II 

108TH CONGRESS 

2D SESSION S. 2257 

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 

MARCH 30, 2004 

Mr. DURBIN (for himself, Mr. DAYTON, and Mr. LEVIN) 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 2004’’. 

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 
2 

•S 2257 IS 

1 2003 (Public Law 108–173, 117 Stat. 2071), is amended 

2 by inserting after section 1860D–11 the following new sec3 tion: 

4 ‘‘MEDICARE OPERATED PRESCRIPTION DRUG PLAN

5 OPTION

6 ‘‘SEC. 1860D–11A. (a) IN GENERAL.—Notwith7 standing any other provision of this part, for each year 

8 (beginning with 2006), in addition to any plans offered 

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

10 more medicare operated prescription drug plans (as de11 fined in subsection (c)) with a service area that consists 

12 of the entire United States and shall enter into negotia13 tions with pharmaceutical manufacturers to reduce the 

14 purchase cost of covered part D drugs for eligible part 

15 D individuals in accordance with subsection (b). 

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 and 

21 shall encourage the use of more affordable therapeutic 

22 equivalents to the extent such practices do not override 

23 medical necessity as determined by the prescribing physi24 cian. To the extent practicable and consistent with the 

25 previous sentence, the Secretary shall implement strate26 gies similar to those used by other Federal purchasers of 
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•S 2257 IS 

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 offers qualified prescription drug 

7 coverage and access to negotiated prices described in sec8 tion 1860D–2(a)(1)(A). Such a plan may offer supple9 mental prescription drug coverage in the same manner as 

10 other qualified prescription drug coverage offered by other 

11 prescription drug plans. 

12 ‘‘(d) MONTHLY BENEFICIARY PREMIUM.— 

13 ‘‘(1) QUALIFIED PRESCRIPTION DRUG COV14 ERAGE.—The monthly beneficiary premium for 

15 qualified prescription drug coverage and access to 

16 negotiated prices described in section 1860D– 

17 2(a)(1)(A) to be charged under a medicare operated 

18 prescription drug plan shall be uniform nationally. 

19 Such premium for months in 2006 shall be $35 and 

20 for months in succeeding years shall be based on the 

21 average monthly per capita actuarial cost of offering 

22 the medicare operated prescription drug plan for the 

23 year involved, including administrative expenses. 

24 ‘‘(2) SUPPLEMENTAL PRESCRIPTION DRUG COV25 ERAGE.—Insofar as a medicare operated prescrip-
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1 tion drug plan offers supplemental prescription drug 

2 coverage, the Secretary may adjust the amount of 

3 the premium charged under paragraph (1). 

4 ‘‘(3) REQUIREMENT FOR AT LEAST ONE PLAN

5 WITH A $35 PREMIUM IN 2006.—The Secretary shall 

6 ensure that at least one medicare operated prescrip7 tion drug plan offered in 2006 has a monthly pre8 mium of $35.’’. 

9 (b) CONFORMING AMENDMENTS.— 

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

11 Act (42 U.S.C. 1395w–103(a)) is amended by add12 ing at the end the following new paragraph: 

13 ‘‘(4) AVAILABILITY OF THE MEDICARE OPER14 ATED PRESCRIPTION DRUG PLAN.— 

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

16 prescription drug plan (as defined in section 

17 1860D–11A(c)) shall be offered nationally in 

18 accordance with section 1860D–11A. 

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

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

21 (ii), a medicare operated prescription drug 

22 plan shall be offered in addition to any 

23 qualifying plan or fallback prescription 

24 drug plan offered in a PDP region and 

25 shall not be considered to be such a plan 
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1 for purposes of meeting the requirements 

2 of this subsection. 

3 ‘‘(ii) DESIGNATION AS A FALLBACK

4 PLAN.—Notwithstanding any other provi5 sion of this part, the Secretary may des6 ignate the medicare operated prescription 

7 drug plan as the fallback prescription drug 

8 plan for any fallback service area (as de9 fined in section 1860D–11(g)(3)) deter10 mined to be appropriate by the Sec11 retary.’’. 

12 (2) Section 1860D–13(c)(3) of such Act (42 

13 U.S.C. 1395w–113(c)(3)) is amended— 

14 (A) in the heading, by inserting ‘‘and 

15 medicare operated prescription drug plans’’ 

16 after ‘‘Fallback plans’’; and 

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

18 prescription drug plan’’ after ‘‘a fallback pre19 scription drug plan’’. 

20 (3) Section 1860D–16(b)(1) of such Act (42 

21 U.S.C. 1395w–116(b)(1)) is amended— 

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

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

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

25 period at the end and inserting ‘‘; and’’; and 
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1 ‘‘(E) payments for expenses incurred with 

2 respect to the operation of medicare operated 

3 prescription drug plans under section 1860D– 

4 11A.’’. 

5 (4) Section 1860D–41(a) of such Act (42 

6 U.S.C. 141(a)) is amended by adding at the end the 

7 following new paragraph: 

8 ‘‘(19) MEDICARE OPERATED PRESCRIPTION

9 DRUG PLAN.—The term ‘medicare operated prescrip10 tion drug plan’ has the meaning given such term in 

11 section 1860D–11A(c).’’. 

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

13 this section shall take effect as if included in the enact14 ment of section 101 of the Medicare Prescription Drug, 

15 Improvement, and Modernization Act of 2003 (Public Law 

16 108–173; 117 Stat. 2071). 

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