I 
108TH CONGRESS 
1ST SESSION H. R. 3662
To provide for substantial reductions in the price of prescription drugs pur-
chased by States for its employees, retirees, and pharmaceutical assist-
ance beneficiaries. 
IN THE HOUSE OF REPRESENTATIVES 
DECEMBER 8, 2003
Mr. ALLEN (for himself, Mr. WAXMAN, Mr. STARK, Mr. BROWN of Ohio, Mr. 
PALLONE, Mr. MARKEY, Mr. MEEHAN, Mr. BERRY, Mr. MICHAUD, Ms. 
SCHAKOWSKY, Mr. FRANK of Massachusetts, Mr. OLVER, Mr. CASE, Mrs. 
EMERSON, Mr. STUPAK, Mr. OBERSTAR, and Mr. MCGOVERN) introduced 
the following bill; which was referred to the Committee on Energy and 
Commerce 
A BILL 
To provide for substantial reductions in the price of prescrip-
tion drugs purchased by States for its employees, retir-
ees, and pharmaceutical assistance beneficiaries.
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 ‘‘State and Local Access 
to Fair Prescription Drug Prices Act’’. 
SEC. 2. FINDINGS AND PURPOSE. 
(a) FINDINGS.—
(1) The majority of States are facing their 
worst fiscal crisis since World War II. Soaring 
healthcare costs are deepening the crisis. Healthcare 
costs grew an average of 11 percent in 2002 and are 
expected to grow to 13 percent in fiscal year 2004. 
Healthcare spending currently accounts for approxi-
mately 30 percent of total State budgets. 
(2) As the economy continues to struggle, State 
revenues continue to fall dramatically while spending 
pressure has grown. Thirty-seven States reduced fis-
cal 
2003 
enacted 
budgets 
by 
nearly 
$14,500,000,000, the largest spending cut since 
1979. 
(3) State drug expenditures for public employ-
ees, dependents and retirees, medicaid beneficiaries, 
and the uninsured are rising each year. As more 
Americans lose jobs and health care coverage for 
themselves and their dependents, States’ share of 
medicaid costs grew by 13 percent in fiscal year 
2002. This growth is expected to rise by an esti-
mated 8 percent in fiscal year 2003 and 4.9 percent 
in fiscal year 2004 based on governors’ fiscal 2004 
budget proposals. 
(4) In February 2002, the National Governor’s 
Association passed a resolution urging Congress to
review Federal laws which may be contributing to 
the ‘‘high cost of prescription drugs’’. 
(5) Several States and localities are currently 
seeking to reimport drugs from Canada and other 
foreign countries in an attempt to lower prescription 
drug costs. 
(6) Foreign nations and Federally funded 
health care programs use purchasing power to ob-
tain prescription drugs at low prices. States and lo-
calities are not legally allowed to reimport prescrip-
tion drugs. This Act will provide an appropriate al-
ternative by allowing states and localities to pur-
chase prescription drugs domestically at prices 
roughly equivalent to those available in foreign na-
tions and Federally funded health care programs. 
(7) Implementation of the policy set forth in 
this Act may reduce prices for brand name prescrip-
tion drugs for many States and localities by up to 
40 percent. 
(b) PURPOSE.—The purpose of this Act is to make 
prescription drugs available to States and local govern-
ments and residents thereof at prices that are substan-
tially lower than current United States prices. 
SEC. 3. PARTICIPATING MANUFACTURERS. 
(a) AVAILABILITY OF DRUGS FOR PURCHASE.—
(1) IN GENERAL.—Each participating manufac-
turer of a covered outpatient drug shall make avail-
able for purchase in whole or in part by each State 
for the benefit of residents within the State whose 
cost of covered outpatient drugs are paid for by the 
State through a group health program, a retiree 
health program, a State or local pharmaceutical as-
sistance program, or other similar program (includ-
ing, to the extent provided under subsection (f)(2), 
a State medicaid program), such covered outpatient 
drug in the amount described in subsection (b) at 
the price described in subsection (c). 
(2) DIRECT PURCHASES BY AGENTS.—The re-
quirements of paragraph (1) shall apply in the case 
of purchases by an organization or agent of the 
State that directly purchases covered outpatient pre-
scription drugs on behalf of the State, or on behalf 
of a county or municipality of such State, for resi-
dents described in such paragraph. 
(b) DESCRIPTION
OF AMOUNT
OF DRUGS.—The 
amount of a covered outpatient drug that a participating 
manufacturer shall make available for purchase by a State 
or local government (or agent thereof) is an amount equal 
to the aggregate amount of the covered outpatient drug
sold or distributed to residents described in subsection (a) 
in that State. 
(c) DESCRIPTION OF PRICE.—
(1) IN GENERAL.—The price at which a partici-
pating manufacturer shall make a covered outpatient 
drug available for purchase by a pharmacy is a price 
no greater than the manufacturer’s average foreign 
price. 
(2) HANDLING
FEE.—Nothing in this sub-
section shall be construed to prevent a pharmacy 
from assessing a reasonable (as determined by the 
Secretary in consultation with pharmacy stake-
holders) handling fee in connection with the provi-
sion of covered outpatient prescription drugs to resi-
dents described in subsection (a)(1). 
(d) ENFORCEMENT.—
(1) IN GENERAL.—The Secretary, any whole-
saler or retailer in the United States, or any resident 
described in subsection (a)(1) that is aggrieved by a 
violation of this Act may bring a civil action in a 
United States district court against a manufacturer 
or other person that violates this Act for an order 
enjoining the violation and awarding damages in the 
amount that is equal to 3 times the amount of the 
value of the difference between—
(A) the price that the manufacturer or 
other person sold a covered outpatient prescrip-
tion drug to the wholesaler, retailer, or indi-
vidual; and 
(B) the manufacturer’s average foreign 
price for the prescription drug. 
(2) REPEAT VIOLATIONS.—The United States 
shall debar a manufacturer of drugs or biologicals 
that commits repeated violations of the provisions of 
this Act. 
(e) APPLICATION TO LOCAL GOVERNMENTS.—The 
provisions of this section shall apply with respect to the 
purchase of covered outpatient drugs by local governments 
if such purchase was made for the benefit of individuals 
within the jurisdiction of the local government whose cost 
of covered outpatient drugs are paid for by the local gov-
ernment (or agent thereof) through a group health pro-
gram, a retiree health program, a local pharmaceutical as-
sistance program, or other similar program, in the same 
manner as such provisions apply to States. 
(f) RELATION TO MEDICAID REBATE AGREEMENT.—
A State, with respect to its provision of medical assistance 
for covered outpatient drugs under title XIX of the Social 
Security Act, may elect for a year (or other period speci-
fied by the Secretary) either of the following to apply (and
such election shall apply to all such covered outpatient 
drugs under such title):
(1) CONTINUATION OF REBATE AGREEMENT.—
(A) IN GENERAL.—The provisions of sec-
tion 1927 of such Act (42 U.S.C. 1396r–8) 
shall continue to apply. 
(B) DISREGARD OF MANUFACTURER’S AV-
ERAGE FOREIGN PRICE IN DETERMINING BEST 
PRICE UNDER REBATE AGREEMENT.—The price 
under subsection (c) at which a participating 
manufacturer makes a covered outpatient drug 
available under this Act shall be disregarded for 
purposes of determining the best price under a 
rebate agreement under such section 1927 of 
the Social Security Act. 
(2) 
USE
OF
MANUFACTURER’S
FOREIGN 
PRICE.—The provisions of such section do not apply 
and such drugs shall be made available for purposes 
of such title in the quantities under subsection (b) 
and at the prices specified under subsection (c). 
(g) RULE OF CONSTRUCTION.—Nothing in this sec-
tion shall be construed to prevent a State or local govern-
ment from implementing programs that provide for the 
purchase and distribution of outpatient drugs at prices