180 
‘‘(A) the purchaser of the drug submitted 
the purchase order for the drug, or conducted 
any other part of the sales transaction for the 
drug, through an Internet site; 
‘‘(B) the person dispenses the drug to the 
purchaser by mailing or shipping the drug to 
the purchaser; and 
‘‘(C) such site, or any other Internet site 
used by such person for purposes of sales of a 
prescription drug, fails to meet each of the re-
quirements specified in paragraph (2), other 
than a site or pages on a site that— 
‘‘(i) are not intended to be accessed 
by purchasers or prospective purchasers; or 
‘‘(ii) provide an Internet information 
location tool within the meaning of section 
231(e)(5) of the Communications Act of 
1934 (47 U.S.C. 231(e)(5)). 
‘‘(2) REQUIREMENTS.—With respect to an 
Internet site, the requirements referred to in sub-
paragraph (C) of paragraph (1) for a person to 
whom such paragraph applies are as follows: 
‘‘(A) Each page of the site shall include ei-
ther the following information or a link to a 
page that provides the following information:
181 
‘‘(i) The name of such person. 
‘‘(ii) Each State in which the person 
is authorized by law to dispense prescrip-
tion drugs. 
‘‘(iii) The address and telephone num-
ber of each place of business of the person 
with respect to sales of prescription drugs 
through the Internet, other than a place of 
business that does not mail or ship pre-
scription drugs to purchasers. 
‘‘(iv) The name of each individual who 
serves as a pharmacist for prescription 
drugs that are mailed or shipped pursuant 
to the site, and each State in which the in-
dividual is authorized by law to dispense 
prescription drugs. 
‘‘(v) If the person provides for medical 
consultations through the site for purposes 
of providing prescriptions, the name of 
each individual who provides such con-
sultations; each State in which the indi-
vidual is licensed or otherwise authorized 
by law to provide such consultations or 
practice medicine; and the type or types of
182 
health professions for which the individual 
holds such licenses or other authorizations. 
‘‘(B) A link to which paragraph (1) applies 
shall be displayed in a clear and prominent 
place and manner, and shall include in the cap-
tion for the link the words ‘licensing and con-
tact information’. 
‘‘(b) INTERNET
SALES
WITHOUT
APPROPRIATE 
MEDICAL RELATIONSHIPS.— 
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), a person may not dispense a prescription 
drug, or sell such a drug, if— 
‘‘(A) for purposes of such dispensing or 
sale, the purchaser communicated with the per-
son through the Internet; 
‘‘(B) the patient for whom the drug was 
dispensed or purchased did not, when such 
communications began, have a prescription for 
the drug that is valid in the United States; 
‘‘(C) pursuant to such communications, the 
person provided for the involvement of a practi-
tioner, or an individual represented by the per-
son as a practitioner, and the practitioner or 
such individual issued a prescription for the 
drug that was purchased;
183 
‘‘(D) the person knew, or had reason to 
know, that the practitioner or the individual re-
ferred to in subparagraph (C) did not, when 
issuing the prescription, have a qualifying med-
ical relationship with the patient; and 
‘‘(E) the person received payment for the 
dispensing or sale of the drug. 
For purposes of subparagraph (E), payment is re-
ceived if money or other other valuable consideration 
is received. 
‘‘(2) EXCEPTIONS.—Paragraph (1) does not 
apply to— 
‘‘(A) the dispensing or selling of a pre-
scription drug pursuant to telemedicine prac-
tices sponsored by— 
‘‘(i) a hospital that has in effect a 
provider agreement under title XVIII of 
the Social Security Act (relating to the 
Medicare program); or 
‘‘(ii) a group practice that has not 
fewer than 100 physicians who have in ef-
fect provider agreements under such title; 
or 
‘‘(B) the dispensing or selling of a pre-
scription drug pursuant to practices that pro-
184 
mote the public health, as determined by the 
Secretary by regulation. 
‘‘(3) QUALIFYING MEDICAL RELATIONSHIP.— 
‘‘(A) 
IN
GENERAL.—With 
respect 
to 
issuing a prescription for a drug for a patient, 
a practitioner has a qualifying medical relation-
ship with the patient for purposes of this sec-
tion if— 
‘‘(i) at least one in-person medical 
evaluation of the patient has been con-
ducted by the practitioner; or 
‘‘(ii) the practitioner conducts a med-
ical evaluation of the patient as a covering 
practitioner. 
‘‘(B) IN-PERSON MEDICAL EVALUATION.— 
A medical evaluation by a practitioner is an in- 
person medical evaluation for purposes of this 
section if the practitioner is in the physical 
presence of the patient as part of conducting 
the evaluation, without regard to whether por-
tions of the evaluation are conducted by other 
health professionals. 
‘‘(C) COVERING PRACTITIONER.—With re-
spect to a patient, a practitioner is a covering 
practitioner for purposes of this section if the
185 
practitioner conducts a medical evaluation of 
the patient at the request of a practitioner who 
has conducted at least one in-person medical 
evaluation of the patient and is temporarily un-
available to conduct the evaluation of the pa-
tient. A practitioner is a covering practitioner 
without regard to whether the practitioner has 
conducted any in-person medical evaluation of 
the patient involved. 
‘‘(4) RULES OF CONSTRUCTION.— 
‘‘(A) 
INDIVIDUALS
REPRESENTED
AS 
PRACTITIONERS.—A person who is not a practi-
tioner (as defined in subsection (e)(1)) lacks 
legal capacity under this section to have a 
qualifying medical relationship with any patient. 
‘‘(B) STANDARD
PRACTICE
OF
PHAR-
MACY.—Paragraph (1) may not be construed as 
prohibiting any conduct that is a standard prac-
tice in the practice of pharmacy. 
‘‘(C) 
APPLICABILITY
OF
REQUIRE-
MENTS.—Paragraph (3) may not be construed 
as having any applicability beyond this section, 
and does not affect any State law, or interpre-
tation of State law, concerning the practice of 
medicine.
186 
‘‘(c) ACTIONS BY STATES.— 
‘‘(1) IN GENERAL.—Whenever an attorney gen-
eral of any State has reason to believe that the in-
terests of the residents of that State have been or 
are being threatened or adversely affected because 
any person has engaged or is engaging in a pattern 
or practice that violates section 301(l), the State 
may bring a civil action on behalf of its residents in 
an appropriate district court of the United States to 
enjoin such practice, to enforce compliance with such 
section (including a nationwide injunction), to obtain 
damages, restitution, or other compensation on be-
half of residents of such State, to obtain reasonable 
attorneys fees and costs if the State prevails in the 
civil action, or to obtain such further and other relief 
as the court may deem appropriate. 
‘‘(2) NOTICE.—The State shall serve prior writ-
ten notice of any civil action under paragraph (1) or 
(5)(B) upon the Secretary and provide the Secretary 
with a copy of its complaint, except that if it is not 
feasible for the State to provide such prior notice, 
the State shall serve such notice immediately upon 
instituting such action. Upon receiving a notice re-
specting a civil action, the Secretary shall have the 
right—
187 
‘‘(A) to intervene in such action; 
‘‘(B) upon so intervening, to be heard on 
all matters arising therein; and 
‘‘(C) to file petitions for appeal. 
‘‘(3) CONSTRUCTION.—For purposes of bring-
ing any civil action under paragraph (1), nothing in 
this chapter shall prevent an attorney general of a 
State from exercising the powers conferred on the 
attorney general by the laws of such State to con-
duct investigations or to administer oaths or affir-
mations or to compel the attendance of witnesses or 
the production of documentary and other evidence. 
‘‘(4) VENUE; SERVICE OF PROCESS.—Any civil 
action brought under paragraph (1) in a district 
court of the United States may be brought in the 
district in which the defendant is found, is an inhab-
itant, or transacts business or wherever venue is 
proper under section 1391 of title 28, United States 
Code. Process in such an action may be served in 
any district in which the defendant is an inhabitant 
or in which the defendant may be found. 
‘‘(5) ACTIONS BY OTHER STATE OFFICIALS.— 
‘‘(A) Nothing contained in this section 
shall prohibit an authorized State official from 
proceeding in State court on the basis of an al-
188 
leged violation of any civil or criminal statute of 
such State. 
‘‘(B) In addition to actions brought by an 
attorney general of a State under paragraph 
(1), such an action may be brought by officers 
of such State who are authorized by the State 
to bring actions in such State on behalf of its 
residents. 
‘‘(d) EFFECT OF SECTION.—This section shall not 
apply to a person that is a registered exporter under sec-
tion 804. 
‘‘(e) GENERAL DEFINITIONS.—For purposes of this 
section: 
‘‘(1) The term ‘practitioner’ means a practi-
tioner referred to in section 503(b)(1) with respect 
to issuing a written or oral prescription. 
‘‘(2) The term ‘prescription drug’ means a drug 
that is described in section 503(b)(1). 
‘‘(3) The term ‘qualifying medical relationship’, 
with respect to a practitioner and a patient, has the 
meaning indicated for such term in subsection (b). 
‘‘(f) INTERNET-RELATED DEFINITIONS.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion:
189 
‘‘(A) The term ‘Internet’ means collectively 
the myriad of computer and telecommunications 
facilities, including equipment and operating 
software, which comprise the interconnected 
world-wide network of networks that employ the 
transmission control protocol/internet protocol, 
or any predecessor or successor protocols to 
such protocol, to communicate information of 
all kinds by wire or radio. 
‘‘(B) The term ‘link’, with respect to the 
Internet, means one or more letters, words, 
numbers, symbols, or graphic items that appear 
on a page of an Internet site for the purpose 
of serving, when activated, as a method for exe-
cuting an electronic command— 
‘‘(i) to move from viewing one portion 
of a page on such site to another portion 
of the page; 
‘‘(ii) to move from viewing one page 
on such site to another page on such site; 
or 
‘‘(iii) to move from viewing a page on 
one Internet site to a page on another 
Internet site.
190 
‘‘(C) The term ‘page’, with respect to the 
Internet, means a document or other file 
accessed at an Internet site. 
‘‘(D)(i) The terms ‘site’ and ‘address’, with 
respect to the Internet, mean a specific location 
on the Internet that is determined by Internet 
Protocol numbers. Such term includes the do-
main name, if any. 
‘‘(ii) The term ‘domain name’ means a 
method of representing an Internet address 
without direct reference to the Internet Protocol 
numbers for the address, including methods 
that use designations such as ‘.com’, ‘.edu’, 
‘.gov’, ‘.net’, or ‘.org’. 
‘‘(iii) The term ‘Internet Protocol num-
bers’ includes any successor protocol for deter-
mining a specific location on the Internet. 
‘‘(2) AUTHORITY
OF
SECRETARY.—The Sec-
retary may by regulation modify any definition 
under paragraph (1) to take into account changes in 
technology. 
‘‘(g) INTERACTIVE COMPUTER SERVICE; ADVER-
TISING.—No provider of an interactive computer service, 
as defined in section 230(f)(2) of the Communications Act 
of 1934 (47 U.S.C. 230(f)(2)), or of advertising services
191 
shall be liable under this section for dispensing or selling 
prescription drugs in violation of this section on account 
of another person’s selling or dispensing such drugs, pro-
vided that the provider of the interactive computer service 
or of advertising services does not own or exercise cor-
porate control over such person.’’. 
(2) INCLUSION AS PROHIBITED ACT.—Section 
301 of the Federal Food, Drug, and Cosmetic Act 
(21 U.S.C. 331) is amended by inserting after sub-
section (k) the following: 
‘‘(l) The dispensing or selling of a prescription drug 
in violation of section 503B.’’. 
(3) INTERNET SALES OF PRESCRIPTION DRUGS; 
CONSIDERATION BY SECRETARY OF PRACTICES AND 
PROCEDURES FOR CERTIFICATION OF LEGITIMATE 
BUSINESSES.—In carrying out section 503B of the 
Federal Food, Drug, and Cosmetic Act (as added by 
this section), the Secretary of Health and Human 
Services shall take into consideration the practices 
and procedures of public or private entities that cer-
tify that businesses selling prescription drugs 
through Internet sites are legitimate businesses, in-
cluding practices and procedures regarding disclo-
sure formats and verification programs.
192 
(4) REPORTS REGARDING INTERNET-RELATED 
VIOLATIONS OF FEDERAL AND STATE LAWS ON DIS-
PENSING OF DRUGS.— 
(A) 
IN
GENERAL.—The 
Secretary 
of 
Health and Human Services (referred to in this 
paragraph as the ‘‘Secretary’’) shall, pursuant 
to the submission of an application meeting the 
criteria of the Secretary, make an award of a 
grant or contract to the National Clearinghouse 
on Internet Prescribing (operated by the Fed-
eration of State Medical Boards) for the pur-
pose of— 
(i) identifying Internet sites that ap-
pear to be in violation of Federal or State 
laws concerning the dispensing of drugs; 
(ii) reporting such sites to State med-
ical licensing boards and State pharmacy 
licensing boards, and to the Attorney Gen-
eral and the Secretary, for further inves-
tigation; and 
(iii) submitting, for each fiscal year 
for which the award under this subsection 
is made, a report to the Secretary describ-
ing investigations undertaken with respect 
to violations described in clause (i).
193 
(B) 
AUTHORIZATION
OF
APPROPRIA-
TIONS.—For the purpose of carrying out sub-
paragraph (A), there is authorized to be appro-
priated $100,000 for each of the fiscal years 
2006 through 2008. 
(5) EFFECTIVE DATE.—The amendments made 
by paragraphs (1) and (2) take effect 90 days after 
the date of enactment of this Act, without regard to 
whether a final rule to implement such amendments 
has been promulgated by the Secretary of Health 
and Human Services under section 701(a) of the 
Federal Food, Drug, and Cosmetic Act. The pre-
ceding sentence may not be construed as affecting 
the authority of such Secretary to promulgate such 
a final rule. 
(g) IMPORTATION EXEMPTION UNDER CONTROLLED 
SUBSTANCES
IMPORT
AND
EXPORT
ACT.—Section 
1006(a)(2) of the Controlled Substances Import and Ex-
port Act (21 U.S.C. 956(a)(2)) is amended by striking 
‘‘not import the controlled substance into the United 
States in an amount that exceeds 50 dosage units of the 
controlled substance.’’ and inserting ‘‘import into the 
United States not more than 10 dosage units combined 
of all such controlled substances.’’.
194 
SEC. 7. REASONABLE PRICE AGREEMENT FOR FEDERALLY 
FUNDED RESEARCH. 
(a) IN GENERAL.—If any Federal agency or any non- 
profit entity undertakes federally funded health care re-
search and development and is to convey or provide a pat-
ent or other exclusive right to use such research and devel-
opment for a drug or other health care technology, such 
agency or entity shall not make such conveyance or pro-
vide such patent or other right until the person who will 
receive such conveyance or patent or other right first 
agrees to a reasonable pricing agreement with the Sec-
retary of Health and Human Services or the Secretary 
makes a determination that the public interest is served 
by a waiver of the reasonable pricing agreement provided 
in accordance with subsection (c). 
(b) CONSIDERATION OF COMPETITIVE BIDDING.—In 
cases where the Federal Government conveys or licenses 
exclusive rights to federally funded research under sub-
section (a), consideration shall be given to mechanisms for 
determining reasonable prices which are based upon a 
competitive bidding process. When appropriate, the mech-
anisms should be considered where— 
(1) qualified bidders compete on the basis of 
the lowest prices that will be charged to consumers; 
(2) qualified bidders compete on the basis of 
the least sales revenues before prices are adjusted in
195 
accordance with a cost based reasonable pricing for-
mula; 
(3) qualified bidders compete on the basis of 
the least period of time before prices are adjusted in 
accordance with a cost based reasonable pricing for-
mula; 
(4) qualified bidders compete on the basis of 
the shortest period of exclusivity; or 
(5) qualified bidders compete under other com-
petitive bidding systems. 
Such competitive bidding process may incorporate require-
ments for minimum levels of expenditures on research, 
marketing, maximum price, or other factors. 
(c) WAIVER.—No waiver shall take effect under sub-
section (a) before the public is given notice of the proposed 
waiver and provided a reasonable opportunity to comment 
on the proposed waiver. A decision to grant a waiver shall 
set out the Secretary’s finding that such a waiver is in 
the public interest. 
SEC. 8. GAO ONGOING STUDIES AND REPORTS ON PRO-
GRAM; MISCELLANEOUS REPORTS. 
(a) ONGOING STUDY.—The Comptroller General of 
the United States shall conduct an ongoing study and 
analysis of the prescription medicine benefit program 
under part D of the medicare program under title XVIII
196 
of the Social Security Act (as added by section 4 of this 
Act), including an analysis of each of the following: 
(1) The extent to which the administering enti-
ties have achieved volume-based discounts similar to 
the favored price paid by other large purchasers. 
(2) Whether access to the benefits under such 
program are in fact available to all beneficiaries, 
with special attention given to access for bene-
ficiaries living in rural and hard-to-serve areas. 
(3) The success of such program in reducing 
medication error and adverse medicine reactions and 
improving quality of care, and whether it is probable 
that the program has resulted in savings through re-
duced hospitalizations and morbidity due to medica-
tion errors and adverse medicine reactions. 
(4) Whether patient medical record confiden-
tiality is being maintained and safe-guarded. 
(5) Such other issues as the Comptroller Gen-
eral may consider. 
(b) REPORTS.—The Comptroller General shall issue 
such reports on the results of the ongoing study described 
in (a) as the Comptroller General shall deem appropriate 
and shall notify Congress on a timely basis of significant 
problems in the operation of the part D prescription medi-
197 
cine program and the need for legislative adjustments and 
improvements. 
(c) MISCELLANEOUS STUDIES AND REPORTS.— 
(1) STUDY ON METHODS TO ENCOURAGE ADDI-
TIONAL
RESEARCH
ON
BREAKTHROUGH
PHARMA-
CEUTICALS.— 
(A) 
IN
GENERAL.—The 
Secretary 
of 
Health and Human Services shall seek the ad-
vice of the Secretary of the Treasury on pos-
sible tax and trade law changes to encourage 
increased original research on new pharma-
ceutical breakthrough products designed to ad-
dress disease and illness. 
(B) REPORT.—Not later than January 1, 
2007, the Secretary shall submit to Congress a 
report on such study. The report shall include 
recommended methods to encourage the phar-
maceutical industry to devote more resources to 
research and development of new covered prod-
ucts than it devotes to overhead expenses. 
(2) STUDY ON PHARMACEUTICAL SALES PRAC-
TICES
AND
IMPACT
ON
COSTS
AND
QUALITY
OF 
CARE.— 
(A) 
IN
GENERAL.—The 
Secretary 
of 
Health and Human Services shall conduct a
198 
study on the methods used by the pharma-
ceutical industry to advertise and sell to con-
sumers and educate and sell to providers. 
(B) REPORT.—Not later than January 1, 
2007, the Secretary shall submit to Congress a 
report on such study. The report shall include 
the estimated direct and indirect costs of the 
sales methods used, the quality of the informa-
tion conveyed, and whether such sales efforts 
leads (or could lead) to inappropriate pre-
scribing. Such report may include legislative 
and regulatory recommendations to encourage 
more appropriate education and prescribing 
practices. 
(3) STUDY ON COST OF PHARMACEUTICAL RE-
SEARCH.— 
(A) 
IN
GENERAL.—The 
Secretary 
of 
Health and Human Services shall conduct a 
study on the costs of, and needs for, the phar-
maceutical research and the role that the tax-
payer provides in encouraging such research. 
(B) REPORT.—Not later than January 1, 
2007, the Secretary shall submit to Congress a 
report on such study. The report shall include 
a description of the full-range of taxpayer-as-
199 
sisted programs impacting pharmaceutical re-
search, including tax, trade, government re-
search, and regulatory assistance. The report 
may also include legislative and regulatory rec-
ommendations that are designed to ensure that 
the taxpayer’s investment in pharmaceutical re-
search results in the availability of pharma-
ceuticals at reasonable prices. 
(4) REPORT ON PHARMACEUTICAL PRICES IN 
MAJOR FOREIGN NATIONS.—Not later than January 
1, 2007, the Secretary of Health and Human Serv-
ices shall submit to Congress a report on the retail 
price of major pharmaceutical products in various 
developed nations, compared to prices for the same 
or similar products in the United States. The report 
shall include a description of the principal reasons 
for any price differences that may exist. 
SEC. 9. MEDIGAP TRANSITION PROVISIONS. 
(a) IN GENERAL.—Notwithstanding any other provi-
sion of law, no new medicare supplemental policy that pro-
vides coverage of expenses for prescription drugs may be 
issued under section 1882 of the Social Security Act on 
or after January 1, 2007, to an individual unless it re-
places a medicare supplemental policy that was issued to
200 
that individual and that provided some coverage of ex-
penses for prescription drugs. 
(b) ISSUANCE OF SUBSTITUTE POLICIES IF OBTAIN 
PRESCRIPTION DRUG COVERAGE THROUGH MEDICARE.— 
(1) IN
GENERAL.—The issuer of a medicare 
supplemental policy— 
(A) may not deny or condition the issuance 
or effectiveness of a medicare supplemental pol-
icy that has a benefit package classified as ‘‘A’’, 
‘‘B’’, ‘‘C’’, ‘‘D’’, ‘‘E’’, ‘‘F’’, or ‘‘G’’ (under the 
standards established under subsection (p)(2) of 
section 1882 of the Social Security Act, 42 
U.S.C. 1395ss) and that is offered and is avail-
able for issuance to new enrollees by such 
issuer; 
(B) may not discriminate in the pricing of 
such policy, because of health status, claims ex-
perience, receipt of health care, or medical con-
dition; and 
(C) may not impose an exclusion of bene-
fits based on a pre-existing condition under 
such policy, 
in the case of an individual described in paragraph 
(2) who seeks to enroll under the policy not later 
than 63 days after the date of the termination of en-
201 
rollment described in such paragraph and who sub-
mits evidence of the date of termination or 
disenrollment along with the application for such 
medicare supplemental policy. 
(2) INDIVIDUAL COVERED.—An individual de-
scribed in this paragraph is an individual who— 
(A) enrolls in a prescription drug plan 
under part D of title XVIII of the Social Secu-
rity Act; and 
(B) at the time of such enrollment was en-
rolled and terminates enrollment in a medicare 
supplemental policy which has a benefit pack-
age classified as ‘‘H’’, ‘‘I’’, or ‘‘J’’ under the 
standards referred to in paragraph (1)(A) or 
terminates enrollment in a policy to which such 
standards do not apply but which provides ben-
efits for prescription drugs. 
(3) ENFORCEMENT.—The provisions of para-
graph (1) shall be enforced as though they were in-
cluded in section 1882(s) of the Social Security Act 
(42 U.S.C. 1395ss(s)) on and after January 1, 
2007. 
(4) DEFINITIONS.—For purposes of this sub-
section, the term ‘‘medicare supplemental policy’’
202 
has the meaning given such term in section 1882(g) 
of the Social Security Act (42 U.S.C. 1395ss(g)). 
Æ