Title: Medicare Fair Drug Pricing Act of 2018
Policy area: Health

Summary:
Medicare Fair Drug Pricing Act of 2018
This bill requires the Centers for Medicare & Medicaid Services (CMS) to negotiate with drug manufacturers in determining the price that may be charged for prescription drugs under the Medicare prescription drug benefit.
Under current law, the CMS may not interfere with negotiations between drug manufacturers and prescription drug plan (PDP) sponsors. The bill creates an exception to this prohibition with respect to specified drugs that: (1) are single-source or biological, (2) are not both manufactured by more than two drug manufacturers and manufactured by at least one manufacturer as a generic drug, and (3) meet other specified requirements. The CMS must promulgate regulations regarding the identification of such drugs.
With respect to these drugs, the CMS shall negotiate the price that may be charged to PDP sponsors and Medicare Advantage (MA) organizations for Medicare and MA enrollees. The bill establishes processes for negotiation and price determination in the initial plan year and subsequent plan years.
A manufacturer must participate in the negotiation process as a condition of coverage under the Medicare prescription drug benefit.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6574 Introduced in House (IH)]

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115th CONGRESS
  2d Session
                                H. R. 6574

 To amend part D of title XVIII of the Social Security Act to require 
 the Secretary of Health and Human Services to determine, on behalf of 
Medicare beneficiaries, covered part D drug prices for certain covered 
                 part D drugs, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 26, 2018

Ms. Schakowsky introduced the following bill; which was referred to the 
 Committee on Energy and Commerce, and in addition to the Committee on 
   Ways and Means, 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 amend part D of title XVIII of the Social Security Act to require 
 the Secretary of Health and Human Services to determine, on behalf of 
Medicare beneficiaries, covered part D drug prices for certain covered 
                 part D drugs, 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 Fair Drug Pricing Act of 
2018''.

SEC. 2. REQUIREMENT TO DETERMINE LOWER COVERED PART D DRUG PRICES FOR 
              CERTAIN COVERED PART D DRUGS.

    (a) In General.--Section 1860D-11(i) of the Social Security Act (42 
U.S.C. 1395w-111(i)) is amended--
            (1) by striking ``(i) Noninterference.--In'' and inserting 
        the following:
    ``(i) Noninterference.--
            ``(1) In general.--In'';
            (2) by inserting ``subject to paragraph (2),'' after 
        ``part,''; and
            (3) by adding at the end the following new paragraph:
            ``(2) Exception for specified drugs.--
                    ``(A) Requirement.--
                            ``(i) In general.--Notwithstanding 
                        paragraph (1), the part D price for specified 
                        drugs shall be determined in accordance with 
                        the process described in subparagraph (B).
                            ``(ii) Specified drugs.--For purposes of 
                        this paragraph, the term `specified drug' means 
                        a covered part D drug--
                                    ``(I) that is--
                                            ``(aa) a single source drug 
                                        or biological;
                                            ``(bb) not a biological 
                                        product licensed pursuant to an 
                                        application under section 
                                        351(k) of the Public Health 
                                        Service Act; and
                                            ``(cc) not both 
                                        manufactured by more than two 
                                        drug manufacturers and 
                                        manufactured by at least one 
                                        such manufacturer as a generic 
                                        drug; or
                                    ``(II) that--
                                            ``(aa) is selected by the 
                                        Secretary for purposes of this 
                                        paragraph; and
                                            ``(bb) the Secretary 
                                        determines is a covered part D 
                                        drug with respect to which 
                                        there is limited ability for 
                                        PDP sponsors and MA 
                                        organizations to negotiate 
                                        manufacturer rebates, such that 
                                        the Secretary determines that 
                                        the failure to apply this 
                                        paragraph will have a 
                                        significant fiscal impact on 
                                        the program under this title.
                            ``(iii) Part d price defined.--For purposes 
                        of this paragraph, the term `part D price' 
                        means, with respect to a covered part D drug, 
                        the price (including discounts, rebates, and 
                        other price concessions) that may be charged to 
                        PDP sponsors and MA organizations for such drug 
                        for part D eligible individuals who are 
                        enrolled under a prescription drug plan or 
                        under an MA-PD plan.
                            ``(iv) Regulations for identification of 
                        specified drugs.--The Secretary, not later than 
                        one year after the date of the enactment of 
                        this paragraph, shall promulgate regulations 
                        regarding the identification of single source 
                        drugs and biologicals as specified drugs.
                            ``(v) Process to petition that drug is no 
                        longer a specified drug.--The Secretary shall 
                        establish a process under which a manufacturer 
                        for a specified drug may petition the Secretary 
                        for the rescinding of a previous identification 
                        of a drug as a specified drug under clause (ii) 
                        based upon the drug involved no longer being a 
                        specified drug.
                    ``(B) Price determination process.--For purposes of 
                subparagraph (A), the process described in this 
                subparagraph, with respect to the part D price for a 
                specified drug for a plan year, is the following:
                            ``(i) Limited period for negotiation for 
                        first plan year.--
                                    ``(I) In general.--The Secretary 
                                shall negotiate such price with the 
                                drug manufacturer involved for a period 
                                of not more than 90 days beginning on 
                                the date of identification of the drug 
                                as a specified drug for such plan year 
                                by the Secretary.
                                    ``(II) Successful negotiations.--In 
                                the case that such negotiation with 
                                respect to such 90-day period results 
                                in a price that is agreed to by both 
                                the Secretary and manufacturer, such 
                                price shall be the maximum part D price 
                                for such specified drug through the end 
                                of the plan year beginning after such 
                                period.
                            ``(ii) Secretary sets price for first plan 
                        year in case of failure to negotiate price.--In 
                        the case that negotiations under clause (i), 
                        with respect to a specified drug, do not result 
                        in a price for such specified drug that is so 
                        agreed to by the Secretary and drug 
                        manufacturer, the Secretary shall determine a 
                        price for such drug based on--
                                    ``(I) the information provided to 
                                the Secretary by the drug manufacturer 
                                during the 90-day period described in 
                                clause (i)(I) regarding costs 
                                associated with such drug that are 
                                applicable with respect to such drug 
                                manufacturer;
                                    ``(II) in the case that payment is 
                                made for such drug by the Department of 
                                Veterans Affairs or under title XIX, 
                                the net priced paid for such drug by 
                                such Department or under such title, as 
                                applicable;
                                    ``(III) ensuring affordability of 
                                such drug, and accessibility to such 
                                drug, for individuals entitled to 
                                benefits under part A or enrolled under 
                                part B; and
                                    ``(IV) such other factors as the 
                                Secretary determines appropriate.
                        The price determined under this clause shall be 
                        the maximum part D price for such specified 
                        drug through the end of the plan year beginning 
                        after such determination of such price.
                            ``(iii) Price in subsequent plan years.--
                        For each plan year that is subsequent to the 
                        plan year for which a price is determined for a 
                        specified drug under clause (i) or (ii) and in 
                        which, on the first day of such subsequent plan 
                        year, the identification of such drug as a 
                        specified drug still applies, the maximum price 
                        for such drug shall be the maximum part D price 
                        for the previous year determined under clause 
                        (i) or (ii), as applicable, increased by the 
                        percentage increase in the consumer price index 
                        for all urban consumers (all items; U.S. city 
                        average) for the 12-month period ending with 
                        June of the year before such subsequent plan 
                        year.
                            ``(iv) Consultation.--In determining a 
                        price for a specified drug under clause (ii), 
                        the Secretary may consult with the Comptroller 
                        General, the Medicare Payment Advisory 
                        Commission, the Medicaid and CHIP Payment and 
                        Access Commission, or other outside, 
                        independent experts.
                    ``(C) No change in rules for formularies.--
                            ``(i) In general.--Nothing in subparagraph 
                        (A) or (B) shall be construed to authorize the 
                        Secretary to establish or require a particular 
                        formulary.
                            ``(ii) Construction.--Clause (i) shall not 
                        be construed as affecting the Secretary's 
                        authority to ensure appropriate and adequate 
                        access to covered part D drugs under 
                        prescription drug plans and under MA-PD plans, 
                        including compliance of such plans with 
                        formulary requirements under section 1860D-
                        4(b)(3).
                    ``(D) Construction.--Nothing in this paragraph 
                shall be construed as--
                            ``(i) 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 described in subparagraph 
                        (A) below the price negotiated under such 
                        subparagraph or determined under subparagraph 
                        (B); or
                            ``(ii) permitting the Secretary to make 
                        proprietary data available to the public.
                    ``(E) Definitions.--In this paragraph:
                            ``(i) Drug manufacturer.--The term `drug 
                        manufacturer' has the meaning given the term 
                        `manufacturer' in section 1860D-14A(g)(5).
                            ``(ii) Single source drug or biological.--
                        The term `single source drug or biological' has 
                        the meaning given such term in section 
                        1847A(c)(6)(D).''.
    (b) Requiring Participation in Negotiation Process as Condition of 
Part D Drug Coverage.--Section 1860D-14A(b) of the Social Security Act 
(42 U.S.C. 1395w-114a(b)) is amended by adding at the end the following 
new paragraph:
            ``(5) Participation in negotiation process.--Each agreement 
        under this subsection shall include, with respect to plans 
        years beginning with plan year 2019, an agreement by the 
        manufacturer, with respect to each specified drug of such 
        manufacturer under section 1860d-11(i)(2), to participate in 
        the negotiation process under such section for such drug, 
        including accepting the price resulting from the negotiation 
        (or, in the case that such negotiation does not result in a 
        price for such drug that is agreed to by the Secretary and the 
        manufacturer, the price resulting from the application of 
        subparagraph (B)(ii) of such section) as the maximum price for 
        such drug for the period provided under such section.''.

SEC. 3. STUDY AND REPORT.

    (a) Study.--The Secretary of Health and Human Services shall 
conduct a study examining--
            (1) the impact of the amendments made by section 2 on--
                    (A) the cost of single source drugs and biologicals 
                (as defined in section 1847A(c)(6)(D) of the Social 
                Security Act (42 U.S.C. 1395w-3a(c)(6)(D))) for which 
                payment is made under part B of title XVIII of such 
                Act; and
                    (B) the accessibility of such drugs and biologicals 
                for individuals entitled to benefits under part A of 
                such title or enrolled under part B of such title; and
            (2) options that would permit or require the Secretary to 
        create and implement, not later than one year after the date of 
        the report described in subsection (b)--
                    (A) a method to apply to such single source drugs 
                and biologicals for which the Secretary determines 
                appropriate--
                            (i) an authority similar to the authority 
                        granted to the Secretary under subparagraph (A) 
                        of section 1860D-11(i)(2) of such Act (relating 
                        to negotiating with drug manufacturers the part 
                        D prices for certain specified drugs); and
                            (ii) a negotiation process similar to the 
                        process under subparagraph (B) of such section; 
                        and
                    (B) a method, such as a rebate program, to 
                incorporate the rate negotiated for such drugs and 
                biologicals pursuant to the authority described in 
                subparagraph (A) into payments for such drugs and 
                biologicals under part B of such Act.
    (b) Report.--Not later than one year after the date of the 
enactment of this Act, the Secretary of Health and Human Services shall 
submit a report to Congress on the results of the study conducted under 
subsection (a). Such report shall include recommendations regarding the 
options examined pursuant to paragraph (2) of such subsection.
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