I 
117TH CONGRESS 
1ST SESSION H. R. 2706 
To amend title XVIII of the Social Security Act to require drug manufactur-
ers 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. BLU-
MENAUER) introduced the following bill; which was referred to the Com-
mittee 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. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Freedom from Price 
Gouging Act’’. 
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SEC. 2. MEDICARE PART B PRESCRIPTION DRUG INFLA-
TION REBATE BY MANUFACTURERS. 
(a) IN GENERAL.—Section 1834 of the Social Secu-
rity Act (42 U.S.C. 1395m) is amended by adding at the 
end the following new subsection: 
‘‘(z) REBATE
BY MANUFACTURERS
FOR SINGLE 
SOURCE DRUGS WITH PRICES INCREASING FASTER 
THAN INFLATION.— 
‘‘(1) REQUIREMENTS.— 
‘‘(A) SECRETARIAL PROVISION OF INFOR-
MATION.—Not later than 6 months after the 
end of each calendar quarter beginning on or 
after July 1, 2022, the Secretary shall, for each 
part B rebatable drug, report to each manufac-
turer of such part B rebatable drug the fol-
lowing for such calendar quarter: 
‘‘(i) Information on the total number 
of billing units described in subparagraph 
(A)(i) of paragraph (3) with respect to 
such drug and calendar quarter. 
‘‘(ii) Information on the amount (if 
any) of the excess average sales price in-
crease described in subparagraph (A)(ii) of 
such paragraph for such drug and calendar 
quarter. 
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‘‘(iii) The rebate amount specified 
under such paragraph for such part B 
rebatable drug and calendar quarter. 
‘‘(B) MANUFACTURER
REQUIREMENT.— 
For each calendar quarter beginning on or after 
July 1, 2022, the manufacturer of a part B 
rebatable drug shall, for such drug, not later 
than 30 days after the date of receipt from the 
Secretary of the information described in sub-
paragraph (A) for such calendar quarter, pro-
vide to the Secretary a rebate that is equal to 
the amount specified in paragraph (3) for such 
drug for such calendar quarter. 
‘‘(2) PART B REBATABLE DRUG DEFINED.— 
‘‘(A) IN GENERAL.—In this subsection, the 
term ‘part B rebatable drug’ means a single 
source drug or biological (as defined in sub-
paragraph (D) of section 1847A(c)(6)), includ-
ing a biosimilar biological product (as defined 
in subparagraph (H) of such section), paid for 
under this part, except such term shall not in-
clude such a drug or biological— 
‘‘(i) if the average total allowed 
charges for a year per individual that uses 
such a drug or biological, as determined by 
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the Secretary, are less than, subject to 
subparagraph (B), $100; or 
‘‘(ii) that is a vaccine described in 
subparagraph (A) or (B) of section 
1861(s)(10). 
‘‘(B) INCREASE.—The dollar amount ap-
plied under subparagraph (A)(i)— 
‘‘(i) for 2023, shall be the dollar 
amount specified under such subparagraph 
for 2022, increased by the percentage in-
crease in the consumer price index for all 
urban consumers (United States city aver-
age) as of the first quarter of the previous 
year; and 
‘‘(ii) for a subsequent year, shall be 
the dollar amount specified in this clause 
(or clause (i)) for the previous year, in-
creased by the percentage increase in the 
consumer price index for all urban con-
sumers (United States city average) as of 
the first quarter of the previous year. 
Any dollar amount specified under this sub-
paragraph that is not a multiple of $10 shall be 
rounded to the nearest multiple of $10. 
‘‘(3) REBATE AMOUNT.— 
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‘‘(A) IN GENERAL.—For purposes of para-
graph (1)(B), the amount specified in this para-
graph for a part B rebatable drug assigned to 
a billing and payment code for a calendar quar-
ter is, subject to paragraph (4), the amount 
equal to the product of— 
‘‘(i) subject to subparagraph (B), the 
total number of billing units, as described 
in section 1847A(b)(6)(B), for such part B 
rebatable drug furnished under this part 
during the calendar quarter; and 
‘‘(ii) the amount (if any) by which— 
‘‘(I) the payment amount under 
subparagraph (B) or (C) of section 
1847A(b)(1), as applicable, for such 
part B rebatable drug during the cal-
endar quarter; exceeds 
‘‘(II) the inflation-adjusted pay-
ment amount determined under sub-
paragraph (C) for such part B 
rebatable drug during the calendar 
quarter. 
‘‘(B) EXCLUDED UNITS.—For purposes of 
subparagraph (A)(i), the total number of billing 
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units for part B rebatable drugs furnished dur-
ing a calendar quarter shall not include— 
‘‘(i) units packaged into the payment 
for a related procedure or service under 
section 1833(t) or under section 1833(i) 
(instead of separately payable under such 
respective section); 
‘‘(ii) units included under the single 
payment system for renal dialysis services 
under section 1881(b)(14); or 
‘‘(iii) units of a part B rebatable drug 
of a manufacturer that is furnished to an 
individual, if such manufacturer, with re-
spect to the furnishing of such units of 
such drug, provides for discounts under 
section 340B of the Public Health Service 
Act or for rebates under section 1927. 
‘‘(C) DETERMINATION OF INFLATION-AD-
JUSTED PAYMENT AMOUNT.—The inflation-ad-
justed payment amount determined under this 
subparagraph for a part B rebatable drug for 
a calendar quarter is— 
‘‘(i) the payment amount for the bill-
ing and payment code for such drug in the 
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payment amount benchmark quarter (as 
defined in subparagraph (D)); increased by 
‘‘(ii) the percentage by which the re-
bate period CPI–U (as defined in subpara-
graph (F)) for the calendar quarter ex-
ceeds the benchmark period CPI–U (as de-
fined in subparagraph (E)). 
‘‘(D) 
PAYMENT
AMOUNT
BENCHMARK 
QUARTER.—The term ‘payment amount bench-
mark quarter’ means the calendar quarter be-
ginning January 1, 2016. 
‘‘(E) BENCHMARK
PERIOD
CPI–U.—The 
term ‘benchmark period CPI–U’ means the con-
sumer price index for all urban consumers 
(United States city average) for July 2015. 
‘‘(F) REBATE PERIOD CPI–U.—The term 
‘rebate period CPI–U’ means, with respect to a 
calendar quarter described in subparagraph 
(C), the greater of the benchmark period CPI– 
U and the consumer price index for all urban 
consumers (United States city average) for the 
first month of the calendar quarter that is two 
calendar quarters prior to such described cal-
endar quarter. 
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‘‘(4) SPECIAL TREATMENT OF CERTAIN DRUGS 
AND EXEMPTION.— 
‘‘(A) SUBSEQUENTLY APPROVED DRUGS.— 
Subject to subparagraph (B), in the case of a 
part B rebatable drug first approved by the 
Food and Drug Administration after July 1, 
2015, clause (i) of paragraph (3)(C) shall be 
applied as if the term ‘payment amount bench-
mark quarter’ were defined under paragraph 
(3)(D) as the third full calendar quarter after 
the day on which the drug was first marketed 
and clause (ii) of paragraph (3)(C) shall be ap-
plied as if the term ‘benchmark period CPI–U’ 
were defined under paragraph (3)(E) as if the 
reference to ‘July 2015’ under such paragraph 
were a reference to ‘the first month of the first 
full calendar quarter after the day on which the 
drug was first marketed’. 
‘‘(B) TIMELINE
FOR
PROVISION
OF
RE-
BATES FOR NEW DRUGS.—In the case of a part 
B rebatable drug first approved by the Food 
and Drug Administration after July 1, 2015, 
clause (i) of paragraph (1)(B) shall be applied 
as if the reference to ‘July 1, 2022’ under such 
paragraph were a reference to the later of the 
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6th full calendar quarter after the day on which 
the drug was first marketed or July 1, 2022. 
‘‘(C) EXEMPTION FOR SHORTAGES.—The 
Secretary may reduce or waive the rebate under 
paragraph (1)(B) with respect to a part B 
rebatable drug that appears on the drug short-
age list in effect under section 506(e) of the 
Federal Food, Drug, and Cosmetic Act or in 
the case of other exigent circumstances, as de-
termined by the Secretary. 
‘‘(5) APPLICATION TO BENEFICIARY COINSUR-
ANCE.—In the case of a part B rebatable drug for 
which a rebate is payable under this subsection— 
‘‘(A) in computing the amount of any coin-
surance applicable under this title to an indi-
vidual with respect to such drug, the computa-
tion of such coinsurance shall be based on the 
inflation-adjusted payment amount determined 
under paragraph (3)(C) for such part B 
rebatable drug; and 
‘‘(B) the amount of such coinsurance is 
equal to 20 percent of such inflation-adjusted 
payment amount so determined. 
‘‘(6) REBATE DEPOSITS.—Amounts paid as re-
bates under paragraph (1)(B) shall be deposited into 
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the Federal Supplementary Medical Insurance Trust 
Fund established under section 1841. 
‘‘(7) CIVIL MONEY PENALTY.—If a manufac-
turer of a part B rebatable drug has failed to com-
ply with the requirements under paragraph (1)(B) 
for such drug for a calendar quarter, the manufac-
turer shall be subject to, in accordance with a proc-
ess established by the Secretary pursuant to regula-
tions, a civil money penalty in an amount equal to 
at least 125 percent of the amount specified in para-
graph (3) for such drug for such calendar quarter. 
The provisions of section 1128A (other than sub-
sections (a) (with respect to amounts of penalties or 
additional assessments) and (b)) shall apply to a 
civil money penalty under this paragraph in the 
same manner as such provisions apply to a penalty 
or proceeding under section 1128A(a). 
‘‘(8) STUDY AND REPORT.— 
‘‘(A) STUDY.—The Secretary shall conduct 
a study of the feasibility of and operational 
issues involved with the following: 
‘‘(i) Including multiple source drugs 
(as defined in section 1847A(c)(6)(C)) in 
the rebate system under this subsection. 
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‘‘(ii) Including drugs and biologicals 
paid for under MA plans under part C in 
the rebate system under this subsection. 
‘‘(iii) Including drugs excluded under 
paragraph (2)(A) and billing units of 
drugs excluded under paragraph (3)(B) in 
the rebate system under this subsection. 
‘‘(B) REPORT.—Not later than 3 years 
after the date of the enactment of this sub-
section, the Secretary shall submit to Congress 
a report on the study conducted under subpara-
graph (A). 
‘‘(9) APPLICATION
TO
MULTIPLE
SOURCE 
DRUGS.—The Secretary may, based on the report 
submitted under paragraph (8) and pursuant to 
rulemaking, apply the provisions of this subsection 
to multiple source drugs (as defined in section 
1847A(c)(6)(C)), including, for purposes of deter-
mining the rebate amount under paragraph (3), by 
calculating 
manufacturer-specific 
average 
sales 
prices for the benchmark period and the rebate pe-
riod.’’. 
(b) AMOUNTS PAYABLE; COST-SHARING.—Section 
1833(a) of the Social Security Act (42 U.S.C. 1395l(a)) 
is amended— 
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(1) in paragraph (1)— 
(A) in subparagraph (S), by striking ‘‘with 
respect to’’ and inserting ‘‘subject to subpara-
graph (EE), with respect to’’; 
(B) by striking ‘‘and (DD)’’ and inserting 
‘‘(DD)’’; and 
(C) by inserting before the semicolon at 
the end the following: ‘‘, and (EE) with respect 
to a part B rebatable drug (as defined in para-
graph (2) of section 1834(z)) for which a rebate 
is payable under such section, the amounts paid 
shall be the difference between (i) the payment 
amount under paragraph (3)(A)(ii)(I) of such 
section for such drug, and (ii) 20 percent of the 
inflation-adjusted payment amount under para-
graph (3)(A)(ii)(II) of such section for such 
drug’’; and 
(2) by adding at the end of the flush left matter 
following paragraph (10), the following: 
‘‘For purposes of applying paragraph (1)(EE) and section 
1834(z)(5), the Secretary shall make such estimates and 
use such data as the Secretary determines appropriate.’’. 
(c) CONFORMING AMENDMENT TO PART B ASP CAL-
CULATION.—Section 1847A(c)(3) of the Social Security 
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Act (42 U.S.C. 1395w–3a(c)(3)) is amended by inserting 
‘‘or section 1834(z)’’ after ‘‘section 1927’’. 
Æ 
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