[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 3384 Introduced in Senate (IS)]
<DOC>
116th CONGRESS
2d Session
S. 3384
To allow for negotiation of prices for certain covered Medicare part D
drugs, to allow for importation by individuals of prescription drugs
from Canada, to preserve access to affordable generics and biosimilars,
to increase the use of real-time benefit tools to lower beneficiary
costs, to establish a manufacturer discount program, and for other
purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
March 3, 2020
Ms. McSally introduced the following bill; which was read twice and
referred to the Committee on Finance
_______________________________________________________________________
A BILL
To allow for negotiation of prices for certain covered Medicare part D
drugs, to allow for importation by individuals of prescription drugs
from Canada, to preserve access to affordable generics and biosimilars,
to increase the use of real-time benefit tools to lower beneficiary
costs, to establish a manufacturer discount program, 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 ``Lowering Prescription Drug Prices
for America's Seniors and Families Act of 2020''.
SEC. 2. NEGOTIATION OF PRICES FOR CERTAIN COVERED PART D DRUGS
FOLLOWING PERIOD OF EXCLUSIVITY.
(a) In General.--Section 1860D-11 of the Social Security Act (42
U.S.C. 1395w-111) is amended--
(1) in subsection (i), by striking ``In order'' and
inserting ``Except as provided in subsection (k), in order'';
and
(2) by adding at the end the following new subsection:
``(k) Negotiation of Prices for Certain Covered Part D Drugs
Following Period of Exclusivity.--
``(1) In general.--Notwithstanding any other provision of
law, subject to paragraph (2), the Secretary shall, for plan
years beginning on or after the date on which the applicable
period with respect to an applicable covered part D drug (as
those terms are defined in paragraph (3)) expires--
``(A) negotiate directly with pharmaceutical
manufacturers the prices that may be charged to PDP
sponsors and MA organizations for such applicable
covered part D drug; and
``(B) complete such negotiations not later than 3
months prior to the beginning of each such plan year.
``(2) Use of medicaid best price if negotiations fail.--In
the case where the Secretary is not able to reach an agreement
under paragraph (1) with respect to an applicable covered part
D drug for a plan year by the date specified in paragraph
(1)(B), the price that a pharmaceutical manufacturer may charge
to PDP sponsors and MA organizations for such applicable
covered part D drug for the plan year shall be determined using
the methodology used to determine the best price of a covered
outpatient drug under section 1927(c)(1)(C).
``(3) Definitions.--In this subsection:
``(A) Applicable covered part d drug.--The term
`applicable covered part D drug' means a covered part D
drug for which there is in effect--
``(i) in the case of a drug approved under
section 505 of the Federal Food, Drug, and
Cosmetic Act, a patent on an active ingredient
of the drug; or
``(ii) in the case of a biological product,
a patent on the structure of the biological
product.
A patent shall be considered to be in effect for
purposes of this subparagraph during any extension of
the patent term under section 156 of title 35, United
States Code.
``(B) Applicable period.--The term `applicable
period' means, with respect to an applicable covered
part D drug, any applicable patent described in
subparagraph (A).
``(4) Condition of coverage.--
``(A) In general.--Subject to subparagraph (B), in
order for coverage to be available under this part for
an applicable covered part D drug (as defined in
section 1860D-2(e)) of a manufacturer with respect to a
plan year beginning on or after the date on which the
applicable period with respect to such covered part D
drug expires, the manufacturer must provide such
applicable covered part D drug to PDP sponsors and MA
organizations at the price negotiated under paragraph
(1) or the price determined under paragraph (2), if
applicable, for the plan year.
``(B) Authorizing coverage in certain
circumstances.--Subparagraph (A) shall not apply to the
dispensing of a covered part D drug if the Secretary
has made a determination that the availability of the
drug is essential to the health of beneficiaries under
this part.''.
(b) Effective Date.--The amendments made by this section shall
apply to covered part D drugs dispensed on or after January 1, 2021.
SEC. 3. DRUG IMPORTATION.
Chapter VIII of the Federal Food, Drug, and Cosmetic Act (21 U.S.C.
381 et seq.) is amended by adding at the end the following:
``SEC. 810. IMPORTATION BY INDIVIDUALS OF PRESCRIPTION DRUGS FROM
CANADA.
``(a) In General.--Notwithstanding any other provision of this Act,
not later than 180 days after the date of enactment of this section,
the Secretary shall promulgate regulations permitting individuals to
safely import into the United States a prescription drug described in
subsection (b).
``(b) Prescription Drug.--A prescription drug described in this
subsection--
``(1) is a prescription drug that--
``(A) is purchased from an approved Canadian
pharmacy;
``(B) is dispensed by a pharmacist licensed to
practice pharmacy and dispense prescription drugs in
Canada;
``(C) is purchased for personal use by the
individual, not for resale, in quantities that do not
exceed a 90-day supply;
``(D) is filled using a valid prescription issued
by a physician licensed to practice in a State in the
United States; and
``(E) has the same active ingredient or
ingredients, route of administration, dosage form, and
strength as a prescription drug approved by the
Secretary under chapter V; and
``(2) does not include--
``(A) a controlled substance (as defined in section
102 of the Controlled Substances Act);
``(B) a biological product (as defined in section
351 of the Public Health Service Act);
``(C) an infused drug (including a peritoneal
dialysis solution);
``(D) an intravenously injected drug;
``(E) a drug that is inhaled during surgery;
``(F) a parenteral drug;
``(G) a drug manufactured through one or more
biotechnology processes, including--
``(i) a therapeutic DNA plasmid product;
``(ii) a therapeutic synthetic peptide
product of not more than 40 amino acids;
``(iii) a monoclonal antibody product for
in vivo use; and
``(iv) a therapeutic recombinant DNA-
derived product;
``(H) a drug required to be refrigerated at any
time during manufacturing, packing, processing, or
holding; or
``(I) a photoreactive drug.
``(c) Approved Canadian Pharmacy.--
``(1) In general.--In this section, an approved Canadian
pharmacy is a pharmacy that--
``(A) is located in Canada; and
``(B) the Secretary certifies--
``(i) is licensed to operate and dispense
prescription drugs to individuals in Canada;
and
``(ii) meets the criteria under paragraph
(3).
``(2) Publication of approved canadian pharmacies.--The
Secretary shall publish on the internet website of the Food and
Drug Administration a list of approved Canadian pharmacies,
including the internet website address of each such approved
Canadian pharmacy, from which individuals may purchase
prescription drugs in accordance with subsection (a).
``(3) Additional criteria.--To be an approved Canadian
pharmacy, the Secretary shall certify that the pharmacy--
``(A) has been in existence for a period of at
least 5 years preceding the date of such certification
and has a purpose other than to participate in the
program established under this section;
``(B) operates in accordance with pharmacy
standards set forth by the provincial pharmacy rules
and regulations enacted in Canada;
``(C) has processes established by the pharmacy, or
participates in another established process, to certify
that the physical premises and data reporting
procedures and licenses are in compliance with all
applicable laws and regulations, and has implemented
policies designed to monitor ongoing compliance with
such laws and regulations;
``(D) conducts or commits to participate in ongoing
and comprehensive quality assurance programs and
implements such quality assurance measures, including
blind testing, to ensure the veracity and reliability
of the findings of the quality assurance program;
``(E) agrees that laboratories approved by the
Secretary shall be used to conduct product testing to
determine the safety and efficacy of sample
pharmaceutical products;
``(F) has established, or will establish or
participate in, a process for resolving grievances and
will be held accountable for violations of established
guidelines and rules;
``(G) does not resell products from online
pharmacies located outside Canada to customers in the
United States; and
``(H) meets any other criteria established by the
Secretary.''.
SEC. 4. PRESERVING ACCESS THROUGH FTC ACTIONS.
(a) Preserve Access to Affordable Generics and Biosimilars.--
(1) Unlawful compensation for delay.--
(A) In general.--The Federal Trade Commission Act
(15 U.S.C. 41 et seq.) is amended by inserting after
section 26 (15 U.S.C. 57c-2) the following:
``SEC. 27. PRESERVING ACCESS TO AFFORDABLE GENERICS AND BIOSIMILARS.
``(a) In General.--
``(1) Enforcement proceeding.--The Commission may initiate
a proceeding to enforce the provisions of this section against
the parties to any agreement resolving or settling, on a final
or interim basis, a patent infringement claim, in connection
with the sale of a drug product or biological product.
``(2) Presumption and violation.--
``(A) In general.--Subject to subparagraph (B), in
such a proceeding, an agreement shall be presumed to
have anticompetitive effects and shall be a violation
of this section if--
``(i) an ANDA filer or a biosimilar
biological product application filer receives
anything of value, including an exclusive
license; and
``(ii) the ANDA filer or biosimilar
biological product application filer agrees to
limit or forego research, development,
manufacturing, marketing, or sales of the ANDA
product or biosimilar biological product, as
applicable, for any period of time.
``(B) Exception.--Subparagraph (A) shall not apply
if the parties to such agreement demonstrate by clear
and convincing evidence that--
``(i) the value described in subparagraph
(A)(i) is compensation solely for other goods
or services that the ANDA filer or biosimilar
biological product application filer has
promised to provide; or
``(ii) the procompetitive benefits of the
agreement outweigh the anticompetitive effects
of the agreement.
``(b) Limitations.--In determining whether the settling parties
have met their burden under subsection (a)(2)(B), the fact finder shall
not presume--
``(1) that entry would not have occurred until the
expiration of the relevant patent or statutory exclusivity; or
``(2) that the agreement's provision for entry of the ANDA
product or biosimilar biological product prior to the
expiration of the relevant patent or statutory exclusivity
means that the agreement is procompetitive.
``(c) Exclusions.--Nothing in this section shall prohibit a
resolution or settlement of a patent infringement claim in which the
consideration granted by the NDA holder or biological product license
holder to the ANDA filer or biosimilar biological product application
filer, respectively, as part of the resolution or settlement includes
only one or more of the following:
``(1) The right to market the ANDA product or biosimilar
biological product in the United States prior to the expiration
of--
``(A) any patent that is the basis for the patent
infringement claim; or
``(B) any patent right or other statutory
exclusivity that would prevent the marketing of such
ANDA product or biosimilar biological product.
``(2) A payment for reasonable litigation expenses not to
exceed $7,500,000.
``(3) A covenant not to sue on any claim that the ANDA
product or biosimilar biological product infringes a United
States patent.
``(d) Enforcement.--
``(1) Enforcement.--A violation of this section shall be
treated as a violation of section 5.
``(2) Judicial review.--
``(A) In general.--Any party that is subject to a
final order of the Commission, issued in an
administrative adjudicative proceeding under the
authority of subsection (a)(1), may, within 30 days of
the issuance of such order, petition for review of such
order in--
``(i) the United States Court of Appeals
for the District of Columbia Circuit;
``(ii) the United States Court of Appeals
for the circuit in which the ultimate parent
entity, as defined in section 801.1(a)(3) of
title 16, Code of Federal Regulations, or any
successor thereto, of the NDA holder or
biological product license holder is
incorporated as of the date that the NDA or
biological product license application, as
applicable, is filed with the Commissioner of
Food and Drugs; or
``(iii) the United States Court of Appeals
for the circuit in which the ultimate parent
entity of the ANDA filer or biosimilar
biological product application filer is
incorporated as of the date that the ANDA or
biosimilar biological product application is
filed with the Commissioner of Food and Drugs.
``(B) Treatment of findings.--In a proceeding for
judicial review of a final order of the Commission, the
findings of the Commission as to the facts, if
supported by evidence, shall be conclusive.
``(e) Antitrust Laws.--Nothing in this section shall modify,
impair, limit, or supersede the applicability of the antitrust laws as
defined in subsection (a) of the first section of the Clayton Act (15
U.S.C. 12(a)), and of section 5 of this Act to the extent that section
5 applies to unfair methods of competition. Nothing in this section
shall modify, impair, limit, or supersede the right of an ANDA filer or
biosimilar biological product application filer to assert claims or
counterclaims against any person, under the antitrust laws or other
laws relating to unfair competition.
``(f) Penalties.--
``(1) Forfeiture.--Each party that violates or assists in
the violation of this section shall forfeit and pay to the
United States a civil penalty sufficient to deter violations of
this section, but in no event greater than 3 times the value
received by the party that is reasonably attributable to the
violation of this section. If no such value has been received
by the NDA holder or biological product license holder, the
penalty to the NDA holder or biological product license holder
shall be sufficient to deter violations, but in no event
greater than 3 times the value given to the ANDA filer or
biosimilar biological product application filer reasonably
attributable to the violation of this section. Such penalty
shall accrue to the United States and may be recovered in a
civil action brought by the Commission, in its own name by any
of its attorneys designated by it for such purpose, in a
district court of the United States against any party that
violates this section. In such actions, the United States
district courts are empowered to grant mandatory injunctions
and such other and further equitable relief as they deem
appropriate.
``(2) Cease and desist.--
``(A) In general.--If the Commission has issued a
cease and desist order with respect to a party in an
administrative adjudicative proceeding under the
authority of subsection (a)(1), an action brought
pursuant to paragraph (1) may be commenced against such
party at any time before the expiration of 1 year after
such order becomes final pursuant to section 5(g).
``(B) Exception.--In an action under subparagraph
(A), the findings of the Commission as to the material
facts in the administrative adjudicative proceeding
with respect to the violation of this section by a
party shall be conclusive unless--
``(i) the terms of such cease and desist
order expressly provide that the Commission's
findings shall not be conclusive; or
``(ii) the order became final by reason of
section 5(g)(1), in which case such finding
shall be conclusive if supported by evidence.
``(3) Civil penalty.--In determining the amount of the
civil penalty described in this section, the court shall take
into account--
``(A) the nature, circumstances, extent, and
gravity of the violation;
``(B) with respect to the violator, the degree of
culpability, any history of violations, the ability to
pay, any effect on the ability to continue doing
business, profits earned by the NDA holder or
biological product license holder, compensation
received by the ANDA filer or biosimilar biological
product application filer, and the amount of commerce
affected; and
``(C) other matters that justice requires.
``(4) Remedies in addition.--Remedies provided in this
subsection are in addition to, and not in lieu of, any other
remedy provided by Federal law. Nothing in this paragraph shall
be construed to affect any authority of the Commission under
any other provision of law.
``(g) Definitions.--In this section:
``(1) Agreement.--The term `agreement' means anything that
would constitute an agreement under section 1 of the Sherman
Act (15 U.S.C. 1) or section 5 of this Act.
``(2) Agreement resolving or settling a patent infringement
claim.--The term `agreement resolving or settling a patent
infringement claim' includes any agreement that is entered into
within 30 days of the resolution or the settlement of the
claim, or any other agreement that is contingent upon, provides
a contingent condition for, or is otherwise related to the
resolution or settlement of the claim.
``(3) ANDA.--The term `ANDA' means an abbreviated new drug
application filed under section 505(j) of the Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 355(j)) or a new drug
application filed under section 505(b)(2) of the Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 355(b)(2)).
``(4) ANDA filer.--The term `ANDA filer' means a party that
owns or controls an ANDA filed with the Food and Drug
Administration or has the exclusive rights under such ANDA to
distribute the ANDA product.
``(5) ANDA product.--The term `ANDA product' means the
product to be manufactured under the ANDA that is the subject
of the patent infringement claim.
``(6) Biological product.--The term `biological product'
has the meaning given such term in section 351(i)(1) of the
Public Health Service Act (42 U.S.C. 262(i)(1)).
``(7) Biological product license application.--The term
`biological product license application' means an application
under section 351(a) of the Public Health Service Act (42
U.S.C. 262(a)).
``(8) Biological product license holder.--The term
`biological product license holder' means--
``(A) the holder of an approved biological product
license application for a biological product;
``(B) a person owning or controlling enforcement of
any patents that claim the biological product that is
the subject of such approved application; or
``(C) the predecessors, subsidiaries, divisions,
groups, and affiliates controlled by, controlling, or
under common control with any of the entities described
in subparagraphs (A) and (B) (such control to be
presumed by direct or indirect share ownership of 50
percent or greater), as well as the licensees,
licensors, successors, and assigns of each of the
entities.
``(9) Biosimilar biological product.--The term `biosimilar
biological product' means the product to be manufactured under
the biosimilar biological product application that is the
subject of the patent infringement claim.
``(10) Biosimilar biological product application.--The term
`biosimilar biological product application' means an
application under section 351(k) of the Public Health Service
Act (42 U.S.C. 262(k)) for licensure of a biological product as
biosimilar to, or interchangeable with, a reference product.
``(11) Biosimilar biological product application filer.--
The term `biosimilar biological product application filer'
means a party that owns or controls a biosimilar biological
product application filed with the Food and Drug Administration
or has the exclusive rights under such application to
distribute the biosimilar biological product.
``(12) Drug product.--The term `drug product' has the
meaning given such term in section 314.3(b) of title 21, Code
of Federal Regulations (or any successor regulation).
``(13) NDA.--The term `NDA' means a new drug application
filed under section 505(b) of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 355(b)).
``(14) NDA holder.--The term `NDA holder' means--
``(A) the holder of an approved NDA application for
a drug product;
``(B) a person owning or controlling enforcement of
the patent listed in the Approved Drug Products With
Therapeutic Equivalence Evaluations (commonly known as
the `FDA Orange Book') in connection with the NDA; or
``(C) the predecessors, subsidiaries, divisions,
groups, and affiliates controlled by, controlling, or
under common control with any of the entities described
in subparagraphs (A) and (B) (such control to be
presumed by direct or indirect share ownership of 50
percent or greater), as well as the licensees,
licensors, successors, and assigns of each of the
entities.
``(15) Party.--The term `party' means any person,
partnership, corporation, or other legal entity.
``(16) Patent infringement.--The term `patent infringement'
means infringement of any patent or of any filed patent
application, extension, reissue, renewal, division,
continuation, continuation in part, reexamination, patent term
restoration, patents of addition, and extensions thereof.
``(17) Patent infringement claim.--The term `patent
infringement claim' means any allegation made to an ANDA filer
or biosimilar biological product application filer, whether or
not included in a complaint filed with a court of law, that its
ANDA or ANDA product, or biological product license application
or biological product, may infringe any patent held by, or
exclusively licensed to, the NDA holder or biological product
license holder of the drug product or biological product, as
applicable.
``(18) Statutory exclusivity.--The term `statutory
exclusivity' means those prohibitions on the approval of drug
applications under clauses (ii) through (iv) of section
505(c)(3)(E) (5- and 3-year data exclusivity), section 527
(orphan drug exclusivity), or section 505A (pediatric
exclusivity) of the Federal Food, Drug, and Cosmetic Act (21
U.S.C. 355(c)(3)(E), 360cc, 355a), or on the licensing of
biological product applications under section 351(k)(7) (12-
year exclusivity) or paragraph (2) or (3) of section 351(m)
(pediatric exclusivity) of the Public Health Service Act (42
U.S.C. 262) or under section 527 of the Federal Food, Drug, and
Cosmetic Act (orphan drug exclusivity).''.
(B) Effective date.--Section 27 of the Federal
Trade Commission Act, as added by this paragraph, shall
apply to all agreements described in section 27(a)(1)
of that Act entered into after June 17, 2013. Section
27(f) of the Federal Trade Commission Act, as added by
this paragraph, shall apply to agreements entered into
on or after the date of enactment of this Act.
(2) Certification of agreements.--Section 1112 of the
Medicare Prescription Drug, Improvement, and Modernization Act
of 2003 (21 U.S.C. 355 note) is amended by adding at the end
the following:
``(d) Certification.--The Chief Executive Officer or the company
official responsible for negotiating any agreement under subsection (a)
or (b) that is required to be filed under subsection (c), within 30
days after such filing, shall execute and file with the Assistant
Attorney General and the Commission a certification as follows: `I
declare that the following is true, correct, and complete to the best
of my knowledge: The materials filed with the Federal Trade Commission
and the Department of Justice under section 1112 of subtitle B of title
XI of the Medicare Prescription Drug, Improvement, and Modernization
Act of 2003, with respect to the agreement referenced in this
certification--
```(1) represent the complete, final, and exclusive
agreement between the parties;
```(2) include any ancillary agreements that are contingent
upon, provide a contingent condition for, or are otherwise
related to, the referenced agreement; and
```(3) include written descriptions of any oral agreements,
representations, commitments, or promises between the parties
that are responsive to subsection (a) or (b) of such section
1112 and have not been reduced to writing.'.''.
(3) Forfeiture of 180-day exclusivity period.--Section
505(j)(5)(D)(i)(V) of the Federal Food, Drug, and Cosmetic Act
(21 U.S.C. 355(j)(5)(D)(i)(V)) is amended by inserting
``section 27 of the Federal Trade Commission Act or'' after
``that the agreement has violated''.
(4) Commission litigation authority.--Section 16(a)(2) of
the Federal Trade Commission Act (15 U.S.C. 56(a)(2)) is
amended--
(A) in subparagraph (D), by striking ``or'' after
the semicolon;
(B) in subparagraph (E), by inserting ``or'' after
the semicolon; and
(C) inserting after subparagraph (E) the following:
``(F) under section 27;''.
(5) Statute of limitations.--The Federal Trade Commission
shall commence any enforcement proceeding described in section
27 of the Federal Trade Commission Act, as added by paragraph
(1), except for an action described in section 27(f)(2) of the
Federal Trade Commission Act, not later than 6 years after the
date on which the parties to the agreement file the
certification under section 1112(d) of the Medicare
Prescription Drug Improvement and Modernization Act of 2003 (21
U.S.C. 355 note).
(b) Citizen Petitions.--Section 505(q)(1) of the Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 355(q)(1)) is amended--
(1) in subparagraph (E)--
(A) by striking ``If the Secretary'' and inserting
the following:
``(i) In general.--If the Secretary'';
(B) by striking the second sentence and inserting
the following:
``(ii) Factors.--In determining whether a
petition was submitted with the primary purpose
of delaying the approval of an application, the
Secretary shall consider--
``(I) whether it appears, based on
the date that relevant information
relied upon in the petition became
known to the petitioner (or reasonably
should have been known to the
petitioner), as certified by the
petitioner in accordance with
subparagraph (H), that the petitioner
has taken an unreasonable length of
time to submit the petition;
``(II) whether the petitioner has
submitted multiple or serial petitions
raising issues that reasonably could
have been known to the petitioner at
the time of submission of the earlier
petition or petitions;
``(III) whether the petition was
submitted close in time to a known,
first date upon which an application
under subsection (b)(2) of this section
or section 351(k) of the Public Health
Service Act could be approved;
``(IV) whether the petition was
submitted without any data or
information in support of the
scientific positions set forth in the
petition;
``(V) whether the petition raises
the same or substantially similar
issues as a prior petition to which the
Secretary has responded substantively
already, particularly if the subsequent
submission follows the earlier response
closely in time;
``(VI) whether the petition
concerns standards for approval of a
drug for which the Secretary has
provided an opportunity for public
input, such as draft or final product-
specific guidance applicable to the
drug, and the petitioner has not
provided comment other than through the
petition;
``(VII) whether the petition
requests that other applicants meet
standards for testing, data, or
labeling for a drug that are more
onerous or rigorous than the standards
applicable to, as applicable, the
listed drug, reference product, or
petitioner's version of the same drug;
``(VIII) the history of the
petitioner with the Food and Drug
Administration, such as whether the
petitioner has a history of submitting
petitions that the Secretary has
determined were submitted with the
primary purpose of delay; and
``(IX) other relevant
considerations, as the Secretary may
describe in guidance.''; and
(C) by adding at the end the following:
``(iii) Public availability.--The Secretary
shall publish on the internet website of the
Food and Drug Administration a list of any
petitions that the Secretary determines were
submitted for the primary purpose of delaying
the approval of an application.
``(iv) Referral to the federal trade
commission.--The Secretary shall establish
procedures for referring to the Federal Trade
Commission any petition or supplement to a
petition that the Secretary determines was
submitted with the primary purpose of delaying
approval of an application. Such procedures
shall include notification to the petitioner
and an opportunity for the petitioner to
respond to the Secretary prior to referral to
the Federal Trade Commission.''; and
(2) by adding at the end the following:
``(J) Timeline for submitting petitions.--The
Secretary may establish a time period after the
relevant information relied upon in a petition became
known to the petitioner (or reasonably should have been
known to a petitioner), as certified by the petitioner
in accordance with subparagraph (H), and any petition
that is submitted after such time period has passed
shall be summarily denied.''.
(c) Federal Trade Commission Enforcement Against Sham Petitions.--
(1) Definitions.--In this subsection:
(A) Commission.--The term ``Commission'' means the
Federal Trade Commission.
(B) Covered application.--The term ``covered
application'' means an application filed pursuant to
subsection (b)(2) or (j) of section 505 of the Federal
Food, Drug, and Cosmetic Act (21 U.S.C. 355) or section
351(k) of the Public Health Service Act (42 U.S.C.
262(k)).
(C) Covered petition.--The term ``covered
petition'' means a petition, or a supplement to a
petition, filed under section 505(q) of the Federal
Food, Drug, and Cosmetic Act (21 U.S.C. 355(q)).
(D) Person.--The term ``person''--
(i) means an individual or entity; and
(ii) includes--
(I) a successor and an assign of an
entity; and
(II) a joint venture, subsidiary,
partnership, division, group, and
affiliate controlled by an entity, and
(III) a successor and an assign of
a joint venture, subsidiary,
partnership, division, group, and
affiliate controlled by an entity.
(E) Series of covered petitions.--The term ``series
of covered petitions'' means any group of more than 1
covered petition relating to the same covered
application.
(F) Sham.--The term ``sham'' means a covered
petition that is objectively baseless and that attempts
to use a governmental process, as opposed to the
outcome of that process, to interfere with the business
of a competitor, or a series of covered petitions that
attempts to use a governmental process, as opposed to
the outcome of that process, to interfere with the
business of a competitor.
(2) Violation.--A person submitting or causing the
submission of a covered petition or a series of covered
petitions that is a sham shall be liable for engaging in an
unfair method of competition under section 5(a)(1) of the
Federal Trade Commission Act (15 U.S.C. 45(a)(1)).
(3) Civil action.--
(A) In general.--If the Commission has reason to
believe that the submission of a covered petition or a
series of covered petitions constitutes a violation of
section 5(a)(1) of the Federal Trade Commission Act (15
U.S.C. 45(a)(1)), the Commission may commence a civil
action to recover a civil penalty and seek other
appropriate relief in a district court of the United
States against any person that submitted or caused to
be submitted such covered petition or such series of
covered petitions, including successors or assigns.
(B) Presumption.--In a civil action under
subparagraph (A), a covered petition shall be presumed
to be part of a series of covered petitions that is a
sham under paragraph (2) of this subsection if--
(i) the Secretary of Health and Human
Services--
(I) has determined that the covered
petition was submitted with the primary
purpose of delaying the approval of a
covered application; and
(II) has referred such
determination to the Federal Trade
Commission in writing, including a
reasoned basis for the determination;
and
(ii) the covered petition was part of a
series of covered petitions.
(C) Exception.--The presumption in subparagraph (B)
shall not apply if the defendant establishes, by a
preponderance of the evidence, that the series of
covered petitions that includes the covered petition
referred to the Commission by the Secretary of Health
and Human Services is not a sham.
(D) Civil penalty.--In an action under subparagraph
(A), any person that has been found liable for a
violation of section 5(a)(1) of the Federal Trade
Commission Act (15 U.S.C. 45(a)(1)) shall be subject to
a civil penalty for each violation of not more than the
greater of--
(i) any revenue earned from the sale by
such person of any drug product, referenced in
a covered application that was the subject of a
covered petition or a series of covered
petitions that is a sham, during the period in
which the covered petition or series of covered
petitions was under review by the Secretary of
Health and Human Services; or
(ii) $50,000 for each calendar day that
each covered petition that is a sham or that
was part of a series of covered petitions that
is a sham was under review by the Secretary of
Health and Human Services.
(E) Antitrust laws.--Nothing in this subsection
shall modify, impair, limit, or supersede the
applicability of the antitrust laws as defined in
subsection (a) of the first section of the Clayton Act
(15 U.S.C. 12(a)), and of section 5 of the Federal
Trade Commission Act (15 U.S.C. 45) to the extent that
it applies to unfair methods of competition.
(F) Rule of construction.--The civil penalty
provided in this paragraph is in addition to, and not
in lieu of, any other remedies provided by Federal law,
including under section 16 of the Clayton Act (15
U.S.C. 26) or under section 13(b) of the Federal Trade
Commission Act (15 U.S.C. 53(b)). Nothing in this
subparagraph shall be construed to affect any authority
of the Commission under any other provision of law.
(4) Applicability.--This subsection shall apply to any
covered petition submitted on or after the date of enactment of
this Act.
SEC. 5. INCREASING THE USE OF REAL-TIME BENEFIT TOOLS TO LOWER
BENEFICIARY COSTS.
(a) Requiring Prescription Drug Plan Sponsors and Medicare
Advantage Organizations To Include Real-Time Benefit Information Under
Medicare Part D.--Section 1860D-4 of the Social Security Act (42 U.S.C.
1395w-104) is amended--
(1) by redesignating subsection (m) (relating to program
integrity transparency measures), as added by section 6063(c)
of the Substance Use-Disorder Prevention that Promotes Opioid
Recovery and Treatment for Patients and Communities Act (Public
Law 115-271), as subsection (n); and
(2) by adding at the end the following new subsection:
``(o) Real-Time Benefit Information.--
``(1) In general.--After the Secretary has adopted a
standard under paragraph (3) for electronic real-time benefit
tools, and at a time determined appropriate by the Secretary, a
PDP sponsor of a prescription drug plan shall implement one or
more of such tools that meet the requirements described in
paragraph (2).
``(2) Requirements.--For purposes of paragraph (1), the
requirements described in this paragraph, with respect to an
electronic real-time benefit tool, are that the tool is capable
of--
``(A) integrating with electronic prescribing and
electronic health record systems of prescribing health
care professionals for the transmission of eligibility
and formulary and benefit information in real time to
such professionals; and
``(B) with respect to a covered part D drug,
transmitting such information specific to an individual
enrolled in a prescription drug plan, including the
following:
``(i) A list of any clinically appropriate
alternatives to such drug included in the
formulary of such plan.
``(ii) Cost-sharing information and the
negotiated price for such drug and such
alternatives at--
``(I) multiple pharmacy options,
including the individual's preferred
pharmacy and, as applicable, other
retail pharmacies and a mail order
pharmacy; and
``(II) the formulary status of such
drug and such alternatives and any
prior authorization or other
utilization management requirements
applicable to such drug and such
alternatives included in the formulary
of such plan.
``(3) Standards.--In order to be treated (for purposes of
this subsection) as an electronic real-time benefit tool
described in paragraph (1), such tool shall comply with
technical standards adopted by the Secretary in consultation
with the National Coordinator for Health Information
Technology, the National Council for Prescription Drug
Programs, other standard setting organizations determined
appropriate by the Secretary, and stakeholders including PDP
sponsors, Medicare Advantage organizations, health care
professionals, and health information technology software
vendors.
``(4) Rule of construction.--Nothing in this subsection
shall be construed to prohibit the application of paragraph
(b)(7) of section 423.160 of title 42, Code of Federal
Regulations, as is to be added to such section pursuant to the
final rule published in the Federal Register on May 23, 2019,
and titled `Modernizing Part D and Medicare Advantage To Lower
Drug Prices and Reduce Out-of-Pocket Expenses' (84 Fed. Reg.
23832 through 23884).''.
(b) Requiring Qualified Electronic Health Records To Include Real-
Time Benefit Tools.--Section 3000(13) of the Public Health Service Act
(42 U.S.C. 300jj(13)) is amended--
(1) in subparagraph (A), by striking ``and'' at the end;
(2) in subparagraph (B), by striking the period and
inserting ``; and''; and
(3) by adding at the end the following:
``(C) includes, or is capable of including, a real-
time benefit tool that conveys patient-specific real-
time cost and coverage information with respect to
prescription drugs that, with respect to any health
information technology certified for electronic
prescribing, the technology shall be capable of
incorporating the information described in clauses (i)
and (ii) of paragraph (2)(B) of section 1860D-4(o) of
the Social Security Act at a time specified by the
Secretary but not before the Secretary adopts a
standard for such tools as described in paragraph (1)
of such section.''.
(c) Inclusion of Use of Real-Time Electronic Information in Shared
Decision Making Under MIPS.--Section 1848(q)(2)(B)(iii)(IV) of the
Social Security Act (42 U.S.C. 1395w-4(q)(2)(B)(iii)(IV)) is amended by
adding at the end the following new sentence: ``This subcategory shall
include as an activity option, beginning with the performance period
starting on January 1, 2021, use of a real-time benefit tool as
described in 1860D-4(o).''.
SEC. 6. 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 2022
and for costs above the annual deductible specified in
paragraph (1) and up to the annual out-of-pocket
threshold specified in paragraph (4)(B) for 2022 and
each subsequent year'' after ``paragraph (3)'';
(B) in subparagraph (C)--
(i) in clause (i), in the matter preceding
subclause (I), by inserting ``for a year
preceding 2022,'' after ``paragraph (4),''; and
(ii) in clause (ii)(III), by striking ``and
each subsequent year'' and inserting ``and
2021''; and
(C) in subparagraph (D)--
(i) in clause (i)--
(I) in the matter preceding
subclause (I), by inserting ``for a
year preceding 2022,'' after
``paragraph (4),''; and
(II) in subclause (I)(bb), by
striking ``a year after 2018'' and
inserting ``each of years 2018 through
2021''; and
(ii) in clause (ii)(V), by striking ``2019
and each subsequent year'' and inserting ``each
of years 2019 through 2021'';
(2) in paragraph (3)(A)--
(A) in the matter preceding clause (i), by
inserting ``for a year preceding 2022,'' after ``and
(4),''; and
(B) in clause (ii), by striking ``for a subsequent
year'' and inserting ``for each of years 2007 through
2021'';
(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 2022,
the greater of--'';
(III) by striking the period at the
end of item (bb), as redesignated by
subclause (I), and inserting ``; and'';
and
(IV) by adding at the end the
following:
``(II) for 2022 and each succeeding
year, $0.''; and
(ii) in clause (ii)--
(I) by striking ``clause (i)(I)''
and inserting ``clause (i)(I)(aa)'';
and
(II) by adding at the end the
following new sentence: ``The Secretary
shall continue to calculate the dollar
amounts specified in clause (i)(I)(aa),
including with the adjustment under
this clause, after 2021 for purposes of
section 1860D-14(a)(1)(D)(iii).'';
(B) in subparagraph (B)--
(i) in clause (i)--
(I) in subclause (V), by striking
``or'' at the end;
(II) in subclause (VI)--
(aa) by striking ``for a
subsequent year'' and inserting
``for 2021''; and
(bb) by striking the period
at the end and inserting a
semicolon; and
(III) by adding at the end the
following new subclauses:
``(VII) for 2022, is equal to
$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 2022
for amounts''; and
(D) in subparagraph (E), by striking ``In
applying'' and inserting ``For each of 2011 through
2021, 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 2022, 25
percent; and
``(II) for 2022 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 2022, 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 a 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 2022, 60 percent;
``(ii) for 2023, 40 percent; and
``(iii) for 2024 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 2022, 80 percent;
``(ii) for 2023, 60 percent; and
``(iii) for 2024 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,
2021, in consultation with manufacturers, and allow for comment on such
model agreement.
``(b) Terms of Agreement.--
``(1) In general.--
``(A) Agreement.--An agreement under this section
shall require the manufacturer to provide applicable
beneficiaries access to discounted prices for
applicable drugs of the manufacturer that are dispensed
on or after January 1, 2022.
``(B) Provision of discounted prices at the point-
of-sale.--The discounted prices described in
subparagraph (A) shall be provided to the applicable
beneficiary at the pharmacy or by the mail order
service at the point-of-sale of an applicable drug.
``(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 one 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 2020
through 2023, 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).
``(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.--The term `discounted price'
means--
``(i) with respect to an applicable drug
dispensed for an applicable beneficiary who has
incurred costs that are below the annual out-
of-pocket threshold specified in section 1860D-
2(b)(4)(B), 93 percent of the negotiated price
of the applicable drug of a manufacturer; and
``(ii) with respect to an applicable drug
dispensed for an applicable beneficiary who has
incurred costs for covered part D drugs in the
year that are equal to or exceed the annual
out-of-pocket threshold specified in section
1860D-2(b)(4)(B), 86 percent of the negotiated
price of the applicable drug of a manufacturer.
``(B) Clarification.--Nothing in this section shall
be construed as affecting the responsibility of an
applicable beneficiary for payment of a dispensing fee
for an applicable drug.
``(C) Clarification for certain claims.--With
respect to the amount of the negotiated price of an
individual claim for an applicable drug with respect to
an applicable beneficiary, the manufacturer of the
applicable drug shall provide--
``(i) the discounted price under clause (i)
of subparagraph (A) only on the portion of the
negotiated price of the applicable drug that
falls above the deductible specified in section
1860D-2(b)(1) and below the annual out-of-
pocket threshold specified in section 1860D-
2(b)(4)(B); and
``(ii) the discounted price under clause
(ii) of subparagraph (A) only on the portion of
the negotiated price of the applicable drug
that falls at or above such annual out-of-
pocket threshold.
``(5) Manufacturer.--The term `manufacturer' means any
entity which is engaged in the production, preparation,
propagation, compounding, conversion, or processing of
prescription drug products, either directly or indirectly by
extraction from substances of natural origin, or independently
by means of chemical synthesis, or by a combination of
extraction and chemical synthesis. Such term does not include a
wholesale distributor of drugs or a retail pharmacy licensed
under State law.
``(6) Negotiated price.--The term `negotiated price' has
the meaning given such term in section 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, 2022, and,
subject to paragraph (2), agreements under this section shall
be terminated as of such date.
``(2) Continued application for applicable drugs dispensed
prior to sunset.--The provisions of this section (including all
responsibilities and duties) shall continue to apply after
January 1, 2022, with respect to applicable drugs dispensed
prior to such date.''.
(3) Inclusion of actuarial value of manufacturer discounts
in bids.--Section 1860D-11 of the Social Security Act (42
U.S.C. 1395w-111) is amended--
(A) in subsection (b)(2)(C)(iii)--
(i) by striking ``assumptions regarding the
reinsurance'' an inserting ``assumptions
regarding--
``(I) the reinsurance''; and
(ii) by adding at the end the following:
``(II) for 2022 and each subsequent
year, the manufacturer discounts
provided under section 1860D-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 2022 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 121 of the Lowering Prescription Drug Prices
for America's Seniors and Families Act of 2020.''.
(g) Conforming Amendments.--
(1) Section 1860D-2 of the Social Security Act (42 U.S.C.
1395w-102) is amended--
(A) in subsection (a)(2)(A)(i)(I), by striking ``,
or an increase in the initial'' and inserting ``or for
a year preceding 2022 an increase in the initial'';
(B) in subsection (c)(1)(C)--
(i) in the subparagraph heading, by
striking ``at initial coverage limit''; and
(ii) by inserting ``for a year preceding
2022 or the annual out-of-pocket threshold
specified in subsection (b)(4)(B) for the year
for 2022 and each subsequent year'' after
``subsection (b)(3) for the year'' each place
it appears;
(C) in subsection (d)(1)(A), by striking ``or an
initial'' and inserting ``or for a year preceding 2022
an initial''.
(2) Section 1860D-4(a)(4)(B)(i) of the Social Security Act
(42 U.S.C. 1395w-104(a)(4)(B)) is amended by striking ``the
initial'' and inserting ``for a year preceding 2022, the
initial''.
(3) Section 1860D-14(a) of the Social Security Act (42
U.S.C. 1395w-114(a)) is amended--
(A) in paragraph (1)--
(i) in subparagraph (C), by striking ``The
continuation'' and inserting ``For a year
preceding 2022, the continuation'';
(ii) in subparagraph (E), by striking ``The
elimination'' and inserting ``For a year
preceding 2022, the elimination''; and
(iii) in subparagraph (D)(iii), by striking
``1860D-2(b)(4)(A)(i)(I)'' and inserting
``1860D-2(b)(4)(A)(i)(I)(aa)''; and
(B) in paragraph (2)--
(i) in subparagraph (C), by striking ``The
continuation'' and inserting ``For a year
preceding 2022, the continuation''; and
(ii) in subparagraph (E)--
(I) by inserting ``for a year
preceding 2022,'' after ``subsection
(c)''; and
(II) by striking ``1860D-
2(b)(4)(A)(i)(I)'' and inserting
``1860D-2(b)(4)(A)(i)(I)(aa)''.
(4) Section 1860D-21(d)(7) of the Social Security Act (42
U.S.C. 1395w-131(d)(7)) is amended by striking ``section 1860D-
2(b)(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 2022, any
discount'';
(B) in clause (i), as inserted by subparagraph (A)
of this paragraph, by striking the period at the end
and inserting ``; and''; and
(C) by adding at the end the following new clause:
``(ii) for 2022 and each subsequent year,
any discount provided pursuant to section
1860D-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 2022'' after
``1860D-2(b)(3)''; and
(B) by inserting ``for such year'' before the
period.
(7) Section 1860D-43(a)(1) of the Social Security Act (42
U.S.C. 1395w-153(a)(1)) is amended to read as follows:
``(1) participate in--
``(A) for 2011 through 2021, the Medicare coverage
gap discount program under section 1860D-14A; and
``(B) for 2022 and each subsequent year, the
manufacturer discount program under section 1860D-
14B;''.
(h) Effective Date.--The amendments made by this section shall
apply to plan year 2022 and subsequent plan years.
SEC. 7. SEVERABILITY.
If any provision of this Act, an amendment made by this Act, or the
application of such provision or amendment to any person or
circumstance is held to be unconstitutional, the remainder of this Act,
the amendments made by this Act, and the application of the provisions
of such Act or amendments to any person or circumstance shall not be
affected.
<all>