I 
115TH CONGRESS 
1ST SESSION H. R. 1775 
To amend part D of title XVIII of the Social Security Act to direct the 
President to negotiate prescription drug prices and establish a formulary 
on behalf of Medicare beneficiaries, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 29, 2017 
Mr. DEFAZIO (for himself and Mr. CONYERS) 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 subse-
quently determined by the Speaker, in each case for consideration of such 
provisions as fall within the jurisdiction of the committee concerned 
A BILL 
To amend part D of title XVIII of the Social Security 
Act to direct the President to negotiate prescription drug 
prices and establish a formulary on behalf of Medicare 
beneficiaries, 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. 
This Act may be cited as the ‘‘Prescription Reduction 
in Costs for Everyone (PRICE) Act of 2017’’. 
SEC. 2. FINDINGS. 
Congress finds the following: 
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(1) The President has announced his intention 
to bring down prices of prescription drugs. 
(2) The President has touted his negotiating 
skills and referred to himself as a ‘‘master nego-
tiator’’. 
SEC. 3. PRESIDENTIAL NEGOTIATION OF PRESCRIPTION 
DRUG PRICES. 
(a) NEGOTIATION BY PRESIDENT.—Section 1860D– 
11 of the Social Security Act (42 U.S.C. 1395w–111) is 
amended by striking subsection (i) (relating to noninter-
ference) and inserting the following: 
‘‘(i) NEGOTIATION OF LOWER DRUG PRICES.— 
‘‘(1) IN GENERAL.—Notwithstanding any other 
provision of law, the President shall negotiate with 
pharmaceutical manufacturers the prices (including 
discounts, rebates, and other price concessions) that 
may be charged to PDP sponsors and MA organiza-
tions for covered part D drugs for part D eligible in-
dividuals who are enrolled under a prescription drug 
plan or under an MA–PD plan. 
‘‘(2) 
NO
CHANGE
IN
RULES
FOR 
FORMULARIES.— 
‘‘(A) IN GENERAL.—Nothing in paragraph 
(1) shall be construed to authorize the Presi-
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dent to establish or require a particular for-
mulary. 
‘‘(B) CONSTRUCTION.—Subparagraph (A) 
shall not be construed as affecting the Presi-
dent’s authority to ensure appropriate and ade-
quate access to covered part D drugs under 
prescription drug plans and under MA–PD 
plans, including compliance of such plans with 
formulary requirements under section 1860D– 
4(b)(3). 
‘‘(3) CONSTRUCTION.—Nothing in this sub-
section shall be construed as preventing the sponsor 
of a prescription drug plan, or an organization offer-
ing an MA–PD plan, from obtaining a discount or 
reduction of the price for a covered part D drug 
below the price negotiated under paragraph (1). 
‘‘(4) SEMI-ANNUAL REPORTS TO CONGRESS.— 
Not later than June 1, 2018, and every 6 months 
thereafter, the President shall submit to the Com-
mittees on Ways and Means, Energy and Commerce, 
and Oversight and Government Reform of the House 
of Representatives and the Committee on Finance of 
the Senate a report on negotiations conducted by the 
President to achieve lower prices for Medicare bene-
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ficiaries, and the prices and price discounts achieved 
by the President as a result of such negotiations.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall take effect on the date of the enact-
ment of this Act and shall first apply to negotiations and 
prices for plan years beginning on January 1, 2018. 
SEC. 4. PRESIDENTIAL ESTABLISHMENT OF MEDICARE OP-
ERATED PRESCRIPTION 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 2018), in addition to any plans offered 
under section 1860D–11, the President 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. 
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‘‘(b) NEGOTIATIONS.—For purposes of offering a 
Medicare operated prescription drug plan under this sec-
tion, the President shall negotiate with pharmaceutical 
manufacturers with respect to the purchase price of cov-
ered part D drugs in a Medicare operated prescription 
drug plan and shall encourage the use of more affordable 
therapeutic equivalents to the extent such practices do not 
override medical necessity as determined by the pre-
scribing physician. To the extent practicable and con-
sistent with the previous sentence, the President shall im-
plement strategies similar to those used by other Federal 
purchasers of prescription drugs, and other strategies, in-
cluding the use of a formulary and formulary incentives 
in subsection (e), to reduce 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.— 
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‘‘(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 2018 and each suc-
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 President 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 President 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; 
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‘‘(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 
President 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 President 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, 
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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— 
‘‘(I) the Director under section 
1013 of the Medicare Prescription 
Drug, Improvement, and Moderniza-
tion 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 President— 
‘‘(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; 
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‘‘(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 
‘‘(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 President, 
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 
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‘‘(III) have the same cost but 
provide greater clinical benefit than 
other drugs. 
‘‘(ii) FORMULARY
INCENTIVES.—The 
formulary incentives under clause (i) may 
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 President 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. 
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‘‘(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; 
‘‘(B) to remove such a drug for which a 
safety problem is found; and 
‘‘(C) to add a drug that the President 
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 
President 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 
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‘‘(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, 
pharmacists, and consumers and others with ex-
pertise in evaluating prescription drugs. The 
President shall select members based on their 
knowledge of pharmaceuticals and the Medicare 
population. Members shall be deemed to be spe-
cial Government employees for purposes of ap-
plying the conflict of interest provisions under 
section 208 of title 18, United States Code, and 
no waiver of such provisions for such a member 
shall be permitted. 
‘‘(C) CONSULTATION.—The advisory com-
mittee shall consult, as necessary, with physi-
cians who are specialists in treating the disease 
for which a drug is being considered. 
‘‘(D) REQUEST FOR STUDIES.—The advi-
sory committee may request the Agency for 
Healthcare Research and Quality or an aca-
demic or research institution to study and make 
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a report on a petition described in subpara-
graph (A)(ii) in order to assess— 
‘‘(i) clinical effectiveness; 
‘‘(ii) comparative effectiveness; 
‘‘(iii) safety; and 
‘‘(iv) enhanced compliance with a 
drug regimen. 
‘‘(E) RECOMMENDATIONS.—The advisory 
committee shall make recommendations to the 
President regarding— 
‘‘(i) whether a covered part D drug is 
found to provide a greater clinical benefit, 
including fewer safety concerns or less risk 
of side effects, than another drug in the 
same class that is currently included in the 
formulary and should be included in the 
formulary; 
‘‘(ii) whether a covered part D drug is 
found to provide less clinical benefit, in-
cluding greater safety concerns or a great-
er risk of side effects, than another drug 
in the same class that is currently included 
in the formulary and should not be in-
cluded in the formulary; and 
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‘‘(iii) whether a covered part D drug 
has the same or similar clinical benefit to 
a drug in the same class that is currently 
included in the formulary and whether the 
drug should be included in the formulary. 
‘‘(F) LIMITATIONS ON REVIEW OF MANU-
FACTURER
PETITIONS.—The advisory com-
mittee shall not review a petition of a drug 
manufacturer under subparagraph (A)(ii) with 
respect to a covered part D drug unless the pe-
tition is accompanied by the following: 
‘‘(i) Raw data from clinical trials on 
the safety and effectiveness of the drug. 
‘‘(ii) Any data from clinical trials con-
ducted using active controls on the drug or 
drugs that are the current standard of 
care. 
‘‘(iii) Any available data on compara-
tive effectiveness of the drug. 
‘‘(iv) Any other information the Presi-
dent requires for the advisory committee to 
complete its review. 
‘‘(G) RESPONSE TO RECOMMENDATIONS.— 
The President shall review the recommenda-
tions of the advisory committee and if the 
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President accepts such recommendations the 
President shall modify the formulary estab-
lished under this subsection accordingly. Noth-
ing in this section shall preclude the President 
from adding to the formulary a drug for which 
the Director of the Agency for Healthcare Re-
search and Quality or the advisory committee 
has not made a recommendation. 
‘‘(H) NOTICE
OF
CHANGES.—The Presi-
dent shall provide timely notice to beneficiaries 
and health professionals about changes to the 
formulary or formulary incentives. 
‘‘(f) INFORMING
BENEFICIARIES.—The President 
shall take steps to inform beneficiaries about the avail-
ability of a Medicare operated drug plan or plans including 
providing information in the annual handbook distributed 
to all beneficiaries and adding information to the official 
public Medicare Web site related to prescription drug cov-
erage available through this part. 
‘‘(g) APPLICATION OF ALL OTHER REQUIREMENTS 
FOR PRESCRIPTION DRUG PLANS.—Except as specifically 
provided in this section, any Medicare operated drug plan 
shall meet the same requirements as apply to any other 
prescription drug plan, including the requirements of sec-
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tion 1860D–4(b)(1) relating to assuring pharmacy ac-
cess.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 1860D–3(a) of the Social Security 
Act (42 U.S.C. 1395w–103(a)) is amended by add-
ing at the end the following new paragraph: 
‘‘(4) AVAILABILITY OF THE MEDICARE OPER-
ATED PRESCRIPTION DRUG PLAN.—A Medicare op-
erated prescription drug plan (as defined in section 
1860D–11A(c)) shall be offered nationally in accord-
ance with section 1860D–11A.’’. 
(2)(A) Section 1860D–3 of the Social Security 
Act (42 U.S.C. 1395w–103) is amended by adding 
at the end the following new subsection: 
‘‘(c) PROVISIONS
ONLY
APPLICABLE
IN
2006 
THROUGH 2017.—The provisions of this section shall only 
apply with respect to 2006 through 2017.’’. 
(B) Section 1860D–11(g) of such Act (42 
U.S.C. 1395w–111(g)) is amended by adding at the 
end the following new paragraph: 
‘‘(8) NO
AUTHORITY
FOR
FALLBACK
PLANS 
AFTER 2017.—A fallback prescription drug plan shall 
not be available after December 31, 2017.’’. 
(3) Section 1860D–13(c)(3) of the Social Secu-
rity Act (42 U.S.C. 1395w–113(c)(3)) is amended— 
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