I 
117TH CONGRESS 
1ST SESSION H. R. 5260 
To amend titles XI, XVIII, and XIX of the Social Security Act to lower 
prescription drug prices in the Medicare and Medicaid programs, to 
improve transparency related to pharmaceutical prices and transactions, 
to lower patients’ out-of-pocket costs, and to ensure accountability to 
taxpayers, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
SEPTEMBER 14, 2021 
Mr. PETERS (for himself, Mr. SCHRADER, Miss RICE of New York, Mrs. MUR-
PHY of Florida, and Mr. CORREA) introduced the following bill; which was 
referred to the Committee on Energy and Commerce, and in addition to 
the Committees on Ways and Means, and the Judiciary, for a period to 
be subsequently determined by the Speaker, in each case for consider-
ation of such provisions as fall within the jurisdiction of the committee 
concerned 
A BILL 
To amend titles XI, XVIII, and XIX of the Social Security 
Act to lower prescription drug prices in the Medicare 
and Medicaid programs, to improve transparency related 
to pharmaceutical prices and transactions, to lower pa-
tients’ out-of-pocket costs, and to ensure accountability 
to taxpayers, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
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SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Reduced Costs and Continued Cures Act’’. 
(b) TABLE OF CONTENTS.—The table of contents of 
this Act is as follows: 
Sec. 1. Short title; table of contents. 
TITLE I—ESTABLISHMENT OF PART B PAYMENT RULES FOR 
NEGOTIATION-ELIGIBLE DRUGS AND BIOLOGICALS 
Sec. 101. Establishment of part B payment rules for negotiation-eligible drugs 
and biologicals. 
TITLE II—MEDICARE 
Subtitle A—Part B 
Sec. 201. Inclusion of value of coupons in determination of average sales price 
for drugs and biologicals under Medicare part B. 
Sec. 202. Payment for biosimilar biological products during initial period. 
Sec. 203. Temporary increase in Medicare part B payment for biosimilar bio-
logical products. 
Sec. 204. Medicare part B rebate by manufacturers. 
Sec. 205. Establishment of maximum add-on payment for drugs and 
biologicals. 
Sec. 206. GAO study and report on average sales price. 
Sec. 207. Authority to use alternative payment for drugs and biologicals to pre-
vent potential drug shortages. 
Sec. 208. Change in definition of strength for the purposes of determining 
interchangeability of biological and biosimilar products. 
Subtitle B—Part D 
Sec. 209. Medicare part D modernization redesign. 
Sec. 210. Public disclosure of drug discounts and other pharmacy benefit man-
ager (PBM) provisions. 
Sec. 211. Public disclosure of direct and indirect remuneration review and audit 
results. 
Sec. 212. Improvements to provision of parts A and B claims data to prescrip-
tion drug plans. 
Sec. 213. Medicare part D rebate by manufacturers. 
Sec. 214. Prohibiting branding on part D benefit cards. 
Sec. 215. Requiring prescription drug plans and MA–PD plans to report poten-
tial fraud, waste, and abuse to the Secretary of HHS. 
Sec. 216. Establishment of pharmacy quality measures under Medicare part D. 
Sec. 217. Addition of new measures based on access to biosimilar biological 
products to the 5-star rating system under Medicare Advan-
tage. 
Sec. 218. HHS study and report on the influence of pharmaceutical manufac-
turer third-party reimbursement hubs on health care providers 
who prescribe their drugs and biologicals. 
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Sec. 219. Establishing a monthly cap on beneficiary incurred costs for insulin 
products and supplies under a prescription drug plan or MA– 
PD plan. 
Sec. 220. Monthly out-of-pocket cost sharing maximum for enrollees who incur 
a significant portion of costs towards annual out-of-pocket 
threshold. 
Subtitle C—Miscellaneous 
Sec. 221. Drug manufacturer price transparency. 
Sec. 222. Strengthening and expanding pharmacy benefit managers trans-
parency requirements. 
Sec. 223. Prescription drug pricing dashboards. 
Sec. 224. Improving coordination between the Food and Drug Administration 
and the Centers for Medicare & Medicaid Services. 
Sec. 225. Patient consultation in Medicare national and local coverage deter-
minations in order to mitigate barriers to inclusion of such per-
spectives. 
Sec. 226. GAO study on increases to Medicare and Medicaid spending due to 
copayment coupons and other patient assistance programs. 
Sec. 227. MedPAC report on shifting coverage of certain Medicare part B 
drugs to Medicare part D. 
Sec. 228. Taking steps to fulfill treaty obligations to Tribal communities. 
TITLE III—MEDICAID 
Sec. 301. Medicaid pharmacy and therapeutics committee improvements. 
Sec. 302. Improving reporting requirements and developing standards for the 
use of drug use review boards in State Medicaid programs. 
Sec. 303. GAO report on conflicts of interest in State Medicaid program drug 
use review boards and pharmacy and therapeutics (P&T) com-
mittees. 
Sec. 304. Ensuring the accuracy of manufacturer price and drug product infor-
mation under the Medicaid drug rebate program. 
Sec. 305. T–MSIS drug data analytics reports. 
Sec. 306. Risk-sharing value-based payment agreements for covered outpatient 
drugs under Medicaid. 
Sec. 307. Modification of maximum rebate amount under Medicaid drug rebate 
program. 
TITLE IV—ADDRESSING INTERMEDIARIES AND DRUG 
COMPETITION 
Sec. 401. Health plan oversight of pharmacy benefit manager services. 
Sec. 402. Study of pharmaceutical supply chain intermediaries and merger ac-
tivity. 
Sec. 403. Requirement that direct-to-consumer advertisements for prescription 
drugs and biological products include truthful and non-mis-
leading pricing information. 
Sec. 404. Change conditions of first generic exclusivity to spur access and com-
petition. 
Sec. 405. Ending the practice preventing market competition known as ‘‘Pay- 
for-Delay’’. 
Sec. 406. Empowering the FTC to prevent ‘‘product hopping’’. 
Sec. 407. Promoting competition by limiting patent thickets. 
TITLE V—BENEFICIARY COST SHARING FAIRNESS 
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Sec. 501. Repealing of rule by the Department of Health and Human Services. 
Sec. 502. Defining cost under prescription drug plans under part D of Medi-
care. 
TITLE 
I—ESTABLISHMENT 
OF 
PART B PAYMENT RULES FOR 
NEGOTIATION-ELIGIBLE 
DRUGS AND BIOLOGICALS 
SEC. 101. ESTABLISHMENT OF PART B PAYMENT RULES 
FOR 
NEGOTIATION-ELIGIBLE 
DRUGS 
AND 
BIOLOGICALS. 
Section 1847A of the Social Security Act (42 U.S.C. 
1395w–3a) is amended— 
(1) in paragraph (1)— 
(A) in the matter preceding subparagraph 
(A), by striking ‘‘Subject to paragraph (7)’’ and 
inserting ‘‘Subject to paragraphs (7) and (9)’’; 
(B) in subparagraph (B), by striking at 
the end ‘‘or’’; 
(C) in subparagraph (C), by striking the 
period at the end and inserting ‘‘; or’’; and 
(D) by adding at the end the following new 
subparagraph: 
‘‘(D) in the case of a negotiation-eligible 
drug or biological, the maximum allowable cost 
determined under paragraph (9).’’; and 
(2) by adding at the end the following new 
paragraph: 
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‘‘(9) 
RULES
FOR
NEGOTIATION-ELIGIBLE 
DRUGS AND BIOLOGICALS.— 
‘‘(A) NOTIFICATION OF MANUFACTURERS 
OF
NEGOTIATION-ELIGIBLE
DRUGS
AND 
BIOLOGICALS.— 
‘‘(i) IN
GENERAL.—Not later than 
180 days after the date of the enactment 
of this paragraph, the Secretary shall no-
tify each manufacturer of each negotiation- 
eligible drug or biological that is subject to 
negotiation for payment under this part. 
‘‘(ii) NEGOTIATION-ELIGIBLE
DRUG 
OR
BIOLOGICAL.—In this paragraph, the 
term ‘negotiation-eligible drug or biologi-
cal’ means a single source drug or biologi-
cal (as defined in subparagraph (C)) for 
which each of the following have expired: 
‘‘(I) The period of regulatory 
data protections or exclusivity granted 
for such drug or biological (including 
for new chemical entities, biologics, 
orphan drugs, pediatric formulations, 
and clinical trials). 
‘‘(II) Subject to the succeeding 
sentence, the period of any patents 
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issued for such drug or biological up 
to 1 year after the approval of such 
drug or biological. In the case of small 
molecule product that is a such a 
drug or biological, the period of any 
patents listed in the publication, Ap-
proved Drug Products With Thera-
peutic Equivalence Evaluations (re-
ferred to as the ‘Orange Book’). 
‘‘(B) NEGOTIATION.— 
‘‘(i) IN GENERAL.—The Secretary and 
the manufacturer of a negotiation-eligible 
drug or biological shall during the negotia-
tion period negotiate a maximum allowable 
cost for such drug or biological. In the case 
that the Secretary and the manufacturer 
do not determine a maximum allowable 
cost for such drug or biological, the Sec-
retary shall determine the maximum allow-
able cost for such drug or biological at an 
amount that is at least 65 percent and not 
more than 75 percent of the average sales 
price of such drug or biological. 
‘‘(ii) MAXIMUM ALLOWABLE COST.— 
In this subparagraph, the term ‘maximum 
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allowable cost’ means the amount agreed 
to by the Secretary and the manufacturer 
of a negotiation-eligible drug or biological 
for a unit of such drug or biological that 
is not less than 65 percent and not more 
than 75 percent of the lowest average sales 
price of such drug or biological for the pre-
ceding 1-year period. 
‘‘(C) SINGLE SOURCE DRUG OR BIOLOGI-
CAL.—For purposes of this paragraph, the term 
‘single source drug or biological’ means— 
‘‘(i) a drug or drug product that— 
‘‘(I) is approved under section 
505(c) of the Federal Food, Drug, 
and Cosmetic Act and is marketed 
pursuant to such approval; and 
‘‘(II) is not the listed drug for 
any drug that is approved under sec-
tion 505(j) and is marketed pursuant 
to such approval; or 
‘‘(ii) a biological product that— 
‘‘(I) is licensed under section 
351(a) of the Public Health Service 
Act, including any product deemed to 
be licensed under such section pursu-
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ant to section 7002(e)(4) of the Bio-
logics Price Competition and Innova-
tion Act and is marketed pursuant to 
section 351 of the Public Health Serv-
ice Act; and 
‘‘(II) is not the reference product 
for any biological product that is li-
censed and is marketed pursuant to 
such section of such Act.’’. 
TITLE II—MEDICARE 
Subtitle A—Part B 
SEC. 201. INCLUSION OF VALUE OF COUPONS IN DETER-
MINATION OF AVERAGE SALES PRICE FOR 
DRUGS AND BIOLOGICALS UNDER MEDICARE 
PART B. 
Section 1847A(c) of the Social Security Act (42 
U.S.C. 1395w–3a(c)) is amended— 
(1) in paragraph (3)— 
(A) by striking ‘‘DISCOUNTS.—In calcu-
lating’’ and inserting ‘‘DISCOUNTS
TO
PUR-
CHASERS
AND
COUPONS
PROVIDED
TO
PRI-
VATELY INSURED INDIVIDUALS.— 
‘‘(A) DISCOUNTS
TO
PURCHASERS.—In 
calculating’’; and 
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(B) by adding at the end the following new 
subparagraph: 
‘‘(B) COUPONS
PROVIDED
TO
REDUCE 
COST-SHARING.—For calendar quarters begin-
ning on or after July 1, 2024, in calculating the 
manufacturer’s average sales price under this 
subsection, such price shall include the value 
(as defined in paragraph (6)(J)) of any coupons 
provided under a drug coupon program of a 
manufacturer (as those terms are defined in 
subparagraphs (K) and (L), respectively, of 
paragraph (6)).’’; and 
(2) in paragraph (6), by adding at the end the 
following new subparagraphs: 
‘‘(J) VALUE.—The term ‘value’ means, 
with respect to a coupon (as defined in sub-
paragraph (K)), the difference, if any, be-
tween— 
‘‘(i) the amount of any reduction or 
elimination of cost-sharing or other out-of- 
pocket costs described in such subpara-
graph to a patient as a result of the use 
of such coupon; and 
‘‘(ii) any charge to the patient for the 
use of such coupon. 
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‘‘(K) COUPON.—The term ‘coupon’ means 
any financial support that is provided to a pa-
tient, either directly to the patient or indirectly 
to the patient through a physician, prescriber, 
pharmacy, or other provider, under a drug cou-
pon program of a manufacturer (as defined in 
subparagraph (L)) that is used to reduce or 
eliminate cost-sharing or other out-of-pocket 
costs of the patient, including costs related to 
a deductible, coinsurance, or copayment, with 
respect to a drug or biological, including a bio-
similar biological product, of the manufacturer. 
‘‘(L) DRUG COUPON PROGRAM.— 
‘‘(i) IN GENERAL.—Subject to clause 
(ii), the term ‘drug coupon program’ 
means, with respect to a manufacturer, a 
program through which the manufacturer 
provides coupons to patients as described 
in subparagraph (K). 
‘‘(ii) EXCLUSIONS.—Such term does 
not include— 
‘‘(I) a patient assistance program 
operated by a manufacturer that pro-
vides free or discounted drugs or 
biologicals, including biosimilar bio-
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logical products, (through in-kind do-
nations) to patients of low income; or 
‘‘(II) a contribution by a manu-
facturer to a nonprofit or Foundation 
that provides free or discounted drugs 
or biologicals, including biosimilar bio-
logical products, (through in-kind do-
nations) to patients of low income.’’. 
SEC. 202. PAYMENT FOR BIOSIMILAR BIOLOGICAL PROD-
UCTS DURING INITIAL PERIOD. 
Section 1847A(c)(4) of the Social Security Act (42 
U.S.C. 1395w–3a(c)(4)) is amended— 
(1) in each of subparagraphs (A) and (B), by 
redesignating clauses (i) and (ii) as subclauses (I) 
and (II), respectively, and moving such subclauses 2 
ems to the right; 
(2) by redesignating subparagraphs (A) and 
(B) as clauses (i) and (ii) and moving such clauses 
2 ems to the right; 
(3) by striking ‘‘UNAVAILABLE.—In the case’’ 
and inserting ‘‘UNAVAILABLE.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), in the case’’; and 
(4) by adding at the end the following new sub-
paragraph: 
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‘‘(B) LIMITATION
ON
PAYMENT
AMOUNT 
FOR BIOSIMILAR BIOLOGICAL PRODUCTS DUR-
ING
INITIAL
PERIOD.—In the case of a bio-
similar biological product furnished on or after 
July 1, 2023, in lieu of applying subparagraph 
(A) during the initial period described in such 
subparagraph with respect to the biosimilar bio-
logical product, the amount payable under this 
section for the biosimilar biological product is 
the lesser of the following: 
‘‘(i) The amount determined under 
clause (ii) of such subparagraph for the 
biosimilar biological product. 
‘‘(ii) The amount determined under 
subsection (b)(1)(B) for the reference bio-
logical product.’’. 
SEC. 203. TEMPORARY INCREASE IN MEDICARE PART B 
PAYMENT 
FOR 
BIOSIMILAR 
BIOLOGICAL 
PRODUCTS. 
Section 1847A(b)(8) of the Social Security Act (42 
U.S.C. 1395w–3a(b)(8)) is amended— 
(1) by redesignating subparagraphs (A) and 
(B) as clauses (i) and (ii), respectively, and indent-
ing appropriately; 
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(2) by striking ‘‘PRODUCT.—The amount’’ and 
inserting the following: ‘‘PRODUCT.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), the amount’’; and 
(3) by adding at the end the following new sub-
paragraph: 
‘‘(B) TEMPORARY PAYMENT INCREASE FOR 
BIOSIMILAR BIOLOGICAL PRODUCTS.— 
‘‘(i) IN GENERAL.—Beginning Janu-
ary 1, 2023, in the case of a biosimilar bio-
logical product described in paragraph 
(1)(C) that is furnished during the applica-
ble 5-year period for such product, the 
amount specified in this paragraph for 
such product is an amount equal to the 
lesser of the following: 
‘‘(I) The amount specified in sub-
paragraph (A) for such product if 
clause (ii) of such subparagraph was 
applied by substituting ‘8 percent’ for 
‘6 percent’. 
‘‘(II) The amount determined 
under subsection (b)(1)(B) for the 
reference biological product. 
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‘‘(ii) APPLICABLE 5-YEAR PERIOD.— 
For purposes of clause (i), the applicable 
5-year period for a biosimilar biological 
product is— 
‘‘(I) in the case of such a product 
for which payment was made under 
this paragraph as of December 31, 
2012, the 5-year period beginning on 
January 1, 2023; and 
‘‘(II) in the case of such a prod-
uct that is not described in subclause 
(I), the 5-year period beginning on the 
first day of the first calendar quarter 
in which payment was made for such 
product under this paragraph.’’. 
SEC. 204. MEDICARE PART B 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: 
‘‘(x) 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 
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end of each calendar quarter beginning on or 
after July 1, 2024, 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 units of the billing and payment code 
described in subparagraph (A)(i) of para-
graph (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. 
‘‘(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, 2024, 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-
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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 
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 2025, shall be the dollar 
amount specified under such subparagraph 
for 2024, increased by the percentage in-
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‘‘(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 furnished to an indi-
vidual, if such manufacturer, with respect 
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 
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)). 
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‘‘(D) PROSPECTIVE
PAYMENT
AMOUNT 
BENCHMARK QUARTER.—The term ‘prospective 
payment amount benchmark quarter’ means the 
calendar quarter beginning 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. 
‘‘(G) COUNTING UNITS.— 
‘‘(i) CUT-OFF
PERIOD
TO
COUNT 
UNITS.—For purposes of subparagraph 
(A)(i), subject to clause (ii), to count the 
total number of billing units for a part B 
rebatable drug for a quarter, the Secretary 
may use a cut-off period in order to ex-
clude from such total number of billing 
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units for such quarter claims for services 
furnished during such quarter that were 
not processed at an appropriate time prior 
to the end of the cut-off period. 
‘‘(ii) COUNTING
UNITS
FOR
CLAIMS 
PROCESSED
AFTER
CUT-OFF
PERIOD.—If 
the Secretary uses a cut-off period pursu-
ant to clause (i), in the case of units of a 
part B rebatable drug furnished during a 
quarter but pursuant to application of such 
cut-off period excluded for purposes of sub-
paragraph (A)(i) from the total number of 
billing units for the drug for such quarter, 
the Secretary shall count such units of 
such drug so furnished in the total number 
of billing units for such drug for a subse-
quent quarter, as the Secretary determines 
appropriate. 
‘‘(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 or licensed 
by the Food and Drug Administration after 
July 1, 2015, clause (i) of paragraph (3)(C) 
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shall be applied as if the term ‘payment amount 
benchmark quarter’ were defined under para-
graph (3)(D) as the third full calendar quarter 
after the day on which the drug was first mar-
keted and clause (ii) of paragraph (3)(C) shall 
be applied 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
SUBSEQUENTLY
APPROVED 
DRUGS.—In the case of a part B rebatable drug 
first approved or licensed by the Food and 
Drug Administration after July 1, 2015, para-
graph (1)(B) shall be applied as if the reference 
to ‘July 1, 2024’ under such paragraph were a 
reference to the later of the 6th full calendar 
quarter after the day on which the drug was 
first marketed or July 1, 2024. 
‘‘(C) EXEMPTION FOR SHORTAGES.—The 
Secretary may reduce or waive the rebate 
amount under paragraph (1)(B) with respect to 
a part B rebatable drug that is described as 
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currently in shortage on the shortage list in ef-
fect under section 506E of the Federal Food, 
Drug, and Cosmetic Act or in the case of other 
exigent circumstances, as determined by the 
Secretary. 
‘‘(D) SELECTED DRUGS.—In the case of a 
part B rebatable drug that is a selected drug 
(as defined in section 1192(c)) for a price appli-
cability 
period 
(as 
defined 
in 
section 
1191(b)(2))— 
‘‘(i) for calendar quarters during such 
period for which a maximum fair price (as 
defined in section 1191(c)(2)) for such 
drug has been determined and is applied 
under part E of title XI, the rebate 
amount under paragraph (1)(B) shall be 
waived; and 
‘‘(ii) in the case such drug is deter-
mined (pursuant to such section 1192(c)) 
to no longer be a selected drug, for each 
applicable year beginning after the price 
applicability period with respect to such 
drug, clause (i) of paragraph (3)(C) shall 
be applied as if the term ‘payment amount 
benchmark quarter’ were defined under 
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paragraph (3)(D) as the calendar quarter 
beginning January 1 of the last year be-
ginning during such price applicability pe-
riod with respect to such selected drug 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 July of the year preceding such last 
year. 
‘‘(5) APPLICATION TO BENEFICIARY COINSUR-
ANCE.—In the case of a part B rebatable drug, if 
the payment amount for a quarter exceeds the infla-
tion adjusted payment for such quarter— 
‘‘(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. 
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‘‘(6) REBATE DEPOSITS.—Amounts paid as re-
bates under paragraph (1)(B) shall be deposited into 
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: 
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‘‘(i) Including multiple source drugs 
(as defined in section 1847A(c)(6)(C)) in 
the rebate system under this subsection. 
‘‘(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 units of the billing 
and payment code of the drugs excluded 
under paragraph (3)(B) in the rebate sys-
tem 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 
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prices for the benchmark period and the rebate pe-
riod.’’. 
(b) AMOUNTS PAYABLE; COST-SHARING.—Section 
1833 of the Social Security Act (42 U.S.C. 1395l) is 
amended— 
(1) in subsection (a)— 
(A) in paragraph (1)— 
(i) in subparagraph (S), by striking 
‘‘with respect to’’ and inserting ‘‘subject to 
subparagraph (DD), with respect to’’; 
(ii) by striking ‘‘and (CC)’’ and in-
serting ‘‘(CC)’’; and 
(iii) by inserting before the semicolon 
at the end the following: ‘‘, and (DD) with 
respect to a part B rebatable drug (as de-
fined in paragraph (2) of section 1834(x)) 
for which the payment amount for a cal-
endar 
quarter 
under 
paragraph 
(3)(A)(ii)(I) of such section for such quar-
ter exceeds the inflation-adjusted payment 
under paragraph (3)(A)(ii)(II) of such sec-
tion for such quarter, the amounts paid 
shall be the difference between (i) the pay-
ment 
amount 
under 
paragraph 
(3)(A)(ii)(I) of such section for such drug, 
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and (ii) 20 percent of the inflation-ad-
justed payment amount under paragraph 
(3)(A)(ii)(II) of such section for such 
drug’’; and 
(B) by adding at the end of the flush left 
matter following paragraph (9) the following: 
‘‘For purposes of applying paragraph (1)(DD), sub-
sections (i)(9) and (t)(8)(F), and section 1834(x)(5), the 
Secretary shall make such estimates and use such data 
as the Secretary determines appropriate, and notwith-
standing any other provision of law, may do so by program 
instruction or otherwise.’’; 
(2) in subsection (i), by adding at the end the 
following new paragraph: 
‘‘(9) In the case of a part B rebatable drug (as 
defined in paragraph (2) of section 1834(x)) for 
which payment under this subsection is not pack-
aged into a payment for a covered OPD service (as 
defined in subsection (t)(1)(B)) (or group of serv-
ices) furnished on or after July 1, 2024, under the 
system under this subsection, in lieu of calculation 
of coinsurance and the amount of payment otherwise 
applicable under this subsection, the provisions of 
section 1834(x)(5), paragraph (1)(DD) of subsection 
(a), and the flush left matter following paragraph 
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(9) of subsection (a), shall, as determined appro-
priate by the Secretary, apply under this subsection 
in the same manner as such provisions of section 
1834(x)(5) and subsection (a) apply under such sec-
tion and subsection.’’; and 
(3) in subsection (t)(8), by adding at the end 
the following new subparagraph: 
‘‘(F) PART B REBATABLE DRUGS.—In the 
case of a part B rebatable drug (as defined in 
paragraph (2) of section 1834(x)) for which 
payment under this part is not packaged into a 
payment for a service furnished on or after July 
1, 2024, under the system under this sub-
section, in lieu of calculation of coinsurance and 
the amount of payment otherwise applicable 
under this subsection, the provisions of section 
1834(x)(5), paragraph (1)(DD) of subsection 
(a), and the flush left matter following para-
graph (9) of subsection (a), shall, as determined 
appropriate by the Secretary, apply under this 
subsection in the same manner as such provi-
sions of section 1834(x)(5) and subsection (a) 
apply under such section and subsection.’’. 
(c) CONFORMING AMENDMENTS.— 
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(1) TO
PART
B
ASP
CALCULATION.—Section 
1847A(c)(3) of the Social Security Act (42 U.S.C. 
1395w–3a(c)(3)) is amended by inserting ‘‘or section 
1834(x)’’ after ‘‘section 1927’’. 
(2) EXCLUDING PART B DRUG INFLATION RE-
BATE
FROM
BEST
PRICE.—Section 
1927(c)(1)(C)(ii)(I) of the Social Security Act (42 
U.S.C. 1396r–8(c)(1)(C)(ii)(I)) is amended by in-
serting ‘‘or section 1834(x)’’ after ‘‘this section’’. 
(3) COORDINATION WITH MEDICAID REBATE IN-
FORMATION DISCLOSURE.—Section 1927(b)(3)(D)(i) 
of the Social Security Act (42 U.S.C. 1396r– 
8(b)(3)(D)(i)) is amended by striking ‘‘or to carry 
out section 1847B’’ and inserting ‘‘to carry out sec-
tion 1847B or section 1834(x)’’. 
SEC. 205. ESTABLISHMENT OF MAXIMUM ADD-ON PAYMENT 
FOR DRUGS AND BIOLOGICALS. 
(a) IN GENERAL.—Section 1847A of the Social Secu-
rity Act (42 U.S.C. 1395w–3a) is amended— 
(1) in subsection (b)— 
(A) in paragraph (1), in the matter pre-
ceding subparagraph (A), by striking ‘‘para-
graph (7)’’ and inserting ‘‘paragraphs (7) and 
(9)’’; and 
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(B) by adding at the end the following new 
paragraph: 
‘‘(9) MAXIMUM ADD-ON PAYMENT AMOUNT.— 
‘‘(A) IN
GENERAL.—In determining the 
payment amount under the provisions of sub-
paragraph (A), (B), or (C) of paragraph (1) of 
this subsection, subsection (c)(4)(A)(ii), or sub-
section (d)(3)(C) for a drug or biological fur-
nished on or after January 1, 2024, if the ap-
plicable add-on payment (as defined in subpara-
graph (B)) for each drug or biological on a 
claim for a date of service exceeds the max-
imum add-on payment amount specified under 
subparagraph (C) for the drug or biological, 
then the payment amount otherwise determined 
for the drug or biological under those provi-
sions, as applicable, shall be reduced by the 
amount of such excess. 
‘‘(B) APPLICABLE ADD-ON PAYMENT DE-
FINED.—In this paragraph, the term ‘applicable 
add-on payment’ means the following amounts, 
determined without regard to the application of 
subparagraph (A): 
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‘‘(i) In the case of a multiple source 
drug, an amount equal to the difference 
between— 
‘‘(I) the amount that would oth-
erwise be applied under paragraph 
(1)(A); and 
‘‘(II) the amount that would be 
applied under such paragraph if ‘100 
percent’ were substituted for ‘106 per-
cent’. 
‘‘(ii) In the case of a single source 
drug or biological, an amount equal to the 
difference between— 
‘‘(I) the amount that would oth-
erwise be applied under paragraph 
(1)(B); and 
‘‘(II) the amount that would be 
applied under such paragraph if ‘100 
percent’ were substituted for ‘106 per-
cent’. 
‘‘(iii) In the case of a biosimilar bio-
logical product, the amount otherwise de-
termined under paragraph (8)(B). 
‘‘(iv) In the case of a drug or biologi-
cal during the initial period described in 
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subsection (c)(4)(A), an amount equal to 
the difference between— 
‘‘(I) the amount that would oth-
erwise be applied under subsection 
(c)(4)(A)(ii); and 
‘‘(II) the amount that would be 
applied under such subsection if ‘100 
percent’ were substituted, as applica-
ble, for— 
‘‘(aa) ‘103 percent’ in sub-
clause (I) of such subsection; or 
‘‘(bb) any percent in excess 
of 100 percent applied under 
subclause (II) of such subsection. 
‘‘(v) In the case of a drug or biologi-
cal to which subsection (d)(3)(C) applies, 
an amount equal to the difference be-
tween— 
‘‘(I) the amount that would oth-
erwise be applied under such sub-
section; and 
‘‘(II) the amount that would be 
applied under such subsection if ‘100 
percent’ were substituted, as applica-
ble, for— 
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‘‘(aa) any percent in excess 
of 100 percent applied under 
clause (i) of such subsection; or 
‘‘(bb) ‘103 percent’ in clause 
(ii) of such subsection. 
‘‘(C) MAXIMUM ADD-ON PAYMENT AMOUNT 
SPECIFIED.—For purposes of subparagraph 
(A), the maximum add-on payment amount 
specified in this subparagraph is— 
‘‘(i) for each of 2024 through 2031, 
$1,000; and 
‘‘(ii) for a subsequent year, the 
amount specified in this subparagraph for 
the preceding year increased by the per-
centage increase in the consumer price 
index for all urban consumers (all items; 
United States city average) for the 12- 
month period ending with June of the pre-
vious year. 
Any amount determined under this subpara-
graph that is not a multiple of $10 shall be 
rounded to the nearest multiple of $10.’’; and 
(2) in subsection (c)(4)(A)(ii), by striking ‘‘in 
the case’’ and inserting ‘‘subject to subsection 
(b)(9), in the case’’. 
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(b) CONFORMING AMENDMENTS RELATING TO SEPA-
RATELY PAYABLE DRUGS.— 
(1) OPPS.—Section 1833(t)(14) of the Social 
Security Act (42 U.S.C. 1395l(t)(14)) is amended— 
(A) in subparagraph (A)(iii)(II), by insert-
ing ‘‘, subject to subparagraph (I)’’ after ‘‘are 
not available’’; and 
(B) by adding at the end the following new 
subparagraph: 
‘‘(I) APPLICATION
OF
MAXIMUM
ADD-ON 
PAYMENT
FOR
SEPARATELY
PAYABLE
DRUGS 
AND BIOLOGICALS.—In establishing the amount 
of payment under subparagraph (A) for a speci-
fied covered outpatient drug that is furnished 
as part of a covered OPD service (or group of 
services) on or after January 1, 2024, if such 
payment is determined based on the average 
price for the year established under section 
1847A pursuant to clause (iii)(II) of such sub-
paragraph, the provisions of subsection (b)(9) 
of section 1847A shall apply to the amount of 
payment so established in the same manner as 
such provisions apply to the amount of payment 
under section 1847A.’’. 
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(2) ASC.—Section 1833(i)(2)(D) of the Social 
Security Act (42 U.S.C. 1395l(i)(2)(D)) is amend-
ed— 
(A) by moving clause (v) 6 ems to the left; 
(B) by redesignating clause (vi) as clause 
(vii); and 
(C) by inserting after clause (v) the fol-
lowing new clause: 
‘‘(vi) If there is a separate payment under the system 
described in clause (i) for a drug or biological furnished 
on or after January 1, 2024, the provisions of subsection 
(t)(14)(I) shall apply to the establishment of the amount 
of payment for the drug or biological under such system 
in the same manner in which such provisions apply to the 
establishment of the amount of payment under subsection 
(t)(14)(A).’’. 
SEC. 206. GAO STUDY AND REPORT ON AVERAGE SALES 
PRICE. 
(a) STUDY.— 
(1) IN GENERAL.—The Comptroller General of 
the United States (in this section referred to as the 
‘‘Comptroller General’’) shall conduct a study on 
spending for applicable drugs under part B of title 
XVIII of the Social Security Act. 
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(2) APPLICABLE DRUGS DEFINED.—In this sec-
tion, the term ‘‘applicable drugs’’ means drugs and 
biologicals— 
(A) for which reimbursement under such 
part B is based on the average sales price of 
the drug or biological; and 
(B) that account for the largest percentage 
of total spending on drugs and biologicals under 
such part B (as determined by the Comptroller 
General, but in no case less that 25 drugs or 
biologicals). 
(3) REQUIREMENTS.—The study under para-
graph (1) shall include an analysis of the following: 
(A) The extent to which each applicable 
drug is paid for— 
(i) under such part B for Medicare 
beneficiaries; or 
(ii) by private payers in the commer-
cial market. 
(B) Any change in Medicare spending or 
Medicare beneficiary cost-sharing that would 
occur if the average sales price of an applicable 
drug was based solely on payments by private 
payers in the commercial market. 
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(C) The extent to which drug manufactur-
ers provide rebates, discounts, or other price 
concessions to private payers in the commercial 
market for applicable drugs, which the manu-
facturer includes in its average sales price cal-
culation, for— 
(i) formulary placement; 
(ii) utilization management consider-
ations; or 
(iii) other purposes. 
(D) Barriers to drug manufacturers pro-
viding such price concessions for applicable 
drugs. 
(E) Other areas determined appropriate by 
the Comptroller General. 
(b) REPORT.—Not later than 2 years after the date 
of the enactment of this Act, the Comptroller General shall 
submit to Congress a report on the study conducted under 
subsection (a), together with recommendations for such 
legislation and administrative action as the Secretary de-
termines appropriate. 
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SEC. 207. AUTHORITY TO USE ALTERNATIVE PAYMENT FOR 
DRUGS AND BIOLOGICALS TO PREVENT PO-
TENTIAL DRUG SHORTAGES. 
(a) IN GENERAL.—Section 1847A(e) of the Social 
Security Act (42 U.S.C. 1395w–3a(e)) is amended— 
(1) by striking ‘‘PAYMENT IN RESPONSE TO 
PUBLIC HEALTH EMERGENCY.—In the case’’ and 
inserting ‘‘PAYMENTS.— 
‘‘(1) IN RESPONSE TO PUBLIC HEALTH EMER-
GENCY.—In the case’’; and 
(2) by adding at the end the following new 
paragraph: 
‘‘(2) PREVENTING
POTENTIAL
DRUG
SHORT-
AGES.— 
‘‘(A) IN GENERAL.—In the case of a drug 
or biological that the Secretary determines is 
described in subparagraph (B) for one or more 
quarters beginning on or after January 1, 
2024, the Secretary may use wholesale acquisi-
tion cost (or other reasonable measure of a 
drug or biological price) instead of the manu-
facturer’s average sales price for such quarters 
and for subsequent quarters until the end of 
the quarter in which such drug or biological is 
removed from the drug shortage list under sec-
tion 506E of the Federal Food, Drug, and Cos-
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metic Act, or in the case of a drug or biological 
described in subparagraph (B)(ii), the date on 
which the Secretary determines that the total 
manufacturing capacity or the total number of 
manufacturers of such drug or biological is suf-
ficient to mitigate a potential shortage of the 
drug or biological. 
‘‘(B) DRUG OR BIOLOGICAL DESCRIBED.— 
For purposes of subparagraph (A), a drug or 
biological described in this subparagraph is a 
drug or biological— 
‘‘(i) that is listed on the drug shortage 
list maintained by the Food and Drug Ad-
ministration pursuant to section 506E of 
the Federal Food, Drug, and Cosmetic 
Act, and with respect to which any manu-
facturer of such drug or biological notifies 
the Secretary of a permanent discontinu-
ance or an interruption that is likely to 
lead to a meaningful disruption in the 
manufacturer’s supply of that drug pursu-
ant to section 506C(a) of such Act; or 
‘‘(ii) that— 
‘‘(I) 
is 
described 
in 
section 
506C(a) of such Act; 
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‘‘(II) was listed on the drug 
shortage list maintained by the Food 
and Drug Administration pursuant to 
section 506E of such Act within the 
preceding 5 years; and 
‘‘(III) for which the total manu-
facturing capacity of all manufactur-
ers with an approved application for 
such drug or biological that is cur-
rently marketed or total number of 
manufacturers with an approved ap-
plication for such drug or biological 
that is currently marketed declines 
during a 6-month period, as deter-
mined by the Secretary. 
‘‘(C) PROVISION OF ADDITIONAL INFORMA-
TION.—For each quarter in which the amount 
of payment for a drug or biological described in 
subparagraph (B) pursuant to subparagraph 
(A) exceeds the amount of payment for the 
drug or biological otherwise applicable under 
this section, each manufacturer of such drug or 
biological shall provide to the Secretary infor-
mation related to the potential cause or causes 
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of the shortage and the expected duration of 
the shortage with respect to such drug.’’. 
(b) 
TRACKING
SHORTAGE
DRUGS
THROUGH 
CLAIMS.—The Secretary of Health and Human Services 
(referred to in this section as the ‘‘Secretary’’) shall estab-
lish a mechanism (such as a modifier) for purposes of 
tracking utilization under title XVIII of the Social Secu-
rity Act (42 U.S.C. 1395 et seq.) of drugs and biologicals 
listed on the drug shortage list maintained by the Food 
and Drug Administration pursuant to section 506E of the 
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 356e). 
(c) HHS REPORT AND RECOMMENDATIONS.— 
(1) IN GENERAL.—Not later than July 1, 2024, 
the Secretary shall submit to Congress a report on 
shortages of drugs within the Medicare program 
under title XVIII of the Social Security Act (42 
U.S.C. 1395 et seq.). The report shall include— 
(A) an analysis of— 
(i) the effect of drug shortages on 
Medicare beneficiary access, quality, safe-
ty, and out-of-pocket costs; 
(ii) the effect of drug shortages on 
health providers, including hospitals and 
physicians, across the Medicare program; 
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(iii) the current role of the Centers for 
Medicare & Medicaid Services (CMS) in 
addressing 
drug 
shortages, 
including 
CMS’s working relationship and commu-
nication with other Federal agencies and 
stakeholders; 
(iv) the role of all actors in the drug 
supply chain (including drug manufactur-
ers, distributors, wholesalers, secondary 
wholesalers, group purchasing organiza-
tions, hospitals, and physicians) on drug 
shortages within the Medicare program; 
and 
(v) payment structures and incentives 
under parts A, B, C, and D of the Medi-
care program and their effect, if any, on 
drug shortages; and 
(B) relevant findings and recommendations 
to Congress. 
(2) PUBLIC AVAILABILITY.—The report under 
this subsection shall be made available to the public. 
(3) CONSULTATION.—The Secretary shall con-
sult with the drug shortage task force authorized 
under section 506D(a)(1)(A) of the Federal Food, 
Drug, and Cosmetic Act (21 U.S.C. 356d(a)(1)(A)) 
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in preparing the report under this subsection, as ap-
propriate. 
SEC. 208. CHANGE IN DEFINITION OF STRENGTH FOR THE 
PURPOSES OF DETERMINING INTERCHANGE-
ABILITY OF BIOLOGICAL AND BIOSIMILAR 
PRODUCTS. 
(a) Section 351(i) of the Public Health Service Act 
is amended by inserting the following after paragraph (4): 
‘‘(5) The term ‘strength’, in reference to a bio-
logical product intended for administration by injec-
tion, means the total content of drug substance in 
the dosage form without regard to the concentration 
of drug substance or total volume of the biological 
product.’’. 
(b) Section 351(k)(7)(C)(ii)(I) of the Public Health 
Service Act is amended by inserting ‘‘concentration,’’ after 
‘‘delivery device,’’. 
Subtitle B—Part D 
SEC. 209. MEDICARE PART D MODERNIZATION REDESIGN. 
(a) 
BENEFIT
STRUCTURE
REDESIGN.—Section 
1860D–2(b) of the Social Security Act (42 U.S.C. 1395w– 
102(b)) is amended— 
(1) in paragraph (2)— 
(A) in subparagraph (A), in the matter 
preceding clause (i), by inserting ‘‘for a year 
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preceding 2024 and for costs above the annual 
deductible specified in paragraph (1) and up to 
the annual out-of-pocket threshold specified in 
paragraph (4)(B) for 2024 and each subsequent 
year’’ after ‘‘paragraph (3)’’; 
(B) in subparagraph (C)— 
(i) in clause (i), in the matter pre-
ceding subclause (I), by inserting ‘‘for a 
year preceding 2024,’’ after ‘‘paragraph 
(4),’’; and 
(ii) in clause (ii)(III), by striking 
‘‘and each subsequent year’’ and inserting 
‘‘, 2021, 2022, and 2023’’; and 
(C) in subparagraph (D)— 
(i) in clause (i)— 
(I) in the matter preceding sub-
clause (I), by inserting ‘‘for a year 
preceding 2024,’’ after ‘‘paragraph 
(4),’’; and 
(II) in subclause (I)(bb), by 
striking ‘‘a year after 2018’’ and in-
serting ‘‘each of years 2018 through 
2023’’; and 
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(ii) in clause (ii)(V), by striking 
‘‘2019 and each subsequent year’’ and in-
serting ‘‘each of years through 2023’’; 
(2) in paragraph (3)(A)— 
(A) in the matter preceding clause (i), by 
inserting ‘‘for a year preceding 2024,’’ after 
‘‘and (4),’’; and 
(B) in clause (ii), by striking ‘‘for a subse-
quent year’’ and inserting ‘‘for each of years 
2007 through 2023’’; and 
(3) in paragraph (4)— 
(A) in subparagraph (A)— 
(i) in clause (i)— 
(I) by redesignating subclauses 
(I) and (II) as items (aa) and (bb), 
respectively, and indenting appro-
priately; 
(II) in the matter preceding item 
(aa), as redesignated by subclause (I), 
by striking ‘‘is equal to the greater 
of—’’ and inserting ‘‘is equal to— 
‘‘(I) for a year preceding 2024, 
the greater of—’’; 
(III) by striking the period at the 
end of item (bb), as redesignated by 
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subclause (I), and inserting ‘‘; and’’; 
and 
(IV) by adding at the end the fol-
lowing: 
‘‘(II) for and each succeeding 
year, $0.’’; and 
(ii) in clause (ii)— 
(I) by striking ‘‘clause (i)(I)’’ and 
inserting ‘‘clause (i)(I)(aa)’’; and 
(II) by adding at the end the fol-
lowing new sentence: ‘‘The Secretary 
shall continue to calculate the dollar 
amounts specified in clause (i)(I)(aa), 
including with the adjustment under 
this clause, after 2023 for purposes of 
section 1860D–14(a)(1)(D)(iii).’’; 
(B) in subparagraph (B)— 
(i) in clause (i)— 
(I) in subclause (V), by striking 
‘‘or’’ at the end; 
(II) in subclause (VI)— 
(aa) by striking ‘‘for a sub-
sequent year’’ and inserting ‘‘for 
2021, 2022, and 2023’’; and 
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(bb) by striking the period 
at the end and inserting a semi-
colon; and 
(III) by adding at the end the 
following new subclauses: 
‘‘(VII) for 2024, is equal to— 
‘‘(aa) 
$3,100 
for 
bene-
ficiaries determined to have in-
come that is over 400 percent of 
the Federal poverty line applica-
ble to a family of the size in-
volved; 
‘‘(bb) 
$1,800 
for 
bene-
ficiaries determined to have in-
come that is between 300 to 400 
percent of the Federal poverty 
line applicable to a family of the 
size involved; or 
‘‘(cc) 
$1,200 
for 
bene-
ficiaries determined to have in-
come that is below 300 percent of 
the Federal poverty line applica-
ble to a family of the size in-
volved; or 
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‘‘(VIII) for a subsequent year, is 
equal to the amount specified in this 
subparagraph for the previous year, 
increased by the annual percentage in-
crease described in paragraph (6) for 
the year involved.’’; and 
(ii) in clause (ii), by striking ‘‘clause 
(i)(II)’’ and inserting ‘‘clause (i)’’; 
(C) in subparagraph (C)(i), by striking 
‘‘and for amounts’’ and inserting ‘‘and for a 
year preceding 2024 for amounts’’; and 
(D) in subparagraph (E), by striking ‘‘In 
applying’’ and inserting ‘‘For each of 2011 
through 2023, in applying’’. 
(b) 
DECREASING
REINSURANCE
PAYMENT 
AMOUNT.—Section 1860D–15(b) of the Social Security 
Act (42 U.S.C. 1395w–115(b)) is amended— 
(1) in paragraph (1)— 
(A) by striking ‘‘equal to 80 percent’’ and 
inserting ‘‘equal to— 
‘‘(A) for a year preceding 2024, 80 per-
cent’’; 
(B) in subparagraph (A), as added by 
paragraph (1), by striking the period at the end 
and inserting ‘‘; and’’; and 
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(C) by adding at the end the following new 
subparagraph: 
‘‘(B) for 2024 and each subsequent year, 
the sum of— 
‘‘(i) an amount equal to the applicable 
percentage specified in paragraph (5)(A) of 
such allowable reinsurance costs attrib-
utable to that portion of gross prescription 
drug costs as specified in paragraph (3) in-
curred in the coverage year after such indi-
vidual has incurred costs that exceed the 
annual out-of-pocket threshold specified in 
section 1860D–2(b)(4)(B) with respect to 
applicable drugs (as defined in section 
1860D–14B(g)(2)); and 
‘‘(ii) an amount equal to the applica-
ble percentage specified in paragraph 
(5)(B) of allowable reinsurance costs at-
tributable to that portion of gross prescrip-
tion drug costs as specified in paragraph 
(3) incurred in the coverage year after 
such individual has incurred costs that ex-
ceed the annual out-of-pocket threshold 
specified in section 1860D–2(b)(4)(B) with 
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respect to covered part D drugs that are 
not applicable drugs (as so defined).’’; and 
(2) by adding at the end the following new 
paragraph: 
‘‘(5) APPLICABLE
PERCENTAGE
SPECIFIED.— 
For purposes of paragraph (1)(B), the applicable 
percentage specified in this paragraph is— 
‘‘(A) with respect to applicable drugs (as 
defined in section 1860D–14B(g)(2))— 
‘‘(i) for 2024, 60 percent; 
‘‘(ii) for 2025, 40 percent; and 
‘‘(iii) for 2026 and each subsequent 
year, 20 percent; and 
‘‘(B) with respect to covered part D drugs 
that are not applicable drugs (as so defined)— 
‘‘(i) for 2024, 80 percent; 
‘‘(ii) for 2025, 60 percent; and 
‘‘(iii) for 2026 and each subsequent 
year, 40 percent.’’. 
(c) MANUFACTURER DISCOUNT PROGRAM DURING 
INITIAL AND CATASTROPHIC PHASES OF COVERAGE.— 
(1) IN GENERAL.—Part D of title XVIII of the 
Social Security Act is amended by inserting after 
section 1860D–14A (42 U.S.C. 1495w–114) the fol-
lowing new section: 
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‘‘SEC. 1860D–14B. MANUFACTURER DISCOUNT PROGRAM. 
‘‘(a) ESTABLISHMENT.—The Secretary shall estab-
lish a manufacturer discount program (in this section re-
ferred to as the ‘program’). Under the program, the Sec-
retary shall enter into agreements described in subsection 
(b) with manufacturers and provide for the performance 
of the duties described in subsection (c). The Secretary 
shall establish a model agreement for use under the pro-
gram by not later than January 1, 2023, in consultation 
with manufacturers, and allow for comment on such model 
agreement. 
‘‘(b) TERMS OF AGREEMENT.— 
‘‘(1) IN GENERAL.— 
‘‘(A) AGREEMENT.—An agreement under 
this section shall require the manufacturer to 
provide applicable beneficiaries access to dis-
counted prices for applicable drugs of the man-
ufacturer that are dispensed on or after Janu-
ary 1, 2024. 
‘‘(B) PROVISION OF DISCOUNTED PRICES 
AT THE POINT-OF-SALE.—The discounted prices 
described in subparagraph (A) shall be provided 
to the applicable beneficiary at the pharmacy or 
by the mail order service at the point-of-sale of 
an applicable drug. 
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‘‘(2) PROVISION OF APPROPRIATE DATA.—Each 
manufacturer with an agreement in effect under this 
section shall collect and have available appropriate 
data, as determined by the Secretary, to ensure that 
it can demonstrate to the Secretary compliance with 
the requirements under the program. 
‘‘(3) COMPLIANCE
WITH
REQUIREMENTS
FOR 
ADMINISTRATION
OF
PROGRAM.—Each manufac-
turer with an agreement in effect under this section 
shall comply with requirements imposed by the Sec-
retary or a third party with a contract under sub-
section (d)(3), as applicable, for purposes of admin-
istering the program, including any determination 
under subparagraph (A) of subsection (c)(1) or pro-
cedures established under such subsection (c)(1). 
‘‘(4) LENGTH OF AGREEMENT.— 
‘‘(A) IN GENERAL.—An agreement under 
this section shall be effective for an initial pe-
riod of not less than 12 months and shall be 
automatically renewed for a period of not less 
than 1 year unless terminated under subpara-
graph (B). 
‘‘(B) TERMINATION.— 
‘‘(i) BY THE SECRETARY.—The Sec-
retary may provide for termination of an 
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of the day after the end of the suc-
ceeding plan year. 
‘‘(iii) EFFECTIVENESS
OF
TERMI-
NATION.—Any termination under this sub-
paragraph shall not affect discounts for 
applicable drugs of the manufacturer that 
are due under the agreement before the ef-
fective date of its termination. 
‘‘(iv) NOTICE TO THIRD PARTY.—The 
Secretary shall provide notice of such ter-
mination to a third party with a contract 
under subsection (d)(3) within not less 
than 30 days before the effective date of 
such termination. 
‘‘(5) EFFECTIVE
DATE
OF
AGREEMENT.—An 
agreement under this section shall take effect on a 
date determined appropriate by the Secretary, which 
may be at the start of a calendar quarter. 
‘‘(c) DUTIES DESCRIBED.—The duties described in 
this subsection are the following: 
‘‘(1) ADMINISTRATION OF PROGRAM.—Admin-
istering the program, including— 
‘‘(A) the determination of the amount of 
the discounted price of an applicable drug of a 
manufacturer; 
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‘‘(B) the establishment of procedures 
under which discounted prices are provided to 
applicable beneficiaries at pharmacies or by 
mail order service at the point-of-sale of an ap-
plicable drug; 
‘‘(C) the establishment of procedures to 
ensure that, not later than the applicable num-
ber of calendar days after the dispensing of an 
applicable drug by a pharmacy or mail order 
service, the pharmacy or mail order service is 
reimbursed for an amount equal to the dif-
ference between— 
‘‘(i) the negotiated price of the appli-
cable drug; and 
‘‘(ii) the discounted price of the appli-
cable drug; 
‘‘(D) the establishment of procedures to 
ensure that the discounted price for an applica-
ble drug under this section is applied before any 
coverage or financial assistance under other 
health benefit plans or programs that provide 
coverage or financial assistance for the pur-
chase or provision of prescription drug coverage 
on behalf of applicable beneficiaries as the Sec-
retary may specify; and 
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‘‘(E) providing a reasonable dispute resolu-
tion mechanism to resolve disagreements be-
tween manufacturers, applicable beneficiaries, 
and the third party with a contract under sub-
section (d)(3). 
‘‘(2) MONITORING COMPLIANCE.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
monitor compliance by a manufacturer with the 
terms of an agreement under this section. 
‘‘(B) NOTIFICATION.—If a third party 
with a contract under subsection (d)(3) deter-
mines that the manufacturer is not in compli-
ance with such agreement, the third party shall 
notify the Secretary of such noncompliance for 
appropriate enforcement under subsection (e). 
‘‘(3) COLLECTION OF DATA FROM PRESCRIP-
TION DRUG PLANS AND MA–PD PLANS.—The Sec-
retary may collect appropriate data from prescrip-
tion drug plans and MA–PD plans in a timeframe 
that allows for discounted prices to be provided for 
applicable drugs under this section. 
‘‘(d) ADMINISTRATION.— 
‘‘(1) IN GENERAL.—Subject to paragraph (2), 
the Secretary shall provide for the implementation of 
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this section, including the performance of the duties 
described in subsection (c). 
‘‘(2) LIMITATION.—In providing for the imple-
mentation of this section, the Secretary shall not re-
ceive or distribute any funds of a manufacturer 
under the program. 
‘‘(3) CONTRACT
WITH
THIRD
PARTIES.—The 
Secretary shall enter into a contract with 1 or more 
third parties to administer the requirements estab-
lished by the Secretary in order to carry out this 
section. At a minimum, the contract with a third 
party under the preceding sentence shall require 
that the third party— 
‘‘(A) receive and transmit information be-
tween the Secretary, manufacturers, and other 
individuals or entities the Secretary determines 
appropriate; 
‘‘(B) receive, distribute, or facilitate the 
distribution of funds of manufacturers to ap-
propriate individuals or entities in order to 
meet the obligations of manufacturers under 
agreements under this section; 
‘‘(C) provide adequate and timely informa-
tion to manufacturers, consistent with the 
agreement with the manufacturer under this 
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section, as necessary for the manufacturer to 
fulfill its obligations under this section; and 
‘‘(D) permit manufacturers to conduct 
periodic audits, directly or through contracts, of 
the data and information used by the third 
party to determine discounts for applicable 
drugs of the manufacturer under the program. 
‘‘(4) 
PERFORMANCE
REQUIREMENTS.—The 
Secretary shall establish performance requirements 
for a third party with a contract under paragraph 
(3) and safeguards to protect the independence and 
integrity of the activities carried out by the third 
party under the program under this section. 
‘‘(5) ADMINISTRATION.—Chapter 35 of title 44, 
United States Code, shall not apply to the program 
under this section. 
‘‘(6) FUNDING.—For purposes of carrying out 
this section, the Secretary shall provide for the 
transfer, from the Federal Supplementary Medical 
Insurance Trust Fund under section 1841 to the 
Centers for Medicare & Medicaid Services Program 
Management Account, of $4,000,000 for each of fis-
cal years 2021 through 2024, to remain available 
until expended. 
‘‘(e) ENFORCEMENT.— 
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‘‘(1) AUDITS.—Each manufacturer with an 
agreement in effect under this section shall be sub-
ject to periodic audit by the Secretary. 
‘‘(2) CIVIL MONEY PENALTY.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
impose a civil money penalty on a manufacturer 
that fails to provide applicable beneficiaries dis-
counts for applicable drugs of the manufacturer 
in accordance with such agreement for each 
such failure in an amount the Secretary deter-
mines is commensurate with the sum of— 
‘‘(i) the amount that the manufac-
turer would have paid with respect to such 
discounts under the agreement, which will 
then be used to pay the discounts which 
the manufacturer had failed to provide; 
and 
‘‘(ii) 25 percent of such amount. 
‘‘(B) APPLICATION.—The provisions of 
section 1128A (other than subsections (a) 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). 
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‘‘(4) DISCOUNTED PRICE.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), the term ‘discounted price’ 
means 90 percent of the negotiated price of the 
applicable drug of a manufacturer. 
‘‘(B) PHASE-IN FOR CERTAIN DRUGS DIS-
PENSED
FOR
SUBSIDY
ELIGIBLE
INDIVID-
UALS.— 
‘‘(i) IN GENERAL.—In the case of an 
applicable drug of a specified manufacturer 
(as defined in clause (ii)) that is dispensed 
for an applicable beneficiary who is a sub-
sidy eligible individual (as defined in sec-
tion 1860D–14(a)(3), the term ‘discounted 
price’ means the specified LIS percent (as 
defined in clause (iii)) of the negotiated 
price of the applicable drug of the manu-
facturer. 
‘‘(ii) SPECIFIED MANUFACTURER.—In 
this subparagraph, the term ‘specified 
manufacturer’ means a manufacturer of an 
applicable drug for which, in the calendar 
year 2 years prior to the current plan year 
(referred to in this clause as the ‘applicable 
period’), the total reimbursement under 
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conversion, or processing of prescription drug prod-
ucts, either directly or indirectly by extraction from 
substances of natural origin, or independently by 
means of chemical synthesis, or by a combination of 
extraction and chemical synthesis. Such term does 
not include a wholesale distributor of drugs or a re-
tail pharmacy licensed under State law. 
‘‘(6) NEGOTIATED
PRICE.—The term ‘nego-
tiated price’ has the meaning given such term in sec-
tion 1860D–2(d)(1)(B), except that such negotiated 
price shall not include any dispensing fee for the ap-
plicable drug. 
‘‘(7) QUALIFIED RETIREE PRESCRIPTION DRUG 
PLAN.—The term ‘qualified retiree prescription drug 
plan’ has the meaning given such term in section 
1860D–22(a)(2).’’. 
(2) SUNSET OF MEDICARE COVERAGE GAP DIS-
COUNT PROGRAM.—Section 1860D–14A of the So-
cial Security Act (42 U.S.C. 1395–114a) is amend-
ed— 
(A) in subsection (a), in the first sentence, 
by striking ‘‘The Secretary’’ and inserting 
‘‘Subject to subsection (h), the Secretary’’; and 
(B) by adding at the end the following new 
subsection: 
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‘‘(h) SUNSET OF PROGRAM.— 
‘‘(1) IN
GENERAL.—The program shall not 
apply to applicable drugs dispensed on or after Jan-
uary 1, 2024, and, subject to paragraph (2), agree-
ments under this section shall be terminated as of 
such date. 
‘‘(2) CONTINUED APPLICATION FOR APPLICA-
BLE
DRUGS
DISPENSED
PRIOR
TO
SUNSET.—The 
provisions of this section (including all responsibil-
ities and duties) shall continue to apply after Janu-
ary 1, 2024, with respect to applicable drugs dis-
pensed prior to such date.’’. 
(3) INCLUSION OF ACTUARIAL VALUE OF MANU-
FACTURER DISCOUNTS IN BIDS.—Section 1860D–11 
of the Social Security Act (42 U.S.C. 1395w–111) 
is amended— 
(A) in subsection (b)(2)(C)(iii)— 
(i) by striking ‘‘assumptions regarding 
the reinsurance’’ and inserting ‘‘an actu-
arial valuation of— 
‘‘(I) the reinsurance’’; and 
(ii) by adding at the end the fol-
lowing: 
‘‘(II) for 2024 and each subse-
quent year, the manufacturer dis-
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counts provided under section 1860D– 
14B subtracted from the actuarial 
value to produce such bid; and’’; and 
(B) in subsection (c)(1)(C)— 
(i) by striking ‘‘an actuarial valuation 
of the reinsurance’’ and inserting ‘‘an ac-
tuarial valuation of— 
‘‘(i) the reinsurance’’; 
(ii) in clause (i), as added by clause 
(i) of this subparagraph, by adding ‘‘and’’ 
at the end; and 
(iii) by adding at the end the fol-
lowing: 
‘‘(ii) for 2024 and each subsequent 
year, the manufacturer discounts provided 
under section 1860D–14B;’’. 
(4) CLARIFICATION REGARDING EXCLUSION OF 
MANUFACTURER DISCOUNTS FROM TROOP.—Section 
1860D–2(b)(4) of the Social Security Act (42 
U.S.C. 1395w–102(b)(4)) is amended— 
(A) in subparagraph (C), by inserting ‘‘and 
subject to subparagraph (F)’’ after ‘‘subpara-
graph (E)’’; and 
(B) by adding at the end the following new 
subparagraph: 
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‘‘(F) CLARIFICATION REGARDING EXCLU-
SION OF MANUFACTURER DISCOUNTS.—In ap-
plying subparagraph (A), incurred costs shall 
not include any manufacturer discounts pro-
vided under section 1860D–14B.’’. 
(d) DETERMINATION OF ALLOWABLE REINSURANCE 
COSTS.—Section 1860D–15(b) of the Social Security Act 
(42 U.S.C. 1395w–115(b)) is amended— 
(1) in paragraph (2)— 
(A) by striking ‘‘COSTS.—For purposes’’ 
and inserting: ‘‘COSTS.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), for purposes’’; and 
(B) by adding at the end the following new 
subparagraph: 
‘‘(B) INCLUSION OF MANUFACTURER DIS-
COUNTS ON APPLICABLE DRUGS.—For purposes 
of applying subparagraph (A), the term ‘allow-
able reinsurance costs’ shall include the portion 
of the negotiated price (as defined in section 
1860D–14B(g)(6)) of an applicable drug (as 
defined in section 1860D–14B(g)(2)) that was 
paid by a manufacturer under the manufacturer 
discount program under section 1860D–14B.’’; 
and 
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(2) in paragraph (3)— 
(A) in the first sentence, by striking ‘‘For 
purposes’’ and inserting ‘‘Subject to paragraph 
(2)(B), for purposes’’; and 
(B) in the second sentence, by inserting 
‘‘or, in the case of an applicable drug, by a 
manufacturer’’ after ‘‘by the individual or 
under the plan’’. 
(e) UPDATING RISK ADJUSTMENT METHODOLOGIES 
TO ACCOUNT
FOR PART D MODERNIZATION REDE-
SIGN.—Section 1860D–15(c) of the Social Security Act 
(42 U.S.C. 1395w–115(c)) is amended by adding at the 
end the following new paragraph: 
‘‘(3) UPDATING
RISK
ADJUSTMENT
METH-
ODOLOGIES TO ACCOUNT FOR PART D MODERNIZA-
TION REDESIGN.—The Secretary shall update the 
risk adjustment methodologies used to adjust bid 
amounts pursuant to this subsection as appropriate 
to take into account changes in benefits under this 
part pursuant to the amendments made by section 
2 of the Seniors Prescription Drug Relief Act.’’. 
(f) CONDITIONS FOR COVERAGE OF DRUGS UNDER 
THIS PART.—Section 1860D–43 of the Social Security 
Act (42 U.S.C. 1395w–153) is amended— 
(1) in subsection (a)— 
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(A) in paragraph (2), by striking ‘‘and’’ at 
the end; 
(B) in paragraph (3), by striking the pe-
riod at the end and inserting a semicolon; and 
(C) by adding at the end the following new 
paragraphs: 
‘‘(4) participate in the manufacturer discount 
program under section 1860D–14B; 
‘‘(5) have entered into and have in effect an 
agreement described in subsection (b) of such sec-
tion 1860D–14B with the Secretary; and 
‘‘(6) have entered into and have in effect, under 
terms and conditions specified by the Secretary, a 
contract with a third party that the Secretary has 
entered into a contract with under subsection (d)(3) 
of such section 1860D–14B.’’; 
(2) by striking subsection (b) and inserting the 
following: 
‘‘(b) EFFECTIVE DATE.—Paragraphs (1) through (3) 
of subsection (a) shall apply to covered part D drugs dis-
pensed under this part on or after January 1, 2011, and 
before January 1, 2024, and paragraphs (4) through (6) 
of such subsection shall apply to covered part D drugs 
dispensed on or after January 1, 2024.’’; and 
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(3) in subsection (c), by striking paragraph (2) 
and inserting the following: 
‘‘(2) the Secretary determines that in the period 
beginning on January 1, 2011, and ending on De-
cember 31, 2011 (with respect to paragraphs (1) 
through (3) of subsection (a)), or the period begin-
ning on January 1, 2024, and ending December 31, 
2024 (with respect to paragraphs (4) through (6) of 
such subsection), there were extenuating cir-
cumstances.’’. 
(g) CONFORMING AMENDMENTS.— 
(1) Section 1860D–2 of the Social Security Act 
(42 U.S.C. 1395w–102) is amended— 
(A) in subsection (a)(2)(A)(i)(I), by strik-
ing ‘‘, or an increase in the initial’’ and insert-
ing ‘‘or for a year preceding 2024 an increase 
in the initial’’; 
(B) in subsection (c)(1)(C)— 
(i) in the subparagraph heading, by 
striking ‘‘AT
INITIAL
COVERAGE
LIMIT’’; 
and 
(ii) by inserting ‘‘for a year preceding 
2024 or the annual out-of-pocket threshold 
specified in subsection (b)(4)(B) for the 
year for 2024 and each subsequent year’’ 
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after ‘‘subsection (b)(3) for the year’’ each 
place it appears; and 
(C) in subsection (d)(1)(A), by striking ‘‘or 
an initial’’ and inserting ‘‘or for a year pre-
ceding 2024 an initial’’. 
(2) Section 1860D–4(a)(4)(B)(i) of the Social 
Security Act (42 U.S.C. 1395w–104(a)(4)(B)(i)) is 
amended by striking ‘‘the initial’’ and inserting ‘‘for 
a year preceding 2024, the initial’’. 
(3) Section 1860D–14(a) of the Social Security 
Act (42 U.S.C. 1395w–114(a)) is amended— 
(A) in paragraph (1)— 
(i) in subparagraph (C), by striking 
‘‘The continuation’’ and inserting ‘‘For a 
year preceding 2024, the continuation’’; 
(ii) in subparagraph (D)(iii), by strik-
ing ‘‘1860D–2(b)(4)(A)(i)(I)’’ and insert-
ing ‘‘1860D–2(b)(4)(A)(i)(I)(aa)’’; and 
(iii) in subparagraph (E), by striking 
‘‘The elimination’’ and inserting ‘‘For a 
year preceding 2024, the elimination’’; and 
(B) in paragraph (2)— 
(i) in subparagraph (C), by striking 
‘‘The continuation’’ and inserting ‘‘For a 
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year preceding 2024, the continuation’’; 
and 
(ii) in subparagraph (E)— 
(I) by inserting ‘‘for a year pre-
ceding 2024,’’ after ‘‘subsection (c)’’; 
and 
(II) 
by 
striking 
‘‘1860D– 
2(b)(4)(A)(i)(I)’’ 
and 
inserting 
‘‘1860D–2(b)(4)(A)(i)(I)(aa)’’. 
(4) Section 1860D–21(d)(7) of the Social Secu-
rity Act (42 U.S.C. 1395w–131(d)(7)) is amended 
by striking ‘‘section 1860D–2(b)(B)(4)(B)(i)’’ and 
inserting ‘‘section 1860D–2(b)(B)(4)(C)(i)’’. 
(5) Section 1860D–22(a)(2)(A) of the Social 
Security Act (42 U.S.C. 1395w–132(a)(2)(A)) is 
amended— 
(A) by striking ‘‘the value of any discount’’ 
and inserting the following: ‘‘the value of— 
‘‘(i) for years prior to 2024, any dis-
count’’; 
(B) in clause (i), as inserted by subpara-
graph (A) of this paragraph, by striking the pe-
riod at the end and inserting ‘‘; and’’; and 
(C) by adding at the end the following new 
clause: 
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‘‘(ii) for 2024 and each subsequent 
year, any discount provided pursuant to 
section 1860D–14B.’’. 
(6) Section 1860D–41(a)(6) of the Social Secu-
rity Act (42 U.S.C. 1395w–151(a)(6)) is amended— 
(A) by inserting ‘‘for a year before 2024’’ 
after ‘‘1860D–2(b)(3)’’; and 
(B) by inserting ‘‘for such year’’ before the 
period. 
(h) EFFECTIVE DATE.—The amendments made by 
this section shall apply to plan year 2024 and subsequent 
plan years. 
SEC. 210. PUBLIC DISCLOSURE OF DRUG DISCOUNTS AND 
OTHER PHARMACY BENEFIT MANAGER (PBM) 
PROVISIONS. 
(a) PUBLIC DISCLOSURE OF DRUG DISCOUNTS.— 
(1) IN GENERAL.—Section 1150A of the Social 
Security Act (42 U.S.C. 1320b–23) is amended— 
(A) in subsection (c), in the matter pre-
ceding paragraph (1), by striking ‘‘this section’’ 
and inserting ‘‘subsection (b)(1)’’; and 
(B) by adding at the end the following new 
subsection: 
‘‘(e) PUBLIC AVAILABILITY OF CERTAIN INFORMA-
TION.— 
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‘‘(1) IN GENERAL.—Subject to paragraphs (2) 
and (3), in order to allow patients and employers to 
compare PBMs’ ability to negotiate rebates, dis-
counts, and price concessions and the amount of 
such rebates, discounts, and price concessions that 
are passed through to plan sponsors, not later than 
July 1, 2025, the Secretary shall make available on 
the Internet website of the Department of Health 
and Human Services the information provided to the 
Secretary and described in paragraphs (2) and (3) 
of subsection (b) with respect to each PBM. 
‘‘(2) LAG
IN
DATA.—The information made 
available in a plan year under paragraph (1) shall 
not include information with respect to such plan 
year or the two preceding plan years. 
‘‘(3) CONFIDENTIALITY.—The Secretary shall 
ensure that such information is displayed in a man-
ner that prevents the disclosure of information on 
rebates, discounts, and price concessions with re-
spect to an individual drug or an individual PDP 
sponsor, MA organization, or qualified health bene-
fits plan.’’. 
(2) EFFECTIVE DATE.—The amendment made 
by paragraph (1)(A) shall take effect on January 1, 
2025. 
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(b) PLAN AUDIT OF PHARMACY BENEFIT MANAGER 
DATA.—Section 1860D–2(d)(3) of the Social Security Act 
(42 U.S.C. 1395w–102(d)(3)) is amended— 
(1) by striking ‘‘AUDITS.—To protect’’ and in-
serting the following: ‘‘AUDITS.— 
‘‘(A) AUDITS
OF
PLANS
BY
THE
SEC-
RETARY.—To protect’’; and 
(2) by adding at the end the following new sub-
paragraph: 
‘‘(B) AUDITS
OF
PHARMACY
BENEFIT 
MANAGERS BY PDP SPONSORS AND MA ORGANI-
ZATIONS.— 
‘‘(i) IN GENERAL.—Beginning Janu-
ary 1, 2025, in order to ensure that— 
‘‘(I) contracting terms between a 
PDP sponsor offering a prescription 
drug plan or an MA organization of-
fering an MA–PD plan and its con-
tracted or owned pharmacy benefit 
manager are met; and 
‘‘(II) the PDP sponsor and MA 
organization can account for the cost 
of each covered part D drug net of all 
direct and indirect remuneration, 
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the PDP sponsor or MA organization shall 
conduct financial audits. 
‘‘(ii) INDEPENDENT THIRD PARTY.— 
An audit described in clause (i) shall— 
‘‘(I) be conducted by an inde-
pendent third party; and 
‘‘(II) account and reconcile flows 
of funds that determine the net cost 
of covered part D drugs, including di-
rect and indirect remuneration from 
drug manufacturers and pharmacies 
or provided to pharmacies. 
‘‘(iii) REBATE AGREEMENTS.—A PDP 
sponsor and an MA organization shall re-
quire pharmacy benefit managers to make 
rebate contracts with drug manufacturers 
made on their behalf available under audits 
described in clause (i). 
‘‘(iv) 
CONFIDENTIALITY
AGREE-
MENTS.—Audits described in clause (i) 
shall be subject to confidentiality agree-
ments to prevent, except as required under 
clause (vii), the redisclosure of data trans-
mitted under the audit. 
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‘‘(v) FREQUENCY.—A financial audit 
under clause (i) shall be conducted periodi-
cally (but in no case less frequently than 
once every 2 years). 
‘‘(vi) TIMEFRAME FOR PBM TO PRO-
VIDE INFORMATION.—A PDP sponsor and 
an MA organization shall require that a 
pharmacy benefit manager that is being 
audited under clause (i) provide (as part of 
their contracting agreement) the requested 
information to the independent third party 
conducting the audit within 45 days of the 
date of the request. 
‘‘(vii) SUBMISSION OF AUDIT REPORTS 
TO THE SECRETARY.— 
‘‘(I) IN GENERAL.—A PDP spon-
sor and an MA organization shall sub-
mit to the Secretary the final report 
on any audit conducted under clause 
(i) within 30 days of the PDP sponsor 
or MA organization receiving the re-
port from the independent third party 
conducting the audit. 
‘‘(II) REVIEW.—The Secretary 
shall review final reports submitted 
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under clause (i) to determine the ex-
tent to which the goals specified in 
subclauses (I) and (II) of subpara-
graph (B)(i) are met. 
‘‘(III) CONFIDENTIALITY.—Not-
withstanding any other provision of 
law, information disclosed in a report 
submitted under clause (i) related to 
the net cost of a covered part D drug 
is confidential and shall not be dis-
closed by the Secretary or a Medicare 
contractor. 
‘‘(viii) 
NOTICE
OF
NONCOMPLI-
ANCE.—A PDP sponsor and an MA orga-
nization shall notify the Secretary if any 
pharmacy benefit manager is not com-
plying with requests for access to informa-
tion required under an audit under clause 
(i). 
‘‘(ix) CIVIL MONETARY PENALTIES.— 
‘‘(I) IN
GENERAL.—Subject to 
subclause (II), if the Secretary deter-
mines that a PDP sponsor or an MA 
organization has failed to conduct an 
audit under clause (i), the Secretary 
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may impose a civil monetary penalty 
of not more than $10,000 for each 
day of such noncompliance. 
‘‘(II) PROCEDURE.—The provi-
sions of section 1128A, other than 
subsections (a) and (b) and the first 
sentence of subsection (c)(1) of such 
section, shall apply to civil monetary 
penalties under this clause in the 
same manner as such provisions apply 
to a penalty or proceeding under sec-
tion 1128A.’’. 
(c) DISCLOSURE TO PHARMACY OF POST-POINT-OF- 
SALE PHARMACY PRICE CONCESSIONS AND INCENTIVE 
PAYMENTS.—Section 1860D–2(d)(2) of the Social Secu-
rity Act (42 U.S.C. 1395w–102(d)(2)) is amended— 
(1) by striking ‘‘DISCLOSURE.—A PDP spon-
sor’’ and inserting the following: ‘‘DISCLOSURE.— 
‘‘(A) TO THE SECRETARY.—A PDP spon-
sor’’; and 
(2) by adding at the end the following new sub-
paragraph: 
‘‘(B) TO PHARMACIES.— 
‘‘(i) IN
GENERAL.—For plan year 
2025 and subsequent plan years, a PDP 
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sponsor offering a prescription drug plan 
and an MA organization offering an MA– 
PD plan shall report any pharmacy price 
concession or incentive payment that oc-
curs with respect to a pharmacy after pay-
ment for covered part D drugs at the 
point-of-sale, including by an intermediary 
organization with which a PDP sponsor or 
MA organization has contracted, to the 
pharmacy. 
‘‘(ii) TIMING.—The reporting of price 
concessions and incentive payments to a 
pharmacy under clause (i) shall be made 
on a periodic basis (but in no case less fre-
quently than annually). 
‘‘(iii) CLAIM
LEVEL.—The reporting 
of price concessions and incentive pay-
ments to a pharmacy under clause (i) shall 
be at the claim level or approximated at 
the claim level if the price concession or in-
centive payment was applied at a level 
other than at the claim level.’’. 
(d) DISCLOSURE OF P&T COMMITTEE CONFLICTS OF 
INTEREST.— 
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(1) IN
GENERAL.—Section 1860D–4(b)(3)(A) 
of the Social Security Act (42 U.S.C. 1395w– 
104(b)(3)(A)) is amended by adding at the end the 
following new clause: 
‘‘(iii) DISCLOSURE OF CONFLICTS OF 
INTEREST.—With respect to plan year 
2025 and subsequent plan years, a PDP 
sponsor of a prescription drug plan and an 
MA organization offering an MA–PD plan 
shall, as part of its bid submission under 
section 1860D–11(b), provide the Sec-
retary with a completed statement of fi-
nancial conflicts of interest, including with 
manufacturers, from each member of any 
pharmacy and therapeutic committee used 
by the sponsor or organization pursuant to 
this paragraph.’’. 
(2) 
INCLUSION
IN
BID.—Section 
1860D– 
11(b)(2) of the Social Security Act (42 U.S.C. 
1395w–111(b)(2)) is amended— 
(A) by redesignating subparagraph (F) as 
subparagraph (G); and 
(B) by inserting after subparagraph (E) 
the following new subparagraph: 
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‘‘(F) P&T COMMITTEE CONFLICTS OF IN-
TEREST.—The information required to be dis-
closed under section 1860D–4(b)(3)(A)(iii).’’. 
(e) INFORMATION ON DIRECT AND INDIRECT REMU-
NERATION REQUIRED TO BE INCLUDED IN BID.—Section 
1860D–11(b) of the Social Security Act (42 U.S.C. 
1395w–111(b)) is amended— 
(1) in paragraph (1), by adding at the end the 
following new sentence: ‘‘With respect to actual 
amounts of direct and indirect remuneration sub-
mitted pursuant to clause (v) of paragraph (2), such 
amounts shall be consistent with data reported to 
the Secretary in a prior year.’’; and 
(2) in paragraph (2)(C)— 
(A) in clause (iii), by striking ‘‘and’’ at the 
end; 
(B) in clause (iv), by striking the period at 
the end and inserting the following: ‘‘, and, with 
respect to plan year 2025 and subsequent plan 
years, actual and projected administrative ex-
penses assumed in the bid, categorized by the 
type of such expense, including actual and pro-
jected price concessions retained by a pharmacy 
benefit manager; and’’; and 
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(C) by adding at the end the following new 
clause: 
‘‘(v) with respect to plan year 2025 
and subsequent plan years, actual and pro-
jected direct and indirect remuneration, 
categorized as received from each of the 
following: 
‘‘(I) A pharmacy. 
‘‘(II) A manufacturer. 
‘‘(III) A pharmacy benefit man-
ager. 
‘‘(IV) Other entities, as deter-
mined by the Secretary.’’. 
SEC. 211. PUBLIC DISCLOSURE OF DIRECT AND INDIRECT 
REMUNERATION REVIEW AND AUDIT RE-
SULTS. 
Section 1860D–42 of the Social Security Act (42 
U.S.C. 1395w–152) is amended by adding at the end the 
following new subsection: 
‘‘(e) PUBLIC DISCLOSURE OF DIRECT AND INDIRECT 
REMUNERATION REVIEW
AND FINANCIAL AUDIT RE-
SULTS.— 
‘‘(1) DIR REVIEW RESULTS.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), in 2023 and each subse-
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quent year, the Secretary shall make available 
to the public on the Internet website of the 
Centers for Medicare & Medicaid Services infor-
mation on discrepancies related to summary 
and detailed DIR reports submitted by PDP 
sponsors pursuant to section 1860D–15 across 
all prescription drug plans based on the most 
recent data available. Information made avail-
able under this subparagraph shall include the 
following: 
‘‘(i) The number of potential errors 
identified by the Secretary for PDP spon-
sors to review. 
‘‘(ii) The extent to which PDP spon-
sors resubmitted DIR reports to make 
changes for previous contract years. 
‘‘(iii) The extent to which resubmitted 
DIR reports resulted in an increase or de-
crease in DIR in a previous contract year. 
‘‘(B) EXCLUSION
OF
CERTAIN
SUBMIS-
SIONS IN CALCULATION.—The Secretary shall 
exclude any information in DIR reports sub-
mitted with respect to PACE programs under 
section 1894 (pursuant to section 1860D–21(f)) 
and qualified retiree prescription drug plans (as 
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defined in section 1860D–22(a)(2)) from the 
information that is made available to the public 
under subparagraph (A). 
‘‘(2) FINANCIAL AUDIT RESULTS.—In 2023 and 
each subsequent year, the Secretary shall make 
available to the public on the Internet website of the 
Centers for Medicare & Medicaid Services the results 
of DIR audits required under section 1860D– 
12(b)(3)(C). Information made available under this 
paragraph shall include the following: 
‘‘(A) With respect to the year, the number 
of PDP sponsors that received each of the fol-
lowing: 
‘‘(i) A notice of observations or find-
ings that required the sponsor to make 
DIR report corrections. 
‘‘(ii) An unqualified audit opinion that 
renders the audit closed. 
‘‘(iii) A qualified audit opinion that 
requires the sponsor to submit a corrective 
action plan to the Secretary. 
‘‘(iv) An adverse opinion, with a de-
scription of the types of actions that the 
Secretary takes when issuing an adverse 
opinion. 
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‘‘(B) With respect to a preceding year: 
‘‘(i) The number of PDP sponsors 
that reopened a previously closed reconcili-
ation as a result of an audit, including as 
a result of DIR changes. 
‘‘(ii) The extent to which the Sec-
retary recouped an overpayment or made 
an underpayment as a result of a reopen-
ing of a previously closed reconciliation. 
‘‘(3) DEFINITION
OF
DIR.—For purposes of 
this subsection, the term ‘DIR’ means direct and in-
direct remuneration as defined in section 423.308 of 
title 42, Code of Federal Regulations, or any suc-
cessor regulation.’’. 
SEC. 212. IMPROVEMENTS TO PROVISION OF PARTS A AND 
B CLAIMS DATA TO PRESCRIPTION DRUG 
PLANS. 
(a) DATA USE.— 
(1) IN
GENERAL.—Paragraph (6) of section 
1860D–4(c) of the Social Security Act (42 U.S.C. 
1395w–104(c)), as added by section 50354 of divi-
sion E of the Bipartisan Budget Act of 2018 (Public 
Law 115–123), relating to providing prescription 
drug plans with parts A and B claims data to pro-
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mote the appropriate use of medications and im-
prove health outcomes, is amended— 
(A) in subparagraph (B)— 
(i) by redesignating clauses (i), (ii), 
and (iii) as subclauses (I), (II), and (III), 
respectively, and moving such subclauses 2 
ems to the right; 
(ii) by striking ‘‘PURPOSES.—A PDP 
sponsor’’ and inserting ‘‘PURPOSES.— 
‘‘(i) IN GENERAL.—A PDP sponsor.’’; 
and 
(iii) by adding at the end the fol-
lowing new clause: 
‘‘(ii) CLARIFICATION.—The limitation 
on data use under subparagraph (C)(i) 
shall not apply to the extent that the PDP 
sponsor is using the data provided to carry 
out any of the purposes described in clause 
(i).’’; and 
(B) in subparagraph (C)(i), by striking 
‘‘To inform’’ and inserting ‘‘Subject to subpara-
graph (B)(ii), to inform’’. 
(2) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to plan years begin-
ning on or after January 1, 2025. 
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(b) MANNER OF PROVISION.—Subparagraph (D) of 
such paragraph (6) is amended— 
(1) by striking ‘‘DESCRIBED.—The data de-
scribed in this clause’’ and inserting ‘‘DESCRIBED.— 
‘‘(i) IN
GENERAL.—The data de-
scribed in this subparagraph’’; and 
(2) by adding at the end the following new 
clause: 
‘‘(ii) MANNER OF PROVISION.— 
‘‘(I) IN
GENERAL.—Such data 
may be provided pursuant to this 
paragraph in the same manner as 
data under the Part D Enhanced 
Medication 
Therapy 
Management 
model tested under section 1115A, 
through 
Application 
Programming 
Interface, or in another manner as de-
termined by the Secretary. 
‘‘(II) 
IMPLEMENTATION.—Not-
withstanding any other provision of 
law, the Secretary may implement this 
clause by program instruction or oth-
erwise.’’. 
(c) TECHNICAL CORRECTION.—Such paragraph (6) 
is redesignated as paragraph (7). 
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SEC. 213. MEDICARE PART D REBATE BY MANUFACTURERS. 
(a) IN GENERAL.—Part D of title XVIII of the Social 
Security Act is amended by inserting after section 1860D– 
14A (42 U.S.C. 1395w–114a) the following new section: 
‘‘SEC. 1860D–14B. MANUFACTURER REBATE FOR CERTAIN 
DRUGS WITH PRICES INCREASING FASTER 
THAN INFLATION. 
‘‘(a) IN GENERAL.— 
‘‘(1) IN GENERAL.—Subject to the provisions of 
this section, in order for coverage to be available 
under this part for a part D rebatable drug (as de-
fined in subsection (h)(1)) of a manufacturer (as de-
fined in section 1927(k)(5)) dispensed during an ap-
plicable year, the manufacturer must have entered 
into and have in effect an agreement described in 
subsection (b). 
‘‘(2) AUTHORIZING COVERAGE FOR DRUGS NOT 
COVERED
UNDER
AGREEMENTS.—Paragraph (1) 
shall not apply to the dispensing of a covered part 
D drug if— 
‘‘(A) the Secretary has made a determina-
tion that the availability of the drug is essential 
to the health of beneficiaries under this part; or 
‘‘(B) the Secretary determines that in the 
period beginning on January 1, 2025, and end-
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ing on December 31, 2025, there were extenu-
ating circumstances. 
‘‘(3) APPLICABLE YEAR.—For purposes of this 
section the term ‘applicable year’ means a year be-
ginning with 2025. 
‘‘(b) AGREEMENTS.— 
‘‘(1) TERMS OF AGREEMENT.—An agreement 
described in this subsection, with respect to a manu-
facturer of a part D rebatable drug, is an agreement 
under which the following shall apply: 
‘‘(A) SECRETARIAL PROVISION OF INFOR-
MATION.—Not later than 9 months after the 
end of each applicable year with respect to 
which the agreement is in effect, the Secretary, 
for each part D rebatable drug of the manufac-
turer, shall report to the manufacturer the fol-
lowing for such year: 
‘‘(i) Information on the total number 
of units (as defined in subsection (h)(2)) 
for each dosage form and strength with re-
spect to such part D rebatable drug and 
year. 
‘‘(ii) Information on the amount (if 
any) of the excess average manufacturer 
price increase described in subsection 
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(c)(1)(B) for each dosage form and 
strength with respect to such drug and 
year. 
‘‘(iii) The rebate amount specified 
under subsection (c) for each dosage form 
and strength with respect to such drug and 
year. 
‘‘(B) MANUFACTURER
REQUIREMENTS.— 
For each applicable year with respect to which 
the agreement is in effect, the manufacturer of 
the part D rebatable drug, for each dosage 
form and strength with respect to such drug, 
not later than 30 days after the date of receipt 
from the Secretary of the information described 
in subparagraph (A) for such year, shall pro-
vide to the Secretary a rebate that is equal to 
the amount specified in subsection (c) for such 
dosage form and strength with respect to such 
drug for such year. 
‘‘(2) LENGTH OF AGREEMENT.— 
‘‘(A) IN GENERAL.—An agreement under 
this section, with respect to a part D rebatable 
drug, shall be effective for an initial period of 
not less than one year and shall be automati-
cally renewed for a period of not less than one 
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year unless terminated under subparagraph 
(B). 
‘‘(B) TERMINATION.— 
‘‘(i) BY SECRETARY.—The Secretary 
may provide for termination of an agree-
ment under this section for violation of the 
requirements of the agreement or other 
good cause shown. Such termination shall 
not be effective earlier than 30 days after 
the date of notice of such termination. The 
Secretary shall provide, upon request, a 
manufacturer with a hearing concerning 
such a termination, but such hearing shall 
not delay the effective date of the termi-
nation. 
‘‘(ii) BY A MANUFACTURER.—A man-
ufacturer may terminate an agreement 
under this section for any reason. Any 
such termination shall be effective, with re-
spect to a plan year— 
‘‘(I) if the termination occurs be-
fore January 30 of the plan year, as 
of the day after the end of the plan 
year; and 
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‘‘(II) if the termination occurs on 
or after January 30 of the plan year, 
as of the day after the end of the suc-
ceeding plan year. 
‘‘(C) EFFECTIVENESS OF TERMINATION.— 
Any termination under this paragraph shall not 
affect rebates due under the agreement under 
this section before the effective date of its ter-
mination. 
‘‘(D) DELAY
BEFORE
REENTRY.—In the 
case of any agreement under this section with 
a manufacturer that is terminated in a plan 
year, the Secretary may not enter into another 
such agreement with the manufacturer (or a 
successor manufacturer) before the subsequent 
plan year, unless the Secretary finds good cause 
for an earlier reinstatement of such an agree-
ment. 
‘‘(c) REBATE AMOUNT.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the amount specified in this subsection for a 
dosage form and strength with respect to a part D 
rebatable drug and applicable year is, subject to sub-
paragraphs (B) and (C) of paragraph (5), the 
amount equal to the product of— 
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‘‘(B) the ratio of— 
‘‘(i) the total number of units of such 
dosage form and strength dispensed during 
each such calendar quarter of such year; to 
‘‘(ii) the total number of units of such 
dosage form and strength dispensed during 
such year. 
‘‘(3) DETERMINATION OF INFLATION-ADJUSTED 
PAYMENT AMOUNT.—The inflation-adjusted payment 
amount determined under this paragraph for a dos-
age form and strength with respect to a part D 
rebatable drug for an applicable year, subject to sub-
paragraphs (A) and (D) of paragraph (5), is— 
‘‘(A) the benchmark year manufacturer 
price determined under paragraph (4) for such 
dosage form and strength with respect to such 
drug and an applicable year; increased by 
‘‘(B) the percentage by which the applica-
ble year CPI–U (as defined in subsection 
(h)(5)) for the applicable year exceeds the 
benchmark period CPI–U (as defined in sub-
section (h)(4)). 
‘‘(4) DETERMINATION
OF
BENCHMARK
YEAR 
MANUFACTURER PRICE.—The benchmark year man-
ufacturer price determined under this paragraph for 
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a dosage form and strength, with respect to a part 
D rebatable drug and an applicable year, is the sum 
of the products of— 
‘‘(A) the average manufacturer price (as 
defined in subsection (h)(6)) of such dosage 
form and strength, as calculated for a unit of 
such drug, with respect to each of the calendar 
quarters of the payment amount benchmark 
year (as defined in subsection (h)(3)); and 
‘‘(B) the ratio of— 
‘‘(i) the total number of units of such 
dosage form and strength dispensed during 
each such calendar quarter of such pay-
ment amount benchmark year; to 
‘‘(ii) the total number of units of such 
dosage form and strength dispensed during 
such payment amount benchmark year. 
‘‘(5) SPECIAL TREATMENT OF CERTAIN DRUGS 
AND EXEMPTION.— 
‘‘(A) SUBSEQUENTLY APPROVED DRUGS.— 
In the case of a part D rebatable drug first ap-
proved or licensed by the Food and Drug Ad-
ministration after January 1, 2016, subpara-
graphs (A) and (B) of paragraph (4) shall be 
applied as if the term ‘payment amount bench-
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mark year’ were defined under subsection 
(h)(3) as the first calendar year beginning after 
the day on which the drug was first marketed 
by any manufacturer and subparagraph (B) of 
paragraph (3) shall be applied as if the term 
‘benchmark period CPI–U’ were defined under 
subsection (h)(4) as if the reference to ‘January 
2016’ under such subsection were a reference to 
‘January of the first year beginning after the 
date on which the drug was first marketed by 
any manufacturer’. 
‘‘(B) EXEMPTION FOR SHORTAGES.—The 
Secretary may reduce or waive the rebate under 
paragraph (1) with respect to a part D 
rebatable drug that is described as currently in 
shortage on the shortage list in effect under 
section 506E of the Federal Food, Drug, and 
Cosmetic Act or in the case of other exigent cir-
cumstances, as determined by the Secretary. 
‘‘(C) TREATMENT
OF
NEW
FORMULA-
TIONS.— 
‘‘(i) IN GENERAL.—In the case of a 
part D rebatable drug that is a line exten-
sion of a part D rebatable drug that is an 
oral solid dosage form, the Secretary shall 
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establish a formula for determining the 
amount specified in this subsection with 
respect to such part D rebatable drug and 
an applicable year with consideration of 
the original part D rebatable drug. 
‘‘(ii) LINE EXTENSION DEFINED.—In 
this subparagraph, the term ‘line exten-
sion’ means, with respect to a part D 
rebatable drug, a new formulation of the 
drug (as determined by the Secretary), 
such as an extended release formulation, 
but does not include an abuse-deterrent 
formulation of the drug (as determined by 
the Secretary), regardless of whether such 
abuse-deterrent formulation is an extended 
release formulation. 
‘‘(D) SELECTED DRUGS.—In the case of a 
part D rebatable drug that is a selected drug 
(as defined in section 1192(c)) for a price appli-
cability 
period 
(as 
defined 
in 
section 
1191(b)(2))— 
‘‘(i) for plan years during such period 
for which a maximum fair price (as defined 
in section 1191(c)(2)) for such drug has 
been determined and is applied under part 
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100 
E of title XI, the rebate under subsection 
(b)(1)(B) shall be waived; and 
‘‘(ii) in the case such drug is deter-
mined (pursuant to such section 1192(c)) 
to no longer be a selected drug, for each 
applicable year beginning after the price 
applicability period with respect to such 
drug, subparagraphs (A) and (B) of para-
graph (4) shall be applied as if the term 
‘payment amount benchmark year’ were 
defined under subsection (h)(3) as the last 
year beginning during such price applica-
bility period with respect to such selected 
drug and subparagraph (B) of paragraph 
(3) shall be applied as if the term ‘bench-
mark period CPI–U’ were defined under 
subsection (h)(4) as if the reference to 
‘January 2016’ under such subsection were 
a reference to January of the last year be-
ginning during such price applicability pe-
riod with respect to such drug. 
‘‘(d) REBATE DEPOSITS.—Amounts paid as rebates 
under subsection (c) shall be deposited into the Medicare 
Prescription Drug Account in the Federal Supplementary 
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101 
Medical Insurance Trust Fund established under section 
1841. 
‘‘(e) INFORMATION.—For purposes of carrying out 
this section, the Secretary shall use information submitted 
by manufacturers under section 1927(b)(3). 
‘‘(f) CIVIL MONEY PENALTY.—In the case of a man-
ufacturer of a part D rebatable drug with an agreement 
in effect under this section who has failed to comply with 
the terms of the agreement under subsection (b)(1)(B) 
with respect to such drug for an applicable year, the Sec-
retary may impose a civil money penalty on such manufac-
turer in an amount equal to 125 percent of the amount 
specified in subsection (c) for such drug for such year. 
The provisions of section 1128A (other than subsections 
(a) (with respect to amounts of penalties or additional as-
sessments) and (b)) shall apply to a civil money penalty 
under this subsection in the same manner as such provi-
sions apply to a penalty or proceeding under section 
1128A(a). 
‘‘(g) JUDICIAL REVIEW.—There shall be no judicial 
review of the following: 
‘‘(1) The determination of units under this sec-
tion. 
‘‘(2) The determination of whether a drug is a 
part D rebatable drug under this section. 
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102 
‘‘(3) The calculation of the rebate amount 
under this section. 
‘‘(h) DEFINITIONS.—In this section: 
‘‘(1) PART D REBATABLE DRUG DEFINED.— 
‘‘(A) IN
GENERAL.—The term ‘part D 
rebatable drug’ means a drug or biological that 
would (without application of this section) be a 
covered part D drug, except such term shall, 
with respect to an applicable year, not include 
such a drug or biological if the average annual 
total cost under this part for such year per in-
dividual who uses such a drug or biological, as 
determined by the Secretary, is less than, sub-
ject to subparagraph (B), $100, as determined 
by the Secretary using the most recent data 
available or, if data is not available, as esti-
mated by the Secretary. 
‘‘(B) INCREASE.—The dollar amount ap-
plied under subparagraph (A)— 
‘‘(i) for 2026, shall be the dollar 
amount specified under such subparagraph 
for 2025, increased by the percentage in-
crease in the consumer price index for all 
urban consumers (United States city aver-
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103 
age) for the 12-month period beginning 
with January of 2025; and 
‘‘(ii) for a subsequent year, shall be 
the dollar amount specified in this sub-
paragraph for the previous year, increased 
by the percentage increase in the consumer 
price index for all urban consumers 
(United States city average) for the 12- 
month period beginning with January 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. 
‘‘(2) UNIT DEFINED.—The term ‘unit’ means, 
with respect to a part D rebatable drug, the lowest 
identifiable quantity (such as a capsule or tablet, 
milligram of molecules, or grams) of the part D 
rebatable drug that is dispensed to individuals under 
this part. 
‘‘(3) PAYMENT AMOUNT BENCHMARK YEAR.— 
The term ‘payment amount benchmark year’ means 
the year beginning January 1, 2016. 
‘‘(4) BENCHMARK
PERIOD
CPI–U.—The term 
‘benchmark period CPI–U’ means the consumer 
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104 
price index for all urban consumers (United States 
city average) for January 2016. 
‘‘(5) APPLICABLE YEAR CPI–U.—The term ‘ap-
plicable year CPI–U’ means, with respect to an ap-
plicable year, the consumer price index for all urban 
consumers (United States city average) for January 
of such year. 
‘‘(6) AVERAGE
MANUFACTURER
PRICE.—The 
term ‘average manufacturer price’ has the meaning, 
with respect to a part D rebatable drug of a manu-
facturer, given such term in section 1927(k)(1), with 
respect to a covered outpatient drug of a manufac-
turer for a rebate period under section 1927.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) TO
PART
B
ASP
CALCULATION.—Section 
1847A(c)(3) of the Social Security Act (42 U.S.C. 
1395w–3a(c)(3)), as amended by section 201(c)(1), 
is further amended by striking ‘‘section 1927 or sec-
tion 1834(x)’’ and inserting ‘‘section 1927, section 
1834(x), or section 1860D–14B’’. 
(2) EXCLUDING PART D DRUG INFLATION RE-
BATE
FROM
BEST
PRICE.—Section 
1927(c)(1)(C)(ii)(I) of the Social Security Act (42 
U.S.C. 1396r–8(c)(1)(C)(ii)(I)), as amended by sec-
tion 201(c)(2), is further amended by striking ‘‘or 
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105 
section 1834(x)’’ and inserting ‘‘, section 1834(x), or 
section 1860D–14B’’. 
(3) COORDINATION WITH MEDICAID REBATE IN-
FORMATION DISCLOSURE.—Section 1927(b)(3)(D)(i) 
of the Social Security Act (42 U.S.C. 1396r– 
8(b)(3)(D)(i)), as amended by section 201(c)(3), is 
further amended by striking ‘‘or section 1834(x)’’ 
and inserting ‘‘, section 1834(x), or section 1860D– 
14B’’. 
SEC. 214. PROHIBITING BRANDING ON PART D BENEFIT 
CARDS. 
(a) IN GENERAL.—Section 1851(j)(2)(B) of the So-
cial Security Act (42 U.S.C. 1395w–21(j)(2)(B)) is 
amended by striking ‘‘co-branded network provider’’ and 
inserting ‘‘co-branded, co-owned, or affiliated network pro-
vider, pharmacy, or pharmacy benefit manager’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to plan years beginning on or 
after January 1, 2025. 
SEC. 215. REQUIRING PRESCRIPTION DRUG PLANS AND 
MA–PD 
PLANS 
TO 
REPORT 
POTENTIAL 
FRAUD, WASTE, AND ABUSE TO THE SEC-
RETARY OF HHS. 
Section 1860D–4 of the Social Security Act (42 
U.S.C. 1395w–104), as amended by section 225, is 
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106 
amended by adding at the end the following new sub-
section: 
‘‘(p) REPORTING POTENTIAL FRAUD, WASTE, AND 
ABUSE.—Beginning January 1, 2024, the PDP sponsor 
of a prescription drug plan shall report to the Secretary, 
as specified by the Secretary— 
‘‘(1) any substantiated or suspicious activities 
(as defined by the Secretary) with respect to the 
program under this part as it relates to fraud, 
waste, and abuse; and 
‘‘(2) any steps made by the PDP sponsor after 
identifying such activities to take corrective ac-
tions.’’. 
SEC. 216. ESTABLISHMENT OF PHARMACY QUALITY MEAS-
URES UNDER MEDICARE PART D. 
Section 1860D–4(c) of the Social Security Act (42 
U.S.C. 1395w–104(c)), as amended by section 226, is 
amended by adding at the end the following new para-
graph: 
‘‘(8) APPLICATION
OF
PHARMACY
QUALITY 
MEASURES.— 
‘‘(A) IN GENERAL.—A PDP sponsor that 
implements incentive payments to a pharmacy 
or price concessions paid by a pharmacy based 
on quality measures shall use measures estab-
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107 
lished or approved by the Secretary under sub-
paragraph (B) with respect to payment for cov-
ered part D drugs dispensed by such pharmacy. 
‘‘(B) 
STANDARD
PHARMACY
QUALITY 
MEASURES.—The Secretary shall establish or 
approve standard quality measures from a con-
sensus and evidence-based organization for pay-
ments described in subparagraph (A). Such 
measures shall focus on patient health outcomes 
and be based on proven criteria measuring 
pharmacy performance. 
‘‘(C) EFFECTIVE DATE.—The requirement 
under subparagraph (A) shall take effect for 
plan years beginning on or after January 1, 
2026, or such earlier date specified by the Sec-
retary if the Secretary determines there are suf-
ficient measures established or approved under 
subparagraph (B) to meet the requirement 
under subparagraph (A).’’. 
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108 
SEC. 217. ADDITION OF NEW MEASURES BASED ON ACCESS 
TO BIOSIMILAR BIOLOGICAL PRODUCTS TO 
THE 5-STAR RATING SYSTEM UNDER MEDI-
CARE ADVANTAGE. 
(a) IN GENERAL.—Section 1853(o)(4) of the Social 
Security Act (42 U.S.C. 1395w–23(o)(4)) is amended by 
adding at the end the following new subparagraph: 
‘‘(E) ADDITION OF NEW MEASURES BASED 
ON ACCESS TO BIOSIMILAR BIOLOGICAL PROD-
UCTS.— 
‘‘(i) IN
GENERAL.—For 2028 and 
subsequent years, the Secretary shall add a 
new set of measures to the 5-star rating 
system based on access to biosimilar bio-
logical products covered under part B and, 
in the case of MA–PD plans, such prod-
ucts that are covered part D drugs. Such 
measures shall assess the impact a plan’s 
benefit structure may have on enrollees’ 
utilization of or ability to access biosimilar 
biological products, including in compari-
son to the reference biological product, and 
shall include measures, as applicable, with 
respect to the following: 
‘‘(I) 
COVERAGE.—Assessing 
whether a biosimilar biological prod-
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110 
‘‘(iii) PROTECTING
PATIENT
INTER-
ESTS.—In developing such measures, the 
Secretary shall ensure that each measure 
developed 
to 
address 
coverage, 
preferencing, or utilization management is 
constructed such that patients retain ac-
cess to appropriate therapeutic options 
without undue administrative burden.’’. 
(b) CLARIFICATION REGARDING APPLICATION
TO 
PRESCRIPTION DRUG PLANS.—To the extent the Sec-
retary of Health and Human Services applies the 5-star 
rating system under section 1853(o)(4) of the Social Secu-
rity Act (42 U.S.C. 1395w–23(o)(4)), or a similar system, 
to prescription drug plans under part D of title XVIII of 
such Act, the provisions of subparagraph (E) of such sec-
tion, as added by subsection (a) of this section, shall apply 
under the system with respect to such plans in the same 
manner as such provisions apply to the 5-star rating sys-
tem under such section 1853(o)(4). 
SEC. 218. HHS STUDY AND REPORT ON THE INFLUENCE OF 
PHARMACEUTICAL MANUFACTURER THIRD- 
PARTY REIMBURSEMENT HUBS ON HEALTH 
CARE PROVIDERS WHO PRESCRIBE THEIR 
DRUGS AND BIOLOGICALS. 
(a) STUDY.— 
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(1) IN GENERAL.—The Secretary of Health and 
Human Services (in this section referred to as the 
‘‘Secretary’’) shall conduct a study on the influence 
of pharmaceutical manufacturer distribution models 
that provide third-party reimbursement hub services 
on health care providers who prescribe the manufac-
turer’s drugs and biologicals, including for Medicare 
part D beneficiaries. 
(2) REQUIREMENTS.—The study under para-
graph (1) shall include an analysis of the following: 
(A) The influence of pharmaceutical manu-
facturer distribution models that provide third- 
party reimbursement hub services to health care 
providers who prescribe the manufacturer’s 
drugs and biologicals, including— 
(i) the operations of pharmaceutical 
manufacturer distribution models that pro-
vide reimbursement hub services for health 
care providers who prescribe the manufac-
turer’s products; 
(ii) Federal laws affecting these phar-
maceutical manufacturer distribution mod-
els; and 
(iii) whether hub services could im-
properly incentivize health care providers 
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to deem a drug or biological as medically 
necessary under section 423.578 of title 
42, Code of Federal Regulations. 
(B) Other areas determined appropriate by 
the Secretary. 
(b) REPORT.—Not later than January 1, 2024, the 
Secretary shall submit to Congress a report on the study 
conducted under subsection (a), together with rec-
ommendations for such legislation and administrative ac-
tion as the Secretary determines appropriate. 
(c) CONSULTATION.—In conducting the study under 
subsection (a) and preparing the report under subsection 
(b), the Secretary shall consult with the Attorney General. 
SEC. 219. ESTABLISHING A MONTHLY CAP ON BENEFICIARY 
INCURRED COSTS FOR INSULIN PRODUCTS 
AND 
SUPPLIES 
UNDER 
A 
PRESCRIPTION 
DRUG PLAN OR MA–PD PLAN. 
(a) IN GENERAL.—Section 1860D–2 of the Social 
Security Act (42 U.S.C. 1395w–102), as amended by sec-
tions 121 and 133, is further amended— 
(1) in subsection (b)(2)— 
(A) in subparagraph (A), by striking ‘‘and 
(E)’’ and inserting ‘‘(E), and (F)’’; 
(B) in subparagraph (B), by striking ‘‘and 
(D)’’ and inserting ‘‘(D), and (F)’’; and 
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(C) by adding at the end the following new 
subparagraph: 
‘‘(F) CAP ON INCURRED COSTS FOR INSU-
LIN PRODUCTS AND SUPPLIES.— 
‘‘(i) IN GENERAL.—The coverage pro-
vides benefits, for costs above the annual 
deductible specified in paragraph (1) and 
up to the annual out-of-pocket threshold 
described in paragraph (4)(B) and with re-
spect to a month (beginning with January 
of 2022), with cost sharing that is equal to 
$0 for a specified covered part D drug (as 
defined in clause (iii)) furnished to an indi-
vidual who has incurred costs during such 
month with respect to specified covered 
part D drugs equal to— 
‘‘(I) for months occurring in 
2022, $50; or 
‘‘(II) for months occurring in a 
subsequent year, the amount applica-
ble under this clause for months oc-
curring in the year preceding such 
subsequent year, increased by the an-
nual percentage increase specified in 
paragraph (6) for such subsequent 
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year and rounded to the nearest dol-
lar. 
‘‘(ii) APPLICATION.—The provisions 
of clauses (i) through (iii) of paragraph 
(4)(C) shall apply with respect to the de-
termination of the incurred costs for speci-
fied covered part D drugs for purposes of 
clause (i) in the same manner as such pro-
visions apply with respect to the deter-
mination of incurred costs for covered part 
D drugs for purposes of paragraph (4)(A). 
‘‘(iii) SPECIFIED
COVERED
PART
D 
DRUG.—For purposes of this subpara-
graph, the term ‘specified covered part D 
drug’ means a covered part D drug that 
is— 
‘‘(I) insulin; or 
‘‘(II) a medical supply associated 
with the injection of insulin (as de-
fined in regulations of the Secretary 
promulgated pursuant to subsection 
(e)(1)(B)).’’; and 
(2) in subsection (c), by adding at the end the 
following new paragraph: 
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‘‘(5) SAME PROTECTION WITH RESPECT TO EX-
PENDITURES FOR INSULIN AND CERTAIN MEDICAL 
SUPPLIES.—The coverage provides the coverage re-
quired under subsection (b)(2)(F).’’. 
(b) CONFORMING AMENDMENTS.— 
(1) IN GENERAL.—Section 1860D–14(a)(1)(D) 
of the Social Security Act (42 U.S.C. 1395w– 
114(a)(1)(D)), as amended by section 121, is fur-
ther amended— 
(A) in clause (ii), by striking ‘‘section 
1860D–2(b)(2)’’ and inserting ‘‘section 1860D– 
2(b)(2)(A)’’; and 
(B) in clause (iii), by striking ‘‘section 
1860D–2(b)(2)’’ and inserting ‘‘section 1860D– 
2(b)(2)(A)’’. 
(2) EFFECTIVE DATE.—The amendments made 
by paragraph (1) shall apply with respect to plan 
year 2022 and each subsequent plan year. 
SEC. 220. MONTHLY OUT-OF-POCKET COST SHARING MAX-
IMUM FOR ENROLLEES WHO INCUR A SIG-
NIFICANT PORTION OF COSTS TOWARDS AN-
NUAL OUT-OF-POCKET THRESHOLD. 
(a) IN GENERAL.—Section 1860D–2(b) of the Social 
Security Act (42 U.S.C. 1395w–102(b)), as amended by 
section 2, is amended— 
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(1) in paragraph (2)— 
(A) in subparagraph (A), by striking ‘‘and 
(D)’’ and inserting ‘‘, (D), and (E)’’; and 
(B) by adding at the end the following new 
subparagraph: 
‘‘(E) MONTHLY
OUT-OF-POCKET
COST 
SHARING
MAXIMUM
FOR
ENROLLEES
WHO 
INCUR A SIGNIFICANT PORTION OF COSTS TO-
WARDS
ANNUAL
OUT-OF-POCKET
THRESH-
OLD.— 
‘‘(i) ESTABLISHMENT OF PROCESS.— 
‘‘(I) IN
GENERAL.—For plan 
years beginning on or after January 
1, 2024, the Secretary shall, through 
notice and comment rulemaking, es-
tablish a process under which each 
PDP sponsor offering a prescription 
drug plan and each MA organization 
offering an MA–PD plan shall each 
plan year automatically enroll applica-
ble enrollees in the option to have 
their monthly out-of-pocket cost-shar-
ing under the plan capped and paid in 
monthly installments in accordance 
with this subparagraph (referred to in 
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this subparagraph as the ‘monthly 
out-of-pocket cost sharing maximum 
option’). 
‘‘(II) OPT OUT.—The process es-
tablished under this clause shall per-
mit an applicable enrollee, prior to the 
beginning of the plan year or at any 
point during the plan year, to opt out 
of enrollment in the monthly out-of- 
pocket cost sharing maximum option 
and pay any out-of-pocket cost-shar-
ing otherwise applicable for any cov-
ered part D drug in full at the time 
of the dispensing of such drug (or at 
the time of such opt out in the case 
of costs incurred during such enroll-
ment that have not yet been billed to 
the enrollee). 
‘‘(ii) DEFINITIONS.— 
‘‘(I) APPLICABLE
ENROLLEE.— 
In this subparagraph, the term ‘appli-
cable enrollee’ means any enrollee in a 
prescription drug plan or an MA–PD 
plan, including an enrollee who is a 
subsidy eligible individual (as defined 
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in paragraph (3) of section 1860D– 
14(a)), who incurs or is likely to incur 
a significant percentage of costs for 
covered part D drugs. 
‘‘(II) 
SIGNIFICANT
PERCENT-
AGE.—For purposes of subclause (I), 
the Secretary shall, in the rulemaking 
under clause (i), define the term ‘sig-
nificant percentage’ with respect to a 
percentage of the annual out-of-pocket 
threshold 
specified 
in 
paragraph 
(4)(B) but in no case shall the ‘sig-
nificant percentage’ be less than 50 
percent or more than 100 percent of 
the annual out-of-pocket threshold. 
‘‘(iii) DETERMINATION OF MONTHLY 
OUT-OF-POCKET
COST
SHARING
MAX-
IMUM.—For each month in a plan year in 
which an applicable enrollee is enrolled in 
the monthly out-of-pocket cost sharing 
maximum option, the PDP sponsor or MA 
organization shall determine a monthly 
out-of-pocket cost sharing maximum (as 
defined in clause (v)) for such enrollee. 
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119 
‘‘(iv) BENEFICIARY
MONTHLY
PAY-
MENTS.—With respect to an applicable en-
rollee who is enrolled in the monthly out- 
of-pocket cost sharing maximum option, 
for each month described in clause (iii), 
the PDP sponsor or MA organization shall 
bill such enrollee an amount (not to exceed 
the monthly out-of-pocket cost sharing 
maximum) for the out-of-pocket costs of 
such enrollee in such month. 
‘‘(v) MONTHLY OUT-OF-POCKET COST 
SHARING
MAXIMUM
DEFINED.—In this 
subparagraph, the term ‘monthly out-of- 
pocket cost sharing maximum’ means, with 
respect to an enrollee— 
‘‘(I) for the first month in which 
this subparagraph applies, an amount 
determined by calculating— 
‘‘(aa) the annual out-of- 
pocket 
threshold 
specified 
in 
paragraph (4)(B) minus the in-
curred costs of the enrollee as de-
scribed in paragraph (4)(C); di-
vided by 
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‘‘(bb) the number of months 
remaining in the plan year; and 
‘‘(II) for a subsequent month, an 
amount determined by calculating— 
‘‘(aa) the sum of any re-
maining out-of-pocket costs owed 
by the enrollee from a previous 
month that have not yet been 
billed to the enrollee and any ad-
ditional costs incurred by the en-
rollee; divided by 
‘‘(bb) the number of months 
remaining in the plan year. 
‘‘(vi) ADDITIONAL REQUIREMENTS.— 
The following requirements shall apply 
with respect to the monthly out-of-pocket 
cost sharing maximum option under this 
subparagraph: 
‘‘(I) SECRETARIAL RESPONSIBIL-
ITIES.—The Secretary shall provide 
information to part D eligible individ-
uals on the monthly out-of-pocket cost 
sharing maximum option through edu-
cational materials, including through 
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the notices provided under section 
1804(a). 
‘‘(II) PDP SPONSOR AND MA OR-
GANIZATION
RESPONSIBILITIES.— 
Each PDP sponsor offering a pre-
scription drug plan or MA organiza-
tion offering an MA–PD plan— 
‘‘(aa) shall not limit the ap-
plication of the monthly out-of- 
pocket cost sharing maximum op-
tion to certain covered part D 
drugs; 
‘‘(bb) shall, prior to the plan 
year, notify prospective enrollees 
of such option, including the 
availability of the opt out under 
clause (i)(II); 
‘‘(cc) shall include informa-
tion on such option in enrollee 
educational materials, including 
the availability of the opt out 
under clause (i)(II); 
‘‘(dd) shall have in place a 
mechanism to notify a pharmacy 
during the plan year when an en-
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