Freedom from Price Gouging Act
Bill: H.R.2706 | Sponsor: Rep. Porter, Katie (D-CA)
Policy area: Health

Summary:
Freedom from Price Gouging Act
This bill requires drug manufacturers to issue rebates to the Centers for Medicare & Medicaid Services for covered drugs under Medicare that cost $100 or more and for which the average manufacturer price increases faster than inflation.

To amend title XVIII of the Social Security Act to require drug 
manufacturers to pay a Medicare part B rebate for certain drugs if the 
          price of such drugs increases faster than inflation.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Freedom from Price Gouging Act''.

SEC. 2. MEDICARE PART B PRESCRIPTION DRUG INFLATION REBATE BY 
              MANUFACTURERS.

    (a) In General.--Section 1834 of the Social Security Act (42 U.S.C. 
1395m) is amended by adding at the end the following new subsection:
    ``(z) Rebate by Manufacturers for Single Source Drugs With Prices 
Increasing Faster Than Inflation.--
            ``(1) Requirements.--
                    ``(A) Secretarial provision of information.--Not 
                later than 6 months after the end of each calendar 
                quarter beginning on or after July 1, 2022, the 
                Secretary shall, for each part B rebatable drug, report 
                to each manufacturer of such part B rebatable drug the 
                following for such calendar quarter:
                            ``(i) Information on the total number of 
                        billing units described in subparagraph (A)(i) 
                        of paragraph (3) with respect to such drug and 
                        calendar quarter.
                            ``(ii) Information on the amount (if any) 
                        of the excess average sales price increase 
                        described in subparagraph (A)(ii) of such 
                        paragraph for such drug and calendar quarter.
                            ``(iii) The rebate amount specified under 
                        such paragraph for such part B rebatable drug 
                        and calendar quarter.
                    ``(B) Manufacturer requirement.--For each calendar 
                quarter beginning on or after July 1, 2022, the 
                manufacturer of a part B rebatable drug shall, for such 
                drug, not later than 30 days after the date of receipt 
                from the Secretary of the information described in 
                subparagraph (A) for such calendar quarter, provide to 
                the Secretary a rebate that is equal to the amount 
                specified in paragraph (3) for such drug for such 
                calendar quarter.
            ``(2) Part b rebatable drug defined.--
                    ``(A) In general.--In this subsection, the term 
                `part B rebatable drug' means a single source drug or 
                biological (as defined in subparagraph (D) of section 
                1847A(c)(6)), including a biosimilar biological product 
                (as defined in subparagraph (H) of such section), paid 
                for under this part, except such term shall not include 
                such a drug or biological--
                            ``(i) if the average total allowed charges 
                        for a year per individual that uses such a drug 
                        or biological, as determined by the Secretary, 
                        are less than, subject to subparagraph (B), 
                        $100; or
                            ``(ii) that is a vaccine described in 
                        subparagraph (A) or (B) of section 1861(s)(10).
                    ``(B) Increase.--The dollar amount applied under 
                subparagraph (A)(i)--
                            ``(i) for 2023, shall be the dollar amount 
                        specified under such subparagraph for 2022, 
                        increased by the percentage increase in the 
                        consumer price index for all urban consumers 
                        (United States city average) as of the first 
                        quarter of the previous year; and
                            ``(ii) for a subsequent year, shall be the 
                        dollar amount specified in this clause (or 
                        clause (i)) for the previous year, increased by 
                        the percentage increase in the consumer price 
                        index for all urban consumers (United States 
                        city average) as of the first quarter of the 
                        previous year.
                Any dollar amount specified under this subparagraph 
                that is not a multiple of $10 shall be rounded to the 
                nearest multiple of $10.
            ``(3) Rebate amount.--
                    ``(A) In general.--For purposes of paragraph 
                (1)(B), the amount specified in this paragraph for a 
                part B rebatable drug assigned to a billing and payment 
                code for a calendar quarter is, subject to paragraph 
                (4), the amount equal to the product of--
                            ``(i) subject to subparagraph (B), the 
                        total number of billing units, as described in 
                        section 1847A(b)(6)(B), for such part B 
                        rebatable drug furnished under this part during 
                        the calendar quarter; and
                            ``(ii) the amount (if any) by which--
                                    ``(I) the payment amount under 
                                subparagraph (B) or (C) of section 
                                1847A(b)(1), as applicable, for such 
                                part B rebatable drug during the 
                                calendar quarter; exceeds
                                    ``(II) the inflation-adjusted 
                                payment amount determined under 
                                subparagraph (C) for such part B 
                                rebatable drug during the calendar 
                                quarter.
                    ``(B) Excluded units.--For purposes of subparagraph 
                (A)(i), the total number of billing units for part B 
                rebatable drugs furnished during a calendar quarter 
                shall not include--
                            ``(i) units packaged into the payment for a 
                        related procedure or service under section 
                        1833(t) or under section 1833(i) (instead of 
                        separately payable under such respective 
                        section);
                            ``(ii) units included under the single 
                        payment system for renal dialysis services 
                        under section 1881(b)(14); or
                            ``(iii) units of a part B rebatable drug of 
                        a manufacturer that is furnished to an 
                        individual, if such manufacturer, with respect 
                        to the furnishing of such units of such drug, 
                        provides for discounts under section 340B of 
                        the Public Health Service Act or for rebates 
                        under section 1927.
                    ``(C) Determination of inflation-adjusted payment 
                amount.--The inflation-adjusted payment amount 
                determined under this subparagraph for a part B 
                rebatable drug for a calendar quarter is--
                            ``(i) the payment amount for the billing 
                        and payment code for such drug in the payment 
                        amount benchmark quarter (as defined in 
                        subparagraph (D)); increased by
                            ``(ii) the percentage by which the rebate 
                        period CPI-U (as defined in subparagraph (F)) 
                        for the calendar quarter exceeds the benchmark 
                        period CPI-U (as defined in subparagraph (E)).
                    ``(D) Payment amount benchmark quarter.--The term 
                `payment amount benchmark quarter' means the calendar 
                quarter beginning January 1, 2016.
                    ``(E) Benchmark period cpi-u.--The term `benchmark 
                period CPI-U' means the consumer price index for all 
                urban consumers (United States city average) for July 
                2015.
                    ``(F) Rebate period cpi-u.--The term `rebate period 
                CPI-U' means, with respect to a calendar quarter 
                described in subparagraph (C), the greater of the 
                benchmark period CPI-U and the consumer price index for 
                all urban consumers (United States city average) for 
                the first month of the calendar quarter that is two 
                calendar quarters prior to such described calendar 
                quarter.
            ``(4) Special treatment of certain drugs and exemption.--
                    ``(A) Subsequently approved drugs.--Subject to 
                subparagraph (B), in the case of a part B rebatable 
                drug first approved by the Food and Drug Administration 
                after July 1, 2015, clause (i) of paragraph (3)(C) 
                shall be applied as if the term `payment amount 
                benchmark quarter' were defined under paragraph (3)(D) 
                as the third full calendar quarter after the day on 
                which the drug was first marketed and clause (ii) of 
                paragraph (3)(C) shall be applied as if the term 
                `benchmark period CPI-U' were defined under paragraph 
                (3)(E) as if the reference to `July 2015' under such 
                paragraph were a reference to `the first month of the 
                first full calendar quarter after the day on which the 
                drug was first marketed'.
                    ``(B) Timeline for provision of rebates for new 
                drugs.--In the case of a part B rebatable drug first 
                approved by the Food and Drug Administration after July 
                1, 2015, clause (i) of paragraph (1)(B) shall be 
                applied as if the reference to `July 1, 2022' under 
                such paragraph were a reference to the later of the 6th 
                full calendar quarter after the day on which the drug 
                was first marketed or July 1, 2022.
                    ``(C) Exemption for shortages.--The Secretary may 
                reduce or waive the rebate under paragraph (1)(B) with 
                respect to a part B rebatable drug that appears on the 
                drug shortage list in effect under section 506(e) of 
                the Federal Food, Drug, and Cosmetic Act or in the case 
                of other exigent circumstances, as determined by the 
                Secretary.
            ``(5) Application to beneficiary coinsurance.--In the case 
        of a part B rebatable drug for which a rebate is payable under 
        this subsection--
                    ``(A) in computing the amount of any coinsurance 
                applicable under this title to an individual with 
                respect to such drug, the computation of such 
                coinsurance shall be based on the inflation-adjusted 
                payment amount determined under paragraph (3)(C) for 
                such part B rebatable drug; and
                    ``(B) the amount of such coinsurance is equal to 20 
                percent of such inflation-adjusted payment amount so 
                determined.
            ``(6) Rebate deposits.--Amounts paid as rebates under 
        paragraph (1)(B) shall be deposited into the Federal 
        Supplementary Medical Insurance Trust Fund established under 
        section 1841.
            ``(7) Civil money penalty.--If a manufacturer of a part B 
        rebatable drug has failed to comply with the requirements under 
        paragraph (1)(B) for such drug for a calendar quarter, the 
        manufacturer shall be subject to, in accordance with a process 
        established by the Secretary pursuant to regulations, a civil 
        money penalty in an amount equal to at least 125 percent of the 
        amount specified in paragraph (3) for such drug for such 
        calendar quarter. The provisions of section 1128A (other than 
        subsections (a) (with respect to amounts of penalties or 
        additional assessments) and (b)) shall apply to a civil money 
        penalty under this paragraph in the same manner as such 
        provisions apply to a penalty or proceeding under section 
        1128A(a).
            ``(8) Study and report.--
                    ``(A) Study.--The Secretary shall conduct a study 
                of the feasibility of and operational issues involved 
                with the following:
                            ``(i) Including multiple source drugs (as 
                        defined in section 1847A(c)(6)(C)) in the 
                        rebate system under this subsection.
                            ``(ii) Including drugs and biologicals paid 
                        for under MA plans under part C in the rebate 
                        system under this subsection.
                            ``(iii) Including drugs excluded under 
                        paragraph (2)(A) and billing units of drugs 
                        excluded under paragraph (3)(B) in the rebate 
                        system under this subsection.
                    ``(B) Report.--Not later than 3 years after the 
                date of the enactment of this subsection, the Secretary 
                shall submit to Congress a report on the study 
                conducted under subparagraph (A).
            ``(9) Application to multiple source drugs.--The Secretary 
        may, based on the report submitted under paragraph (8) and 
        pursuant to rulemaking, apply the provisions of this subsection 
        to multiple source drugs (as defined in section 
        1847A(c)(6)(C)), including, for purposes of determining the 
        rebate amount under paragraph (3), by calculating manufacturer-
        specific average sales prices for the benchmark period and the 
        rebate period.''.
    (b) Amounts Payable; Cost-Sharing.--Section 1833(a) of the Social 
Security Act (42 U.S.C. 1395l(a)) is amended--
            (1) in paragraph (1)--
                    (A) in subparagraph (S), by striking ``with respect 
                to'' and inserting ``subject to subparagraph (EE), with 
                respect to'';
                    (B) by striking ``and (DD)'' and inserting 
                ``(DD)''; and
                    (C) by inserting before the semicolon at the end 
                the following: ``, and (EE) with respect to a part B 
                rebatable drug (as defined in paragraph (2) of section 
                1834(z)) for which a rebate is payable under such 
                section, the amounts paid shall be the difference 
                between (i) the payment amount under paragraph 
                (3)(A)(ii)(I) of such section for such drug, and (ii) 
                20 percent of the inflation-adjusted payment amount 
                under paragraph (3)(A)(ii)(II) of such section for such 
                drug''; and
            (2) by adding at the end of the flush left matter following 
        paragraph (10), the following:
``For purposes of applying paragraph (1)(EE) and section 1834(z)(5), 
the Secretary shall make such estimates and use such data as the 
Secretary determines appropriate.''.
    (c) Conforming Amendment to Part B ASP Calculation.--Section 
1847A(c)(3) of the Social Security Act (42 U.S.C. 1395w-3a(c)(3)) is 
amended by inserting ``or section 1834(z)'' after ``section 1927''.
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