Medicare Drug Price Negotiation Act
Bill: S.908 | Sponsor: Sen. Sanders, Bernard (I-VT)
Policy area: Health

Summary:
Medicare Drug Price Negotiation Act
This bill makes a series of changes relating to the prices of prescription drugs under the Medicare prescription drug benefit and Medicare Advantage (MA) prescription drug plans (PDPs).
Under current law, the Centers for Medicare & Medicaid Services (CMS) may neither negotiate the prices of covered drugs nor establish a formulary. The bill repeals these restrictions and instead specifically requires the CMS to (1) negotiate the prices of covered drugs; and (2) either establish a formulary for covered drugs, or require changes to PDP formularies that take into account CMS negotiations.
If the CMS is unable to negotiate an appropriate price for a drug in accordance with certain criteria, the price must be the lowest of three specified options (e.g., the median price in other countries). The CMS must identify drugs that are subject to negotiation, with priority given to certain categories of drugs based on usage and cost.
Additionally, drug manufacturers must issue rebates to the CMS for drugs dispensed to eligible low-income individuals. Subject to civil monetary penalties, a Medicare or MA PDP sponsor must report, both to drug manufacturers and to the CMS, specified information related to the determination and payment of such rebates.

To amend title XVIII of the Social Security Act to provide for the 
 negotiation of lower covered part D drug prices on behalf of Medicare 
 beneficiaries and the establishment and application of a formulary by 
 the Secretary of Health and Human Services under Medicare part D, and 
                          for other purposes.

    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 ``Medicare Drug Price Negotiation 
Act''.

SEC. 2. NEGOTIATION OF LOWER COVERED PART D DRUG PRICES ON BEHALF OF 
              MEDICARE BENEFICIARIES; ESTABLISHMENT AND APPLICATION OF 
              FORMULARY BY THE SECRETARY OF HEALTH AND HUMAN SERVICES 
              UNDER MEDICARE PART D.

    (a) 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 inserting the following:
    ``(i) Negotiation of Lower Drug Prices; Establishment and 
Application of Formulary.--
            ``(1) Negotiation.--
                    ``(A) In general.--Notwithstanding any other 
                provision of law, subject to subparagraph (B), the 
                Secretary shall, for plan years beginning with plan 
                year 2023--
                            ``(i) negotiate with pharmaceutical 
                        manufacturers the prices (including discounts, 
                        rebates, and all other price concessions) that 
                        may be charged to PDP sponsors and MA 
                        organizations for covered part D drugs 
                        furnished to enrollees; and
                            ``(ii) complete such negotiations for a 
                        plan year not less than 30 days before the 
                        first day of the application review process for 
                        such plan year for new contracts or expanding 
                        existing contracts with PDP sponsors and MA 
                        organizations to offer prescription drug plans 
                        or MA-PD plans, respectively.
                    ``(B) Use of fallback if negotiations fail.--
                            ``(i) In general.--If, after negotiations 
                        under subparagraph (A), the Secretary is not 
                        successful in obtaining a reasonable price for 
                        covered part D drugs in accordance with clause 
                        (iii), the price that may be charged to PDP 
                        sponsors and MA organizations for such covered 
                        part D drugs furnished to enrollees shall be 
                        the lowest of the following:
                                    ``(I) The price applied pursuant to 
                                section 8126 of title 38, United States 
                                Code, for such drug for the year.
                                    ``(II) The median price available, 
                                during the most recent 12-month period 
                                for which data is available from the 
                                manufacturer to any wholesaler, 
                                retailer, provider, health maintenance 
                                organization, nonprofit entity, or 
                                governmental entity in Canada, the 
                                United Kingdom, Germany, France, and 
                                Japan.
                                    ``(III) The average manufacturer 
                                price (as defined in subsection (k) of 
                                section 1927) for such drug for the 
                                most recent rebate period (as defined 
                                in such subsection) applicable to such 
                                plan year, reduced by the sum of the 
                                applicable rebate factors for the drug 
                                and rebate period.
                            ``(ii) Applicable rebate factor.--For 
                        purposes of clause (i)(III), the term 
                        `applicable rebate factor' means, with respect 
                        to a covered part D drug and a rebate period 
                        (as defined in section 1927(k)), a dollar 
                        amount that applies for purposes of determining 
                        the amount of a rebate that is applicable to 
                        such drug for such rebate period under--
                                    ``(I) paragraph (1)(A)(ii) of 
                                section 1927(c);
                                    ``(II) paragraph (2)(A)(ii) of such 
                                section;
                                    ``(III) paragraph (2)(B) of such 
                                section;
                                    ``(IV) paragraph (2)(C) of such 
                                section;
                                    ``(V) paragraph (3)(A)(i) of such 
                                section; or
                                    ``(VI) paragraph (3)(C) of such 
                                section.
                            ``(iii) Guidance.--Not later than 60 days 
                        after the date of enactment of this subsection, 
                        the Secretary shall issue guidance on criteria 
                        to be considered for purposes of determining 
                        under clause (i) whether or not the Secretary 
                        is successful in obtaining a reasonable price 
                        for a covered part D drug. Such criteria shall 
                        include at least the following:
                                    ``(I) The comparative clinical 
                                effectiveness and cost effectiveness, 
                                if available, of such covered part D 
                                drug.
                                    ``(II) The budgetary impact of 
                                providing coverage under this part for 
                                such covered part D drug.
                                    ``(III) The number of similarly 
                                effective drug or alternative treatment 
                                regimens for each approved use of such 
                                covered part D drug.
                                    ``(IV) Associated unmet need or 
                                severity of illness.
                    ``(C) Identification of covered part d drugs 
                subject to negotiation and application of negotiated 
                price.--
                            ``(i) Identification.--The Secretary shall, 
                        for each plan year, in accordance with the 
                        subsequent clauses of this subparagraph, and 
                        pursuant to rulemaking, identify covered part D 
                        drugs for which negotiations under subparagraph 
                        (A) shall be conducted.
                            ``(ii) Application of negotiated price.--
                        Except as provided in clause (iii), the 
                        negotiated price of a covered Part D drug shall 
                        be in effect for each subsequent plan year, and 
                        may be adjusted for inflation, as measured by 
                        the percentage increase in the consumer price 
                        index for all urban consumers over the 
                        preceding year.
                            ``(iii) Process for renegotiation.--The 
                        Secretary may establish a process whereby 
                        stakeholders may petition for the negotiated 
                        price of a covered Part D to be renegotiated 
                        after an appropriate length of time and only if 
                        evidence justifying the need for such 
                        renegotiation is provided.
                            ``(iv) Reasonable notification.--The 
                        Secretary shall carry out this subparagraph in 
                        such manner as to provide for public 
                        notification of the covered part D drugs 
                        subject to negotiations for a plan year within 
                        a reasonable period before the beginning of 
                        such negotiations.
                    ``(D) Prioritization of certain covered part d 
                drugs.--For purposes of subparagraph (C)(i), the 
                Secretary shall prioritize negotiating the prices of 
                covered part D drugs--
                            ``(i) that are among--
                                    ``(I) the 40 covered part D drugs 
                                that are utilized by at least 1,000 
                                Medicare part D beneficiaries and with 
                                respect to which there were the highest 
                                total expenditures under this part 
                                during the most recent 12-month period 
                                for which data is available;
                                    ``(II) the 40 covered part D drugs 
                                that are utilized by at least 1,000 
                                Medicare part D beneficiaries with 
                                respect to whom the total annual 
                                spending per such a beneficiary under 
                                this part for coverage of such a drug 
                                is at least $10,000; or
                                    ``(III) the 20 covered part D drugs 
                                that are utilized by at least 1,000 
                                Medicare part D beneficiaries and with 
                                respect to which there are unit cost 
                                increases at or above the 95th 
                                percentile of overall covered part D 
                                drug unit cost increases during the 
                                most recent 12-month period for which 
                                data is available;
                            ``(ii) with respect to which the cost of 
                        such a drug to the part D eligible individual 
                        involved would exceed the annual out-of-pocket 
                        threshold applicable under section 1860D-
                        2(b)(4)(B) for such plan year, if the drug were 
                        prescribed to the individual for the period of 
                        the year or with respect to which a single 
                        treatment regimen is priced above such annual 
                        out-of-pocket threshold applicable under such 
                        section 1860D-2(b)(4)(B) for the year; or
                            ``(iii) that are single-source drugs or 
                        biologicals (as defined in section 
                        1847A(c)(6)(D)) and that satisfy at least one 
                        other criterion described in a previous clause 
                        of this subparagraph.
                    ``(E) Annual report to congress.--Not later than 30 
                days after the date on which the Secretary completes 
                negotiations under this paragraph for the first plan 
                year and each subsequent plan year, the Secretary shall 
                submit to Congress and make available to the public a 
                report describing the negotiations during the preceding 
                year, including--
                            ``(i) the number of covered part D drug 
                        prices negotiated;
                            ``(ii) the magnitude of savings achieved as 
                        a result of such negotiations;
                            ``(iii) the number of times price 
                        negotiations failed (based on the criteria 
                        included in the guidance issued pursuant to 
                        clause (iii) of subparagraph (B)) and resulted 
                        in the use of fallback prices under clause (i) 
                        of such subparagraph, and the rationale for any 
                        such decisions;
                            ``(iv) the progress made toward negotiating 
                        the prices of covered part D drugs that are 
                        prioritized under subparagraph (D); and
                            ``(v) the barriers, if any, to achieving 
                        savings through negotiations.
                    ``(F) Evaluation.--Not later than December 31, 
                2026, the Inspector General of the Department of Health 
                and Human Services shall submit to Congress a report 
                evaluating the negotiations conducted by the Secretary 
                under this paragraph, including a description and 
                analysis of--
                            ``(i) the extent to which such price 
                        negotiations are achieving lower prices for 
                        covered part D drugs for enrollees;
                            ``(ii) the parties benefitting from such 
                        lower prices, such as enrollees, the Federal 
                        Government, States, prescription drug plans and 
                        MA-PD plans, or other entities;
                            ``(iii) how such price negotiations are 
                        affecting--
                                    ``(I) the list price of covered 
                                part D drugs; and
                                    ``(II) drug prices in the private 
                                market; and
                            ``(iv) recommendations for improving price 
                        negotiations, if applicable.
            ``(2) Establishment and application of formulary by the 
        secretary or changes in formularies to be required by 
        secretary.--
                    ``(A) In general.--The Secretary shall, for plan 
                years beginning with plan year 2023--
                            ``(i) subject to subparagraphs (B) and (C), 
                        establish and apply a formulary for required 
                        use by sponsors of prescription drug plans and 
                        organizations offering MA-PD plans under this 
                        part; or
                            ``(ii) require changes, as necessary, in 
                        the covered part D drugs included on 
                        formularies of PDP sponsors of prescription 
                        drug plans (including changes, as necessary, in 
                        the preferred or tiered cost-sharing status of 
                        such a drug) to take into account negotiations 
                        carried out by the Secretary pursuant to 
                        paragraph (1), regardless of whether such a 
                        covered part D drug is the subject of such 
                        negotiations.
                    ``(B) Required inclusion of drugs in all 
                therapeutic categories.--A formulary established and 
                applied under subparagraph (A)(i) shall include at 
                least two covered part D drugs in each category and 
                class of covered part D drugs as described in section 
                423.120(b)(2)(i) of title 42, Code of Federal 
                Regulations (as in effect on January 1, 2019).
                    ``(C) Application of development and revision 
                requirements and required inclusion of all drugs in 
                certain categories and classes.--The requirements 
                described in subparagraphs (A) and (B) of section 
                1860D-4(b)(3) (relating to development and revision 
                requirements of the formulary) and subparagraph (G) of 
                such section (relating to required inclusion of all 
                drugs in certain categories and classes) shall apply to 
                a formulary established and applied under subparagraph 
                (A)(i) of this paragraph.
            ``(3) Plan flexibility to negotiate greater discounts.--
        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), if applicable, including 
        through the use of preferred or tiered cost-sharing status.
            ``(4) Ensuring beneficiary access to needed drugs.--
        Beginning with plan year 2023, each PDP sponsor of a 
        prescription drug plan and organization offering an MA-PD plan 
        shall have in place a process under which an enrollee in the 
        plan may request coverage under the plan for a covered part D 
        drug that is not on the formulary, or is subject to utilization 
        management controls, such as tiered pricing, prior 
        authorization, or step therapy.''.
    (b) Conforming Amendments.--
            (1) In general.--Section 1860D-4 of the Social Security Act 
        (42 U.S.C. 1395w-104) is amended--
                    (A) in subsection (b)(3), in the matter preceding 
                subparagraph (A), by striking ``If a PDP'' and 
                inserting ``Subject to section 1860D-11(i)(2), if a 
                PDP'';
                    (B) in subsection (g)--
                            (i) in paragraph (1), by inserting before 
                        the period at the end the following: ``, except 
                        that the PDP sponsor of a prescription drug 
                        plan shall treat the presentation of a 
                        prescription to a participating pharmacy, which 
                        is transmitted to the plan by the pharmacy, as 
                        a request for a coverage determination 
                        (including with respect to prior authorization, 
                        step therapy, or quantity limits) and, in 
                        applying such paragraphs of section 1852(g), 
                        the response to such transmittal shall be 
                        treated as a determination by the sponsor''; 
                        and
                            (ii) in paragraph (2), in the first 
                        sentence, by inserting ``(or a participating 
                        pharmacy, on behalf of such individual, through 
                        transmission of a prescription as described in 
                        paragraph (1))'' after ``a part D eligible 
                        individual who is enrolled in the plan''; and
                    (C) in subsection (h)--
                            (i) in paragraph (1), in the second 
                        sentence, by inserting ``(or a participating 
                        pharmacy, on behalf of such individual)'' after 
                        ``the part D eligible individual''; and
                            (ii) in paragraph (2), by inserting ``(or a 
                        participating pharmacy, on behalf of such 
                        individual)'' after ``A part D eligible 
                        individual who is enrolled in a prescription 
                        drug plan offered by a PDP sponsor''.
            (2) Effective date.--The amendments made by subparagraphs 
        (B) and (C) of paragraph (1) shall apply to plan years 
        beginning on or after January 1, 2023.

SEC. 3. REQUIRING DRUG MANUFACTURERS TO PROVIDE DRUG REBATES FOR DRUGS 
              DISPENSED TO LOW-INCOME INDIVIDUALS.

    (a) In General.--Section 1860D-2 of the Social Security Act (42 
U.S.C. 1395w-102) is amended--
            (1) in subsection (e)(1), in the matter preceding 
        subparagraph (A), by inserting ``and subsection (f)'' after 
        ``this subsection''; and
            (2) by adding at the end the following new subsection:
    ``(f) Prescription Drug Rebate Agreement for Rebate Eligible 
Individuals.--
            ``(1) Requirement.--
                    ``(A) In general.--For plan years beginning on or 
                after January 1, 2023, in this part, the term `covered 
                part D drug' does not include any drug or biological 
                product that is manufactured by a manufacturer that has 
                not entered into and have in effect a rebate agreement 
                described in paragraph (2).
                    ``(B) 2023 plan year requirement.--Any drug or 
                biological product manufactured by a manufacturer that 
                declines to enter into a rebate agreement described in 
                paragraph (2) for the period beginning on January 1, 
                2023, and ending on December 31, 2023, shall not be 
                included as a `covered part D drug' for the subsequent 
                plan year.
            ``(2) Rebate agreement.--A rebate agreement under this 
        subsection shall require the manufacturer to provide to the 
        Secretary a rebate for each rebate period (as defined in 
        paragraph (6)(B)) ending after December 31, 2022, in the amount 
        specified in paragraph (3) for any covered part D drug of the 
        manufacturer dispensed after December 31, 2022, to any rebate 
        eligible individual (as defined in paragraph (6)(A)) for which 
        payment was made by a PDP sponsor or MA organization under this 
        part for such period, including payments passed through the 
        low-income and reinsurance subsidies under sections 1860D-14 
        and 1860D-15(b), respectively. Such rebate shall be paid by the 
        manufacturer to the Secretary not later than 30 days after the 
        date of receipt of the information described in section 1860D-
        12(b)(8), including as such section is applied under section 
        1857(f)(3), or 30 days after the receipt of information under 
        subparagraph (D) of paragraph (3), as determined by the 
        Secretary. Insofar as not inconsistent with this subsection, 
        the Secretary shall establish terms and conditions of such 
        agreement relating to compliance, penalties, and program 
        evaluations, investigations, and audits that are similar to the 
        terms and conditions for rebate agreements under paragraphs (3) 
        and (4) of section 1927(b).
            ``(3) Rebate for rebate eligible medicare drug plan 
        enrollees.--
                    ``(A) In general.--The amount of the rebate 
                specified under this paragraph for a manufacturer for a 
                rebate period, with respect to each dosage form and 
                strength of any covered part D drug provided by such 
                manufacturer and dispensed to a rebate eligible 
                individual, shall be equal to the product of--
                            ``(i) the total number of units of such 
                        dosage form and strength of the drug so 
                        provided and dispensed for which payment was 
                        made by a PDP sponsor or an MA organization 
                        under this part for the rebate period, 
                        including payments passed through the low-
                        income and reinsurance subsidies under sections 
                        1860D-14 and 1860D-15(b), respectively; and
                            ``(ii) the amount (if any) by which--
                                    ``(I) the Medicaid rebate amount 
                                (as defined in subparagraph (B)) for 
                                such form, strength, and period, 
                                exceeds
                                    ``(II) the average Medicare drug 
                                program rebate eligible rebate amount 
                                (as defined in subparagraph (C)) for 
                                such form, strength, and period.
                    ``(B) Medicaid rebate amount.--For purposes of this 
                paragraph, the term `Medicaid rebate amount' means, 
                with respect to each dosage form and strength of a 
                covered part D drug provided by the manufacturer for a 
                rebate period--
                            ``(i) in the case of a single source drug 
                        or an innovator multiple source drug, the 
                        amount specified in paragraph (1)(A)(ii)(II) or 
                        (2)(C) of section 1927(c) plus the amount, if 
                        any, specified in subparagraph (A)(ii) of 
                        paragraph (2) of such section, for such form, 
                        strength, and period; or
                            ``(ii) in the case of any other covered 
                        outpatient drug, the amount specified in 
                        paragraph (3)(A)(i) of such section for such 
                        form, strength, and period.
                    ``(C) Average medicare drug program rebate eligible 
                rebate amount.--For purposes of this subsection, the 
                term `average Medicare drug program rebate eligible 
                rebate amount' means, with respect to each dosage form 
                and strength of a covered part D drug provided by a 
                manufacturer for a rebate period, the sum, for all PDP 
                sponsors under part D and MA organizations 
                administering an MA-PD plan under part C, of--
                            ``(i) the product, for each such sponsor or 
                        organization, of--
                                    ``(I) the sum of all rebates, 
                                discounts, or other price concessions 
                                (not taking into account any rebate 
                                provided under paragraph (2) or any 
                                discounts under the program under 
                                section 1860D-14A) for such dosage form 
                                and strength of the drug dispensed, 
                                calculated on a per-unit basis, but 
                                only to the extent that any such 
                                rebate, discount, or other price 
                                concession applies equally to drugs 
                                dispensed to rebate eligible Medicare 
                                drug plan enrollees and drugs dispensed 
                                to PDP and MA-PD enrollees who are not 
                                rebate eligible individuals; and
                                    ``(II) the number of the units of 
                                such dosage and strength of the drug 
                                dispensed during the rebate period to 
                                rebate eligible individuals enrolled in 
                                the prescription drug plans 
                                administered by the PDP sponsor or the 
                                MA-PD plans administered by the MA 
                                organization; divided by
                            ``(ii) the total number of units of such 
                        dosage and strength of the drug dispensed 
                        during the rebate period to rebate eligible 
                        individuals enrolled in all prescription drug 
                        plans administered by PDP sponsors and all MA-
                        PD plans administered by MA organizations.
                    ``(D) Use of estimates.--The Secretary may 
                establish a methodology for estimating the average 
                Medicare drug program rebate eligible rebate amounts 
                for each rebate period based on bid and utilization 
                information under this part and may use these estimates 
                as the basis for determining the rebates under this 
                section. If the Secretary elects to estimate the 
                average Medicare drug program rebate eligible rebate 
                amounts, the Secretary shall establish a reconciliation 
                process for adjusting manufacturer rebate payments not 
                later than 3 months after the date that manufacturers 
                receive the information collected under section 1860D-
                12(b)(8)(B).
            ``(4) Length of agreement.--The provisions of paragraph (4) 
        of section 1927(b) (other than clauses (iv) and (v) of 
        subparagraph (B)) shall apply to rebate agreements under this 
        subsection in the same manner as such paragraph applies to a 
        rebate agreement under such section.
            ``(5) Other terms and conditions.--The Secretary shall 
        establish other terms and conditions of the rebate agreement 
        under this subsection, including terms and conditions related 
        to compliance, that are consistent with this subsection.
            ``(6) Definitions.--In this subsection and section 1860D-
        12(b)(8):
                    ``(A) Rebate eligible individual.--The term `rebate 
                eligible individual' means--
                            ``(i) a subsidy eligible individual (as 
                        defined in section 1860D-14(a)(3)(A));
                            ``(ii) a Medicaid beneficiary treated as a 
                        subsidy eligible individual under clause (v) of 
                        section 1860D-14(a)(3)(B); and
                            ``(iii) any part D eligible individual not 
                        described in clause (i) or (ii) who is 
                        determined for purposes of the State plan under 
                        title XIX to be eligible for medical assistance 
                        under clause (i), (iii), or (iv) of section 
                        1902(a)(10)(E).
                    ``(B) Rebate period.--The term `rebate period' has 
                the meaning given such term in section 1927(k)(8).''.
    (b) Reporting Requirement for the Determination and Payment of 
Rebates by Manufacturers Related to Rebate for Rebate Eligible Medicare 
Drug Plan Enrollees.--
            (1) Requirements for pdp sponsors.--Section 1860D-12(b) of 
        the Social Security Act (42 U.S.C. 1395w-112(b)) is amended by 
        adding at the end the following new paragraph:
            ``(8) Reporting requirement for the determination and 
        payment of rebates by manufacturers related to rebate for 
        rebate eligible medicare drug plan enrollees.--
                    ``(A) In general.--For purposes of the rebate under 
                section 1860D-2(f) for contract years beginning on or 
                after January 1, 2023, each contract entered into with 
                a PDP sponsor under this part with respect to a 
                prescription drug plan shall require that the sponsor 
                comply with subparagraphs (B) and (C).
                    ``(B) Report form and contents.--Not later than a 
                date specified by the Secretary, a PDP sponsor of a 
                prescription drug plan under this part shall report to 
                each manufacturer--
                            ``(i) information (by National Drug Code 
                        number) on the total number of units of each 
                        dosage, form, and strength of each drug of such 
                        manufacturer dispensed to rebate eligible 
                        Medicare drug plan enrollees under any 
                        prescription drug plan operated by the PDP 
                        sponsor during the rebate period;
                            ``(ii) information on the price discounts, 
                        price concessions, and rebates for such drugs 
                        for such form, strength, and period;
                            ``(iii) information on the extent to which 
                        such price discounts, price concessions, and 
                        rebates apply equally to rebate eligible 
                        Medicare drug plan enrollees and PDP enrollees 
                        who are not rebate eligible Medicare drug plan 
                        enrollees; and
                            ``(iv) any additional information that the 
                        Secretary determines is necessary to enable the 
                        Secretary to calculate the average Medicare 
                        drug program rebate eligible rebate amount (as 
                        defined in paragraph (3)(C) of such section), 
                        and to determine the amount of the rebate 
                        required under this section, for such form, 
                        strength, and period.
                Such report shall be in a form consistent with a 
                standard reporting format established by the Secretary.
                    ``(C) Submission to secretary.--Each PDP sponsor 
                shall promptly transmit a copy of the information 
                reported under subparagraph (B) to the Secretary for 
                the purpose of audit oversight and evaluation.
                    ``(D) Confidentiality of information.--The 
                provisions of subparagraph (D) of section 1927(b)(3), 
                relating to confidentiality of information, shall apply 
                to information reported by PDP sponsors under this 
                paragraph in the same manner that such provisions apply 
                to information disclosed by manufacturers or 
                wholesalers under such section, except--
                            ``(i) that any reference to `this section' 
                        in clause (i) of such subparagraph shall be 
                        treated as being a reference to this section;
                            ``(ii) the reference to the Director of the 
                        Congressional Budget Office in clause (iii) of 
                        such subparagraph shall be treated as including 
                        a reference to the Medicare Payment Advisory 
                        Commission; and
                            ``(iii) clause (iv) of such subparagraph 
                        shall not apply.
                    ``(E) Oversight.--Information reported under this 
                paragraph may be used by the Inspector General of the 
                Department of Health and Human Services for the 
                statutorily authorized purposes of audit, 
                investigation, and evaluations.
                    ``(F) Penalties for failure to provide timely 
                information and provision of false information.--In the 
                case of a PDP sponsor--
                            ``(i) that fails to provide information 
                        required under subparagraph (B) on a timely 
                        basis, the sponsor is subject to a civil money 
                        penalty in the amount of $10,000 for each day 
                        in which such information has not been 
                        provided; or
                            ``(ii) that knowingly (as defined in 
                        section 1128A(i)) provides false information 
                        under such subparagraph, the sponsor is subject 
                        to a civil money penalty in an amount not to 
                        exceed $100,000 for each item of false 
                        information.
                Such civil money penalties are in addition to other 
                penalties as may be prescribed by law. The provisions 
                of section 1128A (other than subsections (a) and (b)) 
                shall apply to a civil money penalty under this 
                subparagraph in the same manner as such provisions 
                apply to a penalty or proceeding under section 
                1128A(a).''.
            (2) Application to ma organizations.--Section 1857(f)(3) of 
        the Social Security Act (42 U.S.C. 1395w-27(f)(3)) is amended 
        by adding at the end the following:
                    ``(E) Reporting requirement related to rebate for 
                rebate eligible medicare drug plan enrollees.--Section 
                1860D-12(b)(8).''.
    (c) Deposit of Rebates Into Medicare Prescription Drug Account.--
Section 1860D-16(c) of the Social Security Act (42 U.S.C. 1395w-116(c)) 
is amended by adding at the end the following new paragraph:
            ``(6) Rebate for rebate eligible medicare drug plan 
        enrollees.--Amounts paid under a rebate agreement under section 
        1860D-2(f) shall be deposited into the Account.''.
    (d) Exclusion From Determination of Best Price and Average 
Manufacturer Price Under Medicaid.--
            (1) Exclusion from best price determination.--Section 
        1927(c)(1)(C)(ii)(I) of the Social Security Act (42 U.S.C. 
        1396r-8(c)(1)(C)(ii)(I)) is amended by inserting ``and amounts 
        paid under a rebate agreement under section 1860D-2(f)'' after 
        ``this section''.
            (2) Exclusion from average manufacturer price 
        determination.--Section 1927(k)(1)(B)(i) of the Social Security 
        Act (42 U.S.C. 1396r-8(k)(1)(B)(i)) is amended--
                    (A) in subclause (IV), by striking ``and'' after 
                the semicolon;
                    (B) in subclause (V), by striking the period at the 
                end and inserting ``; and''; and
                    (C) by adding at the end the following:
                                    ``(VI) amounts paid under a rebate 
                                agreement under section 1860D-2(f).''.
                                 <all>