I 
112TH CONGRESS 
1ST SESSION 
H. R. 999 
To amend title XVIII of the Social Security Act to deliver a meaningful 
benefit and lower prescription drug prices under the Medicare Program. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 10, 2011 
Ms. SCHAKOWSKY (for herself, Ms. DEGETTE, Mr. FARR, Mr. FRANK of Mas-
sachusetts, Mr. HINCHEY, Ms. LEE of California, Mr. LIPINSKI, Mrs. 
MALONEY, Ms. MCCOLLUM, Ms. PINGREE of Maine, Ms. WOOLSEY, Mr. 
HONDA, Mr. PRICE of North Carolina, Mr. SERRANO, Mr. GRIJALVA, Mr. 
GEORGE MILLER of California, Mr. STARK, Mr. PAYNE, Mr. WAXMAN, 
Mrs. CAPPS, and Mr. WEINER) introduced the following bill; which was 
referred to the Committee on Energy and Commerce, and in addition to 
the Committee on Ways and Means, for a period to be subsequently de-
termined by the Speaker, in each case for consideration of such provisions 
as fall within the jurisdiction of the committee concerned 
A BILL 
To amend title XVIII of the Social Security Act to deliver 
a meaningful benefit and lower prescription drug prices 
under the Medicare Program. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Medicare Prescription 
Drug Savings and Choice Act of 2011’’. 
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SEC. 2. ESTABLISHMENT OF MEDICARE OPERATED PRE-
SCRIPTION DRUG PLAN OPTION. 
(a) IN GENERAL.—Subpart 2 of part D of title XVIII 
of the Social Security Act is amended by inserting after 
section 1860D–11 (42 U.S.C. 1395w–111) the following 
new section: 
‘‘MEDICARE OPERATED PRESCRIPTION DRUG PLAN 
OPTION 
‘‘SEC. 1860D–11A. (a) IN
GENERAL.—Notwith-
standing any other provision of this part, for each year 
(beginning with 2012), in addition to any plans offered 
under section 1860D–11, the Secretary shall offer one or 
more Medicare operated prescription drug plans (as de-
fined in subsection (c)) with a service area that consists 
of the entire United States and shall enter into negotia-
tions in accordance with subsection (b) with pharma-
ceutical manufacturers to reduce the purchase cost of cov-
ered part D drugs for eligible part D individuals who en-
roll in such a plan. 
‘‘(b) 
NEGOTIATIONS.—Notwithstanding 
section 
1860D–11(i), for purposes of offering a Medicare operated 
prescription drug plan under this section, the Secretary 
shall negotiate with pharmaceutical manufacturers with 
respect to the purchase price of covered part D drugs in 
a Medicare operated prescription drug plan and shall en-
courage the use of more affordable therapeutic equivalents 
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to the extent such practices do not override medical neces-
sity as determined by the prescribing physician. To the 
extent practicable and consistent with the previous sen-
tence, the Secretary shall implement strategies similar to 
those used by other Federal purchasers of prescription 
drugs, and other strategies, including the use of a for-
mulary and formulary incentives in subsection (e), to re-
duce the purchase cost of covered part D drugs. 
‘‘(c) MEDICARE OPERATED PRESCRIPTION DRUG 
PLAN DEFINED.—For purposes of this part, the term 
‘Medicare operated prescription drug plan’ means a pre-
scription drug plan that offers qualified prescription drug 
coverage and access to negotiated prices described in sec-
tion 1860D–2(a)(1)(A). Such a plan may offer supple-
mental prescription drug coverage in the same manner as 
other qualified prescription drug coverage offered by other 
prescription drug plans. 
‘‘(d) MONTHLY BENEFICIARY PREMIUM.— 
‘‘(1) QUALIFIED
PRESCRIPTION
DRUG
COV-
ERAGE.—The monthly beneficiary premium for 
qualified prescription drug coverage and access to 
negotiated prices described in section 1860D– 
2(a)(1)(A) to be charged under a Medicare operated 
prescription drug plan shall be uniform nationally. 
Such premium for months in 2012 and each suc-
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ceeding year shall be based on the average monthly 
per capita actuarial cost of offering the Medicare op-
erated prescription drug plan for the year involved, 
including administrative expenses. 
‘‘(2) SUPPLEMENTAL PRESCRIPTION DRUG COV-
ERAGE.—Insofar as a Medicare operated prescrip-
tion drug plan offers supplemental prescription drug 
coverage, the Secretary may adjust the amount of 
the premium charged under paragraph (1). 
‘‘(e) USE OF A FORMULARY AND FORMULARY INCEN-
TIVES.— 
‘‘(1) IN GENERAL.—With respect to the oper-
ation of a Medicare operated prescription drug plan, 
the Secretary shall establish and apply a formulary 
(and may include formulary incentives described in 
paragraph (2)(C)(ii)) in accordance with this sub-
section in order to— 
‘‘(A) increase patient safety; 
‘‘(B) increase appropriate use and reduce 
inappropriate use of drugs; and 
‘‘(C) reward value. 
‘‘(2) DEVELOPMENT OF INITIAL FORMULARY.— 
‘‘(A) IN
GENERAL.—In selecting covered 
part D drugs for inclusion in a formulary, the 
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Secretary shall consider clinical benefit and 
price. 
‘‘(B) ROLE OF AHRQ.—The Director of the 
Agency for Healthcare Research and Quality 
shall be responsible for assessing the clinical 
benefit of covered part D drugs and making 
recommendations to the Secretary regarding 
which drugs should be included in the for-
mulary. In conducting such assessments and 
making such recommendations, the Director 
shall— 
‘‘(i) consider safety concerns including 
those identified by the Federal Food and 
Drug Administration; 
‘‘(ii) use available data and evalua-
tions, with priority given to randomized 
controlled trials, to examine clinical effec-
tiveness, comparative effectiveness, safety, 
and enhanced compliance with a drug regi-
men; 
‘‘(iii) use the same classes of drugs 
developed by United States Pharmacopeia 
for this part; 
‘‘(iv) consider evaluations made by— 
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‘‘(I) the Director under section 
1013 of Medicare Prescription Drug, 
Improvement, and Modernization Act 
of 2003; 
‘‘(II) other Federal entities, such 
as the Secretary of Veterans Affairs; 
and 
‘‘(III) other private and public 
entities, such as the Drug Effective-
ness Review Project and Medicaid 
programs; and 
‘‘(v) recommend to the Secretary— 
‘‘(I) those drugs in a class that 
provide a greater clinical benefit, in-
cluding fewer safety concerns or less 
risk of side-effects, than another drug 
in the same class that should be in-
cluded in the formulary; 
‘‘(II) those drugs in a class that 
provide less clinical benefit, including 
greater safety concerns or a greater 
risk of side-effects, than another drug 
in the same class that should be ex-
cluded from the formulary; and 
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‘‘(III) drugs in a class with same 
or similar clinical benefit for which it 
would be appropriate for the Sec-
retary to competitively bid (or nego-
tiate) for placement on the formulary. 
‘‘(C) CONSIDERATION
OF
AHRQ
REC-
OMMENDATIONS.— 
‘‘(i) IN
GENERAL.—The Secretary, 
after taking into consideration the rec-
ommendations under subparagraph (B)(v), 
shall establish a formulary, and formulary 
incentives, to encourage use of covered 
part D drugs that— 
‘‘(I) have a lower cost and pro-
vide a greater clinical benefit than 
other drugs; 
‘‘(II) have a lower cost than 
other drugs with same or similar clin-
ical benefit; and 
‘‘(III) drugs that have the same 
cost but provide greater clinical ben-
efit than other drugs. 
‘‘(ii) FORMULARY
INCENTIVES.—The 
formulary incentives under clause (i) may 
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be in the form of one or more of the fol-
lowing: 
‘‘(I) Tiered copayments. 
‘‘(II) Reference pricing. 
‘‘(III) Prior authorization. 
‘‘(IV) Step therapy. 
‘‘(V) Medication therapy manage-
ment. 
‘‘(VI) Generic drug substitution. 
‘‘(iii) FLEXIBILITY.—In applying such 
formulary incentives the Secretary may de-
cide not to impose any cost-sharing for a 
covered part D drug for which— 
‘‘(I) the elimination of cost shar-
ing would be expected to increase 
compliance with a drug regimen; and 
‘‘(II) compliance would be ex-
pected to produce savings under part 
A or B or both. 
‘‘(3) LIMITATIONS
ON
FORMULARY.—In any 
formulary established under this subsection, the for-
mulary may not be changed during a year, except— 
‘‘(A) to add a generic version of a covered 
part D drug that entered the market; 
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‘‘(B) to remove such a drug for which a 
safety problem is found; and 
‘‘(C) to add a drug that the Secretary 
identifies as a drug which treats a condition for 
which there has not previously been a treatment 
option or for which a clear and significant ben-
efit has been demonstrated over other covered 
part D drugs. 
‘‘(4) ADDING
DRUGS
TO
THE
INITIAL
FOR-
MULARY.— 
‘‘(A) USE OF ADVISORY COMMITTEE.—The 
Secretary shall establish and appoint an advi-
sory committee (in this paragraph referred to 
as the ‘advisory committee’)— 
‘‘(i) to review petitions from drug 
manufacturers, health care provider orga-
nizations, patient groups, and other enti-
ties for inclusion of a drug in, or other 
changes to, such formulary; and 
‘‘(ii) to recommend any changes to the 
formulary established under this sub-
section. 
‘‘(B) COMPOSITION.—The advisory com-
mittee shall be composed of 9 members and 
shall include representatives of physicians, 
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