I 

108TH CONGRESS 

2D SESSION H. R. 4919

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

for the offering of a Federal national prescription drug discount card program. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 22, 2004

Mr. ALLEN (for himself and Mr. MICHAUD) introduced the following bill; 

which was referred to the Committee on Energy and Commerce, and in 

addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such 

provisions as fall within the jurisdiction of the committee concerned 

A BILL

To amend part D of title XVIII of the Social Security 

Act to provide for the offering of a Federal national 

prescription drug discount card 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; FINDINGS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Medicare Drug Card Guaranteed Savings Act’’. 

6 (b) FINDINGS.—Congress finds the following: 

7 (1) Americans who buy their own prescription 

8 drugs often pay twice as much for prescription drugs 
2

•HR 4919 IH 

1 as consumers in foreign nations or as the price the 

2 Department of Veterans Affairs obtains by negoti3 ating directly with the pharmaceutical manufactur4 ers. In some cases, older Americans pay 10 times 

5 more for prescription drugs than such customers. 

6 Prescription drug prices have increased 3.4 percent 

7 during the first quarter of 2004, nearly three times 

8 the rate of inflation. 

9 (2) The Medicare Prescription Drug, Improve10 ment, and Modernization Act of 2003 (Public Law 

11 No: 108–173) established a program for the en12 dorsement of medicare drug discount card programs 

13 in order to provide for reduced prices for drugs for 

14 medicare beneficiaries and provide a subsidy for low15 income medicare beneficiaries. 

16 (3) There are currently more than 70 endorsed 

17 medicare drug discount card programs. Medicare 

18 drug discount card programs can change the drugs 

19 that they offer and the size of the discounts every 

20 seven days. Medicare beneficiaries are allowed to 

21 change their current medicare drug discount card 

22 program only once, during an annual enrollment pe23 riod between November 15 and December 31, 2004. 

24 (4) Enrollment in medicare drug discount card 

25 programs has been less than projected due to the 
3

•HR 4919 IH 

1 complexity of the programs, the limited number of 

2 drugs covered under most programs, the changing 

3 prescription drug needs of beneficiaries, and bene4 ficiaries’ concern that the programs do not guar5 antee real savings on prescription drug purchases. 

6 As of July 19, 2004, fewer than 14 percent of low7 income medicare beneficiaries who qualify for the 

8 $600 subsidy under the law have enrolled in a medi9 care drug discount card program. 

10 (5) Currently, medicare discount drug card 

11 sponsors are required to pass on to enrollees only an 

12 undefined ‘‘share’’ of the rebates they secure from 

13 drug manufacturers and card sponsors can use the 

14 remaining savings for administrative costs and prof15 it. The law does not require the sponsors to reveal 

16 to enrollees the size of the rebates secured from 

17 drug manufacturers or to disclose what portion of 

18 those rebates are kept by the sponsors and not 

19 passed on to enrollees. 

20 (6) There is a need for a Federal national 

21 medicare prescription drug discount card program 

22 that offers guaranteed discounts on all prescription 

23 drugs and that aggregates the buying power of all 

24 medicare beneficiaries in order to negotiate signifi25 cant reductions in price. 
4

•HR 4919 IH 

1 SEC. 2. OFFERING OF FEDERAL NATIONAL PRESCRIPTION 

2 DRUG DISCOUNT CARD PROGRAM. 

3 (a) OFFERING OF PROGRAM.—

4 (1) IN GENERAL.—Subsection (a)(1) of section 

5 1860D–31 of the Social Security Act (42 U.S.C. 

6 1395w–141) is amended—

7 (A) by striking ‘‘and’’ at the end of sub8 paragraph (A); 

9 (B) by striking the period at the end of 

10 subparagraph (B) and inserting ‘‘; and’’; and 

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

12 subparagraph: 

13 ‘‘(C) to provide for the offering of a Fed14 eral national prescription drug discount card 

15 program that is available for discount card eli16 gible individuals throughout the United States 

17 (including the territories) and that meets the 

18 requirements under subsection (l)(1) in addition 

19 to the requirements otherwise applicable to an 

20 endorsed discount card program.’’. 

21 (2) EXCLUSIVE PROGRAM IN 2005.—Subsection 

22 (c)(1)(C) of such section is amended—

23 (A) in clause (i), by striking ‘‘clauses (ii) 

24 and (iii)’’ and inserting ‘‘clauses (ii) through 

25 (iv)’’; and 
5

•HR 4919 IH 

1 (B) by adding at the end the following new 

2 clause: 

3 ‘‘(iv) LIMITATION TO ENROLLMENT IN

4 FEDERAL NATIONAL PRESCRIPTION DRUG

5 DISCOUNT CARD PROGRAM IN 2005.—Not6 withstanding any other provision of this 

7 section, for periods beginning with January 

8 1, 2005, the only discount card program in 

9 which an individual may be enrolled under 

10 this section shall be the Federal national 

11 prescription drug discount card program 

12 described in subsection (l). Individuals en13 rolled in another program as of December 

14 31, 2004, who do not affirmatively 

15 disenroll from all discount card programs 

16 under this section are deemed to be en17 rolled in such Federal national prescription 

18 drug discount card program.’’. 

19 (b) ADDITIONAL PROGRAM REQUIREMENTS.—Such 

20 section is further amended by adding at the end the fol21 lowing new subsection: 

22 ‘‘(l) PROVISIONS RELATING TO FEDERAL NATIONAL

23 PRESCRIPTION DRUG DISCOUNT CARD PROGRAM.—

24 ‘‘(1) ADDITIONAL REQUIREMENTS.—The Fed25 eral national prescription drug discount card pro-
6

•HR 4919 IH 

1 gram described in subsection (a)(1)(C) shall also 

2 meet the following requirements: 

3 ‘‘(A) DISCOUNTED PRICES.—Through di4 rect negotiations with prescription drug manu5 facturers, the discounted prices offered under 

6 the program shall be less than prices otherwise 

7 available in the retail market. Through such ne8 gotiations, the Secretary shall obtain discounted 

9 prices that are at least as low as the manufac10 turer’s average foreign price (as defined in 

11 paragraph (3)) for the drug involved. 

12 ‘‘(B) PASSING THROUGH ALL SAVINGS.—

13 The full amount of discounted savings are 

14 passed through to enrollees. 

15 ‘‘(C) FEE FOR CARD.—The annual fee for 

16 enrollment in the program shall be $30 (except 

17 as provided under subparagraphs (E) through 

18 (G) of subsection (c)(1)), which fees shall be 

19 available to the Secretary for administrative ex20 penses in offering such program. 

21 ‘‘(D) NATIONAL AVAILABILITY.—The pro22 gram shall be made available to individuals re23 siding anyplace in the United States. 

24 ‘‘(E) HANDLING FEE FOR PHAR25 MACISTS.—The program shall be designed to 
7

•HR 4919 IH 

1 provide for a reasonable handling fee for phar2 macists in connection with the provision of 

3 drugs obtained under the program and shall be 

4 approximately equal to the average handling fee 

5 for pharmacists of other large insurance plans 

6 that administer drug benefits. 

7 ‘‘(2) OVERSIGHT.—The oversight authority of 

8 the Secretary under subsection (i)(2) with respect to 

9 such Federal national prescription drug discount 

10 card program shall be exercised by the Inspector 

11 General of the Department of Health and Human 

12 Services. 

13 ‘‘(3) AVERAGE FOREIGN PRICE DEFINED.—

14 ‘‘(A) IN GENERAL.—For purposes of this 

15 subsection, the term ‘average foreign price’ 

16 means, with respect to a covered discount card 

17 drug, the average price that the manufacturer 

18 of the drug realizes on the sale of drugs with 

19 the same active ingredient or ingredients that 

20 are consumed in Canada, France, Germany, 

21 Italy, Japan, and the United Kingdom, taking 

22 into account—

23 ‘‘(i) any rebate, contract term or con24 dition, or other arrangement (whether with 

25 the purchaser or other persons) that has 
8

•HR 4919 IH 

1 the effect of reducing the amount realized 

2 by the manufacturer on the sale of the 

3 drugs; 

4 ‘‘(ii) adjustments for any differences 

5 in dosage, formulation, or other relevant 

6 characteristics of the drugs; and 

7 ‘‘(iii) any other contract or side agree8 ment that has the effect of adjusting the 

9 effective price of the drug, including agree10 ments to purchase non-drug products. 

11 ‘‘(B) EXEMPT TRANSACTIONS.—The Sec12 retary may, by regulation, exempt from the cal13 culation of the average foreign price of a drug 

14 those prices realized by a manufacturer in 

15 transactions that are entered into for charitable 

16 purposes, for research purposes, or under other 

17 unusual circumstances, if the Secretary deter18 mines that the exemption is in the public inter19 est and is consistent with the purposes of this 

20 section.’’. 

21 (c) CONFORMING AMENDMENTS.—Such section is 

22 further amended—

23 (1) in subsection (h)(1)(A), by adding after and 

24 below clause (v) the following new sentence: 
9

•HR 4919 IH 

1 ‘‘Such term also includes the Secretary with re2 spect to the offering of the Federal national 

3 prescription drug discount card program de4 scribed in subsection (a)(1)(C).’’; 

5 (2) in subsection (h)(2)(A), by adding at the 

6 end the following: ‘‘The Secretary shall establish a 

7 separate procedure for the qualification of the Fed8 eral national prescription drug discount card pro9 gram described in subsection (a)(1)(C).’’; and 

10 (3) in subsection (k)(6), by inserting before the 

11 period at the end the following: ‘‘, except in the case 

12 of the Federal national prescription drug discount 

13 card program described in subsection (a)(1)(C)’’. 

14 (d) IMPLEMENTATION.—

15 (1) AVAILABILITY OF FUNDS.—Notwith16 standing any other provision of law, funds provided 

17 under section 1015 of the Medicare Prescription 

18 Drug, Improvement, and Modernization Act of 2003 

19 (Public Law 108–173) shall be available to the Sec20 retary of Health and Human Services for reasonable 

21 administrative costs in offering the Federal national 

22 prescription drug discount card program described 

23 in section 1860D–31(a)(1)(C) of the Social Security 

24 Act, as added by subsection (a). 
10

•HR 4919 IH 

1 (2) TIMELY IMPLEMENTATION.—The Secretary 

2 shall take such steps as may be required to provide 

3 for the offering of such program during the annual 

4 open enrollment period occurring in November, 

5 2004.

Æ