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 
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. 
‘‘(3) COORDINATION OF DATA COLLECTION.— 
To the extent feasible, as determined by the Sec-
retary, the Secretary shall ensure that data collected 
pursuant to this subsection is coordinated with, and 
not duplicative of, other Federal data collection ef-
forts. 
‘‘(c) CONTRACT WITH THIRD PARTIES.—
‘‘(1) IN GENERAL.—The Secretary may 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 
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. 
‘‘SEC. 
1197. 
VOLUNTARY 
PARTICIPATION 
BY 
OTHER 
HEALTH PLANS. 
‘‘(a) AGREEMENT
TO PARTICIPATE UNDER PRO-
GRAM.— 
‘‘(1) IN GENERAL.—Subject to paragraph (2), 
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 group or individual health insurance cov-
erage (as such terms are defined in section 2791 of 
the Public Health Service Act), with respect to a 
price applicability period and a selected drug with 
respect to such period— 
‘‘(A) with respect to such selected drug 
furnished or dispensed at a pharmacy or by 
mail order service if coverage is provided under 
such plan or coverage during such period for 
such selected drug as so furnished or dispensed; 
and
‘‘(B) with respect to such selected drug 
furnished or administered by a hospital, physi-
cian, or other provider of services or supplier if 
coverage is provided under such plan or cov-
erage during such period for such selected drug 
as so furnished or administered. 
‘‘(2) OPTING OUT OF AGREEMENT.—The Sec-
retary shall not be treated as having in effect an 
agreement under the program under this part with 
a group health plan or health insurance issuer offer-
ing group or individual health insurance coverage 
with respect to a price applicability period and a se-
lected drug with respect to such period if such a 
plan or issuer affirmatively elects, through a process 
specified by the Secretary, not to participate under 
the program with respect to such period and drug. 
‘‘(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 
health insurance issuer offering group or individual health 
insurance coverage, with respect to which coverage is pro-
vided under such plan or coverage for such drug, that has
elected under subsection (a) not to participate 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 
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 who with 
respect to such drug is described in subparagraph 
(A) of section 1191(c)(1) and who is furnished or 
dispensed 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 who with respect to such drug is de-
scribed in subparagraph (B) of such section and is 
furnished or administered such drug by such hos-
pital, physician, or provider or supplier 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 for such year by such manu-
facturer with respect to such individual or hospital, physi-
cian, 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 
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. 
‘‘(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. 
‘‘(g) GAO STUDY.—Not later than December 31, 
2025, the Comptroller General of the United States shall 
conduct a study of, and submit to Congress a report on, 
the implementation of the Fair Price Negotiation Program 
under this part.’’. 
(b) APPLICATION OF MAXIMUM FAIR PRICES AND 
CONFORMING AMENDMENTS.— 
(1) UNDER MEDICARE.— 
(A) APPLICATION
TO
PAYMENTS
UNDER 
PART B.—Section 1847A(b)(1)(B) of the Social 
Security Act (42 U.S.C. 1395w–3a(b)(1)(B)) is 
amended by inserting ‘‘or in the case of such a 
drug or biological that is a selected drug (as de-
fined in section 1192(c)), with respect to a 
price applicability period (as defined in section 
1191(b)(2)), 106 percent of the maximum fair 
price (as defined in section 1191(c)(2) applica-
ble for such drug and a plan year during such 
period’’ after ‘‘paragraph (4)’’. 
(B) EXCEPTION TO PART D 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 Secretary’’. 
(C) APPLICATION AS NEGOTIATED PRICE 
UNDER PART D.—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 prices used for payment (as de-
scribed in this subsection) shall be the max-
imum 
fair 
price 
(as 
defined 
in 
section 
1191(c)(2)) for such drug and for each plan 
year during such period.’’. 
(D) 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.— 
(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 NEGOTIATION PROGRAM AND AP-
PLICATION OF MAXIMUM FAIR PRICES. 
‘‘(a) IN GENERAL.—In the case of a group health 
plan or health insurance issuer offering group or indi-
vidual health insurance coverage that is treated under sec-
tion 1197 of the Social Security Act as having in effect 
an agreement with the Secretary under the Fair Price Ne-
gotiation 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 de-
fined 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— 
‘‘(A) if coverage of such selected drug is 
provided under such plan or coverage if the 
drug is furnished or dispensed at a pharmacy 
or by a mail order service, to the plans or cov-
erage offered by such plan or issuer, and to the 
individuals enrolled under such plans or cov-
erage, during such period, with respect to such 
selected drug, in the same manner as such pro-
visions apply to prescription drug plans and
MA–PD plans, and to individuals enrolled 
under such prescription drug plans and MA– 
PD plans during such period; and 
‘‘(B) if coverage of such selected drug is 
provided under such plan or coverage if the 
drug is furnished or administered by a hospital, 
physician, or other provider of services or sup-
plier, to the plans or coverage offered by such 
plan or issuers, to the individuals enrolled 
under such plans or coverage, and to hospitals, 
physicians, and other providers of services and 
suppliers during such period, with respect to 
such drug in the same manner as such provi-
sions apply to the Secretary, to individuals enti-
tled to benefits under part A of title XVIII or 
enrolled under part B of such title, and to hos-
pitals, physicians, and other providers and sup-
pliers participating under title XVIII during 
such period; 
‘‘(2) the plan or issuer shall apply any cost- 
sharing responsibilities under such plan or coverage, 
with respect to such selected drug, by substituting 
an amount not more than the maximum fair price 
negotiated under such part E of title XI for such 
drug in lieu of the drug price upon which the cost-
sharing would have otherwise applied, and such cost- 
sharing responsibilities with respect to such selected 
drug may not exceed such maximum fair price; and 
‘‘(3) the Secretary shall apply the provisions of 
such part E to such plan, issuer, and coverage, such 
individuals so enrolled in such plans and coverage, 
and such hospitals, physicians, and other providers 
and suppliers participating in such plans and cov-
erage. 
‘‘(b) NOTIFICATION REGARDING NONPARTICIPATION 
IN FAIR PRICE NEGOTIATION PROGRAM.—A group health 
plan or a health insurance issuer offering group or indi-
vidual 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 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.’’. 
(B) ERISA.— 
(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 NEGOTIATION PROGRAM AND APPLI-
CATION 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 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, as 
applicable— 
‘‘(A) if coverage of such selected drug is 
provided under such plan or coverage if the 
drug is furnished or dispensed at a pharmacy 
or by a mail order service, to the plans or cov-
erage offered by such plan or issuer, and to the 
individuals enrolled under such plans or cov-
erage, during such period, with respect to such
selected drug, in the same manner as such pro-
visions apply to prescription drug plans and 
MA–PD plans, and to individuals enrolled 
under such prescription drug plans and MA– 
PD plans during such period; and 
‘‘(B) if coverage of such selected drug is 
provided under such plan or coverage if the 
drug is furnished or administered by a hospital, 
physician, or other provider of services or sup-
plier, to the plans or coverage offered by such 
plan or issuers, to the individuals enrolled 
under such plans or coverage, and to hospitals, 
physicians, and other providers of services and 
suppliers during such period, with respect to 
such drug in the same manner as such provi-
sions apply to the Secretary, to individuals enti-
tled to benefits under part A of title XVIII or 
enrolled under part B of such title, and to hos-
pitals, physicians, and other providers and sup-
pliers participating under title XVIII during 
such period; 
‘‘(2) the plan or issuer shall apply any cost- 
sharing responsibilities under such plan or coverage, 
with respect to such selected drug, by substituting 
an amount not more than the maximum fair price
negotiated under such part E of title XI for such 
drug in lieu of the drug price upon which the cost- 
sharing would have otherwise applied, and such cost- 
sharing responsibilities with respect to such selected 
drug may not exceed such maximum fair price; and 
‘‘(3) the Secretary shall apply the provisions of 
such part E to such plan, issuer, and coverage, and 
such individuals so enrolled in such plans. 
‘‘(b) NOTIFICATION REGARDING NONPARTICIPATION 
IN FAIR PRICE NEGOTIATION PROGRAM.—A group health 
plan or a health insurance issuer offering group health in-
surance 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 Secu-
rity Act by the plan or issuer to not participate in the 
Fair 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 pro-
vided under such plan or coverage before the beginning 
of the plan year for which such election was made.’’. 
(ii) APPLICATION
TO
RETIREE
AND 
CERTAIN SMALL GROUP HEALTH PLANS.— 
Section 732(a) of the Employee Retire-
ment Income Security Act of 1974 (29 
U.S.C. 1191a(a)) is amended by striking
‘‘section 711’’ and inserting ‘‘sections 711 
and 716’’. 
(iii) 
CLERICAL
AMENDMENT.—The 
table of sections for subpart B of part 7 of 
subtitle B of title I of the Employee Re-
tirement Income Security Act of 1974 is 
amended by adding at the end the fol-
lowing: 
‘‘Sec. 716. Fair Price 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 NEGOTIATION PROGRAM AND AP-
PLICATION 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 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 respect to 
which coverage is provided under such plan—
‘‘(1) the provisions of such part shall apply, as 
applicable— 
‘‘(A) if coverage of such selected drug is 
provided under such plan if the drug is fur-
nished or dispensed at a pharmacy or by a mail 
order service, to the plan, and to the individuals 
enrolled under such plan during such period, 
with respect to such selected drug, in the same 
manner as such provisions apply to prescription 
drug plans and MA–PD plans, and to individ-
uals enrolled under such prescription drug 
plans and MA–PD plans during such period; 
and 
‘‘(B) if coverage of such selected drug is 
provided under such plan if the drug is fur-
nished or administered by a hospital, physician, 
or other provider of services or supplier, to the 
plan, to the individuals enrolled under such 
plan, and to hospitals, physicians, and other 
providers of services and suppliers during such 
period, with respect to such drug in the same 
manner as such provisions apply to the Sec-
retary, to individuals entitled to benefits under 
part A of title XVIII or enrolled under part B 
of such title, and to hospitals, physicians, and
other providers and suppliers participating 
under title XVIII during such period; 
‘‘(2) the plan shall apply any cost-sharing re-
sponsibilities under such plan, with respect to such 
selected drug, by substituting an amount not more 
than the maximum fair price negotiated under such 
part E of title XI for such drug in lieu of the drug 
price upon which the cost-sharing would have other-
wise applied, and such cost-sharing responsibilities 
with respect to such selected drug may not exceed 
such maximum fair price; and 
‘‘(3) the Secretary shall apply the provisions of 
such part E to such plan and such individuals so en-
rolled in such plan. 
‘‘(b) NOTIFICATION REGARDING NONPARTICIPATION 
IN FAIR PRICE NEGOTIATION PROGRAM.—A group health 
plan 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 to not participate in the Fair 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.’’.
(ii) APPLICATION
TO
RETIREE
AND 
CERTAIN SMALL GROUP HEALTH PLANS.— 
Section 9831(a)(2) of the Internal Revenue 
Code of 1986 is amended by inserting 
‘‘other than with respect to section 9816,’’ 
before ‘‘any group health plan’’. 
(iii) 
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 Negotiation Program and application of maximum fair 
prices.’’. 
(3) FAIR PRICE NEGOTIATION PROGRAM PRICES 
INCLUDED IN BEST PRICE AND AMP.—Section 1927 
of the Social Security Act (42 U.S.C. 1396r–8) is 
amended— 
(A) in subsection (c)(1)(C)(ii)— 
(i) in subclause (III), by striking at 
the end ‘‘; and’’; 
(ii) in subclause (IV), by striking at 
the end the period and inserting ‘‘; and’’; 
and 
(iii) by adding at the end the fol-
lowing new subclause: 
‘‘(V) in the case of a rebate pe-
riod and a covered outpatient drug
that is a selected drug (as defined in 
section 1192(c)) during such rebate 
period, shall be inclusive of the price 
for such drug made available from the 
manufacturer during the rebate period 
by reason of application of part E of 
title XI to any wholesaler, retailer, 
provider, health maintenance organi-
zation, nonprofit entity, or govern-
mental entity within the United 
States.’’; and 
(B) in subsection (k)(1)(B), by adding at 
the end the following new clause: 
‘‘(iii) 
CLARIFICATION.—Notwith-
standing clause (i), in the case of a rebate 
period and a covered outpatient drug that 
is a selected drug (as defined in section 
1192(c)) during such rebate period, any 
reduction in price paid during the rebate 
period to the manufacturer for the drug by 
a wholesaler or retail community pharmacy 
described in subparagraph (A) by reason of 
application of part E of title XI shall be 
included in the average manufacturer price 
for the covered outpatient drug.’’.
(4) FEHBP.—Section 8902 of title 5, United 
States Code, is amended by adding at the end the 
following: 
‘‘(p) A contract may not be made or a plan approved 
under this chapter with any carrier that has affirmatively 
elected, pursuant to section 1197 of the Social Security 
Act, not to participate in the Fair Price Negotiation Pro-
gram established under section 1191 of such Act for any 
selected drug (as that term is defined in section 1192(c) 
of such Act).’’. 
(5) OPTION OF SECRETARY OF VETERANS AF-
FAIRS TO PURCHASE COVERED DRUGS AT MAXIMUM 
FAIR
PRICES.—Section 8126 of title 38, United 
States Code, is amended— 
(A) in subsection (a)(2), by inserting ‘‘, 
subject to subsection (j),’’ after ‘‘may not ex-
ceed’’; 
(B) in subsection (d), in the matter pre-
ceding paragraph (1), by inserting ‘‘, subject to 
subsection (j)’’ after ‘‘for the procurement of 
the drug’’; and 
(C) by adding at the end the following new 
subsection: 
‘‘(j)(1) In the case of a covered drug that is a selected 
drug, for any year during the price applicability period for
such drug, if the Secretary determines that the maximum 
fair price of such drug for such year is less than the price 
for such drug otherwise in effect pursuant to this section 
(including after application of any reduction under sub-
section (a)(2) and any discount under subsection (c)), at 
the option of the Secretary, in lieu of the maximum price 
(determined after application of the reduction under sub-
section (a)(2) and any discount under subsection (c), as 
applicable) that would be permitted to be charged during 
such year for such drug pursuant to this section without 
application of this subsection, the maximum price per-
mitted to be charged during such year for such drug pur-
suant to this section shall be such maximum fair price for 
such drug and year. 
‘‘(2) For purposes of this subsection: 
‘‘(A) The term ‘maximum fair price’ means, 
with respect to a selected drug and year during the 
price applicability period for such drug, the max-
imum fair price (as defined in section 1191(c)(2) of 
the Social Security Act) for such drug and year. 
‘‘(B) The term ‘negotiation eligible drug’ has 
the meaning given such term in section 1192(d)(1) 
of the Social Security Act.
‘‘(C) The term ‘price applicability period’ has, 
with respect to a selected drug, the meaning given 
such term in section 1191(b)(2) of such Act. 
‘‘(D) The term ‘selected drug’ means, with re-
spect to a year, a drug that is a selected drug under 
section 1192(c) of such Act for such year.’’. 
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:
‘‘(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.
‘‘(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.—For purposes of 
this section, the term ‘applicable 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) SELECTED DRUG.—For purposes of this sec-
tion— 
‘‘(1) IN GENERAL.—The term ‘selected drug’ 
means any selected drug (within the meaning of sec-
tion 1192 of the Social Security Act) which is manu-
factured or produced in the United States or entered 
into the United States for consumption, use, or 
warehousing. 
‘‘(2) UNITED
STATES.—The term ‘United 
States’ has the meaning given such term by section 
4612(a)(4). 
‘‘(3) COORDINATION WITH RULES FOR POSSES-
SIONS OF THE UNITED STATES.—Rules similar to 
the rules of paragraphs (2) and (4) of section 
4132(c) shall apply for purposes of this section. 
‘‘(e) OTHER DEFINITIONS.—For purposes of this 
section, the terms ‘selected drug publication date’ and 
‘maximum fair price’ have the meaning given such terms 
in section 1191 of the Social Security Act. 
‘‘(f) 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’’. 
(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. 
SEC. 103. FAIR PRICE NEGOTIATION IMPLEMENTATION 
FUND. 
(a) IN GENERAL.—There is hereby established a Fair 
Price Negotiation Implementation Fund (referred to in
this section as the ‘‘Fund’’). The Secretary of Health and 
Human Services may obligate and expend amounts in the 
Fund to carry out this title and titles II and III (and the 
amendments made by such titles). 
(b) FUNDING.—There is authorized to be appro-
priated, and there is hereby appropriated, out of any mon-
ies in the Treasury not otherwise appropriated, to the 
Fund $3,000,000,000, to remain available until expended, 
of which— 
(1) $600,000,000 shall become available on the 
date of the enactment of this Act; 
(2) $600,000,000 shall become available on Oc-
tober 1, 2020; 
(3) $600,000,000 shall become available on Oc-
tober 1, 2021; 
(4) $600,000,000 shall become available on Oc-
tober 1, 2022; and 
(5) $600,000,000 shall become available on Oc-
tober 1, 2023. 
(c) SUPPLEMENT NOT SUPPLANT.—Any amounts 
appropriated pursuant to this section shall be in addition 
to any other amounts otherwise appropriated pursuant to 
any other provision of law.
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: 
‘‘(i) Information on the total number 
of units of the billing and payment code 
described in subparagraph (A)(i) of para-
graph (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 
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) for the 12 month period ending with 
June of the previous year; and 
‘‘(ii) for a subsequent year, shall be 
the dollar amount specified in this clause 
(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) for 
the 12 month period ending with June 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), 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 subparagraphs (B) and 
(G), the total number of units of the bill-
ing and payment code 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 
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 units 
of the billing and payment code for each part 
B rebatable drug furnished during a calendar 
quarter shall not include— 
‘‘(i) units packaged into the payment 
for a 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 furnished to an indi-
vidual, if such manufacturer, with respect 
to the furnishing of such units of such 
drug, provides for discounts under 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. 
‘‘(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. 
‘‘(G) COUNTING UNITS.— 
‘‘(i) CUT-OFF
PERIOD
TO
COUNT 
UNITS.—For purposes of subparagraph 
(A)(i), subject to clause (ii), to count the 
total number of billing units for a part B 
rebatable drug for a quarter, the Secretary 
may use a cut-off period in order to ex-
clude from such total number of billing 
units for such quarter claims for services 
furnished during such quarter that were 
not processed at an appropriate time prior 
to the end of the cut-off period. 
‘‘(ii) COUNTING
UNITS
FOR
CLAIMS 
PROCESSED
AFTER
CUT-OFF
PERIOD.—If 
the Secretary uses a cut-off period pursu-
ant to clause (i), in the case of units of a 
part B rebatable drug furnished during a 
quarter but pursuant to application of such 
cut-off period excluded for purposes of sub-
paragraph (A)(i) from the total number of 
billing units for the drug for such quarter, 
the Secretary shall count such units of
such drug so furnished in the total number 
of billing units for such drug for a subse-
quent quarter, as the Secretary determines 
appropriate. 
‘‘(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 or licensed 
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 
benchmark quarter’ were defined under para-
graph (3)(D) as the third full calendar quarter 
after the day on which the drug was first mar-
keted 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 first month 
of the first full calendar quarter after the day 
on which the drug was first marketed’. 
‘‘(B) TIMELINE
FOR
PROVISION
OF
RE-
BATES
FOR
SUBSEQUENTLY
APPROVED 
DRUGS.—In the case of a part B rebatable drug
first approved or licensed by the Food and 
Drug Administration after July 1, 2015, para-
graph (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 
amount under paragraph (1)(B) with respect to 
a part B rebatable drug that is described as 
currently in shortage on the shortage list in ef-
fect under section 506E of the Federal Food, 
Drug, and Cosmetic Act or in the case of other 
exigent circumstances, as determined 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 a price appli-
cability 
period 
(as 
defined 
in 
section 
1191(b)(2))— 
‘‘(i) for calendar quarters during such 
period for which a maximum fair price (as 
defined in section 1191(c)(2)) for such 
drug has been determined and is applied
under part E of title XI, the rebate 
amount under paragraph (1)(B) shall be 
waived; and 
‘‘(ii) in the case such drug is deter-
mined (pursuant to such section 1192(c)) 
to no longer be a selected drug, for each 
applicable year beginning after the price 
applicability period with respect to such 
drug, clause (i) of paragraph (3)(C) shall 
be applied as if the term ‘payment amount 
benchmark quarter’ were defined under 
paragraph (3)(D) as the calendar quarter 
beginning January 1 of the last year be-
ginning during such price applicability pe-
riod with respect to such selected drug 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 July of the year preceding such last 
year. 
‘‘(5) APPLICATION TO BENEFICIARY COINSUR-
ANCE.—In the case of a part B rebatable drug, if
the payment amount for a quarter exceeds the infla-
tion adjusted payment for such quarter— 
‘‘(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. 
‘‘(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: 
‘‘(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 units of the billing 
and payment code of the drugs excluded 
under paragraph (3)(B) in the rebate sys-
tem 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.’’. 
(b) AMOUNTS PAYABLE; COST-SHARING.—Section 
1833 of the Social Security Act (42 U.S.C. 1395l) is 
amended— 
(1) in subsection (a)— 
(A) in paragraph (1)— 
(i) in subparagraph (S), by striking 
‘‘with respect to’’ and inserting ‘‘subject to 
subparagraph (DD), with respect to’’; 
(ii) by striking ‘‘and (CC)’’ and in-
serting ‘‘(CC)’’; and 
(iii) by inserting before the semicolon 
at the end the following: ‘‘, and (DD) with 
respect to a part B rebatable drug (as de-
fined in paragraph (2) of section 1834(x)) 
for which the payment amount for a cal-
endar 
quarter 
under 
paragraph 
(3)(A)(ii)(I) of such section for such quar-
ter exceeds the inflation-adjusted payment 
under paragraph (3)(A)(ii)(II) of such sec-
tion for such quarter, the amounts paid 
shall be the difference between (i) the pay-
ment 
amount 
under 
paragraph 
(3)(A)(ii)(I) of such section for such drug, 
and (ii) 20 percent of the inflation-ad-
justed payment amount under paragraph 
(3)(A)(ii)(II) of such section for such 
drug’’; 
(B) by adding at the end of the flush left 
matter following paragraph (9), the following: 
‘‘For purposes of applying paragraph (1)(DD), sub-
sections (i)(9) and (t)(8)(F), and section 1834(x)(5), the 
Secretary shall make such estimates and use such data 
as the Secretary determines appropriate, and notwith-
standing any other provision of law, may do so by program 
instruction or otherwise.’’; 
(2) in subsection (i), by adding at the end the 
following new paragraph:
‘‘(9) In the case of a part B rebatable drug (as de-
fined in paragraph (2) of section 1834(x)) for which pay-
ment under this subsection is not packaged into a payment 
for a covered OPD service (as defined in subsection 
(t)(1)(B)) (or group of services) furnished on or after July 
1, 2021, under the system under this subsection, in lieu 
of calculation of coinsurance and the amount of payment 
otherwise applicable under this subsection, the provisions 
of section 1834(x)(5), paragraph (1)(DD) of subsection 
(a), and the flush left matter following paragraph (9) of 
subsection (a), shall, as determined appropriate by the 
Secretary, apply under this subsection in the same manner 
as such provisions of section 1834(x)(5) and subsection 
(a) apply under such section and subsection.’’; and 
(3) in subsection (t)(8), by adding at the end 
the following new subparagraph: 
‘‘(F) PART B REBATABLE DRUGS.—In the 
case of a part B rebatable drug (as defined in 
paragraph (2) of section 1834(x)) for which 
payment under this part is not packaged into a 
payment for a service furnished on or after July 
1, 2021, under the system under this sub-
section, in lieu of calculation of coinsurance and 
the amount of payment otherwise applicable 
under this subsection, the provisions of section
1834(x)(5), paragraph (1)(DD) of subsection 
(a), and the flush left matter following para-
graph (9) of subsection (a), shall, as determined 
appropriate by the Secretary, apply under this 
subsection in the same manner as such provi-
sions of section 1834(x)(5) and subsection (a) 
apply under such section and subsection.’’. 
(c) CONFORMING AMENDMENTS.— 
(1) TO
PART
B
ASP
CALCULATION.—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’’. 
(2) EXCLUDING PARTS B DRUG INFLATION RE-
BATE
FROM
BEST
PRICE.—Section 
1927(c)(1)(C)(ii)(I) of the Social Security Act (42 
U.S.C. 1396r–8(c)(1)(C)(ii)(I)) is amended by in-
serting ‘‘or section 1834(x)’’ after ‘‘this section’’. 
(3) COORDINATION WITH MEDICAID REBATE IN-
FORMATION DISCLOSURE.—Section 1927(b)(3)(D)(i) 
of the Social Security Act (42 U.S.C. 1396r– 
8(b)(3)(D)(i)) is amended by striking ‘‘or to carry 
out section 1847B’’ and inserting ‘‘to carry out sec-
tion 1847B or section 1834(x)’’.
SEC. 202. MEDICARE PART D REBATE BY MANUFACTURERS. 
(a) IN GENERAL.—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.— 
‘‘(1) 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 (as de-
fined in subsection (h)(1)) of a manufacturer (as de-
fined in section 1927(k)(5)) dispensed during an ap-
plicable year, the manufacturer must have entered 
into and have in effect an agreement described in 
subsection (b). 
‘‘(2) AUTHORIZING COVERAGE FOR DRUGS NOT 
COVERED
UNDER
AGREEMENTS.—Paragraph (1) 
shall not apply to the dispensing of a covered part 
D drug if— 
‘‘(A) the Secretary has made a determina-
tion that the availability of the drug is essential 
to the health of beneficiaries under this part; or 
‘‘(B) the Secretary determines that in the 
period beginning on January 1, 2022, and end-
ing on December 31, 2022, there were extenu-
ating circumstances. 
‘‘(3) APPLICABLE YEAR.—For purposes of this 
section the term ‘applicable year’ means a year be-
ginning 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 shall apply: 
‘‘(A) SECRETARIAL PROVISION OF INFOR-
MATION.—Not later than 9 months after the 
end of each applicable year with respect to 
which the agreement is in effect, the Secretary, 
for each part D rebatable drug of the manufac-
turer, shall report to the manufacturer the fol-
lowing for such year: 
‘‘(i) Information on the total number 
of units (as defined in subsection (h)(2)) 
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, 
not later than 30 days after the date of receipt 
from the Secretary of the information described 
in subparagraph (A) for such year, shall pro-
vide to the Secretary a rebate that is equal to 
the amount specified in subsection (c) for such 
dosage 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 30 days after 
the date of notice of such termination. The 
Secretary shall provide, upon request, a 
manufacturer with a hearing concerning 
such a termination, but such hearing shall 
not delay the effective date of the termi-
nation. 
‘‘(ii) BY A MANUFACTURER.—A man-
ufacturer may terminate an agreement 
under this section for any reason. Any 
such termination shall be effective, with re-
spect to a plan year— 
‘‘(I) if the termination occurs be-
fore January 30 of the plan year, as 
of the day after the end of the plan 
year; and
‘‘(II) if the termination occurs on 
or after January 30 of the plan year, 
as of the day after the end of the suc-
ceeding plan year. 
‘‘(C) EFFECTIVENESS OF TERMINATION.— 
Any termination under this paragraph shall not 
affect rebates due under the agreement under 
this section before the effective date of its ter-
mination. 
‘‘(D) DELAY
BEFORE
REENTRY.—In the 
case of any agreement under this section with 
a manufacturer that is terminated in a plan 
year, the Secretary may not enter into another 
such agreement with the manufacturer (or a 
successor manufacturer) before the subsequent 
plan year, unless the Secretary finds good cause 
for an earlier reinstatement of such an agree-
ment. 
‘‘(c) REBATE AMOUNT.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the amount specified in this subsection for a 
dosage form and strength with respect to a part D 
rebatable drug and applicable year is, subject to sub-
paragraphs (B) and (C) of paragraph (5), the 
amount equal to the product of—
‘‘(A) the total number of units of such dos-
age form and strength with respect to such part 
D rebatable drug and year; and 
‘‘(B) the amount (if any) by which— 
‘‘(i) the annual manufacturer price 
(as determined in paragraph (2)) paid for 
such dosage form and strength with re-
spect to such part D rebatable drug for the 
year; exceeds 
‘‘(ii) the inflation-adjusted payment 
amount determined under paragraph (3) 
for such dosage form and strength with re-
spect to such part D rebatable drug for the 
year. 
‘‘(2) DETERMINATION OF ANNUAL MANUFAC-
TURER PRICE.—The annual manufacturer price de-
termined under this paragraph for a dosage form 
and strength, with respect to a part D rebatable 
drug and an applicable year, is the sum of the prod-
ucts of— 
‘‘(A) the average manufacturer price (as 
defined in subsection (h)(6)) of such dosage 
form and strength, as calculated for a unit of 
such drug, with respect to each of the calendar 
quarters of such year; and
‘‘(B) the ratio of— 
‘‘(i) the total number of units of such 
dosage form and strength dispensed during 
each such calendar quarter of such year; to 
‘‘(ii) the total number of units of such 
dosage form and strength dispensed during 
such year. 
‘‘(3) DETERMINATION OF INFLATION-ADJUSTED 
PAYMENT AMOUNT.—The inflation-adjusted payment 
amount determined under this paragraph for a dos-
age form and strength with respect to a part D 
rebatable drug for an applicable year, subject to sub-
paragraphs (A) and (D) of paragraph (5), is— 
‘‘(A) the benchmark year manufacturer 
price determined under paragraph (4) for such 
dosage form and strength with respect to such 
drug and an applicable year; increased by 
‘‘(B) the percentage by which the applica-
ble year CPI–U (as defined in subsection 
(h)(5)) for the applicable year exceeds the 
benchmark period CPI–U (as defined in sub-
section (h)(4)). 
‘‘(4) DETERMINATION
OF
BENCHMARK
YEAR 
MANUFACTURER PRICE.—The benchmark year man-
ufacturer price determined under this paragraph for
a dosage form and strength, with respect to a part 
D rebatable drug and an applicable year, is the sum 
of the products of— 
‘‘(A) the average manufacturer price (as 
defined in subsection (h)(6)) of such dosage 
form and strength, as calculated for a unit of 
such drug, with respect to each of the calendar 
quarters of the payment amount benchmark 
year (as defined in subsection (h)(3)); and 
‘‘(B) the ratio of— 
‘‘(i) the total number of units of such 
dosage form and strength dispensed during 
each such calendar quarter of such pay-
ment amount benchmark year; to 
‘‘(ii) the total number of units of such 
dosage form and strength dispensed during 
such payment amount benchmark year. 
‘‘(5) SPECIAL TREATMENT OF CERTAIN DRUGS 
AND EXEMPTION.— 
‘‘(A) SUBSEQUENTLY APPROVED DRUGS.— 
In the case of a part D rebatable drug first ap-
proved or licensed by the Food and Drug Ad-
ministration after January 1, 2016, subpara-
graphs (A) and (B) of paragraph (4) shall be 
applied as if the term ‘payment amount bench-
mark year’ were defined under subsection 
(h)(3) as the first calendar year beginning after 
the day on which the drug was first marketed 
by any manufacturer and subparagraph (B) of 
paragraph (3) shall be applied as if the term 
‘benchmark period CPI–U’ were defined under 
subsection (h)(4) as if the reference to ‘January 
2016’ under such subsection were a reference to 
‘January of the first year beginning after the 
date on which the drug was first marketed by 
any manufacturer’. 
‘‘(B) EXEMPTION FOR SHORTAGES.—The 
Secretary may reduce or waive the rebate under 
paragraph (1) with respect to a part D 
rebatable drug that is described as currently in 
shortage on the shortage list in effect under 
section 506E of the Federal Food, Drug, and 
Cosmetic Act or in the case of other exigent cir-
cumstances, as determined by the Secretary. 
‘‘(C) TREATMENT
OF
NEW
FORMULA-
TIONS.— 
‘‘(i) IN GENERAL.—In the case of a 
part D rebatable drug that is a line exten-
sion of a part D rebatable drug that is an 
oral solid dosage form, the Secretary shall
establish a formula for determining the 
amount specified in this subsection with 
respect to such part D rebatable drug and 
an applicable year with consideration of 
the original part D rebatable drug. 
‘‘(ii) LINE EXTENSION DEFINED.—In 
this subparagraph, the term ‘line exten-
sion’ means, with respect to a part D 
rebatable drug, a new formulation of the 
drug (as determined by the Secretary), 
such as an extended release formulation, 
but does not include an abuse-deterrent 
formulation of the drug (as determined by 
the Secretary), regardless of whether such 
abuse-deterrent formulation is an extended 
release formulation. 
‘‘(D) SELECTED DRUGS.—In the case of a 
part D rebatable drug that is a selected drug 
(as defined in section 1192(c)) for a price appli-
cability 
period 
(as 
defined 
in 
section 
1191(b)(2))— 
‘‘(i) for plan years during such period 
for which a maximum fair price (as defined 
in section 1191(c)(2)) for such drug has 
been determined and is applied under part
E of title XI, the rebate under subsection 
(b)(1)(B) shall be waived; and 
‘‘(ii) in the case such drug is deter-
mined (pursuant to such section 1192(c)) 
to no longer be a selected drug, for each 
applicable year beginning after the price 
applicability period with respect to such 
drug, subparagraphs (A) and (B) of para-
graph (4) shall be applied as if the term 
‘payment amount benchmark year’ were 
defined under subsection (h)(3) as the last 
year beginning during such price applica-
bility period with respect to such selected 
drug and subparagraph (B) of paragraph 
(3) shall be applied as if the term ‘bench-
mark period CPI–U’ were defined under 
subsection (h)(4) as if the reference to 
‘January 2016’ under such subsection were 
a reference to January of the last year be-
ginning during such price applicability pe-
riod with respect to such drug. 
‘‘(d) REBATE DEPOSITS.—Amounts paid as rebates 
under subsection (c) shall be deposited into the Medicare 
Prescription Drug Account in the Federal Supplementary
Medical Insurance Trust Fund established under section 
1841. 
‘‘(e) INFORMATION.—For purposes of carrying out 
this section, the Secretary shall use information submitted 
by manufacturers under section 1927(b)(3). 
‘‘(f) CIVIL MONEY PENALTY.—In the case of a man-
ufacturer of a part D rebatable drug with an agreement 
in effect under this section who has failed to comply with 
the terms of the agreement under subsection (b)(1)(B) 
with respect to such drug for an applicable year, the Sec-
retary may impose a civil money penalty on such manufac-
turer in an amount equal to 125 percent of the amount 
specified in subsection (c) for such drug for such year. 
The provisions of section 1128A (other than subsections 
(a) (with respect to amounts of penalties or additional as-
sessments) and (b)) shall apply to a civil money penalty 
under this subsection in the same manner as such provi-
sions apply to a penalty or proceeding under section 
1128A(a). 
‘‘(g) JUDICIAL REVIEW.—There shall be no judicial 
review of the following: 
‘‘(1) The determination of units under this sec-
tion. 
‘‘(2) The determination of whether a drug is a 
part D rebatable drug under this section.
100 
‘‘(3) The calculation of the rebate amount 
under this section. 
‘‘(h) DEFINITIONS.—In this section: 
‘‘(1) PART D REBATABLE DRUG DEFINED.— 
‘‘(A) IN
GENERAL.—The term ‘part D 
rebatable drug’ means a drug or biological that 
would (without application of this section) be a 
covered part D drug, except such term shall, 
with respect to an applicable year, not include 
such a drug or biological if the average annual 
total cost under this part for such year per in-
dividual who uses such a drug or biological, as 
determined by the Secretary, is less than, sub-
ject to subparagraph (B), $100, as determined 
by the Secretary using the most recent data 
available or, if data is not available, as esti-
mated by the Secretary. 
‘‘(B) INCREASE.—The dollar amount ap-
plied under subparagraph (A)— 
‘‘(i) for 2023, shall be the dollar 
amount specified under such subparagraph 
for 2022, increased by the percentage in-
crease in the consumer price index for all 
urban consumers (United States city aver-
101 
age) for the 12-month period beginning 
with January of 2022; and 
‘‘(ii) for a subsequent year, shall be 
the dollar amount specified in this sub-
paragraph for the previous year, increased 
by the percentage increase in the consumer 
price index for all urban consumers 
(United States city average) for the 12- 
month period beginning with January 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. 
‘‘(2) UNIT DEFINED.—The term ‘unit’ means, 
with respect to a part D rebatable drug, the lowest 
identifiable quantity (such as a capsule or tablet, 
milligram of molecules, or grams) of the part D 
rebatable drug that is dispensed to individuals under 
this part. 
‘‘(3) PAYMENT AMOUNT BENCHMARK YEAR.— 
The term ‘payment amount benchmark year’ means 
the year beginning January 1, 2016. 
‘‘(4) BENCHMARK
PERIOD
CPI–U.—The term 
‘benchmark period CPI–U’ means the consumer
102 
price index for all urban consumers (United States 
city average) for January 2016. 
‘‘(5) APPLICABLE YEAR CPI–U.—The term ‘ap-
plicable year CPI–U’ means, with respect to an ap-
plicable year, the consumer price index for all urban 
consumers (United States city average) for January 
of such year. 
‘‘(6) AVERAGE
MANUFACTURER
PRICE.—The 
term ‘average manufacturer price’ has the meaning, 
with respect to a part D rebatable drug of a manu-
facturer, given such term in section 1927(k)(1), with 
respect to a covered outpatient drug of a manufac-
turer for a rebate period under section 1927.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) TO
PART
B
ASP
CALCULATION.—Section 
1847A(c)(3) of the Social Security Act (42 U.S.C. 
1395w–3a(c)(3)), as amended by section 201(c)(1), 
is further amended by striking ‘‘section 1927 or sec-
tion 1834(x)’’ and inserting ‘‘section 1927, section 
1834(x), or section 1860D–14B’’. 
(2) EXCLUDING PART D DRUG INFLATION RE-
BATE
FROM
BEST
PRICE.—Section 
1927(c)(1)(C)(ii)(I) of the Social Security Act (42 
U.S.C. 1396r–8(c)(1)(C)(ii)(I)), as amended by sec-
tion 201(c)(2), is further amended by striking ‘‘or
103 
section 1834(x)’’ and inserting ‘‘, section 1834(x), or 
section 1860D–14B’’. 
(3) COORDINATION WITH MEDICAID REBATE IN-
FORMATION DISCLOSURE.—Section 1927(b)(3)(D)(i) 
of the Social Security Act (42 U.S.C. 1396r– 
8(b)(3)(D)(i)), as amended by section 201(c)(3), is 
further amended by striking ‘‘or section 1834(x)’’ 
and inserting ‘‘, section 1834(x), or section 1860D– 
14B’’. 
SEC. 203. PROVISION REGARDING INFLATION REBATES 
FOR GROUP HEALTH PLANS AND GROUP 
HEALTH INSURANCE COVERAGE. 
(a) IN GENERAL.—Not later than December 31, 
2021, the Secretary of Labor, in consultation with the 
Secretary of Health and Human Services and the Sec-
retary of the Treasury, shall submit to Congress a report 
on— 
(1) potential models for an agreement process 
with manufacturers of prescription drugs under 
which such manufacturers provide for inflation re-
bates with respect to such drugs that are furnished 
or dispensed to participants and beneficiaries of 
group health plans and health insurance coverage of-
fered in the group market in a manner similar to 
how manufacturers provide for rebates under section
104 
1834(x) of the Social Security Act, as added by sec-
tion 201, and section 1860D–14B of such Act, as 
added by section 202, with respect to prescription 
drugs that are furnished or dispensed under part B 
of title XVIII of such Act and part D of such title, 
respectively; and 
(2) potential models for enforcement mecha-
nisms with respect to such an agreement process 
that ensure that such inflation rebates are propor-
tionally distributed, with respect to costs, to group 
health plans and health insurance issuers offering 
health insurance coverage in the group market, to 
participants and beneficiaries of such plans and cov-
erage, or to both. 
(b) REGULATIONS.—Not later than December 31, 
2022, the Secretary of Labor shall, in consultation with 
the Secretary of Health and Human Services and the Sec-
retary of the Treasury, promulgate regulations to imple-
ment a model described in subsection (a)(1) and a model 
described in subsection (a)(2), if the Secretary determines 
that— 
(1) the prices of a sufficient number (as deter-
mined by the Secretary) of drugs described in sub-
section (a)(1) have increased over a period of time 
(as determined by the Secretary) at a percentage
105 
that exceeds the percentage by which the consumer 
price index for all urban consumers (United States 
city average) has increased over such period; and 
(2) such model described in subsection (a)(1) 
and such model described in subsection (a)(2) are 
feasible. 
SEC. 204. ANNUAL REPORT ON DRUG COSTS IN GROUP 
HEALTH PLANS AND GROUP HEALTH INSUR-
ANCE COVERAGE. 
(a) INITIAL REPORT.—Not later than December 31, 
2021, the Secretary of Labor shall, in consultation with 
the Secretary of Health and Human Services and the Sec-
retary of the Treasury, submit to Congress a report, with 
respect to a period (as determined by the Secretary of 
Labor), on— 
(1) whether the prices of prescription drugs 
that are furnished or dispensed to participants and 
beneficiaries of group health plans and health insur-
ance coverage offered in the group market during 
such period have increased at a percentage that ex-
ceeds the percentage by which the consumer price 
index for all urban consumers (United States city 
average) increased for such period; and 
(2) whether there are mechanisms by which 
manufacturers of prescription drugs have attempted
106 
to recover rebate payments required of such manu-
facturers under section 1834(x) of the Social Secu-
rity Act, as added by section 201, and section 
1860D–14B of such Act, as added by section 202, 
with respect to prescription drugs that are furnished 
or dispensed under part B of title XVIII of such Act 
and part D of such title, respectively, through in-
creased prices charged with respect to drugs that are 
furnished or dispensed to participants and bene-
ficiaries of group health plans and health insurance 
coverage offered in the group market during such 
period. 
(b) ANNUAL REPORT.—Not later than December 31 
of each year following 2021, the Secretary of Labor shall, 
in consultation with the Secretary of Health and Human 
Services and the Secretary of the Treasury, submit to 
Congress a report updating the information and analysis 
included in the report required under subsection (a), re-
flecting, in part, new price and cost information and data 
for the 12-month period after the period on which the 
prior year’s report was based. 
SEC. 205. COLLECTION OF DATA. 
(a) MANUFACTURERS OF PRESCRIPTION DRUGS.— 
Manufacturers of prescription drugs shall submit to the 
Secretary of Health and Human Services, Secretary of
107 
Labor, and the Secretary of the Treasury appropriate data 
as necessary for the Secretaries to obtain information 
needed to provide the reports under sections 203 and 204. 
(b) GROUP HEALTH PLANS AND HEALTH INSUR-
ANCE ISSUERS OFFERING HEALTH INSURANCE COV-
ERAGE IN THE GROUP MARKET.—Group health plans and 
health insurance issuers offering health insurance cov-
erage in the group market shall submit to the Secretary 
of Health and Human Services, Secretary of Labor, and 
the Secretary of the Treasury appropriate data as nec-
essary for the Secretaries to obtain information needed to 
provide the reports under sections 203 and 204. 
TITLE 
III—PART 
D 
IMPROVE-
MENTS AND MAXIMUM OUT- 
OF-POCKET CAP FOR MEDI-
CARE BENEFICIARIES 
SEC. 301. MEDICARE PART D BENEFIT REDESIGN. 
(a) 
BENEFIT
STRUCTURE
REDESIGN.—Section 
1860D–2(b) of the Social Security Act (42 U.S.C. 1395w– 
102(b)) is amended— 
(1) in paragraph (2)— 
(A) in subparagraph (A), in the matter 
preceding clause (i), by inserting ‘‘for a year 
preceding 2022 and for costs above the annual 
deductible specified in paragraph (1) and up to
108 
the annual out-of-pocket threshold specified in 
paragraph (4)(B) for 2022 and each subsequent 
year’’ after ‘‘paragraph (3)’’; 
(B) in subparagraph (C)— 
(i) in clause (i), in the matter pre-
ceding subclause (I), by inserting ‘‘for a 
year preceding 2022,’’ after ‘‘paragraph 
(4),’’; and 
(ii) in clause (ii)(III), by striking 
‘‘and each subsequent year’’ and inserting 
‘‘and 2021’’; and 
(C) in subparagraph (D)— 
(i) in clause (i)— 
(I) in the matter preceding sub-
clause (I), by inserting ‘‘for a year 
preceding 2022,’’ after ‘‘paragraph 
(4),’’; and 
(II) in subclause (I)(bb), by 
striking ‘‘a year after 2018’’ and in-
serting ‘‘each of years 2018 through 
2021’’; and 
(ii) in clause (ii)(V), by striking 
‘‘2019 and each subsequent year’’ and in-
serting ‘‘each of years 2019 through 
2021’’;
109 
(2) in paragraph (3)(A)— 
(A) in the matter preceding clause (i), by 
inserting ‘‘for a year preceding 2022,’’ after 
‘‘and (4),’’; and 
(B) in clause (ii), by striking ‘‘for a subse-
quent year’’ and inserting ‘‘for each of years 
2007 through 2021’’; and 
(3) in paragraph (4)— 
(A) in subparagraph (A)— 
(i) in clause (i)— 
(I) by redesignating subclauses 
(I) and (II) as items (aa) and (bb), 
respectively, and moving the margin 
of each such redesignated item 2 ems 
to the right; 
(II) in the matter preceding item 
(aa), as redesignated by subclause (I), 
by striking ‘‘is equal to the greater 
of—’’ and inserting ‘‘is equal to— 
‘‘(I) for a year preceding 2022, 
the greater of—’’; 
(III) by striking the period at the 
end of item (bb), as redesignated by 
subclause (I), and inserting ‘‘; and’’; 
and
110 
(IV) by adding at the end the fol-
lowing: 
‘‘(II) for 2022 and each suc-
ceeding year, $0.’’; and 
(ii) in clause (ii), by striking ‘‘clause 
(i)(I)’’ and inserting ‘‘clause (i)(I)(aa)’’; 
(B) in subparagraph (B)— 
(i) in clause (i)— 
(I) in subclause (V), by striking 
‘‘or’’ at the end; 
(II) in subclause (VI)— 
(aa) by striking ‘‘for a sub-
sequent year’’ and inserting ‘‘for 
2021’’; and 
(bb) by striking the period 
at the end and inserting a semi-
colon; and 
(III) by adding at the end the 
following new subclauses: 
‘‘(VII) for 2022, is equal to 
$2,000; or 
‘‘(VIII) for a subsequent year, is 
equal to the amount specified in this 
subparagraph for the previous year, 
increased by the annual percentage in-
111 
crease described in paragraph (6) for 
the year involved.’’; and 
(ii) in clause (ii), by striking ‘‘clause 
(i)(II)’’ and inserting ‘‘clause (i)’’; 
(C) in subparagraph (C)(i), by striking 
‘‘and for amounts’’ and inserting ‘‘and, for a 
year preceding 2022, for amounts’’; and 
(D) in subparagraph (E), by striking ‘‘In 
applying’’ and inserting ‘‘For each of years 
2011 through 2021, in applying’’. 
(b) 
DECREASING
REINSURANCE
PAYMENT 
AMOUNT.—Section 1860D–15(b)(1) of the Social Security 
Act (42 U.S.C. 1395w–115(b)(1)) is amended by inserting 
after ‘‘80 percent’’ the following: ‘‘(or, with respect to a 
coverage year after 2021, 20 percent)’’. 
(c) MANUFACTURER DISCOUNT PROGRAM.— 
(1) IN GENERAL.—Part D of title XVIII of the 
Social Security Act (42 U.S.C. 1395w–101 et seq.), 
as amended by section 202, is further amended by 
inserting after section 1860D–14B the following new 
section: 
‘‘SEC. 1860D–14C. MANUFACTURER DISCOUNT PROGRAM. 
‘‘(a) ESTABLISHMENT.—The Secretary shall estab-
lish a manufacturer discount program (in this section re-
ferred to as the ‘program’). Under the program, the Sec-
112 
retary shall enter into agreements described in subsection 
(b) with manufacturers and provide for the performance 
of the duties described in subsection (c). The Secretary 
shall establish a model agreement for use under the pro-
gram by not later than January 1, 2021, in consultation 
with manufacturers, and allow for comment on such model 
agreement. 
‘‘(b) TERMS OF AGREEMENT.— 
‘‘(1) IN GENERAL.— 
‘‘(A) AGREEMENT.—An agreement under 
this section shall require the manufacturer to 
provide applicable beneficiaries access to dis-
counted prices for applicable drugs of the man-
ufacturer that are dispensed on or after Janu-
ary 1, 2022. 
‘‘(B) PROVISION OF DISCOUNTED PRICES 
AT THE POINT-OF-SALE.—The discounted prices 
described in subparagraph (A) shall be provided 
to the applicable beneficiary at the pharmacy or 
by the mail order service at the point-of-sale of 
an applicable drug. 
‘‘(C) TIMING OF AGREEMENT.— 
‘‘(i) SPECIAL
RULE
FOR
2022.—In 
order for an agreement with a manufac-
turer to be in effect under this section with
113 
respect to the period beginning on January 
1, 2022, and ending on December 31, 
2022, the manufacturer shall enter into 
such agreement not later than 30 days 
after the date of the establishment of a 
model agreement under subsection (a). 
‘‘(ii) 
2023 
AND
SUBSEQUENT 
YEARS.—In order for an agreement with a 
manufacturer to be in effect under this 
section with respect to plan year 2023 or 
a subsequent plan year, the manufacturer 
shall enter into such agreement (or such 
agreement shall be renewed under para-
graph (4)(A)) not later than January 30 of 
the preceding year. 
‘‘(2) PROVISION OF APPROPRIATE DATA.—Each 
manufacturer with an agreement in effect under this 
section shall collect and have available appropriate 
data, as determined by the Secretary, to ensure that 
it can demonstrate to the Secretary compliance with 
the requirements under the program. 
‘‘(3) COMPLIANCE
WITH
REQUIREMENTS
FOR 
ADMINISTRATION
OF
PROGRAM.—Each manufac-
turer with an agreement in effect under this section 
shall comply with requirements imposed by the Sec-
114 
retary or a third party with a contract under sub-
section (d)(3), as applicable, for purposes of admin-
istering the program, including any determination 
under subparagraph (A) of subsection (c)(1) or pro-
cedures established under such subsection (c)(1). 
‘‘(4) LENGTH OF AGREEMENT.— 
‘‘(A) IN GENERAL.—An agreement under 
this section shall be effective for an initial pe-
riod of not less than 12 months and shall be 
automatically renewed for a period of not less 
than 1 year unless terminated under subpara-
graph (B). 
‘‘(B) TERMINATION.— 
‘‘(i) BY THE SECRETARY.—The Sec-
retary may provide for termination of an 
agreement under this section for a knowing 
and willful violation of the requirements of 
the agreement or other good cause shown. 
Such termination shall not be effective ear-
lier than 30 days after the date of notice 
to the manufacturer of such termination. 
The Secretary shall provide, upon request, 
a manufacturer with a hearing concerning 
such a termination, and such hearing shall 
take place prior to the effective date of the
115 
termination with sufficient time for such 
effective date to be repealed if the Sec-
retary determines appropriate. 
‘‘(ii) BY A MANUFACTURER.—A man-
ufacturer may terminate an agreement 
under this section for any reason. Any 
such termination shall be effective, with re-
spect to a plan year— 
‘‘(I) if the termination occurs be-
fore January 30 of a plan year, as of 
the day after the end of the plan year; 
and 
‘‘(II) if the termination occurs on 
or after January 30 of a plan year, as 
of the day after the end of the suc-
ceeding plan year. 
‘‘(iii) EFFECTIVENESS
OF
TERMI-
NATION.—Any termination under this sub-
paragraph shall not affect discounts for 
applicable drugs of the manufacturer that 
are due under the agreement before the ef-
fective date of its termination. 
‘‘(iv) NOTICE TO THIRD PARTY.—The 
Secretary shall provide notice of such ter-
mination to a third party with a contract
116 
under subsection (d)(3) within not less 
than 30 days before the effective date of 
such termination. 
‘‘(c) DUTIES DESCRIBED.—The duties described in 
this subsection are the following: 
‘‘(1) ADMINISTRATION OF PROGRAM.—Admin-
istering the program, including— 
‘‘(A) the determination of the amount of 
the discounted price of an applicable drug of a 
manufacturer; 
‘‘(B) the establishment of procedures 
under which discounted prices are provided to 
applicable beneficiaries at pharmacies or by 
mail order service at the point-of-sale of an ap-
plicable drug; 
‘‘(C) the establishment of procedures to 
ensure that, not later than the applicable num-
ber of calendar days after the dispensing of an 
applicable drug by a pharmacy or mail order 
service, the pharmacy or mail order service is 
reimbursed for an amount equal to the dif-
ference between— 
‘‘(i) the negotiated price of the appli-
cable drug; and
117 
‘‘(ii) the discounted price of the appli-
cable drug; 
‘‘(D) the establishment of procedures to 
ensure that the discounted price for an applica-
ble drug under this section is applied before any 
coverage or financial assistance under other 
health benefit plans or programs that provide 
coverage or financial assistance for the pur-
chase or provision of prescription drug coverage 
on behalf of applicable beneficiaries as the Sec-
retary may specify; and 
‘‘(E) providing a reasonable dispute resolu-
tion mechanism to resolve disagreements be-
tween manufacturers, applicable beneficiaries, 
and the third party with a contract under sub-
section (d)(3). 
‘‘(2) MONITORING COMPLIANCE.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
monitor compliance by a manufacturer with the 
terms of an agreement under this section. 
‘‘(B) NOTIFICATION.—If a third party 
with a contract under subsection (d)(3) deter-
mines that the manufacturer is not in compli-
ance with such agreement, the third party shall
118 
notify the Secretary of such noncompliance for 
appropriate enforcement under subsection (e). 
‘‘(3) COLLECTION OF DATA FROM PRESCRIP-
TION DRUG PLANS AND MA–PD PLANS.—The Sec-
retary may collect appropriate data from prescrip-
tion drug plans and MA–PD plans in a timeframe 
that allows for discounted prices to be provided for 
applicable drugs under this section. 
‘‘(d) ADMINISTRATION.— 
‘‘(1) IN GENERAL.—Subject to paragraph (2), 
the Secretary shall provide for the implementation of 
this section, including the performance of the duties 
described in subsection (c). 
‘‘(2) LIMITATION.—In providing for the imple-
mentation of this section, the Secretary shall not re-
ceive or distribute any funds of a manufacturer 
under the program. 
‘‘(3) CONTRACT
WITH
THIRD
PARTIES.—The 
Secretary shall enter into a contract with 1 or more 
third parties to administer the requirements estab-
lished by the Secretary in order to carry out this 
section. At a minimum, the contract with a third 
party under the preceding sentence shall require 
that the third party—
119 
‘‘(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 
meet the obligations of manufacturers under 
agreements under this section; 
‘‘(C) provide adequate and timely informa-
tion to manufacturers, consistent with the 
agreement with the manufacturer under this 
section, as necessary for the manufacturer to 
fulfill its obligations under this section; 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. 
‘‘(4) 
PERFORMANCE
REQUIREMENTS.—The 
Secretary shall establish performance requirements 
for a third party with a contract under paragraph 
(3) and safeguards to protect the independence and 
integrity of the activities carried out by the third 
party under the program under this section.
120 
‘‘(5) IMPLEMENTATION.—Notwithstanding any 
other provision of law, the Secretary may implement 
the program under this section by program instruc-
tion or otherwise. 
‘‘(6) ADMINISTRATION.—Chapter 35 of title 44, 
United States Code, shall not apply to the program 
under this section. 
‘‘(e) ENFORCEMENT.— 
‘‘(1) AUDITS.—Each manufacturer with an 
agreement in effect under this section shall be sub-
ject to periodic audit by the Secretary. 
‘‘(2) CIVIL MONEY PENALTY.— 
‘‘(A) IN
GENERAL.—The Secretary may 
impose a civil money penalty on a manufacturer 
that fails to provide applicable beneficiaries dis-
counts for applicable drugs of the manufacturer 
in accordance with such agreement for each 
such failure in an amount the Secretary deter-
mines is equal to the sum of— 
‘‘(i) the amount that the manufac-
turer would have paid with respect to such 
discounts under the agreement, which will 
then be used to pay the discounts which 
the manufacturer had failed to provide; 
and
121 
‘‘(ii) 25 percent of such amount. 
‘‘(B) APPLICATION.—The provisions of 
section 1128A (other than subsections (a) 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). 
‘‘(f) CLARIFICATION REGARDING AVAILABILITY OF 
OTHER COVERED PART D DRUGS.—Nothing in this sec-
tion shall prevent an applicable beneficiary from pur-
chasing a covered part D drug that is not an applicable 
drug (including a generic drug or a drug that is not on 
the formulary of the prescription drug plan or MA–PD 
plan that the applicable beneficiary is enrolled in). 
‘‘(g) DEFINITIONS.—In this section: 
‘‘(1) APPLICABLE
BENEFICIARY.—The term 
‘applicable beneficiary’ means an individual who, on 
the date of dispensing a covered part D drug— 
‘‘(A) is enrolled in a prescription drug plan 
or an MA–PD plan; 
‘‘(B) is not enrolled in a qualified retiree 
prescription drug plan; and 
‘‘(C) has incurred costs, as determined in 
accordance with section 1860D–2(b)(4)(C), for 
covered part D drugs in the year that exceed
122 
the annual deductible with respect to such indi-
vidual for such year, as specified in section 
1860D–2(b)(1), section 1860D–14(a)(1)(B), or 
section 1860D–14(a)(2)(B), as applicable. 
‘‘(2) APPLICABLE DRUG.—The term ‘applicable 
drug’, with respect to an applicable beneficiary— 
‘‘(A) means a covered part D drug— 
‘‘(i) approved under a new drug appli-
cation under section 505(c) of the Federal 
Food, Drug, and Cosmetic Act or, in the 
case of a biologic product, licensed under 
section 351 of the Public Health Service 
Act; and 
‘‘(ii)(I) if the PDP sponsor of the pre-
scription drug plan or the MA organization 
offering the MA–PD plan uses a for-
mulary, which is on the formulary of the 
prescription drug plan or MA–PD plan 
that the applicable beneficiary is enrolled 
in; 
‘‘(II) if the PDP sponsor of the pre-
scription drug plan or the MA organization 
offering the MA–PD plan does not use a 
formulary, for which benefits are available 
under the prescription drug plan or MA–
123 
PD plan that the applicable beneficiary is 
enrolled in; or 
‘‘(III) is provided through an excep-
tion or appeal; and 
‘‘(B) does not include a selected drug (as 
defined in section 1192(c)) during a price appli-
cability 
period 
(as 
defined 
in 
section 
1191(b)(2)) with respect to such drug. 
‘‘(3) APPLICABLE
NUMBER
OF
CALENDAR 
DAYS.—The term ‘applicable number of calendar 
days’ means— 
‘‘(A) with respect to claims for reimburse-
ment submitted electronically, 14 days; and 
‘‘(B) with respect to claims for reimburse-
ment submitted otherwise, 30 days. 
‘‘(4) DISCOUNTED PRICE.— 
‘‘(A) IN GENERAL.—The term ‘discounted 
price’ means, with respect to an applicable drug 
of a manufacturer dispensed during a year to 
an applicable beneficiary— 
‘‘(i) who has not incurred costs, as de-
termined 
in 
accordance 
with 
section 
1860D–2(b)(4)(C), for covered part D 
drugs in the year that are equal to or ex-
ceed the annual out-of-pocket threshold
124 
specified in section 1860D–2(b)(4)(B)(i) 
for the year, 90 percent of the negotiated 
price of such drug; and 
‘‘(ii) who has incurred such costs, as 
so determined, in the year that are equal 
to or exceed such threshold for the year, 
70 percent of the negotiated price of such 
drug. 
‘‘(B) CLARIFICATION.—Nothing in this 
section shall be construed as affecting the re-
sponsibility of an applicable beneficiary for pay-
ment of a dispensing fee for an applicable drug. 
‘‘(C) 
SPECIAL
CASE
FOR
CERTAIN 
CLAIMS.— 
‘‘(i) 
CLAIMS
SPANNING
DEDUCT-
IBLE.—In the case where the entire 
amount of the negotiated price of an indi-
vidual claim for an applicable drug with re-
spect to an applicable beneficiary does not 
fall above the annual deductible specified 
in section 1860D–2(b)(1) for the year, the 
manufacturer of the applicable drug shall 
provide the discounted price under this 
section on only the portion of the nego-
125 
tiated price of the applicable drug that 
falls above such annual deductible. 
‘‘(ii) CLAIMS SPANNING OUT-OF-POCK-
ET THRESHOLD.—In the case where the 
entire amount of the negotiated price of an 
individual claim for an applicable drug 
with respect to an applicable beneficiary 
does not fall entirely below or entirely 
above the annual out-of-pocket threshold 
specified in section 1860D–2(b)(4)(B)(i) 
for the year, the manufacturer of the ap-
plicable drug shall provide the discounted 
price— 
‘‘(I) in accordance with subpara-
graph (A)(i) on the portion of the ne-
gotiated price of the applicable drug 
that falls below such threshold; and 
‘‘(II) in accordance with subpara-
graph (A)(ii) on the portion of such 
price of such drug that falls at or 
above such threshold. 
‘‘(5) MANUFACTURER.—The term ‘manufac-
turer’ means any entity which is engaged in the pro-
duction, preparation, propagation, compounding, 
conversion, or processing of prescription drug prod-
126 
ucts, either directly or indirectly by extraction from 
substances of natural origin, or independently by 
means of chemical synthesis, or by a combination of 
extraction and chemical synthesis. Such term does 
not include a wholesale distributor of drugs or a re-
tail pharmacy licensed under State law. 
‘‘(6) NEGOTIATED
PRICE.—The term ‘nego-
tiated price’ has the meaning given such term in sec-
tion 423.100 of title 42, Code of Federal Regula-
tions (or any successor regulation), except that, with 
respect to an applicable drug, such negotiated price 
shall not include any dispensing fee for the applica-
ble drug. 
‘‘(7) QUALIFIED RETIREE PRESCRIPTION DRUG 
PLAN.—The term ‘qualified retiree prescription drug 
plan’ has the meaning given such term in section 
1860D–22(a)(2).’’. 
(2) SUNSET OF MEDICARE COVERAGE GAP DIS-
COUNT PROGRAM.—Section 1860D–14A of the So-
cial Security Act (42 U.S.C. 1395–114a) is amend-
ed— 
(A) in subsection (a), in the first sentence, 
by striking ‘‘The Secretary’’ and inserting 
‘‘Subject to subsection (h), the Secretary’’; and
127 
(B) by adding at the end the following new 
subsection: 
‘‘(h) SUNSET OF PROGRAM.— 
‘‘(1) IN
GENERAL.—The program shall not 
apply with respect to applicable drugs dispensed on 
or after January 1, 2022, and, subject to paragraph 
(2), agreements under this section shall be termi-
nated as of such date. 
‘‘(2) CONTINUED APPLICATION FOR APPLICA-
BLE
DRUGS
DISPENSED
PRIOR
TO
SUNSET.—The 
provisions of this section (including all responsibil-
ities and duties) shall continue to apply after Janu-
ary 1, 2022, with respect to applicable drugs dis-
pensed prior to such date.’’. 
(3) INCLUSION OF ACTUARIAL VALUE OF MANU-
FACTURER DISCOUNTS IN BIDS.—Section 1860D–11 
of the Social Security Act (42 U.S.C. 1395w–111) 
is amended— 
(A) in subsection (b)(2)(C)(iii)— 
(i) by striking ‘‘assumptions regarding 
the reinsurance’’ and inserting ‘‘assump-
tions regarding— 
‘‘(I) the reinsurance’’; and 
(ii) by adding at the end the fol-
lowing:
128 
‘‘(II) for 2022 and each subse-
quent year, the manufacturer dis-
counts provided under section 1860D– 
14C subtracted from the actuarial 
value to produce such bid; and’’; and 
(B) in subsection (c)(1)(C)— 
(i) by striking ‘‘an actuarial valuation 
of the reinsurance’’ and inserting ‘‘an ac-
tuarial valuation of— 
‘‘(i) the reinsurance’’; 
(ii) in clause (i), as inserted by clause 
(i) of this subparagraph, by adding ‘‘and’’ 
at the end; and 
(iii) by adding at the end the fol-
lowing: 
‘‘(ii) for 2022 and each subsequent 
year, the manufacturer discounts provided 
under section 1860D–14C;’’. 
(d) CONFORMING AMENDMENTS.— 
(1) Section 1860D–2 of the Social Security Act 
(42 U.S.C. 1395w–102) is amended— 
(A) in subsection (a)(2)(A)(i)(I), by strik-
ing ‘‘, or an increase in the initial’’ and insert-
ing ‘‘or, for a year preceding 2022, an increase 
in the initial’’;
129 
(B) in subsection (c)(1)(C)— 
(i) in the subparagraph heading, by 
striking ‘‘AT
INITIAL
COVERAGE
LIMIT’’; 
and 
(ii) by inserting ‘‘for a year preceding 
2022 or the annual out-of-pocket threshold 
specified in subsection (b)(4)(B) for the 
year for 2022 and each subsequent year’’ 
after ‘‘subsection (b)(3) for the year’’ each 
place it appears; and 
(C) in subsection (d)(1)(A), by striking ‘‘or 
an initial’’ and inserting ‘‘or, for a year pre-
ceding 2022, an initial’’. 
(2) Section 1860D–4(a)(4)(B)(i) of the Social 
Security Act (42 U.S.C. 1395w–104(a)(4)(B)(i)) is 
amended by striking ‘‘the initial’’ and inserting ‘‘for 
a year preceding 2022, the initial’’. 
(3) Section 1860D–14(a) of the Social Security 
Act (42 U.S.C. 1395w–114(a)) is amended— 
(A) in paragraph (1)— 
(i) in subparagraph (C), by striking 
‘‘The continuation’’ and inserting ‘‘For a 
year preceding 2022, the continuation’’;
130 
(ii) in subparagraph (D)(iii), by strik-
ing ‘‘1860D–2(b)(4)(A)(i)(I)’’ and insert-
ing ‘‘1860D–2(b)(4)(A)(i)(I)(aa)’’; and 
(iii) in subparagraph (E), by striking 
‘‘The elimination’’ and inserting ‘‘For a 
year preceding 2022, the elimination’’; and 
(B) in paragraph (2)— 
(i) in subparagraph (C), by striking 
‘‘The continuation’’ and inserting ‘‘For a 
year preceding 2022, the continuation’’; 
and 
(ii) in subparagraph (E), by striking 
‘‘1860D–2(b)(4)(A)(i)(I)’’ and inserting 
‘‘1860D–2(b)(4)(A)(i)(I)(aa)’’. 
(4) Section 1860D–21(d)(7) of the Social Secu-
rity Act (42 U.S.C. 1395w–131(d)(7)) is amended 
by striking ‘‘section 1860D–2(b)(4)(B)(i)’’ and in-
serting ‘‘section 1860D–2(b)(4)(C)(i)’’. 
(5) Section 1860D–22(a)(2)(A) of the Social 
Security Act (42 U.S.C. 1395w–132(a)(2)(A)) is 
amended— 
(A) by striking ‘‘the value of any discount’’ 
and inserting the following: ‘‘the value of— 
‘‘(i) for years prior to 2022, any dis-
count’’;
131 
(B) in clause (i), as inserted by subpara-
graph (A) of this paragraph, by striking the pe-
riod at the end and inserting ‘‘; and’’; and 
(C) by adding at the end the following new 
clause: 
‘‘(ii) for 2022 and each subsequent 
year, any discount provided pursuant to 
section 1860D–14C.’’. 
(6) Section 1860D–41(a)(6) of the Social Secu-
rity Act (42 U.S.C. 1395w–151(a)(6)) is amended— 
(A) by inserting ‘‘for a year before 2022’’ 
after ‘‘1860D–2(b)(3)’’; and 
(B) by inserting ‘‘for such year’’ before the 
period. 
(7) Section 1860D–43 of the Social Security 
Act (42 U.S.C. 1395w–153) is amended— 
(A) in subsection (a)— 
(i) by striking paragraph (1) and in-
serting the following: 
‘‘(1) participate in— 
‘‘(A) for 2011 through 2021, the Medicare 
coverage gap discount program under section 
1860D–14A; and
132 
‘‘(B) for 2022 and each subsequent year, 
the manufacturer discount program under sec-
tion 1860D–14C;’’; 
(ii) by striking paragraph (2) and in-
serting the following: 
‘‘(2) have entered into and have in effect— 
‘‘(A) for 2011 through 2021, an agreement 
described in subsection (b) of section 1860D– 
14A with the Secretary; and 
‘‘(B) for 2022 and each subsequent year, 
an agreement described in subsection (b) of sec-
tion 1860D–14C with the Secretary; and’’; and 
(iii) by striking paragraph (3) and in-
serting the following: 
‘‘(3) have entered into and have in effect, under 
terms and conditions specified by the Secretary— 
‘‘(A) for 2011 through 2021, a contract 
with a third party that the Secretary has en-
tered into a contract with under subsection 
(d)(3) of section 1860D–14A; and 
‘‘(B) for 2022 and each subsequent year, 
a contract with a third party that the Secretary 
has entered into a contract with under sub-
section (d)(3) of section 1860D–14C.’’; and
133 
(B) by striking subsection (b) and insert-
ing the following: 
‘‘(b) EFFECTIVE DATE.—Paragraphs (1)(A), (2)(A), 
and (3)(A) of subsection (a) shall apply to covered part 
D drugs dispensed under this part on or after January 
1, 2011, and before January 1, 2022, and paragraphs 
(1)(B), (2)(B), and (3)(B) of such subsection shall apply 
to covered part D drugs dispensed under this part on or 
after January 1, 2022.’’. 
(8) Section 1927 of the Social Security Act (42 
U.S.C. 1396r–8) is amended— 
(A) in subsection (c)(1)(C)(i)(VI), by in-
serting before the period at the end the fol-
lowing: ‘‘or under the manufacturer discount 
program under section 1860D–14C’’; and 
(B) in subsection (k)(1)(B)(i)(V), by in-
serting before the period at the end the fol-
lowing: ‘‘or under section 1860D–14C’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply with respect to plan year 2022 and 
subsequent plan years.
134 
SEC. 302. ALLOWING CERTAIN ENROLLEES OF PRESCRIP-
TION 
DRUGS 
PLANS 
AND 
MA–PD 
PLANS 
UNDER MEDICARE PROGRAM TO SPREAD 
OUT COST-SHARING UNDER CERTAIN CIR-
CUMSTANCES. 
Section 1860D–2(b)(2) of the Social Security Act (42 
U.S.C. 1395w–102(b)(2)), as amended by section 301, is 
further amended— 
(1) in subparagraph (A), by striking ‘‘Subject 
to subparagraphs (C) and (D)’’ and inserting ‘‘Sub-
ject to subparagraphs (C), (D), and (E)’’; and 
(2) by adding at the end the following new sub-
paragraph: 
‘‘(E) 
ENROLLEE
OPTION
REGARDING 
SPREADING
COST-SHARING.—The 
Secretary 
shall establish by regulation a process under 
which, with respect to plan year 2022 and sub-
sequent plan years, a prescription drug plan or 
an MA–PD plan shall, in the case of a part D 
eligible individual enrolled with such plan for 
such plan year who is not a subsidy eligible in-
dividual (as defined in section 1860D–14(a)(3)) 
and with respect to whom the plan projects that 
the dispensing of the first fill of a covered part 
D drug to such individual will result in the indi-
vidual incurring costs that are equal to or above
135 
the annual out-of-pocket threshold specified in 
paragraph (4)(B) for such plan year, provide 
such individual with the option to make the co-
insurance payment required under subpara-
graph (A) (for the portion of such costs that 
are not above such annual out-of-pocket thresh-
old) in the form of periodic installments over 
the remainder of such plan year.’’. 
SEC. 303. ESTABLISHMENT OF PHARMACY QUALITY MEAS-
URES UNDER MEDICARE PART D. 
Section 1860D–4(c) of the Social Security Act (42 
U.S.C. 1395w–104(c)) is amended— 
(1) by redesignating the paragraph (6), as 
added by section 50354 of division E of the Bipar-
tisan Budget Act of 2018 (Public Law 115–123), as 
paragraph (7); and 
(2) by adding at the end the following new 
paragraph: 
‘‘(8) APPLICATION
OF
PHARMACY
QUALITY 
MEASURES.— 
‘‘(A) IN GENERAL.—A PDP sponsor that 
implements incentive payments to a pharmacy 
or price concessions paid by a pharmacy based 
on quality measures shall use measures estab-
lished or approved by the Secretary under sub-
136 
paragraph (B) with respect to payment for cov-
ered part D drugs dispensed by such pharmacy. 
‘‘(B) 
STANDARD
PHARMACY
QUALITY 
MEASURES.—The Secretary shall establish or 
approve standard quality measures from a con-
sensus and evidence-based organization for pay-
ments described in subparagraph (A). Such 
measures shall focus on patient health outcomes 
and be based on proven criteria measuring 
pharmacy performance. 
‘‘(C) EFFECTIVE DATE.—The requirement 
under subparagraph (A) shall take effect for 
plan years beginning on or after January 1, 
2021, or such earlier date specified by the Sec-
retary if the Secretary determines there are suf-
ficient measures established or approved under 
subparagraph (B) to meet the requirement 
under subparagraph (A).’’. 
TITLE IV—DRUG PRICE 
TRANSPARENCY 
SEC. 401. DRUG PRICE TRANSPARENCY. 
Part A of title XI of the Social Security Act is 
amended by adding at the end the following new sections: 
‘‘SEC. 1150C. REPORTING ON DRUG PRICES. 
‘‘(a) DEFINITIONS.—In this section:
137 
‘‘(1) MANUFACTURER.—The term ‘manufac-
turer’ means the person— 
‘‘(A) that holds the application for a drug 
approved under section 505 of the Federal 
Food, Drug, and Cosmetic Act or licensed 
under section 351 of the Public Health Service 
Act; or 
‘‘(B) who is responsible for setting the 
wholesale acquisition cost for the drug. 
‘‘(2) QUALIFYING DRUG.—The term ‘qualifying 
drug’ means any drug that is approved under sub-
section (c) or (j) of section 505 of the Federal Food, 
Drug, and Cosmetic Act or licensed under subsection 
(a) or (k) of section 351 of the Public Health Serv-
ice Act— 
‘‘(A) that has a wholesale acquisition cost 
of $100 or more, adjusted for inflation occur-
ring after the date of enactment of this section, 
for a month’s supply or a typical course of 
treatment that lasts less than a month, and 
is— 
‘‘(i) subject to section 503(b)(1) of 
the Federal Food, Drug, and Cosmetic 
Act; and 
‘‘(ii) not a preventative vaccine; and
138 
‘‘(B) for which, during the previous cal-
endar year, at least 1 dollar of the total amount 
of sales were for individuals enrolled under the 
Medicare program under title XVIII or under a 
State Medicaid plan under title XIX or under 
a waiver of such plan. 
‘‘(3) WHOLESALE
ACQUISITION
COST.—The 
term ‘wholesale acquisition cost’ has the meaning 
given that term in section 1847A(c)(6)(B). 
‘‘(b) REPORT.— 
‘‘(1) REPORT REQUIRED.—The manufacturer of 
a qualifying drug shall submit a report to the Sec-
retary if, with respect to the qualifying drug— 
‘‘(A) there is an increase in the price of 
the qualifying drug that results in an increase 
in the wholesale acquisition cost of that drug 
that is equal to— 
‘‘(i) 10 percent or more within a 12- 
month period beginning on or after Janu-
ary 1, 2019; or 
‘‘(ii) 25 percent or more within a 36- 
month period beginning on or after Janu-
ary 1, 2019; 
‘‘(B) the estimated price of the qualifying 
drug or spending per individual or per user of
139 
such drug (as estimated by the Secretary) for 
the applicable year (or per course of treatment 
in such applicable year as determined by the 
Secretary) is at least $26,000 beginning on or 
after January 1, 2021; or 
‘‘(C) there was an increase in the price of 
the qualifying drug that resulted in an increase 
in the wholesale acquisition cost of that drug 
that is equal to— 
‘‘(i) 10 percent or more within a 12- 
month period that begins and ends during 
the 5-year period preceding January 1, 
2021; or 
‘‘(ii) 25 percent or more within a 36- 
month period that begins and ends during 
the 5-year period preceding January 1, 
2021. 
‘‘(2) REPORT
DEADLINE.—Each report de-
scribed in paragraph (1) shall be submitted to the 
Secretary— 
‘‘(A) in the case of a report with respect 
to an increase in the price of a qualifying drug 
that occurs during the period beginning on Jan-
uary 1, 2019, and ending on the day that is 60 
days after the date of the enactment of this sec-
140 
tion, not later than 90 days after such date of 
enactment; 
‘‘(B) in the case of a report with respect 
to an increase in the price of a qualifying drug 
that occurs after the period described in sub-
paragraph (A), not later than 30 days prior to 
the planned effective date of such price increase 
for such qualifying drug; 
‘‘(C) in the case of a report with respect 
to a qualifying drug that meets the criteria 
under paragraph (1)(B), not later than 30 days 
after such drug meets such criteria; and 
‘‘(D) in the case of a report with respect 
to an increase in the price of a qualifying drug 
that occurs during a 12-month or 36-month pe-
riod described in paragraph (1)(C), not later 
than April 1, 2021. 
‘‘(c) CONTENTS.—A report under subsection (b), con-
sistent with the standard for disclosures described in sec-
tion 213.3(d) of title 12, Code of Federal Regulations (as 
in effect on the date of enactment of this section), shall, 
at a minimum, include— 
‘‘(1) with respect to the qualifying drug— 
‘‘(A) the percentage by which the manufac-
turer will raise the wholesale acquisition cost of
141 
the drug within the 12-month period or 36- 
month period as described in subsection 
(b)(1)(A)(i), 
(b)(1)(A)(ii), 
(b)(1)(C)(i), 
or 
(b)(1)(C)(ii), as applicable, and the effective 
date of such price increase or the cost associ-
ated with a qualifying drug if such drug meets 
the criteria under subsection (b)(1)(B) and the 
effective date at which such drug meets such 
criteria; 
‘‘(B) an explanation for, and description 
of, each price increase for such drug that will 
occur during the 12-month period or the 36- 
month 
period 
described 
in 
subsection 
(b)(1)(A)(i), 
(b)(1)(A)(ii), 
(b)(1)(C)(i), 
or 
(b)(1)(C)(ii), as applicable; 
‘‘(C) an explanation for, and description 
of, the cost associated with a qualifying drug if 
such drug meets the criteria under subsection 
(b)(1)(B), as applicable; 
‘‘(D) if known and different from the man-
ufacturer of the qualifying drug, the identity 
of— 
‘‘(i) the sponsor or sponsors of any in-
vestigational new drug applications under 
section 505(i) of the Federal Food, Drug,
142 
and Cosmetic Act for clinical investigations 
with respect to such drug, for which the 
full reports are submitted as part of the 
application— 
‘‘(I) for approval of the drug 
under section 505 of such Act; or 
‘‘(II) for licensure of the drug 
under section 351 of the Pubic Health 
Service Act; and 
‘‘(ii) the sponsor of an application for 
the drug approved under such section 505 
of the Federal Food, Drug, and Cosmetic 
Act or licensed under section 351 of the 
Public Health Service Act; 
‘‘(E) a description of the history of the 
manufacturer’s price increases for the drug 
since the approval of the application for the 
drug under section 505 of the Federal Food, 
Drug, and Cosmetic Act or the issuance of the 
license for the drug under section 351 of the 
Public Health Service Act, or since the manu-
facturer acquired such approved application or 
license, if applicable; 
‘‘(F) the current wholesale acquisition cost 
of the drug;
143 
‘‘(G) the total expenditures of the manu-
facturer on— 
‘‘(i) materials and manufacturing for 
such drug; 
‘‘(ii) acquiring patents and licensing 
for such drug; and 
‘‘(iii) purchasing or acquiring such 
drug from another manufacturer, if appli-
cable; 
‘‘(H) the percentage of total expenditures 
of the manufacturer on research and develop-
ment for such drug that was derived from Fed-
eral funds; 
‘‘(I) the total expenditures of the manufac-
turer on research and development for such 
drug that is necessary to demonstrate that it 
meets applicable statutory standards for ap-
proval under section 505 of the Federal Food, 
Drug, and Cosmetic Act or licensure under sec-
tion 351 of the Public Health Service Act, as 
applicable; 
‘‘(J) the total expenditures of the manufac-
turer on pursuing new or expanded indications 
or dosage changes for such drug under section 
505 of the Federal Food, Drug, and Cosmetic
144 
Act or section 351 of the Public Health Service 
Act; 
‘‘(K) the total expenditures of the manu-
facturer on carrying out postmarket require-
ments related to such drug, including under 
section 505(o)(3) of the Federal Food, Drug, 
and Cosmetic Act; 
‘‘(L) the total revenue and the net profit 
generated from the qualifying drug for each cal-
endar year since the approval of the application 
for the drug under section 505 of the Federal 
Food, Drug, and Cosmetic Act or the issuance 
of the license for the drug under section 351 of 
the Public Health Service Act, or since the 
manufacturer acquired such approved applica-
tion or license; and 
‘‘(M) the total costs associated with mar-
keting and advertising for the qualifying drug; 
‘‘(2) with respect to the manufacturer— 
‘‘(A) the total revenue and the net profit 
of the manufacturer for each of the 12-month 
period described in subsection (b)(1)(A)(i) or 
(b)(1)(C)(i) or the 36-month period described in 
subsection (b)(1)(A)(ii) or (b)(1)(C)(ii), as ap-
plicable;
145 
‘‘(B) all stock-based performance metrics 
used by the manufacturer to determine execu-
tive compensation for each of the 12-month pe-
riods described in subsection (b)(1)(A)(i) or 
(b)(1)(C)(i) or the 36-month periods described 
in subsection (b)(1)(A)(ii) or (b)(1)(C)(ii), as 
applicable; and 
‘‘(C) any additional information the manu-
facturer chooses to provide related to drug pric-
ing decisions, such as total expenditures on— 
‘‘(i) drug research and development; 
or 
‘‘(ii) clinical trials, including on drugs 
that failed to receive approval by the Food 
and Drug Administration; and 
‘‘(3) such other related information as the Sec-
retary considers appropriate and as specified by the 
Secretary. 
‘‘(d) INFORMATION PROVIDED.—The manufacturer 
of a qualifying drug that is required to submit a report 
under subsection (b), shall ensure that such report and 
any explanation for, and description of, each price increase 
described in subsection (c)(1) shall be truthful, not mis-
leading, and accurate.
146 
‘‘(e) CIVIL MONETARY PENALTY.—Any manufac-
turer of a qualifying drug that fails to submit a report 
for the drug as required by this section, following notifica-
tion by the Secretary to the manufacturer that the manu-
facturer is not in compliance with this section, shall be 
subject to a civil monetary penalty of $75,000 for each 
day on which the violation continues. 
‘‘(f) FALSE INFORMATION.—Any manufacturer that 
submits a report for a drug as required by this section 
that knowingly provides false information in such report 
is subject to a civil monetary penalty in an amount not 
to exceed $100,000 for each item of false information. 
‘‘(g) PUBLIC POSTING.— 
‘‘(1) IN GENERAL.—Subject to paragraph (4), 
the Secretary shall post each report submitted under 
subsection (b) on the public website of the Depart-
ment of Health and Human Services the day the 
price increase of a qualifying drug is scheduled to go 
into effect. 
‘‘(2) FORMAT.—In developing the format in 
which reports will be publicly posted under para-
graph (1), the Secretary shall consult with stake-
holders, including beneficiary groups, and shall seek 
feedback from consumer advocates and readability 
experts on the format and presentation of the con-
147 
tent of such reports to ensure that such reports 
are— 
‘‘(A) user-friendly to the public; and 
‘‘(B) written in plain language that con-
sumers can readily understand. 
‘‘(3) LIST.—In addition to the reports sub-
mitted under subsection (b), the Secretary shall also 
post a list of each qualifying drug with respect to 
which the manufacturer was required to submit such 
a report in the preceding year and whether such 
manufacturer was required to submit such report 
based on a qualifying price increase or whether such 
drug meets the criteria under subsection (b)(1)(B). 
‘‘(4) PROTECTED
INFORMATION.—In carrying 
out this section, the Secretary shall enforce applica-
ble law concerning the protection of confidential 
commercial information and trade secrets. 
‘‘SEC. 1150D. ANNUAL REPORT TO CONGRESS. 
‘‘(a) IN GENERAL.—Subject to subsection (b), the 
Secretary shall submit to the Committees on Energy and 
Commerce and Ways and Means of the House of Rep-
resentatives and the Committees on Health, Education, 
Labor, and Pensions and Finance of the Senate, and post 
on the public website of the Department of Health and 
Human Services in a way that is user-friendly to the pub-
171 
(as defined by the Secretary) to the physician’s 
or practitioner’s own patients as part of the 
physician’s or practitioner’s professional serv-
ice.’’. 
(f) EXCLUSION MODIFICATIONS.—Section 1862(a) of 
the Social Security Act (42 U.S.C. 1395y(a)) is amend-
ed— 
(1) in paragraph (1)— 
(A) in subparagraph (O), by striking 
‘‘and’’ at the end; 
(B) in subparagraph (P), by striking the 
semicolon at the end and inserting ‘‘, and’’; and 
(C) by adding at the end the following new 
subparagraph: 
‘‘(Q) in the case of dental and oral health serv-
ices (as defined in section 1861(kkk)) that are pre-
ventive and screening services described in para-
graph (2) of such section, which are furnished more 
frequently than provided under section 1834(x)(3) 
and under circumstances other than circumstances 
determined appropriate under such section;’’; and 
(2) in paragraph (12), by inserting before the 
semicolon at the end the following: ‘‘and except that 
payment may be made under part B for dental and
270 
‘‘(A) a demonstration that the State in 
which the demonstration project is to be con-
ducted has in effect policies or laws that permit 
certain allied health and behavioral health care 
credentials to be awarded to people with certain 
arrest or conviction records (which policies or 
laws shall include appeals processes, waivers, 
certificates, and other opportunities to dem-
onstrate rehabilitation to obtain credentials, li-
censure, and approval to work in the proposed 
health careers), and a plan described in the ap-
plication that will use a career pathway to as-
sist participants with such a record in acquiring 
credentials, licensing, and employment in the 
specified careers; 
‘‘(B) a discussion of how the project or fu-
ture strategic hiring decisions will demonstrate 
the experience and expertise of the project in 
working with job seekers who have arrest or 
conviction records or employers with experience 
working with people with arrest or conviction 
records; 
‘‘(C) an identification of promising innova-
tions or best practices that can be used to pro-
vide the training;