I 

118TH CONGRESS 

1ST SESSION H. R. 4895 

To amend title XI of the Social Security Act to expand the drug price 

negotiation program, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 26, 2023 

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

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

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

Education and the Workforce, for a period to be subsequently determined 

by the Speaker, in each case for consideration of such provisions as fall 

within the jurisdiction of the committee concerned 

A BILL 

To amend title XI of the Social Security Act to expand 

the drug price negotiation program, 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 ‘‘Lowering Drug Costs 

5 for American Families Act’’. 


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1 SEC. 2. EXPANDING THE DRUG PRICE NEGOTIATION PRO2 GRAM. 

3 (a) INCREASING THE NUMBER OF DRUGS SUBJECT

4 TO NEGOTIATION.—Section 1192(a)(4) of the Social Se5 curity Act (42 U.S.C. 1320f–1(a)(4)) is amended by strik6 ing ‘‘20’’ each place it appears and inserting ‘‘50’’ in each 

7 such place. 

8 (b) EXPANSION OF DEFINITION OF MAXIMUM FAIR

9 PRICE ELIGIBLE INDIVIDUAL.—Section 1191(c)(2) of the 

10 Social Security Act (42 U.S.C. 1320f–1(c)(2)) is amend11 ed— 

12 (1) in subparagraph (A), by inserting ‘‘, or a 

13 participant, beneficiary, or enrollee who is enrolled 

14 under a group health plan or health insurance cov15 erage offered in the group or individual market (as 

16 such terms are defined in section 2791 of the Public 

17 Health Service Act) with respect to which there is in 

18 effect an agreement with the Secretary under section 

19 1197 with respect to such selected drug as so fur20 nished or dispensed’’ after ‘‘such selected drug’’; and 

21 (2) in subparagraph (B), by inserting ‘‘, or a 

22 participant, beneficiary, or enrollee who is enrolled 

23 under a group health plan or health insurance cov24 erage offered in the group or individual market (as 

25 such terms are defined in section 2791 of the Public 

26 Health Service Act) with respect to which there is in 


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1 effect an agreement with the Secretary under section 

2 1197 with respect to such selected drug as so fur3 nished or administered’’ after ‘‘such selected drug’’. 

4 (c) APPLICATION OF ADMINISTRATIVE PROCEDURES

5 TO NEW MAXIMUM FAIR PRICE ELIGIBLE INDIVID6 UALS.—Section 1196(a)(3) of the Social Security Act (42 

7 U.S.C. 1320f–5(a)(3)) is amended— 

8 (1) in subparagraph (A), by striking ‘‘and’’ at 

9 the end; 

10 (2) in subparagraph (B), by striking the period 

11 and inserting ‘‘; and’’; and 

12 (3) by adding at the end the following new sub13 paragraph: 

14 ‘‘(C) maximum fair price eligible individ15 uals not described in subparagraph (A) or 

16 (B).’’. 

17 (d) HEALTH INSURER AGREEMENTS.—Part E of 

18 title XI of the Social Security Act (42 U.S.C. 1320f et 

19 seq.) is amended— 

20 (1) by redesignating sections 1197 and 1198 as 

21 sections 1198 and 1199, respectively; and 

22 (2) by inserting after section 1196 the following 

23 new section: 


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1 ‘‘SEC. 1197. VOLUNTARY PARTICIPATION BY OTHER 

2 HEALTH PLANS. 

3 ‘‘(a) AGREEMENT TO PARTICIPATE UNDER PRO4 GRAM.— 

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

6 under the program under this part the Secretary 

7 shall be treated as having in effect an agreement 

8 with a group health plan or health insurance issuer 

9 offering group or individual health insurance cov10 erage (as such terms are defined in section 2791 of 

11 the Public Health Service Act), with respect to a 

12 price applicability period and a selected drug with 

13 respect to such period— 

14 ‘‘(A) in the case such selected drug fur15 nished or dispensed at a pharmacy or by mail 

16 order service if coverage is provided under such 

17 plan or coverage during such period for such se18 lected drug as so furnished or dispensed; and 

19 ‘‘(B) in the case such selected drug fur20 nished or administered by a hospital, physician, 

21 or other provider of services or supplier if cov22 erage is provided under such plan or coverage 

23 during such period for such selected drug as so 

24 furnished or administered. 

25 ‘‘(2) OPTING OUT OF AGREEMENT.—The Sec26 retary shall not be treated as having in effect an 


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1 agreement under the program under this part with 

2 a group health plan or health insurance issuer offer3 ing group or individual health insurance coverage 

4 with respect to a price applicability period and a se5 lected drug with respect to such period if such a 

6 plan or issuer affirmatively elects, through a process 

7 specified by the Secretary, not to participate under 

8 the program with respect to such period and drug. 

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

10 each price applicability period and each selected drug with 

11 respect to such period, the Secretary and the Secretary 

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

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

14 health insurance issuer offering group or individual health 

15 insurance coverage, with respect to which coverage is pro16 vided under such plan or coverage for such drug, that has 

17 elected under subsection (a) not to participate under the 

18 program with respect to such period and drug.’’. 

19 (e) APPLICATION TO GROUP HEALTH PLANS AND

20 HEALTH INSURANCE COVERAGE.— 

21 (1) PHSA.—Part D of title XXVII of the Pub22 lic Health Service Act (42 U.S.C. 300gg–111 et 

23 seq.) is amended by adding at the end the following 

24 new section: 


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1 ‘‘SEC. 2799A–11. DRUG PRICE NEGOTIATION PROGRAM AND 

2 APPLICATION OF MAXIMUM FAIR PRICES. 

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

4 plan or health insurance issuer offering group or indi5 vidual health insurance coverage that is treated under sec6 tion 1197 of the Social Security Act as having in effect 

7 an agreement with the Secretary under the Drug Price 

8 Negotiation Program under part E of title XI of such Act, 

9 with respect to a price applicability period (as defined in 

10 section 1191(b) of such Act) and a selected drug (as de11 fined in section 1192(c) of such Act) with respect to such 

12 period for which coverage is provided under such plan or 

13 coverage— 

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

15 ‘‘(A) in the case the drug is furnished or 

16 dispensed at a pharmacy or by a mail order 

17 service, to such plan or coverage, and to the 

18 participants, beneficiaries, and enrollees en19 rolled under such plan or coverage, during such 

20 period, with respect to such selected drug, in 

21 the same manner as such provisions apply to 

22 prescription drug plans and MA–PD plans, and 

23 to participants, beneficiaries, and enrollees en24 rolled under such prescription drug plans and 

25 MA–PD plans during such period; and 


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1 ‘‘(B) in the case the drug is furnished or 

2 administered by a hospital, physician, or other 

3 provider of services or supplier, to such plan or 

4 coverage, and to the participants, beneficiaries, 

5 and enrollees enrolled under such plan or cov6 erage, and to hospitals, physicians, and other 

7 providers of services and suppliers during such 

8 period, with respect to such drug in the same 

9 manner as such provisions apply to the Sec10 retary, to participants, beneficiaries, and enroll11 ees entitled to benefits under part A of title 

12 XVIII or enrolled under part B of such title, 

13 and to hospitals, physicians, and other pro14 viders and suppliers participating under title 

15 XVIII during such period; 

16 ‘‘(2) the plan or issuer shall apply any cost17 sharing responsibilities under such plan or coverage, 

18 with respect to such selected drug, by substituting 

19 an amount not more than the maximum fair price 

20 negotiated under such part E of title XI for such 

21 drug in lieu of the drug price upon which the cost22 sharing would have otherwise applied, and such cost23 sharing responsibilities with respect to such selected 

24 drug may not exceed such maximum fair price; and 


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

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

3 participants, beneficiaries, and enrollees so enrolled 

4 in such plans and coverage, and such hospitals, phy5 sicians, and other providers and suppliers partici6 pating in such plans and coverage. 

7 ‘‘(b) NOTIFICATION REGARDING NONPARTICIPATION

8 IN DRUG PRICE NEGOTIATION PROGRAM.—A group 

9 health plan or a health insurance issuer offering group or 

10 individual health insurance coverage shall publicly dis11 close, in a manner and in accordance with a process speci12 fied by the Secretary, any election made under section 

13 1197 of the Social Security Act by such plan or issuer 

14 to not participate in the Drug Price Negotiation Program 

15 under part E of title XI of such Act with respect to a 

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

17 for which coverage is provided under such plan or coverage 

18 before the beginning of the plan year for which such elec19 tion was made.’’. 

20 (2) ERISA.— 

21 (A) IN GENERAL.—Subpart B of part 7 of 

22 subtitle B of title I of the Employee Retirement 

23 Income Security Act of 1974 (29 U.S.C. 1181 

24 et seq.) is amended by adding at the end the 

25 following new section: 


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1 ‘‘SEC. 726. DRUG PRICE NEGOTIATION PROGRAM AND AP2 PLICATION OF MAXIMUM FAIR PRICES. 

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

4 plan or health insurance issuer offering group health in5 surance coverage that is treated under section 1197 of the 

6 Social Security Act as having in effect an agreement with 

7 the Secretary of Health and Human Services under the 

8 Drug Price Negotiation Program under part E of title XI 

9 of such Act, with respect to a price applicability period 

10 (as defined in section 1191(b) of such Act) and a selected 

11 drug (as defined in section 1192(c) of such Act) with re12 spect to such period for which coverage is provided under 

13 such plan or coverage— 

14 ‘‘(1) the provisions of such part shall apply, as 

15 applicable— 

16 ‘‘(A) in the case the drug is furnished or 

17 dispensed at a pharmacy or by a mail order 

18 service, to such plan or coverage, and to the 

19 participants and beneficiaries enrolled under 

20 such plan or coverage, during such period, with 

21 respect to such selected drug, in the same man22 ner as such provisions apply to prescription 

23 drug plans and MA–PD plans, and to partici24 pants and beneficiaries enrolled under such pre25 scription drug plans and MA–PD plans during 

26 such period; and 


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1 ‘‘(B) in the case the drug is furnished or 

2 administered by a hospital, physician, or other 

3 provider of services or supplier, to the group 

4 health plan or coverage offered by an issuer, to 

5 the participants and beneficiaries enrolled 

6 under such plans or coverage, and to hospitals, 

7 physicians, and other providers of services and 

8 suppliers during such period, with respect to 

9 such drug in the same manner as such provi10 sions apply to the Secretary of Health and 

11 Human Services, to participants and bene12 ficiaries entitled to benefits under part A of 

13 title XVIII or enrolled under part B of such 

14 title, and to hospitals, physicians, and other 

15 providers and suppliers participating under title 

16 XVIII during such period; 

17 ‘‘(2) the plan or issuer shall apply any cost18 sharing responsibilities under such plan or coverage, 

19 with respect to such selected drug, by substituting 

20 an amount not more than the maximum fair price 

21 negotiated under such part E of title XI for such 

22 drug in lieu of the drug price upon which the cost23 sharing would have otherwise applied, and such cost24 sharing responsibilities with respect to such selected 

25 drug may not exceed such maximum fair price; and 


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

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

3 such participants and beneficiaries so enrolled in 

4 such plans. 

5 ‘‘(b) NOTIFICATION REGARDING NONPARTICIPATION

6 IN DRUG PRICE NEGOTIATION PROGRAM.—A group 

7 health plan or a health insurance issuer offering group 

8 health insurance coverage shall publicly disclose in a man9 ner and in accordance with a process specified by the Sec10 retary any election made under section 1197 of the Social 

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

12 the Drug Price Negotiation Program under part E of title 

13 XI of such Act with respect to a selected drug (as defined 

14 in section 1192(c) of such Act) for which coverage is pro15 vided under such plan or coverage before the beginning 

16 of the plan year for which such election was made.’’. 

17 (B) APPLICATION TO RETIREE AND CER18 TAIN SMALL GROUP HEALTH PLANS.—Section 

19 732(a) of the Employee Retirement Income Se20 curity Act of 1974 (29 U.S.C. 1191a(a)) is 

21 amended by striking ‘‘section 711’’ and insert22 ing ‘‘sections 711 and 726’’. 

23 (C) CLERICAL AMENDMENT.—The table of 

24 sections for subpart B of part 7 of subtitle B 

25 of title I of the Employee Retirement Income 


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1 Security Act of 1974 is amended by adding at 

2 the end the following: 

‘‘Sec. 726. Drug Price Negotiation Program and application of maximum fair 

prices.’’. 

3 (3) IRC.— 

4 (A) IN GENERAL.—Subchapter B of chap5 ter 100 of the Internal Revenue Code of 1986 

6 is amended by adding at the end the following 

7 new section: 

8 ‘‘SEC. 9826. DRUG PRICE NEGOTIATION PROGRAM AND AP9 PLICATION OF MAXIMUM FAIR PRICES. 

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

11 plan that is treated under section 1197 of the Social Secu12 rity Act as having in effect an agreement with the Sec13 retary of Health and Human Services under the Drug 

14 Price Negotiation Program under part E of title XI of 

15 such Act, with respect to a price applicability period (as 

16 defined in section 1191(b) of such Act) and a selected 

17 drug (as defined in section 1192(c) of such Act) with re18 spect to such period for which coverage is provided under 

19 such plan— 

20 ‘‘(1) the provisions of such part shall apply, as 

21 applicable— 

22 ‘‘(A) if coverage of such selected drug is 

23 provided under such plan if the drug is fur24 nished or dispensed at a pharmacy or by a mail 


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1 order service, to the plan, and to the partici2 pants and beneficiaries enrolled under such 

3 plan during such period, with respect to such 

4 selected drug, in the same manner as such pro5 visions apply to prescription drug plans and 

6 MA–PD plans, and to participants and bene7 ficiaries enrolled under such prescription drug 

8 plans and MA–PD plans during such period; 

9 and 

10 ‘‘(B) if coverage of such selected drug is 

11 provided under such plan if the drug is fur12 nished or administered by a hospital, physician, 

13 or other provider of services or supplier, to the 

14 plan, to the participants and beneficiaries en15 rolled under such plan, and to hospitals, physi16 cians, and other providers of services and sup17 pliers during such period, with respect to such 

18 drug in the same manner as such provisions 

19 apply to the Secretary of Health and Human 

20 Services, to participants and beneficiaries enti21 tled to benefits under part A of title XVIII or 

22 enrolled under part B of such title, and to hos23 pitals, physicians, and other providers and sup24 pliers participating under title XVIII during 

25 such period; 


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1 ‘‘(2) the plan shall apply any cost-sharing re2 sponsibilities under such plan, with respect to such 

3 selected drug, by substituting an amount not more 

4 than the maximum fair price negotiated under such 

5 part E of title XI for such drug in lieu of the drug 

6 price upon which the cost-sharing would have other7 wise applied, and such cost-sharing responsibilities 

8 with respect to such selected drug may not exceed 

9 such maximum fair price; and 

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

11 such part E to such plan and such participants and 

12 beneficiaries so enrolled in such plan. 

13 ‘‘(b) NOTIFICATION REGARDING NONPARTICIPATION

14 IN DRUG PRICE NEGOTIATION PROGRAM.—A group 

15 health plan shall publicly disclose in a manner and in ac16 cordance with a process specified by the Secretary any 

17 election made under section 1197 of the Social Security 

18 Act by the plan to not participate in the Drug Price Nego19 tiation Program under part E of title XI of such Act with 

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

21 of such Act) for which coverage is provided under such 

22 plan before the beginning of the plan year for which such 

23 election was made.’’. 

24 (B) APPLICATION TO RETIREE AND CER25 TAIN SMALL GROUP HEALTH PLANS.—Section 


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1 9831(a)(2) of the Internal Revenue Code of 

2 1986 is amended by inserting ‘‘other than with 

3 respect to section 9826,’’ before ‘‘any group 

4 health plan’’. 

5 (C) CLERICAL AMENDMENT.—The table of 

6 sections for subchapter B of chapter 100 of 

7 such Code is amended by adding at the end the 

8 following new item: 

‘‘Sec. 9826. Drug Price Negotiation Program and application of maximum fair 

prices.’’. 

9 SEC. 3. APPLICATION OF PRESCRIPTION DRUG INFLATION 

10 REBATES TO DRUGS FURNISHED IN THE 

11 COMMERCIAL MARKET. 

12 (a) PART B DRUGS.— 

13 (1) APPLICATION OF PRESCRIPTION DRUG IN14 FLATION REBATES TO DRUGS FURNISHED IN THE

15 COMMERCIAL MARKET.—Section 1847A(i) of the So16 cial Security Act (42 U.S.C. 1395w–3a(i)) is amend17 ed— 

18 (A) in paragraph (1)(A)(i), by striking 

19 ‘‘units’’ and inserting ‘‘billing units’’; 

20 (B) in paragraph (2)(A), by striking ‘‘for 

21 which payment is made under this part’’ and 

22 inserting ‘‘that would be payable under this 

23 part if such drug were furnished to an indi24 vidual enrolled under this part’’; and 


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1 (C) in paragraph (3)— 

2 (i) in subparagraph (A)(i), by striking 

3 ‘‘units’’ and inserting ‘‘billing units’’; and 

4 (ii) by striking subparagraph (B) and 

5 inserting the following: 

6 ‘‘(B) TOTAL NUMBER OF BILLING

7 UNITS.—For purposes of subparagraph (A)(i), 

8 the total number of billing units with respect to 

9 a part B rebatable drug is determined as fol10 lows: 

11 ‘‘(i) Determine the total number of 

12 units equal to— 

13 ‘‘(I) the total number of units, as 

14 reported under subsection (c)(1)(B) 

15 for each National Drug Code of such 

16 drug during the calendar quarter that 

17 is two calendar quarters prior to the 

18 calendar quarter as described in sub19 paragraph (A), minus 

20 ‘‘(II) the total number of units 

21 with respect to each National Drug 

22 Code of such drug for which payment 

23 was made under a State plan under 

24 title XIX (or waiver of such plan), as 

25 reported by States under section 


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1 1927(b)(2)(A) for the rebate period 

2 that is the same calendar quarter as 

3 described in subclause (I). 

4 ‘‘(ii) Convert the units determined 

5 under clause (i) to billing units for the bill6 ing and payment code of such drug, using 

7 a methodology similar to the methodology 

8 used under this section, by dividing the 

9 units determined under clause (i) for each 

10 National Drug Code of such drug by the 

11 billing unit for the billing and payment 

12 code of such drug. 

13 ‘‘(iii) Compute the sum of the billing 

14 units for each National Drug Code of such 

15 drug in clause (ii).’’. 

16 (2) EFFECTIVE DATE.—The amendments made 

17 by this subsection shall apply with respect to cal18 endar quarters beginning after the date of the enact19 ment of this Act. 

20 (b) COVERED PART D DRUGS.— 

21 (1) APPLICATION OF PRESCRIPTION DRUG IN22 FLATION REBATES TO DRUGS FURNISHED IN THE

23 COMMERCIAL MARKET.—Section 1860D–14B of the 

24 Social Security Act (42 U.S.C. 1395w–114b) is 

25 amended— 


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1 (A) in subsection (b)— 

2 (i) in paragraph (1)— 

3 (I) in subparagraph (A)(i), by 

4 striking ‘‘the total number of units’’ 

5 and all that follows through the semi6 colon and inserting the following: ‘‘the 

7 total number of units that are used to 

8 calculate the average manufacturer 

9 price of such dosage form and 

10 strength with respect to such part D 

11 rebatable drug, as reported by the 

12 manufacturer of such drug under sec13 tion 1927 for each month, with re14 spect to such period;’’; and 

15 (II) by striking subparagraph (B) 

16 and inserting the following: 

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

18 subparagraph (A)(i), the Secretary shall exclude 

19 from the total number of units for a dosage 

20 form and strength with respect to a part D 

21 rebatable drug, with respect to an applicable pe22 riod, the following: 

23 ‘‘(i) Units of each dosage form and 

24 strength of such part D rebatable drug for 

25 which payment was made under a State 


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1 plan under title XIX (or waiver of such 

2 plan), as reported by States under section 

3 1927(b)(2)(A). 

4 ‘‘(ii) Units of each dosage form and 

5 strength of such part D rebatable drug for 

6 which a rebate is paid under section 

7 1847A(i). 

8 ‘‘(iii) Beginning with plan year 2026, 

9 units of each dosage form and strength of 

10 such part D rebatable drug for which the 

11 manufacturer provides a discount under 

12 the program under section 340B of the 

13 Public Health Service Act.’’; and 

14 (ii) in paragraph (6), by striking ‘‘IN15 FORMATION.—The Secretary’’ and all that 

16 follows through ‘‘rebatable covered part D 

17 drug dispensed’’ and inserting the fol18 lowing: ‘‘AMP REPORTS.—The Secretary 

19 shall provide for a method and process 

20 under which, in the case of a manufacturer 

21 of a part D rebatable drug that submits 

22 revisions to information submitted under 

23 section 1927 by the manufacturer with re24 spect to such drug’’; and 


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1 (B) by striking subsection (d) and insert2 ing the following: 

3 ‘‘(d) INFORMATION.—For purposes of carrying out 

4 this section, the Secretary shall use information submitted 

5 by manufacturers under section 1927(b)(3) and informa6 tion submitted by States under section 1927(b)(2)(A).’’. 

7 (2) EFFECTIVE DATE.—The amendments made 

8 by this subsection shall apply with respect to appli9 cable periods (as defined in section 1860D– 

10 14B(g)(7) of the Social Security Act (42 U.S.C. 

11 1395w–114b(g)(7))) beginning after the date of the 

12 enactment of this Act. 

Æ 


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