‘‘(A) IN GENERAL.—The term ‘discounted 
price’ means, with respect to an applicable drug 
of a manufacturer furnished during a year to 
an applicable beneficiary— 
‘‘(i) who has not incurred costs for 
covered part D drugs in the year that are 
equal to or exceed the annual out-of-pocket 
threshold specified in section 1860D– 
2(b)(4)(B)(i) for the year, 90 percent of 
the negotiated price of such drug; and 
‘‘(ii) who has incurred such costs in 
the year that are equal to or exceed such 
threshold for the year, 70 percent of the 
negotiated price of such drug. 
‘‘(B) CLARIFICATION.—Nothing in this 
section shall be construed as affecting the re-
sponsibility of an applicable beneficiary for pay-
ment of a dispensing fee for an applicable drug. 
‘‘(C) 
SPECIAL
CASE
FOR
CERTAIN 
CLAIMS.— 
‘‘(i) 
CLAIMS
SPANNING
DEDUCT-
IBLE.—In the case where the entire 
amount of the negotiated price of an indi-
vidual claim for an applicable drug with re-
spect to an applicable beneficiary does not 
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kjohnson on DSK79L0C42PROD with BILLS
fall at or above the annual deductible spec-
ified in section 1860D–2(b)(1) for the 
year, the manufacturer of the applicable 
drug shall provide the discounted price 
under this section on only the portion of 
the negotiated price of the applicable drug 
that falls at or above such annual deduct-
ible. 
‘‘(ii) CLAIMS SPANNING OUT-OF-POCK-
ET THRESHOLD.—In the case where the 
entire amount of the negotiated price of an 
individual claim for an applicable drug 
with respect to an applicable beneficiary 
does not fall entirely below or entirely 
above the annual out-of-pocket threshold 
specified in section 1860D–2(b)(4)(B)(i) 
for the year, the manufacturer of the ap-
plicable drug shall provide the discounted 
price— 
‘‘(I) in accordance with subpara-
graph (A)(i) on the portion of the ne-
gotiated price of the applicable drug 
that falls below such threshold; and 
‘‘(II) in accordance with subpara-
graph (A)(ii) on the portion of such 
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kjohnson on DSK79L0C42PROD with BILLS
price of such drug that falls at or 
above such threshold. 
‘‘(5) MANUFACTURER.—The term ‘manufac-
turer’ means any entity which is engaged in the pro-
duction, preparation, propagation, compounding, 
conversion, or processing of prescription drug prod-
ucts, either directly or indirectly by extraction from 
substances of natural origin, or independently by 
means of chemical synthesis, or by a combination of 
extraction and chemical synthesis. Such term does 
not include a wholesale distributor of drugs or a re-
tail pharmacy licensed under State law. 
‘‘(6) NEGOTIATED
PRICE.—The term ‘nego-
tiated price’ has the meaning given such term in sec-
tion 423.100 of title 42, Code of Federal Regula-
tions (as in effect on the date of enactment of sec-
tion 1860D–14A), except that such negotiated price 
shall not include any dispensing fee for the applica-
ble drug. 
‘‘(7) QUALIFIED RETIREE PRESCRIPTION DRUG 
PLAN.—The term ‘qualified retiree prescription drug 
plan’ has the meaning given such term in section 
1860D–22(a)(2).’’. 
(2) SUNSET OF MEDICARE COVERAGE GAP DIS-
COUNT PROGRAM.—Section 1860D–14A of the So-
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cial Security Act (42 U.S.C. 1395–114a) is amend-
ed— 
(A) in subsection (a), in the first sentence, 
by striking ‘‘The Secretary’’ and inserting 
‘‘Subject to subsection (h), the Secretary’’; and 
(B) by adding at the end the following new 
subsection: 
‘‘(h) SUNSET OF PROGRAM.— 
‘‘(1) IN
GENERAL.—The program shall not 
apply with respect to applicable drugs dispensed on 
or after January 1, 2022, and, subject to paragraph 
(2), agreements under this section shall be termi-
nated as of such date. 
‘‘(2) CONTINUED APPLICATION FOR APPLICA-
BLE
DRUGS
DISPENSED
PRIOR
TO
SUNSET.—The 
provisions of this section (including all responsibil-
ities and duties) shall continue to apply after Janu-
ary 1, 2022, with respect to applicable drugs dis-
pensed prior to such date.’’. 
(3) INCLUSION OF ACTUARIAL VALUE OF MANU-
FACTURER DISCOUNTS IN BIDS.—Section 1860D–11 
of the Social Security Act (42 U.S.C. 1395w–111) 
is amended— 
(A) in subsection (b)(2)(C)(iii)— 
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(i) by striking ‘‘assumptions regarding 
the reinsurance’’ an inserting ‘‘assump-
tions regarding— 
‘‘(I) the reinsurance’’; and 
(ii) by adding at the end the fol-
lowing: 
‘‘(II) for 2022 and each subse-
quent year, the manufacturer dis-
counts provided under section 1860D– 
14B subtracted from the actuarial 
value to produce such bid; and’’; and 
(B) in subsection (c)(1)(C)— 
(i) by striking ‘‘an actuarial valuation 
of the reinsurance’’ and inserting ‘‘an ac-
tuarial valuation of— 
‘‘(i) the reinsurance’’; 
(ii) in clause (i), as inserted by clause 
(i) of this subparagraph, by adding ‘‘and’’ 
at the end; and 
(iii) by adding at the end the fol-
lowing: 
‘‘(ii) for 2022 and each subsequent 
year, the manufacturer discounts provided 
under section 1860D–14B;’’. 
(d) CONFORMING AMENDMENTS.— 
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(1) Section 1860D–2 of the Social Security Act 
(42 U.S.C. 1395w–102) is amended— 
(A) in subsection (a)(2)(A)(i)(I), by strik-
ing ‘‘, or an increase in the initial’’ and insert-
ing ‘‘or, for a year preceding 2022, an increase 
in the initial’’; 
(B) in subsection (c)(1)(C)— 
(i) in the subparagraph heading, by 
striking ‘‘AT
INITIAL
COVERAGE
LIMIT’’; 
and 
(ii) by inserting ‘‘for a year preceding 
2022 or the annual out-of-pocket threshold 
specified in subsection (b)(4)(B) for the 
year for 2022 and each subsequent year’’ 
after ‘‘subsection (b)(3) for the year’’ each 
place it appears; and 
(C) in subsection (d)(1)(A), by striking ‘‘or 
an initial’’ and inserting ‘‘or, for a year pre-
ceding 2022, an initial’’. 
(2) Section 1860D–4(a)(4)(B)(i) of the Social 
Security Act (42 U.S.C. 1395w–104(a)(4)(B)) is 
amended by striking ‘‘the initial’’ and inserting ‘‘for 
a year preceding 2022, the initial’’. 
(3) Section 1860D–14(a) of the Social Security 
Act (42 U.S.C. 1395w–114(a)) is amended— 
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