II

107TH CONGRESS

1ST SESSION S. 125

To provide substantial reductions in the price of prescription drugs for

medicare beneficiaries.

IN THE SENATE OF THE UNITED STATES

JANUARY 22, 2001

Mr. JOHNSON (for himself, Mr. KENNEDY, Mr. DORGAN, Mr. BINGAMAN, Mr.

FEINGOLD, Mr. LEAHY, Mr. INOUYE, Mr. KERRY, and Mr. CONRAD) introduced the following bill; which was read twice and referred to the Committee on Finance

A BILL

To provide substantial reductions in the price of prescription

drugs for medicare beneficiaries.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Prescription Drug

5 Fairness for Seniors Act of 2001’’.

6 SEC. 2. FINDINGS AND PURPOSE.

7 (a) FINDINGS.—Congress finds the following:

8 (1) Manufacturers of prescription drugs engage

9 in price discrimination practices that compel many
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1 older Americans to pay substantially more for pre2 scription drugs than the drug manufacturers’ most

3 favored customers, such as health insurers, health

4 maintenance organizations, and the Federal Govern5 ment.

6 (2) On average, older Americans who buy their

7 own prescription drugs pay twice as much for pre8 scription drugs as the drug manufacturers’ most fa9 vored customers. In some cases, older Americans pay

10 over 15 times more for prescription drugs than the

11 most favored customers.

12 (3) The discriminatory pricing by major drug

13 manufacturers sustains their annual profits of

14 $20,000,000,000, but causes financial hardship and

15 impairs the health and well-being of millions of older

16 Americans. More than 1 in 8 older Americans are

17 forced to choose between buying their food and buy18 ing their medicines.

19 (4) Most federally funded health care programs,

20 including the medicaid program under title XIX of

21 the Social Security Act, and programs administered

22 by the Veterans Health Administration, the Public

23 Health Service, and the Indian Health Service, ob24 tain prescription drugs for their beneficiaries at low

25 prices. Beneficiaries under the medicare program
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1 under title XVIII of the Social Security Act are de2 nied this benefit and cannot obtain their prescription

3 drugs at the favorable prices available to other fed4 erally funded health care programs.

5 (5) Implementation of the policy set forth in

6 this Act is estimated to reduce prescription drug

7 prices for medicare beneficiaries by more than 40

8 percent.

9 (6) In addition to substantially lowering the

10 costs of prescription drugs for older Americans, im11 plementation of the policy set forth in this Act will

12 significantly improve the health and well-being of

13 older Americans and lower the costs to the Federal

14 taxpayer of the medicare program.

15 (7) Older Americans who are terminally ill and

16 receiving hospice care services represent some of the

17 most vulnerable individuals in our Nation. Making

18 prescription drugs available to medicare beneficiaries

19 under the care of medicare-certified hospices will as20 sist in extending the benefits of lower prescription

21 drug prices to those most vulnerable and in need.

22 (b) PURPOSE.—The purpose of this Act is to protect

23 medicare beneficiaries from discriminatory pricing by drug

24 manufacturers and to make prescription drugs available

25 to medicare beneficiaries at substantially reduced prices.
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1 SEC. 3. PARTICIPATING MANUFACTURERS.

2 (a) IN GENERAL.—Each participating manufacturer

3 of a covered outpatient drug shall make available for pur4 chase by each pharmacy such covered outpatient drug in

5 the amount described in subsection (b) at the price de6 scribed in subsection (c).

7 (b) DESCRIPTION OF AMOUNT OF DRUGS.—The

8 amount of a covered outpatient drug that a participating

9 manufacturer shall make available for purchase by a phar10 macy is an amount equal to the aggregate amount of the

11 covered outpatient drug sold or distributed by the phar12 macy to medicare beneficiaries.

13 (c) DESCRIPTION OF PRICE.—The price at which a

14 participating manufacturer shall make a covered out15 patient drug available for purchase by a pharmacy is the

16 price equal to the lower of the following:

17 (1) The lowest price paid for the covered out18 patient drug by any agency or department of the

19 United States.

20 (2) The manufacturer’s best price for the cov21 ered outpatient drug, as defined in section

22 1927(c)(1)(C) of the Social Security Act (42 U.S.C.

23 1396r–8(c)(1)(C)).
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1 SEC. 4. SPECIAL PROVISION WITH RESPECT TO HOSPICE

2 PROGRAMS.

3 For purposes of determining the amount of a covered

4 outpatient drug that a participating manufacturer shall

5 make available for purchase by a pharmacy under section

6 3, there shall be included in the calculation of such

7 amount the amount of the covered outpatient drug sold

8 or distributed by a pharmacy to a hospice program. In

9 calculating such amount, only amounts of the covered out10 patient drug furnished to a medicare beneficiary enrolled

11 in the hospice program shall be included.

12 SEC. 5. ADMINISTRATION.

13 The Secretary shall issue such regulations as may be

14 necessary to implement this Act.

15 SEC. 6. REPORTS TO CONGRESS REGARDING EFFECTIVE16 NESS OF ACT.

17 (a) IN GENERAL.—Not later than 2 years after the

18 date of enactment of this Act, and annually thereafter,

19 the Secretary shall report to Congress regarding the effec20 tiveness of this Act in—

21 (1) protecting medicare beneficiaries from dis22 criminatory pricing by drug manufacturers; and

23 (2) making prescription drugs available to

24 medicare beneficiaries at substantially reduced

25 prices.
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1 (b) CONSULTATION.—In preparing such reports, the

2 Secretary shall consult with public health experts, affected

3 industries, organizations representing consumers and

4 older Americans, and other interested persons.

5 (c) RECOMMENDATIONS.—The Secretary shall in6 clude in such reports any recommendations that the Sec7 retary considers appropriate for changes in this Act to fur8 ther reduce the cost of covered outpatient drugs to medi9 care beneficiaries.

10 SEC. 7. DEFINITIONS.

11 In this Act:

12 (1) PARTICIPATING MANUFACTURER.—The

13 term ‘‘participating manufacturer’’ means any man14 ufacturer of drugs or biologicals that, on or after the

15 date of enactment of this Act, enters into or renews

16 a contract or agreement with the United States for

17 the sale or distribution of covered outpatient drugs

18 to the United States.

19 (2) COVERED OUTPATIENT DRUG.—The term

20 ‘‘covered outpatient drug’’ has the meaning given

21 that term in section 1927(k)(2) of the Social Secu22 rity Act (42 U.S.C. 1396r–8(k)(2)).

23 (3) MEDICARE BENEFICIARY.—The term

24 ‘‘medicare beneficiary’’ means an individual entitled

25 to benefits under part A of title XVIII of the Social
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1 Security Act or enrolled under part B of such title,

2 or both.

3 (4) HOSPICE PROGRAM.—The term ‘‘hospice

4 program’’ has the meaning given that term under

5 section 1861(dd)(2) of the Social Security Act (42

6 U.S.C. 1395x(dd)(2)).

7 (5) SECRETARY.—The term ‘‘Secretary’’ means

8 the Secretary of Health and Human Services.

9 SEC. 8. EFFECTIVE DATE.

10 The Secretary shall implement this Act as expedi11 tiously as practicable and in a manner consistent with the

12 obligations of the United States.

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