II 

111TH CONGRESS 

1ST SESSION S. 266 

To amend title XVIII of the Social Security Act to reduce the coverage 

gap in prescription drug coverage under part D of such title based 

on savings to the Medicare program resulting from the negotiation of 

prescription drug prices. 

IN THE SENATE OF THE UNITED STATES 

JANUARY 15, 2009 

Mr. NELSON of Florida (for himself, Ms. COLLINS, Mr. WHITEHOUSE, Mr. 

KOHL, Mr. KERRY, Mr. JOHNSON, and Mrs. BOXER) 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 reduce 

the coverage gap in prescription drug coverage under 

part D of such title based on savings to the Medicare 

program resulting from the negotiation of prescription 

drug prices. 

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 Gap Reduction Act of 2009’’. 


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1 SEC. 2. REDUCING COVERAGE GAP. 

2 Section 1860D–2(b) of the Social Security Act (42 

3 U.S.C. 1395w–102(b)) is amended— 

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

5 (4)’’ and inserting ‘‘paragraph (4), subject to the in6 crease described in paragraph (7)’’; and 

7 (2) by adding at the end the following new 

8 paragraph: 

9 ‘‘(7) INCREASE OF INITIAL COVERAGE LIMIT

10 BASED ON MEDICARE SAVINGS DUE TO NEGOTIA11 TION OF DRUG PRICES.—For each year (beginning 

12 with 2010), the Secretary shall increase the initial 

13 coverage limit for the year specified in paragraph (3) 

14 so that the aggregate amount of increased expendi15 tures from the Medicare Prescription Drug Account 

16 as a result of such increase under this paragraph in 

17 the year (as estimated by the Office of the Actuary 

18 of the Centers for Medicare & Medicaid Services) is 

19 equal to the aggregate amount of reduced expendi20 tures from such Account that the Office of the Actu21 ary estimates will result in the year as a result of 

22 the application of the amendment made by section 

23 3(a) of the Medicare Prescription Drug Gap Reduc24 tion Act of 2009.’’. 


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1 SEC. 3. NEGOTIATING FAIR PRICES FOR MEDICARE PRE2 SCRIPTION DRUGS. 

3 (a) IN GENERAL.—Section 1860D–11 of the Social 

4 Security Act (42 U.S.C. 1395w–111) is amended by strik5 ing subsection (i) (relating to noninterference) and insert6 ing the following: 

7 ‘‘(i) AUTHORITY TO NEGOTIATE PRICES WITH MAN8 UFACTURERS.— 

9 ‘‘(1) IN GENERAL.—Subject to paragraph (4), 

10 in order to ensure that beneficiaries enrolled under 

11 prescription drug plans and MA–PD plans pay the 

12 lowest possible price, the Secretary shall have au13 thority similar to that of other Federal entities that 

14 purchase prescription drugs in bulk to negotiate con15 tracts with manufacturers of covered part D drugs, 

16 consistent with the requirements and in furtherance 

17 of the goals of providing quality care and containing 

18 costs under this part. 

19 ‘‘(2) MANDATORY RESPONSIBILITIES.—The 

20 Secretary shall be required to— 

21 ‘‘(A) negotiate contracts with manufactur22 ers of covered part D drugs for each fallback 

23 prescription drug plan under subsection (g); 

24 and 

25 ‘‘(B) participate in negotiation of contracts 

26 of any covered part D drug upon request of an 


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1 approved prescription drug plan or MA–PD 

2 plan. 

3 ‘‘(3) RULE OF CONSTRUCTION.—Nothing in 

4 paragraph (2) shall be construed to limit the author5 ity of the Secretary under paragraph (1) to the man6 datory responsibilities under paragraph (2). 

7 ‘‘(4) NO PARTICULAR FORMULARY OR PRICE

8 STRUCTURE.—In order to promote competition 

9 under this part and in carrying out this part, the 

10 Secretary may not require a particular formulary or 

11 institute a price structure for the reimbursement of 

12 covered part D drugs. 

13 ‘‘(5) USE OF SAVINGS.—The savings to the 

14 Medicare Prescription Drug Account through the 

15 use of the authority provided under this subsection 

16 (including the mandatory responsibilities under 

17 paragraph (2)) shall be used to increase the initial 

18 coverage limit for the year in accordance with sec19 tion 1860D–2(b)(7).’’. 

20 (b) EFFECTIVE DATE.—The amendment made by 

21 subsection (a) shall take effect on the date of enactment 

22 of this Act. 

Æ 


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