II 

108TH CONGRESS 

1ST SESSION S. 1992

To amend the Medicare Prescription Drug, Improvement, and Modernization 

Act of 2003 to eliminate privatization of the medicare program, to 

improve the medicare prescription drug benefit, to repeal health savings 

accounts, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

DECEMBER 9, 2003

Mr. KENNEDY introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL

To amend the Medicare Prescription Drug, Improvement, 

and Modernization Act of 2003 to eliminate privatization 

of the medicare program, to improve the medicare prescription drug benefit, to repeal health savings accounts, 

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; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as ‘‘De5 fense of Medicare and Real Medicare Prescription Drug 

6 Benefit Act’’. 
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1 (b) TABLE OF CONTENTS.—The table of contents of 

2 this Act is as follows:

Sec. 1. Short title; table of contents. 

TITLE I—DEFENSE OF MEDICARE 

Sec. 101. Application of risk adjustment reflecting characteristics for the entire 

medicare population. 

Sec. 102. Phase-in to payment at 100 percent of fee-for-service rate. 

Sec. 103. Elimination of MA Regional Plan Stabilization Fund (slush fund). 

Sec. 104. Repeal of premium support program. 

Sec. 105. Repeal of medicare expenditures cap. 

TITLE II—ESTABLISHMENT OF REAL MEDICARE PRESCRIPTION 

DRUG BENEFIT 

Sec. 201. Elimination of coverage gap. 

Sec. 202. Elimination of discriminatory treatment of employer plans. 

Sec. 203. Allowing medicaid wrap. 

Sec. 204. Elimination of assets test. 

Sec. 205. Requiring two prescription drug plans to avoid federal fallback. 

Sec. 206. Secretary defining classes and categories under any formulary. 

Sec. 207. Provision of wrap-around prescription drug coverage through 

medigap. 

Sec. 208. No additional beneficiary premium. 

Sec. 209. Elimination of State maintenance of effort. 

TITLE III—REDUCTION IN PRESCRIPTION DRUG PRICES 

Sec. 301. Importation of prescription drugs. 

Sec. 302. Negotiating fair prices for medicare prescription drugs. 

TITLE IV—REPEAL OF HEALTH SAVINGS ACCOUNTS 

Sec. 401. Repeal of health savings accounts.

3 TITLE I—DEFENSE OF 

4 MEDICARE 

5 SEC. 101. APPLICATION OF RISK ADJUSTMENT REFLECT6 ING CHARACTERISTICS FOR THE ENTIRE 

7 MEDICARE POPULATION. 

8 Effective January 1, 2005, in applying risk adjust9 ment factors to payment to organizations under section 

10 1853 of the Social Security Act (42 U.S.C. 1395w–23) 

11 in a budget neutral manner, the Secretary of Health and 
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•S 1992 IS 

1 Human Services shall assure that such factors, in the ag2 gregate, take into account the actuarial characteristics of 

3 the entire medicare population, and not merely the popu4 lation of individuals enrolled under a plan under part C 

5 of title XVIII of such Act. 

6 SEC. 102. PHASE-IN TO PAYMENT AT 100 PERCENT OF FEE7 FOR-SERVICE RATE. 

8 Notwithstanding any other provision of law, the Sec9 retary of Health and Human Services shall provide, in a 

10 phased-in manner over a 5-year period beginning with 

11 2005, for adjustment of payment rates to organizations 

12 under section 1853 of the Social Security Act so that, at 

13 the end of such phase-in period, such payment rates reflect 

14 only the payment rate described in subsection (c)(1)(D) 

15 of such section (relating to 100 percent fee-for-service pay16 ment). 

17 SEC. 103. ELIMINATION OF MA REGIONAL PLAN STABILIZA18 TION FUND (SLUSH FUND). 

19 Subsection (e) of section 1858 of the Social Security 

20 Act, as added by section 221(c) of the Medicare Prescrip21 tion Drug, Improvement, and Modernization Act of 2003, 

22 is repealed. 

23 SEC. 104. REPEAL OF PREMIUM SUPPORT PROGRAM. 

24 Effective as if included in the enactment of the Medi25 care Prescription Drug, Improvement, and Modernization 
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1 Act of 2003, subtitle E of title I of such Act is repealed 

2 and any provisions of law amended by such subtitle are 

3 restored as if such subtitle had not been enacted. 

4 SEC. 105. REPEAL OF MEDICARE EXPENDITURE CAP. 

5 Subtitle A of title VIII of the Medicare Prescription 

6 Drug, Improvement, and Modernization Act of 2003 is re7 pealed and any provisions of law amended by such subtitle 

8 are restored as if such subtitle had not been enacted. 

9 TITLE II—ESTABLISHMENT OF 

10 REAL MEDICARE PRESCRIP11 TION DRUG BENEFIT 

12 SEC. 201. ELIMINATION OF COVERAGE GAP. 

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

14 Security Act, as added by section 101(a) of the Medicare 

15 Prescription Drug, Improvement, and Modernization Act 

16 of 2003, is amended—

17 (1) in paragraph (3)(A), by striking ‘‘paragraph 

18 (4)’’ and inserting ‘‘paragraphs (4) and (5)’’; 

19 (2) by redesignating paragraph (5) as para20 graph (7) and by moving such paragraph to follow 

21 paragraph (6); and 

22 (3) by inserting after paragraph (4) the fol23 lowing new paragraph: 

24 ‘‘(5) PHASED-IN ELIMINATION OF COVERAGE

25 GAP.—The coverage provides continuation of bene-
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1 fits from the initial coverage limit (under paragraph 

2 (3)) for expenditures incurred through the total 

3 amount of expenditures at which benefits are avail4 able under paragraph (4), subject to coinsurance of 

5 the following: 

6 ‘‘(A) 2006, 2007, AND2008.—During the 

7 years 2006 through 2008, 75 percent (or actu8 arially equivalent, using processes and methods 

9 established under section 1860D–11(c)) to an 

10 average expected payment of 75 percent of such 

11 costs. 

12 ‘‘(B) 2009, 2010, AND2011.—During the 

13 years 2009 through 2011, 50 percent (or actu14 arially equivalent, using processes and methods 

15 established under section 1860D–11(c)) to an 

16 average expected payment of 50 percent of such 

17 costs. 

18 ‘‘(C) 2012 ANDSUBSEQUENT YEARS.—

19 During 2012 and each subsequent year, 25 per20 cent (or actuarially equivalent, using processes 

21 and methods established under section 1860D–

22 11(c)) to an average expected payment of 25 

23 percent of such costs.
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1 The provisions of paragraph (2)(B) shall apply 

2 under this paragraph in the same manner as they 

3 apply with respect to paragraph (2)(A).’’. 

4 (b) CONFORMING AMENDMENT.—Section 1860D–

5 14(a) of such Act, as so added, is amended by striking 

6 subparagraph (C) of paragraphs (1) and (2). 

7 SEC. 202. ELIMINATION OF DISCRIMINATORY TREATMENT 

8 OF EMPLOYER PLANS. 

9 (a) ELIMINATION OF TRUE OUT-OF-POCKET LIMITA10 TION.—Section 1860D–2(b)(4)(C) of the Social Security 

11 Act, as added by section 101(a) of the Medicare Prescrip12 tion Drug, Improvement, and Modernization Act of 2003, 

13 is amended to read as follows: 

14 ‘‘(C) APPLICATION.—In applying subpara15 graph (A), incurred costs shall only include 

16 costs incurred with respect to covered part D 

17 drugs for the annual deductible described in 

18 paragraph (1), for cost-sharing described in 

19 paragraph (2), and for amounts for which bene20 fits are not provided because of the application 

21 of the initial coverage limit described in para22 graph (3), but does not include any costs in23 curred for covered part D drugs which are not 

24 included (or treated as being included) in the 

25 plan’s formulary.’’. 
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1 (b) EQUALIZATION OF SUBSIDIES.—Notwithstanding 

2 any other provision of law, the Secretary of Health and 

3 Human Services shall provide for such increase in the spe4 cial subsidy payment amounts under section 1860D–

5 22(a)(3) of the Social Security Act, as added by section 

6 101(a) of the Medicare Prescription Drug, Improvement, 

7 and Modernization Act of 2003, as may be appropriate 

8 to provide for payments in the aggregate equivalent to the 

9 payments that would have been made under section 

10 1860D–15 of such Act if the individuals were not enrolled 

11 in a qualified retiree prescription drug plan. In making 

12 such computation, the Secretary shall not take into ac13 count the application of the amendments made by section 

14 1202 of the Medicare Prescription Drug, Improvement, 

15 and Modernization Act of 2003. 

16 SEC. 203. ALLOWING MEDICAID WRAP. 

17 Section 1935(d) of the Social Security Act, as added 

18 by section 103(c) of the Medicare Prescription Drug, Im19 provement, and Modernization Act of 2003, is repealed. 

20 SEC. 204. ELIMINATION OF ASSETS TEST. 

21 (a) IN GENERAL.—Section 1860D–14 of the Social 

22 Security Act, as added by section 101(a) of the Medicare 

23 Prescription Drug, Improvement, and Modernization Act 

24 of 2003, is amended as follows: 
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1 (1) In subsection (a)(1), strike ‘‘and who meets 

2 the resource requirements of paragraph (3)(B)’’. 

3 (2) In subsection (a)(3)(A), add ‘‘and’’ at the 

4 end of clause (i), strike ‘‘; and’’ at the end of clause 

5 (ii) and inserting period, and strike clause (iii). 

6 (3) In subsection (a)(3), strike subparagraphs 

7 (D) and (E). 

8 (b) CONFORMING AMENDMENT.—Section 107(e) of 

9 the Medicare Prescription Drug, Improvement, and Mod10 ernization Act of 2003 is repealed. 

11 SEC. 205. REQUIRING TWO PRESCRIPTION DRUG PLANS TO 

12 AVOID FEDERAL FALLBACK. 

13 Section 1860D–3(a) of the Social Security Act, as 

14 added by section 101(a) of the Medicare Prescription 

15 Drug, Improvement, and Modernization Act of 2003, is 

16 amended—

17 (1) in paragraph (1), by striking ‘‘qualifying 

18 plans (as defined in paragraph (3)’’ and inserting 

19 ‘‘prescription drug plans’’; 

20 (2) in paragraph (2), by striking ‘‘qualifying 

21 plans’’ and inserting ‘‘prescription drug plans’’; 

22 (3) by striking paragraph (3). 
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1 SEC. 206. SECRETARY DEFINING CLASSES AND CAT2 EGORIES UNDER ANY FORMULARY. 

3 Notwithstanding any other provision of law, no for4 mulary may be established or applied under part D of title 

5 XVIII of the Social Security Act, as added by section 

6 101(a) of the Medicare Prescription Drug, Improvement, 

7 and Modernization Act of 2003, unless the classes and cat8 egories used under such formulary are such classes and 

9 categories as the Secretary of Health and Human Services 

10 shall specify. 

11 SEC. 207. PROVISION OF WRAP-AROUND PRESCRIPTION 

12 DRUG COVERAGE THROUGH MEDIGAP. 

13 Section 1882(v) of the Social Security Act (42 U.S.C. 

14 1395ss(v)), as added by section 104(a) of the Medicare 

15 Prescription Drug, Improvement, and Modernization Act 

16 of 2003, is amended as follows: 

17 (1) In paragraph (1)(A), by inserting ‘‘, other 

18 than such a policy that provides wrap-around pre19 scription drug coverage included within a range of 

20 such coverage approved under subparagraph 

21 (D)(ii),’’ after ‘‘paragraph (6)(A))’’. 

22 (2) Add at the end of paragraph (1) the fol23 lowing new subparagraph: 

24 ‘‘(D) WRAP-AROUNDPRESCRIPTION DRUG

25 COVERAGE.—
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1 ‘‘(i) IN GENERAL.—Notwithstanding 

2 any other provision of this subsection, a 

3 medigap Rx policy that provides wrap4 around prescription drug coverage included 

5 within a range of such coverage approved 

6 by the Secretary under clause (ii) may be 

7 offered to part D enrollees. 

8 ‘‘(ii) DEVELOPMENT OF STAND9 ARDS.—The Secretary shall approve a 

10 range of wrap-around prescription drug 

11 coverage that may be offered under this 

12 subparagraph to part D enrollees.’’. 

13 SEC. 208. NO ADDITIONAL BENEFICIARY PREMIUM. 

14 Notwithstanding any other provision of law, the Sec15 retary of Health and Human Services shall provide for 

16 such adjustment in payments to PDP sponsors under part 

17 D of title XVIII of the Social Security Act, and to MA 

18 organizations offering MA–PD plans under part C of such 

19 title, as may be appropriate to assure that premiums of 

20 part D eligible individuals under prescription drug plans 

21 and under MA–PD plans are not increased as a result of 

22 this Act (and the amendments made by this Act).
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1 SEC. 209. ELIMINATION OF STATE MAINTENANCE OF EF2 FORT. 

3 Section 1935(c)(5) of the Social Security Act, as 

4 added by section 103(c) of the Medicare Prescription 

5 Drug, Improvement, and Modernization Act of 2003, is 

6 amended—

7 (1) by striking ‘‘or’’ at the end of subparagraph 

8 (I); and 

9 (2) by striking subparagraph (J) and inserting 

10 the following new subparagraphs: 

11 ‘‘(J) in each of 2014 and 2015 is 75 per12 cent; 

13 ‘‘(K) in 2016 is 67.5 percent; 

14 ‘‘(L) in 2017 is 60 percent; 

15 ‘‘(M) in 2018 is 52.5 percent; 

16 ‘‘(N) in 2019 is 45 percent; 

17 ‘‘(O) in 2020 is 37.5 percent; 

18 ‘‘(P) in 2021 is 30 percent; 

19 ‘‘(Q) in 2022 is 22.5 percent; 

20 ‘‘(R) in 2023 is 15 percent; 

21 ‘‘(S) in 2024 is 7.5 percent; or 

22 ‘‘(T) after December 2024, is 0 percent.’’. 
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1 TITLE III—REDUCTION IN 

2 PRESCRIPTION DRUG PRICES 

3 SEC. 301. IMPORTATION OF PRESCRIPTION DRUGS. 

4 (a) IN GENERAL.—Chapter VIII of the Federal 

5 Food, Drug, and Cosmetic Act (21 U.S.C. 381 et seq.) 

6 is amended by striking section 804 and inserting the fol7 lowing: 

8 ‘‘SEC. 804. IMPORTATION OF PRESCRIPTION DRUGS. 

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

10 ‘‘(1) CANADIAN PHARMACIST.—The term ‘Ca11 nadian pharmacist’ means a person licensed in Can12 ada to practice pharmacy, including the dispensing 

13 and selling of prescription drugs. 

14 ‘‘(2) CANADIAN WHOLESALER.—The term ‘Ca15 nadian wholesaler’ means a person licensed in Can16 ada to distribute within Canada prescription drugs 

17 that have been approved by Health Canada. 

18 ‘‘(3) CANADIAN EXPORTER.—The term ‘Cana19 dian exporter’ means a Canadian pharmacist or Ca20 nadian wholesaler. 

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

22 pharmacist or wholesaler. 

23 ‘‘(5) PHARMACIST.—The term ‘pharmacist’ 

24 means a person licensed by a State to practice phar-
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1 macy, including the dispensing and selling of pre2 scription drugs. 

3 ‘‘(6) PRESCRIPTION DRUG.—The term ‘pre4 scription drug’ means a drug subject to section 

5 503(b), other than—

6 ‘‘(A) a controlled substance (as defined in 

7 section 102 of the Controlled Substances Act 

8 (21 U.S.C. 802)); 

9 ‘‘(B) a biological product (as defined in 

10 section 351 of the Public Health Service Act 

11 (42 U.S.C. 262)); 

12 ‘‘(C) an infused drug (including a peri13 toneal dialysis solution); 

14 ‘‘(D) an intravenously injected drug; or 

15 ‘‘(E) a drug that is inhaled during surgery. 

16 ‘‘(7) QUALIFYING LABORATORY.—The term 

17 ‘qualifying laboratory’ means a laboratory in the 

18 United States that has been approved by the Sec19 retary for the purposes of this section. 

20 ‘‘(8) WHOLESALER.—

21 ‘‘(A) IN GENERAL.—The term ‘wholesaler’ 

22 means a person licensed as a wholesaler or dis23 tributor of prescription drugs in the United 

24 States under section 503(e)(2)(A). 
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1 ‘‘(B) EXCLUSION.—The term ‘wholesaler’ 

2 does not include a person authorized to import 

3 drugs under section 801(d)(1). 

4 ‘‘(b) REGULATIONS.—No later than 18 months after 

5 the date of enactment of this section, the Secretary, after 

6 consultation with the United States Trade Representative 

7 and the Commissioner of Customs, shall promulgate regu8 lations permitting pharmacists and wholesalers to import 

9 prescription drugs from Canada into the United States. 

10 ‘‘(c) LIMITATION.—The regulations under subsection 

11 (b) shall—

12 ‘‘(1) require that a Canadian exporter—

13 ‘‘(A) register with the Secretary the name 

14 and place of business of the Canadian exporter 

15 (and including the place of business of each 

16 warehouse and establishment of the Canadian 

17 exporter); 

18 ‘‘(B) export only prescription drugs that 

19 have been approved by Health Canada and 

20 meet all requirements of Canadian law; 

21 ‘‘(C) permit inspections by the Secretary 

22 (including inspections of all records, including 

23 financial records) of each warehouse and estab24 lishment of the Canadian exporter; and 
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1 ‘‘(D) pay an inspection fee to the Secretary 

2 on a semiannual basis not to exceed 5 percent 

3 of the total price of prescription drugs exported 

4 by the Canadian exporter to the United States 

5 under the regulations (which fees the Secretary 

6 shall use solely to inspect the warehouses and 

7 establishments of Canadian exporters and to 

8 monitor imports of prescription drugs at ports 

9 of entry); 

10 ‘‘(2) require that each prescription drug im11 ported under the regulations be imported directly 

12 from a Canadian exporter through a limited number 

13 of ports of entry (at which the Secretary shall mon14 itor such imports); 

15 ‘‘(3) require that safeguards be in place to en16 sure that each prescription drug imported under the 

17 regulations complies with section 505 (including 

18 with respect to being safe and effective for the in19 tended use of the prescription drug), with sections 

20 501 and 502, and with other applicable require21 ments of this Act; 

22 ‘‘(4) require that an importer of a prescription 

23 drug under the regulations comply with subsections 

24 (d)(1) and (e); and
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1 ‘‘(5) contain any additional provisions deter2 mined by the Secretary to be appropriate as a safe3 guard to protect the public health or as a means to 

4 facilitate the importation of prescription drugs. 

5 ‘‘(d) INFORMATION AND RECORDS.—

6 ‘‘(1) IN GENERAL.—The regulations under sub7 section (b) shall require an importer of a prescrip8 tion drug under subsection (b) to submit to the Sec9 retary the following information and documentation: 

10 ‘‘(A) The name and quantity of the active 

11 ingredient of the prescription drug. 

12 ‘‘(B) A description of the dosage form of 

13 the prescription drug. 

14 ‘‘(C) The date on which the prescription 

15 drug is shipped. 

16 ‘‘(D) The quantity of the prescription drug 

17 that is shipped. 

18 ‘‘(E) The point of origin and destination of 

19 the prescription drug. 

20 ‘‘(F) The price paid by the importer for 

21 the prescription drug. 

22 ‘‘(G) Documentation from the foreign sell23 er specifying—

24 ‘‘(i) the original source of the pre25 scription drug; and 
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1 ‘‘(ii) the quantity of each lot of the 

2 prescription drug originally received by the 

3 seller from that source. 

4 ‘‘(H) The lot or control number assigned 

5 to the prescription drug by the manufacturer of 

6 the prescription drug. 

7 ‘‘(I) The name, address, telephone number, 

8 and professional license number (if any) of the 

9 importer. 

10 ‘‘(J)(i) In the case of a prescription drug 

11 that is shipped directly from the first foreign 

12 recipient of the prescription drug from the 

13 manufacturer: 

14 ‘‘(I) Documentation demonstrating 

15 that the prescription drug was received by 

16 the recipient from the manufacturer and 

17 subsequently shipped by the first foreign 

18 recipient to the importer. 

19 ‘‘(II) Documentation of the quantity 

20 of each lot of the prescription drug re21 ceived by the first foreign recipient dem22 onstrating that the quantity being im23 ported into the United States is not more 

24 than the quantity that was received by the 

25 first foreign recipient. 
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1 ‘‘(III)(aa) In the case of an initial im2 ported shipment, documentation dem3 onstrating that each batch of the prescrip4 tion drug in the shipment was statistically 

5 sampled and tested for authenticity and 

6 degradation. 

7 ‘‘(bb) In the case of any subsequent 

8 shipment, documentation demonstrating 

9 that a statistically valid sample of the ship10 ment was tested for authenticity and deg11 radation. 

12 ‘‘(ii) In the case of a prescription drug 

13 that is not shipped directly from the first for14 eign recipient of the prescription drug from the 

15 manufacturer, documentation demonstrating 

16 that each batch in each shipment offered for 

17 importation into the United States was statis18 tically sampled and tested for authenticity and 

19 degradation. 

20 ‘‘(K) Certification from the importer or 

21 manufacturer of the prescription drug that the 

22 prescription drug—

23 ‘‘(i) is approved for marketing in the 

24 United States; and 
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1 ‘‘(ii) meets all labeling requirements 

2 under this Act. 

3 ‘‘(L) Laboratory records, including com4 plete data derived from all tests necessary to 

5 ensure that the prescription drug is in compli6 ance with established specifications and stand7 ards. 

8 ‘‘(M) Documentation demonstrating that 

9 the testing required by subparagraphs (J) and 

10 (L) was conducted at a qualifying laboratory. 

11 ‘‘(N) Any other information that the Sec12 retary determines is necessary to ensure the 

13 protection of the public health. 

14 ‘‘(2) MAINTENANCE BY THE SECRETARY.—The 

15 Secretary shall maintain information and docu16 mentation submitted under paragraph (1) for such 

17 period of time as the Secretary determines to be nec18 essary. 

19 ‘‘(e) TESTING.—The regulations under subsection (b) 

20 shall require—

21 ‘‘(1) that testing described in subparagraphs 

22 (J) and (L) of subsection (d)(1) be conducted by the 

23 importer or by the manufacturer of the prescription 

24 drug at a qualified laboratory; 
20

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1 ‘‘(2) if the tests are conducted by the im2 porter—

3 ‘‘(A) that information needed to—

4 ‘‘(i) authenticate the prescription drug 

5 being tested; and 

6 ‘‘(ii) confirm that the labeling of the 

7 prescription drug complies with labeling re8 quirements under this Act; 

9 be supplied by the manufacturer of the pre10 scription drug to the pharmacist or wholesaler; 

11 and 

12 ‘‘(B) that the information supplied under 

13 subparagraph (A) be kept in strict confidence 

14 and used only for purposes of testing or other15 wise complying with this Act; and 

16 ‘‘(3) may include such additional provisions as 

17 the Secretary determines to be appropriate to pro18 vide for the protection of trade secrets and commer19 cial or financial information that is privileged or 

20 confidential. 

21 ‘‘(f) SUSPENSION OF IMPORTATION.—The Secretary 

22 shall require that importations of a specific prescription 

23 drug or importations by a specific importer or from a spe24 cific Canadian exporter under subsection (b) be imme25 diately suspended on discovery of a pattern of importation
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1 of that specific prescription drug or by that specific im2 porter or Canadian exporter of drugs that are counterfeit 

3 or in violation of any requirement under this section, until 

4 an investigation is completed and the Secretary deter5 mines that the public is adequately protected from coun6 terfeit and violative prescription drugs being imported 

7 under subsection (b). 

8 ‘‘(g) APPROVED LABELING.—The manufacturer of a 

9 prescription drug shall provide an importer written au10 thorization for the importer to use, at no cost, the ap11 proved labeling for the prescription drug. 

12 ‘‘(h) PROHIBITION OF DISCRIMINATION.—

13 ‘‘(1) IN GENERAL.—It shall be unlawful for a 

14 manufacturer of a prescription drug to discriminate 

15 against, or cause any other person to discriminate 

16 against, a pharmacist, wholesaler, or Canadian ex17 porter that purchases or offers to purchase a pre18 scription drug from the manufacturer or from any 

19 person that distributes a prescription drug manufac20 tured by the drug manufacturer. 

21 ‘‘(2) DISCRIMINATION.—For the purposes of 

22 paragraph (1), a manufacturer of a prescription 

23 drug shall be considered to discriminate against a 

24 pharmacist, wholesaler, or Canadian exporter if the 

25 manufacturer enters into a contract for sale of a 
22

•S 1992 IS 

1 prescription drug, places a limit on supply, or em2 ploys any other measure, that has the effect of—

3 ‘‘(A) providing pharmacists, wholesalers, or 

4 Canadian exporters access to prescription drugs 

5 on terms or conditions that are less favorable 

6 than the terms or conditions provided to a for7 eign purchaser (other than a charitable or hu8 manitarian organization) of the prescription 

9 drug; or 

10 ‘‘(B) restricting the access of pharmacists, 

11 wholesalers, or Canadian exporters to a pre12 scription drug that is permitted to be imported 

13 into the United States under this section. 

14 ‘‘(i) CHARITABLE CONTRIBUTIONS.—Notwith15 standing any other provision of this section, section 

16 801(d)(1) continues to apply to a prescription drug that 

17 is donated or otherwise supplied at no charge by the man18 ufacturer of the drug to a charitable or humanitarian or19 ganization (including the United Nations and affiliates) 

20 or to a government of a foreign country. 

21 ‘‘(j) WAIVER AUTHORITY FOR IMPORTATION BY IN22 DIVIDUALS.—

23 ‘‘(1) DECLARATIONS.—Congress declares that 

24 in the enforcement against individuals of the prohi-
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1 bition of importation of prescription drugs and de2 vices, the Secretary should—

3 ‘‘(A) focus enforcement on cases in which 

4 the importation by an individual poses a signifi5 cant threat to public health; and 

6 ‘‘(B) exercise discretion to permit individ7 uals to make such importations in cir8 cumstances in which—

9 ‘‘(i) the importation is clearly for per10 sonal use; and 

11 ‘‘(ii) the prescription drug or device 

12 imported does not appear to present an 

13 unreasonable risk to the individual. 

14 ‘‘(2) WAIVER AUTHORITY.—

15 ‘‘(A) IN GENERAL.—The Secretary may 

16 grant to individuals, by regulation or on a case17 by-case basis, a waiver of the prohibition of im18 portation of a prescription drug or device or 

19 class of prescription drugs or devices, under 

20 such conditions as the Secretary determines to 

21 be appropriate. 

22 ‘‘(B) GUIDANCE ON CASE-BY-CASE WAIV23 ERS.—The Secretary shall publish, and update 

24 as necessary, guidance that accurately describes 

25 circumstances in which the Secretary will con-
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1 sistently grant waivers on a case-by-case basis 

2 under subparagraph (A), so that individuals 

3 may know with the greatest practicable degree 

4 of certainty whether a particular importation 

5 for personal use will be permitted. 

6 ‘‘(3) DRUGS IMPORTEDFROM CANADA.—In 

7 particular, the Secretary shall by regulation grant 

8 individuals a waiver to permit individuals to import 

9 into the United States a prescription drug that—

10 ‘‘(A) is imported from a licensed pharmacy 

11 for personal use by an individual, not for resale, 

12 in quantities that do not exceed a 90-day sup13 ply; 

14 ‘‘(B) is accompanied by a copy of a valid 

15 prescription; 

16 ‘‘(C) is imported from Canada, from a Ca17 nadian exporter registered with the Secretary; 

18 ‘‘(D) is a prescription drug approved by 

19 the Secretary under chapter V; 

20 ‘‘(E) is in the form of a final finished dos21 age that was manufactured in an establishment 

22 registered under section 510; and 

23 ‘‘(F) is imported under such other condi24 tions as the Secretary determines to be nec25 essary to ensure public safety.
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1 ‘‘(k) STUDIES; REPORTS.—

2 ‘‘(1) BY THE INSTITUTE OF MEDICINE OF THE

3 NATIONAL ACADEMY OF SCIENCES.—

4 ‘‘(A) STUDY.—

5 ‘‘(i) IN GENERAL.—The Secretary 

6 shall request that the Institute of Medicine 

7 of the National Academy of Sciences con8 duct a study of—

9 ‘‘(I) importations of prescription 

10 drugs made under the regulations 

11 under subsection (b); and 

12 ‘‘(II) information and docu13 mentation submitted under subsection 

14 (d). 

15 ‘‘(ii) REQUIREMENTS.—In conducting 

16 the study, the Institute of Medicine shall—

17 ‘‘(I) evaluate the compliance of 

18 importers with the regulations under 

19 subsection (b); 

20 ‘‘(II) compare the number of 

21 shipments under the regulations 

22 under subsection (b) during the study 

23 period that are determined to be 

24 counterfeit, misbranded, or adulter25 ated, and compare that number with 
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1 the number of shipments made during 

2 the study period within the United 

3 States that are determined to be 

4 counterfeit, misbranded, or adulter5 ated; and 

6 ‘‘(III) consult with the Secretary, 

7 the United States Trade Representa8 tive, and the Commissioner of Patents 

9 and Trademarks to evaluate the effect 

10 of importations under the regulations 

11 under subsection (b) on trade and 

12 patent rights under Federal law. 

13 ‘‘(B) REPORT.—Not later than 2 years 

14 after the effective date of the regulations under 

15 subsection (b), the Institute of Medicine shall 

16 submit to Congress a report describing the find17 ings of the study under subparagraph (A). 

18 ‘‘(2) BY THE COMPTROLLER GENERAL.—

19 ‘‘(A) STUDY.—The Comptroller General of 

20 the United States shall conduct a study to de21 termine the effect of this section on the price of 

22 prescription drugs sold to consumers at retail. 

23 ‘‘(B) REPORT.—Not later than 18 months 

24 after the effective date of the regulations under 

25 subsection (b), the Comptroller General of the 
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•S 1992 IS 

1 United States shall submit to Congress a report 

2 describing the findings of the study under sub3 paragraph (A). 

4 ‘‘(l) CONSTRUCTION.—Nothing in this section limits 

5 the authority of the Secretary relating to the importation 

6 of prescription drugs, other than with respect to section 

7 801(d)(1) as provided in this section. 

8 ‘‘(m) AUTHORIZATION OF APPROPRIATIONS.—There 

9 are authorized to be appropriated such sums as are nec10 essary to carry out this section.’’. 

11 (b) CONFORMING AMENDMENTS.—The Federal 

12 Food, Drug, and Cosmetic Act is amended—

13 (1) in section 301(aa) (21 U.S.C. 331(aa)), by 

14 striking ‘‘covered product in violation of section 

15 804’’ and inserting ‘‘prescription drug in violation of 

16 section 804’’; and 

17 (2) in section 303(a)(6) (21 U.S.C. 333(a)(6), 

18 by striking ‘‘covered product pursuant to section 

19 804(a)’’ and inserting ‘‘prescription drug under sec20 tion 804(b)’’. 

21 SEC. 302. NEGOTIATING FAIR PRICES FOR MEDICARE PRE22 SCRIPTION DRUGS. 

23 Section 1860D–11 of the Social Security Act, as 

24 added by section 101(a) of the Medicare Prescription 

25 Drug, Improvement, and Modernization Act of 2003, is 
28

•S 1992 IS 

1 amended by striking subsection (i) (relating to noninter2 ference) and by inserting the following: 

3 ‘‘(i) AUTHORITY TO NEGOTIATE PRICES WITH MAN4 UFACTURERS.—In order to ensure that beneficiaries en5 rolled under prescription drug plans and MA–PD plans 

6 pay the lowest possible price, the Secretary shall have au7 thority similar to that of other Federal entities that pur8 chase prescription drugs in bulk to negotiate contracts 

9 with manufacturers of covered part D drugs, consistent 

10 with the requirements and in furtherance of the goals of 

11 providing quality care and containing costs under this 

12 part.’’. 

13 TITLE IV—REPEAL OF HEALTH 

14 SAVINGS ACCOUNTS 

15 SEC. 401. REPEAL OF HEALTH SAVINGS ACCOUNTS. 

16 Section 1201 of the Medicare Prescription Drug, Im17 provement, and Modernization Act of 2003 is repealed and 

18 any provisions of law amended by such section are re19 stored as if such section had not been enacted.

Æ