I 

111TH CONGRESS 

1ST SESSION H. R. 444 

To amend section 340B of the Public Health Service Act to revise and 

expand the drug discount program under that section to improve the 

provision of discounts on drug purchases for certain safety net providers. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 9, 2009 

Mr. RUSH (for himself, Mrs. EMERSON, and Mr. STUPAK) introduced the 

following bill; which was referred to the Committee on Energy and Commerce 

A BILL 

To amend section 340B of the Public Health Service Act 

to revise and expand the drug discount program under 

that section to improve the provision of discounts on 

drug purchases for certain safety net providers. 

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; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘340B Program Improvement and Integrity Act of 2009’’. 

6 (b) TABLE OF CONTENTS.—The table of contents of 

7 this Act is as follows: 

Sec. 1. Short title; table of contents. 

Sec. 2. Expanded participation in 340B program. 

Sec. 3. Extension of discounts to inpatient drugs. 


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Sec. 4. Improvements to 340B program integrity. 

Sec. 5. Other improvements in 340B program. 

Sec. 6. Effective dates. 

1 SEC. 2. EXPANDED PARTICIPATION IN 340B PROGRAM. 

2 (a) EXPANSION OF COVERED ENTITIES RECEIVING

3 DISCOUNTED PRICES.—Section 340B(a)(4) of the Public 

4 Health Service Act (42 U.S.C. 256b(a)(4)) is amended by 

5 adding at the end the following new subparagraphs: 

6 ‘‘(M) A children’s hospital excluded from 

7 the Medicare prospective payment system pur8 suant to section 1886(d)(1)(B)(iii) of the Social 

9 Security Act (42 U.S.C. 1395ww(d)(1)(B)(iii)) 

10 which would meet the requirements of sub11 section (a)(4)(L), including the disproportionate 

12 share adjustment percentage requirement under 

13 clause (ii), if the hospital were a subsection (d) 

14 hospital as defined by Section 1886(d)(1)(B) of 

15 the Social Security Act. 

16 ‘‘(N) An entity that is a critical access hos17 pital (as determined under section 1820(c)(2) 

18 of the Social Security Act (42 U.S.C. 1395i– 

19 4(c)(2)). 

20 ‘‘(O) An entity receiving funds under title 

21 V of the Social Security Act (relating to mater22 nal and child health) for the provision of health 

23 services. 


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1 ‘‘(P) An entity receiving funds under sub2 part I of part B of title XIX of the Public 

3 Health Service Act (relating to comprehensive 

4 mental health services) for the provision of com5 munity mental health services. 

6 ‘‘(Q) An entity receiving funds under sub7 part II of such part B (relating to the preven8 tion and treatment of substance abuse) for the 

9 provision of treatment services for substance 

10 abuse. 

11 ‘‘(R) An entity that is a Medicare-depend12 ent, small rural hospital (as defined in section 

13 1886(d)(5)(G)(iv) of the Social Security Act). 

14 ‘‘(S) An entity that is a sole community 

15 hospital (as defined in section 

16 1886(d)(5)(D)(iii) of the Social Security Act). 

17 ‘‘(T) An entity that is classified as a rural 

18 referral center under section 1886(d)(5)(C) of 

19 the Social Security Act.’’. 

20 (b) PROHIBITION ON GROUP PURCHASING ARRANGE21 MENTS.—Section 340B(a) of such Act (42 U.S.C. 

22 256b(a)) is amended— 

23 (1) in paragraph (4)(L)— 

24 (A) by adding ‘‘and’’ at the end of clause 

25 (i); 


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1 (B) by striking ‘‘; and’’ at the end of 

2 clause (ii) and inserting a period; and 

3 (C) by striking clause (iii); 

4 (2) in subsection (a)(5), by redesignating the 

5 subparagraphs (C) and (D) as subparagraphs (D) 

6 and (E), respectively, and by inserting after sub7 paragraph (B) the following new subparagraph: 

8 ‘‘(C) PROHIBITING USE OF GROUP PUR9 CHASING ARRANGEMENTS.— 

10 ‘‘(i) A hospital described in subpara11 graph (L), (M), (N), (R), (S), or (T) of 

12 subsection (a)(4) shall not obtain covered 

13 outpatient drugs through a group pur14 chasing organization or other group pur15 chasing arrangement, except as permitted 

16 or provided pursuant to clause (ii) or (iii). 

17 ‘‘(ii) Clause (i) shall not apply to 

18 drugs purchased for inpatient use. 

19 ‘‘(iii) The Secretary shall establish 

20 reasonable exceptions to the requirement of 

21 clause (i)— 

22 ‘‘(I) with respect to a covered 

23 outpatient drug that is unavailable to 

24 be purchased through the program 

25 under this section due to a drug 


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1 shortage problem, manufacturer non2 compliance, or any other reason be3 yond the hospital’s control; 

4 ‘‘(II) to facilitate generic substi5 tution when a generic covered out6 patient drug is available at a lower 

7 price; and 

8 ‘‘(III) to reduce in other ways 

9 the administrative burdens of man10 aging both inventories of drugs ob11 tained under this section and not 

12 under this section, if such exception 

13 does not create a duplicate discount 

14 problem in violation of subparagraph 

15 (A) or a diversion problem in violation 

16 of subparagraph (B).’’. 

17 SEC. 3. EXTENSION OF DISCOUNTS TO INPATIENT DRUGS. 

18 (a) IN GENERAL.—Section 340B of the Public 

19 Health Service Act (42 U.S.C. 256b) is amended— 

20 (1) in subsection (b)— 

21 (A) by designating the matter beginning 

22 ‘‘In this section’’ as a paragraph (1) with the 

23 heading ‘‘IN GENERAL’’; and 

24 (B) by adding at the end the following new 

25 paragraph: 


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1 ‘‘(2) COVERED DRUG.—In this section, the term 

2 ‘covered drug’— 

3 ‘‘(A) means a covered outpatient drug (as 

4 defined in section 1927(k)(2) of the Social Se5 curity Act); and 

6 ‘‘(B) includes, notwithstanding the section 

7 1927(k)(3)(A) of such Act, a drug used in con8 nection with an inpatient or outpatient service 

9 provided by a hospital described in subpara10 graph (L), (M), (N), (R), (S), or (T) of sub11 section (a)(4) that is enrolled to participate in 

12 the drug discount program under this section.’’; 

13 and 

14 (2) in paragraphs (5), (7), and (9) of sub15 section (a), by striking ‘‘outpatient’’ each place it 

16 appears. 

17 (b) MEDICAID CREDITS ON INPATIENT DRUGS.— 

18 Subsection (c) of section 340B of the Public Health Serv19 ice Act (42 U.S.C. 256b(c)) is replaced as follows: 

20 ‘‘(c) MEDICAID CREDITS ON INPATIENT DRUGS.— 

21 ‘‘(1) IN GENERAL.—For the cost reporting pe22 riod covered by the most recently filed Medicare cost 

23 report under title XVIII of the Social Security Act, 

24 a hospital described in subparagraph (L), (M), (N), 

25 (R), (S), or (T) of subsection (a)(4) and enrolled to 


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1 participate in the drug discount program under this 

2 section shall provide to each State under its plan 

3 under title XIX of such Act— 

4 ‘‘(A) a credit on the estimated annual 

5 costs to such hospital of single source and inno6 vator multiple source drugs provided to Med7 icaid recipients for inpatient use; and 

8 ‘‘(B) a credit on the estimated annual 

9 costs to such hospital of noninnovator multiple 

10 source drugs provided to Medicaid recipients for 

11 inpatient use. 

12 ‘‘(2) AMOUNT OF CREDITS.— 

13 ‘‘(A) SINGLE SOURCE AND INNOVATOR

14 MULTIPLE SOURCE DRUGS.—For purposes of 

15 paragraph (1)(A)— 

16 ‘‘(i) the credit under such paragraph 

17 shall be equal to the product of— 

18 ‘‘(I) the annual value of single 

19 source and innovator multiple source 

20 drugs purchased under this section by 

21 the hospital based on the drugs’ aver22 age manufacturer price; 

23 ‘‘(II) the estimated percentage of 

24 the hospital’s drug purchases attribVerDate Nov 24 2008 03:06 Jan 14, 2009 Jkt 079200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H444.IH H444

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1 utable to Medicaid recipients for inpa2 tient use; and 

3 ‘‘(III) the minimum rebate per4 centage described in section 

5 1927(c)(1)(B) of the Social Security 

6 Act; 

7 ‘‘(ii) the reference in clause (i)(I) to 

8 the annual value of single source and inno9 vator multiple source drugs purchased 

10 under this section by the hospital based on 

11 the drugs’ average manufacturer price 

12 shall be equal to the sum of— 

13 ‘‘(I) the annual quantity of each 

14 single source and innovator multiple 

15 source drug purchased during the cost 

16 reporting period, multiplied by 

17 ‘‘(II) the average manufacturer 

18 price for that drug; 

19 ‘‘(iii) the reference in clause (i)(II) to 

20 the estimated percentage of the hospital’s 

21 drug purchases attributable to Medicaid 

22 recipients for inpatient use; shall be equal 

23 to— 

24 ‘‘(I) the Medicaid inpatient drug 

25 charges as reported on the hospital’s 


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1 most recently filed Medicare cost re2 port, divided by 

3 ‘‘(II) total drug charges reported 

4 on the cost report; and 

5 ‘‘(iv) the terms ‘single source drug’ 

6 and ‘innovator multiple source drug’ have 

7 the meanings given such terms in section 

8 1927(k)(7) of the Social Security Act. 

9 ‘‘(B) NONINNOVATOR MULTIPLE SOURCE

10 DRUGS.—For purposes of subparagraph 

11 (1)(B)— 

12 ‘‘(i) the credit under such paragraph 

13 shall be equal to the product of— 

14 ‘‘(I) the annual value of noninno15 vator multiple source drugs purchased 

16 under this section by the hospital 

17 based on the drugs’ average manufac18 turer price; 

19 ‘‘(II) the estimated percentage of 

20 the hospital’s drug purchases attrib21 utable to Medicaid recipients for inpa22 tient use; and 

23 ‘‘(III) the applicable percentage 

24 as defined in section 1927(c)(3)(B) of 

25 the Social Security Act; 


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1 ‘‘(ii) the reference in clause (i)(I) to 

2 the annual value of noninnovator multiple 

3 source drugs purchased under this section 

4 by the hospital based on the drugs’ average 

5 manufacturer price shall be equal to the 

6 sum of— 

7 ‘‘(I) the annual quantity of each 

8 noninnovator multiple source drug 

9 purchased during the cost reporting 

10 period, multiplied by 

11 ‘‘(II) the average manufacturer 

12 price for that drug; 

13 ‘‘(iii) the reference in clause (i)(II) to 

14 the estimated percentage of the hospital’s 

15 drug purchases attributable to Medicaid 

16 recipients for inpatient use shall be equal 

17 to— 

18 ‘‘(I) the Medicaid inpatient drug 

19 charges as reported on the hospital’s 

20 most recently filed Medicare cost re21 port, divided by 

22 ‘‘(II) total drug charges reported 

23 on the cost report; and 

24 ‘‘(iv) the term ‘noninnovator multiple 

25 source drug’ has the meaning given such 


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1 term in section 1927(k)(7) of the Social 

2 Security Act. 

3 ‘‘(3) CALCULATION OF CREDITS.— 

4 ‘‘(A) IN GENERAL.—Not later than 30 

5 days after receiving the information specified in 

6 subparagraph (B), the State shall calculate the 

7 credits owed by the hospital under paragraph 

8 (1) and provide the hospital with both the 

9 amounts and an explanation of how it cal10 culated the credits. In performing the calcula11 tions specified in paragraphs (2)(A)(ii) and 

12 (2)(B)(ii), the State shall use the average man13 ufacturer price applicable to the calendar quar14 ter in which the drug was purchased by the 

15 hospital. 

16 ‘‘(B) HOSPITAL PROVISION OF INFORMA17 TION.—Not later than 30 days after the date of 

18 the filing of the hospital’s most recently filed 

19 Medicare cost report, the hospital shall provide 

20 the State with the information described in 

21 paragraphs (2)(A)(ii) and (2)(B)(ii). With re22 spect to each drug purchased during the cost 

23 reporting period, the hospital shall provide the 

24 dosage form, strength, package size, date of 

25 purchase and the number of units purchased. 


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1 ‘‘(4) PAYMENT DEADLINE.—The credits pro2 vided by a hospital under paragraph (1) shall be 

3 paid within 60 days after receiving the information 

4 specified in paragraph (3)(A). 

5 ‘‘(5) OPT OUT.—A hospital shall not be re6 quired to provide the Medicaid credit required under 

7 paragraph (1) if— 

8 ‘‘(A) it can demonstrate to the State that 

9 it will lose reimbursement under the State plan 

10 resulting from the extension of discounts to in11 patient drugs under subsection (b)(2) and that 

12 the loss of reimbursement will exceed the 

13 amount of the credit otherwise owed by the hos14 pital; or 

15 ‘‘(B) the hospital and State agree to an al16 ternative arrangement. 

17 Any dispute between the hospital and the State 

18 under this paragraph shall be adjudicated through 

19 the administrative dispute resolution process under 

20 this section. 

21 ‘‘(6) OFFSET AGAINST MEDICAL ASSISTANCE.— 

22 Amounts received by a State under this subsection 

23 in any quarter shall be considered to be a reduction 

24 in the amount expended under the State plan in the 


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1 quarter for medical assistance for purposes of sec2 tion 1903(a)(1) of the Social Security Act.’’. 

3 (c) CONFORMING AMENDMENTS.—Section 1927 of 

4 the Social Security Act (42 U.S.C. 1396r–8), is amend5 ed— 

6 (1) in subsection (a)(5)(A), by striking ‘‘covered 

7 outpatient drugs’’ and inserting ‘‘covered drugs (as 

8 defined in section 340B(b)(2) of the Public Health 

9 Service Act)’’; 

10 (2) by striking subsection (a)(5)(D) in its en11 tirety; 

12 (3) in subsection (c)(1)(C)(i), by redesignating 

13 subclauses (II) through (IV) as subclauses (III) 

14 through (V), respectively and by inserting after sub15 clause (I) the following new subclause: 

16 ‘‘(II) any prices charged for a 

17 covered drug as defined in section 

18 340B(b)(2) of the Public Health Serv19 ice Act;’’; and 

20 (4) in subsection (k)(1)— 

21 (A) in subparagraph (A), by striking ‘‘sub22 paragraph (B)’’ and inserting ‘‘subparagraphs 

23 (B) and (D)’’; and 

24 (B) by adding at the end the following new 

25 subparagraph: 


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1 ‘‘(D) CALCULATION FOR COVERED

2 DRUGS.—With respect to a covered drug (as de3 fined in section 340B(b)(2) of the Public 

4 Health Service Act), the average manufacturer 

5 price shall be determined in accordance with 

6 subparagraph (A) except that, in the event a 

7 covered drug is not distributed to the retail 

8 pharmacy class of trade, it shall mean the aver9 age price paid to the manufacturer for the drug 

10 in the United States by wholesalers for drugs 

11 distributed to the acute care class of trade, 

12 after deducting customary prompt pay dis13 counts.’’. 

14 SEC. 4. IMPROVEMENTS TO 340B PROGRAM INTEGRITY. 

15 (a) INTEGRITY IMPROVEMENTS.—Subsection (d) of 

16 section 340B of the Public Health Service Act (42 U.S.C. 

17 256b) is replaced as follows: 

18 ‘‘(d) IMPROVEMENTS IN PROGRAM INTEGRITY.— 

19 ‘‘(1) MANUFACTURER COMPLIANCE.— 

20 ‘‘(A) IN GENERAL.—From amounts appro21 priated under paragraph (4), the Secretary 

22 shall provide for improvements in compliance by 

23 manufacturers with the requirements of this 

24 section in order to prevent overcharges and 


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1 other violations of the discounted pricing re2 quirements specified in this section. 

3 ‘‘(B) IMPROVEMENTS.—The improvements 

4 described in subparagraph (A) shall include the 

5 following: 

6 ‘‘(i) The development of a system to 

7 enable the Secretary to verify the accuracy 

8 of ceiling prices calculated by manufactur9 ers under subsection (a)(1) and charged to 

10 covered entities, which shall include the 

11 following: 

12 ‘‘(I) Developing and publishing 

13 through an appropriate policy or regu14 latory issuance, precisely defined 

15 standards and methodology for the 

16 calculation of ceiling prices under 

17 such subsection. 

18 ‘‘(II) Comparing regularly the 

19 ceiling prices calculated by the Sec20 retary with the quarterly pricing data 

21 that is reported by manufacturers to 

22 the Secretary. 

23 ‘‘(III) Performing spot checks of 

24 sales transactions by covered entities. 


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1 ‘‘(IV) Inquiring into the cause of 

2 any pricing discrepancies that may be 

3 identified and either taking, or requir4 ing manufacturers to take, such cor5 rective action as is appropriate in re6 sponse to such price discrepancies. 

7 ‘‘(ii) The establishment of procedures 

8 for manufacturers to issue refunds to cov9 ered entities in the event that there is an 

10 overcharge by the manufacturers, including 

11 the following: 

12 ‘‘(I) Providing the Secretary with 

13 an explanation of why and how the 

14 overcharge occurred, how the refunds 

15 will be calculated, and to whom the 

16 refunds will be issued. 

17 ‘‘(II) Oversight by the Secretary 

18 to ensure that the refunds are issued 

19 accurately and within a reasonable pe20 riod of time, both in routine instances 

21 of retroactive adjustment to relevant 

22 pricing data and exceptional cir23 cumstances such as erroneous or in24 tentional overcharging for covered 

25 drugs. 


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1 ‘‘(iii) The provision of access through 

2 the Internet website of the Department of 

3 Health and Human Services to the applica4 ble ceiling prices for covered drugs as cal5 culated and verified by the Secretary in ac6 cordance with this section, in a manner 

7 (such as through the use of password pro8 tection) that limits such access to covered 

9 entities and adequately assures security 

10 and protection of privileged pricing data 

11 from unauthorized re-disclosure. 

12 ‘‘(iv) The development of a mecha13 nism by which— 

14 ‘‘(I) rebates and other discounts 

15 provided by manufacturers to other 

16 purchasers subsequent to the sale of 

17 covered drugs to covered entities are 

18 reported to the Secretary; and 

19 ‘‘(II) appropriate credits and re20 funds are issued to covered entities if 

21 such discounts or rebates have the ef22 fect of lowering the applicable ceiling 

23 price for the relevant quarter for the 

24 drugs involved. 


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1 ‘‘(v) Selective auditing of manufactur2 ers and wholesalers to ensure the integrity 

3 of the drug discount program under this 

4 section. 

5 ‘‘(vi) The imposition of sanctions in 

6 the form of civil monetary penalties, 

7 which— 

8 ‘‘(I) shall be assessed according 

9 to standards established in regulations 

10 to be promulgated by the Secretary 

11 within 180 days of enactment of this 

12 subsection; 

13 ‘‘(II) shall not exceed $5,000 for 

14 each instance of overcharging a cov15 ered entity that may have occurred; 

16 and 

17 ‘‘(III) shall apply to any manu18 facturer with an agreement under this 

19 section that knowingly and inten20 tionally charges a covered entity a 

21 price for purchase of a drug that ex22 ceeds the maximum applicable price 

23 under subsection (a)(1). 

24 ‘‘(2) COVERED ENTITY COMPLIANCE.— 


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1 ‘‘(A) IN GENERAL.—From amounts appro2 priated under paragraph (4), the Secretary 

3 shall provide for improvements in compliance by 

4 covered entities with the requirements of this 

5 section in order to prevent diversion and viola6 tions of the duplicate discount provision and 

7 other requirements specified under subsection 

8 (a)(5). 

9 ‘‘(B) IMPROVEMENTS.—The improvements 

10 described in subparagraph (A) shall include the 

11 following: 

12 ‘‘(i) The development of procedures to 

13 enable and require covered entities to regu14 larly update (at least annually) the infor15 mation on the Internet website of the De16 partment of Health and Human Services 

17 relating to this section. 

18 ‘‘(ii) The development of a system for 

19 the Secretary to verify the accuracy of in20 formation regarding covered entities that is 

21 listed on the website described in clause 

22 (i). 

23 ‘‘(iii) The development of more de24 tailed guidance describing methodologies 

25 and options available to covered entities for 


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1 billing covered drugs to State Medicaid 

2 agencies in a manner that avoids duplicate 

3 discounts pursuant to subsection (a)(5)(A). 

4 ‘‘(iv) The establishment of a single, 

5 universal, and standardized identification 

6 system by which each covered entity site 

7 can be identified by manufacturers, dis8 tributors, covered entities, and the Sec9 retary for purposes of facilitating the or10 dering, purchasing, and delivery of covered 

11 drugs under this section, including the 

12 processing of chargebacks for such drugs. 

13 ‘‘(v) The imposition of sanctions, in 

14 appropriate cases as determined by the 

15 Secretary, additional to those to which cov16 ered entities are subject under subpara17 graph (a)(5)(E), through one or more of 

18 the following actions: 

19 ‘‘(I) Where a covered entity 

20 knowingly and intentionally violates 

21 subparagraph (a)(5)(B), the covered 

22 entity shall be required to pay a mon23 etary penalty to a manufacturer or 

24 manufacturers in the form of interest 

25 on sums for which the covered entity 


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1 is found liable under paragraph 

2 (a)(5)(E), such interest to be com3 pounded monthly and equal to the 

4 current short term interest rate as de5 termined by the Federal Reserve for 

6 the time period for which the covered 

7 entity is liable. 

8 ‘‘(II) Where the Secretary deter9 mines a violation of subparagraph 

10 (a)(5)(B) was systematic and egre11 gious as well as knowing and inten12 tional, removing the covered entity 

13 from the drug discount program 

14 under this section and disqualifying 

15 the entity from re-entry into such pro16 gram for a reasonable period of time 

17 to be determined by the Secretary. 

18 ‘‘(III) Referring matters to ap19 propriate Federal authorities within 

20 the Food and Drug Administration, 

21 the Office of Inspector General of De22 partment of Health and Human Serv23 ices, or other Federal agencies for 

24 consideration of appropriate action 

25 under other Federal statutes, such as 


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1 the Prescription Drug Marketing Act 

2 (21 U.S.C. 353). 

3 ‘‘(3) ADMINISTRATIVE DISPUTE RESOLUTION

4 PROCESS.— 

5 ‘‘(A) IN GENERAL.—Not later than 180 

6 days after the date of enactment of this sub7 section, the Secretary shall promulgate regula8 tions to establish and implement an administra9 tive process for the resolution of claims by cov10 ered entities that they have been overcharged 

11 for drugs purchased under this section, and 

12 claims by manufacturers, after the conduct of 

13 audits as authorized by subsection (a)(5)(D), of 

14 violations of subsections (a)(5)(A) or (a)(5)(B), 

15 including appropriate procedures for the provi16 sion of remedies and enforcement of determina17 tions made pursuant to such process through 

18 mechanisms and sanctions described in para19 graphs (1)(B) and (2)(B). 

20 ‘‘(B) DEADLINES AND PROCEDURES.— 

21 Regulations promulgated by the Secretary 

22 under subparagraph (A) shall— 

23 ‘‘(i) designate or establish a decision24 making official or decisionmaking body 

25 within the Department of Health and 


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1 Human Services to be responsible for re2 viewing and finally resolving claims by cov3 ered entities that they have been charged 

4 prices for covered drugs in excess of the 

5 ceiling price described in subsection (a)(1), 

6 and claims by manufacturers that viola7 tions of subsection (a)(5)(A) or (a)(5)(B) 

8 have occurred; 

9 ‘‘(ii) establish such deadlines and pro10 cedures as may be necessary to ensure that 

11 claims shall be resolved fairly, efficiently, 

12 and expeditiously; 

13 ‘‘(iii) establish procedures by which a 

14 covered entity may discover and obtain 

15 such information and documents from 

16 manufacturers and third parties as may be 

17 relevant to demonstrate the merits of a 

18 claim that charges for a manufacturer’s 

19 product have exceeded the applicable ceil20 ing price under this section, and may sub21 mit such documents and information to the 

22 administrative official or body responsible 

23 for adjudicating such claim; 

24 ‘‘(iv) require that a manufacturer 

25 must conduct an audit of a covered entity 


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1 pursuant to subsection (a)(5)(D) as a pre2 requisite to initiating administrative dis3 pute resolution proceedings against a cov4 ered entity; 

5 ‘‘(v) permit the official or body des6 ignated in clause (i), at the request of a 

7 manufacturer or manufacturers, to consoli8 date claims brought by more than one 

9 manufacturer against the same covered en10 tity where, in the judgment of such official 

11 or body, consolidation is appropriate and 

12 consistent with the goals of fairness and 

13 economy of resources; and 

14 ‘‘(vi) include provisions and proce15 dures to permit multiple covered entities to 

16 jointly assert claims of overcharges by the 

17 same manufacturer for the same drug or 

18 drugs in one administrative proceeding, 

19 and permit such claims to be asserted on 

20 behalf of covered entities by associations or 

21 organizations representing the interests of 

22 such covered entities and of which the cov23 ered entities are members. 

24 ‘‘(C) FINALITY OF ADMINISTRATIVE RESO25 LUTION.—The administrative resolution of a 


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1 claim or claims under the regulations promul2 gated under subparagraph (A) shall be a final 

3 agency decision and shall be binding upon the 

4 parties involved, unless invalidated by an order 

5 of a court of competent jurisdiction. 

6 ‘‘(4) AUTHORIZATION OF APPROPRIATIONS.— 

7 There are authorized to be appropriated to carry out 

8 this subsection, such sums as may be necessary for 

9 fiscal year 2010 and each succeeding fiscal year.’’. 

10 (b) CONFORMING AMENDMENTS.—Section 340B(a) 

11 of such Act (42 U.S.C. 256b(a)) is amended— 

12 (1) in subsection (a)(1), by adding at the end 

13 the following: ‘‘Each such agreement shall require 

14 that the manufacturer furnish the Secretary with re15 ports, on a quarterly basis, of the price for each cov16 ered drug subject to the agreement that, according 

17 to the manufacturer, represents the maximum price 

18 that covered entities may permissibly be required to 

19 pay for the drug (referred to in this section as the 

20 ‘ceiling price’), and shall require that the manufac21 turer offer each covered entity covered drugs for 

22 purchase at or below the applicable ceiling price if 

23 such drug is made available to any other purchaser 

24 at any price.’’; and 


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1 (2) in the first sentence of subsection (a)(5)(E), 

2 as redesignated by section 2(b), by inserting ‘‘after 

3 audit as described in subparagraph (D) and’’ after 

4 ‘‘finds,’’. 

5 SEC. 5. OTHER IMPROVEMENTS IN 340B PROGRAM. 

6 Section 340B of the Public Health Service Act (42 

7 U.S.C. 256b), as amended by section 4(a), is further 

8 amended by adding at the end the following new sub9 sections: 

10 ‘‘(f) USE OF MULTIPLE CONTRACT PHARMACIES

11 PERMITTED.—Nothing in this section shall be construed 

12 as prohibiting a covered entity from entering into con13 tracts with more than one pharmacy for the provision of 

14 covered drugs, including such a contract that supplements 

15 the use of an in-house pharmacy arrangement or as re16 quiring the approval of the Secretary for entering into 

17 such a contract. 

18 ‘‘(g) INTRA-AGENCY COORDINATION.—The Secretary 

19 shall establish specific measures, policies, and procedures 

20 to ensure effective communication and coordination be21 tween the Centers for Medicare & Medicaid Services and 

22 the Health Resources and Services Administration with 

23 respect to all agency actions and all aspects of policy and 

24 administration affecting or pertaining to the drug discount 

25 program under this section and in which the functions and 


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1 responsibilities of those agency components are inter2 related or interdependent, including by establishment of 

3 a permanent working group, composed of representatives 

4 of both the Health Resources and Services Administration 

5 and the Centers for Medicare & Medicaid Services, to iden6 tify and oversee matters requiring such coordination.’’. 

7 SEC. 6. EFFECTIVE DATES. 

8 (a) IN GENERAL.—The amendments made by this 

9 Act shall take effect on January 1, 2010, and shall apply 

10 to drugs purchased on or after January 1, 2010. 

11 (b) EFFECTIVENESS.—The amendments made by 

12 this Act shall be effective, and shall be taken into account 

13 in determining whether a manufacturer is deemed to meet 

14 the requirements of section 340B(a) of the Public Health 

15 Service Act (42 U.S.C. 256b(a)) and of section 1927(a)(5) 

16 of the Social Security Act (42 U.S.C. 1396r–8(a)(5)), not17 withstanding any other provision of law. 

Æ 


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