I

107TH CONGRESS

1ST SESSION H. R. 1400

To provide for substantial reductions in the price of prescription drugs for

Medicare beneficiaries.

IN THE HOUSE OF REPRESENTATIVES

APRIL 4, 2001

Mr. ALLEN (for himself, Mr. WAXMAN, Mr. STARK, Mr. BERRY, Mr. BONIOR,

Mr. FROST, Mr. OBEY, Mrs. THURMAN, Mr. DOGGETT, Mr. BROWN of

Ohio, Mr. GREEN of Texas, Ms. DELAURO, Mr. PALLONE, Mr. SHOWS,

Mr. SANDERS, Ms. SCHAKOWSKY, Mr. CROWLEY, Mr. HINCHEY, Mr.

BALDACCI, Mr. ABERCROMBIE, Mr. ANDREWS, Mr. BACA, Mr. BAIRD,

Ms. BALDWIN, Mr. BARRETT, Ms. BERKLEY, Mr. BLAGOJEVICH, Mr.

BLUMENAUER, Mr. BORSKI, Mr. BOYD, Mr. BRADY of Pennsylvania, Ms.

BROWN of Florida, Ms. CARSON of Indiana, Mrs. CLAYTON, Mr. CLEMENT, Mr. CONYERS, Mr. CUMMINGS, Mr. DAVIS of Illinois, Mr. DEFAZIO,

Ms. DEGETTE, Mr. DELAHUNT, Mr. EVANS, Mr. FALEOMAVAEGA, Mr.

FILNER, Mr. HASTINGS of Florida, Ms. HOOLEY of Oregon, Ms. JACKSON-LEE of Texas, Mr. JEFFERSON, Mrs. JONES of Ohio, Ms. KAPTUR,

Mr. KENNEDY of Rhode Island, Mr. KILDEE, Mr. KLECZKA, Mr.

KUCINICH, Mr. LAMPSON, Mr. LANTOS, Mr. LARSON of Connecticut, Ms.

LEE, Mr. LEWIS of Georgia, Mrs. LOWEY, Mrs. MCCARTHY of New York,

Ms. MCCOLLUM, Mr. MCGOVERN, Ms. MCKINNEY, Mr. MCNULTY, Mrs.

MALONEY of New York, Mr. MARKEY, Mr. MASCARA, Mr. MEEHAN, Mrs.

MEEK of Florida, Mr. MEEKS of New York, Ms. MILLENDER-MCDONALD, Mr. GEORGE MILLER of California, Mrs. MINK of Hawaii, Mr.

MOAKLEY, Mr. NADLER, Mrs. NAPOLITANO, Ms. NORTON, Mr. OBERSTAR, Mr. OLVER, Mr. ORTIZ, Mr. OWENS, Mr. PASTOR, Mr. PAYNE, Ms.

PELOSI, Mr. PHELPS, Mr. POMEROY, Mr. RAHALL, Mr. REYES, Ms. RIVERS, Ms. ROYBAL-ALLARD, Mr. SANDLIN, Mr. SAYWER, Mr. SERRANO,

Ms. SLAUGHTER, Mr. STRICKLAND, Mr. STUPAK, Mr. THOMPSON of Mississippi, Mr. TIERNEY, Mr. UDALL of New Mexico, Mr. UNDERWOOD,

Ms. VELA ́ZQUEZ, Ms. WATERS, Mr. WEINER, Mr. WEXLER, Ms. WOOLSEY, and Mr. WYNN) introduced the following bill; which was referred to

the Committee on Energy and Commerce, and in addition to the Committee on Ways and Means, 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
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A BILL

To provide for substantial reductions in the price of

prescription drugs for Medicare beneficiaries.

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 ‘‘Prescription Drug

5 Fairness for Seniors Act of 2001’’.

6 SEC. 2. FINDINGS AND PURPOSES.

7 (a) FINDINGS.—The Congress finds the following:

8 (1) Manufacturers of prescription drugs engage

9 in price discrimination practices that compel many

10 older Americans to pay substantially more for pre11 scription drugs than consumers in foreign nations

12 and the drug manufacturers’ most favored U.S. cus13 tomers, such as health insurers, health maintenance

14 organizations, and the Federal Government.

15 (2) Older Americans who buy their own pre16 scription drugs often pay twice as much for prescrip17 tion drugs as consumers in foreign nations and the

18 drug manufacturers’ most favored U.S. customers.

19 In some cases, older Americans pay 10 times more

20 for prescription drugs than such customers.

21 (3) The discriminatory pricing by major drug

22 manufacturers sustains their high profits (for exam-
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1 ple, $27,300,000,000 in 1999), but causes financial

2 hardship and impairs the health and well-being of

3 millions of older Americans. Many older Americans

4 are forced to choose between buying their food and

5 buying their medicines.

6 (4) Foreign nations and U.S. federally funded

7 health care programs use purchasing power to ob8 tain prescription drugs at low prices. Medicare bene9 ficiaries are denied this benefit and cannot obtain

10 their prescription drugs at the lower prices available

11 to such nations and programs.

12 (5) Implementation of the policy set forth in

13 this Act will reduce prices for brand name prescrip14 tion drugs for many Medicare beneficiaries by an av15 erage of 40 percent.

16 (6) In addition to substantially lowering the

17 costs of prescription drugs for older Americans, im18 plementation of the policy set forth in this Act will

19 significantly improve the health and well-being of

20 older Americans and lower the costs to the Federal

21 taxpayer of the Medicare program.

22 (7) Older Americans who are terminally ill and

23 receiving hospice care services represent some of the

24 most vulnerable individuals in our nation. Making

25 prescription drugs available to Medicare beneficiaries
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1 under the care of Medicare-certified hospices will as2 sist in extending the benefits of lower prescription

3 drug prices to those most vulnerable and in need.

4 (b) PURPOSE.—The purpose of this Act is to protect

5 Medicare beneficiaries from discriminatory pricing by drug

6 manufacturers and to make prescription drugs available

7 to Medicare beneficiaries at substantially reduced prices.

8 SEC. 3. PARTICIPATING MANUFACTURERS.

9 (a) IN GENERAL.—Each participating manufacturer

10 of a covered outpatient drug shall make available for pur11 chase by each pharmacy such covered outpatient drug in

12 the amount described in subsection (b) at the price de13 scribed in subsection (c).

14 (b) DESCRIPTION OF AMOUNT OF DRUGS.—The

15 amount of a covered outpatient drug that a participating

16 manufacturer shall make available for purchase by a phar17 macy is an amount equal to the aggregate amount of the

18 covered outpatient drug sold or distributed by the phar19 macy to Medicare beneficiaries.

20 (c) DESCRIPTION OF PRICE.—The price at which a

21 participating manufacturer shall make a covered out22 patient drug available for purchase by a pharmacy is a

23 price no greater than the manufacturer’s average foreign

24 price.
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1 (d) ENFORCEMENT.—The United States shall debar

2 a manufacturer of drugs or biologicals that does not com3 ply with the provisions of this Act.

4 SEC. 4. SPECIAL PROVISION WITH RESPECT TO HOSPICE

5 PROGRAMS.

6 For purposes of determining the amount of a covered

7 outpatient drug that a participating manufacturer shall

8 make available for purchase by a pharmacy under section

9 3, there shall be included in the calculation of such

10 amount the amount of the covered outpatient drug sold

11 or distributed by a pharmacy to a hospice program. In

12 calculating such amount, only amounts of the covered out13 patient drug furnished to a Medicare beneficiary enrolled

14 in the hospice program shall be included.

15 SEC. 5. ADMINISTRATION.

16 The Secretary shall issue such regulations as may be

17 necessary to implement this Act.

18 SEC. 6. REPORTS TO CONGRESS REGARDING EFFECTIVE19 NESS OF ACT.

20 (a) IN GENERAL.—Not later than 2 years after the

21 date of the enactment of this Act, and annually thereafter,

22 the Secretary shall report to the Congress regarding the

23 effectiveness of this Act in—

24 (1) protecting Medicare beneficiaries from dis25 criminatory pricing by drug manufacturers, and
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1 (2) making prescription drugs available to

2 Medicare beneficiaries at substantially reduced

3 prices.

4 (b) CONSULTATION.—In preparing such reports, the

5 Secretary shall consult with public health experts, affected

6 industries, organizations representing consumers and

7 older Americans, and other interested persons.

8 (c) RECOMMENDATIONS.—The Secretary shall in9 clude in such reports any recommendations the Secretary

10 considers appropriate for changes in this Act to further

11 reduce the cost of covered outpatient drugs to Medicare

12 beneficiaries.

13 SEC. 7. DEFINITIONS.

14 In this Act:

15 (1) AVERAGE FOREIGN PRICE.—

16 (A) IN GENERAL.—The term ‘‘average for17 eign price’’ means, with respect to a covered

18 outpatient drug, the average price that the

19 manufacturer of the drug realizes on the sale of

20 drugs with the same active ingredient or ingre21 dients that are consumed in covered foreign na22 tions, taking into account—

23 (i) any rebate, contract term or condi24 tion, or other arrangement (whether with

25 the purchaser or other persons) that has
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1 the effect of reducing the amount realized

2 by the manufacturer on the sale of the

3 drugs; and

4 (ii) adjustments for any differences in

5 dosage, formulation, or other relevant

6 characteristics of the drugs.

7 (B) EXEMPT TRANSACTIONS.—The Sec8 retary may, by regulation, exempt from the cal9 culation of the average foreign price of a drug

10 those prices realized by a manufacturer in

11 transactions that are entered into for charitable

12 purposes, for research purposes, or under other

13 unusual circumstances, if the Secretary deter14 mines that the exemption is in the public inter15 est and is consistent with the purposes of this

16 Act.

17 (2) COVERED FOREIGN NATION.—The term

18 ‘‘covered foreign nation’ means Canada, France,

19 Germany, Italy, Japan, and the United Kingdom.

20 (3) COVERED OUTPATIENT DRUG.—The term

21 ‘‘covered outpatient drug’’ has the meaning given

22 that term in section 1927(k)(2) of the Social Secu23 rity Act (42 U.S.C. 1396r–8(k)(2)).

24 (4) DEBAR.—The term ‘‘debar’’ means to ex25 clude, pursuant to established administrative proce-
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1 dures, from Government contracting and subcon2 tracting for a specified period of time commensurate

3 with the seriousness of the failure or offense or the

4 inadequacy of performance.

5 (5) HOSPICE PROGRAM.—The term ‘‘hospice

6 program’’ has the meaning given that term under

7 section 1861(dd)(2) of the Social Security Act (42

8 U.S.C. 1395x(dd)(2)).

9 (6) MEDICARE BENEFICIARY.—The term

10 ‘‘Medicare beneficiary’’ means an individual entitled

11 to benefits under part A of title XVIII of the Social

12 Security Act or enrolled under part B of such title,

13 or both.

14 (7) PARTICIPATING MANUFACTURER.—The

15 term ‘‘participating manufacturer’’ means any man16 ufacturer of drugs or biologicals that, on or after the

17 date of the enactment of this Act, enters into a con18 tract or agreement with the United States for the

19 sale or distribution of covered outpatient drugs to

20 the United States.

21 (8) SECRETARY.—The term ‘‘Secretary’’ means

22 the Secretary of Health and Human Services.
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1 SEC. 8. EFFECTIVE DATE.

2 The Secretary shall implement this Act as expedi3 tiously as practicable and in a manner consistent with the

4 obligations of the United States.

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