‘‘(2) the Secretary and the manufacturer shall, 
in accordance with a process and during a period 
specified by the Secretary pursuant to rulemaking, 
renegotiate (and, by not later than the last date of 
such period and in accordance with subsection (c), 
agree to) the maximum fair price for the drug if the 
Secretary determines that there is a material change 
in any of the factors described in section 1194(d) re-
lating to the drug, including changes in the AIM 
price for the drug, in order to provide access to such 
maximum fair price (as so renegotiated)— 
‘‘(A) to fair price eligible individuals de-
scribed in subparagraph (A) or (B) of section 
1191(c)(1) furnished such drug during any year 
during the price applicability period (beginning 
after such renegotiation) with respect to such 
selected drug; 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 any year described in sub-
paragraph (A); 
‘‘(3) the maximum fair price (including as re-
negotiated pursuant to paragraph (2)), with respect 
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to such a selected drug, shall be provided to fair 
price eligible individuals described in subparagraph 
(A) or (B) of section 1191(c)(1) at the pharmacy or 
by the mail order service at the point-of-sale of such 
drug; 
‘‘(4) the manufacturer, subject to subsection 
(c), submits to the Secretary, in a form and manner 
specified by the Secretary— 
‘‘(A) for the voluntary negotiation period 
for the price applicability period (and, if appli-
cable, before any period of renegotiation speci-
fied pursuant to paragraph (2)) with respect to 
such drug all information that the Secretary re-
quires to carry out the negotiation (or renegoti-
ation process) under this part, including infor-
mation described in section 1192(f) and section 
1194(d)(1); and 
‘‘(B) on an ongoing basis, information on 
changes in prices for the drug that would affect 
the AIM price for the drug or otherwise provide 
a basis for renegotiation of the maximum fair 
price of such drug pursuant to paragraph (2); 
‘‘(5) the manufacturer agrees that in the case 
the selected drug of a manufacturer is a drug de-
scribed in subsection (c), the manufacturer will, in 
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accordance with such subsection, make any payment 
required under such subsection with respect to such 
drug; and 
‘‘(6) the manufacturer complies with require-
ments imposed by the Secretary for purposes of ad-
ministering the program, including with respect to 
the duties described in section 1196. 
‘‘(b) AGREEMENT IN EFFECT UNTIL DRUG IS NO 
LONGER A SELECTED DRUG.—An agreement entered into 
under this section shall be effective, with respect to a drug, 
until such drug is no longer considered a selected drug 
under section 1192(c). 
‘‘(c) SPECIAL RULE FOR CERTAIN SELECTED DRUGS 
WITHOUT AIM PRICE.— 
‘‘(1) IN GENERAL.—In the case of a selected 
drug for which there is no AIM price available with 
respect to the initial price applicability year for such 
drug and for which an AIM price becomes available 
beginning with respect to a subsequent plan year 
during the price applicability period for such drug, 
if the Secretary determines that the amount de-
scribed in paragraph (2)(A) for such drug is greater 
than the amount described in paragraph (2)(B) for 
such drug, then by not later than one year after the 
date of such determination, the manufacturer of 
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such selected drug shall pay to the Treasury an 
amount equal to the difference between such amount 
described in paragraph (2)(A) for such drug and 
such amount described in paragraph (2)(B) for such 
drug. 
‘‘(2) AMOUNTS DESCRIBED.— 
‘‘(A) WEIGHTED AVERAGE PRICE BEFORE 
AIM PRICE AVAILABLE.—For purposes of para-
graph (1), the amount described in this sub-
paragraph for a selected drug described in such 
paragraph, is the amount equal to the weighted 
average manufacturer price for such dosage 
strength and form for the drug during the pe-
riod beginning with the first plan year for 
which the drug is included on the list of nego-
tiation-eligible drugs published under section 
1192(d) and ending with the last plan year dur-
ing the price applicability period for such drug 
with respect to which there is no AIM price 
available for such drug. 
‘‘(B) AMOUNT
MULTIPLIER
AFTER
AIM 
PRICE AVAILABLE.—For purposes of paragraph 
(1), the amount described in this subparagraph 
for a selected drug described in such paragraph, 
is the amount equal to 200 percent of the AIM 
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price for such drug with respect to the first 
plan year during the price applicability period 
for such drug with respect to which there is an 
AIM price available for such drug. 
‘‘(d) CONFIDENTIALITY
OF INFORMATION.—Infor-
mation submitted to the Secretary under this part by a 
manufacturer of a selected drug that is proprietary infor-
mation of such manufacturer (as determined by the Sec-
retary) may be used only by the Secretary or disclosed 
to and used by the Comptroller General of the United 
States or the Medicare Payment Advisory Commission for 
purposes of carrying out this part. 
‘‘(e) REGULATIONS.— 
‘‘(1) IN GENERAL.—The Secretary shall, pursu-
ant to rulemaking, specify, in accordance with para-
graph (2), the information that must be submitted 
under subsection (a)(4). 
‘‘(2) INFORMATION
SPECIFIED.—Information 
described in paragraph (1), with respect to a se-
lected drug, shall include information on sales of the 
drug (by the manufacturer of the drug or by another 
entity under license or other agreement with the 
manufacturer, with respect to the sales of such drug, 
regardless of the name under which the drug is sold) 
in any foreign country that is part of the AIM price. 
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The Secretary shall verify, to the extent practicable, 
such sales from appropriate officials of the govern-
ment of the foreign country involved. 
‘‘(f) COMPLIANCE WITH REQUIREMENTS FOR AD-
MINISTRATION OF PROGRAM.—Each manufacturer with 
an agreement in effect under this section shall comply with 
requirements imposed by the Secretary or a third party 
with a contract under section 1196(c)(1), as applicable, 
for purposes of administering the program. 
‘‘SEC. 1194. NEGOTIATION AND RENEGOTIATION PROCESS. 
‘‘(a) IN GENERAL.—For purposes of this part, under 
an agreement under section 1193 between the Secretary 
and a manufacturer of a selected drug, with respect to 
the period for which such agreement is in effect and in 
accordance with subsections (b) and (c), the Secretary and 
the manufacturer— 
‘‘(1) shall during the voluntary negotiation pe-
riod with respect to the initial price applicability 
year for such drug, in accordance with this section, 
negotiate a maximum fair price for such drug for 
the purpose described in section 1193(a)(1); and 
‘‘(2) 
as 
applicable 
pursuant 
to 
section 
1193(a)(2) and in accordance with the process speci-
fied pursuant to such section, renegotiate such max-
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imum fair price for such drug for the purpose de-
scribed in such section. 
‘‘(b) NEGOTIATING
METHODOLOGY
AND
OBJEC-
TIVE.— 
‘‘(1) IN GENERAL.—The Secretary shall develop 
and use a consistent methodology for negotiations 
under subsection (a) that, in accordance with para-
graph (2) and subject to paragraph (3), achieves the 
lowest maximum fair price for each selected drug 
while appropriately rewarding innovation. 
‘‘(2) PRIORITIZING
FACTORS.—In considering 
the factors described in subsection (d) in negotiating 
(and, as applicable, renegotiating) the maximum fair 
price for a selected drug, the Secretary shall, to the 
extent practicable, consider all of the available fac-
tors listed but shall prioritize the following factors: 
‘‘(A) 
RESEARCH
AND
DEVELOPMENT 
COSTS.—The factor described in paragraph 
(1)(A) of subsection (d). 
‘‘(B) MARKET
DATA.—The factor de-
scribed in paragraph (1)(B) of such subsection. 
‘‘(C) UNIT
COSTS
OF
PRODUCTION
AND 
DISTRIBUTION.—The factor described in para-
graph (1)(C) of such subsection. 
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‘‘(D) COMPARISON
TO
EXISTING
THERA-
PEUTIC ALTERNATIVES.—The factor described 
in paragraph (2)(A) of such subsection. 
‘‘(3) REQUIREMENT.— 
‘‘(A) IN
GENERAL.—In negotiating the 
maximum fair price of a selected drug, with re-
spect to an initial price applicability year for 
the selected drug, and, as applicable, in renego-
tiating the maximum fair price for such drug, 
with respect to a subsequent year during the 
price applicability period for such drug, in the 
case that the manufacturer of the selected drug 
offers under the negotiation or renegotiation, as 
applicable, a price for such drug that is not 
more than the target price described in sub-
paragraph (B) for such drug for the respective 
year, the Secretary shall agree under such ne-
gotiation or renegotiation, respectively, to such 
offered price as the maximum fair price. 
‘‘(B) TARGET PRICE.— 
‘‘(i) IN GENERAL.—Subject to clause 
(ii), the target price described in this sub-
paragraph for a selected drug with respect 
to a year, is the average price (which shall 
be the net average price, if practicable, and 
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volume-weighted, if practicable) for any 
dosage form and strength of a unit for the 
drug for sales of such drug, as computed 
in the applicable country described in sec-
tion 1191(c)(3)(B) with respect to such 
drug that, with respect to such year, has 
the lowest average price for such drug as 
compared to the average prices (as so com-
puted) for such drug with respect to such 
year in the other applicable countries de-
scribed in such section with respect to such 
drug. 
‘‘(ii) SELECTED DRUGS WITHOUT AIM 
PRICE.—In applying this paragraph in the 
case of negotiating the maximum fair price 
of a selected drug for which there is no 
AIM price available with respect to the ini-
tial price applicability year for such drug, 
or, as applicable, renegotiating the max-
imum fair price for such drug with respect 
to a subsequent year during the price ap-
plicability period for such drug before the 
first plan year for which there is an AIM 
price available for such drug, the target 
price described in this subparagraph for 
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such drug and respective year is the 
amount that is 80 percent of the average 
manufacturer price for such drug and 
year. 
‘‘(4) ANNUAL REPORT.—After the completion 
of each voluntary negotiation period, the Secretary 
shall submit to Congress a report on the maximum 
fair prices negotiated (or, as applicable, renegoti-
ated) for such period. Such report shall include in-
formation on how such prices so negotiated (or re-
negotiated) meet the requirements of this part, in-
cluding the requirements of this subsection. 
‘‘(c) LIMITATION.— 
‘‘(1) IN GENERAL.—Subject to paragraph (2), 
the maximum fair price negotiated (including as re-
negotiated) under this section for a selected drug, 
with respect to each plan year during a price appli-
cability period for such drug, shall not exceed 120 
percent of the AIM price applicable to such drug 
with respect to such year. 
‘‘(2) SELECTED DRUGS WITHOUT AIM PRICE.— 
In the case of a selected drug for which there is no 
AIM price available with respect to the initial price 
applicability year for such drug, for each plan year 
during the price applicability period before the first 
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plan year for which there is an AIM price available 
for such drug, the maximum fair price negotiated 
(including as renegotiated) under this section for the 
selected drug shall not exceed the amount equal to 
85 percent of the average manufacturer price for the 
drug with respect to such year. 
‘‘(d) CONSIDERATIONS.—For purposes of negotiating 
and, as applicable, renegotiating (including for purposes 
of determining whether to renegotiate) the maximum fair 
price of a selected drug under this part with the manufac-
turer of the drug, the Secretary shall, consistent with sub-
section (b)(2), take into consideration the following fac-
tors: 
‘‘(1) 
MANUFACTURER-SPECIFIC
INFORMA-
TION.—The following information, including as sub-
mitted by the manufacturer: 
‘‘(A) Research and development costs of 
the manufacturer for the drug and the extent to 
which the manufacturer has recouped research 
and development costs. 
‘‘(B) Market data for the drug, including 
the distribution of sales across different pro-
grams and purchasers and projected future rev-
enues for the drug. 
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‘‘(C) Unit costs of production and distribu-
tion of the drug. 
‘‘(D) Prior Federal financial support for 
novel therapeutic discovery and development 
with respect to the drug. 
‘‘(E) Data on patent and on existing and 
pending exclusivity for the drug. 
‘‘(F) National sales data for the drug. 
‘‘(G) Information on clinical trials for the 
drug in the United States or in applicable coun-
tries described in section 1191(c)(3)(B). 
‘‘(2) INFORMATION
ON
ALTERNATIVE
PROD-
UCTS.—The following information: 
‘‘(A) The extent to which the drug rep-
resents a therapeutic advance as compared to 
existing therapeutic alternatives and, to the ex-
tent such information is available, the costs of 
such existing therapeutic alternatives. 
‘‘(B) Information on approval by the Food 
and Drug Administration of alternative drug 
products. 
‘‘(C) Information on comparative effective-
ness analysis for such products. 
‘‘(3) FOREIGN
SALES
INFORMATION.—To the 
extent available on a timely basis, including as pro-
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vided by a manufacturer of the selected drug or oth-
erwise, information on sales of the selected drug in 
each 
of 
the 
countries 
described 
in 
section 
1191(c)(3)(B). 
‘‘(4) ADDITIONAL INFORMATION.—Information 
submitted to the Secretary, in accordance with a 
process specified by the Secretary, by other parties 
that are affected by the establishment of a maximum 
fair price for the selected drug. 
‘‘(e) REQUEST FOR INFORMATION.—For purposes of 
negotiating and, as applicable, renegotiating (including for 
purposes of determining whether to renegotiate) the max-
imum fair price of a selected drug under this part with 
the manufacturer of the drug, with respect to a price ap-
plicability period, and other relevant data for purposes of 
this section— 
‘‘(1) the Secretary shall, not later than the se-
lected drug publication date with respect to the ini-
tial price applicability year of such period, request 
drug pricing information from the manufacturer of 
such selected drug, including information described 
in subsection (d)(1); and 
‘‘(2) by not later than October 1 following the 
selected drug publication date, the manufacturer of 
such selected drug shall submit to the Secretary 
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such requested information in such form and man-
ner as the Secretary may require. 
The Secretary shall request, from the manufacturer or 
others, such additional information as may be needed to 
carry out the negotiation and renegotiation process under 
this section. 
‘‘SEC. 1195. PUBLICATION OF MAXIMUM FAIR PRICES. 
‘‘(a) IN GENERAL.—With respect to an initial price 
applicability year and selected drug with respect to such 
year, not later than May 1 of the plan year prior to such 
initial price applicability year, the Secretary shall publish 
in the Federal Register the maximum fair price negotiated 
under this part with the manufacturer of such drug. 
‘‘(b) UPDATES.— 
‘‘(1) 
SUBSEQUENT
YEAR
MAXIMUM
FAIR 
PRICES.—For a selected drug, for each plan year 
subsequent to the initial price applicability year for 
such drug with respect to which an agreement for 
such drug is in effect under section 1193, the Sec-
retary shall publish in the Federal Register— 
‘‘(A) subject to subparagraph (B), the 
amount equal to the maximum fair price pub-
lished for such drug for the previous year, in-
creased by the annual percentage increase in 
the consumer price index for all urban con-
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sumers (all items; U.S. city average) as of Sep-
tember of such previous year; or 
‘‘(B) in the case the maximum fair price 
for such drug was renegotiated, for the first 
year for which such price as so renegotiated ap-
plies, such renegotiated maximum fair price. 
‘‘(2) PRICES NEGOTIATED AFTER DEADLINE.— 
In the case of a selected drug with respect to an ini-
tial price applicability year for which the maximum 
fair price is determined under this part after the 
date of publication under this section, the Secretary 
shall publish such maximum fair price in the Fed-
eral Register by not later than 30 days after the 
date such maximum price is so determined. 
‘‘SEC. 1196. ADMINISTRATIVE DUTIES; COORDINATION PRO-
VISIONS. 
‘‘(a) ADMINISTRATIVE DUTIES.— 
‘‘(1) IN
GENERAL.—For purposes of section 
1191, the administrative duties described in this sec-
tion are the following: 
‘‘(A) The establishment of procedures (in-
cluding through agreements with manufacturers 
under this part, contracts with prescription 
drug plans under part D of title XVIII and 
MA–PD plans under part C of such title, and 
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agreements under section 1197 with group 
health plans and health insurance issuers of 
health insurance coverage offered in the indi-
vidual or group market) under which the max-
imum fair price for a selected drug is provided 
to fair price eligible individuals described in 
subparagraph (A) or (B) of section 1191(c)(1) 
at pharmacies or by mail order service at the 
point-of-sale of the drug for the applicable price 
period for such drug and providing that such 
maximum fair price is used for determining 
cost-sharing under such plans or coverage for 
the selected drug. 
‘‘(B) The establishment of procedures (in-
cluding through agreements with manufacturers 
under this part and contracts with hospitals, 
physicians, and other providers of services and 
suppliers) under which, in the case of a selected 
drug administered by such a hospital, physician, 
or other provider of services or supplier to fair 
price eligible individuals described in subpara-
graph (C) of section 1191(c)(1) and if payment 
for such drug may be made under part A of 
title XVIII or part B of such title, the max-
imum fair price for the selected drug is pro-
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vided to such hospitals, physicians, and other 
providers of services and suppliers (as applica-
ble) and providing that such maximum fair 
price is used for determining cost-sharing under 
the respective part, for the selected drug. 
‘‘(C) The establishment of procedures (in-
cluding through agreements and contracts de-
scribed in subparagraphs (A) and (B)) to en-
sure that, not later than 90 days after the dis-
pensing of a selected drug to a fair price eligi-
ble individual by a pharmacy or mail order serv-
ice, the pharmacy or mail order service is reim-
bursed for an amount equal to the difference 
between— 
‘‘(i) the lesser of— 
‘‘(I) the wholesale acquisition 
cost of the drug; 
‘‘(II) the national average drug 
acquisition cost of the drug; and 
‘‘(III) any other similar deter-
mination of pharmacy acquisition 
costs of the drug, as determined by 
the Secretary; and 
‘‘(ii) the maximum fair price for the 
drug. 
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‘‘(D) The establishment of procedures to 
ensure that the maximum fair price for a se-
lected drug is applied before— 
‘‘(i) any coverage or financial assist-
ance under other health benefit plans or 
programs that provide coverage or finan-
cial assistance for the purchase or provi-
sion of prescription drug coverage on be-
half of fair price eligible individuals as the 
Secretary may specify; and 
‘‘(ii) any other discounts. 
‘‘(E) The establishment of procedures to 
enter into appropriate agreements and protocols 
for the ongoing computation of AIM prices for 
selected drugs, including, to the extent possible, 
to compute the AIM price for selected drugs 
and including by providing that the manufac-
turer of such a selected drug should provide in-
formation for such computation not later than 
3 months after the first date of the voluntary 
negotiation period for such selected drug. 
‘‘(F) The establishment of procedures to 
compute and apply the maximum fair price 
across different strengths and dosage forms of 
a selected drug that are not based on the spe-
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cific formulation, dosage or strength, pack-
aging, or form of administration. 
‘‘(G) The establishment of procedures to 
negotiate and apply the maximum fair price in 
a manner that does not include any dispensing 
or similar fee. 
‘‘(H) The establishment of procedures to 
carry out the provisions of this part with re-
spect to— 
‘‘(i) fair price eligible individuals who 
are enrolled under a prescription drug plan 
under part D of title XVIII or an MA–PD 
plan under part C of such title; and 
‘‘(ii) fair price eligible individuals who 
are enrolled under a group health plan or 
health insurance coverage offered by a 
health insurance issuer in the individual or 
group market with respect to which there 
is an agreement in effect under section 
1197. 
‘‘(I) The establishment of a negotiation 
process and renegotiation process in accordance 
with section 1194, including a process for ac-
quiring information described in subsection (d) 
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of such section and determining amounts de-
scribed in subsection (b) of such section. 
‘‘(J) The provision of a reasonable dispute 
resolution mechanism to resolve disagreements 
between manufacturers, fair price eligible indi-
viduals, and the third party with a contract 
under subsection (c)(1). 
‘‘(2) MONITORING COMPLIANCE.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
monitor compliance by a manufacturer with the 
terms of an agreement under section 1193, in-
cluding by establishing a mechanism through 
which violations of such terms may be reported. 
‘‘(B) NOTIFICATION.—If a third party 
with a contract under subsection (c)(1) deter-
mines that the manufacturer is not in compli-
ance with such agreement, the third party shall 
notify the Secretary of such noncompliance for 
appropriate enforcement under section 4192 of 
the Internal Revenue Code of 1986 or section 
1198, as applicable. 
‘‘(b) COLLECTION OF DATA.— 
‘‘(1) FROM
PRESCRIPTION
DRUG
PLANS
AND 
MA–PD PLANS.—The Secretary may collect appro-
priate data from prescription drug plans under part 
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D of title XVIII and MA–PD plans under part C of 
such title in a timeframe that allows for maximum 
fair prices to be provided under this part for selected 
drugs. 
‘‘(2) FROM
HEALTH
PLANS.—The Secretary 
may collect appropriate data from group health 
plans or health insurance issuers offering group or 
individual health insurance coverage in a timeframe 
that allows for maximum fair prices to be provided 
under this part for selected drugs. 
‘‘(c) CONTRACT WITH THIRD PARTIES.— 
‘‘(1) IN GENERAL.—The Secretary shall enter 
into a contract with 1 or more third parties to ad-
minister the requirements established by the Sec-
retary in order to carry out this part. At a min-
imum, the contract with a third party under the pre-
ceding sentence shall require that the third party— 
‘‘(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 
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meet the obligations of manufacturers under 
agreements under this part; 
‘‘(C) provide adequate and timely informa-
tion to manufacturers, consistent with the 
agreement with the manufacturer under this 
part, as necessary for the manufacturer to ful-
fill its obligations under this part; 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. 
‘‘(2) 
PERFORMANCE
REQUIREMENTS.—The 
Secretary shall establish performance requirements 
for a third party with a contract under paragraph 
(1) and safeguards to protect the independence and 
integrity of the activities carried out by the third 
party under the program under this part. 
‘‘(d) COORDINATION WITH 340B PROGRAM.—In the 
case of a manufacturer of a selected drug, with respect 
to an initial price applicability year, for each year with 
respect to which a maximum fair price is applied under 
this part for such drug, such drug shall not be considered 
a covered outpatient drug subject to an agreement under 
section 340B of the Public Health Service Act. 
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‘‘SEC. 
1197. 
VOLUNTARY 
PARTICIPATION 
BY 
OTHER 
HEALTH PLANS. 
‘‘(a) IN GENERAL.—Under the program under this 
part the Secretary shall be treated as having in effect an 
agreement with a group health plan or health insurance 
issuer offering health insurance coverage (as such terms 
are defined in section 2791 of the Public Health Service 
Act), except in the case that such a plan or issuer affirma-
tively elects not to participate under the program, through 
a process specified by the Secretary, with respect to a 
price applicability period and a selected drug with respect 
to such period with respect to which coverage is provided 
under such plan or coverage. 
‘‘(b) PUBLICATION OF ELECTION.—With respect to 
each price applicability period and each selected drug with 
respect to such period, the Secretary and the Secretary 
of Labor and the Secretary of the Treasury, as applicable, 
shall make public a list of each group health plan and each 
issuer of health insurance coverage, with respect to which 
coverage is provided under such plan or coverage for such 
drug, that has elected under subsection (a) not to partici-
pate under the program with respect to such period and 
drug. 
‘‘SEC. 1198. CIVIL MONETARY PENALTY. 
‘‘(a) VIOLATIONS RELATING TO OFFERING OF MAX-
IMUM FAIR PRICE.—Any manufacturer of a selected drug 
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that has entered into an agreement under section 1193, 
with respect to a plan year during the price applicability 
period for such drug, that does not provide access to a 
price that is not more than the maximum fair price (or 
a lesser price) for such drug for such year— 
‘‘(1) to a fair price eligible individual described 
in subparagraph (A) or (B) of section 1191(c)(1) 
furnished such drug during such year; or 
‘‘(2) to a hospital, physician, or other provider 
of services or supplier with respect to fair price eligi-
ble individuals described in subparagraph (C) of 
such section administered such drug during such 
year; 
shall be subject to a civil monetary penalty equal to ten 
times the amount equal to the difference between the price 
for such drug made available by such manufacturer with 
respect to such individual or hospital, physician, provider, 
or supplier and the maximum fair price for such drug for 
such year. 
‘‘(b) VIOLATIONS OF CERTAIN TERMS OF AGREE-
MENT.—Any manufacturer of a selected drug that has en-
tered into an agreement under section 1193, with respect 
to a plan year during the price applicability period for 
such drug, that is in violation of a requirement imposed 
pursuant to section 1193(a)(6) shall be subject to a civil 
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monetary penalty of not more than $1,000,000 for each 
such violation. 
‘‘(c) APPLICATION.—The provisions of section 1128A 
(other than subsections (a) and (b)) shall apply to a civil 
monetary penalty under this section in the same manner 
as such provisions apply to a penalty or proceeding under 
section 1128A(a). 
‘‘SEC. 1199. MISCELLANEOUS PROVISIONS. 
‘‘(a) PAPERWORK REDUCTION ACT.—Chapter 35 of 
title 44, United States Code, shall not apply to data col-
lected under this part. 
‘‘(b) NATIONAL ACADEMY OF MEDICINE STUDY.— 
Not later than December 31, 2025, the National Academy 
of Medicine shall conduct a study, and submit to Congress 
a report, on recommendations for improvements to the 
program under this part, including the determination of 
the limits applied under section 1194(c). 
‘‘(c) MEDPAC STUDY.—Not later than December 31, 
2025, the Medicare Payment Advisory Commission shall 
conduct a study, and submit to Congress a report, on the 
program under this part with respect to the Medicare pro-
gram under title XVIII, including with respect to the ef-
fect of the program on individuals entitled to benefits or 
enrolled under such title. 
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‘‘(d) LIMITATION ON JUDICIAL REVIEW.—The fol-
lowing shall not be subject to judicial review: 
‘‘(1) The selection of drugs for publication 
under section 1192(a). 
‘‘(2) The determination of whether a drug is a 
negotiation-eligible drug under section 1192(d). 
‘‘(3) The determination of the maximum fair 
price of a selected drug under section 1194. 
‘‘(4) The determination of units of a drug for 
purposes of section 1191(c)(3). 
‘‘(e) COORDINATION.—In carrying out this part with 
respect to group health plans or health insurance coverage 
offered in the group market that are subject to oversight 
by the Secretary of Labor or the Secretary of the Treas-
ury, the Secretary of Health and Human Services shall 
coordinate with such respective Secretary. 
‘‘(f) DATA SHARING.—The Secretary shall share with 
the Secretary of the Treasury such information as is nec-
essary to determine the tax imposed by section 4192 of 
the Internal Revenue Code of 1986.’’. 
(b) APPLICATION OF MAXIMUM FAIR PRICES AND 
CONFORMING AMENDMENTS.— 
(1) UNDER
MEDICARE
PRESCRIPTION
DRUG 
PROGRAM.— 
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(A) 
EXCEPTION
TO
NON-INTER-
FERENCE.—Section 1860D–11(i) of the Social 
Security Act (42 U.S.C. 1395w–111(i)) is 
amended by inserting ‘‘, except as provided 
under part E of title XI,’’ after ‘‘the Sec-
retary’’. 
(B) 
APPLICATION
AS
NEGOTIATED 
PRICE.—Section 1860D–2(d)(1) of the Social 
Security Act (42 U.S.C. 1395w–102(d)(1)) is 
amended— 
(i) in subparagraph (B), by inserting 
‘‘, subject to subparagraph (D),’’ after 
‘‘negotiated prices’’; and 
(ii) by adding at the end the following 
new subparagraph: 
‘‘(D) APPLICATION
OF
MAXIMUM
FAIR 
PRICE FOR SELECTED DRUGS.—In applying this 
section, in the case of a covered part D drug 
that is a selected drug (as defined in section 
1192(c)), with respect to a price applicability 
period (as defined in section 1191(b)(2)), the 
negotiated price described in this subsection 
shall be the maximum fair price (as defined in 
section 1191(c)(2)) for such drug and for each 
plan year during such period.’’. 
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(C) INFORMATION
FROM
PRESCRIPTION 
DRUG PLANS AND MA–PD PLANS REQUIRED.— 
(i) PRESCRIPTION DRUG PLANS.—Sec-
tion 1860D–12(b) of the Social Security 
Act (42 U.S.C. 1395w–112(b)) is amended 
by adding at the end the following new 
paragraph: 
‘‘(8) PROVISION OF INFORMATION RELATED TO 
MAXIMUM FAIR PRICES.—Each contract entered into 
with a PDP sponsor under this part with respect to 
a prescription drug plan offered by such sponsor 
shall require the sponsor to provide information to 
the Secretary as requested by the Secretary in ac-
cordance with section 1196(b).’’. 
(ii) 
MA–PD 
PLANS.—Section 
1857(f)(3) of the Social Security Act (42 
U.S.C. 1395w–27(f)(3)) is amended by 
adding at the end the following new sub-
paragraph: 
‘‘(E) PROVISION
OF
INFORMATION
RE-
LATED
TO
MAXIMUM
FAIR
PRICES.—Section 
1860D–12(b)(8).’’. 
(2) UNDER
GROUP
HEALTH
PLANS
AND 
HEALTH INSURANCE COVERAGE.— 
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(A) PHSA.—Part A of title XXVII of the 
Public Health Service Act is amended by insert-
ing after section 2729 the following new sec-
tion: 
‘‘SEC. 2729A. FAIR PRICE DRUG NEGOTIATION PROGRAM 
AND 
APPLICATION 
OF 
MAXIMUM 
FAIR 
PRICES. 
‘‘(a) IN GENERAL.—In the case of a group health 
plan or health insurance issuer offering health insurance 
coverage that is treated under section 1197 of the Social 
Security Act as having in effect an agreement with the 
Secretary under the Fair Price Drug Negotiation Program 
under part E of title XI of such Act, with respect to a 
price applicability period (as defined in section 1191(b) 
of such Act) and a selected drug (as defined in section 
1192(c) of such Act) with respect to such period with re-
spect to which coverage is provided under such plan or 
coverage— 
‘‘(1) the provisions of such part shall apply to 
the plans or coverage offered by such plan or issuer, 
and to the individuals enrolled under such plans or 
coverage, during such period, with respect to such 
selected drug, in the same manner as such provi-
sions apply to prescription drug plans and MA–PD 
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plans, and to individuals enrolled under such pre-
scription drug plans and MA–PD plans; 
‘‘(2) the plan or issuer shall apply any cost- 
sharing responsibilities under such plan or coverage, 
with respect to such selected drug, by substituting 
the maximum fair price negotiated under such part 
for such drug in lieu of the contracted rate under 
such plan or coverage for such selected drug; and 
‘‘(3) the Secretary shall apply the provisions of 
such part to such plan, issuer, and coverage, and 
such individuals so enrolled in such plans. 
‘‘(b) NOTIFICATION REGARDING NONPARTICIPATION 
IN FAIR DRUG PRICE NEGOTIATION PROGRAM.—A group 
health plan or a health insurance issuer offering group or 
individual health insurance coverage shall publicly disclose 
in a manner and in accordance with a process specified 
by the Secretary any election made under section 1197 
of the Social Security Act by the plan or issuer to not 
participate in the Fair Drug Price Negotiation Program 
under part E of title XI of such Act with respect to a 
selected drug (as defined in section 1192(c) of such Act) 
for which coverage is provided under such plan or coverage 
before the beginning of the plan year for which such elec-
tion was made.’’. 
(B) ERISA.— 
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(i) IN GENERAL.—Subpart B of part 
7 of subtitle B of title I of the Employee 
Retirement Income Security Act of 1974 
(29 U.S.C. 1181 et. seq.) is amended by 
adding at the end the following new sec-
tion: 
‘‘SEC. 716. FAIR PRICE DRUG NEGOTIATION PROGRAM AND 
APPLICATION OF MAXIMUM FAIR PRICES. 
‘‘(a) IN GENERAL.—In the case of a group health 
plan or health insurance issuer offering group health in-
surance coverage that is treated under section 1197 of the 
Social Security Act as having in effect an agreement with 
the Secretary under the Fair Price Drug Negotiation Pro-
gram under part E of title XI of such Act, with respect 
to a price applicability period (as defined in section 
1191(b) of such Act) and a selected drug (as defined in 
section 1192(c) of such Act) with respect to such period 
with respect to which coverage is provided under such plan 
or coverage— 
‘‘(1) the provisions of such part shall apply to 
the plans or coverage offered by such plan or issuer, 
and to the individuals enrolled under such plans or 
coverage, during such period, with respect to such 
selected drug, in the same manner as such provi-
sions apply to prescription drug plans and MA–PD 
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plans, and to individuals enrolled under such pre-
scription drug plans and MA–PD plans; 
‘‘(2) the plan or issuer shall apply any cost- 
sharing responsibilities under such plan or coverage, 
with respect to such selected drug, by substituting 
the maximum fair price negotiated under such part 
for such drug in lieu of the contracted rate under 
such plan or coverage for such selected drug; and 
‘‘(3) the Secretary shall apply the provisions of 
such part to such plan, issuer, and coverage, and 
such individuals so enrolled in such plans. 
‘‘(b) NOTIFICATION REGARDING NONPARTICIPATION 
IN FAIR DRUG PRICE NEGOTIATION PROGRAM.—A group 
health plan or a health insurance issuer offering group 
health insurance coverage shall publicly disclose in a man-
ner and in accordance with a process specified by the Sec-
retary any election made under section 1197 of the Social 
Security Act by the plan or issuer to not participate in 
the Fair Drug Price Negotiation Program under part E 
of title XI of such Act with respect to a selected drug (as 
defined in section 1192(c) of such Act) for which coverage 
is provided under such plan or coverage before the begin-
ning of the plan year for which such election was made.’’. 
(ii) 
CLERICAL
AMENDMENT.—The 
table of sections for part 7 of subtitle B of 
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title I of the Employee Retirement Income 
Security Act of 1974 is amended by adding 
at the end the following: 
‘‘Sec. 716. Fair Price Drug Negotiation Program and application of maximum 
fair prices.’’. 
(C) IRC.— 
(i) IN
GENERAL.—Subchapter B of 
chapter 100 of the Internal Revenue Code 
of 1986 is amended by adding at the end 
the following new section: 
‘‘SEC. 9816. FAIR PRICE DRUG NEGOTIATION PROGRAM 
AND 
APPLICATION 
OF 
MAXIMUM 
FAIR 
PRICES. 
‘‘(a) IN GENERAL.—In the case of a group health 
plan that is treated under section 1197 of the Social Secu-
rity Act as having in effect an agreement with the Sec-
retary under the Fair Price Drug Negotiation Program 
under part E of title XI of such Act, with respect to a 
price applicability period (as defined in section 1191(b) 
of such Act) and a selected drug (as defined in section 
1192(c) of such Act) with respect to such period with re-
spect to which coverage is provided under such plan— 
‘‘(1) the provisions of such part shall apply to 
the plans offered by such plan, and to the individ-
uals enrolled under such plans, during such period, 
with respect to such selected drug, in the same man-
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ner as such provisions apply to prescription drug 
plans and MA–PD plans, and to individuals enrolled 
under such prescription drug plans and MA–PD 
plans; 
‘‘(2) the plan shall apply any cost-sharing re-
sponsibilities under such plan, with respect to such 
selected drug, by substituting the maximum fair 
price negotiated under such part for such drug in 
lieu of the contracted rate under such plan for such 
selected drug; and 
‘‘(3) the Secretary shall apply the provisions of 
such part to such plan and such individuals so en-
rolled in such plan. 
‘‘(b) NOTIFICATION REGARDING NONPARTICIPATION 
IN FAIR DRUG PRICE NEGOTIATION PROGRAM.—A group 
health plan shall publicly disclose in a manner and in ac-
cordance with a process specified by the Secretary any 
election made under section 1197 of the Social Security 
Act by the plan to not participate in the Fair Drug Price 
Negotiation Program under part E of title XI of such Act 
with respect to a selected drug (as defined in section 
1192(c) of such Act) for which coverage is provided under 
such plan before the beginning of the plan year for which 
such election was made.’’. 
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(ii) 
CLERICAL
AMENDMENT.—The 
table of sections for subchapter B of chap-
ter 100 of such Code is amended by add-
ing at the end the following new item: 
‘‘Sec. 9816. Fair Price Drug Negotiation Program and application of maximum 
fair prices.’’. 
SEC. 102. SELECTED DRUG MANUFACTURER EXCISE TAX 
IMPOSED DURING NONCOMPLIANCE PERI-
ODS. 
(a) 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. SELECTED DRUGS DURING NONCOMPLIANCE 
PERIODS. 
‘‘(a) IN GENERAL.—There is hereby imposed on the 
sale by the manufacturer, producer, or importer of any 
selected drug during a day described in subsection (b) a 
tax in an amount such that the applicable percentage is 
equal to the ratio of— 
‘‘(1) such tax, divided by 
‘‘(2) the sum of such tax and the price for 
which so sold. 
‘‘(b) NONCOMPLIANCE PERIODS.—A day is described 
in this subsection with respect to a selected drug if it is 
a day during one of the following periods: 
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‘‘(1) The period beginning on the June 16th 
immediately following the selected drug publication 
date and ending on the first date during which the 
manufacturer of the drug has in place an agreement 
described in subsection (a) of section 1193 of the 
Social Security Act with respect to such drug. 
‘‘(2) The period beginning on the April 1st im-
mediately following the June 16th described in para-
graph (1) and ending on the first date during which 
the manufacturer of the drug has agreed to a max-
imum fair price under such agreement. 
‘‘(3) In the case of a selected drug with respect 
to which the Secretary of Health and Human Serv-
ices has specified a renegotiation period under such 
agreement, the period beginning on the first date 
after the last date of such renegotiation period and 
ending on the first date during which the manufac-
turer of the drug has agreed to a renegotiated max-
imum fair price under such agreement. 
‘‘(4) With respect to information that is re-
quired to be submitted to the Secretary of Health 
and Human Services under such agreement, the pe-
riod beginning on the date on which such Secretary 
certifies that such information is overdue and ending 
on the date that such information is so submitted. 
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‘‘(5) In the case of a selected drug with respect 
to which a payment is due under subsection (c) of 
such section 1193, the period beginning on the date 
on which the Secretary of Health and Human Serv-
ices certifies that such payment is overdue and end-
ing on the date that such payment is made in full. 
‘‘(c) APPLICABLE PERCENTAGE.—The term ‘applica-
ble percentage’ means— 
‘‘(1) in the case of sales of a selected drug dur-
ing the first 90 days described in subsection (b) with 
respect to such drug, 65 percent, 
‘‘(2) in the case of sales of such drug during 
the 91st day through the 180th day described in 
subsection (b) with respect to such drug, 75 percent, 
‘‘(3) in the case of sales of such drug during 
the 181st day through the 270th day described in 
subsection (b) with respect to such drug, 85 percent, 
and 
‘‘(4) in the case of sales of such drug during 
any subsequent day, 95 percent. 
‘‘(d) DEFINITIONS.—The terms ‘selected drug publi-
cation date’ and ‘maximum fair price’ have the meaning 
given such terms in section 1191 of the Social Security 
Act and the term ‘selected drug’ has the meaning given 
such term in section 1192 of such Act. 
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‘‘(e) ANTI-ABUSE RULE.—In the case of a sale which 
was timed for the purpose of avoiding the tax imposed by 
this section, the Secretary may treat such sale as occur-
ring during a day described in subsection (b).’’. 
(b) NO DEDUCTION FOR EXCISE TAX PAYMENTS.— 
Section 275 of the Internal Revenue Code of 1986 is 
amended by adding ‘‘or by section 4192’’ before the period 
at the end of subsection (a)(6). 
(c) CONFORMING AMENDMENTS.— 
(1) Section 4221(a) of the Internal Revenue 
Code of 1986 is amended by inserting ‘‘or 4192’’ 
after ‘‘section 4191’’. 
(2) Section 6416(b)(2) of such Code is amend-
ed by inserting ‘‘or 4192’’ after ‘‘section 4191’’. 
(d) CLERICAL AMENDMENTS.— 
(1) The heading of subchapter E of chapter 32 
of the Internal Revenue Code of 1986 is amended by 
striking 
‘‘Medical 
Devices’’ 
and 
inserting 
‘‘Other Medical Products’’. 
(2) 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. OTHER MEDICAL PRODUCTS’’. 
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(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. Selected drugs during noncompliance periods.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to sales after the date of the enact-
ment of this Act. 
TITLE II—MEDICARE PARTS B 
AND D PRESCRIPTION DRUG 
INFLATION REBATES 
SEC. 201. MEDICARE PART B REBATE BY MANUFACTURERS. 
(a) IN GENERAL.—Section 1834 of the Social Secu-
rity Act (42 U.S.C. 1395m) is amended by adding at the 
end the following new subsection: 
‘‘(x) REBATE
BY MANUFACTURERS
FOR SINGLE 
SOURCE DRUGS WITH PRICES INCREASING FASTER 
THAN INFLATION.— 
‘‘(1) REQUIREMENTS.— 
‘‘(A) SECRETARIAL PROVISION OF INFOR-
MATION.—Not later than 6 months after the 
end of each calendar quarter beginning on or 
after July 1, 2021, the Secretary shall, for each 
part B rebatable drug, report to each manufac-
turer of such part B rebatable drug the fol-
lowing for such calendar quarter: 
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‘‘(i) Information on the total number 
of billing units described in subparagraph 
(A)(i) of paragraph (3) with respect to 
such drug and calendar quarter. 
‘‘(ii) Information on the amount (if 
any) of the excess average sales price in-
crease described in subparagraph (A)(ii) of 
such paragraph for such drug and calendar 
quarter. 
‘‘(iii) The rebate amount specified 
under such paragraph for such part B 
rebatable drug and calendar quarter. 
‘‘(B) MANUFACTURER
REQUIREMENT.— 
For each calendar quarter beginning on or after 
July 1, 2021, the manufacturer of a part B 
rebatable drug shall, for such drug, not later 
than 30 days after the date of receipt from the 
Secretary of the information described in sub-
paragraph (A) for such calendar quarter, pro-
vide to the Secretary a rebate that is equal to 
the amount specified in paragraph (3) for such 
drug for such calendar quarter. 
‘‘(2) PART B REBATABLE DRUG DEFINED.— 
‘‘(A) IN GENERAL.—In this subsection, the 
term ‘part B rebatable drug’ means a single 
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source drug or biological (as defined in sub-
paragraph (D) of section 1847A(c)(6)), includ-
ing a biosimilar biological product (as defined 
in subparagraph (H) of such section), paid for 
under this part, except such term shall not in-
clude such a drug or biological— 
‘‘(i) if the average total allowed 
charges for a year per individual that uses 
such a drug or biological, as determined by 
the Secretary, are less than, subject to 
subparagraph (B), $100; or 
‘‘(ii) that is a vaccine described in 
subparagraph (A) or (B) of section 
1861(s)(10). 
‘‘(B) INCREASE.—The dollar amount ap-
plied under subparagraph (A)(i)— 
‘‘(i) for 2022, shall be the dollar 
amount specified under such subparagraph 
for 2021, increased by the percentage in-
crease in the consumer price index for all 
urban consumers (United States city aver-
age) as of the first quarter of the previous 
year; and 
‘‘(ii) for a subsequent year, shall be 
the dollar amount specified in this clause 
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(or clause (i)) for the previous year, in-
creased by the percentage increase in the 
consumer price index for all urban con-
sumers (United States city average) as of 
the first quarter of the previous year. 
Any dollar amount specified under this sub-
paragraph that is not a multiple of $10 shall be 
rounded to the nearest multiple of $10. 
‘‘(3) REBATE AMOUNT.— 
‘‘(A) IN GENERAL.—For purposes of para-
graph (1)(B), the amount specified in this para-
graph for a part B rebatable drug assigned to 
a billing and payment code for a calendar quar-
ter is, subject to paragraph (4), the amount 
equal to the product of— 
‘‘(i) subject to subparagraph (B), the 
total number of billing units, as described 
in section 1847A(b)(6)(B), for such part B 
rebatable drug furnished under this part 
during the calendar quarter; and 
‘‘(ii) the amount (if any) by which— 
‘‘(I) the payment amount under 
subparagraph (B) or (C) of section 
1847A(b)(1), as applicable, for such 
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part B rebatable drug during the cal-
endar quarter; exceeds 
‘‘(II) the inflation-adjusted pay-
ment amount determined under sub-
paragraph (C) for such part B 
rebatable drug during the calendar 
quarter. 
‘‘(B) EXCLUDED UNITS.—For purposes of 
subparagraph (A)(i), the total number of billing 
units for part B rebatable drugs furnished dur-
ing a calendar quarter shall not include— 
‘‘(i) units packaged into the payment 
for a related procedure or service under 
section 1833(t) or under section 1833(i) 
(instead of separately payable under such 
respective section); 
‘‘(ii) units included under the single 
payment system for renal dialysis services 
under section 1881(b)(14); or 
‘‘(iii) units of a part B rebatable drug 
of a manufacturer that is furnished to an 
individual, if such manufacturer, with re-
spect to the furnishing of such units of 
such drug, provides for discounts under 
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section 340B of the Public Health Service 
Act or for rebates under section 1927. 
‘‘(C) DETERMINATION OF INFLATION-AD-
JUSTED PAYMENT AMOUNT.—The inflation-ad-
justed payment amount determined under this 
subparagraph for a part B rebatable drug for 
a calendar quarter is— 
‘‘(i) the payment amount for the bill-
ing and payment code for such drug in the 
payment amount benchmark quarter (as 
defined in subparagraph (D)); increased by 
‘‘(ii) the percentage by which the re-
bate period CPI–U (as defined in subpara-
graph (F)) for the calendar quarter ex-
ceeds the benchmark period CPI–U (as de-
fined in subparagraph (E)). 
‘‘(D) 
PAYMENT
AMOUNT
BENCHMARK 
QUARTER.—The term ‘payment amount bench-
mark quarter’ means the calendar quarter be-
ginning January 1, 2016. 
‘‘(E) BENCHMARK
PERIOD
CPI–U.—The 
term ‘benchmark period CPI–U’ means the con-
sumer price index for all urban consumers 
(United States city average) for July 2015. 
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‘‘(F) REBATE PERIOD CPI–U.—The term 
‘rebate period CPI–U’ means, with respect to a 
calendar quarter described in subparagraph 
(C), the greater of the benchmark period CPI– 
U and the consumer price index for all urban 
consumers (United States city average) for the 
first month of the calendar quarter that is two 
calendar quarters prior to such described cal-
endar quarter. 
‘‘(4) SPECIAL TREATMENT OF CERTAIN DRUGS 
AND EXEMPTION.— 
‘‘(A) SUBSEQUENTLY APPROVED DRUGS.— 
Subject to subparagraph (B), in the case of a 
part B rebatable drug first approved by the 
Food and Drug Administration after July 1, 
2015, clause (i) of paragraph (3)(C) shall be 
applied as if the term ‘payment amount bench-
mark quarter’ were defined under paragraph 
(3)(D) as the third full calendar quarter after 
the day on which the drug was first marketed 
and clause (ii) of paragraph (3)(C) shall be ap-
plied as if the term ‘benchmark period CPI–U’ 
were defined under paragraph (3)(E) as if the 
reference to ‘July 2015’ under such paragraph 
were a reference to ‘the first month of the first 
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full calendar quarter after the day on which the 
drug was first marketed’. 
‘‘(B) TIMELINE
FOR
PROVISION
OF
RE-
BATES FOR NEW DRUGS.—In the case of a part 
B rebatable drug first approved by the Food 
and Drug Administration after July 1, 2015, 
clause (i) of paragraph (1)(B) shall be applied 
as if the reference to ‘July 1, 2021’ under such 
paragraph were a reference to the later of the 
6th full calendar quarter after the day on which 
the drug was first marketed or July 1, 2021. 
‘‘(C) EXEMPTION FOR SHORTAGES.—The 
Secretary may reduce or waive the rebate under 
paragraph (1)(B) with respect to a part B 
rebatable drug that appears on the drug short-
age list in effect under section 506(e) of the 
Federal Food, Drug, and Cosmetic Act or in 
the case of other exigent circumstances, as de-
termined by the Secretary. 
‘‘(D) SELECTED DRUGS.—In the case of a 
part B rebatable drug that is a selected drug 
(as defined in section 1192(c)), for each appli-
cable year beginning after the price applicability 
period (as defined in section 1191(b)(2) with 
respect to such drug, clause (i) of paragraph 
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(3)(C) shall be applied as if the term ‘payment 
amount benchmark quarter’ were defined under 
paragraph (3)(D) as the calendar quarter be-
ginning January 1 of the last year beginning 
during such price applicability period with re-
spect to such selected drug and clause (ii) of 
paragraph (3)(C) shall be applied as if the term 
‘benchmark period CPI–U’ were defined under 
paragraph (3)(E) as if the reference to ‘July 
2015’ under such paragraph were a reference to 
the July of the year preceding such last year. 
‘‘(5) APPLICATION TO BENEFICIARY COINSUR-
ANCE.—In the case of a part B rebatable drug for 
which a rebate is payable under this subsection— 
‘‘(A) in computing the amount of any coin-
surance applicable under this title to an indi-
vidual with respect to such drug, the computa-
tion of such coinsurance shall be based on the 
inflation-adjusted payment amount determined 
under paragraph (3)(C) for such part B 
rebatable drug; and 
‘‘(B) the amount of such coinsurance is 
equal to 20 percent of such inflation-adjusted 
payment amount so determined. 
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‘‘(6) REBATE DEPOSITS.—Amounts paid as re-
bates under paragraph (1)(B) shall be deposited into 
the Federal Supplementary Medical Insurance Trust 
Fund established under section 1841. 
‘‘(7) CIVIL MONEY PENALTY.—If a manufac-
turer of a part B rebatable drug has failed to com-
ply with the requirements under paragraph (1)(B) 
for such drug for a calendar quarter, the manufac-
turer shall be subject to, in accordance with a proc-
ess established by the Secretary pursuant to regula-
tions, a civil money penalty in an amount equal to 
at least 125 percent of the amount specified in para-
graph (3) for such drug for such calendar quarter. 
The provisions of section 1128A (other than sub-
sections (a) (with respect to amounts of penalties or 
additional assessments) and (b)) shall apply to a 
civil money penalty under this paragraph in the 
same manner as such provisions apply to a penalty 
or proceeding under section 1128A(a). 
‘‘(8) STUDY AND REPORT.— 
‘‘(A) STUDY.—The Secretary shall conduct 
a study of the feasibility of and operational 
issues involved with the following: 
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‘‘(i) Including multiple source drugs 
(as defined in section 1847A(c)(6)(C)) in 
the rebate system under this subsection. 
‘‘(ii) Including drugs and biologicals 
paid for under MA plans under part C in 
the rebate system under this subsection. 
‘‘(iii) Including drugs excluded under 
paragraph (2)(A) and billing units of 
drugs excluded under paragraph (3)(B) in 
the rebate system under this subsection. 
‘‘(B) REPORT.—Not later than 3 years 
after the date of the enactment of this sub-
section, the Secretary shall submit to Congress 
a report on the study conducted under subpara-
graph (A). 
‘‘(9) APPLICATION
TO
MULTIPLE
SOURCE 
DRUGS.—The Secretary may, based on the report 
submitted under paragraph (8) and pursuant to 
rulemaking, apply the provisions of this subsection 
to multiple source drugs (as defined in section 
1847A(c)(6)(C)), including, for purposes of deter-
mining the rebate amount under paragraph (3), by 
calculating 
manufacturer-specific 
average 
sales 
prices for the benchmark period and the rebate pe-
riod.’’. 
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(b) AMOUNTS PAYABLE; COST-SHARING.—Section 
1833(a) of the Social Security Act is amended— 
(1) in paragraph (1)— 
(A) in subparagraph (S), by striking ‘‘with 
respect to’’ and inserting ‘‘subject to subpara-
graph (DD), with respect to’’; 
(B) by striking ‘‘and (CC)’’ and inserting 
‘‘(CC)’’; and 
(C) by inserting before the semicolon at 
the end the following: ‘‘, and (DD) with respect 
to a part B rebatable drug (as defined in para-
graph (2) of section 1834(x)) for which a rebate 
is payable under such section, the amounts paid 
shall be the difference between (i) the payment 
amount under paragraph (3)(A)(ii)(I) of such 
section for such drug, and (ii) 20 percent of the 
inflation-adjusted payment amount under para-
graph (3)(A)(ii)(II) of such section for such 
drug’’; and 
(2) by adding at the end of the flush left matter 
following paragraph (9), the following: 
‘‘For purposes of applying paragraph (1)(DD) and section 
1834(x)(5), the Secretary shall make such estimates and 
use such data as the Secretary determines appropriate.’’. 
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(c) CONFORMING AMENDMENT TO PART B ASP CAL-
CULATION.—Section 1847A(c)(3) of the Social Security 
Act (42 U.S.C. 1395w–3a(c)(3)) is amended by inserting 
‘‘or section 1834(x)’’ after ‘‘section 1927’’. 
SEC. 202. MEDICARE PART D REBATE BY MANUFACTURERS. 
Part D of title XVIII of the Social Security Act is 
amended by inserting after section 1860D–14A (42 
U.S.C. 1395w–114a) the following new section: 
‘‘SEC. 1860D–14B. MANUFACTURER REBATE FOR CERTAIN 
DRUGS WITH PRICES INCREASING FASTER 
THAN INFLATION. 
‘‘(a) IN GENERAL.—Subject to the provisions of this 
section, in order for coverage to be available under this 
part for a part D rebatable drug of a manufacturer dis-
pensed during an applicable year, the manufacturer must 
have entered into and have in effect an agreement de-
scribed in subsection (b). For purposes of this section the 
term ‘applicable year’ means a year beginning with 2022. 
‘‘(b) AGREEMENTS.— 
‘‘(1) TERMS OF AGREEMENT.—An agreement 
described in this subsection, with respect to a manu-
facturer of a part D rebatable drug, is an agreement 
under which the following applies: 
‘‘(A) SECRETARIAL PROVISION OF INFOR-
MATION.—Not later than 9 months after the 
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end of each applicable year with respect to 
which the agreement is in effect, the Secretary, 
for the part D rebatable drug of the manufac-
turer, reports to the manufacturer the following 
for such year: 
‘‘(i) Information on the total units (as 
defined in subsection (g)(2)) dispensed for 
each dosage form and strength with re-
spect to such part D rebatable drug and 
year. 
‘‘(ii) Information on the amount (if 
any) of the excess average manufacturer 
price increase described in subsection 
(c)(1)(B) for each dosage form and 
strength with respect to such drug and 
year. 
‘‘(iii) The rebate amount specified 
under subsection (c) for each dosage form 
and strength with respect to such drug and 
year. 
‘‘(B) MANUFACTURER
REQUIREMENTS.— 
For each applicable year with respect to which 
the agreement is in effect, the manufacturer of 
the part D rebatable drug, for each dosage 
form and strength with respect to such drug, 
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not later than 30 days after the date of receipt 
from the Secretary of the information described 
in subparagraph (A) for such year, provides to 
the Secretary a rebate that is equal to the 
amount specified in subsection (c) for such dos-
age form and strength with respect to such 
drug for such year. 
‘‘(2) LENGTH OF AGREEMENT.— 
‘‘(A) IN GENERAL.—An agreement under 
this section, with respect to a part D rebatable 
drug, shall be effective for an initial period of 
not less than one year and shall be automati-
cally renewed for a period of not less than one 
year unless terminated under subparagraph 
(B). 
‘‘(B) TERMINATION.— 
‘‘(i) BY SECRETARY.—The Secretary 
may provide for termination of an agree-
ment under this section for violation of the 
requirements of the agreement or other 
good cause shown. Such termination shall 
not be effective earlier than 60 days after 
the date of notice of such termination. The 
Secretary shall provide, upon request, a 
manufacturer with a hearing concerning 
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