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
Prices Review Board Act of 1993’’.
SEC. 2. ESTABLISHMENT.
There is established in the Food and Drug Adminis-
tration a board to be known as the Patented Medicine
Prices Review Board (in this Act referred to as the
‘‘Board’’).
SEC. 3. MEMBERSHIP.
(a) 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—
(1) who are recognized experts in the fields of
consumer advocacy, medicine, pharmacology, phar-
macy, and prescription drug reimbursement; and
(2) who have not worked in the pharmaceutical
industry during the 1-year period ending on the date
of appointment.
(b) INITIAL APPOINTMENTS.—Initial appointments
under subsection (a) shall be made not later than 90 days
after the date of the enactment of this Act.
(c) TERMS.—
(1) IN GENERAL.—Except as provided in para-
graphs (2) and (3), each member shall be appointed
for a term of 5 years.
(2) TERMS OF INITIAL APPOINTEES.—As des-
ignated by the President at the time of appointment,
of the members first appointed—
(A) 1 member shall be appointed for a
term of 1 year;
(B) 1 member shall be appointed for a
term of 2 years;
(C) 1 member shall be appointed for a
term of 3 years;
(D) 1 member shall be appointed for a
term of 4 years; and
(E) 1 member shall be appointed for a
term of 5 years.
(3) VACANCIES.—A vacancy in the Board shall
be filled in the manner in which the original appoint-
ment was made. Any member appointed to fill a va-
cancy 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 mem-
ber’s term until a successor has taken office.
(d) 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.
(e) CHAIRPERSON.—The President shall designate 1
member of the Board to serve as the chairperson.
(f) BASIC PAY.—
(1) IN GENERAL.—Members shall be paid at a
rate not to exceed the daily equivalent of the maxi-
mum annual rate of basic pay payable for grade
GS–18 of the General Schedule under section 5332
of title 5, United States Code, for each day during
which the members are engaged in the actual per-
formance of the duties of the Board.
(2) TRAVEL EXPENSES.—Members shall receive
travel expenses, including per diem in lieu of subsist-
ence, in accordance with sections 5702 and 5703 of
title 5, United States Code.
SEC. 4. DIRECTOR AND STAFF.
(a) DIRECTOR.—The Board shall have a director who
shall be appointed by the chairperson, subject to rules pre-
scribed by the Board.
(b) STAFF.—The chairperson may appoint and fix
the pay of such additional personnel as the chairperson
considers appropriate, subject to rules prescribed by the
Board.
(c) APPLICABILITY
OF CERTAIN CIVIL SERVICE
LAWS.—The director and staff of the Board shall be ap-
pointed subject to the provisions of title 5, United States
Code, governing appointments in the competitive 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 individual 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. 5. REGULATION OF PRESCRIPTION DRUG PRICING.
(a) ANNUAL
INFORMATION
REQUIREMENT.—The
Board shall require each patentee of a prescription drug
to provide the Board with information on an annual
basis—
(1) identifying the type of prescription drug
sold by the patentee; and
(2) identifying the price at which the prescrip-
tion drug is being sold in the United States.
The Board shall also require each such patentee to provide
the Board with information describing the costs of produc-
ing and marketing the prescription drug for sale in the
United States. Such information shall be provided at a
level of specificity necessary for the Board to make its de-
termination under subsection (b).
(b) DECREASE IN LENGTH OF PATENT TERM.—
(1) IN
GENERAL.—The Board shall decrease
the length of a term of a patent issued under section
151 of title 35, United States Code, for a prescrip-
tion drug, after notice and an opportunity for a
hearing, if the patentee of such drug charges an ex-
cessive price for such drug. If the patentee charged
an excessive price for a drug which has gone off pat-
ent, the Board may select another drug of the pat-
entee to have its length of patent term reduced.
(2) EXCESSIVE PRICE.—
(A) IN GENERAL.—For purposes of para-
graph (1), the term ‘‘excessive price’’ means the
average price charged by the patentee for a pre-
scription drug during the calendar year preced-
ing the date on which the Board gives notice to
the patentee under paragraph (1), if such price
for such calendar year, adjusted for cost-of-liv-
ing, as determined by the Board, exceeds the
average price for such drug charged by the pat-
entee for the calendar year preceding such year
in an amount determined by the Board to be
excessive under subparagraph (B).
(B) EXCESSIVE AMOUNT.—In determining
if an amount of increase in a drug price is ex-
cessive, the Board shall consider—
(i) the average price at which the pat-
entee sold the drug during the 5-year pe-
riod ending on the date on which the
Board gives notice to the patentee under
paragraph (1);
(ii) the average prices of other pre-
scription drugs in the same therapeutic
class sold in the United States during such
period;
(iii) the average price at which the
prescription drug and other prescription
drugs in the same therapeutic class have
been sold in countries other than the
United States during such period;
(iv) the costs associated with produc-
ing and marketing the prescription drug
during such period and the value of any
support provided by Federal agencies, the
value of any tax benefit provided to the
patentee in the development of the drug,
the amount of compensation provided to
officers of the patentee, and other factors
determinative as to the true cost of pro-
duction; and
(v) if the price of the drug exceeds the
CPI increase percentage (as defined in sec-
tion 215(i) of the Social Security Act) by
more than 2 percent.
(3) LENGTH OF TERM DECREASE.—The Board
shall determine the length of the decrease of a term
of a patent for a prescription drug described in
paragraph (1).
(c) AUTHORITY TO RECAPTURE CERTAIN TAX BEN-
EFITS.—
(1) IN
GENERAL.—If the Board determines,
after notice and an opportunity for a hearing, that
the patentee of any prescription drug charges an ex-
cessive price for such drug, the Board may require
the recapture of tax benefits provided to the pat-
entee with respect to such drug.
(2) RECAPTURE.—
(A) IN GENERAL.—If the Board requires
the recapture of tax benefits with respect to any
prescription drug, the patentee’s tax under
chapter 1 of the Internal Revenue Code of 1986
for each taxable year specified by the Board
shall be increased by the aggregate of the re-
capture amounts with respect to sales of such
drug during such taxable year.
(B) RECAPTURE AMOUNT.—For purposes
of subparagraph (A), the recapture amount
with respect to the sale of any prescription drug
is the lesser of—
(i) the portion of the price of such
drug which the Board determines is exces-
sive, or
(ii) the amount which the Board de-
termines is such sales pro rata share of the
tax benefits received by the patentee in
connection with the research for, and de-
velopment of, such drug.
(3) NO CREDITS AGAINST TAX, ETC.—Any in-
crease in tax by reason of this subsection shall not
be treated as a tax imposed by chapter 1 of such
Code for purposes of determining—
(A) the amount of any credit under sub-
part A, B, D, or G of part IV of subchapter A
of such chapter, or
(B) the minimum tax under section 55 of
such Code.
(d) MANUFACTURE AND SALE OF DRUGS.—If the
Board determines, after notice and an opportunity for a
hearing, that the patentee of any prescription drug
charges an excessive price for such drug, the Board may,
either directly or by contract, manufacture and sell such
drug.
(e) INCREASE IN LENGTH OF PATENT TERM.—
(1) IN GENERAL.—Upon application of the pat-
entee, the Board may increase the length of a term
of a patent issued under section 151 of title 35,
United States Code, for a prescription drug, if—
(A) the Board determines that the pat-
entee of such drug has not charged an excessive
price for such drug during the 5-year period
ending on the date the patentee applies to the
Board, as determined by the Board using rules
similar to the rules applicable under subsection
(b); and
(B) the patentee provides assurances satis-
factory to the Board that it will not charge an
excessive price for such drug for any period
during the extension of the term.
(2) LENGTH OF TERM INCREASE.—
(A) IN
GENERAL.—Subject to subpara-
graph (B), the Board shall determine the length
of the increase of a term of a patent for a pre-
scription drug described in paragraph (1).
(B) LIMITATION.—The Board may not in-
crease the length of a term of such patent in
excess of 10 percent of the length of the origi-
nal term of such patent.
(f) REGULATIONS.—
(1) IN GENERAL.—Not later than 1 year after
the date of the initial meeting held under section
3(e), the Board shall develop regulations to carry
out subsections (a), (b), (c), (d), and (e).
(2) NOTICE AND COMMENT REQUIREMENT.—
The regulations developed under paragraph (1) shall
be issued in accordance with the notice and com-
ment procedures established under section 553 of
title 5, United States Code.
(g) DEFINITIONS.—For purposes of this section, the
following definitions apply:
(1) PATENTEE.—The term ‘‘patentee’’ has the
meaning given such term in section 100(d) of title
35, United States Code.
(2) PRESCRIPTION DRUG.—The term ‘‘prescrip-
tion drug’’ means a drug (as defined in section
201(g)(1) of the Federal Food, Drug, and Cosmetic
Act (21 U.S.C. 321 (g)(1))) which is subject to reg-
ulation under section 503(b) of such Act.
SEC. 6. PROVISION OF REPORT TO FEDERAL AGENCIES RE-
LATING TO PRESCRIPTION DRUGS SOLD AT
EXCESSIVE PRICES.
(a) IN GENERAL.—The Board shall provide on an an-
nual basis to each Federal agency which dispenses or
makes payments for the dispensing of prescription drugs
a report containing—
(1) a list of each prescription drug which is sold
at an excessive price, as determined by the Board
under section 5(b)(2);
(2) recommendations to the Federal agency
against dispensing or making payments for the dis-
pensing of the prescription drug; and
(3) recommendations to the Federal agency to
substitute the drug with a similar prescription drug
which is not sold at an excessive price.
(b) PRESCRIPTION DRUG DEFINED.—For purposes
of this section, the term ‘‘prescription drug’’ has the
meaning given such term in section 5(e)(2).
SEC. 7. POWERS.
(a) OBTAINING OFFICIAL DATA.—The chairperson
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 disclosure 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. 8. ASSISTANCE FOR THE BOARD.
The Director of the National Institutes of Health, the
Commissioner of the Food and Drug Administration, and
the Director of the Center for Disease Control shall report
to the Board the amount of any subsidy paid through such
agency to a patentee.
SEC. 9. REPORT.
Not later than 1 year after the initial meeting of the
Board under section 3(e), and annually thereafter, the
Board shall submit to the Congress a report describing
the activities of the Board for the preceding year.
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