Title: Protecting Medicare from Excessive Price Increases Act of 2018
Policy area: Health

Summary:
Protecting Medicare from Excessive Price Increases Act of 2018
This bill requires a drug manufacturer to pay a Medicare rebate on a single-source drug or biological in accordance with the extent to which the manufacturer's average sales price for the drug or biological increases faster than inflation.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5150 Introduced in House (IH)]

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115th CONGRESS
  2d Session
                                H. R. 5150

    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.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 1, 2018

  Mr. Levin 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 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 ``Protecting Medicare from Excessive 
Price Increases Act of 2018''.

SEC. 2. MEDICARE PART B REBATE BY MANUFACTURERS FOR CERTAIN DRUGS WITH 
              PRICES INCREASING FASTER THAN INFLATION.

    (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:
    ``(w) No Payment Without Rebate by Manufacturers for Single Source 
Drugs With Prices Increasing Faster Than Inflation.--
            ``(1) No payment for noncompliant manufacturers.--Subject 
        to the subsequent paragraphs of this subsection, no payment 
        shall be available under this part for a unit of a rebatable 
        drug of a manufacturer (as defined in section 1847A(c)(6)(A)) 
        for each calendar quarter beginning on or after July 1, 2019, 
        if such manufacturer has failed to comply with the requirement 
        under paragraph (2)(B)(i) for the rebate period with respect to 
        such calendar quarter.
            ``(2) Requirements.--
                    ``(A) Secretarial provision of information.--Not 
                later than 6 months after the end of each rebate period 
                with respect to a calendar quarter beginning on or 
                after July 1, 2019, the Secretary shall, for each 
                rebatable drug, report to each manufacturer of such 
                rebatable drug--
                            ``(i) information on the total number of 
                        units described in subparagraph (A)(i) of 
                        paragraph (4) with respect to such drug and 
                        rebate period;
                            ``(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 period; and
                            ``(iii) the rebate amount specified under 
                        such paragraph for such rebatable drug and 
                        period.
                    ``(B) Manufacturer requirements.--The manufacturer 
                of a rebatable drug, for such drug, shall meet each of 
                the following requirements for each rebate period with 
                respect to a calendar quarter beginning on or after 
                July 1, 2019:
                            ``(i) Rebate payment.--The manufacturer 
                        shall, not later than 30 days after the date of 
                        receipt of the information described in 
                        subparagraph (A) from the Secretary, provide to 
                        the Secretary a rebate that is equal to the 
                        amount specified in paragraph (4) for such drug 
                        for such rebate period.
                            ``(ii) Report of asp.--The manufacturer 
                        shall report to the Secretary the information 
                        described in section 1927(b)(3)(A)(iii) in a 
                        time and manner consistent with the reporting 
                        under such section, unless such information is 
                        already reported in accordance with section 
                        1927(b)(3)(C).
            ``(3) Rebatable drug defined.--In this subsection, the term 
        `rebatable drug' means a drug or biological (as defined in 
        section 1847A(c)(6)(D)) paid for under this part, except such 
        term shall not include such a drug or biological--
                    ``(A) to the extent the units of such drug or 
                biological are furnished as part of a grouping of items 
                and services and paid for as such a grouping in an 
                ambulatory payment classification under section 1833(t) 
                or in a single payment under section 1833(i) (instead 
                of separately payable under such respective section);
                    ``(B) to the extent payment for the units of such 
                drug or biological is included under the single payment 
                system for renal dialysis services under section 
                1881(b)(14);
                    ``(C) to the extent the average total allowed 
                charges per year per individual that uses such drug or 
                biological are less than $100; or
                    ``(D) that is a vaccine described in subparagraph 
                (A) or (B) of section 1861(s)(10).
            ``(4) Rebate amount.--
                    ``(A) In general.--For purposes of paragraph 
                (2)(B)(i), the amount specified in this paragraph for a 
                rebatable drug assigned to a billing and payment code 
                for a rebate period is, subject to paragraph (5), the 
                amount equal to the product of--
                            ``(i) the total number of units for which 
                        payment was made under this part for such 
                        rebatable drug during the rebate period; and
                            ``(ii) the amount (if any) by which--
                                    ``(I) the applicable manufacturer's 
                                average sales price (as determined 
                                under subparagraph (B)) for such 
                                rebatable drug for sales that occurred 
                                two quarters prior to the rebate 
                                period; exceeds
                                    ``(II) the inflation-adjusted ASP 
                                determined under subparagraph (C) for 
                                such rebatable drug for sales that 
                                occurred two quarters prior to the 
                                rebate period.
                    ``(B) Determination of applicable manufacturer's 
                asp.--The applicable manufacturer's average sales 
                price, with respect to a manufacturer, determined under 
                this subparagraph for a billing and payment code is the 
                weighted average of the average sales prices of all of 
                the rebatable drugs of the manufacturer identified by a 
                national drug code assigned to such billing and payment 
                code for sales that occurred two quarters prior to the 
                rebate period.
                    ``(C) Determination of inflation-adjusted asp.--The 
                inflation-adjusted ASP determined under this 
                subparagraph for a rebatable drug for a rebate period 
                is--
                            ``(i) the average sales price for the 
                        billing and payment code for all units of such 
                        drug for sales that occurred in the ASP 
                        benchmark quarter (as defined in subparagraph 
                        (E)); increased by
                            ``(ii) the percentage by which the rebate 
                        period CPI-U (as defined in subparagraph (G) 
                        for the rebate period exceeds the benchmark 
                        period CPI-U (as defined in subparagraph (F)).
                    ``(D) Rebate period.--For purposes of this 
                subsection, subject to paragraph (5)(E), the term 
                `rebate period' means, with respect to a calendar 
                quarter, the period that is 2 calendar quarters prior 
                to such calendar quarter.
                    ``(E) ASP benchmark quarter.--The term `ASP 
                benchmark quarter' means the calendar quarter beginning 
                January 1, 2016.
                    ``(F) Benchmark period cpi-u.--The term `benchmark 
                period CPI-U' means the consumer price index for all 
                urban consumers (United States city average) for 
                January 2016.
                    ``(G) Rebate period cpi-u.--The term `rebate period 
                CPI-U' means, with respect to a rebate period, 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 
                the rebate period.
            ``(5) Special treatment of certain drugs.--
                    ``(A) Subsequently approved drugs.--Subject to 
                subparagraph (B), in the case of a single source 
                rebatable drug first approved by the Food and Drug 
                Administration after January 1, 2016, clause (i) of 
                paragraph (4)(C) shall be applied as if the term `ASP 
                benchmark quarter' were defined under paragraph (4)(E) 
                as the third full calendar quarter after the day on 
                which the drug was first marketed and clause (ii) of 
                paragraph (4)(C) shall be applied as if the term 
                `benchmark period CPI-U' were defined under paragraph 
                (4)(F) as if the reference to `January 2016' under such 
                paragraph were a reference to `the first month of the 
                third full calendar quarter after the day on which the 
                drug was first marketed'.
                    ``(B) Special rule for new drugs.--In applying this 
                subsection in the case of a newly approved single 
                source rebatable drug for which a payment and billing 
                code has not previously been established the first 
                calendar quarter to which this subsection shall apply 
                shall be the sixth full calendar quarter after the day 
                on which the drug was first marketed.
            ``(6) Adjustment of coinsurance.--With respect to 
        coinsurance under this part with respect to a rebatable drug 
        for which a rebate is paid under this subsection, the Secretary 
        shall, on an annual basis, pay the individual an amount as if 
        the coinsurance for a rebatable drug for which payment is made 
        under this part for such individual were computed as if the 
        payment amount incurred under this part for such drug were 
        ratably reduced to reflect the rebate amount under this 
        subsection for such drug.
            ``(7) Rebate deposits.--Amounts paid as rebates under 
        paragraph (2)(B)(i) shall be deposited into the Federal 
        Supplementary Medical Insurance Trust Fund established under 
        section 1841.
            ``(8) Exemptions.--
                    ``(A) Other rebates or discounts.--The Secretary 
                shall waive the rebate under paragraph (2)(B)(i) with 
                respect to the units of a 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.
                    ``(B) Shortages.--The Secretary may reduce or waive 
                the rebate under paragraph (2)(B)(i) with respect to a 
                rebatable drug in the case of a shortage of such drug 
                or other exigent circumstances, as determined by the 
                Secretary.
            ``(9) Verification surveys.--The Secretary may survey 
        wholesalers and manufacturers that directly distribute 
        rebatable drugs, when necessary, to verify the manufacturer's 
        average sales prices (including wholesale acquisition cost) 
        reported under paragraph (2)(B)(ii). The Secretary may impose a 
        civil monetary penalty in an amount not to exceed $100,000 on a 
        wholesaler or manufacturer that refuses a request for 
        information about charges or prices by the Secretary in 
        connection with a survey under this subparagraph or knowingly 
        provides false information. 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 subparagraph in the same manner 
        as such provisions apply to a penalty or proceeding under 
        section 1128A(a).
            ``(10) Civil monetary penalty.--In lieu of applying 
        paragraph (1) for a calendar quarter, in the case of a 
        manufacturer of a rebatable drug who has failed to comply with 
        the requirements under paragraph (2)(B)(i) for such drug for 
        the rebate period with respect to such calendar quarter, the 
        Secretary may, pursuant to regulations, impose a civil monetary 
        penalty on such manufacturer in an amount not to exceed 2 
        percent of the total expenditures under this part for such drug 
        for such failure with respect to such drug and 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 
        subparagraph in the same manner as such provisions apply to a 
        penalty or proceeding under section 1128A(a).
            ``(11) Study and report.--
                    ``(A) Study.--The Secretary shall conduct a study 
                of the feasibility of and operational issues involved 
                with the following:
                            ``(i) Including multisource drugs (as 
                        defined in section 1847A(c)(3)(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 (3) 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).
            ``(12) Application to multisource drugs.--The Secretary 
        may, based on the report submitted under paragraph (11) and 
        pursuant to rulemaking, apply the provisions of this subsection 
        to multisource drugs (as defined in section 1847A(c)(3)(C)).''.
    (b) Providing MedPAC Access to Information.--Section 1927(b)(3)(D) 
of the Social Security Act is amended--
            (1) in clause (iv), by striking at the end ``and'';
            (2) in clause (v), by striking at the end the period and 
        inserting ``, and''; and
            (3) by inserting after clause (v) the following new clause:
                            ``(vi) to permit the Medicare Payment 
                        Advisory Commission to review the information 
                        provided.''.
    (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(w)'' after ``section 1927''.
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