I 

116TH CONGRESS 

1ST SESSION H. R. 2069 

To amend title XI of the Social Security Act to provide for drug manufacturer 

price transparency. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 3, 2019 

Mr. HORSFORD (for himself and Mr. REED) 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 title XI of the Social Security Act to provide 

for drug manufacturer price transparency. 

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 ‘‘Stopping the Pharma5 ceutical Industry from Keeping drugs Expensive Act’’ or 

6 the ‘‘SPIKE Act’’. 


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1 SEC. 2. DRUG MANUFACTURER PRICE TRANSPARENCY. 

2 Title XI of the Social Security Act (42 U.S.C. 1301 

3 et seq.) is amended by inserting after section 1128K the 

4 following new section: 

5 ‘‘SEC. 1128L. DRUG MANUFACTURER PRICE TRANS6 PARENCY. 

7 ‘‘(a) IN GENERAL.—With respect to each year, begin8 ning with 2021, the Secretary shall, at least once during 

9 such year, determine if there is a triggered SPIKE in10 crease (in accordance with subsection (b)) with respect to 

11 an applicable drug (as defined in subsection (f)(1)). If the 

12 Secretary determines, with respect to a year, there is such 

13 an increase with respect to an applicable drug, the manu14 facturer of the applicable drug shall submit to the Sec15 retary the justification described in subsection (c), subject 

16 to subsection (b)(3), for each such triggered SPIKE in17 crease in accordance with the timing described in sub18 section (d). 

19 ‘‘(b) TRIGGERED SPIKE INCREASE.— 

20 ‘‘(1) IN GENERAL.—A triggered SPIKE in21 crease occurs, with respect to an applicable drug and 

22 year (beginning with 2021), in any of the following 

23 cases: 

24 ‘‘(A) If there is a 10 percent (or $10,000) 

25 increase with respect to the wholesale acquisi26 tion cost (or alternative cost measure specified 


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1 by the Secretary under paragraph (2)) of such 

2 drug during any 12-month period beginning 

3 and ending within the lookback period that is 

4 the 5-year period preceding 2021 or 2022, re5 spectively. 

6 ‘‘(B) If there is a 25 percent (or $25,000) 

7 increase with respect to the wholesale acquisi8 tion cost (or such alternative cost measure) of 

9 such drug during any 36-month period begin10 ning and ending within such respective lookback 

11 period. 

12 ‘‘(C) In the case of such a drug that is 

13 first covered under title XVIII with respect to 

14 such year, if the estimated cost or spending 

15 under such title per individual or per user of 

16 such drug (as estimated by the Secretary) for 

17 such year (or per course of treatment, as de18 fined by the Secretary) is at least $26,000. 

19 ‘‘(2) ALTERNATIVE TO WAC.—The Secretary 

20 may, for purposes of making determinations under 

21 paragraph (1), in addition to using the wholesale ac22 quisition cost for an applicable drug, use alternative 

23 cost measures of such drug. 

24 ‘‘(3) EXCEPTION.—A justification under sub25 section (c) shall not be required for a triggered 


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1 SPIKE increase described in paragraph (1) of an 

2 applicable drug of a manufacturer if there is any 

3 portion of the lookback period described in the re4 spective subparagraph of such paragraph for such 

5 increase that is included within the lookback period 

6 for another triggered SPIKE increase (or combina7 tion of such increases) for which a justification is 

8 made under this section for such drug by such man9 ufacturer. 

10 ‘‘(4) UNIT DETERMINATION.—For purposes of 

11 determining the wholesale acquisition cost in car12 rying out this section, the Secretary shall determine 

13 a unit (such as a unit size) to apply. 

14 ‘‘(5) PUBLIC POSTING.—Beginning with respect 

15 to 2021, the Secretary shall publicly post on the 

16 Internet website of the Department of Health and 

17 Human Services— 

18 ‘‘(A) alternative percentages, dollar 

19 amounts, and lookback periods that, if applied 

20 under paragraph (1), would be projected to in21 crease the number of applicable drugs for which 

22 a triggered SPIKE increase would occur for 

23 such year; and 

24 ‘‘(B) the number of applicable drugs for 

25 which a triggered SPIKE increase would occur 


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1 for such year of such an alternative percentage, 

2 dollar amount, or period were applied for such 

3 year. 

4 ‘‘(c) JUSTIFICATION DESCRIBED.— 

5 ‘‘(1) IN GENERAL.—The justification described 

6 in this subsection, with respect to a triggered 

7 SPIKE increase described in subsection (b)(1) of an 

8 applicable drug of a manufacturer, is— 

9 ‘‘(A) all of the information described in 

10 paragraph (2); 

11 ‘‘(B) all of the information and supporting 

12 documentation described in paragraph (3), as 

13 applicable to the increase and drug; and 

14 ‘‘(C) a certification described in paragraph 

15 (4). 

16 ‘‘(2) REQUIRED INFORMATION.—For purposes 

17 of paragraph (1), the information described in this 

18 paragraph is the following: 

19 ‘‘(A) The individual factors that have con20 tributed to the increase in the wholesale acqui21 sition cost. 

22 ‘‘(B) An explanation of the role of each 

23 factor in contributing to such increase. 

24 ‘‘(3) INFORMATION AS APPLICABLE.—For pur25 poses of paragraph (1), the information and supVerDate Sep 11 2014 23:19 Apr 15, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H2069.IH H2069

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1 porting documentation described in this paragraph is 

2 the following: 

3 ‘‘(A) Total expenditures of the manufac4 turer on— 

5 ‘‘(i) materials and manufacturing for 

6 such drug; 

7 ‘‘(ii) acquiring patents and licensing 

8 for each drug of the manufacturer; and 

9 ‘‘(iii) costs to purchase or acquire the 

10 drug from another company, if applicable. 

11 ‘‘(B) The percentage of total expenditures 

12 of the manufacturer on research and develop13 ment for such drug that was derived from Fed14 eral funds. 

15 ‘‘(C) The total expenditures of the manu16 facturer on research and development for such 

17 drug. 

18 ‘‘(D) The total revenue and net profit gen19 erated from the applicable drug for each cal20 endar year since drug approval. 

21 ‘‘(E) The total costs associated with mar22 keting and advertising for the applicable drug. 

23 ‘‘(F) Additional information specific to the 

24 manufacturer of the applicable drug, such as— 


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1 ‘‘(i) the total revenue and net profit of 

2 the manufacturer for the period of such in3 crease, as determined by the Secretary; 

4 ‘‘(ii) metrics used to determine execu5 tive compensation; 

6 ‘‘(iii) total expenditures on— 

7 ‘‘(I) drug research and develop8 ment; or 

9 ‘‘(II) clinical trials on drugs that 

10 failed to receive approval by the Food 

11 and Drug Administration; and 

12 ‘‘(iv) any additional information re13 lated to drug pricing decisions of the man14 ufacturer. 

15 ‘‘(G) Any other relevant information and 

16 supporting documentation necessary to justify 

17 the triggering SPIKE increase. 

18 ‘‘(H) Any other relevant information and 

19 supporting documentation, as specified by the 

20 Secretary. 

21 ‘‘(4) CERTIFICATION.—For purposes of para22 graph (1), the certification described in this para23 graph is a certification, that all such information 

24 and documentation is accurate and complete, by one 

25 of the following: 


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1 ‘‘(A) The chief executive officer of the 

2 manufacturer. 

3 ‘‘(B) The chief financial officer of the 

4 manufacturer. 

5 ‘‘(C) An individual who has delegated au6 thority to sign for, and who reports directly to, 

7 such chief executive officer or chief financial of8 ficer. 

9 ‘‘(d) TIMING.— 

10 ‘‘(1) NOTIFICATION.—Not later than 60 days 

11 after the date on which the Secretary makes the de12 termination that there is a triggering SPIKE in13 crease with respect to an applicable drug, the Sec14 retary shall notify the manufacturer of the applica15 ble drug of such determination. 

16 ‘‘(2) SUBMISSION OF JUSTIFICATION.—Not 

17 later than 90 days after the date on which a manu18 facturer receives a notification under paragraph (1), 

19 subject to subsection (b)(3), the manufacturer shall 

20 submit to the Secretary the justification required 

21 under subsection (a), including a summary of such 

22 justification, in a form and manner specified by the 

23 Secretary. In specifying such form, with respect to 

24 the summary required under the previous sentence, 

25 the Secretary shall provide that such summary shall 


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1 be in an easily understandable format, as specified 

2 by the Secretary, and shall permit the manufacturer 

3 to exclude proprietary information from such sum4 mary. 

5 ‘‘(3) POSTING ON INTERNET WEBSITE.—Not 

6 later than 30 days after receiving the complete jus7 tification under paragraph (2), the Secretary shall 

8 post on the Internet website of the Centers for Medi9 care & Medicaid Services the summary included for 

10 such justification. 

11 ‘‘(e) PENALTIES.— 

12 ‘‘(1) FAILURE TO SUBMIT TIMELY JUSTIFICA13 TION.—If the Secretary determines that a manufac14 turer has failed to submit a justification as required 

15 under this section, including in accordance with the 

16 timing and form required, with respect to an appli17 cable drug, the Secretary shall apply a civil mone18 tary penalty in an amount of $10,000 for each day 

19 the manufacturer has failed to submit such justifica20 tion as so required. 

21 ‘‘(2) FALSE INFORMATION.—Any manufacturer 

22 that submits a justification under this section that 

23 knowingly provides false information in such jus24 tification is subject to a civil monetary penalty in an 


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1 amount not to exceed $100,000 for each item of 

2 false information. 

3 ‘‘(3) APPLICATION OF PROCEDURES.—The pro4 visions of section 1128A (other than subsections (a) 

5 and (b)) shall apply to a civil monetary penalty 

6 under this subsection in the same manner as such 

7 provisions apply to a penalty or proceeding under 

8 section 1128A(a). Civil monetary penalties imposed 

9 under this subsection are in addition to other pen10 alties as may be prescribed by law. 

11 ‘‘(f) DEFINITIONS.—In this section: 

12 ‘‘(1) APPLICABLE DRUG.— 

13 ‘‘(A) IN GENERAL.—Subject to paragraph 

14 (2), the term ‘applicable drug’ means, with re15 spect to a lookback period described in para16 graph (2), a covered outpatient drug (as de17 fined in paragraph (2) of section 1927(k), with18 out application of paragraph (3) of such sec19 tion) that is covered under title XVIII and is 

20 not a low cost drug. 

21 ‘‘(B) EXCLUSION OF LOW COST DRUGS.— 

22 For purposes of subparagraph (A)(iii), not later 

23 than January 1, 2021, the Secretary shall 

24 specify a threshold (such as a cost or spending 

25 threshold) for identifying (and shall identify) 


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1 low cost drugs to be excluded from the defini2 tion of the term ‘applicable drug’, such as a 

3 drug that has a wholesale acquisition cost of 

4 less than $10 per unit or less than $100 in av5 erage estimated expenditures under title XVIII 

6 per individual per year or per user of such drug 

7 per year. For purposes of this section, a drug 

8 shall not be considered specified as a low cost 

9 drug for a lookback period described in para10 graph (2) with respect to a year unless such 

11 drug is identified as being below the specified 

12 threshold for the entirety of the lookback pe13 riod. 

14 ‘‘(2) MANUFACTURER.—The term ‘manufac15 turer’ has the meaning given that term in section 

16 1847A(c)(6)(A). 

17 ‘‘(3) WHOLESALE ACQUISITION COST.—The 

18 term ‘wholesale acquisition cost’ has the meaning 

19 given that term in section 1847A(c)(6)(B).’’. 

Æ 


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