I 
115TH CONGRESS 
2D SESSION 
H. R. 5150 
To amend title XVIII of the Social Security Act to require drug manufactur-
ers to pay a Medicare part B rebate for certain drugs if the price 
of such drugs increases faster than inflation. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 1, 2018 
Mr. LEVIN 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 determined by the Speaker, 
in each case for consideration of such provisions as fall within the juris-
diction of the committee concerned 
A BILL 
To amend title XVIII of the Social Security Act to require 
drug manufacturers to pay a Medicare part B rebate 
for certain drugs if the price of such drugs increases 
faster than inflation. 
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 ‘‘Protecting Medicare 
from Excessive Price Increases Act of 2018’’. 
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SEC. 2. MEDICARE PART B REBATE BY MANUFACTURERS 
FOR CERTAIN DRUGS WITH PRICES INCREAS-
ING FASTER THAN INFLATION. 
(a) IN GENERAL.—Section 1834 of the Social Secu-
rity Act (42 U.S.C. 1395m) is amended by adding at the 
end the following new subsection: 
‘‘(w) NO PAYMENT WITHOUT REBATE BY MANUFAC-
TURERS FOR SINGLE SOURCE DRUGS WITH PRICES IN-
CREASING FASTER THAN INFLATION.— 
‘‘(1) NO PAYMENT FOR NONCOMPLIANT MANU-
FACTURERS.—Subject to the subsequent paragraphs 
of this subsection, no payment shall be available 
under this part for a unit of a rebatable drug of a 
manufacturer (as defined in section 1847A(c)(6)(A)) 
for each calendar quarter beginning on or after July 
1, 2019, if such manufacturer has failed to comply 
with the requirement under paragraph (2)(B)(i) for 
the rebate period with respect to such calendar quar-
ter. 
‘‘(2) REQUIREMENTS.— 
‘‘(A) SECRETARIAL PROVISION OF INFOR-
MATION.—Not later than 6 months after the 
end of each rebate period with respect to a cal-
endar quarter beginning on or after July 1, 
2019, the Secretary shall, for each rebatable 
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drug, report to each manufacturer of such 
rebatable drug— 
‘‘(i) information on the total number 
of units described in subparagraph (A)(i) 
of paragraph (4) with respect to such drug 
and rebate period; 
‘‘(ii) information on the amount (if 
any) of the excess average sales price in-
crease described in subparagraph (A)(ii) of 
such paragraph for such drug and period; 
and 
‘‘(iii) the rebate amount specified 
under such paragraph for such rebatable 
drug and period. 
‘‘(B) MANUFACTURER
REQUIREMENTS.— 
The manufacturer of a rebatable drug, for such 
drug, shall meet each of the following require-
ments for each rebate period with respect to a 
calendar quarter beginning on or after July 1, 
2019: 
‘‘(i) REBATE PAYMENT.—The manu-
facturer shall, not later than 30 days after 
the date of receipt of the information de-
scribed in subparagraph (A) from the Sec-
retary, provide to the Secretary a rebate 
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that is equal to the amount specified in 
paragraph (4) for such drug for such re-
bate period. 
‘‘(ii) REPORT OF ASP.—The manufac-
turer shall report to the Secretary the in-
formation 
described 
in 
section 
1927(b)(3)(A)(iii) in a time and manner 
consistent with the reporting under such 
section, unless such information is already 
reported 
in 
accordance 
with 
section 
1927(b)(3)(C). 
‘‘(3) REBATABLE DRUG DEFINED.—In this sub-
section, the term ‘rebatable drug’ means a drug or 
biological (as defined in section 1847A(c)(6)(D)) 
paid for under this part, except such term shall not 
include such a drug or biological— 
‘‘(A) to the extent the units of such drug 
or biological are furnished as part of a grouping 
of items and services and paid for as such a 
grouping in an ambulatory payment classifica-
tion under section 1833(t) or in a single pay-
ment under section 1833(i) (instead of sepa-
rately payable under such respective section); 
‘‘(B) to the extent payment for the units 
of such drug or biological is included under the 
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single payment system for renal dialysis serv-
ices under section 1881(b)(14); 
‘‘(C) to the extent the average total al-
lowed charges per year per individual that uses 
such drug or biological are less than $100; or 
‘‘(D) that is a vaccine described in sub-
paragraph (A) or (B) of section 1861(s)(10). 
‘‘(4) REBATE AMOUNT.— 
‘‘(A) IN GENERAL.—For purposes of para-
graph (2)(B)(i), the amount specified in this 
paragraph for a rebatable drug assigned to a 
billing and payment code for a rebate period is, 
subject to paragraph (5), the amount equal to 
the product of— 
‘‘(i) the total number of units for 
which payment was made under this part 
for such rebatable drug during the rebate 
period; and 
‘‘(ii) the amount (if any) by which— 
‘‘(I) the applicable manufactur-
er’s average sales price (as determined 
under subparagraph (B)) for such 
rebatable drug for sales that occurred 
two quarters prior to the rebate pe-
riod; exceeds 
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‘‘(II) the inflation-adjusted ASP 
determined under subparagraph (C) 
for such rebatable drug for sales that 
occurred two quarters prior to the re-
bate period. 
‘‘(B) DETERMINATION
OF
APPLICABLE 
MANUFACTURER’S ASP.—The applicable manu-
facturer’s average sales price, with respect to a 
manufacturer, determined under this subpara-
graph for a billing and payment code is the 
weighted average of the average sales prices of 
all of the rebatable drugs of the manufacturer 
identified by a national drug code assigned to 
such billing and payment code for sales that oc-
curred two quarters prior to the rebate period. 
‘‘(C) DETERMINATION OF INFLATION-AD-
JUSTED ASP.—The inflation-adjusted ASP de-
termined under this subparagraph for a 
rebatable drug for a rebate period is— 
‘‘(i) the average sales price for the 
billing and payment code for all units of 
such drug for sales that occurred in the 
ASP benchmark quarter (as defined in 
subparagraph (E)); increased by 
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‘‘(ii) the percentage by which the re-
bate period CPI–U (as defined in subpara-
graph (G) for the rebate period exceeds the 
benchmark period CPI–U (as defined in 
subparagraph (F)). 
‘‘(D) REBATE PERIOD.—For purposes of 
this subsection, subject to paragraph (5)(E), 
the term ‘rebate period’ means, with respect to 
a calendar quarter, the period that is 2 cal-
endar quarters prior to such calendar quarter. 
‘‘(E) ASP BENCHMARK
QUARTER.—The 
term ‘ASP benchmark quarter’ means the cal-
endar quarter beginning January 1, 2016. 
‘‘(F) BENCHMARK
PERIOD
CPI–U.—The 
term ‘benchmark period CPI–U’ means the con-
sumer price index for all urban consumers 
(United States city average) for January 2016. 
‘‘(G) REBATE PERIOD CPI–U.—The term 
‘rebate period CPI–U’ means, with respect to a 
rebate period, the consumer price index for all 
urban consumers (United States city average) 
for the first month of the calendar quarter that 
is two calendar quarters prior to the rebate pe-
riod. 
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‘‘(5) 
SPECIAL
TREATMENT
OF
CERTAIN 
DRUGS.— 
‘‘(A) SUBSEQUENTLY APPROVED DRUGS.— 
Subject to subparagraph (B), in the case of a 
single source rebatable drug first approved by 
the Food and Drug Administration after Janu-
ary 1, 2016, clause (i) of paragraph (4)(C) 
shall be applied as if the term ‘ASP benchmark 
quarter’ were defined under paragraph (4)(E) 
as the third full calendar quarter after the day 
on which the drug was first marketed and 
clause (ii) of paragraph (4)(C) shall be applied 
as if the term ‘benchmark period CPI–U’ were 
defined under paragraph (4)(F) as if the ref-
erence to ‘January 2016’ under such paragraph 
were a reference to ‘the first month of the third 
full calendar quarter after the day on which the 
drug was first marketed’. 
‘‘(B) SPECIAL RULE FOR NEW DRUGS.—In 
applying this subsection in the case of a newly 
approved single source rebatable drug for which 
a payment and billing code has not previously 
been established the first calendar quarter to 
which this subsection shall apply shall be the 
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340B of the Public Health Service Act or for 
rebates under section 1927. 
‘‘(B) SHORTAGES.—The Secretary may re-
duce or waive the rebate under paragraph 
(2)(B)(i) with respect to a rebatable drug in the 
case of a shortage of such drug or other exigent 
circumstances, as determined by the Secretary. 
‘‘(9) VERIFICATION
SURVEYS.—The Secretary 
may survey wholesalers and manufacturers that di-
rectly distribute rebatable drugs, when necessary, to 
verify the manufacturer’s average sales prices (in-
cluding wholesale acquisition cost) reported under 
paragraph (2)(B)(ii). The Secretary may impose a 
civil monetary penalty in an amount not to exceed 
$100,000 on a wholesaler or manufacturer that re-
fuses a request for information about charges or 
prices by the Secretary in connection with a survey 
under this subparagraph or knowingly provides false 
information. The provisions of section 1128A (other 
than subsections (a) (with respect to amounts of 
penalties or additional assessments) and (b)) shall 
apply to a civil money penalty under this subpara-
graph in the same manner as such provisions apply 
to a penalty or proceeding under section 1128A(a). 
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‘‘(10) CIVIL MONETARY PENALTY.—In lieu of 
applying paragraph (1) for a calendar quarter, in 
the case of a manufacturer of a rebatable drug who 
has failed to comply with the requirements under 
paragraph (2)(B)(i) for such drug for the rebate pe-
riod with respect to such calendar quarter, the Sec-
retary may, pursuant to regulations, impose a civil 
monetary penalty on such manufacturer in an 
amount not to exceed 2 percent of the total expendi-
tures under this part for such drug for such failure 
with respect to such drug and quarter. The provi-
sions of section 1128A (other than subsections (a) 
(with respect to amounts of penalties or additional 
assessments) and (b)) shall apply to a civil money 
penalty under this subparagraph in the same man-
ner as such provisions apply to a penalty or pro-
ceeding under section 1128A(a). 
‘‘(11) STUDY AND REPORT.— 
‘‘(A) STUDY.—The Secretary shall conduct 
a study of the feasibility of and operational 
issues involved with the following: 
‘‘(i) Including multisource drugs (as 
defined in section 1847A(c)(3)(C)) in the 
rebate system under this subsection. 
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‘‘(ii) Including drugs and biologicals 
paid for under MA plans under part C in 
the rebate system under this subsection. 
‘‘(iii) Including drugs excluded under 
paragraph (3) in the rebate system under 
this subsection. 
‘‘(B) REPORT.—Not later than 3 years 
after the date of the enactment of this sub-
section, the Secretary shall submit to Congress 
a report on the study conducted under subpara-
graph (A). 
‘‘(12) 
APPLICATION
TO
MULTISOURCE 
DRUGS.—The Secretary may, based on the report 
submitted under paragraph (11) and pursuant to 
rulemaking, apply the provisions of this subsection 
to multisource drugs (as defined in section 
1847A(c)(3)(C)).’’. 
(b) PROVIDING MEDPAC ACCESS
TO INFORMA-
TION.—Section 1927(b)(3)(D) of the Social Security Act 
is amended— 
(1) in clause (iv), by striking at the end ‘‘and’’; 
(2) in clause (v), by striking at the end the pe-
riod and inserting ‘‘, and’’; and 
(3) by inserting after clause (v) the following 
new clause: 
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‘‘(vi) to permit the Medicare Payment 
Advisory Commission to review the infor-
mation provided.’’. 
(c) CONFORMING AMENDMENT TO PART B ASP CAL-
CULATION.—Section 1847A(c)(3) of the Social Security 
Act (42 U.S.C. 1395w–3a(c)(3)) is amended by inserting 
‘‘or section 1834(w)’’ after ‘‘section 1927’’. 
Æ 
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