I 
110TH CONGRESS 
1ST SESSION H. R. 3932 
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 
OCTOBER 23, 2007 
Mr. BERRY (for himself, Mr. HINCHEY, Mr. FARR, Mr. WAXMAN, Mr. 
WEXLER, Ms. LINDA T. SA´NCHEZ of California, Mr. KANJORSKI, Mr. 
MCNULTY, Mr. TIERNEY, Mr. BISHOP of New York, Mr. NADLER, Mr. 
MARSHALL, Mr. SERRANO, Mr. HALL
of New York, and Ms. 
SCHAKOWSKY) 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 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 2007’’. 
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SEC. 2. ESTABLISHMENT OF MEDICARE OPERATED PRE-
SCRIPTION DRUG PLAN OPTION. 
(a) IN GENERAL.—Subpart 2 of part D 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 2009), 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 
to the extent such practices do not override medical neces-
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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 2009 and each suc-
ceeding year shall be based on the average monthly 
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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 
Secretary shall consider clinical benefit and 
price. 
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‘‘(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; 
‘‘(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 
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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, 
pharmacists, and consumers and others with ex-
pertise in evaluating prescription drugs. The 
Secretary shall select members based on their 
knowledge of pharmaceuticals and the Medicare 
population. Members shall be deemed to be spe-
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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 
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 
Secretary regarding— 
‘‘(i) whether a covered part D drug is 
found to provide a greater clinical benefit, 
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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 included 
in the formulary; and 
‘‘(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. 
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‘‘(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 Sec-
retary requires for the advisory committee 
to complete its review. 
‘‘(G) RESPONSE TO RECOMMENDATIONS.— 
The Secretary shall review the recommenda-
tions of the advisory committee and if the Sec-
retary accepts such recommendations the Sec-
retary shall modify the formulary established 
under this subsection accordingly. Nothing in 
this section shall preclude the Secretary from 
adding to the formulary a drug for which the 
Director of the Agency for Healthcare Research 
and Quality or the advisory committee has not 
made a recommendation. 
‘‘(H) NOTICE
OF
CHANGES.—The Sec-
retary shall provide timely notice to bene-
ficiaries and health professionals about changes 
to the formulary or formulary incentives. 
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‘‘(f) INFORMING
BENEFICIARIES.—The Secretary 
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 website 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-
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 oper-
ated prescription drug plan (as defined in section 
1860D–11A(c)) shall be offered nationally in accord-
ance with section 1860D–11A.’’. 
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(B) in subparagraph (D), by striking the 
period at the end and inserting ‘‘; and’’; and 
(C) by adding at the end the following new 
subparagraph: 
‘‘(E) payments for expenses incurred with 
respect to the operation of medicare operated 
prescription drug plans under section 1860D– 
11A.’’. 
(5) Section 1860D–41(a) of such Act (42 
U.S.C. 1395w–151(a)) is amended by adding at the 
end the following new paragraph: 
‘‘(19) MEDICARE
OPERATED
PRESCRIPTION 
DRUG PLAN.—The term ‘medicare operated prescrip-
tion drug plan’ has the meaning given such term in 
section 1860D–11A(c).’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall take effect as if included in the enact-
ment of section 101 of the Medicare Prescription Drug, 
Improvement, and Modernization Act of 2003. 
SEC. 3. IMPROVED APPEALS PROCESS UNDER THE MEDI-
CARE OPERATED PRESCRIPTION DRUG PLAN. 
Section 1860D–4(h) of the Social Security Act (42 
U.S.C. 1305w–104(h)) is amended by adding at the end 
the following new paragraph: 
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‘‘(h) APPEALS PROCESS FOR MEDICARE OPERATED 
PRESCRIPTION DRUG PLAN.— 
‘‘(1) IN GENERAL.—The Secretary shall develop 
a well-defined process for appeals for denials of ben-
efits under this part under the medicare operated 
prescription drug plan. Such process shall be effi-
cient, impose minimal administrative burdens, and 
ensure the timely procurement of non-formulary 
drugs or exemption from formulary incentives when 
medically necessary. Medical necessity shall be based 
on professional medical judgment, the medical condi-
tion of the beneficiary, and other medical evidence. 
Such appeals process shall include— 
‘‘(A) an initial review and determination 
made by the Secretary; and 
‘‘(B) for appeals denied during the initial 
review and determination, the option of an ex-
ternal review and determination by an inde-
pendent entity selected by the Secretary. 
‘‘(2) CONSULTATION
IN
DEVELOPMENT
OF 
PROCESS.—In developing the appeals process under 
paragraph (1), the Secretary shall consult with con-
sumer and patient groups, as well as other key 
stakeholders to ensure the goals described in para-
graph (1) are achieved.’’. 
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SEC. 4. PHARMACY PAYMENT UNDER THE MEDICARE OP-
ERATED PRESCRIPTION DRUG PLAN. 
Section 1860D–12(b) of the Social Security Act (42 
U.S.C. 1395w–112 (b)) is amended by adding at the end 
the following new paragraph: 
‘‘(4) PHARMACY PAYMENT UNDER THE MEDI-
CARE OPERATED PRESCRIPTION DRUG PLAN.— 
‘‘(A) IN GENERAL.—Under the medicare 
operated prescription drug plan, the Secretary 
shall develop a system for payment to phar-
macies. Such a system shall include a require-
ment that the plan shall issue, mail, or other-
wise transmit payment for all clean claims sub-
mitted under this part within the applicable 
number of calendar days after the date on 
which the claim is received. 
‘‘(B) DEFINITIONS.—In this paragraph: 
‘‘(i) CLEAN CLAIM.—The term ‘clean 
claim’ means a claim, with respect to a 
covered part D drug, that has no apparent 
defect or impropriety (including any lack 
of any required substantiating documenta-
tion) or particular circumstance requiring 
special treatment that prevents timely pay-
ment from being made on the claim under 
this part. 
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‘‘(ii) APPLICABLE
NUMBER
OF
CAL-
ENDAR DAYS.—The term ‘applicable num-
ber of calendar days’ means— 
‘‘(I) with respect to claims sub-
mitted 
electronically, 
calendar 
days; and 
‘‘(II) with respect to claims sub-
mitted otherwise, 30 calendar days. 
‘‘(C) PROCEDURES INVOLVING CLAIMS.— 
‘‘(i) CLAIMS DEEMED TO BE CLEAN 
CLAIMS.— 
‘‘(I) IN GENERAL.—A claim for a 
covered part D drug shall be deemed 
to be a clean claim for purposes of 
this paragraph if the Secretary does 
not provide a notification of deficiency 
to the claimant by the 10th day that 
begins after the date on which the 
claim is submitted. 
‘‘(II) NOTIFICATION
OF
DEFI-
CIENCY.—For purposes of subclause 
(I), the term ‘notification of defi-
ciency’ means a notification that 
specifies all defects or improprieties in 
the claim involved and that lists all 
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additional information or documents 
necessary for the proper processing 
and payment of the claim. 
‘‘(ii) PAYMENT OF CLEAN PORTIONS 
OF CLAIMS.—The Secretary shall, as ap-
propriate, pay any portion of a claim for a 
covered part D drug under the medicare 
operated prescription drug plan that would 
be a clean claim but for a defect or impro-
priety in a separate portion of the claim in 
accordance with subparagraph (A). 
‘‘(iii) OBLIGATION TO PAY.—A claim 
for a covered part D drug submitted to the 
Secretary that is not paid or contested by 
the provider within the applicable number 
of calendar days (as defined in subpara-
graph (B)) shall be deemed to be a clean 
claim and shall be paid by the Secretary in 
accordance with subparagraph (A). 
‘‘(iv) DATE OF PAYMENT OF CLAIM.— 
Payment of a clean claim under subpara-
graph (A) is considered to have been made 
on the date on which full payment is re-
ceived by the provider. 
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‘‘(D) 
ELECTRONIC
TRANSFER
OF 
FUNDS.—The Secretary shall pay all clean 
claims submitted electronically by an electronic 
funds transfer mechanism.’’. 
Æ 
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