I 

115TH CONGRESS 

1ST SESSION H. R. 1775 

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

President to negotiate prescription drug prices and establish a formulary 

on behalf of Medicare beneficiaries, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 29, 2017 

Mr. DEFAZIO (for himself and Mr. CONYERS) 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 direct the President to negotiate prescription drug 

prices and establish a formulary on behalf of Medicare 

beneficiaries, 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 ‘‘Prescription Reduction 

5 in Costs for Everyone (PRICE) Act of 2017’’. 

6 SEC. 2. FINDINGS. 

7 Congress finds the following: 


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1 (1) The President has announced his intention 

2 to bring down prices of prescription drugs. 

3 (2) The President has touted his negotiating 

4 skills and referred to himself as a ‘‘master nego5 tiator’’. 

6 SEC. 3. PRESIDENTIAL NEGOTIATION OF PRESCRIPTION 

7 DRUG PRICES. 

8 (a) NEGOTIATION BY PRESIDENT.—Section 1860D– 

9 11 of the Social Security Act (42 U.S.C. 1395w–111) is 

10 amended by striking subsection (i) (relating to noninter11 ference) and inserting the following: 

12 ‘‘(i) NEGOTIATION OF LOWER DRUG PRICES.— 

13 ‘‘(1) IN GENERAL.—Notwithstanding any other 

14 provision of law, the President shall negotiate with 

15 pharmaceutical manufacturers the prices (including 

16 discounts, rebates, and other price concessions) that 

17 may be charged to PDP sponsors and MA organiza18 tions for covered part D drugs for part D eligible in19 dividuals who are enrolled under a prescription drug 

20 plan or under an MA–PD plan. 

21 ‘‘(2) NO CHANGE IN RULES FOR

22 FORMULARIES.— 

23 ‘‘(A) IN GENERAL.—Nothing in paragraph 

24 (1) shall be construed to authorize the PresiVerDate Sep 11 2014 23:33 Mar 31, 2017 Jkt 069200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H1775.IH H1775

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1 dent to establish or require a particular for2 mulary. 

3 ‘‘(B) CONSTRUCTION.—Subparagraph (A) 

4 shall not be construed as affecting the Presi5 dent’s authority to ensure appropriate and ade6 quate access to covered part D drugs under 

7 prescription drug plans and under MA–PD 

8 plans, including compliance of such plans with 

9 formulary requirements under section 1860D– 

10 4(b)(3). 

11 ‘‘(3) CONSTRUCTION.—Nothing in this sub12 section shall be construed as preventing the sponsor 

13 of a prescription drug plan, or an organization offer14 ing an MA–PD plan, from obtaining a discount or 

15 reduction of the price for a covered part D drug 

16 below the price negotiated under paragraph (1). 

17 ‘‘(4) SEMI-ANNUAL REPORTS TO CONGRESS.— 

18 Not later than June 1, 2018, and every 6 months 

19 thereafter, the President shall submit to the Com20 mittees on Ways and Means, Energy and Commerce, 

21 and Oversight and Government Reform of the House 

22 of Representatives and the Committee on Finance of 

23 the Senate a report on negotiations conducted by the 

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1 ficiaries, and the prices and price discounts achieved 

2 by the President as a result of such negotiations.’’. 

3 (b) EFFECTIVE DATE.—The amendment made by 

4 subsection (a) shall take effect on the date of the enact5 ment of this Act and shall first apply to negotiations and 

6 prices for plan years beginning on January 1, 2018. 

7 SEC. 4. PRESIDENTIAL ESTABLISHMENT OF MEDICARE OP8 ERATED PRESCRIPTION DRUG PLAN OPTION. 

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

10 of the Social Security Act is amended by inserting after 

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

12 new section: 

13 ‘‘MEDICARE OPERATED PRESCRIPTION DRUG PLAN

14 OPTION

15 ‘‘SEC. 1860D–11A. (a) IN GENERAL.—Notwith16 standing any other provision of this part, for each year 

17 (beginning with 2018), in addition to any plans offered 

18 under section 1860D–11, the President shall offer one or 

19 more Medicare operated prescription drug plans (as de20 fined in subsection (c)) with a service area that consists 

21 of the entire United States and shall enter into negotia22 tions in accordance with subsection (b) with pharma23 ceutical manufacturers to reduce the purchase cost of cov24 ered part D drugs for eligible part D individuals who en25 roll in such a plan. 


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1 ‘‘(b) NEGOTIATIONS.—For purposes of offering a 

2 Medicare operated prescription drug plan under this sec3 tion, the President shall negotiate with pharmaceutical 

4 manufacturers with respect to the purchase price of cov5 ered part D drugs in a Medicare operated prescription 

6 drug plan and shall encourage the use of more affordable 

7 therapeutic equivalents to the extent such practices do not 

8 override medical necessity as determined by the pre9 scribing physician. To the extent practicable and con10 sistent with the previous sentence, the President shall im11 plement strategies similar to those used by other Federal 

12 purchasers of prescription drugs, and other strategies, in13 cluding the use of a formulary and formulary incentives 

14 in subsection (e), to reduce the purchase cost of covered 

15 part D drugs. 

16 ‘‘(c) MEDICARE OPERATED PRESCRIPTION DRUG

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

18 ‘Medicare operated prescription drug plan’ means a pre19 scription drug plan that offers qualified prescription drug 

20 coverage and access to negotiated prices described in sec21 tion 1860D–2(a)(1)(A). Such a plan may offer supple22 mental prescription drug coverage in the same manner as 

23 other qualified prescription drug coverage offered by other 

24 prescription drug plans. 

25 ‘‘(d) MONTHLY BENEFICIARY PREMIUM.— 


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1 ‘‘(1) QUALIFIED PRESCRIPTION DRUG COV2 ERAGE.—The monthly beneficiary premium for 

3 qualified prescription drug coverage and access to 

4 negotiated prices described in section 1860D– 

5 2(a)(1)(A) to be charged under a Medicare operated 

6 prescription drug plan shall be uniform nationally. 

7 Such premium for months in 2018 and each suc8 ceeding year shall be based on the average monthly 

9 per capita actuarial cost of offering the Medicare op10 erated prescription drug plan for the year involved, 

11 including administrative expenses. 

12 ‘‘(2) SUPPLEMENTAL PRESCRIPTION DRUG COV13 ERAGE.—Insofar as a Medicare operated prescrip14 tion drug plan offers supplemental prescription drug 

15 coverage, the President may adjust the amount of 

16 the premium charged under paragraph (1). 

17 ‘‘(e) USE OF A FORMULARY AND FORMULARY INCEN18 TIVES.— 

19 ‘‘(1) IN GENERAL.—With respect to the oper20 ation of a Medicare operated prescription drug plan, 

21 the President shall establish and apply a formulary 

22 (and may include formulary incentives described in 

23 paragraph (2)(C)(ii)) in accordance with this sub24 section in order to— 

25 ‘‘(A) increase patient safety; 


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1 ‘‘(B) increase appropriate use and reduce 

2 inappropriate use of drugs; and 

3 ‘‘(C) reward value. 

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

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

6 part D drugs for inclusion in a formulary, the 

7 President shall consider clinical benefit and 

8 price. 

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

10 Agency for Healthcare Research and Quality 

11 shall be responsible for assessing the clinical 

12 benefit of covered part D drugs and making 

13 recommendations to the President regarding 

14 which drugs should be included in the for15 mulary. In conducting such assessments and 

16 making such recommendations, the Director 

17 shall— 

18 ‘‘(i) consider safety concerns including 

19 those identified by the Federal Food and 

20 Drug Administration; 

21 ‘‘(ii) use available data and evalua22 tions, with priority given to randomized 

23 controlled trials, to examine clinical effec24 tiveness, comparative effectiveness, safety, 


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1 and enhanced compliance with a drug regi2 men; 

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

4 developed by United States Pharmacopeia 

5 for this part; 

6 ‘‘(iv) consider evaluations made by— 

7 ‘‘(I) the Director under section 

8 1013 of the Medicare Prescription 

9 Drug, Improvement, and Moderniza10 tion Act of 2003; 

11 ‘‘(II) other Federal entities, such 

12 as the Secretary of Veterans Affairs; 

13 and 

14 ‘‘(III) other private and public 

15 entities, such as the Drug Effective16 ness Review Project and Medicaid 

17 programs; and 

18 ‘‘(v) recommend to the President— 

19 ‘‘(I) those drugs in a class that 

20 provide a greater clinical benefit, in21 cluding fewer safety concerns or less 

22 risk of side effects, than another drug 

23 in the same class that should be in24 cluded in the formulary; 


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1 ‘‘(II) those drugs in a class that 

2 provide less clinical benefit, including 

3 greater safety concerns or a greater 

4 risk of side effects, than another drug 

5 in the same class that should be ex6 cluded from the formulary; and 

7 ‘‘(III) drugs in a class with same 

8 or similar clinical benefit for which it 

9 would be appropriate for the Sec10 retary to competitively bid (or nego11 tiate) for placement on the formulary. 

12 ‘‘(C) CONSIDERATION OF AHRQ REC13 OMMENDATIONS.— 

14 ‘‘(i) IN GENERAL.—The President, 

15 after taking into consideration the rec16 ommendations under subparagraph (B)(v), 

17 shall establish a formulary, and formulary 

18 incentives, to encourage use of covered 

19 part D drugs that— 

20 ‘‘(I) have a lower cost and pro21 vide a greater clinical benefit than 

22 other drugs; 

23 ‘‘(II) have a lower cost than 

24 other drugs with same or similar clin25 ical benefit; and 


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1 ‘‘(III) have the same cost but 

2 provide greater clinical benefit than 

3 other drugs. 

4 ‘‘(ii) FORMULARY INCENTIVES.—The 

5 formulary incentives under clause (i) may 

6 be in the form of one or more of the fol7 lowing: 

8 ‘‘(I) Tiered copayments. 

9 ‘‘(II) Reference pricing. 

10 ‘‘(III) Prior authorization. 

11 ‘‘(IV) Step therapy. 

12 ‘‘(V) Medication therapy manage13 ment. 

14 ‘‘(VI) Generic drug substitution. 

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

16 formulary incentives the President may de17 cide not to impose any cost-sharing for a 

18 covered part D drug for which— 

19 ‘‘(I) the elimination of cost shar20 ing would be expected to increase 

21 compliance with a drug regimen; and 

22 ‘‘(II) compliance would be ex23 pected to produce savings under part 

24 A or B or both. 


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

2 formulary established under this subsection, the for3 mulary may not be changed during a year, except— 

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

5 part D drug that entered the market; 

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

7 safety problem is found; and 

8 ‘‘(C) to add a drug that the President 

9 identifies as a drug which treats a condition for 

10 which there has not previously been a treatment 

11 option or for which a clear and significant ben12 efit has been demonstrated over other covered 

13 part D drugs. 

14 ‘‘(4) ADDING DRUGS TO THE INITIAL FOR15 MULARY.— 

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

17 President shall establish and appoint an advi18 sory committee (in this paragraph referred to 

19 as the ‘advisory committee’)— 

20 ‘‘(i) to review petitions from drug 

21 manufacturers, health care provider orga22 nizations, patient groups, and other enti23 ties for inclusion of a drug in, or other 

24 changes to, such formulary; and 


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

2 formulary established under this sub3 section. 

4 ‘‘(B) COMPOSITION.—The advisory com5 mittee shall be composed of 9 members and 

6 shall include representatives of physicians, 

7 pharmacists, and consumers and others with ex8 pertise in evaluating prescription drugs. The 

9 President shall select members based on their 

10 knowledge of pharmaceuticals and the Medicare 

11 population. Members shall be deemed to be spe12 cial Government employees for purposes of ap13 plying the conflict of interest provisions under 

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

15 no waiver of such provisions for such a member 

16 shall be permitted. 

17 ‘‘(C) CONSULTATION.—The advisory com18 mittee shall consult, as necessary, with physi19 cians who are specialists in treating the disease 

20 for which a drug is being considered. 

21 ‘‘(D) REQUEST FOR STUDIES.—The advi22 sory committee may request the Agency for 

23 Healthcare Research and Quality or an aca24 demic or research institution to study and make 


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1 a report on a petition described in subpara2 graph (A)(ii) in order to assess— 

3 ‘‘(i) clinical effectiveness; 

4 ‘‘(ii) comparative effectiveness; 

5 ‘‘(iii) safety; and 

6 ‘‘(iv) enhanced compliance with a 

7 drug regimen. 

8 ‘‘(E) RECOMMENDATIONS.—The advisory 

9 committee shall make recommendations to the 

10 President regarding— 

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

12 found to provide a greater clinical benefit, 

13 including fewer safety concerns or less risk 

14 of side effects, than another drug in the 

15 same class that is currently included in the 

16 formulary and should be included in the 

17 formulary; 

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

19 found to provide less clinical benefit, in20 cluding greater safety concerns or a great21 er risk of side effects, than another drug 

22 in the same class that is currently included 

23 in the formulary and should not be in24 cluded in the formulary; and 


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

2 has the same or similar clinical benefit to 

3 a drug in the same class that is currently 

4 included in the formulary and whether the 

5 drug should be included in the formulary. 

6 ‘‘(F) LIMITATIONS ON REVIEW OF MANU7 FACTURER PETITIONS.—The advisory com8 mittee shall not review a petition of a drug 

9 manufacturer under subparagraph (A)(ii) with 

10 respect to a covered part D drug unless the pe11 tition is accompanied by the following: 

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

13 the safety and effectiveness of the drug. 

14 ‘‘(ii) Any data from clinical trials con15 ducted using active controls on the drug or 

16 drugs that are the current standard of 

17 care. 

18 ‘‘(iii) Any available data on compara19 tive effectiveness of the drug. 

20 ‘‘(iv) Any other information the Presi21 dent requires for the advisory committee to 

22 complete its review. 

23 ‘‘(G) RESPONSE TO RECOMMENDATIONS.— 

24 The President shall review the recommenda25 tions of the advisory committee and if the 


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1 President accepts such recommendations the 

2 President shall modify the formulary estab3 lished under this subsection accordingly. Noth4 ing in this section shall preclude the President 

5 from adding to the formulary a drug for which 

6 the Director of the Agency for Healthcare Re7 search and Quality or the advisory committee 

8 has not made a recommendation. 

9 ‘‘(H) NOTICE OF CHANGES.—The Presi10 dent shall provide timely notice to beneficiaries 

11 and health professionals about changes to the 

12 formulary or formulary incentives. 

13 ‘‘(f) INFORMING BENEFICIARIES.—The President 

14 shall take steps to inform beneficiaries about the avail15 ability of a Medicare operated drug plan or plans including 

16 providing information in the annual handbook distributed 

17 to all beneficiaries and adding information to the official 

18 public Medicare Web site related to prescription drug cov19 erage available through this part. 

20 ‘‘(g) APPLICATION OF ALL OTHER REQUIREMENTS

21 FOR PRESCRIPTION DRUG PLANS.—Except as specifically 

22 provided in this section, any Medicare operated drug plan 

23 shall meet the same requirements as apply to any other 

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1 tion 1860D–4(b)(1) relating to assuring pharmacy ac2 cess.’’. 

3 (b) CONFORMING AMENDMENTS.— 

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

5 Act (42 U.S.C. 1395w–103(a)) is amended by add6 ing at the end the following new paragraph: 

7 ‘‘(4) AVAILABILITY OF THE MEDICARE OPER8 ATED PRESCRIPTION DRUG PLAN.—A Medicare op9 erated prescription drug plan (as defined in section 

10 1860D–11A(c)) shall be offered nationally in accord11 ance with section 1860D–11A.’’. 

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

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

14 at the end the following new subsection: 

15 ‘‘(c) PROVISIONS ONLY APPLICABLE IN 2006 

16 THROUGH 2017.—The provisions of this section shall only 

17 apply with respect to 2006 through 2017.’’. 

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

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

20 end the following new paragraph: 

21 ‘‘(8) NO AUTHORITY FOR FALLBACK PLANS

22 AFTER 2017.—A fallback prescription drug plan shall 

23 not be available after December 31, 2017.’’. 

24 (3) Section 1860D–13(c)(3) of the Social Secu25 rity Act (42 U.S.C. 1395w–113(c)(3)) is amended— 


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

2 MEDICARE OPERATED PRESCRIPTION DRUG

3 PLANS’’ after ‘‘FALLBACK PLANS’’; and 

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

5 prescription drug plan’’ after ‘‘a fallback pre6 scription drug plan’’. 

7 (4) Section 1860D–16(b)(1) of the Social Secu8 rity Act (42 U.S.C. 1395w–116(b)(1)) is amended— 

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

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

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

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

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

14 subparagraph: 

15 ‘‘(E) payments for expenses incurred with 

16 respect to the operation of Medicare operated 

17 prescription drug plans under section 1860D– 

18 11A.’’. 

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

20 Act (42 U.S.C. 1395w–151(a)) is amended by add21 ing at the end the following new paragraph: 

22 ‘‘(19) MEDICARE OPERATED PRESCRIPTION

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1 tion drug plan’ has the meaning given such term in 

2 section 1860D–11A(c).’’. 

Æ 


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