I 

114TH CONGRESS 

2D SESSION H. R. 6043 

To require reporting regarding certain drug price increases, and for other 

purposes. 

IN THE HOUSE OF REPRESENTATIVES 

SEPTEMBER 15, 2016 

Ms. SCHAKOWSKY (for herself, Ms. DELAURO, Mr. MCDERMOTT, Mr. CUMMINGS, Mrs. KIRKPATRICK, Mr. DOGGETT, and Mr. WELCH) introduced 

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

Commerce 

A BILL 

To require reporting regarding certain drug price increases, 

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 ‘‘Fair Accountability 

5 and Innovative Research Drug Pricing Act of 2016’’. 


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1 SEC. 2. REPORTING ON JUSTIFICATION FOR DRUG PRICE 

2 INCREASES. 

3 Title III of the Public Health Service Act (42 U.S.C. 

4 241 et seq.) is amended by adding at the end the fol5 lowing: 

6 ‘‘PART W—DRUG PRICE REPORTING; DRUG 

7 VALUE FUND 

8 ‘‘SEC. 399OO. REPORTING ON JUSTIFICATION FOR DRUG 

9 PRICE INCREASES. 

10 ‘‘(a) DEFINITIONS.—In this section: 

11 ‘‘(1) AVERAGE MANUFACTURER PRICE.—The 

12 term ‘average manufacturer price’ has the meaning 

13 given the term in section 1927(k)(1) of the Social 

14 Security Act (42 U.S.C. 1396r–8(k)(1)). 

15 ‘‘(2) MANUFACTURER.—The term ‘manufac16 turer’ means the person— 

17 ‘‘(A) that holds the application for a drug 

18 approved under section 505 of the Federal 

19 Food, Drug, and Cosmetic Act or the license 

20 issued under section 351 of the Public Health 

21 Service Act; or 

22 ‘‘(B) who is responsible for setting the 

23 price for the drug. 

24 ‘‘(3) QUALIFYING DRUG.—The term ‘qualifying 

25 drug’ means any drug that is approved under sub26 section (c) or (j) of section 505 of the Federal Food, 


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1 Drug, and Cosmetic Act or licensed under subsection 

2 (a) or (k) of section 351 of this Act— 

3 ‘‘(A) that is— 

4 ‘‘(i)(I) subject to section 503(b)(1) of 

5 the Federal Food, Drug, and Cosmetic 

6 Act; or 

7 ‘‘(II) commonly administered by hos8 pitals (as determined by the Secretary); 

9 ‘‘(ii) not designated as a drug for a 

10 rare disease or condition under section 526 

11 of the Federal Food, Drug, and Cosmetic 

12 Act; and 

13 ‘‘(iii) not designated by the Secretary 

14 as a vaccine; and 

15 ‘‘(B) for which, during the previous cal16 endar year, at least 1 dollar of the total amount 

17 of sales were for individuals enrolled under the 

18 Medicare program under title XVIII of the So19 cial Security Act (42 U.S.C. 1395 et seq.) or 

20 under a State Medicaid plan under title XIX of 

21 such Act (42 U.S.C. 1396 et seq.) or under a 

22 waiver of such plan. 

23 ‘‘(b) REPORT.— 

24 ‘‘(1) REPORT REQUIRED.—The manufacturer of 

25 a qualifying drug shall submit a report to the SecVerDate Sep 11 2014 04:24 Sep 16, 2016 Jkt 059200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H6043.IH H6043

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1 retary for each price increase of a qualifying drug 

2 that will result in an increase in the average manu3 facturer price of that drug that is equal to 10 per4 cent or more over a 12-month period. 

5 ‘‘(2) REPORT DEADLINE.—Each report de6 scribed in paragraph (1) shall be submitted to the 

7 Secretary not later than 30 days prior to the 

8 planned effective date of such price increase. 

9 ‘‘(c) CONTENTS.—A report under subsection (b) 

10 shall, at a minimum, include— 

11 ‘‘(1) with respect to the qualifying drug— 

12 ‘‘(A) the percentage by which the manufac13 turer will raise the average manufacturer price 

14 of the drug on the planned effective date of 

15 such price increase; 

16 ‘‘(B) a justification for, and description of, 

17 each manufacturer’s price increase that oc18 curred during the 12-month period described in 

19 subsection (b)(1); 

20 ‘‘(C) the identity of the initial developer of 

21 the drug; 

22 ‘‘(D) a description of the history of the 

23 manufacturer’s price increases for the drug 

24 since the approval of the application for the 

25 drug under section 505 of the Federal Food, 


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1 Drug, and Cosmetic Act or the issuance of the 

2 license for the drug under section 351, or since 

3 the manufacturer acquired such approved appli4 cation or license; 

5 ‘‘(E) the current list price of the drug; 

6 ‘‘(F) the total expenditures of the manu7 facturer on— 

8 ‘‘(i) materials and manufacturing for 

9 such drug; and 

10 ‘‘(ii) acquiring patents and licensing 

11 for such drug; 

12 ‘‘(G) the percentage of total expenditures 

13 of the manufacturer on research and develop14 ment for such drug that was derived from Fed15 eral funds; 

16 ‘‘(H) the total expenditures of the manu17 facturer on research and development for such 

18 drug that is used for— 

19 ‘‘(i) basic and preclinical research; 

20 ‘‘(ii) clinical research; 

21 ‘‘(iii) new drug development; 

22 ‘‘(iv) pursuing new or expanded indi23 cations for such drug through supple24 mental applications under section 505 of 


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1 the Federal Food, Drug, and Cosmetic 

2 Act; and 

3 ‘‘(v) carrying out postmarket require4 ments related to such drug, including those 

5 under section 505(o)(3) of such Act; 

6 ‘‘(I) the total revenue and the net profit 

7 generated from the qualifying drug for each cal8 endar year since the approval of the application 

9 for the drug under section 505 of the Federal 

10 Food, Drug, and Cosmetic Act or the issuance 

11 of the license for the drug under section 351, 

12 or since the manufacturer acquired such ap13 proved application or license; and 

14 ‘‘(J) the total costs associated with mar15 keting and advertising for the qualifying drug; 

16 ‘‘(2) with respect to the manufacturer— 

17 ‘‘(A) the total revenue and the net profit 

18 of the manufacturer for the 12-month period 

19 described in subsection (b)(1); 

20 ‘‘(B) the amount the manufacturer has 

21 spent on dividends and stock repurchases and 

22 the specific metrics used by the manufacturer 

23 to determine executive compensation, including 

24 any stock-based performance metrics, for the 


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1 12-month period described in subsection (b)(1); 

2 and 

3 ‘‘(C) any additional information the manu4 facturer chooses to provide related to drug pric5 ing decisions, such as total expenditures on— 

6 ‘‘(i) drug research and development; 

7 or 

8 ‘‘(ii) clinical trials on drugs that failed 

9 to receive approval by the Food and Drug 

10 Administration; and 

11 ‘‘(3) such other related information as the Sec12 retary considers appropriate. 

13 ‘‘(d) CIVIL PENALTY.—Any manufacturer of a quali14 fying drug that fails to submit a report for the drug as 

15 required by this section shall be subject to a civil penalty 

16 of $100,000 for each day on which the violation continues. 

17 ‘‘(e) COMPLIANCE DETERMINATIONS.—In deter18 mining whether a manufacturer may have been required 

19 to submit a report under this section, and otherwise mak20 ing determinations about manufacturer compliance with 

21 the requirements of this section, the Inspector General of 

22 the Department of Health and Human Services shall an23 nually review and consider the average manufacturer price 

24 information submitted under section 447.510 of title 42, 

25 Code of Federal Regulations, or any successor regulations. 


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1 ‘‘(f) PUBLIC POSTING.— 

2 ‘‘(1) IN GENERAL.—Subject to paragraph (3), 

3 not later than 30 days after the submission of a re4 port under subsection (b), the Secretary shall post 

5 the report on the public Web site of the Department 

6 of Health and Human Services. 

7 ‘‘(2) FORMAT.—In developing the format of 

8 such report for public posting, the Secretary shall 

9 consult stakeholders, including beneficiary groups, 

10 and shall seek feedback on the content and format 

11 from consumer advocates and readability experts to 

12 ensure such public reports are user-friendly to the 

13 public and are written in plain language that con14 sumers can readily understand. 

15 ‘‘(3) TRADE SECRETS AND CONFIDENTIAL IN16 FORMATION.—In carrying out this section the Sec17 retary shall ensure the protection of confidential 

18 commercial information and trade secrets.’’. 

19 ‘‘SEC. 399OO–1. USE OF CIVIL PENALTY AMOUNTS. 

20 ‘‘The Secretary shall collect the civil penalties under 

21 section 399OO, in addition to any other amounts avail22 able, and without further appropriation, and shall use 

23 such funds to carry out activities described in this part 

24 and to improve consumer and provider information about 

25 drug value and drug price transparency. 


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1 ‘‘SEC. 399OO–2. ANNUAL REPORT TO CONGRESS. 

2 ‘‘(a) IN GENERAL.—Subject to subsection (b), the 

3 Secretary shall submit to Congress, and post on the public 

4 Web site of the Department of Health and Human Serv5 ices in a way that is easy to use and understand, an an6 nual report— 

7 ‘‘(1) summarizing the information reported pur8 suant to section 399OO; and 

9 ‘‘(2) including copies of the reports and sup10 porting detailed economic analyses submitted pursu11 ant to such section. 

12 ‘‘(b) TRADE SECRETS AND CONFIDENTIAL INFORMA13 TION.—In carrying out this section the Secretary shall en14 sure the protection of confidential commercial information 

15 and trade secrets.’’. 

Æ 


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