chase or provision of prescription drug coverage 
on behalf of applicable beneficiaries as the Sec-
retary may specify; and 
‘‘(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.— 
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‘‘(1) IN GENERAL.—Subject to paragraph (2), 
the Secretary shall provide for the implementation of 
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 one or 
more third parties to administer the requirements 
established by the Secretary in order to carry out 
this section. At a minimum, the contract with a 
third party under the preceding sentence shall re-
quire 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; 
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‘‘(C) provide adequate and timely informa-
tion to manufacturers, consistent with the 
agreement with the manufacturer under this 
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) IMPLEMENTATION.—The Secretary may 
implement the program under this section by pro-
gram instruction or otherwise. 
‘‘(6) ADMINISTRATION.—Chapter 35 of title 44, 
United States Code, shall not apply to the program 
under this section. 
‘‘(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 may 
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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‘‘(f) CLARIFICATION REGARDING AVAILABILITY OF 
OTHER COVERED PART D DRUGS.—Nothing in this sec-
tion shall prevent an applicable beneficiary from pur-
chasing a covered part D drug that is not an applicable 
drug (including a generic drug or a drug that is not on 
the formulary of the prescription drug plan or MA–PD 
plan that the applicable beneficiary is enrolled in). 
‘‘(g) DEFINITIONS.—In this section: 
‘‘(1) APPLICABLE
BENEFICIARY.—The term 
‘applicable beneficiary’ means an individual who, on 
the date of dispensing a covered part D drug— 
‘‘(A) is enrolled in a prescription drug plan 
or an MA–PD plan; 
‘‘(B) is not enrolled in a qualified retiree 
prescription drug plan; and 
‘‘(C) has incurred costs for covered part D 
drugs in the year that are equal to or exceed 
the annual deductible specified in section 
1860D–2(b)(1) for such year. 
‘‘(2) APPLICABLE DRUG.—The term ‘applicable 
drug’, with respect to an applicable beneficiary 
means a covered part D drug— 
‘‘(A) approved under a new drug applica-
tion under section 505(b) of the Federal Food, 
Drug, and Cosmetic Act or, in the case of a bio-
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logic product, licensed under section 351 of the 
Public Health Service Act; and 
‘‘(B)(i) if the PDP sponsor of the prescrip-
tion drug plan or the MA organization offering 
the MA–PD plan uses a formulary, which is on 
the formulary of the prescription drug plan or 
MA–PD plan that the applicable beneficiary is 
enrolled in; 
‘‘(ii) if the PDP sponsor of the prescrip-
tion drug plan or the MA organization offering 
the MA–PD plan does not use a formulary, for 
which benefits are available under the prescrip-
tion drug plan or MA–PD plan that the appli-
cable beneficiary is enrolled in; or 
‘‘(iii) is provided through an exception or 
appeal. 
‘‘(3) APPLICABLE
NUMBER
OF
CALENDAR 
DAYS.—The term ‘applicable number of calendar 
days’ means— 
‘‘(A) with respect to claims for reimburse-
ment submitted electronically, 14 days; and 
‘‘(B) with respect to claims for reimburse-
ment submitted otherwise, 30 days. 
‘‘(4) DISCOUNTED PRICE.— 
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