Title: SPIKE Act
Policy area: Health

Summary:
Stopping the Pharmaceutical Industry from Keeping drugs Expensive Act or the SPIKE Act
This bill requires the Centers for Medicare & Medicaid Services (CMS) to determine at least annually whether certain covered drugs under Medicare were subject to a price increase that exceeded specified thresholds. Drug manufacturers must submit justifications for such price increases to the CMS, subject to civil penalties. The bill's requirements do not apply to low-cost drugs, as identified by the CMS.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2069 Introduced in House (IH)]

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116th CONGRESS
  1st Session
                                H. R. 2069

   To amend title XI of the Social Security Act to provide for drug 
                    manufacturer price transparency.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             April 3, 2019

Mr. Horsford (for himself and Mr. Reed) introduced the following bill; 
  which was referred to the Committee on Energy and Commerce, and in 
    addition to the Committee on Ways and Means, 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 amend title XI of the Social Security Act to provide for drug 
                    manufacturer price transparency.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Stopping the Pharmaceutical Industry 
from Keeping drugs Expensive Act'' or the ``SPIKE Act''.

SEC. 2. DRUG MANUFACTURER PRICE TRANSPARENCY.

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

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

    ``(a) In General.--With respect to each year, beginning with 2021, 
the Secretary shall, at least once during such year, determine if there 
is a triggered SPIKE increase (in accordance with subsection (b)) with 
respect to an applicable drug (as defined in subsection (f)(1)). If the 
Secretary determines, with respect to a year, there is such an increase 
with respect to an applicable drug, the manufacturer of the applicable 
drug shall submit to the Secretary the justification described in 
subsection (c), subject to subsection (b)(3), for each such triggered 
SPIKE increase in accordance with the timing described in subsection 
(d).
    ``(b) Triggered SPIKE Increase.--
            ``(1) In general.--A triggered SPIKE increase occurs, with 
        respect to an applicable drug and year (beginning with 2021), 
        in any of the following cases:
                    ``(A) If there is a 10 percent (or $10,000) 
                increase with respect to the wholesale acquisition cost 
                (or alternative cost measure specified by the Secretary 
                under paragraph (2)) of such drug during any 12-month 
                period beginning and ending within the lookback period 
                that is the 5-year period preceding 2021 or 2022, 
                respectively.
                    ``(B) If there is a 25 percent (or $25,000) 
                increase with respect to the wholesale acquisition cost 
                (or such alternative cost measure) of such drug during 
                any 36-month period beginning and ending within such 
                respective lookback period.
                    ``(C) In the case of such a drug that is first 
                covered under title XVIII with respect to such year, if 
                the estimated cost or spending under such title per 
                individual or per user of such drug (as estimated by 
                the Secretary) for such year (or per course of 
                treatment, as defined by the Secretary) is at least 
                $26,000.
            ``(2) Alternative to wac.--The Secretary may, for purposes 
        of making determinations under paragraph (1), in addition to 
        using the wholesale acquisition cost for an applicable drug, 
        use alternative cost measures of such drug.
            ``(3) Exception.--A justification under subsection (c) 
        shall not be required for a triggered SPIKE increase described 
        in paragraph (1) of an applicable drug of a manufacturer if 
        there is any portion of the lookback period described in the 
        respective subparagraph of such paragraph for such increase 
        that is included within the lookback period for another 
        triggered SPIKE increase (or combination of such increases) for 
        which a justification is made under this section for such drug 
        by such manufacturer.
            ``(4) Unit determination.--For purposes of determining the 
        wholesale acquisition cost in carrying out this section, the 
        Secretary shall determine a unit (such as a unit size) to 
        apply.
            ``(5) Public posting.--Beginning with respect to 2021, the 
        Secretary shall publicly post on the Internet website of the 
        Department of Health and Human Services--
                    ``(A) alternative percentages, dollar amounts, and 
                lookback periods that, if applied under paragraph (1), 
                would be projected to increase the number of applicable 
                drugs for which a triggered SPIKE increase would occur 
                for such year; and
                    ``(B) the number of applicable drugs for which a 
                triggered SPIKE increase would occur for such year of 
                such an alternative percentage, dollar amount, or 
                period were applied for such year.
    ``(c) Justification Described.--
            ``(1) In general.--The justification described in this 
        subsection, with respect to a triggered SPIKE increase 
        described in subsection (b)(1) of an applicable drug of a 
        manufacturer, is--
                    ``(A) all of the information described in paragraph 
                (2);
                    ``(B) all of the information and supporting 
                documentation described in paragraph (3), as applicable 
                to the increase and drug; and
                    ``(C) a certification described in paragraph (4).
            ``(2) Required information.--For purposes of paragraph (1), 
        the information described in this paragraph is the following:
                    ``(A) The individual factors that have contributed 
                to the increase in the wholesale acquisition cost.
                    ``(B) An explanation of the role of each factor in 
                contributing to such increase.
            ``(3) Information as applicable.--For purposes of paragraph 
        (1), the information and supporting documentation described in 
        this paragraph is the following:
                    ``(A) Total expenditures of the manufacturer on--
                            ``(i) materials and manufacturing for such 
                        drug;
                            ``(ii) acquiring patents and licensing for 
                        each drug of the manufacturer; and
                            ``(iii) costs to purchase or acquire the 
                        drug from another company, if applicable.
                    ``(B) The percentage of total expenditures of the 
                manufacturer on research and development for such drug 
                that was derived from Federal funds.
                    ``(C) The total expenditures of the manufacturer on 
                research and development for such drug.
                    ``(D) The total revenue and net profit generated 
                from the applicable drug for each calendar year since 
                drug approval.
                    ``(E) The total costs associated with marketing and 
                advertising for the applicable drug.
                    ``(F) Additional information specific to the 
                manufacturer of the applicable drug, such as--
                            ``(i) the total revenue and net profit of 
                        the manufacturer for the period of such 
                        increase, as determined by the Secretary;
                            ``(ii) metrics used to determine executive 
                        compensation;
                            ``(iii) total expenditures on--
                                    ``(I) drug research and 
                                development; or
                                    ``(II) clinical trials on drugs 
                                that failed to receive approval by the 
                                Food and Drug Administration; and
                            ``(iv) any additional information related 
                        to drug pricing decisions of the manufacturer.
                    ``(G) Any other relevant information and supporting 
                documentation necessary to justify the triggering SPIKE 
                increase.
                    ``(H) Any other relevant information and supporting 
                documentation, as specified by the Secretary.
            ``(4) Certification.--For purposes of paragraph (1), the 
        certification described in this paragraph is a certification, 
        that all such information and documentation is accurate and 
        complete, by one of the following:
                    ``(A) The chief executive officer of the 
                manufacturer.
                    ``(B) The chief financial officer of the 
                manufacturer.
                    ``(C) An individual who has delegated authority to 
                sign for, and who reports directly to, such chief 
                executive officer or chief financial officer.
    ``(d) Timing.--
            ``(1) Notification.--Not later than 60 days after the date 
        on which the Secretary makes the determination that there is a 
        triggering SPIKE increase with respect to an applicable drug, 
        the Secretary shall notify the manufacturer of the applicable 
        drug of such determination.
            ``(2) Submission of justification.--Not later than 90 days 
        after the date on which a manufacturer receives a notification 
        under paragraph (1), subject to subsection (b)(3), the 
        manufacturer shall submit to the Secretary the justification 
        required under subsection (a), including a summary of such 
        justification, in a form and manner specified by the Secretary. 
        In specifying such form, with respect to the summary required 
        under the previous sentence, the Secretary shall provide that 
        such summary shall be in an easily understandable format, as 
        specified by the Secretary, and shall permit the manufacturer 
        to exclude proprietary information from such summary.
            ``(3) Posting on internet website.--Not later than 30 days 
        after receiving the complete justification under paragraph (2), 
        the Secretary shall post on the Internet website of the Centers 
        for Medicare & Medicaid Services the summary included for such 
        justification.
    ``(e) Penalties.--
            ``(1) Failure to submit timely justification.--If the 
        Secretary determines that a manufacturer has failed to submit a 
        justification as required under this section, including in 
        accordance with the timing and form required, with respect to 
        an applicable drug, the Secretary shall apply a civil monetary 
        penalty in an amount of $10,000 for each day the manufacturer 
        has failed to submit such justification as so required.
            ``(2) False information.--Any manufacturer that submits a 
        justification under this section that knowingly provides false 
        information in such justification is subject to a civil 
        monetary penalty in an amount not to exceed $100,000 for each 
        item of false information.
            ``(3) Application of procedures.--The provisions of section 
        1128A (other than subsections (a) and (b)) shall apply to a 
        civil monetary penalty under this subsection in the same manner 
        as such provisions apply to a penalty or proceeding under 
        section 1128A(a). Civil monetary penalties imposed under this 
        subsection are in addition to other penalties as may be 
        prescribed by law.
    ``(f) Definitions.--In this section:
            ``(1) Applicable drug.--
                    ``(A) In general.--Subject to paragraph (2), the 
                term `applicable drug' means, with respect to a 
                lookback period described in paragraph (2), a covered 
                outpatient drug (as defined in paragraph (2) of section 
                1927(k), without application of paragraph (3) of such 
                section) that is covered under title XVIII and is not a 
                low cost drug.
                    ``(B) Exclusion of low cost drugs.--For purposes of 
                subparagraph (A)(iii), not later than January 1, 2021, 
                the Secretary shall specify a threshold (such as a cost 
                or spending threshold) for identifying (and shall 
                identify) low cost drugs to be excluded from the 
                definition of the term `applicable drug', such as a 
                drug that has a wholesale acquisition cost of less than 
                $10 per unit or less than $100 in average estimated 
                expenditures under title XVIII per individual per year 
                or per user of such drug per year. For purposes of this 
                section, a drug shall not be considered specified as a 
                low cost drug for a lookback period described in 
                paragraph (2) with respect to a year unless such drug 
                is identified as being below the specified threshold 
                for the entirety of the lookback period.
            ``(2) Manufacturer.--The term `manufacturer' has the 
        meaning given that term in section 1847A(c)(6)(A).
            ``(3) Wholesale acquisition cost.--The term `wholesale 
        acquisition cost' has the meaning given that term in section 
        1847A(c)(6)(B).''.
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