To provide for prescription drugs at reduced prices to Medicare beneficiaries.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medicare Prescription Drug Price 
Negotiation Act''.

SEC. 2. AVAILABILITY OF PRESCRIPTION DRUGS FROM PARTICIPATING 
              MANUFACTURERS AT NEGOTIATED PRICES.

    (a) In General.--Each participating manufacturer of a covered 
outpatient drug shall make available for purchase by any qualified 
Federal health care provider, by each pharmacy, and by each provider of 
services, physician, practitioner, and supplier under the medicare 
program such covered outpatient drug in the amount described in 
subsection (b) at the price described in subsection (c).
    (b) Description of Amount of Drugs.--The amount of a covered 
outpatient drug that a participating manufacturer shall make available 
for purchase under subsection (a) is the sum of--
            (1) an amount equal to the aggregate amount of the covered 
        outpatient drug dispensed by pharmacies to Medicare 
        beneficiaries; and
            (2) an amount equal to the aggregate amount of the covered 
        outpatient drug dispensed through qualified Federal health care 
        providers.
    (c) Description of Price.--
            (1) In general.--The price at which a participating 
        manufacturer shall make a covered outpatient drug available for 
        purchase under subsection (a) is a price that the Secretary, in 
        conjunction with the Secretary of Defense and the Secretary of 
        Veterans Affairs, negotiate with the manufacturer.
            (2) Promotion of breakthrough drugs.--
                    (A) In general.--In conducting negotiations with 
                participating manufacturers under paragraph (1), the 
                Secretary shall take into account the goal of promoting 
                the development of breakthrough drugs.
                    (B) Definition.--For purposes of this paragraph, a 
                drug is a ``breakthrough drug'' if the Secretary 
                determines it is a new product that will make a 
                significant and major improvement by reducing physical 
                or mental illness, reducing mortality, or reducing 
                disability, and that no other product is available to 
                enrollees that achieves similar results for the same 
                condition.
    (d) Enforcement.--The United States shall debar a manufacturer of 
drugs or biologicals that does not comply with the provisions of this 
Act.
    (e) Dispute Resolution Mechanism.--The Secretary shall establish a 
mechanism (such as an ombudsman) for the resolution of disputes between 
Medicare beneficiaries and prescription drug resellers and drug 
manufacturers in order to protect such beneficiaries and to ensure 
that--
            (1) prescription drug resellers are not artifically 
        increasing prices charged to Medicare beneficiaries (above 
        those negotiated under subsection (c)) in places where there is 
        less competition (such as in rural areas); and
            (2) such resellers are not colluding on prices in areas 
        with more potential significant competition.

SEC. 3. ADMINISTRATION.

    The Secretary shall issue such regulations as may be necessary to 
implement this Act.

SEC. 4. REPORTS TO CONGRESS REGARDING EFFECTIVENESS OF ACT.

    (a) In General.--Not later than 2 years after the date of the 
enactment of this Act, and annually thereafter, the Secretary shall 
report to the Congress regarding the effectiveness of this Act in--
            (1) protecting Medicare beneficiaries from discriminatory 
        pricing by drug manufacturers, and
            (2) making prescription drugs available to Medicare 
        beneficiaries at substantially reduced prices.
    (b) Consultation.--In preparing such reports, the Secretary shall 
consult with public health experts, affected industries, organizations 
representing consumers and older Americans, and other interested 
persons.
    (c) Recommendations.--The Secretary shall include in such reports 
any recommendations the Secretary considers appropriate for changes in 
this Act to further reduce the cost of covered outpatient drugs to 
Medicare beneficiaries.

SEC. 5. DEFINITIONS.

    In this Act:
            (1) Provider of services.--The term ``provider of 
        services'' has the meaning given that term in section 1861(u) 
        of the Social Security Act (42 U.S.C. 1395x(u)).
            (2) Physician.--The term ``physician'' has the meaning 
        given that term in section 1861(r) of the Social Security Act 
        (42 U.S.C. 1395x(r)).
            (3) Practitioner.--The term ``practitioner'' has the 
        meaning given that term in section 1842(b)(18)(C) of the Social 
        Security Act (42 U.S.C. 1395u(b)(18)(C)).
            (4) Supplier.--The term ``supplier'' has the meaning given 
        that term under section 1842(o) of the Social Security Act (42 
        U.S.C. 1395u(o)).
            (5) Covered outpatient drug.--The term ``covered outpatient 
        drug'' has the meaning given that term in section 1927(k)(2) of 
        the Social Security Act (42 U.S.C. 1396r-8(k)(2)).
            (6) Debar.--The term ``debar'' means to exclude, pursuant 
        to established administrative procedures, from Government 
        contracting and subcontracting for a specified period of time 
        commensurate with the seriousness of the failure or offense or 
        the inadequacy of performance.
            (7) Medicare beneficiary.--The term ``Medicare 
        beneficiary'' means an individual entitled to benefits under 
        part A of title XVIII of the Social Security Act or enrolled 
        under part B of such title, or both.
            (8) Participating manufacturer.--The term ``participating 
        manufacturer'' means any manufacturer of drugs or biologicals 
        that, on or after the date of the enactment of this title, 
        enters into a contract or agreement with the United States for 
        the sale or distribution of covered outpatient drugs to the 
        United States.
            (9) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.

SEC. 6. EFFECTIVE DATE.

    The Secretary shall implement this Act as expeditiously as 
practicable and in a manner consistent with the obligations of the 
United States.

Summary: Medicare Prescription Drug Price Negotiation Act - Requires each participating manufacturer of a covered outpatient drug to make such drugs available for purchase by any qualified Federal health care provider, by each pharmacy, and by each provider of services, physician, practitioner, and supplier under the Medicare program at a price that the Secretary of Health and Human Services, in conjunction with the Secretary of Defense and the Secretary of Veterans Affairs, negotiates with the manufacturer. Provides that the amount of a covered outpatient drug that a participating manufacturer shall make available for purchase is equal to the sum of the aggregate amounts of the covered outpatient drug dispensed by pharmacies to Medicare beneficiaries plus those dispensed through qualified Federal health care providers.

Requires that, in conducting negotiations with participating manufacturers, the Secretary take into account the goal of promoting the development of breakthrough drugs.

Requires the United States to exclude from Government contracting and subcontracting, for a period of time, a manufacturer of drugs or biologicals that does not comply with this Act.

Directs the Secretary to establish a mechanism (such as an ombudsman) for the resolution of disputes between Medicare beneficiaries and prescription drug resellers and drug manufacturers in order to protect such beneficiaries and to ensure that: (1) prescription drug resellers are not artifically increasing prices charged to Medicare beneficiaries (above those negotiated under this Act) in places (such as rural areas) where there is less competition; and (2) such resellers are not colluding on prices in areas with more potential significant competition.