A bill to amend title XVIII of the Social Security Act to prohibit removal of covered part D drugs from a prescription drug plan formulary during the plan year once an individual has enrolled in the plan.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medicare Drug Formulary Protection 
Act''.

SEC. 2. REMOVAL OF COVERED PART D DRUGS FROM THE PRESCRIPTION DRUG PLAN 
              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 for 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: Medicare Drug Formulary Protection Act - Amends title XVIII (Medicare) of the Social Security Act to prohibit removal of covered part D (Voluntary Prescription Drug Benefit Program) drugs from a prescription drug plan formulary, or imposition of a restriction or limitation on the coverage of such a drug, during the plan year: (1) except at the beginning; or (2) for an individual enrollee, from the date of enrollment until December 31 of the immediately succeeding plan year. Specifies exceptions to such prohibition. Requires an annual notice to enrollees of changes in formulary and other restrictions or limitations on coverage.