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[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 2011 Introduced in Senate (IS)]

<DOC>

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.

    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 ``Medicare Drug Price Negotiation 
Act''.

SEC. 2. NEGOTIATION OF LOWER COVERED PART D DRUG PRICES ON BEHALF OF 
              MEDICARE BENEFICIARIES AND ESTABLISHMENT AND APPLICATION 
              OF FORMULARY BY THE SECRETARY OF HEALTH AND HUMAN 
              SERVICES UNDER MEDICARE PART D.

    (a) In General.--Section 1860D-11 of the Social Security Act (42 
U.S.C. 1395w-111) is amended by striking subsection (i) (relating to 
noninterference) and inserting the following:
    ``(i) Negotiation of Lower Drug Prices; Establishment and 
Application of Formulary.--
            ``(1) Negotiation.--
                    ``(A) In general.--Notwithstanding any other 
                provision of law, subject to subparagraph (B), the 
                Secretary shall during a negotiation year and with 
                respect to the negotiation drug grouping identified 
                under subparagraph (C) with respect to such negotiation 
                year--
                            ``(i) negotiate with pharmaceutical 
                        manufacturers the prices (including discounts, 
                        rebates, and all other price concessions) that 
                        may be charged for each plan year during the 
                        negotiated price period, with respect to such 
                        negotiation year, to PDP sponsors and MA 
                        organizations for covered part D drugs 
                        identified as included within such negotiation 
                        drug grouping for part D eligible individuals 
                        who are enrolled under a prescription drug plan 
                        or under an MA-PD plan; and
                            ``(ii) complete such negotiations 30 days 
                        before the first day of the application review 
                        process for the first plan year during such 
                        negotiated price period for new contracts or 
                        expanding existing contracts with PDP sponsors 
                        and MA organizations to offer prescription drug 
                        plans or MA-PD plans, respectively.
                    ``(B) Use of fallback if negotiations fail.--If, 
                after attempting to negotiate the price during a 
                negotiation year for a covered part D drug that is 
                identified as included within the negotiation drug 
                grouping for such negotiation year, the Secretary is 
                not successful in obtaining an appropriate price (as 
                determined by the Secretary in accordance with guidance 
                described in subparagraph (E)), the price that may be 
                charged during each plan year during the negotiated 
                price period, with respect to such negotiation year, to 
                PDP sponsors and MA organizations for such covered part 
                D drugs for part D eligible individuals who are 
                enrolled under a prescription drug plan or under an MA-
                PD plan shall be the lowest of--
                            ``(i) the contract price applied pursuant 
                        to section 8126 of title 38, United States 
                        Code, for such drug for the contract year (as 
                        defined in such section 8126) beginning during 
                        the first plan year of such negotiated price 
                        period;
                            ``(ii) the average of the prices available, 
                        during the most recent 12-month period for 
                        which data is available prior to the beginning 
                        of such negotiated price period, from the 
                        manufacturer to any wholesaler, retailer, 
                        provider, health maintenance organization, 
                        nonprofit entity, or governmental entity in the 
                        ten OECD (Organization for Economic Cooperation 
                        and Development) countries that have the 
                        largest gross domestic product with a per 
                        capita income that is not less than half the 
                        per capita income of the United States, as 
                        reported by the manufacturer to the Secretary; 
                        and
                            ``(iii) the best price determined under 
                        section 1927(c)(1)(C) for such drug for the 
                        most recent rebate period (as defined in 
                        section 1927(k)(8)) applicable to such first 
                        plan year of such negotiated price period.
                    ``(C) Identification of negotiation drug 
                groupings.--
                            ``(i) In general.--For each negotiation 
                        year, the Secretary shall, during the previous 
                        year, in accordance with the subsequent clauses 
                        of this subparagraph, and pursuant to 
                        rulemaking, identify covered part D drugs for 
                        which negotiations under subparagraph (A) shall 
                        be conducted during such negotiation year. In 
                        this subsection, all such covered part D drugs 
                        so identified for a negotiation year are 
                        collectively referred to as the negotiation 
                        drug grouping, with respect to such year.
                            ``(ii) Identification of prioritized 
                        drugs.--In carrying out clause (i), except as 
                        provided under clause (iii), the Secretary may 
                        not identify for inclusion within the 
                        negotiation drug grouping with respect to a 
                        negotiation year, a covered part D drug that is 
                        not a drug prioritized pursuant to subparagraph 
                        (D) before all covered part D drugs that are so 
                        prioritized have been identified for inclusion 
                        in such grouping or in a negotiation drug 
                        grouping with respect to a previous negotiation 
                        year for which the negotiated price period has 
                        not expired.
                            ``(iii) Drug inclusions for price 
                        renegotiations.--In the case of a covered part 
                        D drug that is identified as included in a 
                        negotiation drug grouping under this 
                        subparagraph, with respect to a negotiation 
                        year, such covered part D drug shall be 
                        identified as included within the negotiation 
                        drug grouping for each subsequent third 
                        negotiation year.
                            ``(iv) Reasonable notification.--The 
                        Secretary shall carry out this subparagraph in 
                        such manner as to provide for public 
                        notification of the negotiation drug grouping 
                        identified with respect to a negotiation year 
                        within a reasonable period before the beginning 
                        of such negotiation year.
                    ``(D) Prioritization.--For purposes of subparagraph 
                (C)(ii), for a negotiation drug grouping, with respect 
                to a negotiation year, the Secretary shall prioritize 
                covered part D drugs--
                            ``(i) with respect to which the cost of 
                        such a drug to the part D eligible individual 
                        involved would exceed the annual out-of-pocket 
                        threshold applicable under section 1860D-
                        2(b)(4)(B) for such negotiation year, if the 
                        drug were prescribed to the individual for the 
                        period of the year or with respect to which a 
                        single treatment regimen is priced above such 
                        annual out-of-pocket threshold applicable under 
                        such section 1860D-2(b)(4)(B) for the year;
                            ``(ii) that are among--
                                    ``(I) the 40 covered part D drugs 
                                that are utilized by at least 1,000 
                                Medicare part D beneficiaries and with 
                                respect to which there were the highest 
                                total expenditures under this part 
                                during the most recent 12-month period 
                                prior to the beginning of such 
                                negotiation year for which data is 
                                available;
                                    ``(II) the 40 covered part D drugs 
                                that are utilized by at least 1,000 
                                Medicare part D beneficiaries with 
                                respect to whom the total annual 
                                spending per such a beneficiary under 
                                this part for coverage of such a drug 
                                is at least $10,000; or
                                    ``(III) the 20 covered part D drugs 
                                that are utilized by at least 1,000 
                                Medicare part D beneficiaries and with 
                                respect to which there are unit cost 
                                increases at or above the 95th 
                                percentile of overall covered part D 
                                drug unit cost increases during the 
                                most recent 12-month period prior to 
                                the beginning of such negotiation year 
                                for which data is available; or
                            ``(iii) that are single-source drugs or 
                        biologicals (as defined in section 
                        1847A(c)(6)(D)) and that satisfy at least one 
                        other criterion described in a previous clause 
                        of this subparagraph.
                    ``(E) Guidance.--Not later than 6 months before the 
                Secretary begins negotiations under subparagraph (A) 
                for the first negotiation year, the Secretary shall 
                issue guidance on criteria to be considered for 
                purposes of determining under subparagraph (B) whether 
                or not the Secretary is successful in obtaining an 
                appropriate price for a covered part D drug. Such 
                criteria shall include at least the following:
                            ``(i) The comparative clinical 
                        effectiveness and cost effectiveness, if 
                        available, of such covered part D drug.
                            ``(ii) The budgetary impact of providing 
                        coverage under this part for such covered part 
                        D drug.
                            ``(iii) The number of similarly effective 
                        drug or alternative treatment regimens for each 
                        approved use of such covered part D drug.
                            ``(iv) Associated unmet need or severity of 
                        illness.
                    ``(F) Public explanation on negotiations 
                outcomes.--Not later than 30 days after the date on 
                which the Secretary completes negotiations under this 
                section during a negotiation year with a pharmaceutical 
                manufacturer, with respect to the price for a covered 
                part D drug for a negotiated price period, with respect 
                to such year, the Secretary shall make publicly 
                available an explanation of the outcome of such 
                negotiations, based on the criteria included in the 
                guidance issued pursuant to subparagraph (E).
                    ``(G) MedPAC report.--
                            ``(i) Study.--The Medicare Payment Advisory 
                        Commission shall conduct a study on the price 
                        negotiations conducted by the Secretary under 
                        this paragraph, including an analysis of--
                                    ``(I) the extent to which such 
                                price negotiations are achieving lower 
                                prices for covered part D drugs for 
                                part D eligible individuals who are 
                                enrolled under a prescription drug plan 
                                or under an MA-PD plan;
                                    ``(II) the parties benefitting from 
                                such lower prices, such as part D 
                                eligible individuals described in 
                                subclause (I), the Federal government, 
                                States, prescription drug plans and MA-
                                PD plans, or other entities;
                                    ``(III) how such price negotiations 
                                are affecting drug prices in the 
                                private market; and
                                    ``(IV) how such price negotiations 
                                are affecting the list price of covered 
                                part D drugs.
                            ``(ii) Report.--Not later than January 1, 
                        2022, the Medicare Payment Advisory Commission 
                        shall submit to Congress a report on the study 
                        conducted under clause (i), including 
                        recommendations for improving price 
                        negotiations described in clause (i).
                    ``(H) Definitions.--For purposes of this paragraph:
                            ``(i) Negotiation year.--The term 
                        `negotiation year' means a year beginning with 
                        2019.
                            ``(ii) Negotiated price period.--The term 
                        `negotiated price period' means, with respect 
                        to a negotiation year and negotiation drug 
                        grouping, the 3-plan year period beginning with 
                        the first plan year beginning after the 
                        negotiation year for such grouping.
            ``(2) Establishment and application of formulary by the 
        secretary or changes in formularies to be required by 
        secretary.--
                    ``(A) In general.--The Secretary shall, for plan 
                years beginning with plan year 2019--
                            ``(i) subject to subparagraphs (B) and (C), 
                        establish and apply a formulary for required 
                        use by sponsors of prescription drug plans and 
                        organizations offering MA-PD plans under this 
                        part; or
                            ``(ii) require changes, as necessary, in 
                        the covered part D drugs included on 
                        formularies of PDP sponsors of prescription 
                        drug plans (including changes, as necessary, in 
                        the preferred or tiered cost-sharing status of 
                        such a drug) to take into account negotiations 
                        carried out by the Secretary pursuant to 
                        paragraph (1), regardless of whether such a 
                        covered part D drug is the subject of such 
                        negotiations.
                    ``(B) Required inclusion of drugs in all 
                therapeutic categories.--A formulary established and 
                applied under subparagraph (A)(i) shall include at 
                least two covered part D drugs in each category and 
                class of covered part D drugs as described in section 
                423.120(b)(2)(i) of title 42, Code of Federal 
                Regulations (as in effect on January 1, 2017).
                    ``(C) Application of development and revision 
                requirements and required inclusion of all drugs in 
                certain categories and classes.--The requirements 
                described in subparagraphs (A) and (B) of section 
                1860D-4(b)(3) (relating to development and revision 
                requirements of the formulary) and subparagraph (G) of 
                such section (relating to required inclusion of all 
                drugs in certain categories and classes) shall apply to 
                a formulary established and applied under subparagraph 
                (A)(i) of this paragraph.
            ``(3) Plan flexibility to negotiate greater discounts.--
        Nothing in this subsection shall be construed as preventing the 
        sponsor of a prescription drug plan, or an organization 
        offering an MA-PD plan, from obtaining a discount or reduction 
        of the price for a covered part D drug below the price 
        negotiated under paragraph (1), if applicable, including 
        through the use of preferred or tiered cost-sharing status.
            ``(4) Ensuring beneficiary access to needed drugs.--
        Beginning with plan year 2019, Each PDP sponsor of a 
        prescription drug plan and organization offering an MA-PD plan 
        shall have in place a process under which an enrollee in the 
        plan may request coverage under the plan for a covered part D 
        drug that is not on the formulary, or is subject to utilization 
        management controls, such as tiered pricing, prior 
        authorization, or step therapy.''.
    (b) Conforming Amendments.--Section 1860D-4 of the Social Security 
Act (42 U.S.C. 1395w-104) is amended--
            (1) in subsection (b)(3), in the matter preceding 
        subparagraph (A), by striking ``If a PDP'' and inserting 
        ``Subject to section 1860D-11(i)(2), if a PDP'';
            (2) in subsection (g)--
                    (A) in paragraph (1), by inserting before the 
                period at the end the following: ``, except that the 
                PDP sponsor of a prescription drug plan shall treat the 
                presentation of a prescription to a participating 
                pharmacy, which is transmitted to the plan by the 
                pharmacy, as a request for a coverage determination 
                (including with respect to prior authorization, step 
                therapy, or quantity limits) and, in applying such 
                paragraphs of section 1852(g), the response to such 
                transmittal shall be treated as a determination by the 
                sponsor''; and
                    (B) in paragraph (2), in the first sentence, by 
                inserting ``(or a participating pharmacy, on behalf of 
                such individual, through transmission of a prescription 
                as described in paragraph (1))'' after ``a part D 
                eligible individual who is enrolled in the plan''; and
            (3) in subsection (h)--
                    (A) in paragraph (1), in the second sentence, by 
                inserting ``(or a participating pharmacy, on behalf of 
                such individual)'' after ``the part D eligible 
                individual''; and
                    (B) in paragraph (2), by inserting ``(or a 
                participating pharmacy, on behalf of such individual)'' 
                after ``A part D eligible individual who is enrolled in 
                a prescription drug plan offered by a PDP sponsor''.
            (4) Effective date.--The amendments made by paragraphs (2) 
        and (3) shall apply to plans years beginning on or after 
        January 1, 2019.

SEC. 3. REQUIRING DRUG MANUFACTURERS TO PROVIDE DRUG REBATES FOR DRUGS 
              DISPENSED TO LOW-INCOME INDIVIDUALS.

    (a) In General.--Section 1860D-2 of the Social Security Act (42 
U.S.C. 1395w-102) is amended--
            (1) in subsection (e)(1), in the matter preceding 
        subparagraph (A), by inserting ``and subsection (f)'' after 
        ``this subsection''; and
            (2) by adding at the end the following new subsection:
    ``(f) Prescription Drug Rebate Agreement for Rebate Eligible 
Individuals.--
            ``(1) Requirement.--
                    ``(A) In general.--For plan years beginning on or 
                after January 1, 2019, in this part, the term `covered 
                part D drug' does not include any drug or biological 
                product that is manufactured by a manufacturer that has 
                not entered into and have in effect a rebate agreement 
                described in paragraph (2).
                    ``(B) 2019 plan year requirement.--Any drug or 
                biological product manufactured by a manufacturer that 
                declines to enter into a rebate agreement described in 
                paragraph (2) for the period beginning on January 1, 
                2019, and ending on December 31, 2019, shall not be 
                included as a `covered part D drug' for the subsequent 
                plan year.
            ``(2) Rebate agreement.--A rebate agreement under this 
        subsection shall require the manufacturer to provide to the 
        Secretary a rebate for each rebate period (as defined in 
        paragraph (6)(B)) ending after December 31, 2018, in the amount 
        specified in paragraph (3) for any covered part D drug of the 
        manufacturer dispensed after December 31, 2018, to any rebate 
        eligible individual (as defined in paragraph (6)(A)) for which 
        payment was made by a PDP sponsor or MA organization under this 
        part for such period, including payments passed through the 
        low-income and reinsurance subsidies under sections 1860D-14 
        and 1860D-15(b), respectively. Such rebate shall be paid by the 
        manufacturer to the Secretary not later than 30 days after the 
        date of receipt of the information described in section 1860D-
        12(b)(7), including as such section is applied under section 
        1857(f)(3), or 30 days after the receipt of information under 
        subparagraph (D) of paragraph (3), as determined by the 
        Secretary. Insofar as not inconsistent with this subsection, 
        the Secretary shall establish terms and conditions of such 
        agreement relating to compliance, penalties, and program 
        evaluations, investigations, and audits that are similar to the 
        terms and conditions for rebate agreements under paragraphs (3) 
        and (4) of section 1927(b).
            ``(3) Rebate for rebate eligible medicare drug plan 
        enrollees.--
                    ``(A) In general.--The amount of the rebate 
                specified under this paragraph for a manufacturer for a 
                rebate period, with respect to each dosage form and 
                strength of any covered part D drug provided by such 
                manufacturer and dispensed to a rebate eligible 
                individual, shall be equal to the product of--
                            ``(i) the total number of units of such 
                        dosage form and strength of the drug so 
                        provided and dispensed for which payment was 
                        made by a PDP sponsor or an MA organization 
                        under this part for the rebate period, 
                        including payments passed through the low-
                        income and reinsurance subsidies under sections 
                        1860D-14 and 1860D-15(b), respectively; and
                            ``(ii) the amount (if any) by which--
                                    ``(I) the Medicaid rebate amount 
                                (as defined in subparagraph (B)) for 
                                such form, strength, and period, 
                                exceeds
                                    ``(II) the average Medicare drug 
                                program rebate eligible rebate amount 
                                (as defined in subparagraph (C)) for 
                                such form, strength, and period.
                    ``(B) Medicaid rebate amount.--For purposes of this 
                paragraph, the term `Medicaid rebate amount' means, 
                with respect to each dosage form and strength of a 
                covered part D drug provided by the manufacturer for a 
                rebate period--
                            ``(i) in the case of a single source drug 
                        or an innovator multiple source drug, the 
                        amount specified in paragraph (1)(A)(ii)(II) or 
                        (2)(C) of section 1927(c) plus the amount, if 
                        any, specified in subparagraph (A)(ii) of 
                        paragraph (2) of such section, for such form, 
                        strength, and period; or
                            ``(ii) in the case of any other covered 
                        outpatient drug, the amount specified in 
                        paragraph (3)(A)(i) of such section for such 
                        form, strength, and period.
                    ``(C) Average medicare drug program rebate eligible 
                rebate amount.--For purposes of this subsection, the 
                term `average Medicare drug program rebate eligible 
                rebate amount' means, with respect to each dosage form 
                and strength of a covered part D drug provided by a 
                manufacturer for a rebate period, the sum, for all PDP 
                sponsors under part D and MA organizations 
                administering an MA-PD plan under part C, of--
                            ``(i) the product, for each such sponsor or 
                        organization, of--
                                    ``(I) the sum of all rebates, 
                                discounts, or other price concessions 
                                (not taking into account any rebate 
                                provided under paragraph (2) or any 
                                discounts under the program under 
                                section 1860D-14A) for such dosage form 
                                and strength of the drug dispensed, 
                                calculated on a per-unit basis, but 
                                only to the extent that any such 
                                rebate, discount, or other price 
                                concession applies equally to drugs 
                                dispensed to rebate eligible Medicare 
                                drug plan enrollees and drugs dispensed 
                                to PDP and MA-PD enrollees who are not 
                                rebate eligible individuals; and
                                    ``(II) the number of the units of 
                                such dosage and strength of the drug 
                                dispensed during the rebate period to 
                                rebate eligible individuals enrolled in 
                                the prescription drug plans 
                                administered by the PDP sponsor or the 
                                MA-PD plans administered by the MA 
                                organization; divided by
                            ``(ii) the total number of units of such 
                        dosage and strength of the drug dispensed 
                        during the rebate period to rebate eligible 
                        individuals enrolled in all prescription drug 
                        plans administered by PDP sponsors and all MA-
                        PD plans administered by MA organizations.
                    ``(D) Use of estimates.--The Secretary may 
                establish a methodology for estimating the average 
                Medicare drug program rebate eligible rebate amounts 
                for each rebate period based on bid and utilization 
                information under this part and may use these estimates 
                as the basis for determining the rebates under this 
                section. If the Secretary elects to estimate the 
                average Medicare drug program rebate eligible rebate 
                amounts, the Secretary shall establish a reconciliation 
                process for adjusting manufacturer rebate payments not 
                later than 3 months after the date that manufacturers 
                receive the information collected under section 1860D-
                12(b)(7)(B).
            ``(4) Length of agreement.--The provisions of paragraph (4) 
        of section 1927(b) (other than clauses (iv) and (v) of 
        subparagraph (B)) shall apply to rebate agreements under this 
        subsection in the same manner as such paragraph applies to a 
        rebate agreement under such section.
            ``(5) Other terms and conditions.--The Secretary shall 
        establish other terms and conditions of the rebate agreement 
        under this subsection, including terms and conditions related 
        to compliance, that are consistent with this subsection.
            ``(6) Definitions.--In this subsection and section 1860D-
        12(b)(7):
                    ``(A) Rebate eligible individual.--The term `rebate 
                eligible individual' means--
                            ``(i) a subsidy eligible individual (as 
                        defined in section 1860D-14(a)(3)(A));
                            ``(ii) a Medicaid beneficiary treated as a 
                        subsidy eligible individual under clause (v) of 
                        section 1860D-14(a)(3)(B); and
                            ``(iii) any part D eligible individual not 
                        described in clause (i) or (ii) who is 
                        determined for purposes of the State plan under 
                        title XIX to be eligible for medical assistance 
                        under clause (i), (iii), or (iv) of section 
                        1902(a)(10)(E).
                    ``(B) Rebate period.--The term `rebate period' has 
                the meaning given such term in section 1927(k)(8).''.
    (b) Reporting Requirement for the Determination and Payment of 
Rebates by Manufacturers Related to Rebate for Rebate Eligible Medicare 
Drug Plan Enrollees.--
            (1) Requirements for pdp sponsors.--Section 1860D-12(b) of 
        the Social Security Act (42 U.S.C. 1395w-112(b)) is amended by 
        adding at the end the following new paragraph:
            ``(7) Reporting requirement for the determination and 
        payment of rebates by manufacturers related to rebate for 
        rebate eligible medicare drug plan enrollees.--
                    ``(A) In general.--For purposes of the rebate under 
                section 1860D-2(f) for contract years beginning on or 
                after January 1, 2019, each contract entered into with 
                a PDP sponsor under this part with respect to a 
                prescription drug plan shall require that the sponsor 
                comply with subparagraphs (B) and (C).
                    ``(B) Report form and contents.--Not later than a 
                date specified by the Secretary, a PDP sponsor of a 
                prescription drug plan under this part shall report to 
                each manufacturer--
                            ``(i) information (by National Drug Code 
                        number) on the total number of units of each 
                        dosage, form, and strength of each drug of such 
                        manufacturer dispensed to rebate eligible 
                        Medicare drug plan enrollees under any 
                        prescription drug plan operated by the PDP 
                        sponsor during the rebate period;
                            ``(ii) information on the price discounts, 
                        price concessions, and rebates for such drugs 
                        for such form, strength, and period;
                            ``(iii) information on the extent to which 
                        such price discounts, price concessions, and 
                        rebates apply equally to rebate eligible 
                        Medicare drug plan enrollees and PDP enrollees 
                        who are not rebate eligible Medicare drug plan 
                        enrollees; and
                            ``(iv) any additional information that the 
                        Secretary determines is necessary to enable the 
                        Secretary to calculate the average Medicare 
                        drug program rebate eligible rebate amount (as 
                        defined in paragraph (3)(C) of such section), 
                        and to determine the amount of the rebate 
                        required under this section, for such form, 
                        strength, and period.
                Such report shall be in a form consistent with a 
                standard reporting format established by the Secretary.
                    ``(C) Submission to secretary.--Each PDP sponsor 
                shall promptly transmit a copy of the information 
                reported under subparagraph (B) to the Secretary for 
                the purpose of audit oversight and evaluation.
                    ``(D) Confidentiality of information.--The 
                provisions of subparagraph (D) of section 1927(b)(3), 
                relating to confidentiality of information, shall apply 
                to information reported by PDP sponsors under this 
                paragraph in the same manner that such provisions apply 
                to information disclosed by manufacturers or 
                wholesalers under such section, except--
                            ``(i) that any reference to `this section' 
                        in clause (i) of such subparagraph shall be 
                        treated as being a reference to this section;
                            ``(ii) the reference to the Director of the 
                        Congressional Budget Office in clause (iii) of 
                        such subparagraph shall be treated as including 
                        a reference to the Medicare Payment Advisory 
                        Commission; and
                            ``(iii) clause (iv) of such subparagraph 
                        shall not apply.
                    ``(E) Oversight.--Information reported under this 
                paragraph may be used by the Inspector General of the 
                Department of Health and Human Services for the 
                statutorily authorized purposes of audit, 
                investigation, and evaluations.
                    ``(F) Penalties for failure to provide timely 
                information and provision of false information.--In the 
                case of a PDP sponsor--
                            ``(i) that fails to provide information 
                        required under subparagraph (B) on a timely 
                        basis, the sponsor is subject to a civil money 
                        penalty in the amount of $10,000 for each day 
                        in which such information has not been 
                        provided; or
                            ``(ii) that knowingly (as defined in 
                        section 1128A(i)) provides false information 
                        under such subparagraph, the sponsor is subject 
                        to a civil money penalty in an amount not to 
                        exceed $100,000 for each item of false 
                        information.
                Such civil money penalties are in addition to other 
                penalties as may be prescribed by law. The provisions 
                of section 1128A (other than subsections (a) and (b)) 
                shall apply to a civil money penalty under this 
                subparagraph in the same manner as such provisions 
                apply to a penalty or proceeding under section 
                1128A(a).''.
            (2) Application to ma organizations.--Section 1857(f)(3) of 
        the Social Security Act (42 U.S.C. 1395w-27(f)(3)) is amended 
        by adding at the end the following:
                    ``(D) Reporting requirement related to rebate for 
                rebate eligible medicare drug plan enrollees.--Section 
                1860D-12(b)(7).''.
    (c) Deposit of Rebates Into Medicare Prescription Drug Account.--
Section 1860D-16(c) of the Social Security Act (42 U.S.C. 1395w-116(c)) 
is amended by adding at the end the following new paragraph:
            ``(6) Rebate for rebate eligible medicare drug plan 
        enrollees.--Amounts paid under a rebate agreement under section 
        1860D-2(f) shall be deposited into the Account.''.
    (d) Exclusion From Determination of Best Price and Average 
Manufacturer Price Under Medicaid.--
            (1) Exclusion from best price determination.--Section 
        1927(c)(1)(C)(ii)(I) of the Social Security Act (42 U.S.C. 
        1396r-8(c)(1)(C)(ii)(I)) is amended by inserting ``and amounts 
        paid under a rebate agreement under section 1860D-2(f)'' after 
        ``this section''.
            (2) Exclusion from average manufacturer price 
        determination.--Section 1927(k)(1)(B)(i) of the Social Security 
        Act (42 U.S.C. 1396r-8(k)(1)(B)(i)) is amended--
                    (A) in subclause (IV), by striking ``and'' after 
                the semicolon;
                    (B) in subclause (V), by striking the period at the 
                end and inserting ``; and''; and
                    (C) by adding at the end the following:
                                    ``(VI) amounts paid under a rebate 
                                agreement under section 1860D-2(f).''.
                                 <all>
```