Title: Prescription Drug and Medical Device Price Review Board Act of 2018
Policy area: Health

Summary:
Prescription Drug and Medical Device Price Review Board Act of 2018
This bill establishes the Prescription Drug and Medical Device Price Review Board within the Food and Drug Administration. Each manufacturer of a prescription drug or medical device that is sold in the United States must submit to the board:
The board must establish a formula for determining whether the average manufacturer price of a prescription drug or medical device over an annual quarter is an excessive price. Manufacturers may not charge excessive prices. Individuals may petition the board to determine whether the price for a prescription drug or medical device is excessive.
The board may subject violators to reduced patent terms, civil penalties, and increased Medicaid rebates payable to states. The bill amends the Internal Revenue Code to impose a tax on the sale of prescription drugs or medical devices that have excessive prices.
The board must allow individuals to import from approved counties prescription drugs and devices that are comparable to prescription drugs and devices with excessive prices.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5739 Introduced in House (IH)]

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115th CONGRESS
  2d Session
                                H. R. 5739

  To establish within the Department of Health and Human Services the 
Prescription Drug and Medical Device Price Review Board to regulate the 
prices of certain prescription drugs and medical devices, and for other 
                               purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 9, 2018

 Ms. DeLauro (for herself, Mr. Doggett, and Ms. Moore) introduced the 
   following bill; which was referred to the Committee on Energy and 
Commerce, and in addition to the Committees on Ways and Means, and the 
 Judiciary, for a period to be subsequently determined by the Speaker, 
 in each case for consideration of such provisions as fall within the 
                jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
  To establish within the Department of Health and Human Services the 
Prescription Drug and Medical Device Price Review Board to regulate the 
prices of certain prescription drugs and medical devices, 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 ``Prescription Drug and Medical Device 
Price Review Board Act of 2018''.

SEC. 2. ESTABLISHMENT.

    There is established in the Department of Health and Human Services 
a board to be known as the Prescription Drug and Medical Device Price 
Review Board (in this Act referred to as the ``Board'').

SEC. 3. MEMBERSHIP; STAFF.

    (a) Members.--The Board shall be composed of 5 members as follows:
            (1) The Assistant Secretary for Planning and Evaluation of 
        the Department of Health and Human Services (or the Assistant 
        Secretary's designee).
            (2) The Administrator of the Centers for Medicare & 
        Medicaid Services (or the Administrator's designee).
            (3) The Assistant Director for the Health Services Division 
        of the Federal Bureau of Prisons (or the Assistant Director's 
        designee).
            (4) The Secretary of Defense (or the Secretary's designee).
            (5) The Secretary of Veterans Affairs (or the Secretary's 
        designee).
            (6) The Commissioner of Food and Drugs (or the 
        Commissioner's designee).
    (b) Chairperson.--The Board shall designate 1 member of the Board 
to serve as the chairperson.
    (c) Director and Staff.--
            (1) Director.--The Board shall have a director who shall be 
        appointed by the chairperson of the Board, subject to rules 
        prescribed by the Board.
            (2) Staff.--The director may appoint and fix the pay of 
        such additional personnel as the chairperson considers 
        appropriate, subject to rules prescribed by the Board.
            (3) Applicability of certain civil service laws.--The 
        director and staff of the Board shall be appointed subject to 
        the provisions of title 5, United States Code, governing 
        appointments in the competitive service, and shall be paid in 
        accordance with the requirements of chapter 51 and subchapter 
        III of chapter 53 of such title relating to classification and 
        General Schedule pay rates; except that an individual so 
        appointed may not receive pay in excess of the maximum annual 
        rate of basic pay payable for grade GS-15 of the General 
        Schedule.
    (d) Assistance for the Board.--Subject to section 7(g), in carrying 
out this Act, the Board--
            (1) may seek assistance from outside experts in the fields 
        of consumer advocacy, medicine, pharmacology, pharmacy, and 
        prescription drug reimbursement; and
            (2) shall establish and maintain an advisory group and a 
        stakeholder group for purposes of seeking such assistance.
    (e) Initial Meeting.--The Board shall hold its initial meeting not 
later than 90 days after the date of the enactment of this Act.

SEC. 4. REPORTING REQUIREMENTS.

    (a) Reporting by Manufacturers.--The Board shall require each 
manufacturer of a prescription drug or medical device that is sold in 
the United States to submit to the Board on a periodic basis, at a 
level of specificity determined by the Board to be necessary to make a 
determination under section 5, the following information with respect 
to the reporting period:
            (1) Each type of prescription drug and medical device that 
        is sold by the manufacturer or an affiliate of the 
        manufacturer--
                    (A) in the United States; or
                    (B) in a country that is a member of the 
                Organization for Economic Co-operation and Development.
            (2) The price charged by the manufacturer and the affiliate 
        for the prescription drug or medical device in the United 
        States and in any such country, as applicable.
            (3) The costs of the manufacturer and the affiliate to 
        produce and market the prescription drug or medical device for 
        sale in the United States and in any such country, as 
        applicable.
    (b) Reporting by CBO.--The Director of the Congressional Budget 
Office shall submit an annual report to the Board on trends in the 
prices charged for prescription drugs and medical devices.

SEC. 5. PROHIBITION AGAINST EXCESSIVE PRICE.

    (a) Prohibition.--Beginning on the effective date of the regulation 
required by subsection (b), the manufacturer of a prescription drug or 
medical device shall not charge an excessive price, as determined 
pursuant to such regulation, for such drug or device.
    (b) Formula.--The Board shall by regulation prescribe a formula for 
determining whether the average manufacturer price of such drug or 
device over an annual quarter is an excessive price.
    (c) Determination of Excessive Price.--If the Board determines, on 
its own initiative or in response to a petition submitted under 
subsection (d), that the manufacturer of a prescription drug or medical 
device charges an excessive price for such drug or device in violation 
of subsection (a)--
            (1) the Board shall give the manufacturer--
                    (A) notice of such violation; and
                    (B) subject to subsection (d), a period to correct 
                such violation; and
            (2) if the manufacturer fails to correct the violation by 
        the end of such period, the manufacturer shall be subject to 
        section 6 of this Act, section 1927(c)(2)(E) of the Social 
        Security Act, as added by subsection (c) of such section 6, and 
        section 4192 of the Internal Revenue Code of 1986, as added by 
        subsection (d) of such section 6.
    (d) Petitions.--Any person may petition the Board to make a 
determination under subsection (c) regarding the pricing of a 
prescription drug or medical device. Not later than 90 days after the 
date of receipt of such a petition, the Board shall--
            (1) make a determination under subsection (c) regarding 
        such pricing; or
            (2) decline to make such a determination.
    (e) Continuing Violation.--The Board shall not be required to give 
a manufacturer an opportunity to correct a violation, as described in 
subsection (c)(1)(B), before the manufacturer becomes subject to the 
provisions described in subsection (c)(2) for such violation, if--
            (1) the Board has already provided such an opportunity to 
        correct to the manufacturer; and
            (2) the Board finds that the violation of subsection (a) is 
        a continuation of an earlier violation with respect to which 
        such an opportunity was provided.
    (f) Considerations.--The formula required by subsection (a) shall 
at a minimum take into consideration--
            (1) the average manufacturer price of the prescription drug 
        or medical device over the respective annual quarter or 
        quarters;
            (2) the average manufacturer price of other prescription 
        drugs or medical devices in the same therapeutic class over the 
        same quarter or quarters;
            (3) the average price at which the prescription drug or 
        medical device and other prescription drugs and medical devices 
        in the same therapeutic class have been sold by manufacturers 
        in countries other than the United States;
            (4) the costs associated with producing and marketing the 
        prescription drug or medical device, the value of the drug or 
        device to patients where sufficient data is available to 
        determine such value, the total Federal investment in the 
        development of the drug or device, the size of the patient 
        population receiving the drug or device, and other factors 
        determinative as to the true cost of production; and
            (5) whether the price of the prescription drug or medical 
        device increased during any annual quarter by a percentage that 
        is more than 2 percent greater than the CPI increase percentage 
        (as defined in section 215(i) of the Social Security Act (42 
        U.S.C. 415)) for the respective annual quarter.

SEC. 6. ENFORCEMENT PROVISIONS.

    (a) Reduced Patent Term.--If the Board finds that the manufacturer 
of a prescription drug or medical device, who is also an owner of a 
patent for such drug or device, charged an excessive price for such 
drug or device in violation of section 5(a), the Board may--
            (1) reduce the term, by not more than 5 years, of any 
        patent issued under title 35, United States Code, relating to 
        such drug or device; or
            (2) if the term of each patent for such drug or device has 
        expired, reduce the term, by not more than 5 years, of another 
        patent owned by the patent owner relating to a prescription 
        drug or medical device.
    (b) Civil Penalties.--If the Board determines under section 5(c) 
that a manufacturer of a prescription drug or medical device charged an 
excessive price for a prescription drug or medical device in violation 
of section 5(a), the Board may impose a civil penalty on the 
manufacturer of not more than 10 percent of the manufacturer's gross 
sales of the drug or device during the period beginning on the date on 
which an excessive price is first charged and ending on the date on 
which the manufacturer ceases to charge an excessive price.
    (c) Enforcement Through Increased Medicaid Rebates.--
            (1) In general.--Section 1927(c)(2) of the Social Security 
        Act (42 U.S.C. 1396r-8(c)(2)) is amended--
                    (A) in subparagraph (A), by inserting ``, subject 
                to subparagraph (E),'' after ``increased by''; and
                    (B) by adding at the end the following new 
                subparagraph:
                    ``(E) Discouraging excessive prices.--
                            ``(i) In general.--In the case of a 
                        manufacturer of a single source drug or an 
                        innovator multiple source drug with a rebate 
                        agreement under this section, if the 
                        Prescription Drug and Medical Device Price 
                        Review Board established under section 2 of the 
                        Prescription Drug and Medical Device Price 
                        Review Board Act of 2018 determines under 
                        section 5(a) of such Act that such manufacturer 
                        charged, with respect to a 30-day period, an 
                        excessive price for such drug, and the Board 
                        determines under clause (ii) to apply an 
                        increased amount described in such clause with 
                        respect to such manufacturer and drug, the 
                        amount of the rebate determined under 
                        subparagraph (A) for such manufacturer and drug 
                        shall be, subject to subparagraph (D), 
                        increased by such amount for the 4 rebate 
                        periods following such 30-day period.
                            ``(ii) Increased amount determination.--For 
                        purposes of clause (i), if the Board described 
                        in such clause makes such a determination under 
                        such section 5(a), with respect to a 
                        manufacturer and drug described in such clause, 
                        the Board may determine an increased amount to 
                        apply with respect to such manufacturer and 
                        drug and rebate period described in such 
                        clause. Such increased amount may not exceed 
                        the rebate amount that would otherwise be 
                        applied to such manufacturer and drug under 
                        this section for such rebate period, without 
                        regard to this subparagraph.''.
            (2) Effective date.--This subsection and the amendments 
        made by this subsection shall apply with respect to rebate 
        agreements entered into after the date that is 60 days after 
        the date of the enactment of this Act.
    (d) Tax on Excess Prescription Drug and Medical Device Profits.--
            (1) Determination of amount.--If the Board determines under 
        section 5(a) that a manufacturer, producer, or importer of a 
        prescription drug or medical device charged an excessive price 
        for such prescription drug or medical device during a taxable 
        year, the Board may determine under this paragraph a reasonable 
        price for such drug or device for such taxable year.
            (2) Imposition of tax.--
                    (A) In general.--The Internal Revenue Code of 1986 
                is amended by inserting after section 4191 the 
                following new section:

``SEC. 4192. EXCESSIVE PRESCRIPTION DRUG AND MEDICAL DEVICE PRICE.

    ``(a) In General.--There is hereby imposed on the sale of any 
prescription drug or medical device by the manufacturer, producer, or 
importer a tax equal to the difference between the price at which such 
drug or device is so sold and the reasonable price determined by the 
Prescription Drug and Medical Device Price Review Board under section 
6(d)(1) of the Prescription Drug and Medical Device Price Review Board 
Act of 2018 for such drug or device for the taxable year for sales 
after the determination.
    ``(b) Prescription Drug or Medical Device.--For purposes of this 
section, the term `prescription drug or medical device' means any 
prescription drug (as defined in section 9008 of the Patient Protection 
and Affordable Care Act) or device (as defined in section 201(h) of the 
Federal Food, Drug, and Cosmetic Act) intended for humans.''.
                    (B) Clerical amendment.--The table of parts for 
                chapter 32 of such Code is amended--
                            (i) in the item relating to subchapter E, 
                        by striking ``Medical'' and inserting ``Drugs 
                        and medical'', and
                            (ii) by inserting after the item relating 
                        to section 4191 the following new item:

``Sec. 4192. Excessive prescription drug and medical device price.''.
            (3) Effective date.--This subsection and the amendments 
        made by this subsection shall apply with respect to sales after 
        December 31, 2018.
    (e) Safe and Affordable Drugs From Approved Countries.--Chapter 
VIII of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 381 et 
seq.) is amended by adding at the end the following:

``SEC. 810. IMPORTATION BY INDIVIDUALS OF PRESCRIPTION DRUGS, AND 
              DEVICES, FROM AN APPROVED COUNTRY IF MANUFACTURERS ARE 
              CHARGING AN EXCESSIVE PRICE FOR COMPARABLE PRODUCTS IN 
              THE UNITED STATES.

    ``(a) In General.--Notwithstanding any other provision of this Act, 
not later than 180 days after the date of enactment of this section, 
the Prescription Drug and Medical Device Price Review Board (in this 
section referred to as the `Board') shall promulgate regulations 
permitting individuals to safely import from an approved country into 
the United States prescription drugs, and devices, that are comparable 
to prescription drugs, and devices, for which the Board makes a final 
determination that the manufacturer is charging or has charged an 
excessive price in violation of section 5(a) of the Prescription Drug 
and Medical Device Price Review Board Act of 2018.
    ``(b) Comparable Defined.--For purposes of this section, the term 
`comparable' means--
            ``(1) with respect to a drug, having the same active 
        ingredient or ingredients, route of administration, dosage 
        form, and strength; and
            ``(2) with respect to a device, being substantially 
        equivalent.
    ``(c) Assurance of Safety.--For purposes of this section, the term 
`approved country' means a country that is determined by the Secretary 
to have in effect standards to ensure the safety of prescription drugs, 
and of devices, that are at least as protective as the standards 
applicable under Federal law in the United States.''.

SEC. 7. AUTHORITY.

    (a) Obtaining Official Data.--The chairperson of the Board may 
secure directly from any Federal agency information necessary to enable 
the Board to carry out its duties. Upon request of the chairperson, the 
head of the agency shall furnish such information to the Board to the 
extent such information is not prohibited from disclosure by law.
    (b) Mails.--The Board may use the United States mails in the same 
manner and under the same conditions as other Federal agencies.
    (c) Administrative Support Services.--Upon the request of the 
chairperson of the Board, the Administrator of General Services shall 
provide to the Board, on a reimbursable basis, the administrative 
support services necessary for the Board to carry out its duties.
    (d) Contract Authority.--The Board may contract with and compensate 
government and private agencies or persons for the purpose of 
conducting research, surveys, and other services necessary to enable 
the Board to carry out its duties.
    (e) Investigations.--The Board may make such investigations as it 
considers necessary to determine whether there is or may be a violation 
of any regulation promulgated under this Act and may require or permit 
any person to file with it a statement in writing, under oath or 
otherwise as the Board shall determine, as to all the facts and 
circumstances concerning the matter to be investigated.
    (f) Subpoena Power.--
            (1) In general.--The Board may issue subpoenas requiring 
        the attendance and testimony of witnesses and the production of 
        any evidence relating to any matter under investigation by the 
        Board. The attendance of witnesses and the production of 
        evidence may be required from any place within the United 
        States at any designated place of hearing within the United 
        States.
            (2) Failure to obey a subpoena.--If a person refuses to 
        obey a subpoena issued under paragraph (1), the Board may apply 
        to a United States district court for an order requiring that 
        person to appear before the Board to give testimony, produce 
        evidence, or both, relating to the matter under investigation. 
        The application may be made within the judicial district where 
        the hearing is conducted or where that person is found, 
        resides, or transacts business. Any failure to obey the order 
        of the court may be punished by the court as civil contempt.
            (3) Service of subpoenas.--The subpoenas of the Board shall 
        be served in the manner provided for subpoenas issued by a 
        United States district court under the Federal Rules of Civil 
        Procedure for the United States district courts.
            (4) Service of process.--All process of any court to which 
        application is made under paragraph (2) may be served in the 
        judicial district in which the person required to be served 
        resides or may be found.
            (5) Notice.--Upon issuing any subpoena under this 
        subsection, the Board shall give notice of such issuance to the 
        appropriate committees of Congress, including the Committee on 
        Appropriations of the House of Representatives and the 
        Committee on Appropriations of the Senate.
    (g) Confidentiality.--Nothing in this Act shall be construed as 
authorizing the Board to disclose any information that is a trade 
secret or confidential information subject to section 552(b)(4) of 
title 5, United States Code, or section 1905 of title 18, United States 
Code.

SEC. 8. REGULATIONS.

    (a) In General.--Not later than 1 year after the date of the 
initial meeting held under section 3(e), the Board shall issue final 
regulations to carry out this Act.
    (b) Notice and Comment Requirement.--The regulations developed 
under subsection (a) shall be issued in accordance with the notice and 
comment procedures established under section 553 of title 5, United 
States Code.

SEC. 9. REPORT TO FEDERAL AGENCIES.

    Not later than 1 year after the effective date of the regulations 
under section 8 and annually thereafter, the Board shall submit to each 
Federal agency that dispenses or makes payments for the dispensing of 
prescription drugs or medical devices a report containing--
            (1) a list of each prescription drug and medical device for 
        which an excessive price was charged during the preceding 
        calendar year, as determined by the Board under section 5;
            (2) recommendations to the Federal agency against 
        dispensing or making payments for the dispensing of the 
        prescription drug or medical device; and
            (3) recommendations to the Federal agency to substitute, in 
        place of any drug or device listed pursuant to paragraph (1), a 
        similar prescription drug or medical device that is not sold at 
        an excessive price.

SEC. 10. REPORT TO CONGRESS.

    Not later than 1 year after the initial meeting of the Board under 
section 3(e), and annually thereafter, the Board shall submit to the 
Congress a report describing the activities of the Board for the 
preceding year.

SEC. 11. DEFINITIONS.

    In this Act:
            (1) The term ``affiliate'' means, with respect to a 
        manufacturer, any entity that controls, is controlled by, or is 
        under common control with such manufacturer.
            (2) The term ``average manufacturer price'' means the 
        average price charged by the manufacturer of a prescription 
        drug or medical device, as applicable, for sales of the drug or 
        device by the manufacturer in the United States over the 
        respective annual quarter.
            (3) The term ``medical device'' means a device (as defined 
        in section 201 of the Federal Food, Drug, and Cosmetic Act (21 
        U.S.C. 321)).
            (4) The term ``prescription drug'' means a drug (as defined 
        in section 201 of the Federal Food, Drug, and Cosmetic Act (21 
        U.S.C. 321)) that is subject to section 503(b)(1) of such Act 
        (21 U.S.C. 353(b)(1)).
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