I 
117TH CONGRESS 
1ST SESSION 
H. R. 3 
To establish a fair price negotiation program, protect the Medicare program 
from excessive price increases, and establish an out-of-pocket maximum 
for Medicare part D enrollees, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 22, 2021 
Mr. PALLONE (for himself, Mr. NEAL, and Mr. SCOTT of Virginia) introduced 
the following bill; which was referred to the Committee on Energy and 
Commerce, and in addition to the Committees on Ways and Means, Edu-
cation and Labor, Oversight and Reform, and Veterans’ Affairs, for a pe-
riod to be subsequently determined by the Speaker, in each case for con-
sideration of such provisions as fall within the jurisdiction of the com-
mittee concerned 
A BILL 
To establish a fair price negotiation program, protect the 
Medicare program from excessive price increases, and 
establish an out-of-pocket maximum for Medicare part 
D enrollees, 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 
‘‘Elijah E. Cummings Lower Drug Costs Now Act’’. 
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(b) TABLE OF CONTENTS.—The table of contents is 
as follows: 
Sec. 1. Short title; table of contents. 
TITLE I—LOWERING PRICES THROUGH FAIR DRUG PRICE 
NEGOTIATION 
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. Fair Price Negotiation Implementation Fund. 
TITLE II—PRESCRIPTION DRUG INFLATION REBATES 
Sec. 201. Medicare part B rebate by manufacturers. 
Sec. 202. Medicare part D rebate by manufacturers. 
Sec. 203. Provision regarding inflation rebates for group health plans and 
group health insurance coverage. 
Sec. 204. Annual report on drug costs in group health plans and group health 
insurance coverage. 
Sec. 205. Collection of data. 
TITLE III—PART D IMPROVEMENTS AND MAXIMUM OUT-OF- 
POCKET CAP FOR MEDICARE BENEFICIARIES 
Sec. 301. Medicare part D benefit redesign. 
Sec. 302. Allowing certain enrollees of prescription drug plans and MA–PD 
plans under Medicare program to spread out cost-sharing 
under certain circumstances. 
Sec. 303. Establishment of pharmacy quality measures under Medicare part D. 
TITLE IV—DRUG PRICE TRANSPARENCY 
Sec. 401. Drug price transparency. 
TITLE V—NIH, FDA, AND OVERDOSE EPIDEMIC FUNDING 
Subtitle A—Biomedical Innovation Expansion 
Sec. 501. NIH Innovation Initiatives. 
Sec. 502. NIH clinical trial. 
Sec. 503. Innovation Network. 
Subtitle B—Investing in Safety and Innovation 
Sec. 511. Food and Drug Administration. 
Sec. 512. Study on high-risk, high-reward drugs. 
Subtitle C—Overdose Epidemic Response 
Sec. 521. Overdose Epidemic Response Fund. 
Sec. 522. Substance Abuse and Mental Health Services Administration. 
Sec. 523. Centers for Disease Control and Prevention. 
Sec. 524. Food and Drug Administration. 
Sec. 525. National Institutes of Health. 
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Sec. 526. Health Resources and Services Administration. 
Sec. 527. Administration for Children and Families. 
TITLE 
I—LOWERING 
PRICES 
THROUGH FAIR DRUG PRICE 
NEGOTIATION 
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 (42 U.S.C. 1301 et seq.) is amended 
by adding at the end the following new part: 
‘‘PART E—FAIR 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 
Fair 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 selected drugs in accord-
ance with section 1192; 
‘‘(2) enter into agreements with manufacturers 
of selected drugs with respect to such period, in ac-
cordance with section 1193; 
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‘‘(3) negotiate and, if applicable, renegotiate 
maximum fair prices for such selected drugs, in ac-
cordance with section 1194; and 
‘‘(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 plan 
year (beginning with plan year 2024) or, if agreed 
to in an agreement under section 1193 by the Sec-
retary and manufacturer involved, a period of more 
than one plan year (beginning on or after January 
1, 2024). 
‘‘(2) PRICE APPLICABILITY PERIOD.—The term 
‘price applicability period’ means, with respect to a 
drug, the period beginning with the initial price ap-
plicability year with respect to which such drug is a 
selected drug and ending with the last plan year 
during which the drug is a selected drug. 
‘‘(3) SELECTED
DRUG
PUBLICATION
DATE.— 
The term ‘selected drug publication date’ means, 
with respect to each initial price applicability year, 
April 15 of the plan year that begins 2 years prior 
to such year. 
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‘‘(4) VOLUNTARY NEGOTIATION PERIOD.—The 
term ‘voluntary negotiation period’ means, with re-
spect to an initial price applicability year with re-
spect to a selected drug, the period— 
‘‘(A) beginning on the sooner of— 
‘‘(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) June 15 following the selected 
drug publication date with respect to such 
selected drug; and 
‘‘(B) ending on March 31 of the year that 
begins one year prior to the initial price appli-
cability year. 
‘‘(c) OTHER DEFINITIONS.—For purposes of this 
part: 
‘‘(1) FAIR PRICE ELIGIBLE INDIVIDUAL.—The 
term ‘fair price eligible individual’ means, with re-
spect to a selected drug— 
‘‘(A) in the case such drug is furnished or 
dispensed to the individual at a pharmacy or by 
a mail order service— 
‘‘(i) an individual who is enrolled 
under a prescription drug plan under part 
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D of title XVIII or an MA–PD plan under 
part C of such title if coverage is provided 
under such plan for such selected drug; 
and 
‘‘(ii) an individual who is enrolled 
under a group health plan or health insur-
ance coverage offered in the group or indi-
vidual market (as such terms are defined 
in section 2791 of the Public Health Serv-
ice Act) with respect to which there is in 
effect an agreement with the Secretary 
under section 1197 with respect to such se-
lected drug as so furnished or dispensed; 
and 
‘‘(B) in the case such drug is furnished or 
administered to the individual by a hospital, 
physician, or other provider of services or sup-
plier— 
‘‘(i) an individual who is entitled to 
benefits under part A of title XVIII or en-
rolled under part B of such title if such se-
lected drug is covered under the respective 
part; and 
‘‘(ii) an individual who is enrolled 
under a group health plan or health insur-
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imum number (if such number is less than 50) of 
such negotiation-eligible drugs for the year) with re-
spect to such year; 
‘‘(2) all negotiation-eligible drugs described in 
subparagraph (C) of such subsection with respect to 
such year; and 
‘‘(3) all new-entrant negotiation-eligible drugs 
(as defined in subsection (g)(1)) with respect to such 
year. 
Each drug published on the list pursuant to the previous 
sentence shall be subject to the negotiation process under 
section 1194 for the voluntary negotiation period with re-
spect to such initial price applicability year (and the re-
negotiation process under such section as applicable for 
any subsequent year during the applicable price applica-
bility period). In applying this subsection, any negotiation- 
eligible drug that is selected under this subsection for an 
initial price applicability year shall not count toward the 
required minimum amount of drugs to be selected under 
paragraph (1) for any subsequent year, including such a 
drug so selected that is subject to renegotiation under sec-
tion 1194. 
‘‘(b) SELECTION OF DRUGS.—In carrying out sub-
section (a)(1) the Secretary shall select for inclusion on 
the published list described in subsection (a) with respect 
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to a price applicability period, the negotiation-eligible 
drugs that the Secretary projects will result in the greatest 
savings to the Federal Government or fair price eligible 
individuals during the price applicability period. In making 
this projection of savings for drugs for which there is an 
AIM price for a price applicability period, the savings shall 
be projected across different dosage forms and strengths 
of the drugs and not based on the specific formulation or 
package size or package type of the drugs, taking into con-
sideration both the volume of drugs for which payment 
is made, to the extent such data is available, and the 
amount by which the net price for the drugs exceeds the 
AIM price for the drugs. 
‘‘(c) SELECTED DRUG.—For purposes of this part, 
each drug included 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 plan year beginning before the 
first plan year beginning after the date on which the Sec-
retary determines two or more drug products— 
‘‘(1) are approved or licensed (as applicable)— 
‘‘(A) under section 505(j) of the Federal 
Food, Drug, and Cosmetic Act using such drug 
as the listed drug; or 
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‘‘(B) under section 351(k) of the Public 
Health Service Act using such drug as the ref-
erence product; and 
‘‘(2) continue to be marketed. 
‘‘(d) NEGOTIATION-ELIGIBLE DRUG.— 
‘‘(1) IN GENERAL.—For purposes of this part, 
the term ‘negotiation-eligible drug’ means, with re-
spect to the selected drug publication date with re-
spect to an initial price applicability year, a quali-
fying single source drug, as defined in subsection 
(e), that meets any of the following criteria: 
‘‘(A) COVERED PART D DRUGS.—The drug 
is among the 125 covered part D drugs (as de-
fined in section 1860D–2(e)) for which there 
was an estimated greatest net spending under 
parts C and D of title XVIII, as determined by 
the Secretary, during the most recent plan year 
prior to such drug publication date for which 
data are available. 
‘‘(B) OTHER DRUGS.—The drug is among 
the 125 drugs for which there was an estimated 
greatest net spending in the United States (in-
cluding the 50 States, the District of Columbia, 
and the territories of the United States), as de-
termined by the Secretary, during the most re-
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cent plan year prior to such drug publication 
date for which data are available. 
‘‘(C) INSULIN.—The drug is a qualifying 
single source drug described in subsection 
(e)(3). 
‘‘(2) CLARIFICATION.—In determining whether 
a qualifying single source drug satisfies any of the 
criteria described in paragraph (1), the Secretary 
shall, to the extent practicable, use data that is ag-
gregated across dosage forms and strengths of the 
drug and not based on the specific formulation or 
package size or package type of the drug. 
‘‘(3) 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. 
‘‘(e) QUALIFYING SINGLE SOURCE DRUG.—For pur-
poses of this part, the term ‘qualifying single source drug’ 
means any of the following: 
‘‘(1) DRUG PRODUCTS.—A drug that— 
‘‘(A) is approved under section 505(c) of 
the Federal Food, Drug, and Cosmetic Act and 
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continues to be marketed pursuant to such ap-
proval; and 
‘‘(B) is not the listed drug for any drug 
that is approved and continues to be marketed 
under section 505(j) of such Act. 
‘‘(2) BIOLOGICAL
PRODUCTS.—A biological 
product that— 
‘‘(A) is licensed under section 351(a) of 
the Public Health Service Act, including any 
product that has been deemed to be licensed 
under section 351 of such Act pursuant to sec-
tion 7002(e)(4) of the Biologics Price Competi-
tion and Innovation Act of 2009, and continues 
to be marketed under section 351 of such Act; 
and 
‘‘(B) is not the reference product for any 
biological product that is licensed and continues 
to be marketed under section 351(k) of such 
Act. 
‘‘(3) 
INSULIN
PRODUCT.—Notwithstanding 
paragraphs (1) and (2), any insulin product that is 
approved under subsection (c) or (j) of section 505 
of the Federal Food, Drug, and Cosmetic Act or li-
censed under subsection (a) or (k) of section 351 of 
the Public Health Service Act and continues to be 
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marketed under such section 505 or 351, including 
any insulin product that has been deemed to be li-
censed under section 351(a) of the Public Health 
Service Act pursuant to section 7002(e)(4) of the 
Biologics Price Competition and Innovation Act of 
2009 and continues to be marketed pursuant to such 
licensure. 
For purposes of applying paragraphs (1) and (2), a drug 
or biological product that is marketed by the same sponsor 
or manufacturer (or an affiliate thereof or a cross-licensed 
producer or distributor) as the listed drug or reference 
product described in such respective paragraph shall not 
be taken into consideration. 
‘‘(f) INFORMATION
ON
INTERNATIONAL
DRUG 
PRICES.—For purposes of determining which negotiation- 
eligible drugs to select under subsection (a) and, in the 
case of such drugs that are selected drugs, to determine 
the maximum fair price for such a drug and whether such 
maximum fair price should be renegotiated under section 
1194, the Secretary shall use data relating to the AIM 
price with respect to such drug as available or provided 
to the Secretary and shall on an ongoing basis request 
from manufacturers of selected drugs information on the 
AIM price of such a drug. 
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‘‘(g) 
NEW-ENTRANT
NEGOTIATION-ELIGIBLE 
DRUGS.— 
‘‘(1) IN GENERAL.—For purposes of this part, 
the term ‘new-entrant negotiation-eligible drug’ 
means, with respect to the selected drug publication 
date with respect to an initial price applicability 
year, a qualifying single source drug— 
‘‘(A) that is first approved or licensed, as 
described in paragraph (1), (2), or (3) of sub-
section (e), as applicable, during the year pre-
ceding such selected drug publication date; and 
‘‘(B) that the Secretary determines under 
paragraph (2) is likely to be included as a nego-
tiation-eligible drug with respect to the subse-
quent selected drug publication date. 
‘‘(2) DETERMINATION.—In the case of a quali-
fying single source drug that meets the criteria de-
scribed in subparagraph (A) of paragraph (1), with 
respect to an initial price applicability year, if the 
wholesale acquisition cost at which such drug is first 
marketed in the United States is equal to or greater 
than the median household income (as determined 
according to the most recent data collected by the 
United States Census Bureau), the Secretary shall 
determine before the selected drug publication date 
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with respect to the initial price applicability year, if 
the drug is likely to be included as a negotiation-eli-
gible drug with respect to the subsequent selected 
drug publication date, based on the projected spend-
ing under title XVIII or in the United States on 
such drug. For purposes of this paragraph the term 
‘United States’ includes the 50 States, the District 
of Columbia, and the territories of the United 
States. 
‘‘(h) CONFLICT OF INTEREST.— 
‘‘(1) IN GENERAL.—In the case the Inspector 
General of the Department of Health and Human 
Services determines the Secretary has a conflict, 
with respect to a matter described in paragraph (2), 
the individual described in paragraph (3) shall carry 
out the duties of the Secretary under this part, with 
respect to a negotiation-eligible drug, that would 
otherwise be such a conflict. 
‘‘(2) MATTER DESCRIBED.—A matter described 
in this paragraph is— 
‘‘(A) a financial interest (as described in 
section 2635.402 of title 5, Code of Federal 
Regulations, as in effect on the date of the en-
actment of this section, (except for an interest 
described in subsection (b)(2)(iv) of such sec-
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tion)) on the date of the selected drug publica-
tion date, with respect the price applicability 
year (as applicable); 
‘‘(B) a personal or business relationship 
(as described in section 2635.502 of such title) 
on the date of the selected drug publication 
date, with respect the price applicability year; 
‘‘(C) employment by a manufacturer of a 
negotiation-eligible drug during the preceding 
10-year period beginning on the date of the se-
lected drug publication date, with respect to 
each price applicability year; and 
‘‘(D) any other matter the General Counsel 
determines appropriate. 
‘‘(3) INDIVIDUAL
DESCRIBED.—An individual 
described in this paragraph is— 
‘‘(A) the highest-ranking officer or em-
ployee of the Department of Health and 
Human Services (as determined by the organi-
zational chart of the Department) that does not 
have a conflict under this subsection; and 
‘‘(B) is nominated by the President and 
confirmed by the Senate with respect to the po-
sition. 
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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 June 15 following 
the selected drug publication date with respect to such se-
lected drug, under which— 
‘‘(1) during the voluntary negotiation period for 
the initial price applicability year for the selected 
drug, the Secretary and manufacturer, in accordance 
with section 1194, negotiate to determine (and, by 
not later than the last date of such period and in ac-
cordance with subsection (c), agree to) a maximum 
fair price for such selected drug of the manufacturer 
in order to provide access to such price— 
‘‘(A) to fair price eligible individuals who 
with respect to such drug are described in sub-
paragraph (A) of section 1191(c)(1) and are 
furnished or dispensed such drug during, sub-
ject to subparagraph (2), the price applicability 
period; and 
‘‘(B) to hospitals, physicians, and other 
providers of services and suppliers with respect 
to fair price eligible individuals who with re-
spect to such drug are described in subpara-
graph (B) of such section and are furnished or 
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administered such drug during, subject to sub-
paragraph (2), the price applicability period; 
‘‘(2) the Secretary and the manufacturer shall, 
in accordance with a process and during a period 
specified by the Secretary pursuant to rulemaking, 
renegotiate (and, by not later than the last date of 
such period and in accordance with subsection (c), 
agree to) the maximum fair price for such drug if 
the Secretary determines that there is a material 
change in any of the factors described in section 
1194(d) relating to the drug, including changes in 
the AIM price for such drug, in order to provide ac-
cess to such maximum fair price (as so renegoti-
ated)— 
‘‘(A) to fair price eligible individuals who 
with respect to such drug are described in sub-
paragraph (A) of section 1191(c)(1) and are 
furnished or dispensed such drug during any 
year during the price applicability period (be-
ginning after such renegotiation) with respect 
to such selected drug; and 
‘‘(B) to hospitals, physicians, and other 
providers of services and suppliers with respect 
to fair price eligible individuals who with re-
spect to such drug are described in subpara-
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graph (B) of such section and are furnished or 
administered such drug during any year de-
scribed in subparagraph (A); 
‘‘(3) the maximum fair price (including as re-
negotiated pursuant to paragraph (2)), with respect 
to such a selected drug, shall be provided to fair 
price eligible individuals, who with respect to such 
drug are described in subparagraph (A) of section 
1191(c)(1), at the pharmacy or by a mail order serv-
ice at the point-of-sale of such drug; 
‘‘(4) the manufacturer, subject to subsection 
(d), submits to the Secretary, in a form and manner 
specified by the Secretary— 
‘‘(A) for the voluntary negotiation period 
for the price applicability period (and, if appli-
cable, before any period of renegotiation speci-
fied pursuant to paragraph (2)) with respect to 
such drug all information that the Secretary re-
quires to carry out the negotiation (or renegoti-
ation process) under this part, including infor-
mation described in section 1192(f) and section 
1194(d)(1); and 
‘‘(B) on an ongoing basis, information on 
changes in prices for such drug that would af-
fect the AIM price for such drug or otherwise 
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provide a basis for renegotiation of the max-
imum fair price for such drug pursuant to 
paragraph (2); 
‘‘(5) the manufacturer agrees that in the case 
the selected drug of a manufacturer is a drug de-
scribed in subsection (c), the manufacturer will, in 
accordance with such subsection, make any payment 
required under such subsection with respect to such 
drug; and 
‘‘(6) 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 drug, 
until such drug is no longer considered a selected drug 
under section 1192(c). 
‘‘(c) SPECIAL RULE FOR CERTAIN SELECTED DRUGS 
WITHOUT AIM PRICE.— 
‘‘(1) IN GENERAL.—In the case of a selected 
drug for which there is no AIM price available with 
respect to the initial price applicability year for such 
drug and for which an AIM price becomes available 
beginning with respect to a subsequent plan year 
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during the price applicability period for such drug, 
if the Secretary determines that the amount de-
scribed in paragraph (2)(A) for a unit of such drug 
is greater than the amount described in paragraph 
(2)(B) for a unit of such drug, then by not later 
than one year after the date of such determination, 
the manufacturer of such selected drug shall pay to 
the Treasury an amount equal to the product of— 
‘‘(A) the difference between such amount 
described in paragraph (2)(A) for a unit of 
such drug and such amount described in para-
graph (2)(B) for a unit of such drug; and 
‘‘(B) the number of units of such drug sold 
in the United States, including the 50 States, 
the District of Columbia, and the territories of 
the United States, during the period described 
in paragraph (2)(B). 
‘‘(2) AMOUNTS DESCRIBED.— 
‘‘(A) WEIGHTED AVERAGE PRICE BEFORE 
AIM PRICE AVAILABLE.—For purposes of para-
graph (1), the amount described in this sub-
paragraph for a selected drug described in such 
paragraph, is the amount equal to the weighted 
average manufacturer price (as defined in sec-
tion 1927(k)(1)) for such dosage strength and 
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form for the drug during the period beginning 
with the first plan year for which the drug is 
included on the list of negotiation-eligible drugs 
published under section 1192(d) and ending 
with the last plan year during the price applica-
bility period for such drug with respect to which 
there is no AIM price available for such drug. 
‘‘(B) AMOUNT
MULTIPLIER
AFTER
AIM 
PRICE AVAILABLE.—For purposes of paragraph 
(1), the amount described in this subparagraph 
for a selected drug described in such paragraph, 
is the amount equal to 200 percent of the AIM 
price for such drug with respect to the first 
plan year during the price applicability period 
for such drug with respect to which there is an 
AIM price available for such drug. 
‘‘(d) CONFIDENTIALITY
OF INFORMATION.—Infor-
mation submitted to the Secretary under this part by a 
manufacturer of a selected drug that is proprietary infor-
mation of such manufacturer (as determined by the Sec-
retary) may 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. 
‘‘(e) REGULATIONS.— 
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‘‘(1) IN GENERAL.—The Secretary shall, pursu-
ant to rulemaking, specify, in accordance with para-
graph (2), the information that must be submitted 
under subsection (a)(4). 
‘‘(2) INFORMATION
SPECIFIED.—Information 
described in paragraph (1), with respect to a se-
lected drug, shall include information on sales of the 
drug (by the manufacturer of the drug or by another 
entity under license or other agreement with the 
manufacturer, with respect to the sales of such drug, 
regardless of the name under which the drug is sold) 
in any foreign country that is part of the AIM price. 
The Secretary shall verify, to the extent practicable, 
such sales from appropriate officials of the govern-
ment of the foreign country involved. 
‘‘(f) COMPLIANCE WITH REQUIREMENTS FOR AD-
MINISTRATION OF PROGRAM.—Each manufacturer with 
an agreement in effect under this section shall comply with 
requirements imposed by the Secretary or a third party 
with a contract under section 1196(c)(1), as applicable, 
for purposes of administering the program. 
‘‘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 
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the period for which such agreement is in effect and in 
accordance with subsections (b) and (c), the Secretary and 
the manufacturer— 
‘‘(1) shall during the voluntary negotiation pe-
riod with respect to the initial price applicability 
year for 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 
‘‘(2) 
as 
applicable 
pursuant 
to 
section 
1193(a)(2) and in accordance with the process speci-
fied pursuant to such section, renegotiate such max-
imum fair price for such drug for the purpose de-
scribed in such section. 
‘‘(b) NEGOTIATING
METHODOLOGY
AND
OBJEC-
TIVE.— 
‘‘(1) IN GENERAL.—The Secretary shall develop 
and use a consistent methodology for negotiations 
under subsection (a) that, in accordance with para-
graph (2) and subject to paragraph (3), achieves the 
lowest maximum fair price for each selected drug 
while appropriately rewarding innovation. 
‘‘(2) PRIORITIZING
FACTORS.—In considering 
the factors described in subsection (d) in negotiating 
(and, as applicable, renegotiating) the maximum fair 
price for a selected drug, the Secretary shall, to the 
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extent practicable, consider all of the available fac-
tors listed but shall prioritize the following factors: 
‘‘(A) 
RESEARCH
AND
DEVELOPMENT 
COSTS.—The factor described in paragraph 
(1)(A) of subsection (d). 
‘‘(B) MARKET
DATA.—The factor de-
scribed in paragraph (1)(B) of such subsection. 
‘‘(C) UNIT
COSTS
OF
PRODUCTION
AND 
DISTRIBUTION.—The factor described in para-
graph (1)(C) of such subsection. 
‘‘(D) COMPARISON
TO
EXISTING
THERA-
PEUTIC ALTERNATIVES.—The factor described 
in paragraph (2)(A) of such subsection. 
‘‘(3) REQUIREMENT.— 
‘‘(A) IN
GENERAL.—In negotiating the 
maximum fair price of a selected drug, with re-
spect to an initial price applicability year for 
the selected drug, and, as applicable, in renego-
tiating the maximum fair price for such drug, 
with respect to a subsequent year during the 
price applicability period for such drug, in the 
case that the manufacturer of the selected drug 
offers under the negotiation or renegotiation, as 
applicable, a price for such drug that is not 
more than the target price described in sub-
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paragraph (B) for such drug for the respective 
year, the Secretary shall agree under such ne-
gotiation or renegotiation, respectively, to such 
offered price as the maximum fair price. 
‘‘(B) TARGET PRICE.— 
‘‘(i) IN GENERAL.—Subject to clause 
(ii), the target price described in this sub-
paragraph for a selected drug with respect 
to a year, is the average price (which shall 
be the net average price, if practicable, and 
volume-weighted, if practicable) for a unit 
of such drug for sales of such drug, as 
computed (across different dosage forms 
and strengths of the drug and not based 
on the specific formulation or package size 
or package type of the drug) in the appli-
cable 
country 
described 
in 
section 
1191(c)(3)(B) with respect to such drug 
that, with respect to such year, has the 
lowest average price for such drug as com-
pared to the average prices (as so com-
puted) of such drug with respect to such 
year in the other applicable countries de-
scribed in such section with respect to such 
drug. 
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‘‘(ii) SELECTED DRUGS WITHOUT AIM 
PRICE.—In applying this paragraph in the 
case of negotiating the maximum fair price 
of a selected drug for which there is no 
AIM price available with respect to the ini-
tial price applicability year for such drug, 
or, as applicable, renegotiating the max-
imum fair price for such drug with respect 
to a subsequent year during the price ap-
plicability period for such drug before the 
first plan year for which there is an AIM 
price available for such drug, the target 
price described in this subparagraph for 
such drug and respective year is the 
amount that is 80 percent of the average 
manufacturer price (as defined in section 
1927(k)(1)) for such drug and year. 
‘‘(4) ANNUAL REPORT.—After the completion 
of each voluntary negotiation period, the Secretary 
shall submit to Congress a report on the maximum 
fair prices negotiated (or, as applicable, renegoti-
ated) for such period. Such report shall include in-
formation on how such prices so negotiated (or re-
negotiated) meet the requirements of this part, in-
cluding the requirements of this subsection. 
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‘‘(c) LIMITATION.— 
‘‘(1) IN GENERAL.—Subject to paragraph (2), 
the maximum fair price negotiated (including as re-
negotiated) under this section for a selected drug, 
with respect to each plan year during a price appli-
cability period for such drug, shall not exceed 120 
percent of the AIM price applicable to such drug 
with respect to such year. 
‘‘(2) SELECTED DRUGS WITHOUT AIM PRICE.— 
In the case of a selected drug for which there is no 
AIM price available with respect to the initial price 
applicability year for such drug, for each plan year 
during the price applicability period before the first 
plan year for which there is an AIM price available 
for such drug, the maximum fair price negotiated 
(including as renegotiated) under this section for the 
selected drug shall not exceed the amount equal to 
85 percent of the average manufacturer price for the 
drug with respect to such year. 
‘‘(d) CONSIDERATIONS.—For purposes of negotiating 
and, as applicable, renegotiating (including for purposes 
of determining whether to renegotiate) the maximum fair 
price of a selected drug under this part with the manufac-
turer of the drug, the Secretary, consistent with sub-
section (b)(2), shall take into consideration the factors de-
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scribed in paragraphs (1), (2), (3), and (5), and may take 
into consideration the factor described in paragraph (4): 
‘‘(1) 
MANUFACTURER-SPECIFIC
INFORMA-
TION.—The following information, including as sub-
mitted 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-
grams and purchasers and projected future rev-
enues for the drug. 
‘‘(C) Unit costs of production and distribu-
tion of the drug. 
‘‘(D) Prior Federal financial support for 
novel therapeutic discovery and development 
with respect to the drug. 
‘‘(E) Data on patents and on existing and 
pending exclusivity for the drug. 
‘‘(F) National sales data for the drug. 
‘‘(G) Information on clinical trials for the 
drug in the United States or in applicable coun-
tries described in section 1191(c)(3)(B). 
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‘‘(2) INFORMATION
ON
ALTERNATIVE
PROD-
UCTS.—The following information: 
‘‘(A) The extent to which the drug rep-
resents a therapeutic advance as compared to 
existing therapeutic alternatives and, to the ex-
tent such information is available, the costs of 
such existing therapeutic alternatives. 
‘‘(B) Information on approval by the Food 
and Drug Administration of alternative drug 
products. 
‘‘(C) Information on comparative effective-
ness analysis for such products, taking into 
consideration the effects of such products on 
specific populations, such as individuals with 
disabilities, the elderly, terminally ill, children, 
and other patient populations. 
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. 
Nothing in the previous sentence shall affect the ap-
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plication or consideration of an AIM price for a se-
lected drug. 
‘‘(3) FOREIGN
SALES
INFORMATION.—To the 
extent available on a timely basis, including as pro-
vided by a manufacturer of the selected drug or oth-
erwise, information on sales of the selected drug in 
each 
of 
the 
countries 
described 
in 
section 
1191(c)(3)(B). 
‘‘(4) VA DRUG PRICING INFORMATION.—Infor-
mation disclosed to the Secretary pursuant to sub-
section (f). 
‘‘(5) 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. 
‘‘(e) 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-
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tial price applicability year of such period, request 
drug pricing information from the manufacturer of 
such selected drug, including information described 
in subsection (d)(1); and 
‘‘(2) by not later than October 1 following the 
selected 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 may require. 
The Secretary shall request, from the manufacturer or 
others, such additional information as may be needed to 
carry out the negotiation and renegotiation process under 
this section. 
‘‘(f) DISCLOSURE OF INFORMATION.—For purposes 
of this part, the Secretary of Veterans Affairs may disclose 
to the Secretary of Health and Human Services the price 
of any negotiation-eligible drug that is purchased pursuant 
to section 8126 of title 38, United States Code. 
‘‘SEC. 1195. PUBLICATION OF MAXIMUM FAIR PRICES. 
‘‘(a) IN GENERAL.—With respect to an initial price 
applicability year and selected drug with respect to such 
year, not later than April 1 of the plan year prior to such 
initial price applicability year, the Secretary shall publish 
in the Federal Register the maximum fair price for such 
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drug negotiated under this part with the manufacturer of 
such drug. 
‘‘(b) UPDATES.— 
‘‘(1) 
SUBSEQUENT
YEAR
MAXIMUM
FAIR 
PRICES.—For a selected drug, for each plan year 
subsequent to the initial price applicability year for 
such drug with respect to which an agreement for 
such drug is in effect under section 1193, the Sec-
retary shall publish in the Federal Register— 
‘‘(A) subject to subparagraph (B), the 
amount equal to the maximum fair price pub-
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 
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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: 
‘‘(A) The establishment of procedures (in-
cluding through agreements with manufacturers 
under this part, contracts with prescription 
drug plans under part D of title XVIII and 
MA–PD plans under part C of such title, and 
agreements under section 1197 with group 
health plans and health insurance issuers of 
health insurance coverage offered in the indi-
vidual or group market) under which the max-
imum fair price for a selected drug is provided 
to fair price eligible individuals, who with re-
spect to such drug are described in subpara-
graph (A) of section 1191(c)(1), at pharmacies 
or by mail order service at the point-of-sale of 
the drug for the applicable price period for such 
drug and providing that such maximum fair 
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price is used for determining cost-sharing under 
such plans or coverage for the selected drug. 
‘‘(B) The establishment of procedures (in-
cluding through agreements with manufacturers 
under this part and contracts with hospitals, 
physicians, and other providers of services and 
suppliers and agreements under section 1197 
with group health plans and health insurance 
issuers of health insurance coverage offered in 
the individual or group market) under which, in 
the case of a selected drug furnished or admin-
istered by such a hospital, physician, or other 
provider of services or supplier to fair price eli-
gible individuals (who with respect to such drug 
are described in subparagraph (B) of section 
1191(c)(1)), the maximum fair price for the se-
lected drug is provided to such hospitals, physi-
cians, and other providers of services and sup-
pliers (as applicable) with respect to such indi-
viduals and providing that such maximum fair 
price is used for determining cost-sharing under 
the respective part, plan, or coverage for the se-
lected drug. 
‘‘(C) The establishment of procedures (in-
cluding through agreements and contracts de-
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scribed in subparagraphs (A) and (B)) to en-
sure that, not later than 90 days after the dis-
pensing of a selected drug to a fair price eligi-
ble individual by a pharmacy or mail order serv-
ice, the pharmacy or mail order service is reim-
bursed for an amount equal to the difference 
between— 
‘‘(i) the lesser of— 
‘‘(I) the wholesale acquisition 
cost of the drug; 
‘‘(II) the national average drug 
acquisition cost of the drug; and 
‘‘(III) any other similar deter-
mination of pharmacy acquisition 
costs of the drug, as determined by 
the Secretary; and 
‘‘(ii) the maximum fair price for the 
drug. 
‘‘(D) 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-
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sion of prescription drug coverage on be-
half of fair price eligible individuals as the 
Secretary may specify; and 
‘‘(ii) any other discounts. 
‘‘(E) The establishment of procedures to 
enter into appropriate agreements and protocols 
for the ongoing computation of AIM prices for 
selected drugs, including, to the extent possible, 
to compute the AIM price for selected drugs 
and including by providing that the manufac-
turer of such a selected drug should provide in-
formation for such computation not later than 
3 months after the first date of the voluntary 
negotiation period for such selected drug. 
‘‘(F) 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. 
‘‘(G) The establishment of procedures to 
negotiate and apply the maximum fair price in 
a manner that does not include any dispensing 
or similar fee. 
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‘‘(H) The establishment of procedures to 
carry out the provisions of this part, as applica-
ble, with respect to— 
‘‘(i) fair price eligible individuals who 
are enrolled under a prescription drug plan 
under part D of title XVIII or an MA–PD 
plan under part C of such title; 
‘‘(ii) fair price eligible individuals who 
are enrolled under a group health plan or 
health insurance coverage offered by a 
health insurance issuer in the individual or 
group market with respect to which there 
is an agreement in effect under section 
1197; and 
‘‘(iii) fair price eligible individuals who 
are entitled to benefits under part A of 
title XVIII or enrolled under part B of 
such title. 
‘‘(I) The establishment of a negotiation 
process and renegotiation process in accordance 
with section 1194, including a process for ac-
quiring information described in subsection (d) 
of such section and determining amounts de-
scribed in subsection (b) of such section. 
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‘‘(J) The provision of a reasonable dispute 
resolution mechanism to resolve disagreements 
between manufacturers, fair price eligible indi-
viduals, and the third party with a contract 
under subsection (c)(1). 
‘‘(2) MONITORING COMPLIANCE.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
monitor compliance by a manufacturer with the 
terms of an agreement under section 1193, in-
cluding by establishing a mechanism through 
which violations of such terms may be reported. 
‘‘(B) NOTIFICATION.—If a third party 
with a contract under subsection (c)(1) 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 section 4192 of 
the Internal Revenue Code of 1986 or section 
1198, as applicable. 
‘‘(b) COLLECTION OF DATA.— 
‘‘(1) FROM
PRESCRIPTION
DRUG
PLANS
AND 
MA–PD PLANS.—The Secretary may collect appro-
priate data from prescription drug plans under part 
D of title XVIII and MA–PD plans under part C of 
such title in a timeframe that allows for maximum 
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fair prices to be provided under this part for selected 
drugs. 
‘‘(2) FROM
HEALTH
PLANS.—The Secretary 
may collect appropriate data from group health 
plans or health insurance issuers offering group or 
individual health insurance coverage in a timeframe 
that allows for maximum fair prices to be provided 
under this part for selected drugs. 
‘‘(3) COORDINATION OF DATA COLLECTION.— 
To the extent feasible, as determined by the Sec-
retary, the Secretary shall ensure that data collected 
pursuant to this subsection is coordinated with, and 
not duplicative of, other Federal data collection ef-
forts. 
‘‘(c) CONTRACT WITH THIRD PARTIES.— 
‘‘(1) IN GENERAL.—The Secretary may enter 
into a contract with 1 or more third parties to ad-
minister the requirements established by the Sec-
retary in order to carry out this part. At a min-
imum, the contract with a third party under the pre-
ceding sentence shall require that the third party— 
‘‘(A) receive and transmit information be-
tween the Secretary, manufacturers, and other 
individuals or entities the Secretary determines 
appropriate; 
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‘‘(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 part; 
‘‘(C) provide adequate and timely informa-
tion to manufacturers, consistent with the 
agreement with the manufacturer under this 
part, as necessary for the manufacturer to ful-
fill its obligations under this part; 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. 
‘‘(2) 
PERFORMANCE
REQUIREMENTS.—The 
Secretary shall establish performance requirements 
for a third party with a contract under paragraph 
(1) and safeguards to protect the independence and 
integrity of the activities carried out by the third 
party under the program under this part. 
‘‘SEC. 
1197. 
VOLUNTARY 
PARTICIPATION 
BY 
OTHER 
HEALTH PLANS. 
‘‘(a) AGREEMENT TO PARTICIPATE UNDER PRO-
GRAM.— 
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‘‘(1) IN GENERAL.—Subject to paragraph (2), 
under the program under this part the Secretary 
shall be treated as having in effect an agreement 
with a group health plan or health insurance issuer 
offering group or individual health insurance cov-
erage (as such terms are defined in section 2791 of 
the Public Health Service Act), with respect to a 
price applicability period and a selected drug with 
respect to such period— 
‘‘(A) with respect to such selected drug 
furnished or dispensed at a pharmacy or by 
mail order service if coverage is provided under 
such plan or coverage during such period for 
such selected drug as so furnished or dispensed; 
and 
‘‘(B) with respect to such selected drug 
furnished or administered by a hospital, physi-
cian, or other provider of services or supplier if 
coverage is provided under such plan or cov-
erage during such period for such selected drug 
as so furnished or administered. 
‘‘(2) OPTING OUT OF AGREEMENT.—The Sec-
retary shall not be treated as having in effect an 
agreement under the program under this part with 
a group health plan or health insurance issuer offer-
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ing group or individual health insurance coverage 
with respect to a price applicability period and a se-
lected drug with respect to such period if such a 
plan or issuer affirmatively elects, through a process 
specified by the Secretary, not to participate under 
the program with respect to such period and drug. 
‘‘(b) PUBLICATION OF ELECTION.—With respect to 
each price applicability period and each selected drug with 
respect to such period, the Secretary and the Secretary 
of Labor and the Secretary of the Treasury, as applicable, 
shall make public a list of each group health plan and each 
health insurance issuer offering group or individual health 
insurance coverage, with respect to which coverage is pro-
vided under such plan or coverage for such drug, that has 
elected under subsection (a) not to participate under the 
program with respect to such period and drug. 
‘‘SEC. 1198. 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 plan year during the price applicability 
period for 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— 
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‘‘(1) to a fair price eligible individual who with 
respect to such drug is described in subparagraph 
(A) of section 1191(c)(1) and who is furnished or 
dispensed such drug during such year; or 
‘‘(2) to a hospital, physician, or other provider 
of services or supplier with respect to fair price eligi-
ble individuals who with respect to such drug is de-
scribed in subparagraph (B) of such section and is 
furnished or administered such drug by such hos-
pital, physician, or provider or supplier during such 
year; 
shall be subject to a civil monetary penalty equal to ten 
times the amount equal to the difference between the price 
for such drug made available for such year by such manu-
facturer with respect to such individual or hospital, physi-
cian, provider, or supplier and the maximum 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 plan year during the price applicability period for 
such drug, that is in violation of a requirement imposed 
pursuant to section 1193(a)(6) shall be subject to a civil 
monetary penalty of not more than $1,000,000 for each 
such violation. 
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‘‘(c) 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). 
‘‘SEC. 1199. MISCELLANEOUS PROVISIONS. 
‘‘(a) PAPERWORK REDUCTION ACT.—Chapter 35 of 
title 44, United States Code, shall not apply to data col-
lected under this part. 
‘‘(b) NATIONAL ACADEMY OF MEDICINE STUDY.— 
Not later than December 31, 2027, the National Academy 
of Medicine shall conduct a study, and submit to Congress 
a report, on recommendations for improvements to the 
program under this part, including the determination of 
the limits applied under section 1194(c). 
‘‘(c) MEDPAC STUDY.—Not later than December 31, 
2027, the Medicare Payment Advisory Commission shall 
conduct a study, and submit to Congress a report, on the 
program under this part with respect to the Medicare pro-
gram under title XVIII, including with respect to the ef-
fect of the program on individuals entitled to benefits or 
enrolled under such title. 
‘‘(d) LIMITATION ON JUDICIAL REVIEW.—The fol-
lowing shall not be subject to judicial review: 
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‘‘(1) The selection of drugs for publication 
under section 1192(a). 
‘‘(2) The determination of whether a drug is a 
negotiation-eligible drug under section 1192(d). 
‘‘(3) The determination of the maximum fair 
price of a selected drug under section 1194. 
‘‘(4) The determination of units of a drug for 
purposes of section 1191(c)(3). 
‘‘(e) COORDINATION.—In carrying out this part with 
respect to group health plans or health insurance coverage 
offered in the group market that are subject to oversight 
by the Secretary of Labor or the Secretary of the Treas-
ury, the Secretary of Health and Human Services shall 
coordinate with such respective Secretary. 
‘‘(f) DATA SHARING.—The Secretary shall share with 
the Secretary of the Treasury such information as is nec-
essary to determine the tax imposed by section 4192 of 
the Internal Revenue Code of 1986. 
‘‘(g) GAO STUDY.—Not later than December 31, 
2027, the Comptroller General of the United States shall 
conduct a study of, and submit to Congress a report on, 
the implementation of the Fair Price Negotiation Program 
under this part.’’. 
(b) APPLICATION OF MAXIMUM FAIR PRICES AND 
CONFORMING AMENDMENTS.— 
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(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 de-
fined 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 plan year during such 
period’’ after ‘‘paragraph (4)’’. 
(B) 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 by inserting ‘‘, except as provided 
under part E of title XI’’ after ‘‘the Secretary’’. 
(C) 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 
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(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 defined 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 the max-
imum 
fair 
price 
(as 
defined 
in 
section 
1191(c)(2)) for such drug and for each plan 
year during such period.’’. 
(D) 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 
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the Secretary as requested by the Secretary in ac-
cordance with section 1196(b).’’. 
(ii) 
MA–PD 
PLANS.—Section 
1857(f)(3) of the Social Security Act (42 
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) UNDER
GROUP
HEALTH
PLANS
AND 
HEALTH INSURANCE COVERAGE.— 
(A) PHSA.—Part D of title XXVII of the 
Public Health Service Act (42 U.S.C. 300gg– 
111 et seq.) is amended by adding at the end 
the following new section: 
‘‘SEC. 2799A–11. FAIR PRICE NEGOTIATION PROGRAM AND 
APPLICATION OF MAXIMUM FAIR PRICES. 
‘‘(a) IN GENERAL.—In the case of a group health 
plan or health insurance issuer offering group or indi-
vidual health insurance coverage that is treated under sec-
tion 1197 of the Social Security Act as having in effect 
an agreement with the Secretary under the Fair Price Ne-
gotiation Program under part E of title XI of such Act, 
with respect to a price applicability period (as defined in 
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section 1191(b) of such Act) and a selected drug (as de-
fined in section 1192(c) of such Act) with respect to such 
period with respect to which coverage is provided under 
such plan or coverage— 
‘‘(1) the provisions of such part shall apply— 
‘‘(A) if coverage of such selected drug is 
provided under such plan or coverage if the 
drug is furnished or dispensed at a pharmacy 
or by a mail order service, to the plans or cov-
erage offered by such plan or issuer, and to the 
individuals enrolled under such plans or cov-
erage, during such period, with respect to such 
selected drug, in the same manner as such pro-
visions apply to prescription drug plans and 
MA–PD plans, and to individuals enrolled 
under such prescription drug plans and MA– 
PD plans during such period; and 
‘‘(B) if coverage of such selected drug is 
provided under such plan or coverage if the 
drug is furnished or administered by a hospital, 
physician, or other provider of services or sup-
plier, to the plans or coverage offered by such 
plan or issuers, to the individuals enrolled 
under such plans or coverage, and to hospitals, 
physicians, and other providers of services and 
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suppliers during such period, with respect to 
such drug in the same manner as such provi-
sions apply to the Secretary, to individuals enti-
tled to benefits under part A of title XVIII or 
enrolled under part B of such title, and to hos-
pitals, physicians, and other providers and sup-
pliers participating under title XVIII during 
such period; 
‘‘(2) the plan or issuer shall apply any cost- 
sharing responsibilities under such plan or coverage, 
with respect to such selected drug, by substituting 
an amount not more than the maximum fair price 
negotiated under such part E of title XI for such 
drug in lieu of the drug price upon which the cost- 
sharing would have otherwise applied, and such cost- 
sharing responsibilities with respect to such selected 
drug may not exceed such maximum fair price; and 
‘‘(3) the Secretary shall apply the provisions of 
such part E to such plan, issuer, and coverage, such 
individuals so enrolled in such plans and coverage, 
and such hospitals, physicians, and other providers 
and suppliers participating in such plans and cov-
erage. 
‘‘(b) NOTIFICATION REGARDING NONPARTICIPATION 
IN FAIR PRICE NEGOTIATION PROGRAM.—A group health 
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plan or a health insurance issuer offering group or indi-
vidual health insurance coverage shall publicly disclose in 
a manner and in accordance with a process specified by 
the Secretary any election made under section 1197 of the 
Social Security Act by the plan or issuer to not participate 
in the Fair Price Negotiation Program under part E of 
title XI of such Act with respect to a selected drug (as 
defined in section 1192(c) of such Act) for which coverage 
is provided under such plan or coverage before the begin-
ning of the plan year for which such election was made.’’. 
(B) ERISA.— 
(i) IN GENERAL.—Subpart B of part 
7 of subtitle B of title I of the Employee 
Retirement Income Security Act of 1974 
(29 U.S.C. 1181 et seq.) is amended by 
adding at the end the following new sec-
tion: 
‘‘SEC. 726. FAIR PRICE NEGOTIATION PROGRAM AND APPLI-
CATION OF MAXIMUM FAIR PRICES. 
‘‘(a) IN GENERAL.—In the case of a group health 
plan or health insurance issuer offering group health in-
surance coverage that is treated under section 1197 of the 
Social Security Act as having in effect an agreement with 
the Secretary under the Fair Price Negotiation Program 
under part E of title XI of such Act, with respect to a 
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price applicability period (as defined in section 1191(b) 
of such Act) and a selected drug (as defined in section 
1192(c) of such Act) with respect to such period with re-
spect to which coverage is provided under such plan or 
coverage— 
‘‘(1) the provisions of such part shall apply, as 
applicable— 
‘‘(A) if coverage of such selected drug is 
provided under such plan or coverage if the 
drug is furnished or dispensed at a pharmacy 
or by a mail order service, to the plans or cov-
erage offered by such plan or issuer, and to the 
individuals enrolled under such plans or cov-
erage, during such period, with respect to such 
selected drug, in the same manner as such pro-
visions apply to prescription drug plans and 
MA–PD plans, and to individuals enrolled 
under such prescription drug plans and MA– 
PD plans during such period; and 
‘‘(B) if coverage of such selected drug is 
provided under such plan or coverage if the 
drug is furnished or administered by a hospital, 
physician, or other provider of services or sup-
plier, to the plans or coverage offered by such 
plan or issuers, to the individuals enrolled 
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under such plans or coverage, and to hospitals, 
physicians, and other providers of services and 
suppliers during such period, with respect to 
such drug in the same manner as such provi-
sions apply to the Secretary, to individuals enti-
tled to benefits under part A of title XVIII or 
enrolled under part B of such title, and to hos-
pitals, physicians, and other providers and sup-
pliers participating under title XVIII during 
such period; 
‘‘(2) the plan or issuer shall apply any cost- 
sharing responsibilities under such plan or coverage, 
with respect to such selected drug, by substituting 
an amount not more than the maximum fair price 
negotiated under such part E of title XI for such 
drug in lieu of the drug price upon which the cost- 
sharing would have otherwise applied, and such cost- 
sharing responsibilities with respect to such selected 
drug may not exceed such maximum fair price; and 
‘‘(3) the Secretary shall apply the provisions of 
such part E to such plan, issuer, and coverage, and 
such individuals so enrolled in such plans. 
‘‘(b) NOTIFICATION REGARDING NONPARTICIPATION 
IN FAIR PRICE NEGOTIATION PROGRAM.—A group health 
plan or a health insurance issuer offering group health in-
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surance coverage shall publicly disclose in a manner and 
in accordance with a process specified by the Secretary 
any election made under section 1197 of the Social Secu-
rity Act by the plan or issuer to not participate in the 
Fair Price Negotiation Program under part E of title XI 
of such Act with respect to a selected drug (as defined 
in section 1192(c) of such Act) for which coverage is pro-
vided under such plan or coverage before the beginning 
of the plan year for which such election was made.’’. 
(ii) APPLICATION
TO
RETIREE
AND 
CERTAIN SMALL GROUP HEALTH PLANS.— 
Section 732(a) of the Employee Retire-
ment Income Security Act of 1974 (29 
U.S.C. 1191a(a)) is amended by striking 
‘‘section 711’’ and inserting ‘‘sections 711 
and 726’’. 
(iii) 
CLERICAL
AMENDMENT.—The 
table of sections for subpart B of part 7 of 
subtitle B of title I of the Employee Re-
tirement Income Security Act of 1974 is 
amended by adding at the end the fol-
lowing: 
‘‘Sec. 726. Fair Price Negotiation Program and application of maximum fair 
prices.’’. 
(C) IRC.— 
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(i) IN
GENERAL.—Subchapter B of 
chapter 100 of the Internal Revenue Code 
of 1986 is amended by adding at the end 
the following new section: 
‘‘SEC. 9826. FAIR PRICE NEGOTIATION PROGRAM AND AP-
PLICATION OF MAXIMUM FAIR PRICES. 
‘‘(a) IN GENERAL.—In the case of a group health 
plan that is treated under section 1197 of the Social Secu-
rity Act as having in effect an agreement with the Sec-
retary under the Fair Price Negotiation Program under 
part E of title XI of such Act, with respect to a price 
applicability period (as defined in section 1191(b) of such 
Act) and a selected drug (as defined in section 1192(c) 
of such Act) with respect to such period with respect to 
which coverage is provided under such plan— 
‘‘(1) the provisions of such part shall apply, as 
applicable— 
‘‘(A) if coverage of such selected drug is 
provided under such plan if the drug is fur-
nished or dispensed at a pharmacy or by a mail 
order service, to the plan, and to the individuals 
enrolled under such plan during such period, 
with respect to such selected drug, in the same 
manner as such provisions apply to prescription 
drug plans and MA–PD plans, and to individ-
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uals enrolled under such prescription drug 
plans and MA–PD plans during such period; 
and 
‘‘(B) if coverage of such selected drug is 
provided under such plan if the drug is fur-
nished or administered by a hospital, physician, 
or other provider of services or supplier, to the 
plan, to the individuals enrolled under such 
plan, and to hospitals, physicians, and other 
providers of services and suppliers during such 
period, with respect to such drug in the same 
manner as such provisions apply to the Sec-
retary, to individuals entitled to benefits under 
part A of title XVIII or enrolled under part B 
of such title, and to hospitals, physicians, and 
other providers and suppliers participating 
under title XVIII during such period; 
‘‘(2) the plan shall apply any cost-sharing re-
sponsibilities under such plan, with respect to such 
selected drug, by substituting an amount not more 
than the maximum fair price negotiated under such 
part E of title XI for such drug in lieu of the drug 
price upon which the cost-sharing would have other-
wise applied, and such cost-sharing responsibilities 
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with respect to such selected drug may not exceed 
such maximum fair price; and 
‘‘(3) the Secretary shall apply the provisions of 
such part E to such plan and such individuals so en-
rolled in such plan. 
‘‘(b) NOTIFICATION REGARDING NONPARTICIPATION 
IN FAIR PRICE NEGOTIATION PROGRAM.—A group health 
plan shall publicly disclose in a manner and in accordance 
with a process specified by the Secretary any election 
made under section 1197 of the Social Security Act by 
the plan to not participate in the Fair Price Negotiation 
Program under part E of title XI of such Act with respect 
to a selected drug (as defined in section 1192(c) of such 
Act) for which coverage is provided under such plan before 
the beginning of the plan year for which such election was 
made.’’. 
(ii) APPLICATION
TO
RETIREE
AND 
CERTAIN SMALL GROUP HEALTH PLANS.— 
Section 9831(a)(2) of the Internal Revenue 
Code of 1986 is amended by inserting 
‘‘other than with respect to section 9826,’’ 
before ‘‘any group health plan’’. 
(iii) 
CLERICAL
AMENDMENT.—The 
table of sections for subchapter B of chap-
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ter 100 of such Code is amended by add-
ing at the end the following new item: 
‘‘Sec. 9826. Fair Price Negotiation Program and application of maximum fair 
prices.’’. 
(3) FAIR PRICE NEGOTIATION PROGRAM PRICES 
INCLUDED IN BEST PRICE AND AMP.—Section 1927 
of the Social Security Act (42 U.S.C. 1396r–8) is 
amended— 
(A) in subsection (c)(1)(C)(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 defined in 
section 1192(c)) during such rebate 
period, shall be inclusive of the price 
for such drug made available from the 
manufacturer during the rebate period 
by reason of application of part E of 
title XI to any wholesaler, retailer, 
provider, health maintenance organi-
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zation, nonprofit entity, or govern-
mental entity within the United 
States.’’; and 
(B) in subsection (k)(1)(B), by adding at 
the end the following new clause: 
‘‘(iii) 
CLARIFICATION.—Notwith-
standing clause (i), in the case of a rebate 
period and a covered outpatient drug that 
is a selected drug (as defined in section 
1192(c)) during such rebate period, any 
reduction in price paid during the rebate 
period to the manufacturer for the drug by 
a wholesaler or retail community pharmacy 
described in subparagraph (A) by reason of 
application of part E of title XI shall be 
included in the average manufacturer price 
for the covered outpatient drug.’’. 
(4) FEHBP.—Section 8902 of title 5, United 
States Code, is amended by adding at the end the 
following: 
‘‘(p) A contract may not be made or a plan approved 
under this chapter with any carrier that has affirmatively 
elected, pursuant to section 1197 of the Social Security 
Act, not to participate in the Fair Price Negotiation Pro-
gram established under section 1191 of such Act for any 
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selected drug (as that term is defined in section 1192(c) 
of such Act).’’. 
(5) OPTION OF SECRETARY OF VETERANS AF-
FAIRS TO PURCHASE COVERED DRUGS AT MAXIMUM 
FAIR
PRICES.—Section 8126 of title 38, United 
States Code, is amended— 
(A) in subsection (a)(2), by inserting ‘‘, 
subject to subsection (j),’’ after ‘‘may not ex-
ceed’’; 
(B) in subsection (d), in the matter pre-
ceding paragraph (1), by inserting ‘‘, subject to 
subsection (j)’’ after ‘‘for the procurement of 
the drug’’; and 
(C) by adding at the end the following new 
subsection: 
‘‘(j)(1) In the case of a covered drug that is a selected 
drug, for any year during the price applicability period for 
such drug, if the Secretary determines that the maximum 
fair price of such drug for such year is less than the price 
for such drug otherwise in effect pursuant to this section 
(including after application of any reduction under sub-
section (a)(2) and any discount under subsection (c)), at 
the option of the Secretary, in lieu of the maximum price 
(determined after application of the reduction under sub-
section (a)(2) and any discount under subsection (c), as 
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applicable) that would be permitted to be charged during 
such year for such drug pursuant to this section without 
application of this subsection, the maximum price per-
mitted to be charged during such year for such drug pur-
suant to this section shall be such maximum fair price for 
such drug and year. 
‘‘(2) For purposes of this subsection: 
‘‘(A) The term ‘maximum fair price’ means, 
with respect to a selected drug and year during the 
price applicability period for such drug, the max-
imum fair price (as defined in section 1191(c)(2) of 
the Social Security Act) for such drug and year. 
‘‘(B) The term ‘negotiation eligible drug’ has 
the meaning given such term in section 1192(d)(1) 
of the Social Security Act. 
‘‘(C) The term ‘price applicability period’ has, 
with respect to a selected drug, the meaning given 
such term in section 1191(b)(2) of such Act. 
‘‘(D) The term ‘selected drug’ means, with re-
spect to a year, a drug that is a selected drug under 
section 1192(c) of such Act for such year.’’. 
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SEC. 102. SELECTED DRUG MANUFACTURER EXCISE TAX 
IMPOSED DURING NONCOMPLIANCE PERI-
ODS. 
(a) IN GENERAL.—Subchapter E of chapter 32 of the 
Internal Revenue Code of 1986 is amended by adding at 
the end the following new section: 
‘‘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: 
‘‘(1) The period beginning on the June 16th 
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. 
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‘‘(2) The period beginning on the April 1st im-
mediately following the June 16th described in para-
graph (1) and ending on the first date during which 
the manufacturer of the drug has agreed to a max-
imum 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 
certifies that such information is overdue and ending 
on the date that such information is so submitted. 
‘‘(5) In the case of a selected drug with respect 
to which a payment is due under subsection (c) of 
such section 1193, the period beginning on the date 
on which the Secretary of Health and Human Serv-
ices certifies that such payment is overdue and end-
ing on the date that such payment is made in full. 
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‘‘(c) APPLICABLE PERCENTAGE.—For purposes of 
this section, the term ‘applicable percentage’ means— 
‘‘(1) in the case of sales of a selected drug dur-
ing the first 90 days described in subsection (b) with 
respect to such drug, 65 percent, 
‘‘(2) in the case of sales of such drug during 
the 91st day through the 180th day described in 
subsection (b) with respect to such drug, 75 percent, 
‘‘(3) in the case of sales of such drug during 
the 181st day through the 270th day described in 
subsection (b) with respect to such drug, 85 percent, 
and 
‘‘(4) in the case of sales of such drug during 
any subsequent day, 95 percent. 
‘‘(d) SELECTED DRUG.—For purposes of this sec-
tion— 
‘‘(1) IN GENERAL.—The term ‘selected drug’ 
means any selected drug (within the meaning of sec-
tion 1192 of the Social Security Act) which is manu-
factured or produced in the United States or entered 
into the United States for consumption, use, or 
warehousing. 
‘‘(2) UNITED
STATES.—The term ‘United 
States’ has the meaning given such term by section 
4612(a)(4). 
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‘‘(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 of the Internal Revenue Code of 1986 is 
amended by adding ‘‘or by section 4192’’ before the period 
at the end of subsection (a)(6). 
(c) CONFORMING AMENDMENTS.— 
(1) Section 4221(a) of the Internal Revenue 
Code of 1986 is amended by inserting ‘‘or 4192’’ 
after ‘‘section 4191’’. 
(2) Section 6416(b)(2) of such Code is amend-
ed by inserting ‘‘or 4192’’ after ‘‘section 4191’’. 
(d) CLERICAL AMENDMENTS.— 
(1) The heading of subchapter E of chapter 32 
of the Internal Revenue Code of 1986 is amended by 
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striking 
‘‘Medical 
Devices’’ 
and 
inserting 
‘‘Other Medical Products’’. 
(2) The table of subchapters for chapter 32 of 
such Code is amended by striking the item relating 
to subchapter E and inserting the following new 
item: 
‘‘SUBCHAPTER E. OTHER MEDICAL PRODUCTS’’. 
(3) The table of sections for subchapter E of 
chapter 32 of such Code is amended by adding at 
the end the following new item: 
‘‘Sec. 4192. Selected drugs during noncompliance periods.’’. 
(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. FAIR PRICE NEGOTIATION IMPLEMENTATION 
FUND. 
(a) IN GENERAL.—There is hereby established a Fair 
Price Negotiation Implementation Fund (referred to in 
this section as the ‘‘Fund’’). The Secretary of Health and 
Human Services may obligate and expend amounts in the 
Fund to carry out this title and titles II and III (and the 
amendments made by such titles). 
(b) FUNDING.—There is authorized to be appro-
priated, and there is hereby appropriated, out of any mon-
ies in the Treasury not otherwise appropriated, to the 
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Fund $3,000,000,000, to remain available until expended, 
of which— 
(1) $600,000,000 shall become available on the 
date of the enactment of this Act; 
(2) $600,000,000 shall become available on Oc-
tober 1, 2022; 
(3) $600,000,000 shall become available on Oc-
tober 1, 2023; 
(4) $600,000,000 shall become available on Oc-
tober 1, 2024; and 
(5) $600,000,000 shall become available on Oc-
tober 1, 2025. 
(c) SUPPLEMENT NOT SUPPLANT.—Any amounts 
appropriated pursuant to this section shall be in addition 
to any other amounts otherwise appropriated pursuant to 
any other provision of law. 
TITLE II—PRESCRIPTION DRUG 
INFLATION REBATES 
SEC. 201. MEDICARE PART B REBATE BY MANUFACTURERS. 
(a) IN GENERAL.—Section 1834 of the Social Secu-
rity Act (42 U.S.C. 1395m) is amended by adding at the 
end the following new subsection: 
‘‘(z) REBATE
BY MANUFACTURERS
FOR SINGLE 
SOURCE DRUGS WITH PRICES INCREASING FASTER 
THAN INFLATION.— 
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‘‘(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 units of the billing and payment code 
described in subparagraph (A)(i) of para-
graph (3) with respect to such drug and 
calendar quarter. 
‘‘(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 
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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 section 1847A(c)(6)), includ-
ing a biosimilar biological product (as defined 
in subparagraph (H) of such section), paid for 
under this part, except such term shall not in-
clude such a drug or biological— 
‘‘(i) if the average total allowed 
charges for a year per individual that uses 
such a drug or biological, as determined by 
the Secretary, 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)— 
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‘‘(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 
‘‘(ii) for a subsequent year, shall be 
the dollar amount specified in this clause 
(or clause (i)) for the previous year, 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. 
Any dollar amount specified under this sub-
paragraph 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 paragraph (4), the amount 
equal to the product of— 
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‘‘(i) subject to subparagraphs (B) and 
(G), the total number of units of the bill-
ing and payment code for such part B 
rebatable drug furnished under this part 
during the calendar quarter; and 
‘‘(ii) the amount (if any) by which— 
‘‘(I) the payment amount under 
subparagraph (B) or (C) of section 
1847A(b)(1), as applicable, for such 
part B rebatable drug during the cal-
endar 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) EXCLUDED UNITS.—For purposes of 
subparagraph (A)(i), the total number of units 
of the billing and payment code for each part 
B rebatable drug furnished during a calendar 
quarter shall not include— 
‘‘(i) units packaged into the payment 
for a procedure or service under section 
1833(t) or under section 1833(i) (instead 
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of separately payable under such respective 
section); 
‘‘(ii) units included under the single 
payment system for renal dialysis services 
under section 1881(b)(14); or 
‘‘(iii) units of a part B rebatable drug 
of a manufacturer furnished to an indi-
vidual, if such manufacturer, with respect 
to the furnishing of such units of such 
drug, provides for discounts under section 
340B of the Public Health Service Act or 
for rebates under section 1927. 
‘‘(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-
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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 be-
ginning January 1, 2016. 
‘‘(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 July 2015. 
‘‘(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) COUNTING UNITS.— 
‘‘(i) CUT-OFF
PERIOD
TO
COUNT 
UNITS.—For purposes of subparagraph 
(A)(i), subject to clause (ii), to count the 
total number of billing units for a part B 
rebatable drug for a quarter, the Secretary 
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may use a cut-off period in order to ex-
clude from such total number of billing 
units for such quarter claims for services 
furnished during such quarter that were 
not processed at an appropriate time prior 
to the end of the cut-off period. 
‘‘(ii) COUNTING
UNITS
FOR
CLAIMS 
PROCESSED
AFTER
CUT-OFF
PERIOD.—If 
the Secretary uses a cut-off period pursu-
ant to clause (i), in the case of units of a 
part B rebatable drug furnished during a 
quarter but pursuant to application of such 
cut-off period excluded for purposes of sub-
paragraph (A)(i) from the total number of 
billing units for the drug for such quarter, 
the Secretary shall count such units of 
such drug so furnished in the total number 
of billing units for such drug for a subse-
quent quarter, as the Secretary determines 
appropriate. 
‘‘(4) SPECIAL TREATMENT OF CERTAIN DRUGS 
AND EXEMPTION.— 
‘‘(A) SUBSEQUENTLY APPROVED DRUGS.— 
Subject to subparagraph (B), in the case of a 
part B rebatable drug first approved or licensed 
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by the Food and Drug Administration after 
July 1, 2015, clause (i) of paragraph (3)(C) 
shall be applied as if the term ‘payment amount 
benchmark quarter’ were defined under para-
graph (3)(D) as the third full calendar quarter 
after the day on which the drug was first mar-
keted and clause (ii) of paragraph (3)(C) shall 
be applied as if the term ‘benchmark period 
CPI–U’ were defined under paragraph (3)(E) 
as if the reference to ‘July 2015’ 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 
first approved or licensed by the Food and 
Drug Administration after July 1, 2015, para-
graph (1)(B) shall be applied as if the reference 
to ‘July 1, 2023’ under such paragraph were a 
reference to the later of the 6th full calendar 
quarter after the day on which the drug was 
first marketed or July 1, 2023. 
‘‘(C) EXEMPTION FOR SHORTAGES.—The 
Secretary may reduce or waive the rebate 
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amount under paragraph (1)(B) with respect to 
a part B rebatable drug that is described as 
currently in shortage on the shortage list in ef-
fect under section 506E of the Federal Food, 
Drug, and Cosmetic Act or in the case of other 
exigent circumstances, as determined by the 
Secretary. 
‘‘(D) 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))— 
‘‘(i) for calendar quarters during such 
period for which a maximum fair price (as 
defined in section 1191(c)(2)) for such 
drug has been determined and is applied 
under part E of title XI, the rebate 
amount under paragraph (1)(B) shall be 
waived; and 
‘‘(ii) in the case such drug is deter-
mined (pursuant to such section 1192(c)) 
to no longer be a selected drug, for each 
applicable year beginning after the price 
applicability period with respect to such 
drug, clause (i) of paragraph (3)(C) shall 
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be applied as if the term ‘payment amount 
benchmark quarter’ were defined under 
paragraph (3)(D) as the calendar quarter 
beginning January 1 of the last year be-
ginning during such price applicability pe-
riod with respect to such selected drug and 
clause (ii) of paragraph (3)(C) shall be ap-
plied as if the term ‘benchmark period 
CPI–U’ were defined under paragraph 
(3)(E) as if the reference to ‘July 2015’ 
under such paragraph were a reference to 
the July 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 for a quarter exceeds the infla-
tion adjusted payment for such quarter— 
‘‘(A) in computing the amount of any coin-
surance applicable under this title to an indi-
vidual with respect to such drug, the computa-
tion of such coinsurance shall be based on the 
inflation-adjusted payment amount determined 
under paragraph (3)(C) for such part B 
rebatable drug; and 
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‘‘(B) the amount of such coinsurance is 
equal to 20 percent of such inflation-adjusted 
payment amount so determined. 
‘‘(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). 
‘‘(8) STUDY AND REPORT.— 
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‘‘(A) STUDY.—The Secretary shall conduct 
a study of the feasibility of and operational 
issues involved with the following: 
‘‘(i) Including multiple source drugs 
(as defined in section 1847A(c)(6)(C)) in 
the rebate system under this subsection. 
‘‘(ii) Including drugs and biologicals 
paid for under MA plans under part C in 
the rebate system under this subsection. 
‘‘(iii) Including drugs excluded under 
paragraph (2)(A) and units of the billing 
and payment code of the drugs excluded 
under paragraph (3)(B) in the rebate sys-
tem under this subsection. 
‘‘(B) REPORT.—Not later than 3 years 
after the date of the enactment of this sub-
section, the Secretary shall submit to Congress 
a report on the study conducted under subpara-
graph (A). 
‘‘(9) APPLICATION
TO
MULTIPLE
SOURCE 
DRUGS.—The Secretary may, based on the report 
submitted under paragraph (8) and pursuant to 
rulemaking, apply the provisions of this subsection 
to multiple source drugs (as defined in section 
1847A(c)(6)(C)), including, for purposes of deter-
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mining the rebate amount under paragraph (3), by 
calculating 
manufacturer-specific 
average 
sales 
prices for the benchmark period and the rebate pe-
riod.’’. 
(b) AMOUNTS PAYABLE; COST-SHARING.—Section 
1833 of the Social Security Act (42 U.S.C. 1395l) is 
amended— 
(1) in subsection (a)— 
(A) in paragraph (1)— 
(i) in subparagraph (S), by striking 
‘‘with respect to’’ and inserting ‘‘subject to 
subparagraph (DD), with respect to’’; 
(ii) by striking ‘‘and (DD)’’ and in-
serting ‘‘(EE)’’; and 
(iii) by inserting before the semicolon 
at the end the following: ‘‘, and (EE) with 
respect to a part B rebatable drug (as de-
fined in paragraph (2) of section 1834(z)) 
for which the payment amount for a cal-
endar 
quarter 
under 
paragraph 
(3)(A)(ii)(I) of such section for such quar-
ter exceeds the inflation-adjusted payment 
under paragraph (3)(A)(ii)(II) of such sec-
tion for such quarter, the amounts paid 
shall be the difference between (i) the pay-
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ment 
amount 
under 
paragraph 
(3)(A)(ii)(I) of such section for such drug, 
and (ii) 20 percent of the inflation-ad-
justed payment amount under paragraph 
(3)(A)(ii)(II) of such section for such 
drug’’; and 
(B) by adding at the end of the flush left 
matter following paragraph (9), the following: 
‘‘For purposes of applying paragraph (1)(EE), sub-
sections (i)(9) and (t)(8)(F), and section 1834(z)(5), the 
Secretary shall make such estimates and use such data 
as the Secretary determines appropriate, and notwith-
standing any other provision of law, may do so by program 
instruction or otherwise.’’; 
(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 1834(z)) for which pay-
ment under this subsection is not packaged into a payment 
for a covered OPD service (as defined in subsection 
(t)(1)(B)) (or group of services) furnished on or after July 
1, 2023, under the system under this subsection, in lieu 
of calculation of coinsurance and the amount of payment 
otherwise applicable under this subsection, the provisions 
of section 1834(z)(5), paragraph (1)(EE) of subsection 
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(a), and the flush left matter following paragraph (9) of 
subsection (a), shall, as determined appropriate by the 
Secretary, apply under this subsection in the same manner 
as such provisions of section 1834(z)(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 1834(z)) for which 
payment under this part is not packaged into a 
payment for a service furnished on or after July 
1, 2023, under the system under this sub-
section, in lieu of calculation of coinsurance and 
the amount of payment otherwise applicable 
under this subsection, the provisions of section 
1834(z)(5), paragraph (1)(EE) of subsection 
(a), and the flush left matter following para-
graph (9) of subsection (a), shall, as determined 
appropriate by the Secretary, apply under this 
subsection in the same manner as such provi-
sions of section 1834(z)(5) and subsection (a) 
apply under such section and subsection.’’. 
(c) CONFORMING AMENDMENTS.— 
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101 
respect to a covered outpatient drug of a manufac-
turer for a rebate period under section 1927.’’. 
(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 ‘‘section 1927 or sec-
tion 1834(z)’’ and inserting ‘‘section 1927, section 
1834(z), 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 1834(z)’’ and inserting ‘‘, section 1834(z), 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 section 1834(z)’’ 
and inserting ‘‘, section 1834(z), or section 1860D– 
14B’’. 
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04:12 Apr 27, 2021
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