Title: Elijah E. Cummings Lower Drug Costs Now Act
Policy area: Health

Summary:
Lower Drug Costs Now Act of 2019
This bill establishes several programs and requirements relating to the prices of prescription drugs.
In particular, the bill requires the Department of Health and Human Services (HHS) to negotiate prices for certain drugs (current law prohibits HHS from doing so). Specifically, HHS must negotiate maximum prices for (1) insulin products; and (2) at least 25 single source, brand-name drugs that do not have generic competition and that are among the 125 drugs that account for the greatest national spending or the 125 drugs that account for the greatest spending under the Medicare prescription drug benefit and Medicare Advantage (MA). The negotiated prices must be offered under Medicare and MA, and may also be offered under private health insurance unless the insurer opts out.
The negotiated maximum price may not exceed (1) 120% of the average price in Australia, Canada, France, Germany, Japan, and the United Kingdom; or (2) if such information is not available, 85% of the U.S. average manufacturer price. Drug manufacturers that fail to comply with the bill's negotiation requirements are subject to civil and tax penalties.
The bill also makes a series of additional changes to Medicare prescription drug coverage and pricing. Among other things, the bill (1) requires drug manufacturers to issue rebates to the Centers for Medicare & Medicaid Services for covered drugs that cost $100 or more and for which the average manufacturer price increases faster than inflation; and (2) reduces the annual out-of-pocket spending threshold, and eliminates beneficiary cost-sharing above this threshold, under the Medicare prescription drug benefit.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3 Introduced in House (IH)]

<DOC>






116th CONGRESS
  1st Session
                                 H. R. 3

  To establish a fair price negotiation program, protect the Medicare 
program from excessive price increases, and establish an out-of-pocket 
     maximum for Medicare part D enrollees, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           September 19, 2019

    Mr. Pallone (for himself, Mr. Neal, and Mr. Scott of Virginia) 
 introduced the following bill; which was referred to the Committee on 
  Energy and Commerce, and in addition to the Committees on Ways and 
    Means, and Education and Labor, for a period to be subsequently 
   determined by the Speaker, in each case for consideration of such 
 provisions as fall within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
  To establish a fair price negotiation program, protect the Medicare 
program from excessive price increases, and establish an out-of-pocket 
     maximum for Medicare part D enrollees, 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) In General.--This Act may be cited as the ``Lower Drug Costs 
Now Act of 2019''.
    (b) Table of Contents.--The table of contents is as follows:

Sec. 1. Short title; table of contents.
      TITLE I--LOWERING PRICES THROUGH FAIR DRUG PRICE NEGOTIATION

Sec. 101. Providing for lower prices for certain high-priced single 
                            source drugs.
Sec. 102. Selected drug manufacturer excise tax imposed during 
                            noncompliance periods.
  TITLE II--MEDICARE PARTS B AND D PRESCRIPTION DRUG INFLATION REBATES

Sec. 201. Medicare part B rebate by manufacturers.
Sec. 202. Medicare part D rebate by manufacturers.
   TITLE III--PART D IMPROVEMENTS AND MAXIMUM OUT-OF-POCKET CAP FOR 
                         MEDICARE BENEFICIARIES

Sec. 301. Medicare part D benefit redesign.

      TITLE I--LOWERING PRICES THROUGH FAIR DRUG PRICE NEGOTIATION

SEC. 101. PROVIDING FOR LOWER PRICES FOR CERTAIN HIGH-PRICED SINGLE 
              SOURCE DRUGS.

    (a) Program To Lower Prices for Certain High-Priced Single Source 
Drugs.--Title XI of the Social Security Act (42 U.S.C. 1301 et seq.) is 
amended by adding at the end the following new part:

 ``PART E--FAIR PRICE NEGOTIATION PROGRAM TO LOWER PRICES FOR CERTAIN 
                    HIGH-PRICED SINGLE SOURCE DRUGS

``SEC. 1191. ESTABLISHMENT OF PROGRAM.

    ``(a) In General.--The Secretary shall establish a Fair Price 
Negotiation Program (in this part referred to as the `program'). Under 
the program, with respect to each price applicability period, the 
Secretary shall--
            ``(1) publish a list of selected drugs in accordance with 
        section 1192;
            ``(2) enter into agreements with manufacturers of selected 
        drugs with respect to such period, in accordance with section 
        1193;
            ``(3) negotiate and, if applicable, renegotiate maximum 
        fair prices for such selected drugs, in accordance with section 
        1194; and
            ``(4) carry out the administrative duties described in 
        section 1196.
    ``(b) Definitions Relating to Timing.--For purposes of this part:
            ``(1) Initial price applicability year.--The term `initial 
        price applicability year' means a plan year (beginning with 
        plan year 2023) or, if agreed to in an agreement under section 
        1193 by the Secretary and manufacturer involved, a period of 
        more than one plan year (beginning on or after January 1, 
        2023).
            ``(2) Price applicability period.--The term `price 
        applicability period' means, with respect to a drug, the period 
        beginning with the initial price applicability year with 
        respect to which such drug is a selected drug and ending with 
        the last plan year during which the drug is a selected drug.
            ``(3) Selected drug publication date.--The term `selected 
        drug publication date' means, with respect to each initial 
        price applicability year, April 15 of the plan year that begins 
        2 years prior to such year.
            ``(4) Voluntary negotiation period.--The term `voluntary 
        negotiation period' means, with respect to an initial price 
        applicability year with respect to a selected drug, the 
        period--
                    ``(A) beginning on the sooner of--
                            ``(i) the date on which the manufacturer of 
                        the drug and the Secretary enter into an 
                        agreement under section 1193 with respect to 
                        such drug; or
                            ``(ii) June 15 following the selected drug 
                        publication date with respect to such selected 
                        drug; and
                    ``(B) ending on March 31 of the year that begins 
                one year prior to the initial price applicability year.
    ``(c) Other Definitions.--For purposes of this part:
            ``(1) Fair price eligible individual.--The term `fair price 
        eligible individual' means, with respect to a selected drug, an 
        individual who is--
                    ``(A) enrolled under a prescription drug plan under 
                part D of title XVIII or an MA-PD plan under part C of 
                such title under which coverage is provided for such 
                drug;
                    ``(B) enrolled under a group health plan or health 
                insurance coverage offered in the group or individual 
                market (as such terms are defined in section 2791 of 
                the Public Health Service Act) with respect to which 
                there is in effect an agreement with the Secretary 
                under section 1197 with respect to such selected drug; 
                or
                    ``(C) entitled to benefits under part A of title 
                XVIII or enrolled under part B of such title.
            ``(2) Maximum fair price.--The term `maximum fair price' 
        means, with respect to a plan year during a price applicability 
        period and with respect to a selected drug (as defined in 
        section 1192(c)) with respect to such period, the price 
        published pursuant to section 1195 in the Federal Register for 
        such drug and year.
            ``(3) Average international market price defined.--
                    ``(A) In general.--The terms `average international 
                market price' and `AIM price' mean, with respect to a 
                drug, the average price (which shall be the net average 
                price, if practicable, and volume-weighted, if 
                practicable) for any dosage form and strength of a unit 
                (as defined in subparagraph (C)) for the drug for sales 
                of such drug, as computed (as of the date of 
                publication of such drug as a selected drug under 
                section 1192(a)) in all countries described in clause 
                (ii) of subparagraph (B) that are applicable countries 
                (as described in clause (i) of such subparagraph) with 
                respect to such drug.
                    ``(B) Applicable countries.--
                            ``(i) In general.--For purposes of 
                        subparagraph (A), a country described in clause 
                        (ii) is an applicable country described in this 
                        clause with respect to a drug if there is 
                        available an average price for any unit for the 
                        drug for sales of such drug in such country.
                            ``(ii) Countries described.--For purposes 
                        of this paragraph, the following are countries 
                        described in this clause:
                                    ``(I) Australia.
                                    ``(II) Canada.
                                    ``(III) France.
                                    ``(IV) Germany.
                                    ``(V) Japan.
                                    ``(VI) The United Kingdom.
                    ``(C) Unit.--The term `unit' means, with respect to 
                a drug, the lowest identifiable quantity (such as a 
                capsule or tablet, milligram of molecules, or grams) of 
                the drug that is dispensed.

``SEC. 1192. SELECTION OF NEGOTIATION-ELIGIBLE DRUGS AS SELECTED DRUGS.

    ``(a) In General.--Not later than the selected drug publication 
date with respect to an initial price applicability year, the Secretary 
shall select and publish in the Federal Register a list of--
            ``(1) at least 25 negotiation-eligible drugs described in 
        subparagraphs (A) and (B), but not subparagraph (C), of 
        subsection (d)(1) (or, with respect to an initial price 
        applicability year beginning after 2023, the maximum number (if 
        such number is less than 25) of such negotiation-eligible drugs 
        for the year) with respect to such year; and
            ``(2) all negotiation-eligible drugs described in 
        subparagraph (C) of such subsection with respect to such year.
Each drug published on the list pursuant to the previous sentence shall 
be subject to the negotiation process under section 1194 for the 
voluntary negotiation period with respect to such initial price 
applicability year (and the renegotiation process under such section as 
applicable for any subsequent year during the applicable price 
applicability period). In applying this subsection, any negotiation-
eligible drug that is selected under this subsection for an initial 
price applicability year shall not count toward the required minimum 
amount of drugs to be selected under paragraph (1) for any subsequent 
year, including such a drug so selected that is subject to 
renegotiation under section 1194.
    ``(b) Selection of Drugs.--In carrying out subsection (a)(1) the 
Secretary shall select for inclusion on the published list described in 
subsection (a) with respect to a price applicability period, the 
negotiation-eligible drugs that the Secretary projects will result in 
the greatest savings to the Federal Government or fair price eligible 
individuals during the price applicability period. In making this 
projection of savings for drugs for which there is an AIM price for a 
price applicability period, the savings shall be projected taking into 
consideration both the volume of drugs for which payment is made, to 
the extent such data is available, and the amount by which the net 
price for the drugs exceeds the AIM price for the drugs.
    ``(c) Selected Drug.--For purposes of this part, each drug included 
on the list published under subsection (a) with respect to an initial 
price applicability year shall be referred to as a `selected drug' with 
respect to such year and each subsequent plan year beginning before the 
first plan year beginning after the date on which the Secretary 
determines the drug is no longer a qualifying single source drug.
    ``(d) Negotiation-Eligible Drug.--
            ``(1) In general.--For purposes of this part, the term 
        `negotiation-eligible drug' means, with respect to the selected 
        drug publication date with respect to an initial price 
        applicability year, a qualifying single source drug, as defined 
        in subsection (e), that meets any of the following criteria:
                    ``(A) Covered part d drugs.--The drug is among the 
                125 covered part D drugs (as defined in section 1860D-
                2(e)) for which there was an estimated greatest net 
                spending under parts C and D of title XVIII, as 
                determined by the Secretary, during the most recent 
                plan year prior to such drug publication date for which 
                data are available.
                    ``(B) Other drugs.--The drug is among the 125 drugs 
                for which there was an estimated greatest net spending 
                in the United States, as determined by the Secretary, 
                during the most recent plan year prior to such drug 
                publication date for which data are available.
                    ``(C) Insulin.--The drug is a qualifying single 
                source drug described in subsection (e)(3).
            ``(2) Clarification.--In determining whether a qualifying 
        single source drug satisfies any of the criteria described in 
        paragraph (1), the Secretary shall, to the extent practicable, 
        use data that is aggregated across strengths and dosage forms 
        and routes of administration of the drug.
            ``(3) Publication.--Not later than the selected drug 
        publication date with respect to an initial price applicability 
        year, the Secretary shall publish in the Federal Register a 
        list of negotiation-eligible drugs with respect to such 
        selected drug publication date.
    ``(e) Qualifying Single Source Drug.--For purposes of this part, 
the term `qualifying single source drug' means any of the following:
            ``(1) Drug products.--A drug that--
                    ``(A) is approved under section 505(c) of the 
                Federal Food, Drug, and Cosmetic Act and continues to 
                be marketed pursuant to such approval; and
                    ``(B) is not the listed drug for any drug that is 
                approved and continues to be marketed under section 
                505(j) of such Act.
            ``(2) Biological products.--A biological product that--
                    ``(A) is licensed under section 351(a) of the 
                Public Health Service Act, including any product that 
                has been deemed to be licensed under section 351 of 
                such Act pursuant to section 7002(e)(4) of the 
                Biologics Price Competition and Innovation Act of 2009, 
                and continues to be marketed under section 351 of such 
                Act; and
                    ``(B) is not the reference product for any 
                biological product that is licensed and continues to be 
                marketed under section 351(k) of such Act.
            ``(3) Insulin product.--Notwithstanding paragraphs (1) and 
        (2), any insulin product that is approved under subsection (c) 
        or (j) of section 505 of the Federal Food, Drug, and Cosmetic 
        Act or licensed under subsection (a) or (k) of section 351 of 
        the Public Health Service Act and continues to be marketed 
        under such section 505 or 351.
For purposes of applying paragraphs (1)(B) and (2)(B), a drug or 
biological product that is marketed by the same sponsor or manufacturer 
(or an affiliate thereof or a cross-licensed producer or distributor) 
as the listed drug or reference product described in such respective 
paragraph shall not be taken into consideration.
    ``(f) Information on International Drug Prices.--For purposes of 
determining which negotiation-eligible drugs to select under subsection 
(a) and, in the case of such drugs that are selected drugs, to 
determine the maximum fair price of such drug and whether such maximum 
fair price should be renegotiated under section 1194, the Secretary 
shall use data relating to the AIM price with respect to such drugs as 
available or provided to the Secretary and shall on an ongoing basis 
request from manufacturers of selected drugs information on the AIM 
price of such drugs.

``SEC. 1193. MANUFACTURER AGREEMENTS.

    ``(a) In General.--For purposes of section 1191(a)(2), the 
Secretary shall enter into agreements with manufacturers of selected 
drugs with respect to a price applicability period, by not later than 
June 15 following the selected drug publication date with respect to 
such selected drug, under which--
            ``(1) during the voluntary negotiation period for the 
        initial price applicability year for the selected drug, the 
        Secretary and manufacturer, in accordance with section 1194, 
        negotiate to determine (and, by not later than the last date of 
        such period and in accordance with subsection (c), agree to) a 
        maximum fair price for the selected drug of the manufacturer in 
        order to provide access to such price--
                    ``(A) to fair price eligible individuals described 
                in subparagraph (A) or (B) of section 1191(c)(1) 
                furnished such drug during, subject to subparagraph 
                (2), the price applicability period; and
                    ``(B) to hospitals, physicians, and other providers 
                of services and suppliers with respect to fair price 
                eligible individuals described in subparagraph (C) of 
                such section administered such drug during, subject to 
                subparagraph (2), the price applicability period;
            ``(2) the Secretary and the manufacturer shall, in 
        accordance with a process and during a period specified by the 
        Secretary pursuant to rulemaking, renegotiate (and, by not 
        later than the last date of such period and in accordance with 
        subsection (c), agree to) the maximum fair price for the drug 
        if the Secretary determines that there is a material change in 
        any of the factors described in section 1194(d) relating to the 
        drug, including changes in the AIM price for the drug, in order 
        to provide access to such maximum fair price (as so 
        renegotiated)--
                    ``(A) to fair price eligible individuals described 
                in subparagraph (A) or (B) of section 1191(c)(1) 
                furnished such drug during any year during the price 
                applicability period (beginning after such 
                renegotiation) with respect to such selected drug; and
                    ``(B) to hospitals, physicians, and other providers 
                of services and suppliers with respect to fair price 
                eligible individuals described in subparagraph (C) of 
                such section administered such drug during any year 
                described in subparagraph (A);
            ``(3) the maximum fair price (including as renegotiated 
        pursuant to paragraph (2)), with respect to such a selected 
        drug, shall be provided to fair price eligible individuals 
        described in subparagraph (A) or (B) of section 1191(c)(1) at 
        the pharmacy or by the mail order service at the point-of-sale 
        of such drug;
            ``(4) the manufacturer, subject to subsection (c), submits 
        to the Secretary, in a form and manner specified by the 
        Secretary--
                    ``(A) for the voluntary negotiation period for the 
                price applicability period (and, if applicable, before 
                any period of renegotiation specified pursuant to 
                paragraph (2)) with respect to such drug all 
                information that the Secretary requires to carry out 
                the negotiation (or renegotiation process) under this 
                part, including information described in section 
                1192(f) and section 1194(d)(1); and
                    ``(B) on an ongoing basis, information on changes 
                in prices for the drug that would affect the AIM price 
                for the drug or otherwise provide a basis for 
                renegotiation of the maximum fair price of such drug 
                pursuant to paragraph (2);
            ``(5) the manufacturer agrees that in the case the selected 
        drug of a manufacturer is a drug described in subsection (c), 
        the manufacturer will, in accordance with such subsection, make 
        any payment required under such subsection with respect to such 
        drug; and
            ``(6) the manufacturer complies with requirements imposed 
        by the Secretary for purposes of administering the program, 
        including with respect to the duties described in section 1196.
    ``(b) Agreement in Effect Until Drug Is No Longer a Selected 
Drug.--An agreement entered into under this section shall be effective, 
with respect to a drug, until such drug is no longer considered a 
selected drug under section 1192(c).
    ``(c) Special Rule for Certain Selected Drugs Without AIM Price.--
            ``(1) In general.--In the case of a selected drug for which 
        there is no AIM price available with respect to the initial 
        price applicability year for such drug and for which an AIM 
        price becomes available beginning with respect to a subsequent 
        plan year during the price applicability period for such drug, 
        if the Secretary determines that the amount described in 
        paragraph (2)(A) for such drug is greater than the amount 
        described in paragraph (2)(B) for such drug, then by not later 
        than one year after the date of such determination, the 
        manufacturer of such selected drug shall pay to the Treasury an 
        amount equal to the difference between such amount described in 
        paragraph (2)(A) for such drug and such amount described in 
        paragraph (2)(B) for such drug.
            ``(2) Amounts described.--
                    ``(A) Weighted average price before aim price 
                available.--For purposes of paragraph (1), the amount 
                described in this subparagraph for a selected drug 
                described in such paragraph, is the amount equal to the 
                weighted average manufacturer price for such dosage 
                strength and form for the drug during the period 
                beginning with the first plan year for which the drug 
                is included on the list of negotiation-eligible drugs 
                published under section 1192(d) and ending with the 
                last plan year during the price applicability period 
                for such drug with respect to which there is no AIM 
                price available for such drug.
                    ``(B) Amount multiplier after aim price 
                available.--For purposes of paragraph (1), the amount 
                described in this subparagraph for a selected drug 
                described in such paragraph, is the amount equal to 200 
                percent of the AIM price for such drug with respect to 
                the first plan year during the price applicability 
                period for such drug with respect to which there is an 
                AIM price available for such drug.
    ``(d) Confidentiality of Information.--Information submitted to the 
Secretary under this part by a manufacturer of a selected drug that is 
proprietary information of such manufacturer (as determined by the 
Secretary) may be used only by the Secretary or disclosed to and used 
by the Comptroller General of the United States or the Medicare Payment 
Advisory Commission for purposes of carrying out this part.
    ``(e) Regulations.--
            ``(1) In general.--The Secretary shall, pursuant to 
        rulemaking, specify, in accordance with paragraph (2), the 
        information that must be submitted under subsection (a)(4).
            ``(2) Information specified.--Information described in 
        paragraph (1), with respect to a selected drug, shall include 
        information on sales of the drug (by the manufacturer of the 
        drug or by another entity under license or other agreement with 
        the manufacturer, with respect to the sales of such drug, 
        regardless of the name under which the drug is sold) in any 
        foreign country that is part of the AIM price. The Secretary 
        shall verify, to the extent practicable, such sales from 
        appropriate officials of the government of the foreign country 
        involved.
    ``(f) 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 section 1196(c)(1), as applicable, for purposes of 
administering the program.

``SEC. 1194. NEGOTIATION AND RENEGOTIATION PROCESS.

    ``(a) In General.--For purposes of this part, under an agreement 
under section 1193 between the Secretary and a manufacturer of a 
selected drug, with respect to the period for which such agreement is 
in effect and in accordance with subsections (b) and (c), the Secretary 
and the manufacturer--
            ``(1) shall during the voluntary negotiation period with 
        respect to the initial price applicability year for such drug, 
        in accordance with this section, negotiate a maximum fair price 
        for such drug for the purpose described in section 1193(a)(1); 
        and
            ``(2) as applicable pursuant to section 1193(a)(2) and in 
        accordance with the process specified pursuant to such section, 
        renegotiate such maximum fair price for such drug for the 
        purpose described in such section.
    ``(b) Negotiating Methodology and Objective.--
            ``(1) In general.--The Secretary shall develop and use a 
        consistent methodology for negotiations under subsection (a) 
        that, in accordance with paragraph (2) and subject to paragraph 
        (3), achieves the lowest maximum fair price for each selected 
        drug while appropriately rewarding innovation.
            ``(2) Prioritizing factors.--In considering the factors 
        described in subsection (d) in negotiating (and, as applicable, 
        renegotiating) the maximum fair price for a selected drug, the 
        Secretary shall, to the extent practicable, consider all of the 
        available factors listed but shall prioritize the following 
        factors:
                    ``(A) Research and development costs.--The factor 
                described in paragraph (1)(A) of subsection (d).
                    ``(B) Market data.--The factor described in 
                paragraph (1)(B) of such subsection.
                    ``(C) Unit costs of production and distribution.--
                The factor described in paragraph (1)(C) of such 
                subsection.
                    ``(D) Comparison to existing therapeutic 
                alternatives.--The factor described in paragraph (2)(A) 
                of such subsection.
            ``(3) Requirement.--
                    ``(A) In general.--In negotiating the maximum fair 
                price of a selected drug, with respect to an initial 
                price applicability year for the selected drug, and, as 
                applicable, in renegotiating the maximum fair price for 
                such drug, with respect to a subsequent year during the 
                price applicability period for such drug, in the case 
                that the manufacturer of the selected drug offers under 
                the negotiation or renegotiation, as applicable, a 
                price for such drug that is not more than the target 
                price described in subparagraph (B) for such drug for 
                the respective year, the Secretary shall agree under 
                such negotiation or renegotiation, respectively, to 
                such offered price as the maximum fair price.
                    ``(B) Target price.--
                            ``(i) In general.--Subject to clause (ii), 
                        the target price described in this subparagraph 
                        for a selected drug with respect to a year, is 
                        the average price (which shall be the net 
                        average price, if practicable, and volume-
                        weighted, if practicable) for any dosage form 
                        and strength of a unit for the drug for sales 
                        of such drug, as computed in the applicable 
                        country described in section 1191(c)(3)(B) with 
                        respect to such drug that, with respect to such 
                        year, has the lowest average price for such 
                        drug as compared to the average prices (as so 
                        computed) for such drug with respect to such 
                        year in the other applicable countries 
                        described in such section with respect to such 
                        drug.
                            ``(ii) Selected drugs without aim price.--
                        In applying this paragraph in the case of 
                        negotiating the maximum fair price of a 
                        selected drug for which there is no AIM price 
                        available with respect to the initial price 
                        applicability year for such drug, or, as 
                        applicable, renegotiating the maximum fair 
                        price for such drug with respect to a 
                        subsequent year during the price applicability 
                        period for such drug before the first plan year 
                        for which there is an AIM price available for 
                        such drug, the target price described in this 
                        subparagraph for such drug and respective year 
                        is the amount that is 80 percent of the average 
                        manufacturer price for such drug and year.
            ``(4) Annual report.--After the completion of each 
        voluntary negotiation period, the Secretary shall submit to 
        Congress a report on the maximum fair prices negotiated (or, as 
        applicable, renegotiated) for such period. Such report shall 
        include information on how such prices so negotiated (or 
        renegotiated) meet the requirements of this part, including the 
        requirements of this subsection.
    ``(c) Limitation.--
            ``(1) In general.--Subject to paragraph (2), the maximum 
        fair price negotiated (including as renegotiated) under this 
        section for a selected drug, with respect to each plan year 
        during a price applicability period for such drug, shall not 
        exceed 120 percent of the AIM price applicable to such drug 
        with respect to such year.
            ``(2) Selected drugs without aim price.--In the case of a 
        selected drug for which there is no AIM price available with 
        respect to the initial price applicability year for such drug, 
        for each plan year during the price applicability period before 
        the first plan year for which there is an AIM price available 
        for such drug, the maximum fair price negotiated (including as 
        renegotiated) under this section for the selected drug shall 
        not exceed the amount equal to 85 percent of the average 
        manufacturer price for the drug with respect to such year.
    ``(d) Considerations.--For purposes of negotiating and, as 
applicable, renegotiating (including for purposes of determining 
whether to renegotiate) the maximum fair price of a selected drug under 
this part with the manufacturer of the drug, the Secretary shall, 
consistent with subsection (b)(2), take into consideration the 
following factors:
            ``(1) Manufacturer-specific information.--The following 
        information, including as submitted by the manufacturer:
                    ``(A) Research and development costs of the 
                manufacturer for the drug and the extent to which the 
                manufacturer has recouped research and development 
                costs.
                    ``(B) Market data for the drug, including the 
                distribution of sales across different programs and 
                purchasers and projected future revenues for the drug.
                    ``(C) Unit costs of production and distribution of 
                the drug.
                    ``(D) Prior Federal financial support for novel 
                therapeutic discovery and development with respect to 
                the drug.
                    ``(E) Data on patent and on existing and pending 
                exclusivity for the drug.
                    ``(F) National sales data for the drug.
                    ``(G) Information on clinical trials for the drug 
                in the United States or in applicable countries 
                described in section 1191(c)(3)(B).
            ``(2) Information on alternative products.--The following 
        information:
                    ``(A) The extent to which the drug represents a 
                therapeutic advance as compared to existing therapeutic 
                alternatives and, to the extent such information is 
                available, the costs of such existing therapeutic 
                alternatives.
                    ``(B) Information on approval by the Food and Drug 
                Administration of alternative drug products.
                    ``(C) Information on comparative effectiveness 
                analysis for such products.
            ``(3) Foreign sales information.--To the extent available 
        on a timely basis, including as provided by a manufacturer of 
        the selected drug or otherwise, information on sales of the 
        selected drug in each of the countries described in section 
        1191(c)(3)(B).
            ``(4) Additional information.--Information submitted to the 
        Secretary, in accordance with a process specified by the 
        Secretary, by other parties that are affected by the 
        establishment of a maximum fair price for the selected drug.
    ``(e) Request for Information.--For purposes of negotiating and, as 
applicable, renegotiating (including for purposes of determining 
whether to renegotiate) the maximum fair price of a selected drug under 
this part with the manufacturer of the drug, with respect to a price 
applicability period, and other relevant data for purposes of this 
section--
            ``(1) the Secretary shall, not later than the selected drug 
        publication date with respect to the initial price 
        applicability year of such period, request drug pricing 
        information from the manufacturer of such selected drug, 
        including information described in subsection (d)(1); and
            ``(2) by not later than October 1 following the selected 
        drug publication date, the manufacturer of such selected drug 
        shall submit to the Secretary such requested information in 
        such form and manner as the Secretary may require.
The Secretary shall request, from the manufacturer or others, such 
additional information as may be needed to carry out the negotiation 
and renegotiation process under this section.

``SEC. 1195. PUBLICATION OF MAXIMUM FAIR PRICES.

    ``(a) In General.--With respect to an initial price applicability 
year and selected drug with respect to such year, not later than May 1 
of the plan year prior to such initial price applicability year, the 
Secretary shall publish in the Federal Register the maximum fair price 
negotiated under this part with the manufacturer of such drug.
    ``(b) Updates.--
            ``(1) Subsequent year maximum fair prices.--For a selected 
        drug, for each plan year subsequent to the initial price 
        applicability year for such drug with respect to which an 
        agreement for such drug is in effect under section 1193, the 
        Secretary shall publish in the Federal Register--
                    ``(A) subject to subparagraph (B), the amount equal 
                to the maximum fair price published for such drug for 
                the previous year, increased by the annual percentage 
                increase in the consumer price index for all urban 
                consumers (all items; U.S. city average) as of 
                September of such previous year; or
                    ``(B) in the case the maximum fair price for such 
                drug was renegotiated, for the first year for which 
                such price as so renegotiated applies, such 
                renegotiated maximum fair price.
            ``(2) Prices negotiated after deadline.--In the case of a 
        selected drug with respect to an initial price applicability 
        year for which the maximum fair price is determined under this 
        part after the date of publication under this section, the 
        Secretary shall publish such maximum fair price in the Federal 
        Register by not later than 30 days after the date such maximum 
        price is so determined.

``SEC. 1196. ADMINISTRATIVE DUTIES; COORDINATION PROVISIONS.

    ``(a) Administrative Duties.--
            ``(1) In general.--For purposes of section 1191, the 
        administrative duties described in this section are the 
        following:
                    ``(A) The establishment of procedures (including 
                through agreements with manufacturers under this part, 
                contracts with prescription drug plans under part D of 
                title XVIII and MA-PD plans under part C of such title, 
                and agreements under section 1197 with group health 
                plans and health insurance issuers of health insurance 
                coverage offered in the individual or group market) 
                under which the maximum fair price for a selected drug 
                is provided to fair price eligible individuals 
                described in subparagraph (A) or (B) of section 
                1191(c)(1) at pharmacies or by mail order service at 
                the point-of-sale of the drug for the applicable price 
                period for such drug and providing that such maximum 
                fair price is used for determining cost-sharing under 
                such plans or coverage for the selected drug.
                    ``(B) The establishment of procedures (including 
                through agreements with manufacturers under this part 
                and contracts with hospitals, physicians, and other 
                providers of services and suppliers) under which, in 
                the case of a selected drug administered by such a 
                hospital, physician, or other provider of services or 
                supplier to fair price eligible individuals described 
                in subparagraph (C) of section 1191(c)(1) and if 
                payment for such drug may be made under part A of title 
                XVIII or part B of such title, the maximum fair price 
                for the selected drug is provided to such hospitals, 
                physicians, and other providers of services and 
                suppliers (as applicable) and providing that such 
                maximum fair price is used for determining cost-sharing 
                under the respective part, for the selected drug.
                    ``(C) The establishment of procedures (including 
                through agreements and contracts described in 
                subparagraphs (A) and (B)) to ensure that, not later 
                than 90 days after the dispensing of a selected drug to 
                a fair price eligible individual 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 lesser of--
                                    ``(I) the wholesale acquisition 
                                cost of the drug;
                                    ``(II) the national average drug 
                                acquisition cost of the drug; and
                                    ``(III) any other similar 
                                determination of pharmacy acquisition 
                                costs of the drug, as determined by the 
                                Secretary; and
                            ``(ii) the maximum fair price for the drug.
                    ``(D) The establishment of procedures to ensure 
                that the maximum fair price for a selected drug is 
                applied before--
                            ``(i) 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 fair price eligible 
                        individuals as the Secretary may specify; and
                            ``(ii) any other discounts.
                    ``(E) The establishment of procedures to enter into 
                appropriate agreements and protocols for the ongoing 
                computation of AIM prices for selected drugs, 
                including, to the extent possible, to compute the AIM 
                price for selected drugs and including by providing 
                that the manufacturer of such a selected drug should 
                provide information for such computation not later than 
                3 months after the first date of the voluntary 
                negotiation period for such selected drug.
                    ``(F) The establishment of procedures to compute 
                and apply the maximum fair price across different 
                strengths and dosage forms of a selected drug that are 
                not based on the specific formulation, dosage or 
                strength, packaging, or form of administration.
                    ``(G) The establishment of procedures to negotiate 
                and apply the maximum fair price in a manner that does 
                not include any dispensing or similar fee.
                    ``(H) The establishment of procedures to carry out 
                the provisions of this part with respect to--
                            ``(i) fair price eligible individuals who 
                        are enrolled under a prescription drug plan 
                        under part D of title XVIII or an MA-PD plan 
                        under part C of such title; and
                            ``(ii) fair price eligible individuals who 
                        are enrolled under a group health plan or 
                        health insurance coverage offered by a health 
                        insurance issuer in the individual or group 
                        market with respect to which there is an 
                        agreement in effect under section 1197.
                    ``(I) The establishment of a negotiation process 
                and renegotiation process in accordance with section 
                1194, including a process for acquiring information 
                described in subsection (d) of such section and 
                determining amounts described in subsection (b) of such 
                section.
                    ``(J) The provision of a reasonable dispute 
                resolution mechanism to resolve disagreements between 
                manufacturers, fair price eligible individuals, and the 
                third party with a contract under subsection (c)(1).
            ``(2) Monitoring compliance.--
                    ``(A) In general.--The Secretary shall monitor 
                compliance by a manufacturer with the terms of an 
                agreement under section 1193, including by establishing 
                a mechanism through which violations of such terms may 
                be reported.
                    ``(B) Notification.--If a third party with a 
                contract under subsection (c)(1) 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 section 
                4192 of the Internal Revenue Code of 1986 or section 
                1198, as applicable.
    ``(b) Collection of Data.--
            ``(1) From prescription drug plans and ma-pd plans.--The 
        Secretary may collect appropriate data from prescription drug 
        plans under part D of title XVIII and MA-PD plans under part C 
        of such title in a timeframe that allows for maximum fair 
        prices to be provided under this part for selected drugs.
            ``(2) From health plans.--The Secretary may collect 
        appropriate data from group health plans or health insurance 
        issuers offering group or individual health insurance coverage 
        in a timeframe that allows for maximum fair prices to be 
        provided under this part for selected drugs.
    ``(c) Contract With Third Parties.--
            ``(1) In general.--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 part. 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 part;
                    ``(C) provide adequate and timely information to 
                manufacturers, consistent with the agreement with the 
                manufacturer under this part, as necessary for the 
                manufacturer to fulfill its obligations under this 
                part; 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.
            ``(2) Performance requirements.--The Secretary shall 
        establish performance requirements for a third party with a 
        contract under paragraph (1) and safeguards to protect the 
        independence and integrity of the activities carried out by the 
        third party under the program under this part.
    ``(d) Coordination With 340B Program.--In the case of a 
manufacturer of a selected drug, with respect to an initial price 
applicability year, for each year with respect to which a maximum fair 
price is applied under this part for such drug, such drug shall not be 
considered a covered outpatient drug subject to an agreement under 
section 340B of the Public Health Service Act.

``SEC. 1197. VOLUNTARY PARTICIPATION BY OTHER HEALTH PLANS.

    ``(a) In General.--Under the program under this part the Secretary 
shall be treated as having in effect an agreement with a group health 
plan or health insurance issuer offering health insurance coverage (as 
such terms are defined in section 2791 of the Public Health Service 
Act), except in the case that such a plan or issuer affirmatively 
elects not to participate under the program, through a process 
specified by the Secretary, with respect to a price applicability 
period and a selected drug with respect to such period with respect to 
which coverage is provided under such plan or coverage.
    ``(b) Publication of Election.--With respect to each price 
applicability period and each selected drug with respect to such 
period, the Secretary and the Secretary of Labor and the Secretary of 
the Treasury, as applicable, shall make public a list of each group 
health plan and each issuer of health insurance coverage, with respect 
to which coverage is provided under such plan or coverage for such 
drug, that has elected under subsection (a) not to participate under 
the program with respect to such period and drug.

``SEC. 1198. CIVIL MONETARY PENALTY.

    ``(a) Violations Relating To Offering of Maximum Fair Price.--Any 
manufacturer of a selected drug that has entered into an agreement 
under section 1193, with respect to a plan year during the price 
applicability period for such drug, that does not provide access to a 
price that is not more than the maximum fair price (or a lesser price) 
for such drug for such year--
            ``(1) to a fair price eligible individual described in 
        subparagraph (A) or (B) of section 1191(c)(1) furnished such 
        drug during such year; or
            ``(2) to a hospital, physician, or other provider of 
        services or supplier with respect to fair price eligible 
        individuals described in subparagraph (C) of such section 
        administered such drug during such year;
shall be subject to a civil monetary penalty equal to ten times the 
amount equal to the difference between the price for such drug made 
available by such manufacturer with respect to such individual or 
hospital, physician, provider, or supplier and the maximum fair price 
for such drug for such year.
    ``(b) Violations of Certain Terms of Agreement.--Any manufacturer 
of a selected drug that has entered into an agreement under section 
1193, with respect to a plan year during the price applicability period 
for such drug, that is in violation of a requirement imposed pursuant 
to section 1193(a)(6) shall be subject to a civil monetary penalty of 
not more than $1,000,000 for each such violation.
    ``(c) Application.--The provisions of section 1128A (other than 
subsections (a) and (b)) shall apply to a civil monetary penalty under 
this section in the same manner as such provisions apply to a penalty 
or proceeding under section 1128A(a).

``SEC. 1199. MISCELLANEOUS PROVISIONS.

    ``(a) Paperwork Reduction Act.--Chapter 35 of title 44, United 
States Code, shall not apply to data collected under this part.
    ``(b) National Academy of Medicine Study.--Not later than December 
31, 2025, the National Academy of Medicine shall conduct a study, and 
submit to Congress a report, on recommendations for improvements to the 
program under this part, including the determination of the limits 
applied under section 1194(c).
    ``(c) MedPAC Study.--Not later than December 31, 2025, the Medicare 
Payment Advisory Commission shall conduct a study, and submit to 
Congress a report, on the program under this part with respect to the 
Medicare program under title XVIII, including with respect to the 
effect of the program on individuals entitled to benefits or enrolled 
under such title.
    ``(d) Limitation on Judicial Review.--The following shall not be 
subject to judicial review:
            ``(1) The selection of drugs for publication under section 
        1192(a).
            ``(2) The determination of whether a drug is a negotiation-
        eligible drug under section 1192(d).
            ``(3) The determination of the maximum fair price of a 
        selected drug under section 1194.
            ``(4) The determination of units of a drug for purposes of 
        section 1191(c)(3).
    ``(e) Coordination.--In carrying out this part with respect to 
group health plans or health insurance coverage offered in the group 
market that are subject to oversight by the Secretary of Labor or the 
Secretary of the Treasury, the Secretary of Health and Human Services 
shall coordinate with such respective Secretary.
    ``(f) Data Sharing.--The Secretary shall share with the Secretary 
of the Treasury such information as is necessary to determine the tax 
imposed by section 4192 of the Internal Revenue Code of 1986.''.
    (b) Application of Maximum Fair Prices and Conforming Amendments.--
            (1) Under medicare prescription drug program.--
                    (A) Exception to non-interference.--Section 1860D-
                11(i) of the Social Security Act (42 U.S.C. 1395w-
                111(i)) is amended by inserting ``, except as provided 
                under part E of title XI,'' after ``the Secretary''.
                    (B) Application as negotiated price.--Section 
                1860D-2(d)(1) of the Social Security Act (42 U.S.C. 
                1395w-102(d)(1)) is amended--
                            (i) in subparagraph (B), by inserting ``, 
                        subject to subparagraph (D),'' after 
                        ``negotiated prices''; and
                            (ii) by adding at the end the following new 
                        subparagraph:
                    ``(D) Application of maximum fair price for 
                selected drugs.--In applying this section, in the case 
                of a covered part D drug that is a selected drug (as 
                defined in section 1192(c)), with respect to a price 
                applicability period (as defined in section 
                1191(b)(2)), the negotiated price described in this 
                subsection shall be the maximum fair price (as defined 
                in section 1191(c)(2)) for such drug and for each plan 
                year during such period.''.
                    (C) Information from prescription drug plans and 
                ma-pd plans required.--
                            (i) Prescription drug plans.--Section 
                        1860D-12(b) of the Social Security Act (42 
                        U.S.C. 1395w-112(b)) is amended by adding at 
                        the end the following new paragraph:
            ``(8) Provision of information related to maximum fair 
        prices.--Each contract entered into with a PDP sponsor under 
        this part with respect to a prescription drug plan offered by 
        such sponsor shall require the sponsor to provide information 
        to the Secretary as requested by the Secretary in accordance 
        with section 1196(b).''.
                            (ii) MA-PD plans.--Section 1857(f)(3) of 
                        the Social Security Act (42 U.S.C. 1395w-
                        27(f)(3)) is amended by adding at the end the 
                        following new subparagraph:
                    ``(E) Provision of information related to maximum 
                fair prices.--Section 1860D-12(b)(8).''.
            (2) Under group health plans and health insurance 
        coverage.--
                    (A) PHSA.--Part A of title XXVII of the Public 
                Health Service Act is amended by inserting after 
                section 2729 the following new section:

``SEC. 2729A. FAIR PRICE DRUG NEGOTIATION PROGRAM AND APPLICATION OF 
              MAXIMUM FAIR PRICES.

    ``(a) In General.--In the case of a group health plan or health 
insurance issuer offering health insurance coverage that is treated 
under section 1197 of the Social Security Act as having in effect an 
agreement with the Secretary under the Fair Price Drug Negotiation 
Program under part E of title XI of such Act, with respect to a price 
applicability period (as defined in section 1191(b) of such Act) and a 
selected drug (as defined in section 1192(c) of such Act) with respect 
to such period with respect to which coverage is provided under such 
plan or coverage--
            ``(1) the provisions of such part shall apply to the plans 
        or coverage offered by such plan or issuer, and to the 
        individuals enrolled under such plans or coverage, during such 
        period, with respect to such selected drug, in the same manner 
        as such provisions apply to prescription drug plans and MA-PD 
        plans, and to individuals enrolled under such prescription drug 
        plans and MA-PD plans;
            ``(2) the plan or issuer shall apply any cost-sharing 
        responsibilities under such plan or coverage, with respect to 
        such selected drug, by substituting the maximum fair price 
        negotiated under such part for such drug in lieu of the 
        contracted rate under such plan or coverage for such selected 
        drug; and
            ``(3) the Secretary shall apply the provisions of such part 
        to such plan, issuer, and coverage, and such individuals so 
        enrolled in such plans.
    ``(b) Notification Regarding Nonparticipation in Fair Drug Price 
Negotiation Program.--A group health plan or a health insurance issuer 
offering group or individual health insurance coverage shall publicly 
disclose in a manner and in accordance with a process specified by the 
Secretary any election made under section 1197 of the Social Security 
Act by the plan or issuer to not participate in the Fair Drug Price 
Negotiation Program under part E of title XI of such Act with respect 
to a selected drug (as defined in section 1192(c) of such Act) for 
which coverage is provided under such plan or coverage before the 
beginning of the plan year for which such election was made.''.
                    (B) ERISA.--
                            (i) In general.--Subpart B of part 7 of 
                        subtitle B of title I of the Employee 
                        Retirement Income Security Act of 1974 (29 
                        U.S.C. 1181 et. seq.) is amended by adding at 
                        the end the following new section:

``SEC. 716. FAIR PRICE DRUG NEGOTIATION PROGRAM AND APPLICATION OF 
              MAXIMUM FAIR PRICES.

    ``(a) In General.--In the case of a group health plan or health 
insurance issuer offering group health insurance coverage that is 
treated under section 1197 of the Social Security Act as having in 
effect an agreement with the Secretary under the Fair Price Drug 
Negotiation Program under part E of title XI of such Act, with respect 
to a price applicability period (as defined in section 1191(b) of such 
Act) and a selected drug (as defined in section 1192(c) of such Act) 
with respect to such period with respect to which coverage is provided 
under such plan or coverage--
            ``(1) the provisions of such part shall apply to the plans 
        or coverage offered by such plan or issuer, and to the 
        individuals enrolled under such plans or coverage, during such 
        period, with respect to such selected drug, in the same manner 
        as such provisions apply to prescription drug plans and MA-PD 
        plans, and to individuals enrolled under such prescription drug 
        plans and MA-PD plans;
            ``(2) the plan or issuer shall apply any cost-sharing 
        responsibilities under such plan or coverage, with respect to 
        such selected drug, by substituting the maximum fair price 
        negotiated under such part for such drug in lieu of the 
        contracted rate under such plan or coverage for such selected 
        drug; and
            ``(3) the Secretary shall apply the provisions of such part 
        to such plan, issuer, and coverage, and such individuals so 
        enrolled in such plans.
    ``(b) Notification Regarding Nonparticipation in Fair Drug Price 
Negotiation Program.--A group health plan or a health insurance issuer 
offering group health insurance coverage shall publicly disclose in a 
manner and in accordance with a process specified by the Secretary any 
election made under section 1197 of the Social Security Act by the plan 
or issuer to not participate in the Fair Drug Price Negotiation Program 
under part E of title XI of such Act with respect to a selected drug 
(as defined in section 1192(c) of such Act) for which coverage is 
provided under such plan or coverage before the beginning of the plan 
year for which such election was made.''.
                            (ii) Clerical amendment.--The table of 
                        sections for part 7 of subtitle B of title I of 
                        the Employee Retirement Income Security Act of 
                        1974 is amended by adding at the end the 
                        following:

``Sec. 716. Fair Price Drug Negotiation Program and application of 
                            maximum fair prices.''.
                    (C) IRC.--
                            (i) In general.--Subchapter B of chapter 
                        100 of the Internal Revenue Code of 1986 is 
                        amended by adding at the end the following new 
                        section:

``SEC. 9816. FAIR PRICE DRUG NEGOTIATION PROGRAM AND APPLICATION OF 
              MAXIMUM FAIR PRICES.

    ``(a) In General.--In the case of a group health plan that is 
treated under section 1197 of the Social Security Act as having in 
effect an agreement with the Secretary under the Fair Price Drug 
Negotiation Program under part E of title XI of such Act, with respect 
to a price applicability period (as defined in section 1191(b) of such 
Act) and a selected drug (as defined in section 1192(c) of such Act) 
with respect to such period with respect to which coverage is provided 
under such plan--
            ``(1) the provisions of such part shall apply to the plans 
        offered by such plan, and to the individuals enrolled under 
        such plans, during such period, with respect to such selected 
        drug, in the same manner as such provisions apply to 
        prescription drug plans and MA-PD plans, and to individuals 
        enrolled under such prescription drug plans and MA-PD plans;
            ``(2) the plan shall apply any cost-sharing 
        responsibilities under such plan, with respect to such selected 
        drug, by substituting the maximum fair price negotiated under 
        such part for such drug in lieu of the contracted rate under 
        such plan for such selected drug; and
            ``(3) the Secretary shall apply the provisions of such part 
        to such plan and such individuals so enrolled in such plan.
    ``(b) Notification Regarding Nonparticipation in Fair Drug Price 
Negotiation Program.--A group health plan shall publicly disclose in a 
manner and in accordance with a process specified by the Secretary any 
election made under section 1197 of the Social Security Act by the plan 
to not participate in the Fair Drug Price Negotiation Program under 
part E of title XI of such Act with respect to a selected drug (as 
defined in section 1192(c) of such Act) for which coverage is provided 
under such plan before the beginning of the plan year for which such 
election was made.''.
                            (ii) Clerical amendment.--The table of 
                        sections for subchapter B of chapter 100 of 
                        such Code is amended by adding at the end the 
                        following new item:

``Sec. 9816. Fair Price Drug Negotiation Program and application of 
                            maximum fair prices.''.

SEC. 102. SELECTED DRUG MANUFACTURER EXCISE TAX IMPOSED DURING 
              NONCOMPLIANCE PERIODS.

    (a) In General.--Subchapter E of chapter 32 of the Internal Revenue 
Code of 1986 is amended by adding at the end the following new section:

``SEC. 4192. SELECTED DRUGS DURING NONCOMPLIANCE PERIODS.

    ``(a) In General.--There is hereby imposed on the sale by the 
manufacturer, producer, or importer of any selected drug during a day 
described in subsection (b) a tax in an amount such that the applicable 
percentage is equal to the ratio of--
            ``(1) such tax, divided by
            ``(2) the sum of such tax and the price for which so sold.
    ``(b) Noncompliance Periods.--A day is described in this subsection 
with respect to a selected drug if it is a day during one of the 
following periods:
            ``(1) The period beginning on the June 16th immediately 
        following the selected drug publication date and ending on the 
        first date during which the manufacturer of the drug has in 
        place an agreement described in subsection (a) of section 1193 
        of the Social Security Act with respect to such drug.
            ``(2) The period beginning on the April 1st immediately 
        following the June 16th described in paragraph (1) and ending 
        on the first date during which the manufacturer of the drug has 
        agreed to a maximum fair price under such agreement.
            ``(3) In the case of a selected drug with respect to which 
        the Secretary of Health and Human Services has specified a 
        renegotiation period under such agreement, the period beginning 
        on the first date after the last date of such renegotiation 
        period and ending on the first date during which the 
        manufacturer of the drug has agreed to a renegotiated maximum 
        fair price under such agreement.
            ``(4) With respect to information that is required to be 
        submitted to the Secretary of Health and Human Services under 
        such agreement, the period beginning on the date on which such 
        Secretary certifies that such information is overdue and ending 
        on the date that such information is so submitted.
            ``(5) In the case of a selected drug with respect to which 
        a payment is due under subsection (c) of such section 1193, the 
        period beginning on the date on which the Secretary of Health 
        and Human Services certifies that such payment is overdue and 
        ending on the date that such payment is made in full.
    ``(c) Applicable Percentage.--The term `applicable percentage' 
means--
            ``(1) in the case of sales of a selected drug during the 
        first 90 days described in subsection (b) with respect to such 
        drug, 65 percent,
            ``(2) in the case of sales of such drug during the 91st day 
        through the 180th day described in subsection (b) with respect 
        to such drug, 75 percent,
            ``(3) in the case of sales of such drug during the 181st 
        day through the 270th day described in subsection (b) with 
        respect to such drug, 85 percent, and
            ``(4) in the case of sales of such drug during any 
        subsequent day, 95 percent.
    ``(d) Definitions.--The terms `selected drug publication date' and 
`maximum fair price' have the meaning given such terms in section 1191 
of the Social Security Act and the term `selected drug' has the meaning 
given such term in section 1192 of such Act.
    ``(e) Anti-Abuse Rule.--In the case of a sale which was timed for 
the purpose of avoiding the tax imposed by this section, the Secretary 
may treat such sale as occurring during a day described in subsection 
(b).''.
    (b) No Deduction for Excise Tax Payments.--Section 275 of the 
Internal Revenue Code of 1986 is amended by adding ``or by section 
4192'' before the period at the end of subsection (a)(6).
    (c) Conforming Amendments.--
            (1) Section 4221(a) of the Internal Revenue Code of 1986 is 
        amended by inserting ``or 4192'' after ``section 4191''.
            (2) Section 6416(b)(2) of such Code is amended by inserting 
        ``or 4192'' after ``section 4191''.
    (d) Clerical Amendments.--
            (1) The heading of subchapter E of chapter 32 of the 
        Internal Revenue Code of 1986 is amended by striking ``Medical 
        Devices'' and inserting ``Other Medical Products''.
            (2) The table of subchapters for chapter 32 of such Code is 
        amended by striking the item relating to subchapter E and 
        inserting the following new item:

               ``subchapter e. other medical products''.

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

``Sec. 4192. Selected drugs during noncompliance periods.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to sales after the date of the enactment of this Act.

  TITLE II--MEDICARE PARTS B AND D PRESCRIPTION DRUG INFLATION REBATES

SEC. 201. MEDICARE PART B REBATE BY MANUFACTURERS.

    (a) In General.--Section 1834 of the Social Security Act (42 U.S.C. 
1395m) is amended by adding at the end the following new subsection:
    ``(x) Rebate by Manufacturers for Single Source Drugs With Prices 
Increasing Faster Than Inflation.--
            ``(1) Requirements.--
                    ``(A) Secretarial provision of information.--Not 
                later than 6 months after the end of each calendar 
                quarter beginning on or after July 1, 2021, the 
                Secretary shall, for each part B rebatable drug, report 
                to each manufacturer of such part B rebatable drug the 
                following for such calendar quarter:
                            ``(i) Information on the total number of 
                        billing units described in subparagraph (A)(i) 
                        of paragraph (3) with respect to such drug and 
                        calendar quarter.
                            ``(ii) Information on the amount (if any) 
                        of the excess average sales price increase 
                        described in subparagraph (A)(ii) of such 
                        paragraph for such drug and calendar quarter.
                            ``(iii) The rebate amount specified under 
                        such paragraph for such part B rebatable drug 
                        and calendar quarter.
                    ``(B) Manufacturer requirement.--For each calendar 
                quarter beginning on or after July 1, 2021, the 
                manufacturer of a part B rebatable drug shall, for such 
                drug, not later than 30 days after the date of receipt 
                from the Secretary of the information described in 
                subparagraph (A) for such calendar quarter, provide to 
                the Secretary a rebate that is equal to the amount 
                specified in paragraph (3) for such drug for such 
                calendar quarter.
            ``(2) Part b rebatable drug defined.--
                    ``(A) In general.--In this subsection, the term 
                `part B rebatable drug' means a single source drug or 
                biological (as defined in subparagraph (D) of section 
                1847A(c)(6)), including a biosimilar biological product 
                (as defined in subparagraph (H) of such section), paid 
                for under this part, except such term shall not include 
                such a drug or biological--
                            ``(i) if the average total allowed charges 
                        for a year per individual that uses such a drug 
                        or biological, as determined by the Secretary, 
                        are less than, subject to subparagraph (B), 
                        $100; or
                            ``(ii) that is a vaccine described in 
                        subparagraph (A) or (B) of section 1861(s)(10).
                    ``(B) Increase.--The dollar amount applied under 
                subparagraph (A)(i)--
                            ``(i) for 2022, shall be the dollar amount 
                        specified under such subparagraph for 2021, 
                        increased by the percentage increase in the 
                        consumer price index for all urban consumers 
                        (United States city average) as of the first 
                        quarter of the previous year; and
                            ``(ii) for a subsequent year, shall be the 
                        dollar amount specified in this clause (or 
                        clause (i)) for the previous year, increased by 
                        the percentage increase in the consumer price 
                        index for all urban consumers (United States 
                        city average) as of the first quarter of the 
                        previous year.
                Any dollar amount specified under this subparagraph 
                that is not a multiple of $10 shall be rounded to the 
                nearest multiple of $10.
            ``(3) Rebate amount.--
                    ``(A) In general.--For purposes of paragraph 
                (1)(B), the amount specified in this paragraph for a 
                part B rebatable drug assigned to a billing and payment 
                code for a calendar quarter is, subject to paragraph 
                (4), the amount equal to the product of--
                            ``(i) subject to subparagraph (B), the 
                        total number of billing units, as described in 
                        section 1847A(b)(6)(B), for such part B 
                        rebatable drug furnished under this part during 
                        the calendar quarter; and
                            ``(ii) the amount (if any) by which--
                                    ``(I) the payment amount under 
                                subparagraph (B) or (C) of section 
                                1847A(b)(1), as applicable, for such 
                                part B rebatable drug during the 
                                calendar quarter; exceeds
                                    ``(II) the inflation-adjusted 
                                payment amount determined under 
                                subparagraph (C) for such part B 
                                rebatable drug during the calendar 
                                quarter.
                    ``(B) Excluded units.--For purposes of subparagraph 
                (A)(i), the total number of billing units for part B 
                rebatable drugs furnished during a calendar quarter 
                shall not include--
                            ``(i) units packaged into the payment for a 
                        related procedure or service under section 
                        1833(t) or under section 1833(i) (instead of 
                        separately payable under such respective 
                        section);
                            ``(ii) units included under the single 
                        payment system for renal dialysis services 
                        under section 1881(b)(14); or
                            ``(iii) units of a part B rebatable drug of 
                        a manufacturer that is furnished to an 
                        individual, if such manufacturer, with respect 
                        to the furnishing of such units of such drug, 
                        provides for discounts under section 340B of 
                        the Public Health Service Act or for rebates 
                        under section 1927.
                    ``(C) Determination of inflation-adjusted payment 
                amount.--The inflation-adjusted payment amount 
                determined under this subparagraph for a part B 
                rebatable drug for a calendar quarter is--
                            ``(i) the payment amount for the billing 
                        and payment code for such 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 calendar quarter 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 January 1, 2016.
                    ``(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 
                2015.
                    ``(F) Rebate period cpi-u.--The term `rebate period 
                CPI-U' means, with respect to a calendar quarter 
                described in subparagraph (C), the greater of the 
                benchmark period CPI-U and the consumer price index for 
                all urban consumers (United States city average) for 
                the first month of the calendar quarter that is two 
                calendar quarters prior to such described calendar 
                quarter.
            ``(4) Special treatment of certain drugs and exemption.--
                    ``(A) Subsequently approved drugs.--Subject to 
                subparagraph (B), in the case of a part B rebatable 
                drug first approved by the Food and Drug Administration 
                after July 1, 2015, 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 third full calendar quarter after the day on 
                which the drug was first marketed and clause (ii) of 
                paragraph (3)(C) shall be applied as if the term 
                `benchmark period CPI-U' were defined under paragraph 
                (3)(E) as if the reference to `July 2015' 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) Timeline for provision of rebates for new 
                drugs.--In the case of a part B rebatable drug first 
                approved by the Food and Drug Administration after July 
                1, 2015, clause (i) of paragraph (1)(B) shall be 
                applied as if the reference to `July 1, 2021' under 
                such paragraph were a reference to the later of the 6th 
                full calendar quarter after the day on which the drug 
                was first marketed or July 1, 2021.
                    ``(C) Exemption for shortages.--The Secretary may 
                reduce or waive the rebate under paragraph (1)(B) with 
                respect to a part B rebatable drug that appears on the 
                drug shortage list in effect under section 506(e) of 
                the Federal Food, Drug, and Cosmetic Act or in the case 
                of other exigent circumstances, as determined by the 
                Secretary.
                    ``(D) Selected drugs.--In the case of a part B 
                rebatable drug that is a selected drug (as defined in 
                section 1192(c)), for each applicable year beginning 
                after the price applicability period (as defined in 
                section 1191(b)(2) with respect to such drug, 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 calendar quarter beginning 
                January 1 of the last year beginning during such price 
                applicability period with respect to such selected drug 
                and clause (ii) of paragraph (3)(C) shall be applied as 
                if the term `benchmark period CPI-U' were defined under 
                paragraph (3)(E) as if the reference to `July 2015' 
                under such paragraph were a reference to the July of 
                the year preceding such last year.
            ``(5) Application to beneficiary coinsurance.--In the case 
        of a part B rebatable drug for which a rebate is payable under 
        this subsection--
                    ``(A) in computing the amount of any coinsurance 
                applicable under this title to an individual with 
                respect to such drug, the computation of such 
                coinsurance shall be based on the inflation-adjusted 
                payment amount determined under paragraph (3)(C) for 
                such part B rebatable drug; and
                    ``(B) the amount of such coinsurance is equal to 20 
                percent of such inflation-adjusted payment amount so 
                determined.
            ``(6) 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.
            ``(7) Civil money penalty.--If a manufacturer of a part B 
        rebatable drug has failed to comply with the requirements under 
        paragraph (1)(B) for such drug for a calendar quarter, the 
        manufacturer shall be subject to, in accordance with a process 
        established by the Secretary pursuant to regulations, a civil 
        money penalty in an amount equal to at least 125 percent of the 
        amount specified in paragraph (3) for such drug for such 
        calendar quarter. The provisions of section 1128A (other than 
        subsections (a) (with respect to amounts of penalties or 
        additional assessments) and (b)) shall apply to a civil money 
        penalty under this paragraph in the same manner as such 
        provisions apply to a penalty or proceeding under section 
        1128A(a).
            ``(8) Study and report.--
                    ``(A) Study.--The Secretary shall conduct a study 
                of the feasibility of and operational issues involved 
                with the following:
                            ``(i) Including multiple source drugs (as 
                        defined in section 1847A(c)(6)(C)) in the 
                        rebate system under this subsection.
                            ``(ii) Including drugs and biologicals paid 
                        for under MA plans under part C in the rebate 
                        system under this subsection.
                            ``(iii) Including drugs excluded under 
                        paragraph (2)(A) and billing units of drugs 
                        excluded under paragraph (3)(B) in the rebate 
                        system under this subsection.
                    ``(B) Report.--Not later than 3 years after the 
                date of the enactment of this subsection, the Secretary 
                shall submit to Congress a report on the study 
                conducted under subparagraph (A).
            ``(9) Application to multiple source drugs.--The Secretary 
        may, based on the report submitted under paragraph (8) and 
        pursuant to rulemaking, apply the provisions of this subsection 
        to multiple source drugs (as defined in section 
        1847A(c)(6)(C)), including, for purposes of determining the 
        rebate amount under paragraph (3), by calculating manufacturer-
        specific average sales prices for the benchmark period and the 
        rebate period.''.
    (b) Amounts Payable; Cost-Sharing.--Section 1833(a) of the Social 
Security Act is amended--
            (1) in paragraph (1)--
                    (A) in subparagraph (S), by striking ``with respect 
                to'' and inserting ``subject to subparagraph (DD), with 
                respect to'';
                    (B) by striking ``and (CC)'' and inserting 
                ``(CC)''; and
                    (C) by inserting before the semicolon at the end 
                the following: ``, and (DD) with respect to a part B 
                rebatable drug (as defined in paragraph (2) of section 
                1834(x)) for which a rebate is payable under such 
                section, the amounts paid shall be the difference 
                between (i) the payment amount under paragraph 
                (3)(A)(ii)(I) of such section for such drug, and (ii) 
                20 percent of the inflation-adjusted payment amount 
                under paragraph (3)(A)(ii)(II) of such section for such 
                drug''; and
            (2) by adding at the end of the flush left matter following 
        paragraph (9), the following:
``For purposes of applying paragraph (1)(DD) and section 1834(x)(5), 
the Secretary shall make such estimates and use such data as the 
Secretary determines appropriate.''.
    (c) Conforming Amendment to Part B ASP Calculation.--Section 
1847A(c)(3) of the Social Security Act (42 U.S.C. 1395w-3a(c)(3)) is 
amended by inserting ``or section 1834(x)'' after ``section 1927''.

SEC. 202. MEDICARE PART D REBATE BY MANUFACTURERS.

    Part D of title XVIII of the Social Security Act is amended by 
inserting after section 1860D-14A (42 U.S.C. 1395w-114a) the following 
new section:

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

    ``(a) In General.--Subject to the provisions of this section, in 
order for coverage to be available under this part for a part D 
rebatable drug of a manufacturer dispensed during an applicable year, 
the manufacturer must have entered into and have in effect an agreement 
described in subsection (b). For purposes of this section the term 
`applicable year' means a year beginning with 2022.
    ``(b) Agreements.--
            ``(1) Terms of agreement.--An agreement described in this 
        subsection, with respect to a manufacturer of a part D 
        rebatable drug, is an agreement under which the following 
        applies:
                    ``(A) Secretarial provision of information.--Not 
                later than 9 months after the end of each applicable 
                year with respect to which the agreement is in effect, 
                the Secretary, for the part D rebatable drug of the 
                manufacturer, reports to the manufacturer the following 
                for such year:
                            ``(i) Information on the total units (as 
                        defined in subsection (g)(2)) dispensed for 
                        each dosage form and strength with respect to 
                        such part D rebatable drug and year.
                            ``(ii) Information on the amount (if any) 
                        of the excess average manufacturer price 
                        increase described in subsection (c)(1)(B) for 
                        each dosage form and strength with respect to 
                        such drug and year.
                            ``(iii) The rebate amount specified under 
                        subsection (c) for each dosage form and 
                        strength with respect to such drug and year.
                    ``(B) Manufacturer requirements.--For each 
                applicable year with respect to which the agreement is 
                in effect, the manufacturer of the part D rebatable 
                drug, for each dosage form and strength with respect to 
                such drug, not later than 30 days after the date of 
                receipt from the Secretary of the information described 
                in subparagraph (A) for such year, provides to the 
                Secretary a rebate that is equal to the amount 
                specified in subsection (c) for such dosage form and 
                strength with respect to such drug for such year.
            ``(2) Length of agreement.--
                    ``(A) In general.--An agreement under this section, 
                with respect to a part D rebatable drug, shall be 
                effective for an initial period of not less than one 
                year and shall be automatically renewed for a period of 
                not less than one year unless terminated under 
                subparagraph (B).
                    ``(B) Termination.--
                            ``(i) By secretary.--The Secretary may 
                        provide for termination of an agreement under 
                        this section for violation of the requirements 
                        of the agreement or other good cause shown. 
                        Such termination shall not be effective earlier 
                        than 60 days after the date of notice of such 
                        termination. The Secretary shall provide, upon 
                        request, a manufacturer with a hearing 
                        concerning such a termination, but such hearing 
                        shall not delay the effective date of the 
                        termination.
                            ``(ii) By a manufacturer.--A manufacturer 
                        may terminate an agreement under this section 
                        for any reason. Any such termination shall not 
                        be effective until the year beginning at least 
                        60 days after the date the manufacturer 
                        provides notice to the Secretary.
                    ``(C) Effectiveness of termination.--Any 
                termination under this paragraph shall not affect 
                rebates due under the agreement under this section 
                before the effective date of its termination.
                    ``(D) Delay before reentry.--In the case of any 
                agreement under this section with a manufacturer which 
                is terminated in a plan year, another such agreement 
                with the manufacturer (or a successor manufacturer) may 
                not be entered into before the subsequent plan year, 
                unless the Secretary finds good cause for an earlier 
                reinstatement of such an agreement.
            ``(3) Information.--For purposes of carrying out this 
        section, the Secretary shall use information submitted by 
        manufacturers under section 1927(b)(3).
    ``(c) Rebate Amount.--
            ``(1) In general.--For purposes of this section, the amount 
        specified in this subsection for a dosage form and strength 
        with respect to a part D rebatable drug and applicable year is, 
        subject to subparagraphs (B) and (C) of paragraph (3), the 
        amount equal to the product of--
                    ``(A) the total average number of units weighted 
                by, and dispensed for, such dosage form and strength 
                with respect to such part D rebatable drug and year; 
                and
                    ``(B) the amount (if any) by which--
                            ``(i) the average manufacturer price (as 
                        defined in subsection (g)) paid for such dosage 
                        form and strength with respect to such part D 
                        rebatable drug during the year; exceeds
                            ``(ii) the inflation-adjusted payment 
                        amount determined under paragraph (2) for such 
                        dosage form and strength with respect to such 
                        part D rebatable drug during the year.
            ``(2) Determination of inflation-adjusted payment amount.--
        The inflation-adjusted payment amount determined under this 
        paragraph for a dosage form and strength with respect to a part 
        D rebatable drug for an applicable year, subject to 
        subparagraphs (A) and (D) of paragraph (3), is--
                    ``(A) the average manufacturer price paid for such 
                dosage form and strength with respect to such drug in 
                the payment amount benchmark year (as defined in 
                subsection (g)(3)); increased by
                    ``(B) the percentage by which the rebate period 
                CPI-U (as defined in subsection (g)(5)) for the 
                applicable year exceeds the benchmark period CPI-U (as 
                defined in subsection (g)(4)).
            ``(3) Special treatment of certain drugs and exemption.--
                    ``(A) Subsequently approved drugs.--In the case of 
                a part D rebatable drug first approved by the Food and 
                Drug Administration after January 1, 2016, subparagraph 
                (A) of paragraph (2) shall be applied as if the term 
                `payment amount benchmark year' were defined under 
                subsection (g)(3) as the first year beginning after the 
                day on which the drug was first marketed and 
                subparagraph (B) of paragraph (2) shall be applied as 
                if the term `benchmark period CPI-U' were defined under 
                subsection (g)(4) as if the reference to `January 2016' 
                under such subsection were a reference to `January of 
                the first year beginning after the date on which the 
                drug was first marketed by any manufacturer'.
                    ``(B) Exemption for shortages.--The Secretary may 
                reduce or waive the rebate under paragraph (1) with 
                respect to a part D rebatable drug in the case of a 
                shortage of such drug or other exigent circumstances, 
                as determined by the Secretary.
                    ``(C) Treatment of new formulations.--
                            ``(i) In general.--In the case of a part D 
                        rebatable drug that is a line extension of a 
                        single source drug or an innovator multiple 
                        source drug that is an oral solid dosage form, 
                        the Secretary shall establish a formula for 
                        determining the amount specified in this 
                        subsection with respect to such part D 
                        rebatable drug and an applicable year with 
                        consideration of the single source drug or an 
                        innovator multiple source drug.
                            ``(ii) Line extension defined.--In this 
                        subparagraph, the term `line extension' means, 
                        with respect to a part D rebatable drug, a new 
                        formulation of the drug (as determined by the 
                        Secretary), such as an extended release 
                        formulation, but does not include an abuse-
                        deterrent formulation of the drug (as 
                        determined by the Secretary), regardless of 
                        whether such abuse-deterrent formulation is an 
                        extended release formulation.
                    ``(D) Selected drugs.--In the case of a part D 
                rebatable drug that is a selected drug (as defined in 
                section 1192(c)), for each applicable year beginning 
                after the price applicability period (as defined in 
                section 1191(b)(2) with respect to such drug, 
                subparagraph (A) of paragraph (2) shall be applied as 
                if the term `payment amount benchmark year' were 
                defined under subsection (g)(3) as the last year 
                beginning during such price applicability period with 
                respect to such selected drug and subparagraph (B) of 
                paragraph (2) shall be applied as if the term 
                `benchmark period CPI-U' were defined under subsection 
                (g)(4) as if the reference to `January 2016' under such 
                subsection were a reference to January of the last year 
                beginning during such price applicability period with 
                respect to such drug.
    ``(d) Rebate Deposits.--Amounts paid as rebates under subsection 
(c) shall be deposited into the Medicare Prescription Drug Account in 
the Federal Supplementary Medical Insurance Trust Fund established 
under section 1841.
    ``(e) Civil Money Penalty.--In the case of a manufacturer of a part 
D rebatable drug with an agreement in effect under this section who has 
failed to comply with the terms of the agreement under subsection 
(b)(1)(B) with respect to such drug for an applicable year, the 
Secretary may impose a civil money penalty on such manufacturer in an 
amount equal to 125 percent of the amount specified in subsection (c) 
for such drug for such year. 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 subsection in the same manner as such provisions apply to a 
penalty or proceeding under section 1128A(a).
    ``(f) Judicial Review.--There shall be no judicial review of the 
following:
            ``(1) The determination of units under this section.
            ``(2) The determination of whether a drug is a part D 
        rebatable drug under this section.
            ``(3) The calculation of the rebate amount under this 
        section.
    ``(g) Definitions.--In this section:
            ``(1) Part d rebatable drug defined.--
                    ``(A) In general.--The term `part D rebatable drug' 
                means a drug or biological that would (without 
                application of this section) be a covered part D drug, 
                except such term shall, with respect to an applicable 
                year, not include such a drug or biological if the 
                average total cost under a prescription drug plan under 
                this part or MA-PD plan under part C for such year per 
                individual who uses such a drug or biological, as 
                determined by the Secretary, are less than, subject to 
                subparagraph (B), $100, as determined by the Secretary 
                using the most recent data available or, if data is not 
                available, as estimated by the Secretary.
                    ``(B) Increase.--The dollar amount applied under 
                subparagraph (A)--
                            ``(i) for 2023, shall be the dollar amount 
                        specified under such subparagraph for 2022, 
                        increased by the percentage increase in the 
                        consumer price index for all urban consumers 
                        (United States city average) as of January of 
                        2022; and
                            ``(ii) for a subsequent year, shall be the 
                        dollar amount specified in this subparagraph 
                        (or subparagraph (A)) for the previous year, 
                        increased by the percentage increase in the 
                        consumer price index for all urban consumers 
                        (United States city average) as of January of 
                        the previous year.
                Any dollar amount specified under this subparagraph 
                that is not a multiple of $10 shall be rounded to the 
                nearest multiple of $10.
            ``(2) Unit defined.--The term `unit' means, with respect to 
        a part D rebatable drug, the lowest identifiable quantity (such 
        as a capsule or tablet, milligram of molecules, or grams) of 
        the part D rebatable drug that is dispensed to individuals 
        enrolled under a prescription drug plan under this part or an 
        MA-PD plan under part C.
            ``(3) Payment amount benchmark year.--The term `payment 
        amount benchmark year' means the year beginning January 1, 
        2016.
            ``(4) Benchmark period cpi-u.--The term `benchmark period 
        CPI-U' means the consumer price index for all urban consumers 
        (United States city average) for January 2016.
            ``(5) Rebate period cpi-u.--The term `rebate period CPI-U' 
        means, with respect to an applicable year, the consumer price 
        index for all urban consumers (United States city average) for 
        January of such year.
            ``(6) Average manufacturer price.--The term `average 
        manufacturer price' has the meaning, with respect to a part D 
        rebatable drug of a manufacturer for an applicable year, given 
        such term in section 1927(k)(1), with respect to a covered 
        outpatient drug of a manufacturer for a rebate period under 
        section 1927. For purposes of applying the previous sentence, 
        with respect to a part D rebatable drug of a manufacturer and 
        an applicable year, the Secretary shall use the information 
        with respect to the average manufacturer price for such drug 
        reported by the manufacturer under section 1927(b)(3) with 
        respect to each of the quarters in the applicable year and 
        calculate an annual average manufacturer price for such 
        applicable year as the average of such average manufacturer 
        prices for each such quarter, weighted by units of such drug 
        sold or dispensed with respect to such applicable year.''.

   TITLE III--PART D IMPROVEMENTS AND MAXIMUM OUT-OF-POCKET CAP FOR 
                         MEDICARE BENEFICIARIES

SEC. 301. MEDICARE PART D BENEFIT 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''; and
            (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 moving the margin of 
                                each such redesignated item 2 ems to 
                                the right;
                                    (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 
                                $2,000; 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 years 2011 
                through 2021, in applying''.
    (b) Decreasing Reinsurance Payment Amount.--Section 1860D-15(b)(1) 
of the Social Security Act (42 U.S.C. 1395w-115(b)(1)) is amended by 
inserting after ``80 percent'' the following: ``(or, with respect to a 
coverage year after 2021, 20 percent)''.
    (c) Manufacturer Discount Program.--
            (1) In general.--Part D of title XVIII of the Social 
        Security Act (42 U.S.C. 1395w-101 et seq.), as amended by 
        section 202, is further amended by inserting after section 
        1860D-14B the following new section:

``SEC. 1860D-14C. MANUFACTURER DISCOUNT PROGRAM.

    ``(a) Establishment.--The Secretary shall establish a manufacturer 
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.
                    ``(C) Timing of agreement.--
                            ``(i) Special rule for 2022.--In order for 
                        an agreement with a manufacturer to be in 
                        effect under this section with respect to the 
                        period beginning on January 1, 2022, and ending 
                        on December 31, 2022, the manufacturer shall 
                        enter into such agreement not later than 30 
                        days after the date of the establishment of a 
                        model agreement under subsection (a).
                            ``(ii) 2023 and subsequent years.--In order 
                        for an agreement with a manufacturer to be in 
                        effect under this section with respect to plan 
                        year 2023 or a subsequent plan year, the 
                        manufacturer shall enter into such agreement 
                        (or such agreement shall be renewed under 
                        paragraph (4)(A)) not later than January 30 of 
                        the preceding year.
            ``(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.
    ``(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) Implementation.--The Secretary may implement the 
        program under this section by program instruction or otherwise.
            ``(6) Administration.--Chapter 35 of title 44, United 
        States Code, shall not apply to the program under this section.
    ``(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 may 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 
                deductible specified in section 1860D-2(b)(1) for such 
                year.
            ``(2) Applicable drug.--The term `applicable drug', with 
        respect to an applicable beneficiary--
                    ``(A) means a covered part D drug--
                            ``(i) approved under a new drug application 
                        under section 505(b) 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; and
                            ``(ii)(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; and
                    ``(B) does not include a selected drug (as defined 
                in section 1192(c)) during a price applicability period 
                (as defined in section 1191(b)(2)) with respect to such 
                drug.
            ``(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, with respect to an applicable drug of a 
                manufacturer furnished during a year to an applicable 
                beneficiary--
                            ``(i) who has not 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)(i) for 
                        the year, 90 percent of the negotiated price of 
                        such drug; and
                            ``(ii) who has incurred such costs in the 
                        year that are equal to or exceed such threshold 
                        for the year, 70 percent of the negotiated 
                        price of such drug.
                    ``(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.--
                            ``(i) Claims spanning deductible.--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 deductible 
                        specified in section 1860D-2(b)(1) 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 deductible.
                            ``(ii) Claims spanning out-of-pocket 
                        threshold.--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 entirely 
                        below or entirely above the annual out-of-
                        pocket threshold specified in section 1860D-
                        2(b)(4)(B)(i) for the year, the manufacturer of 
                        the applicable drug shall provide the 
                        discounted price--
                                    ``(I) in accordance with 
                                subparagraph (A)(i) on the portion of 
                                the negotiated price of the applicable 
                                drug that falls below such threshold; 
                                and
                                    ``(II) in accordance with 
                                subparagraph (A)(ii) on the portion of 
                                such price of such drug that falls at 
                                or above such 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 423.100 of title 42, 
        Code of Federal Regulations (as in effect on the date of 
        enactment of section 1860D-14A), 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 with respect 
        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-14C 
                                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 inserted 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-14C;''.
    (d) 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; and
                    (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 (D)(iii), by striking 
                        ``1860D-2(b)(4)(A)(i)(I)'' and inserting 
                        ``1860D-2(b)(4)(A)(i)(I)(aa)''; and
                            (iii) in subparagraph (E), by striking 
                        ``The elimination'' and inserting ``For a year 
                        preceding 2022, the elimination''; 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)(4)(B)(i)'' and inserting ``section 1860D-2(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-14C.''.
            (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) Paragraph (1) of section 1860D-43(a) of the Social 
        Security Act (42 U.S.C. 1395w-153(a)) 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 discount program under section 1860D-
                14C;''.
    (e) Effective Date.--The amendments made by this section shall 
apply with respect to plan year 2022 and subsequent plan years.
                                 <all>