II 

116TH CONGRESS 

1ST SESSION S. 1801 

To ensure medications are affordable. 

IN THE SENATE OF THE UNITED STATES 

JUNE 12, 2019 

Ms. SMITH (for herself, Ms. KLOBUCHAR, Mr. BLUMENTHAL, Mr. UDALL, Mr. 

BROWN, Ms. WARREN, Mr. SANDERS, Ms. HASSAN, Mr. WHITEHOUSE, 

Mr. MERKLEY, Mr. REED, Ms. BALDWIN, Mr. BOOKER, Mr. DURBIN, 

and Mrs. GILLIBRAND) introduced the following bill; which was read 

twice and referred to the Committee on Finance 

A BILL 

To ensure medications are affordable. 

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

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

5 ‘‘Affordable Medications Act’’. 

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

7 this Act is as follows: 

Sec. 1. Short title; table of contents. 

TITLE I—TRANSPARENCY 

Sec. 101. Drug manufacturer reporting. 

Sec. 102. Determining the public and private benefit of copayment coupons and 

other patient assistance programs. 


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TITLE II—ACCESS AND AFFORDABILITY 

Sec. 201. Negotiating fair prices for Medicare prescription drugs. 

Sec. 202. Prescription drug price spikes. 

Sec. 203. Importing affordable and safe drugs. 

Sec. 204. Requiring drug manufacturers to provide drug rebates for drugs dispensed to low-income individuals. 

Sec. 205. Cap on prescription drug cost-sharing. 

Sec. 206. Modification of trade negotiating objectives relating to intellectual 

property rights to ensure access to biological products. 

TITLE III—INNOVATION 

Sec. 301. Innovation incentive fund for new and more effective treatments of 

bacterial infections. 

Sec. 302. Public funding for clinical trials. 

Sec. 303. Rewarding innovative drug development. 

Sec. 304. Improving program integrity. 

TITLE IV—CHOICE AND COMPETITION 

Sec. 401. Unlawful compensation for delay. 

Sec. 402. 180-day exclusivity period amendments regarding first applicant status. 

Sec. 403. 180-day exclusivity period amendments regarding agreements to defer 

commercial marketing. 

Sec. 404. Increasing drug competition and preventing drug shortages. 

Sec. 405. Disallowance of deduction for advertising for prescription drugs. 

Sec. 406. Drug manufacturer duty to disclose drug prices to practitioners. 

Sec. 407. Excluding authorized generic drugs from calculation of average manufacturer price under the Medicaid drug rebate program. 

1 TITLE I—TRANSPARENCY 

2 SEC. 101. DRUG MANUFACTURER REPORTING. 

3 Part P of title III of the Public Health Service Act 

4 (42 U.S.C. 280g et seq.) is amended by adding at the end 

5 the following: 

6 ‘‘SEC. 399V–7. DRUG MANUFACTURER REPORTING. 

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

8 ‘‘(1) INDEPENDENT CHARITY PATIENT ASSIST9 ANCE PROGRAM.—The term ‘independent charity pa10 tient assistance program’ means any organization 

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1 enue Code of 1986 and exempt from taxation under 

2 section 501(a) of such Code and which is not a pri3 vate foundation (as defined in section 509(a) of such 

4 Code) that offers patient assistance. 

5 ‘‘(2) MANUFACTURER PATIENT ASSISTANCE

6 PROGRAM.—The term ‘manufacturer patient assist7 ance program’ means an organization, including a 

8 private foundation (as so defined), that is sponsored 

9 by, or receives funding from, a manufacturer and 

10 that offers patient assistance. Such term does not 

11 include an independent charity patient assistance 

12 program. 

13 ‘‘(3) PATIENT ASSISTANCE.—The term ‘patient 

14 assistance’ means assistance provided to offset the 

15 cost of drugs for individuals. Such term includes free 

16 products, coupons, rebates, copay or discount cards, 

17 and other means of providing assistance to individ18 uals related to drug costs, as determined by the Sec19 retary. 

20 ‘‘(b) REPORTING ON DOMESTIC SALES.—An applica21 ble manufacturer of an approved drug (including a drug 

22 approved under subsection (c) or (j) of section 505 of the 

23 Federal Food, Drug, and Cosmetic Act and a biological 

24 product licensed under subsection (a) or (k) of section 351 

25 of this Act) shall submit to the Secretary and to Congress 


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1 an annual report, in such format as the Secretary shall 

2 require, outlining with respect to the previous calendar 

3 year (except as provided in subsection (c)(3))— 

4 ‘‘(1) with respect to each such drug— 

5 ‘‘(A) the total expenditures of the manu6 facturer on— 

7 ‘‘(i) domestic and foreign drug re8 search and development, including an 

9 itemized description of— 

10 ‘‘(I) basic and preclinical re11 search; 

12 ‘‘(II) clinical research, broken out 

13 by clinical trial phase; 

14 ‘‘(III) development of alternative 

15 dosage forms and strengths for the 

16 drug molecule or combinations, in17 cluding the molecule; 

18 ‘‘(IV) other drug development ac19 tivities, such as nonclinical laboratory 

20 studies and record and report mainte21 nance; 

22 ‘‘(V) pursuing new or expanded 

23 indications for such drug through sup24 plemental applications under section 


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1 505 of the Federal Food, Drug, and 

2 Cosmetic Act; 

3 ‘‘(VI) carrying out postmarket 

4 requirements related to such drug, in5 cluding under section 505(o)(3) of 

6 such Act; 

7 ‘‘(VII) carrying out risk evalua8 tion and mitigation strategies in ac9 cordance with section 505–1 of such 

10 Act; and 

11 ‘‘(VIII) marketing research; 

12 ‘‘(ii) cost of goods sold, broken out by 

13 source and cost of each component and 

14 identifying specific costs that reflect inter15 nal transfers within the manufacturer’s 

16 company; 

17 ‘‘(iii) acquisition costs in total and per 

18 unit sold, including costs for the purchase 

19 of patents and licensing; and 

20 ‘‘(iv) marketing and advertising for 

21 the promotion of the drug, including a 

22 breakdown of amounts aimed at con23 sumers, prescribers, managed care organi24 zations, and others; 


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1 ‘‘(B) the gross revenue, net revenue, gross 

2 profit, and net profit to the manufacturer; 

3 ‘‘(C) the total number of units of the pre4 scription drug that were sold in interstate com5 merce in the most recently completed calendar 

6 year; 

7 ‘‘(D) pricing information, including— 

8 ‘‘(i) wholesale acquisition cost; 

9 ‘‘(ii) net average price realized by 

10 pharmacy benefit managers for drugs pro11 vided to individuals in the United States, 

12 after accounting for any rebates or other 

13 payments from the manufacturer to the 

14 pharmacy benefit manager and from the 

15 pharmacy benefit manager to the manufac16 turer; and 

17 ‘‘(iii) the net price of the drug, after 

18 accounting for discounts, rebates, or other 

19 financial considerations, charged to pur20 chasers in each applicable country of the 

21 Organisation for Economic Co-operation 

22 and Development; 

23 ‘‘(E) information, including the dollar 

24 value to the recipient of manufacturer patient 

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1 turer or a manufacturer patient assistance pro2 gram sponsored by or associated with the man3 ufacturer, per patient, including— 

4 ‘‘(i) the specific forms of such patient 

5 assistance available, such as coupons, re6 bates, discount codes, or copayment cards; 

7 ‘‘(ii) the total dollar value of each 

8 manufacturer patient assistance program 

9 and the dollar value of each program to 

10 the patient, including the basis used to as11 sign value to the manufacturer patient as12 sistance program; 

13 ‘‘(iii) the duration of each type of 

14 such patient assistance available; and 

15 ‘‘(iv) any requirements, such as in16 come thresholds, for how to qualify for 

17 such patient assistance; 

18 ‘‘(F) information on usage of patient as19 sistance offered by the manufacturer or a man20 ufacturer patient assistance program sponsored 

21 by or associated with the manufacturer, includ22 ing— 

23 ‘‘(i) the number of transactions of 

24 each type of patient assistance used; 


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1 ‘‘(ii) the number of individuals receiv2 ing each type of patient assistance; 

3 ‘‘(iii) the total value of each type of 

4 patient assistance that was used; 

5 ‘‘(iv) the average length of time that 

6 each individual received each type of pa7 tient assistance; 

8 ‘‘(v) the number of individuals who 

9 were discontinued from receiving each type 

10 of patient assistance; and 

11 ‘‘(vi) complete documentation of the 

12 terms and conditions for an individual 

13 agreeing to participate in the program for 

14 each type of patient assistance provided; 

15 ‘‘(G) any Federal benefits received by the 

16 manufacturer, including the amounts and peri17 ods of impact for each such benefit, including 

18 tax credits, patent applications that benefited 

19 from a Federal grant, patent extensions, exclu20 sivity periods, and other Federal benefits with 

21 respect to such drug; and 

22 ‘‘(H) the percentage of research and devel23 opment expenditures on— 

24 ‘‘(i) activities conducted by the manu25 facturer; 


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1 ‘‘(ii) activities funded by Federal enti2 ties; and 

3 ‘‘(iii) activities conducted by other en4 tities such as academic institutions or 

5 other drug manufacturers; 

6 ‘‘(2) executive compensation for the chief execu7 tive officer, chief financial officer, and the three 

8 other most highly compensated executive officers, in9 cluding bonuses, paid by such manufacturer, and 

10 stock options affiliated with the manufacturer that 

11 were offered to or accrued by such officers; 

12 ‘‘(3) any additional information the manufac13 turer chooses to provide related to drug pricing deci14 sions, such as total expenditures on drug research, 

15 drug development, and clinical trials on drugs that 

16 failed to receive approval by the Food and Drug Ad17 ministration, a list of drugs and drug prices against 

18 which the manufacturer compared the applicable 

19 drug, and other relevant information; and 

20 ‘‘(4) any other information as the Secretary 

21 may require. 

22 ‘‘(c) SUBMISSION OF REPORTS.— 

23 ‘‘(1) IN GENERAL.— 

24 ‘‘(A) SUBMISSION BY DRUG MANUFACTUR25 ERS.—Drug manufacturers shall submit the anVerDate Sep 11 2014 03:57 Jun 19, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S1801.IS S1801

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1 nual reports required under this section sub2 mitted to the Secretary in a usable format, as 

3 the Secretary may require. 

4 ‘‘(B) COLLATION BY THE SECRETARY.— 

5 The Secretary shall collate the reports received 

6 as described in subparagraph (A) and submit 

7 such collated reports to Congress, together with 

8 an analysis of the reports by the Secretary that 

9 includes— 

10 ‘‘(i) a summary of data from the re11 ports; 

12 ‘‘(ii) consideration of factors such as 

13 trends on research and development costs, 

14 Federal benefits, and manufacturer patient 

15 assistance programs; and 

16 ‘‘(iii) the relationship between the fac17 tors described in clause (ii) and prescrip18 tion drug prices. 

19 ‘‘(C) PUBLIC AVAILABILITY.—The Sec20 retary shall make the reports submitted by 

21 manufacturers as described in subparagraph 

22 (A) and the collated reports together with the 

23 analysis of the Secretary described in subpara24 graph (B) publicly available, including by post25 ing such reports to the internet website of the 


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1 Department of Health and Human Services, in 

2 a searchable format. In publicizing such re3 ports, the Secretary may redact such propri4 etary information as the Secretary determines 

5 appropriate. 

6 ‘‘(2) SINGLE REPORTS.—A drug manufacturer 

7 shall submit all information required under sub8 section (b) with respect to each applicable drug, in 

9 a single, annual report. 

10 ‘‘(3) INITIAL REPORT.— 

11 ‘‘(A) IN GENERAL.—An applicable drug 

12 manufacturer shall submit a report pursuant to 

13 this section one year after the date of enact14 ment of the Affordable Medications Act (except 

15 as provided in subparagraph (B)) that includes 

16 the information required under subsection 

17 (b)(1) with respect to each calendar year since 

18 the drug for which the report is required was 

19 approved under section 505 of the Federal 

20 Food, Drug, and Cosmetic Act, licensed under 

21 section 351 of this Act, or received an exemp22 tion under section 505(i) of the Federal Food, 

23 Drug, and Cosmetic Act or section 351(a)(3) of 

24 this Act, or the calendar year in which the man25 ufacturer acquired the drug. 


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1 ‘‘(B) SMALL BUSINESSES.—In the case of 

2 an applicable drug manufacturer that has fewer 

3 than 500 employees, the initial report described 

4 in subparagraph (A) shall be submitted by a 

5 date determined by the Secretary, which shall 

6 be not earlier than the date described in sub7 paragraph (A) and not later than the date that 

8 is 3 years after the date of enactment of the Af9 fordable Medications Act. 

10 ‘‘(d) PENALTY FOR NONCOMPLIANCE.—The Sec11 retary shall report to the Office of the Inspector General 

12 any manufacturer’s failure to submit a complete report as 

13 required under this section. Any manufacturer that fails 

14 to submit a complete report required under this section 

15 shall be subject to a civil penalty of up to $200,000 for 

16 each day on which the violation continues. The Secretary 

17 shall collect the civil penalties under this subsection, and 

18 without further appropriation, shall use such funds to sup19 port the programs under sections 409K and 485E, and, 

20 at the discretion of the Secretary, research of the National 

21 Institutes of Health and other activities authorized under 

22 the Affordable Medications Act, including any amend23 ments made by such Act.’’. 


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1 SEC. 102. DETERMINING THE PUBLIC AND PRIVATE BEN2 EFIT OF COPAYMENT COUPONS AND OTHER 

3 PATIENT ASSISTANCE PROGRAMS. 

4 (a) INFORMATION REPORTING BY INDEPENDENT

5 CHARITY PATIENT ASSISTANCE PROGRAMS.—Section 

6 6033(b) of the Internal Revenue Code of 1986 is amended 

7 by striking the period at the end of paragraph (16) and 

8 inserting ‘‘, and’’ and by inserting after paragraph (16) 

9 the following new paragraph: 

10 ‘‘(17) the total amount of patient assistance 

11 (within the meaning of section 399V–7 of the Public 

12 Health Service Act) provided to individuals who are 

13 prescribed drugs manufactured by any contributor to 

14 the organization.’’. 

15 (b) GAO STUDY AND REPORT ON IMPACT OF COPAY16 MENT COUPONS AND OTHER PATIENT ASSISTANCE PRO17 GRAMS ON PRESCRIPTION DRUG PRICING AND EXPENDI18 TURES.— 

19 (1) STUDY.—The Comptroller General of the 

20 United States shall conduct a study on the impact 

21 of copayment coupons and other patient assistance 

22 programs on prescription drug pricing and expendi23 tures. Such study shall include an analysis of the 

24 following: 

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1 tribute to inflated prescription drug prices and 

2 health insurance premiums, including with re3 spect to— 

4 (i) the Medicaid program under title 

5 XIX of the Social Security Act (42 U.S.C. 

6 1396 et seq.); 

7 (ii) the Medicare program under title 

8 XVIII of such Act (42 U.S.C. 1395 et 

9 seq.); 

10 (iii) the TRICARE program under 

11 chapter 55 of title 10, United States Code; 

12 (iv) health care under the laws admin13 istered by the Secretary of Veterans Af14 fairs; 

15 (v) the commercial health insurance 

16 market; and 

17 (vi) the cash pay health market. 

18 (B) The extent to which manufacturers of19 fering copayment coupons and other patient as20 sistance programs or sponsoring manufacturer 

21 patient assistance programs report obtaining 

22 tax deductions for offering or sponsoring such 

23 assistance (either as business expenses or chari24 table deductions), including— 


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1 (i) the total reported value of the tax 

2 deductions claimed by manufacturers for 

3 offering or sponsoring patient assistance 

4 programs during the 10 years preceding 

5 the date of enactment of this Act; 

6 (ii) a description of the methodology 

7 manufacturers reported for assigning a 

8 value to the tax deduction claimed by man9 ufacturers for offering or sponsoring pa10 tient assistance programs; and 

11 (iii) a description of the extent to 

12 which the activities of independent charity 

13 patient assistance programs, which are 

14 sponsored by, or receive funding from, 

15 pharmaceutical manufacturers (as deter16 mined using tax returns, sales data, and 

17 other public disclosures) provide a financial 

18 benefit to the manufacturers that sponsor 

19 them. 

20 (C) Oversight that is conducted to ensure 

21 that independent charity patient assistance pro22 grams adhere to guidance from the Office of 

23 the Inspector General of the Department of 

24 Health and Human Services on avoiding waste, 

25 fraud, and abuse. 


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1 (2) DEFINITIONS.—In this subsection, the 

2 terms ‘‘patient assistance’’, ‘‘independent charity pa3 tient assistance program’’, ‘‘manufacturer’’, and 

4 ‘‘manufacturer patient assistance program’’ have the 

5 meaning given those terms under section 399V–7 of 

6 the Public Health Service Act, as added by section 

7 101. 

8 (3) REPORT.—Not later than 2 years after the 

9 date of the enactment of this Act, the Comptroller 

10 General of the United States shall submit to Con11 gress a report describing the findings of the study 

12 required under this subsection. 

13 TITLE II—ACCESS AND 

14 AFFORDABILITY 

15 SEC. 201. NEGOTIATING FAIR PRICES FOR MEDICARE PRE16 SCRIPTION DRUGS. 

17 (a) NEGOTIATING FAIR PRICES.— 

18 (1) IN GENERAL.—Section 1860D–11 of the 

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

20 amended by striking subsection (i) (relating to non21 interference) and by inserting the following: 

22 ‘‘(i) NEGOTIATING FAIR PRICES WITH DRUG MANU23 FACTURERS.— 

24 ‘‘(1) IN GENERAL.—Notwithstanding any other 

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1 viding quality care and containing costs under this 

2 part, the Secretary shall, with respect to applicable 

3 covered part D drugs, and may, with respect to 

4 other covered part D drugs, negotiate, using the ne5 gotiation technique or techniques that the Secretary 

6 determines will maximize savings and value to the 

7 government for prescription drug plans and MA–PD 

8 plans and for plan enrollees (in a manner that may 

9 be similar to Federal entities and that may include, 

10 but is not limited to, formularies, reference pricing, 

11 discounts, rebates, other price concessions, and cov12 erage determinations), with drug manufacturers the 

13 prices that may be charged to PDP sponsors and 

14 MA organizations for such drugs for part D eligible 

15 individuals who are enrolled in a prescription drug 

16 plan or in an MA–PD plan. In conducting such ne17 gotiations, the Secretary shall consider the drug’s 

18 current price, initial launch price, prevalence of dis19 ease and usage, and approved indications, the num20 ber of similarly effective alternative treatments for 

21 each approved use of the drug, the budgetary impact 

22 of providing coverage under this part for such drug 

23 for all individuals who would likely benefit from the 

24 drug, evidence on the drug’s effectiveness and safety 

25 compared to similar drugs, and the quality and 


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1 quantity of clinical data and rigor of the applicable 

2 process of approval of a drug under section 505 of 

3 the Federal Food, Drug, and Cosmetic Act or a bio4 logical product under section 351 of the Public 

5 Health Service Act. 

6 ‘‘(2) USE OF LOWER OF VA OR BIG FOUR PRICE

7 IF NEGOTIATIONS FAIL.—If, after attempting to ne8 gotiate for a price with respect to a covered part D 

9 drug under paragraph (1) for a period of 1 year, the 

10 Secretary is not successful in obtaining an appro11 priate price for the drug (as determined by the Sec12 retary), the Secretary shall establish the price that 

13 may be charged to PDP sponsors and MA organiza14 tions for such drug for part D eligible individuals 

15 who are enrolled in a prescription drug plan or in 

16 an MA–PD plan at an amount equal to the lesser 

17 of— 

18 ‘‘(A) the price paid by the Secretary of 

19 Veterans Affairs to procure the drug under the 

20 laws administered by the Secretary of Veterans 

21 Affairs; or 

22 ‘‘(B) the price paid to procure the drug 

23 under section 8126 of title 38, United States 

24 Code. 


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1 ‘‘(3) APPLICABLE COVERED PART D DRUG DE2 FINED.—For purposes of this subsection, the term 

3 ‘applicable covered part D drug’ means a covered 

4 part D drug that the Secretary determines to be ap5 propriate for negotiation under paragraph (1) based 

6 on one or more of the following factors as applied 

7 to such drug: 

8 ‘‘(A) Spending on a per beneficiary basis. 

9 ‘‘(B) The proportion of total spending 

10 under this title. 

11 ‘‘(C) Unit price increases over the pre12 ceding 5 years. 

13 ‘‘(D) Initial launch price. 

14 ‘‘(E) Availability of less expensive, simi15 larly effective alternative treatments. 

16 ‘‘(F) Status of the drug as a follow-on to 

17 previously approved drugs. 

18 ‘‘(G) Any other criteria determined by the 

19 Secretary. 

20 ‘‘(4) PDP SPONSORS AND MA ORGANIZATION

21 MAY NEGOTIATE LOWER PRICES.—Nothing in this 

22 subsection shall be construed as preventing the spon23 sor of a prescription drug plan, or an organization 

24 offering an MA–PD plan, from obtaining a discount 

25 or reduction of the price for a covered part D drug 


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1 below the price negotiated under paragraph (1) or 

2 the price established under paragraph (2). 

3 ‘‘(5) NO EFFECT ON EXISTING APPEALS PROC4 ESS.—Nothing in this subsection shall be construed 

5 to affect the appeals procedures under subsections 

6 (g) and (h) of section 1860D–4.’’. 

7 (2) EFFECTIVE DATE.—The amendments made 

8 by this subsection shall take effect on the date of the 

9 enactment of this Act and shall first apply to nego10 tiations and prices for plan years beginning on Jan11 uary 1, 2020. 

12 (b) REQUIREMENT TO INCLUDE A LINK TO THE

13 MEDICARE DRUG SPENDING DASHBOARD ON THE MEDI14 CARE PLAN FINDER.—Beginning not later than January 

15 1, 2020, the Secretary of Health and Human Services 

16 shall ensure that the Medicare Plan Finder on the Medi17 care.gov internet website includes a link to the Medicare 

18 Drug Spending Dashboard on the CMS.gov internet 

19 website. Such link shall be easily accessible on the Medi20 care Plan Finder. 

21 (c) REPORTS TO CONGRESS.— 

22 (1) SECRETARY OF HHS.— 

23 (A) IN GENERAL.—Not later than 3 years 

24 after the date of the enactment of this Act, and 

25 every 6 months thereafter, the Secretary of 


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1 Health and Human Services shall submit to 

2 Congress a report on the following: 

3 (i) The price negotiations conducted 

4 by the Secretary under section 1860D– 

5 11(i) of the Social Security Act (42 U.S.C. 

6 1395w–111(i)), as amended by subsection 

7 (a), including a description of— 

8 (I) how such price negotiations 

9 are achieving lower prices for covered 

10 part D drugs (as defined in section 

11 1860D–2(e) of the Social Security Act 

12 (42 U.S.C. 1395w–102(e))) for Medi13 care beneficiaries; 

14 (II) how such lower prices are 

15 passed through to Medicare bene16 ficiaries; 

17 (III) how such price negotiations 

18 are affecting drug prices in the pri19 vate market; and 

20 (IV) how such price negotiations 

21 are affecting the list price of covered 

22 part D drugs. 

23 (ii) Data on spending under part D of 

24 the Medicare program on covered part D 


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1 drugs, including data on covered part D 

2 drugs with— 

3 (I) spending on a per beneficiary 

4 basis that is above the median spend5 ing on other drugs in the same class 

6 or above the median spending of other 

7 drug classes; and 

8 (II) high unit cost increases over 

9 the past five years, especially where 

10 such increases are greater than the 

11 increases for covered part D drugs in 

12 general. 

13 (iii) A list of the covered part D drugs 

14 with no therapeutic substitute and data on 

15 spending under part D of the Medicare 

16 program on such drugs. 

17 (iv) Access to covered part D drugs 

18 and, where available, compliance rates and 

19 health outcomes associated with compli20 ance rates. 

21 (v) Appeals by enrollees with respect 

22 to covered part D drugs not included on 

23 plan formularies. 

24 (B) PUBLIC AVAILABILITY OF REPORT.— 

25 The Secretary of Health and Human Services 


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1 shall publish on the internet website of the Cen2 ters for Medicare & Medicaid Services a copy of 

3 each report submitted under subparagraph (A), 

4 including the detailed tables, figures, and data 

5 published in the report and its appendices. 

6 (2) MEDPAC.— 

7 (A) STUDY.—The Comptroller General of 

8 the United States shall conduct a study on the 

9 price negotiations conducted by the Secretary 

10 under section 1860D–11(i) of the Social Secu11 rity Act (42 U.S.C. 1395w–111(i)), as amended 

12 by subsection (a), including an analysis of— 

13 (i) how such price negotiations are 

14 achieving lower prices for covered part D 

15 drugs (as defined in section 1860D–2(e) of 

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

17 102(e))) for Medicare beneficiaries; 

18 (ii) who is benefiting from such lower 

19 prices, such as Medicare beneficiaries, the 

20 Federal Government, States, prescription 

21 drug plans and MA–PD plans, or other en22 tities; 

23 (iii) how such price negotiations are a 

24 factor affecting drug prices in the private 

25 market; and 


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1 (iv) how such price negotiations are a 

2 factor affecting the list price of covered 

3 part D drugs. 

4 (B) REPORT.—Not later than January 1, 

5 2022, the Comptroller General of the United 

6 States shall submit to Congress a report on the 

7 study conducted under subparagraph (A), to8 gether with recommendations for improving 

9 such price negotiations. 

10 (d) CMI TESTING OF NEGOTIATING DRUG AND BIO11 LOGICAL PRICES TO IMPROVE VALUE.—Section 

12 1115A(b)(2) of the Social Security Act (42 U.S.C. 

13 1315a(b)(2)) is amended— 

14 (1) in subparagraph (A), by adding at the end 

15 the following new sentence: ‘‘The models selected 

16 under this subparagraph shall include at least three 

17 of the models described in subparagraph (D), which 

18 shall be implemented by not later than 18 months 

19 after the date of the enactment of the Affordable 

20 Medications Act’’; and 

21 (2) by adding at the end the following new sub22 paragraph: 

23 ‘‘(D) MODELS OF NEGOTIATING DRUG AND

24 BIOLOGICAL PRICES TO IMPROVE VALUE.—The 

25 models described in this subparagraph are the 


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1 following models for negotiating drug and bio2 logical prices under the applicable titles (includ3 ing under both parts B and D of title XVIII) 

4 in order to improve the value of payments for 

5 such drugs and biologicals under such titles: 

6 ‘‘(i) Discounting or eliminating pa7 tient cost-sharing on high-value drugs and 

8 biologicals. 

9 ‘‘(ii) Value-based formularies. 

10 ‘‘(iii) Indications-based pricing. 

11 ‘‘(iv) Reference pricing. 

12 ‘‘(v) Risk-sharing agreements based 

13 on outcomes. 

14 ‘‘(vi) Pricing based on comparative ef15 fectiveness research. 

16 ‘‘(vii) Episode-based payments for 

17 chemotherapy and other conditions deter18 mined appropriate by the Secretary. 

19 ‘‘(viii) Alternative ways of paying for 

20 drugs and biologicals under part B of title 

21 XVIII. 

22 ‘‘(ix) Other models determined appro23 priate by the Secretary.’’. 


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1 SEC. 202. PRESCRIPTION DRUG PRICE SPIKES. 

2 (a) IDENTIFICATION OF PRESCRIPTION DRUG PRICE

3 SPIKES.— 

4 (1) DEFINITIONS.—In this subsection: 

5 (A) APPLICABLE ENTITY.—The term ‘‘ap6 plicable entity’’ means the holder of an applica7 tion approved under subsection (c) or (j) of sec8 tion 505 of the Federal Food, Drug, and Cos9 metic Act (21 U.S.C. 355) or of a license issued 

10 under subsection (a) or (k) of section 351 of 

11 the Public Health Service Act (42 U.S.C. 262) 

12 for a drug described in paragraph (5)(A). 

13 (B) AVERAGE MANUFACTURER PRICE.— 

14 The term ‘‘average manufacturer price’’— 

15 (i) has the same meaning given such 

16 term under section 1927(k)(1) of the So17 cial Security Act (42 U.S.C. 1396r– 

18 8(k)(1)); or 

19 (ii) with respect to a drug for which 

20 there is no average manufacturer price as 

21 so defined, such term shall mean the 

22 wholesale acquisition cost of the drug. 

23 (C) COMMERCE.—The term ‘‘commerce’’ 

24 has the meaning given such term in section 4 

25 of the Federal Trade Commission Act (15 

26 U.S.C. 44). 


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1 (D) INSPECTOR GENERAL.—The term ‘‘In2 spector General’’ means the Inspector General 

3 of the Department of Health and Human Serv4 ices. 

5 (E) PRESCRIPTION DRUG.— 

6 (i) IN GENERAL.—The term ‘‘pre7 scription drug’’ means any drug (as de8 fined in section 201(g) of the Federal 

9 Food, Drug, and Cosmetic Act (21 U.S.C. 

10 321(g))), including a combination product 

11 whose primary mode of action is deter12 mined under section 503(g) of such Act 

13 (21 U.S.C. 353(g)) to be that of a drug, 

14 and that— 

15 (I) is subject to section 503(b)(1) 

16 of the Federal Food, Drug, and Cos17 metic Act (21 U.S.C. 353(b)(1)); and 

18 (II) is covered by a Federal 

19 health care program (as defined in 

20 section 1128B(f) of the Social Secu21 rity Act (42 U.S.C. 1320a–7b(f))). 

22 (ii) TREATMENT OF REFORMULATED

23 DRUGS.—For purposes of this subsection, 

24 a prescription drug with respect to which 

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1 ices has approved any minor reformulation 

2 that does not produce a meaningful thera3 peutic benefit, the drug that was approved 

4 prior to any such reformulation and the 

5 drug with any such reformulation shall be 

6 considered one prescription drug. 

7 (F) PRICE SPIKE.— 

8 (i) IN GENERAL.—The term ‘‘price 

9 spike’’ means an increase in the average 

10 manufacturer price in commerce of a pre11 scription drug for which the price spike 

12 percentage is equal to or greater than ap13 plicable price increase allowance. 

14 (ii) PRICE SPIKE PERCENTAGE.—The 

15 price spike percentage is the percentage (if 

16 any) by which— 

17 (I) the average manufacturer 

18 price of a prescription drug in com19 merce for the calendar year; exceeds 

20 (II) the average manufacturer 

21 price of such prescription drug in 

22 commerce for the calendar year pre23 ceding such year. 

24 (iii) APPLICABLE PRICE INCREASE AL25 LOWANCE.—The applicable price increase 


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1 allowance for any calendar year is the per2 centage (rounded to the nearest one-tenth 

3 of 1 percent) by which the C–CPI–U (as 

4 defined in section 1(f)(6) of the Internal 

5 Revenue Code of 1986) for that year ex6 ceeds the C–CPI–U for the preceding cal7 endar year. 

8 (G) PRICE SPIKE REVENUE.— 

9 (i) IN GENERAL.—The price spike rev10 enue for any calendar year is an amount 

11 equal to— 

12 (I) the gross price spike revenue; 

13 minus 

14 (II) the adjustment amount. 

15 (ii) GROSS PRICE SPIKE REVENUE.— 

16 The gross price spike revenue for any cal17 endar year is an amount equal to the prod18 uct of— 

19 (I) an amount equal to the dif20 ference between subclause (I) of sub21 paragraph (F)(ii) and subclause (II) 

22 of such subparagraph; and 

23 (II) the total number of units of 

24 the prescription drug which were sold 

25 in commerce in such calendar year. 


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1 (iii) ADJUSTMENT AMOUNT.—The ad2 justment amount is the amount, if any, of 

3 the gross price spike revenue which the In4 spector General has determined is due sole5 ly to an increase in the cost of the inputs 

6 necessary to manufacture the prescription 

7 drug subject to the price spike. 

8 (2) SUBMISSION BY PHARMACEUTICAL COMPA9 NIES OF INFORMATION TO INSPECTOR GENERAL.— 

10 (A) IN GENERAL.—For each prescription 

11 drug, the applicable entity shall submit to the 

12 Inspector General a quarterly report that in13 cludes the following: 

14 (i) For each prescription drug of the 

15 applicable entity— 

16 (I) the total number of units of 

17 the prescription drug which were sold 

18 in commerce in the preceding calendar 

19 quarter; 

20 (II) the average and median price 

21 per unit of such prescription drug in 

22 commerce in the preceding calendar 

23 quarter, disaggregated by month; and 

24 (III) the gross revenues from 

25 sales of such prescription drug in 


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1 commerce in the preceding calendar 

2 quarter. 

3 (ii) Such information related to in4 creased input costs or public health consid5 erations as the applicable entity may wish 

6 the Inspector General to consider in mak7 ing a determination under subclause (II) of 

8 paragraph (3)(B)(ii) or an assessment in 

9 subclause (III) of such paragraph for the 

10 preceding calendar quarter. 

11 (iii) Such information related to any 

12 anticipated increased input costs for the 

13 subsequent calendar quarter as the appli14 cable entity may wish the Inspector Gen15 eral to consider in making a determination 

16 under subclause (II) of paragraph 

17 (3)(B)(ii) or an assessment in subclause 

18 (III) of such paragraph for such calendar 

19 quarter. 

20 (B) PENALTY FOR FAILURE TO SUBMIT.— 

21 (i) IN GENERAL.—An applicable enti22 ty described in subparagraph (A) that fails 

23 to submit information to the Inspector 

24 General regarding a prescription drug, as 

25 required by such subparagraph, before the 


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1 date specified in subparagraph (C) shall be 

2 liable for a civil penalty, as determined 

3 under clause (ii). 

4 (ii) AMOUNT OF PENALTY.—The 

5 amount of the civil penalty shall be equal 

6 to the product of— 

7 (I) an amount, as determined ap8 propriate by the Inspector General, 

9 which is— 

10 (aa) not less than 0.5 per11 cent of the gross revenues from 

12 sales of the prescription drug de13 scribed in clause (i) for the pre14 ceding calendar year, and 

15 (bb) not greater than 1 per16 cent of the gross revenues from 

17 sales of such prescription drug 

18 for the preceding calendar year, 

19 and 

20 (II) the number of days in the 

21 period between— 

22 (aa) the applicable date 

23 specified in subparagraph (C), 

24 and 


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1 (bb) the date on which the 

2 Inspector General receives the in3 formation described in subpara4 graph (A) from the applicable en5 tity. 

6 (C) SUBMISSION DEADLINE.—An applica7 ble entity shall submit each quarterly report de8 scribed in subparagraph (A) not later than Jan9 uary 17, April 18, June 15, and September 15 

10 of each calendar year. 

11 (3) ASSESSMENT BY INSPECTOR GENERAL.— 

12 (A) IN GENERAL.—Not later than the last 

13 day in February of each year, the Inspector 

14 General, in consultation with other relevant 

15 Federal agencies (including the Federal Trade 

16 Commission), shall— 

17 (i) complete an assessment of the in18 formation the Inspector General received 

19 pursuant to paragraph (2)(A) with respect 

20 to sales of prescription drugs in the pre21 ceding calendar year; and 

22 (ii) in the case of any prescription 

23 drug which satisfies the conditions de24 scribed in subparagraph (A) or (B) of 

25 paragraph (4), submit a recommendation 


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•S 1801 IS

1 to the Secretary of Health and Human 

2 Services that such drug be exempted from 

3 application of the tax imposed under sec4 tion 4192 of the Internal Revenue Code of 

5 1986 (as added by subsection (b) of this 

6 section) for such year. 

7 (B) ELEMENTS.—The assessment required 

8 by subparagraph (A) shall include the following: 

9 (i) Identification of each price spike 

10 relating to a prescription drug in the pre11 ceding calendar year. 

12 (ii) For each price spike identified 

13 under clause (i)— 

14 (I) a determination of the price 

15 spike revenue; 

16 (II) a determination regarding 

17 the accuracy of the information sub18 mitted by the applicable entity regard19 ing increased input costs; and 

20 (III) an assessment of the ration21 ale of the applicable entity for the 

22 price spike. 

23 (4) EXEMPTION OF CERTAIN DRUGS.— 

24 (A) IN GENERAL.—The Secretary of 

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•S 1801 IS

1 ommendation of the Inspector General pursuant 

2 to paragraph (3)(A)(ii), may exempt any pre3 scription drug which has been subject to a price 

4 spike during the preceding calendar year from 

5 application of the tax imposed under section 

6 4192 of the Internal Revenue Code of 1986 for 

7 such year, if the Secretary determines that— 

8 (i) based on information submitted 

9 pursuant to paragraph (2)(A)(ii), a for10 cause price increase exemption should 

11 apply; or 

12 (ii)(I) the prescription drug which has 

13 been subject to a price spike has an aver14 age manufacturer price of not greater than 

15 $10 for a 30-day supply; and 

16 (II) such drug is marketed by not less 

17 than three other holders of applications ap18 proved under subsection (c) or (j) of sec19 tion 505 of the Federal Food, Drug, and 

20 Cosmetic Act (21 U.S.C. 355), where such 

21 applications approved under such sub22 section (j) use as a reference drug the drug 

23 so approved under such subsection (c). 

24 (B) CLARIFICATION.—In considering, 

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1 mitted pursuant to paragraph (2)(A)(ii), the 

2 Secretary— 

3 (i) has the discretion to determine 

4 that such information does not warrant a 

5 for-cause price increase exemption; and 

6 (ii) shall exclude from such consider7 ation any information submitted by the ap8 plicable entity threatening to curtail or 

9 limit production of the prescription drug if 

10 the Secretary does not grant an exemption 

11 from the application of the tax under sec12 tion 4192 of the Internal Revenue Code of 

13 1986. 

14 (5) INSPECTOR GENERAL REPORT TO INTERNAL

15 REVENUE SERVICE.— 

16 (A) IN GENERAL.—Subject to subpara17 graph (C), not later than the last day in Feb18 ruary of each year, the Inspector General shall 

19 transmit to the Internal Revenue Service a re20 port on the findings of the Inspector General 

21 with respect to the information the Inspector 

22 General received under paragraph (2)(A) with 

23 respect to the preceding calendar year and the 

24 assessment carried out by the Inspector General 


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•S 1801 IS

1 under paragraph (3)(A) with respect to such in2 formation. 

3 (B) CONTENTS.—The report transmitted 

4 under subparagraph (A) shall include the fol5 lowing: 

6 (i) The information received under 

7 paragraph (2)(A) with respect to the pre8 ceding calendar year. 

9 (ii) The price spikes identified under 

10 clause (i) of paragraph (3)(B). 

11 (iii) The price spike revenue deter12 minations made under clause (ii)(I) of 

13 such paragraph. 

14 (iv) The determinations and assess15 ments made under subclauses (II) and 

16 (III) of clause (ii) of such paragraph. 

17 (C) NOTICE AND OPPORTUNITY FOR HEAR18 ING.— 

19 (i) IN GENERAL.—No report shall be 

20 transmitted to the Internal Revenue Serv21 ice under subparagraph (A) in regards to 

22 a prescription drug unless the Inspector 

23 General has provided the applicable entity 

24 with— 


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•S 1801 IS

1 (I) the assessment of such drug 

2 under paragraph (3)(A); and 

3 (II) notice of their right to a 

4 hearing in regards to such assess5 ment. 

6 (ii) NOTICE.—The notice required 

7 under clause (i) shall be provided to the 

8 applicable entity not later than 30 days 

9 after completion of the assessment under 

10 paragraph (3)(A). 

11 (iii) REQUEST FOR HEARING.—Sub12 ject to clause (v), an applicable entity may 

13 request a hearing before the Secretary of 

14 Health and Human Services not later than 

15 30 days after the date on which the notice 

16 under clause (ii) is received. 

17 (iv) COMPLETION OF HEARING.—In 

18 the case of an applicable entity which re19 quests a hearing pursuant to clause (iii), 

20 the Secretary of Health and Human Serv21 ices shall, not later than 12 months after 

22 the date on which the assessment under 

23 paragraph (3)(A) was completed by the In24 spector General— 


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•S 1801 IS

1 (I) make a final determination in 

2 regards the accuracy of such assess3 ment; and 

4 (II) provide the report described 

5 in subparagraph (B) to the Internal 

6 Revenue Service. 

7 (v) LIMITATION.—An applicable entity 

8 may request a hearing under clause (iii) 

9 with respect to a particular prescription 

10 drug only once within a 5-year period. 

11 (D) PUBLICATION.— 

12 (i) IN GENERAL.—Not later than the 

13 last day in February of each year, subject 

14 to clause (ii), the Inspector General shall 

15 make the report transmitted under sub16 paragraph (A) available to the public, in17 cluding on the internet website of the In18 spector General. 

19 (ii) PROPRIETARY INFORMATION.— 

20 The Inspector General shall ensure that 

21 any information made public in accordance 

22 with clause (i) excludes trade secrets and 

23 confidential commercial information. 

24 (6) NOTIFICATION.—The Secretary of the 

25 Treasury, in conjunction with the Inspector General, 


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•S 1801 IS

1 shall notify, at such time and in such manner as the 

2 Secretary of the Treasury shall provide, each appli3 cable entity in regard to any prescription drug which 

4 has been determined to have been subject to a price 

5 spike during the preceding calendar year and the 

6 amount of the tax imposed on such applicable entity 

7 pursuant to section 4192 of the Internal Revenue 

8 Code of 1986. 

9 (b) EXCISE TAX ON PRESCRIPTION DRUGS SUBJECT

10 TO PRICE SPIKES.— 

11 (1) IN GENERAL.—Subchapter E of chapter 32 

12 of the Internal Revenue Code of 1986 is amended by 

13 adding at the end the following new section: 

14 ‘‘SEC. 4192. PRESCRIPTION DRUGS SUBJECT TO PRICE 

15 SPIKES. 

16 ‘‘(a) IMPOSITION OF TAX.— 

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

18 for each taxable prescription drug sold by an appli19 cable entity during the calendar year, there is hereby 

20 imposed on such entity a tax equal to the greater 

21 of— 

22 ‘‘(A) the annual price spike tax for such 

23 prescription drug, or 

24 ‘‘(B) subject to paragraph (2), the cumu25 lative price spike tax for such prescription drug. 


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1 ‘‘(2) LIMITATION.—In the case of a taxable 

2 prescription drug for which the applicable period (as 

3 determined under subsection (c)(2)(E)(i)) is less 

4 than 2 calendar years, the cumulative price spike tax 

5 shall not apply. 

6 ‘‘(3) EXEMPTION.—For any calendar year in 

7 which the Secretary of Health and Human Services 

8 has provided an exemption for a taxable prescription 

9 drug pursuant to section 202(a)(4) of the Affordable 

10 Medications Act, the amount of the tax determined 

11 under paragraph (1) for such drug or device for 

12 such calendar year shall be reduced to zero. 

13 ‘‘(b) ANNUAL PRICE SPIKE TAX.— 

14 ‘‘(1) IN GENERAL.—The amount of the annual 

15 price spike tax shall be equal to the applicable per16 centage of the price spike revenue received by the 

17 applicable entity on the sale of the taxable prescrip18 tion drug during the calendar year. 

19 ‘‘(2) APPLICABLE PERCENTAGE.—For purposes 

20 of paragraph (1), the applicable percentage shall be 

21 equal to— 

22 ‘‘(A) in the case of a taxable prescription 

23 drug which has been subject to a price spike 

24 percentage greater than the applicable price in25 crease allowance (as defined in section 


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•S 1801 IS

1 202(a)(1)(F)(iii) of the Affordable Medications 

2 Act) but less than 15 percent, 50 percent, 

3 ‘‘(B) in the case of a taxable prescription 

4 drug which has been subject to a price spike 

5 percentage equal to or greater than 15 percent 

6 but less than 20 percent, 75 percent, and 

7 ‘‘(C) in the case of a taxable prescription 

8 drug which has been subject to a price spike 

9 percentage equal to or greater than 20 percent, 

10 100 percent. 

11 ‘‘(c) CUMULATIVE PRICE SPIKE TAX.— 

12 ‘‘(1) IN GENERAL.—The amount of the cumu13 lative price spike tax shall be equal to the applicable 

14 percentage of the cumulative price spike revenue re15 ceived by the applicable entity on the sale of the tax16 able prescription drug during the calendar year. 

17 ‘‘(2) APPLICABLE PERCENTAGE.— 

18 ‘‘(A) IN GENERAL.—For purposes of para19 graph (1), the applicable percentage shall be 

20 equal to— 

21 ‘‘(i) in the case of a taxable prescrip22 tion drug which has been subject to a cu23 mulative price spike percentage greater 

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1 ance but less than the first multi-year per2 centage, 50 percent, 

3 ‘‘(ii) in the case of a taxable prescrip4 tion drug which has been subject to a cu5 mulative price spike percentage equal to or 

6 greater than the first multi-year percent7 age but less than the second multi-year 

8 percentage, 75 percent, and 

9 ‘‘(iii) in the case of a taxable prescrip10 tion drug which has been subject to a cu11 mulative price spike percentage equal to or 

12 greater than the second multi-year percent13 age, 100 percent. 

14 ‘‘(B) CUMULATIVE PRICE SPIKE PERCENT15 AGE.—The cumulative price spike percentage is 

16 the percentage (if any) by which— 

17 ‘‘(i) the average manufacturer price of 

18 the taxable prescription drug in commerce 

19 for the preceding calendar year, exceeds 

20 ‘‘(ii) the average manufacturer price 

21 of such prescription drug in commerce for 

22 the base year. 

23 ‘‘(C) CUMULATIVE PRICE INCREASE AL24 LOWANCE.—For purposes of clause (i) of sub25 paragraph (A), the cumulative price increase alVerDate Sep 11 2014 03:57 Jun 19, 2019 Jkt 089200 PO 00000 Frm 00043 Fmt 6652 Sfmt 6201 E:\BILLS\S1801.IS S1801

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•S 1801 IS

1 lowance for any calendar year is the percentage 

2 (rounded to the nearest one-tenth of 1 percent) 

3 by which the C–CPI–U (as defined in section 

4 1(f)(6)) for that year exceeds the C–CPI–U for 

5 the base year. 

6 ‘‘(D) MULTI-YEAR PERCENTAGES.—For 

7 purposes of subparagraph (A), the first multi8 year percentage and second multi-year percent9 age shall be determined in accordance with the 

10 following table: 

‘‘Number of years in applicable period 

First 

multi-year 

percentage 

Second 

multi-year 

percentage 

2 years .................................................................... 17.5 22.5

3 years .................................................................... 20 25

4 years .................................................................... 22.5 27.5

5 years .................................................................... 25 30. 

11 ‘‘(E) APPLICABLE PERIOD AND BASE

12 YEAR.— 

13 ‘‘(i) APPLICABLE PERIOD.—The appli14 cable period shall be the lesser of— 

15 ‘‘(I) the 5 preceding calendar 

16 years, 

17 ‘‘(II) all calendar years beginning 

18 after the date of enactment of this 

19 section, or 


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•S 1801 IS

1 ‘‘(III) all calendar years in which 

2 the taxable prescription drug was sold 

3 in commerce. 

4 ‘‘(ii) BASE YEAR.—The base year 

5 shall be the calendar year immediately pre6 ceding the applicable period. 

7 ‘‘(3) CUMULATIVE PRICE SPIKE REVENUE.— 

8 For purposes of paragraph (1), the cumulative price 

9 spike revenue for any taxable prescription drug shall 

10 be an amount equal to— 

11 ‘‘(A) an amount equal to the product of— 

12 ‘‘(i) an amount (not less than zero) 

13 equal to— 

14 ‘‘(I) the average manufacturer 

15 price of such prescription drug in 

16 commerce for the preceding calendar 

17 year, minus 

18 ‘‘(II) the average manufacturer 

19 price of such prescription drug in 

20 commerce for the base year, and 

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

22 prescription drug which were sold in com23 merce in the preceding calendar year, 

24 minus 


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•S 1801 IS

1 ‘‘(B) an amount equal to the sum of the 

2 adjustment amounts, if any, determined under 

3 section 202(a)(1)(G)(iii) of the Affordable 

4 Medications Act for each calendar year during 

5 the applicable period. 

6 ‘‘(d) DEFINITIONS.—For purposes of this section— 

7 ‘‘(1) TAXABLE PRESCRIPTION DRUG.—The 

8 term ‘taxable prescription drug’ means a prescrip9 tion drug (as defined in section 202(a)(1)(E) of the 

10 Affordable Medications Act) which has been identi11 fied by the Inspector General of the Department of 

12 Health and Human Services, under section 

13 202(a)(3)(B)(i) of such Act, as being subject to a 

14 price spike. 

15 ‘‘(2) OTHER TERMS.—The terms ‘applicable en16 tity’, ‘average manufacturer price’, ‘price spike’, 

17 ‘price spike percentage’, and ‘price spike revenue’ 

18 have the same meaning given such terms under sec19 tion 202(a)(1) of the Affordable Medications Act.’’. 

20 (2) CLERICAL AMENDMENTS.— 

21 (A) The heading of subchapter E of chap22 ter 32 of the Internal Revenue Code of 1986 is 

23 amended by striking ‘‘Medical Devices’’ 

24 and inserting ‘‘Certain Medical Devices 

25 and Prescription Drugs’’. 


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•S 1801 IS

1 (B) The table of subchapters for chapter 

2 32 of such Code is amended by striking the 

3 item relating to subchapter E and inserting the 

4 following new item: 

‘‘SUBCHAPTER E. CERTAIN MEDICAL DEVICES AND PRESCRIPTION DRUGS’’. 

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

6 chapter 32 of such Code is amended by adding at 

7 the end the following new item: 

‘‘Sec. 4192. Prescription drugs subject to price spikes.’’. 

8 (4) EFFECTIVE DATE.—The amendments made 

9 by this section shall apply to sales after the date of 

10 the enactment of this Act. 

11 (c) REVENUES COLLECTED.—There are authorized 

12 to be appropriated to the Secretary of Health and Human 

13 Services such sums as are equal to any increase in revenue 

14 to the Treasury by reason of the provisions of this section 

15 or the amendments made by this section for the purposes 

16 of— 

17 (1) funding or conducting research on the eco18 nomic and policy implications of price patterns of 

19 prescription drugs; 

20 (2) increasing amounts available to the Na21 tional Institutes of Health for research and develop22 ment of drugs; 

23 (3) reducing prescription drug cost-sharing for 

24 patients; or 


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•S 1801 IS

1 (4) reducing health insurance premiums. 

2 SEC. 203. IMPORTING AFFORDABLE AND SAFE DRUGS. 

3 (a) IN GENERAL.—Section 804 of the Federal Food, 

4 Drug, and Cosmetic Act (21 U.S.C. 384) is amended to 

5 read as follows: 

6 ‘‘SEC. 804. IMPORTATION OF SAFE AND AFFORDABLE 

7 DRUGS BY WHOLESALE DISTRIBUTORS, 

8 PHARMACIES, AND INDIVIDUALS. 

9 ‘‘(a) IN GENERAL.—Not later than 180 days after 

10 the date of enactment of the Affordable Medications Act, 

11 the Secretary shall promulgate regulations permitting the 

12 importation of qualifying prescription drugs into the 

13 United States, in accordance with this section. 

14 ‘‘(b) DEFINITIONS.—For purposes of this section: 

15 ‘‘(1) CERTIFIED FOREIGN SELLER.—The term 

16 ‘certified foreign seller’ means a licensed foreign 

17 pharmacy or foreign wholesale distributor that the 

18 Secretary certifies under subsection (d)(1)(B), that 

19 pays the fee required under subsection (d)(1)(C), 

20 and that is included on the list described in sub21 section (c). 

22 ‘‘(2) FOREIGN WHOLESALE DISTRIBUTOR.— 

23 The term ‘foreign wholesale distributor’ means a 

24 person (other than a manufacturer, a manufactur25 er’s co-licensed partner, a third-party logistics proVerDate Sep 11 2014 03:57 Jun 19, 2019 Jkt 089200 PO 00000 Frm 00048 Fmt 6652 Sfmt 6201 E:\BILLS\S1801.IS S1801

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1 vider, or a repackager) engaged in wholesale dis2 tribution. 

3 ‘‘(3) IMPORTER.—The term ‘importer’ means a 

4 dispenser (as defined in section 581(3)) or wholesale 

5 distributor registered under section 503(e) who im6 ports prescription drugs into the United States in 

7 accordance with this section. 

8 ‘‘(4) LICENSED FOREIGN PHARMACY.—The 

9 term ‘licensed foreign pharmacy’ means a pharmacy 

10 located in Canada, or subject to subsection (e), an11 other applicable country, that— 

12 ‘‘(A) operates in accordance with applica13 ble pharmacy standards set forth by the provin14 cial pharmacy rules and regulations enacted in 

15 Canada, or, subject to subsection (e), such ap16 plicable rules and regulations of the permitted 

17 country in which such seller is located; and 

18 ‘‘(B) is licensed to operate and dispense 

19 prescription drugs to individuals in Canada, or, 

20 subject to subsection (e), the permitted country 

21 in which the pharmacy is located. 

22 ‘‘(5) QUALIFYING PRESCRIPTION DRUG.—The 

23 term ‘qualifying prescription drug’— 

24 ‘‘(A) means a prescription drug that— 


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1 ‘‘(i) is approved for use in patients, 

2 and marketed, in Canada, or subject to 

3 subsection (e), approved for use in pa4 tients, and marketed, in another permitted 

5 country; 

6 ‘‘(ii) is manufactured in a facility reg7 istered under subsection (b)(1) or (i) of 

8 section 510 that is in compliance with good 

9 manufacturing practices regulations of the 

10 Food and Drug Administration; 

11 ‘‘(iii) has the same active ingredient 

12 or ingredients, route of administration, and 

13 strength as a prescription drug approved 

14 under chapter V, or, for purposes of sub15 paragraph (B)(iv), is biosimilar to an ap16 proved biological product and has the same 

17 route of administration and strength as the 

18 approved biological product; and 

19 ‘‘(iv) is labeled in accordance with— 

20 ‘‘(I) the laws of Canada, or an21 other country from which importation 

22 is permitted pursuant to subsection 

23 (e); and 


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1 ‘‘(II) the requirements promul2 gated by the Secretary, which shall in3 clude labeling in English; 

4 ‘‘(B) with respect to importers only, in5 cludes— 

6 ‘‘(i) peritoneal dialysis solution; 

7 ‘‘(ii) insulin; 

8 ‘‘(iii) a drug for which a risk evalua9 tion and mitigation strategy is required 

10 under section 505–1; 

11 ‘‘(iv) biological products, as defined in 

12 section 351 of the Public Health Service 

13 Act that are proteins (except any chemi14 cally synthesized polypeptides) or analo15 gous products; and 

16 ‘‘(v) intravenously infused drugs; and 

17 ‘‘(C) does not include— 

18 ‘‘(i) a controlled substance (as defined 

19 in section 102 of the Controlled Sub20 stances Act); 

21 ‘‘(ii) an anesthetic drug inhaled dur22 ing surgery; or 

23 ‘‘(iii) a compounded drug. 

24 ‘‘(6) VALID PRESCRIPTION.—The term ‘valid 

25 prescription’ means a prescription that is issued for 


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1 a legitimate medical purpose in the usual course of 

2 professional practice by— 

3 ‘‘(A) a practitioner who has conducted at 

4 least one in-person medical evaluation of the 

5 patient; or 

6 ‘‘(B) a covering practitioner. 

7 ‘‘(c) PUBLICATION OF CERTIFIED FOREIGN SELL8 ERS.—The Secretary shall publish on a dedicated internet 

9 website a list of certified foreign sellers, including the 

10 internet website address, physical address, and telephone 

11 number of each such certified foreign seller. 

12 ‘‘(d) ADDITIONAL CRITERIA.— 

13 ‘‘(1) CERTIFIED FOREIGN SELLERS.— 

14 ‘‘(A) IN GENERAL.—To be a certified for15 eign seller, such seller shall— 

16 ‘‘(i) be certified by the Secretary in 

17 accordance with subparagraph (B); 

18 ‘‘(ii) pay the registration fee estab19 lished under subparagraph (C); and 

20 ‘‘(iii) sell only qualifying prescription 

21 drugs to importers or individuals who im22 port prescription drugs into the United 

23 States in accordance with this section. 


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1 ‘‘(B) CERTIFICATION.—To be a certified 

2 foreign seller, the Secretary shall certify that 

3 such seller— 

4 ‘‘(i) is a foreign wholesale distributor 

5 or licensed foreign pharmacy operating an 

6 establishment, which may include an online 

7 foreign pharmacy, that is located in Can8 ada, or, subject to subsection (e), another 

9 permitted country; 

10 ‘‘(ii) is engaged in the distribution or 

11 dispensing of a prescription drug that is 

12 imported or offered for importation into 

13 the United States; 

14 ‘‘(iii) has been in existence for a pe15 riod of at least 5 years preceding the date 

16 of such certification and has a purpose 

17 other than to participate in the program 

18 established under this section; 

19 ‘‘(iv) in the case of a certified foreign 

20 seller that is a licensed foreign pharmacy, 

21 agrees to dispense a qualifying prescription 

22 drug to an individual in the United States 

23 only after receiving a valid prescription, as 

24 described in paragraph (2)(C); 


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1 ‘‘(v) has processes established by the 

2 seller, or participates in another estab3 lished process, to certify that the physical 

4 premises and data reporting procedures 

5 and licenses are in compliance with all ap6 plicable laws and regulations of Canada, 

7 or, subject to subsection (e), the permitted 

8 country in which the seller is located, and 

9 has implemented policies designed to mon10 itor ongoing compliance with such laws 

11 and regulations; 

12 ‘‘(vi) conducts or commits to partici13 pate in ongoing and comprehensive quality 

14 assurance programs and implements such 

15 quality assurance measures, including 

16 blind testing, to ensure the veracity and re17 liability of the findings of the quality as18 surance program; 

19 ‘‘(vii) agrees that, pursuant to sub20 section (g), laboratories approved by the 

21 Secretary may be authorized to conduct 

22 product testing to determine the chemical 

23 authenticity of sample pharmaceutical 

24 products; 


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1 ‘‘(viii) agrees to notify the Secretary, 

2 importers, and individuals of product re3 calls in Canada, or pursuant to subsection 

4 (e), the permitted country in which the 

5 seller is located, and agrees to cease, or re6 frain from, exporting such product; 

7 ‘‘(ix) has established, or will establish 

8 or participate in, a process for resolving 

9 grievances, as defined by the Secretary, 

10 and will be held accountable for violations 

11 of established guidelines and rules; 

12 ‘‘(x) except as otherwise permitted 

13 under this section, does not sell products 

14 that the seller could not otherwise legally 

15 sell in Canada, or, subject to subsection 

16 (e), the permitted country in which such 

17 seller is located to customers in the United 

18 States; and 

19 ‘‘(xi) meets any other criteria estab20 lished by the Secretary. 

21 ‘‘(C) CERTIFICATION FEE.—Not later than 

22 30 days before the start of each fiscal year, the 

23 Secretary shall establish a fee to be collected 

24 from foreign sellers for such fiscal year that are 

25 certified under subparagraph (B), in an amount 


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1 that is sufficient, and not more than necessary, 

2 to pay the costs of administering the program 

3 under this section, and enforcing this section 

4 pursuant to section 303(h), for that fiscal year. 

5 ‘‘(D) RECERTIFICATION.—A certification 

6 under subparagraph (B) shall be in effect for a 

7 period of 2 years, or until there is a material 

8 change in the circumstances under which the 

9 foreign seller meets the requirements under 

10 such subparagraph, whichever occurs earlier. A 

11 foreign seller may reapply for certification 

12 under such subparagraph (B), in accordance 

13 with a process established by the Secretary. 

14 ‘‘(2) INDIVIDUALS.—An individual may import 

15 a qualifying prescription drug described in sub16 section (b) from Canada or another country pursu17 ant to subsection (e) if such drug— 

18 ‘‘(A) is dispensed, including through an 

19 online pharmacy, by a certified foreign seller 

20 that is a licensed foreign pharmacy; 

21 ‘‘(B) is purchased for personal use by the 

22 individual, not for resale, in quantities that do 

23 not exceed a 90-day supply; and 

24 ‘‘(C) is filled only after providing to the li25 censed foreign pharmacy a valid prescription 


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1 issued by a health care practitioner licensed to 

2 practice in a State in the United States. 

3 ‘‘(e) IMPORTATION FROM OTHER COUNTRIES.—Be4 ginning on the date that is 2 years after the date on which 

5 final regulations are promulgated to carry out this section, 

6 if, based on a review of the evidence obtained after such 

7 effective date, including the reports submitted under sec8 tion 2(d) of the Affordable Medications Act, that importa9 tion of qualifying prescription drugs from Canada under 

10 this section resulted in cost savings for consumers in the 

11 United States and increased access to safe medication, the 

12 Secretary shall have the authority to permit importation 

13 of qualifying prescription drugs by importers and individ14 uals from, in addition to Canada, any country that— 

15 ‘‘(1) is a member of the Organisation for Eco16 nomic Co-operation and Development; and 

17 ‘‘(2) has statutory or regulatory standards for 

18 the approval and sale of prescription drugs that are 

19 comparable to the standards in the United States 

20 and that— 

21 ‘‘(A) authorizes the approval of drugs only 

22 if a drug has been determined to be safe and 

23 effective by experts employed by or acting on 

24 behalf of a governmental entity and qualified by 


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1 scientific training and experience to evaluate 

2 the safety and effectiveness of drugs; 

3 ‘‘(B) requires that any determination of 

4 safety and effectiveness described in subpara5 graph (A) be made on the basis of adequate 

6 and well-controlled investigations, including 

7 clinical investigations, as appropriate, con8 ducted by experts qualified by scientific training 

9 and experience to evaluate the safety and effec10 tiveness of drugs; 

11 ‘‘(C) requires the methods used in, and the 

12 facilities and controls used for, the manufac13 ture, processing, and packing of drugs in the 

14 country to be adequate to preserve the identity, 

15 quality, purity, and strength of the drugs; and 

16 ‘‘(D) requires the reporting of adverse re17 actions to drugs and establish procedures to re18 call, and withdraw approval of, drugs found not 

19 to be safe or effective. 

20 ‘‘(f) LABELING.—Any qualifying prescription drug 

21 imported that meets the labeling requirements described 

22 in subsection (b)(5)(A)(iv) is deemed not misbranded for 

23 purposes of section 502. 

24 ‘‘(g) DRUG TESTING LABORATORIES.—The Sec25 retary may approve one or more laboratories to conduct 


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1 random testing of prescription drugs sold by certified for2 eign sellers to assess the chemical authenticity of such 

3 drugs. 

4 ‘‘(h) UNFAIR AND DISCRIMINATORY ACTS AND PRAC5 TICES.—It is unlawful for a manufacturer, directly or indi6 rectly (including by being a party to a licensing agreement 

7 or other agreement)— 

8 ‘‘(1) to discriminate by charging a higher price 

9 for a prescription drug sold to a certified foreign 

10 seller that sells such drug to an importer in accord11 ance with this section than the price that is charged, 

12 inclusive of rebates or other incentives to the coun13 try from which the drug is exported, to another per14 son that is in the same country and that does not 

15 import such a drug into the United States in accord16 ance with this section; 

17 ‘‘(2) except with respect to a prescription drug 

18 on the drug shortage list under section 506E, dis19 criminate by denying, restricting, or delaying sup20 plies of a prescription drug to a certified foreign sell21 er, on account of such seller’s status as a certified 

22 foreign seller, that sells such drug to an importer in 

23 accordance with this section, or by publicly, pri24 vately, or otherwise refusing to do business with 


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1 such a certified foreign seller on account of such 

2 seller’s status as a certified foreign seller; 

3 ‘‘(3) cause there to be a difference (including a 

4 difference in active ingredient, route of administra5 tion, bioequivalence, strength, formulation, manufac6 turing establishment, manufacturing process, or per7 son that manufactures the drug) between a prescrip8 tion drug for distribution in the United States and 

9 the drug for distribution in Canada or another per10 mitted country, subject to subsection (e), for the 

11 purpose of avoiding sales by certified foreign sellers; 

12 or 

13 ‘‘(4) except with respect to a prescription drug 

14 on the drug shortage list under section 506E, en15 gage in any other action to restrict, prohibit, or 

16 delay the importation of a prescription drug under 

17 this section. 

18 ‘‘(i) INFORMATION AND RECORDS.— 

19 ‘‘(1) BIANNUAL REPORTS.—Each importer shall 

20 submit biannual reports to the Secretary which shall 

21 contain, for each qualifying prescription drug im22 ported into the United States— 

23 ‘‘(A) the unique facility identifier of the 

24 manufacturer of the drug, described in section 

25 510; 


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1 ‘‘(B) the transaction information described 

2 in section 581(26) (other than the information 

3 described in subparagraph (C)); and 

4 ‘‘(C) the price paid by the importer for the 

5 drug. 

6 ‘‘(2) MAINTENANCE OF RECORDS BY SEC7 RETARY.—The Secretary shall maintain information 

8 and documentation submitted under paragraph (1) 

9 for such period of time as the Secretary determines 

10 to be appropriate. 

11 ‘‘(j) SUSPENSION OF IMPORTATION.— 

12 ‘‘(1) PATTERNS OF NONCOMPLIANCE.—The 

13 Secretary shall require that importation of a specific 

14 qualifying prescription drug or importation by a spe15 cific certified foreign seller or importer pursuant to 

16 this section be immediately suspended if the Sec17 retary determines that there is a pattern of importa18 tion of such specific drug or by such specific seller 

19 or importer that involves counterfeit drugs, drugs 

20 that have been recalled or withdrawn, or drugs in 

21 violation of any requirement of this section, until an 

22 investigation is completed and the Secretary deter23 mines that importation of such drug or by such sell24 er or importer does not endanger the public health. 


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1 ‘‘(2) TEMPORARY SUSPENSION.—The Secretary 

2 may require that importation of a specific qualifying 

3 prescription drug or importation by a specific cer4 tified foreign seller or importer pursuant to this sec5 tion be temporarily suspended if, with respect to 

6 such drug, seller, or importer, there is a violation of 

7 any requirement of this section or if the Secretary 

8 determines that importation of such drug or by such 

9 seller or importer might endanger the public health. 

10 Such temporary suspension shall apply until the Sec11 retary completes an investigation and determines 

12 that importation of such drug or by such seller or 

13 importer does not endanger the public health. 

14 ‘‘(k) SUPPLY CHAIN SECURITY.— 

15 ‘‘(1) PURCHASE FROM REGISTERED FACILITIES

16 AND CERTIFIED FOREIGN SELLERS.— 

17 ‘‘(A) IN GENERAL.—Except as provided in 

18 subparagraph (B), certified foreign sellers who 

19 sell qualifying prescription drugs for importa20 tion into the United States pursuant to this 

21 section may purchase such drugs only from 

22 manufacturers or entities registered under sec23 tion 510 or other certified foreign sellers. 

24 ‘‘(B) EXCEPTION.—Certified foreign sellers 

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1 portation into the United States pursuant to 

2 this section may purchase such drugs from for3 eign sellers in Canada or another permitted 

4 country, even if such foreign seller is not a 

5 manufacturer registered under section 510 or a 

6 certified foreign seller, if the Secretary enters 

7 into a memorandum of understanding or coop8 erative agreement with Canada, or such other 

9 permitted country, to ensure compliance, to the 

10 extent appropriate and feasible, with subchapter 

11 H of chapter V. The Secretary shall seek to 

12 enter into such a memorandum of under13 standing or cooperative agreement with Canada 

14 and each country from which importation is 

15 permitted under subsection (e). 

16 ‘‘(2) IMPORTATION TRACING.—Certified foreign 

17 sellers shall provide importers with the unique facil18 ity identifier associated with the manufacturer reg19 istered under section 510 of the qualifying prescrip20 tion drug and the information under paragraph 

21 (25), paragraph (26) (other than subparagraph (C)), 

22 and subparagraphs (D), (F), and (G) of paragraph 

23 (27) of section 581. Certified foreign sellers shall 

24 provide such information to individuals purchasing 

25 such drugs, upon request. 


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1 ‘‘(l) REMS.—In the case of an importer that imports 

2 a qualifying prescription drug, where the drug with the 

3 same active ingredient or ingredients (or that is biosimilar 

4 to an approved biological product), route of administra5 tion, and strength that is approved under chapter V or 

6 section 351 of the Public Health Service Act is subject 

7 to elements to assure safe use under section 505–1, such 

8 importer shall be subject to such elements to assure safe 

9 use, as applicable and appropriate. 

10 ‘‘(m) CONSTRUCTION.—Nothing in this section limits 

11 the authority of the Secretary relating to the importation 

12 of prescription drugs, other than with respect to section 

13 801(d)(1) as provided in this section.’’. 

14 (b) PENALTIES WITH RESPECT TO ONLINE PHAR15 MACIES.—Section 303 of the Federal Food, Drug, and 

16 Cosmetic Act (21 U.S.C. 333) is amended by adding at 

17 the end the following: 

18 ‘‘(h) In the case of a person operating an internet 

19 website, whether in the United States or in another coun20 try, that violates section 301(aa) by— 

21 ‘‘(1) selling, by means of the internet, with the 

22 intent to defraud or mislead or with reckless dis23 regard for safety of the public, an adulterated or 

24 counterfeit drug to an individual in the United 

25 States; or 


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1 ‘‘(2) dispenses, by means of the internet, a drug 

2 to an individual in the United States who the person 

3 knows or has reasonable cause to believe, does not 

4 possess a valid prescription for that drug, 

5 such person shall be imprisoned for not more than 10 

6 years or fined not more than $250,000.’’. 

7 (c) NO PREEMPTION.—Nothing in this section, in8 cluding the amendments made by this section, shall be 

9 construed to preempt, alter, displace, abridge, or supplant 

10 any remedy available under any State or Federal law, in11 cluding common law, that provides a remedy for civil re12 lief. 

13 (d) REPORTS.— 

14 (1) HHS.—Not later than 1 year after the date 

15 on which final regulations are promulgated to carry 

16 out section 804 of the Federal Food, Drug, and Cos17 metic Act (21 U.S.C. 384), as amended by sub18 section (a), and every 2 years thereafter, the Sec19 retary of Health and Human Services, after con20 sultation with appropriate Federal agencies, shall 

21 submit to Congress and make public a report on the 

22 importation of drugs into the United States. 

23 (2) GAO REPORT.—Not later than 18 months 

24 after the first report is submitted under paragraph 

25 (1), the Comptroller General of the United States 


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1 shall submit to Congress a report containing an 

2 analysis of the implementation of the amendments 

3 made by this section, including a review of drug 

4 safety and cost-savings and expenses, including cost5 savings to consumers in the United States and 

6 trans-shipment and importation tracing processes, 

7 resulting from such implementation. 

8 SEC. 204. REQUIRING DRUG MANUFACTURERS TO PROVIDE 

9 DRUG REBATES FOR DRUGS DISPENSED TO 

10 LOW-INCOME INDIVIDUALS. 

11 (a) IN GENERAL.—Section 1860D–2 of the Social 

12 Security Act (42 U.S.C. 1395w–102) is amended— 

13 (1) in subsection (e)(1), in the matter preceding 

14 subparagraph (A), by inserting ‘‘and subsection (f)’’ 

15 after ‘‘this subsection’’; and 

16 (2) by adding at the end the following new sub17 section: 

18 ‘‘(f) PRESCRIPTION DRUG REBATE AGREEMENT FOR

19 REBATE ELIGIBLE INDIVIDUALS.— 

20 ‘‘(1) REQUIREMENT.— 

21 ‘‘(A) IN GENERAL.—For plan years begin22 ning on or after January 1, 2020, in this part, 

23 the term ‘covered part D drug’ does not include 

24 any drug or biological product that is manufac25 tured by a manufacturer that has not entered 


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1 into and have in effect a rebate agreement de2 scribed in paragraph (2). 

3 ‘‘(B) 2020 PLAN YEAR REQUIREMENT.— 

4 Any drug or biological product manufactured by 

5 a manufacturer that declines to enter into a re6 bate agreement described in paragraph (2) for 

7 the period beginning on January 1, 2020, and 

8 ending on December 31, 2020, shall not be in9 cluded as a ‘covered part D drug’ for the subse10 quent plan year. 

11 ‘‘(2) REBATE AGREEMENT.—A rebate agree12 ment under this subsection shall require the manu13 facturer to provide to the Secretary a rebate for 

14 each rebate period (as defined in paragraph (6)(B)) 

15 ending after December 31, 2019, in the amount 

16 specified in paragraph (3) for any covered part D 

17 drug of the manufacturer dispensed after December 

18 31, 2019, to any rebate eligible individual (as de19 fined in paragraph (6)(A)) for which payment was 

20 made by a PDP sponsor or MA organization under 

21 this part for such period, including payments passed 

22 through the low-income and reinsurance subsidies 

23 under sections 1860D–14 and 1860D–15(b), respec24 tively. Such rebate shall be paid by the manufac25 turer to the Secretary not later than 30 days after 


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1 the date of receipt of the information described in 

2 section 1860D–12(b)(8), including as such section is 

3 applied under section 1857(f)(3), or 30 days after 

4 the receipt of information under subparagraph (D) 

5 of paragraph (3), as determined by the Secretary. 

6 Insofar as not inconsistent with this subsection, the 

7 Secretary shall establish terms and conditions of 

8 such agreement relating to compliance, penalties, 

9 and program evaluations, investigations, and audits 

10 that are similar to the terms and conditions for re11 bate agreements under paragraphs (3) and (4) of 

12 section 1927(b). 

13 ‘‘(3) REBATE FOR REBATE ELIGIBLE MEDICARE

14 DRUG PLAN ENROLLEES.— 

15 ‘‘(A) IN GENERAL.—The amount of the re16 bate specified under this paragraph for a manu17 facturer for a rebate period, with respect to 

18 each dosage form and strength of any covered 

19 part D drug provided by such manufacturer 

20 and dispensed to a rebate eligible individual, 

21 shall be equal to the product of— 

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

23 dosage form and strength of the drug so 

24 provided and dispensed for which payment 

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1 ganization under this part for the rebate 

2 period, including payments passed through 

3 the low-income and reinsurance subsidies 

4 under sections 1860D–14 and 1860D– 

5 15(b), respectively; and 

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

7 ‘‘(I) the Medicaid rebate amount 

8 (as defined in subparagraph (B)) for 

9 such form, strength, and period; ex10 ceeds 

11 ‘‘(II) the average Medicare drug 

12 program rebate eligible rebate amount 

13 (as defined in subparagraph (C)) for 

14 such form, strength, and period. 

15 ‘‘(B) MEDICAID REBATE AMOUNT.—For 

16 purposes of this paragraph, the term ‘Medicaid 

17 rebate amount’ means, with respect to each 

18 dosage form and strength of a covered part D 

19 drug provided by the manufacturer for a rebate 

20 period— 

21 ‘‘(i) in the case of a single source 

22 drug or an innovator multiple source drug, 

23 the amount specified in paragraph 

24 (1)(A)(ii)(II) or (2)(C) of section 1927(c) 

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1 paragraph (A)(ii) of paragraph (2) of such 

2 section, for such form, strength, and pe3 riod; or 

4 ‘‘(ii) in the case of any other covered 

5 outpatient drug, the amount specified in 

6 paragraph (3)(A)(i) of such section for 

7 such form, strength, and period. 

8 ‘‘(C) AVERAGE MEDICARE DRUG PROGRAM

9 REBATE ELIGIBLE REBATE AMOUNT.—For pur10 poses of this subsection, the term ‘average 

11 Medicare drug program rebate eligible rebate 

12 amount’ means, with respect to each dosage 

13 form and strength of a covered part D drug 

14 provided by a manufacturer for a rebate period, 

15 the sum, for all PDP sponsors under part D 

16 and MA organizations administering an MA– 

17 PD plan under part C, of— 

18 ‘‘(i) the product, for each such spon19 sor or organization, of— 

20 ‘‘(I) the sum of all rebates, dis21 counts, or other price concessions (not 

22 taking into account any rebate pro23 vided under paragraph (2) or any dis24 counts under the program under sec25 tion 1860D–14A) for such dosage 


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1 form and strength of the drug dis2 pensed, calculated on a per-unit basis, 

3 but only to the extent that any such 

4 rebate, discount, or other price con5 cession applies equally to drugs dis6 pensed to rebate eligible Medicare 

7 drug plan enrollees and drugs dis8 pensed to PDP and MA–PD enrollees 

9 who are not rebate eligible individuals; 

10 and 

11 ‘‘(II) the number of the units of 

12 such dosage and strength of the drug 

13 dispensed during the rebate period to 

14 rebate eligible individuals enrolled in 

15 the prescription drug plans adminis16 tered by the PDP sponsor or the MA– 

17 PD plans administered by the MA or18 ganization; divided by 

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

20 dosage and strength of the drug dispensed 

21 during the rebate period to rebate eligible 

22 individuals enrolled in all prescription drug 

23 plans administered by PDP sponsors and 

24 all MA–PD plans administered by MA or25 ganizations. 


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1 ‘‘(D) USE OF ESTIMATES.—The Secretary 

2 may establish a methodology for estimating the 

3 average Medicare drug program rebate eligible 

4 rebate amounts for each rebate period based on 

5 bid and utilization information under this part 

6 and may use these estimates as the basis for 

7 determining the rebates under this section. If 

8 the Secretary elects to estimate the average 

9 Medicare drug program rebate eligible rebate 

10 amounts, the Secretary shall establish a rec11 onciliation process for adjusting manufacturer 

12 rebate payments not later than 3 months after 

13 the date that manufacturers receive the infor14 mation collected under section 1860D– 

15 12(b)(8)(B). 

16 ‘‘(4) LENGTH OF AGREEMENT.—The provisions 

17 of paragraph (4) of section 1927(b) (other than 

18 clauses (iv) and (v) of subparagraph (B)) shall apply 

19 to rebate agreements under this subsection in the 

20 same manner as such paragraph applies to a rebate 

21 agreement under such section. 

22 ‘‘(5) OTHER TERMS AND CONDITIONS.—The 

23 Secretary shall establish other terms and conditions 

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1 cluding terms and conditions related to compliance, 

2 that are consistent with this subsection. 

3 ‘‘(6) DEFINITIONS.—In this subsection and sec4 tion 1860D–12(b)(8): 

5 ‘‘(A) REBATE ELIGIBLE INDIVIDUAL.—The 

6 term ‘rebate eligible individual’ means— 

7 ‘‘(i) a subsidy eligible individual (as 

8 defined in section 1860D–14(a)(3)(A)); 

9 ‘‘(ii) a Medicaid beneficiary treated as 

10 a subsidy eligible individual under clause 

11 (v) of section 1860D–14(a)(3)(B); and 

12 ‘‘(iii) any part D eligible individual 

13 not described in clause (i) or (ii) who is de14 termined for purposes of the State plan 

15 under title XIX to be eligible for medical 

16 assistance under clause (i), (iii), or (iv) of 

17 section 1902(a)(10)(E). 

18 ‘‘(B) REBATE PERIOD.—The term ‘rebate 

19 period’ has the meaning given such term in sec20 tion 1927(k)(8).’’. 

21 (b) REPORTING REQUIREMENT FOR THE DETER22 MINATION AND PAYMENT OF REBATES BY MANUFACTUR23 ERS RELATED TO REBATE FOR REBATE ELIGIBLE MEDI24 CARE DRUG PLAN ENROLLEES.— 


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1 (1) REQUIREMENTS FOR PDP SPONSORS.—Sec2 tion 1860D–12(b) of the Social Security Act (42 

3 U.S.C. 1395w–112(b)) is amended by adding at the 

4 end the following new paragraph: 

5 ‘‘(8) REPORTING REQUIREMENT FOR THE DE6 TERMINATION AND PAYMENT OF REBATES BY MANU7 FACTURERS RELATED TO REBATE FOR REBATE ELI8 GIBLE MEDICARE DRUG PLAN ENROLLEES.— 

9 ‘‘(A) IN GENERAL.—For purposes of the 

10 rebate under section 1860D–2(f) for contract 

11 years beginning on or after January 1, 2020, 

12 each contract entered into with a PDP sponsor 

13 under this part with respect to a prescription 

14 drug plan shall require that the sponsor comply 

15 with subparagraphs (B) and (C). 

16 ‘‘(B) REPORT FORM AND CONTENTS.—Not 

17 later than a date specified by the Secretary, a 

18 PDP sponsor of a prescription drug plan under 

19 this part shall report to each manufacturer— 

20 ‘‘(i) information (by National Drug 

21 Code number) on the total number of units 

22 of each dosage, form, and strength of each 

23 drug of such manufacturer dispensed to re24 bate eligible Medicare drug plan enrollees 

25 under any prescription drug plan operated 


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1 by the PDP sponsor during the rebate pe2 riod; 

3 ‘‘(ii) information on the price dis4 counts, price concessions, and rebates for 

5 such drugs for such form, strength, and 

6 period; 

7 ‘‘(iii) information on the extent to 

8 which such price discounts, price conces9 sions, and rebates apply equally to rebate 

10 eligible Medicare drug plan enrollees and 

11 PDP enrollees who are not rebate eligible 

12 Medicare drug plan enrollees; and 

13 ‘‘(iv) any additional information that 

14 the Secretary determines is necessary to 

15 enable the Secretary to calculate the aver16 age Medicare drug program rebate eligible 

17 rebate amount (as defined in paragraph 

18 (3)(C) of such section), and to determine 

19 the amount of the rebate required under 

20 this section, for such form, strength, and 

21 period. 

22 Such report shall be in a form consistent with 

23 a standard reporting format established by the 

24 Secretary. 


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1 ‘‘(C) SUBMISSION TO SECRETARY.—Each 

2 PDP sponsor shall promptly transmit a copy of 

3 the information reported under subparagraph 

4 (B) to the Secretary for the purpose of audit 

5 oversight and evaluation. 

6 ‘‘(D) CONFIDENTIALITY OF INFORMA7 TION.—The provisions of subparagraph (D) of 

8 section 1927(b)(3), relating to confidentiality of 

9 information, shall apply to information reported 

10 by PDP sponsors under this paragraph in the 

11 same manner that such provisions apply to in12 formation disclosed by manufacturers or whole13 salers under such section, except— 

14 ‘‘(i) that any reference to ‘this sec15 tion’ in clause (i) of such subparagraph 

16 shall be treated as being a reference to this 

17 section; 

18 ‘‘(ii) the reference to the Director of 

19 the Congressional Budget Office in clause 

20 (iii) of such subparagraph shall be treated 

21 as including a reference to the Medicare 

22 Payment Advisory Commission; and 

23 ‘‘(iii) clause (iv) of such subparagraph 

24 shall not apply. 


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1 ‘‘(E) OVERSIGHT.—Information reported 

2 under this paragraph may be used by the In3 spector General of the Department of Health 

4 and Human Services for the statutorily author5 ized purposes of audit, investigation, and eval6 uations. 

7 ‘‘(F) PENALTIES FOR FAILURE TO PRO8 VIDE TIMELY INFORMATION AND PROVISION OF

9 FALSE INFORMATION.—In the case of a PDP 

10 sponsor— 

11 ‘‘(i) that fails to provide information 

12 required under subparagraph (B) on a 

13 timely basis, the sponsor is subject to a 

14 civil money penalty in the amount of 

15 $10,000 for each day in which such infor16 mation has not been provided; or 

17 ‘‘(ii) that knowingly (as defined in 

18 section 1128A(i)) provides false informa19 tion under such subparagraph, the sponsor 

20 is subject to a civil money penalty in an 

21 amount not to exceed $100,000 for each 

22 item of false information. 

23 Such civil money penalties are in addition to 

24 other penalties as may be prescribed by law. 

25 The provisions of section 1128A (other than 


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1 subsections (a) and (b)) shall apply to a civil 

2 money penalty under this subparagraph in the 

3 same manner as such provisions apply to a pen4 alty or proceeding under section 1128A(a).’’. 

5 (2) APPLICATION TO MA ORGANIZATIONS.—Sec6 tion 1857(f)(3) of the Social Security Act (42 

7 U.S.C. 1395w–27(f)(3)) is amended by adding at 

8 the end the following: 

9 ‘‘(E) REPORTING REQUIREMENT RELATED

10 TO REBATE FOR REBATE ELIGIBLE MEDICARE

11 DRUG PLAN ENROLLEES.—Section 1860D– 

12 12(b)(8).’’. 

13 (c) DEPOSIT OF REBATES INTO MEDICARE PRE14 SCRIPTION DRUG ACCOUNT.—Section 1860D–16(c) of the 

15 Social Security Act (42 U.S.C. 1395w–116(c)) is amended 

16 by adding at the end the following new paragraph: 

17 ‘‘(6) REBATE FOR REBATE ELIGIBLE MEDICARE

18 DRUG PLAN ENROLLEES.—Amounts paid under a re19 bate agreement under section 1860D–2(f) shall be 

20 deposited into the Account.’’. 

21 (d) EXCLUSION FROM DETERMINATION OF BEST

22 PRICE AND AVERAGE MANUFACTURER PRICE UNDER

23 MEDICAID.— 

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1 curity Act (42 U.S.C. 1396r–8(c)(1)(C)(ii)(I)) is 

2 amended by inserting ‘‘and amounts paid under a 

3 rebate agreement under section 1860D–2(f)’’ after 

4 ‘‘this section’’. 

5 (2) EXCLUSION FROM AVERAGE MANUFAC6 TURER PRICE DETERMINATION.—Section 

7 1927(k)(1)(B)(i) of the Social Security Act (42 

8 U.S.C. 1396r–8(k)(1)(B)(i)) is amended— 

9 (A) in subclause (IV), by striking ‘‘and’’ 

10 after the semicolon; 

11 (B) in subclause (V), by striking the period 

12 at the end and inserting ‘‘; and’’; and 

13 (C) by adding at the end the following: 

14 ‘‘(VI) amounts paid under a re15 bate agreement under section 1860D– 

16 2(f).’’. 

17 SEC. 205. CAP ON PRESCRIPTION DRUG COST-SHARING. 

18 (a) QUALIFIED HEALTH PLANS.—Section 1302(c) of 

19 the Patient Protection and Affordable Care Act (42 

20 U.S.C. 18022(c)) is amended— 

21 (1) in paragraph (3)(A)(i), by inserting ‘‘, in22 cluding cost-sharing with respect to prescription 

23 drugs covered by the plan’’ after ‘‘charges’’; and 

24 (2) by adding at the end the following: 

25 ‘‘(5) PRESCRIPTION DRUG COST-SHARING.— 


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1 ‘‘(A) 2020.—For plan years beginning in 

2 2020, the cost-sharing incurred under a health 

3 plan with respect to prescription drugs covered 

4 by the plan shall not exceed $250 per month for 

5 each enrolled individual, or $500 for each fam6 ily. 

7 ‘‘(B) 2021 AND LATER.— 

8 ‘‘(i) IN GENERAL.—In the case of any 

9 plan year beginning in a calendar year 

10 after 2020, the limitation under this para11 graph shall be equal to the applicable dol12 lar amount under subparagraph (A) for 

13 plan years beginning in 2020, increased by 

14 an amount equal to the product of that 

15 amount and the medical care component of 

16 the consumer price index for all urban con17 sumers (as published by the Bureau of 

18 Labor Statistics) for that year. 

19 ‘‘(ii) ADJUSTMENT TO AMOUNT.—If 

20 the amount of any increase under clause 

21 (i) is not a multiple of $5, such increase 

22 shall be rounded to the next lowest mul23 tiple of $5.’’. 


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1 (b) GROUP HEALTH PLANS.—Section 2707(b) of the 

2 Public Health Service Act (42 U.S.C. 300gg–6(b)) is 

3 amended— 

4 (1) by striking ‘‘annual’’; and 

5 (2) by striking ‘‘paragraph (1) of section 

6 1302(c)’’ and inserting ‘‘paragraphs (1) and (5) of 

7 section 1302(c) of the Patient Protection and Af8 fordable Care Act’’. 

9 (c) EFFECTIVE DATE.—The amendments made by 

10 subsections (a) and (b) shall take effect with respect to 

11 plans beginning after December 31, 2019. 

12 SEC. 206. MODIFICATION OF TRADE NEGOTIATING OBJEC13 TIVES RELATING TO INTELLECTUAL PROP14 ERTY RIGHTS TO ENSURE ACCESS TO BIO15 LOGICAL PRODUCTS. 

16 Section 102(b)(5)(C) of the Bipartisan Congressional 

17 Trade Priorities and Accountability Act of 2015 (19 

18 U.S.C. 4201(b)(5)(C)) is amended by striking the end pe19 riod and inserting the following: ‘‘, including by ensuring 

20 that trade agreements do not require a party to provide 

21 biological product exclusivity of more than 7 years.’’. 


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1 TITLE III—INNOVATION 

2 SEC. 301. INNOVATION INCENTIVE FUND FOR NEW AND 

3 MORE EFFECTIVE TREATMENTS OF BAC4 TERIAL INFECTIONS. 

5 Part B of title IV of the Public Health Service Act 

6 (42 U.S.C. 284 et seq.) is amended by adding at the end 

7 the following: 

8 ‘‘SEC. 409K. INNOVATION INCENTIVE FUND FOR NEW AND 

9 MORE EFFECTIVE TREATMENTS OF BAC10 TERIAL INFECTIONS. 

11 ‘‘(a) ESTABLISHMENT OF FUND.—There is hereby 

12 established in the Treasury of the United States a revolv13 ing fund to be known as the ‘Antibiotics Innovation Incen14 tive Fund’, which shall consist of funds transferred under 

15 subsection (b). 

16 ‘‘(b) AMOUNTS CREDITED TO THE FUND.—There 

17 are hereby authorized to be appropriated, and appro18 priated, to the Antibiotics Innovation Incentive Fund, for 

19 fiscal year 2020, out of any monies in the Treasury not 

20 otherwise appropriated, $2,000,000,000. Such funds shall 

21 remain available until expended. 

22 ‘‘(c) AWARDS.— 

23 ‘‘(1) IN GENERAL.—During the 10-year period 

24 following the date of enactment of the Affordable 

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1 ance with the criteria under subsection (d) and the 

2 goals under subsection (e), shall award— 

3 ‘‘(A) up to 3 market entry awards for 

4 qualifying products that provide added benefit 

5 for patients over existing therapies in the treat6 ment of serious and life-threatening bacterial 

7 infections demonstrating in superiority trials; 

8 and 

9 ‘‘(B) award open source dividend prizes for 

10 contributions that significantly advance the 

11 field of antibiotic research with openly sourced 

12 materials, technology, data, and knowledge. 

13 ‘‘(2) AWARD AMOUNT REQUIREMENTS.—No 

14 more than 5 percent of the amount available in the 

15 Antibiotics Innovation Incentive shall be dedicated to 

16 open source dividend prizes. 

17 ‘‘(d) CRITERIA AND STRUCTURE OF PRIZES.— 

18 ‘‘(1) ESTABLISHMENT OF CRITERIA.—Not later 

19 than 120 days after the date of enactment of the Af20 fordable Medications Act, the Director of NIH shall 

21 establish criteria for the selection of recipients and 

22 eligibility of persons for market entry rewards and 

23 open source dividend prizes under this section and 

24 criteria for determining the amounts of such prizes, 

25 through notice and comment rulemaking. 


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1 ‘‘(2) CONSIDERATIONS IN ESTABLISHING CRI2 TERIA FOR QUALIFYING PRODUCTS.—In establishing 

3 the criteria for selection of recipients and amounts 

4 of market entry rewards and open source dividend 

5 prizes under paragraph (1), the Director of NIH, in 

6 consultation with other agencies as appropriate, 

7 shall consider the following: 

8 ‘‘(A) The number of patients in the United 

9 States and in other countries who would benefit 

10 from the qualifying product that treats a seri11 ous or life-threatening bacterial infection, and 

12 the number of patients in the United States 

13 and in other countries projected to benefit dur14 ing the upcoming 10-year period. 

15 ‘‘(B) Whether the qualifying product 

16 treats, or has the potential to treat, a serious 

17 or life-threatening bacterial infection for which 

18 no other treatment is currently available or for 

19 which there is a high threat of resistance to ex20 isting treatments. 

21 ‘‘(C) The incremental and additional thera22 peutic benefit to human in the United States 

23 and other countries of the qualifying product as 

24 compared to other treatments available to treat 

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1 mental therapeutic benefit in comparison to 

2 treatments that were not recently developed. 

3 ‘‘(D) The transmissibility of the bacterial 

4 infection the qualifying product would treat, 

5 and barriers to prevention of that infection. 

6 ‘‘(E) The extent to which knowledge, data, 

7 materials, and technology that are openly 

8 sourced have contributed to the successful de9 velopment of new treatments that provide an 

10 added benefit to patients, such as decreasing 

11 mortality or irreversible morbidity on patient12 centered outcomes, significantly advancing the 

13 field of antibiotic research, or improving proc14 esses for manufacturing products used for the 

15 treatment. 

16 ‘‘(F) Other criteria that the Director of 

17 NIH determines to be relevant and useful in 

18 ensuring that the prizes provide appropriate in19 centives. 

20 ‘‘(3) CRITERIA FOR OPEN SOURCE DIVIDEND

21 PRIZES.—An open source dividend prize under this 

22 section shall reward persons that openly shared on 

23 a royalty-free, not-for-profit and non-discriminatory 

24 basis, materials, technology, data, and knowledge 

25 that contribute in a significant way to the successful 


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1 development of a qualifying product or significantly 

2 advanced the field of antibiotic research. 

3 ‘‘(e) GOALS.—With respect to each year for which the 

4 Director of NIH awards market entry rewards and open 

5 source dividend prizes under subsection (c), the Director 

6 of NIH shall establish a framework of goals that a quali7 fying product or contribution that significantly advances 

8 the field of antibiotic research is required to show promise 

9 to help meet in order for a person to be eligible to receive 

10 a market entry reward or open source dividend prize with 

11 respect to such product or such contribution. Such goals 

12 may include— 

13 ‘‘(1) reduced hospital admissions or readmis14 sions; 

15 ‘‘(2) use of diagnostics prior to prescribing of 

16 drugs; and 

17 ‘‘(3) use of innovative programs for antibiotic 

18 stewardship. 

19 ‘‘(f) CONDITION ON RECEIPT OF MARKET ENTRY

20 REWARD.— 

21 ‘‘(1) IN GENERAL.—Each market entry reward 

22 for a qualifying product offered under this section 

23 shall be conditioned on the following: 


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1 ‘‘(A) The recipient shall agree to offer the 

2 qualifying product at a reasonable price as de3 scribed in paragraph (3). 

4 ‘‘(B) Subject to applicable patient privacy 

5 protections, the recipient shall agree to publicly 

6 disclose all pre-clinical and clinical trial data 

7 with respect to the qualifying product. 

8 ‘‘(C) The recipient shall agree to submit to 

9 the Director of NIH, for review and approval 

10 by such director, in collaboration with the Com11 missioner of Food and Drugs and the Director 

12 of the Centers for Disease Control and Preven13 tion, all marketing, sales, and other promotional 

14 and educational activities associated with the 

15 qualifying product, to ensure that such activi16 ties align with, and advance the goals of, re17 source conserving stewardship, protecting the 

18 utility of antibiotics, and encouraging and en19 suring the correct use of antibiotics. 

20 ‘‘(D) The recipient shall irrevocably 

21 waive— 

22 ‘‘(i) all periods of exclusivity available 

23 to the product under chapter V of the Fed24 eral Food, Drug, and Cosmetic Act or sec25 tion 351 of this Act; and 


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1 ‘‘(ii) all applicable patent rights under 

2 title 35, United States Code. 

3 ‘‘(E) Any other conditions the Director of 

4 NIH determines appropriate. 

5 ‘‘(2) APPLICABILITY.—All conditions described 

6 in paragraph (1) shall apply to subsequent owners, 

7 licensees, producers, and manufacturers, and assign8 ees of the product or any chemical component of the 

9 qualifying product for which the market entry re10 ward was awarded. 

11 ‘‘(3) REASONABLE PRICE.— 

12 ‘‘(A) IN GENERAL.—A recipient may sat13 isfy the requirement to offer a qualifying prod14 uct or contribution at a ‘reasonable price’ for 

15 purposes of paragraph (1)(A) by— 

16 ‘‘(i)(I) providing open licensing of all 

17 necessary rights to patents, manufacturing 

18 processes, rights in data, and other intel19 lectual property rights needed to make and 

20 sell the product to manufacturers of the 

21 generic version of such product; or 

22 ‘‘(II) selling such product at a price 

23 that is no more than twice the price of an24 tibiotic drugs approved under section 

25 505(j) of the Federal Food, Drug, and 


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1 Cosmetic Act with similar manufacturing 

2 costs; and 

3 ‘‘(ii) selling such product at a price 

4 that is not higher than the median price 

5 charged, at the time of such sale, in the 

6 applicable 7 countries, as determined 

7 under in subparagraph (B). 

8 ‘‘(B) CRITERIA.—For purposes of subpara9 graph (A)(ii), the Director of NIH shall iden10 tify, on an annual basis, the countries that have 

11 a per capita income that is not less than half 

12 the per capita income of the United States, se13 lect the 7 of such countries that have the larg14 est gross domestic product, and determine the 

15 median price charged for each qualifying prod16 uct for which an award has been granted under 

17 subsection (c). 

18 ‘‘(g) ENFORCEMENT.—If the market entry reward re19 cipient, or subsequent owner, licensee, or assignee of the 

20 qualifying product, does not fulfill the conditions described 

21 subsection (f)(1), the Secretary, in collaboration with the 

22 Attorney General, shall take all necessary action to 

23 clawback the market entry reward. 


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1 ‘‘(h) TRANSPARENCY.—With respect to each market 

2 entry reward or open source dividend prize awarded under 

3 this section, the Director of NIH shall make public— 

4 ‘‘(1) the methodology used and criteria analyzed 

5 in determining the market entry reward or open 

6 source dividend prize recipient; and 

7 ‘‘(2) a complete analysis of the recipient’s ful8 fillment of award conditions under subsection (e)(1). 

9 ‘‘(i) QUALIFYING PRODUCT.—For purposes of this 

10 section, the term ‘qualifying product’ means a drug (as 

11 defined in section 201(g) of the Federal Food, Drug, and 

12 Cosmetic Act) subject to section 503(b)(1) of the Federal 

13 Food, Drug, and Cosmetic Act. 

14 ‘‘(j) STUDY.— 

15 ‘‘(1) IN GENERAL.—The Director of NIH shall 

16 seek to enter into an agreement with the National 

17 Academies of Sciences, Engineering, and Medicine to 

18 conduct a study to examine— 

19 ‘‘(A) the use of innovation inducement re20 ward funds and push financing mechanisms as 

21 ways to stimulate investments in biomedical re22 search and development that de-links costs from 

23 product prices; 

24 ‘‘(B) models of different possible means of 

25 de-linking research and development costs from 


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1 drug prices, including the progressive replace2 ment of the monopoly on new products with a 

3 combination of expanded research subsidies and 

4 new incentives from innovation inducement 

5 funds to stimulate the development of drugs, in6 cluding drugs to treat bacterial infections, rare 

7 diseases, HIV/AIDS, and cancer; 

8 ‘‘(C) the size of market entry rewards, 

9 open source dividends and other innovation in10 ducement prizes that would be necessary to 

11 achieve innovation objectives and the relative 

12 cost effectiveness of incentives delinked from 

13 the prices of products and services in stimu14 lating innovation, compared to time-limited mo15 nopolies; and 

16 ‘‘(D) methods of progressively imple17 menting policies that delink research and devel18 opment funding from prices of products and 

19 services, including to the progressive reduction 

20 in the effective term of exclusive rights, accom21 panied by a progressive introduction and expan22 sion of market entry rewards. 

23 ‘‘(2) AUTHORIZATION OF APPROPRIATIONS.— 

24 For the purpose of carrying out this subsection, 

25 there are authorized to be appropriated, and there 


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1 are appropriated, $3,000,000 for fiscal year 2020. 

2 Such funds shall remain available until expended.’’. 

3 SEC. 302. PUBLIC FUNDING FOR CLINICAL TRIALS. 

4 (a) IN GENERAL.—Part E of title IV of the Public 

5 Health Service Act (42 U.S.C. 287 et seq.) is amended 

6 by adding at the end the following: 

7 ‘‘Subpart 6—Center for Clinical Research 

8 ‘‘SEC. 485E. CENTER FOR CLINICAL RESEARCH. 

9 ‘‘(a) IN GENERAL.—There is established within the 

10 National Institutes of Health the Center for Clinical Re11 search, for the purpose of conducting clinical trials on 

12 drugs, as described in subsection (b), with the intention 

13 of obtaining approval of such drug under section 505 of 

14 the Federal Food, Drug, and Cosmetic Act or section 351 

15 of this Act. The Director of NIH shall appoint a Director 

16 of the Center for Clinical Research referred to in this sec17 tion as the ‘Director’) not later than 90 days after the 

18 date of enactment of the Affordable Medications Act. 

19 ‘‘(b) CLINICAL TRIALS.— 

20 ‘‘(1) IN GENERAL.—Each year, beginning not 

21 later than 1 year after the date of enactment of the 

22 Affordable Medications Act, the Director shall select 

23 at least 2 molecules, compounds, drugs, or biological 

24 products and conduct clinical trials on such mol25 ecules, compounds, drugs, or biological products, or 


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1 enter into contracts with other entities to conduct 

2 such clinical trials. 

3 ‘‘(2) SELECTION OF DRUGS.— 

4 ‘‘(A) CRITERIA.—The Director shall estab5 lish criteria, which shall be made public, for ac6 quiring the patent rights for, and selecting, 

7 drugs under paragraph (1) to ensure that the 

8 drugs selected for clinical trials through the 

9 Center— 

10 ‘‘(i) have the potential to address an 

11 existing or emerging need, including drugs 

12 that can be repurposed to treat a new con13 dition in the case of a national emergency; 

14 and 

15 ‘‘(ii) are not solely drugs that private 

16 sector researchers with access to all avail17 able information on such drugs chose not 

18 to develop. 

19 ‘‘(B) PROCESS.—The Director shall secure 

20 all patent rights to each drug selected under 

21 paragraph (1), as applicable, and perform the 

22 clinical trials at NIH or subcontract with an23 other entity to conduct the clinical trials. 

24 ‘‘(c) TREATMENT OF APPROVED DRUGS.—If a drug 

25 for which clinical trials have been conducted by the Center 


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1 for Clinical Research is approved by the Food and Drug 

2 Administration under section 505 of the Federal Food, 

3 Drug, and Cosmetic Act or section 351 of this Act, the 

4 Director shall— 

5 ‘‘(1) execute non-exclusive licenses to allow 

6 drug manufacturers to manufacture and sell the 

7 drug; or 

8 ‘‘(2) in collaboration with other Federal agen9 cies as appropriate, enter into purchasing contracts. 

10 ‘‘(d) PUBLIC INFORMATION.— 

11 ‘‘(1) RESEARCH DATA AND FINDINGS.—Subject 

12 to applicable patient privacy protections, the Sec13 retary shall— 

14 ‘‘(A)(i) submit all completed studies (and 

15 terminated studies, if terminated for safety or 

16 ethical reasons) for publication in a peer-re17 viewed publication within 180 days of comple18 tion or termination; and 

19 ‘‘(ii) if a study submitted as described in 

20 clause (i) is not selected for publication, pub21 licly disclose all de-identified primary clinical 

22 data not later than 180 days after the Sec23 retary’s final decision not to pursue further 

24 submissions for publication; and 


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1 ‘‘(B) publicly disclose all de-identified pri2 mary clinical data upon publication of a study 

3 as described in subparagraph (A)(i). 

4 ‘‘(2) FINANCIAL INFORMATION.—The Director 

5 shall make public all costs to the Federal Govern6 ment associated with carrying out clinical trials by 

7 the Center for Clinical Research and with sub8 contract agreements under this section, in a manner 

9 that identifies the cost associated with each trial. 

10 ‘‘(e) DEFINITION.—In this section, the term ‘drug’ 

11 has the meaning given such term in section 201(g) of the 

12 Federal Food, Drug, and Cosmetic Act. 

13 ‘‘(f) APPROPRIATIONS.—For the purpose of carrying 

14 out this section, in addition to any other funds available 

15 for such purpose, there are authorized to be appropriated, 

16 and there are appropriated, $1,000,000,000 for each of 

17 fiscal years 2020 through 2030, to remain available until 

18 expended.’’. 

19 (b) CLERICAL AMENDMENT.—Section 401(b) of the 

20 Public Health Service Act (42 U.S.C. 281(b)) is amend21 ed— 

22 (1) by redesignating paragraph (25) as para23 graph (26); and 

24 (2) by inserting after paragraph (24) the fol25 lowing: 


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1 ‘‘(25) The Center for Clinical Research.’’. 

2 SEC. 303. REWARDING INNOVATIVE DRUG DEVELOPMENT. 

3 (a) DRUG EXCLUSIVITY.— 

4 (1) NEW CHEMICAL ENTITY EXCLUSIVITY.— 

5 (A) IN GENERAL.—Section 505(j)(5) of 

6 the Federal Food, Drug, and Cosmetic Act (21 

7 U.S.C. 355(j)(5)) is amended— 

8 (i) in subparagraph (B)— 

9 (I) in clause (i), by inserting ‘‘ex10 cept that such approval may not be 

11 made effective before the date that is 

12 5 years after the date on which the 

13 drug to which the application refers 

14 was approved under subsection (c)’’ 

15 before the period; and 

16 (II) in clause (ii), by inserting 

17 ‘‘except that such approval may not 

18 be made effective before the date that 

19 is 5 years after the date on which the 

20 drug to which the application refers 

21 was approved under subsection (c)’’ 

22 before the period; and 

23 (ii) in subparagraph (F)(ii)— 


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1 (I) by striking ‘‘expiration of five 

2 years’’ and inserting ‘‘expiration of 3 

3 years’’; 

4 (II) by striking ‘‘, except that 

5 such an application may be submitted 

6 under this subsection after the expira7 tion of four years from the date of the 

8 approval of the subsection (b) applica9 tion if it contains a certification of 

10 patent invalidity or noninfringement 

11 described in subclause (IV) of para12 graph (2)(A)(vii)’’; and 

13 (III) by striking ‘‘seven and one14 half years’’ and inserting ‘‘6 and one15 half years’’. 

16 (B) CONFORMING AMENDMENTS.—Chapter 

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

18 (21 U.S.C. 351 et seq.) is amended— 

19 (i) in subsection (v)(2)(A)(i)(II) of 

20 section 505, by inserting ‘‘the 3-year exclu21 sivity period referred to’’ before ‘‘under 

22 clause (ii) of subsection (j)(5)(F)’’; 

23 (ii) in subsections (b)(1)(A)(i)(I) and 

24 (c)(1)(A)(i)(I) of section 505A— 


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1 (I) by striking ‘‘five years’’ each 

2 place such term appears and inserting 

3 ‘‘3 years’’; 

4 (II) by striking ‘‘seven and one5 half years’’ each place such term ap6 pears and inserting ‘‘6 and one-half 

7 years’’; and 

8 (III) by striking ‘‘eight years’’ 

9 each place such term appears and in10 serting ‘‘7 years’’; and 

11 (iii) in section 505E, by striking ‘‘the 

12 4- and 5-year periods described in sub13 sections (c)(3)(E)(ii) and (j)(5)(F)(ii) of 

14 section 505, the 3-year periods described 

15 in clauses (iii) and (iv) of subsection 

16 (c)(3)(E) and clauses (iii) and (iv) of sub17 section (j)(5)(F)’’ and inserting ‘‘the 4- 

18 and 5-year periods described in subsection 

19 (c)(3)(E)(ii) of section 505, the 3-year pe20 riods described in clauses (iii) and (iv) of 

21 subsection (c)(3)(E) and clauses (ii), (iii), 

22 and (iv) of subsection (j)(5)(F)’’. 

23 (2) NEW CLINICAL INVESTIGATION EXCLU24 SIVITY.—Section 505(c)(3)(E)(iv) of the Federal 

25 Food, Drug, and Cosmetic Act (21 U.S.C. 


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•S 1801 IS

1 355(c)(3)(E)(iv)) is amended by inserting ‘‘, and the 

2 supplement shows a significant clinical benefit over 

3 existing therapies manufactured by the applicant in 

4 the 5-year period preceding the submission of the 

5 application,’’ before ‘‘the Secretary’’. 

6 (3) BIOLOGICAL PRODUCT EXCLUSIVITY.— 

7 (A) IN GENERAL.—Section 351(k)(7)(A) of 

8 the Public Health Service Act (42 U.S.C. 

9 262(k)(7)(A)) is amended by striking ‘‘12 

10 years’’ and inserting ‘‘7 years’’. 

11 (B) CONFORMING AMENDMENTS.—Para12 graphs (2)(A) and (3)(A) of section 351(m) of 

13 the Public Health Service Act (42 U.S.C. 

14 262(m)) is amended by striking ‘‘12 years’’ 

15 each place it appears and inserting ‘‘7 years’’. 

16 (b) APPLICABILITY.—The amendments made by sub17 section (a) apply only with respect to a drug or biological 

18 product for which the listed drug (as described in section 

19 505(j)(7) of the Federal Food, Drug, and Cosmetic Act 

20 (21 U.S.C. 355(j)(7))) or reference product (as such term 

21 is used in section 351 of the Public Health Service Act 

22 (42 U.S.C. 262)) is approved under section 505(c) of the 

23 Federal Food, Drug, and Cosmetic Act or licensed under 

24 section 351(a) of the Public Health Service Act, as appli25 cable, on or after the date of enactment of this Act. 


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1 (c) GAO STUDY.—Not later than 1 year after the 

2 date of enactment of this Act, the Comptroller General 

3 of the United States shall conduct a study and submit to 

4 Congress a report that includes— 

5 (1)(A) the number of requests for designation 

6 as a drug for a rare disease or condition under sec7 tion 526 of the Federal Food, Drug, and Cosmetic 

8 Act (21 U.S.C. 360bb) the Food and Drug Adminis9 tration receives each year in the previous 10-year pe10 riod; 

11 (B) the number of such requests granted, de12 nied, and pending; 

13 (C) the names of all drugs receiving such des14 ignation during such period, including the date of 

15 approval and indication for which market exclusivity 

16 was granted; and 

17 (D) any drugs for which such designation has 

18 been revoked or amended during such period; 

19 (2) for each drug so designated as a drug for 

20 a rare disease or condition in the previous 10-year 

21 period, the total annual expenditures for such drugs 

22 under the Medicare program under title XVIII of 

23 the Social Security Act (42 U.S.C. 1395 et seq.) and 

24 the Medicaid program under title XIX of the Social 

25 Security Act (42 U.S.C. 1396 et seq.), the number 


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1 of Medicare and Medicaid beneficiaries who used 

2 each such drug each year during such time period, 

3 and any changes in price per unit during such time 

4 period; and 

5 (3) for a sample of drugs (selected by the 

6 Comptroller General) so designated in the previous 

7 10-year period, to the extent feasible— 

8 (A) gross revenues of the manufacturers 

9 with respect to each such drug, and manufac10 turer spending for marketing and patient as11 sistance programs; 

12 (B) the average price per drug and how 

13 those prices changed over time for the selected 

14 drugs based on industry drug pricing bench15 marks; and 

16 (C) the indications that were the basis of 

17 such designation and other approved indications 

18 for the drugs, and the indications for which 

19 each drug has most commonly been used, in20 cluding non-approved indications for which the 

21 drug may be recommended by external organi22 zations such as physician or patient organiza23 tions. 


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1 SEC. 304. IMPROVING PROGRAM INTEGRITY. 

2 (a) IN GENERAL.—Subchapter E of chapter V of the 

3 Federal Food, Drug, and Cosmetic Act (21 U.S.C. 360bbb 

4 et seq.) is amended by adding at the end the following: 

5 ‘‘SEC. 569E. CONDITIONS ON AWARD OF DRUG EXCLU6 SIVITY. 

7 ‘‘(a) TERMINATION OF EXCLUSIVITY.—Notwith8 standing any other provision of this Act, any period of 

9 exclusivity described in subsection (b) granted to a person 

10 or assigned to a person on or after the date of enactment 

11 of this section with respect to a drug shall be terminated 

12 if the person to which such exclusivity was granted or any 

13 person to which such exclusivity is assigned commits a vio14 lation described in subsection (c)(1) with respect to such 

15 drug. 

16 ‘‘(b) EXCLUSIVITIES AFFECTED.—The periods of ex17 clusivity described in this subsection are those periods of 

18 exclusivity granted under any of the following sections: 

19 ‘‘(1) Clause (ii), (iii), or (iv) of section 

20 505(c)(3)(E). 

21 ‘‘(2) Clause (iv) of section 505(j)(5)(B). 

22 ‘‘(3) Clause (ii), (iii), or (iv) of section 

23 505(j)(5)(F). 

24 ‘‘(4) Section 505A. 

25 ‘‘(5) Section 505E. 

26 ‘‘(6) Section 527. 


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1 ‘‘(7) Section 351(k)(7) of the Public Health 

2 Service Act. 

3 ‘‘(8) Any other provision of this Act that pro4 vides for market exclusivity (or extension of market 

5 exclusivity) with respect to a drug. 

6 ‘‘(c) VIOLATIONS.— 

7 ‘‘(1) IN GENERAL.—A violation described in 

8 this subsection is a violation of a law described in 

9 paragraph (2), enforced by a Federal or State gov10 ernmental entity that results in— 

11 ‘‘(A) a criminal conviction of a person de12 scribed in subsection (a); 

13 ‘‘(B) a civil judgment against a person de14 scribed in subsection (a); or 

15 ‘‘(C) a settlement agreement in which a 

16 person described in subsection (a) admits to 

17 fault. 

18 ‘‘(2) LAWS DESCRIBED.—The laws described in 

19 this paragraph are the following: 

20 ‘‘(A) The provisions of this Act that pro21 hibit— 

22 ‘‘(i) the adulteration or misbranding 

23 of a drug; 

24 ‘‘(ii) the making of false statements to 

25 the Secretary or committing fraud; or 


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1 ‘‘(iii) the illegal marketing of a drug. 

2 ‘‘(B) Section 3729 of title 31, United 

3 States Code. 

4 ‘‘(C) Section 286 or 287 of title 18, United 

5 States Code. 

6 ‘‘(D) The Medicare and Medicaid Patient 

7 Protection and Program Act of 1987 (com8 monly known as the ‘Antikickback Statute’). 

9 ‘‘(E) Section 1927 of the Social Security 

10 Act. 

11 ‘‘(F) A State law against fraud comparable 

12 to a law described in subparagraphs (A) 

13 through (E). 

14 ‘‘(d) DATE OF EXCLUSIVITY TERMINATION.—The 

15 date on which the exclusivity shall be terminated as de16 scribed in subsection (a) is the date on which, as applica17 ble— 

18 ‘‘(1) a final judgment is entered relating to a 

19 violation described in subparagraph (A) or (B) of 

20 subsection (c)(1); or 

21 ‘‘(2)(A) a settlement agreement described in 

22 subsection (c)(1)(C) is approved by a court order 

23 that is or becomes final and nonappealable; or 

24 ‘‘(B) if there is no court order approving a set25 tlement agreement described in subsection (c)(1)(C), 


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1 a court order dismissing the applicable case, issued 

2 after the settlement agreement, is or becomes final 

3 and nonappealable. 

4 ‘‘(e) REPORTING OF INFORMATION.— 

5 ‘‘(1) IN GENERAL.—A person described in sub6 section (a) that commits a violation described in 

7 subsection (c)(1) shall report such violation to the 

8 Secretary no later than 30 days after the date 

9 that— 

10 ‘‘(A) a final judgment is entered relating 

11 to a violation described in subparagraph (A) or 

12 (B) of subsection (c)(1); or 

13 ‘‘(B)(i) a settlement agreement described 

14 in subsection (c)(1)(C) is approved by a court 

15 order that is or becomes final and nonappeal16 able; or 

17 ‘‘(ii) if there is no court order approving a 

18 settlement agreement described in subsection 

19 (c)(1)(C), a court order dismissing the applica20 ble case, issued after the settlement agreement, 

21 is or becomes final and nonappealable. 

22 ‘‘(2) CIVIL PENALTY.—A person who fails to re23 port a violation as required under paragraph (1) 

24 shall be subject to a civil penalty in the amount of 

25 $200,000 for each day the failure to report conVerDate Sep 11 2014 03:57 Jun 19, 2019 Jkt 089200 PO 00000 Frm 00105 Fmt 6652 Sfmt 6201 E:\BILLS\S1801.IS S1801

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1 tinues, beginning with the day after the date on 

2 which such report is due as described in paragraph 

3 (1).’’. 

4 (b) FTC.—There are authorized to be appropriated 

5 to the Federal Trade Commission such sums as may be 

6 necessary for the purpose of carrying out activities related 

7 to addressing criminal activity and anticompetitive prac8 tices by pharmaceutical companies. 

9 TITLE IV—CHOICE AND 

10 COMPETITION 

11 SEC. 401. UNLAWFUL COMPENSATION FOR DELAY. 

12 (a) IN GENERAL.—The Federal Trade Commission 

13 Act (15 U.S.C. 44 et seq.) is amended by inserting after 

14 section 26 (15 U.S.C. 57c–2) the following: 

15 ‘‘SEC. 27. PRESERVING ACCESS TO AFFORDABLE GENERICS 

16 AND BIOSIMILARS. 

17 ‘‘(a) IN GENERAL.— 

18 ‘‘(1) ENFORCEMENT PROCEEDING.—The Com19 mission may initiate a proceeding to enforce the pro20 visions of this section against the parties to any 

21 agreement resolving or settling, on a final or interim 

22 basis, a patent infringement claim, in connection 

23 with the sale of a drug product or biological product. 

24 ‘‘(2) PRESUMPTION AND VIOLATION.— 


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1 ‘‘(A) IN GENERAL.—Subject to subpara2 graph (B), in such a proceeding, an agreement 

3 shall be presumed to have anticompetitive ef4 fects and shall be a violation of this section if— 

5 ‘‘(i) an ANDA filer or a biosimilar bi6 ological product application filer receives 

7 anything of value, including an exclusive li8 cense; and 

9 ‘‘(ii) the ANDA filer or biosimilar bio10 logical product application filer agrees to 

11 limit or forego research, development, 

12 manufacturing, marketing, or sales of the 

13 ANDA product or biosimilar biological 

14 product, as applicable, for any period of 

15 time. 

16 ‘‘(B) EXCEPTION.—Subparagraph (A) 

17 shall not apply if the parties to such agreement 

18 demonstrate by clear and convincing evidence 

19 that— 

20 ‘‘(i) the value described in subpara21 graph (A)(i) is compensation solely for 

22 other goods or services that the ANDA 

23 filer or biosimilar biological product appli24 cation filer has promised to provide; or 


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•S 1801 IS

1 ‘‘(ii) the procompetitive benefits of the 

2 agreement outweigh the anticompetitive ef3 fects of the agreement. 

4 ‘‘(b) LIMITATIONS.—In determining whether the set5 tling parties have met their burden under subsection 

6 (a)(2)(B), the fact finder shall not presume— 

7 ‘‘(1) that entry would not have occurred until 

8 the expiration of the relevant patent or statutory ex9 clusivity; or 

10 ‘‘(2) that the agreement’s provision for entry of 

11 the ANDA product or biosimilar biological product 

12 prior to the expiration of the relevant patent or stat13 utory exclusivity means that the agreement is pro14 competitive. 

15 ‘‘(c) EXCLUSIONS.—Nothing in this section shall pro16 hibit a resolution or settlement of a patent infringement 

17 claim in which the consideration granted by the NDA 

18 holder or biological product license holder to the ANDA 

19 filer or biosimilar biological product application filer, re20 spectively, as part of the resolution or settlement includes 

21 only one or more of the following: 

22 ‘‘(1) The right to market the ANDA product or 

23 biosimilar biological product in the United States 

24 prior to the expiration of— 


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•S 1801 IS

1 ‘‘(A) any patent that is the basis for the 

2 patent infringement claim; or 

3 ‘‘(B) any patent right or other statutory 

4 exclusivity that would prevent the marketing of 

5 such ANDA product or biosimilar biological 

6 product. 

7 ‘‘(2) A payment for reasonable litigation ex8 penses not to exceed $7,500,000. 

9 ‘‘(3) A covenant not to sue on any claim that 

10 the ANDA product or biosimilar biological product 

11 infringes a United States patent. 

12 ‘‘(d) ENFORCEMENT.— 

13 ‘‘(1) ENFORCEMENT.—A violation of this sec14 tion shall be treated as a violation of section 5. 

15 ‘‘(2) JUDICIAL REVIEW.— 

16 ‘‘(A) IN GENERAL.—Any party that is sub17 ject to a final order of the Commission, issued 

18 in an administrative adjudicative proceeding 

19 under the authority of subsection (a)(1), may, 

20 within 30 days of the issuance of such order, 

21 petition for review of such order in— 

22 ‘‘(i) the United States Court of Ap23 peals for the District of Columbia Circuit; 

24 ‘‘(ii) the United States Court of Ap25 peals for the circuit in which the ultimate 


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•S 1801 IS

1 parent entity, as defined in section 

2 801.1(a)(3) of title 16, Code of Federal 

3 Regulations, or any successor thereto, of 

4 the NDA holder or biological product li5 cense holder is incorporated as of the date 

6 that the NDA or biological product license 

7 application, as applicable, is filed with the 

8 Commissioner of Food and Drugs; or 

9 ‘‘(iii) the United States Court of Ap10 peals for the circuit in which the ultimate 

11 parent entity of the ANDA filer or bio12 similar biological product application filer 

13 is incorporated as of the date that the 

14 ANDA or biosimilar biological product ap15 plication is filed with the Commissioner of 

16 Food and Drugs. 

17 ‘‘(B) TREATMENT OF FINDINGS.—In a 

18 proceeding for judicial review of a final order of 

19 the Commission, the findings of the Commis20 sion as to the facts, if supported by evidence, 

21 shall be conclusive. 

22 ‘‘(e) ANTITRUST LAWS.—Nothing in this section 

23 shall modify, impair, limit, or supersede the applicability 

24 of the antitrust laws as defined in subsection (a) of the 

25 first section of the Clayton Act (15 U.S.C. 12(a)), and 


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•S 1801 IS

1 of section 5 of this Act to the extent that section 5 applies 

2 to unfair methods of competition. Nothing in this section 

3 shall modify, impair, limit, or supersede the right of an 

4 ANDA filer or biosimilar biological product application 

5 filer to assert claims or counterclaims against any person, 

6 under the antitrust laws or other laws relating to unfair 

7 competition. 

8 ‘‘(f) PENALTIES.— 

9 ‘‘(1) FORFEITURE.—Each party that violates or 

10 assists in the violation of this section shall forfeit 

11 and pay to the United States a civil penalty suffi12 cient to deter violations of this section, but in no 

13 event greater than 3 times the value received by the 

14 party that is reasonably attributable to the violation 

15 of this section. If no such value has been received by 

16 the NDA holder or biological product license holder, 

17 the penalty to the NDA holder or biological product 

18 license holder shall be sufficient to deter violations, 

19 but in no event greater than 3 times the value given 

20 to the ANDA filer or biosimilar biological product 

21 application filer reasonably attributable to the viola22 tion of this section. Such penalty shall accrue to the 

23 United States and may be recovered in a civil action 

24 brought by the Commission, in its own name by any 

25 of its attorneys designated by it for such purpose, in 


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•S 1801 IS

1 a district court of the United States against any 

2 party that violates this section. In such actions, the 

3 United States district courts are empowered to grant 

4 mandatory injunctions and such other and further 

5 equitable relief as they deem appropriate. 

6 ‘‘(2) CEASE AND DESIST.— 

7 ‘‘(A) IN GENERAL.—If the Commission has 

8 issued a cease and desist order with respect to 

9 a party in an administrative adjudicative pro10 ceeding under the authority of subsection 

11 (a)(1), an action brought pursuant to para12 graph (1) may be commenced against such 

13 party at any time before the expiration of 1 

14 year after such order becomes final pursuant to 

15 section 5(g). 

16 ‘‘(B) EXCEPTION.—In an action under 

17 subparagraph (A), the findings of the Commis18 sion as to the material facts in the administra19 tive adjudicative proceeding with respect to the 

20 violation of this section by a party shall be con21 clusive unless— 

22 ‘‘(i) the terms of such cease and de23 sist order expressly provide that the Com24 mission’s findings shall not be conclusive; 

25 or 


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1 ‘‘(ii) the order became final by reason 

2 of section 5(g)(1), in which case such find3 ing shall be conclusive if supported by evi4 dence. 

5 ‘‘(3) CIVIL PENALTY.—In determining the 

6 amount of the civil penalty described in this section, 

7 the court shall take into account— 

8 ‘‘(A) the nature, circumstances, extent, 

9 and gravity of the violation; 

10 ‘‘(B) with respect to the violator, the de11 gree of culpability, any history of violations, the 

12 ability to pay, any effect on the ability to con13 tinue doing business, profits earned by the 

14 NDA holder or biological product license holder, 

15 compensation received by the ANDA filer or 

16 biosimilar biological product application filer, 

17 and the amount of commerce affected; and 

18 ‘‘(C) other matters that justice requires. 

19 ‘‘(4) REMEDIES IN ADDITION.—Remedies pro20 vided in this subsection are in addition to, and not 

21 in lieu of, any other remedy provided by Federal 

22 law. Nothing in this paragraph shall be construed to 

23 affect any authority of the Commission under any 

24 other provision of law. 

25 ‘‘(g) DEFINITIONS.—In this section: 


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•S 1801 IS

1 ‘‘(1) AGREEMENT.—The term ‘agreement’ 

2 means anything that would constitute an agreement 

3 under section 1 of the Sherman Act (15 U.S.C. 1) 

4 or section 5 of this Act. 

5 ‘‘(2) AGREEMENT RESOLVING OR SETTLING A

6 PATENT INFRINGEMENT CLAIM.—The term ‘agree7 ment resolving or settling a patent infringement 

8 claim’ includes any agreement that is entered into 

9 within 30 days of the resolution or the settlement of 

10 the claim, or any other agreement that is contingent 

11 upon, provides a contingent condition for, or is oth12 erwise related to the resolution or settlement of the 

13 claim. 

14 ‘‘(3) ANDA.—The term ‘ANDA’ means an ab15 breviated new drug application filed under section 

16 505(j) of the Federal Food, Drug, and Cosmetic Act 

17 (21 U.S.C. 355(j)) or a new drug application filed 

18 under section 505(b)(2) of the Federal Food, Drug, 

19 and Cosmetic Act (21 U.S.C. 355(b)(2)). 

20 ‘‘(4) ANDA FILER.—The term ‘ANDA filer’ 

21 means a party that owns or controls an ANDA filed 

22 with the Food and Drug Administration or has the 

23 exclusive rights under such ANDA to distribute the 

24 ANDA product. 


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1 ‘‘(5) ANDA PRODUCT.—The term ‘ANDA 

2 product’ means the product to be manufactured 

3 under the ANDA that is the subject of the patent 

4 infringement claim. 

5 ‘‘(6) BIOLOGICAL PRODUCT.—The term ‘bio6 logical product’ has the meaning given such term in 

7 section 351(i)(1) of the Public Health Service Act 

8 (42 U.S.C. 262(i)(1)). 

9 ‘‘(7) BIOLOGICAL PRODUCT LICENSE APPLICA10 TION.—The term ‘biological product license applica11 tion’ means an application under section 351(a) of 

12 the Public Health Service Act (42 U.S.C. 262(a)). 

13 ‘‘(8) BIOLOGICAL PRODUCT LICENSE HOLD14 ER.—The term ‘biological product license holder’ 

15 means— 

16 ‘‘(A) the holder of an approved biological 

17 product license application for a biological prod18 uct; 

19 ‘‘(B) a person owning or controlling en20 forcement of any patents that claim the biologi21 cal product that is the subject of such approved 

22 application; or 

23 ‘‘(C) the predecessors, subsidiaries, divi24 sions, groups, and affiliates controlled by, con25 trolling, or under common control with any of 


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•S 1801 IS

1 the entities described in subparagraphs (A) and 

2 (B) (such control to be presumed by direct or 

3 indirect share ownership of 50 percent or great4 er), as well as the licensees, licensors, succes5 sors, and assigns of each of the entities. 

6 ‘‘(9) BIOSIMILAR BIOLOGICAL PRODUCT.—The 

7 term ‘biosimilar biological product’ means the prod8 uct to be manufactured under the biosimilar biologi9 cal product application that is the subject of the pat10 ent infringement claim. 

11 ‘‘(10) BIOSIMILAR BIOLOGICAL PRODUCT APPLI12 CATION.—The term ‘biosimilar biological product ap13 plication’ means an application under section 351(k) 

14 of the Public Health Service Act (42 U.S.C. 262(k)) 

15 for licensure of a biological product as biosimilar to, 

16 or interchangeable with, a reference product. 

17 ‘‘(11) BIOSIMILAR BIOLOGICAL PRODUCT APPLI18 CATION FILER.—The term ‘biosimilar biological 

19 product application filer’ means a party that owns or 

20 controls a biosimilar biological product application 

21 filed with the Food and Drug Administration or has 

22 the exclusive rights under such application to dis23 tribute the biosimilar biological product. 

24 ‘‘(12) DRUG PRODUCT.—The term ‘drug prod25 uct’ has the meaning given such term in section 


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•S 1801 IS

1 314.3(b) of title 21, Code of Federal Regulations (or 

2 any successor regulation). 

3 ‘‘(13) NDA.—The term ‘NDA’ means a new 

4 drug application filed under section 505(b) of the 

5 Federal Food, Drug, and Cosmetic Act (21 U.S.C. 

6 355(b)). 

7 ‘‘(14) NDA HOLDER.—The term ‘NDA holder’ 

8 means— 

9 ‘‘(A) the holder of an approved NDA appli10 cation for a drug product; 

11 ‘‘(B) a person owning or controlling en12 forcement of the patent listed in the Approved 

13 Drug Products With Therapeutic Equivalence 

14 Evaluations (commonly known as the ‘FDA Or15 ange Book’) in connection with the NDA; or 

16 ‘‘(C) the predecessors, subsidiaries, divi17 sions, groups, and affiliates controlled by, con18 trolling, or under common control with any of 

19 the entities described in subparagraphs (A) and 

20 (B) (such control to be presumed by direct or 

21 indirect share ownership of 50 percent or great22 er), as well as the licensees, licensors, succes23 sors, and assigns of each of the entities. 


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•S 1801 IS

1 ‘‘(15) PARTY.—The term ‘party’ means any 

2 person, partnership, corporation, or other legal enti3 ty. 

4 ‘‘(16) PATENT INFRINGEMENT.—The term 

5 ‘patent infringement’ means infringement of any 

6 patent or of any filed patent application, extension, 

7 reissue, renewal, division, continuation, continuation 

8 in part, reexamination, patent term restoration, pat9 ents of addition, and extensions thereof. 

10 ‘‘(17) PATENT INFRINGEMENT CLAIM.—The 

11 term ‘patent infringement claim’ means any allega12 tion made to an ANDA filer or biosimilar biological 

13 product application filer, whether or not included in 

14 a complaint filed with a court of law, that its ANDA 

15 or ANDA product, or biological product license ap16 plication or biological product, may infringe any pat17 ent held by, or exclusively licensed to, the NDA 

18 holder or biological product license holder of the 

19 drug product or biological product, as applicable. 

20 ‘‘(18) STATUTORY EXCLUSIVITY.—The term 

21 ‘statutory exclusivity’ means those prohibitions on 

22 the approval of drug applications under clauses (ii) 

23 through (iv) of section 505(c)(3)(E) (5- and 3-year 

24 data exclusivity), section 527 (orphan drug exclu25 sivity), or section 505A (pediatric exclusivity) of the 


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•S 1801 IS

1 Federal Food, Drug, and Cosmetic Act (21 U.S.C. 

2 355(c)(3)(E), 360cc, 355a), or on the licensing of 

3 biological product applications under section 

4 351(k)(7) (12-year exclusivity) or paragraph (2) or 

5 (3) of section 351(m) (pediatric exclusivity) of the 

6 Public Health Service Act (42 U.S.C. 262) or under 

7 section 527 of the Federal Food, Drug, and Cos8 metic Act (orphan drug exclusivity).’’. 

9 (b) EFFECTIVE DATE.—Section 27 of the Federal 

10 Trade Commission Act, as added by this section, shall 

11 apply to all agreements described in section 27(a)(1) of 

12 that Act entered into after June 17, 2013. Section 27(f) 

13 of the Federal Trade Commission Act, as added by this 

14 section, shall apply to agreements entered into on or after 

15 the date of enactment of this Act. 

16 SEC. 402. 180-DAY EXCLUSIVITY PERIOD AMENDMENTS RE17 GARDING FIRST APPLICANT STATUS. 

18 (a) AMENDMENTS TO FEDERAL FOOD, DRUG, AND

19 COSMETIC ACT.— 

20 (1) IN GENERAL.—Section 505(j)(5)(B) of the 

21 Federal Food, Drug, and Cosmetic Act (21 U.S.C. 

22 355(j)(5)(B)) is amended— 

23 (A) in clause (iv)(II)— 

24 (i) by striking item (bb); and 


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•S 1801 IS

1 (ii) by redesignating items (cc) and 

2 (dd) as items (bb) and (cc), respectively; 

3 and 

4 (B) by adding at the end the following: 

5 ‘‘(v) FIRST APPLICANT DEFINED.—As used in 

6 this subsection, the term ‘first applicant’ means an 

7 applicant— 

8 ‘‘(I)(aa) that, on the first day on which a 

9 substantially complete application containing a 

10 certification described in paragraph 

11 (2)(A)(vii)(IV) is submitted for approval of a 

12 drug, submits a substantially complete applica13 tion that contains and lawfully maintains a cer14 tification described in paragraph (2)(A)(vii)(IV) 

15 for the drug; and 

16 ‘‘(bb) that has not entered into a disquali17 fying agreement described under clause 

18 (vii)(II); or 

19 ‘‘(II)(aa) for the drug that is not described 

20 in subclause (I) and that, with respect to the 

21 applicant and drug, each requirement described 

22 in clause (vi) is satisfied; and 

23 ‘‘(bb) that has not entered into a disquali24 fying agreement described under clause 

25 (vii)(II). 


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1 ‘‘(vi) REQUIREMENT.—The requirements de2 scribed in this clause are the following: 

3 ‘‘(I) The applicant described in clause 

4 (v)(II) submitted and lawfully maintains a cer5 tification described in paragraph (2)(A)(vii)(IV) 

6 or a statement described in paragraph 

7 (2)(A)(viii) for each unexpired patent for which 

8 a first applicant described in clause (v)(I) had 

9 submitted a certification described in paragraph 

10 (2)(A)(vii)(IV) on the first day on which a sub11 stantially complete application containing such 

12 a certification was submitted. 

13 ‘‘(II) With regard to each such unexpired 

14 patent for which the applicant described in 

15 clause (v)(II) submitted a certification de16 scribed in paragraph (2)(A)(vii)(IV), no action 

17 for patent infringement was brought against 

18 such applicant within the 45-day period speci19 fied in paragraph (5)(B)(iii); or if an action 

20 was brought within such time period, such an 

21 action was withdrawn or dismissed by a court 

22 (including a district court) without a decision 

23 that the patent was valid and infringed; or if an 

24 action was brought within such time period and 

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1 cant has obtained the decision of a court (in2 cluding a district court) that the patent is in3 valid or not infringed (including any substantive 

4 determination that there is no cause of action 

5 for patent infringement or invalidity, and in6 cluding a settlement order or consent decree 

7 signed and entered by the court stating that the 

8 patent is invalid or not infringed). 

9 ‘‘(III) If an applicant described in clause 

10 (v)(I) has begun commercial marketing of such 

11 drug, the applicant described in clause (v)(II) 

12 does not begin commercial marketing of such 

13 drug until the date that is 30 days after the 

14 date on which the applicant described in clause 

15 (v)(I) began such commercial marketing.’’. 

16 (2) CONFORMING AMENDMENT.—Section 

17 505(j)(5)(D)(i)(IV) of the Federal Food, Drug, and 

18 Cosmetic Act (21 U.S.C. 355(j)(5)(D)(i)(IV)) is 

19 amended by striking ‘‘The first applicant’’ and in20 serting ‘‘The first applicant, as defined in subpara21 graph (B)(v)(I),’’. 

22 (b) APPLICABILITY.—The amendments made by sub23 section (a) shall apply only with respect to an application 

24 filed under section 505(j) of the Federal Food, Drug, and 

25 Cosmetic Act (21 U.S.C. 355(j)) to which the amendments 


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1 made by section 1102(a) of the Medicare Prescription 

2 Drug, Improvement, and Modernization Act of 2003 (Pub3 lic Law 108–173) apply. 

4 SEC. 403. 180-DAY EXCLUSIVITY PERIOD AMENDMENTS RE5 GARDING AGREEMENTS TO DEFER COMMER6 CIAL MARKETING. 

7 (a) AMENDMENTS TO FEDERAL FOOD, DRUG, AND

8 COSMETIC ACT.— 

9 (1) LIMITATIONS ON AGREEMENTS TO DEFER

10 COMMERCIAL MARKETING DATE.—Section 

11 505(j)(5)(B) of the Federal Food, Drug, and Cos12 metic Act (21 U.S.C. 355(j)(5)(B)), as amended by 

13 section 402, is further amended by adding at the 

14 end the following: 

15 ‘‘(vii) AGREEMENT BY FIRST APPLICANT TO

16 DEFER COMMERCIAL MARKETING; LIMITATION ON

17 ACCELERATION OF DEFERRED COMMERCIAL MAR18 KETING DATE.— 

19 ‘‘(I) AGREEMENT TO DEFER APPROVAL OR

20 COMMERCIAL MARKETING DATE.—An agree21 ment described in this subclause is an agree22 ment between a first applicant and the holder 

23 of the application for the listed drug or an 

24 owner of one or more of the patents as to which 

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1 fying such applicant for the 180-day exclusivity 

2 period whereby that applicant agrees, directly 

3 or indirectly, (aa) not to seek an approval of its 

4 application that is made effective on the earliest 

5 possible date under this subparagraph, subpara6 graph (F) of this paragraph, section 505A, or 

7 section 527, (bb) not to begin the commercial 

8 marketing of its drug on the earliest possible 

9 date after receiving an approval of its applica10 tion that is made effective under this subpara11 graph, subparagraph (F) of this paragraph, sec12 tion 505A, or section 527, or (cc) to both items 

13 (aa) and (bb). 

14 ‘‘(II) AGREEMENT THAT DISQUALIFIES AP15 PLICANT FROM FIRST APPLICANT STATUS.—An 

16 agreement described in this subclause is an 

17 agreement between an applicant and the holder 

18 of the application for the listed drug or an 

19 owner of one or more of the patents as to which 

20 any applicant submitted a certification quali21 fying such applicant for the 180-day exclusivity 

22 period whereby that applicant agrees, directly 

23 or indirectly, not to seek an approval of its ap24 plication or not to begin the commercial mar25 keting of its drug until a date that is after the 


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1 expiration of the 180-day exclusivity period 

2 awarded to another applicant with respect to 

3 such drug (without regard to whether such 180- 

4 day exclusivity period is awarded before or after 

5 the date of the agreement). 

6 ‘‘(viii) LIMITATION ON ACCELERATION.—If an 

7 agreement described in clause (vii)(I) includes more 

8 than 1 possible date when an applicant may seek an 

9 approval of its application or begin the commercial 

10 marketing of its drug— 

11 ‘‘(I) the applicant may seek an approval of 

12 its application or begin such commercial mar13 keting on the date that is the earlier of— 

14 ‘‘(aa) the latest date set forth in the 

15 agreement on which that applicant can re16 ceive an approval that is made effective 

17 under this subparagraph, subparagraph 

18 (F) of this paragraph, section 505A, or 

19 section 527, or begin the commercial mar20 keting of such drug, without regard to any 

21 other provision of such agreement pursu22 ant to which the commercial marketing 

23 could begin on an earlier date; or 


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•S 1801 IS

1 ‘‘(bb) 180 days after another first ap2 plicant begins commercial marketing of 

3 such drug; and 

4 ‘‘(II) the latest date set forth in the agree5 ment on which that applicant can receive an ap6 proval that is made effective under this sub7 paragraph, subparagraph (F) of this paragraph, 

8 section 505A, or section 527, or begin the com9 mercial marketing of such drug, without regard 

10 to any other provision of such agreement pursu11 ant to which commercial marketing could begin 

12 on an earlier date, shall be the date used to de13 termine whether an applicant is disqualified 

14 from first applicant status pursuant to clause 

15 (vii)(II).’’. 

16 (2) NOTIFICATION OF FDA.—Section 505(j) of 

17 the Federal Food, Drug, and Cosmetic Act (21 

18 U.S.C. 355(j)) is amended by adding at the end the 

19 following: 

20 ‘‘(14)(A) The holder of an abbreviated application 

21 under this subsection shall submit to the Secretary a noti22 fication that includes— 

23 ‘‘(i)(I) the text of any agreement entered into 

24 by such holder described under paragraph 

25 (5)(B)(vii)(I); or 


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•S 1801 IS

1 ‘‘(II) if such an agreement has not been re2 duced to text, a written detailed description of such 

3 agreement that is sufficient to disclose all the terms 

4 and conditions of the agreement; and 

5 ‘‘(ii) the text, or a written detailed description 

6 in the event of an agreement that has not been re7 duced to text, of any other agreements that are con8 tingent upon, provide a contingent condition for, or 

9 are otherwise related to an agreement described in 

10 clause (i). 

11 ‘‘(B) The notification described under subparagraph 

12 (A) shall be submitted not later than 10 business days 

13 after execution of the agreement described in subpara14 graph (A)(i). Such notification is in addition to any notifi15 cation required under section 1112 of the Medicare Pre16 scription Drug, Improvement, and Modernization Act of 

17 2003. 

18 ‘‘(C) Any information or documentary material filed 

19 with the Secretary pursuant to this paragraph shall be ex20 empt from disclosure under section 552 of title 5, United 

21 States Code, and no such information or documentary ma22 terial may be made public, except as may be relevant to 

23 any administrative or judicial action or proceeding. Noth24 ing in this paragraph is intended to prevent disclosure to 


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•S 1801 IS

1 either body of the Congress or to any duly authorized com2 mittee or subcommittee of the Congress.’’. 

3 (3) PROHIBITED ACTS.—Section 301(e) of the 

4 Federal Food, Drug, and Cosmetic Act (21 U.S.C. 

5 331(e)) is amended by striking ‘‘505 (i) or (k)’’ and 

6 inserting ‘‘505 (i), (j)(11), or (k)’’. 

7 (b) INFRINGEMENT OF PATENT.—Section 271(e) of 

8 title 35, United States Code, is amended by adding at the 

9 end the following: 

10 ‘‘(7) The exclusive remedy under this section for an 

11 infringement of a patent for which the Secretary of Health 

12 and Human Services has published information pursuant 

13 to subsection (b)(1) or (c)(2) of section 505 of the Federal 

14 Food, Drug, and Cosmetic Act shall be an action brought 

15 under this subsection within the 45-day period described 

16 in subsection (j)(5)(B)(iii) or (c)(3)(C) of section 505 of 

17 the Federal Food, Drug, and Cosmetic Act.’’. 

18 (c) APPLICABILITY.— 

19 (1) LIMITATIONS ON ACCELERATION OF DE20 FERRED COMMERCIAL MARKETING DATE.—The 

21 amendment made by subsection (a)(1) shall apply 

22 only with respect to— 

23 (A) an application filed under section 

24 505(j) of the Federal Food, Drug, and Cos25 metic Act (21 U.S.C. 355(j)) to which the 


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•S 1801 IS

1 amendments made by section 1102(a) of the 

2 Medicare Prescription Drug, Improvement, and 

3 Modernization Act of 2003 (Public Law 108– 

4 173) apply; and 

5 (B) an agreement described under section 

6 505(j)(5)(B)(vii)(I) of the Federal Food, Drug, 

7 and Cosmetic Act (as added by subsection 

8 (a)(1)) executed after the date of enactment of 

9 this Act. 

10 (2) NOTIFICATION OF FDA.—The amendments 

11 made by paragraphs (2) and (3) of subsection (a) 

12 shall apply only with respect to an agreement de13 scribed under section 505(j)(5)(B)(vii)(I) of the 

14 Federal Food, Drug, and Cosmetic Act (as added by 

15 subsection (a)(1)) executed after the date of enact16 ment of this Act. 

17 SEC. 404. INCREASING DRUG COMPETITION AND PRE18 VENTING DRUG SHORTAGES. 

19 Section 505(j)(7) of the Federal Food, Drug, and 

20 Cosmetic Act (21 U.S.C. 355(j)(7)) is amended by adding 

21 at the end the following: 

22 ‘‘(D)(i) The Commissioner shall— 

23 ‘‘(I) not later than 9 months after the date of 

24 enactment of the Affordable Medications Act, pub25 lish a complete, up-to-date list on the internet 


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1 website of the Food and Drug Administration of all 

2 drugs, including authorized generics, together with, 

3 with respect to the drug, as applicable— 

4 ‘‘(aa) the drug trade name; 

5 ‘‘(bb) the established name; 

6 ‘‘(cc) each active pharmaceutical ingredient 

7 facility (as defined in section 744B(a)(4)(a)(ii)); 

8 ‘‘(dd) each generic drug facility; 

9 ‘‘(ee) each contract manufacturing organi10 zation facility (as defined in section 744A(5)); 

11 ‘‘(ff) the date any authorized generic drug 

12 entered the market; 

13 ‘‘(gg) the marketing status; and 

14 ‘‘(hh) any other information the Secretary 

15 may require to mitigate or prevent drug short16 ages; 

17 ‘‘(II) designate each drug on the list that is a 

18 sole-source generic drug; 

19 ‘‘(III) designate each drug on the list that is an 

20 essential medicine, as identified by the World Health 

21 Organization, or another entity designated by the 

22 Secretary that meets evidence-based standards as re23 quired by the Secretary; and 

24 ‘‘(IV) maintain a confidential list of the identity 

25 and address of each facility described in subclause 


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1 (I), and publicly report on the website only the city 

2 and State or country of each such facility. 

3 ‘‘(ii) The Commissioner may choose not to make in4 formation collected under clause (i) publicly available if 

5 the Secretary determines that disclosure of such informa6 tion would adversely affect the public health (such as by 

7 increasing the possibility of hoarding or other disruption 

8 of the availability of drug products to patients). 

9 ‘‘(iii) The Commissioner shall notify relevant Federal 

10 agencies, including the Centers for Medicare & Medicaid 

11 Services and the Federal Trade Commission, when the 

12 Commissioner first publishes the information under clause 

13 (i) that the information has been published and will be 

14 updated regularly. 

15 ‘‘(iv) In this subparagraph, the term ‘sole-source’ 

16 means, with respect to a drug, there is not more than one 

17 approved drug on the list of drugs under subparagraph 

18 (A), not including drugs on the discontinued section of 

19 such list.’’. 

20 SEC. 405. DISALLOWANCE OF DEDUCTION FOR ADVER21 TISING FOR PRESCRIPTION DRUGS. 

22 (a) IN GENERAL.—Part IX of subchapter B of chap23 ter 1 of subtitle A of the Internal Revenue Code of 1986 

24 (relating to items not deductible) is amended by adding 

25 at the end the following new section: 


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1 ‘‘SEC. 280I. DISALLOWANCE OF DEDUCTION FOR DIRECT2 TO-CONSUMER ADVERTISING OF PRESCRIP3 TION DRUGS. 

4 ‘‘(a) IN GENERAL.—No deduction shall be allowed 

5 under this chapter for expenses relating to direct-to-con6 sumer advertising of prescription drugs for any taxable 

7 year. 

8 ‘‘(b) DIRECT-TO-CONSUMER ADVERTISING.—For 

9 purposes of this section, the term ‘direct-to-consumer ad10 vertising’ means any dissemination, by or on behalf of a 

11 sponsor of a prescription drug product (as such term is 

12 defined in section 735(3) of the Federal Food, Drug, and 

13 Cosmetic Act), of an advertisement which— 

14 ‘‘(1) is in regard to such prescription drug 

15 product, and 

16 ‘‘(2) primarily targeted to the general public, 

17 including through— 

18 ‘‘(A) publication in journals, magazines, 

19 other periodicals, and newspapers, 

20 ‘‘(B) broadcasting through media such as 

21 radio, television, telephone communication sys22 tems, direct mail, and billboards, 

23 ‘‘(C) dissemination on the internet (includ24 ing social media), and 


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1 ‘‘(D) manufacturer patient assistance pro2 grams, as defined in section 399V–7 of the 

3 Public Health Service Act.’’. 

4 (b) CONFORMING AMENDMENT.—The table of sec5 tions for such part IX of the Internal Revenue Code of 

6 1986 is amended by adding after the item relating to sec7 tion 280H the following new item: 

‘‘Sec. 280I. Disallowance of deduction for direct-to-consumer advertising of prescription drugs.’’. 

8 (c) EFFECTIVE DATE.—The amendments made by 

9 subsections (a) and (b) shall apply to amounts paid or in10 curred after the date of the enactment of this Act, in tax11 able years ending after such date. 

12 (d) OVERSIGHT OF PRESCRIPTION DRUGS.— 

13 (1) IN GENERAL.—The Secretary of Health and 

14 Human Services (referred to in this subsection as 

15 the ‘‘Secretary’’), acting through the Commissioner 

16 of Food and Drugs and in coordination with other 

17 Federal agencies, shall conduct oversight of the risks 

18 and benefits of drugs that are on the market and 

19 how such risks are presented in drug advertisements 

20 for the purpose of correcting false or misleading in21 formation published in direct-to-consumer advertise22 ments and to disseminate corrective information to 

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1 ing the risks and benefits of a drug on an quarterly 

2 basis. 

3 (2) PREREVIEW OF TELEVISION ADVERTISE4 MENTS.—The Secretary, acting through the Com5 missioner of Food and Drugs and in consultation 

6 with relevant stakeholders, shall issue new, or up7 date current, guidance issued under section 503C of 

8 the Federal Food, Drug, and Cosmetic Act (21 

9 U.S.C. 353c). In carrying out this paragraph, the 

10 Secretary shall focus on drugs that present the 

11 greatest risk to consumers, drugs that represent the 

12 greatest proportion of total spending in Federal pro13 grams, drugs with high unit price increases over the 

14 preceding year, drugs with high launch prices, or 

15 any other priority drugs identified by the Secretary. 

16 (3) FUNDING.—There is authorized to be ap17 propriated to the Secretary an amount equal to the 

18 increase in revenue resulting from the enactment of 

19 section 280I of the Internal Revenue Code of 1986, 

20 as added by subsection (a). 

21 SEC. 406. DRUG MANUFACTURER DUTY TO DISCLOSE DRUG 

22 PRICES TO PRACTITIONERS. 

23 (a) DUTY TO DISCLOSE.—Whenever a drug manu24 facturer, including any representative of the manufac25 turer, communicates with a health care practitioner about 


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1 a drug manufactured by the drug manufacturer, including 

2 through promotional, educational, or marketing commu3 nications, meetings or paid events, and the provision of 

4 goods, gifts, and samples, the drug manufacturer shall dis5 close to the practitioner the wholesale acquisition cost (as 

6 defined in section 1847A(c)(6)(B) of the Social Security 

7 Act (42 U.S.C. 1395w–3a(c)(6)(B))) for a 30-day supply 

8 of the drug, which may include a brief qualitative expla9 nation of reduced cost availability for certain consumers. 

10 (b) ENFORCEMENT BY FEDERAL TRADE COMMIS11 SION.— 

12 (1) UNFAIR OR DECEPTIVE ACTS OR PRAC13 TICES.—A violation of subsection (a) by a person 

14 with respect to whom the Commission is empowered 

15 under section 5(a)(2) of the Federal Trade Commis16 sion Act (15 U.S.C. 45(a)(2)) shall be treated as a 

17 violation of a rule defining an unfair or deceptive act 

18 or practice prescribed under section 18(a)(1)(B) of 

19 the Federal Trade Commission Act (15 U.S.C. 

20 57a(a)(1)(B)). 

21 (2) POWERS OF FEDERAL TRADE COMMIS22 SION.— 

23 (A) IN GENERAL.—The Federal Trade 

24 Commission shall enforce this section in the 

25 same manner, by the same means, and with the 


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1 same jurisdiction, powers, and duties as though 

2 all applicable terms and provisions of the Fed3 eral Trade Commission Act (15 U.S.C. 41 et 

4 seq.) were incorporated into and made a part of 

5 this Act. 

6 (B) PRIVILEGES AND IMMUNITIES.—Any 

7 person who violates this section shall be subject 

8 to the penalties and entitled to the privileges 

9 and immunities provided in the Federal Trade 

10 Commission Act (15 U.S.C. 41 et seq.). 

11 (c) RULEMAKING.—The Federal Trade Commission 

12 shall promulgate in accordance with section 553 of title 

13 5, United States Code, such rules as may be necessary 

14 to carry out this section. 

15 (d) SAVINGS PROVISION.—Nothing in this section 

16 shall be construed to limit, impair, or supersede the oper17 ation of the Federal Trade Commission Act (15 U.S.C. 

18 41 et seq.) or any other provision of Federal law. 

19 SEC. 407. EXCLUDING AUTHORIZED GENERIC DRUGS FROM 

20 CALCULATION OF AVERAGE MANUFACTURER 

21 PRICE UNDER THE MEDICAID DRUG REBATE 

22 PROGRAM. 

23 (a) IN GENERAL.—Subparagraph (C) of section 

24 1927(k)(1) of the Social Security Act (42 U.S.C. 1396r– 

25 8(k)(1)) is amended— 


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1 (1) in the subparagraph heading, by striking 

2 ‘‘INCLUSION’’ and inserting ‘‘EXCLUSION’’; 

3 (2) by striking ‘‘a new drug application’’ and 

4 inserting ‘‘the manufacturer’s new drug applica5 tion’’; and 

6 (3) by striking ‘‘inclusive’’ and inserting ‘‘exclu7 sive’’. 

8 (b) EFFECTIVE DATE.—The amendments made by 

9 this section shall take effect on the first day of the first 

10 fiscal quarter that begins after the date of enactment of 

11 this Act. 

Æ 


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