I 
109TH CONGRESS 
1ST SESSION H. R. 2685 
To provide for prescription drugs at reduced prices to Medicare beneficiaries. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 26, 2005 
Mr. LARSON of Connecticut (for himself, Mr. GRIJALVA, and Mr. HINCHEY) 
introduced the following bill; which was referred to the Committee on En-
ergy and Commerce, and in addition to the Committee on Ways and 
Means, for a period to be subsequently determined by the Speaker, in 
each case for consideration of such provisions as fall within the jurisdic-
tion of the committee concerned 
A BILL 
To provide for prescription drugs at reduced prices to 
Medicare beneficiaries. 
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 ‘‘Medicare Prescription 
Drug Price Negotiation Act’’.
SEC. 2. AVAILABILITY OF PRESCRIPTION DRUGS FROM 
PARTICIPATING MANUFACTURERS AT NEGO-
TIATED PRICES. 
(a) IN GENERAL.—Each participating manufacturer 
of a covered outpatient drug shall make available for pur-
chase by any qualified Federal health care provider, by 
each pharmacy, and by each provider of services, physi-
cian, practitioner, and supplier under the medicare pro-
gram such covered outpatient drug in the amount de-
scribed in subsection (b) at the price described in sub-
section (c). 
(b) DESCRIPTION
OF AMOUNT
OF DRUGS.—The 
amount of a covered outpatient drug that a participating 
manufacturer shall make available for purchase under 
subsection (a) is the sum of— 
(1) an amount equal to the aggregate amount 
of the covered outpatient drug dispensed by phar-
macies to Medicare beneficiaries; and 
(2) an amount equal to the aggregate amount 
of the covered outpatient drug dispensed through 
qualified Federal health care providers. 
(c) DESCRIPTION OF PRICE.— 
(1) IN GENERAL.—The price at which a partici-
pating manufacturer shall make a covered outpatient 
drug available for purchase under subsection (a) is 
a price that the Secretary, in conjunction with the
Secretary of Defense and the Secretary of Veterans 
Affairs, negotiate with the manufacturer. 
(2) PROMOTION OF BREAKTHROUGH DRUGS.— 
(A) IN GENERAL.—In conducting negotia-
tions with participating manufacturers under 
paragraph (1), the Secretary shall take into ac-
count the goal of promoting the development of 
breakthrough drugs. 
(B) DEFINITION.—For purposes of this 
paragraph, a drug is a ‘‘breakthrough drug’’ if 
the Secretary determines it is a new product 
that will make a significant and major improve-
ment by reducing physical or mental illness, re-
ducing mortality, or reducing disability, and 
that no other product is available to enrollees 
that achieves similar results for the same condi-
tion. 
(d) ENFORCEMENT.—The United States shall debar 
a manufacturer of drugs or biologicals that does not com-
ply with the provisions of this Act. 
(e) DISPUTE RESOLUTION MECHANISM.—The Sec-
retary shall establish a mechanism (such as an ombuds-
man) for the resolution of disputes between Medicare 
beneficiaries and prescription drug resellers and drug
manufacturers in order to protect such beneficiaries and 
to ensure that— 
(1) prescription drug resellers are not artifically 
increasing prices charged to Medicare beneficiaries 
(above those negotiated under subsection (c)) in 
places where there is less competition (such as in 
rural areas); and 
(2) such resellers are not colluding on prices in 
areas with more potential significant competition. 
SEC. 3. ADMINISTRATION. 
The Secretary shall issue such regulations as may be 
necessary to implement this Act. 
SEC. 4. REPORTS TO CONGRESS REGARDING EFFECTIVE-
NESS OF ACT. 
(a) IN GENERAL.—Not later than 2 years after the 
date of the enactment of this Act, and annually thereafter, 
the Secretary shall report to the Congress regarding the 
effectiveness of this Act in— 
(1) protecting Medicare beneficiaries from dis-
criminatory pricing by drug manufacturers, and 
(2) making prescription drugs available to 
Medicare beneficiaries at substantially reduced 
prices. 
(b) CONSULTATION.—In preparing such reports, the 
Secretary shall consult with public health experts, affected
industries, organizations representing consumers and 
older Americans, and other interested persons. 
(c) RECOMMENDATIONS.—The Secretary shall in-
clude in such reports any recommendations the Secretary 
considers appropriate for changes in this Act to further 
reduce the cost of covered outpatient drugs to Medicare 
beneficiaries. 
SEC. 5. DEFINITIONS. 
In this Act: 
(1) PROVIDER OF SERVICES.—The term ‘‘pro-
vider of services’’ has the meaning given that term 
in section 1861(u) of the Social Security Act (42 
U.S.C. 1395x(u)). 
(2) PHYSICIAN.—The term ‘‘physician’’ has the 
meaning given that term in section 1861(r) of the 
Social Security Act (42 U.S.C. 1395x(r)). 
(3) PRACTITIONER.—The term ‘‘practitioner’’ 
has the meaning given that term in section 
1842(b)(18)(C) of the Social Security Act (42 
U.S.C. 1395u(b)(18)(C)). 
(4) SUPPLIER.—The term ‘‘supplier’’ has the 
meaning given that term under section 1842(o) of 
the Social Security Act (42 U.S.C. 1395u(o)). 
(5) COVERED OUTPATIENT DRUG.—The term 
‘‘covered outpatient drug’’ has the meaning given
that term in section 1927(k)(2) of the Social Secu-
rity Act (42 U.S.C. 1396r–8(k)(2)). 
(6) DEBAR.—The term ‘‘debar’’ means to ex-
clude, pursuant to established administrative proce-
dures, from Government contracting and subcon-
tracting for a specified period of time commensurate 
with the seriousness of the failure or offense or the 
inadequacy of performance. 
(7) 
MEDICARE
BENEFICIARY.—The 
term 
‘‘Medicare beneficiary’’ means an individual entitled 
to benefits under part A of title XVIII of the Social 
Security Act or enrolled under part B of such title, 
or both. 
(8) 
PARTICIPATING
MANUFACTURER.—The 
term ‘‘participating manufacturer’’ means any man-
ufacturer of drugs or biologicals that, on or after the 
date of the enactment of this title, enters into a con-
tract or agreement with the United States for the 
sale or distribution of covered outpatient drugs to 
the United States. 
(9) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of Health and Human Services.
SEC. 6. EFFECTIVE DATE. 
The Secretary shall implement this Act as expedi-
tiously as practicable and in a manner consistent with the 
obligations of the United States. 
SEC. 7. CONFORMING AMENDMENT. 
Section 1860D–11 of the Social Security Act (42 
U.S.C. 1395w–111) is amended by striking subsection (i) 
(relating to noninterference). 
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