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[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 916 Introduced in House (IH)]

103d CONGRESS
  2d Session
                                H. R. 916

To establish in the Food and Drug Administration the Patented Medicine 
  Prices Review Board to regulate the prices of certain prescription 
  drugs, to amend the Internal Revenue Code to recapture certain tax 
                   benefits, and for other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                           February 16, 1993

Mr. Stark introduced the following bill; which was referred jointly to 
  the Committees on Energy and Commerce, the Judiciary, and Ways and 
                                 Means

                           February 28, 1994

  Additional sponsors: Mrs. Collins of Illinois, Mr. Sanders, Mr. de 
    Lugo, Mr. Frank of Massachusetts, Mr. Barrett of Wisconsin, Mr. 
LaFalce, Mr. Martinez, Ms. Pelosi, Mr. Strickland, Mr. Owens, Mr. Sabo, 
 Mr. Blackwell, Mr. Hastings, Ms. Furse, Miss Collins of Michigan, Ms. 
  Kaptur, Mr. Evans, Mr. Barlow, Mr. Foglietta, Mr. Hall of Ohio, Mr. 
  Flake, Mr. Baesler, Mr. Torricelli, Mr. DeFazio, Ms. Slaughter, Mr. 
   Miller of California, Mrs. Clayton, Mr. Kleczka, Mr. Pastor, Mr. 
      Gibbons, Mr. Dellums, Mr. Washington, and Mr. Romero-Barcelo
Deleted sponsors: Mr. Clyburn (added March 24, 1993; deleted April 22, 
                                 1993)

_______________________________________________________________________

                                 A BILL

 
To establish in the Food and Drug Administration the Patented Medicine 
  Prices Review Board to regulate the prices of certain prescription 
  drugs, to amend the Internal Revenue Code to recapture certain tax 
                   benefits, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Prescription Drug Prices Review 
Board Act of 1993''.

SEC. 2. ESTABLISHMENT.

    There is established in the Food and Drug Administration a board to 
be known as the Patented Medicine Prices Review Board (in this Act 
referred to as the ``Board'').

SEC. 3. MEMBERSHIP.

    (a) Number and Appointment.--The Board shall be composed of 5 
members appointed by the President, by and with the advice and consent 
of the Senate, from among individuals--
            (1) who are recognized experts in the fields of consumer 
        advocacy, medicine, pharmacology, pharmacy, and prescription 
        drug reimbursement; and
            (2) who have not worked in the pharmaceutical industry 
        during the 1-year period ending on the date of appointment.
    (b) Initial Appointments.--Initial appointments under subsection 
(a) shall be made not later than 90 days after the date of the 
enactment of this Act.
    (c) Terms.--
            (1) In general.--Except as provided in paragraphs (2) and 
        (3), each member shall be appointed for a term of 5 years.
            (2) Terms of initial appointees.--As designated by the 
        President at the time of appointment, of the members first 
        appointed--
                    (A) 1 member shall be appointed for a term of 1 
                year;
                    (B) 1 member shall be appointed for a term of 2 
                years;
                    (C) 1 member shall be appointed for a term of 3 
                years;
                    (D) 1 member shall be appointed for a term of 4 
                years; and
                    (E) 1 member shall be appointed for a term of 5 
                years.
            (3) Vacancies.--A vacancy in the Board shall be filled in 
        the manner in which the original appointment was made. Any 
        member appointed to fill a vacancy occurring before the 
        expiration of the term for which the member's predecessor was 
        appointed shall be appointed only for the remainder of that 
        term. A member may serve after the expiration of the member's 
        term until a successor has taken office.
    (d) Initial Meeting.--The initial meeting of the Board shall be 
held not later than 90 days after the date on which the first 
appointments of the members have been completed.
    (e) Chairperson.--The President shall designate 1 member of the 
Board to serve as the chairperson.
    (f) Basic Pay.--
            (1) In general.--Members shall be paid at a rate not to 
        exceed the daily equivalent of the maximum annual rate of basic 
        pay payable for grade GS-18 of the General Schedule under 
        section 5332 of title 5, United States Code, for each day 
        during which the members are engaged in the actual performance 
        of the duties of the Board.
            (2) Travel expenses.--Members shall receive travel 
        expenses, including per diem in lieu of subsistence, in 
        accordance with sections 5702 and 5703 of title 5, United 
        States Code.

SEC. 4. DIRECTOR AND STAFF.

    (a) Director.--The Board shall have a director who shall be 
appointed by the chairperson, subject to rules prescribed by the Board.
    (b) Staff.--The chairperson may appoint and fix the pay of such 
additional personnel as the chairperson considers appropriate, subject 
to rules prescribed by the Board.
    (c) Applicability of Certain Civil Service Laws.--The director and 
staff of the Board shall be appointed subject to the provisions of 
title 5, United States Code, governing appointments in the competitive 
service, and shall be paid in accordance with the requirements of 
chapter 51 and subchapter III of chapter 53 of such title relating to 
classification and General Schedule pay rates; except that an 
individual so appointed may not receive pay in excess of the maximum 
annual rate of basic pay payable for grade GS-15 of the General 
Schedule.

SEC. 5. REGULATION OF PRESCRIPTION DRUG PRICING.

    (a) Annual Information Requirement.--The Board shall require each 
patentee of a prescription drug to provide the Board with information 
on an annual basis--
            (1) identifying the type of prescription drug sold by the 
        patentee; and
            (2) identifying the price at which the prescription drug is 
        being sold in the United States.
The Board shall also require each such patentee to provide the Board 
with information describing the costs of producing and marketing the 
prescription drug for sale in the United States. Such information shall 
be provided at a level of specificity necessary for the Board to make 
its determination under subsection (b).
    (b) Decrease in Length of Patent Term.--
            (1) In general.--The Board shall decrease the length of a 
        term of a patent issued under section 151 of title 35, United 
        States Code, for a prescription drug, after notice and an 
        opportunity for a hearing, if the patentee of such drug charges 
        an excessive price for such drug. If the patentee charged an 
        excessive price for a drug which has gone off patent, the Board 
        may select another drug of the patentee to have its length of 
        patent term reduced.
            (2) Excessive price.--
                    (A) In general.--For purposes of paragraph (1), the 
                term ``excessive price'' means the average price 
                charged by the patentee for a prescription drug during 
                the calendar year preceding the date on which the Board 
                gives notice to the patentee under paragraph (1), if 
                such price for such calendar year, adjusted for cost-
                of-living, as determined by the Board, exceeds the 
                average price for such drug charged by the patentee for 
                the calendar year preceding such year in an amount 
                determined by the Board to be excessive under 
                subparagraph (B).
                    (B) Excessive amount.--In determining if an amount 
                of increase in a drug price is excessive, the Board 
                shall consider--
                            (i) the average price at which the patentee 
                        sold the drug during the 5-year period ending 
                        on the date on which the Board gives notice to 
                        the patentee under paragraph (1);
                            (ii) the average prices of other 
                        prescription drugs in the same therapeutic 
                        class sold in the United States during such 
                        period;
                            (iii) the average price at which the 
                        prescription drug and other prescription drugs 
                        in the same therapeutic class have been sold in 
                        countries other than the United States during 
                        such period;
                            (iv) the costs associated with producing 
                        and marketing the prescription drug during such 
                        period and the value of any support provided by 
                        Federal agencies, the value of any tax benefit 
                        provided to the patentee in the development of 
                        the drug, the amount of compensation provided 
                        to officers of the patentee, and other factors 
                        determinative as to the true cost of 
                        production; and
                            (v) if the price of the drug exceeds the 
                        CPI increase percentage (as defined in section 
                        215(i) of the Social Security Act) by more than 
                        2 percent.
            (3) Length of term decrease.--The Board shall determine the 
        length of the decrease of a term of a patent for a prescription 
        drug described in paragraph (1).
    (c) Authority To Recapture Certain Tax Benefits.--
            (1) In general.--If the Board determines, after notice and 
        an opportunity for a hearing, that the patentee of any 
        prescription drug charges an excessive price for such drug, the 
        Board may require the recapture of tax benefits provided to the 
        patentee with respect to such drug.
            (2) Recapture.--
                    (A) In general.--If the Board requires the 
                recapture of tax benefits with respect to any 
                prescription drug, the patentee's tax under chapter 1 
                of the Internal Revenue Code of 1986 for each taxable 
                year specified by the Board shall be increased by the 
                aggregate of the recapture amounts with respect to 
                sales of such drug during such taxable year.
                    (B) Recapture amount.--For purposes of subparagraph 
                (A), the recapture amount with respect to the sale of 
                any prescription drug is the lesser of--
                            (i) the portion of the price of such drug 
                        which the Board determines is excessive, or
                            (ii) the amount which the Board determines 
                        is such sales pro rata share of the tax 
                        benefits received by the patentee in connection 
                        with the research for, and development of, such 
                        drug.
            (3) No credits against tax, etc.--Any increase in tax by 
        reason of this subsection shall not be treated as a tax imposed 
        by chapter 1 of such Code for purposes of determining--
                    (A) the amount of any credit under subpart A, B, D, 
                or G of part IV of subchapter A of such chapter, or
                    (B) the minimum tax under section 55 of such Code.
    (d) Manufacture and Sale of Drugs.--If the Board determines, after 
notice and an opportunity for a hearing, that the patentee of any 
prescription drug charges an excessive price for such drug, the Board 
may, either directly or by contract, manufacture and sell such drug.
    (e) Increase in Length of Patent Term.--
            (1) In general.--Upon application of the patentee, the 
        Board may increase the length of a term of a patent issued 
        under section 151 of title 35, United States Code, for a 
        prescription drug, if--
                    (A) the Board determines that the patentee of such 
                drug has not charged an excessive price for such drug 
                during the 5-year period ending on the date the 
                patentee applies to the Board, as determined by the 
                Board using rules similar to the rules applicable under 
                subsection (b); and
                    (B) the patentee provides assurances satisfactory 
                to the Board that it will not charge an excessive price 
                for such drug for any period during the extension of 
                the term.
            (2) Length of term increase.--
                    (A) In general.--Subject to subparagraph (B), the 
                Board shall determine the length of the increase of a 
                term of a patent for a prescription drug described in 
                paragraph (1).
                    (B) Limitation.--The Board may not increase the 
                length of a term of such patent in excess of 10 percent 
                of the length of the original term of such patent.
    (f) Regulations.--
            (1) In general.--Not later than 1 year after the date of 
        the initial meeting held under section 3(e), the Board shall 
        develop regulations to carry out subsections (a), (b), (c), 
        (d), and (e).
            (2) Notice and comment requirement.--The regulations 
        developed under paragraph (1) shall be issued in accordance 
        with the notice and comment procedures established under 
        section 553 of title 5, United States Code.
    (g) Definitions.--For purposes of this section, the following 
definitions apply:
            (1) Patentee.--The term ``patentee'' has the meaning given 
        such term in section 100(d) of title 35, United States Code.
            (2) Prescription drug.--The term ``prescription drug'' 
        means a drug (as defined in section 201(g)(1) of the Federal 
        Food, Drug, and Cosmetic Act (21 U.S.C. 321 (g)(1))) which is 
        subject to regulation under section 503(b) of such Act.

SEC. 6. PROVISION OF REPORT TO FEDERAL AGENCIES RELATING TO 
              PRESCRIPTION DRUGS SOLD AT EXCESSIVE PRICES.

    (a) In General.--The Board shall provide on an annual basis to each 
Federal agency which dispenses or makes payments for the dispensing of 
prescription drugs a report containing--
            (1) a list of each prescription drug which is sold at an 
        excessive price, as determined by the Board under section 
        5(b)(2);
            (2) recommendations to the Federal agency against 
        dispensing or making payments for the dispensing of the 
        prescription drug; and
            (3) recommendations to the Federal agency to substitute the 
        drug with a similar prescription drug which is not sold at an 
        excessive price.
    (b) Prescription Drug Defined.--For purposes of this section, the 
term ``prescription drug'' has the meaning given such term in section 
5(e)(2).

SEC. 7. POWERS.

    (a) Obtaining Official Data.--The chairperson may secure directly 
from any Federal agency information necessary to enable the Board to 
carry out its duties. Upon request of the chairperson, the head of the 
agency shall furnish such information to the Board to the extent such 
information is not prohibited from disclosure by law.
    (b) Mails.--The Board may use the United States mails in the same 
manner and under the same conditions as other Federal agencies.
    (c) Administrative Support Services.--Upon the request of the 
chairperson, the Administrator of General Services shall provide to the 
Board on a reimbursable basis, the administrative support services 
necessary for the Board to carry out its duties.
    (d) Contract Authority.--The chairperson may contract with and 
compensate government and private agencies or persons for the purpose 
of conducting research, surveys, and other services necessary to enable 
the Board to carry out its duties.
    (e) Investigations.--The Board may make such investigations as it 
considers necessary to determine whether there is or may be a violation 
of any regulation promulgated under this Act and may require or permit 
any person to file with it a statement in writing, under oath or 
otherwise as the Board shall determine, as to all the facts and 
circumstances concerning the matter to be investigated.
    (f) Subpoena Power.--
            (1) In general.--The Board may issue subpoenas requiring 
        the attendance and testimony of witnesses and the production of 
        any evidence relating to any matter under investigation by the 
        Board. The attendance of witnesses and the production of 
        evidence may be required from any place within the United 
        States at any designated place of hearing within the United 
        States.
            (2) Failure to obey a subpoena.--If a person refuses to 
        obey a subpoena issued under paragraph (1), the Board may apply 
        to a United States district court for an order requiring that 
        person to appear before the Board to give testimony, produce 
        evidence, or both, relating to the matter under investigation. 
        The application may be made within the judicial district where 
        the hearing is conducted or where that person is found, 
        resides, or transacts business. Any failure to obey the order 
        of the court may be punished by the court as civil contempt.
            (3) Service of subpoenas.--The subpoenas of the Board shall 
        be served in the manner provided for subpoenas issued by a 
        United States district court under the Federal Rules of Civil 
        Procedure for the United States district courts.
            (4) Service of process.--All process of any court to which 
        application is made under paragraph (2) may be served in the 
        judicial district in which the person required to be served 
        resides or may be found.

SEC. 8. ASSISTANCE FOR THE BOARD.

    The Director of the National Institutes of Health, the Commissioner 
of the Food and Drug Administration, and the Director of the Center for 
Disease Control shall report to the Board the amount of any subsidy 
paid through such agency to a patentee.

SEC. 9. REPORT.

    Not later than 1 year after the initial meeting of the Board under 
section 3(e), and annually thereafter, the Board shall submit to the 
Congress a report describing the activities of the Board for the 
preceding year.

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