2377 
‘‘(1) IN
GENERAL.—For purposes of section 
1191, the administrative duties described in this sec-
tion are the following: 
‘‘(A) The establishment of procedures (in-
cluding through agreements with manufacturers 
under this part, contracts with prescription 
drug plans under part D of title XVIII and 
MA–PD plans under part C of such title, and 
agreements under section 1197 with group 
health plans and health insurance issuers of 
health insurance coverage offered in the indi-
vidual or group market) under which the max-
imum fair price for a selected drug is provided 
to fair price eligible individuals, who with re-
spect to such drug are described in subpara-
graph (A) of section 1191(c)(1), at pharmacies 
or by mail order service at the point-of-sale of 
the drug for the applicable price period for such 
drug and providing that such maximum fair 
price is used for determining cost-sharing under 
such plans or coverage for the selected drug. 
‘‘(B) The establishment of procedures (in-
cluding through agreements with manufacturers 
under this part and contracts with hospitals, 
physicians, and other providers of services and 
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suppliers and agreements under section 1197 
with group health plans and health insurance 
issuers of health insurance coverage offered in 
the individual or group market) under which, in 
the case of a selected drug furnished or admin-
istered by such a hospital, physician, or other 
provider of services or supplier to fair price eli-
gible individuals (who with respect to such drug 
are described in subparagraph (B) of section 
1191(c)(1)), the maximum fair price for the se-
lected drug is provided to such hospitals, physi-
cians, and other providers of services and sup-
pliers (as applicable) with respect to such indi-
viduals and providing that such maximum fair 
price is used for determining cost-sharing under 
the respective part, plan, or coverage for the se-
lected drug. 
‘‘(C) The establishment of procedures (in-
cluding through agreements and contracts de-
scribed in subparagraphs (A) and (B)) to en-
sure that, not later than 90 days after the dis-
pensing of a selected drug to a fair price eligi-
ble individual by a pharmacy or mail order serv-
ice, the pharmacy or mail order service is reim-
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bursed for an amount equal to the difference 
between— 
‘‘(i) the lesser of— 
‘‘(I) the wholesale acquisition 
cost of the drug; 
‘‘(II) the national average drug 
acquisition cost of the drug; and 
‘‘(III) any other similar deter-
mination of pharmacy acquisition 
costs of the drug, as determined by 
the Secretary; and 
‘‘(ii) the maximum fair price for the 
drug. 
‘‘(D) The establishment of procedures to 
ensure that the maximum fair price for a se-
lected drug is applied before— 
‘‘(i) any coverage or financial assist-
ance under other health benefit plans or 
programs that provide coverage or finan-
cial assistance for the purchase or provi-
sion of prescription drug coverage on be-
half of fair price eligible individuals as the 
Secretary may specify; and 
‘‘(ii) any other discounts. 
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‘‘(E) The establishment of procedures to 
enter into appropriate agreements and protocols 
for the ongoing computation of AIM prices for 
selected drugs, including, to the extent possible, 
to compute the AIM price for selected drugs 
and including by providing that the manufac-
turer of such a selected drug should provide in-
formation for such computation not later than 
3 months after the first date of the voluntary 
negotiation period for such selected drug. 
‘‘(F) The establishment of procedures to 
compute and apply the maximum fair price 
across different strengths and dosage forms of 
a selected drug and not based on the specific 
formulation or package size or package type of 
the drug. 
‘‘(G) The establishment of procedures to 
negotiate and apply the maximum fair price in 
a manner that does not include any dispensing 
or similar fee. 
‘‘(H) The establishment of procedures to 
carry out the provisions of this part, as applica-
ble, with respect to— 
‘‘(i) fair price eligible individuals who 
are enrolled under a prescription drug plan 
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under part D of title XVIII or an MA–PD 
plan under part C of such title; 
‘‘(ii) fair price eligible individuals who 
are enrolled under a group health plan or 
health insurance coverage offered by a 
health insurance issuer in the individual or 
group market with respect to which there 
is an agreement in effect under section 
1197; and 
‘‘(iii) fair price eligible individuals who 
are entitled to benefits under part A of 
title XVIII or enrolled under part B of 
such title. 
‘‘(I) The establishment of a negotiation 
process and renegotiation process in accordance 
with section 1194, including a process for ac-
quiring information described in subsection (d) 
of such section and determining amounts de-
scribed in subsection (b) of such section. 
‘‘(J) The provision of a reasonable dispute 
resolution mechanism to resolve disagreements 
between manufacturers, fair price eligible indi-
viduals, and the third party with a contract 
under subsection (c)(1). 
‘‘(2) MONITORING COMPLIANCE.— 
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‘‘(A) IN
GENERAL.—The Secretary shall 
monitor compliance by a manufacturer with the 
terms of an agreement under section 1193, in-
cluding by establishing a mechanism through 
which violations of such terms may be reported. 
‘‘(B) NOTIFICATION.—If a third party 
with a contract under subsection (c)(1) 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 section 4192 of 
the Internal Revenue Code of 1986 or section 
1198, as applicable. 
‘‘(b) COLLECTION OF DATA.— 
‘‘(1) FROM
PRESCRIPTION
DRUG
PLANS
AND 
MA–PD PLANS.—The Secretary may collect appro-
priate data from prescription drug plans under part 
D of title XVIII and MA–PD plans under part C of 
such title in a timeframe that allows for maximum 
fair prices to be provided under this part for selected 
drugs. 
‘‘(2) FROM
HEALTH
PLANS.—The Secretary 
may collect appropriate data from group health 
plans or health insurance issuers offering group or 
individual health insurance coverage in a timeframe 
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that allows for maximum fair prices to be provided 
under this part for selected drugs. 
‘‘(3) COORDINATION OF DATA COLLECTION.— 
To the extent feasible, as determined by the Sec-
retary, the Secretary shall ensure that data collected 
pursuant to this subsection is coordinated with, and 
not duplicative of, other Federal data collection ef-
forts. 
‘‘(c) CONTRACT WITH THIRD PARTIES.— 
‘‘(1) IN GENERAL.—The Secretary may enter 
into a contract with 1 or more third parties to ad-
minister the requirements established by the Sec-
retary in order to carry out this part. At a min-
imum, the contract with a third party under the pre-
ceding 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 part; 
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‘‘(C) provide adequate and timely informa-
tion to manufacturers, consistent with the 
agreement with the manufacturer under this 
part, as necessary for the manufacturer to ful-
fill its obligations under this part; 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. 
‘‘(2) 
PERFORMANCE
REQUIREMENTS.—The 
Secretary shall establish performance requirements 
for a third party with a contract under paragraph 
(1) and safeguards to protect the independence and 
integrity of the activities carried out by the third 
party under the program under this part. 
‘‘SEC. 
1197. 
VOLUNTARY 
PARTICIPATION 
BY 
OTHER 
HEALTH PLANS. 
‘‘(a) AGREEMENT TO PARTICIPATE UNDER PRO-
GRAM.— 
‘‘(1) IN GENERAL.—Subject to paragraph (2), 
under the program under this part the Secretary 
shall be treated as having in effect an agreement 
with a group health plan or health insurance issuer 
offering group or individual health insurance cov-
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erage (as such terms are defined in section 2791 of 
the Public Health Service Act), with respect to a 
price applicability period and a selected drug with 
respect to such period— 
‘‘(A) with respect to such selected drug 
furnished or dispensed at a pharmacy or by 
mail order service if coverage is provided under 
such plan or coverage during such period for 
such selected drug as so furnished or dispensed; 
and 
‘‘(B) with respect to such selected drug 
furnished or administered by a hospital, physi-
cian, or other provider of services or supplier if 
coverage is provided under such plan or cov-
erage during such period for such selected drug 
as so furnished or administered. 
‘‘(2) OPTING OUT OF AGREEMENT.—The Sec-
retary shall not be treated as having in effect an 
agreement under the program under this part with 
a group health plan or health insurance issuer offer-
ing group or individual health insurance coverage 
with respect to a price applicability period and a se-
lected drug with respect to such period if such a 
plan or issuer affirmatively elects, through a process 
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specified by the Secretary, not to participate under 
the program with respect to such period and drug. 
‘‘(b) PUBLICATION OF ELECTION.—With respect to 
each price applicability period and each selected drug with 
respect to such period, the Secretary and the Secretary 
of Labor and the Secretary of the Treasury, as applicable, 
shall make public a list of each group health plan and each 
health insurance issuer offering group or individual health 
insurance coverage, with respect to which coverage is pro-
vided under such plan or coverage for such drug, that has 
elected under subsection (a) not to participate under the 
program with respect to such period and drug. 
‘‘SEC. 1198. CIVIL MONETARY PENALTY. 
‘‘(a) VIOLATIONS RELATING TO OFFERING OF MAX-
IMUM FAIR PRICE.—Any manufacturer of a selected drug 
that has entered into an agreement under section 1193, 
with respect to a plan year during the price applicability 
period for such drug, that does not provide access to a 
price that is not more than the maximum fair price (or 
a lesser price) for such drug for such year— 
‘‘(1) to a fair price eligible individual who with 
respect to such drug is described in subparagraph 
(A) of section 1191(c)(1) and who is furnished or 
dispensed such drug during such year; or 
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‘‘(2) to a hospital, physician, or other provider 
of services or supplier with respect to fair price eligi-
ble individuals who with respect to such drug is de-
scribed in subparagraph (B) of such section and is 
furnished or administered such drug by such hos-
pital, physician, or provider or supplier during such 
year; 
shall be subject to a civil monetary penalty equal to ten 
times the amount equal to the difference between the price 
for such drug made available for such year by such manu-
facturer with respect to such individual or hospital, physi-
cian, provider, or supplier and the maximum fair price for 
such drug for such year. 
‘‘(b) VIOLATIONS OF CERTAIN TERMS OF AGREE-
MENT.—Any manufacturer of a selected drug that has en-
tered into an agreement under section 1193, with respect 
to a plan year during the price applicability period for 
such drug, that is in violation of a requirement imposed 
pursuant to section 1193(a)(6) shall be subject to a civil 
monetary penalty of not more than $1,000,000 for each 
such violation. 
‘‘(c) APPLICATION.—The provisions of section 1128A 
(other than subsections (a) and (b)) shall apply to a civil 
monetary penalty under this section in the same manner 
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as such provisions apply to a penalty or proceeding under 
section 1128A(a). 
‘‘SEC. 1199. MISCELLANEOUS PROVISIONS. 
‘‘(a) PAPERWORK REDUCTION ACT.—Chapter 35 of 
title 44, United States Code, shall not apply to data col-
lected under this part. 
‘‘(b) LIMITATION ON JUDICIAL REVIEW.—The fol-
lowing shall not be subject to judicial review: 
‘‘(1) The selection of drugs for publication 
under section 1192(a). 
‘‘(2) The determination of whether a drug is a 
negotiation-eligible drug under section 1192(d). 
‘‘(3) The determination of the maximum fair 
price of a selected drug under section 1194. 
‘‘(4) The determination of units of a drug for 
purposes of section 1191(c)(3). 
‘‘(c) COORDINATION.—In carrying out this part with 
respect to group health plans or health insurance coverage 
offered in the group market that are subject to oversight 
by the Secretary of Labor or the Secretary of the Treas-
ury, the Secretary of Health and Human Services shall 
coordinate with such respective Secretary. 
‘‘(d) DATA SHARING.—The Secretary shall share 
with the Secretary of the Treasury such information as 
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is necessary to determine the tax imposed by section 4192 
of the Internal Revenue Code of 1986.’’. 
(b) APPLICATION OF MAXIMUM FAIR PRICES AND 
CONFORMING AMENDMENTS.— 
(1) UNDER MEDICARE.— 
(A) APPLICATION
TO
PAYMENTS
UNDER 
PART B.—Section 1847A(b)(1)(B) of the Social 
Security Act (42 U.S.C. 1395w–3a(b)(1)(B)) is 
amended by inserting ‘‘or in the case of such a 
drug or biological that is a selected drug (as de-
fined in section 1192(c)), with respect to a 
price applicability period (as defined in section 
1191(b)(2)), 106 percent of the maximum fair 
price (as defined in section 1191(c)(2)) applica-
ble for such drug and a plan year during such 
period’’ after ‘‘paragraph (4)’’. 
(B) EXCEPTION TO PART D NON-INTER-
FERENCE.—Section 1860D–11(i) of the Social 
Security Act (42 U.S.C. 1395w–111(i)) is 
amended by inserting ‘‘, except as provided 
under part E of title XI’’ after ‘‘the Secretary’’. 
(C) APPLICATION AS NEGOTIATED PRICE 
UNDER PART D.—Section 1860D–2(d)(1) of the 
Social 
Security 
Act 
(42 
U.S.C. 
1395w– 
102(d)(1)) is amended— 
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(i) in subparagraph (B), by inserting 
‘‘, subject to subparagraph (D),’’ after 
‘‘negotiated prices’’; and 
(ii) by adding at the end the following 
new subparagraph: 
‘‘(D) APPLICATION
OF
MAXIMUM
FAIR 
PRICE FOR SELECTED DRUGS.—In applying this 
section, in the case of a covered part D drug 
that is a selected drug (as defined in section 
1192(c)), with respect to a price applicability 
period (as defined in section 1191(b)(2)), the 
negotiated prices used for payment (as de-
scribed in this subsection) shall be the max-
imum 
fair 
price 
(as 
defined 
in 
section 
1191(c)(2)) for such drug and for each plan 
year during such period.’’. 
(D) INFORMATION
FROM
PRESCRIPTION 
DRUG PLANS AND MA–PD PLANS REQUIRED.— 
(i) PRESCRIPTION DRUG PLANS.—Sec-
tion 1860D–12(b) of the Social Security 
Act (42 U.S.C. 1395w–112(b)) is amended 
by adding at the end the following new 
paragraph: 
‘‘(8) PROVISION OF INFORMATION RELATED TO 
MAXIMUM FAIR PRICES.—Each contract entered into 
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with a PDP sponsor under this part with respect to 
a prescription drug plan offered by such sponsor 
shall require the sponsor to provide information to 
the Secretary as requested by the Secretary in ac-
cordance with section 1196(b).’’. 
(ii) 
MA–PD 
PLANS.—Section 
1857(f)(3) of the Social Security Act (42 
U.S.C. 1395w–27(f)(3)) is amended by 
adding at the end the following new sub-
paragraph: 
‘‘(E) PROVISION
OF
INFORMATION
RE-
LATED
TO
MAXIMUM
FAIR
PRICES.—Section 
1860D–12(b)(8).’’. 
(2) UNDER
GROUP
HEALTH
PLANS
AND 
HEALTH INSURANCE COVERAGE.— 
(A) PHSA.—Part D of title XXVII of the 
Public Health Service Act (42 U.S.C. 300gg– 
111 et seq.) is amended by adding at the end 
the following new section: 
‘‘SEC. 2799A–11. FAIR PRICE NEGOTIATION PROGRAM AND 
APPLICATION OF MAXIMUM FAIR PRICES. 
‘‘(a) IN GENERAL.—In the case of a group health 
plan or health insurance issuer offering group or indi-
vidual health insurance coverage that is treated under sec-
tion 1197 of the Social Security Act as having in effect 
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an agreement with the Secretary under the Fair Price Ne-
gotiation Program under part E of title XI of such Act, 
with respect to a price applicability period (as defined in 
section 1191(b) of such Act) and a selected drug (as de-
fined in section 1192(c) of such Act) with respect to such 
period with respect to which coverage is provided under 
such plan or coverage— 
‘‘(1) the provisions of such part shall apply— 
‘‘(A) if coverage of such selected drug is 
provided under such plan or coverage if the 
drug is furnished or dispensed at a pharmacy 
or by a mail order service, to the plans or cov-
erage offered by such plan or issuer, and to the 
individuals enrolled under such plans or cov-
erage, during such period, with respect to such 
selected drug, in the same manner as such pro-
visions apply to prescription drug plans and 
MA–PD plans, and to individuals enrolled 
under such prescription drug plans and MA– 
PD plans during such period; and 
‘‘(B) if coverage of such selected drug is 
provided under such plan or coverage if the 
drug is furnished or administered by a hospital, 
physician, or other provider of services or sup-
plier, to the plans or coverage offered by such 
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plan or issuers, to the individuals enrolled 
under such plans or coverage, and to hospitals, 
physicians, and other providers of services and 
suppliers during such period, with respect to 
such drug in the same manner as such provi-
sions apply to the Secretary, to individuals enti-
tled to benefits under part A of title XVIII or 
enrolled under part B of such title, and to hos-
pitals, physicians, and other providers and sup-
pliers participating under title XVIII during 
such period; 
‘‘(2) the plan or issuer shall apply any cost- 
sharing responsibilities under such plan or coverage, 
with respect to such selected drug, by substituting 
an amount not more than the maximum fair price 
negotiated under such part E of title XI for such 
drug in lieu of the drug price upon which the cost- 
sharing would have otherwise applied, and such cost- 
sharing responsibilities with respect to such selected 
drug may not exceed such maximum fair price; and 
‘‘(3) the Secretary shall apply the provisions of 
such part E to such plan, issuer, and coverage, such 
individuals so enrolled in such plans and coverage, 
and such hospitals, physicians, and other providers 
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and suppliers participating in such plans and cov-
erage. 
‘‘(b) NOTIFICATION REGARDING NONPARTICIPATION 
IN FAIR PRICE NEGOTIATION PROGRAM.—A group health 
plan or a health insurance issuer offering group or indi-
vidual health insurance coverage shall publicly disclose in 
a manner and in accordance with a process specified by 
the Secretary any election made under section 1197 of the 
Social Security Act by the plan or issuer to not participate 
in the Fair Price Negotiation Program under part E of 
title XI of such Act with respect to a selected drug (as 
defined in section 1192(c) of such Act) for which coverage 
is provided under such plan or coverage before the begin-
ning of the plan year for which such election was made.’’. 
(B) ERISA.— 
(i) IN GENERAL.—Subpart B of part 
7 of subtitle B of title I of the Employee 
Retirement Income Security Act of 1974 
(29 U.S.C. 1181 et seq.) is amended by 
adding at the end the following new sec-
tion: 
‘‘SEC. 726. FAIR PRICE NEGOTIATION PROGRAM AND APPLI-
CATION OF MAXIMUM FAIR PRICES. 
‘‘(a) IN GENERAL.—In the case of a group health 
plan or health insurance issuer offering group health in-
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surance coverage that is treated under section 1197 of the 
Social Security Act as having in effect an agreement with 
the Secretary under the Fair Price Negotiation Program 
under part E of title XI of such Act, with respect to a 
price applicability period (as defined in section 1191(b) 
of such Act) and a selected drug (as defined in section 
1192(c) of such Act) with respect to such period with re-
spect to which coverage is provided under such plan or 
coverage— 
‘‘(1) the provisions of such part shall apply, as 
applicable— 
‘‘(A) if coverage of such selected drug is 
provided under such plan or coverage if the 
drug is furnished or dispensed at a pharmacy 
or by a mail order service, to the plans or cov-
erage offered by such plan or issuer, and to the 
individuals enrolled under such plans or cov-
erage, during such period, with respect to such 
selected drug, in the same manner as such pro-
visions apply to prescription drug plans and 
MA–PD plans, and to individuals enrolled 
under such prescription drug plans and MA– 
PD plans during such period; and 
‘‘(B) if coverage of such selected drug is 
provided under such plan or coverage if the 
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drug is furnished or administered by a hospital, 
physician, or other provider of services or sup-
plier, to the plans or coverage offered by such 
plan or issuers, to the individuals enrolled 
under such plans or coverage, and to hospitals, 
physicians, and other providers of services and 
suppliers during such period, with respect to 
such drug in the same manner as such provi-
sions apply to the Secretary, to individuals enti-
tled to benefits under part A of title XVIII or 
enrolled under part B of such title, and to hos-
pitals, physicians, and other providers and sup-
pliers participating under title XVIII during 
such period; 
‘‘(2) the plan or issuer shall apply any cost- 
sharing responsibilities under such plan or coverage, 
with respect to such selected drug, by substituting 
an amount not more than the maximum fair price 
negotiated under such part E of title XI for such 
drug in lieu of the drug price upon which the cost- 
sharing would have otherwise applied, and such cost- 
sharing responsibilities with respect to such selected 
drug may not exceed such maximum fair price; and 
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‘‘(3) the Secretary shall apply the provisions of 
such part E to such plan, issuer, and coverage, and 
such individuals so enrolled in such plans. 
‘‘(b) NOTIFICATION REGARDING NONPARTICIPATION 
IN FAIR PRICE NEGOTIATION PROGRAM.—A group health 
plan or a health insurance issuer offering group health in-
surance coverage shall publicly disclose in a manner and 
in accordance with a process specified by the Secretary 
any election made under section 1197 of the Social Secu-
rity Act by the plan or issuer to not participate in the 
Fair Price Negotiation Program under part E of title XI 
of such Act with respect to a selected drug (as defined 
in section 1192(c) of such Act) for which coverage is pro-
vided under such plan or coverage before the beginning 
of the plan year for which such election was made.’’. 
(ii) APPLICATION
TO
RETIREE
AND 
CERTAIN SMALL GROUP HEALTH PLANS.— 
Section 732(a) of the Employee Retire-
ment Income Security Act of 1974 (29 
U.S.C. 1191a(a)) is amended by striking 
‘‘section 711’’ and inserting ‘‘sections 711 
and 726’’. 
(iii) 
CLERICAL
AMENDMENT.—The 
table of sections for subpart B of part 7 of 
subtitle B of title I of the Employee Re-
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tirement Income Security Act of 1974 is 
amended by adding at the end the fol-
lowing: 
‘‘Sec. 726. Fair Price Negotiation Program and application of maximum fair 
prices.’’. 
(C) IRC.— 
(i) IN
GENERAL.—Subchapter B of 
chapter 100 of the Internal Revenue Code 
of 1986 is amended by adding at the end 
the following new section: 
‘‘SEC. 9826. FAIR PRICE NEGOTIATION PROGRAM AND AP-
PLICATION OF MAXIMUM FAIR PRICES. 
‘‘(a) IN GENERAL.—In the case of a group health 
plan that is treated under section 1197 of the Social Secu-
rity Act as having in effect an agreement with the Sec-
retary under the Fair Price Negotiation Program under 
part E of title XI of such Act, with respect to a price 
applicability period (as defined in section 1191(b) of such 
Act) and a selected drug (as defined in section 1192(c) 
of such Act) with respect to such period with respect to 
which coverage is provided under such plan— 
‘‘(1) the provisions of such part shall apply, as 
applicable— 
‘‘(A) if coverage of such selected drug is 
provided under such plan if the drug is fur-
nished or dispensed at a pharmacy or by a mail 
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order service, to the plan, and to the individuals 
enrolled under such plan during such period, 
with respect to such selected drug, in the same 
manner as such provisions apply to prescription 
drug plans and MA–PD plans, and to individ-
uals enrolled under such prescription drug 
plans and MA–PD plans during such period; 
and 
‘‘(B) if coverage of such selected drug is 
provided under such plan if the drug is fur-
nished or administered by a hospital, physician, 
or other provider of services or supplier, to the 
plan, to the individuals enrolled under such 
plan, and to hospitals, physicians, and other 
providers of services and suppliers during such 
period, with respect to such drug in the same 
manner as such provisions apply to the Sec-
retary, to individuals entitled to benefits under 
part A of title XVIII or enrolled under part B 
of such title, and to hospitals, physicians, and 
other providers and suppliers participating 
under title XVIII during such period; 
‘‘(2) the plan shall apply any cost-sharing re-
sponsibilities under such plan, with respect to such 
selected drug, by substituting an amount not more 
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than the maximum fair price negotiated under such 
part E of title XI for such drug in lieu of the drug 
price upon which the cost-sharing would have other-
wise applied, and such cost-sharing responsibilities 
with respect to such selected drug may not exceed 
such maximum fair price; and 
‘‘(3) the Secretary shall apply the provisions of 
such part E to such plan and such individuals so en-
rolled in such plan. 
‘‘(b) NOTIFICATION REGARDING NONPARTICIPATION 
IN FAIR PRICE NEGOTIATION PROGRAM.—A group health 
plan shall publicly disclose in a manner and in accordance 
with a process specified by the Secretary any election 
made under section 1197 of the Social Security Act by 
the plan to not participate in the Fair Price Negotiation 
Program under part E of title XI of such Act with respect 
to a selected drug (as defined in section 1192(c) of such 
Act) for which coverage is provided under such plan before 
the beginning of the plan year for which such election was 
made.’’. 
(ii) APPLICATION
TO
RETIREE
AND 
CERTAIN SMALL GROUP HEALTH PLANS.— 
Section 9831(a)(2) of the Internal Revenue 
Code of 1986 is amended by inserting 
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‘‘other than with respect to section 9826,’’ 
before ‘‘any group health plan’’. 
(iii) 
CLERICAL
AMENDMENT.—The 
table of sections for subchapter B of chap-
ter 100 of such Code is amended by add-
ing at the end the following new item: 
‘‘Sec. 9826. Fair Price Negotiation Program and application of maximum fair 
prices.’’. 
(3) FAIR PRICE NEGOTIATION PROGRAM PRICES 
INCLUDED IN BEST PRICE AND AMP.—Section 1927 
of the Social Security Act (42 U.S.C. 1396r–8) is 
amended— 
(A) in subsection (c)(1)(C)(ii)— 
(i) in subclause (III), by striking at 
the end ‘‘; and’’; 
(ii) in subclause (IV), by striking at 
the end the period and inserting ‘‘; and’’; 
and 
(iii) by adding at the end the fol-
lowing new subclause: 
‘‘(V) in the case of a rebate pe-
riod and a covered outpatient drug 
that is a selected drug (as defined in 
section 1192(c)) during such rebate 
period, shall be inclusive of the price 
for such drug made available from the 
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manufacturer during the rebate period 
by reason of application of part E of 
title XI to any wholesaler, retailer, 
provider, health maintenance organi-
zation, nonprofit entity, or govern-
mental entity within the United 
States.’’; and 
(B) in subsection (k)(1)(B), by adding at 
the end the following new clause: 
‘‘(iii) 
CLARIFICATION.—Notwith-
standing clause (i), in the case of a rebate 
period and a covered outpatient drug that 
is a selected drug (as defined in section 
1192(c)) during such rebate period, any 
reduction in price paid during the rebate 
period to the manufacturer for the drug by 
a wholesaler or retail community pharmacy 
described in subparagraph (A) by reason of 
application of part E of title XI shall be 
included in the average manufacturer price 
for the covered outpatient drug.’’. 
(4) FEHBP.—Section 8902 of title 5, United 
States Code, is amended by adding at the end the 
following: 
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‘‘(p) A contract may not be made or a plan approved 
under this chapter with any carrier that has affirmatively 
elected, pursuant to section 1197 of the Social Security 
Act, not to participate in the Fair Price Negotiation Pro-
gram established under section 1191 of such Act for any 
selected drug (as that term is defined in section 1192(c) 
of such Act).’’. 
(5) OPTION OF SECRETARY OF VETERANS AF-
FAIRS TO PURCHASE COVERED DRUGS AT MAXIMUM 
FAIR
PRICES.—Section 8126 of title 38, United 
States Code, is amended— 
(A) in subsection (a)(2), by inserting ‘‘, 
subject to subsection (j),’’ after ‘‘may not ex-
ceed’’; 
(B) in subsection (d), in the matter pre-
ceding paragraph (1), by inserting ‘‘, subject to 
subsection (j)’’ after ‘‘for the procurement of 
the drug’’; and 
(C) by adding at the end the following new 
subsection: 
‘‘(j)(1) In the case of a covered drug that is a selected 
drug, for any year during the price applicability period for 
such drug, if the Secretary determines that the maximum 
fair price of such drug for such year is less than the price 
for such drug otherwise in effect pursuant to this section 
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(including after application of any reduction under sub-
section (a)(2) and any discount under subsection (c)), at 
the option of the Secretary, in lieu of the maximum price 
(determined after application of the reduction under sub-
section (a)(2) and any discount under subsection (c), as 
applicable) that would be permitted to be charged during 
such year for such drug pursuant to this section without 
application of this subsection, the maximum price per-
mitted to be charged during such year for such drug pur-
suant to this section shall be such maximum fair price for 
such drug and year. 
‘‘(2) For purposes of this subsection: 
‘‘(A) The term ‘maximum fair price’ means, 
with respect to a selected drug and year during the 
price applicability period for such drug, the max-
imum fair price (as defined in section 1191(c)(2) of 
the Social Security Act) for such drug and year. 
‘‘(B) The term ‘negotiation eligible drug’ has 
the meaning given such term in section 1192(d)(1) 
of the Social Security Act. 
‘‘(C) The term ‘price applicability period’ has, 
with respect to a selected drug, the meaning given 
such term in section 1191(b)(2) of such Act. 
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‘‘(D) The term ‘selected drug’ means, with re-
spect to a year, a drug that is a selected drug under 
section 1192(c) of such Act for such year.’’. 
SEC. 139002. SELECTED DRUG MANUFACTURER EXCISE TAX 
IMPOSED DURING NONCOMPLIANCE PERI-
ODS. 
(a) IN GENERAL.—Subchapter E of chapter 32 of the 
Internal Revenue Code of 1986 is amended by adding at 
the end the following new section: 
‘‘SEC. 4192. SELECTED DRUGS DURING NONCOMPLIANCE 
PERIODS. 
‘‘(a) IN GENERAL.—There is hereby imposed on the 
sale by the manufacturer, producer, or importer of any 
selected drug during a day described in subsection (b) a 
tax in an amount such that the applicable percentage is 
equal to the ratio of— 
‘‘(1) such tax, divided by 
‘‘(2) the sum of such tax and the price for 
which so sold. 
‘‘(b) NONCOMPLIANCE PERIODS.—A day is described 
in this subsection with respect to a selected drug if it is 
a day during one of the following periods: 
‘‘(1) The period beginning on the June 16th 
immediately following the selected drug publication 
date and ending on the first date during which the 
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manufacturer of the drug has in place an agreement 
described in subsection (a) of section 1193 of the 
Social Security Act with respect to such drug. 
‘‘(2) The period beginning on the April 1st im-
mediately following the June 16th described in para-
graph (1) and ending on the first date during which 
the manufacturer of the drug has agreed to a max-
imum fair price under such agreement. 
‘‘(3) In the case of a selected drug with respect 
to which the Secretary of Health and Human Serv-
ices has specified a renegotiation period under such 
agreement, the period beginning on the first date 
after the last date of such renegotiation period and 
ending on the first date during which the manufac-
turer of the drug has agreed to a renegotiated max-
imum fair price under such agreement. 
‘‘(4) With respect to information that is re-
quired to be submitted to the Secretary of Health 
and Human Services under such agreement, the pe-
riod beginning on the date on which such Secretary 
certifies that such information is overdue and ending 
on the date that such information is so submitted. 
‘‘(5) In the case of a selected drug with respect 
to which a payment is due under subsection (c) of 
such section 1193, the period beginning on the date 
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on which the Secretary of Health and Human Serv-
ices certifies that such payment is overdue and end-
ing on the date that such payment is made in full. 
‘‘(c) APPLICABLE PERCENTAGE.—For purposes of 
this section, the term ‘applicable percentage’ means— 
‘‘(1) in the case of sales of a selected drug dur-
ing the first 90 days described in subsection (b) with 
respect to such drug, 65 percent, 
‘‘(2) in the case of sales of such drug during 
the 91st day through the 180th day described in 
subsection (b) with respect to such drug, 75 percent, 
‘‘(3) in the case of sales of such drug during 
the 181st day through the 270th day described in 
subsection (b) with respect to such drug, 85 percent, 
and 
‘‘(4) in the case of sales of such drug during 
any subsequent day, 95 percent. 
‘‘(d) SELECTED DRUG.—For purposes of this sec-
tion— 
‘‘(1) IN GENERAL.—The term ‘selected drug’ 
means any selected drug (within the meaning of sec-
tion 1192 of the Social Security Act) which is manu-
factured or produced in the United States or entered 
into the United States for consumption, use, or 
warehousing. 
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