II 

116TH CONGRESS 

1ST SESSION S. 2081 

To amend title XVIII of the Social Security Act to require drug manufacturers to provide rebates for drugs furnished under Medicare part B for 

which the growth in average sales price has exceeded inflation, and 

for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JULY 10, 2019 

Mr. PETERS (for himself and Ms. STABENOW) introduced the following bill; 

which was read twice and referred to the Committee on Finance 

A BILL 

To amend title XVIII of the Social Security Act to require 

drug manufacturers to provide rebates for drugs furnished under Medicare part B for which the growth 

in average sales price has exceeded inflation, and for 

other purposes. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Stop Drug Companies 

5 from Overcharging Seniors in Medicare Part B Act of 

6 2019’’. 


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1 SEC. 2. REQUIRING DRUG MANUFACTURERS TO PROVIDE 

2 REBATES FOR DRUGS FURNISHED UNDER 

3 MEDICARE PART B FOR WHICH ASP GROWTH 

4 HAS EXCEEDED INFLATION. 

5 Section 1847A of the Social Security Act (42 U.S.C. 

6 1395w–3a) is amended by adding at the end the following 

7 new subsection: 

8 ‘‘(h) PRESCRIPTION DRUG REBATE AGREEMENT.— 

9 ‘‘(1) REQUIREMENT.— 

10 ‘‘(A) IN GENERAL.—Subject to subpara11 graphs (B) and (C), in order for payment to be 

12 made under this part for an applicable part B 

13 drug (as defined in paragraph (7)(A)) of a 

14 manufacturer furnished on or after January 1, 

15 2020, the manufacturer shall have entered into 

16 and have in effect a rebate agreement described 

17 in paragraph (2) with the Secretary. 

18 ‘‘(B) EXCEPTIONS.—This subsection shall 

19 not apply with respect to an applicable part B 

20 drug of a manufacturer— 

21 ‘‘(i) if the Secretary determines that 

22 the estimated average annual cost per user 

23 for the associated drug billing code as de24 termined in such manner as the Secretary 

25 determines appropriate, including with re26 spect to an applicable part B drug for 


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1 which a HCPCS code has not been as2 signed, is less than— 

3 ‘‘(I) for 2020, $100; and 

4 ‘‘(II) for a subsequent year, the 

5 amount determined under this clause 

6 for the preceding year increased by 

7 the percentage increase in the con8 sumer price index for all urban con9 sumers (U.S. city average) for the 12- 

10 month period ending with June of the 

11 previous year; 

12 ‘‘(ii) if the drug is included on the 

13 drug shortage list under section 506E of 

14 the Federal Food, Drug, and Cosmetic Act 

15 (21 U.S.C. 356e). 

16 ‘‘(C) ESTABLISHMENT OF PROCEDURES TO

17 AVOID DUPLICATION.—The Secretary shall es18 tablish procedures to ensure that there is no 

19 duplication with respect to drug rebates pro20 vided by manufacturers with respect to applica21 ble part B drugs under this subsection and ei22 ther of the following: 

23 ‘‘(i) Purchase by a covered entity of 

24 covered outpatient drugs pursuant to an 


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1 agreement under section 340B of the Pub2 lic Health Service Act (42 U.S.C. 256b). 

3 ‘‘(ii) Drug rebates provided by manu4 facturers with respect to covered out5 patient drugs pursuant to section 1927. 

6 ‘‘(2) REBATE AGREEMENT.—A rebate agree7 ment under this subsection shall require the manu8 facturer to provide to the Secretary (to be deposited 

9 in the Treasury to the credit of the Federal Supple10 mentary Medical Insurance Trust Fund) a rebate 

11 for each rebate period (as defined in paragraph 

12 (7)(B)) ending after December 31, 2019, in an 

13 amount specified in paragraph (4) for applicable 

14 part B drugs of the manufacturer furnished after 

15 December 31, 2019, for which payment was made 

16 under this section or under a separate ambulatory 

17 classification group pursuant to section 1833(t) for 

18 such period. Such rebate shall be paid by the manu19 facturer not later than 30 days after the date of re20 ceipt of the information described in paragraph (3) 

21 for the period involved. 

22 ‘‘(3) SECRETARY PROVISION OF INFORMA23 TION.— 

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

25 report to each manufacturer not later than 180 


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1 days after the end of each rebate period and in 

2 a form consistent with a standard reporting for3 mat established by the Secretary, information 

4 on the total number of units of each dosage 

5 form and strength and package size of each ap6 plicable part B drug of the manufacturer fur7 nished after December 31, 2019, for which pay8 ment was made under this section or under a 

9 separate ambulatory classification group pursu10 ant to section 1833(t) during the period. 

11 ‘‘(B) AUDITS BY MANUFACTURER OF IN12 FORMATION PROVIDED.—A manufacturer may, 

13 as determined by the Secretary, audit the infor14 mation provided (or required to be provided) 

15 under subparagraph (A). 

16 ‘‘(C) AUDITS BY SECRETARY.—The Sec17 retary may audit the information provided (or 

18 required to be provided) under subparagraph 

19 (A) and the determination of the billing-code 

20 level rebate amount, including the manufac21 turer-level billing-code level ASP and inflation22 adjusted billing-code level ASP, under para23 graph (4). 

24 ‘‘(D) ADJUSTMENTS BASED ON AUDIT RE25 SULTS.—The Secretary shall make adjustments 


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1 to rebates and average sales price as appro2 priate based on the results of an audit con3 ducted under subparagraph (B) or (C). 

4 ‘‘(4) DETERMINATION OF BILLING-CODE LEVEL

5 REBATE AMOUNT.— 

6 ‘‘(A) IN GENERAL.—The amount of the re7 bate specified under this paragraph for a manu8 facturer for a rebate period, with respect to ap9 plicable part B drugs of a manufacturer as10 signed to a billing code, shall be equal to the 

11 product of— 

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

13 drugs of the manufacturer assigned to the 

14 billing code for which payment was made 

15 under this section or under a separate am16 bulatory classification group pursuant to 

17 section 1833(t) for the rebate period; and 

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

19 ‘‘(I) the manufacturer-level bill20 ing-code level ASP (as defined in sub21 paragraph (B)) for the manufacturer 

22 for the rebate period, exceeds 

23 ‘‘(II) the inflation-adjusted bill24 ing-code level ASP (as defined in sub25 paragraph (C)) for the rebate period. 


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1 ‘‘(B) MANUFACTURER-LEVEL BILLING2 CODE LEVEL ASP DEFINED.—In this subsection, 

3 the term ‘manufacturer-level billing-code level 

4 ASP’ means, with respect to a manufacturer 

5 and a billing code for a rebate period, subject 

6 to subparagraph (E)(i), the weighted average 

7 sales price (per unit) across all of the National 

8 Drug Codes for a manufacturer assigned to the 

9 billing code, as determined by the Secretary, for 

10 the quarter used to establish payment rates for 

11 such Codes during the rebate period. 

12 ‘‘(C) INFLATION-ADJUSTED BILLING-CODE

13 LEVEL ASP DEFINED.—In this subsection, the 

14 term ‘inflation-adjusted billing-code level ASP’ 

15 means, with respect to a billing code and a re16 bate period, the product of— 

17 ‘‘(i) subject to subparagraph (E)(ii), 

18 the average sales price for all National 

19 Drug Codes, regardless of manufacturer, 

20 assigned to the billing code, as determined 

21 by the Secretary, for the calendar quarter 

22 beginning January 1, 2017; and 

23 ‘‘(ii) the percentage increase in the 

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1 tween December 2016, and the month 

2 prior to the quarter described in subpara3 graph (B). 

4 ‘‘(D) TREATMENT OF SUBSEQUENTLY AP5 PROVED DRUGS.—In the case of an applicable 

6 part B drug first marketed after September 30, 

7 2016, clause (i) of subparagraph (C) shall be 

8 applied by substituting ‘the second full calendar 

9 quarter after the day on which the drug was 

10 first marketed’ for ‘the calendar quarter begin11 ning January 1, 2017’ and clause (ii) of such 

12 subparagraph shall be applied by substituting 

13 ‘the month prior to the first month of the sec14 ond full calendar quarter after the day on which 

15 the drug was first marketed’ for ‘December 

16 2016’. 

17 ‘‘(E) AUTHORITY TO MODIFY METHOD18 OLOGY.— 

19 ‘‘(i) DETERMINATION OF MANUFAC20 TURER-LEVEL BILLING-CODE LEVEL

21 ASP.—In the case where the Secretary does 

22 not have manufacturer level data with re23 spect to a billing code, the Secretary may 

24 request such additional data as needed, al25 locate total volume for all National Drug 


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1 Codes, regardless of manufacturer, as2 signed to the billing Code as determined by 

3 the Secretary, or use an alternate method4 ology as necessary in order to determine 

5 the manufacturer-level billing-code level 

6 ASP under subparagraph (B). 

7 ‘‘(ii) DETERMINATION OF INFLATION8 ADJUSTED BILLING-CODE LEVEL ASP.—In 

9 the case where the Secretary does not have 

10 sufficient data with respect to the average 

11 sales price for applicable part B drugs as12 signed to a billing code in order to deter13 mine the inflation-adjusted billing-code 

14 level ASP for the period described in sub15 paragraph (C)(i), including through the 

16 application of subparagraph (D) to such 

17 subparagraph (C)(i), the Secretary may 

18 modify the methodology or period as nec19 essary for purposes of determining an in20 flation-adjusted billing-code level ASP for 

21 such period. 

22 ‘‘(5) SUBMISSION OF DATA.—A rebate agree23 ment under this subsection shall require a manufac24 turer of an applicable part B drug to submit to the 

25 Secretary at such time, and in such manner, as the 


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1 Secretary may specify such data as the Secretary de2 termines is necessary in order to carry out this sub3 section. 

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

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

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

7 to rebate agreements under this subsection in the 

8 same manner as such paragraph applies to a rebate 

9 agreement under such section. 

10 ‘‘(7) OTHER TERMS AND CONDITIONS.—The 

11 Secretary shall establish other terms and conditions 

12 of the rebate agreement under this subsection, in13 cluding terms and conditions related to compliance, 

14 that are consistent with this subsection. 

15 ‘‘(8) DEFINITIONS.—In this subsection: 

16 ‘‘(A) APPLICABLE PART B DRUG.—The 

17 term ‘applicable part B drug’ means— 

18 ‘‘(i) a drug or biological described in 

19 section 1842(o)(1)(C) for which payment is 

20 made under this section; or 

21 ‘‘(ii) a drug or biological for which the 

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1 patient department services under section 

2 1833(t). 

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

4 period’ means, with respect to an agreement 

5 under paragraph (2), a calendar quarter or 

6 other period specified by the Secretary with re7 spect to the payment of rebates under such 

8 agreement.’’. 

9 SEC. 3. PROTECTION AGAINST HIGH OUT-OF-POCKET EX10 PENDITURES FOR PART B DRUGS. 

11 Title XVIII of the Social Security Act (42 U.S.C. 

12 1395 et seq.) is amended by inserting after section 1847B 

13 the following new section: 

14 ‘‘SEC. 1847C. PROTECTION AGAINST HIGH OUT-OF-POCKET 

15 EXPENDITURES FOR PART B DRUGS. 

16 ‘‘(a) IN GENERAL.—Notwithstanding any other pro17 vision of this title, in the case of an individual enrolled 

18 under this part, if the amount of the out-of-pocket cost19 sharing for part B drugs (as defined in subsection (b)) 

20 of such individual for a year (beginning with 2020) equals 

21 or exceeds the part B drug annual out-of-pocket threshold 

22 specified in subsection (c) for the year, section 

23 1833(a)(1)(S) shall be applied by substituting ‘100 per24 cent’ for ‘80 percent’. 


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1 ‘‘(b) OUT-OF-POCKET COST-SHARING FOR PART B 

2 DRUGS DEFINED.—In this section, the term ‘out-of-pock3 et cost-sharing for part B drugs’ means, with respect to 

4 an individual, the amount of the expenses incurred by the 

5 individual that are attributable to drugs or biologicals fur6 nished under this part. 

7 ‘‘(c) PART B DRUG ANNUAL OUT-OF-POCKET

8 THRESHOLD.— 

9 ‘‘(1) IN GENERAL.—For purposes of this sec10 tion, the ‘part B drug annual out-of-pocket thresh11 old’ specified in this subsection— 

12 ‘‘(A) for 2020, is equal to the annual out13 of-pocket threshold specified in section 1860D– 

14 2(b)(4)(B) for 2019, increased by the annual 

15 percentage increase in the consumer price index 

16 for all urban consumers (United States city av17 erage) for the 12-month period ending in July 

18 of the 2019; and 

19 ‘‘(B) for a subsequent year, is equal to the 

20 amount specified in this subsection for the pre21 vious year, increased by the annual percentage 

22 increase in the consumer price index for all 

23 urban consumers (United States city average) 

24 for the 12-month period ending in July of the 

25 previous year. 


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1 ‘‘(2) ROUNDING.—Any amount determined 

2 under paragraph (1) that is not a multiple of $50 

3 shall be rounded to the nearest multiple of $50.’’. 

Æ 


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