II 

113TH CONGRESS 

1ST SESSION S. 408 

To amend title XVIII of the Social Security Act to deliver a meaningful 

benefit and lower prescription drug prices under the Medicare program. 

IN THE SENATE OF THE UNITED STATES 

FEBRUARY 28, 2013 

Mr. DURBIN (for himself, Mr. REED, and Mr. WHITEHOUSE) 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 deliver 

a meaningful benefit and lower prescription drug prices 

under the Medicare program. 

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 ‘‘Medicare Prescription 

5 Drug Savings and Choice Act of 2013’’. 

6 SEC. 2. ESTABLISHMENT OF MEDICARE OPERATED PRE7 SCRIPTION DRUG PLAN OPTION. 

8 (a) IN GENERAL.—Subpart 2 of part D of title XVIII 

9 of the Social Security Act is amended by inserting after 


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1 section 1860D–11 (42 U.S.C. 1395w–111) the following 

2 new section: 

3 ‘‘MEDICARE OPERATED PRESCRIPTION DRUG PLAN

4 OPTION

5 ‘‘SEC. 1860D–11A. (a) IN GENERAL.—Notwith6 standing any other provision of this part, for each year 

7 (beginning with 2014), in addition to any plans offered 

8 under section 1860D–11, the Secretary shall offer one or 

9 more Medicare operated prescription drug plans (as de10 fined in subsection (c)) with a service area that consists 

11 of the entire United States and shall enter into negotia12 tions in accordance with subsection (b) with pharma13 ceutical manufacturers to reduce the purchase cost of cov14 ered part D drugs for eligible part D individuals who en15 roll in such a plan. 

16 ‘‘(b) NEGOTIATIONS.—Notwithstanding section 

17 1860D–11(i), for purposes of offering a Medicare operated 

18 prescription drug plan under this section, the Secretary 

19 shall negotiate with pharmaceutical manufacturers with 

20 respect to the purchase price of covered part D drugs in 

21 a Medicare operated prescription drug plan and shall en22 courage the use of more affordable therapeutic equivalents 

23 to the extent such practices do not override medical neces24 sity as determined by the prescribing physician. To the 

25 extent practicable and consistent with the previous sen26 tence, the Secretary shall implement strategies similar to 


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1 those used by other Federal purchasers of prescription 

2 drugs, and other strategies, including the use of a for3 mulary and formulary incentives in subsection (e), to re4 duce the purchase cost of covered part D drugs. 

5 ‘‘(c) MEDICARE OPERATED PRESCRIPTION DRUG

6 PLAN DEFINED.—For purposes of this part, the term 

7 ‘Medicare operated prescription drug plan’ means a pre8 scription drug plan that offers qualified prescription drug 

9 coverage and access to negotiated prices described in sec10 tion 1860D–2(a)(1)(A). Such a plan may offer supple11 mental prescription drug coverage in the same manner as 

12 other qualified prescription drug coverage offered by other 

13 prescription drug plans. 

14 ‘‘(d) MONTHLY BENEFICIARY PREMIUM.— 

15 ‘‘(1) QUALIFIED PRESCRIPTION DRUG COV16 ERAGE.—The monthly beneficiary premium for 

17 qualified prescription drug coverage and access to 

18 negotiated prices described in section 1860D– 

19 2(a)(1)(A) to be charged under a Medicare operated 

20 prescription drug plan shall be uniform nationally. 

21 Such premium for months in 2014 and each suc22 ceeding year shall be based on the average monthly 

23 per capita actuarial cost of offering the Medicare op24 erated prescription drug plan for the year involved, 

25 including administrative expenses. 


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1 ‘‘(2) SUPPLEMENTAL PRESCRIPTION DRUG COV2 ERAGE.—Insofar as a Medicare operated prescrip3 tion drug plan offers supplemental prescription drug 

4 coverage, the Secretary may adjust the amount of 

5 the premium charged under paragraph (1). 

6 ‘‘(e) USE OF A FORMULARY AND FORMULARY INCEN7 TIVES.— 

8 ‘‘(1) IN GENERAL.—With respect to the oper9 ation of a Medicare operated prescription drug plan, 

10 the Secretary shall establish and apply a formulary 

11 (and may include formulary incentives described in 

12 paragraph (2)(C)(ii)) in accordance with this sub13 section in order to— 

14 ‘‘(A) increase patient safety; 

15 ‘‘(B) increase appropriate use and reduce 

16 inappropriate use of drugs; and 

17 ‘‘(C) reward value. 

18 ‘‘(2) DEVELOPMENT OF INITIAL FORMULARY.— 

19 ‘‘(A) IN GENERAL.—In selecting covered 

20 part D drugs for inclusion in a formulary, the 

21 Secretary shall consider clinical benefit and 

22 price. 

23 ‘‘(B) ROLE OF AHRQ.—The Director of the 

24 Agency for Healthcare Research and Quality 

25 shall be responsible for assessing the clinical 


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1 benefit of covered part D drugs and making 

2 recommendations to the Secretary regarding 

3 which drugs should be included in the for4 mulary. In conducting such assessments and 

5 making such recommendations, the Director 

6 shall— 

7 ‘‘(i) consider safety concerns including 

8 those identified by the Federal Food and 

9 Drug Administration; 

10 ‘‘(ii) use available data and evalua11 tions, with priority given to randomized 

12 controlled trials, to examine clinical effec13 tiveness, comparative effectiveness, safety, 

14 and enhanced compliance with a drug regi15 men; 

16 ‘‘(iii) use the same classes of drugs 

17 developed by the United States Pharma18 copeia for this part; 

19 ‘‘(iv) consider evaluations made by— 

20 ‘‘(I) the Director under section 

21 1013 of the Medicare Prescription 

22 Drug, Improvement, and Moderniza23 tion Act of 2003; 


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1 ‘‘(II) other Federal entities, such 

2 as the Secretary of Veterans Affairs; 

3 and 

4 ‘‘(III) other private and public 

5 entities, such as the Drug Effective6 ness Review Project and State plans 

7 under title XIX; and 

8 ‘‘(v) recommend to the Secretary— 

9 ‘‘(I) those drugs in a class that 

10 provide a greater clinical benefit, in11 cluding fewer safety concerns or less 

12 risk of side-effects, than another drug 

13 in the same class that should be in14 cluded in the formulary; 

15 ‘‘(II) those drugs in a class that 

16 provide less clinical benefit, including 

17 greater safety concerns or a greater 

18 risk of side-effects, than another drug 

19 in the same class that should be ex20 cluded from the formulary; and 

21 ‘‘(III) drugs in a class with same 

22 or similar clinical benefit for which it 

23 would be appropriate for the Sec24 retary to competitively bid (or nego25 tiate) for placement on the formulary. 


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1 ‘‘(C) CONSIDERATION OF AHRQ REC2 OMMENDATIONS.— 

3 ‘‘(i) IN GENERAL.—The Secretary, 

4 after taking into consideration the rec5 ommendations under subparagraph (B)(v), 

6 shall establish a formulary, and formulary 

7 incentives, to encourage use of covered 

8 part D drugs that— 

9 ‘‘(I) have a lower cost and pro10 vide a greater clinical benefit than 

11 other drugs; 

12 ‘‘(II) have a lower cost than 

13 other drugs with the same or similar 

14 clinical benefit; and 

15 ‘‘(III) have the same cost but 

16 provide greater clinical benefit than 

17 other drugs. 

18 ‘‘(ii) FORMULARY INCENTIVES.—The 

19 formulary incentives under clause (i) may 

20 be in the form of one or more of the fol21 lowing: 

22 ‘‘(I) Tiered copayments. 

23 ‘‘(II) Reference pricing. 

24 ‘‘(III) Prior authorization. 

25 ‘‘(IV) Step therapy. 


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1 ‘‘(V) Medication therapy manage2 ment. 

3 ‘‘(VI) Generic drug substitution. 

4 ‘‘(iii) FLEXIBILITY.—In applying such 

5 formulary incentives the Secretary may de6 cide not to impose any cost-sharing for a 

7 covered part D drug for which— 

8 ‘‘(I) the elimination of cost shar9 ing would be expected to increase 

10 compliance with a drug regimen; and 

11 ‘‘(II) compliance would be ex12 pected to produce savings under part 

13 A or B or both. 

14 ‘‘(3) LIMITATIONS ON FORMULARY.—In any 

15 formulary established under this subsection, the for16 mulary may not be changed during a year, except— 

17 ‘‘(A) to add a generic version of a covered 

18 part D drug that entered the market; 

19 ‘‘(B) to remove such a drug for which a 

20 safety problem is found; and 

21 ‘‘(C) to add a drug that the Secretary 

22 identifies as a drug which treats a condition for 

23 which there has not previously been a treatment 

24 option or for which a clear and significant benVerDate Mar 15 2010 00:36 Mar 02, 2013 Jkt 029200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S408.IS S408

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1 efit has been demonstrated over other covered 

2 part D drugs. 

3 ‘‘(4) ADDING DRUGS TO THE INITIAL FOR4 MULARY.— 

5 ‘‘(A) USE OF ADVISORY COMMITTEE.—The 

6 Secretary shall establish and appoint an advi7 sory committee (in this paragraph referred to 

8 as the ‘advisory committee’)— 

9 ‘‘(i) to review petitions from drug 

10 manufacturers, health care provider orga11 nizations, patient groups, and other enti12 ties for inclusion of a drug in, or other 

13 changes to, such formulary; and 

14 ‘‘(ii) to recommend any changes to the 

15 formulary established under this sub16 section. 

17 ‘‘(B) COMPOSITION.—The advisory com18 mittee shall be composed of 9 members and 

19 shall include representatives of physicians, 

20 pharmacists, and consumers and others with ex21 pertise in evaluating prescription drugs. The 

22 Secretary shall select members based on their 

23 knowledge of pharmaceuticals and the Medicare 

24 population. Members shall be deemed to be spe25 cial Government employees for purposes of apVerDate Mar 15 2010 00:36 Mar 02, 2013 Jkt 029200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S408.IS S408

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1 plying the conflict of interest provisions under 

2 section 208 of title 18, United States Code, and 

3 no waiver of such provisions for such a member 

4 shall be permitted. 

5 ‘‘(C) CONSULTATION.—The advisory com6 mittee shall consult, as necessary, with physi7 cians who are specialists in treating the disease 

8 for which a drug is being considered. 

9 ‘‘(D) REQUEST FOR STUDIES.—The advi10 sory committee may request the Agency for 

11 Healthcare Research and Quality or an aca12 demic or research institution to study and make 

13 a report on a petition described in subpara14 graph (A)(i) in order to assess— 

15 ‘‘(i) clinical effectiveness; 

16 ‘‘(ii) comparative effectiveness; 

17 ‘‘(iii) safety; and 

18 ‘‘(iv) enhanced compliance with a 

19 drug regimen. 

20 ‘‘(E) RECOMMENDATIONS.—The advisory 

21 committee shall make recommendations to the 

22 Secretary regarding— 

23 ‘‘(i) whether a covered part D drug is 

24 found to provide a greater clinical benefit, 

25 including fewer safety concerns or less risk 


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1 of side-effects, than another drug in the 

2 same class that is currently included in the 

3 formulary and should be included in the 

4 formulary; 

5 ‘‘(ii) whether a covered part D drug is 

6 found to provide less clinical benefit, in7 cluding greater safety concerns or a great8 er risk of side-effects, than another drug in 

9 the same class that is currently included in 

10 the formulary and should not be included 

11 in the formulary; and 

12 ‘‘(iii) whether a covered part D drug 

13 has the same or similar clinical benefit to 

14 a drug in the same class that is currently 

15 included in the formulary and whether the 

16 drug should be included in the formulary. 

17 ‘‘(F) LIMITATIONS ON REVIEW OF MANU18 FACTURER PETITIONS.—The advisory com19 mittee shall not review a petition of a drug 

20 manufacturer under subparagraph (A)(i) with 

21 respect to a covered part D drug unless the pe22 tition is accompanied by the following: 

23 ‘‘(i) Raw data from clinical trials on 

24 the safety and effectiveness of the drug. 


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1 ‘‘(ii) Any data from clinical trials con2 ducted using active controls on the drug or 

3 drugs that are the current standard of 

4 care. 

5 ‘‘(iii) Any available data on compara6 tive effectiveness of the drug. 

7 ‘‘(iv) Any other information the Sec8 retary requires for the advisory committee 

9 to complete its review. 

10 ‘‘(G) RESPONSE TO RECOMMENDATIONS.— 

11 The Secretary shall review the recommenda12 tions of the advisory committee and if the Sec13 retary accepts such recommendations the Sec14 retary shall modify the formulary established 

15 under this subsection accordingly. Nothing in 

16 this section shall preclude the Secretary from 

17 adding to the formulary a drug for which the 

18 Director of the Agency for Healthcare Research 

19 and Quality or the advisory committee has not 

20 made a recommendation. 

21 ‘‘(H) NOTICE OF CHANGES.—The Sec22 retary shall provide timely notice to bene23 ficiaries and health professionals about changes 

24 to the formulary or formulary incentives. 


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1 ‘‘(f) INFORMING BENEFICIARIES.—The Secretary 

2 shall take steps to inform beneficiaries about the avail3 ability of a Medicare operated drug plan or plans including 

4 providing information in the annual handbook distributed 

5 to all beneficiaries and adding information to the official 

6 public Medicare website related to prescription drug cov7 erage available through this part. 

8 ‘‘(g) APPLICATION OF ALL OTHER REQUIREMENTS

9 FOR PRESCRIPTION DRUG PLANS.—Except as specifically 

10 provided in this section, any Medicare operated drug plan 

11 shall meet the same requirements as apply to any other 

12 prescription drug plan, including the requirements of sec13 tion 1860D–4(b)(1) relating to assuring pharmacy ac14 cess.’’. 

15 (b) CONFORMING AMENDMENTS.— 

16 (1) Section 1860D–3(a) of the Social Security 

17 Act (42 U.S.C. 1395w–103(a)) is amended by add18 ing at the end the following new paragraph: 

19 ‘‘(4) AVAILABILITY OF THE MEDICARE OPER20 ATED PRESCRIPTION DRUG PLAN.—A Medicare op21 erated prescription drug plan (as defined in section 

22 1860D–11A(c)) shall be offered nationally in accord23 ance with section 1860D–11A.’’. 


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1 (2)(A) Section 1860D–3 of the Social Security 

2 Act (42 U.S.C. 1395w–103) is amended by adding 

3 at the end the following new subsection: 

4 ‘‘(c) PROVISIONS ONLY APPLICABLE IN 2006 

5 THROUGH 2013.—The provisions of this section shall only 

6 apply with respect to 2006 through 2013.’’. 

7 (B) Section 1860D–11(g) of such Act (42 

8 U.S.C. 1395w–111(g)) is amended by adding at the 

9 end the following new paragraph: 

10 ‘‘(8) NO AUTHORITY FOR FALLBACK PLANS

11 AFTER 2013.—A fallback prescription drug plan shall 

12 not be available after December 31, 2013.’’. 

13 (3) Section 1860D–13(c)(3) of the Social Secu14 rity Act (42 U.S.C. 1395w–113(c)(3)) is amended— 

15 (A) in the heading, by inserting ‘‘AND

16 MEDICARE OPERATED PRESCRIPTION DRUG

17 PLANS’’ after ‘‘FALLBACK PLANS’’; and 

18 (B) by inserting ‘‘or a Medicare operated 

19 prescription drug plan’’ after ‘‘a fallback pre20 scription drug plan’’. 

21 (4) Section 1860D–16(b)(1) of the Social Secu22 rity Act (42 U.S.C. 1395w–116(b)(1)) is amended— 

23 (A) in subparagraph (C), by striking 

24 ‘‘and’’ after the semicolon at the end; 


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1 (B) in subparagraph (D), by striking the 

2 period at the end and inserting ‘‘; and’’; and 

3 (C) by adding at the end the following new 

4 subparagraph: 

5 ‘‘(E) payments for expenses incurred with 

6 respect to the operation of Medicare operated 

7 prescription drug plans under section 1860D– 

8 11A.’’. 

9 (5) Section 1860D–41(a) of the Social Security 

10 Act (42 U.S.C. 1395w–151(a)) is amended by add11 ing at the end the following new paragraph: 

12 ‘‘(19) MEDICARE OPERATED PRESCRIPTION

13 DRUG PLAN.—The term ‘Medicare operated prescrip14 tion drug plan’ has the meaning given such term in 

15 section 1860D–11A(c).’’. 

16 SEC. 3. IMPROVED APPEALS PROCESS UNDER THE MEDI17 CARE OPERATED PRESCRIPTION DRUG PLAN. 

18 Section 1860D–4(h) of the Social Security Act (42 

19 U.S.C. 1305w–104(h)) is amended by adding at the end 

20 the following new paragraph: 

21 ‘‘(4) APPEALS PROCESS FOR MEDICARE OPER22 ATED PRESCRIPTION DRUG PLAN.— 

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

24 develop a well-defined process for appeals for 

25 denials of benefits under this part under the 


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1 Medicare operated prescription drug plan. Such 

2 process shall be efficient, impose minimal ad3 ministrative burdens, and ensure the timely 

4 procurement of non-formulary drugs or exemp5 tion from formulary incentives when medically 

6 necessary. Medical necessity shall be based on 

7 professional medical judgment, the medical con8 dition of the beneficiary, and other medical evi9 dence. Such appeals process shall include— 

10 ‘‘(i) an initial review and determina11 tion made by the Secretary; and 

12 ‘‘(ii) for appeals denied during the ini13 tial review and determination, the option of 

14 an external review and determination by 

15 an independent entity selected by the Sec16 retary. 

17 ‘‘(B) CONSULTATION IN DEVELOPMENT OF

18 PROCESS.—In developing the appeals process 

19 under subparagraph (A), the Secretary shall 

20 consult with consumer and patient groups, as 

21 well as other key stakeholders to ensure the 

22 goals described in subparagraph (A) are 

23 achieved.’’. 

Æ 


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