of molecules, or grams) of the part D rebatable 
drug, as reported under section 1927. 
‘‘(3) PAYMENT AMOUNT BENCHMARK YEAR.— 
The term ‘payment amount benchmark year’ means 
the year ending in the month immediately prior to 
October 1, 2021. 
‘‘(4) BENCHMARK
PERIOD
CPI–U.—The term 
‘benchmark period CPI–U’ means the consumer 
price index for all urban consumers (United States 
city average) for the month immediately prior to Oc-
tober 2021. 
‘‘(5) APPLICABLE YEAR CPI–U.—The term ‘ap-
plicable year CPI–U’ means, with respect to an ap-
plicable year, the consumer price index for all urban 
consumers (United States city average) for January 
of such year. 
‘‘(6) AVERAGE
MANUFACTURER
PRICE.—The 
term ‘average manufacturer price’ has the meaning, 
with respect to a part D rebatable drug of a manu-
facturer, given such term in section 1927(k)(1), with 
respect to a covered outpatient drug of a manufac-
turer for a rebate period under section 1927. 
‘‘(7) APPLICABLE YEAR.—The term ‘applicable 
year’ means a calendar year beginning with 2023. 
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‘‘(h) IMPLEMENTATION FOR 2023 AND 2024.—Not-
withstanding any other provision of this section, the Sec-
retary shall implement this section for 2023 and 2024 by 
program instruction or otherwise.’’. 
(b) 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)), as amended by section 201(c)(1), 
is further amended by striking ‘‘subsection (h) or 
section 1927’’ and inserting ‘‘subsection (h), section 
1927, or section 1860D–14B’’. 
(2) EXCLUDING PART D 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)), as amended by sec-
tion 201(c)(2), is further amended by striking ‘‘or 
section 
1847A(h)’’ 
and 
inserting 
‘‘, 
section 
1847A(h), or section 1860D–14B’’. 
(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)), as amended by section 201(c)(3), is 
further amended by striking ‘‘or to carry out section 
1847B’’ and inserting ‘‘or to carry out section 
1847B or section 1860D–14B’’. 
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(4) EXCLUDING PART D 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 by adding at the end 
the following new subclause: 
‘‘(VII) rebates paid by manufac-
turers under section 1860D–14B.’’. 
(c) 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. 
TITLE 
III—PART 
D 
IMPROVE-
MENTS AND MAXIMUM OUT- 
OF-POCKET CAP FOR MEDI-
CARE BENEFICIARIES 
SEC. 301. MEDICARE PART D BENEFIT REDESIGN. 
(a) 
BENEFIT
STRUCTURE
REDESIGN.—Section 
1860D–2(b) of the Social Security Act (42 U.S.C. 1395w– 
102(b)) is amended— 
(1) in paragraph (2)— 
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(A) in subparagraph (A), in the matter 
preceding clause (i), by inserting ‘‘for a year 
preceding 2024 and for costs above the annual 
deductible specified in paragraph (1) and up to 
the annual out-of-pocket threshold specified in 
paragraph (4)(B) for 2024 and each subsequent 
year’’ after ‘‘paragraph (3)’’; 
(B) in subparagraph (C)— 
(i) in clause (i), in the matter pre-
ceding subclause (I), by inserting ‘‘for a 
year preceding 2024,’’ after ‘‘paragraph 
(4),’’; and 
(ii) in clause (ii)(III), by striking 
‘‘and each subsequent year’’ and inserting 
‘‘through 2023’’; and 
(C) in subparagraph (D)— 
(i) in clause (i)— 
(I) in the matter preceding sub-
clause (I), by inserting ‘‘for a year 
preceding 2024,’’ after ‘‘paragraph 
(4),’’; and 
(II) in subclause (I)(bb), by 
striking ‘‘a year after 2018’’ and in-
serting ‘‘each of years 2019 through 
2023’’; and 
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(ii) in clause (ii)(V), by striking 
‘‘2019 and each subsequent year’’ and in-
serting ‘‘each of years 2019 through 
2023’’; 
(2) in paragraph (3)(A)— 
(A) in the matter preceding clause (i), by 
inserting ‘‘for a year preceding 2024,’’ after 
‘‘and (4),’’; and 
(B) in clause (ii), by striking ‘‘for a subse-
quent year’’ and inserting ‘‘for each of years 
2007 through 2023’’; and 
(3) in paragraph (4)— 
(A) in subparagraph (A)— 
(i) in clause (i)— 
(I) by redesignating subclauses 
(I) and (II) as items (aa) and (bb), 
respectively, and moving the margin 
of each such redesignated item 2 ems 
to the right; 
(II) in the matter preceding item 
(aa), as redesignated by subclause (I), 
by striking ‘‘is equal to the greater 
of—’’ and inserting ‘‘is equal to— 
‘‘(I) for a year preceding 2024, 
the greater of—’’; 
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(III) by striking the period at the 
end of item (bb), as redesignated by 
subclause (I), and inserting ‘‘; and’’; 
and 
(IV) by adding at the end the fol-
lowing: 
‘‘(II) for 2024 and each suc-
ceeding year, $0.’’; and 
(ii) in clause (ii)— 
(I) by striking ‘‘clause (i)(I)’’ and 
inserting ‘‘clause (i)(I)(aa)’’; and 
(II) by adding at the end the fol-
lowing new sentence: ‘‘The Secretary 
shall continue to calculate the dollar 
amounts specified in clause (i)(I)(aa), 
including with the adjustment under 
this clause, after 2023 for purposes of 
section 1860D–14(a)(1)(D)(iii).’’; 
(B) in subparagraph (B)— 
(i) in clause (i)— 
(I) in subclause (V), by striking 
‘‘or’’ at the end; 
(II) in subclause (VI)— 
(aa) by striking ‘‘for a sub-
sequent year’’ and inserting ‘‘for 
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each of years 2021 through 
2023’’; and 
(bb) by striking the period 
at the end and inserting a semi-
colon; and 
(III) by adding at the end the 
following new subclauses: 
‘‘(VII) for 2024, is equal to 
$2,000; or 
‘‘(VIII) for a subsequent year, is 
equal to the amount specified in this 
subparagraph for the previous year, 
increased by the annual percentage in-
crease described in paragraph (6) for 
the year involved.’’; and 
(ii) in clause (ii), by striking ‘‘clause 
(i)(II)’’ and inserting ‘‘clause (i)’’; 
(C) in subparagraph (C)(i), by striking 
‘‘and for amounts’’ and inserting ‘‘and, for a 
year preceding 2024, for amounts’’; and 
(D) in subparagraph (E), by striking ‘‘In 
applying’’ and inserting ‘‘For each of years 
2011 through 2023, in applying’’. 
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(b) REINSURANCE
PAYMENT
AMOUNT.—Section 
1860D–15(b) of the Social Security Act (42 U.S.C. 
1395w–115(b)) is amended— 
(1) in paragraph (1)— 
(A) by striking ‘‘equal to 80 percent’’ and 
inserting ‘‘equal to— 
‘‘(A) for a year preceding 2024, 80 per-
cent’’; 
(B) in subparagraph (A), as added by sub-
paragraph (A), by striking the period at the 
end and inserting ‘‘; and’’; and 
(C) by adding at the end the following new 
subparagraph: 
‘‘(B) for 2024 and each subsequent year, 
the sum of— 
‘‘(i) an amount equal to 20 percent of 
such allowable reinsurance costs attrib-
utable to that portion of gross prescription 
drug costs as specified in paragraph (3) in-
curred in the coverage year after such indi-
vidual has incurred costs that exceed the 
annual out-of-pocket threshold specified in 
section 1860D–2(b)(4)(B) with respect to 
applicable drugs (as defined in section 
1860D–14C(g)(2)); and 
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‘‘(ii) an amount equal to 40 percent of 
such allowable reinsurance costs attrib-
utable to that portion of gross prescription 
drug costs as specified in paragraph (3) in-
curred in the coverage year after such indi-
vidual has incurred costs that exceed the 
annual out-of-pocket threshold specified in 
section 1860D–2(b)(4)(B) with respect to 
covered part D drugs that are not applica-
ble drugs (as so defined).’’; 
(2) in paragraph (2)— 
(A) by striking ‘‘COSTS.—For purposes’’ 
and inserting ‘‘COSTS.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), for purposes’’; and 
(B) by adding at the end the following new 
subparagraph: 
‘‘(B) INCLUSION OF MANUFACTURER DIS-
COUNTS ON APPLICABLE DRUGS.—For purposes 
of applying subparagraph (A), the term ‘allow-
able reinsurance costs’ shall include the portion 
of the negotiated price (as defined in section 
1860D–14C(g)(6)) of an applicable drug (as 
defined in section 1860D–14C(g)(2)) that was 
paid by a manufacturer under the manufacturer 
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discount program under section 1860D–14C.’’; 
and 
(3) in paragraph (3)— 
(A) in the first sentence, by striking ‘‘For 
purposes’’ and inserting ‘‘Subject to paragraph 
(2)(B), for purposes’’; and 
(B) in the second sentence, by inserting 
‘‘(or, with respect to 2024 and subsequent 
years, in the case of an applicable drug, as de-
fined in section 1860D–14C(g)(2), by a manu-
facturer)’’ after ‘‘by the individual or under the 
plan’’. 
(c) REDUCED COST-SHARING; BENEFICIARY PRE-
MIUM PERCENTAGE.— 
(1) COST-SHARING.— 
(A) 
IN
GENERAL.—Section 
1860D– 
2(b)(2)(A) of the Social Security Act (42 
U.S.C. 1395w–102(b)(2)(A)) is amended— 
(i) in the subparagraph header, by 
striking ‘‘25 PERCENT COINSURANCE’’ and 
inserting ‘‘COINSURANCE’’; 
(ii) in clause (i), by inserting ‘‘(or, for 
2024 and each subsequent year, 23 per-
cent)’’ after ‘‘25 percent’’; and 
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(iii) in clause (ii), by inserting ‘‘(or, 
for 2024 and each subsequent year, 23 
percent)’’ after ‘‘25 percent’’. 
(B) CONFORMING
AMENDMENT.—Section 
1860D–14(a)(2)(D) of the Social Security Act 
(42 U.S.C. 1395w–114(a)(2)(D)) is amended 
by inserting ‘‘(or, for 2024 and each subsequent 
year, instead of coinsurance of ‘23 percent’)’’ 
after ‘‘instead of coinsurance of ‘25 percent’ ’’. 
(2) BENEFICIARY PREMIUM PERCENTAGE.— 
(A) 
IN
GENERAL.—Section 
1860D– 
13(a)(3)(A) of the Social Security Act (42 
U.S.C. 1395w–113(a)(3)(A)) is amended by in-
serting ‘‘(or, for 2024 and each subsequent 
year, 23.5 percent)’’ after ‘‘25.5 percent’’. 
(B) CONFORMING AMENDMENTS.— 
(i) Section 1860D–11(g)(6) of the So-
cial Security Act (42 U.S.C. 1395w– 
111(g)(6)) is amended by inserting ‘‘(or, 
for 2024 and each subsequent year, 23.5 
percent)’’ after ‘‘25.5 percent’’. 
(ii) Section 1860D–13(a)(7)(B)(i) of 
the Social Security Act (42 U.S.C. 1395w– 
113(a)(7)(B)(i)) is amended— 
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100 
(I) in subclause (I), by inserting 
‘‘(or, for 2024 and each subsequent 
year, 23.5 percent)’’ after ‘‘25.5 per-
cent’’; and 
(II) in subclause (II), by insert-
ing ‘‘(or, for 2024 and each subse-
quent year, 23.5 percent)’’ after ‘‘25.5 
percent’’. 
(iii) Section 1860D–15(a) of the So-
cial Security Act (42 U.S.C. 1395w– 
115(a)) is amended by inserting ‘‘(or, for 
2024 and each subsequent year, 76.5 per-
cent)’’ after ‘‘74.5 percent’’. 
(d) MANUFACTURER DISCOUNT PROGRAM.— 
(1) IN GENERAL.—Part D of title XVIII of the 
Social Security Act (42 U.S.C. 1395w–101 through 
42 U.S.C. 1395w–153), as amended by section 202, 
is further amended by inserting after section 
1860D–14B the following new sections: 
‘‘SEC. 1860D–14C. MANUFACTURER DISCOUNT PROGRAM. 
‘‘(a) ESTABLISHMENT.—The Secretary shall estab-
lish a manufacturer discount program (in this section re-
ferred to as the ‘program’). Under the program, the Sec-
retary shall enter into agreements described in subsection 
(b) with manufacturers and provide for the performance 
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101 
of the duties described in subsection (c). The Secretary 
shall establish a model agreement for use under the pro-
gram by not later than January 1, 2023, in consultation 
with manufacturers, and allow for comment on such model 
agreement. 
‘‘(b) TERMS OF AGREEMENT.— 
‘‘(1) IN GENERAL.— 
‘‘(A) AGREEMENT.—An agreement under 
this section shall require the manufacturer to 
provide, in accordance with this section, dis-
counted prices for applicable drugs of the man-
ufacturer that are dispensed to applicable bene-
ficiaries on or after January 1, 2024. 
‘‘(B) CLARIFICATION.—Nothing in this 
section shall be construed as affecting— 
‘‘(i) the application of a coinsurance 
of 23 percent of the negotiated price, as 
applied under paragraph (2)(A) of section 
1860D–2(b), for costs described in such 
paragraph; or 
‘‘(ii) the application of the copayment 
amount described in paragraph (4)(A) of 
such section, with respect to costs de-
scribed in such paragraph. 
‘‘(C) TIMING OF AGREEMENT.— 
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102 
‘‘(i) SPECIAL
RULE
FOR
2024.—In 
order for an agreement with a manufac-
turer to be in effect under this section with 
respect to the period beginning on January 
1, 2024, and ending on December 31, 
2024, the manufacturer shall enter into 
such agreement not later than 30 days 
after the date of the establishment of a 
model agreement under subsection (a). 
‘‘(ii) 
2025 
AND
SUBSEQUENT 
YEARS.—In order for an agreement with a 
manufacturer to be in effect under this 
section with respect to plan year 2025 or 
a subsequent plan year, the manufacturer 
shall enter into such agreement not later 
than a calendar quarter or semi-annual 
deadline established by the Secretary. 
‘‘(2) PROVISION OF APPROPRIATE DATA.—Each 
manufacturer with an agreement in effect under this 
section shall collect and have available appropriate 
data, as determined by the Secretary, to ensure that 
it can demonstrate to the Secretary compliance with 
the requirements under the program. 
‘‘(3) COMPLIANCE
WITH
REQUIREMENTS
FOR 
ADMINISTRATION
OF
PROGRAM.—Each manufac-
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103 
turer with an agreement in effect under this section 
shall comply with requirements imposed by the Sec-
retary or a third party with a contract under sub-
section (d)(3), as applicable, for purposes of admin-
istering the program, including any determination 
under subparagraph (A) of subsection (c)(1) or pro-
cedures established under such subsection (c)(1). 
‘‘(4) LENGTH OF AGREEMENT.— 
‘‘(A) IN GENERAL.—An agreement under 
this section shall be effective for an initial pe-
riod of not less than 12 months and shall be 
automatically renewed for a period of not less 
than 1 year unless terminated under subpara-
graph (B). 
‘‘(B) TERMINATION.— 
‘‘(i) BY THE SECRETARY.—The Sec-
retary shall provide for termination of an 
agreement under this section for a knowing 
and willful violation of the requirements of 
the agreement or other good cause shown. 
Such termination shall not be effective ear-
lier than 30 days after the date of notice 
to the manufacturer of such termination. 
The Secretary shall provide, upon request, 
a manufacturer with a hearing concerning 
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104 
such a termination, and such hearing shall 
take place prior to the effective date of the 
termination with sufficient time for such 
effective date to be repealed if the Sec-
retary determines appropriate. 
‘‘(ii) BY A MANUFACTURER.—A man-
ufacturer may terminate an agreement 
under this section for any reason. Any 
such termination shall be effective, with re-
spect to a plan year— 
‘‘(I) if the termination occurs be-
fore January 31 of a plan year, as of 
the day after the end of the plan year; 
and 
‘‘(II) if the termination occurs on 
or after January 31 of a plan year, as 
of the day after the end of the suc-
ceeding plan year. 
‘‘(iii) EFFECTIVENESS
OF
TERMI-
NATION.—Any termination under this sub-
paragraph shall not affect discounts for 
applicable drugs of the manufacturer that 
are due under the agreement before the ef-
fective date of its termination. 
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105 
‘‘(iv) NOTICE TO THIRD PARTY.—The 
Secretary shall provide notice of such ter-
mination to a third party with a contract 
under subsection (d)(3) within not less 
than 30 days before the effective date of 
such termination. 
‘‘(c) DUTIES DESCRIBED.—The duties described in 
this subsection are the following: 
‘‘(1) ADMINISTRATION OF PROGRAM.—Admin-
istering the program, including— 
‘‘(A) the determination of the amount of 
the discounted price of an applicable drug of a 
manufacturer; 
‘‘(B) the establishment of procedures to 
ensure that, not later than the applicable num-
ber of calendar days after the dispensing of an 
applicable drug by a pharmacy or mail order 
service, the pharmacy or mail order service is 
reimbursed for an amount equal to the dif-
ference between— 
‘‘(i) the negotiated price of the appli-
cable drug; and 
‘‘(ii) the discounted price of the appli-
cable drug; 
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106 
‘‘(C) the establishment of procedures to 
ensure that the discounted price for an applica-
ble drug under this section is applied before any 
coverage or financial assistance under other 
health benefit plans or programs that provide 
coverage or financial assistance for the pur-
chase or provision of prescription drug coverage 
on behalf of applicable beneficiaries as specified 
by the Secretary; and 
‘‘(D) providing a reasonable dispute resolu-
tion mechanism to resolve disagreements be-
tween manufacturers, applicable beneficiaries, 
and the third party with a contract under sub-
section (d)(3). 
‘‘(2) MONITORING COMPLIANCE.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
monitor compliance by a manufacturer with the 
terms of an agreement under this section. 
‘‘(B) NOTIFICATION.—If a third party 
with a contract under subsection (d)(3) deter-
mines that the manufacturer is not in compli-
ance with such agreement, the third party shall 
notify the Secretary of such noncompliance for 
appropriate enforcement under subsection (e). 
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107 
‘‘(3) COLLECTION OF DATA FROM PRESCRIP-
TION DRUG PLANS AND MA–PD PLANS.—The Sec-
retary may collect appropriate data from prescrip-
tion drug plans and MA–PD plans in a timeframe 
that allows for discounted prices to be provided for 
applicable drugs under this section. 
‘‘(d) ADMINISTRATION.— 
‘‘(1) IN GENERAL.—Subject to paragraph (2), 
the Secretary shall provide for the implementation of 
this section, including the performance of the duties 
described in subsection (c). 
‘‘(2) LIMITATION.—In providing for the imple-
mentation of this section, the Secretary shall not re-
ceive or distribute any funds of a manufacturer 
under the program. 
‘‘(3) CONTRACT
WITH
THIRD
PARTIES.—The 
Secretary shall enter into a contract with 1 or more 
third parties to administer the requirements estab-
lished by the Secretary in order to carry out this 
section. At a minimum, the contract with a third 
party under the preceding sentence shall require 
that the third party— 
‘‘(A) receive and transmit information be-
tween the Secretary, manufacturers, and other 
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108 
individuals or entities the Secretary determines 
appropriate; 
‘‘(B) receive, distribute, or facilitate the 
distribution of funds of manufacturers to ap-
propriate individuals or entities in order to 
meet the obligations of manufacturers under 
agreements under this section; 
‘‘(C) provide adequate and timely informa-
tion to manufacturers, consistent with the 
agreement with the manufacturer under this 
section, as necessary for the manufacturer to 
fulfill its obligations under this section; and 
‘‘(D) permit manufacturers to conduct 
periodic audits, directly or through contracts, of 
the data and information used by the third 
party to determine discounts for applicable 
drugs of the manufacturer under the program. 
‘‘(4) 
PERFORMANCE
REQUIREMENTS.—The 
Secretary shall establish performance requirements 
for a third party with a contract under paragraph 
(3) and safeguards to protect the independence and 
integrity of the activities carried out by the third 
party under the program under this section. 
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109 
‘‘(5) IMPLEMENTATION.—The Secretary shall 
implement the program under this section for 2024 
and 2025 by program instruction or otherwise. 
‘‘(e) ENFORCEMENT.— 
‘‘(1) AUDITS.—Each manufacturer with an 
agreement in effect under this section shall be sub-
ject to periodic audit by the Secretary. 
‘‘(2) CIVIL MONEY PENALTY.— 
‘‘(A) IN GENERAL.—A manufacturer that 
fails to provide discounted prices for applicable 
drugs of the manufacturer dispensed to applica-
ble beneficiaries in accordance with such agree-
ment shall be subject to a civil money penalty 
for each such failure in an amount the Sec-
retary determines is equal to the sum of— 
‘‘(i) the amount that the manufac-
turer would have paid with respect to such 
discounts under the agreement, which will 
then be used to pay the discounts which 
the manufacturer had failed to provide; 
and 
‘‘(ii) 25 percent of such amount. 
‘‘(B) APPLICATION.—The provisions of 
section 1128A (other than subsections (a) and 
(b)) shall apply to a civil money penalty under 
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this paragraph in the same manner as such 
provisions apply to a penalty or proceeding 
under section 1128A(a). 
‘‘(f) CLARIFICATION REGARDING AVAILABILITY OF 
OTHER COVERED PART D DRUGS.—Nothing in this sec-
tion shall prevent an applicable beneficiary from pur-
chasing a covered part D drug that is not an applicable 
drug (including a generic drug or a drug that is not on 
the formulary of the prescription drug plan or MA–PD 
plan that the applicable beneficiary is enrolled in). 
‘‘(g) DEFINITIONS.—In this section: 
‘‘(1) APPLICABLE
BENEFICIARY.—The term 
‘applicable beneficiary’ means an individual who, on 
the date of dispensing a covered part D drug— 
‘‘(A) is enrolled in a prescription drug plan 
or an MA–PD plan; 
‘‘(B) is not enrolled in a qualified retiree 
prescription drug plan; and 
‘‘(C) has incurred costs, as determined in 
accordance with section 1860D–2(b)(4)(C) as if 
clause (iii) of such section included a reference 
to costs reimbursed through insurance, a group 
health plan, or certain other third-party pay-
ment arrangements, for covered part D drugs 
in the year that exceed— 
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‘‘(i) in the case of an individual not 
described in clause (ii) or (iii), the annual 
deductible for such year, as specified in 
section 1860D–2(b)(1); 
‘‘(ii) in the case of a subsidy eligible 
individual described in section 1860D– 
14(a)(1), the annual deductible for such 
year, as specified in subparagraph (B) of 
such section; and 
‘‘(iii) in the case of a subsidy eligible 
individual described in section 1860D– 
14(a)(2), the annual deductible for such 
year, as specified in subparagraph (B) of 
such section. 
‘‘(2) APPLICABLE DRUG.—The term ‘applicable 
drug’, with respect to an applicable beneficiary— 
‘‘(A) means a covered part D drug— 
‘‘(i) approved under a new drug appli-
cation under section 505(c) of the Federal 
Food, Drug, and Cosmetic Act or, in the 
case of a biologic product, licensed under 
section 351 of the Public Health Service 
Act; and 
‘‘(ii)(I) if the PDP sponsor of the pre-
scription drug plan or the MA organization 
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‘‘(4) DISCOUNTED PRICE.— 
‘‘(A) IN GENERAL.—The term ‘discounted 
price’ means, subject to subparagraphs (B) and 
(C), with respect to an applicable drug of a 
manufacturer dispensed during a year to an ap-
plicable beneficiary— 
‘‘(i) who has not incurred costs, as de-
termined 
in 
accordance 
with 
section 
1860D–2(b)(4)(C), for covered part D 
drugs in the year that are equal to or ex-
ceed the annual out-of-pocket threshold 
specified in section 1860D–2(b)(4)(B)(i) 
for the year, 90 percent of the negotiated 
price of such drug; and 
‘‘(ii) who has incurred such costs, as 
so determined, in the year that are equal 
to or exceed such threshold for the year, 
80 percent of the negotiated price of such 
drug. 
‘‘(B) PHASE-IN FOR CERTAIN DRUGS DIS-
PENSED TO LIS BENEFICIARIES.— 
‘‘(i) IN GENERAL.—In the case of an 
applicable drug of a specified manufacturer 
(as defined in clause (ii)) that is marketed 
as of the date of enactment of this sub-
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114 
paragraph and dispensed for an applicable 
beneficiary who is a subsidy eligible indi-
vidual (as defined in section 1860D– 
14(a)(3)), the term ‘discounted price’ 
means the specified LIS percent (as de-
fined in clause (iii)) of the negotiated price 
of the applicable drug of the manufacturer. 
‘‘(ii) SPECIFIED MANUFACTURER.— 
‘‘(I) IN GENERAL.—In this sub-
paragraph, subject to subclause (II), 
the 
term 
‘specified 
manufacturer’ 
means a manufacturer of an applica-
ble drug for which, in 2021— 
‘‘(aa) the manufacturer had 
a coverage gap discount agree-
ment under section 1860D–14A; 
‘‘(bb) the total expenditures 
for all of the specified drugs of 
the manufacturer covered by 
such agreement or agreements 
for such year and covered under 
this part during such year rep-
resented less than 1.0 percent of 
the total expenditures under this 
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part for all covered Part D drugs 
during such year; and 
‘‘(cc) the total expenditures 
for all of the specified drugs of 
the manufacturer that are single 
source drugs and biological prod-
ucts covered under part B during 
such year represented less than 
1.0 percent of the total expendi-
tures under part B for all drugs 
or biological products covered 
under such part during such 
year. 
‘‘(II) SPECIFIED DRUGS.— 
‘‘(aa) 
IN
GENERAL.—For 
purposes of this clause, the term 
‘specified drug’ means, with re-
spect to a specified manufac-
turer, for 2021, an applicable 
drug that is produced, prepared, 
propagated, 
compounded, 
con-
verted, or processed by the man-
ufacturer. 
‘‘(bb) 
AGGREGATION 
RULE.—All persons treated as a 
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single employer under subsection 
(a) or (b) of section 52 of the In-
ternal Revenue Code of 1986 
shall be treated as one manufac-
turer for purposes of this sub-
paragraph. For purposes of mak-
ing a determination pursuant to 
the previous sentence, an agree-
ment under this section shall re-
quire that a manufacturer pro-
vide and attest to such informa-
tion as specified by the Secretary 
as necessary. 
‘‘(III) LIMITATION.—The term 
‘specified manufacturer’ shall not in-
clude a manufacturer described in 
subclause (I) if such manufacturer is 
acquired after 2021 by another manu-
facturer that is not a specified manu-
facturer, effective at the beginning of 
the plan year immediately following 
such acquisition or, in the case of an 
acquisition before 2024, effective Jan-
uary 1, 2024. 
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‘‘(iii) SPECIFIED
LIS
PERCENT.—In 
this subparagraph, the ‘specified LIS per-
cent’ means, with respect to a year— 
‘‘(I) for an applicable drug dis-
pensed for an applicable beneficiary 
described in clause (i) who has not in-
curred costs, as determined in accord-
ance with section 1860D–2(b)(4)(C), 
for covered part D drugs in the year 
that are equal to or exceed the annual 
out-of-pocket threshold specified in 
section 1860D–2(b)(4)(B)(i) for the 
year— 
‘‘(aa) for 2024, 99 percent; 
‘‘(bb) for 2025, 98 percent; 
‘‘(cc) for 2026, 95 percent; 
‘‘(dd) for 2027, 92 percent; 
and 
‘‘(ee) for 2028 and each 
subsequent year, 90 percent; and 
‘‘(II) for an applicable drug dis-
pensed for an applicable beneficiary 
described in clause (i) who has in-
curred costs, as determined in accord-
ance with section 1860D–2(b)(4)(C), 
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118 
for covered part D drugs in the year 
that are equal to or exceed the annual 
out-of-pocket threshold specified in 
section 1860D–2(b)(4)(B)(i) for the 
year— 
‘‘(aa) for 2024, 99 percent; 
‘‘(bb) for 2025, 98 percent; 
‘‘(cc) for 2026, 95 percent; 
‘‘(dd) for 2027, 92 percent; 
‘‘(ee) for 2028, 90 percent; 
‘‘(ff) for 2029, 85 percent; 
and 
‘‘(gg) for 2030 and each 
subsequent year, 80 percent. 
‘‘(C) PHASE-IN
FOR
SPECIFIED
SMALL 
MANUFACTURERS.— 
‘‘(i) IN GENERAL.—In the case of an 
applicable drug of a specified small manu-
facturer (as defined in clause (ii)) that is 
marketed as of the date of enactment of 
this subparagraph and dispensed for an 
applicable beneficiary, the term ‘discounted 
price’ means the specified small manufac-
turer percent (as defined in clause (iii)) of 
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119 
the negotiated price of the applicable drug 
of the manufacturer. 
‘‘(ii) SPECIFIED
SMALL
MANUFAC-
TURER.— 
‘‘(I) IN GENERAL.—In this sub-
paragraph, subject to subclause (III), 
the term ‘specified small manufac-
turer’ means a manufacturer of an 
applicable drug for which, in 2021— 
‘‘(aa) the manufacturer is a 
specified manufacturer (as de-
fined in subparagraph (B)(ii)); 
and 
‘‘(bb) the total expenditures 
under part D for any one of the 
specified 
small 
manufacturer 
drugs of the manufacturer that 
are covered by the agreement or 
agreements 
under 
section 
1860D–14A of such manufac-
turer for such year and covered 
under this part during such year 
are equal to or more than 80 per-
cent of the total expenditures 
under this part for all specified 
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small manufacturer drugs of the 
manufacturer that are covered by 
such agreement or agreements 
for such year and covered under 
this part during such year. 
‘‘(II) SPECIFIED
SMALL
MANU-
FACTURER DRUGS.— 
‘‘(aa) 
IN
GENERAL.—For 
purposes of this clause, the term 
‘specified 
small 
manufacturer 
drugs’ means, with respect to a 
specified small manufacturer, for 
2021, an applicable drug that is 
produced, prepared, propagated, 
compounded, converted, or proc-
essed by the manufacturer. 
‘‘(bb) 
AGGREGATION 
RULE.—All persons treated as a 
single employer under subsection 
(a) or (b) of section 52 of the In-
ternal Revenue Code of 1986 
shall be treated as one manufac-
turer for purposes of this sub-
paragraph. For purposes of mak-
ing a determination pursuant to 
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121 
the previous sentence, an agree-
ment under this section shall re-
quire that a manufacturer pro-
vide and attest to such informa-
tion as specified by the Secretary 
as necessary. 
‘‘(III) LIMITATION.—The term 
‘specified small manufacturer’ shall 
not include a manufacturer described 
in subclause (I) if such manufacturer 
is acquired after 2021 by another 
manufacturer that is not a specified 
small manufacturer, effective at the 
beginning of the plan year imme-
diately following such acquisition or, 
in the case of an acquisition before 
2024, effective January 1, 2024. 
‘‘(iii) SPECIFIED
SMALL
MANUFAC-
TURER PERCENT.—In this subparagraph, 
the term ‘specified small manufacturer per-
cent’ means, with respect to a year— 
‘‘(I) for an applicable drug dis-
pensed for an applicable beneficiary 
who has not incurred costs, as deter-
mined in accordance with section 
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122 
1860D–2(b)(4)(C), for covered part D 
drugs in the year that are equal to or 
exceed 
the 
annual 
out-of-pocket 
threshold specified in section 1860D– 
2(b)(4)(B)(i) for the year— 
‘‘(aa) for 2024, 99 percent; 
‘‘(bb) for 2025, 98 percent; 
‘‘(cc) for 2026, 95 percent; 
‘‘(dd) for 2027, 92 percent; 
and 
‘‘(ee) for 2028 and each 
subsequent year, 90 percent; and 
‘‘(II) for an applicable drug dis-
pensed for an applicable beneficiary 
who has incurred costs, as determined 
in accordance with section 1860D– 
2(b)(4)(C), for covered part D drugs 
in the year that are equal to or exceed 
the annual out-of-pocket threshold 
specified 
in 
section 
1860D– 
2(b)(4)(B)(i) for the year— 
‘‘(aa) for 2024, 99 percent; 
‘‘(bb) for 2025, 98 percent; 
‘‘(cc) for 2026, 95 percent; 
‘‘(dd) for 2027, 92 percent; 
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123 
‘‘(ee) for 2028, 90 percent; 
‘‘(ff) for 2029, 85 percent; 
and 
‘‘(gg) for 2030 and each 
subsequent year, 80 percent. 
‘‘(D) TOTAL
EXPENDITURES.—For pur-
poses of this paragraph, the term ‘total expend-
itures’ includes, in the case of expenditures with 
respect to part D, ingredient costs, dispensing 
fees, sales tax, and, if applicable, vaccine ad-
ministration fees. The term ‘total expenditures’ 
excludes, in the case of expenditures with re-
spect to part B, expenditures for a drug or bio-
logical that are bundled or packaged into the 
payment for another service. 
‘‘(E) 
SPECIAL
CASE
FOR
CERTAIN 
CLAIMS.— 
‘‘(i) 
CLAIMS
SPANNING
DEDUCT-
IBLE.—In the case where the entire 
amount of the negotiated price of an indi-
vidual claim for an applicable drug with re-
spect to an applicable beneficiary does not 
fall above the annual deductible specified 
in section 1860D–2(b)(1) for the year, the 
manufacturer of the applicable drug shall 
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124 
provide the discounted price under this 
section on only the portion of the nego-
tiated price of the applicable drug that 
falls above such annual deductible. 
‘‘(ii) CLAIMS SPANNING OUT-OF-POCK-
ET THRESHOLD.—In the case where the 
entire amount of the negotiated price of an 
individual claim for an applicable drug 
with respect to an applicable beneficiary 
does not fall entirely below or entirely 
above the annual out-of-pocket threshold 
specified in section 1860D–2(b)(4)(B)(i) 
for the year, the manufacturer of the ap-
plicable drug shall provide the discounted 
price— 
‘‘(I) in accordance with subpara-
graph (A)(i) on the portion of the ne-
gotiated price of the applicable drug 
that falls below such threshold; and 
‘‘(II) in accordance with subpara-
graph (A)(ii) on the portion of such 
price of such drug that falls at or 
above such threshold. 
‘‘(5) MANUFACTURER.—The term ‘manufac-
turer’ means any entity which is engaged in the pro-
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duction, preparation, propagation, compounding, 
conversion, or processing of prescription drug prod-
ucts, either directly or indirectly by extraction from 
substances of natural origin, or independently by 
means of chemical synthesis, or by a combination of 
extraction and chemical synthesis. Such term does 
not include a wholesale distributor of drugs or a re-
tail pharmacy licensed under State law. 
‘‘(6) NEGOTIATED
PRICE.—The term ‘nego-
tiated price’ has the meaning given such term in sec-
tion 423.100 of title 42, Code of Federal Regula-
tions (or any successor regulation) and, with respect 
to an applicable drug, such negotiated price shall in-
clude any dispensing fee and, if applicable, any vac-
cine administration fee for the applicable drug. 
‘‘(7) QUALIFIED RETIREE PRESCRIPTION DRUG 
PLAN.—The term ‘qualified retiree prescription drug 
plan’ has the meaning given such term in section 
1860D–22(a)(2). 
‘‘SEC. 1860D–14D. SELECTED DRUG SUBSIDY PROGRAM. 
‘‘With respect to covered part D drugs that would 
be applicable drugs (as defined in section 1860D– 
14C(g)(2)) but for the application of subparagraph (B) 
of such section, the Secretary shall provide a process 
whereby, in the case of an applicable beneficiary (as de-
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126 
fined in section 1860D–14C(g)(1)) who, with respect to 
a year, is enrolled in a prescription drug plan or is enrolled 
in an MA–PD plan, has not incurred costs that are equal 
to or exceed the annual out-of-pocket threshold specified 
in section 1860D–2(b)(4)(B)(i), and is dispensed such a 
drug the Secretary (periodically and on a timely basis) 
provides the PDP sponsor or the MA organization offering 
the plan, a subsidy with respect to such drug that is equal 
to 10 percent of the negotiated price (as defined in section 
1860D–14C(g)(6)) of such drug.’’. 
(2) SUNSET OF MEDICARE COVERAGE GAP DIS-
COUNT PROGRAM.—Section 1860D–14A of the So-
cial Security Act (42 U.S.C. 1395–114a) is amend-
ed— 
(A) in subsection (a), in the first sentence, 
by striking ‘‘The Secretary’’ and inserting 
‘‘Subject to subsection (h), the Secretary’’; and 
(B) by adding at the end the following new 
subsection: 
‘‘(h) SUNSET OF PROGRAM.— 
‘‘(1) IN
GENERAL.—The program shall not 
apply with respect to applicable drugs dispensed on 
or after January 1, 2024, and, subject to paragraph 
(2), agreements under this section shall be termi-
nated as of such date. 
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127 
‘‘(2) CONTINUED APPLICATION FOR APPLICA-
BLE
DRUGS
DISPENSED
PRIOR
TO
SUNSET.—The 
provisions of this section (including all responsibil-
ities and duties) shall continue to apply on and after 
January 1, 2024, with respect to applicable drugs 
dispensed prior to such date.’’. 
(3) INCLUSION OF ACTUARIAL VALUE OF MANU-
FACTURER DISCOUNTS IN BIDS.—Section 1860D–11 
of the Social Security Act (42 U.S.C. 1395w–111) 
is amended— 
(A) in subsection (b)(2)(C)(iii)— 
(i) by striking ‘‘assumptions regarding 
the reinsurance’’ and inserting ‘‘assump-
tions regarding— 
‘‘(I) the reinsurance’’; and 
(ii) by adding at the end the fol-
lowing: 
‘‘(II) for 2024 and each subse-
quent year, the manufacturer dis-
counts provided under section 1860D– 
14C subtracted from the actuarial 
value to produce such bid; and’’; and 
(B) in subsection (c)(1)(C)— 
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128 
(i) by striking ‘‘an actuarial valuation 
of the reinsurance’’ and inserting ‘‘an ac-
tuarial valuation of— 
‘‘(i) the reinsurance’’; 
(ii) in clause (i), as inserted by clause 
(i) of this subparagraph, by adding ‘‘and’’ 
at the end; and 
(iii) by adding at the end the fol-
lowing: 
‘‘(ii) for 2024 and each subsequent 
year, the manufacturer discounts provided 
under section 1860D–14C;’’. 
(e) CONFORMING AMENDMENTS.— 
(1) Section 1860D–2 of the Social Security Act 
(42 U.S.C. 1395w–102) is amended— 
(A) in subsection (a)(2)(A)(i)(I), by strik-
ing ‘‘, or an increase in the initial’’ and insert-
ing ‘‘or, for a year preceding 2024, an increase 
in the initial’’; 
(B) in subsection (c)(1)(C)— 
(i) in the subparagraph heading, by 
striking ‘‘AT
INITIAL
COVERAGE
LIMIT’’; 
and 
(ii) by inserting ‘‘for a year preceding 
2024 or the annual out-of-pocket threshold 
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129 
specified in subsection (b)(4)(B) for the 
year for 2024 and each subsequent year’’ 
after ‘‘subsection (b)(3) for the year’’ each 
place it appears; and 
(C) in subsection (d)(1)(A), by striking ‘‘or 
an initial’’ and inserting ‘‘or, for a year pre-
ceding 2024, an initial’’. 
(2) Section 1860D–4(a)(4)(B)(i) of the Social 
Security Act (42 U.S.C. 1395w–104(a)(4)(B)(i)) is 
amended by striking ‘‘the initial’’ and inserting ‘‘for 
a year preceding 2024, the initial’’. 
(3) Section 1860D–14(a) of the Social Security 
Act (42 U.S.C. 1395w–114(a)) is amended— 
(A) in paragraph (1)— 
(i) in subparagraph (C), by striking 
‘‘The continuation’’ and inserting ‘‘For a 
year preceding 2024, the continuation’’; 
(ii) in subparagraph (D)(iii), by strik-
ing ‘‘1860D–2(b)(4)(A)(i)(I)’’ and insert-
ing ‘‘1860D–2(b)(4)(A)(i)(I)(aa)’’; and 
(iii) in subparagraph (E), by striking 
‘‘The elimination’’ and inserting ‘‘For a 
year preceding 2024, the elimination’’; and 
(B) in paragraph (2)— 
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133 
to covered part D drugs dispensed under this part on or 
after January 1, 2024.’’. 
(8) Section 1927 of the Social Security Act (42 
U.S.C. 1396r–8) is amended— 
(A) in subsection (c)(1)(C)(i)(VI), by in-
serting before the period at the end the fol-
lowing: ‘‘or under the manufacturer discount 
program under section 1860D–14C’’; and 
(B) in subsection (k)(1)(B)(i)(V), by in-
serting before the period at the end the fol-
lowing: ‘‘or under section 1860D–14C’’. 
(f) IMPLEMENTATION FOR 2024 AND 2025.—Not-
withstanding any other provision of this section, the Sec-
retary shall implement this section, including the amend-
ments made by this section, for 2024 and 2025 by pro-
gram instruction or otherwise. 
(g) 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, $44,000,000 for fiscal 
year 2022, $38,000,000 for fiscal year 2023, and 
$32,000,000 for each of fiscal years 2024 through 2031, 
to remain available until expended, to carry out the provi-
sions of, including the amendments made by, this section. 
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134 
SEC. 302. MAXIMUM MONTHLY CAP ON COST-SHARING PAY-
MENTS UNDER PRESCRIPTION DRUG PLANS 
AND MA–PD PLANS. 
(a) IN GENERAL.—Section 1860D–2(b) of the Social 
Security Act (42 U.S.C. 1395w–102(b)), as amended by 
section 301, is amended— 
(1) in paragraph (2)— 
(A) in subparagraph (A), by striking ‘‘and 
(D)’’ and inserting ‘‘, (D), and (E)’’; and 
(B) by adding at the end the following new 
subparagraph: 
‘‘(E) MAXIMUM MONTHLY CAP ON COST- 
SHARING PAYMENTS.— 
‘‘(i) IN GENERAL.—For plan years be-
ginning on or after January 1, 2025, each 
PDP sponsor offering a prescription drug 
plan and each MA organization offering an 
MA–PD plan shall provide to any enrollee 
of such plan, including an enrollee who is 
a subsidy eligible individual (as defined in 
paragraph (3) of section 1860D–14(a)), 
the option to elect with respect to a plan 
year to pay cost-sharing under the plan in 
monthly amounts that are capped in ac-
cordance with this subparagraph. 
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pamtmann on DSKBC07HB2PROD with BILLS
135 
‘‘(ii) DETERMINATION
OF
MAXIMUM 
MONTHLY
CAP.—For each month in the 
plan year for which an enrollee in a pre-
scription drug plan or an MA–PD plan has 
made an election pursuant to clause (i), 
the PDP sponsor or MA organization shall 
determine a maximum monthly cap (as de-
fined in clause (iv)) for such enrollee. 
‘‘(iii) BENEFICIARY
MONTHLY
PAY-
MENTS.—With respect to an enrollee who 
has made an election pursuant to clause 
(i), for each month described in clause (ii), 
the PDP sponsor or MA organization shall 
bill such enrollee an amount (not to exceed 
the maximum monthly cap) for the out-of- 
pocket costs of such enrollee in such 
month. 
‘‘(iv) MAXIMUM
MONTHLY
CAP
DE-
FINED.—In this subparagraph, the term 
‘maximum monthly cap’ means, with re-
spect to an enrollee— 
‘‘(I) for the first month for which 
the enrollee has made an election pur-
suant to clause (i), an amount deter-
mined by calculating— 
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‘‘(aa) the annual out-of- 
pocket 
threshold 
specified 
in 
paragraph (4)(B) minus the in-
curred costs of the enrollee as de-
scribed in paragraph (4)(C); di-
vided by 
‘‘(bb) the number of months 
remaining in the plan year; and 
‘‘(II) for a subsequent month, an 
amount determined by calculating— 
‘‘(aa) the sum of any re-
maining out-of-pocket costs owed 
by the enrollee from a previous 
month that have not yet been 
billed to the enrollee and any ad-
ditional out-of-pocket costs in-
curred by the enrollee; divided by 
‘‘(bb) the number of months 
remaining in the plan year. 
‘‘(v) ADDITIONAL
REQUIREMENTS.— 
The following requirements shall apply 
with respect to the option to make an elec-
tion pursuant to clause (i) under this sub-
paragraph: 
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137 
‘‘(I) SECRETARIAL RESPONSIBIL-
ITIES.—The Secretary shall provide 
information to part D eligible individ-
uals on the option to make such elec-
tion through educational materials, in-
cluding through the notices provided 
under section 1804(a). 
‘‘(II) TIMING OF ELECTION.—An 
enrollee in a prescription drug plan or 
an MA–PD plan may make such an 
election— 
‘‘(aa) prior to the beginning 
of the plan year; or 
‘‘(bb) in any month during 
the plan year. 
‘‘(III) PDP SPONSOR
AND
MA 
ORGANIZATION
RESPONSIBILITIES.— 
Each PDP sponsor offering a pre-
scription drug plan or MA organiza-
tion offering an MA–PD plan— 
‘‘(aa) may not limit the op-
tion for an enrollee to make such 
an election to certain covered 
part D drugs; 
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138 
‘‘(bb) shall, prior to the plan 
year, notify prospective enrollees 
of the option to make such an 
election in promotional materials; 
‘‘(cc) shall include informa-
tion on such option in enrollee 
educational materials; 
‘‘(dd) shall have in place a 
mechanism to notify a pharmacy 
during the plan year when an en-
rollee incurs out-of-pocket costs 
with respect to covered part D 
drugs that make it likely the en-
rollee may benefit from making 
such an election; 
‘‘(ee) shall provide that a 
pharmacy, after receiving a noti-
fication described in item (dd) 
with respect to an enrollee, in-
forms the enrollee of such notifi-
cation; 
‘‘(ff) shall ensure that such 
an election by an enrollee has no 
effect on the amount paid to 
pharmacies (or the timing of 
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139 
such payments) with respect to 
covered part D drugs dispensed 
to the enrollee; and 
‘‘(gg) shall have in place a 
financial reconciliation process to 
correct inaccuracies in payments 
made by an enrollee under this 
subparagraph with respect to 
covered part D drugs during the 
plan year. 
‘‘(IV) FAILURE TO PAY AMOUNT 
BILLED.—If an enrollee fails to pay 
the amount billed for a month as re-
quired under this subparagraph, the 
election of the enrollee pursuant to 
clause (i) shall be terminated and the 
enrollee shall pay the cost-sharing 
otherwise applicable for any covered 
part D drugs subsequently dispensed 
to the enrollee up to the annual out- 
of-pocket threshold specified in para-
graph (4)(B). 
‘‘(V) CLARIFICATION REGARDING 
PAST DUE AMOUNTS.—Nothing in this 
subparagraph shall be construed as 
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