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making, using, offering to sell, selling, or importation into 
the United States of the biological product that is the subject 
of the action infringed the patent, shall be a reasonable roy-
alty. 
‘‘(C) The owner of a patent that should have been in-
cluded in the list described in section 351(l)(3)(A) of the 
Public Health Service Act, including as provided under sec-
tion 351(l)(7) of such Act for a biological product, but was 
not timely included in such list, may not bring an action 
under this section for infringement of the patent with re-
spect to the biological product.’’. 
(2) CONFORMING
AMENDMENT
UNDER
TITLE 
28.—Section 2201(b) of title 28, United States Code, 
is amended by inserting before the period the fol-
lowing: ‘‘, or section 351 of the Public Health Service 
Act’’. 
(d) CONFORMING AMENDMENTS UNDER THE FEDERAL 
FOOD, DRUG, AND COSMETIC ACT.— 
(1) CONTENT AND REVIEW OF APPLICATIONS.— 
Section 505(b)(5)(B) of the Federal Food, Drug, and 
Cosmetic Act (21 U.S.C. 355(b)(5)(B)) is amended by 
inserting before the period at the end of the first sen-
tence the following: ‘‘or, with respect to an applicant 
for approval of a biological product under section 
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351(k) of the Public Health Service Act, any nec-
essary clinical study or studies’’. 
(2) NEW ACTIVE INGREDIENT.—Section 505B of 
the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
355c) is amended by adding at the end the following: 
‘‘(n) NEW ACTIVE INGREDIENT.— 
‘‘(1) NON-INTERCHANGEABLE
BIOSIMILAR
BIO-
LOGICAL PRODUCT.—A biological product that is bio-
similar to a reference product under section 351 of the 
Public Health Service Act, and that the Secretary has 
not determined to meet the standards described in 
subsection (k)(4) of such section for interchangeability 
with the reference product, shall be considered to have 
a new active ingredient under this section. 
‘‘(2) INTERCHANGEABLE BIOSIMILAR BIOLOGICAL 
PRODUCT.—A biological product that is interchange-
able with a reference product under section 351 of the 
Public Health Service Act shall not be considered to 
have a new active ingredient under this section.’’. 
(e) PRODUCTS PREVIOUSLY APPROVED UNDER SEC-
TION 505.— 
(1) REQUIREMENT TO FOLLOW SECTION 351.— 
Except as provided in paragraph (2), an application 
for a biological product shall be submitted under sec-
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tion 351 of the Public Health Service Act (42 U.S.C. 
262) (as amended by this Act). 
(2) EXCEPTION.—An application for a biological 
product may be submitted under section 505 of the 
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
355) if— 
(A) such biological product is in a product 
class for which a biological product in such 
product class is the subject of an application ap-
proved under such section 505 not later than the 
date of enactment of this Act; and 
(B) such application— 
(i) has been submitted to the Secretary 
of Health and Human Services (referred to 
in this subtitle as the ‘‘Secretary’’) before 
the date of enactment of this Act; or 
(ii) is submitted to the Secretary not 
later than the date that is 10 years after the 
date of enactment of this Act. 
(3) LIMITATION.—Notwithstanding paragraph 
(2), an application for a biological product may not 
be submitted under section 505 of the Federal Food, 
Drug, and Cosmetic Act (21 U.S.C. 355) if there is 
another biological product approved under subsection 
(a) of section 351 of the Public Health Service Act 
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that could be a reference product with respect to such 
application (within the meaning of such section 351) 
if such application were submitted under subsection 
(k) of such section 351. 
(4) DEEMED APPROVED UNDER SECTION 351.— 
An approved application for a biological product 
under section 505 of the Federal Food, Drug, and 
Cosmetic Act (21 U.S.C. 355) shall be deemed to be 
a license for the biological product under such section 
351 on the date that is 10 years after the date of en-
actment of this Act. 
(5) DEFINITIONS.—For purposes of this sub-
section, the term ‘‘biological product’’ has the mean-
ing given such term under section 351 of the Public 
Health Service Act (42 U.S.C. 262) (as amended by 
this Act). 
(f) FOLLOW-ON BIOLOGICS USER FEES.— 
(1) DEVELOPMENT
OF
USER
FEES
FOR
BIO-
SIMILAR BIOLOGICAL PRODUCTS.— 
(A) IN GENERAL.—Beginning not later than 
October 1, 2010, the Secretary shall develop rec-
ommendations to present to Congress with re-
spect to the goals, and plans for meeting the 
goals, for the process for the review of biosimilar 
biological product applications submitted under 
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section 351(k) of the Public Health Service Act 
(as added by this Act) for the first 5 fiscal years 
after fiscal year 2012. In developing such rec-
ommendations, 
the 
Secretary 
shall 
consult 
with— 
(i) the Committee on Health, Edu-
cation, Labor, and Pensions of the Senate; 
(ii) the Committee on Energy and 
Commerce of the House of Representatives; 
(iii) scientific and academic experts; 
(iv) health care professionals; 
(v) representatives of patient and con-
sumer advocacy groups; and 
(vi) the regulated industry. 
(B) PUBLIC
REVIEW
OF
RECOMMENDA-
TIONS.—After negotiations with the regulated in-
dustry, the Secretary shall— 
(i) present the recommendations devel-
oped under subparagraph (A) to the Con-
gressional committees specified in such sub-
paragraph; 
(ii) publish such recommendations in 
the Federal Register; 
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(iii) provide for a period of 30 days for 
the public to provide written comments on 
such recommendations; 
(iv) hold a meeting at which the public 
may present its views on such recommenda-
tions; and 
(v) after consideration of such public 
views and comments, revise such rec-
ommendations as necessary. 
(C) 
TRANSMITTAL
OF
RECOMMENDA-
TIONS.—Not later than January 15, 2012, the 
Secretary shall transmit to Congress the revised 
recommendations under subparagraph (B), a 
summary of the views and comments received 
under such subparagraph, and any changes 
made to the recommendations in response to such 
views and comments. 
(2) ESTABLISHMENT OF USER FEE PROGRAM.— 
It is the sense of the Senate that, based on the rec-
ommendations transmitted to Congress by the Sec-
retary pursuant to paragraph (1)(C), Congress should 
authorize a program, effective on October 1, 2012, for 
the collection of user fees relating to the submission of 
biosimilar biological product applications under sec-
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tion 351(k) of the Public Health Service Act (as 
added by this Act). 
(3) TRANSITIONAL PROVISIONS FOR USER FEES 
FOR BIOSIMILAR BIOLOGICAL PRODUCTS.— 
(A) APPLICATION
OF
THE
PRESCRIPTION 
DRUG
USER
FEE
PROVISIONS.—Section 
735(1)(B) of the Federal Food, Drug, and Cos-
metic Act (21 U.S.C. 379g(1)(B)) is amended by 
striking ‘‘section 351’’ and inserting ‘‘subsection 
(a) or (k) of section 351’’. 
(B) EVALUATION OF COSTS OF REVIEWING 
BIOSIMILAR
BIOLOGICAL
PRODUCT
APPLICA-
TIONS.—During the period beginning on the date 
of enactment of this Act and ending on October 
1, 2010, the Secretary shall collect and evaluate 
data regarding the costs of reviewing applica-
tions for biological products submitted under sec-
tion 351(k) of the Public Health Service Act (as 
added by this Act) during such period. 
(C) AUDIT.— 
(i) IN GENERAL.—On the date that is 
2 years after first receiving a user fee appli-
cable to an application for a biological 
product under section 351(k) of the Public 
Health Service Act (as added by this Act), 
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and on a biennial basis thereafter until Oc-
tober 1, 2013, the Secretary shall perform 
an audit of the costs of reviewing such ap-
plications under such section 351(k). Such 
an audit shall compare— 
(I) the costs of reviewing such ap-
plications under such section 351(k) to 
the amount of the user fee applicable to 
such applications; and 
(II)(aa) such ratio determined 
under subclause (I); to 
(bb) the ratio of the costs of re-
viewing applications for biological 
products under section 351(a) of such 
Act (as amended by this Act) to the 
amount of the user fee applicable to 
such applications under such section 
351(a). 
(ii) ALTERATION OF USER FEE.—If the 
audit performed under clause (i) indicates 
that the ratios compared under subclause 
(II) of such clause differ by more than 5 
percent, then the Secretary shall alter the 
user fee applicable to applications sub-
mitted under such section 351(k) to more 
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appropriately account for the costs of re-
viewing such applications. 
(iii) ACCOUNTING
STANDARDS.—The 
Secretary shall perform an audit under 
clause (i) in conformance with the account-
ing principles, standards, and requirements 
prescribed by the Comptroller General of the 
United States under section 3511 of title 31, 
United State Code, to ensure the validity of 
any potential variability. 
(4) AUTHORIZATION
OF
APPROPRIATIONS.— 
There is authorized to be appropriated to carry out 
this subsection such sums as may be necessary for 
each of fiscal years 2010 through 2012. 
(g) PEDIATRIC STUDIES OF BIOLOGICAL PRODUCTS.— 
(1) IN
GENERAL.—Section 351 of the Public 
Health Service Act (42 U.S.C. 262) is amended by 
adding at the end the following: 
‘‘(m) PEDIATRIC STUDIES.— 
‘‘(1) APPLICATION
OF
CERTAIN
PROVISIONS.— 
The provisions of subsections (a), (d), (e), (f), (i), (j), 
(k), (l), (p), and (q) of section 505A of the Federal 
Food, Drug, and Cosmetic Act shall apply with re-
spect to the extension of a period under paragraphs 
(2) and (3) to the same extent and in the same man-
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ner as such provisions apply with respect to the ex-
tension of a period under subsection (b) or (c) of sec-
tion 505A of the Federal Food, Drug, and Cosmetic 
Act. 
‘‘(2) MARKET EXCLUSIVITY FOR NEW BIOLOGICAL 
PRODUCTS.—If, prior to approval of an application 
that is submitted under subsection (a), the Secretary 
determines that information relating to the use of a 
new biological product in the pediatric population 
may produce health benefits in that population, the 
Secretary makes a written request for pediatric stud-
ies (which shall include a timeframe for completing 
such studies), the applicant agrees to the request, such 
studies are completed using appropriate formulations 
for each age group for which the study is requested 
within any such timeframe, and the reports thereof 
are submitted and accepted in accordance with sec-
tion 505A(d)(3) of the Federal Food, Drug, and Cos-
metic Act— 
‘‘(A) the periods for such biological product 
referred to in subsection (k)(7) are deemed to be 
4 years and 6 months rather than 4 years and 
12 years and 6 months rather than 12 years; 
and 
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‘‘(B) if the biological product is designated 
under section 526 for a rare disease or condition, 
the period for such biological product referred to 
in section 527(a) is deemed to be 7 years and 6 
months rather than 7 years. 
‘‘(3) MARKET EXCLUSIVITY FOR ALREADY-MAR-
KETED BIOLOGICAL PRODUCTS.—If the Secretary de-
termines that information relating to the use of a li-
censed biological product in the pediatric population 
may produce health benefits in that population and 
makes a written request to the holder of an approved 
application under subsection (a) for pediatric studies 
(which shall include a timeframe for completing such 
studies), the holder agrees to the request, such studies 
are completed using appropriate formulations for 
each age group for which the study is requested with-
in any such timeframe, and the reports thereof are 
submitted and accepted in accordance with section 
505A(d)(3) of the Federal Food, Drug, and Cosmetic 
Act— 
‘‘(A) the periods for such biological product 
referred to in subsection (k)(7) are deemed to be 
4 years and 6 months rather than 4 years and 
12 years and 6 months rather than 12 years; 
and 
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‘‘(B) if the biological product is designated 
under section 526 for a rare disease or condition, 
the period for such biological product referred to 
in section 527(a) is deemed to be 7 years and 6 
months rather than 7 years. 
‘‘(4) EXCEPTION.—The Secretary shall not ex-
tend a period referred to in paragraph (2)(A), (2)(B), 
(3)(A), or (3)(B) if the determination under section 
505A(d)(3) is made later than 9 months prior to the 
expiration of such period.’’. 
(2) 
STUDIES
REGARDING
PEDIATRIC
RE-
SEARCH.— 
(A) PROGRAM
FOR
PEDIATRIC
STUDY
OF 
DRUGS.—Subsection (a)(1) of section 409I of the 
Public Health Service Act (42 U.S.C. 284m) is 
amended by inserting ‘‘, biological products,’’ 
after ‘‘including drugs’’. 
(B) INSTITUTE OF MEDICINE STUDY.—Sec-
tion 505A(p) of the Federal Food, Drug, and 
Cosmetic Act (21 U.S.C. 355b(p)) is amended by 
striking paragraphs (4) and (5) and inserting 
the following: 
‘‘(4) review and assess the number and impor-
tance of biological products for children that are being 
tested as a result of the amendments made by the Bio-
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logics Price Competition and Innovation Act of 2009 
and the importance for children, health care pro-
viders, parents, and others of labeling changes made 
as a result of such testing; 
‘‘(5) review and assess the number, importance, 
and prioritization of any biological products that are 
not being tested for pediatric use; and 
‘‘(6) offer recommendations for ensuring pedi-
atric testing of biological products, including consid-
eration of any incentives, such as those provided 
under this section or section 351(m) of the Public 
Health Service Act.’’. 
(h) ORPHAN PRODUCTS.—If a reference product, as de-
fined in section 351 of the Public Health Service Act (42 
U.S.C. 262) (as amended by this Act) has been designated 
under section 526 of the Federal Food, Drug, and Cosmetic 
Act (21 U.S.C. 360bb) for a rare disease or condition, a 
biological product seeking approval for such disease or con-
dition under subsection (k) of such section 351 as biosimilar 
to, or interchangeable with, such reference product may be 
licensed by the Secretary only after the expiration for such 
reference product of the later of— 
(1) the 7-year period described in section 527(a) 
of the Federal Food, Drug, and Cosmetic Act (21 
U.S.C. 360cc(a)); and 
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(2) the 12-year period described in subsection 
(k)(7) of such section 351. 
SEC. 7003. SAVINGS. 
(a) DETERMINATION.—The Secretary of the Treasury, 
in consultation with the Secretary of Health and Human 
Services, shall for each fiscal year determine the amount 
of savings to the Federal Government as a result of the en-
actment of this subtitle. 
(b) USE.—Notwithstanding any other provision of this 
subtitle (or an amendment made by this subtitle), the sav-
ings to the Federal Government generated as a result of the 
enactment of this subtitle shall be used for deficit reduction. 
Subtitle B—More Affordable Medi-
cines for Children and Under-
served Communities 
SEC. 7101. EXPANDED PARTICIPATION IN 340B PROGRAM. 
(a) EXPANSION OF COVERED ENTITIES RECEIVING 
DISCOUNTED PRICES.—Section 340B(a)(4) of the Public 
Health Service Act (42 U.S.C. 256b(a)(4)) is amended by 
adding at the end the following: 
‘‘(M) A children’s hospital excluded from the 
Medicare prospective payment system pursuant 
to section 1886(d)(1)(B)(iii) of the Social Secu-
rity Act, or a free-standing cancer hospital ex-
cluded from the Medicare prospective payment 
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system pursuant to section 1886(d)(1)(B)(v) of 
the Social Security Act, that would meet the re-
quirements of subparagraph (L), including the 
disproportionate share adjustment percentage re-
quirement under clause (ii) of such subpara-
graph, if the hospital were a subsection (d) hos-
pital as defined by section 1886(d)(1)(B) of the 
Social Security Act. 
‘‘(N) An entity that is a critical access hos-
pital (as determined under section 1820(c)(2) of 
the Social Security Act), and that meets the re-
quirements of subparagraph (L)(i). 
‘‘(O) An entity that is a rural referral cen-
ter, as defined by section 1886(d)(5)(C)(i) of the 
Social Security Act, or a sole community hos-
pital, as defined by section 1886(d)(5)(C)(iii) of 
such Act, and that both meets the requirements 
of subparagraph (L)(i) and has a dispropor-
tionate share adjustment percentage equal to or 
greater than 8 percent.’’. 
(b) EXTENSION OF DISCOUNT TO INPATIENT DRUGS.— 
Section 340B of the Public Health Service Act (42 U.S.C. 
256b) is amended— 
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(1) in paragraphs (2), (5), (7), and (9) of sub-
section (a), by striking ‘‘outpatient’’ each place it ap-
pears; and 
(2) in subsection (b)— 
(A) by striking ‘‘OTHER DEFINITION’’ and 
all that follows through ‘‘In this section’’ and in-
serting the following: ‘‘OTHER DEFINITIONS.— 
‘‘(1) IN GENERAL.—In this section’’; and 
(B) by adding at the end the following new 
paragraph: 
‘‘(2) COVERED DRUG.—In this section, the term 
‘covered drug’— 
‘‘(A) means a covered outpatient drug (as 
defined in section 1927(k)(2) of the Social Secu-
rity Act); and 
‘‘(B) includes, notwithstanding paragraph 
(3)(A) of section 1927(k) of such Act, a drug 
used in connection with an inpatient or out-
patient service provided by a hospital described 
in subparagraph (L), (M), (N), or (O) of sub-
section (a)(4) that is enrolled to participate in 
the drug discount program under this section.’’. 
(c) PROHIBITION ON GROUP PURCHASING ARRANGE-
MENTS.—Section 340B(a) of the Public Health Service Act 
(42 U.S.C. 256b(a)) is amended— 
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(1) in paragraph (4)(L)— 
(A) in clause (i), by adding ‘‘and’’ at the 
end; 
(B) in clause (ii), by striking ‘‘; and’’ and 
inserting a period; and 
(C) by striking clause (iii); and 
(2) in paragraph (5), as amended by subsection 
(b)— 
(A) by redesignating subparagraphs (C) 
and (D) as subparagraphs (D) and (E); respec-
tively; and 
(B) by inserting after subparagraph (B), 
the following: 
‘‘(C) PROHIBITION ON GROUP PURCHASING 
ARRANGEMENTS.— 
‘‘(i) IN
GENERAL.—A hospital de-
scribed in subparagraph (L), (M), (N), or 
(O) of paragraph (4) shall not obtain cov-
ered outpatient drugs through a group pur-
chasing organization or other group pur-
chasing arrangement, except as permitted or 
provided for pursuant to clauses (ii) or 
(iii). 
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‘‘(ii) INPATIENT
DRUGS.—Clause (i) 
shall not apply to drugs purchased for in-
patient use. 
‘‘(iii) 
EXCEPTIONS.—The 
Secretary 
shall establish reasonable exceptions to 
clause (i)— 
‘‘(I) with respect to a covered out-
patient drug that is unavailable to be 
purchased through the program under 
this section due to a drug shortage 
problem, manufacturer noncompliance, 
or any other circumstance beyond the 
hospital’s control; 
‘‘(II) to facilitate generic substi-
tution when a generic covered out-
patient drug is available at a lower 
price; or 
‘‘(III) to reduce in other ways the 
administrative burdens of managing 
both inventories of drugs subject to this 
section and inventories of drugs that 
are not subject to this section, so long 
as the exceptions do not create a dupli-
cate discount problem in violation of 
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subparagraph (A) or a diversion prob-
lem in violation of subparagraph (B). 
‘‘(iv) 
PURCHASING
ARRANGEMENTS 
FOR
INPATIENT
DRUGS.—The Secretary 
shall ensure that a hospital described in 
subparagraph (L), (M), (N), or (O) of sub-
section (a)(4) that is enrolled to participate 
in the drug discount program under this 
section shall have multiple options for pur-
chasing covered drugs for inpatients, in-
cluding by utilizing a group purchasing or-
ganization or other group purchasing ar-
rangement, establishing and utilizing its 
own group purchasing program, purchasing 
directly from a manufacturer, and any 
other purchasing arrangements that the Sec-
retary determines is appropriate to ensure 
access to drug discount pricing under this 
section for inpatient drugs taking into ac-
count the particular needs of small and 
rural hospitals.’’. 
(d) MEDICAID CREDITS ON INPATIENT DRUGS.—Sec-
tion 340B of the Public Health Service Act (42 U.S.C. 256b) 
is amended by striking subsection (c) and inserting the fol-
lowing: 
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‘‘(c) MEDICAID CREDIT.—Not later than 90 days after 
the date of filing of the hospital’s most recently filed Medi-
care cost report, the hospital shall issue a credit as deter-
mined by the Secretary to the State Medicaid program for 
inpatient covered drugs provided to Medicaid recipients.’’. 
(e) EFFECTIVE DATES.— 
(1) IN
GENERAL.—The amendments made by 
this section and section 7102 shall take effect on Jan-
uary 1, 2010, and shall apply to drugs purchased on 
or after January 1, 2010. 
(2) EFFECTIVENESS.—The amendments made by 
this section and section 7102 shall be effective and 
shall be taken into account in determining whether a 
manufacturer is deemed to meet the requirements of 
section 340B(a) of the Public Health Service Act (42 
U.S.C. 256b(a)), notwithstanding any other provision 
of law. 
SEC. 7102. IMPROVEMENTS TO 340B PROGRAM INTEGRITY. 
(a) INTEGRITY IMPROVEMENTS.—Subsection (d) of sec-
tion 340B of the Public Health Service Act (42 U.S.C. 256b) 
is amended to read as follows: 
‘‘(d) IMPROVEMENTS IN PROGRAM INTEGRITY.— 
‘‘(1) MANUFACTURER COMPLIANCE.— 
‘‘(A) IN GENERAL.—From amounts appro-
priated under paragraph (4), the Secretary shall 
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provide for improvements in compliance by 
manufacturers with the requirements of this sec-
tion in order to prevent overcharges and other 
violations of the discounted pricing requirements 
specified in this section. 
‘‘(B) IMPROVEMENTS.—The improvements 
described in subparagraph (A) shall include the 
following: 
‘‘(i) The development of a system to en-
able the Secretary to verify the accuracy of 
ceiling prices calculated by manufacturers 
under subsection (a)(1) and charged to cov-
ered entities, which shall include the fol-
lowing: 
‘‘(I) Developing and publishing 
through an appropriate policy or regu-
latory 
issuance, 
precisely 
defined 
standards and methodology for the cal-
culation of ceiling prices under such 
subsection. 
‘‘(II) Comparing regularly the 
ceiling prices calculated by the Sec-
retary with the quarterly pricing data 
that is reported by manufacturers to 
the Secretary. 
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‘‘(III) Performing spot checks of 
sales transactions by covered entities. 
‘‘(IV) Inquiring into the cause of 
any pricing discrepancies that may be 
identified and either taking, or requir-
ing manufacturers to take, such correc-
tive action as is appropriate in re-
sponse to such price discrepancies. 
‘‘(ii) The establishment of procedures 
for manufacturers to issue refunds to cov-
ered entities in the event that there is an 
overcharge by the manufacturers, including 
the following: 
‘‘(I) Providing the Secretary with 
an explanation of why and how the 
overcharge occurred, how the refunds 
will be calculated, and to whom the re-
funds will be issued. 
‘‘(II) Oversight by the Secretary 
to ensure that the refunds are issued 
accurately and within a reasonable pe-
riod of time, both in routine instances 
of retroactive adjustment to relevant 
pricing data and exceptional cir-
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cumstances such as erroneous or inten-
tional overcharging for covered drugs. 
‘‘(iii) The provision of access through 
the Internet website of the Department of 
Health and Human Services to the applica-
ble ceiling prices for covered drugs as cal-
culated and verified by the Secretary in ac-
cordance with this section, in a manner 
(such as through the use of password protec-
tion) that limits such access to covered enti-
ties and adequately assures security and 
protection of privileged pricing data from 
unauthorized re-disclosure. 
‘‘(iv) The development of a mechanism 
by which— 
‘‘(I) rebates and other discounts 
provided by manufacturers to other 
purchasers subsequent to the sale of 
covered drugs to covered entities are re-
ported to the Secretary; and 
‘‘(II) appropriate credits and re-
funds are issued to covered entities if 
such discounts or rebates have the effect 
of lowering the applicable ceiling price 
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for the relevant quarter for the drugs 
involved. 
‘‘(v) Selective auditing of manufactur-
ers and wholesalers to ensure the integrity 
of the drug discount program under this 
section. 
‘‘(vi) The imposition of sanctions in 
the form of civil monetary penalties, 
which— 
‘‘(I) shall be assessed according to 
standards established in regulations to 
be promulgated by the Secretary not 
later than 180 days after the date of 
enactment of the Patient Protection 
and Affordable Care Act; 
‘‘(II) shall not exceed $5,000 for 
each instance of overcharging a covered 
entity that may have occurred; and 
‘‘(III) shall apply to any manu-
facturer with an agreement under this 
section that knowingly and inten-
tionally charges a covered entity a 
price for purchase of a drug that ex-
ceeds the maximum applicable price 
under subsection (a)(1). 
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‘‘(2) COVERED ENTITY COMPLIANCE.— 
‘‘(A) IN GENERAL.—From amounts appro-
priated under paragraph (4), the Secretary shall 
provide for improvements in compliance by cov-
ered entities with the requirements of this section 
in order to prevent diversion and violations of 
the duplicate discount provision and other re-
quirements specified under subsection (a)(5). 
‘‘(B) IMPROVEMENTS.—The improvements 
described in subparagraph (A) shall include the 
following: 
‘‘(i) The development of procedures to 
enable and require covered entities to regu-
larly update (at least annually) the infor-
mation on the Internet website of the De-
partment of Health and Human Services 
relating to this section. 
‘‘(ii) The development of a system for 
the Secretary to verify the accuracy of in-
formation regarding covered entities that is 
listed on the website described in clause (i). 
‘‘(iii) The development of more detailed 
guidance describing methodologies and op-
tions available to covered entities for billing 
covered drugs to State Medicaid agencies in 
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a manner that avoids duplicate discounts 
pursuant to subsection (a)(5)(A). 
‘‘(iv) The establishment of a single, 
universal, and standardized identification 
system by which each covered entity site can 
be identified by manufacturers, distributors, 
covered entities, and the Secretary for pur-
poses of facilitating the ordering, pur-
chasing, and delivery of covered drugs 
under this section, including the processing 
of chargebacks for such drugs. 
‘‘(v) The imposition of sanctions, in 
appropriate cases as determined by the Sec-
retary, additional to those to which covered 
entities 
are 
subject 
under 
subsection 
(a)(5)(E), through one or more of the fol-
lowing actions: 
‘‘(I) Where a covered entity know-
ingly and intentionally violates sub-
section (a)(5)(B), the covered entity 
shall be required to pay a monetary 
penalty to a manufacturer or manufac-
turers in the form of interest on sums 
for which the covered entity is found 
liable under subsection (a)(5)(E), such 
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interest to be compounded monthly and 
equal to the current short term interest 
rate as determined by the Federal Re-
serve for the time period for which the 
covered entity is liable. 
‘‘(II) Where the Secretary deter-
mines 
a 
violation 
of 
subsection 
(a)(5)(B) was systematic and egregious 
as well as knowing and intentional, re-
moving the covered entity from the 
drug discount program under this sec-
tion and disqualifying the entity from 
re-entry into such program for a rea-
sonable period of time to be determined 
by the Secretary. 
‘‘(III) Referring matters to appro-
priate Federal authorities within the 
Food and Drug Administration, the 
Office of Inspector General of Depart-
ment of Health and Human Services, 
or other Federal agencies for consider-
ation of appropriate action under 
other Federal statutes, such as the Pre-
scription Drug Marketing Act (21 
U.S.C. 353). 
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‘‘(3) ADMINISTRATIVE
DISPUTE
RESOLUTION 
PROCESS.— 
‘‘(A) IN
GENERAL.—Not later than 180 
days after the date of enactment of the Patient 
Protection and Affordable Care Act, the Sec-
retary shall promulgate regulations to establish 
and implement an administrative process for the 
resolution of claims by covered entities that they 
have been overcharged for drugs purchased under 
this section, and claims by manufacturers, after 
the conduct of audits as authorized by subsection 
(a)(5)(D), of violations of subsections (a)(5)(A) 
or (a)(5)(B), including appropriate procedures 
for the provision of remedies and enforcement of 
determinations made pursuant to such process 
through mechanisms and sanctions described in 
paragraphs (1)(B) and (2)(B). 
‘‘(B) DEADLINES AND PROCEDURES.—Reg-
ulations promulgated by the Secretary under 
subparagraph (A) shall— 
‘‘(i) designate or establish a decision- 
making official or decision-making body 
within the Department of Health and 
Human Services to be responsible for re-
viewing and finally resolving claims by cov-
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ered entities that they have been charged 
prices for covered drugs in excess of the ceil-
ing price described in subsection (a)(1), and 
claims by manufacturers that violations of 
subsection (a)(5)(A) or (a)(5)(B) have oc-
curred; 
‘‘(ii) establish such deadlines and pro-
cedures as may be necessary to ensure that 
claims shall be resolved fairly, efficiently, 
and expeditiously; 
‘‘(iii) establish procedures by which a 
covered entity may discover and obtain such 
information and documents from manufac-
turers and third parties as may be relevant 
to demonstrate the merits of a claim that 
charges for a manufacturer’s product have 
exceeded the applicable ceiling price under 
this section, and may submit such docu-
ments and information to the administra-
tive official or body responsible for adjudi-
cating such claim; 
‘‘(iv) require that a manufacturer con-
duct an audit of a covered entity pursuant 
to subsection (a)(5)(D) as a prerequisite to 
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initiating administrative dispute resolution 
proceedings against a covered entity; 
‘‘(v) permit the official or body des-
ignated under clause (i), at the request of a 
manufacturer or manufacturers, to consoli-
date claims brought by more than one man-
ufacturer against the same covered entity 
where, in the judgment of such official or 
body, consolidation is appropriate and con-
sistent with the goals of fairness and econ-
omy of resources; and 
‘‘(vi) include provisions and proce-
dures to permit multiple covered entities to 
jointly assert claims of overcharges by the 
same manufacturer for the same drug or 
drugs in one administrative proceeding, 
and permit such claims to be asserted on be-
half of covered entities by associations or or-
ganizations representing the interests of 
such covered entities and of which the cov-
ered entities are members. 
‘‘(C) FINALITY OF ADMINISTRATIVE RESO-
LUTION.—The administrative resolution of a 
claim or claims under the regulations promul-
gated under subparagraph (A) shall be a final 
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agency decision and shall be binding upon the 
parties involved, unless invalidated by an order 
of a court of competent jurisdiction. 
‘‘(4) AUTHORIZATION
OF
APPROPRIATIONS.— 
There are authorized to be appropriated to carry out 
this subsection, such sums as may be necessary for fis-
cal year 2010 and each succeeding fiscal year.’’. 
(b) CONFORMING AMENDMENTS.—Section 340B(a) of 
the Public Health Service Act (42 U.S.C. 256b(a)) is 
amended— 
(1) in subsection (a)(1), by adding at the end the 
following: ‘‘Each such agreement shall require that the 
manufacturer furnish the Secretary with reports, on 
a quarterly basis, of the price for each covered drug 
subject to the agreement that, according to the manu-
facturer, represents the maximum price that covered 
entities may permissibly be required to pay for the 
drug (referred to in this section as the ‘ceiling price’), 
and shall require that the manufacturer offer each 
covered entity covered drugs for purchase at or below 
the applicable ceiling price if such drug is made 
available to any other purchaser at any price.’’; and 
(2) in the first sentence of subsection (a)(5)(E), 
as redesignated by section 7101(c), by inserting ‘‘after 
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audit as described in subparagraph (D) and’’ after 
‘‘finds,’’. 
SEC. 7103. GAO STUDY TO MAKE RECOMMENDATIONS ON 
IMPROVING THE 340B PROGRAM. 
(a) REPORT.—Not later than 18 months after the date 
of enactment of this Act, the Comptroller General of the 
United States shall submit to Congress a report that exam-
ines whether those individuals served by the covered entities 
under the program under section 340B of the Public Health 
Service Act (42 U.S.C. 256b) (referred to in this section 
as the ‘‘340B program’’) are receiving optimal health care 
services. 
(b) RECOMMENDATIONS.—The report under subsection 
(a) shall include recommendations on the following: 
(1) Whether the 340B program should be ex-
panded since it is anticipated that the 47,000,000 in-
dividuals who are uninsured as of the date of enact-
ment of this Act will have health care coverage once 
this Act is implemented. 
(2) Whether mandatory sales of certain products 
by the 340B program could hinder patients access to 
those therapies through any provider. 
(3) Whether income from the 340B program is 
being used by the covered entities under the program 
to further the program objectives. 
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TITLE VIII—CLASS ACT 
SEC. 8001. SHORT TITLE OF TITLE. 
This title may be cited as the ‘‘Community Living As-
sistance Services and Supports Act’’ or the ‘‘CLASS Act’’. 
SEC. 8002. ESTABLISHMENT OF NATIONAL VOLUNTARY IN-
SURANCE PROGRAM FOR PURCHASING COM-
MUNITY LIVING ASSISTANCE SERVICES AND 
SUPPORT. 
(a) ESTABLISHMENT OF CLASS PROGRAM.— 
(1) IN GENERAL.—The Public Health Service Act 
(42 U.S.C. 201 et seq.), as amended by section 
4302(a), is amended by adding at the end the fol-
lowing: 
‘‘TITLE XXXII—COMMUNITY LIV-
ING 
ASSISTANCE 
SERVICES 
AND SUPPORTS 
‘‘SEC. 3201. PURPOSE. 
‘‘The purpose of this title is to establish a national vol-
untary insurance program for purchasing community liv-
ing assistance services and supports in order to— 
‘‘(1) provide individuals with functional limita-
tions with tools that will allow them to maintain 
their personal and financial independence and live in 
the community through a new financing strategy for 
community living assistance services and supports; 
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‘‘(2) establish an infrastructure that will help 
address the Nation’s community living assistance 
services and supports needs; 
‘‘(3) alleviate burdens on family caregivers; and 
‘‘(4) address institutional bias by providing a fi-
nancing mechanism that supports personal choice and 
independence to live in the community. 
‘‘SEC. 3202. DEFINITIONS. 
‘‘In this title: 
‘‘(1) ACTIVE ENROLLEE.—The term ‘active en-
rollee’ means an individual who is enrolled in the 
CLASS program in accordance with section 3204 and 
who has paid any premiums due to maintain such 
enrollment. 
‘‘(2) ACTIVELY EMPLOYED.—The term ‘actively 
employed’ means an individual who— 
‘‘(A) is reporting for work at the individ-
ual’s usual place of employment or at another lo-
cation to which the individual is required to 
travel because of the individual’s employment (or 
in the case of an individual who is a member of 
the uniformed services, is on active duty and is 
physically able to perform the duties of the indi-
vidual’s position); and 
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‘‘(B) is able to perform all the usual and 
customary duties of the individual’s employment 
on the individual’s regular work schedule. 
‘‘(3) ACTIVITIES
OF
DAILY
LIVING.—The term 
‘activities of daily living’ means each of the following 
activities specified in section 7702B(c)(2)(B) of the 
Internal Revenue Code of 1986: 
‘‘(A) Eating. 
‘‘(B) Toileting. 
‘‘(C) Transferring. 
‘‘(D) Bathing. 
‘‘(E) Dressing. 
‘‘(F) Continence. 
‘‘(4) CLASS PROGRAM.—The term ‘CLASS pro-
gram’ means the program established under this title. 
‘‘(5) ELIGIBILITY
ASSESSMENT
SYSTEM.—The 
term ‘Eligibility Assessment System’ means the entity 
established by the Secretary under section 3205(a)(2) 
to make functional eligibility determinations for the 
CLASS program. 
‘‘(6) ELIGIBLE BENEFICIARY.— 
‘‘(A) IN GENERAL.—The term ‘eligible bene-
ficiary’ means any individual who is an active 
enrollee in the CLASS program and, as of the 
date described in subparagraph (B)— 
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