Title: Improving Access To Affordable Prescription Drugs Act
Policy area: Health

Summary:
This bill amends provisions of various laws relating to prescription-drug pricing and affordability. Specifically, the bill:

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 771 Introduced in Senate (IS)]

<DOC>






115th CONGRESS
  1st Session
                                 S. 771

          To improve access to affordable prescription drugs.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 29, 2017

 Mr. Franken (for himself, Mr. Sanders, Mr. Whitehouse, Mr. Brown, Ms. 
  Klobuchar, Ms. Warren, Ms. Baldwin, Mr. Reed, Mrs. Gillibrand, Ms. 
    Hassan, Mr. Durbin, Mr. Van Hollen, Mr. Merkley, Mr. Udall, Mr. 
 Blumenthal, and Mr. Booker) introduced the following bill; which was 
          read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
          To improve access to affordable prescription drugs.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Improving Access 
To Affordable Prescription Drugs Act''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
                         TITLE I--TRANSPARENCY

Sec. 101. Drug manufacturer reporting.
Sec. 102. Determining the public and private benefit of copayment 
                            coupons and other patient assistance 
                            programs.
                   TITLE II--ACCESS AND AFFORDABILITY

Sec. 201. Negotiating fair prices for Medicare prescription drugs.
Sec. 202. Prescription drug price spikes.
Sec. 203. Acceleration of the closing of the Medicare Part D coverage 
                            gap.
Sec. 204. Importing affordable and safe drugs.
Sec. 205. Requiring drug manufacturers to provide drug rebates for 
                            drugs dispensed to low-income individuals.
Sec. 206. Cap on prescription drug cost-sharing.
                         TITLE III--INNOVATION

Sec. 301. Prize fund for new and more effective treatments of bacterial 
                            infections.
Sec. 302. Public funding for clinical trials.
Sec. 303. Rewarding innovative drug development.
Sec. 304. Improving program integrity.
                    TITLE IV--CHOICE AND COMPETITION

Sec. 401. Preserving access to affordable generics.
Sec. 402. 180-day exclusivity period amendments regarding first 
                            applicant status.
Sec. 403. 180-day exclusivity period amendments regarding agreements to 
                            defer commercial marketing.
Sec. 404. Increasing generic drug competition.
Sec. 405. Disallowance of deduction for advertising for prescription 
                            drugs.
Sec. 406. Product hopping.

                         TITLE I--TRANSPARENCY

SEC. 101. DRUG MANUFACTURER REPORTING.

    Part P of title III of the Public Health Service Act (42 U.S.C. 
280g et seq.) is amended by adding at the end the following:

``SEC. 399V-7. DRUG MANUFACTURER REPORTING.

    ``(a) Definitions.--In this section:
            ``(1) Independent charity patient assistance program.--The 
        term `independent charity patient assistance program' means any 
        organization described in section 501(c)(3) of the Internal 
        Revenue Code of 1986 and exempt from taxation under section 
        501(a) of such Code and which is not a private foundation (as 
        defined in section 509(a) of such Code) that offers patient 
        assistance.
            ``(2) Manufacturer patient assistance program.--The term 
        `manufacturer patient assistance program' means an 
        organization, including a private foundation (as so defined), 
        that is sponsored by, or receives funding from, a manufacturer 
        and that offers patient assistance. Such term does not include 
        an independent charity patient assistance program.
            ``(3) Patient assistance.--The term `patient assistance' 
        means assistance provided to offset the cost of drugs for 
        individuals. Such term includes free products, coupons, 
        rebates, copay or discount cards, and other means of providing 
        assistance to individuals related to drug costs, as determined 
        by the Secretary.
    ``(b) Reporting on Domestic Sales.--An applicable manufacturer of 
an approved drug (including a drug approved under subsection (c) or (j) 
of section 505 of the Federal Food, Drug, and Cosmetic Act and a 
biological product licensed under subsection (a) or (k) of section 351 
of this Act) shall submit to the Secretary and to Congress an annual 
report, in such format as the Secretary shall require, outlining with 
respect to the previous calendar year (except as provided in subsection 
(c)(3))--
            ``(1) with respect to each such drug--
                    ``(A) the total expenditures of the manufacturer 
                on--
                            ``(i) domestic and foreign drug research 
                        and development, including an itemized 
                        description of--
                                    ``(I) basic and preclinical 
                                research;
                                    ``(II) clinical research, broken 
                                out by clinical trial phase;
                                    ``(III) development of alternative 
                                dosage forms and strengths for the drug 
                                molecule or combinations, including the 
                                molecule;
                                    ``(IV) other drug development 
                                activities, such as nonclinical 
                                laboratory studies and record and 
                                report maintenance;
                                    ``(V) pursuing new or expanded 
                                indications for such drug through 
                                supplemental applications under section 
                                505 of the Federal Food, Drug, and 
                                Cosmetic Act;
                                    ``(VI) carrying out postmarket 
                                requirements related to such drug, 
                                including under section 505(o)(3) of 
                                such Act;
                                    ``(VII) carrying out risk 
                                evaluation and mitigation strategies in 
                                accordance with section 505-1 of such 
                                Act; and
                                    ``(VIII) marketing research;
                            ``(ii) cost of goods sold, broken out by 
                        source and cost of each component and 
                        identifying specific costs that reflect 
                        internal transfers within the manufacturer's 
                        company;
                            ``(iii) acquisition costs in total and per 
                        unit sold, including costs for the purchase of 
                        patents and licensing; and
                            ``(iv) marketing and advertising for the 
                        promotion of the drug, including a breakdown of 
                        amounts aimed at consumers, prescribers, 
                        managed care organizations, and others;
                    ``(B) the gross revenue, net revenue, gross profit, 
                and net profit to the manufacturer;
                    ``(C) the total number of units of the prescription 
                drug that were sold in interstate commerce in the most 
                recently completed calendar year;
                    ``(D) pricing information, including--
                            ``(i) wholesale acquisition cost;
                            ``(ii) net average price realized by 
                        pharmacy benefit managers for drugs provided to 
                        individuals in the United States, after 
                        accounting for any rebates or other payments 
                        from the manufacturer to the pharmacy benefit 
                        manager and from the pharmacy benefit manager 
                        to the manufacturer; and
                            ``(iii) the net price of the drug, after 
                        accounting for discounts, rebates, or other 
                        financial considerations, charged to purchasers 
                        in each applicable country of the Organisation 
                        for Economic Co-operation and Development;
                    ``(E) information, including the dollar value to 
                the recipient of manufacturer patient assistance 
                programs offered by the manufacturer or a manufacturer 
                patient assistance program sponsored by or associated 
                with the manufacturer, per patient, including--
                            ``(i) the specific forms of such patient 
                        assistance available, such as coupons, rebates, 
                        discount codes, or copayment cards;
                            ``(ii) the total dollar value of each 
                        manufacturer patient assistance program and the 
                        dollar value of each program to the patient, 
                        including the basis used to assign value to the 
                        manufacturer patient assistance program;
                            ``(iii) the duration of each type of such 
                        patient assistance available; and
                            ``(iv) any requirements, such as income 
                        thresholds, for how to qualify for such patient 
                        assistance; and
                    ``(F) information on usage of patient assistance 
                offered by the manufacturer or a manufacturer patient 
                assistance program sponsored by or associated with the 
                manufacturer, including--
                            ``(i) the number of transactions of each 
                        type of patient assistance used;
                            ``(ii) the number of individuals receiving 
                        each type of patient assistance;
                            ``(iii) the total value of each type of 
                        patient assistance that was used;
                            ``(iv) the average length of time that each 
                        individual received each type of patient 
                        assistance;
                            ``(v) the number of individuals who were 
                        discontinued from receiving each type of 
                        patient assistance; and
                            ``(vi) complete documentation of the terms 
                        and conditions for an individual agreeing to 
                        participate in the program for each type of 
                        patient assistance provided;
                    ``(G) any Federal benefits received by the 
                manufacturer, including the amounts and periods of 
                impact for each such benefit, including tax credits, 
                patent applications that benefitted from a grant from 
                the National Institutes of Health, patent extensions, 
                exclusivity periods, and other Federal benefits with 
                respect to such drug; and
                    ``(H) the percentage of research and development 
                expenditures on--
                            ``(i) activities conducted by the 
                        manufacturer;
                            ``(ii) activities funded by Federal 
                        entities; and
                            ``(iii) activities conducted by other 
                        entities such as academic institutions or other 
                        drug manufacturers;
            ``(2) executive compensation for the chief executive 
        officer, chief financial officer, and the 3 other most highly 
        compensated executive officers, including bonuses, paid by such 
        manufacturer, and stock options affiliated with the 
        manufacturer that were offered to or accrued by such officers;
            ``(3) any additional information the manufacturer chooses 
        to provide related to drug pricing decisions, such as total 
        expenditures on drug research, drug development, and clinical 
        trials on drugs that failed to receive approval by the Food and 
        Drug Administration, a list of drugs and drug prices against 
        which the manufacturer compared the applicable drug, and other 
        relevant information; and
            ``(4) any other information as the Secretary may require.
    ``(c) Submission of Reports.--
            ``(1) In general.--
                    ``(A) Submission by drug manufacturers.--Drug 
                manufacturers shall submit the annual reports required 
                under this section submitted to the Secretary in a 
                usable format, as the Secretary may require.
                    ``(B) Collation by the secretary.--The Secretary 
                shall collate the reports received as described in 
                subparagraph (A) and submit such collated reports to 
                Congress, together with an analysis of the reports by 
                the Secretary that includes--
                            ``(i) a summary of data from the reports;
                            ``(ii) consideration of factors such as 
                        trends on research and development costs, 
                        Federal benefits, and manufacturer patient 
                        assistance programs; and
                            ``(iii) the relationship between the 
                        factors described in clause (ii) and 
                        prescription drug prices.
                    ``(C) Public availability.--The Secretary shall 
                make the reports submitted by manufacturers as 
                described in subparagraph (A) and the collated reports 
                together with the analysis of the Secretary described 
                in subparagraph (B) publicly available, including by 
                posting such reports to the Internet website of the 
                Department of Health and Human Services, in a 
                searchable format.
            ``(2) Single reports.--A drug manufacturer shall submit all 
        information required under subsection (b) with respect to each 
        applicable drug, in a single, annual report.
            ``(3) Initial report.--
                    ``(A) In general.--An applicable drug manufacturer 
                shall submit a report pursuant to this section one year 
                after the date of enactment of the Improving Access To 
                Affordable Prescription Drugs Act (except as provided 
                in subparagraph (B)) that includes the information 
                required under subsection (b)(1) with respect to each 
                calendar year since the drug for which the report is 
                required was approved under section 505 of the Federal 
                Food, Drug, and Cosmetic Act, licensed under section 
                351 of this Act, or received an exemption under section 
                505(i) of the Federal Food, Drug, and Cosmetic Act or 
                section 351(a)(3) of this Act, or the calendar year in 
                which the manufacturer acquired the drug.
                    ``(B) Small businesses.--In the case of an 
                applicable drug manufacturer that has fewer than 500 
                employees, the initial report described in subparagraph 
                (A) shall be submitted by a date determined by the 
                Secretary, which shall be not earlier than the date 
                described in subparagraph (A) and not later than the 
                date that is 3 years after the date of enactment of the 
                Improving Access To Affordable Prescription Drugs Act.
    ``(d) Penalty for Noncompliance.--The Secretary shall report to the 
Office of the Inspector General any manufacturer's failure to submit a 
complete report as required under this section. Any manufacturer that 
fails to submit a complete report required under this section shall be 
subject to a civil penalty of up to $200,000 for each day on which the 
violation continues. The Secretary shall collect the civil penalties 
under this subsection, and without further appropriation, shall use 
such funds to support the programs under sections 409K and 485E, and, 
at the discretion of the Secretary, research of the National Institutes 
of Health and other activities authorized under the Improving Access To 
Affordable Prescription Drugs Act, including any amendments made by 
such Act.''.

SEC. 102. DETERMINING THE PUBLIC AND PRIVATE BENEFIT OF COPAYMENT 
              COUPONS AND OTHER PATIENT ASSISTANCE PROGRAMS.

    (a) Information Reporting by Independent Charity Patient Assistance 
Programs.--Section 6033(b) of the Internal Revenue Code of 1986 is 
amended by striking the period at the end of paragraph (16) and 
inserting ``, and'' and by inserting after paragraph (16) the following 
new paragraph:
            ``(17) the total amount of patient assistance (within the 
        meaning of section 399V-7 of the Public Health Service Act) 
        provided to individuals who are prescribed drugs manufactured 
        by any contributor to the organization.''.
    (b) GAO Study and Report on Impact of Copayment Coupons and Other 
Patient Assistance Programs on Prescription Drug Pricing and 
Expenditures.--
            (1) Study.--The Comptroller General of the United States 
        shall conduct a study on the impact of copayment coupons and 
        other patient assistance programs on prescription drug pricing 
        and expenditures. Such study shall include an analysis of the 
        following:
                    (A) The extent to which copayment coupons and 
                patient assistance programs contribute to inflated 
                prescription drug prices and health insurance premiums, 
                including with respect to--
                            (i) the Medicaid program under title XIX of 
                        the Social Security Act (42 U.S.C. 1396 et 
                        seq.);
                            (ii) the Medicare program under title XVIII 
                        of such Act (42 U.S.C. 1395 et seq.);
                            (iii) the TRICARE program under chapter 55 
                        of title 10, United States Code;
                            (iv) health care under the laws 
                        administered by the Secretary of Veterans 
                        Affairs;
                            (v) the commercial health insurance market; 
                        and
                            (vi) the cash pay health market.
                    (B) The extent to which manufacturers offering 
                copayment coupons and other patient assistance programs 
                or sponsoring manufacturer patient assistance programs 
                obtain tax deductions for offering or sponsoring such 
                assistance (either as business expenses or charitable 
                deductions), including--
                            (i) the total value of the tax deductions 
                        claimed by manufacturers for offering or 
                        sponsoring patient assistance programs during 
                        the 10 years preceding the date of enactment of 
                        this Act;
                            (ii) a description of the methodology for 
                        assigning a value to the tax deduction claimed 
                        by manufacturers for offering or sponsoring 
                        patient assistance programs; and
                            (iii) an analysis of the extent to which 
                        the activities of independent charity patient 
                        assistance programs, which are sponsored by, or 
                        receive funding from, pharmaceutical 
                        manufacturers (as determined using tax returns, 
                        sales data, and other public disclosures) 
                        provide a financial benefit to the 
                        manufacturers that sponsor them.
                    (C) The extent to which independent charity patient 
                assistance programs adhere to guidance from the Office 
                of the Inspector General of the Department of Health 
                and Human Services on avoiding waste, fraud, and abuse.
            (2) Definitions.--In this subsection, the terms ``patient 
        assistance'', ``independent charity patient assistance 
        program'', ``manufacturer'', and ``manufacturer patient 
        assistance program'' have the meaning given those terms under 
        section 399V-7 of the Public Health Service Act, as added by 
        section 101.
            (3) Report.--Not later than 2 years after the date of the 
        enactment of this Act, the Comptroller General of the United 
        States shall submit to Congress a report describing the 
        findings of the study required under this subsection.

                   TITLE II--ACCESS AND AFFORDABILITY

SEC. 201. NEGOTIATING FAIR PRICES FOR MEDICARE PRESCRIPTION DRUGS.

    (a) Negotiating Fair Prices.--
            (1) 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 by inserting the following:
    ``(i) Negotiating Fair Prices With Drug Manufacturers.--
            ``(1) In general.--Notwithstanding any other provision of 
        law, in furtherance of the goals of providing quality care and 
        containing costs under this part, the Secretary shall, with 
        respect to applicable covered part D drugs, and may, with 
        respect to other covered part D drugs, negotiate, using the 
        negotiation technique or techniques that the Secretary 
        determines will maximize savings and value to the government 
        for prescription drug plans and MA-PD plans and for plan 
        enrollees (in a manner that may be similar to Federal entities 
        and that may include, but is not limited to, formularies, 
        reference pricing, discounts, rebates, other price concessions, 
        and coverage determinations), with drug manufacturers the 
        prices that may be charged to PDP sponsors and MA organizations 
        for such drugs for part D eligible individuals who are enrolled 
        in a prescription drug plan or in an MA-PD plan. In conducting 
        such negotiations, the Secretary shall consider the drug's 
        current price, initial launch price, prevalence of disease and 
        usage, and approved indications, the number of similarly 
        effective alternative treatments for each approved use of the 
        drug, the budgetary impact of providing coverage under this 
        part for such drug for all individuals who would likely benefit 
        from the drug, evidence on the drug's effectiveness and safety 
        compared to similar drugs, and the quality and quantity of 
        clinical data and rigor of the applicable process of approval 
        of a drug under section 505 of the Federal Food, Drug, and 
        Cosmetic Act or a biological product under section 351 of the 
        Public Health Service Act.
            ``(2) Use of lower of va or big four price if negotiations 
        fail.--If, after attempting to negotiate for a price with 
        respect to a covered part D drug under paragraph (1) for a 
        period of 1 year, the Secretary is not successful in obtaining 
        an appropriate price for the drug (as determined by the 
        Secretary), the Secretary shall establish the price that may be 
        charged to PDP sponsors and MA organizations for such drug for 
        part D eligible individuals who are enrolled in a prescription 
        drug plan or in an MA-PD plan at an amount equal to the lesser 
        of--
                    ``(A) the price paid by the Secretary of Veterans 
                Affairs to procure the drug under the laws administered 
                by the Secretary of Veterans Affairs; or
                    ``(B) the price paid to procure the drug under 
                section 8126 of title 38, United States Code.
            ``(3) Applicable covered part d drug defined.--For purposes 
        of this subsection, the term `applicable covered part D drug' 
        means a covered part D drug that the Secretary determines to be 
        appropriate for negotiation under paragraph (1) based on one or 
        more of the following factors as applied to such drug:
                    ``(A) Spending on a per beneficiary basis.
                    ``(B) The proportion of total spending under this 
                title.
                    ``(C) Unit price increases over the preceding 5 
                years.
                    ``(D) Initial launch price.
                    ``(E) Availability of less expensive, similarly 
                effective alternative treatments.
                    ``(F) Status of the drug as a follow-on to 
                previously approved drugs.
                    ``(G) Any other criteria determined by the 
                Secretary.
            ``(4) PDP sponsors and ma organization may negotiate lower 
        prices.--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) or the price established 
        under paragraph (2).
            ``(5) No effect on existing appeals process.--Nothing in 
        this subsection shall be construed to affect the appeals 
        procedures under subsections (g) and (h) of section 1860D-4.''.
            (2) Effective date.--The amendments made by this subsection 
        shall take effect on the date of the enactment of this Act and 
        shall first apply to negotiations and prices for plan years 
        beginning on January 1, 2019.
    (b) Requirement To Include a Link to the Medicare Drug Spending 
Dashboard on the Medicare Plan Finder.--Beginning not later than 
October 1, 2017, the Secretary of Health and Human Services shall 
ensure that the Medicare Plan Finder on the Medicare.gov Internet 
website includes a link to the Medicare Drug Spending Dashboard on the 
CMS.gov Internet website. Such link shall be easily accessible on the 
Medicare Plan Finder.
    (c) Reports to Congress.--
            (1) Secretary of hhs.--
                    (A) In general.--Not later than 3 years after the 
                date of the enactment of this Act, and every 6 months 
                thereafter, the Secretary of Health and Human Services 
                shall submit to Congress a report on the following:
                            (i) The price negotiations conducted by the 
                        Secretary under section 1860D-11(i) of the 
                        Social Security Act (42 U.S.C. 1395w-111(i)), 
                        as amended by subsection (a), including a 
                        description of--
                                    (I) how such price negotiations are 
                                achieving lower prices for covered part 
                                D drugs (as defined in section 1860D-
                                2(e) of the Social Security Act (42 
                                U.S.C. 1395w-102(e))) for Medicare 
                                beneficiaries;
                                    (II) how such lower prices are 
                                passed through to Medicare 
                                beneficiaries;
                                    (III) how such price negotiations 
                                are affecting drug prices in the 
                                private market; and
                                    (IV) how such price negotiations 
                                are affecting the list price of covered 
                                part D drugs.
                            (ii) Data on spending under part D of the 
                        Medicare program on covered part D drugs, 
                        including data on covered part D drugs with--
                                    (I) spending on a per beneficiary 
                                basis that is above the median spending 
                                on other drugs in the same class or 
                                above the median spending of other drug 
                                classes; and
                                    (II) high unit cost increases over 
                                the past five years, especially where 
                                such increases are greater than the 
                                increases for covered part D drugs in 
                                general.
                            (iii) A list of the covered part D drugs 
                        with no therapeutic substitute and data on 
                        spending under part D of the Medicare program 
                        on such drugs.
                            (iv) Access to covered part D drugs and, 
                        where available, compliance rates and health 
                        outcomes associated with compliance rates.
                            (v) Appeals by enrollees with respect to 
                        covered part D drugs not included on plan 
                        formularies.
                    (B) Public availability of report.--The Secretary 
                of Health and Human Services shall publish on the 
                Internet website of the Centers for Medicare & Medicaid 
                Services a copy of each report submitted under 
                subparagraph (A), including the detailed tables, 
                figures, and data published in the report and its 
                appendices.
            (2) MedPAC.--
                    (A) Study.--The Comptroller General of the United 
                States shall conduct a study on the price negotiations 
                conducted by the Secretary under section 1860D-11(i) of 
                the Social Security Act (42 U.S.C. 1395w-111(i)), as 
                amended by subsection (a), including an analysis of--
                            (i) how such price negotiations are 
                        achieving lower prices for covered part D drugs 
                        (as defined in section 1860D-2(e) of the Social 
                        Security Act (42 U.S.C. 1395w-102(e))) for 
                        Medicare beneficiaries;
                            (ii) who is benefitting from such lower 
                        prices, such as Medicare beneficiaries, the 
                        Federal Government, States, prescription drug 
                        plans and MA-PD plans, or other entities;
                            (iii) how such price negotiations are 
                        affecting drug prices in the private market; 
                        and
                            (iv) how such price negotiations are 
                        affecting the list price of covered part D 
                        drugs.
                    (B) Report.--Not later than January 1, 2021, the 
                Comptroller General of the United States shall submit 
                to Congress a report on the study conducted under 
                subparagraph (A), together with recommendations for 
                improving such price negotiations.
    (d) CMI Testing of Negotiating Drug and Biological Prices To 
Improve Value.--Section 1115A(b)(2) of the Social Security Act (42 
U.S.C. 1315a(b)(2)) is amended--
            (1) in subparagraph (A), by adding at the end the following 
        new sentence: ``The models selected under this subparagraph 
        shall include at least 3 of the models described in 
        subparagraph (D), which shall be implemented by not later than 
        18 months after the date of the enactment of the Improving 
        Access To Affordable Prescription Drugs Act''; and
            (2) by adding at the end the following new subparagraph:
                    ``(D) Models of negotiating drug and biological 
                prices to improve value.--The models described in this 
                subparagraph are the following models for negotiating 
                drug and biological prices under the applicable titles 
                (including under both parts B and D of title XVIII) in 
                order to improve the value of payments for such drugs 
                and biologicals under such titles:
                            ``(i) Discounting or eliminating patient 
                        cost-sharing on high-value drugs and 
                        biologicals.
                            ``(ii) Value-based formularies.
                            ``(iii) Indications-based pricing.
                            ``(iv) Reference pricing.
                            ``(v) Risk-sharing agreements based on 
                        outcomes.
                            ``(vi) Pricing based on comparative 
                        effectiveness research.
                            ``(vii) Episode-based payments for 
                        chemotherapy and other conditions determined 
                        appropriate by the Secretary.
                            ``(viii) Alternative ways of paying for 
                        drugs and biologicals under part B of title 
                        XVIII.
                            ``(ix) Other models determined appropriate 
                        by the Secretary.''.

SEC. 202. PRESCRIPTION DRUG PRICE SPIKES.

    (a) Identification of Prescription Drug Price Spikes.--
            (1) Definitions.--In this subsection:
                    (A) Applicable entity.--The term ``applicable 
                entity'' means the holder of an application approved 
                under subsection (c) or (j) of section 505 of the 
                Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355) or 
                of a license issued under subsection (a) or (k) of 
                section 351 of the Public Health Service Act (42 U.S.C. 
                262) for a prescription drug.
                    (B) Average price.--The term ``average price'' 
                means--
                            (i) the average manufacturer price, as 
                        defined in section 1927(k)(1) of the Social 
                        Security Act (42 U.S.C. 1396r-8(k)(1)); or
                            (ii) in the case of a drug for which the 
                        average manufacturer price is not available, 
                        the manufacturer's average sales price (as 
                        defined in section 1847A(c)(1) of the Social 
                        Security Act (42 U.S.C. 1395w-3a(c)(1)).
                    (C) Commerce.--The term ``commerce'' has the 
                meaning given such term in section 4 of the Federal 
                Trade Commission Act (15 U.S.C. 44).
                    (D) Prescription drug.--The term ``prescription 
                drug'' means any drug subject to section 503(b)(1) of 
                the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
                353(b)(1)) which is covered by a Federal health care 
                program (as defined in section 1128B(f) of the Social 
                Security Act (42 U.S.C. 1320a-7b(f))).
                    (E) Price spike.--
                            (i) In general.--The term ``price spike'' 
                        means an increase in the average price in 
                        commerce of a prescription drug for which the 
                        price spike percentage is equal to or greater 
                        than the applicable price increase allowance.
                            (ii) Price spike percentage.--The price 
                        spike percentage is the percentage (if any) by 
                        which--
                                    (I) the average price of a 
                                prescription drug in commerce for the 
                                most recently completed calendar year; 
                                exceeds
                                    (II) the average price of such drug 
                                in commerce for the calendar year 
                                preceding such year.
                            (iii) Applicable price increase 
                        allowance.--The applicable price increase 
                        allowance for any calendar year is the 
                        percentage (rounded to the nearest one-tenth of 
                        1 percent) by which the medical care component 
                        of the consumer price index for all urban 
                        consumers (as published by the Bureau of Labor 
                        Statistics) for that year exceeds such 
                        component for the preceding calendar year.
                    (F) Price spike revenue.--
                            (i) In general.--The price spike revenue 
                        for any calendar year is an amount equal to--
                                    (I) the gross price spike revenue; 
                                minus
                                    (II) the adjustment amount.
                            (ii) Gross price spike revenue.--The gross 
                        price spike revenue for any calendar year is an 
                        amount equal to the product of--
                                    (I) an amount equal to the 
                                difference between subclause (I) of 
                                subparagraph (E)(ii) and subclause (II) 
                                of such subparagraph; and
                                    (II) the total number of units of 
                                the prescription drug which were sold 
                                in commerce in such calendar year.
                            (iii) Adjustment amount.--The adjustment 
                        amount is the amount, if any, of the gross 
                        price spike revenue which the Inspector General 
                        has determined is due solely to an increase in 
                        the cost of the goods sold (excluding any 
                        increase in costs which are related to internal 
                        transfers within the applicable entity) which 
                        are necessary to manufacture the prescription 
                        drug subject to the price spike.
                    (G) Inspector general.--The term ``Inspector 
                General'' means the Inspector General of the Department 
                of Health and Human Services.
            (2) Submission by pharmaceutical companies of 
        information.--
                    (A) In general.--For each prescription drug, the 
                applicable entity shall submit to the Inspector General 
                a quarterly report that includes the following:
                            (i) For each prescription drug of the 
                        applicable entity--
                                    (I) the total number of units of 
                                the prescription drug which were sold 
                                in commerce in the most recently 
                                completed calendar quarter; and
                                    (II) the gross revenues from sales 
                                of such prescription drug in commerce 
                                in the most recently completed calendar 
                                quarter.
                            (ii) Such information related to increased 
                        input costs as the applicable entity may wish 
                        the Inspector General to consider in making a 
                        determination under subclause (II) of paragraph 
                        (3)(B)(ii) or an assessment in subclause (III) 
                        of such paragraph for the most recently 
                        completed calendar quarter.
                            (iii) Such information related to any 
                        anticipated increased input costs for the 
                        subsequent calendar quarter as the applicable 
                        entity may wish the Inspector General to 
                        consider in making a determination under 
                        subclause (II) of paragraph (3)(B)(ii) or an 
                        assessment in subclause (III) of such paragraph 
                        for such calendar quarter.
                    (B) Penalty for failure to submit.--
                            (i) In general.--An applicable entity 
                        described in subparagraph (A) that fails to 
                        submit information to the Inspector General 
                        regarding a prescription drug, as required by 
                        such paragraph, before the date specified in 
                        subparagraph (C) shall be liable for a civil 
                        penalty, as determined under clause (ii).
                            (ii) Amount of penalty.--The amount of the 
                        civil penalty shall be equal to the product 
                        of--
                                    (I) an amount, as determined 
                                appropriate by the Inspector General; 
                                which is--
                                            (aa) not less than 0.5 
                                        percent of the gross revenues 
                                        from sales of the prescription 
                                        drug described in clause (i) 
                                        for the most recently completed 
                                        calendar year; and
                                            (bb) not greater than 1 
                                        percent of the gross revenues 
                                        from sales of such drug for the 
                                        most recently completed 
                                        calendar year; and
                                    (II) the number of days in the 
                                period between--
                                            (aa) the applicable date 
                                        specified in subparagraph (C); 
                                        and
                                            (bb) the date on which the 
                                        Inspector General receives the 
                                        information described in 
                                        subparagraph (A) from the 
                                        applicable entity.
                    (C) Submission deadline.--An applicable entity 
                shall submit each quarterly report described in 
                subparagraph (A) not later than January 17, April 18, 
                June 15, and September 15 of each calendar year.
            (3) Assessment.--
                    (A) In general.--Not later than the last day in 
                February of each year, the Inspector General, in 
                consultation with the Federal Trade Commission, shall 
                complete an assessment of the information the Inspector 
                General received pursuant to paragraph (2)(A) with 
                respect to sales of prescription drugs in the most 
                recently completed calendar year.
                    (B) Elements.--The assessment required by 
                subparagraph (A) shall include the following:
                            (i) Identification of each price spike 
                        relating to a prescription drug in the most 
                        recently completed calendar year.
                            (ii) For each price spike identified under 
                        clause (i)--
                                    (I) a determination of the price 
                                spike percentage and price spike 
                                revenue;
                                    (II) a determination regarding the 
                                accuracy of the information submitted 
                                by the applicable entity regarding 
                                increased input costs; and
                                    (III) an assessment of the 
                                rationale of the applicable entity for 
                                the price spike.
            (4) Report to internal revenue service.--
                    (A) In general.--Not later than the last day in 
                February of each year, the Inspector General shall 
                transmit to the Internal Revenue Service a report on 
                the findings of the Inspector General with respect to 
                the information the Inspector General received under 
                paragraph (2)(A) with respect to the most recently 
                completed calendar year and the assessment carried out 
                by the Inspector General under paragraph (3)(A) with 
                respect to such information.
                    (B) Contents.--The report transmitted under 
                subparagraph (A) shall include the following:
                            (i) The information received under 
                        paragraph (2)(A) with respect to the most 
                        recently completed calendar year.
                            (ii) The price spikes identified under 
                        clause (i) of paragraph (3)(B).
                            (iii) The price spike revenue 
                        determinations made under clause (ii)(I) of 
                        such paragraph.
                            (iv) The average price of the prescription 
                        drug for each month during the most recently 
                        completed calendar year.
                            (v) The determinations and assessments made 
                        under subclauses (II) and (III) of clause (ii) 
                        of such paragraph.
                    (C) Publication.--Not later than the last day in 
                February of each year, the Inspector General shall make 
                the report transmitted under subparagraph (A) available 
                to the public, including on the Internet website of the 
                Inspector General.
            (5) Notification.--The Secretary of the Treasury, in 
        conjunction with the Inspector General, shall notify, at such 
        time and in such manner as the Secretary of the Treasury shall 
        provide, each applicable entity in regard to any prescription 
        drug which has been determined to have been subject to a price 
        spike during the most recently completed calendar year and the 
        amount of the tax imposed on such applicable entity pursuant to 
        section 4192 of the Internal Revenue Code of 1986 (as added by 
        subsection (b) of this section).
    (b) Excise Tax on Prescription Drugs Subject to Price Spikes.--
            (1) In general.--Subchapter E of chapter 32 of the Internal 
        Revenue Code of 1986 is amended by adding at the end the 
        following new section:

``SEC. 4192. PRESCRIPTION DRUGS SUBJECT TO PRICE SPIKES.

    ``(a) Imposition of Tax.--
            ``(1) In general.--For each taxable prescription drug sold 
        by an applicable entity during the calendar year, there is 
        hereby imposed on such entity a tax equal to the greater of--
                    ``(A) the annual price spike tax for such drug, or
                    ``(B) subject to paragraph (2), the cumulative 
                price spike tax for such drug.
            ``(2) Limitation.--In the case of a taxable prescription 
        drug for which the applicable period (as determined under 
        subsection (c)(2)(E)(i)) is less than 2 completed calendar 
        years, the cumulative price spike tax shall not apply.
    ``(b) Annual Price Spike Tax.--
            ``(1) In general.--The amount of the annual price spike tax 
        shall be equal to the applicable percentage of the price spike 
        revenue received by the applicable entity on the sale of the 
        taxable prescription drug during the calendar year.
            ``(2) Applicable percentage.--For purposes of paragraph 
        (1), the applicable percentage shall be equal to--
                    ``(A) in the case of a taxable prescription drug 
                which has been subject to a price spike percentage 
                equal to or greater than the applicable price increase 
                allowance (as defined in section 202(a)(1)(E)(iii) of 
                the Improving Access To Affordable Prescription Drugs 
                Act) but less than 15 percent, 50 percent,
                    ``(B) in the case of a taxable prescription drug 
                which has been subject to a price spike percentage 
                equal to or greater than 15 percent but less than 20 
                percent, 75 percent, and
                    ``(C) in the case of a taxable prescription drug 
                which has been subject to a price spike percentage 
                equal to or greater than 20 percent, 100 percent.
    ``(c) Cumulative Price Spike Tax.--
            ``(1) In general.--The amount of the cumulative price spike 
        tax shall be equal to the applicable percentage of the 
        cumulative price spike revenue received by the applicable 
        entity on the sale of the taxable prescription drug during the 
        calendar year.
            ``(2) Applicable percentage.--
                    ``(A) In general.--For purposes of paragraph (1), 
                the applicable percentage shall be equal to--
                            ``(i) in the case of a taxable prescription 
                        drug which has been subject to a cumulative 
                        price spike percentage equal to or greater than 
                        the cumulative price increase allowance but 
                        less than the first compounded percentage, 50 
                        percent,
                            ``(ii) in the case of a taxable 
                        prescription drug which has been subject to a 
                        cumulative price spike percentage equal to or 
                        greater than the first compounded percentage 
                        but less than the second compounded percentage, 
                        75 percent, and
                            ``(iii) in the case of a taxable 
                        prescription drug which has been subject to a 
                        cumulative price spike percentage equal to or 
                        greater than the second compounded percentage, 
                        100 percent.
                    ``(B) Cumulative price spike percentage.--The 
                cumulative price spike percentage is the percentage (if 
                any) by which--
                            ``(i) the average price of the taxable 
                        prescription drug in commerce for the most 
                        recently completed calendar year, exceeds
                            ``(ii) the average price of such drug in 
                        commerce for the base year.
                    ``(C) Cumulative price increase allowance.--For 
                purposes of clause (i) of subparagraph (A), the 
                cumulative price increase allowance for any calendar 
                year is the percentage (rounded to the nearest one-
                tenth of 1 percent) by which the medical care component 
                of the consumer price index for all urban consumers (as 
                published by the Bureau of Labor Statistics) for that 
                year exceeds such component for the base year.
                    ``(D) Compounded percentages.--For purposes of 
                subparagraph (A), the first compounded percentage and 
                second compounded percentage shall be determined in 
                accordance with the following table:


------------------------------------------------------------------------
                                                   First        Second
    ``Number of years in applicable period       compounded   compounded
                                                 percentage   percentage
------------------------------------------------------------------------
2 years.......................................        32.35        44.00
3 years.......................................        52.09        72.80
4 years.......................................        74.90       107.36
5 years.......................................       101.14      148.83.
------------------------------------------------------------------------

                    ``(E) Applicable period and base year.--
                            ``(i) Applicable period.--The applicable 
                        period shall be the lesser of--
                                    ``(I) the 5 most recently completed 
                                calendar years,
                                    ``(II) any completed calendar years 
                                beginning after March 29, 2017, or
                                    ``(III) any completed calendar 
                                years in which the taxable prescription 
                                drug was sold in commerce.
                            ``(ii) Base year.--The base year shall be 
                        the calendar year immediately preceding the 
                        applicable period.
            ``(3) Cumulative price spike revenue.--For purposes of 
        paragraph (1), the cumulative price spike revenue for any 
        taxable prescription drug shall be an amount equal to--
                    ``(A) an amount equal to the product of--
                            ``(i) an amount (not less than zero) equal 
                        to--
                                    ``(I) the average price of such 
                                drug in commerce for the most recently 
                                completed calendar year, minus
                                    ``(II) the average price of such 
                                drug in commerce for the base year, and
                            ``(ii) the total number of units of such 
                        drug which were sold in commerce in the most 
                        recently completed calendar year, minus
                    ``(B) the adjustment amount, if any, determined 
                under section 202(a)(1)(F)(iii) of the Improving Access 
                To Affordable Prescription Drugs Act for such calendar 
                year.
    ``(d) Definitions.--For purposes of this section--
            ``(1) Taxable prescription drug.--The term `taxable 
        prescription drug' means a prescription drug (as defined in 
        section 202(a)(1)(D) of the Improving Access To Affordable 
        Prescription Drugs Act) which has been identified by the 
        Inspector General of the Department of Health and Human 
        Services, under section 202(a)(3)(B)(i) of such Act, as being 
        subject to a price spike.
            ``(2) Other terms.--The terms `applicable entity', `average 
        price', `price spike', `price spike percentage', and `price 
        spike revenue' have the same meaning given such terms under 
        section 202(a)(1) of the Improving Access To Affordable 
        Prescription Drugs Act.''.
            (2) Clerical amendments.--
                    (A) The heading of subchapter E of chapter 32 of 
                the Internal Revenue Code of 1986 is amended by 
                striking ``Medical Devices'' and inserting ``Certain 
                Medical Devices and Prescription Drugs''.
                    (B) The table of subchapters for chapter 32 of such 
                Code is amended by striking the item relating to 
                subchapter E and inserting the following new item:

   ``subchapter e. certain medical devices and prescription drugs''.

            (3) The table of sections for subchapter E of chapter 32 of 
        such Code is amended by adding at the end the following new 
        item:

``Sec. 4192. Prescription drugs subject to price spikes.''.
            (4) Effective date.--The amendments made by this section 
        shall apply to sales after the date of the enactment of this 
        Act.
    (c) Revenues Collected.--There are authorized to be appropriated to 
the Secretary of Health and Human Services such sums as are equal to 
any increase in revenue to the Treasury by reason of the provisions of 
this section or the amendments made by this section for the purposes 
of--
            (1) funding or conducting research on the economic and 
        policy implications of price patterns of prescription drugs; or
            (2) increasing amounts available to the National Institutes 
        of Health for research and development of drugs.

SEC. 203. ACCELERATION OF THE CLOSING OF THE MEDICARE PART D COVERAGE 
              GAP.

    (a) Reduction in Coinsurance.--Section 1860D-2(b)(2) of the Social 
Security Act (42 U.S.C. 1395w-102(b)(2)) is amended--
            (1) in each of subclauses (II) and (III) of subparagraph 
        (C)(ii), by striking ``2020'' and inserting ``2018''; and
            (2) in subparagraph (D)(ii)--
                    (A) in subclause (II), by inserting ``and'' at the 
                end; and
                    (B) by striking subclauses (III) through (VI) and 
                inserting the following:
                                    ``(III) 2018 is 100 percent.''.
    (b) Increase in Manufacturer Rebate.--Section 1860D-14A(g)(4)(A) of 
the Social Security Act (42 U.S.C. 1395w-114a(g)(4)(A)) is amended by 
inserting ``(or, for 2018 and subsequent years, 75 percent)'' after 
``50 percent''.

SEC. 204. IMPORTING AFFORDABLE AND SAFE DRUGS.

    (a) In General.--Section 804 of the Federal Food, Drug, and 
Cosmetic Act (21 U.S.C. 384) is amended to read as follows:

``SEC. 804. IMPORTATION OF SAFE AND AFFORDABLE DRUGS BY WHOLESALE 
              DISTRIBUTORS, PHARMACIES, AND INDIVIDUALS.

    ``(a) In General.--Not later than 180 days after the date of 
enactment of the Improving Access To Affordable Prescription Drugs Act, 
the Secretary shall promulgate regulations permitting the importation 
of qualifying prescription drugs into the United States, in accordance 
with this section.
    ``(b) Definitions.--For purposes of this section:
            ``(1) Certified foreign seller.--The term `certified 
        foreign seller' means a licensed foreign pharmacy or foreign 
        wholesale distributor that the Secretary certifies under 
        subsection (d)(1)(B), that pays the fee required under 
        subsection (d)(1)(C), and that is included on the list 
        described in subsection (c).
            ``(2) Foreign wholesale distributor.--The term `foreign 
        wholesale distributor' means a person (other than a 
        manufacturer, a manufacturer's co-licensed partner, a third-
        party logistics provider, or a repackager) engaged in wholesale 
        distribution.
            ``(3) Importer.--The term `importer' means a dispenser (as 
        defined in section 581(3)) or wholesale distributor registered 
        under section 503(e) who imports prescription drugs into the 
        United States in accordance with this section.
            ``(4) Licensed foreign pharmacy.--The term `licensed 
        foreign pharmacy' means a pharmacy located in Canada, or 
        subject to subsection (e), another applicable country, that--
                    ``(A) operates in accordance with applicable 
                pharmacy standards set forth by the provincial pharmacy 
                rules and regulations enacted in Canada, or, subject to 
                subsection (e), such applicable rules and regulations 
                of the permitted country in which such seller is 
                located; and
                    ``(B) is licensed to operate and dispense 
                prescription drugs to individuals in Canada, or, 
                subject to subsection (e), the permitted country in 
                which the pharmacy is located.
            ``(5) Qualifying prescription drug.--The term `qualifying 
        prescription drug'--
                    ``(A) means a prescription drug that--
                            ``(i) is approved for use in patients, and 
                        marketed, in Canada, or subject to subsection 
                        (e), approved for use in patients, and 
                        marketed, in another permitted country;
                            ``(ii) is manufactured in a facility 
                        registered under subsection (b)(1) or (i) of 
                        section 510 that is in compliance with good 
                        manufacturing practices regulations of the Food 
                        and Drug Administration;
                            ``(iii) has the same active ingredient or 
                        ingredients, route of administration, and 
                        strength as a prescription drug approved under 
                        chapter V, or, for purposes of subparagraph 
                        (B)(iv), is biosimilar to an approved 
                        biological product and has the same route of 
                        administration and strength as the approved 
                        biological product; and
                            ``(iv) is labeled in accordance with--
                                    ``(I) the laws of Canada, or 
                                another country from which importation 
                                is permitted pursuant to subsection 
                                (e); and
                                    ``(II) the requirements promulgated 
                                by the Secretary, which shall include 
                                labeling in English;
                    ``(B) with respect to importers only, includes--
                            ``(i) peritoneal dialysis solution;
                            ``(ii) insulin;
                            ``(iii) a drug for which a risk evaluation 
                        and mitigation strategy is required under 
                        section 505-1;
                            ``(iv) biological products, as defined in 
                        section 351 of the Public Health Service Act 
                        that are proteins (except any chemically 
                        synthesized polypeptides) or analogous 
                        products; and
                            ``(v) intravenously infused drugs; and
                    ``(C) does not include--
                            ``(i) a controlled substance (as defined in 
                        section 102 of the Controlled Substances Act);
                            ``(ii) an anesthetic drug inhaled during 
                        surgery; or
                            ``(iii) a compounded drug.
            ``(6) Valid prescription.--The term `valid prescription' 
        means a prescription that is issued for a legitimate medical 
        purpose in the usual course of professional practice by--
                    ``(A) a practitioner who has conducted at least one 
                in-person medical evaluation of the patient; or
                    ``(B) a covering practitioner.
    ``(c) Publication of Certified Foreign Sellers.--The Secretary 
shall publish on a dedicated Internet website a list of certified 
foreign sellers, including the Internet website address, physical 
address, and telephone number of each such certified foreign seller.
    ``(d) Additional Criteria.--
            ``(1) Certified foreign sellers.--
                    ``(A) In general.--To be a certified foreign 
                seller, such seller shall--
                            ``(i) be certified by the Secretary in 
                        accordance with subparagraph (B);
                            ``(ii) pay the registration fee established 
                        under subparagraph (C); and
                            ``(iii) sell only qualifying prescription 
                        drugs to importers or individuals who import 
                        prescription drugs into the United States in 
                        accordance with this section.
                    ``(B) Certification.--To be a certified foreign 
                seller, the Secretary shall certify that such seller--
                            ``(i) is a foreign wholesale distributor or 
                        licensed foreign pharmacy operating an 
                        establishment, which may include an online 
                        foreign pharmacy, that is located in Canada, 
                        or, subject to subsection (e), another 
                        permitted country;
                            ``(ii) is engaged in the distribution or 
                        dispensing of a prescription drug that is 
                        imported or offered for importation into the 
                        United States;
                            ``(iii) has been in existence for a period 
                        of at least 5 years preceding the date of such 
                        certification and has a purpose other than to 
                        participate in the program established under 
                        this section;
                            ``(iv) in the case of a certified foreign 
                        seller that is a licensed foreign pharmacy, 
                        agrees to dispense a qualifying prescription 
                        drug to an individual in the United States only 
                        after receiving a valid prescription, as 
                        described in paragraph (2)(C);
                            ``(v) has processes established by the 
                        seller, or participates in another established 
                        process, to certify that the physical premises 
                        and data reporting procedures and licenses are 
                        in compliance with all applicable laws and 
                        regulations of Canada, or, subject to 
                        subsection (e), the permitted country in which 
                        the seller is located, and has implemented 
                        policies designed to monitor ongoing compliance 
                        with such laws and regulations;
                            ``(vi) conducts or commits to participate 
                        in ongoing and comprehensive quality assurance 
                        programs and implements such quality assurance 
                        measures, including blind testing, to ensure 
                        the veracity and reliability of the findings of 
                        the quality assurance program;
                            ``(vii) agrees that, pursuant to subsection 
                        (g), laboratories approved by the Secretary may 
                        be authorized to conduct product testing to 
                        determine the chemical authenticity of sample 
                        pharmaceutical products;
                            ``(viii) agrees to notify the Secretary, 
                        importers, and individuals of product recalls 
                        in Canada, or pursuant to subsection (e), the 
                        permitted country in which the seller is 
                        located, and agrees to cease, or refrain from, 
                        exporting such product;
                            ``(ix) has established, or will establish 
                        or participate in, a process for resolving 
                        grievances, as defined by the Secretary, and 
                        will be held accountable for violations of 
                        established guidelines and rules;
                            ``(x) except as otherwise permitted under 
                        this section, does not sell products that the 
                        seller could not otherwise legally sell in 
                        Canada, or, subject to subsection (e), the 
                        permitted country in which such seller is 
                        located to customers in the United States; and
                            ``(xi) meets any other criteria established 
                        by the Secretary.
                    ``(C) Certification fee.--Not later than 30 days 
                before the start of each fiscal year, the Secretary 
                shall establish a fee to be collected from foreign 
                sellers for such fiscal year that are certified under 
                subparagraph (B), in an amount that is sufficient, and 
                not more than necessary, to pay the costs of 
                administering the program under this section, and 
                enforcing this section pursuant to section 303(h), for 
                that fiscal year.
                    ``(D) Recertification.--A certification under 
                subparagraph (B) shall be in effect for a period of 2 
                years, or until there is a material change in the 
                circumstances under which the foreign seller meets the 
                requirements under such subparagraph, whichever occurs 
                earlier. A foreign seller may reapply for certification 
                under such subparagraph (B), in accordance with a 
                process established by the Secretary.
            ``(2) Individuals.--An individual may import a qualifying 
        prescription drug described in subsection (b) from Canada or 
        another country pursuant to subsection (e) if such drug--
                    ``(A) is dispensed, including through an online 
                pharmacy, by a certified foreign seller that is a 
                licensed foreign pharmacy;
                    ``(B) is purchased for personal use by the 
                individual, not for resale, in quantities that do not 
                exceed a 90-day supply; and
                    ``(C) is filled only after providing to the 
                licensed foreign pharmacy a valid prescription issued 
                by a health care practitioner licensed to practice in a 
                State in the United States.
    ``(e) Importation From Other Countries.--Beginning on the date that 
is 2 years after the date on which final regulations are promulgated to 
carry out this section, if, based on a review of the evidence obtained 
after such effective date, including the reports submitted under 
section 2(d) of the Improving Access To Affordable Prescription Drugs 
Act , that importation of qualifying prescription drugs from Canada 
under this section resulted in cost savings for consumers in the United 
States and increased access to safe medication, the Secretary shall 
have the authority to permit importation of qualifying prescription 
drugs by importers and individuals from, in addition to Canada, any 
country that--
            ``(1) is a member of the Organisation for Economic Co-
        operation and Development; and
            ``(2) has statutory or regulatory standards for the 
        approval and sale of prescription drugs that are comparable to 
        the standards in the United States and that--
                    ``(A) authorizes the approval of drugs only if a 
                drug has been determined to be safe and effective by 
                experts employed by or acting on behalf of a 
                governmental entity and qualified by scientific 
                training and experience to evaluate the safety and 
                effectiveness of drugs;
                    ``(B) requires that any determination of safety and 
                effectiveness described in subparagraph (A) be made on 
                the basis of adequate and well-controlled 
                investigations, including clinical investigations, as 
                appropriate, conducted by experts qualified by 
                scientific training and experience to evaluate the 
                safety and effectiveness of drugs;
                    ``(C) requires the methods used in, and the 
                facilities and controls used for, the manufacture, 
                processing, and packing of drugs in the country to be 
                adequate to preserve the identity, quality, purity, and 
                strength of the drugs; and
                    ``(D) requires the reporting of adverse reactions 
                to drugs and establish procedures to recall, and 
                withdraw approval of, drugs found not to be safe or 
                effective.
    ``(f) Labeling.--Any qualifying prescription drug imported that 
meets the labeling requirements described in subsection (b)(5)(A)(iv) 
is deemed not misbranded for purposes of section 502.
    ``(g) Drug Testing Laboratories.--The Secretary may approve one or 
more laboratories to conduct random testing of prescription drugs sold 
by certified foreign sellers to assess the chemical authenticity of 
such drugs.
    ``(h) Unfair and Discriminatory Acts and Practices.--It is unlawful 
for a manufacturer, directly or indirectly (including by being a party 
to a licensing agreement or other agreement)--
            ``(1) to discriminate by charging a higher price for a 
        prescription drug sold to a certified foreign seller that sells 
        such drug to an importer in accordance with this section than 
        the price that is charged, inclusive of rebates or other 
        incentives to the country from which the drug is exported, to 
        another person that is in the same country and that does not 
        import such a drug into the United States in accordance with 
        this section;
            ``(2) except with respect to a prescription drug on the 
        drug shortage list under section 506E, discriminate by denying, 
        restricting, or delaying supplies of a prescription drug to a 
        certified foreign seller, on account of such seller's status as 
        a certified foreign seller, that sells such drug to an importer 
        in accordance with this section, or by publicly, privately, or 
        otherwise refusing to do business with such a certified foreign 
        seller on account of such seller's status as a certified 
        foreign seller;
            ``(3) cause there to be a difference (including a 
        difference in active ingredient, route of administration, 
        bioequivalence, strength, formulation, manufacturing 
        establishment, manufacturing process, or person that 
        manufactures the drug) between a prescription drug for 
        distribution in the United States and the drug for distribution 
        in Canada or another permitted country, subject to subsection 
        (e), for the purpose of avoiding sales by certified foreign 
        sellers; or
            ``(4) except with respect to a prescription drug on the 
        drug shortage list under section 506E, engage in any other 
        action to restrict, prohibit, or delay the importation of a 
        prescription drug under this section.
    ``(i) Information and Records.--
            ``(1) Biannual reports.--Each importer shall submit 
        biannual reports to the Secretary which shall contain, for each 
        qualifying prescription drug imported into the United States--
                    ``(A) the unique facility identifier of the 
                manufacturer of the drug, described in section 510;
                    ``(B) the transaction information described in 
                section 581(26) (other than the information described 
                in subparagraph (C)); and
                    ``(C) the price paid by the importer for the drug.
            ``(2) Maintenance of records by secretary.--The Secretary 
        shall maintain information and documentation submitted under 
        paragraph (1) for such period of time as the Secretary 
        determines to be appropriate.
    ``(j) Suspension of Importation.--
            ``(1) Patterns of noncompliance.--The Secretary shall 
        require that importation of a specific qualifying prescription 
        drug or importation by a specific certified foreign seller or 
        importer pursuant to this section be immediately suspended if 
        the Secretary determines that there is a pattern of importation 
        of such specific drug or by such specific seller or importer 
        that involves counterfeit drugs, drugs that have been recalled 
        or withdrawn, or drugs in violation of any requirement of this 
        section, until an investigation is completed and the Secretary 
        determines that importation of such drug or by such seller or 
        importer does not endanger the public health.
            ``(2) Temporary suspension.--The Secretary may require that 
        importation of a specific qualifying prescription drug or 
        importation by a specific certified foreign seller or importer 
        pursuant to this section be temporarily suspended if, with 
        respect to such drug, seller, or importer, there is a violation 
        of any requirement of this section or if the Secretary 
        determines that importation of such drug or by such seller or 
        importer might endanger the public health. Such temporary 
        suspension shall apply until the Secretary completes an 
        investigation and determines that importation of such drug or 
        by such seller or importer does not endanger the public health.
    ``(k) Supply Chain Security.--
            ``(1) Purchase from registered facilities and certified 
        foreign sellers.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), certified foreign sellers who sell 
                qualifying prescription drugs for importation into the 
                United States pursuant to this section may purchase 
                such drugs only from manufacturers or entities 
                registered under section 510 or other certified foreign 
                sellers.
                    ``(B) Exception.--Certified foreign sellers who 
                sell qualifying prescription drugs for importation into 
                the United States pursuant to this section may purchase 
                such drugs from foreign sellers in Canada or another 
                permitted country, even if such foreign seller is not a 
                manufacturer registered under section 510 or a 
                certified foreign seller, if the Secretary enters into 
                a memorandum of understanding or cooperative agreement 
                with Canada, or such other permitted country, to ensure 
                compliance, to the extent appropriate and feasible, 
                with subchapter H of chapter V. The Secretary shall 
                seek to enter into such a memorandum of understanding 
                or cooperative agreement with Canada and each country 
                from which importation is permitted under subsection 
                (e).
            ``(2) Importation tracing.--Certified foreign sellers shall 
        provide importers with the unique facility identifier 
        associated with the manufacturer registered under section 510 
        of the qualifying prescription drug and the information under 
        paragraph (25), paragraph (26) (other than subparagraph (C)), 
        and subparagraphs (D), (F), and (G) of paragraph (27) of 
        section 581. Certified foreign sellers shall provide such 
        information to individuals purchasing such drugs, upon request.
    ``(l) REMs.--In the case of an importer that imports a qualifying 
prescription drug, where the drug with the same active ingredient or 
ingredients (or that is biosimilar to an approved biological product), 
route of administration, and strength that is approved under chapter V 
or section 351 of the Public Health Service Act is subject to elements 
to assure safe use under section 505-1, such importer shall be subject 
to such elements to assure safe use, as applicable and appropriate.
    ``(m) Construction.--Nothing in this section limits the authority 
of the Secretary relating to the importation of prescription drugs, 
other than with respect to section 801(d)(1) as provided in this 
section.''.
    (b) Penalties With Respect to Online Pharmacies.--Section 303 of 
the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 333) is amended by 
adding at the end the following:
    ``(h) In the case of person operating an Internet website, whether 
in the United States or in another country, that violates section 
301(aa) by--
            ``(1) selling, by means of the Internet, with the intent to 
        defraud or mislead or with reckless disregard for safety of the 
        public, an adulterated or counterfeit drug to an individual in 
        the United States; or
            ``(2) dispenses, by means of the Internet, a drug to an 
        individual in the United States who the person knows or has 
        reasonable cause to believe, does not possess a valid 
        prescription for that drug,
        such person shall be imprisoned for not more than 10 years or 
        fined not more than $250,000.''.
    (c) No Preemption.--Nothing in this section, including the 
amendments made by this section, shall be construed to preempt, alter, 
displace, abridge, or supplant any remedy available under any State or 
Federal law, including common law, that provides a remedy for civil 
relief.
    (d) Reports.--
            (1) HHS.--Not later than 1 year after the date on which 
        final regulations are promulgated to carry out section 804 of 
        the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 384), as 
        amended by subsection (a), and every 2 years thereafter, the 
        Secretary of Health and Human Services, after consultation with 
        appropriate Federal agencies, shall submit to Congress and make 
        public a report on the importation of drugs into the United 
        States.
            (2) GAO report.--Not later than 18 months after the date on 
        which final regulations are promulgated to carry out section 
        804 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
        384), as amended by subsection (a), the Comptroller General of 
        the United States shall submit to Congress a report containing 
        an analysis of the implementation of the amendments made by 
        this section, including a review of drug safety and cost-
        savings and expenses, including cost-savings to consumers in 
        the United States and trans-shipment and importation tracing 
        processes, resulting from such implementation.

SEC. 205. 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, 2019, 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) 2018 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, 
                2018, and ending on December 31, 2018, 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, 2017, in the amount 
        specified in paragraph (3) for any covered part D drug of the 
        manufacturer dispensed after December 31, 2017, 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)(7), 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)(7)(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)(7):
                    ``(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:
            ``(7) 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, 2019, 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:
                    ``(D) Reporting requirement related to rebate for 
                rebate eligible medicare drug plan enrollees.--Section 
                1860D-12(b)(7).''.
    (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).''.

SEC. 206. CAP ON PRESCRIPTION DRUG COST-SHARING.

    (a) Qualified Health Plans.--Section 1302(c) of the Patient 
Protection and Affordable Care Act (42 U.S.C. 18022(c)) is amended--
            (1) in paragraph (3)(A)(i), by inserting ``(including cost-
        sharing with respect to prescription drugs covered by the 
        plan)'' after ``copayments''; and
            (2) by adding at the end the following:
            ``(5) Prescription drug cost-sharing.--
                    ``(A) 2019.--For plan years beginning in 2019 or 
                later, the cost-sharing incurred under a health plan 
                with respect to prescription drugs covered by the plan 
                shall not exceed $250 per month for each enrolled 
                individual, or $500 for each family.
                    ``(B) 2020 and later.--
                            ``(i) In general.--In the case of any plan 
                        year beginning in a calendar year after 2019, 
                        the limitation under this paragraph shall be 
                        equal to the applicable dollar amount under 
                        subparagraph (A) for plan years beginning in 
                        2019, increased by an amount equal to the 
                        product of that amount and the medical care 
                        component of the consumer price index for all 
                        urban consumers (as published by the Bureau of 
                        Labor Statistics) for that year.
                            ``(ii) Adjustment to amount.--If the amount 
                        of any increase under clause (i) is not a 
                        multiple of $5, such increase shall be rounded 
                        to the next lowest multiple of $5.''.
    (b) Group Health Plans.--Section 2707(b) of the Public Health 
Service Act (42 U.S.C. 300gg-6(b)) is amended by striking ``paragraph 
(1) of section 1302(c)'' and inserting ``paragraphs (1) and (5) of 
section 1302(c) of the Patient Protection and Affordable Care Act''.
    (c) Effective Date.--The amendments made by subsections (a) and (b) 
shall take effect with respect to the first plan year that begins after 
the date on which initial reports are required to be submitted under 
section 399V-7(c)(3) of the Public Health Service Act, as added by 
section 101.

                         TITLE III--INNOVATION

SEC. 301. PRIZE FUND FOR NEW AND MORE EFFECTIVE TREATMENTS OF BACTERIAL 
              INFECTIONS.

    Part B of title IV of the Public Health Service Act (42 U.S.C. 284 
et seq.) is amended by adding at the end the following:

``SEC. 409K. PRIZE FUND FOR NEW AND MORE EFFECTIVE TREATMENTS OF 
              BACTERIAL INFECTIONS.

    ``(a) Establishment of Fund.--There is hereby established in the 
Treasury of the United States a revolving fund to be known as the 
`Antibiotics Prize Fund', which shall consist of funds transferred 
under subsection (b).
    ``(b) Amounts Credited to the Fund.--There are hereby authorized to 
be appropriated, and appropriated, to the Antibiotics Prize Fund, for 
fiscal year 2018, out of any monies in the Treasury not otherwise 
appropriated, $2,000,000,000. Such funds shall remain available until 
expended.
    ``(c) Awards.--
            ``(1) In general.--During the 10-year period following the 
        date of enactment of the Improving Access To Affordable 
        Prescription Drugs Act, the Director of the NIH, in accordance 
        with the criteria under subsection (d) and the goals under 
        subsection (e), shall award--
                    ``(A) up to 3 prizes for qualifying products that 
                provide added benefit for patients over existing 
                therapies in the treatment of serious and life-
                threatening bacterial infections demonstrating in 
                superiority trials; and
                    ``(B) award open source dividend prizes for 
                contributions that significantly advance the field of 
                antibiotic research with openly sourced materials, 
                technology, data, and knowledge.
            ``(2) Award amount requirements.--No more than 5 percent of 
        the amount available in the Antibiotics Prize Fund shall be 
        dedicated to open source dividend prizes.
    ``(d) Criteria and Structure of Prizes.--
            ``(1) Establishment of criteria.--Not later than 120 days 
        after the date of enactment of the Improving Access To 
        Affordable Prescription Drugs Act, the Director of NIH shall 
        establish criteria for the selection of recipients and 
        eligibility of persons for prizes under this section and 
        criteria for determining the amounts of such prizes, through 
        notice and comment rulemaking.
            ``(2) Considerations in establishing criteria for 
        qualifying products.--In establishing the criteria for 
        selection of recipients and amounts of prizes under paragraph 
        (1), the Director of NIH, in consultation with other agencies 
        as appropriate, shall consider the following:
                    ``(A) The number of patients in the United States 
                and in other countries who would benefit from the 
                qualifying product that treats a serious or life-
                threatening bacterial infection, and the number of 
                patients in the United States and in other countries 
                projected to benefit during the upcoming 10-year 
                period.
                    ``(B) Whether the qualifying product treats, or has 
                the potential to treat, a serious or life-threatening 
                bacterial infection for which no other treatment is 
                currently available or for which there is a high threat 
                of resistance to existing treatments.
                    ``(C) The incremental and additional therapeutic 
                benefit to human in the United States and other 
                countries of the qualifying product as compared to 
                other treatments available to treat the bacterial 
                infection, evaluating the incremental therapeutic 
                benefit in comparison to treatments that were not 
                recently developed.
                    ``(D) The transmissibility of the bacterial 
                infection the qualifying product would treat, and 
                barriers to prevention of that infection.
                    ``(E) The extent to which knowledge, data, 
                materials, and technology that are openly sourced have 
                contributed to the successful development of new 
                treatments that provide an added benefit to patients, 
                such as decreasing mortality or irreversible morbidity 
                on patient-centered outcomes, significantly advancing 
                the field of antibiotic research, or improving 
                processes for manufacturing products used for the 
                treatment.
                    ``(F) Other criteria that the Director of NIH 
                determines to be relevant and useful in ensuring that 
                the prizes provide appropriate incentives.
            ``(3) Criteria for open source dividend prizes.--An open 
        source dividend prize under this section shall reward persons 
        that openly shared on a royalty-free, not-for-profit and non-
        discriminatory basis, materials, technology, data, and 
        knowledge that contribute in a significant way to the 
        successful development of a qualifying product or significantly 
        advanced the field of antibiotic research.
    ``(e) Goals.--With respect to each year for which the Director of 
NIH awards prizes under subsection (c), the Director of NIH shall 
establish a framework of goals that a qualifying product or 
contribution that significantly advances the field of antibiotic 
research is required to show promise to help meet in order for a person 
to be eligible to receive a prize with respect to such product or such 
contribution. Such goals may include--
            ``(1) reduced hospital admissions or readmissions;
            ``(2) use of diagnostics prior to prescribing of drugs; and
            ``(3) use of innovative programs for antibiotic 
        stewardship.
    ``(f) Condition on Receipt of Prize.--
            ``(1) In general.--Each prize for a qualifying product 
        offered under this section shall be conditioned on the 
        following:
                    ``(A) The recipient shall agree to offer the 
                qualifying product at a reasonable price as described 
                in paragraph (3).
                    ``(B) Subject to applicable patient privacy 
                protections, the recipient shall agree to publicly 
                disclose all pre-clinical and clinical trial data with 
                respect to the qualifying product.
                    ``(C) The recipient shall agree to submit to the 
                Director of NIH, for review and approval by such 
                director, in collaboration with the Commissioner of 
                Food and Drugs and the Director of the Centers for 
                Disease Control and Prevention, all marketing, sales, 
                and other promotional and educational activities 
                associated with the qualifying product, to ensure that 
                such activities align with, and advance the goals of, 
                resource conserving stewardship, protecting the utility 
                of antibiotics, and encouraging and ensuring the 
                correct use of antibiotics.
                    ``(D) The recipient shall irrevocably waive--
                            ``(i) all periods of exclusivity available 
                        to the product under chapter V of the Federal 
                        Food, Drug, and Cosmetic Act or section 351 of 
                        this Act; and
                            ``(ii) all applicable patent rights under 
                        title 35, United States Code.
                    ``(E) Any other conditions the Director of NIH 
                determines appropriate.
            ``(2) Applicability.--All conditions described in paragraph 
        (1) shall apply to subsequent owners, licensees, producers, and 
        manufacturers, and assignees of the product or any chemical 
        component of the qualifying product for which the prize was 
        awarded.
            ``(3) Reasonable price.--
                    ``(A) In general.--A recipient may satisfy the 
                requirement to offer a qualifying product or 
                contribution at a `reasonable price' for purposes of 
                paragraph (1)(A) by--
                            ``(i)(I) providing open licensing of all 
                        necessary rights to patents, manufacturing 
                        processes, rights in data, and other 
                        intellectual property rights needed to make and 
                        sell the product to manufacturers of the 
                        generic version of such product; or
                            ``(II) selling such product at a price that 
                        is no more than twice the price of antibiotic 
                        drugs approved under section 505(j) of the 
                        Federal Food, Drug, and Cosmetic Act with 
                        similar manufacturing costs; and
                            ``(ii) selling such product at a price that 
                        is not higher than the median price charged, at 
                        the time of such sale, in the applicable 7 
                        countries, as determined under in subparagraph 
                        (B).
                    ``(B) Criteria.--For purposes of subparagraph 
                (A)(ii), the Director of NIH shall identify, on an 
                annual basis, the countries that have a per capita 
                income that is not less than half the per capita income 
                of the United States, select the 7 of such countries 
                that have the largest gross domestic product, and 
                determine the median price charged for each qualifying 
                product for which an award has been granted under 
                subsection (c).
    ``(g) Enforcement.--If the prize recipient, or subsequent owner, 
licensee, or assignee of the qualifying product, does not fulfill the 
conditions described subsection (f)(1), the Secretary, in collaboration 
with the Attorney General, shall take all necessary action to clawback 
the prize.
    ``(h) Transparency.--With respect to each prize awarded under this 
section, the Director of NIH shall make public--
            ``(1) the methodology used and criteria analyzed in 
        determining the prize recipient; and
            ``(2) a complete analysis of the recipient's fulfillment of 
        award conditions under subsection (e)(1).
    ``(i) Qualifying Product.--For purposes of this section, the term 
`qualifying product' means a drug (as defined in section 201(g) of the 
Federal Food, Drug, and Cosmetic Act) subject to section 503(b)(1) of 
the Federal Food, Drug, and Cosmetic Act.
    ``(j) Study.--
            ``(1) In general.--The Director of NIH shall seek to enter 
        into an agreement with the National Academies of Sciences, 
        Engineering, and Medicine to conduct a study to examine--
                    ``(A) the use of innovation inducement prize funds 
                and push financing mechanisms as ways to stimulate 
                investments in biomedical research and development that 
                de-links costs from product prices;
                    ``(B) models of different possible means of de-
                linking research and development costs from drug 
                prices, including the replacement of the monopoly on 
                new products as an incentive, with innovation 
                inducement prize funds and push financing mechanisms as 
                new incentives to stimulate the development of drugs, 
                including drugs to treat bacterial infections, rare 
                diseases, HIV/AIDS, and cancer; and
                    ``(C) the size of prizes awarded under this section 
                and the effectiveness of such prizes in stimulating 
                innovation.
            ``(2) Authorization of appropriations.--For the purpose of 
        carrying out this subsection, there are authorized to be 
        appropriated, and there are appropriated, $3,000,000 for fiscal 
        year 2018. Such funds shall remain available until expended.''.

SEC. 302. PUBLIC FUNDING FOR CLINICAL TRIALS.

    (a) In General.--Part E of title IV of the Public Health Service 
Act (42 U.S.C. 287 et seq.) is amended by adding at the end the 
following:

               ``Subpart 6--Center for Clinical Research

``SEC. 485E. CENTER FOR CLINICAL RESEARCH.

    ``(a) In General.--There is established within the National 
Institutes of Health the Center for Clinical Research, for the purpose 
of conducting clinical trials on drugs, as described in subsection (b), 
with the intention of obtaining approval of such drug under section 505 
of the Federal Food, Drug, and Cosmetic Act or section 351 of this Act. 
The Director of NIH shall appoint a Director of the Center for Clinical 
Research referred to in this section as the `Director') not later than 
90 days after the date of enactment of the Improving Access To 
Affordable Prescription Drugs Act.
    ``(b) Clinical Trials.--
            ``(1) In general.--Each year, beginning not later than 1 
        year after the date of enactment of the Improving Access To 
        Affordable Prescription Drugs Act, the Director shall select at 
        least 2 molecules, compounds, drugs, or biological products and 
        conduct clinical trials on such molecules, compounds, drugs, or 
        biological products, or enter into contracts with other 
        entities to conduct such clinical trials.
            ``(2) Selection of drugs.--
                    ``(A) Criteria.--The Director shall establish 
                criteria, which shall be made public, for acquiring the 
                patent rights for, and selecting, drugs under paragraph 
                (1) to ensure that the drugs selected for clinical 
                trials through the Center--
                            ``(i) have the potential to address an 
                        existing or emerging need, including drugs that 
                        can be repurposed to treat a new condition in 
                        the case of a national emergency; and
                            ``(ii) are not solely drugs that private 
                        sector researchers with access to all available 
                        information on such drugs chose not to develop.
                    ``(B) Process.--The Director shall secure all 
                patent rights to each drug selected under paragraph 
                (1), as applicable, and perform the clinical trials at 
                NIH or subcontract with another entity to conduct the 
                clinical trials.
    ``(c) Treatment of Approved Drugs.--If a drug for which clinical 
trials have been conducted by the Center for Clinical Research is 
approved by the Food and Drug Administration under section 505 of the 
Federal Food, Drug, and Cosmetic Act or section 351 of this Act, the 
Director shall--
            ``(1) execute non-exclusive licenses to allow drug 
        manufacturers to manufacture the drug; or
            ``(2) in collaboration with other Federal agencies as 
        appropriate, enter into purchasing contracts.
    ``(d) Public Information.--
            ``(1) Research data and findings.--Subject to applicable 
        patient privacy protections, the Secretary shall--
                    ``(A)(i) submit all completed studies (and 
                terminated studies, if terminated for safety or ethical 
                reasons) for publication in a peer-reviewed publication 
                within 180 days of completion or termination; and
                    ``(ii) if a study submitted as described in clause 
                (i) is not selected for publication, publicly disclose 
                all de-identified primary clinical data not later than 
                180 days after the Secretary's final decision not to 
                pursue further submissions for publication; and
                    ``(B) publicly disclose all de-identified primary 
                clinical data upon publication of a study as described 
                in subparagraph (A)(i).
            ``(2) Financial information.--The Director shall make 
        public all costs to the Federal Government associated with 
        carrying out clinical trials by the Center for Clinical 
        Research and with subcontract agreements under this section.
    ``(e) Definition.--In this section, the term `drug' has the meaning 
given such term in section 201(g) of the Federal Food, Drug, and 
Cosmetic Act.
    ``(f) Appropriations.--For the purpose of carrying out this 
section, in addition to any other funds available for such purpose, 
there are authorized to be appropriated, and there are appropriated, 
$1,000,000,000 for each of fiscal years 2017 through 2027, to remain 
available until expended.''.
    (b) Clerical Amendment.--Section 401(b) of the Public Health 
Service Act (42 U.S.C. 281(b)) is amended--
            (1) by redesignating paragraph (25) as paragraph (26); and
            (2) by inserting after paragraph (24) the following:
            ``(25) The Center for Clinical Research.''.

SEC. 303. REWARDING INNOVATIVE DRUG DEVELOPMENT.

    (a) Drug Exclusivity.--
            (1) New chemical entity exclusivity.--
                    (A) In general.--Section 505(j)(5) of the Federal 
                Food, Drug, and Cosmetic Act (21 U.S.C. 355(j)(5)) is 
                amended--
                            (i) in subparagraph (B)--
                                    (I) in clause (i), by inserting 
                                ``except that such approval may not be 
                                made effective before the date that is 
                                5 years after the date on which the 
                                drug to which the application refers 
                                was approved under subsection (c)'' 
                                before the period; and
                                    (II) in clause (ii), by inserting 
                                ``except that such approval may not be 
                                made effective before the date that is 
                                5 years after the date on which the 
                                drug to which the application refers 
                                was approved under subsection (c)'' 
                                before the period; and
                            (ii) in subparagraph (F)(ii)--
                                    (I) by striking ``expiration of 
                                five years'' and inserting ``expiration 
                                of 3 years'';
                                    (II) by striking ``, except that 
                                such an application may be submitted 
                                under this subsection after the 
                                expiration of four years from the date 
                                of the approval of the subsection (b) 
                                application if it contains a 
                                certification of patent invalidity or 
                                noninfringement described in subclause 
                                (IV) of paragraph (2)(A)(vii)''; and
                                    (III) by striking ``seven and one-
                                half years'' and inserting ``6 and one-
                                half years''.
                    (B) Conforming amendments.--Chapter V of the 
                Federal Food, Drug, and Cosmetic Act (21 U.S.C. 351 et 
                seq.) is amended--
                            (i) in subsection (v)(2)(A)(i)(II) of 
                        section 505, by inserting ``the 3-year 
                        exclusivity period referred to'' before ``under 
                        clause (ii) of subsection (j)(5)(F)'';
                            (ii) in subsections (b)(1)(A)(i)(I) and 
                        (c)(1)(A)(i)(I) of section 505A--
                                    (I) by striking ``five years'' each 
                                place such term appears and inserting 
                                ``3 years'';
                                    (II) by striking ``seven and one-
                                half years'' each place such term 
                                appears and inserting ``6 and one-half 
                                years''; and
                                    (III) by striking ``eight years'' 
                                each place such term appears and 
                                inserting ``7 years''; and
                            (iii) in section 505E, by striking ``the 4- 
                        and 5-year periods described in subsections 
                        (c)(3)(E)(ii) and (j)(5)(F)(ii) of section 505, 
                        the 3-year periods described in clauses (iii) 
                        and (iv) of subsection (c)(3)(E) and clauses 
                        (iii) and (iv) of subsection (j)(5)(F)'' and 
                        inserting ``the 4- and 5-year periods described 
                        in subsection (c)(3)(E)(ii) of section 505, the 
                        3-year periods described in clauses (iii) and 
                        (iv) of subsection (c)(3)(E) and clauses (ii), 
                        (iii), and (iv) of subsection (j)(5)(F)'';
            (2) New clinical investigation exclusivity.--Section 
        505(c)(3)(E)(iv) of the Federal Food, Drug, and Cosmetic Act 
        (21 U.S.C. 355(c)(3)(E)(iv)) is amended by inserting ``, and 
        the supplement shows a significant clinical benefit over 
        existing therapies manufactured by the applicant in the 5-year 
        period preceding the submission of the application,'' before 
        ``the Secretary''.
            (3) Biological product exclusivity.--
                    (A) In general.--Section 351(k)(7)(A) of the Public 
                Health Service Act (42 U.S.C. 262(k)(7)(A)) is amended 
                by striking ``12 years'' and inserting ``7 years''.
                    (B) Conforming amendments.--Paragraphs (2)(A) and 
                (3)(A) of section 351(m) of the Public Health Service 
                Act (42 U.S.C. 262(m)) is amended by striking ``12 
                years'' each place it appears and inserting ``7 
                years''.
    (b) Applicability.--The amendments made by subsection (a) apply 
only with respect to a drug or biological product for which the listed 
drug (as described in section 505(j)(7) of the Federal Food, Drug, and 
Cosmetic Act (21 U.S.C. 355(j)(7)) or reference product (as such term 
is used in section 351 of the Public Health Service Act (42 U.S.C. 
262)) is approved under section 505(c) of the Federal Food, Drug, and 
Cosmetic Act or licensed under section 351(a) of the Public Health 
Service Act, as applicable, on or after the date of enactment of this 
Act.
    (c) GAO Study.--Not later than 1 year after the date of enactment 
of this Act, the Comptroller General of the United States shall conduct 
a study and submit to Congress a report that includes--
            (1)(A) the number of requests for designation as a drug for 
        a rare disease or condition under section 526 of the Federal 
        Food, Drug, and Cosmetic Act (21 U.S.C. 360bb) the Food and 
        Drug Administration receives each year in the previous 10-year 
        period;
            (B) the number of such requests granted, denied, and 
        pending;
            (C) the names of all drugs receiving such designation 
        during such period, including the date of approval and 
        indication for which market exclusivity was granted; and
            (D) any drugs for which such designation has been revoked 
        or amended during such period;
            (2) for each drug so designated as a drug for a rare 
        disease or condition in the previous 10-year period, the total 
        annual expenditures for such drugs under the Medicare program 
        under title XVIII of the Social Security Act (42 U.S.C. 1395 et 
        seq.) and the Medicaid program under title XIX of the Social 
        Security Act (42 U.S.C. 1396 et seq.), the number of Medicare 
        and Medicaid beneficiaries who used each such drug each year 
        during such time period, and any changes in price per unit 
        during such time period; and
            (3) for a sample of drugs (selected by the Comptroller 
        General) so designated in the previous 10-year period, to the 
        extent feasible--
                    (A) gross revenues of the manufacturers with 
                respect to each such drug, and manufacturer spending 
                for marketing and patient assistance programs;
                    (B) the average price per drug and how those prices 
                changed over time for the selected drugs based on 
                industry drug pricing benchmarks; and
                    (C) the indications that were the basis of such 
                designation and other approved indications for the 
                drugs, and the indications for which each drug has most 
                commonly been used, including non-approved indications 
                for which the drug may be recommended by external 
                organizations such as physician or patient 
                organizations.

SEC. 304. IMPROVING PROGRAM INTEGRITY.

    (a) In General.--Subchapter E of chapter V of the Federal Food, 
Drug, and Cosmetic Act (21 U.S.C. 360bbb et seq.) is amended by adding 
at the end the following:

``SEC. 569D. CONDITIONS ON AWARD OF DRUG EXCLUSIVITY.

    ``(a) Termination of Exclusivity.--Notwithstanding any other 
provision of this Act, any period of exclusivity described in 
subsection (b) granted to a person or assigned to a person on or after 
the date of enactment of this section with respect to a drug shall be 
terminated if the person to which such exclusivity was granted or any 
person to which such exclusivity is assigned commits a violation 
described in subsection (c)(1) with respect to such drug.
    ``(b) Exclusivities Affected.--The periods of exclusivity described 
in this subsection are those periods of exclusivity granted under any 
of the following sections:
            ``(1) Clause (ii), (iii), or (iv) of section 505(c)(3)(E).
            ``(2) Clause (iv) of section 505(j)(5)(B).
            ``(3) Clause (ii), (iii), or (iv) of section 505(j)(5)(F).
            ``(4) Section 505A.
            ``(5) Section 505E.
            ``(6) Section 527.
            ``(7) Section 351(k)(7) of the Public Health Service Act.
            ``(8) Any other provision of this Act that provides for 
        market exclusivity (or extension of market exclusivity) with 
        respect to a drug.
    ``(c) Violations.--
            ``(1) In general.--A violation described in this subsection 
        is a violation of a law described in paragraph (2), enforced by 
        a Federal or State governmental entity that results in--
                    ``(A) a criminal conviction of a person described 
                in subsection (a);
                    ``(B) a civil judgment against a person described 
                in subsection (a); or
                    ``(C) a settlement agreement in which a person 
                described in subsection (a) admits to fault.
            ``(2) Laws described.--The laws described in this paragraph 
        are the following:
                    ``(A) The provisions of this Act that prohibit--
                            ``(i) the adulteration or misbranding of a 
                        drug;
                            ``(ii) the making of false statements to 
                        the Secretary or committing fraud; or
                            ``(iii) the illegal marketing of a drug.
                    ``(B) Section 3729 of title 31, United States Code.
                    ``(C) Section 286 or 287 of title 18, United States 
                Code.
                    ``(D) The Medicare and Medicaid Patient Protection 
                and Program Act of 1987 (commonly known as the 
                `Antikickback Statute').
                    ``(E) Section 1927 of the Social Security Act.
                    ``(F) A State law against fraud comparable to a law 
                described in subparagraphs (A) through (E).
    ``(d) Date of Exclusivity Termination.--The date on which the 
exclusivity shall be terminated as described in subsection (a) is the 
date on which, as applicable--
            ``(1) a final judgment is entered relating to a violation 
        described in subparagraph (A) or (B) of subsection (c)(1); or
            ``(2)(A) a settlement agreement described in subsection 
        (c)(1)(C) is approved by a court order that is or becomes final 
        and nonappealable; or
            ``(B) if there is no court order approving a settlement 
        agreement described in subsection (c)(1)(C), a court order 
        dismissing the applicable case, issued after the settlement 
        agreement, is or becomes final and nonappealable.
    ``(e) Reporting of Information.--
            ``(1) In general.--A person described in subsection (a) 
        that commits a violation described in subsection (c)(1) shall 
        report such violation to the Secretary no later than 30 days 
        after the date that--
                    ``(A) a final judgment is entered relating to a 
                violation described in subparagraph (A) or (B) of 
                subsection (c)(1); or
                    ``(B)(i) a settlement agreement described in 
                subsection (c)(1)(C) is approved by a court order that 
                is or becomes final and nonappealable; or
                    ``(ii) if there is no court order approving a 
                settlement agreement described in subsection (c)(1)(C), 
                a court order dismissing the applicable case, issued 
                after the settlement agreement, is or becomes final and 
                nonappealable.
            ``(2) Civil penalty.--A person who fails to report a 
        violation as required under paragraph (1) shall be subject to a 
        civil penalty in the amount of $200,000 for each day the 
        failure to report continues, beginning with the day after the 
        date on which such report is due as described in paragraph 
        (1).''.
    (b) FTC.--There are authorized to be appropriated to the Federal 
Trade Commission such sums as may be necessary for the purpose of 
carrying out activities related to addressing criminal activity and 
anticompetitive practices by pharmaceutical companies.

                    TITLE IV--CHOICE AND COMPETITION

SEC. 401. PRESERVING ACCESS TO AFFORDABLE GENERICS.

    (a) In General.--The Federal Trade Commission Act (15 U.S.C. 44 et 
seq.) is amended by inserting after section 26 (15 U.S.C. 57c-2) the 
following:

``SEC. 27. PRESERVING ACCESS TO AFFORDABLE GENERICS.

    ``(a) In General.--
            ``(1) Enforcement proceeding.--The Commission may initiate 
        a proceeding to enforce the provisions of this section against 
        the parties to any agreement resolving or settling, on a final 
        or interim basis, a patent infringement claim, in connection 
        with the sale of a drug product.
            ``(2) Presumption and violation.--
                    ``(A) In general.--Subject to subparagraph (B), in 
                such a proceeding, an agreement shall be presumed to 
                have anticompetitive effects and be a violation of this 
                section if--
                            ``(i) an ANDA filer receives anything of 
                        value, including an exclusive license; and
                            ``(ii) the ANDA filer agrees to limit or 
                        forego research, development, manufacturing, 
                        marketing, or sales of the ANDA product for any 
                        period of time.
                    ``(B) Exception.--Subparagraph (A) shall not apply 
                if the parties to such agreement demonstrate by clear 
                and convincing evidence that--
                            ``(i) the value described in subparagraph 
                        (A)(i) is compensation solely for other goods 
                        or services that the ANDA filer has promised to 
                        provide; or
                            ``(ii) the procompetitive benefits of the 
                        agreement outweigh the anticompetitive effects 
                        of the agreement.
    ``(b) Limitations.--In determining whether the settling parties 
have met their burden under subsection (a)(2)(B), the fact finder shall 
not presume--
            ``(1) that entry would not have occurred until the 
        expiration of the relevant patent or statutory exclusivity; or
            ``(2) that the agreement's provision for entry of the ANDA 
        product prior to the expiration of the relevant patent or 
        statutory exclusivity means that the agreement is 
        procompetitive.
    ``(c) Exclusions.--Nothing in this section shall prohibit a 
resolution or settlement of a patent infringement claim in which the 
consideration granted by the NDA holder to the ANDA filer as part of 
the resolution or settlement includes only one or more of the 
following:
            ``(1) The right to market the ANDA product in the United 
        States prior to the expiration of--
                    ``(A) any patent that is the basis for the patent 
                infringement claim; or
                    ``(B) any patent right or other statutory 
                exclusivity that would prevent the marketing of such 
                drug.
            ``(2) A payment for reasonable litigation expenses not to 
        exceed $7,500,000.
            ``(3) A covenant not to sue on any claim that the ANDA 
        product infringes a United States patent.
    ``(d) Enforcement.--
            ``(1) Enforcement.--A violation of this section shall be 
        treated as a violation of section 5.
            ``(2) Judicial review.--
                    ``(A) In general.--Any party that is subject to a 
                final order of the Commission, issued in an 
                administrative adjudicative proceeding under the 
                authority of subsection (a)(1), may, within 30 days of 
                the issuance of such order, petition for review of such 
                order in--
                            ``(i) the United States Court of Appeals 
                        for the District of Columbia Circuit;
                            ``(ii) the United States Court of Appeals 
                        for the circuit in which the ultimate parent 
                        entity, as defined in section 801.1(a)(3) of 
                        title 16, Code of Federal Regulations, or any 
                        successor thereto, of the NDA holder is 
                        incorporated as of the date that the NDA is 
                        filed with the Commissioner of Food and Drugs; 
                        or
                            ``(iii) the United States Court of Appeals 
                        for the circuit in which the ultimate parent 
                        entity of the ANDA filer is incorporated as of 
                        the date that the ANDA is filed with the 
                        Commissioner of Food and Drugs.
                    ``(B) Treatment of findings.--In a proceeding for 
                judicial review of a final order of the Commission, the 
                findings of the Commission as to the facts, if 
                supported by evidence, shall be conclusive.
    ``(e) Antitrust Laws.--Nothing in this section shall be construed 
to modify, impair, or supersede the applicability of the antitrust laws 
as defined in subsection (a) of the first section of the Clayton Act 
(15 U.S.C. 12(a)), and of section 5 of this Act to the extent that 
section 5 applies to unfair methods of competition. Nothing in this 
section shall modify, impair, limit, or supersede the right of an ANDA 
filer to assert claims or counterclaims against any person, under the 
antitrust laws or other laws relating to unfair competition.
    ``(f) Penalties.--
            ``(1) Forfeiture.--Each party that violates or assists in 
        the violation of this section shall forfeit and pay to the 
        United States a civil penalty sufficient to deter violations of 
        this section, but in no event greater than 3 times the value 
        received by the party that is reasonably attributable to the 
        violation of this section. If no such value has been received 
        by the NDA holder, the penalty to the NDA holder shall be 
        sufficient to deter violations, but in no event greater than 3 
        times the value given to the ANDA filer reasonably attributable 
        to the violation of this section. Such penalty shall accrue to 
        the United States and may be recovered in a civil action 
        brought by the Commission, in its own name by any of its 
        attorneys designated by it for such purpose, in a district 
        court of the United States against any party that violates this 
        section. In such actions, the United States district courts are 
        empowered to grant mandatory injunctions and such other and 
        further equitable relief as they deem appropriate.
            ``(2) Cease and desist.--
                    ``(A) In general.--If the Commission has issued a 
                cease and desist order with respect to a party in an 
                administrative adjudicative proceeding under the 
                authority of subsection (a)(1), an action brought 
                pursuant to paragraph (1) may be commenced against such 
                party at any time before the expiration of 1 year after 
                such order becomes final pursuant to section 5(g).
                    ``(B) Exception.--In an action under subparagraph 
                (A), the findings of the Commission as to the material 
                facts in the administrative adjudicative proceeding 
                with respect to the violation of this section by a 
                party shall be conclusive unless--
                            ``(i) the terms of such cease and desist 
                        order expressly provide that the Commission's 
                        findings shall not be conclusive; or
                            ``(ii) the order became final by reason of 
                        section 5(g)(1), in which case such finding 
                        shall be conclusive if supported by evidence.
            ``(3) Civil penalty.--In determining the amount of the 
        civil penalty described in this section, the court shall take 
        into account--
                    ``(A) the nature, circumstances, extent, and 
                gravity of the violation;
                    ``(B) with respect to the violator, the degree of 
                culpability, any history of violations, the ability to 
                pay, any effect on the ability to continue doing 
                business, profits earned by the NDA holder, 
                compensation received by the ANDA filer, and the amount 
                of commerce affected; and
                    ``(C) other matters that justice requires.
            ``(4) Remedies in addition.--Remedies provided in this 
        subsection are in addition to, and not in lieu of, any other 
        remedy provided by Federal law. Nothing in this paragraph shall 
        be construed to affect any authority of the Commission under 
        any other provision of law.
    ``(g) Definitions.--In this section:
            ``(1) Agreement.--The term `agreement' means anything that 
        would constitute an agreement under section 1 of the Sherman 
        Act (15 U.S.C. 1) or section 5 of this Act.
            ``(2) Agreement resolving or settling a patent infringement 
        claim.--The term `agreement resolving or settling a patent 
        infringement claim' includes any agreement that is entered into 
        within 30 days of the resolution or the settlement of the 
        claim, or any other agreement that is contingent upon, provides 
        a contingent condition for, or is otherwise related to the 
        resolution or settlement of the claim.
            ``(3) ANDA.--The term `ANDA' means an abbreviated new drug 
        application filed under section 505(j) of the Federal Food, 
        Drug, and Cosmetic Act (21 U.S.C. 355(j)) or a new drug 
        application filed under section 505(b)(2) of the Federal Food, 
        Drug, and Cosmetic Act (21 U.S.C. 355(b)(2)).
            ``(4) ANDA filer.--The term `ANDA filer' means a party that 
        owns or controls an ANDA filed with the Commission of Food and 
        Drugs or has the exclusive rights under such ANDA to distribute 
        the ANDA product.
            ``(5) ANDA product.--The term `ANDA product' means the 
        product to be manufactured under the ANDA that is the subject 
        of the patent infringement claim.
            ``(6) Drug product.--The term `drug product' has the 
        meaning given such term in section 314.3(b) of title 21, Code 
        of Federal Regulations (or any successor regulation).
            ``(7) NDA.--The term `NDA' means a new drug application 
        filed under section 505(b) of the Federal Food, Drug, and 
        Cosmetic Act (21 U.S.C. 355(b)).
            ``(8) NDA holder.--The term `NDA holder' means--
                    ``(A) the holder of an approved NDA application for 
                a drug product;
                    ``(B) a person owning or controlling enforcement of 
                the patent listed in the Approved Drug Products With 
                Therapeutic Equivalence Evaluations (commonly known as 
                the `FDA Orange Book') in connection with the NDA; or
                    ``(C) the predecessors, subsidiaries, divisions, 
                groups, and affiliates controlled by, controlling, or 
                under common control with any of the entities described 
                in subparagraphs (A) and (B) (such control to be 
                presumed by direct or indirect share ownership of 50 
                percent or greater), as well as the licensees, 
                licensors, successors, and assigns of each of the 
                entities.
            ``(9) Party.--The term `party' means any person, 
        partnership, corporation, or other legal entity.
            ``(10) Patent infringement.--The term `patent infringement' 
        means infringement of any patent or of any filed patent 
        application, extension, reissue, renewal, division, 
        continuation, continuation in part, reexamination, patent term 
        restoration, patents of addition, and extensions thereof.
            ``(11) Patent infringement claim.--The term `patent 
        infringement claim' means any allegation made to an ANDA filer, 
        whether or not included in a complaint filed with a court of 
        law, that its ANDA or ANDA product may infringe any patent held 
        by, or exclusively licensed to, the NDA holder of the drug 
        product.
            ``(12) Statutory exclusivity.--The term `statutory 
        exclusivity' means those prohibitions on the approval of drug 
        applications under clauses (ii) through (iv) of section 
        505(c)(3)(E) (5- and 3-year data exclusivity), section 527 
        (orphan drug exclusivity), or section 505A (pediatric 
        exclusivity) of the Federal Food, Drug, and Cosmetic Act (21 
        U.S.C. 355(c)(3)(E), 360cc, 355a).''.
    (b) Effective Date.--Section 27 of the Federal Trade Commission 
Act, as added by this section, shall apply to all agreements described 
in section 27(a)(1) of that Act entered into after June 17, 2013. 
Section 27(f) of the Federal Trade Commission Act, as added by this 
section, shall apply to agreements entered into on or after the date of 
enactment of this Act.

SEC. 402. 180-DAY EXCLUSIVITY PERIOD AMENDMENTS REGARDING FIRST 
              APPLICANT STATUS.

    (a) Amendments to Federal Food, Drug, and Cosmetic Act.--
            (1) In general.--Section 505(j)(5)(B) of the Federal Food, 
        Drug, and Cosmetic Act (21 U.S.C. 355(j)(5)(B)) is amended--
                    (A) in clause (iv)(II)--
                            (i) by striking item (bb); and
                            (ii) by redesignating items (cc) and (dd) 
                        as items (bb) and (cc), respectively; and
                    (B) by adding at the end the following:
            ``(v) First applicant defined.--As used in this subsection, 
        the term `first applicant' means an applicant--
                    ``(I)(aa) that, on the first day on which a 
                substantially complete application containing a 
                certification described in paragraph (2)(A)(vii)(IV) is 
                submitted for approval of a drug, submits a 
                substantially complete application that contains and 
                lawfully maintains a certification described in 
                paragraph (2)(A)(vii)(IV) for the drug; and
                    ``(bb) that has not entered into a disqualifying 
                agreement described under clause (vii)(II); or
                    ``(II)(aa) for the drug that is not described in 
                subclause (I) and that, with respect to the applicant 
                and drug, each requirement described in clause (vi) is 
                satisfied; and
                    ``(bb) that has not entered into a disqualifying 
                agreement described under clause (vii)(II).
            ``(vi) Requirement.--The requirements described in this 
        clause are the following:
                    ``(I) The applicant described in clause (v)(II) 
                submitted and lawfully maintains a certification 
                described in paragraph (2)(A)(vii)(IV) or a statement 
                described in paragraph (2)(A)(viii) for each unexpired 
                patent for which a first applicant described in clause 
                (v)(I) had submitted a certification described in 
                paragraph (2)(A)(vii)(IV) on the first day on which a 
                substantially complete application containing such a 
                certification was submitted.
                    ``(II) With regard to each such unexpired patent 
                for which the applicant described in clause (v)(II) 
                submitted a certification described in paragraph 
                (2)(A)(vii)(IV), no action for patent infringement was 
                brought against such applicant within the 45-day period 
                specified in paragraph (5)(B)(iii); or if an action was 
                brought within such time period, such an action was 
                withdrawn or dismissed by a court (including a district 
                court) without a decision that the patent was valid and 
                infringed; or if an action was brought within such time 
                period and was not withdrawn or so dismissed, such 
                applicant has obtained the decision of a court 
                (including a district court) that the patent is invalid 
                or not infringed (including any substantive 
                determination that there is no cause of action for 
                patent infringement or invalidity, and including a 
                settlement order or consent decree signed and entered 
                by the court stating that the patent is invalid or not 
                infringed).
                    ``(III) If an applicant described in clause (v)(I) 
                has begun commercial marketing of such drug, the 
                applicant described in clause (v)(II) does not begin 
                commercial marketing of such drug until the date that 
                is 30 days after the date on which the applicant 
                described in clause (v)(I) began such commercial 
                marketing.''.
            (2) Conforming amendment.--Section 505(j)(5)(D)(i)(IV) of 
        the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
        355(j)(5)(D)(i)(IV)) is amended by striking ``The first 
        applicant'' and inserting ``The first applicant, as defined in 
        subparagraph (B)(v)(I),''.
    (b) Applicability.--The amendments made by subsection (a) shall 
apply only with respect to an application filed under section 505(j) of 
the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(j)) to which 
the amendments made by section 1102(a) of the Medicare Prescription 
Drug, Improvement, and Modernization Act of 2003 (Public Law 108-173) 
apply.

SEC. 403. 180-DAY EXCLUSIVITY PERIOD AMENDMENTS REGARDING AGREEMENTS TO 
              DEFER COMMERCIAL MARKETING.

    (a) Amendments to Federal Food, Drug, and Cosmetic Act.--
            (1) Limitations on agreements to defer commercial marketing 
        date.--Section 505(j)(5)(B) of the Federal Food, Drug, and 
        Cosmetic Act (21 U.S.C. 355(j)(5)(B)), as amended by section 
        402, is further amended by adding at the end the following:
            ``(vii) Agreement by first applicant to defer commercial 
        marketing; limitation on acceleration of deferred commercial 
        marketing date.--
                    ``(I) Agreement to defer approval or commercial 
                marketing date.--An agreement described in this 
                subclause is an agreement between a first applicant and 
                the holder of the application for the listed drug or an 
                owner of one or more of the patents as to which any 
                applicant submitted a certification qualifying such 
                applicant for the 180-day exclusivity period whereby 
                that applicant agrees, directly or indirectly, (aa) not 
                to seek an approval of its application that is made 
                effective on the earliest possible date under this 
                subparagraph, subparagraph (F) of this paragraph, 
                section 505A, or section 527, (bb) not to begin the 
                commercial marketing of its drug on the earliest 
                possible date after receiving an approval of its 
                application that is made effective under this 
                subparagraph, subparagraph (F) of this paragraph, 
                section 505A, or section 527, or (cc) to both items 
                (aa) and (bb).
                    ``(II) Agreement that disqualifies applicant from 
                first applicant status.--An agreement described in this 
                subclause is an agreement between an applicant and the 
                holder of the application for the listed drug or an 
                owner of one or more of the patents as to which any 
                applicant submitted a certification qualifying such 
                applicant for the 180-day exclusivity period whereby 
                that applicant agrees, directly or indirectly, not to 
                seek an approval of its application or not to begin the 
                commercial marketing of its drug until a date that is 
                after the expiration of the 180-day exclusivity period 
                awarded to another applicant with respect to such drug 
                (without regard to whether such 180-day exclusivity 
                period is awarded before or after the date of the 
                agreement).
            ``(viii) Limitation on acceleration.--If an agreement 
        described in clause (vii)(I) includes more than 1 possible date 
        when an applicant may seek an approval of its application or 
        begin the commercial marketing of its drug--
                    ``(I) the applicant may seek an approval of its 
                application or begin such commercial marketing on the 
                date that is the earlier of--
                            ``(aa) the latest date set forth in the 
                        agreement on which that applicant can receive 
                        an approval that is made effective under this 
                        subparagraph, subparagraph (F) of this 
                        paragraph, section 505A, or section 527, or 
                        begin the commercial marketing of such drug, 
                        without regard to any other provision of such 
                        agreement pursuant to which the commercial 
                        marketing could begin on an earlier date; or
                            ``(bb) 180 days after another first 
                        applicant begins commercial marketing of such 
                        drug; and
                    ``(II) the latest date set forth in the agreement 
                on which that applicant can receive an approval that is 
                made effective under this subparagraph, subparagraph 
                (F) of this paragraph, section 505A, or section 527, or 
                begin the commercial marketing of such drug, without 
                regard to any other provision of such agreement 
                pursuant to which commercial marketing could begin on 
                an earlier date, shall be the date used to determine 
                whether an applicant is disqualified from first 
                applicant status pursuant to clause (vii)(II).''.
            (2) Notification of fda.--Section 505(j) of the Federal 
        Food, Drug, and Cosmetic Act (21 U.S.C. 355(j)) is amended by 
        adding at the end the following:
    ``(11)(A) The holder of an abbreviated application under this 
subsection shall submit to the Secretary a notification that includes--
            ``(i)(I) the text of any agreement entered into by such 
        holder described under paragraph (5)(B)(vii)(I); or
            ``(II) if such an agreement has not been reduced to text, a 
        written detailed description of such agreement that is 
        sufficient to disclose all the terms and conditions of the 
        agreement; and
            ``(ii) the text, or a written detailed description in the 
        event of an agreement that has not been reduced to text, of any 
        other agreements that are contingent upon, provide a contingent 
        condition for, or are otherwise related to an agreement 
        described in clause (i).
    ``(B) The notification described under subparagraph (A) shall be 
submitted not later than 10 business days after execution of the 
agreement described in subparagraph (A)(i). Such notification is in 
addition to any notification required under section 1112 of the 
Medicare Prescription Drug, Improvement, and Modernization Act of 2003.
    ``(C) Any information or documentary material filed with the 
Secretary pursuant to this paragraph shall be exempt from disclosure 
under section 552 of title 5, United States Code, and no such 
information or documentary material may be made public, except as may 
be relevant to any administrative or judicial action or proceeding. 
Nothing in this paragraph is intended to prevent disclosure to either 
body of the Congress or to any duly authorized committee or 
subcommittee of the Congress.''.
            (3) Prohibited acts.--Section 301(e) of the Federal Food, 
        Drug, and Cosmetic Act (21 U.S.C. 331(e)) is amended by 
        striking ``505 (i) or (k)'' and inserting ``505 (i), (j)(11), 
        or (k)''.
    (b) Infringement of Patent.--Section 271(e) of title 35, United 
States Code, is amended by adding at the end the following:
    ``(7) The exclusive remedy under this section for an infringement 
of a patent for which the Secretary of Health and Human Services has 
published information pursuant to subsection (b)(1) or (c)(2) of 
section 505 of the Federal Food, Drug, and Cosmetic Act shall be an 
action brought under this subsection within the 45-day period described 
in subsection (j)(5)(B)(iii) or (c)(3)(C) of section 505 of the Federal 
Food, Drug, and Cosmetic Act.''.
    (c) Applicability.--
            (1) Limitations on acceleration of deferred commercial 
        marketing date.--The amendment made by subsection (a)(1) shall 
        apply only with respect to--
                    (A) an application filed under section 505(j) of 
                the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
                355(j)) to which the amendments made by section 1102(a) 
                of the Medicare Prescription Drug, Improvement, and 
                Modernization Act of 2003 (Public Law 108-173) apply; 
                and
                    (B) an agreement described under section 
                505(j)(5)(B)(vii)(I) of the Federal Food, Drug, and 
                Cosmetic Act (as added by subsection (a)(1)) executed 
                after the date of enactment of this Act.
            (2) Notification of fda.--The amendments made by paragraphs 
        (2) and (3) of subsection (a) shall apply only with respect to 
        an agreement described under section 505(j)(5)(B)(vii)(I) of 
        the Federal Food, Drug, and Cosmetic Act (as added by 
        subsection (a)(1)) executed after the date of enactment of this 
        Act.

SEC. 404. INCREASING GENERIC DRUG COMPETITION.

    (a) Listing of Generic Drugs at List of Being in Shortage.--Chapter 
V of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 351 et seq.) 
is amended by inserting after section 506E the following:

``SEC. 506E-1. LISTING OF GENERIC DRUGS.

    ``(a) Database for Manufacturers of Generic Drugs.--The 
Commissioner shall--
            ``(1) not later than 9 months after the date of enactment 
        of the Improving Access To Affordable Prescription Drugs Act, 
        publish a complete, up-to-date list on the Internet website of 
        the Food and Drug Administration of all generic drugs 
        (including drug trade name, active pharmaceutical ingredient 
        manufacturer, active finished dosage form manufacturer, any 
        contract manufacturing organization, the date the authorized 
        generic drug entered the market, and marketing status);
            ``(2) designate each drug on the list that is a sole-source 
        drug; and
            ``(3) maintain a confidential list of the identity and 
        address of each manufacturer and labeler associated with a drug 
        reported under this section, and publicly report on the website 
        only the city and State or country of each such manufacturer 
        and labeler.
    ``(b) Public Health Exception.--The Commissioner may choose not to 
make information collected under subsection (a) publicly available if 
the Secretary determines that disclosure of such information would 
adversely affect the public health (such as by increasing the 
possibility of hoarding or other disruption of the availability of drug 
products to patients).
    ``(c) Notification.--The Commissioner shall notify relevant Federal 
agencies, including the Centers for Medicare & Medicaid Services and 
the Federal Trade Commission, when the Commissioner first publishes the 
information under subsection (a) that the information has been 
published and will be updated regularly.
    ``(d) Definitions.--In this section:
            ``(1) The term `manufacturer' means a person engaged in the 
        manufacture of an active pharmaceutical ingredient or finished 
        dosage form, as defined in section 744A.
            ``(2) The term `sole-source' means--
                    ``(A) A drug for which there is only one approved 
                manufacturer listed in the active section of the 
                Approved Drug Products With Therapeutic Equivalence 
                Evaluations (commonly known as the `FDA Orange Book'); 
                and
                    ``(B) for which there are no blocking patents or 
                exclusivities that may receive expedited review, except 
                where the drug was approved pursuant to a suitability 
                petition under section 505(j)(2)(C).''.
    (b) Report on Contracts.--Section 510(j) of the Federal Food, Drug, 
and Cosmetic Act (21 U.S.C. 360(j)) is amended by adding at the end the 
following:
    ``(5) Each person who registers with the Secretary under this 
section shall report to the Secretary any contract with a contract 
manufacturing organization with respect to any drug such person 
manufacturers, distributes, or compounds, including the start date and 
end date of such contract.''.
    (c) Discontinuance or Interruption in the Production of Life-Saving 
Drugs.--Section 506C(a) of the Federal Food, Drug, and Cosmetic Act (21 
U.S.C. 356c(a)) is amended by striking ``of a drug--'' and all that 
follows through the end of paragraph (2) and inserting ``of a drug''.
    (d) Decrease in Manufacturers of Drugs.--Chapter V of the Federal 
Food, Drug, and Cosmetic Act (21 U.S.C. 351 et seq.) is amended by 
inserting after section 506C-1 the following:

``SEC. 506C-2. DECREASE IN MANUFACTURERS OF GENERIC DRUGS.

    ``(a) In General.--If the Secretary determines that the number of 
manufacturers of a drug approved under section 505 or a biological 
product licensed under section 351 is less than 2, the Secretary may--
            ``(1) with respect to a manufacturer with fewer than 500 
        employees, including employees of affiliates of the 
        manufacturer, waive the prescription drug application fees 
        under sections 736(a), 744B(a), or 744H(a);
            ``(2) expedite the review of applications for the drug 
        under section 505(j) or section 351(k) of the Public Health 
        Service Act until the number of manufacturers of the drug is at 
        least 4; and
            ``(3) after consultation with the Federal Trade Commission 
        to ensure that the manufacturer has not engaged in 
        anticompetitive tactics to remove other manufacturers from the 
        market in order to incentivize such a contract, establish and 
        prioritize purchase contracts with manufacturers who are 
        holders of applications approved under section 505(j) or 
        section 351(k) of the Public Health Service Act for the drug 
        but who are not currently manufacturing such drug.
    ``(b) Guidelines for Purchase Contracts.--
            ``(1) In general.--The Secretary shall promulgate 
        regulations to establish guidelines for the drugs with respect 
        to which the Secretary may establish purchase contracts in 
        accordance with subsection (a)(3). Such guidelines shall 
        provide that any such purchase contract may be only with 
        respect to a drug that is listed as an essential medicine by 
        the World Health Organization, or another external entity, as 
        the Secretary may specify, that meets evidence-based standards 
        as the Secretary may require.
            ``(2) Pricing.--If a manufacturer enters into purchase 
        contract in accordance with subsection (a)(3), the Secretary, 
        in cooperation with the Office of the Inspector General, shall 
        establish a limit on the retail price at which the drug may be 
        made available to consumers in the United States.''.

SEC. 405. DISALLOWANCE OF DEDUCTION FOR ADVERTISING FOR PRESCRIPTION 
              DRUGS.

    (a) In General.--Part IX of subchapter B of chapter 1 of subtitle A 
of the Internal Revenue Code of 1986 (relating to items not deductible) 
is amended by adding at the end the following new section:

``SEC. 280I. DISALLOWANCE OF DEDUCTION FOR DIRECT-TO-CONSUMER 
              ADVERTISING OF PRESCRIPTION DRUGS.

    ``(a) In General.--No deduction shall be allowed under this chapter 
for expenses relating to direct-to-consumer advertising of prescription 
drugs for any taxable year.
    ``(b) Direct-to-Consumer Advertising.--For purposes of this 
section, the term `direct-to-consumer advertising' means any 
dissemination, by or on behalf of a sponsor of a prescription drug 
product (as such term is defined in section 735(3) of the Federal Food, 
Drug, and Cosmetic Act), of an advertisement which--
            ``(1) is in regard to such prescription drug product, and
            ``(2) primarily targeted to the general public, including 
        through--
                    ``(A) publication in journals, magazines, other 
                periodicals, and newspapers,
                    ``(B) broadcasting through media such as radio, 
                television, telephone communication systems, direct 
                mail, and billboards,
                    ``(C) dissemination on the Internet (including 
                social media); and
                    ``(D) manufacturer patient assistance programs, as 
                defined in section 399V-7 of the Public Health Service 
                Act.''.
    (b) Conforming Amendment.--The table of sections for such part IX 
of the Internal Revenue Code of 1986 is amended by adding after the 
item relating to section 280H the following new item:

``Sec. 280I. Disallowance of deduction for direct-to-consumer 
                            advertising of prescription drugs.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to amounts paid or incurred after the date of the enactment of 
this Act, in taxable years ending after such date.

SEC. 406. PRODUCT HOPPING.

    (a) Definitions.--In this section--
            (1) the term ``biological product'' has the meaning given 
        that term in section 351 of the Public Health Service Act (42 
        U.S.C. 262);
            (2) the term ``drug'' has the meaning given that term in 
        section 201 of the Federal Food, Drug, and Cosmetic Act (21 
        U.S.C. 321); and
            (3) the term ``product hopping'' means a circumstance in 
        which--
                    (A) a manufacturer reformulates a drug or 
                biological product in such a way that allows the 
                manufacturer to submit a new drug application under 
                section 505(b) of the Federal Food, Drug, and Cosmetic 
                Act (21 U.S.C. 355(b)) or new application for a license 
                under section 351(a) of the Public Health Service Act 
                (42 U.S.C. 262(a)) with respect to such new 
                formulation;
                    (B) the new formulation described in subparagraph 
                (A) is intended for the treatment of the same medical 
                condition as the drug or biological product that was 
                reformulated; and
                    (C) actions are taken to reduce or eliminate demand 
                for the original drug or biological product.
    (b) Report.--The Federal Trade Commission shall submit to Congress 
a report on the extent to which--
            (1) manufacturers of drugs and biological products engage 
        in product hopping, including an analysis of the timing of the 
        introduction of the reformulated product relative to the market 
        entry of a drug approved under section 505(j) of the Federal 
        Food, Drug, and Cosmetic Act or biological product licensed 
        under section 351(k) of the Public Health Service Act, the 
        types of changes made in the new product, the patents and 
        market exclusivities awarded to reformulated products, and the 
        various forms of product hopping manufacturers employ;
            (2) manufacturers assess the profitability of a new product 
        based whether it launches before (or how long before) generic 
        entry occurs on the original product;
            (3) the effect of product-hopping behavior on consumers, 
        including the total estimated annual cost to consumers of 
        physicians prescribing the substituted drug in place of a 
        generic version of the original product;
            (4) the effect of product-hopping on insurance prices and 
        availability, including cost increases and coverage reductions 
        attributable to the economic losses described in paragraph (3);
            (5) product hopping affects manufacturer profits, revenues, 
        unit sales, and prices; and
            (6) product hopping affects the unit sales, manufacturer 
        profits, and prices of the generic version of the original 
        product.
                                 <all>