IB 

Union Calendar No. 264 

116TH CONGRESS 

1ST SESSION H. R. 3 

[Report No. 116–324, Parts I, II and III] 

To establish a fair price negotiation program, protect the Medicare program 

from excessive price increases, and establish an out-of-pocket maximum 

for Medicare part D enrollees, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

SEPTEMBER 19, 2019 

Mr. PALLONE (for himself, Mr. NEAL, and Mr. SCOTT of Virginia) introduced 

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

Commerce, and in addition to the Committees on Ways and Means, and 

Education and Labor, 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 

DECEMBER 6, 2019 

Reported from the Committee on Energy and Commerce with an amendment 

[Strike out all after the enacting clause and insert the part printed in italic] 

DECEMBER 6, 2019 

Reported from the Committee on Ways and Means with an amendment 

[Strike out all after the enacting clause and insert the part printed in boldface roman] 

DECEMBER 6, 2019 

Referral to the Committee on Education and Labor extended for a period 

ending not later than December 9, 2019 


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DECEMBER 9, 2019 

Additional sponsors: Mr. LARSON of Connecticut, Ms. KUSTER of New Hampshire, Ms. DEGETTE, Mr. RUSH, Ms. SHALALA, Mr. RYAN, Mr. 

MORELLE, Mr. SABLAN, Mr. CASE, Mr. ENGEL, Ms. CASTOR of Florida, 

Ms. FRANKEL, Mr. EVANS, Mr. COURTNEY, Mr. NORCROSS, Ms. MOORE, 

Mr. KILDEE, Ms. NORTON, Mr. MCGOVERN, Mr. VISCLOSKY, Mr. 

CARBAJAL, Mr. PAPPAS, Ms. BONAMICI, Ms. HILL of California, Mrs. 

HAYES, Mr. CARTWRIGHT, Mr. MCNERNEY, Ms. BLUNT ROCHESTER, 

Mr. KIM, Mr. TRONE, Mr. ALLRED, Mr. ROSE of New York, Mr. THOMPSON of California, Ms. MENG, Mr. COHEN, Mr. SUOZZI, Ms. WILD, Ms. 

ESHOO, Mr. SOTO, Mr. HORSFORD, Mr. VELA, Mrs. BEATTY, Ms. 

WASSERMAN SCHULTZ, Mr. KEATING, Mr. GOLDEN, Mr. SCHIFF, Ms. 

CRAIG, Mr. WELCH, Mr. MICHAEL F. DOYLE of Pennsylvania, Ms. GARCIA of Texas, Mr. DANNY K. DAVIS of Illinois, Mr. RUIZ, Ms. MATSUI, 

Ms. SLOTKIN, Ms. WILSON of Florida, Mr. LOEBSACK, Mr. CRIST, Mrs. 

BUSTOS, Ms. MUCARSEL-POWELL, Mr. CASTEN of Illinois, Ms. SCHRIER, 

Mr. CUELLAR, Ms. WEXTON, Mr. CLEAVER, Ms. SCHAKOWSKY, Mr. SARBANES, Mr. SEAN PATRICK MALONEY of New York, Mr. LAWSON of 

Florida, Mr. PHILLIPS, Mr. SCHNEIDER, Mr. MEEKS, Mr. ESPAILLAT, 

Mr. LYNCH, Mr. HIGGINS of New York, Mr. LANGEVIN, Ms. JUDY CHU

of California, Ms. STEVENS, Mr. PERLMUTTER, Ms. DAVIDS of Kansas, 

Mrs. AXNE, Mr. HASTINGS, Mr. BEYER, Mrs. LOWEY, Mr. MCEACHIN, 

Mrs. TORRES of California, Mr. PAYNE, Ms. SCANLON, Mr. DEUTCH, Mr. 

YARMUTH, Ms. SPANBERGER, Mr. JEFFRIES, Mrs. MCBATH, Mrs. DINGELL, Ms. FINKENAUER, Mr. GARAMENDI, Ms. MCCOLLUM, Mr. VEASEY, 

Mr. CASTRO of Texas, Mr. GONZALEZ of Texas, Ms. BASS, Mr. BISHOP

of Georgia, Mr. SMITH of Washington, Mr. LOWENTHAL, and Mrs. 

FLETCHER

DECEMBER 9, 2019 

Reported from the Committee on Education and Labor with an amendment; 

committed to the Committee of the Whole House on the State of the 

Union and ordered to be printed 

[Strike out all after the enacting clause and insert the part printed in boldface italic] 

[For text of introduced bill, see copy of bill as introduced on September 19, 2019] 

A BILL 

To establish a fair price negotiation program, protect the 

Medicare program from excessive price increases, and 

establish an out-of-pocket maximum for Medicare part 

D enrollees, and for other purposes. 


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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) IN GENERAL.—This Act may be cited as the 

5 ‘‘Lower Drug Costs Now Act of 2019’’. 

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

7 follows: 

Sec. 1. Short title; table of contents. 

TITLE I—LOWERING PRICES THROUGH FAIR DRUG PRICE 

NEGOTIATION 

Sec. 101. Providing for lower prices for certain high-priced single source drugs. 

Sec. 102. Selected drug manufacturer excise tax imposed during noncompliance 

periods. 

TITLE II—MEDICARE PARTS B AND D PRESCRIPTION DRUG 

INFLATION REBATES 

Sec. 201. Medicare part B rebate by manufacturers. 

Sec. 202. Medicare part D rebate by manufacturers. 

TITLE III—PART D IMPROVEMENTS AND MAXIMUM OUT-OF-POCKET 

CAP FOR MEDICARE BENEFICIARIES 

Sec. 301. Medicare part D benefit redesign. 

Sec. 302. Allowing certain enrollees of prescription drugs plans and MA–PD 

plans under Medicare program to spread out cost-sharing under 

certain circumstances. 

Sec. 303. Establishment of pharmacy quality measures under Medicare part D. 

TITLE IV—PRESCRIPTION DRUG POLICIES FOR LOW-INCOME 

INDIVIDUALS 

Sec. 401. Adjustments to Medicare part D cost-sharing reductions for low-income 

individuals. 

Sec. 402. Dissemination to Medicare part D subsidy eligible individuals of information comparing premiums of certain prescription drug plans. 

Sec. 403. Providing for intelligent assignment of certain subsidy eligible individuals auto-enrolled under Medicare prescription drug plans and 

MA–PD plans. 

Sec. 404. Expanding eligibility for low-income subsidies under part D of the 

Medicare program. 

Sec. 405. Automatic eligibility of certain low-income territorial residents for premium and cost-sharing subsidies under the Medicare program; 

Sunset of enhanced allotment program. 

Sec. 406. Automatic qualification of certain Medicaid beneficiaries for premium 

and cost-sharing subsidies under part D of the Medicare program. 


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Sec. 407. Eliminating the resource requirement with respect to subsidy eligible 

individuals under part D of the Medicare program. 

TITLE V—DRUG PRICE TRANSPARENCY 

Sec. 501. Drug price transparency. 

TITLE VI—MISCELLANEOUS 

Sec. 601. Temporary increase in Medicare part B payment for certain biosimilar 

biological products. 

1 TITLE I—LOWERING PRICES 

2 THROUGH FAIR DRUG PRICE 

3 NEGOTIATION 

4 SEC. 101. PROVIDING FOR LOWER PRICES FOR CERTAIN 

5 HIGH-PRICESECTIOND SINGLE SOURCE 

6 DRUGS. 

7 (a) PROGRAM TO LOWER PRICES FOR CERTAIN HIGH8 PRICED SINGLE SOURCE DRUGS.—Title XI of the Social 

9 Security Act (42 U.S.C. 1301 et seq.) is amended by adding 

10 at the end the following new part: 

11 ‘‘PART E—FAIR PRICE NEGOTIATION PROGRAM 

12 TO LOWER PRICES FOR CERTAIN HIGH13 PRICED SINGLE SOURCE DRUGS 

14 ‘‘SEC. 1191. ESTABLISHMENT OF PROGRAM. 

15 ‘‘(a) IN GENERAL.—The Secretary shall establish a 

16 Fair Price Negotiation Program (in this part referred to 

17 as the ‘program’). Under the program, with respect to each 

18 price applicability period, the Secretary shall— 

19 ‘‘(1) publish a list of selected drugs in accord20 ance with section 1192; 


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1 ‘‘(2) enter into agreements with manufacturers of 

2 selected drugs with respect to such period, in accord3 ance with section 1193; 

4 ‘‘(3) negotiate and, if applicable, renegotiate 

5 maximum fair prices for such selected drugs, in ac6 cordance with section 1194; and 

7 ‘‘(4) carry out the administrative duties de8 scribed in section 1196. 

9 ‘‘(b) DEFINITIONS RELATING TO TIMING.—For pur10 poses of this part: 

11 ‘‘(1) INITIAL PRICE APPLICABILITY YEAR.—The 

12 term ‘initial price applicability year’ means a plan 

13 year (beginning with plan year 2023) or, if agreed to 

14 in an agreement under section 1193 by the Secretary 

15 and manufacturer involved, a period of more than 

16 one plan year (beginning on or after January 1, 

17 2023). 

18 ‘‘(2) PRICE APPLICABILITY PERIOD.—The term 

19 ‘price applicability period’ means, with respect to a 

20 drug, the period beginning with the initial price ap21 plicability year with respect to which such drug is a 

22 selected drug and ending with the last plan year dur23 ing which the drug is a selected drug. 

24 ‘‘(3) SELECTED DRUG PUBLICATION DATE.—The 

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1 spect to each initial price applicability year, April 15 

2 of the plan year that begins 2 years prior to such 

3 year. 

4 ‘‘(4) VOLUNTARY NEGOTIATION PERIOD.—The 

5 term ‘voluntary negotiation period’ means, with re6 spect to an initial price applicability year with re7 spect to a selected drug, the period— 

8 ‘‘(A) beginning on the sooner of— 

9 ‘‘(i) the date on which the manufac10 turer of the drug and the Secretary enter 

11 into an agreement under section 1193 with 

12 respect to such drug; or 

13 ‘‘(ii) June 15 following the selected 

14 drug publication date with respect to such 

15 selected drug; and 

16 ‘‘(B) ending on March 31 of the year that 

17 begins one year prior to the initial price appli18 cability year. 

19 ‘‘(c) OTHER DEFINITIONS.—For purposes of this part: 

20 ‘‘(1) FAIR PRICE ELIGIBLE INDIVIDUAL.—The 

21 term ‘fair price eligible individual’ means, with re22 spect to a selected drug— 

23 ‘‘(A) in the case such drug is furnished or 

24 dispensed to the individual at a pharmacy or by 

25 a mail order service— 


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1 ‘‘(i) an individual who is enrolled 

2 under a prescription drug plan under part 

3 D of title XVIII or an MA–PD plan under 

4 part C of such title under which coverage is 

5 provided for such drug; and 

6 ‘‘(ii) an individual who is enrolled 

7 under a group health plan or health insur8 ance coverage offered in the group or indi9 vidual market (as such terms are defined in 

10 section 2791 of the Public Health Service 

11 Act) with respect to which there is in effect 

12 an agreement with the Secretary under sec13 tion 1197 with respect to such selected drug 

14 as so furnished or dispensed; and 

15 ‘‘(B) in the case such drug is furnished or 

16 administered to the individual by a hospital, 

17 physician, or other provider of services or sup18 plier— 

19 ‘‘(i) an individual who is entitled to 

20 benefits under part A of title XVIII or en21 rolled under part B of such title if such se22 lected drug is covered under the respective 

23 part; and 

24 ‘‘(ii) an individual who is enrolled 

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1 ance coverage offered in the group or indi2 vidual market (as such terms are defined in 

3 section 2791 of the Public Health Service 

4 Act) with respect to which there is in effect 

5 an agreement with the Secretary under sec6 tion 1197 with respect to such selected drug 

7 as so furnished or administered. 

8 ‘‘(2) MAXIMUM FAIR PRICE.—The term ‘max9 imum fair price’ means, with respect to a plan year 

10 during a price applicability period and with respect 

11 to a selected drug (as defined in section 1192(c)) with 

12 respect to such period, the price published pursuant 

13 to section 1195 in the Federal Register for such drug 

14 and year. 

15 ‘‘(3) AVERAGE INTERNATIONAL MARKET PRICE

16 DEFINED.— 

17 ‘‘(A) IN GENERAL.—The terms ‘average 

18 international market price’ and ‘AIM price’ 

19 mean, with respect to a drug, the average price 

20 (which shall be the net average price, if prac21 ticable, and volume-weighted, if practicable) for 

22 a unit (as defined in paragraph (4)) of the drug 

23 for sales of such drug (calculated across different 

24 dosage forms and strengths of the drug and not 

25 based on the specific formulation or package size 


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1 or package type), as computed (as of the date of 

2 publication of such drug as a selected drug under 

3 section 1192(a)) in all countries described in 

4 clause (ii) of subparagraph (B) that are applica5 ble countries (as described in clause (i) of such 

6 subparagraph) with respect to such drug. 

7 ‘‘(B) APPLICABLE COUNTRIES.— 

8 ‘‘(i) IN GENERAL.—For purposes of 

9 subparagraph (A), a country described in 

10 clause (ii) is an applicable country de11 scribed in this clause with respect to a drug 

12 if there is available an average price for 

13 any unit for the drug for sales of such drug 

14 in such country. 

15 ‘‘(ii) COUNTRIES DESCRIBED.—For 

16 purposes of this paragraph, the following 

17 are countries described in this clause: 

18 ‘‘(I) Australia. 

19 ‘‘(II) Canada. 

20 ‘‘(III) France. 

21 ‘‘(IV) Germany. 

22 ‘‘(V) Japan. 

23 ‘‘(VI) The United Kingdom. 

24 ‘‘(4) UNIT.—The term ‘unit’ means, with respect 

25 to a drug, the lowest identifiable quantity (such as a 


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1 capsule or tablet, milligram of molecules, or grams) of 

2 the drug that is dispensed. 

3 ‘‘SEC. 1192. SELECTION OF NEGOTIATION-ELIGIBLE DRUGS 

4 AS SELECTED DRUGS. 

5 ‘‘(a) IN GENERAL.—Not later than the selected drug 

6 publication date with respect to an initial price applica7 bility year, the Secretary shall select and publish in the 

8 Federal Register a list of— 

9 ‘‘(1)(A) with respect to an initial price applica10 bility year during the period beginning with 2023 

11 and ending with 2027, at least 25 negotiation-eligible 

12 drugs described in subparagraphs (A) and (B), but 

13 not subparagraph (C), of subsection (d)(1) (or, with 

14 respect to an initial price applicability year during 

15 such period beginning after 2023, the maximum num16 ber (if such number is less than 25) of such negotia17 tion-eligible drugs for the year) with respect to such 

18 year; 

19 ‘‘(B) with respect to an initial price applica20 bility year during the period beginning with 2028 

21 and ending with 2032, at least 30 negotiation-eligible 

22 drugs described in subparagraphs (A) and (B), but 

23 not subparagraph (C), of subsection (d)(1) (or, with 

24 respect to an initial price applicability year during 

25 such period, the maximum number (if such number is 


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1 less than 30) of such negotiation-eligible drugs for the 

2 year) with respect to such year; and 

3 ‘‘(C) with respect to an initial price applica4 bility year beginning after 2032, at least 35 negotia5 tion-eligible drugs described in subparagraphs (A) 

6 and (B), but not subparagraph (C), of subsection 

7 (d)(1) (or, with respect to an initial price applica8 bility year during such period, the maximum number 

9 (if such number is less than 35) of such negotiation10 eligible drugs for the year) with respect to such year; 

11 ‘‘(2) all negotiation-eligible drugs described in 

12 subparagraph (C) of such subsection with respect to 

13 such year; and 

14 ‘‘(3) all new-entrant negotiation-eligible drugs 

15 (as defined in subsection (g)(1)) with respect to such 

16 year. 

17 Each drug published on the list pursuant to the previous 

18 sentence shall be subject to the negotiation process under 

19 section 1194 for the voluntary negotiation period with re20 spect to such initial price applicability year (and the re21 negotiation process under such section as applicable for any 

22 subsequent year during the applicable price applicability 

23 period). In applying this subsection, any negotiation-eligi24 ble drug that is selected under this subsection for an initial 

25 price applicability year shall not count toward the required 


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1 minimum amount of drugs to be selected under paragraph 

2 (1) for any subsequent year, including such a drug so se3 lected that is subject to renegotiation under section 1194. 

4 ‘‘(b) SELECTION OF DRUGS.—In carrying out sub5 section (a)(1) the Secretary shall select for inclusion on the 

6 published list described in subsection (a) with respect to a 

7 price applicability period, the negotiation-eligible drugs 

8 that the Secretary projects will result in the greatest savings 

9 to the Federal Government or fair price eligible individuals 

10 during the price applicability period. In making this pro11 jection of savings for drugs for which there is an AIM price 

12 for a price applicability period, the savings shall be pro13 jected across different dosage forms and strengths of the 

14 drugs and not based on the specific formulation or package 

15 size or package type of the drugs, taking into consideration 

16 both the volume of drugs for which payment is made, to 

17 the extent such data is available, and the amount by which 

18 the net price for the drugs exceeds the AIM price for the 

19 drugs. 

20 ‘‘(c) SELECTED DRUG.—For purposes of this part, 

21 each drug included on the list published under subsection 

22 (a) with respect to an initial price applicability year shall 

23 be referred to as a ‘selected drug’ with respect to such year 

24 and each subsequent plan year beginning before the first 


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1 plan year beginning after the date on which the Secretary 

2 determines two or more drug products— 

3 ‘‘(1) are approved or licensed (as applicable)— 

4 ‘‘(A) under section 505(j) of the Federal 

5 Food, Drug, and Cosmetic Act using such drug 

6 as the listed drug; or 

7 ‘‘(B) under section 351(k) of the Public 

8 Health Service Act using such drug as the ref9 erence product; and 

10 ‘‘(2) continue to be marketed. 

11 ‘‘(d) NEGOTIATION-ELIGIBLE DRUG.— 

12 ‘‘(1) IN GENERAL.—For purposes of this part, 

13 the term ‘negotiation-eligible drug’ means, with re14 spect to the selected drug publication date with re15 spect to an initial price applicability year, a quali16 fying single source drug, as defined in subsection (e), 

17 that meets any of the following criteria: 

18 ‘‘(A) COVERED PART D DRUGS.—The drug 

19 is among the 125 covered part D drugs (as de20 fined in section 1860D–2(e)) for which there was 

21 an estimated greatest net spending under parts 

22 C and D of title XVIII, as determined by the 

23 Secretary, during the most recent plan year 

24 prior to such drug publication date for which 

25 data are available. 


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1 ‘‘(B) OTHER DRUGS.—The drug is among 

2 the 125 drugs for which there was an estimated 

3 greatest net spending in the United States (in4 cluding the 50 States, the District of Columbia, 

5 and the territories of the United States), as de6 termined by the Secretary, during the most re7 cent plan year prior to such drug publication 

8 date for which data are available. 

9 ‘‘(C) INSULIN.—The drug is a qualifying 

10 single source drug described in subsection (e)(3). 

11 ‘‘(2) CLARIFICATION.—In determining whether a 

12 qualifying single source drug satisfies any of the cri13 teria described in paragraph (1), the Secretary shall, 

14 to the extent practicable, use data that is aggregated 

15 across dosage forms and strengths of the drug and not 

16 based on the specific formulation or package size or 

17 package type of the drug. 

18 ‘‘(3) PUBLICATION.—Not later than the selected 

19 drug publication date with respect to an initial price 

20 applicability year, the Secretary shall publish in the 

21 Federal Register a list of negotiation-eligible drugs 

22 with respect to such selected drug publication date. 

23 ‘‘(e) QUALIFYING SINGLE SOURCE DRUG.—For pur24 poses of this part, the term ‘qualifying single source drug’ 

25 means any of the following: 


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1 ‘‘(1) DRUG PRODUCTS.—A drug that— 

2 ‘‘(A) is approved under section 505(c) of the 

3 Federal Food, Drug, and Cosmetic Act and con4 tinues to be marketed pursuant to such approval; 

5 and 

6 ‘‘(B) is not the listed drug for any drug 

7 that is approved and continues to be marketed 

8 under section 505(j) of such Act. 

9 ‘‘(2) BIOLOGICAL PRODUCTS.—A biological prod10 uct that— 

11 ‘‘(A) is licensed under section 351(a) of the 

12 Public Health Service Act, including any prod13 uct that has been deemed to be licensed under 

14 section 351 of such Act pursuant to section 

15 7002(e)(4) of the Biologics Price Competition 

16 and Innovation Act of 2009, and continues to be 

17 marketed under section 351 of such Act; and 

18 ‘‘(B) is not the reference product for any bi19 ological product that is licensed and continues to 

20 be marketed under section 351(k) of such Act. 

21 ‘‘(3) INSULIN PRODUCT.—Notwithstanding para22 graphs (1) and (2), any insulin product that is ap23 proved under subsection (c) or (j) of section 505 of the 

24 Federal Food, Drug, and Cosmetic Act or licensed 

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1 lic Health Service Act and continues to be marketed 

2 under such section 505 or 351, including any insulin 

3 product that has been deemed to be licensed under sec4 tion 351(a) of the Public Health Service Act pursuant 

5 to section 7002(e)(4) of the Biologics Price Competi6 tion and Innovation Act of 2009 and continues to be 

7 marketed pursuant to such licensure. 

8 For purposes of applying paragraphs (1) and (2), a drug 

9 or biological product that is marketed by the same sponsor 

10 or manufacturer (or an affiliate thereof or a cross-licensed 

11 producer or distributor) as the listed drug or reference prod12 uct described in such respective paragraph shall not be 

13 taken into consideration. 

14 ‘‘(f) INFORMATION ON INTERNATIONAL DRUG

15 PRICES.—For purposes of determining which negotiation16 eligible drugs to select under subsection (a) and, in the case 

17 of such drugs that are selected drugs, to determine the max18 imum fair price for such a drug and whether such max19 imum fair price should be renegotiated under section 1194, 

20 the Secretary shall use data relating to the AIM price with 

21 respect to such drug as available or provided to the Sec22 retary and shall on an ongoing basis request from manufac23 turers of selected drugs information on the AIM price of 

24 such a drug. 

25 ‘‘(g) NEW-ENTRANT NEGOTIATION-ELIGIBLE DRUGS.— 


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1 ‘‘(1) IN GENERAL.—For purposes of this part, 

2 the term ‘new-entrant negotiation-eligible drug’ 

3 means, with respect to the selected drug publication 

4 date with respect to an initial price applicability 

5 year, a qualifying single source drug— 

6 ‘‘(A) that is first approved or licensed, as 

7 described in paragraph (1), (2), or (3) of sub8 section (e), as applicable, during the year pre9 ceding such selected drug publication date; and 

10 ‘‘(B) that the Secretary determines under 

11 paragraph (2) is likely to be a negotiation-eligi12 ble drug with respect to the subsequent selected 

13 drug publication date. 

14 ‘‘(2) DETERMINATION.—In the case of a quali15 fying single source drug that meets the criteria de16 scribed in subparagraphs (A) and (B) of paragraph 

17 (1), with respect to an initial price applicability 

18 year, if the wholesale acquisition cost at which such 

19 drug is first marketed in the United States is equal 

20 to or greater than the median household income (as 

21 determined according to the most recent data collected 

22 by the United States Census Bureau), the Secretary 

23 shall determine before the selected drug publication 

24 date with respect to the initial price applicability 

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1 tion-eligible drug with respect to the subsequent se2 lected drug publication date, based on the projected 

3 spending under title XVIII or in the United States on 

4 such drug. For purposes of this paragraph the term 

5 ‘United States’ includes the 50 States, the District of 

6 Columbia, and the territories of the United States. 

7 ‘‘SEC. 1193. MANUFACTURER AGREEMENTS. 

8 ‘‘(a) IN GENERAL.—For purposes of section 

9 1191(a)(2), the Secretary shall enter into agreements with 

10 manufacturers of selected drugs with respect to a price ap11 plicability period, by not later than June 15 following the 

12 selected drug publication date with respect to such selected 

13 drug, under which— 

14 ‘‘(1) during the voluntary negotiation period for 

15 the initial price applicability year for the selected 

16 drug, the Secretary and manufacturer, in accordance 

17 with section 1194, negotiate to determine (and, by not 

18 later than the last date of such period and in accord19 ance with subsection (c), agree to) a maximum fair 

20 price for such selected drug of the manufacturer in 

21 order to provide access to such price— 

22 ‘‘(A) to fair price eligible individuals who 

23 with respect to such drug are described in sub24 paragraph (A) of section 1191(c)(1) and are fur25 nished or dispensed such drug during, subject to 


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1 subparagraph (2), the price applicability period; 

2 and 

3 ‘‘(B) to hospitals, physicians, and other 

4 providers of services and suppliers with respect 

5 to fair price eligible individuals who with respect 

6 to such drug are described in subparagraph (B) 

7 of such section and are furnished or adminis8 tered such drug during, subject to subparagraph 

9 (2), the price applicability period; 

10 ‘‘(2) the Secretary and the manufacturer shall, 

11 in accordance with a process and during a period 

12 specified by the Secretary pursuant to rulemaking, re13 negotiate (and, by not later than the last date of such 

14 period and in accordance with subsection (c), agree 

15 to) the maximum fair price for such drug if the Sec16 retary determines that there is a material change in 

17 any of the factors described in section 1194(d) relat18 ing to the drug, including changes in the AIM price 

19 for such drug, in order to provide access to such max20 imum fair price (as so renegotiated)— 

21 ‘‘(A) to fair price eligible individuals who 

22 with respect to such drug are described in sub23 paragraph (A) of section 1191(c)(1) and are fur24 nished or dispensed such drug during any year 

25 during the price applicability period (beginning 


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1 after such renegotiation) with respect to such se2 lected drug; and 

3 ‘‘(B) to hospitals, physicians, and other 

4 providers of services and suppliers with respect 

5 to fair price eligible individuals who with respect 

6 to such drug are described in subparagraph (B) 

7 of such section and are furnished or adminis8 tered such drug during any year described in 

9 subparagraph (A); 

10 ‘‘(3) the maximum fair price (including as re11 negotiated pursuant to paragraph (2)), with respect 

12 to such a selected drug, shall be provided to fair price 

13 eligible individuals, who with respect to such drug are 

14 described in subparagraph (A) of section 1191(c)(1), 

15 at the pharmacy or by a mail order service at the 

16 point-of-sale of such drug; 

17 ‘‘(4) the manufacturer, subject to subsection (d), 

18 submits to the Secretary, in a form and manner spec19 ified by the Secretary— 

20 ‘‘(A) for the voluntary negotiation period 

21 for the price applicability period (and, if appli22 cable, before any period of renegotiation specified 

23 pursuant to paragraph (2)) with respect to such 

24 drug all information that the Secretary requires 

25 to carry out the negotiation (or renegotiation 


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1 process) under this part, including information 

2 described in section 1192(f) and section 

3 1194(d)(1); and 

4 ‘‘(B) on an ongoing basis, information on 

5 changes in prices for such drug that would affect 

6 the AIM price for such drug or otherwise provide 

7 a basis for renegotiation of the maximum fair 

8 price for such drug pursuant to paragraph (2); 

9 ‘‘(5) the manufacturer agrees that in the case the 

10 selected drug of a manufacturer is a drug described 

11 in subsection (c), the manufacturer will, in accord12 ance with such subsection, make any payment re13 quired under such subsection with respect to such 

14 drug; and 

15 ‘‘(6) the manufacturer complies with require16 ments imposed by the Secretary for purposes of ad17 ministering the program, including with respect to 

18 the duties described in section 1196. 

19 ‘‘(b) AGREEMENT IN EFFECT UNTIL DRUG IS NO

20 LONGER A SELECTED DRUG.—An agreement entered into 

21 under this section shall be effective, with respect to a drug, 

22 until such drug is no longer considered a selected drug 

23 under section 1192(c). 

24 ‘‘(c) SPECIAL RULE FOR CERTAIN SELECTED DRUGS

25 WITHOUT AIM PRICE.— 


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1 ‘‘(1) IN GENERAL.—In the case of a selected drug 

2 for which there is no AIM price available with respect 

3 to the initial price applicability year for such drug 

4 and for which an AIM price becomes available begin5 ning with respect to a subsequent plan year during 

6 the price applicability period for such drug, if the 

7 Secretary determines that the amount described in 

8 paragraph (2)(A) for a unit of such drug is greater 

9 than the amount described in paragraph (2)(B) for a 

10 unit of such drug, then by not later than one year 

11 after the date of such determination, the manufac12 turer of such selected drug shall pay to the Treasury 

13 an amount equal to the product of— 

14 ‘‘(A) the difference between such amount de15 scribed in paragraph (2)(A) for a unit of such 

16 drug and such amount described in paragraph 

17 (2)(B) for a unit of such drug; and 

18 ‘‘(B) the number of units of such drug sold 

19 in the United States, including the 50 States, the 

20 District of Columbia, and the territories of the 

21 United States, during the period described in 

22 paragraph (2)(B). 

23 ‘‘(2) AMOUNTS DESCRIBED.— 

24 ‘‘(A) WEIGHTED AVERAGE PRICE BEFORE

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1 graph (1), the amount described in this subpara2 graph for a selected drug described in such para3 graph, is the amount equal to the weighted aver4 age manufacturer price (as defined in section 

5 1927(k)(1)) for such dosage strength and form for 

6 the drug during the period beginning with the 

7 first plan year for which the drug is included on 

8 the list of negotiation-eligible drugs published 

9 under section 1192(d) and ending with the last 

10 plan year during the price applicability period 

11 for such drug with respect to which there is no 

12 AIM price available for such drug. 

13 ‘‘(B) AMOUNT MULTIPLIER AFTER AIM

14 PRICE AVAILABLE.—For purposes of paragraph 

15 (1), the amount described in this subparagraph 

16 for a selected drug described in such paragraph, 

17 is the amount equal to 200 percent of the AIM 

18 price for such drug with respect to the first plan 

19 year during the price applicability period for 

20 such drug with respect to which there is an AIM 

21 price available for such drug. 

22 ‘‘(d) CONFIDENTIALITY OF INFORMATION.—Informa23 tion submitted to the Secretary under this part by a manu24 facturer of a selected drug that is proprietary information 

25 of such manufacturer (as determined by the Secretary) may 


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1 be used only by the Secretary or disclosed to and used by 

2 the Comptroller General of the United States or the Medi3 care Payment Advisory Commission for purposes of car4 rying out this part. 

5 ‘‘(e) REGULATIONS.— 

6 ‘‘(1) IN GENERAL.—The Secretary shall, pursu7 ant to rulemaking, specify, in accordance with para8 graph (2), the information that must be submitted 

9 under subsection (a)(4). 

10 ‘‘(2) INFORMATION SPECIFIED.—Information de11 scribed in paragraph (1), with respect to a selected 

12 drug, shall include information on sales of the drug 

13 (by the manufacturer of the drug or by another entity 

14 under license or other agreement with the manufac15 turer, with respect to the sales of such drug, regardless 

16 of the name under which the drug is sold) in any for17 eign country that is part of the AIM price. The Sec18 retary shall verify, to the extent practicable, such 

19 sales from appropriate officials of the government of 

20 the foreign country involved. 

21 ‘‘(f) COMPLIANCE WITH REQUIREMENTS FOR ADMIN22 ISTRATION OF PROGRAM.—Each manufacturer with an 

23 agreement in effect under this section shall comply with re24 quirements imposed by the Secretary or a third party with 


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1 a contract under section 1196(c)(1), as applicable, for pur2 poses of administering the program. 

3 ‘‘SEC. 1194. NEGOTIATION AND RENEGOTIATION PROCESS. 

4 ‘‘(a) IN GENERAL.—For purposes of this part, under 

5 an agreement under section 1193 between the Secretary and 

6 a manufacturer of a selected drug, with respect to the period 

7 for which such agreement is in effect and in accordance 

8 with subsections (b) and (c), the Secretary and the manu9 facturer— 

10 ‘‘(1) shall during the voluntary negotiation pe11 riod with respect to the initial price applicability 

12 year for such drug, in accordance with this section, 

13 negotiate a maximum fair price for such drug for the 

14 purpose described in section 1193(a)(1); and 

15 ‘‘(2) as applicable pursuant to section 1193(a)(2) 

16 and in accordance with the process specified pursuant 

17 to such section, renegotiate such maximum fair price 

18 for such drug for the purpose described in such sec19 tion. 

20 ‘‘(b) NEGOTIATING METHODOLOGY AND OBJECTIVE.— 

21 ‘‘(1) IN GENERAL.—The Secretary shall develop 

22 and use a consistent methodology for negotiations 

23 under subsection (a) that, in accordance with para24 graph (2) and subject to paragraph (3), achieves the 


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1 lowest maximum fair price for each selected drug 

2 while appropriately rewarding innovation. 

3 ‘‘(2) PRIORITIZING FACTORS.—In considering 

4 the factors described in subsection (d) in negotiating 

5 (and, as applicable, renegotiating) the maximum fair 

6 price for a selected drug, the Secretary shall, to the 

7 extent practicable, consider all of the available factors 

8 listed but shall prioritize the following factors: 

9 ‘‘(A) RESEARCH AND DEVELOPMENT

10 COSTS.—The factor described in paragraph 

11 (1)(A) of subsection (d). 

12 ‘‘(B) MARKET DATA.—The factor described 

13 in paragraph (1)(B) of such subsection. 

14 ‘‘(C) UNIT COSTS OF PRODUCTION AND DIS15 TRIBUTION.—The factor described in paragraph 

16 (1)(C) of such subsection. 

17 ‘‘(D) COMPARISON TO EXISTING THERA18 PEUTIC ALTERNATIVES.—The factor described in 

19 paragraph (2)(A) of such subsection. 

20 ‘‘(3) REQUIREMENT.— 

21 ‘‘(A) IN GENERAL.—In negotiating the max22 imum fair price of a selected drug, with respect 

23 to an initial price applicability year for the se24 lected drug, and, as applicable, in renegotiating 

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1 spect to a subsequent year during the price ap2 plicability period for such drug, in the case that 

3 the manufacturer of the selected drug offers 

4 under the negotiation or renegotiation, as appli5 cable, a price for such drug that is not more 

6 than the target price described in subparagraph 

7 (B) for such drug for the respective year, the Sec8 retary shall agree under such negotiation or re9 negotiation, respectively, to such offered price as 

10 the maximum fair price. 

11 ‘‘(B) TARGET PRICE.— 

12 ‘‘(i) IN GENERAL.—Subject to clause 

13 (ii), the target price described in this sub14 paragraph for a selected drug with respect 

15 to a year, is the average price (which shall 

16 be the net average price, if practicable, and 

17 volume-weighted, if practicable) for a unit 

18 of such drug for sales of such drug, as com19 puted (across different dosage forms and 

20 strengths of the drug and not based on the 

21 specific formulation or package size or 

22 package type of the drug) in the applicable 

23 country described in section 1191(c)(3)(B) 

24 with respect to such drug that, with respect 

25 to such year, has the lowest average price 


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1 for such drug as compared to the average 

2 prices (as so computed) of such drug with 

3 respect to such year in the other applicable 

4 countries described in such section with re5 spect to such drug. 

6 ‘‘(ii) SELECTED DRUGS WITHOUT AIM

7 PRICE.—In applying this paragraph in the 

8 case of negotiating the maximum fair price 

9 of a selected drug for which there is no AIM 

10 price available with respect to the initial 

11 price applicability year for such drug, or, 

12 as applicable, renegotiating the maximum 

13 fair price for such drug with respect to a 

14 subsequent year during the price applica15 bility period for such drug before the first 

16 plan year for which there is an AIM price 

17 available for such drug, the target price de18 scribed in this subparagraph for such drug 

19 and respective year is the amount that is 80 

20 percent of the average manufacturer price 

21 (as defined in section 1927(k)(1)) for such 

22 drug and year. 

23 ‘‘(4) ANNUAL REPORT.—After the completion of 

24 each voluntary negotiation period, the Secretary shall 

25 submit to Congress a report on the maximum fair 


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1 prices negotiated (or, as applicable, renegotiated) for 

2 such period. Such report shall include information on 

3 how such prices so negotiated (or renegotiated) meet 

4 the requirements of this part, including the require5 ments of this subsection. 

6 ‘‘(c) LIMITATION.— 

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

8 maximum fair price negotiated (including as renego9 tiated) under this section for a selected drug, with re10 spect to each plan year during a price applicability 

11 period for such drug, shall not exceed 120 percent of 

12 the AIM price applicable to such drug with respect to 

13 such year. 

14 ‘‘(2) SELECTED DRUGS WITHOUT AIM PRICE.— 

15 In the case of a selected drug for which there is no 

16 AIM price available with respect to the initial price 

17 applicability year for such drug, for each plan year 

18 during the price applicability period before the first 

19 plan year for which there is an AIM price available 

20 for such drug, the maximum fair price negotiated (in21 cluding as renegotiated) under this section for the se22 lected drug shall not exceed the amount equal to 85 

23 percent of the average manufacturer price for the 

24 drug with respect to such year. 


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1 ‘‘(d) CONSIDERATIONS.—For purposes of negotiating 

2 and, as applicable, renegotiating (including for purposes of 

3 determining whether to renegotiate) the maximum fair 

4 price of a selected drug under this part with the manufac5 turer of the drug, the Secretary shall, consistent with sub6 section (b)(2), take into consideration the following factors: 

7 ‘‘(1) MANUFACTURER-SPECIFIC INFORMATION.— 

8 The following information, including as submitted by 

9 the manufacturer: 

10 ‘‘(A) Research and development costs of the 

11 manufacturer for the drug and the extent to 

12 which the manufacturer has recouped research 

13 and development costs. 

14 ‘‘(B) Market data for the drug, including 

15 the distribution of sales across different pro16 grams and purchasers and projected future reve17 nues for the drug. 

18 ‘‘(C) Unit costs of production and distribu19 tion of the drug. 

20 ‘‘(D) Prior Federal financial support for 

21 novel therapeutic discovery and development 

22 with respect to the drug. 

23 ‘‘(E) Data on patents and on existing and 

24 pending exclusivity for the drug. 

25 ‘‘(F) National sales data for the drug. 


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1 ‘‘(G) Information on clinical trials for the 

2 drug in the United States or in applicable coun3 tries described in section 1191(c)(3)(B). 

4 ‘‘(2) INFORMATION ON ALTERNATIVE PROD5 UCTS.—The following information: 

6 ‘‘(A) The extent to which the drug rep7 resents a therapeutic advance as compared to ex8 isting therapeutic alternatives and, to the extent 

9 such information is available, the costs of such 

10 existing therapeutic alternatives. 

11 ‘‘(B) Information on approval by the Food 

12 and Drug Administration of alternative drug 

13 products. 

14 ‘‘(C) Information on comparative effective15 ness analysis for such products, taking into con16 sideration the effects of such products on specific 

17 populations, such as individuals with disabil18 ities, the elderly, terminally ill, children, and 

19 other patient populations. 

20 In considering information described in subpara21 graph (C), the Secretary shall not use evidence or 

22 findings from comparative clinical effectiveness re23 search in a manner that treats extending the life of 

24 an elderly, disabled, or terminally ill individual as of 

25 lower value than extending the life of an individual 


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1 who is younger, nondisabled, or not terminally ill. 

2 Nothing in the previous sentence shall affect the ap3 plication or consideration of an AIM price for a se4 lected drug. 

5 ‘‘(3) FOREIGN SALES INFORMATION.—To the ex6 tent available on a timely basis, including as pro7 vided by a manufacturer of the selected drug or other8 wise, information on sales of the selected drug in each 

9 of the countries described in section 1191(c)(3)(B). 

10 ‘‘(4) ADDITIONAL INFORMATION.—Information 

11 submitted to the Secretary, in accordance with a 

12 process specified by the Secretary, by other parties 

13 that are affected by the establishment of a maximum 

14 fair price for the selected drug. 

15 ‘‘(e) REQUEST FOR INFORMATION.—For purposes of 

16 negotiating and, as applicable, renegotiating (including for 

17 purposes of determining whether to renegotiate) the max18 imum fair price of a selected drug under this part with 

19 the manufacturer of the drug, with respect to a price appli20 cability period, and other relevant data for purposes of this 

21 section— 

22 ‘‘(1) the Secretary shall, not later than the se23 lected drug publication date with respect to the initial 

24 price applicability year of such period, request drug 

25 pricing information from the manufacturer of such 


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1 selected drug, including information described in sub2 section (d)(1); and 

3 ‘‘(2) by not later than October 1 following the se4 lected drug publication date, the manufacturer of such 

5 selected drug shall submit to the Secretary such re6 quested information in such form and manner as the 

7 Secretary may require. 

8 The Secretary shall request, from the manufacturer or oth9 ers, such additional information as may be needed to carry 

10 out the negotiation and renegotiation process under this sec11 tion. 

12 ‘‘SEC. 1195. PUBLICATION OF MAXIMUM FAIR PRICES. 

13 ‘‘(a) IN GENERAL.—With respect to an initial price 

14 applicability year and selected drug with respect to such 

15 year, not later than April 1 of the plan year prior to such 

16 initial price applicability year, the Secretary shall publish 

17 in the Federal Register the maximum fair price for such 

18 drug negotiated under this part with the manufacturer of 

19 such drug. 

20 ‘‘(b) UPDATES.— 

21 ‘‘(1) SUBSEQUENT YEAR MAXIMUM FAIR

22 PRICES.—For a selected drug, for each plan year sub23 sequent to the initial price applicability year for such 

24 drug with respect to which an agreement for such 


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1 drug is in effect under section 1193, the Secretary 

2 shall publish in the Federal Register— 

3 ‘‘(A) subject to subparagraph (B), the 

4 amount equal to the maximum fair price pub5 lished for such drug for the previous year, in6 creased by the annual percentage increase in the 

7 consumer price index for all urban consumers 

8 (all items; U.S. city average) as of September of 

9 such previous year; or 

10 ‘‘(B) in the case the maximum fair price for 

11 such drug was renegotiated, for the first year for 

12 which such price as so renegotiated applies, such 

13 renegotiated maximum fair price. 

14 ‘‘(2) PRICES NEGOTIATED AFTER DEADLINE.—In 

15 the case of a selected drug with respect to an initial 

16 price applicability year for which the maximum fair 

17 price is determined under this part after the date of 

18 publication under this section, the Secretary shall 

19 publish such maximum fair price in the Federal Reg20 ister by not later than 30 days after the date such 

21 maximum price is so determined. 

22 ‘‘SEC. 1196. ADMINISTRATIVE DUTIES; COORDINATION PRO23 VISIONS. 

24 ‘‘(a) ADMINISTRATIVE DUTIES.— 


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1 ‘‘(1) IN GENERAL.—For purposes of section 1191, 

2 the administrative duties described in this section are 

3 the following: 

4 ‘‘(A) The establishment of procedures (in5 cluding through agreements with manufacturers 

6 under this part, contracts with prescription drug 

7 plans under part D of title XVIII and MA–PD 

8 plans under part C of such title, and agreements 

9 under section 1197 with group health plans and 

10 health insurance issuers of health insurance cov11 erage offered in the individual or group market) 

12 under which the maximum fair price for a se13 lected drug is provided to fair price eligible indi14 viduals, who with respect to such drug are de15 scribed in subparagraph (A) of section 

16 1191(c)(1), at pharmacies or by mail order serv17 ice at the point-of-sale of the drug for the appli18 cable price period for such drug and providing 

19 that such maximum fair price is used for deter20 mining cost-sharing under such plans or cov21 erage for the selected drug. 

22 ‘‘(B) The establishment of procedures (in23 cluding through agreements with manufacturers 

24 under this part and contracts with hospitals, 

25 physicians, and other providers of services and 


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1 suppliers and agreements under section 1197 

2 with group health plans and health insurance 

3 issuers of health insurance coverage offered in the 

4 individual or group market) under which, in the 

5 case of a selected drug furnished or administered 

6 by such a hospital, physician, or other provider 

7 of services or supplier to fair price eligible indi8 viduals (who with respect to such drug are de9 scribed in subparagraph (B) of section 

10 1191(c)(1)), the maximum fair price for the se11 lected drug is provided to such hospitals, physi12 cians, and other providers of services and sup13 pliers (as applicable) with respect to such indi14 viduals and providing that such maximum fair 

15 price is used for determining cost-sharing under 

16 the respective part, plan, or coverage for the se17 lected drug. 

18 ‘‘(C) The establishment of procedures (in19 cluding through agreements and contracts de20 scribed in subparagraphs (A) and (B)) to ensure 

21 that, not later than 90 days after the dispensing 

22 of a selected drug to a fair price eligible indi23 vidual by a pharmacy or mail order service, the 

24 pharmacy or mail order service is reimbursed for 

25 an amount equal to the difference between— 


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1 ‘‘(i) the lesser of— 

2 ‘‘(I) the wholesale acquisition cost 

3 of the drug; 

4 ‘‘(II) the national average drug 

5 acquisition cost of the drug; and 

6 ‘‘(III) any other similar deter7 mination of pharmacy acquisition 

8 costs of the drug, as determined by the 

9 Secretary; and 

10 ‘‘(ii) the maximum fair price for the 

11 drug. 

12 ‘‘(D) The establishment of procedures to en13 sure that the maximum fair price for a selected 

14 drug is applied before— 

15 ‘‘(i) any coverage or financial assist16 ance under other health benefit plans or 

17 programs that provide coverage or financial 

18 assistance for the purchase or provision of 

19 prescription drug coverage on behalf of fair 

20 price eligible individuals as the Secretary 

21 may specify; and 

22 ‘‘(ii) any other discounts. 

23 ‘‘(E) The establishment of procedures to 

24 enter into appropriate agreements and protocols 

25 for the ongoing computation of AIM prices for 


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1 selected drugs, including, to the extent possible, 

2 to compute the AIM price for selected drugs and 

3 including by providing that the manufacturer of 

4 such a selected drug should provide information 

5 for such computation not later than 3 months 

6 after the first date of the voluntary negotiation 

7 period for such selected drug. 

8 ‘‘(F) The establishment of procedures to 

9 compute and apply the maximum fair price 

10 across different strengths and dosage forms of a 

11 selected drug and not based on the specific for12 mulation or package size or package type of the 

13 drug. 

14 ‘‘(G) The establishment of procedures to ne15 gotiate and apply the maximum fair price in a 

16 manner that does not include any dispensing or 

17 similar fee. 

18 ‘‘(H) The establishment of procedures to 

19 carry out the provisions of this part, as applica20 ble, with respect to— 

21 ‘‘(i) fair price eligible individuals who 

22 are enrolled under a prescription drug plan 

23 under part D of title XVIII or an MA–PD 

24 plan under part C of such title; 


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1 ‘‘(ii) fair price eligible individuals who 

2 are enrolled under a group health plan or 

3 health insurance coverage offered by a 

4 health insurance issuer in the individual or 

5 group market with respect to which there is 

6 an agreement in effect under section 1197; 

7 and 

8 ‘‘(iii) fair price eligible individuals 

9 who are entitled to benefits under part A of 

10 title XVIII or enrolled under part B of such 

11 title. 

12 ‘‘(I) The establishment of a negotiation 

13 process and renegotiation process in accordance 

14 with section 1194, including a process for ac15 quiring information described in subsection (d) 

16 of such section and determining amounts de17 scribed in subsection (b) of such section. 

18 ‘‘(J) The provision of a reasonable dispute 

19 resolution mechanism to resolve disagreements 

20 between manufacturers, fair price eligible indi21 viduals, and the third party with a contract 

22 under subsection (c)(1). 

23 ‘‘(2) MONITORING COMPLIANCE.— 

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

25 monitor compliance by a manufacturer with the 


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1 terms of an agreement under section 1193, in2 cluding by establishing a mechanism through 

3 which violations of such terms may be reported. 

4 ‘‘(B) NOTIFICATION.—If a third party with 

5 a contract under subsection (c)(1) determines 

6 that the manufacturer is not in compliance with 

7 such agreement, the third party shall notify the 

8 Secretary of such noncompliance for appropriate 

9 enforcement under section 4192 of the Internal 

10 Revenue Code of 1986 or section 1198, as appli11 cable. 

12 ‘‘(b) COLLECTION OF DATA.— 

13 ‘‘(1) FROM PRESCRIPTION DRUG PLANS AND MA– 

14 PD PLANS.—The Secretary may collect appropriate 

15 data from prescription drug plans under part D of 

16 title XVIII and MA–PD plans under part C of such 

17 title in a timeframe that allows for maximum fair 

18 prices to be provided under this part for selected 

19 drugs. 

20 ‘‘(2) FROM HEALTH PLANS.—The Secretary may 

21 collect appropriate data from group health plans or 

22 health insurance issuers offering group or individual 

23 health insurance coverage in a timeframe that allows 

24 for maximum fair prices to be provided under this 

25 part for selected drugs. 


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1 ‘‘(c) CONTRACT WITH THIRD PARTIES.— 

2 ‘‘(1) IN GENERAL.—The Secretary may enter 

3 into a contract with 1 or more third parties to ad4 minister the requirements established by the Secretary 

5 in order to carry out this part. At a minimum, the 

6 contract with a third party under the preceding sen7 tence shall require that the third party— 

8 ‘‘(A) receive and transmit information be9 tween the Secretary, manufacturers, and other 

10 individuals or entities the Secretary determines 

11 appropriate; 

12 ‘‘(B) receive, distribute, or facilitate the dis13 tribution of funds of manufacturers to appro14 priate individuals or entities in order to meet 

15 the obligations of manufacturers under agree16 ments under this part; 

17 ‘‘(C) provide adequate and timely informa18 tion to manufacturers, consistent with the agree19 ment with the manufacturer under this part, as 

20 necessary for the manufacturer to fulfill its obli21 gations under this part; and 

22 ‘‘(D) permit manufacturers to conduct peri23 odic audits, directly or through contracts, of the 

24 data and information used by the third party to 


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1 determine discounts for applicable drugs of the 

2 manufacturer under the program. 

3 ‘‘(2) PERFORMANCE REQUIREMENTS.—The Sec4 retary shall establish performance requirements for a 

5 third party with a contract under paragraph (1) and 

6 safeguards to protect the independence and integrity 

7 of the activities carried out by the third party under 

8 the program under this part. 

9 ‘‘SEC. 1197. VOLUNTARY PARTICIPATION BY OTHER HEALTH 

10 PLANS. 

11 ‘‘(a) AGREEMENT TO PARTICIPATE UNDER PRO12 GRAM.— 

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

14 under the program under this part the Secretary shall 

15 be treated as having in effect an agreement with a 

16 group health plan or health insurance issuer offering 

17 health insurance coverage (as such terms are defined 

18 in section 2791 of the Public Health Service Act), 

19 with respect to a price applicability period and a se20 lected drug with respect to such period— 

21 ‘‘(A) with respect to such selected drug fur22 nished or dispensed at a pharmacy or by mail 

23 order service if coverage is provided under such 

24 plan or coverage during such period for such se25 lected drug as so furnished or dispensed; and 


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1 ‘‘(B) with respect to such selected drug fur2 nished or administered by a hospital, physician, 

3 or other provider of services or supplier if cov4 erage is provided under such plan or coverage 

5 during such period for such selected drug as so 

6 furnished or administered. 

7 ‘‘(2) OPTING OUT OF AGREEMENT.—The Sec8 retary shall not be treated as having in effect an 

9 agreement under the program under this part with a 

10 group health plan or health insurance issuer offering 

11 health insurance coverage with respect to a price ap12 plicability period and a selected drug with respect to 

13 such period if such a plan or issuer affirmatively 

14 elects, through a process specified by the Secretary, 

15 not to participate under the program with respect to 

16 such period and drug. 

17 ‘‘(b) PUBLICATION OF ELECTION.—With respect to 

18 each price applicability period and each selected drug with 

19 respect to such period, the Secretary and the Secretary of 

20 Labor and the Secretary of the Treasury, as applicable, 

21 shall make public a list of each group health plan and each 

22 issuer of health insurance coverage, with respect to which 

23 coverage is provided under such plan or coverage for such 

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1 pate under the program with respect to such period and 

2 drug. 

3 ‘‘SEC. 1198. CIVIL MONETARY PENALTY. 

4 ‘‘(a) VIOLATIONS RELATING TO OFFERING OF MAX5 IMUM FAIR PRICE.—Any manufacturer of a selected drug 

6 that has entered into an agreement under section 1193, with 

7 respect to a plan year during the price applicability period 

8 for such drug, that does not provide access to a price that 

9 is not more than the maximum fair price (or a lesser price) 

10 for such drug for such year— 

11 ‘‘(1) to a fair price eligible individual who with 

12 respect to such drug is described in subparagraph (A) 

13 of section 1191(c)(1) and who is furnished or dis14 pensed such drug during such year; or 

15 ‘‘(2) to a hospital, physician, or other provider 

16 of services or supplier with respect to fair price eligi17 ble individuals who with respect to such drug is de18 scribed in subparagraph (B) of such section and is 

19 furnished or administered such drug by such hospital, 

20 physician, or provider or supplier during such year; 

21 shall be subject to a civil monetary penalty equal to ten 

22 times the amount equal to the difference between the price 

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1 cian, provider, or supplier and the maximum fair price for 

2 such drug for such year. 

3 ‘‘(b) VIOLATIONS OF CERTAIN TERMS OF AGREE4 MENT.—Any manufacturer of a selected drug that has en5 tered into an agreement under section 1193, with respect 

6 to a plan year during the price applicability period for 

7 such drug, that is in violation of a requirement imposed 

8 pursuant to section 1193(a)(6) shall be subject to a civil 

9 monetary penalty of not more than $1,000,000 for each such 

10 violation. 

11 ‘‘(c) APPLICATION.—The provisions of section 1128A 

12 (other than subsections (a) and (b)) shall apply to a civil 

13 monetary penalty under this section in the same manner 

14 as such provisions apply to a penalty or proceeding under 

15 section 1128A(a). 

16 ‘‘SEC. 1199. MISCELLANEOUS PROVISIONS. 

17 ‘‘(a) PAPERWORK REDUCTION ACT.—Chapter 35 of 

18 title 44, United States Code, shall not apply to data col19 lected under this part. 

20 ‘‘(b) NATIONAL ACADEMY OF MEDICINE STUDY.—Not 

21 later than December 31, 2025, the National Academy of 

22 Medicine shall conduct a study, and submit to Congress a 

23 report, on recommendations for improvements to the pro24 gram under this part, including the determination of the 

25 limits applied under section 1194(c). 


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1 ‘‘(c) MEDPAC STUDY.—Not later than December 31, 

2 2025, the Medicare Payment Advisory Commission shall 

3 conduct a study, and submit to Congress a report, on the 

4 program under this part with respect to the Medicare pro5 gram under title XVIII, including with respect to the effect 

6 of the program on individuals entitled to benefits or enrolled 

7 under such title. 

8 ‘‘(d) LIMITATION ON JUDICIAL REVIEW.—The fol9 lowing shall not be subject to judicial review: 

10 ‘‘(1) The selection of drugs for publication under 

11 section 1192(a). 

12 ‘‘(2) The determination of whether a drug is a 

13 negotiation-eligible drug under section 1192(d). 

14 ‘‘(3) The determination of the maximum fair 

15 price of a selected drug under section 1194. 

16 ‘‘(4) The determination of units of a drug for 

17 purposes of section 1191(c)(3). 

18 ‘‘(e) COORDINATION.—In carrying out this part with 

19 respect to group health plans or health insurance coverage 

20 offered in the group market that are subject to oversight by 

21 the Secretary of Labor or the Secretary of the Treasury, 

22 the Secretary of Health and Human Services shall coordi23 nate with such respective Secretary. 

24 ‘‘(f) DATA SHARING.—The Secretary shall share with 

25 the Secretary of the Treasury such information as is necVerDate Sep 11 2014 23:24 Dec 09, 2019 Jkt 099200 PO 00000 Frm 00046 Fmt 6652 Sfmt 6203 E:\BILLS\H3.RH H3

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1 essary to determine the tax imposed by section 4192 of the 

2 Internal Revenue Code of 1986.’’. 

3 (b) APPLICATION OF MAXIMUM FAIR PRICES AND CON4 FORMING AMENDMENTS.— 

5 (1) UNDER MEDICARE.— 

6 (A) APPLICATION TO PAYMENTS UNDER

7 PART B.—Section 1847A(b)(1)(B) of the Social 

8 Security Act (42 U.S.C. 1395w–3a(b)(1)(B)) is 

9 amended by inserting ‘‘or in the case of such a 

10 drug or biological that is a selected drug (as de11 fined in section 1192(c)), with respect to a price 

12 applicability period (as defined in section 

13 1191(b)(2)), 106 percent of the maximum fair 

14 price (as defined in section 1191(c)(2) applicable 

15 for such drug and a plan year during such pe16 riod’’ after ‘‘paragraph (4)’’. 

17 (B) EXCEPTION TO PART D NON-INTER18 FERENCE.—Section 1860D–11(i) of the Social 

19 Security Act (42 U.S.C. 1395w–111(i)) is 

20 amended by inserting ‘‘, except as provided 

21 under part E of title XI’’ after ‘‘the Secretary’’. 

22 (C) APPLICATION AS NEGOTIATED PRICE

23 UNDER PART D.—Section 1860D–2(d)(1) of the 

24 Social Security Act (42 U.S.C. 1395w– 

25 102(d)(1)) is amended— 


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1 (i) in subparagraph (B), by inserting 

2 ‘‘, subject to subparagraph (D),’’ after ‘‘ne3 gotiated prices’’; and 

4 (ii) by adding at the end the following 

5 new subparagraph: 

6 ‘‘(D) APPLICATION OF MAXIMUM FAIR PRICE

7 FOR SELECTED DRUGS.—In applying this sec8 tion, in the case of a covered part D drug that 

9 is a selected drug (as defined in section 1192(c)), 

10 with respect to a price applicability period (as 

11 defined in section 1191(b)(2)), the negotiated 

12 prices used for payment (as described in this 

13 subsection) shall be the maximum fair price (as 

14 defined in section 1191(c)(2)) for such drug and 

15 for each plan year during such period.’’. 

16 (D) INFORMATION FROM PRESCRIPTION

17 DRUG PLANS AND MA–PD PLANS REQUIRED.— 

18 (i) PRESCRIPTION DRUG PLANS.—Sec19 tion 1860D–12(b) of the Social Security Act 

20 (42 U.S.C. 1395w–112(b)) is amended by 

21 adding at the end the following new para22 graph: 

23 ‘‘(8) PROVISION OF INFORMATION RELATED TO

24 MAXIMUM FAIR PRICES.—Each contract entered into 

25 with a PDP sponsor under this part with respect to 


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1 a prescription drug plan offered by such sponsor shall 

2 require the sponsor to provide information to the Sec3 retary as requested by the Secretary in accordance 

4 with section 1196(b).’’. 

5 (ii) MA–PD PLANS.—Section 

6 1857(f)(3) of the Social Security Act (42 

7 U.S.C. 1395w–27(f)(3)) is amended by add8 ing at the end the following new subpara9 graph: 

10 ‘‘(E) PROVISION OF INFORMATION RELATED

11 TO MAXIMUM FAIR PRICES.—Section 1860D– 

12 12(b)(8).’’. 

13 (2) UNDER GROUP HEALTH PLANS AND HEALTH

14 INSURANCE COVERAGE.— 

15 (A) PHSA.—Part A of title XXVII of the 

16 Public Health Service Act is amended by insert17 ing after section 2729 the following new section: 

18 ‘‘SEC. 2729A. FAIR PRICE DRUG NEGOTIATION PROGRAM 

19 AND APPLICATION OF MAXIMUM FAIR 

20 PRICES. 

21 ‘‘(a) IN GENERAL.—In the case of a group health plan 

22 or health insurance issuer offering health insurance cov23 erage that is treated under section 1197 of the Social Secu24 rity Act as having in effect an agreement with the Secretary 

25 under the Fair Price Drug Negotiation Program under part 


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1 E of title XI of such Act, with respect to a price applica2 bility period (as defined in section 1191(b) of such Act) and 

3 a selected drug (as defined in section 1192(c) of such Act) 

4 with respect to such period with respect to which coverage 

5 is provided under such plan or coverage— 

6 ‘‘(1) the provisions of such part shall apply— 

7 ‘‘(A) if coverage of such selected drug is pro8 vided under such plan or coverage if the drug is 

9 furnished or dispensed at a pharmacy or by a 

10 mail order service, to the plans or coverage of11 fered by such plan or issuer, and to the individ12 uals enrolled under such plans or coverage, dur13 ing such period, with respect to such selected 

14 drug, in the same manner as such provisions 

15 apply to prescription drug plans and MA–PD 

16 plans, and to individuals enrolled under such 

17 prescription drug plans and MA–PD plans dur18 ing such period; and 

19 ‘‘(B) if coverage of such selected drug is pro20 vided under such plan or coverage if the drug is 

21 furnished or administered by a hospital, physi22 cian, or other provider of services or supplier, to 

23 the plans or coverage offered by such plan or 

24 issuers, to the individuals enrolled under such 

25 plans or coverage, and to hospitals, physicians, 


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1 and other providers of services and suppliers 

2 during such period, with respect to such drug in 

3 the same manner as such provisions apply to the 

4 Secretary, to individuals entitled to benefits 

5 under part A of title XVIII or enrolled under 

6 part B of such title, and to hospitals, physicians, 

7 and other providers and suppliers participating 

8 under title XVIII during such period; 

9 ‘‘(2) the plan or issuer shall apply any cost-shar10 ing responsibilities under such plan or coverage, with 

11 respect to such selected drug, by substituting an 

12 amount not more than the maximum fair price nego13 tiated under such part E of title XI for such drug in 

14 lieu of the drug price upon which the cost-sharing 

15 would have otherwise applied; and 

16 ‘‘(3) the Secretary shall apply the provisions of 

17 such part E to such plan, issuer, and coverage, such 

18 individuals so enrolled in such plans and coverage, 

19 and such hospitals, physicians, and other providers 

20 and suppliers participating in such plans and cov21 erage. 

22 ‘‘(b) NOTIFICATION REGARDING NONPARTICIPATION IN

23 FAIR DRUG PRICE NEGOTIATION PROGRAM.—A group 

24 health plan or a health insurance issuer offering group or 

25 individual health insurance coverage shall publicly disclose 


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1 in a manner and in accordance with a process specified 

2 by the Secretary any election made under section 1197 of 

3 the Social Security Act by the plan or issuer to not partici4 pate in the Fair Drug Price Negotiation Program under 

5 part E of title XI of such Act with respect to a selected 

6 drug (as defined in section 1192(c) of such Act) for which 

7 coverage is provided under such plan or coverage before the 

8 beginning of the plan year for which such election was 

9 made.’’. 

10 (B) ERISA.— 

11 (i) IN GENERAL.—Subpart B of part 7 

12 of subtitle B of title I of the Employee Re13 tirement Income Security Act of 1974 (29 

14 U.S.C. 1181 et. seq.) is amended by adding 

15 at the end the following new section: 

16 ‘‘SEC. 716. FAIR PRICE DRUG NEGOTIATION PROGRAM AND 

17 APPLICATION OF MAXIMUM FAIR PRICES. 

18 ‘‘(a) IN GENERAL.—In the case of a group health plan 

19 or health insurance issuer offering group health insurance 

20 coverage that is treated under section 1197 of the Social 

21 Security Act as having in effect an agreement with the Sec22 retary under the Fair Price Drug Negotiation Program 

23 under part E of title XI of such Act, with respect to a price 

24 applicability period (as defined in section 1191(b) of such 

25 Act) and a selected drug (as defined in section 1192(c) of 


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1 such Act) with respect to such period with respect to which 

2 coverage is provided under such plan or coverage— 

3 ‘‘(1) the provisions of such part shall apply to 

4 the plans or coverage offered by such plan or issuer, 

5 and to the individuals enrolled under such plans or 

6 coverage, during such period, with respect to such se7 lected drug, in the same manner as such provisions 

8 apply to prescription drug plans and MA–PD plans, 

9 and to individuals enrolled under such prescription 

10 drug plans and MA–PD plans; 

11 ‘‘(2) the plan or issuer shall apply any cost-shar12 ing responsibilities under such plan or coverage, with 

13 respect to such selected drug, by substituting the max14 imum fair price negotiated under such part for such 

15 drug in lieu of the contracted rate under such plan 

16 or coverage for such selected drug; and 

17 ‘‘(3) the Secretary shall apply the provisions of 

18 such part to such plan, issuer, and coverage, and such 

19 individuals so enrolled in such plans. 

20 ‘‘(b) NOTIFICATION REGARDING NONPARTICIPATION IN

21 FAIR DRUG PRICE NEGOTIATION PROGRAM.—A group 

22 health plan or a health insurance issuer offering group 

23 health insurance coverage shall publicly disclose in a man24 ner and in accordance with a process specified by the Sec25 retary any election made under section 1197 of the Social 


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1 Security Act by the plan or issuer to not participate in 

2 the Fair Drug Price Negotiation Program under part E 

3 of title XI of such Act with respect to a selected drug (as 

4 defined in section 1192(c) of such Act) for which coverage 

5 is provided under such plan or coverage before the begin6 ning of the plan year for which such election was made.’’. 

7 (ii) CLERICAL AMENDMENT.—The table 

8 of sections for subpart B of part 7 of sub9 title B of title I of the Employee Retirement 

10 Income Security Act of 1974 is amended by 

11 adding at the end the following: 

‘‘Sec. 716. Fair Price Drug Negotiation Program and application of maximum 

fair prices.’’. 

12 (C) IRC.— 

13 (i) IN GENERAL.—Subchapter B of 

14 chapter 100 of the Internal Revenue Code of 

15 1986 is amended by adding at the end the 

16 following new section: 

17 ‘‘SEC. 9816. FAIR PRICE DRUG NEGOTIATION PROGRAM AND 

18 APPLICATION OF MAXIMUM FAIR PRICES. 

19 ‘‘(a) IN GENERAL.—In the case of a group health plan 

20 that is treated under section 1197 of the Social Security 

21 Act as having in effect an agreement with the Secretary 

22 under the Fair Price Drug Negotiation Program under part 

23 E of title XI of such Act, with respect to a price applica24 bility period (as defined in section 1191(b) of such Act) and 


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1 a selected drug (as defined in section 1192(c) of such Act) 

2 with respect to such period with respect to which coverage 

3 is provided under such plan— 

4 ‘‘(1) the provisions of such part shall apply to 

5 the plans offered by such plan, and to the individuals 

6 enrolled under such plans, during such period, with 

7 respect to such selected drug, in the same manner as 

8 such provisions apply to prescription drug plans and 

9 MA–PD plans, and to individuals enrolled under 

10 such prescription drug plans and MA–PD plans; 

11 ‘‘(2) the plan shall apply any cost-sharing re12 sponsibilities under such plan, with respect to such 

13 selected drug, by substituting the maximum fair price 

14 negotiated under such part for such drug in lieu of 

15 the contracted rate under such plan for such selected 

16 drug; and 

17 ‘‘(3) the Secretary shall apply the provisions of 

18 such part to such plan and such individuals so en19 rolled in such plan. 

20 ‘‘(b) NOTIFICATION REGARDING NONPARTICIPATION IN

21 FAIR DRUG PRICE NEGOTIATION PROGRAM.—A group 

22 health plan shall publicly disclose in a manner and in ac23 cordance with a process specified by the Secretary any elec24 tion made under section 1197 of the Social Security Act 

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1 tiation Program under part E of title XI of such Act with 

2 respect to a selected drug (as defined in section 1192(c) of 

3 such Act) for which coverage is provided under such plan 

4 before the beginning of the plan year for which such election 

5 was made.’’. 

6 (ii) CLERICAL AMENDMENT.—The table 

7 of sections for subchapter B of chapter 100 

8 of such Code is amended by adding at the 

9 end the following new item: 

‘‘Sec. 9816. Fair Price Drug Negotiation Program and application of maximum 

fair prices.’’. 

10 SEC. 102. SELECTED DRUG MANUFACTURER EXCISE TAX IM11 POSED DURING NONCOMPLIANCE PERIODS. 

12 (a) IN GENERAL.—Subchapter E of chapter 32 of the 

13 Internal Revenue Code of 1986 is amended by adding at 

14 the end the following new section: 

15 ‘‘SEC. 4192. SELECTED DRUGS DURING NONCOMPLIANCE 

16 PERIODS. 

17 ‘‘(a) IN GENERAL.—There is hereby imposed on the 

18 sale by the manufacturer, producer, or importer of any se19 lected drug during a day described in subsection (b) a tax 

20 in an amount such that the applicable percentage is equal 

21 to the ratio of— 

22 ‘‘(1) such tax, divided by 

23 ‘‘(2) the sum of such tax and the price for which 

24 so sold. 


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1 ‘‘(b) NONCOMPLIANCE PERIODS.—A day is described 

2 in this subsection with respect to a selected drug if it is 

3 a day during one of the following periods: 

4 ‘‘(1) The period beginning on the June 16th im5 mediately following the selected drug publication date 

6 and ending on the first date during which the manu7 facturer of the drug has in place an agreement de8 scribed in subsection (a) of section 1193 of the Social 

9 Security Act with respect to such drug. 

10 ‘‘(2) The period beginning on the April 1st im11 mediately following the June 16th described in para12 graph (1) and ending on the first date during which 

13 the manufacturer of the drug has agreed to a max14 imum fair price under such agreement. 

15 ‘‘(3) In the case of a selected drug with respect 

16 to which the Secretary of Health and Human Services 

17 has specified a renegotiation period under such agree18 ment, the period beginning on the first date after the 

19 last date of such renegotiation period and ending on 

20 the first date during which the manufacturer of the 

21 drug has agreed to a renegotiated maximum fair 

22 price under such agreement. 

23 ‘‘(4) With respect to information that is required 

24 to be submitted to the Secretary of Health and 

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1 ginning on the date on which such Secretary certifies 

2 that such information is overdue and ending on the 

3 date that such information is so submitted. 

4 ‘‘(5) In the case of a selected drug with respect 

5 to which a payment is due under subsection (c) of 

6 such section 1193, the period beginning on the date 

7 on which the Secretary of Health and Human Serv8 ices certifies that such payment is overdue and ending 

9 on the date that such payment is made in full. 

10 ‘‘(c) APPLICABLE PERCENTAGE.—The term ‘applicable 

11 percentage’ means— 

12 ‘‘(1) in the case of sales of a selected drug during 

13 the first 90 days described in subsection (b) with re14 spect to such drug, 65 percent, 

15 ‘‘(2) in the case of sales of such drug during the 

16 91st day through the 180th day described in sub17 section (b) with respect to such drug, 75 percent, 

18 ‘‘(3) in the case of sales of such drug during the 

19 181st day through the 270th day described in sub20 section (b) with respect to such drug, 85 percent, and 

21 ‘‘(4) in the case of sales of such drug during any 

22 subsequent day, 95 percent. 

23 ‘‘(d) DEFINITIONS.—The terms ‘selected drug publica24 tion date’ and ‘maximum fair price’ have the meaning 

25 given such terms in section 1191 of the Social Security Act 


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1 and the term ‘selected drug’ has the meaning given such 

2 term in section 1192 of such Act. 

3 ‘‘(e) ANTI-ABUSE RULE.—In the case of a sale which 

4 was timed for the purpose of avoiding the tax imposed by 

5 this section, the Secretary may treat such sale as occurring 

6 during a day described in subsection (b).’’. 

7 (b) NO DEDUCTION FOR EXCISE TAX PAYMENTS.— 

8 Section 275 of the Internal Revenue Code of 1986 is amend9 ed by adding ‘‘or by section 4192’’ before the period at the 

10 end of subsection (a)(6). 

11 (c) CONFORMING AMENDMENTS.— 

12 (1) Section 4221(a) of the Internal Revenue Code 

13 of 1986 is amended by inserting ‘‘or 4192’’ after ‘‘sec14 tion 4191’’. 

15 (2) Section 6416(b)(2) of such Code is amended 

16 by inserting ‘‘or 4192’’ after ‘‘section 4191’’. 

17 (d) CLERICAL AMENDMENTS.— 

18 (1) The heading of subchapter E of chapter 32 

19 of the Internal Revenue Code of 1986 is amended by 

20 striking ‘‘Medical Devices’’ and inserting 

21 ‘‘Other Medical Products’’. 

22 (2) The table of subchapters for chapter 32 of 

23 such Code is amended by striking the item relating to 

24 subchapter E and inserting the following new item: 


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‘‘SUBCHAPTER E. OTHER MEDICAL PRODUCTS’’. 

1 (3) The table of sections for subchapter E of 

2 chapter 32 of such Code is amended by adding at the 

3 end the following new item: 

‘‘Sec. 4192. Selected drugs during noncompliance periods.’’. 

4 (e) EFFECTIVE DATE.—The amendments made by this 

5 section shall apply to sales after the date of the enactment 

6 of this Act. 

7 TITLE II—MEDICARE PARTS B 

8 AND D PRESCRIPTION DRUG 

9 INFLATION REBATES 

10 SEC. 201. MEDICARE PART B REBATE BY MANUFACTURERS. 

11 (a) IN GENERAL.—Section 1834 of the Social Security 

12 Act (42 U.S.C. 1395m) is amended by adding at the end 

13 the following new subsection: 

14 ‘‘(x) REBATE BY MANUFACTURERS FOR SINGLE

15 SOURCE DRUGS WITH PRICES INCREASING FASTER THAN

16 INFLATION.— 

17 ‘‘(1) REQUIREMENTS.— 

18 ‘‘(A) SECRETARIAL PROVISION OF INFORMA19 TION.—Not later than 6 months after the end of 

20 each calendar quarter beginning on or after July 

21 1, 2021, the Secretary shall, for each part B 

22 rebatable drug, report to each manufacturer of 

23 such part B rebatable drug the following for such 

24 calendar quarter: 


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1 ‘‘(i) Information on the total number 

2 of units of the billing and payment code de3 scribed in subparagraph (A)(i) of para4 graph (3) with respect to such drug and cal5 endar quarter. 

6 ‘‘(ii) Information on the amount (if 

7 any) of the excess average sales price in8 crease described in subparagraph (A)(ii) of 

9 such paragraph for such drug and calendar 

10 quarter. 

11 ‘‘(iii) The rebate amount specified 

12 under such paragraph for such part B 

13 rebatable drug and calendar quarter. 

14 ‘‘(B) MANUFACTURER REQUIREMENT.—For 

15 each calendar quarter beginning on or after July 

16 1, 2021, the manufacturer of a part B rebatable 

17 drug shall, for such drug, not later than 30 days 

18 after the date of receipt from the Secretary of the 

19 information described in subparagraph (A) for 

20 such calendar quarter, provide to the Secretary 

21 a rebate that is equal to the amount specified in 

22 paragraph (3) for such drug for such calendar 

23 quarter. 

24 ‘‘(2) PART B REBATABLE DRUG DEFINED.— 


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1 ‘‘(A) IN GENERAL.—In this subsection, the 

2 term ‘part B rebatable drug’ means a single 

3 source drug or biological (as defined in subpara4 graph (D) of section 1847A(c)(6)), including a 

5 biosimilar biological product (as defined in sub6 paragraph (H) of such section), paid for under 

7 this part, except such term shall not include such 

8 a drug or biological— 

9 ‘‘(i) if the average total allowed charges 

10 for a year per individual that uses such a 

11 drug or biological, as determined by the 

12 Secretary, are less than, subject to subpara13 graph (B), $100; or 

14 ‘‘(ii) that is a vaccine described in sub15 paragraph (A) or (B) of section 1861(s)(10). 

16 ‘‘(B) INCREASE.—The dollar amount ap17 plied under subparagraph (A)(i)— 

18 ‘‘(i) for 2022, shall be the dollar 

19 amount specified under such subparagraph 

20 for 2021, increased by the percentage in21 crease in the consumer price index for all 

22 urban consumers (United States city aver23 age) for the 12 month period ending with 

24 June of the previous year; and 


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1 ‘‘(ii) for a subsequent year, shall be the 

2 dollar amount specified in this clause (or 

3 clause (i)) for the previous year, increased 

4 by the percentage increase in the consumer 

5 price index for all urban consumers (United 

6 States city average) for the 12 month period 

7 ending with June of the previous year. 

8 Any dollar amount specified under this subpara9 graph that is not a multiple of $10 shall be 

10 rounded to the nearest multiple of $10. 

11 ‘‘(3) REBATE AMOUNT.— 

12 ‘‘(A) IN GENERAL.—For purposes of para13 graph (1), the amount specified in this para14 graph for a part B rebatable drug assigned to a 

15 billing and payment code for a calendar quarter 

16 is, subject to paragraph (4), the amount equal to 

17 the product of— 

18 ‘‘(i) subject to subparagraph (B), the 

19 total number of units of the billing and 

20 payment code for such part B rebatable 

21 drug furnished under this part during the 

22 calendar quarter; and 

23 ‘‘(ii) the amount (if any) by which— 

24 ‘‘(I) the payment amount under 

25 subparagraph (B) or (C) of section 


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1 1847A(b)(1), as applicable, for such 

2 part B rebatable drug during the cal3 endar quarter; exceeds 

4 ‘‘(II) the inflation-adjusted pay5 ment amount determined under sub6 paragraph (C) for such part B 

7 rebatable drug during the calendar 

8 quarter. 

9 ‘‘(B) EXCLUDED UNITS.—For purposes of 

10 subparagraph (A)(i), the total number of units of 

11 the billing and payment code for each part B 

12 rebatable drug furnished during a calendar 

13 quarter shall not include— 

14 ‘‘(i) units packaged into the payment 

15 for a procedure or service under section 

16 1833(t) or under section 1833(i) (instead of 

17 separately payable under such respective 

18 section); 

19 ‘‘(ii) units included under the single 

20 payment system for renal dialysis services 

21 under section 1881(b)(14); or 

22 ‘‘(iii) units of a part B rebatable drug 

23 of a manufacturer furnished to an indi24 vidual, if such manufacturer, with respect 

25 to the furnishing of such units of such drug, 


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1 provides for discounts under section 340B of 

2 the Public Health Service Act or for rebates 

3 under section 1927. 

4 ‘‘(C) DETERMINATION OF INFLATION-AD5 JUSTED PAYMENT AMOUNT.—The inflation-ad6 justed payment amount determined under this 

7 subparagraph for a part B rebatable drug for a 

8 calendar quarter is— 

9 ‘‘(i) the payment amount for the bill10 ing and payment code for such drug in the 

11 payment amount benchmark quarter (as de12 fined in subparagraph (D)); increased by 

13 ‘‘(ii) the percentage by which the rebate 

14 period CPI–U (as defined in subparagraph 

15 (F)) for the calendar quarter exceeds the 

16 benchmark period CPI–U (as defined in 

17 subparagraph (E)). 

18 ‘‘(D) PAYMENT AMOUNT BENCHMARK QUAR19 TER.—The term ‘payment amount benchmark 

20 quarter’ means the calendar quarter beginning 

21 January 1, 2016. 

22 ‘‘(E) BENCHMARK PERIOD CPI–U.—The 

23 term ‘benchmark period CPI–U’ means the con24 sumer price index for all urban consumers 

25 (United States city average) for July 2015. 


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1 ‘‘(F) REBATE PERIOD CPI–U.—The term 

2 ‘rebate period CPI–U’ means, with respect to a 

3 calendar quarter described in subparagraph (C), 

4 the greater of the benchmark period CPI–U and 

5 the consumer price index for all urban con6 sumers (United States city average) for the first 

7 month of the calendar quarter that is two cal8 endar quarters prior to such described calendar 

9 quarter. 

10 ‘‘(4) SPECIAL TREATMENT OF CERTAIN DRUGS

11 AND EXEMPTION.— 

12 ‘‘(A) SUBSEQUENTLY APPROVED DRUGS.— 

13 Subject to subparagraph (B), in the case of a 

14 part B rebatable drug first approved or licensed 

15 by the Food and Drug Administration after July 

16 1, 2015, clause (i) of paragraph (3)(C) shall be 

17 applied as if the term ‘payment amount bench18 mark quarter’ were defined under paragraph 

19 (3)(D) as the third full calendar quarter after the 

20 day on which the drug was first marketed and 

21 clause (ii) of paragraph (3)(C) shall be applied 

22 as if the term ‘benchmark period CPI–U’ were 

23 defined under paragraph (3)(E) as if the ref24 erence to ‘July 2015’ under such paragraph were 

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1 endar quarter after the day on which the drug 

2 was first marketed’. 

3 ‘‘(B) TIMELINE FOR PROVISION OF REBATES

4 FOR SUBSEQUENTLY APPROVED DRUGS.—In the 

5 case of a part B rebatable drug first approved or 

6 licensed by the Food and Drug Administration 

7 after July 1, 2015, paragraph (1)(B) shall be ap8 plied as if the reference to ‘July 1, 2021’ under 

9 such paragraph were a reference to the later of 

10 the 6th full calendar quarter after the day on 

11 which the drug was first marketed or July 1, 

12 2021. 

13 ‘‘(C) EXEMPTION FOR SHORTAGES.—The 

14 Secretary may reduce or waive the rebate 

15 amount under paragraph (1)(B) with respect to 

16 a part B rebatable drug that is described as cur17 rently in shortage on the shortage list in effect 

18 under section 506E of the Federal Food, Drug, 

19 and Cosmetic Act or in the case of other exigent 

20 circumstances, as determined by the Secretary. 

21 ‘‘(D) SELECTED DRUGS.—In the case of a 

22 part B rebatable drug that is a selected drug (as 

23 defined in section 1192(c)) for a price applica24 bility period (as defined in section 1191(b)(2)) 

25 and is determined (pursuant to such section 


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1 1192(c)) to no longer be a selected drug, for each 

2 applicable year beginning after the price appli3 cability period with respect to such drug, clause 

4 (i) of paragraph (3)(C) shall be applied as if the 

5 term ‘payment amount benchmark quarter’ were 

6 defined under paragraph (3)(D) as the calendar 

7 quarter beginning January 1 of the last year be8 ginning during such price applicability period 

9 with respect to such selected drug and clause (ii) 

10 of paragraph (3)(C) shall be applied as if the 

11 term ‘benchmark period CPI–U’ were defined 

12 under paragraph (3)(E) as if the reference to 

13 ‘July 2015’ under such paragraph were a ref14 erence to the July of the year preceding such last 

15 year. 

16 ‘‘(5) APPLICATION TO BENEFICIARY COINSUR17 ANCE.—In the case of a part B rebatable drug, if the 

18 payment amount for a quarter exceeds the inflation 

19 adjusted payment for such quarter— 

20 ‘‘(A) in computing the amount of any coin21 surance applicable under this title to an indi22 vidual with respect to such drug, the computa23 tion of such coinsurance shall be based on the in24 flation-adjusted payment amount determined 


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1 under paragraph (3)(C) for such part B 

2 rebatable drug; and 

3 ‘‘(B) the amount of such coinsurance is 

4 equal to 20 percent of such inflation-adjusted 

5 payment amount so determined. 

6 ‘‘(6) REBATE DEPOSITS.—Amounts paid as re7 bates under paragraph (1)(B) shall be deposited into 

8 the Federal Supplementary Medical Insurance Trust 

9 Fund established under section 1841. 

10 ‘‘(7) CIVIL MONEY PENALTY.—If a manufacturer 

11 of a part B rebatable drug has failed to comply with 

12 the requirements under paragraph (1)(B) for such 

13 drug for a calendar quarter, the manufacturer shall 

14 be subject to, in accordance with a process established 

15 by the Secretary pursuant to regulations, a civil 

16 money penalty in an amount equal to at least 125 

17 percent of the amount specified in paragraph (3) for 

18 such drug for such calendar quarter. The provisions 

19 of section 1128A (other than subsections (a) (with re20 spect to amounts of penalties or additional assess21 ments) and (b)) shall apply to a civil money penalty 

22 under this paragraph in the same manner as such 

23 provisions apply to a penalty or proceeding under 

24 section 1128A(a). 

25 ‘‘(8) STUDY AND REPORT.— 


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1 ‘‘(A) STUDY.—The Secretary shall conduct 

2 a study of the feasibility of and operational 

3 issues involved with the following: 

4 ‘‘(i) Including multiple source drugs 

5 (as defined in section 1847A(c)(6)(C)) in 

6 the rebate system under this subsection. 

7 ‘‘(ii) Including drugs and biologicals 

8 paid for under MA plans under part C in 

9 the rebate system under this subsection. 

10 ‘‘(iii) Including drugs excluded under 

11 paragraph (2)(A) and units of the billing 

12 and payment code of the drugs excluded 

13 under paragraph (3)(B) in the rebate sys14 tem under this subsection. 

15 ‘‘(B) REPORT.—Not later than 3 years after 

16 the date of the enactment of this subsection, the 

17 Secretary shall submit to Congress a report on 

18 the study conducted under subparagraph (A). 

19 ‘‘(9) APPLICATION TO MULTIPLE SOURCE

20 DRUGS.—The Secretary may, based on the report sub21 mitted under paragraph (8) and pursuant to rule22 making, apply the provisions of this subsection to 

23 multiple source drugs (as defined in section 

24 1847A(c)(6)(C)), including, for purposes of deter25 mining the rebate amount under paragraph (3), by 


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1 calculating manufacturer-specific average sales prices 

2 for the benchmark period and the rebate period.’’. 

3 (b) AMOUNTS PAYABLE; COST-SHARING.—Section 

4 1833 of the Social Security Act (42 U.S.C. 1395l) is amend5 ed— 

6 (1) in subsection (a)— 

7 (A) in paragraph (1)— 

8 (i) in subparagraph (S), by striking 

9 ‘‘with respect to’’ and inserting ‘‘subject to 

10 subparagraph (DD), with respect to’’; 

11 (ii) by striking ‘‘and (CC)’’ and insert12 ing ‘‘(CC)’’; and 

13 (iii) by inserting before the semicolon 

14 at the end the following: ‘‘, and (DD) with 

15 respect to a part B rebatable drug (as de16 fined in paragraph (2) of section 1834(x)) 

17 for which the payment amount for a cal18 endar quarter under paragraph 

19 (3)(A)(ii)(I) of such section for such quarter 

20 exceeds the inflation adjusted payment 

21 under paragraph (3)(A)(ii)(II) of such sec22 tion for such quarter, the amounts paid 

23 shall be the difference between (i) the pay24 ment amount under paragraph (3)(A)(ii)(I) 

25 of such section for such drug, and (ii) 20 


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1 percent of the inflation-adjusted payment 

2 amount under paragraph (3)(A)(ii)(II) of 

3 such section for such drug’’; 

4 (B) in paragraph (4), by inserting ‘‘subject 

5 to paragraph (1)(DD),’’ before ‘‘the applicable 

6 amount’’; and 

7 (C) by adding at the end of the flush left 

8 matter following paragraph (9), the following: 

9 ‘‘For purposes of applying paragraph (1)(DD), subsection 

10 (t)(23), and section 1834(x)(5), the Secretary shall make 

11 such estimates and use such data as the Secretary deter12 mines appropriate, and notwithstanding any other provi13 sion of law, may do so by program instruction or other14 wise.’’; 

15 (2) in subsection (t), by adding at the end the 

16 following new paragraph: 

17 ‘‘(23) PART B REBATABLE DRUGS.—The amount 

18 of payment under this subsection for a part B 

19 rebatable drug (as defined in paragraph (2) of section 

20 1834(x)) for which the payment amount for a cal21 endar quarter under paragraph (3)(A)(ii)(I) of such 

22 section for such quarter exceeds the inflation adjusted 

23 payment under paragraph (3)(A)(ii)(II) of such sec24 tion for such quarter and that is furnished as part of 


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1 a covered OPD service (or group of services), shall be 

2 the difference between— 

3 ‘‘(A) the payment under paragraph 

4 (3)(A)(ii)(I) of such section for such drug; and 

5 ‘‘(B) 20 percent of the inflation-adjusted 

6 payment amount under paragraph (3)(A)(ii)(II) 

7 of such section for such drug.’’. 

8 (c) CONFORMING AMENDMENT TO PART B ASP CAL9 CULATION.—Section 1847A(c)(3) of the Social Security Act 

10 (42 U.S.C. 1395w–3a(c)(3)) is amended by inserting ‘‘or 

11 section 1834(x)’’ after ‘‘section 1927’’. 

12 SEC. 202. MEDICARE PART D REBATE BY MANUFACTURERS. 

13 Part D of title XVIII of the Social Security Act is 

14 amended by inserting after section 1860D–14A (42 U.S.C. 

15 1395w–114a) the following new section: 

16 ‘‘SEC. 1860D–14B. MANUFACTURER REBATE FOR CERTAIN 

17 DRUGS WITH PRICES INCREASING FASTER 

18 THAN INFLATION. 

19 ‘‘(a) IN GENERAL.— 

20 ‘‘(1) IN GENERAL.—Subject to the provisions of 

21 this section, in order for coverage to be available 

22 under this part for a part D rebatable drug (as de23 fined in subsection (h)(1)) of a manufacturer (as de24 fined in section 1927(k)(5)) dispensed during an ap25 plicable year, the manufacturer must have entered 


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1 into and have in effect an agreement described in sub2 section (b). 

3 ‘‘(2) AUTHORIZING COVERAGE FOR DRUGS NOT

4 COVERED UNDER AGREEMENTS.—Paragraph (1) shall 

5 not apply to the dispensing of a covered part D drug 

6 if— 

7 ‘‘(A) the Secretary has made a determina8 tion that the availability of the drug is essential 

9 to the health of beneficiaries under this part; or 

10 ‘‘(B) the Secretary determines that in a 

11 specified period (as specified by the Secretary), 

12 there were extenuating circumstances. 

13 ‘‘(3) APPLICABLE YEAR.—For purposes of this 

14 section the term ‘applicable year’ means a year begin15 ning with 2022. 

16 ‘‘(b) AGREEMENTS.— 

17 ‘‘(1) TERMS OF AGREEMENT.—An agreement de18 scribed in this subsection, with respect to a manufac19 turer of a part D rebatable drug, is an agreement 

20 under which the following shall apply: 

21 ‘‘(A) SECRETARIAL PROVISION OF INFORMA22 TION.—Not later than 9 months after the end of 

23 each applicable year with respect to which the 

24 agreement is in effect, the Secretary, for each 

25 part D rebatable drug of the manufacturer, shall 


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1 report to the manufacturer the following for such 

2 year: 

3 ‘‘(i) Information on the total number 

4 of units (as defined in subsection (h)(2)) for 

5 each dosage form and strength with respect 

6 to such part D rebatable drug and year. 

7 ‘‘(ii) Information on the amount (if 

8 any) of the excess average manufacturer 

9 price increase described in subsection 

10 (c)(1)(B) for each dosage form and strength 

11 with respect to such drug and year. 

12 ‘‘(iii) The rebate amount specified 

13 under subsection (c) for each dosage form 

14 and strength with respect to such drug and 

15 year. 

16 ‘‘(B) MANUFACTURER REQUIREMENTS.— 

17 For each applicable year with respect to which 

18 the agreement is in effect, the manufacturer of 

19 the part D rebatable drug, for each dosage form 

20 and strength with respect to such drug, not later 

21 than 30 days after the date of receipt from the 

22 Secretary of the information described in sub23 paragraph (A) for such year, shall provide to the 

24 Secretary a rebate that is equal to the amount 

25 specified in subsection (c) for such dosage form 


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1 and strength with respect to such drug for such 

2 year. 

3 ‘‘(2) LENGTH OF AGREEMENT.— 

4 ‘‘(A) IN GENERAL.—An agreement under 

5 this section, with respect to a part D rebatable 

6 drug, shall be effective for an initial period of 

7 not less than one year and shall be automatically 

8 renewed for a period of not less than one year 

9 unless terminated under subparagraph (B). 

10 ‘‘(B) TERMINATION.— 

11 ‘‘(i) BY SECRETARY.—The Secretary 

12 may provide for termination of an agree13 ment under this section for violation of the 

14 requirements of the agreement or other good 

15 cause shown. Such termination shall not be 

16 effective earlier than 30 days after the date 

17 of notice of such termination. The Secretary 

18 shall provide, upon request, a manufacturer 

19 with a hearing concerning such a termi20 nation, but such hearing shall not delay the 

21 effective date of the termination. 

22 ‘‘(ii) BY A MANUFACTURER.—A manu23 facturer may terminate an agreement under 

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1 nation shall be effective, with respect to a 

2 plan year— 

3 ‘‘(I) if the termination occurs be4 fore January 30 of the plan year, as of 

5 the day after the end of the plan year; 

6 and 

7 ‘‘(II) if the termination occurs on 

8 or after January 30 of the plan year, 

9 as of the day after the end of the suc10 ceeding plan year. 

11 ‘‘(C) EFFECTIVENESS OF TERMINATION.— 

12 Any termination under this paragraph shall not 

13 affect rebates due under the agreement under this 

14 section before the effective date of its termination. 

15 ‘‘(D) DELAY BEFORE REENTRY.—In the 

16 case of any agreement under this section with a 

17 manufacturer that is terminated in a plan year, 

18 the Secretary may not enter into another such 

19 agreement with the manufacturer (or a successor 

20 manufacturer) before the subsequent plan year, 

21 unless the Secretary finds good cause for an ear22 lier reinstatement of such an agreement. 

23 ‘‘(c) REBATE AMOUNT.— 

24 ‘‘(1) IN GENERAL.—For purposes of this section, 

25 the amount specified in this subsection for a dosage 


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1 form and strength with respect to a part D rebatable 

2 drug and applicable year is, subject to subparagraphs 

3 (B) and (C) of paragraph (5), the amount equal to 

4 the product of— 

5 ‘‘(A) the total number of units of such dos6 age form and strength with respect to such part 

7 D rebatable drug and year; and 

8 ‘‘(B) the amount (if any) by which— 

9 ‘‘(i) the annual manufacturer price (as 

10 determined in paragraph (2)) paid for such 

11 dosage form and strength with respect to 

12 such part D rebatable drug for the year; ex13 ceeds 

14 ‘‘(ii) the inflation-adjusted payment 

15 amount determined under paragraph (3) for 

16 such dosage form and strength with respect 

17 to such part D rebatable drug for the year. 

18 ‘‘(2) DETERMINATION OF ANNUAL MANUFAC19 TURER PRICE.—The annual manufacturer price de20 termined under this paragraph for a dosage form and 

21 strength, with respect to a part D rebatable drug and 

22 an applicable year, is the sum of the products of— 

23 ‘‘(A) the average manufacturer price (as de24 fined in subsection (h)(6)) of such dosage form 

25 and strength, as calculated for a unit of such 


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1 drug, with respect to each of the calendar quar2 ters of such year; and 

3 ‘‘(B) the ratio of— 

4 ‘‘(i) the total number of units of such 

5 dosage form and strength dispensed during 

6 each such calendar quarter of such year; to 

7 ‘‘(ii) the total number of units of such 

8 dosage form and strength dispensed during 

9 such year. 

10 ‘‘(3) DETERMINATION OF INFLATION-ADJUSTED

11 PAYMENT AMOUNT.—The inflation-adjusted payment 

12 amount determined under this paragraph for a dos13 age form and strength with respect to a part D 

14 rebatable drug for an applicable year, subject to sub15 paragraphs (A) and (D) of paragraph (5), is— 

16 ‘‘(A) the benchmark year manufacturer 

17 price determined under paragraph (4) for such 

18 dosage form and strength with respect to such 

19 drug and an applicable year; increased by 

20 ‘‘(B) the percentage by which the applicable 

21 year CPI–U (as defined in subsection (h)(5)) for 

22 the applicable year exceeds the benchmark period 

23 CPI–U (as defined in subsection (h)(4)). 

24 ‘‘(4) DETERMINATION OF BENCHMARK YEAR

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1 facturer price determined under this paragraph for a 

2 dosage form and strength, with respect to a part D 

3 rebatable drug and an applicable year, is the sum of 

4 the products of— 

5 ‘‘(A) the average manufacturer price (as de6 fined in subsection (h)(6)) of such dosage form 

7 and strength, as calculated for a unit of such 

8 drug, with respect to each calendar quarter of the 

9 payment amount benchmark year (as defined in 

10 subsection (h)(3)); and 

11 ‘‘(B) the ratio of— 

12 ‘‘(i) the total number of units of such 

13 dosage form and strength dispensed during 

14 such calendar quarter of the payment 

15 amount benchmark year; to 

16 ‘‘(ii) the total number of units of such 

17 dosage form and strength dispensed during 

18 the payment amount benchmark year. 

19 ‘‘(5) SPECIAL TREATMENT OF CERTAIN DRUGS

20 AND EXEMPTION.— 

21 ‘‘(A) SUBSEQUENTLY APPROVED DRUGS.— 

22 In the case of a part D rebatable drug first ap23 proved or licensed by the Food and Drug Admin24 istration after January 1, 2016, subparagraphs 

25 (A) and (B) of paragraph (4) shall be applied as 


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1 if the term ‘payment amount benchmark year’ 

2 were defined under subsection (h)(3) as the first 

3 calendar year beginning after the day on which 

4 the drug was first marketed by any manufac5 turer and subparagraph (B) of paragraph (3) 

6 shall be applied as if the term ‘benchmark period 

7 CPI–U’ were defined under subsection (h)(4) as 

8 if the reference to ‘January 2016’ under such 

9 subsection were a reference to ‘January of the 

10 first year beginning after the date on which the 

11 drug was first marketed by any manufacturer’. 

12 ‘‘(B) EXEMPTION FOR SHORTAGES.—The 

13 Secretary may reduce or waive the rebate under 

14 paragraph (1) with respect to a part D rebatable 

15 drug that is described as currently in shortage 

16 on the shortage list in effect under section 506E 

17 of the Federal Food, Drug, and Cosmetic Act or 

18 in the case of other exigent circumstances, as de19 termined by the Secretary. 

20 ‘‘(C) TREATMENT OF NEW FORMULA21 TIONS.— 

22 ‘‘(i) IN GENERAL.—In the case of a 

23 part D rebatable drug that is a line exten24 sion of a part D rebatable drug that is an 

25 oral solid dosage form, the Secretary shall 


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1 establish a formula for determining the 

2 amount specified in this subsection with re3 spect to such part D rebatable drug and an 

4 applicable year with consideration of the 

5 original part D rebatable drug. 

6 ‘‘(ii) LINE EXTENSION DEFINED.—In 

7 this subparagraph, the term ‘line extension’ 

8 means, with respect to a part D rebatable 

9 drug, a new formulation of the drug (as de10 termined by the Secretary), such as an ex11 tended release formulation, but does not in12 clude an abuse-deterrent formulation of the 

13 drug (as determined by the Secretary), re14 gardless of whether such abuse-deterrent for15 mulation is an extended release formula16 tion. 

17 ‘‘(D) SELECTED DRUGS.—In the case of a 

18 part D rebatable drug that is a selected drug (as 

19 defined in section 1192(c)) for a price applica20 bility period (as defined in section 1191(b)(2)) 

21 and is determined (pursuant to such section 

22 1192(c)) to no longer be a selected drug, for each 

23 applicable year beginning after the price appli24 cability period with respect to such drug, sub25 paragraphs (A) and (B) of paragraph (4) shall 


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1 be applied as if the term ‘payment amount 

2 benchmark year’ were defined under subsection 

3 (h)(3) as the last year beginning during such 

4 price applicability period with respect to such 

5 selected drug and subparagraph (B) of para6 graph (3) shall be applied as if the term ‘bench7 mark period CPI–U’ were defined under sub8 section (h)(4) as if the reference to ‘January 

9 2016’ under such subsection were a reference to 

10 January of the last year beginning during such 

11 price applicability period with respect to such 

12 drug. 

13 ‘‘(d) REBATE DEPOSITS.—Amounts paid as rebates 

14 under subsection (c) shall be deposited into the Medicare 

15 Prescription Drug Account in the Federal Supplementary 

16 Medical Insurance Trust Fund established under section 

17 1841. 

18 ‘‘(e) INFORMATION.—For purposes of carrying out this 

19 section, the Secretary shall use information submitted by 

20 manufacturers under section 1927(b)(3). 

21 ‘‘(f) CIVIL MONEY PENALTY.—In the case of a manu22 facturer of a part D rebatable drug with an agreement in 

23 effect under this section who has failed to comply with the 

24 terms of the agreement under subsection (b)(1)(B) with re25 spect to such drug for an applicable year, the Secretary may 


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1 impose a civil money penalty on such manufacturer in an 

2 amount equal to 125 percent of the amount specified in sub3 section (c) for such drug for such year. The provisions of 

4 section 1128A (other than subsections (a) (with respect to 

5 amounts of penalties or additional assessments) and (b)) 

6 shall apply to a civil money penalty under this subsection 

7 in the same manner as such provisions apply to a penalty 

8 or proceeding under section 1128A(a). 

9 ‘‘(g) JUDICIAL REVIEW.—There shall be no judicial re10 view of the following: 

11 ‘‘(1) The determination of units under this sec12 tion. 

13 ‘‘(2) The determination of whether a drug is a 

14 part D rebatable drug under this section. 

15 ‘‘(3) The calculation of the rebate amount under 

16 this section. 

17 ‘‘(h) DEFINITIONS.—In this section: 

18 ‘‘(1) PART D REBATABLE DRUG DEFINED.— 

19 ‘‘(A) IN GENERAL.—The term ‘part D 

20 rebatable drug’ means a drug or biological that 

21 would (without application of this section) be a 

22 covered part D drug, except such term shall, with 

23 respect to an applicable year, not include such a 

24 drug or biological if the average annual total 

25 cost under this part for such year per individual 


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1 who uses such a drug or biological, as deter2 mined by the Secretary, is less than, subject to 

3 subparagraph (B), $100, as determined by the 

4 Secretary using the most recent data available 

5 or, if data is not available, as estimated by the 

6 Secretary. 

7 ‘‘(B) INCREASE.—The dollar amount ap8 plied under subparagraph (A)— 

9 ‘‘(i) for 2023, shall be the dollar 

10 amount specified under such subparagraph 

11 for 2022, increased by the percentage in12 crease in the consumer price index for all 

13 urban consumers (United States city aver14 age) for the 12-month period beginning with 

15 January of 2022; and 

16 ‘‘(ii) for a subsequent year, shall be the 

17 dollar amount specified in this subpara18 graph (or subparagraph (A)) for the pre19 vious year, increased by the percentage in20 crease in the consumer price index for all 

21 urban consumers (United States city aver22 age) for the 12-month period beginning with 

23 January of the previous year. 


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1 Any dollar amount specified under this subpara2 graph that is not a multiple of $10 shall be 

3 rounded to the nearest multiple of $10. 

4 ‘‘(2) UNIT DEFINED.—The term ‘unit’ means, 

5 with respect to a part D rebatable drug, the lowest 

6 identifiable quantity (such as a capsule or tablet, mil7 ligram of molecules, or grams) of the part D rebatable 

8 drug that is dispensed to individuals under this part. 

9 ‘‘(3) PAYMENT AMOUNT BENCHMARK YEAR.—The 

10 term ‘payment amount benchmark year’ means the 

11 year beginning January 1, 2016. 

12 ‘‘(4) BENCHMARK PERIOD CPI–U.—The term 

13 ‘benchmark period CPI–U’ means the consumer price 

14 index for all urban consumers (United States city av15 erage) for January 2016. 

16 ‘‘(5) APPLICABLE YEAR CPI–U.—The term ‘ap17 plicable year CPI–U’ means, with respect to an ap18 plicable year, the consumer price index for all urban 

19 consumers (United States city average) for January 

20 of such year. 

21 ‘‘(6) AVERAGE MANUFACTURER PRICE.—The 

22 term ‘average manufacturer price’ has the meaning, 

23 with respect to a part D rebatable drug of a manufac24 turer, given such term in section 1927(k)(1), with reVerDate Sep 11 2014 23:24 Dec 09, 2019 Jkt 099200 PO 00000 Frm 00086 Fmt 6652 Sfmt 6203 E:\BILLS\H3.RH H3

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1 spect to a covered outpatient drug of a manufacturer 

2 for a rebate period under section 1927.’’. 


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1 TITLE III—PART D IMPROVE2 MENTS AND MAXIMUM OUT3 OF-POCKET CAP FOR MEDI4 CARE BENEFICIARIES 

5 SEC. 301. MEDICARE PART D BENEFIT REDESIGN. 

6 (a) BENEFIT STRUCTURE REDESIGN.—Section 

7 1860D–2(b) of the Social Security Act (42 U.S.C. 1395w– 

8 102(b)) is amended— 

9 (1) in paragraph (2)— 

10 (A) in subparagraph (A), in the matter pre11 ceding clause (i), by inserting ‘‘for a year pre12 ceding 2022 and for costs above the annual de13 ductible specified in paragraph (1) and up to the 

14 annual out-of-pocket threshold specified in para15 graph (4)(B) for 2022 and each subsequent year’’ 

16 after ‘‘paragraph (3)’’; 

17 (B) in subparagraph (C)— 

18 (i) in clause (i), in the matter pre19 ceding subclause (I), by inserting ‘‘for a 

20 year preceding 2022,’’ after ‘‘paragraph 

21 (4),’’; and 

22 (ii) in clause (ii)(III), by striking 

23 ‘‘and each subsequent year’’ and inserting 

24 ‘‘and 2021’’; and 

25 (C) in subparagraph (D)— 


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1 (i) in clause (i)— 

2 (I) in the matter preceding sub3 clause (I), by inserting ‘‘for a year pre4 ceding 2022,’’ after ‘‘paragraph (4),’’; 

5 and 

6 (II) in subclause (I)(bb), by strik7 ing ‘‘a year after 2018’’ and inserting 

8 ‘‘each of years 2018 through 2021’’; 

9 and 

10 (ii) in clause (ii)(V), by striking ‘‘2019 

11 and each subsequent year’’ and inserting 

12 ‘‘each of years 2019 through 2021’’; 

13 (2) in paragraph (3)(A)— 

14 (A) in the matter preceding clause (i), by 

15 inserting ‘‘for a year preceding 2022,’’ after 

16 ‘‘and (4),’’; and 

17 (B) in clause (ii), by striking ‘‘for a subse18 quent year’’ and inserting ‘‘for each of years 

19 2007 through 2021’’; and 

20 (3) in paragraph (4)— 

21 (A) in subparagraph (A)— 

22 (i) in clause (i)— 

23 (I) by redesignating subclauses (I) 

24 and (II) as items (aa) and (bb), re25 spectively, and moving the margin of 


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1 each such redesignated item 2 ems to 

2 the right; 

3 (II) in the matter preceding item 

4 (aa), as redesignated by subclause (I), 

5 by striking ‘‘is equal to the greater 

6 of—’’ and inserting ‘‘is equal to— 

7 ‘‘(I) for a year preceding 2022, 

8 the greater of—’’; 

9 (III) by striking the period at the 

10 end of item (bb), as redesignated by 

11 subclause (I), and inserting ‘‘; and’’; 

12 and 

13 (IV) by adding at the end the fol14 lowing: 

15 ‘‘(II) for 2022 and each suc16 ceeding year, $0.’’; and 

17 (ii) in clause (ii), by striking ‘‘clause 

18 (i)(I)’’ and inserting ‘‘clause (i)(I)(aa)’’; 

19 (B) in subparagraph (B)— 

20 (i) in clause (i)— 

21 (I) in subclause (V), by striking 

22 ‘‘or’’ at the end; 

23 (II) in subclause (VI)— 


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1 (aa) by striking ‘‘for a subse2 quent year’’ and inserting ‘‘for 

3 2021’’; and 

4 (bb) by striking the period at 

5 the end and inserting a semicolon; 

6 and 

7 (III) by adding at the end the fol8 lowing new subclauses: 

9 ‘‘(VII) for 2022, is equal to 

10 $2,000; or 

11 ‘‘(VIII) for a subsequent year, is 

12 equal to the amount specified in this 

13 subparagraph for the previous year, 

14 increased by the annual percentage in15 crease described in paragraph (6) for 

16 the year involved.’’; and 

17 (ii) in clause (ii), by striking ‘‘clause 

18 (i)(II)’’ and inserting ‘‘clause (i)’’; 

19 (C) in subparagraph (C)(i), by striking 

20 ‘‘and for amounts’’ and inserting ‘‘and, for a 

21 year preceding 2022, for amounts’’; and 

22 (D) in subparagraph (E), by striking ‘‘In 

23 applying’’ and inserting ‘‘For each of years 2011 

24 through 2021, in applying’’. 


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1 (b) DECREASING REINSURANCE PAYMENT AMOUNT.— 

2 Section 1860D–15(b)(1) of the Social Security Act (42 

3 U.S.C. 1395w–115(b)(1)) is amended by inserting after ‘‘80 

4 percent’’ the following: ‘‘(or, with respect to a coverage year 

5 after 2021, 20 percent)’’. 

6 (c) MANUFACTURER DISCOUNT PROGRAM.— 

7 (1) IN GENERAL.—Part D of title XVIII of the 

8 Social Security Act (42 U.S.C. 1395w–101 et seq.), as 

9 amended by section 202, is further amended by insert10 ing after section 1860D–14B the following new sec11 tion: 

12 ‘‘SEC. 1860D–14C. MANUFACTURER DISCOUNT PROGRAM. 

13 ‘‘(a) ESTABLISHMENT.—The Secretary shall establish 

14 a manufacturer discount program (in this section referred 

15 to as the ‘program’). Under the program, the Secretary shall 

16 enter into agreements described in subsection (b) with man17 ufacturers and provide for the performance of the duties de18 scribed in subsection (c). The Secretary shall establish a 

19 model agreement for use under the program by not later 

20 than January 1, 2021, in consultation with manufacturers, 

21 and allow for comment on such model agreement. 

22 ‘‘(b) TERMS OF AGREEMENT.— 

23 ‘‘(1) IN GENERAL.— 

24 ‘‘(A) AGREEMENT.—An agreement under 

25 this section shall require the manufacturer to 


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1 provide applicable beneficiaries access to dis2 counted prices for applicable drugs of the manu3 facturer that are dispensed on or after January 

4 1, 2022. 

5 ‘‘(B) PROVISION OF DISCOUNTED PRICES AT

6 THE POINT-OF-SALE.—The discounted prices de7 scribed in subparagraph (A) shall be provided to 

8 the applicable beneficiary at the pharmacy or by 

9 the mail order service at the point-of-sale of an 

10 applicable drug. 

11 ‘‘(C) TIMING OF AGREEMENT.— 

12 ‘‘(i) SPECIAL RULE FOR 2022.—In 

13 order for an agreement with a manufac14 turer to be in effect under this section with 

15 respect to the period beginning on January 

16 1, 2022, and ending on December 31, 2022, 

17 the manufacturer shall enter into such 

18 agreement not later than 30 days after the 

19 date of the establishment of a model agree20 ment under subsection (a). 

21 ‘‘(ii) 2023 AND SUBSEQUENT YEARS.— 

22 In order for an agreement with a manufac23 turer to be in effect under this section with 

24 respect to plan year 2023 or a subsequent 

25 plan year, the manufacturer shall enter into 


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1 such agreement (or such agreement shall be 

2 renewed under paragraph (4)(A)) not later 

3 than January 30 of the preceding year. 

4 ‘‘(2) PROVISION OF APPROPRIATE DATA.—Each 

5 manufacturer with an agreement in effect under this 

6 section shall collect and have available appropriate 

7 data, as determined by the Secretary, to ensure that 

8 it can demonstrate to the Secretary compliance with 

9 the requirements under the program. 

10 ‘‘(3) COMPLIANCE WITH REQUIREMENTS FOR AD11 MINISTRATION OF PROGRAM.—Each manufacturer 

12 with an agreement in effect under this section shall 

13 comply with requirements imposed by the Secretary 

14 or a third party with a contract under subsection 

15 (d)(3), as applicable, for purposes of administering 

16 the program, including any determination under sub17 paragraph (A) of subsection (c)(1) or procedures es18 tablished under such subsection (c)(1). 

19 ‘‘(4) LENGTH OF AGREEMENT.— 

20 ‘‘(A) IN GENERAL.—An agreement under 

21 this section shall be effective for an initial period 

22 of not less than 12 months and shall be auto23 matically renewed for a period of not less than 

24 1 year unless terminated under subparagraph 

25 (B). 


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1 ‘‘(B) TERMINATION.— 

2 ‘‘(i) BY THE SECRETARY.—The Sec3 retary may provide for termination of an 

4 agreement under this section for a knowing 

5 and willful violation of the requirements of 

6 the agreement or other good cause shown. 

7 Such termination shall not be effective ear8 lier than 30 days after the date of notice to 

9 the manufacturer of such termination. The 

10 Secretary shall provide, upon request, a 

11 manufacturer with a hearing concerning 

12 such a termination, and such hearing shall 

13 take place prior to the effective date of the 

14 termination with sufficient time for such ef15 fective date to be repealed if the Secretary 

16 determines appropriate. 

17 ‘‘(ii) BY A MANUFACTURER.—A manu18 facturer may terminate an agreement under 

19 this section for any reason. Any such termi20 nation shall be effective, with respect to a 

21 plan year— 

22 ‘‘(I) if the termination occurs be23 fore January 30 of a plan year, as of 

24 the day after the end of the plan year; 

25 and 


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1 ‘‘(II) if the termination occurs on 

2 or after January 30 of a plan year, as 

3 of the day after the end of the suc4 ceeding plan year. 

5 ‘‘(iii) EFFECTIVENESS OF TERMI6 NATION.—Any termination under this sub7 paragraph shall not affect discounts for ap8 plicable drugs of the manufacturer that are 

9 due under the agreement before the effective 

10 date of its termination. 

11 ‘‘(iv) NOTICE TO THIRD PARTY.—The 

12 Secretary shall provide notice of such termi13 nation to a third party with a contract 

14 under subsection (d)(3) within not less than 

15 30 days before the effective date of such ter16 mination. 

17 ‘‘(c) DUTIES DESCRIBED.—The duties described in 

18 this subsection are the following: 

19 ‘‘(1) ADMINISTRATION OF PROGRAM.—Admin20 istering the program, including— 

21 ‘‘(A) the determination of the amount of the 

22 discounted price of an applicable drug of a man23 ufacturer; 

24 ‘‘(B) the establishment of procedures under 

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1 ble beneficiaries at pharmacies or by mail order 

2 service at the point-of-sale of an applicable drug; 

3 ‘‘(C) the establishment of procedures to en4 sure that, not later than the applicable number 

5 of calendar days after the dispensing of an ap6 plicable drug by a pharmacy or mail order serv7 ice, the pharmacy or mail order service is reim8 bursed for an amount equal to the difference be9 tween— 

10 ‘‘(i) the negotiated price of the applica11 ble drug; and 

12 ‘‘(ii) the discounted price of the appli13 cable drug; 

14 ‘‘(D) the establishment of procedures to en15 sure that the discounted price for an applicable 

16 drug under this section is applied before any 

17 coverage or financial assistance under other 

18 health benefit plans or programs that provide 

19 coverage or financial assistance for the purchase 

20 or provision of prescription drug coverage on be21 half of applicable beneficiaries as the Secretary 

22 may specify; and 

23 ‘‘(E) providing a reasonable dispute resolu24 tion mechanism to resolve disagreements between 

25 manufacturers, applicable beneficiaries, and the 


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1 third party with a contract under subsection 

2 (d)(3). 

3 ‘‘(2) MONITORING COMPLIANCE.— 

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

5 monitor compliance by a manufacturer with the 

6 terms of an agreement under this section. 

7 ‘‘(B) NOTIFICATION.—If a third party with 

8 a contract under subsection (d)(3) determines 

9 that the manufacturer is not in compliance with 

10 such agreement, the third party shall notify the 

11 Secretary of such noncompliance for appropriate 

12 enforcement under subsection (e). 

13 ‘‘(3) COLLECTION OF DATA FROM PRESCRIPTION

14 DRUG PLANS AND MA–PD PLANS.—The Secretary may 

15 collect appropriate data from prescription drug plans 

16 and MA–PD plans in a timeframe that allows for 

17 discounted prices to be provided for applicable drugs 

18 under this section. 

19 ‘‘(d) ADMINISTRATION.— 

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

21 Secretary shall provide for the implementation of this 

22 section, including the performance of the duties de23 scribed in subsection (c). 

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1 ceive or distribute any funds of a manufacturer under 

2 the program. 

3 ‘‘(3) CONTRACT WITH THIRD PARTIES.—The Sec4 retary shall enter into a contract with 1 or more 

5 third parties to administer the requirements estab6 lished by the Secretary in order to carry out this sec7 tion. At a minimum, the contract with a third party 

8 under the preceding sentence shall require that the 

9 third party— 

10 ‘‘(A) receive and transmit information be11 tween the Secretary, manufacturers, and other 

12 individuals or entities the Secretary determines 

13 appropriate; 

14 ‘‘(B) receive, distribute, or facilitate the dis15 tribution of funds of manufacturers to appro16 priate individuals or entities in order to meet 

17 the obligations of manufacturers under agree18 ments under this section; 

19 ‘‘(C) provide adequate and timely informa20 tion to manufacturers, consistent with the agree21 ment with the manufacturer under this section, 

22 as necessary for the manufacturer to fulfill its 

23 obligations under this section; and 

24 ‘‘(D) permit manufacturers to conduct peri25 odic audits, directly or through contracts, of the 


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1 data and information used by the third party to 

2 determine discounts for applicable drugs of the 

3 manufacturer under the program. 

4 ‘‘(4) PERFORMANCE REQUIREMENTS.—The Sec5 retary shall establish performance requirements for a 

6 third party with a contract under paragraph (3) and 

7 safeguards to protect the independence and integrity 

8 of the activities carried out by the third party under 

9 the program under this section. 

10 ‘‘(5) IMPLEMENTATION.—Notwithstanding any 

11 other provision of law, the Secretary may implement 

12 the program under this section by program instruc13 tion or otherwise. 

14 ‘‘(6) ADMINISTRATION.—Chapter 35 of title 44, 

15 United States Code, shall not apply to the program 

16 under this section. 

17 ‘‘(e) ENFORCEMENT.— 

18 ‘‘(1) AUDITS.—Each manufacturer with an 

19 agreement in effect under this section shall be subject 

20 to periodic audit by the Secretary. 

21 ‘‘(2) CIVIL MONEY PENALTY.— 

22 ‘‘(A) IN GENERAL.—The Secretary may im23 pose a civil money penalty on a manufacturer 

24 that fails to provide applicable beneficiaries dis25 counts for applicable drugs of the manufacturer 


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1 in accordance with such agreement for each such 

2 failure in an amount the Secretary determines is 

3 equal to the sum of— 

4 ‘‘(i) the amount that the manufacturer 

5 would have paid with respect to such dis6 counts under the agreement, which will then 

7 be used to pay the discounts which the man8 ufacturer had failed to provide; and 

9 ‘‘(ii) 25 percent of such amount. 

10 ‘‘(B) APPLICATION.—The provisions of sec11 tion 1128A (other than subsections (a) and (b)) 

12 shall apply to a civil money penalty under this 

13 paragraph in the same manner as such provi14 sions apply to a penalty or proceeding under 

15 section 1128A(a). 

16 ‘‘(f) CLARIFICATION REGARDING AVAILABILITY OF

17 OTHER COVERED PART D DRUGS.—Nothing in this section 

18 shall prevent an applicable beneficiary from purchasing a 

19 covered part D drug that is not an applicable drug (includ20 ing a generic drug or a drug that is not on the formulary 

21 of the prescription drug plan or MA–PD plan that the ap22 plicable beneficiary is enrolled in). 

23 ‘‘(g) DEFINITIONS.—In this section: 


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1 ‘‘(1) APPLICABLE BENEFICIARY.—The term ‘ap2 plicable beneficiary’ means an individual who, on the 

3 date of dispensing a covered part D drug— 

4 ‘‘(A) is enrolled in a prescription drug plan 

5 or an MA–PD plan; 

6 ‘‘(B) is not enrolled in a qualified retiree 

7 prescription drug plan; and 

8 ‘‘(C) has incurred costs for covered part D 

9 drugs in the year that are equal to or exceed the 

10 annual deductible specified in section 1860D– 

11 2(b)(1) for such year. 

12 ‘‘(2) APPLICABLE DRUG.—The term ‘applicable 

13 drug’, with respect to an applicable beneficiary— 

14 ‘‘(A) means a covered part D drug— 

15 ‘‘(i) approved under a new drug appli16 cation under section 505(c) of the Federal 

17 Food, Drug, and Cosmetic Act or, in the 

18 case of a biologic product, licensed under 

19 section 351 of the Public Health Service 

20 Act; and 

21 ‘‘(ii)(I) if the PDP sponsor of the pre22 scription drug plan or the MA organization 

23 offering the MA–PD plan uses a formulary, 

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1 tion drug plan or MA–PD plan that the ap2 plicable beneficiary is enrolled in; 

3 ‘‘(II) if the PDP sponsor of the pre4 scription drug plan or the MA organization 

5 offering the MA–PD plan does not use a for6 mulary, for which benefits are available 

7 under the prescription drug plan or MA– 

8 PD plan that the applicable beneficiary is 

9 enrolled in; or 

10 ‘‘(III) is provided through an exception 

11 or appeal; and 

12 ‘‘(B) does not include a selected drug (as de13 fined in section 1192(c)) during a price applica14 bility period (as defined in section 1191(b)(2)) 

15 with respect to such drug. 

16 ‘‘(3) APPLICABLE NUMBER OF CALENDAR

17 DAYS.—The term ‘applicable number of calendar 

18 days’ means— 

19 ‘‘(A) with respect to claims for reimburse20 ment submitted electronically, 14 days; and 

21 ‘‘(B) with respect to claims for reimburse22 ment submitted otherwise, 30 days. 

23 ‘‘(4) DISCOUNTED PRICE.— 

24 ‘‘(A) IN GENERAL.—The term ‘discounted 

25 price’ means, with respect to an applicable drug 


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1 of a manufacturer furnished during a year to an 

2 applicable beneficiary— 

3 ‘‘(i) who has not incurred costs for cov4 ered part D drugs in the year that are 

5 equal to or exceed the annual out-of-pocket 

6 threshold specified in section 1860D– 

7 2(b)(4)(B)(i) for the year, 90 percent of the 

8 negotiated price of such drug; and 

9 ‘‘(ii) who has incurred such costs in 

10 the year that are equal to or exceed such 

11 threshold for the year, 70 percent of the ne12 gotiated price of such drug. 

13 ‘‘(B) CLARIFICATION.—Nothing in this sec14 tion shall be construed as affecting the responsi15 bility of an applicable beneficiary for payment 

16 of a dispensing fee for an applicable drug. 

17 ‘‘(C) SPECIAL CASE FOR CERTAIN

18 CLAIMS.— 

19 ‘‘(i) CLAIMS SPANNING DEDUCTIBLE.— 

20 In the case where the entire amount of the 

21 negotiated price of an individual claim for 

22 an applicable drug with respect to an ap23 plicable beneficiary does not fall at or above 

24 the annual deductible specified in section 

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1 turer of the applicable drug shall provide 

2 the discounted price under this section on 

3 only the portion of the negotiated price of 

4 the applicable drug that falls at or above 

5 such annual deductible. 

6 ‘‘(ii) CLAIMS SPANNING OUT-OF-POCK7 ET THRESHOLD.—In the case where the en8 tire amount of the negotiated price of an in9 dividual claim for an applicable drug with 

10 respect to an applicable beneficiary does not 

11 fall entirely below or entirely above the an12 nual out-of-pocket threshold specified in sec13 tion 1860D–2(b)(4)(B)(i) for the year, the 

14 manufacturer of the applicable drug shall 

15 provide the discounted price— 

16 ‘‘(I) in accordance with subpara17 graph (A)(i) on the portion of the ne18 gotiated price of the applicable drug 

19 that falls below such threshold; and 

20 ‘‘(II) in accordance with subpara21 graph (A)(ii) on the portion of such 

22 price of such drug that falls at or 

23 above such threshold. 

24 ‘‘(5) MANUFACTURER.—The term ‘manufacturer’ 

25 means any entity which is engaged in the production, 


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1 preparation, propagation, compounding, conversion, 

2 or processing of prescription drug products, either di3 rectly or indirectly by extraction from substances of 

4 natural origin, or independently by means of chem5 ical synthesis, or by a combination of extraction and 

6 chemical synthesis. Such term does not include a 

7 wholesale distributor of drugs or a retail pharmacy li8 censed under State law. 

9 ‘‘(6) NEGOTIATED PRICE.—The term ‘negotiated 

10 price’ has the meaning given such term in section 

11 423.100 of title 42, Code of Federal Regulations (or 

12 any successor regulation), except that such negotiated 

13 price shall not include any dispensing fee for the ap14 plicable drug. 

15 ‘‘(7) QUALIFIED RETIREE PRESCRIPTION DRUG

16 PLAN.—The term ‘qualified retiree prescription drug 

17 plan’ has the meaning given such term in section 

18 1860D–22(a)(2).’’. 

19 (2) SUNSET OF MEDICARE COVERAGE GAP DIS20 COUNT PROGRAM.—Section 1860D–14A of the Social 

21 Security Act (42 U.S.C. 1395–114a) is amended— 

22 (A) in subsection (a), in the first sentence, 

23 by striking ‘‘The Secretary’’ and inserting ‘‘Sub24 ject to subsection (h), the Secretary’’; and 


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

2 subsection: 

3 ‘‘(h) SUNSET OF PROGRAM.— 

4 ‘‘(1) IN GENERAL.—The program shall not apply 

5 with respect to applicable drugs dispensed on or after 

6 January 1, 2022, and, subject to paragraph (2), 

7 agreements under this section shall be terminated as 

8 of such date. 

9 ‘‘(2) CONTINUED APPLICATION FOR APPLICABLE

10 DRUGS DISPENSED PRIOR TO SUNSET.—The provi11 sions of this section (including all responsibilities and 

12 duties) shall continue to apply after January 1, 2022, 

13 with respect to applicable drugs dispensed prior to 

14 such date.’’. 

15 (3) INCLUSION OF ACTUARIAL VALUE OF MANU16 FACTURER DISCOUNTS IN BIDS.—Section 1860D–11 

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

18 amended— 

19 (A) in subsection (b)(2)(C)(iii)— 

20 (i) by striking ‘‘assumptions regarding 

21 the reinsurance’’ and inserting ‘‘assump22 tions regarding— 

23 ‘‘(I) the reinsurance’’; and 

24 (ii) by adding at the end the following: 


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1 ‘‘(II) for 2022 and each subse2 quent year, the manufacturer discounts 

3 provided under section 1860D–14C 

4 subtracted from the actuarial value to 

5 produce such bid; and’’; and 

6 (B) in subsection (c)(1)(C)— 

7 (i) by striking ‘‘an actuarial valuation 

8 of the reinsurance’’ and inserting ‘‘an actu9 arial valuation of— 

10 ‘‘(i) the reinsurance’’; 

11 (ii) in clause (i), as inserted by clause 

12 (i) of this subparagraph, by adding ‘‘and’’ 

13 at the end; and 

14 (iii) by adding at the end the fol15 lowing: 

16 ‘‘(ii) for 2022 and each subsequent 

17 year, the manufacturer discounts provided 

18 under section 1860D–14C;’’. 

19 (d) CONFORMING AMENDMENTS.— 

20 (1) Section 1860D–2 of the Social Security Act 

21 (42 U.S.C. 1395w–102) is amended— 

22 (A) in subsection (a)(2)(A)(i)(I), by striking 

23 ‘‘, or an increase in the initial’’ and inserting 

24 ‘‘or, for a year preceding 2022, an increase in 

25 the initial’’; 


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1 (B) in subsection (c)(1)(C)— 

2 (i) in the subparagraph heading, by 

3 striking ‘‘AT INITIAL COVERAGE LIMIT’’; and 

4 (ii) by inserting ‘‘for a year preceding 

5 2022 or the annual out-of-pocket threshold 

6 specified in subsection (b)(4)(B) for the year 

7 for 2022 and each subsequent year’’ after 

8 ‘‘subsection (b)(3) for the year’’ each place 

9 it appears; and 

10 (C) in subsection (d)(1)(A), by striking ‘‘or 

11 an initial’’ and inserting ‘‘or, for a year pre12 ceding 2022, an initial’’. 

13 (2) Section 1860D–4(a)(4)(B)(i) of the Social 

14 Security Act (42 U.S.C. 1395w–104(a)(4)(B)(i)) is 

15 amended by striking ‘‘the initial’’ and inserting ‘‘for 

16 a year preceding 2022, the initial’’. 

17 (3) Section 1860D–14(a) of the Social Security 

18 Act (42 U.S.C. 1395w–114(a)) is amended— 

19 (A) in paragraph (1)— 

20 (i) in subparagraph (C), by striking 

21 ‘‘The continuation’’ and inserting ‘‘For a 

22 year preceding 2022, the continuation’’; 

23 (ii) in subparagraph (D)(iii), by strik24 ing ‘‘1860D–2(b)(4)(A)(i)(I)’’ and inserting 

25 ‘‘1860D–2(b)(4)(A)(i)(I)(aa)’’; and 


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1 (iii) in subparagraph (E), by striking 

2 ‘‘The elimination’’ and inserting ‘‘For a 

3 year preceding 2022, the elimination’’; and 

4 (B) in paragraph (2)— 

5 (i) in subparagraph (C), by striking 

6 ‘‘The continuation’’ and inserting ‘‘For a 

7 year preceding 2022, the continuation’’; and 

8 (ii) in subparagraph (E), by striking 

9 ‘‘1860D–2(b)(4)(A)(i)(I)’’ and inserting 

10 ‘‘1860D–2(b)(4)(A)(i)(I)(aa)’’. 

11 (4) Section 1860D–21(d)(7) of the Social Secu12 rity Act (42 U.S.C. 1395w–131(d)(7)) is amended by 

13 striking ‘‘section 1860D–2(b)(4)(B)(i)’’ and inserting 

14 ‘‘section 1860D–2(b)(4)(C)(i)’’. 

15 (5) Section 1860D–22(a)(2)(A) of the Social Se16 curity Act (42 U.S.C. 1395w–132(a)(2)(A)) is amend17 ed— 

18 (A) by striking ‘‘the value of any discount’’ 

19 and inserting the following: ‘‘the value of— 

20 ‘‘(i) for years prior to 2022, any dis21 count’’; 

22 (B) in clause (i), as inserted by subpara23 graph (A) of this paragraph, by striking the pe24 riod at the end and inserting ‘‘; and’’; and 


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

2 clause: 

3 ‘‘(ii) for 2022 and each subsequent 

4 year, any discount provided pursuant to 

5 section 1860D–14C.’’. 

6 (6) Section 1860D–41(a)(6) of the Social Secu7 rity Act (42 U.S.C. 1395w–151(a)(6)) is amended— 

8 (A) by inserting ‘‘for a year before 2022’’ 

9 after ‘‘1860D–2(b)(3)’’; and 

10 (B) by inserting ‘‘for such year’’ before the 

11 period. 

12 (7) Section 1860D–43 of the Social Security Act 

13 (42 U.S.C. 1395w–153) is amended— 

14 (A) in subsection (a)— 

15 (i) by striking paragraph (1) and in16 serting the following: 

17 ‘‘(1) participate in— 

18 ‘‘(A) for 2011 through 2021, the Medicare 

19 coverage gap discount program under section 

20 1860D–14A; and 

21 ‘‘(B) for 2022 and each subsequent year, the 

22 manufacturer discount program under section 

23 1860D–14C;’’; 

24 (ii) by striking paragraph (2) and in25 serting the following: 


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1 ‘‘(2) have entered into and have in effect— 

2 ‘‘(A) for 2011 through 2021, an agreement 

3 described in subsection (b) of section 1860D–14A 

4 with the Secretary; and 

5 ‘‘(B) for 2022 and each subsequent year, an 

6 agreement described in subsection (b) of section 

7 1860D–14C with the Secretary; and’’; and 

8 (iii) by striking paragraph (3) and in9 serting the following: 

10 ‘‘(3) have entered into and have in effect, under 

11 terms and conditions specified by the Secretary— 

12 ‘‘(A) for 2011 through 2021, a contract with 

13 a third party that the Secretary has entered into 

14 a contract with under subsection (d)(3) of section 

15 1860D–14A; and 

16 ‘‘(B) for 2022 and each subsequent year, a 

17 contract with a third party that the Secretary 

18 has entered into a contract with under subsection 

19 (d)(3) of section 1860D–14C.’’; and 

20 (B) by striking subsection (b) and inserting 

21 the following: 

22 ‘‘(b) EFFECTIVE DATE.—Paragraphs (1)(A), (2)(A), 

23 and (3)(A) of subsection (a) shall apply to covered part D 

24 drugs dispensed under this part on or after January 1, 

25 2011, and before January 1, 2022, and paragraphs (1)(B), 


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1 (2)(B), and (3)(B) of such subsection shall apply to covered 

2 part D drugs dispensed under this part on or after January 

3 1, 2022.’’. 

4 (e) EFFECTIVE DATE.—The amendments made by this 

5 section shall apply with respect to plan year 2022 and sub6 sequent plan years. 

7 SEC. 302. ALLOWING CERTAIN ENROLLEES OF PRESCRIP8 TION DRUGS PLANS AND MA–PD PLANS 

9 UNDER MEDICARE PROGRAM TO SPREAD OUT 

10 COST-SHARING UNDER CERTAIN CIR11 CUMSTANCES. 

12 Section 1860D–2(b)(2) of the Social Security Act (42 

13 U.S.C. 1395w–102(b)(2)), as amended by section 301, is 

14 further amended— 

15 (1) in subparagraph (A), by striking ‘‘Subject to 

16 subparagraphs (C) and (D)’’ and inserting ‘‘Subject 

17 to subparagraphs (C), (D), and (E)’’; and 

18 (2) by adding at the end the following new sub19 paragraph: 

20 ‘‘(E) ENROLLEE OPTION REGARDING

21 SPREADING COST-SHARING.—The Secretary shall 

22 establish by regulation a process under which, 

23 with respect to plan year 2022 and subsequent 

24 plan years, a prescription drug plan or an MA– 

25 PD plan shall, in the case of a part D eligible 


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1 individual enrolled with such plan for such plan 

2 year who is not a subsidy eligible individual (as 

3 defined in section 1860D–14(a)(3)) and with re4 spect to whom the plan projects that the dis5 pensing of the first fill of a covered part D drug 

6 to such individual will result in the individual 

7 incurring costs that are equal to or above the an8 nual out-of-pocket threshold specified in para9 graph (4)(B) for such plan year, provide such 

10 individual with the option to make the coinsur11 ance payment required under subparagraph (A) 

12 (for the portion of such costs that are not above 

13 such annual out-of-pocket threshold) in the form 

14 of periodic installments over the remainder of 

15 such plan year.’’. 

16 SEC. 303. ESTABLISHMENT OF PHARMACY QUALITY MEAS17 URES UNDER MEDICARE PART D. 

18 Section 1860D–4(c) of the Social Security Act (42 

19 U.S.C. 1395w–104(c)) is amended— 

20 (1) by redesignating the paragraph (6), as added 

21 by section 50354 of division E of the Bipartisan 

22 Budget Act of 2018 (Public Law 115–123), as para23 graph (7); and 

24 (2) by adding at the end the following new para25 graph: 


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1 ‘‘(8) APPLICATION OF PHARMACY QUALITY MEAS2 URES.— 

3 ‘‘(A) IN GENERAL.—A PDP sponsor that 

4 implements incentive payments to a pharmacy 

5 or price concessions paid by a pharmacy based 

6 on quality measures shall use measures estab7 lished or approved by the Secretary under sub8 paragraph (B) with respect to payment for cov9 ered part D drugs dispensed by such pharmacy. 

10 ‘‘(B) STANDARD PHARMACY QUALITY MEAS11 URES.—The Secretary shall establish or approve 

12 standard quality measures from a consensus and 

13 evidence-based organization for payments de14 scribed in subparagraph (A). Such measures 

15 shall focus on patient health outcomes and be 

16 based on proven criteria measuring pharmacy 

17 performance. 

18 ‘‘(C) EFFECTIVE DATE.—The requirement 

19 under subparagraph (A) shall take effect for plan 

20 years beginning on or after January 1, 2021, or 

21 such earlier date specified by the Secretary if the 

22 Secretary determines there are sufficient meas23 ures established or approved under subparagraph 

24 (B) to meet the requirement under subparagraph 

25 (A).’’. 


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1 TITLE IV—PRESCRIPTION DRUG 

2 POLICIES FOR LOW-INCOME 

3 INDIVIDUALS 

4 SEC. 401. ADJUSTMENTS TO MEDICARE PART D COST-SHAR5 ING REDUCTIONS FOR LOW-INCOME INDIVID6 UALS. 

7 Section 1860D–14(a) of the Social Security Act (42 

8 U.S.C. 1395w–114(a)), as amended by section 301(d), is 

9 further amended— 

10 (1) in paragraph (1)— 

11 (A) in subparagraph (D)— 

12 (i) in clause (ii)— 

13 (I) by striking ‘‘that does not ex14 ceed $1 for’’ and all that follows 

15 through the period at the end and in16 serting ‘‘that does not exceed— 

17 ‘‘(I) for plan years before plan 

18 year 2021— 

19 ‘‘(aa) for a generic drug or a 

20 preferred drug that is a multiple 

21 source drug (as defined in section 

22 1927(k)(7)(A)(i)), $1 or, if less, 

23 the copayment amount applicable 

24 to an individual under clause 

25 (iii); and 


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1 ‘‘(bb) for any other drug, $3 

2 or, if less, the copayment amount 

3 applicable to an individual under 

4 clause (iii); and’’; and 

5 (II) by adding at the end the fol6 lowing new subclauses: 

7 ‘‘(II) for plan year 2021— 

8 ‘‘(aa) for a generic drug, $0; 

9 and 

10 ‘‘(bb) for any other drug, the 

11 dollar amount applied under this 

12 clause (after application of para13 graph (4)(A)) for plan year 2020 

14 for a drug described in subclause 

15 (I)(bb); and 

16 ‘‘(III) for a subsequent year, the 

17 dollar amount applied under this 

18 clause for the previous year for the 

19 drug, increased by the annual percent20 age increase in the consumer price 

21 index (all items; U.S. city average) as 

22 of September of such previous year.’’; 

23 and 

24 (ii) in clause (iii)— 


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1 (I) by striking ‘‘does not exceed 

2 the copayment amount specified 

3 under’’ and inserting ‘‘does not ex4 ceed— 

5 ‘‘(I) for plan years beginning be6 fore plan year 2021, the copayment 

7 amount specified under’’; 

8 (II) by striking the period at the 

9 end and inserting ‘‘; and’’; and 

10 (III) by adding at the end the fol11 lowing new subclause: 

12 ‘‘(II) for plan year 2021 and each 

13 subsequent plan year, the copayment 

14 amount applied under clause (ii) for 

15 the drug and year involved.’’; and 

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

17 subparagraph: 

18 ‘‘(F) ROUNDING.—Any amount established 

19 under clause (ii) of subparagraph (D), including 

20 as applied under clause (iii) of such subpara21 graph or paragraph (2)(D), that is based on an 

22 increase of $3, that is not a multiple of 5 cents 

23 or 10 cents, respectively, shall be rounded to the 

24 nearest multiple of 5 cents or 10 cents, respec25 tively.’’; 


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1 (2) in paragraph (2)— 

2 (A) in subparagraph (D)— 

3 (i) by striking ‘‘of coinsurance of’’ and 

4 inserting ‘‘of— 

5 ‘‘(i) for plan years before plan year 

6 2021, coinsurance of’’; 

7 (ii) by striking the period at the end 

8 and inserting ‘‘; and’’; and 

9 (iii) by adding at the end the following 

10 new clause: 

11 ‘‘(ii) for plan year 2021 and each sub12 sequent plan year, a copayment amount 

13 that does not exceed the copayment amount 

14 applied under paragraph (1)(D)(ii) for the 

15 drug and year involved.’’; and 

16 (B) in subparagraph (E)— 

17 (i) by striking ‘‘subsection (c), the sub18 stitution for’’ and inserting ‘‘subsection 

19 (c)— 

20 ‘‘(i) for plan years before plan year 

21 2021, the substitution for’’; 

22 (ii) by striking the period at the end 

23 and inserting ‘‘; and’’; and 

24 (iii) by adding at the end the following 

25 new clause: 


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1 ‘‘(ii) for plan year 2021, the elimi2 nation of any cost-sharing imposed under 

3 section 1860D–2(b)(4)(A).’’; and 

4 (3) in paragraph (4)(A)(ii), by inserting ‘‘(before 

5 2021)’’ after ‘‘subsequent year’’. 

6 SEC. 402. DISSEMINATION TO MEDICARE PART D SUBSIDY 

7 ELIGIBLE INDIVIDUALS OF INFORMATION 

8 COMPARING PREMIUMS OF CERTAIN PRE9 SCRIPTION DRUG PLANS. 

10 Section 1860D–1(c)(3) of the Social Security Act (42 

11 U.S.C. 1395w–101(c)(3)) is amended by adding at the end 

12 the following new subparagraph: 

13 ‘‘(C) INFORMATION ON PREMIUMS FOR SUB14 SIDY ELIGIBLE INDIVIDUALS.— 

15 ‘‘(i) IN GENERAL.—For plan year 2022 

16 and each subsequent plan year, the Sec17 retary shall disseminate to each subsidy eli18 gible individual (as defined in section 

19 1860D–14(a)(3)) information under this 

20 paragraph comparing premiums that would 

21 apply to such individual for prescription 

22 drug coverage under LIS benchmark plans, 

23 including, in the case of an individual en24 rolled in a prescription drug plan under 

25 this part, information that compares the 


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1 premium that would apply if such indi2 vidual were to remain enrolled in such plan 

3 to premiums that would apply if the indi4 vidual were to enroll in other LIS bench5 mark plans. 

6 ‘‘(ii) LIS BENCHMARK PLAN.—For 

7 purposes of clause (i), the term ‘LIS bench8 mark plan’ means, with respect to an indi9 vidual, a prescription drug plan under this 

10 part that is offered in the region in which 

11 the individual resides and— 

12 ‘‘(I) that provides for a premium 

13 that is not more than the low-income 

14 benchmark premium amount (as de15 fined in section 1860D–14(b)(2)) for 

16 such region; or 

17 ‘‘(II) with respect to which the 

18 premium would be waived as de mini19 mis pursuant to section 1860D– 

20 14(a)(5) for such individual.’’. 


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1 SEC. 403. PROVIDING FOR INTELLIGENT ASSIGNMENT OF 

2 CERTAIN SUBSIDY ELIGIBLE INDIVIDUALS 

3 AUTO-ENROLLED UNDER MEDICARE PRE4 SCRIPTION DRUG PLANS AND MA–PD PLANS. 

5 (a) IN GENERAL.—Section 1860D–1(b)(1) of the So6 cial Security Act (42 U.S.C. 1395w–101(b)(1)) is amend7 ed— 

8 (1) in subparagraph (C)— 

9 (A) by inserting after ‘‘PDP region’’ the fol10 lowing: ‘‘or through use of an intelligent assign11 ment process that is designed to maximize the 

12 access of such individual to necessary prescrip13 tion drugs while minimizing costs to such indi14 vidual and to the program under this part to the 

15 greatest extent possible. In the case the Secretary 

16 enrolls such individuals through use of an intel17 ligent assignment process, such process shall take 

18 into account the extent to which prescription 

19 drugs necessary for the individual are covered in 

20 the case of a PDP sponsor of a prescription drug 

21 plan that uses a formulary, the use of prior au22 thorization or other restrictions on access to cov23 erage of such prescription drugs by such a spon24 sor, and the overall quality of a prescription 

25 drug plan as measured by quality ratings estab26 lished by the Secretary’’; and 


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1 (B) by striking ‘‘Nothing in the previous 

2 sentence’’ and inserting ‘‘Nothing in this sub3 paragraph’’; and 

4 (2) in subparagraph (D)— 

5 (A) by inserting after ‘‘PDP region’’ the fol6 lowing: ‘‘or through use of an intelligent assign7 ment process that is designed to maximize the 

8 access of such individual to necessary prescrip9 tion drugs while minimizing costs to such indi10 vidual and to the program under this part to the 

11 greatest extent possible. In the case the Secretary 

12 enrolls such individuals through use of an intel13 ligent assignment process, such process shall take 

14 into account the extent to which prescription 

15 drugs necessary for the individual are covered in 

16 the case of a PDP sponsor of a prescription drug 

17 plan that uses a formulary, the use of prior au18 thorization or other restrictions on access to cov19 erage of such prescription drugs by such a spon20 sor, and the overall quality of a prescription 

21 drug plan as measured by quality ratings estab22 lished by the Secretary’’; and 

23 (B) by striking ‘‘Nothing in the previous 

24 sentence’’ and inserting ‘‘Nothing in this sub25 paragraph’’. 


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1 (b) EFFECTIVE DATE.—The amendments made by sub2 section (a) shall apply with respect to plan years beginning 

3 with plan year 2022. 

4 SEC. 404. EXPANDING ELIGIBILITY FOR LOW-INCOME SUB5 SIDIES UNDER PART D OF THE MEDICARE 

6 PROGRAM. 

7 Section 1860D–14(a) of the Social Security Act (42 

8 U.S.C. 1395w–114(a)), as amended by sections 301(d) and 

9 401, is further amended— 

10 (1) in the subsection heading, by striking ‘‘INDI11 VIDUALS’’ and all that follows through ‘‘LINE’’ and 

12 inserting ‘‘CERTAIN INDIVIDUALS’’; 

13 (2) in paragraph (1)— 

14 (A) by striking the paragraph heading and 

15 inserting ‘‘INDIVIDUALS WITH CERTAIN LOW IN16 COMES’’; and 

17 (B) in the matter preceding subparagraph 

18 (A), by inserting ‘‘(or, with respect to a plan 

19 year beginning on or after January 1, 2022, 150 

20 percent)’’ after ‘‘135 percent’’; 

21 (3) in paragraph (2)— 

22 (A) by striking the paragraph heading and 

23 inserting ‘‘OTHER LOW-INCOME INDIVIDUALS’’; 

24 and 

25 (B) in subparagraph (A)— 


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1 (i) by inserting ‘‘(or, with respect to a 

2 plan year beginning on or after January 1, 

3 2022, 150 percent)’’ after ‘‘135 percent’’; 

4 and 

5 (ii) by inserting ‘‘(or, with respect to a 

6 plan year beginning on or after January 1, 

7 2022, 200 percent)’’ after ‘‘150 percent’’; 

8 and 

9 (4) in paragraph (3)(A)(ii), by inserting ‘‘(or, 

10 with respect to a plan year beginning on or after 

11 January 1, 2022, 200 percent)’’ after ‘‘150 percent’’. 

12 SEC. 405. AUTOMATIC ELIGIBILITY OF CERTAIN LOW-IN13 COME TERRITORIAL RESIDENTS FOR PRE14 MIUM AND COST-SHARING SUBSIDIES UNDER 

15 THE MEDICARE PROGRAM; SUNSET OF EN16 HANCED ALLOTMENT PROGRAM. 

17 (a) AUTOMATIC ELIGIBILITY OF CERTAIN LOW-IN18 COME TERRITORIAL RESIDENTS FOR PREMIUM AND COST19 SHARING SUBSIDIES UNDER THE MEDICARE PROGRAM.— 

20 (1) IN GENERAL.—Section 1860D–14(a)(3) of the 

21 Social Security Act (42 U.S.C. 1395w–114(a)(3)) is 

22 amended— 

23 (A) in subparagraph (B)(v)— 

24 (i) in subclause (I), by striking ‘‘and’’ 

25 at the end; 


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1 (ii) in subclause (II), by striking the 

2 period and inserting ‘‘; and’’; and 

3 (iii) by inserting after subclause (II) 

4 the following new subclause: 

5 ‘‘(III) with respect to plan years 

6 beginning on or after January 1, 2021, 

7 shall provide that any part D eligible 

8 individual who is enrolled for medical 

9 assistance under the State Medicaid 

10 plan of a territory (as defined in sec11 tion 1935(f)) under title XIX (or a 

12 waiver of such a plan) shall be treated 

13 as a subsidy eligible individual de14 scribed in paragraph (1).’’; and 

15 (B) in subparagraph (F), by adding at the 

16 end the following new sentence: ‘‘The previous 

17 sentence shall not apply with respect to eligi18 bility determinations for premium and cost-shar19 ing subsidies under this section made on or after 

20 January 1, 2021.’’. 

21 (2) CONFORMING AMENDMENT.—Section 1860D– 

22 31(j)(2)(D) of the Social Security Act (42 U.S.C. 

23 1395w–141(j)(2)(D)) is amended by adding at the 

24 end the following new sentence: ‘‘The previous sen25 tence shall not apply with respect to amounts made 


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1 available to a State under this paragraph on or after 

2 January 1, 2021.’’. 

3 (b) SUNSET OF ENHANCED ALLOTMENT PROGRAM.— 

4 (1) IN GENERAL.—Section 1935(e) of the Social 

5 Security Act (42 U.S.C. 1396u–5(e)) is amended— 

6 (A) in paragraph (1)(A), by inserting after 

7 ‘‘such State’’ the following: ‘‘before January 1, 

8 2021’’; and 

9 (B) in paragraph (3)— 

10 (i) in subparagraph (A), in the matter 

11 preceding clause (i), by inserting after ‘‘a 

12 year’’ the following: ‘‘(before 2021)’’; and 

13 (ii) in subparagraph (B)(iii), by strik14 ing ‘‘a subsequent year’’ and inserting 

15 ‘‘each of fiscal years 2008 through 2020’’. 

16 (2) TERRITORY DEFINED.—Section 1935 of the 

17 Social Security Act (42 U.S.C. 1396u–5) is amended 

18 by adding at the end the following new subsection: 

19 ‘‘(f) TERRITORY DEFINED.—In this section, the term 

20 ‘territory’ means Puerto Rico, the Virgin Islands, Guam, 

21 the Northern Mariana Islands, and American Samoa.’’. 


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1 SEC. 406. AUTOMATIC QUALIFICATION OF CERTAIN MED2 ICAID BENEFICIARIES FOR PREMIUM AND 

3 COST-SHARING SUBSIDIES UNDER PART D OF 

4 THE MEDICARE PROGRAM. 

5 Clause (v) of section 1860D–14(a)(3)(B) of the Social 

6 Security Act (42 U.S.C. 1395w–114(a)(3)(B)), as amended 

7 by section 405, is further amended— 

8 (1) in subclause (II), by striking ‘‘and’’ at the 

9 end; 

10 (2) in subclause (III), by striking the period and 

11 inserting ‘‘; and’’; and 

12 (3) by inserting after subclause (III) the fol13 lowing new subclause: 

14 ‘‘(IV) with respect to plan years 

15 beginning on or after January 1, 2022, 

16 shall, notwithstanding the preceding 

17 clauses of this subparagraph, provide 

18 that any part D eligible individual not 

19 described in subclause (I), (II), or (III) 

20 who is enrolled, as of the day before the 

21 date on which such individual attains 

22 the age of 65, for medical assistance 

23 under a State plan under title XIX (or 

24 a waiver of such plan) pursuant to 

25 clause (i)(VIII) or (ii)(XX) of section 

26 1902(a)(10)(A), and who has income 


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1 below 200 percent of the poverty line 

2 applicable to a family of the size in3 volved, shall be treated as a subsidy el4 igible individual described in para5 graph (1) for a limited period of time, 

6 as specified by the Secretary.’’. 

7 SEC. 407. ELIMINATING THE RESOURCE REQUIREMENT 

8 WITH RESPECT TO SUBSIDY ELIGIBLE INDI9 VIDUALS UNDER PART D OF THE MEDICARE 

10 PROGRAM. 

11 Section 1860D–14(a)(3)(A)(iii) of the Social Security 

12 Act (42 U.S.C. 1395w–114(a)(3)(A)(iii)) is amended by in13 serting ‘‘in the case of a plan year beginning before Janu14 ary 1, 2022,’’ before ‘‘meets’’. 

15 TITLE V—DRUG PRICE 

16 TRANSPARENCY 

17 SEC. 501. DRUG PRICE TRANSPARENCY. 

18 Part A of title XI of the Social Security Act is amend19 ed by adding at the end the following new sections: 

20 ‘‘SEC. 1150C. REPORTING ON DRUG PRICES. 

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

22 ‘‘(1) MANUFACTURER.—The term ‘manufacturer’ 

23 means the person— 

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

25 approved under section 505 of the Federal Food, 


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1 Drug, and Cosmetic Act or licensed under section 

2 351 of the Public Health Service Act; or 

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

4 wholesale acquisition cost for the drug. 

5 ‘‘(2) QUALIFYING DRUG.—The term ‘qualifying 

6 drug’ means any drug that is approved under sub7 section (c) or (j) of section 505 of the Federal Food, 

8 Drug, and Cosmetic Act or licensed under subsection 

9 (a) or (k) of section 351 of the Public Health Service 

10 Act— 

11 ‘‘(A) that has a wholesale acquisition cost of 

12 $100 or more, adjusted for inflation occurring 

13 after the date of enactment of this section, for a 

14 month’s supply or a typical course of treatment 

15 that lasts less than a month, and is— 

16 ‘‘(i) subject to section 503(b)(1) of the 

17 Federal Food, Drug, and Cosmetic Act; and 

18 ‘‘(ii) not a preventative vaccine; and 

19 ‘‘(B) for which, during the previous cal20 endar year, at least 1 dollar of the total amount 

21 of sales were for individuals enrolled under the 

22 Medicare program under title XVIII or under a 

23 State Medicaid plan under title XIX or under a 

24 waiver of such plan. 


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1 ‘‘(3) WHOLESALE ACQUISITION COST.—The term 

2 ‘wholesale acquisition cost’ has the meaning given 

3 that term in section 1847A(c)(6)(B). 

4 ‘‘(b) REPORT.— 

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

6 a qualifying drug shall submit a report to the Sec7 retary if, with respect to the qualifying drug— 

8 ‘‘(A) there is an increase in the price of the 

9 qualifying drug that results in an increase in the 

10 wholesale acquisition cost of that drug that is 

11 equal to— 

12 ‘‘(i) 10 percent or more within a 12- 

13 month period beginning on or after Janu14 ary 1, 2019; or 

15 ‘‘(ii) 25 percent or more within a 36- 

16 month period beginning on or after Janu17 ary 1, 2019; or 

18 ‘‘(B) the estimated price of the qualifying 

19 drug or spending per individual or per user of 

20 such drug (as estimated by the Secretary) for the 

21 applicable year (or per course of treatment in 

22 such applicable year as determined by the Sec23 retary) is at least $26,000 beginning on or after 

24 January 1, 2021. 


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1 ‘‘(2) REPORT DEADLINE.—Each report described 

2 in paragraph (1) shall be submitted to the Sec3 retary— 

4 ‘‘(A) in the case of a report with respect to 

5 an increase in the price of a qualifying drug 

6 that occurs during the period beginning on Jan7 uary 1, 2019, and ending on the day that is 60 

8 days after the date of the enactment of this sec9 tion, not later than 90 days after such date of 

10 enactment; 

11 ‘‘(B) in the case of a report with respect to 

12 an increase in the price of a qualifying drug 

13 that occurs after the period described in subpara14 graph (A), not later than 30 days prior to the 

15 planned effective date of such price increase for 

16 such qualifying drug; and 

17 ‘‘(C) in the case of a report with respect to 

18 a qualifying drug that meets the criteria under 

19 paragraph (1)(B), not later than 30 days after 

20 such drug meets such criteria. 

21 ‘‘(c) CONTENTS.—A report under subsection (b), con22 sistent with the standard for disclosures described in section 

23 213.3(d) of title 12, Code of Federal Regulations (as in effect 

24 on the date of enactment of this section), shall, at a min25 imum, include— 


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

2 ‘‘(A) the percentage by which the manufac3 turer will raise the wholesale acquisition cost of 

4 the drug within the 12-month period or 36- 

5 month period as described in subsection 

6 (b)(1)(A)(i) or (b)(1)(A)(ii), and the effective 

7 date of such price increase or the cost associated 

8 with a qualifying drug if such drug meets the 

9 criteria under subsection (b)(1)(B) and the effec10 tive date at which such drug meets such criteria; 

11 ‘‘(B) an explanation for, and description of, 

12 each price increase for such drug that will occur 

13 during the 12-month period or the 36-month pe14 riod described in subsection (b)(1)(A)(i) or 

15 (b)(1)(A)(ii), as applicable; 

16 ‘‘(C) an explanation for, and description of, 

17 the cost associated with a qualifying drug if such 

18 drug meets the criteria under subsection 

19 (b)(1)(B), as applicable; 

20 ‘‘(D) if known and different from the manu21 facturer of the qualifying drug, the identity of— 

22 ‘‘(i) the sponsor or sponsors of any in23 vestigational new drug applications under 

24 section 505(i) of the Federal Food, Drug, 

25 and Cosmetic Act for clinical investigations 


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1 with respect to such drug, for which the full 

2 reports are submitted as part of the appli3 cation— 

4 ‘‘(I) for approval of the drug 

5 under section 505 of such Act; or 

6 ‘‘(II) for licensure of the drug 

7 under section 351 of the Pubic Health 

8 Service Act; and 

9 ‘‘(ii) the sponsor of an application for 

10 the drug approved under such section 505 of 

11 the Federal Food, Drug, and Cosmetic Act 

12 or licensed under section 351 of the Public 

13 Health Service Act; 

14 ‘‘(E) a description of the history of the 

15 manufacturer’s price increases for the drug since 

16 the approval of the application for the drug 

17 under section 505 of the Federal Food, Drug, 

18 and Cosmetic Act or the issuance of the license 

19 for the drug under section 351 of the Public 

20 Health Service Act, or since the manufacturer 

21 acquired such approved application or license, if 

22 applicable; 

23 ‘‘(F) the current wholesale acquisition cost 

24 of the drug; 


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1 ‘‘(G) the total expenditures of the manufac2 turer on— 

3 ‘‘(i) materials and manufacturing for 

4 such drug; 

5 ‘‘(ii) acquiring patents and licensing 

6 for such drug; and 

7 ‘‘(iii) purchasing or acquiring such 

8 drug from another manufacturer, if appli9 cable; 

10 ‘‘(H) the percentage of total expenditures of 

11 the manufacturer on research and development 

12 for such drug that was derived from Federal 

13 funds; 

14 ‘‘(I) the total expenditures of the manufac15 turer on research and development for such drug 

16 that is necessary to demonstrate that it meets 

17 applicable statutory standards for approval 

18 under section 505 of the Federal Food, Drug, 

19 and Cosmetic Act or licensure under section 351 

20 of the Public Health Service Act, as applicable; 

21 ‘‘(J) the total expenditures of the manufac22 turer on pursuing new or expanded indications 

23 or dosage changes for such drug under section 

24 505 of the Federal Food, Drug, and Cosmetic Act 

25 or section 351 of the Public Health Service Act; 


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1 ‘‘(K) the total expenditures of the manufac2 turer on carrying out postmarket requirements 

3 related to such drug, including under section 

4 505(o)(3) of the Federal Food, Drug, and Cos5 metic Act; 

6 ‘‘(L) 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 of 

11 the license for the drug under section 351 of the 

12 Public Health Service Act, or since the manufac13 turer acquired such approved application or li14 cense; and 

15 ‘‘(M) the total costs associated with mar16 keting and advertising for the qualifying drug; 

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

18 ‘‘(A) the total revenue and the net profit of 

19 the manufacturer for each of the 12-month period 

20 described in subsection (b)(1)(A)(i) or the 36- 

21 month period described in subsection 

22 (b)(1)(A)(ii), as applicable; 

23 ‘‘(B) all stock-based performance metrics 

24 used by the manufacturer to determine executive 

25 compensation for each of the 12-month periods 


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1 described in subsection (b)(1)(A)(i) or the 36- 

2 month periods described in subsection 

3 (b)(1)(A)(ii), as applicable; and 

4 ‘‘(C) any additional information the manu5 facturer chooses to provide related to drug pric6 ing decisions, such as total expenditures on— 

7 ‘‘(i) drug research and development; or 

8 ‘‘(ii) clinical trials, including on drugs 

9 that failed to receive approval by the Food 

10 and Drug Administration; and 

11 ‘‘(3) such other related information as the Sec12 retary considers appropriate and as specified by the 

13 Secretary. 

14 ‘‘(d) INFORMATION PROVIDED.—The manufacturer of 

15 a qualifying drug that is required to submit a report under 

16 subsection (b), shall ensure that such report and any expla17 nation for, and description of, each price increase described 

18 in subsection (c)(1) shall be truthful, not misleading, and 

19 accurate. 

20 ‘‘(e) CIVIL MONETARY PENALTY.—Any manufacturer 

21 of a qualifying drug that fails to submit a report for the 

22 drug as required by this section, following notification by 

23 the Secretary to the manufacturer that the manufacturer 

24 is not in compliance with this section, shall be subject to 


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1 a civil monetary penalty of $75,000 for each day on which 

2 the violation continues. 

3 ‘‘(f) FALSE INFORMATION.—Any manufacturer that 

4 submits a report for a drug as required by this section that 

5 knowingly provides false information in such report is sub6 ject to a civil monetary penalty in an amount not to exceed 

7 $100,000 for each item of false information. 

8 ‘‘(g) PUBLIC POSTING.— 

9 ‘‘(1) IN GENERAL.—Subject to paragraph (4), the 

10 Secretary shall post each report submitted under sub11 section (b) on the public website of the Department of 

12 Health and Human Services the day the price in13 crease of a qualifying drug is scheduled to go into ef14 fect. 

15 ‘‘(2) FORMAT.—In developing the format in 

16 which reports will be publicly posted under para17 graph (1), the Secretary shall consult with stake18 holders, including beneficiary groups, and shall seek 

19 feedback from consumer advocates and readability ex20 perts on the format and presentation of the content of 

21 such reports to ensure that such reports are— 

22 ‘‘(A) user-friendly to the public; and 

23 ‘‘(B) written in plain language that con24 sumers can readily understand. 


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1 ‘‘(3) LIST.—In addition to the reports submitted 

2 under subsection (b), the Secretary shall also post a 

3 list of each qualifying drug with respect to which the 

4 manufacturer was required to submit such a report in 

5 the preceding year and whether such manufacturer 

6 was required to submit such report based on a quali7 fying price increase or whether such drug meets the 

8 criteria under subsection (b)(1)(B). 

9 ‘‘(4) PROTECTED INFORMATION.—In carrying 

10 out this section, the Secretary shall enforce applicable 

11 law concerning the protection of confidential commer12 cial information and trade secrets. 

13 ‘‘SEC. 1150D. ANNUAL REPORT TO CONGRESS. 

14 ‘‘(a) IN GENERAL.—Subject to subsection (b), the Sec15 retary shall submit to the Committees on Energy and Com16 merce and Ways and Means of the House of Representatives 

17 and the Committees on Health, Education, Labor, and Pen18 sions and Finance of the Senate, and post on the public 

19 website of the Department of Health and Human Services 

20 in a way that is user-friendly to the public and written 

21 in plain language that consumers can readily understand, 

22 an annual report— 

23 ‘‘(1) summarizing the information reported pur24 suant to section 1150C; 


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1 ‘‘(2) including copies of the reports and sup2 porting detailed economic analyses submitted pursu3 ant to such section; 

4 ‘‘(3) detailing the costs and expenditures in5 curred by the Department of Health and Human 

6 Services in carrying out section 1150C; and 

7 ‘‘(4) explaining how the Department of Health 

8 and Human Services is improving consumer and pro9 vider information about drug value and drug price 

10 transparency. 

11 ‘‘(b) PROTECTED INFORMATION.—In carrying out this 

12 section, the Secretary shall enforce applicable law con13 cerning the protection of confidential commercial informa14 tion and trade secrets.’’. 

15 TITLE VI—MISCELLANEOUS 

16 SEC. 601. TEMPORARY INCREASE IN MEDICARE PART B PAY17 MENT FOR CERTAIN BIOSIMILAR BIOLOGICAL 

18 PRODUCTS. 

19 Section 1847A(b)(8) of the Social Security Act (42 

20 U.S.C. 1395w–3a(b)(8)) is amended— 

21 (1) by redesignating subparagraphs (A) and (B) 

22 as clauses (i) and (ii), respectively, and moving the 

23 margin of each such redesignated clause 2 ems to the 

24 right; 


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1 (2) by striking ‘‘PRODUCT.—The amount’’ and 

2 inserting the following: ‘‘PRODUCT.— 

3 ‘‘(A) IN GENERAL.—Subject to subpara4 graph (B), the amount’’; and 

5 (3) by adding at the end the following new sub6 paragraph: 

7 ‘‘(B) TEMPORARY PAYMENT INCREASE.— 

8 ‘‘(i) IN GENERAL.—In the case of a 

9 qualifying biosimilar biological product 

10 that is furnished during the applicable 5- 

11 year period for such product, the amount 

12 specified in this paragraph for such product 

13 with respect to such period is the sum deter14 mined under subparagraph (A), except that 

15 clause (ii) of such subparagraph shall be 

16 applied by substituting ‘8 percent’ for ‘6 

17 percent’. 

18 ‘‘(ii) APPLICABLE 5-YEAR PERIOD.— 

19 For purposes of clause (i), the applicable 5- 

20 year period for a biosimilar biological prod21 uct is— 

22 ‘‘(I) in the case of such a product 

23 for which payment was made under 

24 this paragraph as of December 31, 


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1 2019, the 5-year period beginning on 

2 January 1, 2020; and 

3 ‘‘(II) in the case of such a product 

4 for which payment is first made under 

5 this paragraph during a calendar 

6 quarter during the period beginning 

7 January 1, 2020, and ending Decem8 ber 31, 2024, the 5-year period begin9 ning on the first day of such calendar 

10 quarter during which such payment is 

11 first made. 

12 ‘‘(iii) QUALIFYING BIOSIMILAR BIO13 LOGICAL PRODUCT DEFINED.—For purposes 

14 of this subparagraph, the term ‘qualifying 

15 biosimilar biological product’ means a bio16 similar biological product described in 

17 paragraph (1)(C) with respect to which— 

18 ‘‘(I) in the case of a product de19 scribed in clause (ii)(I), the average 

20 sales price is not more than the aver21 age sales price for the reference biologi22 cal product; and 

23 ‘‘(II) in the case of a product de24 scribed in clause (ii)(II), the wholesale 

25 acquisition cost is not more than the 


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1 wholesale acquisition cost for the ref2 erence biological product.’’. 

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

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

5 the ‘‘Elijah E. Cummings Lower Drug Costs 

6 Now Act’’. 

7 (b) TABLE OF CONTENTS.—The table of con8 tents is as follows: 

Sec. 1. Short title; table of contents. 

TITLE I—LOWERING PRICES THROUGH FAIR DRUG PRICE 

NEGOTIATION 

Sec. 101. Providing for lower prices for certain high-priced single source drugs. 

Sec. 102. Selected drug manufacturer excise tax imposed during noncompliance periods. 

TITLE II—MEDICARE PARTS B AND D PRESCRIPTION 

DRUG INFLATION REBATES 

Sec. 201. Medicare part B rebate by manufacturers. 

Sec. 202. Medicare part D rebate by manufacturers. 

TITLE III—PART D IMPROVEMENTS AND MAXIMUM OUTOF-POCKET CAP FOR MEDICARE BENEFICIARIES 

Sec. 301. Medicare part D benefit redesign. 

Sec. 302. Allowing certain enrollees of prescription drugs plans 

and MA–PD plans under Medicare program to 

spread out cost-sharing under certain circumstances. 

Sec. 303. Establishment of pharmacy quality measures under 

Medicare part D. 

TITLE IV—PRESCRIPTION DRUG POLICIES FOR LOWINCOME INDIVIDUALS 

Sec. 401. Adjustments to Medicare part D cost-sharing reductions for low-income individuals. 

Sec. 402. Dissemination to Medicare part D subsidy eligible individuals of information comparing premiums of 

certain prescription drug plans. 

Sec. 403. Providing for intelligent assignment of certain subsidy eligible individuals auto-enrolled under 

Medicare prescription drug plans and MA–PD 

plans. 


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Sec. 404. Expanding eligibility for low-income subsidies under 

part D of the Medicare program. 

Sec. 405. Automatic eligibility of certain low-income territorial 

residents for premium and cost-sharing subsidies 

under the Medicare program; Sunset of enhanced 

allotment program. 

Sec. 406. Automatic qualification of certain Medicaid beneficiaries for premium and cost-sharing subsidies 

under part D of the Medicare program. 

Sec. 407. Eliminating the resource requirement with respect to 

subsidy eligible individuals under part D of the 

Medicare program. 

Sec. 408. Providing for certain rules regarding the treatment 

of eligible retirement plans in determining the 

eligibility of individuals for premium and costsharing subsidies under part D of the Medicare 

program. 

TITLE V—DRUG PRICE TRANSPARENCY 

Sec. 501. Drug price transparency. 

1 TITLE I—LOWERING PRICES 

2 THROUGH FAIR DRUG PRICE 

3 NEGOTIATION 

4 SEC. 101. PROVIDING FOR LOWER PRICES FOR CERTAIN 

5 HIGH-PRICED SINGLE SOURCE DRUGS. 

6 (a) PROGRAM TO LOWER PRICES FOR CER7 TAIN HIGH-PRICED SINGLE SOURCE DRUGS.— 

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

9 1301 et seq.) is amended by adding at the end 

10 the following new part: 

11 ‘‘PART E—FAIR PRICE NEGOTIATION PROGRAM 

12 TO LOWER PRICES FOR CERTAIN HIGH13 PRICED SINGLE SOURCE DRUGS 

14 ‘‘SEC. 1191. ESTABLISHMENT OF PROGRAM. 

15 ‘‘(a) IN GENERAL.—The Secretary shall es16 tablish a Fair Price Negotiation Program (in 


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1 this part referred to as the ‘program’). Under 

2 the program, with respect to each price appli3 cability period, the Secretary shall— 

4 ‘‘(1) publish a list of selected drugs in 

5 accordance with section 1192; 

6 ‘‘(2) enter into agreements with man7 ufacturers of selected drugs with respect 

8 to such period, in accordance with sec9 tion 1193; 

10 ‘‘(3) negotiate and, if applicable, re11 negotiate maximum fair prices for such 

12 selected drugs, in accordance with sec13 tion 1194; and 

14 ‘‘(4) carry out the administrative du15 ties described in section 1196. 

16 ‘‘(b) DEFINITIONS RELATING TO TIMING.—For 

17 purposes of this part: 

18 ‘‘(1) INITIAL PRICE APPLICABILITY

19 YEAR.—The term ‘initial price applica20 bility year’ means a plan year (beginning 

21 with plan year 2023) or, if agreed to in an 

22 agreement under section 1193 by the Sec23 retary and manufacturer involved, a pe24 riod of more than one plan year (begin25 ning on or after January 1, 2023). 


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1 ‘‘(2) PRICE APPLICABILITY PERIOD.—The 

2 term ‘price applicability period’ means, 

3 with respect to a drug, the period begin4 ning with the initial price applicability 

5 year with respect to which such drug is a 

6 selected drug and ending with the last 

7 plan year during which the drug is a se8 lected drug. 

9 ‘‘(3) SELECTED DRUG PUBLICATION

10 DATE.—The term ‘selected drug publica11 tion date’ means, with respect to each ini12 tial price applicability year, April 15 of 

13 the plan year that begins 2 years prior to 

14 such year. 

15 ‘‘(4) VOLUNTARY NEGOTIATION PERIOD.— 

16 The term ‘voluntary negotiation period’ 

17 means, with respect to an initial price ap18 plicability year with respect to a selected 

19 drug, the period— 

20 ‘‘(A) beginning on the sooner of— 

21 ‘‘(i) the date on which the 

22 manufacturer of the drug and the 

23 Secretary enter into an agree24 ment under section 1193 with re25 spect to such drug; or 


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1 ‘‘(ii) June 15 following the se2 lected drug publication date with 

3 respect to such selected drug; and 

4 ‘‘(B) ending on March 31 of the 

5 year that begins one year prior to the 

6 initial price applicability year. 

7 ‘‘(c) OTHER DEFINITIONS.—For purposes of 

8 this part: 

9 ‘‘(1) FAIR PRICE ELIGIBLE INDIVIDUAL.— 

10 The term ‘fair price eligible individual’ 

11 means, with respect to a selected drug— 

12 ‘‘(A) in the case such drug is fur13 nished or dispensed to the individual 

14 at a pharmacy or by a mail order 

15 service— 

16 ‘‘(i) an individual who is en17 rolled under a prescription drug 

18 plan under part D of title XVIII or 

19 an MA–PD plan under part C of 

20 such title under which coverage 

21 is provided for such drug; and 

22 ‘‘(ii) an individual who is en23 rolled under a group health plan 

24 or health insurance coverage of25 fered in the group or individual 


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1 market (as such terms are defined 

2 in section 2791 of the Public 

3 Health Service Act) with respect 

4 to which there is in effect an 

5 agreement with the Secretary 

6 under section 1197 with respect 

7 to such selected drug as so fur8 nished or dispensed; and 

9 ‘‘(B) in the case such drug is fur10 nished or administered to the indi11 vidual by a hospital, physician, or 

12 other provider of services or sup13 plier— 

14 ‘‘(i) an individual who is enti15 tled to benefits under part A of 

16 title XVIII or enrolled under part 

17 B of such title if such selected 

18 drug is covered under the respec19 tive part; and 

20 ‘‘(ii) an individual who is en21 rolled under a group health plan 

22 or health insurance coverage of23 fered in the group or individual 

24 market (as such terms are defined 

25 in section 2791 of the Public 


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1 Health Service Act) with respect 

2 to which there is in effect an 

3 agreement with the Secretary 

4 under section 1197 with respect 

5 to such selected drug as so fur6 nished or administered. 

7 ‘‘(2) MAXIMUM FAIR PRICE.—The term 

8 ‘maximum fair price’ means, with respect 

9 to a plan year during a price applica10 bility period and with respect to a se11 lected drug (as defined in section 1192(c)) 

12 with respect to such period, the price 

13 published pursuant to section 1195 in the 

14 Federal Register for such drug and year. 

15 ‘‘(3) AVERAGE INTERNATIONAL MARKET

16 PRICE DEFINED.— 

17 ‘‘(A) IN GENERAL.—The terms ‘aver18 age international market price’ and 

19 ‘AIM price’ mean, with respect to a 

20 drug, the average price (which shall 

21 be the net average price, if prac22 ticable, and volume-weighted, if prac23 ticable) for a unit (as defined in para24 graph (4)) of the drug for sales of 

25 such drug (calculated across different 


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1 dosage forms and strengths of the 

2 drug and not based on the specific 

3 formulation or package size or pack4 age type), as computed (as of the date 

5 of publication of such drug as a se6 lected drug under section 1192(a)) in 

7 all countries described in clause (ii) 

8 of subparagraph (B) that are applica9 ble countries (as described in clause 

10 (i) of such subparagraph) with re11 spect to such drug. 

12 ‘‘(B) APPLICABLE COUNTRIES.— 

13 ‘‘(i) IN GENERAL.—For purposes 

14 of subparagraph (A), a country 

15 described in clause (ii) is an ap16 plicable country described in this 

17 clause with respect to a drug if 

18 there is available an average 

19 price for any unit for the drug for 

20 sales of such drug in such coun21 try. 

22 ‘‘(ii) COUNTRIES DESCRIBED.— 

23 For purposes of this paragraph, 

24 the following are countries de25 scribed in this clause: 


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1 ‘‘(I) Australia. 

2 ‘‘(II) Canada. 

3 ‘‘(III) France. 

4 ‘‘(IV) Germany. 

5 ‘‘(V) Japan. 

6 ‘‘(VI) The United Kingdom. 

7 ‘‘(4) UNIT.—The term ‘unit’ means, 

8 with respect to a drug, the lowest identi9 fiable quantity (such as a capsule or tab10 let, milligram of molecules, or grams) of 

11 the drug that is dispensed. 

12 ‘‘SEC. 1192. SELECTION OF NEGOTIATION-ELIGIBLE DRUGS 

13 AS SELECTED DRUGS. 

14 ‘‘(a) IN GENERAL.—Not later than the se15 lected drug publication date with respect to 

16 an initial price applicability year, the Sec17 retary shall select and publish in the Federal 

18 Register a list of— 

19 ‘‘(1)(A) with respect to an initial price 

20 applicability year during the period be21 ginning with 2023 and ending with 2027, 

22 at least 25 negotiation-eligible drugs de23 scribed in subparagraphs (A) and (B), but 

24 not subparagraph (C), of subsection (d)(1) 

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1 cability year during such period begin2 ning after 2023, the maximum number (if 

3 such number is less than 25) of such ne4 gotiation-eligible drugs for the year) with 

5 respect to such year; 

6 ‘‘(B) with respect to an initial price 

7 applicability year during the period be8 ginning with 2028 and ending with 2032, 

9 at least 30 negotiation-eligible drugs de10 scribed in subparagraphs (A) and (B), but 

11 not subparagraph (C), of subsection (d)(1) 

12 (or, with respect to an initial price appli13 cability year during such period, the 

14 maximum number (if such number is less 

15 than 30) of such negotiation-eligible 

16 drugs for the year) with respect to such 

17 year; and 

18 ‘‘(C) with respect to an initial price 

19 applicability year beginning after 2032, at 

20 least 35 negotiation-eligible drugs de21 scribed in subparagraphs (A) and (B), but 

22 not subparagraph (C), of subsection (d)(1) 

23 (or, with respect to an initial price appli24 cability year during such period, the 

25 maximum number (if such number is less 


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1 than 35) of such negotiation-eligible 

2 drugs for the year) with respect to such 

3 year; 

4 ‘‘(2) all negotiation-eligible drugs de5 scribed in subparagraph (C) of such sub6 section with respect to such year; and 

7 ‘‘(3) all new-entrant negotiation-eligi8 ble drugs (as defined in subsection (g)(1)) 

9 with respect to such year. 

10 Each drug published on the list pursuant to 

11 the previous sentence shall be subject to the 

12 negotiation process under section 1194 for the 

13 voluntary negotiation period with respect to 

14 such initial price applicability year (and the 

15 renegotiation process under such section as 

16 applicable for any subsequent year during the 

17 applicable price applicability period). In ap18 plying this subsection, any negotiation-eligi19 ble drug that is selected under this subsection 

20 for an initial price applicability year shall not 

21 count toward the required minimum amount 

22 of drugs to be selected under paragraph (1) 

23 for any subsequent year, including such a 

24 drug so selected that is subject to renegoti25 ation under section 1194. 


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1 ‘‘(b) SELECTION OF DRUGS.—In carrying out 

2 subsection (a)(1) the Secretary shall select for 

3 inclusion on the published list described in 

4 subsection (a) with respect to a price applica5 bility period, the negotiation-eligible drugs 

6 that the Secretary projects will result in the 

7 greatest savings to the Federal Government 

8 or fair price eligible individuals during the 

9 price applicability period. In making this pro10 jection of savings for drugs for which there is 

11 an AIM price for a price applicability period, 

12 the savings shall be projected across different 

13 dosage forms and strengths of the drugs and 

14 not based on the specific formulation or pack15 age size or package type of the drugs, taking 

16 into consideration both the volume of drugs 

17 for which payment is made, to the extent such 

18 data is available, and the amount by which 

19 the net price for the drugs exceeds the AIM 

20 price for the drugs. 

21 ‘‘(c) SELECTED DRUG.—For purposes of this 

22 part, each drug included on the list published 

23 under subsection (a) with respect to an initial 

24 price applicability year shall be referred to as 

25 a ‘selected drug’ with respect to such year and 


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1 each subsequent plan year beginning before 

2 the first plan year beginning after the date on 

3 which the Secretary determines two or more 

4 drug products— 

5 ‘‘(1) are approved or licensed (as ap6 plicable)— 

7 ‘‘(A) under section 505(j) of the 

8 Federal Food, Drug, and Cosmetic Act 

9 using such drug as the listed drug; or 

10 ‘‘(B) under section 351(k) of the 

11 Public Health Service Act using such 

12 drug as the reference product; and 

13 ‘‘(2) continue to be marketed. 

14 ‘‘(d) NEGOTIATION-ELIGIBLE DRUG.— 

15 ‘‘(1) IN GENERAL.—For purposes of this 

16 part, the term ‘negotiation-eligible drug’ 

17 means, with respect to the selected drug 

18 publication date with respect to an initial 

19 price applicability year, a qualifying sin20 gle source drug, as defined in subsection 

21 (e), that meets any of the following cri22 teria: 

23 ‘‘(A) COVERED PART D DRUGS.—The 

24 drug is among the 125 covered part D 

25 drugs (as defined in section 1860D– 


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1 2(e)) for which there was an esti2 mated greatest net spending under 

3 parts C and D of title XVIII, as deter4 mined by the Secretary, during the 

5 most recent plan year prior to such 

6 drug publication date for which data 

7 are available. 

8 ‘‘(B) OTHER DRUGS.—The drug is 

9 among the 125 drugs for which there 

10 was an estimated greatest net spend11 ing in the United States (including 

12 the 50 States, the District of Colum13 bia, and the territories of the United 

14 States), as determined by the Sec15 retary, during the most recent plan 

16 year prior to such drug publication 

17 date for which data are available. 

18 ‘‘(C) INSULIN.—The drug is a quali19 fying single source drug described in 

20 subsection (e)(3). 

21 ‘‘(2) CLARIFICATION.—In determining 

22 whether a qualifying single source drug 

23 satisfies any of the criteria described in 

24 paragraph (1), the Secretary shall, to the 

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1 gated across dosage forms and strengths 

2 of the drug and not based on the specific 

3 formulation or package size or package 

4 type of the drug. 

5 ‘‘(3) PUBLICATION.—Not later than the 

6 selected drug publication date with re7 spect to an initial price applicability 

8 year, the Secretary shall publish in the 

9 Federal Register a list of negotiation-eli10 gible drugs with respect to such selected 

11 drug publication date. 

12 ‘‘(e) QUALIFYING SINGLE SOURCE DRUG.— 

13 For purposes of this part, the term ‘qualifying 

14 single source drug’ means any of the fol15 lowing: 

16 ‘‘(1) DRUG PRODUCTS.—A drug that— 

17 ‘‘(A) is approved under section 

18 505(c) of the Federal Food, Drug, and 

19 Cosmetic Act and continues to be 

20 marketed pursuant to such approval; 

21 and 

22 ‘‘(B) is not the listed drug for any 

23 drug that is approved and continues 

24 to be marketed under section 505(j) of 

25 such Act. 


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1 ‘‘(2) BIOLOGICAL PRODUCTS.—A biologi2 cal product that— 

3 ‘‘(A) is licensed under section 

4 351(a) of the Public Health Service 

5 Act, including any product that has 

6 been deemed to be licensed under 

7 section 351 of such Act pursuant to 

8 section 7002(e)(4) of the Biologics 

9 Price Competition and Innovation 

10 Act of 2009, and continues to be mar11 keted under section 351 of such Act; 

12 and 

13 ‘‘(B) is not the reference product 

14 for any biological product that is li15 censed and continues to be marketed 

16 under section 351(k) of such Act. 

17 ‘‘(3) INSULIN PRODUCT.—Notwith18 standing paragraphs (1) and (2), any insu19 lin product that is approved under sub20 section (c) or (j) of section 505 of the Fed21 eral Food, Drug, and Cosmetic Act or li22 censed under subsection (a) or (k) of sec23 tion 351 of the Public Health Service Act 

24 and continues to be marketed under such 

25 section 505 or 351, including any insulin 


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1 product that has been deemed to be li2 censed under section 351(a) of the Public 

3 Health Service Act pursuant to section 

4 7002(e)(4) of the Biologics Price Competi5 tion and Innovation Act of 2009 and con6 tinues to be marketed pursuant to such 

7 licensure. 

8 For purposes of applying paragraphs (1) and 

9 (2), a drug or biological product that is mar10 keted by the same sponsor or manufacturer 

11 (or an affiliate thereof or a cross-licensed pro12 ducer or distributor) as the listed drug or ref13 erence product described in such respective 

14 paragraph shall not be taken into consider15 ation. 

16 ‘‘(f) INFORMATION ON INTERNATIONAL DRUG

17 PRICES.—For purposes of determining which 

18 negotiation-eligible drugs to select under sub19 section (a) and, in the case of such drugs that 

20 are selected drugs, to determine the max21 imum fair price for such a drug and whether 

22 such maximum fair price should be renegoti23 ated under section 1194, the Secretary shall 

24 use data relating to the AIM price with re25 spect to such drug as available or provided to 


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1 the Secretary and shall on an ongoing basis 

2 request from manufacturers of selected drugs 

3 information on the AIM price of such a drug. 

4 ‘‘(g) NEW-ENTRANT NEGOTIATION-ELIGIBLE

5 DRUGS.— 

6 ‘‘(1) IN GENERAL.—For purposes of this 

7 part, the term ‘new-entrant negotiation8 eligible drug’ means, with respect to the 

9 selected drug publication date with re10 spect to an initial price applicability 

11 year, a qualifying single source drug— 

12 ‘‘(A) that is first approved or li13 censed, as described in paragraph (1), 

14 (2), or (3) of subsection (e), as applica15 ble, during the year preceding such 

16 selected drug publication date; and 

17 ‘‘(B) that the Secretary deter18 mines under paragraph (2) is likely to 

19 be included as a negotiation-eligible 

20 drug with respect to the subsequent 

21 selected drug publication date. 

22 ‘‘(2) DETERMINATION.—In the case of a 

23 qualifying single source drug that meets 

24 the criteria described in subparagraph 

25 (A) of paragraph (1), with respect to an 


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1 initial price applicability year, if the 

2 wholesale acquisition cost at which such 

3 drug is first marketed in the United 

4 States is equal to or greater than the me5 dian household income (as determined 

6 according to the most recent data col7 lected by the United States Census Bu8 reau), the Secretary shall determine be9 fore the selected drug publication date 

10 with respect to the initial price applica11 bility year, if the drug is likely to be in12 cluded as a negotiation-eligible drug with 

13 respect to the subsequent selected drug 

14 publication date, based on the projected 

15 spending under title XVIII or in the 

16 United States on such drug. For purposes 

17 of this paragraph the term ‘United States’ 

18 includes the 50 States, the District of Co19 lumbia, and the territories of the United 

20 States. 

21 ‘‘SEC. 1193. MANUFACTURER AGREEMENTS. 

22 ‘‘(a) IN GENERAL.—For purposes of section 

23 1191(a)(2), the Secretary shall enter into 

24 agreements with manufacturers of selected 

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1 riod, by not later than June 15 following the 

2 selected drug publication date with respect to 

3 such selected drug, under which— 

4 ‘‘(1) during the voluntary negotiation 

5 period for the initial price applicability 

6 year for the selected drug, the Secretary 

7 and manufacturer, in accordance with 

8 section 1194, negotiate to determine (and, 

9 by not later than the last date of such pe10 riod and in accordance with subsection 

11 (c), agree to) a maximum fair price for 

12 such selected drug of the manufacturer 

13 in order to provide access to such price— 

14 ‘‘(A) to fair price eligible individ15 uals who with respect to such drug 

16 are described in subparagraph (A) of 

17 section 1191(c)(1) and are furnished 

18 or dispensed such drug during, sub19 ject to subparagraph (2), the price ap20 plicability period; and 

21 ‘‘(B) to hospitals, physicians, and 

22 other providers of services and sup23 pliers with respect to fair price eligi24 ble individuals who with respect to 

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1 graph (B) of such section and are fur2 nished or administered such drug 

3 during, subject to subparagraph (2), 

4 the price applicability period; 

5 ‘‘(2) the Secretary and the manufac6 turer shall, in accordance with a process 

7 and during a period specified by the Sec8 retary pursuant to rulemaking, renego9 tiate (and, by not later than the last date 

10 of such period and in accordance with 

11 subsection (c), agree to) the maximum 

12 fair price for such drug if the Secretary 

13 determines that there is a material 

14 change in any of the factors described in 

15 section 1194(d) relating to the drug, in16 cluding changes in the AIM price for 

17 such drug, in order to provide access to 

18 such maximum fair price (as so renegoti19 ated)— 

20 ‘‘(A) to fair price eligible individ21 uals who with respect to such drug 

22 are described in subparagraph (A) of 

23 section 1191(c)(1) and are furnished 

24 or dispensed such drug during any 

25 year during the price applicability 


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1 period (beginning after such renego2 tiation) with respect to such selected 

3 drug; and 

4 ‘‘(B) to hospitals, physicians, and 

5 other providers of services and sup6 pliers with respect to fair price eligi7 ble individuals who with respect to 

8 such drug are described in subpara9 graph (B) of such section and are fur10 nished or administered such drug 

11 during any year described in sub12 paragraph (A); 

13 ‘‘(3) the maximum fair price (includ14 ing as renegotiated pursuant to para15 graph (2)), with respect to such a selected 

16 drug, shall be provided to fair price eligi17 ble individuals, who with respect to such 

18 drug are described in subparagraph (A) 

19 of section 1191(c)(1), at the pharmacy or 

20 by a mail order service at the point-of21 sale of such drug; 

22 ‘‘(4) the manufacturer, subject to sub23 section (d), submits to the Secretary, in a 

24 form and manner specified by the Sec25 retary— 


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1 ‘‘(A) for the voluntary negotiation 

2 period for the price applicability pe3 riod (and, if applicable, before any 

4 period of renegotiation specified pur5 suant to paragraph (2)) with respect 

6 to such drug all information that the 

7 Secretary requires to carry out the 

8 negotiation (or renegotiation process) 

9 under this part, including informa10 tion described in section 1192(f) and 

11 section 1194(d)(1); and 

12 ‘‘(B) on an ongoing basis, informa13 tion on changes in prices for such 

14 drug that would affect the AIM price 

15 for such drug or otherwise provide a 

16 basis for renegotiation of the max17 imum fair price for such drug pursu18 ant to paragraph (2); 

19 ‘‘(5) the manufacturer agrees that in 

20 the case the selected drug of a manufac21 turer is a drug described in subsection 

22 (c), the manufacturer will, in accordance 

23 with such subsection, make any payment 

24 required under such subsection with re25 spect to such drug; and 


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1 ‘‘(6) the manufacturer complies with 

2 requirements imposed by the Secretary 

3 for purposes of administering the pro4 gram, including with respect to the du5 ties described in section 1196. 

6 ‘‘(b) AGREEMENT IN EFFECT UNTIL DRUG IS

7 NO LONGER A SELECTED DRUG.—An agreement 

8 entered into under this section shall be effec9 tive, with respect to a drug, until such drug 

10 is no longer considered a selected drug under 

11 section 1192(c). 

12 ‘‘(c) SPECIAL RULE FOR CERTAIN SELECTED

13 DRUGS WITHOUT AIM PRICE.— 

14 ‘‘(1) IN GENERAL.—In the case of a se15 lected drug for which there is no AIM 

16 price available with respect to the initial 

17 price applicability year for such drug and 

18 for which an AIM price becomes avail19 able beginning with respect to a subse20 quent plan year during the price applica21 bility period for such drug, if the Sec22 retary determines that the amount de23 scribed in paragraph (2)(A) for a unit of 

24 such drug is greater than the amount de25 scribed in paragraph (2)(B) for a unit of 


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1 such drug, then by not later than one 

2 year after the date of such determination, 

3 the manufacturer of such selected drug 

4 shall pay to the Treasury an amount 

5 equal to the product of— 

6 ‘‘(A) the difference between such 

7 amount described in paragraph (2)(A) 

8 for a unit of such drug and such 

9 amount described in paragraph (2)(B) 

10 for a unit of such drug; and 

11 ‘‘(B) the number of units of such 

12 drug sold in the United States, in13 cluding the 50 States, the District of 

14 Columbia, and the territories of the 

15 United States, during the period de16 scribed in paragraph (2)(B). 

17 ‘‘(2) AMOUNTS DESCRIBED.— 

18 ‘‘(A) WEIGHTED AVERAGE PRICE BE19 FORE AIM PRICE AVAILABLE.—For pur20 poses of paragraph (1), the amount 

21 described in this subparagraph for a 

22 selected drug described in such para23 graph, is the amount equal to the 

24 weighted average manufacturer price 

25 (as defined in section 1927(k)(1)) for 


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1 such dosage strength and form for 

2 the drug during the period beginning 

3 with the first plan year for which the 

4 drug is included on the list of nego5 tiation-eligible drugs published under 

6 section 1192(d) and ending with the 

7 last plan year during the price appli8 cability period for such drug with re9 spect to which there is no AIM price 

10 available for such drug. 

11 ‘‘(B) AMOUNT MULTIPLIER AFTER

12 AIM PRICE AVAILABLE.—For purposes of 

13 paragraph (1), the amount described 

14 in this subparagraph for a selected 

15 drug described in such paragraph, is 

16 the amount equal to 200 percent of 

17 the AIM price for such drug with re18 spect to the first plan year during the 

19 price applicability period for such 

20 drug with respect to which there is 

21 an AIM price available for such drug. 

22 ‘‘(d) CONFIDENTIALITY OF INFORMATION.— 

23 Information submitted to the Secretary under 

24 this part by a manufacturer of a selected drug 

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1 facturer (as determined by the Secretary) 

2 may be used only by the Secretary or dis3 closed to and used by the Comptroller Gen4 eral of the United States or the Medicare Pay5 ment Advisory Commission for purposes of 

6 carrying out this part. 

7 ‘‘(e) REGULATIONS.— 

8 ‘‘(1) IN GENERAL.—The Secretary shall, 

9 pursuant to rulemaking, specify, in ac10 cordance with paragraph (2), the infor11 mation that must be submitted under 

12 subsection (a)(4). 

13 ‘‘(2) INFORMATION SPECIFIED.—Informa14 tion described in paragraph (1), with re15 spect to a selected drug, shall include in16 formation on sales of the drug (by the 

17 manufacturer of the drug or by another 

18 entity under license or other agreement 

19 with the manufacturer, with respect to 

20 the sales of such drug, regardless of the 

21 name under which the drug is sold) in 

22 any foreign country that is part of the 

23 AIM price. The Secretary shall verify, to 

24 the extent practicable, such sales from 


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1 appropriate officials of the government of 

2 the foreign country involved. 

3 ‘‘(f) COMPLIANCE WITH REQUIREMENTS FOR

4 ADMINISTRATION OF PROGRAM.—Each manufac5 turer with an agreement in effect under this 

6 section shall comply with requirements im7 posed by the Secretary or a third party with 

8 a contract under section 1196(c)(1), as appli9 cable, for purposes of administering the pro10 gram. 

11 ‘‘SEC. 1194. NEGOTIATION AND RENEGOTIATION PROCESS. 

12 ‘‘(a) IN GENERAL.—For purposes of this 

13 part, under an agreement under section 1193 

14 between the Secretary and a manufacturer of 

15 a selected drug, with respect to the period for 

16 which such agreement is in effect and in ac17 cordance with subsections (b) and (c), the Sec18 retary and the manufacturer— 

19 ‘‘(1) shall during the voluntary nego20 tiation period with respect to the initial 

21 price applicability year for such drug, in 

22 accordance with this section, negotiate a 

23 maximum fair price for such drug for the 

24 purpose described in section 1193(a)(1); 

25 and 


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1 ‘‘(2) as applicable pursuant to section 

2 1193(a)(2) and in accordance with the 

3 process specified pursuant to such sec4 tion, renegotiate such maximum fair 

5 price for such drug for the purpose de6 scribed in such section. 

7 ‘‘(b) NEGOTIATING METHODOLOGY AND OB8 JECTIVE.— 

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

10 develop and use a consistent method11 ology for negotiations under subsection 

12 (a) that, in accordance with paragraph 

13 (2) and subject to paragraph (3), achieves 

14 the lowest maximum fair price for each 

15 selected drug while appropriately re16 warding innovation. 

17 ‘‘(2) PRIORITIZING FACTORS.—In consid18 ering the factors described in subsection 

19 (d) in negotiating (and, as applicable, re20 negotiating) the maximum fair price for a 

21 selected drug, the Secretary shall, to the 

22 extent practicable, consider all of the 

23 available factors listed but shall 

24 prioritize the following factors: 


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1 ‘‘(A) RESEARCH AND DEVELOPMENT

2 COSTS.—The factor described in para3 graph (1)(A) of subsection (d). 

4 ‘‘(B) MARKET DATA.—The factor de5 scribed in paragraph (1)(B) of such 

6 subsection. 

7 ‘‘(C) UNIT COSTS OF PRODUCTION

8 AND DISTRIBUTION.—The factor de9 scribed in paragraph (1)(C) of such 

10 subsection. 

11 ‘‘(D) COMPARISON TO EXISTING

12 THERAPEUTIC ALTERNATIVES.—The fac13 tor described in paragraph (2)(A) of 

14 such subsection. 

15 ‘‘(3) REQUIREMENT.— 

16 ‘‘(A) IN GENERAL.—In negotiating 

17 the maximum fair price of a selected 

18 drug, with respect to an initial price 

19 applicability year for the selected 

20 drug, and, as applicable, in renegoti21 ating the maximum fair price for 

22 such drug, with respect to a subse23 quent year during the price applica24 bility period for such drug, in the 

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1 lected drug offers under the negotia2 tion or renegotiation, as applicable, a 

3 price for such drug that is not more 

4 than the target price described in 

5 subparagraph (B) for such drug for 

6 the respective year, the Secretary 

7 shall agree under such negotiation or 

8 renegotiation, respectively, to such 

9 offered price as the maximum fair 

10 price. 

11 ‘‘(B) TARGET PRICE.— 

12 ‘‘(i) IN GENERAL.—Subject to 

13 clause (ii), the target price de14 scribed in this subparagraph for a 

15 selected drug with respect to a 

16 year, is the average price (which 

17 shall be the net average price, if 

18 practicable, and volume-weighted, 

19 if practicable) for a unit of such 

20 drug for sales of such drug, as 

21 computed (across different dosage 

22 forms and strengths of the drug 

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1 cable country described in sec2 tion 1191(c)(3)(B) with respect to 

3 such drug that, with respect to 

4 such year, has the lowest average 

5 price for such drug as compared 

6 to the average prices (as so com7 puted) of such drug with respect 

8 to such year in the other applica9 ble countries described in such 

10 section with respect to such drug. 

11 ‘‘(ii) SELECTED DRUGS WITHOUT

12 AIM PRICE.—In applying this para13 graph in the case of negotiating 

14 the maximum fair price of a se15 lected drug for which there is no 

16 AIM price available with respect 

17 to the initial price applicability 

18 year for such drug, or, as applica19 ble, renegotiating the maximum 

20 fair price for such drug with re21 spect to a subsequent year during 

22 the price applicability period for 

23 such drug before the first plan 

24 year for which there is an AIM 

25 price available for such drug, the 


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1 target price described in this sub2 paragraph for such drug and re3 spective year is the amount that 

4 is 80 percent of the average man5 ufacturer price (as defined in sec6 tion 1927(k)(1)) for such drug and 

7 year. 

8 ‘‘(4) ANNUAL REPORT.—After the com9 pletion of each voluntary negotiation pe10 riod, the Secretary shall submit to Con11 gress a report on the maximum fair 

12 prices negotiated (or, as applicable, re13 negotiated) for such period. Such report 

14 shall include information on how such 

15 prices so negotiated (or renegotiated) 

16 meet the requirements of this part, in17 cluding the requirements of this sub18 section. 

19 ‘‘(c) LIMITATION.— 

20 ‘‘(1) IN GENERAL.—Subject to para21 graph (2), the maximum fair price nego22 tiated (including as renegotiated) under 

23 this section for a selected drug, with re24 spect to each plan year during a price ap25 plicability period for such drug, shall not 


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1 exceed 120 percent of the AIM price ap2 plicable to such drug with respect to 

3 such year. 

4 ‘‘(2) SELECTED DRUGS WITHOUT AIM

5 PRICE.—In the case of a selected drug for 

6 which there is no AIM price available 

7 with respect to the initial price applica8 bility year for such drug, for each plan 

9 year during the price applicability period 

10 before the first plan year for which there 

11 is an AIM price available for such drug, 

12 the maximum fair price negotiated (in13 cluding as renegotiated) under this sec14 tion for the selected drug shall not ex15 ceed the amount equal to 85 percent of 

16 the average manufacturer price for the 

17 drug with respect to such year. 

18 ‘‘(d) CONSIDERATIONS.—For purposes of ne19 gotiating and, as applicable, renegotiating (in20 cluding for purposes of determining whether 

21 to renegotiate) the maximum fair price of a 

22 selected drug under this part with the manu23 facturer of the drug, the Secretary shall, con24 sistent with subsection (b)(2), take into con25 sideration the following factors: 


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1 ‘‘(1) MANUFACTURER-SPECIFIC INFORMA2 TION.—The following information, includ3 ing as submitted by the manufacturer: 

4 ‘‘(A) Research and development 

5 costs of the manufacturer for the 

6 drug and the extent to which the 

7 manufacturer has recouped research 

8 and development costs. 

9 ‘‘(B) Market data for the drug, in10 cluding the distribution of sales 

11 across different programs and pur12 chasers and projected future reve13 nues for the drug. 

14 ‘‘(C) Unit costs of production and 

15 distribution of the drug. 

16 ‘‘(D) Prior Federal financial sup17 port for novel therapeutic discovery 

18 and development with respect to the 

19 drug. 

20 ‘‘(E) Data on patents and on exist21 ing and pending exclusivity for the 

22 drug. 

23 ‘‘(F) National sales data for the 

24 drug. 


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1 ‘‘(G) Information on clinical trials 

2 for the drug in the United States or 

3 in applicable countries described in 

4 section 1191(c)(3)(B). 

5 ‘‘(2) INFORMATION ON ALTERNATIVE

6 PRODUCTS.—The following information: 

7 ‘‘(A) The extent to which the drug 

8 represents a therapeutic advance as 

9 compared to existing therapeutic al10 ternatives and, to the extent such in11 formation is available, the costs of 

12 such existing therapeutic alter13 natives. 

14 ‘‘(B) Information on approval by 

15 the Food and Drug Administration of 

16 alternative drug products. 

17 ‘‘(C) Information on comparative 

18 effectiveness analysis for such prod19 ucts, taking into consideration the ef20 fects of such products on specific 

21 populations, such as individuals with 

22 disabilities, the elderly, terminally ill, 

23 children, and other patient popu24 lations. 


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1 In considering information described in 

2 subparagraph (C), the Secretary shall not 

3 use evidence or findings from compara4 tive clinical effectiveness research in a 

5 manner that treats extending the life of 

6 an elderly, disabled, or terminally ill indi7 vidual as of lower value than extending 

8 the life of an individual who is younger, 

9 nondisabled, or not terminally ill. Noth10 ing in the previous sentence shall affect 

11 the application or consideration of an 

12 AIM price for a selected drug. 

13 ‘‘(3) FOREIGN SALES INFORMATION.—To 

14 the extent available on a timely basis, in15 cluding as provided by a manufacturer of 

16 the selected drug or otherwise, informa17 tion on sales of the selected drug in each 

18 of the countries described in section 

19 1191(c)(3)(B). 

20 ‘‘(4) ADDITIONAL INFORMATION.—Infor21 mation submitted to the Secretary, in ac22 cordance with a process specified by the 

23 Secretary, by other parties that are af24 fected by the establishment of a max25 imum fair price for the selected drug. 


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1 ‘‘(e) REQUEST FOR INFORMATION.—For pur2 poses of negotiating and, as applicable, re3 negotiating (including for purposes of deter4 mining whether to renegotiate) the maximum 

5 fair price of a selected drug under this part 

6 with the manufacturer of the drug, with re7 spect to a price applicability period, and 

8 other relevant data for purposes of this sec9 tion— 

10 ‘‘(1) the Secretary shall, not later than 

11 the selected drug publication date with 

12 respect to the initial price applicability 

13 year of such period, request drug pricing 

14 information from the manufacturer of 

15 such selected drug, including information 

16 described in subsection (d)(1); and 

17 ‘‘(2) by not later than October 1 fol18 lowing the selected drug publication 

19 date, the manufacturer of such selected 

20 drug shall submit to the Secretary such 

21 requested information in such form and 

22 manner as the Secretary may require. 

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1 tiation and renegotiation process under this 

2 section. 

3 ‘‘SEC. 1195. PUBLICATION OF MAXIMUM FAIR PRICES. 

4 ‘‘(a) IN GENERAL.—With respect to an ini5 tial price applicability year and selected drug 

6 with respect to such year, not later than April 

7 1 of the plan year prior to such initial price 

8 applicability year, the Secretary shall publish 

9 in the Federal Register the maximum fair 

10 price for such drug negotiated under this part 

11 with the manufacturer of such drug. 

12 ‘‘(b) UPDATES.— 

13 ‘‘(1) SUBSEQUENT YEAR MAXIMUM FAIR

14 PRICES.—For a selected drug, for each 

15 plan year subsequent to the initial price 

16 applicability year for such drug with re17 spect to which an agreement for such 

18 drug is in effect under section 1193, the 

19 Secretary shall publish in the Federal 

20 Register— 

21 ‘‘(A) subject to subparagraph (B), 

22 the amount equal to the maximum 

23 fair price published for such drug for 

24 the previous year, increased by the 

25 annual percentage increase in the 


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1 consumer price index for all urban 

2 consumers (all items; U.S. city aver3 age) as of September of such previous 

4 year; or 

5 ‘‘(B) in the case the maximum fair 

6 price for such drug was renegotiated, 

7 for the first year for which such price 

8 as so renegotiated applies, such re9 negotiated maximum fair price. 

10 ‘‘(2) PRICES NEGOTIATED AFTER DEAD11 LINE.—In the case of a selected drug with 

12 respect to an initial price applicability 

13 year for which the maximum fair price is 

14 determined under this part after the date 

15 of publication under this section, the Sec16 retary shall publish such maximum fair 

17 price in the Federal Register by not later 

18 than 30 days after the date such max19 imum price is so determined. 

20 ‘‘SEC. 1196. ADMINISTRATIVE DUTIES; COORDINATION PRO21 VISIONS. 

22 ‘‘(a) ADMINISTRATIVE DUTIES.— 

23 ‘‘(1) IN GENERAL.—For purposes of sec24 tion 1191, the administrative duties de25 scribed in this section are the following: 


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1 ‘‘(A) The establishment of proce2 dures (including through agreements 

3 with manufacturers under this part, 

4 contracts with prescription drug 

5 plans under part D of title XVIII and 

6 MA–PD plans under part C of such 

7 title, and agreements under section 

8 1197 with group health plans and 

9 health insurance issuers of health in10 surance coverage offered in the indi11 vidual or group market) under which 

12 the maximum fair price for a selected 

13 drug is provided to fair price eligible 

14 individuals, who with respect to such 

15 drug are described in subparagraph 

16 (A) of section 1191(c)(1), at phar17 macies or by mail order service at the 

18 point-of-sale of the drug for the appli19 cable price period for such drug and 

20 providing that such maximum fair 

21 price is used for determining cost22 sharing under such plans or coverage 

23 for the selected drug. 

24 ‘‘(B) The establishment of proce25 dures (including through agreements 


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1 with manufacturers under this part 

2 and contracts with hospitals, physi3 cians, and other providers of services 

4 and suppliers and agreements under 

5 section 1197 with group health plans 

6 and health insurance issuers of 

7 health insurance coverage offered in 

8 the individual or group market) 

9 under which, in the case of a selected 

10 drug furnished or administered by 

11 such a hospital, physician, or other 

12 provider of services or supplier to 

13 fair price eligible individuals (who 

14 with respect to such drug are de15 scribed in subparagraph (B) of sec16 tion 1191(c)(1)), the maximum fair 

17 price for the selected drug is pro18 vided to such hospitals, physicians, 

19 and other providers of services and 

20 suppliers (as applicable) with respect 

21 to such individuals and providing 

22 that such maximum fair price is used 

23 for determining cost-sharing under 

24 the respective part, plan, or coverage 

25 for the selected drug. 


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1 ‘‘(C) The establishment of proce2 dures (including through agreements 

3 and contracts described in subpara4 graphs (A) and (B)) to ensure that, 

5 not later than 90 days after the dis6 pensing of a selected drug to a fair 

7 price eligible individual by a phar8 macy or mail order service, the phar9 macy or mail order service is reim10 bursed for an amount equal to the 

11 difference between— 

12 ‘‘(i) the lesser of— 

13 ‘‘(I) the wholesale acquisi14 tion cost of the drug; 

15 ‘‘(II) the national average 

16 drug acquisition cost of the 

17 drug; and 

18 ‘‘(III) any other similar de19 termination of pharmacy ac20 quisition costs of the drug, as 

21 determined by the Secretary; 

22 and 

23 ‘‘(ii) the maximum fair price 

24 for the drug. 


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1 ‘‘(D) The establishment of proce2 dures to ensure that the maximum 

3 fair price for a selected drug is ap4 plied before— 

5 ‘‘(i) any coverage or financial 

6 assistance under other health 

7 benefit plans or programs that 

8 provide coverage or financial as9 sistance for the purchase or pro10 vision of prescription drug cov11 erage on behalf of fair price eligi12 ble individuals as the Secretary 

13 may specify; and 

14 ‘‘(ii) any other discounts. 

15 ‘‘(E) The establishment of proce16 dures to enter into appropriate agree17 ments and protocols for the ongoing 

18 computation of AIM prices for se19 lected drugs, including, to the extent 

20 possible, to compute the AIM price 

21 for selected drugs and including by 

22 providing that the manufacturer of 

23 such a selected drug should provide 

24 information for such computation not 

25 later than 3 months after the first 


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1 date of the voluntary negotiation pe2 riod for such selected drug. 

3 ‘‘(F) The establishment of proce4 dures to compute and apply the max5 imum fair price across different 

6 strengths and dosage forms of a se7 lected drug and not based on the spe8 cific formulation or package size or 

9 package type of the drug. 

10 ‘‘(G) The establishment of proce11 dures to negotiate and apply the max12 imum fair price in a manner that 

13 does not include any dispensing or 

14 similar fee. 

15 ‘‘(H) The establishment of proce16 dures to carry out the provisions of 

17 this part, as applicable, with respect 

18 to— 

19 ‘‘(i) fair price eligible individ20 uals who are enrolled under a 

21 prescription drug plan under part 

22 D of title XVIII or an MA–PD plan 

23 under part C of such title; 

24 ‘‘(ii) fair price eligible individ25 uals who are enrolled under a 


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1 group health plan or health insur2 ance coverage offered by a health 

3 insurance issuer in the individual 

4 or group market with respect to 

5 which there is an agreement in ef6 fect under section 1197; and 

7 ‘‘(iii) fair price eligible indi8 viduals who are entitled to bene9 fits under part A of title XVIII or 

10 enrolled under part B of such 

11 title. 

12 ‘‘(I) The establishment of a nego13 tiation process and renegotiation 

14 process in accordance with section 

15 1194, including a process for acquir16 ing information described in sub17 section (d) of such section and deter18 mining amounts described in sub19 section (b) of such section. 

20 ‘‘(J) The provision of a reasonable 

21 dispute resolution mechanism to re22 solve disagreements between manu23 facturers, fair price eligible individ24 uals, and the third party with a con25 tract under subsection (c)(1). 


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1 ‘‘(2) MONITORING COMPLIANCE.— 

2 ‘‘(A) IN GENERAL.—The Secretary 

3 shall monitor compliance by a manu4 facturer with the terms of an agree5 ment under section 1193, including by 

6 establishing a mechanism through 

7 which violations of such terms may 

8 be reported. 

9 ‘‘(B) NOTIFICATION.—If a third 

10 party with a contract under sub11 section (c)(1) determines that the 

12 manufacturer is not in compliance 

13 with such agreement, the third party 

14 shall notify the Secretary of such 

15 noncompliance for appropriate en16 forcement under section 4192 of the 

17 Internal Revenue Code of 1986 or sec18 tion 1198, as applicable. 

19 ‘‘(b) COLLECTION OF DATA.— 

20 ‘‘(1) FROM PRESCRIPTION DRUG PLANS

21 AND MA–PD PLANS.—The Secretary may 

22 collect appropriate data from prescrip23 tion drug plans under part D of title 

24 XVIII and MA–PD plans under part C of 

25 such title in a timeframe that allows for 


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1 maximum fair prices to be provided 

2 under this part for selected drugs. 

3 ‘‘(2) FROM HEALTH PLANS.—The Sec4 retary may collect appropriate data from 

5 group health plans or health insurance 

6 issuers offering group or individual 

7 health insurance coverage in a timeframe 

8 that allows for maximum fair prices to be 

9 provided under this part for selected 

10 drugs. 

11 ‘‘(c) CONTRACT WITH THIRD PARTIES.— 

12 ‘‘(1) IN GENERAL.—The Secretary may 

13 enter into a contract with 1 or more third 

14 parties to administer the requirements 

15 established by the Secretary in order to 

16 carry out this part. At a minimum, the 

17 contract with a third party under the 

18 preceding sentence shall require that the 

19 third party— 

20 ‘‘(A) receive and transmit infor21 mation between the Secretary, manu22 facturers, and other individuals or 

23 entities the Secretary determines ap24 propriate; 


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1 ‘‘(B) receive, distribute, or facili2 tate the distribution of funds of man3 ufacturers to appropriate individuals 

4 or entities in order to meet the obli5 gations of manufacturers under 

6 agreements under this part; 

7 ‘‘(C) provide adequate and timely 

8 information to manufacturers, con9 sistent with the agreement with the 

10 manufacturer under this part, as nec11 essary for the manufacturer to fulfill 

12 its obligations under this part; and 

13 ‘‘(D) permit manufacturers to con14 duct periodic audits, directly or 

15 through contracts, of the data and in16 formation used by the third party to 

17 determine discounts for applicable 

18 drugs of the manufacturer under the 

19 program. 

20 ‘‘(2) PERFORMANCE REQUIREMENTS.— 

21 The Secretary shall establish perform22 ance requirements for a third party with 

23 a contract under paragraph (1) and safe24 guards to protect the independence and 

25 integrity of the activities carried out by 


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1 the third party under the program under 

2 this part. 

3 ‘‘SEC. 1197. VOLUNTARY PARTICIPATION BY OTHER 

4 HEALTH PLANS. 

5 ‘‘(a) AGREEMENT TO PARTICIPATE UNDER

6 PROGRAM.— 

7 ‘‘(1) IN GENERAL.—Subject to para8 graph (2), under the program under this 

9 part the Secretary shall be treated as 

10 having in effect an agreement with a 

11 group health plan or health insurance 

12 issuer offering health insurance coverage 

13 (as such terms are defined in section 2791 

14 of the Public Health Service Act), with re15 spect to a price applicability period and 

16 a selected drug with respect to such pe17 riod— 

18 ‘‘(A) with respect to such selected 

19 drug furnished or dispensed at a 

20 pharmacy or by mail order service if 

21 coverage is provided under such plan 

22 or coverage during such period for 

23 such selected drug as so furnished or 

24 dispensed; and 


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1 ‘‘(B) with respect to such selected 

2 drug furnished or administered by a 

3 hospital, physician, or other provider 

4 of services or supplier if coverage is 

5 provided under such plan or cov6 erage during such period for such se7 lected drug as so furnished or admin8 istered. 

9 ‘‘(2) OPTING OUT OF AGREEMENT.—The 

10 Secretary shall not be treated as having 

11 in effect an agreement under the pro12 gram under this part with a group health 

13 plan or health insurance issuer offering 

14 health insurance coverage with respect 

15 to a price applicability period and a se16 lected drug with respect to such period if 

17 such a plan or issuer affirmatively elects, 

18 through a process specified by the Sec19 retary, not to participate under the pro20 gram with respect to such period and 

21 drug. 

22 ‘‘(b) PUBLICATION OF ELECTION.—With re23 spect to each price applicability period and 

24 each selected drug with respect to such pe25 riod, the Secretary and the Secretary of Labor 


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1 and the Secretary of the Treasury, as applica2 ble, shall make public a list of each group 

3 health plan and each issuer of health insur4 ance coverage, with respect to which cov5 erage is provided under such plan or cov6 erage for such drug, that has elected under 

7 subsection (a) not to participate under the 

8 program with respect to such period and 

9 drug. 

10 ‘‘SEC. 1198. CIVIL MONETARY PENALTY. 

11 ‘‘(a) VIOLATIONS RELATING TO OFFERING OF

12 MAXIMUM FAIR PRICE.—Any manufacturer of a 

13 selected drug that has entered into an agree14 ment under section 1193, with respect to a 

15 plan year during the price applicability pe16 riod for such drug, that does not provide ac17 cess to a price that is not more than the max18 imum fair price (or a lesser price) for such 

19 drug for such year— 

20 ‘‘(1) to a fair price eligible individual 

21 who with respect to such drug is de22 scribed in subparagraph (A) of section 

23 1191(c)(1) and who is furnished or dis24 pensed such drug during such year; or 


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1 ‘‘(2) to a hospital, physician, or other 

2 provider of services or supplier with re3 spect to fair price eligible individuals 

4 who with respect to such drug is de5 scribed in subparagraph (B) of such sec6 tion and is furnished or administered 

7 such drug by such hospital, physician, or 

8 provider or supplier during such year; 

9 shall be subject to a civil monetary penalty 

10 equal to ten times the amount equal to the dif11 ference between the price for such drug made 

12 available for such year by such manufacturer 

13 with respect to such individual or hospital, 

14 physician, provider, or supplier and the max15 imum fair price for such drug for such year. 

16 ‘‘(b) VIOLATIONS OF CERTAIN TERMS OF

17 AGREEMENT.—Any manufacturer of a selected 

18 drug that has entered into an agreement 

19 under section 1193, with respect to a plan 

20 year during the price applicability period for 

21 such drug, that is in violation of a require22 ment imposed pursuant to section 1193(a)(6) 

23 shall be subject to a civil monetary penalty of 

24 not more than $1,000,000 for each such viola25 tion. 


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1 ‘‘(c) APPLICATION.—The provisions of sec2 tion 1128A (other than subsections (a) and (b)) 

3 shall apply to a civil monetary penalty under 

4 this section in the same manner as such provi5 sions apply to a penalty or proceeding under 

6 section 1128A(a). 

7 ‘‘SEC. 1199. MISCELLANEOUS PROVISIONS. 

8 ‘‘(a) PAPERWORK REDUCTION ACT.—Chapter 

9 35 of title 44, United States Code, shall not 

10 apply to data collected under this part. 

11 ‘‘(b) NATIONAL ACADEMY OF MEDICINE

12 STUDY.—Not later than December 31, 2025, the 

13 National Academy of Medicine shall conduct 

14 a study, and submit to Congress a report, on 

15 recommendations for improvements to the 

16 program under this part, including the deter17 mination of the limits applied under section 

18 1194(c). 

19 ‘‘(c) MEDPAC STUDY.—Not later than De20 cember 31, 2025, the Medicare Payment Advi21 sory Commission shall conduct a study, and 

22 submit to Congress a report, on the program 

23 under this part with respect to the Medicare 

24 program under title XVIII, including with re25 spect to the effect of the program on individVerDate Sep 11 2014 23:24 Dec 09, 2019 Jkt 099200 PO 00000 Frm 00196 Fmt 6652 Sfmt 6202 E:\BILLS\H3.RH H3

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1 uals entitled to benefits or enrolled under 

2 such title. 

3 ‘‘(d) LIMITATION ON JUDICIAL REVIEW.—The 

4 following shall not be subject to judicial re5 view: 

6 ‘‘(1) The selection of drugs for publi7 cation under section 1192(a). 

8 ‘‘(2) The determination of whether a 

9 drug is a negotiation-eligible drug under 

10 section 1192(d). 

11 ‘‘(3) The determination of the max12 imum fair price of a selected drug under 

13 section 1194. 

14 ‘‘(4) The determination of units of a 

15 drug for purposes of section 1191(c)(3). 

16 ‘‘(e) COORDINATION.—In carrying out this 

17 part with respect to group health plans or 

18 health insurance coverage offered in the 

19 group market that are subject to oversight by 

20 the Secretary of Labor or the Secretary of the 

21 Treasury, the Secretary of Health and Human 

22 Services shall coordinate with such respec23 tive Secretary. 

24 ‘‘(f) DATA SHARING.—The Secretary shall 

25 share with the Secretary of the Treasury such 


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1 information as is necessary to determine the 

2 tax imposed by section 4192 of the Internal 

3 Revenue Code of 1986.’’. 

4 (b) APPLICATION OF MAXIMUM FAIR PRICES

5 AND CONFORMING AMENDMENTS.— 

6 (1) UNDER MEDICARE.— 

7 (A) APPLICATION TO PAYMENTS

8 UNDER PART B.—Section 1847A(b)(1)(B) 

9 of the Social Security Act (42 U.S.C. 

10 1395w–3a(b)(1)(B)) is amended by in11 serting ‘‘or in the case of such a drug 

12 or biological that is a selected drug 

13 (as defined in section 1192(c)), with 

14 respect to a price applicability period 

15 (as defined in section 1191(b)(2)), 106 

16 percent of the maximum fair price (as 

17 defined in section 1191(c)(2) applica18 ble for such drug and a plan year 

19 during such period’’ after ‘‘paragraph 

20 (4)’’. 

21 (B) EXCEPTION TO PART D NON-IN22 TERFERENCE.—Section 1860D–11(i) of 

23 the Social Security Act (42 U.S.C. 

24 1395w–111(i)) is amended by inserting 


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1 ‘‘, except as provided under part E of 

2 title XI’’ after ‘‘the Secretary’’. 

3 (C) APPLICATION AS NEGOTIATED

4 PRICE UNDER PART D.—Section 1860D– 

5 2(d)(1) of the Social Security Act (42 

6 U.S.C. 1395w–102(d)(1)) is amended— 

7 (i) in subparagraph (B), by in8 serting ‘‘, subject to subparagraph 

9 (D),’’ after ‘‘negotiated prices’’; 

10 and 

11 (ii) by adding at the end the 

12 following new subparagraph: 

13 ‘‘(D) APPLICATION OF MAXIMUM FAIR

14 PRICE FOR SELECTED DRUGS.—In apply15 ing this section, in the case of a cov16 ered part D drug that is a selected 

17 drug (as defined in section 1192(c)), 

18 with respect to a price applicability 

19 period (as defined in section 

20 1191(b)(2)), the negotiated prices used 

21 for payment (as described in this sub22 section) shall be the maximum fair 

23 price (as defined in section 1191(c)(2)) 

24 for such drug and for each plan year 

25 during such period.’’. 


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1 (D) INFORMATION FROM PRESCRIP2 TION DRUG PLANS AND MA–PD PLANS RE3 QUIRED.— 

4 (i) PRESCRIPTION DRUG

5 PLANS.—Section 1860D–12(b) of 

6 the Social Security Act (42 U.S.C. 

7 1395w–112(b)) is amended by add8 ing at the end the following new 

9 paragraph: 

10 ‘‘(8) PROVISION OF INFORMATION RE11 LATED TO MAXIMUM FAIR PRICES.—Each 

12 contract entered into with a PDP sponsor 

13 under this part with respect to a pre14 scription drug plan offered by such spon15 sor shall require the sponsor to provide 

16 information to the Secretary as requested 

17 by the Secretary in accordance with sec18 tion 1196(b).’’. 

19 (ii) MA–PD PLANS.—Section 

20 1857(f)(3) of the Social Security 

21 Act (42 U.S.C. 1395w–27(f)(3)) is 

22 amended by adding at the end the 

23 following new subparagraph: 


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1 ‘‘(E) PROVISION OF INFORMATION

2 RELATED TO MAXIMUM FAIR PRICES.— 

3 Section 1860D–12(b)(8).’’. 

4 (2) UNDER GROUP HEALTH PLANS AND

5 HEALTH INSURANCE COVERAGE.— 

6 (A) PHSA.—Part A of title XXVII 

7 of the Public Health Service Act is 

8 amended by inserting after section 

9 2729 the following new section: 

10 ‘‘SEC. 2729A. FAIR PRICE DRUG NEGOTIATION PROGRAM 

11 AND APPLICATION OF MAXIMUM FAIR 

12 PRICES. 

13 ‘‘(a) IN GENERAL.—In the case of a group 

14 health plan or health insurance issuer offer15 ing health insurance coverage that is treated 

16 under section 1197 of the Social Security Act 

17 as having in effect an agreement with the Sec18 retary under the Fair Price Drug Negotiation 

19 Program under part E of title XI of such Act, 

20 with respect to a price applicability period (as 

21 defined in section 1191(b) of such Act) and a 

22 selected drug (as defined in section 1192(c) of 

23 such Act) with respect to such period with re24 spect to which coverage is provided under 

25 such plan or coverage— 


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1 ‘‘(1) the provisions of such part shall 

2 apply to the plans or coverage offered by 

3 such plan or issuer, and to the individ4 uals enrolled under such plans or cov5 erage, during such period, with respect 

6 to such selected drug, in the same man7 ner as such provisions apply to prescrip8 tion drug plans and MA–PD plans, and to 

9 individuals enrolled under such prescrip10 tion drug plans and MA–PD plans; 

11 ‘‘(2) the plan or issuer shall apply any 

12 cost-sharing responsibilities under such 

13 plan or coverage, with respect to such se14 lected drug, by substituting the maximum 

15 fair price negotiated under such part for 

16 such drug in lieu of the contracted rate 

17 under such plan or coverage for such se18 lected drug; and 

19 ‘‘(3) the Secretary shall apply the pro20 visions of such part to such plan, issuer, 

21 and coverage, and such individuals so en22 rolled in such plans. 

23 ‘‘(b) NOTIFICATION REGARDING NONPARTICI24 PATION IN FAIR DRUG PRICE NEGOTIATION PRO25 GRAM.—A group health plan or a health insurVerDate Sep 11 2014 23:24 Dec 09, 2019 Jkt 099200 PO 00000 Frm 00202 Fmt 6652 Sfmt 6202 E:\BILLS\H3.RH H3

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1 ance issuer offering group or individual 

2 health insurance coverage shall publicly dis3 close in a manner and in accordance with a 

4 process specified by the Secretary any elec5 tion made under section 1197 of the Social Se6 curity Act by the plan or issuer to not partici7 pate in the Fair Drug Price Negotiation Pro8 gram under part E of title XI of such Act with 

9 respect to a selected drug (as defined in sec10 tion 1192(c) of such Act) for which coverage 

11 is provided under such plan or coverage be12 fore the beginning of the plan year for which 

13 such election was made.’’. 

14 (B) ERISA.— 

15 (i) IN GENERAL.—Subpart B of 

16 part 7 of subtitle B of title I of the 

17 Employee Retirement Income Se18 curity Act of 1974 (29 U.S.C. 1181 

19 et. seq.) is amended by adding at 

20 the end the following new section: 

21 ‘‘SEC. 716. FAIR PRICE DRUG NEGOTIATION PROGRAM AND 

22 APPLICATION OF MAXIMUM FAIR PRICES. 

23 ‘‘(a) IN GENERAL.—In the case of a group 

24 health plan or health insurance issuer offer25 ing group health insurance coverage that is 


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1 treated under section 1197 of the Social Secu2 rity Act as having in effect an agreement with 

3 the Secretary under the Fair Price Drug Ne4 gotiation Program under part E of title XI of 

5 such Act, with respect to a price applicability 

6 period (as defined in section 1191(b) of such 

7 Act) and a selected drug (as defined in section 

8 1192(c) of such Act) with respect to such pe9 riod with respect to which coverage is pro10 vided under such plan or coverage— 

11 ‘‘(1) the provisions of such part shall 

12 apply to the plans or coverage offered by 

13 such plan or issuer, and to the individ14 uals enrolled under such plans or cov15 erage, during such period, with respect 

16 to such selected drug, in the same man17 ner as such provisions apply to prescrip18 tion drug plans and MA–PD plans, and to 

19 individuals enrolled under such prescrip20 tion drug plans and MA–PD plans; 

21 ‘‘(2) the plan or issuer shall apply any 

22 cost-sharing responsibilities under such 

23 plan or coverage, with respect to such se24 lected drug, by substituting the maximum 

25 fair price negotiated under such part for 


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1 such drug in lieu of the contracted rate 

2 under such plan or coverage for such se3 lected drug; and 

4 ‘‘(3) the Secretary shall apply the pro5 visions of such part to such plan, issuer, 

6 and coverage, and such individuals so en7 rolled in such plans. 

8 ‘‘(b) NOTIFICATION REGARDING NONPARTICI9 PATION IN FAIR DRUG PRICE NEGOTIATION PRO10 GRAM.—A group health plan or a health insur11 ance issuer offering group health insurance 

12 coverage shall publicly disclose in a manner 

13 and in accordance with a process specified by 

14 the Secretary any election made under sec15 tion 1197 of the Social Security Act by the 

16 plan or issuer to not participate in the Fair 

17 Drug Price Negotiation Program under part E 

18 of title XI of such Act with respect to a se19 lected drug (as defined in section 1192(c) of 

20 such Act) for which coverage is provided 

21 under such plan or coverage before the begin22 ning of the plan year for which such election 

23 was made.’’. 

24 (ii) CLERICAL AMENDMENT.— 

25 The table of sections for part 7 of 


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1 subtitle B of title I of the Em2 ployee Retirement Income Secu3 rity Act of 1974 is amended by 

4 adding at the end the following: 

‘‘Sec. 716. Fair Price Drug Negotiation Program and application of maximum fair prices.’’. 

5 (C) IRC.— 

6 (i) IN GENERAL.—Subchapter B 

7 of chapter 100 of the Internal 

8 Revenue Code of 1986 is amended 

9 by adding at the end the fol10 lowing new section: 

11 ‘‘SEC. 9816. FAIR PRICE DRUG NEGOTIATION PROGRAM 

12 AND APPLICATION OF MAXIMUM FAIR 

13 PRICES. 

14 ‘‘(a) IN GENERAL.—In the case of a group 

15 health plan that is treated under section 1197 

16 of the Social Security Act as having in effect 

17 an agreement with the Secretary under the 

18 Fair Price Drug Negotiation Program under 

19 part E of title XI of such Act, with respect to 

20 a price applicability period (as defined in sec21 tion 1191(b) of such Act) and a selected drug 

22 (as defined in section 1192(c) of such Act) with 

23 respect to such period with respect to which 

24 coverage is provided under such plan— 


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1 ‘‘(1) the provisions of such part shall 

2 apply, as applicable— 

3 ‘‘(A) if coverage of such selected 

4 drug is provided under such plan if 

5 the drug is furnished or dispensed at 

6 a pharmacy or by a mail order serv7 ice, to the plan, and to the individuals 

8 enrolled under such plan during such 

9 period, with respect to such selected 

10 drug, in the same manner as such 

11 provisions apply to prescription drug 

12 plans and MA–PD plans, and to indi13 viduals enrolled under such prescrip14 tion drug plans and MA–PD plans 

15 during such period; and 

16 ‘‘(B) if coverage of such selected 

17 drug is provided under such plan if 

18 the drug is furnished or administered 

19 by a hospital, physician, or other pro20 vider of services or supplier, to the 

21 plan, to the individuals enrolled 

22 under such plan, and to hospitals, 

23 physicians, and other providers of 

24 services and suppliers during such 

25 period, with respect to such drug in 


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1 the same manner as such provisions 

2 apply to the Secretary, to individuals 

3 entitled to benefits under part A of 

4 title XVIII or enrolled under part B of 

5 such title, and to hospitals, physi6 cians, and other providers and sup7 pliers participating under title XVIII 

8 during such period; 

9 ‘‘(2) the plan shall apply any cost10 sharing responsibilities under such plan, 

11 with respect to such selected drug, by 

12 substituting an amount not more than 

13 the maximum fair price negotiated under 

14 such part E of title XI for such drug in 

15 lieu of the drug price upon which the 

16 cost-sharing would have otherwise ap17 plied; and 

18 ‘‘(3) the Secretary shall apply the pro19 visions of such part E to such plan and 

20 such individuals so enrolled in such plan. 

21 ‘‘(b) NOTIFICATION REGARDING NONPARTICI22 PATION IN FAIR DRUG PRICE NEGOTIATION PRO23 GRAM.—A group health plan shall publicly dis24 close in a manner and in accordance with a 

25 process specified by the Secretary any elecVerDate Sep 11 2014 23:24 Dec 09, 2019 Jkt 099200 PO 00000 Frm 00208 Fmt 6652 Sfmt 6202 E:\BILLS\H3.RH H3

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1 tion made under section 1197 of the Social Se2 curity Act by the plan to not participate in the 

3 Fair Drug Price Negotiation Program under 

4 part E of title XI of such Act with respect to 

5 a selected drug (as defined in section 1192(c) 

6 of such Act) for which coverage is provided 

7 under such plan before the beginning of the 

8 plan year for which such election was made.’’. 

9 (ii) APPLICATION TO RETIREE

10 AND CERTAIN SMALL GROUP HEALTH

11 PLANS.—Section 9831(a)(2) of the 

12 Internal Revenue Code of 1986 is 

13 amended by inserting ‘‘other than 

14 with respect to section 9816,’’ be15 fore ‘‘any group health plan’’. 

16 (iii) CLERICAL AMENDMENT.— 

17 The table of sections for sub18 chapter B of chapter 100 of such 

19 Code is amended by adding at the 

20 end the following new item: 

‘‘Sec. 9816. Fair Price Drug Negotiation Program and application of maximum fair prices.’’. 


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1 SEC. 102. SELECTED DRUG MANUFACTURER EXCISE TAX 

2 IMPOSED DURING NONCOMPLIANCE PERI3 ODS. 

4 (a) IN GENERAL.—Subchapter E of chapter 

5 32 of the Internal Revenue Code of 1986 is 

6 amended by adding at the end the following 

7 new section: 

8 ‘‘SEC. 4192. SELECTED DRUGS DURING NONCOMPLIANCE 

9 PERIODS. 

10 ‘‘(a) IN GENERAL.—There is hereby im11 posed on the sale by the manufacturer, pro12 ducer, or importer of any selected drug dur13 ing a day described in subsection (b) a tax in 

14 an amount such that the applicable percent15 age is equal to the ratio of— 

16 ‘‘(1) such tax, divided by 

17 ‘‘(2) the sum of such tax and the price 

18 for which so sold. 

19 ‘‘(b) NONCOMPLIANCE PERIODS.—A day is 

20 described in this subsection with respect to a 

21 selected drug if it is a day during one of the 

22 following periods: 

23 ‘‘(1) The period beginning on the 

24 June 16th immediately following the se25 lected drug publication date and ending 

26 on the first date during which the manuVerDate Sep 11 2014 23:24 Dec 09, 2019 Jkt 099200 PO 00000 Frm 00210 Fmt 6652 Sfmt 6202 E:\BILLS\H3.RH H3

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1 facturer of the drug has in place an 

2 agreement described in subsection (a) of 

3 section 1193 of the Social Security Act 

4 with respect to such drug. 

5 ‘‘(2) The period beginning on the 

6 April 1st immediately following the June 

7 16th described in paragraph (1) and end8 ing on the first date during which the 

9 manufacturer of the drug has agreed to a 

10 maximum fair price under such agree11 ment. 

12 ‘‘(3) In the case of a selected drug 

13 with respect to which the Secretary of 

14 Health and Human Services has specified 

15 a renegotiation period under such agree16 ment, the period beginning on the first 

17 date after the last date of such renegoti18 ation period and ending on the first date 

19 during which the manufacturer of the 

20 drug has agreed to a renegotiated max21 imum fair price under such agreement. 

22 ‘‘(4) With respect to information that 

23 is required to be submitted to the Sec24 retary of Health and Human Services 

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1 ning on the date on which such Secretary 

2 certifies that such information is overdue 

3 and ending on the date that such infor4 mation is so submitted. 

5 ‘‘(5) In the case of a selected drug 

6 with respect to which a payment is due 

7 under subsection (c) of such section 1193, 

8 the period beginning on the date on 

9 which the Secretary of Health and 

10 Human Services certifies that such pay11 ment is overdue and ending on the date 

12 that such payment is made in full. 

13 ‘‘(c) APPLICABLE PERCENTAGE.—For pur14 poses of this section, the term ‘applicable per15 centage’ means— 

16 ‘‘(1) in the case of sales of a selected 

17 drug during the first 90 days described in 

18 subsection (b) with respect to such drug, 

19 65 percent, 

20 ‘‘(2) in the case of sales of such drug 

21 during the 91st day through the 180th 

22 day described in subsection (b) with re23 spect to such drug, 75 percent, 

24 ‘‘(3) in the case of sales of such drug 

25 during the 181st day through the 270th 


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1 day described in subsection (b) with re2 spect to such drug, 85 percent, and 

3 ‘‘(4) in the case of sales of such drug 

4 during any subsequent day, 95 percent. 

5 ‘‘(d) SELECTED DRUG.—For purposes of this 

6 section— 

7 ‘‘(1) IN GENERAL.—The term ‘selected 

8 drug’ means any selected drug (within 

9 the meaning of section 1192 of the Social 

10 Security Act) which is manufactured or 

11 produced in the United States or entered 

12 into the United States for consumption, 

13 use, or warehousing. 

14 ‘‘(2) UNITED STATES.—The term ‘United 

15 States’ has the meaning given such term 

16 by section 4612(a)(4). 

17 ‘‘(3) COORDINATION WITH RULES FOR

18 POSSESSIONS OF THE UNITED STATES.—Rules 

19 similar to the rules of paragraphs (2) and 

20 (4) of section 4132(c) shall apply for pur21 poses of this section. 

22 ‘‘(e) OTHER DEFINITIONS.—For purposes of 

23 this section, the terms ‘selected drug publica24 tion date’ and ‘maximum fair price’ have the 


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1 meaning given such terms in section 1191 of 

2 the Social Security Act. 

3 ‘‘(f) ANTI-ABUSE RULE.—In the case of a 

4 sale which was timed for the purpose of 

5 avoiding the tax imposed by this section, the 

6 Secretary may treat such sale as occurring 

7 during a day described in subsection (b).’’. 

8 (b) NO DEDUCTION FOR EXCISE TAX PAY9 MENTS.—Section 275 of the Internal Revenue 

10 Code of 1986 is amended by adding ‘‘or by sec11 tion 4192’’ before the period at the end of sub12 section (a)(6). 

13 (c) CONFORMING AMENDMENTS.— 

14 (1) Section 4221(a) of the Internal 

15 Revenue Code of 1986 is amended by in16 serting ‘‘or 4192’’ after ‘‘section 4191’’. 

17 (2) Section 6416(b)(2) of such Code is 

18 amended by inserting ‘‘or 4192’’ after 

19 ‘‘section 4191’’. 

20 (d) CLERICAL AMENDMENTS.— 

21 (1) The heading of subchapter E of 

22 chapter 32 of the Internal Revenue Code 

23 of 1986 is amended by striking ‘‘Medical 

24 Devices’’ and inserting ‘‘Other Medical 

25 Products’’. 


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1 (2) The table of subchapters for chap2 ter 32 of such Code is amended by strik3 ing the item relating to subchapter E and 

4 inserting the following new item: 

‘‘SUBCHAPTER E. OTHER MEDICAL PRODUCTS’’. 

5 (3) The table of sections for sub6 chapter E of chapter 32 of such Code is 

7 amended by adding at the end the fol8 lowing new item: 

‘‘Sec. 4192. Selected drugs during noncompliance periods.’’. 

9 (e) EFFECTIVE DATE.—The amendments 

10 made by this section shall apply to sales after 

11 the date of the enactment of this Act. 

12 TITLE II—MEDICARE PARTS B 

13 AND D PRESCRIPTION DRUG 

14 INFLATION REBATES 

15 SEC. 201. MEDICARE PART B REBATE BY MANUFACTURERS. 

16 (a) IN GENERAL.—Section 1834 of the So17 cial Security Act (42 U.S.C. 1395m) is amended 

18 by adding at the end the following new sub19 section: 

20 ‘‘(x) REBATE BY MANUFACTURERS FOR SIN21 GLE SOURCE DRUGS WITH PRICES INCREASING

22 FASTER THAN INFLATION.— 

23 ‘‘(1) REQUIREMENTS.— 


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1 ‘‘(A) SECRETARIAL PROVISION OF IN2 FORMATION.—Not later than 6 months 

3 after the end of each calendar quar4 ter beginning on or after July 1, 2021, 

5 the Secretary shall, for each part B 

6 rebatable drug, report to each manu7 facturer of such part B rebatable 

8 drug the following for such calendar 

9 quarter: 

10 ‘‘(i) Information on the total 

11 number of units of the billing and 

12 payment code described in sub13 paragraph (A)(i) of paragraph (3) 

14 with respect to such drug and cal15 endar quarter. 

16 ‘‘(ii) Information on the 

17 amount (if any) of the excess av18 erage sales price increase de19 scribed in subparagraph (A)(ii) of 

20 such paragraph for such drug and 

21 calendar quarter. 

22 ‘‘(iii) The rebate amount speci23 fied under such paragraph for 

24 such part B rebatable drug and 

25 calendar quarter. 


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1 ‘‘(B) MANUFACTURER REQUIRE2 MENT.—For each calendar quarter be3 ginning on or after July 1, 2021, the 

4 manufacturer of a part B rebatable 

5 drug shall, for such drug, not later 

6 than 30 days after the date of receipt 

7 from the Secretary of the information 

8 described in subparagraph (A) for 

9 such calendar quarter, provide to the 

10 Secretary a rebate that is equal to the 

11 amount specified in paragraph (3) for 

12 such drug for such calendar quarter. 

13 ‘‘(2) PART B REBATABLE DRUG DE14 FINED.— 

15 ‘‘(A) IN GENERAL.—In this sub16 section, the term ‘part B rebatable 

17 drug’ means a single source drug or 

18 biological (as defined in subpara19 graph (D) of section 1847A(c)(6)), in20 cluding a biosimilar biological prod21 uct (as defined in subparagraph (H) 

22 of such section), paid for under this 

23 part, except such term shall not in24 clude such a drug or biological— 


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1 ‘‘(i) if the average total al2 lowed charges for a year per indi3 vidual that uses such a drug or 

4 biological, as determined by the 

5 Secretary, are less than, subject 

6 to subparagraph (B), $100; or 

7 ‘‘(ii) that is a vaccine de8 scribed in subparagraph (A) or 

9 (B) of section 1861(s)(10). 

10 ‘‘(B) INCREASE.—The dollar 

11 amount applied under subparagraph 

12 (A)(i)— 

13 ‘‘(i) for 2022, shall be the dol14 lar amount specified under such 

15 subparagraph for 2021, increased 

16 by the percentage increase in the 

17 consumer price index for all 

18 urban consumers (United States 

19 city average) for the 12 month pe20 riod ending with June of the pre21 vious year; and 

22 ‘‘(ii) for a subsequent year, 

23 shall be the dollar amount speci24 fied in this clause (or clause (i)) 

25 for the previous year, increased 


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1 by the percentage increase in the 

2 consumer price index for all 

3 urban consumers (United States 

4 city average) for the 12 month pe5 riod ending with June of the pre6 vious year. 

7 Any dollar amount specified under 

8 this subparagraph that is not a mul9 tiple of $10 shall be rounded to the 

10 nearest multiple of $10. 

11 ‘‘(3) REBATE AMOUNT.— 

12 ‘‘(A) IN GENERAL.—For purposes of 

13 paragraph (1), the amount specified 

14 in this paragraph for a part B 

15 rebatable drug assigned to a billing 

16 and payment code for a calendar 

17 quarter is, subject to paragraph (4), 

18 the amount equal to the product of— 

19 ‘‘(i) subject to subparagraphs 

20 (B) and (G), the total number of 

21 units of the billing and payment 

22 code for such part B rebatable 

23 drug furnished under this part 

24 during the calendar quarter; and 


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1 ‘‘(ii) the amount (if any) by 

2 which— 

3 ‘‘(I) the payment amount 

4 under subparagraph (B) or 

5 (C) of section 1847A(b)(1), as 

6 applicable, for such part B 

7 rebatable drug during the cal8 endar quarter; exceeds 

9 ‘‘(II) the inflation-adjusted 

10 payment amount determined 

11 under subparagraph (C) for 

12 such part B rebatable drug 

13 during the calendar quarter. 

14 ‘‘(B) EXCLUDED UNITS.—For pur15 poses of subparagraph (A)(i), the total 

16 number of units of the billing and 

17 payment code for each part B 

18 rebatable drug furnished during a 

19 calendar quarter shall not include— 

20 ‘‘(i) units packaged into the 

21 payment for a procedure or serv22 ice under section 1833(t) or under 

23 section 1833(i) (instead of sepa24 rately payable under such respec25 tive section); 


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1 ‘‘(ii) units included under the 

2 single payment system for renal 

3 dialysis services under section 

4 1881(b)(14); or 

5 ‘‘(iii) units of a part B 

6 rebatable drug of a manufacturer 

7 furnished to an individual, if such 

8 manufacturer, with respect to the 

9 furnishing of such units of such 

10 drug, provides for discounts 

11 under section 340B of the Public 

12 Health Service Act or for rebates 

13 under section 1927. 

14 ‘‘(C) DETERMINATION OF INFLATION15 ADJUSTED PAYMENT AMOUNT.—The in16 flation-adjusted payment amount de17 termined under this subparagraph 

18 for a part B rebatable drug for a cal19 endar quarter is— 

20 ‘‘(i) the payment amount for 

21 the billing and payment code for 

22 such drug in the payment amount 

23 benchmark quarter (as defined in 

24 subparagraph (D)); increased by 


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1 ‘‘(ii) the percentage by which 

2 the rebate period CPI–U (as de3 fined in subparagraph (F)) for the 

4 calendar quarter exceeds the 

5 benchmark period CPI–U (as de6 fined in subparagraph (E)). 

7 ‘‘(D) PAYMENT AMOUNT BENCHMARK

8 QUARTER.—The term ‘payment amount 

9 benchmark quarter’ means the cal10 endar quarter beginning January 1, 

11 2016. 

12 ‘‘(E) BENCHMARK PERIOD CPI–U.— 

13 The term ‘benchmark period CPI–U’ 

14 means the consumer price index for 

15 all urban consumers (United States 

16 city average) for July 2015. 

17 ‘‘(F) REBATE PERIOD CPI–U.—The 

18 term ‘rebate period CPI–U’ means, 

19 with respect to a calendar quarter de20 scribed in subparagraph (C), the 

21 greater of the benchmark period CPI– 

22 U and the consumer price index for 

23 all urban consumers (United States 

24 city average) for the first month of 

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1 endar quarters prior to such de2 scribed calendar quarter. 

3 ‘‘(G) COUNTING UNITS.— 

4 ‘‘(i) CUT-OFF PERIOD TO COUNT

5 UNITS.—For purposes of subpara6 graph (A)(i), subject to clause (ii), 

7 to count the total number of bill8 ing units for a part B rebatable 

9 drug for a quarter, the Secretary 

10 may use a cut-off period in order 

11 to exclude from such total num12 ber of billing units for such quar13 ter claims for services furnished 

14 during such quarter that were 

15 not processed at an appropriate 

16 time prior to the end of the cut17 off period. 

18 ‘‘(ii) COUNTING UNITS FOR

19 CLAIMS PROCESSED AFTER CUT-OFF

20 PERIOD.—If the Secretary uses a 

21 cut-off period pursuant to clause 

22 (i), in the case of units of a part B 

23 rebatable drug furnished during a 

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1 cluded for purposes of subpara2 graph (A)(i) from the total num3 ber of billing units for the drug 

4 for such quarter, the Secretary 

5 shall count such units of such 

6 drug so furnished in the total 

7 number of billing units for such 

8 drug for a subsequent quarter, as 

9 the Secretary determines appro10 priate. 

11 ‘‘(4) SPECIAL TREATMENT OF CERTAIN

12 DRUGS AND EXEMPTION.— 

13 ‘‘(A) SUBSEQUENTLY APPROVED

14 DRUGS.—Subject to subparagraph (B), 

15 in the case of a part B rebatable drug 

16 first approved or licensed by the 

17 Food and Drug Administration after 

18 July 1, 2015, clause (i) of paragraph 

19 (3)(C) shall be applied as if the term 

20 ‘payment amount benchmark quarter’ 

21 were defined under paragraph (3)(D) 

22 as the third full calendar quarter 

23 after the day on which the drug was 

24 first marketed and clause (ii) of para25 graph (3)(C) shall be applied as if the 


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1 term ‘benchmark period CPI–U’ were 

2 defined under paragraph (3)(E) as if 

3 the reference to ‘July 2015’ under 

4 such paragraph were a reference to 

5 ‘the first month of the first full cal6 endar quarter after the day on which 

7 the drug was first marketed’. 

8 ‘‘(B) TIMELINE FOR PROVISION OF

9 REBATES FOR SUBSEQUENTLY APPROVED

10 DRUGS.—In the case of a part B 

11 rebatable drug first approved or li12 censed by the Food and Drug Admin13 istration after July 1, 2015, paragraph 

14 (1)(B) shall be applied as if the ref15 erence to ‘July 1, 2021’ under such 

16 paragraph were a reference to the 

17 later of the 6th full calendar quarter 

18 after the day on which the drug was 

19 first marketed or July 1, 2021. 

20 ‘‘(C) EXEMPTION FOR SHORTAGES.— 

21 The Secretary may reduce or waive 

22 the rebate amount under paragraph 

23 (1)(B) with respect to a part B 

24 rebatable drug that is described as 

25 currently in shortage on the shortage 


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1 list in effect under section 506E of the 

2 Federal Food, Drug, and Cosmetic Act 

3 or in the case of other exigent cir4 cumstances, as determined by the 

5 Secretary. 

6 ‘‘(D) SELECTED DRUGS.—In the case 

7 of a part B rebatable drug that is a 

8 selected drug (as defined in section 

9 1192(c)) for a price applicability pe10 riod (as defined in section 1191(b)(2)) 

11 and is determined (pursuant to such 

12 section 1192(c)) to no longer be a se13 lected drug, for each applicable year 

14 beginning after the price applica15 bility period with respect to such 

16 drug, clause (i) of paragraph (3)(C) 

17 shall be applied as if the term ‘pay18 ment amount benchmark quarter’ 

19 were defined under paragraph (3)(D) 

20 as the calendar quarter beginning 

21 January 1 of the last year beginning 

22 during such price applicability period 

23 with respect to such selected drug 

24 and clause (ii) of paragraph (3)(C) 

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1 mark period CPI–U’ were defined 

2 under paragraph (3)(E) as if the ref3 erence to ‘July 2015’ under such para4 graph were a reference to the July of 

5 the year preceding such last year. 

6 ‘‘(5) APPLICATION TO BENEFICIARY COIN7 SURANCE.—In the case of a part B 

8 rebatable drug, if the payment amount 

9 for a quarter exceeds the inflation ad10 justed payment for such quarter— 

11 ‘‘(A) in computing the amount of 

12 any coinsurance applicable under 

13 this title to an individual with re14 spect to such drug, the computation 

15 of such coinsurance shall be based on 

16 the inflation-adjusted payment 

17 amount determined under paragraph 

18 (3)(C) for such part B rebatable drug; 

19 and 

20 ‘‘(B) the amount of such coinsur21 ance is equal to 20 percent of such in22 flation-adjusted payment amount so 

23 determined. 

24 ‘‘(6) REBATE DEPOSITS.—Amounts paid 

25 as rebates under paragraph (1)(B) shall 


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1 be deposited into the Federal Supple2 mentary Medical Insurance Trust Fund 

3 established under section 1841. 

4 ‘‘(7) CIVIL MONEY PENALTY.—If a manu5 facturer of a part B rebatable drug has 

6 failed to comply with the requirements 

7 under paragraph (1)(B) for such drug for 

8 a calendar quarter, the manufacturer 

9 shall be subject to, in accordance with a 

10 process established by the Secretary pur11 suant to regulations, a civil money pen12 alty in an amount equal to at least 125 

13 percent of the amount specified in para14 graph (3) for such drug for such calendar 

15 quarter. The provisions of section 1128A 

16 (other than subsections (a) (with respect 

17 to amounts of penalties or additional as18 sessments) and (b)) shall apply to a civil 

19 money penalty under this paragraph in 

20 the same manner as such provisions 

21 apply to a penalty or proceeding under 

22 section 1128A(a). 

23 ‘‘(8) STUDY AND REPORT.— 

24 ‘‘(A) STUDY.—The Secretary shall 

25 conduct a study of the feasibility of 


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1 and operational issues involved with 

2 the following: 

3 ‘‘(i) Including multiple source 

4 drugs (as defined in section 

5 1847A(c)(6)(C)) in the rebate sys6 tem under this subsection. 

7 ‘‘(ii) Including drugs and 

8 biologicals paid for under MA 

9 plans under part C in the rebate 

10 system under this subsection. 

11 ‘‘(iii) Including drugs ex12 cluded under paragraph (2)(A) 

13 and units of the billing and pay14 ment code of the drugs excluded 

15 under paragraph (3)(B) in the re16 bate system under this sub17 section. 

18 ‘‘(B) REPORT.—Not later than 3 

19 years after the date of the enactment 

20 of this subsection, the Secretary shall 

21 submit to Congress a report on the 

22 study conducted under subparagraph 

23 (A). 

24 ‘‘(9) APPLICATION TO MULTIPLE SOURCE

25 DRUGS.—The Secretary may, based on the 


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1 report submitted under paragraph (8) 

2 and pursuant to rulemaking, apply the 

3 provisions of this subsection to multiple 

4 source drugs (as defined in section 

5 1847A(c)(6)(C)), including, for purposes of 

6 determining the rebate amount under 

7 paragraph (3), by calculating manufac8 turer-specific average sales prices for the 

9 benchmark period and the rebate pe10 riod.’’. 

11 (b) AMOUNTS PAYABLE; COST-SHARING.— 

12 Section 1833 of the Social Security Act (42 

13 U.S.C. 1395l) is amended— 

14 (1) in subsection (a)— 

15 (A) in paragraph (1)— 

16 (i) in subparagraph (S), by 

17 striking ‘‘with respect to’’ and in18 serting ‘‘subject to subparagraph 

19 (DD), with respect to’’; 

20 (ii) by striking ‘‘and (CC)’’ and 

21 inserting ‘‘(CC)’’; and 

22 (iii) by inserting before the 

23 semicolon at the end the fol24 lowing: ‘‘, and (DD) with respect 

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1 fined in paragraph (2) of section 

2 1834(x)) for which the payment 

3 amount for a calendar quarter 

4 under paragraph (3)(A)(ii)(I) of 

5 such section for such quarter ex6 ceeds the inflation-adjusted pay7 ment under paragraph 

8 (3)(A)(ii)(II) of such section for 

9 such quarter, the amounts paid 

10 shall be the difference between (i) 

11 the payment amount under para12 graph (3)(A)(ii)(I) of such section 

13 for such drug, and (ii) 20 percent 

14 of the inflation-adjusted payment 

15 amount under paragraph 

16 (3)(A)(ii)(II) of such section for 

17 such drug’’; 

18 (B) by adding at the end of the 

19 flush left matter following paragraph 

20 (9), the following: 

21 ‘‘For purposes of applying paragraph (1)(DD), 

22 subsections (i)(9) and (t)(3)(H), and section 

23 1834(x)(5), the Secretary shall make such esti24 mates and use such data as the Secretary de25 termines appropriate, and notwithstanding 


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1 any other provision of law, may do so by pro2 gram instruction or otherwise.’’; 

3 (2) in subsection (i), by adding at the 

4 end the following new paragraph: 

5 ‘‘(9) In the case of a part B rebatable drug 

6 (as defined in paragraph (2) of section 

7 1834(x)) furnished on or after July 1, 2021, 

8 under the system under this subsection, in 

9 lieu of calculation of coinsurance and the 

10 amount of payment otherwise applicable 

11 under this subsection, the provisions of sec12 tion 1834(x)(5), paragraph (1)(DD) of sub13 section (a), and the flush left matter following 

14 paragraph (9) of subsection (a), shall, as deter15 mined appropriate by the Secretary, apply 

16 under this subsection in the same manner as 

17 such provisions of section 1834(x)(5) and sub18 section (a) apply under such section and sub19 section.’’; and 

20 (3) in subsection (t)(3), by adding at 

21 the end the following new subparagraph: 

22 ‘‘(H) PART B REBATABLE DRUGS.—In 

23 the case of a part B rebatable drug 

24 (as defined in paragraph (2) of sec25 tion 1834(x)) furnished on or after 


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1 July 1, 2021, under the system under 

2 this subsection, in lieu of calculation 

3 of coinsurance and the amount of 

4 payment otherwise applicable under 

5 this subsection, the provisions of sec6 tion 1834(x)(5), paragraph (1)(DD) of 

7 subsection (a), and the flush left mat8 ter following paragraph (9) of sub9 section (a), shall, as determined ap10 propriate by the Secretary, apply 

11 under this subsection in the same 

12 manner as such provisions of section 

13 1834(x)(5) and subsection (a) apply 

14 under such section and subsection.’’. 

15 (c) CONFORMING AMENDMENT TO PART B 

16 ASP CALCULATION.—Section 1847A(c)(3) of the 

17 Social Security Act (42 U.S.C. 1395w–3a(c)(3)) 

18 is amended by inserting ‘‘or section 1834(x)’’ 

19 after ‘‘section 1927’’. 

20 SEC. 202. MEDICARE PART D REBATE BY MANUFACTURERS. 

21 (a) IN GENERAL.—Part D of title XVIII of 

22 the Social Security Act is amended by insert23 ing after section 1860D–14A (42 U.S.C. 1395w– 

24 114a) the following new section: 


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1 ‘‘SEC. 1860D–14B. MANUFACTURER REBATE FOR CERTAIN 

2 DRUGS WITH PRICES INCREASING FASTER 

3 THAN INFLATION. 

4 ‘‘(a) IN GENERAL.— 

5 ‘‘(1) IN GENERAL.—Subject to the provi6 sions of this section, in order for cov7 erage to be available under this part for 

8 a part D rebatable drug (as defined in 

9 subsection (h)(1)) of a manufacturer (as 

10 defined in section 1927(k)(5)) dispensed 

11 during an applicable year, the manufac12 turer must have entered into and have in 

13 effect an agreement described in sub14 section (b). 

15 ‘‘(2) AUTHORIZING COVERAGE FOR DRUGS

16 NOT COVERED UNDER AGREEMENTS.—Para17 graph (1) shall not apply to the dis18 pensing of a covered part D drug if— 

19 ‘‘(A) the Secretary has made a de20 termination that the availability of 

21 the drug is essential to the health of 

22 beneficiaries under this part; or 

23 ‘‘(B) the Secretary determines 

24 that in the period beginning on Janu25 ary 1, 2022, and ending on December 


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1 31, 2022, there were extenuating cir2 cumstances. 

3 ‘‘(3) APPLICABLE YEAR.—For purposes 

4 of this section the term ‘applicable year’ 

5 means a year beginning with 2022. 

6 ‘‘(b) AGREEMENTS.— 

7 ‘‘(1) TERMS OF AGREEMENT.—An agree8 ment described in this subsection, with 

9 respect to a manufacturer of a part D 

10 rebatable drug, is an agreement under 

11 which the following shall apply: 

12 ‘‘(A) SECRETARIAL PROVISION OF IN13 FORMATION.—Not later than 9 months 

14 after the end of each applicable year 

15 with respect to which the agreement 

16 is in effect, the Secretary, for each 

17 part D rebatable drug of the manufac18 turer, shall report to the manufac19 turer the following for such year: 

20 ‘‘(i) Information on the total 

21 number of units (as defined in 

22 subsection (h)(2)) for each dosage 

23 form and strength with respect to 

24 such part D rebatable drug and 

25 year. 


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1 ‘‘(ii) Information on the 

2 amount (if any) of the excess av3 erage manufacturer price in4 crease described in subsection 

5 (c)(1)(B) for each dosage form and 

6 strength with respect to such 

7 drug and year. 

8 ‘‘(iii) The rebate amount speci9 fied under subsection (c) for each 

10 dosage form and strength with re11 spect to such drug and year. 

12 ‘‘(B) MANUFACTURER REQUIRE13 MENTS.—For each applicable year 

14 with respect to which the agreement 

15 is in effect, the manufacturer of the 

16 part D rebatable drug, for each dos17 age form and strength with respect to 

18 such drug, not later than 30 days 

19 after the date of receipt from the Sec20 retary of the information described in 

21 subparagraph (A) for such year, shall 

22 provide to the Secretary a rebate that 

23 is equal to the amount specified in 

24 subsection (c) for such dosage form 


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1 and strength with respect to such 

2 drug for such year. 

3 ‘‘(2) LENGTH OF AGREEMENT.— 

4 ‘‘(A) IN GENERAL.—An agreement 

5 under this section, with respect to a 

6 part D rebatable drug, shall be effec7 tive for an initial period of not less 

8 than one year and shall be automati9 cally renewed for a period of not less 

10 than one year unless terminated 

11 under subparagraph (B). 

12 ‘‘(B) TERMINATION.— 

13 ‘‘(i) BY SECRETARY.—The Sec14 retary may provide for termi15 nation of an agreement under this 

16 section for violation of the re17 quirements of the agreement or 

18 other good cause shown. Such ter19 mination shall not be effective 

20 earlier than 30 days after the date 

21 of notice of such termination. The 

22 Secretary shall provide, upon re23 quest, a manufacturer with a 

24 hearing concerning such a termi25 nation, but such hearing shall not 


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1 delay the effective date of the ter2 mination. 

3 ‘‘(ii) BY A MANUFACTURER.—A 

4 manufacturer may terminate an 

5 agreement under this section for 

6 any reason. Any such termination 

7 shall be effective, with respect to 

8 a plan year— 

9 ‘‘(I) if the termination oc10 curs before January 30 of the 

11 plan year, as of the day after 

12 the end of the plan year; and 

13 ‘‘(II) if the termination oc14 curs on or after January 30 of 

15 the plan year, as of the day 

16 after the end of the suc17 ceeding plan year. 

18 ‘‘(C) EFFECTIVENESS OF TERMI19 NATION.—Any termination under this 

20 paragraph shall not affect rebates 

21 due under the agreement under this 

22 section before the effective date of its 

23 termination. 

24 ‘‘(D) DELAY BEFORE REENTRY.—In 

25 the case of any agreement under this 


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1 section with a manufacturer that is 

2 terminated in a plan year, the Sec3 retary may not enter into another 

4 such agreement with the manufac5 turer (or a successor manufacturer) 

6 before the subsequent plan year, un7 less the Secretary finds good cause 

8 for an earlier reinstatement of such 

9 an agreement. 

10 ‘‘(c) REBATE AMOUNT.— 

11 ‘‘(1) IN GENERAL.—For purposes of this 

12 section, the amount specified in this sub13 section for a dosage form and strength 

14 with respect to a part D rebatable drug 

15 and applicable year is, subject to sub16 paragraphs (B) and (C) of paragraph (5), 

17 the amount equal to the product of— 

18 ‘‘(A) the total number of units of 

19 such dosage form and strength with 

20 respect to such part D rebatable drug 

21 and year; and 

22 ‘‘(B) the amount (if any) by 

23 which— 

24 ‘‘(i) the annual manufacturer 

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1 graph (2)) paid for such dosage 

2 form and strength with respect to 

3 such part D rebatable drug for 

4 the year; exceeds 

5 ‘‘(ii) the inflation-adjusted 

6 payment amount determined 

7 under paragraph (3) for such dos8 age form and strength with re9 spect to such part D rebatable 

10 drug for the year. 

11 ‘‘(2) DETERMINATION OF ANNUAL MANU12 FACTURER PRICE.—The annual manufac13 turer price determined under this para14 graph for a dosage form and strength, 

15 with respect to a part D rebatable drug 

16 and an applicable year, is the sum of the 

17 products of— 

18 ‘‘(A) the average manufacturer 

19 price (as defined in subsection (h)(6)) 

20 of such dosage form and strength, as 

21 calculated for a unit of such drug, 

22 with respect to each of the calendar 

23 quarters of such year; and 

24 ‘‘(B) the ratio of— 


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1 ‘‘(i) the total number of units 

2 of such dosage form and strength 

3 dispensed during each such cal4 endar quarter of such year; to 

5 ‘‘(ii) the total number of units 

6 of such dosage form and strength 

7 dispensed during such year. 

8 ‘‘(3) DETERMINATION OF INFLATION-AD9 JUSTED PAYMENT AMOUNT.—The inflation10 adjusted payment amount determined 

11 under this paragraph for a dosage form 

12 and strength with respect to a part D 

13 rebatable drug for an applicable year, 

14 subject to subparagraphs (A) and (D) of 

15 paragraph (5), is— 

16 ‘‘(A) the benchmark year manu17 facturer price determined under 

18 paragraph (4) for such dosage form 

19 and strength with respect to such 

20 drug and an applicable year; in21 creased by 

22 ‘‘(B) the percentage by which the 

23 applicable year CPI–U (as defined in 

24 subsection (h)(5)) for the applicable 

25 year exceeds the benchmark period 


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1 CPI–U (as defined in subsection 

2 (h)(4)). 

3 ‘‘(4) DETERMINATION OF BENCHMARK

4 YEAR MANUFACTURER PRICE.—The bench5 mark year manufacturer price deter6 mined under this paragraph for a dosage 

7 form and strength, with respect to a part 

8 D rebatable drug and an applicable year, 

9 is the sum of the products of— 

10 ‘‘(A) the average manufacturer 

11 price (as defined in subsection (h)(6)) 

12 of such dosage form and strength, as 

13 calculated for a unit of such drug, 

14 with respect to each calendar quarter 

15 of the payment amount benchmark 

16 year (as defined in subsection (h)(3)); 

17 and 

18 ‘‘(B) the ratio of— 

19 ‘‘(i) the total number of units 

20 of such dosage form and strength 

21 dispensed during such calendar 

22 quarter of the payment amount 

23 benchmark year; to 

24 ‘‘(ii) the total number of units 

25 of such dosage form and strength 


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1 dispensed during the payment 

2 amount benchmark year. 

3 ‘‘(5) SPECIAL TREATMENT OF CERTAIN

4 DRUGS AND EXEMPTION.— 

5 ‘‘(A) SUBSEQUENTLY APPROVED

6 DRUGS.—In the case of a part D 

7 rebatable drug first approved or li8 censed by the Food and Drug Admin9 istration after January 1, 2016, sub10 paragraphs (A) and (B) of paragraph 

11 (4) shall be applied as if the term 

12 ‘payment amount benchmark year’ 

13 were defined under subsection (h)(3) 

14 as the first calendar year beginning 

15 after the day on which the drug was 

16 first marketed by any manufacturer 

17 and subparagraph (B) of paragraph 

18 (3) shall be applied as if the term 

19 ‘benchmark period CPI–U’ were de20 fined under subsection (h)(4) as if the 

21 reference to ‘January 2016’ under 

22 such subsection were a reference to 

23 ‘January of the first year beginning 

24 after the date on which the drug was 

25 first marketed by any manufacturer’. 


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1 ‘‘(B) EXEMPTION FOR SHORTAGES.— 

2 The Secretary may reduce or waive 

3 the rebate under paragraph (1) with 

4 respect to a part D rebatable drug 

5 that is described as currently in 

6 shortage on the shortage list in effect 

7 under section 506E of the Federal 

8 Food, Drug, and Cosmetic Act or in 

9 the case of other exigent cir10 cumstances, as determined by the 

11 Secretary. 

12 ‘‘(C) TREATMENT OF NEW FORMULA13 TIONS.— 

14 ‘‘(i) IN GENERAL.—In the case 

15 of a part D rebatable drug that is 

16 a line extension of a part D 

17 rebatable drug that is an oral 

18 solid dosage form, the Secretary 

19 shall establish a formula for de20 termining the amount specified in 

21 this subsection with respect to 

22 such part D rebatable drug and 

23 an applicable year with consider24 ation of the original part D 

25 rebatable drug. 


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1 ‘‘(ii) LINE EXTENSION DE2 FINED.—In this subparagraph, the 

3 term ‘line extension’ means, with 

4 respect to a part D rebatable 

5 drug, a new formulation of the 

6 drug (as determined by the Sec7 retary), such as an extended re8 lease formulation, but does not in9 clude an abuse-deterrent formula10 tion of the drug (as determined 

11 by the Secretary), regardless of 

12 whether such abuse-deterrent for13 mulation is an extended release 

14 formulation. 

15 ‘‘(D) SELECTED DRUGS.—In the case 

16 of a part D rebatable drug that is a 

17 selected drug (as defined in section 

18 1192(c)) for a price applicability pe19 riod (as defined in section 1191(b)(2)) 

20 and is determined (pursuant to such 

21 section 1192(c)) to no longer be a se22 lected drug, for each applicable year 

23 beginning after the price applica24 bility period with respect to such 

25 drug, subparagraphs (A) and (B) of 


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1 paragraph (4) shall be applied as if 

2 the term ‘payment amount bench3 mark year’ were defined under sub4 section (h)(3) as the last year begin5 ning during such price applicability 

6 period with respect to such selected 

7 drug and subparagraph (B) of para8 graph (3) shall be applied as if the 

9 term ‘benchmark period CPI–U’ were 

10 defined under subsection (h)(4) as if 

11 the reference to ‘January 2016’ under 

12 such subsection were a reference to 

13 January of the last year beginning 

14 during such price applicability period 

15 with respect to such drug. 

16 ‘‘(d) REBATE DEPOSITS.—Amounts paid as 

17 rebates under subsection (c) shall be depos18 ited into the Medicare Prescription Drug Ac19 count in the Federal Supplementary Medical 

20 Insurance Trust Fund established under sec21 tion 1841. 

22 ‘‘(e) INFORMATION.—For purposes of car23 rying out this section, the Secretary shall use 

24 information submitted by manufacturers 

25 under section 1927(b)(3). 


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1 ‘‘(f) CIVIL MONEY PENALTY.—In the case of 

2 a manufacturer of a part D rebatable drug 

3 with an agreement in effect under this section 

4 who has failed to comply with the terms of the 

5 agreement under subsection (b)(1)(B) with re6 spect to such drug for an applicable year, the 

7 Secretary may impose a civil money penalty 

8 on such manufacturer in an amount equal to 

9 125 percent of the amount specified in sub10 section (c) for such drug for such year. The 

11 provisions of section 1128A (other than sub12 sections (a) (with respect to amounts of pen13 alties or additional assessments) and (b)) shall 

14 apply to a civil money penalty under this sub15 section in the same manner as such provi16 sions apply to a penalty or proceeding under 

17 section 1128A(a). 

18 ‘‘(g) JUDICIAL REVIEW.—There shall be no 

19 judicial review of the following: 

20 ‘‘(1) The determination of units under 

21 this section. 

22 ‘‘(2) The determination of whether a 

23 drug is a part D rebatable drug under 

24 this section. 


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1 ‘‘(3) The calculation of the rebate 

2 amount under this section. 

3 ‘‘(h) DEFINITIONS.—In this section: 

4 ‘‘(1) PART D REBATABLE DRUG DE5 FINED.— 

6 ‘‘(A) IN GENERAL.—The term ‘part 

7 D rebatable drug’ means a drug or bi8 ological that would (without applica9 tion of this section) be a covered part 

10 D drug, except such term shall, with 

11 respect to an applicable year, not in12 clude such a drug or biological if the 

13 average annual total cost under this 

14 part for such year per individual who 

15 uses such a drug or biological, as de16 termined by the Secretary, is less 

17 than, subject to subparagraph (B), 

18 $100, as determined by the Secretary 

19 using the most recent data available 

20 or, if data is not available, as esti21 mated by the Secretary. 

22 ‘‘(B) INCREASE.—The dollar 

23 amount applied under subparagraph 

24 (A)— 


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1 ‘‘(i) for 2023, shall be the dol2 lar amount specified under such 

3 subparagraph for 2022, increased 

4 by the percentage increase in the 

5 consumer price index for all 

6 urban consumers (United States 

7 city average) for the 12-month pe8 riod beginning with January of 

9 2022; and 

10 ‘‘(ii) for a subsequent year, 

11 shall be the dollar amount speci12 fied in this subparagraph for the 

13 previous year, increased by the 

14 percentage increase in the con15 sumer price index for all urban 

16 consumers (United States city av17 erage) for the 12-month period be18 ginning with January of the pre19 vious year. 

20 Any dollar amount specified under 

21 this subparagraph that is not a mul22 tiple of $10 shall be rounded to the 

23 nearest multiple of $10. 

24 ‘‘(2) UNIT DEFINED.—The term ‘unit’ 

25 means, with respect to a part D rebatable 


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1 drug, the lowest identifiable quantity 

2 (such as a capsule or tablet, milligram of 

3 molecules, or grams) of the part D 

4 rebatable drug that is dispensed to indi5 viduals under this part. 

6 ‘‘(3) PAYMENT AMOUNT BENCHMARK

7 YEAR.—The term ‘payment amount bench8 mark year’ means the year beginning 

9 January 1, 2016. 

10 ‘‘(4) BENCHMARK PERIOD CPI–U.—The 

11 term ‘benchmark period CPI–U’ means 

12 the consumer price index for all urban 

13 consumers (United States city average) 

14 for January 2016. 

15 ‘‘(5) APPLICABLE YEAR CPI–U.—The 

16 term ‘applicable year CPI–U’ means, with 

17 respect to an applicable year, the con18 sumer price index for all urban con19 sumers (United States city average) for 

20 January of such year. 

21 ‘‘(6) AVERAGE MANUFACTURER PRICE.— 

22 The term ‘average manufacturer price’ 

23 has the meaning, with respect to a part D 

24 rebatable drug of a manufacturer, given 

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1 spect to a covered outpatient drug of a 

2 manufacturer for a rebate period under 

3 section 1927.’’. 

4 (b) CONFORMING AMENDMENT TO PART B 

5 ASP CALCULATION.—Section 1847A(c)(3) of the 

6 Social Security Act (42 U.S.C. 1395w–3a(c)(3)), 

7 as amended by section 201(c), is further 

8 amended by striking ‘‘section 1927 or section 

9 1834(x)’’ and inserting ‘‘section 1927, section 

10 1834(x), or section 1860D–14B’’. 

11 TITLE III—PART D IMPROVE12 MENTS AND MAXIMUM OUT13 OF-POCKET CAP FOR MEDI14 CARE BENEFICIARIES 

15 SEC. 301. MEDICARE PART D BENEFIT REDESIGN. 

16 (a) BENEFIT STRUCTURE REDESIGN.—Sec17 tion 1860D–2(b) of the Social Security Act (42 

18 U.S.C. 1395w–102(b)) is amended— 

19 (1) in paragraph (2)— 

20 (A) in subparagraph (A), in the 

21 matter preceding clause (i), by insert22 ing ‘‘for a year preceding 2022 and for 

23 costs above the annual deductible 

24 specified in paragraph (1) and up to 

25 the annual out-of-pocket threshold 


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1 specified in paragraph (4)(B) for 2022 

2 and each subsequent year’’ after 

3 ‘‘paragraph (3)’’; 

4 (B) in subparagraph (C)— 

5 (i) in clause (i), in the matter 

6 preceding subclause (I), by insert7 ing ‘‘for a year preceding 2022,’’ 

8 after ‘‘paragraph (4),’’; and 

9 (ii) in clause (ii)(III), by strik10 ing ‘‘and each subsequent year’’ 

11 and inserting ‘‘and 2021’’; and 

12 (C) in subparagraph (D)— 

13 (i) in clause (i)— 

14 (I) in the matter pre15 ceding subclause (I), by in16 serting ‘‘for a year preceding 

17 2022,’’ after ‘‘paragraph (4),’’; 

18 and 

19 (II) in subclause (I)(bb), by 

20 striking ‘‘a year after 2018’’ 

21 and inserting ‘‘each of years 

22 2018 through 2021’’; and 

23 (ii) in clause (ii)(V), by strik24 ing ‘‘2019 and each subsequent 


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1 year’’ and inserting ‘‘each of years 

2 2019 through 2021’’; 

3 (2) in paragraph (3)(A)— 

4 (A) in the matter preceding clause 

5 (i), by inserting ‘‘for a year preceding 

6 2022,’’ after ‘‘and (4),’’; and 

7 (B) in clause (ii), by striking ‘‘for 

8 a subsequent year’’ and inserting ‘‘for 

9 each of years 2007 through 2021’’; and 

10 (3) in paragraph (4)— 

11 (A) in subparagraph (A)— 

12 (i) in clause (i)— 

13 (I) by redesignating sub14 clauses (I) and (II) as items 

15 (aa) and (bb), respectively, 

16 and moving the margin of 

17 each such redesignated item 2 

18 ems to the right; 

19 (II) in the matter pre20 ceding item (aa), as redesig21 nated by subclause (I), by 

22 striking ‘‘is equal to the great23 er of—’’ and inserting ‘‘is 

24 equal to— 


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1 ‘‘(I) for a year preceding 

2 2022, the greater of—’’; 

3 (III) by striking the period 

4 at the end of item (bb), as re5 designated by subclause (I), 

6 and inserting ‘‘; and’’; and 

7 (IV) by adding at the end 

8 the following: 

9 ‘‘(II) for 2022 and each 

10 succeeding year, $0.’’; and 

11 (ii) in clause (ii), by striking 

12 ‘‘clause (i)(I)’’ and inserting 

13 ‘‘clause (i)(I)(aa)’’; 

14 (B) in subparagraph (B)— 

15 (i) in clause (i)— 

16 (I) in subclause (V), by 

17 striking ‘‘or’’ at the end; 

18 (II) in subclause (VI)— 

19 (aa) by striking ‘‘for a 

20 subsequent year’’ and in21 serting ‘‘for 2021’’; and 

22 (bb) by striking the 

23 period at the end and in24 serting a semicolon; and 


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1 (III) by adding at the end 

2 the following new subclauses: 

3 ‘‘(VII) for 2022, is equal to 

4 $2,000; or 

5 ‘‘(VIII) for a subsequent 

6 year, is equal to the amount 

7 specified in this subpara8 graph for the previous year, 

9 increased by the annual per10 centage increase described in 

11 paragraph (6) for the year in12 volved.’’; and 

13 (ii) in clause (ii), by striking 

14 ‘‘clause (i)(II)’’ and inserting 

15 ‘‘clause (i)’’; 

16 (C) in subparagraph (C)(i), by 

17 striking ‘‘and for amounts’’ and in18 serting ‘‘and, for a year preceding 

19 2022, for amounts’’; and 

20 (D) in subparagraph (E), by strik21 ing ‘‘In applying’’ and inserting ‘‘For 

22 each of years 2011 through 2021, in 

23 applying’’. 

24 (b) DECREASING REINSURANCE PAYMENT

25 AMOUNT.—Section 1860D–15(b)(1) of the Social 


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1 Security Act (42 U.S.C. 1395w–115(b)(1)) is 

2 amended by inserting after ‘‘80 percent’’ the 

3 following: ‘‘(or, with respect to a coverage 

4 year after 2021, 20 percent)’’. 

5 (c) MANUFACTURER DISCOUNT PROGRAM.— 

6 (1) IN GENERAL.—Part D of title XVIII 

7 of the Social Security Act (42 U.S.C. 

8 1395w–101 et seq.), as amended by section 

9 202, is further amended by inserting after 

10 section 1860D–14B the following new sec11 tion: 

12 ‘‘SEC. 1860D–14C. MANUFACTURER DISCOUNT PROGRAM. 

13 ‘‘(a) ESTABLISHMENT.—The Secretary shall 

14 establish a manufacturer discount program 

15 (in this section referred to as the ‘program’). 

16 Under the program, the Secretary shall enter 

17 into agreements described in subsection (b) 

18 with manufacturers and provide for the per19 formance of the duties described in sub20 section (c). The Secretary shall establish a 

21 model agreement for use under the program 

22 by not later than January 1, 2021, in consulta23 tion with manufacturers, and allow for com24 ment on such model agreement. 

25 ‘‘(b) TERMS OF AGREEMENT.— 


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1 ‘‘(1) IN GENERAL.— 

2 ‘‘(A) AGREEMENT.—An agreement 

3 under this section shall require the 

4 manufacturer to provide applicable 

5 beneficiaries access to discounted 

6 prices for applicable drugs of the 

7 manufacturer that are dispensed on 

8 or after January 1, 2022. 

9 ‘‘(B) PROVISION OF DISCOUNTED

10 PRICES AT THE POINT-OF-SALE.—The dis11 counted prices described in subpara12 graph (A) shall be provided to the ap13 plicable beneficiary at the pharmacy 

14 or by the mail order service at the 

15 point-of-sale of an applicable drug. 

16 ‘‘(C) TIMING OF AGREEMENT.— 

17 ‘‘(i) SPECIAL RULE FOR 2022.—In 

18 order for an agreement with a 

19 manufacturer to be in effect 

20 under this section with respect to 

21 the period beginning on January 

22 1, 2022, and ending on December 

23 31, 2022, the manufacturer shall 

24 enter into such agreement not 

25 later than 30 days after the date 


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1 of the establishment of a model 

2 agreement under subsection (a). 

3 ‘‘(ii) 2023 AND SUBSEQUENT

4 YEARS.—In order for an agreement 

5 with a manufacturer to be in ef6 fect under this section with re7 spect to plan year 2023 or a subse8 quent plan year, the manufac9 turer shall enter into such agree10 ment (or such agreement shall be 

11 renewed under paragraph (4)(A)) 

12 not later than January 30 of the 

13 preceding year. 

14 ‘‘(2) PROVISION OF APPROPRIATE DATA.— 

15 Each manufacturer with an agreement in 

16 effect under this section shall collect and 

17 have available appropriate data, as deter18 mined by the Secretary, to ensure that it 

19 can demonstrate to the Secretary compli20 ance with the requirements under the 

21 program. 

22 ‘‘(3) COMPLIANCE WITH REQUIREMENTS

23 FOR ADMINISTRATION OF PROGRAM.—Each 

24 manufacturer with an agreement in ef25 fect under this section shall comply with 


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1 requirements imposed by the Secretary 

2 or a third party with a contract under 

3 subsection (d)(3), as applicable, for pur4 poses of administering the program, in5 cluding any determination under sub6 paragraph (A) of subsection (c)(1) or pro7 cedures established under such sub8 section (c)(1). 

9 ‘‘(4) LENGTH OF AGREEMENT.— 

10 ‘‘(A) IN GENERAL.—An agreement 

11 under this section shall be effective 

12 for an initial period of not less than 

13 12 months and shall be automatically 

14 renewed for a period of not less than 

15 1 year unless terminated under sub16 paragraph (B). 

17 ‘‘(B) TERMINATION.— 

18 ‘‘(i) BY THE SECRETARY.—The 

19 Secretary may provide for termi20 nation of an agreement under this 

21 section for a knowing and willful 

22 violation of the requirements of 

23 the agreement or other good 

24 cause shown. Such termination 

25 shall not be effective earlier than 


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1 30 days after the date of notice to 

2 the manufacturer of such termi3 nation. The Secretary shall pro4 vide, upon request, a manufac5 turer with a hearing concerning 

6 such a termination, and such 

7 hearing shall take place prior to 

8 the effective date of the termi9 nation with sufficient time for 

10 such effective date to be repealed 

11 if the Secretary determines ap12 propriate. 

13 ‘‘(ii) BY A MANUFACTURER.—A 

14 manufacturer may terminate an 

15 agreement under this section for 

16 any reason. Any such termination 

17 shall be effective, with respect to 

18 a plan year— 

19 ‘‘(I) if the termination oc20 curs before January 30 of a 

21 plan year, as of the day after 

22 the end of the plan year; and 

23 ‘‘(II) if the termination oc24 curs on or after January 30 of 

25 a plan year, as of the day 


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1 after the end of the suc2 ceeding plan year. 

3 ‘‘(iii) EFFECTIVENESS OF TERMI4 NATION.—Any termination under 

5 this subparagraph shall not affect 

6 discounts for applicable drugs of 

7 the manufacturer that are due 

8 under the agreement before the 

9 effective date of its termination. 

10 ‘‘(iv) NOTICE TO THIRD PARTY.— 

11 The Secretary shall provide no12 tice of such termination to a third 

13 party with a contract under sub14 section (d)(3) within not less than 

15 30 days before the effective date 

16 of such termination. 

17 ‘‘(c) DUTIES DESCRIBED.—The duties de18 scribed in this subsection are the following: 

19 ‘‘(1) ADMINISTRATION OF PROGRAM.—Ad20 ministering the program, including— 

21 ‘‘(A) the determination of the 

22 amount of the discounted price of an 

23 applicable drug of a manufacturer; 

24 ‘‘(B) the establishment of proce25 dures under which discounted prices 


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1 are provided to applicable bene2 ficiaries at pharmacies or by mail 

3 order service at the point-of-sale of 

4 an applicable drug; 

5 ‘‘(C) the establishment of proce6 dures to ensure that, not later than 

7 the applicable number of calendar 

8 days after the dispensing of an appli9 cable drug by a pharmacy or mail 

10 order service, the pharmacy or mail 

11 order service is reimbursed for an 

12 amount equal to the difference be13 tween— 

14 ‘‘(i) the negotiated price of the 

15 applicable drug; and 

16 ‘‘(ii) the discounted price of 

17 the applicable drug; 

18 ‘‘(D) the establishment of proce19 dures to ensure that the discounted 

20 price for an applicable drug under 

21 this section is applied before any cov22 erage or financial assistance under 

23 other health benefit plans or pro24 grams that provide coverage or finan25 cial assistance for the purchase or 


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1 provision of prescription drug cov2 erage on behalf of applicable bene3 ficiaries as the Secretary may specify; 

4 and 

5 ‘‘(E) providing a reasonable dis6 pute resolution mechanism to resolve 

7 disagreements between manufactur8 ers, applicable beneficiaries, and the 

9 third party with a contract under 

10 subsection (d)(3). 

11 ‘‘(2) MONITORING COMPLIANCE.— 

12 ‘‘(A) IN GENERAL.—The Secretary 

13 shall monitor compliance by a manu14 facturer with the terms of an agree15 ment under this section. 

16 ‘‘(B) NOTIFICATION.—If a third 

17 party with a contract under sub18 section (d)(3) determines that the 

19 manufacturer is not in compliance 

20 with such agreement, the third party 

21 shall notify the Secretary of such 

22 noncompliance for appropriate en23 forcement under subsection (e). 

24 ‘‘(3) COLLECTION OF DATA FROM PRE25 SCRIPTION DRUG PLANS AND MA–PD PLANS.— 


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1 The Secretary may collect appropriate 

2 data from prescription drug plans and 

3 MA–PD plans in a timeframe that allows 

4 for discounted prices to be provided for 

5 applicable drugs under this section. 

6 ‘‘(d) ADMINISTRATION.— 

7 ‘‘(1) IN GENERAL.—Subject to para8 graph (2), the Secretary shall provide for 

9 the implementation of this section, in10 cluding the performance of the duties de11 scribed in subsection (c). 

12 ‘‘(2) LIMITATION.—In providing for the 

13 implementation of this section, the Sec14 retary shall not receive or distribute any 

15 funds of a manufacturer under the pro16 gram. 

17 ‘‘(3) CONTRACT WITH THIRD PARTIES.— 

18 The Secretary shall enter into a contract 

19 with 1 or more third parties to admin20 ister the requirements established by the 

21 Secretary in order to carry out this sec22 tion. At a minimum, the contract with a 

23 third party under the preceding sentence 

24 shall require that the third party— 


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1 ‘‘(A) receive and transmit infor2 mation between the Secretary, manu3 facturers, and other individuals or 

4 entities the Secretary determines ap5 propriate; 

6 ‘‘(B) receive, distribute, or facili7 tate the distribution of funds of man8 ufacturers to appropriate individuals 

9 or entities in order to meet the obli10 gations of manufacturers under 

11 agreements under this section; 

12 ‘‘(C) provide adequate and timely 

13 information to manufacturers, con14 sistent with the agreement with the 

15 manufacturer under this section, as 

16 necessary for the manufacturer to ful17 fill its obligations under this section; 

18 and 

19 ‘‘(D) permit manufacturers to con20 duct periodic audits, directly or 

21 through contracts, of the data and in22 formation used by the third party to 

23 determine discounts for applicable 

24 drugs of the manufacturer under the 

25 program. 


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1 ‘‘(4) PERFORMANCE REQUIREMENTS.— 

2 The Secretary shall establish perform3 ance requirements for a third party with 

4 a contract under paragraph (3) and safe5 guards to protect the independence and 

6 integrity of the activities carried out by 

7 the third party under the program under 

8 this section. 

9 ‘‘(5) IMPLEMENTATION.—Notwith10 standing any other provision of law, the 

11 Secretary may implement the program 

12 under this section by program instruc13 tion or otherwise. 

14 ‘‘(6) ADMINISTRATION.—Chapter 35 of 

15 title 44, United States Code, shall not 

16 apply to the program under this section. 

17 ‘‘(e) ENFORCEMENT.— 

18 ‘‘(1) AUDITS.—Each manufacturer with 

19 an agreement in effect under this section 

20 shall be subject to periodic audit by the 

21 Secretary. 

22 ‘‘(2) CIVIL MONEY PENALTY.— 

23 ‘‘(A) IN GENERAL.—The Secretary 

24 may impose a civil money penalty on 

25 a manufacturer that fails to provide 


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1 applicable beneficiaries discounts for 

2 applicable drugs of the manufacturer 

3 in accordance with such agreement 

4 for each such failure in an amount 

5 the Secretary determines is equal to 

6 the sum of— 

7 ‘‘(i) the amount that the man8 ufacturer would have paid with 

9 respect to such discounts under 

10 the agreement, which will then be 

11 used to pay the discounts which 

12 the manufacturer had failed to 

13 provide; and 

14 ‘‘(ii) 25 percent of such 

15 amount. 

16 ‘‘(B) APPLICATION.—The provisions 

17 of section 1128A (other than sub18 sections (a) and (b)) shall apply to a 

19 civil money penalty under this para20 graph in the same manner as such 

21 provisions apply to a penalty or pro22 ceeding under section 1128A(a). 

23 ‘‘(f) CLARIFICATION REGARDING AVAIL24 ABILITY OF OTHER COVERED PART D DRUGS.— 

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1 cable beneficiary from purchasing a covered 

2 part D drug that is not an applicable drug (in3 cluding a generic drug or a drug that is not 

4 on the formulary of the prescription drug 

5 plan or MA–PD plan that the applicable bene6 ficiary is enrolled in). 

7 ‘‘(g) DEFINITIONS.—In this section: 

8 ‘‘(1) APPLICABLE BENEFICIARY.—The 

9 term ‘applicable beneficiary’ means an in10 dividual who, on the date of dispensing a 

11 covered part D drug— 

12 ‘‘(A) is enrolled in a prescription 

13 drug plan or an MA–PD plan; 

14 ‘‘(B) is not enrolled in a qualified 

15 retiree prescription drug plan; and 

16 ‘‘(C) has incurred costs for cov17 ered part D drugs in the year that are 

18 equal to or exceed the annual deduct19 ible specified in section 1860D–2(b)(1) 

20 for such year. 

21 ‘‘(2) APPLICABLE DRUG.—The term ‘ap22 plicable drug’, with respect to an applica23 ble beneficiary— 

24 ‘‘(A) means a covered part D 

25 drug— 


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1 ‘‘(i) approved under a new 

2 drug application under section 

3 505(c) of the Federal Food, Drug, 

4 and Cosmetic Act or, in the case 

5 of a biologic product, licensed 

6 under section 351 of the Public 

7 Health Service Act; and 

8 ‘‘(ii)(I) if the PDP sponsor of 

9 the prescription drug plan or the 

10 MA organization offering the MA– 

11 PD plan uses a formulary, which 

12 is on the formulary of the pre13 scription drug plan or MA–PD 

14 plan that the applicable bene15 ficiary is enrolled in; 

16 ‘‘(II) if the PDP sponsor of the 

17 prescription drug plan or the MA 

18 organization offering the MA–PD 

19 plan does not use a formulary, for 

20 which benefits are available 

21 under the prescription drug plan 

22 or MA–PD plan that the applica23 ble beneficiary is enrolled in; or 

24 ‘‘(III) is provided through an 

25 exception or appeal; and 


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1 ‘‘(B) does not include a selected 

2 drug (as defined in section 1192(c)) 

3 during a price applicability period (as 

4 defined in section 1191(b)(2)) with re5 spect to such drug. 

6 ‘‘(3) APPLICABLE NUMBER OF CALENDAR

7 DAYS.—The term ‘applicable number of 

8 calendar days’ means— 

9 ‘‘(A) with respect to claims for re10 imbursement submitted electroni11 cally, 14 days; and 

12 ‘‘(B) with respect to claims for re13 imbursement submitted otherwise, 30 

14 days. 

15 ‘‘(4) DISCOUNTED PRICE.— 

16 ‘‘(A) IN GENERAL.—The term ‘dis17 counted price’ means, with respect to 

18 an applicable drug of a manufacturer 

19 furnished during a year to an appli20 cable beneficiary— 

21 ‘‘(i) who has not incurred 

22 costs for covered part D drugs in 

23 the year that are equal to or ex24 ceed the annual out-of-pocket 

25 threshold specified in section 


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1 1860D–2(b)(4)(B)(i) for the year, 90 

2 percent of the negotiated price of 

3 such drug; and 

4 ‘‘(ii) who has incurred such 

5 costs in the year that are equal to 

6 or exceed such threshold for the 

7 year, 70 percent of the negotiated 

8 price of such drug. 

9 ‘‘(B) CLARIFICATION.—Nothing in 

10 this section shall be construed as af11 fecting the responsibility of an appli12 cable beneficiary for payment of a 

13 dispensing fee for an applicable drug. 

14 ‘‘(C) SPECIAL CASE FOR CERTAIN

15 CLAIMS.— 

16 ‘‘(i) CLAIMS SPANNING DEDUCT17 IBLE.—In the case where the en18 tire amount of the negotiated 

19 price of an individual claim for 

20 an applicable drug with respect 

21 to an applicable beneficiary does 

22 not fall at or above the annual de23 ductible specified in section 

24 1860D–2(b)(1) for the year, the 

25 manufacturer of the applicable 


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1 drug shall provide the discounted 

2 price under this section on only 

3 the portion of the negotiated 

4 price of the applicable drug that 

5 falls at or above such annual de6 ductible. 

7 ‘‘(ii) CLAIMS SPANNING OUT-OF8 POCKET THRESHOLD.—In the case 

9 where the entire amount of the 

10 negotiated price of an individual 

11 claim for an applicable drug with 

12 respect to an applicable bene13 ficiary does not fall entirely 

14 below or entirely above the an15 nual out-of-pocket threshold spec16 ified in section 1860D–2(b)(4)(B)(i) 

17 for the year, the manufacturer of 

18 the applicable drug shall provide 

19 the discounted price— 

20 ‘‘(I) in accordance with 

21 subparagraph (A)(i) on the 

22 portion of the negotiated 

23 price of the applicable drug 

24 that falls below such thresh25 old; and 


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1 ‘‘(II) in accordance with 

2 subparagraph (A)(ii) on the 

3 portion of such price of such 

4 drug that falls at or above 

5 such threshold. 

6 ‘‘(5) MANUFACTURER.—The term ‘manu7 facturer’ means any entity which is en8 gaged in the production, preparation, 

9 propagation, compounding, conversion, 

10 or processing of prescription drug prod11 ucts, either directly or indirectly by ex12 traction from substances of natural ori13 gin, or independently by means of chem14 ical synthesis, or by a combination of ex15 traction and chemical synthesis. Such 

16 term does not include a wholesale dis17 tributor of drugs or a retail pharmacy li18 censed under State law. 

19 ‘‘(6) NEGOTIATED PRICE.—The term ‘ne20 gotiated price’ has the meaning given 

21 such term in section 423.100 of title 42, 

22 Code of Federal Regulations (or any suc23 cessor regulation), except that, with re24 spect to an applicable drug, such negoVerDate Sep 11 2014 23:24 Dec 09, 2019 Jkt 099200 PO 00000 Frm 00273 Fmt 6652 Sfmt 6202 E:\BILLS\H3.RH H3

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1 tiated price shall not include any dis2 pensing fee for the applicable drug. 

3 ‘‘(7) QUALIFIED RETIREE PRESCRIPTION

4 DRUG PLAN.—The term ‘qualified retiree 

5 prescription drug plan’ has the meaning 

6 given such term in section 1860D– 

7 22(a)(2).’’. 

8 (2) SUNSET OF MEDICARE COVERAGE GAP

9 DISCOUNT PROGRAM.—Section 1860D–14A 

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

11 114a) is amended— 

12 (A) in subsection (a), in the first 

13 sentence, by striking ‘‘The Secretary’’ 

14 and inserting ‘‘Subject to subsection 

15 (h), the Secretary’’; and 

16 (B) by adding at the end the fol17 lowing new subsection: 

18 ‘‘(h) SUNSET OF PROGRAM.— 

19 ‘‘(1) IN GENERAL.—The program shall 

20 not apply with respect to applicable 

21 drugs dispensed on or after January 1, 

22 2022, and, subject to paragraph (2), agree23 ments under this section shall be termi24 nated as of such date. 


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1 ‘‘(2) CONTINUED APPLICATION FOR AP2 PLICABLE DRUGS DISPENSED PRIOR TO SUN3 SET.—The provisions of this section (in4 cluding all responsibilities and duties) 

5 shall continue to apply after January 1, 

6 2022, with respect to applicable drugs 

7 dispensed prior to such date.’’. 

8 (3) INCLUSION OF ACTUARIAL VALUE OF

9 MANUFACTURER DISCOUNTS IN BIDS.—Sec10 tion 1860D–11 of the Social Security Act 

11 (42 U.S.C. 1395w–111) is amended— 

12 (A) in subsection (b)(2)(C)(iii)— 

13 (i) by striking ‘‘assumptions 

14 regarding the reinsurance’’ and 

15 inserting ‘‘assumptions regard16 ing— 

17 ‘‘(I) the reinsurance’’; and 

18 (ii) by adding at the end the 

19 following: 

20 ‘‘(II) for 2022 and each 

21 subsequent year, the manu22 facturer discounts provided 

23 under section 1860D–14C sub24 tracted from the actuarial 


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1 value to produce such bid; 

2 and’’; and 

3 (B) in subsection (c)(1)(C)— 

4 (i) by striking ‘‘an actuarial 

5 valuation of the reinsurance’’ and 

6 inserting ‘‘an actuarial valuation 

7 of— 

8 ‘‘(i) the reinsurance’’; 

9 (ii) in clause (i), as inserted by 

10 clause (i) of this subparagraph, by 

11 adding ‘‘and’’ at the end; and 

12 (iii) by adding at the end the 

13 following: 

14 ‘‘(ii) for 2022 and each subse15 quent year, the manufacturer dis16 counts provided under section 

17 1860D–14C;’’. 

18 (d) CONFORMING AMENDMENTS.— 

19 (1) Section 1860D–2 of the Social Se20 curity Act (42 U.S.C. 1395w–102) is 

21 amended— 

22 (A) in subsection (a)(2)(A)(i)(I), by 

23 striking ‘‘, or an increase in the ini24 tial’’ and inserting ‘‘or, for a year preVerDate Sep 11 2014 23:24 Dec 09, 2019 Jkt 099200 PO 00000 Frm 00276 Fmt 6652 Sfmt 6202 E:\BILLS\H3.RH H3

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1 ceding 2022, an increase in the ini2 tial’’; 

3 (B) in subsection (c)(1)(C)— 

4 (i) in the subparagraph head5 ing, by striking ‘‘AT INITIAL COV6 ERAGE LIMIT’’; and 

7 (ii) by inserting ‘‘for a year 

8 preceding 2022 or the annual out9 of-pocket threshold specified in 

10 subsection (b)(4)(B) for the year 

11 for 2022 and each subsequent 

12 year’’ after ‘‘subsection (b)(3) for 

13 the year’’ each place it appears; 

14 and 

15 (C) in subsection (d)(1)(A), by 

16 striking ‘‘or an initial’’ and inserting 

17 ‘‘or, for a year preceding 2022, an ini18 tial’’. 

19 (2) Section 1860D–4(a)(4)(B)(i) of the 

20 Social Security Act (42 U.S.C. 1395w– 

21 104(a)(4)(B)(i)) is amended by striking 

22 ‘‘the initial’’ and inserting ‘‘for a year pre23 ceding 2022, the initial’’. 


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1 (3) Section 1860D–14(a) of the Social 

2 Security Act (42 U.S.C. 1395w–114(a)) is 

3 amended— 

4 (A) in paragraph (1)— 

5 (i) in subparagraph (C), by 

6 striking ‘‘The continuation’’ and 

7 inserting ‘‘For a year preceding 

8 2022, the continuation’’; 

9 (ii) in subparagraph (D)(iii), 

10 by striking ‘‘1860D–2(b)(4)(A)(i)(I)’’ 

11 and inserting ‘‘1860D– 

12 2(b)(4)(A)(i)(I)(aa)’’; and 

13 (iii) in subparagraph (E), by 

14 striking ‘‘The elimination’’ and in15 serting ‘‘For a year preceding 

16 2022, the elimination’’; and 

17 (B) in paragraph (2)— 

18 (i) in subparagraph (C), by 

19 striking ‘‘The continuation’’ and 

20 inserting ‘‘For a year preceding 

21 2022, the continuation’’; and 

22 (ii) in subparagraph (E), by 

23 striking ‘‘1860D–2(b)(4)(A)(i)(I)’’ 

24 and inserting ‘‘1860D– 

25 2(b)(4)(A)(i)(I)(aa)’’. 


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1 (4) Section 1860D–21(d)(7) of the So2 cial Security Act (42 U.S.C. 1395w– 

3 131(d)(7)) is amended by striking ‘‘section 

4 1860D–2(b)(4)(B)(i)’’ and inserting ‘‘sec5 tion 1860D–2(b)(4)(C)(i)’’. 

6 (5) Section 1860D–22(a)(2)(A) of the 

7 Social Security Act (42 U.S.C. 1395w– 

8 132(a)(2)(A)) is amended— 

9 (A) by striking ‘‘the value of any 

10 discount’’ and inserting the following: 

11 ‘‘the value of— 

12 ‘‘(i) for years prior to 2022, 

13 any discount’’; 

14 (B) in clause (i), as inserted by 

15 subparagraph (A) of this paragraph, 

16 by striking the period at the end and 

17 inserting ‘‘; and’’; and 

18 (C) by adding at the end the fol19 lowing new clause: 

20 ‘‘(ii) for 2022 and each subse21 quent year, any discount pro22 vided pursuant to section 1860D– 

23 14C.’’. 


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1 (6) Section 1860D–41(a)(6) of the So2 cial Security Act (42 U.S.C. 1395w– 

3 151(a)(6)) is amended— 

4 (A) by inserting ‘‘for a year before 

5 2022’’ after ‘‘1860D–2(b)(3)’’; and 

6 (B) by inserting ‘‘for such year’’ 

7 before the period. 

8 (7) Section 1860D–43 of the Social Se9 curity Act (42 U.S.C. 1395w–153) is 

10 amended— 

11 (A) in subsection (a)— 

12 (i) by striking paragraph (1) 

13 and inserting the following: 

14 ‘‘(1) participate in— 

15 ‘‘(A) for 2011 through 2021, the 

16 Medicare coverage gap discount pro17 gram under section 1860D–14A; and 

18 ‘‘(B) for 2022 and each subsequent 

19 year, the manufacturer discount pro20 gram under section 1860D–14C;’’; 

21 (ii) by striking paragraph (2) 

22 and inserting the following: 

23 ‘‘(2) have entered into and have in ef24 fect— 


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1 ‘‘(A) for 2011 through 2021, an 

2 agreement described in subsection (b) 

3 of section 1860D–14A with the Sec4 retary; and 

5 ‘‘(B) for 2022 and each subsequent 

6 year, an agreement described in sub7 section (b) of section 1860D–14C with 

8 the Secretary; and’’; and 

9 (iii) by striking paragraph (3) 

10 and inserting the following: 

11 ‘‘(3) have entered into and have in ef12 fect, under terms and conditions speci13 fied by the Secretary— 

14 ‘‘(A) for 2011 through 2021, a con15 tract with a third party that the Sec16 retary has entered into a contract 

17 with under subsection (d)(3) of sec18 tion 1860D–14A; and 

19 ‘‘(B) for 2022 and each subsequent 

20 year, a contract with a third party 

21 that the Secretary has entered into a 

22 contract with under subsection (d)(3) 

23 of section 1860D–14C.’’; and 

24 (B) by striking subsection (b) and 

25 inserting the following: 


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1 ‘‘(b) EFFECTIVE DATE.—Paragraphs (1)(A), 

2 (2)(A), and (3)(A) of subsection (a) shall apply 

3 to covered part D drugs dispensed under this 

4 part on or after January 1, 2011, and before 

5 January 1, 2022, and paragraphs (1)(B), (2)(B), 

6 and (3)(B) of such subsection shall apply to 

7 covered part D drugs dispensed under this 

8 part on or after January 1, 2022.’’. 

9 (e) EFFECTIVE DATE.—The amendments 

10 made by this section shall apply with respect 

11 to plan year 2022 and subsequent plan years. 

12 SEC. 302. ALLOWING CERTAIN ENROLLEES OF PRESCRIP13 TION DRUGS PLANS AND MA–PD PLANS 

14 UNDER MEDICARE PROGRAM TO SPREAD 

15 OUT COST-SHARING UNDER CERTAIN CIR16 CUMSTANCES. 

17 Section 1860D–2(b)(2) of the Social Secu18 rity Act (42 U.S.C. 1395w–102(b)(2)), as amend19 ed by section 301, is further amended— 

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

21 ‘‘Subject to subparagraphs (C) and (D)’’ 

22 and inserting ‘‘Subject to subparagraphs 

23 (C), (D), and (E)’’; and 

24 (2) by adding at the end the following 

25 new subparagraph: 


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1 ‘‘(E) ENROLLEE OPTION REGARDING

2 SPREADING COST-SHARING.—The Sec3 retary shall establish by regulation a 

4 process under which, with respect to 

5 plan year 2022 and subsequent plan 

6 years, a prescription drug plan or an 

7 MA–PD plan shall, in the case of a 

8 part D eligible individual enrolled 

9 with such plan for such plan year 

10 who is not a subsidy eligible indi11 vidual (as defined in section 1860D– 

12 14(a)(3)) and with respect to whom 

13 the plan projects that the dispensing 

14 of the first fill of a covered part D 

15 drug to such individual will result in 

16 the individual incurring costs that 

17 are equal to or above the annual out18 of-pocket threshold specified in para19 graph (4)(B) for such plan year, pro20 vide such individual with the option 

21 to make the coinsurance payment re22 quired under subparagraph (A) (for 

23 the portion of such costs that are not 

24 above such annual out-of-pocket 

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1 stallments over the remainder of such 

2 plan year.’’. 

3 SEC. 303. ESTABLISHMENT OF PHARMACY QUALITY MEAS4 URES UNDER MEDICARE PART D. 

5 Section 1860D–4(c) of the Social Security 

6 Act (42 U.S.C. 1395w–104(c)) is amended— 

7 (1) by redesignating the paragraph 

8 (6), as added by section 50354 of division 

9 E of the Bipartisan Budget Act of 2018 

10 (Public Law 115–123), as paragraph (7); 

11 and 

12 (2) by adding at the end the following 

13 new paragraph: 

14 ‘‘(8) APPLICATION OF PHARMACY QUALITY

15 MEASURES.— 

16 ‘‘(A) IN GENERAL.—A PDP sponsor 

17 that implements incentive payments 

18 to a pharmacy or price concessions 

19 paid by a pharmacy based on quality 

20 measures shall use measures estab21 lished or approved by the Secretary 

22 under subparagraph (B) with respect 

23 to payment for covered part D drugs 

24 dispensed by such pharmacy. 


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1 ‘‘(B) STANDARD PHARMACY QUALITY

2 MEASURES.—The Secretary shall estab3 lish or approve standard quality 

4 measures from a consensus and evi5 dence-based organization for pay6 ments described in subparagraph (A). 

7 Such measures shall focus on patient 

8 health outcomes and be based on 

9 proven criteria measuring pharmacy 

10 performance. 

11 ‘‘(C) EFFECTIVE DATE.—The re12 quirement under subparagraph (A) 

13 shall take effect for plan years begin14 ning on or after January 1, 2021, or 

15 such earlier date specified by the Sec16 retary if the Secretary determines 

17 there are sufficient measures estab18 lished or approved under subpara19 graph (B) to meet the requirement 

20 under subparagraph (A).’’. 


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1 TITLE IV—PRESCRIPTION DRUG 

2 POLICIES FOR LOW-INCOME 

3 INDIVIDUALS 

4 SEC. 401. ADJUSTMENTS TO MEDICARE PART D COST-SHAR5 ING REDUCTIONS FOR LOW-INCOME INDIVID6 UALS. 

7 Section 1860D–14(a) of the Social Security 

8 Act (42 U.S.C. 1395w–114(a)), as amended by 

9 section 301(d), is further amended— 

10 (1) in paragraph (1)— 

11 (A) in subparagraph (D)— 

12 (i) in clause (ii)— 

13 (I) by striking ‘‘that does 

14 not exceed $1 for’’ and all that 

15 follows through the period at 

16 the end and inserting ‘‘that 

17 does not exceed— 

18 ‘‘(I) for plan years before 

19 plan year 2021— 

20 ‘‘(aa) for a generic 

21 drug or a preferred drug 

22 that is a multiple source 

23 drug (as defined in sec24 tion 1927(k)(7)(A)(i)), $1 

25 or, if less, the copayment 


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1 amount applicable to an 

2 individual under clause 

3 (iii); and 

4 ‘‘(bb) for any other 

5 drug, $3 or, if less, the co6 payment amount applica7 ble to an individual under 

8 clause (iii); and’’; and 

9 (II) by adding at the end 

10 the following new subclauses: 

11 ‘‘(II) for plan year 2021— 

12 ‘‘(aa) for a generic 

13 drug, $0; and 

14 ‘‘(bb) for any other 

15 drug, the dollar amount 

16 applied under this clause 

17 (after application of para18 graph (4)(A)) for plan year 

19 2020 for a drug described 

20 in subclause (I)(bb); and 

21 ‘‘(III) for a subsequent 

22 year, the dollar amount ap23 plied under this clause for the 

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1 centage increase in the con2 sumer price index (all items; 

3 U.S. city average) as of Sep4 tember of such previous 

5 year.’’; and 

6 (ii) in clause (iii)— 

7 (I) by striking ‘‘does not 

8 exceed the copayment amount 

9 specified under’’ and inserting 

10 ‘‘does not exceed— 

11 ‘‘(I) for plan years begin12 ning before plan year 2021, 

13 the copayment amount speci14 fied under’’; 

15 (II) by striking the period 

16 at the end and inserting ‘‘; 

17 and’’; and 

18 (III) by adding at the end 

19 the following new subclause: 

20 ‘‘(II) for plan year 2021 

21 and each subsequent plan 

22 year, the copayment amount 

23 applied under clause (ii) for 

24 the drug and year involved.’’; 

25 and 


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1 (B) by adding at the end the fol2 lowing new subparagraph: 

3 ‘‘(F) ROUNDING.—Any amount es4 tablished under clause (ii) of subpara5 graph (D), including as applied under 

6 clause (iii) of such subparagraph or 

7 paragraph (2)(D), that is based on an 

8 increase of $3, that is not a multiple 

9 of 5 cents or 10 cents, respectively, 

10 shall be rounded to the nearest mul11 tiple of 5 cents or 10 cents, respec12 tively.’’; 

13 (2) in paragraph (2)— 

14 (A) in subparagraph (D)— 

15 (i) by striking ‘‘of coinsurance 

16 of’’ and inserting ‘‘of— 

17 ‘‘(i) for plan years before plan 

18 year 2021, coinsurance of’’; 

19 (ii) by striking the period at 

20 the end and inserting ‘‘; and’’; and 

21 (iii) by adding at the end the 

22 following new clause: 

23 ‘‘(ii) for plan year 2021 and 

24 each subsequent plan year, a co25 payment amount that does not exVerDate Sep 11 2014 23:24 Dec 09, 2019 Jkt 099200 PO 00000 Frm 00289 Fmt 6652 Sfmt 6202 E:\BILLS\H3.RH H3

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1 ceed the copayment amount ap2 plied under paragraph (1)(D)(ii) 

3 for the drug and year involved.’’; 

4 and 

5 (B) in subparagraph (E)— 

6 (i) by striking ‘‘subsection (c), 

7 the substitution for’’ and insert8 ing ‘‘subsection (c)— 

9 ‘‘(i) for plan years before plan 

10 year 2021, the substitution for’’; 

11 (ii) by striking the period at 

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

13 (iii) by adding at the end the 

14 following new clause: 

15 ‘‘(ii) for plan year 2021, the 

16 elimination of any cost-sharing 

17 imposed under section 1860D– 

18 2(b)(4)(A).’’; and 

19 (3) in paragraph (4)(A)(ii), by insert20 ing ‘‘(before 2021)’’ after ‘‘subsequent 

21 year’’. 


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1 SEC. 402. DISSEMINATION TO MEDICARE PART D SUBSIDY 

2 ELIGIBLE INDIVIDUALS OF INFORMATION 

3 COMPARING PREMIUMS OF CERTAIN PRE4 SCRIPTION DRUG PLANS. 

5 Section 1860D–1(c)(3) of the Social Secu6 rity Act (42 U.S.C. 1395w–101(c)(3)) is amend7 ed by adding at the end the following new 

8 subparagraph: 

9 ‘‘(C) INFORMATION ON PREMIUMS

10 FOR SUBSIDY ELIGIBLE INDIVIDUALS.— 

11 ‘‘(i) IN GENERAL.—For plan 

12 year 2022 and each subsequent 

13 plan year, the Secretary shall dis14 seminate to each subsidy eligible 

15 individual (as defined in section 

16 1860D–14(a)(3)) information under 

17 this paragraph comparing pre18 miums that would apply to such 

19 individual for prescription drug 

20 coverage under LIS benchmark 

21 plans, including, in the case of an 

22 individual enrolled in a prescrip23 tion drug plan under this part, in24 formation that compares the pre25 mium that would apply if such in26 dividual were to remain enrolled 


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1 in such plan to premiums that 

2 would apply if the individual 

3 were to enroll in other LIS bench4 mark plans. 

5 ‘‘(ii) LIS BENCHMARK PLAN.— 

6 For purposes of clause (i), the 

7 term ‘LIS benchmark plan’ means, 

8 with respect to an individual, a 

9 prescription drug plan under this 

10 part that is offered in the region 

11 in which the individual resides 

12 and— 

13 ‘‘(I) that provides for a 

14 premium that is not more 

15 than the low-income bench16 mark premium amount (as de17 fined in section 1860D– 

18 14(b)(2)) for such region; or 

19 ‘‘(II) with respect to which 

20 the premium would be waived 

21 as de minimis pursuant to sec22 tion 1860D–14(a)(5) for such 

23 individual.’’. 


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1 SEC. 403. PROVIDING FOR INTELLIGENT ASSIGNMENT OF 

2 CERTAIN SUBSIDY ELIGIBLE INDIVIDUALS 

3 AUTO-ENROLLED UNDER MEDICARE PRE4 SCRIPTION DRUG PLANS AND MA–PD PLANS. 

5 (a) IN GENERAL.—Section 1860D–1(b)(1) of 

6 the Social Security Act (42 U.S.C. 1395w– 

7 101(b)(1)) is amended— 

8 (1) in subparagraph (C)— 

9 (A) by inserting after ‘‘PDP re10 gion’’ the following: ‘‘or through use 

11 of an intelligent assignment process 

12 that is designed to maximize the ac13 cess of such individual to necessary 

14 prescription drugs while minimizing 

15 costs to such individual and to the 

16 program under this part to the great17 est extent possible. In the case the 

18 Secretary enrolls such individuals 

19 through use of an intelligent assign20 ment process, such process shall take 

21 into account the extent to which pre22 scription drugs necessary for the in23 dividual are covered in the case of a 

24 PDP sponsor of a prescription drug 

25 plan that uses a formulary, the use of 

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1 tions on access to coverage of such 

2 prescription drugs by such a sponsor, 

3 and the overall quality of a prescrip4 tion drug plan as measured by qual5 ity ratings established by the Sec6 retary’’; and 

7 (B) by striking ‘‘Nothing in the 

8 previous sentence’’ and inserting 

9 ‘‘Nothing in this subparagraph’’; and 

10 (2) in subparagraph (D)— 

11 (A) by inserting after ‘‘PDP re12 gion’’ the following: ‘‘or through use 

13 of an intelligent assignment process 

14 that is designed to maximize the ac15 cess of such individual to necessary 

16 prescription drugs while minimizing 

17 costs to such individual and to the 

18 program under this part to the great19 est extent possible. In the case the 

20 Secretary enrolls such individuals 

21 through use of an intelligent assign22 ment process, such process shall take 

23 into account the extent to which pre24 scription drugs necessary for the in25 dividual are covered in the case of a 


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1 PDP sponsor of a prescription drug 

2 plan that uses a formulary, the use of 

3 prior authorization or other restric4 tions on access to coverage of such 

5 prescription drugs by such a sponsor, 

6 and the overall quality of a prescrip7 tion drug plan as measured by qual8 ity ratings established by the Sec9 retary’’; and 

10 (B) by striking ‘‘Nothing in the 

11 previous sentence’’ and inserting 

12 ‘‘Nothing in this subparagraph’’. 

13 (b) EFFECTIVE DATE.—The amendments 

14 made by subsection (a) shall apply with re15 spect to plan years beginning with plan year 

16 2022. 

17 SEC. 404. EXPANDING ELIGIBILITY FOR LOW-INCOME SUB18 SIDIES UNDER PART D OF THE MEDICARE 

19 PROGRAM. 

20 Section 1860D–14(a) of the Social Security 

21 Act (42 U.S.C. 1395w–114(a)), as amended by 

22 sections 301(d) and 401, is further amended— 

23 (1) in the subsection heading, by 

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1 lows through ‘‘LINE’’ and inserting ‘‘CER2 TAIN INDIVIDUALS’’; 

3 (2) in paragraph (1)— 

4 (A) by striking the paragraph 

5 heading and inserting ‘‘INDIVIDUALS

6 WITH CERTAIN LOW INCOMES’’; and 

7 (B) in the matter preceding sub8 paragraph (A), by inserting ‘‘(or, with 

9 respect to a plan year beginning on 

10 or after January 1, 2022, 150 per11 cent)’’ after ‘‘135 percent’’; 

12 (3) in paragraph (2)— 

13 (A) by striking the paragraph 

14 heading and inserting ‘‘OTHER LOW-IN15 COME INDIVIDUALS’’; and 

16 (B) in subparagraph (A)— 

17 (i) by inserting ‘‘(or, with re18 spect to a plan year beginning on 

19 or after January 1, 2022, 150 per20 cent)’’ after ‘‘135 percent’’; and 

21 (ii) by inserting ‘‘(or, with re22 spect to a plan year beginning on 

23 or after January 1, 2022, 200 per24 cent)’’ after ‘‘150 percent’’; and 


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1 (4) in paragraph (3)(A)(ii), by insert2 ing ‘‘(or, with respect to a plan year be3 ginning on or after January 1, 2022, 200 

4 percent)’’ after ‘‘150 percent’’. 

5 SEC. 405. AUTOMATIC ELIGIBILITY OF CERTAIN LOW-IN6 COME TERRITORIAL RESIDENTS FOR PRE7 MIUM AND COST-SHARING SUBSIDIES UNDER 

8 THE MEDICARE PROGRAM; SUNSET OF EN9 HANCED ALLOTMENT PROGRAM. 

10 (a) AUTOMATIC ELIGIBILITY OF CERTAIN

11 LOW-INCOME TERRITORIAL RESIDENTS FOR PRE12 MIUM AND COST-SHARING SUBSIDIES UNDER THE

13 MEDICARE PROGRAM.— 

14 (1) IN GENERAL.—Section 1860D– 

15 14(a)(3) of the Social Security Act (42 

16 U.S.C. 1395w–114(a)(3)) is amended— 

17 (A) in subparagraph (B)(v)— 

18 (i) in subclause (I), by striking 

19 ‘‘and’’ at the end; 

20 (ii) in subclause (II), by strik21 ing the period and inserting ‘‘; 

22 and’’; and 

23 (iii) by inserting after sub24 clause (II) the following new sub25 clause: 


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1 ‘‘(III) with respect to plan 

2 years beginning on or after 

3 January 1, 2021, shall provide 

4 that any part D eligible indi5 vidual who is enrolled for 

6 medical assistance under the 

7 State Medicaid plan of a terri8 tory (as defined in section 

9 1935(f)) under title XIX (or a 

10 waiver of such a plan) shall 

11 be treated as a subsidy eligi12 ble individual described in 

13 paragraph (1).’’; and 

14 (B) in subparagraph (F), by add15 ing at the end the following new sen16 tence: ‘‘The previous sentence shall 

17 not apply with respect to eligibility 

18 determinations for premium and cost19 sharing subsidies under this section 

20 made on or after January 1, 2021.’’. 

21 (2) CONFORMING AMENDMENT.—Section 

22 1860D–31(j)(2)(D) of the Social Security 

23 Act (42 U.S.C. 1395w–141(j)(2)(D)) is 

24 amended by adding at the end the fol25 lowing new sentence: ‘‘The previous senVerDate Sep 11 2014 23:24 Dec 09, 2019 Jkt 099200 PO 00000 Frm 00298 Fmt 6652 Sfmt 6202 E:\BILLS\H3.RH H3

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1 tence shall not apply with respect to 

2 amounts made available to a State under 

3 this paragraph on or after January 1, 

4 2021.’’. 

5 (b) SUNSET OF ENHANCED ALLOTMENT PRO6 GRAM.— 

7 (1) IN GENERAL.—Section 1935(e) of the 

8 Social Security Act (42 U.S.C. 1396u–5(e)) 

9 is amended— 

10 (A) in paragraph (1)(A), by insert11 ing after ‘‘such State’’ the following: 

12 ‘‘before January 1, 2021’’; and 

13 (B) in paragraph (3)— 

14 (i) in subparagraph (A), in the 

15 matter preceding clause (i), by in16 serting after ‘‘a year’’ the fol17 lowing: ‘‘(before 2021)’’; and 

18 (ii) in subparagraph (B)(iii), 

19 by striking ‘‘a subsequent year’’ 

20 and inserting ‘‘each of fiscal years 

21 2008 through 2020’’. 

22 (2) TERRITORY DEFINED.—Section 1935 

23 of the Social Security Act (42 U.S.C. 

24 1396u–5) is amended by adding at the end 

25 the following new subsection: 


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1 ‘‘(f) TERRITORY DEFINED.—In this section, 

2 the term ‘territory’ means Puerto Rico, the 

3 Virgin Islands, Guam, the Northern Mariana 

4 Islands, and American Samoa.’’. 

5 SEC. 406. AUTOMATIC QUALIFICATION OF CERTAIN MED6 ICAID BENEFICIARIES FOR PREMIUM AND 

7 COST-SHARING SUBSIDIES UNDER PART D OF 

8 THE MEDICARE PROGRAM. 

9 Clause (v) of section 1860D–14(a)(3)(B) of 

10 the Social Security Act (42 U.S.C. 1395w– 

11 114(a)(3)(B)), as amended by section 405, is 

12 further amended— 

13 (1) in subclause (II), by striking ‘‘and’’ 

14 at the end; 

15 (2) in subclause (III), by striking the 

16 period and inserting ‘‘; and’’; and 

17 (3) by inserting after subclause (III) 

18 the following new subclause: 

19 ‘‘(IV) with respect to plan 

20 years beginning on or after 

21 January 1, 2022, shall, not22 withstanding the preceding 

23 clauses of this subparagraph, 

24 provide that any part D eligi25 ble individual not described 


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1 in subclause (I), (II), or (III) 

2 who is enrolled, as of the day 

3 before the date on which such 

4 individual attains the age of 

5 65, for medical assistance 

6 under a State plan under title 

7 XIX (or a waiver of such plan) 

8 pursuant to clause (i)(VIII) or 

9 (ii)(XX) of section 

10 1902(a)(10)(A), and who has 

11 income below 200 percent of 

12 the poverty line applicable to 

13 a family of the size involved, 

14 shall be treated as a subsidy 

15 eligible individual described 

16 in paragraph (1) for a limited 

17 period of time, as specified by 

18 the Secretary.’’. 

19 SEC. 407. ELIMINATING THE RESOURCE REQUIREMENT 

20 WITH RESPECT TO SUBSIDY ELIGIBLE INDI21 VIDUALS UNDER PART D OF THE MEDICARE 

22 PROGRAM. 

23 Section 1860D–14(a)(3)(A)(iii) of the Social 

24 Security Act (42 U.S.C. 1395w–114(a)(3)(A)(iii)) 

25 is amended by inserting ‘‘in the case of a plan 


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1 year beginning before January 1, 2022,’’ be2 fore ‘‘meets’’. 

3 SEC. 408. PROVIDING FOR CERTAIN RULES REGARDING 

4 THE TREATMENT OF ELIGIBLE RETIREMENT 

5 PLANS IN DETERMINING THE ELIGIBILITY OF 

6 INDIVIDUALS FOR PREMIUM AND COST7 SHARING SUBSIDIES UNDER PART D OF THE 

8 MEDICARE PROGRAM. 

9 Section 1860D–14(a)(3)(C)(i) of the Social 

10 Security Act (42 U.S.C. 1395w–114(a)(3)(C)(i)) 

11 is amended, by striking ‘‘except that support 

12 and maintenance furnished in kind shall not 

13 be counted as income; and’’ and inserting ‘‘ex14 cept that— 

15 ‘‘(I) support and mainte16 nance furnished in kind shall 

17 not be counted as income; and 

18 ‘‘(II) for plan years begin19 ning on or after January 1, 

20 2022, any distribution or with21 drawal from an eligible retire22 ment plan (as defined in sub23 paragraph (B) of section 

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1 ing any defined benefit plan 

2 described in clause (iv) or (v) 

3 of such subparagraph and any 

4 qualified trust (as defined in 

5 subparagraph (A) of such sec6 tion) which is part of such a 

7 defined benefit plan) shall be 

8 counted as income; and’’. 

9 TITLE V—DRUG PRICE 

10 TRANSPARENCY 

11 SEC. 501. DRUG PRICE TRANSPARENCY. 

12 Part A of title XI of the Social Security Act 

13 is amended by adding at the end the following 

14 new sections: 

15 ‘‘SEC. 1150C. REPORTING ON DRUG PRICES. 

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

17 ‘‘(1) MANUFACTURER.—The term ‘manu18 facturer’ means the person— 

19 ‘‘(A) that holds the application for 

20 a drug approved under section 505 of 

21 the Federal Food, Drug, and Cosmetic 

22 Act or licensed under section 351 of 

23 the Public Health Service Act; or 


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1 ‘‘(B) who is responsible for setting 

2 the wholesale acquisition cost for the 

3 drug. 

4 ‘‘(2) QUALIFYING DRUG.—The term 

5 ‘qualifying drug’ means any drug that is 

6 approved under subsection (c) or (j) of 

7 section 505 of the Federal Food, Drug, 

8 and Cosmetic Act or licensed under sub9 section (a) or (k) of section 351 of the 

10 Public Health Service Act— 

11 ‘‘(A) that has a wholesale acquisi12 tion cost of $100 or more, adjusted for 

13 inflation occurring after the date of 

14 enactment of this section, for a 

15 month’s supply or a typical course of 

16 treatment that lasts less than a 

17 month, and is— 

18 ‘‘(i) subject to section 503(b)(1) 

19 of the Federal Food, Drug, and 

20 Cosmetic Act; and 

21 ‘‘(ii) not a preventative vac22 cine; and 

23 ‘‘(B) for which, during the pre24 vious calendar year, at least 1 dollar 

25 of the total amount of sales were for 


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1 individuals enrolled under the Medi2 care program under title XVIII or 

3 under a State Medicaid plan under 

4 title XIX or under a waiver of such 

5 plan. 

6 ‘‘(3) WHOLESALE ACQUISITION COST.— 

7 The term ‘wholesale acquisition cost’ has 

8 the meaning given that term in section 

9 1847A(c)(6)(B). 

10 ‘‘(b) REPORT.— 

11 ‘‘(1) REPORT REQUIRED.—The manufac12 turer of a qualifying drug shall submit a 

13 report to the Secretary if, with respect to 

14 the qualifying drug— 

15 ‘‘(A) there is an increase in the 

16 price of the qualifying drug that re17 sults in an increase in the wholesale 

18 acquisition cost of that drug that is 

19 equal to— 

20 ‘‘(i) 10 percent or more within 

21 a 12-month period beginning on 

22 or after January 1, 2019; or 

23 ‘‘(ii) 25 percent or more with24 in a 36-month period beginning 

25 on or after January 1, 2019; 


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1 ‘‘(B) the estimated price of the 

2 qualifying drug or spending per indi3 vidual or per user of such drug (as es4 timated by the Secretary) for the ap5 plicable year (or per course of treat6 ment in such applicable year as de7 termined by the Secretary) is at least 

8 $26,000 beginning on or after January 

9 1, 2021; or 

10 ‘‘(C) there was an increase in the 

11 price of the qualifying drug that re12 sulted in an increase in the wholesale 

13 acquisition cost of that drug that is 

14 equal to— 

15 ‘‘(i) 10 percent or more within 

16 a 12-month period that begins 

17 and ends during the 5-year period 

18 preceding January 1, 2021; or 

19 ‘‘(ii) 25 percent or more with20 in a 36-month period that begins 

21 and ends during the 5-year period 

22 preceding January 1, 2021. 

23 ‘‘(2) REPORT DEADLINE.—Each report 

24 described in paragraph (1) shall be sub25 mitted to the Secretary— 


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1 ‘‘(A) in the case of a report with 

2 respect to an increase in the price of 

3 a qualifying drug that occurs during 

4 the period beginning on January 1, 

5 2019, and ending on the day that is 60 

6 days after the date of the enactment 

7 of this section, not later than 90 days 

8 after such date of enactment; 

9 ‘‘(B) in the case of a report with 

10 respect to an increase in the price of 

11 a qualifying drug that occurs after 

12 the period described in subparagraph 

13 (A), not later than 30 days prior to 

14 the planned effective date of such 

15 price increase for such qualifying 

16 drug; 

17 ‘‘(C) in the case of a report with 

18 respect to a qualifying drug that 

19 meets the criteria under paragraph 

20 (1)(B), not later than 30 days after 

21 such drug meets such criteria; and 

22 ‘‘(D) in the case of a report with 

23 respect to an increase in the price of 

24 a qualifying drug that occurs during 

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1 scribed in paragraph (1)(C), not later 

2 than April 1, 2021. 

3 ‘‘(c) CONTENTS.—A report under sub4 section (b), consistent with the standard for 

5 disclosures described in section 213.3(d) of 

6 title 12, Code of Federal Regulations (as in ef7 fect on the date of enactment of this section), 

8 shall, at a minimum, include— 

9 ‘‘(1) with respect to the qualifying 

10 drug— 

11 ‘‘(A) the percentage by which the 

12 manufacturer will raise the wholesale 

13 acquisition cost of the drug within 

14 the 12-month period or 36-month pe15 riod as described in subsection 

16 (b)(1)(A)(i), (b)(1)(A)(ii), (b)(1)(C)(i), or 

17 (b)(1)(C)(ii), as applicable, and the ef18 fective date of such price increase or 

19 the cost associated with a qualifying 

20 drug if such drug meets the criteria 

21 under subsection (b)(1)(B) and the ef22 fective date at which such drug meets 

23 such criteria; 

24 ‘‘(B) an explanation for, and de25 scription of, each price increase for 


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1 such drug that will occur during the 

2 12-month period or the 36-month pe3 riod described in subsection 

4 (b)(1)(A)(i), (b)(1)(A)(ii), (b)(1)(C)(i), or 

5 (b)(1)(C)(ii), as applicable; 

6 ‘‘(C) an explanation for, and de7 scription of, the cost associated with 

8 a qualifying drug if such drug meets 

9 the criteria under subsection 

10 (b)(1)(B), as applicable; 

11 ‘‘(D) if known and different from 

12 the manufacturer of the qualifying 

13 drug, the identity of— 

14 ‘‘(i) the sponsor or sponsors of 

15 any investigational new drug ap16 plications under section 505(i) of 

17 the Federal Food, Drug, and Cos18 metic Act for clinical investiga19 tions with respect to such drug, 

20 for which the full reports are sub21 mitted as part of the applica22 tion— 

23 ‘‘(I) for approval of the 

24 drug under section 505 of 

25 such Act; or 


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1 ‘‘(II) for licensure of the 

2 drug under section 351 of the 

3 Pubic Health Service Act; and 

4 ‘‘(ii) the sponsor of an applica5 tion for the drug approved under 

6 such section 505 of the Federal 

7 Food, Drug, and Cosmetic Act or 

8 licensed under section 351 of the 

9 Public Health Service Act; 

10 ‘‘(E) a description of the history of 

11 the manufacturer’s price increases 

12 for the drug since the approval of the 

13 application for the drug under sec14 tion 505 of the Federal Food, Drug, 

15 and Cosmetic Act or the issuance of 

16 the license for the drug under section 

17 351 of the Public Health Service Act, 

18 or since the manufacturer acquired 

19 such approved application or license, 

20 if applicable; 

21 ‘‘(F) the current wholesale acqui22 sition cost of the drug; 

23 ‘‘(G) the total expenditures of the 

24 manufacturer on— 


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1 ‘‘(i) materials and manufac2 turing for such drug; 

3 ‘‘(ii) acquiring patents and li4 censing for such drug; and 

5 ‘‘(iii) purchasing or acquiring 

6 such drug from another manufac7 turer, if applicable; 

8 ‘‘(H) the percentage of total ex9 penditures of the manufacturer on re10 search and development for such 

11 drug that was derived from Federal 

12 funds; 

13 ‘‘(I) the total expenditures of the 

14 manufacturer on research and devel15 opment for such drug that is nec16 essary to demonstrate that it meets 

17 applicable statutory standards for ap18 proval under section 505 of the Fed19 eral Food, Drug, and Cosmetic Act or 

20 licensure under section 351 of the 

21 Public Health Service Act, as applica22 ble; 

23 ‘‘(J) the total expenditures of the 

24 manufacturer on pursuing new or ex25 panded indications or dosage changes 


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1 for such drug under section 505 of the 

2 Federal Food, Drug, and Cosmetic Act 

3 or section 351 of the Public Health 

4 Service Act; 

5 ‘‘(K) the total expenditures of the 

6 manufacturer on carrying out 

7 postmarket requirements related to 

8 such drug, including under section 

9 505(o)(3) of the Federal Food, Drug, 

10 and Cosmetic Act; 

11 ‘‘(L) the total revenue and the net 

12 profit generated from the qualifying 

13 drug for each calendar year since the 

14 approval of the application for the 

15 drug under section 505 of the Federal 

16 Food, Drug, and Cosmetic Act or the 

17 issuance of the license for the drug 

18 under section 351 of the Public 

19 Health Service Act, or since the man20 ufacturer acquired such approved ap21 plication or license; and 

22 ‘‘(M) the total costs associated 

23 with marketing and advertising for 

24 the qualifying drug; 


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1 ‘‘(2) with respect to the manufac2 turer— 

3 ‘‘(A) the total revenue and the net 

4 profit of the manufacturer for each of 

5 the 12-month period described in sub6 section (b)(1)(A)(i) or (b)(1)(C)(i) or 

7 the 36-month period described in sub8 section (b)(1)(A)(ii) or (b)(1)(C)(ii), as 

9 applicable; 

10 ‘‘(B) all stock-based performance 

11 metrics used by the manufacturer to 

12 determine executive compensation 

13 for each of the 12-month periods de14 scribed in subsection (b)(1)(A)(i) or 

15 (b)(1)(C)(i) or the 36-month periods 

16 described in subsection (b)(1)(A)(ii) or 

17 (b)(1)(C)(ii), as applicable; and 

18 ‘‘(C) any additional information 

19 the manufacturer chooses to provide 

20 related to drug pricing decisions, 

21 such as total expenditures on— 

22 ‘‘(i) drug research and devel23 opment; or 

24 ‘‘(ii) clinical trials, including 

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1 proval by the Food and Drug Ad2 ministration; and 

3 ‘‘(3) such other related information as 

4 the Secretary considers appropriate and 

5 as specified by the Secretary. 

6 ‘‘(d) INFORMATION PROVIDED.—The manu7 facturer of a qualifying drug that is required 

8 to submit a report under subsection (b), shall 

9 ensure that such report and any explanation 

10 for, and description of, each price increase de11 scribed in subsection (c)(1) shall be truthful, 

12 not misleading, and accurate. 

13 ‘‘(e) CIVIL MONETARY PENALTY.—Any manu14 facturer of a qualifying drug that fails to sub15 mit a report for the drug as required by this 

16 section, following notification by the Sec17 retary to the manufacturer that the manufac18 turer is not in compliance with this section, 

19 shall be subject to a civil monetary penalty of 

20 $75,000 for each day on which the violation 

21 continues. 

22 ‘‘(f) FALSE INFORMATION.—Any manufac23 turer that submits a report for a drug as re24 quired by this section that knowingly pro25 vides false information in such report is subVerDate Sep 11 2014 23:24 Dec 09, 2019 Jkt 099200 PO 00000 Frm 00314 Fmt 6652 Sfmt 6202 E:\BILLS\H3.RH H3

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1 ject to a civil monetary penalty in an amount 

2 not to exceed $100,000 for each item of false 

3 information. 

4 ‘‘(g) PUBLIC POSTING.— 

5 ‘‘(1) IN GENERAL.—Subject to para6 graph (4), the Secretary shall post each 

7 report submitted under subsection (b) on 

8 the public website of the Department of 

9 Health and Human Services the day the 

10 price increase of a qualifying drug is 

11 scheduled to go into effect. 

12 ‘‘(2) FORMAT.—In developing the for13 mat in which reports will be publicly 

14 posted under paragraph (1), the Sec15 retary shall consult with stakeholders, in16 cluding beneficiary groups, and shall 

17 seek feedback from consumer advocates 

18 and readability experts on the format 

19 and presentation of the content of such 

20 reports to ensure that such reports are— 

21 ‘‘(A) user-friendly to the public; 

22 and 

23 ‘‘(B) written in plain language 

24 that consumers can readily under25 stand. 


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1 ‘‘(3) LIST.—In addition to the reports 

2 submitted under subsection (b), the Sec3 retary shall also post a list of each quali4 fying drug with respect to which the 

5 manufacturer was required to submit 

6 such a report in the preceding year and 

7 whether such manufacturer was required 

8 to submit such report based on a quali9 fying price increase or whether such 

10 drug meets the criteria under subsection 

11 (b)(1)(B). 

12 ‘‘(4) PROTECTED INFORMATION.—In car13 rying out this section, the Secretary shall 

14 enforce applicable law concerning the 

15 protection of confidential commercial in16 formation and trade secrets. 

17 ‘‘SEC. 1150D. ANNUAL REPORT TO CONGRESS. 

18 ‘‘(a) IN GENERAL.—Subject to subsection 

19 (b), the Secretary shall submit to the Commit20 tees on Energy and Commerce and Ways and 

21 Means of the House of Representatives and 

22 the Committees on Health, Education, Labor, 

23 and Pensions and Finance of the Senate, and 

24 post on the public website of the Department 

25 of Health and Human Services in a way that 


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1 is user-friendly to the public and written in 

2 plain language that consumers can readily 

3 understand, an annual report— 

4 ‘‘(1) summarizing the information re5 ported pursuant to section 1150C; 

6 ‘‘(2) including copies of the reports 

7 and supporting detailed economic anal8 yses submitted pursuant to such section; 

9 ‘‘(3) detailing the costs and expendi10 tures incurred by the Department of 

11 Health and Human Services in carrying 

12 out section 1150C; and 

13 ‘‘(4) explaining how the Department 

14 of Health and Human Services is improv15 ing consumer and provider information 

16 about drug value and drug price trans17 parency. 

18 ‘‘(b) PROTECTED INFORMATION.—In car19 rying out this section, the Secretary shall en20 force applicable law concerning the protec21 tion of confidential commercial information 

22 and trade secrets.’’. 

23 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

24 (a) IN GENERAL.—This Act may be cited as 

25 the ‘‘Lower Drug Costs Now Act of 2019’’. 


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1 (b) TABLE OF CONTENTS.—The table of con2 tents is as follows: 

Sec. 1. Short title; table of contents. 

TITLE I—LOWERING PRICES THROUGH FAIR DRUG PRICE 

NEGOTIATION 

Sec. 101. Providing for lower prices for certain high-priced single source drugs. 

Sec. 102. Selected drug manufacturer excise tax imposed during 

noncompliance periods. 

TITLE II—MEDICARE PARTS B AND D PRESCRIPTION 

DRUG INFLATION REBATES 

Sec. 201. Medicare part B rebate by manufacturers. 

Sec. 202. Medicare part D rebate by manufacturers. 

TITLE III—PART D IMPROVEMENTS AND MAXIMUM OUTOF-POCKET CAP FOR MEDICARE BENEFICIARIES 

Sec. 301. Medicare part D benefit redesign. 

3 TITLE I—LOWERING PRICES 

4 THROUGH FAIR DRUG PRICE 

5 NEGOTIATION 

6 SEC. 101. PROVIDING FOR LOWER PRICES FOR CERTAIN 

7 HIGH-PRICED SINGLE SOURCE DRUGS. 

8 (a) PROGRAM TO LOWER PRICES FOR CER9 TAIN HIGH-PRICED SINGLE SOURCE DRUGS.— 

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

11 1301 et seq.) is amended by adding at the end 

12 the following new part: 


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1 ‘‘PART E—FAIR PRICE NEGOTIATION PROGRAM 

2 TO LOWER PRICES FOR CERTAIN HIGH3 PRICED SINGLE SOURCE DRUGS 

4 ‘‘SEC. 1191. ESTABLISHMENT OF PROGRAM. 

5 ‘‘(a) IN GENERAL.—The Secretary shall es6 tablish a Fair Price Negotiation Program (in 

7 this part referred to as the ‘program’). Under 

8 the program, with respect to each price appli9 cability period, the Secretary shall— 

10 ‘‘(1) publish a list of selected drugs in 

11 accordance with section 1192; 

12 ‘‘(2) enter into agreements with manu13 facturers of selected drugs with respect to 

14 such period, in accordance with section 

15 1193; 

16 ‘‘(3) negotiate and, if applicable, re17 negotiate maximum fair prices for such 

18 selected drugs, in accordance with section 

19 1194; and 

20 ‘‘(4) carry out the administrative du21 ties described in section 1196. 

22 ‘‘(b) DEFINITIONS RELATING TO TIMING.—For 

23 purposes of this part: 

24 ‘‘(1) INITIAL PRICE APPLICABILITY

25 YEAR.—The term ‘initial price applica26 bility year’ means a plan year (beginning 


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1 with plan year 2023) or, if agreed to in an 

2 agreement under section 1193 by the Sec3 retary and manufacturer involved, a pe4 riod of more than one plan year (begin5 ning on or after January 1, 2023). 

6 ‘‘(2) PRICE APPLICABILITY PERIOD.—The 

7 term ‘price applicability period’ means, 

8 with respect to a drug, the period begin9 ning with the initial price applicability 

10 year with respect to which such drug is a 

11 selected drug and ending with the last 

12 plan year during which the drug is a se13 lected drug. 

14 ‘‘(3) SELECTED DRUG PUBLICATION

15 DATE.—The term ‘selected drug publica16 tion date’ means, with respect to each ini17 tial price applicability year, April 15 of 

18 the plan year that begins 2 years prior to 

19 such year. 

20 ‘‘(4) VOLUNTARY NEGOTIATION PERIOD.— 

21 The term ‘voluntary negotiation period’ 

22 means, with respect to an initial price ap23 plicability year with respect to a selected 

24 drug, the period— 

25 ‘‘(A) beginning on the sooner of— 


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1 ‘‘(i) the date on which the 

2 manufacturer of the drug and the 

3 Secretary enter into an agreement 

4 under section 1193 with respect to 

5 such drug; or 

6 ‘‘(ii) June 15 following the se7 lected drug publication date with 

8 respect to such selected drug; and 

9 ‘‘(B) ending on March 31 of the 

10 year that begins one year prior to the 

11 initial price applicability year. 

12 ‘‘(c) OTHER DEFINITIONS.—For purposes of 

13 this part: 

14 ‘‘(1) FAIR PRICE ELIGIBLE INDIVIDUAL.— 

15 The term ‘fair price eligible individual’ 

16 means, with respect to a selected drug— 

17 ‘‘(A) in the case such drug is fur18 nished or dispensed to the individual 

19 at a pharmacy or by a mail order 

20 service— 

21 ‘‘(i) an individual who is en22 rolled under a prescription drug 

23 plan under part D of title XVIII or 

24 an MA–PD plan under part C of 


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1 such title under which coverage is 

2 provided for such drug; and 

3 ‘‘(ii) an individual who is en4 rolled under a group health plan 

5 or health insurance coverage of6 fered in the group or individual 

7 market (as such terms are defined 

8 in section 2791 of the Public 

9 Health Service Act) with respect to 

10 which there is in effect an agree11 ment with the Secretary under sec12 tion 1197 with respect to such se13 lected drug as so furnished or dis14 pensed; and 

15 ‘‘(B) in the case such drug is fur16 nished or administered to the indi17 vidual by a hospital, physician, or 

18 other provider of services or sup19 plier— 

20 ‘‘(i) an individual who is enti21 tled to benefits under part A of 

22 title XVIII or enrolled under part 

23 B of such title if such selected 

24 drug is covered under the respec25 tive part; and 


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1 ‘‘(ii) an individual who is en2 rolled under a group health plan 

3 or health insurance coverage of4 fered in the group or individual 

5 market (as such terms are defined 

6 in section 2791 of the Public 

7 Health Service Act) with respect to 

8 which there is in effect an agree9 ment with the Secretary under sec10 tion 1197 with respect to such se11 lected drug as so furnished or ad12 ministered. 

13 ‘‘(2) MAXIMUM FAIR PRICE.—The term 

14 ‘maximum fair price’ means, with respect 

15 to a plan year during a price applica16 bility period and with respect to a selected 

17 drug (as defined in section 1192(c)) with 

18 respect to such period, the price published 

19 pursuant to section 1195 in the Federal 

20 Register for such drug and year. 

21 ‘‘(3) AVERAGE INTERNATIONAL MARKET

22 PRICE DEFINED.— 

23 ‘‘(A) IN GENERAL.—The terms ‘aver24 age international market price’ and 

25 ‘AIM price’ mean, with respect to a 


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1 drug, the average price (which shall 

2 be the net average price, if prac3 ticable, and volume-weighted, if prac4 ticable) for a unit (as defined in para5 graph (4)) of the drug for sales of such 

6 drug (calculated across different dos7 age forms and strengths of the drug 

8 and not based on the specific formula9 tion or package size or package type), 

10 as computed (as of the date of publi11 cation of such drug as a selected drug 

12 under section 1192(a)) in all countries 

13 described in clause (ii) of subpara14 graph (B) that are applicable coun15 tries (as described in clause (i) of such 

16 subparagraph) with respect to such 

17 drug. 

18 ‘‘(B) APPLICABLE COUNTRIES.— 

19 ‘‘(i) IN GENERAL.—For purposes 

20 of subparagraph (A), a country de21 scribed in clause (ii) is an appli22 cable country described in this 

23 clause with respect to a drug if 

24 there is available an average 

25 price for any unit for the drug for 


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1 sales of such drug in such coun2 try. 

3 ‘‘(ii) COUNTRIES DESCRIBED.— 

4 For purposes of this paragraph, 

5 the following are countries de6 scribed in this clause: 

7 ‘‘(I) Australia. 

8 ‘‘(II) Canada. 

9 ‘‘(III) France. 

10 ‘‘(IV) Germany. 

11 ‘‘(V) Japan. 

12 ‘‘(VI) The United Kingdom. 

13 ‘‘(4) UNIT.—The term ‘unit’ means, 

14 with respect to a drug, the lowest identifi15 able quantity (such as a capsule or tablet, 

16 milligram of molecules, or grams) of the 

17 drug that is dispensed. 

18 ‘‘SEC. 1192. SELECTION OF NEGOTIATION-ELIGIBLE DRUGS 

19 AS SELECTED DRUGS. 

20 ‘‘(a) IN GENERAL.—Not later than the se21 lected drug publication date with respect to an 

22 initial price applicability year, the Secretary 

23 shall select and publish in the Federal Reg24 ister a list of— 


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1 ‘‘(1)(A) with respect to an initial price 

2 applicability year during the period be3 ginning with 2023 and ending with 2027, 

4 at least 25 negotiation-eligible drugs de5 scribed in subparagraphs (A) and (B), but 

6 not subparagraph (C), of subsection (d)(1) 

7 (or, with respect to an initial price appli8 cability year during such period begin9 ning after 2023, the maximum number (if 

10 such number is less than 25) of such nego11 tiation-eligible drugs for the year) with 

12 respect to such year; 

13 ‘‘(B) with respect to an initial price 

14 applicability year during the period be15 ginning with 2028 and ending with 2032, 

16 at least 30 negotiation-eligible drugs de17 scribed in subparagraphs (A) and (B), but 

18 not subparagraph (C), of subsection (d)(1) 

19 (or, with respect to an initial price appli20 cability year during such period, the max21 imum number (if such number is less than 

22 30) of such negotiation-eligible drugs for 

23 the year) with respect to such year; and 

24 ‘‘(C) with respect to an initial price 

25 applicability year beginning after 2032, at 


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1 least 35 negotiation-eligible drugs de2 scribed in subparagraphs (A) and (B), but 

3 not subparagraph (C), of subsection (d)(1) 

4 (or, with respect to an initial price appli5 cability year during such period, the max6 imum number (if such number is less than 

7 35) of such negotiation-eligible drugs for 

8 the year) with respect to such year; 

9 ‘‘(2) all negotiation-eligible drugs de10 scribed in subparagraph (C) of such sub11 section with respect to such year; and 

12 ‘‘(3) all new-entrant negotiation-eligi13 ble drugs (as defined in subsection (g)(1)) 

14 with respect to such year. 

15 Each drug published on the list pursuant to 

16 the previous sentence shall be subject to the 

17 negotiation process under section 1194 for the 

18 voluntary negotiation period with respect to 

19 such initial price applicability year (and the 

20 renegotiation process under such section as 

21 applicable for any subsequent year during the 

22 applicable price applicability period). In ap23 plying this subsection, any negotiation-eligible 

24 drug that is selected under this subsection for 

25 an initial price applicability year shall not 


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1 count toward the required minimum amount 

2 of drugs to be selected under paragraph (1) for 

3 any subsequent year, including such a drug so 

4 selected that is subject to renegotiation under 

5 section 1194. 

6 ‘‘(b) SELECTION OF DRUGS.—In carrying out 

7 subsection (a)(1) the Secretary shall select for 

8 inclusion on the published list described in 

9 subsection (a) with respect to a price applica10 bility period, the negotiation-eligible drugs 

11 that the Secretary projects will result in the 

12 greatest savings to the Federal Government or 

13 fair price eligible individuals during the price 

14 applicability period. In making this projection 

15 of savings for drugs for which there is an AIM 

16 price for a price applicability period, the sav17 ings shall be projected across different dosage 

18 forms and strengths of the drugs and not 

19 based on the specific formulation or package 

20 size or package type of the drugs, taking into 

21 consideration both the volume of drugs for 

22 which payment is made, to the extent such 

23 data is available, and the amount by which 

24 the net price for the drugs exceeds the AIM 

25 price for the drugs. 


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1 ‘‘(c) SELECTED DRUG.—For purposes of this 

2 part, each drug included on the list published 

3 under subsection (a) with respect to an initial 

4 price applicability year shall be referred to as 

5 a ‘selected drug’ with respect to such year and 

6 each subsequent plan year beginning before 

7 the first plan year beginning after the date on 

8 which the Secretary determines two or more 

9 drug products— 

10 ‘‘(1) are approved or licensed (as ap11 plicable)— 

12 ‘‘(A) under section 505(j) of the 

13 Federal Food, Drug, and Cosmetic Act 

14 using such drug as the listed drug; or 

15 ‘‘(B) under section 351(k) of the 

16 Public Health Service Act using such 

17 drug as the reference product; and 

18 ‘‘(2) continue to be marketed. 

19 ‘‘(d) NEGOTIATION-ELIGIBLE DRUG.— 

20 ‘‘(1) IN GENERAL.—For purposes of this 

21 part, the term ‘negotiation-eligible drug’ 

22 means, with respect to the selected drug 

23 publication date with respect to an initial 

24 price applicability year, a qualifying sin25 gle source drug, as defined in subsection 


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1 (e), that meets any of the following cri2 teria: 

3 ‘‘(A) COVERED PART D DRUGS.—The 

4 drug is among the 125 covered part D 

5 drugs (as defined in section 1860D– 

6 2(e)) for which there was an estimated 

7 greatest net spending under parts C 

8 and D of title XVIII, as determined by 

9 the Secretary, during the most recent 

10 plan year prior to such drug publica11 tion date for which data are avail12 able. 

13 ‘‘(B) OTHER DRUGS.—The drug is 

14 among the 125 drugs for which there 

15 was an estimated greatest net spend16 ing in the United States (including 

17 the 50 States, the District of Colum18 bia, and the territories of the United 

19 States), as determined by the Sec20 retary, during the most recent plan 

21 year prior to such drug publication 

22 date for which data are available. 

23 ‘‘(C) INSULIN.—The drug is a 

24 qualifying single source drug de25 scribed in subsection (e)(3). 


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1 ‘‘(2) CLARIFICATION.—In determining 

2 whether a qualifying single source drug 

3 satisfies any of the criteria described in 

4 paragraph (1), the Secretary shall, to the 

5 extent practicable, use data that is aggre6 gated across dosage forms and strengths 

7 of the drug and not based on the specific 

8 formulation or package size or package 

9 type of the drug. 

10 ‘‘(3) PUBLICATION.—Not later than the 

11 selected drug publication date with re12 spect to an initial price applicability year, 

13 the Secretary shall publish in the Federal 

14 Register a list of negotiation-eligible 

15 drugs with respect to such selected drug 

16 publication date. 

17 ‘‘(e) QUALIFYING SINGLE SOURCE DRUG.— 

18 For purposes of this part, the term ‘qualifying 

19 single source drug’ means any of the following: 

20 ‘‘(1) DRUG PRODUCTS.—A drug that— 

21 ‘‘(A) is approved under section 

22 505(c) of the Federal Food, Drug, and 

23 Cosmetic Act and continues to be mar24 keted pursuant to such approval; and 


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1 ‘‘(B) is not the listed drug for any 

2 drug that is approved and continues 

3 to be marketed under section 505(j) of 

4 such Act. 

5 ‘‘(2) BIOLOGICAL PRODUCTS.—A biologi6 cal product that— 

7 ‘‘(A) is licensed under section 

8 351(a) of the Public Health Service 

9 Act, including any product that has 

10 been deemed to be licensed under sec11 tion 351 of such Act pursuant to sec12 tion 7002(e)(4) of the Biologics Price 

13 Competition and Innovation Act of 

14 2009, and continues to be marketed 

15 under section 351 of such Act; and 

16 ‘‘(B) is not the reference product 

17 for any biological product that is li18 censed and continues to be marketed 

19 under section 351(k) of such Act. 

20 ‘‘(3) INSULIN PRODUCT.—Notwith21 standing paragraphs (1) and (2), any in22 sulin product that is approved under sub23 section (c) or (j) of section 505 of the Fed24 eral Food, Drug, and Cosmetic Act or li25 censed under subsection (a) or (k) of secVerDate Sep 11 2014 23:24 Dec 09, 2019 Jkt 099200 PO 00000 Frm 00332 Fmt 6652 Sfmt 6204 E:\BILLS\H3.RH H3

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1 tion 351 of the Public Health Service Act 

2 and continues to be marketed under such 

3 section 505 or 351, including any insulin 

4 product that has been deemed to be li5 censed under section 351(a) of the Public 

6 Health Service Act pursuant to section 

7 7002(e)(4) of the Biologics Price Competi8 tion and Innovation Act of 2009 and con9 tinues to be marketed pursuant to such li10 censure. 

11 For purposes of applying paragraphs (1) and 

12 (2), a drug or biological product that is mar13 keted by the same sponsor or manufacturer (or 

14 an affiliate thereof or a cross-licensed pro15 ducer or distributor) as the listed drug or ref16 erence product described in such respective 

17 paragraph shall not be taken into consider18 ation. 

19 ‘‘(f) INFORMATION ON INTERNATIONAL DRUG

20 PRICES.—For purposes of determining which 

21 negotiation-eligible drugs to select under sub22 section (a) and, in the case of such drugs that 

23 are selected drugs, to determine the maximum 

24 fair price for such a drug and whether such 

25 maximum fair price should be renegotiated 


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1 under section 1194, the Secretary shall use 

2 data relating to the AIM price with respect to 

3 such drug as available or provided to the Sec4 retary and shall on an ongoing basis request 

5 from manufacturers of selected drugs informa6 tion on the AIM price of such a drug. 

7 ‘‘(g) NEW-ENTRANT NEGOTIATION-ELIGIBLE

8 DRUGS.— 

9 ‘‘(1) IN GENERAL.—For purposes of this 

10 part, the term ‘new-entrant negotiation-el11 igible drug’ means, with respect to the se12 lected drug publication date with respect 

13 to an initial price applicability year, a 

14 qualifying single source drug— 

15 ‘‘(A) that is first approved or li16 censed, as described in paragraph (1), 

17 (2), or (3) of subsection (e), as applica18 ble, during the year preceding such se19 lected drug publication date; and 

20 ‘‘(B) that the Secretary determines 

21 under paragraph (2) is likely to be a 

22 negotiation-eligible drug with respect 

23 to the subsequent selected drug publi24 cation date. 


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1 ‘‘(2) DETERMINATION.—In the case of a 

2 qualifying single source drug that meets 

3 the criteria described in subparagraphs 

4 (A) and (B) of paragraph (1), with respect 

5 to an initial price applicability year, if 

6 the wholesale acquisition cost at which 

7 such drug is first marketed in the United 

8 States is equal to or greater than the me9 dian household income (as determined ac10 cording to the most recent data collected 

11 by the United States Census Bureau), the 

12 Secretary shall determine before the se13 lected drug publication date with respect 

14 to the initial price applicability year, if 

15 the drug is likely to be included as a nego16 tiation-eligible drug with respect to the 

17 subsequent selected drug publication 

18 date, based on the projected spending 

19 under title XVIII or in the United States 

20 on such drug. For purposes of this para21 graph the term ‘United States’ includes 

22 the 50 States, the District of Columbia, 

23 and the territories of the United States. 


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1 ‘‘SEC. 1193. MANUFACTURER AGREEMENTS. 

2 ‘‘(a) IN GENERAL.—For purposes of section 

3 1191(a)(2), the Secretary shall enter into 

4 agreements with manufacturers of selected 

5 drugs with respect to a price applicability pe6 riod, by not later than June 15 following the 

7 selected drug publication date with respect to 

8 such selected drug, under which— 

9 ‘‘(1) during the voluntary negotiation 

10 period for the initial price applicability 

11 year for the selected drug, the Secretary 

12 and manufacturer, in accordance with 

13 section 1194, negotiate to determine (and, 

14 by not later than the last date of such pe15 riod and in accordance with subsection 

16 (c), agree to) a maximum fair price for 

17 such selected drug of the manufacturer in 

18 order to provide access to such price— 

19 ‘‘(A) to fair price eligible individ20 uals who with respect to such drug 

21 are described in subparagraph (A) of 

22 section 1191(c)(1) and are furnished 

23 or dispensed such drug during, sub24 ject to subparagraph (2), the price ap25 plicability period; and 


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1 ‘‘(B) to hospitals, physicians, and 

2 other providers of services and sup3 pliers with respect to fair price eligi4 ble individuals who with respect to 

5 such drug are described in subpara6 graph (B) of such section and are fur7 nished or administered such drug 

8 during, subject to subparagraph (2), 

9 the price applicability period; 

10 ‘‘(2) the Secretary and the manufac11 turer shall, in accordance with a process 

12 and during a period specified by the Sec13 retary pursuant to rulemaking, renego14 tiate (and, by not later than the last date 

15 of such period and in accordance with 

16 subsection (c), agree to) the maximum fair 

17 price for such drug if the Secretary deter18 mines that there is a material change in 

19 any of the factors described in section 

20 1194(d) relating to the drug, including 

21 changes in the AIM price for such drug, in 

22 order to provide access to such maximum 

23 fair price (as so renegotiated)— 

24 ‘‘(A) to fair price eligible individ25 uals who with respect to such drug 


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1 are described in subparagraph (A) of 

2 section 1191(c)(1) and are furnished 

3 or dispensed such drug during any 

4 year during the price applicability pe5 riod (beginning after such renegoti6 ation) with respect to such selected 

7 drug; and 

8 ‘‘(B) to hospitals, physicians, and 

9 other providers of services and sup10 pliers with respect to fair price eligi11 ble individuals who with respect to 

12 such drug are described in subpara13 graph (B) of such section and are fur14 nished or administered such drug 

15 during any year described in subpara16 graph (A); 

17 ‘‘(3) the maximum fair price (includ18 ing as renegotiated pursuant to para19 graph (2)), with respect to such a selected 

20 drug, shall be provided to fair price eligi21 ble individuals, who with respect to such 

22 drug are described in subparagraph (A) 

23 of section 1191(c)(1), at the pharmacy or 

24 by a mail order service at the point-of-sale 

25 of such drug; 


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1 ‘‘(4) the manufacturer, subject to sub2 section (c), submits to the Secretary, in a 

3 form and manner specified by the Sec4 retary— 

5 ‘‘(A) for the voluntary negotiation 

6 period for the price applicability pe7 riod (and, if applicable, before any pe8 riod of renegotiation specified pursu9 ant to paragraph (2)) with respect to 

10 such drug all information that the 

11 Secretary requires to carry out the ne12 gotiation (or renegotiation process) 

13 under this part, including informa14 tion described in section 1192(f) and 

15 section 1194(d)(1); and 

16 ‘‘(B) on an ongoing basis, informa17 tion on changes in prices for such 

18 drug that would affect the AIM price 

19 for such drug or otherwise provide a 

20 basis for renegotiation of the max21 imum fair price for such drug pursu22 ant to paragraph (2); 

23 ‘‘(5) the manufacturer agrees that in 

24 the case the selected drug of a manufac25 turer is a drug described in subsection (c), 


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1 the manufacturer will, in accordance 

2 with such subsection, make any payment 

3 required under such subsection with re4 spect to such drug; and 

5 ‘‘(6) the manufacturer complies with 

6 requirements imposed by the Secretary for 

7 purposes of administering the program, 

8 including with respect to the duties de9 scribed in section 1196. 

10 ‘‘(b) AGREEMENT IN EFFECT UNTIL DRUG IS

11 NO LONGER A SELECTED DRUG.—An agreement 

12 entered into under this section shall be effec13 tive, with respect to a drug, until such drug is 

14 no longer considered a selected drug under 

15 section 1192(c). 

16 ‘‘(c) SPECIAL RULE FOR CERTAIN SELECTED

17 DRUGS WITHOUT AIM PRICE.— 

18 ‘‘(1) IN GENERAL.—In the case of a se19 lected drug for which there is no AIM 

20 price available with respect to the initial 

21 price applicability year for such drug and 

22 for which an AIM price becomes available 

23 beginning with respect to a subsequent 

24 plan year during the price applicability 

25 period for such drug, if the Secretary deVerDate Sep 11 2014 23:24 Dec 09, 2019 Jkt 099200 PO 00000 Frm 00340 Fmt 6652 Sfmt 6204 E:\BILLS\H3.RH H3

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1 termines that the amount described in 

2 paragraph (2)(A) for a unit of such drug 

3 is greater than the amount described in 

4 paragraph (2)(B) for a unit of such drug, 

5 then by not later than one year after the 

6 date of such determination, the manufac7 turer of such selected drug shall pay to 

8 the Treasury an amount equal to the 

9 product of— 

10 ‘‘(A) the difference between such 

11 amount described in paragraph (2)(A) 

12 for a unit of such drug and such 

13 amount described in paragraph (2)(B) 

14 for a unit of such drug; and 

15 ‘‘(B) the number of units of such 

16 drug sold in the United States, includ17 ing the 50 States, the District of Co18 lumbia, and the territories of the 

19 United States, during the period de20 scribed in paragraph (2)(B). 

21 ‘‘(2) AMOUNTS DESCRIBED.— 

22 ‘‘(A) WEIGHTED AVERAGE PRICE BE23 FORE AIM PRICE AVAILABLE.—For pur24 poses of paragraph (1), the amount 

25 described in this subparagraph for a 


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1 selected drug described in such para2 graph, is the amount equal to the 

3 weighted average manufacturer price 

4 (as defined in section 1927(k)(1)) for 

5 such dosage strength and form for the 

6 drug during the period beginning 

7 with the first plan year for which the 

8 drug is included on the list of negotia9 tion-eligible drugs published under 

10 section 1192(d) and ending with the 

11 last plan year during the price appli12 cability period for such drug with re13 spect to which there is no AIM price 

14 available for such drug. 

15 ‘‘(B) AMOUNT MULTIPLIER AFTER AIM

16 PRICE AVAILABLE.—For purposes of 

17 paragraph (1), the amount described 

18 in this subparagraph for a selected 

19 drug described in such paragraph, is 

20 the amount equal to 200 percent of the 

21 AIM price for such drug with respect 

22 to the first plan year during the price 

23 applicability period for such drug 

24 with respect to which there is an AIM 

25 price available for such drug. 


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1 ‘‘(d) CONFIDENTIALITY OF INFORMATION.—In2 formation submitted to the Secretary under 

3 this part by a manufacturer of a selected drug 

4 that is proprietary information of such manu5 facturer (as determined by the Secretary) may 

6 be used only by the Secretary or disclosed to 

7 and used by the Comptroller General of the 

8 United States or the Medicare Payment Advi9 sory Commission for purposes of carrying out 

10 this part. 

11 ‘‘(e) REGULATIONS.— 

12 ‘‘(1) IN GENERAL.—The Secretary shall, 

13 pursuant to rulemaking, specify, in ac14 cordance with paragraph (2), the infor15 mation that must be submitted under sub16 section (a)(4). 

17 ‘‘(2) INFORMATION SPECIFIED.—Informa18 tion described in paragraph (1), with re19 spect to a selected drug, shall include in20 formation on sales of the drug (by the 

21 manufacturer of the drug or by another 

22 entity under license or other agreement 

23 with the manufacturer, with respect to the 

24 sales of such drug, regardless of the name 

25 under which the drug is sold) in any forVerDate Sep 11 2014 23:24 Dec 09, 2019 Jkt 099200 PO 00000 Frm 00343 Fmt 6652 Sfmt 6204 E:\BILLS\H3.RH H3

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1 eign country that is part of the AIM price. 

2 The Secretary shall verify, to the extent 

3 practicable, such sales from appropriate 

4 officials of the government of the foreign 

5 country involved. 

6 ‘‘(f) COMPLIANCE WITH REQUIREMENTS FOR

7 ADMINISTRATION OF PROGRAM.—Each manufac8 turer with an agreement in effect under this 

9 section shall comply with requirements im10 posed by the Secretary or a third party with a 

11 contract under section 1196(c)(1), as applica12 ble, for purposes of administering the pro13 gram. 

14 ‘‘SEC. 1194. NEGOTIATION AND RENEGOTIATION PROCESS. 

15 ‘‘(a) IN GENERAL.—For purposes of this 

16 part, under an agreement under section 1193 

17 between the Secretary and a manufacturer of 

18 a selected drug, with respect to the period for 

19 which such agreement is in effect and in ac20 cordance with subsections (b) and (c), the Sec21 retary and the manufacturer— 

22 ‘‘(1) shall during the voluntary nego23 tiation period with respect to the initial 

24 price applicability year for such drug, in 

25 accordance with this section, negotiate a 


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1 maximum fair price for such drug for the 

2 purpose described in section 1193(a)(1); 

3 and 

4 ‘‘(2) as applicable pursuant to section 

5 1193(a)(2) and in accordance with the 

6 process specified pursuant to such section, 

7 renegotiate such maximum fair price for 

8 such drug for the purpose described in 

9 such section. 

10 ‘‘(b) NEGOTIATING METHODOLOGY AND OB11 JECTIVE.— 

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

13 develop and use a consistent methodology 

14 for negotiations under subsection (a) that, 

15 in accordance with paragraph (2) and 

16 subject to paragraph (3), achieves the low17 est maximum fair price for each selected 

18 drug while appropriately rewarding inno19 vation. 

20 ‘‘(2) PRIORITIZING FACTORS.—In consid21 ering the factors described in subsection 

22 (d) in negotiating (and, as applicable, re23 negotiating) the maximum fair price for a 

24 selected drug, the Secretary shall, to the 

25 extent practicable, consider all of the 


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1 available factors listed but shall 

2 prioritize the following factors: 

3 ‘‘(A) RESEARCH AND DEVELOPMENT

4 COSTS.—The factor described in para5 graph (1)(A) of subsection (d). 

6 ‘‘(B) MARKET DATA.—The factor de7 scribed in paragraph (1)(B) of such 

8 subsection. 

9 ‘‘(C) UNIT COSTS OF PRODUCTION

10 AND DISTRIBUTION.—The factor de11 scribed in paragraph (1)(C) of such 

12 subsection. 

13 ‘‘(D) COMPARISON TO EXISTING

14 THERAPEUTIC ALTERNATIVES.—The fac15 tor described in paragraph (2)(A) of 

16 such subsection. 

17 ‘‘(3) REQUIREMENT.— 

18 ‘‘(A) IN GENERAL.—In negotiating 

19 the maximum fair price of a selected 

20 drug, with respect to an initial price 

21 applicability year for the selected 

22 drug, and, as applicable, in renegoti23 ating the maximum fair price for such 

24 drug, with respect to a subsequent 

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1 riod for such drug, in the case that 

2 the manufacturer of the selected drug 

3 offers under the negotiation or renego4 tiation, as applicable, a price for such 

5 drug that is not more than the target 

6 price described in subparagraph (B) 

7 for such drug for the respective year, 

8 the Secretary shall agree under such 

9 negotiation or renegotiation, respec10 tively, to such offered price as the 

11 maximum fair price. 

12 ‘‘(B) TARGET PRICE.— 

13 ‘‘(i) IN GENERAL.—Subject to 

14 clause (ii), the target price de15 scribed in this subparagraph for a 

16 selected drug with respect to a 

17 year, is the average price (which 

18 shall be the net average price, if 

19 practicable, and volume-weighted, 

20 if practicable) for a unit of such 

21 drug for sales of such drug, as 

22 computed (across different dosage 

23 forms and strengths of the drug 

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1 age type of the drug) in the appli2 cable country described in section 

3 1191(c)(3)(B) with respect to such 

4 drug that, with respect to such 

5 year, has the lowest average price 

6 for such drug as compared to the 

7 average prices (as so computed) of 

8 such drug with respect to such 

9 year in the other applicable coun10 tries described in such section 

11 with respect to such drug. 

12 ‘‘(ii) SELECTED DRUGS WITHOUT

13 AIM PRICE.—In applying this para14 graph in the case of negotiating 

15 the maximum fair price of a se16 lected drug for which there is no 

17 AIM price available with respect 

18 to the initial price applicability 

19 year for such drug, or, as applica20 ble, renegotiating the maximum 

21 fair price for such drug with re22 spect to a subsequent year during 

23 the price applicability period for 

24 such drug before the first plan 

25 year for which there is an AIM 


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1 price available for such drug, the 

2 target price described in this sub3 paragraph for such drug and re4 spective year is the amount that is 

5 80 percent of the average manu6 facturer price (as defined in sec7 tion 1927(k)(1)) for such drug and 

8 year. 

9 ‘‘(4) ANNUAL REPORT.—After the com10 pletion of each voluntary negotiation pe11 riod, the Secretary shall submit to Con12 gress a report on the maximum fair prices 

13 negotiated (or, as applicable, renegoti14 ated) for such period. Such report shall 

15 include information on how such prices so 

16 negotiated (or renegotiated) meet the re17 quirements of this part, including the re18 quirements of this subsection. 

19 ‘‘(c) LIMITATION.— 

20 ‘‘(1) IN GENERAL.—Subject to para21 graph (2), the maximum fair price nego22 tiated (including as renegotiated) under 

23 this section for a selected drug, with re24 spect to each plan year during a price ap25 plicability period for such drug, shall not 


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1 exceed 120 percent of the AIM price appli2 cable to such drug with respect to such 

3 year. 

4 ‘‘(2) SELECTED DRUGS WITHOUT AIM

5 PRICE.—In the case of a selected drug for 

6 which there is no AIM price available 

7 with respect to the initial price applica8 bility year for such drug, for each plan 

9 year during the price applicability period 

10 before the first plan year for which there 

11 is an AIM price available for such drug, 

12 the maximum fair price negotiated (in13 cluding as renegotiated) under this sec14 tion for the selected drug shall not exceed 

15 the amount equal to 85 percent of the av16 erage manufacturer price for the drug 

17 with respect to such year. 

18 ‘‘(d) CONSIDERATIONS.—For purposes of ne19 gotiating and, as applicable, renegotiating 

20 (including for purposes of determining wheth21 er to renegotiate) the maximum fair price of a 

22 selected drug under this part with the manu23 facturer of the drug, the Secretary shall, con24 sistent with subsection (b)(2), take into consid25 eration the following factors: 


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1 ‘‘(1) MANUFACTURER-SPECIFIC INFORMA2 TION.—The following information, includ3 ing as submitted by the manufacturer: 

4 ‘‘(A) Research and development 

5 costs of the manufacturer for the drug 

6 and the extent to which the manufac7 turer has recouped research and de8 velopment costs. 

9 ‘‘(B) Market data for the drug, in10 cluding the distribution of sales 

11 across different programs and pur12 chasers and projected future revenues 

13 for the drug. 

14 ‘‘(C) Unit costs of production and 

15 distribution of the drug. 

16 ‘‘(D) Prior Federal financial sup17 port for novel therapeutic discovery 

18 and development with respect to the 

19 drug. 

20 ‘‘(E) Data on patents and on exist21 ing and pending exclusivity for the 

22 drug. 

23 ‘‘(F) National sales data for the 

24 drug. 


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1 ‘‘(G) Information on clinical trials 

2 for the drug in the United States or in 

3 applicable countries described in sec4 tion 1191(c)(3)(B). 

5 ‘‘(2) INFORMATION ON ALTERNATIVE

6 PRODUCTS.—The following information: 

7 ‘‘(A) The extent to which the drug 

8 represents a therapeutic advance as 

9 compared to existing therapeutic al10 ternatives and, to the extent such in11 formation is available, the costs of 

12 such existing therapeutic alternatives. 

13 ‘‘(B) Information on approval by 

14 the Food and Drug Administration of 

15 alternative drug products. 

16 ‘‘(C) Information on comparative 

17 effectiveness analysis for such prod18 ucts, taking into consideration the ef19 fects of such products on specific pop20 ulations, such as individuals with dis21 abilities, the elderly, terminally ill, 

22 children, and other patient popu23 lations. 

24 In considering information described in 

25 subparagraph (C), the Secretary shall not 


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1 use evidence or findings from comparative 

2 clinical effectiveness research in a man3 ner that treats extending the life of an el4 derly, disabled, or terminally ill indi5 vidual as of lower value than extending 

6 the life of an individual who is younger, 

7 nondisabled, or not terminally ill. Noth8 ing in the previous sentence shall affect 

9 the application or consideration of an 

10 AIM price for a selected drug. 

11 ‘‘(3) FOREIGN SALES INFORMATION.—To 

12 the extent available on a timely basis, in13 cluding as provided by a manufacturer of 

14 the selected drug or otherwise, informa15 tion on sales of the selected drug in each 

16 of the countries described in section 

17 1191(c)(3)(B). 

18 ‘‘(4) ADDITIONAL INFORMATION.—Infor19 mation submitted to the Secretary, in ac20 cordance with a process specified by the 

21 Secretary, by other parties that are af22 fected by the establishment of a maximum 

23 fair price for the selected drug. 

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1 negotiating (including for purposes of deter2 mining whether to renegotiate) the maximum 

3 fair price of a selected drug under this part 

4 with the manufacturer of the drug, with re5 spect to a price applicability period, and other 

6 relevant data for purposes of this section— 

7 ‘‘(1) the Secretary shall, not later than 

8 the selected drug publication date with 

9 respect to the initial price applicability 

10 year of such period, request drug pricing 

11 information from the manufacturer of 

12 such selected drug, including information 

13 described in subsection (d)(1); and 

14 ‘‘(2) by not later than October 1 fol15 lowing the selected drug publication date, 

16 the manufacturer of such selected drug 

17 shall submit to the Secretary such re18 quested information in such form and 

19 manner as the Secretary may require. 

20 The Secretary shall request, from the manu21 facturer or others, such additional informa22 tion as may be needed to carry out the negotia23 tion and renegotiation process under this sec24 tion. 


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1 ‘‘SEC. 1195. PUBLICATION OF MAXIMUM FAIR PRICES. 

2 ‘‘(a) IN GENERAL.—With respect to an ini3 tial price applicability year and selected drug 

4 with respect to such year, not later than April 

5 1 of the plan year prior to such initial price 

6 applicability year, the Secretary shall publish 

7 in the Federal Register the maximum fair 

8 price for such drug negotiated under this part 

9 with the manufacturer of such drug. 

10 ‘‘(b) UPDATES.— 

11 ‘‘(1) SUBSEQUENT YEAR MAXIMUM FAIR

12 PRICES.—For a selected drug, for each 

13 plan year subsequent to the initial price 

14 applicability year for such drug with re15 spect to which an agreement for such 

16 drug is in effect under section 1193, the 

17 Secretary shall publish in the Federal 

18 Register— 

19 ‘‘(A) subject to subparagraph (B), 

20 the amount equal to the maximum 

21 fair price published for such drug for 

22 the previous year, increased by the an23 nual percentage increase in the con24 sumer price index for all urban con25 sumers (all items; U.S. city average) 


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1 as of September of such previous year; 

2 or 

3 ‘‘(B) in the case the maximum fair 

4 price for such drug was renegotiated, 

5 for the first year for which such price 

6 as so renegotiated applies, such re7 negotiated maximum fair price. 

8 ‘‘(2) PRICES NEGOTIATED AFTER DEAD9 LINE.—In the case of a selected drug with 

10 respect to an initial price applicability 

11 year for which the maximum fair price is 

12 determined under this part after the date 

13 of publication under this section, the Sec14 retary shall publish such maximum fair 

15 price in the Federal Register by not later 

16 than 30 days after the date such max17 imum price is so determined. 

18 ‘‘SEC. 1196. ADMINISTRATIVE DUTIES; COORDINATION PRO19 VISIONS. 

20 ‘‘(a) ADMINISTRATIVE DUTIES.— 

21 ‘‘(1) IN GENERAL.—For purposes of sec22 tion 1191, the administrative duties de23 scribed in this section are the following: 

24 ‘‘(A) The establishment of proce25 dures (including through agreements 


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1 with manufacturers under this part, 

2 contracts with prescription drug 

3 plans under part D of title XVIII and 

4 MA–PD plans under part C of such 

5 title, and agreements under section 

6 1197 with group health plans and 

7 health insurance issuers of health in8 surance coverage offered in the indi9 vidual or group market) under which 

10 the maximum fair price for a selected 

11 drug is provided to fair price eligible 

12 individuals, who with respect to such 

13 drug are described in subparagraph 

14 (A) of section 1191(c)(1), at phar15 macies or by mail order service at the 

16 point-of-sale of the drug for the appli17 cable price period for such drug and 

18 providing that such maximum fair 

19 price is used for determining cost20 sharing under such plans or coverage 

21 for the selected drug. 

22 ‘‘(B) The establishment of proce23 dures (including through agreements 

24 with manufacturers under this part 

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1 cians, and other providers of services 

2 and suppliers and agreements under 

3 section 1197 with group health plans 

4 and health insurance issuers of 

5 health insurance coverage offered in 

6 the individual or group market) 

7 under which, in the case of a selected 

8 drug furnished or administered by 

9 such a hospital, physician, or other 

10 provider of services or supplier to fair 

11 price eligible individuals (who with 

12 respect to such drug are described in 

13 subparagraph (B) of section 

14 1191(c)(1)), the maximum fair price 

15 for the selected drug is provided to 

16 such hospitals, physicians, and other 

17 providers of services and suppliers (as 

18 applicable) with respect to such indi19 viduals and providing that such max20 imum fair price is used for deter21 mining cost-sharing under the respec22 tive part, plan, or coverage for the se23 lected drug. 

24 ‘‘(C) The establishment of proce25 dures (including through agreements 


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1 and contracts described in subpara2 graphs (A) and (B)) to ensure that, not 

3 later than 90 days after the dis4 pensing of a selected drug to a fair 

5 price eligible individual by a phar6 macy or mail order service, the phar7 macy or mail order service is reim8 bursed for an amount equal to the dif9 ference between— 

10 ‘‘(i) the lesser of— 

11 ‘‘(I) the wholesale acquisi12 tion cost of the drug; 

13 ‘‘(II) the national average 

14 drug acquisition cost of the 

15 drug; and 

16 ‘‘(III) any other similar de17 termination of pharmacy ac18 quisition costs of the drug, as 

19 determined by the Secretary; 

20 and 

21 ‘‘(ii) the maximum fair price 

22 for the drug. 

23 ‘‘(D) The establishment of proce24 dures to ensure that the maximum 


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1 fair price for a selected drug is ap2 plied before— 

3 ‘‘(i) any coverage or financial 

4 assistance under other health ben5 efit plans or programs that pro6 vide coverage or financial assist7 ance for the purchase or provision 

8 of prescription drug coverage on 

9 behalf of fair price eligible indi10 viduals as the Secretary may 

11 specify; and 

12 ‘‘(ii) any other discounts. 

13 ‘‘(E) The establishment of proce14 dures to enter into appropriate agree15 ments and protocols for the ongoing 

16 computation of AIM prices for selected 

17 drugs, including, to the extent pos18 sible, to compute the AIM price for se19 lected drugs and including by pro20 viding that the manufacturer of such 

21 a selected drug should provide infor22 mation for such computation not later 

23 than 3 months after the first date of 

24 the voluntary negotiation period for 

25 such selected drug. 


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1 ‘‘(F) The establishment of proce2 dures to compute and apply the max3 imum fair price across different 

4 strengths and dosage forms of a se5 lected drug and not based on the spe6 cific formulation or package size or 

7 package type of the drug. 

8 ‘‘(G) The establishment of proce9 dures to negotiate and apply the max10 imum fair price in a manner that 

11 does not include any dispensing or 

12 similar fee. 

13 ‘‘(H) The establishment of proce14 dures to carry out the provisions of 

15 this part, as applicable, with respect 

16 to— 

17 ‘‘(i) fair price eligible individ18 uals who are enrolled under a 

19 prescription drug plan under part 

20 D of title XVIII or an MA–PD plan 

21 under part C of such title; and 

22 ‘‘(ii) fair price eligible individ23 uals who are enrolled under a 

24 group health plan or health insur25 ance coverage offered by a health 


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1 insurance issuer in the individual 

2 or group market with respect to 

3 which there is an agreement in ef4 fect under section 1197. 

5 ‘‘(I) The establishment of a nego6 tiation process and renegotiation 

7 process in accordance with section 

8 1194, including a process for acquir9 ing information described in sub10 section (d) of such section and deter11 mining amounts described in sub12 section (b) of such section. 

13 ‘‘(J) The provision of a reasonable 

14 dispute resolution mechanism to re15 solve disagreements between manufac16 turers, fair price eligible individuals, 

17 and the third party with a contract 

18 under subsection (c)(1). 

19 ‘‘(2) MONITORING COMPLIANCE.— 

20 ‘‘(A) IN GENERAL.—The Secretary 

21 shall monitor compliance by a manu22 facturer with the terms of an agree23 ment under section 1193, including by 

24 establishing a mechanism through 


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1 which violations of such terms may be 

2 reported. 

3 ‘‘(B) NOTIFICATION.—If a third 

4 party with a contract under sub5 section (c)(1) determines that the 

6 manufacturer is not in compliance 

7 with such agreement, the third party 

8 shall notify the Secretary of such non9 compliance for appropriate enforce10 ment under section 4192 of the Inter11 nal Revenue Code of 1986 or section 

12 1198, as applicable. 

13 ‘‘(b) COLLECTION OF DATA.— 

14 ‘‘(1) FROM PRESCRIPTION DRUG PLANS

15 AND MA–PD PLANS.—The Secretary may col16 lect appropriate data from prescription 

17 drug plans under part D of title XVIII 

18 and MA–PD plans under part C of such 

19 title in a timeframe that allows for max20 imum fair prices to be provided under 

21 this part for selected drugs. 

22 ‘‘(2) FROM HEALTH PLANS.—The Sec23 retary may collect appropriate data from 

24 group health plans or health insurance 

25 issuers offering group or individual 


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1 health insurance coverage in a timeframe 

2 that allows for maximum fair prices to be 

3 provided under this part for selected 

4 drugs. 

5 ‘‘(3) COORDINATION OF DATA COLLEC6 TION.—To the extent feasible, as deter7 mined by the Secretary, the Secretary 

8 shall ensure that data collected pursuant 

9 to this subsection is coordinated with, and 

10 not duplicative of, other data collection 

11 efforts. 

12 ‘‘(c) CONTRACT WITH THIRD PARTIES.— 

13 ‘‘(1) IN GENERAL.—The Secretary may 

14 enter into a contract with 1 or more third 

15 parties to administer the requirements es16 tablished by the Secretary in order to 

17 carry out this part. At a minimum, the 

18 contract with a third party under the pre19 ceding sentence shall require that the 

20 third party— 

21 ‘‘(A) receive and transmit informa22 tion between the Secretary, manufac23 turers, and other individuals or enti24 ties the Secretary determines appro25 priate; 


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1 ‘‘(B) receive, distribute, or facili2 tate the distribution of funds of manu3 facturers to appropriate individuals 

4 or entities in order to meet the obliga5 tions of manufacturers under agree6 ments under this part; 

7 ‘‘(C) provide adequate and timely 

8 information to manufacturers, con9 sistent with the agreement with the 

10 manufacturer under this part, as nec11 essary for the manufacturer to fulfill 

12 its obligations under this part; and 

13 ‘‘(D) permit manufacturers to con14 duct periodic audits, directly or 

15 through contracts, of the data and in16 formation used by the third party to 

17 determine discounts for applicable 

18 drugs of the manufacturer under the 

19 program. 

20 ‘‘(2) PERFORMANCE REQUIREMENTS.— 

21 The Secretary shall establish performance 

22 requirements for a third party with a con23 tract under paragraph (1) and safeguards 

24 to protect the independence and integrity 


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1 of the activities carried out by the third 

2 party under the program under this part. 

3 ‘‘(d) COORDINATION WITH 340B PROGRAM.— 

4 In the case of a manufacturer of a selected 

5 drug, with respect to an initial price applica6 bility year, for each year with respect to which 

7 a maximum fair price is applied under this 

8 part for such drug, such drug shall not be con9 sidered a covered outpatient drug subject to 

10 an agreement under section 340B of the Public 

11 Health Service Act. 

12 ‘‘SEC. 1197. VOLUNTARY PARTICIPATION BY OTHER HEALTH 

13 PLANS. 

14 ‘‘(a) AGREEMENT TO PARTICIPATE UNDER

15 PROGRAM.— 

16 ‘‘(1) IN GENERAL.—Subject to para17 graph (2), under the program under this 

18 part the Secretary shall be treated as hav19 ing in effect an agreement with a group 

20 health plan or health insurance issuer of21 fering health insurance coverage (as such 

22 terms are defined in section 2791 of the 

23 Public Health Service Act), with respect to 

24 a price applicability period and a selected 

25 drug with respect to such period— 


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1 ‘‘(A) with respect to such selected 

2 drug furnished or dispensed at a 

3 pharmacy or by mail order service if 

4 coverage is provided under such plan 

5 or coverage during such period for 

6 such selected drug as so furnished or 

7 dispensed; and 

8 ‘‘(B) with respect to such selected 

9 drug furnished or administered by a 

10 hospital, physician, or other provider 

11 of services or supplier if coverage is 

12 provided under such plan or coverage 

13 during such period for such selected 

14 drug as so furnished or administered. 

15 ‘‘(2) OPTING OUT OF AGREEMENT.—The 

16 Secretary shall not be treated as having 

17 in effect an agreement under the program 

18 under this part with a group health plan 

19 or health insurance issuer offering health 

20 insurance coverage with respect to a price 

21 applicability period and a selected drug 

22 with respect to such period if such a plan 

23 or issuer affirmatively elects, through a 

24 process specified by the Secretary, not to 


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1 participate under the program with re2 spect to such period and drug. 

3 ‘‘(b) PUBLICATION OF ELECTION.—With re4 spect to each price applicability period and 

5 each selected drug with respect to such period, 

6 the Secretary and the Secretary of Labor and 

7 the Secretary of the Treasury, as applicable, 

8 shall make public a list of each group health 

9 plan and each issuer of health insurance cov10 erage, with respect to which coverage is pro11 vided under such plan or coverage for such 

12 drug, that has elected under subsection (a) not 

13 to participate under the program with respect 

14 to such period and drug. 

15 ‘‘SEC. 1198. CIVIL MONETARY PENALTY. 

16 ‘‘(a) VIOLATIONS RELATING TO OFFERING OF

17 MAXIMUM FAIR PRICE.—Any manufacturer of a 

18 selected drug that has entered into an agree19 ment under section 1193, with respect to a plan 

20 year during the price applicability period for 

21 such drug, that does not provide access to a 

22 price that is not more than the maximum fair 

23 price (or a lesser price) for such drug for such 

24 year— 


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1 ‘‘(1) to a fair price eligible individual 

2 who with respect to such drug is described 

3 in subparagraph (A) of section 1191(c)(1) 

4 and who is furnished or dispensed such 

5 drug during such year; or 

6 ‘‘(2) to a hospital, physician, or other 

7 provider of services or supplier with re8 spect to fair price eligible individuals who 

9 with respect to such drug is described in 

10 subparagraph (B) of such section and is 

11 furnished or administered such drug by 

12 such hospital, physician, or provider or 

13 supplier during such year; 

14 shall be subject to a civil monetary penalty 

15 equal to ten times the amount equal to the dif16 ference between the price for such drug made 

17 available for such year by such manufacturer 

18 with respect to such individual or hospital, 

19 physician, provider, or supplier and the max20 imum fair price for such drug for such year. 

21 ‘‘(b) VIOLATIONS OF CERTAIN TERMS OF

22 AGREEMENT.—Any manufacturer of a selected 

23 drug that has entered into an agreement 

24 under section 1193, with respect to a plan year 

25 during the price applicability period for such 


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1 drug, that is in violation of a requirement im2 posed pursuant to section 1193(a)(6) shall be 

3 subject to a civil monetary penalty of not more 

4 than $1,000,000 for each such violation. 

5 ‘‘(c) APPLICATION.—The provisions of sec6 tion 1128A (other than subsections (a) and (b)) 

7 shall apply to a civil monetary penalty under 

8 this section in the same manner as such provi9 sions apply to a penalty or proceeding under 

10 section 1128A(a). 

11 ‘‘SEC. 1199. MISCELLANEOUS PROVISIONS. 

12 ‘‘(a) PAPERWORK REDUCTION ACT.—Chapter 

13 35 of title 44, United States Code, shall not 

14 apply to data collected under this part. 

15 ‘‘(b) NATIONAL ACADEMY OF MEDICINE

16 STUDY.—Not later than December 31, 2025, the 

17 National Academy of Medicine shall conduct 

18 a study, and submit to Congress a report, on 

19 recommendations for improvements to the pro20 gram under this part, including the deter21 mination of the limits applied under section 

22 1194(c). 

23 ‘‘(c) MEDPAC STUDY.—Not later than De24 cember 31, 2025, the Medicare Payment Advi25 sory Commission shall conduct a study, and 


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1 submit to Congress a report, on the program 

2 under this part with respect to the Medicare 

3 program under title XVIII, including with re4 spect to the effect of the program on individ5 uals entitled to benefits or enrolled under such 

6 title. 

7 ‘‘(d) LIMITATION ON JUDICIAL REVIEW.—The 

8 following shall not be subject to judicial re9 view: 

10 ‘‘(1) The selection of drugs for publica11 tion under section 1192(a). 

12 ‘‘(2) The determination of whether a 

13 drug is a negotiation-eligible drug under 

14 section 1192(d). 

15 ‘‘(3) The determination of the max16 imum fair price of a selected drug under 

17 section 1194. 

18 ‘‘(4) The determination of units of a 

19 drug for purposes of section 1191(c)(3). 

20 ‘‘(e) COORDINATION.—In carrying out this 

21 part with respect to group health plans or 

22 health insurance coverage offered in the group 

23 market that are subject to oversight by the Sec24 retary of Labor or the Secretary of the Treas25 ury, the Secretary of Health and Human ServVerDate Sep 11 2014 23:24 Dec 09, 2019 Jkt 099200 PO 00000 Frm 00371 Fmt 6652 Sfmt 6204 E:\BILLS\H3.RH H3

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1 ices shall coordinate with such respective Sec2 retary. 

3 ‘‘(f) DATA SHARING.—The Secretary shall 

4 share with the Secretary of the Treasury such 

5 information as is necessary to determine the 

6 tax imposed by section 4192 of the Internal 

7 Revenue Code of 1986. 

8 ‘‘(g) GAO STUDY.—Not later than December 

9 31, 2025, the Comptroller General of the United 

10 States shall conduct a study of, and submit to 

11 Congress a report on, the implementation of 

12 the Fair Price Negotiation Program under this 

13 part. 

14 ‘‘(h) INFLATION REBATE FOR GROUP HEALTH

15 PLANS.— 

16 ‘‘(1) IN GENERAL.—Not later than De17 cember 31, 2021, the Secretary of Labor 

18 shall, in consultation with the Secretary 

19 of Health and Human Services and the 

20 Secretary of the Treasury, submit to Con21 gress a report on the feasibility of the Sec22 retary of Labor— 

23 ‘‘(A) establishing an agreement 

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1 facturers provide for inflation rebates 

2 (in a manner similar to rebates under 

3 section 1834(x) and 1860D–14B with 

4 respect to part B and part D drugs, re5 spectively) with respect to drugs that 

6 are furnished or dispensed to partici7 pants, enrollees, and beneficiaries of 

8 health insurance coverage in connec9 tion with a group health plan; and 

10 ‘‘(B) establishing an enforcement 

11 mechanism with respect to such agree12 ment process that ensures that such 

13 inflation rebates are, proportionally 

14 distributed, with respect to costs, to— 

15 ‘‘(i) participants, enrollees, 

16 and beneficiaries of health insur17 ance coverage offered in the group 

18 market; and 

19 ‘‘(ii) a health insurance issuer 

20 offering health insurance cov21 erage in the group market. 

22 ‘‘(2) REGULATIONS.—Not later than De23 cember 31, 2022, the Secretary of Labor 

24 shall, in consultation with the Secretary 

25 of Health and Human Services and the 


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1 Secretary of the Treasury, promulgate reg2 ulations consistent with the information 

3 contained in the report submitted pursu4 ant to paragraph (1) if— 

5 ‘‘(A) the Secretary of Labor deter6 mines the prices of a sufficient num7 ber (as determined by the Secretary of 

8 Labor) of drugs described in para9 graph (1)(A) have increased at a per10 centage that exceeds the percentage by 

11 which the consumer price index for 

12 all urban consumers (United States 

13 city average) for a period of time (as 

14 determined by the Secretary of Labor); 

15 and 

16 ‘‘(B) the Secretary of Labor finds 

17 that the agreement process identified 

18 pursuant to subparagraph (A) of 

19 paragraph (1) and the enforcement 

20 mechanism identified pursuant to 

21 subparagraph (B) of such paragraph 

22 are feasible.’’. 

23 (b) APPLICATION OF MAXIMUM FAIR PRICES

24 AND CONFORMING AMENDMENTS.— 


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1 (1) UNDER MEDICARE PRESCRIPTION

2 DRUG PROGRAM.— 

3 (A) EXCEPTION TO NON-INTER4 FERENCE.—Section 1860D–11(i) of the 

5 Social Security Act (42 U.S.C. 1395w– 

6 111(i)) is amended by inserting ‘‘, ex7 cept as provided under part E of title 

8 XI,’’ after ‘‘the Secretary’’. 

9 (B) APPLICATION AS NEGOTIATED

10 PRICE.—Section 1860D–2(d)(1) of the 

11 Social Security Act (42 U.S.C. 1395w– 

12 102(d)(1)) is amended— 

13 (i) in subparagraph (B), by in14 serting ‘‘, subject to subparagraph 

15 (D),’’ after ‘‘negotiated prices’’; 

16 and 

17 (ii) by adding at the end the 

18 following new subparagraph: 

19 ‘‘(D) APPLICATION OF MAXIMUM FAIR

20 PRICE FOR SELECTED DRUGS.—In apply21 ing this section, in the case of a cov22 ered part D drug that is a selected 

23 drug (as defined in section 1192(c)), 

24 with respect to a price applicability 

25 period (as defined in section 


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1 1191(b)(2)), the negotiated price de2 scribed in this subsection shall be the 

3 maximum fair price (as defined in 

4 section 1191(c)(2)) for such drug and 

5 for each plan year during such pe6 riod.’’. 

7 (C) INFORMATION FROM PRESCRIP8 TION DRUG PLANS AND MA–PD PLANS RE9 QUIRED.— 

10 (i) PRESCRIPTION DRUG

11 PLANS.—Section 1860D–12(b) of the 

12 Social Security Act (42 U.S.C. 

13 1395w–112(b)) is amended by add14 ing at the end the following new 

15 paragraph: 

16 ‘‘(8) PROVISION OF INFORMATION RE17 LATED TO MAXIMUM FAIR PRICES.—Each con18 tract entered into with a PDP sponsor 

19 under this part with respect to a prescrip20 tion drug plan offered by such sponsor 

21 shall require the sponsor to provide infor22 mation to the Secretary as requested by 

23 the Secretary in accordance with section 

24 1196(b).’’. 


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1 (ii) MA–PD PLANS.—Section 

2 1857(f)(3) of the Social Security 

3 Act (42 U.S.C. 1395w–27(f)(3)) is 

4 amended by adding at the end the 

5 following new subparagraph: 

6 ‘‘(E) PROVISION OF INFORMATION RE7 LATED TO MAXIMUM FAIR PRICES.—Sec8 tion 1860D–12(b)(8).’’. 

9 (2) UNDER GROUP HEALTH PLANS AND

10 HEALTH INSURANCE COVERAGE.— 

11 (A) PHSA.—Part A of title XXVII 

12 of the Public Health Service Act is 

13 amended by inserting after section 

14 2729 the following new section: 

15 ‘‘SEC. 2729A. FAIR PRICE DRUG NEGOTIATION PROGRAM 

16 AND APPLICATION OF MAXIMUM FAIR 

17 PRICES. 

18 ‘‘(a) IN GENERAL.—In the case of a group 

19 health plan or health insurance issuer offer20 ing health insurance coverage that is treated 

21 under section 1197 of the Social Security Act 

22 as having in effect an agreement with the Sec23 retary under the Fair Price Drug Negotiation 

24 Program under part E of title XI of such Act, 

25 with respect to a price applicability period (as 


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1 defined in section 1191(b) of such Act) and a 

2 selected drug (as defined in section 1192(c) of 

3 such Act) with respect to such period with re4 spect to which coverage is provided under such 

5 plan or coverage— 

6 ‘‘(1) the provisions of such part shall 

7 apply to the plans or coverage offered by 

8 such plan or issuer, and to the individ9 uals enrolled under such plans or cov10 erage, during such period, with respect to 

11 such selected drug, in the same manner as 

12 such provisions apply to prescription drug 

13 plans and MA–PD plans, and to individ14 uals enrolled under such prescription 

15 drug plans and MA–PD plans; 

16 ‘‘(2) the plan or issuer shall apply any 

17 cost-sharing responsibilities under such 

18 plan or coverage, with respect to such se19 lected drug, by substituting the maximum 

20 fair price negotiated under such part for 

21 such drug in lieu of the contracted rate 

22 under such plan or coverage for such se23 lected drug; and 

24 ‘‘(3) the Secretary shall apply the pro25 visions of such part to such plan, issuer, 


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1 and coverage, and such individuals so en2 rolled in such plans. 

3 ‘‘(b) NOTIFICATION REGARDING NONPARTICI4 PATION IN FAIR DRUG PRICE NEGOTIATION PRO5 GRAM.—A group health plan or a health insur6 ance issuer offering group or individual 

7 health insurance coverage shall publicly dis8 close in a manner and in accordance with a 

9 process specified by the Secretary any election 

10 made under section 1197 of the Social Security 

11 Act by the plan or issuer to not participate in 

12 the Fair Drug Price Negotiation Program 

13 under part E of title XI of such Act with re14 spect to a selected drug (as defined in section 

15 1192(c) of such Act) for which coverage is pro16 vided under such plan or coverage before the 

17 beginning of the plan year for which such elec18 tion was made.’’. 

19 (B) ERISA.— 

20 (i) IN GENERAL.—Subpart B of 

21 part 7 of subtitle B of title I of the 

22 Employee Retirement Income Se23 curity Act of 1974 (29 U.S.C. 1181 

24 et. seq.) is amended by adding at 

25 the end the following new section: 


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1 ‘‘SEC. 716. FAIR PRICE DRUG NEGOTIATION PROGRAM AND 

2 APPLICATION OF MAXIMUM FAIR PRICES. 

3 ‘‘(a) IN GENERAL.—In the case of a group 

4 health plan or health insurance issuer offer5 ing group health insurance coverage that is 

6 treated under section 1197 of the Social Secu7 rity Act as having in effect an agreement with 

8 the Secretary under the Fair Price Drug Nego9 tiation Program under part E of title XI of 

10 such Act, with respect to a price applicability 

11 period (as defined in section 1191(b) of such 

12 Act) and a selected drug (as defined in section 

13 1192(c) of such Act) with respect to such period 

14 with respect to which coverage is provided 

15 under such plan or coverage— 

16 ‘‘(1) the provisions of such part shall 

17 apply, as applicable— 

18 ‘‘(A) if coverage of such selected 

19 drug is provided under such plan or 

20 coverage if the drug is furnished or 

21 dispensed at a pharmacy or by a mail 

22 order service, to the plans or coverage 

23 offered by such plan or issuer, and to 

24 the individuals enrolled under such 

25 plans or coverage, during such period, 

26 with respect to such selected drug, in 


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1 the same manner as such provisions 

2 apply to prescription drug plans and 

3 MA–PD plans, and to individuals en4 rolled under such prescription drug 

5 plans and MA–PD plans during such 

6 period; and 

7 ‘‘(B) if coverage of such selected 

8 drug is provided under such plan or 

9 coverage if the drug is furnished or 

10 administered by a hospital, physician, 

11 or other provider of services or sup12 plier, to the plans or coverage offered 

13 by such plan or issuers, to the individ14 uals enrolled under such plans or cov15 erage, and to hospitals, physicians, 

16 and other providers of services and 

17 suppliers during such period, with re18 spect to such drug in the same man19 ner as such provisions apply to the 

20 Secretary, to individuals entitled to 

21 benefits under part A of title XVIII or 

22 enrolled under part B of such title, 

23 and to hospitals, physicians, and 

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1 pating under title XVIII during such 

2 period; 

3 ‘‘(2) the plan or issuer shall apply any 

4 cost-sharing responsibilities under such 

5 plan or coverage, with respect to such se6 lected drug, by substituting an amount 

7 not more than the maximum fair price ne8 gotiated under such part E of title XI for 

9 such drug in lieu of the drug price upon 

10 which the cost-sharing would have other11 wise applied, and such cost-sharing re12 sponsibilities with respect to such selected 

13 drug may not exceed such amount; and 

14 ‘‘(3) the Secretary shall apply the pro15 visions of such part E to such plan, issuer, 

16 and coverage, and such individuals so en17 rolled in such plans. 

18 ‘‘(b) NOTIFICATION REGARDING NONPARTICI19 PATION IN FAIR DRUG PRICE NEGOTIATION PRO20 GRAM.—A group health plan or a health insur21 ance issuer offering group health insurance 

22 coverage shall publicly disclose in a manner 

23 and in accordance with a process specified by 

24 the Secretary any election made under section 

25 1197 of the Social Security Act by the plan or 


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1 issuer to not participate in the Fair Drug 

2 Price Negotiation Program under part E of 

3 title XI of such Act with respect to a selected 

4 drug (as defined in section 1192(c) of such Act) 

5 for which coverage is provided under such 

6 plan or coverage before the beginning of the 

7 plan year for which such election was made.’’. 

8 (ii) APPLICATION TO RETIREE

9 AND CERTAIN SMALL GROUP HEALTH

10 PLANS.—Section 732(a) of the Em11 ployee Retirement Income Security 

12 Act of 1974 (29 U.S.C. 1191a(a)) is 

13 amended by striking ‘‘section 711’’ 

14 and inserting ‘‘sections 711 and 

15 716’’. 

16 (iii) CLERICAL AMENDMENT.— 

17 The table of sections for subpart B 

18 of part 7 of subtitle B of title I of 

19 the Employee Retirement Income 

20 Security Act of 1974 is amended by 

21 adding at the end the following: 

‘‘Sec. 716. Fair Price Drug Negotiation Program and application of maximum fair prices.’’. 

22 (C) IRC.— 

23 (i) IN GENERAL.—Subchapter B 

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1 enue Code of 1986 is amended by 

2 adding at the end the following 

3 new section: 

4 ‘‘SEC. 9816. FAIR PRICE DRUG NEGOTIATION PROGRAM AND 

5 APPLICATION OF MAXIMUM FAIR PRICES. 

6 ‘‘(a) IN GENERAL.—In the case of a group 

7 health plan that is treated under section 1197 

8 of the Social Security Act as having in effect 

9 an agreement with the Secretary under the 

10 Fair Price Drug Negotiation Program under 

11 part E of title XI of such Act, with respect to 

12 a price applicability period (as defined in sec13 tion 1191(b) of such Act) and a selected drug 

14 (as defined in section 1192(c) of such Act) with 

15 respect to such period with respect to which 

16 coverage is provided under such plan— 

17 ‘‘(1) the provisions of such part shall 

18 apply to the plans offered by such plan, 

19 and to the individuals enrolled under 

20 such plans, during such period, with re21 spect to such selected drug, in the same 

22 manner as such provisions apply to pre23 scription drug plans and MA–PD plans, 

24 and to individuals enrolled under such 


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1 prescription drug plans and MA–PD 

2 plans; 

3 ‘‘(2) the plan shall apply any cost4 sharing responsibilities under such plan, 

5 with respect to such selected drug, by sub6 stituting the maximum fair price nego7 tiated under such part for such drug in 

8 lieu of the contracted rate under such 

9 plan for such selected drug; and 

10 ‘‘(3) the Secretary shall apply the pro11 visions of such part to such plan and such 

12 individuals so enrolled in such plan. 

13 ‘‘(b) NOTIFICATION REGARDING NONPARTICI14 PATION IN FAIR DRUG PRICE NEGOTIATION PRO15 GRAM.—A group health plan shall publicly dis16 close in a manner and in accordance with a 

17 process specified by the Secretary any election 

18 made under section 1197 of the Social Security 

19 Act by the plan to not participate in the Fair 

20 Drug Price Negotiation Program under part E 

21 of title XI of such Act with respect to a selected 

22 drug (as defined in section 1192(c) of such Act) 

23 for which coverage is provided under such 

24 plan before the beginning of the plan year for 

25 which such election was made.’’. 


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1 (ii) CLERICAL AMENDMENT.— 

2 The table of sections for sub3 chapter B of chapter 100 of such 

4 Code is amended by adding at the 

5 end the following new item: 

‘‘Sec. 9816. Fair Price Drug Negotiation Program and application of maximum fair prices.’’. 

6 SEC. 102. SELECTED DRUG MANUFACTURER EXCISE TAX IM7 POSED DURING NONCOMPLIANCE PERIODS. 

8 (a) IN GENERAL.—Subchapter E of chapter 

9 32 of the Internal Revenue Code of 1986 is 

10 amended by adding at the end the following 

11 new section: 

12 ‘‘SEC. 4192. SELECTED DRUGS DURING NONCOMPLIANCE 

13 PERIODS. 

14 ‘‘(a) IN GENERAL.—There is hereby imposed 

15 on the sale by the manufacturer, producer, or 

16 importer of any selected drug during a day de17 scribed in subsection (b) a tax in an amount 

18 such that the applicable percentage is equal to 

19 the ratio of— 

20 ‘‘(1) such tax, divided by 

21 ‘‘(2) the sum of such tax and the price 

22 for which so sold. 

23 ‘‘(b) NONCOMPLIANCE PERIODS.—A day is 

24 described in this subsection with respect to a 


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1 selected drug if it is a day during one of the 

2 following periods: 

3 ‘‘(1) The period beginning on the June 

4 16th immediately following the selected 

5 drug publication date and ending on the 

6 first date during which the manufacturer 

7 of the drug has in place an agreement de8 scribed in subsection (a) of section 1193 of 

9 the Social Security Act with respect to 

10 such drug. 

11 ‘‘(2) The period beginning on the April 

12 1st immediately following the June 16th 

13 described in paragraph (1) and ending on 

14 the first date during which the manufac15 turer of the drug has agreed to a max16 imum fair price under such agreement. 

17 ‘‘(3) In the case of a selected drug with 

18 respect to which the Secretary of Health 

19 and Human Services has specified a re20 negotiation period under such agreement, 

21 the period beginning on the first date 

22 after the last date of such renegotiation 

23 period and ending on the first date dur24 ing which the manufacturer of the drug 


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1 has agreed to a renegotiated maximum 

2 fair price under such agreement. 

3 ‘‘(4) With respect to information that 

4 is required to be submitted to the Sec5 retary of Health and Human Services 

6 under such agreement, the period begin7 ning on the date on which such Secretary 

8 certifies that such information is overdue 

9 and ending on the date that such infor10 mation is so submitted. 

11 ‘‘(5) In the case of a selected drug with 

12 respect to which a payment is due under 

13 subsection (c) of such section 1193, the pe14 riod beginning on the date on which the 

15 Secretary of Health and Human Services 

16 certifies that such payment is overdue and 

17 ending on the date that such payment is 

18 made in full. 

19 ‘‘(c) APPLICABLE PERCENTAGE.—The term 

20 ‘applicable percentage’ means— 

21 ‘‘(1) in the case of sales of a selected 

22 drug during the first 90 days described in 

23 subsection (b) with respect to such drug, 

24 65 percent, 


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1 ‘‘(2) in the case of sales of such drug 

2 during the 91st day through the 180th day 

3 described in subsection (b) with respect to 

4 such drug, 75 percent, 

5 ‘‘(3) in the case of sales of such drug 

6 during the 181st day through the 270th 

7 day described in subsection (b) with re8 spect to such drug, 85 percent, and 

9 ‘‘(4) in the case of sales of such drug 

10 during any subsequent day, 95 percent. 

11 ‘‘(d) DEFINITIONS.—The terms ‘selected 

12 drug publication date’ and ‘maximum fair 

13 price’ have the meaning given such terms in 

14 section 1191 of the Social Security Act and the 

15 term ‘selected drug’ has the meaning given 

16 such term in section 1192 of such Act. 

17 ‘‘(e) ANTI-ABUSE RULE.—In the case of a 

18 sale which was timed for the purpose of avoid19 ing the tax imposed by this section, the Sec20 retary may treat such sale as occurring during 

21 a day described in subsection (b).’’. 

22 (b) NO DEDUCTION FOR EXCISE TAX PAY23 MENTS.—Section 275 of the Internal Revenue 

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1 tion 4192’’ before the period at the end of sub2 section (a)(6). 

3 (c) CONFORMING AMENDMENTS.— 

4 (1) Section 4221(a) of the Internal 

5 Revenue Code of 1986 is amended by in6 serting ‘‘or 4192’’ after ‘‘section 4191’’. 

7 (2) Section 6416(b)(2) of such Code is 

8 amended by inserting ‘‘or 4192’’ after ‘‘sec9 tion 4191’’. 

10 (d) CLERICAL AMENDMENTS.— 

11 (1) The heading of subchapter E of 

12 chapter 32 of the Internal Revenue Code 

13 of 1986 is amended by striking ‘‘Medical 

14 Devices’’ and inserting ‘‘Other Medical 

15 Products’’. 

16 (2) The table of subchapters for chap17 ter 32 of such Code is amended by striking 

18 the item relating to subchapter E and in19 serting the following new item: 

‘‘SUBCHAPTER E. OTHER MEDICAL PRODUCTS’’. 

20 (3) The table of sections for sub21 chapter E of chapter 32 of such Code is 

22 amended by adding at the end the fol23 lowing new item: 

‘‘Sec. 4192. Selected drugs during noncompliance periods.’’. 


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1 (e) EFFECTIVE DATE.—The amendments 

2 made by this section shall apply to sales after 

3 the date of the enactment of this Act. 

4 TITLE II—MEDICARE PARTS B 

5 AND D PRESCRIPTION DRUG 

6 INFLATION REBATES 

7 SEC. 201. MEDICARE PART B REBATE BY MANUFACTURERS. 

8 (a) IN GENERAL.—Section 1834 of the Social 

9 Security Act (42 U.S.C. 1395m) is amended by 

10 adding at the end the following new sub11 section: 

12 ‘‘(x) REBATE BY MANUFACTURERS FOR SINGLE

13 SOURCE DRUGS WITH PRICES INCREASING FAST14 ER THAN INFLATION.— 

15 ‘‘(1) REQUIREMENTS.— 

16 ‘‘(A) SECRETARIAL PROVISION OF IN17 FORMATION.—Not later than 6 months 

18 after the end of each calendar quarter 

19 beginning on or after July 1, 2021, the 

20 Secretary shall, for each part B 

21 rebatable drug, report to each manu22 facturer of such part B rebatable drug 

23 the following for such calendar quar24 ter: 


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1 ‘‘(i) Information on the total 

2 number of billing units described 

3 in subparagraph (A)(i) of para4 graph (3) with respect to such 

5 drug and calendar quarter. 

6 ‘‘(ii) Information on the 

7 amount (if any) of the excess aver8 age sales price increase described 

9 in subparagraph (A)(ii) of such 

10 paragraph for such drug and cal11 endar quarter. 

12 ‘‘(iii) The rebate amount speci13 fied under such paragraph for 

14 such part B rebatable drug and 

15 calendar quarter. 

16 ‘‘(B) MANUFACTURER REQUIRE17 MENT.—For each calendar quarter be18 ginning on or after July 1, 2021, the 

19 manufacturer of a part B rebatable 

20 drug shall, for such drug, not later 

21 than 30 days after the date of receipt 

22 from the Secretary of the information 

23 described in subparagraph (A) for 

24 such calendar quarter, provide to the 

25 Secretary a rebate that is equal to the 


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1 amount specified in paragraph (3) for 

2 such drug for such calendar quarter. 

3 ‘‘(2) PART B REBATABLE DRUG DE4 FINED.— 

5 ‘‘(A) IN GENERAL.—In this sub6 section, the term ‘part B rebatable 

7 drug’ means a single source drug or 

8 biological (as defined in subpara9 graph (D) of section 1847A(c)(6)), in10 cluding a biosimilar biological prod11 uct (as defined in subparagraph (H) 

12 of such section), paid for under this 

13 part, except such term shall not in14 clude such a drug or biological— 

15 ‘‘(i) if the average total al16 lowed charges for a year per indi17 vidual that uses such a drug or bi18 ological, as determined by the Sec19 retary, are less than, subject to 

20 subparagraph (B), $100; or 

21 ‘‘(ii) that is a vaccine de22 scribed in subparagraph (A) or 

23 (B) of section 1861(s)(10). 


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1 ‘‘(B) INCREASE.—The dollar 

2 amount applied under subparagraph 

3 (A)(i)— 

4 ‘‘(i) for 2022, shall be the dol5 lar amount specified under such 

6 subparagraph for 2021, increased 

7 by the percentage increase in the 

8 consumer price index for all 

9 urban consumers (United States 

10 city average) as of the first quar11 ter of the previous year; and 

12 ‘‘(ii) for a subsequent year, 

13 shall be the dollar amount speci14 fied in this clause (or clause (i)) 

15 for the previous year, increased by 

16 the percentage increase in the 

17 consumer price index for all 

18 urban consumers (United States 

19 city average) as of the first quar20 ter of the previous year. 

21 Any dollar amount specified under 

22 this subparagraph that is not a mul23 tiple of $10 shall be rounded to the 

24 nearest multiple of $10. 

25 ‘‘(3) REBATE AMOUNT.— 


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1 ‘‘(A) IN GENERAL.—For purposes of 

2 paragraph (1)(B), the amount speci3 fied in this paragraph for a part B 

4 rebatable drug assigned to a billing 

5 and payment code for a calendar 

6 quarter is, subject to paragraph (4), 

7 the amount equal to the product of— 

8 ‘‘(i) subject to subparagraph 

9 (B), the total number of billing 

10 units, as described in section 

11 1847A(b)(6)(B), for such part B 

12 rebatable drug furnished under 

13 this part during the calendar 

14 quarter; and 

15 ‘‘(ii) the amount (if any) by 

16 which— 

17 ‘‘(I) the payment amount 

18 under subparagraph (B) or 

19 (C) of section 1847A(b)(1), as 

20 applicable, for such part B 

21 rebatable drug during the cal22 endar quarter; exceeds 

23 ‘‘(II) the inflation-adjusted 

24 payment amount determined 

25 under subparagraph (C) for 


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1 such part B rebatable drug 

2 during the calendar quarter. 

3 ‘‘(B) EXCLUDED UNITS.—For pur4 poses of subparagraph (A)(i), the total 

5 number of billing units for part B 

6 rebatable drugs furnished during a 

7 calendar quarter shall not include— 

8 ‘‘(i) units packaged into the 

9 payment for a related procedure 

10 or service under section 1833(t) or 

11 under section 1833(i) (instead of 

12 separately payable under such re13 spective section); 

14 ‘‘(ii) units included under the 

15 single payment system for renal 

16 dialysis services under section 

17 1881(b)(14); or 

18 ‘‘(iii) units of a part B 

19 rebatable drug of a manufacturer 

20 that is furnished to an individual, 

21 if such manufacturer, with respect 

22 to the furnishing of such units of 

23 such drug, provides for discounts 

24 under section 340B of the Public 


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1 Health Service Act or for rebates 

2 under section 1927. 

3 ‘‘(C) DETERMINATION OF INFLATION4 ADJUSTED PAYMENT AMOUNT.—The in5 flation-adjusted payment amount de6 termined under this subparagraph for 

7 a part B rebatable drug for a cal8 endar quarter is— 

9 ‘‘(i) the payment amount for 

10 the billing and payment code for 

11 such drug in the payment amount 

12 benchmark quarter (as defined in 

13 subparagraph (D)); increased by 

14 ‘‘(ii) the percentage by which 

15 the rebate period CPI–U (as de16 fined in subparagraph (F)) for the 

17 calendar quarter exceeds the 

18 benchmark period CPI–U (as de19 fined in subparagraph (E)). 

20 ‘‘(D) PAYMENT AMOUNT BENCHMARK

21 QUARTER.—The term ‘payment amount 

22 benchmark quarter’ means the cal23 endar quarter beginning January 1, 

24 2016. 


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1 ‘‘(E) BENCHMARK PERIOD CPI–U.— 

2 The term ‘benchmark period CPI–U’ 

3 means the consumer price index for 

4 all urban consumers (United States 

5 city average) for July 2015. 

6 ‘‘(F) REBATE PERIOD CPI–U.—The 

7 term ‘rebate period CPI–U’ means, 

8 with respect to a calendar quarter de9 scribed in subparagraph (C), the 

10 greater of the benchmark period CPI– 

11 U and the consumer price index for 

12 all urban consumers (United States 

13 city average) for the first month of the 

14 calendar quarter that is two calendar 

15 quarters prior to such described cal16 endar quarter. 

17 ‘‘(4) SPECIAL TREATMENT OF CERTAIN

18 DRUGS AND EXEMPTION.— 

19 ‘‘(A) SUBSEQUENTLY APPROVED

20 DRUGS.—Subject to subparagraph (B), 

21 in the case of a part B rebatable drug 

22 first approved by the Food and Drug 

23 Administration after July 1, 2015, 

24 clause (i) of paragraph (3)(C) shall be 

25 applied as if the term ‘payment 


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1 amount benchmark quarter’ were de2 fined under paragraph (3)(D) as the 

3 third full calendar quarter after the 

4 day on which the drug was first mar5 keted and clause (ii) of paragraph 

6 (3)(C) shall be applied as if the term 

7 ‘benchmark period CPI–U’ were de8 fined under paragraph (3)(E) as if the 

9 reference to ‘July 2015’ under such 

10 paragraph were a reference to ‘the 

11 first month of the first full calendar 

12 quarter after the day on which the 

13 drug was first marketed’. 

14 ‘‘(B) TIMELINE FOR PROVISION OF

15 REBATES FOR NEW DRUGS.—In the case 

16 of a part B rebatable drug first ap17 proved by the Food and Drug Admin18 istration after July 1, 2015, clause (i) 

19 of paragraph (1)(B) shall be applied 

20 as if the reference to ‘July 1, 2021’ 

21 under such paragraph were a ref22 erence to the later of the 6th full cal23 endar quarter after the day on which 

24 the drug was first marketed or July 1, 

25 2021. 


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1 ‘‘(C) EXEMPTION FOR SHORTAGES.— 

2 The Secretary may reduce or waive 

3 the rebate under paragraph (1)(B) 

4 with respect to a part B rebatable 

5 drug that appears on the drug short6 age list in effect under section 506(e) 

7 of the Federal Food, Drug, and Cos8 metic Act or in the case of other exi9 gent circumstances, as determined by 

10 the Secretary. 

11 ‘‘(D) SELECTED DRUGS.—In the case 

12 of a part B rebatable drug that is a 

13 selected drug (as defined in section 

14 1192(c)), for each applicable year be15 ginning after the price applicability 

16 period (as defined in section 

17 1191(b)(2) with respect to such drug, 

18 clause (i) of paragraph (3)(C) shall be 

19 applied as if the term ‘payment 

20 amount benchmark quarter’ were de21 fined under paragraph (3)(D) as the 

22 calendar quarter beginning January 

23 1 of the last year beginning during 

24 such price applicability period with 

25 respect to such selected drug and 


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1 clause (ii) of paragraph (3)(C) shall 

2 be applied as if the term ‘benchmark 

3 period CPI–U’ were defined under 

4 paragraph (3)(E) as if the reference to 

5 ‘July 2015’ under such paragraph 

6 were a reference to the July of the 

7 year preceding such last year. 

8 ‘‘(5) APPLICATION TO BENEFICIARY COIN9 SURANCE.—In the case of a part B 

10 rebatable drug for which a rebate is pay11 able under this subsection— 

12 ‘‘(A) in computing the amount of 

13 any coinsurance applicable under this 

14 title to an individual with respect to 

15 such drug, the computation of such 

16 coinsurance shall be based on the in17 flation-adjusted payment amount de18 termined under paragraph (3)(C) for 

19 such part B rebatable drug; and 

20 ‘‘(B) the amount of such coinsur21 ance is equal to 20 percent of such in22 flation-adjusted payment amount so 

23 determined. 

24 ‘‘(6) REBATE DEPOSITS.—Amounts paid 

25 as rebates under paragraph (1)(B) shall 


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1 be deposited into the Federal Supple2 mentary Medical Insurance Trust Fund 

3 established under section 1841. 

4 ‘‘(7) CIVIL MONEY PENALTY.—If a manu5 facturer of a part B rebatable drug has 

6 failed to comply with the requirements 

7 under paragraph (1)(B) for such drug for 

8 a calendar quarter, the manufacturer 

9 shall be subject to, in accordance with a 

10 process established by the Secretary pur11 suant to regulations, a civil money pen12 alty in an amount equal to at least 125 

13 percent of the amount specified in para14 graph (3) for such drug for such calendar 

15 quarter. The provisions of section 1128A 

16 (other than subsections (a) (with respect 

17 to amounts of penalties or additional as18 sessments) and (b)) shall apply to a civil 

19 money penalty under this paragraph in 

20 the same manner as such provisions apply 

21 to a penalty or proceeding under section 

22 1128A(a). 

23 ‘‘(8) STUDY AND REPORT.— 

24 ‘‘(A) STUDY.—The Secretary shall 

25 conduct a study of the feasibility of 


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1 and operational issues involved with 

2 the following: 

3 ‘‘(i) Including multiple source 

4 drugs (as defined in section 

5 1847A(c)(6)(C)) in the rebate sys6 tem under this subsection. 

7 ‘‘(ii) Including drugs and 

8 biologicals paid for under MA 

9 plans under part C in the rebate 

10 system under this subsection. 

11 ‘‘(iii) Including drugs ex12 cluded under paragraph (2)(A) 

13 and billing units of drugs ex14 cluded under paragraph (3)(B) in 

15 the rebate system under this sub16 section. 

17 ‘‘(B) REPORT.—Not later than 3 

18 years after the date of the enactment 

19 of this subsection, the Secretary shall 

20 submit to Congress a report on the 

21 study conducted under subparagraph 

22 (A). 

23 ‘‘(9) APPLICATION TO MULTIPLE SOURCE

24 DRUGS.—The Secretary may, based on the 

25 report submitted under paragraph (8) 


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1 and pursuant to rulemaking, apply the 

2 provisions of this subsection to multiple 

3 source drugs (as defined in section 

4 1847A(c)(6)(C)), including, for purposes of 

5 determining the rebate amount under 

6 paragraph (3), by calculating manufac7 turer-specific average sales prices for the 

8 benchmark period and the rebate pe9 riod.’’. 

10 (b) AMOUNTS PAYABLE; COST-SHARING.—Sec11 tion 1833(a) of the Social Security Act is 

12 amended— 

13 (1) in paragraph (1)— 

14 (A) in subparagraph (S), by strik15 ing ‘‘with respect to’’ and inserting 

16 ‘‘subject to subparagraph (DD), with 

17 respect to’’; 

18 (B) by striking ‘‘and (CC)’’ and in19 serting ‘‘(CC)’’; and 

20 (C) by inserting before the semi21 colon at the end the following: ‘‘, and 

22 (DD) with respect to a part B 

23 rebatable drug (as defined in para24 graph (2) of section 1834(x)) for which 

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1 tion, the amounts paid shall be the 

2 difference between (i) the payment 

3 amount under paragraph (3)(A)(ii)(I) 

4 of such section for such drug, and (ii) 

5 20 percent of the inflation-adjusted 

6 payment amount under paragraph 

7 (3)(A)(ii)(II) of such section for such 

8 drug’’; and 

9 (2) by adding at the end of the flush 

10 left matter following paragraph (9), the 

11 following: 

12 ‘‘For purposes of applying paragraph (1)(DD) 

13 and section 1834(x)(5), the Secretary shall 

14 make such estimates and use such data as the 

15 Secretary determines appropriate.’’. 

16 (c) CONFORMING AMENDMENT TO PART B 

17 ASP CALCULATION.—Section 1847A(c)(3) of the 

18 Social Security Act (42 U.S.C. 1395w–3a(c)(3)) 

19 is amended by inserting ‘‘or section 1834(x)’’ 

20 after ‘‘section 1927’’. 

21 SEC. 202. MEDICARE PART D REBATE BY MANUFACTURERS. 

22 Part D of title XVIII of the Social Security 

23 Act is amended by inserting after section 

24 1860D–14A (42 U.S.C. 1395w–114a) the fol25 lowing new section: 


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1 ‘‘SEC. 1860D–14B. MANUFACTURER REBATE FOR CERTAIN 

2 DRUGS WITH PRICES INCREASING FASTER 

3 THAN INFLATION. 

4 ‘‘(a) IN GENERAL.—Subject to the provisions 

5 of this section, in order for coverage to be 

6 available under this part for a part D 

7 rebatable drug of a manufacturer dispensed 

8 during an applicable year, the manufacturer 

9 must have entered into and have in effect an 

10 agreement described in subsection (b). For 

11 purposes of this section the term ‘applicable 

12 year’ means a year beginning with 2022. 

13 ‘‘(b) AGREEMENTS.— 

14 ‘‘(1) TERMS OF AGREEMENT.—An agree15 ment described in this subsection, with re16 spect to a manufacturer of a part D 

17 rebatable drug, is an agreement under 

18 which the following applies: 

19 ‘‘(A) SECRETARIAL PROVISION OF IN20 FORMATION.—Not later than 9 months 

21 after the end of each applicable year 

22 with respect to which the agreement is 

23 in effect, the Secretary, for the part D 

24 rebatable drug of the manufacturer, 

25 reports to the manufacturer the fol26 lowing for such year: 


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1 ‘‘(i) Information on the total 

2 units (as defined in subsection 

3 (g)(2)) dispensed for each dosage 

4 form and strength with respect to 

5 such part D rebatable drug and 

6 year. 

7 ‘‘(ii) Information on the 

8 amount (if any) of the excess aver9 age manufacturer price increase 

10 described in subsection (c)(1)(B) 

11 for each dosage form and strength 

12 with respect to such drug and 

13 year. 

14 ‘‘(iii) The rebate amount speci15 fied under subsection (c) for each 

16 dosage form and strength with re17 spect to such drug and year. 

18 ‘‘(B) MANUFACTURER REQUIRE19 MENTS.—For each applicable year with 

20 respect to which the agreement is in 

21 effect, the manufacturer of the part D 

22 rebatable drug, for each dosage form 

23 and strength with respect to such 

24 drug, not later than 30 days after the 

25 date of receipt from the Secretary of 


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1 the information described in subpara2 graph (A) for such year, provides to 

3 the Secretary a rebate that is equal to 

4 the amount specified in subsection (c) 

5 for such dosage form and strength 

6 with respect to such drug for such 

7 year. 

8 ‘‘(2) LENGTH OF AGREEMENT.— 

9 ‘‘(A) IN GENERAL.—An agreement 

10 under this section, with respect to a 

11 part D rebatable drug, shall be effec12 tive for an initial period of not less 

13 than one year and shall be automati14 cally renewed for a period of not less 

15 than one year unless terminated 

16 under subparagraph (B). 

17 ‘‘(B) TERMINATION.— 

18 ‘‘(i) BY SECRETARY.—The Sec19 retary may provide for termi20 nation of an agreement under this 

21 section for violation of the re22 quirements of the agreement or 

23 other good cause shown. Such ter24 mination shall not be effective 

25 earlier than 60 days after the date 


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1 of notice of such termination. The 

2 Secretary shall provide, upon re3 quest, a manufacturer with a 

4 hearing concerning such a termi5 nation, but such hearing shall not 

6 delay the effective date of the ter7 mination. 

8 ‘‘(ii) BY A MANUFACTURER.—A 

9 manufacturer may terminate an 

10 agreement under this section for 

11 any reason. Any such termination 

12 shall not be effective until the year 

13 beginning at least 60 days after 

14 the date the manufacturer pro15 vides notice to the Secretary. 

16 ‘‘(C) EFFECTIVENESS OF TERMI17 NATION.—Any termination under this 

18 paragraph shall not affect rebates 

19 due under the agreement under this 

20 section before the effective date of its 

21 termination. 

22 ‘‘(D) DELAY BEFORE REENTRY.—In 

23 the case of any agreement under this 

24 section with a manufacturer which is 

25 terminated in a plan year, another 


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1 such agreement with the manufac2 turer (or a successor manufacturer) 

3 may not be entered into before the sub4 sequent plan year, unless the Sec5 retary finds good cause for an earlier 

6 reinstatement of such an agreement. 

7 ‘‘(3) INFORMATION.—For purposes of 

8 carrying out this section, the Secretary 

9 shall use information submitted by manu10 facturers under section 1927(b)(3). 

11 ‘‘(c) REBATE AMOUNT.— 

12 ‘‘(1) IN GENERAL.—For purposes of this 

13 section, the amount specified in this sub14 section for a dosage form and strength 

15 with respect to a part D rebatable drug 

16 and applicable year is, subject to sub17 paragraphs (B) and (C) of paragraph (3), 

18 the amount equal to the product of— 

19 ‘‘(A) the total average number of 

20 units weighted by, and dispensed for, 

21 such dosage form and strength with 

22 respect to such part D rebatable drug 

23 and year; and 

24 ‘‘(B) the amount (if any) by 

25 which— 


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1 ‘‘(i) the average manufacturer 

2 price (as defined in subsection (g)) 

3 paid for such dosage form and 

4 strength with respect to such part 

5 D rebatable drug during the year; 

6 exceeds 

7 ‘‘(ii) the inflation-adjusted 

8 payment amount determined 

9 under paragraph (2) for such dos10 age form and strength with re11 spect to such part D rebatable 

12 drug during the year. 

13 ‘‘(2) DETERMINATION OF INFLATION-AD14 JUSTED PAYMENT AMOUNT.—The inflation15 adjusted payment amount determined 

16 under this paragraph for a dosage form 

17 and strength with respect to a part D 

18 rebatable drug for an applicable year, 

19 subject to subparagraphs (A) and (D) of 

20 paragraph (3), is— 

21 ‘‘(A) the average manufacturer 

22 price paid for such dosage form and 

23 strength with respect to such drug in 

24 the payment amount benchmark year 


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1 (as defined in subsection (g)(3)); in2 creased by 

3 ‘‘(B) the percentage by which the 

4 rebate period CPI–U (as defined in 

5 subsection (g)(5)) for the applicable 

6 year exceeds the benchmark period 

7 CPI–U (as defined in subsection 

8 (g)(4)). 

9 ‘‘(3) SPECIAL TREATMENT OF CERTAIN

10 DRUGS AND EXEMPTION.— 

11 ‘‘(A) SUBSEQUENTLY APPROVED

12 DRUGS.—In the case of a part D 

13 rebatable drug first approved by the 

14 Food and Drug Administration after 

15 January 1, 2016, subparagraph (A) of 

16 paragraph (2) shall be applied as if 

17 the term ‘payment amount benchmark 

18 year’ were defined under subsection 

19 (g)(3) as the first year beginning after 

20 the day on which the drug was first 

21 marketed and subparagraph (B) of 

22 paragraph (2) shall be applied as if 

23 the term ‘benchmark period CPI–U’ 

24 were defined under subsection (g)(4) 

25 as if the reference to ‘January 2016’ 


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1 under such subsection were a ref2 erence to ‘January of the first year be3 ginning after the date on which the 

4 drug was first marketed by any manu5 facturer’. 

6 ‘‘(B) EXEMPTION FOR SHORTAGES.— 

7 The Secretary may reduce or waive 

8 the rebate under paragraph (1) with 

9 respect to a part D rebatable drug in 

10 the case of a shortage of such drug or 

11 other exigent circumstances, as deter12 mined by the Secretary. 

13 ‘‘(C) TREATMENT OF NEW FORMULA14 TIONS.— 

15 ‘‘(i) IN GENERAL.—In the case of 

16 a part D rebatable drug that is a 

17 line extension of a single source 

18 drug or an innovator multiple 

19 source drug that is an oral solid 

20 dosage form, the Secretary shall 

21 establish a formula for deter22 mining the amount specified in 

23 this subsection with respect to 

24 such part D rebatable drug and 

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1 ation of the single source drug or 

2 an innovator multiple source 

3 drug. 

4 ‘‘(ii) LINE EXTENSION DE5 FINED.—In this subparagraph, the 

6 term ‘line extension’ means, with 

7 respect to a part D rebatable 

8 drug, a new formulation of the 

9 drug (as determined by the Sec10 retary), such as an extended re11 lease formulation, but does not in12 clude an abuse-deterrent formula13 tion of the drug (as determined by 

14 the Secretary), regardless of 

15 whether such abuse-deterrent for16 mulation is an extended release 

17 formulation. 

18 ‘‘(D) SELECTED DRUGS.—In the case 

19 of a part D rebatable drug that is a 

20 selected drug (as defined in section 

21 1192(c)), for each applicable year be22 ginning after the price applicability 

23 period (as defined in section 

24 1191(b)(2) with respect to such drug, 

25 subparagraph (A) of paragraph (2) 


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1 shall be applied as if the term ‘pay2 ment amount benchmark year’ were 

3 defined under subsection (g)(3) as the 

4 last year beginning during such price 

5 applicability period with respect to 

6 such selected drug and subparagraph 

7 (B) of paragraph (2) shall be applied 

8 as if the term ‘benchmark period CPI– 

9 U’ were defined under subsection 

10 (g)(4) as if the reference to ‘January 

11 2016’ under such subsection were a 

12 reference to January of the last year 

13 beginning during such price applica14 bility period with respect to such 

15 drug. 

16 ‘‘(d) REBATE DEPOSITS.—Amounts paid as 

17 rebates under subsection (c) shall be deposited 

18 into the Medicare Prescription Drug Account 

19 in the Federal Supplementary Medical Insur20 ance Trust Fund established under section 

21 1841. 

22 ‘‘(e) CIVIL MONEY PENALTY.—In the case of 

23 a manufacturer of a part D rebatable drug 

24 with an agreement in effect under this section 

25 who has failed to comply with the terms of the 


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1 agreement under subsection (b)(1)(B) with re2 spect to such drug for an applicable year, the 

3 Secretary may impose a civil money penalty on 

4 such manufacturer in an amount equal to 125 

5 percent of the amount specified in subsection 

6 (c) for such drug for such year. The provisions 

7 of section 1128A (other than subsections (a) 

8 (with respect to amounts of penalties or addi9 tional assessments) and (b)) shall apply to a 

10 civil money penalty under this subsection in 

11 the same manner as such provisions apply to 

12 a penalty or proceeding under section 

13 1128A(a). 

14 ‘‘(f) JUDICIAL REVIEW.—There shall be no 

15 judicial review of the following: 

16 ‘‘(1) The determination of units under 

17 this section. 

18 ‘‘(2) The determination of whether a 

19 drug is a part D rebatable drug under 

20 this section. 

21 ‘‘(3) The calculation of the rebate 

22 amount under this section. 

23 ‘‘(g) DEFINITIONS.—In this section: 

24 ‘‘(1) PART D REBATABLE DRUG DE25 FINED.— 


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1 ‘‘(A) IN GENERAL.—The term ‘part 

2 D rebatable drug’ means a drug or bi3 ological that would (without applica4 tion of this section) be a covered part 

5 D drug, except such term shall, with 

6 respect to an applicable year, not in7 clude such a drug or biological if the 

8 average total cost under a prescrip9 tion drug plan under this part or MA– 

10 PD plan under part C for such year 

11 per individual who uses such a drug 

12 or biological, as determined by the 

13 Secretary, are less than, subject to 

14 subparagraph (B), $100, as deter15 mined by the Secretary using the most 

16 recent data available or, if data is not 

17 available, as estimated by the Sec18 retary. 

19 ‘‘(B) INCREASE.—The dollar 

20 amount applied under subparagraph 

21 (A)— 

22 ‘‘(i) for 2023, shall be the dol23 lar amount specified under such 

24 subparagraph for 2022, increased 

25 by the percentage increase in the 


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1 consumer price index for all 

2 urban consumers (United States 

3 city average) as of January of 

4 2022; and 

5 ‘‘(ii) for a subsequent year, 

6 shall be the dollar amount speci7 fied in this subparagraph (or sub8 paragraph (A)) for the previous 

9 year, increased by the percentage 

10 increase in the consumer price 

11 index for all urban consumers 

12 (United States city average) as of 

13 January of the previous year. 

14 Any dollar amount specified under 

15 this subparagraph that is not a mul16 tiple of $10 shall be rounded to the 

17 nearest multiple of $10. 

18 ‘‘(2) UNIT DEFINED.—The term ‘unit’ 

19 means, with respect to a part D rebatable 

20 drug, the lowest identifiable quantity 

21 (such as a capsule or tablet, milligram of 

22 molecules, or grams) of the part D 

23 rebatable drug that is dispensed to indi24 viduals enrolled under a prescription 


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1 drug plan under this part or an MA–PD 

2 plan under part C. 

3 ‘‘(3) PAYMENT AMOUNT BENCHMARK

4 YEAR.—The term ‘payment amount bench5 mark year’ means the year beginning Jan6 uary 1, 2016. 

7 ‘‘(4) BENCHMARK PERIOD CPI–U.—The 

8 term ‘benchmark period CPI–U’ means the 

9 consumer price index for all urban con10 sumers (United States city average) for 

11 January 2016. 

12 ‘‘(5) REBATE PERIOD CPI–U.—The term 

13 ‘rebate period CPI–U’ means, with respect 

14 to an applicable year, the consumer price 

15 index for all urban consumers (United 

16 States city average) for January of such 

17 year. 

18 ‘‘(6) AVERAGE MANUFACTURER PRICE.— 

19 The term ‘average manufacturer price’ 

20 has the meaning, with respect to a part D 

21 rebatable drug of a manufacturer for an 

22 applicable year, given such term in sec23 tion 1927(k)(1), with respect to a covered 

24 outpatient drug of a manufacturer for a 

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1 poses of applying the previous sentence, 

2 with respect to a part D rebatable drug of 

3 a manufacturer and an applicable year, 

4 the Secretary shall use the information 

5 with respect to the average manufacturer 

6 price for such drug reported by the manu7 facturer under section 1927(b)(3) with re8 spect to each of the quarters in the appli9 cable year and calculate an annual aver10 age manufacturer price for such applica11 ble year as the average of such average 

12 manufacturer prices for each such quar13 ter, weighted by units of such drug sold or 

14 dispensed with respect to such applicable 

15 year.’’. 

16 TITLE III—PART D IMPROVE17 MENTS AND MAXIMUM OUT18 OF-POCKET CAP FOR MEDI19 CARE BENEFICIARIES 

20 SEC. 301. MEDICARE PART D BENEFIT REDESIGN. 

21 (a) BENEFIT STRUCTURE REDESIGN.—Sec22 tion 1860D–2(b) of the Social Security Act (42 

23 U.S.C. 1395w–102(b)) is amended— 

24 (1) in paragraph (2)— 


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1 (A) in subparagraph (A), in the 

2 matter preceding clause (i), by insert3 ing ‘‘for a year preceding 2022 and for 

4 costs above the annual deductible 

5 specified in paragraph (1) and up to 

6 the annual out-of-pocket threshold 

7 specified in paragraph (4)(B) for 2022 

8 and each subsequent year’’ after 

9 ‘‘paragraph (3)’’; 

10 (B) in subparagraph (C)— 

11 (i) in clause (i), in the matter 

12 preceding subclause (I), by insert13 ing ‘‘for a year preceding 2022,’’ 

14 after ‘‘paragraph (4),’’; and 

15 (ii) in clause (ii)(III), by strik16 ing ‘‘and each subsequent year’’ 

17 and inserting ‘‘and 2021’’; and 

18 (C) in subparagraph (D)— 

19 (i) in clause (i)— 

20 (I) in the matter preceding 

21 subclause (I), by inserting ‘‘for 

22 a year preceding 2022,’’ after 

23 ‘‘paragraph (4),’’; and 

24 (II) in subclause (I)(bb), by 

25 striking ‘‘a year after 2018’’ 


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1 and inserting ‘‘each of years 

2 2018 through 2021’’; and 

3 (ii) in clause (ii)(V), by strik4 ing ‘‘2019 and each subsequent 

5 year’’ and inserting ‘‘each of years 

6 2019 through 2021’’; 

7 (2) in paragraph (3)(A)— 

8 (A) in the matter preceding clause 

9 (i), by inserting ‘‘for a year preceding 

10 2022,’’ after ‘‘and (4),’’; and 

11 (B) in clause (ii), by striking ‘‘for 

12 a subsequent year’’ and inserting ‘‘for 

13 each of years 2007 through 2021’’; and 

14 (3) in paragraph (4)— 

15 (A) in subparagraph (A)— 

16 (i) in clause (i)— 

17 (I) by redesignating sub18 clauses (I) and (II) as items 

19 (aa) and (bb), respectively, 

20 and moving the margin of 

21 each such redesignated item 2 

22 ems to the right; 

23 (II) in the matter pre24 ceding item (aa), as redesig25 nated by subclause (I), by 


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1 striking ‘‘is equal to the great2 er of—’’ and inserting ‘‘is 

3 equal to— 

4 ‘‘(I) for a year preceding 

5 2022, the greater of—’’; 

6 (III) by striking the period 

7 at the end of item (bb), as re8 designated by subclause (I), 

9 and inserting ‘‘; and’’; and 

10 (IV) by adding at the end 

11 the following: 

12 ‘‘(II) for 2022 and each 

13 succeeding year, $0.’’; and 

14 (ii) in clause (ii)— 

15 (I) by striking ‘‘clause 

16 (i)(I)’’ and inserting ‘‘clause 

17 (i)(I)(aa)’’; and 

18 (II) by adding at the end 

19 the following new sentence: 

20 ‘‘The Secretary shall continue 

21 to calculate the dollar 

22 amounts specified in clause 

23 (i)(I)(aa), including with the 

24 adjustment under this clause, 


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1 after 2021 for purposes of sec2 tion 1860D–14(a)(1)(D)(iii).’’; 

3 (B) in subparagraph (B)— 

4 (i) in clause (i)— 

5 (I) in subclause (V), by 

6 striking ‘‘or’’ at the end; 

7 (II) in subclause (VI)— 

8 (aa) by striking ‘‘for a 

9 subsequent year’’ and in10 serting ‘‘for 2021’’; and 

11 (bb) by striking the pe12 riod at the end and insert13 ing a semicolon; and 

14 (III) by adding at the end 

15 the following new subclauses: 

16 ‘‘(VII) for 2022, is equal to 

17 $2,000; or 

18 ‘‘(VIII) for a subsequent 

19 year, is equal to the amount 

20 specified in this subparagraph 

21 for the previous year, in22 creased by the annual percent23 age increase described in 

24 paragraph (6) for the year in25 volved.’’; and 


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1 (ii) in clause (ii), by striking 

2 ‘‘clause (i)(II)’’ and inserting 

3 ‘‘clause (i)’’; 

4 (C) in subparagraph (C)(i), by 

5 striking ‘‘and for amounts’’ and in6 serting ‘‘and, for a year preceding 

7 2022, for amounts’’; and 

8 (D) in subparagraph (E), by strik9 ing ‘‘In applying’’ and inserting ‘‘For 

10 each of years 2011 through 2021, in 

11 applying’’. 

12 (b) DECREASING REINSURANCE PAYMENT

13 AMOUNT.—Section 1860D–15(b)(1) of the Social 

14 Security Act (42 U.S.C. 1395w–115(b)(1)) is 

15 amended by inserting after ‘‘80 percent’’ the 

16 following: ‘‘(or, with respect to a coverage year 

17 after 2021, 20 percent)’’. 

18 (c) MANUFACTURER DISCOUNT PROGRAM.— 

19 (1) IN GENERAL.—Part D of title XVIII 

20 of the Social Security Act (42 U.S.C. 

21 1395w–101 et seq.), as amended by section 

22 202, is further amended by inserting after 

23 section 1860D–14B the following new sec24 tion: 


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1 ‘‘SEC. 1860D–14C. MANUFACTURER DISCOUNT PROGRAM. 

2 ‘‘(a) ESTABLISHMENT.—The Secretary shall 

3 establish a manufacturer discount program 

4 (in this section referred to as the ‘program’). 

5 Under the program, the Secretary shall enter 

6 into agreements described in subsection (b) 

7 with manufacturers and provide for the per8 formance of the duties described in subsection 

9 (c). The Secretary shall establish a model 

10 agreement for use under the program by not 

11 later than January 1, 2021, in consultation 

12 with manufacturers, and allow for comment 

13 on such model agreement. 

14 ‘‘(b) TERMS OF AGREEMENT.— 

15 ‘‘(1) IN GENERAL.— 

16 ‘‘(A) AGREEMENT.—An agreement 

17 under this section shall require the 

18 manufacturer to provide applicable 

19 beneficiaries access to discounted 

20 prices for applicable drugs of the 

21 manufacturer that are dispensed on 

22 or after January 1, 2022. 

23 ‘‘(B) PROVISION OF DISCOUNTED

24 PRICES AT THE POINT-OF-SALE.—The dis25 counted prices described in subpara26 graph (A) shall be provided to the apVerDate Sep 11 2014 23:24 Dec 09, 2019 Jkt 099200 PO 00000 Frm 00426 Fmt 6652 Sfmt 6204 E:\BILLS\H3.RH H3

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1 plicable beneficiary at the pharmacy 

2 or by the mail order service at the 

3 point-of-sale of an applicable drug. 

4 ‘‘(C) TIMING OF AGREEMENT.— 

5 ‘‘(i) SPECIAL RULE FOR 2022.—In 

6 order for an agreement with a 

7 manufacturer to be in effect under 

8 this section with respect to the pe9 riod beginning on January 1, 

10 2022, and ending on December 31, 

11 2022, the manufacturer shall enter 

12 into such agreement not later 

13 than 30 days after the date of the 

14 establishment of a model agree15 ment under subsection (a). 

16 ‘‘(ii) 2023 AND SUBSEQUENT

17 YEARS.—In order for an agreement 

18 with a manufacturer to be in ef19 fect under this section with re20 spect to plan year 2023 or a subse21 quent plan year, the manufacturer 

22 shall enter into such agreement 

23 (or such agreement shall be re24 newed under paragraph (4)(A)) 


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1 not later than January 30 of the 

2 preceding year. 

3 ‘‘(2) PROVISION OF APPROPRIATE DATA.— 

4 Each manufacturer with an agreement in 

5 effect under this section shall collect and 

6 have available appropriate data, as deter7 mined by the Secretary, to ensure that it 

8 can demonstrate to the Secretary compli9 ance with the requirements under the pro10 gram. 

11 ‘‘(3) COMPLIANCE WITH REQUIREMENTS

12 FOR ADMINISTRATION OF PROGRAM.—Each 

13 manufacturer with an agreement in effect 

14 under this section shall comply with re15 quirements imposed by the Secretary or a 

16 third party with a contract under sub17 section (d)(3), as applicable, for purposes 

18 of administering the program, including 

19 any determination under subparagraph 

20 (A) of subsection (c)(1) or procedures es21 tablished under such subsection (c)(1). 

22 ‘‘(4) LENGTH OF AGREEMENT.— 

23 ‘‘(A) IN GENERAL.—An agreement 

24 under this section shall be effective 

25 for an initial period of not less than 


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1 12 months and shall be automatically 

2 renewed for a period of not less than 

3 1 year unless terminated under sub4 paragraph (B). 

5 ‘‘(B) TERMINATION.— 

6 ‘‘(i) BY THE SECRETARY.—The 

7 Secretary may provide for termi8 nation of an agreement under this 

9 section for a knowing and willful 

10 violation of the requirements of 

11 the agreement or other good cause 

12 shown. Such termination shall not 

13 be effective earlier than 30 days 

14 after the date of notice to the man15 ufacturer of such termination. The 

16 Secretary shall provide, upon re17 quest, a manufacturer with a 

18 hearing concerning such a termi19 nation, and such hearing shall 

20 take place prior to the effective 

21 date of the termination with suffi22 cient time for such effective date 

23 to be repealed if the Secretary de24 termines appropriate. 


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1 ‘‘(ii) BY A MANUFACTURER.—A 

2 manufacturer may terminate an 

3 agreement under this section for 

4 any reason. Any such termination 

5 shall be effective, with respect to a 

6 plan year— 

7 ‘‘(I) if the termination oc8 curs before January 30 of a 

9 plan year, as of the day after 

10 the end of the plan year; and 

11 ‘‘(II) if the termination oc12 curs on or after January 30 of 

13 a plan year, as of the day after 

14 the end of the succeeding plan 

15 year. 

16 ‘‘(iii) EFFECTIVENESS OF TERMI17 NATION.—Any termination under 

18 this subparagraph shall not affect 

19 discounts for applicable drugs of 

20 the manufacturer that are due 

21 under the agreement before the ef22 fective date of its termination. 

23 ‘‘(iv) NOTICE TO THIRD PARTY.— 

24 The Secretary shall provide notice 

25 of such termination to a third 


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1 party with a contract under sub2 section (d)(3) within not less than 

3 30 days before the effective date of 

4 such termination. 

5 ‘‘(c) DUTIES DESCRIBED.—The duties de6 scribed in this subsection are the following: 

7 ‘‘(1) ADMINISTRATION OF PROGRAM.—Ad8 ministering the program, including— 

9 ‘‘(A) the determination of the 

10 amount of the discounted price of an 

11 applicable drug of a manufacturer; 

12 ‘‘(B) the establishment of proce13 dures under which discounted prices 

14 are provided to applicable bene15 ficiaries at pharmacies or by mail 

16 order service at the point-of-sale of an 

17 applicable drug; 

18 ‘‘(C) the establishment of proce19 dures to ensure that, not later than 

20 the applicable number of calendar 

21 days after the dispensing of an appli22 cable drug by a pharmacy or mail 

23 order service, the pharmacy or mail 

24 order service is reimbursed for an 


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1 amount equal to the difference be2 tween— 

3 ‘‘(i) the negotiated price of the 

4 applicable drug; and 

5 ‘‘(ii) the discounted price of 

6 the applicable drug; 

7 ‘‘(D) the establishment of proce8 dures to ensure that the discounted 

9 price for an applicable drug under 

10 this section is applied before any cov11 erage or financial assistance under 

12 other health benefit plans or pro13 grams that provide coverage or finan14 cial assistance for the purchase or 

15 provision of prescription drug cov16 erage on behalf of applicable bene17 ficiaries as the Secretary may specify; 

18 and 

19 ‘‘(E) providing a reasonable dis20 pute resolution mechanism to resolve 

21 disagreements between manufactur22 ers, applicable beneficiaries, and the 

23 third party with a contract under sub24 section (d)(3). 

25 ‘‘(2) MONITORING COMPLIANCE.— 


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1 ‘‘(A) IN GENERAL.—The Secretary 

2 shall monitor compliance by a manu3 facturer with the terms of an agree4 ment under this section. 

5 ‘‘(B) NOTIFICATION.—If a third 

6 party with a contract under sub7 section (d)(3) determines that the 

8 manufacturer is not in compliance 

9 with such agreement, the third party 

10 shall notify the Secretary of such non11 compliance for appropriate enforce12 ment under subsection (e). 

13 ‘‘(3) COLLECTION OF DATA FROM PRE14 SCRIPTION DRUG PLANS AND MA–PD PLANS.— 

15 The Secretary may collect appropriate 

16 data from prescription drug plans and 

17 MA–PD plans in a timeframe that allows 

18 for discounted prices to be provided for 

19 applicable drugs under this section. 

20 ‘‘(d) ADMINISTRATION.— 

21 ‘‘(1) IN GENERAL.—Subject to para22 graph (2), the Secretary shall provide for 

23 the implementation of this section, includ24 ing the performance of the duties de25 scribed in subsection (c). 


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1 ‘‘(2) LIMITATION.—In providing for the 

2 implementation of this section, the Sec3 retary shall not receive or distribute any 

4 funds of a manufacturer under the pro5 gram. 

6 ‘‘(3) CONTRACT WITH THIRD PARTIES.— 

7 The Secretary shall enter into a contract 

8 with 1 or more third parties to administer 

9 the requirements established by the Sec10 retary in order to carry out this section. 

11 At a minimum, the contract with a third 

12 party under the preceding sentence shall 

13 require that the third party— 

14 ‘‘(A) receive and transmit informa15 tion between the Secretary, manufac16 turers, and other individuals or enti17 ties the Secretary determines appro18 priate; 

19 ‘‘(B) receive, distribute, or facili20 tate the distribution of funds of manu21 facturers to appropriate individuals 

22 or entities in order to meet the obliga23 tions of manufacturers under agree24 ments under this section; 


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1 ‘‘(C) provide adequate and timely 

2 information to manufacturers, con3 sistent with the agreement with the 

4 manufacturer under this section, as 

5 necessary for the manufacturer to ful6 fill its obligations under this section; 

7 and 

8 ‘‘(D) permit manufacturers to con9 duct periodic audits, directly or 

10 through contracts, of the data and in11 formation used by the third party to 

12 determine discounts for applicable 

13 drugs of the manufacturer under the 

14 program. 

15 ‘‘(4) PERFORMANCE REQUIREMENTS.— 

16 The Secretary shall establish performance 

17 requirements for a third party with a con18 tract under paragraph (3) and safeguards 

19 to protect the independence and integrity 

20 of the activities carried out by the third 

21 party under the program under this sec22 tion. 

23 ‘‘(5) IMPLEMENTATION.—The Secretary 

24 may implement the program under this 


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1 section by program instruction or other2 wise. 

3 ‘‘(6) ADMINISTRATION.—Chapter 35 of 

4 title 44, United States Code, shall not 

5 apply to the program under this section. 

6 ‘‘(e) ENFORCEMENT.— 

7 ‘‘(1) AUDITS.—Each manufacturer with 

8 an agreement in effect under this section 

9 shall be subject to periodic audit by the 

10 Secretary. 

11 ‘‘(2) CIVIL MONEY PENALTY.— 

12 ‘‘(A) IN GENERAL.—The Secretary 

13 may impose a civil money penalty on a 

14 manufacturer that fails to provide ap15 plicable beneficiaries discounts for 

16 applicable drugs of the manufacturer 

17 in accordance with such agreement 

18 for each such failure in an amount 

19 the Secretary determines is commen20 surate with the sum of— 

21 ‘‘(i) the amount that the man22 ufacturer would have paid with 

23 respect to such discounts under 

24 the agreement, which will then be 

25 used to pay the discounts which 


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1 the manufacturer had failed to 

2 provide; and 

3 ‘‘(ii) 25 percent of such 

4 amount. 

5 ‘‘(B) APPLICATION.—The provisions 

6 of section 1128A (other than sub7 sections (a) and (b)) shall apply to a 

8 civil money penalty under this para9 graph in the same manner as such 

10 provisions apply to a penalty or pro11 ceeding under section 1128A(a). 

12 ‘‘(f) CLARIFICATION REGARDING AVAILABILITY

13 OF OTHER COVERED PART D DRUGS.—Nothing in 

14 this section shall prevent an applicable bene15 ficiary from purchasing a covered part D drug 

16 that is not an applicable drug (including a ge17 neric drug or a drug that is not on the for18 mulary of the prescription drug plan or MA– 

19 PD plan that the applicable beneficiary is en20 rolled in). 

21 ‘‘(g) DEFINITIONS.—In this section: 

22 ‘‘(1) APPLICABLE BENEFICIARY.—The 

23 term ‘applicable beneficiary’ means an in24 dividual who, on the date of dispensing a 

25 covered part D drug— 


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1 ‘‘(A) is enrolled in a prescription 

2 drug plan or an MA–PD plan; 

3 ‘‘(B) is not enrolled in a qualified 

4 retiree prescription drug plan; and 

5 ‘‘(C) has incurred costs for covered 

6 part D drugs in the year that are 

7 equal to or exceed the annual deduct8 ible specified in section 1860D–2(b)(1) 

9 for such year. 

10 ‘‘(2) APPLICABLE DRUG.—The term ‘ap11 plicable drug’, with respect to an applica12 ble beneficiary— 

13 ‘‘(A) means a covered part D 

14 drug— 

15 ‘‘(i) approved under a new 

16 drug application under section 

17 505(b) of the Federal Food, Drug, 

18 and Cosmetic Act or, in the case of 

19 a biologic product, licensed under 

20 section 351 of the Public Health 

21 Service Act; and 

22 ‘‘(ii)(I) if the PDP sponsor of 

23 the prescription drug plan or the 

24 MA organization offering the MA– 

25 PD plan uses a formulary, which 


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1 is on the formulary of the pre2 scription drug plan or MA–PD 

3 plan that the applicable bene4 ficiary is enrolled in; 

5 ‘‘(II) if the PDP sponsor of the 

6 prescription drug plan or the MA 

7 organization offering the MA–PD 

8 plan does not use a formulary, for 

9 which benefits are available 

10 under the prescription drug plan 

11 or MA–PD plan that the applica12 ble beneficiary is enrolled in; or 

13 ‘‘(III) is provided through an 

14 exception or appeal; and 

15 ‘‘(B) does not include a selected 

16 drug (as defined in section 1192(c)) 

17 during a price applicability period 

18 (as defined in section 1191(b)(2)) with 

19 respect to such drug. 

20 ‘‘(3) APPLICABLE NUMBER OF CALENDAR

21 DAYS.—The term ‘applicable number of 

22 calendar days’ means— 

23 ‘‘(A) with respect to claims for re24 imbursement submitted electronically, 

25 14 days; and 


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1 ‘‘(B) with respect to claims for re2 imbursement submitted otherwise, 30 

3 days. 

4 ‘‘(4) DISCOUNTED PRICE.— 

5 ‘‘(A) IN GENERAL.—The term ‘dis6 counted price’ means, with respect to 

7 an applicable drug of a manufacturer 

8 furnished during a year to an appli9 cable beneficiary— 

10 ‘‘(i) who has not incurred costs 

11 for covered part D drugs in the 

12 year that are equal to or exceed 

13 the annual out-of-pocket threshold 

14 specified in section 1860D– 

15 2(b)(4)(B)(i) for the year, 90 per16 cent of the negotiated price of 

17 such drug; and 

18 ‘‘(ii) who has incurred such 

19 costs in the year that are equal to 

20 or exceed such threshold for the 

21 year, 70 percent of the negotiated 

22 price of such drug. 

23 ‘‘(B) CLARIFICATION.—Nothing in 

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1 cable beneficiary for payment of a dis2 pensing fee for an applicable drug. 

3 ‘‘(C) SPECIAL CASE FOR CERTAIN

4 CLAIMS.— 

5 ‘‘(i) CLAIMS SPANNING DEDUCT6 IBLE.—In the case where the entire 

7 amount of the negotiated price of 

8 an individual claim for an appli9 cable drug with respect to an ap10 plicable beneficiary does not fall 

11 at or above the annual deductible 

12 specified in section 1860D–2(b)(1) 

13 for the year, the manufacturer of 

14 the applicable drug shall provide 

15 the discounted price under this 

16 section on only the portion of the 

17 negotiated price of the applicable 

18 drug that falls at or above such 

19 annual deductible. 

20 ‘‘(ii) CLAIMS SPANNING OUT-OF21 POCKET THRESHOLD.—In the case 

22 where the entire amount of the ne23 gotiated price of an individual 

24 claim for an applicable drug with 

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1 ficiary does not fall entirely below 

2 or entirely above the annual out3 of-pocket threshold specified in 

4 section 1860D–2(b)(4)(B)(i) for the 

5 year, the manufacturer of the ap6 plicable drug shall provide the 

7 discounted price— 

8 ‘‘(I) in accordance with 

9 subparagraph (A)(i) on the 

10 portion of the negotiated price 

11 of the applicable drug that 

12 falls below such threshold; 

13 and 

14 ‘‘(II) in accordance with 

15 subparagraph (A)(ii) on the 

16 portion of such price of such 

17 drug that falls at or above 

18 such threshold. 

19 ‘‘(5) MANUFACTURER.—The term ‘manu20 facturer’ means any entity which is en21 gaged in the production, preparation, 

22 propagation, compounding, conversion, or 

23 processing of prescription drug products, 

24 either directly or indirectly by extraction 

25 from substances of natural origin, or 


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1 independently by means of chemical syn2 thesis, or by a combination of extraction 

3 and chemical synthesis. Such term does 

4 not include a wholesale distributor of 

5 drugs or a retail pharmacy licensed 

6 under State law. 

7 ‘‘(6) NEGOTIATED PRICE.—The term ‘ne8 gotiated price’ has the meaning given 

9 such term in section 423.100 of title 42, 

10 Code of Federal Regulations (as in effect 

11 on the date of enactment of section 1860D– 

12 14A), except that such negotiated price 

13 shall not include any dispensing fee for 

14 the applicable drug. 

15 ‘‘(7) QUALIFIED RETIREE PRESCRIPTION

16 DRUG PLAN.—The term ‘qualified retiree 

17 prescription drug plan’ has the meaning 

18 given such term in section 1860D– 

19 22(a)(2).’’. 

20 (2) SUNSET OF MEDICARE COVERAGE GAP

21 DISCOUNT PROGRAM.—Section 1860D–14A of 

22 the Social Security Act (42 U.S.C. 1395– 

23 114a) is amended— 

24 (A) in subsection (a), in the first 

25 sentence, by striking ‘‘The Secretary’’ 


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1 and inserting ‘‘Subject to subsection 

2 (h), the Secretary’’; and 

3 (B) by adding at the end the fol4 lowing new subsection: 

5 ‘‘(h) SUNSET OF PROGRAM.— 

6 ‘‘(1) IN GENERAL.—The program shall 

7 not apply with respect to applicable drugs 

8 dispensed on or after January 1, 2022, 

9 and, subject to paragraph (2), agreements 

10 under this section shall be terminated as 

11 of such date. 

12 ‘‘(2) CONTINUED APPLICATION FOR APPLI13 CABLE DRUGS DISPENSED PRIOR TO SUN14 SET.—The provisions of this section (in15 cluding all responsibilities and duties) 

16 shall continue to apply after January 1, 

17 2022, with respect to applicable drugs dis18 pensed prior to such date.’’. 

19 (3) INCLUSION OF ACTUARIAL VALUE OF

20 MANUFACTURER DISCOUNTS IN BIDS.—Sec21 tion 1860D–11 of the Social Security Act 

22 (42 U.S.C. 1395w–111) is amended— 

23 (A) in subsection (b)(2)(C)(iii)— 


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1 (i) by striking ‘‘assumptions 

2 regarding the reinsurance’’ an in3 serting ‘‘assumptions regarding— 

4 ‘‘(I) the reinsurance’’; and 

5 (ii) by adding at the end the 

6 following: 

7 ‘‘(II) for 2022 and each 

8 subsequent year, the manufac9 turer discounts provided 

10 under section 1860D–14C sub11 tracted from the actuarial 

12 value to produce such bid; 

13 and’’; and 

14 (B) in subsection (c)(1)(C)— 

15 (i) by striking ‘‘an actuarial 

16 valuation of the reinsurance’’ and 

17 inserting ‘‘an actuarial valuation 

18 of— 

19 ‘‘(i) the reinsurance’’; 

20 (ii) in clause (i), as inserted by 

21 clause (i) of this subparagraph, by 

22 adding ‘‘and’’ at the end; and 

23 (iii) by adding at the end the 

24 following: 


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1 ‘‘(ii) for 2022 and each subse2 quent year, the manufacturer dis3 counts provided under section 

4 1860D–14C;’’. 

5 (d) CONFORMING AMENDMENTS.— 

6 (1) Section 1860D–2 of the Social Secu7 rity Act (42 U.S.C. 1395w–102) is amend8 ed— 

9 (A) in subsection (a)(2)(A)(i)(I), by 

10 striking ‘‘, or an increase in the ini11 tial’’ and inserting ‘‘or, for a year pre12 ceding 2022, an increase in the ini13 tial’’; 

14 (B) in subsection (c)(1)(C)— 

15 (i) in the subparagraph head16 ing, by striking ‘‘AT INITIAL COV17 ERAGE LIMIT’’; and 

18 (ii) by inserting ‘‘for a year 

19 preceding 2022 or the annual out20 of-pocket threshold specified in 

21 subsection (b)(4)(B) for the year 

22 for 2022 and each subsequent 

23 year’’ after ‘‘subsection (b)(3) for 

24 the year’’ each place it appears; 

25 and 


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1 (C) in subsection (d)(1)(A), by 

2 striking ‘‘or an initial’’ and inserting 

3 ‘‘or, for a year preceding 2022, an ini4 tial’’. 

5 (2) Section 1860D–4(a)(4)(B)(i) of the 

6 Social Security Act (42 U.S.C. 1395w– 

7 104(a)(4)(B)) is amended by striking ‘‘the 

8 initial’’ and inserting ‘‘for a year pre9 ceding 2022, the initial’’. 

10 (3) Section 1860D–14(a) of the Social 

11 Security Act (42 U.S.C. 1395w–114(a)) is 

12 amended— 

13 (A) in paragraph (1)— 

14 (i) in subparagraph (C), by 

15 striking ‘‘The continuation’’ and 

16 inserting ‘‘For a year preceding 

17 2022, the continuation’’; 

18 (ii) in subparagraph (D)(iii), 

19 by striking ‘‘1860D–2(b)(4)(A)(i)(I)’’ 

20 and inserting ‘‘1860D– 

21 2(b)(4)(A)(i)(I)(aa)’’; and 

22 (iii) in subparagraph (E), by 

23 striking ‘‘The elimination’’ and in24 serting ‘‘For a year preceding 

25 2022, the elimination’’; and 


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1 (B) in paragraph (2)— 

2 (i) in subparagraph (C), by 

3 striking ‘‘The continuation’’ and 

4 inserting ‘‘For a year preceding 

5 2022, the continuation’’; and 

6 (ii) in subparagraph (E)— 

7 (I) by inserting ‘‘for a year 

8 preceding 2022,’’ after ‘‘sub9 section (c)’’; and 

10 (II) by striking ‘‘1860D– 

11 2(b)(4)(A)(i)(I)’’ and inserting 

12 ‘‘1860D–2(b)(4)(A)(i)(I)(aa)’’. 

13 (4) Section 1860D–21(d)(7) of the So14 cial Security Act (42 U.S.C. 1395w– 

15 131(d)(7)) is amended by striking ‘‘section 

16 1860D–2(b)(4)(B)(i)’’ and inserting ‘‘sec17 tion 1860D–2(b)(4)(C)(i)’’. 

18 (5) Section 1860D–22(a)(2)(A) of the 

19 Social Security Act (42 U.S.C. 1395w– 

20 132(a)(2)(A)) is amended— 

21 (A) by striking ‘‘the value of any 

22 discount’’ and inserting the following: 

23 ‘‘the value of— 

24 ‘‘(i) for years prior to 2022, any 

25 discount’’. 


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1 (B) in clause (i), as inserted by 

2 subparagraph (A) of this paragraph, 

3 by striking the period at the end and 

4 inserting ‘‘; and’’; and 

5 (C) by adding at the end the fol6 lowing new clause: 

7 ‘‘(ii) for 2022 and each subse8 quent year, any discount provided 

9 pursuant to section 1860D–14C.’’. 

10 (6) Section 1860D–41(a)(6) of the So11 cial Security Act (42 U.S.C. 1395w– 

12 151(a)(6)) is amended— 

13 (A) by inserting ‘‘for a year before 

14 2022’’ after ‘‘1860D–2(b)(3)’’; and 

15 (B) by inserting ‘‘for such year’’ be16 fore the period. 

17 (7) Paragraph (1) of section 1860D– 

18 43(a) of the Social Security Act (42 U.S.C. 

19 1395w–153(a)) is amended to read as fol20 lows: 

21 ‘‘(1) participate in— 

22 ‘‘(A) for 2011 through 2021, the 

23 Medicare coverage gap discount pro24 gram under section 1860D–14A; and 


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1 ‘‘(B) for 2022 and each subsequent 

2 year, the manufacturer discount pro3 gram under section 1860D–14C;’’. 

4 (e) EFFECTIVE DATE.—The amendments 

5 made by this section shall apply with respect 

6 to plan year 2022 and subsequent plan years. 


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Union Calendar No. 264 

116TH CONGRESS 

1ST SESSION H. R. 3 

[Report No. 116–324, Parts I, II and III] 

A BILL 

To establish a fair price negotiation program, proother purposes. imum for Medicare part D enrollees, and for increases, and establish an out-of-pocket max- tect the Medicare program from excessive price 

DECEMBER 9, 2019 

Reported from the Committee on Education and Labor 

dered to be printed the Whole House on the State of the Union and orwith an amendment; committed to the Committee of 


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