I 
116TH CONGRESS 
1ST SESSION 
H. R. 19 
To provide for certain reforms with respect to the Medicare program under 
title XVIII of the Social Security Act, the Medicaid program under 
title XIX of such Act, the Food and Drug Administration, and for 
other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
DECEMBER 9, 2019 
Mr. WALDEN (for himself, Mr. BRADY, Ms. FOXX of North Carolina, Mr. 
COLLINS of Georgia, Mr. BURGESS, Mr. NUNES, Mr. WALBERG, Mr. 
SENSENBRENNER, Mr. SCALISE, Ms. CHENEY, Mr. UPTON, Mr. SHIM-
KUS, Mr. LATTA, Mr. GUTHRIE, Mrs. RODGERS of Washington, Mr. 
OLSON, Mr. MCKINLEY, Mr. KINZINGER, Mr. GRIFFITH, Mr. BILIRAKIS, 
Mr. JOHNSON of Ohio, Mr. LONG, Mr. BUCSHON, Mr. FLORES, Mrs. 
BROOKS of Indiana, Mr. MULLIN, Mr. HUDSON, Mr. CARTER of Georgia, 
Mr. GIANFORTE, Mr. PALMER, Mr. COLE, Mr. WILLIAMS, Mr. ABRAHAM, 
Mr. KELLER, Mr. RUTHERFORD, Mr. FERGUSON, Mr. KUSTOFF of Ten-
nessee, Mr. RIGGLEMAN, Mr. WESTERMAN, Mr. GRAVES of Louisiana, 
Mr. LAMALFA, Mr. BAIRD, Mr. HUIZENGA, Mr. MURPHY of North Caro-
lina, Mr. CONAWAY, Mr. ALLEN, Mr. WEBER of Texas, Mr. NEWHOUSE, 
Mr. BABIN, Mr. HAGEDORN, Mr. ROUZER, Mr. RICE of South Carolina, 
Mr. WILSON of South Carolina, Mr. PENCE, Mr. HILL of Arkansas, Mr. 
MARSHALL, Mr. BALDERSON, Mr. ADERHOLT, Mr. RODNEY DAVIS of Il-
linois, Mr. MITCHELL, Mr. CRENSHAW, Mr. JOYCE of Pennsylvania, Mr. 
JOHNSON of South Dakota, Mr. GREEN of Tennessee, Mrs. MILLER, Ms. 
STEFANIK, Mr. BANKS, Mr. COMER, Mr. MCCAUL, Mr. DIAZ-BALART, 
Mr. AMODEI, Mr. NORMAN, Mr. DAVID P. ROE of Tennessee, Mr. BUDD, 
Mr. COOK, Mr. KEVIN HERN of Oklahoma, Mr. CHABOT, Mr. STEUBE, 
Mr. CURTIS, Mr. GROTHMAN, Mr. STEIL, Mr. JOYCE of Ohio, Mr. SMITH 
of New Jersey, Mr. GONZALEZ of Ohio, Mr. STAUBER, Mr. BUCHANAN, 
Mr. SMITH
of Nebraska, Mr. ARRINGTON, Mr. MARCHANT, Mrs. 
WALORSKI, Mr. KELLY of Pennsylvania, Mr. SMITH of Missouri, Mr. 
LAHOOD, Mr. HOLDING, Mr. ESTES, Mr. REED, Mr. SCHWEIKERT, Mr. 
WENSTRUP, Mrs. ROBY, Mr. RESCHENTHALER, Mr. HURD of Texas, Mr. 
WATKINS, Mr. LUETKEMEYER, Mr. TURNER, Mr. THOMPSON of Pennsyl-
vania, Ms. HERRERA BEUTLER, Mr. GUEST, Mrs. HARTZLER, Mrs. WAG-
NER, Mr. WALTZ, Mr. WRIGHT, and Mr. GIBBS) 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, 
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for a period to be subsequently determined by the Speaker, in each case 
for consideration of such provisions as fall within the jurisdiction of the 
committee concerned 
A BILL 
To provide for certain reforms with respect to the Medicare 
program under title XVIII of the Social Security Act, 
the Medicaid program under title XIX of such Act, the 
Food and Drug Administration, 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 ‘‘Lower Costs, More 
Cures Act of 2019’’. 
SEC. 2. TABLE OF CONTENTS. 
The table of contents for this Act is as follows: 
Sec. 1. Short title. 
Sec. 2. Table of contents. 
TITLE I—MEDICARE PARTS B AND D 
Subtitle A—Medicare Part B Provisions 
Sec. 101. Improvements to Medicare site-of-service transparency. 
Sec. 102. Requiring manufacturers of certain single-dose container or single-use 
package drugs payable under part B of the Medicare program 
to provide refunds with respect to discarded amounts of such 
drugs. 
Sec. 103. Providing for variation in payment for certain drugs covered under 
part B of the Medicare program. 
Sec. 104. Establishment of maximum add-on payment for drugs and 
biologicals. 
Sec. 105. Treatment of drug administration services furnished by certain ex-
cepted off-campus outpatient departments of a provider. 
Subtitle B—Drug Price Transparency 
Sec. 111. Reporting on explanation for drug price increases. 
Sec. 112. Public disclosure of drug discounts. 
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Sec. 113. Study of pharmaceutical supply chain intermediaries and merger ac-
tivity. 
Sec. 114. Requiring certain manufacturers to report drug pricing information 
with respect to drugs under the Medicare program. 
Sec. 115. Making prescription drug marketing sample information reported by 
manufacturers available to certain individuals and entities. 
Sec. 116. Requiring prescription drug plan sponsors to include real-time benefit 
information as part of such sponsor’s electronic prescription 
program under the Medicare program. 
Sec. 117. Sense of Congress regarding the need to expand commercially avail-
able drug pricing comparison platforms. 
Sec. 118. Technical corrections. 
Subtitle C—Medicare Part D Benefit Redesign 
Sec. 121. Medicare part D benefit redesign. 
Subtitle D—Other Medicare Part D Provisions 
Sec. 131. Transitional coverage and retroactive Medicare part D coverage for 
certain low-income beneficiaries. 
Sec. 132. Allowing the offering of additional prescription drug plans under 
Medicare part D. 
Sec. 133. Allowing certain enrollees of prescription drugs plans and MA–PD 
plans under Medicare program to spread out cost-sharing 
under certain circumstances. 
Sec. 134. Establishing a monthly cap on beneficiary incurred costs for insulin 
products and supplies under a prescription drug plan or MA– 
PD plan. 
Sec. 135. Growth rate of Medicare part D out-of-pocket cost threshold. 
Subtitle E—MedPAC 
Sec. 141. Providing the Medicare Payment Advisory Commission and Medicaid 
and CHIP Payment and Access Commission with access to cer-
tain drug payment information, including certain rebate infor-
mation. 
TITLE II—MEDICAID 
Sec. 201. Sunset of limit on maximum rebate amount for single source drugs 
and innovator multiple source drugs. 
Sec. 202. Medicaid pharmacy and therapeutics committee improvements. 
Sec. 203. GAO report on conflicts of interest in State Medicaid program drug 
use review boards and pharmacy and therapeutics (P&T) com-
mittees. 
Sec. 204. Ensuring the accuracy of manufacturer price and drug product infor-
mation under the Medicaid drug rebate program. 
Sec. 205. Improving transparency and preventing the use of abusive spread 
pricing and related practices in Medicaid. 
Sec. 206. T–MSIS drug data analytics reports. 
Sec. 207. Risk-sharing value-based payment agreements for covered outpatient 
drugs under Medicaid. 
Sec. 208. Applying Medicaid drug rebate requirement to drugs provided as part 
of outpatient hospital services. 
TITLE III—FOOD AND DRUG ADMINISTRATION 
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Subtitle A—CREATES Act 
Sec. 301. Actions for delays of generic drugs and biosimilar biological products. 
Sec. 302. REMS approval process for subsequent filers. 
Sec. 303. Rule of construction. 
Subtitle B—Pay-for-Delay 
Sec. 311. Unlawful agreements. 
Sec. 312. Notice and certification of agreements. 
Sec. 313. Forfeiture of 180-day exclusivity period. 
Sec. 314. Commission litigation authority. 
Sec. 315. Statute of limitations. 
Subtitle C—BLOCKING Act 
Sec. 321. Change conditions of first generic exclusivity to spur access and com-
petition. 
Subtitle D—Purple Book 
Sec. 331. Public listing. 
Sec. 332. Review and report on types of information to be listed. 
Subtitle E—Orange Book 
Sec. 341. Orange Book. 
Sec. 342. GAO report to Congress. 
Subtitle F—Advancing Education on Biosimilars 
Sec. 351. Education on biological products. 
Subtitle G—Streamlining Transition of Biological Products 
Sec. 361. Streamlining the transition of biological products. 
Subtitle H—Over-the-Counter Monograph Safety, Innovation, and Reform 
Sec. 370. Short title; references in subtitle. 
PART 1—OTC DRUG REVIEW 
Sec. 371. Regulation of certain nonprescription drugs that are marketed with-
out an approved drug application. 
Sec. 372. Misbranding. 
Sec. 373. Drugs excluded from the over-the-counter drug review. 
Sec. 374. Treatment of Sunscreen Innovation Act. 
Sec. 375. Annual update to Congress on appropriate pediatric indication for 
certain OTC cough and cold drugs. 
Sec. 376. Technical corrections. 
PART 2—USER FEES 
Sec. 381. Short title; finding. 
Sec. 382. Fees relating to over-the-counter drugs. 
Subtitle I—Other Provisions 
Sec. 391. Protecting access to biological products. 
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Sec. 392. Orphan drug clarification. 
Sec. 393. Conditions of use for biosimilar biological products. 
Sec. 394. Clarifying the meaning of new chemical entity. 
TITLE IV—REVENUE PROVISIONS 
Sec. 401. Permanent extension of reduction in medical expense deduction floor. 
Sec. 402. Safe harbor for high deductible health plans without deductible for 
insulin. 
Sec. 403. Inclusion of certain over-the-counter medical products as qualified 
medical expenses. 
TITLE V—MISCELLANEOUS 
Sec. 501. Payment for biosimilar biological products during initial period. 
Sec. 502. GAO study and report on average sales price. 
Sec. 503. Requiring prescription drug plans and MA–PD plans to report poten-
tial fraud, waste, and abuse to the Secretary of HHS. 
Sec. 504. Establishment of pharmacy quality measures under Medicare part D. 
Sec. 505. Improving coordination between the Food and Drug Administration 
and the Centers for Medicare & Medicaid Services. 
Sec. 506. Patient consultation in Medicare national and local coverage deter-
minations in order to mitigate barriers to inclusion of such per-
spectives. 
Sec. 507. MedPAC report on shifting coverage of certain Medicare part B 
drugs to Medicare part D. 
Sec. 508. Requirement that direct-to-consumer advertisements for prescription 
drugs and biological products include truthful and non-mis-
leading pricing information. 
Sec. 509. Chief Pharmaceutical Negotiator at the Office of the United States 
Trade Representative. 
Sec. 510. Waiving Medicare coinsurance for colorectal cancer screening tests. 
TITLE I—MEDICARE PARTS B 
AND D 
Subtitle A—Medicare Part B 
Provisions 
SEC. 101. IMPROVEMENTS TO MEDICARE SITE-OF-SERVICE 
TRANSPARENCY. 
Section 1834(t) of the Social Security Act (42 U.S.C. 
1395m(t)) is amended— 
(1) in paragraph (1)— 
(A) in the heading, by striking ‘‘IN GEN-
ERAL’’ and inserting ‘‘SITE PAYMENT’’; 
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(B) in the matter preceding subparagraph 
(A)— 
(i) by striking ‘‘or to’’ and inserting ‘‘, 
to’’; 
(ii) by inserting ‘‘, or to a physician 
for services furnished in a physician’s of-
fice’’ after ‘‘surgical center’’; and 
(iii) by inserting ‘‘(or 2021 with re-
spect to a physician for services furnished 
in a physician’s office)’’ after ‘‘2018’’; and 
(C) in subparagraph (A)— 
(i) by striking ‘‘and the’’ and insert-
ing ‘‘, the’’; and 
(ii) by inserting ‘‘, and the physician 
fee schedule under section 1848 (with re-
spect to the practice expense component of 
such payment amount)’’ after ‘‘such sec-
tion’’; 
(2) by redesignating paragraphs (2) through 
(4) as paragraphs (3) through (5), respectively; and 
(3) by inserting after paragraph (1) the fol-
lowing new paragraph: 
‘‘(2) 
PHYSICIAN
PAYMENT.—Beginning 
in 
2021, the Secretary shall expand the information in-
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cluded on the Internet website described in para-
graph (1) to include— 
‘‘(A) the amount paid to a physician under 
section 1848 for an item or service for the set-
tings described in paragraph (1); and 
‘‘(B) the estimated amount of beneficiary 
liability applicable to the item or service.’’. 
SEC. 102. REQUIRING MANUFACTURERS OF CERTAIN SIN-
GLE-DOSE CONTAINER OR SINGLE-USE PACK-
AGE DRUGS PAYABLE UNDER PART B OF THE 
MEDICARE PROGRAM TO PROVIDE REFUNDS 
WITH RESPECT TO DISCARDED AMOUNTS OF 
SUCH DRUGS. 
Section 1847A of the Social Security Act (42 U.S.C. 
1395–3a) is amended by adding at the end the following 
new subsection: 
‘‘(h) REFUND FOR CERTAIN DISCARDED SINGLE- 
DOSE CONTAINER OR SINGLE-USE PACKAGE DRUGS.— 
‘‘(1) SECRETARIAL
PROVISION
OF
INFORMA-
TION.— 
‘‘(A) IN
GENERAL.—For each calendar 
quarter beginning on or after July 1, 2021, the 
Secretary shall, with respect to a refundable 
single-dose container or single-use package drug 
(as defined in paragraph (8)), report to each 
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manufacturer 
(as 
defined 
in 
subsection 
(c)(6)(A)) of such refundable single-dose con-
tainer or single-use package drug the following 
for the calendar quarter: 
‘‘(i) Subject to subparagraph (C), in-
formation on the total number of units of 
the billing and payment code of such drug, 
if any, that were discarded during such 
quarter, as determined using a mechanism 
such as the JW modifier used as of the 
date of enactment of this subsection (or 
any such successor modifier that includes 
such data as determined appropriate by 
the Secretary). 
‘‘(ii) The refund amount that the 
manufacturer is liable for pursuant to 
paragraph (3). 
‘‘(B) 
DETERMINATION
OF
DISCARDED 
AMOUNTS.—For 
purposes 
of 
subparagraph 
(A)(i), with respect to a refundable single-dose 
container or single-use package drug furnished 
during a quarter, the amount of such drug that 
was discarded shall be determined based on the 
amount of such drug that was unused and dis-
carded for each drug on the date of service. 
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‘‘(C) EXCLUSION OF UNITS OF PACKAGED 
DRUGS.—The total number of units of the bill-
ing and payment code of a refundable single- 
dose container or single-use package drug of a 
manufacturer furnished during a calendar quar-
ter for purposes of subparagraph (A)(i), and 
the determination of the estimated total allowed 
charges for the drug in the quarter for purposes 
of paragraph (3)(A)(ii), shall not include such 
units that are packaged into the payment 
amount for an item or service and are not sepa-
rately payable. 
‘‘(2) 
MANUFACTURER
REQUIREMENT.—For 
each calendar quarter beginning on or after July 1, 
2021, the manufacturer of a refundable single-dose 
container or single-use package drug shall, for such 
drug, provide to the Secretary a refund that is equal 
to the amount specified in paragraph (3) for such 
drug for such quarter. 
‘‘(3) REFUND AMOUNT.— 
‘‘(A) IN GENERAL.—The amount of the re-
fund specified in this paragraph is, with respect 
to a refundable single-dose container or single- 
use package drug of a manufacturer assigned to 
a billing and payment code for a calendar quar-
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ter beginning on or after July 1, 2021, an 
amount equal to the estimated amount (if any) 
by which— 
‘‘(i) the product of— 
‘‘(I) the total number of units of 
the billing and payment code for such 
drug that were discarded during such 
quarter (as determined under para-
graph (1)); and 
‘‘(II)(aa) in the case of a refund-
able single-dose container or single- 
use package drug that is a single 
source drug or biological, the amount 
determined for such drug under sub-
section (b)(4); or 
‘‘(bb) in the case of a refundable 
single-dose container or single-use 
package drug that is a biosimilar bio-
logical product, the average sales price 
determined 
under 
subsection 
(b)(8)(A); exceeds 
‘‘(ii) an amount equal to the applica-
ble percentage (as defined in subparagraph 
(B)) of the estimated total allowed charges 
for such drug during the quarter. 
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‘‘(B) 
APPLICABLE
PERCENTAGE
DE-
FINED.— 
‘‘(i) IN
GENERAL.—For purposes of 
subparagraph (A)(ii), the term ‘applicable 
percentage’ means— 
‘‘(I) subject to subclause (II), 10 
percent; and 
‘‘(II) if applicable, in the case of 
a refundable single-dose container or 
single-use package drug described in 
clause (ii), a percentage specified by 
the Secretary pursuant to such clause. 
‘‘(ii) TREATMENT
OF
DRUGS
THAT 
HAVE
UNIQUE
CIRCUMSTANCES.—In the 
case of a refundable single-dose container 
or single-use package drug that has unique 
circumstances involving similar loss of 
product as that described in paragraph 
(8)(B), the Secretary, through notice and 
comment rulemaking, may increase the ap-
plicable percentage otherwise applicable 
under clause (i)(I) as determined appro-
priate by the Secretary. 
‘‘(4) FREQUENCY.—Amounts required to be re-
funded pursuant to paragraph (2) shall be paid in 
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regular intervals (as determined appropriate by the 
Secretary). 
‘‘(5) REFUND DEPOSITS.—Amounts paid as re-
funds pursuant to paragraph (2) shall be deposited 
into the Federal Supplementary Medical Insurance 
Trust Fund established under section 1841. 
‘‘(6) ENFORCEMENT.— 
‘‘(A) AUDITS.— 
‘‘(i) MANUFACTURER AUDITS.—Each 
manufacturer of a refundable single-dose 
container or single-use package drug that 
is required to provide a refund under this 
subsection shall be subject to periodic 
audit with respect to such drug and such 
refunds by the Secretary. 
‘‘(ii) PROVIDER
AUDITS.—The Sec-
retary shall conduct periodic audits of 
claims submitted under this part with re-
spect to refundable single-dose container or 
single-use package drugs in accordance 
with the authority under section 1833(e) to 
ensure compliance with the requirements 
applicable under this subsection. 
‘‘(B) CIVIL MONEY PENALTY.— 
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‘‘(i) IN
GENERAL.—The Secretary 
shall impose a civil money penalty on a 
manufacturer of a refundable single-dose 
container or single-use package drug who 
has failed to comply with the requirement 
under paragraph (2) for such drug for a 
calendar quarter in an amount equal to the 
sum of— 
‘‘(I) the amount that the manu-
facturer would have paid under such 
paragraph with respect to such drug 
for such quarter; and 
‘‘(II) 25 percent of such amount. 
‘‘(ii) APPLICATION.—The provisions 
of section 1128A (other than subsections 
(a) and (b)) shall apply to a civil money 
penalty under this subparagraph in the 
same manner as such provisions apply to a 
penalty 
or 
proceeding 
under 
section 
1128A(a). 
‘‘(7) IMPLEMENTATION.—The Secretary shall 
implement this subsection through notice and com-
ment rulemaking. 
‘‘(8) DEFINITION
OF
REFUNDABLE
SINGLE- 
DOSE CONTAINER OR SINGLE-USE PACKAGE DRUG.— 
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‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), in this subsection, the term 
‘refundable single-dose container or single-use 
package drug’ means a single source drug or bi-
ological (as defined in section 1847A(c)(6)(D)) 
or a biosimilar biological product (as defined in 
section 1847A(c)(6)(H)) for which payment is 
established under this part and that is fur-
nished from a single-dose container or single- 
use package. 
‘‘(B) EXCLUSIONS.—The term ‘refundable 
single-dose container or single-use package 
drug’ does not include— 
‘‘(i) a drug or biological that is either 
a radiopharmaceutical or an imaging 
agent; 
‘‘(ii) a drug or biological for which 
dosage and administration instructions ap-
proved by the Commissioner of Food and 
Drugs require filtration during the drug 
preparation process, prior to dilution and 
administration, and require that any un-
used portion of such drug after the filtra-
tion process be discarded after the comple-
tion of such filtration process; or 
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‘‘(iii) a drug or biological approved by 
the Food and Drug Administration on or 
after the date of enactment of this sub-
section and with respect to which payment 
has been made under this part for less 
than 18 months.’’. 
SEC. 103. PROVIDING FOR VARIATION IN PAYMENT FOR 
CERTAIN DRUGS COVERED UNDER PART B 
OF THE MEDICARE PROGRAM. 
(a) IN GENERAL.—Section 1847A(b) of the Social 
Security Act (42 U.S.C. 1395w–3a(b)) is amended— 
(1) in paragraph (1)— 
(A) in subparagraph (A), by inserting after 
‘‘or 106 percent’’ the following: ‘‘(or, for a mul-
tiple source drug (other than autologous cellular 
immunotherapy) furnished on or after January 
1, 2021, the applicable percent specified in 
paragraph (9)(A) for the drug and quarter in-
volved)’’; and 
(B) in subparagraph (B) of paragraph (1), 
by inserting after ‘‘106 percent’’ the following: 
‘‘(or, for a single source drug or biological 
(other than autologous cellular immunotherapy) 
furnished on or after January 1, 2021, the ap-
plicable percent specified in paragraph (9)(A) 
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for the drug or biological and quarter in-
volved)’’; and 
(2) by adding at the end the following new 
paragraph: 
‘‘(9) APPLICATION OF VARIABLE PERCENTAGES 
BASED
ON
PERCENTILE
RANKING
OF
PER
BENE-
FICIARY ALLOWED CHARGES.— 
‘‘(A) APPLICABLE
PERCENT
TO
BE
AP-
PLIED.— 
‘‘(i) IN GENERAL.—Subject to clauses 
(ii), with respect to a drug or biological 
furnished in a calendar quarter beginning 
on or after January 1, 2021, if the Sec-
retary determines that the percentile rank 
of a drug or biological under subparagraph 
(B)(i)(III), with respect to per beneficiary 
allowed charges for all such drugs or 
biologicals, is— 
‘‘(I) at least equal to the 85th 
percentile, the applicable percent for 
the drug for such quarter under this 
subparagraph is 104 percent; 
‘‘(II) at least equal to the 70th 
percentile, but less than the 85th per-
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centile, such applicable percent is 106 
percent; 
‘‘(III) at least equal to the 50th 
percentile, but less than the 70th per-
centile, such applicable percent is 108 
percent; or 
‘‘(IV) less than the 50th per-
centile, such applicable percent is 110 
percent. 
‘‘(ii) CASES WHERE DATA NOT SUFFI-
CIENTLY
AVAILABLE
TO
COMPUTE
PER 
BENEFICIARY
ALLOWED
CHARGES.—Sub-
ject to clause (iii), in the case of a drug or 
biological furnished for which the amount 
of payment is determined under subpara-
graph (A) or (B) of paragraph (1) and not 
under subsection (c)(4), for calendar quar-
ters during a period in which data are not 
sufficiently available to compute a per ben-
eficiary allowed charges for the drug or bi-
ological, the applicable percent is 106 per-
cent. 
‘‘(B) DETERMINATION
OF
PERCENTILE 
RANK OF PER BENEFICIARY ALLOWED CHARGES 
OF DRUGS.— 
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‘‘(i) IN GENERAL.—With respect to a 
calendar quarter beginning on or after 
January 1, 2021, for drugs and biologicals 
for which the amount of payment is deter-
mined under subparagraph (A) or (B) of 
paragraph 
(1), 
except 
for 
drugs 
or 
biologicals for which data are not suffi-
ciently available, the Secretary shall— 
‘‘(I) compute the per beneficiary 
allowed charges (as defined in sub-
paragraph (C)) for each such drug or 
biological; 
‘‘(II) adjust such per beneficiary 
allowed charges for the quarter, to the 
extent provided under subparagraph 
(D); and 
‘‘(III) array such adjusted per 
beneficiary allowed charges for all 
such drugs or biologicals from high to 
low and rank such drugs or biologicals 
by percentile of such arrayed per ben-
eficiary allowed charges. 
‘‘(ii) 
FREQUENCY.—The 
Secretary 
shall make the computations under clause 
(i)(I) every 6 months (or, if necessary, as 
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determined by the Secretary, every 9 or 12 
months) and such computations shall apply 
to succeeding calendar quarters until a 
new computation has been made. 
‘‘(iii) APPLICABLE
DATA
PERIOD.— 
For purposes of this paragraph, the term 
‘applicable data period’ means the most re-
cent period for which the data necessary 
for making the computations under clause 
(i) are available, as determined by the Sec-
retary. 
‘‘(C) 
PER
BENEFICIARY
ALLOWED 
CHARGES
DEFINED.—In this paragraph, the 
term ‘per beneficiary allowed charges’ means, 
with respect to a drug or biological for which 
the amount of payment is determined under 
subparagraph (A) or (B) of paragraph (1)— 
‘‘(i) the allowed charges for the drug 
or biological for which payment is so made 
for the applicable data period, as estimated 
by the Secretary; divided by 
‘‘(ii) the number of individuals for 
whom any payment for the drug or biologi-
cal was made under paragraph (1) for the 
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applicable data period, as estimated by the 
Secretary. 
‘‘(D) ADJUSTMENT TO REFLECT CHANGES 
IN
AVERAGE
SALES
PRICE.—In applying this 
paragraph for a particular calendar quarter, the 
Secretary shall adjust the per beneficiary al-
lowed charges for a drug or biological by multi-
plying such per beneficiary allowed charges 
under subparagraph (C) for the applicable data 
period by the ratio of— 
‘‘(i) the average sales price for the 
drug or biological for the most recent cal-
endar quarter used under subsection 
(c)(5)(B); to 
‘‘(ii) the average sales price for the 
drug or biological for the calendar quarter 
(or the weighted average for the quarters 
involved) included in the applicable data 
period.’’. 
(b) APPLICATION
OF JUDICIAL REVIEW PROVI-
SIONS.—Section 1847A(g) of the Social Security Act is 
amended— 
(1) by striking ‘‘and’’ at the end of paragraph 
(4); 
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(2) by striking the period at the end of para-
graph (5) and inserting ‘‘; and’’; and 
(3) by adding at the end the following new 
paragraph: 
‘‘(6) the determination of per beneficiary al-
lowed charges of drugs or biologicals and ranking of 
such charges under subsection (b)(9).’’. 
SEC. 104. 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), as amended by section 
103, is further 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 
(10)’’; and 
(B) by adding at the end the following new 
paragraph: 
‘‘(10) 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-
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nished on or after January 1, 2021, 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): 
‘‘(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 the ap-
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plicable percent (as defined in para-
graph (9)) for such drug. 
‘‘(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 the ap-
plicable percent (as defined in para-
graph (9)) for such drug or biological. 
‘‘(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 
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 
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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— 
‘‘(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 
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(A), the maximum add-on payment amount 
specified in this subparagraph is— 
‘‘(i) with respect to a drug or biologi-
cal 
(other 
than 
autologous 
cellular 
immunotherapy)— 
‘‘(I) for each of 2021 through 
2028, $1,000; and 
‘‘(II) for a subsequent year, the 
amount specified in this subparagraph 
for the preceding year increased by 
the percentage increase in the con-
sumer price index for all urban con-
sumers (all items; United States city 
average) for the 12-month period end-
ing with June of the previous year; or 
‘‘(ii) with respect to a drug or biologi-
cal 
consisting 
of 
autologous 
cellular 
immunotherapy— 
‘‘(I) for each of 2021 through 
2028, $2,000; and 
‘‘(II) for a subsequent year, the 
amount specified in this subparagraph 
for the preceding year increased by 
the percentage increase in the con-
sumer price index for all urban con-
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sumers (all items; United States city 
average) for the 12-month period end-
ing with June of the previous 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)(10), in the case’’. 
(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, 2021, if such 
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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)(10) 
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.’’. 
(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, 2021, the provisions of sub-
section (t)(14)(I) shall apply to the estab-
lishment of the amount of payment for the 
drug or biological under such system in the 
same manner in which such provisions 
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apply to the establishment of the amount 
of payment under subsection (t)(14)(A).’’. 
SEC. 105. TREATMENT OF DRUG ADMINISTRATION SERV-
ICES FURNISHED BY CERTAIN EXCEPTED 
OFF-CAMPUS OUTPATIENT DEPARTMENTS OF 
A PROVIDER. 
Section 1833(t)(16) of the Social Security Act (42 
12 U.S.C. 1395l(t)(16)) is amended by adding at the end 
the following new subparagraph: 
‘‘(G) SPECIAL PAYMENT RULE FOR DRUG 
ADMINISTRATION SERVICES FURNISHED BY AN 
EXCEPTED DEPARTMENT OF A PROVIDER.— 
‘‘(i) IN GENERAL.—In the case of a 
covered OPD service that is a drug admin-
istration service (as defined by the Sec-
retary) furnished by a department of a 
provider described in clause (ii) or (iv) of 
paragraph (21)(B), the payment amount 
for such service furnished on or after Jan-
uary 1, 2021, shall be the same payment 
amount (as determined in paragraph 
(21)(C)) that would apply if the drug ad-
ministration service was furnished by an 
off-campus outpatient department of a pro-
vider (as defined in paragraph (21)(B)). 
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Food, Drug, and Cosmetic Act or licensed 
under section 351 of this Act; or 
‘‘(B) who is responsible for setting the 
wholesale acquisition cost for the drug. 
‘‘(2) QUALIFYING DRUG.—The term ‘qualifying 
drug’ means any drug that is approved under sub-
section (c) or (j) of section 505 of the Federal Food, 
Drug, and Cosmetic Act or licensed under subsection 
(a) or (k) of section 351 of this Act— 
‘‘(A) that has a wholesale acquisition cost 
of $100 or more, adjusted for inflation occur-
ring after the date of enactment of this section, 
for a month’s supply or a typical course of 
treatment that lasts less than a month, and 
is— 
‘‘(i) subject to section 503(b)(1) of 
the Federal Food, Drug, and Cosmetic 
Act; 
‘‘(ii) administered or otherwise dis-
pensed to treat a disease or condition af-
fecting more than 200,000 persons in the 
United States; and 
‘‘(iii) not a vaccine; and 
‘‘(B) for which, during the previous cal-
endar year, at least 1 dollar of the total amount 
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of sales were for individuals enrolled under the 
Medicare program under title XVIII of the So-
cial Security Act (42 U.S.C. 1395 et seq.) or 
under a State Medicaid plan under title XIX of 
such Act (42 U.S.C. 1396 et seq.) or under a 
waiver of such plan. 
‘‘(3) WHOLESALE
ACQUISITION
COST.—The 
term ‘wholesale acquisition cost’ has the meaning 
given that term in section 1847A(c)(6)(B) of the So-
cial Security Act (42 U.S.C. 1395w–3a(c)(6)(B)). 
‘‘(b) REPORT.— 
‘‘(1) REPORT REQUIRED.—The manufacturer of 
a qualifying drug shall submit a report to the Sec-
retary— 
‘‘(A) for each increase in the price of a 
qualifying drug that results in an increase in 
the wholesale acquisition cost of that drug that 
is equal to— 
‘‘(i) 10 percent or more within a sin-
gle calendar year beginning on or after 
January 1, 2019; or 
‘‘(ii) 25 percent or more within three 
consecutive calendar years for which the 
first such calendar year begins on or after 
January 1, 2019; and 
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‘‘(B) in the case that the qualifying drug 
is first covered under title XVIII with respect 
to an applicable year, if the estimated cost or 
spending under such title per individual or per 
user of such drug (as estimated by the Sec-
retary) for such applicable year (or per course 
of treatment in such applicable year, as defined 
by the Secretary) is at least $26,000. 
‘‘(2) REPORT
DEADLINE.—Each report de-
scribed in paragraph (1) shall be submitted to the 
Secretary— 
‘‘(A) in the case of a report with respect 
to an increase in the price of a qualifying drug 
that occurs during the period beginning on Jan-
uary 1, 2019, and ending on the day that is 60 
days after the date of enactment of this section, 
not later than 90 days after such date of enact-
ment; 
‘‘(B) in the case of a report with respect 
to an increase in the price of a qualifying drug 
that occurs after the period described in sub-
paragraph (A), not later than 30 days prior to 
the planned effective date of such price increase 
for such qualifying drug; and 
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‘‘(C) in the case of a report with respect 
to a qualifying drug that meets the criteria de-
scribed in paragraph (1)(B), not later than 30 
days after such drug meets such criteria. 
‘‘(c) CONTENTS.—A report under subsection (b), con-
sistent with the standard for disclosures described in sec-
tion 213.3(d) of title 12, Code of Federal Regulations (as 
in effect on the date of enactment of this section), shall, 
at a minimum, include— 
‘‘(1) with respect to the qualifying drug— 
‘‘(A) the percentage by which the manufac-
turer will raise the wholesale acquisition cost of 
the drug within the calendar year or three con-
secutive calendar years as described in sub-
section (b)(1)(A) or (b)(1)(B), if applicable, and 
the effective date of such price increase; 
‘‘(B) an explanation for, and description 
of, each price increase for such drug that will 
occur during the calendar year period described 
in subsection (b)(1)(A) or the three consecutive 
calendar year period described in subsection 
(b)(1)(B), as applicable; 
‘‘(C) if known and different from the man-
ufacturer of the qualifying drug, the identity 
of— 
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‘‘(i) the sponsor or sponsors of any in-
vestigational new drug applications under 
section 505(i) of the Federal Food, Drug, 
and Cosmetic Act for clinical investigations 
with respect to such drug, for which the 
full reports are submitted as part of the 
application— 
‘‘(I) for approval of the drug 
under section 505 of such Act; or 
‘‘(II) for licensure of the drug 
under section 351 of this Act; and 
‘‘(ii) the sponsor of an application for 
the drug approved under such section 505 
of the Federal Food, Drug, and Cosmetic 
Act or licensed under section 351 of this 
Act; 
‘‘(D) a description of the history of the 
manufacturer’s price increases for the drug 
since the approval of the application for the 
drug under section 505 of the Federal Food, 
Drug, and Cosmetic Act or the issuance of the 
license for the drug under section 351 of this 
Act, or since the manufacturer acquired such 
approved application or license, if applicable; 
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‘‘(E) the current wholesale acquisition cost 
of the drug; 
‘‘(F) the total expenditures of the manu-
facturer on— 
‘‘(i) materials and manufacturing for 
such drug; and 
‘‘(ii) acquiring patents and licensing 
for such drug; 
‘‘(G) the percentage of total expenditures 
of the manufacturer on research and develop-
ment for such drug that was derived from Fed-
eral funds; 
‘‘(H) the total expenditures of the manu-
facturer on research and development for such 
drug that is necessary to demonstrate that it 
meets applicable statutory standards for ap-
proval under section 505 of the Federal Food, 
Drug, and Cosmetic Act or licensure under sec-
tion 351 of this Act, as applicable; 
‘‘(I) the total expenditures of the manufac-
turer on pursuing new or expanded indications 
or dosage changes for such drug under section 
505 of the Federal Food, Drug, and Cosmetic 
Act or section 351 of this Act; 
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‘‘(J) the total expenditures of the manufac-
turer on carrying out postmarket requirements 
related to such drug, including under section 
505(o)(3) of the Federal Food, Drug, and Cos-
metic Act; 
‘‘(K) the total revenue and the net profit 
generated from the qualifying drug for each cal-
endar year since the approval of the application 
for the drug under section 505 of the Federal 
Food, Drug, and Cosmetic Act or the issuance 
of the license for the drug under section 351, 
or since the manufacturer acquired such ap-
proved application or license; and 
‘‘(L) the total costs associated with mar-
keting and advertising for the qualifying drug; 
‘‘(2) with respect to the manufacturer— 
‘‘(A) the total revenue and the net profit 
of the manufacturer for each of the 1-year pe-
riod described in subsection (b)(1)(A) or the 3- 
year period described in subsection (b)(1)(B), 
as applicable; 
‘‘(B) all stock-based performance metrics 
used by the manufacturer to determine execu-
tive compensation for each of the 1-year period 
described in subsection (b)(1)(A) or the 3-year 
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period described in subsection (b)(1)(B), as ap-
plicable; and 
‘‘(C) any additional information the manu-
facturer chooses to provide related to drug pric-
ing decisions, such as total expenditures on— 
‘‘(i) drug research and development; 
or 
‘‘(ii) clinical trials, including on drugs 
that failed to receive approval by the Food 
and Drug Administration; and 
‘‘(3) such other related information as the Sec-
retary considers appropriate and as specified by the 
Secretary through notice-and-comment rulemaking. 
‘‘(d) INFORMATION PROVIDED.—The manufacturer 
of a qualifying drug that is required to submit a report 
under subsection (b), shall ensure that such report and 
any explanation for, and description of, each price increase 
described in subsection (c)(1)(B) shall be truthful, not 
misleading, and accurate. 
‘‘(e) CIVIL MONETARY PENALTY.—Any manufac-
turer of a qualifying drug that fails to submit a report 
for the drug as required by this section, following notifica-
tion by the Secretary to the manufacturer that the manu-
facturer is not in compliance with this section, shall be 
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subject to a civil monetary penalty of $75,000 for each 
day on which the violation continues. 
‘‘(f) FALSE INFORMATION.—Any manufacturer that 
submits a report for a drug as required by this section 
that knowingly provides false information in such report 
is subject to a civil monetary penalty in an amount not 
to exceed $75,000 for each item of false information. 
‘‘(g) PUBLIC POSTING.— 
‘‘(1) IN GENERAL.—Subject to paragraph (3), 
the Secretary shall post each report submitted under 
subsection (b) on the public website of the Depart-
ment of Health and Human Services the day the 
price increase of a qualifying drug is scheduled to go 
into effect. 
‘‘(2) FORMAT.—In developing the format in 
which reports will be publicly posted under para-
graph (1), the Secretary shall consult with stake-
holders, including beneficiary groups, and shall seek 
feedback from consumer advocates and readability 
experts on the format and presentation of the con-
tent of such reports to ensure that such reports 
are— 
‘‘(A) user-friendly to the public; and 
‘‘(B) written in plain language that con-
sumers can readily understand. 
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‘‘(3) PROTECTED
INFORMATION.—Nothing in 
this section shall be construed to authorize the pub-
lic disclosure of information submitted by a manu-
facturer that is prohibited from disclosure by appli-
cable laws concerning the protection of trade secrets, 
commercial information, and other information cov-
ered under such laws. 
‘‘SEC. 399OO–1. ANNUAL REPORT TO CONGRESS. 
‘‘(a) IN GENERAL.—Subject to subsection (b), the 
Secretary shall submit to Congress, and post on the public 
website of the Department of Health and Human Services 
in a way that is user-friendly to the public and written 
in plain language that consumers can readily understand, 
an annual report— 
‘‘(1) summarizing the information reported pur-
suant to section 399OO; 
‘‘(2) including copies of the reports and sup-
porting detailed economic analyses submitted pursu-
ant to such section; 
‘‘(3) detailing the costs and expenditures in-
curred by the Department of Health and Human 
Services in carrying out section 399OO; and 
‘‘(4) explaining how the Department of Health 
and Human Services is improving consumer and 
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provider information about drug value and drug 
price transparency. 
‘‘(b) PROTECTED INFORMATION.—Nothing in this 
section shall be construed to authorize the public disclo-
sure of information submitted by a manufacturer that is 
prohibited from disclosure by applicable laws concerning 
the protection of trade secrets, commercial information, 
and other information covered under such laws.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) takes effect on the date of enactment of 
this Act. 
SEC. 112. PUBLIC DISCLOSURE OF DRUG DISCOUNTS. 
Section 1150A of the Social Security Act (42 U.S.C. 
1320b–23) is amended— 
(1) in subsection (c), in the matter preceding 
paragraph (1), by inserting ‘‘(other than as per-
mitted under subsection (e))’’ after ‘‘disclosed by the 
Secretary’’; and 
(2) by adding at the end the following new sub-
section: 
‘‘(e) PUBLIC AVAILABILITY OF CERTAIN INFORMA-
TION.— 
‘‘(1) IN GENERAL.—In order to allow the com-
parison of PBMs’ ability to negotiate rebates, dis-
counts, direct and indirect remuneration fees, ad-
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ministrative fees, and price concessions and the 
amount of such rebates, discounts, direct and indi-
rect remuneration fees, administrative fees, and 
price concessions that are passed through to plan 
sponsors, beginning January 1, 2020, the Secretary 
shall make available on the Internet website of the 
Department of Health and Human Services the in-
formation with respect to the second preceding cal-
endar year provided to the Secretary on generic dis-
pensing rates (as described in paragraph (1) of sub-
section (b)) and information provided to the Sec-
retary under paragraphs (2) and (3) of such sub-
section that, as determined by the Secretary, is with 
respect to each PBM. 
‘‘(2) AVAILABILITY OF DATA.—In carrying out 
paragraph (1), the Secretary shall ensure the fol-
lowing: 
‘‘(A) CONFIDENTIALITY.—The information 
described in such paragraph is displayed in a 
manner that prevents the disclosure of informa-
tion, with respect to an individual drug or an 
individual plan, on rebates, discounts, direct 
and indirect remuneration fees, administrative 
fees, and price concessions. 
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‘‘(B) CLASS OF DRUG.—The information 
described in such paragraph is made available 
by class of drug, using an existing classification 
system, but only if the class contains such num-
ber of drugs, as specified by the Secretary (but 
not fewer than three drugs), to ensure confiden-
tiality of proprietary information or other infor-
mation that is prevented to be disclosed under 
subparagraph (A).’’. 
SEC. 113. STUDY OF PHARMACEUTICAL SUPPLY CHAIN 
INTERMEDIARIES AND MERGER ACTIVITY. 
(a) INITIAL REPORT.—Not later than 1 year after 
the date of enactment of this Act, the Commission shall 
submit to the appropriate committees of Congress a report 
that— 
(1) addresses at minimum— 
(A) whether pharmacy benefit managers— 
(i) charge payers a higher price than 
the reimbursement rate at which the phar-
macy benefit managers reimburse com-
peting pharmacies; 
(ii) steer patients for anticompetitive 
purposes to any pharmacies, including re-
tail, mail-order, or any other type of phar-
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macy, in which the pharmacy benefit man-
ager has an ownership interest; 
(iii) audit or review proprietary data, 
including acquisition costs, patient infor-
mation, or dispensing information, of com-
peting pharmacies that can be used for 
anticompetitive purposes; or 
(iv) use formulary designs to increase 
the market share of higher cost prescrip-
tion drugs and depress the market share of 
lower cost prescription drugs (each net of 
rebates and discounts); 
(B) how companies and payers assess the 
benefits, costs, and risks of contracting with 
intermediaries, including pharmacy services ad-
ministrative organizations, and whether more 
information about the roles of intermediaries 
should be available to consumers and payers; 
and 
(C) whether there are any specific legal or 
regulatory obstacles the Commission currently 
faces in ensuring a competitive and transparent 
marketplace in the pharmaceutical supply 
chain, including the pharmacy benefit manager 
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marketplace and pharmacy services administra-
tive organizations; and 
(2) provides— 
(A) observations or conclusions drawn 
from the November 2017 roundtable entitled 
‘‘Understanding Competition in Prescription 
Drug Markets: Entry and Supply Chain Dy-
namics’’, and any similar efforts; 
(B) specific actions the Commission in-
tends to take as a result of the November 2017 
roundtable, and any similar efforts, including a 
detailed description of relevant forthcoming ac-
tions, additional research or roundtable discus-
sions, consumer education efforts, or enforce-
ment actions; and 
(C) policy or legislative recommendations 
to— 
(i) improve transparency and competi-
tion in the pharmaceutical supply chain; 
(ii) prevent and deter anticompetitive 
behavior in the pharmaceutical supply 
chain; and 
(iii) best ensure that consumers ben-
efit from any cost savings or efficiencies 
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that may result from mergers and consoli-
dations. 
(b) INTERIM REPORT.—Not later than 180 days 
after the date of enactment of this Act, the Commission 
shall submit to the appropriate committees of Congress 
an interim report on the progress of the report required 
by subsection (a), along with preliminary findings and 
conclusions based on information collected to that date. 
(c) DEFINITIONS.—In this section: 
(1) 
APPROPRIATE
COMMITTEES
OF
CON-
GRESS.—The term ‘‘appropriate committees of Con-
gress’’ means— 
(A) the Committee on Energy and Com-
merce of the House of Representatives; 
(B) the Committee on the Judiciary of the 
Senate; and 
(C) the Committee on the Judiciary of the 
House of Representatives. 
(2) COMMISSION.—The term ‘‘Commission’’ 
means the Federal Trade Commission. 
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SEC. 114. REQUIRING CERTAIN MANUFACTURERS TO RE-
PORT DRUG PRICING INFORMATION WITH 
RESPECT TO DRUGS UNDER THE MEDICARE 
PROGRAM. 
(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 (2)(A), by inserting ‘‘or 
subsection (f)(2), as applicable’’ before the pe-
riod at the end; 
(B) in paragraph (3), in the matter pre-
ceding subparagraph (A), by inserting ‘‘or sub-
section (f)(2), as applicable,’’ before ‘‘deter-
mined by’’; and 
(C) in paragraph (6)(A), in the matter 
preceding clause (i), by inserting ‘‘or subsection 
(f)(2), as applicable,’’ before ‘‘determined by’’; 
and 
(2) in subsection (f)— 
(A) by striking ‘‘For requirements’’ and 
inserting the following: 
‘‘(1) IN GENERAL.—For requirements’’; and 
(B) by adding at the end the following new 
paragraph: 
‘‘(2) MANUFACTURERS
WITHOUT
A
REBATE 
AGREEMENT UNDER TITLE XIX.— 
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‘‘(A) IN GENERAL.—If the manufacturer 
of a drug or biological described in subpara-
graph (C), (E), or (G) of section 1842(o)(1) or 
in section 1881(b)(14)(B) that is payable under 
this part has not entered into and does not 
have in effect a rebate agreement described in 
subsection (b) of section 1927, for calendar 
quarters beginning on or after January 1, 
2020, such manufacturer shall report to the 
Secretary the information described in sub-
section (b)(3)(A)(iii) of such section 1927 with 
respect to such drug or biological in a time and 
manner specified by the Secretary. For pur-
poses of applying this paragraph, a drug or bio-
logical described in the previous sentence in-
cludes items, services, supplies, and products 
that are payable under this part as a drug or 
biological. 
‘‘(B) AUDIT.—Information reported under 
subparagraph (A) is subject to audit by the In-
spector General of the Department of Health 
and Human Services. 
‘‘(C) VERIFICATION.—The Secretary may 
survey wholesalers and manufacturers that di-
rectly distribute drugs described in subpara-
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graph (A), when necessary, to verify manufac-
turer prices and manufacturer’s average sales 
prices (including wholesale acquisition cost) if 
required to make payment reported under sub-
paragraph (A). The Secretary may impose a 
civil monetary penalty in an amount not to ex-
ceed $100,000 on a wholesaler, manufacturer, 
or direct seller, if the wholesaler, manufacturer, 
or direct seller of such a drug refuses a request 
for information about charges or prices by the 
Secretary in connection with a survey under 
this subparagraph or knowingly provides false 
information. The provisions of section 1128A 
(other than subsections (a) (with respect to 
amounts of penalties or additional assessments) 
and (b)) shall apply to a civil money penalty 
under this subparagraph in the same manner as 
such provisions apply to a penalty or proceeding 
under section 1128A(a). 
‘‘(D) 
CONFIDENTIALITY.—Notwith-
standing any other provision of law, information 
disclosed by manufacturers or wholesalers 
under this paragraph (other than the wholesale 
acquisition cost for purposes of carrying out 
this section) is confidential and shall not be dis-
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closed by the Secretary in a form which dis-
closes the identity of a specific manufacturer or 
wholesaler or prices charged for drugs by such 
manufacturer or wholesaler, except— 
‘‘(i) as the Secretary determines to be 
necessary to carry out this section (includ-
ing the determination and implementation 
of the payment amount), or to carry out 
section 1847B; 
‘‘(ii) to permit the Comptroller Gen-
eral of the United States to review the in-
formation provided; and 
‘‘(iii) to permit the Director of the 
Congressional Budget Office to review the 
information provided.’’. 
(b) ENFORCEMENT.—Section 1847A of such Act (42 
U.S.C. 1395w–3a) is further amended— 
(1) in subsection (d)(4)— 
(A) in subparagraph (A), by striking ‘‘IN 
GENERAL’’ and inserting ‘‘MISREPRESENTA-
TION’’; 
(B) in subparagraph (B), by striking ‘‘sub-
paragraph (B)’’ and inserting ‘‘subparagraph 
(A), (B), or (C)’’; 
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(C) by redesignating subparagraph (B) as 
subparagraph (D); and 
(D) by inserting after subparagraph (A) 
the following new subparagraphs: 
‘‘(B) FAILURE TO PROVIDE TIMELY INFOR-
MATION.—If the Secretary determines that a 
manufacturer described in subsection (f)(2) has 
failed to report on information described in sec-
tion 1927(b)(3)(A)(iii) with respect to a drug or 
biological in accordance with such subsection, 
the Secretary shall apply a civil money penalty 
in an amount of $10,000 for each day the man-
ufacturer has failed to report such information 
and such amount shall be paid to the Treasury. 
‘‘(C) FALSE
INFORMATION.—Any manu-
facturer required to submit information under 
subsection (f)(2) that knowingly provides false 
information is subject to a civil money penalty 
in an amount not to exceed $100,000 for each 
item of false information. Such civil money pen-
alties are in addition to other penalties as may 
be prescribed by law.’’; and 
(2) in subsection (c)(6)(A), by striking the pe-
riod at the end and inserting ‘‘, except that, for pur-
poses of subsection (f)(2), the Secretary may, if the 
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Secretary determines appropriate, exclude repack-
agers of a drug or biological from such term.’’. 
(c) MANUFACTURERS
WITH
A
REBATE
AGREE-
MENT.— 
(1) IN GENERAL.—Section 1927(b)(3)(A) of the 
Social Security Act (42 U.S.C. 1396r–8(b)(3)(A)) is 
amended by adding at the end the following new 
sentence: ‘‘For purposes of applying clause (iii), a 
drug or biological described in the flush matter fol-
lowing such clause includes items, services, supplies, 
and products that are payable under this part as a 
drug or biological.’’. 
(2) 
TECHNICAL
AMENDMENT.—Section 
1927(b)(3)(A)(iii) of the Social Security Act (42 
U.S.C. 1396r–8(b)(3)(A)(iii)) is amended by striking 
‘‘section 1881(b)(13)(A)(ii)’’ and inserting ‘‘section 
1881(b)(14)(B)’’. 
(d) REPORT.—Not later than January 1, 2021, the 
Inspector General of the Department of Health and 
Human Services shall assess and submit to Congress a 
report on the accuracy of average sales price information 
submitted by manufacturers under section 1847A of the 
Social Security Act (42 U.S.C. 1395w–3a). Such report 
shall include any recommendations on how to improve the 
accuracy of such information. 
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SEC. 115. MAKING PRESCRIPTION DRUG MARKETING SAM-
PLE INFORMATION REPORTED BY MANUFAC-
TURERS AVAILABLE TO CERTAIN INDIVID-
UALS AND ENTITIES. 
(a) IN GENERAL.—Section 1128H of the Social Secu-
rity Act (42 U.S.C. 1320a–7i) is amended— 
(1) by redesignating subsection (b) as sub-
section (e); and 
(2) by inserting after subsection (a) the fol-
lowing new subsections: 
‘‘(b) DATA SHARING AGREEMENTS.— 
‘‘(1) IN GENERAL.—The Secretary shall enter 
into agreements with the specified data sharing indi-
viduals and entities described in paragraph (2) 
under which— 
‘‘(A) upon request of such an individual or 
entity, as applicable, the Secretary makes avail-
able to such individual or entity the information 
submitted under subsection (a) by manufactur-
ers and authorized distributors of record; and 
‘‘(B) such individual or entity agrees to 
not disclose publicly or to another individual or 
entity any information that identifies a par-
ticular practitioner or health care facility. 
‘‘(2) SPECIFIED
DATA
SHARING
INDIVIDUALS 
AND ENTITIES.—For purposes of paragraph (1), the 
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specified data sharing individuals and entities de-
scribed in this paragraph are the following: 
‘‘(A) OVERSIGHT AGENCIES.—Health over-
sight agencies (as defined in section 164.501 of 
title 45, Code of Federal Regulations), includ-
ing the Centers for Medicare & Medicaid Serv-
ices, the Office of the Inspector General of the 
Department of Health and Human Services, the 
Government Accountability Office, the Congres-
sional Budget Office, the Medicare Payment 
Advisory Commission, and the Medicaid and 
CHIP Payment and Access Commission. 
‘‘(B) 
RESEARCHERS.—Individuals 
who 
conduct scientific research (as defined in sec-
tion 164.501 of title 45, Code of Federal Regu-
lations) in relevant areas as determined by the 
Secretary. 
‘‘(C) PAYERS.—Private and public health 
care payers, including group health plans, 
health insurance coverage offered by health in-
surance issuers, Federal health programs, and 
State health programs. 
‘‘(3) EXEMPTION FROM FREEDOM OF INFORMA-
TION ACT.—Except as described in paragraph (1), 
the Secretary may not be compelled to disclose the 
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information submitted under subsection (a) to any 
individual or entity. For purposes of section 552 of 
title 5, United States Code (commonly referred to as 
the Freedom of Information Act), this paragraph 
shall be considered a statute described in subsection 
(b)(3)(B) of such section. 
‘‘(c) PENALTIES.— 
‘‘(1) DATA SHARING AGREEMENTS.—Subject to 
paragraph (3), any specified data sharing individual 
or entity described in subsection (b)(2) that violates 
the terms of a data sharing agreement the individual 
or entity has with the Secretary under subsection 
(b)(1) shall be subject to a civil money penalty of 
not less than $1,000, but not more than $10,000, 
for each such violation. Such penalty shall be im-
posed and collected in the same manner as civil 
money penalties under subsection (a) of section 
1128A are imposed and collected under that section. 
‘‘(2) FAILURE TO REPORT.—Subject to para-
graph (3), any manufacturer or authorized dis-
tributor of record of an applicable drug under sub-
section (a) that fails to submit information required 
under such subsection in a timely manner in accord-
ance with rules or regulations promulgated to carry 
out such subsection shall be subject to a civil money 
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penalty of not less than $1,000, but not more than 
$10,000, for each such failure. Such penalty shall be 
imposed and collected in the same manner as civil 
money penalties under subsection (a) of section 
1128A are imposed and collected under that section. 
‘‘(3) LIMITATION.—The total amount of civil 
money penalties imposed under paragraph (1) or (2) 
with respect to a year and an individual or entity de-
scribed in paragraph (1) or a manufacturer or dis-
tributor described in paragraph (2), respectively, 
shall not exceed $150,000. 
‘‘(d) DRUG SAMPLE DISTRIBUTION INFORMATION.— 
‘‘(1) IN GENERAL.—Not later than January 1 
of each year (beginning with 2021), the Secretary 
shall maintain a list containing information related 
to the distribution of samples of applicable drugs. 
Such list shall provide the following information with 
respect to the preceding year: 
‘‘(A) The name of the manufacturer or au-
thorized distributor of record of an applicable 
drug for which samples were requested or dis-
tributed under this section. 
‘‘(B) The quantity and class of drug sam-
ples requested. 
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‘‘(C) The quantity and class of drug sam-
ples distributed. 
‘‘(2) PUBLIC
AVAILABILITY.—The Secretary 
shall make the information in such list available to 
the public on the Internet website of the Food and 
Drug Administration.’’. 
(b) FDA MAINTENANCE
OF INFORMATION.—The 
Food and Drug Administration shall maintain information 
available to affected reporting companies to ensure their 
ability to fully comply with the requirements of section 
1128H of the Social Security Act. 
(c) PROHIBITION ON DISTRIBUTION OF SAMPLES OF 
OPIOIDS.—Section 503(d) of the Federal Food, Drug, and 
Cosmetic Act (21 U.S.C. 353(d)) is amended— 
(1) by moving the margin of paragraph (4) 2 
ems to the left; and 
(2) by adding at the end the following: 
‘‘(5) No person may distribute a drug sample of a 
drug that is— 
‘‘(A) an applicable drug (as defined in section 
1128H(e) of the Social Security Act); 
‘‘(B) a controlled substance (as defined in sec-
tion 102 of the Controlled Substances Act) for which 
the findings required under section 202(b)(2) of 
such Act have been made; and 
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‘‘(C) approved under section 505 for use in the 
management or treatment of pain (other than for 
the management or treatment of a substance use 
disorder).’’. 
(d) MEDPAC REPORT.—Not later than 3 years after 
the date of the enactment of this Act, the Medicare Pay-
ment Advisory Commission shall conduct a study on the 
impact of drug samples on provider prescribing practices 
and health care costs and may, as the Commission deems 
appropriate, make recommendations on such study. 
SEC. 116. REQUIRING PRESCRIPTION DRUG PLAN SPON-
SORS TO INCLUDE REAL-TIME BENEFIT IN-
FORMATION AS PART OF SUCH SPONSOR’S 
ELECTRONIC 
PRESCRIPTION 
PROGRAM 
UNDER THE MEDICARE PROGRAM. 
Section 1860D–4(e)(2) of the Social Security Act (42 
U.S.C. 1395w–104(e)(2)) is amended— 
(1) in subparagraph (D), by striking ‘‘To the 
extent’’ and inserting ‘‘Except as provided in sub-
paragraph (F), to the extent’’; and 
(2) by adding at the end the following new sub-
paragraph: 
‘‘(F) 
REAL-TIME
BENEFIT
INFORMA-
TION.— 
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‘‘(i) IN
GENERAL.—Not later than 
January 1, 2021, the program shall imple-
ment real-time benefit tools that are capa-
ble of integrating with a prescribing health 
care professional’s electronic prescribing or 
electronic health record system for the 
transmission of formulary and benefit in-
formation in real time to prescribing health 
care professionals. With respect to a cov-
ered part D drug, such tools shall be capa-
ble of transmitting such information spe-
cific to an individual enrolled in a prescrip-
tion drug plan. Such information shall in-
clude the following: 
‘‘(I) A list of any clinically-appro-
priate alternatives to such drug in-
cluded in the formulary of such plan. 
‘‘(II) Cost-sharing information 
for such drug and such alternatives, 
including a description of any vari-
ance in cost-sharing based on the 
pharmacy dispensing such drug or 
such alternatives. 
‘‘(III) Information relating to 
whether such drug is included in the 
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formulary of such plan and any prior 
authorization or other utilization man-
agement requirements applicable to 
such drug and such alternatives so in-
cluded. 
‘‘(ii) ELECTRONIC
TRANSMISSION.— 
The provisions of subclauses (I) and (II) of 
clause (ii) of subparagraph (E) shall apply 
to an electronic transmission described in 
clause (i) in the same manner as such pro-
visions apply with respect to an electronic 
transmission described in clause (i) of such 
subparagraph. 
‘‘(iii) SPECIAL RULE FOR 2021.—The 
program shall be deemed to be in compli-
ance with clause (i) for 2021 if the pro-
gram complies with the provisions of sec-
tion 423.160(b)(7) of title 42, Code of 
Federal Regulations (or a successor regula-
tion), for such year. 
‘‘(iv) RULE
OF
CONSTRUCTION.— 
Nothing in this subparagraph shall be con-
strued as to allow a real-time benefits tool 
to steer an individual, without the consent 
of the individual, to a particular pharmacy 
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or pharmacy setting over their preferred 
pharmacy setting nor prohibit the designa-
tion of a preferred pharmacy under such 
tool.’’. 
SEC. 117. SENSE OF CONGRESS REGARDING THE NEED TO 
EXPAND COMMERCIALLY AVAILABLE DRUG 
PRICING COMPARISON PLATFORMS. 
It is the sense of Congress that— 
(1) commercially available drug pricing com-
parison platforms can, at no cost, help patients find 
the lowest price for their medications at their local 
pharmacy; 
(2) such platforms should be integrated, to the 
maximum extent possible, in the health care delivery 
ecosystem; and 
(3) pharmacy benefit managers should work to 
disclose generic and brand name drug prices to such 
platforms to ensure that— 
(A) patients can benefit from the lowest 
possible price available to them; and 
(B) overall drug prices can be reduced as 
more educated purchasing decisions are made 
based on price transparency. 
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SEC. 118. TECHNICAL CORRECTIONS. 
(a) IN GENERAL.—Section 3022(b) of the Public 
Health Service Act (42 U.S.C. 300jj–52(b)) is amended 
by adding at the end the following new paragraph: 
‘‘(4) APPLICATION OF AUTHORITIES UNDER IN-
SPECTOR GENERAL ACT OF 1978.—In carrying out 
this subsection, the Inspector General shall have the 
same authorities as provided under section 6 of the 
Inspector General Act of 1978 (5 U.S.C. App.).’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall take effect as if included in the enact-
ment of the 21st Century Cures Act (Public Law 114– 
255). 
Subtitle C—Medicare Part D 
Benefit Redesign 
SEC. 121. MEDICARE PART D BENEFIT 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)— 
(i) in the matter preceding clause (i), 
by inserting ‘‘for a year preceding 2022 
and for costs above the annual deductible 
specified in paragraph (1) and up to the 
annual out-of-pocket threshold specified in 
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paragraph (4)(B) for 2022 and each subse-
quent year’’ after ‘‘paragraph (3)’’; and 
(ii) in clause (i), by inserting after 
‘‘25 percent’’ the following: ‘‘(or, for 2022 
and each subsequent year, 15 percent)’’; 
(B) in subparagraph (C)— 
(i) in clause (i), in the matter pre-
ceding subclause (I), by inserting ‘‘for a 
year preceding 2022,’’ after ‘‘paragraph 
(4),’’; and 
(ii) in clause (ii)(III), by striking 
‘‘and each subsequent year’’ and inserting 
‘‘and 2021’’; and 
(C) in subparagraph (D)— 
(i) in clause (i)— 
(I) in the matter preceding sub-
clause (I), by inserting ‘‘for a year 
preceding 2022,’’ after ‘‘paragraph 
(4),’’; and 
(II) in subclause (I)(bb), by 
striking ‘‘a year after 2018’’ and in-
serting ‘‘each of years 2018 through 
2021’’; and 
(ii) in clause (ii)(V), by striking 
‘‘2019 and each subsequent year’’ and in-
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serting ‘‘each of years 2019 through 
2021’’; 
(2) in paragraph (3)(A)— 
(A) in the matter preceding clause (i), by 
inserting ‘‘for a year preceding 2022,’’ after 
‘‘and (4),’’; and 
(B) in clause (ii), by striking ‘‘for a subse-
quent year’’ and inserting ‘‘for each of years 
2007 through 2021’’; 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 2022, 
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 2022 and each suc-
ceeding 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 2021 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’’; 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 2022, is equal to 
$3,100; or 
‘‘(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 2022 for amounts’’; and 
(D) in subparagraph (E), by striking ‘‘In 
applying’’ and inserting ‘‘For each of 2011 
through 2021, in applying’’. 
(b) 
DECREASING
REINSURANCE
PAYMENT 
AMOUNT.—Section 1860D–15(b)(1) of the Social Security 
Act (42 U.S.C. 1395w–115(b)(1)) is amended— 
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(1) by striking ‘‘equal to 80 percent’’ and in-
serting ‘‘equal to— 
‘‘(A) for a year preceding 2022, 80 per-
cent’’; 
(2) in subparagraph (A), as added by para-
graph (1), by striking the period at the end and in-
serting ‘‘; and’’; and 
(3) by adding at the end the following new sub-
paragraph: 
‘‘(B) for 2022 and each subsequent year, 
the sum of— 
‘‘(i) an amount equal to 20 percent of 
the allowable reinsurance costs (as speci-
fied in paragraph (2)) attributable to that 
portion of gross covered 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 30 percent of 
the allowable reinsurance costs (as speci-
fied in paragraph (2)) attributable to that 
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portion of gross covered 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 
covered part D drugs that are not applica-
ble drugs (as so defined).’’. 
(c) MANUFACTURER DISCOUNT PROGRAM.— 
(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: 
‘‘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, 2021, in consultation 
with manufacturers, and allow for comment on such model 
agreement. 
‘‘(b) TERMS OF AGREEMENT.— 
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‘‘(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, 2022. 
‘‘(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. 
‘‘(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-
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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 
agreement under this section for a knowing 
and willful violation of the requirements of 
the agreement or other good cause shown. 
Such termination shall not be effective ear-
lier than 30 days after the date of notice 
to the manufacturer of such termination. 
The Secretary shall provide, upon request, 
a manufacturer with a hearing concerning 
such a termination, and such hearing shall 
take place prior to the effective date of the 
termination with sufficient time for such 
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effective date to be repealed if the Sec-
retary determines appropriate. 
‘‘(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 a plan year, as of 
the day after the end of the plan year; 
and 
‘‘(II) if the termination occurs on 
or after January 30 of a plan year, as 
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 
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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; 
‘‘(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— 
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‘‘(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 
‘‘(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-
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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 
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— 
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‘‘(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 
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. 
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‘‘(5) ADMINISTRATION.—Chapter 35 of title 44, 
United States Code, shall not apply to the program 
under this section. 
‘‘(e) ENFORCEMENT.— 
‘‘(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 
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this paragraph in the same manner as such 
provisions apply to a penalty or proceeding 
under section 1128A(a). 
‘‘(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 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’ means, with respect to an applicable bene-
ficiary, a covered part D drug— 
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‘‘(A) approved under a new drug applica-
tion under section 505(c) of the Federal Food, 
Drug, and Cosmetic Act or, in the case of a bio-
logic product, licensed under section 351 of the 
Public Health Service Act (including a product 
licensed under subsection (k) of such section); 
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— 
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drug that falls at or above such annual deduct-
ible. 
‘‘(5) MANUFACTURER.—The term ‘manufac-
turer’ means any entity which is engaged in the pro-
duction, preparation, propagation, compounding, 
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 an ap-
plicable drug. 
‘‘(7) QUALIFIED RETIREE PRESCRIPTION DRUG 
PLAN.—The term ‘qualified retiree prescription drug 
plan’ has the meaning given such term in section 
11860D–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— 
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(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: 
‘‘(h) SUNSET OF PROGRAM.— 
‘‘(1) IN
GENERAL.—The program shall not 
apply to applicable drugs dispensed on or after Jan-
uary 1, 2022, 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, 2022, 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 ‘‘assump-
tions regarding— 
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‘‘(I) the reinsurance’’; and 
(ii) by adding at the end the fol-
lowing: 
‘‘(II) for 2022 and each subse-
quent year, the manufacturer dis-
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 2022 and each subsequent 
year, the manufacturer discounts provided 
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)— 
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(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–14(g)(2)) that was 
paid by a manufacturer under the manufacturer 
discount program under section 1860D–14B.’’; 
and 
(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’’. 
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(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 model used to adjust bid amounts 
pursuant to this subsection as appropriate to take 
into account changes in benefits under this part pur-
suant to the amendments made by section 121 of 
the Lower Costs, More Cures Act of 2019.’’. 
(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)— 
(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; 
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‘‘(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, 2022, and paragraphs (4) through (6) 
of such subsection shall apply to covered part D drugs 
dispensed on or after January 1, 2022.’’; and 
(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, 2022, and ending December 31, 
2022 (with respect to paragraphs (4) through (6) of 
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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 2022 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 
2022 or the annual out-of-pocket threshold 
specified in subsection (b)(4)(B) for the 
year for 2022 and each subsequent year’’ 
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 2022, 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 
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amended by striking ‘‘the initial’’ and inserting ‘‘for 
a year preceding 2022, 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 2022, 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 2022, the elimination’’; and 
(B) in paragraph (2)— 
(i) in subparagraph (C), by striking 
‘‘The continuation’’ and inserting ‘‘For a 
year preceding 2022, the continuation’’; 
and 
(ii) in subparagraph (E)— 
(I) by inserting ‘‘for a year pre-
ceding 2022,’’ after ‘‘subsection (c)’’; 
and 
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(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)(4)(B)(i)’’ and in-
serting ‘‘section 1860D–2(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 2022, 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: 
‘‘(ii) for 2022 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— 
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pamtmann on DSKBC07HB2PROD with BILLS
(A) by inserting ‘‘for a year before 2022’’ 
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 2022 and subsequent 
plan years. 
Subtitle D—Other Medicare Part D 
Provisions 
SEC. 131. TRANSITIONAL COVERAGE AND RETROACTIVE 
MEDICARE PART D COVERAGE FOR CERTAIN 
LOW-INCOME BENEFICIARIES. 
Section 1860D–14 of the Social Security Act (42 
U.S.C. 1395w–114) is amended— 
(1) by redesignating subsection (e) as sub-
section (f); and 
(2) by adding after subsection (d) the following 
new subsection: 
‘‘(e) LIMITED INCOME NEWLY ELIGIBLE TRANSI-
TION PROGRAM.— 
‘‘(1) IN GENERAL.—Beginning not later than 
January 1, 2021, the Secretary shall carry out a 
program to provide transitional coverage for covered 
part D drugs for LI NET eligible individuals in ac-
cordance with this subsection. 
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‘‘(2) LI NET ELIGIBLE INDIVIDUAL DEFINED.— 
For purposes of this subsection, the term ‘LI NET 
eligible individual’ means a part D eligible individual 
who— 
‘‘(A) meets the requirements of clauses (ii) 
and (iii) of subsection (a)(3)(A); and 
‘‘(B) has not yet enrolled in a prescription 
drug plan or an MA–PD plan, or, who has so 
enrolled, but with respect to whom coverage 
under such plan has not yet taken effect. 
‘‘(3) TRANSITIONAL COVERAGE.—For purposes 
of this subsection, the term ‘transitional coverage’ 
means, with respect to an LI NET eligible indi-
vidual— 
‘‘(A) immediate access to covered part D 
drugs at the point-of-sale during the period that 
begins on the first day of the month such indi-
vidual is determined to meet the requirements 
of clauses (ii) and (iii) of subsection (a)(3)(A) 
and ends on the date that coverage under a pre-
scription drug plan or MA–PD plan takes effect 
with respect to such individual; and 
‘‘(B) in the case of an LI NET eligible in-
dividual who is a full-benefit dual eligible indi-
vidual (as defined in section 1935(c)(6)) or a 
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recipient of supplemental security income bene-
fits under title XVI, retroactive coverage (in the 
form of reimbursement of the amounts that 
would have been paid under this part had such 
individual been enrolled in a prescription drug 
plan or MA–PD plan) of covered part D drugs 
purchased by such individual during the period 
that begins on the date that is the later of— 
‘‘(i) the date that such individual was 
first eligible for a low-income subsidy 
under this part; or 
‘‘(ii) the date that is 36 months prior 
to the date such individual enrolls in a pre-
scription drug plan or MA–PD plan, and 
ends on the date that coverage under such 
plan takes effect. 
‘‘(4) PROGRAM ADMINISTRATION.— 
‘‘(A) SINGLE
POINT
OF
CONTACT.—The 
Secretary shall, to the extent feasible, admin-
ister the program under this subsection through 
a contract with a single program administrator. 
‘‘(B) BENEFIT
DESIGN.—The Secretary 
shall ensure that the transitional coverage pro-
vided to LI NET eligible individuals under this 
subsection— 
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‘‘(i) provides access to all covered part 
D drugs under an open formulary; 
‘‘(ii) permits all pharmacies deter-
mined by the Secretary to be in good 
standing to process claims under the pro-
gram; 
‘‘(iii) is consistent with such require-
ments as the Secretary considers necessary 
to improve patient safety and ensure ap-
propriate dispensing of medication; and 
‘‘(iv) meets such other requirements 
as the Secretary may establish. 
‘‘(5) RELATIONSHIP TO OTHER PROVISIONS OF 
THIS TITLE; WAIVER AUTHORITY.— 
‘‘(A) IN GENERAL.—The following provi-
sions shall not apply with respect to the pro-
gram under this subsection: 
‘‘(i) Paragraphs (1) and (3)(B) of sec-
tion 1860D–4(a) (relating to dissemination 
of general information; availability of infor-
mation on changes in formulary through 
the internet). 
‘‘(ii) Subparagraphs (A) and (B) of 
section 1860D–4(b)(3) (relating to require-
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ments on development and application of 
formularies; formulary development). 
‘‘(iii) Paragraphs (1)(C) and (2) of 
section 1860D–4(c) (relating to medication 
therapy management program). 
‘‘(B) WAIVER AUTHORITY.—The Secretary 
may waive such other requirements of title XI 
and this title as may be necessary to carry out 
the purposes of the program established under 
this subsection.’’. 
SEC. 132. ALLOWING THE OFFERING OF ADDITIONAL PRE-
SCRIPTION DRUG PLANS UNDER MEDICARE 
PART D. 
(a) RESCINDING
AND ISSUANCE
OF NEW GUID-
ANCE.—Not later than one year after the date of the en-
actment of this Act, the Secretary of Health and Human 
Services (in this section referred to as the ‘‘Secretary’’) 
shall— 
(1) rescind sections of any sub-regulatory guid-
ance that limit the number of prescription drug 
plans in each PDP region that may be offered by a 
PDP sponsor under part D of title XVIII of the So-
cial Security Act (42 U.S.C. 1395w–101 et seq.); 
and 
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(2) issue new guidance specifying that a PDP 
sponsor may offer up to 4 (or a greater number if 
determined appropriate by the Secretary) prescrip-
tion drug plans in each PDP region, except in cases 
where the PDP sponsor may offer up to 2 additional 
plans in a PDP region pursuant to section 1860D– 
11(d)(4) of the Social Security Act (42 U.S.C. 
1395w–111(d)(4)), as added by subsection (b). 
(b) OFFERING
OF ADDITIONAL PLANS.—Section 
1860D–11(d) of the Social Security Act (42 U.S.C. 
1395w–111(d)) is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(4) OFFERING OF ADDITIONAL PLANS.— 
‘‘(A) IN GENERAL.—For plan year 2022 
and each subsequent plan year, a PDP sponsor 
may offer up to 2 additional prescription drug 
plans in a PDP region (in addition to any limit 
established by the Secretary under this part) 
provided that the PDP sponsor complies with 
subparagraph (B) with respect to at least one 
such prescription drug plan. 
‘‘(B) REQUIREMENTS.—In order to be eli-
gible to offer up to 2 additional plans in a PDP 
region pursuant to subparagraph (A), a PDP 
sponsor must ensure that, with respect to at 
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least one such prescription drug plan, the spon-
sor or any entity that provides pharmacy bene-
fits management services under a contract with 
any such sponsor or plan does not receive direct 
or indirect remuneration, as defined in section 
423.308 of title 42, Code of Federal Regula-
tions (or any successor regulation), unless at 
least 25 percent of the aggregate reductions in 
price or other remuneration received by the 
PDP sponsor or entity from drug manufactur-
ers with respect to the plan and plan year— 
‘‘(i) are reflected at the point-of-sale 
to the enrollee; or 
‘‘(ii) are used to reduce total bene-
ficiary cost-sharing estimated by the PDP 
sponsor for prescription drug coverage 
under the plan in the annual bid submitted 
by the PDP sponsor under section 1860D– 
11(b). 
‘‘(C) DEFINITION
OF
REDUCTIONS
IN 
PRICE.—For purposes of subparagraph (B), the 
term ‘reductions in price’ refers only to collect-
ible amounts, as determined by the Secretary, 
which excludes amounts which after adjudica-
tion and reconciliation with pharmacies and 
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manufacturers are duplicate in nature, contrary 
to other contractual clauses, or otherwise ineli-
gible (such as due to beneficiary disenrollment 
or coordination of benefits).’’. 
(c) RULE OF CONSTRUCTION.—Nothing in the provi-
sions of, or amendments made by, this section shall be 
construed as limiting the ability of the Secretary to in-
crease any limit otherwise applicable on the number of 
prescription drug plans that a PDP sponsor may offer, 
at the discretion of the PDP sponsor, in a PDP region 
under part D of title XVIII of the Social Security Act (42 
U.S.C. 1395w–101 et seq.). 
SEC. 133. ALLOWING CERTAIN ENROLLEES OF PRESCRIP-
TION 
DRUGS 
PLANS 
AND 
MA–PD 
PLANS 
UNDER MEDICARE PROGRAM TO SPREAD 
OUT COST-SHARING UNDER CERTAIN CIR-
CUMSTANCES. 
(a) STANDARD PRESCRIPTION DRUG COVERAGE.— 
Section 1860D–2(b)(2) of the Social Security Act (42 
U.S.C. 1395w–102(b)(2)), as amended by section 121, is 
further amended— 
(1) in subparagraph (A), by striking ‘‘Subject 
to subparagraphs (C) and (D)’’ and inserting ‘‘Sub-
ject to subparagraphs (C), (D), and (E)’’; and 
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(2) by adding at the end the following new sub-
paragraph: 
‘‘(E) 
ENROLLEE
OPTION
REGARDING 
SPREADING COST-SHARING.— 
‘‘(i) IN
GENERAL.—The Secretary 
shall establish by regulation a process 
under which, with respect to plan year 
2022 and subsequent plan years, a pre-
scription drug plan or an MA–PD plan 
shall, in the case of a part D eligible indi-
vidual enrolled with such plan for such 
plan year with respect to whom the plan 
projects that the dispensing of a covered 
part D drug to such individual will result 
in the individual incurring costs within a 
30-day period that are equal to a signifi-
cant percentage (as specified by the Sec-
retary pursuant to such regulation) of the 
annual out-of-pocket threshold specified in 
paragraph (4)(B) for such plan year, pro-
vide such individual with the option to 
make the coinsurance payment required 
under subparagraph (A) for such costs in 
the form of equal monthly installments 
over the remainder of such plan year. 
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‘‘(ii) SIGNIFICANT PERCENTAGE LIMI-
TATIONS.—In specifying a significant per-
centage pursuant to the regulation estab-
lished by the Secretary under clause (i), 
the Secretary may not specify a percentage 
that is less than 30 percent or greater 
than 100 percent.’’. 
(b) 
ALTERNATIVE
PRESCRIPTION
DRUG
COV-
ERAGE.—Section 1860D–2(c) of the Social Security Act 
(42 U.S.C. 1395w–102(c)) is amended by adding at the 
end the following new paragraph: 
‘‘(4) SAME
ENROLLEE
OPTION
REGARDING 
SPREADING
COST-SHARING.—For plan year 2022 
and subsequent plan years, the coverage provides the 
enrollee option regarding spreading cost-sharing de-
scribed 
in 
and 
required 
under 
subsection 
(b)(2)(E).’’. 
SEC. 134. 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)— 
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(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 
(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-
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curring in the year preceding such 
subsequent year, increased by the an-
nual percentage increase specified in 
paragraph (6) for such subsequent 
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 
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100 
promulgated pursuant to subsection 
(e)(1)(B)).’’; and 
(2) in subsection (c), by adding at the end the 
following new paragraph: 
‘‘(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. 
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101 
SEC. 135. GROWTH RATE OF MEDICARE PART D OUT-OF- 
POCKET COST THRESHOLD. 
(a) PROVIDING MEDICARE PART D BENEFICIARIES 
WITH
CERTAIN
2020 OFFSET
PAYMENTS.—Section 
1860D–2(b)(4) of the Social Security Act (42 U.S.C. 
1395w–102(b)(4)) is amended by adding at the end the 
following new subparagraph: 
‘‘(F) 2020 OFFSET PAYMENTS.— 
‘‘(i) IN GENERAL.—Subject to clause 
(iv), the Secretary shall provide for pay-
ment from the Medicare Prescription Drug 
Account as follows: 
‘‘(I) In the case of a specified in-
dividual (as defined in clause (ii)(I)) 
who as of the last day of a calendar 
quarter in 2020 has incurred costs for 
covered part D drugs so that the indi-
vidual has exceeded the annual out-of- 
pocket threshold applied under sub-
paragraph (B)(i)(V) for 2020, pay-
ment to the individual by not later 
than 15th day of the third month fol-
lowing the end of such quarter of the 
amount by which such threshold so 
applied exceeded the target threshold 
for 2020. 
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102 
‘‘(II) In the case of a specified 
individual who is not described in sub-
clause (I) and who as of the last day 
of 2020 has incurred costs for covered 
part D drugs so that the individual 
has exceeded the target threshold for 
2020, payment to the individual by 
not later than December 31, 2021, of 
the amount by which such incurred 
costs exceeded the target threshold for 
2020. 
‘‘(ii) DEFINITIONS.—For purposes of 
this subparagraph: 
‘‘(I) SPECIFIED
INDIVIDUAL.— 
The term ‘specified individual’ means 
an individual who— 
‘‘(aa) is enrolled in a pre-
scription drug plan or an MA– 
PD plan; 
‘‘(bb) is not enrolled in a 
qualified retiree prescription drug 
plan; and 
‘‘(cc) is not entitled to an in-
come-related subsidy under sec-
tion 1860D–14(a). 
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103 
‘‘(II) TARGET
THRESHOLD
FOR 
2020.—the term ‘target threshold for 
2020’ means the annual out-of-pocket 
threshold that would have been ap-
plied under subparagraph (B)(i) for 
2020 if such threshold had been de-
termined in accordance with subclause 
(IV) of such subparagraph instead of 
subclause (V) of such subparagraph. 
‘‘(iii) NOTIFICATION.—In the case of 
any specified individual who during 2020 
has incurred costs for covered part D 
drugs so that the individual has exceeded 
the target threshold for 2020, the Sec-
retary shall, not later than September 30, 
2021, provide to such individual a notifica-
tion informing such individual of such indi-
vidual’s right to a payment described in 
clause (i) and the estimated timing of such 
payment. 
‘‘(iv) CLARIFICATION.—The Secretary 
shall provide only 1 payment under this 
subparagraph with respect to any indi-
vidual. 
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104 
‘‘(v) 
IMPLEMENTATION.—The 
Sec-
retary may implement this subparagraph 
by program instruction or otherwise.’’. 
(b) REDUCED GROWTH RATE FOR 2021 OF MEDI-
CARE PART D OUT-OF-POCKET COST THRESHOLD.—Sec-
tion 1860D–2(b)(4)(B)(i) of the Social Security Act (42 
U.S.C. 1395w–102(b)(4)(B)(i)) is amended— 
(1) in subclause (V), by striking at the end 
‘‘or’’; 
(2) by redesignating subclause (VI) as sub-
clause (VIII); and 
(3) by inserting after subclause (V) the fol-
lowing new subclauses: 
‘‘(VI) for 2021, is equal to the 
amount that would have been applied 
under this subparagraph for 2020 if 
such amount had been determined in 
accordance with subclause (IV) in-
stead of subclause (V), increased by 
the lesser of— 
‘‘(aa) the annual percentage 
increase described in paragraph 
(7) for 2021, plus 2 percentage 
points; or 
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105 
‘‘(bb) the annual percentage 
increase described in paragraph 
(6) for 2021; 
‘‘(VII) for 2022, is equal to the 
amount that would have been applied 
under this subparagraph for 2022 if 
the amendments made by section 
1101(d)(1) of the Health Care and 
Education Reconciliation Act of 2010 
and by section 135 of the Lower 
Costs, More Cures Act of 2019 had 
not been enacted; or’’. 
Subtitle E—MedPAC 
SEC. 141. PROVIDING THE MEDICARE PAYMENT ADVISORY 
COMMISSION AND MEDICAID AND CHIP PAY-
MENT AND ACCESS COMMISSION WITH AC-
CESS TO CERTAIN DRUG PAYMENT INFORMA-
TION, INCLUDING CERTAIN REBATE INFOR-
MATION. 
(a) ACCESS TO CERTAIN PART D PAYMENT DATA.— 
Section 1860D–15(f) of the Social Security Act (42 
U.S.C. 1395w–115(f)) is amended— 
(1) in paragraph (2)— 
(A) in subparagraph (A)(ii), by striking 
‘‘and’’ at the end; 
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(B) in subparagraph (B), by striking the 
period at the end and inserting ‘‘; and’’; and 
(C) by inserting at the end the following 
new subparagraph: 
‘‘(C) by the Executive Director of the 
Medicare Payment Advisory Commission for 
purposes of monitoring, making recommenda-
tions, and analysis of the program under this 
title and by the Executive Director of the Med-
icaid and CHIP Payment and Access Commis-
sion for purposes of monitoring, making rec-
ommendations, and analysis of the Medicaid 
program established under title XIX and the 
Children’s Health Insurance Program under 
title XXI.’’; and 
(2) by adding at the end the following new 
paragraph: 
‘‘(3) ADDITIONAL
RESTRICTIONS
ON
DISCLO-
SURE OF INFORMATION.—The Executive Directors 
described in paragraph (2)(C) shall not disclose any 
of the following information disclosed to such Execu-
tive Directors or obtained by such Executive Direc-
tors pursuant to such paragraph, with respect to a 
prescription drug plan offered by a PDP sponsor: 
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‘‘(A) The specific amounts or the identity 
of the source of any rebates, price concessions, 
or other forms of direct or indirect remunera-
tion under such prescription drug plan. 
‘‘(B) Information submitted with the bid 
submitted under section 1860D–11 by such 
PDP sponsor. 
‘‘(C) In the case of such information from 
prescription drug event records, in a form that 
would 
not 
be 
permitted 
under 
section 
423.505(m) of title 42, Code of Federal Regula-
tions, or any successor regulation, if made by 
the Centers for Medicare & Medicaid Services.’’. 
(b) ACCESS TO CERTAIN REBATE AND PAYMENT 
DATA
UNDER
MEDICARE
AND
MEDICAID.—Section 
1927(b)(3)(D) of the Social Security Act (42 U.S.C. 
1396r–8(b)(3)(D)) is amended— 
(1) in the matter before clause (i), by striking 
‘‘subsection (a)(6)(A)(ii)’’ and inserting ‘‘subsection 
(a)(6)(A)’’; 
(2) in clause (v), by striking ‘‘and’’ at the end; 
(3) in clause (vi), by striking the period at the 
end and inserting ‘‘, and’’; 
(4) by inserting after clause (vi) the following 
new clause: 
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‘‘(vii) to permit the Executive Direc-
tor of the Medicare Payment Advisory 
Commission and the Executive Director of 
the Medicaid and CHIP Payment and Ac-
cess Commission to review the information 
provided.’’; 
(5) in the matter at the end, by striking 
‘‘1860D–4(c)(2)(E)’’ 
and 
inserting 
‘‘1860D– 
4(c)(2)(G)’’; and 
(6) by adding at the end the following new sen-
tence: ‘‘Any information disclosed to the Executive 
Director of the Medicare Payment Advisory Commis-
sion or the Executive Director of the Medicaid and 
CHIP Payment and Access Commission pursuant to 
this subparagraph shall not be disclosed by either 
such Executive Director in a form which discloses 
the identity of a specific manufacturer or wholesaler 
or prices charged for drugs by such manufacturer or 
wholesaler.’’. 
TITLE II—MEDICAID 
SEC. 201. SUNSET OF LIMIT ON MAXIMUM REBATE AMOUNT 
FOR SINGLE SOURCE DRUGS AND INNO-
VATOR MULTIPLE SOURCE DRUGS. 
Section 1927(c)(2)(D) of the Social Security Act (42 
U.S.C. 1396r–8(c)(2)(D)) is amended by inserting after 
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‘‘December 31, 2009,’’ the following: ‘‘and before January 
1, 2023,’’. 
SEC. 202. MEDICAID PHARMACY AND THERAPEUTICS COM-
MITTEE IMPROVEMENTS. 
(a) IN GENERAL.—Subparagraph (A) of section 
1927(d)(4) of the Social Security Act (42 U.S.C. 1396r– 
8(d)(4)) is amended to read as follows: 
‘‘(A)(i) The formulary is developed and re-
viewed by a pharmacy and therapeutics com-
mittee consisting of physicians, pharmacists, 
and other appropriate individuals appointed by 
the Governor of the State. 
‘‘(ii) Subject to clause (vi), the State estab-
lishes and implements a conflict of interest pol-
icy for the pharmacy and therapeutics com-
mittee that— 
‘‘(I) is publicly accessible; 
‘‘(II) requires all committee members 
to complete, on at least an annual basis, a 
disclosure of relationships, associations, 
and financial dealings that may affect their 
independence of judgement in committee 
matters; and 
‘‘(III) contains clear processes, such 
as recusal from voting or discussion, for 
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those members who report a conflict of in-
terest, along with appropriate processes to 
address any instance where a member fails 
to report a conflict of interest. 
‘‘(iii) The membership of the pharmacy 
and therapeutics committee— 
‘‘(I) includes at least 1 actively prac-
ticing physician and at least 1 actively 
practicing pharmacist, each of whom— 
‘‘(aa) is independent and free of 
conflict with respect to manufacturers 
and Medicaid participating plans or 
subcontractors, including pharmacy 
benefit managers; and 
‘‘(bb) has expertise in the care of 
1 or more Medicaid-specific popu-
lations such as elderly or disabled in-
dividuals, children with complex med-
ical needs, or low-income individuals 
with chronic illnesses; and 
‘‘(II) is made publicly available. 
‘‘(iv) At the option of the State, the 
State’s drug use review board established under 
subsection (g)(3) may serve as the pharmacy 
and therapeutics committee provided the State 
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ensures that such board meets the requirements 
of clauses (ii) and (iii). 
‘‘(v) The State reviews and has final ap-
proval of the formulary established by the phar-
macy and therapeutics committee. 
‘‘(vi) If the Secretary determines it appro-
priate or necessary based on the findings and 
recommendations of the Comptroller General of 
the United States in the report submitted to 
Congress under section 203 of the Lower Costs, 
More Cures Act of 2019, the Secretary shall 
issue guidance that States must follow for es-
tablishing conflict of interest policies for the 
pharmacy and therapeutics committee in ac-
cordance with the requirements of clause (ii), 
including appropriate standards and require-
ments for identifying, addressing, and reporting 
on conflicts of interest.’’. 
(b) APPLICATION TO MEDICAID MANAGED CARE OR-
GANIZATIONS.—Clause (xiii) of section 1903(m)(2)(A) of 
the Social Security Act (42 U.S.C. 1396b(m)(2)(A)) is 
amended— 
(1) by striking ‘‘and (III)’’ and inserting 
‘‘(III)’’; 
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(2) by striking the period at the end and insert-
ing ‘‘, and (IV) any formulary used by the entity for 
covered outpatient drugs dispensed to individuals eli-
gible for medical assistance who are enrolled with 
the entity is developed and reviewed by a pharmacy 
and therapeutics committee that meets the require-
ments 
of 
clauses 
(ii) 
and 
(iii) 
of 
section 
1927(d)(4)(A).’’; and 
(3) by moving the left margin 2 ems to the left. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall take effect on the date that is 1 year 
after the date of enactment of this Act. 
SEC. 203. GAO REPORT ON CONFLICTS OF INTEREST IN 
STATE MEDICAID PROGRAM DRUG USE RE-
VIEW BOARDS AND PHARMACY AND THERA-
PEUTICS (P&T) COMMITTEES. 
(a) INVESTIGATION.—The Comptroller General of the 
United States shall conduct an investigation of potential 
or existing conflicts of interest among members of State 
Medicaid program State drug use review boards (in this 
section referred to as ‘‘DUR Boards’’) and pharmacy and 
therapeutics committees (in this section referred to as 
‘‘P&T Committees’’). 
(b) REPORT.—Not later than 24 months after the 
date of enactment of this Act, the Comptroller General 
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shall submit to Congress a report on the investigation con-
ducted under subsection (a) that includes the following: 
(1) A description outlining how DUR Boards 
and P&T Committees operate in States, including 
details with respect to— 
(A) the structure and operation of DUR 
Boards and statewide P&T Committees; 
(B) States that operate separate P&T 
Committees for their fee-for-service Medicaid 
program and their Medicaid managed care or-
ganizations or other Medicaid managed care ar-
rangements (collectively referred to in this sec-
tion as ‘‘Medicaid MCOs)’’; and 
(C) States that allow Medicaid MCOs to 
have their own P&T Committees and the extent 
to which pharmacy benefit managers administer 
or participate in such P&T Committees. 
(2) A description outlining the differences be-
tween DUR Boards established in accordance with 
section 1927(g)(3) of the Social Security Act (42 
U.S.C. 1396r(g)(3)) and P&T Committees. 
(3) A description outlining the tools P&T Com-
mittees may use to determine Medicaid drug cov-
erage and utilization management policies. 
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(4) An analysis of whether and how States or 
P&T Committees establish participation and inde-
pendence requirements for DUR Boards and P&T 
Committees, including with respect to entities with 
connections with drug manufacturers, State Med-
icaid programs, managed care organizations, and 
other entities or individuals in the pharmaceutical 
industry. 
(5) A description outlining how States, DUR 
Boards, or P&T Committees define conflicts of inter-
est. 
(6) A description of how DUR Boards and P&T 
Committees address conflicts of interest, including 
who is responsible for implementing such policies. 
(7) A description of the tools, if any, States use 
to ensure that there are no conflicts of interest on 
DUR Boards and P&T Committees. 
(8) An analysis of the effectiveness of tools 
States use to ensure that there are no conflicts of 
interest on DUR Boards and P&T Committees and, 
if applicable, recommendations as to how such tools 
could be improved. 
(9) A review of strategies States may use to 
guard against conflicts of interest on DUR Boards 
and P&T Committees and to ensure compliance with 
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the requirements of titles XI and XIX of the Social 
Security Act (42 U.S.C. 1301 et seq., 1396 et seq.) 
and access to effective, clinically appropriate, and 
medically necessary drug treatments for Medicaid 
beneficiaries, including recommendations for such 
legislative and administrative actions as the Comp-
troller General determines appropriate. 
SEC. 204. ENSURING THE ACCURACY OF MANUFACTURER 
PRICE AND DRUG PRODUCT INFORMATION 
UNDER THE MEDICAID DRUG REBATE PRO-
GRAM. 
(a) AUDIT OF MANUFACTURER PRICE AND DRUG 
PRODUCT INFORMATION.— 
(1) IN GENERAL.—Subparagraph (B) of section 
1927(b)(3) of the Social Security Act (42 U.S.C. 
1396r–8(b)(3)) is amended to read as follows: 
‘‘(B) AUDITS AND SURVEYS OF MANUFAC-
TURER PRICE AND DRUG PRODUCT INFORMA-
TION.— 
‘‘(i) AUDITS.—The Secretary shall 
conduct ongoing audits of the price and 
drug product information reported by man-
ufacturers under subparagraph (A) for the 
most recently ended rebate period to en-
sure the accuracy and timeliness of such 
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116 
information. In conducting such audits, the 
Secretary may employ evaluations, surveys, 
statistical sampling, predictive analytics 
and other relevant tools and methods. 
‘‘(ii) VERIFICATIONS SURVEYS OF AV-
ERAGE MANUFACTURER PRICE AND MANU-
FACTURER’S
AVERAGE
SALES
PRICE.—In 
addition to the audits required under 
clause (i), the Secretary may survey whole-
salers and manufacturers (including manu-
facturers that directly distribute their cov-
ered outpatient drugs (in this subpara-
graph referred to as ‘direct sellers’)), when 
necessary, to verify manufacturer prices 
and manufacturer’s average sales prices 
(including wholesale acquisition cost) to 
make payment reported under subpara-
graph (A). 
‘‘(iii) PENALTIES.—In addition to 
other penalties as may be prescribed by 
law, including under subparagraph (C) of 
this paragraph, the Secretary may impose 
a civil monetary penalty in an amount not 
to exceed $185,000 on an annual basis on 
a wholesaler, manufacturer, or direct sell-
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er, if the wholesaler, manufacturer, or di-
rect seller of a covered outpatient drug re-
fuses a request for information about 
charges or prices by the Secretary in con-
nection with an audit or survey under this 
subparagraph or knowingly provides false 
information. The provisions of section 
1128A (other than subsections (a) (with 
respect to amounts of penalties or addi-
tional assessments) and (b)) shall apply to 
a civil money penalty under this clause in 
the same manner as such provisions apply 
to a penalty or proceeding under section 
1128A(a). 
‘‘(iv) REPORTS.— 
‘‘(I) REPORT
TO
CONGRESS.— 
The Secretary shall, not later than 18 
months after date of enactment of 
this subparagraph, submit a report to 
the Committee on Energy and Com-
merce of the House of Representatives 
and the Committee on Finance of the 
Senate regarding additional regulatory 
or statutory changes that may be re-
quired in order to ensure accurate and 
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timely reporting and oversight of 
manufacturer price and drug product 
information, 
including 
whether 
changes should be made to reasonable 
assumption requirements to ensure 
such assumptions are reasonable and 
accurate or whether another method-
ology for ensuring accurate and timely 
reporting of price and drug product 
information should be considered to 
ensure the integrity of the drug rebate 
program under this section. 
‘‘(II) ANNUAL
REPORTS.—The 
Secretary shall, on at least an annual 
basis, submit a report to the Com-
mittee on Energy and Commerce of 
the House of Representatives and the 
Committee on Finance of the Senate 
summarizing the results of the audits 
and surveys conducted under this sub-
paragraph during the period that is 
the subject of the report. 
‘‘(III) CONTENT.—Each report 
submitted under subclause (II) shall, 
with respect to the period that is the 
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119 
subject of the report, include sum-
maries of— 
‘‘(aa) error rates in the 
price, drug product, and other 
relevant information supplied by 
manufacturers under subpara-
graph (A); 
‘‘(bb) the timeliness with 
which 
manufacturers, 
whole-
salers, and direct sellers provide 
information required under sub-
paragraph (A) or under clause (i) 
or (ii) of this subparagraph; 
‘‘(cc) the number of manu-
facturers, wholesalers, and direct 
sellers and drug products audited 
under this subparagraph; 
‘‘(dd) the types of price and 
drug product information re-
viewed under the audits con-
ducted under this subparagraph; 
‘‘(ee) the tools and meth-
odologies employed in such au-
dits; 
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‘‘(ff) the findings of such 
audits, including which manufac-
turers, if any, were penalized 
under this subparagraph; and 
‘‘(gg) such other relevant in-
formation as the Secretary shall 
deem appropriate. 
‘‘(IV) PROTECTION OF INFORMA-
TION.—In preparing a report required 
under subclause (II), the Secretary 
shall redact such proprietary informa-
tion as the Secretary determines ap-
propriate to prevent disclosure of, and 
to safeguard, such information. 
‘‘(v) APPROPRIATIONS.—Out of any 
funds in the Treasury not otherwise appro-
priated, there is appropriated to the Sec-
retary $2,000,000 for fiscal year 2020 and 
each fiscal year thereafter to carry out this 
subparagraph.’’. 
(2) EFFECTIVE DATE.—The amendments made 
by this subsection shall take effect on the first day 
of the first fiscal quarter that begins after the date 
of enactment of this Act. 
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(b) INCREASED PENALTIES
FOR NONCOMPLIANCE 
WITH REPORTING REQUIREMENTS.— 
(1) INCREASED PENALTY FOR LATE REPORTING 
OF INFORMATION.—Section 1927(b)(3)(C)(i) of the 
Social Security Act (42 U.S.C. 1396r–8(b)(3)(C)(i)) 
is amended by striking ‘‘increased by $10,000 for 
each day in which such information has not been 
provided and such amount shall be paid to the 
Treasury’’ and inserting ‘‘, for each covered out-
patient drug with respect to which such information 
is not provided, $50,000 for the first day that such 
information is not provided on a timely basis and 
$19,000 for each subsequent day that such informa-
tion is not provided’’. 
(2) INCREASED PENALTY FOR KNOWINGLY RE-
PORTING
FALSE
INFORMATION.—Section 
1927(b)(3)(C)(ii) of the Social Security Act (42 
U.S.C. 1396r–8(b)(3)(C)(ii)) is amended by striking 
‘‘$100,000’’ and inserting ‘‘$500,000’’. 
(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall take effect on the first day 
of the first fiscal quarter that begins after the date 
of enactment of this Act. 
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SEC. 205. IMPROVING TRANSPARENCY AND PREVENTING 
THE USE OF ABUSIVE SPREAD PRICING AND 
RELATED PRACTICES IN MEDICAID. 
(a) PASS-THROUGH PRICING REQUIRED.— 
(1) IN GENERAL.—Section 1927(e) of the So-
cial Security Act (42 U.S.C. 1396r–8(e)) is amended 
by adding at the end the following: 
‘‘(6) PASS-THROUGH
PRICING
REQUIRED.—A 
contract between the State and a pharmacy benefit 
manager (referred to in this paragraph as a ‘PBM’), 
or a contract between the State and a managed care 
entity or other specified entity (as such terms are 
defined in section 1903(m)(9)(D)) that includes pro-
visions making the entity responsible for coverage of 
covered outpatient drugs dispensed to individuals en-
rolled with the entity, shall require that payment for 
such drugs and related administrative services (as 
applicable), including payments made by a PBM on 
behalf of the State or entity, is based on a pass- 
through pricing model under which— 
‘‘(A) any payment made by the entity of 
the PBM (as applicable) for such a drug— 
‘‘(i) is limited to— 
‘‘(I) ingredient cost; and 
‘‘(II) a professional dispensing 
fee that is not less than the profes-
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sional dispensing fee that the State 
plan or waiver would pay if the plan 
or waiver was making the payment di-
rectly; 
‘‘(ii) is passed through in its entirety 
by the entity or PBM to the pharmacy 
that dispenses the drug; and 
‘‘(iii) is made in a manner that is con-
sistent with section 1902(a)(30)(A) and 
sections 447.512, 447.514, and 447.518 of 
title 42, Code of Federal Regulations (or 
any successor regulation), as if such re-
quirements applied directly to the entity or 
the PBM; 
‘‘(B) payment to the entity or the PBM 
(as applicable) for administrative services per-
formed by the entity or PBM is limited to a 
reasonable administrative fee that covers the 
reasonable cost of providing such services; 
‘‘(C) the entity or the PBM (as applicable) 
shall make available to the State, and the Sec-
retary upon request, all costs and payments re-
lated to covered outpatient drugs and accom-
panying administrative services incurred, re-
ceived, or made by the entity or the PBM, in-
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124 
cluding ingredient costs, professional dispensing 
fees, administrative fees, post-sale and post-in- 
voice fees. Discounts, or related adjustments 
such as direct and indirect remuneration fees, 
and any and all remuneration; and 
‘‘(D) any form of spread pricing whereby 
any amount charged or claimed by the entity or 
the PBM (as applicable) is in excess of the 
amount paid to the pharmacies on behalf of the 
entity, including any post-sale or post-invoice 
fees, discounts, or related adjustments such as 
direct and indirect remuneration fees or assess-
ments (after allowing for a reasonable adminis-
trative fee as described in subparagraph (B)) is 
not allowable for purposes of claiming Federal 
matching payments under this title.’’. 
(2) CONFORMING
AMENDMENT.—Clause (xiii) 
of section 1903(m)(2)(A) of such Act (42 U.S.C. 
1396b(m)(2)(A)), as amended by section 202, is fur-
ther amended— 
(A) by striking ‘‘and (IV)’’ and inserting 
‘‘(IV)’’; and 
(B) by inserting before the period at the 
end the following: ‘‘, and (V) pharmacy benefit 
management services provided by the entity, or 
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125 
provided by a pharmacy benefit manager on be-
half of the entity under a contract or other ar-
rangement between the entity and the phar-
macy benefit manager, shall comply with the re-
quirements of section 1927(e)(6)’’. 
(3) EFFECTIVE DATE.—The amendments made 
by this subsection apply to contracts between States 
and managed care entities, other specified entities, 
or pharmacy benefits managers that are entered into 
or renewed on or after the date that is 18 months 
after the date of enactment of this Act. 
(b) SURVEY OF RETAIL PRICES.— 
(1) IN GENERAL.—Section 1927(f) of the Social 
Security Act (42 U.S.C. 1396r–8(f)) is amended— 
(A) by striking ‘‘and’’ after the semicolon 
at the end of paragraph (1)(A)(i) and all that 
precedes it through ‘‘(1)’’ and inserting the fol-
lowing: 
‘‘(1) SURVEY
OF
RETAIL
PRICES.—The Sec-
retary shall conduct a survey of retail community 
drug prices, to include at least the national average 
drug acquisition cost, as follows: 
‘‘(A) USE
OF
VENDOR.—The Secretary 
may contract services for— 
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‘‘(i) with respect to retail community 
pharmacies, the determination on a month-
ly basis of retail survey prices of the na-
tional average drug acquisition cost for 
covered outpatient drugs for such phar-
macies, net of all discounts and rebates (to 
the extent any information with respect to 
such discounts and rebates is available), 
the average reimbursement received for 
such drugs by such pharmacies from all 
sources of payment, including third par-
ties, and, to the extent available, the usual 
and customary charges to consumers for 
such drugs; and’’; 
(B) by adding at the end of paragraph (1) 
the following: 
‘‘(F) SURVEY
REPORTING.—In order to 
meet the requirement of section 1902(a)(54), a 
State shall require that any retail community 
pharmacy in the State that receives any pay-
ment, administrative fee, discount, or rebate re-
lated to the dispensing of covered outpatient 
drugs to individuals receiving benefits under 
this title, regardless of whether such payment, 
fee, discount, or rebate is received from the 
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State or a managed care entity directly or from 
a pharmacy benefit manager or another entity 
that has a contract with the State or a man-
aged care entity, shall respond to surveys of re-
tail prices conducted under this subsection. 
‘‘(G) SURVEY INFORMATION.—Information 
on retail community prices obtained under this 
paragraph shall be made publicly available and 
shall include at least the following: 
‘‘(i) The monthly response rate of the 
survey including a list of pharmacies not in 
compliance with subparagraph (F). 
‘‘(ii) The sampling frame and number 
of pharmacies sampled monthly. 
‘‘(iii) 
Characteristics 
of 
reporting 
pharmacies, including type (such as inde-
pendent or chain), geographic or regional 
location, and dispensing volume. 
‘‘(iv) Reporting of a separate national 
average drug acquisition cost for each drug 
for independent retail pharmacies and 
chain operated pharmacies. 
‘‘(v) Information on price concessions 
including on and off invoice discounts, re-
bates, and other price concessions. 
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‘‘(vi) Information on average profes-
sional dispensing fees paid. 
‘‘(H) PENALTIES.— 
‘‘(i) FAILURE TO PROVIDE TIMELY IN-
FORMATION.—A retail community phar-
macy that fails to respond to a survey con-
ducted under this subsection on a timely 
basis may be subject to a civil monetary 
penalty in the amount of $10,000 for each 
day in which such information has not 
been provided. 
‘‘(ii) FALSE INFORMATION.—A retail 
community pharmacy that knowingly pro-
vides false information in response to a 
survey conducted under this subsection 
may be subject to a civil money penalty in 
an amount not to exceed $100,000 for 
each item of false information. 
‘‘(iii) OTHER
PENALTIES.—Any civil 
money penalties imposed under this sub-
paragraph shall be in addition to other 
penalties as may be prescribed by law. The 
provisions of section 1128A (other than 
subsections (a) and (b)) shall apply to a 
civil money penalty under this subpara-
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129 
graph in the same manner as such provi-
sions apply to a penalty or proceedings 
under section 1128A(a). 
‘‘(I) 
REPORT
ON
SPECIALTY
PHAR-
MACIES.— 
‘‘(i) IN GENERAL.—Not later than 1 
year after the effective date of this sub-
paragraph, the Secretary shall submit a re-
port to Congress examining specialty drug 
coverage and reimbursement under this 
title. 
‘‘(ii) CONTENT OF REPORT.—Such re-
port shall include a description of how 
State Medicaid programs define specialty 
drugs, how much State Medicaid programs 
pay for specialty drugs, how States and 
managed care plans determine payment for 
specialty drugs, the settings in which spe-
cialty drugs are dispensed (such as retail 
community pharmacies or specialty phar-
macies), whether acquisition costs for spe-
cialty drugs are captured in the national 
average drug acquisition cost survey, and 
recommendations as to whether specialty 
pharmacies should be included in the sur-
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130 
vey of retail prices to ensure national aver-
age drug acquisition costs capture drugs 
sold at specialty pharmacies and how such 
specialty pharmacies should be defined.’’; 
(C) in paragraph (2)— 
(i) in subparagraph (A), by inserting 
‘‘, including payments rates under Med-
icaid managed care plans,’’ after ‘‘under 
this title’’; and 
(ii) in subparagraph (B), by inserting 
‘‘and the basis for such dispensing fees’’ 
before the semicolon; and 
(D) in paragraph (4), by inserting ‘‘, and 
$5,000,000 for fiscal year 2020 and each fiscal 
year thereafter,’’ after ‘‘2010’’. 
(2) EFFECTIVE DATE.—The amendments made 
by this subsection take effect on the 1st day of the 
1st quarter that begins on or after the date that is 
18 months after the date of enactment of this Act. 
(c) MANUFACTURER REPORTING
OF WHOLESALE 
ACQUISITION COST.—Section 1927(b)(3) of such Act (42 
U.S.C. 1396r–8(b)(3)), as amended by section 141, is fur-
ther amended— 
(1) in subparagraph (A)(i)— 
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(A) in subclause (I), by striking ‘‘and’’ 
after the semicolon; 
(B) in subclause (II), by adding ‘‘and’’ 
after the semicolon; 
(C) by moving the left margins of sub-
clauses (I) and (II) 2 ems to the right; and 
(D) by adding at the end the following: 
‘‘(III) in the case of rebate peri-
ods that begin on or after the date of 
enactment of this subclause, on the 
wholesale acquisition cost (as defined 
in section 1847A(c)(6)(B)) for cov-
ered outpatient drugs for the rebate 
period under the agreement (including 
for all such drugs that are sold under 
a new drug application approved 
under section 505(c) of the Federal 
Food, Drug, and Cosmetic Act);’’; and 
(2) in subparagraph (D)— 
(A) in the matter preceding clause (i), by 
inserting ‘‘and clause (vii) of this subpara-
graph’’ after ‘‘1847A’’; 
(B) in clause (vi), by striking ‘‘and’’ after 
the comma; 
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(C) in clause (vii), by striking the period 
and inserting ‘‘, and’’; and 
(D) by inserting after clause (vii) the fol-
lowing: 
‘‘(viii) to the Secretary to disclose 
(through a website accessible to the public) 
the most recently reported wholesale acqui-
sition 
cost 
(as 
defined 
in 
section 
1847A(c)(6)(B)) for each covered out-
patient drug (including for all such drugs 
that are sold under a new drug application 
approved under section 505(c) of the Fed-
eral Food, Drug, and Cosmetic Act), as re-
ported under subparagraph (A)(i)(III).’’. 
SEC. 206. T–MSIS DRUG DATA ANALYTICS REPORTS. 
(a) IN GENERAL.—Not later than May 1 of each cal-
endar year beginning with calendar year 2021, the Sec-
retary of Health and Human Services (in this section re-
ferred to as the ‘‘Secretary’’) shall publish on a website 
of the Centers for Medicare & Medicaid Services that is 
accessible to the public a report of the most recently avail-
able data on provider prescribing patterns under the Med-
icaid program. 
(b) CONTENT OF REPORT.— 
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(1) REQUIRED
CONTENT.—Each report re-
quired under subsection (a) for a calendar year shall 
include the following information with respect to 
each State (and, to the extent available, with respect 
to Puerto Rico, the United States Virgin Islands, 
Guam, the Northern Mariana Islands, and American 
Samoa): 
(A) A comparison of covered outpatient 
drug (as defined in section 1927(k)(2) of the 
Social Security Act (42 U.S.C. 1396r–8(k)(2))) 
prescribing patterns under the State Medicaid 
plan or waiver of such plan (including drugs 
prescribed on a fee-for-service basis and drugs 
prescribed under managed care arrangements 
under such plan or waiver)— 
(i) across all forms or models of reim-
bursement used under the plan or waiver; 
(ii) within specialties and subspecial-
ties, as defined by the Secretary; 
(iii) by episodes of care for— 
(I) each chronic disease category, 
as defined by the Secretary, that is 
represented in the 10 conditions that 
accounted for the greatest share of 
total spending under the plan or waiv-
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134 
er during the year that is the subject 
of the report; 
(II) procedural groupings; and 
(III) rare disease diagnosis codes; 
(iv) by patient demographic character-
istics, including race (to the extent that 
the Secretary determines that there is suf-
ficient data available with respect to such 
characteristic in a majority of States), gen-
der, and age; 
(v) by patient high-utilizer or risk sta-
tus; and 
(vi) by high and low resource settings 
by facility and place of service categories, 
as determined by the Secretary. 
(B) In the case of medical assistance for 
covered outpatient drugs (as so defined) pro-
vided under a State Medicaid plan or waiver of 
such plan in a managed care setting, an anal-
ysis of the differences in managed care pre-
scribing patterns when a covered outpatient 
drug is prescribed in a managed care setting as 
compared to when the drug is prescribed in a 
fee-for-service setting. 
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(2) ADDITIONAL CONTENT.—A report required 
under subsection (a) for a calendar year may include 
State-specific information about prescription utiliza-
tion management tools under State Medicaid plans 
or waivers of such plans, including— 
(A) a description of prescription utilization 
management tools under State programs to pro-
vide long-term services and supports under a 
State Medicaid plan or a waiver of such plan; 
(B) a comparison of prescription utilization 
management tools applicable to populations cov-
ered under a State Medicaid plan waiver under 
section 1115 of the Social Security Act (42 
U.S.C. 1315) and the models applicable to pop-
ulations that are not covered under the waiver; 
(C) a comparison of the prescription utili-
zation management tools employed by different 
Medicaid managed care organizations, phar-
macy benefit managers, and related entities 
within the State; 
(D) a comparison of the prescription utili-
zation management tools applicable to each en-
rollment category under a State Medicaid plan 
or waiver; and 
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(E) a comparison of the prescription utili-
zation management tools applicable under the 
State Medicaid plan or waiver by patient high- 
utilizer or risk status. 
(3) ADDITIONAL
ANALYSIS.—To the extent 
practicable, the Secretary shall include in each re-
port published under subsection (a)— 
(A) analyses of national, State, and local 
patterns of Medicaid population-based pre-
scribing behaviors; and 
(B) recommendations for administrative or 
legislative action to improve the effectiveness of, 
and reduce costs for, covered outpatient drugs 
under Medicaid while ensuring timely bene-
ficiary access to medically necessary covered 
outpatient drugs. 
(c) USE OF T–MSIS DATA.—Each report required 
under subsection (a) shall— 
(1) be prepared using data and definitions from 
the Transformed Medicaid Statistical Information 
System (T–MSIS) data set (or a successor data set) 
that is not more than 24 months old on the date 
that the report is published; and 
(2) as appropriate, include a description with 
respect to each State of the quality and complete-
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ness of the data, as well as any necessary caveats 
describing the limitations of the data reported to the 
Secretary by the State that are sufficient to commu-
nicate the appropriate uses for the information. 
(d) PREPARATION
OF REPORT.—Each report re-
quired under subsection (a) shall be prepared by the Ad-
ministrator for the Centers for Medicare & Medicaid Serv-
ices. 
(e) APPROPRIATION.—For fiscal year 2020 and each 
fiscal year thereafter, there is appropriated to the Sec-
retary $2,000,000 to carry out this section. 
SEC. 207. RISK-SHARING VALUE-BASED PAYMENT AGREE-
MENTS FOR COVERED OUTPATIENT DRUGS 
UNDER MEDICAID. 
(a) IN GENERAL.—Section 1927 of the Social Secu-
rity Act (42 U.S.C. 1396r–8) is amended by adding at 
the end the following new subsection: 
‘‘(l) STATE OPTION TO PAY FOR COVERED OUT-
PATIENT DRUGS THROUGH RISK-SHARING VALUE-BASED 
AGREEMENTS.— 
‘‘(1) IN
GENERAL.—Beginning January 1, 
2022, a State shall have the option to pay (whether 
on a fee-for-service or managed care basis) for cov-
ered outpatient drugs that are potentially curative 
treatments intended for one-time use that are ad-
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ministered to individuals under this title by entering 
into a risk-sharing value-based payment agreement 
with the manufacturer of the drug in accordance 
with the requirements of this subsection. 
‘‘(2) SECRETARIAL APPROVAL.— 
‘‘(A) IN GENERAL.—A State shall submit a 
request to the Secretary to enter into a risk- 
sharing value based payment agreement, and 
the Secretary shall not approve a proposed risk- 
sharing value-based payment agreement be-
tween a State and a manufacturer for payment 
for a covered outpatient drug of the manufac-
turer unless the following requirements are met: 
‘‘(i) MANUFACTURER IS PARTY TO RE-
BATE
AGREEMENT
AND
IN
COMPLIANCE 
WITH REQUIREMENTS.—The manufacturer 
has a rebate agreement in effect as re-
quired under subsections (a) and (b) of 
this section and is in compliance with all 
applicable requirements under this title. 
‘‘(ii) NO
INCREASE
TO
PROJECTED 
NET FEDERAL SPENDING.— 
‘‘(I) IN
GENERAL.—The Chief 
Actuary certifies that the projected 
payments for each covered outpatient 
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drug under such proposed agreement 
would not result in greater estimated 
Federal spending under this title than 
the net Federal spending that would 
result in the absence of the agree-
ment. 
‘‘(II) NET
FEDERAL
SPENDING 
DEFINED.—For purposes of this sub-
section, the term ‘net Federal spend-
ing’ means the amount of Federal 
payments the Chief Actuary estimates 
would be made under this title for ad-
ministering a covered outpatient drug 
to an individual eligible for medical 
assistance under a State plan or a 
waiver of such plan, reduced by the 
amount of all rebates the Chief Actu-
ary estimates would be paid with re-
spect to the administering of such 
drug, including all rebates under this 
title and any supplemental or other 
additional rebates, in the absence of 
such an agreement. 
‘‘(III) INFORMATION.—The Chief 
Actuary shall make the certifications 
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required under this clause based on 
the most recently available and reli-
able drug pricing and product infor-
mation. The State and manufacturer 
shall provide the Secretary and the 
Chief Actuary with all necessary infor-
mation required to make the estimates 
needed for such certifications. 
‘‘(iii) LAUNCH AND LIST PRICE JUS-
TIFICATIONS.—The manufacturer submits 
all relevant information and supporting 
documentation necessary for pricing deci-
sions as deemed appropriate by the Sec-
retary, which shall be truthful and non- 
misleading, including manufacturer infor-
mation and supporting documentation for 
launch price or list price increases, and 
any applicable justification required under 
section 1128L. 
‘‘(iv) CONFIDENTIALITY OF INFORMA-
TION; PENALTIES.—The provisions of sub-
paragraphs (C) and (D) of subsection 
(b)(3) shall apply to a manufacturer that 
fails to submit the information and docu-
mentation required under clauses (ii) and 
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141 
(iii) on a timely basis, or that knowingly 
provides false or misleading information, in 
the same manner as such provisions apply 
to a manufacturer with a rebate agreement 
under this section. 
‘‘(B) CONSIDERATION OF STATE REQUEST 
FOR APPROVAL.— 
‘‘(i) IN
GENERAL.—The Secretary 
shall treat a State request for approval of 
a risk-sharing value-based payment agree-
ment in the same manner that the Sec-
retary treats a State plan amendment, and 
subpart B of part 430 of title 42, Code of 
Federal Regulations, including, subject to 
clause (ii), the timing requirements of sec-
tion 430.16 of such title (as in effect on 
the date of enactment of this subsection), 
shall apply to a request for approval of a 
risk-sharing value-based payment agree-
ment in the same manner as such subpart 
applies to a State plan amendment. 
‘‘(ii) TIMING.—The Secretary shall 
consult with the Commissioner of Food 
and Drugs as required under subpara-
graph (C) and make a determination on 
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whether to approve a request from a State 
for approval of a proposed risk-sharing 
value-based payment agreement (or request 
additional information necessary to allow 
the Secretary to make a determination 
with respect to such request for approval) 
within the time period, to the extent prac-
ticable, specified in section 430.16 of title 
42, Code of Federal Regulations (as in ef-
fect on the date of enactment of this sub-
section), but in no case shall the Secretary 
take more than 180 days after the receipt 
of such request for approval or response to 
such request for additional information to 
make such a determination (or request ad-
ditional information). 
‘‘(C) CONSULTATION WITH THE COMMIS-
SIONER OF FOOD AND DRUGS.—In considering 
whether to approve a risk-sharing value-based 
payment agreement, the Secretary, to the ex-
tent necessary, shall consult with the Commis-
sioner of Food and Drugs to determine whether 
the relevant clinical parameters specified in 
such agreement are appropriate. 
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143 
‘‘(3) INSTALLMENT-BASED
PAYMENT
STRUC-
TURE.— 
‘‘(A) IN GENERAL.—A risk-sharing value- 
based payment agreement shall provide for a 
payment structure under which, for every in-
stallment year of the agreement (subject to sub-
paragraph (B)), the State shall pay the total in-
stallment year amount in equal installments to 
be paid at regular intervals over a period of 
time that shall be specified in the agreement. 
‘‘(B) REQUIREMENTS
FOR
INSTALLMENT 
PAYMENTS.— 
‘‘(i) TIMING
OF
FIRST
PAYMENT.— 
The State shall make the first of the in-
stallment payments described in subpara-
graph (A) for an installment year not later 
than 30 days after the end of such year. 
‘‘(ii) LENGTH OF INSTALLMENT PE-
RIOD.—The period of time over which the 
State shall make the installment payments 
described in subparagraph (A) for an in-
stallment year shall not be longer than 5 
years. 
‘‘(iii) NONPAYMENT
OR
REDUCED 
PAYMENT OF INSTALLMENTS FOLLOWING 
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A
FAILURE
TO
MEET
CLINICAL
PARAM-
ETER.—If, prior to the payment date (as 
specified in the agreement) of any install-
ment payment described in subparagraph 
(A) or any other alternative date or time 
frame (as otherwise specified in the agree-
ment), the covered outpatient drug which 
is subject to the agreement fails to meet a 
relevant clinical parameter of the agree-
ment, the agreement shall provide that— 
‘‘(I) the installment payment 
shall not be made; or 
‘‘(II) the installment payment 
shall be reduced by a percentage spec-
ified in the agreement that is based 
on the outcome achieved by the drug 
relative to the relevant clinical param-
eter. 
‘‘(4) NOTICE OF INTENT.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), a manufacturer of a covered out-
patient drug shall not be eligible to enter into 
a risk-sharing value-based payment agreement 
under this subsection with respect to such drug 
unless the manufacturer notifies the Secretary 
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145 
that the manufacturer is interested in entering 
into such an agreement with respect to such 
drug. The decision to submit and timing of a 
request to enter into a proposed risk-sharing 
value-based payment agreement shall remain 
solely within the discretion of the State and 
shall only be effective upon Secretarial approval 
as required under this subsection. 
‘‘(B) TREATMENT OF SUBSEQUENTLY AP-
PROVED DRUGS.— 
‘‘(i) IN GENERAL.—In the case of a 
manufacturer of a covered outpatient drug 
approved under section 505 of the Federal 
Food, Drug, and Cosmetic Act or licensed 
under section 351 of the Public Health 
Service Act after the date of enactment of 
this subsection, not more than 90 days 
after meeting with the Food and Drug Ad-
ministration following phase II clinical 
trials for such drug (or, in the case of a 
drug described in clause (ii), not later than 
March 31, 2022), the manufacturer must 
notify the Secretary of the manufacturer’s 
intent to enter into a risk-sharing value- 
based payment agreement under this sub-
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146 
section with respect to such drug. If no 
such meeting has occurred, the Secretary 
may use discretion as to whether a poten-
tially curative treatment intended for one- 
time use may qualify for a risk-sharing 
value-based payment agreement under this 
section. A manufacturer notification of in-
terest shall not have any influence on a de-
cision for approval by the Food and Drug 
Administration. 
‘‘(ii) APPLICATION TO CERTAIN SUB-
SEQUENTLY
APPROVED
DRUGS.—A drug 
described in this clause is a covered out-
patient drug of a manufacturer— 
‘‘(I) that is approved under sec-
tion 505 of the Federal Food, Drug, 
and Cosmetic Act or licensed under 
section 351 of the Public Health Serv-
ice Act after the date of enactment of 
this subsection; and 
‘‘(II) with respect to which, as of 
January 1, 2022, more than 90 days 
have passed after the manufacturer’s 
meeting with the Food and Drug Ad-
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ministration following phase II clinical 
trials for such drug. 
‘‘(iii) 
PARALLEL
APPROVAL.—The 
Secretary, in coordination with the Admin-
istrator of the Centers for Medicare & 
Medicaid Services and the Commissioner of 
Food and Drugs, shall, to the extent prac-
ticable, approve a State’s request to enter 
into a proposed risk-sharing value-based 
payment agreement that otherwise meets 
the requirements of this subsection at the 
time that such a drug is approved by the 
Food and Drug Administration to help 
provide that no State that wishes to enter 
into such an agreement is required to pay 
for the drug in full at one time if the State 
is seeking to pay over a period of time as 
outlined in the proposed agreement. 
‘‘(iv) RULE
OF
CONSTRUCTION.— 
Nothing in this paragraph shall be applied 
or construed to modify or affect the time-
frames or factors involved in the Sec-
retary’s determination of whether to ap-
prove or license a drug under section 505 
of the Federal Food, Drug, and Cosmetic 
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Act or section 351 of the Public Health 
Service Act. 
‘‘(5) SPECIAL PAYMENT RULES.— 
‘‘(A) IN GENERAL.—Except as otherwise 
provided in this paragraph, with respect to an 
individual who is administered a unit of a cov-
ered outpatient drug that is purchased under a 
State plan by a State Medicaid agency under a 
risk-sharing value-based payment agreement in 
an installment year, the State shall remain lia-
ble to the manufacturer of such drug for pay-
ment for such unit without regard to whether 
the individual remains enrolled in the State 
plan under this title (or a waiver of such plan) 
for each installment year for which the State is 
to make installment payments for covered out-
patient drugs purchased under the agreement 
in such year. 
‘‘(B) DEATH.—In the case of an individual 
described in subparagraph (A) who dies during 
the period described in such subparagraph, the 
State plan shall not be liable for any remaining 
payment for the unit of the covered outpatient 
drug administered to the individual which is 
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owed under the agreement described in such 
subparagraph. 
‘‘(C) WITHDRAWAL OF APPROVAL.—In the 
case of a covered outpatient drug that is the 
subject of a risk-sharing value-based agreement 
between a State and a manufacturer under this 
subsection, including a drug approved in ac-
cordance with section 506(c) of the Federal 
Food, Drug, and Cosmetic Act, and such drug 
is the subject of an application that has been 
withdrawn by the Secretary, the State plan 
shall not be liable for any remaining payment 
that is owed under the agreement. 
‘‘(D) ALTERNATIVE ARRANGEMENT UNDER 
AGREEMENT.—Subject to approval by the Sec-
retary, the terms of a proposed risk-sharing 
value-based payment agreement submitted for 
approval by a State may provide that subpara-
graph (A) shall not apply. 
‘‘(E) GUIDANCE.—Not later than January 
1, 2022, the Secretary shall issue guidance to 
States establishing a process for States to no-
tify the Secretary when an individual who is ad-
ministered a unit of a covered outpatient drug 
that is purchased by a State plan under a risk- 
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sharing value-based payment agreement ceases 
to be enrolled under the State plan under this 
title (or a waiver of such plan) or dies before 
the end of the installment period applicable to 
such unit under the agreement. 
‘‘(6) TREATMENT OF PAYMENTS UNDER RISK- 
SHARING
VALUE-BASED
AGREEMENTS
FOR
PUR-
POSES OF AVERAGE MANUFACTURER PRICE; BEST 
PRICE.—The Secretary shall treat any payments 
made to the manufacturer of a covered outpatient 
drug under a risk-sharing value-based payment 
agreement under this subsection during a rebate pe-
riod in the same manner that the Secretary treats 
payments made under a State supplemental rebate 
agreement 
under 
sections 
447.504(c)(19) 
and 
447.505(c)(7) of title 42, Code of Federal Regula-
tions (or any successor regulations), for purposes of 
determining average manufacturer price and best 
price under this section with respect to the covered 
outpatient drug and a rebate period and for pur-
poses of offsets required under subsection (b)(1)(B). 
‘‘(7) ASSESSMENTS
AND
REPORT
TO
CON-
GRESS.— 
‘‘(A) ASSESSMENTS.— 
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‘‘(i) IN
GENERAL.—Not later than 
180 days after the end of each assessment 
period of any risk-sharing value-based pay-
ment agreement for a State approved 
under this subsection, the Secretary shall 
conduct an evaluation of such agreement 
which shall include an evaluation by the 
Chief Actuary to determine whether pro-
gram spending under the risk-sharing 
value-based payment agreement aligned 
with the projections for the agreement 
made under paragraph (2)(A)(ii), including 
an assessment of whether actual Federal 
spending under this title under the agree-
ment was less or more than net Federal 
spending would have been in the absence 
of the agreement. 
‘‘(ii) ASSESSMENT PERIOD.—For pur-
poses of clause (i)— 
‘‘(I) the first assessment period 
for a risk-sharing value-based pay-
ment agreement shall be the period of 
time over which payments are sched-
uled to be made under the agreement 
for the first 10 individuals who are 
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administered covered outpatient drugs 
under the agreement except that such 
period shall not exceed the 5-year pe-
riod after the date on which the Sec-
retary approves the agreement; and 
‘‘(II) each subsequent assessment 
period for a risk-sharing value-based 
payment agreement shall be the 5- 
year period following the end of the 
previous assessment period. 
‘‘(B) RESULTS OF ASSESSMENTS.— 
‘‘(i) TERMINATION
OPTION.—If the 
Secretary determines as a result of the as-
sessment by the Chief Actuary under sub-
paragraph (A) that the actual Federal 
spending under this title for any covered 
outpatient drug that was the subject of the 
State’s risk-sharing value-based payment 
agreement was greater than the net Fed-
eral spending that would have resulted in 
the absence of the agreement, the Sec-
retary may terminate approval of such 
agreement and shall immediately conduct 
an assessment under this paragraph of any 
other ongoing risk-sharing value-based 
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payment agreement to which the same 
manufacturer is a party. 
‘‘(ii) REPAYMENT REQUIRED.— 
‘‘(I) IN
GENERAL.—If the Sec-
retary determines as a result of the 
assessment by the Chief Actuary 
under subparagraph (A) that the Fed-
eral spending under the risk-sharing 
value-based agreement for a covered 
outpatient drug that was subject to 
such agreement was greater than the 
net Federal spending that would have 
resulted in the absence of the agree-
ment, the manufacturer shall repay 
the difference to the State and Fed-
eral governments in a timely manner 
as determined by the Secretary. 
‘‘(II) TERMINATION
FOR
FAIL-
URE TO PAY.—The failure of a manu-
facturer to make repayments required 
under subclause (I) in a timely man-
ner shall result in immediate termi-
nation of all risk-sharing value-based 
agreements to which the manufacturer 
is a party. 
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‘‘(III) 
ADDITIONAL
PEN-
ALTIES.—In the case of a manufac-
turer that fails to make repayments 
required under subclause (I), the Sec-
retary may treat such manufacturer 
in the same manner as a manufac-
turer that fails to pay required re-
bates under this section, and the Sec-
retary may— 
‘‘(aa) suspend or terminate 
the manufacturer’s rebate agree-
ment under this section; and 
‘‘(bb) pursue any other rem-
edy that would be available if the 
manufacturer had failed to pay 
required rebates under this sec-
tion. 
‘‘(C) REPORT
TO
CONGRESS.—Not later 
than 5 years after the first risk-sharing value- 
based payment agreement is approved under 
this subsection, the Secretary shall submit to 
Congress and make available to the public a re-
port that includes— 
‘‘(i) an assessment of the impact of 
risk-sharing value-based payment agree-
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ments on access for individuals who are eli-
gible for benefits under a State plan or 
waiver under this title to medically nec-
essary covered outpatient drugs and re-
lated treatments; 
‘‘(ii) an analysis of the impact of such 
agreements on overall State and Federal 
spending under this title; 
‘‘(iii) an assessment of the impact of 
such agreements on drug prices, including 
launch price and price increases; and 
‘‘(iv) such recommendations to Con-
gress as the Secretary deems appropriate. 
‘‘(8) GUIDANCE AND REGULATIONS.— 
‘‘(A) IN GENERAL.—Not later than Janu-
ary 1, 2022, the Secretary shall issue guidance 
to States seeking to enter into risk-sharing 
value-based payment agreements under this 
subsection that includes a model template for 
such agreements. The Secretary may issue any 
additional guidance or promulgate regulations 
as necessary to implement and enforce the pro-
visions of this subsection. 
‘‘(B) MODEL AGREEMENTS.— 
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‘‘(i) IN
GENERAL.—If a State ex-
presses an interest in pursuing a risk-shar-
ing value-based payment agreement under 
this subsection with a manufacturer for 
the purchase of a covered outpatient drug, 
the Secretary may share with such State 
any risk-sharing value-based agreement be-
tween a State and the manufacturer for 
the purchase of such drug that has been 
approved under this subsection. While such 
shared agreement may serve as a template 
for a State that wishes to propose, the use 
of a previously approved agreement shall 
not affect the submission and approval 
process for approval of a proposed risk- 
sharing value-based payment agreement 
under this subsection, including the re-
quirements under paragraph (2)(A). 
‘‘(ii) CONFIDENTIALITY.—In the case 
of a risk-sharing value-based payment 
agreement that is disclosed to a State by 
the Secretary under this subparagraph and 
that is only in effect with respect to a sin-
gle State, the confidentiality of information 
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provisions 
described 
in 
subsection 
(b)(3)(D) shall apply to such information. 
‘‘(C) OIG CONSULTATION.— 
‘‘(i) IN
GENERAL.—The Secretary 
shall consult with the Office of the Inspec-
tor General of the Department of Health 
and Human Services to determine whether 
there are potential program integrity con-
cerns with agreement approvals or tem-
plates and address accordingly. 
‘‘(ii) OIG POLICY UPDATES AS NEC-
ESSARY.—The Inspector General of the 
Department of Health and Human Serv-
ices shall review and update, as necessary, 
any policies or guidelines of the Office of 
the Inspector General of the Department 
of Human Services (including policies re-
lated to the enforcement of section 1128B) 
to accommodate the use of risk-sharing 
value-based payment agreements in accord-
ance with this section. 
‘‘(9) RULES OF CONSTRUCTION.— 
‘‘(A) MODIFICATIONS.—Nothing in this 
subsection or any regulations promulgated 
under this subsection shall prohibit a State 
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from requesting a modification from the Sec-
retary to the terms of a risk-sharing value- 
based payment agreement. A modification that 
is expected to result in any increase to pro-
jected net State or Federal spending under the 
agreement shall be subject to recertification by 
the Chief Actuary as described in paragraph 
(2)(A)(ii) before the modification may be ap-
proved. 
‘‘(B) REBATE AGREEMENTS.—Nothing in 
this subsection shall be construed as requiring 
a State to enter into a risk-sharing value-based 
payment agreement or as limiting or super-
seding the ability of a State to enter into a sup-
plemental rebate agreement for a covered out-
patient drug. 
‘‘(C) FFP FOR PAYMENTS UNDER RISK- 
SHARING
VALUE-BASED
PAYMENT
AGREE-
MENTS.—Federal financial participation shall 
be available under this title for any payment 
made by a State to a manufacturer for a cov-
ered outpatient drug under a risk-sharing 
value-based payment agreement in accordance 
with this subsection, except that no Federal fi-
nancial participation shall be available for any 
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payment made by a State to a manufacturer 
under such an agreement on and after the ef-
fective date of a disapproval of such agreement 
by the Secretary. 
‘‘(D) CONTINUED APPLICATION OF OTHER 
PROVISIONS.—Except as expressly provided in 
this subsection, nothing in this subsection or in 
any regulations promulgated under this sub-
section shall affect the application of any other 
provision of this Act. 
‘‘(10) APPROPRIATIONS.—For fiscal year 2020 
and each fiscal year thereafter, there are appro-
priated to the Secretary $5,000,000 for the purpose 
of carrying out this subsection. 
‘‘(11) DEFINITIONS.—In this subsection: 
‘‘(A) CHIEF ACTUARY.—The term ‘Chief 
Actuary’ means the Chief Actuary of the Cen-
ters for Medicare & Medicaid Services. 
‘‘(B) INSTALLMENT YEAR.—The term ‘in-
stallment year’ means, with respect to a risk- 
sharing value-based payment agreement, a 12- 
month period during which a covered outpatient 
drug is administered under the agreement. 
‘‘(C) POTENTIALLY CURATIVE TREATMENT 
INTENDED FOR ONE-TIME USE.—The term ‘po-
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tentially curative treatment intended for one- 
time use’ means a treatment that consists of 
the administration of a covered outpatient drug 
that— 
‘‘(i) is a form of gene therapy for a 
rare disease, as defined by the Commis-
sioner of Food and Drugs, designated 
under section 526 of the Federal Food, 
Drug, and Cosmetics Act, and approved 
under section 505 of such Act or licensed 
under subsection (a) or (k) of section 351 
of the Public Health Service Act to treat 
a serious or life-threatening disease or con-
dition; 
‘‘(ii) if administered in accordance 
with the labeling of such drug, is expected 
to result in either— 
‘‘(I) the cure of such disease or 
condition; or 
‘‘(II) a reduction in the symp-
toms of such disease or condition to 
the extent that such disease or condi-
tion is not expected to lead to early 
mortality; and 
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‘‘(iii) is expected to achieve a result 
described in clause (ii), which may be 
achieved over an extended period of time, 
after not more than 3 administrations. 
‘‘(D) RELEVANT CLINICAL PARAMETER.— 
The term ‘relevant clinical parameter’ means, 
with respect to a covered outpatient drug that 
is the subject of a risk-sharing value-based pay-
ment agreement— 
‘‘(i) a clinical endpoint specified in the 
drug’s labeling or supported by one or 
more of the compendia described in section 
1861(t)(2)(B)(ii)(I) that— 
‘‘(I) is able to be measured or 
evaluated on an annual basis for each 
year of the agreement on an inde-
pendent basis by a provider or other 
entity; and 
‘‘(II) is required to be achieved 
(based on observed metrics in patient 
populations) under the terms of the 
agreement; or 
‘‘(ii) a surrogate endpoint (as defined 
in section 507(e)(9) of the Federal Food, 
Drug, and Cosmetic Act), including those 
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developed by patient-focused drug develop-
ment tools, that— 
‘‘(I) is able to be measured or 
evaluated on an annual basis for each 
year of the agreement on an inde-
pendent basis by a provider or other 
entity; and 
‘‘(II) has been qualified by the 
Food and Drug Administration. 
‘‘(E) RISK-SHARING
VALUE-BASED
PAY-
MENT
AGREEMENT.—The term ‘risk-sharing 
value-based payment agreement’ means an 
agreement between a State plan and a manu-
facturer— 
‘‘(i) for the purchase of a covered out-
patient drug of the manufacturer that is a 
potentially curative treatment intended for 
one-time use; 
‘‘(ii) under which payment for such 
drug shall be made pursuant to an install-
ment-based payment structure that meets 
the requirements of paragraph (3); 
‘‘(iii) which conditions payment on the 
achievement of at least 2 relevant clinical 
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parameters (as defined in subparagraph 
(C)); 
‘‘(iv) which provides that— 
‘‘(I) the State plan will directly 
reimburse the manufacturer for the 
drug; or 
‘‘(II) a third party will reimburse 
the manufacture in a manner ap-
proved by the Secretary; and 
‘‘(v) is approved by the Secretary in 
accordance with paragraph (2). 
‘‘(F) 
TOTAL
INSTALLMENT
YEAR 
AMOUNT.—The term ‘total installment year 
amount’ means, with respect to a risk-sharing 
value-based payment agreement for the pur-
chase of a covered outpatient drug and an in-
stallment year, an amount equal to the product 
of— 
‘‘(i) the unit price of the drug charged 
under the agreement; and 
‘‘(ii) the number of units of such drug 
administered under the agreement during 
such installment year.’’. 
(b) CONFORMING AMENDMENTS.— 
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(1) Section 1903(i)(10)(A) of the Social Secu-
rity Act (42 U.S.C. 1396b(i)(10)(A)) is amended by 
striking ‘‘or unless section 1927(a)(3) applies’’ and 
inserting ‘‘, section 1927(a)(3) applies with respect 
to such drugs, or such drugs are the subject of a 
risk-sharing value-based payment agreement under 
section 1927(l)’’. 
(2) Section 1927(b) of the Social Security Act 
(42 U.S.C. 1396r–8(b)) is amended— 
(A) in paragraph (1)(A), by inserting ‘‘(ex-
cept for drugs for which payment is made by a 
State under a risk-sharing value-based payment 
agreement under subsection (l))’’ after ‘‘under 
the State plan for such period’’; and 
(B) in paragraph (3)— 
(i) in subparagraph (C)(i), by insert-
ing ‘‘or subsection (l)(2)(A)’’ after ‘‘sub-
paragraph (A)’’; and 
(ii) in subparagraph (D), in the mat-
ter preceding clause (i), by inserting ‘‘, 
under subsection (l)(2)(A),’’ after ‘‘under 
this paragraph’’. 
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SEC. 208. APPLYING MEDICAID DRUG REBATE REQUIRE-
MENT TO DRUGS PROVIDED AS PART OF OUT-
PATIENT HOSPITAL SERVICES. 
(a) IN GENERAL.—Section 1927(k)(3) of the Social 
Security Act (42 U.S.C. 1396r–8(k)(3)) is amended to 
read as follows: 
‘‘(3) LIMITING DEFINITION.— 
‘‘(A) IN
GENERAL.—The term ‘covered 
outpatient drug’ does not include any drug, bio-
logical product, or insulin provided as part of, 
or as incident to and in the same setting as, 
any of the following (and for which payment 
may be made under this title as part of pay-
ment for the following and not as direct reim-
bursement for the drug): 
‘‘(i) Inpatient hospital services. 
‘‘(ii) Hospice services. 
‘‘(iii) Dental services, except that 
drugs for which the State plan authorizes 
direct reimbursement to the dispensing 
dentist are covered outpatient drugs. 
‘‘(iv) Physicians’ services. 
‘‘(v) Outpatient hospital services. 
‘‘(vi) Nursing facility services and 
services provided by an intermediate care 
facility for the mentally retarded. 
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‘‘(vii) Other laboratory and x-ray serv-
ices. 
‘‘(viii) Renal dialysis. 
‘‘(B) OTHER
EXCLUSIONS.—Such term 
also does not include any such drug or product 
for which a National Drug Code number is not 
required by the Food and Drug Administration 
or a drug or biological used for a medical indi-
cation which is not a medically accepted indica-
tion. 
‘‘(C) STATE OPTION.—At the option of a 
State, such term may include any drug, biologi-
cal product, or insulin for which the State is 
the primary payer under this title or a dem-
onstration project concerning this title, and that 
is provided on an outpatient basis as part of, or 
as incident to and in the same setting as, de-
scribed in clause (iv) or (v) of subparagraph (A) 
and for which payment is made as part of pay-
ment for such services. 
‘‘(D) NO EFFECT ON BEST PRICE.—Any 
drug, biological product, or insulin excluded 
from the definition of such term as a result of 
this paragraph shall be treated as a covered 
outpatient drug for purposes of determining the 
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best price (as defined in subsection (c)(1)(C)) 
for such drug, biological product, or insulin.’’. 
(b) EFFECTIVE
DATE; IMPLEMENTATION
GUID-
ANCE.— 
(1) IN
GENERAL.—The amendment made by 
subsection (a) shall take effect on the date that is 
1 year after the date of enactment of this Act. 
(2) IMPLEMENTATION
AND
GUIDANCE.—Not 
later than 1 year after the date of enactment of this 
Act, the Secretary of Health and Human Services 
shall issue guidance and relevant informational bul-
letins for States, manufacturers (as defined in sec-
tion 1927(k)(5) of the Social Security Act (42 
U.S.C. 1396r–8(k)(5))), and other relevant stake-
holders, including health care providers, regarding 
implementation of the amendment made by sub-
section (a). 
TITLE III—FOOD AND DRUG 
ADMINISTRATION 
Subtitle A—CREATES Act 
SEC. 301. ACTIONS FOR DELAYS OF GENERIC DRUGS AND 
BIOSIMILAR BIOLOGICAL PRODUCTS. 
(a) DEFINITIONS.—In this section— 
(1) the term ‘‘commercially reasonable, market- 
based terms’’ means— 
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(A) a nondiscriminatory price for the sale 
of the covered product at or below, but not 
greater than, the most recent wholesale acquisi-
tion cost for the drug, as defined in section 
1847A(c)(6)(B) of the Social Security Act (42 
U.S.C. 1395w–3a(c)(6)(B)); 
(B) a schedule for delivery that results in 
the transfer of the covered product to the eligi-
ble product developer consistent with the timing 
under subsection (b)(2)(A)(iv); and 
(C) no additional conditions are imposed 
on the sale of the covered product; 
(2) the term ‘‘covered product’’— 
(A) means— 
(i) any drug approved under sub-
section (c) or (j) of section 505 of the Fed-
eral Food, Drug, and Cosmetic Act (21 
U.S.C. 355) or biological product licensed 
under subsection (a) or (k) of section 351 
of the Public Health Service Act (42 
U.S.C. 262); 
(ii) any combination of a drug or bio-
logical product described in clause (i); or 
(iii) when reasonably necessary to 
support approval of an application under 
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section 505 of the Federal Food, Drug, 
and Cosmetic Act (21 U.S.C. 355), or sec-
tion 351 of the Public Health Service Act 
(42 U.S.C. 262), as applicable, or other-
wise meet the requirements for approval 
under either such section, any product, in-
cluding any device, that is marketed or in-
tended for use with such a drug or biologi-
cal product; and 
(B) does not include any drug or biological 
product that appears on the drug shortage list 
in effect under section 506E of the Federal 
Food, Drug, and Cosmetic Act (21 U.S.C. 
356e), unless— 
(i) the drug or biological product has 
been on the drug shortage list in effect 
under such section 506E continuously for 
more than 6 months; or 
(ii) the Secretary determines that in-
clusion of the drug or biological product as 
a covered product is likely to contribute to 
alleviating or preventing a shortage; 
(3) the term ‘‘device’’ has the meaning given 
the term in section 201 of the Federal Food, Drug, 
and Cosmetic Act (21 U.S.C. 321); 
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(4) the term ‘‘eligible product developer’’ means 
a person that seeks to develop a product for ap-
proval pursuant to an application for approval under 
subsection (b)(2) or (j) of section 505 of the Federal 
Food, Drug, and Cosmetic Act (21 U.S.C. 355) or 
for licensing pursuant to an application under sec-
tion 351(k) of the Public Health Service Act (42 
U.S.C. 262(k)); 
(5) the term ‘‘license holder’’ means the holder 
of an application approved under subsection (c) or 
(j) of section 505 of the Federal Food, Drug, and 
Cosmetic Act (21 U.S.C. 355) or the holder of a li-
cense under subsection (a) or (k) of section 351 of 
the Public Health Service Act (42 U.S.C. 262) for 
a covered product; 
(6) the term ‘‘REMS’’ means a risk evaluation 
and mitigation strategy under section 505–1 of the 
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
355–1); 
(7) the term ‘‘REMS with ETASU’’ means a 
REMS that contains elements to assure safe use 
under section 505–1(f) of the Federal Food, Drug, 
and Cosmetic Act (21 U.S.C. 355–1(f)); 
(8) the term ‘‘Secretary’’ means the Secretary 
of Health and Human Services; 
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(9) the term ‘‘single, shared system of elements 
to assure safe use’’ means a single, shared system 
of elements to assure safe use under section 505– 
1(f) of the Federal Food, Drug, and Cosmetic Act 
(21 U.S.C. 355–1(f)); and 
(10) the term ‘‘sufficient quantities’’ means an 
amount of a covered product that the eligible prod-
uct developer determines allows it to— 
(A) conduct testing to support an applica-
tion under— 
(i) subsection (b)(2) or (j) of section 
505 of the Federal Food, Drug, and Cos-
metic Act (21 U.S.C. 355); or 
(ii) section 351(k) of the Public 
Health Service Act (42 U.S.C. 262(k)); 
and 
(B) fulfill any regulatory requirements re-
lating to approval of such an application. 
(b) CIVIL ACTION FOR FAILURE TO PROVIDE SUFFI-
CIENT QUANTITIES OF A COVERED PRODUCT.— 
(1) IN GENERAL.—An eligible product developer 
may bring a civil action against the license holder 
for a covered product seeking relief under this sub-
section in an appropriate district court of the United 
States alleging that the license holder has declined 
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to provide sufficient quantities of the covered prod-
uct to the eligible product developer on commercially 
reasonable, market-based terms. 
(2) ELEMENTS.— 
(A) IN GENERAL.—To prevail in a civil ac-
tion brought under paragraph (1), an eligible 
product developer shall prove, by a preponder-
ance of the evidence— 
(i) that— 
(I) the covered product is not 
subject to a REMS with ETASU; or 
(II) if the covered product is sub-
ject to a REMS with ETASU— 
(aa) the eligible product de-
veloper has obtained a covered 
product authorization from the 
Secretary in accordance with sub-
paragraph (B); and 
(bb) the eligible product de-
veloper has provided a copy of 
the covered product authorization 
to the license holder; 
(ii) that, as of the date on which the 
civil action is filed, the product developer 
has not obtained sufficient quantities of 
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the covered product on commercially rea-
sonable, market-based terms; 
(iii) that the eligible product developer 
has submitted a written request to pur-
chase sufficient quantities of the covered 
product to the license holder and such re-
quest— 
(I) was sent to a named cor-
porate officer of the license holder; 
(II) was made by certified or reg-
istered mail with return receipt re-
quested; 
(III) specified an individual as 
the point of contact for the license 
holder to direct communications re-
lated to the sale of the covered prod-
uct to the eligible product developer 
and a means for electronic and writ-
ten communications with that indi-
vidual; and 
(IV) specified an address to 
which the covered product was to be 
shipped upon reaching an agreement 
to transfer the covered product; and 
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(iv) that the license holder has not de-
livered to the eligible product developer 
sufficient quantities of the covered product 
on commercially reasonable, market-based 
terms— 
(I) for a covered product that is 
not subject to a REMS with ETASU, 
by the date that is 31 days after the 
date on which the license holder re-
ceived the request for the covered 
product; and 
(II) for a covered product that is 
subject to a REMS with ETASU, by 
31 days after the later of— 
(aa) the date on which the 
license holder received the re-
quest for the covered product; or 
(bb) the date on which the 
license holder received a copy of 
the covered product authorization 
issued by the Secretary in ac-
cordance with subparagraph (B). 
(B) AUTHORIZATION FOR COVERED PROD-
UCT SUBJECT TO A REMS WITH ETASU.— 
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