II 

108TH CONGRESS 

2D SESSION S. 2487

To amend part D of title XVIII of the Social Security Act to ensure that 

every medicare beneficiary has access to a medicare administered prescription drug plan option, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JUNE 2, 2004

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

to the Committee on Finance 

A BILL

To amend part D of title XVIII of the Social Security 

Act to ensure that every medicare beneficiary has access 

to a medicare administered prescription drug plan option, 

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 the 

5 ‘‘Right Prescription for Seniors Act of 2004’’. 

6 (b) TABLE OF CONTENTS.—The table of contents of 

7 this Act is as follows:

Sec. 1. Short title; table of contents. 

Sec. 2. Establishment of medicare operated plan option. 

Sec. 3. Negotiating fair prices for medicare prescription drugs. 
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Sec. 4. Importation of prescription drugs. 

Sec. 5. Limitation on prescription drug benefits of Members of Congress.

1 SEC. 2. ESTABLISHMENT OF MEDICARE OPERATED PLAN 

2 OPTION. 

3 (a) IN GENERAL.—Section 1860D–11(g) of the So4 cial Security Act, as added by section 101(a) of the Medi5 care Prescription Drug, Improvement, and Modernization 

6 Act of 2003 (Public Law 108–173), is amended to read 

7 as follows: 

8 ‘‘(g) MEDICARE OPERATED PLAN OPTION.—

9 ‘‘(1) IN GENERAL.—Separate from the bidding 

10 process under subsection (b), the Secretary shall 

11 provide for the offering in each PDP region of a 

12 medicare operated plan option (as defined in para13 graph (4)) and shall enter into negotiations with 

14 pharmaceutical manufacturers to reduce the pur15 chase cost of covered part D drugs for eligible part 

16 D individuals in accordance with paragraph (2). 

17 ‘‘(2) NEGOTIATIONS.—The Secretary shall ne18 gotiate with pharmaceutical manufacturers with re19 spect to the purchase price of covered part D drugs 

20 and shall encourage the use of more affordable 

21 therapeutic equivalents to the extent such practices 

22 do not override medical necessity as determined by 

23 the prescribing physician. To the extent practicable 

24 and consistent with the previous sentence, the Sec-
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1 retary shall implement strategies similar to those 

2 used by other Federal purchasers of prescription 

3 drugs, and other strategies, to reduce the purchase 

4 cost of covered part D drugs. 

5 ‘‘(3) MEDICARE OPERATED PLAN OPTION.—For 

6 purposes of this part, the term ‘medicare operated 

7 plan option’ means a prescription drug plan that of8 fers coverage similar to the standard prescription 

9 drug coverage and access to negotiated prices de10 scribed in section 1860D–2(a)(1)(A) and does not 

11 include any supplemental prescription drug coverage, 

12 except that such plan shall provide continuous cov13 erage and shall not have a coverage gap. 

14 ‘‘(4) MONTHLY BENEFICIARY PREMIUM.—

15 ‘‘(A) IN GENERAL.—Except as provided in 

16 section 1860D–13(b) (relating to late enroll17 ment penalty) and subject to section 1860D–14 

18 (relating to low-income assistance), the monthly 

19 beneficiary premium to be charged under the 

20 medicare operated plan option shall be—

21 ‘‘(i) for months in 2006, $35; and 

22 ‘‘(ii) for months in a subsequent year, 

23 the lesser of—

24 ‘‘(I) the amount determined 

25 under this paragraph for months in 
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1 the previous year, increased by the 

2 annual percentage increase described 

3 in subparagraph (B) for the year in4 volved; or 

5 ‘‘(II) in the case of months in 

6 years prior to 2014, the specified 

7 amount (as defined in subparagraph 

8 (C)). 

9 ‘‘(B) ANNUAL PERCENTAGE INCREASE.—

10 The annual percentage increase specified in this 

11 paragraph for a year is equal to the annual per12 centage increase in average per capita aggre13 gate expenditures for covered drugs in the 

14 United States for beneficiaries under this title, 

15 as determined by the Administrator for the 12-

16 month period ending in July of the previous 

17 year. 

18 ‘‘(C) SPECIFIED AMOUNT.—For purposes 

19 of the paragraph, the term ‘specified amount’ 

20 means—

21 ‘‘(i) for months in 2007, $37; 

22 ‘‘(ii) for months in 2008, $40; 

23 ‘‘(iii) for months in 2009, $43; 

24 ‘‘(iv) for months in 2010, $46; 

25 ‘‘(v) for months in 2011, $51;
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1 ‘‘(vi) for months in 2012, $54; and 

2 ‘‘(vii) for months in 2013, $59. 

3 ‘‘(5) NO AFFECT ON ACCESS REQUIREMENTS.—

4 The medicare operated plan option shall be in addi5 tion to the plans required under subsection (d)(1)’’. 

6 (b) CONFORMING AMENDMENTS.—

7 (1) Section 1860D–3 of the Social Security Act, 

8 as added by section 101(a) of the Medicare Prescrip9 tion Drug, Improvement, and Modernization Act of 

10 2003 (Public Law 108–173), is repealed. 

11 (2) Section 1860D–11(f) of the Social Security 

12 Act, as added by section 101(a) of the Medicare Pre13 scription Drug, Improvement, and Modernization 

14 Act of 2003 (Public Law 108–173), is amended—

15 (A) by striking paragraph (1) and insert16 ing the following: 

17 ‘‘(1) CONDITIONS FOR APPROVAL OF LIMITED

18 RISK PLANS.—

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

20 only approve a limited risk plan (as defined in 

21 paragraph (4)(A)) for a PDP region if the ac22 cess requirements under subparagraph (B) 

23 would not be met for the region but for the ap24 proval of such a plan. 
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1 ‘‘(B) ENSURING ACCESS TO A CHOICE OF

2 COVERAGE.—

3 ‘‘(i) CHOICE OF AT LEAST TWO PLANS

4 IN EACH AREA.—The Secretary shall en5 sure that each part D eligible individual 

6 has available, consistent with clause (ii), a 

7 choice of enrollment in at least 2 quali8 fying plans (as defined in clause (iii)) in 

9 the area in which the individual resides, at 

10 least one of which is a prescription drug 

11 plan. 

12 ‘‘(ii) REQUIREMENT FOR DIFFERENT

13 PLAN SPONSORS.—The requirement in 

14 clause (i) is not satisfied with respect to an 

15 area if only one entity offers all the quali16 fying plans in the area. 

17 ‘‘(iii) QUALIFYING PLAN DEFINED.—

18 For purposes of this section, the term 

19 ‘qualifying plan’ means—

20 ‘‘(I) a prescription drug plan; or 

21 ‘‘(II) an MA–PD plan described 

22 in section 1851(a)(2)(A)(i) that pro23 vides basic prescription drug coverage 

24 or qualified prescription drug coverage 

25 that provides supplemental prescrip-
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1 tion drug coverage so long as there is 

2 no MA monthly supplemental bene3 ficiary premium applied under the 

4 plan, due to the application of a credit 

5 against such premium of a rebate 

6 under section 1854(b)(1)(C).’’; 

7 (B) in paragraph (2)(A), by striking ‘‘sec8 tion 1860D–3(a)’’ and inserting ‘‘paragraph 

9 (1)(B)’’; and 

10 (C) in subparagraphs (A) and (B) of para11 graph (4), by striking ‘‘fallback prescription 

12 drug plan’’ each place it appears and inserting 

13 ‘‘medicare operated plan option’’. 

14 (3) Section 1860D–11(h) is amended—

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

16 FALLBACK PLANS’’; and 

17 (B) by striking the first sentence and in18 serting the following: ‘‘The Secretary shall sub19 mit to Congress an annual report that describes 

20 instances in which limited risk plans were of21 fered under subsection (f).’’. 

22 (4) Section 1860D–12(b) of the Social Security 

23 Act, as added by section 101(a) of the Medicare Pre24 scription Drug, Improvement, and Modernization 

25 Act of 2003 (Public Law 108–173), is amended—
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1 (A) by striking paragraph (2); and 

2 (B) by redesignating paragraph (3) as 

3 paragraph (2). 

4 (5) Section 1860D–15 of the Social Security 

5 Act, as added by section 101(a) of the Medicare Pre6 scription Drug, Improvement, and Modernization 

7 Act of 2003 (Public Law 108–173), is amended by 

8 striking subsection (g). 

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

10 this section shall take effect as if included in the enact11 ment of section 101(a) of the Medicare Prescription Drug, 

12 Improvement, and Modernization Act of 2003 (Public Law 

13 108–173). 

14 SEC. 3. NEGOTIATING FAIR PRICES FOR MEDICARE PRE15 SCRIPTION DRUGS. 

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

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

18 Drug, Improvement, and Modernization Act of 2003 (Pub19 lic Law 108–173), is amended by striking subsection (i) 

20 (relating to noninterference) and by inserting the fol21 lowing: 

22 ‘‘(i) NEGOTIATION OF PRICES WITH MANUFACTUR23 ERS.—In order to ensure that beneficiaries enrolled under 

24 prescription drug plans and MA–PD plans pay the lowest 

25 possible price, the Secretary shall—
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1 ‘‘(1) have authority similar to that of other 

2 Federal entities that purchase prescription drugs in 

3 bulk to negotiate contracts with manufacturers of 

4 covered part D drugs, consistent with the require5 ments and in furtherance of the goals of providing 

6 quality care and containing costs under this part; 

7 and 

8 ‘‘(2) use such authority to negotiate the prices 

9 of covered part D drugs furnished to part D eligible 

10 individuals under prescription drug plans offered by 

11 PDP sponsors under this part.’’. 

12 SEC. 4. IMPORTATION OF PRESCRIPTION DRUGS. 

13 Section 804 of the Federal Food, Drug, and Cosmetic 

14 Act (21 U.S.C. 384) is amended—

15 (1) in subsection (a)—

16 (A) by striking ‘‘The Secretary’’ and in17 serting ‘‘Not later than 180 days after the date 

18 of enactment of the Pharmaceutical Market Ac19 cess Act of 2003, the Secretary’’; and 

20 (B) by striking ‘‘pharmacists and whole21 salers’’ and inserting ‘‘pharmacists, wholesalers, 

22 and qualifying individuals’’; 

23 (2) in subsection (b)—

24 (A) by striking paragraph (1) and insert25 ing the following: 
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1 ‘‘(1) require that each covered product imported 

2 under that subsection complies with sections 501, 

3 502, and 505 and other applicable requirements of 

4 this Act; and’’; 

5 (B) in paragraph (2), by striking ‘‘, includ6 ing subsection (d); and’’ and inserting a period; 

7 and 

8 (C) by striking paragraph (3); 

9 (3) in subsection (c), by inserting ‘‘by phar10 macists and wholesalers (but not qualifying individ11 uals)’’ after ‘‘importation of covered products’’; 

12 (4) in subsection (d)—

13 (A) by striking paragraphs (3) and (10); 

14 (B) in paragraph (5), by striking ‘‘, includ15 ing the professional license number of the im16 porter, if any’’; 

17 (C) in paragraph (6)—

18 (i) in subparagraph (C), by inserting 

19 ‘‘(if required under subsection (e))’’ before 

20 the period; 

21 (ii) in subparagraph (D), by inserting 

22 ‘‘(if required under subsection (e))’’ before 

23 the period; and 

24 (iii) in subparagraph (E), by striking 

25 ‘‘labeling’’; 
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1 (D) in paragraph (7)—

2 (i) in subparagraph (A), by inserting 

3 ‘‘(if required under subsection (e))’’ before 

4 the period; and 

5 (ii) by striking subparagraph (B) and 

6 inserting the following: 

7 ‘‘(B) Certification from the importer or 

8 manufacturer of the product that the product 

9 meets all requirements of this Act.’’; and 

10 (E) by redesignating paragraphs (4) 

11 through (9) as paragraphs (3) through (8), re12 spectively; 

13 (5) by striking subsection (e) and inserting the 

14 following: 

15 ‘‘(e) TESTING.—

16 ‘‘(1) IN GENERAL.—Subject to paragraph (2), 

17 regulations under subsection (a) shall require that 

18 testing referred to in paragraphs (5) through (7) of 

19 subsection (d) be conducted by the importer of the 

20 covered product, unless the covered product is a pre21 scription drug subject to the requirements of section 

22 505B for counterfeit-resistant technologies. 

23 ‘‘(2) EXCEPTION.—The testing requirements of 

24 paragraphs (5) through (7) of subsection (d) shall
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1 not apply to an importer unless the importer is a 

2 wholesaler.’’; 

3 (6) in subsection (f), by striking ‘‘or designated 

4 by the Secretary, subject to such limitations as the 

5 Secretary determines to be appropriate to protect 

6 the public health’’; 

7 (7) in subsection (g)—

8 (A) by striking ‘‘counterfeit or’’; and 

9 (B) by striking ‘‘and the Secretary deter10 mines that the public is adequately protected 

11 from counterfeit and violative covered products 

12 being imported pursuant to subsection (a)’’; 

13 (8) in subsection (i)(1)—

14 (A) by striking subparagraph (A) and in15 serting the following: 

16 ‘‘(A) STUDY.—

17 ‘‘(i) IN GENERAL.—The Secretary 

18 shall conduct, or contract with an entity to 

19 conduct, a study on the imports permitted 

20 under subsection (a), including consider21 ation of the information received under 

22 subsection (d). 

23 ‘‘(ii) EVALUATION.—In conducting 

24 the study, the Secretary or entity shall—
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1 ‘‘(I) evaluate the compliance of 

2 importers with regulations under sub3 section (a), and the incidence of ship4 ments under that subsection, if any, 

5 that have been determined to be mis6 branded or adulterated; and 

7 ‘‘(II) determine how that compli8 ance contrasts with the incidence of 

9 shipments of prescription drugs trans10 ported within the United States that 

11 have been determined to be mis12 branded or adulterated.’’; and 

13 (B) in subparagraph (B), by striking ‘‘Not 

14 later than 2 years after the effective date of 

15 final regulations under subsection (a),’’ and in16 serting ‘‘Not later than 18 months after the 

17 date of enactment of the Pharmaceutical Mar18 ket Access Act of 2003,’’; 

19 (9) in subsection (k)(2)—

20 (A) by redesignating subparagraphs (D) 

21 and (E) as subparagraphs (E) and (F), respec22 tively; and 

23 (B) by inserting after subparagraph (C) 

24 the following: 
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1 ‘‘(D) QUALIFYING INDIVIDUAL.—The term 

2 ‘qualifying individual’ means an individual who 

3 is not a pharmacist or a wholesaler.’’; and 

4 (10) by striking subsections (l) and (m). 

5 SEC. 5. LIMITATION ON PRESCRIPTION DRUG BENEFITS OF 

6 MEMBERS OF CONGRESS. 

7 (a) LIMITATION ON BENEFITS.—Notwithstanding 

8 any other provision of law, the actuarial value of the pre9 scription drug benefits of any Member of Congress en10 rolled in a health benefits plan under chapter 89 of title 

11 5, United States Code, may not exceed the actuarial value 

12 of basic prescription drug coverage (as defined in section 

13 1860D–2(a)(3) of the Social Security Act, as added by 

14 section 101(a) of the Medicare Prescription Drug, Im15 provement, and Modernization Act of 2003 (Public Law 

16 108–173)). 

17 (b) REGULATIONS.—The Director of the Office of 

18 Personnel Management shall promulgate regulations to 

19 carry out this section.

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