Title: Stop Drug Companies from Overcharging Seniors in Medicare Part B Act of 2019
Policy area: Health

Summary:
Stop Drug Companies from Overcharging Seniors in Medicare Part B Act of 2019
This bill requires manufacturers of covered drugs under Medicare medical services to issue rebates to the Centers for Medicare & Medicaid Services. Rebates are calculated based on the number of units sold and the amount by which the manufacturer price exceeds inflation. The bill's requirements do not apply to drugs that cost less than $100 annually per user in 2020 (and as adjusted for inflation annually thereafter) or to drugs on a specified drug shortage list.
The bill also eliminates cost-sharing for such drugs for beneficiaries whose out-of-pocket costs meet or exceed a specified threshold.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 2081 Introduced in Senate (IS)]

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116th CONGRESS
  1st Session
                                S. 2081

    To amend title XVIII of the Social Security Act to require drug 
  manufacturers to provide rebates for drugs furnished under Medicare 
    part B for which the growth in average sales price has exceeded 
                   inflation, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 10, 2019

  Mr. Peters (for himself and Ms. Stabenow) introduced the following 
  bill; which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
    To amend title XVIII of the Social Security Act to require drug 
  manufacturers to provide rebates for drugs furnished under Medicare 
    part B for which the growth in average sales price has exceeded 
                   inflation, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Stop Drug Companies from 
Overcharging Seniors in Medicare Part B Act of 2019''.

SEC. 2. REQUIRING DRUG MANUFACTURERS TO PROVIDE REBATES FOR DRUGS 
              FURNISHED UNDER MEDICARE PART B FOR WHICH ASP GROWTH HAS 
              EXCEEDED INFLATION.

    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) Prescription Drug Rebate Agreement.--
            ``(1) Requirement.--
                    ``(A) In general.--Subject to subparagraphs (B) and 
                (C), in order for payment to be made under this part 
                for an applicable part B drug (as defined in paragraph 
                (7)(A)) of a manufacturer furnished on or after January 
                1, 2020, the manufacturer shall have entered into and 
                have in effect a rebate agreement described in 
                paragraph (2) with the Secretary.
                    ``(B) Exceptions.--This subsection shall not apply 
                with respect to an applicable part B drug of a 
                manufacturer--
                            ``(i) if the Secretary determines that the 
                        estimated average annual cost per user for the 
                        associated drug billing code as determined in 
                        such manner as the Secretary determines 
                        appropriate, including with respect to an 
                        applicable part B drug for which a HCPCS code 
                        has not been assigned, is less than--
                                    ``(I) for 2020, $100; and
                                    ``(II) for a subsequent year, the 
                                amount determined under this clause for 
                                the preceding year increased by the 
                                percentage increase in the consumer 
                                price index for all urban consumers 
                                (U.S. city average) for the 12-month 
                                period ending with June of the previous 
                                year;
                            ``(ii) if the drug is included on the drug 
                        shortage list under section 506E of the Federal 
                        Food, Drug, and Cosmetic Act (21 U.S.C. 356e).
                    ``(C) Establishment of procedures to avoid 
                duplication.--The Secretary shall establish procedures 
                to ensure that there is no duplication with respect to 
                drug rebates provided by manufacturers with respect to 
                applicable part B drugs under this subsection and 
                either of the following:
                            ``(i) Purchase by a covered entity of 
                        covered outpatient drugs pursuant to an 
                        agreement under section 340B of the Public 
                        Health Service Act (42 U.S.C. 256b).
                            ``(ii) Drug rebates provided by 
                        manufacturers with respect to covered 
                        outpatient drugs pursuant to section 1927.
            ``(2) Rebate agreement.--A rebate agreement under this 
        subsection shall require the manufacturer to provide to the 
        Secretary (to be deposited in the Treasury to the credit of the 
        Federal Supplementary Medical Insurance Trust Fund) a rebate 
        for each rebate period (as defined in paragraph (7)(B)) ending 
        after December 31, 2019, in an amount specified in paragraph 
        (4) for applicable part B drugs of the manufacturer furnished 
        after December 31, 2019, for which payment was made under this 
        section or under a separate ambulatory classification group 
        pursuant to section 1833(t) for such period. Such rebate shall 
        be paid by the manufacturer not later than 30 days after the 
        date of receipt of the information described in paragraph (3) 
        for the period involved.
            ``(3) Secretary provision of information.--
                    ``(A) In general.--The Secretary shall report to 
                each manufacturer not later than 180 days after the end 
                of each rebate period and in a form consistent with a 
                standard reporting format established by the Secretary, 
                information on the total number of units of each dosage 
                form and strength and package size of each applicable 
                part B drug of the manufacturer furnished after 
                December 31, 2019, for which payment was made under 
                this section or under a separate ambulatory 
                classification group pursuant to section 1833(t) during 
                the period.
                    ``(B) Audits by manufacturer of information 
                provided.--A manufacturer may, as determined by the 
                Secretary, audit the information provided (or required 
                to be provided) under subparagraph (A).
                    ``(C) Audits by secretary.--The Secretary may audit 
                the information provided (or required to be provided) 
                under subparagraph (A) and the determination of the 
                billing-code level rebate amount, including the 
                manufacturer-level billing-code level ASP and 
                inflation-adjusted billing-code level ASP, under 
                paragraph (4).
                    ``(D) Adjustments based on audit results.--The 
                Secretary shall make adjustments to rebates and average 
                sales price as appropriate based on the results of an 
                audit conducted under subparagraph (B) or (C).
            ``(4) Determination of billing-code level rebate amount.--
                    ``(A) In general.--The amount of the rebate 
                specified under this paragraph for a manufacturer for a 
                rebate period, with respect to applicable part B drugs 
                of a manufacturer assigned to a billing code, shall be 
                equal to the product of--
                            ``(i) the total number of units of such 
                        drugs of the manufacturer assigned to the 
                        billing code for which payment was made under 
                        this section or under a separate ambulatory 
                        classification group pursuant to section 
                        1833(t) for the rebate period; and
                            ``(ii) the amount (if any) by which--
                                    ``(I) the manufacturer-level 
                                billing-code level ASP (as defined in 
                                subparagraph (B)) for the manufacturer 
                                for the rebate period, exceeds
                                    ``(II) the inflation-adjusted 
                                billing-code level ASP (as defined in 
                                subparagraph (C)) for the rebate 
                                period.
                    ``(B) Manufacturer-level billing-code level asp 
                defined.--In this subsection, the term `manufacturer-
                level billing-code level ASP' means, with respect to a 
                manufacturer and a billing code for a rebate period, 
                subject to subparagraph (E)(i), the weighted average 
                sales price (per unit) across all of the National Drug 
                Codes for a manufacturer assigned to the billing code, 
                as determined by the Secretary, for the quarter used to 
                establish payment rates for such Codes during the 
                rebate period.
                    ``(C) Inflation-adjusted billing-code level asp 
                defined.--In this subsection, the term `inflation-
                adjusted billing-code level ASP' means, with respect to 
                a billing code and a rebate period, the product of--
                            ``(i) subject to subparagraph (E)(ii), the 
                        average sales price for all National Drug 
                        Codes, regardless of manufacturer, assigned to 
                        the billing code, as determined by the 
                        Secretary, for the calendar quarter beginning 
                        January 1, 2017; and
                            ``(ii) the percentage increase in the 
                        consumer price index for all urban consumers 
                        (United States city average) between December 
                        2016, and the month prior to the quarter 
                        described in subparagraph (B).
                    ``(D) Treatment of subsequently approved drugs.--In 
                the case of an applicable part B drug first marketed 
                after September 30, 2016, clause (i) of subparagraph 
                (C) shall be applied by substituting `the second full 
                calendar quarter after the day on which the drug was 
                first marketed' for `the calendar quarter beginning 
                January 1, 2017' and clause (ii) of such subparagraph 
                shall be applied by substituting `the month prior to 
                the first month of the second full calendar quarter 
                after the day on which the drug was first marketed' for 
                `December 2016'.
                    ``(E) Authority to modify methodology.--
                            ``(i) Determination of manufacturer-level 
                        billing-code level asp.--In the case where the 
                        Secretary does not have manufacturer level data 
                        with respect to a billing code, the Secretary 
                        may request such additional data as needed, 
                        allocate total volume for all National Drug 
                        Codes, regardless of manufacturer, assigned to 
                        the billing Code as determined by the 
                        Secretary, or use an alternate methodology as 
                        necessary in order to determine the 
                        manufacturer-level billing-code level ASP under 
                        subparagraph (B).
                            ``(ii) Determination of inflation-adjusted 
                        billing-code level asp.--In the case where the 
                        Secretary does not have sufficient data with 
                        respect to the average sales price for 
                        applicable part B drugs assigned to a billing 
                        code in order to determine the inflation-
                        adjusted billing-code level ASP for the period 
                        described in subparagraph (C)(i), including 
                        through the application of subparagraph (D) to 
                        such subparagraph (C)(i), the Secretary may 
                        modify the methodology or period as necessary 
                        for purposes of determining an inflation-
                        adjusted billing-code level ASP for such 
                        period.
            ``(5) Submission of data.--A rebate agreement under this 
        subsection shall require a manufacturer of an applicable part B 
        drug to submit to the Secretary at such time, and in such 
        manner, as the Secretary may specify such data as the Secretary 
        determines is necessary in order to carry out this subsection.
            ``(6) Length of agreement.--The provisions of paragraph (4) 
        of section 1927(b) (other than clauses (iv) and (v) of 
        subparagraph (B)) shall apply to rebate agreements under this 
        subsection in the same manner as such paragraph applies to a 
        rebate agreement under such section.
            ``(7) Other terms and conditions.--The Secretary shall 
        establish other terms and conditions of the rebate agreement 
        under this subsection, including terms and conditions related 
        to compliance, that are consistent with this subsection.
            ``(8) Definitions.--In this subsection:
                    ``(A) Applicable part b drug.--The term `applicable 
                part B drug' means--
                            ``(i) a drug or biological described in 
                        section 1842(o)(1)(C) for which payment is made 
                        under this section; or
                            ``(ii) a drug or biological for which the 
                        Secretary has established a separate ambulatory 
                        classification group under the prospective 
                        payment system for hospital outpatient 
                        department services under section 1833(t).
                    ``(B) Rebate period.--The term `rebate period' 
                means, with respect to an agreement under paragraph 
                (2), a calendar quarter or other period specified by 
                the Secretary with respect to the payment of rebates 
                under such agreement.''.

SEC. 3. PROTECTION AGAINST HIGH OUT-OF-POCKET EXPENDITURES FOR PART B 
              DRUGS.

    Title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) is 
amended by inserting after section 1847B the following new section:

``SEC. 1847C. PROTECTION AGAINST HIGH OUT-OF-POCKET EXPENDITURES FOR 
              PART B DRUGS.

    ``(a) In General.--Notwithstanding any other provision of this 
title, in the case of an individual enrolled under this part, if the 
amount of the out-of-pocket cost-sharing for part B drugs (as defined 
in subsection (b)) of such individual for a year (beginning with 2020) 
equals or exceeds the part B drug annual out-of-pocket threshold 
specified in subsection (c) for the year, section 1833(a)(1)(S) shall 
be applied by substituting `100 percent' for `80 percent'.
    ``(b) Out-of-Pocket Cost-Sharing for Part B Drugs Defined.--In this 
section, the term `out-of-pocket cost-sharing for part B drugs' means, 
with respect to an individual, the amount of the expenses incurred by 
the individual that are attributable to drugs or biologicals furnished 
under this part.
    ``(c) Part B Drug Annual Out-of-Pocket Threshold.--
            ``(1) In general.--For purposes of this section, the `part 
        B drug annual out-of-pocket threshold' specified in this 
        subsection--
                    ``(A) for 2020, is equal to the annual out-of-
                pocket threshold specified in section 1860D-2(b)(4)(B) 
                for 2019, increased by the annual percentage increase 
                in the consumer price index for all urban consumers 
                (United States city average) for the 12-month period 
                ending in July of the 2019; and
                    ``(B) for a subsequent year, is equal to the amount 
                specified in this subsection for the previous year, 
                increased by the annual percentage increase in the 
                consumer price index for all urban consumers (United 
                States city average) for the 12-month period ending in 
                July of the previous year.
            ``(2) Rounding.--Any amount determined under paragraph (1) 
        that is not a multiple of $50 shall be rounded to the nearest 
        multiple of $50.''.
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