I 

115TH CONGRESS 

2D SESSION H. R. 5150 

To amend title XVIII of the Social Security Act to require drug manufacturers to pay a Medicare part B rebate for certain drugs if the price 

of such drugs increases faster than inflation. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 1, 2018 

Mr. LEVIN introduced the following bill; which was referred to the Committee 

on Energy and Commerce, and in addition to the Committee on Ways 

and Means, for a period to be subsequently determined by the Speaker, 

in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To amend title XVIII of the Social Security Act to require 

drug manufacturers to pay a Medicare part B rebate 

for certain drugs if the price of such drugs increases 

faster than inflation. 

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 ‘‘Protecting Medicare 

5 from Excessive Price Increases Act of 2018’’. 


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1 SEC. 2. MEDICARE PART B REBATE BY MANUFACTURERS 

2 FOR CERTAIN DRUGS WITH PRICES INCREAS3 ING FASTER THAN INFLATION. 

4 (a) IN GENERAL.—Section 1834 of the Social Secu5 rity Act (42 U.S.C. 1395m) is amended by adding at the 

6 end the following new subsection: 

7 ‘‘(w) NO PAYMENT WITHOUT REBATE BY MANUFAC8 TURERS FOR SINGLE SOURCE DRUGS WITH PRICES IN9 CREASING FASTER THAN INFLATION.— 

10 ‘‘(1) NO PAYMENT FOR NONCOMPLIANT MANU11 FACTURERS.—Subject to the subsequent paragraphs 

12 of this subsection, no payment shall be available 

13 under this part for a unit of a rebatable drug of a 

14 manufacturer (as defined in section 1847A(c)(6)(A)) 

15 for each calendar quarter beginning on or after July 

16 1, 2019, if such manufacturer has failed to comply 

17 with the requirement under paragraph (2)(B)(i) for 

18 the rebate period with respect to such calendar quar19 ter. 

20 ‘‘(2) REQUIREMENTS.— 

21 ‘‘(A) SECRETARIAL PROVISION OF INFOR22 MATION.—Not later than 6 months after the 

23 end of each rebate period with respect to a cal24 endar quarter beginning on or after July 1, 

25 2019, the Secretary shall, for each rebatable 


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1 drug, report to each manufacturer of such 

2 rebatable drug— 

3 ‘‘(i) information on the total number 

4 of units described in subparagraph (A)(i) 

5 of paragraph (4) with respect to such drug 

6 and rebate period; 

7 ‘‘(ii) information on the amount (if 

8 any) of the excess average sales price in9 crease described in subparagraph (A)(ii) of 

10 such paragraph for such drug and period; 

11 and 

12 ‘‘(iii) the rebate amount specified 

13 under such paragraph for such rebatable 

14 drug and period. 

15 ‘‘(B) MANUFACTURER REQUIREMENTS.— 

16 The manufacturer of a rebatable drug, for such 

17 drug, shall meet each of the following require18 ments for each rebate period with respect to a 

19 calendar quarter beginning on or after July 1, 

20 2019: 

21 ‘‘(i) REBATE PAYMENT.—The manu22 facturer shall, not later than 30 days after 

23 the date of receipt of the information de24 scribed in subparagraph (A) from the Sec25 retary, provide to the Secretary a rebate 


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1 that is equal to the amount specified in 

2 paragraph (4) for such drug for such re3 bate period. 

4 ‘‘(ii) REPORT OF ASP.—The manufac5 turer shall report to the Secretary the in6 formation described in section 

7 1927(b)(3)(A)(iii) in a time and manner 

8 consistent with the reporting under such 

9 section, unless such information is already 

10 reported in accordance with section 

11 1927(b)(3)(C). 

12 ‘‘(3) REBATABLE DRUG DEFINED.—In this sub13 section, the term ‘rebatable drug’ means a drug or 

14 biological (as defined in section 1847A(c)(6)(D)) 

15 paid for under this part, except such term shall not 

16 include such a drug or biological— 

17 ‘‘(A) to the extent the units of such drug 

18 or biological are furnished as part of a grouping 

19 of items and services and paid for as such a 

20 grouping in an ambulatory payment classifica21 tion under section 1833(t) or in a single pay22 ment under section 1833(i) (instead of sepa23 rately payable under such respective section); 

24 ‘‘(B) to the extent payment for the units 

25 of such drug or biological is included under the 


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1 single payment system for renal dialysis serv2 ices under section 1881(b)(14); 

3 ‘‘(C) to the extent the average total al4 lowed charges per year per individual that uses 

5 such drug or biological are less than $100; or 

6 ‘‘(D) that is a vaccine described in sub7 paragraph (A) or (B) of section 1861(s)(10). 

8 ‘‘(4) REBATE AMOUNT.— 

9 ‘‘(A) IN GENERAL.—For purposes of para10 graph (2)(B)(i), the amount specified in this 

11 paragraph for a rebatable drug assigned to a 

12 billing and payment code for a rebate period is, 

13 subject to paragraph (5), the amount equal to 

14 the product of— 

15 ‘‘(i) the total number of units for 

16 which payment was made under this part 

17 for such rebatable drug during the rebate 

18 period; and 

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

20 ‘‘(I) the applicable manufactur21 er’s average sales price (as determined 

22 under subparagraph (B)) for such 

23 rebatable drug for sales that occurred 

24 two quarters prior to the rebate pe25 riod; exceeds 


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1 ‘‘(II) the inflation-adjusted ASP 

2 determined under subparagraph (C) 

3 for such rebatable drug for sales that 

4 occurred two quarters prior to the re5 bate period. 

6 ‘‘(B) DETERMINATION OF APPLICABLE

7 MANUFACTURER’S ASP.—The applicable manu8 facturer’s average sales price, with respect to a 

9 manufacturer, determined under this subpara10 graph for a billing and payment code is the 

11 weighted average of the average sales prices of 

12 all of the rebatable drugs of the manufacturer 

13 identified by a national drug code assigned to 

14 such billing and payment code for sales that oc15 curred two quarters prior to the rebate period. 

16 ‘‘(C) DETERMINATION OF INFLATION-AD17 JUSTED ASP.—The inflation-adjusted ASP de18 termined under this subparagraph for a 

19 rebatable drug for a rebate period is— 

20 ‘‘(i) the average sales price for the 

21 billing and payment code for all units of 

22 such drug for sales that occurred in the 

23 ASP benchmark quarter (as defined in 

24 subparagraph (E)); increased by 


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1 ‘‘(ii) the percentage by which the re2 bate period CPI–U (as defined in subpara3 graph (G) for the rebate period exceeds the 

4 benchmark period CPI–U (as defined in 

5 subparagraph (F)). 

6 ‘‘(D) REBATE PERIOD.—For purposes of 

7 this subsection, subject to paragraph (5)(E), 

8 the term ‘rebate period’ means, with respect to 

9 a calendar quarter, the period that is 2 cal10 endar quarters prior to such calendar quarter. 

11 ‘‘(E) ASP BENCHMARK QUARTER.—The 

12 term ‘ASP benchmark quarter’ means the cal13 endar quarter beginning January 1, 2016. 

14 ‘‘(F) BENCHMARK PERIOD CPI–U.—The 

15 term ‘benchmark period CPI–U’ means the con16 sumer price index for all urban consumers 

17 (United States city average) for January 2016. 

18 ‘‘(G) REBATE PERIOD CPI–U.—The term 

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

20 rebate period, the consumer price index for all 

21 urban consumers (United States city average) 

22 for the first month of the calendar quarter that 

23 is two calendar quarters prior to the rebate pe24 riod. 


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1 ‘‘(5) SPECIAL TREATMENT OF CERTAIN

2 DRUGS.— 

3 ‘‘(A) SUBSEQUENTLY APPROVED DRUGS.— 

4 Subject to subparagraph (B), in the case of a 

5 single source rebatable drug first approved by 

6 the Food and Drug Administration after Janu7 ary 1, 2016, clause (i) of paragraph (4)(C) 

8 shall be applied as if the term ‘ASP benchmark 

9 quarter’ were defined under paragraph (4)(E) 

10 as the third full calendar quarter after the day 

11 on which the drug was first marketed and 

12 clause (ii) of paragraph (4)(C) shall be applied 

13 as if the term ‘benchmark period CPI–U’ were 

14 defined under paragraph (4)(F) as if the ref15 erence to ‘January 2016’ under such paragraph 

16 were a reference to ‘the first month of the third 

17 full calendar quarter after the day on which the 

18 drug was first marketed’. 

19 ‘‘(B) SPECIAL RULE FOR NEW DRUGS.—In 

20 applying this subsection in the case of a newly 

21 approved single source rebatable drug for which 

22 a payment and billing code has not previously 

23 been established the first calendar quarter to 

24 which this subsection shall apply shall be the 


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1 sixth full calendar quarter after the day on 

2 which the drug was first marketed. 

3 ‘‘(6) ADJUSTMENT OF COINSURANCE.—With re4 spect to coinsurance under this part with respect to 

5 a rebatable drug for which a rebate is paid under 

6 this subsection, the Secretary shall, on an annual 

7 basis, pay the individual an amount as if the coin8 surance for a rebatable drug for which payment is 

9 made under this part for such individual were com10 puted as if the payment amount incurred under this 

11 part for such drug were ratably reduced to reflect 

12 the rebate amount under this subsection for such 

13 drug. 

14 ‘‘(7) REBATE DEPOSITS.—Amounts paid as re15 bates under paragraph (2)(B)(i) shall be deposited 

16 into the Federal Supplementary Medical Insurance 

17 Trust Fund established under section 1841. 

18 ‘‘(8) EXEMPTIONS.— 

19 ‘‘(A) OTHER REBATES OR DISCOUNTS.— 

20 The Secretary shall waive the rebate under 

21 paragraph (2)(B)(i) with respect to the units of 

22 a rebatable drug of a manufacturer that is fur23 nished to an individual, if such manufacturer, 

24 with respect to the furnishing of such units of 

25 such drug, provides for discounts under section 


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1 340B of the Public Health Service Act or for 

2 rebates under section 1927. 

3 ‘‘(B) SHORTAGES.—The Secretary may re4 duce or waive the rebate under paragraph 

5 (2)(B)(i) with respect to a rebatable drug in the 

6 case of a shortage of such drug or other exigent 

7 circumstances, as determined by the Secretary. 

8 ‘‘(9) VERIFICATION SURVEYS.—The Secretary 

9 may survey wholesalers and manufacturers that di10 rectly distribute rebatable drugs, when necessary, to 

11 verify the manufacturer’s average sales prices (in12 cluding wholesale acquisition cost) reported under 

13 paragraph (2)(B)(ii). The Secretary may impose a 

14 civil monetary penalty in an amount not to exceed 

15 $100,000 on a wholesaler or manufacturer that re16 fuses a request for information about charges or 

17 prices by the Secretary in connection with a survey 

18 under this subparagraph or knowingly provides false 

19 information. The provisions of section 1128A (other 

20 than subsections (a) (with respect to amounts of 

21 penalties or additional assessments) and (b)) shall 

22 apply to a civil money penalty under this subpara23 graph in the same manner as such provisions apply 

24 to a penalty or proceeding under section 1128A(a). 


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1 ‘‘(10) CIVIL MONETARY PENALTY.—In lieu of 

2 applying paragraph (1) for a calendar quarter, in 

3 the case of a manufacturer of a rebatable drug who 

4 has failed to comply with the requirements under 

5 paragraph (2)(B)(i) for such drug for the rebate pe6 riod with respect to such calendar quarter, the Sec7 retary may, pursuant to regulations, impose a civil 

8 monetary penalty on such manufacturer in an 

9 amount not to exceed 2 percent of the total expendi10 tures under this part for such drug for such failure 

11 with respect to such drug and quarter. The provi12 sions of section 1128A (other than subsections (a) 

13 (with respect to amounts of penalties or additional 

14 assessments) and (b)) shall apply to a civil money 

15 penalty under this subparagraph in the same man16 ner as such provisions apply to a penalty or pro17 ceeding under section 1128A(a). 

18 ‘‘(11) STUDY AND REPORT.— 

19 ‘‘(A) STUDY.—The Secretary shall conduct 

20 a study of the feasibility of and operational 

21 issues involved with the following: 

22 ‘‘(i) Including multisource drugs (as 

23 defined in section 1847A(c)(3)(C)) in the 

24 rebate system under this subsection. 


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1 ‘‘(ii) Including drugs and biologicals 

2 paid for under MA plans under part C in 

3 the rebate system under this subsection. 

4 ‘‘(iii) Including drugs excluded under 

5 paragraph (3) in the rebate system under 

6 this subsection. 

7 ‘‘(B) REPORT.—Not later than 3 years 

8 after the date of the enactment of this sub9 section, the Secretary shall submit to Congress 

10 a report on the study conducted under subpara11 graph (A). 

12 ‘‘(12) APPLICATION TO MULTISOURCE

13 DRUGS.—The Secretary may, based on the report 

14 submitted under paragraph (11) and pursuant to 

15 rulemaking, apply the provisions of this subsection 

16 to multisource drugs (as defined in section 

17 1847A(c)(3)(C)).’’. 

18 (b) PROVIDING MEDPAC ACCESS TO INFORMA19 TION.—Section 1927(b)(3)(D) of the Social Security Act 

20 is amended— 

21 (1) in clause (iv), by striking at the end ‘‘and’’; 

22 (2) in clause (v), by striking at the end the pe23 riod and inserting ‘‘, and’’; and 

24 (3) by inserting after clause (v) the following 

25 new clause: 


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1 ‘‘(vi) to permit the Medicare Payment 

2 Advisory Commission to review the infor3 mation provided.’’. 

4 (c) CONFORMING AMENDMENT TO PART B ASP CAL5 CULATION.—Section 1847A(c)(3) of the Social Security 

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

7 ‘‘or section 1834(w)’’ after ‘‘section 1927’’. 

Æ 


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