Prescription Drug and Health Improvement Act of 2017

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Prescription Drug and Health 
Improvement Act of 2017''.

SEC. 2. NEGOTIATING FAIR PRICES FOR MEDICARE PRESCRIPTION DRUGS.

    (a) Negotiating Fair Prices.--
            (1) In general.--Section 1860D-11 of the Social Security 
        Act (42 U.S.C. 1395w-111) is amended by striking subsection (i) 
        (relating to noninterference) and by inserting the following:
    ``(i) Negotiating Fair Prices With Drug Manufacturers.--
            ``(1) In general.--Notwithstanding any other provision of 
        law, in furtherance of the goals of providing quality care and 
        containing costs under this part, the Secretary shall, with 
        respect to applicable covered part D drugs, and may, with 
        respect to other covered part D drugs, negotiate, using the 
        negotiation technique that the Secretary determines will 
        maximize savings and value for a covered part D drug and plan 
        enrollees (in a manner that may be similar to Federal entities 
        and that may include, but is not limited to, formularies, 
        reference pricing, discounts, rebates, and other price 
        concessions), with drug manufacturers the prices that may be 
        charged to PDP sponsors and MA organizations for such drugs for 
        part D eligible individuals who are enrolled in a prescription 
        drug plan or in an MA-PD plan. In conducting such negotiations, 
        the Secretary shall consider the drug's current price, initial 
        launch price, prevalence and usage, and approved indications, 
        the number of similarly effective alternative treatments for 
        each approved use of the drug, the budgetary impact of 
        providing coverage under this part for such drug for all 
        individuals who would likely benefit from the drug, and 
        evidence on the drug's effectiveness compared to similar drugs.
            ``(2) Use of lower of va or big four price if negotiations 
        fail.--If, after attempting to negotiate for a price with 
        respect to a covered part D drug under paragraph (1) for a 
        period of 1 year, the Secretary is not successful in obtaining 
        an appropriate price for the drug (as determined by the 
        Secretary), the Secretary shall establish the price that may be 
        charged to PDP sponsors and MA organizations for such drug for 
        part D eligible individuals who are enrolled in a prescription 
        drug plan or in an MA-PD plan at an amount equal to the lesser 
        of--
                    ``(A) the price paid by the Secretary of Veterans 
                Affairs to procure the drug under the laws administered 
                by the Secretary of Veterans Affairs; or
                    ``(B) the price paid to procure the drug under 
                section 8126 of title 38, United States Code.
            ``(3) Applicable covered part d drug defined.--For purposes 
        of this subsection, the term `applicable covered part D drug' 
        means a covered part D drug that the Secretary determines to be 
        appropriate for negotiation under paragraph (1) based on one or 
        more of the following factors as applied to such drug:
                    ``(A) Spending on a per beneficiary basis.
                    ``(B) Spending under this title.
                    ``(C) Unit price increases over the preceding 
                years.
                    ``(D) Initial launch price.
                    ``(E) Availability of similarly effective 
                alternative treatments.
                    ``(F) Status of the drug as a follow-on to 
                previously approved drugs.
                    ``(G) Any other criteria determined by the 
                Secretary.
            ``(4) PDP sponsors and ma organization may negotiate lower 
        prices.--Nothing in this subsection shall be construed as 
        preventing the sponsor of a prescription drug plan, or an 
        organization offering an MA-PD plan, from obtaining a discount 
        or reduction of the price for a covered part D drug below the 
        price negotiated under paragraph (1) or the price established 
        under paragraph (2).
            ``(5) No affect on existing appeals process.--Nothing in 
        this subsection shall be construed to affect the appeals 
        procedures under subsections (g) and (h) of section 1860D-4.''.
            (2) Effective date.--The amendments made by this subsection 
        shall take effect on the date of the enactment of this Act and 
        shall first apply to negotiations and prices for plan years 
        beginning on January 1, 2019.
    (b) Reports to Congress.--
            (1) Secretary of hhs.--
                    (A) In general.--Not later than 3 years after the 
                date of the enactment of this Act, and every 6 months 
                thereafter, the Secretary of Health and Human Services 
                shall submit to Congress a report on the following:
                            (i) The negotiations conducted by the 
                        Secretary under section 1860D-11(i) of the 
                        Social Security Act (42 U.S.C. 1395w-111(i)), 
                        as amended by subsection (a), including a 
                        description of how such negotiations are 
                        achieving lower prices for covered part D drugs 
                        (as defined in section 1860D-2(e) of the Social 
                        Security Act (42 U.S.C. 1395w-102(e))) for 
                        Medicare beneficiaries.
                            (ii) Data on spending under part D of the 
                        Medicare program on covered part D drugs, 
                        including data on covered part D drugs with--
                                    (I) spending on a per beneficiary 
                                basis that is above the median spending 
                                on other drugs in the same class or 
                                above the median spending of other drug 
                                classes; and
                                    (II) high unit cost increases over 
                                the past five years, especially where 
                                such increases are greater than the 
                                increases for covered part D drugs in 
                                general.
                            (iii) A list of the covered part D drugs 
                        with no therapeutic substitute and data on 
                        spending under part D of the Medicare program 
                        on such drugs.
                            (iv) Access to covered part D drugs.
                            (v) Appeals by enrollees with respect to 
                        covered part D drugs not included on plan 
                        formularies.
                    (B) Public availability of report.--The Secretary 
                of Health and Human Services shall publish on the 
                Internet website of the Centers for Medicare & Medicaid 
                Services a copy of each report submitted under 
                subparagraph (A).
            (2) MedPAC.--
                    (A) Study.--The Comptroller General of the United 
                States shall conduct a study on the negotiations 
                conducted by the Secretary under section 1860D-11(i) of 
                the Social Security Act (42 U.S.C. 1395w-111(i)), as 
                amended by subsection (a), including a description of 
                how such negotiations are achieving lower prices for 
                covered part D drugs (as defined in section 1860D-2(e) 
                of the Social Security Act (42 U.S.C. 1395w-102(e))) 
                for Medicare beneficiaries.
                    (B) Report.--Not later than January 1, 2022, the 
                Comptroller General of the United States shall submit 
                to Congress a report on the study conducted under 
                subparagraph (A), together with recommendations for 
                improving such negotiations.
    (c) CMI Testing of Negotiating Drug and Biological Prices To 
Improve Value.--Section 1115A(b)(2) of the Social Security Act (42 
U.S.C. 1315a(b)(2)) is amended--
            (1) in subparagraph (A), by adding at the end the following 
        new sentence: ``The models selected under this subparagraph 
        shall include at least 3 of the models described in 
        subparagraph (D), which shall be implemented by not later than 
        18 months after the date of the enactment of the Prescription 
        Drug and Health Improvement Act of 2017''; and
            (2) by adding at the end the following new subparagraph:
                    ``(D) Models of negotiating drug and biological 
                prices to improve value.--The models described in this 
                subparagraph are the following models for negotiating 
                drug and biological prices under the applicable titles 
                (including under both parts B and D of title XVIII) in 
                order to improve the value of payments for such drugs 
                and biologicals under such titles:
                            ``(i) Discounting or eliminating patient 
                        cost-sharing on high-value drugs and 
                        biologicals.
                            ``(ii) Value-based formularies.
                            ``(iii) Indications-based pricing.
                            ``(iv) Reference pricing.
                            ``(v) Risk-sharing agreements based on 
                        outcomes.
                            ``(vi) Pricing based on comparative 
                        effectiveness research.
                            ``(vii) Episode-based payments for 
                        chemotherapy and other conditions determined 
                        appropriate by the Secretary.''.

Summary: Prescription Drug and Health Improvement Act of 2017 This bill requires the Centers for Medicare &amp; Medicaid Services (CMS) to negotiate lower prices on behalf of Medicare and Medicare Advantage (MA) beneficiaries for covered prescription drugs that the CMS deems appropriate for negotiation based on: (1) program and per-beneficiary spending, (2) unit price&nbsp;increases over the preceding years, (3) initial launch price,&nbsp;(4) availability of similarly effective alternative treatments, (5) status of the drug as a follow-on to previously approved drugs,&nbsp;and (6) any other criteria determined by the CMS. If, after a one year period, negotiations with respect to a covered prescription drug prove unsuccessful, the CMS shall establish a price for the drug that is equal to the lesser of the price paid by the Department of Veterans Affairs or the price paid by the four largest federal pharmaceutical-drug purchasers. The CMS may (but is not required to)&nbsp;negotiate lower prices on behalf of Medicare and MA beneficiaries for other covered prescription drugs. The Government Accountability Office must report to Congress on the CMS' negotiations. The Center for Medicare and Medicaid Innovation must test&nbsp;several specified&nbsp;models for negotiating drug and biological prices.