II 

115TH CONGRESS 

1ST SESSION S. 2011 

To amend title XVIII of the Social Security Act to provide for the negotiation 

of lower covered part D drug prices on behalf of Medicare beneficiaries 

and the establishment and application of a formulary by the Secretary 

of Health and Human Services under Medicare part D, and for other 

purposes. 

IN THE SENATE OF THE UNITED STATES 

OCTOBER 25, 2017 

Mr. SANDERS (for himself, Mr. REED, Mr. LEAHY, Mrs. GILLIBRAND, Ms. 

HARRIS, Mr. FRANKEN, and Ms. WARREN) introduced the following bill; 

which was read twice and referred to the Committee on Finance 

A BILL 

To amend title XVIII of the Social Security Act to provide 

for the negotiation of lower covered part D drug prices 

on behalf of Medicare beneficiaries and the establishment 

and application of a formulary by the Secretary of 

Health and Human Services under Medicare part D, 

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. 

4 This Act may be cited as the ‘‘Medicare Drug Price 

5 Negotiation Act’’. 


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1 SEC. 2. NEGOTIATION OF LOWER COVERED PART D DRUG 

2 PRICES ON BEHALF OF MEDICARE BENE3 FICIARIES AND ESTABLISHMENT AND APPLI4 CATION OF FORMULARY BY THE SECRETARY 

5 OF HEALTH AND HUMAN SERVICES UNDER 

6 MEDICARE PART D. 

7 (a) IN GENERAL.—Section 1860D–11 of the Social 

8 Security Act (42 U.S.C. 1395w–111) is amended by strik9 ing subsection (i) (relating to noninterference) and insert10 ing the following: 

11 ‘‘(i) NEGOTIATION OF LOWER DRUG PRICES; ESTAB12 LISHMENT AND APPLICATION OF FORMULARY.— 

13 ‘‘(1) NEGOTIATION.— 

14 ‘‘(A) IN GENERAL.—Notwithstanding any 

15 other provision of law, subject to subparagraph 

16 (B), the Secretary shall during a negotiation 

17 year and with respect to the negotiation drug 

18 grouping identified under subparagraph (C) 

19 with respect to such negotiation year— 

20 ‘‘(i) negotiate with pharmaceutical 

21 manufacturers the prices (including dis22 counts, rebates, and all other price conces23 sions) that may be charged for each plan 

24 year during the negotiated price period, 

25 with respect to such negotiation year, to 

26 PDP sponsors and MA organizations for 


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1 covered part D drugs identified as included 

2 within such negotiation drug grouping for 

3 part D eligible individuals who are enrolled 

4 under a prescription drug plan or under an 

5 MA–PD plan; and 

6 ‘‘(ii) complete such negotiations 30 

7 days before the first day of the application 

8 review process for the first plan year dur9 ing such negotiated price period for new 

10 contracts or expanding existing contracts 

11 with PDP sponsors and MA organizations 

12 to offer prescription drug plans or MA–PD 

13 plans, respectively. 

14 ‘‘(B) USE OF FALLBACK IF NEGOTIATIONS

15 FAIL.—If, after attempting to negotiate the 

16 price during a negotiation year for a covered 

17 part D drug that is identified as included with18 in the negotiation drug grouping for such nego19 tiation year, the Secretary is not successful in 

20 obtaining an appropriate price (as determined 

21 by the Secretary in accordance with guidance 

22 described in subparagraph (E)), the price that 

23 may be charged during each plan year during 

24 the negotiated price period, with respect to such 

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1 ganizations for such covered part D drugs for 

2 part D eligible individuals who are enrolled 

3 under a prescription drug plan or under an 

4 MA–PD plan shall be the lowest of— 

5 ‘‘(i) the contract price applied pursu6 ant to section 8126 of title 38, United 

7 States Code, for such drug for the contract 

8 year (as defined in such section 8126) be9 ginning during the first plan year of such 

10 negotiated price period; 

11 ‘‘(ii) the average of the prices avail12 able, during the most recent 12-month pe13 riod for which data is available prior to the 

14 beginning of such negotiated price period, 

15 from the manufacturer to any wholesaler, 

16 retailer, provider, health maintenance orga17 nization, nonprofit entity, or governmental 

18 entity in the ten OECD (Organization for 

19 Economic Cooperation and Development) 

20 countries that have the largest gross do21 mestic product with a per capita income 

22 that is not less than half the per capita in23 come of the United States, as reported by 

24 the manufacturer to the Secretary; and 


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1 ‘‘(iii) the best price determined under 

2 section 1927(c)(1)(C) for such drug for the 

3 most recent rebate period (as defined in 

4 section 1927(k)(8)) applicable to such first 

5 plan year of such negotiated price period. 

6 ‘‘(C) IDENTIFICATION OF NEGOTIATION

7 DRUG GROUPINGS.— 

8 ‘‘(i) IN GENERAL.—For each negotia9 tion year, the Secretary shall, during the 

10 previous year, in accordance with the sub11 sequent clauses of this subparagraph, and 

12 pursuant to rulemaking, identify covered 

13 part D drugs for which negotiations under 

14 subparagraph (A) shall be conducted dur15 ing such negotiation year. In this sub16 section, all such covered part D drugs so 

17 identified for a negotiation year are collec18 tively referred to as the negotiation drug 

19 grouping, with respect to such year. 

20 ‘‘(ii) IDENTIFICATION OF PRIORITIZED

21 DRUGS.—In carrying out clause (i), except 

22 as provided under clause (iii), the Sec23 retary may not identify for inclusion within 

24 the negotiation drug grouping with respect 

25 to a negotiation year, a covered part D 


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1 drug that is not a drug prioritized pursu2 ant to subparagraph (D) before all covered 

3 part D drugs that are so prioritized have 

4 been identified for inclusion in such group5 ing or in a negotiation drug grouping with 

6 respect to a previous negotiation year for 

7 which the negotiated price period has not 

8 expired. 

9 ‘‘(iii) DRUG INCLUSIONS FOR PRICE

10 RENEGOTIATIONS.—In the case of a cov11 ered part D drug that is identified as in12 cluded in a negotiation drug grouping 

13 under this subparagraph, with respect to a 

14 negotiation year, such covered part D drug 

15 shall be identified as included within the 

16 negotiation drug grouping for each subse17 quent third negotiation year. 

18 ‘‘(iv) REASONABLE NOTIFICATION.— 

19 The Secretary shall carry out this subpara20 graph in such manner as to provide for 

21 public notification of the negotiation drug 

22 grouping identified with respect to a nego23 tiation year within a reasonable period be24 fore the beginning of such negotiation 

25 year. 


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1 ‘‘(D) PRIORITIZATION.—For purposes of 

2 subparagraph (C)(ii), for a negotiation drug 

3 grouping, with respect to a negotiation year, the 

4 Secretary shall prioritize covered part D 

5 drugs— 

6 ‘‘(i) with respect to which the cost of 

7 such a drug to the part D eligible indi8 vidual involved would exceed the annual 

9 out-of-pocket threshold applicable under 

10 section 1860D–2(b)(4)(B) for such nego11 tiation year, if the drug were prescribed to 

12 the individual for the period of the year or 

13 with respect to which a single treatment 

14 regimen is priced above such annual out15 of-pocket threshold applicable under such 

16 section 1860D–2(b)(4)(B) for the year; 

17 ‘‘(ii) that are among— 

18 ‘‘(I) the 40 covered part D drugs 

19 that are utilized by at least 1,000 

20 Medicare part D beneficiaries and 

21 with respect to which there were the 

22 highest total expenditures under this 

23 part during the most recent 12-month 

24 period prior to the beginning of such 


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1 negotiation year for which data is 

2 available; 

3 ‘‘(II) the 40 covered part D 

4 drugs that are utilized by at least 

5 1,000 Medicare part D beneficiaries 

6 with respect to whom the total annual 

7 spending per such a beneficiary under 

8 this part for coverage of such a drug 

9 is at least $10,000; or 

10 ‘‘(III) the 20 covered part D 

11 drugs that are utilized by at least 

12 1,000 Medicare part D beneficiaries 

13 and with respect to which there are 

14 unit cost increases at or above the 

15 95th percentile of overall covered part 

16 D drug unit cost increases during the 

17 most recent 12-month period prior to 

18 the beginning of such negotiation year 

19 for which data is available; or 

20 ‘‘(iii) that are single-source drugs or 

21 biologicals (as defined in section 

22 1847A(c)(6)(D)) and that satisfy at least 

23 one other criterion described in a previous 

24 clause of this subparagraph. 


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1 ‘‘(E) GUIDANCE.—Not later than 6 

2 months before the Secretary begins negotiations 

3 under subparagraph (A) for the first negotia4 tion year, the Secretary shall issue guidance on 

5 criteria to be considered for purposes of deter6 mining under subparagraph (B) whether or not 

7 the Secretary is successful in obtaining an ap8 propriate price for a covered part D drug. Such 

9 criteria shall include at least the following: 

10 ‘‘(i) The comparative clinical effective11 ness and cost effectiveness, if available, of 

12 such covered part D drug. 

13 ‘‘(ii) The budgetary impact of pro14 viding coverage under this part for such 

15 covered part D drug. 

16 ‘‘(iii) The number of similarly effec17 tive drug or alternative treatment regimens 

18 for each approved use of such covered part 

19 D drug. 

20 ‘‘(iv) Associated unmet need or sever21 ity of illness. 

22 ‘‘(F) PUBLIC EXPLANATION ON NEGOTIA23 TIONS OUTCOMES.—Not later than 30 days 

24 after the date on which the Secretary completes 

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1 tiation year with a pharmaceutical manufac2 turer, with respect to the price for a covered 

3 part D drug for a negotiated price period, with 

4 respect to such year, the Secretary shall make 

5 publicly available an explanation of the outcome 

6 of such negotiations, based on the criteria in7 cluded in the guidance issued pursuant to sub8 paragraph (E). 

9 ‘‘(G) MEDPAC REPORT.— 

10 ‘‘(i) STUDY.—The Medicare Payment 

11 Advisory Commission shall conduct a study 

12 on the price negotiations conducted by the 

13 Secretary under this paragraph, including 

14 an analysis of— 

15 ‘‘(I) the extent to which such 

16 price negotiations are achieving lower 

17 prices for covered part D drugs for 

18 part D eligible individuals who are en19 rolled under a prescription drug plan 

20 or under an MA–PD plan; 

21 ‘‘(II) the parties benefitting from 

22 such lower prices, such as part D eli23 gible individuals described in sub24 clause (I), the Federal government, 


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1 States, prescription drug plans and 

2 MA–PD plans, or other entities; 

3 ‘‘(III) how such price negotia4 tions are affecting drug prices in the 

5 private market; and 

6 ‘‘(IV) how such price negotiations 

7 are affecting the list price of covered 

8 part D drugs. 

9 ‘‘(ii) REPORT.—Not later than Janu10 ary 1, 2022, the Medicare Payment Advi11 sory Commission shall submit to Congress 

12 a report on the study conducted under 

13 clause (i), including recommendations for 

14 improving price negotiations described in 

15 clause (i). 

16 ‘‘(H) DEFINITIONS.—For purposes of this 

17 paragraph: 

18 ‘‘(i) NEGOTIATION YEAR.—The term 

19 ‘negotiation year’ means a year beginning 

20 with 2019. 

21 ‘‘(ii) NEGOTIATED PRICE PERIOD.— 

22 The term ‘negotiated price period’ means, 

23 with respect to a negotiation year and ne24 gotiation drug grouping, the 3-plan year 

25 period beginning with the first plan year 


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1 beginning after the negotiation year for 

2 such grouping. 

3 ‘‘(2) ESTABLISHMENT AND APPLICATION OF

4 FORMULARY BY THE SECRETARY OR CHANGES IN

5 FORMULARIES TO BE REQUIRED BY SECRETARY.— 

6 ‘‘(A) IN GENERAL.—The Secretary shall, 

7 for plan years beginning with plan year 2019— 

8 ‘‘(i) subject to subparagraphs (B) and 

9 (C), establish and apply a formulary for 

10 required use by sponsors of prescription 

11 drug plans and organizations offering MA– 

12 PD plans under this part; or 

13 ‘‘(ii) require changes, as necessary, in 

14 the covered part D drugs included on 

15 formularies of PDP sponsors of prescrip16 tion drug plans (including changes, as nec17 essary, in the preferred or tiered cost-shar18 ing status of such a drug) to take into ac19 count negotiations carried out by the Sec20 retary pursuant to paragraph (1), regard21 less of whether such a covered part D drug 

22 is the subject of such negotiations. 

23 ‘‘(B) REQUIRED INCLUSION OF DRUGS IN

24 ALL THERAPEUTIC CATEGORIES.—A formulary 

25 established and applied under subparagraph 


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1 (A)(i) shall include at least two covered part D 

2 drugs in each category and class of covered part 

3 D drugs as described in section 

4 423.120(b)(2)(i) of title 42, Code of Federal 

5 Regulations (as in effect on January 1, 2017). 

6 ‘‘(C) APPLICATION OF DEVELOPMENT AND

7 REVISION REQUIREMENTS AND REQUIRED IN8 CLUSION OF ALL DRUGS IN CERTAIN CAT9 EGORIES AND CLASSES.—The requirements de10 scribed in subparagraphs (A) and (B) of section 

11 1860D–4(b)(3) (relating to development and re12 vision requirements of the formulary) and sub13 paragraph (G) of such section (relating to re14 quired inclusion of all drugs in certain cat15 egories and classes) shall apply to a formulary 

16 established and applied under subparagraph 

17 (A)(i) of this paragraph. 

18 ‘‘(3) PLAN FLEXIBILITY TO NEGOTIATE GREAT19 ER DISCOUNTS.—Nothing in this subsection shall be 

20 construed as preventing the sponsor of a prescrip21 tion drug plan, or an organization offering an MA– 

22 PD plan, from obtaining a discount or reduction of 

23 the price for a covered part D drug below the price 

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1 cluding through the use of preferred or tiered cost2 sharing status. 

3 ‘‘(4) ENSURING BENEFICIARY ACCESS TO

4 NEEDED DRUGS.—Beginning with plan year 2019, 

5 Each PDP sponsor of a prescription drug plan and 

6 organization offering an MA–PD plan shall have in 

7 place a process under which an enrollee in the plan 

8 may request coverage under the plan for a covered 

9 part D drug that is not on the formulary, or is sub10 ject to utilization management controls, such as 

11 tiered pricing, prior authorization, or step therapy.’’. 

12 (b) CONFORMING AMENDMENTS.—Section 1860D–4 

13 of the Social Security Act (42 U.S.C. 1395w–104) is 

14 amended— 

15 (1) in subsection (b)(3), in the matter pre16 ceding subparagraph (A), by striking ‘‘If a PDP’’ 

17 and inserting ‘‘Subject to section 1860D–11(i)(2), if 

18 a PDP’’; 

19 (2) in subsection (g)— 

20 (A) in paragraph (1), by inserting before 

21 the period at the end the following: ‘‘, except 

22 that the PDP sponsor of a prescription drug 

23 plan shall treat the presentation of a prescrip24 tion to a participating pharmacy, which is 

25 transmitted to the plan by the pharmacy, as a 


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1 request for a coverage determination (including 

2 with respect to prior authorization, step ther3 apy, or quantity limits) and, in applying such 

4 paragraphs of section 1852(g), the response to 

5 such transmittal shall be treated as a deter6 mination by the sponsor’’; and 

7 (B) in paragraph (2), in the first sentence, 

8 by inserting ‘‘(or a participating pharmacy, on 

9 behalf of such individual, through transmission 

10 of a prescription as described in paragraph 

11 (1))’’ after ‘‘a part D eligible individual who is 

12 enrolled in the plan’’; and 

13 (3) in subsection (h)— 

14 (A) in paragraph (1), in the second sen15 tence, by inserting ‘‘(or a participating phar16 macy, on behalf of such individual)’’ after ‘‘the 

17 part D eligible individual’’; and 

18 (B) in paragraph (2), by inserting ‘‘(or a 

19 participating pharmacy, on behalf of such indi20 vidual)’’ after ‘‘A part D eligible individual who 

21 is enrolled in a prescription drug plan offered 

22 by a PDP sponsor’’. 

23 (4) EFFECTIVE DATE.—The amendments made 

24 by paragraphs (2) and (3) shall apply to plans years 

25 beginning on or after January 1, 2019. 


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1 SEC. 3. REQUIRING DRUG MANUFACTURERS TO PROVIDE 

2 DRUG REBATES FOR DRUGS DISPENSED TO 

3 LOW-INCOME INDIVIDUALS. 

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

5 Security Act (42 U.S.C. 1395w–102) is amended— 

6 (1) in subsection (e)(1), in the matter preceding 

7 subparagraph (A), by inserting ‘‘and subsection (f)’’ 

8 after ‘‘this subsection’’; and 

9 (2) by adding at the end the following new sub10 section: 

11 ‘‘(f) PRESCRIPTION DRUG REBATE AGREEMENT FOR

12 REBATE ELIGIBLE INDIVIDUALS.— 

13 ‘‘(1) REQUIREMENT.— 

14 ‘‘(A) IN GENERAL.—For plan years begin15 ning on or after January 1, 2019, in this part, 

16 the term ‘covered part D drug’ does not include 

17 any drug or biological product that is manufac18 tured by a manufacturer that has not entered 

19 into and have in effect a rebate agreement de20 scribed in paragraph (2). 

21 ‘‘(B) 2019 PLAN YEAR REQUIREMENT.— 

22 Any drug or biological product manufactured by 

23 a manufacturer that declines to enter into a re24 bate agreement described in paragraph (2) for 

25 the period beginning on January 1, 2019, and 

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1 cluded as a ‘covered part D drug’ for the subse2 quent plan year. 

3 ‘‘(2) REBATE AGREEMENT.—A rebate agree4 ment under this subsection shall require the manu5 facturer to provide to the Secretary a rebate for 

6 each rebate period (as defined in paragraph (6)(B)) 

7 ending after December 31, 2018, in the amount 

8 specified in paragraph (3) for any covered part D 

9 drug of the manufacturer dispensed after December 

10 31, 2018, to any rebate eligible individual (as de11 fined in paragraph (6)(A)) for which payment was 

12 made by a PDP sponsor or MA organization under 

13 this part for such period, including payments passed 

14 through the low-income and reinsurance subsidies 

15 under sections 1860D–14 and 1860D–15(b), respec16 tively. Such rebate shall be paid by the manufac17 turer to the Secretary not later than 30 days after 

18 the date of receipt of the information described in 

19 section 1860D–12(b)(7), including as such section is 

20 applied under section 1857(f)(3), or 30 days after 

21 the receipt of information under subparagraph (D) 

22 of paragraph (3), as determined by the Secretary. 

23 Insofar as not inconsistent with this subsection, the 

24 Secretary shall establish terms and conditions of 

25 such agreement relating to compliance, penalties, 


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1 and program evaluations, investigations, and audits 

2 that are similar to the terms and conditions for re3 bate agreements under paragraphs (3) and (4) of 

4 section 1927(b). 

5 ‘‘(3) REBATE FOR REBATE ELIGIBLE MEDICARE

6 DRUG PLAN ENROLLEES.— 

7 ‘‘(A) IN GENERAL.—The amount of the re8 bate specified under this paragraph for a manu9 facturer for a rebate period, with respect to 

10 each dosage form and strength of any covered 

11 part D drug provided by such manufacturer 

12 and dispensed to a rebate eligible individual, 

13 shall be equal to the product of— 

14 ‘‘(i) the total number of units of such 

15 dosage form and strength of the drug so 

16 provided and dispensed for which payment 

17 was made by a PDP sponsor or an MA or18 ganization under this part for the rebate 

19 period, including payments passed through 

20 the low-income and reinsurance subsidies 

21 under sections 1860D–14 and 1860D– 

22 15(b), respectively; and 

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

24 ‘‘(I) the Medicaid rebate amount 

25 (as defined in subparagraph (B)) for 


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1 such form, strength, and period, ex2 ceeds 

3 ‘‘(II) the average Medicare drug 

4 program rebate eligible rebate amount 

5 (as defined in subparagraph (C)) for 

6 such form, strength, and period. 

7 ‘‘(B) MEDICAID REBATE AMOUNT.—For 

8 purposes of this paragraph, the term ‘Medicaid 

9 rebate amount’ means, with respect to each 

10 dosage form and strength of a covered part D 

11 drug provided by the manufacturer for a rebate 

12 period— 

13 ‘‘(i) in the case of a single source 

14 drug or an innovator multiple source drug, 

15 the amount specified in paragraph 

16 (1)(A)(ii)(II) or (2)(C) of section 1927(c) 

17 plus the amount, if any, specified in sub18 paragraph (A)(ii) of paragraph (2) of such 

19 section, for such form, strength, and pe20 riod; or 

21 ‘‘(ii) in the case of any other covered 

22 outpatient drug, the amount specified in 

23 paragraph (3)(A)(i) of such section for 

24 such form, strength, and period. 


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1 ‘‘(C) AVERAGE MEDICARE DRUG PROGRAM

2 REBATE ELIGIBLE REBATE AMOUNT.—For pur3 poses of this subsection, the term ‘average 

4 Medicare drug program rebate eligible rebate 

5 amount’ means, with respect to each dosage 

6 form and strength of a covered part D drug 

7 provided by a manufacturer for a rebate period, 

8 the sum, for all PDP sponsors under part D 

9 and MA organizations administering an MA– 

10 PD plan under part C, of— 

11 ‘‘(i) the product, for each such spon12 sor or organization, of— 

13 ‘‘(I) the sum of all rebates, dis14 counts, or other price concessions (not 

15 taking into account any rebate pro16 vided under paragraph (2) or any dis17 counts under the program under sec18 tion 1860D–14A) for such dosage 

19 form and strength of the drug dis20 pensed, calculated on a per-unit basis, 

21 but only to the extent that any such 

22 rebate, discount, or other price con23 cession applies equally to drugs dis24 pensed to rebate eligible Medicare 

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1 pensed to PDP and MA–PD enrollees 

2 who are not rebate eligible individuals; 

3 and 

4 ‘‘(II) the number of the units of 

5 such dosage and strength of the drug 

6 dispensed during the rebate period to 

7 rebate eligible individuals enrolled in 

8 the prescription drug plans adminis9 tered by the PDP sponsor or the MA– 

10 PD plans administered by the MA or11 ganization; divided by 

12 ‘‘(ii) the total number of units of such 

13 dosage and strength of the drug dispensed 

14 during the rebate period to rebate eligible 

15 individuals enrolled in all prescription drug 

16 plans administered by PDP sponsors and 

17 all MA–PD plans administered by MA or18 ganizations. 

19 ‘‘(D) USE OF ESTIMATES.—The Secretary 

20 may establish a methodology for estimating the 

21 average Medicare drug program rebate eligible 

22 rebate amounts for each rebate period based on 

23 bid and utilization information under this part 

24 and may use these estimates as the basis for 

25 determining the rebates under this section. If 


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1 the Secretary elects to estimate the average 

2 Medicare drug program rebate eligible rebate 

3 amounts, the Secretary shall establish a rec4 onciliation process for adjusting manufacturer 

5 rebate payments not later than 3 months after 

6 the date that manufacturers receive the infor7 mation collected under section 1860D– 

8 12(b)(7)(B). 

9 ‘‘(4) LENGTH OF AGREEMENT.—The provisions 

10 of paragraph (4) of section 1927(b) (other than 

11 clauses (iv) and (v) of subparagraph (B)) shall apply 

12 to rebate agreements under this subsection in the 

13 same manner as such paragraph applies to a rebate 

14 agreement under such section. 

15 ‘‘(5) OTHER TERMS AND CONDITIONS.—The 

16 Secretary shall establish other terms and conditions 

17 of the rebate agreement under this subsection, in18 cluding terms and conditions related to compliance, 

19 that are consistent with this subsection. 

20 ‘‘(6) DEFINITIONS.—In this subsection and sec21 tion 1860D–12(b)(7): 

22 ‘‘(A) REBATE ELIGIBLE INDIVIDUAL.—The 

23 term ‘rebate eligible individual’ means— 

24 ‘‘(i) a subsidy eligible individual (as 

25 defined in section 1860D–14(a)(3)(A)); 


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1 ‘‘(ii) a Medicaid beneficiary treated as 

2 a subsidy eligible individual under clause 

3 (v) of section 1860D–14(a)(3)(B); and 

4 ‘‘(iii) any part D eligible individual 

5 not described in clause (i) or (ii) who is de6 termined for purposes of the State plan 

7 under title XIX to be eligible for medical 

8 assistance under clause (i), (iii), or (iv) of 

9 section 1902(a)(10)(E). 

10 ‘‘(B) REBATE PERIOD.—The term ‘rebate 

11 period’ has the meaning given such term in sec12 tion 1927(k)(8).’’. 

13 (b) REPORTING REQUIREMENT FOR THE DETER14 MINATION AND PAYMENT OF REBATES BY MANUFACTUR15 ERS RELATED TO REBATE FOR REBATE ELIGIBLE MEDI16 CARE DRUG PLAN ENROLLEES.— 

17 (1) REQUIREMENTS FOR PDP SPONSORS.—Sec18 tion 1860D–12(b) of the Social Security Act (42 

19 U.S.C. 1395w–112(b)) is amended by adding at the 

20 end the following new paragraph: 

21 ‘‘(7) REPORTING REQUIREMENT FOR THE DE22 TERMINATION AND PAYMENT OF REBATES BY MANU23 FACTURERS RELATED TO REBATE FOR REBATE ELI24 GIBLE MEDICARE DRUG PLAN ENROLLEES.— 


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1 ‘‘(A) IN GENERAL.—For purposes of the 

2 rebate under section 1860D–2(f) for contract 

3 years beginning on or after January 1, 2019, 

4 each contract entered into with a PDP sponsor 

5 under this part with respect to a prescription 

6 drug plan shall require that the sponsor comply 

7 with subparagraphs (B) and (C). 

8 ‘‘(B) REPORT FORM AND CONTENTS.—Not 

9 later than a date specified by the Secretary, a 

10 PDP sponsor of a prescription drug plan under 

11 this part shall report to each manufacturer— 

12 ‘‘(i) information (by National Drug 

13 Code number) on the total number of units 

14 of each dosage, form, and strength of each 

15 drug of such manufacturer dispensed to re16 bate eligible Medicare drug plan enrollees 

17 under any prescription drug plan operated 

18 by the PDP sponsor during the rebate pe19 riod; 

20 ‘‘(ii) information on the price dis21 counts, price concessions, and rebates for 

22 such drugs for such form, strength, and 

23 period; 

24 ‘‘(iii) information on the extent to 

25 which such price discounts, price concesVerDate Sep 11 2014 23:36 Oct 26, 2017 Jkt 079200 PO 00000 Frm 00024 Fmt 6652 Sfmt 6201 E:\BILLS\S2011.IS S2011

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•S 2011 IS

1 sions, and rebates apply equally to rebate 

2 eligible Medicare drug plan enrollees and 

3 PDP enrollees who are not rebate eligible 

4 Medicare drug plan enrollees; and 

5 ‘‘(iv) any additional information that 

6 the Secretary determines is necessary to 

7 enable the Secretary to calculate the aver8 age Medicare drug program rebate eligible 

9 rebate amount (as defined in paragraph 

10 (3)(C) of such section), and to determine 

11 the amount of the rebate required under 

12 this section, for such form, strength, and 

13 period. 

14 Such report shall be in a form consistent with 

15 a standard reporting format established by the 

16 Secretary. 

17 ‘‘(C) SUBMISSION TO SECRETARY.—Each 

18 PDP sponsor shall promptly transmit a copy of 

19 the information reported under subparagraph 

20 (B) to the Secretary for the purpose of audit 

21 oversight and evaluation. 

22 ‘‘(D) CONFIDENTIALITY OF INFORMA23 TION.—The provisions of subparagraph (D) of 

24 section 1927(b)(3), relating to confidentiality of 

25 information, shall apply to information reported 


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•S 2011 IS

1 by PDP sponsors under this paragraph in the 

2 same manner that such provisions apply to in3 formation disclosed by manufacturers or whole4 salers under such section, except— 

5 ‘‘(i) that any reference to ‘this sec6 tion’ in clause (i) of such subparagraph 

7 shall be treated as being a reference to this 

8 section; 

9 ‘‘(ii) the reference to the Director of 

10 the Congressional Budget Office in clause 

11 (iii) of such subparagraph shall be treated 

12 as including a reference to the Medicare 

13 Payment Advisory Commission; and 

14 ‘‘(iii) clause (iv) of such subparagraph 

15 shall not apply. 

16 ‘‘(E) OVERSIGHT.—Information reported 

17 under this paragraph may be used by the In18 spector General of the Department of Health 

19 and Human Services for the statutorily author20 ized purposes of audit, investigation, and eval21 uations. 

22 ‘‘(F) PENALTIES FOR FAILURE TO PRO23 VIDE TIMELY INFORMATION AND PROVISION OF

24 FALSE INFORMATION.—In the case of a PDP 

25 sponsor— 


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•S 2011 IS

1 ‘‘(i) that fails to provide information 

2 required under subparagraph (B) on a 

3 timely basis, the sponsor is subject to a 

4 civil money penalty in the amount of 

5 $10,000 for each day in which such infor6 mation has not been provided; or 

7 ‘‘(ii) that knowingly (as defined in 

8 section 1128A(i)) provides false informa9 tion under such subparagraph, the sponsor 

10 is subject to a civil money penalty in an 

11 amount not to exceed $100,000 for each 

12 item of false information. 

13 Such civil money penalties are in addition to 

14 other penalties as may be prescribed by law. 

15 The provisions of section 1128A (other than 

16 subsections (a) and (b)) shall apply to a civil 

17 money penalty under this subparagraph in the 

18 same manner as such provisions apply to a pen19 alty or proceeding under section 1128A(a).’’. 

20 (2) APPLICATION TO MA ORGANIZATIONS.—Sec21 tion 1857(f)(3) of the Social Security Act (42 

22 U.S.C. 1395w–27(f)(3)) is amended by adding at 

23 the end the following: 

24 ‘‘(D) REPORTING REQUIREMENT RELATED

25 TO REBATE FOR REBATE ELIGIBLE MEDICARE


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1 DRUG PLAN ENROLLEES.—Section 1860D– 

2 12(b)(7).’’. 

3 (c) DEPOSIT OF REBATES INTO MEDICARE PRE4 SCRIPTION DRUG ACCOUNT.—Section 1860D–16(c) of the 

5 Social Security Act (42 U.S.C. 1395w–116(c)) is amended 

6 by adding at the end the following new paragraph: 

7 ‘‘(6) REBATE FOR REBATE ELIGIBLE MEDICARE

8 DRUG PLAN ENROLLEES.—Amounts paid under a re9 bate agreement under section 1860D–2(f) shall be 

10 deposited into the Account.’’. 

11 (d) EXCLUSION FROM DETERMINATION OF BEST

12 PRICE AND AVERAGE MANUFACTURER PRICE UNDER

13 MEDICAID.— 

14 (1) EXCLUSION FROM BEST PRICE DETERMINA15 TION.—Section 1927(c)(1)(C)(ii)(I) of the Social Se16 curity Act (42 U.S.C. 1396r–8(c)(1)(C)(ii)(I)) is 

17 amended by inserting ‘‘and amounts paid under a 

18 rebate agreement under section 1860D–2(f)’’ after 

19 ‘‘this section’’. 

20 (2) EXCLUSION FROM AVERAGE MANUFAC21 TURER PRICE DETERMINATION.—Section 

22 1927(k)(1)(B)(i) of the Social Security Act (42 

23 U.S.C. 1396r–8(k)(1)(B)(i)) is amended— 

24 (A) in subclause (IV), by striking ‘‘and’’ 

25 after the semicolon; 


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•S 2011 IS

1 (B) in subclause (V), by striking the period 

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

3 (C) by adding at the end the following: 

4 ‘‘(VI) amounts paid under a re5 bate agreement under section 1860D– 

6 2(f).’’. 

Æ 


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