I 
117TH CONGRESS 
2D SESSION 
H. R. 7497 
To provide for lower prices for drugs through drug price negotiation, and 
for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 11, 2022 
Ms. SLOTKIN introduced the following bill; which was referred to the Com-
mittee on Energy and Commerce, and in addition to the Committees on 
Ways and Means, and Education and Labor, 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 provide for lower prices for drugs through drug price 
negotiation, 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; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Make Medicine Affordable Act’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
Sec. 1. Short title; table of contents. 
TITLE I—LOWERING PRICES THROUGH DRUG PRICE 
NEGOTIATION 
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Sec. 101. Providing for lower prices for certain high-priced single source drugs. 
Sec. 102. Selected drug manufacturer excise tax imposed during noncompliance 
periods. 
Sec. 103. Funding. 
TITLE II—PRESCRIPTION DRUG INFLATION REBATES 
Sec. 201. Medicare part B rebate by manufacturers. 
Sec. 202. Medicare part D rebate by manufacturers. 
TITLE III—PART D IMPROVEMENTS AND MAXIMUM OUT-OF- 
POCKET CAP FOR MEDICARE BENEFICIARIES 
Sec. 301. Medicare part D benefit redesign. 
Sec. 302. Maximum monthly cap on cost-sharing payments under prescription 
drug plans and MA–PD plans. 
TITLE IV—REPEAL OF CERTAIN PRESCRIPTION DRUG REBATE 
RULE 
Sec. 401. Prohibiting implementation of rule relating to eliminating the anti- 
kickback statute safe harbor protection for prescription drug 
rebates. 
TITLE V—MISCELLANEOUS 
Sec. 501. Appropriate cost-sharing for certain insulin products under Medicare 
part D. 
Sec. 502. Coverage of adult vaccines recommended by the Advisory Committee 
on Immunization Practices under Medicare part D. 
Sec. 503. Payment for biosimilar biological products during initial period. 
Sec. 504. Temporary increase in Medicare part B payment for certain bio-
similar biological products. 
Sec. 505. Improving access to adult vaccines under Medicaid and CHIP. 
TITLE VI—ADDITIONAL INSULIN POLICIES 
Sec. 601. ERISA requirements with respect to cost-sharing for certain insulin 
products. 
Sec. 602. Public Health Service Act requirements with respect to cost-sharing 
for insulin products. 
Sec. 603. IRC requirements with respect to cost-sharing for certain insulin 
products. 
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TITLE 
I—LOWERING 
PRICES 
THROUGH DRUG PRICE NE-
GOTIATION 
SEC. 101. PROVIDING FOR LOWER PRICES FOR CERTAIN 
HIGH-PRICED SINGLE SOURCE DRUGS. 
(a) PROGRAM TO LOWER PRICES
FOR CERTAIN 
HIGH-PRICED SINGLE SOURCE DRUGS.—Title XI of the 
Social Security Act is amended by adding after section 
1184 (42 U.S.C. 1320e–3) the following new part: 
‘‘PART E—PRICE NEGOTIATION PROGRAM TO 
LOWER PRICES FOR CERTAIN HIGH-PRICED 
SINGLE SOURCE DRUGS 
‘‘SEC. 1191. ESTABLISHMENT OF PROGRAM. 
‘‘(a) IN GENERAL.—The Secretary shall establish a 
Drug Price Negotiation Program (in this part referred to 
as the ‘program’). Under the program, with respect to 
each price applicability period, the Secretary shall— 
‘‘(1) publish a list of negotiation-eligible drugs 
and selected drugs in accordance with section 1192; 
‘‘(2) enter into agreements with manufacturers 
of selected drugs with respect to such period, in ac-
cordance with section 1193; 
‘‘(3) negotiate and, if applicable, renegotiate 
maximum fair prices for such selected drugs, in ac-
cordance with section 1194; and 
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‘‘(4) carry out the administrative duties de-
scribed in section 1196. 
‘‘(b) DEFINITIONS RELATING TO TIMING.—For pur-
poses of this part: 
‘‘(1) INITIAL PRICE APPLICABILITY YEAR.—The 
term ‘initial price applicability year’ means a year 
(beginning with 2025). 
‘‘(2) PRICE APPLICABILITY PERIOD.—The term 
‘price applicability period’ means, with respect to a 
qualifying single source drug, the period beginning 
with the first initial price applicability year with re-
spect to which such drug is a selected drug and end-
ing with the last year during which the drug is a se-
lected drug. 
‘‘(3) SELECTED
DRUG
PUBLICATION
DATE.— 
The term ‘selected drug publication date’ means, 
with respect to each initial price applicability year, 
February 1 of the year that begins 2 years prior to 
such year. 
‘‘(4) NEGOTIATION PERIOD.—The term ‘nego-
tiation period’ means, with respect to an initial price 
applicability year with respect to a selected drug, the 
period— 
‘‘(A) beginning on the sooner of— 
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‘‘(i) the date on which the manufac-
turer of the drug and the Secretary enter 
into an agreement under section 1193 with 
respect to such drug; or 
‘‘(ii) February 28 following the se-
lected drug publication date with respect to 
such selected drug; and 
‘‘(B) ending on November 1 of the year 
that begins 2 years prior to the initial price ap-
plicability year. 
‘‘(c) OTHER DEFINITIONS.—For purposes of this 
part: 
‘‘(1) MAXIMUM
FAIR
PRICE
ELIGIBLE
INDI-
VIDUAL.—The term ‘maximum fair price eligible in-
dividual’ means, with respect to a selected drug— 
‘‘(A) in the case such drug is dispensed to 
the individual at a pharmacy, by a mail order 
service, or by another dispenser, an individual 
who is enrolled under a prescription drug plan 
under part D of title XVIII or an MA–PD plan 
under part C of such title if coverage is pro-
vided under such plan for such selected drug; 
and 
‘‘(B) in the case such drug is furnished or 
administered to the individual by a hospital, 
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physician, or other provider of services or sup-
plier, an individual who is enrolled under part 
B of title XVIII, including an individual who is 
enrolled under an MA plan under part C of 
such title, if such selected drug is covered under 
such part. 
‘‘(2) MAXIMUM FAIR PRICE.—The term ‘max-
imum fair price’ means, with respect to a year dur-
ing a price applicability period and with respect to 
a selected drug (as defined in section 1192(c)) with 
respect to such period, the price published pursuant 
to section 1195 in the Federal Register for such 
drug and year. 
‘‘(3) UNIT.—The term ‘unit’ means, with re-
spect to a drug or biological, the lowest identifiable 
amount (such as a capsule or tablet, milligram of 
molecules, or grams) of the drug or biological that 
is dispensed or furnished. The determination of a 
unit, with respect to a drug or biological, pursuant 
to this paragraph shall not be subject to administra-
tive or judicial review. 
‘‘(4) TOTAL EXPENDITURES.—The term ‘total 
expenditures’ includes, in the case of expenditures 
with respect to part D of title XVIII, ingredient 
costs, dispensing fees, sales tax, and if applicable, 
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drugs under parts B and D of title XVIII, as 
determined by the Secretary, during the most 
recent period of 12 months prior to the selected 
drug publication date (but ending not later 
than October 31 of the year prior to the year 
of such drug publication date), with respect to 
such year, for which data are available, with the 
negotiation-eligible drugs with the highest total 
expenditures being ranked the highest; and 
‘‘(B) select from such ranked combined list 
for inclusion on the published list described in 
subsection (a) with respect to such year the ne-
gotiation-eligible drugs with the highest such 
rankings. 
‘‘(2) HIGH SPEND PART D DRUGS FOR 2025 AND 
2026.—With respect to the initial price applicability 
year 2025 and with respect to the initial price appli-
cability year 2026, the Secretary shall apply para-
graph (1) as if the reference to ‘negotiation-eligible 
drugs described in subsection (d)(1)(A)’ were a ref-
erence to ‘negotiation-eligible drugs described in sub-
section (d)(1)(A)(i)’ and as if the reference to ‘total 
expenditures for such drugs under parts B and D of 
title XVIII’ were a reference to ‘total expenditures 
for such drugs under part D of title XVIII’. 
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‘‘(c) SELECTED DRUG.— 
‘‘(1) IN GENERAL.—For purposes of this part, 
consistent with subsection (e)(2) and subject to 
paragraph (2), each negotiation-eligible drug in-
cluded on the list published under subsection (a) 
with respect to an initial price applicability year 
shall be referred to as a ‘selected drug’ with respect 
to such year and each subsequent year beginning be-
fore the first year that begins after the date on 
which the Secretary determines at least one drug or 
biological product— 
‘‘(A) is approved or licensed (as applica-
ble)— 
‘‘(i) under section 505(j) of the Fed-
eral Food, Drug, and Cosmetic Act using 
such drug as the listed drug; or 
‘‘(ii) under section 351(k) of the Pub-
lic Health Service Act using such drug as 
the reference product; and 
‘‘(B) is marketed pursuant to such ap-
proval or licensure. 
‘‘(2) 
CLARIFICATION.—A 
negotiation-eligible 
drug— 
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‘‘(A) that is included on the list published 
under subsection (a) with respect to an initial 
price applicability year; and 
‘‘(B) for which the Secretary makes a de-
termination described in paragraph (1) before 
or during the negotiation period with respect to 
such initial price applicability year, 
shall not be subject to the negotiation process under 
section 1194 with respect to such negotiation period 
and shall continue to be considered a selected drug 
under this part with respect to the number of nego-
tiation-eligible drugs published on the list under sub-
section (a) with respect to such initial price applica-
bility year. 
‘‘(d) NEGOTIATION-ELIGIBLE DRUG.— 
‘‘(1) IN GENERAL.—For purposes of this part, 
subject to paragraph (2), the term ‘negotiation-eligi-
ble drug’ means, with respect to the selected drug 
publication date with respect to an initial price ap-
plicability year, a qualifying single source drug, as 
defined in subsection (e), that is described in either 
of the following subparagraphs (or, with respect to 
the initial price applicability year 2025 or 2026, that 
is described in subparagraph (A)(i) or (B)): 
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‘‘(A) HIGH SPEND DRUGS.—The qualifying 
single source drug is, determined in accordance 
with subsection (e)(2)— 
‘‘(i) among the 50 qualifying single 
source drugs with the highest total expend-
itures under part D of title XVIII, as de-
termined by the Secretary in accordance 
with paragraph (3), during the most recent 
period for which data are available of at 
least 12 months prior to the selected drug 
publication date (but ending no later than 
October 31 of the year prior to the year of 
such drug publication date), with respect 
to such year; or 
‘‘(ii) among the 50 qualifying single 
source drugs with the highest total expend-
itures under part B of title XVIII, as de-
termined by the Secretary in accordance 
with paragraph (3), during such most re-
cent period, as described in clause (i). 
‘‘(B) 
INSULIN.—The 
qualifying 
single 
source drug is described in subsection (e)(1)(C). 
‘‘(2) 
EXCEPTION
FOR
SMALL
BIOTECH 
DRUGS.— 
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‘‘(A) IN
GENERAL.—Subject to subpara-
graph (C), the term ‘negotiation-eligible drug’ 
shall not include, with respect to the initial 
price applicability years 2025, 2026, and 2027, 
a qualifying single source drug that meets ei-
ther of the following: 
‘‘(i) PART D DRUGS.—The total ex-
penditures for the qualifying single source 
drug under part D of title XVIII, as deter-
mined by the Secretary in accordance with 
paragraph (3), during 2021— 
‘‘(I) are equal to or less than 1 
percent of the total expenditures 
under such part D, as so determined, 
for all covered part D drugs during 
such year; and 
‘‘(II) are equal to at least 80 per-
cent of the total expenditures under 
such part D, as so determined, for all 
covered part D drugs for which the 
manufacturer of the drug has an 
agreement in effect under section 
1860D–14A during such year. 
‘‘(ii) PART B DRUGS.—The total ex-
penditures for the qualifying single source 
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drug under part B of title XVIII, as deter-
mined by the Secretary in accordance with 
paragraph (3), during 2021— 
‘‘(I) are equal to or less than 1 
percent of the total expenditures 
under such part B, as so determined, 
for all qualifying single source drugs 
covered under such part B during 
such year; and 
‘‘(II) are equal to at least 80 per-
cent of the total expenditures under 
such part B, as so determined, for all 
qualifying single source drugs of the 
manufacturer that are covered under 
such part B during such year. 
‘‘(B) CLARIFICATIONS RELATING TO MAN-
UFACTURERS.— 
‘‘(i) AGGREGATION
RULE.—All per-
sons treated as a single employer under 
subsection (a) or (b) of section 52 of the 
Internal Revenue Code of 1986 shall be 
treated as one manufacturer for purposes 
of this paragraph. 
‘‘(ii) LIMITATION.—A qualifying sin-
gle source drug described in subparagraph 
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(A) shall not include a qualifying single 
source drug of a manufacturer if such 
manufacturer is acquired after 2021 by 
another manufacturer that does not meet 
the definition of a specified manufacturer 
under section 1860D–14C(g)(4)(B)(ii), ef-
fective at the beginning of the plan year 
immediately following such acquisition or, 
in the case of an acquisition before 2024, 
effective January 1, 2024. 
‘‘(C) DRUGS
NOT
INCLUDED
AS
SMALL 
BIOTECH DRUGS.—The following shall not be 
considered a qualifying single source drug de-
scribed in subparagraph (A): 
‘‘(i) A vaccine that is licensed under 
section 351 of the Public Health Service 
Act and is marketed pursuant to such sec-
tion. 
‘‘(ii) A new formulation, such as an 
extended release formulation, of a quali-
fying single source drug. 
‘‘(iii) A qualifying single source drug 
described in subsection (e)(1)(C). 
‘‘(3) CLARIFICATIONS AND DETERMINATIONS.— 
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‘‘(A) PREVIOUSLY SELECTED DRUGS AND 
SMALL BIOTECH DRUGS EXCLUDED.—In apply-
ing clauses (i) and (ii) of paragraph (1)(A), the 
Secretary shall not consider or count— 
‘‘(i) drugs that are already selected 
drugs; and 
‘‘(ii) for initial price applicability 
years 2025, 2026, and 2027, qualifying 
single source drugs described in paragraph 
(2)(A). 
‘‘(B) USE
OF
DATA.—In determining 
whether a qualifying single source drug satisfies 
any of the criteria described in paragraph (1) 
or (2), the Secretary shall use data that is ag-
gregated across dosage forms and strengths of 
the drug, including new formulations of the 
drug, such as an extended release formulation, 
and not based on the specific formulation or 
package size or package type of the drug. 
‘‘(4) PUBLICATION.—Not later than the se-
lected drug publication date with respect to an ini-
tial price applicability year, the Secretary shall pub-
lish in the Federal Register a list of negotiation-eli-
gible drugs with respect to such selected drug publi-
cation date. 
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‘‘(e) QUALIFYING SINGLE SOURCE DRUG.— 
‘‘(1) IN GENERAL.—For purposes of this part, 
the term ‘qualifying single source drug’ means, with 
respect to an initial price applicability year, subject 
to paragraphs (2) and (3), a covered part D drug 
(as defined in section 1860D–2(e)) that is described 
in any of the following or a drug or biological prod-
uct covered under part B of title XVIII that is de-
scribed in any of the following: 
‘‘(A) DRUG PRODUCTS.—A drug— 
‘‘(i) that is approved under section 
505(c) of the Federal Food, Drug, and 
Cosmetic Act and is marketed pursuant to 
such approval; 
‘‘(ii) for which, as of the selected drug 
publication date with respect to such initial 
price applicability year, at least 7 years 
will have elapsed since the date of such ap-
proval; and 
‘‘(iii) that is not the listed drug for 
any drug that is approved and marketed 
under section 505(j) of such Act. 
‘‘(B) BIOLOGICAL PRODUCTS.—A biologi-
cal product— 
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‘‘(i) that is licensed under section 
351(a) of the Public Health Service Act 
and is marketed under section 351 of such 
Act; 
‘‘(ii) for which, as of the selected drug 
publication date with respect to such initial 
price applicability year, at least 11 years 
will have elapsed since the date of such li-
censure; and 
‘‘(iii) that is not the reference product 
for any biological product that is licensed 
and marketed under section 351(k) of such 
Act. 
‘‘(C) INSULIN
PRODUCT.—Any insulin 
product that is approved under section 505 of 
the Federal Food, Drug, and Cosmetic Act or 
licensed under section 351 of the Public Health 
Service Act and marketed pursuant to such ap-
proval or licensure, including any insulin prod-
uct that has been deemed to be licensed under 
section 351 of the Public Health Service Act 
pursuant to section 7002(e)(4) of the Biologics 
Price Competition and Innovation Act of 2009 
and is marketed pursuant to such section, re-
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gardless of whether such insulin product would 
be described in subparagraph (A) or (B). 
‘‘(2) TREATMENT
OF
AUTHORIZED
GENERIC 
DRUGS.— 
‘‘(A) IN GENERAL.—In the case of a quali-
fying single source drug described in subpara-
graph (A) or (B) of paragraph (1) that is the 
listed drug (as such term is used in section 
505(j) of the Federal Food, Drug, and Cos-
metic Act) or the reference product (as defined 
in section 351(i) of the Public Health Service 
Act), with respect to an authorized generic 
drug, in applying the provisions of this part, 
such authorized generic drug and such listed 
drug or reference product shall be treated as 
the same qualifying single source drug. 
‘‘(B) AUTHORIZED
GENERIC
DRUG
DE-
FINED.—For purposes of this paragraph, the 
term ‘authorized generic drug’ means— 
‘‘(i) in the case of a drug, an author-
ized generic drug (as such term is defined 
in section 505(t)(3) of the Federal Food, 
Drug, and Cosmetic Act); and 
‘‘(ii) in the case of a biological prod-
uct, a reference product (as such term is 
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defined in section 351(i) of the Public 
Health Service Act) that— 
‘‘(I) has been licensed under sec-
tion 351(a) of such Act; and 
‘‘(II) is marketed, sold, or dis-
tributed directly or indirectly to retail 
class of trade under a different label-
ing, packaging (other than repack-
aging as the reference product in blis-
ter packs, unit doses, or similar pack-
aging for use in institutions), product 
code, labeler code, trade name, or 
trade mark than the reference prod-
uct. 
‘‘(3) EXCLUSIONS.—In this part, the term 
‘qualifying single source drug’ does not include any 
of the following: 
‘‘(A) CERTAIN ORPHAN DRUGS.—A drug 
that is designated as a drug for only one rare 
disease or condition under section 526 of the 
Federal Food, Drug, and Cosmetic Act and for 
which the only approved indication (or indica-
tions) is for such disease or condition. 
‘‘(B) LOW SPEND MEDICARE DRUGS.—A 
drug or biological product (other than an insu-
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lin product described in paragraph (1)(C)) with 
respect to which the total expenditures under 
parts B and D of title XVIII, as determined by 
the Secretary, during the most recent period for 
which data are available of at least 12 months 
prior to the selected drug publication date (but 
ending no later than October 31 of the year 
prior to the year of such drug publication date), 
with respect to such year is less than— 
‘‘(i) 
with 
respect 
to 
2021, 
$200,000,000; or 
‘‘(ii) with respect to a subsequent 
year, the dollar amount specified in this 
subparagraph for the previous year in-
creased by the annual percentage increase 
in the consumer price index (all items; 
U.S. city average) as of December of such 
previous year. 
‘‘(f) NO ADMINISTRATIVE OR JUDICIAL REVIEW OF 
DETERMINATIONS AND SELECTIONS.—The determination 
of negotiation-eligible drugs under subsection (d) and the 
selection of drugs under this section are not subject to 
administrative or judicial review. 
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‘‘SEC. 1193. MANUFACTURER AGREEMENTS. 
‘‘(a) 
IN
GENERAL.—For 
purposes 
of 
section 
1191(a)(2), the Secretary shall enter into agreements with 
manufacturers of selected drugs with respect to a price 
applicability period, by not later than February 28 fol-
lowing the selected drug publication date with respect to 
such selected drug, under which— 
‘‘(1) during the negotiation period for the initial 
price applicability year for the selected drug, the 
Secretary and manufacturer, in accordance with sec-
tion 1194, negotiate to determine (and, by not later 
than the last date of such period, agree to) a max-
imum fair price for such selected drug of the manu-
facturer in order for the manufacturer to provide ac-
cess to such price— 
‘‘(A) to maximum fair price eligible indi-
viduals who with respect to such drug are de-
scribed 
in 
subparagraph 
(A) 
of 
section 
1191(c)(1) and are dispensed such drug (and to 
pharmacies, mail order services, and other dis-
pensers, with respect to such maximum fair 
price eligible individuals who are dispensed such 
drugs) during, subject to subparagraph (2), the 
price applicability period; and 
‘‘(B) to hospitals, physicians, and other 
providers of services and suppliers with respect 
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to maximum fair price eligible individuals who 
with respect to such drug are described in sub-
paragraph (B) of such section and are fur-
nished or administered such drug during, sub-
ject to subparagraph (2), the price applicability 
period; 
‘‘(2) the Secretary and the manufacturer shall, 
in accordance with section 1194, renegotiate (and, 
by not later than the last date of such period, agree 
to) the maximum fair price for such drug, in order 
for the manufacturer to provide access to such max-
imum fair price (as so renegotiated)— 
‘‘(A) to maximum fair price eligible indi-
viduals who with respect to such drug are de-
scribed 
in 
subparagraph 
(A) 
of 
section 
1191(c)(1) and are dispensed such drug (and to 
pharmacies, mail order services, and other dis-
pensers, with respect to such maximum fair 
price eligible individuals who are dispensed such 
drugs) during any year during the price appli-
cability period (beginning after such renegoti-
ation) with respect to such selected drug; and 
‘‘(B) to hospitals, physicians, and other 
providers of services and suppliers with respect 
to maximum fair price eligible individuals who 
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with respect to such drug are described in sub-
paragraph (B) of such section and are fur-
nished or administered such drug during any 
year described in subparagraph (A); 
‘‘(3) access to the maximum fair price (includ-
ing as renegotiated pursuant to paragraph (2)), with 
respect to such a selected drug, shall be provided by 
the manufacturer to— 
‘‘(A) maximum fair price eligible individ-
uals, who with respect to such drug are de-
scribed 
in 
subparagraph 
(A) 
of 
section 
1191(c)(1), at the pharmacy, mail order service, 
or other dispenser at the point-of-sale of such 
drug (and shall be provided by the manufac-
turer to the pharmacy, mail order service, or 
other dispenser, with respect to such maximum 
fair price eligible individuals who are dispensed 
such drugs), as described in paragraph (1)(A) 
or (2)(A), as applicable; and 
‘‘(B) hospitals, physicians, and other pro-
viders of services and suppliers with respect to 
maximum fair price eligible individuals who 
with respect to such drug are described in sub-
paragraph (B) of such section and are fur-
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nished or administered such drug, as described 
in paragraph (1)(B) or (2)(B), as applicable; 
‘‘(4) the manufacturer, subject to subsection 
(d), submits to the Secretary, through an online por-
tal established by the Secretary or other form and 
manner specified by the Secretary, for the negotia-
tion period for the price applicability period (and, if 
applicable, before any period of renegotiation pursu-
ant to section 1194(f)) with respect to such drug— 
‘‘(A) information on the non-Federal aver-
age manufacturer price for the drug for the ap-
plicable year or period; and 
‘‘(B) all other information that the Sec-
retary requires to carry out the negotiation (or 
renegotiation process) under this part, including 
information described in section 1194(e)(1); 
and 
‘‘(5) the manufacturer complies with require-
ments imposed by the Secretary for purposes of ad-
ministering the program, including with respect to 
the duties described in section 1196. 
‘‘(b) AGREEMENT IN EFFECT UNTIL DRUG IS NO 
LONGER A SELECTED DRUG.—An agreement entered into 
under this section shall be effective, with respect to a se-
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lected drug, until such drug is no longer considered a se-
lected drug under section 1192(c). 
‘‘(c) CONFIDENTIALITY OF INFORMATION.—Informa-
tion submitted to the Secretary under this part by a man-
ufacturer of a selected drug that is proprietary informa-
tion of such manufacturer (as determined by the Sec-
retary) shall be used only by the Secretary or disclosed 
to and used by the Comptroller General of the United 
States or the Medicare Payment Advisory Commission for 
purposes of carrying out this part. 
‘‘(d) IMPLEMENTATION FOR 2025 AND 2026.—Not-
withstanding any other provision of this part, the Sec-
retary shall implement this section for 2025 and 2026 by 
program instruction or otherwise. 
‘‘SEC. 1194. NEGOTIATION AND RENEGOTIATION PROCESS. 
‘‘(a) IN GENERAL.—For purposes of this part, under 
an agreement under section 1193 between the Secretary 
and a manufacturer of a selected drug, with respect to 
the period for which such agreement is in effect and in 
accordance with subsections (b), (c), and (d), the Sec-
retary and the manufacturer— 
‘‘(1) shall during the negotiation period with re-
spect to such drug, in accordance with this section, 
negotiate a maximum fair price for such drug for 
the purpose described in section 1193(a)(1); and 
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‘‘(2) renegotiate, in accordance with the process 
specified pursuant to subsection (f), such maximum 
fair price for such drug if such drug is a renegoti-
ation-eligible drug under such subsection. 
‘‘(b) NEGOTIATION PROCESS REQUIREMENTS.— 
‘‘(1) METHODOLOGY AND PROCESS.—The Sec-
retary shall develop and use a consistent method-
ology and process, in accordance with paragraph (2), 
for negotiations under subsection (a) that aims to 
achieve the lowest maximum fair price for each se-
lected drug. 
‘‘(2) SPECIFIC
ELEMENTS
OF
NEGOTIATION 
PROCESS.—As part of the negotiation process under 
this section, with respect to a selected drug and the 
negotiation period with respect to the initial price 
applicability year with respect to such drug, the fol-
lowing shall apply: 
‘‘(A) SUBMISSION OF INFORMATION.—Not 
later than March 1 of the year of the selected 
drug publication date, with respect to the se-
lected drug, the manufacturer of the drug shall 
submit to the Secretary, in accordance with sec-
tion 1193(a)(4), the information described in 
such section. 
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‘‘(B) INITIAL OFFER BY SECRETARY.—Not 
later than the June 1 following the selected 
drug publication date, the Secretary shall pro-
vide the manufacturer of a selected drug with 
a written initial offer that contains the Sec-
retary’s proposal for the maximum fair price of 
the drug and a list of the considerations de-
scribed in section 1194(e) that were used in de-
veloping such offer. 
‘‘(C) RESPONSE TO INITIAL OFFER.— 
‘‘(i) IN GENERAL.—Not later than 30 
days after the date of receipt of an initial 
offer under subparagraph (B), the manu-
facturer shall either accept such offer or 
propose a counteroffer to such offer. 
‘‘(ii) 
COUNTEROFFER
REQUIRE-
MENTS.—If a manufacturer proposes a 
counteroffer, such counteroffer— 
‘‘(I) shall be in writing; and 
‘‘(II) shall be justified based on 
the factors described in subsection (e). 
‘‘(D) RESPONSE
TO
COUNTEROFFER.— 
After receiving a counteroffer under subpara-
graph (C), the Secretary shall respond in writ-
ing to such counteroffer. 
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‘‘(1) IN GENERAL.—The maximum fair price 
negotiated under this section for a selected drug, 
with respect to the first year of the price applica-
bility period with respect to such drug, shall not ex-
ceed the applicable percent described in paragraph 
(2), with respect to such drug, of the following: 
‘‘(A) INITIAL PRICE APPLICABILITY YEAR 
2025.—In the case of a selected drug with re-
spect to which such initial price applicability 
year is 2025, the average of the non-Federal 
average manufacturer price for such drug for 
the first 3 calendar quarters of 2021 (or, in the 
case that there is not a non-Federal average 
manufacturer price available for such drug for 
any of such first 3 calendar quarters of 2021, 
for the first full year following the market entry 
for such drug), increased by the percentage in-
crease in the consumer price index for all urban 
consumers (all items; United States city aver-
age) from September 2021 (or such first full 
year following the market entry), as applicable, 
to the year prior to the selected drug publica-
tion date with respect to such initial price appli-
cability year. 
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‘‘(B) INITIAL PRICE APPLICABILITY YEAR 
2026 AND SUBSEQUENT YEARS.—In the case of 
a selected drug with respect to which such ini-
tial price applicability year is 2026 or a subse-
quent year, the lower of— 
‘‘(i) the average of the non-Federal 
average manufacturer price for such drug 
for the first 3 calendar quarters of 2021 
(or, in the case that there is not a non- 
Federal average manufacturer price avail-
able for such drug for any of such first 3 
calendar quarters of 2021, for the first full 
year following the market entry for such 
drug), increased by the percentage increase 
in the consumer price index for all urban 
consumers (all items; United States city 
average) from September 2021 (or such 
first full year following the market entry), 
as applicable, to the year prior to the se-
lected drug publication date with respect to 
such initial price applicability year; or 
‘‘(ii) the non-Federal average manu-
facturer price for such drug for the year 
prior to the selected drug publication date 
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with respect to such initial price applica-
bility year. 
‘‘(2) APPLICABLE PERCENT DESCRIBED.—For 
purposes of paragraph (1), the applicable percent 
described in this paragraph is the following: 
‘‘(A) SHORT-MONOPOLY DRUGS.—With re-
spect to a selected drug (other than a post-ex-
clusivity drug and a long-monopoly drug), 75 
percent. 
‘‘(B) POST-EXCLUSIVITY DRUGS.—With re-
spect to a post-exclusivity drug, 65 percent. 
‘‘(C) LONG-MONOPOLY DRUGS.—With re-
spect to a long-monopoly drug, 40 percent. 
‘‘(3) POST-EXCLUSIVITY DRUG DEFINED.— 
‘‘(A) IN GENERAL.—In this part, subject 
to subparagraph (B), the term ‘post-exclusivity 
drug’ means, with respect to an initial price ap-
plicability year, a selected drug for which at 
least 12 years, but fewer than 16 years, have 
elapsed since the date of approval of such drug 
under section 505(c) of the Federal Food, 
Drug, and Cosmetic Act or since the date of li-
censure of such drug under section 351(a) of 
the Public Health Service Act, as applicable. 
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‘‘(B) EXCLUSIONS.—The term ‘post-exclu-
sivity drug’ shall not include any of the fol-
lowing: 
‘‘(i) A vaccine that is licensed under 
section 351 of the Public Health Service 
Act and marketed pursuant to such sec-
tion. 
‘‘(ii) A selected drug that had an 
agreement under this part with the Sec-
retary prior to the initial price applicability 
year 2030. 
‘‘(C) CLARIFICATION.—Nothing in sub-
paragraph (B)(ii) shall limit the transition of a 
selected drug described in paragraph (2)(A) to 
a long-monopoly drug if the selected drug meets 
the definition of a long-monopoly drug. 
‘‘(4) LONG-MONOPOLY DRUG DEFINED.— 
‘‘(A) IN GENERAL.—In this part, subject 
to subparagraph (B), the term ‘long-monopoly 
drug’ means, with respect to an initial price ap-
plicability year, a selected drug for which at 
least 16 years have elapsed since the date of 
approval of such drug under section 505(c) of 
the Federal Food, Drug, and Cosmetic Act or 
since the date of licensure of such drug under 
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section 351(a) of the Public Health Service Act, 
as applicable. 
‘‘(B) EXCLUSION.—The term ‘long-monop-
oly drug’ shall not include a vaccine that is li-
censed under section 351 of the Public Health 
Service Act and marketed pursuant to such sec-
tion. 
‘‘(5) NON-FEDERAL AVERAGE MANUFACTURER 
PRICE.—In this part, the term ‘non-Federal average 
manufacturer price’ has the meaning given such 
term in section 8126(h)(5) of title 38, United States 
Code. 
‘‘(d) TEMPORARY
FLOOR
FOR
SMALL
BIOTECH 
DRUGS.—In the case of a selected drug that is a quali-
fying single source drug described in section 1192(d)(2) 
and with respect to which the first initial price applica-
bility year of the price applicability period with respect to 
such drug is 2028 or 2029, the maximum fair price nego-
tiated under this section for such drug for such initial 
price applicability year may not be less than 66 percent 
of the average of the non-Federal average manufacturer 
price for such drug (as defined and applied in subsection 
(c)(4)) for the first 3 calendar quarters of 2021 (or, in 
the case that there is not a non-Federal average manufac-
turer price available for such drug for any of such first 
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3 calendar quarters of 2021, for the first full year fol-
lowing the market entry for such drug), increased by the 
percentage increase in the consumer price index for all 
urban consumers (all items; United States city average) 
from September 2021 (or such first full year following the 
market entry), as applicable, to the year prior to the se-
lected drug publication date with respect to the initial 
price applicability year. 
‘‘(e) CONSIDERATIONS.—For purposes of negotiating 
the maximum fair price of a selected drug under this part 
with the manufacturer of the drug, the Secretary shall 
consider the following factors (and, with respect to post- 
exclusivity drugs and long-monopoly drugs, shall not con-
sider factors other than those described in subparagraphs 
(B) and (C) of paragraph (1)): 
‘‘(1) 
MANUFACTURER-SPECIFIC
INFORMA-
TION.—The following information, with respect to 
such selected drug, including as submitted by the 
manufacturer: 
‘‘(A) Research and development costs of 
the manufacturer for the drug and the extent to 
which the manufacturer has recouped research 
and development costs. 
‘‘(B) Market data for the drug, including 
the distribution of sales across different pro-
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consideration the effects of such products on 
specific populations, such as individuals with 
disabilities, the elderly, the terminally ill, chil-
dren, and other patient populations. 
‘‘(D) The extent to which the drug ad-
dresses unmet medical needs for a condition for 
which treatment or diagnosis is not addressed 
adequately by available therapy. 
In considering information described in subpara-
graph (C), the Secretary shall not use evidence or 
findings from comparative clinical effectiveness re-
search in a manner that treats extending the life of 
an elderly, disabled, or terminally ill individual as of 
lower value than extending the life of an individual 
who is younger, nondisabled, or not terminally ill. 
‘‘(3) ADDITIONAL INFORMATION.—Information 
submitted to the Secretary, in accordance with a 
process specified by the Secretary, by other parties 
that are affected by the establishment of a maximum 
fair price for the selected drug. 
‘‘(f) RENEGOTIATION PROCESS.— 
‘‘(1) IN GENERAL.—In the case of a renegoti-
ation-eligible drug (as defined in paragraph (2)) that 
is selected under paragraph (3), the Secretary shall 
provide for a process of renegotiation (for years (be-
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ginning with 2027) during the price applicability pe-
riod, with respect to such drug) of the maximum fair 
price for such drug consistent with paragraph (4). 
‘‘(2) 
RENEGOTIATION-ELIGIBLE
DRUG
DE-
FINED.—In this section, the term ‘renegotiation-eli-
gible drug’ means a selected drug that is any of the 
following: 
‘‘(A) ADDITION OF NEW INDICATION.—A 
selected drug for which a new indication is 
added to the drug. 
‘‘(B) CHANGE OF STATUS TO A POST-EX-
CLUSIVITY DRUG.—A selected drug that is de-
scribed in section 1192(d)(1)(A) that— 
‘‘(i) is not a post-exclusivity drug or a 
long-monopoly drug; and 
‘‘(ii) for which there is a change in 
status to that of a post-exclusivity drug. 
‘‘(C) CHANGE OF STATUS TO A LONG-MO-
NOPOLY
DRUG.—A selected drug that is de-
scribed in section 1192(d)(1)(A) that— 
‘‘(i) is not a long-monopoly drug; and 
‘‘(ii) for which there is a change in 
status to that of a long-monopoly drug. 
‘‘(D) MATERIAL
CHANGES.—A selected 
drug for which the Secretary determines there 
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has been a material change of factors described 
in paragraph (1) or (2) of subsection (e). 
‘‘(3) SELECTION
OF
DRUGS
FOR
RENEGOTI-
ATION.—Each year the Secretary shall select among 
renegotiation-eligible drugs for renegotiation as fol-
lows: 
‘‘(A) ALL
POST-EXCLUSIVITY
NEGOTIA-
TION-ELIGIBLE
DRUGS.—The Secretary shall 
select all renegotiation-eligible drugs described 
in paragraph (2)(B). 
‘‘(B) ALL LONG-MONOPOLY NEGOTIATION- 
ELIGIBLE DRUGS.—The Secretary shall select 
all renegotiation-eligible drugs described in 
paragraph (2)(C). 
‘‘(C) REMAINING DRUGS.—Among the re-
maining renegotiation-eligible drugs described 
in subparagraphs (A) and (D) of paragraph (2), 
the Secretary shall select renegotiation-eligible 
drugs for which the Secretary expects renegoti-
ation is likely to result in a significant change 
in the maximum fair price otherwise negotiated. 
‘‘(4) RENEGOTIATION PROCESS.—The Secretary 
shall specify the process for renegotiation of max-
imum fair prices with the manufacturer of a renego-
tiation-eligible drug selected for renegotiation under 
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this subsection. Such process shall, to the extent 
practicable, be consistent with the methodology and 
process established under subsection (b) and in ac-
cordance with subsections (c) and (d), and for pur-
poses of applying subsections (c) and (d), the ref-
erence to the first initial price applicability year of 
the price applicability period with respect to such 
drug shall be treated as the first initial price appli-
cability year of such period for which the maximum 
fair price established pursuant to such renegotiation 
applies, including for applying subsection (c)(2)(B) 
in the case of renegotiation-eligible drugs described 
in paragraph (3)(A) of this subsection and sub-
section (c)(2)(C) in the case of renegotiation-eligible 
drugs described in paragraph (3)(B) of this sub-
section. 
‘‘(5) CLARIFICATION.—A renegotiation-eligible 
drug for which the Secretary makes a determination 
described in section 1192(c)(1) before or during the 
period of renegotiation shall not be subject to the re-
negotiation process under this section. 
‘‘(6) NO
ADMINISTRATIVE
OR
JUDICIAL
RE-
VIEW.—The determination of renegotiation-eligible 
drugs under paragraph (2) and the selection of re-
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negotiation-eligible drugs under paragraph (3) are 
not subject to administrative or judicial review. 
‘‘(g) REQUEST FOR INFORMATION.—For purposes of 
negotiating and, as applicable, renegotiating (including for 
purposes of determining whether to renegotiate) the max-
imum fair price of a selected drug under this part with 
the manufacturer of the drug, with respect to a price ap-
plicability period, and other relevant data for purposes of 
this section— 
‘‘(1) the Secretary shall, not later than the se-
lected drug publication date with respect to the ini-
tial price applicability year of such period, request 
drug pricing information from the manufacturer of 
such selected drug, including information described 
in subsection (e)(1); and 
‘‘(2) by not later than March 1 following the se-
lected drug publication date, the manufacturer of 
such selected drug shall submit to the Secretary 
such requested information in such form and man-
ner as the Secretary requires. 
The Secretary shall request, from the manufacturer or 
others, all additional information needed to carry out the 
negotiation and renegotiation process under this section. 
‘‘(h) CLARIFICATION.—In no case shall the maximum 
fair price negotiated under this section for a selected drug 
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that is a qualifying single source drug described in sub-
paragraph (A) or (B) of section 1192(e)(1) apply before— 
‘‘(1) in the case the selected drug is a quali-
fying single source drug described in such subpara-
graph (A), the date that is 9 years after the date on 
which the drug was approved under section 505(c) 
of the Federal Food, Drug, and Cosmetic Act; and 
‘‘(2) in the case the selected drug is a quali-
fying single source drug described in such subpara-
graph (B), the date that is 13 years after the date 
on which the drug was licensed under section 351(a) 
of the Public Health Service Act. 
‘‘(i) IMPLEMENTATION FOR 2025 AND 2026.—Not-
withstanding any other provision of this part, the Sec-
retary shall implement this section for 2025 and 2026 by 
program instruction or otherwise. 
‘‘SEC. 1195. PUBLICATION OF MAXIMUM FAIR PRICES. 
‘‘(a) IN GENERAL.—With respect to an initial price 
applicability year and a selected drug with respect to such 
year— 
‘‘(1) not later than November 15 of the year 
that is 2 years prior to such initial price applicability 
year, the Secretary shall publish on CMS.gov the 
maximum fair price for such drug negotiated under 
this part with the manufacturer of such drug; 
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‘‘(2) not later than November 30 of the year 
that is 2 years prior to such initial price applicability 
year, the Secretary shall publish in the Federal Reg-
ister the maximum fair price for such drug described 
in paragraph (1); and 
‘‘(3) not later than March 1 of the year prior 
to such initial price applicability year, the Secretary 
shall publish in the Federal Register, subject to sec-
tion 1193(c) and based on the considerations as de-
scribed in section 1194(e), the explanation for the 
maximum fair price for such drug described in para-
graphs (1) and (2). 
‘‘(b) UPDATES.— 
‘‘(1) 
SUBSEQUENT
YEAR
MAXIMUM
FAIR 
PRICES.—For a selected drug, for each year subse-
quent to first initial price applicability year of the 
price applicability period with respect to such drug, 
with respect to which an agreement for such drug is 
in effect under section 1193, not later than Novem-
ber 30 of the year that is 2 years prior to such sub-
sequent year, the Secretary shall publish in the Fed-
eral Register the maximum fair price applicable to 
such drug and year, which shall be— 
‘‘(A) subject to subparagraph (B), the 
amount equal to the maximum fair price pub-
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lished for such drug for the previous year, in-
creased by the annual percentage increase in 
the consumer price index for all urban con-
sumers (all items; U.S. city average) as of Sep-
tember of such previous year; or 
‘‘(B) in the case the maximum fair price 
for such drug was renegotiated, for the first 
year for which such price as so renegotiated ap-
plies, such renegotiated maximum fair price. 
‘‘(2) PRICES NEGOTIATED AFTER DEADLINE.— 
In the case of a selected drug with respect to an ini-
tial price applicability year for which the maximum 
fair price is determined under this part after the 
date of publication under this section, the Secretary 
shall publish such maximum fair price in the Fed-
eral Register by not later than 30 days after the 
date such maximum price is so determined. 
‘‘SEC. 1196. ADMINISTRATIVE DUTIES; COORDINATION PRO-
VISIONS. 
‘‘(a) ADMINISTRATIVE DUTIES.— 
‘‘(1) IN
GENERAL.—For purposes of section 
1191, the administrative duties described in this sec-
tion are the following: 
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‘‘(A) The establishment of procedures to 
ensure that the maximum fair price for a se-
lected drug is applied before— 
‘‘(i) any coverage or financial assist-
ance under other health benefit plans or 
programs that provide coverage or finan-
cial assistance for the purchase or provi-
sion of prescription drug coverage on be-
half of maximum fair price eligible individ-
uals; and 
‘‘(ii) any other discounts. 
‘‘(B) The establishment of procedures to 
compute and apply the maximum fair price 
across different strengths and dosage forms of 
a selected drug and not based on the specific 
formulation or package size or package type of 
the drug. 
‘‘(C) The establishment of procedures to 
carry out the provisions of this part, as applica-
ble, with respect to— 
‘‘(i) maximum fair price eligible indi-
viduals who are enrolled under a prescrip-
tion drug plan under part D of title XVIII 
or an MA–PD plan under part C of such 
title; and 
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‘‘(ii) maximum fair price eligible indi-
viduals who are enrolled under part B of 
such title, including who are enrolled under 
an MA plan under part C of such title. 
‘‘(D) The establishment of a negotiation 
process and renegotiation process in accordance 
with section 1194, including a process for ac-
quiring information described in subsection (e) 
of such section. 
‘‘(E) The establishment of an online portal 
which manufacturers shall be required to use to 
submit 
information 
described 
in 
section 
1194(b)(2)(A). 
‘‘(F) The sharing with the Secretary of the 
Treasury of such information as is necessary to 
determine the tax imposed by section 4192 of 
the Internal Revenue Code of 1986 (relating to 
enforcement of this part). 
‘‘(G) The establishment of an attestation 
and verification process for purposes of apply-
ing section 1192(d)(2)(B). 
‘‘(2) MONITORING
COMPLIANCE.—The Sec-
retary shall monitor compliance by a manufacturer 
with the terms of an agreement under section 1193, 
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including by establishing a mechanism through 
which violations of such terms shall be reported. 
‘‘(b) IMPLEMENTATION FOR 2025 AND 2026.—Not-
withstanding any other provision of this part, the Sec-
retary shall implement this section for 2025 and 2026 by 
program instruction or otherwise. 
‘‘SEC. 1197. CIVIL MONETARY PENALTY. 
‘‘(a) VIOLATIONS RELATING TO OFFERING OF MAX-
IMUM FAIR PRICE.—Any manufacturer of a selected drug 
that has entered into an agreement under section 1193, 
with respect to a year during the price applicability period 
with respect to such drug, that does not provide access 
to a price that is not more than the maximum fair price 
(or a lesser price) for such drug for such year— 
‘‘(1) to a maximum fair price eligible individual 
who with respect to such drug is described in sub-
paragraph (A) of section 1191(c)(1) and who is dis-
pensed such drug during such year (and to phar-
macies, mail order services, and other dispensers, 
with respect to such maximum fair price eligible in-
dividuals who are dispensed such drugs); or 
‘‘(2) to a hospital, physician, or other provider 
of services or supplier with respect to maximum fair 
price eligible individuals who with respect to such 
drug is described in subparagraph (B) of such sec-
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tion and is furnished or administered such drug by 
such hospital, physician, or provider or supplier dur-
ing such year, 
shall be subject to a civil monetary penalty equal to ten 
times the amount equal to the product of the number of 
units of such drug so furnished, dispensed, or adminis-
tered during such year and the difference between the 
price for such drug made available for such year by such 
manufacturer with respect to such individual or hospital, 
physician, provider of services, or supplier and the max-
imum fair price for such drug for such year. 
‘‘(b) VIOLATIONS OF CERTAIN TERMS OF AGREE-
MENT.—Any manufacturer of a selected drug that has en-
tered into an agreement under section 1193, with respect 
to a year during the price applicability period with respect 
to such drug, that is in violation of a requirement imposed 
pursuant to section 1193(a)(5), including the requirement 
to submit information pursuant to section 1193(a)(4), 
shall be subject to a civil monetary penalty equal to 
$1,000,000 for each day of such violation. 
‘‘(c) FALSE INFORMATION.—Any manufacturer that 
knowingly provides false information for the attestation 
process or verification process established pursuant to sec-
tion 1196(a)(1)(H), shall be subject to a civil monetary 
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penalty equal to $100,000,000 for each item of such false 
information. 
‘‘(d) APPLICATION.—The provisions of section 1128A 
(other than subsections (a) and (b)) shall apply to a civil 
monetary penalty under this section in the same manner 
as such provisions apply to a penalty or proceeding under 
section 1128A(a).’’. 
(b) APPLICATION OF MAXIMUM FAIR PRICES AND 
CONFORMING AMENDMENTS.— 
(1) UNDER MEDICARE.— 
(A) APPLICATION
TO
PAYMENTS
UNDER 
PART B.—Section 1847A(b)(1)(B) of the Social 
Security Act (42 U.S.C. 1395w–3a(b)(1)(B)) is 
amended by inserting ‘‘or in the case of such a 
drug or biological that is a selected drug (as re-
ferred to in section 1192(c)), with respect to a 
price applicability period (as defined in section 
1191(b)(2)), 106 percent of the maximum fair 
price (as defined in section 1191(c)(2)) applica-
ble for such drug and a year during such pe-
riod’’ after ‘‘paragraph (4)’’. 
(B) APPLICATION
UNDER
MA
OF
COST- 
SHARING FOR PART B DRUGS BASED OFF OF 
NEGOTIATED
PRICE.—Section 
1852(a)(1)(B)(iv) of the Social Security Act 
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(42 U.S.C. 1395w–22(a)(1)(B)(iv)) is amend-
ed— 
(i) by redesignating subclause (VII) as 
subclause (VIII); and 
(ii) by inserting after subclause (VI) 
the following subclause: 
‘‘(VII) A drug or biological that 
is a selected drug (as referred to in 
section 1192(c)).’’. 
(C) EXCEPTION TO PART D NON-INTER-
FERENCE.—Section 1860D–11(i) of the Social 
Security Act (42 U.S.C. 1395w–111(i)) is 
amended— 
(i) in paragraph (1), by striking 
‘‘and’’ at the end; 
(ii) in paragraph (2), by striking ‘‘or 
institute a price structure for the reim-
bursement of covered part D drugs’’ and 
inserting ‘‘for covered part D drugs; and’’; 
and 
(iii) by adding at the end the fol-
lowing: 
‘‘(3) may not institute a price structure for the 
reimbursement of covered part D drugs, except as 
provided under part E of title XI.’’. 
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(D) APPLICATION AS NEGOTIATED PRICE 
UNDER PART D.—Section 1860D–2(d)(1) of the 
Social 
Security 
Act 
(42 
U.S.C. 
1395w– 
102(d)(1)) is amended— 
(i) in subparagraph (B), by inserting 
‘‘, subject to subparagraph (D),’’ after 
‘‘negotiated prices’’; and 
(ii) by adding at the end the following 
new subparagraph: 
‘‘(D) APPLICATION
OF
MAXIMUM
FAIR 
PRICE FOR SELECTED DRUGS.—In applying this 
section, in the case of a covered part D drug 
that is a selected drug (as referred to in section 
1192(c)), with respect to a price applicability 
period (as defined in section 1191(b)(2)), the 
negotiated prices used for payment (as de-
scribed in this subsection) shall be no greater 
than the maximum fair price (as defined in sec-
tion 1191(c)(2)) for such drug and for each 
year during such period plus any dispensing 
fees for such drug.’’. 
(E) COVERAGE
OF
SELECTED
DRUGS.— 
Section 1860D–4(b)(3) of the Social Security 
Act (42 U.S.C. 1395w–104(b)(3)) is amended 
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by adding at the end the following new sub-
paragraph: 
‘‘(I) REQUIRED INCLUSION OF SELECTED 
DRUGS.—For 2025 and each subsequent year, 
the PDP sponsor offering a prescription drug 
plan shall include each covered part D drug 
that is a selected drug under section 1192 for 
which an agreement for such drug is in effect 
under section 1193 with respect to the year.’’. 
(F) INFORMATION
FROM
PRESCRIPTION 
DRUG PLANS AND MA–PD PLANS REQUIRED.— 
(i) PRESCRIPTION DRUG PLANS.—Sec-
tion 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: 
‘‘(8) PROVISION OF INFORMATION RELATED TO 
MAXIMUM FAIR PRICES.—Each contract entered into 
with a PDP sponsor under this part with respect to 
a prescription drug plan offered by such sponsor 
shall require the sponsor to provide information to 
the Secretary as requested by the Secretary in ac-
cordance with section 1194(g).’’. 
(ii) 
MA–PD 
PLANS.—Section 
1857(f)(3) of the Social Security Act (42 
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U.S.C. 1395w–27(f)(3)) is amended by 
adding at the end the following new sub-
paragraph: 
‘‘(E) PROVISION
OF
INFORMATION
RE-
LATED
TO
MAXIMUM
FAIR
PRICES.—Section 
1860D–12(b)(8).’’. 
(2) 
DRUG
PRICE
NEGOTIATION
PROGRAM 
PRICES
INCLUDED
IN
BEST
PRICE.—Section 
1927(c)(1)(C) of the Social Security Act (42 U.S.C. 
1396r–8(c)(1)(C)) is amended— 
(A) in clause (i)(VI), by striking ‘‘any 
prices charged’’ and inserting ‘‘subject to clause 
(ii)(V), any prices charged’’; and 
(B) in clause (ii)— 
(i) in subclause (III), by striking at 
the end ‘‘; and’’; 
(ii) in subclause (IV), by striking at 
the end the period and inserting ‘‘; and’’; 
and 
(iii) by adding at the end the fol-
lowing new subclause: 
‘‘(V) in the case of a rebate pe-
riod and a covered outpatient drug 
that is a selected drug (as referred to 
in section 1192(c)) during such rebate 
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period, shall be inclusive of the max-
imum fair price (as defined in section 
1191(c)(2)) for such drug with re-
spect to such period.’’. 
SEC. 102. SELECTED DRUG MANUFACTURER EXCISE TAX 
IMPOSED DURING NONCOMPLIANCE PERI-
ODS. 
(a) IN GENERAL.—Chapter 32 of the Internal Rev-
enue Code of 1986 is amended by adding at the end the 
following new subchapter: 
‘‘Subchapter E—Other Items 
‘‘Sec. 4192. Selected drugs during noncompliance periods. 
‘‘SEC. 4192. SELECTED DRUGS DURING NONCOMPLIANCE 
PERIODS. 
‘‘(a) IN GENERAL.—There is hereby imposed on the 
sale by the manufacturer, producer, or importer of any 
selected drug during a day described in subsection (b) a 
tax in an amount such that the applicable percentage is 
equal to the ratio of— 
‘‘(1) such tax, divided by 
‘‘(2) the sum of such tax and the price for 
which so sold. 
‘‘(b) NONCOMPLIANCE PERIODS.—A day is described 
in this subsection with respect to a selected drug if it is 
a day during one of the following periods: 
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‘‘(1) The period beginning on the March 1st 
immediately following the selected drug publication 
date and ending on the first date during which the 
manufacturer of the drug has in place an agreement 
described in subsection (a) of section 1193 of the 
Social Security Act with respect to such drug. 
‘‘(2) The period beginning on the November 
2nd immediately following the March 1st described 
in paragraph (1) and ending on the first date during 
which the manufacturer of the drug and the Sec-
retary have agreed to a maximum fair price under 
such agreement. 
‘‘(3) In the case of a selected drug with respect 
to which the Secretary of Health and Human Serv-
ices has specified a renegotiation period under such 
agreement, the period beginning on the first date 
after the last date of such renegotiation period and 
ending on the first date during which the manufac-
turer of the drug has agreed to a renegotiated max-
imum fair price under such agreement. 
‘‘(4) With respect to information that is re-
quired to be submitted to the Secretary of Health 
and Human Services under such agreement, the pe-
riod beginning on the date on which such Secretary 
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‘‘(2) UNITED
STATES.—The term ‘United 
States’ has the meaning given such term by section 
4612(a)(4). 
‘‘(3) COORDINATION WITH RULES FOR POSSES-
SIONS OF THE UNITED STATES.—Rules similar to 
the rules of paragraphs (2) and (4) of section 
4132(c) shall apply for purposes of this section. 
‘‘(e) OTHER DEFINITIONS.—For purposes of this 
section, the terms ‘selected drug publication date’ and 
‘maximum fair price’ have the meaning given such terms 
in section 1191 of the Social Security Act. 
‘‘(f) ANTI-ABUSE RULE.—In the case of a sale which 
was timed for the purpose of avoiding the tax imposed by 
this section, the Secretary may treat such sale as occur-
ring during a day described in subsection (b).’’. 
(b) NO DEDUCTION FOR EXCISE TAX PAYMENTS.— 
Section 275(a)(6) of the Internal Revenue Code of 1986 
is amended by inserting ‘‘or by section 4192’’ before the 
period at the end. 
(c) CERTAIN EXEMPTIONS FROM TAX NOT APPLICA-
BLE.— 
(1) Section 4221(a) of the Internal Revenue 
Code of 1986 is amended by adding at the end the 
following: ‘‘In the case of the tax imposed by section 
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4192, paragraphs (3), (4), (5), and (6) shall not 
apply.’’. 
(2) Section 6416(b)(2) of such Code is amend-
ed by adding at the end the following: ‘‘In the case 
of the tax imposed by section 4192, subparagraphs 
(B), (C), (D), and (E) shall not apply.’’. 
(d) CLERICAL AMENDMENT.—The table of sub-
chapters for chapter 32 of such Code is amended by add-
ing at the end the following new item: 
‘‘SUBCHAPTER E. OTHER ITEMS’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to sales after the date of the enact-
ment of this Act. 
SEC. 103. FUNDING. 
In addition to amounts otherwise available, there is 
appropriated for fiscal year 2022, out of any money in 
the Treasury not otherwise appropriated, to remain avail-
able until expended— 
(1) $300,000,000 to carry out the provisions of, 
including the amendments made by, this part in fis-
cal year 2022; 
(2) $300,000,000 to carry out the provisions of, 
including the amendments made by, this part in fis-
cal year 2023; 
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(3) $300,000,000 to carry out the provisions of, 
including the amendments made by, this part in fis-
cal year 2024; 
(4) $300,000,000 to carry out the provisions of, 
including the amendments made by, this part in fis-
cal year 2025; 
(5) $300,000,000 to carry out the provisions of, 
including the amendments made by, this part in fis-
cal year 2026; 
(6) $300,000,000 to carry out the provisions of, 
including the amendments made by, this part in fis-
cal year 2027; 
(7) $300,000,000 to carry out the provisions of, 
including the amendments made by, this part in fis-
cal year 2028; 
(8) $300,000,000 to carry out the provisions of, 
including the amendments made by, this part in fis-
cal year 2029; 
(9) $300,000,000 to carry out the provisions of, 
including the amendments made by, this part in fis-
cal year 2030; and 
(10) $300,000,000 to carry out the provisions 
of, including the amendments made by, this part in 
fiscal year 2031. 
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TITLE II—PRESCRIPTION DRUG 
INFLATION REBATES 
SEC. 201. MEDICARE PART B REBATE BY MANUFACTURERS. 
(a) IN GENERAL.—Section 1847A of the Social Secu-
rity Act (42 U.S.C. 1395w–3a) is amended— 
(1) by redesignating subsection (h) as sub-
section (i) and by inserting after subsection (g) the 
following subsection: 
‘‘(h) REBATE
BY MANUFACTURERS
FOR SINGLE 
SOURCE DRUGS
AND BIOLOGICALS WITH PRICES IN-
CREASING FASTER THAN INFLATION.— 
‘‘(1) REQUIREMENTS.— 
‘‘(A) SECRETARIAL PROVISION OF INFOR-
MATION.—Not later than 6 months after the 
end of each calendar quarter beginning on or 
after July 1, 2023, the Secretary shall, for each 
part B rebatable drug, report to each manufac-
turer of such part B rebatable drug the fol-
lowing for such calendar quarter: 
‘‘(i) Information on the total number 
of billing units of the billing and payment 
code described in subparagraph (A)(i) of 
paragraph (3) with respect to such drug 
and calendar quarter. 
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‘‘(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 calendar 
quarter. 
‘‘(iii) The rebate amount specified 
under such paragraph for such part B 
rebatable drug and calendar quarter. 
‘‘(B) MANUFACTURER
REQUIREMENT.— 
For each calendar quarter beginning on or after 
July 1, 2023, the manufacturer of a part B 
rebatable drug shall, for such drug, not later 
than 30 days after the date of receipt from the 
Secretary of the information described in sub-
paragraph (A) for such calendar quarter, pro-
vide to the Secretary a rebate that is equal to 
the amount specified in paragraph (3) for such 
drug for such calendar quarter. 
‘‘(2) PART B REBATABLE DRUG DEFINED.— 
‘‘(A) IN GENERAL.—In this subsection, the 
term ‘part B rebatable drug’ means a single 
source drug or biological (as defined in sub-
paragraph (D) of subsection (c)(6)), including a 
biosimilar biological product (as defined in sub-
paragraph (H) of such subsection) but exclud-
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ing a qualifying biosimilar biological product 
(as defined in subsection (b)(8)(B)(iii)), that 
would be payable under this part if such drug 
were furnished to an individual enrolled under 
this part, except such term shall not include 
such a drug or biological— 
‘‘(i) if, as determined by the Sec-
retary, the average total allowed charges 
for such drug or biological under this part 
for a year per individual that uses such a 
drug or biological are less than, subject to 
subparagraph (B), $100; or 
‘‘(ii) that is a vaccine described in 
subparagraph (A) or (B) of section 
1861(s)(10). 
‘‘(B) INCREASE.—The dollar amount ap-
plied under subparagraph (A)(i)— 
‘‘(i) for 2024, shall be the dollar 
amount specified under such subparagraph 
for 2023, increased by the percentage in-
crease in the consumer price index for all 
urban consumers (United States city aver-
age) for the 12-month period ending with 
June of the previous year; and 
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‘‘(ii) for a subsequent year, shall be 
the dollar amount specified in this clause 
(or clause (i)) for the previous year (with-
out application of subparagraph (C)), in-
creased by the percentage increase in the 
consumer price index for all urban con-
sumers (United States city average) for 
the 12-month period ending with June of 
the previous year. 
‘‘(C) ROUNDING.—Any dollar amount de-
termined under subparagraph (B) that is not a 
multiple of $10 shall be rounded to the nearest 
multiple of $10. 
‘‘(3) REBATE AMOUNT.— 
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), the amount specified in this para-
graph for a part B rebatable drug assigned to 
a billing and payment code for a calendar quar-
ter is, subject to subparagraphs (B) and (G) 
and paragraph (4), the amount equal to the 
product of— 
‘‘(i) the total number of billing units 
determined under subparagraph (B) for 
the billing and payment code of such drug; 
and 
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‘‘(ii) the amount (if any) by which— 
‘‘(I) the amount equal to— 
‘‘(aa) in the case of a part B 
rebatable drug described in para-
graph 
(1)(B) 
of 
section 
1847A(b), 106 percent of the 
amount determined under para-
graph (4) of such section for 
such drug during the calendar 
quarter; or 
‘‘(bb) in the case of a part B 
rebatable drug described in para-
graph (1)(C) of such section, the 
payment 
amount 
under 
such 
paragraph for such drug during 
the calendar quarter; exceeds 
‘‘(II) the inflation-adjusted pay-
ment amount determined under sub-
paragraph (C) for such part B 
rebatable drug during the calendar 
quarter. 
‘‘(B) 
TOTAL
NUMBER
OF
BILLING 
UNITS.—For purposes of subparagraph (A)(i), 
the total number of billing units with respect to 
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a part B rebatable drug is determined as fol-
lows: 
‘‘(i) Determine the total number of 
units equal to— 
‘‘(I) the total number of units, as 
reported under subsection (c)(1)(B) 
for each National Drug Code of such 
drug during the calendar quarter that 
is two calendar quarters prior to the 
calendar quarter as described in sub-
paragraph (A), minus 
‘‘(II) the total number of units 
with respect to each National Drug 
Code of such drug for which payment 
was made under a State plan under 
title XIX (or waiver of such plan), as 
reported by States under section 
1927(b)(2)(A) for the rebate period 
that is the same calendar quarter as 
described in subclause (I). 
‘‘(ii) Convert the units determined 
under clause (i) to billing units for the bill-
ing and payment code of such drug, using 
a methodology similar to the methodology 
used under this section, by dividing the 
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units determined under clause (i) for each 
National Drug Code of such drug by the 
billing unit for the billing and payment 
code of such drug. 
‘‘(iii) Compute the sum of the billing 
units for each National Drug Code of such 
drug in clause (ii). 
‘‘(C) DETERMINATION OF INFLATION-AD-
JUSTED PAYMENT AMOUNT.—The inflation-ad-
justed payment amount determined under this 
subparagraph for a part B rebatable drug for 
a calendar quarter is— 
‘‘(i) the payment amount for the bill-
ing and payment code for such drug in the 
payment amount benchmark quarter (as 
defined in subparagraph (D)); increased by 
‘‘(ii) the percentage by which the re-
bate period CPI–U (as defined in subpara-
graph (F)) for the calendar quarter ex-
ceeds the benchmark period CPI–U (as de-
fined in subparagraph (E)). 
‘‘(D) 
PAYMENT
AMOUNT
BENCHMARK 
QUARTER.—The term ‘payment amount bench-
mark quarter’ means the calendar quarter im-
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mediately prior to the calendar quarter begin-
ning October 1, 2021. 
‘‘(E) 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 the last month 
of the calendar quarter beginning October 1, 
2021. 
‘‘(F) REBATE PERIOD CPI–U.—The term 
‘rebate period CPI–U’ means, with respect to a 
calendar quarter described in subparagraph 
(C), the greater of the benchmark period CPI– 
U and 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 such described cal-
endar quarter. 
‘‘(G) EXEMPTION
FOR
SHORTAGES
AND 
SEVERE
SUPPLY
CHAIN
DISRUPTIONS.—The 
Secretary shall reduce or waive the amount 
under subparagraph (A) with respect to a part 
B rebatable drug that is described as currently 
in shortage on the shortage list in effect under 
section 506E of the Federal Food, Drug, and 
Cosmetic Act or in the case of a biosimilar bio-
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logical product, when the Secretary determines 
there are severe supply chain disruptions. 
‘‘(4) SPECIAL TREATMENT OF CERTAIN DRUGS 
AND EXEMPTION.— 
‘‘(A) SUBSEQUENTLY APPROVED DRUGS.— 
In the case of a part B rebatable drug first ap-
proved or licensed by the Food and Drug Ad-
ministration after March 1, 2021, clause (i) of 
paragraph (3)(C) shall be applied as if the term 
‘payment amount benchmark quarter’ were de-
fined under paragraph (3)(D) as the third full 
calendar quarter after the day on which the 
drug was first marketed and clause (ii) of para-
graph (3)(C) shall be applied as if the term 
‘benchmark period CPI–U’ were defined under 
paragraph (3)(E) as if the reference to ‘the last 
month of the calendar quarter immediately 
prior to the calendar quarter beginning October 
1, 2021’ under such paragraph were a reference 
to ‘the first month of the first full calendar 
quarter after the day on which the drug was 
first marketed’. 
‘‘(B) TIMELINE
FOR
PROVISION
OF
RE-
BATES
FOR
SUBSEQUENTLY
APPROVED 
DRUGS.—In the case of a part B rebatable drug 
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first approved or licensed by the Food and 
Drug Administration after March 1, 2021, 
paragraph (1)(B) shall be applied as if the ref-
erence to ‘July 1, 2023’ under such paragraph 
were a reference to the later of the 6th full cal-
endar quarter after the day on which the drug 
was first marketed or July 1, 2023. 
‘‘(C) SELECTED DRUGS.—In the case of a 
part B rebatable drug that is a selected drug 
(as defined in section 1192(c)) for a price appli-
cability 
period 
(as 
defined 
in 
section 
1191(b)(2)), in the case such drug is deter-
mined (pursuant to such section 1192(c)) to no 
longer be a selected drug, beginning the first 
calendar quarter after the price applicability pe-
riod with respect to such drug, clause (i) of 
paragraph (3)(C) shall be applied as if the term 
‘payment amount benchmark quarter’ were de-
fined under paragraph (3)(D) as the calendar 
quarter beginning January 1 of the last year 
beginning during such price applicability period 
with respect to such selected drug and clause 
(ii) of paragraph (3)(C) shall be applied as if 
the term ‘benchmark period CPI–U’ were de-
fined under paragraph (3)(E) as if the ref-
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erence to ‘the last month of the calendar quar-
ter immediately prior to the calendar quarter 
beginning October 1, 2021’ under such para-
graph were a reference to the March of the year 
preceding such last year. 
‘‘(5) APPLICATION TO BENEFICIARY COINSUR-
ANCE.—In the case of a part B rebatable drug, if 
the payment amount described in paragraph 
(3)(A)(ii)(I) (or, in the case of a part B rebatable 
drug that is a selected drug (as defined in section 
1192(c)), the payment amount described in sub-
section (b)(1)(B) for such drug) for a calendar quar-
ter exceeds the inflation adjusted payment for such 
quarter— 
‘‘(A) in computing the amount of any coin-
surance applicable under this part to an indi-
vidual to whom such drug is furnished, the 
computation of such coinsurance shall be equal 
to 20 percent of the inflation-adjusted payment 
amount determined under paragraph (3)(C) for 
such part B rebatable drug; and 
‘‘(B) the amount of such coinsurance for 
such calendar quarter, as computed under sub-
paragraph (A), shall be applied as a percent, as 
determined by the Secretary, to the payment 
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amount that would otherwise apply under sub-
paragraph (B) or (C) of subsection (b)(1). 
‘‘(6) REBATE DEPOSITS.—Amounts paid as re-
bates under paragraph (1)(B) shall be deposited into 
the Federal Supplementary Medical Insurance Trust 
Fund established under section 1841. 
‘‘(7) CIVIL MONEY PENALTY.—If a manufac-
turer of a part B rebatable drug has failed to com-
ply with the requirements under paragraph (1)(B) 
for such drug for a calendar quarter, the manufac-
turer shall be subject to, in accordance with a proc-
ess established by the Secretary pursuant to regula-
tions, a civil money penalty in an amount equal to 
at least 125 percent of the amount specified in para-
graph (3) for such drug for such calendar quarter. 
The provisions of section 1128A (other than sub-
sections (a) (with respect to amounts of penalties or 
additional assessments) and (b)) shall apply to a 
civil money penalty under this paragraph in the 
same manner as such provisions apply to a penalty 
or proceeding under section 1128A(a).’’; and 
(2) in subsection (i), as redesignated by para-
graph (1)— 
(A) in paragraph (4), by striking at the 
end ‘‘and’’; 
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(B) in paragraph (5), by striking at the 
end the period and inserting a semicolon; and 
(C) by adding at the end the following new 
paragraphs: 
‘‘(6) the determination of units under sub-
section (h); 
‘‘(7) the determination of whether a drug is a 
part B rebatable drug under subsection (h); 
‘‘(8) the calculation of the rebate amount under 
subsection (h); 
‘‘(9) the computation of coinsurance under sub-
section (h)(5); and 
‘‘(10) the computation of amounts paid under 
section 1833(a)(1)(EE).’’. 
(b) AMOUNTS PAYABLE; COST-SHARING.—Section 
1833 of the Social Security Act (42 U.S.C. 1395l) is 
amended— 
(1) in subsection (a)(1)— 
(A) in subparagraph (G), by inserting ‘‘, 
subject 
to 
subsection 
(i)(9),’’ 
after 
‘‘the 
amounts paid’’; 
(B) in subparagraph (S), by striking ‘‘with 
respect to’’ and inserting ‘‘subject to subpara-
graph (EE), with respect to’’; 
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(C) by striking ‘‘and (DD)’’ and inserting 
‘‘(DD)’’; and 
(D) by inserting before the semicolon at 
the end the following: ‘‘, and (EE) with respect 
to a part B rebatable drug (as defined in para-
graph (2) of section 1847A(h)) for which the 
payment amount for a calendar quarter under 
paragraph (3)(A)(ii)(I) of such section (or, in 
the case of a part B rebatable drug that is a 
selected drug (as defined in section 1192(c)) for 
which, the payment amount described in section 
1847A(b)(1)(B)) for such drug for such quarter 
exceeds the inflation-adjusted payment under 
paragraph (3)(A)(ii)(II) of such section for 
such quarter, the amounts paid shall be equal 
to the percent of the payment amount under 
paragraph (3)(A)(ii)(I) of such section or sec-
tion 1847A(b)(1)(B), as applicable, that equals 
the difference between (i) 100 percent, and (ii) 
the 
percent 
applied 
under 
section 
1847A(h)(5)(B)’’; 
(2) in subsection (i), by adding at the end the 
following new paragraph: 
‘‘(9) In the case of a part B rebatable drug (as de-
fined in paragraph (2) of section 1847A(h)) for which pay-
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ment under this subsection is not packaged into a payment 
for a service furnished on or after July 1, 2023, under 
the revised payment system under this subsection, in lieu 
of calculation of coinsurance and the amount of payment 
otherwise applicable under this subsection, the provisions 
of section 1847A(h)(5) and paragraph (1)(EE) of sub-
section (a), shall, as determined appropriate by the Sec-
retary, apply under this subsection in the same manner 
as such provisions of section 1847A(h)(5) and subsection 
(a) apply under such section and subsection.’’; and 
(3) in subsection (t)(8), by adding at the end 
the following new subparagraph: 
‘‘(F) PART B REBATABLE DRUGS.—In the 
case of a part B rebatable drug (as defined in 
paragraph (2) of section 1847A(h), except if 
such drug does not have a copayment amount 
as a result of application of subparagraph (E)) 
for which payment under this part is not pack-
aged into a payment for a covered OPD service 
(or group of services) furnished on or after July 
1, 2023, and the payment for such drug under 
this subsection is the same as the amount for 
a 
calendar 
quarter 
under 
paragraph 
(3)(A)(ii)(I) of section 1847A(h), under the sys-
tem under this subsection, in lieu of calculation 
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of the copayment amount and the amount of 
payment otherwise applicable under this sub-
section (other than the application of the limita-
tion described in subparagraph (C)), the provi-
sions of section 1847A(h)(5) and paragraph 
(1)(EE) of subsection (a), shall, as determined 
appropriate by the Secretary, apply under this 
subsection in the same manner as such provi-
sions of section 1847A(h)(5) and subsection (a) 
apply under such section and subsection.’’. 
(c) CONFORMING AMENDMENTS.— 
(1) TO
PART
B
ASP
CALCULATION.—Section 
1847A(c)(3) of the Social Security Act (42 U.S.C. 
1395w–3a(c)(3)) is amended by inserting ‘‘sub-
section (h) or’’ before ‘‘section 1927’’. 
(2) EXCLUDING PART B DRUG INFLATION RE-
BATE
FROM
BEST
PRICE.—Section 
1927(c)(1)(C)(ii)(I) of the Social Security Act (42 
U.S.C. 1396r–8(c)(1)(C)(ii)(I)) is amended by in-
serting ‘‘or section 1847A(h)’’ after ‘‘this section’’. 
(3) COORDINATION WITH MEDICAID REBATE IN-
FORMATION DISCLOSURE.—Section 1927(b)(3)(D)(i) 
of the Social Security Act (42 U.S.C. 1396r– 
8(b)(3)(D)(i)) is amended by inserting ‘‘and the re-
bate’’ after ‘‘the payment amount’’. 
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(4) EXCLUDING PART B DRUG INFLATION RE-
BATES
FROM
AVERAGE
MANUFACTURER
PRICE.— 
Section 1927(k)(1)(B)(i) of the Social Security Act 
(42 U.S.C. 1396r–8(k)(1)(B)(i)), as previously 
amended, is further amended— 
(A) in subclause (IV), by striking ‘‘and’’; 
(B) in subclause (V), by striking the period 
at the end and inserting a semicolon; and 
(C) by adding at the end the following new 
subclause: 
‘‘(VI) rebates paid by manufac-
turers under section 1847A(h); and’’. 
(d) FUNDING.—In addition to amounts otherwise 
available, there are appropriated to the Centers for Medi-
care & Medicaid Services, out of any money in the Treas-
ury not otherwise appropriated, $12,500,000 for fiscal 
year 2022 and $7,500,000 for each of fiscal years 2023 
through 2031, to remain available until expended, to carry 
out the provisions of, including the amendments made by, 
this section. 
SEC. 202. MEDICARE PART D REBATE BY MANUFACTURERS. 
(a) IN GENERAL.—Part D of title XVIII of the Social 
Security Act is amended by inserting after section 1860D– 
14A (42 U.S.C. 1395w–114a) the following new section: 
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‘‘SEC. 1860D–14B. MANUFACTURER REBATE FOR CERTAIN 
DRUGS WITH PRICES INCREASING FASTER 
THAN INFLATION. 
‘‘(a) REQUIREMENTS.— 
‘‘(1) SECRETARIAL
PROVISION
OF
INFORMA-
TION.—Not later than 9 months after the end of 
each applicable year (as defined in subsection 
(g)(7)), subject to paragraph (3), the Secretary 
shall, for each part D rebatable drug, report to each 
manufacturer of such part D rebatable drug the fol-
lowing for such year: 
‘‘(A) The amount (if any) of the excess an-
nual manufacturer price increase described in 
subsection (b)(1)(A)(ii) for each dosage form 
and strength with respect to such drug and 
year. 
‘‘(B) The rebate amount specified under 
subsection (b) for each dosage form and 
strength with respect to such drug and year. 
‘‘(2) MANUFACTURER
REQUIREMENTS.—For 
each applicable year, the manufacturer of a part D 
rebatable drug, for each dosage form and strength 
with respect to such drug, not later than 30 days 
after the date of receipt from the Secretary of the 
information described in paragraph (1) for such 
year, shall provide to the Secretary a rebate that is 
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equal to the amount specified in subsection (b) for 
such dosage form and strength with respect to such 
drug for such year. 
‘‘(3) TRANSITION RULE FOR REPORTING.—The 
Secretary may, for each rebatable covered part D 
drug, delay the timeframe for reporting the informa-
tion and rebate amount described in subparagraphs 
(A) and (B) of such paragraph for the applicable 
year of 2023 until not later than September 30, 
2025. 
‘‘(b) REBATE AMOUNT.— 
‘‘(1) IN GENERAL.— 
‘‘(A) CALCULATION.—For purposes of this 
section, the amount specified in this subsection 
for a dosage form and strength with respect to 
a part D rebatable drug and applicable year is, 
subject to subparagraph (C), paragraph (5)(B), 
and paragraph (6), the amount equal to the 
product of— 
‘‘(i) subject to subparagraph (B) of 
this paragraph, the total number of units 
that are used to calculate the average man-
ufacturer price of such dosage form and 
strength with respect to such part D 
rebatable drug, as reported by the manu-
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facturer of such drug under section 1927 
for each month, with respect to such year; 
and 
‘‘(ii) the amount (if any) by which— 
‘‘(I) the annual manufacturer 
price (as determined in paragraph 
(2)) paid for such dosage form and 
strength with respect to such part D 
rebatable drug for the year; exceeds 
‘‘(II) the inflation-adjusted pay-
ment amount determined under para-
graph (3) for such dosage form and 
strength with respect to such part D 
rebatable drug for the year. 
‘‘(B) EXCLUDED UNITS.—For purposes of 
subparagraph (A)(i), the Secretary shall exclude 
from the total number of units for a dosage 
form and strength with respect to a part D 
rebatable drug, with respect to an applicable 
year, the following: 
‘‘(i) Units of each dosage form and 
strength of such part D rebatable drug for 
which payment was made under a State 
plan under title XIX (or waiver of such 
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plan), as reported by States under section 
1927(b)(2)(A). 
‘‘(ii) Units of each dosage form and 
strength of such part D rebatable drug for 
which a rebate is paid under section 
1847A(h). 
‘‘(C) EXEMPTION
FOR
SHORTAGES
AND 
SEVERE
SUPPLY
CHAIN
DISRUPTIONS.—The 
Secretary shall reduce or waive the amount 
under subparagraph (A) with respect to a part 
D rebatable drug that is described as currently 
in shortage on the shortage list in effect under 
section 506E of the Federal Food, Drug, and 
Cosmetic Act or in the case of a generic drug, 
when the Secretary determines there are severe 
supply chain disruptions. 
‘‘(2) DETERMINATION OF ANNUAL MANUFAC-
TURER PRICE.—The annual manufacturer price de-
termined under this paragraph for a dosage form 
and strength, with respect to a part D rebatable 
drug and an applicable year, is the sum of the prod-
ucts of— 
‘‘(A) the average manufacturer price (as 
defined in subsection (g)(6)) of such dosage 
form and strength, as calculated for a unit of 
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such drug, with respect to each of the calendar 
quarters of such year; and 
‘‘(B) the ratio of— 
‘‘(i) the total number of units of such 
dosage form and strength reported under 
section 1927 with respect to each such cal-
endar quarter of such year; to 
‘‘(ii) the total number of units of such 
dosage form and strength reported under 
section 1927 with respect to such year, as 
determined by the Secretary. 
‘‘(3) DETERMINATION OF INFLATION-ADJUSTED 
PAYMENT AMOUNT.—The inflation-adjusted payment 
amount determined under this paragraph for a dos-
age form and strength with respect to a part D 
rebatable drug for an applicable year, subject to 
paragraph (5), is— 
‘‘(A) the benchmark year manufacturer 
price determined under paragraph (4) for such 
dosage form and strength with respect to such 
drug and year; increased by 
‘‘(B) the percentage by which the applica-
ble year CPI–U (as defined in subsection 
(g)(5)) for the year exceeds the benchmark pe-
riod CPI–U (as defined in subsection (g)(4)). 
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‘‘(4) DETERMINATION
OF
BENCHMARK
YEAR 
MANUFACTURER PRICE.—The benchmark year man-
ufacturer price determined under this paragraph for 
a dosage form and strength, with respect to a part 
D rebatable drug and an applicable year, is the sum 
of the products of— 
‘‘(A) the average manufacturer price (as 
defined in subsection (g)(6)) of such dosage 
form and strength, as calculated for a unit of 
such drug, with respect to each of the calendar 
quarters of the payment amount benchmark 
year (as defined in subsection (g)(3)); and 
‘‘(B) the ratio of— 
‘‘(i) the total number of units re-
ported under section 1927 of such dosage 
form and strength with respect to each 
such calendar quarter of such payment 
amount benchmark year; to 
‘‘(ii) the total number of units re-
ported under section 1927 of such dosage 
form and strength with respect to such 
payment amount benchmark year. 
‘‘(5) SPECIAL TREATMENT OF CERTAIN DRUGS 
AND EXEMPTION.— 
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‘‘(A) SUBSEQUENTLY APPROVED DRUGS.— 
In the case of a part D rebatable drug first ap-
proved or licensed by the Food and Drug Ad-
ministration after October 1, 2021, subpara-
graphs (A) and (B) of paragraph (4) shall be 
applied as if the term ‘payment amount bench-
mark year’ were defined under subsection 
(g)(3) as the first calendar year beginning after 
the day on which the drug was first marketed 
by any manufacturer and subparagraph (B) of 
paragraph (3) shall be applied as if the term 
‘benchmark period CPI–U’ were defined under 
subsection (g)(4) as if the reference to ‘the 
month immediately prior to October 2021’ 
under such subsection were a reference to ‘Jan-
uary of the first year beginning after the date 
on which the drug was first marketed by any 
manufacturer’. 
‘‘(B) TREATMENT
OF
NEW
FORMULA-
TIONS.— 
‘‘(i) IN GENERAL.—In the case of a 
part D rebatable drug that is a line exten-
sion of a part D rebatable drug that is an 
oral solid dosage form, the Secretary shall 
establish a formula for determining the re-
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bate amount under paragraph (1) and the 
inflation adjusted payment amount under 
paragraph (3) with respect to such part D 
rebatable drug and an applicable year, con-
sistent with the formula applied under sub-
section (c)(2)(C) of section 1927 for deter-
mining a rebate obligation for a rebate pe-
riod under such section. 
‘‘(ii) LINE EXTENSION DEFINED.—In 
this subparagraph, the term ‘line exten-
sion’ means, with respect to a part D 
rebatable drug, a new formulation of the 
drug, such as an extended release formula-
tion, but does not include an abuse-deter-
rent formulation of the drug (as deter-
mined by the Secretary), regardless of 
whether such abuse-deterrent formulation 
is an extended release formulation. 
‘‘(C) SELECTED DRUGS.—In the case of a 
part D rebatable drug that is a selected drug 
(as defined in section 1192(c)) for a price appli-
cability 
period 
(as 
defined 
in 
section 
1191(b)(2)), in the case such drug is deter-
mined (pursuant to such section 1192(c)) to no 
longer be a selected drug, for each applicable 
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year beginning after the price applicability pe-
riod with respect to such drug, subparagraphs 
(A) and (B) of paragraph (4) shall be applied 
as if the term ‘payment amount benchmark 
year’ were defined under subsection (g)(3) as 
the last year beginning during such price appli-
cability period with respect to such selected 
drug and subparagraph (B) of paragraph (3) 
shall be applied as if the term ‘benchmark pe-
riod CPI–U’ were defined under subsection 
(g)(4) as if the reference to ‘the month imme-
diately prior to October 1, 2021’ under such 
subsection were a reference to January of the 
last year beginning during such price applica-
bility period with respect to such drug. 
‘‘(6) RECONCILIATION
IN
CASE
OF
REVISED 
AMP REPORTS.—The Secretary shall provide for a 
method and process under which, in the case of a 
manufacturer of a part D rebatable drug that sub-
mits revisions to information submitted under sec-
tion 1927 by the manufacturer with respect to such 
drug, the Secretary determines, pursuant to such re-
visions, adjustments, if any, to the calculation of the 
amount specified in this subsection for a dosage 
form and strength with respect to such part D 
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rebatable drug and an applicable year and reconciles 
any overpayments or underpayments in amounts 
paid as rebates under this subsection. Any identified 
underpayment shall be rectified by the manufacturer 
not later than 30 days after the date of receipt from 
the Secretary of information on such underpayment. 
‘‘(c) REBATE DEPOSITS.—Amounts paid as rebates 
under subsection (b) shall be deposited into the Medicare 
Prescription Drug Account in the Federal Supplementary 
Medical Insurance Trust Fund established under section 
1841. 
‘‘(d) INFORMATION.—For purposes of carrying out 
this section, the Secretary shall use information submitted 
by manufacturers under section 1927(b)(3) and informa-
tion submitted by States under section 1927(b)(2)(A). 
‘‘(e) CIVIL MONEY PENALTY.—If a manufacturer of 
a part D rebatable drug has failed to comply with the re-
quirement under subsection (a)(2) with respect to such 
drug for an applicable year, the manufacturer shall be 
subject to, in accordance with a process established by the 
Secretary pursuant to regulations, a civil money penalty 
in an amount equal to 125 percent of the amount specified 
in subsection (b) for such drug for such year. The provi-
sions of section 1128A (other than subsections (a) (with 
respect to amounts of penalties or additional assessments) 
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and (b)) shall apply to a civil money penalty under this 
subsection in the same manner as such provisions apply 
to a penalty or proceeding under section 1128A(a). 
‘‘(f) NO ADMINISTRATIVE OR JUDICIAL REVIEW.— 
There shall be no administrative or judicial review of the 
following: 
‘‘(1) The determination of units under this sec-
tion. 
‘‘(2) The determination of whether a drug is a 
part D rebatable drug under this section. 
‘‘(3) The calculation of the rebate amount 
under this section. 
‘‘(g) DEFINITIONS.—In this section: 
‘‘(1) PART D REBATABLE DRUG.— 
‘‘(A) IN
GENERAL.—The term ‘part D 
rebatable drug’ means a drug or biological that 
would (without application of this section) be a 
covered part D drug, except such term shall, 
with respect to an applicable year, not include 
such a drug or biological if the average annual 
total cost under this part for such year per in-
dividual who uses such a drug or biological, as 
determined by the Secretary, is less than, sub-
ject to subparagraph (B), $100, as determined 
by the Secretary using the most recent data 
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available or, if data is not available, as esti-
mated by the Secretary. 
‘‘(B) INCREASE.—The dollar amount ap-
plied under subparagraph (A)— 
‘‘(i) for 2024, shall be the dollar 
amount specified under such subparagraph 
for 2023, increased by the percentage in-
crease in the consumer price index for all 
urban consumers (United States city aver-
age) for the 12-month period beginning 
with January of 2023; and 
‘‘(ii) for a subsequent year, shall be 
the dollar amount specified in this sub-
paragraph for the previous year, increased 
by the percentage increase in the consumer 
price index for all urban consumers 
(United States city average) for the 12- 
month period beginning with January of 
the previous year. 
Any dollar amount specified under this sub-
paragraph that is not a multiple of $10 shall be 
rounded to the nearest multiple of $10. 
‘‘(2) UNIT.—The term ‘unit’ means, with re-
spect to a part D rebatable drug, the lowest dispen-
sable amount (such as a capsule or tablet, milligram 
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