such a termination, but such hearing shall 
not delay the effective date of the termi-
nation. 
‘‘(ii) BY A MANUFACTURER.—A man-
ufacturer may terminate an agreement 
under this section for any reason. Any 
such termination shall not be effective 
until the year beginning at least 60 days 
after the date the manufacturer provides 
notice to the Secretary. 
‘‘(C) EFFECTIVENESS OF TERMINATION.— 
Any termination under this paragraph shall not 
affect rebates due under the agreement under 
this section before the effective date of its ter-
mination. 
‘‘(D) DELAY
BEFORE
REENTRY.—In the 
case of any agreement under this section with 
a manufacturer which is terminated in a plan 
year, another such agreement with the manu-
facturer (or a successor manufacturer) may not 
be entered into before the subsequent plan year, 
unless the Secretary finds good cause for an 
earlier reinstatement of such an agreement. 
‘‘(3) INFORMATION.—For purposes of carrying 
out this section, the Secretary shall use information 
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submitted 
by 
manufacturers 
under 
section 
1927(b)(3). 
‘‘(c) REBATE AMOUNT.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the amount specified in this subsection for a 
dosage form and strength with respect to a part D 
rebatable drug and applicable year is, subject to sub-
paragraphs (B) and (C) of paragraph (3), the 
amount equal to the product of— 
‘‘(A) the total average number of units 
weighted by, and dispensed for, such dosage 
form and strength with respect to such part D 
rebatable drug and year; and 
‘‘(B) the amount (if any) by which— 
‘‘(i) the average manufacturer price 
(as defined in subsection (g)) paid for such 
dosage form and strength with respect to 
such part D rebatable drug during the 
year; exceeds 
‘‘(ii) the inflation-adjusted payment 
amount determined under paragraph (2) 
for such dosage form and strength with re-
spect to such part D rebatable drug during 
the year. 
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‘‘(2) DETERMINATION OF INFLATION-ADJUSTED 
PAYMENT AMOUNT.—The inflation-adjusted payment 
amount determined under this paragraph for a dos-
age form and strength with respect to a part D 
rebatable drug for an applicable year, subject to sub-
paragraphs (A) and (D) of paragraph (3), is— 
‘‘(A) the average manufacturer price paid 
for such dosage form and strength with respect 
to such drug in the payment amount bench-
mark year (as defined in subsection (g)(3)); in-
creased by 
‘‘(B) the percentage by which the rebate 
period CPI–U (as defined in subsection (g)(5)) 
for the applicable year exceeds the benchmark 
period CPI–U (as defined in subsection (g)(4)). 
‘‘(3) SPECIAL TREATMENT OF CERTAIN DRUGS 
AND EXEMPTION.— 
‘‘(A) SUBSEQUENTLY APPROVED DRUGS.— 
In the case of a part D rebatable drug first ap-
proved by the Food and Drug Administration 
after January 1, 2016, subparagraph (A) of 
paragraph (2) shall be applied as if the term 
‘payment amount benchmark year’ were defined 
under subsection (g)(3) as the first year begin-
ning after the day on which the drug was first 
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marketed and subparagraph (B) of paragraph 
(2) shall be applied as if the term ‘benchmark 
period CPI–U’ were defined under subsection 
(g)(4) as if the reference to ‘January 2016’ 
under such subsection were a reference to ‘Jan-
uary of the first year beginning after the date 
on which the drug was first marketed by any 
manufacturer’. 
‘‘(B) EXEMPTION FOR SHORTAGES.—The 
Secretary may reduce or waive the rebate under 
paragraph (1) with respect to a part D 
rebatable drug in the case of a shortage of such 
drug or other exigent circumstances, as deter-
mined by the Secretary. 
‘‘(C) TREATMENT
OF
NEW
FORMULA-
TIONS.— 
‘‘(i) IN GENERAL.—In the case of a 
part D rebatable drug that is a line exten-
sion of a single source drug or an inno-
vator multiple source drug that is an oral 
solid dosage form, the Secretary shall es-
tablish a formula for determining the 
amount specified in this subsection with 
respect to such part D rebatable drug and 
an applicable year with consideration of 
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the single source drug or an innovator 
multiple source drug. 
‘‘(ii) LINE EXTENSION DEFINED.—In 
this subparagraph, the term ‘line exten-
sion’ means, with respect to a part D 
rebatable drug, a new formulation of the 
drug (as determined by the Secretary), 
such as an extended release formulation, 
but does not include an abuse-deterrent 
formulation of the drug (as determined by 
the Secretary), regardless of whether such 
abuse-deterrent formulation is an extended 
release formulation. 
‘‘(D) SELECTED DRUGS.—In the case of a 
part D rebatable drug that is a selected drug 
(as defined in section 1192(c)), for each appli-
cable year beginning after the price applicability 
period (as defined in section 1191(b)(2) with 
respect to such drug, subparagraph (A) of para-
graph (2) shall be applied as if the term ‘pay-
ment amount benchmark year’ were defined 
under subsection (g)(3) as the last year begin-
ning during such price applicability period with 
respect to such selected drug and subparagraph 
(B) of paragraph (2) shall be applied as if the 
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term ‘benchmark period CPI–U’ were defined 
under subsection (g)(4) as if the reference to 
‘January 2016’ under such subsection were a 
reference to January of the last year beginning 
during such price applicability period with re-
spect to such drug. 
‘‘(d) REBATE DEPOSITS.—Amounts paid as rebates 
under subsection (c) shall be deposited into the Medicare 
Prescription Drug Account in the Federal Supplementary 
Medical Insurance Trust Fund established under section 
1841. 
‘‘(e) CIVIL MONEY PENALTY.—In the case of a man-
ufacturer of a part D rebatable drug with an agreement 
in effect under this section who has failed to comply with 
the terms of the agreement under subsection (b)(1)(B) 
with respect to such drug for an applicable year, the Sec-
retary may impose a civil money penalty on such manufac-
turer in an amount equal to 125 percent of the amount 
specified in subsection (c) for such drug for such year. 
The provisions of section 1128A (other than subsections 
(a) (with respect to amounts of penalties or additional as-
sessments) and (b)) shall apply to a civil money penalty 
under this subsection in the same manner as such provi-
sions apply to a penalty or proceeding under section 
1128A(a). 
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‘‘(f) JUDICIAL REVIEW.—There shall be no judicial 
review of the following: 
‘‘(1) The determination of units under this sec-
tion. 
‘‘(2) The determination of whether a drug is a 
part D rebatable drug under this section. 
‘‘(3) The calculation of the rebate amount 
under this section. 
‘‘(g) DEFINITIONS.—In this section: 
‘‘(1) PART D REBATABLE DRUG DEFINED.— 
‘‘(A) IN
GENERAL.—The term ‘part D 
rebatable drug’ means a drug or biological that 
would (without application of this section) be a 
covered part D drug, except such term shall, 
with respect to an applicable year, not include 
such a drug or biological if the average total 
cost under a prescription drug plan under this 
part or MA–PD plan under part C for such 
year per individual who uses such a drug or bi-
ological, as determined by the Secretary, are 
less than, subject to subparagraph (B), $100, 
as determined by the Secretary using the most 
recent data available or, if data is not available, 
as estimated by the Secretary. 
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‘‘(B) INCREASE.—The dollar amount ap-
plied under subparagraph (A)— 
‘‘(i) for 2023, shall be the dollar 
amount specified under such subparagraph 
for 2022, increased by the percentage in-
crease in the consumer price index for all 
urban consumers (United States city aver-
age) as of January of 2022; and 
‘‘(ii) for a subsequent year, shall be 
the dollar amount specified in this sub-
paragraph (or subparagraph (A)) for the 
previous year, increased by the percentage 
increase in the consumer price index for all 
urban consumers (United States city aver-
age) as of January of the previous year. 
Any dollar amount specified under this sub-
paragraph that is not a multiple of $10 shall be 
rounded to the nearest multiple of $10. 
‘‘(2) UNIT DEFINED.—The term ‘unit’ means, 
with respect to a part D rebatable drug, the lowest 
identifiable quantity (such as a capsule or tablet, 
milligram of molecules, or grams) of the part D 
rebatable drug that is dispensed to individuals en-
rolled under a prescription drug plan under this part 
or an MA–PD plan under part C. 
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‘‘(3) PAYMENT AMOUNT BENCHMARK YEAR.— 
The term ‘payment amount benchmark year’ means 
the year beginning January 1, 2016. 
‘‘(4) BENCHMARK
PERIOD
CPI–U.—The term 
‘benchmark period CPI–U’ means the consumer 
price index for all urban consumers (United States 
city average) for January 2016. 
‘‘(5) REBATE PERIOD CPI–U.—The term ‘rebate 
period CPI–U’ means, with respect to an applicable 
year, the consumer price index for all urban con-
sumers (United States city average) for January of 
such year. 
‘‘(6) AVERAGE
MANUFACTURER
PRICE.—The 
term ‘average manufacturer price’ has the meaning, 
with respect to a part D rebatable drug of a manu-
facturer for an applicable year, given such term in 
section 1927(k)(1), with respect to a covered out-
patient drug of a manufacturer for a rebate period 
under section 1927. For purposes of applying the 
previous sentence, with respect to a part D rebatable 
drug of a manufacturer and an applicable year, the 
Secretary shall use the information with respect to 
the average manufacturer price for such drug re-
ported 
by 
the 
manufacturer 
under 
section 
1927(b)(3) with respect to each of the quarters in 
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the applicable year and calculate an annual average 
manufacturer price for such applicable year as the 
average of such average manufacturer prices for 
each such quarter, weighted by units of such drug 
sold or dispensed with respect to such applicable 
year.’’. 
TITLE 
III—PART 
D 
IMPROVE-
MENTS AND MAXIMUM OUT- 
OF-POCKET CAP FOR MEDI-
CARE BENEFICIARIES 
SEC. 301. MEDICARE PART D BENEFIT REDESIGN. 
(a) 
BENEFIT
STRUCTURE
REDESIGN.—Section 
1860D–2(b) of the Social Security Act (42 U.S.C. 1395w– 
102(b)) is amended— 
(1) in paragraph (2)— 
(A) in subparagraph (A), in the matter 
preceding clause (i), by inserting ‘‘for a year 
preceding 2022 and for costs above the annual 
deductible specified in paragraph (1) and up to 
the annual out-of-pocket threshold specified in 
paragraph (4)(B) for 2022 and each subsequent 
year’’ after ‘‘paragraph (3)’’; 
(B) in subparagraph (C)— 
(i) in clause (i), in the matter pre-
ceding subclause (I), by inserting ‘‘for a 
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year preceding 2022,’’ after ‘‘paragraph 
(4),’’; and 
(ii) in clause (ii)(III), by striking 
‘‘and each subsequent year’’ and inserting 
‘‘and 2021’’; and 
(C) in subparagraph (D)— 
(i) in clause (i)— 
(I) in the matter preceding sub-
clause (I), by inserting ‘‘for a year 
preceding 2022,’’ after ‘‘paragraph 
(4),’’; and 
(II) in subclause (I)(bb), by 
striking ‘‘a year after 2018’’ and in-
serting ‘‘each of years 2018 through 
2021’’; and 
(ii) in clause (ii)(V), by striking 
‘‘2019 and each subsequent year’’ and in-
serting ‘‘each of years 2019 through 
2021’’; 
(2) in paragraph (3)(A)— 
(A) in the matter preceding clause (i), by 
inserting ‘‘for a year preceding 2022,’’ after 
‘‘and (4),’’; and 
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(B) in clause (ii), by striking ‘‘for a subse-
quent year’’ and inserting ‘‘for each of years 
2007 through 2021’’; and 
(3) in paragraph (4)— 
(A) in subparagraph (A)— 
(i) in clause (i)— 
(I) by redesignating subclauses 
(I) and (II) as items (aa) and (bb), 
respectively, and moving the margin 
of each such redesignated item 2 ems 
to the right; 
(II) in the matter preceding item 
(aa), as redesignated by subclause (I), 
by striking ‘‘is equal to the greater 
of—’’ and inserting ‘‘is equal to— 
‘‘(I) for a year preceding 2022, 
the greater of—’’; 
(III) by striking the period at the 
end of item (bb), as redesignated by 
subclause (I), and inserting ‘‘; and’’; 
and 
(IV) by adding at the end the fol-
lowing: 
‘‘(II) for 2022 and each suc-
ceeding year, $0.’’; and 
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(ii) in clause (ii)— 
(I) by striking ‘‘clause (i)(I)’’ and 
inserting ‘‘clause (i)(I)(aa)’’; and 
(II) by adding at the end the fol-
lowing new sentence: ‘‘The Secretary 
shall continue to calculate the dollar 
amounts specified in clause (i)(I)(aa), 
including with the adjustment under 
this clause, after 2021 for purposes of 
section 1860D–14(a)(1)(D)(iii).’’; 
(B) in subparagraph (B)— 
(i) in clause (i)— 
(I) in subclause (V), by striking 
‘‘or’’ at the end; 
(II) in subclause (VI)— 
(aa) by striking ‘‘for a sub-
sequent year’’ and inserting ‘‘for 
2021’’; and 
(bb) by striking the period 
at the end and inserting a semi-
colon; and 
(III) by adding at the end the 
following new subclauses: 
‘‘(VII) for 2022, is equal to 
$2,000; or 
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‘‘(VIII) for a subsequent year, is 
equal to the amount specified in this 
subparagraph for the previous year, 
increased by the annual percentage in-
crease described in paragraph (6) for 
the year involved.’’; and 
(ii) in clause (ii), by striking ‘‘clause 
(i)(II)’’ and inserting ‘‘clause (i)’’; 
(C) in subparagraph (C)(i), by striking 
‘‘and for amounts’’ and inserting ‘‘and, for a 
year preceding 2022, for amounts’’; and 
(D) in subparagraph (E), by striking ‘‘In 
applying’’ and inserting ‘‘For each of years 
2011 through 2021, in applying’’. 
(b) 
DECREASING
REINSURANCE
PAYMENT 
AMOUNT.—Section 1860D–15(b)(1) of the Social Security 
Act (42 U.S.C. 1395w–115(b)(1)) is amended by inserting 
after ‘‘80 percent’’ the following: ‘‘(or, with respect to a 
coverage year after 2021, 20 percent)’’. 
(c) MANUFACTURER DISCOUNT PROGRAM.— 
(1) IN GENERAL.—Part D of title XVIII of the 
Social Security Act (42 U.S.C. 1395w–101 et seq.), 
as amended by section 202, is further amended by 
inserting after section 1860D–14B the following new 
section: 
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‘‘SEC. 1860D–14C. MANUFACTURER DISCOUNT PROGRAM. 
‘‘(a) ESTABLISHMENT.—The Secretary shall estab-
lish a manufacturer discount program (in this section re-
ferred to as the ‘program’). Under the program, the Sec-
retary shall enter into agreements described in subsection 
(b) with manufacturers and provide for the performance 
of the duties described in subsection (c). The Secretary 
shall establish a model agreement for use under the pro-
gram by not later than January 1, 2021, in consultation 
with manufacturers, and allow for comment on such model 
agreement. 
‘‘(b) TERMS OF AGREEMENT.— 
‘‘(1) IN GENERAL.— 
‘‘(A) AGREEMENT.—An agreement under 
this section shall require the manufacturer to 
provide applicable beneficiaries access to dis-
counted prices for applicable drugs of the man-
ufacturer that are dispensed on or after Janu-
ary 1, 2022. 
‘‘(B) PROVISION OF DISCOUNTED PRICES 
AT THE POINT-OF-SALE.—The discounted prices 
described in subparagraph (A) shall be provided 
to the applicable beneficiary at the pharmacy or 
by the mail order service at the point-of-sale of 
an applicable drug. 
‘‘(C) TIMING OF AGREEMENT.— 
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‘‘(i) SPECIAL
RULE
FOR
2022.—In 
order for an agreement with a manufac-
turer to be in effect under this section with 
respect to the period beginning on January 
1, 2022, and ending on December 31, 
2022, the manufacturer shall enter into 
such agreement not later than 30 days 
after the date of the establishment of a 
model agreement under subsection (a). 
‘‘(ii) 
2023 
AND
SUBSEQUENT 
YEARS.—In order for an agreement with a 
manufacturer to be in effect under this 
section with respect to plan year 2023 or 
a subsequent plan year, the manufacturer 
shall enter into such agreement (or such 
agreement shall be renewed under para-
graph (4)(A)) not later than January 30 of 
the preceding year. 
‘‘(2) PROVISION OF APPROPRIATE DATA.—Each 
manufacturer with an agreement in effect under this 
section shall collect and have available appropriate 
data, as determined by the Secretary, to ensure that 
it can demonstrate to the Secretary compliance with 
the requirements under the program. 
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‘‘(3) COMPLIANCE
WITH
REQUIREMENTS
FOR 
ADMINISTRATION
OF
PROGRAM.—Each manufac-
turer with an agreement in effect under this section 
shall comply with requirements imposed by the Sec-
retary or a third party with a contract under sub-
section (d)(3), as applicable, for purposes of admin-
istering the program, including any determination 
under subparagraph (A) of subsection (c)(1) or pro-
cedures established under such subsection (c)(1). 
‘‘(4) LENGTH OF AGREEMENT.— 
‘‘(A) IN GENERAL.—An agreement under 
this section shall be effective for an initial pe-
riod of not less than 12 months and shall be 
automatically renewed for a period of not less 
than 1 year unless terminated under subpara-
graph (B). 
‘‘(B) TERMINATION.— 
‘‘(i) BY THE SECRETARY.—The Sec-
retary may provide for termination of an 
agreement under this section for a knowing 
and willful violation of the requirements of 
the agreement or other good cause shown. 
Such termination shall not be effective ear-
lier than 30 days after the date of notice 
to the manufacturer of such termination. 
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The Secretary shall provide, upon request, 
a manufacturer with a hearing concerning 
such a termination, and such hearing shall 
take place prior to the effective date of the 
termination with sufficient time for such 
effective date to be repealed if the Sec-
retary determines appropriate. 
‘‘(ii) BY A MANUFACTURER.—A man-
ufacturer may terminate an agreement 
under this section for any reason. Any 
such termination shall be effective, with re-
spect to a plan year— 
‘‘(I) if the termination occurs be-
fore January 30 of a plan year, as of 
the day after the end of the plan year; 
and 
‘‘(II) if the termination occurs on 
or after January 30 of a plan year, as 
of the day after the end of the suc-
ceeding plan year. 
‘‘(iii) EFFECTIVENESS
OF
TERMI-
NATION.—Any termination under this sub-
paragraph shall not affect discounts for 
applicable drugs of the manufacturer that 
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are due under the agreement before the ef-
fective date of its termination. 
‘‘(iv) NOTICE TO THIRD PARTY.—The 
Secretary shall provide notice of such ter-
mination to a third party with a contract 
under subsection (d)(3) within not less 
than 30 days before the effective date of 
such termination. 
‘‘(c) DUTIES DESCRIBED.—The duties described in 
this subsection are the following: 
‘‘(1) ADMINISTRATION OF PROGRAM.—Admin-
istering the program, including— 
‘‘(A) the determination of the amount of 
the discounted price of an applicable drug of a 
manufacturer; 
‘‘(B) the establishment of procedures 
under which discounted prices are provided to 
applicable beneficiaries at pharmacies or by 
mail order service at the point-of-sale of an ap-
plicable drug; 
‘‘(C) the establishment of procedures to 
ensure that, not later than the applicable num-
ber of calendar days after the dispensing of an 
applicable drug by a pharmacy or mail order 
service, the pharmacy or mail order service is 
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reimbursed for an amount equal to the dif-
ference between— 
‘‘(i) the negotiated price of the appli-
cable drug; and 
‘‘(ii) the discounted price of the appli-
cable drug; 
‘‘(D) the establishment of procedures to 
ensure that the discounted price for an applica-
ble drug under this section is applied before any 
coverage or financial assistance under other 
health benefit plans or programs that provide 
coverage or financial assistance for the pur-
chase or provision of prescription drug coverage 
on behalf of applicable beneficiaries as the Sec-
retary may specify; and 
‘‘(E) providing a reasonable dispute resolu-
tion mechanism to resolve disagreements be-
tween manufacturers, applicable beneficiaries, 
and the third party with a contract under sub-
section (d)(3). 
‘‘(2) MONITORING COMPLIANCE.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
monitor compliance by a manufacturer with the 
terms of an agreement under this section. 
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‘‘(B) NOTIFICATION.—If a third party 
with a contract under subsection (d)(3) deter-
mines that the manufacturer is not in compli-
ance with such agreement, the third party shall 
notify the Secretary of such noncompliance for 
appropriate enforcement under subsection (e). 
‘‘(3) COLLECTION OF DATA FROM PRESCRIP-
TION DRUG PLANS AND MA–PD PLANS.—The Sec-
retary may collect appropriate data from prescrip-
tion drug plans and MA–PD plans in a timeframe 
that allows for discounted prices to be provided for 
applicable drugs under this section. 
‘‘(d) ADMINISTRATION.— 
‘‘(1) IN GENERAL.—Subject to paragraph (2), 
the Secretary shall provide for the implementation of 
this section, including the performance of the duties 
described in subsection (c). 
‘‘(2) LIMITATION.—In providing for the imple-
mentation of this section, the Secretary shall not re-
ceive or distribute any funds of a manufacturer 
under the program. 
‘‘(3) CONTRACT
WITH
THIRD
PARTIES.—The 
Secretary shall enter into a contract with 1 or more 
third parties to administer the requirements estab-
lished by the Secretary in order to carry out this 
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section. At a minimum, the contract with a third 
party under the preceding sentence shall require 
that the third party— 
‘‘(A) receive and transmit information be-
tween the Secretary, manufacturers, and other 
individuals or entities the Secretary determines 
appropriate; 
‘‘(B) receive, distribute, or facilitate the 
distribution of funds of manufacturers to ap-
propriate individuals or entities in order to 
meet the obligations of manufacturers under 
agreements under this section; 
‘‘(C) provide adequate and timely informa-
tion to manufacturers, consistent with the 
agreement with the manufacturer under this 
section, as necessary for the manufacturer to 
fulfill its obligations under this section; and 
‘‘(D) permit manufacturers to conduct 
periodic audits, directly or through contracts, of 
the data and information used by the third 
party to determine discounts for applicable 
drugs of the manufacturer under the program. 
‘‘(4) 
PERFORMANCE
REQUIREMENTS.—The 
Secretary shall establish performance requirements 
for a third party with a contract under paragraph 
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(3) and safeguards to protect the independence and 
integrity of the activities carried out by the third 
party under the program under this section. 
‘‘(5) IMPLEMENTATION.—The Secretary may 
implement the program under this section by pro-
gram instruction or otherwise. 
‘‘(6) ADMINISTRATION.—Chapter 35 of title 44, 
United States Code, shall not apply to the program 
under this section. 
‘‘(e) ENFORCEMENT.— 
‘‘(1) AUDITS.—Each manufacturer with an 
agreement in effect under this section shall be sub-
ject to periodic audit by the Secretary. 
‘‘(2) CIVIL MONEY PENALTY.— 
‘‘(A) IN
GENERAL.—The Secretary may 
impose a civil money penalty on a manufacturer 
that fails to provide applicable beneficiaries dis-
counts for applicable drugs of the manufacturer 
in accordance with such agreement for each 
such failure in an amount the Secretary deter-
mines is commensurate with the sum of— 
‘‘(i) the amount that the manufac-
turer would have paid with respect to such 
discounts under the agreement, which will 
then be used to pay the discounts which 
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the manufacturer had failed to provide; 
and 
‘‘(ii) 25 percent of such amount. 
‘‘(B) APPLICATION.—The provisions of 
section 1128A (other than subsections (a) and 
(b)) shall apply to a civil money penalty under 
this paragraph in the same manner as such 
provisions apply to a penalty or proceeding 
under section 1128A(a). 
‘‘(f) CLARIFICATION REGARDING AVAILABILITY OF 
OTHER COVERED PART D DRUGS.—Nothing in this sec-
tion shall prevent an applicable beneficiary from pur-
chasing a covered part D drug that is not an applicable 
drug (including a generic drug or a drug that is not on 
the formulary of the prescription drug plan or MA–PD 
plan that the applicable beneficiary is enrolled in). 
‘‘(g) DEFINITIONS.—In this section: 
‘‘(1) APPLICABLE
BENEFICIARY.—The term 
‘applicable beneficiary’ means an individual who, on 
the date of dispensing a covered part D drug— 
‘‘(A) is enrolled in a prescription drug plan 
or an MA–PD plan; 
‘‘(B) is not enrolled in a qualified retiree 
prescription drug plan; and 
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‘‘(C) has incurred costs for covered part D 
drugs in the year that are equal to or exceed 
the annual deductible specified in section 
1860D–2(b)(1) for such year. 
‘‘(2) APPLICABLE DRUG.—The term ‘applicable 
drug’, with respect to an applicable beneficiary— 
‘‘(A) means a covered part D drug— 
‘‘(i) approved under a new drug appli-
cation under section 505(b) of the Federal 
Food, Drug, and Cosmetic Act or, in the 
case of a biologic product, licensed under 
section 351 of the Public Health Service 
Act; and 
‘‘(ii)(I) if the PDP sponsor of the pre-
scription drug plan or the MA organization 
offering the MA–PD plan uses a for-
mulary, which is on the formulary of the 
prescription drug plan or MA–PD plan 
that the applicable beneficiary is enrolled 
in; 
‘‘(II) if the PDP sponsor of the pre-
scription drug plan or the MA organization 
offering the MA–PD plan does not use a 
formulary, for which benefits are available 
under the prescription drug plan or MA– 
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PD plan that the applicable beneficiary is 
enrolled in; or 
‘‘(III) is provided through an excep-
tion or appeal; and 
‘‘(B) does not include a selected drug (as 
defined in section 1192(c)) during a price appli-
cability 
period 
(as 
defined 
in 
section 
1191(b)(2)) with respect to such drug. 
‘‘(3) APPLICABLE
NUMBER
OF
CALENDAR 
DAYS.—The term ‘applicable number of calendar 
days’ means— 
‘‘(A) with respect to claims for reimburse-
ment submitted electronically, 14 days; and 
‘‘(B) with respect to claims for reimburse-
ment submitted otherwise, 30 days. 
‘‘(4) DISCOUNTED PRICE.— 
‘‘(A) IN GENERAL.—The term ‘discounted 
price’ means, with respect to an applicable drug 
of a manufacturer furnished during a year to 
an applicable beneficiary— 
‘‘(i) who has not incurred costs for 
covered part D drugs in the year that are 
equal to or exceed the annual out-of-pocket 
threshold specified in section 1860D– 
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2(b)(4)(B)(i) for the year, 90 percent of 
the negotiated price of such drug; and 
‘‘(ii) who has incurred such costs in 
the year that are equal to or exceed such 
threshold for the year, 70 percent of the 
negotiated price of such drug. 
‘‘(B) CLARIFICATION.—Nothing in this 
section shall be construed as affecting the re-
sponsibility of an applicable beneficiary for pay-
ment of a dispensing fee for an applicable drug. 
‘‘(C) 
SPECIAL
CASE
FOR
CERTAIN 
CLAIMS.— 
‘‘(i) 
CLAIMS
SPANNING
DEDUCT-
IBLE.—In the case where the entire 
amount of the negotiated price of an indi-
vidual claim for an applicable drug with re-
spect to an applicable beneficiary does not 
fall at or above the annual deductible spec-
ified in section 1860D–2(b)(1) for the 
year, the manufacturer of the applicable 
drug shall provide the discounted price 
under this section on only the portion of 
the negotiated price of the applicable drug 
that falls at or above such annual deduct-
ible. 
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‘‘(ii) CLAIMS SPANNING OUT-OF-POCK-
ET THRESHOLD.—In the case where the 
entire amount of the negotiated price of an 
individual claim for an applicable drug 
with respect to an applicable beneficiary 
does not fall entirely below or entirely 
above the annual out-of-pocket threshold 
specified in section 1860D–2(b)(4)(B)(i) 
for the year, the manufacturer of the ap-
plicable drug shall provide the discounted 
price— 
‘‘(I) in accordance with subpara-
graph (A)(i) on the portion of the ne-
gotiated price of the applicable drug 
that falls below such threshold; and 
‘‘(II) in accordance with subpara-
graph (A)(ii) on the portion of such 
price of such drug that falls at or 
above such threshold. 
‘‘(5) MANUFACTURER.—The term ‘manufac-
turer’ means any entity which is engaged in the pro-
duction, preparation, propagation, compounding, 
conversion, or processing of prescription drug prod-
ucts, either directly or indirectly by extraction from 
substances of natural origin, or independently by 
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means of chemical synthesis, or by a combination of 
extraction and chemical synthesis. Such term does 
not include a wholesale distributor of drugs or a re-
tail pharmacy licensed under State law. 
‘‘(6) NEGOTIATED
PRICE.—The term ‘nego-
tiated price’ has the meaning given such term in sec-
tion 423.100 of title 42, Code of Federal Regula-
tions (as in effect on the date of enactment of sec-
tion 1860D–14A), except that such negotiated price 
shall not include any dispensing fee for the applica-
ble drug. 
‘‘(7) QUALIFIED RETIREE PRESCRIPTION DRUG 
PLAN.—The term ‘qualified retiree prescription drug 
plan’ has the meaning given such term in section 
1860D–22(a)(2).’’. 
(2) SUNSET OF MEDICARE COVERAGE GAP DIS-
COUNT PROGRAM.—Section 1860D–14A of the So-
cial Security Act (42 U.S.C. 1395–114a) is amend-
ed— 
(A) in subsection (a), in the first sentence, 
by striking ‘‘The Secretary’’ and inserting 
‘‘Subject to subsection (h), the Secretary’’; and 
(B) by adding at the end the following new 
subsection: 
‘‘(h) SUNSET OF PROGRAM.— 
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‘‘(1) IN
GENERAL.—The program shall not 
apply with respect to applicable drugs dispensed on 
or after January 1, 2022, and, subject to paragraph 
(2), agreements under this section shall be termi-
nated as of such date. 
‘‘(2) CONTINUED APPLICATION FOR APPLICA-
BLE
DRUGS
DISPENSED
PRIOR
TO
SUNSET.—The 
provisions of this section (including all responsibil-
ities and duties) shall continue to apply after Janu-
ary 1, 2022, with respect to applicable drugs dis-
pensed prior to such date.’’. 
(3) INCLUSION OF ACTUARIAL VALUE OF MANU-
FACTURER DISCOUNTS IN BIDS.—Section 1860D–11 
of the Social Security Act (42 U.S.C. 1395w–111) 
is amended— 
(A) in subsection (b)(2)(C)(iii)— 
(i) by striking ‘‘assumptions regarding 
the reinsurance’’ an inserting ‘‘assump-
tions regarding— 
‘‘(I) the reinsurance’’; and 
(ii) by adding at the end the fol-
lowing: 
‘‘(II) for 2022 and each subse-
quent year, the manufacturer dis-
counts provided under section 1860D– 
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14C subtracted from the actuarial 
value to produce such bid; and’’; and 
(B) in subsection (c)(1)(C)— 
(i) by striking ‘‘an actuarial valuation 
of the reinsurance’’ and inserting ‘‘an ac-
tuarial valuation of— 
‘‘(i) the reinsurance’’; 
(ii) in clause (i), as inserted by clause 
(i) of this subparagraph, by adding ‘‘and’’ 
at the end; and 
(iii) by adding at the end the fol-
lowing: 
‘‘(ii) for 2022 and each subsequent 
year, the manufacturer discounts provided 
under section 1860D–14C;’’. 
(d) CONFORMING AMENDMENTS.— 
(1) Section 1860D–2 of the Social Security Act 
(42 U.S.C. 1395w–102) is amended— 
(A) in subsection (a)(2)(A)(i)(I), by strik-
ing ‘‘, or an increase in the initial’’ and insert-
ing ‘‘or, for a year preceding 2022, an increase 
in the initial’’; 
(B) in subsection (c)(1)(C)— 
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(iii) in subparagraph (E), by striking 
‘‘The elimination’’ and inserting ‘‘For a 
year preceding 2022, the elimination’’; and 
(B) in paragraph (2)— 
(i) in subparagraph (C), by striking 
‘‘The continuation’’ and inserting ‘‘For a 
year preceding 2022, the continuation’’; 
and 
(ii) in subparagraph (E)— 
(I) by inserting ‘‘for a year pre-
ceding 2022,’’ after ‘‘subsection (c)’’; 
and 
(II) 
by 
striking 
‘‘1860D– 
2(b)(4)(A)(i)(I)’’ 
and 
inserting 
‘‘1860D–2(b)(4)(A)(i)(I)(aa)’’. 
(4) Section 1860D–21(d)(7) of the Social Secu-
rity Act (42 U.S.C. 1395w–131(d)(7)) is amended 
by striking ‘‘section 1860D–2(b)(4)(B)(i)’’ and in-
serting ‘‘section 1860D–2(b)(4)(C)(i)’’. 
(5) Section 1860D–22(a)(2)(A) of the Social 
Security Act (42 U.S.C. 1395w–132(a)(2)(A)) is 
amended— 
(A) by striking ‘‘the value of any discount’’ 
and inserting the following: ‘‘the value of— 
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100 
‘‘(i) for years prior to 2022, any dis-
count’’. 
(B) in clause (i), as inserted by subpara-
graph (A) of this paragraph, by striking the pe-
riod at the end and inserting ‘‘; and’’; and 
(C) by adding at the end the following new 
clause: 
‘‘(ii) for 2022 and each subsequent 
year, any discount provided pursuant to 
section 1860D–14C.’’. 
(6) Section 1860D–41(a)(6) of the Social Secu-
rity Act (42 U.S.C. 1395w–151(a)(6)) is amended— 
(A) by inserting ‘‘for a year before 2022’’ 
after ‘‘1860D–2(b)(3)’’; and 
(B) by inserting ‘‘for such year’’ before the 
period. 
(7) Paragraph (1) of section 1860D–43(a) of 
the Social Security Act (42 U.S.C. 1395w–153(a)) is 
amended to read as follows: 
‘‘(1) participate in— 
‘‘(A) for 2011 through 2021, the Medicare 
coverage gap discount program under section 
1860D–14A; and 
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101 
‘‘(B) for 2022 and each subsequent year, 
the manufacturer discount program under sec-
tion 1860D–14C;’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply with respect to plan year 2022 and 
subsequent plan years. 
Æ 
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