I 

117TH CONGRESS 

1ST SESSION H. R. 2706 

To amend title XVIII of the Social Security Act to require drug manufacturers to pay a Medicare part B rebate for certain drugs if the price 

of such drugs increases faster than inflation. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 20, 2021 

Ms. PORTER (for herself, Ms. UNDERWOOD, Mr. CROW, and Mr. BLUMENAUER) 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 title XVIII of the Social Security Act to require 

drug manufacturers to pay a Medicare part B rebate 

for certain drugs if the price of such drugs increases 

faster than inflation. 

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 ‘‘Freedom from Price 

5 Gouging Act’’. 


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1 SEC. 2. MEDICARE PART B PRESCRIPTION DRUG INFLA2 TION REBATE BY MANUFACTURERS. 

3 (a) IN GENERAL.—Section 1834 of the Social Secu4 rity Act (42 U.S.C. 1395m) is amended by adding at the 

5 end the following new subsection: 

6 ‘‘(z) REBATE BY MANUFACTURERS FOR SINGLE

7 SOURCE DRUGS WITH PRICES INCREASING FASTER

8 THAN INFLATION.— 

9 ‘‘(1) REQUIREMENTS.— 

10 ‘‘(A) SECRETARIAL PROVISION OF INFOR11 MATION.—Not later than 6 months after the 

12 end of each calendar quarter beginning on or 

13 after July 1, 2022, the Secretary shall, for each 

14 part B rebatable drug, report to each manufac15 turer of such part B rebatable drug the fol16 lowing for such calendar quarter: 

17 ‘‘(i) Information on the total number 

18 of billing units described in subparagraph 

19 (A)(i) of paragraph (3) with respect to 

20 such drug and calendar quarter. 

21 ‘‘(ii) Information on the amount (if 

22 any) of the excess average sales price in23 crease described in subparagraph (A)(ii) of 

24 such paragraph for such drug and calendar 

25 quarter. 


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1 ‘‘(iii) The rebate amount specified 

2 under such paragraph for such part B 

3 rebatable drug and calendar quarter. 

4 ‘‘(B) MANUFACTURER REQUIREMENT.— 

5 For each calendar quarter beginning on or after 

6 July 1, 2022, the manufacturer of a part B 

7 rebatable drug shall, for such drug, not later 

8 than 30 days after the date of receipt from the 

9 Secretary of the information described in sub10 paragraph (A) for such calendar quarter, pro11 vide to the Secretary a rebate that is equal to 

12 the amount specified in paragraph (3) for such 

13 drug for such calendar quarter. 

14 ‘‘(2) PART B REBATABLE DRUG DEFINED.— 

15 ‘‘(A) IN GENERAL.—In this subsection, the 

16 term ‘part B rebatable drug’ means a single 

17 source drug or biological (as defined in sub18 paragraph (D) of section 1847A(c)(6)), includ19 ing a biosimilar biological product (as defined 

20 in subparagraph (H) of such section), paid for 

21 under this part, except such term shall not in22 clude such a drug or biological— 

23 ‘‘(i) if the average total allowed 

24 charges for a year per individual that uses 

25 such a drug or biological, as determined by 


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1 the Secretary, are less than, subject to 

2 subparagraph (B), $100; or 

3 ‘‘(ii) that is a vaccine described in 

4 subparagraph (A) or (B) of section 

5 1861(s)(10). 

6 ‘‘(B) INCREASE.—The dollar amount ap7 plied under subparagraph (A)(i)— 

8 ‘‘(i) for 2023, shall be the dollar 

9 amount specified under such subparagraph 

10 for 2022, increased by the percentage in11 crease in the consumer price index for all 

12 urban consumers (United States city aver13 age) as of the first quarter of the previous 

14 year; and 

15 ‘‘(ii) for a subsequent year, shall be 

16 the dollar amount specified in this clause 

17 (or clause (i)) for the previous year, in18 creased by the percentage increase in the 

19 consumer price index for all urban con20 sumers (United States city average) as of 

21 the first quarter of the previous year. 

22 Any dollar amount specified under this sub23 paragraph that is not a multiple of $10 shall be 

24 rounded to the nearest multiple of $10. 

25 ‘‘(3) REBATE AMOUNT.— 


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1 ‘‘(A) IN GENERAL.—For purposes of para2 graph (1)(B), the amount specified in this para3 graph for a part B rebatable drug assigned to 

4 a billing and payment code for a calendar quar5 ter is, subject to paragraph (4), the amount 

6 equal to the product of— 

7 ‘‘(i) subject to subparagraph (B), the 

8 total number of billing units, as described 

9 in section 1847A(b)(6)(B), for such part B 

10 rebatable drug furnished under this part 

11 during the calendar quarter; and 

12 ‘‘(ii) the amount (if any) by which— 

13 ‘‘(I) the payment amount under 

14 subparagraph (B) or (C) of section 

15 1847A(b)(1), as applicable, for such 

16 part B rebatable drug during the cal17 endar quarter; exceeds 

18 ‘‘(II) the inflation-adjusted pay19 ment amount determined under sub20 paragraph (C) for such part B 

21 rebatable drug during the calendar 

22 quarter. 

23 ‘‘(B) EXCLUDED UNITS.—For purposes of 

24 subparagraph (A)(i), the total number of billing 


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1 units for part B rebatable drugs furnished dur2 ing a calendar quarter shall not include— 

3 ‘‘(i) units packaged into the payment 

4 for a related procedure or service under 

5 section 1833(t) or under section 1833(i) 

6 (instead of separately payable under such 

7 respective section); 

8 ‘‘(ii) units included under the single 

9 payment system for renal dialysis services 

10 under section 1881(b)(14); or 

11 ‘‘(iii) units of a part B rebatable drug 

12 of a manufacturer that is furnished to an 

13 individual, if such manufacturer, with re14 spect to the furnishing of such units of 

15 such drug, provides for discounts under 

16 section 340B of the Public Health Service 

17 Act or for rebates under section 1927. 

18 ‘‘(C) DETERMINATION OF INFLATION-AD19 JUSTED PAYMENT AMOUNT.—The inflation-ad20 justed payment amount determined under this 

21 subparagraph for a part B rebatable drug for 

22 a calendar quarter is— 

23 ‘‘(i) the payment amount for the bill24 ing and payment code for such drug in the 


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1 payment amount benchmark quarter (as 

2 defined in subparagraph (D)); increased by 

3 ‘‘(ii) the percentage by which the re4 bate period CPI–U (as defined in subpara5 graph (F)) for the calendar quarter ex6 ceeds the benchmark period CPI–U (as de7 fined in subparagraph (E)). 

8 ‘‘(D) PAYMENT AMOUNT BENCHMARK

9 QUARTER.—The term ‘payment amount bench10 mark quarter’ means the calendar quarter be11 ginning January 1, 2016. 

12 ‘‘(E) BENCHMARK PERIOD CPI–U.—The 

13 term ‘benchmark period CPI–U’ means the con14 sumer price index for all urban consumers 

15 (United States city average) for July 2015. 

16 ‘‘(F) REBATE PERIOD CPI–U.—The term 

17 ‘rebate period CPI–U’ means, with respect to a 

18 calendar quarter described in subparagraph 

19 (C), the greater of the benchmark period CPI– 

20 U and the consumer price index for all urban 

21 consumers (United States city average) for the 

22 first month of the calendar quarter that is two 

23 calendar quarters prior to such described cal24 endar quarter. 


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1 ‘‘(4) SPECIAL TREATMENT OF CERTAIN DRUGS

2 AND EXEMPTION.— 

3 ‘‘(A) SUBSEQUENTLY APPROVED DRUGS.— 

4 Subject to subparagraph (B), in the case of a 

5 part B rebatable drug first approved by the 

6 Food and Drug Administration after July 1, 

7 2015, clause (i) of paragraph (3)(C) shall be 

8 applied as if the term ‘payment amount bench9 mark quarter’ were defined under paragraph 

10 (3)(D) as the third full calendar quarter after 

11 the day on which the drug was first marketed 

12 and clause (ii) of paragraph (3)(C) shall be ap13 plied as if the term ‘benchmark period CPI–U’ 

14 were defined under paragraph (3)(E) as if the 

15 reference to ‘July 2015’ under such paragraph 

16 were a reference to ‘the first month of the first 

17 full calendar quarter after the day on which the 

18 drug was first marketed’. 

19 ‘‘(B) TIMELINE FOR PROVISION OF RE20 BATES FOR NEW DRUGS.—In the case of a part 

21 B rebatable drug first approved by the Food 

22 and Drug Administration after July 1, 2015, 

23 clause (i) of paragraph (1)(B) shall be applied 

24 as if the reference to ‘July 1, 2022’ under such 

25 paragraph were a reference to the later of the 


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1 6th full calendar quarter after the day on which 

2 the drug was first marketed or July 1, 2022. 

3 ‘‘(C) EXEMPTION FOR SHORTAGES.—The 

4 Secretary may reduce or waive the rebate under 

5 paragraph (1)(B) with respect to a part B 

6 rebatable drug that appears on the drug short7 age list in effect under section 506(e) of the 

8 Federal Food, Drug, and Cosmetic Act or in 

9 the case of other exigent circumstances, as de10 termined by the Secretary. 

11 ‘‘(5) APPLICATION TO BENEFICIARY COINSUR12 ANCE.—In the case of a part B rebatable drug for 

13 which a rebate is payable under this subsection— 

14 ‘‘(A) in computing the amount of any coin15 surance applicable under this title to an indi16 vidual with respect to such drug, the computa17 tion of such coinsurance shall be based on the 

18 inflation-adjusted payment amount determined 

19 under paragraph (3)(C) for such part B 

20 rebatable drug; and 

21 ‘‘(B) the amount of such coinsurance is 

22 equal to 20 percent of such inflation-adjusted 

23 payment amount so determined. 

24 ‘‘(6) REBATE DEPOSITS.—Amounts paid as re25 bates under paragraph (1)(B) shall be deposited into 


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1 the Federal Supplementary Medical Insurance Trust 

2 Fund established under section 1841. 

3 ‘‘(7) CIVIL MONEY PENALTY.—If a manufac4 turer of a part B rebatable drug has failed to com5 ply with the requirements under paragraph (1)(B) 

6 for such drug for a calendar quarter, the manufac7 turer shall be subject to, in accordance with a proc8 ess established by the Secretary pursuant to regula9 tions, a civil money penalty in an amount equal to 

10 at least 125 percent of the amount specified in para11 graph (3) for such drug for such calendar quarter. 

12 The provisions of section 1128A (other than sub13 sections (a) (with respect to amounts of penalties or 

14 additional assessments) and (b)) shall apply to a 

15 civil money penalty under this paragraph in the 

16 same manner as such provisions apply to a penalty 

17 or proceeding under section 1128A(a). 

18 ‘‘(8) STUDY AND REPORT.— 

19 ‘‘(A) STUDY.—The Secretary shall conduct 

20 a study of the feasibility of and operational 

21 issues involved with the following: 

22 ‘‘(i) Including multiple source drugs 

23 (as defined in section 1847A(c)(6)(C)) in 

24 the rebate system under this subsection. 


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1 ‘‘(ii) Including drugs and biologicals 

2 paid for under MA plans under part C in 

3 the rebate system under this subsection. 

4 ‘‘(iii) Including drugs excluded under 

5 paragraph (2)(A) and billing units of 

6 drugs excluded under paragraph (3)(B) in 

7 the rebate system under this subsection. 

8 ‘‘(B) REPORT.—Not later than 3 years 

9 after the date of the enactment of this sub10 section, the Secretary shall submit to Congress 

11 a report on the study conducted under subpara12 graph (A). 

13 ‘‘(9) APPLICATION TO MULTIPLE SOURCE

14 DRUGS.—The Secretary may, based on the report 

15 submitted under paragraph (8) and pursuant to 

16 rulemaking, apply the provisions of this subsection 

17 to multiple source drugs (as defined in section 

18 1847A(c)(6)(C)), including, for purposes of deter19 mining the rebate amount under paragraph (3), by 

20 calculating manufacturer-specific average sales 

21 prices for the benchmark period and the rebate pe22 riod.’’. 

23 (b) AMOUNTS PAYABLE; COST-SHARING.—Section 

24 1833(a) of the Social Security Act (42 U.S.C. 1395l(a)) 

25 is amended— 


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1 (1) in paragraph (1)— 

2 (A) in subparagraph (S), by striking ‘‘with 

3 respect to’’ and inserting ‘‘subject to subpara4 graph (EE), with respect to’’; 

5 (B) by striking ‘‘and (DD)’’ and inserting 

6 ‘‘(DD)’’; and 

7 (C) by inserting before the semicolon at 

8 the end the following: ‘‘, and (EE) with respect 

9 to a part B rebatable drug (as defined in para10 graph (2) of section 1834(z)) for which a rebate 

11 is payable under such section, the amounts paid 

12 shall be the difference between (i) the payment 

13 amount under paragraph (3)(A)(ii)(I) of such 

14 section for such drug, and (ii) 20 percent of the 

15 inflation-adjusted payment amount under para16 graph (3)(A)(ii)(II) of such section for such 

17 drug’’; and 

18 (2) by adding at the end of the flush left matter 

19 following paragraph (10), the following: 

20 ‘‘For purposes of applying paragraph (1)(EE) and section 

21 1834(z)(5), the Secretary shall make such estimates and 

22 use such data as the Secretary determines appropriate.’’. 

23 (c) CONFORMING AMENDMENT TO PART B ASP CAL24 CULATION.—Section 1847A(c)(3) of the Social Security 


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1 Act (42 U.S.C. 1395w–3a(c)(3)) is amended by inserting 

2 ‘‘or section 1834(z)’’ after ‘‘section 1927’’. 

Æ 


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