II 

111TH CONGRESS 

1ST SESSION S. 330 

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 

JANUARY 27, 2009 

Mr. DURBIN (for himself, Mr. WHITEHOUSE, Mr. AKAKA, Mr. BROWN, and 

Mr. SANDERS) 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 2009’’. 


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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 is amended by inserting after section 1860D– 

5 11 (42 U.S.C. 1395w–111) the following new section: 

6 ‘‘MEDICARE OPERATED PRESCRIPTION DRUG PLAN

7 OPTION

8 ‘‘SEC. 1860D–11A. (a) IN GENERAL.—Notwith9 standing any other provision of this part, for each year 

10 (beginning with 2010), in addition to any plans offered 

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

12 more medicare operated prescription drug plans (as de13 fined in subsection (c)) with a service area that consists 

14 of the entire United States and shall enter into negotia15 tions in accordance with subsection (b) with pharma16 ceutical manufacturers to reduce the purchase cost of cov17 ered part D drugs for eligible part D individuals who en18 roll in such a plan. 

19 ‘‘(b) NEGOTIATIONS.—Notwithstanding section 

20 1860D–11(i), for purposes of offering a medicare operated 

21 prescription drug plan under this section, the Secretary 

22 shall negotiate with pharmaceutical manufacturers with 

23 respect to the purchase price of covered part D drugs in 

24 a Medicare operated prescription drug plan and shall en25 courage the use of more affordable therapeutic equivalents 

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1 sity as determined by the prescribing physician. To the 

2 extent practicable and consistent with the previous sen3 tence, the Secretary shall implement strategies similar to 

4 those used by other Federal purchasers of prescription 

5 drugs, and other strategies, including the use of a for6 mulary and formulary incentives in subsection (e), to re7 duce the purchase 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 2010 and each suc25 ceeding year shall be based on the average monthly 


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1 per capita actuarial cost of offering the medicare op2 erated prescription drug plan for the year involved, 

3 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 ‘‘(e) USE OF A FORMULARY AND FORMULARY INCEN10 TIVES.— 

11 ‘‘(1) IN GENERAL.—With respect to the oper12 ation of a medicare operated prescription drug plan, 

13 the Secretary shall establish and apply a formulary 

14 (and may include formulary incentives described in 

15 paragraph (2)(C)(ii)) in accordance with this sub16 section in order to— 

17 ‘‘(A) increase patient safety; 

18 ‘‘(B) increase appropriate use and reduce 

19 inappropriate use of drugs; and 

20 ‘‘(C) reward value. 

21 ‘‘(2) DEVELOPMENT OF INITIAL FORMULARY.— 

22 ‘‘(A) IN GENERAL.—In selecting covered 

23 part D drugs for inclusion in a formulary. the 

24 Secretary shall consider clinical benefit and 

25 price. 


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1 ‘‘(B) ROLE OF AHRQ.—The Director of the 

2 Agency for Healthcare Research and Quality 

3 shall be responsible for assessing the clinical 

4 benefit of covered part D drugs and making 

5 recommendations to the Secretary regarding 

6 which drugs should be included in the for7 mulary. In conducting such assessments and 

8 making such recommendations, the Director 

9 shall— 

10 ‘‘(i) consider safety concerns including 

11 those identified by the Federal Food and 

12 Drug Administration; 

13 ‘‘(ii) use available data and evalua14 tions, with priority given to randomized 

15 controlled trials, to examine clinical effec16 tiveness, comparative effectiveness, safety, 

17 and enhanced compliance with a drug regi18 men; 

19 ‘‘(iii) use the same classes of drugs 

20 developed by United States Pharmacopeia 

21 for this part; 

22 ‘‘(iv) consider evaluations made by— 

23 ‘‘(I) the Director under section 

24 1013 of Medicare Prescription Drug, 


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1 Improvement, and Modernization Act 

2 of 2003; 

3 ‘‘(II) other Federal entities, such 

4 as the Secretary of Veterans Affairs; 

5 and 

6 ‘‘(III) other private and public 

7 entities, such as the Drug Effective8 ness Review Project and Medicaid 

9 programs; and 

10 ‘‘(v) recommend to the Secretary— 

11 ‘‘(I) those drugs in a class that 

12 provide a greater clinical benefit, in13 cluding fewer safety concerns or less 

14 risk of side-effects, than another drug 

15 in the same class that should be in16 cluded in the formulary; 

17 ‘‘(II) those drugs in a class that 

18 provide less clinical benefit, including 

19 greater safety concerns or a greater 

20 risk of side-effects, than another drug 

21 in the same class that should be ex22 cluded from the formulary; and 

23 ‘‘(III) drugs in a class with same 

24 or similar clinical benefit for which it 

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1 retary to competitively bid (or nego2 tiate) for placement on the formulary. 

3 ‘‘(C) CONSIDERATION OF AHRQ REC4 OMMENDATIONS.— 

5 ‘‘(i) IN GENERAL.—The Secretary, 

6 after taking into consideration the rec7 ommendations under subparagraph (B)(v), 

8 shall establish a formulary, and formulary 

9 incentives, to encourage use of covered 

10 part D drugs that— 

11 ‘‘(I) have a lower cost and pro12 vide a greater clinical benefit than 

13 other drugs; 

14 ‘‘(II) have a lower cost than 

15 other drugs with same or similar clin16 ical benefit; and 

17 ‘‘(III) drugs that have the same 

18 cost but provide greater clinical ben19 efit than other drugs. 

20 ‘‘(ii) FORMULARY INCENTIVES.—The 

21 formulary incentives under clause (i) may 

22 be in the form of one or more of the fol23 lowing: 

24 ‘‘(I) Tiered copayments. 

25 ‘‘(II) Reference pricing. 


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1 ‘‘(III) Prior authorization. 

2 ‘‘(IV) Step therapy. 

3 ‘‘(V) Medication therapy manage4 ment. 

5 ‘‘(VI) Generic drug substitution. 

6 ‘‘(iii) FLEXIBILITY.—In applying such 

7 formulary incentives the Secretary may de8 cide not to impose any cost-sharing for a 

9 covered part D drug for which— 

10 ‘‘(I) the elimination of cost shar11 ing would be expected to increase 

12 compliance with a drug regimen; and 

13 ‘‘(II) compliance would be ex14 pected to produce savings under part 

15 A or B or both. 

16 ‘‘(3) LIMITATIONS ON FORMULARY.—In any 

17 formulary established under this subsection, the for18 mulary may not be changed during a year, except— 

19 ‘‘(A) to add a generic version of a covered 

20 part D drug that entered the market; 

21 ‘‘(B) to remove such a drug for which a 

22 safety problem is found; and 

23 ‘‘(C) to add a drug that the Secretary 

24 identifies as a drug which treats a condition for 

25 which there has not previously been a treatment 


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1 option or for which a clear and significant ben2 efit has been demonstrated over other covered 

3 part D drugs. 

4 ‘‘(4) ADDING DRUGS TO THE INITIAL FOR5 MULARY.— 

6 ‘‘(A) USE OF ADVISORY COMMITTEE.—The 

7 Secretary shall establish and appoint an advi8 sory committee (in this paragraph referred to 

9 as the ‘advisory committee’)— 

10 ‘‘(i) to review petitions from drug 

11 manufacturers, health care provider orga12 nizations, patient groups, and other enti13 ties for inclusion of a drug in, or other 

14 changes to, such formulary; and 

15 ‘‘(ii) to recommend any changes to the 

16 formulary established under this sub17 section. 

18 ‘‘(B) COMPOSITION.—The advisory com19 mittee shall be composed of 9 members and 

20 shall include representatives of physicians, 

21 pharmacists, and consumers and others with ex22 pertise in evaluating prescription drugs. The 

23 Secretary shall select members based on their 

24 knowledge of pharmaceuticals and the Medicare 

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1 cial Government employees for purposes of ap2 plying the conflict of interest provisions under 

3 section 208 of title 18, United States Code, and 

4 no waiver of such provisions for such a member 

5 shall be permitted. 

6 ‘‘(C) CONSULTATION.—The advisory com7 mittee shall consult, as necessary, with physi8 cians who are specialists in treating the disease 

9 for which a drug is being considered. 

10 ‘‘(D) REQUEST FOR STUDIES.—The advi11 sory committee may request the Agency for 

12 Healthcare Research and Quality or an aca13 demic or research institution to study and make 

14 a report on a petition described in subpara15 graph (A)(ii) in order to assess— 

16 ‘‘(i) clinical effectiveness; 

17 ‘‘(ii) comparative effectiveness; 

18 ‘‘(iii) safety; and 

19 ‘‘(iv) enhanced compliance with a 

20 drug regimen. 

21 ‘‘(E) RECOMMENDATIONS.—The advisory 

22 committee shall make recommendations to the 

23 Secretary regarding— 

24 ‘‘(i) whether a covered part D drug is 

25 found to provide a greater clinical benefit, 


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1 including fewer safety concerns or less risk 

2 of side-effects, than another drug in the 

3 same class that is currently included in the 

4 formulary and should be included in the 

5 formulary; 

6 ‘‘(ii) whether a covered part D drug is 

7 found to provide less clinical benefit, in8 cluding greater safety concerns or a great9 er risk of side-effects, than another drug in 

10 the same class that is currently included in 

11 the formulary and should not be included 

12 in the formulary; and 

13 ‘‘(iii) whether a covered part D drug 

14 has the same or similar clinical benefit to 

15 a drug in the same class that is currently 

16 included in the formulary and whether the 

17 drug should be included in the formulary. 

18 ‘‘(F) LIMITATIONS ON REVIEW OF MANU19 FACTURER PETITIONS.—The advisory com20 mittee shall not review a petition of a drug 

21 manufacturer under subparagraph (A)(ii) with 

22 respect to a covered part D drug unless the pe23 tition is accompanied by the following: 

24 ‘‘(i) Raw data from clinical trials on 

25 the safety and effectiveness of the drug. 


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1 ‘‘(ii) Any data from clinical trials con2 ducted using active controls on the drug or 

3 drugs that are the current standard of 

4 care. 

5 ‘‘(iii) Any available data on compara6 tive effectiveness of the drug. 

7 ‘‘(iv) Any other information the Sec8 retary requires for the advisory committee 

9 to complete its review. 

10 ‘‘(G) RESPONSE TO RECOMMENDATIONS.— 

11 The Secretary shall review the recommenda12 tions of the advisory committee and if the Sec13 retary accepts such recommendations the Sec14 retary shall modify the formulary established 

15 under this subsection accordingly. Nothing in 

16 this section shall preclude the Secretary from 

17 adding to the formulary a drug for which the 

18 Director of the Agency for Healthcare Research 

19 and Quality or the advisory committee has not 

20 made a recommendation. 

21 ‘‘(H) NOTICE OF CHANGES.—The Sec22 retary shall provide timely notice to bene23 ficiaries and health professionals about changes 

24 to the formulary or formulary incentives. 


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1 ‘‘(f) INFORMING BENEFICIARIES.—The Secretary 

2 shall take steps to inform beneficiaries about the avail3 ability of a Medicare operated drug plan or plans including 

4 providing information in the annual handbook distributed 

5 to all beneficiaries and adding information to the official 

6 public Medicare website related to prescription drug cov7 erage available through this part. 

8 ‘‘(g) APPLICATION OF ALL OTHER REQUIREMENTS

9 FOR PRESCRIPTION DRUG PLANS.—Except as specifically 

10 provided in this section, any Medicare operated drug plan 

11 shall meet the same requirements as apply to any other 

12 prescription drug plan, including the requirements of sec13 tion 1860D–4(b)(1) relating to assuring pharmacy ac14 cess.’’. 

15 (b) CONFORMING AMENDMENTS.— 

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

17 Act (42 U.S.C. 1395w–103(a)) is amended by add18 ing at the end the following new paragraph: 

19 ‘‘(4) AVAILABILITY OF THE MEDICARE OPER20 ATED PRESCRIPTION DRUG PLAN.—A medicare oper21 ated prescription drug plan (as defined in section 

22 1860D–11A(c)) shall be offered nationally in accord23 ance with section 1860D–11A.’’. 


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1 (2)(A) Section 1860D–3 of the Social Security 

2 Act (42 U.S.C. 1395w–103) is amended by adding 

3 at the end the following new subsection: 

4 ‘‘(c) PROVISIONS ONLY APPLICABLE IN 2006, 2007, 

5 2008, AND 2009.—The provisions of this section shall only 

6 apply with respect to 2006, 2007, 2008, and 2009.’’. 

7 (B) Section 1860D–11(g) of such Act (42 

8 U.S.C. 1395w–111(g)) is amended by adding at the 

9 end the following new paragraph: 

10 ‘‘(8) NO AUTHORITY FOR FALLBACK PLANS

11 AFTER 2009.—A fallback prescription drug plan shall 

12 not be available after December 31, 2009.’’. 

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

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

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

16 MEDICARE OPERATED PRESCRIPTION DRUG

17 PLANS’’ after ‘‘FALLBACK PLANS’’; and 

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

19 prescription drug plan’’ after ‘‘a fallback pre20 scription drug plan’’. 

21 (4) Section 1860D–16(b)(1) of such Act (42 

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

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

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


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

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

3 (C) by adding at the end the following new 

4 subparagraph: 

5 ‘‘(E) payments for expenses incurred with 

6 respect to the operation of medicare operated 

7 prescription drug plans under section 1860D– 

8 11A.’’. 

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

10 U.S.C. 1395w–151(a)) is amended by adding at the 

11 end the following new paragraph: 

12 ‘‘(19) MEDICARE OPERATED PRESCRIPTION

13 DRUG PLAN.—The term ‘medicare operated prescrip14 tion drug plan’ has the meaning given such term in 

15 section 1860D–11A(c).’’. 

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

17 this section shall take effect as if included in the enact18 ment of section 101 of the Medicare Prescription Drug, 

19 Improvement, and Modernization Act of 2003. 

20 SEC. 3. IMPROVED APPEALS PROCESS UNDER THE MEDI21 CARE OPERATED PRESCRIPTION DRUG PLAN. 

22 Section 1860D–4(h) of the Social Security Act (42 

23 U.S.C. 1305w–104(h)) is amended by adding at the end 

24 the following new paragraph: 


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1 ‘‘(4) APPEALS PROCESS FOR MEDICARE OPER2 ATED PRESCRIPTION DRUG PLAN.— 

3 ‘‘(A) IN GENERAL.—The Secretary shall 

4 develop a well-defined process for appeals for 

5 denials of benefits under this part under the 

6 medicare operated prescription drug plan. Such 

7 process shall be efficient, impose minimal ad8 ministrative burdens, and ensure the timely 

9 procurement of non-formulary drugs or exemp10 tion from formulary incentives when medically 

11 necessary. Medical necessity shall be based on 

12 professional medical judgment, the medical con13 dition of the beneficiary, and other medical evi14 dence. Such appeals process shall include— 

15 ‘‘(i) an initial review and determina16 tion made by the Secretary; and 

17 ‘‘(ii) for appeals denied during the ini18 tial review and determination, the option of 

19 an external review and determination by 

20 an independent entity selected by the Sec21 retary. 

22 ‘‘(B) CONSULTATION IN DEVELOPMENT OF

23 PROCESS.—In developing the appeals process 

24 under subparagraph (A), the Secretary shall 

25 consult with consumer and patient groups, as 


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1 well as other key stakeholders to ensure the 

2 goals described in subparagraph (A) are 

3 achieved.’’. 

Æ 


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