Title: Medicare Negotiation and Competitive Licensing Act of 2019
Policy area: Health

Summary:
Medicare Negotiation and Competitive Licensing Act of 2019
This bill requires the Centers for Medicare & Medicaid Services (CMS) to negotiate with pharmaceutical companies regarding prices for drugs covered under the Medicare prescription drug benefit. (Current law prohibits the CMS from doing so.)
The CMS must take certain factors into account during negotiations, including the clinical- and cost-effectiveness of the drug, the financial burden on patients, and unmet patient needs. If the CMS is unable to negotiate the price of a drug, such drug is subject to competitive licensing in order to further its sale under Medicare, notwithstanding existing government-granted exclusivities.
Additionally, for one year after a drug is provided under a competitive license, such drug is also subject to specified price limitations; if the drug is not offered at such prices, the drug is subject to additional licensing that furthers its sale under any federal program (e.g., Medicaid).

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 377 Introduced in Senate (IS)]

<DOC>






116th CONGRESS
  1st Session
                                 S. 377

    To amend title XVIII of the Social Security Act to require the 
     Secretary of Health and Human Services to negotiate prices of 
   prescription drugs furnished under part D of the Medicare program.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            February 7, 2019

Mr. Brown (for himself, Ms. Baldwin, and Ms. Klobuchar) introduced the 
 following bill; which was read twice and referred to the Committee on 
                                Finance

_______________________________________________________________________

                                 A BILL


 
    To amend title XVIII of the Social Security Act to require the 
     Secretary of Health and Human Services to negotiate prices of 
   prescription drugs furnished under part D of the Medicare program.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medicare Negotiation and Competitive 
Licensing Act of 2019''.

SEC. 2. REQUIRING THE SECRETARY OF HEALTH AND HUMAN SERVICES TO 
              NEGOTIATE PRICES OF PRESCRIPTION DRUGS FURNISHED UNDER 
              PART D OF THE MEDICARE PROGRAM.

    Section 1860D-11 of the Social Security Act (42 U.S.C. 1395w-111) 
is amended by striking subsection (i) and inserting the following new 
subsection:
    ``(i) Negotiation of Lower Drug Prices.--
            ``(1) In general.--Notwithstanding any other provision of 
        law, the Secretary shall, for plan years beginning on or after 
        the date of the enactment of this subsection, negotiate with 
        pharmaceutical manufacturers the prices (including discounts, 
        rebates, and other price concessions) that may be charged to 
        PDP sponsors and MA organizations during a negotiated price 
        period (as specified by the Secretary) for covered part D drugs 
        for part D eligible individuals who are enrolled under a 
        prescription drug plan or under an MA-PD plan. In negotiating 
        such prices under this section, the Secretary shall take into 
        account the following factors:
                    ``(A) The comparative clinical effectiveness and 
                cost effectiveness, when available from an impartial 
                source, of such drug.
                    ``(B) The budgetary impact of providing coverage of 
                such drug.
                    ``(C) The number of similarly effective drugs or 
                alternative treatment regimens for each approved use of 
                such drug.
                    ``(D) The associated financial burden on patients 
                that utilize such drug.
                    ``(E) The associated unmet patient need for such 
                drug.
                    ``(F) The total revenues from global sales obtained 
                by the manufacturer for such drug and the associated 
                investment in research and development of such drug by 
                the manufacturer.
            ``(2) Finalization of negotiated price.--The negotiated 
        price of each covered part D drug for a negotiated price period 
        shall be finalized not later than 30 days before a PDP sponsor 
        is required to submit information described in subsection 
        (b)(2) for the first plan year in such negotiated price period.
            ``(3) Competitive licensing authority.--
                    ``(A) In general.--Notwithstanding any exclusivity 
                under clause (iii) or (iv) of section 505(j)(5)(F) of 
                the Federal Food, Drug, and Cosmetic Act, clause (iii) 
                or (iv) of section 505(c)(3)(E) of such Act, section 
                351(k)(7)(A) of the Public Health Service Act, or 
                section 527(a) of the Federal Food, Drug, and Cosmetic 
                Act, or by an extension of such exclusivity under 
                section 505A of such Act or section 505E of such Act, 
                and any other provision of law that provides for market 
                exclusivity (or extension of market exclusivity) with 
                respect to a drug, in the case that the Secretary is 
                unable to successfully negotiate an appropriate price 
                for a covered part D drug for a negotiated price 
                period, the Secretary shall authorize the use of any 
                patent, clinical trial data, or other exclusivity 
                granted by the Federal Government with respect to such 
                drug as the Secretary determines appropriate for 
                purposes of manufacturing such drug for sale under a 
                prescription drug plan or MA-PD plan. Any entity making 
                use of a competitive license to use patent, clinical 
                trial data, or other exclusivity under this section 
                shall provide to the manufacturer holding such 
                exclusivity reasonable compensation, as determined by 
                the Secretary based on the following factors:
                            ``(i) The risk-adjusted value of any 
                        Federal Government subsidies and investments in 
                        research and development used to support the 
                        development of such drug.
                            ``(ii) The risk-adjusted value of any 
                        investment made by such manufacturer in the 
                        research and development of such drug.
                            ``(iii) The impact of the price, including 
                        license compensation payments, on meeting the 
                        medical need of all patients.
                            ``(iv) The relationship between the price 
                        of such drug, including compensation payments, 
                        and the health benefits of such drug.
                            ``(v) Other relevant factors determined 
                        appropriate by the Secretary to provide 
                        reasonable compensation.
                    ``(B) Reasonable compensation.--The manufacturer 
                described in subparagraph (A) may seek recovery against 
                the United States in the United States Court of Federal 
                Claims.
                    ``(C) Interim period.--
                            ``(i) In general.--Until 1 year after a 
                        drug described in subparagraph (A) is approved 
                        under section 505(j) of the Federal Food, Drug, 
                        and Cosmetic Act or section 351(k) of the 
                        Public Health Service Act and is provided under 
                        license issued by the Secretary under such 
                        subparagraph, PDP plans and MA-PD plans shall 
                        not pay more for such drug than the average of 
                        the prices available, during the most recent 
                        12-month period for which data is available 
                        prior to the beginning of such negotiated price 
                        period, from the manufacturer to any 
                        wholesaler, retailer, provider, health 
                        maintenance organization, nonprofit entity, or 
                        governmental entity in the ten OECD 
                        (Organization for Economic Cooperation and 
                        Development) countries that have the largest 
                        gross domestic product with a per capita income 
                        that is not less than half the per capita 
                        income of the United States, as reported by the 
                        manufacturer to the Secretary.
                            ``(ii) Federal program licensing.--If such 
                        drug is not made available at the price 
                        determined, the Secretary shall authorize such 
                        entities to use any patent, clinical trial 
                        data, or other exclusivity granted by the 
                        Federal Government with respect to such drug as 
                        the Secretary determines appropriate for 
                        purposes of manufacturing such drug for sale 
                        under any Federal program, including those 
                        provided by Medicare, Medicaid, Veterans 
                        Affairs, the Department of Defense, and the 
                        Coast Guard.
                    ``(D) Authorization for secretary to procure drugs 
                directly.--
                            ``(i) In general.--The Secretary may 
                        procure a drug manufactured pursuant to a 
                        competitive license under subparagraph (A) for 
                        purposes of this part or pursuant to a Federal 
                        program license under subparagraph (C)(ii) for 
                        purposes of a Federal program directly from the 
                        entity manufacturing the drug pursuant to such 
                        a license.
                            ``(ii) Clarification regarding application 
                        of buy american act.--In the case where the 
                        Secretary procures a drug under this 
                        subparagraph, the provisions of chapter 83 of 
                        title 41, United States Code (commonly referred 
                        to as the `Buy American Act') shall apply.
                    ``(E) Priority for u.s. manufacturers in 
                authorizing competitive licenses.--In authorizing a 
                competitive license under this paragraph, the 
                Secretary--
                            ``(i) shall give preference to entities 
                        that the Secretary determines have the highest 
                        safety and security standards; and
                            ``(ii) may give priority to entities that 
                        will manufacture such drug in the United 
                        States.
            ``(4) FDA review of licensed drug applications.--The 
        Secretary shall prioritize review of applications under section 
        505(j) of the Federal Food, Drug, and Cosmetic Act for drugs 
        licensed under paragraph (3)(A).
            ``(5) Prohibition of anticompetitive behavior.--No drug 
        manufacturer may engage in anticompetitive behavior with 
        another manufacturer that may interfere with the issuance and 
        implementation of a competitive license or run contrary to 
        public policy.
            ``(6) Required reporting.--The Secretary may require drug 
        manufacturers to disclose to the Secretary such information 
        that the Secretary determines necessary for purposes of 
        carrying out this subsection.
            ``(7) Clarification.--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 by the Secretary.''.
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