I 

114TH CONGRESS 

1ST SESSION H. R. 3261 

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

meaningful benefit and lower prescription drug prices under the Medicare 

Program. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 28, 2015 

Ms. SCHAKOWSKY (for herself, Mr. GRIJALVA, Mr. FARR, Ms. PINGREE, Ms. 

CLARKE of New York, Ms. DEGETTE, and Mr. MCDERMOTT) 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 part D of title XVIII of the Social Security 

Act to deliver a meaningful benefit and lower prescription 

drug prices under the Medicare Program. 

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 Prescription 

5 Drug Savings and Choice Act of 2015’’. 


SSpencer on DSK4SPTVN1PROD with BILLS
2 

•HR 3261 IH

1 SEC. 2. ESTABLISHMENT OF MEDICARE OPERATED PRE2 SCRIPTION DRUG PLAN OPTION. 

3 (a) IN GENERAL.—Subpart 2 of part D of title XVIII 

4 of the Social Security Act is amended by inserting after 

5 section 1860D–11 (42 U.S.C. 1395w–111) the following 

6 new section: 

7 ‘‘MEDICARE OPERATED PRESCRIPTION DRUG PLAN

8 OPTION

9 ‘‘SEC. 1860D–11A. (a) IN GENERAL.—Notwith10 standing any other provision of this part, for each year 

11 (beginning with 2016), in addition to any plans offered 

12 under section 1860D–11, the Secretary shall offer one or 

13 more Medicare operated prescription drug plans (as de14 fined in subsection (c)) with a service area that consists 

15 of the entire United States and shall enter into negotia16 tions in accordance with subsection (b) with pharma17 ceutical manufacturers to reduce the purchase cost of cov18 ered part D drugs for eligible part D individuals who en19 roll in such a plan. 

20 ‘‘(b) NEGOTIATIONS.—Notwithstanding section 

21 1860D–11(i), for purposes of offering a Medicare operated 

22 prescription drug plan under this section, the Secretary 

23 shall negotiate with pharmaceutical manufacturers with 

24 respect to the purchase price of covered part D drugs in 

25 a Medicare operated prescription drug plan and shall en26 courage the use of more affordable therapeutic equivalents 


SSpencer on DSK4SPTVN1PROD with BILLS
3 

•HR 3261 IH

1 to the extent such practices do not override medical neces2 sity as determined by the prescribing physician. To the 

3 extent practicable and consistent with the previous sen4 tence, the Secretary shall implement strategies similar to 

5 those used by other Federal purchasers of prescription 

6 drugs, and other strategies, including the use of a for7 mulary and formulary incentives in subsection (e), to re8 duce the purchase cost of covered part D drugs. 

9 ‘‘(c) MEDICARE OPERATED PRESCRIPTION DRUG

10 PLAN DEFINED.—For purposes of this part, the term 

11 ‘Medicare operated prescription drug plan’ means a pre12 scription drug plan that offers qualified prescription drug 

13 coverage and access to negotiated prices described in sec14 tion 1860D–2(a)(1)(A). Such a plan may offer supple15 mental prescription drug coverage in the same manner as 

16 other qualified prescription drug coverage offered by other 

17 prescription drug plans. 

18 ‘‘(d) MONTHLY BENEFICIARY PREMIUM.— 

19 ‘‘(1) QUALIFIED PRESCRIPTION DRUG COV20 ERAGE.—The monthly beneficiary premium for 

21 qualified prescription drug coverage and access to 

22 negotiated prices described in section 1860D– 

23 2(a)(1)(A) to be charged under a Medicare operated 

24 prescription drug plan shall be uniform nationally. 

25 Such premium for months in 2016 and each sucVerDate Sep 11 2014 01:47 Jul 30, 2015 Jkt 049200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H3261.IH H3261

SSpencer on DSK4SPTVN1PROD with BILLS
4 

•HR 3261 IH

1 ceeding year shall be based on the average monthly 

2 per capita actuarial cost of offering the Medicare op3 erated prescription drug plan for the year involved, 

4 including administrative expenses. 

5 ‘‘(2) SUPPLEMENTAL PRESCRIPTION DRUG COV6 ERAGE.—Insofar as a Medicare operated prescrip7 tion drug plan offers supplemental prescription drug 

8 coverage, the Secretary may adjust the amount of 

9 the premium charged under paragraph (1). 

10 ‘‘(e) USE OF A FORMULARY AND FORMULARY INCEN11 TIVES.— 

12 ‘‘(1) IN GENERAL.—With respect to the oper13 ation of a Medicare operated prescription drug plan, 

14 the Secretary shall establish and apply a formulary 

15 (and may include formulary incentives described in 

16 paragraph (2)(C)(ii)) in accordance with this sub17 section in order to— 

18 ‘‘(A) increase patient safety; 

19 ‘‘(B) increase appropriate use and reduce 

20 inappropriate use of drugs; and 

21 ‘‘(C) reward value. 

22 ‘‘(2) DEVELOPMENT OF INITIAL FORMULARY.— 

23 ‘‘(A) IN GENERAL.—In selecting covered 

24 part D drugs for inclusion in a formulary, the 


SSpencer on DSK4SPTVN1PROD with BILLS
5 

•HR 3261 IH

1 Secretary shall consider clinical benefit and 

2 price. 

3 ‘‘(B) ROLE OF AHRQ.—The Director of the 

4 Agency for Healthcare Research and Quality 

5 shall be responsible for assessing the clinical 

6 benefit of covered part D drugs and making 

7 recommendations to the Secretary regarding 

8 which drugs should be included in the for9 mulary. In conducting such assessments and 

10 making such recommendations, the Director 

11 shall— 

12 ‘‘(i) consider safety concerns including 

13 those identified by the Federal Food and 

14 Drug Administration; 

15 ‘‘(ii) use available data and evalua16 tions, with priority given to randomized 

17 controlled trials, to examine clinical effec18 tiveness, comparative effectiveness, safety, 

19 and enhanced compliance with a drug regi20 men; 

21 ‘‘(iii) use the same classes of drugs 

22 developed by United States Pharmacopeia 

23 for this part; 

24 ‘‘(iv) consider evaluations made by— 


SSpencer on DSK4SPTVN1PROD with BILLS
6 

•HR 3261 IH

1 ‘‘(I) the Director under section 

2 1013 of the Medicare Prescription 

3 Drug, Improvement, and Moderniza4 tion Act of 2003; 

5 ‘‘(II) other Federal entities, such 

6 as the Secretary of Veterans Affairs; 

7 and 

8 ‘‘(III) other private and public 

9 entities, such as the Drug Effective10 ness Review Project and Medicaid 

11 programs; and 

12 ‘‘(v) recommend to the Secretary— 

13 ‘‘(I) those drugs in a class that 

14 provide a greater clinical benefit, in15 cluding fewer safety concerns or less 

16 risk of side-effects, than another drug 

17 in the same class that should be in18 cluded in the formulary; 

19 ‘‘(II) those drugs in a class that 

20 provide less clinical benefit, including 

21 greater safety concerns or a greater 

22 risk of side-effects, than another drug 

23 in the same class that should be ex24 cluded from the formulary; and 


SSpencer on DSK4SPTVN1PROD with BILLS
7 

•HR 3261 IH

1 ‘‘(III) drugs in a class with same 

2 or similar clinical benefit for which it 

3 would be appropriate for the Sec4 retary to competitively bid (or nego5 tiate) for placement on the formulary. 

6 ‘‘(C) CONSIDERATION OF AHRQ REC7 OMMENDATIONS.— 

8 ‘‘(i) IN GENERAL.—The Secretary, 

9 after taking into consideration the rec10 ommendations under subparagraph (B)(v), 

11 shall establish a formulary, and formulary 

12 incentives, to encourage use of covered 

13 part D drugs that— 

14 ‘‘(I) have a lower cost and pro15 vide a greater clinical benefit than 

16 other drugs; 

17 ‘‘(II) have a lower cost than 

18 other drugs with same or similar clin19 ical benefit; and 

20 ‘‘(III) have the same cost but 

21 provide greater clinical benefit than 

22 other drugs. 

23 ‘‘(ii) FORMULARY INCENTIVES.—The 

24 formulary incentives under clause (i) may 


SSpencer on DSK4SPTVN1PROD with BILLS
8 

•HR 3261 IH

1 be in the form of one or more of the fol2 lowing: 

3 ‘‘(I) Tiered copayments. 

4 ‘‘(II) Reference pricing. 

5 ‘‘(III) Prior authorization. 

6 ‘‘(IV) Step therapy. 

7 ‘‘(V) Medication therapy manage8 ment. 

9 ‘‘(VI) Generic drug substitution. 

10 ‘‘(iii) FLEXIBILITY.—In applying such 

11 formulary incentives the Secretary may de12 cide not to impose any cost-sharing for a 

13 covered part D drug for which— 

14 ‘‘(I) the elimination of cost shar15 ing would be expected to increase 

16 compliance with a drug regimen; and 

17 ‘‘(II) compliance would be ex18 pected to produce savings under part 

19 A or B or both. 

20 ‘‘(3) LIMITATIONS ON FORMULARY.—In any 

21 formulary established under this subsection, the for22 mulary may not be changed during a year, except— 

23 ‘‘(A) to add a generic version of a covered 

24 part D drug that entered the market; 


SSpencer on DSK4SPTVN1PROD with BILLS
9 

•HR 3261 IH

1 ‘‘(B) to remove such a drug for which a 

2 safety problem is found; and 

3 ‘‘(C) to add a drug that the Secretary 

4 identifies as a drug which treats a condition for 

5 which there has not previously been a treatment 

6 option or for which a clear and significant ben7 efit has been demonstrated over other covered 

8 part D drugs. 

9 ‘‘(4) ADDING DRUGS TO THE INITIAL FOR10 MULARY.— 

11 ‘‘(A) USE OF ADVISORY COMMITTEE.—The 

12 Secretary shall establish and appoint an advi13 sory committee (in this paragraph referred to 

14 as the ‘advisory committee’)— 

15 ‘‘(i) to review petitions from drug 

16 manufacturers, health care provider orga17 nizations, patient groups, and other enti18 ties for inclusion of a drug in, or other 

19 changes to, such formulary; and 

20 ‘‘(ii) to recommend any changes to the 

21 formulary established under this sub22 section. 

23 ‘‘(B) COMPOSITION.—The advisory com24 mittee shall be composed of 9 members and 

25 shall include representatives of physicians, 


SSpencer on DSK4SPTVN1PROD with BILLS
10 

•HR 3261 IH

1 pharmacists, and consumers and others with ex2 pertise in evaluating prescription drugs. The 

3 Secretary shall select members based on their 

4 knowledge of pharmaceuticals and the Medicare 

5 population. Members shall be deemed to be spe6 cial Government employees for purposes of ap7 plying the conflict of interest provisions under 

8 section 208 of title 18, United States Code, and 

9 no waiver of such provisions for such a member 

10 shall be permitted. 

11 ‘‘(C) CONSULTATION.—The advisory com12 mittee shall consult, as necessary, with physi13 cians who are specialists in treating the disease 

14 for which a drug is being considered. 

15 ‘‘(D) REQUEST FOR STUDIES.—The advi16 sory committee may request the Agency for 

17 Healthcare Research and Quality or an aca18 demic or research institution to study and make 

19 a report on a petition described in subpara20 graph (A)(ii) in order to assess— 

21 ‘‘(i) clinical effectiveness; 

22 ‘‘(ii) comparative effectiveness; 

23 ‘‘(iii) safety; and 

24 ‘‘(iv) enhanced compliance with a 

25 drug regimen. 


SSpencer on DSK4SPTVN1PROD with BILLS
11 

•HR 3261 IH

1 ‘‘(E) RECOMMENDATIONS.—The advisory 

2 committee shall make recommendations to the 

3 Secretary regarding— 

4 ‘‘(i) whether a covered part D drug is 

5 found to provide a greater clinical benefit, 

6 including fewer safety concerns or less risk 

7 of side-effects, than another drug in the 

8 same class that is currently included in the 

9 formulary and should be included in the 

10 formulary; 

11 ‘‘(ii) whether a covered part D drug is 

12 found to provide less clinical benefit, in13 cluding greater safety concerns or a great14 er risk of side-effects, than another drug in 

15 the same class that is currently included in 

16 the formulary and should not be included 

17 in the formulary; and 

18 ‘‘(iii) whether a covered part D drug 

19 has the same or similar clinical benefit to 

20 a drug in the same class that is currently 

21 included in the formulary and whether the 

22 drug should be included in the formulary. 

23 ‘‘(F) LIMITATIONS ON REVIEW OF MANU24 FACTURER PETITIONS.—The advisory com25 mittee shall not review a petition of a drug 


SSpencer on DSK4SPTVN1PROD with BILLS
12 

•HR 3261 IH

1 manufacturer under subparagraph (A)(ii) with 

2 respect to a covered part D drug unless the pe3 tition is accompanied by the following: 

4 ‘‘(i) Raw data from clinical trials on 

5 the safety and effectiveness of the drug. 

6 ‘‘(ii) Any data from clinical trials con7 ducted using active controls on the drug or 

8 drugs that are the current standard of 

9 care. 

10 ‘‘(iii) Any available data on compara11 tive effectiveness of the drug. 

12 ‘‘(iv) Any other information the Sec13 retary requires for the advisory committee 

14 to complete its review. 

15 ‘‘(G) RESPONSE TO RECOMMENDATIONS.— 

16 The Secretary shall review the recommenda17 tions of the advisory committee and if the Sec18 retary accepts such recommendations the Sec19 retary shall modify the formulary established 

20 under this subsection accordingly. Nothing in 

21 this section shall preclude the Secretary from 

22 adding to the formulary a drug for which the 

23 Director of the Agency for Healthcare Research 

24 and Quality or the advisory committee has not 

25 made a recommendation. 


SSpencer on DSK4SPTVN1PROD with BILLS
13 

•HR 3261 IH

1 ‘‘(H) NOTICE OF CHANGES.—The Sec2 retary shall provide timely notice to bene3 ficiaries and health professionals about changes 

4 to the formulary or formulary incentives. 

5 ‘‘(f) INFORMING BENEFICIARIES.—The Secretary 

6 shall take steps to inform beneficiaries about the avail7 ability of a Medicare operated drug plan or plans including 

8 providing information in the annual handbook distributed 

9 to all beneficiaries and adding information to the official 

10 public Medicare Web site related to prescription drug cov11 erage available through this part. 

12 ‘‘(g) APPLICATION OF ALL OTHER REQUIREMENTS

13 FOR PRESCRIPTION DRUG PLANS.—Except as specifically 

14 provided in this section, any Medicare operated drug plan 

15 shall meet the same requirements as apply to any other 

16 prescription drug plan, including the requirements of sec17 tion 1860D–4(b)(1) relating to assuring pharmacy ac18 cess).’’. 

19 (b) CONFORMING AMENDMENTS.— 

20 (1) Section 1860D–3(a) of the Social Security 

21 Act (42 U.S.C. 1395w–103(a)) is amended by add22 ing at the end the following new paragraph: 

23 ‘‘(4) AVAILABILITY OF THE MEDICARE OPER24 ATED PRESCRIPTION DRUG PLAN.—A Medicare op25 erated prescription drug plan (as defined in section 


SSpencer on DSK4SPTVN1PROD with BILLS
14 

•HR 3261 IH

1 1860D–11A(c)) shall be offered nationally in accord2 ance with section 1860D–11A.’’. 

3 (2)(A) Section 1860D–3 of the Social Security 

4 Act (42 U.S.C. 1395w–103) is amended by adding 

5 at the end the following new subsection: 

6 ‘‘(c) PROVISIONS ONLY APPLICABLE IN 2006 

7 THROUGH 2015.—The provisions of this section shall only 

8 apply with respect to 2006 through 2015.’’. 

9 (B) Section 1860D–11(g) of such Act (42 

10 U.S.C. 1395w–111(g)) is amended by adding at the 

11 end the following new paragraph: 

12 ‘‘(8) NO AUTHORITY FOR FALLBACK PLANS

13 AFTER 2015.—A fallback prescription drug plan shall 

14 not be available after December 31, 2015.’’. 

15 (3) Section 1860D–13(c)(3) of the Social Secu16 rity Act (42 U.S.C. 1395w–113(c)(3)) is amended— 

17 (A) in the heading, by inserting ‘‘AND

18 MEDICARE OPERATED PRESCRIPTION DRUG

19 PLANS’’ after ‘‘FALLBACK PLANS’’; and 

20 (B) by inserting ‘‘or a Medicare operated 

21 prescription drug plan’’ after ‘‘a fallback pre22 scription drug plan’’. 

23 (4) Section 1860D–16(b)(1) of the Social Secu24 rity Act (42 U.S.C. 1395w–116(b)(1)) is amended— 


SSpencer on DSK4SPTVN1PROD with BILLS
15 

•HR 3261 IH

1 (A) in subparagraph (C), by striking 

2 ‘‘and’’ after the semicolon at the end; 

3 (B) in subparagraph (D), by striking the 

4 period at the end and inserting ‘‘; and’’; and 

5 (C) by adding at the end the following new 

6 subparagraph: 

7 ‘‘(E) payments for expenses incurred with 

8 respect to the operation of Medicare operated 

9 prescription drug plans under section 1860D– 

10 11A.’’. 

11 (5) Section 1860D–41(a) of the Social Security 

12 Act (42 U.S.C. 1395w–151(a)) is amended by add13 ing at the end the following new paragraph: 

14 ‘‘(19) MEDICARE OPERATED PRESCRIPTION

15 DRUG PLAN.—The term ‘Medicare operated prescrip16 tion drug plan’ has the meaning given such term in 

17 section 1860D–11A(c).’’. 

18 SEC. 3. IMPROVED APPEALS PROCESS UNDER THE MEDI19 CARE OPERATED PRESCRIPTION DRUG PLAN. 

20 Section 1860D–4(h) of the Social Security Act (42 

21 U.S.C. 1305w–104(h)) is amended by adding at the end 

22 the following new paragraph: 

23 ‘‘(4) APPEALS PROCESS FOR MEDICARE OPER24 ATED PRESCRIPTION DRUG PLAN.— 


SSpencer on DSK4SPTVN1PROD with BILLS
16 

•HR 3261 IH

1 ‘‘(A) IN GENERAL.—The Secretary shall 

2 develop a well-defined process for appeals for 

3 denials of benefits under this part under the 

4 Medicare operated prescription drug plan. Such 

5 process shall be efficient, impose minimal ad6 ministrative burdens, and ensure the timely 

7 procurement of non-formulary drugs or exemp8 tion from formulary incentives when medically 

9 necessary. Medical necessity shall be based on 

10 professional medical judgment, the medical con11 dition of the beneficiary, and other medical evi12 dence. Such appeals process shall include— 

13 ‘‘(i) an initial review and determina14 tion made by the Secretary; and 

15 ‘‘(ii) for appeals denied during the ini16 tial review and determination, the option of 

17 an external review and determination by 

18 an independent entity selected by the Sec19 retary. 

20 ‘‘(B) CONSULTATION IN DEVELOPMENT OF

21 PROCESS.—In developing the appeals process 

22 under subparagraph (A), the Secretary shall 

23 consult with consumer and patient groups, as 

24 well as other key stakeholders to ensure the 


SSpencer on DSK4SPTVN1PROD with BILLS
17 

•HR 3261 IH

1 goals described in subparagraph (A) are 

2 achieved.’’. 

Æ 


SSpencer on DSK4SPTVN1PROD with BILLS