Title: Prescription Drug Pricing Reduction Act of 2019
Policy area: Health

Summary:
Prescription Drug Pricing Reduction Act of 2019
This bill alters several programs and requirements relating to the prices of prescription drugs under Medicare and Medicaid.
Among other things, the bill

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 2543 Reported in Senate (RS)]

<DOC>





                                                       Calendar No. 225
116th CONGRESS
  1st Session
                                S. 2543

                          [Report No. 116-120]

To amend titles XI, XVIII, and XIX of the Social Security Act to lower 
  prescription drug prices in the Medicare and Medicaid programs, to 
improve transparency related to pharmaceutical prices and transactions, 
to lower patients' out-of-pocket costs, and to ensure accountability to 
                   taxpayers, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           September 25, 2019

  Mr. Grassley, from the Committee on Finance, reported the following 
     original bill; which was read twice and placed on the calendar

_______________________________________________________________________

                                 A BILL


 
To amend titles XI, XVIII, and XIX of the Social Security Act to lower 
  prescription drug prices in the Medicare and Medicaid programs, to 
improve transparency related to pharmaceutical prices and transactions, 
to lower patients' out-of-pocket costs, and to ensure accountability to 
                   taxpayers, and for other purposes.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Prescription Drug 
Pricing Reduction Act of 2019''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

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

                           Subtitle A--Part B

Sec. 101. Improving manufacturers' reporting of average sales prices to 
                            set accurate payment rates.
Sec. 102. Inclusion of value of coupons in determination of average 
                            sales price for drugs and biologicals under 
                            Medicare part B.
Sec. 103. Payment for biosimilar biological products during initial 
                            period.
Sec. 104. Temporary increase in Medicare part B payment for biosimilar 
                            biological products.
Sec. 105. Improvements to Medicare site-of-service transparency.
Sec. 106. Medicare part B rebate by manufacturers for drugs or 
                            biologicals with prices increasing faster 
                            than inflation.
Sec. 107. Requiring manufacturers of certain single-dose container or 
                            single-use package drugs payable under part 
                            B of the Medicare program to provide 
                            refunds with respect to discarded amounts 
                            of such drugs.
Sec. 108. Clarification of Medicare average sales price payment 
                            methodology.
Sec. 109. Establishment of maximum add-on payment for drugs and 
                            biologicals.
Sec. 110. Treatment of drug administration services furnished by 
                            certain excepted off-campus outpatient 
                            departments of a provider.
Sec. 111. GAO study and report on average sales price.
Sec. 112. Authority to use alternative payment for drugs and 
                            biologicals to prevent potential drug 
                            shortages.
                           Subtitle B--Part D

Sec. 121. Medicare part D modernization redesign.
Sec. 122. Providing the Medicare Payment Advisory Commission and 
                            Medicaid and CHIP Payment and Access 
                            Commission with access to certain drug 
                            payment information, including certain 
                            rebate information.
Sec. 123. Public disclosure of drug discounts and other pharmacy 
                            benefit manager (PBM) provisions.
Sec. 124. Public disclosure of direct and indirect remuneration review 
                            and audit results.
Sec. 125. Increasing the use of real-time benefit tools to lower 
                            beneficiary costs.
Sec. 126. Improvements to provision of parts A and B claims data to 
                            prescription drug plans.
Sec. 127. Permanently authorize a successful pilot on retroactive 
                            Medicare part D coverage for low-income 
                            beneficiaries.
Sec. 128. Medicare part D rebate by manufacturers for certain drugs 
                            with prices increasing faster than 
                            inflation.
Sec. 129. Prohibiting branding on part D benefit cards.
Sec. 130. Requiring prescription drug plans and MA-PD plans to report 
                            potential fraud, waste, and abuse to the 
                            Secretary of HHS.
Sec. 131. Establishment of pharmacy quality measures under Medicare 
                            part D.
Sec. 132. Addition of new measures based on access to biosimilar 
                            biological products to the 5-star rating 
                            system under Medicare Advantage.
Sec. 133. HHS study and report on the influence of pharmaceutical 
                            manufacturer third-party reimbursement hubs 
                            on health care providers who prescribe 
                            their drugs and biologicals.
                       Subtitle C--Miscellaneous

Sec. 141. Drug manufacturer price transparency.
Sec. 142. Strengthening and expanding pharmacy benefit managers 
                            transparency requirements.
Sec. 143. Prescription drug pricing dashboards.
Sec. 144. Improving coordination between the Food and Drug 
                            Administration and the Centers for Medicare 
                            & Medicaid Services.
Sec. 145. Patient consultation in Medicare national and local coverage 
                            determinations in order to mitigate 
                            barriers to inclusion of such perspectives.
Sec. 146. GAO study on increases to Medicare and Medicaid spending due 
                            to copayment coupons and other patient 
                            assistance programs.
Sec. 147. MedPAC report on shifting coverage of certain Medicare part B 
                            drugs to Medicare part D.
Sec. 148. Taking steps to fulfill treaty obligations to tribal 
                            communities.
                           TITLE II--MEDICAID

Sec. 201. Medicaid pharmacy and therapeutics committee improvements.
Sec. 202. Improving reporting requirements and developing standards for 
                            the use of drug use review boards in State 
                            Medicaid programs.
Sec. 203. GAO report on conflicts of interest in State Medicaid program 
                            drug use review boards and pharmacy and 
                            therapeutics (P&T) committees.
Sec. 204. Ensuring the accuracy of manufacturer price and drug product 
                            information under the Medicaid drug rebate 
                            program.
Sec. 205. Excluding authorized generic drugs from calculation of 
                            average manufacturer price under the 
                            Medicaid drug rebate program.
Sec. 206. Improving transparency and preventing the use of abusive 
                            spread pricing and related practices in 
                            Medicaid.
Sec. 207. T-MSIS drug data analytics reports.
Sec. 208. Risk-sharing value-based payment agreements for covered 
                            outpatient drugs under Medicaid.
Sec. 209. Modification of maximum rebate amount under Medicaid drug 
                            rebate program.
Sec. 210. Applying Medicaid drug rebate requirement to drugs provided 
                            as part of outpatient hospital services.

                           TITLE I--MEDICARE

                           Subtitle A--Part B

SEC. 101. IMPROVING MANUFACTURERS' REPORTING OF AVERAGE SALES PRICES TO 
              SET ACCURATE PAYMENT RATES.

    (a) In General.--Section 1847A(f) of the Social Security Act (42 
U.S.C. 1395w-3a(f)) is amended--
            (1) by striking ``Price.--For requirements'' and inserting 
        ``Price.--
            ``(1) In general.--For requirements''; and
            (2) by adding at the end the following new paragraph:
            ``(2) Manufacturers that do not have a rebate agreement.--
                    ``(A) In general.--For calendar quarters beginning 
                with the first calendar quarter after the date of the 
                enactment of this paragraph, the following provisions 
                shall apply with respect to a manufacturer of an 
                applicable drug or biological (as defined in 
                subparagraph (B)) that has not entered into and does 
                not have in effect a rebate agreement described in 
                subsection (b) of section 1927 in the same manner and 
                to the same extent as such provisions apply with 
                respect to a manufacturer that has entered into and has 
                in effect such a rebate agreement:
                            ``(i) Section 1927(b)(3)(A)(iii).
                            ``(ii) Subparagraphs (B) and (C) (other 
                        than the rebate agreement suspension described 
                        in such subparagraph (C)) of section 
                        1927(b)(3).
                    ``(B) Applicable drug or biological defined.--For 
                purposes of subparagraph (A), the term `applicable drug 
                or biological' means a drug or biological described in 
                subparagraph (C), (E), or (G) of section 1842(o)(1) or 
                in section 1881(b)(14)(B) that is payable under this 
                part. For purposes of applying this paragraph, a drug 
                or biological described in the previous sentence 
                includes an item, service, supply, or product that is 
                payable under this part as a drug or biological.''.
    (b) Conforming Amendments.--
            (1) Title xviii.--Section 1847A(b) of the Social Security 
        Act (42 U.S.C. 1395w-3a(b)) is amended--
                    (A) in paragraph (2)(A), by inserting ``or 
                subsection (f)(2), as applicable'' after ``under 
                section 1927(b)(3)(A)(iii)''; and
                    (B) in each of paragraphs (3) and (6)(A), in the 
                matter preceding subparagraph (A) and clause (i), 
                respectively, by inserting ``or subsection (f)(2), as 
                applicable,'' after ``under section 
                1927(b)(3)(A)(iii)''.
            (2) Title xix.--Section 1927(b)(3) of the Social Security 
        Act (42 U.S.C. 1396r-8(b)(3)) is amended--
                    (A) in subparagraph (A), in the flush matter 
                following clause (iv), by inserting ``or section 
                1847A(f)(2)'' after ``Information reported under this 
                subparagraph''; and
                    (B) in subparagraph (D), in the matter preceding 
                clause (i), by striking ``or wholesalers under this 
                paragraph or under'' and inserting ``or wholesalers 
                under this paragraph, under section 1847A(f)(2), or 
                under''.
            (3) Technical correction.--Section 1927(b)(3)(A)(iii) of 
        such Act (42 U.S.C. 1396r-8(b)(3)(A)(iii)) is amended by 
        striking ``section 1881(b)(13)(A)(ii)'' and inserting ``section 
        1881(b)(14)(B)''.

SEC. 102. INCLUSION OF VALUE OF COUPONS IN DETERMINATION OF AVERAGE 
              SALES PRICE FOR DRUGS AND BIOLOGICALS UNDER MEDICARE PART 
              B.

    Section 1847A(c) of the Social Security Act (42 U.S.C. 1395w-3a(c)) 
is amended--
            (1) in paragraph (3)--
                    (A) by striking ``discounts.--In calculating'' and 
                inserting ``discounts to purchasers and coupons 
                provided to privately insured individuals.--
                    ``(A) Discounts to purchasers.--In calculating''; 
                and
                    (B) by adding at the end the following new 
                subparagraph:
                    ``(B) Coupons provided to reduce cost-sharing.--For 
                calendar quarters beginning on or after July 1, 2021, 
                in calculating the manufacturer's average sales price 
                under this subsection, such price shall include the 
                value (as defined in paragraph (6)(J)) of any coupons 
                provided under a drug coupon program of a manufacturer 
                (as those terms are defined in subparagraphs (K) and 
                (L), respectively, of paragraph (6)).''; and
            (2) in paragraph (6), by adding at the end the following 
        new subparagraphs:
                    ``(J) Value.--The term `value' means, with respect 
                to a coupon (as defined in subparagraph (K)), the 
                difference, if any, between--
                            ``(i) the amount of any reduction or 
                        elimination of cost-sharing or other out-of-
                        pocket costs described in such subparagraph to 
                        a patient as a result of the use of such 
                        coupon; and
                            ``(ii) any charge to the patient for the 
                        use of such coupon.
                    ``(K) Coupon.--The term `coupon' means any 
                financial support that is provided to a patient, either 
                directly to the patient or indirectly to the patient 
                through a physician, prescriber, pharmacy, or other 
                provider, under a drug coupon program of a manufacturer 
                (as defined in subparagraph (L)) that is used to reduce 
                or eliminate cost-sharing or other out-of-pocket costs 
                of the patient, including costs related to a 
                deductible, coinsurance, or copayment, with respect to 
                a drug or biological, including a biosimilar biological 
                product, of the manufacturer.
                    ``(L) Drug coupon program.--
                            ``(i) In general.--Subject to clause (ii), 
                        the term `drug coupon program' means, with 
                        respect to a manufacturer, a program through 
                        which the manufacturer provides coupons to 
                        patients as described in subparagraph (K).
                            ``(ii) Exclusions.--Such term does not 
                        include--
                                    ``(I) a patient assistance program 
                                operated by a manufacturer that 
                                provides free or discounted drugs or 
                                biologicals, including biosimilar 
                                biological products, (through in-kind 
                                donations) to patients of low income; 
                                or
                                    ``(II) a contribution by a 
                                manufacturer to a nonprofit or 
                                Foundation that provides free or 
                                discounted drugs or biologicals, 
                                including biosimilar biological 
                                products, (through in-kind donations) 
                                to patients of low income.''.

SEC. 103. PAYMENT FOR BIOSIMILAR BIOLOGICAL PRODUCTS DURING INITIAL 
              PERIOD.

    Section 1847A(c)(4) of the Social Security Act (42 U.S.C. 1395w-
3a(c)(4)) is amended--
            (1) in each of subparagraphs (A) and (B), by redesignating 
        clauses (i) and (ii) as subclauses (I) and (II), respectively, 
        and moving such subclauses 2 ems to the right;
            (2) by redesignating subparagraphs (A) and (B) as clauses 
        (i) and (ii) and moving such clauses 2 ems to the right;
            (3) by striking ``unavailable.--In the case'' and inserting 
        ``unavailable.--
                    ``(A) In general.--Subject to subparagraph (B), in 
                the case''; and
            (4) by adding at the end the following new subparagraph:
                    ``(B) Limitation on payment amount for biosimilar 
                biological products during initial period.--In the case 
                of a biosimilar biological product furnished on or 
                after July 1, 2020, in lieu of applying subparagraph 
                (A) during the initial period described in such 
                subparagraph with respect to the biosimilar biological 
                product, the amount payable under this section for the 
                biosimilar biological product is the lesser of the 
                following:
                            ``(i) The amount determined under clause 
                        (ii) of such subparagraph for the biosimilar 
                        biological product.
                            ``(ii) The amount determined under 
                        subsection (b)(1)(B) for the reference 
                        biological product.''.

SEC. 104. TEMPORARY INCREASE IN MEDICARE PART B PAYMENT FOR BIOSIMILAR 
              BIOLOGICAL PRODUCTS.

    Section 1847A(b)(8) of the Social Security Act (42 U.S.C. 1395w-
3a(b)(8)) is amended--
            (1) by redesignating subparagraphs (A) and (B) as clauses 
        (i) and (ii), respectively, and indenting appropriately;
            (2) by striking ``product.--The amount'' and inserting the 
        following: ``product.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                amount''; and
            (3) by adding at the end the following new subparagraph:
                    ``(B) Temporary payment increase for biosimilar 
                biological products.--
                            ``(i) In general.--Beginning January 1, 
                        2020, in the case of a biosimilar biological 
                        product described in paragraph (1)(C) that is 
                        furnished during the applicable 5-year period 
                        for such product, the amount specified in this 
                        paragraph for such product is an amount equal 
                        to the lesser of the following:
                                    ``(I) The amount specified in 
                                subparagraph (A) for such product if 
                                clause (ii) of such subparagraph was 
                                applied by substituting `8 percent' for 
                                `6 percent'.
                                    ``(II) The amount determined under 
                                subsection (b)(1)(B) for the reference 
                                biological product.
                            ``(ii) Applicable 5-year period.--For 
                        purposes of clause (i), the applicable 5-year 
                        period for a biosimilar biological product is--
                                    ``(I) in the case of such a product 
                                for which payment was made under this 
                                paragraph as of December 31, 2019, the 
                                5-year period beginning on January 1, 
                                2020; and
                                    ``(II) in the case of such a 
                                product that is not described in 
                                subclause (I), the 5-year period 
                                beginning on the first day of the first 
                                calendar quarter in which payment was 
                                made for such product under this 
                                paragraph.''.

SEC. 105. IMPROVEMENTS TO MEDICARE SITE-OF-SERVICE TRANSPARENCY.

    Section 1834(t) of the Social Security Act (42 U.S.C. 1395m(t)) is 
amended--
            (1) in paragraph (1)--
                    (A) in the heading, by striking ``In general'' and 
                inserting ``Site payment'';
                    (B) in the matter preceding subparagraph (A)--
                            (i) by striking ``or to'' and inserting ``, 
                        to'';
                            (ii) by inserting ``, or to a physician for 
                        services furnished in a physician's office'' 
                        after ``surgical center''; and
                            (iii) by inserting ``(or 2021 with respect 
                        to a physician for services furnished in a 
                        physician's office)'' after ``2018''; and
                    (C) in subparagraph (A)--
                            (i) by striking ``and the'' and inserting 
                        ``, the''; and
                            (ii) by inserting ``, and the physician fee 
                        schedule under section 1848 (with respect to 
                        the practice expense component of such payment 
                        amount)'' after ``such section'';
            (2) by redesignating paragraphs (2) through (4) and 
        paragraphs (3) through (5), respectively; and
            (3) by inserting after paragraph (1) the following new 
        paragraph:
            ``(2) Physician payment.--Beginning in 2021, the Secretary 
        may expand the information included on the Internet website 
        described in paragraph (1) to include--
                    ``(A) the amount paid to a physician under section 
                1848 for an item or service for the settings described 
                in paragraph (1); and
                    ``(B) the estimated amount of beneficiary liability 
                applicable to the item or service.''.

SEC. 106. MEDICARE PART B REBATE BY MANUFACTURERS FOR DRUGS OR 
              BIOLOGICALS WITH PRICES INCREASING FASTER THAN INFLATION.

    (a) In General.--Section 1847A of the Social Security Act (42 
U.S.C. 1395w-3a) is amended by adding at the end the following new 
subsection:
    ``(h) Rebate by Manufacturers for Drugs or Biologicals With Prices 
Increasing Faster Than Inflation.--
            ``(1) Requirements.--
                    ``(A) Secretarial provision of information.--Not 
                later than 6 months after the end of each rebate period 
                (as defined in paragraph (2)(A)) beginning on or after 
                January 1, 2021, the Secretary shall, for each 
                rebatable drug (as defined in paragraph (2)(B)), report 
                to each manufacturer of such rebatable drug the 
                following for such rebate period:
                            ``(i) Information on the total number of 
                        units of the billing and payment code described 
                        in subparagraph (A)(i) of paragraph (3) with 
                        respect to such rebatable drug and rebate 
                        period.
                            ``(ii) Information on the amount (if any) 
                        of the excess average sales price increase 
                        described in subparagraph (A)(ii) of such 
                        paragraph for such rebatable drug and rebate 
                        period.
                            ``(iii) The rebate amount specified under 
                        such paragraph for such rebatable drug and 
                        rebate period.
                    ``(B) Manufacturer rebate.--
                            ``(i) In general.--Subject to clause (ii), 
                        for each rebate period beginning on or after 
                        January 1, 2021, the manufacturer of a 
                        rebatable drug shall, for such drug, not later 
                        than 30 days after the date of receipt from the 
                        Secretary of the information and rebate amount 
                        pursuant to subparagraph (A) for such rebate 
                        period, provide to the Secretary a rebate that 
                        is equal to the amount specified in paragraph 
                        (3) for such drug for such rebate period.
                            ``(ii) Exemption for shortages.--The 
                        Secretary may reduce or waive the rebate under 
                        this subparagraph with respect to a rebatable 
                        drug that is listed on the drug shortage list 
                        maintained by the Food and Drug Administration 
                        pursuant to section 506E of the Federal Food, 
                        Drug, and Cosmetic Act .
                    ``(C) Request for reconsideration.--The Secretary 
                shall establish procedures under which a manufacturer 
                of a rebatable drug may request a reconsideration by 
                the Secretary of the rebate amount specified under 
                paragraph (3) for such rebatable drug and rebate 
                period, as reported to the manufacturer pursuant to 
                subparagraph (A)(iii).
            ``(2) Rebate period and rebatable drug defined.--In this 
        subsection:
                    ``(A) Rebate period.--The term `rebate period' 
                means a calendar quarter beginning on or after January 
                1, 2021.
                    ``(B) Rebatable drug.--The term `rebatable drug' 
                means a single source drug or biological (other than a 
                biosimilar biological product)--
                            ``(i) described in section 1842(o)(1)(C) 
                        for which the payment amount is provided under 
                        this section; or
                            ``(ii) for which payment is made separately 
                        under section 1833(i) or section 1833(t) and 
                        for which the payment amount is calculated 
                        based on the payment amount under this section.
            ``(3) Rebate amount.--
                    ``(A) In general.--For purposes of paragraph 
                (1)(B), the amount specified in this paragraph for a 
                rebatable drug assigned to a billing and payment code 
                for a rebate period is, subject to paragraph (4), the 
                amount equal to the product of--
                            ``(i) subject to subparagraph (B), the 
                        total number of units of the billing and 
                        payment code for such rebatable drug furnished 
                        during the rebate period; and
                            ``(ii) the amount (if any) by which--
                                    ``(I) the amount determined under 
                                subsection (b)(4) for such rebatable 
                                drug during the rebate period; exceeds
                                    ``(II) the inflation-adjusted base 
                                payment amount determined under 
                                subparagraph (C) of this paragraph for 
                                such rebatable drug during the rebate 
                                period.
                    ``(B) Excluded units.--For purposes of subparagraph 
                (A)(i), the total number of units of the billing and 
                payment code for rebatable drugs furnished during a 
                rebate period shall not include units with respect to 
                which the manufacturer provides a discount under the 
                program under section 340B of the Public Health Service 
                Act or a rebate under section 1927.
                    ``(C) Determination of inflation-adjusted payment 
                amount.--The inflation-adjusted payment amount 
                determined under this subparagraph for a rebatable drug 
                for a rebate period is--
                            ``(i) the amount determined under 
                        subsection (b)(4) for such rebatable drug in 
                        the payment amount benchmark quarter (as 
                        defined in subparagraph (D)); increased by
                            ``(ii) the percentage by which the rebate 
                        period CPI-U (as defined in subparagraph (F)) 
                        for the rebate period exceeds the benchmark 
                        period CPI-U (as defined in subparagraph (E)).
                    ``(D) Payment amount benchmark quarter.--The term 
                `payment amount benchmark quarter' means the calendar 
                quarter beginning July 1, 2019.
                    ``(E) Benchmark period cpi-u.--The term `benchmark 
                period CPI-U' means the consumer price index for all 
                urban consumers (United States city average) for July 
                2019.
                    ``(F) Rebate period cpi-u.--The term `rebate period 
                CPI-U' means, with respect to a rebate period, the 
                consumer price index for all urban consumers (United 
                States city average) for the last month of the calendar 
                quarter that is two calendar quarters prior to the 
                rebate period.
            ``(4) Application to new drugs.--In the case of a rebatable 
        drug first approved or licensed by the Food and Drug 
        Administration after July 1, 2019, the following shall apply:
                    ``(A) During initial period.--For quarters during 
                the initial period in which the payment amount for such 
                drug is determined using the methodology described in 
                subsection (c)(4)--
                            ``(i) clause (ii)(I) of paragraph (3)(A) 
                        shall be applied as if the reference to `the 
                        amount determined under subsection (b)(4),' 
                        were a reference to `the wholesale acquisition 
                        cost applicable under subsection (c)(4)';
                            ``(ii) clause (i) of paragraph (3)(C) shall 
                        be applied--
                                    ``(I) as if the reference to `the 
                                amount determined under subsection 
                                (b)(4),' were a reference to `the 
                                wholesale acquisition cost applicable 
                                under subsection (c)(4)'; and
                                    ``(II) as if the term `payment 
                                amount benchmark quarter' were defined 
                                under paragraph (3)(D) as the first 
                                full calendar quarter after the day on 
                                which the drug was first marketed; and
                            ``(iii) clause (ii) of paragraph (3)(C) 
                        shall be applied as if the term `benchmark 
                        period CPI-U' were defined under paragraph 
                        (4)(E) as if the reference to `July 2019' under 
                        such paragraph were a reference to `the first 
                        month of the first full calendar quarter after 
                        the day on which the drug was first marketed'.
                    ``(B) After initial period.--For quarters beginning 
                after such initial period--
                            ``(i) clause (i) of paragraph (3)(C) shall 
                        be applied as if the term `payment amount 
                        benchmark quarter' were defined under paragraph 
                        (3)(D) as the first full calendar quarter for 
                        which the Secretary is able to compute an 
                        average sales price for the rebatable drug; and
                            ``(ii) clause (ii) of paragraph (3)(C) 
                        shall be applied as if the term `benchmark 
                        period CPI-U' were defined under paragraph 
                        (4)(E) as if the reference to `July 2019' under 
                        such paragraph were a reference to `the first 
                        month of the first full calendar quarter for 
                        which the Secretary is able to compute an 
                        average sales price for the rebatable drug'.
            ``(5) Rebate deposits.--Amounts paid as rebates under 
        paragraph (1)(B) shall be deposited into the Federal 
        Supplementary Medical Insurance Trust Fund established under 
        section 1841.
            ``(6) Enforcement.--
                    ``(A) Civil money penalty.--
                            ``(i) In general.--The Secretary shall 
                        impose a civil money penalty on a manufacturer 
                        that fails to comply with the requirements 
                        under paragraph (1)(B) with respect to 
                        providing a rebate for a rebatable drug for a 
                        rebate period for each such failure in an 
                        amount equal to the sum of--
                                    ``(I) the rebate amount specified 
                                pursuant to paragraph (3) for such drug 
                                for such rebate period; and
                                    ``(II) 25 percent of such amount.
                            ``(ii) Application.--The provisions of 
                        section 1128A (other than subsections (a) (with 
                        respect to amounts of penalties or additional 
                        assessments) and (b)) shall apply to a civil 
                        money penalty under this subparagraph in the 
                        same manner as such provisions apply to a 
                        penalty or proceeding under section 1128A(a).
                    ``(B) No payment for manufacturers who fail to pay 
                penalty.--If the manufacturer of a rebatable drug fails 
                to pay a civil money penalty under subparagraph (A) 
                with respect to the failure to provide a rebate for a 
                rebatable drug for a rebate period by a date specified 
                by the Secretary after the imposition of such penalty, 
                no payment shall be available under this part for such 
                rebatable drug for calendar quarters beginning on or 
                after such date until the Secretary determines the 
                manufacturer has paid the penalty due under such 
                subparagraph.''.
    (b) Implementation.--Section 1847A(g) of the Social Security Act 
(42 U.S.C. 1395w-3(g)) is amended--
            (1) in paragraph (4), by striking ``and'' at the end;
            (2) in paragraph (5), by striking the period at the end and 
        inserting ``; and''; and
            (3) by adding at the end the following new paragraph:
            ``(6) determination of the rebate amount for a rebatable 
        drug under paragraph (3) of subsection (h), including with 
        respect to a new drug pursuant to paragraph (4) of such 
        subsection, including--
                    ``(A) a decision by the Secretary with respect to a 
                request for reconsideration under paragraph (1)(C); and
                    ``(B) the determination of--
                            ``(i) the total number of units of the 
                        billing and payment code under paragraph 
                        (3)(A)(i); and
                            ``(ii) the inflation-adjusted payment 
                        amount under paragraph (3)(C).''.
    (c) Conforming Amendment to Part B ASP Calculation.--Section 
1847A(c)(3) of the Social Security Act (42 U.S.C. 1395w-3a(c)(3)) is 
amended by inserting ``or subsection (h)'' after ``section 1927''.

SEC. 107. REQUIRING MANUFACTURERS OF CERTAIN SINGLE-DOSE CONTAINER OR 
              SINGLE-USE PACKAGE DRUGS PAYABLE UNDER PART B OF THE 
              MEDICARE PROGRAM TO PROVIDE REFUNDS WITH RESPECT TO 
              DISCARDED AMOUNTS OF SUCH DRUGS.

    Section 1847A of the Social Security Act (42 U.S.C. 1395-3a), as 
amended by section 106, is amended by adding at the end the following 
new subsection:
    ``(i) Refund for Certain Discarded Single-dose Container or Single-
use Package Drugs.--
            ``(1) Secretarial provision of information.--
                    ``(A) In general.--For each calendar quarter 
                beginning on or after July 1, 2021, the Secretary 
                shall, with respect to a refundable single-dose 
                container or single-use package drug (as defined in 
                paragraph (8)), report to each manufacturer (as defined 
                in subsection (c)(6)(A)) of such refundable single-dose 
                container or single-use package drug the following for 
                the calendar quarter:
                            ``(i) Subject to subparagraph (C), 
                        information on the total number of units of the 
                        billing and payment code of such drug, if any, 
                        that were discarded during such quarter, as 
                        determined using a mechanism such as the JW 
                        modifier used as of the date of enactment of 
                        this subsection (or any such successor modifier 
                        that includes such data as determined 
                        appropriate by the Secretary).
                            ``(ii) The refund amount that the 
                        manufacturer is liable for pursuant to 
                        paragraph (3).
                    ``(B) Determination of discarded amounts.--For 
                purposes of subparagraph (A)(i), with respect to a 
                refundable single-dose container or single-use package 
                drug furnished during a quarter, the amount of such 
                drug that was discarded shall be determined based on 
                the amount of such drug that was unused and discarded 
                for each drug on the date of service.
                    ``(C) Exclusion of units of packaged drugs.--The 
                total number of units of the billing and payment code 
                of a refundable single-dose container or single-use 
                package drug of a manufacturer furnished during a 
                calendar quarter for purposes of subparagraph (A)(i), 
                and the determination of the estimated total allowed 
                charges for the drug in the quarter for purposes of 
                paragraph (3)(A)(ii), shall not include such units that 
                are packaged into the payment amount for an item or 
                service and are not separately payable.
            ``(2) Manufacturer requirement.--For each calendar quarter 
        beginning on or after July 1, 2021, the manufacturer of a 
        refundable single-dose container or single-use package drug 
        shall, for such drug, provide to the Secretary a refund that is 
        equal to the amount specified in paragraph (3) for such drug 
        for such quarter.
            ``(3) Refund amount.--
                    ``(A) In general.--The amount of the refund 
                specified in this paragraph is, with respect to a 
                refundable single-dose container or single-use package 
                drug of a manufacturer assigned to a billing and 
                payment code for a calendar quarter beginning on or 
                after July 1, 2021, an amount equal to the estimated 
                amount (if any) by which--
                            ``(i) the product of--
                                    ``(I) the total number of units of 
                                the billing and payment code for such 
                                drug that were discarded during such 
                                quarter (as determined under paragraph 
                                (1)); and
                                    ``(II)(aa) in the case of a 
                                refundable single-dose container or 
                                single-use package drug that is a 
                                single source drug or biological, the 
                                amount determined for such drug under 
                                subsection (b)(4); or
                                    ``(bb) in the case of a refundable 
                                single-dose container or single-use 
                                package drug that is a biosimilar 
                                biological product, the average sales 
                                price determined under subsection 
                                (b)(8)(A); exceeds
                            ``(ii) an amount equal to the applicable 
                        percentage (as defined in subparagraph (B)) of 
                        the estimated total allowed charges for such 
                        drug during the quarter.
                    ``(B) Applicable percentage defined.--
                            ``(i) In general.--For purposes of 
                        subparagraph (A)(ii), the term `applicable 
                        percentage' means--
                                    ``(I) subject to subclause (II), 10 
                                percent; and
                                    ``(II) in the case of a refundable 
                                single-dose container or single-use 
                                package drug described in subclause (I) 
                                of clause (iii) and, if applicable, a 
                                refundable single-dose container or 
                                single-use package drug described in 
                                subclause (II) of such clause, a 
                                percentage specified by the Secretary 
                                pursuant to clause (ii).
                            ``(ii) Treatment of drugs that require 
                        filtration or other unique circumstances.--The 
                        Secretary, through notice and comment 
                        rulemaking--
                                    ``(I) in the case of a refundable 
                                single-dose container or single-use 
                                package drug described in subclause (I) 
                                of clause (iii), shall increase the 
                                applicable percentage otherwise 
                                applicable under clause (i)(I) as 
                                determined appropriate by the 
                                Secretary; and
                                    ``(II) in the case of a refundable 
                                single-dose container or single-use 
                                package drug described in subclause 
                                (II) of clause (iii), may increase the 
                                applicable percentage otherwise 
                                applicable under clause (i)(I) as 
                                determined appropriate by the 
                                Secretary.
                            ``(iii) Drug described.--For purposes of 
                        clause (ii), a refundable single-dose container 
                        or single-use package drug described in this 
                        clause is either of the following:
                                    ``(I) A refundable single-dose 
                                container or single-use package drug 
                                for which preparation instructions 
                                required and approved by the 
                                Commissioner of the Food and Drug 
                                Administration include filtration 
                                during the drug preparation process, 
                                prior to dilution and administration, 
                                and require that any unused portion of 
                                such drug after the filtration process 
                                be discarded after the completion of 
                                such filtration process.
                                    ``(II) Any other refundable single-
                                dose container or single-use package 
                                drug that has unique circumstances 
                                involving similar loss of product.
            ``(4) Frequency.--Amounts required to be refunded pursuant 
        to paragraph (2) shall be paid in regular intervals (as 
        determined appropriate by the Secretary).
            ``(5) Refund deposits.--Amounts paid as refunds pursuant to 
        paragraph (2) shall be deposited into the Federal Supplementary 
        Medical Insurance Trust Fund established under section 1841.
            ``(6) Enforcement.--
                    ``(A) Audits.--
                            ``(i) Manufacturer audits.--Each 
                        manufacturer of a refundable single-dose 
                        container or single-use package drug that is 
                        required to provide a refund under this 
                        subsection shall be subject to periodic audit 
                        with respect to such drug and such refunds by 
                        the Secretary.
                            ``(ii) Provider audits.--The Secretary 
                        shall conduct periodic audits of claims 
                        submitted under this part with respect to 
                        refundable single-dose container or single-use 
                        package drugs in accordance with the authority 
                        under section 1833(e) to ensure compliance with 
                        the requirements applicable under this 
                        subsection.
                    ``(B) Civil money penalty.--
                            ``(i) In general.--The Secretary shall 
                        impose a civil money penalty on a manufacturer 
                        of a refundable single-dose container or 
                        single-use package drug who has failed to 
                        comply with the requirement under paragraph (2) 
                        for such drug for a calendar quarter in an 
                        amount equal to the sum of--
                                    ``(I) the amount that the 
                                manufacturer would have paid under such 
                                paragraph with respect to such drug for 
                                such quarter; and
                                    ``(II) 25 percent of such amount.
                            ``(ii) Application.--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).
            ``(7) Implementation.--The Secretary shall implement this 
        subsection through notice and comment rulemaking.
            ``(8) Definition of refundable single-dose container or 
        single-use package drug.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), in this subsection, the term 
                `refundable single-dose container or single-use package 
                drug' means a single source drug or biological (as 
                defined in section 1847A(c)(6)(D)) or a biosimilar 
                biological product (as defined in section 
                1847A(c)(6)(H)) for which payment is established under 
                this part and that is furnished from a single-dose 
                container or single-use package.
                    ``(B) Exclusions.--The term `refundable single-dose 
                container or single-use package drug' does not include 
                a drug or biological that is either a 
                radiopharmaceutical or an imaging agent.''.

SEC. 108. CLARIFICATION OF MEDICARE AVERAGE SALES PRICE PAYMENT 
              METHODOLOGY.

    (a) In General.--Section 1847A(c) of the Social Security Act (42 
U.S.C. 1395w-3a(c)), as amended by section 102, is amended--
            (1) in paragraph (3)(A), in the first sentence--
                    (A) by striking ``and rebates'' and inserting 
                ``rebates''; and
                    (B) by inserting ``, and fees (other than bona fide 
                service fees)'' before the period at the end; and
            (2) in paragraph (6), by adding at the end the following 
        new subparagraph:
                    ``(M) Bona fide service fee.--The term `bona fide 
                service fee' means a fee paid by a manufacturer to an 
                entity that--
                            ``(i) represents fair market value for a 
                        bona fide, itemized service that--
                                    ``(I) is actually performed on 
                                behalf of the manufacturer; and
                                    ``(II) the manufacturer would 
                                otherwise perform (or contract for) in 
                                the absence of the service arrangement;
                            ``(ii) is not passed on, in whole or in 
                        part, to a client or customer of the entity, 
                        whether or not the entity takes title to the 
                        drug or biological;
                            ``(iii) is a fixed payment and not based on 
                        a percentage of sales; and
                            ``(iv) is not determined in a manner that 
                        takes into account the volume or value of any 
                        referrals or business otherwise generated 
                        between the parties.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to drugs and biologicals furnished on or after the first day of 
the first calendar quarter that begins on or after the date that is 180 
days after the date of the enactment of this Act.

SEC. 109. ESTABLISHMENT OF MAXIMUM ADD-ON PAYMENT FOR DRUGS AND 
              BIOLOGICALS.

    (a) In General.--Section 1847A of the Social Security Act (42 
U.S.C. 1395w-3a) is amended--
            (1) in subsection (b)--
                    (A) in paragraph (1), in the matter preceding 
                subparagraph (A), by striking ``paragraph (7)'' and 
                inserting ``paragraphs (7) and (9)''; and
                    (B) by adding at the end the following new 
                paragraph:
            ``(9) Maximum add-on payment amount.--
                    ``(A) In general.--In determining the payment 
                amount under the provisions of subparagraph (A), (B), 
                or (C) of paragraph (1) of this subsection, subsection 
                (c)(4)(A)(ii), or subsection (d)(3)(C) for a drug or 
                biological furnished on or after January 1, 2021, if 
                the applicable add-on payment (as defined in 
                subparagraph (B)) for each drug or biological on a 
                claim for a date of service exceeds the maximum add-on 
                payment amount specified under subparagraph (C) for the 
                drug or biological, then the payment amount otherwise 
                determined for the drug or biological under those 
                provisions, as applicable, shall be reduced by the 
                amount of such excess.
                    ``(B) Applicable add-on payment defined.--In this 
                paragraph, the term `applicable add-on payment' means 
                the following amounts, determined without regard to the 
                application of subparagraph (A):
                            ``(i) In the case of a multiple source 
                        drug, an amount equal to the difference 
                        between--
                                    ``(I) the amount that would 
                                otherwise be applied under paragraph 
                                (1)(A); and
                                    ``(II) the amount that would be 
                                applied under such paragraph if `100 
                                percent' were substituted for `106 
                                percent'.
                            ``(ii) In the case of a single source drug 
                        or biological, an amount equal to the 
                        difference between--
                                    ``(I) the amount that would 
                                otherwise be applied under paragraph 
                                (1)(B); and
                                    ``(II) the amount that would be 
                                applied under such paragraph if `100 
                                percent' were substituted for `106 
                                percent'.
                            ``(iii) In the case of a biosimilar 
                        biological product, the amount otherwise 
                        determined under paragraph (8)(B).
                            ``(iv) In the case of a drug or biological 
                        during the initial period described in 
                        subsection (c)(4)(A), an amount equal to the 
                        difference between--
                                    ``(I) the amount that would 
                                otherwise be applied under subsection 
                                (c)(4)(A)(ii); and
                                    ``(II) the amount that would be 
                                applied under such subsection if `100 
                                percent' were substituted, as 
                                applicable, for--
                                            ``(aa) `103 percent' in 
                                        subclause (I) of such 
                                        subsection; or
                                            ``(bb) any percent in 
                                        excess of 100 percent applied 
                                        under subclause (II) of such 
                                        subsection.
                            ``(v) In the case of a drug or biological 
                        to which subsection (d)(3)(C) applies, an 
                        amount equal to the difference between--
                                    ``(I) the amount that would 
                                otherwise be applied under such 
                                subsection; and
                                    ``(II) the amount that would be 
                                applied under such subsection if `100 
                                percent' were substituted, as 
                                applicable, for--
                                            ``(aa) any percent in 
                                        excess of 100 percent applied 
                                        under clause (i) of such 
                                        subsection; or
                                            ``(bb) `103 percent' in 
                                        clause (ii) of such subsection.
                    ``(C) Maximum add-on payment amount specified.--For 
                purposes of subparagraph (A), the maximum add-on 
                payment amount specified in this subparagraph is--
                            ``(i) for each of 2021 through 2028, 
                        $1,000; and
                            ``(ii) for a subsequent year, the amount 
                        specified in this subparagraph for the 
                        preceding year increased by the percentage 
                        increase in the consumer price index for all 
                        urban consumers (all items; United States city 
                        average) for the 12-month period ending with 
                        June of the previous year.
                Any amount determined under this subparagraph that is 
                not a multiple of $10 shall be rounded to the nearest 
                multiple of $10.''; and
            (2) in subsection (c)(4)(A)(ii), by striking ``in the 
        case'' and inserting ``subject to subsection (b)(9), in the 
        case''.
    (b) Conforming Amendments Relating to Separately Payable Drugs.--
            (1) OPPS.--Section 1833(t)(14) of the Social Security Act 
        (42 U.S.C. 1395l(t)(14)) is amended--
                    (A) in subparagraph (A)(iii)(II), by inserting ``, 
                subject to subparagraph (I)'' after ``are not 
                available''; and
                    (B) by adding at the end the following new 
                subparagraph:
                    ``(I) Application of maximum add-on payment for 
                separately payable drugs and biologicals.--In 
                establishing the amount of payment under subparagraph 
                (A) for a specified covered outpatient drug that is 
                furnished as part of a covered OPD service (or group of 
                services) on or after January 1, 2021, if such payment 
                is determined based on the average price for the year 
                established under section 1847A pursuant to clause 
                (iii)(II) of such subparagraph, the provisions of 
                subsection (b)(9) of section 1847A shall apply to the 
                amount of payment so established in the same manner as 
                such provisions apply to the amount of payment under 
                section 1847A.''.
            (2) ASC.--Section 1833(i)(2)(D) of the Social Security Act 
        (42 U.S.C. 1395l(i)(2)(D)) is amended--
                    (A) by moving clause (v) 6 ems to the left;
                    (B) by redesignating clause (vi) as clause (vii); 
                and
                    (C) by inserting after clause (v) the following new 
                clause:
    ``(vi) If there is a separate payment under the system described in 
clause (i) for a drug or biological furnished on or after January 1, 
2021, the provisions of subsection (t)(14)(I) shall apply to the 
establishment of the amount of payment for the drug or biological under 
such system in the same manner in which such provisions apply to the 
establishment of the amount of payment under subsection (t)(14)(A).''.

SEC. 110. TREATMENT OF DRUG ADMINISTRATION SERVICES FURNISHED BY 
              CERTAIN EXCEPTED OFF-CAMPUS OUTPATIENT DEPARTMENTS OF A 
              PROVIDER.

    Section 1833(t)(16) of the Social Security Act (42 U.S.C. 
1395l(t)(16)) is amended by adding at the end the following new 
subparagraph:
                    ``(G) Special payment rule for drug administration 
                services furnished by an excepted department of a 
                provider.--
                            ``(i) In general.--In the case of a covered 
                        OPD service that is a drug administration 
                        service (as defined by the Secretary) furnished 
                        by a department of a provider described in 
                        clause (ii) or (iv) of paragraph (21)(B), the 
                        payment amount for such service furnished on or 
                        after January 1, 2021, shall be the same 
                        payment amount (as determined in paragraph 
                        (21)(C)) that would apply if the drug 
                        administration service was furnished by an off-
                        campus outpatient department of a provider (as 
                        defined in paragraph (21)(B)).
                            ``(ii) Application without regard to budget 
                        neutrality.--The reductions made under this 
                        subparagraph--
                                    ``(I) shall not be considered an 
                                adjustment under paragraph (2)(E); and
                                    ``(II) shall not be implemented in 
                                a budget neutral manner.''.

SEC. 111. GAO STUDY AND REPORT ON AVERAGE SALES PRICE.

    (a) Study.--
            (1) In general.--The Comptroller General of the United 
        States (in this section referred to as the ``Comptroller 
        General'') shall conduct a study on spending for applicable 
        drugs under part B of title XVIII of the Social Security Act.
            (2) Applicable drugs defined.--In this section, the term 
        ``applicable drugs'' means drugs and biologicals--
                    (A) for which reimbursement under such part B is 
                based on the average sales price of the drug or 
                biological; and
                    (B) that account for the largest percentage of 
                total spending on drugs and biologicals under such part 
                B (as determined by the Comptroller General, but in no 
                case less that 25 drugs or biologicals).
            (3) Requirements.--The study under paragraph (1) shall 
        include an analysis of the following:
                    (A) The extent to which each applicable drug is 
                paid for--
                            (i) under such part B for Medicare 
                        beneficiaries; or
                            (ii) by private payers in the commercial 
                        market.
                    (B) Any change in Medicare spending or Medicare 
                beneficiary cost-sharing that would occur if the 
                average sales price of an applicable drug was based 
                solely on payments by private payers in the commercial 
                market.
                    (C) The extent to which drug manufacturers provide 
                rebates, discounts, or other price concessions to 
                private payers in the commercial market for applicable 
                drugs, which the manufacturer includes in its average 
                sales price calculation, for--
                            (i) formulary placement;
                            (ii) utilization management considerations; 
                        or
                            (iii) other purposes.
                    (D) Barriers to drug manufacturers providing such 
                price concessions for applicable drugs.
                    (E) Other areas determined appropriate by the 
                Comptroller General.
    (b) Report.--Not later than 2 years after the date of the enactment 
of this Act, the Comptroller General shall submit to Congress a report 
on the study conducted under subsection (a), together with 
recommendations for such legislation and administrative action as the 
Secretary determines appropriate.

SEC. 112. AUTHORITY TO USE ALTERNATIVE PAYMENT FOR DRUGS AND 
              BIOLOGICALS TO PREVENT POTENTIAL DRUG SHORTAGES.

    (a) In General.--Section 1847A(e) of the Social Security Act (42 
U.S.C. 1395w-3a(e)) is amended--
            (1) by striking ``Payment in Response to Public Health 
        Emergency.--In the case'' and inserting ``Payments.--
            ``(1) In response to public health emergency.--In the 
        case''; and
            (2) by adding at the end the following new paragraph:
            ``(2) Preventing potential drug shortages.--
                    ``(A) In general.--In the case of a drug or 
                biological that the Secretary determines is described 
                in subparagraph (B) for one or more quarters beginning 
                on or after January 1, 2021, the Secretary may use 
                wholesale acquisition cost (or other reasonable measure 
                of a drug or biological price) instead of the 
                manufacturer's average sales price for such quarters 
                and for subsequent quarters until the end of the 
                quarter in which such drug or biological is removed 
                from the drug shortage list under section 506E of the 
                Federal Food, Drug, and Cosmetic Act, or in the case of 
                a drug or biological described in subparagraph (B)(ii), 
                the date on which the Secretary determines that the 
                total manufacturing capacity or the total number of 
                manufacturers of such drug or biological is sufficient 
                to mitigate a potential shortage of the drug or 
                biological.
                    ``(B) Drug or biological described.--For purposes 
                of subparagraph (A), a drug or biological described in 
                this subparagraph is a drug or biological--
                            ``(i) that is listed on the drug shortage 
                        list maintained by the Food and Drug 
                        Administration pursuant to section 506E of the 
                        Federal Food, Drug, and Cosmetic Act, and with 
                        respect to which any manufacturer of such drug 
                        or biological notifies the Secretary of a 
                        permanent discontinuance or an interruption 
                        that is likely to lead to a meaningful 
                        disruption in the manufacturer's supply of that 
                        drug pursuant to section 506C(a) of such Act; 
                        or
                            ``(ii) that--
                                    ``(I) is described in section 
                                506C(a) of such Act;
                                    ``(II) was listed on the drug 
                                shortage list maintained by the Food 
                                and Drug Administration pursuant to 
                                section 506E of such Act within the 
                                preceding 5 years; and
                                    ``(III) for which the total 
                                manufacturing capacity of all 
                                manufacturers with an approved 
                                application for such drug or biological 
                                that is currently marketed or total 
                                number of manufacturers with an 
                                approved application for such drug or 
                                biological that is currently marketed 
                                declines during a 6-month period, as 
                                determined by the Secretary.
                    ``(C) Provision of additional information.--For 
                each quarter in which the amount of payment for a drug 
                or biological described in subparagraph (B) pursuant to 
                subparagraph (A) exceeds the amount of payment for the 
                drug or biological otherwise applicable under this 
                section, each manufacturer of such drug or biological 
                shall provide to the Secretary information related to 
                the potential cause or causes of the shortage and the 
                expected duration of the shortage with respect to such 
                drug.''.
    (b) Tracking Shortage Drugs Through Claims.--The Secretary of 
Health and Human Services (referred to in this section as the 
``Secretary'') shall establish a mechanism (such as a modifier) for 
purposes of tracking utilization under title XVIII of the Social 
Security Act (42 U.S.C. 1395 et seq.) of drugs and biologicals listed 
on the drug shortage list maintained by the Food and Drug 
Administration pursuant to section 506E of the Federal Food, Drug, and 
Cosmetic Act (21 U.S.C. 356e).
    (c) HHS Report and Recommendations.--
            (1) In general.--Not later than July 1, 2021, the Secretary 
        shall submit to Congress a report on shortages of drugs within 
        the Medicare program under title XVIII of the Social Security 
        Act (42 U.S.C. 1395 et seq.). The report shall include--
                    (A) an analysis of--
                            (i) the effect of drug shortages on 
                        Medicare beneficiary access, quality, safety, 
                        and out-of-pocket costs;
                            (ii) the effect of drug shortages on health 
                        providers, including hospitals and physicians, 
                        across the Medicare program;
                            (iii) the current role of the Centers for 
                        Medicare & Medicaid Services (CMS) in 
                        addressing drug shortages, including CMS's 
                        working relationship and communication with 
                        other Federal agencies and stakeholders;
                            (iv) the role of all actors in the drug 
                        supply chain (including drug manufacturers, 
                        distributors, wholesalers, secondary 
                        wholesalers, group purchasing organizations, 
                        hospitals, and physicians) on drug shortages 
                        within the Medicare program; and
                            (v) payment structures and incentives under 
                        parts A, B, C, and D of the Medicare program 
                        and their effect, if any, on drug shortages; 
                        and
                    (B) relevant findings and recommendations to 
                Congress.
            (2) Public availability.--The report under this subsection 
        shall be made available to the public.
            (3) Consultation.--The Secretary shall consult with the 
        drug shortage task force authorized under section 506D(a)(1)(A) 
        of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
        356d(a)(1)(A)) in preparing the report under this subsection, 
        as appropriate.

                           Subtitle B--Part D

SEC. 121. MEDICARE PART D MODERNIZATION REDESIGN.

    (a) Benefit Structure Redesign.--Section 1860D-2(b) of the Social 
Security Act (42 U.S.C. 1395w-102(b)) is amended--
            (1) in paragraph (2)--
                    (A) in subparagraph (A), in the matter preceding 
                clause (i), by inserting ``for a year preceding 2022 
                and for costs above the annual deductible specified in 
                paragraph (1) and up to the annual out-of-pocket 
                threshold specified in paragraph (4)(B) for 2022 and 
                each subsequent year'' after ``paragraph (3)'';
                    (B) in subparagraph (C)--
                            (i) in clause (i), in the matter preceding 
                        subclause (I), by inserting ``for a year 
                        preceding 2022,'' after ``paragraph (4),''; and
                            (ii) in clause (ii)(III), by striking ``and 
                        each subsequent year'' and inserting ``and 
                        2021''; and
                    (C) in subparagraph (D)--
                            (i) in clause (i)--
                                    (I) in the matter preceding 
                                subclause (I), by inserting ``for a 
                                year preceding 2022,'' after 
                                ``paragraph (4),''; and
                                    (II) in subclause (I)(bb), by 
                                striking ``a year after 2018'' and 
                                inserting ``each of years 2018 through 
                                2021''; and
                            (ii) in clause (ii)(V), by striking ``2019 
                        and each subsequent year'' and inserting ``each 
                        of years 2019 through 2021'';
            (2) in paragraph (3)(A)--
                    (A) in the matter preceding clause (i), by 
                inserting ``for a year preceding 2022,'' after ``and 
                (4),''; and
                    (B) in clause (ii), by striking ``for a subsequent 
                year'' and inserting ``for each of years 2007 through 
                2021'';
            (3) in paragraph (4)--
                    (A) in subparagraph (A)--
                            (i) in clause (i)--
                                    (I) by redesignating subclauses (I) 
                                and (II) as items (aa) and (bb), 
                                respectively, and indenting 
                                appropriately;
                                    (II) in the matter preceding item 
                                (aa), as redesignated by subclause (I), 
                                by striking ``is equal to the greater 
                                of--'' and inserting ``is equal to--
                                    ``(I) for a year preceding 2022, 
                                the greater of--'';
                                    (III) by striking the period at the 
                                end of item (bb), as redesignated by 
                                subclause (I), and inserting ``; and''; 
                                and
                                    (IV) by adding at the end the 
                                following:
                                    ``(II) for 2022 and each succeeding 
                                year, $0.''; and
                            (ii) in clause (ii)--
                                    (I) by striking ``clause (i)(I)'' 
                                and inserting ``clause (i)(I)(aa)''; 
                                and
                                    (II) by adding at the end the 
                                following new sentence: ``The Secretary 
                                shall continue to calculate the dollar 
                                amounts specified in clause (i)(I)(aa), 
                                including with the adjustment under 
                                this clause, after 2021 for purposes of 
                                section 1860D-14(a)(1)(D)(iii).'';
                    (B) in subparagraph (B)--
                            (i) in clause (i)--
                                    (I) in subclause (V), by striking 
                                ``or'' at the end;
                                    (II) in subclause (VI)--
                                            (aa) by striking ``for a 
                                        subsequent year'' and inserting 
                                        ``for 2021''; and
                                            (bb) by striking the period 
                                        at the end and inserting a 
                                        semicolon; and
                                    (III) by adding at the end the 
                                following new subclauses:
                                    ``(VII) for 2022, is equal to 
                                $3,100; or
                                    ``(VIII) for a subsequent year, is 
                                equal to the amount specified in this 
                                subparagraph for the previous year, 
                                increased by the annual percentage 
                                increase described in paragraph (6) for 
                                the year involved.''; and
                            (ii) in clause (ii), by striking ``clause 
                        (i)(II)'' and inserting ``clause (i)'';
                    (C) in subparagraph (C)(i), by striking ``and for 
                amounts'' and inserting ``and for a year preceding 2022 
                for amounts''; and
                    (D) in subparagraph (E), by striking ``In 
                applying'' and inserting ``For each of 2011 through 
                2021, in applying''
    (b) Decreasing Reinsurance Payment Amount.--Section 1860D-15(b) of 
the Social Security Act (42 U.S.C. 1395w-115(b)) is amended--
            (1) in paragraph (1)--
                    (A) by striking ``equal to 80 percent'' and 
                inserting ``equal to--
                    ``(A) for a year preceding 2022, 80 percent'';
                    (B) in subparagraph (A), as added by paragraph (1), 
                by striking the period at the end and inserting ``; 
                and''; and
                    (C) by adding at the end the following new 
                subparagraph:
                    ``(B) for a subsequent year, the sum of--
                            ``(i) an amount equal to the applicable 
                        percentage specified in paragraph (5)(A) of 
                        such allowable reinsurance costs attributable 
                        to that portion of gross prescription drug 
                        costs as specified in paragraph (3) incurred in 
                        the coverage year after such individual has 
                        incurred costs that exceed the annual out-of-
                        pocket threshold specified in section 1860D-
                        2(b)(4)(B) with respect to applicable drugs (as 
                        defined in section 1860D-14B(g)(2)); and
                            ``(ii) an amount equal to the applicable 
                        percentage specified in paragraph (5)(B) of 
                        allowable reinsurance costs attributable to 
                        that portion of gross prescription drug costs 
                        as specified in paragraph (3) incurred in the 
                        coverage year after such individual has 
                        incurred costs that exceed the annual out-of-
                        pocket threshold specified in section 1860D-
                        2(b)(4)(B) with respect to covered part D drugs 
                        that are not applicable drugs (as so 
                        defined).''; and
            (2) by adding at the end the following new paragraph:
            ``(5) Applicable percentage specified.--For purposes of 
        paragraph (1)(B), the applicable percentage specified in this 
        paragraph is--
                    ``(A) with respect to applicable drugs (as defined 
                in section 1860D-14B(g)(2))--
                            ``(i) for 2022, 60 percent;
                            ``(ii) for 2023, 40 percent; and
                            ``(iii) for 2024 and each subsequent year, 
                        20 percent; and
                    ``(B) with respect to covered part D drugs that are 
                not applicable drugs (as so defined)--
                            ``(i) for 2022, 80 percent;
                            ``(ii) for 2023, 60 percent; and
                            ``(iii) for 2024 and each subsequent year, 
                        40 percent.''.
    (c) Manufacturer Catastrophic Discount Program.--
            (1) In general.--Part D of title XVIII of the Social 
        Security Act is amended by inserting after section 1860D-14A 
        (42 U.S.C. 1495w-114) the following new section:

``SEC. 1860D-14B. MANUFACTURER CATASTROPHIC DISCOUNT PROGRAM.

    ``(a) Establishment.--The Secretary shall establish a manufacturer 
catastrophic discount program (in this section referred to as the 
`program'). Under the program, the Secretary shall enter into 
agreements described in subsection (b) with manufacturers and provide 
for the performance of the duties described in subsection (c). The 
Secretary shall establish a model agreement for use under the program 
by not later than January 1, 2021, in consultation with manufacturers, 
and allow for comment on such model agreement.
    ``(b) Terms of Agreement.--
            ``(1) In general.--
                    ``(A) Agreement.--An agreement under this section 
                shall require the manufacturer to provide applicable 
                beneficiaries access to discounted prices for 
                applicable drugs of the manufacturer that are dispensed 
                on or after January 1, 2022.
                    ``(B) Provision of discounted prices at the point-
                of-sale.--The discounted prices described in 
                subparagraph (A) shall be provided to the applicable 
                beneficiary at the pharmacy or by the mail order 
                service at the point-of-sale of an applicable drug.
            ``(2) Provision of appropriate data.--Each manufacturer 
        with an agreement in effect under this section shall collect 
        and have available appropriate data, as determined by the 
        Secretary, to ensure that it can demonstrate to the Secretary 
        compliance with the requirements under the program.
            ``(3) Compliance with requirements for administration of 
        program.--Each manufacturer with an agreement in effect under 
        this section shall comply with requirements imposed by the 
        Secretary or a third party with a contract under subsection 
        (d)(3), as applicable, for purposes of administering the 
        program, including any determination under subparagraph (A) of 
        subsection (c)(1) or procedures established under such 
        subsection (c)(1).
            ``(4) Length of agreement.--
                    ``(A) In general.--An agreement under this section 
                shall be effective for an initial period of not less 
                than 12 months and shall be automatically renewed for a 
                period of not less than 1 year unless terminated under 
                subparagraph (B).
                    ``(B) Termination.--
                            ``(i) By the secretary.--The Secretary may 
                        provide for termination of an agreement under 
                        this section for a knowing and willful 
                        violation of the requirements of the agreement 
                        or other good cause shown. Such termination 
                        shall not be effective earlier than 30 days 
                        after the date of notice to the manufacturer of 
                        such termination. The Secretary shall provide, 
                        upon request, a manufacturer with a hearing 
                        concerning such a termination, and such hearing 
                        shall take place prior to the effective date of 
                        the termination with sufficient time for such 
                        effective date to be repealed if the Secretary 
                        determines appropriate.
                            ``(ii) By a manufacturer.--A manufacturer 
                        may terminate an agreement under this section 
                        for any reason. Any such termination shall be 
                        effective, with respect to a plan year--
                                    ``(I) if the termination occurs 
                                before January 30 of a plan year, as of 
                                the day after the end of the plan year; 
                                and
                                    ``(II) if the termination occurs on 
                                or after January 30 of a plan year, as 
                                of the day after the end of the 
                                succeeding plan year.
                            ``(iii) Effectiveness of termination.--Any 
                        termination under this subparagraph shall not 
                        affect discounts for applicable drugs of the 
                        manufacturer that are due under the agreement 
                        before the effective date of its termination.
                            ``(iv) Notice to third party.--The 
                        Secretary shall provide notice of such 
                        termination to a third party with a contract 
                        under subsection (d)(3) within not less than 30 
                        days before the effective date of such 
                        termination.
            ``(5) Effective date of agreement.--An agreement under this 
        section shall take effect on a date determined appropriate by 
        the Secretary, which may be at the start of a calendar quarter.
    ``(c) Duties Described.--The duties described in this subsection 
are the following:
            ``(1) Administration of program.--Administering the 
        program, including--
                    ``(A) the determination of the amount of the 
                discounted price of an applicable drug of a 
                manufacturer;
                    ``(B) the establishment of procedures under which 
                discounted prices are provided to applicable 
                beneficiaries at pharmacies or by mail order service at 
                the point-of-sale of an applicable drug;
                    ``(C) the establishment of procedures to ensure 
                that, not later than the applicable number of calendar 
                days after the dispensing of an applicable drug by a 
                pharmacy or mail order service, the pharmacy or mail 
                order service is reimbursed for an amount equal to the 
                difference between--
                            ``(i) the negotiated price of the 
                        applicable drug; and
                            ``(ii) the discounted price of the 
                        applicable drug;
                    ``(D) the establishment of procedures to ensure 
                that the discounted price for an applicable drug under 
                this section is applied before any coverage or 
                financial assistance under other health benefit plans 
                or programs that provide coverage or financial 
                assistance for the purchase or provision of 
                prescription drug coverage on behalf of applicable 
                beneficiaries as the Secretary may specify; and
                    ``(E) providing a reasonable dispute resolution 
                mechanism to resolve disagreements between 
                manufacturers, applicable beneficiaries, and the third 
                party with a contract under subsection (d)(3).
            ``(2) Monitoring compliance.--
                    ``(A) In general.--The Secretary shall monitor 
                compliance by a manufacturer with the terms of an 
                agreement under this section.
                    ``(B) Notification.--If a third party with a 
                contract under subsection (d)(3) determines that the 
                manufacturer is not in compliance with such agreement, 
                the third party shall notify the Secretary of such 
                noncompliance for appropriate enforcement under 
                subsection (e).
            ``(3) Collection of data from prescription drug plans and 
        ma-pd plans.--The Secretary may collect appropriate data from 
        prescription drug plans and MA-PD plans in a timeframe that 
        allows for discounted prices to be provided for applicable 
        drugs under this section.
    ``(d) Administration.--
            ``(1) In general.--Subject to paragraph (2), the Secretary 
        shall provide for the implementation of this section, including 
        the performance of the duties described in subsection (c).
            ``(2) Limitation.--In providing for the implementation of 
        this section, the Secretary shall not receive or distribute any 
        funds of a manufacturer under the program.
            ``(3) Contract with third parties.--The Secretary shall 
        enter into a contract with 1 or more third parties to 
        administer the requirements established by the Secretary in 
        order to carry out this section. At a minimum, the contract 
        with a third party under the preceding sentence shall require 
        that the third party--
                    ``(A) receive and transmit information between the 
                Secretary, manufacturers, and other individuals or 
                entities the Secretary determines appropriate;
                    ``(B) receive, distribute, or facilitate the 
                distribution of funds of manufacturers to appropriate 
                individuals or entities in order to meet the 
                obligations of manufacturers under agreements under 
                this section;
                    ``(C) provide adequate and timely information to 
                manufacturers, consistent with the agreement with the 
                manufacturer under this section, as necessary for the 
                manufacturer to fulfill its obligations under this 
                section; and
                    ``(D) permit manufacturers to conduct periodic 
                audits, directly or through contracts, of the data and 
                information used by the third party to determine 
                discounts for applicable drugs of the manufacturer 
                under the program.
            ``(4) Performance requirements.--The Secretary shall 
        establish performance requirements for a third party with a 
        contract under paragraph (3) and safeguards to protect the 
        independence and integrity of the activities carried out by the 
        third party under the program under this section.
            ``(5) Administration.--Chapter 35 of title 44, United 
        States Code, shall not apply to the program under this section.
            ``(6) Funding.--For purposes of carrying out this section, 
        the Secretary shall provide for the transfer, from the Federal 
        Supplementary Medical Insurance Trust Fund under section 1841 
        to the Centers for Medicare & Medicaid Services Program 
        Management Account, of $4,000,000 for each of fiscal years 2020 
        through 2023, to remain available until expended.''.
    ``(e) Enforcement.--
            ``(1) Audits.--Each manufacturer with an agreement in 
        effect under this section shall be subject to periodic audit by 
        the Secretary.
            ``(2) Civil money penalty.--
                    ``(A) In general.--The Secretary shall impose a 
                civil money penalty on a manufacturer that fails to 
                provide applicable beneficiaries discounts for 
                applicable drugs of the manufacturer in accordance with 
                such agreement for each such failure in an amount the 
                Secretary determines is commensurate with the sum of--
                            ``(i) the amount that the manufacturer 
                        would have paid with respect to such discounts 
                        under the agreement, which will then be used to 
                        pay the discounts which the manufacturer had 
                        failed to provide; and
                            ``(ii) 25 percent of such amount.
                    ``(B) Application.--The provisions of section 1128A 
                (other than subsections (a) and (b)) shall apply to a 
                civil money penalty under this paragraph in the same 
                manner as such provisions apply to a penalty or 
                proceeding under section 1128A(a).
    ``(f) Clarification Regarding Availability of Other Covered Part D 
Drugs.--Nothing in this section shall prevent an applicable beneficiary 
from purchasing a covered part D drug that is not an applicable drug 
(including a generic drug or a drug that is not on the formulary of the 
prescription drug plan or MA-PD plan that the applicable beneficiary is 
enrolled in).
    ``(g) Definitions.--In this section:
            ``(1) Applicable beneficiary.--The term `applicable 
        beneficiary' means an individual who, on the date of dispensing 
        a covered part D drug--
                    ``(A) is enrolled in a prescription drug plan or an 
                MA-PD plan;
                    ``(B) is not enrolled in a qualified retiree 
                prescription drug plan; and
                    ``(C) has incurred costs for covered part D drugs 
                in the year that are equal to or exceed the annual out-
                of-pocket threshold specified in section 1860D-
                2(b)(4)(B).
            ``(2) Applicable drug.--The term `applicable drug' means, 
        with respect to an applicable beneficiary, a covered part D 
        drug--
                    ``(A) approved under a new drug application under 
                section 505(c) of the Federal Food, Drug, and Cosmetic 
                Act or, in the case of a biologic product, licensed 
                under section 351 of the Public Health Service Act 
                (including a product licensed under subsection (k) of 
                such section 351); and
                    ``(B)(i) if the PDP sponsor of the prescription 
                drug plan or the MA organization offering the MA-PD 
                plan uses a formulary, which is on the formulary of the 
                prescription drug plan or MA-PD plan that the 
                applicable beneficiary is enrolled in;
                    ``(ii) if the PDP sponsor of the prescription drug 
                plan or the MA organization offering the MA-PD plan 
                does not use a formulary, for which benefits are 
                available under the prescription drug plan or MA-PD 
                plan that the applicable beneficiary is enrolled in; or
                    ``(iii) is provided through an exception or appeal.
            ``(3) Applicable number of calendar days.--The term 
        `applicable number of calendar days' means--
                    ``(A) with respect to claims for reimbursement 
                submitted electronically, 14 days; and
                    ``(B) with respect to claims for reimbursement 
                submitted otherwise, 30 days.
            ``(4) Discounted price.--
                    ``(A) In general.--The term `discounted price' 
                means 80 percent of the negotiated price of the 
                applicable drug of a manufacturer.
                    ``(B) Clarification.--Nothing in this section shall 
                be construed as affecting the responsibility of an 
                applicable beneficiary for payment of a dispensing fee 
                for an applicable drug.
                    ``(C) Special case for certain claims.--In the case 
                where the entire amount of the negotiated price of an 
                individual claim for an applicable drug with respect to 
                an applicable beneficiary does not fall at or above the 
                annual out-of-pocket threshold specified in section 
                1860D-2(b)(4)(B) for the year, the manufacturer of the 
                applicable drug shall provide the discounted price 
                under this section on only the portion of the 
                negotiated price of the applicable drug that falls at 
                or above such annual out-of-pocket threshold.
            ``(5) Manufacturer.--The term `manufacturer' means any 
        entity which is engaged in the production, preparation, 
        propagation, compounding, conversion, or processing of 
        prescription drug products, either directly or indirectly by 
        extraction from substances of natural origin, or independently 
        by means of chemical synthesis, or by a combination of 
        extraction and chemical synthesis. Such term does not include a 
        wholesale distributor of drugs or a retail pharmacy licensed 
        under State law.
            ``(6) Negotiated price.--The term `negotiated price' has 
        the meaning given such term in section 1860D-2(d)(1)(B), except 
        that such negotiated price shall not include any dispensing fee 
        for the applicable drug.
            ``(7) Qualified retiree prescription drug plan.--The term 
        `qualified retiree prescription drug plan' has the meaning 
        given such term in section 1860D-22(a)(2).''.
            (2) Sunset of medicare coverage gap discount program.--
        Section 1860D-14A of the Social Security Act (42 U.S.C. 1395-
        114a) is amended--
                    (A) in subsection (a), in the first sentence, by 
                striking ``The Secretary'' and inserting ``Subject to 
                subsection (h), the Secretary''; and
                    (B) by adding at the end the following new 
                subsection:
    ``(h) Sunset of Program.--
            ``(1) In general.--The program shall not apply to 
        applicable drugs dispensed on or after January 1, 2022, and, 
        subject to paragraph (2), agreements under this section shall 
        be terminated as of such date.
            ``(2) Continued application for applicable drugs dispensed 
        prior to sunset.--The provisions of this section (including all 
        responsibilities and duties) shall continue to apply after 
        January 1, 2022, with respect to applicable drugs dispensed 
        prior to such date.''.
            (3) Inclusion of actuarial value of manufacturer discounts 
        in bids.--Section 1860D-11 of the Social Security Act (42 
        U.S.C. 1395w-111) is amended--
                    (A) in subsection (b)(2)(C)(iii)--
                            (i) by striking ``assumptions regarding the 
                        reinsurance'' an inserting ``assumptions 
                        regarding--
                                    ``(I) the reinsurance''; and
                            (ii) by adding at the end the following:
                                    ``(II) for 2022 and each subsequent 
                                year, the manufacturer discounts 
                                provided under section 1860D-14B 
                                subtracted from the actuarial value to 
                                produce such bid; and''; and
                    (B) in subsection (c)(1)(C)--
                            (i) by striking ``an actuarial valuation of 
                        the reinsurance'' and inserting ``an actuarial 
                        valuation of--
                            ``(i) the reinsurance'';
                            (ii) in clause (i), as added by clause (i) 
                        of this subparagraph, by adding ``and'' at the 
                        end; and
                            (iii) by adding at the end the following:
                            ``(ii) for 2022 and each subsequent year, 
                        the manufacturer discounts provided under 
                        section 1860D-14B;''.
    (d) Determination of Allowable Reinsurance Costs.--Section 1860D-
15(b) of the Social Security Act (42 U.S.C. 1395w-115(b)) is amended--
            (1) in paragraph (2)--
                    (A) by striking ``costs.--For purposes'' and 
                inserting ``costs.--
                    ``(A) In general.--Subject to subparagraph (B), for 
                purposes''; and
                    (B) by adding at the end the following new 
                subparagraph:
                    ``(B) Inclusion of manufacturer discounts on 
                applicable drugs.--For purposes of applying 
                subparagraph (A), the term `allowable reinsurance 
                costs' shall include the portion of the negotiated 
                price (as defined in section 1860D-14B(g)(6)) of an 
                applicable drug (as defined in section 1860D-14(g)(2)) 
                that was paid by a manufacturer under the manufacturer 
                catastrophic discount program under section 1860D-
                14B.''; and
            (2) in paragraph (3)--
                    (A) in the first sentence, by striking ``For 
                purposes'' and inserting ``Subject to paragraph (2)(B), 
                for purposes''; and
                    (B) in the second sentence, by inserting ``or, in 
                the case of an applicable drug, by a manufacturer'' 
                after ``by the individual or under the plan''.
    (e) Updating Risk Adjustment Methodologies to Account for Part D 
Modernization Redesign.--Section 1860D-15(c) of the Social Security Act 
(42 U.S.C. 1395w-115(c)) is amended by adding at the end the following 
new paragraph:
            ``(3) Updating risk adjustment methodologies to account for 
        part d modernization redesign.--The Secretary shall update the 
        risk adjustment model used to adjust bid amounts pursuant to 
        this subsection as appropriate to take into account changes in 
        benefits under this part pursuant to the amendments made by 
        section 121 of the Prescription Drug Pricing Reduction Act of 
        2019.''.
    (f) Conforming Amendments.--
            (1) Section 1860D-2 of the Social Security Act (42 U.S.C. 
        1395w-102) is amended--
                    (A) in subsection (a)(2)(A)(i)(I), by striking ``, 
                or an increase in the initial'' and inserting ``or for 
                a year preceding 2022 an increase in the initial'';
                    (B) in subsection (c)(1)(C)--
                            (i) in the subparagraph heading, by 
                        striking ``at initial coverage limit''; and
                            (ii) by inserting ``for a year preceding 
                        2022 or the annual out-of-pocket threshold 
                        specified in subsection (b)(4)(B) for the year 
                        for 2022 and each subsequent year'' after 
                        ``subsection (b)(3) for the year'' each place 
                        it appears;
                    (C) in subsection (d)(1)(A), by striking ``or an 
                initial'' and inserting ``or for a year preceding 2022 
                an initial''.
            (2) Section 1860D-4(a)(4)(B)(i) of the Social Security Act 
        (42 U.S.C. 1395w-104(a)(4)(B)) is amended by striking ``the 
        initial'' and inserting ``for a year preceding 2022, the 
        initial''.
            (3) Section 1860D-14(a) of the Social Security Act (42 
        U.S.C. 1395w-114(a)) is amended--
                    (A) in paragraph (1)--
                            (i) in subparagraph (C), by striking ``The 
                        continuation'' and inserting ``For a year 
                        preceding 2022, the continuation'';
                            (ii) in subparagraph (E), by striking ``The 
                        elimination'' and inserting ``For a year 
                        preceding 2022, the elimination''; and
                            (iii) in subparagraph (D)(iii), by striking 
                        ``1860D-2(b)(4)(A)(i)(I)'' and inserting 
                        ``1860D-2(b)(4)(A)(i)(I)(aa)''; and
                    (B) in paragraph (2)--
                            (i) in subparagraph (C), by striking ``The 
                        continuation'' and inserting ``For a year 
                        preceding 2022, the continuation''; and
                            (ii) in subparagraph (E)--
                                    (I) by inserting ``for a year 
                                preceding 2022,'' after ``subsection 
                                (c)''; and
                                    (II) by striking ``1860D-
                                2(b)(4)(A)(i)(I)'' and inserting 
                                ``1860D-2(b)(4)(A)(i)(I)(aa)''.
            (4) Section 1860D-21(d)(7) of the Social Security Act (42 
        U.S.C. 1395w-131(d)(7)) is amended by striking ``section 1860D-
        2(b)(B)(4)(B)(i)'' and inserting ``section 1860D-
        2(b)(B)(4)(C)(i)''.
            (5) Section 1860D-22(a)(2)(A) of the Social Security Act 
        (42 U.S.C. 1395w-132(a)(2)(A)) is amended--
                    (A) by striking ``the value of any discount'' and 
                inserting the following: "the value of--
                            ``(i) for years prior to 2022, any 
                        discount'';
                    (B) in clause (i), as inserted by subparagraph (A) 
                of this paragraph, by striking the period at the end 
                and inserting ``; and''; and
                    (C) by adding at the end the following new clause:
                            ``(ii) for 2022 and each subsequent year, 
                        any discount provided pursuant to section 
                        1860D-14B.''.
            (6) Section 1860D-41(a)(6) of the Social Security Act (42 
        U.S.C. 1395w-151(a)(6)) is amended--
                    (A) by inserting ``for a year before 2022'' after 
                ``1860D-2(b)(3)''; and
                    (B) by inserting ``for such year'' before the 
                period.
            (7) Section 1860D-43(a)(1) of the Social Security Act (42 
        U.S.C. 1395w-153(a)(1)) is amended to read as follows:
            ``(1) participate in--
                    ``(A) for 2011 through 2021, the Medicare coverage 
                gap discount program under section 1860D-14A; and
                    ``(B) for 2022 and each subsequent year, the 
                manufacturer catastrophic discount program under 
                section 1860D-14B;''.
    (g) Effective Date.--The amendments made by this section shall 
apply to plan year 2022 and subsequent plan years.

SEC. 122. PROVIDING THE MEDICARE PAYMENT ADVISORY COMMISSION AND 
              MEDICAID AND CHIP PAYMENT AND ACCESS COMMISSION WITH 
              ACCESS TO CERTAIN DRUG PAYMENT INFORMATION, INCLUDING 
              CERTAIN REBATE INFORMATION.

    (a) Access to Certain Part D Payment Data.--Section 1860D-15(f) of 
the Social Security Act (42 U.S.C. 1395w-115(f)) is amended--
            (1) in paragraph (2)--
                    (A) in subparagraph (A)(ii), by striking ``and'' at 
                the end;
                    (B) in subparagraph (B), by striking the period at 
                the end and inserting ``; and''; and
                    (C) by inserting at the end the following new 
                subparagraph:
                    ``(C) by the Executive Director of the Medicare 
                Payment Advisory Commission for purposes of monitoring, 
                making recommendations, and analysis of the program 
                under this title and by the Executive Director of the 
                Medicaid and CHIP Payment and Access Commission for 
                purposes of monitoring, making recommendations, and 
                analysis of the Medicaid program established under 
                title XIX and the Children's Health Insurance Program 
                established under title XXI.''; and
            (2) by adding at the end the following new paragraph:
            ``(3) Additional restrictions on disclosure of 
        information.--The Executive Directors described in paragraph 
        (2)(C) shall not disclose any of the following information 
        disclosed to such Executive Directors or obtained by such 
        Executive Directors pursuant to such paragraph, with respect to 
        a prescription drug plan offered by a PDP sponsor or an MA-PD 
        plan offered by an MA organization:
                    ``(A) The specific amounts or the identity of the 
                source of any rebates, price concessions, or other 
                forms of direct or indirect remuneration under such 
                prescription drug plan or such MA-PD plan.
                    ``(B) Information submitted with the bid submitted 
                under section 1860D-11 by such PDP sponsor or section 
                1854 by such MA organization.
                    ``(C) In the case of such information from 
                prescription drug event records, in a form that would 
                not be permitted under section 423.505(m) of title 42, 
                Code of Federal Regulations, or any successor 
                regulation, if made by the Centers for Medicare & 
                Medicaid Services.''.
    (b) Access to Certain Rebate and Payment Data Under Medicare and 
Medicaid.--Section 1927(b)(3)(D) of the Social Security Act (42 U.S.C. 
1396r-8(b)(3)(D)) is amended--
            (1) in the matter before clause (i), by striking 
        ``subsection (a)(6)(A)(ii)'' and inserting ``subsection 
        (a)(6)(A)'';
            (2) in clause (v), by striking ``and'' at the end;
            (3) in clause (vi), by striking the period at the end and 
        inserting ``, and'';
            (4) by inserting after clause (vi) the following new 
        clause:
                            ``(vii) to permit the Executive Director of 
                        the Medicare Payment Advisory Commission and 
                        the Executive Director of the Medicaid and CHIP 
                        Payment and Access Commission to review the 
                        information provided.'';
            (5) in the matter at the end, by striking ``1860D-
        4(c)(2)(E)'' and inserting ``1860D-4(c)(2)(G)''; and
            (6) by adding at the end the following new sentence: ``Any 
        information disclosed to the Executive Director of the Medicare 
        Payment Advisory Commission or the Executive Director of the 
        Medicaid and CHIP Payment and Access Commission pursuant to 
        this subparagraph shall not be disclosed by either such 
        Executive Director in a form which discloses the identity of a 
        specific manufacturer or wholesaler or prices charged for drugs 
        by such manufacturer or wholesaler.''.

SEC. 123. PUBLIC DISCLOSURE OF DRUG DISCOUNTS AND OTHER PHARMACY 
              BENEFIT MANAGER (PBM) PROVISIONS.

    (a) Public Disclosure of Drug Discounts.--
            (1) In general.--Section 1150A of the Social Security Act 
        (42 U.S.C. 1320b-23) is amended--
                    (A) in subsection (c), in the matter preceding 
                paragraph (1), by striking ``this section'' and 
                inserting ``subsection (b)(1)''; and
                    (B) by adding at the end the following new 
                subsection:
    ``(e) Public Availability of Certain Information.--
            ``(1) In general.--Subject to paragraphs (2) and (3), in 
        order to allow patients and employers to compare PBMs' ability 
        to negotiate rebates, discounts, and price concessions and the 
        amount of such rebates, discounts, and price concessions that 
        are passed through to plan sponsors, not later than July 1, 
        2022, the Secretary shall make available on the Internet 
        website of the Department of Health and Human Services the 
        information provided to the Secretary and described in 
        paragraphs (2) and (3) of subsection (b) with respect to each 
        PBM.
            ``(2) Lag in data.--The information made available in a 
        plan year under paragraph (1) shall not include information 
        with respect to such plan year or the two preceding plan years.
            ``(3) Confidentiality.--The Secretary shall ensure that 
        such information is displayed in a manner that prevents the 
        disclosure of information on rebates, discounts, and price 
        concessions with respect to an individual drug or an individual 
        PDP sponsor, MA organization, or qualified health benefits 
        plan.''.
            (2) Effective date.--The amendment made by paragraph (1)(A) 
        shall take effect on January 1, 2022.
    (b) Plan Audit of Pharmacy Benefit Manager Data.--Section 1860D-
2(d)(3) of the Social Security Act (42 U.S.C. 1395w-102(d)(3)) is 
amended--
            (1) by striking ``Audits.--To protect'' and inserting the 
        following: ``Audits.--
                    ``(A) Audits of plans by the secretary.--To 
                protect''; and
            (2) by adding at the end the following new subparagraph:
                    ``(B) Audits of pharmacy benefit managers by pdp 
                sponsors and ma organizations.--
                            ``(i) In general.--Beginning January 1, 
                        2022, in order to ensure that--
                                    ``(I) contracting terms between a 
                                PDP sponsor offering a prescription 
                                drug plan or an MA organization 
                                offering an MA-PD plan and its 
                                contracted or owned pharmacy benefit 
                                manager are met; and
                                    ``(II) the PDP sponsor and MA 
                                organization can account for the cost 
                                of each covered part D drug net of all 
                                direct and indirect remuneration;
                        the PDP sponsor or MA organization shall 
                        conduct financial audits.
                            ``(ii) Independent third party.--An audit 
                        described in clause (i) shall--
                                    ``(I) be conducted by an 
                                independent third party; and
                                    ``(II) account and reconcile flows 
                                of funds that determine the net cost of 
                                covered part D drugs, including direct 
                                and indirect remuneration from drug 
                                manufacturers and pharmacies or 
                                provided to pharmacies.
                            ``(iii) Rebate agreements.--A PDP sponsor 
                        and an MA organization shall require pharmacy 
                        benefit managers to make rebate contracts with 
                        drug manufacturers made on their behalf 
                        available under audits described in clause (i).
                            ``(iv) Confidentiality agreements.--Audits 
                        described in clause (i) shall be subject to 
                        confidentiality agreements to prevent, except 
                        as required under clause (vii), the 
                        redisclosure of data transmitted under the 
                        audit.
                            ``(v) Frequency.--A financial audit under 
                        clause (i) shall be conducted periodically (but 
                        in no case less frequently than once every 2 
                        years).
                            ``(vi) Timeframe for pbm to provide 
                        information.--A PDP sponsor and an MA 
                        organization shall require that a pharmacy 
                        benefit manager that is being audited under 
                        clause (i) provide (as part of their 
                        contracting agreement) the requested 
                        information to the independent third party 
                        conducting the audit within 45 days of the date 
                        of the request.
                            ``(vii) Submission of audit reports to the 
                        secretary.--
                                    ``(I) In general.--A PDP sponsor 
                                and an MA organization shall submit to 
                                the Secretary the final report on any 
                                audit conducted under clause (i) within 
                                30 days of the PDP sponsor or MA 
                                organization receiving the report from 
                                the independent third party conducting 
                                the audit.
                                    ``(II) Review.--The Secretary shall 
                                review final reports submitted under 
                                clause (i) to determine the extent to 
                                which the goals specified in subclauses 
                                (I) and (II) of subparagraph (B)(i) are 
                                met.
                                    ``(III) Confidentiality.--
                                Notwithstanding any other provision of 
                                law, information disclosed in a report 
                                submitted under clause (i) related to 
                                the net cost of a covered part D drug 
                                is confidential and shall not be 
                                disclosed by the Secretary or a 
                                Medicare contractor.
                            ``(viii) Notice of noncompliance.--A PDP 
                        sponsor and an MA organization shall notify the 
                        Secretary if any pharmacy benefit manager is 
                        not complying with requests for access to 
                        information required under an audit under 
                        clause (i).
                            ``(ix) Civil monetary penalties.--
                                    ``(I) In general.--Subject to 
                                subclause (II), if the Secretary 
                                determines that a PDP sponsor or an MA 
                                organization has failed to conduct an 
                                audit under clause (i), the Secretary 
                                may impose a civil monetary penalty of 
                                not more than $10,000 for each day of 
                                such noncompliance.
                                    ``(II) Procedure.--The provisions 
                                of section 1128A, other than 
                                subsections (a) and (b) and the first 
                                sentence of subsection (c)(1) of such 
                                section, shall apply to civil monetary 
                                penalties under this clause in the same 
                                manner as such provisions apply to a 
                                penalty or proceeding under section 
                                1128A.''.
    (c) Disclosure to Pharmacy of Post-point-of-sale Pharmacy Price 
Concessions and Incentive Payments.--Section 1860D-2(d)(2) of the 
Social Security Act (42 U.S.C. 1395w-102(d)(2)) is amended--
            (1) by striking ``Disclosure.--A PDP sponsor'' and 
        inserting the following: ``Disclosure.--
                    ``(A) To the secretary.--A PDP sponsor''; and
            (2) by adding at the end the following new subparagraph:
                    ``(B) To pharmacies.--
                            ``(i) In general.--For plan year 2022 and 
                        subsequent plan years, a PDP sponsor offering a 
                        prescription drug plan and an MA organization 
                        offering an MA-PD plan shall report any 
                        pharmacy price concession or incentive payment 
                        that occurs with respect to a pharmacy after 
                        payment for covered part D drugs at the point-
                        of-sale, including by an intermediary 
                        organization with which a PDP sponsor or MA 
                        organization has contracted, to the pharmacy.
                            ``(ii) Timing.--The reporting of price 
                        concessions and incentive payments to a 
                        pharmacy under clause (i) shall be made on a 
                        periodic basis (but in no case less frequently 
                        than annually).
                            ``(iii) Claim level.--The reporting of 
                        price concessions and incentive payments to a 
                        pharmacy under clause (i) shall be at the claim 
                        level or approximated at the claim level if the 
                        price concession or incentive payment was 
                        applied at a level other than at the claim 
                        level.''.
    (d) Disclosure of P&T Committee Conflicts of Interest.--
            (1) In general.--Section 1860D-4(b)(3)(A) of the Social 
        Security Act (42 U.S.C. 1395w-104(b)(3)(A)) is amended by 
        adding at the end the following new clause:
                            ``(iii) Disclosure of conflicts of 
                        interest.--With respect to plan year 2022 and 
                        subsequent plan years, a PDP sponsor of a 
                        prescription drug plan and an MA organization 
                        offering an MA-PD plan shall, as part of its 
                        bid submission under section 1860D-11(b), 
                        provide the Secretary with a completed 
                        statement of financial conflicts of interest, 
                        including with manufacturers, from each member 
                        of any pharmacy and therapeutic committee used 
                        by the sponsor or organization pursuant to this 
                        paragraph.''.
            (2) Inclusion in bid.--Section 1860D-11(b)(2) of the Social 
        Security Act (42 U.S.C. 1395w-111(b)(2)) is amended--
                    (A) by redesignating subparagraph (F) as 
                subparagraph (G); and
                    (B) by inserting after subparagraph (E) the 
                following new subparagraph:
                    ``(F) P&T committee conflicts of interest.--The 
                information required to be disclosed under section 
                1860D-4(b)(3)(A)(iii).''.
    (e) Information on Direct and Indirect Remuneration Required To Be 
Included in Bid.--Section 1860D-11(b) of the Social Security Act (42 
U.S.C. 1395w-111(b)) is amended--
            (1) in paragraph (1), by adding at the end the following 
        new sentence: ``With respect to actual amounts of direct and 
        indirect remuneration submitted pursuant to clause (v) of 
        paragraph (2), such amounts shall be consistent with data 
        reported to the Secretary in a prior year.''; and
            (2) in paragraph (2)(C)--
                    (A) in clause (iii), by striking ``and'' at the 
                end;
                    (B) in clause (iv), by striking the period at the 
                end and inserting the following: ``, and, with respect 
                to plan year 2022 and subsequent plan years, actual and 
                projected administrative expenses assumed in the bid, 
                categorized by the type of such expense, including 
                actual and projected price concessions retained by a 
                pharmacy benefit manager; and''; and
                    (C) by adding at the end the following new clause:
                            ``(v) with respect to plan year 2022 and 
                        subsequent plan years, actual and projected 
                        direct and indirect remuneration, categorized 
                        as received from each of the following:
                                    ``(I) A pharmacy.
                                    ``(II) A manufacturer.
                                    ``(III) A pharmacy benefit manager.
                                    ``(IV) Other entities, as 
                                determined by the Secretary.''.

SEC. 124. PUBLIC DISCLOSURE OF DIRECT AND INDIRECT REMUNERATION REVIEW 
              AND AUDIT RESULTS.

    Section 1860D-42 of the Social Security Act (42 U.S.C. 1395w-152) 
is amended by adding at the end the following new subsection:
    ``(e) Public Disclosure of Direct and Indirect Remuneration Review 
and Financial Audit Results.--
            ``(1) DIR review results.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), in 2020 and each subsequent year, the 
                Secretary shall make available to the public on the 
                Internet website of the Centers for Medicare & Medicaid 
                Services information on discrepancies related to 
                summary and detailed DIR reports submitted by PDP 
                sponsors pursuant to section 1860D-15 across all 
                prescription drug plans based on the most recent data 
                available. Information made available under this 
                subparagraph shall include the following:
                            ``(i) The number of potential errors 
                        identified by the Secretary for PDP sponsors to 
                        review.
                            ``(ii) The extent to which PDP sponsors 
                        resubmitted DIR reports to make changes for 
                        previous contract years.
                            ``(iii) The extent to which resubmitted DIR 
                        reports resulted in an increase or decrease in 
                        DIR in a previous contract year.
                    ``(B) Exclusion of certain submissions in 
                calculation.--The Secretary shall exclude any 
                information in DIR reports submitted with respect to 
                PACE programs under section 1894 (pursuant to section 
                1860D-21(f)) and qualified retiree prescription drug 
                plans (as defined in section 1860D-22(a)(2)) from the 
                information that is made available to the public under 
                subparagraph (A).
            ``(2) Financial audit results.--In 2020 and each subsequent 
        year, the Secretary shall make available to the public on the 
        Internet website of the Centers for Medicare & Medicaid 
        Services the results of DIR audits required under section 
        1860D-12(b)(3)(C). Information made available under this 
        paragraph shall include the following:
                    ``(A) With respect to the year, the number of PDP 
                sponsors that received each of the following:
                            ``(i) A notice of observations or findings 
                        that required the sponsor to make DIR report 
                        corrections.
                            ``(ii) An unqualified audit opinion that 
                        renders the audit closed.
                            ``(iii) A qualified audit opinion that 
                        requires the sponsor to submit a corrective 
                        action plan to the Secretary.
                            ``(iv) An adverse opinion, with a 
                        description of the types of actions that the 
                        Secretary takes when issuing an adverse 
                        opinion.
                    ``(B) With respect to a preceding year:
                            ``(i) The number of PDP sponsors that 
                        reopened a previously closed reconciliation as 
                        a result of an audit, including as a result of 
                        DIR changes.
                            ``(ii) The extent to which the Secretary 
                        recouped an overpayment or made an underpayment 
                        as a result of a reopening of a previously 
                        closed reconciliation.
            ``(3) Definition of dir.--For purposes of this subsection, 
        the term `DIR' means direct and indirect remuneration as 
        defined in section 423.308 of title 42, Code of Federal 
        Regulations, or any successor regulation.''.

SEC. 125. INCREASING THE USE OF REAL-TIME BENEFIT TOOLS TO LOWER 
              BENEFICIARY COSTS.

    (a) Requiring Prescription Drug Plan Sponsors and Medicare 
Advantage Organizations to Include Real-time Benefit Information Under 
Medicare Part D.--Section 1860D-4 of the Social Security Act (42 U.S.C. 
1395w-104) is amended--
            (1) by redesignating subsection (m) (relating to program 
        integrity transparency measures), as added by section 6063(c) 
        of the Substance Use-Disorder Prevention that Promotes Opioid 
        Recovery and Treatment for Patients and Communities Act (Public 
        Law 115-271), as subsection (n); and
            (2) by adding at the end the following new subsection:
    ``(o) Real-time Benefit Information.--
            ``(1) In general.--After the Secretary has adopted a 
        standard under paragraph (3) for electronic real-time benefit 
        tools, and at a time determined appropriate by the Secretary, a 
        PDP sponsor of a prescription drug plan shall implement one or 
        more of such tools that meet the requirements described in 
        paragraph (2).
            ``(2) Requirements.--For purposes of paragraph (1), the 
        requirements described in this paragraph, with respect to an 
        electronic real-time benefit tool, are that the tool is capable 
        of--
                    ``(A) integrating with electronic prescribing and 
                electronic health record systems of prescribing health 
                care professionals for the transmission of eligibility 
                and formulary and benefit information in real time to 
                such professionals; and
                    ``(B) with respect to a covered part D drug, 
                transmitting such information specific to an individual 
                enrolled in a prescription drug plan, including the 
                following:
                            ``(i) A list of any clinically-appropriate 
                        alternatives to such drug included in the 
                        formulary of such plan.
                            ``(ii) Cost-sharing information and the 
                        negotiated price for such drug and such 
                        alternatives at--
                                    ``(I) multiple pharmacy options, 
                                including the individual's preferred 
                                pharmacy and, as applicable, other 
                                retail pharmacies and a mail order 
                                pharmacy; and
                                    ``(II) the formulary status of such 
                                drug and such alternatives and any 
                                prior authorization or other 
                                utilization management requirements 
                                applicable to such drug and such 
                                alternatives included in the formulary 
                                of such plan.
            ``(3) Standards.--In order to be treated (for purposes of 
        this subsection) as an electronic real-time benefit tool 
        described in paragraph (1), such tool shall comply with 
        technical standards adopted by the Secretary in consultation 
        with the National Coordinator for Health Information 
        Technology, the National Council for Prescription Drug 
        Programs, other standard setting organizations determined 
        appropriate by the Secretary, and stakeholders including PDP 
        sponsors, Medicare Advantage organizations, health care 
        professionals, and health information technology software 
        vendors.
            ``(4) Rule of construction.--Nothing in this subsection 
        shall be construed to prohibit the application of paragraph 
        (b)(7) of section 423.160 of title 42, Code of Federal 
        Regulations, as is to be added to such section pursuant to the 
        final rule published in the Federal Register on May 23, 2019, 
        and titled `Modernizing Part D and Medicare Advantage To Lower 
        Drug Prices and Reduce Out-of-Pocket Expenses' (84 Fed. Reg. 
        23832 through 23884).''.
    (b) Requiring Qualified Electronic Health Records To Include Real-
time Benefit Tools.--Section 3000(13) of the Public Health Service Act 
(42 U.S.C. 300jj(13)) is amended--
            (1) in subparagraph (A), by striking ``and'' at the end;
            (2) in subparagraph (B), by striking the period and 
        inserting ``; and''; and
            (3) by adding at the end the following:
                    ``(C) includes, or is capable of including, a real-
                time benefit tool that conveys patient-specific real-
                time cost and coverage information with respect to 
                prescription drugs that, with respect to any health 
                information technology certified for electronic 
                prescribing, the technology shall be capable of 
                incorporating the information described in clauses (i) 
                and (ii) of paragraph (2)(B) of section 1860D-4(o) of 
                the Social Security Act at a time specified by the 
                Secretary but not before the Secretary adopts a 
                standard for such tools as described in paragraph (1) 
                of such section.''.
    (c) Inclusion of Use of Real-time Electronic Information in Shared 
Decision-making Under MIPS.--Section 1848(q)(2)(B)(iii)(IV) of the 
Social Security Act (42 U.S.C. 1395w-4(q)(2)(B)(iii)(IV)) is amended by 
adding at the end the following new sentence: ``This subcategory shall 
include as an activity option, beginning with the performance period 
starting on January 1, 2021, use of a real-time benefit tool as 
described in 1860D-4(o).''.

SEC. 126. IMPROVEMENTS TO PROVISION OF PARTS A AND B CLAIMS DATA TO 
              PRESCRIPTION DRUG PLANS.

    (a) Data Use.--
            (1) In general.--Paragraph (6) of section 1860D-4(c) of the 
        Social Security Act (42 U.S.C. 1395w-104(c)), as added by 
        section 50354 of division E of the Bipartisan Budget Act of 
        2018 (Public Law 115-123), relating to providing prescription 
        drug plans with parts A and B claims data to promote the 
        appropriate use of medications and improve health outcomes, is 
        amended--
                    (A) in subparagraph (B)--
                            (i) by redesignating clauses (i), (ii), and 
                        (iii) as subclauses (I), (II), and (III), 
                        respectively, and moving such subclauses 2 ems 
                        to the right;
                            (ii) by striking ``Purposes.--A PDP 
                        sponsor'' and inserting Purposes--
                            ``(i) In general.--A PDP sponsor.''; and
                            (iii) by adding at the end the following 
                        new clause:
                            ``(ii) Clarification.--The limitation on 
                        data use under subparagraph (C)(i) shall not 
                        apply to the extent that the PDP sponsor is 
                        using the data provided to carry out any of the 
                        purposes described in clause (i).''; and
                    (B) in subparagraph (C)(i), by striking ``To 
                inform'' and inserting ``Subject to subparagraph 
                (B)(ii), to inform''.
            (2) Effective date.--The amendments made by this subsection 
        shall apply to plan years beginning on or after January 1, 
        2022.
    (b) Manner of Provision.--Subparagraph (D) of such paragraph (6) is 
amended--
            (1) by striking ``described.--The data described in this 
        clause'' and inserting ``described.--
                            ``(i) In general.--The data described in 
                        this subparagraph''; and
            (2) by adding at the end the following new clause:
                            ``(ii) Manner of provision.--
                                    ``(I) In general.--Such data may be 
                                provided pursuant to this paragraph in 
                                the same manner as data under the Part 
                                D Enhanced Medication Therapy 
                                Management model tested under section 
                                1115A, through Application Programming 
                                Interface, or in another manner as 
                                determined by the Secretary.
                                    ``(II) Implementation.--
                                Notwithstanding any other provision of 
                                law, the Secretary may implement this 
                                clause by program instruction or 
                                otherwise.''.
    (c) Technical Correction.--Such paragraph (6) is redesignated as 
paragraph (7).

SEC. 127. PERMANENTLY AUTHORIZE A SUCCESSFUL PILOT ON RETROACTIVE 
              MEDICARE PART D COVERAGE FOR LOW-INCOME BENEFICIARIES.

    Section 1860D-14 of the Social Security Act (42 U.S.C. 1395w-114) 
is amended--
            (1) by redesignating subsection (e) as subsection (f); and
            (2) by inserting after subsection (d) the following new 
        subsection:
    ``(e) Limited Income Newly Eligible Transition (LI NET) Program.--
            ``(1) In general.--By not later than 2022, the Secretary 
        shall establish a program to provide transitional coverage for 
        covered part D drugs for LI NET eligible individuals in 
        accordance with this subsection.
            ``(2) LI net eligible individual defined.--For purposes of 
        this subsection, the term `LI NET eligible individual' means a 
        part D eligible individual who--
                    ``(A) meets the requirements of clauses (ii) and 
                (iii) of subsection (a)(3)(A); and
                    ``(B) has not yet enrolled in a prescription drug 
                plan or an MA-PD plan, or, who has so enrolled, but 
                with respect to whom coverage under such plan has not 
                yet taken effect.
            ``(3) Transitional coverage defined.--For purposes of this 
        subsection, the term `transitional coverage' means the 
        following with respect to a LI NET eligible individual:
                    ``(A) All li net eligible individuals.--Immediate 
                access to covered part D drugs at the point of sale 
                during the period that begins on the first day of the 
                month such individual is determined to meet the 
                requirements of clauses (ii) and (iii) of subsection 
                (a)(3)(A) and ends on the date that coverage under a 
                prescription drug plan or an MA-PD plan takes effect 
                with respect to such individual.
                    ``(B) Full-benefit dual eligibles and ssi 
                recipients.--In the case of a LI NET eligible 
                individual who is a full-benefit dual eligible 
                individual (as defined in section 1935(c)(6)) or 
                recipient of supplemental security income benefits 
                under title XVI, retroactive coverage (in the form of 
                reimbursement of the amounts that would have been paid 
                under this part had such individual been enrolled in a 
                prescription drug plan or an MA-PD plan) of covered 
                part D drugs purchased by such individual during the 
                period that--
                            ``(i) begins on the date that is the later 
                        of the date that--
                                    ``(I) such individual was first 
                                eligible for a low income subsidy under 
                                this part; or
                                    ``(II) is 36 months prior to the 
                                date such individual enrolls in a 
                                prescription drug plan or an MA-PD 
                                plan; and
                            ``(ii) ends on the date that coverage under 
                        such plan takes effect.
            ``(4) Program administration.--
                    ``(A) Single point of contact.--The Secretary 
                shall, to the extent feasible, administer the program 
                under this subsection through a contract with a single 
                program administrator who will provide for a single 
                point of contact for LI NET eligible individuals.
                    ``(B) Benefit design.--The Secretary shall ensure 
                that the transitional coverage provided to LI NET 
                eligible individuals under this subsection--
                            ``(i) provides access to all covered part D 
                        drugs under an open formulary;
                            ``(ii) permits all pharmacies determined by 
                        the Secretary to be in good standing to process 
                        claims under the program;
                            ``(iii) is consistent with such 
                        requirements as the Secretary considers 
                        necessary to improve patient safety and ensure 
                        appropriate dispensing of medication; and
                            ``(iv) meets such other requirements as the 
                        Secretary may establish.
            ``(5) Relationship to other provisions of this title; 
        waiver authority.--
                    ``(A) In general.--The following provisions shall 
                not apply to the program under this subsection:
                            ``(i) Paragraphs (1) and (3)(B) of section 
                        1860D-4(a) (dissemination of general 
                        information; availability of information on 
                        changes in formulary through the internet).
                            ``(ii) Subparagraphs (A) and (B) of section 
                        1860D-4(b)(3) (development and revision by a 
                        pharmacy and therapeutic committee; formulary 
                        development).
                            ``(iii) Paragraphs (1)(C) and (2) of 
                        section 1860D-4(c) (medication therapy 
                        management program).
                    ``(B) Waiver authority.--The Secretary may waive 
                such other requirements of title XI and this title as 
                may be necessary to carry out the purposes of the 
                program established under this subsection.''.

SEC. 128. MEDICARE PART D REBATE BY MANUFACTURERS FOR CERTAIN DRUGS 
              WITH PRICES INCREASING FASTER THAN INFLATION.

    (a) In General.--Subpart 2 of part D of title XVIII of the Social 
Security Act is amended by inserting after section 1860D-14B, as added 
by section 121, the following new section:

``SEC. 1860D-14C. MANUFACTURER REBATE FOR CERTAIN DRUGS WITH PRICES 
              INCREASING FASTER THAN INFLATION.

    ``(a) Requirements.--
            ``(1) Secretarial provision of information.--
                    ``(A) In general.--Subject to subparagraph (B), not 
                later than 6 months after the end of each rebate period 
                (as defined in paragraph (4)(A)) beginning on or after 
                January 1, 2022, the Secretary shall, for each 
                rebatable covered part D drug (as defined in paragraph 
                (4)(B)), report to each manufacturer (as defined in 
                paragraph (4)(C)) of such rebatable covered part D drug 
                the following for the rebate period:
                            ``(i) Information on the total number of 
                        units (as defined in paragraph (4)(D)) of each 
                        dosage form and strength described in paragraph 
                        (1)(A) of subsection (b) for such rebatable 
                        covered part D drug and rebate period.
                            ``(ii) Information on the amount (if any) 
                        of the excess price described in paragraph 
                        (1)(B) of such subsection for such rebatable 
                        covered part D drug and rebate period.
                            ``(iii) The rebate amount specified under 
                        such subsection for such rebatable covered part 
                        D drug and rebate period.
                            ``(iv) Other information determined 
                        appropriate by the Secretary.
                    ``(B) Transition rule for information in 2022.--
                Notwithstanding subparagraph (A), the Secretary may, 
                for each rebatable covered part D drug, delay the 
                timeframe for reporting the information and rebate 
                amount described in clauses (i), (ii), (iii), and (iv) 
                of such subparagraph for rebate periods in 2022 until 
                not later than December 31, 2023.
            ``(2) Manufacturer rebate.--
                    ``(A) In general.--Subject to subparagraph (B), for 
                each rebate period beginning on or after January 1, 
                2022, each manufacturer of a rebatable covered part D 
                drug shall, not later than 30 days after the date of 
                receipt from the Secretary of the information and 
                rebate amount pursuant to paragraph (1), provide to the 
                Secretary a rebate that is equal to the amount 
                specified in subsection (b) for such drug for such 
                rebate period.
                    ``(B) Exemption for shortages.--The Secretary may 
                reduce or waive the rebate under this paragraph with 
                respect to a rebatable covered part D drug that is 
                listed on the drug shortage list maintained by the Food 
                and Drug Administration pursuant to section 506E of the 
                Federal Food, Drug, and Cosmetic Act.
            ``(3) Request for reconsideration.--The Secretary shall 
        establish procedures under which a manufacturer of a rebatable 
        covered part D drug may request a reconsideration by the 
        Secretary of the rebate amount specified under subsection (b) 
        for such drug and rebate period, as reported to the 
        manufacturer pursuant to paragraph (1). Timing for a 
        reconsideration shall be coordinated with the timing of 
        reconciliation, as described in subsection (b)(6) and as 
        determined appropriate by the Secretary.
            ``(4) Definitions.--In this section:
                    ``(A) Rebate period.--
                            ``(i) In general.--Subject to clause (ii), 
                        the term `rebate period' means, with respect to 
                        a year, each of the six month periods that 
                        begin on January 1 and July 1 of the year.
                            ``(ii) Initial rebate period for 
                        subsequently approved drugs.--In the case of a 
                        rebatable covered part D drug described in 
                        subsection (c), the initial rebate period for 
                        which a rebate amount is determined for such 
                        rebatable covered part D drug pursuant to such 
                        subsection shall be the period beginning with 
                        the first month after the last day of the six 
                        month period that begins on the day on which 
                        the drug was first marketed and ending on the 
                        last day of the first full rebate period under 
                        clause (i) that begins after the last day of 
                        such six month period.
                    ``(B) Rebatable covered part d drug.--The term 
                `rebatable covered part D drug' means a covered part D 
                drug approved under a new drug application under 
                section 505(c) of the Federal Food, Drug, and Cosmetic 
                Act or, in the case of a biologic product, licensed 
                under section 351(a) of the Public Health Service Act.
                    ``(C) Manufacturer.--The term `manufacturer' has 
                the meaning given such term in section 1860D--14A(g).
                    ``(D) Units.--The term `units' means, with respect 
                to a rebatable covered part D drug, the lowest common 
                quantity (such as the number of capsules or tablets, 
                milligrams of molecules, or grams) of such drug 
                dispensed to individuals under this part.
                    ``(E) Price.--The term `price' means, with respect 
                to a rebatable covered part D drug, the wholesale 
                acquisition cost (as defined in section 1847A(c)(6)(B)) 
                for such drug.
    ``(b) Rebate Amount.--
            ``(1) In general.--Subject to subsection (e)(2), the amount 
        of the rebate specified in this subsection for a rebate period, 
        with respect to each dosage form and strength of a rebatable 
        covered part D drug, is the amount equal to the product of--
                    ``(A) the total number of units of such dosage form 
                and strength for each rebatable covered part D drug 
                during the rebate period; and
                    ``(B) the amount (if any) by which--
                            ``(i) the unit-weighted average price for 
                        such dosage form and strength of the drug 
                        determined under paragraph (2) for the rebate 
                        period; exceeds
                            ``(ii) the inflation-adjusted price for 
                        such dosage form and strength determined under 
                        paragraph (3) for the rebate period.
            ``(2) Determination of unit-weighted average price.--
                    ``(A) In general.--The unit-weighted average price 
                determined under this paragraph for a rebate period, 
                with respect to each dosage form and strength of a 
                rebatable covered Part D drug, is the sum of the 
                products of--
                            ``(i) the weighted average price determined 
                        under subparagraph (B) with respect to each 
                        package size of such dosage form and strength 
                        dispensed during the rebate period; and
                            ``(ii) the ratio of--
                                    ``(I) the total number of units of 
                                such package size dispensed during the 
                                rebate period; to
                                    ``(II) the total number of units of 
                                such dosage form and strength of such 
                                drug dispensed during such rebate 
                                period.
                    ``(B) Computation of weighted average price.--The 
                weighted average price, with respect to each package 
                size of such dosage form and strength of a rebatable 
                covered part D drug dispensed during a rebate period, 
                is the sum of the products of--
                            ``(i) each price, as calculated for a unit 
                        of such drug, applicable to each package size 
                        of such dosage form and strength of such drug 
                        during the rebate period; and
                            ``(ii) the ratio of--
                                    ``(I) the number of days for which 
                                each such price is applicable during 
                                the rebate period; to
                                    ``(II) the total number of days in 
                                such rebate period.
            ``(3) Determination of inflation-adjusted price.--
                    ``(A) In general.--The inflation-adjusted price 
                determined under this paragraph for a rebate period, 
                with respect to each dosage form and strength of a 
                rebatable covered part D drug, is--
                            ``(i) the benchmark unit-weighted price 
                        determined under subparagraph (B) for the 
                        rebate period; increased by
                            ``(ii) the percentage by which the rebate 
                        period CPI-U (as defined in paragraph (4)) for 
                        the rebate period exceeds the benchmark CPI-U 
                        (as defined in paragraph (5)).
                    ``(B) Determination of benchmark unit-weighted 
                price.--The benchmark unit-weighted price determined 
                under this subparagraph for a rebate period, with 
                respect to each dosage form and strength of a rebatable 
                covered part D drug, is the sum of the products of--
                            ``(i) each price, as calculated for a unit 
                        of such drug, applicable to each package size 
                        of such dosage form and strength of such drug 
                        on July 1, 2019; and
                            ``(ii) the ratio of--
                                    ``(I) the total number of units of 
                                such package size dispensed on July 1, 
                                2019; to
                                    ``(II) the total number of units of 
                                such dosage form and strength dispensed 
                                on July 1, 2019.
            ``(4) Benchmark cpi-u.--The term `benchmark CPI-U' means 
        the consumer price index for all urban consumers (United States 
        city average) for July 2019.
            ``(5) Rebate period cpi-u.--The term `rebate period CPI-U' 
        means, with respect to a rebate period, the consumer price 
        index for all urban consumers (United States city average) for 
        the last month of the rebate period.
            ``(6) Annual reconciliation of rebate amount.--The 
        Secretary shall, on an annual basis, conduct a one-time 
        reconciliation of the rebate amounts owed by a manufacturer 
        under this section based on any changes submitted by a PDP 
        sponsor of a prescription drug plan or an MA organization 
        offering an MA-PD plan to the number of units of a rebatable 
        covered part D drug dispensed during the preceding year. Such 
        reconciliation shall be completed not later than 6 months after 
        the date by which the Secretary reconciles payment for covered 
        part D drugs with PDP sponsors of prescription drug plans or MA 
        organizations offering MA-PD plans.
    ``(c) Treatment of Subsequently Approved Drugs.--Subject to 
subsection (e)(2), in the case of a rebatable covered part D drug first 
approved or licensed by the Food and Drug Administration after July 1, 
2019--
            ``(1) subparagraph (A)(ii) of subsection (b)(3) shall be 
        applied as if the term `benchmark CPI-U' were defined under 
        subsection (b)(4) as if the reference to `July 2019' under such 
        subsection were a reference to `the first month after the last 
        day of the six month period that begins on the day on which the 
        drug was first marketed'; and
            ``(2) subsection (b)(3) shall be applied by substituting, 
        for the benchmark unit-weighted price otherwise determined 
        under subparagraph (B) of such subsection, the benchmark unit-
        weighted average price determined under paragraph (3) for the 
        rebate period;
            ``(3) the benchmark unit-weighted average price determined 
        under this paragraph for a rebate period, with respect to each 
        dosage form and strength of a rebatable covered part D drug, is 
        the sum of the products of--
                    ``(A) the new drug weighted average price 
                determined under paragraph (4) with respect to each 
                package size of such dosage form and strength of such 
                drug dispensed during the six month period that begins 
                on the day on which the drug was first marketed; and
                    ``(B) the ratio of--
                            ``(i) the total number of units of such 
                        package size dispensed during the six month 
                        period that begins on the day on which the drug 
                        was first marketed; to
                            ``(ii) the total number of units of such 
                        dosage form and strength of such drug dispensed 
                        during such six month period; and
            ``(4) the new drug weighted average price, with respect to 
        each package size of such dosage form and strength of such 
        rebatable covered part D drug dispensed during the six month 
        period that begins on the day on which the drug was first 
        marketed, is the sum of the products of--
                    ``(A) each price, as calculated for a unit of such 
                drug, applicable to each package size of such dosage 
                form and strength of such drug during the six month 
                period that begins on the day on which the drug was 
                first marketed; and
                    ``(B) the ratio of--
                            ``(i) the number of days for which each 
                        such price is applicable during such six month 
                        period; to
                            ``(ii) the total number of days in such six 
                        month period.
    ``(d) Rebate Deposits.--Amounts paid as rebates under subsection 
(b) shall be deposited into the Federal Supplementary Medical Insurance 
Trust Fund established under section 1841.
    ``(e) Administration.--
            ``(1) Periodic audits.--The Secretary shall permit a 
        manufacturer of a rebatable covered part D drug to conduct 
        periodic audits, directly or through contracts, of the data and 
        information used to determine the rebate amount for such drug 
        under this section.
            ``(2) Special rules for calculation of benchmark unit-
        weighted price and benchmark-unit-weighted average price.--
                    ``(A) Benchmark unit-weighted price.--In the case 
                that the benchmark unit-weighted price of a dosage form 
                and strength of a rebatable covered part D drug is 
                determined under subsection (b)(3)(B) to be $0 due to 
                no units of such dosage form and strength of such drug 
                being dispensed on July 1, 2019, the Secretary may use 
                a calculation, as determined appropriate by the 
                Secretary, to determine the benchmark-unit weighted 
                price for such dosage form and strength of such drug 
                that is different than the calculation described in 
                such subsection.
                    ``(B) Benchmark unit-weighted average price.--In 
                the case that the benchmark unit-weighted average price 
                of a dosage form and strength of a rebatable covered 
                part D drug described under subsection (c) is 
                determined under paragraph (3) of such subsection to be 
                $0 due to no units of such dosage form and strength of 
                such drug being dispensed during the six month period 
                that begins on the day on which the drug was first 
                marketed, the Secretary may use a calculation, as 
                determined appropriate by the Secretary, to determine 
                the benchmark-unit weighted average price for such 
                dosage form and strength of such drug that is different 
                than the calculation described in such paragraph.
            ``(3) Administration.--Chapter 35 of title 44, United 
        States Code, shall not apply to the program under this section.
            ``(4) Judicial review.--There shall be no administrative or 
        judicial review under section 1869, section 1878, or otherwise 
        of the determination of the rebate amount under subsection (b), 
        including with respect to a subsequently approved drug pursuant 
        to subsection (c), including--
                    ``(A) the determination of--
                            ``(i) the total number of units of each 
                        rebatable covered part D drug under subsection 
                        (b)(1)(A);
                            ``(ii) the unit-weighted average price 
                        under subsection (b)(2);
                            ``(iii) the inflation-adjusted price under 
                        subsection (b)(3);
                            ``(iv) the benchmark unit-weighted average 
                        price under subsection (c)(3); and
                            ``(v) the new drug weighted average price 
                        under subsection (c)(4); and
                    ``(B) the application of special rules for 
                calculation of benchmark unit-weighted price and 
                benchmark unit-weighted average price under paragraph 
                (2) of this subsection.
    ``(f) Civil Money Penalty.--
            ``(1) In general.--The Secretary shall impose a civil money 
        penalty on a manufacturer that fails to comply with the 
        requirements under subsection (a)(2) with respect to providing 
        a rebate for a rebatable covered part D drug for a rebate 
        period for each such failure in an amount equal to the sum of--
                    ``(A) the rebate amount determined pursuant to 
                subsection (b) for such drug for such rebate period; 
                and
                    ``(B) 25 percent of such amount.
            ``(2) Application.--The provisions of section 1128A (other 
        than subsections (a) and (b)) shall apply to a civil money 
        penalty under this subsection in the same manner as such 
        provisions apply to a penalty or proceeding under section 
        1128A(a).
    ``(g) Rule of Construction.--Nothing in this section shall be 
construed as having any effect on--
            ``(1) any formulary design under section 1860D-4(b)(3); or
            ``(2) any discounts provided under the coverage gap 
        discount program under section 1860D-14A or the manufacturer 
        catastrophic discount program under section 1860D-14B.
    ``(h) Rebate Agreement.--
            ``(1) In general.--The Secretary shall enter into 
        agreements described in paragraph (2) with manufacturers.
            ``(2) Terms of agreement.--
                    ``(A) In general.--A rebate agreement under this 
                paragraph shall require the manufacturer to provide to 
                the Secretary rebates required under subsection 
                (a)(2)(A) with respect to a rebate period.
                    ``(B) Manufacturer provision of price and drug 
                product information.--Each manufacturer with an 
                agreement in effect under this subsection shall report 
                to the Secretary, with respect to each rebatable 
                covered part D drug of the manufacturer, at a time 
                specified by the Secretary--
                            ``(i) for each calendar month under the 
                        rebate agreement--
                                    ``(I) each wholesale acquisition 
                                cost (as defined in section 
                                1847A(c)(6)) applicable during the 
                                month, applicable to each National Drug 
                                Code for the dosage form and strength 
                                of such rebatable covered part D drug; 
                                and
                                    ``(II) the number of days with 
                                respect to which each wholesale 
                                acquisition cost reported was 
                                applicable;
                            ``(ii) the wholesale acquisition cost (as 
                        so defined) applicable on July 1, 2019, 
                        applicable to each National Drug Code for the 
                        dosage form and strength of such rebatable 
                        covered part D drug (or, in the case of a 
                        rebatable covered part D drug first approved or 
                        licensed by the Food and Drug Administration 
                        after July 1, 2019, each wholesale acquisition 
                        cost applicable to each National Drug Code of 
                        each dosage form and strength of the rebatable 
                        covered part D drug of the manufacturer during 
                        the six month period that begins on the day on 
                        which the drug was first marketed); and
                            ``(iii) such other information as the 
                        Secretary shall require.
                Information reported under this subparagraph is subject 
                to audit by the Inspector General of the Department of 
                Health and Human Services.
            ``(3) Civil money penalties.--The provisions of 
        subparagraph (C) of section 1927(b)(3) shall apply with respect 
        to information required pursuant to paragraph (2)(B) of this 
        subsection and the failure to provide such information in the 
        same manner and to the same extent as such provisions apply 
        with respect to information required under subparagraph (A) of 
        such section 1927(b)(3) and the failure to provide such 
        information.
            ``(4) Coordination.--The Secretary may coordinate rebate 
        agreements required under this subsection with agreements 
        required under section 1860D-14B.
    ``(i) Funding.--
            ``(1) In general.--There are appropriated to the Secretary, 
        from the Federal Supplementary Medical Insurance Trust Fund 
        established under section 1841--
                    ``(A) for each of calendar years 2020 through 2025, 
                $4,000,000; and
                    ``(B) for each subsequent calendar year, such sums 
                as are necessary to carry out this section.
            ``(2) Availability.--Amounts appropriated under paragraph 
        (1) shall remain available until expended.''.
    (b) Conforming Amendments.--
            (1) Section 1860D-43(a) of the Social Security Act (42 
        U.S.C. 1395w-153(a)), as amended by section 121(f)(7), is 
        amended--
                    (A) in paragraph (2), by striking ``and'' at the 
                end;
                    (B) in paragraph (3), by striking the period at the 
                end and inserting ``; and''; and
                    (C) by adding at the end the following new 
                paragraph:
            ``(4) for 2022 and each subsequent year, have entered into 
        and have in effect an agreement described in section 1860D-
        14C(h)(2) with the Secretary''.
            (2) Section 1927(c)(1)(C)(VI) of the Social Security Act 
        (42 U.S.C. 1396r-8(c)(1)(C)(VI)) is amended--
                    (A) by striking ``or any discounts'' and inserting 
                ``any discounts''; and
                    (B) by inserting ``, or any rebates under section 
                1860D-14C'' before the period.

SEC. 129. PROHIBITING BRANDING ON PART D BENEFIT CARDS.

    (a) In General.--Section 1851(j)(2)(B) of the Social Security Act 
(42 U.S.C. 1395w-21(j)(2)(B)) is amended by striking ``co-branded 
network provider'' and inserting ``co-branded, co-owned, or affiliated 
network provider, pharmacy, or pharmacy benefit manager''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to plan years beginning on or after January 1, 2022.

SEC. 130. REQUIRING PRESCRIPTION DRUG PLANS AND MA-PD PLANS TO REPORT 
              POTENTIAL FRAUD, WASTE, AND ABUSE TO THE SECRETARY OF 
              HHS.

    Section 1860D-4 of the Social Security Act (42 U.S.C. 1395w-104), 
as amended by section 125, is amended by adding at the end the 
following new subsection:
    ``(p) Reporting Potential Fraud, Waste, and Abuse.--Beginning 
January 1, 2021, the PDP sponsor of a prescription drug plan shall 
report to the Secretary, as specified by the Secretary--
            ``(1) any substantiated or suspicious activities (as 
        defined by the Secretary) with respect to the program under 
        this part as it relates to fraud, waste, and abuse; and
            ``(2) any steps made by the PDP sponsor after identifying 
        such activities to take corrective actions.''.

SEC. 131. ESTABLISHMENT OF PHARMACY QUALITY MEASURES UNDER MEDICARE 
              PART D.

    Section 1860D-4(c) of the Social Security Act (42 U.S.C. 1395w-
104(c)), as amended by section 126, is amended by adding at the end the 
following new paragraph:
            ``(8) Application of pharmacy quality measures.--
                    ``(A) In general.--A PDP sponsor that implements 
                incentive payments to a pharmacy or price concessions 
                paid by a pharmacy based on quality measures shall use 
                measures established or approved by the Secretary under 
                subparagraph (B) with respect to payment for covered 
                part D drugs dispensed by such pharmacy.
                    ``(B) Standard pharmacy quality measures.--The 
                Secretary shall establish or approve standard quality 
                measures from a consensus and evidence-based 
                organization for payments described in subparagraph 
                (A). Such measures shall focus on patient health 
                outcomes and be based on proven criteria measuring 
                pharmacy performance.
                    ``(C) Effective date.--The requirement under 
                subparagraph (A) shall take effect for plan years 
                beginning on or after January 1, 2023, or such earlier 
                date specified by the Secretary if the Secretary 
                determines there are sufficient measures established or 
                approved under subparagraph (B) to meet the requirement 
                under subparagraph (A).''.

SEC. 132. ADDITION OF NEW MEASURES BASED ON ACCESS TO BIOSIMILAR 
              BIOLOGICAL PRODUCTS TO THE 5-STAR RATING SYSTEM UNDER 
              MEDICARE ADVANTAGE.

    (a) In General.--Section 1853(o)(4) of the Social Security Act (42 
U.S.C. 1395w-23(o)(4)) is amended by adding at the end the following 
new subparagraph:
                    ``(E) Addition of new measures based on access to 
                biosimilar biological products.--
                            ``(i) In general.--For 2025 and subsequent 
                        years, the Secretary shall add a new set of 
                        measures to the 5-star rating system based on 
                        access to biosimilar biological products 
                        covered under part B and, in the case of MA-PD 
                        plans, such products that are covered part D 
                        drugs. Such measures shall assess the impact a 
                        plan's benefit structure may have on enrollees' 
                        utilization of or ability to access biosimilar 
                        biological products, including in comparison to 
                        the reference biological product, and shall 
                        include measures, as applicable, with respect 
                        to the following:
                                    ``(I) Coverage.--Assessing whether 
                                a biosimilar biological product is on 
                                the plan formulary in lieu of or in 
                                addition to the reference biological 
                                product.
                                    ``(II) Preferencing.--Assessing 
                                tier placement or cost-sharing for a 
                                biosimilar biological product relative 
                                to the reference biological product.
                                    ``(III) Utilization management 
                                tools.--Assessing whether and how 
                                utilization management tools are used 
                                with respect to a biosimilar biological 
                                product relative to the reference 
                                biological product.
                                    ``(IV) Utilization.--Assessing the 
                                percentage of enrollees prescribed the 
                                biosimilar biological product and the 
                                percentage of enrollees prescribed the 
                                reference biological product when the 
                                reference biological product is also on 
                                the plan formulary.
                            ``(ii) Definitions.--In this subparagraph, 
                        the terms `biosimilar biological product' and 
                        `reference biological product' have the meaning 
                        given those terms in section 1847A(c)(6).
                            ``(iii) Protecting patient interests.--In 
                        developing such measures, the Secretary shall 
                        ensure that each measure developed to address 
                        coverage, preferencing, or utilization 
                        management is constructed such that patients 
                        retain access to appropriate therapeutic 
                        options without undue administrative burden.''.
    (b) Clarification Regarding Application to Prescription Drug 
Plans.--To the extent the Secretary of Health and Human Services 
applies the 5-star rating system under section 1853(o)(4) of the Social 
Security Act (42 U.S.C. 1395w-23(o)(4)), or a similar system, to 
prescription drug plans under part D of title XVIII of such Act, the 
provisions of subparagraph (E) of such section, as added by subsection 
(a) of this section, shall apply under the system with respect to such 
plans in the same manner as such provisions apply to the 5-star rating 
system under such section 1853(o)(4).

SEC. 133. HHS STUDY AND REPORT ON THE INFLUENCE OF PHARMACEUTICAL 
              MANUFACTURER THIRD-PARTY REIMBURSEMENT HUBS ON HEALTH 
              CARE PROVIDERS WHO PRESCRIBE THEIR DRUGS AND BIOLOGICALS.

    (a) Study.--
            (1) In general.--The Secretary of Health and Human Services 
        (in this section referred to as the ``Secretary'') shall 
        conduct a study on the influence of pharmaceutical manufacturer 
        distribution models that provide third-party reimbursement hub 
        services on health care providers who prescribe the 
        manufacturer's drugs and biologicals, including for Medicare 
        part D beneficiaries.
            (2) Requirements.--The study under paragraph (1) shall 
        include an analysis of the following:
                    (A) The influence of pharmaceutical manufacturer 
                distribution models that provide third-party 
                reimbursement hub services to health care providers who 
                prescribe the manufacturer's drugs and biologicals, 
                including--
                            (i) the operations of pharmaceutical 
                        manufacturer distribution models that provide 
                        reimbursement hub services for health care 
                        providers who prescribe the manufacturer's 
                        products;
                            (ii) Federal laws affecting these 
                        pharmaceutical manufacturer distribution 
                        models; and
                            (iii) whether hub services could improperly 
                        incentivize health care providers to deem a 
                        drug or biological as medically necessary under 
                        section 423.578 of title 42, Code of Federal 
                        Regulations.
                    (B) Other areas determined appropriate by the 
                Secretary.
    (b) Report.--Not later than January 1, 2021, the Secretary shall 
submit to Congress a report on the study conducted under subsection 
(a), together with recommendations for such legislation and 
administrative action as the Secretary determines appropriate.
    (c) Consultation.--In conducting the study under subsection (a) and 
preparing the report under subsection (b), the Secretary shall consult 
with the Attorney General.

                       Subtitle C--Miscellaneous

SEC. 141. DRUG MANUFACTURER PRICE TRANSPARENCY.

    Title XI of the Social Security Act (42 U.S.C. 1301 et seq.) is 
amended by inserting after section 1128K the following new section:

``SEC. 1128L. DRUG MANUFACTURER PRICE TRANSPARENCY.

    ``(a) In General.--
            ``(1) Determinations.--Beginning July 1, 2022, the 
        Secretary shall make determinations as to whether a drug is an 
        applicable drug as described in subsection (b).
            ``(2) Required justification.--If the Secretary determines 
        under paragraph (1) that an applicable drug is described in 
        subsection (b), the manufacturer of the applicable drug shall 
        submit to the Secretary the justification described in 
        subsection (c) in accordance with the timing described in 
        subsection (d).
    ``(b) Applicable Drug Described.--
            ``(1) In general.--An applicable drug is described in this 
        subsection if it meets any of the following at the time of the 
        determination:
                    ``(A) Large increase.--The drug (per dose)--
                            ``(i) has a wholesale acquisition cost of 
                        at least $10; and
                            ``(ii) had an increase in the wholesale 
                        acquisition cost, with respect to 
                        determinations made--
                                    ``(I) during 2020, of at least 100 
                                percent since the date of the enactment 
                                of this section;
                                    ``(II) during 2021, of at least 100 
                                percent in the preceding 12 months or 
                                of at least 150 percent in the 
                                preceding 24 months;
                                    ``(III) during 2022, of at least 
                                100 percent in the preceding 12 months 
                                or of at least 200 percent in the 
                                preceding 36 months;
                                    ``(IV) during 2023, of at least 100 
                                percent in the preceding 12 months or 
                                of at least 250 percent in the 
                                preceding 48 months; or
                                    ``(V) on or after January 1, 2024, 
                                of at least 100 percent in the 
                                preceding 12 months or of at least 300 
                                percent in the preceding 60 months.
                    ``(B) High spending with increase.--The drug--
                            ``(i) was in the top 50th percentile of net 
                        spending under title XVIII or XIX (to the 
                        extent data is available) during any 12-month 
                        period in the preceding 60 months; and
                            ``(ii) per dose, had an increase in the 
                        wholesale acquisition cost, with respect to 
                        determinations made--
                                    ``(I) during 2020, of at least 15 
                                percent since the date of the enactment 
                                of this section;
                                    ``(II) during 2021, of at least 15 
                                percent in the preceding 12 months or 
                                of at least 20 percent in the preceding 
                                24 months;
                                    ``(III) during 2022, of at least 15 
                                percent in the preceding 12 months or 
                                of at least 30 percent in the preceding 
                                36 months;
                                    ``(IV) during 2023, of at least 15 
                                percent in the preceding 12 months or 
                                of at least 40 percent in the preceding 
                                48 months; or
                                    ``(V) on or after January 1, 2024, 
                                of at least 15 percent in the preceding 
                                12 months or of at least 50 percent in 
                                the preceding 60 months.
                    ``(C) High launch price for new drugs.--In the case 
                of a drug that is marketed for the first time on or 
                after January 1, 2020, and for which the manufacturer 
                has established the first wholesale acquisition cost on 
                or after such date, such wholesale acquisition cost for 
                a year's supply or a course of treatment for such drug 
                exceeds the gross spending for covered part D drugs at 
                which the annual out-of-pocket threshold under section 
                1860D-2(b)(4)(B) would be met for the year.
            ``(2) Special rules.--
                    ``(A) Authority of secretary to substitute 
                percentages within a de minimis range.--For purposes of 
                applying paragraph (1), the Secretary may substitute 
                for each percentage described in subparagraph (A) or 
                (B) of such paragraph (other than the percentile 
                described subparagraph (B)(i) of such paragraph) a 
                percentage within a de minimis range specified by the 
                Secretary below the percentage so described.
                    ``(B) Drugs with high launch prices annually report 
                until a therapeutic equivalent is available.--In the 
                case of a drug that the Secretary determines is an 
                applicable drug described in subparagraph (C) of 
                paragraph (1), such drug shall remain described in such 
                subparagraph (C) (and the manufacturer of such drug 
                shall annually report the justification under 
                subsection (c)(2)) until the Secretary determines that 
                there is a therapeutic equivalent (as defined in 
                section 314.3 of title 21, Code of Federal Regulations, 
                or any successor regulation) for such drug.
            ``(3) Dose.--For purposes of applying paragraph (1), the 
        Secretary shall establish a definition of the term `dose'.
    ``(c) Justification Described.--
            ``(1) Increase in wac.--In the case of a drug that the 
        Secretary determines is an applicable drug described in 
        subparagraph (A) or (B) of subsection (b)(1), the justification 
        described in this subsection is all relevant, truthful, and 
        nonmisleading information and supporting documentation 
        necessary to justify the increase in the wholesale acquisition 
        cost of the applicable drug of the manufacturer, as determined 
        appropriate by the Secretary and which may include the 
        following:
                    ``(A) The individual factors that have contributed 
                to the increase in the wholesale acquisition cost.
                    ``(B) An explanation of the role of each factor in 
                contributing to such increase.
                    ``(C) Total expenditures of the manufacturer on--
                            ``(i) materials and manufacturing for such 
                        drug;
                            ``(ii) acquiring patents and licensing for 
                        each drug of the manufacturer; and
                            ``(iii) costs to purchase or acquire the 
                        drug from another company, if applicable.
                    ``(D) The percentage of total expenditures of the 
                manufacturer on research and development for such drug 
                that was derived from Federal funds.
                    ``(E) The total expenditures of the manufacturer on 
                research and development for such drug.
                    ``(F) The total revenue and net profit generated 
                from the applicable drug for each calendar year since 
                drug approval.
                    ``(G) The total expenditures of the manufacturer 
                that are associated with marketing and advertising for 
                the applicable drug.
                    ``(H) Additional information specific to the 
                manufacturer of the applicable drug, such as--
                            ``(i) the total revenue and net profit of 
                        the manufacturer for the period of such 
                        increase, as determined by the Secretary;
                            ``(ii) metrics used to determine executive 
                        compensation;
                            ``(iii) any additional information related 
                        to drug pricing decisions of the manufacturer, 
                        such as total expenditures on--
                                    ``(I) drug research and 
                                development; or
                                    ``(II) clinical trials on drugs 
                                that failed to receive approval by the 
                                Food and Drug Administration.
            ``(2) High launch price.--In the case of a drug that the 
        Secretary determines is an applicable drug described in 
        subparagraph (C) of subsection (b)(1), the justification 
        described in this subsection is all relevant, truthful, and 
        nonmisleading information and supporting documentation 
        necessary to justify the wholesale acquisition cost of the 
        applicable drug of the manufacturer, as determined by the 
        Secretary and which may include the items described in 
        subparagraph (C) through (H) of paragraph (1).
    ``(d) Timing.--
            ``(1) Notification.--Not later than 60 days after the date 
        on which the Secretary makes the determination that a drug is 
        an applicable drug under subsection (b), the Secretary shall 
        notify the manufacturer of the applicable drug of such 
        determination.
            ``(2) Submission of justification.--Not later than 180 days 
        after the date on which a manufacturer receives a notification 
        under paragraph (1), the manufacturer shall submit to the 
        Secretary the justification required under subsection (a).
            ``(3) Posting on internet website.--
                    ``(A) In general.--Subject to subparagraph (B), not 
                later than 30 days after receiving the justification 
                under paragraph (2), the Secretary shall post on the 
                Internet website of the Centers for Medicare & Medicaid 
                Services the justification, together with a summary of 
                such justification that is written and formatted using 
                language that is easily understandable by beneficiaries 
                under titles XVIII and XIX.
                    ``(B) Exclusion of proprietary information.--The 
                Secretary shall exclude proprietary information, such 
                as trade secrets and intellectual property, submitted 
                by the manufacturer in the justification under 
                paragraph (2) from the posting described in 
                subparagraph (A).
    ``(e) Exception to Requirement for Submission.--In the case of a 
drug that the Secretary determines is an applicable drug described in 
subparagraph (A) or (B) of subsection (b)(1), the requirement to submit 
a justification under subsection (a) shall not apply where the 
manufacturer, after receiving the notification under subsection (d)(1) 
with respect to the applicable drug of the manufacturer, reduces the 
wholesale acquisition cost of a drug so that it no longer is described 
in such subparagraph (A) or (B) for at least a 4-month period, as 
determined by the Secretary.
    ``(f) Penalties.--
            ``(1) Failure to submit timely justification.--If the 
        Secretary determines that a manufacturer has failed to submit a 
        justification as required under this section, including in 
        accordance with the timing and form required, with respect to 
        an applicable drug, the Secretary shall apply a civil monetary 
        penalty in an amount of $10,000 for each day the manufacturer 
        has failed to submit such justification as so required.
            ``(2) False information.--Any manufacturer that submits a 
        justification under this section and knowingly provides false 
        information in such justification is subject to a civil 
        monetary penalty in an amount not to exceed $100,000 for each 
        item of false information.
            ``(3) Application of procedures.--The provisions of section 
        1128A (other than subsections (a) and (b)) shall apply to a 
        civil monetary penalty under this subsection in the same manner 
        as such provisions apply to a penalty or proceeding under 
        section 1128A(a). Civil monetary penalties imposed under this 
        subsection are in addition to other penalties as may be 
        prescribed by law.
    ``(g) Definitions.--In this section:
            ``(1) Drug.--The term `drug' means a drug, as defined in 
        section 201(g) of the Federal Food, Drug, and Cosmetic Act, 
        that is intended for human use and subject to section 503(b)(1) 
        of such Act, including a product licensed under section 351 of 
        the Public health Service Act.
            ``(2) Manufacturer.--The term `manufacturer' has the 
        meaning given that term in section 1847A(c)(6)(A).
            ``(3) Wholesale acquisition cost.--The term `wholesale 
        acquisition cost' has the meaning given that term in section 
        1847A(c)(6)(B).''.

SEC. 142. STRENGTHENING AND EXPANDING PHARMACY BENEFIT MANAGERS 
              TRANSPARENCY REQUIREMENTS.

    Section 1150A of the Social Security Act (42 U.S.C. 1320b-23), as 
amended by section 123, is amended--
            (1) in subsection (a)--
                    (A) in paragraph (1), by striking ``or'' at then 
                end;
                    (B) in paragraph (2), by striking the comma at the 
                end and inserting ``; or''; and
                    (C) by inserting after paragraph (2) the following 
                new paragraph:
            ``(3) a State plan under title XIX, including a managed 
        care entity (as defined in section 1932(a)(1)(B)),'';
            (2) in subsection (b)--
                    (A) in paragraph (2)--
                            (i) by striking ``(excluding bona fide'' 
                        and all that follows through ``patient 
                        education programs))''; and
                            (ii) by striking ``aggregate amount of'' 
                        and inserting ``aggregate amount and percentage 
                        of'';
                    (B) in paragraph (3), by striking ``aggregate 
                amount of'' and inserting ``aggregate amount and 
                percentage (defined as a share of gross drug costs) 
                of''; and
                    (C) by adding at the end the following new 
                paragraph:
            ``(4) The aggregate amount of bona fide service fees (which 
        include distribution service fees, inventory management fees, 
        product stocking allowances, and fees associated with 
        administrative services agreements and patient care programs 
        (such as medication compliance programs and patient education 
        programs)) the PBM received from--
                    ``(A) PDP sponsors;
                    ``(B) qualified health benefit plans;
                    ``(C) managed care entities (as defined in section 
                1932(a)(1)(b)); and
                    ``(D) drug manufacturers.'';
            (3) in subsection (c), by adding at the end the following 
        new paragraphs:
            ``(5) To States to carry out their administration and 
        oversight of the State plan under title XIX.
            ``(6) To the Federal Trade Commission to carry out section 
        5(a) of the Federal Trade Commission Act (15 U.S.C. 45a) and 
        any other relevant consumer protection or antitrust authorities 
        enforced by such Commission, including reviewing proposed 
        mergers in the prescription drug sector.
            ``(7) To assist the Department of Justice to carry out its 
        antitrust authorities, including reviewing proposed mergers in 
        the prescription drug sector.''; and
            (4) by adding at the end the following new subsection:
    ``(f) Annual OIG Evaluation and Report.--
            ``(1) Analysis.--The Inspector General of the Department of 
        Health and Human Services shall conduct an annual evaluation of 
        the information provided to the Secretary under this section. 
        Such evaluation shall include an analysis of--
                    ``(A) PBM rebates;
                    ``(B) administrative fees;
                    ``(C) the difference between what plans pay PBMs 
                and what PBMs pay pharmacies;
                    ``(D) generic dispensing rates; and
                    ``(E) other areas determined appropriate by the 
                Inspector General.
            ``(2) Report.--Not later than July 1, 2020, and annually 
        thereafter, the Inspector General of the Department of Health 
        and Human Services shall submit to Congress a report containing 
        the results of the evaluation conducted under paragraph (1), 
        together with recommendations for such legislation and 
        administrative action as the Inspector General determines 
        appropriate. Such report shall not disclose the identity of a 
        specific PBM, plan, or price charged for a drug.''.

SEC. 143. PRESCRIPTION DRUG PRICING DASHBOARDS.

    Part A of title XI of the Social Security Act is amended by adding 
at the end the following new section:

``SEC. 1150C. PRESCRIPTION DRUG PRICING DASHBOARDS.

    ``(a) In General.--Beginning not later than January 1, 2020, the 
Secretary shall establish, and annually update, internet website-based 
dashboards, through which beneficiaries, clinicians, researchers, and 
the public can review information on spending for, and utilization of, 
prescription drugs and biologicals (and related supplies and mechanisms 
of delivery) covered under each of parts B and D of title XVIII and 
under a State program under title XIX, including information on trends 
of such spending and utilization over time.
    ``(b) Medicare Part B Drug and Biological Dashboard.--
            ``(1) In general.--The dashboard established under 
        subsection (a) for part B of title XVIII shall provide the 
        information described in paragraph (2).
            ``(2) Information described.--The information described in 
        this paragraph is the following information with respect to 
        drug or biologicals covered under such part B:
                    ``(A) The brand name and, if applicable, the 
                generic names of the drug or biological.
                    ``(B) Consumer-friendly information on the uses and 
                clinical indications of the drug or biological.
                    ``(C) The manufacturer or labeler of the drug or 
                biological.
                    ``(D) To the extent feasible, the following 
                information:
                            ``(i) Average total spending per dosage 
                        unit of the drug or biological in the most 
                        recent 2 calendar years for which data is 
                        available.
                            ``(ii) The percentage change in average 
                        spending on the drug or biological per dosage 
                        unit between the most recent calendar year for 
                        which data is available and--
                                    ``(I) the preceding calendar year; 
                                and
                                    ``(II) the preceding 5 and 10 
                                calendar years.
                            ``(iii) The annual growth rate in average 
                        spending per dosage unit of the drug or 
                        biological in the most recent 5 or 10 calendar 
                        years for which data is available.
                            ``(iv) Total spending for the drug or 
                        biological for the most recent calendar year 
                        for which data is available.
                            ``(v) The number of beneficiaries receiving 
                        the drug or biological in the most recent 
                        calendar year for which data is available.
                            ``(vi) Average spending on the drug per 
                        beneficiary for the most recent calendar year 
                        for which data is available.
                    ``(E) The average sales price of the drug or 
                biological (as determined under section 1847A) for the 
                most recent quarter.
                    ``(F) Consumer-friendly information about the 
                coinsurance amount for the drug or biological for 
                beneficiaries for the most recent quarter. Such 
                information shall not include coinsurance amounts for 
                qualified medicare beneficiaries (as defined in section 
                1905(p)(1)).
                    ``(G) For the most recent calendar year for which 
                data is available--
                            ``(i) the 15 drugs and biologicals with the 
                        highest total spending under such part; and
                            ``(ii) any drug or biological for which the 
                        average annual per beneficiary spending exceeds 
                        the gross spending for covered part D drugs at 
                        which the annual out-of-pocket threshold under 
                        section 1860D-2(b)(4)(B) would be met for the 
                        year.
                    ``(H) Other information (not otherwise prohibited 
                in law from being disclosed) that the Secretary 
                determines would provide beneficiaries, clinicians, 
                researchers, and the public with helpful information 
                about drug and biological spending and utilization 
                (including trends of such spending and utilization).
    ``(c) Medicare Covered Part D Drug Dashboard.--
            ``(1) In general.--The dashboard established under 
        subsection (a) for part D of title XVIII shall provide the 
        information described in paragraph (2).
            ``(2) Information described.--The information described in 
        this paragraph is the following information with respect to 
        covered part D drugs under such part D:
                    ``(A) The information described in subparagraphs 
                (A) through (D) of subsection (b)(2).
                    ``(B) Information on average annual beneficiary 
                out-of-pocket costs below and above the annual out-of-
                pocket threshold under section 1860D-2(b)(4)(B) for the 
                current plan year. Such information shall not include 
                out-of-pocket costs for subsidy eligible individuals 
                under section 1860D-14.
                    ``(C) Information on how to access resources as 
                described in sections 1860D-1(c) and 1851(d).
                    ``(D) For the most recent calendar year for which 
                data is available--
                            ``(i) the 15 covered part D drugs with the 
                        highest total spending under such part; and
                            ``(ii) any covered part D drug for which 
                        the average annual per beneficiary spending 
                        exceeds the gross spending for covered part D 
                        drugs at which the annual out-of-pocket 
                        threshold under section 1860D-2(b)(4)(B) would 
                        be met for the year.
                    ``(E) Other information (not otherwise prohibited 
                in law from being disclosed) that the Secretary 
                determines would provide beneficiaries, clinicians, 
                researchers, and the public with helpful information 
                about covered part D drug spending and utilization 
                (including trends of such spending and utilization).
    ``(d) Medicaid Covered Outpatient Drug Dashboard.--
            ``(1) In general.--The dashboard established under 
        subsection (a) for title XIX shall provide the information 
        described in paragraph (2).
            ``(2) Information described.--The information described in 
        this paragraph is the following information with respect to 
        covered outpatient drugs under such title:
                    ``(A) The information described in subparagraphs 
                (A) through (D) of subsection (b)(2).
                    ``(B) For the most recent calendar year for which 
                data is available, the 15 covered outpatient drugs with 
                the highest total spending under such title.
                    ``(C) Other information (not otherwise prohibited 
                in law from being disclosed) that the Secretary 
                determines would provide beneficiaries, clinicians, 
                researchers, and the public with helpful information 
                about covered outpatient drug spending and utilization 
                (including trends of such spending and utilization).
    ``(e) Data Files.--The Secretary shall make available the 
underlying data for each dashboard established under subsection (a) in 
a machine-readable format.''.

SEC. 144. IMPROVING COORDINATION BETWEEN THE FOOD AND DRUG 
              ADMINISTRATION AND THE CENTERS FOR MEDICARE & MEDICAID 
              SERVICES.

    (a) In General.--
            (1) Public meeting.--
                    (A) In general.--Not later than 12 months after the 
                date of the enactment of this Act, the Secretary of 
                Health and Human Services (referred to in this section 
                as the ``Secretary'') shall convene a public meeting 
                for the purposes of discussing and providing input on 
                improvements to coordination between the Food and Drug 
                Administration and the Centers for Medicare & Medicaid 
                Services in preparing for the availability of novel 
                medical products described in subsection (c) on the 
                market in the United States.
                    (B) Attendees.--The public meeting shall include--
                            (i) representatives of relevant Federal 
                        agencies, including representatives from each 
                        of the medical product centers within the Food 
                        and Drug Administration and representatives 
                        from the coding, coverage, and payment offices 
                        within the Centers for Medicare & Medicaid 
                        Services;
                            (ii) stakeholders with expertise in the 
                        research and development of novel medical 
                        products, including manufacturers of such 
                        products;
                            (iii) representatives of commercial health 
                        insurance payers;
                            (iv) stakeholders with expertise in the 
                        administration and use of novel medical 
                        products, including physicians; and
                            (v) stakeholders representing patients and 
                        with expertise in the utilization of patient 
                        experience data in medical product development.
                    (C) Topics.--The public meeting shall include a 
                discussion of--
                            (i) the status of the drug and medical 
                        device development pipeline related to the 
                        availability of novel medical products;
                            (ii) the anticipated expertise necessary to 
                        review the safety and effectiveness of such 
                        products at the Food and Drug Administration 
                        and current gaps in such expertise, if any;
                            (iii) the expertise necessary to make 
                        coding, coverage, and payment decisions with 
                        respect to such products within the Centers for 
                        Medicare & Medicaid Services, and current gaps 
                        in such expertise, if any;
                            (iv) trends in the differences in the data 
                        necessary to determine the safety and 
                        effectiveness of a novel medical product and 
                        the data necessary to determine whether a novel 
                        medical product meets the reasonable and 
                        necessary requirements for coverage and payment 
                        under title XVIII of the Social Security Act 
                        pursuant to section 1862(a)(1)(A) of such Act 
                        (42 U.S.C. 1395y(a)(1)(A));
                            (v) the availability of information for 
                        sponsors of such novel medical products to meet 
                        each of those requirements; and
                            (vi) the coordination of information 
                        related to significant clinical improvement 
                        over existing therapies for patients between 
                        the Food and Drug Administration and the 
                        Centers for Medicare & Medicaid Services with 
                        respect to novel medical products.
                    (D) Trade secrets and confidential information.--No 
                information discussed as a part of the public meeting 
                under this paragraph shall be construed as authorizing 
                the Secretary to disclose any information that is a 
                trade secret or confidential information subject to 
                section 552(b)(4) of title 5, United States Code.
            (2) Improving transparency of criteria for medicare 
        coverage.--
                    (A) Draft guidance.--Not later than 18 months after 
                the public meeting under paragraph (1), the Secretary 
                shall update the final guidance titled ``National 
                Coverage Determinations with Data Collection as a 
                Condition of Coverage: Coverage with Evidence 
                Development'' to address any opportunities to improve 
                the availability and coordination of information as 
                described in clauses (iv) through (vi) of paragraph 
                (1)(C).
                    (B) Final guidance.--Not later than 12 months after 
                issuing draft guidance under subparagraph (A), the 
                Secretary shall finalize the updated guidance to 
                address any such opportunities.
    (b) Report on Coding, Coverage, and Payment Processes Under 
Medicare for Novel Medical Products.--Not later than 12 months after 
the date of the enactment of this Act, the Secretary shall publish a 
report on the Internet website of the Department of Health and Human 
Services regarding processes under the Medicare program under title 
XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) with respect 
to the coding, coverage, and payment of novel medical products 
described in subsection (c). Such report shall include the following:
            (1) A description of challenges in the coding, coverage, 
        and payment processes under the Medicare program for novel 
        medical products.
            (2) Recommendations to--
                    (A) incorporate patient experience data (such as 
                the impact of a disease or condition on the lives of 
                patients and patient treatment preferences) into the 
                coverage and payment processes within the Centers for 
                Medicare & Medicaid Services;
                    (B) decrease the length of time to make national 
                and local coverage determinations under the Medicare 
                program (as those terms are defined in subparagraph (A) 
                and (B), respectively, of section 1862(l)(6) of the 
                Social Security Act (42 U.S.C. 1395y(l)(6));
                    (C) streamline the coverage process under the 
                Medicare program and incorporate input from relevant 
                stakeholders into such coverage determinations; and
                    (D) identify potential mechanisms to incorporate 
                novel payment designs similar to those in development 
                in commercial insurance plans and State plans under 
                title XIX of such Act (42 U.S.C. 1396 et seq.) into the 
                Medicare program.
    (c) Novel Medical Products Described.--For purposes of this 
section, a novel medical product described in this subsection is a 
medical product, including a drug, biological (including gene and cell 
therapy), or medical device, that has been designated as a breakthrough 
therapy under section 506(a) of the Federal Food, Drug, and Cosmetic 
Act (21 U.S.C. 356(a)), a breakthrough device under section 515B of 
such Act (21 U.S.C. 360e-3), or a regenerative advanced therapy under 
section 506(g) of such Act (21 U.S.C. 356(g)).

SEC. 145. PATIENT CONSULTATION IN MEDICARE NATIONAL AND LOCAL COVERAGE 
              DETERMINATIONS IN ORDER TO MITIGATE BARRIERS TO INCLUSION 
              OF SUCH PERSPECTIVES.

    Section 1862(l) of the Social Security Act (42 U.S.C. 1395y(l)) is 
amended by adding at the end the following new paragraph:
            ``(7) Patient consultation in national and local coverage 
        determinations.--The Secretary may consult with patients and 
        organizations representing patients in making national and 
        local coverage determinations.''.

SEC. 146. GAO STUDY ON INCREASES TO MEDICARE AND MEDICAID SPENDING DUE 
              TO COPAYMENT COUPONS AND OTHER PATIENT ASSISTANCE 
              PROGRAMS.

    (a) 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 
within the Medicare and Medicaid programs. The study shall assess the 
following:
            (1) The extent to which copayment coupons and other patient 
        assistance programs contribute to inflated prescription drug 
        prices under such programs.
            (2) The impact copayment coupons and other patient 
        assistance programs have in the Medicare Part D program 
        established under part D of title XVIII of the Social Security 
        Act (42 U.S.C. 1395w-101 et seq.) on utilization of higher-cost 
        brand drugs and lower utilization of generic drugs in that 
        program.
            (3) The extent to which manufacturers report or obtain tax 
        benefits, including deductions of business expenses and 
        charitable contributions, for any of the following:
                    (A) Offering copayment coupons or other patient 
                assistance programs.
                    (B) Sponsoring manufacturer patient assistance 
                programs.
                    (C) Paying for sponsorships at outreach and 
                advocacy events organized by patient assistance 
                programs.
            (4) The efficacy of oversight conducted to ensure that 
        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.
    (b) 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.--The term ``manufacturer'' has the 
        meaning given that term in section 1927(k)(5) of the Social 
        Security Act (42 U.S.C. 1396r-8(k)(5)).
            (3) 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.
            (4) 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 of Health and Human Services.
    (c) Report.--Not later than 24 months 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 subsection (a).

SEC. 147. MEDPAC REPORT ON SHIFTING COVERAGE OF CERTAIN MEDICARE PART B 
              DRUGS TO MEDICARE PART D.

    (a) Study.--The Medicare Payment Advisory Commission (in this 
section referred to as the ``Commission'') shall conduct a study on 
shifting coverage of certain drugs and biologicals for which payment is 
currently made under part B of title XVIII of the Social Security Act 
(42 U.S.C. 1395j et seq.) to part D of such title (42 U.S.C. 1395w-21 
et seq.). Such study shall include an analysis of--
            (1) differences in program structures and payment methods 
        for drugs and biologicals covered under such parts B and D, 
        including effects of such a shift on program spending, 
        beneficiary cost-sharing liability, and utilization management 
        techniques for such drugs and biologicals; and
            (2) the feasibility and policy implications of shifting 
        coverage of drugs and biologicals for which payment is 
        currently made under such part B to such part D.
    (b) Report.--
            (1) In general.--Not later than June 30, 2021, the 
        Commission shall submit to Congress a report containing the 
        results of the study conducted under subsection (a).
            (2) Contents.--The report under paragraph (1) shall include 
        information, and recommendations as the Commission deems 
        appropriate, regarding--
                    (A) formulary design under such part D;
                    (B) the ability of the benefit structure under such 
                part D to control total spending on drugs and 
                biologicals for which payment is currently made under 
                such part B;
                    (C) changes to the bid process under such part D, 
                if any, that may be necessary to integrate coverage of 
                such drugs and biologicals into such part D; and
                    (D) any other changes to the program that Congress 
                should consider in determining whether to shift 
                coverage of such drugs and biologicals from such part B 
                to such part D.

SEC. 148. TAKING STEPS TO FULFILL TREATY OBLIGATIONS TO TRIBAL 
              COMMUNITIES.

    (a) GAO Study.--The Comptroller General shall conduct a study 
regarding access to, and the cost of, prescription drugs among Indians. 
The study shall include--
            (1) a review of what Indian health programs pay for 
        prescription drugs on reservations and in urban centers 
        relative to other consumers;
            (2) recommendations to align the value of prescription drug 
        discounts available under the Medicaid drug rebate program 
        established under section 1927 of the Social Security Act (42 
        U.S.C. 1396r-8) with prescription drug discounts available to 
        Tribal communities through the purchased/referred care program 
        of the Indian Health Service for physician administered drugs; 
        and
            (3) an examination of how Tribal communities and urban 
        Indian organizations utilize the Medicare part D program 
        established under title XVIII of the Social Security Act (42 
        U.S.C. 1395w-101 et seq.) and recommendations to improve 
        enrollment among Indians in that program.
    (b) Report.--Not later than 18 months after the date of the 
enactment of this Act, the Comptroller General shall submit to Congress 
a report containing the results of the study conducted under subsection 
(a), together with recommendations for such legislation and 
administrative action as the Comptroller General determines 
appropriate.
    (c) Definitions.--In this section:
            (1) Comptroller general.--The term ``Comptroller General'' 
        means the Comptroller General of the United States.
            (2) Indian; indian health program; indian tribe.--The terms 
        ``Indian'', ``Indian health program'', and ``Indian tribe'' 
        have the meanings given those terms in section 4 of the Indian 
        Health Care Improvement Act (25 U.S.C. 1603).

                           TITLE II--MEDICAID

SEC. 201. MEDICAID PHARMACY AND THERAPEUTICS COMMITTEE IMPROVEMENTS.

    (a) In General.--Subparagraph (A) of section 1927(d)(4) of the 
Social Security Act (42 U.S.C. 1396r-8(d)(4)) is amended to read as 
follows:
                    ``(A)(i) The formulary is developed and reviewed by 
                a pharmacy and therapeutics committee consisting of 
                physicians, pharmacists, and other appropriate 
                individuals appointed by the Governor of the State.
                    ``(ii) Subject to clause (vi), the State 
                establishes and implements a conflict of interest 
                policy for the pharmacy and therapeutics committee 
                that--
                            ``(I) is publicly accessible;
                            ``(II) requires all committee members to 
                        complete, on at least an annual basis, a 
                        disclosure of relationships, associations, and 
                        financial dealings that may affect their 
                        independence of judgement in committee matters; 
                        and
                            ``(III) contains clear processes, such as 
                        recusal from voting or discussion, for those 
                        members who report a conflict of interest, 
                        along with appropriate processes to address any 
                        instance where a member fails to report a 
                        conflict of interest.
                    ``(iii) The membership of the pharmacy and 
                therapeutics committee--
                            ``(I) includes at least 1 actively 
                        practicing physician and at least 1 actively 
                        practicing pharmacist, each of whom--
                                    ``(aa) is independent and free of 
                                conflict with respect to manufacturers 
                                and Medicaid participating plans or 
                                subcontractors, including pharmacy 
                                benefit managers; and
                                    ``(bb) has expertise in the care of 
                                1 or more Medicaid-specific populations 
                                such as elderly or disabled 
                                individuals, children with complex 
                                medical needs, or low-income 
                                individuals with chronic illnesses and
                            ``(II) is made publicly available.
                    ``(iv) At the option of the State, the State's drug 
                use review board established under subsection (g)(3) 
                may serve as the pharmacy and therapeutics committee 
                provided the State ensures that such board meets the 
                requirements of clauses (ii) and (iii).
                    ``(v) The State reviews and has final approval of 
                the formulary established by the pharmacy and 
                therapeutics committee.
                    ``(vi) If the Secretary determines it appropriate 
                or necessary based on the findings and recommendations 
                of the Comptroller General of the United States in the 
                report submitted to Congress under section 203 of the 
                Prescription Drug Pricing Reduction Act of 2019, the 
                Secretary shall issue guidance that States must follow 
                for establishing conflict of interest policies for the 
                pharmacy and therapeutics committee in accordance with 
                the requirements of clause (ii), including appropriate 
                standards and requirements for identifying, addressing, 
                and reporting on conflicts of interest.''.
    (b) Application to Medicaid Managed Care Organizations.--Clause 
(xiii) of section 1903(m)(2)(A) of the Social Security Act (42 U.S.C. 
1396b(m)(2)(A)) is amended--
            (1) by striking ``and (III)'' and inserting ``(III)'';
            (2) by striking the period at the end and inserting ``, and 
        (IV) any formulary used by the entity for covered outpatient 
        drugs dispensed to individuals eligible for medical assistance 
        who are enrolled with the entity is developed and reviewed by a 
        pharmacy and therapeutics committee that meets the requirements 
        of clauses (ii) and (iii) of section 1927(d)(4)(A).''; and
            (3) by moving the left margin 2 ems to the left.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date that is 1 year after the date of enactment of this 
Act.

SEC. 202. IMPROVING REPORTING REQUIREMENTS AND DEVELOPING STANDARDS FOR 
              THE USE OF DRUG USE REVIEW BOARDS IN STATE MEDICAID 
              PROGRAMS.

    (a) In General.--Section 1927(g)(3) of the Social Security Act (42 
U.S.C. 1396r-8(g)(3)) is amended--
            (1) by amending subparagraph (B) to read as follows:
                    ``(B) Membership.--
                            ``(i) In general.--The membership of the 
                        DUR Board shall include health care 
                        professionals who have recognized knowledge and 
                        expertise in one or more of the following:
                                    ``(I) The clinically appropriate 
                                prescribing of covered outpatient 
                                drugs.
                                    ``(II) The clinically appropriate 
                                dispensing and monitoring of covered 
                                outpatient drugs.
                                    ``(III) Drug use review, 
                                evaluation, and intervention.
                                    ``(IV) Medical quality assurance.
                            ``(ii) Membership requirements.--The 
                        membership of the DUR Board shall--
                                    ``(I) be made up of at least \1/3\ 
                                but no more than 51 percent members who 
                                are licensed and actively practicing 
                                physicians and at least \1/3\ members 
                                who are licensed and actively 
                                practicing pharmacists; and
                                    ``(II) include at least 1 licensed 
                                and actively practicing physician and 
                                at least 1 licensed and actively 
                                practicing pharmacist, each of whom--
                                            ``(aa) is independent and 
                                        free of any conflict, including 
                                        with respect to manufacturers, 
                                        medicaid managed care entities, 
                                        or pharmacy benefit managers; 
                                        and
                                            ``(bb) has expertise in the 
                                        care of 1 or more categories of 
                                        individuals who are likely to 
                                        be eligible for benefits under 
                                        this title, including elderly 
                                        or disabled individuals, 
                                        children with complex medical 
                                        needs, or low-income 
                                        individuals with chronic 
                                        illnesses; and
                                    ``(III) be made publicly available.
                            ``(iii) Conflict of interest policy.--The 
                        State shall establish and implement a conflict 
                        of interest policy for the DUR Board that--
                                    ``(I) is publicly accessible;
                                    ``(II) requires all board members 
                                to complete, on at least an annual 
                                basis, a disclosure of relationships, 
                                associations, and financial dealings 
                                that may affect their independence of 
                                judgement in board matters; and
                                    ``(III) contains clear processes, 
                                such as recusal from voting or 
                                discussion, for those members who 
                                report a conflict of interest, along 
                                with appropriate processes to address 
                                any instance where a member fails to 
                                report a conflict of interest.''; and
            (2) by adding at the end the following new subparagraph:
                    ``(E) DUR board membership reports.--
                            ``(i) DUR board reports.--Each State shall 
                        require the DUR Board to prepare and submit to 
                        the State an annual report on the DUR Board 
                        membership. Each such report shall include any 
                        conflicts of interest with respect to members 
                        of the DUR Board that the DUR Board recorded or 
                        was aware of during the period that is the 
                        subject of the report, and the process applied 
                        to address such conflicts of interest, in 
                        addition to any other information required by 
                        the State.
                            ``(ii) Inclusion of dur board membership 
                        information in state reports.--Each annual 
                        State report to the Secretary required under 
                        subparagraph (D) shall include--
                                    ``(I) the number of individuals 
                                serving on the State's DUR Board;
                                    ``(II) the names and professions of 
                                the individuals serving on such DUR 
                                Board;
                                    ``(III) any conflicts of interest 
                                or recusals with respect to members of 
                                such DUR Board reported by the DUR 
                                Board or that the State was aware of 
                                during the period that is the subject 
                                of the report; and
                                    ``(IV) whether the State has 
                                elected for such DUR Board to serve as 
                                the committee responsible for 
                                developing a State formulary under 
                                subsection (d)(4)(A).''.
    (b) Managed Care Requirements.--Section 1932(i) of the Social 
Security Act (42 U.S.C. 1396u-2(i)) is amended--
            (1) by striking ``section 483.3(s)(4)'' and inserting 
        ``section 438.3(s)(4)'';
            (2) by striking ``483.3(s)(5)'' and inserting 
        ``438.3(s)(5)''; and
            (3) by adding at the end the following: ``Such a managed 
        care entity shall not be considered to be in compliance with 
        the requirement of such section 438.3(s)(5) that the entity 
        provide a detailed description of its drug utilization review 
        activities unless the entity includes a description of the 
        prospective drug review activities described in paragraph 
        (2)(A) of section 1927(g) and the activities listed in 
        paragraph (3)(C) of section 1927(g), makes the underlying drug 
        utilization review data available to the State and the 
        Secretary, and provides such other information as deemed 
        appropriate by the Secretary.''.
    (c) Development of National Standards for Medicaid Drug Use 
Review.--The Secretary of Health and Human Services may promulgate 
regulations or guidance establishing national standards for Medicaid 
drug use review programs under section 1927(g) of the Social Security 
Act (42 U.S.C. 1396r-8) and drug utilization review activities and 
requirements under section 1932(i) of such Act (42 U.S.C. 1396u-2(i)), 
for the purpose of aligning review criteria for prospective and 
retrospective drug use review across all State Medicaid programs.
    (d) CMS Guidance.--Not later than 18 months after the date of 
enactment of this Act, the Secretary of Health and Human Services shall 
issue guidance--
            (1) outlining steps that States must take to come into 
        compliance with statutory and regulatory requirements for 
        prospective and retrospective drug use review under section 
        1927(g) of the Social Security Act (42 U.S.C. 1396r-8(g)) and 
        drug utilization review activities and requirements under 
        section 1932(i) of such Act (42 U.S.C. 1396u-2(i)) (including 
        with respect to requirements that were in effect before the 
        date of enactment of this Act); and
            (2) describing the actions that the Secretary will take to 
        enforce such requirements.
    (e) Effective Date.--The amendments made by this section shall take 
effect on the date that is 1 year after the date of enactment of this 
Act.

SEC. 203. GAO REPORT ON CONFLICTS OF INTEREST IN STATE MEDICAID PROGRAM 
              DRUG USE REVIEW BOARDS AND PHARMACY AND THERAPEUTICS 
              (P&T) COMMITTEES.

    (a) Investigation.--The Comptroller General of the United States 
shall conduct an investigation of potential or existing conflicts of 
interest among members of State Medicaid program State drug use review 
boards (in this section referred to as ``DUR Boards'') and pharmacy and 
therapeutics committees (in this section referred to as ``P&T 
Committees'').
    (b) Report.--Not later than 24 months after the date of enactment 
of this Act, the Comptroller General shall submit to Congress a report 
on the investigation conducted under subsection (a) that includes the 
following:
            (1) A description outlining how DUR Boards and P&T 
        Committees operate in States, including details with respect 
        to--
                    (A) the structure and operation of DUR Boards and 
                statewide P&T Committees;
                    (B) States that operate separate P&T Committees for 
                their fee-for-service Medicaid program and their 
                Medicaid managed care organizations or other Medicaid 
                managed care arrangements (collectively referred to in 
                this section as ``Medicaid MCOs)''; and
                    (C) States that allow Medicaid MCOs to have their 
                own P&T Committees and the extent to which pharmacy 
                benefit managers administer or participate in such P&T 
                Committees.
            (2) A description outlining the differences between DUR 
        Boards established in accordance with section 1927(g)(3) of the 
        Social Security Act (42 U.S.C. 1396r(g)(3)) and P&T Committees.
            (3) A description outlining the tools P&T Committees may 
        use to determine Medicaid drug coverage and utilization 
        management policies.
            (4) An analysis of whether and how States or P&T Committees 
        establish participation and independence requirements for DUR 
        Boards and P&T Committees, including with respect to entities 
        with connections with drug manufacturers, State Medicaid 
        programs, managed care organizations, and other entities or 
        individuals in the pharmaceutical industry.
            (5) A description outlining how States, DUR Boards, or P&T 
        Committees define conflicts of interest.
            (6) A description of how DUR Boards and P&T Committees 
        address conflicts of interest, including who is responsible for 
        implementing such policies.
            (7) A description of the tools, if any, States use to 
        ensure that there are no conflicts of interest on DUR Boards 
        and P&T Committees.
            (8) An analysis of the effectiveness of tools States use to 
        ensure that there are no conflicts of interest on DUR Boards 
        and P&T Committees and, if applicable, recommendations as to 
        how such tools could be improved.
            (9) A review of strategies States may use to guard against 
        conflicts of interest on DUR Boards and P&T Committees and to 
        ensure compliance with the requirements of titles XI and XIX of 
        the Social Security Act (42 U.S.C. 1301 et seq., 1396 et seq.) 
        and access to effective, clinically appropriate, and medically 
        necessary drug treatments for Medicaid beneficiaries, including 
        recommendations for such legislative and administrative actions 
        as the Comptroller General determines appropriate.

SEC. 204. ENSURING THE ACCURACY OF MANUFACTURER PRICE AND DRUG PRODUCT 
              INFORMATION UNDER THE MEDICAID DRUG REBATE PROGRAM.

    (a) Audit of Manufacturer Price and Drug Product Information.--
            (1) In general.--Subparagraph (B) of section 1927(b)(3) of 
        the Social Security Act (42 U.S.C. 1396r-8(b)(3)) is amended to 
        read as follows:
                    ``(B) Audits and surveys of manufacturer price and 
                drug product information.--
                            ``(i) Audits.--The Secretary shall conduct 
                        ongoing audits of the price and drug product 
                        information reported by manufacturers under 
                        subparagraph (A) for the most recently ended 
                        rebate period to ensure the accuracy and 
                        timeliness of such information. In conducting 
                        such audits, the Secretary may employ 
                        evaluations, surveys, statistical sampling, 
                        predictive analytics and other relevant tools 
                        and methods .
                            ``(ii) Verifications surveys of average 
                        manufacturer price and manufacturer's average 
                        sales price.--In addition to the audits 
                        required under clause (i), the Secretary may 
                        survey wholesalers and manufacturers (including 
                        manufacturers that directly distribute their 
                        covered outpatient drugs (in this subparagraph 
                        referred to as `direct sellers')), when 
                        necessary, to verify manufacturer prices and 
                        manufacturer's average sales prices (including 
                        wholesale acquisition cost) to make payment 
                        reported under subparagraph (A).
                            ``(iii) Penalties.--In addition to other 
                        penalties as may be prescribed by law, 
                        including under subparagraph (C) of this 
                        paragraph, the Secretary may impose a civil 
                        monetary penalty in an amount not to exceed 
                        $185,000 on an annual basis on a wholesaler, 
                        manufacturer, or direct seller, if the 
                        wholesaler, manufacturer, or direct seller of a 
                        covered outpatient drug refuses a request for 
                        information about charges or prices by the 
                        Secretary in connection with an audit or survey 
                        under this subparagraph or knowingly provides 
                        false information. The provisions of section 
                        1128A (other than subsections (a) (with respect 
                        to amounts of penalties or additional 
                        assessments) and (b)) shall apply to a civil 
                        money penalty under this clause in the same 
                        manner as such provisions apply to a penalty or 
                        proceeding under section 1128A(a).
                            ``(iv) Reports.--
                                    ``(I) Report to congress.--The 
                                Secretary shall, not later than 18 
                                months after date of enactment of this 
                                subparagraph, submit a report to the 
                                Committee on Energy and Commerce of the 
                                House of Representatives and the 
                                Committee on Finance of the Senate 
                                regarding additional regulatory or 
                                statutory changes that may be required 
                                in order to ensure accurate and timely 
                                reporting and oversight of manufacturer 
                                price and drug product information, 
                                including whether changes should be 
                                made to reasonable assumption 
                                requirements to ensure such assumptions 
                                are reasonable and accurate or whether 
                                another methodology for ensuring 
                                accurate and timely reporting of price 
                                and drug product information should be 
                                considered to ensure the integrity of 
                                the drug rebate program under this 
                                section.
                                    ``(II) Annual reports.--The 
                                Secretary shall, on at least an annual 
                                basis, submit a report to the Committee 
                                on Energy and Commerce of the House of 
                                Representatives and the Committee on 
                                Finance of the Senate summarizing the 
                                results of the audits and surveys 
                                conducted under this subparagraph 
                                during the period that is the subject 
                                of the report.
                                    ``(III) Content.--Each report 
                                submitted under subclause (II) shall, 
                                with respect to the period that is the 
                                subject of the report, include 
                                summaries of--
                                            ``(aa) error rates in the 
                                        price, drug product, and other 
                                        relevant information supplied 
                                        by manufacturers under 
                                        subparagraph (A);
                                            ``(bb) the timeliness with 
                                        which manufacturers, 
                                        wholesalers, and direct sellers 
                                        provide information required 
                                        under subparagraph (A) or under 
                                        clause (i) or (ii) of this 
                                        subparagraph;
                                            ``(cc) the number of 
                                        manufacturers, wholesalers, and 
                                        direct sellers and drug 
                                        products audited under this 
                                        subparagraph;
                                            ``(dd) the types of price 
                                        and drug product information 
                                        reviewed under the audits 
                                        conducted under this 
                                        subparagraph;
                                            ``(ee) the tools and 
                                        methodologies employed in such 
                                        audits;
                                            ``(ff) the findings of such 
                                        audits, including which 
                                        manufacturers, if any, were 
                                        penalized under this 
                                        subparagraph; and
                                            ``(gg) such other relevant 
                                        information as the Secretary 
                                        shall deem appropriate.
                                    ``(IV) Protection of information.--
                                In preparing a report required under 
                                subclause (II), the Secretary shall 
                                redact such proprietary information as 
                                the Secretary determines appropriate to 
                                prevent disclosure of, and to 
                                safeguard, such information.
                            ``(v) Appropriations.--Out of any funds in 
                        the Treasury not otherwise appropriated, there 
                        is appropriated to the Secretary $2,000,000 for 
                        fiscal year 2020 and each fiscal year 
                        thereafter to carry out this subparagraph.''.
            (2) Effective date.--The amendments made by this subsection 
        shall take effect on the first day of the first fiscal quarter 
        that begins after the date of enactment of this Act.
    (b) Increased Penalties for Noncompliance With Reporting 
Requirements.--
            (1) Increased penalty for late reporting of information.--
        Section 1927(b)(3)(C)(i) of the Social Security Act (42 U.S.C. 
        1396r-8(b)(3)(C)(i)) is amended by striking ``increased by 
        $10,000 for each day in which such information has not been 
        provided and such amount shall be paid to the Treasury'' and 
        inserting ``, for each covered outpatient drug with respect to 
        which such information is not provided, $50,000 for the first 
        day that such information is not provided on a timely basis and 
        $19,000 for each subsequent day that such information is not 
        provided''.
            (2) Increased penalty for knowingly reporting false 
        information.--Section 1927(b)(3)(C)(ii) of the Social Security 
        Act (42 U.S.C. 1396r-8(b)(3)(C)(ii)) is amended by striking 
        ``$100,000'' and inserting ``$500,000''.
            (3) Effective date.--The amendments made by this subsection 
        shall take effect on the first day of the first fiscal quarter 
        that begins after the date of enactment of this Act.

SEC. 205. EXCLUDING AUTHORIZED GENERIC DRUGS FROM CALCULATION OF 
              AVERAGE MANUFACTURER PRICE UNDER THE MEDICAID DRUG REBATE 
              PROGRAM.

    (a) In General.--Subparagraph (C) of section 1927(k)(1) of the 
Social Security Act (42 U.S.C. 1396r-8(k)(1)) is amended--
            (1) in the subparagraph heading, by striking ``Inclusion'' 
        and inserting ``Exclusion'';
            (2) by striking ``a new drug application'' and inserting 
        ``the manufacturer's new drug application''; and
            (3) by striking ``inclusive'' and inserting ``exclusive''.
    (b) Excluding Manufacturers From Definition of Wholesaler.--Section 
1927(k)(11) of the Social Security Act (42 U.S.C. 1396r-8(k)(11)) is 
amended--
            (1) by striking ``manufacturers,'';
            (2) by striking ``manufacturer's and''; and
            (3) by adding at the end the following: ``Such term does 
        not include a manufacturer engaged in wholesale distribution or 
        a manufacturer's warehouses.''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the first day of the first fiscal quarter that begins after 
the date of enactment of this Act.

SEC. 206. IMPROVING TRANSPARENCY AND PREVENTING THE USE OF ABUSIVE 
              SPREAD PRICING AND RELATED PRACTICES IN MEDICAID.

    (a) Pass-through Pricing Required.--
            (1) In general.--Section 1927(e) of the Social Security Act 
        (42 U.S.C. 1396r-8(e)) is amended by adding at the end the 
        following:
            ``(6) Pass-through pricing required.--A contract between 
        the State and a pharmacy benefit manager (referred to in this 
        paragraph as a `PBM'), or a contract between the State and a 
        managed care entity or other specified entity (as such terms 
        are defined in section 1903(m)(9)(D)) that includes provisions 
        making the entity responsible for coverage of covered 
        outpatient drugs dispensed to individuals enrolled with the 
        entity, shall require that payment for such drugs and related 
        administrative services (as applicable), including payments 
        made by a PBM on behalf of the State or entity, is based on a 
        pass-through pricing model under which--
                    ``(A) any payment made by the entity or the PBM (as 
                applicable) for such a drug--
                            ``(i) is limited to--
                                    ``(I) ingredient cost; and
                                    ``(II) a professional dispensing 
                                fee that is not less than the 
                                professional dispensing fee that the 
                                State plan or waiver would pay if the 
                                plan or waiver was making the payment 
                                directly;
                            ``(ii) is passed through in its entirety by 
                        the entity or PBM to the pharmacy that 
                        dispenses the drug; and
                            ``(iii) is made in a manner that is 
                        consistent with section 1902(a)(30)(A) and 
                        sections 447.512, 447.514, and 447.518 of title 
                        42, Code of Federal Regulations (or any 
                        successor regulation) as if such requirements 
                        applied directly to the entity or the PBM;
                    ``(B) payment to the entity or the PBM (as 
                applicable) for administrative services performed by 
                the entity or PBM is limited to a reasonable 
                administrative fee that covers the reasonable cost of 
                providing such services;
                    ``(C) the entity or the PBM (as applicable) shall 
                make available to the State, and the Secretary upon 
                request, all costs and payments related to covered 
                outpatient drugs and accompanying administrative 
                services incurred, received, or made by the entity or 
                the PBM, including ingredient costs, professional 
                dispensing fees, administrative fees, post-sale and 
                post-invoice fees, discounts, or related adjustments 
                such as direct and indirect remuneration fees, and any 
                and all other remuneration; and
                    ``(D) any form of spread pricing whereby any amount 
                charged or claimed by the entity or the PBM (as 
                applicable) is in excess of the amount paid to the 
                pharmacies on behalf of the entity, including any post-
                sale or post-invoice fees, discounts, or related 
                adjustments such as direct and indirect remuneration 
                fees or assessments (after allowing for a reasonable 
                administrative fee as described in subparagraph (B)) is 
                not allowable for purposes of claiming Federal matching 
                payments under this title.''.
            (2) Conforming amendment.--Section 1903(m)(2)(A)(xiii) of 
        such Act (42 U.S.C. 1396b(m)(2)(A)(xiii)) is amended--
                    (A) by striking ``and (III)'' and inserting 
                ``(III)'';
                    (B) by inserting before the period at the end the 
                following: ``, and (IV) pharmacy benefit management 
                services provided by the entity, or provided by a 
                pharmacy benefit manager on behalf of the entity under 
                a contract or other arrangement between the entity and 
                the pharmacy benefit manager, shall comply with the 
                requirements of section 1927(e)(6)''; and
                    (C) by moving the left margin 2 ems to the left.
            (3) Effective date.--The amendments made by this subsection 
        apply to contracts between States and managed care entities, 
        other specified entities, or pharmacy benefits managers that 
        are entered into or renewed on or after the date that is 18 
        months after the date of enactment of this Act.
    (b) Survey of Retail Prices.--
            (1) In general.--Section 1927(f) of the Social Security Act 
        (42 U.S.C. 1396r-8(f)) is amended--
                    (A) by striking ``and'' after the semicolon at the 
                end of paragraph (1)(A)(i) and all that precedes it 
                through ``(1)'' and inserting the following:
            ``(1) Survey of retail prices.--The Secretary shall conduct 
        a survey of retail community drug prices, to include at least 
        the national average drug acquisition cost, as follows:
                    ``(A) Use of vendor.--The Secretary may contract 
                services for--
                            ``(i) with respect to retail community 
                        pharmacies, the determination on a monthly 
                        basis of retail survey prices of the national 
                        average drug acquisition cost for covered 
                        outpatient drugs for such pharmacies, net of 
                        all discounts and rebates (to the extent any 
                        information with respect to such discounts and 
                        rebates is available), the average 
                        reimbursement received for such drugs by such 
                        pharmacies from all sources of payment, 
                        including third parties, and, to the extent 
                        available, the usual and customary charges to 
                        consumers for such drugs; and'';
                    (B) by adding at the end of paragraph (1) the 
                following:
                    ``(F) Survey reporting.--In order to meet the 
                requirement of section 1902(a)(54), a State shall 
                require that any retail community pharmacy in the State 
                that receives any payment, administrative fee, 
                discount, or rebate related to the dispensing of 
                covered outpatient drugs to individuals receiving 
                benefits under this title, regardless of whether such 
                payment, fee, discount, or rebate is received from the 
                State or a managed care entity directly or from a 
                pharmacy benefit manager or another entity that has a 
                contract with the State or a managed care entity, shall 
                respond to surveys of retail prices conducted under 
                this subsection.
                    ``(G) Survey information.--Information on retail 
                community prices obtained under this paragraph shall be 
                made publicly available and shall include at least the 
                following:
                            ``(i) The monthly response rate of the 
                        survey including a list of pharmacies not in 
                        compliance with subparagraph (F).
                            ``(ii) The sampling frame and number of 
                        pharmacies sampled monthly.
                            ``(iii) Characteristics of reporting 
                        pharmacies, including type (such as independent 
                        or chain), geographic or regional location, and 
                        dispensing volume.
                            ``(iv) Reporting of a separate national 
                        average drug acquisition cost for each drug for 
                        independent retail pharmacies and chain 
                        operated pharmacies.
                            ``(v) Information on price concessions 
                        including on and off invoice discounts, 
                        rebates, and other price concessions.
                            ``(vi) Information on average professional 
                        dispensing fees paid.
                    ``(H) Penalties.--
                            ``(i) Failure to provide timely 
                        information.--A retail community pharmacy that 
                        fails to respond to a survey conducted under 
                        this subsection on a timely basis may be 
                        subject to a civil monetary penalty in the 
                        amount of $10,000 for each day in which such 
                        information has not been provided.
                            ``(ii) False information.--A retail 
                        community pharmacy that knowingly provides 
                        false information in response to a survey 
                        conducted under this subsection may be subject 
                        to a civil money penalty in an amount not to 
                        exceed $100,000 for each item of false 
                        information.
                            ``(iii) Other penalties.--Any civil money 
                        penalties imposed under this subparagraph shall 
                        be 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).
                    ``(I) Report on specialty pharmacies.--
                            ``(i) In general.--Not later than 1 year 
                        after the effective date of this subparagraph, 
                        the Secretary shall submit a report to Congress 
                        examining specialty drug coverage and 
                        reimbursement under this title.
                            ``(ii) Content of report.--Such report 
                        shall include a description of how State 
                        Medicaid programs define specialty drugs, how 
                        much State Medicaid programs pay for specialty 
                        drugs, how States and managed care plans 
                        determine payment for specialty drugs, the 
                        settings in which specialty drugs are dispensed 
                        (such as retail community pharmacies or 
                        specialty pharmacies), whether acquisition 
                        costs for specialty drugs are captured in the 
                        national average drug acquisition cost survey, 
                        and recommendations as to whether specialty 
                        pharmacies should be included in the survey of 
                        retail prices to ensure national average drug 
                        acquisition costs capture drugs sold at 
                        specialty pharmacies and how such specialty 
                        pharmacies should be defined.'';
                    (C) in paragraph (2)--
                            (i) in subparagraph (A), by inserting ``, 
                        including payments rates under Medicaid managed 
                        care plans,'' after ``under this title''; and
                            (ii) in subparagraph (B), by inserting 
                        ``and the basis for such dispensing fees'' 
                        before the semicolon; and
                    (D) in paragraph (4), by inserting ``, and 
                $5,000,000 for fiscal year 2020 and each fiscal year 
                thereafter,'' after ``2010''.
            (2) Effective date.--The amendments made by this subsection 
        take effect on the 1st day of the 1st quarter that begins on or 
        after the date that is 18 months after the date of enactment of 
        this Act.
    (c) Manufacturer Reporting of Wholesale Acquisition Cost.--Section 
1927(b)(3) of such Act (42 U.S.C. 1396r-8(b)(3)) is amended--
            (1) in subparagraph (A)(i)--
                    (A) in subclause (I), by striking ``and'' after the 
                semicolon;
                    (B) in subclause (II), by adding ``and'' after the 
                semicolon;
                    (C) by moving the left margins of subclause (I) and 
                (II) 2 ems to the right; and
                    (D) by adding at the end the following:
                                    ``(III) in the case of rebate 
                                periods that begin on or after the date 
                                of enactment of this subclause, on the 
                                wholesale acquisition cost (as defined 
                                in section 1847A(c)(6)(B)) for covered 
                                outpatient drugs for the rebate period 
                                under the agreement (including for all 
                                such drugs that are sold under a new 
                                drug application approved under section 
                                505(c) of the Federal Food, Drug, and 
                                Cosmetic Act);''; and
            (2) in subparagraph (D)--
                    (A) in the matter preceding clause (i), by 
                inserting ``and clause (vii) of this subparagraph'' 
                after ``1847A'';
                    (B) in clause (v), by striking ``and'' after the 
                comma;
                    (C) in clause (vi), by striking the period and 
                inserting ``, and''; and
                    (D) by inserting after clause (vi) the following:
                            ``(vii) to the Secretary to disclose 
                        (through a website accessible to the public) 
                        the most recently reported wholesale 
                        acquisition cost (as defined in section 
                        1847A(c)(6)(B)) for each covered outpatient 
                        drug (including for all such drugs that are 
                        sold under a new drug application approved 
                        under section 505(c) of the Federal Food, Drug, 
                        and Cosmetic Act), as reported under 
                        subparagraph (A)(i)(III).''.

SEC. 207. T-MSIS DRUG DATA ANALYTICS REPORTS.

    (a) In General.--Not later than May 1 of each calendar year 
beginning with calendar year 2021, the Secretary of Health and Human 
Services (in this section referred to as the ``Secretary'') shall 
publish on a website of the Centers for Medicare & Medicaid Services 
that is accessible to the public a report of the most recently 
available data on provider prescribing patterns under the Medicaid 
program.
    (b) Content of Report.--
            (1) Required content.--Each report required under 
        subsection (a) for a calendar year shall include the following 
        information with respect to each State (and, to the extent 
        available, with respect to Puerto Rico, the United States 
        Virgin Islands, Guam, the Northern Mariana Islands, and 
        American Samoa):
                    (A) A comparison of covered outpatient drug (as 
                defined in section 1927(k)(2) of the Social Security 
                Act (42 U.S.C. 1396r-8(k)(2))) prescribing patterns 
                under the State Medicaid plan or waiver of such plan 
                (including drugs prescribed on a fee-for-service basis 
                and drugs prescribed under managed care arrangements 
                under such plan or waiver)--
                            (i) across all forms or models of 
                        reimbursement used under the plan or waiver;
                            (ii) within specialties and subspecialties, 
                        as defined by the Secretary;
                            (iii) by episodes of care for--
                                    (I) each chronic disease category, 
                                as defined by the Secretary, that is 
                                represented in the 10 conditions that 
                                accounted for the greatest share of 
                                total spending under the plan or waiver 
                                during the year that is the subject of 
                                the report;
                                    (II) procedural groupings; and
                                    (III) rare disease diagnosis codes;
                            (iv) by patient demographic 
                        characteristics, including race (to the extent 
                        that the Secretary determines that there is 
                        sufficient data available with respect to such 
                        characteristic in a majority of States), 
                        gender, and age;
                            (v) by patient high-utilizer or risk 
                        status; and
                            (vi) by high and low resource settings by 
                        facility and place of service categories, as 
                        determined by the Secretary.
                    (B) In the case of medical assistance for covered 
                outpatient drugs (as so defined) provided under a State 
                Medicaid plan or waiver of such plan in a managed care 
                setting, an analysis of the differences in managed care 
                prescribing patterns when a covered outpatient drug is 
                prescribed in a managed care setting as compared to 
                when the drug is prescribed in a fee-for-service 
                setting.
            (2) Additional content.--A report required under subsection 
        (a) for a calendar year may include State-specific information 
        about prescription utilization management tools under State 
        Medicaid plans or waivers of such plans, including--
                    (A) a description of prescription utilization 
                management tools under State programs to provide long-
                term services and supports under a State Medicaid plan 
                or a waiver of such plan;
                    (B) a comparison of prescription utilization 
                management tools applicable to populations covered 
                under a State Medicaid plan waiver under section 1115 
                of the Social Security Act (42 U.S.C. 1315) and the 
                models applicable to populations that are not covered 
                under the waiver;
                    (C) a comparison of the prescription utilization 
                management tools employed by different Medicaid managed 
                care organizations, pharmacy benefit managers, and 
                related entities within the State;
                    (D) a comparison of the prescription utilization 
                management tools applicable to each enrollment category 
                under a State Medicaid plan or waiver; and
                    (E) a comparison of the prescription utilization 
                management tools applicable under the State Medicaid 
                plan or waiver by patient high-utilizer or risk status.
            (3) Additional analysis.--To the extent practicable, the 
        Secretary shall include in each report published under 
        subsection (a)--
                    (A) analyses of national, State, and local patterns 
                of Medicaid population-based prescribing behaviors; and
                    (B) recommendations for administrative or 
                legislative action to improve the effectiveness of, and 
                reduce costs for, covered outpatient drugs under 
                Medicaid while ensuring timely beneficiary access to 
                medically necessary covered outpatient drugs.
    (c) Use of T-MSIS Data.--Each report required under subsection (a) 
shall--
            (1) be prepared using data and definitions from the 
        Transformed Medicaid Statistical Information System (``T-
        MSIS'') data set (or a successor data set) that is not more 
        than 24 months old on the date that the report is published; 
        and
            (2) as appropriate, include a description with respect to 
        each State of the quality and completeness of the data, as well 
        as any necessary caveats describing the limitations of the data 
        reported to the Secretary by the State that are sufficient to 
        communicate the appropriate uses for the information.
    (d) Preparation of Report.--Each report required under subsection 
(a) shall be prepared by the Administrator for the Centers for Medicare 
& Medicaid Services.
    (e) Appropriation.--For fiscal year 2020 and each fiscal year 
thereafter, there is appropriated to the Secretary $2,000,000 to carry 
out this section.

SEC. 208. RISK-SHARING VALUE-BASED PAYMENT AGREEMENTS FOR COVERED 
              OUTPATIENT DRUGS UNDER MEDICAID.

    (a) In General.--Section 1927 of the Social Security Act (42 U.S.C. 
1396r-8) is amended by adding at the end the following new subsection:
    ``(l) State Option to Pay for Covered Outpatient Drugs Through 
Risk-sharing Value-based Agreements.--
            ``(1) In general.--Beginning January 1, 2022, a State shall 
        have the option to pay (whether on a fee-for-service or managed 
        care basis) for covered outpatient drugs that are potentially 
        curative treatments intended for one-time use that are 
        administered to individuals under this title by entering into a 
        risk-sharing value-based payment agreement with the 
        manufacturer of the drug in accordance with the requirements of 
        this subsection.
            ``(2) Secretarial approval.--
                    ``(A) In general.--A State shall submit a request 
                to the Secretary to enter into a risk-sharing value 
                based payment agreement, and the Secretary shall not 
                approve a proposed risk-sharing value-based payment 
                agreement between a State and a manufacturer for 
                payment for a covered outpatient drug of the 
                manufacturer unless the following requirements are met:
                            ``(i) Manufacturer is party to rebate 
                        agreement and in compliance with 
                        requirements.--The manufacturer has a rebate 
                        agreement in effect as required under 
                        subsection (a) and (b) of this section and is 
                        in compliance with all applicable requirements 
                        under this title.
                            ``(ii) No increase to projected net federal 
                        spending.--
                                    ``(I) In general.--The Chief 
                                Actuary certifies that the projected 
                                payments for each covered outpatient 
                                drug under such proposed agreement 
                                would not result in greater estimated 
                                Federal spending under this title than 
                                the net Federal spending that would 
                                result in the absence of the agreement.
                                    ``(II) Net federal spending 
                                defined.--For purposes of this 
                                subsection, the term `net Federal 
                                spending' means the amount of Federal 
                                payments the Chief Actuary estimates 
                                would be made under this title for 
                                administering a covered outpatient drug 
                                to an individual eligible for medical 
                                assistance under a State plan or a 
                                waiver of such plan, reduced by the 
                                amount of all rebates the Chief Actuary 
                                estimates would be paid with respect to 
                                the administering of such drug, 
                                including all rebates under this title 
                                and any supplemental or other 
                                additional rebates, in the absence of 
                                such an agreement.
                                    ``(III) Information.--The Chief 
                                Actuary shall make the certifications 
                                required under this clause based on the 
                                most recently available and reliable 
                                drug pricing and product information. 
                                The State and manufacturer shall 
                                provide the Secretary and the Chief 
                                Actuary with all necessary information 
                                required to make the estimates needed 
                                for such certifications.
                            ``(iii) Launch and list price 
                        justifications.--The manufacturer submits all 
                        relevant information and supporting 
                        documentation necessary for pricing decisions 
                        as deemed appropriate by the Secretary, which 
                        shall be truthful and non-misleading, including 
                        manufacturer information and supporting 
                        documentation for launch price or list price 
                        increases, and any applicable justification 
                        required under section 1128L.
                            ``(iv) Confidentiality of information; 
                        penalties.--The provisions of subparagraphs (C) 
                        and (D) of subsection (b)(3) shall apply to a 
                        manufacturer that fails to submit the 
                        information and documentation required under 
                        clauses (ii) and (iii) on a timely basis, or 
                        that knowingly provides false or misleading 
                        information, in the same manner as such 
                        provisions apply to a manufacturer with a 
                        rebate agreement under this section.
                    ``(B) Consideration of state request for 
                approval.--
                            ``(i) In general.--The Secretary shall 
                        treat a State request for approval of a risk-
                        sharing value-based payment agreement in the 
                        same manner that the Secretary treats a State 
                        plan amendment, and subpart B of part 430 of 
                        title 42, Code of Federal Regulations, 
                        including, subject to clause (ii), the timing 
                        requirements of section 430.16 of such title 
                        (as in effect on the date of enactment of this 
                        subsection), shall apply to a request for 
                        approval of a risk-sharing value-based payment 
                        agreement in the same manner as such subpart 
                        applies to a State plan amendment.
                            ``(ii) Timing.--The Secretary shall consult 
                        with the Commissioner of Food and Drugs as 
                        required under subparagraph (C) and make a 
                        determination on whether to approve a request 
                        from a State for approval of a proposed risk-
                        sharing value-based payment agreement (or 
                        request additional information necessary to 
                        allow the Secretary to make a determination 
                        with respect to such request for approval) 
                        within the time period, to the extent 
                        practicable, specified in section 430.16 of 
                        title 42, Code of Federal Regulations (as in 
                        effect on the date of enactment of this 
                        subsection), but in no case shall the Secretary 
                        take more than 180 days after the receipt of 
                        such request for approval or response to such 
                        request for additional information to make such 
                        a determination (or request additional 
                        information).
                    ``(C) Consultation with the commissioner of food 
                and drugs.--In considering whether to approve a risk-
                sharing value-based payment agreement, the Secretary, 
                to the extent necessary, shall consult with the 
                Commissioner of Food and Drugs to determine whether the 
                relevant clinical parameters specified in such 
                agreement are appropriate.
            ``(3) Installment-based payment structure.--
                    ``(A) In general.--A risk-sharing value-based 
                payment agreement shall provide for a payment structure 
                under which, for every installment year of the 
                agreement (subject to subparagraph (B)), the State 
                shall pay the total installment year amount in equal 
                installments to be paid at regular intervals over a 
                period of time that shall be specified in the 
                agreement.
                    ``(B) Requirements for installment payments.--
                            ``(i) Timing of first payment.--The State 
                        shall make the first of the installment 
                        payments described in subparagraph (A) for an 
                        installment year not later than 30 days after 
                        the end of such year.
                            ``(ii) Length of installment period.--The 
                        period of time over which the State shall make 
                        the installment payments described in 
                        subparagraph (A) for an installment year shall 
                        not be longer than 5 years.
                            ``(iii) Nonpayment or reduced payment of 
                        installments following a failure to meet 
                        clinical parameter.--If, prior to the payment 
                        date (as specified in the agreement) of any 
                        installment payment described in subparagraph 
                        (A) or any other alternative date or time frame 
                        (as otherwise specified in the agreement), the 
                        covered outpatient drug which is subject to the 
                        agreement fails to meet a relevant clinical 
                        parameter of the agreement, the agreement shall 
                        provide that--
                                    ``(I) the installment payment shall 
                                not be made; or
                                    ``(II) the installment payment 
                                shall be reduced by a percentage 
                                specified in the agreement that is 
                                based on the outcome achieved by the 
                                drug relative to the relevant clinical 
                                parameter.
            ``(4) Notice of intent.--
                    ``(A) In general.--Subject to subparagraph (B), a 
                manufacturer of a covered outpatient drug shall not be 
                eligible to enter into a risk-sharing value-based 
                payment agreement under this subsection with respect to 
                such drug unless the manufacturer notifies the 
                Secretary that the manufacturer is interested in 
                entering into such an agreement with respect to such 
                drug. The decision to submit and timing of a request to 
                enter into a proposed risk-sharing value-based payment 
                agreement shall remain solely within the discretion of 
                the State and shall only be effective upon Secretarial 
                approval as required under this subsection.
                    ``(B) Treatment of subsequently approved drugs.--
                            ``(i) In general.--In the case of a 
                        manufacturer of a covered outpatient drug 
                        approved under section 505 of the Federal Food, 
                        Drug, and Cosmetic Act or licensed under 
                        section 351 of the Public Health Service Act 
                        after the date of enactment of this subsection, 
                        not more than 90 days after meeting with the 
                        Food and Drug Administration following phase II 
                        clinical trials for such drug (or, in the case 
                        of a drug described in clause (ii), not later 
                        than March 31, 2022), the manufacturer must 
                        notify the Secretary of the manufacturer's 
                        intent to enter into a risk-sharing value-based 
                        payment agreement under this subsection with 
                        respect to such drug. If no such meeting has 
                        occurred, the Secretary may use discretion as 
                        to whether a potentially curative treatment 
                        intended for one-time use may qualify for a 
                        risk-sharing value-based payment agreement 
                        under this section. A manufacturer notification 
                        of interest shall not have any influence on a 
                        decision for approval by the Food and Drug 
                        Administration.
                            ``(ii) Application to certain subsequently 
                        approved drugs.--A drug described in this 
                        clause is a covered outpatient drug of a 
                        manufacturer--
                                    ``(I) that is approved under 
                                section 505 of the Federal Food, Drug, 
                                and Cosmetic Act or licensed under 
                                section 351 of the Public Health 
                                Service Act after the date of enactment 
                                of this subsection; and
                                    ``(II) with respect to which, as of 
                                January 1, 2022, more than 90 days have 
                                passed after the manufacturer's meeting 
                                with the Food and Drug Administration 
                                following phase II clinical trials for 
                                such drug.
                            ``(iii) Parallel approval.--The Secretary, 
                        in coordination with the Administrator of the 
                        Centers for Medicare & Medicaid Services and 
                        the Commissioner of Food and Drugs, shall, to 
                        the extent practicable, approve a State's 
                        request to enter into a proposed risk-sharing 
                        value-based payment agreement that otherwise 
                        meets the requirements of this subsection at 
                        the time that such a drug is approved by the 
                        Food and Drug Administration to help provide 
                        that no State that wishes to enter into such an 
                        agreement is required to pay for the drug in 
                        full at one time if the State is seeking to pay 
                        over a period of time as outlined in the 
                        proposed agreement.
                            ``(iv) Rule of construction.--Nothing in 
                        this paragraph shall be applied or construed to 
                        modify or affect the timeframes or factors 
                        involved in the Secretary's determination of 
                        whether to approve or license a drug under 
                        section 505 of the Federal Food, Drug, and 
                        Cosmetic Act or section 351 of the Public 
                        Health Service Act.
            ``(5) Special payment rules.--
                    ``(A) In general.--Except as otherwise provided in 
                this paragraph, with respect to an individual who is 
                administered a unit of a covered outpatient drug that 
                is purchased under a State plan by a State Medicaid 
                agency under a risk-sharing value-based payment 
                agreement in an installment year, the State shall 
                remain liable to the manufacturer of such drug for 
                payment for such unit without regard to whether the 
                individual remains enrolled in the State plan under 
                this title (or a waiver of such plan) for each 
                installment year for which the State is to make 
                installment payments for covered outpatient drugs 
                purchased under the agreement in such year.
                    ``(B) Death.--In the case of an individual 
                described in subparagraph (A) who dies during the 
                period described in such subparagraph, the State plan 
                shall not be liable for any remaining payment for the 
                unit of the covered outpatient drug administered to the 
                individual which is owed under the agreement described 
                in such subparagraph.
                    ``(C) Withdrawal of approval.--In the case of a 
                covered outpatient drug that is the subject of a risk-
                sharing value-based agreement between a State and a 
                manufacturer under this subsection, including a drug 
                approved in accordance with section 506(c) of the 
                Federal Food, Drug, and Cosmetic Act, and such drug is 
                the subject of an application that has been withdrawn 
                by the Secretary, the State plan shall not be liable 
                for any remaining payment that is owed under the 
                agreement.
                    ``(D) Alternative arrangement under agreement.--
                Subject to approval by the Secretary, the terms of a 
                proposed risk-sharing value-based payment agreement 
                submitted for approval by a State may provide that 
                subparagraph (A) shall not apply.
                    ``(E) Guidance.--Not later than January 1, 2022, 
                the Secretary shall issue guidance to States 
                establishing a process for States to notify the 
                Secretary when an individual who is administered a unit 
                of a covered outpatient drug that is purchased by a 
                State plan under a risk-sharing value-based payment 
                agreement ceases to be enrolled under the State plan 
                under this title (or a waiver of such plan) or dies 
                before the end of the installment period applicable to 
                such unit under the agreement.
            ``(6) Treatment of payments under risk-sharing value-based 
        agreements for purposes of average manufacturer price; best 
        price.--The Secretary shall treat any payments made to the 
        manufacturer of a covered outpatient drug under a risk-sharing 
        value-based payment agreement under this subsection during a 
        rebate period in the same manner that the Secretary treats 
        payments made under a State supplemental rebate agreement under 
        sections 447.504(c)(19) and 447.505(c)(7) of title 42, Code of 
        Federal Regulations (or any successor regulations) for purposes 
        of determining average manufacturer price and best price under 
        this section with respect to the covered outpatient drug and a 
        rebate period and for purposes of offsets required under 
        subsection (b)(1)(B).
            ``(7) Assessments and report to congress.--
                    ``(A) Assessments.--
                            ``(i) In general.--Not later than 180 days 
                        after the end of each assessment period of any 
                        risk-sharing value-based payment agreement for 
                        a State approved under this subsection, the 
                        Secretary shall conduct an evaluation of such 
                        agreement which shall include an evaluation by 
                        the Chief Actuary to determine whether program 
                        spending under the risk-sharing value-based 
                        payment agreement aligned with the projections 
                        for the agreement made under paragraph 
                        (2)(A)(ii), including an assessment of whether 
                        actual Federal spending under this title under 
                        the agreement was less or more than net Federal 
                        spending would have been in the absence of the 
                        agreement.
                            ``(ii) Assessment period.--For purposes of 
                        clause (i)--
                                    ``(I) the first assessment period 
                                for a risk-sharing value-based payment 
                                agreement shall be the period of time 
                                over which payments are scheduled to be 
                                made under the agreement for the first 
                                10 individuals who are administered 
                                covered outpatient drugs under the 
                                agreement except that such period shall 
                                not exceed the 5-year period after the 
                                date on which the Secretary approves 
                                the agreement; and
                                    ``(II) each subsequent assessment 
                                period for a risk-sharing value-based 
                                payment agreement shall be the 5-year 
                                period following the end of the 
                                previous assessment period.
                    ``(B) Results of assessments.--
                            ``(i) Termination option.--If the Secretary 
                        determines as a result of the assessment by the 
                        Chief Actuary under subparagraph (A) that the 
                        actual Federal spending under this title for 
                        any covered outpatient drug that was the 
                        subject of the State's risk-sharing value-based 
                        payment agreement was greater than the net 
                        Federal spending that would have resulted in 
                        the absence of the agreement, the Secretary may 
                        terminate approval of such agreement and shall 
                        immediately conduct an assessment under this 
                        paragraph of any other ongoing risk-sharing 
                        value-based payment agreement to which the same 
                        manufacturer is a party.
                            ``(ii) Repayment required.--
                                    ``(I) In general.--If the Secretary 
                                determines as a result of the 
                                assessment by the Chief Actuary under 
                                subparagraph (A) that the Federal 
                                spending under the risk-sharing value-
                                based agreement for a covered 
                                outpatient drug that was subject to 
                                such agreement was greater than the net 
                                Federal spending that would have 
                                resulted in the absence of the 
                                agreement, the manufacturer shall repay 
                                the difference to the State and Federal 
                                governments in a timely manner as 
                                determined by the Secretary.
                                    ``(II) Termination for failure to 
                                pay.--The failure of a manufacturer to 
                                make repayments required under 
                                subclause (I) in a timely manner shall 
                                result in immediate termination of all 
                                risk-sharing value-based agreements to 
                                which the manufacturer is a party.
                                    ``(III) Additional penalties.--In 
                                the case of a manufacturer that fails 
                                to make repayments required under 
                                subclause (I), the Secretary may treat 
                                such manufacturer in the same manner as 
                                a manufacturer that fails to pay 
                                required rebates under this section, 
                                and the Secretary may--
                                            ``(aa) suspend or terminate 
                                        the manufacturer's rebate 
                                        agreement under this section; 
                                        and
                                            ``(bb) pursue any other 
                                        remedy that would be available 
                                        if the manufacturer had failed 
                                        to pay required rebates under 
                                        this section.
                    ``(C) Report to congress.--Not later than 5 years 
                after the first risk-sharing value-based payment 
                agreement is approved under this subsection, the 
                Secretary shall submit to Congress and make available 
                to the public a report that includes--
                            ``(i) an assessment of the impact of risk-
                        sharing value-based payment agreements on 
                        access for individuals who are eligible for 
                        benefits under a State plan or waiver under 
                        this title to medically necessary covered 
                        outpatient drugs and related treatments;
                            ``(ii) an analysis of the impact of such 
                        agreements on overall State and Federal 
                        spending under this title;
                            ``(iii) an assessment of the impact of such 
                        agreements on drug prices, including launch 
                        price and price increases; and
                            ``(iv) such recommendations to Congress as 
                        the Secretary deems appropriate.
            ``(8) Guidance and regulations.--
                    ``(A) In general.--Not later than January 1, 2022, 
                the Secretary shall issue guidance to States seeking to 
                enter into risk-sharing value-based payment agreements 
                under this subsection that includes a model template 
                for such agreements. The Secretary may issue any 
                additional guidance or promulgate regulations as 
                necessary to implement and enforce the provisions of 
                this subsection.
                    ``(B) Model agreements.--
                            ``(i) In general.--If a State expresses an 
                        interest in pursuing a risk-sharing value-based 
                        payment agreement under this subsection with a 
                        manufacturer for the purchase of a covered 
                        outpatient drug, the Secretary may share with 
                        such State any risk-sharing value-based 
                        agreement between a State and the manufacturer 
                        for the purchase of such drug that has been 
                        approved under this subsection. While such 
                        shared agreement may serve as a template for a 
                        State that wishes to propose, the use of a 
                        previously approved agreement shall not affect 
                        the submission and approval process for 
                        approval of a proposed risk-sharing value-based 
                        payment agreement under this subsection, 
                        including the requirements under paragraph 
                        (2)(A).
                            ``(ii) Confidentiality.--In the case of a 
                        risk-sharing value-based payment agreement that 
                        is disclosed to a State by the Secretary under 
                        this subparagraph and that is only in effect 
                        with respect to a single State, the 
                        confidentiality of information provisions 
                        described in subsection (b)(3)(D) shall apply 
                        to such information.
                    ``(C) OIG consultation.--
                            ``(i) In general.--The Secretary shall 
                        consult with the Office of the Inspector 
                        General of the Department of Health and Human 
                        Services to determine whether there are 
                        potential program integrity concerns with 
                        agreement approvals or templates and address 
                        accordingly.
                            ``(ii) OIG policy updates as necessary.--
                        The Inspector General of the Department of 
                        Health and Human Services shall review and 
                        update, as necessary, any policies or 
                        guidelines of the Office of the Inspector 
                        General of the Department of Human Services 
                        (including policies related to the enforcement 
                        of section 1128B) to accommodate the use of 
                        risk-sharing value-based payment agreements in 
                        accordance with this section.
            ``(9) Rules of construction.--
                    ``(A) Modifications.--Nothing in this subsection or 
                any regulations promulgated under this subsection shall 
                prohibit a State from requesting a modification from 
                the Secretary to the terms of a risk-sharing value-
                based payment agreement. A modification that is 
                expected to result in any increase to projected net 
                State or Federal spending under the agreement shall be 
                subject to recertification by the Chief Actuary as 
                described in paragraph (2)(A)(ii) before the 
                modification may be approved.
                    ``(B) Rebate agreements.--Nothing in this 
                subsection shall be construed as requiring a State to 
                enter into a risk-sharing value-based payment agreement 
                or as limiting or superseding the ability of a State to 
                enter into a supplemental rebate agreement for a 
                covered outpatient drug.
                    ``(C) FFP for payments under risk-sharing value-
                based payment agreements.--Federal financial 
                participation shall be available under this title for 
                any payment made by a State to a manufacturer for a 
                covered outpatient drug under a risk-sharing value-
                based payment agreement in accordance with this 
                subsection, except that no Federal financial 
                participation shall be available for any payment made 
                by a State to a manufacturer under such an agreement on 
                and after the effective date of a disapproval of such 
                agreement by the Secretary.
                    ``(D) Continued application of other provisions.--
                Except as expressly provided in this subsection, 
                nothing in this subsection or in any regulations 
                promulgated under this subsection shall affect the 
                application of any other provision of this Act.
            ``(10) Appropriations.--For fiscal year 2020 and each 
        fiscal year thereafter, there are appropriated to the Secretary 
        $5,000,000 for the purpose of carrying out this subsection.
            ``(11) Definitions.--In this subsection:
                    ``(A) Chief actuary.--The term `Chief Actuary' 
                means the Chief Actuary of the Centers for Medicare & 
                Medicaid Services.
                    ``(B) Installment year.--The term `installment 
                year' means, with respect to a risk-sharing value-based 
                payment agreement, a 12-month period during which a 
                covered outpatient drug is administered under the 
                agreement.
                    ``(C) Potentially curative treatment intended for 
                one-time use.--The term `potentially curative treatment 
                intended for one-time use' means a treatment that 
                consists of the administration of a covered outpatient 
                drug that--
                            ``(i) is a form of gene therapy for a rare 
                        disease, as defined by the Commissioner of Food 
                        and Drugs, designated under section 526 of the 
                        Federal Food, Drug, and Cosmetics Act, and 
                        approved under section 505 of such Act or 
                        licensed under subsection (a) or (k) of section 
                        351 of the Public Health Service Act to treat a 
                        serious or life-threatening disease or 
                        condition;
                            ``(ii) if administered in accordance with 
                        the labeling of such drug, is expected to 
                        result in either--
                                    ``(I) the cure of such disease or 
                                condition; or
                                    ``(II) a reduction in the symptoms 
                                of such disease or condition to the 
                                extent that such disease or condition 
                                is not expected to lead to early 
                                mortality; and
                            ``(iii) is expected to achieve a result 
                        described in clause (ii), which may be achieved 
                        over an extended period of time, after not more 
                        than 3 administrations.
                    ``(D) Relevant clinical parameter.--The term 
                `relevant clinical parameter' means, with respect to a 
                covered outpatient drug that is the subject of a risk-
                sharing value-based payment agreement--
                            ``(i) a clinical endpoint specified in the 
                        drug's labeling or supported by one or more of 
                        the compendia described in section 
                        1861(t)(2)(B)(ii)(I) that--
                                    ``(I) is able to be measured or 
                                evaluated on an annual basis for each 
                                year of the agreement on an independent 
                                basis by a provider or other entity; 
                                and
                                    ``(II) is required to be achieved 
                                (based on observed metrics in patient 
                                populations) under the terms of the 
                                agreement; or
                            ``(ii) a surrogate endpoint (as defined in 
                        section 507(e)(9) of the Federal Food, Drug, 
                        and Cosmetic Act), including those developed by 
                        patient-focused drug development tools, that--
                                    ``(I) is able to be measured or 
                                evaluated on an annual basis for each 
                                year of the agreement on an independent 
                                basis by a provider or other entity; 
                                and
                                    ``(II) has been qualified by the 
                                Food and Drug Administration.
                    ``(E) Risk-sharing value-based payment agreement.--
                The term `risk-sharing value-based payment agreement' 
                means an agreement between a State plan and a 
                manufacturer--
                            ``(i) for the purchase of a covered 
                        outpatient drug of the manufacturer that is a 
                        potentially curative treatment intended for 
                        one-time use;
                            ``(ii) under which payment for such drug 
                        shall be made pursuant to an installment-based 
                        payment structure that meets the requirements 
                        of paragraph (3);
                            ``(iii) which conditions payment on the 
                        achievement of at least 2 relevant clinical 
                        parameters (as defined in subparagraph (C));
                            ``(iv) which provides that--
                                    ``(I) the State plan will directly 
                                reimburse the manufacturer for the 
                                drug; or
                                    ``(II) a third party will reimburse 
                                the manufacture in a manner approved by 
                                the Secretary;
                            ``(v) is approved by the Secretary in 
                        accordance with paragraph (2).
                    ``(F) Total installment year amount.--The term 
                `total installment year amount' means, with respect to 
                a risk-sharing value-based payment agreement for the 
                purchase of a covered outpatient drug and an 
                installment year, an amount equal to the product of--
                            ``(i) the unit price of the drug charged 
                        under the agreement; and
                            ``(ii) the number of units of such drug 
                        administered under the agreement during such 
                        installment year.''.
    (b) Conforming Amendments.--
            (1) Section 1903(i)(10)(A) of the Social Security Act (42 
        U.S.C. 1396b(i)(10)(A)) is amended by striking ``or unless 
        section 1927(a)(3) applies'' and inserting ``, section 
        1927(a)(3) applies with respect to such drugs, or such drugs 
        are the subject of a risk-sharing value-based payment agreement 
        under section 1927(l)''.
            (2) Section 1927(b) of the Social Security Act (42 U.S.C. 
        1396r-8(b)) is amended--
                    (A) in paragraph (1)(A), by inserting ``(except for 
                drugs for which payment is made by a State under a 
                risk-sharing value-based payment agreement under 
                subsection (l))'' after ``under the State plan for such 
                period''; and
                    (B) in paragraph (3)--
                            (i) in subparagraph (C)(i), by inserting 
                        ``or subsection (l)(2)(A)'' after 
                        ``subparagraph (A)''; and
                            (ii) in subparagraph (D), in the matter 
                        preceding clause (i), by inserting ``, under 
                        subsection (l)(2)(A),'' after ``under this 
                        paragraph''.

SEC. 209. MODIFICATION OF MAXIMUM REBATE AMOUNT UNDER MEDICAID DRUG 
              REBATE PROGRAM.

    (a) In General.--Subparagraph (D) of section 1927(c)(2) of the 
Social Security Act (42 U.S.C. 1396r-8(c)(2)) is amended to read as 
follows:
                    ``(D) Maximum rebate amount.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), in no case shall the sum of the 
                        amounts applied under paragraph (1)(A)(ii) and 
                        this paragraph with respect to each dosage form 
                        and strength of a single source drug or an 
                        innovator multiple source drug for a rebate 
                        period exceed--
                                    ``(I) for rebate periods beginning 
                                after December 31, 2009, and before 
                                September 30, 2022, 100 percent of the 
                                average manufacturer price of the drug; 
                                and
                                    ``(II) for rebate periods beginning 
                                on or after October 1, 2022, 125 
                                percent of the average manufacturer 
                                price of the drug.
                            ``(ii) No maximum amount for drugs if amp 
                        increases outpace inflation.--
                                    ``(I) In general.--If the average 
                                manufacturer price with respect to each 
                                dosage form and strength of a single 
                                source drug or an innovator multiple 
                                source drug increases on or after 
                                October 1, 2021, and such increased 
                                average manufacturer price exceeds the 
                                inflation-adjusted average manufacturer 
                                price determined with respect to such 
                                drug under subclause (II) for the 
                                rebate period, clause (i) shall not 
                                apply and there shall be no limitation 
                                on the sum of the amounts applied under 
                                paragraph (1)(A)(ii) and this paragraph 
                                for the rebate period with respect to 
                                each dosage form and strength of the 
                                single source drug or innovator 
                                multiple source drug.
                                    ``(II) Inflation-adjusted average 
                                manufacturer price defined.--In this 
                                clause, the term `inflation-adjusted 
                                average manufacturer price' means, with 
                                respect to a single source drug or an 
                                innovator multiple source drug and a 
                                rebate period, the average manufacturer 
                                price for each dosage form and strength 
                                of the drug for the calendar quarter 
                                beginning July 1, 1990 (without regard 
                                to whether or not the drug has been 
                                sold or transferred to an entity, 
                                including a division or subsidiary of 
                                the manufacturer, after the 1\st\ day 
                                of such quarter), increased by the 
                                percentage by which the consumer price 
                                index for all urban consumers (United 
                                States city average) for the month 
                                before the month in which the rebate 
                                period begins exceeds such index for 
                                September 1990.''.
    (b) Treatment of Subsequently Approved Drugs.--Section 
1927(c)(2)(B) of the Social Security Act (42 U.S.C. 1396r-8(c)(2)(B)) 
is amended by inserting ``and clause (ii)(II) of subparagraph (D)'' 
after ``clause (ii)(II) of subparagraph (A)''.
    (c) Technical Amendments.--Section 1927(c)(3)(C)(ii)(IV) of the 
Social Security Act (42 U.S.C. 1396r-9(c)(3)(C)(ii)(IV)) is amended--
            (1) by striking ``subparagraph (A)'' and inserting 
        ``paragraph (3)(A)''; and
            (2) by striking ``this subparagraph'' and inserting 
        ``paragraph (3)(C)''.

SEC. 210. APPLYING MEDICAID DRUG REBATE REQUIREMENT TO DRUGS PROVIDED 
              AS PART OF OUTPATIENT HOSPITAL SERVICES.

    (a) In General.--Section 1927(k)(3) of the Social Security Act (42 
U.S.C. 1396r-8(k)(3)) is amended to read as follows:
            ``(3) Limiting definition.--
                    ``(A) In general.--The term `covered outpatient 
                drug' does not include any drug, biological product, or 
                insulin provided as part of, or as incident to and in 
                the same setting as, any of the following (and for 
                which payment may be made under this title as part of 
                payment for the following and not as direct 
                reimbursement for the drug):
                            ``(i) Inpatient hospital services.
                            ``(ii) Hospice services.
                            ``(iii) Dental services, except that drugs 
                        for which the State plan authorizes direct 
                        reimbursement to the dispensing dentist are 
                        covered outpatient drugs.
                            ``(iv) Physicians' services.
                            ``(v) Outpatient hospital services.
                            ``(vi) Nursing facility services and 
                        services provided by an intermediate care 
                        facility for the mentally retarded.
                            ``(vii) Other laboratory and x-ray 
                        services.
                            ``(viii) Renal dialysis.
                    ``(B) Other exclusions.--Such term also does not 
                include any such drug or product for which a National 
                Drug Code number is not required by the Food and Drug 
                Administration or a drug or biological used for a 
                medical indication which is not a medically accepted 
                indication.
                    ``(C) State option.--At the option of a State, such 
                term may include any drug, biological product, or 
                insulin provided on an outpatient basis as part of, or 
                as incident to and in the same setting as, described in 
                clause (iv) or (v) of subparagraph (A) (such as a drug, 
                biological product, or insulin being provided as part 
                of a bundled payment).
                    ``(D) No effect on best price.--Any drug, 
                biological product, or insulin excluded from the 
                definition of such term as a result of this paragraph 
                shall be treated as a covered outpatient drug for 
                purposes of determining the best price (as defined in 
                subsection (c)(1)(C)) for such drug, biological 
                product, or insulin.''.
    (b) Effective Date; Implementation Guidance.--
            (1) In general.--The amendment made by subsection (a) shall 
        take effect on the date that is 1 year after the date of 
        enactment of this Act.
            (2) Implementation and guidance.--Not later than 1 year 
        after the date of enactment of this Act, the Secretary of 
        Health and Human Services shall issue guidance and relevant 
        informational bulletins for States, manufacturers (as defined 
        in section 1927(k)(5) of the Social Security Act (42 U.S.C. 
        1396r-8(k)(5)), and other relevant stakeholders, including 
        health care providers, regarding implementation of the 
        amendment made by subsection (a).
                                                       Calendar No. 225

116th CONGRESS

  1st Session

                                S. 2543

                          [Report No. 116-120]

_______________________________________________________________________

                                 A BILL

To amend titles XI, XVIII, and XIX of the Social Security Act to lower 
  prescription drug prices in the Medicare and Medicaid programs, to 
improve transparency related to pharmaceutical prices and transactions, 
to lower patients' out-of-pocket costs, and to ensure accountability to 
                   taxpayers, and for other purposes.

_______________________________________________________________________

                           September 25, 2019

                 Read twice and placed on the calendar