A bill to amend part D of title XVIII of the Social Security Act to ensure that every medicare beneficiary has access to a medicare administered prescription drug plan option, and for other purposes.

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Right Prescription 
for Seniors Act of 2004''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Establishment of medicare operated plan option.
Sec. 3. Negotiating fair prices for medicare prescription drugs.
Sec. 4. Importation of prescription drugs.
Sec. 5. Limitation on prescription drug benefits of Members of 
                            Congress.

SEC. 2. ESTABLISHMENT OF MEDICARE OPERATED PLAN OPTION.

    (a) In General.--Section 1860D-11(g) of the Social Security Act, as 
added by section 101(a) of the Medicare Prescription Drug, Improvement, 
and Modernization Act of 2003 (Public Law 108-173), is amended to read 
as follows:
    ``(g) Medicare Operated Plan Option.--
            ``(1) In general.--Separate from the bidding process under 
        subsection (b), the Secretary shall provide for the offering in 
        each PDP region of a medicare operated plan option (as defined 
        in paragraph (4)) and shall enter into negotiations with 
        pharmaceutical manufacturers to reduce the purchase cost of 
        covered part D drugs for eligible part D individuals in 
        accordance with paragraph (2).
            ``(2) Negotiations.--The Secretary shall negotiate with 
        pharmaceutical manufacturers with respect to the purchase price 
        of covered part D drugs and shall encourage the use of more 
        affordable therapeutic equivalents to the extent such practices 
        do not override medical necessity as determined by the 
        prescribing physician. To the extent practicable and consistent 
        with the previous sentence, the Secretary shall implement 
        strategies similar to those used by other Federal purchasers of 
        prescription drugs, and other strategies, to reduce the 
        purchase cost of covered part D drugs.
            ``(3) Medicare operated plan option.--For purposes of this 
        part, the term `medicare operated plan option' means a 
        prescription drug plan that offers coverage similar to the 
        standard prescription drug coverage and access to negotiated 
        prices described in section 1860D-2(a)(1)(A) and does not 
        include any supplemental prescription drug coverage, except 
        that such plan shall provide continuous coverage and shall not 
        have a coverage gap.
            ``(4) Monthly beneficiary premium.--
                    ``(A) In general.--Except as provided in section 
                1860D-13(b) (relating to late enrollment penalty) and 
                subject to section 1860D-14 (relating to low-income 
                assistance), the monthly beneficiary premium to be 
                charged under the medicare operated plan option shall 
                be--
                            ``(i) for months in 2006, $35; and
                            ``(ii) for months in a subsequent year, the 
                        lesser of--
                                    ``(I) the amount determined under 
                                this paragraph for months in the 
                                previous year, increased by the annual 
                                percentage increase described in 
                                subparagraph (B) for the year involved; 
                                or
                                    ``(II) in the case of months in 
                                years prior to 2014, the specified 
                                amount (as defined in subparagraph 
                                (C)).
                    ``(B) Annual percentage increase.--The annual 
                percentage increase specified in this paragraph for a 
                year is equal to the annual percentage increase in 
                average per capita aggregate expenditures for covered 
                drugs in the United States for beneficiaries under this 
                title, as determined by the Administrator for the 12-
                month period ending in July of the previous year.
                    ``(C) Specified amount.--For purposes of the 
                paragraph, the term `specified amount' means--
                            ``(i) for months in 2007, $37;
                            ``(ii) for months in 2008, $40;
                            ``(iii) for months in 2009, $43;
                            ``(iv) for months in 2010, $46;
                            ``(v) for months in 2011, $51;
                            ``(vi) for months in 2012, $54; and
                            ``(vii) for months in 2013, $59.
            ``(5) No affect on access requirements.--The medicare 
        operated plan option shall be in addition to the plans required 
        under subsection (d)(1)''.
    (b) Conforming Amendments.--
            (1) Section 1860D-3 of the Social Security Act, as added by 
        section 101(a) of the Medicare Prescription Drug, Improvement, 
        and Modernization Act of 2003 (Public Law 108-173), is 
        repealed.
            (2) Section 1860D-11(f) of the Social Security Act, as 
        added by section 101(a) of the Medicare Prescription Drug, 
        Improvement, and Modernization Act of 2003 (Public Law 108-
        173), is amended--
                    (A) by striking paragraph (1) and inserting the 
                following:
            ``(1) Conditions for approval of limited risk plans.--
                    ``(A) In general.--The Secretary may only approve a 
                limited risk plan (as defined in paragraph (4)(A)) for 
                a PDP region if the access requirements under 
                subparagraph (B) would not be met for the region but 
                for the approval of such a plan.
                    ``(B) Ensuring access to a choice of coverage.--
                            ``(i) Choice of at least two plans in each 
                        area.--The Secretary shall ensure that each 
                        part D eligible individual has available, 
                        consistent with clause (ii), a choice of 
                        enrollment in at least 2 qualifying plans (as 
                        defined in clause (iii)) in the area in which 
                        the individual resides, at least one of which 
                        is a prescription drug plan.
                            ``(ii) Requirement for different plan 
                        sponsors.--The requirement in clause (i) is not 
                        satisfied with respect to an area if only one 
                        entity offers all the qualifying plans in the 
                        area.
                            ``(iii) Qualifying plan defined.--For 
                        purposes of this section, the term `qualifying 
                        plan' means--
                                    ``(I) a prescription drug plan; or
                                    ``(II) an MA-PD plan described in 
                                section 1851(a)(2)(A)(i) that provides 
                                basic prescription drug coverage or 
                                qualified prescription drug coverage 
                                that provides supplemental prescription 
                                drug coverage so long as there is no MA 
                                monthly supplemental beneficiary 
                                premium applied under the plan, due to 
                                the application of a credit against 
                                such premium of a rebate under section 
                                1854(b)(1)(C).'';
                    (B) in paragraph (2)(A), by striking ``section 
                1860D-3(a)'' and inserting ``paragraph (1)(B)''; and
                    (C) in subparagraphs (A) and (B) of paragraph (4), 
                by striking ``fallback prescription drug plan'' each 
                place it appears and inserting ``medicare operated plan 
                option''.
            (3) Section 1860D-11(h) is amended--
                    (A) in the heading, by striking ``and Fallback 
                Plans''; and
                    (B) by striking the first sentence and inserting 
                the following: ``The Secretary shall submit to Congress 
                an annual report that describes instances in which 
                limited risk plans were offered under subsection 
                (f).''.
            (4) Section 1860D-12(b) of the Social Security Act, as 
        added by section 101(a) of the Medicare Prescription Drug, 
        Improvement, and Modernization Act of 2003 (Public Law 108-
        173), is amended--
                    (A) by striking paragraph (2); and
                    (B) by redesignating paragraph (3) as paragraph 
                (2).
            (5) Section 1860D-15 of the Social Security Act, as added 
        by section 101(a) of the Medicare Prescription Drug, 
        Improvement, and Modernization Act of 2003 (Public Law 108-
        173), is amended by striking subsection (g).
    (c) Effective Date.--The amendments made by this section shall take 
effect as if included in the enactment of section 101(a) of the 
Medicare Prescription Drug, Improvement, and Modernization Act of 2003 
(Public Law 108-173).

SEC. 3. NEGOTIATING FAIR PRICES FOR MEDICARE PRESCRIPTION DRUGS.

    Section 1860D-11 of the Social Security Act, as added by section 
101(a) of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (Public Law 108-173), is amended by striking 
subsection (i) (relating to noninterference) and by inserting the 
following:
    ``(i) Negotiation of Prices With Manufacturers.--In order to ensure 
that beneficiaries enrolled under prescription drug plans and MA-PD 
plans pay the lowest possible price, the Secretary shall--
            ``(1) have authority similar to that of other Federal 
        entities that purchase prescription drugs in bulk to negotiate 
        contracts with manufacturers of covered part D drugs, 
        consistent with the requirements and in furtherance of the 
        goals of providing quality care and containing costs under this 
        part; and
            ``(2) use such authority to negotiate the prices of covered 
        part D drugs furnished to part D eligible individuals under 
        prescription drug plans offered by PDP sponsors under this 
        part.''.

SEC. 4. IMPORTATION OF PRESCRIPTION DRUGS.

    Section 804 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
384) is amended--
            (1) in subsection (a)--
                    (A) by striking ``The Secretary'' and inserting 
                ``Not later than 180 days after the date of enactment 
                of the Pharmaceutical Market Access Act of 2003, the 
                Secretary''; and
                    (B) by striking ``pharmacists and wholesalers'' and 
                inserting ``pharmacists, wholesalers, and qualifying 
                individuals'';
            (2) in subsection (b)--
                    (A) by striking paragraph (1) and inserting the 
                following:
            ``(1) require that each covered product imported under that 
        subsection complies with sections 501, 502, and 505 and other 
        applicable requirements of this Act; and'';
                    (B) in paragraph (2), by striking ``, including 
                subsection (d); and'' and inserting a period; and
                    (C) by striking paragraph (3);
            (3) in subsection (c), by inserting ``by pharmacists and 
        wholesalers (but not qualifying individuals)'' after 
        ``importation of covered products'';
            (4) in subsection (d)--
                    (A) by striking paragraphs (3) and (10);
                    (B) in paragraph (5), by striking ``, including the 
                professional license number of the importer, if any'';
                    (C) in paragraph (6)--
                            (i) in subparagraph (C), by inserting ``(if 
                        required under subsection (e))'' before the 
                        period;
                            (ii) in subparagraph (D), by inserting 
                        ``(if required under subsection (e))'' before 
                        the period; and
                            (iii) in subparagraph (E), by striking 
                        ``labeling'';
                    (D) in paragraph (7)--
                            (i) in subparagraph (A), by inserting ``(if 
                        required under subsection (e))'' before the 
                        period; and
                            (ii) by striking subparagraph (B) and 
                        inserting the following:
                    ``(B) Certification from the importer or 
                manufacturer of the product that the product meets all 
                requirements of this Act.''; and
                    (E) by redesignating paragraphs (4) through (9) as 
                paragraphs (3) through (8), respectively;
            (5) by striking subsection (e) and inserting the following:
    ``(e) Testing.--
            ``(1) In general.--Subject to paragraph (2), regulations 
        under subsection (a) shall require that testing referred to in 
        paragraphs (5) through (7) of subsection (d) be conducted by 
        the importer of the covered product, unless the covered product 
        is a prescription drug subject to the requirements of section 
        505B for counterfeit-resistant technologies.
            ``(2) Exception.--The testing requirements of paragraphs 
        (5) through (7) of subsection (d) shall not apply to an 
importer unless the importer is a wholesaler.'';
            (6) in subsection (f), by striking ``or designated by the 
        Secretary, subject to such limitations as the Secretary 
        determines to be appropriate to protect the public health'';
            (7) in subsection (g)--
                    (A) by striking ``counterfeit or''; and
                    (B) by striking ``and the Secretary determines that 
                the public is adequately protected from counterfeit and 
                violative covered products being imported pursuant to 
                subsection (a)'';
            (8) in subsection (i)(1)--
                    (A) by striking subparagraph (A) and inserting the 
                following:
                    ``(A) Study.--
                            ``(i) In general.--The Secretary shall 
                        conduct, or contract with an entity to conduct, 
                        a study on the imports permitted under 
                        subsection (a), including consideration of the 
                        information received under subsection (d).
                            ``(ii) Evaluation.--In conducting the 
                        study, the Secretary or entity shall--
                                    ``(I) evaluate the compliance of 
                                importers with regulations under 
                                subsection (a), and the incidence of 
                                shipments under that subsection, if 
                                any, that have been determined to be 
                                misbranded or adulterated; and
                                    ``(II) determine how that 
                                compliance contrasts with the incidence 
                                of shipments of prescription drugs 
                                transported within the United States 
                                that have been determined to be 
                                misbranded or adulterated.''; and
                    (B) in subparagraph (B), by striking ``Not later 
                than 2 years after the effective date of final 
                regulations under subsection (a),'' and inserting ``Not 
                later than 18 months after the date of enactment of the 
                Pharmaceutical Market Access Act of 2003,'';
            (9) in subsection (k)(2)--
                    (A) by redesignating subparagraphs (D) and (E) as 
                subparagraphs (E) and (F), respectively; and
                    (B) by inserting after subparagraph (C) the 
                following:
                    ``(D) Qualifying individual.--The term `qualifying 
                individual' means an individual who is not a pharmacist 
                or a wholesaler.''; and
            (10) by striking subsections (l) and (m).

SEC. 5. LIMITATION ON PRESCRIPTION DRUG BENEFITS OF MEMBERS OF 
              CONGRESS.

    (a) Limitation on Benefits.--Notwithstanding any other provision of 
law, the actuarial value of the prescription drug benefits of any 
Member of Congress enrolled in a health benefits plan under chapter 89 
of title 5, United States Code, may not exceed the actuarial value of 
basic prescription drug coverage (as defined in section 1860D-2(a)(3) 
of the Social Security Act, as added by section 101(a) of the Medicare 
Prescription Drug, Improvement, and Modernization Act of 2003 (Public 
Law 108-173)).
    (b) Regulations.--The Director of the Office of Personnel 
Management shall promulgate regulations to carry out this section.

Summary: Right Prescription for Seniors Act of 2004 - Amends title XVIII (Medicare) of the Social Security Act, as amended by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, to ensure that Medicare beneficiaries have access to a Medicare administered prescription drug plan option.

Repeals provisions prohibiting the Secretary from interfering with the negotiations between drug manufacturers and pharmacies and prescription drug plan sponsors and from requiring a particular formulary or instituting a price structure for the reimbursement of covered part D drugs.

Grants the Secretary the authority similar to that of other Federal entities that purchase prescription drugs in bulk to negotiate contracts with manufacturers of covered part D drugs, consistent with the requirements and in furtherance of the goals of providing quality care and containing costs. Requires the Secretary to use such authority to negotiate the prices of such drugs under prescription drug plans offered by PDP sponsors.

Amends the Federal Food, Drug and Cosmetic Act to direct the Secretary to promulgate regulations allowing qualifying individuals to import covered products (in addition to pharmacists and wholesalers, whom current law authorizes to import such products).

States that the Secretary shall not have to store records in cases in which qualifying individuals have imported a covered product.

Amends provisions regarding the importation of covered products, repealing the mandate that the Secretary require that a foreign seller specify the original source of the product and the amount of each lot of the product originally received.

Amends provisions regarding the testing of imported covered products. Declares that specified tests, including ones involving authenticity and degradation of products, shall not be required unless the importer is a wholesaler. Requires such tests to be conducted by the importer unless a product is a prescription drug subject to requirements for counterfeit-resistant packaging. (Currently either the importer or the manufacturer may conduct such tests).

Eliminates the sunset date current law establishes for the provisions pertaining to the importation of covered products (thus making such provisions permanent).

Limits prescription drug benefits for Members of Congress.