To amend part D of title XVIII of the Social Security Act to extend the 2006 and 2007 initial enrollment periods for the Medicare prescription drug benefit and suspend the late enrollment penalty through December 31, 2007, to permit Medicare beneficiaries to change enrollment in a prescription drug plan during the first 12 months of enrollment, and to prevent changes in formularies other than at the time of open enrollment periods and only with advance notice.

SECTION 1. EXTENSION OF MEDICARE PRESCRIPTION DRUG INITIAL ENROLLMENT 
              PERIODS FOR 2006 AND 2007; SUSPENSION OF LATE ENROLLMENT 
              PENALTY THROUGH DECEMBER 31, 2007.

    (a) Extension of Medicare Prescription Drug Initial Enrollment 
Periods for 2006 and 2007.--Section 1860D-1(b)(1) of the Social 
Security Act (42 U.S.C. 1395w-101(b)(1)) is amended--
            (1) in subparagraph (B)(iii), by inserting ``subparagraph 
        (D) and'' after ``Subject to''; and
            (2) by adding at the end the following new subparagraph:
            ``(D) Extension of initial enrollment periods.--For 
        purposes of subparagraph (B)(iii), in applying section 
        1851(e)(1), with respect to the annual, coordinated election 
        period--
                    ``(i) for 2006, such period shall begin on November 
                15, 2005, and end on November 14, 2006; and
                    ``(ii) for 2007, such period shall begin on 
                November 15, 2006, and end on November 14, 2007.''.
    (b) Suspension of Late Enrollment Penalty Through December 31, 
2007.--Section 1860D-13(b)(3)(B) of such Act (42 U.S.C. 1395w-
113(b)(3)(B)) is amended by inserting ``(after December 2007)'' after 
``any month''.

SEC. 2. OPEN ENROLLMENT AND DISENROLLMENT IN PRESCRIPTION DRUG PLANS 
              ALLOWED DURING FIRST 12 MONTHS OF ENROLLMENT.

    Section 1860D-1(b)(1) of the Social Security Act (42 U.S.C. 1395w-
101(b)(1)) is amended by adding at the end the following new 
subparagraph:
                    ``(D) Open enrollment and disenrollment period for 
                first 12 months of enrollment.--In establishing the 
                process under subparagraph (A), in the case of a part D 
                eligible individual who initially enrolls under section 
                1860D-1(a) in a prescription drug plan on or after the 
                date of enactment of this paragraph, the Secretary 
                shall permit such individual to change such enrollment 
                into another prescription drug plan once at any time 
                during the first 12 months of such initial enrollment 
                (other than during an annual, coordinated election 
                period referred to in section 1860D-
                1(b)(1)(B)(iii)).''.

SEC. 3. LIMITATIONS ON CHANGING PRESCRIPTION DRUG PLAN FORMULARIES; 
              NOTICE OF CHANGE IN FORMULARY.

    (a) Limitation on Removal or Change of Covered Part D Drugs From 
the Prescription Drug Plan Formulary.--Section 1860D-4(b)(3)(E) of the 
Social Security Act (42 U.S.C. 1395w-104(b)(3)(E)) is amended to read 
as follows:
                    ``(E) Removing a drug from formulary or imposing a 
                restriction or limitation on coverage.--
                            ``(i) Limitation on removal, limitation, or 
                        restriction.--
                                    ``(I) In general.--Subject to 
                                subclause (II) and clause (ii), 
                                beginning with 2006, the PDP sponsor of 
                                a prescription drug plan may not remove 
                                a covered part D drug from the plan 
                                formulary or impose a restriction or 
                                limitation on the coverage of such a 
                                drug (such as through the application 
                                of a preferred status, usage 
                                restriction, step therapy, prior 
                                authorization, or quantity limitation) 
                                other than at the beginning of each 
                                plan year except as the Secretary may 
                                permit to take into account new 
                                therapeutic uses and newly covered part 
                                D drugs.
                                    ``(II) Special rule for newly 
                                enrolled individuals.--Subject to 
                                clause (ii), in the case of an 
                                individual who enrolls in a 
                                prescription drug plan on or after the 
                                date of enactment of this subparagraph, 
                                the PDP sponsor of such plan may not 
                                remove a covered part D drug from the 
                                plan formulary or impose a restriction 
                                or limitation on the coverage of such a 
                                drug (such as through the application 
                                of a preferred status, usage 
                                restriction, step therapy, prior 
                                authorization, or quantity limitation) 
                                during the period beginning on the date 
                                of such enrollment and ending on 
                                December 31 of the immediately 
                                succeeding plan year except as the 
                                Secretary may permit to take into 
                                account new therapeutic uses and newly 
                                covered part D drugs.
                            ``(ii) Exceptions to limitation on 
                        removal.--Clause (i) shall not apply with 
                        respect to a covered part D drug that--
                                    ``(I) is a brand name drug for 
                                which there is a generic drug approved 
                                under section 505(j) of the Food and 
                                Drug Cosmetic Act (21 U.S.C. 355(j)) 
                                that is placed on the market during the 
                                period in which there are limitations 
                                on removal or change in the formulary 
                                under subclause (I) or (II) of clause 
                                (i);
                                    ``(II) is a brand name drug that 
                                goes off-patent during such period;
                                    ``(III) is a drug for which the 
                                Commissioner of Food and Drugs issues a 
                                clinical warning that imposes a 
                                restriction or limitation on the drug 
                                during such period; or
                                    ``(IV) has been determined to be 
                                ineffective during such period.
                            ``(iii) Notice of removal under application 
                        of exception to limitation.--The PDP sponsor of 
                        a prescription drug plan shall provide 
                        appropriate notice (such as under subsection 
                        (a)(3)) of any removal or change under clause 
                        (ii) to the Secretary, affected enrollees, 
                        physicians, pharmacies, and pharmacists.''.
    (b) Notice of Change in Formulary and Other Restrictions or 
Limitations on Coverage.--
            (1) In general.--Section 1860D-4(a) of such Act (42 U.S.C. 
        1395w-104(a)) is amended by adding at the end the following new 
        paragraph:
            ``(5) Annual notice of changes in formulary and other 
        restrictions or limitations on coverage.--Each PDP sponsor 
        offering a prescription drug plan shall furnish to each 
        enrollee at the time of each annual coordinated election period 
        (referred to in section 1860D-1(b)(1)(B)(iii)) for a plan year 
        a notice of any changes in the formulary or other restrictions 
        or limitations on coverage of a covered part D drug under the 
        plan that will take effect for the plan year.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to annual coordinated election periods beginning 
        after the date of the enactment of this Act.

Summary: Amends part D (Voluntary Prescription Drug Benefit Program) of title XVIII (Medicare) of the Social Security Act to: (1) extend the 2006 and 2007 initial enrollment periods for the Medicare prescription drug benefit; (2) suspend the late enrollment penalty through December 31, 2007; and (3) permit Medicare beneficiaries to change enrollment in a prescription drug plan during the first 12 months of enrollment.

Prohibits a PDP sponsor, beginning with 2006, from removing a covered part D drug from the plan formulary, or imposing a restriction or limitation on the coverage of such a drug, other than at the beginning of each plan year, except as the Secretary may permit to take into account new therapeutic uses and newly covered part D drugs.

Requires each PDP sponsor to furnish to each plan enrollee, at the time of each annual coordinated election period, a notice of any changes in the formulary or other part D drug coverage restrictions or limitations that will take effect for the upcoming plan year.