II 

109TH CONGRESS 

1ST SESSION S. 123 

To amend part D of title XVIII of the Social Security Act to provide 

for negotiation of fair prices for Medicare prescription drugs. 

IN THE SENATE OF THE UNITED STATES 

JANUARY 24, 2005 

Mr. FEINGOLD introduced the following bill; which was read twice and 

referred to the Committee on Finance 

A BILL 

To amend part D of title XVIII of the Social Security 

Act to provide for negotiation of fair prices for Medicare 

prescription drugs. 

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 ‘‘Efficiency in Govern5 ment Health Care Spending Act’’. 

6 SEC. 2. FINDINGS. 

7 Congress makes the following findings: 

8 (1) Prohibiting the Federal Government from 

9 negotiating prescription drug prices with manufac-
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•S 123 IS 

1 turers fails to take advantage of the purchasing 

2 power of the Medicare program. 

3 (2) Negotiating prescription drug prices can re4 duce the costs of prescription drugs for both the 

5 Medicare program and taxpayers. 

6 (3) A 2002 study by the inspector general of 

7 the Department of Health and Human Services 

8 found that— 

9 (A) both the Medicare program and the 

10 beneficiaries of the Medicare program contin11 ually pay too much for medical equipment and 

12 medical supplies; and 

13 (B) if the Medicare program paid the same 

14 prices for 16 health care supplies as the De15 partment of Veterans Affairs, which directly ne16 gotiates prices with manufacturers, pays for 

17 those supplies, the Federal Government could 

18 save $958,000,000 each year. 

19 SEC. 3. SENSE OF THE SENATE REGARDING THE USE OF 

20 AUTHORITY TO NEGOTIATE PRICES FOR 

21 MEDICARE PRESCRIPTION DRUGS. 

22 It is the sense of the Senate that the Secretary of 

23 Health and Human Services should exercise the authority 

24 under section 1860D–11(i)(1) of the Social Security Act 

25 (42 U.S.C. 1395w–111(i)(1)), as amended by section 4, 
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•S 123 IS 

1 so as to assure an affordable medicare drug benefit for 

2 medicare beneficiaries and taxpayers. 

3 SEC. 4. NEGOTIATING FAIR PRICES FOR MEDICARE PRE4 SCRIPTION DRUGS. 

5 (a) NEGOTIATION.—Section 1860D–11 of the Social 

6 Security Act (42 U.S.C. 1395w–111) is amended by strik7 ing subsection (i) (relating to noninterference) and by in8 serting the following: 

9 ‘‘(i) AUTHORITY TO NEGOTIATE; NO NATIONAL FOR10 MULARY.— 

11 ‘‘(1) AUTHORITY TO NEGOTIATE PRICES WITH

12 MANUFACTURERS.—In order to ensure that bene13 ficiaries enrolled under prescription drug plans and 

14 MA–PD plans pay the lowest possible price, the Sec15 retary shall have authority similar to that of other 

16 Federal entities that purchase prescription drugs in 

17 bulk to negotiate contracts with manufacturers of 

18 covered part D drugs, consistent with the require19 ments and in furtherance of the goals of providing 

20 quality care and containing costs under this part. 

21 ‘‘(2) NO NATIONAL FORMULARY.—In order to 

22 promote competition under this part and in carrying 

23 out this part, the Secretary may not require a par24 ticular formulary for covered part D drugs. 
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1 (b) EFFECTIVE DATE.—The amendment made by 

2 this section shall take effect as if included in the enact3 ment of section 101(a) of the Medicare Prescription Drug, 

4 Improvement, and Modernization Act of 2003 (Public Law 

5 108–173; 117 Stat. 2071). 

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