I 
115TH CONGRESS 
1ST SESSION H. R. 1776 
To improve access to affordable prescription drugs. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 29, 2017 
Ms. SCHAKOWSKY (for herself, Mr. CUMMINGS, Ms. DELAURO, and Mr. 
WELCH) introduced the following bill; which was referred to the Com-
mittee on Energy and Commerce, and in addition to the Committees on 
Ways and Means, and the Judiciary, for a period to be subsequently de-
termined by the Speaker, in each case for consideration of such provisions 
as fall within the jurisdiction of the committee concerned 
A BILL 
To improve access to affordable prescription drugs. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Improving Access To Affordable Prescription Drugs 
Act’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
Sec. 1. Short title; table of contents. 
TITLE I—TRANSPARENCY 
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Sec. 101. Drug manufacturer reporting. 
Sec. 102. Determining the public and private benefit of copayment coupons and 
other patient assistance programs. 
TITLE II—ACCESS AND AFFORDABILITY 
Sec. 201. Negotiating fair prices for Medicare prescription drugs. 
Sec. 202. Prescription drug price spikes. 
Sec. 203. Acceleration of the closing of the Medicare Part D coverage gap. 
Sec. 204. Importing affordable and safe drugs. 
Sec. 205. Requiring drug manufacturers to provide drug rebates for drugs dis-
pensed to low-income individuals. 
Sec. 206. Cap on prescription drug cost-sharing. 
TITLE III—INNOVATION 
Sec. 301. Prize fund for new and more effective treatments of bacterial infec-
tions. 
Sec. 302. Public funding for clinical trials. 
Sec. 303. Rewarding innovative drug development. 
Sec. 304. Improving program integrity. 
TITLE IV—CHOICE AND COMPETITION 
Sec. 401. Preserving access to affordable generics. 
Sec. 402. 180-day exclusivity period amendments regarding first applicant sta-
tus. 
Sec. 403. 180-day exclusivity period amendments regarding agreements to defer 
commercial marketing. 
Sec. 404. Increasing generic drug competition. 
Sec. 405. Disallowance of deduction for advertising for prescription drugs. 
Sec. 406. Product hopping. 
TITLE I—TRANSPARENCY 
SEC. 101. DRUG MANUFACTURER REPORTING. 
Part P of title III of the Public Health Service Act 
(42 U.S.C. 280g et seq.) is amended by adding at the end 
the following: 
‘‘SEC. 399V–7. DRUG MANUFACTURER REPORTING. 
‘‘(a) DEFINITIONS.—In this section: 
‘‘(1) INDEPENDENT CHARITY PATIENT ASSIST-
ANCE PROGRAM.—The term ‘independent charity pa-
tient assistance program’ means any organization 
described in section 501(c)(3) of the Internal Rev-
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enue Code of 1986 and exempt from taxation under 
section 501(a) of such Code and which is not a pri-
vate foundation (as defined in section 509(a) of such 
Code) that offers patient assistance. 
‘‘(2) MANUFACTURER
PATIENT
ASSISTANCE 
PROGRAM.—The term ‘manufacturer patient assist-
ance program’ means an organization, including a 
private foundation (as so defined), that is sponsored 
by, or receives funding from, a manufacturer and 
that offers patient assistance. Such term does not 
include an independent charity patient assistance 
program. 
‘‘(3) PATIENT ASSISTANCE.—The term ‘patient 
assistance’ means assistance provided to offset the 
cost of drugs for individuals. Such term includes free 
products, coupons, rebates, copay or discount cards, 
and other means of providing assistance to individ-
uals related to drug costs, as determined by the Sec-
retary. 
‘‘(b) REPORTING ON DOMESTIC SALES.—An applica-
ble manufacturer of an approved drug (including a drug 
approved under subsection (c) or (j) of section 505 of the 
Federal Food, Drug, and Cosmetic Act and a biological 
product licensed under subsection (a) or (k) of section 351 
of this Act) shall submit to the Secretary and to Congress 
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an annual report, in such format as the Secretary shall 
require, outlining with respect to the previous calendar 
year (except as provided in subsection (c)(3))— 
‘‘(1) with respect to each such drug— 
‘‘(A) the total expenditures of the manu-
facturer on— 
‘‘(i) domestic and foreign drug re-
search and development, including an 
itemized description of— 
‘‘(I) basic and preclinical re-
search; 
‘‘(II) clinical research, broken out 
by clinical trial phase; 
‘‘(III) development of alternative 
dosage forms and strengths for the 
drug molecule or combinations, in-
cluding the molecule; 
‘‘(IV) other drug development ac-
tivities, such as nonclinical laboratory 
studies and record and report mainte-
nance; 
‘‘(V) pursuing new or expanded 
indications for such drug through sup-
plemental applications under section 
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505 of the Federal Food, Drug, and 
Cosmetic Act; 
‘‘(VI) carrying out postmarket 
requirements related to such drug, in-
cluding under section 505(o)(3) of 
such Act; 
‘‘(VII) carrying out risk evalua-
tion and mitigation strategies in ac-
cordance with section 505–1 of such 
Act; and 
‘‘(VIII) marketing research; 
‘‘(ii) cost of goods sold, broken out by 
source and cost of each component and 
identifying specific costs that reflect inter-
nal transfers within the manufacturer’s 
company; 
‘‘(iii) acquisition costs in total and per 
unit sold, including costs for the purchase 
of patents and licensing; and 
‘‘(iv) marketing and advertising for 
the promotion of the drug, including a 
breakdown of amounts aimed at con-
sumers, prescribers, managed care organi-
zations, and others; 
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‘‘(B) the gross revenue, net revenue, gross 
profit, and net profit to the manufacturer; 
‘‘(C) the total number of units of the pre-
scription drug that were sold in interstate com-
merce in the most recently completed calendar 
year; 
‘‘(D) pricing information, including— 
‘‘(i) wholesale acquisition cost; 
‘‘(ii) net average price realized by pre-
scription drug benefit managers for drugs 
provided to individuals in the United 
States, after accounting for any rebates or 
other payments from the manufacturer to 
the pharmacy benefit manager and from 
the pharmacy benefit manager to the man-
ufacturer; and 
‘‘(iii) the net price of the drug, after 
accounting for discounts, rebates, or other 
financial considerations, charged to pur-
chasers in each applicable country of the 
Organisation for Economic Co-operation 
and Development; 
‘‘(E) information, including the dollar 
value to the recipient of manufacturer patient 
assistance programs offered by the manufac-
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‘‘(ii) the number of individuals receiv-
ing each type of patient assistance; 
‘‘(iii) the total value of each type of 
patient assistance that was used; 
‘‘(iv) the average length of time that 
each individual received each type of pa-
tient assistance; 
‘‘(v) the number of individuals who 
were discontinued from receiving each type 
of patient assistance; and 
‘‘(vi) complete documentation of the 
terms and conditions for an individual 
agreeing to participate in the program for 
each type of patient assistance provided; 
‘‘(G) any Federal benefits received by the 
manufacturer, including the amounts and peri-
ods of impact for each such benefit, including 
tax credits, patent applications that benefitted 
from a grant from the National Institutes of 
Health, patent extensions, exclusivity periods, 
and other Federal benefits with respect to such 
drug; and 
‘‘(H) the percentage of research and devel-
opment expenditures on— 
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‘‘(i) activities conducted by the manu-
facturer; 
‘‘(ii) activities funded by Federal enti-
ties; and 
‘‘(iii) activities conducted by other en-
tities such as academic institutions or 
other drug manufacturers; 
‘‘(2) executive compensation for the chief execu-
tive officer, chief financial officer, and the 3 other 
most highly compensated executive officers, includ-
ing bonuses, paid by such manufacturer, and stock 
options affiliated with the manufacturer that were 
offered to or accrued by such officers; 
‘‘(3) any additional information the manufac-
turer chooses to provide related to drug pricing deci-
sions, such as total expenditures on drug research, 
drug development, and clinical trials on drugs that 
failed to receive approval by the Food and Drug Ad-
ministration, a list of drugs and drug prices against 
which the manufacturer compared the applicable 
drug, and other relevant information; and 
‘‘(4) any other information as the Secretary 
may require. 
‘‘(c) SUBMISSION OF REPORTS.— 
‘‘(1) IN GENERAL.— 
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‘‘(A) SUBMISSION BY DRUG MANUFACTUR-
ERS.—Drug manufacturers shall submit the an-
nual reports required under this section sub-
mitted to the Secretary in a usable format, as 
the Secretary may require. 
‘‘(B) COLLATION BY THE SECRETARY.— 
The Secretary shall collate the reports received 
as described in subparagraph (A) and submit 
such collated reports to Congress, together with 
an analysis of the reports by the Secretary that 
includes— 
‘‘(i) a summary of data from the re-
ports; 
‘‘(ii) consideration of factors such as 
trends on research and development costs, 
Federal benefits, and manufacturer patient 
assistance programs; and 
‘‘(iii) the relationship between the fac-
tors described in clause (ii) and prescrip-
tion drug prices. 
‘‘(C) PUBLIC
AVAILABILITY.—The Sec-
retary shall make the reports submitted by 
manufacturers as described in subparagraph 
(A) and the collated reports together with the 
analysis of the Secretary described in subpara-
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graph (B) publicly available, including by post-
ing such reports to the Internet website of the 
Department of Health and Human Services, in 
a searchable format. 
‘‘(2) SINGLE REPORTS.—A drug manufacturer 
shall submit all information required under sub-
section (b) with respect to each applicable drug, in 
a single, annual report. 
‘‘(3) INITIAL REPORT.— 
‘‘(A) IN
GENERAL.—An applicable drug 
manufacturer shall submit a report pursuant to 
this section one year after the date of enact-
ment of the Improving Access To Affordable 
Prescription Drugs Act (except as provided in 
subparagraph (B)) that includes the informa-
tion required under subsection (b)(1) with re-
spect to each calendar year since the drug for 
which the report is required was approved 
under section 505 of the Federal Food, Drug, 
and Cosmetic Act, licensed under section 351 of 
this Act, or received an exemption under section 
505(i) of the Federal Food, Drug, and Cos-
metic Act or section 351(a)(3) of this Act, or 
the calendar year in which the manufacturer ac-
quired the drug. 
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‘‘(B) SMALL BUSINESSES.—In the case of 
an applicable drug manufacturer that has fewer 
than 500 employees, the initial report described 
in subparagraph (A) shall be submitted by a 
date determined by the Secretary, which shall 
be not earlier than the date described in sub-
paragraph (A) and not later than the date that 
is 3 years after the date of enactment of the 
Improving Access To Affordable Prescription 
Drugs Act. 
‘‘(d) PENALTY
FOR NONCOMPLIANCE.—The Sec-
retary shall report to the Office of the Inspector General 
any manufacturer’s failure to submit a complete report as 
required under this section. Any manufacturer that fails 
to submit a complete report required under this section 
shall be subject to a civil penalty of up to $200,000 for 
each day on which the violation continues. The Secretary 
shall collect the civil penalties under this subsection, and 
without further appropriation, shall use such funds to sup-
port the programs under sections 409K and 485E, and, 
at the discretion of the Secretary, research of the National 
Institutes of Health and other activities authorized under 
the Improving Access To Affordable Prescription Drugs 
Act, including any amendments made by such Act.’’. 
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SEC. 102. DETERMINING THE PUBLIC AND PRIVATE BEN-
EFIT OF COPAYMENT COUPONS AND OTHER 
PATIENT ASSISTANCE PROGRAMS. 
(a) INFORMATION REPORTING
BY INDEPENDENT 
CHARITY
PATIENT
ASSISTANCE
PROGRAMS.—Section 
6033(b) of the Internal Revenue Code of 1986 is amended 
by striking the period at the end of paragraph (16) and 
inserting ‘‘, and’’ and by inserting after paragraph (16) 
the following new paragraph: 
‘‘(17) the total amount of patient assistance 
(within the meaning of section 399V–7 of the Public 
Health Service Act) provided to individuals who are 
prescribed drugs manufactured by any contributor to 
the organization.’’. 
(b) GAO STUDY AND REPORT ON IMPACT OF COPAY-
MENT COUPONS AND OTHER PATIENT ASSISTANCE PRO-
GRAMS ON PRESCRIPTION DRUG PRICING AND EXPENDI-
TURES.— 
(1) STUDY.—The Comptroller General of the 
United States shall conduct a study on the impact 
of copayment coupons and other patient assistance 
programs on prescription drug pricing and expendi-
tures. Such study shall include an analysis of the 
following: 
(A) The extent to which copayment cou-
pons and patient assistance programs con-
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tribute to inflated prescription drug prices and 
health insurance premiums, including with re-
spect to— 
(i) the Medicaid program under title 
XIX of the Social Security Act (42 U.S.C. 
1396 et seq.); 
(ii) the Medicare program under title 
XVIII of such Act (42 U.S.C. 1395 et 
seq.); 
(iii) the TRICARE program under 
chapter 55 of title 10, United States Code; 
(iv) health care under the laws admin-
istered by the Secretary of Veterans Af-
fairs; 
(v) the commercial health insurance 
market; and 
(vi) the cash pay health market. 
(B) The extent to which manufacturers of-
fering copayment coupons and other patient as-
sistance programs or sponsoring manufacturer 
patient assistance programs obtain tax deduc-
tions for offering or sponsoring such assistance 
(either as business expenses or charitable de-
ductions), including— 
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(i) the total value of the tax deduc-
tions claimed by manufacturers for offer-
ing or sponsoring patient assistance pro-
grams during the 10 years preceding the 
date of enactment of this Act; 
(ii) a description of the methodology 
for assigning a value to the tax deduction 
claimed by manufacturers for offering or 
sponsoring patient assistance programs; 
and 
(iii) an analysis of the extent to which 
the activities of independent charity pa-
tient assistance programs, which are spon-
sored by, or receive funding from, pharma-
ceutical manufacturers (as determined 
using tax returns, sales data, and other 
public disclosures) provide a financial ben-
efit to the manufacturers that sponsor 
them. 
(C) The extent to which independent char-
ity patient assistance programs adhere to guid-
ance from the Office of the Inspector General 
of the Department of Health and Human Serv-
ices on avoiding waste, fraud, and abuse. 
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(2) DEFINITIONS.—In this subsection, the 
terms ‘‘patient assistance’’, ‘‘independent charity pa-
tient assistance program’’, ‘‘manufacturer’’, and 
‘‘manufacturer patient assistance program’’ have the 
meaning given those terms under section 399V–7 of 
the Public Health Service Act, as added by section 
101. 
(3) REPORT.—Not later than 2 years after the 
date of the enactment of this Act, the Comptroller 
General of the United States shall submit to Con-
gress a report describing the findings of the study 
required under this subsection. 
TITLE II—ACCESS AND 
AFFORDABILITY 
SEC. 201. NEGOTIATING FAIR PRICES FOR MEDICARE PRE-
SCRIPTION DRUGS. 
(a) NEGOTIATING FAIR PRICES.— 
(1) IN
GENERAL.—Section 1860D–11 of the 
Social Security Act (42 U.S.C. 1395w–111) is 
amended by striking subsection (i) (relating to non-
interference) and by inserting the following: 
‘‘(i) NEGOTIATING FAIR PRICES WITH DRUG MANU-
FACTURERS.— 
‘‘(1) IN GENERAL.—Notwithstanding any other 
provision of law, in furtherance of the goals of pro-
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viding quality care and containing costs under this 
part, the Secretary shall, with respect to applicable 
covered part D drugs, and may, with respect to 
other covered part D drugs, negotiate, using the ne-
gotiation technique or techniques that the Secretary 
determines will maximize savings and value to the 
government for prescription drug plans and MA–PD 
plans and for plan enrollees (in a manner that may 
be similar to Federal entities and that may include, 
but is not limited to, formularies, reference pricing, 
discounts, rebates, other price concessions, and cov-
erage determinations), with drug manufacturers the 
prices that may be charged to PDP sponsors and 
MA organizations for such drugs for part D eligible 
individuals who are enrolled in a prescription drug 
plan or in an MA–PD plan. In conducting such ne-
gotiations, the Secretary shall consider the drug’s 
current price, initial launch price, prevalence of dis-
ease and usage, and approved indications, the num-
ber of similarly effective alternative treatments for 
each approved use of the drug, the budgetary impact 
of providing coverage under this part for such drug 
for all individuals who would likely benefit from the 
drug, evidence on the drug’s effectiveness and safety 
compared to similar drugs, and the quality and 
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quantity of clinical data and rigor of the applicable 
process of approval of a drug under section 505 of 
the Federal Food, Drug, and Cosmetic Act or a bio-
logical product under section 351 of the Public 
Health Service Act. 
‘‘(2) USE OF LOWER OF VA OR BIG FOUR PRICE 
IF NEGOTIATIONS FAIL.—If, after attempting to ne-
gotiate for a price with respect to a covered part D 
drug under paragraph (1) for a period of 1 year, the 
Secretary is not successful in obtaining an appro-
priate price for the drug (as determined by the Sec-
retary), the Secretary shall establish the price that 
may be charged to PDP sponsors and MA organiza-
tions for such drug for part D eligible individuals 
who are enrolled in a prescription drug plan or in 
an MA–PD plan at an amount equal to the lesser 
of— 
‘‘(A) the price paid by the Secretary of 
Veterans Affairs to procure the drug under the 
laws administered by the Secretary of Veterans 
Affairs; or 
‘‘(B) the price paid to procure the drug 
under section 8126 of title 38, United States 
Code. 
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‘‘(3) APPLICABLE COVERED PART D DRUG DE-
FINED.—For purposes of this subsection, the term 
‘applicable covered part D drug’ means a covered 
part D drug that the Secretary determines to be ap-
propriate for negotiation under paragraph (1) based 
on one or more of the following factors as applied 
to such drug: 
‘‘(A) Spending on a per beneficiary basis. 
‘‘(B) The proportion of total spending 
under this title. 
‘‘(C) Unit price increases over the pre-
ceding 5 years. 
‘‘(D) Initial launch price. 
‘‘(E) Availability of less expensive, simi-
larly effective alternative treatments. 
‘‘(F) Status of the drug as a follow-on to 
previously approved drugs. 
‘‘(G) Any other criteria determined by the 
Secretary. 
‘‘(4) PDP SPONSORS AND MA ORGANIZATION 
MAY NEGOTIATE LOWER PRICES.—Nothing in this 
subsection shall be construed as preventing the spon-
sor of a prescription drug plan, or an organization 
offering an MA–PD plan, from obtaining a discount 
or reduction of the price for a covered part D drug 
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below the price negotiated under paragraph (1) or 
the price established under paragraph (2). 
‘‘(5) NO EFFECT ON EXISTING APPEALS PROC-
ESS.—Nothing in this subsection shall be construed 
to affect the appeals procedures under subsections 
(g) and (h) of section 1860D–4.’’. 
(2) EFFECTIVE DATE.—The amendments made 
by this subsection shall take effect on the date of the 
enactment of this Act and shall first apply to nego-
tiations and prices for plan years beginning on Jan-
uary 1, 2019. 
(b) REQUIREMENT TO INCLUDE A LINK TO THE 
MEDICARE DRUG SPENDING DASHBOARD ON THE MEDI-
CARE PLAN FINDER.—Beginning not later than October 
1, 2017, the Secretary of Health and Human Services 
shall ensure that the Medicare Plan Finder on the Medi-
care.gov Internet website includes a link to the Medicare 
Drug Spending Dashboard on the CMS.gov Internet 
website. Such link shall be easily accessible on the Medi-
care Plan Finder. 
(c) REPORTS TO CONGRESS.— 
(1) SECRETARY OF HHS.— 
(A) IN GENERAL.—Not later than 3 years 
after the date of the enactment of this Act, and 
every 6 months thereafter, the Secretary of 
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Health and Human Services shall submit to 
Congress a report on the following: 
(i) The price negotiations conducted 
by the Secretary under section 1860D– 
11(i) of the Social Security Act (42 U.S.C. 
1395w–111(i)), as amended by subsection 
(a), including a description of— 
(I) how such price negotiations 
are achieving lower prices for covered 
part D drugs (as defined in section 
1860D–2(e) of the Social Security Act 
(42 U.S.C. 1395w–102(e))) for Medi-
care beneficiaries; 
(II) how such lower prices are 
passed through to Medicare bene-
ficiaries; 
(III) how such price negotiations 
are affecting drug prices in the pri-
vate market; and 
(IV) how such price negotiations 
are affecting the list price of covered 
part D drugs. 
(ii) Data on spending under part D of 
the Medicare program on covered part D 
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drugs, including data on covered part D 
drugs with— 
(I) spending on a per beneficiary 
basis that is above the median spend-
ing on other drugs in the same class 
or above the median spending of other 
drug classes; and 
(II) high unit cost increases over 
the past five years, especially where 
such increases are greater than the 
increases for covered part D drugs in 
general. 
(iii) A list of the covered part D drugs 
with no therapeutic substitute and data on 
spending under part D of the Medicare 
program on such drugs. 
(iv) Access to covered part D drugs 
and, where available, compliance rates and 
health outcomes associated with compli-
ance rates. 
(v) Appeals by enrollees with respect 
to covered part D drugs not included on 
plan formularies. 
(B) PUBLIC AVAILABILITY OF REPORT.— 
The Secretary of Health and Human Services 
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shall publish on the Internet website of the 
Centers for Medicare & Medicaid Services a 
copy of each report submitted under subpara-
graph (A), including the detailed tables, figures, 
and data published in the report and its appen-
dices. 
(2) MEDPAC.— 
(A) STUDY.—The Comptroller General of 
the United States shall conduct a study on the 
price negotiations conducted by the Secretary 
under section 1860D–11(i) of the Social Secu-
rity Act (42 U.S.C. 1395w–111(i)), as amended 
by subsection (a), including an analysis of— 
(i) how such price negotiations are 
achieving lower prices for covered part D 
drugs (as defined in section 1860D–2(e) of 
the Social Security Act (42 U.S.C. 1395w– 
102(e))) for Medicare beneficiaries; 
(ii) who is benefitting from such lower 
prices, such as Medicare beneficiaries, the 
Federal Government, States, prescription 
drug plans and MA–PD plans, or other en-
tities; 
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(iii) how such price negotiations are 
affecting drug prices in the private market; 
and 
(iv) how such price negotiations are 
affecting the list price of covered part D 
drugs. 
(B) REPORT.—Not later than January 1, 
2021, the Comptroller General of the United 
States shall submit to Congress a report on the 
study conducted under subparagraph (A), to-
gether with recommendations for improving 
such price negotiations. 
(d) CMI TESTING OF NEGOTIATING DRUG AND BIO-
LOGICAL
PRICES
TO
IMPROVE
VALUE.—Section 
1115A(b)(2) of the Social Security Act (42 U.S.C. 
1315a(b)(2)) is amended— 
(1) in subparagraph (A), by adding at the end 
the following new sentence: ‘‘The models selected 
under this subparagraph shall include at least 3 of 
the models described in subparagraph (D), which 
shall be implemented by not later than 18 months 
after the date of the enactment of the Improving Ac-
cess To Affordable Prescription Drugs Act’’; and 
(2) by adding at the end the following new sub-
paragraph: 
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‘‘(D) MODELS OF NEGOTIATING DRUG AND 
BIOLOGICAL PRICES TO IMPROVE VALUE.—The 
models described in this subparagraph are the 
following models for negotiating drug and bio-
logical prices under the applicable titles (includ-
ing under both parts B and D of title XVIII) 
in order to improve the value of payments for 
such drugs and biologicals under such titles: 
‘‘(i) Discounting or eliminating pa-
tient cost-sharing on high-value drugs and 
biologicals. 
‘‘(ii) Value-based formularies. 
‘‘(iii) Indications-based pricing. 
‘‘(iv) Reference pricing. 
‘‘(v) Risk-sharing agreements based 
on outcomes. 
‘‘(vi) Pricing based on comparative ef-
fectiveness research. 
‘‘(vii) Episode-based payments for 
chemotherapy and other conditions deter-
mined appropriate by the Secretary. 
‘‘(viii) Alternative ways of paying for 
drugs and biologicals under part B of title 
XVIII. 
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‘‘(ix) Other models determined appro-
priate by the Secretary.’’. 
SEC. 202. PRESCRIPTION DRUG PRICE SPIKES. 
(a) IDENTIFICATION OF PRESCRIPTION DRUG PRICE 
SPIKES.— 
(1) DEFINITIONS.—In this subsection: 
(A) APPLICABLE ENTITY.—The term ‘‘ap-
plicable entity’’ means the holder of an applica-
tion approved under subsection (c) or (j) of sec-
tion 505 of the Federal Food, Drug, and Cos-
metic Act (21 U.S.C. 355) or of a license issued 
under subsection (a) or (k) of section 351 of 
the Public Health Service Act (42 U.S.C. 262) 
for a prescription drug. 
(B) AVERAGE PRICE.—The term ‘‘average 
price’’ means— 
(i) the average manufacturer price, as 
defined in section 1927(k)(1) of the Social 
Security Act (42 U.S.C. 1396r–8(k)(1)); or 
(ii) in the case of a drug for which the 
average manufacturer price is not avail-
able, the manufacturer’s average sales 
price (as defined in section 1847A(c)(1) of 
the Social Security Act (42 U.S.C. 1395w- 
3a(c)(1)). 
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(C) COMMERCE.—The term ‘‘commerce’’ 
has the meaning given such term in section 4 
of the Federal Trade Commission Act (15 
U.S.C. 44). 
(D) 
PRESCRIPTION
DRUG.—The 
term 
‘‘prescription drug’’ means any drug subject to 
section 503(b)(1) of the Federal Food, Drug, 
and Cosmetic Act (21 U.S.C. 353(b)(1)) which 
is covered by a Federal health care program (as 
defined in section 1128B(f) of the Social Secu-
rity Act (42 U.S.C. 1320a–7b(f))). 
(E) PRICE SPIKE.— 
(i) IN
GENERAL.—The term ‘‘price 
spike’’ means an increase in the average 
price in commerce of a prescription drug 
for which the price spike percentage is 
equal to or greater than the applicable 
price increase allowance. 
(ii) PRICE SPIKE PERCENTAGE.—The 
price spike percentage is the percentage (if 
any) by which— 
(I) the average price of a pre-
scription drug in commerce for the 
most 
recently 
completed 
calendar 
year; exceeds 
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(II) the average price of such 
drug in commerce for the calendar 
year preceding such year. 
(iii) APPLICABLE PRICE INCREASE AL-
LOWANCE.—The applicable price increase 
allowance for any calendar year is the per-
centage (rounded to the nearest one-tenth 
of 1 percent) by which the medical care 
component of the consumer price index for 
all urban consumers (as published by the 
Bureau of Labor Statistics) for that year 
exceeds such component for the preceding 
calendar year. 
(F) PRICE SPIKE REVENUE.— 
(i) IN GENERAL.—The price spike rev-
enue for any calendar year is an amount 
equal to— 
(I) the gross price spike revenue; 
minus 
(II) the adjustment amount. 
(ii) GROSS PRICE SPIKE REVENUE.— 
The gross price spike revenue for any cal-
endar year is an amount equal to the prod-
uct of— 
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(I) an amount equal to the dif-
ference between subclause (I) of sub-
paragraph (E)(ii) and subclause (II) 
of such subparagraph; and 
(II) the total number of units of 
the prescription drug which were sold 
in commerce in such calendar year. 
(iii) ADJUSTMENT AMOUNT.—The ad-
justment amount is the amount, if any, of 
the gross price spike revenue which the In-
spector General has determined is due sole-
ly to an increase in the cost of the goods 
sold (excluding any increase in costs which 
are related to internal transfers within the 
applicable entity) which are necessary to 
manufacture the prescription drug subject 
to the price spike. 
(G) INSPECTOR GENERAL.—The term ‘‘In-
spector General’’ means the Inspector General 
of the Department of Health and Human Serv-
ices. 
(2) SUBMISSION BY PHARMACEUTICAL COMPA-
NIES OF INFORMATION.— 
(A) IN GENERAL.—For each prescription 
drug, the applicable entity shall submit to the 
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Inspector General a quarterly report that in-
cludes the following: 
(i) For each prescription drug of the 
applicable entity— 
(I) the total number of units of 
the prescription drug which were sold 
in commerce in the most recently 
completed calendar quarter; and 
(II) the gross revenues from sales 
of such prescription drug in commerce 
in the most recently completed cal-
endar quarter. 
(ii) Such information related to in-
creased input costs as the applicable entity 
may wish the Inspector General to consider 
in making a determination under subclause 
(II) of paragraph (3)(B)(ii) or an assess-
ment in subclause (III) of such paragraph 
for the most recently completed calendar 
quarter. 
(iii) Such information related to any 
anticipated increased input costs for the 
subsequent calendar quarter as the appli-
cable entity may wish the Inspector Gen-
eral to consider in making a determination 
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under 
subclause 
(II) 
of 
paragraph 
(3)(B)(ii) or an assessment in subclause 
(III) of such paragraph for such calendar 
quarter. 
(B) PENALTY FOR FAILURE TO SUBMIT.— 
(i) IN GENERAL.—An applicable enti-
ty described in subparagraph (A) that fails 
to submit information to the Inspector 
General regarding a prescription drug, as 
required by such paragraph, before the 
date specified in subparagraph (C) shall be 
liable for a civil penalty, as determined 
under clause (ii). 
(ii) 
AMOUNT
OF
PENALTY.—The 
amount of the civil penalty shall be equal 
to the product of— 
(I) an amount, as determined ap-
propriate by the Inspector General; 
which is— 
(aa) not less than 0.5 per-
cent of the gross revenues from 
sales of the prescription drug de-
scribed in clause (i) for the most 
recently completed calendar year; 
and 
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(bb) not greater than 1 per-
cent of the gross revenues from 
sales of such drug for the most 
recently completed calendar year; 
and 
(II) the number of days in the 
period between— 
(aa) 
the 
applicable 
date 
specified in subparagraph (C); 
and 
(bb) the date on which the 
Inspector General receives the in-
formation described in subpara-
graph (A) from the applicable en-
tity. 
(C) SUBMISSION DEADLINE.—An applica-
ble entity shall submit each quarterly report de-
scribed in subparagraph (A) not later than Jan-
uary 17, April 18, June 15, and September 15 
of each calendar year. 
(3) ASSESSMENT.— 
(A) IN GENERAL.—Not later than the last 
day in February of each year, the Inspector 
General, in consultation with the Federal Trade 
Commission, shall complete an assessment of 
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the information the Inspector General received 
pursuant to paragraph (2)(A) with respect to 
sales of prescription drugs in the most recently 
completed calendar year. 
(B) ELEMENTS.—The assessment required 
by subparagraph (A) shall include the following: 
(i) Identification of each price spike 
relating to a prescription drug in the most 
recently completed calendar year. 
(ii) For each price spike identified 
under clause (i)— 
(I) a determination of the price 
spike percentage and price spike rev-
enue; 
(II) a determination regarding 
the accuracy of the information sub-
mitted by the applicable entity regard-
ing increased input costs; and 
(III) an assessment of the ration-
ale of the applicable entity for the 
price spike. 
(4) REPORT
TO
INTERNAL
REVENUE
SERV-
ICE.— 
(A) IN GENERAL.—Not later than the last 
day in February of each year, the Inspector 
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General shall transmit to the Internal Revenue 
Service a report on the findings of the Inspector 
General with respect to the information the In-
spector General received under paragraph 
(2)(A) with respect to the most recently com-
pleted calendar year and the assessment carried 
out by the Inspector General under paragraph 
(3)(A) with respect to such information. 
(B) CONTENTS.—The report transmitted 
under subparagraph (A) shall include the fol-
lowing: 
(i) The information received under 
paragraph (2)(A) with respect to the most 
recently completed calendar year. 
(ii) The price spikes identified under 
clause (i) of paragraph (3)(B). 
(iii) The price spike revenue deter-
minations made under clause (ii)(I) of 
such paragraph. 
(iv) The average price of the prescrip-
tion drug for each month during the most 
recently completed calendar year. 
(v) The determinations and assess-
ments made under subclauses (II) and 
(III) of clause (ii) of such paragraph. 
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(C) PUBLICATION.—Not later than the last 
day in February of each year, the Inspector 
General shall make the report transmitted 
under subparagraph (A) available to the public, 
including on the Internet website of the Inspec-
tor General. 
(5) NOTIFICATION.—The Secretary of the 
Treasury, in conjunction with the Inspector General, 
shall notify, at such time and in such manner as the 
Secretary of the Treasury shall provide, each appli-
cable entity in regard to any prescription drug which 
has been determined to have been subject to a price 
spike during the most recently completed calendar 
year and the amount of the tax imposed on such ap-
plicable entity pursuant to section 4192 of the Inter-
nal Revenue Code of 1986 (as added by subsection 
(b) of this section). 
(b) EXCISE TAX ON PRESCRIPTION DRUGS SUBJECT 
TO PRICE SPIKES.— 
(1) IN GENERAL.—Subchapter E of chapter 32 
of the Internal Revenue Code of 1986 is amended by 
adding at the end the following new section: 
‘‘SEC. 4192. PRESCRIPTION DRUGS SUBJECT TO PRICE 
SPIKES. 
‘‘(a) IMPOSITION OF TAX.— 
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‘‘(1) IN GENERAL.—For each taxable prescrip-
tion drug sold by an applicable entity during the cal-
endar year, there is hereby imposed on such entity 
a tax equal to the greater of— 
‘‘(A) the annual price spike tax for such 
drug, or 
‘‘(B) subject to paragraph (2), the cumu-
lative price spike tax for such drug. 
‘‘(2) LIMITATION.—In the case of a taxable 
prescription drug for which the applicable period (as 
determined under subsection (c)(2)(E)(i)) is less 
than 2 completed calendar years, the cumulative 
price spike tax shall not apply. 
‘‘(b) ANNUAL PRICE SPIKE TAX.— 
‘‘(1) IN GENERAL.—The amount of the annual 
price spike tax shall be equal to the applicable per-
centage of the price spike revenue received by the 
applicable entity on the sale of the taxable prescrip-
tion drug during the calendar year. 
‘‘(2) APPLICABLE PERCENTAGE.—For purposes 
of paragraph (1), the applicable percentage shall be 
equal to— 
‘‘(A) in the case of a taxable prescription 
drug which has been subject to a price spike 
percentage equal to or greater than the applica-
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ble price increase allowance (as defined in sec-
tion 202(a)(1)(E)(iii) of the Improving Access 
To Affordable Prescription Drugs Act) but less 
than 15 percent, 50 percent, 
‘‘(B) in the case of a taxable prescription 
drug which has been subject to a price spike 
percentage equal to or greater than 15 percent 
but less than 20 percent, 75 percent, and 
‘‘(C) in the case of a taxable prescription 
drug which has been subject to a price spike 
percentage equal to or greater than 20 percent, 
100 percent. 
‘‘(c) CUMULATIVE PRICE SPIKE TAX.— 
‘‘(1) IN GENERAL.—The amount of the cumu-
lative price spike tax shall be equal to the applicable 
percentage of the cumulative price spike revenue re-
ceived by the applicable entity on the sale of the tax-
able prescription drug during the calendar year. 
‘‘(2) APPLICABLE PERCENTAGE.— 
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), the applicable percentage shall be 
equal to— 
‘‘(i) in the case of a taxable prescrip-
tion drug which has been subject to a cu-
mulative price spike percentage equal to or 
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greater than the cumulative price increase 
allowance but less than the first com-
pounded percentage, 50 percent, 
‘‘(ii) in the case of a taxable prescrip-
tion drug which has been subject to a cu-
mulative price spike percentage equal to or 
greater than the first compounded percent-
age but less than the second compounded 
percentage, 75 percent, and 
‘‘(iii) in the case of a taxable prescrip-
tion drug which has been subject to a cu-
mulative price spike percentage equal to or 
greater than the second compounded per-
centage, 100 percent. 
‘‘(B) CUMULATIVE PRICE SPIKE PERCENT-
AGE.—The cumulative price spike percentage is 
the percentage (if any) by which— 
‘‘(i) the average price of the taxable 
prescription drug in commerce for the 
most recently completed calendar year, ex-
ceeds 
‘‘(ii) the average price of such drug in 
commerce for the base year. 
‘‘(C) CUMULATIVE
PRICE
INCREASE
AL-
LOWANCE.—For purposes of clause (i) of sub-
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paragraph (A), the cumulative price increase al-
lowance for any calendar year is the percentage 
(rounded to the nearest one-tenth of 1 percent) 
by which the medical care component of the 
consumer price index for all urban consumers 
(as published by the Bureau of Labor Statis-
tics) for that year exceeds such component for 
the base year. 
‘‘(D) COMPOUNDED
PERCENTAGES.—For 
purposes of subparagraph (A), the first com-
pounded percentage and second compounded 
percentage shall be determined in accordance 
with the following table: 
‘‘Number of years in applicable period 
First 
compounded 
percentage 
Second 
compounded 
percentage 
2 years ....................................................................
32.35 
44.00
3 years ....................................................................
52.09 
72.80
4 years ....................................................................
74.90 
107.36
5 years ....................................................................
101.14 
148.83. 
‘‘(E) APPLICABLE
PERIOD
AND
BASE 
YEAR.— 
‘‘(i) APPLICABLE PERIOD.—The appli-
cable period shall be the lesser of— 
‘‘(I) the 5 most recently com-
pleted calendar years, 
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most recently completed calendar year, 
minus 
‘‘(B) the adjustment amount, if any, deter-
mined under section 202(a)(1)(F)(iii) of the 
Improving Access To Affordable Prescription 
Drugs Act for such calendar year. 
‘‘(d) DEFINITIONS.—For purposes of this section— 
‘‘(1) 
TAXABLE
PRESCRIPTION
DRUG.—The 
term ‘taxable prescription drug’ means a prescrip-
tion drug (as defined in section 202(a)(1)(D) of the 
Improving Access To Affordable Prescription Drugs 
Act) which has been identified by the Inspector Gen-
eral of the Department of Health and Human Serv-
ices, under section 202(a)(3)(B)(i) of such Act, as 
being subject to a price spike. 
‘‘(2) OTHER TERMS.—The terms ‘applicable en-
tity’, ‘average price’, ‘price spike’, ‘price spike per-
centage’, and ‘price spike revenue’ have the same 
meaning given such terms under section 202(a)(1) 
of the Improving Access To Affordable Prescription 
Drugs Act.’’. 
(2) CLERICAL AMENDMENTS.— 
(A) The heading of subchapter E of chap-
ter 32 of the Internal Revenue Code of 1986 is 
amended by striking ‘‘Medical Devices’’ 
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and inserting ‘‘Certain Medical Devices 
and Prescription Drugs’’. 
(B) The table of subchapters for chapter 
32 of such Code is amended by striking the 
item relating to subchapter E and inserting the 
following new item: 
‘‘SUBCHAPTER E. CERTAIN MEDICAL DEVICES AND PRESCRIPTION DRUGS’’. 
(3) The table of sections for subchapter E of 
chapter 32 of such Code is amended by adding at 
the end the following new item: 
‘‘Sec. 4192. Prescription drugs subject to price spikes.’’. 
(4) EFFECTIVE DATE.—The amendments made 
by this section shall apply to sales after the date of 
the enactment of this Act. 
(c) REVENUES COLLECTED.—There are authorized 
to be appropriated to the Secretary of Health and Human 
Services such sums as are equal to any increase in revenue 
to the Treasury by reason of the provisions of this section 
or the amendments made by this section for the purposes 
of— 
(1) funding or conducting research on the eco-
nomic and policy implications of price patterns of 
prescription drugs; or 
(2) increasing amounts available to the Na-
tional Institutes of Health for research and develop-
ment of drugs. 
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SEC. 203. ACCELERATION OF THE CLOSING OF THE MEDI-
CARE PART D COVERAGE GAP. 
(a) REDUCTION IN COINSURANCE.—Section 1860D– 
2(b)(2) of the Social Security Act (42 U.S.C. 1395w– 
102(b)(2)) is amended— 
(1) in each of subclauses (II) and (III) of sub-
paragraph (C)(ii), by striking ‘‘2020’’ and inserting 
‘‘2018’’; and 
(2) in subparagraph (D)(ii)— 
(A) in subclause (II), by inserting ‘‘and’’ 
at the end; and 
(B) by striking subclauses (III) through 
(VI) and inserting the following: 
‘‘(III) 2018 is 100 percent.’’. 
(b) INCREASE IN MANUFACTURER REBATE.—Section 
1860D–14A(g)(4)(A) of the Social Security Act (42 
U.S.C. 1395w–114a(g)(4)(A)) is amended by inserting 
‘‘(or, for 2018 and subsequent years, 75 percent)’’ after 
‘‘50 percent’’. 
SEC. 204. IMPORTING AFFORDABLE AND SAFE DRUGS. 
(a) IN GENERAL.—Section 804 of the Federal Food, 
Drug, and Cosmetic Act (21 U.S.C. 384) is amended to 
read as follows: 
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‘‘SEC. 804. IMPORTATION OF SAFE AND AFFORDABLE 
DRUGS 
BY 
WHOLESALE 
DISTRIBUTORS, 
PHARMACIES, AND INDIVIDUALS. 
‘‘(a) IN GENERAL.—Not later than 180 days after 
the date of enactment of the Improving Access To Afford-
able Prescription Drugs Act, the Secretary shall promul-
gate regulations permitting the importation of qualifying 
prescription drugs into the United States, in accordance 
with this section. 
‘‘(b) DEFINITIONS.—For purposes of this section: 
‘‘(1) CERTIFIED FOREIGN SELLER.—The term 
‘certified foreign seller’ means a licensed foreign 
pharmacy or foreign wholesale distributor that the 
Secretary certifies under subsection (d)(1)(B), that 
pays the fee required under subsection (d)(1)(C), 
and that is included on the list described in sub-
section (c). 
‘‘(2) FOREIGN
WHOLESALE
DISTRIBUTOR.— 
The term ‘foreign wholesale distributor’ means a 
person (other than a manufacturer, a manufactur-
er’s co-licensed partner, a third-party logistics pro-
vider, or a repackager) engaged in wholesale dis-
tribution. 
‘‘(3) IMPORTER.—The term ‘importer’ means a 
dispenser (as defined in section 581(3)) or wholesale 
distributor registered under section 503(e) who im-
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ports prescription drugs into the United States in 
accordance with this section. 
‘‘(4) LICENSED
FOREIGN
PHARMACY.—The 
term ‘licensed foreign pharmacy’ means a pharmacy 
located in Canada, or subject to subsection (e), an-
other applicable country, that— 
‘‘(A) operates in accordance with applica-
ble pharmacy standards set forth by the provin-
cial pharmacy rules and regulations enacted in 
Canada, or, subject to subsection (e), such ap-
plicable rules and regulations of the permitted 
country in which such seller is located; and 
‘‘(B) is licensed to operate and dispense 
prescription drugs to individuals in Canada, or, 
subject to subsection (e), the permitted country 
in which the pharmacy is located. 
‘‘(5) QUALIFYING
PRESCRIPTION
DRUG.—The 
term ‘qualifying prescription drug’— 
‘‘(A) means a prescription drug that— 
‘‘(i) is approved for use in patients, 
and marketed, in Canada, or subject to 
subsection (e), approved for use in pa-
tients, and marketed, in another permitted 
country; 
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‘‘(ii) is manufactured in a facility reg-
istered under subsection (b)(1) or (i) of 
section 510 that is in compliance with good 
manufacturing practices regulations of the 
Food and Drug Administration; 
‘‘(iii) has the same active ingredient 
or ingredients, route of administration, and 
strength as a prescription drug approved 
under chapter V, or, for purposes of sub-
paragraph (B)(iv), is biosimilar to an ap-
proved biological product and has the same 
route of administration and strength as the 
approved biological product; and 
‘‘(iv) is labeled in accordance with— 
‘‘(I) the laws of Canada, or an-
other country from which importation 
is permitted pursuant to subsection 
(e); and 
‘‘(II) the requirements promul-
gated by the Secretary, which shall in-
clude labeling in English; 
‘‘(B) with respect to importers only, in-
cludes— 
‘‘(i) peritoneal dialysis solution; 
‘‘(ii) insulin; 
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‘‘(iii) a drug for which a risk evalua-
tion and mitigation strategy is required 
under section 505–1; 
‘‘(iv) biological products, as defined in 
section 351 of the Public Health Service 
Act that are proteins (except any chemi-
cally synthesized polypeptides) or analo-
gous products; and 
‘‘(v) intravenously infused drugs; and 
‘‘(C) does not include— 
‘‘(i) a controlled substance (as defined 
in section 102 of the Controlled Sub-
stances Act); 
‘‘(ii) an anesthetic drug inhaled dur-
ing surgery; or 
‘‘(iii) a compounded drug. 
‘‘(6) VALID
PRESCRIPTION.—The term ‘valid 
prescription’ means a prescription that is issued for 
a legitimate medical purpose in the usual course of 
professional practice by— 
‘‘(A) a practitioner who has conducted at 
least one in-person medical evaluation of the 
patient; or 
‘‘(B) a covering practitioner. 
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‘‘(c) PUBLICATION OF CERTIFIED FOREIGN SELL-
ERS.—The Secretary shall publish on a dedicated Internet 
website a list of certified foreign sellers, including the 
Internet website address, physical address, and telephone 
number of each such certified foreign seller. 
‘‘(d) ADDITIONAL CRITERIA.— 
‘‘(1) CERTIFIED FOREIGN SELLERS.— 
‘‘(A) IN GENERAL.—To be a certified for-
eign seller, such seller shall— 
‘‘(i) be certified by the Secretary in 
accordance with subparagraph (B); 
‘‘(ii) pay the registration fee estab-
lished under subparagraph (C); and 
‘‘(iii) sell only qualifying prescription 
drugs to importers or individuals who im-
port prescription drugs into the United 
States in accordance with this section. 
‘‘(B) CERTIFICATION.—To be a certified 
foreign seller, the Secretary shall certify that 
such seller— 
‘‘(i) is a foreign wholesale distributor 
or licensed foreign pharmacy operating an 
establishment, which may include an online 
foreign pharmacy, that is located in Can-
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ada, or, subject to subsection (e), another 
permitted country; 
‘‘(ii) is engaged in the distribution or 
dispensing of a prescription drug that is 
imported or offered for importation into 
the United States; 
‘‘(iii) has been in existence for a pe-
riod of at least 5 years preceding the date 
of such certification and has a purpose 
other than to participate in the program 
established under this section; 
‘‘(iv) in the case of a certified foreign 
seller that is a licensed foreign pharmacy, 
agrees to dispense a qualifying prescription 
drug to an individual in the United States 
only after receiving a valid prescription, as 
described in paragraph (2)(C); 
‘‘(v) has processes established by the 
seller, or participates in another estab-
lished process, to certify that the physical 
premises and data reporting procedures 
and licenses are in compliance with all ap-
plicable laws and regulations of Canada, 
or, subject to subsection (e), the permitted 
country in which the seller is located, and 
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has implemented policies designed to mon-
itor ongoing compliance with such laws 
and regulations; 
‘‘(vi) conducts or commits to partici-
pate in ongoing and comprehensive quality 
assurance programs and implements such 
quality 
assurance 
measures, 
including 
blind testing, to ensure the veracity and re-
liability of the findings of the quality as-
surance program; 
‘‘(vii) agrees that, pursuant to sub-
section (g), laboratories approved by the 
Secretary may be authorized to conduct 
product testing to determine the chemical 
authenticity 
of 
sample 
pharmaceutical 
products; 
‘‘(viii) agrees to notify the Secretary, 
importers, and individuals of product re-
calls in Canada, or pursuant to subsection 
(e), the permitted country in which the 
seller is located, and agrees to cease, or re-
frain from, exporting such product; 
‘‘(ix) has established, or will establish 
or participate in, a process for resolving 
grievances, as defined by the Secretary, 
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and will be held accountable for violations 
of established guidelines and rules; 
‘‘(x) except as otherwise permitted 
under this section, does not sell products 
that the seller could not otherwise legally 
sell in Canada, or, subject to subsection 
(e), the permitted country in which such 
seller is located to customers in the United 
States; and 
‘‘(xi) meets any other criteria estab-
lished by the Secretary. 
‘‘(C) CERTIFICATION FEE.—Not later than 
30 days before the start of each fiscal year, the 
Secretary shall establish a fee to be collected 
from foreign sellers for such fiscal year that are 
certified under subparagraph (B), in an amount 
that is sufficient, and not more than necessary, 
to pay the costs of administering the program 
under this section, and enforcing this section 
pursuant to section 303(h), for that fiscal year. 
‘‘(D) RECERTIFICATION.—A certification 
under subparagraph (B) shall be in effect for a 
period of 2 years, or until there is a material 
change in the circumstances under which the 
foreign seller meets the requirements under 
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such subparagraph, whichever occurs earlier. A 
foreign seller may reapply for certification 
under such subparagraph (B), in accordance 
with a process established by the Secretary. 
‘‘(2) INDIVIDUALS.—An individual may import 
a qualifying prescription drug described in sub-
section (b) from Canada or another country pursu-
ant to subsection (e) if such drug— 
‘‘(A) is dispensed, including through an 
online pharmacy, by a certified foreign seller 
that is a licensed foreign pharmacy; 
‘‘(B) is purchased for personal use by the 
individual, not for resale, in quantities that do 
not exceed a 90-day supply; and 
‘‘(C) is filled only after providing to the li-
censed foreign pharmacy a valid prescription 
issued by a health care practitioner licensed to 
practice in a State in the United States. 
‘‘(e) IMPORTATION FROM OTHER COUNTRIES.—Be-
ginning on the date that is 2 years after the date on which 
final regulations are promulgated to carry out this section, 
if, based on a review of the evidence obtained after such 
effective date, including the reports submitted under sec-
tion 2(d) of the Improving Access To Affordable Prescrip-
tion Drugs Act , that importation of qualifying prescrip-
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tion drugs from Canada under this section resulted in cost 
savings for consumers in the United States and increased 
access to safe medication, the Secretary shall have the au-
thority to permit importation of qualifying prescription 
drugs by importers and individuals from, in addition to 
Canada, any country that— 
‘‘(1) is a member of the Organisation for Eco-
nomic Co-operation and Development; and 
‘‘(2) has statutory or regulatory standards for 
the approval and sale of prescription drugs that are 
comparable to the standards in the United States 
and that— 
‘‘(A) authorizes the approval of drugs only 
if a drug has been determined to be safe and 
effective by experts employed by or acting on 
behalf of a governmental entity and qualified by 
scientific training and experience to evaluate 
the safety and effectiveness of drugs; 
‘‘(B) requires that any determination of 
safety and effectiveness described in subpara-
graph (A) be made on the basis of adequate 
and well-controlled investigations, including 
clinical investigations, as appropriate, con-
ducted by experts qualified by scientific training 
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and experience to evaluate the safety and effec-
tiveness of drugs; 
‘‘(C) requires the methods used in, and the 
facilities and controls used for, the manufac-
ture, processing, and packing of drugs in the 
country to be adequate to preserve the identity, 
quality, purity, and strength of the drugs; and 
‘‘(D) requires the reporting of adverse re-
actions to drugs and establish procedures to re-
call, and withdraw approval of, drugs found not 
to be safe or effective. 
‘‘(f) LABELING.—Any qualifying prescription drug 
imported that meets the labeling requirements described 
in subsection (b)(5)(A)(iv) is deemed not misbranded for 
purposes of section 502. 
‘‘(g) DRUG
TESTING
LABORATORIES.—The Sec-
retary may approve one or more laboratories to conduct 
random testing of prescription drugs sold by certified for-
eign sellers to assess the chemical authenticity of such 
drugs. 
‘‘(h) UNFAIR AND DISCRIMINATORY ACTS AND PRAC-
TICES.—It is unlawful for a manufacturer, directly or indi-
rectly (including by being a party to a licensing agreement 
or other agreement)— 
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‘‘(1) to discriminate by charging a higher price 
for a prescription drug sold to a certified foreign 
seller that sells such drug to an importer in accord-
ance with this section than the price that is charged, 
inclusive of rebates or other incentives to the coun-
try from which the drug is exported, to another per-
son that is in the same country and that does not 
import such a drug into the United States in accord-
ance with this section; 
‘‘(2) except with respect to a prescription drug 
on the drug shortage list under section 506E, dis-
criminate by denying, restricting, or delaying sup-
plies of a prescription drug to a certified foreign sell-
er, on account of such seller’s status as a certified 
foreign seller, that sells such drug to an importer in 
accordance with this section, or by publicly, pri-
vately, or otherwise refusing to do business with 
such a certified foreign seller on account of such 
seller’s status as a certified foreign seller; 
‘‘(3) cause there to be a difference (including a 
difference in active ingredient, route of administra-
tion, bioequivalence, strength, formulation, manufac-
turing establishment, manufacturing process, or per-
son that manufactures the drug) between a prescrip-
tion drug for distribution in the United States and 
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the drug for distribution in Canada or another per-
mitted country, subject to subsection (e), for the 
purpose of avoiding sales by certified foreign sellers; 
or 
‘‘(4) except with respect to a prescription drug 
on the drug shortage list under section 506E, en-
gage in any other action to restrict, prohibit, or 
delay the importation of a prescription drug under 
this section. 
‘‘(i) INFORMATION AND RECORDS.— 
‘‘(1) BIANNUAL REPORTS.—Each importer shall 
submit biannual reports to the Secretary which shall 
contain, for each qualifying prescription drug im-
ported into the United States— 
‘‘(A) the unique facility identifier of the 
manufacturer of the drug, described in section 
510; 
‘‘(B) the transaction information described 
in section 581(26) (other than the information 
described in subparagraph (C)); and 
‘‘(C) the price paid by the importer for the 
drug. 
‘‘(2) MAINTENANCE
OF
RECORDS
BY
SEC-
RETARY.—The Secretary shall maintain information 
and documentation submitted under paragraph (1) 
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for such period of time as the Secretary determines 
to be appropriate. 
‘‘(j) SUSPENSION OF IMPORTATION.— 
‘‘(1) PATTERNS
OF
NONCOMPLIANCE.—The 
Secretary shall require that importation of a specific 
qualifying prescription drug or importation by a spe-
cific certified foreign seller or importer pursuant to 
this section be immediately suspended if the Sec-
retary determines that there is a pattern of importa-
tion of such specific drug or by such specific seller 
or importer that involves counterfeit drugs, drugs 
that have been recalled or withdrawn, or drugs in 
violation of any requirement of this section, until an 
investigation is completed and the Secretary deter-
mines that importation of such drug or by such sell-
er or importer does not endanger the public health. 
‘‘(2) TEMPORARY SUSPENSION.—The Secretary 
may require that importation of a specific qualifying 
prescription drug or importation by a specific cer-
tified foreign seller or importer pursuant to this sec-
tion be temporarily suspended if, with respect to 
such drug, seller, or importer, there is a violation of 
any requirement of this section or if the Secretary 
determines that importation of such drug or by such 
seller or importer might endanger the public health. 
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Such temporary suspension shall apply until the Sec-
retary completes an investigation and determines 
that importation of such drug or by such seller or 
importer does not endanger the public health. 
‘‘(k) SUPPLY CHAIN SECURITY.— 
‘‘(1) PURCHASE FROM REGISTERED FACILITIES 
AND CERTIFIED FOREIGN SELLERS.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), certified foreign sellers who 
sell qualifying prescription drugs for importa-
tion into the United States pursuant to this 
section may purchase such drugs only from 
manufacturers or entities registered under sec-
tion 510 or other certified foreign sellers. 
‘‘(B) EXCEPTION.—Certified foreign sellers 
who sell qualifying prescription drugs for im-
portation into the United States pursuant to 
this section may purchase such drugs from for-
eign sellers in Canada or another permitted 
country, even if such foreign seller is not a 
manufacturer registered under section 510 or a 
certified foreign seller, if the Secretary enters 
into a memorandum of understanding or coop-
erative agreement with Canada, or such other 
permitted country, to ensure compliance, to the 
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extent appropriate and feasible, with subchapter 
H of chapter V. The Secretary shall seek to 
enter into such a memorandum of under-
standing or cooperative agreement with Canada 
and each country from which importation is 
permitted under subsection (e). 
‘‘(2) IMPORTATION TRACING.—Certified foreign 
sellers shall provide importers with the unique facil-
ity identifier associated with the manufacturer reg-
istered under section 510 of the qualifying prescrip-
tion drug and the information under paragraph 
(25), paragraph (26) (other than subparagraph (C)), 
and subparagraphs (D), (F), and (G) of paragraph 
(27) of section 581. Certified foreign sellers shall 
provide such information to individuals purchasing 
such drugs, upon request. 
‘‘(l) REMS.—In the case of an importer that imports 
a qualifying prescription drug, where the drug with the 
same active ingredient or ingredients (or that is biosimilar 
to an approved biological product), route of administra-
tion, and strength that is approved under chapter V or 
section 351 of the Public Health Service Act is subject 
to elements to assure safe use under section 505–1, such 
importer shall be subject to such elements to assure safe 
use, as applicable and appropriate. 
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‘‘(m) CONSTRUCTION.—Nothing in this section limits 
the authority of the Secretary relating to the importation 
of prescription drugs, other than with respect to section 
801(d)(1) as provided in this section.’’. 
(b) PENALTIES WITH RESPECT TO ONLINE PHAR-
MACIES.—Section 303 of the Federal Food, Drug, and 
Cosmetic Act (21 U.S.C. 333) is amended by adding at 
the end the following: 
‘‘(h) In the case of person operating an Internet 
website, whether in the United States or in another coun-
try, that violates section 301(aa) by— 
‘‘(1) selling, by means of the Internet, with the 
intent to defraud or mislead or with reckless dis-
regard for safety of the public, an adulterated or 
counterfeit drug to an individual in the United 
States; or 
‘‘(2) dispenses, by means of the Internet, a 
drug to an individual in the United States who the 
person knows or has reasonable cause to believe, 
does not possess a valid prescription for that drug, 
such person shall be imprisoned for not more than 
10 years or fined not more than $250,000.’’. 
(c) NO PREEMPTION.—Nothing in this section, in-
cluding the amendments made by this section, shall be 
construed to preempt, alter, displace, abridge, or supplant 
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any remedy available under any State or Federal law, in-
cluding common law, that provides a remedy for civil re-
lief. 
(d) REPORTS.— 
(1) HHS.—Not later than 1 year after the date 
on which final regulations are promulgated to carry 
out section 804 of the Federal Food, Drug, and Cos-
metic Act (21 U.S.C. 384), as amended by sub-
section (a), and every 2 years thereafter, the Sec-
retary of Health and Human Services, after con-
sultation with appropriate Federal agencies, shall 
submit to Congress and make public a report on the 
importation of drugs into the United States. 
(2) GAO REPORT.—Not later than 18 months 
after the date on which final regulations are promul-
gated to carry out section 804 of the Federal Food, 
Drug, and Cosmetic Act (21 U.S.C. 384), as amend-
ed by subsection (a), the Comptroller General of the 
United States shall submit to Congress a report con-
taining an analysis of the implementation of the 
amendments made by this section, including a review 
of drug safety and cost-savings and expenses, includ-
ing cost-savings to consumers in the United States 
and trans-shipment and importation tracing proc-
esses, resulting from such implementation. 
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SEC. 205. REQUIRING DRUG MANUFACTURERS TO PROVIDE 
DRUG REBATES FOR DRUGS DISPENSED TO 
LOW-INCOME INDIVIDUALS. 
(a) IN GENERAL.—Section 1860D–2 of the Social 
Security Act (42 U.S.C. 1395w–102) is amended— 
(1) in subsection (e)(1), in the matter preceding 
subparagraph (A), by inserting ‘‘and subsection (f)’’ 
after ‘‘this subsection’’; and 
(2) by adding at the end the following new sub-
section: 
‘‘(f) PRESCRIPTION DRUG REBATE AGREEMENT FOR 
REBATE ELIGIBLE INDIVIDUALS.— 
‘‘(1) REQUIREMENT.— 
‘‘(A) IN GENERAL.—For plan years begin-
ning on or after January 1, 2019, in this part, 
the term ‘covered part D drug’ does not include 
any drug or biological product that is manufac-
tured by a manufacturer that has not entered 
into and have in effect a rebate agreement de-
scribed in paragraph (2). 
‘‘(B) 2018 PLAN YEAR REQUIREMENT.— 
Any drug or biological product manufactured by 
a manufacturer that declines to enter into a re-
bate agreement described in paragraph (2) for 
the period beginning on January 1, 2018, and 
ending on December 31, 2018, shall not be in-
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cluded as a ‘covered part D drug’ for the subse-
quent plan year. 
‘‘(2) REBATE
AGREEMENT.—A rebate agree-
ment under this subsection shall require the manu-
facturer to provide to the Secretary a rebate for 
each rebate period (as defined in paragraph (6)(B)) 
ending after December 31, 2017, in the amount 
specified in paragraph (3) for any covered part D 
drug of the manufacturer dispensed after December 
31, 2017, to any rebate eligible individual (as de-
fined in paragraph (6)(A)) for which payment was 
made by a PDP sponsor or MA organization under 
this part for such period, including payments passed 
through the low-income and reinsurance subsidies 
under sections 1860D–14 and 1860D–15(b), respec-
tively. Such rebate shall be paid by the manufac-
turer to the Secretary not later than 30 days after 
the date of receipt of the information described in 
section 1860D–12(b)(7), including as such section is 
applied under section 1857(f)(3), or 30 days after 
the receipt of information under subparagraph (D) 
of paragraph (3), as determined by the Secretary. 
Insofar as not inconsistent with this subsection, the 
Secretary shall establish terms and conditions of 
such agreement relating to compliance, penalties, 
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