116TH CONGRESS 
1ST SESSION 
H. R. 3 
AN ACT 
To establish a fair price negotiation program, protect the 
Medicare program from excessive price increases, and 
establish an out-of-pocket maximum for Medicare part 
D enrollees, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Elijah E. Cummings Lower Drug Costs Now Act’’. 
(b) TABLE OF CONTENTS.—The table of contents is 
as follows: 
Sec. 1. Short title; table of contents. 
TITLE I—LOWERING PRICES THROUGH FAIR DRUG PRICE 
NEGOTIATION 
Sec. 101. Providing for lower prices for certain high-priced single source drugs. 
Sec. 102. Selected drug manufacturer excise tax imposed during noncompliance 
periods. 
Sec. 103. Fair Price Negotiation Implementation Fund. 
TITLE II—MEDICARE PARTS B AND D PRESCRIPTION DRUG 
INFLATION REBATES 
Sec. 201. Medicare part B rebate by manufacturers. 
Sec. 202. Medicare part D rebate by manufacturers. 
Sec. 203. Provision regarding inflation rebates for group health plans and 
group health insurance coverage. 
Sec. 204. Annual report on drug costs in group health plans and group health 
insurance coverage. 
Sec. 205. Collection of data. 
TITLE III—PART D IMPROVEMENTS AND MAXIMUM OUT-OF- 
POCKET CAP FOR MEDICARE BENEFICIARIES 
Sec. 301. Medicare part D benefit redesign. 
Sec. 302. Allowing certain enrollees of prescription drugs plans and MA–PD 
plans under Medicare program to spread out cost-sharing 
under certain circumstances. 
Sec. 303. Establishment of pharmacy quality measures under Medicare part D. 
TITLE IV—DRUG PRICE TRANSPARENCY 
Sec. 401. Drug price transparency. 
TITLE V—PROGRAM IMPROVEMENTS FOR MEDICARE LOW- 
INCOME BENEFICIARIES 
Sec. 501. Dissemination to Medicare part D subsidy eligible individuals of in-
formation comparing premiums of certain prescription drug 
plans. 
Sec. 502. Providing for intelligent assignment of certain subsidy eligible individ-
uals auto-enrolled under Medicare prescription drug plans and 
MA–PD plans. 
Sec. 503. Expanding eligibility for low-income subsidies under part D of the 
Medicare program.
Sec. 504. Automatic eligibility of certain low-income territorial residents for 
premium and cost-sharing subsidies under the Medicare pro-
gram; Sunset of enhanced allotment program. 
Sec. 505. Automatic qualification of certain Medicaid beneficiaries for premium 
and cost-sharing subsidies under part D of the Medicare pro-
gram. 
Sec. 506. Providing for certain rules regarding the treatment of eligible retire-
ment plans in determining the eligibility of individuals for pre-
mium and cost-sharing subsidies under part D of the Medicare 
program. 
Sec. 507. Reducing cost-sharing and other program improvements for low-in-
come beneficiaries. 
TITLE VI—PROVIDING FOR DENTAL, VISION, AND HEARING 
COVERAGE UNDER THE MEDICARE PROGRAM 
Sec. 601. Dental and oral health care. 
Sec. 602. Providing coverage for hearing care under the Medicare program. 
Sec. 603. Providing coverage for vision care under the Medicare program. 
TITLE VII—NIH, FDA, AND OPIOIDS FUNDING 
Subtitle A—Biomedical Innovation Expansion 
Sec. 701. NIH Innovation Initiatives. 
Sec. 702. NIH clinical trial. 
Sec. 703. Innovation Network. 
Subtitle B—Investing in Safety and Innovation 
Sec. 711. Food and Drug Administration. 
Sec. 712. Study on high-risk, high-reward drugs. 
Subtitle C—Opioid Epidemic Response 
Sec. 721. Opioid Epidemic Response Fund. 
Sec. 722. Substance Abuse and Mental Health Services Administration. 
Sec. 723. Centers for Disease Control and Prevention. 
Sec. 724. Food and Drug Administration. 
Sec. 725. National Institutes of Health. 
Sec. 726. Health Resources and Services Administration. 
Sec. 727. Administration for Children and Families. 
Subtitle D—Reducing Administrative Costs and Burdens in Health Care 
Sec. 731. Reducing administrative costs and burdens in health care. 
TITLE VIII—MISCELLANEOUS 
Sec. 801. Guaranteed issue of certain Medigap policies. 
Sec. 802. Reporting requirements for PDP sponsors regarding point-of-sale re-
jections under Medicare part D. 
Sec. 803. Providing access to annual Medicare notifications in multiple lan-
guages. 
Sec. 804. Temporary increase in Medicare part B payment for certain bio-
similar biological products. 
Sec. 805. Waiving medicare coinsurance for colorectal cancer screening tests.
Sec. 806. Medicare coverage of certain lymphedema compression treatment 
items. 
Sec. 807. Physician fee update. 
Sec. 808. Additional community health center funding. 
Sec. 809. Grants to improve trauma support services and mental health care 
for children and youth in educational settings. 
Sec. 810. Pathway to Health Careers Act. 
Sec. 811. Home Visiting to Reduce Maternal Mortality and Morbidity Act. 
Sec. 812. Addition of new measures based on access to biosimilar biological 
products to the 5-star rating system under medicare advan-
tage. 
Sec. 813. Sense of Congress regarding the impact of the high cost of prescrip-
tion drugs on communities of color and persons living in rural 
or sparsely populated areas of the United States. 
Sec. 814. Regulations requiring direct-to-consumer advertisements for prescrip-
tion drugs and biological products to include truthful and not 
misleading pricing information. 
Sec. 815. Improving transparency and preventing the use of abusive spread 
pricing and related practices in Medicaid. 
Sec. 816. Graduate medical education improvements in rural and underserved 
communities. 
TITLE 
I—LOWERING 
PRICES 
THROUGH FAIR DRUG PRICE 
NEGOTIATION 
SEC. 101. 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 (42 U.S.C. 1301 et seq.) is amended 
by adding at the end the following new part: 
‘‘PART E—FAIR 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 
Fair 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 accord-
ance with section 1192; 
‘‘(2) enter into agreements with manufacturers 
of selected drugs with respect to such period, in ac-
cordance with section 1193; 
‘‘(3) negotiate and, if applicable, renegotiate 
maximum fair prices for such selected drugs, in ac-
cordance with section 1194; and 
‘‘(4) carry out the administrative duties de-
scribed in section 1196. 
‘‘(b) DEFINITIONS RELATING TO TIMING.—For pur-
poses of this part: 
‘‘(1) INITIAL PRICE APPLICABILITY YEAR.—The 
term ‘initial price applicability year’ means a plan 
year (beginning with plan year 2023) or, if agreed 
to in an agreement under section 1193 by the Sec-
retary and manufacturer involved, a period of more 
than one plan year (beginning on or after January 
1, 2023). 
‘‘(2) PRICE APPLICABILITY PERIOD.—The term 
‘price applicability period’ means, with respect to a 
drug, the period beginning with the initial price ap-
plicability year with respect to which such drug is a
selected drug and ending with the last plan 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, 
April 15 of the plan year that begins 2 years prior 
to such year. 
‘‘(4) VOLUNTARY NEGOTIATION PERIOD.—The 
term ‘voluntary negotiation period’ means, with re-
spect to an initial price applicability year with re-
spect to a selected drug, the period— 
‘‘(A) beginning on the sooner of— 
‘‘(i) the date on which the manufac-
turer of the drug and the Secretary enter 
into an agreement under section 1193 with 
respect to such drug; or 
‘‘(ii) June 15 following the selected 
drug publication date with respect to such 
selected drug; and 
‘‘(B) ending on March 31 of the year that 
begins one year prior to the initial price appli-
cability year. 
‘‘(c) OTHER DEFINITIONS.—For purposes of this 
part:
‘‘(1) FAIR PRICE ELIGIBLE INDIVIDUAL.—The 
term ‘fair price eligible individual’ means, with re-
spect to a selected drug— 
‘‘(A) in the case such drug is furnished or 
dispensed to the individual at a pharmacy or by 
a mail order service— 
‘‘(i) an individual who is enrolled 
under 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 
‘‘(ii) an individual who is enrolled 
under a group health plan or health insur-
ance coverage offered in the group or indi-
vidual market (as such terms are defined 
in section 2791 of the Public Health Serv-
ice Act) with respect to which there is in 
effect an agreement with the Secretary 
under section 1197 with respect to such se-
lected drug as so furnished or dispensed; 
and 
‘‘(B) in the case such drug is furnished or 
administered to the individual by a hospital,
‘‘(3) AVERAGE INTERNATIONAL MARKET PRICE 
DEFINED.— 
‘‘(A) IN
GENERAL.—The terms ‘average 
international market price’ and ‘AIM price’ 
mean, with respect to a drug, the average price 
(which shall be the net average price, if prac-
ticable, and volume-weighted, if practicable) for 
a unit (as defined in paragraph (4)) of the drug 
for sales of such drug (calculated across dif-
ferent dosage forms and strengths of the drug 
and not based on the specific formulation or 
package size or package type), as computed (as 
of the date of publication of such drug as a se-
lected drug under section 1192(a)) in all coun-
tries described in clause (ii) of subparagraph 
(B) that are applicable countries (as described 
in clause (i) of such subparagraph) with respect 
to such drug. 
‘‘(B) APPLICABLE COUNTRIES.— 
‘‘(i) IN
GENERAL.—For purposes of 
subparagraph (A), a country described in 
clause (ii) is an applicable country de-
scribed in this clause with respect to a 
drug if there is available an average price
for any unit for the drug for sales of such 
drug in such country. 
‘‘(ii) COUNTRIES
DESCRIBED.—For 
purposes of this paragraph, the following 
are countries described in this clause: 
‘‘(I) Australia. 
‘‘(II) Canada. 
‘‘(III) France. 
‘‘(IV) Germany. 
‘‘(V) Japan. 
‘‘(VI) The United Kingdom. 
‘‘(4) UNIT.—The term ‘unit’ means, with re-
spect to a drug, the lowest identifiable quantity 
(such as a capsule or tablet, milligram of molecules, 
or grams) of the drug that is dispensed. 
‘‘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 applica-
bility year, subject to subsection (h), the Secretary shall 
select and publish in the Federal Register a list of— 
‘‘(1)(A) with respect to an initial price applica-
bility year during 2023, at least 25 negotiation-eligi-
ble drugs described in subparagraphs (A) and (B), 
but not subparagraph (C), of subsection (d)(1) (or,
with respect to an initial price applicability year dur-
ing such period beginning after 2023, the maximum 
number (if such number is less than 25) of such ne-
gotiation-eligible drugs for the year) with respect to 
such year; and 
‘‘(B) with respect to an initial price applica-
bility year during 2024 or a subsequent year, at 
least 50 negotiation-eligible drugs described in sub-
paragraphs (A) and (B), but not subparagraph (C), 
of subsection (d)(1) (or, with respect to an initial 
price applicability year during such period, the max-
imum number (if such number is less than 50) of 
such negotiation-eligible drugs for the year) with re-
spect to such year; 
‘‘(2) all negotiation-eligible drugs described in 
subparagraph (C) of such subsection with respect to 
such year; and 
‘‘(3) all new-entrant negotiation-eligible drugs 
(as defined in subsection (g)(1)) with respect to such 
year. 
Each drug published on the list pursuant to the previous 
sentence shall be subject to the negotiation process under 
section 1194 for the voluntary negotiation period with re-
spect to such initial price applicability year (and the re-
negotiation process under such section as applicable for
any subsequent year during the applicable price applica-
bility period). In applying this subsection, any negotiation- 
eligible drug that is selected under this subsection for an 
initial price applicability year shall not count toward the 
required minimum amount of drugs to be selected under 
paragraph (1) for any subsequent year, including such a 
drug so selected that is subject to renegotiation under sec-
tion 1194. 
‘‘(b) SELECTION OF DRUGS.—In carrying out sub-
section (a)(1) the Secretary shall select for inclusion on 
the published list described in subsection (a) with respect 
to a price applicability period, the negotiation-eligible 
drugs that the Secretary projects will result in the greatest 
savings to the Federal Government or fair price eligible 
individuals during the price applicability period. In making 
this projection of savings for drugs for which there is an 
AIM price for a price applicability period, the savings shall 
be projected across different dosage forms and strengths 
of the drugs and not based on the specific formulation or 
package size or package type of the drugs, taking into con-
sideration both the volume of drugs for which payment 
is made, to the extent such data is available, and the 
amount by which the net price for the drugs exceeds the 
AIM price for the drugs.
‘‘(c) SELECTED DRUG.—For purposes of this part, 
each drug included on the list published under subsection 
(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 plan year beginning before the 
first plan year beginning after the date on which the Sec-
retary determines two or more drug products— 
‘‘(1) are approved or licensed (as applicable)— 
‘‘(A) under section 505(j) of the Federal 
Food, Drug, and Cosmetic Act using such drug 
as the listed drug; or 
‘‘(B) under section 351(k) of the Public 
Health Service Act using such drug as the ref-
erence product; and 
‘‘(2) continue to be marketed. 
‘‘(d) NEGOTIATION-ELIGIBLE DRUG.— 
‘‘(1) IN GENERAL.—For purposes of this part, 
the term ‘negotiation-eligible drug’ means, with re-
spect to the selected drug publication date with re-
spect to an initial price applicability year, a quali-
fying single source drug, as defined in subsection 
(e), that meets any of the following criteria: 
‘‘(A) COVERED PART D DRUGS.—The drug 
is among the 125 covered part D drugs (as de-
fined in section 1860D–2(e)) for which there
‘‘(B) is not the reference product for any 
biological product that is licensed and continues 
to be marketed under section 351(k) of such 
Act. 
‘‘(3) 
INSULIN
PRODUCT.—Notwithstanding 
paragraphs (1) and (2), any insulin product that is 
approved under subsection (c) or (j) of section 505 
of the Federal Food, Drug, and Cosmetic Act or li-
censed under subsection (a) or (k) of section 351 of 
the Public Health Service Act and continues to be 
marketed under such section 505 or 351, including 
any insulin product that has been deemed to be li-
censed under section 351(a) of the Public Health 
Service Act pursuant to section 7002(e)(4) of the 
Biologics Price Competition and Innovation Act of 
2009 and continues to be marketed pursuant to such 
licensure. 
For purposes of applying paragraphs (1) and (2), a drug 
or biological product that is marketed by the same sponsor 
or manufacturer (or an affiliate thereof or a cross-licensed 
producer or distributor) as the listed drug or reference 
product described in such respective paragraph shall not 
be taken into consideration. 
‘‘(f) INFORMATION
ON
INTERNATIONAL
DRUG 
PRICES.—For purposes of determining which negotiation-
eligible drugs to select under subsection (a) and, in the 
case of such drugs that are selected drugs, to determine 
the maximum fair price for such a drug and whether such 
maximum fair price should be renegotiated under section 
1194, the Secretary shall use data relating to the AIM 
price with respect to such drug as available or provided 
to the Secretary and shall on an ongoing basis request 
from manufacturers of selected drugs information on the 
AIM price of such a drug. 
‘‘(g) 
NEW-ENTRANT
NEGOTIATION-ELIGIBLE 
DRUGS.— 
‘‘(1) IN GENERAL.—For purposes of this part, 
the term ‘new-entrant 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— 
‘‘(A) that is first approved or licensed, as 
described in paragraph (1), (2), or (3) of sub-
section (e), as applicable, during the year pre-
ceding such selected drug publication date; and 
‘‘(B) that the Secretary determines under 
paragraph (2) is likely to be included as a nego-
tiation-eligible drug with respect to the subse-
quent selected drug publication date.
‘‘(2) DETERMINATION.—In the case of a quali-
fying single source drug that meets the criteria de-
scribed in subparagraph (A) of paragraph (1), with 
respect to an initial price applicability year, if the 
wholesale acquisition cost at which such drug is first 
marketed in the United States is equal to or greater 
than the median household income (as determined 
according to the most recent data collected by the 
United States Census Bureau), the Secretary shall 
determine before the selected drug publication date 
with respect to the initial price applicability year, if 
the drug is likely to be included as a negotiation-eli-
gible drug with respect to the subsequent selected 
drug publication date, based on the projected spend-
ing under title XVIII or in the United States on 
such drug. For purposes of this paragraph the term 
‘United States’ includes the 50 States, the District 
of Columbia, and the territories of the United 
States. 
‘‘(h) CONFLICT OF INTEREST.— 
‘‘(1) IN GENERAL.—In the case the Inspector 
General of the Department of Health and Human 
Services determines the Secretary has a conflict, 
with respect to a matter described in paragraph (2), 
the individual described in paragraph (3) shall carry
out the duties of the Secretary under this part, with 
respect to a negotiation-eligible drug, that would 
otherwise be such a conflict. 
‘‘(2) MATTER DESCRIBED.—A matter described 
in this paragraph is— 
‘‘(A) a financial interest (as described in 
section 2635.402 of title 5, Code of Federal 
Regulations (except for an interest described in 
subsection (b)(2)(iv) of such section)) on the 
date of the selected drug publication date, with 
respect the price applicability year (as applica-
ble); 
‘‘(B) a personal or business relationship 
(as described in section 2635.502 of such title) 
on the date of the selected drug publication 
date, with respect the price applicability year; 
‘‘(C) employment by a manufacturer of a 
negotiation-eligible drug during the preceding 
10-year period beginning on the date of the se-
lected drug publication date, with respect to 
each price applicability year; and 
‘‘(D) any other matter the General Counsel 
determines appropriate. 
‘‘(3) INDIVIDUAL
DESCRIBED.—An individual 
described in this paragraph is—
‘‘(A) the highest-ranking officer or em-
ployee of the Department of Health and 
Human Services (as determined by the organi-
zational chart of the Department) that does not 
have a conflict under this subsection; and 
‘‘(B) is nominated by the President and 
confirmed by the Senate with respect to the po-
sition. 
‘‘SEC. 1193. MANUFACTURER AGREEMENTS. 
‘‘(a) 
IN
GENERAL.—For 
purposes 
of 
section 
1191(a)(2), the Secretary shall enter into agreements with 
manufacturers of selected drugs with respect to a price 
applicability period, by not later than June 15 following 
the selected drug publication date with respect to such se-
lected drug, under which— 
‘‘(1) during the voluntary negotiation period for 
the initial price applicability year for the selected 
drug, the Secretary and manufacturer, in accordance 
with section 1194, negotiate to determine (and, by 
not later than the last date of such period and in ac-
cordance with subsection (c), agree to) a maximum 
fair price for such selected drug of the manufacturer 
in order to provide access to such price— 
‘‘(A) to fair price eligible individuals who 
with respect to such drug are described in sub-
paragraph (A) of section 1191(c)(1) and are 
furnished or dispensed such drug during, sub-
ject to subparagraph (2), the price applicability 
period; and 
‘‘(B) to hospitals, physicians, and other 
providers of services and suppliers with respect 
to fair price eligible individuals who with re-
spect to such drug are described in subpara-
graph (B) of such section and are furnished or 
administered such drug during, subject to sub-
paragraph (2), the price applicability period; 
‘‘(2) the Secretary and the manufacturer shall, 
in accordance with a process and during a period 
specified by the Secretary pursuant to rulemaking, 
renegotiate (and, by not later than the last date of 
such period and in accordance with subsection (c), 
agree to) the maximum fair price for such drug if 
the Secretary determines that there is a material 
change in any of the factors described in section 
1194(d) relating to the drug, including changes in 
the AIM price for such drug, in order to provide ac-
cess to such maximum fair price (as so renegoti-
ated)— 
‘‘(A) to fair price eligible individuals who 
with respect to such drug are described in sub-
paragraph (A) of section 1191(c)(1) and are 
furnished or dispensed such drug during any 
year during the price applicability period (be-
ginning after such renegotiation) with respect 
to such selected drug; and 
‘‘(B) to hospitals, physicians, and other 
providers of services and suppliers with respect 
to fair price eligible individuals who with re-
spect to such drug are described in subpara-
graph (B) of such section and are furnished or 
administered such drug during any year de-
scribed in subparagraph (A); 
‘‘(3) the maximum fair price (including as re-
negotiated pursuant to paragraph (2)), with respect 
to such a selected drug, shall be provided to fair 
price eligible individuals, who with respect to such 
drug are described in subparagraph (A) of section 
1191(c)(1), at the pharmacy or by a mail order serv-
ice at the point-of-sale of such drug; 
‘‘(4) the manufacturer, subject to subsection 
(d), submits to the Secretary, in a form and manner 
specified by the Secretary— 
‘‘(A) for the voluntary negotiation period 
for the price applicability period (and, if appli-
cable, before any period of renegotiation speci-
fied pursuant to paragraph (2)) with respect to 
such drug all information that the Secretary re-
quires to carry out the negotiation (or renegoti-
ation process) under this part, including infor-
mation described in section 1192(f) and section 
1194(d)(1); and 
‘‘(B) on an ongoing basis, information on 
changes in prices for such drug that would af-
fect the AIM price for such drug or otherwise 
provide a basis for renegotiation of the max-
imum fair price for such drug pursuant to 
paragraph (2); 
‘‘(5) the manufacturer agrees that in the case 
the selected drug of a manufacturer is a drug de-
scribed in subsection (c), the manufacturer will, in 
accordance with such subsection, make any payment 
required under such subsection with respect to such 
drug; and 
‘‘(6) the manufacturer complies with require-
ments imposed by the Secretary for purposes of ad-
ministering the program, including with respect to 
the duties described in section 1196. 
‘‘(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 drug,
the United States, during the period described 
in paragraph (2)(B). 
‘‘(2) AMOUNTS DESCRIBED.— 
‘‘(A) WEIGHTED AVERAGE PRICE BEFORE 
AIM PRICE AVAILABLE.—For purposes of para-
graph (1), the amount described in this sub-
paragraph for a selected drug described in such 
paragraph, is the amount equal to the weighted 
average manufacturer price (as defined in sec-
tion 1927(k)(1)) for such dosage strength and 
form for the drug during the period beginning 
with the first plan year for which the drug is 
included on the list of negotiation-eligible drugs 
published under section 1192(d) and ending 
with the last plan year during the price applica-
bility period for such drug with respect to which 
there is no AIM price available for such drug. 
‘‘(B) AMOUNT
MULTIPLIER
AFTER
AIM 
PRICE AVAILABLE.—For purposes of paragraph 
(1), the amount described in this subparagraph 
for a selected drug described in such paragraph, 
is the amount equal to 200 percent of the AIM 
price for such drug with respect to the first 
plan year during the price applicability period
for such drug with respect to which there is an 
AIM price available for such drug. 
‘‘(d) CONFIDENTIALITY
OF INFORMATION.—Infor-
mation submitted to the Secretary under this part by a 
manufacturer of a selected drug that is proprietary infor-
mation of such manufacturer (as determined by the Sec-
retary) may be used only by the Secretary or disclosed 
to and used by the Comptroller General of the United 
States or the Medicare Payment Advisory Commission for 
purposes of carrying out this part. 
‘‘(e) REGULATIONS.— 
‘‘(1) IN GENERAL.—The Secretary shall, pursu-
ant to rulemaking, specify, in accordance with para-
graph (2), the information that must be submitted 
under subsection (a)(4). 
‘‘(2) INFORMATION
SPECIFIED.—Information 
described in paragraph (1), with respect to a se-
lected drug, shall include information on sales of the 
drug (by the manufacturer of the drug or by another 
entity under license or other agreement with the 
manufacturer, with respect to the sales of such drug, 
regardless of the name under which the drug is sold) 
in any foreign country that is part of the AIM price. 
The Secretary shall verify, to the extent practicable,
such sales from appropriate officials of the govern-
ment of the foreign country involved. 
‘‘(f) COMPLIANCE WITH REQUIREMENTS FOR AD-
MINISTRATION OF PROGRAM.—Each manufacturer with 
an agreement in effect under this section shall comply with 
requirements imposed by the Secretary or a third party 
with a contract under section 1196(c)(1), as applicable, 
for purposes of administering the program. 
‘‘SEC. 1194. NEGOTIATION AND RENEGOTIATION PROCESS. 
‘‘(a) IN GENERAL.—For purposes of this part, under 
an agreement under section 1193 between the Secretary 
and a manufacturer of a selected drug, with respect to 
the period for which such agreement is in effect and in 
accordance with subsections (b) and (c), the Secretary and 
the manufacturer— 
‘‘(1) shall during the voluntary negotiation pe-
riod with respect to the initial price applicability 
year for such drug, in accordance with this section, 
negotiate a maximum fair price for such drug for 
the purpose described in section 1193(a)(1); and 
‘‘(2) 
as 
applicable 
pursuant 
to 
section 
1193(a)(2) and in accordance with the process speci-
fied pursuant to such section, renegotiate such max-
imum fair price for such drug for the purpose de-
scribed in such section.
‘‘(b) NEGOTIATING
METHODOLOGY
AND
OBJEC-
TIVE.— 
‘‘(1) IN GENERAL.—The Secretary shall develop 
and use a consistent methodology for negotiations 
under subsection (a) that, in accordance with para-
graph (2) and subject to paragraph (3), achieves the 
lowest maximum fair price for each selected drug 
while appropriately rewarding innovation. 
‘‘(2) PRIORITIZING
FACTORS.—In considering 
the factors described in subsection (d) in negotiating 
(and, as applicable, renegotiating) the maximum fair 
price for a selected drug, the Secretary shall, to the 
extent practicable, consider all of the available fac-
tors listed but shall prioritize the following factors: 
‘‘(A) 
RESEARCH
AND
DEVELOPMENT 
COSTS.—The factor described in paragraph 
(1)(A) of subsection (d). 
‘‘(B) MARKET
DATA.—The factor de-
scribed in paragraph (1)(B) of such subsection. 
‘‘(C) UNIT
COSTS
OF
PRODUCTION
AND 
DISTRIBUTION.—The factor described in para-
graph (1)(C) of such subsection. 
‘‘(D) COMPARISON
TO
EXISTING
THERA-
PEUTIC ALTERNATIVES.—The factor described 
in paragraph (2)(A) of such subsection.
‘‘(3) REQUIREMENT.— 
‘‘(A) IN
GENERAL.—In negotiating the 
maximum fair price of a selected drug, with re-
spect to an initial price applicability year for 
the selected drug, and, as applicable, in renego-
tiating the maximum fair price for such drug, 
with respect to a subsequent year during the 
price applicability period for such drug, in the 
case that the manufacturer of the selected drug 
offers under the negotiation or renegotiation, as 
applicable, a price for such drug that is not 
more than the target price described in sub-
paragraph (B) for such drug for the respective 
year, the Secretary shall agree under such ne-
gotiation or renegotiation, respectively, to such 
offered price as the maximum fair price. 
‘‘(B) TARGET PRICE.— 
‘‘(i) IN GENERAL.—Subject to clause 
(ii), the target price described in this sub-
paragraph for a selected drug with respect 
to a year, is the average price (which shall 
be the net average price, if practicable, and 
volume-weighted, if practicable) for a unit 
of such drug for sales of such drug, as 
computed (across different dosage forms
and strengths of the drug and not based 
on the specific formulation or package size 
or package type of the drug) in the appli-
cable 
country 
described 
in 
section 
1191(c)(3)(B) with respect to such drug 
that, with respect to such year, has the 
lowest average price for such drug as com-
pared to the average prices (as so com-
puted) of such drug with respect to such 
year in the other applicable countries de-
scribed in such section with respect to such 
drug. 
‘‘(ii) SELECTED DRUGS WITHOUT AIM 
PRICE.—In applying this paragraph in the 
case of negotiating the maximum fair price 
of a selected drug for which there is no 
AIM price available with respect to the ini-
tial price applicability year for such drug, 
or, as applicable, renegotiating the max-
imum fair price for such drug with respect 
to a subsequent year during the price ap-
plicability period for such drug before the 
first plan year for which there is an AIM 
price available for such drug, the target 
price described in this subparagraph for
such drug and respective year is the 
amount that is 80 percent of the average 
manufacturer price (as defined in section 
1927(k)(1)) for such drug and year. 
‘‘(4) ANNUAL REPORT.—After the completion 
of each voluntary negotiation period, the Secretary 
shall submit to Congress a report on the maximum 
fair prices negotiated (or, as applicable, renegoti-
ated) for such period. Such report shall include in-
formation on how such prices so negotiated (or re-
negotiated) meet the requirements of this part, in-
cluding the requirements of this subsection. 
‘‘(c) LIMITATION.— 
‘‘(1) IN GENERAL.—Subject to paragraph (2), 
the maximum fair price negotiated (including as re-
negotiated) under this section for a selected drug, 
with respect to each plan year during a price appli-
cability period for such drug, shall not exceed 120 
percent of the AIM price applicable to such drug 
with respect to such year. 
‘‘(2) SELECTED DRUGS WITHOUT AIM PRICE.— 
In the case of a selected drug for which there is no 
AIM price available with respect to the initial price 
applicability year for such drug, for each plan year 
during the price applicability period before the first
plan year for which there is an AIM price available 
for such drug, the maximum fair price negotiated 
(including as renegotiated) under this section for the 
selected drug shall not exceed the amount equal to 
85 percent of the average manufacturer price for the 
drug with respect to such year. 
‘‘(d) CONSIDERATIONS.—For purposes of negotiating 
and, as applicable, renegotiating (including for purposes 
of determining whether to renegotiate) the maximum fair 
price of a selected drug under this part with the manufac-
turer of the drug, the Secretary, consistent with sub-
section (b)(2), shall take into consideration the factors de-
scribed in paragraphs (1), (2), (3), and (5), and may take 
into consideration the factor described in paragraph (4): 
‘‘(1) 
MANUFACTURER-SPECIFIC
INFORMA-
TION.—The following information, including as sub-
mitted by the manufacturer: 
‘‘(A) Research and development costs of 
the manufacturer for the drug and the extent to 
which the manufacturer has recouped research 
and development costs. 
‘‘(B) Market data for the drug, including 
the distribution of sales across different pro-
grams and purchasers and projected future rev-
enues for the drug.
‘‘(C) Unit costs of production and distribu-
tion of the drug. 
‘‘(D) Prior Federal financial support for 
novel therapeutic discovery and development 
with respect to the drug. 
‘‘(E) Data on patents and on existing and 
pending exclusivity for the drug. 
‘‘(F) National sales data for the drug. 
‘‘(G) Information on clinical trials for the 
drug in the United States or in applicable coun-
tries described in section 1191(c)(3)(B). 
‘‘(2) INFORMATION
ON
ALTERNATIVE
PROD-
UCTS.—The following information: 
‘‘(A) The extent to which the drug rep-
resents a therapeutic advance as compared to 
existing therapeutic alternatives and, to the ex-
tent such information is available, the costs of 
such existing therapeutic alternatives. 
‘‘(B) Information on approval by the Food 
and Drug Administration of alternative drug 
products. 
‘‘(C) Information on comparative effective-
ness analysis for such products, taking into 
consideration the effects of such products on 
specific populations, such as individuals with
disabilities, the elderly, terminally ill, children, 
and other patient populations. 
In considering information described in subpara-
graph (C), the Secretary shall not use evidence or 
findings from comparative clinical effectiveness re-
search 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, nondisabled, or not terminally ill. 
Nothing in the previous sentence shall affect the ap-
plication or consideration of an AIM price for a se-
lected drug. 
‘‘(3) FOREIGN
SALES
INFORMATION.—To the 
extent available on a timely basis, including as pro-
vided by a manufacturer of the selected drug or oth-
erwise, information on sales of the selected drug in 
each 
of 
the 
countries 
described 
in 
section 
1191(c)(3)(B). 
‘‘(4) VA DRUG PRICING INFORMATION.—Infor-
mation disclosed to the Secretary pursuant to sub-
section (f). 
‘‘(5) ADDITIONAL INFORMATION.—Information 
submitted to the Secretary, in accordance with a 
process specified by the Secretary, by other parties
that are affected by the establishment of a maximum 
fair price for the selected drug. 
‘‘(e) REQUEST FOR INFORMATION.—For purposes of 
negotiating and, as applicable, renegotiating (including for 
purposes of determining whether to renegotiate) the max-
imum fair price of a selected drug under this part with 
the manufacturer of the drug, with respect to a price ap-
plicability period, and other relevant data for purposes of 
this section— 
‘‘(1) the Secretary shall, not later than the se-
lected drug publication date with respect to the ini-
tial price applicability year of such period, request 
drug pricing information from the manufacturer of 
such selected drug, including information described 
in subsection (d)(1); and 
‘‘(2) by not later than October 1 following the 
selected drug publication date, the manufacturer of 
such selected drug shall submit to the Secretary 
such requested information in such form and man-
ner as the Secretary may require. 
The Secretary shall request, from the manufacturer or 
others, such additional information as may be needed to 
carry out the negotiation and renegotiation process under 
this section.
‘‘(f) DISCLOSURE OF INFORMATION.—For purposes 
of this part, the Secretary of Veterans Affairs may disclose 
to the Secretary of Health and Human Services the price 
of any negotiation-eligible drug that is purchased pursuant 
to section 8126 of title 38, United States Code. 
‘‘SEC. 1195. PUBLICATION OF MAXIMUM FAIR PRICES. 
‘‘(a) IN GENERAL.—With respect to an initial price 
applicability year and selected drug with respect to such 
year, not later than April 1 of the plan year prior to such 
initial price applicability year, the Secretary shall publish 
in the Federal Register the maximum fair price for such 
drug negotiated under this part with the manufacturer of 
such drug. 
‘‘(b) UPDATES.— 
‘‘(1) 
SUBSEQUENT
YEAR
MAXIMUM
FAIR 
PRICES.—For a selected drug, for each plan year 
subsequent to the initial price applicability year for 
such drug with respect to which an agreement for 
such drug is in effect under section 1193, the Sec-
retary shall publish in the Federal Register— 
‘‘(A) subject to subparagraph (B), the 
amount equal to the maximum fair price pub-
lished for such drug for the previous year, in-
creased by the annual percentage increase in 
the consumer price index for all urban con-
sumers (all items; U.S. city average) as of Sep-
tember of such previous year; 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 ap-
plies, such renegotiated maximum fair price. 
‘‘(2) PRICES NEGOTIATED AFTER DEADLINE.— 
In the case of a selected drug with respect to an ini-
tial 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 in the Fed-
eral Register by not later than 30 days after the 
date such maximum price is so determined. 
‘‘SEC. 1196. ADMINISTRATIVE DUTIES; COORDINATION PRO-
VISIONS. 
‘‘(a) ADMINISTRATIVE DUTIES.— 
‘‘(1) IN
GENERAL.—For purposes of section 
1191, the administrative duties described in this sec-
tion are the following: 
‘‘(A) The establishment of procedures (in-
cluding through agreements with manufacturers 
under this part, contracts with prescription 
drug plans under part D of title XVIII and 
MA–PD plans under part C of such title, and
agreements under section 1197 with group 
health plans and health insurance issuers of 
health insurance coverage offered in the indi-
vidual or group market) under which the max-
imum fair price for a selected drug is provided 
to fair price eligible individuals, who with re-
spect to such drug are described in subpara-
graph (A) of section 1191(c)(1), at pharmacies 
or by mail order service at the point-of-sale of 
the drug for the applicable price period for such 
drug and providing that such maximum fair 
price is used for determining cost-sharing under 
such plans or coverage for the selected drug. 
‘‘(B) The establishment of procedures (in-
cluding through agreements with manufacturers 
under this part and contracts with hospitals, 
physicians, and other providers of services and 
suppliers and agreements under section 1197 
with group health plans and health insurance 
issuers of health insurance coverage offered in 
the individual or group market) under which, in 
the case of a selected drug furnished or admin-
istered by such a hospital, physician, or other 
provider of services or supplier to fair price eli-
gible individuals (who with respect to such drug
are described in subparagraph (B) of section 
1191(c)(1)), the maximum fair price for the se-
lected drug is provided to such hospitals, physi-
cians, and other providers of services and sup-
pliers (as applicable) with respect to such indi-
viduals and providing that such maximum fair 
price is used for determining cost-sharing under 
the respective part, plan, or coverage for the se-
lected drug. 
‘‘(C) The establishment of procedures (in-
cluding through agreements and contracts de-
scribed in subparagraphs (A) and (B)) to en-
sure that, not later than 90 days after the dis-
pensing of a selected drug to a fair price eligi-
ble individual by a pharmacy or mail order serv-
ice, the pharmacy or mail order service is reim-
bursed for an amount equal to the difference 
between— 
‘‘(i) the lesser of— 
‘‘(I) the wholesale acquisition 
cost of the drug; 
‘‘(II) the national average drug 
acquisition cost of the drug; and 
‘‘(III) any other similar deter-
mination of pharmacy acquisition
costs of the drug, as determined by 
the Secretary; and 
‘‘(ii) the maximum fair price for the 
drug. 
‘‘(D) The establishment of procedures to 
ensure that the maximum fair price for a se-
lected drug is applied before— 
‘‘(i) any coverage or financial assist-
ance under other health benefit plans or 
programs that provide coverage or finan-
cial assistance for the purchase or provi-
sion of prescription drug coverage on be-
half of fair price eligible individuals as the 
Secretary may specify; and 
‘‘(ii) any other discounts. 
‘‘(E) The establishment of procedures to 
enter into appropriate agreements and protocols 
for the ongoing computation of AIM prices for 
selected drugs, including, to the extent possible, 
to compute the AIM price for selected drugs 
and including by providing that the manufac-
turer of such a selected drug should provide in-
formation for such computation not later than 
3 months after the first date of the voluntary 
negotiation period for such selected drug.
‘‘(F) 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 
formulation or package size or package type of 
the drug. 
‘‘(G) The establishment of procedures to 
negotiate and apply the maximum fair price in 
a manner that does not include any dispensing 
or similar fee. 
‘‘(H) The establishment of procedures to 
carry out the provisions of this part, as applica-
ble, with respect to— 
‘‘(i) fair price eligible individuals who 
are enrolled under a prescription drug plan 
under part D of title XVIII or an MA–PD 
plan under part C of such title; 
‘‘(ii) fair price eligible individuals who 
are enrolled under a group health plan or 
health insurance coverage offered by a 
health insurance issuer in the individual or 
group market with respect to which there 
is an agreement in effect under section 
1197; and
‘‘(iii) fair price eligible individuals who 
are entitled to benefits under part A of 
title XVIII or enrolled under part B of 
such title. 
‘‘(I) The establishment of a negotiation 
process and renegotiation process in accordance 
with section 1194, including a process for ac-
quiring information described in subsection (d) 
of such section and determining amounts de-
scribed in subsection (b) of such section. 
‘‘(J) The provision of a reasonable dispute 
resolution mechanism to resolve disagreements 
between manufacturers, fair price eligible indi-
viduals, and the third party with a contract 
under subsection (c)(1). 
‘‘(2) MONITORING COMPLIANCE.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
monitor compliance by a manufacturer with the 
terms of an agreement under section 1193, in-
cluding by establishing a mechanism through 
which violations of such terms may be reported. 
‘‘(B) NOTIFICATION.—If a third party 
with a contract under subsection (c)(1) deter-
mines that the manufacturer is not in compli-
ance with such agreement, the third party shall