I 
116TH CONGRESS 
1ST SESSION 
H. R. 3 
To establish a fair price negotiation program, protect the Medicare program 
from excessive price increases, and establish an out-of-pocket maximum 
for Medicare part D enrollees, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
SEPTEMBER 19, 2019 
Mr. PALLONE (for himself, Mr. NEAL, and Mr. SCOTT of Virginia) 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 
Education and Labor, 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 establish a fair price negotiation program, protect the 
Medicare program from excessive price increases, and 
establish an out-of-pocket maximum for Medicare part 
D enrollees, 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; TABLE OF CONTENTS. 
(a) IN GENERAL.—This Act may be cited as the 
‘‘Lower Drug Costs Now Act of 2019’’. 
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(b) TABLE OF CONTENTS.—The table of contents is 
as follows: 
Sec. 1. Short title; table of contents. 
TITLE I—LOWERING PRICES THROUGH FAIR DRUG PRICE 
NEGOTIATION 
Sec. 101. Providing for lower prices for certain high-priced single source drugs. 
Sec. 102. Selected drug manufacturer excise tax imposed during noncompliance 
periods. 
TITLE II—MEDICARE PARTS B AND D PRESCRIPTION DRUG 
INFLATION REBATES 
Sec. 201. Medicare part B rebate by manufacturers. 
Sec. 202. Medicare part D rebate by manufacturers. 
TITLE III—PART D IMPROVEMENTS AND MAXIMUM OUT-OF- 
POCKET CAP FOR MEDICARE BENEFICIARIES 
Sec. 301. Medicare part D benefit redesign. 
TITLE 
I—LOWERING 
PRICES 
THROUGH FAIR DRUG PRICE 
NEGOTIATION 
SEC. 101. PROVIDING FOR LOWER PRICES FOR CERTAIN 
HIGH-PRICED SINGLE SOURCE DRUGS. 
(a) PROGRAM TO LOWER PRICES
FOR CERTAIN 
HIGH-PRICED SINGLE SOURCE DRUGS.—Title XI of the 
Social Security Act (42 U.S.C. 1301 et seq.) is amended 
by adding at the end the following new part: 
‘‘PART E—FAIR PRICE NEGOTIATION PROGRAM 
TO LOWER PRICES FOR CERTAIN HIGH- 
PRICED SINGLE SOURCE DRUGS 
‘‘SEC. 1191. ESTABLISHMENT OF PROGRAM. 
‘‘(a) IN GENERAL.—The Secretary shall establish a 
Fair Price Negotiation Program (in this part referred to 
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as the ‘program’). Under the program, with respect to 
each price applicability period, the Secretary shall— 
‘‘(1) publish a list of selected drugs in accord-
ance with section 1192; 
‘‘(2) enter into agreements with manufacturers 
of selected drugs with respect to such period, in ac-
cordance with section 1193; 
‘‘(3) negotiate and, if applicable, renegotiate 
maximum fair prices for such selected drugs, in ac-
cordance with section 1194; and 
‘‘(4) carry out the administrative duties de-
scribed in section 1196. 
‘‘(b) DEFINITIONS RELATING TO TIMING.—For pur-
poses of this part: 
‘‘(1) INITIAL PRICE APPLICABILITY YEAR.—The 
term ‘initial price applicability year’ means a plan 
year (beginning with plan year 2023) or, if agreed 
to in an agreement under section 1193 by the Sec-
retary and manufacturer involved, a period of more 
than one plan year (beginning on or after January 
1, 2023). 
‘‘(2) PRICE APPLICABILITY PERIOD.—The term 
‘price applicability period’ means, with respect to a 
drug, the period beginning with the initial price ap-
plicability year with respect to which such drug is a 
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selected drug and ending with the last plan year 
during which the drug is a selected drug. 
‘‘(3) SELECTED
DRUG
PUBLICATION
DATE.— 
The term ‘selected drug publication date’ means, 
with respect to each initial price applicability year, 
April 15 of the plan year that begins 2 years prior 
to such year. 
‘‘(4) VOLUNTARY NEGOTIATION PERIOD.—The 
term ‘voluntary negotiation period’ means, with re-
spect to an initial price applicability year with re-
spect to a selected drug, the period— 
‘‘(A) beginning on the sooner of— 
‘‘(i) the date on which the manufac-
turer of the drug and the Secretary enter 
into an agreement under section 1193 with 
respect to such drug; or 
‘‘(ii) June 15 following the selected 
drug publication date with respect to such 
selected drug; and 
‘‘(B) ending on March 31 of the year that 
begins one year prior to the initial price appli-
cability year. 
‘‘(c) OTHER DEFINITIONS.—For purposes of this 
part: 
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‘‘(1) FAIR PRICE ELIGIBLE INDIVIDUAL.—The 
term ‘fair price eligible individual’ means, with re-
spect to a selected drug, an individual who is— 
‘‘(A) enrolled under a prescription drug 
plan under part D of title XVIII or an MA–PD 
plan under part C of such title under which 
coverage is provided for such drug; 
‘‘(B) enrolled under a group health plan or 
health insurance coverage offered in the group 
or individual market (as such terms are defined 
in section 2791 of the Public Health Service 
Act) with respect to which there is in effect an 
agreement with the Secretary under section 
1197 with respect to such selected drug; or 
‘‘(C) entitled to benefits under part A of 
title XVIII or enrolled under part B of such 
title. 
‘‘(2) MAXIMUM FAIR PRICE.—The term ‘max-
imum fair price’ means, with respect to a plan year 
during a price applicability period and with respect 
to a selected drug (as defined in section 1192(c)) 
with respect to such period, the price published pur-
suant to section 1195 in the Federal Register for 
such drug and year. 
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‘‘(3) AVERAGE INTERNATIONAL MARKET PRICE 
DEFINED.— 
‘‘(A) IN
GENERAL.—The terms ‘average 
international market price’ and ‘AIM price’ 
mean, with respect to a drug, the average price 
(which shall be the net average price, if prac-
ticable, and volume-weighted, if practicable) for 
any dosage form and strength of a unit (as de-
fined in subparagraph (C)) for the drug for 
sales of such drug, as computed (as of the date 
of publication of such drug as a selected drug 
under section 1192(a)) in all countries de-
scribed in clause (ii) of subparagraph (B) that 
are applicable countries (as described in clause 
(i) of such subparagraph) with respect to such 
drug. 
‘‘(B) APPLICABLE COUNTRIES.— 
‘‘(i) IN
GENERAL.—For purposes of 
subparagraph (A), a country described in 
clause (ii) is an applicable country de-
scribed in this clause with respect to a 
drug if there is available an average price 
for any unit for the drug for sales of such 
drug in such country. 
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‘‘(ii) COUNTRIES
DESCRIBED.—For 
purposes of this paragraph, the following 
are countries described in this clause: 
‘‘(I) Australia. 
‘‘(II) Canada. 
‘‘(III) France. 
‘‘(IV) Germany. 
‘‘(V) Japan. 
‘‘(VI) The United Kingdom. 
‘‘(C) UNIT.—The term ‘unit’ means, with 
respect to a drug, the lowest identifiable quan-
tity (such as a capsule or tablet, milligram of 
molecules, or grams) of the drug that is dis-
pensed. 
‘‘SEC. 1192. SELECTION OF NEGOTIATION-ELIGIBLE DRUGS 
AS SELECTED DRUGS. 
‘‘(a) IN GENERAL.—Not later than the selected drug 
publication date with respect to an initial price applica-
bility year, the Secretary shall select and publish in the 
Federal Register a list of— 
‘‘(1) at least 25 negotiation-eligible drugs de-
scribed in subparagraphs (A) and (B), but not sub-
paragraph (C), of subsection (d)(1) (or, with respect 
to an initial price applicability year beginning after 
2023, the maximum number (if such number is less 
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than 25) of such negotiation-eligible drugs for the 
year) with respect to such year; and 
‘‘(2) all negotiation-eligible drugs described in 
subparagraph (C) of such subsection with respect to 
such year. 
Each drug published on the list pursuant to the previous 
sentence shall be subject to the negotiation process under 
section 1194 for the voluntary negotiation period with re-
spect to such initial price applicability year (and the re-
negotiation process under such section as applicable for 
any subsequent year during the applicable price applica-
bility period). In applying this subsection, any negotiation- 
eligible drug that is selected under this subsection for an 
initial price applicability year shall not count toward the 
required minimum amount of drugs to be selected under 
paragraph (1) for any subsequent year, including such a 
drug so selected that is subject to renegotiation under sec-
tion 1194. 
‘‘(b) SELECTION OF DRUGS.—In carrying out sub-
section (a)(1) the Secretary shall select for inclusion on 
the published list described in subsection (a) with respect 
to a price applicability period, the negotiation-eligible 
drugs that the Secretary projects will result in the greatest 
savings to the Federal Government or fair price eligible 
individuals during the price applicability period. In making 
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this projection of savings for drugs for which there is an 
AIM price for a price applicability period, the savings shall 
be projected taking into consideration both the volume of 
drugs for which payment is made, to the extent such data 
is available, and the amount by which the net price for 
the drugs exceeds the AIM price for the drugs. 
‘‘(c) SELECTED DRUG.—For purposes of this part, 
each drug included on the list published under subsection 
(a) with respect to an initial price applicability year shall 
be referred to as a ‘selected drug’ with respect to such 
year and each subsequent plan year beginning before the 
first plan year beginning after the date on which the Sec-
retary determines the drug is no longer a qualifying single 
source drug. 
‘‘(d) NEGOTIATION-ELIGIBLE DRUG.— 
‘‘(1) IN GENERAL.—For purposes of this part, 
the term ‘negotiation-eligible drug’ means, with re-
spect to the selected drug publication date with re-
spect to an initial price applicability year, a quali-
fying single source drug, as defined in subsection 
(e), that meets any of the following criteria: 
‘‘(A) COVERED PART D DRUGS.—The drug 
is among the 125 covered part D drugs (as de-
fined in section 1860D–2(e)) for which there 
was an estimated greatest net spending under 
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parts C and D of title XVIII, as determined by 
the Secretary, during the most recent plan year 
prior to such drug publication date for which 
data are available. 
‘‘(B) OTHER DRUGS.—The drug is among 
the 125 drugs for which there was an estimated 
greatest net spending in the United States, as 
determined by the Secretary, during the most 
recent plan year prior to such drug publication 
date for which data are available. 
‘‘(C) INSULIN.—The drug is a qualifying 
single source drug described in subsection 
(e)(3). 
‘‘(2) CLARIFICATION.—In determining whether 
a qualifying single source drug satisfies any of the 
criteria described in paragraph (1), the Secretary 
shall, to the extent practicable, use data that is ag-
gregated across strengths and dosage forms and 
routes of administration of the drug. 
‘‘(3) PUBLICATION.—Not later than the se-
lected drug publication date with respect to an ini-
tial price applicability year, the Secretary shall pub-
lish in the Federal Register a list of negotiation-eli-
gible drugs with respect to such selected drug publi-
cation date. 
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‘‘(e) QUALIFYING SINGLE SOURCE DRUG.—For pur-
poses of this part, the term ‘qualifying single source drug’ 
means any of the following: 
‘‘(1) DRUG PRODUCTS.—A drug that— 
‘‘(A) is approved under section 505(c) of 
the Federal Food, Drug, and Cosmetic Act and 
continues to be marketed pursuant to such ap-
proval; and 
‘‘(B) is not the listed drug for any drug 
that is approved and continues to be marketed 
under section 505(j) of such Act. 
‘‘(2) BIOLOGICAL
PRODUCTS.—A biological 
product that— 
‘‘(A) is licensed under section 351(a) of 
the Public Health Service Act, including any 
product that has been deemed to be licensed 
under section 351 of such Act pursuant to sec-
tion 7002(e)(4) of the Biologics Price Competi-
tion and Innovation Act of 2009, and continues 
to be marketed under section 351 of such Act; 
and 
‘‘(B) is not the reference product for any 
biological product that is licensed and continues 
to be marketed under section 351(k) of such 
Act. 
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‘‘(3) 
INSULIN
PRODUCT.—Notwithstanding 
paragraphs (1) and (2), any insulin product that is 
approved under subsection (c) or (j) of section 505 
of the Federal Food, Drug, and Cosmetic Act or li-
censed under subsection (a) or (k) of section 351 of 
the Public Health Service Act and continues to be 
marketed under such section 505 or 351. 
For purposes of applying paragraphs (1)(B) and (2)(B), 
a drug or biological product that is marketed by the same 
sponsor or manufacturer (or an affiliate thereof or a cross- 
licensed producer or distributor) as the listed drug or ref-
erence product described in such respective paragraph 
shall not be taken into consideration. 
‘‘(f) INFORMATION
ON
INTERNATIONAL
DRUG 
PRICES.—For purposes of determining which negotiation- 
eligible drugs to select under subsection (a) and, in the 
case of such drugs that are selected drugs, to determine 
the maximum fair price of such drug and whether such 
maximum fair price should be renegotiated under section 
1194, the Secretary shall use data relating to the AIM 
price with respect to such drugs as available or provided 
to the Secretary and shall on an ongoing basis request 
from manufacturers of selected drugs information on the 
AIM price of such drugs. 
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‘‘SEC. 1193. MANUFACTURER AGREEMENTS. 
‘‘(a) 
IN
GENERAL.—For 
purposes 
of 
section 
1191(a)(2), the Secretary shall enter into agreements with 
manufacturers of selected drugs with respect to a price 
applicability period, by not later than June 15 following 
the selected drug publication date with respect to such se-
lected drug, under which— 
‘‘(1) during the voluntary negotiation period for 
the initial price applicability year for the selected 
drug, the Secretary and manufacturer, in accordance 
with section 1194, negotiate to determine (and, by 
not later than the last date of such period and in ac-
cordance with subsection (c), agree to) a maximum 
fair price for the selected drug of the manufacturer 
in order to provide access to such price— 
‘‘(A) to fair price eligible individuals de-
scribed in subparagraph (A) or (B) of section 
1191(c)(1) furnished such drug during, subject 
to subparagraph (2), the price applicability pe-
riod; and 
‘‘(B) to hospitals, physicians, and other 
providers of services and suppliers with respect 
to fair price eligible individuals described in 
subparagraph (C) of such section administered 
such drug during, subject to subparagraph (2), 
the price applicability period; 
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