II 

Calendar No. 639 

108TH CONGRESS 

2D SESSION S. 2652 

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 

JULY 14, 2004 

Mr. DURBIN (for himself, Mr. DAYTON, and Mr. LEVIN) introduced the 

following bill; which was read the first time 

JULY 15, 2004 

Read the second time and placed on the calendar 

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’’. 
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1 SEC. 2. ESTABLISHMENT OF MEDICARE OPERATED PRE2 SCRIPTION DRUG PLAN OPTION. 

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

4 Security Act, as added by section 101 of the Medicare Pre5 scription Drug, Improvement, and Modernization Act of 

6 2003 (Public Law 108–173, 117 Stat. 2071), is amended 

7 by inserting after section 1860D–11 the following new sec8 tion: 

9 ‘‘MEDICARE OPERATED PRESCRIPTION DRUG PLAN

10 OPTION

11 ‘‘SEC. 1860D–11A. (a) IN GENERAL.—Notwith12 standing any other provision of this part, for each year 

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

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

15 more medicare operated prescription drug plans (as de16 fined in subsection (c)) with a service area that consists 

17 of the entire United States and shall enter into negotia18 tions with pharmaceutical manufacturers to reduce the 

19 purchase cost of covered part D drugs for eligible part 

20 D individuals in accordance with subsection (b). 

21 ‘‘(b) NEGOTIATIONS.—Notwithstanding section 

22 1860D–11(i), for purposes of offering a medicare operated 

23 prescription drug plan under this section, the Secretary 

24 shall negotiate with pharmaceutical manufacturers with 

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

26 shall encourage the use of more affordable therapeutic 
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1 equivalents to the extent such practices do not override 

2 medical necessity as determined by the prescribing physi3 cian. To the extent practicable and consistent with the 

4 previous sentence, the Secretary shall implement strate5 gies similar to those used by other Federal purchasers of 

6 prescription drugs, and other strategies, to reduce the pur7 chase cost of covered part D drugs. 

8 ‘‘(c) MEDICARE OPERATED PRESCRIPTION DRUG

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

10 ‘medicare operated prescription drug plan’ means a pre11 scription drug plan that offers qualified prescription drug 

12 coverage and access to negotiated prices described in sec13 tion 1860D–2(a)(1)(A). Such a plan may offer supple14 mental prescription drug coverage in the same manner as 

15 other qualified prescription drug coverage offered by other 

16 prescription drug plans. 

17 ‘‘(d) MONTHLY BENEFICIARY PREMIUM.— 

18 ‘‘(1) QUALIFIED PRESCRIPTION DRUG COV19 ERAGE.—The monthly beneficiary premium for 

20 qualified prescription drug coverage and access to 

21 negotiated prices described in section 1860D– 

22 2(a)(1)(A) to be charged under a medicare operated 

23 prescription drug plan shall be uniform nationally. 

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

25 for months in succeeding years shall be based on the 
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1 average monthly per capita actuarial cost of offering 

2 the medicare operated prescription drug plan for the 

3 year involved, including administrative expenses. 

4 ‘‘(2) SUPPLEMENTAL PRESCRIPTION DRUG COV5 ERAGE.—Insofar as a medicare operated prescrip6 tion drug plan offers supplemental prescription drug 

7 coverage, the Secretary may adjust the amount of 

8 the premium charged under paragraph (1). 

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

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

11 ensure that at least one medicare operated prescrip12 tion drug plan offered in 2006 has a monthly pre13 mium of $35.’’. 

14 (b) CONFORMING AMENDMENTS.— 

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

16 Act (42 U.S.C. 1395w–103(a)) is amended by add17 ing at the end the following new paragraph: 

18 ‘‘(4) AVAILABILITY OF THE MEDICARE OPER19 ATED PRESCRIPTION DRUG PLAN.— 

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

21 prescription drug plan (as defined in section 

22 1860D–11A(c)) shall be offered nationally in 

23 accordance with section 1860D–11A. 

24 ‘‘(B) RELATIONSHIP TO OTHER PLANS.— 
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1 ‘‘(i) IN GENERAL.—Subject to clause 

2 (ii), a medicare operated prescription drug 

3 plan shall be offered in addition to any 

4 qualifying plan or fallback prescription 

5 drug plan offered in a PDP region and 

6 shall not be considered to be such a plan 

7 for purposes of meeting the requirements 

8 of this subsection. 

9 ‘‘(ii) DESIGNATION AS A FALLBACK

10 PLAN.—Notwithstanding any other provi11 sion of this part, the Secretary may des12 ignate the medicare operated prescription 

13 drug plan as the fallback prescription drug 

14 plan for any fallback service area (as de15 fined in section 1860D–11(g)(3)) deter16 mined to be appropriate by the Sec17 retary.’’. 

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

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

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

21 medicare operated prescription drug plans’’ 

22 after ‘‘Fallback plans’’; and 

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

24 prescription drug plan’’ after ‘‘a fallback pre25 scription drug plan’’. 
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1 (3) Section 1860D–16(b)(1) of such Act (42 

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

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

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

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

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

7 ‘‘(E) payments for expenses incurred with 

8 respect to the operation of medicare operated 

9 prescription drug plans under section 1860D– 

10 11A.’’. 

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

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

13 following new paragraph: 

14 ‘‘(19) MEDICARE OPERATED PRESCRIPTION

15 DRUG PLAN.—The term ‘medicare operated prescrip16 tion drug plan’ has the meaning given such term in 

17 section 1860D–11A(c).’’. 

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

19 this section shall take effect as if included in the enact20 ment of section 101 of the Medicare Prescription Drug, 

21 Improvement, and Modernization Act of 2003 (Public Law 

22 108–173; 117 Stat. 2071). 

Calendar No. 639 

108TH CONGRESS 

2D SESSION S. 2652 

A BILL 

To amend title XVIII of the Social Security Act to 

tion drug prices under the medicare program. deliver a meaningful benefit and lower prescripJULY 15, 2004 

Read the second time and placed on the calendar