II 

108TH CONGRESS 

1ST SESSION S. 1950

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 

NOVEMBER 24, 2003

Mr. DURBIN 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 Act of 2003’’. 

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

8 (a) IN GENERAL.—Subpart 2 of part D of the Social 

9 Security Act, as added by section 101 of the Medicare Pre10 scription Drug, Improvement, and Modernization Act of 
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1 2003, is amended by inserting after section 1860D–11 the 

2 following 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 2006), in addition to any plans offered 

8 under section 1860D–11, the Secretary shall offer a medi9 care operated prescription drug plan (as defined in sub10 section (c)) with a service area that consists of the entire 

11 United States and shall enter into negotiations with phar12 maceutical manufacturers to reduce the purchase cost of 

13 covered part D drugs for eligible part D individuals in ac14 cordance with subsection (b). 

15 ‘‘(b) NEGOTIATIONS.—Notwithstanding section 

16 1860D–11(i), for purposes of offering a medicare operated 

17 prescription drug plan under this section, the Secretary 

18 shall negotiate with pharmaceutical manufacturers with 

19 respect to the purchase price of covered part D drugs and 

20 shall encourage the use of more affordable therapeutic 

21 equivalents to the extent such practices do not override 

22 medical necessity as determined by the prescribing physi23 cian. To the extent practicable and consistent with the 

24 previous sentence, the Secretary shall implement strate25 gies similar to those used by other Federal purchasers of 
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1 prescription drugs, and other strategies, to reduce the pur2 chase cost of covered part D drugs. 

3 ‘‘(c) MEDICARE OPERATED PRESCRIPTION DRUG

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

5 ‘medicare operated prescription drug plan’ means a pre6 scription drug plan that only offers the standard prescrip7 tion drug coverage and access to negotiated prices de8 scribed in section 1860D–2(a)(1)(A) and does not include 

9 any supplemental prescription drug coverage. 

10 ‘‘(d) MONTHLY BENEFICIARY PREMIUM.—The 

11 monthly beneficiary premium to be charged under a medi12 care operated prescription drug plan shall be uniform na13 tionally and shall be determined by the Secretary related 

14 to the Secretary’s estimate of the average monthly per 

15 capita actuarial cost, including administrative expenses, 

16 under the medicare operated prescription drug plan of 

17 providing coverage in the region, as calculated by the 

18 Chief Actuary of the Centers for Medicare & Medicaid 

19 Services. In calculating such administrative expenses, the 

20 Chief Actuary shall use a factor that is based on similar 

21 expenses of prescription drug plans that are not medicare 

22 operated prescription drug plans.’’. 

23 (b) CONFORMING AMENDMENTS.—

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

25 Act, as added by section 101 of the Medicare Pre-
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1 scription Drug, Improvement, and Modernization 

2 Act of 2003, is amended by adding at the end the 

3 following new paragraph: 

4 ‘‘(4) AVAILABILITY OF THE MEDICARE OPER5 ATED PRESCRIPTION DRUG PLAN.—

6 ‘‘(A) IN GENERAL.—A medicare operated 

7 prescription drug plan (as defined in section 

8 1860D–11A(c)) shall be offered nationally in 

9 accordance with section 1860D–11A. 

10 ‘‘(B) RELATIONSHIP TO OTHER PLANS.—

11 ‘‘(i) IN GENERAL.—Subject to clause 

12 (ii), a medicare operated prescription drug 

13 plan shall be offered in addition to any 

14 qualifying plan or fallback prescription 

15 drug plan offered in a PDP region and 

16 shall not be considered to be such a plan 

17 purposes of meeting the requirements of 

18 this subsection. 

19 ‘‘(ii) DESIGNATION AS A FALLBACK

20 PLAN.—Notwithstanding any other provi21 sion of this part, the Secretary may des22 ignate the medicare operated prescription 

23 drug plan as the fallback prescription drug 

24 plan for any fallback service area (as de25 fined in section 1860D–11(g)(3)) deter-
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1 mined to be appropriate by the Sec2 retary.’’. 

3 (2) Section 1860D–13(c)(3) of such Act, as 

4 added by such section, is amended—

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

6 MEDICARE OPERATED PRESCRIPTION DRUG

7 PLANS’’ after ‘‘FALLBACK PLANS’’; and 

8 (B) by inserting ‘‘or a medicare operated 

9 prescription drug plan’’ after ‘‘a fallback pre10 scription drug plan’’. 

11 (3) Section 1860D–16(b)(1) of such Act, as 

12 added by such section, is amended—

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

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

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

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

17 ‘‘(E) payments for expenses incurred with 

18 respect to the operation of medicare operated 

19 prescription drug plans under section 1860D–

20 11A.’’. 

21 (4) Section 1860D–41(a) of such Act, as added 

22 by such section, is amended by adding at the end 

23 the following new paragraph: 

24 ‘‘(19) MEDICARE OPERATED PRESCRIPTION

25 DRUG PLAN.—The term ‘medicare operated prescrip-
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1 tion drug plan’ has the meaning given such term in 

2 section 1860D–11A(c).’’. 

3 (c) EFFECTIVE DATE.—The amendments made by 

4 this section shall take effect as if included in the enact5 ment of section 101 of the Medicare Prescription Drug, 

6 Improvement, and Modernization Act of 2003.

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