[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 448 Introduced in House (IH)]
<DOC>
116th CONGRESS
1st Session
H. R. 448
To amend title XVIII of the Social Security Act to provide for the
negotiation of lower covered part D drug prices on behalf of Medicare
beneficiaries and the establishment and application of a formulary by
the Secretary of Health and Human Services under Medicare part D, and
for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
January 10, 2019
Mr. Cummings (for himself, Mr. Welch, Mr. Doggett, Mr. Sean Patrick
Maloney of New York, Mr. Pocan, Ms. DeLauro, Ms. Gabbard, Ms. Bonamici,
Ms. Omar, Mr. Khanna, Ms. Norton, Ms. Jayapal, Ms. Schakowsky, Mr.
Higgins of New York, Mr. Neguse, Mr. Cohen, Mr. Krishnamoorthi, and Ms.
Tlaib) 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 XVIII of the Social Security Act to provide for the
negotiation of lower covered part D drug prices on behalf of Medicare
beneficiaries and the establishment and application of a formulary by
the Secretary of Health and Human Services under Medicare part D, and
for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Medicare Drug Price Negotiation
Act''.
SEC. 2. NEGOTIATION OF LOWER COVERED PART D DRUG PRICES ON BEHALF OF
MEDICARE BENEFICIARIES; ESTABLISHMENT AND APPLICATION OF
FORMULARY BY THE SECRETARY OF HEALTH AND HUMAN SERVICES
UNDER MEDICARE PART D.
(a) In General.--Section 1860D-11 of the Social Security Act (42
U.S.C. 1395w-111) is amended by striking subsection (i) (relating to
noninterference) and inserting the following:
``(i) Negotiation of Lower Drug Prices; Establishment and
Application of Formulary.--
``(1) Negotiation.--
``(A) In general.--Notwithstanding any other
provision of law, subject to subparagraph (B), the
Secretary shall, with respect to an applicable period
(as defined in subparagraph (H))--
``(i) during the negotiation year (as
defined in such subparagraph) for such period,
negotiate with pharmaceutical manufacturers the
prices (including discounts, rebates, and all
other price concessions) that may be charged to
PDP sponsors and MA organizations for
applicable covered part D drugs (as defined in
such subparagraph) furnished to enrollees
during such period; and
``(ii) complete such negotiations not less
than 30 days before the first day of the
application review process for the first plan
year during the applicable period for new
contracts or expanding existing contracts with
PDP sponsors and MA organizations to offer
prescription drug plans or MA-PD plans,
respectively.
``(B) Use of fallback if negotiations fail.--
``(i) In general.--If, after negotiations
under subparagraph (A) with respect to an
applicable period, the Secretary is not
successful in obtaining an appropriate price
for applicable covered part D drugs in
accordance with clause (ii), the price that may
be charged to PDP sponsors and MA organizations
for applicable covered part D drugs furnished
to enrollees during such period shall be the
lowest of the following:
``(I) The contract price applied
pursuant to section 8126 of title 38,
United States Code, for such drug for
the contract year (as defined in such
section 8126).
``(II) The average of the prices
available, during the most recent 12-
month period for which data is
available from the manufacturer to any
wholesaler, retailer, provider, health
maintenance organization, nonprofit
entity, or governmental entity in
Canada, the United Kingdom, Germany,
France, and Japan.
``(III) The best price determined
under section 1927(c)(1)(C) for such
drug for the most recent rebate period
(as defined in section 1927(k)(8))
applicable to such first plan year of
the applicable period.
``(ii) Guidance.--Not later than 6 months
before the Secretary begins negotiations under
subparagraph (A) with respect to the first
applicable period, the Secretary shall issue
guidance on criteria to be considered for
purposes of determining under clause (i)
whether or not the Secretary is successful in
obtaining an appropriate price for an
applicable covered part D drug. Such criteria
shall include at least the following:
``(I) The comparative clinical
effectiveness and cost effectiveness,
if available, of such covered part D
drug.
``(II) The budgetary impact of
providing coverage under this part for
such covered part D drug.
``(III) The number of similarly
effective drug or alternative treatment
regimens for each approved use of such
covered part D drug.
``(IV) Associated unmet need or
severity of illness.
``(C) Identification of applicable covered part d
drugs.--
``(i) In general.--The Secretary shall, for
each applicable period, in accordance with the
subsequent clauses of this subparagraph, and
pursuant to rulemaking, identify applicable
covered part D drugs for which negotiations
under subparagraph (A) shall be conducted
during the negotiation year for such period. In
this paragraph, all such covered part D drugs
so identified for an applicable period are
collectively referred to as applicable covered
part D drugs with respect to such period.
``(ii) Identification of prioritized
drugs.--In carrying out clause (i), except as
provided under clause (iii), the Secretary may
not identify a covered part D drug that is not
a drug prioritized pursuant to subparagraph (D)
as an applicable covered part D drug until all
covered part D drugs that are so prioritized
have been identified as an applicable covered
part D drug for the applicable period or for a
previous applicable period for which the
negotiated price of such drug has not expired.
``(iii) Drug inclusions for price
renegotiations.--In the case of a covered part
D drug that is identified as an applicable
covered part D drug for an applicable period,
such covered part D drug shall be identified as
an applicable covered part D drug for each
subsequent third negotiation year.
``(iv) Reasonable notification.--The
Secretary shall carry out this subparagraph in
such manner as to provide for public
notification of applicable covered part D drugs
for the applicable period within a reasonable
period before the beginning of the negotiation
year for such period.
``(D) Prioritization of certain covered part d
drugs.--For purposes of subparagraph (C)(ii), the
Secretary shall prioritize covered part D drugs--
``(i) that are among--
``(I) the 40 covered part D drugs
that are utilized by at least 1,000
Medicare part D beneficiaries and with
respect to which there were the highest
total expenditures under this part
during the most recent 12-month period
for which data is available;
``(II) the 40 covered part D drugs
that are utilized by at least 1,000
Medicare part D beneficiaries with
respect to whom the total annual
spending per such a beneficiary under
this part for coverage of such a drug
is at least $10,000; or
``(III) the 20 covered part D drugs
that are utilized by at least 1,000
Medicare part D beneficiaries and with
respect to which there are unit cost
increases at or above the 95th
percentile of overall covered part D
drug unit cost increases during the
most recent 12-month period prior to
the beginning of such negotiation year
for which data is available;
``(ii) with respect to which the cost of
such a drug to the part D eligible individual
involved would exceed the annual out-of-pocket
threshold applicable under section 1860D-
2(b)(4)(B) for such negotiation year, if the
drug were prescribed to the individual for the
period of the year or with respect to which a
single treatment regimen is priced above such
annual out-of-pocket threshold applicable under
such section 1860D-2(b)(4)(B) for the year; or
``(iii) that are single-source drugs or
biologicals (as defined in section
1847A(c)(6)(D)) and that satisfy at least one
other criterion described in a previous clause
of this subparagraph.
``(E) Annual report to congress.--Not later than 30
days after the date on which the Secretary completes
negotiations under this paragraph for the first
negotiation year and each year thereafter, the
Secretary shall submit to Congress and make available
to the public a report describing the negotiations
during the preceding negotiation year, including--
``(i) the number of applicable covered part
D drug prices negotiated;
``(ii) the magnitude of savings achieved as
a result of such negotiations;
``(iii) the number of times price
negotiations failed (based on the criteria
included in the guidance issued pursuant to
clause (ii) of subparagraph (B)) and resulted
in the use of fallback prices under clause (i)
of such subparagraph, and the rationale for any
such decisions;
``(iv) the progress made toward negotiating
the prices of covered part D drugs that are
prioritized under subparagraph (D); and
``(v) the barriers, if any, to achieving
savings through negotiations.
``(F) GAO report.--Not later than December 31,
2024, the Comptroller General of the United States
shall submit to Congress a report on the negotiations
conducted by the Secretary under this paragraph,
including a description and analysis of--
``(i) the extent to which such price
negotiations are achieving lower prices for
covered part D drugs for enrollees;
``(ii) the parties benefitting from such
lower prices, such as enrollees, the Federal
government, States, prescription drug plans and
MA-PD plans, or other entities;
``(iii) how such price negotiations are
affecting--
``(I) the list price of covered
part D drugs; and
``(II) drug prices in the private
market; and
``(iv) recommendations for improving price
negotiations, if applicable.
``(G) Definitions.--For purposes of this paragraph:
``(i) Applicable covered part d drugs.--The
term `applicable covered part D drugs' means,
for an applicable period, covered part D drugs
identified by the Secretary under subparagraph
(C) for such period.
``(ii) Applicable period.--The term
`applicable period' means, with respect to a
negotiation year and applicable covered part D
drugs, the 3-plan year period beginning with
the first plan year beginning after the
negotiation year for such covered part D drugs.
``(iii) Negotiation year.--The term
`negotiation year' means, with respect to an
applicable period, a plan year, beginning with
2020, prior to the first plan year of the
applicable period.
``(2) Establishment and application of formulary by the
secretary or changes in formularies to be required by
secretary.--
``(A) In general.--The Secretary shall, for plan
years beginning with plan year 2020--
``(i) subject to subparagraphs (B) and (C),
establish and apply a formulary for required
use by sponsors of prescription drug plans and
organizations offering MA-PD plans under this
part; or
``(ii) require changes, as necessary, in
the covered part D drugs included on
formularies of PDP sponsors of prescription
drug plans (including changes, as necessary, in
the preferred or tiered cost-sharing status of
such a drug) to take into account negotiations
carried out by the Secretary pursuant to
paragraph (1), regardless of whether such a
covered part D drug is the subject of such
negotiations.
``(B) Required inclusion of drugs in all
therapeutic categories.--A formulary established and
applied under subparagraph (A)(i) shall include at
least two covered part D drugs in each category and
class of covered part D drugs as described in section
423.120(b)(2)(i) of title 42, Code of Federal
Regulations (as in effect on January 1, 2017).
``(C) Application of development and revision
requirements and required inclusion of all drugs in
certain categories and classes.--The requirements
described in subparagraphs (A) and (B) of section
1860D-4(b)(3) (relating to development and revision
requirements of the formulary) and subparagraph (G) of
such section (relating to required inclusion of all
drugs in certain categories and classes) shall apply to
a formulary established and applied under subparagraph
(A)(i) of this paragraph.
``(3) Plan flexibility to negotiate greater discounts.--
Nothing in this subsection shall be construed as preventing the
sponsor of a prescription drug plan, or an organization
offering an MA-PD plan, from obtaining a discount or reduction
of the price for a covered part D drug below the price
negotiated under paragraph (1), if applicable, including
through the use of preferred or tiered cost-sharing status.
``(4) Ensuring beneficiary access to needed drugs.--
Beginning with plan year 2020, each PDP sponsor of a
prescription drug plan and organization offering an MA-PD plan
shall have in place a process under which an enrollee in the
plan may request coverage under the plan for a covered part D
drug that is not on the formulary, or is subject to utilization
management controls, such as tiered pricing, prior
authorization, or step therapy.''.
(b) Conforming Amendments.--
(1) In general.--Section 1860D-4 of the Social Security Act
(42 U.S.C. 1395w-104) is amended--
(A) in subsection (b)(3), in the matter preceding
subparagraph (A), by striking ``If a PDP'' and
inserting ``Subject to section 1860D-11(i)(2), if a
PDP'';
(B) in subsection (g)--
(i) in paragraph (1), by inserting before
the period at the end the following: ``, except
that the PDP sponsor of a prescription drug
plan shall treat the presentation of a
prescription to a participating pharmacy, which
is transmitted to the plan by the pharmacy, as
a request for a coverage determination
(including with respect to prior authorization,
step therapy, or quantity limits) and, in
applying such paragraphs of section 1852(g),
the response to such transmittal shall be
treated as a determination by the sponsor'';
and
(ii) in paragraph (2), in the first
sentence, by inserting ``(or a participating
pharmacy, on behalf of such individual, through
transmission of a prescription as described in
paragraph (1))'' after ``a part D eligible
individual who is enrolled in the plan''; and
(C) in subsection (h)--
(i) in paragraph (1), in the second
sentence, by inserting ``(or a participating
pharmacy, on behalf of such individual)'' after
``the part D eligible individual''; and
(ii) in paragraph (2), by inserting ``(or a
participating pharmacy, on behalf of such
individual)'' after ``A part D eligible
individual who is enrolled in a prescription
drug plan offered by a PDP sponsor''.
(2) Effective date.--The amendments made by subparagraphs
(B) and (C) of paragraph (1) shall apply to plans years
beginning on or after January 1, 2020.
SEC. 3. REQUIRING DRUG MANUFACTURERS TO PROVIDE DRUG REBATES FOR DRUGS
DISPENSED TO LOW-INCOME INDIVIDUALS.
(a) In General.--Section 1860D-2 of the Social Security Act (42
U.S.C. 1395w-102) is amended--
(1) in subsection (e)(1), in the matter preceding
subparagraph (A), by inserting ``and subsection (f)'' after
``this subsection''; and
(2) by adding at the end the following new subsection:
``(f) Prescription Drug Rebate Agreement for Rebate Eligible
Individuals.--
``(1) Requirement.--
``(A) In general.--For plan years beginning on or
after January 1, 2020, in this part, the term `covered
part D drug' does not include any drug or biological
product that is manufactured by a manufacturer that has
not entered into and have in effect a rebate agreement
described in paragraph (2).
``(B) 2020 plan year requirement.--Any drug or
biological product manufactured by a manufacturer that
declines to enter into a rebate agreement described in
paragraph (2) for the period beginning on January 1,
2020, and ending on December 31, 2020, shall not be
included as a `covered part D drug' for the subsequent
plan year.
``(2) Rebate agreement.--A rebate agreement under this
subsection shall require the manufacturer to provide to the
Secretary a rebate for each rebate period (as defined in
paragraph (6)(B)) ending after December 31, 2019, in the amount
specified in paragraph (3) for any covered part D drug of the
manufacturer dispensed after December 31, 2019, to any rebate
eligible individual (as defined in paragraph (6)(A)) for which
payment was made by a PDP sponsor or MA organization under this
part for such period, including payments passed through the
low-income and reinsurance subsidies under sections 1860D-14
and 1860D-15(b), respectively. Such rebate shall be paid by the
manufacturer to the Secretary not later than 30 days after the
date of receipt of the information described in section 1860D-
12(b)(8), including as such section is applied under section
1857(f)(3), or 30 days after the receipt of information under
subparagraph (D) of paragraph (3), as determined by the
Secretary. Insofar as not inconsistent with this subsection,
the Secretary shall establish terms and conditions of such
agreement relating to compliance, penalties, and program
evaluations, investigations, and audits that are similar to the
terms and conditions for rebate agreements under paragraphs (3)
and (4) of section 1927(b).
``(3) Rebate for rebate eligible medicare drug plan
enrollees.--
``(A) In general.--The amount of the rebate
specified under this paragraph for a manufacturer for a
rebate period, with respect to each dosage form and
strength of any covered part D drug provided by such
manufacturer and dispensed to a rebate eligible
individual, shall be equal to the product of--
``(i) the total number of units of such
dosage form and strength of the drug so
provided and dispensed for which payment was
made by a PDP sponsor or an MA organization
under this part for the rebate period,
including payments passed through the low-
income and reinsurance subsidies under sections
1860D-14 and 1860D-15(b), respectively; and
``(ii) the amount (if any) by which--
``(I) the Medicaid rebate amount
(as defined in subparagraph (B)) for
such form, strength, and period,
exceeds
``(II) the average Medicare drug
program rebate eligible rebate amount
(as defined in subparagraph (C)) for
such form, strength, and period.
``(B) Medicaid rebate amount.--For purposes of this
paragraph, the term `Medicaid rebate amount' means,
with respect to each dosage form and strength of a
covered part D drug provided by the manufacturer for a
rebate period--
``(i) in the case of a single source drug
or an innovator multiple source drug, the
amount specified in paragraph (1)(A)(ii)(II) or
(2)(C) of section 1927(c) plus the amount, if
any, specified in subparagraph (A)(ii) of
paragraph (2) of such section, for such form,
strength, and period; or
``(ii) in the case of any other covered
outpatient drug, the amount specified in
paragraph (3)(A)(i) of such section for such
form, strength, and period.
``(C) Average medicare drug program rebate eligible
rebate amount.--For purposes of this subsection, the
term `average Medicare drug program rebate eligible
rebate amount' means, with respect to each dosage form
and strength of a covered part D drug provided by a
manufacturer for a rebate period, the sum, for all PDP
sponsors under part D and MA organizations
administering an MA-PD plan under part C, of--
``(i) the product, for each such sponsor or
organization, of--
``(I) the sum of all rebates,
discounts, or other price concessions
(not taking into account any rebate
provided under paragraph (2) or any
discounts under the program under
section 1860D-14A) for such dosage form
and strength of the drug dispensed,
calculated on a per-unit basis, but
only to the extent that any such
rebate, discount, or other price
concession applies equally to drugs
dispensed to rebate eligible Medicare
drug plan enrollees and drugs dispensed
to PDP and MA-PD enrollees who are not
rebate eligible individuals; and
``(II) the number of the units of
such dosage and strength of the drug
dispensed during the rebate period to
rebate eligible individuals enrolled in
the prescription drug plans
administered by the PDP sponsor or the
MA-PD plans administered by the MA
organization; divided by
``(ii) the total number of units of such
dosage and strength of the drug dispensed
during the rebate period to rebate eligible
individuals enrolled in all prescription drug
plans administered by PDP sponsors and all MA-
PD plans administered by MA organizations.
``(D) Use of estimates.--The Secretary may
establish a methodology for estimating the average
Medicare drug program rebate eligible rebate amounts
for each rebate period based on bid and utilization
information under this part and may use these estimates
as the basis for determining the rebates under this
section. If the Secretary elects to estimate the
average Medicare drug program rebate eligible rebate
amounts, the Secretary shall establish a reconciliation
process for adjusting manufacturer rebate payments not
later than 3 months after the date that manufacturers
receive the information collected under section 1860D-
12(b)(8)(B).
``(4) Length of agreement.--The provisions of paragraph (4)
of section 1927(b) (other than clauses (iv) and (v) of
subparagraph (B)) shall apply to rebate agreements under this
subsection in the same manner as such paragraph applies to a
rebate agreement under such section.
``(5) Other terms and conditions.--The Secretary shall
establish other terms and conditions of the rebate agreement
under this subsection, including terms and conditions related
to compliance, that are consistent with this subsection.
``(6) Definitions.--In this subsection and section 1860D-
12(b)(8):
``(A) Rebate eligible individual.--The term `rebate
eligible individual' means--
``(i) a subsidy eligible individual (as
defined in section 1860D-14(a)(3)(A));
``(ii) a Medicaid beneficiary treated as a
subsidy eligible individual under clause (v) of
section 1860D-14(a)(3)(B); and
``(iii) any part D eligible individual not
described in clause (i) or (ii) who is
determined for purposes of the State plan under
title XIX to be eligible for medical assistance
under clause (i), (iii), or (iv) of section
1902(a)(10)(E).
``(B) Rebate period.--The term `rebate period' has
the meaning given such term in section 1927(k)(8).''.
(b) Reporting Requirement for the Determination and Payment of
Rebates by Manufacturers Related to Rebate for Rebate Eligible Medicare
Drug Plan Enrollees.--
(1) Requirements for pdp sponsors.--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) Reporting requirement for the determination and
payment of rebates by manufacturers related to rebate for
rebate eligible medicare drug plan enrollees.--
``(A) In general.--For purposes of the rebate under
section 1860D-2(f) for contract years beginning on or
after January 1, 2020, each contract entered into with
a PDP sponsor under this part with respect to a
prescription drug plan shall require that the sponsor
comply with subparagraphs (B) and (C).
``(B) Report form and contents.--Not later than a
date specified by the Secretary, a PDP sponsor of a
prescription drug plan under this part shall report to
each manufacturer--
``(i) information (by National Drug Code
number) on the total number of units of each
dosage, form, and strength of each drug of such
manufacturer dispensed to rebate eligible
Medicare drug plan enrollees under any
prescription drug plan operated by the PDP
sponsor during the rebate period;
``(ii) information on the price discounts,
price concessions, and rebates for such drugs
for such form, strength, and period;
``(iii) information on the extent to which
such price discounts, price concessions, and
rebates apply equally to rebate eligible
Medicare drug plan enrollees and PDP enrollees
who are not rebate eligible Medicare drug plan
enrollees; and
``(iv) any additional information that the
Secretary determines is necessary to enable the
Secretary to calculate the average Medicare
drug program rebate eligible rebate amount (as
defined in paragraph (3)(C) of such section),
and to determine the amount of the rebate
required under this section, for such form,
strength, and period.
Such report shall be in a form consistent with a
standard reporting format established by the Secretary.
``(C) Submission to secretary.--Each PDP sponsor
shall promptly transmit a copy of the information
reported under subparagraph (B) to the Secretary for
the purpose of audit oversight and evaluation.
``(D) Confidentiality of information.--The
provisions of subparagraph (D) of section 1927(b)(3),
relating to confidentiality of information, shall apply
to information reported by PDP sponsors under this
paragraph in the same manner that such provisions apply
to information disclosed by manufacturers or
wholesalers under such section, except--
``(i) that any reference to `this section'
in clause (i) of such subparagraph shall be
treated as being a reference to this section;
``(ii) the reference to the Director of the
Congressional Budget Office in clause (iii) of
such subparagraph shall be treated as including
a reference to the Medicare Payment Advisory
Commission; and
``(iii) clause (iv) of such subparagraph
shall not apply.
``(E) Oversight.--Information reported under this
paragraph may be used by the Inspector General of the
Department of Health and Human Services for the
statutorily authorized purposes of audit,
investigation, and evaluations.
``(F) Penalties for failure to provide timely
information and provision of false information.--In the
case of a PDP sponsor--
``(i) that fails to provide information
required under subparagraph (B) on a timely
basis, the sponsor is subject to a civil money
penalty in the amount of $10,000 for each day
in which such information has not been
provided; or
``(ii) that knowingly (as defined in
section 1128A(i)) provides false information
under such subparagraph, the sponsor is subject
to a civil money penalty in an amount not to
exceed $100,000 for each item of false
information.
Such civil money penalties are in addition to other
penalties as may be prescribed by law. The provisions
of section 1128A (other than subsections (a) and (b))
shall apply to a civil money penalty under this
subparagraph in the same manner as such provisions
apply to a penalty or proceeding under section
1128A(a).''.
(2) Application to ma organizations.--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:
``(E) Reporting requirement related to rebate for
rebate eligible medicare drug plan enrollees.--Section
1860D-12(b)(8).''.
(c) Deposit of Rebates Into Medicare Prescription Drug Account.--
Section 1860D-16(c) of the Social Security Act (42 U.S.C. 1395w-116(c))
is amended by adding at the end the following new paragraph:
``(6) Rebate for rebate eligible medicare drug plan
enrollees.--Amounts paid under a rebate agreement under section
1860D-2(f) shall be deposited into the Account.''.
(d) Exclusion From Determination of Best Price and Average
Manufacturer Price Under Medicaid.--
(1) Exclusion from best price determination.--Section
1927(c)(1)(C)(ii)(I) of the Social Security Act (42 U.S.C.
1396r-8(c)(1)(C)(ii)(I)) is amended by inserting ``and amounts
paid under a rebate agreement under section 1860D-2(f)'' after
``this section''.
(2) Exclusion from average manufacturer price
determination.--Section 1927(k)(1)(B)(i) of the Social Security
Act (42 U.S.C. 1396r-8(k)(1)(B)(i)) is amended--
(A) in subclause (IV), by striking ``and'' after
the semicolon;
(B) in subclause (V), by striking the period at the
end and inserting ``; and''; and
(C) by adding at the end the following:
``(VI) amounts paid under a rebate
agreement under section 1860D-2(f).''.
<all>