

22 offering an MA–PD plan to the number of units of 

23 a rebatable covered part D drug dispensed during 

24 the preceding year. Such reconciliation shall be com25 pleted not later than 6 months after the date by 


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1 which the Secretary reconciles payment for covered 

2 part D drugs with PDP sponsors of prescription 

3 drug plans or MA organizations offering MA–PD 

4 plans. 

5 ‘‘(c) TREATMENT OF SUBSEQUENTLY APPROVED

6 DRUGS.—Subject to subsection (e)(2), in the case of a 

7 rebatable covered part D drug first approved or licensed 

8 by the Food and Drug Administration after July 1, 

9 2019— 

10 ‘‘(1) subparagraph (A)(ii) of subsection (b)(3) 

11 shall be applied as if the term ‘benchmark CPI–U’ 

12 were defined under subsection (b)(4) as if the ref13 erence to ‘July 2019’ under such subsection were a 

14 reference to ‘the first month after the last day of the 

15 six month period that begins on the day on which 

16 the drug was first marketed’; and 

17 ‘‘(2) subsection (b)(3) shall be applied by sub18 stituting, for the benchmark unit-weighted price oth19 erwise determined under subparagraph (B) of such 

20 subsection, the benchmark unit-weighted average 

21 price determined under paragraph (3) for the rebate 

22 period; 

23 ‘‘(3) the benchmark unit-weighted average price 

24 determined under this paragraph for a rebate period, 

25 with respect to each dosage form and strength of a 


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1 rebatable covered part D drug, is the sum of the 

2 products of— 

3 ‘‘(A) the subsequently rebatable drug 

4 weighted average price determined under para5 graph (4) with respect to each package size of 

6 such dosage form and strength of such drug 

7 dispensed during the six month period that be8 gins on the day on which the drug was first 

9 marketed; and 

10 ‘‘(B) the ratio of— 

11 ‘‘(i) the total number of units of such 

12 package size dispensed during the six 

13 month period that begins on the day on 

14 which the drug was first marketed; to 

15 ‘‘(ii) the total number of units of such 

16 dosage form and strength of such drug dis17 pensed during such six month period; and 

18 ‘‘(4) the subsequently rebatable drug weighted 

19 average price, with respect to each package size of 

20 such dosage form and strength of such rebatable 

21 covered part D drug dispensed during the six month 

22 period that begins on the day on which the drug was 

23 first marketed, is the sum of the products of— 

24 ‘‘(A) each price, as calculated for a unit of 

25 such drug, applicable to each package size of 


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1 such dosage form and strength of such drug 

2 during the six month period that begins on the 

3 day on which the drug was first marketed; and 

4 ‘‘(B) the ratio of— 

5 ‘‘(i) the number of days for which 

6 each such price is applicable during such 

7 six month period; to 

8 ‘‘(ii) the total number of days in such 

9 six month period. 

10 ‘‘(d) REBATE DEPOSITS.—Amounts paid as rebates 

11 under subsection (b) shall be deposited into the Federal 

12 Supplementary Medical Insurance Trust Fund established 

13 under section 1841. 

14 ‘‘(e) ADMINISTRATION.— 

15 ‘‘(1) PERIODIC AUDITS.—The Secretary shall 

16 permit a manufacturer of a rebatable covered part 

17 D drug to conduct periodic audits, directly or 

18 through contracts, of the data and information used 

19 to determine the rebate amount for such drug under 

20 this section. 

21 ‘‘(2) SPECIAL RULES FOR CALCULATION OF

22 BENCHMARK UNIT-WEIGHTED PRICE AND BENCH23 MARK-UNIT-WEIGHTED AVERAGE PRICE.— 

24 ‘‘(A) BENCHMARK UNIT-WEIGHTED

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1 weighted price of a dosage form and strength of 

2 a rebatable covered part D drug is determined 

3 under subsection (b)(3)(B) to be $0 due to no 

4 units of such dosage form and strength of such 

5 drug being dispensed on July 1, 2019, the Sec6 retary may use a calculation, as determined ap7 propriate by the Secretary, to determine the 

8 benchmark-unit weighted price for such dosage 

9 form and strength of such drug that is different 

10 than the calculation described in such sub11 section. 

12 ‘‘(B) BENCHMARK UNIT-WEIGHTED AVER13 AGE PRICE.—In the case that the benchmark 

14 unit-weighted average price of a dosage form 

15 and strength of a rebatable covered part D 

16 drug described under subsection (c) is deter17 mined under paragraph (3) of such subsection 

18 to be $0 due to no units of such dosage form 

19 and strength of such drug being dispensed dur20 ing the six month period that begins on the day 

21 on which the drug was first marketed, the Sec22 retary may use a calculation, as determined ap23 propriate by the Secretary, to determine the 

24 benchmark-unit weighted average price for such 

25 dosage form and strength of such drug that is 


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1 different than the calculation described in such 

2 paragraph. 

3 ‘‘(3) ADMINISTRATION.—Chapter 35 of title 44, 

4 United States Code, shall not apply to the program 

5 under this section. 

6 ‘‘(4) JUDICIAL REVIEW.—There shall be no ad7 ministrative or judicial review under section 1869, 

8 section 1878, or otherwise of the determination of 

9 the rebate amount under subsection (b), including 

10 with respect to a subsequently approved drug pursu11 ant to subsection (c), including— 

12 ‘‘(A) the determination of— 

13 ‘‘(i) the total number of units of each 

14 rebatable covered part D drug under sub15 section (b)(1)(A); 

16 ‘‘(ii) the unit-weighted average price 

17 under subsection (b)(2); 

18 ‘‘(iii) the inflation-adjusted price 

19 under subsection (b)(3); 

20 ‘‘(iv) the benchmark unit-weighted av21 erage price under subsection (c)(3); and 

22 ‘‘(v) the subsequently rebatable drug 

23 weighted average price under subsection 

24 (c)(4); and 


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1 ‘‘(B) the application of special rules for 

2 calculation of benchmark unit-weighted price 

3 and benchmark unit-weighted average price 

4 under paragraph (2) of this subsection. 

5 ‘‘(f) CIVIL MONEY PENALTY.— 

6 ‘‘(1) IN GENERAL.—The Secretary shall impose 

7 a civil money penalty on a manufacturer that fails 

8 to comply with the requirements under subsection 

9 (a)(2) with respect to providing a rebate for a 

10 rebatable covered part D drug for a rebate period 

11 for each such failure in an amount equal to the sum 

12 of— 

13 ‘‘(A) the rebate amount determined pursu14 ant to subsection (b) for such drug for such re15 bate period; and 

16 ‘‘(B) 25 percent of such amount. 

17 ‘‘(2) APPLICATION.—The provisions of section 

18 1128A (other than subsections (a) and (b)) shall 

19 apply to a civil money penalty under this subsection 

20 in the same manner as such provisions apply to a 

21 penalty or proceeding under section 1128A(a). 

22 ‘‘(g) RULE OF CONSTRUCTION.—Nothing in this sec23 tion shall be construed as having any effect on— 

24 ‘‘(1) any formulary design under section 

25 1860D–4(b)(3); or 


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1 ‘‘(2) any discounts provided under the coverage 

2 gap discount program under section 1860D–14A or 

3 the manufacturer catastrophic discount program 

4 under section 1860D–14B. 

5 ‘‘(h) REBATE AGREEMENT.— 

6 ‘‘(1) IN GENERAL.—The Secretary shall enter 

7 into agreements described in paragraph (2) with 

8 manufacturers. 

9 ‘‘(2) TERMS OF AGREEMENT.— 

10 ‘‘(A) IN GENERAL.—A rebate agreement 

11 under this paragraph shall require the manu12 facturer to provide to the Secretary rebates re13 quired under subsection (a)(2)(A) with respect 

14 to a rebate period. 

15 ‘‘(B) MANUFACTURER PROVISION OF

16 PRICE AND DRUG PRODUCT INFORMATION.— 

17 Each manufacturer with an agreement in effect 

18 under this subsection shall report to the Sec19 retary, with respect to each rebatable covered 

20 part D drug of the manufacturer, at a time 

21 specified by the Secretary— 

22 ‘‘(i) for each calendar month under 

23 the rebate agreement— 

24 ‘‘(I) each wholesale acquisition 

25 cost (as defined in section 


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•S 4199 IS

1 1847A(c)(6)) applicable during the 

2 month, applicable to each National 

3 Drug Code for the dosage form and 

4 strength of such rebatable covered 

5 part D drug; and 

6 ‘‘(II) the number of days with re7 spect to which each wholesale acquisi8 tion cost reported was applicable; 

9 ‘‘(ii) the wholesale acquisition cost (as 

10 so defined) applicable on July 1, 2019, ap11 plicable to each National Drug Code for 

12 the dosage form and strength of such 

13 rebatable covered part D drug (or, in the 

14 case of a rebatable covered part D drug 

15 first approved or licensed by the Food and 

16 Drug Administration after July 1, 2019, 

17 each wholesale acquisition cost applicable 

18 to each National Drug Code of each dos19 age form and strength of the rebatable 

20 covered part D drug of the manufacturer 

21 during the six month period that begins on 

22 the day on which the drug was first mar23 keted); and 

24 ‘‘(iii) such other information as the 

25 Secretary shall require. 


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1 Information reported under this subparagraph 

2 is subject to audit by the Inspector General of 

3 the Department of Health and Human Services. 

4 ‘‘(3) CIVIL MONEY PENALTIES.—The provisions 

5 of subparagraph (C) of section 1927(b)(3) shall 

6 apply with respect to information required pursuant 

7 to paragraph (2)(B) of this subsection and the fail8 ure to provide such information in the same manner 

9 and to the same extent as such provisions apply with 

10 respect to information required under subparagraph 

11 (A) of such section 1927(b)(3) and the failure to 

12 provide such information. 

13 ‘‘(4) COORDINATION.—The Secretary may co14 ordinate rebate agreements required under this sub15 section with agreements required under section 

16 1860D–14B. 

17 ‘‘(i) FUNDING.— 

18 ‘‘(1) IN GENERAL.—There are appropriated to 

19 the Secretary, from the Federal Supplementary 

20 Medical Insurance Trust Fund established under 

21 section 1841— 

22 ‘‘(A) for each of calendar years 2020 

23 through 2025, $4,000,000; and 


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1 ‘‘(B) for each subsequent calendar year, 

2 such sums as are necessary to carry out this 

3 section. 

4 ‘‘(2) AVAILABILITY.—Amounts appropriated 

5 under paragraph (1) shall remain available until ex6 pended.’’. 

7 (b) CONFORMING AMENDMENTS.— 

8 (1) Section 1860D–43 of the Social Security 

9 Act (42 U.S.C. 1395w–153), as amended by section 

10 121(g), is amended— 

11 (A) in subsection (a)— 

12 (i) in paragraph (5), by striking 

13 ‘‘and’’ at the end; 

14 (ii) in paragraph (6), by striking the 

15 period at the end and inserting ‘‘; and’’; 

16 and 

17 (iii) by adding at the end the fol18 lowing new paragraph: 

19 ‘‘(7) have entered into and have in effect an 

20 agreement described in section 1860D–14C(h)(2) 

21 with the Secretary.’’; 

22 (B) in subsection (b), by striking ‘‘(6)’’ 

23 and inserting ‘‘(7)’’; and 

24 (C) in subsection (c), by striking ‘‘(6)’’ and 

25 inserting ‘‘(7)’’. 


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1 (2) Section 1927(c)(1)(C)(VI) of the Social Se2 curity Act (42 U.S.C. 1396r–8(c)(1)(C)(VI)) is 

3 amended— 

4 (A) by striking ‘‘or any discounts’’ and in5 serting ‘‘any discounts’’; and 

6 (B) by inserting ‘‘, or any rebates under 

7 section 1860D–14C’’ before the period. 

8 SEC. 129. PROHIBITING BRANDING ON PART D BENEFIT 

9 CARDS. 

10 (a) IN GENERAL.—Section 1851(j)(2)(B) of the So11 cial Security Act (42 U.S.C. 1395w–21(j)(2)(B)) is 

12 amended by striking ‘‘co-branded network provider’’ and 

13 inserting ‘‘co-branded, co-owned, or affiliated network pro14 vider, pharmacy, or pharmacy benefit manager’’. 

15 (b) EFFECTIVE DATE.—The amendment made by 

16 subsection (a) shall apply to plan years beginning on or 

17 after January 1, 2022. 

18 SEC. 130. REQUIRING PRESCRIPTION DRUG PLANS AND 

19 MA–PD PLANS TO REPORT POTENTIAL 

20 FRAUD, WASTE, AND ABUSE TO THE SEC21 RETARY OF HHS. 

22 Section 1860D–4 of the Social Security Act (42 

23 U.S.C. 1395w–104), as amended by section 125, is 

24 amended by adding at the end the following new sub25 section: 


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1 ‘‘(p) REPORTING POTENTIAL FRAUD, WASTE, AND

2 ABUSE.—Beginning January 1, 2021, the PDP sponsor 

3 of a prescription drug plan shall report to the Secretary, 

4 as specified by the Secretary— 

5 ‘‘(1) any substantiated or suspicious activities 

6 (as defined by the Secretary) with respect to the 

7 program under this part as it relates to fraud, 

8 waste, and abuse; and 

9 ‘‘(2) any steps made by the PDP sponsor after 

10 identifying such activities to take corrective ac11 tions.’’. 

12 SEC. 131. ESTABLISHMENT OF PHARMACY QUALITY MEAS13 URES UNDER MEDICARE PART D. 

14 Section 1860D–4(c) of the Social Security Act (42 

15 U.S.C. 1395w–104(c)), as amended by section 126, is 

16 amended by adding at the end the following new para17 graph: 

18 ‘‘(8) APPLICATION OF PHARMACY QUALITY

19 MEASURES.— 

20 ‘‘(A) IN GENERAL.—A PDP sponsor that 

21 makes incentive payments to a pharmacy or re22 ceives price concessions paid by a pharmacy 

23 based on quality measures shall, for the pur24 poses of such incentive payments or price con25 cessions with respect to covered part D drugs 


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1 dispensed by such pharmacy, only use meas2 ures— 

3 ‘‘(i) established or adopted by the Sec4 retary under subparagraph (B), as listed 

5 under clause (ii) of such subparagraph; 

6 and 

7 ‘‘(ii) that are relevant to the perform8 ance of such pharmacy with respect to 

9 areas that the pharmacy can impact. 

10 ‘‘(B) STANDARD PHARMACY QUALITY

11 MEASURES.— 

12 ‘‘(i) IN GENERAL.—Notwithstanding 

13 any other provision of law, the Secretary 

14 shall establish or adopt quality measures 

15 from one or more multi-stakeholder, con16 sensus organizations to be used by a PDP 

17 sponsor for the purposes of determining in18 centive payments and price concessions de19 scribed in subparagraph (A). Such meas20 ures shall be evidence-based and focus on 

21 pharmacy performance on patient health 

22 outcomes and other areas, as determined 

23 by the Secretary, that the pharmacy can 

24 impact. 


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1 ‘‘(ii) MAINTENANCE OF LIST.—The 

2 Secretary shall maintain a single list of 

3 measures established or adopted under this 

4 subparagraph. 

5 ‘‘(C) EFFECTIVE DATE.—The requirement 

6 under subparagraph (A) shall take effect for 

7 plan years beginning on January 1, 2022, or 

8 such earlier date specified by the Secretary if 

9 the Secretary determines there are sufficient 

10 measures established or adopted under subpara11 graph (B) for the purposes of the requirement 

12 under subparagraph (A).’’. 

13 SEC. 132. ADDITION OF NEW MEASURES BASED ON ACCESS 

14 TO BIOSIMILAR BIOLOGICAL PRODUCTS TO 

15 THE 5-STAR RATING SYSTEM UNDER MEDI16 CARE ADVANTAGE. 

17 (a) IN GENERAL.—Section 1853(o)(4) of the Social 

18 Security Act (42 U.S.C. 1395w–23(o)(4)) is amended by 

19 adding at the end the following new subparagraph: 

20 ‘‘(E) ADDITION OF NEW MEASURES BASED

21 ON ACCESS TO BIOSIMILAR BIOLOGICAL PROD22 UCTS.— 

23 ‘‘(i) IN GENERAL.—For 2026 and 

24 subsequent years, the Secretary shall add a 

25 new set of measures to the 5-star rating 


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1 system based on access to biosimilar bio2 logical products covered under part B and, 

3 in the case of MA–PD plans, such prod4 ucts that are covered part D drugs. Such 

5 measures shall assess the impact a plan’s 

6 benefit structure may have on enrollees’ 

7 utilization of or ability to access biosimilar 

8 biological products, including in compari9 son to the reference biological product, and 

10 shall include measures, as applicable, with 

11 respect to the following: 

12 ‘‘(I) COVERAGE.—Assessing 

13 whether a biosimilar biological prod14 uct is on the plan formulary in lieu of 

15 or in addition to the reference biologi16 cal product. 

17 ‘‘(II) PREFERENCING.—Assess18 ing tier placement or cost-sharing for 

19 a biosimilar biological product relative 

20 to the reference biological product. 

21 ‘‘(III) UTILIZATION MANAGE22 MENT TOOLS.—Assessing whether and 

23 how utilization management tools are 

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1 logical product relative to the ref2 erence biological product. 

3 ‘‘(IV) UTILIZATION.—Assessing 

4 the percentage of enrollees prescribed 

5 the biosimilar biological product and 

6 the percentage of enrollees prescribed 

7 the reference biological product when 

8 the reference biological product is also 

9 on the plan formulary. 

10 ‘‘(ii) DEFINITIONS.—In this subpara11 graph, the terms ‘biosimilar biological 

12 product’ and ‘reference biological product’ 

13 have the meaning given those terms in sec14 tion 1847A(c)(6). 

15 ‘‘(iii) PROTECTING PATIENT INTER16 ESTS.—In developing such measures, the 

17 Secretary shall ensure that each measure 

18 developed to address coverage, 

19 preferencing, or utilization management is 

20 constructed such that patients retain ac21 cess to appropriate therapeutic options 

22 without undue administrative burden.’’. 

23 (b) CLARIFICATION REGARDING APPLICATION TO

24 PRESCRIPTION DRUG PLANS.—To the extent the Sec25 retary of Health and Human Services applies the 5-star 


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1 rating system under section 1853(o)(4) of the Social Secu2 rity Act (42 U.S.C. 1395w–23(o)(4)), or a similar system, 

3 to prescription drug plans under part D of title XVIII of 

4 such Act, the provisions of subparagraph (E) of such sec5 tion, as added by subsection (a) of this section, shall apply 

6 under the system with respect to such plans in the same 

7 manner as such provisions apply to the 5-star rating sys8 tem under such section 1853(o)(4). 

9 SEC. 133. FAIRNESS IN THE CALCULATION OF THE PART D 

10 PREMIUM. 

11 (a) IN GENERAL.—Section 1860D–13(a) of the So12 cial Security Act (42 U.S.C. 1395w–113(a)) is amended— 

13 (1) in paragraph (3)(A), by striking ‘‘25.5 per14 cent’’ and inserting ‘‘the applicable percent (as spec15 ified in paragraph (8))’’; and 

16 (2) by adding at the end the following new 

17 paragraph: 

18 ‘‘(8) APPLICABLE PERCENT.—For purposes of 

19 paragraph (3)(A), the applicable percent specified in 

20 this paragraph is— 

21 ‘‘(A) for years prior to 2022, 25.5 percent; 

22 and 

23 ‘‘(B) for 2022 and subsequent years, 24.5 

24 percent.’’. 

25 (b) CONFORMING AMENDMENTS.— 


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1 (1) SUBSIDY.—Section 1860D–15(a) of the So2 cial Security Act (42 U.S.C. 1395w–115(a)) is 

3 amended, in the matter preceding paragraph (1), by 

4 inserting ‘‘(or, for 2020 and subsequent years, 75.5 

5 percent)’’ after ‘‘74.5 percent’’. 

6 (2) FALLBACK AREA MONTHLY BENEFICIARY

7 PREMIUM.—Section 1860D–11(g)(6) of the Social 

8 Security Act (42 U.S.C. 1395w–111(g)(6)) is 

9 amended by striking ‘‘25.5 percent’’ and inserting 

10 ‘‘the applicable percent (as specified in section 

11 1860D–13(a)(8))’’. 

12 (3) INCOME-RELATED MONTHLY ADJUSTMENT

13 AMOUNT (IRMAA).—Section 1860D– 

14 13(a)(7)(B)(i)(II) of the Social Security Act (42 

15 U.S.C. 1395w–113(a)(7)(B)(i)(II)) is amended by 

16 striking ‘‘25.5 percent’’ and inserting ‘‘the applica17 ble percent (as specified in paragraph (8))’’. 

18 SEC. 134. HHS STUDY AND REPORT ON THE INFLUENCE OF 

19 PHARMACEUTICAL MANUFACTURER THIRD20 PARTY REIMBURSEMENT HUBS ON HEALTH 

21 CARE PROVIDERS WHO PRESCRIBE THEIR 

22 DRUGS AND BIOLOGICALS. 

23 (a) STUDY.— 

24 (1) IN GENERAL.—The Secretary of Health and 

25 Human Services (in this section referred to as the 


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1 ‘‘Secretary’’) shall conduct a study on the influence 

2 of pharmaceutical manufacturer distribution models 

3 that provide third-party reimbursement hub services 

4 on health care providers who prescribe the manufac5 turer’s drugs and biologicals, including for Medicare 

6 part D beneficiaries. 

7 (2) REQUIREMENTS.—The study under para8 graph (1) shall include an analysis of the following: 

9 (A) The influence of pharmaceutical manu10 facturer distribution models that provide third11 party reimbursement hub services to health care 

12 providers who prescribe the manufacturer’s 

13 drugs and biologicals, including— 

14 (i) the operations of pharmaceutical 

15 manufacturer distribution models that pro16 vide reimbursement hub services for health 

17 care providers who prescribe the manufac18 turer’s products; 

19 (ii) Federal laws affecting these phar20 maceutical manufacturer distribution mod21 els; and 

22 (iii) whether hub services could im23 properly incentivize health care providers 

24 to deem a drug or biological as medically 


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1 necessary under section 423.578 of title 

2 42, Code of Federal Regulations. 

3 (B) Other areas determined appropriate by 

4 the Secretary. 

5 (b) REPORT.—Not later than July 1, 2022, the Sec6 retary shall submit to Congress a report on the study con7 ducted under subsection (a), together with recommenda8 tions for such legislation and administrative action as the 

9 Secretary determines appropriate. 

10 (c) CONSULTATION.—In conducting the study under 

11 subsection (a) and preparing the report under subsection 

12 (b), the Secretary shall consult with the Attorney General. 

13 Subtitle C—Miscellaneous 

14 SEC. 141. DRUG MANUFACTURER PRICE TRANSPARENCY. 

15 Title XI of the Social Security Act (42 U.S.C. 1301 

16 et seq.) is amended by inserting after section 1128K the 

17 following new section: 

18 ‘‘SEC. 1128L. DRUG MANUFACTURER PRICE TRANS19 PARENCY. 

20 ‘‘(a) IN GENERAL.— 

21 ‘‘(1) DETERMINATIONS.—Beginning July 1, 

22 2022, the Secretary shall make determinations as to 

23 whether a drug is an applicable drug as described in 

24 subsection (b). 


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1 ‘‘(2) REQUIRED JUSTIFICATION.—If the Sec2 retary determines under paragraph (1) that an ap3 plicable drug is described in subsection (b), the man4 ufacturer of the applicable drug shall submit to the 

5 Secretary the justification described in subsection (c) 

6 in accordance with the timing described in sub7 section (d). 

8 ‘‘(b) APPLICABLE DRUG DESCRIBED.— 

9 ‘‘(1) IN GENERAL.—An applicable drug is de10 scribed in this subsection if it meets any of the fol11 lowing at the time of the determination: 

12 ‘‘(A) LARGE INCREASE.—The drug (per 

13 dose)— 

14 ‘‘(i) has a wholesale acquisition cost of 

15 at least $10; and 

16 ‘‘(ii) had an increase in the wholesale 

17 acquisition cost, with respect to determina18 tions made— 

19 ‘‘(I) during 2020, of at least 100 

20 percent since the date of the enact21 ment of this section; 

22 ‘‘(II) during 2021, of at least 

23 100 percent in the preceding 12 

24 months or of at least 150 percent in 

25 the preceding 24 months; 


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1 ‘‘(III) during 2022, of at least 

2 100 percent in the preceding 12 

3 months or of at least 200 percent in 

4 the preceding 36 months; 

5 ‘‘(IV) during 2023, of at least 

6 100 percent in the preceding 12 

7 months or of at least 250 percent in 

8 the preceding 48 months; or 

9 ‘‘(V) on or after January 1, 

10 2024, of at least 100 percent in the 

11 preceding 12 months or of at least 

12 300 percent in the preceding 60 

13 months. 

14 ‘‘(B) HIGH SPENDING WITH INCREASE.— 

15 The drug— 

16 ‘‘(i) was in the top 50th percentile of 

17 net spending under title XVIII or XIX (to 

18 the extent data is available) during any 12- 

19 month period in the preceding 60 months; 

20 and 

21 ‘‘(ii) per dose, had an increase in the 

22 wholesale acquisition cost, with respect to 

23 determinations made— 


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1 ‘‘(I) during 2020, of at least 15 

2 percent since the date of the enact3 ment of this section; 

4 ‘‘(II) during 2021, of at least 15 

5 percent in the preceding 12 months or 

6 of at least 20 percent in the preceding 

7 24 months; 

8 ‘‘(III) during 2022, of at least 15 

9 percent in the preceding 12 months or 

10 of at least 30 percent in the preceding 

11 36 months; 

12 ‘‘(IV) during 2023, of at least 15 

13 percent in the preceding 12 months or 

14 of at least 40 percent in the preceding 

15 48 months; or 

16 ‘‘(V) on or after January 1, 

17 2024, of at least 15 percent in the 

18 preceding 12 months or of at least 50 

19 percent in the preceding 60 months. 

20 ‘‘(C) HIGH LAUNCH PRICE FOR NEW

21 DRUGS.—In the case of a drug that is marketed 

22 for the first time on or after January 1, 2020, 

23 and for which the manufacturer has established 

24 the first wholesale acquisition cost on or after 

25 such date, such wholesale acquisition cost for a 


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1 year’s supply or a course of treatment for such 

2 drug exceeds the gross spending for covered 

3 part D drugs at which the annual out-of-pocket 

4 threshold under section 1860D–2(b)(4)(B) 

5 would be met for the year. 

6 ‘‘(2) SPECIAL RULES.— 

7 ‘‘(A) AUTHORITY OF SECRETARY TO SUB8 STITUTE PERCENTAGES WITHIN A DE MINIMIS

9 RANGE.—For purposes of applying paragraph 

10 (1), the Secretary may substitute for each per11 centage described in subparagraph (A) or (B) 

12 of such paragraph (other than the percentile de13 scribed subparagraph (B)(i) of such paragraph) 

14 a percentage within a de minimis range speci15 fied by the Secretary below the percentage so 

16 described. 

17 ‘‘(B) DRUGS WITH HIGH LAUNCH PRICES

18 ANNUALLY REPORT UNTIL A THERAPEUTIC

19 EQUIVALENT IS AVAILABLE.—In the case of a 

20 drug that the Secretary determines is an appli21 cable drug described in subparagraph (C) of 

22 paragraph (1), such drug shall remain de23 scribed in such subparagraph (C) (and the 

24 manufacturer of such drug shall annually re25 port the justification under subsection (c)(2)) 


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1 until the Secretary determines that there is a 

2 therapeutic equivalent (as defined in section 

3 314.3 of title 21, Code of Federal Regulations, 

4 or any successor regulation) for such drug. 

5 ‘‘(3) DOSE.—For purposes of applying para6 graph (1), the Secretary shall establish a definition 

7 of the term ‘dose’. 

8 ‘‘(c) JUSTIFICATION DESCRIBED.— 

9 ‘‘(1) INCREASE IN WAC.—In the case of a drug 

10 that the Secretary determines is an applicable drug 

11 described in subparagraph (A) or (B) of subsection 

12 (b)(1), the justification described in this subsection 

13 is all relevant, truthful, and nonmisleading informa14 tion and supporting documentation necessary to jus15 tify the increase in the wholesale acquisition cost of 

16 the applicable drug of the manufacturer, as deter17 mined appropriate by the Secretary and which may 

18 include the following: 

19 ‘‘(A) The individual factors that have con20 tributed to the increase in the wholesale acqui21 sition cost. 

22 ‘‘(B) An explanation of the role of each 

23 factor in contributing to such increase. 

24 ‘‘(C) Total expenditures of the manufac25 turer on— 


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1 ‘‘(i) materials and manufacturing for 

2 such drug; 

3 ‘‘(ii) acquiring patents and licensing 

4 for each drug of the manufacturer; and 

5 ‘‘(iii) costs to purchase or acquire the 

6 drug from another company, if applicable. 

7 ‘‘(D) The percentage of total expenditures 

8 of the manufacturer on research and develop9 ment for such drug that was derived from Fed10 eral funds. 

11 ‘‘(E) The total expenditures of the manu12 facturer on research and development for such 

13 drug. 

14 ‘‘(F) The total revenue and net profit gen15 erated from the applicable drug for each cal16 endar year since drug approval. 

17 ‘‘(G) The total expenditures of the manu18 facturer that are associated with marketing and 

19 advertising for the applicable drug. 

20 ‘‘(H) Additional information specific to the 

21 manufacturer of the applicable drug, such as— 

22 ‘‘(i) the total revenue and net profit of 

23 the manufacturer for the period of such in24 crease, as determined by the Secretary; 


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1 ‘‘(ii) metrics used to determine execu2 tive compensation; 

3 ‘‘(iii) any additional information re4 lated to drug pricing decisions of the man5 ufacturer, such as total expenditures on— 

6 ‘‘(I) drug research and develop7 ment; or 

8 ‘‘(II) clinical trials on drugs that 

9 failed to receive approval by the Food 

10 and Drug Administration. 

11 ‘‘(2) HIGH LAUNCH PRICE.—In the case of a 

12 drug that the Secretary determines is an applicable 

13 drug described in subparagraph (C) of subsection 

14 (b)(1), the justification described in this subsection 

15 is all relevant, truthful, and nonmisleading informa16 tion and supporting documentation necessary to jus17 tify the wholesale acquisition cost of the applicable 

18 drug of the manufacturer, as determined by the Sec19 retary and which may include the items described in 

20 subparagraph (C) through (H) of paragraph (1). 

21 ‘‘(d) TIMING.— 

22 ‘‘(1) NOTIFICATION.—Not later than 60 days 

23 after the date on which the Secretary makes the de24 termination that a drug is an applicable drug under 

25 subsection (b), the Secretary shall notify the manuVerDate Sep 11 2014 19:48 Jul 14, 2020 Jkt 099200 PO 00000 Frm 00153 Fmt 6652 Sfmt 6201 E:\BILLS\S4199.IS S4199

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1 facturer of the applicable drug of such determina2 tion. 

3 ‘‘(2) SUBMISSION OF JUSTIFICATION.—Not 

4 later than 180 days after the date on which a manu5 facturer receives a notification under paragraph (1), 

6 the manufacturer shall submit to the Secretary the 

7 justification required under subsection (a). 

8 ‘‘(3) POSTING ON INTERNET WEBSITE.— 

9 ‘‘(A) IN GENERAL.—Subject to subpara10 graph (B), not later than 30 days after receiv11 ing the justification under paragraph (2), the 

12 Secretary shall post on the Internet website of 

13 the Centers for Medicare & Medicaid Services 

14 the justification, together with a summary of 

15 such justification that is written and formatted 

16 using language that is easily understandable by 

17 beneficiaries under titles XVIII and XIX. 

18 ‘‘(B) EXCLUSION OF PROPRIETARY INFOR19 MATION.—The Secretary shall exclude propri20 etary information, such as trade secrets and in21 tellectual property, submitted by the manufac22 turer in the justification under paragraph (2) 

23 from the posting described in subparagraph 

24 (A). 


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1 ‘‘(e) EXCEPTION TO REQUIREMENT FOR SUBMIS2 SION.—In the case of a drug that the Secretary deter3 mines is an applicable drug described in subparagraph (A) 

4 or (B) of subsection (b)(1), the requirement to submit a 

5 justification under subsection (a) shall not apply where the 

6 manufacturer, after receiving the notification under sub7 section (d)(1) with respect to the applicable drug of the 

8 manufacturer, reduces the wholesale acquisition cost of a 

9 drug so that it no longer is described in such subpara10 graph (A) or (B) for at least a 4-month period, as deter11 mined by the Secretary. 

12 ‘‘(f) PENALTIES.— 

13 ‘‘(1) FAILURE TO SUBMIT TIMELY JUSTIFICA14 TION.—If the Secretary determines that a manufac15 turer has failed to submit a justification as required 

16 under this section, including in accordance with the 

17 timing and form required, with respect to an appli18 cable drug, the Secretary shall apply a civil mone19 tary penalty in an amount of $10,000 for each day 

20 the manufacturer has failed to submit such justifica21 tion as so required. 

22 ‘‘(2) FALSE INFORMATION.—Any manufacturer 

23 that submits a justification under this section and 

24 knowingly provides false information in such jus25 tification is subject to a civil monetary penalty in an 


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1 amount not to exceed $100,000 for each item of 

2 false information. 

3 ‘‘(3) APPLICATION OF PROCEDURES.—The pro4 visions of section 1128A (other than subsections (a) 

5 and (b)) shall apply to a civil monetary penalty 

6 under this subsection in the same manner as such 

7 provisions apply to a penalty or proceeding under 

8 section 1128A(a). Civil monetary penalties imposed 

9 under this subsection are in addition to other pen10 alties as may be prescribed by law. 

11 ‘‘(g) DEFINITIONS.—In this section: 

12 ‘‘(1) DRUG.—The term ‘drug’ means a drug, as 

13 defined in section 201(g) of the Federal Food, Drug, 

14 and Cosmetic Act, that is intended for human use 

15 and subject to section 503(b)(1) of such Act, includ16 ing a product licensed under section 351 of the Pub17 lic health Service Act. 

18 ‘‘(2) MANUFACTURER.—The term ‘manufac19 turer’ has the meaning given that term in section 

20 1847A(c)(6)(A). 

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

22 term ‘wholesale acquisition cost’ has the meaning 

23 given that term in section 1847A(c)(6)(B).’’. 


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1 SEC. 142. STRENGTHENING AND EXPANDING PHARMACY 

2 BENEFIT MANAGERS TRANSPARENCY RE3 QUIREMENTS. 

4 Section 1150A of the Social Security Act (42 U.S.C. 

5 1320b–23), as amended by section 123, is amended— 

6 (1) in subsection (a)— 

7 (A) in paragraph (1), by striking ‘‘or’’ at 

8 the end; 

9 (B) in paragraph (2), by striking the 

10 comma at the end and inserting ‘‘; or’’; and 

11 (C) by inserting after paragraph (2) the 

12 following new paragraph: 

13 ‘‘(3) a State plan under title XIX, including a 

14 managed care entity (as defined in section 

15 1932(a)(1)(B)),’’; 

16 (2) in subsection (b)— 

17 (A) in paragraph (2)— 

18 (i) by striking ‘‘(excluding bona fide’’ 

19 and all that follows through ‘‘patient edu20 cation programs))’’; and 

21 (ii) by striking ‘‘aggregate amount of’’ 

22 and inserting ‘‘aggregate amount and per23 centage of’’; 

24 (B) in paragraph (3), by striking ‘‘aggre25 gate amount of’’ and inserting ‘‘aggregate 


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1 amount and percentage (defined as a share of 

2 gross drug costs) of’’; and 

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

4 paragraph: 

5 ‘‘(4) The aggregate amount of bona fide service 

6 fees (which include distribution service fees, inven7 tory management fees, product stocking allowances, 

8 and fees associated with administrative services 

9 agreements and patient care programs (such as 

10 medication compliance programs and patient edu11 cation programs)) the PBM received from— 

12 ‘‘(A) PDP sponsors; 

13 ‘‘(B) qualified health benefit plans; 

14 ‘‘(C) managed care entities (as defined in 

15 section 1932(a)(1)(b)); and 

16 ‘‘(D) drug manufacturers.’’; 

17 (3) in subsection (c), by adding at the end the 

18 following new paragraphs: 

19 ‘‘(5) To States to carry out their administration 

20 and oversight of the State plan under title XIX. 

21 ‘‘(6) To the Federal Trade Commission to carry 

22 out section 5(a) of the Federal Trade Commission 

23 Act (15 U.S.C. 45a) and any other relevant con24 sumer protection or antitrust authorities enforced by 


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1 such Commission, including reviewing proposed 

2 mergers in the prescription drug sector. 

3 ‘‘(7) To assist the Department of Justice to 

4 carry out its antitrust authorities, including review5 ing proposed mergers in the prescription drug sec6 tor.’’; and 

7 (4) by adding at the end the following new sub8 section: 

9 ‘‘(f) ANNUAL OIG EVALUATION AND REPORT.— 

10 ‘‘(1) ANALYSIS.—The Inspector General of the 

11 Department of Health and Human Services shall 

12 conduct an annual evaluation of the information pro13 vided to the Secretary under this section. Such eval14 uation shall include an analysis of— 

15 ‘‘(A) PBM rebates; 

16 ‘‘(B) administrative fees; 

17 ‘‘(C) the difference between what plans pay 

18 PBMs and what PBMs pay pharmacies; 

19 ‘‘(D) generic dispensing rates; and 

20 ‘‘(E) other areas determined appropriate 

21 by the Inspector General. 

22 ‘‘(2) REPORT.—Not later than July 1, 2021, 

23 and annually thereafter, the Inspector General of the 

24 Department of Health and Human Services shall 

25 submit to Congress a report containing the results 


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1 of the evaluation conducted under paragraph (1), to2 gether with recommendations for such legislation 

3 and administrative action as the Inspector General 

4 determines appropriate. Such report shall not dis5 close the identity of a specific PBM, plan, or price 

6 charged for a drug.’’. 

7 SEC. 143. PRESCRIPTION DRUG PRICING DASHBOARDS. 

8 Part A of title XI of the Social Security Act is 

9 amended by adding at the end the following new section: 

10 ‘‘SEC. 1150C. PRESCRIPTION DRUG PRICING DASHBOARDS. 

11 ‘‘(a) IN GENERAL.—Beginning not later than Janu12 ary 1, 2021, the Secretary shall establish, and annually 

13 update, internet website-based dashboards, through which 

14 beneficiaries, clinicians, researchers, and the public can re15 view information on spending for, and utilization of, pre16 scription drugs and biologicals (and related supplies and 

17 mechanisms of delivery) covered under each of parts B 

18 and D of title XVIII and under a State program under 

19 title XIX, including information on trends of such spend20 ing and utilization over time. 

21 ‘‘(b) MEDICARE PART B DRUG AND BIOLOGICAL

22 DASHBOARD.— 

23 ‘‘(1) IN GENERAL.—The dashboard established 

24 under subsection (a) for part B of title XVIII shall 

25 provide the information described in paragraph (2). 


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1 ‘‘(2) INFORMATION DESCRIBED.—The informa2 tion described in this paragraph is the following in3 formation with respect to drug or biologicals covered 

4 under such part B: 

5 ‘‘(A) The brand name and, if applicable, 

6 the generic names of the drug or biological. 

7 ‘‘(B) Consumer-friendly information on the 

8 uses and clinical indications of the drug or bio9 logical. 

10 ‘‘(C) The manufacturer or labeler of the 

11 drug or biological. 

12 ‘‘(D) To the extent feasible, the following 

13 information: 

14 ‘‘(i) Average total spending per dos15 age unit of the drug or biological in the 

16 most recent 2 calendar years for which 

17 data is available. 

18 ‘‘(ii) The percentage change in aver19 age spending on the drug or biological per 

20 dosage unit between the most recent cal21 endar year for which data is available 

22 and— 

23 ‘‘(I) the preceding calendar year; 

24 and 


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1 ‘‘(II) the preceding 5 and 10 cal2 endar years. 

3 ‘‘(iii) The annual growth rate in aver4 age spending per dosage unit of the drug 

5 or biological in the most recent 5 or 10 

6 calendar years for which data is available. 

7 ‘‘(iv) Total spending for the drug or 

8 biological for the most recent calendar year 

9 for which data is available. 

10 ‘‘(v) The number of beneficiaries re11 ceiving the drug or biological in the most 

12 recent calendar year for which data is 

13 available. 

14 ‘‘(vi) Average spending on the drug 

15 per beneficiary for the most recent cal16 endar year for which data is available. 

17 ‘‘(E) The average sales price of the drug 

18 or biological (as determined under section 

19 1847A) for the most recent quarter. 

20 ‘‘(F) Consumer-friendly information about 

21 the coinsurance amount for the drug or biologi22 cal for beneficiaries for the most recent quarter. 

23 Such information shall not include coinsurance 

24 amounts for qualified medicare beneficiaries (as 

25 defined in section 1905(p)(1)). 


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1 ‘‘(G) For the most recent calendar year for 

2 which data is available— 

3 ‘‘(i) the 15 drugs and biologicals with 

4 the highest total spending under such part; 

5 and 

6 ‘‘(ii) any drug or biological for which 

7 the average annual per beneficiary spend8 ing exceeds the gross spending for covered 

9 part D drugs at which the annual out-of10 pocket threshold under section 1860D– 

11 2(b)(4)(B) would be met for the year. 

12 ‘‘(H) Other information (not otherwise 

13 prohibited in law from being disclosed) that the 

14 Secretary determines would provide bene15 ficiaries, clinicians, researchers, and the public 

16 with helpful information about drug and bio17 logical spending and utilization (including 

18 trends of such spending and utilization). 

19 ‘‘(c) MEDICARE COVERED PART D DRUG DASH20 BOARD.— 

21 ‘‘(1) IN GENERAL.—The dashboard established 

22 under subsection (a) for part D of title XVIII shall 

23 provide the information described in paragraph (2). 

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1 formation with respect to covered part D drugs 

2 under such part D: 

3 ‘‘(A) The information described in sub4 paragraphs (A) through (D) of subsection 

5 (b)(2). 

6 ‘‘(B) Information on average annual bene7 ficiary out-of-pocket costs below and above the 

8 annual out-of-pocket threshold under section 

9 1860D–2(b)(4)(B) for the current plan year. 

10 Such information shall not include out-of-pocket 

11 costs for subsidy eligible individuals under sec12 tion 1860D–14. 

13 ‘‘(C) Information on how to access re14 sources as described in sections 1860D–1(c) 

15 and 1851(d). 

16 ‘‘(D) For the most recent calendar year for 

17 which data is available— 

18 ‘‘(i) the 15 covered part D drugs with 

19 the highest total spending under such part; 

20 and 

21 ‘‘(ii) any covered part D drug for 

22 which the average annual per beneficiary 

23 spending exceeds the gross spending for 

24 covered part D drugs at which the annual 

25 out-of-pocket threshold under section 


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1 1860D–2(b)(4)(B) would be met for the 

2 year. 

3 ‘‘(E) Other information (not otherwise pro4 hibited in law from being disclosed) that the 

5 Secretary determines would provide bene6 ficiaries, clinicians, researchers, and the public 

7 with helpful information about covered part D 

8 drug spending and utilization (including trends 

9 of such spending and utilization). 

10 ‘‘(d) MEDICAID COVERED OUTPATIENT DRUG DASH11 BOARD.— 

12 ‘‘(1) IN GENERAL.—The dashboard established 

13 under subsection (a) for title XIX shall provide the 

14 information described in paragraph (2). 

15 ‘‘(2) INFORMATION DESCRIBED.—The informa16 tion described in this paragraph is the following in17 formation with respect to covered outpatient drugs 

18 under such title: 

19 ‘‘(A) The information described in sub20 paragraphs (A) through (D) of subsection 

21 (b)(2). 

22 ‘‘(B) For the most recent calendar year for 

23 which data is available, the 15 covered out24 patient drugs with the highest total spending 

25 under such title. 


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1 ‘‘(C) Other information (not otherwise pro2 hibited in law from being disclosed) that the 

3 Secretary determines would provide bene4 ficiaries, clinicians, researchers, and the public 

5 with helpful information about covered out6 patient drug spending and utilization (including 

7 trends of such spending and utilization). 

8 ‘‘(e) DATA FILES.—The Secretary shall make avail9 able the underlying data for each dashboard established 

10 under subsection (a) in a machine-readable format.’’. 

11 SEC. 144. IMPROVING COORDINATION BETWEEN THE FOOD 

12 AND DRUG ADMINISTRATION AND THE CEN13 TERS FOR MEDICARE & MEDICAID SERVICES. 

14 (a) IN GENERAL.— 

15 (1) PUBLIC MEETING.— 

16 (A) IN GENERAL.—Not later than 12 

17 months after the date of the enactment of this 

18 Act, the Secretary of Health and Human Serv19 ices (referred to in this section as the ‘‘Sec20 retary’’) shall convene a public meeting for the 

21 purposes of discussing and providing input on 

22 improvements to coordination between the Food 

23 and Drug Administration and the Centers for 

24 Medicare & Medicaid Services in preparing for 

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1 scribed in subsection (c) on the market in the 

2 United States. 

3 (B) ATTENDEES.—The Secretary shall in4 vite the following to the public meeting: 

5 (i) Representatives of relevant Federal 

6 agencies, including representatives from 

7 each of the medical product centers within 

8 the Food and Drug Administration and 

9 representatives from the coding, coverage, 

10 and payment offices within the Centers for 

11 Medicare & Medicaid Services. 

12 (ii) Stakeholders with expertise in the 

13 research and development of novel medical 

14 products, including manufacturers of such 

15 products. 

16 (iii) Representatives of commercial 

17 health insurance payers. 

18 (iv) Stakeholders with expertise in the 

19 administration and use of novel medical 

20 products, including physicians. 

21 (v) Stakeholders representing patients 

22 and with expertise in the utilization of pa23 tient experience data in medical product 

24 development. 


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1 (C) TOPICS.—The public meeting agenda 

2 shall include— 

3 (i) an overview of the types of prod4 ucts and product categories in the drug 

5 and medical device development pipeline 

6 and the volume of products which may 

7 meet the description of a novel medical 

8 product under subsection (c); 

9 (ii) the anticipated expertise necessary 

10 to review the safety and effectiveness of 

11 such products at the Food and Drug Ad12 ministration and current gaps in such ex13 pertise, if any; 

14 (iii) the expertise necessary to make 

15 coding, coverage, and payment decisions 

16 with respect to such products within the 

17 Centers for Medicare & Medicaid Services, 

18 and current gaps in such expertise, if any; 

19 (iv) trends in the differences in the 

20 data necessary to determine the safety and 

21 effectiveness of a novel medical product 

22 and the data necessary to determine 

23 whether a novel medical product meets the 

24 reasonable and necessary requirements for 

25 coverage and payment under title XVIII of 


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1 the Social Security Act pursuant to section 

2 1862(a)(1)(A) of such Act (42 U.S.C. 

3 1395y(a)(1)(A)); 

4 (v) the availability of information for 

5 sponsors of such novel medical products to 

6 meet each of those requirements; and 

7 (vi) the coordination of information 

8 related to significant clinical improvement 

9 over existing therapies for patients between 

10 the Food and Drug Administration and the 

11 Centers for Medicare & Medicaid Services 

12 with respect to novel medical products. 

13 (D) TRADE SECRETS AND CONFIDENTIAL

14 INFORMATION.—Nothing under this section 

15 shall be construed as authorizing the Secretary 

16 to disclose any information that is a trade se17 cret or confidential information subject to sec18 tion 552(b)(4) of title 5, United States Code. 

19 (2) IMPROVING TRANSPARENCY OF CRITERIA

20 FOR MEDICARE COVERAGE.— 

21 (A) DRAFT GUIDANCE.—Not later than 18 

22 months after the public meeting under para23 graph (1), the Secretary shall update the final 

24 guidance titled ‘‘National Coverage Determina25 tions with Data Collection as a Condition of 


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1 Coverage: Coverage with Evidence Develop2 ment’’ to address any opportunities to improve 

3 the availability and coordination of information 

4 as described in clauses (iv) through (vi) of para5 graph (1)(C). 

6 (B) FINAL GUIDANCE.—Not later than 12 

7 months after issuing draft guidance under sub8 paragraph (A), the Secretary shall finalize the 

9 updated guidance to address any such opportu10 nities. 

11 (b) REPORT ON CODING, COVERAGE, AND PAYMENT

12 PROCESSES UNDER MEDICARE FOR NOVEL MEDICAL

13 PRODUCTS.—Not later than 12 months after the date of 

14 the enactment of this Act, the Secretary shall publish a 

15 report on the Internet website of the Department of 

16 Health and Human Services regarding processes under 

17 the Medicare program under title XVIII of the Social Se18 curity Act (42 U.S.C. 1395 et seq.) with respect to the 

19 coding, coverage, and payment of novel medical products 

20 described in subsection (c). Such report shall include the 

21 following: 

22 (1) A description of challenges in the coding, 

23 coverage, and payment processes under the Medicare 

24 program for novel medical products. 

25 (2) Recommendations to— 


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1 (A) incorporate patient experience data 

2 (such as the impact of a disease or condition on 

3 the lives of patients and patient treatment pref4 erences) into the coverage and payment proc5 esses within the Centers for Medicare & Med6 icaid Services; 

7 (B) decrease the length of time to make 

8 national and local coverage determinations 

9 under the Medicare program (as those terms 

10 are defined in subparagraphs (A) and (B), re11 spectively, of section 1862(l)(6) of the Social 

12 Security Act (42 U.S.C. 1395y(l)(6)); 

13 (C) streamline the coverage process under 

14 the Medicare program and incorporate input 

15 from relevant stakeholders into such coverage 

16 determinations; and 

17 (D) identify potential mechanisms to incor18 porate novel payment designs similar to those 

19 in development in commercial insurance plans 

20 and State plans under title XIX of such Act 

21 (42 U.S.C. 1396 et seq.) into the Medicare pro22 gram. 

23 (c) NOVEL MEDICAL PRODUCTS DESCRIBED.—For 

24 purposes of this section, a novel medical product described 

25 in this subsection is a drug, including a biological product 


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1 (including gene and cell therapy), or medical device, that 

2 has been designated as a breakthrough therapy under sec3 tion 506(a) of the Federal Food, Drug, and Cosmetic Act 

4 (21 U.S.C. 356(a)), a breakthrough device under section 

5 515B of such Act (21 U.S.C. 360e–3), or a regenerative 

6 advanced therapy under section 506(g) of such Act (21 

7 U.S.C. 356(g)). 

8 SEC. 145. PATIENT CONSULTATION IN MEDICARE NA9 TIONAL AND LOCAL COVERAGE DETERMINA10 TIONS IN ORDER TO MITIGATE BARRIERS TO 

11 INCLUSION OF SUCH PERSPECTIVES. 

12 Section 1862(l) of the Social Security Act (42 U.S.C. 

13 1395y(l)) is amended by adding at the end the following 

14 new paragraph: 

15 ‘‘(7) PATIENT CONSULTATION IN NATIONAL

16 AND LOCAL COVERAGE DETERMINATIONS.—With re17 spect to national coverage determinations, the Sec18 retary, and with respect to local coverage determina19 tions, the Medicare administrative contractor, may 

20 consult with patients and organizations representing 

21 patients, including patients with disabilities, in mak22 ing national and local coverage determinations.’’. 


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1 SEC. 146. GAO STUDY ON INCREASES TO MEDICARE AND 

2 MEDICAID SPENDING DUE TO COPAYMENT 

3 COUPONS AND OTHER PATIENT ASSISTANCE 

4 PROGRAMS. 

5 (a) STUDY.—The Comptroller General of the United 

6 States shall conduct a study on the impact of copayment 

7 coupons and other patient assistance programs on pre8 scription drug pricing and expenditures within the Medi9 care and Medicaid programs. The study shall assess the 

10 following: 

11 (1) The extent to which copayment coupons and 

12 other patient assistance programs contribute to in13 flated prescription drug prices under such programs. 

14 (2) The impact copayment coupons and other 

15 patient assistance programs have in the Medicare 

16 Part D program established under part D of title 

17 XVIII of the Social Security Act (42 U.S.C. 1395w– 

18 101 et seq.) on utilization of higher-cost brand drugs 

19 and lower utilization of generic drugs in that pro20 gram. 

21 (3) The extent to which manufacturers report 

22 or obtain tax benefits, including deductions of busi23 ness expenses and charitable contributions, for any 

24 of the following: 

25 (A) Offering copayment coupons or other 

26 patient assistance programs. 


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1 (B) Sponsoring manufacturer patient as2 sistance programs. 

3 (C) Paying for sponsorships at outreach 

4 and advocacy events organized by patient as5 sistance programs. 

6 (4) The efficacy of oversight conducted to en7 sure that independent charity patient assistance pro8 grams adhere to guidance from the Office of the In9 spector General of the Department of Health and 

10 Human Services on avoiding waste, fraud, and 

11 abuse. 

12 (b) DEFINITIONS.—In this section: 

13 (1) INDEPENDENT CHARITY PATIENT ASSIST14 ANCE PROGRAM.—The term ‘‘independent charity 

15 patient assistance program’’ means any organization 

16 described in section 501(c)(3) of the Internal Rev17 enue Code of 1986 and exempt from taxation under 

18 section 501(a) of such Code and which is not a pri19 vate foundation (as defined in section 509(a) of such 

20 Code) that offers patient assistance. 

21 (2) MANUFACTURER.—The term ‘‘manufac22 turer’’ has the meaning given that term in section 

23 1927(k)(5) of the Social Security Act (42 U.S.C. 

24 1396r–8(k)(5)). 


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1 (3) MANUFACTURER PATIENT ASSISTANCE PRO2 GRAM.—The term ‘‘manufacturer patient assistance 

3 program’’ means an organization, including a private 

4 foundation (as so defined), that is sponsored by, or 

5 receives funding from, a manufacturer and that of6 fers patient assistance. Such term does not include 

7 an independent charity patient assistance program. 

8 (4) PATIENT ASSISTANCE.—The term ‘‘patient 

9 assistance’’ means assistance provided to offset the 

10 cost of drugs for individuals. Such term includes free 

11 products, coupons, rebates, copay or discount cards, 

12 and other means of providing assistance to individ13 uals related to drug costs, as determined by the Sec14 retary of Health and Human Services. 

15 (c) REPORT.—Not later than 24 months after the 

16 date of the enactment of this Act, the Comptroller General 

17 of the United States shall submit to Congress a report 

18 describing the findings of the study required under sub19 section (a). 

20 SEC. 147. MEDPAC REPORT ON SHIFTING COVERAGE OF 

21 CERTAIN MEDICARE PART B DRUGS TO MEDI22 CARE PART D. 

23 (a) STUDY.—The Medicare Payment Advisory Com24 mission (in this section referred to as the ‘‘Commission’’) 

25 shall conduct a study on shifting coverage of certain drugs 


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1 and biologicals for which payment is currently made under 

2 part B of title XVIII of the Social Security Act (42 U.S.C. 

3 1395j et seq.) to part D of such title (42 U.S.C. 1395w– 

4 21 et seq.). Such study shall include an analysis of— 

5 (1) differences in program structures and pay6 ment methods for drugs and biologicals covered 

7 under such parts B and D, including effects of such 

8 a shift on program spending, beneficiary cost-shar9 ing liability, and utilization management techniques 

10 for such drugs and biologicals; and 

11 (2) the feasibility and policy implications of 

12 shifting coverage of drugs and biologicals for which 

13 payment is currently made under such part B to 

14 such part D. 

15 (b) REPORT.— 

16 (1) IN GENERAL.—Not later than June 30, 

17 2021, the Commission shall submit to Congress a re18 port containing the results of the study conducted 

19 under subsection (a). 

20 (2) CONTENTS.—The report under paragraph 

21 (1) shall include information, and recommendations 

22 as the Commission deems appropriate, regarding— 

23 (A) formulary design under such part D; 

24 (B) the ability of the benefit structure 

25 under such part D to control total spending on 


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1 drugs and biologicals for which payment is cur2 rently made under such part B; 

3 (C) changes to the bid process under such 

4 part D, if any, that may be necessary to inte5 grate coverage of such drugs and biologicals 

6 into such part D; and 

7 (D) any other changes to the program that 

8 Congress should consider in determining wheth9 er to shift coverage of such drugs and 

10 biologicals from such part B to such part D. 

11 SEC. 148. TAKING STEPS TO FULFILL TREATY OBLIGATIONS 

12 TO TRIBAL COMMUNITIES. 

13 (a) GAO STUDY.—The Comptroller General shall 

14 conduct a study regarding access to, and the cost of, pre15 scription drugs among Indians. The study shall include— 

16 (1) a review of what Indian health programs 

17 pay for prescription drugs on reservations, in urban 

18 centers, and in Tribal communities relative to other 

19 consumers; 

20 (2) recommendations to align the value of pre21 scription drug discounts available under the Med22 icaid drug rebate program established under section 

23 1927 of the Social Security Act (42 U.S.C. 1396r– 

24 8) with prescription drug discounts available to 

25 Tribal communities through the purchased/referred 


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1 care program of the Indian Health Service for physi2 cian administered drugs; and 

3 (3) an examination of how Tribal communities 

4 and urban Indian organizations utilize the Medicare 

5 part D program established under title XVIII of the 

6 Social Security Act (42 U.S.C. 1395w–101 et seq.) 

7 and recommendations to improve enrollment among 

8 Indians in that program. 

9 (b) REPORT.—Not later than 18 months after the 

10 date of the enactment of this Act, the Comptroller General 

11 shall submit to Congress a report containing the results 

12 of the study conducted under subsection (a), together with 

13 recommendations for such legislation and administrative 

14 action as the Comptroller General determines appropriate. 

15 (c) DEFINITIONS.—In this section: 

16 (1) COMPTROLLER GENERAL.—The term 

17 ‘‘Comptroller General’’ means the Comptroller Gen18 eral of the United States. 

19 (2) INDIAN; INDIAN HEALTH PROGRAM; INDIAN

20 TRIBE.—The terms ‘‘Indian’’, ‘‘Indian health pro21 gram’’, and ‘‘Indian tribe’’ have the meanings given 

22 those terms in section 4 of the Indian Health Care 

23 Improvement Act (25 U.S.C. 1603). 


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1 TITLE II—MEDICAID DRUG 

2 PRICING REFORMS 

3 SEC. 201. MEDICAID PHARMACY AND THERAPEUTICS COM4 MITTEE IMPROVEMENTS. 

5 (a) IN GENERAL.—Subparagraph (A) of section 

6 1927(d)(4) of the Social Security Act (42 U.S.C. 1396r– 

7 8(d)(4)) is amended to read as follows: 

8 ‘‘(A)(i) The formulary is developed and re9 viewed by a pharmacy and therapeutics com10 mittee consisting of physicians, pharmacists, 

11 and other appropriate individuals appointed by 

12 the Governor of the State. 

13 ‘‘(ii) Subject to clause (vi), the State estab14 lishes and implements a conflict of interest pol15 icy for the pharmacy and therapeutics com16 mittee that— 

17 ‘‘(I) is publicly accessible; 

18 ‘‘(II) requires all committee members 

19 to complete, on at least an annual basis, a 

20 disclosure of relationships, associations, 

21 and financial dealings that may affect their 

22 independence of judgement in committee 

23 matters; and 

24 ‘‘(III) contains clear processes, such 

25 as recusal from voting or discussion, for 


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1 those members who report a conflict of in2 terest, along with appropriate processes to 

3 address any instance where a member fails 

4 to report a conflict of interest. 

5 ‘‘(iii) The membership of the pharmacy 

6 and therapeutics committee— 

7 ‘‘(I) is made publicly available; 

8 ‘‘(II) is composed of members who are 

9 independent and free of any conflict, in10 cluding with respect to manufacturers, 

11 medicaid managed care entities, and phar12 macy benefit managers; and 

13 ‘‘(III) includes at least 1 actively 

14 practicing physician and at least 1 actively 

15 practicing pharmacist, each of whom has 

16 expertise in the care of 1 or more Med17 icaid-specific populations such as elderly or 

18 disabled individuals, children with complex 

19 medical needs, or low-income individuals 

20 with chronic illnesses. 

21 ‘‘(iv) At the option of the State, the 

22 State’s drug use review board established under 

23 subsection (g)(3) may serve as the pharmacy 

24 and therapeutics committee provided the State 


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1 ensures that such board meets the requirements 

2 of clauses (ii) and (iii). 

3 ‘‘(v) The State reviews and has final ap4 proval of the formulary established by the phar5 macy and therapeutics committee. 

6 ‘‘(vi) If the Secretary determines it appro7 priate or necessary based on the findings and 

8 recommendations of the Comptroller General of 

9 the United States in the report submitted to 

10 Congress under section 203 of the Prescription 

11 Drug Pricing Reduction Act of 2020, the Sec12 retary shall issue guidance that States must fol13 low for establishing conflict of interest policies 

14 for the pharmacy and therapeutics committee in 

15 accordance with the requirements of clause (ii), 

16 including appropriate standards and require17 ments for identifying, addressing, and reporting 

18 on conflicts of interest.’’. 

19 (b) APPLICATION TO MEDICAID MANAGED CARE OR20 GANIZATIONS.— 

21 (1) IN GENERAL.—Clause (xiii) of section 

22 1903(m)(2)(A) of the Social Security Act (42 U.S.C. 

23 1396b(m)(2)(A)) is amended— 

24 (A) by striking ‘‘and (III)’’ and inserting 

25 ‘‘(III)’’; 


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1 (B) by striking the period at the end and 

2 inserting ‘‘, and (IV) any formulary used by the 

3 entity for covered outpatient drugs dispensed to 

4 individuals eligible for medical assistance who 

5 are enrolled with the entity is developed and re6 viewed by a pharmacy and therapeutics com7 mittee that meets the requirements of clauses 

8 (ii) and (iii) of section 1927(d)(4)(A).’’; and 

9 (C) by moving the left margin 2 ems to the 

10 left. 

11 (2) APPLICATION TO PIHPS AND PAHPS.—Sec12 tion 1903(m) of the Social Security Act (42 U.S.C. 

13 1396b(m)) is amended by adding at the end the fol14 lowing new paragraph: 

15 ‘‘(10) No payment shall be made under this 

16 title to a State with respect to expenditures incurred 

17 by the State for payment for services provided by an 

18 other specified entity (as defined in paragraph 

19 (9)(D)(iii)) unless such services are provided in ac20 cordance with a contract between the State and the 

21 entity which satisfies the requirements of paragraph 

22 (2)(A)(xiii).’’. 

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

24 this section shall take effect on the date that is 1 year 

25 after the date of enactment of this Act. 


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1 SEC. 202. IMPROVING REPORTING REQUIREMENTS AND DE2 VELOPING STANDARDS FOR THE USE OF 

3 DRUG USE REVIEW BOARDS IN STATE MED4 ICAID PROGRAMS. 

5 (a) IN GENERAL.—Section 1927(g)(3) of the Social 

6 Security Act (42 U.S.C. 1396r–8(g)(3)) is amended— 

7 (1) by amending subparagraph (B) to read as 

8 follows: 

9 ‘‘(B) MEMBERSHIP.— 

10 ‘‘(i) IN GENERAL.—The membership 

11 of the DUR Board shall include health 

12 care professionals who have recognized 

13 knowledge and expertise in one or more of 

14 the following: 

15 ‘‘(I) The clinically appropriate 

16 prescribing of covered outpatient 

17 drugs. 

18 ‘‘(II) The clinically appropriate 

19 dispensing and monitoring of covered 

20 outpatient drugs. 

21 ‘‘(III) Drug use review, evalua22 tion, and intervention. 

23 ‘‘(IV) Medical quality assurance. 

24 ‘‘(ii) MEMBERSHIP REQUIREMENTS.— 

25 The membership of the DUR Board 

26 shall— 


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1 ‘‘(I) be made publicly available; 

2 ‘‘(II) be composed of members 

3 who are independent and free of any 

4 conflict, including with respect to 

5 manufacturers, medicaid managed 

6 care entities, and pharmacy benefit 

7 managers; 

‘‘(III) be made up of at least 1 8 ⁄3

9 but no more than 51 percent members 

10 who are licensed and actively practicing physicians and at least 1 11 ⁄3 mem12 bers who are licensed and actively 

13 practicing pharmacists; and 

14 ‘‘(IV) include at least 1 actively 

15 practicing physician and at least 1 ac16 tively practicing pharmacist, each of 

17 whom has expertise in the care of 1 or 

18 more Medicaid-specific populations 

19 such as elderly or disabled individuals, 

20 children with complex medical needs, 

21 or low-income individuals with chronic 

22 illnesses. 

23 ‘‘(iii) CONFLICT OF INTEREST POL24 ICY.—The State shall establish and impleVerDate Sep 11 2014 19:48 Jul 14, 2020 Jkt 099200 PO 00000 Frm 00184 Fmt 6652 Sfmt 6201 E:\BILLS\S4199.IS S4199

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1 ment a conflict of interest policy for the 

2 DUR Board that— 

3 ‘‘(I) is publicly accessible; 

4 ‘‘(II) requires all board members 

5 to complete, on at least an annual 

6 basis, a disclosure of relationships, as7 sociations, and financial dealings that 

8 may affect their independence of 

9 judgement in board matters; and 

10 ‘‘(III) contains clear processes, 

11 such as recusal from voting or discus12 sion, for those members who report a 

13 conflict of interest, along with appro14 priate processes to address any in15 stance where a member fails to report 

16 a conflict of interest.’’; and 

17 (2) by adding at the end the following new sub18 paragraph: 

19 ‘‘(E) DUR BOARD MEMBERSHIP RE20 PORTS.— 

21 ‘‘(i) DUR BOARD REPORTS.—Each 

22 State shall require the DUR Board to pre23 pare and submit to the State an annual re24 port on the DUR Board membership. Each 

25 such report shall include any conflicts of 


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1 interest with respect to members of the 

2 DUR Board that the DUR Board recorded 

3 or was aware of during the period that is 

4 the subject of the report, and the process 

5 applied to address such conflicts of inter6 est, in addition to any other information 

7 required by the State. 

8 ‘‘(ii) INCLUSION OF DUR BOARD MEM9 BERSHIP INFORMATION IN STATE RE10 PORTS.—Each annual State report to the 

11 Secretary required under subparagraph 

12 (D) shall include— 

13 ‘‘(I) the number of individuals 

14 serving on the State’s DUR Board; 

15 ‘‘(II) the names and professions 

16 of the individuals serving on such 

17 DUR Board; 

18 ‘‘(III) any conflicts of interest or 

19 recusals with respect to members of 

20 such DUR Board reported by the 

21 DUR Board or that the State was 

22 aware of during the period that is the 

23 subject of the report; and 

24 ‘‘(IV) whether the State has 

25 elected for such DUR Board to serve 


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1 as the committee responsible for de2 veloping a State formulary under sub3 section (d)(4)(A).’’. 

4 (b) MANAGED CARE REQUIREMENTS.—Section 

5 1932(i) of the Social Security Act (42 U.S.C. 1396u–2(i)) 

6 is amended— 

7 (1) by inserting ‘‘and each contract under a 

8 State plan with an other specified entity (as defined 

9 in section 1903(m)(9)(D)(iii))’’ after ‘‘under section 

10 1903(m)’’; 

11 (2) by striking ‘‘section 483.3(s)(4)’’ and in12 serting ‘‘section 438.3(s)(4)’’; 

13 (3) by striking ‘‘483.3(s)(5)’’ and inserting 

14 ‘‘438.3(s)(5)’’; and 

15 (4) by adding at the end the following: ‘‘Such 

16 a managed care entity or other specified entity shall 

17 not be considered to be in compliance with the re18 quirement of such section 438.3(s)(5) that the entity 

19 provide a detailed description of its drug utilization 

20 review activities unless the entity includes a descrip21 tion of the prospective drug review activities de22 scribed in paragraph (2)(A) of section 1927(g) and 

23 the activities listed in paragraph (3)(C) of section 

24 1927(g), makes the underlying drug utilization re25 view data available to the State and the Secretary, 


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1 and provides such other information as deemed ap2 propriate by the Secretary.’’. 

3 (c) DEVELOPMENT OF NATIONAL STANDARDS FOR

4 MEDICAID DRUG USE REVIEW.—The Secretary of Health 

5 and Human Services may promulgate regulations or guid6 ance establishing national standards for Medicaid drug 

7 use review programs under section 1927(g) of the Social 

8 Security Act (42 U.S.C. 1396r–8) and drug utilization re9 view activities and requirements under section 1932(i) of 

10 such Act (42 U.S.C. 1396u–2(i)), for the purpose of align11 ing review criteria for prospective and retrospective drug 

12 use review across all State Medicaid programs. 

13 (d) CMS GUIDANCE.—Not later than 18 months 

14 after the date of enactment of this Act, the Secretary of 

15 Health and Human Services shall issue guidance— 

16 (1) outlining steps that States must take to 

17 come into compliance with statutory and regulatory 

18 requirements for prospective and retrospective drug 

19 use review under section 1927(g) of the Social Secu20 rity Act (42 U.S.C. 1396r–8(g)) and drug utilization 

21 review activities and requirements under section 

22 1932(i) of such Act (42 U.S.C. 1396u–2(i)) (includ23 ing with respect to requirements that were in effect 

24 before the date of enactment of this Act); and 


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1 (2) describing the actions that the Secretary 

2 will take to enforce such requirements. 

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

4 this section shall take effect on the date that is 18 months 

5 after the date of enactment of this Act. 

6 SEC. 203. GAO REPORT ON CONFLICTS OF INTEREST IN 

7 STATE MEDICAID PROGRAM DRUG USE RE8 VIEW BOARDS AND PHARMACY AND THERA9 PEUTICS (P&T) COMMITTEES. 

10 (a) INVESTIGATION.—The Comptroller General of the 

11 United States shall conduct an investigation of potential 

12 or existing conflicts of interest among members of State 

13 Medicaid program State drug use review boards (in this 

14 section referred to as ‘‘DUR Boards’’) and pharmacy and 

15 therapeutics committees (in this section referred to as 

16 ‘‘P&T Committees’’). 

17 (b) REPORT.—Not later than 24 months after the 

18 date of enactment of this Act, the Comptroller General 

19 shall submit to Congress a report on the investigation con20 ducted under subsection (a) that includes the following: 

21 (1) A description outlining how DUR Boards 

22 and P&T Committees operate in States, including 

23 details with respect to— 

24 (A) the structure and operation of DUR 

25 Boards and statewide P&T Committees; 


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1 (B) States that operate separate P&T 

2 Committees for their fee-for-service Medicaid 

3 program and their Medicaid managed care or4 ganizations or other Medicaid managed care ar5 rangements (including other specified entities 

6 (as defined in section 1903(m)(9)(D)(iii) of the 

7 Social Security Act (42 U.S.C. 

8 1396b(m)(9)(D)(iii)) and collectively referred to 

9 in this section as ‘‘Medicaid MCOs’’); and 

10 (C) States that allow Medicaid MCOs to 

11 have their own P&T Committees and the extent 

12 to which pharmacy benefit managers administer 

13 or participate in such P&T Committees. 

14 (2) A description outlining the differences be15 tween DUR Boards established in accordance with 

16 section 1927(g)(3) of the Social Security Act (42 

17 U.S.C. 1396r(g)(3)) and P&T Committees. 

18 (3) A description outlining the tools P&T Com19 mittees may use to determine Medicaid drug cov20 erage and utilization management policies. 

21 (4) An analysis of whether and how States or 

22 P&T Committees establish participation and inde23 pendence requirements for DUR Boards and P&T 

24 Committees, including with respect to entities with 

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1 icaid programs, managed care organizations, and 

2 other entities or individuals in the pharmaceutical 

3 industry. 

4 (5) A description outlining how States, DUR 

5 Boards, or P&T Committees define conflicts of inter6 est. 

7 (6) A description of how DUR Boards and P&T 

8 Committees address conflicts of interest, including 

9 who is responsible for implementing such policies. 

10 (7) A description of the tools, if any, States use 

11 to ensure that there are no conflicts of interest on 

12 DUR Boards and P&T Committees. 

13 (8) An analysis of the effectiveness of tools 

14 States use to ensure that there are no conflicts of 

15 interest on DUR Boards and P&T Committees and, 

16 if applicable, recommendations as to how such tools 

17 could be improved. 

18 (9) A review of strategies States may use to 

19 guard against conflicts of interest on DUR Boards 

20 and P&T Committees and to ensure compliance with 

21 the requirements of titles XI and XIX of the Social 

22 Security Act (42 U.S.C. 1301 et seq., 1396 et seq.) 

23 and access to effective, clinically appropriate, and 

24 medically necessary drug treatments for Medicaid 

25 beneficiaries, including recommendations for such 


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1 legislative and administrative actions as the Comp2 troller General determines appropriate. 

3 SEC. 204. ENSURING THE ACCURACY OF MANUFACTURER 

4 PRICE AND DRUG PRODUCT INFORMATION 

5 UNDER THE MEDICAID DRUG REBATE PRO6 GRAM. 

7 (a) AUDIT OF MANUFACTURER PRICE AND DRUG

8 PRODUCT INFORMATION.— 

9 (1) IN GENERAL.—Subparagraph (B) of section 

10 1927(b)(3) of the Social Security Act (42 U.S.C. 

11 1396r–8(b)(3)) is amended to read as follows: 

12 ‘‘(B) AUDITS AND SURVEYS OF MANUFAC13 TURER PRICE AND DRUG PRODUCT INFORMA14 TION.— 

15 ‘‘(i) AUDITS.—The Secretary shall 

16 conduct regular audits of the price and 

17 drug product information reported by man18 ufacturers under subparagraph (A) for the 

19 most recently ended rebate period to en20 sure the accuracy and timeliness of such 

21 information. In conducting such audits, the 

22 Secretary may employ evaluations, surveys, 

23 statistical sampling, predictive analytics 

24 and other relevant tools and methods. 


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1 ‘‘(ii) VERIFICATIONS SURVEYS OF AV2 ERAGE MANUFACTURER PRICE AND MANU3 FACTURER’S AVERAGE SALES PRICE.—In 

4 addition to the audits required under 

5 clause (i), the Secretary may survey whole6 salers and manufacturers (including manu7 facturers that directly distribute their cov8 ered outpatient drugs (in this subpara9 graph referred to as ‘direct sellers’)), when 

10 necessary, to verify manufacturer prices 

11 and manufacturer’s average sales prices 

12 (including wholesale acquisition cost) to 

13 make payment reported under subpara14 graph (A). 

15 ‘‘(iii) PENALTIES.—In addition to 

16 other penalties as may be prescribed by 

17 law, including under subparagraph (C) of 

18 this paragraph, the Secretary may impose 

19 a civil monetary penalty in an amount not 

20 to exceed $185,000 on an annual basis on 

21 a wholesaler, manufacturer, or direct sell22 er, if the wholesaler, manufacturer, or di23 rect seller of a covered outpatient drug re24 fuses a request for information about 

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1 nection with an audit or survey under this 

2 subparagraph or knowingly provides false 

3 information. The provisions of section 

4 1128A (other than subsections (a) (with 

5 respect to amounts of penalties or addi6 tional assessments) and (b)) shall apply to 

7 a civil money penalty under this clause in 

8 the same manner as such provisions apply 

9 to a penalty or proceeding under section 

10 1128A(a). 

11 ‘‘(iv) REPORTS.— 

12 ‘‘(I) REPORT TO CONGRESS.— 

13 The Secretary shall, not later than 18 

14 months after date of enactment of 

15 this subparagraph, submit a report to 

16 the Committee on Energy and Com17 merce of the House of Representatives 

18 and the Committee on Finance of the 

19 Senate regarding additional regulatory 

20 or statutory changes that may be re21 quired in order to ensure accurate and 

22 timely reporting and oversight of 

23 manufacturer price and drug product 

24 information, including whether 

25 changes should be made to reasonable 


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1 assumption requirements to ensure 

2 such assumptions are reasonable and 

3 accurate or whether another method4 ology for ensuring accurate and timely 

5 reporting of price and drug product 

6 information should be considered to 

7 ensure the integrity of the drug rebate 

8 program under this section. 

9 ‘‘(II) ANNUAL REPORTS.—The 

10 Secretary shall, on at least an annual 

11 basis, submit a report to the Com12 mittee on Energy and Commerce of 

13 the House of Representatives and the 

14 Committee on Finance of the Senate 

15 summarizing the results of the audits 

16 and surveys conducted under this sub17 paragraph during the period that is 

18 the subject of the report. 

19 ‘‘(III) CONTENT.—Each report 

20 submitted under subclause (II) shall, 

21 with respect to the period that is the 

22 subject of the report, include sum23 maries of— 

24 ‘‘(aa) error rates in the 

25 price, drug product, and other 


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1 relevant information supplied by 

2 manufacturers under subpara3 graph (A); 

4 ‘‘(bb) the timeliness with 

5 which manufacturers, whole6 salers, and direct sellers provide 

7 information required under sub8 paragraph (A) or under clause (i) 

9 or (ii) of this subparagraph; 

10 ‘‘(cc) the number of manu11 facturers, wholesalers, and direct 

12 sellers and drug products audited 

13 under this subparagraph; 

14 ‘‘(dd) the types of price and 

15 drug product information re16 viewed under the audits con17 ducted under this subparagraph; 

18 ‘‘(ee) the tools and meth19 odologies employed in such au20 dits; 

21 ‘‘(ff) the findings of such 

22 audits, including which manufac23 turers, if any, were penalized 

24 under this subparagraph; and 


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1 ‘‘(gg) such other relevant in2 formation as the Secretary shall 

3 deem appropriate. 

4 ‘‘(IV) PROTECTION OF INFORMA5 TION.—In preparing a report required 

6 under subclause (II), the Secretary 

7 shall redact such proprietary informa8 tion as the Secretary determines ap9 propriate to prevent disclosure of, and 

10 to safeguard, such information. 

11 ‘‘(v) APPROPRIATIONS.—Out of any 

12 funds in the Treasury not otherwise appro13 priated, there is appropriated to the Sec14 retary $2,000,000 for fiscal year 2020 and 

15 each fiscal year thereafter to carry out this 

16 subparagraph.’’. 

17 (2) EFFECTIVE DATE.—The amendments made 

18 by this subsection shall take effect on the first day 

19 of the first fiscal quarter that begins after the date 

20 of enactment of this Act. 

21 (b) INCREASED PENALTIES FOR NONCOMPLIANCE

22 WITH REPORTING REQUIREMENTS.— 

23 (1) INCREASED PENALTY FOR FAILURE TO PRO24 VIDE TIMELY INFORMATION.—Section 

25 1927(b)(3)(C)(i) of the Social Security Act (42 


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1 U.S.C. 1396r–8(b)(3)(C)(i)) is amended by striking 

2 ‘‘increased by $10,000 for each day in which such 

3 information has not been provided and such amount 

4 shall be paid to the Treasury’’ and inserting ‘‘, for 

5 each covered outpatient drug with respect to which 

6 such information is not provided, $50,000 for the 

7 first day that such information is not provided on a 

8 timely basis and $19,000 for each subsequent day 

9 that such information is not provided’’. 

10 (2) INCREASED PENALTY FOR KNOWINGLY RE11 PORTING FALSE INFORMATION.—Section 

12 1927(b)(3)(C)(ii) of the Social Security Act (42 

13 U.S.C. 1396r–8(b)(3)(C)(ii)) is amended by striking 

14 ‘‘$100,000’’ and inserting ‘‘$500,000’’. 

15 (3) EFFECTIVE DATE.—The amendments made 

16 by this subsection shall take effect on the first day 

17 of the first fiscal quarter that begins after the date 

18 of enactment of this Act. 

19 (c) RULE OF CONSTRUCTION.—Nothing in this sec20 tion or the amendments made by this section shall be con21 strued to affect the application of the Federal Civil Pen22 alties Inflation Adjustment Act of 1990 (28 U.S.C. 2461 

23 note) to any civil penalty amount under section 1927 of 

24 the Social Security Act (42 U.S.C. 1396r–8). 


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1 SEC. 205. APPLYING MEDICAID DRUG REBATE REQUIRE2 MENT TO DRUGS PROVIDED AS PART OF OUT3 PATIENT HOSPITAL SERVICES. 

4 (a) IN GENERAL.—Section 1927(k)(3) of the Social 

5 Security Act (42 U.S.C. 1396r–8(k)(3)) is amended to 

6 read as follows: 

7 ‘‘(3) LIMITING DEFINITION.— 

8 ‘‘(A) IN GENERAL.—The term ‘covered 

9 outpatient drug’ does not include any drug, bio10 logical product, or insulin provided as part of, 

11 or as incident to and in the same setting as, 

12 any of the following (and for which payment 

13 may be made under this title as part of pay14 ment for the following and not as direct reim15 bursement for the drug): 

16 ‘‘(i) Inpatient hospital services. 

17 ‘‘(ii) Hospice services. 

18 ‘‘(iii) Dental services, except that 

19 drugs for which the State plan authorizes 

20 direct reimbursement to the dispensing 

21 dentist are covered outpatient drugs. 

22 ‘‘(iv) Physicians’ services. 

23 ‘‘(v) Outpatient hospital services. 

24 ‘‘(vi) Nursing facility services and 

25 services provided by an intermediate care 

26 facility for the mentally retarded. 


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1 ‘‘(vii) Other laboratory and x-ray serv2 ices. 

3 ‘‘(viii) Renal dialysis. 

4 ‘‘(B) OTHER EXCLUSIONS.—Such term 

5 also does not include any such drug or product 

6 for which a National Drug Code number is not 

7 required by the Food and Drug Administration 

8 or a drug or biological used for a medical indi9 cation which is not a medically accepted indica10 tion. 

11 ‘‘(C) STATE OPTION.—At the option of a 

12 State, such term may include any drug, biologi13 cal product, or insulin provided on an out14 patient basis as part of, or as incident to and 

15 in the same setting as, described in clause (iv) 

16 or (v) of subparagraph (A) (such as a drug, bi17 ological product, or insulin being provided as 

18 part of a bundled payment). 

19 ‘‘(D) NO EFFECT ON BEST PRICE.—Any 

20 drug, biological product, or insulin excluded 

21 from the definition of such term as a result of 

22 this paragraph shall be treated as a covered 

23 outpatient drug for purposes of determining the 

24 best price (as defined in subsection (c)(1)(C)) 

25 for such drug, biological product, or insulin.’’. 


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1 (b) EFFECTIVE DATE; IMPLEMENTATION GUID2 ANCE.— 

3 (1) IN GENERAL.—The amendment made by 

4 subsection (a) shall take effect on the date that is 

5 1 year after the date of enactment of this Act. 

6 (2) IMPLEMENTATION AND GUIDANCE.—Not 

7 later than 1 year after the date of enactment of this 

8 Act, the Secretary of Health and Human Services 

9 shall issue guidance and relevant informational bul10 letins for States, manufacturers (as defined in sec11 tion 1927(k)(5) of the Social Security Act (42 

12 U.S.C. 1396r–8(k)(5)), and other relevant stake13 holders, including health care providers, regarding 

14 implementation of the amendment made by sub15 section (a). 

16 SEC. 206. IMPROVING TRANSPARENCY AND PREVENTING 

17 THE USE OF ABUSIVE SPREAD PRICING AND 

18 RELATED PRACTICES IN MEDICAID. 

19 (a) PASS-THROUGH PRICING REQUIRED.— 

20 (1) IN GENERAL.—Section 1927(e) of the So21 cial Security Act (42 U.S.C. 1396r–8(e)) is amended 

22 by adding at the end the following: 

23 ‘‘(6) PASS-THROUGH PRICING REQUIRED.—A 

24 contract between the State and a pharmacy benefit 

25 manager (referred to in this paragraph as a ‘PBM’), 


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1 or a contract between the State and a managed care 

2 entity or other specified entity (as such terms are 

3 defined in section 1903(m)(9)(D)) that includes pro4 visions making the entity responsible for coverage of 

5 covered outpatient drugs dispensed to individuals en6 rolled with the entity, shall require that payment for 

7 such drugs (excluding, at the option of the State, 

8 any drug that is subject to an agreement under sec9 tion 340B of the Public Health Service Act) and re10 lated administrative services (as applicable), includ11 ing payments made by a PBM on behalf of the State 

12 or entity, is based on a pass-through pricing model 

13 under which— 

14 ‘‘(A) any payment made by the entity or 

15 the PBM (as applicable) for such a drug— 

16 ‘‘(i) is limited to— 

17 ‘‘(I) ingredient cost; and 

18 ‘‘(II) a professional dispensing 

19 fee that is not less than the profes20 sional dispensing fee that the State 

21 plan or waiver would pay if the plan 

22 or waiver was making the payment di23 rectly; 


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1 ‘‘(ii) is passed through in its entirety 

2 by the entity or PBM to the pharmacy 

3 that dispenses the drug; and 

4 ‘‘(iii) is made in a manner that is con5 sistent with section 1902(a)(30)(A) and 

6 sections 447.512, 447.514, and 447.518 of 

7 title 42, Code of Federal Regulations (or 

8 any successor regulation) as if such re9 quirements applied directly to the entity or 

10 the PBM; 

11 ‘‘(B) payment to the entity or the PBM 

12 (as applicable) for administrative services per13 formed by the entity or PBM is limited to a 

14 reasonable administrative fee that covers the 

15 reasonable cost of providing such services; 

16 ‘‘(C) the entity or the PBM (as applicable) 

17 shall make available to the State, and the Sec18 retary upon request, all costs and payments re19 lated to covered outpatient drugs and accom20 panying administrative services incurred, re21 ceived, or made by the entity or the PBM, in22 cluding ingredient costs, professional dispensing 

23 fees, administrative fees, post-sale and post-in24 voice fees, discounts, or related adjustments 


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1 such as direct and indirect remuneration fees, 

2 and any and all other remuneration; and 

3 ‘‘(D) any form of spread pricing whereby 

4 any amount charged or claimed by the entity or 

5 the PBM (as applicable) is in excess of the 

6 amount paid to the pharmacies on behalf of the 

7 entity, including any post-sale or post-invoice 

8 fees, discounts, effective rate contract adjust9 ments, or related adjustments such as direct 

10 and indirect remuneration fees or assessments 

11 (after allowing for a reasonable administrative 

12 fee as described in subparagraph (B)) is not al13 lowable for purposes of claiming Federal match14 ing payments under this title.’’. 

15 (2) CONFORMING AMENDMENT.—Section 

16 1903(m)(2)(A)(xiii) of such Act (42 U.S.C. 

17 1396b(m)(2)(A)(xiii)), as amended by section 

18 201(b)(1), is amended— 

19 (A) by striking ‘‘and (IV)’’ and inserting 

20 ‘‘(IV)’’; and 

21 (B) by inserting before the period at the 

22 end the following: ‘‘, and (V) pharmacy benefit 

23 management services provided by the entity, or 

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1 rangement between the entity and the phar2 macy benefit manager, shall comply with the re3 quirements of section 1927(e)(6)’’. 

4 (3) EFFECTIVE DATE.—The amendments made 

5 by this subsection apply to contracts between States 

6 and managed care entities, other specified entities, 

7 or pharmacy benefits managers that are entered into 

8 or renewed on or after the date that is 18 months 

9 after the date of enactment of this Act. 

10 (b) SURVEY OF RETAIL PRICES.— 

11 (1) IN GENERAL.—Section 1927(f) of the Social 

12 Security Act (42 U.S.C. 1396r–8(f)) is amended— 

13 (A) by striking ‘‘and’’ after the semicolon 

14 at the end of paragraph (1)(A)(i) and all that 

15 precedes it through ‘‘(1)’’ and inserting the fol16 lowing: 

17 ‘‘(1) SURVEY OF RETAIL PRICES.—The Sec18 retary shall conduct a survey of retail community 

19 drug prices, to include at least the national average 

20 drug acquisition cost, as follows: 

21 ‘‘(A) USE OF VENDOR.—The Secretary 

22 may contract services for— 

23 ‘‘(i) with respect to retail community 

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1 tional average drug acquisition cost for 

2 covered outpatient drugs for such phar3 macies, net of all discounts and rebates (to 

4 the extent any information with respect to 

5 such discounts and rebates is available), 

6 the average reimbursement received for 

7 such drugs by such pharmacies from all 

8 sources of payment, including third par9 ties, and, to the extent available, the usual 

10 and customary charges to consumers for 

11 such drugs; and’’; 

12 (B) by adding at the end of paragraph (1) 

13 the following: 

14 ‘‘(F) SURVEY REPORTING.—In order to 

15 meet the requirement of section 1902(a)(54), a 

16 State shall require that any retail community 

17 pharmacy in the State that receives any pay18 ment, administrative fee, discount, or rebate re19 lated to the dispensing of covered outpatient 

20 drugs to individuals receiving benefits under 

21 this title, regardless of whether such payment, 

22 fee, discount, or rebate is received from the 

23 State or a managed care entity directly or from 

24 a pharmacy benefit manager or another entity 

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1 aged care entity or other specified entity (as 

2 such terms are defined in section 

3 1903(m)(9)(D)), shall respond to surveys of re4 tail prices conducted under this subsection. 

5 ‘‘(G) SURVEY INFORMATION.—Information 

6 on retail community prices obtained under this 

7 paragraph shall be made publicly available and 

8 shall include at least the following: 

9 ‘‘(i) The monthly response rate of the 

10 survey including a list of pharmacies not in 

11 compliance with subparagraph (F). 

12 ‘‘(ii) The sampling frame and number 

13 of pharmacies sampled monthly. 

14 ‘‘(iii) Characteristics of reporting 

15 pharmacies, including type (such as inde16 pendent or chain), geographic or regional 

17 location, and dispensing volume. 

18 ‘‘(iv) Reporting of a separate national 

19 average drug acquisition cost for each drug 

20 for independent retail pharmacies and 

21 chain operated pharmacies. 

22 ‘‘(v) Information on price concessions 

23 including on and off invoice discounts, re24 bates, and other price concessions. 


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1 ‘‘(vi) Information on average profes2 sional dispensing fees paid. 

3 ‘‘(H) PENALTIES.— 

4 ‘‘(i) FAILURE TO PROVIDE TIMELY IN5 FORMATION.—A retail community phar6 macy that knowingly fails to respond to a 

7 survey conducted under this subsection on 

8 a timely basis may be subject to a civil 

9 monetary penalty in an amount not to ex10 ceed $10,000 for each day in which such 

11 information has not been provided. 

12 ‘‘(ii) FALSE INFORMATION.—A retail 

13 community pharmacy that knowingly pro14 vides false information in response to a 

15 survey conducted under this subsection 

16 may be subject to a civil money penalty in 

17 an amount not to exceed $100,000 for 

18 each item of false information. 

19 ‘‘(iii) OTHER PENALTIES.—Any civil 

20 money penalties imposed under this sub21 paragraph shall be in addition to other 

22 penalties as may be prescribed by law. The 

23 provisions of section 1128A (other than 

24 subsections (a) and (b)) shall apply to a 

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1 graph in the same manner as such provi2 sions apply to a penalty or proceeding 

3 under section 1128A(a). 

4 ‘‘(I) REPORT ON SPECIALTY DRUGS AND

5 PHARMACIES.— 

6 ‘‘(i) IN GENERAL.—Not later than 18 

7 months after the effective date of this sub8 paragraph, the Secretary shall submit a re9 port to Congress examining specialty drug 

10 coverage and reimbursement under this 

11 title. 

12 ‘‘(ii) CONTENT OF REPORT.—Such re13 port shall include a description of how 

14 State Medicaid programs define specialty 

15 drugs, how much State Medicaid programs 

16 pay for specialty drugs, how States and 

17 managed care plans determine payment for 

18 specialty drugs, the settings in which spe19 cialty drugs are dispensed (such as retail 

20 community pharmacies or specialty phar21 macies), whether acquisition costs for spe22 cialty drugs are captured in the national 

23 average drug acquisition cost survey, and 

24 recommendations as to whether specialty 

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1 vey of retail prices to ensure national aver2 age drug acquisition costs capture drugs 

3 sold at specialty pharmacies and how such 

4 specialty pharmacies should be defined.’’; 

5 (C) in paragraph (2)— 

6 (i) in subparagraph (A), by inserting 

7 ‘‘, including payments rates under Med8 icaid managed care plans,’’ after ‘‘under 

9 this title’’; and 

10 (ii) in subparagraph (B), by inserting 

11 ‘‘and the basis for such dispensing fees’’ 

12 before the semicolon; and 

13 (D) in paragraph (4), by inserting ‘‘, and 

14 $5,000,000 for fiscal year 2020 and each fiscal 

15 year thereafter,’’ after ‘‘2010’’. 

16 (2) EFFECTIVE DATE.—The amendments made 

17 by this subsection take effect on the 1st day of the 

18 1st quarter that begins on or after the date that is 

19 18 months after the date of enactment of this Act. 

20 (c) MANUFACTURER REPORTING OF WHOLESALE

21 ACQUISITION COST.—Section 1927(b)(3) of such Act (42 

22 U.S.C. 1396r–8(b)(3)) is amended— 

23 (1) in subparagraph (A)(i)— 

24 (A) in subclause (I), by striking ‘‘and’’ 

25 after the semicolon; 


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1 (B) in subclause (II), by adding ‘‘and’’ 

2 after the semicolon; 

3 (C) by moving the left margins of sub4 clause (I) and (II) 2 ems to the right; and 

5 (D) by adding at the end the following: 

6 ‘‘(III) in the case of rebate peri7 ods that begin on or after the date of 

8 enactment of this subclause, on the 

9 wholesale acquisition cost (as defined 

10 in section 1847A(c)(6)(B)) for cov11 ered outpatient drugs for the rebate 

12 period under the agreement (including 

13 for all such drugs that are sold under 

14 a new drug application approved 

15 under section 505(c) of the Federal 

16 Food, Drug, and Cosmetic Act);’’; and 

17 (2) in subparagraph (D)— 

18 (A) in the matter preceding clause (i), by 

19 inserting ‘‘and clause (vii) of this subpara20 graph’’ after ‘‘1847A’’; 

21 (B) in clause (v), by striking ‘‘and’’ after 

22 the comma; 

23 (C) in clause (vi), by striking the period 

24 and inserting ‘‘, and’’; and 


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1 (D) by inserting after clause (vi) the fol2 lowing: 

3 ‘‘(vii) to the Secretary to disclose 

4 (through a website accessible to the public) 

5 the most recently reported wholesale acqui6 sition cost (as defined in section 

7 1847A(c)(6)(B)) for each covered out8 patient drug (including for all such drugs 

9 that are sold under a new drug application 

10 approved under section 505(c) of the Fed11 eral Food, Drug, and Cosmetic Act), as re12 ported under subparagraph (A)(i)(III).’’. 

13 SEC. 207. T–MSIS DRUG DATA ANALYTICS REPORTS. 

14 (a) IN GENERAL.—Not later than May 1 of each cal15 endar year beginning with calendar year 2021, the Sec16 retary of Health and Human Services (in this section re17 ferred to as the ‘‘Secretary’’) shall publish on a website 

18 of the Centers for Medicare & Medicaid Services that is 

19 accessible to the public a report of the most recently avail20 able data on patterns related to prescriptions filled by pro21 viders and reimbursed under the Medicaid program. 

22 (b) CONTENT OF REPORT.— 

23 (1) REQUIRED CONTENT.—Each report re24 quired under subsection (a) for a calendar year shall 

25 include the following information with respect to 


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1 each State (and, to the extent available, with respect 

2 to Puerto Rico, the United States Virgin Islands, 

3 Guam, the Northern Mariana Islands, and American 

4 Samoa): 

5 (A) A comparison of covered outpatient 

6 drug (as defined in section 1927(k)(2) of the 

7 Social Security Act (42 U.S.C. 1396r–8(k)(2))) 

8 prescribing patterns under the State Medicaid 

9 plan or waiver of such plan (including drugs 

10 prescribed on a fee-for-service basis and drugs 

11 prescribed under managed care arrangements 

12 under such plan or waiver)— 

13 (i) across all available forms or mod14 els of reimbursement used under the plan 

15 or waiver; 

16 (ii) within specialties and subspecial17 ties, as defined by the Secretary; 

18 (iii) by episodes of care for— 

19 (I) each chronic disease category, 

20 as defined by the Secretary, that is 

21 represented in the 10 conditions that 

22 accounted for the greatest share of 

23 total spending under the plan or waiv24 er during the year that is the subject 

25 of the report; 


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1 (II) procedural groupings; and 

2 (III) rare disease diagnosis codes 

3 (except where the inclusion of such in4 formation would jeopardize the pri5 vacy of an individual, as determined 

6 by the Secretary); 

7 (iv) by patient demographic character8 istics, including race (to the extent that 

9 the Secretary determines that there is suf10 ficient data available with respect to such 

11 characteristic in a majority of States and 

12 that inclusion of such characteristic would 

13 not jeopardize the privacy of the indi14 vidual), gender, and age; 

15 (v) by patient high-utilizer or risk sta16 tus; and 

17 (vi) by high and low resource settings 

18 by facility and place of service categories, 

19 as determined by the Secretary. 

20 (B) In the case of medical assistance for 

21 covered outpatient drugs (as so defined) pro22 vided under a State Medicaid plan or waiver of 

23 such plan in a managed care setting, an anal24 ysis of the differences in managed care pre25 scribing patterns when a covered outpatient 


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1 drug is prescribed in a managed care setting as 

2 compared to when the drug is prescribed in a 

3 fee-for-service setting. 

4 (2) ADDITIONAL CONTENT.—To the extent 

5 available, a report required under subsection (a) for 

6 a calendar year may include State-specific informa7 tion about prescription utilization management tools 

8 under State Medicaid plans or waivers of such plans, 

9 including— 

10 (A) a description of prescription utilization 

11 management tools under State programs to pro12 vide long-term services and supports under a 

13 State Medicaid plan or a waiver of such plan; 

14 (B) a comparison of prescription utilization 

15 management tools applicable to populations cov16 ered under a State Medicaid plan waiver under 

17 section 1115 of the Social Security Act (42 

18 U.S.C. 1315) and the models applicable to pop19 ulations that are not covered under the waiver; 

20 (C) a comparison of the prescription utili21 zation management tools employed by different 

22 Medicaid managed care organizations, phar23 macy benefit managers, and related entities 

24 within the State; 


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1 (D) a comparison of the prescription utili2 zation management tools applicable to each en3 rollment category under a State Medicaid plan 

4 or waiver; and 

5 (E) a comparison of the prescription utili6 zation management tools applicable under the 

7 State Medicaid plan or waiver by patient high8 utilizer or risk status. 

9 (3) ADDITIONAL ANALYSIS.—To the extent 

10 practicable, the Secretary shall include in each re11 port published under subsection (a)— 

12 (A) analyses of national, State, and local 

13 patterns of Medicaid population-based pre14 scribing behaviors (including an analysis of the 

15 impact of non-filled prescriptions on identifying 

16 such patterns); and 

17 (B) recommendations for administrative or 

18 legislative action to improve the effectiveness of, 

19 and reduce costs for, covered outpatient drugs 

20 under Medicaid while ensuring timely bene21 ficiary access to medically necessary covered 

22 outpatient drugs. 

23 (c) USE OF T–MSIS DATA.—Each report required 

24 under subsection (a) shall, to the extent practicable— 


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1 (1) be prepared using data and definitions from 

2 the Transformed Medicaid Statistical Information 

3 System (‘‘T–MSIS’’) data set (or a successor data 

4 set) that is not more than 24 months old on the date 

5 that the report is published; and 

6 (2) as appropriate, include a description with 

7 respect to each State of the quality and complete8 ness of the data, as well as any necessary caveats 

9 describing the limitations of the data reported to the 

10 Secretary by the State that are sufficient to commu11 nicate the appropriate uses for the information. 

12 (d) PREPARATION OF REPORT.—Each report re13 quired under subsection (a) shall be prepared by the Ad14 ministrator for the Centers for Medicare & Medicaid Serv15 ices. 

16 (e) APPROPRIATION.—For fiscal year 2020 and each 

17 fiscal year thereafter, there is appropriated to the Sec18 retary $2,000,000 to carry out this section. 

19 SEC. 208. RISK-SHARING VALUE-BASED PAYMENT AGREE20 MENTS FOR COVERED OUTPATIENT DRUGS 

21 UNDER MEDICAID. 

22 (a) IN GENERAL.—Section 1927 of the Social Secu23 rity Act (42 U.S.C. 1396r–8) is amended by adding at 

24 the end the following new subsection: 


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1 ‘‘(l) STATE OPTION TO PAY FOR COVERED OUT2 PATIENT DRUGS THROUGH RISK-SHARING VALUE-BASED

3 AGREEMENTS.— 

4 ‘‘(1) IN GENERAL.—Beginning January 1, 

5 2022, a State shall have the option to pay (whether 

6 on a fee-for-service or managed care basis) for cov7 ered outpatient drugs that are potentially curative 

8 treatments intended for one-time use that are ad9 ministered to individuals under this title by entering 

10 into a risk-sharing value-based payment agreement 

11 with the manufacturer of the drug in accordance 

12 with the requirements of this subsection. 

13 ‘‘(2) SECRETARIAL APPROVAL.— 

14 ‘‘(A) IN GENERAL.—A State shall submit a 

15 request to the Secretary to enter into a risk16 sharing value-based payment agreement, and 

17 the Secretary shall not approve a proposed risk18 sharing value-based payment agreement be19 tween a State and a manufacturer for payment 

20 for a covered outpatient drug of the manufac21 turer unless the following requirements are met: 

22 ‘‘(i) MANUFACTURER HAS IN EFFECT

23 A REBATE AGREEMENT AND IS IN COMPLI24 ANCE WITH ALL APPLICABLE REQUIRE25 MENTS.—The manufacturer has a rebate 


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1 agreement in effect as required under sub2 sections (a) and (b) of this section and is 

3 in compliance with all applicable require4 ments under this title. 

5 ‘‘(ii) NO EXPECTED INCREASE TO

6 PROJECTED NET FEDERAL SPENDING.— 

7 ‘‘(I) IN GENERAL.—The Chief 

8 Actuary certifies that the projected 

9 payments for each covered outpatient 

10 drug under a proposed risk-sharing 

11 value-based payment agreement is not 

12 expected to result in greater estimated 

13 Federal spending under this title than 

14 the net Federal spending that would 

15 result in the absence of such agree16 ment. 

17 ‘‘(II) NET FEDERAL SPENDING

18 DEFINED.—For purposes of this sub19 section, the term ‘net Federal spend20 ing’ means the amount of Federal 

21 payments the Chief Actuary estimates 

22 would be made under this title for ad23 ministering a covered outpatient drug 

24 to an individual eligible for medical 

25 assistance under a State plan or a 


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1 waiver of such plan, reduced by the 

2 amount of all rebates the Chief Actu3 ary estimates would be paid with re4 spect to the administering of such 

5 drug, including all rebates under this 

6 title and any supplemental or other 

7 additional rebates, in the absence of 

8 such an agreement. 

9 ‘‘(III) INFORMATION.—The Chief 

10 Actuary shall make the certifications 

11 required under this clause based on 

12 the most recently available and reli13 able drug pricing and product infor14 mation. The State and manufacturer 

15 shall provide the Secretary and the 

16 Chief Actuary with all necessary infor17 mation required to make the estimates 

18 needed for such certifications. 

19 ‘‘(iii) LAUNCH AND LIST PRICE JUS20 TIFICATIONS.—The manufacturer submits 

21 all relevant information and supporting 

22 documentation necessary for pricing deci23 sions as deemed appropriate by the Sec24 retary, which shall be truthful and non25 misleading, including manufacturer inforVerDate Sep 11 2014 19:48 Jul 14, 2020 Jkt 099200 PO 00000 Frm 00220 Fmt 6652 Sfmt 6201 E:\BILLS\S4199.IS S4199

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1 mation and supporting documentation for 

2 launch price or list price increases, and 

3 any applicable justification required under 

4 section 1128L. 

5 ‘‘(iv) CONFIDENTIALITY OF INFORMA6 TION; PENALTIES.—The provisions of sub7 paragraphs (C) and (D) of subsection 

8 (b)(3) shall apply to a manufacturer that 

9 fails to submit the information and docu10 mentation required under clauses (ii) and 

11 (iii) on a timely basis, or that knowingly 

12 provides false or misleading information, in 

13 the same manner as such provisions apply 

14 to a manufacturer with a rebate agreement 

15 under this section. 

16 ‘‘(B) CONSIDERATION OF STATE REQUEST

17 FOR APPROVAL.— 

18 ‘‘(i) IN GENERAL.—The Secretary 

19 shall treat a State request for approval of 

20 a risk-sharing value-based payment agree21 ment in the same manner that the Sec22 retary treats a State plan amendment, and 

23 subpart B of part 430 of title 42, Code of 

24 Federal Regulations, including, subject to 

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1 tion 430.16 of such title (as in effect on 

2 the date of enactment of this subsection), 

3 shall apply to a request for approval of a 

4 risk-sharing value-based payment agree5 ment in the same manner as such subpart 

6 applies to a State plan amendment. 

7 ‘‘(ii) TIMING.—The Secretary shall 

8 consult with the Commissioner of Food 

9 and Drugs as required under subpara10 graph (C) and make a determination on 

11 whether to approve a request from a State 

12 for approval of a proposed risk-sharing 

13 value-based payment agreement (or request 

14 additional information necessary to allow 

15 the Secretary to make a determination 

16 with respect to such request for approval) 

17 within the time period, to the extent prac18 ticable, specified in section 430.16 of title 

19 42, Code of Federal Regulations (as in ef20 fect on the date of enactment of this sub21 section), but in no case shall the Secretary 

22 take more than 180 days after the receipt 

23 of such request for approval or response to 

24 such request for additional information to 


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1 make such a determination (or request ad2 ditional information). 

3 ‘‘(C) CONSULTATION WITH THE COMMIS4 SIONER OF FOOD AND DRUGS.—In considering 

5 whether to approve a risk-sharing value-based 

6 payment agreement, the Secretary, to the ex7 tent necessary, shall consult with the Commis8 sioner of Food and Drugs to determine whether 

9 the relevant clinical parameters specified in 

10 such agreement are appropriate. 

11 ‘‘(3) INSTALLMENT-BASED PAYMENT STRUC12 TURE.— 

13 ‘‘(A) IN GENERAL.—A risk-sharing value14 based payment agreement shall provide for a 

15 payment structure under which, for every in16 stallment year of the agreement (subject to sub17 paragraph (B)), the State shall pay the total in18 stallment year amount in equal installments to 

19 be paid at regular intervals over a period of 

20 time that shall be specified in the agreement. 

21 ‘‘(B) REQUIREMENTS FOR INSTALLMENT

22 PAYMENTS.— 

23 ‘‘(i) TIMING OF FIRST PAYMENT.— 

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1 graph (A) for an installment year not later 

2 than 30 days after the end of such year. 

3 ‘‘(ii) LENGTH OF INSTALLMENT PE4 RIOD.—The period of time over which the 

5 State shall make the installment payments 

6 described in subparagraph (A) for an in7 stallment year shall not be longer than 5 

8 years. 

9 ‘‘(iii) NONPAYMENT OR REDUCED

10 PAYMENT OF INSTALLMENTS FOLLOWING

11 A FAILURE TO MEET CLINICAL PARAM12 ETER.—If, prior to the payment date (as 

13 specified in the agreement) of any install14 ment payment described in subparagraph 

15 (A) or any other alternative date or time 

16 frame (as otherwise specified in the agree17 ment), the covered outpatient drug which 

18 is subject to the agreement fails to meet a 

19 relevant clinical parameter of the agree20 ment, the agreement shall provide that— 

21 ‘‘(I) the installment payment 

22 shall not be made; or 

23 ‘‘(II) the installment payment 

24 shall be reduced by a percentage spec25 ified in the agreement that is based 


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1 on the outcome achieved by the drug 

2 relative to the relevant clinical param3 eter. 

4 ‘‘(4) NOTICE OF INTENT.— 

5 ‘‘(A) IN GENERAL.—Subject to subpara6 graph (B), a manufacturer of a covered out7 patient drug shall not be eligible to enter into 

8 a risk-sharing value-based payment agreement 

9 under this subsection with respect to such drug 

10 unless the manufacturer notifies the Secretary 

11 that the manufacturer is interested in entering 

12 into such an agreement with respect to such 

13 drug. The decision to submit and timing of a 

14 request to enter into a proposed risk-sharing 

15 value-based payment agreement shall remain 

16 solely within the discretion of the State and 

17 shall only be effective upon Secretarial approval 

18 as required under this subsection. 

19 ‘‘(B) TREATMENT OF SUBSEQUENTLY AP20 PROVED DRUGS.— 

21 ‘‘(i) IN GENERAL.—In the case of a 

22 manufacturer of a covered outpatient drug 

23 designated under section 526 of the Fed24 eral Food, Drug, and Cosmetics Act, and 

25 approved under section 505 of such Act or 


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1 licensed under subsection (a) or (k) of sec2 tion 351 of the Public Health Service Act 

3 after the date of enactment of this sub4 section, not more than 90 days after meet5 ing with the Food and Drug Administra6 tion following phase II clinical trials for 

7 such drug (or, in the case of a drug de8 scribed in clause (ii), not later than March 

9 31, 2022), the manufacturer must notify 

10 the Secretary of the manufacturer’s intent 

11 to enter into a risk-sharing value-based 

12 payment agreement under this subsection 

13 with respect to such drug. If no such meet14 ing has occurred, the Secretary may use 

15 discretion as to whether a potentially cura16 tive treatment intended for one-time use 

17 may qualify for a risk-sharing value-based 

18 payment agreement under this section. A 

19 manufacturer notification of interest shall 

20 not have any influence on a decision for 

21 drug approval by the Food and Drug Ad22 ministration. 

23 ‘‘(ii) APPLICATION TO CERTAIN SUB24 SEQUENTLY APPROVED DRUGS.—A drug 


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1 described in this clause is a covered out2 patient drug of a manufacturer— 

3 ‘‘(I) that is approved under sec4 tion 505 of the Federal Food, Drug, 

5 and Cosmetic Act or licensed under 

6 section 351 of the Public Health Serv7 ice Act after the date of enactment of 

8 this subsection; and 

9 ‘‘(II) with respect to which, as of 

10 January 1, 2022, more than 90 days 

11 have passed after the manufacturer’s 

12 meeting with the Food and Drug Ad13 ministration following phase II clinical 

14 trials for such drug. 

15 ‘‘(iii) PARALLEL APPROVAL.—The 

16 Secretary, in coordination with the Admin17 istrator of the Centers for Medicare & 

18 Medicaid Services and the Commissioner of 

19 Food and Drugs, shall, to the extent prac20 ticable, approve a State’s request to enter 

21 into a proposed risk-sharing value-based 

22 payment agreement that otherwise meets 

23 the requirements of this subsection at the 

24 time that such a drug is approved by the 

25 Food and Drug Administration to help 


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1 provide that no State that wishes to enter 

2 into such an agreement is required to pay 

3 for the drug in full at one time if the State 

4 is seeking to pay over a period of time as 

5 outlined in the proposed agreement. 

6 ‘‘(iv) RULE OF CONSTRUCTION.— 

7 Nothing in this paragraph shall be applied 

8 or construed to modify or affect the time9 frames or factors involved in the Sec10 retary’s determination of whether to ap11 prove or license a drug under section 505 

12 of the Federal Food, Drug, and Cosmetic 

13 Act or section 351 of the Public Health 

14 Service Act. 

15 ‘‘(5) SPECIAL PAYMENT RULES.— 

16 ‘‘(A) IN GENERAL.—Except as otherwise 

17 provided in this paragraph, with respect to an 

18 individual who is administered a unit of a cov19 ered outpatient drug that is reimbursed under 

20 a State plan by a State Medicaid agency under 

21 a risk-sharing value-based payment agreement 

22 in an installment year, the State shall remain 

23 liable to the manufacturer of such drug for pay24 ment for such unit without regard to whether 

25 the individual remains enrolled in the State 


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1 plan under this title (or a waiver of such plan) 

2 for each installment year for which the State is 

3 to make installment payments for covered out4 patient drugs purchased under the agreement 

5 in such year. 

6 ‘‘(B) DEATH.—In the case of an individual 

7 described in subparagraph (A) who dies during 

8 the period described in such subparagraph, the 

9 State plan shall not be liable for any remaining 

10 payment for the unit of the covered outpatient 

11 drug administered to the individual which is 

12 owed under the agreement described in such 

13 subparagraph. 

14 ‘‘(C) WITHDRAWAL OF APPROVAL.—In the 

15 case of a covered outpatient drug that is the 

16 subject of a risk-sharing value-based payment 

17 agreement between a State and a manufacturer 

18 under this subsection, including a drug ap19 proved in accordance with section 506(c) of the 

20 Federal Food, Drug, and Cosmetic Act, and 

21 such drug is the subject of an application that 

22 has been withdrawn by the Secretary, the State 

23 plan shall not be liable for any remaining pay24 ment that is owed under the agreement. 


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1 ‘‘(D) ALTERNATIVE ARRANGEMENT UNDER

2 AGREEMENT.—Subject to approval by the Sec3 retary, the terms of a proposed risk-sharing 

4 value-based payment agreement submitted for 

5 approval by a State may provide that subpara6 graph (A) shall not apply. 

7 ‘‘(E) GUIDANCE.—Not later than January 

8 1, 2022, the Secretary shall issue guidance to 

9 States establishing a process for States to no10 tify the Secretary when an individual who is ad11 ministered a unit of a covered outpatient drug 

12 that is purchased by a State plan under a risk13 sharing value-based payment agreement ceases 

14 to be enrolled under the State plan under this 

15 title (or a waiver of such plan) or dies before 

16 the end of the installment period applicable to 

17 such unit under the agreement. 

18 ‘‘(6) TREATMENT OF PAYMENTS UNDER RISK19 SHARING VALUE-BASED AGREEMENTS FOR PUR20 POSES OF AVERAGE MANUFACTURER PRICE; BEST

21 PRICE.—The Secretary shall treat any payments 

22 made to the manufacturer of a covered outpatient 

23 drug under a risk-sharing value-based payment 

24 agreement under this subsection during a rebate pe25 riod in the same manner that the Secretary treats 


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1 payments made under a State supplemental rebate 

2 agreement under sections 447.504(c)(19) and 

3 447.505(c)(7) of title 42, Code of Federal Regula4 tions (or any successor regulations) for purposes of 

5 determining average manufacturer price and best 

6 price under this section with respect to the covered 

7 outpatient drug and a rebate period and for pur8 poses of offsets required under subsection (b)(1)(B). 

9 ‘‘(7) ASSESSMENTS AND REPORT TO CON10 GRESS.— 

11 ‘‘(A) ASSESSMENTS.— 

12 ‘‘(i) IN GENERAL.—Not later than 

13 180 days after the end of each assessment 

14 period of any risk-sharing value-based pay15 ment agreement for a State approved 

16 under this subsection, the Secretary shall 

17 conduct an evaluation of such agreement 

18 which shall include an evaluation by the 

19 Chief Actuary to determine whether pro20 gram spending under the risk-sharing 

21 value-based payment agreement aligned 

22 with the projections for the agreement 

23 made under paragraph (2)(A)(ii), including 

24 an assessment of whether actual Federal 

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1 ment was less or more than net Federal 

2 spending would have been in the absence 

3 of the agreement. 

4 ‘‘(ii) ASSESSMENT PERIOD.—For pur5 poses of clause (i)— 

6 ‘‘(I) the first assessment period 

7 for a risk-sharing value-based pay8 ment agreement shall be the period of 

9 time over which payments are sched10 uled to be made under the agreement 

11 for the first 10 individuals who are 

12 administered covered outpatient drugs 

13 under the agreement except that such 

14 period shall not exceed the 5-year pe15 riod after the date on which the Sec16 retary approves the agreement; and 

17 ‘‘(II) each subsequent assessment 

18 period for a risk-sharing value-based 

19 payment agreement shall be the 5- 

20 year period following the end of the 

21 previous assessment period. 

22 ‘‘(B) RESULTS OF ASSESSMENTS.— 

23 ‘‘(i) TERMINATION OPTION.—If the 

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1 paragraph (A) that the actual Federal 

2 spending under this title for any covered 

3 outpatient drug that was the subject of the 

4 State’s risk-sharing value-based payment 

5 agreement was greater than the net Fed6 eral spending that would have resulted in 

7 the absence of the agreement, the Sec8 retary may terminate approval of such 

9 agreement and shall immediately conduct 

10 an assessment under this paragraph of any 

11 other ongoing risk-sharing value-based 

12 payment agreement to which the same 

13 manufacturer is a party. 

14 ‘‘(ii) REPAYMENT REQUIRED.— 

15 ‘‘(I) IN GENERAL.—If the Sec16 retary determines as a result of the 

17 assessment by the Chief Actuary 

18 under subparagraph (A) that the Fed19 eral spending under the risk-sharing 

20 value-based agreement for a covered 

21 outpatient drug that was subject to 

22 such agreement was greater than the 

23 net Federal spending that would have 

24 resulted in the absence of the agree25 ment, the manufacturer shall repay 


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1 the difference to the State and Fed2 eral governments in a timely manner 

3 as determined by the Secretary. 

4 ‘‘(II) TERMINATION FOR FAIL5 URE TO PAY.—The failure of a manu6 facturer to make repayments required 

7 under subclause (I) in a timely man8 ner shall result in immediate termi9 nation of all risk-sharing value-based 

10 agreements to which the manufacturer 

11 is a party. 

12 ‘‘(III) ADDITIONAL PEN13 ALTIES.—In the case of a manufac14 turer that fails to make repayments 

15 required under subclause (I), the Sec16 retary may treat such manufacturer 

17 in the same manner as a manufac18 turer that fails to pay required re19 bates under this section, and the Sec20 retary may— 

21 ‘‘(aa) suspend or terminate 

22 the manufacturer’s rebate agree23 ment under this section; and 

24 ‘‘(bb) pursue any other rem25 edy that would be available if the 


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1 manufacturer had failed to pay 

2 required rebates under this sec3 tion. 

4 ‘‘(C) REPORT TO CONGRESS.—Not later 

5 than 5 years after the first risk-sharing value6 based payment agreement is approved under 

7 this subsection, the Secretary shall submit to 

8 Congress and make available to the public a re9 port that includes— 

10 ‘‘(i) an assessment of the impact of 

11 risk-sharing value-based payment agree12 ments on access for individuals who are eli13 gible for benefits under a State plan or 

14 waiver under this title to medically nec15 essary covered outpatient drugs and re16 lated treatments; 

17 ‘‘(ii) an analysis of the impact of such 

18 agreements on overall State and Federal 

19 spending under this title; 

20 ‘‘(iii) an assessment of the impact of 

21 such agreements on drug prices, including 

22 launch price and price increases; and 

23 ‘‘(iv) such recommendations to Con24 gress as the Secretary deems appropriate. 

25 ‘‘(8) GUIDANCE AND REGULATIONS.— 


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1 ‘‘(A) IN GENERAL.—Not later than Janu2 ary 1, 2022, the Secretary shall issue guidance 

3 to States seeking to enter into risk-sharing 

4 value-based payment agreements under this 

5 subsection that includes a model template for 

6 such agreements. The Secretary may issue any 

7 additional guidance or promulgate regulations 

8 as necessary to implement and enforce the pro9 visions of this subsection. 

10 ‘‘(B) MODEL AGREEMENTS.— 

11 ‘‘(i) IN GENERAL.—If a State ex12 presses an interest in pursuing a risk-shar13 ing value-based payment agreement under 

14 this subsection with a manufacturer for 

15 the purchase of a covered outpatient drug, 

16 the Secretary may share with such State 

17 any risk-sharing value-based agreement be18 tween a State and the manufacturer for 

19 the purchase of such drug that has been 

20 approved under this subsection. While such 

21 shared agreement may serve as a template 

22 for a State that wishes to propose, the use 

23 of a previously approved agreement shall 

24 not affect the submission and approval 

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1 sharing value-based payment agreement 

2 under this subsection, including the re3 quirements under paragraph (2)(A). 

4 ‘‘(ii) CONFIDENTIALITY.—In the case 

5 of a risk-sharing value-based payment 

6 agreement that is disclosed to a State by 

7 the Secretary under this subparagraph and 

8 that is only in effect with respect to a sin9 gle State, the confidentiality of information 

10 provisions described in subsection 

11 (b)(3)(D) shall apply to such information. 

12 ‘‘(C) OIG CONSULTATION.— 

13 ‘‘(i) IN GENERAL.—The Secretary 

14 shall consult with the Office of the Inspec15 tor General of the Department of Health 

16 and Human Services to determine whether 

17 there are potential program integrity con18 cerns (including issues related to compli19 ance with sections 1128B and 1877) with 

20 agreement approvals or templates and ad21 dress accordingly. 

22 ‘‘(ii) OIG POLICY UPDATES AS NEC23 ESSARY.—The Inspector General of the 

24 Department of Health and Human Serv25 ices shall review and update, as necessary, 


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1 any policies or guidelines of the Office of 

2 the Inspector General of the Department 

3 of Human Services (including policies re4 lated to the enforcement of section 1128B) 

5 to accommodate the use of risk-sharing 

6 value-based payment agreements in accord7 ance with this section. 

8 ‘‘(9) RULES OF CONSTRUCTION.— 

9 ‘‘(A) MODIFICATIONS.—Nothing in this 

10 subsection or any regulations promulgated 

11 under this subsection shall prohibit a State 

12 from requesting a modification from the Sec13 retary to the terms of a risk-sharing value14 based payment agreement. A modification that 

15 is expected to result in any increase to pro16 jected net State or Federal spending under the 

17 agreement shall be subject to recertification by 

18 the Chief Actuary as described in paragraph 

19 (2)(A)(ii) before the modification may be ap20 proved. 

21 ‘‘(B) REBATE AGREEMENTS.—Nothing in 

22 this subsection shall be construed as requiring 

23 a State to enter into a risk-sharing value-based 

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1 plemental rebate agreement for a covered out2 patient drug. 

3 ‘‘(C) FFP FOR PAYMENTS UNDER RISK4 SHARING VALUE-BASED PAYMENT AGREE5 MENTS.—Federal financial participation shall 

6 be available under this title for any payment 

7 made by a State to a manufacturer for a cov8 ered outpatient drug under a risk-sharing 

9 value-based payment agreement in accordance 

10 with this subsection, except that no Federal fi11 nancial participation shall be available for any 

12 payment made by a State to a manufacturer 

13 under such an agreement on and after the ef14 fective date of a disapproval of such agreement 

15 by the Secretary. 

16 ‘‘(D) CONTINUED APPLICATION OF OTHER

17 PROVISIONS.—Except as expressly provided in 

18 this subsection, nothing in this subsection or in 

19 any regulations promulgated under this sub20 section shall affect the application of any other 

21 provision of this Act. 

22 ‘‘(10) APPROPRIATIONS.—For fiscal year 2020 

23 and each fiscal year thereafter, there are appro24 priated to the Secretary $5,000,000 for the purpose 

25 of carrying out this subsection. 


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1 ‘‘(11) DEFINITIONS.—In this subsection: 

2 ‘‘(A) CHIEF ACTUARY.—The term ‘Chief 

3 Actuary’ means the Chief Actuary of the Cen4 ters for Medicare & Medicaid Services. 

5 ‘‘(B) INSTALLMENT YEAR.—The term ‘in6 stallment year’ means, with respect to a risk7 sharing value-based payment agreement, a 12- 

8 month period during which a covered outpatient 

9 drug is administered under the agreement. 

10 ‘‘(C) POTENTIALLY CURATIVE TREATMENT

11 INTENDED FOR ONE-TIME USE.—The term ‘po12 tentially curative treatment intended for one13 time use’ means a treatment that consists of 

14 the administration of a covered outpatient drug 

15 that— 

16 ‘‘(i) is a form of gene therapy for a 

17 rare disease, as defined by the Commis18 sioner of Food and Drugs, designated 

19 under section 526 of the Federal Food, 

20 Drug, and Cosmetics Act, and approved 

21 under section 505 of such Act or licensed 

22 under subsection (a) or (k) of section 351 

23 of the Public Health Service Act to treat 

24 a serious or life-threatening disease or con25 dition; 


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1 ‘‘(ii) if administered in accordance 

2 with the labeling of such drug, is expected 

3 to result in either— 

4 ‘‘(I) the cure of such disease or 

5 condition; or 

6 ‘‘(II) a reduction in the symp7 toms of such disease or condition to 

8 the extent that such disease or condi9 tion is not expected to lead to early 

10 mortality; and 

11 ‘‘(iii) is expected to achieve a result 

12 described in clause (ii), which may be 

13 achieved over an extended period of time, 

14 after not more than 3 administrations. 

15 ‘‘(D) RELEVANT CLINICAL PARAMETER.— 

16 The term ‘relevant clinical parameter’ means, 

17 with respect to a covered outpatient drug that 

18 is the subject of a risk-sharing value-based pay19 ment agreement— 

20 ‘‘(i) a clinical endpoint specified in the 

21 drug’s labeling or supported by one or 

22 more of the compendia described in section 

23 1861(t)(2)(B)(ii)(I) that— 

24 ‘‘(I) is able to be measured or 

25 evaluated on an annual basis for each 


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1 year of the agreement on an inde2 pendent basis by a provider or other 

3 entity; and 

4 ‘‘(II) is required to be achieved 

5 (based on observed metrics in patient 

6 populations) under the terms of the 

7 agreement; or 

8 ‘‘(ii) a surrogate endpoint (as defined 

9 in section 507(e)(9) of the Federal Food, 

10 Drug, and Cosmetic Act), including those 

11 developed by patient-focused drug develop12 ment tools, that— 

13 ‘‘(I) is able to be measured or 

14 evaluated on an annual basis for each 

15 year of the agreement on an inde16 pendent basis by a provider or other 

17 entity; and 

18 ‘‘(II) has been qualified by the 

19 Food and Drug Administration. 

20 ‘‘(E) RISK-SHARING VALUE-BASED PAY21 MENT AGREEMENT.—The term ‘risk-sharing 

22 value-based payment agreement’ means an 

23 agreement between a State plan and a manu24 facturer— 


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1 ‘‘(i) for the purchase of a covered out2 patient drug of the manufacturer that is a 

3 potentially curative treatment intended for 

4 one-time use; 

5 ‘‘(ii) under which payment for such 

6 drug shall be made pursuant to an install7 ment-based payment structure that meets 

8 the requirements of paragraph (3); 

9 ‘‘(iii) which conditions payment on the 

10 achievement of at least 2 relevant clinical 

11 parameters (as defined in subparagraph 

12 (C)); 

13 ‘‘(iv) which provides that— 

14 ‘‘(I) the State plan will directly 

15 reimburse the manufacturer for the 

16 drug; or 

17 ‘‘(II) a third party will reimburse 

18 the manufacture in a manner ap19 proved by the Secretary; 

20 ‘‘(v) is approved by the Secretary in 

21 accordance with paragraph (2). 

22 ‘‘(F) TOTAL INSTALLMENT YEAR

23 AMOUNT.—The term ‘total installment year 

24 amount’ means, with respect to a risk-sharing 

25 value-based payment agreement for the purVerDate Sep 11 2014 19:48 Jul 14, 2020 Jkt 099200 PO 00000 Frm 00243 Fmt 6652 Sfmt 6201 E:\BILLS\S4199.IS S4199

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1 chase of a covered outpatient drug and an in2 stallment year, an amount equal to the product 

3 of— 

4 ‘‘(i) the unit price of the drug charged 

5 under the agreement; and 

6 ‘‘(ii) the number of units of such drug 

7 administered under the agreement during 

8 such installment year.’’. 

9 (b) CONFORMING AMENDMENTS.— 

10 (1) Section 1903(i)(10)(A) of the Social Secu11 rity Act (42 U.S.C. 1396b(i)(10)(A)) is amended by 

12 striking ‘‘or unless section 1927(a)(3) applies’’ and 

13 inserting ‘‘, section 1927(a)(3) applies with respect 

14 to such drugs, or such drugs are the subject of a 

15 risk-sharing value-based payment agreement under 

16 section 1927(l)’’. 

17 (2) Section 1927(b) of the Social Security Act 

18 (42 U.S.C. 1396r–8(b)) is amended— 

19 (A) in paragraph (1)(A), by inserting ‘‘but 

20 excluding any drugs for which payment is made 

21 by a State under a risk-sharing value-based 

22 payment agreement under subsection (l))’’ after 

23 ‘‘for coverage of such drugs’’; and 

24 (B) in paragraph (3)— 


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1 (i) in subparagraph (C)(i), by insert2 ing ‘‘or subsection (l)(2)(A)’’ after ‘‘sub3 paragraph (A)’’; and 

4 (ii) in subparagraph (D), in the mat5 ter preceding clause (i), by inserting ‘‘, 

6 under subsection (l)(2)(A),’’ after ‘‘under 

7 this paragraph’’. 

8 SEC. 209. MODIFICATION OF MAXIMUM REBATE AMOUNT 

9 UNDER MEDICAID DRUG REBATE PROGRAM. 

10 (a) IN GENERAL.—Subparagraph (D) of section 

11 1927(c)(2) of the Social Security Act (42 U.S.C. 1396r– 

12 8(c)(2)) is amended to read as follows: 

13 ‘‘(D) MAXIMUM REBATE AMOUNT.— 

14 ‘‘(i) IN GENERAL.—Except as pro15 vided in clause (ii), in no case shall the 

16 sum of the amounts applied under para17 graph (1)(A)(ii) and this paragraph with 

18 respect to each dosage form and strength 

19 of a single source drug or an innovator 

20 multiple source drug for a rebate period 

21 exceed— 

22 ‘‘(I) for rebate periods beginning 

23 after December 31, 2009, and before 

24 September 30, 2022, 100 percent of 


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1 the average manufacturer price of the 

2 drug; and 

3 ‘‘(II) for rebate periods beginning 

4 on or after October 1, 2022, 125 per5 cent of the average manufacturer 

6 price of the drug. 

7 ‘‘(ii) NO MAXIMUM AMOUNT FOR

8 DRUGS IF AMP INCREASES OUTPACE IN9 FLATION.— 

10 ‘‘(I) IN GENERAL.—If the aver11 age manufacturer price with respect 

12 to each dosage form and strength of 

13 a single source drug or an innovator 

14 multiple source drug increases on or 

15 after October 1, 2021, and such in16 creased average manufacturer price 

17 exceeds the inflation-adjusted average 

18 manufacturer price determined with 

19 respect to such drug under subclause 

20 (II) for the rebate period, clause (i) 

21 shall not apply and there shall be no 

22 limitation on the sum of the amounts 

23 applied under paragraph (1)(A)(ii) 

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1 riod until the average manufacturer 

2 price of the drug is the same or less 

3 than the inflation-adjusted average 

4 manufacturer price determined with 

5 respect to such drug under subclause 

6 (II) for the rebate period, with respect 

7 to each dosage form and strength of 

8 the single source drug or innovator 

9 multiple source drug. 

10 ‘‘(II) INFLATION-ADJUSTED AV11 ERAGE MANUFACTURER PRICE DE12 FINED.—In this clause, the term ‘in13 flation-adjusted average manufacturer 

14 price’ means, with respect to a single 

15 source drug or an innovator multiple 

16 source drug and a rebate period, the 

17 average manufacturer price for each 

18 dosage form and strength of the drug 

19 for the calendar quarter beginning 

20 July 1, 1990 (without regard to 

21 whether or not the drug has been sold 

22 or transferred to an entity, including 

23 a division or subsidiary of the manu24 facturer, after the 1st day of such 

25 quarter), increased by the percentage 


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1 by which the consumer price index for 

2 all urban consumers (United States 

3 city average) for the month before the 

4 month in which the rebate period be5 gins exceeds such index for September 

6 1990.’’. 

7 (b) TREATMENT OF SUBSEQUENTLY APPROVED

8 DRUGS.—Section 1927(c)(2)(B) of the Social Security Act 

9 (42 U.S.C. 1396r–8(c)(2)(B)) is amended by inserting 

10 ‘‘and clause (ii)(II) of subparagraph (D)’’ after ‘‘clause 

11 (ii)(II) of subparagraph (A)’’. 

12 (c) TECHNICAL AMENDMENTS.—Section 

13 1927(c)(3)(C)(ii)(IV) of the Social Security Act (42 

14 U.S.C. 1396r–9(c)(3)(C)(ii)(IV)) is amended— 

15 (1) by striking ‘‘subparagraph (A)’’ and insert16 ing ‘‘paragraph (3)(A)’’; and 

17 (2) by striking ‘‘this subparagraph’’ and insert18 ing ‘‘paragraph (3)(C)’’. 

Æ 


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