H. R. 5376 
One Hundred Seventeenth Congress 
of the 
United States of America 
AT THE SECOND SESSION 
Begun and held at the City of Washington on Monday, 
the third day of January, two thousand and twenty-two 
An Act 
To provide for reconciliation pursuant to title II of S. Con. Res. 14. 
Be it enacted by the Senate and House of Representatives of 
the United States of America in Congress assembled, 
TITLE I—COMMITTEE ON FINANCE 
Subtitle A—Deficit Reduction 
SECTION 10001. AMENDMENT OF 1986 CODE. 
Except as otherwise expressly provided, whenever in this sub-
title an amendment or repeal is expressed in terms of an amend-
ment to, or repeal of, a section or other provision, the reference 
shall be considered to be made to a section or other provision 
of the Internal Revenue Code of 1986. 
PART 1—CORPORATE TAX REFORM 
SEC. 10101. CORPORATE ALTERNATIVE MINIMUM TAX. 
(a) IMPOSITION OF TAX.— 
(1) IN GENERAL.—Paragraph (2) of section 55(b) is amended 
to read as follows: 
‘‘(2) CORPORATIONS.— 
‘‘(A) APPLICABLE
CORPORATIONS.—In the case of an 
applicable corporation, the tentative minimum tax for the 
taxable year shall be the excess of— 
‘‘(i) 15 percent of the adjusted financial statement 
income for the taxable year (as determined under sec-
tion 56A), over 
‘‘(ii) the corporate AMT foreign tax credit for the 
taxable year. 
‘‘(B) OTHER CORPORATIONS.—In the case of any corpora-
tion which is not an applicable corporation, the tentative 
minimum tax for the taxable year shall be zero.’’. 
(2) APPLICABLE CORPORATION.—Section 59 is amended by 
adding at the end the following new subsection: 
‘‘(k) APPLICABLE CORPORATION.—For purposes of this part— 
‘‘(1) APPLICABLE CORPORATION DEFINED.— 
‘‘(A) IN
GENERAL.—The term ‘applicable corporation’ 
means, with respect to any taxable year, any corporation 
(other than an S corporation, a regulated investment com-
pany, or a real estate investment trust) which meets the
H. R. 5376—2 
average annual adjusted financial statement income test 
of subparagraph (B) for one or more taxable years which— 
‘‘(i) are prior to such taxable year, and 
‘‘(ii) end after December 31, 2021. 
‘‘(B) AVERAGE ANNUAL ADJUSTED FINANCIAL STATEMENT 
INCOME TEST.—For purposes of this subsection— 
‘‘(i) a corporation meets the average annual 
adjusted financial statement income test for a taxable 
year if the average annual adjusted financial statement 
income of such corporation (determined without regard 
to section 56A(d)) for the 3-taxable-year period ending 
with such taxable year exceeds $1,000,000,000, and 
‘‘(ii) in the case of a corporation described in para-
graph (2), such corporation meets the average annual 
adjusted financial statement income test for a taxable 
year if— 
‘‘(I) the corporation meets the requirements 
of clause (i) for such taxable year (determined after 
the application of paragraph (2)), and 
‘‘(II) the average annual adjusted financial 
statement income of such corporation (determined 
without regard to the application of paragraph 
(2) and without regard to section 56A(d)) for the 
3-taxable-year-period ending with such taxable 
year is $100,000,000 or more. 
‘‘(C) EXCEPTION.—Notwithstanding subparagraph (A), 
the term ‘applicable corporation’ shall not include any cor-
poration which otherwise meets the requirements of 
subparagraph (A) if— 
‘‘(i) such corporation— 
‘‘(I) has a change in ownership, or 
‘‘(II) has a specified number (to be determined 
by the Secretary and which shall, as appropriate, 
take into account the facts and circumstances of 
the 
taxpayer) 
of 
consecutive 
taxable 
years, 
including the most recent taxable year, in which 
the corporation does not meet the average annual 
adjusted financial statement income test of 
subparagraph (B), and 
‘‘(ii) the Secretary determines that it would not 
be appropriate to continue to treat such corporation 
as an applicable corporation. 
The preceding sentence shall not apply to any corporation 
if, after the Secretary makes the determination described 
in clause (ii), such corporation meets the average annual 
adjusted financial statement income test of subparagraph 
(B) for any taxable year beginning after the first taxable 
year for which such determination applies. 
‘‘(D) SPECIAL RULES FOR DETERMINING APPLICABLE COR-
PORATION STATUS.— 
‘‘(i) IN
GENERAL.—Solely for purposes of deter-
mining whether a corporation is an applicable corpora-
tion under this paragraph, all adjusted financial state-
ment income of persons treated as a single employer 
with such corporation under subsection (a) or (b) of 
section 52 (determined with the modifications described 
in clause (ii)) shall be treated as adjusted financial
H. R. 5376—3 
statement income of such corporation, and adjusted 
financial statement income of such corporation shall 
be determined without regard to paragraphs (2)(D)(i) 
and (11) of section 56A(c). 
‘‘(ii) 
MODIFICATIONS.—For 
purposes 
of 
this 
subparagraph— 
‘‘(I) section 52(a) shall be applied by sub-
stituting ‘component members’ for ‘members’, and 
‘‘(II) for purposes of applying section 52(b), 
the term ‘trade or business’ shall include any 
activity treated as a trade or business under para-
graph (5) or (6) of section 469(c) (determined with-
out regard to the phrase ‘To the extent provided 
in regulations’ in such paragraph (6)). 
‘‘(iii) COMPONENT MEMBER.—For purposes of this 
subparagraph, the term ‘component member’ has the 
meaning given such term by section 1563(b), except 
that the determination shall be made without regard 
to section 1563(b)(2). 
‘‘(E) OTHER SPECIAL RULES.— 
‘‘(i) CORPORATIONS IN EXISTENCE FOR LESS THAN 
3 YEARS.—If the corporation was in existence for less 
than 3-taxable years, subparagraph (B) shall be applied 
on the basis of the period during which such corpora-
tion was in existence. 
‘‘(ii) SHORT
TAXABLE
YEARS.—Adjusted financial 
statement income for any taxable year of less than 
12 months shall be annualized by multiplying the 
adjusted financial statement income for the short 
period by 12 and dividing the result by the number 
of months in the short period. 
‘‘(iii) TREATMENT
OF
PREDECESSORS.—Any ref-
erence in this subparagraph to a corporation shall 
include a reference to any predecessor of such corpora-
tion. 
‘‘(2) SPECIAL RULE FOR FOREIGN-PARENTED MULTINATIONAL 
GROUPS.— 
‘‘(A) IN
GENERAL.—If a corporation is a member of 
a foreign-parented multinational group for any taxable 
year, then, solely for purposes of determining whether such 
corporation meets the average annual adjusted financial 
statement income test under paragraph (1)(B)(ii)(I) for such 
taxable year, the adjusted financial statement income of 
such corporation for such taxable year shall include the 
adjusted financial statement income of all members of such 
group. Solely for purposes of this subparagraph, adjusted 
financial statement income shall be determined without 
regard to paragraphs (2)(D)(i), (3), (4), and (11) of section 
56A(c). 
‘‘(B) FOREIGN-PARENTED MULTINATIONAL GROUP.—For 
purposes of subparagraph (A), the term ‘foreign-parented 
multinational group’ means, with respect to any taxable 
year, two or more entities if— 
‘‘(i) at least one entity is a domestic corporation 
and another entity is a foreign corporation,
H. R. 5376—4 
‘‘(ii) such entities are included in the same 
applicable financial statement with respect to such 
year, and 
‘‘(iii) either— 
‘‘(I) the common parent of such entities is a 
foreign corporation, or 
‘‘(II) if there is no common parent, the entities 
are treated as having a common parent which 
is a foreign corporation under subparagraph (D). 
‘‘(C) FOREIGN CORPORATIONS ENGAGED IN A TRADE OR 
BUSINESS WITHIN THE UNITED STATES.—For purposes of this 
paragraph, if a foreign corporation is engaged in a trade 
or business within the United States, such trade or busi-
ness shall be treated as a separate domestic corporation 
that is wholly owned by the foreign corporation. 
‘‘(D) OTHER RULES.—The Secretary shall, applying the 
principles of this section, prescribe rules for the application 
of this paragraph, including rules for the determination 
of— 
‘‘(i) the entities (if any) which are to be to be 
treated under subparagraph (B)(iii)(II) as having a 
common parent which is a foreign corporation, 
‘‘(ii) the entities to be included in a foreign- 
parented multinational group, and 
‘‘(iii) the common parent of a foreign-parented 
multinational group. 
‘‘(3) REGULATIONS
OR
OTHER
GUIDANCE.—The Secretary 
shall provide regulations or other guidance for the purposes 
of carrying out this subsection, including regulations or other 
guidance— 
‘‘(A) providing a simplified method for determining 
whether a corporation meets the requirements of paragraph 
(1), and 
‘‘’(B) addressing the application of this subsection to 
a corporation that experiences a change in ownership.’’. 
(3) REDUCTION FOR BASE EROSION AND ANTI-ABUSE TAX.— 
Section 55(a)(2) is amended by inserting ‘‘plus, in the case 
of an applicable corporation, the tax imposed by section 59A’’ 
before the period at the end. 
(4) CONFORMING AMENDMENTS.— 
(A) Section 55(a) is amended by striking ‘‘In the case 
of a taxpayer other than a corporation, there’’ and inserting 
‘‘There’’. 
(B)(i) Section 55(b)(1) is amended— 
(I) by striking so much as precedes subparagraph 
(A) and inserting the following: 
‘‘(1) NONCORPORATE TAXPAYERS.—In the case of a taxpayer 
other than a corporation—’’, and 
(II) by adding at the end the following new 
subparagraph: 
‘‘(D) ALTERNATIVE
MINIMUM
TAXABLE
INCOME.—The 
term ‘alternative minimum taxable income’ means the tax-
able income of the taxpayer for the taxable year— 
‘‘(i) determined with the adjustments provided in 
section 56 and section 58, and 
‘‘(ii) increased by the amount of the items of tax 
preference described in section 57.
H. R. 5376—5 
If a taxpayer is subject to the regular tax, such taxpayer 
shall be subject to the tax imposed by this section (and, 
if the regular tax is determined by reference to an amount 
other than taxable income, such amount shall be treated 
as the taxable income of such taxpayer for purposes of 
the preceding sentence).’’. 
(ii) Section 860E(a)(4) is amended by striking ‘‘55(b)(2)’’ 
and inserting ‘‘55(b)(1)(D)’’. 
(iii) Section 897(a)(2)(A)(i) is amended by striking 
‘‘55(b)(2)’’ and inserting ‘‘55(b)(1)(D)’’. 
(C) Section 11(d) is amended by striking ‘‘the tax 
imposed by subsection (a)’’ and inserting ‘‘the taxes imposed 
by subsection (a) and section 55’’. 
(D) Section 12 is amended by adding at the end the 
following new paragraph: 
‘‘(5) For alternative minimum tax, see section 55.’’. 
(E) Section 882(a)(1) is amended by inserting ‘‘, 55,’’ 
after ‘‘section 11’’. 
(F) Section 6425(c)(1)(A) is amended to read as follows: 
‘‘(A) the sum of— 
‘‘(i) the tax imposed by section 11 or subchapter 
L of chapter 1, whichever is applicable, plus 
‘‘(ii) the tax imposed by section 55, plus 
‘‘(iii) the tax imposed by section 59A, over’’. 
(G) Section 6655(e)(2) is amended by inserting ‘‘, 
adjusted financial statement income (as defined in section 
56A),’’ before ‘‘and modified taxable income’’ each place 
it appears in subparagraphs (A)(i) and (B)(i). 
(H) Section 6655(g)(1)(A) is amended by redesignating 
clauses (ii) and (iii) as clauses (iii) and (iv), respectively, 
and by inserting after clause (i) the following new clause: 
‘‘(ii) the tax imposed by section 55,’’. 
(b) ADJUSTED FINANCIAL STATEMENT INCOME.— 
(1) IN GENERAL.—Part VI of subchapter A of chapter 1 
is amended by inserting after section 56 the following new 
section: 
‘‘SEC. 56A. ADJUSTED FINANCIAL STATEMENT INCOME. 
‘‘(a) IN GENERAL.—For purposes of this part, the term ‘adjusted 
financial statement income’ means, with respect to any corporation 
for any taxable year, the net income or loss of the taxpayer set 
forth on the taxpayer’s applicable financial statement for such tax-
able year, adjusted as provided in this section. 
‘‘(b) APPLICABLE FINANCIAL STATEMENT.—For purposes of this 
section, the term ‘applicable financial statement’ means, with 
respect to any taxable year, an applicable financial statement (as 
defined in section 451(b)(3) or as specified by the Secretary in 
regulations or other guidance) which covers such taxable year. 
‘‘(c) GENERAL ADJUSTMENTS.— 
‘‘(1) STATEMENTS COVERING DIFFERENT TAXABLE YEARS.— 
Appropriate adjustments shall be made in adjusted financial 
statement income in any case in which an applicable financial 
statement covers a period other than the taxable year. 
‘‘(2) SPECIAL RULES FOR RELATED ENTITIES.— 
‘‘(A) CONSOLIDATED
FINANCIAL
STATEMENTS.—If the 
financial results of a taxpayer are reported on the
H. R. 5376—6 
applicable financial statement for a group of entities, rules 
similar to the rules of section 451(b)(5) shall apply. 
‘‘(B) CONSOLIDATED RETURNS.—Except as provided in 
regulations prescribed by the Secretary, if the taxpayer 
is part of an affiliated group of corporations filing a consoli-
dated return for any taxable year, adjusted financial state-
ment income for such group for such taxable year shall 
take into account items on the group’s applicable financial 
statement which are properly allocable to members of such 
group. 
‘‘(C) TREATMENT OF DIVIDENDS AND OTHER AMOUNTS.— 
In the case of any corporation which is not included on 
a consolidated return with the taxpayer, adjusted financial 
statement income of the taxpayer with respect to such 
other corporation shall be determined by only taking into 
account the dividends received from such other corporation 
(reduced to the extent provided by the Secretary in regula-
tions or other guidance) and other amounts which are 
includible in gross income or deductible as a loss under 
this chapter (other than amounts required to be included 
under sections 951 and 951A or such other amounts as 
provided by the Secretary) with respect to such other cor-
poration. 
‘‘(D) TREATMENT OF PARTNERSHIPS.— 
‘‘(i) IN GENERAL.—Except as provided by the Sec-
retary, if the taxpayer is a partner in a partnership, 
adjusted financial statement income of the taxpayer 
with respect to such partnership shall be adjusted 
to only take into account the taxpayer’s distributive 
share of adjusted financial statement income of such 
partnership. 
‘‘(ii) ADJUSTED FINANCIAL STATEMENT INCOME OF 
PARTNERSHIPS.—For the purposes of this part, the 
adjusted financial statement income of a partnership 
shall be the partnership’s net income or loss set forth 
on such partnership’s applicable financial statement 
(adjusted under rules similar to the rules of this sec-
tion). 
‘‘(3) ADJUSTMENTS TO TAKE INTO ACCOUNT CERTAIN ITEMS 
OF FOREIGN INCOME.— 
‘‘(A) IN GENERAL.—If, for any taxable year, a taxpayer 
is a United States shareholder of one or more controlled 
foreign corporations, the adjusted financial statement 
income of such taxpayer with respect to such controlled 
foreign corporation (as determined under paragraph (2)(C)) 
shall be adjusted to also take into account such taxpayer’s 
pro rata share (determined under rules similar to the rules 
under section 951(a)(2)) of items taken into account in 
computing the net income or loss set forth on the applicable 
financial statement (as adjusted under rules similar to 
those that apply in determining adjusted financial state-
ment income) of each such controlled foreign corporation 
with respect to which such taxpayer is a United States 
shareholder. 
‘‘(B) NEGATIVE ADJUSTMENTS.—In any case in which 
the adjustment determined under subparagraph (A) would 
result in a negative adjustment for such taxable year—
H. R. 5376—7 
‘‘(i) no adjustment shall be made under this para-
graph for such taxable year, and 
‘‘(ii) the amount of the adjustment determined 
under this paragraph for the succeeding taxable year 
(determined without regard to this paragraph) shall 
be reduced by an amount equal to the negative adjust-
ment for such taxable year. 
‘‘(4) EFFECTIVELY CONNECTED INCOME.—In the case of a 
foreign corporation, to determine adjusted financial statement 
income, the principles of section 882 shall apply. 
‘‘(5) ADJUSTMENTS FOR CERTAIN TAXES.—Adjusted financial 
statement income shall be appropriately adjusted to disregard 
any Federal income taxes, or income, war profits, or excess 
profits taxes (within the meaning of section 901) with respect 
to a foreign country or possession of the United States, which 
are taken into account on the taxpayer’s applicable financial 
statement. To the extent provided by the Secretary, the pre-
ceding sentence shall not apply to income, war profits, or excess 
profits taxes (within the meaning of section 901) that are 
imposed by a foreign country or possession of the United States 
and taken into account on the taxpayer’s applicable financial 
statement if the taxpayer does not choose to have the benefits 
of subpart A of part III of subchapter N for the taxable year. 
The Secretary shall prescribe such regulations or other guid-
ance as may be necessary and appropriate to provide for the 
proper treatment of current and deferred taxes for purposes 
of this paragraph, including the time at which such taxes 
are properly taken into account. 
‘‘(6) ADJUSTMENT
WITH
RESPECT
TO
DISREGARDED
ENTI-
TIES.—Adjusted financial statement income shall be adjusted 
to take into account any adjusted financial statement income 
of a disregarded entity owned by the taxpayer. 
‘‘(7) SPECIAL RULE FOR COOPERATIVES.—In the case of a 
cooperative to which section 1381 applies, the adjusted financial 
statement income (determined without regard to this para-
graph) shall be reduced by the amounts referred to in section 
1382(b) (relating to patronage dividends and per-unit retain 
allocations) to the extent such amounts were not otherwise 
taken into account in determining adjusted financial statement 
income. 
‘‘(8) RULES FOR ALASKA NATIVE CORPORATIONS.—Adjusted 
financial statement income shall be appropriately adjusted to 
allow— 
‘‘(A) cost recovery and depletion attributable to prop-
erty the basis of which is determined under section 21(c) 
of the Alaska Native Claims Settlement Act (43 U.S.C. 
1620(c)), and 
‘‘(B) deductions for amounts payable made pursuant 
to section 7(i) or section 7(j) of such Act (43 U.S.C. 1606(i) 
and 1606(j)) only at such time as the deductions are allowed 
for tax purposes. 
‘‘(9) AMOUNTS ATTRIBUTABLE TO ELECTIONS FOR DIRECT PAY-
MENT
OF
CERTAIN
CREDITS.—Adjusted financial statement 
income shall be appropriately adjusted to disregard any amount 
treated as a payment against the tax imposed by subtitle A 
pursuant to an election under section 48D(d) or 6417, to the
H. R. 5376—8 
extent such amount was not otherwise taken into account under 
paragraph (5). 
‘‘(10) CONSISTENT
TREATMENT
OF
MORTGAGE
SERVICING 
INCOME OF TAXPAYER OTHER THAN A REGULATED INVESTMENT 
COMPANY.— 
‘‘(A) IN GENERAL.—Adjusted financial statement income 
shall be adjusted so as not to include any item of income 
in connection with a mortgage servicing contract any earlier 
than when such income is included in gross income under 
any other provision of this chapter. 
‘‘(B) RULES FOR AMOUNTS NOT REPRESENTING REASON-
ABLE COMPENSATION.—The Secretary shall provide regula-
tions to prevent the avoidance of taxes imposed by this 
chapter with respect to amounts not representing reason-
able compensation (as determined by the Secretary) with 
respect to a mortgage servicing contract. 
‘‘(11) ADJUSTMENT WITH RESPECT TO DEFINED BENEFIT PEN-
SIONS.— 
‘‘(A) IN
GENERAL.—Except as otherwise provided in 
rules prescribed by the Secretary in regulations or other 
guidance, adjusted financial statement income shall be— 
‘‘(i) adjusted to disregard any amount of income, 
cost, or expense that would otherwise be included on 
the applicable financial statement in connection with 
any covered benefit plan, 
‘‘(ii) increased by any amount of income in connec-
tion with any such covered benefit plan that is included 
in the gross income of the corporation under any other 
provision of this chapter, and 
‘‘(iii) reduced by deductions allowed under any 
other provision of this chapter with respect to any 
such covered benefit plan. 
‘‘(B) COVERED
BENEFIT
PLAN.—For purposes of this 
paragraph, the term ‘covered benefit plan’ means— 
‘‘(i) a defined benefit plan (other than a multiem-
ployer plan described in section 414(f)) if the trust 
which is part of such plan is an employees’ trust 
described in section 401(a) which is exempt from tax 
under section 501(a), 
‘‘(ii) any qualified foreign plan (as defined in sec-
tion 404A(e)), or 
‘‘(iii) any other defined benefit plan which provides 
post-employment benefits other than pension benefits. 
‘‘(12) TAX-EXEMPT ENTITIES.—In the case of an organization 
subject to tax under section 511, adjusted financial statement 
income shall be appropriately adjusted to only take into account 
any adjusted financial statement income— 
‘‘(A) of an unrelated trade or business (as defined in 
section 513) of such organization, or 
‘‘(B) derived from debt-financed property (as defined 
in section 514) to the extent that income from such property 
is treated as unrelated business taxable income. 
‘‘(13) DEPRECIATION.—Adjusted financial statement income 
shall be— 
‘‘(A) reduced by depreciation deductions allowed under 
section 167 with respect to property to which section 168
H. R. 5376—9 
applies to the extent of the amount allowed as deductions 
in computing taxable income for the taxable year, and 
‘‘(B) appropriately adjusted— 
‘‘(i) to disregard any amount of depreciation 
expense that is taken into account on the taxpayer’s 
applicable financial statement with respect to such 
property, and 
‘‘(ii) to take into account any other item specified 
by the Secretary in order to provide that such property 
is accounted for in the same manner as it is accounted 
for under this chapter. 
‘‘(14) QUALIFIED WIRELESS SPECTRUM.— 
‘‘(A) IN GENERAL.—Adjusted financial statement income 
shall be— 
‘‘(i) reduced by amortization deductions allowed 
under section 197 with respect to qualified wireless 
spectrum to the extent of the amount allowed as deduc-
tions in computing taxable income for the taxable year, 
and 
‘‘(ii) appropriately adjusted— 
‘‘(I) to disregard any amount of amortization 
expense that is taken into account on the tax-
payer’s applicable financial statement with respect 
to such qualified wireless spectrum, and 
‘‘(II) to take into account any other item speci-
fied by the Secretary in order to provide that such 
qualified wireless spectrum is accounted for in the 
same manner as it is accounted for under this 
chapter. 
‘‘(B) QUALIFIED WIRELESS SPECTRUM.—For purposes of 
this paragraph, the term ‘qualified wireless spectrum’ 
means wireless spectrum which— 
‘‘(i) is used in the trade or business of a wireless 
telecommunications carrier, and 
‘‘(ii) was acquired after December 31, 2007, and 
before the date of enactment of this section. 
‘‘(15) SECRETARIAL AUTHORITY TO ADJUST ITEMS.—The Sec-
retary shall issue regulations or other guidance to provide 
for such adjustments to adjusted financial statement income 
as the Secretary determines necessary to carry out the purposes 
of this section, including adjustments— 
‘‘(A) to prevent the omission or duplication of any item, 
and 
‘‘(B) to carry out the principles of part II of subchapter 
C of this chapter (relating to corporate liquidations), part 
III of subchapter C of this chapter (relating to corporate 
organizations and reorganizations), and part II of sub-
chapter K of this chapter (relating to partnership contribu-
tions and distributions). 
‘‘(d) DEDUCTION FOR FINANCIAL STATEMENT NET OPERATING 
LOSS.— 
‘‘(1) IN
GENERAL.—Adjusted financial statement income 
(determined after application of subsection (c) and without 
regard to this subsection) shall be reduced by an amount equal 
to the lesser of— 
‘‘(A) the aggregate amount of financial statement net 
operating loss carryovers to the taxable year, or
H. R. 5376—10 
‘‘(B) 80 percent of adjusted financial statement income 
computed without regard to the deduction allowable under 
this subsection. 
‘‘(2) FINANCIAL
STATEMENT
NET
OPERATING
LOSS
CARRY-
OVER.—A financial statement net operating loss for any taxable 
year shall be a financial statement net operating loss carryover 
to each taxable year following the taxable year of the loss. 
The portion of such loss which shall be carried to subsequent 
taxable years shall be the amount of such loss remaining (if 
any) after the application of paragraph (1). 
‘‘(3) FINANCIAL STATEMENT NET OPERATING LOSS DEFINED.— 
For purposes of this subsection, the term ‘financial statement 
net operating loss’ means the amount of the net loss (if any) 
set forth on the corporation’s applicable financial statement 
(determined after application of subsection (c) and without 
regard to this subsection) for taxable years ending after 
December 31, 2019. 
‘‘(e) REGULATIONS AND OTHER GUIDANCE.—The Secretary shall 
provide for such regulations and other guidance as necessary to 
carry out the purposes of this section, including regulations and 
other guidance relating to the effect of the rules of this section 
on partnerships with income taken into account by an applicable 
corporation.’’. 
(2) CLERICAL AMENDMENT.—The table of sections for part 
VI of subchapter A of chapter 1 is amended by inserting after 
the item relating to section 56 the following new item: 
‘‘Sec. 56A. Adjusted financial statement income.’’. 
(c) CORPORATE AMT FOREIGN TAX CREDIT.—Section 59, as 
amended by this section, is amended by adding at the end the 
following new subsection: 
‘‘(l) CORPORATE AMT FOREIGN TAX CREDIT.— 
‘‘(1) IN GENERAL.—For purposes of this part, if an applicable 
corporation chooses to have the benefits of subpart A of part 
III of subchapter N for any taxable year, the corporate AMT 
foreign tax credit for the taxable year of the applicable corpora-
tion is an amount equal to sum of— 
‘‘(A) the lesser of— 
‘‘(i) the aggregate of the applicable corporation’s 
pro rata share (as determined under section 56A(c)(3)) 
of the amount of income, war profits, and excess profits 
taxes (within the meaning of section 901) imposed 
by any foreign country or possession of the United 
States which are— 
‘‘(I) taken into account on the applicable finan-
cial statement of each controlled foreign corpora-
tion with respect to which the applicable corpora-
tion is a United States shareholder, and 
‘‘(II) paid or accrued (for Federal income tax 
purposes) by each such controlled foreign corpora-
tion, or 
‘‘(ii) the product of the amount of the adjustment 
under section 56A(c)(3) and the percentage specified 
in section 55(b)(2)(A)(i), and 
‘‘(B) in the case of an applicable corporation that is 
a domestic corporation, the amount of income, war profits, 
and excess profits taxes (within the meaning of section
H. R. 5376—11 
901) imposed by any foreign country or possession of the 
United States to the extent such taxes are— 
‘‘(i) taken into account on the applicable corpora-
tion’s applicable financial statement, and 
‘‘(ii) paid or accrued (for Federal income tax pur-
poses) by the applicable corporation. 
‘‘(2) CARRYOVER
OF
EXCESS
TAX
PAID.—For any taxable 
year for which an applicable corporation chooses to have the 
benefits of subpart A of part III of subchapter N, the excess 
of the amount described in paragraph (1)(A)(i) over the amount 
described in paragraph (1)(A)(ii) shall increase the amount 
described in paragraph (1)(A)(i) in any of the first 5 succeeding 
taxable years to the extent not taken into account in a prior 
taxable year. 
‘‘(3) REGULATIONS
OR
OTHER
GUIDANCE.—The Secretary 
shall provide for such regulations or other guidance as is nec-
essary to carry out the purposes of this subsection.’’. 
(d) TREATMENT
OF
GENERAL
BUSINESS
CREDIT.—Section 
38(c)(6)(E) is amended to read as follows: 
‘‘(E) CORPORATIONS.—In the case of a corporation— 
‘‘(i) the first sentence of paragraph (1) shall be 
applied by substituting ‘25 percent of the taxpayer’s 
net income tax as exceeds $25,000’ for ‘the greater 
of’ and all that follows, 
‘‘(ii) paragraph (2)(A) shall be applied without 
regard to clause (ii)(I) thereof, and 
‘‘(iii) paragraph (4)(A) shall be applied without 
regard to clause (ii)(I) thereof.’’. 
(e) CREDIT FOR PRIOR YEAR MINIMUM TAX LIABILITY.— 
(1) IN GENERAL.—Section 53(e) is amended to read as fol-
lows: 
‘‘(e) APPLICATION TO APPLICABLE CORPORATIONS.—In the case 
of a corporation— 
‘‘(1) subsection (b)(1) shall be applied by substituting ‘the 
net minimum tax for all prior taxable years beginning after 
2022’ for ‘the adjusted net minimum tax imposed for all prior 
taxable years beginning after 1986’, and 
‘‘(2) the amount determined under subsection (c)(1) shall 
be increased by the amount of tax imposed under section 59A 
for the taxable year.’’. 
(2) 
CONFORMING
AMENDMENTS.—Section 
53(d) 
is 
amended— 
(A) in paragraph (2), by striking ‘‘, except that in 
the case’’ and all that follows through ‘‘treated as zero’’, 
and 
(B) by striking paragraph (3). 
(f) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2022. 
PART 2—EXCISE TAX ON REPURCHASE OF 
CORPORATE STOCK 
SEC. 10201. EXCISE TAX ON REPURCHASE OF CORPORATE STOCK. 
(a) IN GENERAL.—Subtitle D is amended by inserting after 
chapter 36 the following new chapter:
H. R. 5376—12 
‘‘CHAPTER 37—REPURCHASE OF CORPORATE STOCK 
‘‘Sec. 4501. Repurchase of corporate stock. 
‘‘SEC. 4501. REPURCHASE OF CORPORATE STOCK. 
‘‘(a) GENERAL RULE.—There is hereby imposed on each covered 
corporation a tax equal to 1 percent of the fair market value 
of any stock of the corporation which is repurchased by such cor-
poration during the taxable year. 
‘‘(b) COVERED CORPORATION.—For purposes of this section, the 
term ‘covered corporation’ means any domestic corporation the stock 
of which is traded on an established securities market (within 
the meaning of section 7704(b)(1)). 
‘‘(c) REPURCHASE.—For purposes of this section— 
‘‘(1) IN GENERAL.—The term ‘repurchase’ means— 
‘‘(A) a redemption within the meaning of section 317(b) 
with regard to the stock of a covered corporation, and 
‘‘(B) any transaction determined by the Secretary to 
be economically similar to a transaction described in 
subparagraph (A). 
‘‘(2) TREATMENT OF PURCHASES BY SPECIFIED AFFILIATES.— 
‘‘(A) IN GENERAL.—The acquisition of stock of a covered 
corporation by a specified affiliate of such covered corpora-
tion, from a person who is not the covered corporation 
or a specified affiliate of such covered corporation, shall 
be treated as a repurchase of the stock of the covered 
corporation by such covered corporation. 
‘‘(B) SPECIFIED AFFILIATE.—For purposes of this section, 
the term ‘specified affiliate’ means, with respect to any 
corporation— 
‘‘(i) any corporation more than 50 percent of the 
stock of which is owned (by vote or by value), directly 
or indirectly, by such corporation, and 
‘‘(ii) any partnership more than 50 percent of the 
capital interests or profits interests of which is held, 
directly or indirectly, by such corporation. 
‘‘(3) ADJUSTMENT.—The amount taken into account under 
subsection (a) with respect to any stock repurchased by a cov-
ered corporation shall be reduced by the fair market value 
of any stock issued by the covered corporation during the tax-
able year, including the fair market value of any stock issued 
or provided to employees of such covered corporation or 
employees of a specified affiliate of such covered corporation 
during the taxable year, whether or not such stock is issued 
or provided in response to the exercise of an option to purchase 
such stock. 
‘‘(d) SPECIAL RULES FOR ACQUISITION OF STOCK OF CERTAIN 
FOREIGN CORPORATIONS.— 
‘‘(1) IN GENERAL.—In the case of an acquisition of stock 
of an applicable foreign corporation by a specified affiliate of 
such corporation (other than a foreign corporation or a foreign 
partnership (unless such partnership has a domestic entity 
as a direct or indirect partner)) from a person who is not 
the applicable foreign corporation or a specified affiliate of 
such applicable foreign corporation, for purposes of this sec-
tion—
H. R. 5376—13 
‘‘(A) such specified affiliate shall be treated as a covered 
corporation with respect to such acquisition, 
‘‘(B) such acquisition shall be treated as a repurchase 
of stock of a covered corporation by such covered corpora-
tion, and 
‘‘(C) the adjustment under subsection (c)(3) shall be 
determined only with respect to stock issued or provided 
by such specified affiliate to employees of the specified 
affiliate. 
‘‘(2) SURROGATE FOREIGN CORPORATIONS.—In the case of 
a repurchase of stock of a covered surrogate foreign corporation 
by such covered surrogate foreign corporation, or an acquisition 
of stock of a covered surrogate foreign corporation by a specified 
affiliate of such corporation, for purposes of this section— 
‘‘(A) the expatriated entity with respect to such covered 
surrogate foreign corporation shall be treated as a covered 
corporation with respect to such repurchase or acquisition, 
‘‘(B) such repurchase or acquisition shall be treated 
as a repurchase of stock of a covered corporation by such 
covered corporation, and 
‘‘(C) the adjustment under subsection (c)(3) shall be 
determined only with respect to stock issued or provided 
by such expatriated entity to employees of the expatriated 
entity. 
‘‘(3) DEFINITIONS.—For purposes of this subsection— 
‘‘(A) APPLICABLE
FOREIGN
CORPORATION.—The term 
‘applicable foreign corporation’ means any foreign corpora-
tion the stock of which is traded on an established securi-
ties market (within the meaning of section 7704(b)(1)). 
‘‘(B) COVERED SURROGATE FOREIGN CORPORATION.—The 
term ‘covered surrogate foreign corporation’ means any 
surrogate foreign corporation (as determined under section 
7874(a)(2)(B) by substituting ‘September 20, 2021’ for 
‘March 4, 2003’ each place it appears) the stock of which 
is traded on an established securities market (within the 
meaning of section 7704(b)(1)), but only with respect to 
taxable years which include any portion of the applicable 
period with respect to such corporation under section 
7874(d)(1). 
‘‘(C) EXPATRIATED
ENTITY.—The term ‘expatriated 
entity’ has the meaning given such term by section 
7874(a)(2)(A). 
‘‘(e) EXCEPTIONS.—Subsection (a) shall not apply— 
‘‘(1) to the extent that the repurchase is part of a reorga-
nization (within the meaning of section 368(a)) and no gain 
or loss is recognized on such repurchase by the shareholder 
under chapter 1 by reason of such reorganization, 
‘‘(2) in any case in which the stock repurchased is, or 
an amount of stock equal to the value of the stock repurchased 
is, contributed to an employer-sponsored retirement plan, 
employee stock ownership plan, or similar plan, 
‘‘(3) in any case in which the total value of the stock 
repurchased during the taxable year does not exceed 
$1,000,000, 
‘‘(4) under regulations prescribed by the Secretary, in cases 
in which the repurchase is by a dealer in securities in the 
ordinary course of business,
H. R. 5376—14 
‘‘(5) to repurchases by a regulated investment company 
(as defined in section 851) or a real estate investment trust, 
or 
‘‘(6) to the extent that the repurchase is treated as a 
dividend for purposes of this title. 
‘‘(f) REGULATIONS
AND GUIDANCE.—The Secretary shall pre-
scribe such regulations and other guidance as are necessary or 
appropriate to carry out, and to prevent the avoidance of, the 
purposes of this section, including regulations and other guidance— 
‘‘(1) to prevent the abuse of the exceptions provided by 
subsection (e), 
‘‘(2) to address special classes of stock and preferred stock, 
and 
‘‘(3) for the application of the rules under subsection (d).’’. 
(b) TAX NOT DEDUCTIBLE.—Paragraph (6) of section 275(a) is 
amended by inserting ‘‘37,’’ before ‘‘41’’. 
(c) CLERICAL AMENDMENT.—The table of chapters for subtitle 
D is amended by inserting after the item relating to chapter 36 
the following new item: 
‘‘CHAPTER 37—REPURCHASE OF CORPORATE STOCK’’. 
(d) EFFECTIVE DATE.—The amendments made by this section 
shall apply to repurchases (within the meaning of section 4501(c) 
of the Internal Revenue Code of 1986, as added by this section) 
of stock after December 31, 2022. 
PART 3—FUNDING THE INTERNAL REVENUE 
SERVICE AND IMPROVING TAXPAYER COM-
PLIANCE 
SEC. 
10301. 
ENHANCEMENT 
OF 
INTERNAL 
REVENUE 
SERVICE 
RESOURCES. 
IN GENERAL.—The following sums are appropriated, out of any 
money in the Treasury not otherwise appropriated, for the fiscal 
year ending September 30, 2022: 
(1) INTERNAL REVENUE SERVICE.— 
(A) IN GENERAL.— 
(i) TAXPAYER SERVICES.—For necessary expenses 
of the Internal Revenue Service to provide taxpayer 
services, including pre-filing assistance and education, 
filing and account services, taxpayer advocacy services, 
and other services as authorized by 5 U.S.C. 3109, 
at such rates as may be determined by the Commis-
sioner, $3,181,500,000, to remain available until Sep-
tember 30, 2031: Provided, That these amounts shall 
be in addition to amounts otherwise available for such 
purposes. 
(ii) ENFORCEMENT.—For necessary expenses for tax 
enforcement activities of the Internal Revenue Service 
to determine and collect owed taxes, to provide legal 
and litigation support, to conduct criminal investiga-
tions (including investigative technology), to provide 
digital asset monitoring and compliance activities, to 
enforce criminal statutes related to violations of 
internal revenue laws and other financial crimes, to 
purchase and hire passenger motor vehicles (31 U.S.C.
H. R. 5376—15 
1343(b)), and to provide other services as authorized 
by 5 U.S.C. 3109, at such rates as may be determined 
by the Commissioner, $45,637,400,000, to remain avail-
able until September 30, 2031: Provided, That these 
amounts shall be in addition to amounts otherwise 
available for such purposes. 
(iii) 
OPERATIONS
SUPPORT.—For 
necessary 
expenses of the Internal Revenue Service to support 
taxpayer services and enforcement programs, including 
rent payments; facilities services; printing; postage; 
physical security; headquarters and other IRS-wide 
administration activities; research and statistics of 
income; telecommunications; information technology 
development, enhancement, operations, maintenance, 
and security; the hire of passenger motor vehicles (31 
U.S.C. 1343(b)); the operations of the Internal Revenue 
Service Oversight Board; and other services as author-
ized by 5 U.S.C. 3109, at such rates as may be deter-
mined by the Commissioner, $25,326,400,000, to 
remain available until September 30, 2031: Provided, 
That these amounts shall be in addition to amounts 
otherwise available for such purposes. 
(iv) BUSINESS SYSTEMS MODERNIZATION.—For nec-
essary expenses of the Internal Revenue Service’s busi-
ness 
systems 
modernization 
program, 
including 
development of callback technology and other tech-
nology to provide a more personalized customer service 
but not including the operation and maintenance of 
legacy systems, $4,750,700,000, to remain available 
until September 30, 2031: Provided, That these 
amounts shall be in addition to amounts otherwise 
available for such purposes. 
(B) TASK FORCE TO DESIGN AN IRS-RUN FREE ‘‘DIRECT 
EFILE’’ TAX
RETURN
SYSTEM.—For necessary expenses of 
the Internal Revenue Service to deliver to Congress, within 
nine months following the date of the enactment of this 
Act, a report on (I) the cost (including options for differen-
tial coverage based on taxpayer adjusted gross income and 
return complexity) of developing and running a free direct 
efile tax return system, including costs to build and admin-
ister each release, with a focus on multi-lingual and mobile- 
friendly features and safeguards for taxpayer data; (II) 
taxpayer opinions, expectations, and level of trust, based 
on surveys, for such a free direct efile system; and (III) 
the opinions of an independent third-party on the overall 
feasibility, approach, schedule, cost, organizational design, 
and Internal Revenue Service capacity to deliver such a 
direct efile tax return system, $15,000,000, to remain avail-
able until September 30, 2023: Provided, That these 
amounts shall be in addition to amounts otherwise avail-
able for such purposes. 
(2) TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRA-
TION.—For necessary expenses of the Treasury Inspector Gen-
eral for Tax Administration in carrying out the Inspector Gen-
eral Act of 1978, as amended, including purchase and hire 
of passenger motor vehicles (31 U.S.C. 1343(b)); and services
H. R. 5376—16 
authorized by 5 U.S.C. 3109, at such rates as may be deter-
mined by the Inspector General for Tax Administration, 
$403,000,000, to remain available until September 30, 2031: 
Provided, That these amounts shall be in addition to amounts 
otherwise available for such purposes. 
(3) OFFICE OF TAX POLICY.—For necessary expenses of the 
Office of Tax Policy of the Department of the Treasury to 
carry out functions related to promulgating regulations under 
the Internal Revenue Code of 1986, $104,533,803, to remain 
available until September 30, 2031: Provided, That these 
amounts shall be in addition to amounts otherwise available 
for such purposes. 
(4) UNITED STATES TAX COURT.—For necessary expenses 
of the United States Tax Court, including contract reporting 
and 
other 
services 
as 
authorized 
by 
U.S.C. 
3109; 
$153,000,000, to remain available until September 30, 2031: 
Provided, That these amounts shall be in addition to amounts 
otherwise available for such purposes. 
(5) TREASURY
DEPARTMENTAL
OFFICES.—For necessary 
expenses of the Departmental Offices of the Department of 
the Treasury to provide for oversight and implementation sup-
port for actions by the Internal Revenue Service to implement 
this Act and the amendments made by this Act, $50,000,000, 
to remain available until September 30, 2031: Provided, That 
these amounts shall be in addition to amounts otherwise avail-
able for such purposes. 
Subtitle B—Prescription Drug Pricing 
Reform 
PART 1—LOWERING PRICES THROUGH DRUG 
PRICE NEGOTIATION 
SEC. 11001. PROVIDING FOR LOWER PRICES FOR CERTAIN HIGH- 
PRICED SINGLE SOURCE DRUGS. 
(a) PROGRAM TO LOWER PRICES
FOR CERTAIN HIGH-PRICED 
SINGLE SOURCE DRUGS.—Title XI of the Social Security Act is 
amended by adding after section 1184 (42 U.S.C. 1320e–3) the 
following new part: 
‘‘PART E—PRICE NEGOTIATION PROGRAM TO 
LOWER PRICES FOR CERTAIN HIGH-PRICED 
SINGLE SOURCE DRUGS 
‘‘SEC. 1191. ESTABLISHMENT OF PROGRAM. 
‘‘(a) IN GENERAL.—The Secretary shall establish a Drug Price 
Negotiation Program (in this part referred to as the ‘program’). 
Under the program, with respect to each price applicability period, 
the Secretary shall— 
‘‘(1) publish a list of selected drugs in accordance with 
section 1192; 
‘‘(2) enter into agreements with manufacturers of selected 
drugs with respect to such period, in accordance with section 
1193;
H. R. 5376—17 
‘‘(3) negotiate and, if applicable, renegotiate maximum fair 
prices for such selected drugs, in accordance with section 1194; 
‘‘(4) carry out the publication and administrative duties 
and compliance monitoring in accordance with sections 1195 
and 1196. 
‘‘(b) DEFINITIONS RELATING TO TIMING.—For purposes of this 
part: 
‘‘(1) INITIAL PRICE APPLICABILITY YEAR.—The term ‘initial 
price applicability year’ means a year (beginning with 2026). 
‘‘(2) PRICE APPLICABILITY PERIOD.—The term ‘price applica-
bility period’ means, with respect to a qualifying single source 
drug, the period beginning with the first initial price applica-
bility year with respect to which such drug is a selected drug 
and ending with the last year during which the drug is a 
selected drug. 
‘‘(3) SELECTED DRUG PUBLICATION DATE.—The term ‘selected 
drug publication date’ means, with respect to each initial price 
applicability year, February 1 of the year that begins 2 years 
prior to such year. 
‘‘(4) NEGOTIATION PERIOD.—The term ‘negotiation period’ 
means, with respect to an initial price applicability year with 
respect to a selected drug, the period— 
‘‘(A) beginning on the sooner of— 
‘‘(i) the date on which the manufacturer of the 
drug and the Secretary enter into an agreement under 
section 1193 with respect to such drug; or 
‘‘(ii) February 28 following the selected drug 
publication date with respect to such selected drug; 
and 
‘‘(B) ending on November 1 of the year that begins 
2 years prior to the initial price applicability year. 
‘‘(c) OTHER DEFINITIONS.—For purposes of this part: 
‘‘(1) MANUFACTURER.—The term ‘manufacturer’ has the 
meaning given that term in section 1847A(c)(6)(A). 
‘‘(2) MAXIMUM FAIR PRICE ELIGIBLE INDIVIDUAL.—The term 
‘maximum fair price eligible individual’ means, with respect 
to a selected drug— 
‘‘(A) in the case such drug is dispensed to the individual 
at a pharmacy, by a mail order service, or by another 
dispenser, an individual who is enrolled in a prescription 
drug plan under part D of title XVIII or an MA–PD plan 
under part C of such title if coverage is provided under 
such plan for such selected drug; and 
‘‘(B) in the case such drug is furnished or administered 
to the individual by a hospital, physician, or other provider 
of services or supplier, an individual who is enrolled under 
part B of title XVIII, including an individual who is enrolled 
in an MA plan under part C of such title, if payment 
may be made under part B for such selected drug. 
‘‘(3) MAXIMUM FAIR PRICE.—The term ‘maximum fair price’ 
means, with respect to a year during a price applicability 
period and with respect to a selected drug (as defined in section 
1192(c)) with respect to such period, the price negotiated pursu-
ant to section 1194, and updated pursuant to section 1195(b), 
as applicable, for such drug and year.
H. R. 5376—18 
‘‘(4) REFERENCE
PRODUCT.—The term ‘reference product’ 
has the meaning given such term in section 351(i) of the Public 
Health Service Act. 
‘‘(5) TOTAL EXPENDITURES.—The term ‘total expenditures’ 
includes, in the case of expenditures with respect to part D 
of title XVIII, the total gross covered prescription drug costs 
(as defined in section 1860D–15(b)(3)). The term ‘total expendi-
tures’ excludes, in the case of expenditures with respect to 
part B of such title, expenditures for a drug or biological product 
that are bundled or packaged into the payment for another 
service. 
‘‘(6) UNIT.—The term ‘unit’ means, with respect to a drug 
or biological product, the lowest identifiable amount (such as 
a capsule or tablet, milligram of molecules, or grams) of the 
drug or biological product that is dispensed or furnished. 
‘‘(d) TIMING
FOR INITIAL PRICE APPLICABILITY YEAR 2026.— 
Notwithstanding the provisions of this part, in the case of initial 
price applicability year 2026, the following rules shall apply for 
purposes of implementing the program: 
‘‘(1) Subsection (b)(3) shall be applied by substituting ‘Sep-
tember 1, 2023’ for ‘, with respect to each initial price applica-
bility year, February 1 of the year that begins 2 years prior 
to such year’. 
‘‘(2) Subsection (b)(4) shall be applied— 
‘‘(A) in subparagraph (A)(ii), by substituting ‘October 
1, 2023’ for ‘February 28 following the selected drug 
publication date with respect to such selected drug’; and 
‘‘(B) in subparagraph (B), by substituting ‘August 1, 
2024’ for ‘November 1 of the year that begins 2 years 
prior to the initial price applicability year’. 
‘‘(3) Section 1192 shall be applied— 
‘‘(A) in subsection (b)(1)(A), by substituting ‘during the 
period beginning on June 1, 2022, and ending on May 
31, 2023’ for ‘during the most recent period of 12 months 
prior to the selected drug publication date (but ending 
not later than October 31 of the year prior to the year 
of such drug publication date), with respect to such year, 
for which data are available’; and 
‘‘(B) in subsection (d)(1)(A), by substituting ‘during the 
period beginning on June 1, 2022, and ending on May 
31, 2023’ for ‘during the most recent period for which 
data are available of at least 12 months prior to the selected 
drug publication date (but ending no later than October 
31 of the year prior to the year of such drug publication 
date), with respect to such year’. 
‘‘(4) Section 1193(a) shall be applied by substituting 
‘October 1, 2023’ for ‘February 28 following the selected drug 
publication date with respect to such selected drug’. 
‘‘(5) Section 1194(b)(2) shall be applied— 
‘‘(A) in subparagraph (A), by substituting ‘October 2, 
2023’ for ‘March 1 of the year of the selected drug publica-
tion date, with respect to the selected drug’; 
‘‘(B) in subparagraph (B), by substituting ‘February 
1, 2024’ for ‘the June 1 following the selected drug publica-
tion date’; and 
‘‘(C) in subparagraph (E), by substituting ‘August 1, 
2024’ for ‘the first day of November following the selected
H. R. 5376—19 
drug publication date, with respect to the initial price 
applicability year ’. 
‘‘(6) Section 1195(a)(1) shall be applied by substituting ‘Sep-
tember 1, 2024’ for ‘November 30 of the year that is 2 years 
prior to such initial price applicability year’. 
‘‘SEC. 
1192. 
SELECTION 
OF 
NEGOTIATION-ELIGIBLE 
DRUGS 
AS 
SELECTED DRUGS. 
‘‘(a) IN GENERAL.—Not later than the selected drug publication 
date with respect to an initial price applicability year, in accordance 
with subsection (b), the Secretary shall select and publish a list 
of— 
‘‘(1) with respect to the initial price applicability year 2026, 
10 negotiation-eligible drugs described in subparagraph (A) of 
subsection (d)(1), but not subparagraph (B) of such subsection, 
with respect to such year (or, all (if such number is less than 
10) such negotiation-eligible drugs with respect to such year); 
‘‘(2) with respect to the initial price applicability year 2027, 
15 negotiation-eligible drugs described in subparagraph (A) of 
subsection (d)(1), but not subparagraph (B) of such subsection, 
with respect to such year (or, all (if such number is less than 
15) such negotiation-eligible drugs with respect to such year); 
‘‘(3) with respect to the initial price applicability year 2028, 
15 negotiation-eligible drugs described in subparagraph (A) or 
(B) of subsection (d)(1) with respect to such year (or, all (if 
such number is less than 15) such negotiation-eligible drugs 
with respect to such year); and 
‘‘(4) with respect to the initial price applicability year 2029 
or a subsequent year, 20 negotiation-eligible drugs described 
in subparagraph (A) or (B) of subsection (d)(1), with respect 
to such year (or, all (if such number is less than 20) such 
negotiation-eligible drugs with respect to such year). 
Subject to subsection (c)(2) and section 1194(f)(5), each drug pub-
lished on the list pursuant to the previous sentence shall be subject 
to the negotiation process under section 1194 for the negotiation 
period with respect to such initial price applicability year (and 
the renegotiation process under such section as applicable for any 
subsequent year during the applicable price applicability period). 
‘‘(b) SELECTION OF DRUGS.— 
‘‘(1) IN GENERAL.—In carrying out subsection (a), subject 
to paragraph (2), the Secretary shall, with respect to an initial 
price applicability year, do the following: 
‘‘(A) Rank negotiation-eligible drugs described in sub-
section (d)(1) according to the total expenditures for such 
drugs under parts B and D of title XVIII, as determined 
by the Secretary, during the most recent period of 12 
months prior to the selected drug publication date (but 
ending not later than October 31 of the year prior to 
the year of such drug publication date), with respect to 
such year, for which data are available, with the negotia-
tion-eligible drugs with the highest total expenditures being 
ranked the highest. 
‘‘(B) Select from such ranked drugs with respect to 
such year the negotiation-eligible drugs with the highest 
such rankings. 
‘‘(2) HIGH SPEND PART D DRUGS FOR 2026 AND 2027.—With 
respect to the initial price applicability year 2026 and with
H. R. 5376—20 
respect to the initial price applicability year 2027, the Secretary 
shall apply paragraph (1) as if the reference to ‘negotiation- 
eligible drugs described in subsection (d)(1)’ were a reference 
to ‘negotiation-eligible drugs described in subsection (d)(1)(A)’ 
and as if the reference to ‘total expenditures for such drugs 
under parts B and D of title XVIII’ were a reference to ‘total 
expenditures for such drugs under part D of title XVIII’. 
‘‘(c) SELECTED DRUG.— 
‘‘(1) IN GENERAL.—For purposes of this part, in accordance 
with subsection (e)(2) and subject to paragraph (2), each nego-
tiation-eligible drug included on the list published under sub-
section (a) with respect to an initial price applicability year 
shall be referred to as a ‘selected drug’ with respect to such 
year and each subsequent year beginning before the first year 
that begins at least 9 months after the date on which the 
Secretary determines at least one drug or biological product— 
‘‘(A) is approved or licensed (as applicable)— 
‘‘(i) under section 505(j) of the Federal Food, Drug, 
and Cosmetic Act using such drug as the listed drug; 
or 
‘‘(ii) under section 351(k) of the Public Health 
Service Act using such drug as the reference product; 
and 
‘‘(B) is marketed pursuant to such approval or licen-
sure. 
‘‘(2) CLARIFICATION.—A negotiation-eligible drug— 
‘‘(A) that is included on the list published under sub-
section (a) with respect to an initial price applicability 
year; and 
‘‘(B) for which the Secretary makes a determination 
described in paragraph (1) before or during the negotiation 
period with respect to such initial price applicability year; 
shall not be subject to the negotiation process under section 
1194 with respect to such negotiation period and shall continue 
to be considered a selected drug under this part with respect 
to the number of negotiation-eligible drugs published on the 
list under subsection (a) with respect to such initial price 
applicability year. 
‘‘(d) NEGOTIATION-ELIGIBLE DRUG.— 
‘‘(1) IN GENERAL.—For purposes of this part, subject to 
paragraph (2), the term ‘negotiation-eligible drug’ means, with 
respect to the selected drug publication date with respect to 
an initial price applicability year, a qualifying single source 
drug, as defined in subsection (e), that is described in either 
of the following subparagraphs (or, with respect to the initial 
price applicability year 2026 or 2027, that is described in 
subparagraph (A)): 
‘‘(A) PART D HIGH SPEND DRUGS.—The qualifying single 
source drug is, determined in accordance with subsection 
(e)(2), among the 50 qualifying single source drugs with 
the highest total expenditures under part D of title XVIII, 
as determined by the Secretary in accordance with para-
graph (3), during the most recent 12-month period for 
which data are available prior to such selected drug 
publication date (but ending no later than October 31 of 
the year prior to the year of such drug publication date).
H. R. 5376—21 
‘‘(B) PART B HIGH SPEND DRUGS.—The qualifying single 
source drug is, determined in accordance with subsection 
(e)(2), among the 50 qualifying single source drugs with 
the highest total expenditures under part B of title XVIII, 
as determined by the Secretary in accordance with para-
graph (3), during such most recent 12-month period, as 
described in subparagraph (A). 
‘‘(2) EXCEPTION FOR SMALL BIOTECH DRUGS.— 
‘‘(A) IN GENERAL.—Subject to subparagraph (C), the 
term ‘negotiation-eligible drug’ shall not include, with 
respect to the initial price applicability years 2026, 2027, 
and 2028, a qualifying single source drug that meets either 
of the following: 
‘‘(i) PART
D
DRUGS.—The total expenditures for 
the qualifying single source drug under part D of title 
XVIII, as determined by the Secretary in accordance 
with paragraph (3)(B), during 2021— 
‘‘(I) are equal to or less than 1 percent of 
the total expenditures under such part D, as so 
determined, for all covered part D drugs (as 
defined in section 1860D–2(e)) during such year; 
and 
‘‘(II) are equal to at least 80 percent of the 
total expenditures under such part D, as so deter-
mined, for all covered part D drugs for which 
the manufacturer of the drug has an agreement 
in effect under section 1860D–14A during such 
year. 
‘‘(ii) PART B DRUGS.—The total expenditures for 
the qualifying single source drug under part B of title 
XVIII, as determined by the Secretary in accordance 
with paragraph (3)(B), during 2021— 
‘‘(I) are equal to or less than 1 percent of 
the total expenditures under such part B, as so 
determined, for all qualifying single source drugs 
for which payment may be made under such part 
B during such year; and 
‘‘(II) are equal to at least 80 percent of the 
total expenditures under such part B, as so deter-
mined, for all qualifying single source drugs of 
the manufacturer for which payment may be made 
under such part B during such year. 
‘‘(B) CLARIFICATIONS RELATING TO MANUFACTURERS.— 
‘‘(i) AGGREGATION RULE.—All persons treated as 
a single employer under subsection (a) or (b) of section 
52 of the Internal Revenue Code of 1986 shall be 
treated as one manufacturer for purposes of this para-
graph. 
‘‘(ii) LIMITATION.—A drug shall not be considered 
to be a qualifying single source drug described in clause 
(i) or (ii) of subparagraph (A) if the manufacturer of 
such drug is acquired after 2021 by another manufac-
turer that does not meet the definition of a specified 
manufacturer under section 1860D–14C(g)(4)(B)(ii), 
effective at the beginning of the plan year immediately 
following such acquisition or, in the case of an acquisi-
tion before 2025, effective January 1, 2025.
H. R. 5376—22 
‘‘(C) DRUGS NOT INCLUDED AS SMALL BIOTECH DRUGS.— 
A new formulation, such as an extended release formula-
tion, of a qualifying single source drug shall not be consid-
ered a qualifying single source drug described in subpara-
graph (A). 
‘‘(3) CLARIFICATIONS AND DETERMINATIONS.— 
‘‘(A) PREVIOUSLY SELECTED DRUGS AND SMALL BIOTECH 
DRUGS EXCLUDED.—In applying subparagraphs (A) and (B) 
of paragraph (1), the Secretary shall not consider or count— 
‘‘(i) drugs that are already selected drugs; and 
‘‘(ii) for initial price applicability years 2026, 2027, 
and 2028, qualifying single source drugs described in 
paragraph (2)(A). 
‘‘(B) USE OF DATA.—In determining whether a quali-
fying single source drug satisfies any of the criteria 
described in paragraph (1) or (2), the Secretary shall use 
data that is aggregated across dosage forms and strengths 
of the drug, including new formulations of the drug, such 
as an extended release formulation, and not based on the 
specific formulation or package size or package type of 
the drug. 
‘‘(e) QUALIFYING SINGLE SOURCE DRUG.— 
‘‘(1) IN GENERAL.—For purposes of this part, the term ‘quali-
fying single source drug’ means, with respect to an initial 
price applicability year, subject to paragraphs (2) and (3), a 
covered part D drug (as defined in section 1860D–2(e)) that 
is described in any of the following or a drug or biological 
product for which payment may be made under part B of 
title XVIII that is described in any of the following: 
‘‘(A) DRUG PRODUCTS.—A drug— 
‘‘(i) that is approved under section 505(c) of the 
Federal Food, Drug, and Cosmetic Act and is marketed 
pursuant to such approval; 
‘‘(ii) for which, as of the selected drug publication 
date with respect to such initial price applicability 
year, at least 7 years will have elapsed since the date 
of such approval; and 
‘‘(iii) that is not the listed drug for any drug that 
is approved and marketed under section 505(j) of such 
Act. 
‘‘(B) BIOLOGICAL PRODUCTS.—A biological product— 
‘‘(i) that is licensed under section 351(a) of the 
Public Health Service Act and is marketed under sec-
tion 351 of such Act; 
‘‘(ii) for which, as of the selected drug publication 
date with respect to such initial price applicability 
year, at least 11 years will have elapsed since the 
date of such licensure; and 
‘‘(iii) that is not the reference product for any 
biological product that is licensed and marketed under 
section 351(k) of such Act. 
‘‘(2) TREATMENT OF AUTHORIZED GENERIC DRUGS.— 
‘‘(A) IN GENERAL.—In the case of a qualifying single 
source drug described in subparagraph (A) or (B) of para-
graph (1) that is the listed drug (as such term is used 
in section 505(j) of the Federal Food, Drug, and Cosmetic 
Act) or a product described in clause (ii) of subparagraph
H. R. 5376—23 
(B), with respect to an authorized generic drug, in applying 
the provisions of this part, such authorized generic drug 
and such listed drug or such product shall be treated 
as the same qualifying single source drug. 
‘‘(B) AUTHORIZED GENERIC DRUG DEFINED.—For pur-
poses of this paragraph, the term ‘authorized generic drug’ 
means— 
‘‘(i) in the case of a drug, an authorized generic 
drug (as such term is defined in section 505(t)(3) of 
the Federal Food, Drug, and Cosmetic Act); and 
‘‘(ii) in the case of a biological product, a product 
that— 
‘‘(I) has been licensed under section 351(a) 
of such Act; and 
‘‘(II) is marketed, sold, or distributed directly 
or indirectly to retail class of trade under a dif-
ferent labeling, packaging (other than repackaging 
as the reference product in blister packs, unit 
doses, or similar packaging for use in institutions), 
product code, labeler code, trade name, or trade 
mark than the reference product. 
‘‘(3) EXCLUSIONS.—In this part, the term ‘qualifying single 
source drug’ does not include any of the following: 
‘‘(A) CERTAIN
ORPHAN
DRUGS.—A drug that is des-
ignated as a drug for only one rare disease or condition 
under section 526 of the Federal Food, Drug, and Cosmetic 
Act and for which the only approved indication (or indica-
tions) is for such disease or condition. 
‘‘(B) LOW SPEND MEDICARE DRUGS.—A drug or biological 
product with respect to which the total expenditures under 
parts B and D of title XVIII, as determined by the Secretary 
in accordance with subsection (d)(3)(B)— 
‘‘(i) with respect to initial price applicability year 
2026, is less than, during the period beginning on 
June 1, 2022, and ending on May 31, 2023, 
$200,000,000; 
‘‘(ii) with respect to initial price applicability year 
2027, is less than, during the most recent 12-month 
period applicable under subparagraphs (A) and (B) of 
subsection (d)(1) for such year, the dollar amount speci-
fied in clause (i) increased by the annual percentage 
increase in the consumer price index for all urban 
consumers (all items; United States city average) for 
the period beginning on June 1, 2023, and ending 
on September 30, 2024; or 
‘‘(iii) with respect to a subsequent initial price 
applicability year, is less than, during the most recent 
12-month period applicable under subparagraphs (A) 
and (B) of subsection (d)(1) for such year, the dollar 
amount specified in this subparagraph for the previous 
initial price applicability year increased by the annual 
percentage increase in such consumer price index for 
the 12-month period ending on September 30 of the 
year prior to the year of the selected drug publication 
date with respect to such subsequent initial price 
applicability year.
H. R. 5376—24 
‘‘(C) PLASMA-DERIVED PRODUCTS.—A biological product 
that is derived from human whole blood or plasma. 
‘‘SEC. 1193. MANUFACTURER AGREEMENTS. 
‘‘(a) IN GENERAL.—For purposes of section 1191(a)(2), the Sec-
retary shall enter into agreements with manufacturers of selected 
drugs with respect to a price applicability period, by not later 
than February 28 following the selected drug publication date with 
respect to such selected drug, under which— 
‘‘(1) during the negotiation period for the initial price 
applicability year for the selected drug, the Secretary and the 
manufacturer, in accordance with section 1194, negotiate to 
determine (and, by not later than the last date of such period, 
agree to) a maximum fair price for such selected drug of the 
manufacturer in order for the manufacturer to provide access 
to such price— 
‘‘(A) to maximum fair price eligible individuals who 
with respect to such drug are described in subparagraph 
(A) of section 1191(c)(2) and are dispensed such drug (and 
to pharmacies, mail order services, and other dispensers, 
with respect to such maximum fair price eligible individuals 
who are dispensed such drugs) during, subject to paragraph 
(2), the price applicability period; and 
‘‘(B) to hospitals, physicians, and other providers of 
services and suppliers with respect to maximum fair price 
eligible individuals who with respect to such drug are 
described in subparagraph (B) of such section and are 
furnished or administered such drug during, subject to 
paragraph (2), the price applicability period; 
‘‘(2) the Secretary and the manufacturer shall, in accord-
ance with section 1194, renegotiate (and, by not later than 
the last date of the period of renegotiation, agree to) the max-
imum fair price for such drug, in order for the manufacturer 
to provide access to such maximum fair price (as so renegoti-
ated)— 
‘‘(A) to maximum fair price eligible individuals who 
with respect to such drug are described in subparagraph 
(A) of section 1191(c)(2) and are dispensed such drug (and 
to pharmacies, mail order services, and other dispensers, 
with respect to such maximum fair price eligible individuals 
who are dispensed such drugs) during any year during 
the price applicability period (beginning after such renegoti-
ation) with respect to such selected drug; and 
‘‘(B) to hospitals, physicians, and other providers of 
services and suppliers with respect to maximum fair price 
eligible individuals who with respect to such drug are 
described in subparagraph (B) of such section and are 
furnished or administered such drug during any year 
described in subparagraph (A); 
‘‘(3) subject to subsection (d), access to the maximum fair 
price (including as renegotiated pursuant to paragraph (2)), 
with respect to such a selected drug, shall be provided by 
the manufacturer to— 
‘‘(A) maximum fair price eligible individuals, who with 
respect to such drug are described in subparagraph (A) 
of section 1191(c)(2), at the pharmacy, mail order service, 
or other dispenser at the point-of-sale of such drug (and
H. R. 5376—25 
shall be provided by the manufacturer to the pharmacy, 
mail order service, or other dispenser, with respect to such 
maximum fair price eligible individuals who are dispensed 
such drugs), as described in paragraph (1)(A) or (2)(A), 
as applicable; and 
‘‘(B) hospitals, physicians, and other providers of serv-
ices and suppliers with respect to maximum fair price 
eligible individuals who with respect to such drug are 
described in subparagraph (B) of such section and are 
furnished or administered such drug, as described in para-
graph (1)(B) or (2)(B), as applicable; 
‘‘(4) the manufacturer submits to the Secretary, in a form 
and manner specified by the Secretary, for the negotiation 
period for the price applicability period (and, if applicable, 
before any period of renegotiation pursuant to section 1194(f)) 
with respect to such drug— 
‘‘(A) information on the non-Federal average manufac-
turer price (as defined in section 8126(h)(5) of title 38, 
United States Code) for the drug for the applicable year 
or period; and 
‘‘(B) information that the Secretary requires to carry 
out the negotiation (or renegotiation process) under this 
part; and 
‘‘(5) the manufacturer complies with requirements deter-
mined by the Secretary to be necessary for purposes of admin-
istering the program and monitoring compliance with the pro-
gram. 
‘‘(b) AGREEMENT
IN EFFECT UNTIL DRUG IS NO LONGER
A 
SELECTED DRUG.—An agreement entered into under this section 
shall be effective, with respect to a selected drug, until such drug 
is no longer considered a selected drug under section 1192(c). 
‘‘(c) CONFIDENTIALITY OF INFORMATION.—Information submitted 
to the Secretary under this part by a manufacturer of a selected 
drug that is proprietary information of such manufacturer (as deter-
mined by the Secretary) shall be used only by the Secretary or 
disclosed to and used by the Comptroller General of the United 
States for purposes of carrying out this part. 
‘‘(d) NONDUPLICATION WITH 340B CEILING PRICE.—Under an 
agreement entered into under this section, the manufacturer of 
a selected drug— 
‘‘(1) shall not be required to provide access to the maximum 
fair price under subsection (a)(3), with respect to such selected 
drug and maximum fair price eligible individuals who are 
eligible to be furnished, administered, or dispensed such 
selected drug at a covered entity described in section 340B(a)(4) 
of the Public Health Service Act, to such covered entity if 
such selected drug is subject to an agreement described in 
section 340B(a)(1) of such Act and the ceiling price (defined 
in section 340B(a)(1) of such Act) is lower than the maximum 
fair price for such selected drug; and 
‘‘(2) shall be required to provide access to the maximum 
fair price to such covered entity with respect to maximum 
fair price eligible individuals who are eligible to be furnished, 
administered, or dispensed such selected drug at such entity 
at such ceiling price in a nonduplicated amount to the ceiling 
price if such maximum fair price is below the ceiling price 
for such selected drug.
H. R. 5376—26 
‘‘SEC. 1194. NEGOTIATION AND RENEGOTIATION PROCESS. 
‘‘(a) IN GENERAL.—For purposes of this part, under an agree-
ment under section 1193 between the Secretary and a manufacturer 
of a selected drug (or selected drugs), with respect to the period 
for which such agreement is in effect and in accordance with sub-
sections (b), (c), and (d), the Secretary and the manufacturer— 
‘‘(1) shall during the negotiation period with respect to 
such drug, in accordance with this section, negotiate a max-
imum fair price for such drug for the purpose described in 
section 1193(a)(1); and 
‘‘(2) renegotiate, in accordance with the process specified 
pursuant to subsection (f), such maximum fair price for such 
drug for the purpose described in section 1193(a)(2) if such 
drug is a renegotiation-eligible drug under such subsection. 
‘‘(b) NEGOTIATION PROCESS REQUIREMENTS.— 
‘‘(1) METHODOLOGY
AND
PROCESS.—The Secretary shall 
develop and use a consistent methodology and process, in 
accordance with paragraph (2), for negotiations under sub-
section (a) that aims to achieve the lowest maximum fair price 
for each selected drug. 
‘‘(2) SPECIFIC ELEMENTS OF NEGOTIATION PROCESS.—As part 
of the negotiation process under this section, with respect to 
a selected drug and the negotiation period with respect to 
the initial price applicability year with respect to such drug, 
the following shall apply: 
‘‘(A) SUBMISSION
OF
INFORMATION.—Not later than 
March 1 of the year of the selected drug publication date, 
with respect to the selected drug, the manufacturer of 
the drug shall submit to the Secretary, in accordance with 
section 1193(a)(4), the information described in such sec-
tion. 
‘‘(B) INITIAL OFFER BY SECRETARY.—Not later than the 
June 1 following the selected drug publication date, the 
Secretary shall provide the manufacturer of the selected 
drug with a written initial offer that contains the Sec-
retary’s proposal for the maximum fair price of the drug 
and a concise justification based on the factors described 
in section 1194(e) that were used in developing such offer. 
‘‘(C) RESPONSE TO INITIAL OFFER.— 
‘‘(i) IN
GENERAL.—Not later than 30 days after 
the date of receipt of an initial offer under subpara-
graph (B), the manufacturer shall either accept such 
offer or propose a counteroffer to such offer. 
‘‘(ii) COUNTEROFFER REQUIREMENTS.—If a manu-
facturer proposes a counteroffer, such counteroffer— 
‘‘(I) shall be in writing; and 
‘‘(II) shall be justified based on the factors 
described in subsection (e). 
‘‘(D) RESPONSE TO COUNTEROFFER.—After receiving a 
counteroffer under subparagraph (C), the Secretary shall 
respond in writing to such counteroffer. 
‘‘(E) DEADLINE.—All negotiations between the Sec-
retary and the manufacturer of the selected drug shall 
end prior to the first day of November following the selected 
drug publication date, with respect to the initial price 
applicability year.
H. R. 5376—27 
‘‘(F) LIMITATIONS ON OFFER AMOUNT.—In negotiating 
the maximum fair price of a selected drug, with respect 
to the initial price applicability year for the selected drug, 
and, as applicable, in renegotiating the maximum fair price 
for such drug, with respect to a subsequent year during 
the price applicability period for such drug, the Secretary 
shall not offer (or agree to a counteroffer for) a maximum 
fair price for the selected drug that— 
‘‘(i) exceeds the ceiling determined under sub-
section (c) for the selected drug and year; or 
‘‘(ii) as applicable, is less than the floor determined 
under subsection (d) for the selected drug and year. 
‘‘(c) CEILING FOR MAXIMUM FAIR PRICE.— 
‘‘(1) GENERAL CEILING.— 
‘‘(A) IN GENERAL.—The maximum fair price negotiated 
under this section for a selected drug, with respect to 
the first initial price applicability year of the price applica-
bility period with respect to such drug, shall not exceed 
the lower of the amount under subparagraph (B) or the 
amount under subparagraph (C). 
‘‘(B) SUBPARAGRAPH (B) AMOUNT.—An amount equal 
to the following: 
‘‘(i) COVERED PART D DRUG.—In the case of a cov-
ered part D drug (as defined in section 1860D–2(e)), 
the sum of the plan specific enrollment weighted 
amounts for each prescription drug plan or MA–PD 
plan (as determined under paragraph (2)). 
‘‘(ii) PART
B
DRUG
OR
BIOLOGICAL.—In the case 
of a drug or biological product for which payment may 
be made under part B of title XVIII, the payment 
amount under section 1847A(b)(4) for the drug or 
biological product for the year prior to the year of 
the selected drug publication date with respect to the 
initial price applicability year for the drug or biological 
product. 
‘‘(C) SUBPARAGRAPH (C) AMOUNT.—An amount equal 
to the applicable percent described in paragraph (3), with 
respect to such drug, of the following: 
‘‘(i) INITIAL PRICE APPLICABILITY YEAR 2026.—In the 
case of a selected drug with respect to which such 
initial price applicability year is 2026, the average 
non-Federal average manufacturer price for such drug 
for 2021 (or, in the case that there is not an average 
non-Federal average manufacturer price available for 
such drug for 2021, for the first full year following 
the market entry for such drug), increased by the 
percentage increase in the consumer price index for 
all urban consumers (all items; United States city aver-
age) from September 2021 (or December of such first 
full year following the market entry), as applicable, 
to September of the year prior to the year of the 
selected drug publication date with respect to such 
initial price applicability year. 
‘‘(ii) INITIAL PRICE APPLICABILITY YEAR 2027 AND 
SUBSEQUENT YEARS.—In the case of a selected drug 
with respect to which such initial price applicability 
year is 2027 or a subsequent year, the lower of—
H. R. 5376—28 
‘‘(I) the average non-Federal average manufac-
turer price for such drug for 2021 (or, in the case 
that there is not an average non-Federal average 
manufacturer price available for such drug for 
2021, for the first full year following the market 
entry for such drug), increased by the percentage 
increase in the consumer price index for all urban 
consumers (all items; United States city average) 
from September 2021 (or December of such first 
full year following the market entry), as applicable, 
to September of the year prior to the year of the 
selected drug publication date with respect to such 
initial price applicability year; or 
‘‘(II) the average non-Federal average manu-
facturer price for such drug for the year prior 
to the selected drug publication date with respect 
to such initial price applicability year. 
‘‘(2) PLAN SPECIFIC ENROLLMENT WEIGHTED AMOUNT.—For 
purposes of paragraph (1)(B)(i), the plan specific enrollment 
weighted amount for a prescription drug plan or an MA–PD 
plan with respect to a covered Part D drug is an amount 
equal to the product of— 
‘‘(A) the negotiated price of the drug under such plan 
under part D of title XVIII, net of all price concessions 
received by such plan or pharmacy benefit managers on 
behalf of such plan, for the most recent year for which 
data is available; and 
‘‘(B) a fraction— 
‘‘(i) the numerator of which is the total number 
of individuals enrolled in such plan in such year; and 
‘‘(ii) the denominator of which is the total number 
of individuals enrolled in a prescription drug plan or 
an MA–PD plan in such year. 
‘‘(3) APPLICABLE PERCENT DESCRIBED.—For purposes of this 
subsection, the applicable percent described in this paragraph 
is the following: 
‘‘(A) SHORT-MONOPOLY
DRUGS
AND
VACCINES.—With 
respect to a selected drug (other than an extended- 
monopoly drug and a long-monopoly drug), 75 percent. 
‘‘(B) EXTENDED-MONOPOLY DRUGS.—With respect to an 
extended-monopoly drug, 65 percent. 
‘‘(C) LONG-MONOPOLY DRUGS.—With respect to a long- 
monopoly drug, 40 percent. 
‘‘(4) EXTENDED-MONOPOLY DRUG DEFINED.— 
‘‘(A) IN GENERAL.—In this part, subject to subpara-
graph (B), the term ‘extended-monopoly drug’ means, with 
respect to an initial price applicability year, a selected 
drug for which at least 12 years, but fewer than 16 years, 
have elapsed since the date of approval of such drug under 
section 505(c) of the Federal Food, Drug, and Cosmetic 
Act or since the date of licensure of such drug under 
section 351(a) of the Public Health Service Act, as 
applicable. 
‘‘(B) EXCLUSIONS.—The term ‘extended-monopoly drug’ 
shall not include any of the following:
H. R. 5376—29 
‘‘(i) A vaccine that is licensed under section 351 
of the Public Health Service Act and marketed pursu-
ant to such section. 
‘‘(ii) A selected drug for which a manufacturer 
had an agreement under this part with the Secretary 
with respect to an initial price applicability year that 
is before 2030. 
‘‘(C) CLARIFICATION.—Nothing in subparagraph (B)(ii) 
shall limit the transition of a selected drug described in 
paragraph (3)(A) to a long-monopoly drug if the selected 
drug meets the definition of a long-monopoly drug. 
‘‘(5) LONG-MONOPOLY DRUG DEFINED.— 
‘‘(A) IN GENERAL.—In this part, subject to subpara-
graph (B), the term ‘long-monopoly drug’ means, with 
respect to an initial price applicability year, a selected 
drug for which at least 16 years have elapsed since the 
date of approval of such drug under section 505(c) of the 
Federal Food, Drug, and Cosmetic Act or since the date 
of licensure of such drug under section 351(a) of the Public 
Health Service Act, as applicable. 
‘‘(B) EXCLUSION.—The term ‘long-monopoly drug’ shall 
not include a vaccine that is licensed under section 351 
of the Public Health Service Act and marketed pursuant 
to such section. 
‘‘(6) 
AVERAGE
NON-FEDERAL
AVERAGE
MANUFACTURER 
PRICE.—In this part, the term ‘average non-Federal average 
manufacturer price’ means the average of the non-Federal aver-
age manufacturer price (as defined in section 8126(h)(5) of 
title 38, United States Code) for the 4 calendar quarters of 
the year involved. 
‘‘(d) TEMPORARY FLOOR FOR SMALL BIOTECH DRUGS.—In the 
case of a selected drug that is a qualifying single source drug 
described in section 1192(d)(2) and with respect to which the first 
initial price applicability year of the price applicability period with 
respect to such drug is 2029 or 2030, the maximum fair price 
negotiated under this section for such drug for such initial price 
applicability year may not be less than 66 percent of the average 
non-Federal average manufacturer price for such drug (as defined 
in subsection (c)(6)) for 2021 (or, in the case that there is not 
an average non-Federal average manufacturer price available for 
such drug for 2021, for the first full year following the market 
entry for such drug), increased by the percentage increase in the 
consumer price index for all urban consumers (all items; United 
States city average) from September 2021 (or December of such 
first full year following the market entry), as applicable, to Sep-
tember of the year prior to the selected drug publication date 
with respect to the initial price applicability year. 
‘‘(e) FACTORS.—For purposes of negotiating the maximum fair 
price of a selected drug under this part with the manufacturer 
of the drug, the Secretary shall consider the following factors, 
as applicable to the drug, as the basis for determining the offers 
and counteroffers under subsection (b) for the drug: 
‘‘(1) MANUFACTURER-SPECIFIC
DATA.—The following data, 
with respect to such selected drug, as submitted by the manu-
facturer:
H. R. 5376—30 
‘‘(A) Research and development costs of the manufac-
turer for the drug and the extent to which the manufacturer 
has recouped research and development costs. 
‘‘(B) Current unit costs of production and distribution 
of the drug. 
‘‘(C) Prior Federal financial support for novel thera-
peutic discovery and development with respect to the drug. 
‘‘(D) Data on pending and approved patent applications, 
exclusivities recognized by the Food and Drug Administra-
tion, and applications and approvals under section 505(c) 
of the Federal Food, Drug, and Cosmetic Act or section 
351(a) of the Public Health Service Act for the drug. 
‘‘(E) Market data and revenue and sales volume data 
for the drug in the United States. 
‘‘(2) EVIDENCE ABOUT ALTERNATIVE TREATMENTS.—The fol-
lowing evidence, as available, with respect to such selected 
drug and therapeutic alternatives to such drug: 
‘‘(A) The extent to which such drug represents a thera-
peutic advance as compared to existing therapeutic alter-
natives and the costs of such existing therapeutic alter-
natives. 
‘‘(B) Prescribing information approved by the Food and 
Drug Administration for such drug and therapeutic alter-
natives to such drug. 
‘‘(C) Comparative effectiveness of such drug and thera-
peutic alternatives to such drug, taking into consideration 
the effects of such drug and therapeutic alternatives to 
such drug on specific populations, such as individuals with 
disabilities, the elderly, the terminally ill, children, and 
other patient populations. 
‘‘(D) The extent to which such drug and therapeutic 
alternatives to such drug address unmet medical needs 
for a condition for which treatment or diagnosis is not 
addressed adequately by available therapy. 
In using evidence described in subparagraph (C), the Secretary 
shall not use evidence from comparative clinical effectiveness 
research in a manner that treats extending the life of an 
elderly, disabled, or terminally ill individual as of lower value 
than extending the life of an individual who is younger, non-
disabled, or not terminally ill. 
‘‘(f) RENEGOTIATION PROCESS.— 
‘‘(1) IN GENERAL.—In the case of a renegotiation-eligible 
drug (as defined in paragraph (2)) that is selected under para-
graph (3), the Secretary shall provide for a process of renegoti-
ation (for years (beginning with 2028) during the price applica-
bility period, with respect to such drug) of the maximum fair 
price for such drug consistent with paragraph (4). 
‘‘(2) RENEGOTIATION-ELIGIBLE DRUG DEFINED.—In this sec-
tion, the term ‘renegotiation-eligible drug’ means a selected 
drug that is any of the following: 
‘‘(A) ADDITION OF NEW INDICATION.—A selected drug 
for which a new indication is added to the drug. 
‘‘(B) CHANGE OF STATUS TO AN EXTENDED-MONOPOLY 
DRUG.—A selected drug that— 
‘‘(i) is not an extended-monopoly or a long- 
monopoly drug; and
H. R. 5376—31 
‘‘(ii) for which there is a change in status to that 
of an extended-monopoly drug. 
‘‘(C) CHANGE OF STATUS TO A LONG-MONOPOLY DRUG.— 
A selected drug that— 
‘‘(i) is not a long-monopoly drug; and 
‘‘(ii) for which there is a change in status to that 
of a long-monopoly drug. 
‘‘(D) MATERIAL CHANGES.—A selected drug for which 
the Secretary determines there has been a material change 
of any of the factors described in paragraph (1) or (2) 
of subsection (e). 
‘‘(3) SELECTION OF DRUGS FOR RENEGOTIATION.—For each 
year (beginning with 2028), the Secretary shall select among 
renegotiation-eligible drugs for renegotiation as follows: 
‘‘(A) ALL EXTENDED-MONOPOLY NEGOTIATION-ELIGIBLE 
DRUGS.—The Secretary shall select all renegotiation-eligible 
drugs described in paragraph (2)(B). 
‘‘(B) 
ALL
LONG-MONOPOLY
NEGOTIATION-ELIGIBLE 
DRUGS.—The Secretary shall select all renegotiation-eligible 
drugs described in paragraph (2)(C). 
‘‘(C) REMAINING DRUGS.—Among the remaining renego-
tiation-eligible drugs described in subparagraphs (A) and 
(D) of paragraph (2), the Secretary shall select renegoti-
ation-eligible drugs for which the Secretary expects renego-
tiation is likely to result in a significant change in the 
maximum fair price otherwise negotiated. 
‘‘(4) RENEGOTIATION PROCESS.— 
‘‘(A) IN
GENERAL.—The Secretary shall specify the 
process for renegotiation of maximum fair prices with the 
manufacturer of a renegotiation-eligible drug selected for 
renegotiation under this subsection. 
‘‘(B) CONSISTENT
WITH
NEGOTIATION
PROCESS.—The 
process specified under subparagraph (A) shall, to the 
extent practicable, be consistent with the methodology and 
process established under subsection (b) and in accordance 
with subsections (c), (d), and (e), and for purposes of 
applying subsections (c)(1)(A) and (d), the reference to the 
first initial price applicability year of the price applicability 
period with respect to such drug shall be treated as the 
first initial price applicability year of such period for which 
the maximum fair price established pursuant to such 
renegotiation applies, including for applying subsection 
(c)(3)(B) in the case of renegotiation-eligible drugs described 
in paragraph (3)(A) of this subsection and subsection 
(c)(3)(C) in the case of renegotiation-eligible drugs described 
in paragraph (3)(B) of this subsection. 
‘‘(5) CLARIFICATION.—A renegotiation-eligible drug for 
which the Secretary makes a determination described in section 
1192(c)(1) before or during the period of renegotiation shall 
not be subject to the renegotiation process under this section. 
‘‘(g) CLARIFICATION.—The maximum fair price for a selected 
drug described in subparagraph (A) or (B) of paragraph (1) shall 
take effect no later than the first day of the first calendar quarter 
that begins after the date described in subparagraph (A) or (B), 
as applicable.
H. R. 5376—32 
‘‘SEC. 1195. PUBLICATION OF MAXIMUM FAIR PRICES. 
‘‘(a) IN GENERAL.—With respect to an initial price applicability 
year and a selected drug with respect to such year— 
‘‘(1) not later than November 30 of the year that is 2 
years prior to such initial price applicability year, the Secretary 
shall publish the maximum fair price for such drug negotiated 
with the manufacturer of such drug under this part; and 
‘‘(2) not later than March 1 of the year prior to such 
initial price applicability year, the Secretary shall publish, sub-
ject to section 1193(c), the explanation for the maximum fair 
price with respect to the factors as applied under section 1194(e) 
for such drug described in paragraph (1). 
‘‘(b) UPDATES.— 
‘‘(1) SUBSEQUENT
YEAR
MAXIMUM
FAIR
PRICES.—For a 
selected drug, for each year subsequent to the first initial 
price applicability year of the price applicability period with 
respect to such drug, with respect to which an agreement 
for such drug is in effect under section 1193, not later than 
November 30 of the year that is 2 years prior to such subse-
quent year, the Secretary shall publish the maximum fair price 
applicable to such drug and year, which shall be— 
‘‘(A) subject to subparagraph (B), the amount equal 
to the maximum fair price published for such drug for 
the previous year, increased by the annual percentage 
increase in the consumer price index for all urban con-
sumers (all items; United States city average) for the 12- 
month period ending with the July immediately preceding 
such November 30; or 
‘‘(B) in the case the maximum fair price for such drug 
was renegotiated, for the first year for which such price 
as so renegotiated applies, such renegotiated maximum 
fair price. 
‘‘(2) PRICES NEGOTIATED AFTER DEADLINE.—In the case of 
a selected drug with respect to an initial price applicability 
year for which the maximum fair price is determined under 
this part after the date of publication under this section, the 
Secretary shall publish such maximum fair price by not later 
than 30 days after the date such maximum price is so deter-
mined. 
‘‘SEC. 1196. ADMINISTRATIVE DUTIES AND COMPLIANCE MONITORING. 
‘‘(a) 
ADMINISTRATIVE
DUTIES.—For 
purposes 
of 
section 
1191(a)(4), the administrative duties described in this section are 
the following: 
‘‘(1) The establishment of procedures to ensure that the 
maximum fair price for a selected drug is applied before— 
‘‘(A) any coverage or financial assistance under other 
health benefit plans or programs that provide coverage 
or financial assistance for the purchase or provision of 
prescription drug coverage on behalf of maximum fair price 
eligible individuals; and 
‘‘(B) any other discounts. 
‘‘(2) The establishment of procedures to compute and apply 
the maximum fair price across different strengths and dosage 
forms of a selected drug and not based on the specific formula-
tion or package size or package type of such drug.
H. R. 5376—33 
‘‘(3) The establishment of procedures to carry out the provi-
sions of this part, as applicable, with respect to— 
‘‘(A) maximum fair price eligible individuals who are 
enrolled in a prescription drug plan under part D of title 
XVIII or an MA–PD plan under part C of such title; and 
‘‘(B) maximum fair price eligible individuals who are 
enrolled under part B of such title, including who are 
enrolled in an MA plan under part C of such title. 
‘‘(4) The establishment of a negotiation process and renego-
tiation process in accordance with section 1194. 
‘‘(5) The establishment of a process for manufacturers to 
submit information described in section 1194(b)(2)(A). 
‘‘(6) The sharing with the Secretary of the Treasury of 
such information as is necessary to determine the tax imposed 
by section 5000D of the Internal Revenue Code of 1986, 
including the application of such tax to a manufacturer, pro-
ducer, or importer or the determination of any date described 
in section 5000D(c)(1) of such Code. For purposes of the pre-
ceding sentence, such information shall include— 
‘‘(A) the date on which the Secretary receives notifica-
tion of any termination of an agreement under the Medicare 
coverage gap discount program under section 1860D-14A 
and the date on which any subsequent agreement under 
such program is entered into; 
‘‘(B) the date on which the Secretary receives notifica-
tion of any termination of an agreement under the manu-
facturer discount program under section 1860D-14C and 
the date on which any subsequent agreement under such 
program is entered into; and 
‘‘(C) the date on which the Secretary receives notifica-
tion of any termination of a rebate agreement described 
in section 1927(b) and the date on which any subsequent 
rebate agreement described in such section is entered into. 
‘‘(7) The establishment of procedures for purposes of 
applying section 1192(d)(2)(B). 
‘‘(b) COMPLIANCE MONITORING.—The Secretary shall monitor 
compliance by a manufacturer with the terms of an agreement 
under section 1193 and establish a mechanism through which viola-
tions of such terms shall be reported. 
‘‘SEC. 1197. CIVIL MONETARY PENALTIES. 
‘‘(a) VIOLATIONS RELATING
TO OFFERING
OF MAXIMUM FAIR 
PRICE.—Any manufacturer of a selected drug that has entered 
into an agreement under section 1193, with respect to a year 
during the price applicability period with respect to such drug, 
that does not provide access to a price that is equal to or less 
than the maximum fair price for such drug for such year— 
‘‘(1) to a maximum fair price eligible individual who with 
respect to such drug is described in subparagraph (A) of section 
1191(c)(2) and who is dispensed such drug during such year 
(and to pharmacies, mail order services, and other dispensers, 
with respect to such maximum fair price eligible individuals 
who are dispensed such drugs); or 
‘‘(2) to a hospital, physician, or other provider of services 
or supplier with respect to maximum fair price eligible individ-
uals who with respect to such drug is described in subparagraph 
(B) of such section and is furnished or administered such drug
H. R. 5376—34 
by such hospital, 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 product of the number of units of such 
drug so furnished, dispensed, or administered during such year 
and the difference between the price for such drug made available 
for such year by such manufacturer with respect to such individual 
or hospital, physician, provider of services, or supplier and the 
maximum fair price for such drug for such year. 
‘‘(b) VIOLATIONS
OF CERTAIN TERMS
OF AGREEMENT.—Any 
manufacturer of a selected drug that has entered into an agreement 
under section 1193, with respect to a year during the price applica-
bility period with respect to such drug, that is in violation of 
a requirement imposed pursuant to section 1193(a)(5), including 
the requirement to submit information pursuant to section 
1193(a)(4), shall be subject to a civil monetary penalty equal to 
$1,000,000 for each day of such violation. 
‘‘(c) FALSE INFORMATION.—Any manufacturer that knowingly 
provides false information pursuant to section 1196(a)(7) shall be 
subject to a civil monetary penalty equal to $100,000,000 for each 
item of such false information. 
‘‘(d) 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. 1198. LIMITATION ON ADMINISTRATIVE AND JUDICIAL REVIEW. 
‘‘There shall be no administrative or judicial review of any 
of the following: 
‘‘(1) The determination of a unit, with respect to a drug 
or biological product, pursuant to section 1191(c)(6). 
‘‘(2) The selection of drugs under section 1192(b), the deter-
mination of negotiation-eligible drugs under section 1192(d), 
and the determination of qualifying single source drugs under 
section 1192(e). 
‘‘(3) The determination of a maximum fair price under 
subsection (b) or (f) of section 1194. 
‘‘(4) The determination of renegotiation-eligible drugs under 
section 1194(f)(2) and the selection of renegotiation-eligible 
drugs under section 1194(f)(3).’’. 
(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 product that is a selected drug 
(as referred to 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)(3)) applicable for such drug and a year during 
such period’’ after ‘‘paragraph (4)’’. 
(B) APPLICATION UNDER MA OF COST-SHARING FOR PART 
B
DRUGS
BASED
OFF
OF
NEGOTIATED
PRICE.—Section 
1852(a)(1)(B)(iv) of the Social Security Act (42 U.S.C. 
1395w–22(a)(1)(B)(iv)) is amended—
H. R. 5376—35 
(i) by redesignating subclause (VII) as subclause 
(VIII); and 
(ii) by inserting after subclause (VI) the following 
subclause: 
‘‘(VII) A drug or biological product that is a 
selected drug (as referred to in section 1192(c)).’’. 
(C) EXCEPTION TO PART D NON-INTERFERENCE.—Section 
1860D–11(i) of the Social Security Act (42 U.S.C. 1395w– 
111(i)) is amended— 
(i) in paragraph (1), by striking ‘‘and’’ at the end; 
(ii) in paragraph (2), by striking ‘‘or institute a 
price structure for the reimbursement of covered part 
D drugs.’’ and inserting ‘‘, except as provided under 
section 1860D–4(b)(3)(l); and’’; and 
(iii) by adding at the end the following new para-
graph: 
‘‘(3) may not institute a price structure for the reimburse-
ment of covered part D drugs, except as provided under part 
E of title XI.’’. 
(D) 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 referred 
to 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 described in this subsection) 
shall be no greater than the maximum fair price (as defined 
in section 1191(c)(3)) for such drug and for each year during 
such period plus any dispensing fees for such drug.’’. 
(E) COVERAGE OF SELECTED DRUGS.—Section 1860D– 
4(b)(3) of the Social Security Act (42 U.S.C. 1395w– 
104(b)(3)) is amended by adding at the end the following 
new subparagraph: 
‘‘(I) REQUIRED INCLUSION OF SELECTED DRUGS.— 
‘‘(i) IN GENERAL.—For 2026 and each subsequent 
year, the PDP sponsor offering a prescription drug 
plan shall include each covered part D drug that is 
a selected drug under section 1192 for which a max-
imum fair price (as defined in section 1191(c)(3)) is 
in effect with respect to the year. 
‘‘(ii) CLARIFICATION.—Nothing in clause (i) shall 
be construed as prohibiting a PDP sponsor from 
removing such a selected drug from a formulary if 
such removal would be permitted under section 
423.120(b)(5)(iv) of title 42, Code of Federal Regula-
tions (or any successor regulation).’’. 
(F) INFORMATION FROM PRESCRIPTION DRUG PLANS AND 
MA–PD PLANS REQUIRED.— 
(i) PRESCRIPTION
DRUG
PLANS.—Section 1860D– 
12(b) of the Social Security Act (42 U.S.C. 1395w–
H. R. 5376—36 
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 for purposes 
of carrying out section 1194.’’. 
(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 subparagraph: 
‘‘(E) PROVISION OF INFORMATION RELATED TO MAXIMUM 
FAIR PRICES.—Section 1860D–12(b)(8).’’. 
(G) CONDITIONS FOR COVERAGE.— 
(i) MEDICARE PART D.—Section 1860D–43(c) of the 
Social Security Act (42 U.S.C. 1395w–153(c)) is 
amended— 
(I) by redesignating paragraphs (1) and (2) 
as subparagraphs (A) and (B), respectively; 
(II) by striking ‘‘AGREEMENTS.—Subsection’’ 
and inserting the following: ‘‘AGREEMENTS.— 
‘‘(1) IN GENERAL.—Subject to paragraph (2), subsection’’; 
and 
(III) by adding at the end the following new 
paragraph: 
‘‘(2) EXCEPTION.—Paragraph (1)(A) shall not apply to a 
covered part D drug of a manufacturer for any period described 
in section 5000D(c)(1) of the Internal Revenue Code of 1986 
with respect to the manufacturer.’’. 
(ii) MEDICAID
AND
MEDICARE
PART
B.—Section 
1927(a)(3) of the Social Security Act (42 U.S.C. 1396r– 
8(a)(3)) is amended by adding at the end the following 
new sentence: ‘‘The preceding sentence shall not apply 
to a single source drug or innovator multiple source 
drug of a manufacturer for any period described in 
section 5000D(c)(1) of the Internal Revenue Code of 
1986 with respect to the manufacturer.’’. 
(H) DISCLOSURE
OF
INFORMATION
UNDER
MEDICARE 
PART D.— 
(i) CONTRACT
REQUIREMENTS.—Section 1860D– 
12(b)(3)(D)(i) of the Social Security Act (42 U.S.C. 
1395w–112(b)(3)(D)(i)) is amended by inserting ‘‘, or 
carrying out part E of title XI’’ after ‘‘appropriate)’’. 
(ii) SUBSIDIES.—Section 1860D–15(f)(2)(A)(i) of the 
Social Security Act (42 U.S.C. 1395w–115(f)(2)(A)(i)) 
is amended by inserting ‘‘or part E of title XI’’ after 
‘‘this section’’. 
(2) DRUG PRICE NEGOTIATION PROGRAM PRICES INCLUDED 
IN
BEST
PRICE.—Section 1927(c)(1)(C) of the Social Security 
Act (42 U.S.C. 1396r–8(c)(1)(C)) is amended— 
(A) in clause (i)(VI), by striking ‘‘any prices charged’’ 
and inserting ‘‘subject to clause (ii)(V), any prices charged’’; 
and 
(B) in clause (ii)— 
(i) in subclause (III), by striking ‘‘; and’’ at the 
end;
H. R. 5376—37 
(ii) in subclause (IV), by striking the period at 
the end and inserting ‘‘; and’’; and 
(iii) by adding at the end the following new sub-
clause: 
‘‘(V) in the case of a rebate period and a cov-
ered outpatient drug that is a selected drug (as 
referred to in section 1192(c)) during such rebate 
period, shall be inclusive of the maximum fair 
price (as defined in section 1191(c)(3)) for such 
drug with respect to such period.’’. 
(3) MAXIMUM FAIR PRICES EXCLUDED FROM AVERAGE MANU-
FACTURER PRICE.—Section 1927(k)(1)(B)(i) of the Social Security 
Act (42 U.S.C. 1396r–8(k)(1)(B)(i)) is amended— 
(A) in subclause (IV) by striking ‘‘; and’’ at the end; 
(B) in subclause (V) by striking the period at the end 
and inserting ‘‘; and’’; and 
(C) by adding at the end the following new subclause: 
‘‘(VI) any reduction in price paid during the 
rebate period to the manufacturer for a drug by 
reason of application of part E of title XI.’’. 
(c) IMPLEMENTATION FOR 2026 THROUGH 2028.—The Secretary 
of Health and Human Services shall implement this section, 
including the amendments made by this section, for 2026, 2027, 
and 2028 by program instruction or other forms of program guid-
ance. 
SEC. 11002. SPECIAL RULE TO DELAY SELECTION AND NEGOTIATION 
OF BIOLOGICS FOR BIOSIMILAR MARKET ENTRY. 
(a) IN GENERAL.—Part E of title XI of the Social Security 
Act, as added by section 11001, is amended— 
(1) in section 1192— 
(A) in subsection (a), in the flush matter following 
paragraph (4), by inserting ‘‘and subsection (b)(3)’’ after 
‘‘the previous sentence’’; 
(B) in subsection (b)— 
(i) in paragraph (1), by adding at the end the 
following new subparagraph: 
‘‘(C) In the case of a biological product for which the 
inclusion of the biological product as a selected drug on 
a list published under subsection (a) has been delayed 
under subsection (f)(2), remove such biological product from 
the rankings under subparagraph (A) before making the 
selections under subparagraph (B).’’; and 
(ii) by adding at the end the following new para-
graph: 
‘‘(3) INCLUSION OF DELAYED BIOLOGICAL PRODUCTS.—Pursu-
ant to subparagraphs (B)(ii)(I) and (C)(i) of subsection (f)(2), 
the Secretary shall select and include on the list published 
under subsection (a) the biological products described in such 
subparagraphs. Such biological products shall count towards 
the required number of drugs to be selected under subsection 
(a)(1).’’; and 
(C) by adding at the end the following new subsection: 
‘‘(f) SPECIAL RULE TO DELAY SELECTION AND NEGOTIATION OF 
BIOLOGICS FOR BIOSIMILAR MARKET ENTRY.— 
‘‘(1) APPLICATION.—
H. R. 5376—38 
‘‘(A) IN GENERAL.—Subject to subparagraph (B), in the 
case of a biological product that would (but for this sub-
section) be an extended-monopoly drug (as defined in sec-
tion 1194(c)(4)) included as a selected drug on the list 
published under subsection (a) with respect to an initial 
price applicability year, the rules described in paragraph 
(2) shall apply if the Secretary determines that there is 
a high likelihood (as described in paragraph (3)) that a 
biosimilar biological product (for which such biological 
product will be the reference product) will be licensed and 
marketed under section 351(k) of the Public Health Service 
Act before the date that is 2 years after the selected drug 
publication date with respect to such initial price applica-
bility year. 
‘‘(B) REQUEST REQUIRED.— 
‘‘(i) IN GENERAL.—The Secretary shall not provide 
for a delay under— 
‘‘(I) paragraph (2)(A) unless a request is made 
for such a delay by a manufacturer of a biosimilar 
biological product prior to the selected drug 
publication date for the list published under sub-
section (a) with respect to the initial price applica-
bility year for which the biological product may 
have been included as a selected drug on such 
list but for subparagraph (2)(A); or 
‘‘(II) paragraph (2)(B)(iii) unless a request is 
made for such a delay by such a manufacturer 
prior to the selected drug publication date for the 
list published under subsection (a) with respect 
to the initial price applicability year that is 1 
year after the initial price applicability year for 
which the biological product described in sub-
section (a) would have been included as a selected 
drug on such list but for paragraph (2)(A). 
‘‘(ii) INFORMATION AND DOCUMENTS.— 
‘‘(I) IN
GENERAL.—A request made under 
clause (i) shall be submitted to the Secretary by 
such manufacturer at a time and in a form and 
manner specified by the Secretary, and contain— 
‘‘(aa) information and documents nec-
essary for the Secretary to make determina-
tions under this subsection, as specified by 
the Secretary and including, to the extent 
available, items described in subclause (III); 
and 
‘‘(bb) all agreements related to the bio-
similar biological product filed with the Fed-
eral Trade Commission or the Assistant 
Attorney General pursuant to subsections (a) 
and (c) of section 1112 of the Medicare 
Prescription Drug, Improvement, and Mod-
ernization Act of 2003. 
‘‘(II) ADDITIONAL
INFORMATION
AND
DOCU-
MENTS.—After the Secretary has reviewed the 
request and materials submitted under subclause 
(I), the manufacturer shall submit any additional
H. R. 5376—39 
information and documents requested by the Sec-
retary necessary to make determinations under 
this subsection. 
‘‘(III) ITEMS DESCRIBED.—The items described 
in this clause are the following: 
‘‘(aa) The manufacturing schedule for such 
biosimilar biological product submitted to the 
Food and Drug Administration during its 
review of the application under such section 
351(k). 
‘‘(bb) Disclosures (in filings by the manu-
facturer of such biosimilar biological product 
with the Securities and Exchange Commission 
required under section 12(b), 12(g), 13(a), or 
15(d) of the Securities Exchange Act of 1934 
about capital investment, revenue expecta-
tions, and actions taken by the manufacturer 
that are typical of the normal course of busi-
ness in the year (or the 2 years, as applicable) 
before marketing of a biosimilar biological 
product) that pertain to the marketing of such 
biosimilar biological product, or comparable 
documentation that is distributed to the share-
holders of privately held companies. 
‘‘(C) AGGREGATION RULE.— 
‘‘(i) IN GENERAL.—All persons treated as a single 
employer under subsection (a) or (b) of section 52 of 
the Internal Revenue Code of 1986, or in a partnership, 
shall be treated as one manufacturer for purposes of 
paragraph (2)(D)(iv). 
‘‘(ii) PARTNERSHIP DEFINED.—In clause (i), the term 
‘partnership’ means a syndicate, group, pool, joint ven-
ture, or other organization through or by means of 
which any business, financial operation, or venture 
is carried on by the manufacturer of the biological 
product and the manufacturer of the biosimilar 
biological product. 
‘‘(2) RULES DESCRIBED.—The rules described in this para-
graph are the following: 
‘‘(A) DELAYED
SELECTION
AND
NEGOTIATION
FOR
YEAR.—If a determination of high likelihood is made under 
paragraph (3), the Secretary shall delay the inclusion of 
the biological product as a selected drug on the list pub-
lished under subsection (a) until such list is published 
with respect to the initial price applicability year that 
is 1 year after the initial price applicability year for which 
the biological product would have been included as a 
selected drug on such list. 
‘‘(B) IF NOT LICENSED AND MARKETED DURING THE INI-
TIAL DELAY.— 
‘‘(i) IN
GENERAL.—If, during the time period 
between the selected drug publication date on which 
the biological product would have been included on 
the list as a selected drug pursuant to subsection (a) 
but for subparagraph (A) and the selected drug publica-
tion date with respect to the initial price applicability 
year that is 1 year after the initial price applicability
H. R. 5376—40 
year for which such biological product would have been 
included as a selected drug on such list, the Secretary 
determines that the biosimilar biological product for 
which the manufacturer submitted the request under 
paragraph (1)(B)(i)(II) (and for which the Secretary 
previously made a high likelihood determination under 
paragraph (3)) has not been licensed and marketed 
under section 351(k) of the Public Health Service Act, 
the Secretary shall, at the request of such manufac-
turer— 
‘‘(I) reevaluate whether there is a high likeli-
hood (as described in paragraph (3)) that such 
biosimilar biological product will be licensed and 
marketed under such section 351(k) before the date 
that is 2 years after the selected drug publication 
date for which such biological product would have 
been included as a selected drug on such list pub-
lished but for subparagraph (A); and 
‘‘(II) evaluate whether, on the basis of clear 
and convincing evidence, the manufacturer of such 
biosimilar biological product has made a significant 
amount of progress (as determined by the Sec-
retary) towards both such licensure and the mar-
keting of such biosimilar biological product (based 
on information from items described in subclauses 
(I)(bb) and (II) of paragraph (1)(B)(ii)) since the 
receipt by the Secretary of the request made by 
such manufacturer under paragraph (1)(B)(i)(I). 
‘‘(ii) SELECTION
AND
NEGOTIATION.—If the Sec-
retary determines that there is not a high likelihood 
that such biosimilar biological product will be licensed 
and marketed as described in clause (i)(I) or there 
has not been a significant amount of progress as 
described in clause (i)(II)— 
‘‘(I) the Secretary shall include the biological 
product as a selected drug on the list published 
under subsection (a) with respect to the initial 
price applicability year that is 1 year after the 
initial price applicability year for which such 
biological product would have been included as 
a selected drug on such list but for subparagraph 
(A); and 
‘‘(II) the manufacturer of such biological 
product shall pay a rebate under paragraph (4) 
with respect to the year for which such manufac-
turer would have provided access to a maximum 
fair price for such biological product but for 
subparagraph (A). 
‘‘(iii) SECOND
1-YEAR
DELAY.—If the Secretary 
determines that there is a high likelihood that such 
biosimilar biological product will be licensed and mar-
keted (as described in clause (i)(I)) and a significant 
amount of progress has been made by the manufacturer 
of such biosimilar biological product towards such licen-
sure and marketing (as described in clause (i)(II)), 
the Secretary shall delay the inclusion of the biological 
product as a selected drug on the list published under
H. R. 5376—41 
subsection (a) until the selected drug publication date 
of such list with respect to the initial price applicability 
year that is 2 years after the initial price applicability 
year for which such biological product would have been 
included as a selected drug on such list but for this 
subsection. 
‘‘(C) IF NOT LICENSED AND MARKETED DURING THE YEAR 
TWO
DELAY.—If, during the time period between the 
selected drug publication date of the list for which the 
biological product would have been included as a selected 
drug but for subparagraph (B)(iii) and the selected drug 
publication date with respect to the initial price applica-
bility year that is 2 years after the initial price applicability 
year for which such biological product would have been 
included as a selected drug on such list but for this sub-
section, the Secretary determines that such biosimilar 
biological product has not been licensed and marketed— 
‘‘(i) the Secretary shall include such biological 
product as a selected drug on such list with respect 
to the initial price applicability year that is 2 years 
after the initial price applicability year for which such 
biological product would have been included as a 
selected drug on such list; and 
‘‘(ii) the manufacturer of such biological product 
shall pay a rebate under paragraph (4) with respect 
to the years for which such manufacturer would have 
provided access to a maximum fair price for such 
biological product but for this subsection. 
‘‘(D) LIMITATIONS ON DELAYS.— 
‘‘(i) LIMITED
TO
YEARS.—In no case shall the 
Secretary delay the inclusion of a biological product 
on the list published under subsection (a) for more 
than 2 years. 
‘‘(ii) EXCLUSION
OF
BIOLOGICAL
PRODUCTS
THAT 
TRANSITIONED TO A LONG-MONOPOLY DRUG DURING THE 
DELAY.—In the case of a biological product for which 
the inclusion on the list published pursuant to sub-
section (a) was delayed by 1 year under subparagraph 
(A) and for which there would have been a change 
in status to a long-monopoly drug (as defined in section 
1194(c)(5)) if such biological product had been a 
selected drug, in no case may the Secretary provide 
for a second 1-year delay under subparagraph (B)(iii). 
‘‘(iii) EXCLUSION OF BIOLOGICAL PRODUCTS IF MORE 
THAN 1 YEAR SINCE LICENSURE.—In no case shall the 
Secretary delay the inclusion of a biological product 
on the list published under subsection (a) if more than 
1 year has elapsed since the biosimilar biological 
product has been licensed under section 351(k) of the 
Public Health Service Act and marketing has not com-
menced for such biosimilar biological product. 
‘‘(iv) CERTAIN
MANUFACTURERS
OF
BIOSIMILAR 
BIOLOGICAL PRODUCTS EXCLUDED.—In no case shall the 
Secretary delay the inclusion of a biological product
H. R. 5376—42 
as a selected drug on the list published under sub-
section (a) if Secretary determined that the manufac-
turer of the biosimilar biological product described in 
paragraph (1)(A)— 
‘‘(I) is the same as the manufacturer of the 
reference product described in such paragraph or 
is treated as being the same pursuant to paragraph 
(1)(C); or 
‘‘(II) has, based on information from items 
described in paragraph (1)(B)(ii)(I)(bb), entered 
into any agreement described in such paragraph 
with the manufacturer of the reference product 
described in paragraph (1)(A) that— 
‘‘(aa) requires or incentivizes the manufac-
turer of the biosimilar biological product to 
submit a request described in paragraph 
(1)(B); or 
‘‘(bb) restricts the quantity (either directly 
or indirectly) of the biosimilar biological 
product that may be sold in the United States 
over a specified period of time. 
‘‘(3) HIGH LIKELIHOOD.—For purposes of this subsection, 
there is a high likelihood described in paragraph (1) or para-
graph (2), as applicable, if the Secretary finds that— 
‘‘(A) an application for licensure under section 351(k) 
of the Public Health Service Act for the biosimilar biological 
product has been accepted for review or approved by the 
Food and Drug Administration; and 
‘‘(B) information from items described in sub clauses 
(I)(bb) and (III) of paragraph (1)(B)(ii) submitted to the 
Secretary by the manufacturer requesting a delay under 
such paragraph provides clear and convincing evidence that 
such biosimilar biological product will, within the time 
period specified under paragraph (1)(A) or (2)(B)(i)(I), be 
marketed. 
‘‘(4) REBATE.— 
‘‘(A) IN
GENERAL.—For purposes of subparagraphs 
(B)(ii)(II) and (C)(ii) of paragraph (2), in the case of a 
biological product for which the inclusion on the list under 
subsection (a) was delayed under this subsection and for 
which the Secretary has negotiated and entered into an 
agreement under section 1193 with respect to such 
biological product, the manufacturer shall be required to 
pay a rebate to the Secretary at such time and in such 
manner as determined by the Secretary. 
‘‘(B) AMOUNT.—Subject to subparagraph (C), the 
amount of the rebate under subparagraph (A) with respect 
to a biological product shall be equal to the estimated 
amount— 
‘‘(i) in the case of a biological product that is a 
covered part D drug (as defined in section 1860D– 
2(e)), that is the sum of the products of— 
‘‘(I) 75 percent of the amount by which— 
‘‘(aa) the average manufacturer price, as 
reported by the manufacturer of such covered 
part D drug under section 1927 (or, if not 
reported by such manufacturer under section
H. R. 5376—43 
1927, as reported by such manufacturer to 
the Secretary pursuant to the agreement 
under section 1193(a)) for such biological 
product, with respect to each of the calendar 
quarters of the price applicability period that 
would have applied but for this subsection; 
exceeds 
‘‘(bb) in the initial price applicability year 
that would have applied but for a delay 
under— 
‘‘(AA) paragraph (2)(A), the maximum 
fair price negotiated under section 1194 
for such biological product under such 
agreement; or 
‘‘(BB) paragraph (2)(B)(iii), such max-
imum fair price, increased as described 
in section 1195(b)(1)(A); and 
‘‘(II) the number of units dispensed under part 
D of title XVIII for such covered part D drug 
during each such calendar quarter of such price 
applicability period; and 
‘‘(ii) in the case of a biological product for which 
payment may be made under part B of title XVIII, 
that is the sum of the products of— 
‘‘(I) 80 percent of the amount by which— 
‘‘(aa) the payment amount for such 
biological product under section 1847A(b), with 
respect to each of the calendar quarters of 
the price applicability period that would have 
applied but for this subsection; exceeds 
‘‘(bb) in the initial price applicability year 
that would have applied but for a delay 
under— 
‘‘(AA) paragraph (2)(A), the maximum 
fair price negotiated under section 1194 
for such biological product under such 
agreement; or 
‘‘(BB) paragraph (2)(B)(iii), such max-
imum fair price, increased as described 
in section 1195(b)(1)(A); and 
‘‘(II) the number of units (excluding units that 
are packaged into the payment amount for an 
item or service and are not separately payable 
under such part B) of the billing and payment 
code of such biological product administered or 
furnished under such part B during each such 
calendar quarter of such price applicability period. 
‘‘(C) SPECIAL RULE FOR DELAYED BIOLOGICAL PRODUCTS 
THAT ARE LONG-MONOPOLY DRUGS.— 
‘‘(i) IN GENERAL.—In the case of a biological product 
with respect to which a rebate is required to be paid 
under this paragraph, if such biological product quali-
fies as a long-monopoly drug (as defined in section 
1194(c)(5)) at the time of its inclusion on the list pub-
lished under subsection (a), in determining the amount 
of the rebate for such biological product under subpara-
graph (B), the amount described in clause (ii) shall
H. R. 5376—44 
be substituted for the maximum fair price described 
in clause (i)(I) or (ii)(I) of such subparagraph (B), as 
applicable. 
‘‘(ii) AMOUNT DESCRIBED.—The amount described 
in this clause is an amount equal to 65 percent of 
the average non-Federal average manufacturer price 
for the biological product for 2021 (or, in the case 
that there is not an average non-Federal average 
manufacturer price available for such biological 
product for 2021, for the first full year following the 
market entry for such biological product), increased 
by the percentage increase in the consumer price index 
for all urban consumers (all items; United States city 
average) from September 2021 (or December of such 
first full year following the market entry), as 
applicable, to September of the year prior to the 
selected drug publication date with respect to the ini-
tial price applicability year that would have applied 
but for this subsection. 
‘‘(D) REBATE
DEPOSITS.—Amounts paid as rebates 
under this paragraph shall be deposited into— 
‘‘(i) in the case payment is made for such biological 
product under part B of title XVIII, the Federal Supple-
mentary Medical Insurance Trust Fund established 
under section 1841; and 
‘‘(ii) in the case such biological product is a covered 
part D drug (as defined in section 1860D–2(e)), the 
Medicare Prescription Drug Account under section 
1860D–16 in such Trust Fund. 
‘‘(5) DEFINITIONS OF BIOSIMILAR BIOLOGICAL PRODUCT.—In 
this subsection, the term ‘biosimilar biological product’ has 
the meaning given such term in section 1847A(c)(6).’’; 
(2) in section 1193(a)(4)— 
(A) in the matter preceding subparagraph (A), by 
inserting ‘‘, and for section 1192(f),’’ after ‘‘section 1194(f))’’; 
(B) in subparagraph (A), by striking ‘‘and’’ at the end; 
(C) by adding at the end the following new subpara-
graph: 
‘‘(C) information that the Secretary requires to carry 
out section 1192(f), including rebates under paragraph (4) 
of such section; and’’; 
(3) in section 1196(a)(7), by striking ‘‘section 1192(d)(2)(B)’’ 
and inserting ‘‘subsections (d)(2)(B) and (f)(1)(C) of section 
1192’’; 
(4) in section 1197— 
(A) by redesignating subsections (b), (c), and (d) as 
subsections (c), (d), and (e), respectively; and 
(B) by inserting after subsection (a) the following new 
subsection: 
‘‘(b) VIOLATIONS RELATING TO PROVIDING REBATES.—Any manu-
facturer that fails to comply with the rebate requirements under 
section 1192(f)(4) shall be subject to a civil monetary penalty equal 
to 10 times the amount of the rebate the manufacturer failed 
to pay under such section.’’; and 
(5) in section 1198(b)(2), by inserting ‘‘the application of 
section 1192(f),’’ after ‘‘section 1192(e)’’.