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104TH CONGRESS
2D SESSION
H. R. 3691
To provide for the establishment of a Prescription Drug Price Review Board
to identify excessive drug prices, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JUNE 20, 1996
Mr. JOHNSON of South Dakota introduced the following bill; which was
referred to the Committee on Commerce
A BILL
To provide for the establishment of a Prescription Drug
Price Review Board to identify excessive drug prices,
and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Prescription Drug
Consumer Protection Act of 1996’’.
SEC. 2. ESTABLISHMENT OF BOARD.
(a) ESTABLISHMENT.—There is established in the ex-
ecutive branch the Prescription Drug Price Review Board
(hereinafter in this Act referred to as the ‘‘Board’’).
(b) MEMBERSHIP.—
(1) NUMBER AND APPOINTMENT.—The Board
shall be composed of 5 members appointed by the
President, by and with the advice and consent of the
Senate, from among individuals—
(A) who are recognized experts in the
fields of consumer advocacy, medicine, phar-
macology, pharmacy, and prescription drug re-
imbursement; and
(B) who have not worked in the pharma-
ceutical manufacturing industry during the 3-
year period ending on the date of appointment.
(2) INITIAL
APPOINTMENTS.—Initial appoint-
ments under paragraph (1) shall be made not later
than 90 days after the date of the enactment of this
Act.
(3) TERMS.—
(A) IN GENERAL.—Except as provided in
subparagraphs (B) and (C), each member shall
be appointed for a term of 5 years.
(B) TERMS OF INITIAL APPOINTEES.—As
designated by the President at the time of ap-
pointment, of the members first appointed—
(i) 1 member shall be appointed for a
term of 1 year;
(ii) 1 member shall be appointed for a
term of 2 years;
(iii) 1 member shall be appointed for
a term of 3 years;
(iv) 1 member shall be appointed for
a term of 4 years; and
(v) 1 member shall be appointed for a
term of 5 years.
(C) VACANCIES.—A vacancy in the Board
shall be filled in the manner in which the origi-
nal appointment was made. Any member ap-
pointed to fill a vacancy occurring before the
expiration of the term for which the member’s
predecessor was appointed shall be appointed
only for the remainder of that term. A member
may serve after the expiration of the member’s
term until a successor has taken office.
(4) INITIAL MEETING.—The initial meeting of
the Board shall be held not later than 90 days after
the date on which the first appointments of the
members have been completed.
(5) CHAIRPERSON.—The President shall des-
ignate 1 member of the Board to serve as the chair-
person.
(6) BASIC PAY.—
(A) IN GENERAL.—Members shall be paid
at a rate not to exceed the daily equivalent of
the maximum annual rate of basic pay payable
under section 5376 of title 5, United States
Code, for each day during which the members
are engaged in the actual performance of the
duties of the Board.
(B) TRAVEL
EXPENSES.—Members shall
receive travel expenses, including per diem in
lieu of subsistence, in accordance with sections
5702 and 5703 of title 5, United States Code.
(c) DIRECTOR AND STAFF.—
(1) DIRECTOR.—The Board shall have a direc-
tor who shall be appointed by the chairperson, sub-
ject to rules prescribed by the Board.
(2) STAFF.—The chairperson may appoint and
fix the pay of such additional personnel as the chair-
person considers appropriate, subject to rules pre-
scribed by the Board.
(3) APPLICABILITY OF CERTAIN CIVIL SERVICE
LAWS.—The director and staff of the Board shall be
appointed subject to the provisions of title 5, United
States Code, governing appointments in the competi-
tive service, and shall be paid in accordance with the
requirements of chapter 51 and subchapter III of
chapter 53 of such title relating to classification and
General Schedule pay rates; except that an individ-
ual so appointed may not receive pay in excess of
the maximum annual rate of basic pay payable for
grade GS–15 of the General Schedule.
SEC. 3. POWERS OF BOARD.
(a) OBTAINING OFFICIAL DATA.—The chairperson of
the Board may secure directly from any Federal agency
information necessary to enable the Board to carry out
its duties. Upon request of the chairperson, the head of
the agency shall furnish such information to the Board
to the extent such information is not prohibited from dis-
closure by law.
(b) MAILS.—The Board may use the United States
mails in the same manner and under the same conditions
as other Federal agencies.
(c) ADMINISTRATIVE SUPPORT SERVICES.—Upon the
request of the chairperson, the Administrator of General
Services shall provide to the Board on a reimbursable
basis the administrative support services necessary for the
Board to carry out its duties.
(d) CONTRACT AUTHORITY.—The chairperson may
contract with and compensate government and private
agencies or persons for the purpose of conducting re-
search, surveys, and other services necessary to enable the
Board to carry out its duties.
(e) INVESTIGATIONS.—The Board may make such in-
vestigations as it considers necessary to determine whether
there is or may be a violation of any regulation promul-
gated under this Act and may require or permit any per-
son to file with it a statement in writing, under oath or
otherwise as the Board shall determine, as to all the facts
and circumstances concerning the matter to be inves-
tigated.
(f) SUBPOENA POWER.—
(1) IN GENERAL.—The Board may issue sub-
poenas requiring the attendance and testimony of
witnesses and the production of any evidence relat-
ing to any matter under investigation by the Board.
The attendance of witnesses and the production of
evidence may be required from any place within the
United States at any designated place of hearing
within the United States.
(2) FAILURE TO OBEY A SUBPOENA.—If a per-
son refuses to obey a subpoena issued under para-
graph (1), the Board may apply to a United States
district court for an order requiring that person to
appear before the Board to give testimony, produce
evidence, or both, relating to the matter under inves-
tigation. The application may be made within the ju-
dicial district where the hearing is conducted or
where that person is found, resides, or transacts
business. Any failure to obey the order of the court
may be punished by the court as civil contempt.
(3) SERVICE OF SUBPOENAS.—The subpoenas
of the Board shall be served in the manner provided
for subpoenas issued by a United States district
court under the Federal Rules of Civil Procedure for
the United States district courts.
(4) SERVICE OF PROCESS.—All process of any
court to which application is made under paragraph
(2) may be served in the judicial district in which
the person required to be served resides or may be
found.
SEC. 4. FUNCTIONS OF THE BOARD.
(a) GUIDELINES.—The Board shall—
(1) develop and publish within 9 months of the
date of the establishment of the Board the initial
guidelines that the Board will use in determining
whether an existing price or an increase in the price
of any prescription drug is excessive,
(2) develop and publish within 12 months of the
date of the establishment of the Board the initial
guidelines that the Board will use in determining
whether the initial price at which a prescription drug
is first sold is excessive, and
(3) periodically review the guidelines developed
under paragraphs (1) and (2) and make appropriate
revisions.
(b) DETERMINATIONS AND REVIEWS.—The Board
shall—
(1) within 24 months of the date of the estab-
lishment of the Board, make an initial determination
of whether the price of each prescription drug ap-
proved for sale on the date of the enactment of this
Act is excessive,
(2) promptly make an initial determination of
whether the price of each prescription drug first ap-
proved for sale after the date of the enactment of
this Act is excessive,
(3) review, on an ongoing basis, each increase
in the price of a drug reviewed under paragraphs (1)
and (2) to determine if the price increase is exces-
sive, and
(4) consider whether determinations and re-
views similar to the ones carried out under para-
graphs (1), (2), and (3) should be made for non-pre-
scription drugs and make such determinations and
reviews if appropriate.
(c) FACTORS.—In making determinations under sub-
section (b) as to whether the price of a prescription drug
is excessive, the Board shall take into consideration—
(1) changes in the producer price index (pub-
lished by the Bureau of Labor Statistics of the De-
partment of Labor),
(2) changes in the prescription drug component
of such producer price index,
(3) the price at which such drug was sold to
wholesalers in the United States during the preced-
ing 10 years,
(4) the price at which such drug was sold to
wholesalers in other countries during the preceding
10 years,
(5) the price at which other drugs in the same
therapeutic class were sold to wholesalers in the
United States during the preceding 10 years,
(6) the therapeutic potential rating of such
drug by the Food and Drug Administration,
(7) the percentage of such drug’s research and
development costs paid by the United States,
(8) the cost of manufacturing and marketing
such drug, and
(9) such other factors as the Board considers
relevant.
(d) REPORTING.—The Board shall—
(1) promptly provide to consumers and health
care providers the results of the Board’s determina-
tions under subsection (b) and the method used in
each such determination,
(2) provide information to consumers and
health care providers regarding prescription drug
pricing and price increases by therapeutic class and
manufacturer,
(3) provide to consumers and health care pro-
viders information regarding the Food and Drug Ad-
ministration therapeutic potential rating of each pre-
scription drug and the percentage of the research
and development of each such drug paid by the
United States,
(4) provide to consumers such other informa-
tion as the Board determines will assist consumers
in reducing their expenses for prescription drugs,
(5) publish an easy to understand consumer’s
guide to prescription drug prices, including the in-
formation described in paragraphs (1), (2), (3), and
(4), within 24 months of the date of the establish-
ment of the Board and update and publish such
guide annually thereafter, and
(6) provide to the President and the Congress
a report of its determinations under subsection (b)
within 24 months of the date of the establishment
of the Board and update and report such determina-
tions annually thereafter.
SEC. 5. SANCTIONS AND REMEDIES.
(a) HEARINGS.—After making a determination under
section 4(b) that the price of a prescription drug or an
increase in the price of such a drug is excessive, the Board
shall—
(1) notify, in writing, the manufacturer of such
drug of such determination,
(2) fix a date on which a public hearing before
the Board respecting such determination shall be
held and hold such hearing,
(3) request from such manufacturer such addi-
tional information as the Board deems necessary for
such public hearing, and
(4) notify such manufacturer of the Board’s
recommendation as to the pricing of the drug at a
rate which is not excessive.
(b) SETTLEMENT.—If, after a public hearing under
subsection (a), the Board finds that the price or an in-
crease in the price of a prescription drug is not excessive,
the Board shall—
(1) notify the manufacturer of such drug of the
Board’s finding, and
(2) remove from all publications and reports of
the Board after the date of such finding any state-
ment that the price or increase in the price of such
drug is excessive.
(c) PATENT REVOCATION.—If, after a public hearing
under subsection (a), the Board finds that the price or
an increase in the price of a prescription drug is excessive,
the Board shall—
(1) notify the manufacturer of such drug of the
Board’s finding,
(2) notify the manufacturer of such drug of the
Board’s intent to revoke the patent for such drug if
the drug is patented or to revoke the patent of an-
other drug of such manufacturer if such drug is not
patented, and
(3) take such action as may be necessary to re-
voke a drug patent under paragraph (2) if the man-
ufacturer of such drug does not reduce the price of
the drug to a level that is not excessive.
SEC. 6. MANUFACTURERS.
Each manufacturer of a prescription drug subject to
review under section 4 shall—
(1) provide to the Board such information as
the Board may require to make the determinations
under section 4, including—
(A) information identifying such drug,
(B) the price at which such drug is being
sold or has been sold in any market,
(C) the cost of manufacturing and market-
ing such drug, and
(D) such other information as the Board
considers necessary to be provided in such form
and manner and at such time as the Board pre-
scribes by regulation, and
(2) notify the Board immediately of any in-
crease in the wholesale price of any prescription
drug marketed by the manufacturer.
SEC. 7. STUDY.
The Board shall engage the Institute of Medicine of
the National Academy of Sciences to conduct a study of
prescription drug research and development and pricing
practices, the difficulties many Americans have in afford-
ing prescription drugs, and options for making prescrip-
tion drugs available to all that need them. Such study
shall—
(1) examine Federal incentives for research and
development and determine which incentives are
most effective and what changes would better en-
courage the development of low cost, effective drugs,
(2) examine the Federal regulatory process and
identify ways it might be streamlined without jeop-
ardizing consumer safety,
(3) consider whether the authority of the Food
and Drug Administration should be enhanced and
whether the funding for such agency should be in-
creased to improve Federal regulation of drugs,
(4) consider steps the United States might take
(including possible trade sanctions) to protect manu-
facturers of drugs in the United States from product
pirating and other unfair trade practices by foreign
competitors,
(5) consider changes in the patent laws (includ-
ing delaying the start of a product’s 17 years patent
protection until after the product has been approved
under the Federal Food, Drug, and Cosmetic Act) to
allow manufacturers to charge lower prices and still
recoup their research and development costs,
(6) consider whether a Board review of non-pre-
scription drug prices would have a positive effect on
consumer costs of such drugs,
(7) consider mechanisms to assist consumers
with the high cost of prescription drugs (including
providing reimbursement under title XVIII of the
Social Security Act for prescription drugs at lower
prices negotiated with manufacturers of drugs),
(8) examine Federal policies regarding the li-
censing of drugs discovered and developed by feder-
ally funded researchers and recommend actions that
would allow the United States to recoup its costs or
to influence the pricing of such drugs, and
(9) examine the effects on retail pharmacies of
disparities in drug prices wherein the drug manufac-
turers charge hospitals, mail order pharmacies, and
health maintenance organizations significantly lower
prices than those charged wholesalers for such
drugs.
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