Title: Seniors Prescription Drug Relief Act
Policy area: Health

Summary:
Seniors Prescription Drug Relief Act
This bill establishes and alters several programs and requirements relating to the prices of prescription drugs under Medicare.
For example, the bill caps annual out-of-pocket spending under the Medicare prescription drug benefit. It also establishes (1) a program under which drug manufacturers must, subject to civil penalties, provide discounts for covered drugs for beneficiaries who have incurred costs above the annual deductible; and (2) a process through which certain beneficiaries may have their monthly out-of-pocket costs capped and paid in monthly installments.

[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[S. 2327 Introduced in Senate (IS)]

<DOC>






117th CONGRESS
  1st Session
                                S. 2327

   To amend title XVIII of the Social Security Act to provide for a 
 Medicare part D modernization redesign and to establish a monthly out-
 of-pocket cost sharing maximum for enrollees who incur a significant 
   portion of costs towards the annual out-of-pocket threshold under 
                            Medicare part D.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 13, 2021

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

_______________________________________________________________________

                                 A BILL


 
   To amend title XVIII of the Social Security Act to provide for a 
 Medicare part D modernization redesign and to establish a monthly out-
 of-pocket cost sharing maximum for enrollees who incur a significant 
   portion of costs towards the annual out-of-pocket threshold under 
                            Medicare part D.

    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 ``Seniors Prescription Drug Relief 
Act''.

SEC. 2. MEDICARE PART D MODERNIZATION REDESIGN.

    (a) Benefit Structure Redesign.--Section 1860D-2(b) of the Social 
Security Act (42 U.S.C. 1395w-102(b)) is amended--
            (1) in paragraph (2)--
                    (A) in subparagraph (A), in the matter preceding 
                clause (i), by inserting ``for a year preceding 2024 
                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 2024 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 2024,'' after ``paragraph (4),''; and
                            (ii) in clause (ii)(III), by striking ``and 
                        each subsequent year'' and inserting ``, 2021, 
                        2022, and 2023''; and
                    (C) in subparagraph (D)--
                            (i) in clause (i)--
                                    (I) in the matter preceding 
                                subclause (I), by inserting ``for a 
                                year preceding 2024,'' after 
                                ``paragraph (4),''; and
                                    (II) in subclause (I)(bb), by 
                                striking ``a year after 2018'' and 
                                inserting ``each of years 2018 through 
                                2023''; and
                            (ii) in clause (ii)(V), by striking ``2019 
                        and each subsequent year'' and inserting ``each 
                        of years 2019 through 2023'';
            (2) in paragraph (3)(A)--
                    (A) in the matter preceding clause (i), by 
                inserting ``for a year preceding 2024,'' after ``and 
                (4),''; and
                    (B) in clause (ii), by striking ``for a subsequent 
                year'' and inserting ``for each of years 2007 through 
                2023'';
            (3) in paragraph (4)--
                    (A) in subparagraph (A)--
                            (i) in clause (i)--
                                    (I) by redesignating subclauses (I) 
                                and (II) as items (aa) and (bb), 
                                respectively, and indenting 
                                appropriately;
                                    (II) in the matter preceding item 
                                (aa), as redesignated by subclause (I), 
                                by striking ``is equal to the greater 
                                of--'' and inserting ``is equal to--
                                    ``(I) for a year preceding 2024, 
                                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 2024 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 2023 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, 2022, and 2023''; 
                                        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 2024, is equal to 
                                $3,100; or
                                    ``(VIII) for a subsequent year, is 
                                equal to the amount specified in this 
                                subparagraph for the previous year, 
                                increased by the annual percentage 
                                increase described in paragraph (6) for 
                                the year involved.''; and
                            (ii) in clause (ii), by striking ``clause 
                        (i)(II)'' and inserting ``clause (i)'';
                    (C) in subparagraph (C)(i), by striking ``and for 
                amounts'' and inserting ``and for a year preceding 2024 
                for amounts''; and
                    (D) in subparagraph (E), by striking ``In 
                applying'' and inserting ``For each of 2011 through 
                2023, in applying''.
    (b) Reduction in Beneficiary Coinsurance.--
            (1) In general.--Section 1860D-2(b)(2)(A) of the Social 
        Security Act (42 U.S.C. 1395w-102(b)(2)(A)), as amended by 
        subsection (a), is amended--
                    (A) by redesignating clauses (i) and (ii) as 
                subclauses (I) and (II) and moving such subclauses 2 
                ems to the right;
                    (B) by striking ``25 percent coinsurance.--Subject 
                to'' and inserting ``Coinsurance.--
                            ``(i) In general.--Subject to'';
                    (C) in each of subclauses (I) and (II), as 
                redesignated by subparagraph (A), by striking ``25 
                percent'' and inserting ``the applicable percentage (as 
                defined in clause (ii))''; and
                    (D) by adding at the end the following new clause:
                            ``(ii) Applicable percentage defined.--For 
                        purposes of clause (i), the term `applicable 
                        percentage' means--
                                    ``(I) for a year preceding 2024, 25 
                                percent; and
                                    ``(II) for 2024 and each subsequent 
                                year, 20 percent.''.
            (2) Conforming amendment.--Section 1860D-14(a)(2)(D) of the 
        Social Security Act (42 U.S.C. 1395w-114(a)(2)(D)) is amended 
        by striking ``25 percent'' and inserting ``the applicable 
        percentage''.
    (c) Decreasing Reinsurance Payment Amount.--Section 1860D-15(b) of 
the Social Security Act (42 U.S.C. 1395w-115(b)) is amended--
            (1) in paragraph (1)--
                    (A) by striking ``equal to 80 percent'' and 
                inserting ``equal to--
                    ``(A) for a year preceding 2024, 80 percent'';
                    (B) in subparagraph (A), as added by paragraph (1), 
                by striking the period at the end and inserting ``; 
                and''; and
                    (C) by adding at the end the following new 
                subparagraph:
                    ``(B) for 2024 and each subsequent year, the sum 
                of--
                            ``(i) an amount equal to the applicable 
                        percentage specified in paragraph (5)(A) of 
                        such allowable reinsurance costs attributable 
                        to that portion of gross prescription drug 
                        costs as specified in paragraph (3) incurred in 
                        the coverage year after such individual has 
                        incurred costs that exceed the annual out-of-
                        pocket threshold specified in section 1860D-
                        2(b)(4)(B) with respect to applicable drugs (as 
                        defined in section 1860D-14B(g)(2)); and
                            ``(ii) an amount equal to the applicable 
                        percentage specified in paragraph (5)(B) of 
                        allowable reinsurance costs attributable to 
                        that portion of gross prescription drug costs 
                        as specified in paragraph (3) incurred in the 
                        coverage year after such individual has 
                        incurred costs that exceed the annual out-of-
                        pocket threshold specified in section 1860D-
                        2(b)(4)(B) with respect to covered part D drugs 
                        that are not applicable drugs (as so 
                        defined).''; and
            (2) by adding at the end the following new paragraph:
            ``(5) Applicable percentage specified.--For purposes of 
        paragraph (1)(B), the applicable percentage specified in this 
        paragraph is--
                    ``(A) with respect to applicable drugs (as defined 
                in section 1860D-14B(g)(2))--
                            ``(i) for 2024, 60 percent;
                            ``(ii) for 2025, 40 percent; and
                            ``(iii) for 2026 and each subsequent year, 
                        20 percent; and
                    ``(B) with respect to covered part D drugs that are 
                not applicable drugs (as so defined)--
                            ``(i) for 2024, 80 percent;
                            ``(ii) for 2025, 60 percent; and
                            ``(iii) for 2026 and each subsequent year, 
                        40 percent.''.
    (d) Manufacturer Discount Program During Initial and Catastrophic 
Phases of Coverage.--
            (1) In general.--Part D of title XVIII of the Social 
        Security Act is amended by inserting after section 1860D-14A 
        (42 U.S.C. 1495w-114) the following new section:

``SEC. 1860D-14B. MANUFACTURER 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, 
2023, 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, 2024.
                    ``(B) Provision of discounted prices at the point-
                of-sale.--The discounted prices described in 
                subparagraph (A) shall be provided to the applicable 
                beneficiary at the pharmacy or by the mail order 
                service at the point-of-sale of an applicable drug.
            ``(2) Provision of appropriate data.--Each manufacturer 
        with an agreement in effect under this section shall collect 
        and have available appropriate data, as determined by the 
        Secretary, to ensure that it can demonstrate to the Secretary 
        compliance with the requirements under the program.
            ``(3) Compliance with requirements for administration of 
        program.--Each manufacturer with an agreement in effect under 
        this section shall comply with requirements imposed by the 
        Secretary or a third party with a contract under subsection 
        (d)(3), as applicable, for purposes of administering the 
        program, including any determination under subparagraph (A) of 
        subsection (c)(1) or procedures established under such 
        subsection (c)(1).
            ``(4) Length of agreement.--
                    ``(A) In general.--An agreement under this section 
                shall be effective for an initial period of not less 
                than 12 months and shall be automatically renewed for a 
                period of not less than 1 year unless terminated under 
                subparagraph (B).
                    ``(B) Termination.--
                            ``(i) By the secretary.--The Secretary may 
                        provide for termination of an agreement under 
                        this section for a knowing and willful 
                        violation of the requirements of the agreement 
                        or other good cause shown. Such termination 
                        shall not be effective earlier than 30 days 
                        after the date of notice to the manufacturer of 
                        such termination. The Secretary shall provide, 
                        upon request, a manufacturer with a hearing 
                        concerning such a termination, and such hearing 
                        shall take place prior to the effective date of 
                        the termination with sufficient time for such 
                        effective date to be repealed if the Secretary 
                        determines appropriate.
                            ``(ii) By a manufacturer.--A manufacturer 
                        may terminate an agreement under this section 
                        for any reason. Any such termination shall be 
                        effective, with respect to a plan year--
                                    ``(I) if the termination occurs 
                                before January 30 of a plan year, as of 
                                the day after the end of the plan year; 
                                and
                                    ``(II) if the termination occurs on 
                                or after January 30 of a plan year, as 
                                of the day after the end of the 
                                succeeding plan year.
                            ``(iii) Effectiveness of termination.--Any 
                        termination under this subparagraph shall not 
                        affect discounts for applicable drugs of the 
                        manufacturer that are due under the agreement 
                        before the effective date of its termination.
                            ``(iv) Notice to third party.--The 
                        Secretary shall provide notice of such 
                        termination to a third party with a contract 
                        under subsection (d)(3) within not less than 30 
                        days before the effective date of such 
                        termination.
            ``(5) Effective date of agreement.--An agreement under this 
        section shall take effect on a date determined appropriate by 
        the Secretary, which may be at the start of a calendar quarter.
    ``(c) Duties Described.--The duties described in this subsection 
are the following:
            ``(1) Administration of program.--Administering the 
        program, including--
                    ``(A) the determination of the amount of the 
                discounted price of an applicable drug of a 
                manufacturer;
                    ``(B) the establishment of procedures under which 
                discounted prices are provided to applicable 
                beneficiaries at pharmacies or by mail order service at 
                the point-of-sale of an applicable drug;
                    ``(C) the establishment of procedures to ensure 
                that, not later than the applicable number of calendar 
                days after the dispensing of an applicable drug by a 
                pharmacy or mail order service, the pharmacy or mail 
                order service is reimbursed for an amount equal to the 
                difference between--
                            ``(i) the negotiated price of the 
                        applicable drug; and
                            ``(ii) the discounted price of the 
                        applicable drug;
                    ``(D) the establishment of procedures to ensure 
                that the discounted price for an applicable drug under 
                this section is applied before any coverage or 
                financial assistance under other health benefit plans 
                or programs that provide coverage or financial 
                assistance for the purchase or provision of 
                prescription drug coverage on behalf of applicable 
                beneficiaries as the Secretary may specify; and
                    ``(E) providing a reasonable dispute resolution 
                mechanism to resolve disagreements between 
                manufacturers, applicable beneficiaries, and the third 
                party with a contract under subsection (d)(3).
            ``(2) Monitoring compliance.--
                    ``(A) In general.--The Secretary shall monitor 
                compliance by a manufacturer with the terms of an 
                agreement under this section.
                    ``(B) Notification.--If a third party with a 
                contract under subsection (d)(3) determines that the 
                manufacturer is not in compliance with such agreement, 
                the third party shall notify the Secretary of such 
                noncompliance for appropriate enforcement under 
                subsection (e).
            ``(3) Collection of data from prescription drug plans and 
        ma-pd plans.--The Secretary may collect appropriate data from 
        prescription drug plans and MA-PD plans in a timeframe that 
        allows for discounted prices to be provided for applicable 
        drugs under this section.
    ``(d) Administration.--
            ``(1) In general.--Subject to paragraph (2), the Secretary 
        shall provide for the implementation of this section, including 
        the performance of the duties described in subsection (c).
            ``(2) Limitation.--In providing for the implementation of 
        this section, the Secretary shall not receive or distribute any 
        funds of a manufacturer under the program.
            ``(3) Contract with third parties.--The Secretary shall 
        enter into a contract with 1 or more third parties to 
        administer the requirements established by the Secretary in 
        order to carry out this section. At a minimum, the contract 
        with a third party under the preceding sentence shall require 
        that the third party--
                    ``(A) receive and transmit information between the 
                Secretary, manufacturers, and other individuals or 
                entities the Secretary determines appropriate;
                    ``(B) receive, distribute, or facilitate the 
                distribution of funds of manufacturers to appropriate 
                individuals or entities in order to meet the 
                obligations of manufacturers under agreements under 
                this section;
                    ``(C) provide adequate and timely information to 
                manufacturers, consistent with the agreement with the 
                manufacturer under this section, as necessary for the 
                manufacturer to fulfill its obligations under this 
                section; and
                    ``(D) permit manufacturers to conduct periodic 
                audits, directly or through contracts, of the data and 
                information used by the third party to determine 
                discounts for applicable drugs of the manufacturer 
                under the program.
            ``(4) Performance requirements.--The Secretary shall 
        establish performance requirements for a third party with a 
        contract under paragraph (3) and safeguards to protect the 
        independence and integrity of the activities carried out by the 
        third party under the program under this section.
            ``(5) Administration.--Chapter 35 of title 44, United 
        States Code, shall not apply to the program under this section.
            ``(6) Funding.--For purposes of carrying out this section, 
        the Secretary shall provide for the transfer, from the Federal 
        Supplementary Medical Insurance Trust Fund under section 1841 
        to the Centers for Medicare & Medicaid Services Program 
        Management Account, of $4,000,000 for each of fiscal years 2021 
        through 2024, to remain available until expended.''.
    ``(e) Enforcement.--
            ``(1) Audits.--Each manufacturer with an agreement in 
        effect under this section shall be subject to periodic audit by 
        the Secretary.
            ``(2) Civil money penalty.--
                    ``(A) In general.--The Secretary shall impose a 
                civil money penalty on a manufacturer that fails to 
                provide applicable beneficiaries discounts for 
                applicable drugs of the manufacturer in accordance with 
                such agreement for each such failure in an amount the 
                Secretary determines is commensurate with the sum of--
                            ``(i) the amount that the manufacturer 
                        would have paid with respect to such discounts 
                        under the agreement, which will then be used to 
                        pay the discounts which the manufacturer had 
                        failed to provide; and
                            ``(ii) 25 percent of such amount.
                    ``(B) Application.--The provisions of section 1128A 
                (other than subsections (a) and (b)) shall apply to a 
                civil money penalty under this paragraph in the same 
                manner as such provisions apply to a penalty or 
                proceeding under section 1128A(a).
    ``(f) Clarification Regarding Availability of Other Covered Part D 
Drugs.--Nothing in this section shall prevent an applicable beneficiary 
from purchasing a covered part D drug that is not an applicable drug 
(including a generic drug or a drug that is not on the formulary of the 
prescription drug plan or MA-PD plan that the applicable beneficiary is 
enrolled in).
    ``(g) Definitions.--In this section:
            ``(1) Applicable beneficiary.--The term `applicable 
        beneficiary' means an individual who, on the date of dispensing 
        a covered part D drug--
                    ``(A) is enrolled in a prescription drug plan or an 
                MA-PD plan;
                    ``(B) is not enrolled in a qualified retiree 
                prescription drug plan; and
                    ``(C) has incurred costs for covered part D drugs 
                in the year that are above the annual deductible 
                specified in section 1860D-2(b)(1) for such year.
            ``(2) Applicable drug.--The term `applicable drug' means, 
        with respect to an applicable beneficiary, a covered part D 
        drug--
                    ``(A) approved under a new drug application under 
                section 505(c) of the Federal Food, Drug, and Cosmetic 
                Act or, in the case of a biologic product, licensed 
                under section 351 of the Public Health Service Act 
                (including a product licensed under subsection (k) of 
                such section 351); and
                    ``(B)(i) if the PDP sponsor of the prescription 
                drug plan or the MA organization offering the MA-PD 
                plan uses a formulary, which is on the formulary of the 
                prescription drug plan or MA-PD plan that the 
                applicable beneficiary is enrolled in;
                    ``(ii) if the PDP sponsor of the prescription drug 
                plan or the MA organization offering the MA-PD plan 
                does not use a formulary, for which benefits are 
                available under the prescription drug plan or MA-PD 
                plan that the applicable beneficiary is enrolled in; or
                    ``(iii) is provided through an exception or appeal.
            ``(3) Applicable number of calendar days.--The term 
        `applicable number of calendar days' means--
                    ``(A) with respect to claims for reimbursement 
                submitted electronically, 14 days; and
                    ``(B) with respect to claims for reimbursement 
                submitted otherwise, 30 days.
            ``(4) Discounted price.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the term `discounted price' means 90 
                percent of the negotiated price of the applicable drug 
                of a manufacturer.
                    ``(B) Phase-in for certain drugs dispensed for 
                subsidy eligible individuals.--
                            ``(i) In general.--In the case of an 
                        applicable drug of a specified manufacturer (as 
                        defined in clause (ii)) that is dispensed for 
                        an applicable beneficiary who is a subsidy 
                        eligible individual (as defined in section 
                        1860D-14(a)(3)), the term `discounted price' 
                        means the specified LIS percent (as defined in 
                        clause (iii)) of the negotiated price of the 
                        applicable drug of the manufacturer.
                            ``(ii) Specified manufacturer.--In this 
                        subparagraph, the term `specified manufacturer' 
                        means a manufacturer of an applicable drug for 
                        which, in the calendar year 2 years prior to 
                        the current plan year (referred to in this 
                        clause as the `applicable period'), the total 
                        reimbursement under this title during the 
                        applicable period represented less than 1 
                        percent of the total reimbursement under this 
                        title for all prescription drugs during such 
                        period.
                            ``(iii) Specified lis percent.--In this 
                        subparagraph, the term `specified LIS percent' 
                        means--
                                    ``(I) for 2024, 98 percent;
                                    ``(II) for 2025, 97 percent;
                                    ``(III) for 2026, 96 percent;
                                    ``(IV) for 2027, 95 percent;
                                    ``(V) for 2028, 94 percent;
                                    ``(VI) for 2029, 93 percent;
                                    ``(VII) for 2030, 92 percent;
                                    ``(VIII) for 2031, 91 percent; and
                                    ``(IX) for 2032 and each subsequent 
                                year, 90 percent.
                    ``(C) 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.
            ``(5) Manufacturer.--The term `manufacturer' means any 
        entity which is engaged in the production, preparation, 
        propagation, compounding, conversion, or processing of 
        prescription drug products, either directly or indirectly by 
        extraction from substances of natural origin, or independently 
        by means of chemical synthesis, or by a combination of 
        extraction and chemical synthesis. Such term does not include a 
        wholesale distributor of drugs or a retail pharmacy licensed 
        under State law.
            ``(6) Negotiated price.--The term `negotiated price' has 
        the meaning given such term in section 1860D-2(d)(1)(B), except 
        that such negotiated price shall not include any dispensing fee 
        for the applicable drug.
            ``(7) Qualified retiree prescription drug plan.--The term 
        `qualified retiree prescription drug plan' has the meaning 
        given such term in section 1860D-22(a)(2).''.
            (2) Sunset of medicare coverage gap discount program.--
        Section 1860D-14A of the Social Security Act (42 U.S.C. 1395-
        114a) is amended--
                    (A) in subsection (a), in the first sentence, by 
                striking ``The Secretary'' and inserting ``Subject to 
                subsection (h), the Secretary''; and
                    (B) by adding at the end the following new 
                subsection:
    ``(h) Sunset of Program.--
            ``(1) In general.--The program shall not apply to 
        applicable drugs dispensed on or after January 1, 2024, 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, 2024, 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'' and inserting ``assumptions 
                        regarding--
                                    ``(I) the reinsurance''; and
                            (ii) by adding at the end the following:
                                    ``(II) for 2024 and each subsequent 
                                year, the manufacturer discounts 
                                provided under section 1860D-14B 
                                subtracted from the actuarial value to 
                                produce such bid; and''; and
                    (B) in subsection (c)(1)(C)--
                            (i) by striking ``an actuarial valuation of 
                        the reinsurance'' and inserting ``an actuarial 
                        valuation of--
                            ``(i) the reinsurance'';
                            (ii) in clause (i), as added by clause (i) 
                        of this subparagraph, by adding ``and'' at the 
                        end; and
                            (iii) by adding at the end the following:
                            ``(ii) for 2024 and each subsequent year, 
                        the manufacturer discounts provided under 
                        section 1860D-14B;''.
            (4) Clarification regarding exclusion of manufacturer 
        discounts from troop.--Section 1860D-2(b)(4) of the Social 
        Security Act (42 U.S.C. 1395w-102(b)(4)) is amended--
                    (A) in subparagraph (C), by inserting ``and subject 
                to subparagraph (F)'' after ``subparagraph (E)''; and
                    (B) by adding at the end the following new 
                subparagraph:
                    ``(F) Clarification regarding exclusion of 
                manufacturer discounts.--In applying subparagraph (A), 
                incurred costs shall not include any manufacturer 
                discounts provided under section 1860D-14B.''.
    (e) Determination of Allowable Reinsurance Costs.--Section 1860D-
15(b) of the Social Security Act (42 U.S.C. 1395w-115(b)) is amended--
            (1) in paragraph (2)--
                    (A) by striking ``costs.--For purposes'' and 
                inserting ``costs.--
                    ``(A) In general.--Subject to subparagraph (B), for 
                purposes''; and
                    (B) by adding at the end the following new 
                subparagraph:
                    ``(B) Inclusion of manufacturer discounts on 
                applicable drugs.--For purposes of applying 
                subparagraph (A), the term `allowable reinsurance 
                costs' shall include the portion of the negotiated 
                price (as defined in section 1860D-14B(g)(6)) of an 
                applicable drug (as defined in section 1860D-14B(g)(2)) 
                that was paid by a manufacturer under the manufacturer 
                discount program under section 1860D-14B.''; and
            (2) in paragraph (3)--
                    (A) in the first sentence, by striking ``For 
                purposes'' and inserting ``Subject to paragraph (2)(B), 
                for purposes''; and
                    (B) in the second sentence, by inserting ``or, in 
                the case of an applicable drug, by a manufacturer'' 
                after ``by the individual or under the plan''.
    (f) Updating Risk Adjustment Methodologies To Account for Part D 
Modernization Redesign.--Section 1860D-15(c) of the Social Security Act 
(42 U.S.C. 1395w-115(c)) is amended by adding at the end the following 
new paragraph:
            ``(3) Updating risk adjustment methodologies to account for 
        part d modernization redesign.--The Secretary shall update the 
        risk adjustment methodologies used to adjust bid amounts 
        pursuant to this subsection as appropriate to take into account 
        changes in benefits under this part pursuant to the amendments 
        made by section 2 of the Seniors Prescription Drug Relief 
        Act.''.
    (g) Conditions for Coverage of Drugs Under This Part.--Section 
1860D-43 of the Social Security Act (42 U.S.C. 1395w-153) is amended--
            (1) in subsection (a)--
                    (A) in paragraph (2), by striking ``and'' at the 
                end;
                    (B) in paragraph (3), by striking the period at the 
                end and inserting a semicolon; and
                    (C) by adding at the end the following new 
                paragraphs:
            ``(4) participate in the manufacturer discount program 
        under section 1860D-14B;
            ``(5) have entered into and have in effect an agreement 
        described in subsection (b) of such section 1860D-14B with the 
        Secretary; and
            ``(6) have entered into and have in effect, under terms and 
        conditions specified by the Secretary, a contract with a third 
        party that the Secretary has entered into a contract with under 
        subsection (d)(3) of such section 1860D-14B.'';
            (2) by striking subsection (b) and inserting the following:
    ``(b) Effective Date.--Paragraphs (1) through (3) of subsection (a) 
shall apply to covered part D drugs dispensed under this part on or 
after January 1, 2011, and before January 1, 2024, and paragraphs (4) 
through (6) of such subsection shall apply to covered part D drugs 
dispensed on or after January 1, 2024.''; and
            (3) in subsection (c), by striking paragraph (2) and 
        inserting the following:
            ``(2) the Secretary determines that in the period beginning 
        on January 1, 2011, and ending on December 31, 2011 (with 
        respect to paragraphs (1) through (3) of subsection (a)), or 
        the period beginning on January 1, 2024, and ending December 
        31, 2024 (with respect to paragraphs (4) through (6) of such 
        subsection), there were extenuating circumstances.''.
    (h) 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 2024 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 
                        2024 or the annual out-of-pocket threshold 
                        specified in subsection (b)(4)(B) for the year 
                        for 2024 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 2024 
                an initial''.
            (2) Section 1860D-4(a)(4)(B)(i) of the Social Security Act 
        (42 U.S.C. 1395w-104(a)(4)(B)(i)) is amended by striking ``the 
        initial'' and inserting ``for a year preceding 2024, 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 2024, 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 2024, the elimination''; and
                    (B) in paragraph (2)--
                            (i) in subparagraph (C), by striking ``The 
                        continuation'' and inserting ``For a year 
                        preceding 2024, the continuation''; and
                            (ii) in subparagraph (E)--
                                    (I) by inserting ``for a year 
                                preceding 2024,'' after ``subsection 
                                (c)''; and
                                    (II) by striking ``1860D-
                                2(b)(4)(A)(i)(I)'' and inserting 
                                ``1860D-2(b)(4)(A)(i)(I)(aa)''.
            (4) Section 1860D-21(d)(7) of the Social Security Act (42 
        U.S.C. 1395w-131(d)(7)) is amended by striking ``section 1860D-
        2(b)(B)(4)(B)(i)'' and inserting ``section 1860D-
        2(b)(B)(4)(C)(i)''.
            (5) Section 1860D-22(a)(2)(A) of the Social Security Act 
        (42 U.S.C. 1395w-132(a)(2)(A)) is amended--
                    (A) by striking ``the value of any discount'' and 
                inserting the following: ``the value of--
                            ``(i) for years prior to 2024, 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 2024 and each subsequent year, 
                        any discount provided pursuant to section 
                        1860D-14B.''.
            (6) Section 1860D-41(a)(6) of the Social Security Act (42 
        U.S.C. 1395w-151(a)(6)) is amended--
                    (A) by inserting ``for a year before 2024'' after 
                ``1860D-2(b)(3)''; and
                    (B) by inserting ``for such year'' before the 
                period.
    (i) Effective Date.--The amendments made by this section shall 
apply to plan year 2024 and subsequent plan years.

SEC. 3. MONTHLY OUT-OF-POCKET COST SHARING MAXIMUM FOR ENROLLEES WHO 
              INCUR A SIGNIFICANT PORTION OF COSTS TOWARDS ANNUAL OUT-
              OF-POCKET THRESHOLD.

    (a) In General.--Section 1860D-2(b) of the Social Security Act (42 
U.S.C. 1395w-102(b)), as amended by section 2, is amended--
            (1) in paragraph (2)--
                    (A) in subparagraph (A), by striking ``and (D)'' 
                and inserting ``, (D), and (E)''; and
                    (B) by adding at the end the following new 
                subparagraph:
                    ``(E) Monthly out-of-pocket cost sharing maximum 
                for enrollees who incur a significant portion of costs 
                towards annual out-of-pocket threshold.--
                            ``(i) Establishment of process.--
                                    ``(I) In general.--For plan years 
                                beginning on or after January 1, 2024, 
                                the Secretary shall, through notice and 
                                comment rulemaking, establish a process 
                                under which each PDP sponsor offering a 
                                prescription drug plan and each MA 
                                organization offering an MA-PD plan 
                                shall each plan year automatically 
                                enroll applicable enrollees in the 
                                option to have their monthly out-of-
                                pocket cost-sharing under the plan 
                                capped and paid in monthly installments 
                                in accordance with this subparagraph 
                                (referred to in this subparagraph as 
                                the `monthly out-of-pocket cost sharing 
                                maximum option').
                                    ``(II) Opt out.--The process 
                                established under this clause shall 
                                permit an applicable enrollee, prior to 
                                the beginning of the plan year or at 
                                any point during the plan year, to opt 
                                out of enrollment in the monthly out-
                                of-pocket cost sharing maximum option 
                                and pay any out-of-pocket cost-sharing 
                                otherwise applicable for any covered 
                                part D drug in full at the time of the 
                                dispensing of such drug (or at the time 
                                of such opt out in the case of costs 
                                incurred during such enrollment that 
                                have not yet been billed to the 
                                enrollee).
                            ``(ii) Definitions.--
                                    ``(I) Applicable enrollee.--In this 
                                subparagraph, the term `applicable 
                                enrollee' means any enrollee in a 
                                prescription drug plan or an MA-PD 
                                plan, including an enrollee who is a 
                                subsidy eligible individual (as defined 
                                in paragraph (3) of section 1860D-
                                14(a)), who incurs or is likely to 
                                incur a significant percentage of costs 
                                for covered part D drugs.
                                    ``(II) Significant percentage.--For 
                                purposes of subclause (I), the 
                                Secretary shall, in the rulemaking 
                                under clause (i), define the term 
                                `significant percentage' with respect 
                                to a percentage of the annual out-of-
                                pocket threshold specified in paragraph 
                                (4)(B) but in no case shall the 
                                `significant percentage' be less than 
                                50 percent or more than 100 percent of 
                                the annual out-of-pocket threshold.
                            ``(iii) Determination of monthly out-of-
                        pocket cost sharing maximum.--For each month in 
                        a plan year in which an applicable enrollee is 
                        enrolled in the monthly out-of-pocket cost 
                        sharing maximum option, the PDP sponsor or MA 
                        organization shall determine a monthly out-of-
                        pocket cost sharing maximum (as defined in 
                        clause (v)) for such enrollee.
                            ``(iv) Beneficiary monthly payments.--With 
                        respect to an applicable enrollee who is 
                        enrolled in the monthly out-of-pocket cost 
                        sharing maximum option, for each month 
                        described in clause (iii), the PDP sponsor or 
                        MA organization shall bill such enrollee an 
                        amount (not to exceed the monthly out-of-pocket 
                        cost sharing maximum) for the out-of-pocket 
                        costs of such enrollee in such month.
                            ``(v) Monthly out-of-pocket cost sharing 
                        maximum defined.--In this subparagraph, the 
                        term `monthly out-of-pocket cost sharing 
                        maximum' means, with respect to an enrollee--
                                    ``(I) for the first month in which 
                                this subparagraph applies, an amount 
                                determined by calculating--
                                            ``(aa) the annual out-of-
                                        pocket threshold specified in 
                                        paragraph (4)(B) minus the 
                                        incurred costs of the enrollee 
                                        as described in paragraph 
                                        (4)(C); divided by
                                            ``(bb) the number of months 
                                        remaining in the plan year; and
                                    ``(II) for a subsequent month, an 
                                amount determined by calculating--
                                            ``(aa) the sum of any 
                                        remaining out-of-pocket costs 
                                        owed by the enrollee from a 
                                        previous month that have not 
                                        yet been billed to the enrollee 
                                        and any additional costs 
                                        incurred by the enrollee; 
                                        divided by
                                            ``(bb) the number of months 
                                        remaining in the plan year.
                            ``(vi) Additional requirements.--The 
                        following requirements shall apply with respect 
                        to the monthly out-of-pocket cost sharing 
                        maximum option under this subparagraph:
                                    ``(I) Secretarial 
                                responsibilities.--The Secretary shall 
                                provide information to part D eligible 
                                individuals on the monthly out-of-
                                pocket cost sharing maximum option 
                                through educational materials, 
                                including through the notices provided 
                                under section 1804(a).
                                    ``(II) PDP sponsor and ma 
                                organization responsibilities.--Each 
                                PDP sponsor offering a prescription 
                                drug plan or MA organization offering 
                                an MA-PD plan--
                                            ``(aa) shall not limit the 
                                        application of the monthly out-
                                        of-pocket cost sharing maximum 
                                        option to certain covered part 
                                        D drugs;
                                            ``(bb) shall, prior to the 
                                        plan year, notify prospective 
                                        enrollees of such option, 
                                        including the availability of 
                                        the opt out under clause 
                                        (i)(II);
                                            ``(cc) shall include 
                                        information on such option in 
                                        enrollee educational materials, 
                                        including the availability of 
                                        the opt out under clause 
                                        (i)(II);
                                            ``(dd) shall have in place 
                                        a mechanism to notify a 
                                        pharmacy during the plan year 
                                        when an enrollee incurs out-of-
                                        pocket costs with respect to 
                                        covered part D drugs that make 
                                        it likely the enrollee is an 
                                        applicable enrollee;
                                            ``(ee) shall provide that a 
                                        pharmacy, after receiving a 
                                        notification described in item 
                                        (dd) with respect to an 
                                        enrollee, informs the enrollee 
                                        of such notification;
                                            ``(ff) shall ensure that 
                                        the application of this 
                                        subparagraph has no effect on 
                                        the amount paid to pharmacies 
                                        (or the timing of such 
                                        payments) with respect to 
                                        covered part D drugs dispensed 
                                        to the enrollee; and
                                            ``(gg) shall have in place 
                                        a financial reconciliation 
                                        process to correct inaccuracies 
                                        in payments made by an enrollee 
                                        under this subparagraph with 
                                        respect to covered part D drugs 
                                        during the plan year.
                                    ``(III) Failure to pay amount 
                                billed under monthly out-of-pocket cost 
                                sharing maximum option.--If an 
                                applicable enrollee fails to pay the 
                                amount billed for a month as required 
                                under this subparagraph, the applicable 
                                enrollee's enrollment in the monthly 
                                out-of-pocket cost sharing maximum 
                                option shall be terminated and the 
                                enrollee shall pay the cost-sharing 
                                otherwise applicable for any covered 
                                part D drugs subsequently dispensed to 
                                the enrollee up to the annual out-of-
                                pocket threshold specified in paragraph 
                                (4)(B).
                                    ``(IV) Clarification regarding past 
                                due amounts.--Nothing in this 
                                subparagraph shall be construed as 
                                prohibiting a PDP sponsor or an MA 
                                organization from billing an enrollee 
                                for an amount owed under this 
                                subparagraph.
                                    ``(V) Treatment of unsettled 
                                balances.--Any unsettled balances with 
                                respect to amounts owed under this 
                                subparagraph shall be treated as plan 
                                losses and the Secretary shall not be 
                                liable for any such balances outside of 
                                those assumed as losses estimated in 
                                plan bids.''; and
            (2) in paragraph (4)--
                    (A) in subparagraph (C), by striking ``and subject 
                to subparagraph (F)'' and inserting ``and subject to 
                subparagraphs (F) and (G)''; and
                    (B) by adding at the end the following new 
                subparagraph:
                    ``(G) Inclusion of costs paid under monthly out-of-
                pocket cost sharing maximum option.--In applying 
                subparagraph (A), with respect to an applicable 
                enrollee who is enrolled in the monthly out-of-pocket 
                cost sharing maximum option described in clause (i)(I) 
                of paragraph (2)(E), costs shall be treated as incurred 
                if such costs are paid by a PDP sponsor or an MA 
                organization under the process provided under such 
                paragraph.''.
    (b) Application to Alternative Prescription Drug Coverage.--Section 
1860D-2(c) of the Social Security Act (42 U.S.C. 1395w-102(c)) is 
amended by adding at the end the following new paragraph:
            ``(4) Same monthly out-of-pocket cost sharing maximum.--For 
        plan years beginning on or after January 1, 2024, the monthly 
        out-of-pocket cost sharing maximum for applicable enrollees 
        under the process provided under subsection (b)(2)(E) shall 
        apply to such coverage.''.
                                 <all>