II 

116TH CONGRESS 

1ST SESSION S. 1987 

To require the Secretary of Health and Human Services to establish reference 

prices for prescription drugs for purposes of Federal health programs, 

and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JUNE 26, 2019 

Mr. MERKLEY introduced the following bill; which was read twice and referred 

to the Committee on Health, Education, Labor, and Pensions 

A BILL 

To require the Secretary of Health and Human Services 

to establish reference prices for prescription drugs for 

purposes of Federal health programs, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘End Price Gouging 

5 for Medications Act’’. 

6 SEC. 2. REFERENCE PRICES FOR PRESCRIPTION DRUGS. 

7 (a) REFERENCE PRICES.—The Secretary of Health 

8 and Human Services (referred to in this section as the 


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1 ‘‘Secretary’’), in accordance with subsection (b), shall es2 tablish annual reference prices for each prescription drug. 

3 Notwithstanding any other provision of law, with respect 

4 to enrollees or beneficiaries in any of the Federal health 

5 programs described in subsection (c), the retail list price 

6 for a drug shall not exceed the reference price for such 

7 drug. 

8 (b) CRITERIA.— 

9 (1) IN GENERAL.—Each year, the Secretary 

10 shall establish the reference price for each prescrip11 tion drug under subsection (a)— 

12 (A) by determining the median retail list 

13 price for the drug among the reference coun14 tries in which the drug is available, if drug pric15 ing information is available for at least 3 of 

16 such countries; or 

17 (B) in the case of a drug for which drug 

18 pricing information or dosage equivalents are 

19 not available for at least 3 of the reference 

20 countries, by determining an appropriate price 

21 based on the Secretary’s determination of— 

22 (i) the added therapeutic effect of the 

23 drug; 

24 (ii) the value of the drug; 

25 (iii) patient access to the drug; 


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1 (iv) the costs associated with re2 searching and developing the drug; and 

3 (v) other factors, as the Secretary de4 termines appropriate. 

5 (2) REFERENCE COUNTRIES.—For purposes of 

6 paragraph (1), the reference countries are Japan, 

7 Germany, the United Kingdom, France, Italy, Can8 ada, Australia, Spain, the Netherlands, Switzerland, 

9 and Sweden. 

10 (c) FEDERAL HEALTH PROGRAMS.—The reference 

11 prices established under subsection (a) shall apply with re12 spect to covered inpatient and outpatient drugs under— 

13 (1) the Medicare program under title XVIII of 

14 the Social Security Act (42 U.S.C. 1395 et seq.); 

15 (2) a State Medicaid plan under title XIX of 

16 the Social Security Act (42 U.S.C. 1396 et seq.); 

17 (3) the State Children’s Health Insurance Pro18 gram under title XXI of the Social Security Act (42 

19 U.S.C. 1397aa et seq.); 

20 (4) the TRICARE program under chapter 55 of 

21 title 10, United States Code; 

22 (5) hospital care and medical services furnished 

23 by the Department of Veterans Affairs under chap24 ters 17 and 18 of title 38, United States Code; 


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1 (6) the Federal Employees Health Benefits 

2 Program established under chapter 89 of title 5, 

3 United States Code; and 

4 (7) any health program, service, function, activ5 ity, or facility funded, in whole or part, under the 

6 Indian Health Care Improvement Act (25 U.S.C. 

7 1601 et seq.), including through direct or contract 

8 care provided under such Act or through a contract 

9 or compact under the Indian Self-Determination and 

10 Education Assistance Act (25 U.S.C. 5304 et seq.). 

11 (d) APPLICABILITY TO OTHER PURCHASERS OF

12 DRUGS.—Notwithstanding any other provision of law, a 

13 drug manufacturer shall offer prescription drugs at the 

14 reference price to all individuals, including individuals who 

15 are not insured and individuals who are covered under a 

16 group health plan or group or individual health insurance 

17 coverage. In the case of individuals covered by a group 

18 health plan or group or individual health insurance cov19 erage, such requirement is met if the amount covered 

20 under such plan or coverage plus the cost-sharing amount 

21 does not exceed the reference price. 

22 (e) ENFORCEMENT.— 

23 (1) CIVIL PENALTY.—A drug manufacturer who 

24 does not comply with the requirements of subsection 

25 (a) shall be subject to a civil penalty, for each year 


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1 in which the violation occurs and with respect to 

2 each drug for which the violation occurs, in an 

3 amount equal to 5 times the difference between— 

4 (A) the total amount received by the man5 ufacturer for sales of the drug under the Fed6 eral health programs under subsection (c) for 

7 the year; less 

8 (B) the total amount the manufacturer 

9 would have received for sales of the drug under 

10 such programs for the year if the manufacturer 

11 had complied with subsection (a). 

12 (2) AMOUNTS COLLECTED.—Each year, the 

13 Secretary of the Treasury shall transfer to the Di14 rector of the National Institutes of Health an 

15 amount equal to the amount collected in civil pen16 alties under subsection (e) for the previous year. The 

17 Director of the National Institutes of Health shall 

18 use amounts so transferred for purposes of con19 ducting drug research and development. 

20 (f) APPLICABILITY TO BRAND AND GENERIC

21 DRUGS.—The reference price established under subsection 

22 (a) shall apply to drugs approved under subsection (c) or 

23 (j) of section 505 of the Federal Food, Drug, and Cos24 metic Act (21 U.S.C. 355) or under subsection (a) or (k) 


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1 of section 351 of the Public Health Service Act (42 U.S.C. 

2 262). 

Æ 


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