[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 4199 Introduced in Senate (IS)]
<DOC>
116th CONGRESS
2d Session
S. 4199
To amend titles XI, XVIII, and XIX of the Social Security Act to lower
prescription drug prices in the Medicare and Medicaid programs, to
improve transparency related to pharmaceutical prices and transactions,
to lower patients' out-of-pocket costs, and to ensure accountability to
taxpayers, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
July 2, 2020
Mr. Grassley (for himself, Mr. Portman, Mr. Cassidy, Mr. Daines, Ms.
Collins, Ms. Ernst, Ms. McSally, Mr. Braun, Mrs. Hyde-Smith, and Ms.
Murkowski) introduced the following bill; which was read twice and
referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend titles XI, XVIII, and XIX of the Social Security Act to lower
prescription drug prices in the Medicare and Medicaid programs, to
improve transparency related to pharmaceutical prices and transactions,
to lower patients' out-of-pocket costs, and to ensure accountability to
taxpayers, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Prescription Drug
Pricing Reduction Act of 2020''.
(b) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; table of contents.
TITLE I--MEDICARE
Subtitle A--Part B
Sec. 101. Improving manufacturers' reporting of average sales prices to
set accurate payment rates.
Sec. 102. Inclusion of value of coupons in determination of average
sales price for drugs and biologicals under
Medicare part B.
Sec. 103. Payment for biosimilar biological products during initial
period.
Sec. 104. Temporary increase in Medicare part B payment for biosimilar
biological products.
Sec. 105. Improvements to Medicare site-of-service transparency.
Sec. 106. Medicare part B rebate by manufacturers for drugs or
biologicals with prices increasing faster
than inflation.
Sec. 107. Requiring manufacturers of certain single-dose container or
single-use package drugs payable under part
B of the Medicare program to provide
refunds with respect to discarded amounts
of such drugs.
Sec. 108. HHS Inspector General study and report on bona fide service
fees.
Sec. 109. Establishment of maximum add-on payment for drugs and
biologicals.
Sec. 110. Treatment of drug administration services furnished by
certain excepted off-campus outpatient
departments of a provider.
Sec. 111. GAO study and report on average sales price.
Sec. 112. Authority to use alternative payment for drugs and
biologicals to prevent potential drug
shortages.
Subtitle B--Part D
Sec. 121. Medicare part D modernization redesign.
Sec. 121A. Maximum monthly cap on cost-sharing payments under
prescription drug plans and MA-PD plans.
Sec. 121B. Requiring pharmacy-negotiated price concessions, payment,
and fees to be included in negotiated
prices at the point-of-sale under part D of
the medicare program.
Sec. 122. Providing the Medicare Payment Advisory Commission and
Medicaid and CHIP Payment and Access
Commission with access to certain drug
payment information, including certain
rebate information.
Sec. 123. Public disclosure of drug discounts and other pharmacy
benefit manager (PBM) provisions.
Sec. 124. Public disclosure of direct and indirect remuneration review
and audit results.
Sec. 125. Increasing the use of real-time benefit tools to lower
beneficiary costs.
Sec. 126. Improvements to provision of parts A and B claims data to
prescription drug plans.
Sec. 127. Permanently authorize a successful pilot on retroactive
Medicare part D coverage for low-income
beneficiaries.
Sec. 128. Medicare part D rebate by manufacturers for certain drugs
with prices increasing faster than
inflation.
Sec. 129. Prohibiting branding on part D benefit cards.
Sec. 130. Requiring prescription drug plans and MA-PD plans to report
potential fraud, waste, and abuse to the
Secretary of HHS.
Sec. 131. Establishment of pharmacy quality measures under Medicare
part D.
Sec. 132. Addition of new measures based on access to biosimilar
biological products to the 5-star rating
system under Medicare Advantage.
Sec. 133. Fairness in the calculation of the part D premium.
Sec. 134. HHS study and report on the influence of pharmaceutical
manufacturer third-party reimbursement hubs
on health care providers who prescribe
their drugs and biologicals.
Subtitle C--Miscellaneous
Sec. 141. Drug manufacturer price transparency.
Sec. 142. Strengthening and expanding pharmacy benefit managers
transparency requirements.
Sec. 143. Prescription drug pricing dashboards.
Sec. 144. Improving coordination between the Food and Drug
Administration and the Centers for Medicare
& Medicaid Services.
Sec. 145. Patient consultation in Medicare national and local coverage
determinations in order to mitigate
barriers to inclusion of such perspectives.
Sec. 146. GAO study on increases to Medicare and Medicaid spending due
to copayment coupons and other patient
assistance programs.
Sec. 147. MedPAC report on shifting coverage of certain Medicare part B
drugs to Medicare part D.
Sec. 148. Taking steps to fulfill treaty obligations to tribal
communities.
TITLE II--MEDICAID DRUG PRICING REFORMS
Sec. 201. Medicaid pharmacy and therapeutics committee improvements.
Sec. 202. Improving reporting requirements and developing standards for
the use of drug use review boards in State
Medicaid programs.
Sec. 203. GAO report on conflicts of interest in State Medicaid program
drug use review boards and pharmacy and
therapeutics (P&T) committees.
Sec. 204. Ensuring the accuracy of manufacturer price and drug product
information under the Medicaid drug rebate
program.
Sec. 205. Applying Medicaid drug rebate requirement to drugs provided
as part of outpatient hospital services.
Sec. 206. Improving transparency and preventing the use of abusive
spread pricing and related practices in
Medicaid.
Sec. 207. T-MSIS drug data analytics reports.
Sec. 208. Risk-sharing value-based payment agreements for covered
outpatient drugs under Medicaid.
Sec. 209. Modification of maximum rebate amount under Medicaid drug
rebate program.
TITLE I--MEDICARE
Subtitle A--Part B
SEC. 101. IMPROVING MANUFACTURERS' REPORTING OF AVERAGE SALES PRICES TO
SET ACCURATE PAYMENT RATES.
(a) In General.--Section 1847A(f) of the Social Security Act (42
U.S.C. 1395w-3a(f)) is amended--
(1) by striking ``Price.--For requirements'' and inserting
``Price.--
``(1) In general.--For requirements''; and
(2) by adding at the end the following new paragraph:
``(2) Manufacturers that do not have a rebate agreement.--
``(A) In general.--For calendar quarters beginning
with the second calendar quarter after the date of the
enactment of this paragraph, the following provisions
shall apply with respect to a manufacturer of an
applicable drug or biological (as defined in
subparagraph (B)) that has not entered into and does
not have in effect a rebate agreement described in
subsection (b) of section 1927 in the same manner and
to the same extent as such provisions apply with
respect to a manufacturer that has entered into and has
in effect such a rebate agreement:
``(i) Section 1927(b)(3)(A)(iii).
``(ii) Subparagraphs (B) and (C) (other
than the rebate agreement suspension described
in such subparagraph (C)) of section
1927(b)(3).
``(B) Applicable drug or biological defined.--For
purposes of subparagraph (A), the term `applicable drug
or biological' means a drug or biological described in
subparagraph (C), (E), or (G) of section 1842(o)(1) or
in section 1881(b)(14)(B) that is payable under this
part. For purposes of applying this paragraph, a drug
or biological described in the previous sentence
includes an item, service, supply, or product that is
payable under this part as a drug or biological.''.
(b) Conforming Amendments.--
(1) Title xviii.--Section 1847A(b) of the Social Security
Act (42 U.S.C. 1395w-3a(b)) is amended--
(A) in paragraph (2)(A), by inserting ``or
subsection (f)(2), as applicable'' after ``under
section 1927(b)(3)(A)(iii)''; and
(B) in each of paragraphs (3) and (6)(A), in the
matter preceding subparagraph (A) and clause (i),
respectively, by inserting ``or subsection (f)(2), as
applicable,'' after ``under section
1927(b)(3)(A)(iii)''.
(2) Title xix.--Section 1927(b)(3) of the Social Security
Act (42 U.S.C. 1396r-8(b)(3)) is amended--
(A) in subparagraph (A), in the flush matter
following clause (iv), by inserting ``or section
1847A(f)(2)'' after ``Information reported under this
subparagraph''; and
(B) in subparagraph (D), in the matter preceding
clause (i), by striking ``or wholesalers under this
paragraph or under'' and inserting ``or wholesalers
under this paragraph, under section 1847A(f)(2), or
under''.
(3) Technical correction.--Section 1927(b)(3)(A)(iii) of
such Act (42 U.S.C. 1396r-8(b)(3)(A)(iii)) is amended by
striking ``section 1881(b)(13)(A)(ii)'' and inserting ``section
1881(b)(14)(B)''.
SEC. 102. INCLUSION OF VALUE OF COUPONS IN DETERMINATION OF AVERAGE
SALES PRICE FOR DRUGS AND BIOLOGICALS UNDER MEDICARE PART
B.
Section 1847A(c) of the Social Security Act (42 U.S.C. 1395w-3a(c))
is amended--
(1) in paragraph (3)--
(A) by striking ``discounts.--In calculating'' and
inserting ``discounts to purchasers and coupons
provided to privately insured individuals.--
``(A) Discounts to purchasers.--In calculating'';
and
(B) by adding at the end the following new
subparagraph:
``(B) Coupons provided to reduce cost-sharing.--For
calendar quarters beginning on or after July 1, 2022,
in calculating the manufacturer's average sales price
under this subsection, such price shall include the
value (as defined in paragraph (6)(J)) of any coupons
provided under a drug coupon program of a manufacturer
(as those terms are defined in subparagraphs (K) and
(L), respectively, of paragraph (6)).''; and
(2) in paragraph (6), by adding at the end the following
new subparagraphs:
``(J) Value.--The term `value' means, with respect
to a coupon (as defined in subparagraph (K)), the
difference, if any, between--
``(i) the amount of any reduction or
elimination of cost-sharing or other out-of-
pocket costs described in such subparagraph to
a patient as a result of the use of such
coupon; and
``(ii) any charge to the patient for the
use of such coupon.
``(K) Coupon.--The term `coupon' means any
financial support that is provided to a patient, either
directly to the patient or indirectly to the patient
through a physician, prescriber, pharmacy, or other
provider, under a drug coupon program of a manufacturer
(as defined in subparagraph (L)) that is used to reduce
or eliminate cost-sharing or other out-of-pocket costs
of the patient, including costs related to a
deductible, coinsurance, or copayment, with respect to
a drug or biological, including a biosimilar biological
product, of the manufacturer.
``(L) Drug coupon program.--
``(i) In general.--Subject to clause (ii),
the term `drug coupon program' means, with
respect to a manufacturer, a program through
which the manufacturer provides coupons to
patients as described in subparagraph (K).
``(ii) Exclusions.--Such term does not
include--
``(I) a patient assistance program
operated by a manufacturer that
provides free or discounted drugs or
biologicals, including biosimilar
biological products, (through in-kind
donations) to patients of low income;
or
``(II) a contribution by a
manufacturer to a nonprofit or
Foundation that provides free or
discounted drugs or biologicals,
including biosimilar biological
products, (through in-kind donations)
to patients of low income.''.
SEC. 103. PAYMENT FOR BIOSIMILAR BIOLOGICAL PRODUCTS DURING INITIAL
PERIOD.
Section 1847A(c)(4) of the Social Security Act (42 U.S.C. 1395w-
3a(c)(4)) is amended--
(1) in each of subparagraphs (A) and (B), by redesignating
clauses (i) and (ii) as subclauses (I) and (II), respectively,
and moving such subclauses 2 ems to the right;
(2) by redesignating subparagraphs (A) and (B) as clauses
(i) and (ii) and moving such clauses 2 ems to the right;
(3) by striking ``unavailable.--In the case'' and inserting
``unavailable.--
``(A) In general.--Subject to subparagraph (B), in
the case''; and
(4) by adding at the end the following new subparagraph:
``(B) Limitation on payment amount for biosimilar
biological products during initial period.--In the case
of a biosimilar biological product furnished on or
after January 1, 2021, in lieu of applying subparagraph
(A) during the initial period described in such
subparagraph with respect to the biosimilar biological
product, the amount payable under this section for the
biosimilar biological product is the lesser of the
following:
``(i) The amount determined under clause
(ii) of such subparagraph for the biosimilar
biological product.
``(ii) The amount determined under
subsection (b)(1)(B) for the reference
biological product.''.
SEC. 104. TEMPORARY INCREASE IN MEDICARE PART B PAYMENT FOR BIOSIMILAR
BIOLOGICAL PRODUCTS.
Section 1847A(b)(8) of the Social Security Act (42 U.S.C. 1395w-
3a(b)(8)) is amended--
(1) by redesignating subparagraphs (A) and (B) as clauses
(i) and (ii), respectively, and indenting appropriately;
(2) by striking ``product.--The amount'' and inserting the
following: ``product.--
``(A) In general.--Subject to subparagraph (B), the
amount''; and
(3) by adding at the end the following new subparagraph:
``(B) Temporary payment increase for biosimilar
biological products.--
``(i) In general.--Beginning January 1,
2021, in the case of a biosimilar biological
product described in paragraph (1)(C) that is
furnished during the applicable 5-year period
for such product, the amount specified in this
paragraph for such product is an amount equal
to the lesser of the following:
``(I) The amount specified in
subparagraph (A) for such product if
clause (ii) of such subparagraph was
applied by substituting `8 percent' for
`6 percent'.
``(II) The amount determined under
subsection (b)(1)(B) for the reference
biological product.
``(ii) Applicable 5-year period.--For
purposes of clause (i), the applicable 5-year
period for a biosimilar biological product is--
``(I) in the case of such a product
for which payment was made under this
paragraph as of December 31, 2020, the
5-year period beginning on January 1,
2021; and
``(II) in the case of such a
product that is not described in
subclause (I), the 5-year period
beginning on the first day of the first
calendar quarter in which payment was
made for such product under this
paragraph.''.
SEC. 105. IMPROVEMENTS TO MEDICARE SITE-OF-SERVICE TRANSPARENCY.
Section 1834(t) of the Social Security Act (42 U.S.C. 1395m(t)) is
amended--
(1) in paragraph (1)--
(A) in the heading, by striking ``In general'' and
inserting ``Site payment'';
(B) in the matter preceding subparagraph (A)--
(i) by striking ``or to'' and inserting ``,
to'';
(ii) by inserting ``, or to a physician for
services furnished in a physician's office''
after ``surgical center''; and
(iii) by inserting ``(or 2022 with respect
to a physician for services furnished in a
physician's office)'' after ``2018''; and
(C) in subparagraph (A)--
(i) by striking ``and the'' and inserting
``, the''; and
(ii) by inserting ``, and the physician fee
schedule under section 1848 (with respect to
the practice expense component of such payment
amount)'' after ``such section'';
(2) by redesignating paragraphs (2) through (4) and
paragraphs (3) through (5), respectively; and
(3) by inserting after paragraph (1) the following new
paragraph:
``(2) Physician payment.--Beginning in 2022, the Secretary
may expand the information included on the Internet website
described in paragraph (1) to include--
``(A) the amount paid to a physician under section
1848 for an item or service for the settings described
in paragraph (1); and
``(B) the estimated amount of beneficiary liability
applicable to the item or service.''.
SEC. 106. MEDICARE PART B REBATE BY MANUFACTURERS FOR DRUGS OR
BIOLOGICALS WITH PRICES INCREASING FASTER THAN INFLATION.
(a) In General.--Section 1847A of the Social Security Act (42
U.S.C. 1395w-3a) is amended by adding at the end the following new
subsection:
``(h) Rebate by Manufacturers for Drugs or Biologicals With Prices
Increasing Faster Than Inflation.--
``(1) Requirements.--
``(A) Secretarial provision of information.--Not
later than 6 months after the end of each rebate period
(as defined in paragraph (2)(A)) beginning on or after
January 1, 2022, the Secretary shall, for each
rebatable drug (as defined in paragraph (2)(B)), report
to each manufacturer of such rebatable drug the
following for such rebate period:
``(i) Information on the total number of
units of the billing and payment code described
in subparagraph (A)(i) of paragraph (3) with
respect to such rebatable drug and rebate
period.
``(ii) Information on the amount (if any)
of the excess average sales price increase
described in subparagraph (A)(ii) of such
paragraph for such rebatable drug and rebate
period.
``(iii) The rebate amount specified under
such paragraph for such rebatable drug and
rebate period.
``(B) Manufacturer rebate.--
``(i) In general.--Subject to clause (ii),
for each rebate period beginning on or after
January 1, 2022, the manufacturer of a
rebatable drug shall, for such drug, not later
than 30 days after the date of receipt from the
Secretary of the information and rebate amount
pursuant to subparagraph (A) for such rebate
period, provide to the Secretary a rebate that
is equal to the amount specified in paragraph
(3) for such drug for such rebate period.
``(ii) Exemption for shortages.--The
Secretary may reduce or waive the rebate under
this subparagraph with respect to a rebatable
drug that is listed on the drug shortage list
maintained by the Food and Drug Administration
pursuant to section 506E of the Federal Food,
Drug, and Cosmetic Act.
``(C) Request for reconsideration.--The Secretary
shall establish procedures under which a manufacturer
of a rebatable drug may request a reconsideration by
the Secretary of the rebate amount specified under
paragraph (3) for such rebatable drug and rebate
period, as reported to the manufacturer pursuant to
subparagraph (A)(iii).
``(2) Rebate period and rebatable drug defined.--In this
subsection:
``(A) Rebate period.--The term `rebate period'
means a calendar quarter beginning on or after January
1, 2022.
``(B) Rebatable drug.--The term `rebatable drug'
means a single source drug or biological (other than a
biosimilar biological product)--
``(i) described in section 1842(o)(1)(C)
for which the payment amount is provided under
this section; or
``(ii) for which payment is made separately
under section 1833(i) or section 1833(t) and
for which the payment amount is calculated
based on the payment amount under this section.
``(3) Rebate amount.--
``(A) In general.--For purposes of paragraph
(1)(B), the amount specified in this paragraph for a
rebatable drug assigned to a billing and payment code
for a rebate period is, subject to paragraph (4), the
amount equal to the product of--
``(i) subject to subparagraph (B), the
total number of units of the billing and
payment code for such rebatable drug furnished
during the rebate period; and
``(ii) the amount (if any) by which--
``(I) the amount determined under
subsection (b)(4) for such rebatable
drug during the rebate period; exceeds
``(II) the inflation-adjusted base
payment amount determined under
subparagraph (C) of this paragraph for
such rebatable drug during the rebate
period.
``(B) Excluded units.--For purposes of subparagraph
(A)(i), the total number of units of the billing and
payment code for rebatable drugs furnished during a
rebate period shall not include units with respect to
which the manufacturer provides a discount under the
program under section 340B of the Public Health Service
Act or a rebate under section 1927.
``(C) Determination of inflation-adjusted payment
amount.--The inflation-adjusted payment amount
determined under this subparagraph for a rebatable drug
for a rebate period is--
``(i) the amount determined under
subsection (b)(4) for such rebatable drug in
the payment amount benchmark quarter (as
defined in subparagraph (D)); increased by
``(ii) the percentage by which the rebate
period CPI-U (as defined in subparagraph (F))
for the rebate period exceeds the benchmark
period CPI-U (as defined in subparagraph (E)).
``(D) Payment amount benchmark quarter.--The term
`payment amount benchmark quarter' means the calendar
quarter beginning July 1, 2019.
``(E) Benchmark period cpi-u.--The term `benchmark
period CPI-U' means the consumer price index for all
urban consumers (United States city average) for July
2019.
``(F) Rebate period cpi-u.--The term `rebate period
CPI-U' means, with respect to a rebate period, the
consumer price index for all urban consumers (United
States city average) for the last month of the calendar
quarter that is two calendar quarters prior to the
rebate period.
``(4) Application to new drugs.--In the case of a rebatable
drug first approved or licensed by the Food and Drug
Administration after July 1, 2019, the following shall apply:
``(A) During initial period.--For quarters during
the initial period in which the payment amount for such
drug is determined using the methodology described in
subsection (c)(4)--
``(i) clause (ii)(I) of paragraph (3)(A)
shall be applied as if the reference to `the
amount determined under subsection (b)(4),'
were a reference to `the wholesale acquisition
cost applicable under subsection (c)(4)';
``(ii) clause (i) of paragraph (3)(C) shall
be applied--
``(I) as if the reference to `the
amount determined under subsection
(b)(4),' were a reference to `the
wholesale acquisition cost applicable
under subsection (c)(4)'; and
``(II) as if the term `payment
amount benchmark quarter' were defined
under paragraph (3)(D) as the first
full calendar quarter after the day on
which the drug was first marketed; and
``(iii) clause (ii) of paragraph (3)(C)
shall be applied as if the term `benchmark
period CPI-U' were defined under paragraph
(4)(E) as if the reference to `July 2019' under
such paragraph were a reference to `the first
month of the first full calendar quarter after
the day on which the drug was first marketed'.
``(B) After initial period.--For quarters beginning
after such initial period--
``(i) clause (i) of paragraph (3)(C) shall
be applied as if the term `payment amount
benchmark quarter' were defined under paragraph
(3)(D) as the first full calendar quarter for
which the Secretary is able to compute an
average sales price for the rebatable drug; and
``(ii) clause (ii) of paragraph (3)(C)
shall be applied as if the term `benchmark
period CPI-U' were defined under paragraph
(4)(E) as if the reference to `July 2019' under
such paragraph were a reference to `the first
month of the first full calendar quarter for
which the Secretary is able to compute an
average sales price for the rebatable drug'.
``(5) Rebate deposits.--Amounts paid as rebates under
paragraph (1)(B) shall be deposited into the Federal
Supplementary Medical Insurance Trust Fund established under
section 1841.
``(6) Enforcement.--
``(A) Civil money penalty.--
``(i) In general.--The Secretary shall
impose a civil money penalty on a manufacturer
that fails to comply with the requirements
under paragraph (1)(B) with respect to
providing a rebate for a rebatable drug for a
rebate period for each such failure in an
amount equal to the sum of--
``(I) the rebate amount specified
pursuant to paragraph (3) for such drug
for such rebate period; and
``(II) 25 percent of such amount.
``(ii) Application.--The provisions of
section 1128A (other than subsections (a) (with
respect to amounts of penalties or additional
assessments) and (b)) shall apply to a civil
money penalty under this subparagraph in the
same manner as such provisions apply to a
penalty or proceeding under section 1128A(a).
``(B) No payment for manufacturers who fail to pay
penalty.--If the manufacturer of a rebatable drug fails
to pay a civil money penalty under subparagraph (A)
with respect to the failure to provide a rebate for a
rebatable drug for a rebate period by a date specified
by the Secretary after the imposition of such penalty,
no payment shall be available under this part for such
rebatable drug for calendar quarters beginning on or
after such date until the Secretary determines the
manufacturer has paid the penalty due under such
subparagraph.''.
(b) Implementation.--Section 1847A(g) of the Social Security Act
(42 U.S.C. 1395w-3(g)) is amended--
(1) in paragraph (4), by striking ``and'' at the end;
(2) in paragraph (5), by striking the period at the end and
inserting ``; and''; and
(3) by adding at the end the following new paragraph:
``(6) determination of the rebate amount for a rebatable
drug under paragraph (3) of subsection (h), including with
respect to a new drug pursuant to paragraph (4) of such
subsection, including--
``(A) a decision by the Secretary with respect to a
request for reconsideration under paragraph (1)(C); and
``(B) the determination of--
``(i) the total number of units of the
billing and payment code under paragraph
(3)(A)(i); and
``(ii) the inflation-adjusted payment
amount under paragraph (3)(C).''.
(c) Conforming Amendment to Part B ASP Calculation.--Section
1847A(c)(3) of the Social Security Act (42 U.S.C. 1395w-3a(c)(3)) is
amended by inserting ``or subsection (h)'' after ``section 1927''.
SEC. 107. REQUIRING MANUFACTURERS OF CERTAIN SINGLE-DOSE CONTAINER OR
SINGLE-USE PACKAGE DRUGS PAYABLE UNDER PART B OF THE
MEDICARE PROGRAM TO PROVIDE REFUNDS WITH RESPECT TO
DISCARDED AMOUNTS OF SUCH DRUGS.
Section 1847A of the Social Security Act (42 U.S.C. 1395-3a), as
amended by section 106, is amended by adding at the end the following
new subsection:
``(i) Refund for Certain Discarded Single-Dose Container or Single-
Use Package Drugs.--
``(1) Secretarial provision of information.--
``(A) In general.--For each calendar quarter
beginning on or after January 1, 2022, the Secretary
shall, with respect to a refundable single-dose
container or single-use package drug (as defined in
paragraph (8)), report to each manufacturer (as defined
in subsection (c)(6)(A)) of such refundable single-dose
container or single-use package drug the following for
the calendar quarter:
``(i) Subject to subparagraph (C),
information on the total number of units of the
billing and payment code of such drug, if any,
that were discarded during such quarter, as
determined using a mechanism such as the JW
modifier used as of the date of enactment of
this subsection (or any such successor modifier
that includes such data as determined
appropriate by the Secretary).
``(ii) The refund amount that the
manufacturer is liable for pursuant to
paragraph (3).
``(B) Determination of discarded amounts.--For
purposes of subparagraph (A)(i), with respect to a
refundable single-dose container or single-use package
drug furnished during a quarter, the amount of such
drug that was discarded shall be determined based on
the amount of such drug that was unused and discarded
for each drug on the date of service.
``(C) Exclusion of units of packaged drugs.--The
total number of units of the billing and payment code
of a refundable single-dose container or single-use
package drug of a manufacturer furnished during a
calendar quarter for purposes of subparagraph (A)(i),
and the determination of the estimated total allowed
charges for the drug in the quarter for purposes of
paragraph (3)(A)(ii), shall not include such units that
are packaged into the payment amount for an item or
service and are not separately payable.
``(2) Manufacturer requirement.--For each calendar quarter
beginning on or after January 1, 2022, the manufacturer of a
refundable single-dose container or single-use package drug
shall, for such drug, provide to the Secretary a refund that is
equal to the amount specified in paragraph (3) for such drug
for such quarter.
``(3) Refund amount.--
``(A) In general.--The amount of the refund
specified in this paragraph is, with respect to a
refundable single-dose container or single-use package
drug of a manufacturer assigned to a billing and
payment code for a calendar quarter beginning on or
after January 1, 2022, an amount equal to the estimated
amount (if any) by which--
``(i) the product of--
``(I) the total number of units of
the billing and payment code for such
drug that were discarded during such
quarter (as determined under paragraph
(1)); and
``(II)(aa) in the case of a
refundable single-dose container or
single-use package drug that is a
single source drug or biological, the
amount determined for such drug under
subsection (b)(4); or
``(bb) in the case of a refundable
single-dose container or single-use
package drug that is a biosimilar
biological product, the average sales
price determined under subsection
(b)(8)(A); exceeds
``(ii) an amount equal to the applicable
percentage (as defined in subparagraph (B)) of
the estimated total allowed charges for such
drug during the quarter.
``(B) Applicable percentage defined.--
``(i) In general.--For purposes of
subparagraph (A)(ii), the term `applicable
percentage' means--
``(I) subject to subclause (II), 10
percent; and
``(II) in the case of a refundable
single-dose container or single-use
package drug described in subclause (I)
of clause (iii) and, if applicable, a
refundable single-dose container or
single-use package drug described in
subclause (II) of such clause, a
percentage specified by the Secretary
pursuant to clause (ii).
``(ii) Treatment of drugs that require
filtration or other unique circumstances.--The
Secretary, through notice and comment
rulemaking--
``(I) in the case of a refundable
single-dose container or single-use
package drug described in subclause (I)
of clause (iii), shall increase the
applicable percentage otherwise
applicable under clause (i)(I) as
determined appropriate by the
Secretary; and
``(II) in the case of a refundable
single-dose container or single-use
package drug described in subclause
(II) of clause (iii), may increase the
applicable percentage otherwise
applicable under clause (i)(I) as
determined appropriate by the
Secretary.
``(iii) Drug described.--For purposes of
clause (ii), a refundable single-dose container
or single-use package drug described in this
clause is either of the following:
``(I) A refundable single-dose
container or single-use package drug
for which preparation instructions
required and approved by the
Commissioner of the Food and Drug
Administration include filtration
during the drug preparation process,
prior to dilution and administration,
and require that any unused portion of
such drug after the filtration process
be discarded after the completion of
such filtration process.
``(II) Any other refundable single-
dose container or single-use package
drug that has unique circumstances
involving similar loss of product.
``(4) Frequency.--Amounts required to be refunded pursuant
to paragraph (2) shall be paid in regular intervals (as
determined appropriate by the Secretary).
``(5) Refund deposits.--Amounts paid as refunds pursuant to
paragraph (2) shall be deposited into the Federal Supplementary
Medical Insurance Trust Fund established under section 1841.
``(6) Enforcement.--
``(A) Audits.--
``(i) Manufacturer audits.--Each
manufacturer of a refundable single-dose
container or single-use package drug that is
required to provide a refund under this
subsection shall be subject to periodic audit
with respect to such drug and such refunds by
the Secretary.
``(ii) Provider audits.--The Secretary
shall conduct periodic audits of claims
submitted under this part with respect to
refundable single-dose container or single-use
package drugs in accordance with the authority
under section 1833(e) to ensure compliance with
the requirements applicable under this
subsection.
``(B) Civil money penalty.--
``(i) In general.--The Secretary shall
impose a civil money penalty on a manufacturer
of a refundable single-dose container or
single-use package drug who has failed to
comply with the requirement under paragraph (2)
for such drug for a calendar quarter in an
amount equal to the sum of--
``(I) the amount that the
manufacturer would have paid under such
paragraph with respect to such drug for
such quarter; and
``(II) 25 percent of such amount.
``(ii) Application.--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).
``(7) Implementation.--The Secretary shall implement this
subsection through notice and comment rulemaking.
``(8) Definition of refundable single-dose container or
single-use package drug.--
``(A) In general.--Except as provided in
subparagraph (B), in this subsection, the term
`refundable single-dose container or single-use package
drug' means a single source drug or biological (as
defined in section 1847A(c)(6)(D)) or a biosimilar
biological product (as defined in section
1847A(c)(6)(H)) for which payment is established under
this part and that is furnished from a single-dose
container or single-use package.
``(B) Exclusions.--The term `refundable single-dose
container or single-use package drug' does not include
a drug or biological that is either a
radiopharmaceutical or an imaging agent.''.
SEC. 108. HHS INSPECTOR GENERAL STUDY AND REPORT ON BONA FIDE SERVICE
FEES.
(a) Study.--The Inspector General of the Department of Health and
Human Services (in this section referred to as the ``Inspector
General'') shall conduct a study on the effect of the use of bona fide
service fee contracting arrangements by drug manufacturers and other
entities on Medicare payments for drugs and biologicals furnished under
part B of title XVIII of the Social Security Act (42 U.S.C. 1395j et
seq.). Such study shall include an analysis of--
(1) the various types of entities that enter into
contracting arrangements that use bona fide service fees, such
as group purchasing organizations, wholesalers, providers, and
pharmacies;
(2) the various types of bona fide service fee contracting
arrangements used by such entities;
(3) the types of services that are paid for through such
arrangements;
(4) whether manufacturers define bona fide service fees
differently across different entities;
(5) how such arrangements are structured;
(6) whether the structure or use of such arrangements has
changed over time;
(7) the extent, if any, to which there is consistency
across manufacturers in what they consider to be a bona fide
service fee as opposed to a discount or rebate that should be
excluded from the determination of average sales price pursuant
to the methodology under section 1847A of the Social Security
Act (42 U.S.C. 1395w-3a);
(8) the overall magnitude of bona fide service fees;
(9) what share of bona fide service fees are paid to
various entities;
(10) how the magnitude of bona fide service fees compares
to other fees and rebates that are included in the
determination of average sales price;
(11) whether and, if so, how much, the magnitude of bona
fide service fees has grown over time and how such growth
compares to growth in the magnitude of other fees and rebates;
and
(12) what share of bona fide service fees are based on a
percentage of sales.
(b) Report.--Not later than 18 months after the date of enactment
of this Act, the Inspector General shall submit to Congress a report
containing the results of the study conducted under subsection (a),
together with recommendations for such legislation and administrative
action as the Inspector General determines appropriate.
SEC. 109. ESTABLISHMENT OF MAXIMUM ADD-ON PAYMENT FOR DRUGS AND
BIOLOGICALS.
(a) In General.--Section 1847A of the Social Security Act (42
U.S.C. 1395w-3a) is amended--
(1) in subsection (b)--
(A) in paragraph (1), in the matter preceding
subparagraph (A), by striking ``paragraph (7)'' and
inserting ``paragraphs (7) and (9)''; and
(B) by adding at the end the following new
paragraph:
``(9) Maximum add-on payment amount.--
``(A) In general.--In determining the payment
amount under the provisions of subparagraph (A), (B),
or (C) of paragraph (1) of this subsection, subsection
(c)(4)(A)(ii), or subsection (d)(3)(C) for a drug or
biological furnished on or after January 1, 2022, if
the applicable add-on payment (as defined in
subparagraph (B)) for each drug or biological on a
claim for a date of service exceeds the maximum add-on
payment amount specified under subparagraph (C) for the
drug or biological, then the payment amount otherwise
determined for the drug or biological under those
provisions, as applicable, shall be reduced by the
amount of such excess.
``(B) Applicable add-on payment defined.--In this
paragraph, the term `applicable add-on payment' means
the following amounts, determined without regard to the
application of subparagraph (A):
``(i) In the case of a multiple source
drug, an amount equal to the difference
between--
``(I) the amount that would
otherwise be applied under paragraph
(1)(A); and
``(II) the amount that would be
applied under such paragraph if `100
percent' were substituted for `106
percent'.
``(ii) In the case of a single source drug
or biological, an amount equal to the
difference between--
``(I) the amount that would
otherwise be applied under paragraph
(1)(B); and
``(II) the amount that would be
applied under such paragraph if `100
percent' were substituted for `106
percent'.
``(iii) In the case of a biosimilar
biological product, the amount otherwise
determined under paragraph (8)(B).
``(iv) In the case of a drug or biological
during the initial period described in
subsection (c)(4)(A), an amount equal to the
difference between--
``(I) the amount that would
otherwise be applied under subsection
(c)(4)(A)(ii); and
``(II) the amount that would be
applied under such subsection if `100
percent' were substituted, as
applicable, for--
``(aa) `103 percent' in
subclause (I) of such
subsection; or
``(bb) any percent in
excess of 100 percent applied
under subclause (II) of such
subsection.
``(v) In the case of a drug or biological
to which subsection (d)(3)(C) applies, an
amount equal to the difference between--
``(I) the amount that would
otherwise be applied under such
subsection; and
``(II) the amount that would be
applied under such subsection if `100
percent' were substituted, as
applicable, for--
``(aa) any percent in
excess of 100 percent applied
under clause (i) of such
subsection; or
``(bb) `103 percent' in
clause (ii) of such subsection.
``(C) Maximum add-on payment amount specified.--For
purposes of subparagraph (A), the maximum add-on
payment amount specified in this subparagraph is--
``(i) for each of 2022 through 2029,
$1,000; and
``(ii) for a subsequent year, the amount
specified in this subparagraph for the
preceding year increased by the percentage
increase in the consumer price index for all
urban consumers (all items; United States city
average) for the 12-month period ending with
June of the previous year.
Any amount determined under this subparagraph that is
not a multiple of $10 shall be rounded to the nearest
multiple of $10.''; and
(2) in subsection (c)(4)(A)(ii), by striking ``in the
case'' and inserting ``subject to subsection (b)(9), in the
case''.
(b) Conforming Amendments Relating to Separately Payable Drugs.--
(1) OPPS.--Section 1833(t)(14) of the Social Security Act
(42 U.S.C. 1395l(t)(14)) is amended--
(A) in subparagraph (A)(iii)(II), by inserting ``,
subject to subparagraph (I)'' after ``are not
available''; and
(B) by adding at the end the following new
subparagraph:
``(I) Application of maximum add-on payment for
separately payable drugs and biologicals.--In
establishing the amount of payment under subparagraph
(A) for a specified covered outpatient drug that is
furnished as part of a covered OPD service (or group of
services) on or after January 1, 2022, if such payment
is determined based on the average price for the year
established under section 1847A pursuant to clause
(iii)(II) of such subparagraph, the provisions of
subsection (b)(9) of section 1847A shall apply to the
amount of payment so established in the same manner as
such provisions apply to the amount of payment under
section 1847A.''.
(2) ASC.--Section 1833(i)(2)(D) of the Social Security Act
(42 U.S.C. 1395l(i)(2)(D)) is amended--
(A) by moving clause (v) 6 ems to the left;
(B) by redesignating clause (vi) as clause (vii);
and
(C) by inserting after clause (v) the following new
clause:
``(vi) If there is a separate payment under the system described in
clause (i) for a drug or biological furnished on or after January 1,
2022, the provisions of subsection (t)(14)(I) shall apply to the
establishment of the amount of payment for the drug or biological under
such system in the same manner in which such provisions apply to the
establishment of the amount of payment under subsection (t)(14)(A).''.
SEC. 110. TREATMENT OF DRUG ADMINISTRATION SERVICES FURNISHED BY
CERTAIN EXCEPTED OFF-CAMPUS OUTPATIENT DEPARTMENTS OF A
PROVIDER.
Section 1833(t)(16) of the Social Security Act (42 U.S.C.
1395l(t)(16)) is amended by adding at the end the following new
subparagraph:
``(G) Special payment rule for drug administration
services furnished by an excepted department of a
provider.--
``(i) In general.--In the case of a covered
OPD service that is a drug administration
service (as defined by the Secretary) furnished
by a department of a provider described in
clause (ii) or (iv) of paragraph (21)(B), the
payment amount for such service furnished on or
after January 1, 2022, shall be the same
payment amount (as determined in paragraph
(21)(C)) that would apply if the drug
administration service was furnished by an off-
campus outpatient department of a provider (as
defined in paragraph (21)(B)).
``(ii) Application without regard to budget
neutrality.--The reductions made under this
subparagraph--
``(I) shall not be considered an
adjustment under paragraph (2)(E); and
``(II) shall not be implemented in
a budget neutral manner.''.
SEC. 111. GAO STUDY AND REPORT ON AVERAGE SALES PRICE.
(a) Study.--
(1) In general.--The Comptroller General of the United
States (in this section referred to as the ``Comptroller
General'') shall conduct a study on spending for applicable
drugs under part B of title XVIII of the Social Security Act.
(2) Applicable drugs defined.--In this section, the term
``applicable drugs'' means drugs and biologicals--
(A) for which reimbursement under such part B is
based on the average sales price of the drug or
biological; and
(B) that account for the largest percentage of
total spending on drugs and biologicals under such part
B (as determined by the Comptroller General, but in no
case less that 25 drugs or biologicals).
(3) Requirements.--The study under paragraph (1) shall
include an analysis of the following:
(A) The extent to which each applicable drug is
paid for--
(i) under such part B for Medicare
beneficiaries; or
(ii) by private payers in the commercial
market.
(B) Any change in Medicare spending or Medicare
beneficiary cost-sharing that would occur if the
average sales price of an applicable drug was based
solely on payments by private payers in the commercial
market.
(C) The extent to which drug manufacturers provide
rebates, discounts, or other price concessions to
private payers in the commercial market for applicable
drugs, which the manufacturer includes in its average
sales price calculation, for--
(i) formulary placement;
(ii) utilization management considerations;
or
(iii) other purposes.
(D) Barriers to drug manufacturers providing such
price concessions for applicable drugs.
(E) Other areas determined appropriate by the
Comptroller General.
(b) Report.--Not later than 2 years after the date of the enactment
of this Act, the Comptroller General shall submit to Congress a report
on the study conducted under subsection (a), together with
recommendations for such legislation and administrative action as the
Secretary determines appropriate.
SEC. 112. AUTHORITY TO USE ALTERNATIVE PAYMENT FOR DRUGS AND
BIOLOGICALS TO PREVENT POTENTIAL DRUG SHORTAGES.
(a) In General.--Section 1847A(e) of the Social Security Act (42
U.S.C. 1395w-3a(e)) is amended--
(1) by striking ``Payment in Response to Public Health
Emergency.--In the case'' and inserting ``Payments.--
``(1) In response to public health emergency.--In the
case''; and
(2) by adding at the end the following new paragraph:
``(2) Preventing potential drug shortages.--
``(A) In general.--In the case of a drug or
biological that the Secretary determines is described
in subparagraph (B) for one or more quarters beginning
on or after January 1, 2021, the Secretary may use
wholesale acquisition cost (or other reasonable measure
of a drug or biological price) instead of the
manufacturer's average sales price for such quarters
and for subsequent quarters until the end of the
quarter in which such drug or biological is removed
from the drug shortage list under section 506E of the
Federal Food, Drug, and Cosmetic Act, or in the case of
a drug or biological described in subparagraph (B)(ii),
the date on which the Secretary determines that the
total manufacturing capacity or the total number of
manufacturers of such drug or biological is sufficient
to mitigate a potential shortage of the drug or
biological.
``(B) Drug or biological described.--For purposes
of subparagraph (A), a drug or biological described in
this subparagraph is a drug or biological--
``(i) that is listed on the drug shortage
list maintained by the Food and Drug
Administration pursuant to section 506E of the
Federal Food, Drug, and Cosmetic Act, and with
respect to which any manufacturer of such drug
or biological notifies the Secretary of a
permanent discontinuance or an interruption
that is likely to lead to a meaningful
disruption in the manufacturer's supply of that
drug pursuant to section 506C(a) of such Act;
or
``(ii) that--
``(I) is described in section
506C(a) of such Act;
``(II) was listed on the drug
shortage list maintained by the Food
and Drug Administration pursuant to
section 506E of such Act within the
preceding 5 years; and
``(III) for which the total
manufacturing capacity of all
manufacturers with an approved
application for such drug or biological
that is currently marketed or total
number of manufacturers with an
approved application for such drug or
biological that is currently marketed
declines during a 6-month period, as
determined by the Secretary.
``(C) Provision of additional information.--For
each quarter in which the amount of payment for a drug
or biological described in subparagraph (B) pursuant to
subparagraph (A) exceeds the amount of payment for the
drug or biological otherwise applicable under this
section, each manufacturer of such drug or biological
shall provide to the Secretary information related to
the potential cause or causes of the shortage and the
expected duration of the shortage with respect to such
drug.''.
(b) Tracking Shortage Drugs Through Claims.--The Secretary of
Health and Human Services (referred to in this section as the
``Secretary'') shall establish a mechanism (such as a modifier) for
purposes of tracking utilization under title XVIII of the Social
Security Act (42 U.S.C. 1395 et seq.) of drugs and biologicals listed
on the drug shortage list maintained by the Food and Drug
Administration pursuant to section 506E of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 356e).
(c) HHS Report and Recommendations.--
(1) In general.--Not later than 18 months after the date of
the enactment of this Act, the Secretary shall submit to
Congress a report on shortages of drugs within the Medicare
program under title XVIII of the Social Security Act (42 U.S.C.
1395 et seq.). The report shall include--
(A) an analysis of--
(i) the effect of drug shortages on
Medicare beneficiary access, quality, safety,
and out-of-pocket costs;
(ii) the effect of drug shortages on health
providers, including hospitals and physicians,
across the Medicare program;
(iii) the current role of the Centers for
Medicare & Medicaid Services (CMS) in
addressing drug shortages, including CMS's
working relationship and communication with
other Federal agencies and stakeholders;
(iv) the role of all actors in the drug
supply chain (including drug manufacturers,
distributors, wholesalers, secondary
wholesalers, group purchasing organizations,
hospitals, and physicians) on drug shortages
within the Medicare program; and
(v) payment structures and incentives under
parts A, B, C, and D of the Medicare program
and their effect, if any, on drug shortages;
and
(B) relevant findings and recommendations to
Congress.
(2) Public availability.--The report under this subsection
shall be made available to the public.
(3) Consultation.--The Secretary shall consult with the
drug shortage task force authorized under section 506D(a)(1)(A)
of the Federal Food, Drug, and Cosmetic Act (21 U.S.C.
356d(a)(1)(A)) in preparing the report under this subsection,
as appropriate.
Subtitle B--Part D
SEC. 121. 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 2023
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 2023 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 2023,'' after ``paragraph (4),''; and
(ii) in clause (ii)(III), by striking ``and
each subsequent year'' and inserting ``, 2021,
and 2022''; and
(C) in subparagraph (D)--
(i) in clause (i)--
(I) in the matter preceding
subclause (I), by inserting ``for a
year preceding 2023,'' after
``paragraph (4),''; and
(II) in subclause (I)(bb), by
striking ``a year after 2018'' and
inserting ``each of years 2018 through
2022''; and
(ii) in clause (ii)(V), by striking ``2019
and each subsequent year'' and inserting ``each
of years 2019 through 2022'';
(2) in paragraph (3)(A)--
(A) in the matter preceding clause (i), by
inserting ``for a year preceding 2023,'' after ``and
(4),''; and
(B) in clause (ii), by striking ``for a subsequent
year'' and inserting ``for each of years 2007 through
2022'';
(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 2023,
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 2023 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 2022 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 2022''; 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 2023, 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 2023
for amounts''; and
(D) in subparagraph (E), by striking ``In
applying'' and inserting ``For each of 2011 through
2022, 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 2023, 25
percent; and
``(II) for 2023 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 2023, 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 2023 and each subsequent year, the sum
of--
``(i) an amount equal to the applicable
percentage specified in paragraph (5)(A) of
such allowable reinsurance costs attributable
to that portion of gross prescription drug
costs as specified in paragraph (3) incurred in
the coverage year after such individual has
incurred costs that exceed the annual out-of-
pocket threshold specified in section 1860D-
2(b)(4)(B) with respect to applicable drugs (as
defined in section 1860D-14B(g)(2)); and
``(ii) an amount equal to the applicable
percentage specified in paragraph (5)(B) of
allowable reinsurance costs attributable to
that portion of gross prescription drug costs
as specified in paragraph (3) incurred in the
coverage year after such individual has
incurred costs that exceed the annual out-of-
pocket threshold specified in section 1860D-
2(b)(4)(B) with respect to covered part D drugs
that are not applicable drugs (as so
defined).''; and
(2) by adding at the end the following new paragraph:
``(5) Applicable percentage specified.--For purposes of
paragraph (1)(B), the applicable percentage specified in this
paragraph is--
``(A) with respect to applicable drugs (as defined
in section 1860D-14B(g)(2))--
``(i) for 2023, 60 percent;
``(ii) for 2024, 40 percent; and
``(iii) for 2025 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 2023, 80 percent;
``(ii) for 2024, 60 percent; and
``(iii) for 2025 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,
2022, 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, 2023.
``(B) Provision of discounted prices at the point-
of-sale.--The discounted prices described in
subparagraph (A) shall be provided to the applicable
beneficiary at the pharmacy or by the mail order
service at the point-of-sale of an applicable drug.
``(2) Provision of appropriate data.--Each manufacturer
with an agreement in effect under this section shall collect
and have available appropriate data, as determined by the
Secretary, to ensure that it can demonstrate to the Secretary
compliance with the requirements under the program.
``(3) Compliance with requirements for administration of
program.--Each manufacturer with an agreement in effect under
this section shall comply with requirements imposed by the
Secretary or a third party with a contract under subsection
(d)(3), as applicable, for purposes of administering the
program, including any determination under subparagraph (A) of
subsection (c)(1) or procedures established under such
subsection (c)(1).
``(4) Length of agreement.--
``(A) In general.--An agreement under this section
shall be effective for an initial period of not less
than 12 months and shall be automatically renewed for a
period of not less than 1 year unless terminated under
subparagraph (B).
``(B) Termination.--
``(i) By the secretary.--The Secretary may
provide for termination of an agreement under
this section for a knowing and willful
violation of the requirements of the agreement
or other good cause shown. Such termination
shall not be effective earlier than 30 days
after the date of notice to the manufacturer of
such termination. The Secretary shall provide,
upon request, a manufacturer with a hearing
concerning such a termination, and such hearing
shall take place prior to the effective date of
the termination with sufficient time for such
effective date to be repealed if the Secretary
determines appropriate.
``(ii) By a manufacturer.--A manufacturer
may terminate an agreement under this section
for any reason. Any such termination shall be
effective, with respect to a plan year--
``(I) if the termination occurs
before January 30 of a plan year, as of
the day after the end of the plan year;
and
``(II) if the termination occurs on
or after January 30 of a plan year, as
of the day after the end of the
succeeding plan year.
``(iii) Effectiveness of termination.--Any
termination under this subparagraph shall not
affect discounts for applicable drugs of the
manufacturer that are due under the agreement
before the effective date of its termination.
``(iv) Notice to third party.--The
Secretary shall provide notice of such
termination to a third party with a contract
under subsection (d)(3) within not less than 30
days before the effective date of such
termination.
``(5) Effective date of agreement.--An agreement under this
section shall take effect on a date determined appropriate by
the Secretary, which may be at the start of a calendar quarter.
``(c) Duties Described.--The duties described in this subsection
are the following:
``(1) Administration of program.--Administering the
program, including--
``(A) the determination of the amount of the
discounted price of an applicable drug of a
manufacturer;
``(B) the establishment of procedures under which
discounted prices are provided to applicable
beneficiaries at pharmacies or by mail order service at
the point-of-sale of an applicable drug;
``(C) the establishment of procedures to ensure
that, not later than the applicable number of calendar
days after the dispensing of an applicable drug by a
pharmacy or mail order service, the pharmacy or mail
order service is reimbursed for an amount equal to the
difference between--
``(i) the negotiated price of the
applicable drug; and
``(ii) the discounted price of the
applicable drug;
``(D) the establishment of procedures to ensure
that the discounted price for an applicable drug under
this section is applied before any coverage or
financial assistance under other health benefit plans
or programs that provide coverage or financial
assistance for the purchase or provision of
prescription drug coverage on behalf of applicable
beneficiaries as the Secretary may specify; and
``(E) providing a reasonable dispute resolution
mechanism to resolve disagreements between
manufacturers, applicable beneficiaries, and the third
party with a contract under subsection (d)(3).
``(2) Monitoring compliance.--
``(A) In general.--The Secretary shall monitor
compliance by a manufacturer with the terms of an
agreement under this section.
``(B) Notification.--If a third party with a
contract under subsection (d)(3) determines that the
manufacturer is not in compliance with such agreement,
the third party shall notify the Secretary of such
noncompliance for appropriate enforcement under
subsection (e).
``(3) Collection of data from prescription drug plans and
ma-pd plans.--The Secretary may collect appropriate data from
prescription drug plans and MA-PD plans in a timeframe that
allows for discounted prices to be provided for applicable
drugs under this section.
``(d) Administration.--
``(1) In general.--Subject to paragraph (2), the Secretary
shall provide for the implementation of this section, including
the performance of the duties described in subsection (c).
``(2) Limitation.--In providing for the implementation of
this section, the Secretary shall not receive or distribute any
funds of a manufacturer under the program.
``(3) Contract with third parties.--The Secretary shall
enter into a contract with 1 or more third parties to
administer the requirements established by the Secretary in
order to carry out this section. At a minimum, the contract
with a third party under the preceding sentence shall require
that the third party--
``(A) receive and transmit information between the
Secretary, manufacturers, and other individuals or
entities the Secretary determines appropriate;
``(B) receive, distribute, or facilitate the
distribution of funds of manufacturers to appropriate
individuals or entities in order to meet the
obligations of manufacturers under agreements under
this section;
``(C) provide adequate and timely information to
manufacturers, consistent with the agreement with the
manufacturer under this section, as necessary for the
manufacturer to fulfill its obligations under this
section; and
``(D) permit manufacturers to conduct periodic
audits, directly or through contracts, of the data and
information used by the third party to determine
discounts for applicable drugs of the manufacturer
under the program.
``(4) Performance requirements.--The Secretary shall
establish performance requirements for a third party with a
contract under paragraph (3) and safeguards to protect the
independence and integrity of the activities carried out by the
third party under the program under this section.
``(5) Administration.--Chapter 35 of title 44, United
States Code, shall not apply to the program under this section.
``(6) Funding.--For purposes of carrying out this section,
the Secretary shall provide for the transfer, from the Federal
Supplementary Medical Insurance Trust Fund under section 1841
to the Centers for Medicare & Medicaid Services Program
Management Account, of $4,000,000 for each of fiscal years 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) for such year.
``(2) Applicable drug.--The term `applicable drug' means,
with respect to an applicable beneficiary, a covered part D
drug--
``(A) approved under a new drug application under
section 505(c) of the Federal Food, Drug, and Cosmetic
Act or, in the case of a biologic product, licensed
under section 351 of the Public Health Service Act
(including a product licensed under subsection (k) of
such section 351); and
``(B)(i) if the PDP sponsor of the prescription
drug plan or the MA organization offering the MA-PD
plan uses a formulary, which is on the formulary of the
prescription drug plan or MA-PD plan that the
applicable beneficiary is enrolled in;
``(ii) if the PDP sponsor of the prescription drug
plan or the MA organization offering the MA-PD plan
does not use a formulary, for which benefits are
available under the prescription drug plan or MA-PD
plan that the applicable beneficiary is enrolled in; or
``(iii) is provided through an exception or appeal.
``(3) Applicable number of calendar days.--The term
`applicable number of calendar days' means--
``(A) with respect to claims for reimbursement
submitted electronically, 14 days; and
``(B) with respect to claims for reimbursement
submitted otherwise, 30 days.
``(4) Discounted price.--
``(A) In general.--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) for the year, 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) for the year, 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) for the year and below the annual
out-of-pocket threshold specified in section
1860D-2(b)(4)(B) for the year; 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, 2023, 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, 2023, with respect to applicable drugs dispensed
prior to such date.''.
(3) Inclusion of actuarial value of manufacturer discounts
in bids.--Section 1860D-11 of the Social Security Act (42
U.S.C. 1395w-111) is amended--
(A) in subsection (b)(2)(C)(iii)--
(i) by striking ``assumptions regarding the
reinsurance'' and inserting ``assumptions
regarding--
``(I) the reinsurance''; and
(ii) by adding at the end the following:
``(II) for 2023 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 2023 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 Prescription Drug Pricing Reduction
Act of 2020.''.
(g) Conditions for Coverage of Drugs Under This Part.--Section
1860D-43 of the Social Security Act (42 U.S.C. 1395w-153) is amended--
(1) in subsection (a)--
(A) in paragraph (2), by striking ``and'' at the
end;
(B) in paragraph (3), by striking the period at the
end and inserting a semicolon; and
(C) by adding at the end the following new
paragraphs:
``(4) participate in the manufacturer discount program
under section 1860D-14B;
``(5) have entered into and have in effect an agreement
described in subsection (b) of such section 1860D-14B with the
Secretary; and
``(6) have entered into and have in effect, under terms and
conditions specified by the Secretary, a contract with a third
party that the Secretary has entered into a contract with under
subsection (d)(3) of such section 1860D-14B.'';
(2) by striking subsection (b) and inserting the following:
``(b) Effective Date.--Paragraphs (1) through (3) of subsection (a)
shall apply to covered part D drugs dispensed under this part on or
after January 1, 2011, and before January 1, 2023, and paragraphs (4)
through (6) of such subsection shall apply to covered part D drugs
dispensed on or after January 1, 2023.''; and
(3) in subsection (c), by striking paragraph (2) and
inserting the following:
``(2) the Secretary determines that in the period beginning
on January 1, 2011, and ending on December 31, 2011 (with
respect to paragraphs (1) through (3) of subsection (a)), or
the period beginning on January 1, 2023, and ending December
31, 2023 (with respect to paragraphs (4) through (6) of such
subsection), there were extenuating circumstances.''.
(h) Conforming Amendments.--
(1) Section 1860D-2 of the Social Security Act (42 U.S.C.
1395w-102) is amended--
(A) in subsection (a)(2)(A)(i)(I), by striking ``,
or an increase in the initial'' and inserting ``or for
a year preceding 2023 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
2023 or the annual out-of-pocket threshold
specified in subsection (b)(4)(B) for the year
for 2023 and each subsequent year'' after
``subsection (b)(3) for the year'' each place
it appears; and
(C) in subsection (d)(1)(A), by striking ``or an
initial'' and inserting ``or for a year preceding 2023
an initial''.
(2) Section 1860D-4(a)(4)(B)(i) of the Social Security Act
(42 U.S.C. 1395w-104(a)(4)(B)(i)) is amended by striking ``the
initial'' and inserting ``for a year preceding 2023, 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 2023, the continuation'';
(ii) in subparagraph (D)(iii), by striking
``1860D-2(b)(4)(A)(i)(I)'' and inserting
``1860D-2(b)(4)(A)(i)(I)(aa)''; and
(iii) in subparagraph (E), by striking
``The elimination'' and inserting ``For a year
preceding 2023, the elimination''; and
(B) in paragraph (2)--
(i) in subparagraph (C), by striking ``The
continuation'' and inserting ``For a year
preceding 2023, the continuation''; and
(ii) in subparagraph (E)--
(I) by inserting ``for a year
preceding 2023,'' 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 2023, 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 2023 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 2023'' after
``1860D-2(b)(3)''; and
(B) by inserting ``for such year'' before the
period.
(i) Effective Date.--The amendments made by this section shall
apply to plan year 2023 and subsequent plan years.
SEC. 121A. MAXIMUM MONTHLY CAP ON COST-SHARING PAYMENTS UNDER
PRESCRIPTION DRUG PLANS AND MA-PD PLANS.
(a) In General.--Section 1860D-2(b) of the Social Security Act (42
U.S.C. 1395w-102(b)), as amended by section 121, is amended--
(1) in paragraph (2)--
(A) in subparagraph (A), by striking ``and (D)''
and inserting ``, (D), and (E)''; and
(B) by adding at the end the following new
subparagraph:
``(E) Maximum monthly cap on cost-sharing
payments.--
``(i) In general.--For plan years beginning
on or after January 1, 2023, the Secretary
shall, through notice and comment rulemaking,
establish a process under which each PDP
sponsor offering a prescription drug plan and
each MA organization offering an MA-PD plan
shall provide to any enrollee, including an
enrollee who is a subsidy eligible individual
(as defined in paragraph (3) of section 1860D-
14(a)), the option to elect with respect to a
plan year to have their monthly cost-sharing
payments under the plan capped in accordance
with this subparagraph.
``(ii) Determination of maximum monthly
cap.--For each month in the plan year after an
enrollee in a prescription drug plan or an MA-
PD plan has made an election pursuant to clause
(i), the PDP sponsor or MA organization shall
determine a maximum monthly cap (as defined in
clause (iv)) for such enrollee.
``(iii) Beneficiary monthly payments.--With
respect to an enrollee who has made an election
pursuant to clause (i), for each month
described in clause (ii), the PDP sponsor or MA
organization shall bill such enrollee an amount
(not to exceed the maximum monthly cap) for the
out-of-pocket costs of such enrollee in such
month.
``(iv) Maximum monthly cap defined.--In
this subparagraph, the term `maximum monthly
cap' means, with respect to an enrollee--
``(I) for the first month in which
this subparagraph applies, an amount
determined by calculating--
``(aa) the annual out-of-
pocket threshold specified in
paragraph (4)(B) minus the
incurred costs of the enrollee
as described in paragraph
(4)(C); divided by
``(bb) the number of months
remaining in the plan year; and
``(II) for a subsequent month, an
amount determined by calculating--
``(aa) the sum of any
remaining out-of-pocket costs
owed by the enrollee from a
previous month that have not
yet been billed to the enrollee
and any additional costs
incurred by the enrollee;
divided by
``(bb) the number of months
remaining in the plan year.
``(v) Additional requirements.--The
following requirements shall apply with respect
to the option to make an election pursuant to
clause (i) under this subparagraph:
``(I) Secretarial
responsibilities.--The Secretary shall
provide information to part D eligible
individuals on the option to make such
election through educational materials,
including through the notices provided
under section 1804(a).
``(II) Timing of election.--An
enrollee in a prescription drug plan or
an MA-PD plan may make such an
election--
``(aa) prior to the
beginning of the plan year; or
``(bb) in any month during
the plan year.
``(III) PDP sponsor and ma
organization responsibilities.--Each
PDP sponsor offering a prescription
drug plan or MA organization offering
an MA-PD plan--
``(aa) may not limit the
option for an enrollee to make
such an election to certain
covered part D drugs;
``(bb) shall, prior to the
plan year, notify prospective
enrollees of the option to make
such an election in promotional
materials;
``(cc) shall include
information on such option in
enrollee educational materials;
``(dd) shall have in place
a mechanism to notify a
pharmacy during the plan year
when an enrollee incurs out-of-
pocket costs with respect to
covered part D drugs that make
it likely the enrollee may
benefit from making such an
election;
``(ee) shall provide that a
pharmacy, after receiving a
notification described in item
(dd) with respect to an
enrollee, informs the enrollee
of such notification;
``(ff) shall ensure that
such an election by an enrollee
has no effect on the amount
paid to pharmacies (or the
timing of such payments) with
respect to covered part D drugs
dispensed to the enrollee; and
``(gg) shall have in place
a financial reconciliation
process to correct inaccuracies
in payments made by an enrollee
under this subparagraph with
respect to covered part D drugs
during the plan year.
``(IV) Failure to pay amount
billed.--If an enrollee fails to pay
the amount billed for a month as
required under this subparagraph, the
election of the enrollee pursuant to
clause (i) shall be terminated and
enrollee shall pay the cost-sharing
otherwise applicable for any covered
part D drugs subsequently dispensed to
the enrollee up to the annual out-of-
pocket threshold specified in paragraph
(4)(B).
``(V) Clarification regarding past
due amounts.--Nothing in this
subparagraph shall be construed as
prohibiting a PDP sponsor or an MA
organization from billing an enrollee
for an amount owed under this
subparagraph.
``(VI) Treatment of unsettled
balances.--Any unsettled balances with
respect to amounts owed under this
subparagraph shall be treated as plan
losses and the Secretary shall not be
liable for any such balances outside of
those assumed as losses estimated in
plan bids.''; and
(2) in paragraph (4)--
(A) in subparagraph (C), by striking ``and subject
to subparagraph (F)'' and inserting ``and subject to
subparagraphs (F) and (G)''; and
(B) by adding at the end the following new
subparagraph:
``(G) Inclusion of costs paid under maximum monthly
cap option.--In applying subparagraph (A), with respect
to an enrollee who has made an election pursuant to
clause (i) of paragraph (2)(E), costs shall be treated
as incurred if such costs are paid by a PDP sponsor or
an MA organization under the process provided under
such paragraph.''.
(b) Application to Alternative Prescription Drug Coverage.--Section
1860D-2(c) of the Social Security Act (42 U.S.C. 1395w-102(c)) is
amended by adding at the end the following new paragraph:
``(4) Same maximum monthly cap on cost-sharing.--For plan
years beginning on or after January 1, 2023, the maximum
monthly cap on cost-sharing payments under the process provided
under subsection (b)(2)(E) shall apply to such coverage.''.
SEC. 121B. REQUIRING PHARMACY-NEGOTIATED PRICE CONCESSIONS, PAYMENT,
AND FEES TO BE INCLUDED IN NEGOTIATED PRICES AT THE
POINT-OF-SALE UNDER PART D OF THE MEDICARE PROGRAM.
Section 1860D-2(d)(1)(B) of the Social Security Act (42 U.S.C.
1395w-102(d)(1)(B)) is amended--
(1) by striking ``prices.--For purposes'' and inserting
``prices.--
``(i) In general.--For purposes''; and
(2) by adding at the end the following new clause:
``(ii) Prices negotiated with pharmacy at
point-of-sale.--For plan years beginning on or
after January 1, 2022, a negotiated price for a
covered part D drug described in clause (i)
shall be the approximate lowest possible
reimbursement for such drug negotiated with the
pharmacy dispensing such drug, and shall
include all contingent and noncontingent price
concessions, payments, and fees negotiated with
such pharmacy, but shall not include positive
incentive payments paid or to be paid to such
pharmacy. Such negotiated price shall be
provided at the point-of-sale of such drug.''.
SEC. 122. PROVIDING THE MEDICARE PAYMENT ADVISORY COMMISSION AND
MEDICAID AND CHIP PAYMENT AND ACCESS COMMISSION WITH
ACCESS TO CERTAIN DRUG PAYMENT INFORMATION, INCLUDING
CERTAIN REBATE INFORMATION.
(a) Access to Certain Part D Payment Data.--Section 1860D-15(f) of
the Social Security Act (42 U.S.C. 1395w-115(f)) is amended--
(1) in paragraph (2)--
(A) in subparagraph (A)(ii), by striking ``and'' at
the end;
(B) in subparagraph (B), by striking the period at
the end and inserting ``; and''; and
(C) by inserting at the end the following new
subparagraph:
``(C) by the Executive Director of the Medicare
Payment Advisory Commission for purposes of monitoring,
making recommendations, and analysis of the program
under this title and by the Executive Director of the
Medicaid and CHIP Payment and Access Commission for
purposes of monitoring, making recommendations, and
analysis of the Medicaid program established under
title XIX and the Children's Health Insurance Program
established under title XXI.''; and
(2) by adding at the end the following new paragraph:
``(3) Additional restrictions on disclosure of
information.--The Executive Directors described in paragraph
(2)(C) shall not disclose any of the following information
disclosed to such Executive Directors or obtained by such
Executive Directors pursuant to such paragraph, with respect to
a prescription drug plan offered by a PDP sponsor or an MA-PD
plan offered by an MA organization:
``(A) The specific amounts or the identity of the
source of any rebates, price concessions, or other
forms of direct or indirect remuneration under such
prescription drug plan or such MA-PD plan.
``(B) Information submitted with the bid submitted
under section 1860D-11 by such PDP sponsor or section
1854 by such MA organization.
``(C) In the case of such information from
prescription drug event records, in a form that would
not be permitted under section 423.505(m) of title 42,
Code of Federal Regulations, or any successor
regulation, if made by the Centers for Medicare &
Medicaid Services.''.
(b) Access to Certain Rebate and Payment Data Under Medicare and
Medicaid.--Section 1927(b)(3)(D) of the Social Security Act (42 U.S.C.
1396r-8(b)(3)(D)) is amended--
(1) in the matter before clause (i), by striking
``subsection (a)(6)(A)(ii)'' and inserting ``subsection
(a)(6)(A)'';
(2) in clause (v), by striking ``and'' at the end;
(3) in clause (vi), by striking the period at the end and
inserting ``, and'';
(4) by inserting after clause (vi) the following new
clause:
``(vii) to permit the Executive Director of
the Medicare Payment Advisory Commission and
the Executive Director of the Medicaid and CHIP
Payment and Access Commission to review the
information provided.'';
(5) in the matter at the end, by striking ``1860D-
4(c)(2)(E)'' and inserting ``1860D-4(c)(2)(G)''; and
(6) by adding at the end the following new sentence: ``Any
information disclosed to the Executive Director of the Medicare
Payment Advisory Commission or the Executive Director of the
Medicaid and CHIP Payment and Access Commission pursuant to
this subparagraph shall not be disclosed by either such
Executive Director in a form which discloses the identity of a
specific manufacturer or wholesaler or prices charged for drugs
by such manufacturer or wholesaler.''.
SEC. 123. PUBLIC DISCLOSURE OF DRUG DISCOUNTS AND OTHER PHARMACY
BENEFIT MANAGER (PBM) PROVISIONS.
(a) Public Disclosure of Drug Discounts.--
(1) In general.--Section 1150A of the Social Security Act
(42 U.S.C. 1320b-23) is amended--
(A) in subsection (c), in the matter preceding
paragraph (1), by striking ``this section'' and
inserting ``subsection (b)(1)''; and
(B) by adding at the end the following new
subsection:
``(e) Public Availability of Certain Information.--
``(1) In general.--Subject to paragraphs (2) and (3), in
order to allow patients and employers to compare PBMs' ability
to negotiate rebates, discounts, and price concessions and the
amount of such rebates, discounts, and price concessions that
are passed through to plan sponsors, not later than July 1,
2022, the Secretary shall make available on the Internet
website of the Department of Health and Human Services the
information provided to the Secretary and described in
paragraphs (2) and (3) of subsection (b) with respect to each
PBM.
``(2) Lag in data.--The information made available in a
plan year under paragraph (1) shall not include information
with respect to such plan year or the two preceding plan years.
``(3) Confidentiality.--The Secretary shall ensure that
such information is displayed in a manner that prevents the
disclosure of information on rebates, discounts, and price
concessions with respect to an individual drug or an individual
PDP sponsor, MA organization, or qualified health benefits
plan.''.
(2) Effective date.--The amendment made by paragraph (1)(A)
shall take effect on January 1, 2022.
(b) Plan Audit of Pharmacy Benefit Manager Data.--Section 1860D-
2(d)(3) of the Social Security Act (42 U.S.C. 1395w-102(d)(3)) is
amended--
(1) by striking ``Audits.--To protect'' and inserting the
following: ``Audits.--
``(A) Audits of plans by the secretary.--To
protect''; and
(2) by adding at the end the following new subparagraph:
``(B) Audits of pharmacy benefit managers by pdp
sponsors and ma organizations.--
``(i) In general.--Beginning January 1,
2022, in order to ensure that--
``(I) contracting terms between a
PDP sponsor offering a prescription
drug plan or an MA organization
offering an MA-PD plan and its
contracted or owned pharmacy benefit
manager are met; and
``(II) the PDP sponsor and MA
organization can account for the cost
of each covered part D drug net of all
direct and indirect remuneration;
the PDP sponsor or MA organization shall
conduct financial audits.
``(ii) Independent third party.--An audit
described in clause (i) shall--
``(I) be conducted by an
independent third party; and
``(II) account and reconcile flows
of funds that determine the net cost of
covered part D drugs, including direct
and indirect remuneration from drug
manufacturers and pharmacies or
provided to pharmacies.
``(iii) Rebate agreements.--A PDP sponsor
and an MA organization shall require pharmacy
benefit managers to make rebate contracts with
drug manufacturers made on their behalf
available under audits described in clause (i).
``(iv) Confidentiality agreements.--Audits
described in clause (i) shall be subject to
confidentiality agreements to prevent, except
as required under clause (vii), the
redisclosure of data transmitted under the
audit.
``(v) Frequency.--A financial audit under
clause (i) shall be conducted periodically (but
in no case less frequently than once every 2
years).
``(vi) Timeframe for pbm to provide
information.--A PDP sponsor and an MA
organization shall require that a pharmacy
benefit manager that is being audited under
clause (i) provide (as part of their
contracting agreement) the requested
information to the independent third party
conducting the audit within 45 days of the date
of the request.
``(vii) Submission of audit reports to the
secretary.--
``(I) In general.--A PDP sponsor
and an MA organization shall submit to
the Secretary the final report on any
audit conducted under clause (i) within
30 days of the PDP sponsor or MA
organization receiving the report from
the independent third party conducting
the audit.
``(II) Review.--The Secretary shall
review final reports submitted under
clause (i) to determine the extent to
which the goals specified in subclauses
(I) and (II) of subparagraph (B)(i) are
met.
``(III) Confidentiality.--
Notwithstanding any other provision of
law, information disclosed in a report
submitted under clause (i) related to
the net cost of a covered part D drug
is confidential and shall not be
disclosed by the Secretary or a
Medicare contractor.
``(viii) Notice of noncompliance.--A PDP
sponsor and an MA organization shall notify the
Secretary if any pharmacy benefit manager is
not complying with requests for access to
information required under an audit under
clause (i).
``(ix) Civil monetary penalties.--
``(I) In general.--Subject to
subclause (II), if the Secretary
determines that a PDP sponsor or an MA
organization has failed to conduct an
audit under clause (i), the Secretary
may impose a civil monetary penalty of
not more than $10,000 for each day of
such noncompliance.
``(II) Procedure.--The provisions
of section 1128A, other than
subsections (a) and (b) and the first
sentence of subsection (c)(1) of such
section, shall apply to civil monetary
penalties under this clause in the same
manner as such provisions apply to a
penalty or proceeding under section
1128A.''.
(c) Disclosure to Pharmacy of Post-Point-of-Sale Pharmacy Price
Concessions and Incentive Payments.--Section 1860D-2(d)(2) of the
Social Security Act (42 U.S.C. 1395w-102(d)(2)) is amended--
(1) by striking ``Disclosure.--A PDP sponsor'' and
inserting the following: ``Disclosure.--
``(A) To the secretary.--A PDP sponsor''; and
(2) by adding at the end the following new subparagraph:
``(B) To pharmacies.--
``(i) In general.--For plan year 2022 and
subsequent plan years, a PDP sponsor offering a
prescription drug plan and an MA organization
offering an MA-PD plan shall report any
pharmacy price concession or incentive payment
that occurs with respect to a pharmacy after
payment for covered part D drugs at the point-
of-sale, including by an intermediary
organization with which a PDP sponsor or MA
organization has contracted, to the pharmacy.
``(ii) Timing.--The reporting of price
concessions and incentive payments to a
pharmacy under clause (i) shall be made on a
periodic basis (but in no case less frequently
than annually).
``(iii) Claim level.--The reporting of
price concessions and incentive payments to a
pharmacy under clause (i) shall be at the claim
level or approximated at the claim level if the
price concession or incentive payment was
applied at a level other than at the claim
level.''.
(d) Disclosure of P&T Committee Conflicts of Interest.--
(1) In general.--Section 1860D-4(b)(3)(A) of the Social
Security Act (42 U.S.C. 1395w-104(b)(3)(A)) is amended by
adding at the end the following new clause:
``(iii) Disclosure of conflicts of
interest.--With respect to plan year 2022 and
subsequent plan years, a PDP sponsor of a
prescription drug plan and an MA organization
offering an MA-PD plan shall, as part of its
bid submission under section 1860D-11(b),
provide the Secretary with a completed
statement of financial conflicts of interest,
including with manufacturers, from each member
of any pharmacy and therapeutic committee used
by the sponsor or organization pursuant to this
paragraph.''.
(2) Inclusion in bid.--Section 1860D-11(b)(2) of the Social
Security Act (42 U.S.C. 1395w-111(b)(2)) is amended--
(A) by redesignating subparagraph (F) as
subparagraph (G); and
(B) by inserting after subparagraph (E) the
following new subparagraph:
``(F) P&T committee conflicts of interest.--The
information required to be disclosed under section
1860D-4(b)(3)(A)(iii).''.
(e) Information on Direct and Indirect Remuneration Required To Be
Included in Bid.--Section 1860D-11(b) of the Social Security Act (42
U.S.C. 1395w-111(b)) is amended--
(1) in paragraph (1), by adding at the end the following
new sentence: ``With respect to actual amounts of direct and
indirect remuneration submitted pursuant to clause (v) of
paragraph (2), such amounts shall be consistent with data
reported to the Secretary in a prior year.''; and
(2) in paragraph (2)(C)--
(A) in clause (iii), by striking ``and'' at the
end;
(B) in clause (iv), by striking the period at the
end and inserting the following: ``, and, with respect
to plan year 2022 and subsequent plan years, actual and
projected administrative expenses assumed in the bid,
categorized by the type of such expense, including
actual and projected price concessions retained by a
pharmacy benefit manager; and''; and
(C) by adding at the end the following new clause:
``(v) with respect to plan year 2022 and
subsequent plan years, actual and projected
direct and indirect remuneration, categorized
as received from each of the following:
``(I) A pharmacy.
``(II) A manufacturer.
``(III) A pharmacy benefit manager.
``(IV) Other entities, as
determined by the Secretary.''.
SEC. 124. PUBLIC DISCLOSURE OF DIRECT AND INDIRECT REMUNERATION REVIEW
AND AUDIT RESULTS.
Section 1860D-42 of the Social Security Act (42 U.S.C. 1395w-152)
is amended by adding at the end the following new subsection:
``(e) Public Disclosure of Direct and Indirect Remuneration Review
and Financial Audit Results.--
``(1) Direct and indirect remuneration review results.--
``(A) In general.--Except as provided in
subparagraph (B), in 2021 and each subsequent year, the
Secretary shall make available to the public on the
Internet website of the Centers for Medicare & Medicaid
Services information on discrepancies related to
summary and detailed direct and indirect remuneration
reports submitted by PDP sponsors pursuant to section
1860D-15 across all prescription drug plans based on
the most recent data available. Information made
available under this subparagraph shall include the
following:
``(i) The number of potential discrepancies
in summary and detailed direct and indirect
remuneration identified by the Secretary for
PDP sponsors to review.
``(ii) The extent to which PDP sponsors
resubmitted summary direct and indirect
remuneration reports to make changes for
previous contract years.
``(iii) The extent to which resubmitted
summary direct and indirect remuneration
reports resulted in an increase or decrease in
direct and indirect remuneration in a previous
contract year.
``(B) Exclusion of certain submissions in
calculation.--The Secretary shall exclude any
information in direct and indirect remuneration reports
submitted with respect to PACE programs under section
1894 (pursuant to section 1860D-21(f)) and qualified
retiree prescription drug plans (as defined in section
1860D-22(a)(2)) from the information that is made
available to the public under subparagraph (A).
``(2) Financial audit results.--In 2021 and each subsequent
year, the Secretary shall make available to the public on the
Internet website of the Centers for Medicare & Medicaid
Services data on the results of financial audits required under
section 1860D-12(b)(3)(C). Information made available under
this paragraph shall include the following:
``(A) With respect to a year, the number of PDP
sponsors that received each of the following (or
successor categories), with an indication of the number
that pertain to direct and indirect remuneration:
``(i) A notice of observations or findings.
``(ii) An unqualified audit opinion that
renders the audit closed.
``(iii) A qualified audit opinion that
requires the sponsor to submit a corrective
action plan to the Secretary.
``(iv) An adverse opinion, with a
description of the types of actions that the
Secretary takes when issuing an adverse
opinion.
``(v) A disclaimed opinion.
``(B) With respect to a year, the number of PDP
sponsors--
``(i) that reopened a previously closed
reconciliation as a result of an audit,
indicating those that pertain to direct and
indirect remuneration changes; and
``(ii) for which the Secretary recouped a
payment or made a payment as a result of a
reopening of a previously closed
reconciliation, indicating when such recoupment
or payment pertains to direct and indirect
remuneration.
``(3) No identification of specific pdp sponsors.--The
information to be made available on the Internet website of the
Centers for Medicare & Medicaid Services described in paragraph
(1) and paragraph (2) shall not identity the specific PDP
sponsor to which any determination or action pertains.
``(4) Definition of direct and indirect remuneration.--For
purposes of this subsection, the term `direct and indirect
remuneration' means direct and indirect remuneration as
described in section 423.308 of title 42, Code of Federal
Regulations, or any successor regulation.''.
SEC. 125. 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. 126. IMPROVEMENTS TO PROVISION OF PARTS A AND B CLAIMS DATA TO
PRESCRIPTION DRUG PLANS.
(a) Data Use.--
(1) In general.--Paragraph (6) of section 1860D-4(c) of the
Social Security Act (42 U.S.C. 1395w-104(c)), as added by
section 50354 of division E of the Bipartisan Budget Act of
2018 (Public Law 115-123), relating to providing prescription
drug plans with parts A and B claims data to promote the
appropriate use of medications and improve health outcomes, is
amended--
(A) in subparagraph (B)--
(i) by redesignating clauses (i), (ii), and
(iii) as subclauses (I), (II), and (III),
respectively, and moving such subclauses 2 ems
to the right;
(ii) by striking ``Purposes.--A PDP
sponsor'' and inserting Purposes--
``(i) In general.--A PDP sponsor.''; and
(iii) by adding at the end the following
new clause:
``(ii) Clarification.--The limitation on
data use under subparagraph (C)(i) shall not
apply to the extent that the PDP sponsor is
using the data provided to carry out any of the
purposes described in clause (i).''; and
(B) in subparagraph (C)(i), by striking ``To
inform'' and inserting ``Subject to subparagraph
(B)(ii), to inform''.
(2) Effective date.--The amendments made by this subsection
shall apply to plan years beginning on or after January 1,
2022.
(b) Manner of Provision.--Subparagraph (D) of such paragraph (6) is
amended--
(1) by striking ``described.--The data described in this
clause'' and inserting ``described.--
``(i) In general.--The data described in
this subparagraph''; and
(2) by adding at the end the following new clause:
``(ii) Manner of provision.--
``(I) In general.--Such data may be
provided pursuant to this paragraph in
the same manner as data under the Part
D Enhanced Medication Therapy
Management model tested under section
1115A, through Application Programming
Interface, or in another manner as
determined by the Secretary.
``(II) Implementation.--
Notwithstanding any other provision of
law, the Secretary may implement this
clause by program instruction or
otherwise.''.
(c) Technical Correction.--Such paragraph (6) is redesignated as
paragraph (7).
SEC. 127. PERMANENTLY AUTHORIZE A SUCCESSFUL PILOT ON RETROACTIVE
MEDICARE PART D COVERAGE FOR LOW-INCOME BENEFICIARIES.
Section 1860D-14 of the Social Security Act (42 U.S.C. 1395w-114)
is amended--
(1) by redesignating subsection (e) as subsection (f); and
(2) by inserting after subsection (d) the following new
subsection:
``(e) Limited Income Newly Eligible Transition (LI NET) Program.--
``(1) In general.--By not later than 2022, the Secretary
shall establish a program to provide transitional coverage for
covered part D drugs for LI NET eligible individuals in
accordance with this subsection.
``(2) LI net eligible individual defined.--For purposes of
this subsection, the term `LI NET eligible individual' means a
part D eligible individual who--
``(A) meets the requirements of clauses (ii) and
(iii) of subsection (a)(3)(A); and
``(B) has not yet enrolled in a prescription drug
plan or an MA-PD plan, or, who has so enrolled, but
with respect to whom coverage under such plan has not
yet taken effect.
``(3) Transitional coverage defined.--For purposes of this
subsection, the term `transitional coverage' means the
following with respect to a LI NET eligible individual:
``(A) All li net eligible individuals.--Immediate
access to covered part D drugs at the point of sale
during the period that begins on the first day of the
month such individual is determined to meet the
requirements of clauses (ii) and (iii) of subsection
(a)(3)(A) and ends on the date that coverage under a
prescription drug plan or an MA-PD plan takes effect
with respect to such individual.
``(B) Full-benefit dual eligibles and ssi
recipients.--In the case of a LI NET eligible
individual who is a full-benefit dual eligible
individual (as defined in section 1935(c)(6)) or
recipient of supplemental security income benefits
under title XVI, retroactive coverage (in the form of
reimbursement of the amounts that would have been paid
under this part had such individual been enrolled in a
prescription drug plan or an MA-PD plan) of covered
part D drugs purchased by such individual during the
period that--
``(i) begins on the date that is the later
of the date that--
``(I) such individual was first
eligible for a low income subsidy under
this part; or
``(II) is 36 months prior to the
date such individual enrolls in a
prescription drug plan or an MA-PD
plan; and
``(ii) ends on the date that coverage under
such plan takes effect.
``(4) Program administration.--
``(A) Single point of contact.--The Secretary
shall, to the extent feasible, administer the program
under this subsection through a contract with a single
program administrator who will provide for a single
point of contact for LI NET eligible individuals.
``(B) Benefit design.--The Secretary shall ensure
that the transitional coverage provided to LI NET
eligible individuals under this subsection--
``(i) provides access to all covered part D
drugs under an open formulary;
``(ii) permits all pharmacies determined by
the Secretary to be in good standing to process
claims under the program;
``(iii) is consistent with such
requirements as the Secretary considers
necessary to improve patient safety and ensure
appropriate dispensing of medication; and
``(iv) meets such other requirements as the
Secretary may establish.
``(5) Relationship to other provisions of this title;
waiver authority.--
``(A) In general.--The following provisions shall
not apply to the program under this subsection:
``(i) Paragraphs (1) and (3)(B) of section
1860D-4(a) (dissemination of general
information; availability of information on
changes in formulary through the internet).
``(ii) Subparagraphs (A) and (B) of section
1860D-4(b)(3) (development and revision by a
pharmacy and therapeutic committee; formulary
development).
``(iii) Paragraphs (1)(C) and (2) of
section 1860D-4(c) (medication therapy
management program).
``(B) Waiver authority.--The Secretary may waive
such other requirements of title XI and this title as
may be necessary to carry out the purposes of the
program established under this subsection.''.
SEC. 128. MEDICARE PART D REBATE BY MANUFACTURERS FOR CERTAIN DRUGS
WITH PRICES INCREASING FASTER THAN INFLATION.
(a) In General.--Subpart 2 of part D of title XVIII of the Social
Security Act is amended by inserting after section 1860D-14B, as added
by section 121, the following new section:
``SEC. 1860D-14C. MANUFACTURER REBATE FOR CERTAIN DRUGS WITH PRICES
INCREASING FASTER THAN INFLATION.
``(a) Requirements.--
``(1) Secretarial provision of information.--
``(A) In general.--Subject to subparagraph (B), not
later than 6 months after the end of each rebate period
(as defined in paragraph (4)(A)) beginning on or after
January 1, 2023, the Secretary shall, for each
rebatable covered part D drug (as defined in paragraph
(4)(B)), report to each manufacturer (as defined in
paragraph (4)(C)) of such rebatable covered part D drug
the following for the rebate period:
``(i) Information on the total number of
units (as defined in paragraph (4)(D)) of each
dosage form and strength described in paragraph
(1)(A) of subsection (b) for such rebatable
covered part D drug and rebate period.
``(ii) Information on the amount (if any)
of the excess price described in paragraph
(1)(B) of such subsection for such rebatable
covered part D drug and rebate period.
``(iii) The rebate amount specified under
such subsection for such rebatable covered part
D drug and rebate period.
``(iv) Other information determined
appropriate by the Secretary.
``(B) Transition rule for information in 2023.--
Notwithstanding subparagraph (A), the Secretary may,
for each rebatable covered part D drug, delay the
timeframe for reporting the information and rebate
amount described in clauses (i), (ii), (iii), and (iv)
of such subparagraph for rebate periods in 2023 until
not later than December 31, 2024.
``(2) Manufacturer rebate.--
``(A) In general.--Subject to subparagraph (B), for
each rebate period beginning on or after January 1,
2023, each manufacturer of a rebatable covered part D
drug shall, not later than 30 days after the date of
receipt from the Secretary of the information and
rebate amount pursuant to paragraph (1), provide to the
Secretary a rebate that is equal to the amount
specified in subsection (b) for such drug for such
rebate period.
``(B) Exemption for shortages.--The Secretary may
reduce or waive the rebate under this paragraph with
respect to a rebatable covered part D drug that is
listed on the drug shortage list maintained by the Food
and Drug Administration pursuant to section 506E of the
Federal Food, Drug, and Cosmetic Act.
``(3) Request for reconsideration.--The Secretary shall
establish procedures under which a manufacturer of a rebatable
covered part D drug may request a reconsideration by the
Secretary of the rebate amount specified under subsection (b)
for such drug and rebate period, as reported to the
manufacturer pursuant to paragraph (1). Timing for a
reconsideration shall be coordinated with the timing of
reconciliation, as described in subsection (b)(6) and as
determined appropriate by the Secretary.
``(4) Definitions.--In this section:
``(A) Rebate period.--
``(i) In general.--Subject to clause (ii),
the term `rebate period' means, with respect to
a year, each of the six month periods that
begin on January 1 and July 1 of the year.
``(ii) Initial rebate period for
subsequently approved drugs.--In the case of a
rebatable covered part D drug described in
subsection (c), the initial rebate period for
which a rebate amount is determined for such
rebatable covered part D drug pursuant to such
subsection shall be the period beginning with
the first month after the last day of the six
month period that begins on the day on which
the drug was first marketed and ending on the
last day of the first full rebate period under
clause (i) that follows the last day of such
six month period.
``(B) Rebatable covered part d drug.--The term
`rebatable covered part D drug' means a covered part D
drug 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(a) of the Public Health Service Act.
``(C) Manufacturer.--The term `manufacturer' has
the meaning given such term in section 1860D--14A(g).
``(D) Units.--The term `units' means, with respect
to a rebatable covered part D drug, the lowest common
quantity (such as the number of capsules or tablets,
milligrams of molecules, or grams) of such drug
dispensed to individuals under this part.
``(E) Price.--The term `price' means, with respect
to a rebatable covered part D drug, the wholesale
acquisition cost (as defined in section 1847A(c)(6)(B))
for such drug.
``(b) Rebate Amount.--
``(1) In general.--Subject to subsection (e)(2), the amount
of the rebate specified in this subsection for a rebate period,
with respect to each dosage form and strength of a rebatable
covered part D drug, is the amount equal to the product of--
``(A) the total number of units of such dosage form
and strength for each rebatable covered part D drug
during the rebate period; and
``(B) the amount (if any) by which--
``(i) the unit-weighted average price for
such dosage form and strength of the drug
determined under paragraph (2) for the rebate
period; exceeds
``(ii) the inflation-adjusted price for
such dosage form and strength determined under
paragraph (3) for the rebate period.
``(2) Determination of unit-weighted average price.--
``(A) In general.--The unit-weighted average price
determined under this paragraph for a rebate period,
with respect to each dosage form and strength of a
rebatable covered Part D drug, is the sum of the
products of--
``(i) the weighted average price determined
under subparagraph (B) with respect to each
package size of such dosage form and strength
dispensed during the rebate period; and
``(ii) the ratio of--
``(I) the total number of units of
such package size dispensed during the
rebate period; to
``(II) the total number of units of
such dosage form and strength of such
drug dispensed during such rebate
period.
``(B) Computation of weighted average price.--The
weighted average price, with respect to each package
size of such dosage form and strength of a rebatable
covered part D drug dispensed during a rebate period,
is the sum of the products of--
``(i) each price, as calculated for a unit
of such drug, applicable to each package size
of such dosage form and strength of such drug
during the rebate period; and
``(ii) the ratio of--
``(I) the number of days for which
each such price is applicable during
the rebate period; to
``(II) the total number of days in
such rebate period.
``(3) Determination of inflation-adjusted price.--
``(A) In general.--The inflation-adjusted price
determined under this paragraph for a rebate period,
with respect to each dosage form and strength of a
rebatable covered part D drug, is--
``(i) the benchmark unit-weighted price
determined under subparagraph (B) for the
rebate period; increased by
``(ii) the percentage by which the rebate
period CPI-U (as defined in paragraph (4)) for
the rebate period exceeds the benchmark CPI-U
(as defined in paragraph (5)).
``(B) Determination of benchmark unit-weighted
price.--The benchmark unit-weighted price determined
under this subparagraph for a rebate period, with
respect to each dosage form and strength of a rebatable
covered part D drug, is the sum of the products of--
``(i) each price, as calculated for a unit
of such drug, applicable to each package size
of such dosage form and strength of such drug
on July 1, 2019; and
``(ii) the ratio of--
``(I) the total number of units of
such package size dispensed on July 1,
2019; to
``(II) the total number of units of
such dosage form and strength dispensed
on July 1, 2019.
``(4) Benchmark cpi-u.--The term `benchmark CPI-U' means
the consumer price index for all urban consumers (United States
city average) for July 2019.
``(5) Rebate period cpi-u.--The term `rebate period CPI-U'
means, with respect to a rebate period, the consumer price
index for all urban consumers (United States city average) for
the last month of the rebate period.
``(6) Annual reconciliation of rebate amount.--The
Secretary shall, on an annual basis, conduct a one-time
reconciliation of the rebate amounts owed by a manufacturer
under this section based on any changes submitted by a PDP
sponsor of a prescription drug plan or an MA organization
offering an MA-PD plan to the number of units of a rebatable
covered part D drug dispensed during the preceding year. Such
reconciliation shall be completed not later than 6 months after
the date by which the Secretary reconciles payment for covered
part D drugs with PDP sponsors of prescription drug plans or MA
organizations offering MA-PD plans.
``(c) Treatment of Subsequently Approved Drugs.--Subject to
subsection (e)(2), in the case of a rebatable covered part D drug first
approved or licensed by the Food and Drug Administration after July 1,
2019--
``(1) subparagraph (A)(ii) of subsection (b)(3) shall be
applied as if the term `benchmark CPI-U' were defined under
subsection (b)(4) as if the reference to `July 2019' under such
subsection were a reference to `the first month after the last
day of the six month period that begins on the day on which the
drug was first marketed'; and
``(2) subsection (b)(3) shall be applied by substituting,
for the benchmark unit-weighted price otherwise determined
under subparagraph (B) of such subsection, the benchmark unit-
weighted average price determined under paragraph (3) for the
rebate period;
``(3) the benchmark unit-weighted average price determined
under this paragraph for a rebate period, with respect to each
dosage form and strength of a rebatable covered part D drug, is
the sum of the products of--
``(A) the subsequently rebatable drug weighted
average price determined under paragraph (4) with
respect to each package size of such dosage form and
strength of such drug dispensed during the six month
period that begins on the day on which the drug was
first marketed; and
``(B) the ratio of--
``(i) the total number of units of such
package size dispensed during the six month
period that begins on the day on which the drug
was first marketed; to
``(ii) the total number of units of such
dosage form and strength of such drug dispensed
during such six month period; and
``(4) the subsequently rebatable drug weighted average
price, with respect to each package size of such dosage form
and strength of such rebatable covered part D drug dispensed
during the six month period that begins on the day on which the
drug was first marketed, is the sum of the products of--
``(A) each price, as calculated for a unit of such
drug, applicable to each package size of such dosage
form and strength of such drug during the six month
period that begins on the day on which the drug was
first marketed; and
``(B) the ratio of--
``(i) the number of days for which each
such price is applicable during such six month
period; to
``(ii) the total number of days in such six
month period.
``(d) Rebate Deposits.--Amounts paid as rebates under subsection
(b) shall be deposited into the Federal Supplementary Medical Insurance
Trust Fund established under section 1841.
``(e) Administration.--
``(1) Periodic audits.--The Secretary shall permit a
manufacturer of a rebatable covered part D drug to conduct
periodic audits, directly or through contracts, of the data and
information used to determine the rebate amount for such drug
under this section.
``(2) Special rules for calculation of benchmark unit-
weighted price and benchmark-unit-weighted average price.--
``(A) Benchmark unit-weighted price.--In the case
that the benchmark unit-weighted price of a dosage form
and strength of a rebatable covered part D drug is
determined under subsection (b)(3)(B) to be $0 due to
no units of such dosage form and strength of such drug
being dispensed on July 1, 2019, the Secretary may use
a calculation, as determined appropriate by the
Secretary, to determine the benchmark-unit weighted
price for such dosage form and strength of such drug
that is different than the calculation described in
such subsection.
``(B) Benchmark unit-weighted average price.--In
the case that the benchmark unit-weighted average price
of a dosage form and strength of a rebatable covered
part D drug described under subsection (c) is
determined under paragraph (3) of such subsection to be
$0 due to no units of such dosage form and strength of
such drug being dispensed during the six month period
that begins on the day on which the drug was first
marketed, the Secretary may use a calculation, as
determined appropriate by the Secretary, to determine
the benchmark-unit weighted average price for such
dosage form and strength of such drug that is different
than the calculation described in such paragraph.
``(3) Administration.--Chapter 35 of title 44, United
States Code, shall not apply to the program under this section.
``(4) Judicial review.--There shall be no administrative or
judicial review under section 1869, section 1878, or otherwise
of the determination of the rebate amount under subsection (b),
including with respect to a subsequently approved drug pursuant
to subsection (c), including--
``(A) the determination of--
``(i) the total number of units of each
rebatable covered part D drug under subsection
(b)(1)(A);
``(ii) the unit-weighted average price
under subsection (b)(2);
``(iii) the inflation-adjusted price under
subsection (b)(3);
``(iv) the benchmark unit-weighted average
price under subsection (c)(3); and
``(v) the subsequently rebatable drug
weighted average price under subsection (c)(4);
and
``(B) the application of special rules for
calculation of benchmark unit-weighted price and
benchmark unit-weighted average price under paragraph
(2) of this subsection.
``(f) Civil Money Penalty.--
``(1) In general.--The Secretary shall impose a civil money
penalty on a manufacturer that fails to comply with the
requirements under subsection (a)(2) with respect to providing
a rebate for a rebatable covered part D drug for a rebate
period for each such failure in an amount equal to the sum of--
``(A) the rebate amount determined pursuant to
subsection (b) for such drug for such rebate period;
and
``(B) 25 percent of such amount.
``(2) Application.--The provisions of section 1128A (other
than subsections (a) and (b)) shall apply to a civil money
penalty under this subsection in the same manner as such
provisions apply to a penalty or proceeding under section
1128A(a).
``(g) Rule of Construction.--Nothing in this section shall be
construed as having any effect on--
``(1) any formulary design under section 1860D-4(b)(3); or
``(2) any discounts provided under the coverage gap
discount program under section 1860D-14A or the manufacturer
catastrophic discount program under section 1860D-14B.
``(h) Rebate Agreement.--
``(1) In general.--The Secretary shall enter into
agreements described in paragraph (2) with manufacturers.
``(2) Terms of agreement.--
``(A) In general.--A rebate agreement under this
paragraph shall require the manufacturer to provide to
the Secretary rebates required under subsection
(a)(2)(A) with respect to a rebate period.
``(B) Manufacturer provision of price and drug
product information.--Each manufacturer with an
agreement in effect under this subsection shall report
to the Secretary, with respect to each rebatable
covered part D drug of the manufacturer, at a time
specified by the Secretary--
``(i) for each calendar month under the
rebate agreement--
``(I) each wholesale acquisition
cost (as defined in section
1847A(c)(6)) applicable during the
month, applicable to each National Drug
Code for the dosage form and strength
of such rebatable covered part D drug;
and
``(II) the number of days with
respect to which each wholesale
acquisition cost reported was
applicable;
``(ii) the wholesale acquisition cost (as
so defined) applicable on July 1, 2019,
applicable to each National Drug Code for the
dosage form and strength of such rebatable
covered part D drug (or, in the case of a
rebatable covered part D drug first approved or
licensed by the Food and Drug Administration
after July 1, 2019, each wholesale acquisition
cost applicable to each National Drug Code of
each dosage form and strength of the rebatable
covered part D drug of the manufacturer during
the six month period that begins on the day on
which the drug was first marketed); and
``(iii) such other information as the
Secretary shall require.
Information reported under this subparagraph is subject
to audit by the Inspector General of the Department of
Health and Human Services.
``(3) Civil money penalties.--The provisions of
subparagraph (C) of section 1927(b)(3) shall apply with respect
to information required pursuant to paragraph (2)(B) of this
subsection and the failure to provide such information in the
same manner and to the same extent as such provisions apply
with respect to information required under subparagraph (A) of
such section 1927(b)(3) and the failure to provide such
information.
``(4) Coordination.--The Secretary may coordinate rebate
agreements required under this subsection with agreements
required under section 1860D-14B.
``(i) Funding.--
``(1) In general.--There are appropriated to the Secretary,
from the Federal Supplementary Medical Insurance Trust Fund
established under section 1841--
``(A) for each of calendar years 2020 through 2025,
$4,000,000; and
``(B) for each subsequent calendar year, such sums
as are necessary to carry out this section.
``(2) Availability.--Amounts appropriated under paragraph
(1) shall remain available until expended.''.
(b) Conforming Amendments.--
(1) Section 1860D-43 of the Social Security Act (42 U.S.C.
1395w-153), as amended by section 121(g), is amended--
(A) in subsection (a)--
(i) in paragraph (5), by striking ``and''
at the end;
(ii) in paragraph (6), by striking the
period at the end and inserting ``; and''; and
(iii) by adding at the end the following
new paragraph:
``(7) have entered into and have in effect an agreement
described in section 1860D-14C(h)(2) with the Secretary.'';
(B) in subsection (b), by striking ``(6)'' and
inserting ``(7)''; and
(C) in subsection (c), by striking ``(6)'' and
inserting ``(7)''.
(2) Section 1927(c)(1)(C)(VI) of the Social Security Act
(42 U.S.C. 1396r-8(c)(1)(C)(VI)) is amended--
(A) by striking ``or any discounts'' and inserting
``any discounts''; and
(B) by inserting ``, or any rebates under section
1860D-14C'' before the period.
SEC. 129. PROHIBITING BRANDING ON PART D BENEFIT CARDS.
(a) In General.--Section 1851(j)(2)(B) of the Social Security Act
(42 U.S.C. 1395w-21(j)(2)(B)) is amended by striking ``co-branded
network provider'' and inserting ``co-branded, co-owned, or affiliated
network provider, pharmacy, or pharmacy benefit manager''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to plan years beginning on or after January 1, 2022.
SEC. 130. REQUIRING PRESCRIPTION DRUG PLANS AND MA-PD PLANS TO REPORT
POTENTIAL FRAUD, WASTE, AND ABUSE TO THE SECRETARY OF
HHS.
Section 1860D-4 of the Social Security Act (42 U.S.C. 1395w-104),
as amended by section 125, is amended by adding at the end the
following new subsection:
``(p) Reporting Potential Fraud, Waste, and Abuse.--Beginning
January 1, 2021, the PDP sponsor of a prescription drug plan shall
report to the Secretary, as specified by the Secretary--
``(1) any substantiated or suspicious activities (as
defined by the Secretary) with respect to the program under
this part as it relates to fraud, waste, and abuse; and
``(2) any steps made by the PDP sponsor after identifying
such activities to take corrective actions.''.
SEC. 131. ESTABLISHMENT OF PHARMACY QUALITY MEASURES UNDER MEDICARE
PART D.
Section 1860D-4(c) of the Social Security Act (42 U.S.C. 1395w-
104(c)), as amended by section 126, is amended by adding at the end the
following new paragraph:
``(8) Application of pharmacy quality measures.--
``(A) In general.--A PDP sponsor that makes
incentive payments to a pharmacy or receives price
concessions paid by a pharmacy based on quality
measures shall, for the purposes of such incentive
payments or price concessions with respect to covered
part D drugs dispensed by such pharmacy, only use
measures--
``(i) established or adopted by the
Secretary under subparagraph (B), as listed
under clause (ii) of such subparagraph; and
``(ii) that are relevant to the performance
of such pharmacy with respect to areas that the
pharmacy can impact.
``(B) Standard pharmacy quality measures.--
``(i) In general.--Notwithstanding any
other provision of law, the Secretary shall
establish or adopt quality measures from one or
more multi-stakeholder, consensus organizations
to be used by a PDP sponsor for the purposes of
determining incentive payments and price
concessions described in subparagraph (A). Such
measures shall be evidence-based and focus on
pharmacy performance on patient health outcomes
and other areas, as determined by the
Secretary, that the pharmacy can impact.
``(ii) Maintenance of list.--The Secretary
shall maintain a single list of measures
established or adopted under this subparagraph.
``(C) Effective date.--The requirement under
subparagraph (A) shall take effect for plan years
beginning on January 1, 2022, or such earlier date
specified by the Secretary if the Secretary determines
there are sufficient measures established or adopted
under subparagraph (B) for the purposes of the
requirement under subparagraph (A).''.
SEC. 132. ADDITION OF NEW MEASURES BASED ON ACCESS TO BIOSIMILAR
BIOLOGICAL PRODUCTS TO THE 5-STAR RATING SYSTEM UNDER
MEDICARE ADVANTAGE.
(a) In General.--Section 1853(o)(4) of the Social Security Act (42
U.S.C. 1395w-23(o)(4)) is amended by adding at the end the following
new subparagraph:
``(E) Addition of new measures based on access to
biosimilar biological products.--
``(i) In general.--For 2026 and subsequent
years, the Secretary shall add a new set of
measures to the 5-star rating system based on
access to biosimilar biological products
covered under part B and, in the case of MA-PD
plans, such products that are covered part D
drugs. Such measures shall assess the impact a
plan's benefit structure may have on enrollees'
utilization of or ability to access biosimilar
biological products, including in comparison to
the reference biological product, and shall
include measures, as applicable, with respect
to the following:
``(I) Coverage.--Assessing whether
a biosimilar biological product is on
the plan formulary in lieu of or in
addition to the reference biological
product.
``(II) Preferencing.--Assessing
tier placement or cost-sharing for a
biosimilar biological product relative
to the reference biological product.
``(III) Utilization management
tools.--Assessing whether and how
utilization management tools are used
with respect to a biosimilar biological
product relative to the reference
biological product.
``(IV) Utilization.--Assessing the
percentage of enrollees prescribed the
biosimilar biological product and the
percentage of enrollees prescribed the
reference biological product when the
reference biological product is also on
the plan formulary.
``(ii) Definitions.--In this subparagraph,
the terms `biosimilar biological product' and
`reference biological product' have the meaning
given those terms in section 1847A(c)(6).
``(iii) Protecting patient interests.--In
developing such measures, the Secretary shall
ensure that each measure developed to address
coverage, preferencing, or utilization
management is constructed such that patients
retain access to appropriate therapeutic
options without undue administrative burden.''.
(b) Clarification Regarding Application to Prescription Drug
Plans.--To the extent the Secretary of Health and Human Services
applies the 5-star rating system under section 1853(o)(4) of the Social
Security Act (42 U.S.C. 1395w-23(o)(4)), or a similar system, to
prescription drug plans under part D of title XVIII of such Act, the
provisions of subparagraph (E) of such section, as added by subsection
(a) of this section, shall apply under the system with respect to such
plans in the same manner as such provisions apply to the 5-star rating
system under such section 1853(o)(4).
SEC. 133. FAIRNESS IN THE CALCULATION OF THE PART D PREMIUM.
(a) In General.--Section 1860D-13(a) of the Social Security Act (42
U.S.C. 1395w-113(a)) is amended--
(1) in paragraph (3)(A), by striking ``25.5 percent'' and
inserting ``the applicable percent (as specified in paragraph
(8))''; and
(2) by adding at the end the following new paragraph:
``(8) Applicable percent.--For purposes of paragraph
(3)(A), the applicable percent specified in this paragraph is--
``(A) for years prior to 2022, 25.5 percent; and
``(B) for 2022 and subsequent years, 24.5
percent.''.
(b) Conforming Amendments.--
(1) Subsidy.--Section 1860D-15(a) of the Social Security
Act (42 U.S.C. 1395w-115(a)) is amended, in the matter
preceding paragraph (1), by inserting ``(or, for 2020 and
subsequent years, 75.5 percent)'' after ``74.5 percent''.
(2) Fallback area monthly beneficiary premium.--Section
1860D-11(g)(6) of the Social Security Act (42 U.S.C. 1395w-
111(g)(6)) is amended by striking ``25.5 percent'' and
inserting ``the applicable percent (as specified in section
1860D-13(a)(8))''.
(3) Income-related monthly adjustment amount (irmaa).--
Section 1860D-13(a)(7)(B)(i)(II) of the Social Security Act (42
U.S.C. 1395w-113(a)(7)(B)(i)(II)) is amended by striking ``25.5
percent'' and inserting ``the applicable percent (as specified
in paragraph (8))''.
SEC. 134. HHS STUDY AND REPORT ON THE INFLUENCE OF PHARMACEUTICAL
MANUFACTURER THIRD-PARTY REIMBURSEMENT HUBS ON HEALTH
CARE PROVIDERS WHO PRESCRIBE THEIR DRUGS AND BIOLOGICALS.
(a) Study.--
(1) In general.--The Secretary of Health and Human Services
(in this section referred to as the ``Secretary'') shall
conduct a study on the influence of pharmaceutical manufacturer
distribution models that provide third-party reimbursement hub
services on health care providers who prescribe the
manufacturer's drugs and biologicals, including for Medicare
part D beneficiaries.
(2) Requirements.--The study under paragraph (1) shall
include an analysis of the following:
(A) The influence of pharmaceutical manufacturer
distribution models that provide third-party
reimbursement hub services to health care providers who
prescribe the manufacturer's drugs and biologicals,
including--
(i) the operations of pharmaceutical
manufacturer distribution models that provide
reimbursement hub services for health care
providers who prescribe the manufacturer's
products;
(ii) Federal laws affecting these
pharmaceutical manufacturer distribution
models; and
(iii) whether hub services could improperly
incentivize health care providers to deem a
drug or biological as medically necessary under
section 423.578 of title 42, Code of Federal
Regulations.
(B) Other areas determined appropriate by the
Secretary.
(b) Report.--Not later than July 1, 2022, the Secretary shall
submit to Congress a report on the study conducted under subsection
(a), together with recommendations for such legislation and
administrative action as the Secretary determines appropriate.
(c) Consultation.--In conducting the study under subsection (a) and
preparing the report under subsection (b), the Secretary shall consult
with the Attorney General.
Subtitle C--Miscellaneous
SEC. 141. DRUG MANUFACTURER PRICE TRANSPARENCY.
Title XI of the Social Security Act (42 U.S.C. 1301 et seq.) is
amended by inserting after section 1128K the following new section:
``SEC. 1128L. DRUG MANUFACTURER PRICE TRANSPARENCY.
``(a) In General.--
``(1) Determinations.--Beginning July 1, 2022, the
Secretary shall make determinations as to whether a drug is an
applicable drug as described in subsection (b).
``(2) Required justification.--If the Secretary determines
under paragraph (1) that an applicable drug is described in
subsection (b), the manufacturer of the applicable drug shall
submit to the Secretary the justification described in
subsection (c) in accordance with the timing described in
subsection (d).
``(b) Applicable Drug Described.--
``(1) In general.--An applicable drug is described in this
subsection if it meets any of the following at the time of the
determination:
``(A) Large increase.--The drug (per dose)--
``(i) has a wholesale acquisition cost of
at least $10; and
``(ii) had an increase in the wholesale
acquisition cost, with respect to
determinations made--
``(I) during 2020, of at least 100
percent since the date of the enactment
of this section;
``(II) during 2021, of at least 100
percent in the preceding 12 months or
of at least 150 percent in the
preceding 24 months;
``(III) during 2022, of at least
100 percent in the preceding 12 months
or of at least 200 percent in the
preceding 36 months;
``(IV) during 2023, of at least 100
percent in the preceding 12 months or
of at least 250 percent in the
preceding 48 months; or
``(V) on or after January 1, 2024,
of at least 100 percent in the
preceding 12 months or of at least 300
percent in the preceding 60 months.
``(B) High spending with increase.--The drug--
``(i) was in the top 50th percentile of net
spending under title XVIII or XIX (to the
extent data is available) during any 12-month
period in the preceding 60 months; and
``(ii) per dose, had an increase in the
wholesale acquisition cost, with respect to
determinations made--
``(I) during 2020, of at least 15
percent since the date of the enactment
of this section;
``(II) during 2021, of at least 15
percent in the preceding 12 months or
of at least 20 percent in the preceding
24 months;
``(III) during 2022, of at least 15
percent in the preceding 12 months or
of at least 30 percent in the preceding
36 months;
``(IV) during 2023, of at least 15
percent in the preceding 12 months or
of at least 40 percent in the preceding
48 months; or
``(V) on or after January 1, 2024,
of at least 15 percent in the preceding
12 months or of at least 50 percent in
the preceding 60 months.
``(C) High launch price for new drugs.--In the case
of a drug that is marketed for the first time on or
after January 1, 2020, and for which the manufacturer
has established the first wholesale acquisition cost on
or after such date, such wholesale acquisition cost for
a year's supply or a course of treatment for such drug
exceeds the gross spending for covered part D drugs at
which the annual out-of-pocket threshold under section
1860D-2(b)(4)(B) would be met for the year.
``(2) Special rules.--
``(A) Authority of secretary to substitute
percentages within a de minimis range.--For purposes of
applying paragraph (1), the Secretary may substitute
for each percentage described in subparagraph (A) or
(B) of such paragraph (other than the percentile
described subparagraph (B)(i) of such paragraph) a
percentage within a de minimis range specified by the
Secretary below the percentage so described.
``(B) Drugs with high launch prices annually report
until a therapeutic equivalent is available.--In the
case of a drug that the Secretary determines is an
applicable drug described in subparagraph (C) of
paragraph (1), such drug shall remain described in such
subparagraph (C) (and the manufacturer of such drug
shall annually report the justification under
subsection (c)(2)) until the Secretary determines that
there is a therapeutic equivalent (as defined in
section 314.3 of title 21, Code of Federal Regulations,
or any successor regulation) for such drug.
``(3) Dose.--For purposes of applying paragraph (1), the
Secretary shall establish a definition of the term `dose'.
``(c) Justification Described.--
``(1) Increase in wac.--In the case of a drug that the
Secretary determines is an applicable drug described in
subparagraph (A) or (B) of subsection (b)(1), the justification
described in this subsection is all relevant, truthful, and
nonmisleading information and supporting documentation
necessary to justify the increase in the wholesale acquisition
cost of the applicable drug of the manufacturer, as determined
appropriate by the Secretary and which may include the
following:
``(A) The individual factors that have contributed
to the increase in the wholesale acquisition cost.
``(B) An explanation of the role of each factor in
contributing to such increase.
``(C) Total expenditures of the manufacturer on--
``(i) materials and manufacturing for such
drug;
``(ii) acquiring patents and licensing for
each drug of the manufacturer; and
``(iii) costs to purchase or acquire the
drug from another company, if applicable.
``(D) The percentage of total expenditures of the
manufacturer on research and development for such drug
that was derived from Federal funds.
``(E) The total expenditures of the manufacturer on
research and development for such drug.
``(F) The total revenue and net profit generated
from the applicable drug for each calendar year since
drug approval.
``(G) The total expenditures of the manufacturer
that are associated with marketing and advertising for
the applicable drug.
``(H) Additional information specific to the
manufacturer of the applicable drug, such as--
``(i) the total revenue and net profit of
the manufacturer for the period of such
increase, as determined by the Secretary;
``(ii) metrics used to determine executive
compensation;
``(iii) any additional information related
to drug pricing decisions of the manufacturer,
such as total expenditures on--
``(I) drug research and
development; or
``(II) clinical trials on drugs
that failed to receive approval by the
Food and Drug Administration.
``(2) High launch price.--In the case of a drug that the
Secretary determines is an applicable drug described in
subparagraph (C) of subsection (b)(1), the justification
described in this subsection is all relevant, truthful, and
nonmisleading information and supporting documentation
necessary to justify the wholesale acquisition cost of the
applicable drug of the manufacturer, as determined by the
Secretary and which may include the items described in
subparagraph (C) through (H) of paragraph (1).
``(d) Timing.--
``(1) Notification.--Not later than 60 days after the date
on which the Secretary makes the determination that a drug is
an applicable drug under subsection (b), the Secretary shall
notify the manufacturer of the applicable drug of such
determination.
``(2) Submission of justification.--Not later than 180 days
after the date on which a manufacturer receives a notification
under paragraph (1), the manufacturer shall submit to the
Secretary the justification required under subsection (a).
``(3) Posting on internet website.--
``(A) In general.--Subject to subparagraph (B), not
later than 30 days after receiving the justification
under paragraph (2), the Secretary shall post on the
Internet website of the Centers for Medicare & Medicaid
Services the justification, together with a summary of
such justification that is written and formatted using
language that is easily understandable by beneficiaries
under titles XVIII and XIX.
``(B) Exclusion of proprietary information.--The
Secretary shall exclude proprietary information, such
as trade secrets and intellectual property, submitted
by the manufacturer in the justification under
paragraph (2) from the posting described in
subparagraph (A).
``(e) Exception to Requirement for Submission.--In the case of a
drug that the Secretary determines is an applicable drug described in
subparagraph (A) or (B) of subsection (b)(1), the requirement to submit
a justification under subsection (a) shall not apply where the
manufacturer, after receiving the notification under subsection (d)(1)
with respect to the applicable drug of the manufacturer, reduces the
wholesale acquisition cost of a drug so that it no longer is described
in such subparagraph (A) or (B) for at least a 4-month period, as
determined by the Secretary.
``(f) Penalties.--
``(1) Failure to submit timely justification.--If the
Secretary determines that a manufacturer has failed to submit a
justification as required under this section, including in
accordance with the timing and form required, with respect to
an applicable drug, the Secretary shall apply a civil monetary
penalty in an amount of $10,000 for each day the manufacturer
has failed to submit such justification as so required.
``(2) False information.--Any manufacturer that submits a
justification under this section and knowingly provides false
information in such justification is subject to a civil
monetary penalty in an amount not to exceed $100,000 for each
item of false information.
``(3) Application of procedures.--The provisions of section
1128A (other than subsections (a) and (b)) shall apply to a
civil monetary penalty under this subsection in the same manner
as such provisions apply to a penalty or proceeding under
section 1128A(a). Civil monetary penalties imposed under this
subsection are in addition to other penalties as may be
prescribed by law.
``(g) Definitions.--In this section:
``(1) Drug.--The term `drug' means a drug, as defined in
section 201(g) of the Federal Food, Drug, and Cosmetic Act,
that is intended for human use and subject to section 503(b)(1)
of such Act, including a product licensed under section 351 of
the Public health Service Act.
``(2) Manufacturer.--The term `manufacturer' has the
meaning given that term in section 1847A(c)(6)(A).
``(3) Wholesale acquisition cost.--The term `wholesale
acquisition cost' has the meaning given that term in section
1847A(c)(6)(B).''.
SEC. 142. STRENGTHENING AND EXPANDING PHARMACY BENEFIT MANAGERS
TRANSPARENCY REQUIREMENTS.
Section 1150A of the Social Security Act (42 U.S.C. 1320b-23), as
amended by section 123, is amended--
(1) in subsection (a)--
(A) in paragraph (1), by striking ``or'' at the
end;
(B) in paragraph (2), by striking the comma at the
end and inserting ``; or''; and
(C) by inserting after paragraph (2) the following
new paragraph:
``(3) a State plan under title XIX, including a managed
care entity (as defined in section 1932(a)(1)(B)),'';
(2) in subsection (b)--
(A) in paragraph (2)--
(i) by striking ``(excluding bona fide''
and all that follows through ``patient
education programs))''; and
(ii) by striking ``aggregate amount of''
and inserting ``aggregate amount and percentage
of'';
(B) in paragraph (3), by striking ``aggregate
amount of'' and inserting ``aggregate amount and
percentage (defined as a share of gross drug costs)
of''; and
(C) by adding at the end the following new
paragraph:
``(4) The aggregate amount of bona fide service fees (which
include distribution service fees, inventory management fees,
product stocking allowances, and fees associated with
administrative services agreements and patient care programs
(such as medication compliance programs and patient education
programs)) the PBM received from--
``(A) PDP sponsors;
``(B) qualified health benefit plans;
``(C) managed care entities (as defined in section
1932(a)(1)(b)); and
``(D) drug manufacturers.'';
(3) in subsection (c), by adding at the end the following
new paragraphs:
``(5) To States to carry out their administration and
oversight of the State plan under title XIX.
``(6) To the Federal Trade Commission to carry out section
5(a) of the Federal Trade Commission Act (15 U.S.C. 45a) and
any other relevant consumer protection or antitrust authorities
enforced by such Commission, including reviewing proposed
mergers in the prescription drug sector.
``(7) To assist the Department of Justice to carry out its
antitrust authorities, including reviewing proposed mergers in
the prescription drug sector.''; and
(4) by adding at the end the following new subsection:
``(f) Annual OIG Evaluation and Report.--
``(1) Analysis.--The Inspector General of the Department of
Health and Human Services shall conduct an annual evaluation of
the information provided to the Secretary under this section.
Such evaluation shall include an analysis of--
``(A) PBM rebates;
``(B) administrative fees;
``(C) the difference between what plans pay PBMs
and what PBMs pay pharmacies;
``(D) generic dispensing rates; and
``(E) other areas determined appropriate by the
Inspector General.
``(2) Report.--Not later than July 1, 2021, and annually
thereafter, the Inspector General of the Department of Health
and Human Services shall submit to Congress a report containing
the results of the evaluation conducted under paragraph (1),
together with recommendations for such legislation and
administrative action as the Inspector General determines
appropriate. Such report shall not disclose the identity of a
specific PBM, plan, or price charged for a drug.''.
SEC. 143. PRESCRIPTION DRUG PRICING DASHBOARDS.
Part A of title XI of the Social Security Act is amended by adding
at the end the following new section:
``SEC. 1150C. PRESCRIPTION DRUG PRICING DASHBOARDS.
``(a) In General.--Beginning not later than January 1, 2021, the
Secretary shall establish, and annually update, internet website-based
dashboards, through which beneficiaries, clinicians, researchers, and
the public can review information on spending for, and utilization of,
prescription drugs and biologicals (and related supplies and mechanisms
of delivery) covered under each of parts B and D of title XVIII and
under a State program under title XIX, including information on trends
of such spending and utilization over time.
``(b) Medicare Part B Drug and Biological Dashboard.--
``(1) In general.--The dashboard established under
subsection (a) for part B of title XVIII shall provide the
information described in paragraph (2).
``(2) Information described.--The information described in
this paragraph is the following information with respect to
drug or biologicals covered under such part B:
``(A) The brand name and, if applicable, the
generic names of the drug or biological.
``(B) Consumer-friendly information on the uses and
clinical indications of the drug or biological.
``(C) The manufacturer or labeler of the drug or
biological.
``(D) To the extent feasible, the following
information:
``(i) Average total spending per dosage
unit of the drug or biological in the most
recent 2 calendar years for which data is
available.
``(ii) The percentage change in average
spending on the drug or biological per dosage
unit between the most recent calendar year for
which data is available and--
``(I) the preceding calendar year;
and
``(II) the preceding 5 and 10
calendar years.
``(iii) The annual growth rate in average
spending per dosage unit of the drug or
biological in the most recent 5 or 10 calendar
years for which data is available.
``(iv) Total spending for the drug or
biological for the most recent calendar year
for which data is available.
``(v) The number of beneficiaries receiving
the drug or biological in the most recent
calendar year for which data is available.
``(vi) Average spending on the drug per
beneficiary for the most recent calendar year
for which data is available.
``(E) The average sales price of the drug or
biological (as determined under section 1847A) for the
most recent quarter.
``(F) Consumer-friendly information about the
coinsurance amount for the drug or biological for
beneficiaries for the most recent quarter. Such
information shall not include coinsurance amounts for
qualified medicare beneficiaries (as defined in section
1905(p)(1)).
``(G) For the most recent calendar year for which
data is available--
``(i) the 15 drugs and biologicals with the
highest total spending under such part; and
``(ii) any drug or biological for which the
average annual per beneficiary spending exceeds
the gross spending for covered part D drugs at
which the annual out-of-pocket threshold under
section 1860D-2(b)(4)(B) would be met for the
year.
``(H) Other information (not otherwise prohibited
in law from being disclosed) that the Secretary
determines would provide beneficiaries, clinicians,
researchers, and the public with helpful information
about drug and biological spending and utilization
(including trends of such spending and utilization).
``(c) Medicare Covered Part D Drug Dashboard.--
``(1) In general.--The dashboard established under
subsection (a) for part D of title XVIII shall provide the
information described in paragraph (2).
``(2) Information described.--The information described in
this paragraph is the following information with respect to
covered part D drugs under such part D:
``(A) The information described in subparagraphs
(A) through (D) of subsection (b)(2).
``(B) Information on average annual beneficiary
out-of-pocket costs below and above the annual out-of-
pocket threshold under section 1860D-2(b)(4)(B) for the
current plan year. Such information shall not include
out-of-pocket costs for subsidy eligible individuals
under section 1860D-14.
``(C) Information on how to access resources as
described in sections 1860D-1(c) and 1851(d).
``(D) For the most recent calendar year for which
data is available--
``(i) the 15 covered part D drugs with the
highest total spending under such part; and
``(ii) any covered part D drug for which
the average annual per beneficiary spending
exceeds the gross spending for covered part D
drugs at which the annual out-of-pocket
threshold under section 1860D-2(b)(4)(B) would
be met for the year.
``(E) Other information (not otherwise prohibited
in law from being disclosed) that the Secretary
determines would provide beneficiaries, clinicians,
researchers, and the public with helpful information
about covered part D drug spending and utilization
(including trends of such spending and utilization).
``(d) Medicaid Covered Outpatient Drug Dashboard.--
``(1) In general.--The dashboard established under
subsection (a) for title XIX shall provide the information
described in paragraph (2).
``(2) Information described.--The information described in
this paragraph is the following information with respect to
covered outpatient drugs under such title:
``(A) The information described in subparagraphs
(A) through (D) of subsection (b)(2).
``(B) For the most recent calendar year for which
data is available, the 15 covered outpatient drugs with
the highest total spending under such title.
``(C) Other information (not otherwise prohibited
in law from being disclosed) that the Secretary
determines would provide beneficiaries, clinicians,
researchers, and the public with helpful information
about covered outpatient drug spending and utilization
(including trends of such spending and utilization).
``(e) Data Files.--The Secretary shall make available the
underlying data for each dashboard established under subsection (a) in
a machine-readable format.''.
SEC. 144. IMPROVING COORDINATION BETWEEN THE FOOD AND DRUG
ADMINISTRATION AND THE CENTERS FOR MEDICARE & MEDICAID
SERVICES.
(a) In General.--
(1) Public meeting.--
(A) In general.--Not later than 12 months after the
date of the enactment of this Act, the Secretary of
Health and Human Services (referred to in this section
as the ``Secretary'') shall convene a public meeting
for the purposes of discussing and providing input on
improvements to coordination between the Food and Drug
Administration and the Centers for Medicare & Medicaid
Services in preparing for the availability of novel
medical products described in subsection (c) on the
market in the United States.
(B) Attendees.--The Secretary shall invite the
following to the public meeting:
(i) Representatives of relevant Federal
agencies, including representatives from each
of the medical product centers within the Food
and Drug Administration and representatives
from the coding, coverage, and payment offices
within the Centers for Medicare & Medicaid
Services.
(ii) Stakeholders with expertise in the
research and development of novel medical
products, including manufacturers of such
products.
(iii) Representatives of commercial health
insurance payers.
(iv) Stakeholders with expertise in the
administration and use of novel medical
products, including physicians.
(v) Stakeholders representing patients and
with expertise in the utilization of patient
experience data in medical product development.
(C) Topics.--The public meeting agenda shall
include--
(i) an overview of the types of products
and product categories in the drug and medical
device development pipeline and the volume of
products which may meet the description of a
novel medical product under subsection (c);
(ii) the anticipated expertise necessary to
review the safety and effectiveness of such
products at the Food and Drug Administration
and current gaps in such expertise, if any;
(iii) the expertise necessary to make
coding, coverage, and payment decisions with
respect to such products within the Centers for
Medicare & Medicaid Services, and current gaps
in such expertise, if any;
(iv) trends in the differences in the data
necessary to determine the safety and
effectiveness of a novel medical product and
the data necessary to determine whether a novel
medical product meets the reasonable and
necessary requirements for coverage and payment
under title XVIII of the Social Security Act
pursuant to section 1862(a)(1)(A) of such Act
(42 U.S.C. 1395y(a)(1)(A));
(v) the availability of information for
sponsors of such novel medical products to meet
each of those requirements; and
(vi) the coordination of information
related to significant clinical improvement
over existing therapies for patients between
the Food and Drug Administration and the
Centers for Medicare & Medicaid Services with
respect to novel medical products.
(D) Trade secrets and confidential information.--
Nothing under this section shall be construed as
authorizing the Secretary to disclose any information
that is a trade secret or confidential information
subject to section 552(b)(4) of title 5, United States
Code.
(2) Improving transparency of criteria for medicare
coverage.--
(A) Draft guidance.--Not later than 18 months after
the public meeting under paragraph (1), the Secretary
shall update the final guidance titled ``National
Coverage Determinations with Data Collection as a
Condition of Coverage: Coverage with Evidence
Development'' to address any opportunities to improve
the availability and coordination of information as
described in clauses (iv) through (vi) of paragraph
(1)(C).
(B) Final guidance.--Not later than 12 months after
issuing draft guidance under subparagraph (A), the
Secretary shall finalize the updated guidance to
address any such opportunities.
(b) Report on Coding, Coverage, and Payment Processes Under
Medicare for Novel Medical Products.--Not later than 12 months after
the date of the enactment of this Act, the Secretary shall publish a
report on the Internet website of the Department of Health and Human
Services regarding processes under the Medicare program under title
XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) with respect
to the coding, coverage, and payment of novel medical products
described in subsection (c). Such report shall include the following:
(1) A description of challenges in the coding, coverage,
and payment processes under the Medicare program for novel
medical products.
(2) Recommendations to--
(A) incorporate patient experience data (such as
the impact of a disease or condition on the lives of
patients and patient treatment preferences) into the
coverage and payment processes within the Centers for
Medicare & Medicaid Services;
(B) decrease the length of time to make national
and local coverage determinations under the Medicare
program (as those terms are defined in subparagraphs
(A) and (B), respectively, of section 1862(l)(6) of the
Social Security Act (42 U.S.C. 1395y(l)(6));
(C) streamline the coverage process under the
Medicare program and incorporate input from relevant
stakeholders into such coverage determinations; and
(D) identify potential mechanisms to incorporate
novel payment designs similar to those in development
in commercial insurance plans and State plans under
title XIX of such Act (42 U.S.C. 1396 et seq.) into the
Medicare program.
(c) Novel Medical Products Described.--For purposes of this
section, a novel medical product described in this subsection is a
drug, including a biological product (including gene and cell therapy),
or medical device, that has been designated as a breakthrough therapy
under section 506(a) of the Federal Food, Drug, and Cosmetic Act (21
U.S.C. 356(a)), a breakthrough device under section 515B of such Act
(21 U.S.C. 360e-3), or a regenerative advanced therapy under section
506(g) of such Act (21 U.S.C. 356(g)).
SEC. 145. PATIENT CONSULTATION IN MEDICARE NATIONAL AND LOCAL COVERAGE
DETERMINATIONS IN ORDER TO MITIGATE BARRIERS TO INCLUSION
OF SUCH PERSPECTIVES.
Section 1862(l) of the Social Security Act (42 U.S.C. 1395y(l)) is
amended by adding at the end the following new paragraph:
``(7) Patient consultation in national and local coverage
determinations.--With respect to national coverage
determinations, the Secretary, and with respect to local
coverage determinations, the Medicare administrative
contractor, may consult with patients and organizations
representing patients, including patients with disabilities, in
making national and local coverage determinations.''.
SEC. 146. GAO STUDY ON INCREASES TO MEDICARE AND MEDICAID SPENDING DUE
TO COPAYMENT COUPONS AND OTHER PATIENT ASSISTANCE
PROGRAMS.
(a) Study.--The Comptroller General of the United States shall
conduct a study on the impact of copayment coupons and other patient
assistance programs on prescription drug pricing and expenditures
within the Medicare and Medicaid programs. The study shall assess the
following:
(1) The extent to which copayment coupons and other patient
assistance programs contribute to inflated prescription drug
prices under such programs.
(2) The impact copayment coupons and other patient
assistance programs have in the Medicare Part D program
established under part D of title XVIII of the Social Security
Act (42 U.S.C. 1395w-101 et seq.) on utilization of higher-cost
brand drugs and lower utilization of generic drugs in that
program.
(3) The extent to which manufacturers report or obtain tax
benefits, including deductions of business expenses and
charitable contributions, for any of the following:
(A) Offering copayment coupons or other patient
assistance programs.
(B) Sponsoring manufacturer patient assistance
programs.
(C) Paying for sponsorships at outreach and
advocacy events organized by patient assistance
programs.
(4) The efficacy of oversight conducted to ensure that
independent charity patient assistance programs adhere to
guidance from the Office of the Inspector General of the
Department of Health and Human Services on avoiding waste,
fraud, and abuse.
(b) Definitions.--In this section:
(1) Independent charity patient assistance program.--The
term ``independent charity patient assistance program'' means
any organization described in section 501(c)(3) of the Internal
Revenue Code of 1986 and exempt from taxation under section
501(a) of such Code and which is not a private foundation (as
defined in section 509(a) of such Code) that offers patient
assistance.
(2) Manufacturer.--The term ``manufacturer'' has the
meaning given that term in section 1927(k)(5) of the Social
Security Act (42 U.S.C. 1396r-8(k)(5)).
(3) Manufacturer patient assistance program.--The term
``manufacturer patient assistance program'' means an
organization, including a private foundation (as so defined),
that is sponsored by, or receives funding from, a manufacturer
and that offers patient assistance. Such term does not include
an independent charity patient assistance program.
(4) Patient assistance.--The term ``patient assistance''
means assistance provided to offset the cost of drugs for
individuals. Such term includes free products, coupons,
rebates, copay or discount cards, and other means of providing
assistance to individuals related to drug costs, as determined
by the Secretary of Health and Human Services.
(c) Report.--Not later than 24 months after the date of the
enactment of this Act, the Comptroller General of the United States
shall submit to Congress a report describing the findings of the study
required under subsection (a).
SEC. 147. MEDPAC REPORT ON SHIFTING COVERAGE OF CERTAIN MEDICARE PART B
DRUGS TO MEDICARE PART D.
(a) Study.--The Medicare Payment Advisory Commission (in this
section referred to as the ``Commission'') shall conduct a study on
shifting coverage of certain drugs and biologicals for which payment is
currently made under part B of title XVIII of the Social Security Act
(42 U.S.C. 1395j et seq.) to part D of such title (42 U.S.C. 1395w-21
et seq.). Such study shall include an analysis of--
(1) differences in program structures and payment methods
for drugs and biologicals covered under such parts B and D,
including effects of such a shift on program spending,
beneficiary cost-sharing liability, and utilization management
techniques for such drugs and biologicals; and
(2) the feasibility and policy implications of shifting
coverage of drugs and biologicals for which payment is
currently made under such part B to such part D.
(b) Report.--
(1) In general.--Not later than June 30, 2021, the
Commission shall submit to Congress a report containing the
results of the study conducted under subsection (a).
(2) Contents.--The report under paragraph (1) shall include
information, and recommendations as the Commission deems
appropriate, regarding--
(A) formulary design under such part D;
(B) the ability of the benefit structure under such
part D to control total spending on drugs and
biologicals for which payment is currently made under
such part B;
(C) changes to the bid process under such part D,
if any, that may be necessary to integrate coverage of
such drugs and biologicals into such part D; and
(D) any other changes to the program that Congress
should consider in determining whether to shift
coverage of such drugs and biologicals from such part B
to such part D.
SEC. 148. TAKING STEPS TO FULFILL TREATY OBLIGATIONS TO TRIBAL
COMMUNITIES.
(a) GAO Study.--The Comptroller General shall conduct a study
regarding access to, and the cost of, prescription drugs among Indians.
The study shall include--
(1) a review of what Indian health programs pay for
prescription drugs on reservations, in urban centers, and in
Tribal communities relative to other consumers;
(2) recommendations to align the value of prescription drug
discounts available under the Medicaid drug rebate program
established under section 1927 of the Social Security Act (42
U.S.C. 1396r-8) with prescription drug discounts available to
Tribal communities through the purchased/referred care program
of the Indian Health Service for physician administered drugs;
and
(3) an examination of how Tribal communities and urban
Indian organizations utilize the Medicare part D program
established under title XVIII of the Social Security Act (42
U.S.C. 1395w-101 et seq.) and recommendations to improve
enrollment among Indians in that program.
(b) Report.--Not later than 18 months after the date of the
enactment of this Act, the Comptroller General shall submit to Congress
a report containing the results of the study conducted under subsection
(a), together with recommendations for such legislation and
administrative action as the Comptroller General determines
appropriate.
(c) Definitions.--In this section:
(1) Comptroller general.--The term ``Comptroller General''
means the Comptroller General of the United States.
(2) Indian; indian health program; indian tribe.--The terms
``Indian'', ``Indian health program'', and ``Indian tribe''
have the meanings given those terms in section 4 of the Indian
Health Care Improvement Act (25 U.S.C. 1603).
TITLE II--MEDICAID DRUG PRICING REFORMS
SEC. 201. MEDICAID PHARMACY AND THERAPEUTICS COMMITTEE IMPROVEMENTS.
(a) In General.--Subparagraph (A) of section 1927(d)(4) of the
Social Security Act (42 U.S.C. 1396r-8(d)(4)) is amended to read as
follows:
``(A)(i) The formulary is developed and reviewed by
a pharmacy and therapeutics committee consisting of
physicians, pharmacists, and other appropriate
individuals appointed by the Governor of the State.
``(ii) Subject to clause (vi), the State
establishes and implements a conflict of interest
policy for the pharmacy and therapeutics committee
that--
``(I) is publicly accessible;
``(II) requires all committee members to
complete, on at least an annual basis, a
disclosure of relationships, associations, and
financial dealings that may affect their
independence of judgement in committee matters;
and
``(III) contains clear processes, such as
recusal from voting or discussion, for those
members who report a conflict of interest,
along with appropriate processes to address any
instance where a member fails to report a
conflict of interest.
``(iii) The membership of the pharmacy and
therapeutics committee--
``(I) is made publicly available;
``(II) is composed of members who are
independent and free of any conflict, including
with respect to manufacturers, medicaid managed
care entities, and pharmacy benefit managers;
and
``(III) includes at least 1 actively
practicing physician and at least 1 actively
practicing pharmacist, each of whom has
expertise in the care of 1 or more Medicaid-
specific populations such as elderly or
disabled individuals, children with complex
medical needs, or low-income individuals with
chronic illnesses.
``(iv) At the option of the State, the State's drug
use review board established under subsection (g)(3)
may serve as the pharmacy and therapeutics committee
provided the State ensures that such board meets the
requirements of clauses (ii) and (iii).
``(v) The State reviews and has final approval of
the formulary established by the pharmacy and
therapeutics committee.
``(vi) If the Secretary determines it appropriate
or necessary based on the findings and recommendations
of the Comptroller General of the United States in the
report submitted to Congress under section 203 of the
Prescription Drug Pricing Reduction Act of 2020, the
Secretary shall issue guidance that States must follow
for establishing conflict of interest policies for the
pharmacy and therapeutics committee in accordance with
the requirements of clause (ii), including appropriate
standards and requirements for identifying, addressing,
and reporting on conflicts of interest.''.
(b) Application to Medicaid Managed Care Organizations.--
(1) In general.--Clause (xiii) of section 1903(m)(2)(A) of
the Social Security Act (42 U.S.C. 1396b(m)(2)(A)) is amended--
(A) by striking ``and (III)'' and inserting
``(III)'';
(B) by striking the period at the end and inserting
``, and (IV) any formulary used by the entity for
covered outpatient drugs dispensed to individuals
eligible for medical assistance who are enrolled with
the entity is developed and reviewed by a pharmacy and
therapeutics committee that meets the requirements of
clauses (ii) and (iii) of section 1927(d)(4)(A).''; and
(C) by moving the left margin 2 ems to the left.
(2) Application to pihps and pahps.--Section 1903(m) of the
Social Security Act (42 U.S.C. 1396b(m)) is amended by adding
at the end the following new paragraph:
``(10) No payment shall be made under this title to a State
with respect to expenditures incurred by the State for payment
for services provided by an other specified entity (as defined
in paragraph (9)(D)(iii)) unless such services are provided in
accordance with a contract between the State and the entity
which satisfies the requirements of paragraph (2)(A)(xiii).''.
(c) Effective Date.--The amendments made by this section shall take
effect on the date that is 1 year after the date of enactment of this
Act.
SEC. 202. IMPROVING REPORTING REQUIREMENTS AND DEVELOPING STANDARDS FOR
THE USE OF DRUG USE REVIEW BOARDS IN STATE MEDICAID
PROGRAMS.
(a) In General.--Section 1927(g)(3) of the Social Security Act (42
U.S.C. 1396r-8(g)(3)) is amended--
(1) by amending subparagraph (B) to read as follows:
``(B) Membership.--
``(i) In general.--The membership of the
DUR Board shall include health care
professionals who have recognized knowledge and
expertise in one or more of the following:
``(I) The clinically appropriate
prescribing of covered outpatient
drugs.
``(II) The clinically appropriate
dispensing and monitoring of covered
outpatient drugs.
``(III) Drug use review,
evaluation, and intervention.
``(IV) Medical quality assurance.
``(ii) Membership requirements.--The
membership of the DUR Board shall--
``(I) be made publicly available;
``(II) be composed of members who
are independent and free of any
conflict, including with respect to
manufacturers, medicaid managed care
entities, and pharmacy benefit
managers;
``(III) be made up of at least \1/
3\ but no more than 51 percent members
who are licensed and actively
practicing physicians and at least \1/
3\ members who are licensed and
actively practicing pharmacists; and
``(IV) include at least 1 actively
practicing physician and at least 1
actively practicing pharmacist, each of
whom has expertise in the care of 1 or
more Medicaid-specific populations such
as elderly or disabled individuals,
children with complex medical needs, or
low-income individuals with chronic
illnesses.
``(iii) Conflict of interest policy.--The
State shall establish and implement a conflict
of interest policy for the DUR Board that--
``(I) is publicly accessible;
``(II) requires all board members
to complete, on at least an annual
basis, a disclosure of relationships,
associations, and financial dealings
that may affect their independence of
judgement in board matters; and
``(III) contains clear processes,
such as recusal from voting or
discussion, for those members who
report a conflict of interest, along
with appropriate processes to address
any instance where a member fails to
report a conflict of interest.''; and
(2) by adding at the end the following new subparagraph:
``(E) DUR board membership reports.--
``(i) DUR board reports.--Each State shall
require the DUR Board to prepare and submit to
the State an annual report on the DUR Board
membership. Each such report shall include any
conflicts of interest with respect to members
of the DUR Board that the DUR Board recorded or
was aware of during the period that is the
subject of the report, and the process applied
to address such conflicts of interest, in
addition to any other information required by
the State.
``(ii) Inclusion of dur board membership
information in state reports.--Each annual
State report to the Secretary required under
subparagraph (D) shall include--
``(I) the number of individuals
serving on the State's DUR Board;
``(II) the names and professions of
the individuals serving on such DUR
Board;
``(III) any conflicts of interest
or recusals with respect to members of
such DUR Board reported by the DUR
Board or that the State was aware of
during the period that is the subject
of the report; and
``(IV) whether the State has
elected for such DUR Board to serve as
the committee responsible for
developing a State formulary under
subsection (d)(4)(A).''.
(b) Managed Care Requirements.--Section 1932(i) of the Social
Security Act (42 U.S.C. 1396u-2(i)) is amended--
(1) by inserting ``and each contract under a State plan
with an other specified entity (as defined in section
1903(m)(9)(D)(iii))'' after ``under section 1903(m)'';
(2) by striking ``section 483.3(s)(4)'' and inserting
``section 438.3(s)(4)'';
(3) by striking ``483.3(s)(5)'' and inserting
``438.3(s)(5)''; and
(4) by adding at the end the following: ``Such a managed
care entity or other specified entity shall not be considered
to be in compliance with the requirement of such section
438.3(s)(5) that the entity provide a detailed description of
its drug utilization review activities unless the entity
includes a description of the prospective drug review
activities described in paragraph (2)(A) of section 1927(g) and
the activities listed in paragraph (3)(C) of section 1927(g),
makes the underlying drug utilization review data available to
the State and the Secretary, and provides such other
information as deemed appropriate by the Secretary.''.
(c) Development of National Standards for Medicaid Drug Use
Review.--The Secretary of Health and Human Services may promulgate
regulations or guidance establishing national standards for Medicaid
drug use review programs under section 1927(g) of the Social Security
Act (42 U.S.C. 1396r-8) and drug utilization review activities and
requirements under section 1932(i) of such Act (42 U.S.C. 1396u-2(i)),
for the purpose of aligning review criteria for prospective and
retrospective drug use review across all State Medicaid programs.
(d) CMS Guidance.--Not later than 18 months after the date of
enactment of this Act, the Secretary of Health and Human Services shall
issue guidance--
(1) outlining steps that States must take to come into
compliance with statutory and regulatory requirements for
prospective and retrospective drug use review under section
1927(g) of the Social Security Act (42 U.S.C. 1396r-8(g)) and
drug utilization review activities and requirements under
section 1932(i) of such Act (42 U.S.C. 1396u-2(i)) (including
with respect to requirements that were in effect before the
date of enactment of this Act); and
(2) describing the actions that the Secretary will take to
enforce such requirements.
(e) Effective Date.--The amendments made by this section shall take
effect on the date that is 18 months after the date of enactment of
this Act.
SEC. 203. GAO REPORT ON CONFLICTS OF INTEREST IN STATE MEDICAID PROGRAM
DRUG USE REVIEW BOARDS AND PHARMACY AND THERAPEUTICS
(P&T) COMMITTEES.
(a) Investigation.--The Comptroller General of the United States
shall conduct an investigation of potential or existing conflicts of
interest among members of State Medicaid program State drug use review
boards (in this section referred to as ``DUR Boards'') and pharmacy and
therapeutics committees (in this section referred to as ``P&T
Committees'').
(b) Report.--Not later than 24 months after the date of enactment
of this Act, the Comptroller General shall submit to Congress a report
on the investigation conducted under subsection (a) that includes the
following:
(1) A description outlining how DUR Boards and P&T
Committees operate in States, including details with respect
to--
(A) the structure and operation of DUR Boards and
statewide P&T Committees;
(B) States that operate separate P&T Committees for
their fee-for-service Medicaid program and their
Medicaid managed care organizations or other Medicaid
managed care arrangements (including other specified
entities (as defined in section 1903(m)(9)(D)(iii) of
the Social Security Act (42 U.S.C. 1396b(m)(9)(D)(iii))
and collectively referred to in this section as
``Medicaid MCOs''); and
(C) States that allow Medicaid MCOs to have their
own P&T Committees and the extent to which pharmacy
benefit managers administer or participate in such P&T
Committees.
(2) A description outlining the differences between DUR
Boards established in accordance with section 1927(g)(3) of the
Social Security Act (42 U.S.C. 1396r(g)(3)) and P&T Committees.
(3) A description outlining the tools P&T Committees may
use to determine Medicaid drug coverage and utilization
management policies.
(4) An analysis of whether and how States or P&T Committees
establish participation and independence requirements for DUR
Boards and P&T Committees, including with respect to entities
with connections with drug manufacturers, State Medicaid
programs, managed care organizations, and other entities or
individuals in the pharmaceutical industry.
(5) A description outlining how States, DUR Boards, or P&T
Committees define conflicts of interest.
(6) A description of how DUR Boards and P&T Committees
address conflicts of interest, including who is responsible for
implementing such policies.
(7) A description of the tools, if any, States use to
ensure that there are no conflicts of interest on DUR Boards
and P&T Committees.
(8) An analysis of the effectiveness of tools States use to
ensure that there are no conflicts of interest on DUR Boards
and P&T Committees and, if applicable, recommendations as to
how such tools could be improved.
(9) A review of strategies States may use to guard against
conflicts of interest on DUR Boards and P&T Committees and to
ensure compliance with the requirements of titles XI and XIX of
the Social Security Act (42 U.S.C. 1301 et seq., 1396 et seq.)
and access to effective, clinically appropriate, and medically
necessary drug treatments for Medicaid beneficiaries, including
recommendations for such legislative and administrative actions
as the Comptroller General determines appropriate.
SEC. 204. ENSURING THE ACCURACY OF MANUFACTURER PRICE AND DRUG PRODUCT
INFORMATION UNDER THE MEDICAID DRUG REBATE PROGRAM.
(a) Audit of Manufacturer Price and Drug Product Information.--
(1) In general.--Subparagraph (B) of section 1927(b)(3) of
the Social Security Act (42 U.S.C. 1396r-8(b)(3)) is amended to
read as follows:
``(B) Audits and surveys of manufacturer price and
drug product information.--
``(i) Audits.--The Secretary shall conduct
regular audits of the price and drug product
information reported by manufacturers under
subparagraph (A) for the most recently ended
rebate period to ensure the accuracy and
timeliness of such information. In conducting
such audits, the Secretary may employ
evaluations, surveys, statistical sampling,
predictive analytics and other relevant tools
and methods.
``(ii) Verifications surveys of average
manufacturer price and manufacturer's average
sales price.--In addition to the audits
required under clause (i), the Secretary may
survey wholesalers and manufacturers (including
manufacturers that directly distribute their
covered outpatient drugs (in this subparagraph
referred to as `direct sellers')), when
necessary, to verify manufacturer prices and
manufacturer's average sales prices (including
wholesale acquisition cost) to make payment
reported under subparagraph (A).
``(iii) Penalties.--In addition to other
penalties as may be prescribed by law,
including under subparagraph (C) of this
paragraph, the Secretary may impose a civil
monetary penalty in an amount not to exceed
$185,000 on an annual basis on a wholesaler,
manufacturer, or direct seller, if the
wholesaler, manufacturer, or direct seller of a
covered outpatient drug refuses a request for
information about charges or prices by the
Secretary in connection with an audit or survey
under this subparagraph or knowingly provides
false information. The provisions of section
1128A (other than subsections (a) (with respect
to amounts of penalties or additional
assessments) and (b)) shall apply to a civil
money penalty under this clause in the same
manner as such provisions apply to a penalty or
proceeding under section 1128A(a).
``(iv) Reports.--
``(I) Report to congress.--The
Secretary shall, not later than 18
months after date of enactment of this
subparagraph, submit a report to the
Committee on Energy and Commerce of the
House of Representatives and the
Committee on Finance of the Senate
regarding additional regulatory or
statutory changes that may be required
in order to ensure accurate and timely
reporting and oversight of manufacturer
price and drug product information,
including whether changes should be
made to reasonable assumption
requirements to ensure such assumptions
are reasonable and accurate or whether
another methodology for ensuring
accurate and timely reporting of price
and drug product information should be
considered to ensure the integrity of
the drug rebate program under this
section.
``(II) Annual reports.--The
Secretary shall, on at least an annual
basis, submit a report to the Committee
on Energy and Commerce of the House of
Representatives and the Committee on
Finance of the Senate summarizing the
results of the audits and surveys
conducted under this subparagraph
during the period that is the subject
of the report.
``(III) Content.--Each report
submitted under subclause (II) shall,
with respect to the period that is the
subject of the report, include
summaries of--
``(aa) error rates in the
price, drug product, and other
relevant information supplied
by manufacturers under
subparagraph (A);
``(bb) the timeliness with
which manufacturers,
wholesalers, and direct sellers
provide information required
under subparagraph (A) or under
clause (i) or (ii) of this
subparagraph;
``(cc) the number of
manufacturers, wholesalers, and
direct sellers and drug
products audited under this
subparagraph;
``(dd) the types of price
and drug product information
reviewed under the audits
conducted under this
subparagraph;
``(ee) the tools and
methodologies employed in such
audits;
``(ff) the findings of such
audits, including which
manufacturers, if any, were
penalized under this
subparagraph; and
``(gg) such other relevant
information as the Secretary
shall deem appropriate.
``(IV) Protection of information.--
In preparing a report required under
subclause (II), the Secretary shall
redact such proprietary information as
the Secretary determines appropriate to
prevent disclosure of, and to
safeguard, such information.
``(v) Appropriations.--Out of any funds in
the Treasury not otherwise appropriated, there
is appropriated to the Secretary $2,000,000 for
fiscal year 2020 and each fiscal year
thereafter to carry out this subparagraph.''.
(2) Effective date.--The amendments made by this subsection
shall take effect on the first day of the first fiscal quarter
that begins after the date of enactment of this Act.
(b) Increased Penalties for Noncompliance With Reporting
Requirements.--
(1) Increased penalty for failure to provide timely
information.--Section 1927(b)(3)(C)(i) of the Social Security
Act (42 U.S.C. 1396r-8(b)(3)(C)(i)) is amended by striking
``increased by $10,000 for each day in which such information
has not been provided and such amount shall be paid to the
Treasury'' and inserting ``, for each covered outpatient drug
with respect to which such information is not provided, $50,000
for the first day that such information is not provided on a
timely basis and $19,000 for each subsequent day that such
information is not provided''.
(2) Increased penalty for knowingly reporting false
information.--Section 1927(b)(3)(C)(ii) of the Social Security
Act (42 U.S.C. 1396r-8(b)(3)(C)(ii)) is amended by striking
``$100,000'' and inserting ``$500,000''.
(3) Effective date.--The amendments made by this subsection
shall take effect on the first day of the first fiscal quarter
that begins after the date of enactment of this Act.
(c) Rule of Construction.--Nothing in this section or the
amendments made by this section shall be construed to affect the
application of the Federal Civil Penalties Inflation Adjustment Act of
1990 (28 U.S.C. 2461 note) to any civil penalty amount under section
1927 of the Social Security Act (42 U.S.C. 1396r-8).
SEC. 205. APPLYING MEDICAID DRUG REBATE REQUIREMENT TO DRUGS PROVIDED
AS PART OF OUTPATIENT HOSPITAL SERVICES.
(a) In General.--Section 1927(k)(3) of the Social Security Act (42
U.S.C. 1396r-8(k)(3)) is amended to read as follows:
``(3) Limiting definition.--
``(A) In general.--The term `covered outpatient
drug' does not include any drug, biological product, or
insulin provided as part of, or as incident to and in
the same setting as, any of the following (and for
which payment may be made under this title as part of
payment for the following and not as direct
reimbursement for the drug):
``(i) Inpatient hospital services.
``(ii) Hospice services.
``(iii) Dental services, except that drugs
for which the State plan authorizes direct
reimbursement to the dispensing dentist are
covered outpatient drugs.
``(iv) Physicians' services.
``(v) Outpatient hospital services.
``(vi) Nursing facility services and
services provided by an intermediate care
facility for the mentally retarded.
``(vii) Other laboratory and x-ray
services.
``(viii) Renal dialysis.
``(B) Other exclusions.--Such term also does not
include any such drug or product for which a National
Drug Code number is not required by the Food and Drug
Administration or a drug or biological used for a
medical indication which is not a medically accepted
indication.
``(C) State option.--At the option of a State, such
term may include any drug, biological product, or
insulin provided on an outpatient basis as part of, or
as incident to and in the same setting as, described in
clause (iv) or (v) of subparagraph (A) (such as a drug,
biological product, or insulin being provided as part
of a bundled payment).
``(D) No effect on best price.--Any drug,
biological product, or insulin excluded from the
definition of such term as a result of this paragraph
shall be treated as a covered outpatient drug for
purposes of determining the best price (as defined in
subsection (c)(1)(C)) for such drug, biological
product, or insulin.''.
(b) Effective Date; Implementation Guidance.--
(1) In general.--The amendment made by subsection (a) shall
take effect on the date that is 1 year after the date of
enactment of this Act.
(2) Implementation and guidance.--Not later than 1 year
after the date of enactment of this Act, the Secretary of
Health and Human Services shall issue guidance and relevant
informational bulletins for States, manufacturers (as defined
in section 1927(k)(5) of the Social Security Act (42 U.S.C.
1396r-8(k)(5)), and other relevant stakeholders, including
health care providers, regarding implementation of the
amendment made by subsection (a).
SEC. 206. IMPROVING TRANSPARENCY AND PREVENTING THE USE OF ABUSIVE
SPREAD PRICING AND RELATED PRACTICES IN MEDICAID.
(a) Pass-Through Pricing Required.--
(1) In general.--Section 1927(e) of the Social Security Act
(42 U.S.C. 1396r-8(e)) is amended by adding at the end the
following:
``(6) Pass-through pricing required.--A contract between
the State and a pharmacy benefit manager (referred to in this
paragraph as a `PBM'), or a contract between the State and a
managed care entity or other specified entity (as such terms
are defined in section 1903(m)(9)(D)) that includes provisions
making the entity responsible for coverage of covered
outpatient drugs dispensed to individuals enrolled with the
entity, shall require that payment for such drugs (excluding,
at the option of the State, any drug that is subject to an
agreement under section 340B of the Public Health Service Act)
and related administrative services (as applicable), including
payments made by a PBM on behalf of the State or entity, is
based on a pass-through pricing model under which--
``(A) any payment made by the entity or the PBM (as
applicable) for such a drug--
``(i) is limited to--
``(I) ingredient cost; and
``(II) a professional dispensing
fee that is not less than the
professional dispensing fee that the
State plan or waiver would pay if the
plan or waiver was making the payment
directly;
``(ii) is passed through in its entirety by
the entity or PBM to the pharmacy that
dispenses the drug; and
``(iii) is made in a manner that is
consistent with section 1902(a)(30)(A) and
sections 447.512, 447.514, and 447.518 of title
42, Code of Federal Regulations (or any
successor regulation) as if such requirements
applied directly to the entity or the PBM;
``(B) payment to the entity or the PBM (as
applicable) for administrative services performed by
the entity or PBM is limited to a reasonable
administrative fee that covers the reasonable cost of
providing such services;
``(C) the entity or the PBM (as applicable) shall
make available to the State, and the Secretary upon
request, all costs and payments related to covered
outpatient drugs and accompanying administrative
services incurred, received, or made by the entity or
the PBM, including ingredient costs, professional
dispensing fees, administrative fees, post-sale and
post-invoice fees, discounts, or related adjustments
such as direct and indirect remuneration fees, and any
and all other remuneration; and
``(D) any form of spread pricing whereby any amount
charged or claimed by the entity or the PBM (as
applicable) is in excess of the amount paid to the
pharmacies on behalf of the entity, including any post-
sale or post-invoice fees, discounts, effective rate
contract adjustments, or related adjustments such as
direct and indirect remuneration fees or assessments
(after allowing for a reasonable administrative fee as
described in subparagraph (B)) is not allowable for
purposes of claiming Federal matching payments under
this title.''.
(2) Conforming amendment.--Section 1903(m)(2)(A)(xiii) of
such Act (42 U.S.C. 1396b(m)(2)(A)(xiii)), as amended by
section 201(b)(1), is amended--
(A) by striking ``and (IV)'' and inserting
``(IV)''; and
(B) by inserting before the period at the end the
following: ``, and (V) pharmacy benefit management
services provided by the entity, or provided by a
pharmacy benefit manager on behalf of the entity under
a contract or other arrangement between the entity and
the pharmacy benefit manager, shall comply with the
requirements of section 1927(e)(6)''.
(3) Effective date.--The amendments made by this subsection
apply to contracts between States and managed care entities,
other specified entities, or pharmacy benefits managers that
are entered into or renewed on or after the date that is 18
months after the date of enactment of this Act.
(b) Survey of Retail Prices.--
(1) In general.--Section 1927(f) of the Social Security Act
(42 U.S.C. 1396r-8(f)) is amended--
(A) by striking ``and'' after the semicolon at the
end of paragraph (1)(A)(i) and all that precedes it
through ``(1)'' and inserting the following:
``(1) Survey of retail prices.--The Secretary shall conduct
a survey of retail community drug prices, to include at least
the national average drug acquisition cost, as follows:
``(A) Use of vendor.--The Secretary may contract
services for--
``(i) with respect to retail community
pharmacies, the determination on a monthly
basis of retail survey prices of the national
average drug acquisition cost for covered
outpatient drugs for such pharmacies, net of
all discounts and rebates (to the extent any
information with respect to such discounts and
rebates is available), the average
reimbursement received for such drugs by such
pharmacies from all sources of payment,
including third parties, and, to the extent
available, the usual and customary charges to
consumers for such drugs; and'';
(B) by adding at the end of paragraph (1) the
following:
``(F) Survey reporting.--In order to meet the
requirement of section 1902(a)(54), a State shall
require that any retail community pharmacy in the State
that receives any payment, administrative fee,
discount, or rebate related to the dispensing of
covered outpatient drugs to individuals receiving
benefits under this title, regardless of whether such
payment, fee, discount, or rebate is received from the
State or a managed care entity directly or from a
pharmacy benefit manager or another entity that has a
contract with the State or a managed care entity or
other specified entity (as such terms are defined in
section 1903(m)(9)(D)), shall respond to surveys of
retail prices conducted under this subsection.
``(G) Survey information.--Information on retail
community prices obtained under this paragraph shall be
made publicly available and shall include at least the
following:
``(i) The monthly response rate of the
survey including a list of pharmacies not in
compliance with subparagraph (F).
``(ii) The sampling frame and number of
pharmacies sampled monthly.
``(iii) Characteristics of reporting
pharmacies, including type (such as independent
or chain), geographic or regional location, and
dispensing volume.
``(iv) Reporting of a separate national
average drug acquisition cost for each drug for
independent retail pharmacies and chain
operated pharmacies.
``(v) Information on price concessions
including on and off invoice discounts,
rebates, and other price concessions.
``(vi) Information on average professional
dispensing fees paid.
``(H) Penalties.--
``(i) Failure to provide timely
information.--A retail community pharmacy that
knowingly fails to respond to a survey
conducted under this subsection on a timely
basis may be subject to a civil monetary
penalty in an amount not to exceed $10,000 for
each day in which such information has not been
provided.
``(ii) False information.--A retail
community pharmacy that knowingly provides
false information in response to a survey
conducted under this subsection may be subject
to a civil money penalty in an amount not to
exceed $100,000 for each item of false
information.
``(iii) Other penalties.--Any civil money
penalties imposed under this subparagraph shall
be 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).
``(I) Report on specialty drugs and pharmacies.--
``(i) In general.--Not later than 18 months
after the effective date of this subparagraph,
the Secretary shall submit a report to Congress
examining specialty drug coverage and
reimbursement under this title.
``(ii) Content of report.--Such report
shall include a description of how State
Medicaid programs define specialty drugs, how
much State Medicaid programs pay for specialty
drugs, how States and managed care plans
determine payment for specialty drugs, the
settings in which specialty drugs are dispensed
(such as retail community pharmacies or
specialty pharmacies), whether acquisition
costs for specialty drugs are captured in the
national average drug acquisition cost survey,
and recommendations as to whether specialty
pharmacies should be included in the survey of
retail prices to ensure national average drug
acquisition costs capture drugs sold at
specialty pharmacies and how such specialty
pharmacies should be defined.'';
(C) in paragraph (2)--
(i) in subparagraph (A), by inserting ``,
including payments rates under Medicaid managed
care plans,'' after ``under this title''; and
(ii) in subparagraph (B), by inserting
``and the basis for such dispensing fees''
before the semicolon; and
(D) in paragraph (4), by inserting ``, and
$5,000,000 for fiscal year 2020 and each fiscal year
thereafter,'' after ``2010''.
(2) Effective date.--The amendments made by this subsection
take effect on the 1st day of the 1st quarter that begins on or
after the date that is 18 months after the date of enactment of
this Act.
(c) Manufacturer Reporting of Wholesale Acquisition Cost.--Section
1927(b)(3) of such Act (42 U.S.C. 1396r-8(b)(3)) is amended--
(1) in subparagraph (A)(i)--
(A) in subclause (I), by striking ``and'' after the
semicolon;
(B) in subclause (II), by adding ``and'' after the
semicolon;
(C) by moving the left margins of subclause (I) and
(II) 2 ems to the right; and
(D) by adding at the end the following:
``(III) in the case of rebate
periods that begin on or after the date
of enactment of this subclause, on the
wholesale acquisition cost (as defined
in section 1847A(c)(6)(B)) for covered
outpatient drugs for the rebate period
under the agreement (including for all
such drugs that are sold under a new
drug application approved under section
505(c) of the Federal Food, Drug, and
Cosmetic Act);''; and
(2) in subparagraph (D)--
(A) in the matter preceding clause (i), by
inserting ``and clause (vii) of this subparagraph''
after ``1847A'';
(B) in clause (v), by striking ``and'' after the
comma;
(C) in clause (vi), by striking the period and
inserting ``, and''; and
(D) by inserting after clause (vi) the following:
``(vii) to the Secretary to disclose
(through a website accessible to the public)
the most recently reported wholesale
acquisition cost (as defined in section
1847A(c)(6)(B)) for each covered outpatient
drug (including for all such drugs that are
sold under a new drug application approved
under section 505(c) of the Federal Food, Drug,
and Cosmetic Act), as reported under
subparagraph (A)(i)(III).''.
SEC. 207. T-MSIS DRUG DATA ANALYTICS REPORTS.
(a) In General.--Not later than May 1 of each calendar year
beginning with calendar year 2021, the Secretary of Health and Human
Services (in this section referred to as the ``Secretary'') shall
publish on a website of the Centers for Medicare & Medicaid Services
that is accessible to the public a report of the most recently
available data on patterns related to prescriptions filled by providers
and reimbursed under the Medicaid program.
(b) Content of Report.--
(1) Required content.--Each report required under
subsection (a) for a calendar year shall include the following
information with respect to each State (and, to the extent
available, with respect to Puerto Rico, the United States
Virgin Islands, Guam, the Northern Mariana Islands, and
American Samoa):
(A) A comparison of covered outpatient drug (as
defined in section 1927(k)(2) of the Social Security
Act (42 U.S.C. 1396r-8(k)(2))) prescribing patterns
under the State Medicaid plan or waiver of such plan
(including drugs prescribed on a fee-for-service basis
and drugs prescribed under managed care arrangements
under such plan or waiver)--
(i) across all available forms or models of
reimbursement used under the plan or waiver;
(ii) within specialties and subspecialties,
as defined by the Secretary;
(iii) by episodes of care for--
(I) each chronic disease category,
as defined by the Secretary, that is
represented in the 10 conditions that
accounted for the greatest share of
total spending under the plan or waiver
during the year that is the subject of
the report;
(II) procedural groupings; and
(III) rare disease diagnosis codes
(except where the inclusion of such
information would jeopardize the
privacy of an individual, as determined
by the Secretary);
(iv) by patient demographic
characteristics, including race (to the extent
that the Secretary determines that there is
sufficient data available with respect to such
characteristic in a majority of States and that
inclusion of such characteristic would not
jeopardize the privacy of the individual),
gender, and age;
(v) by patient high-utilizer or risk
status; and
(vi) by high and low resource settings by
facility and place of service categories, as
determined by the Secretary.
(B) In the case of medical assistance for covered
outpatient drugs (as so defined) provided under a State
Medicaid plan or waiver of such plan in a managed care
setting, an analysis of the differences in managed care
prescribing patterns when a covered outpatient drug is
prescribed in a managed care setting as compared to
when the drug is prescribed in a fee-for-service
setting.
(2) Additional content.--To the extent available, a report
required under subsection (a) for a calendar year may include
State-specific information about prescription utilization
management tools under State Medicaid plans or waivers of such
plans, including--
(A) a description of prescription utilization
management tools under State programs to provide long-
term services and supports under a State Medicaid plan
or a waiver of such plan;
(B) a comparison of prescription utilization
management tools applicable to populations covered
under a State Medicaid plan waiver under section 1115
of the Social Security Act (42 U.S.C. 1315) and the
models applicable to populations that are not covered
under the waiver;
(C) a comparison of the prescription utilization
management tools employed by different Medicaid managed
care organizations, pharmacy benefit managers, and
related entities within the State;
(D) a comparison of the prescription utilization
management tools applicable to each enrollment category
under a State Medicaid plan or waiver; and
(E) a comparison of the prescription utilization
management tools applicable under the State Medicaid
plan or waiver by patient high-utilizer or risk status.
(3) Additional analysis.--To the extent practicable, the
Secretary shall include in each report published under
subsection (a)--
(A) analyses of national, State, and local patterns
of Medicaid population-based prescribing behaviors
(including an analysis of the impact of non-filled
prescriptions on identifying such patterns); and
(B) recommendations for administrative or
legislative action to improve the effectiveness of, and
reduce costs for, covered outpatient drugs under
Medicaid while ensuring timely beneficiary access to
medically necessary covered outpatient drugs.
(c) Use of T-MSIS Data.--Each report required under subsection (a)
shall, to the extent practicable--
(1) be prepared using data and definitions from the
Transformed Medicaid Statistical Information System (``T-
MSIS'') data set (or a successor data set) that is not more
than 24 months old on the date that the report is published;
and
(2) as appropriate, include a description with respect to
each State of the quality and completeness of the data, as well
as any necessary caveats describing the limitations of the data
reported to the Secretary by the State that are sufficient to
communicate the appropriate uses for the information.
(d) Preparation of Report.--Each report required under subsection
(a) shall be prepared by the Administrator for the Centers for Medicare
& Medicaid Services.
(e) Appropriation.--For fiscal year 2020 and each fiscal year
thereafter, there is appropriated to the Secretary $2,000,000 to carry
out this section.
SEC. 208. RISK-SHARING VALUE-BASED PAYMENT AGREEMENTS FOR COVERED
OUTPATIENT DRUGS UNDER MEDICAID.
(a) In General.--Section 1927 of the Social Security Act (42 U.S.C.
1396r-8) is amended by adding at the end the following new subsection:
``(l) State Option To Pay for Covered Outpatient Drugs Through
Risk-Sharing Value-Based Agreements.--
``(1) In general.--Beginning January 1, 2022, a State shall
have the option to pay (whether on a fee-for-service or managed
care basis) for covered outpatient drugs that are potentially
curative treatments intended for one-time use that are
administered to individuals under this title by entering into a
risk-sharing value-based payment agreement with the
manufacturer of the drug in accordance with the requirements of
this subsection.
``(2) Secretarial approval.--
``(A) In general.--A State shall submit a request
to the Secretary to enter into a risk-sharing value-
based payment agreement, and the Secretary shall not
approve a proposed risk-sharing value-based payment
agreement between a State and a manufacturer for
payment for a covered outpatient drug of the
manufacturer unless the following requirements are met:
``(i) Manufacturer has in effect a rebate
agreement and is in compliance with all
applicable requirements.--The manufacturer has
a rebate agreement in effect as required under
subsections (a) and (b) of this section and is
in compliance with all applicable requirements
under this title.
``(ii) No expected increase to projected
net federal spending.--
``(I) In general.--The Chief
Actuary certifies that the projected
payments for each covered outpatient
drug under a proposed risk-sharing
value-based payment agreement is not
expected to result in greater estimated
Federal spending under this title than
the net Federal spending that would
result in the absence of such
agreement.
``(II) Net federal spending
defined.--For purposes of this
subsection, the term `net Federal
spending' means the amount of Federal
payments the Chief Actuary estimates
would be made under this title for
administering a covered outpatient drug
to an individual eligible for medical
assistance under a State plan or a
waiver of such plan, reduced by the
amount of all rebates the Chief Actuary
estimates would be paid with respect to
the administering of such drug,
including all rebates under this title
and any supplemental or other
additional rebates, in the absence of
such an agreement.
``(III) Information.--The Chief
Actuary shall make the certifications
required under this clause based on the
most recently available and reliable
drug pricing and product information.
The State and manufacturer shall
provide the Secretary and the Chief
Actuary with all necessary information
required to make the estimates needed
for such certifications.
``(iii) Launch and list price
justifications.--The manufacturer submits all
relevant information and supporting
documentation necessary for pricing decisions
as deemed appropriate by the Secretary, which
shall be truthful and non-misleading, including
manufacturer information and supporting
documentation for launch price or list price
increases, and any applicable justification
required under section 1128L.
``(iv) Confidentiality of information;
penalties.--The provisions of subparagraphs (C)
and (D) of subsection (b)(3) shall apply to a
manufacturer that fails to submit the
information and documentation required under
clauses (ii) and (iii) on a timely basis, or
that knowingly provides false or misleading
information, in the same manner as such
provisions apply to a manufacturer with a
rebate agreement under this section.
``(B) Consideration of state request for
approval.--
``(i) In general.--The Secretary shall
treat a State request for approval of a risk-
sharing value-based payment agreement in the
same manner that the Secretary treats a State
plan amendment, and subpart B of part 430 of
title 42, Code of Federal Regulations,
including, subject to clause (ii), the timing
requirements of section 430.16 of such title
(as in effect on the date of enactment of this
subsection), shall apply to a request for
approval of a risk-sharing value-based payment
agreement in the same manner as such subpart
applies to a State plan amendment.
``(ii) Timing.--The Secretary shall consult
with the Commissioner of Food and Drugs as
required under subparagraph (C) and make a
determination on whether to approve a request
from a State for approval of a proposed risk-
sharing value-based payment agreement (or
request additional information necessary to
allow the Secretary to make a determination
with respect to such request for approval)
within the time period, to the extent
practicable, specified in section 430.16 of
title 42, Code of Federal Regulations (as in
effect on the date of enactment of this
subsection), but in no case shall the Secretary
take more than 180 days after the receipt of
such request for approval or response to such
request for additional information to make such
a determination (or request additional
information).
``(C) Consultation with the commissioner of food
and drugs.--In considering whether to approve a risk-
sharing value-based payment agreement, the Secretary,
to the extent necessary, shall consult with the
Commissioner of Food and Drugs to determine whether the
relevant clinical parameters specified in such
agreement are appropriate.
``(3) Installment-based payment structure.--
``(A) In general.--A risk-sharing value-based
payment agreement shall provide for a payment structure
under which, for every installment year of the
agreement (subject to subparagraph (B)), the State
shall pay the total installment year amount in equal
installments to be paid at regular intervals over a
period of time that shall be specified in the
agreement.
``(B) Requirements for installment payments.--
``(i) Timing of first payment.--The State
shall make the first of the installment
payments described in subparagraph (A) for an
installment year not later than 30 days after
the end of such year.
``(ii) Length of installment period.--The
period of time over which the State shall make
the installment payments described in
subparagraph (A) for an installment year shall
not be longer than 5 years.
``(iii) Nonpayment or reduced payment of
installments following a failure to meet
clinical parameter.--If, prior to the payment
date (as specified in the agreement) of any
installment payment described in subparagraph
(A) or any other alternative date or time frame
(as otherwise specified in the agreement), the
covered outpatient drug which is subject to the
agreement fails to meet a relevant clinical
parameter of the agreement, the agreement shall
provide that--
``(I) the installment payment shall
not be made; or
``(II) the installment payment
shall be reduced by a percentage
specified in the agreement that is
based on the outcome achieved by the
drug relative to the relevant clinical
parameter.
``(4) Notice of intent.--
``(A) In general.--Subject to subparagraph (B), a
manufacturer of a covered outpatient drug shall not be
eligible to enter into a risk-sharing value-based
payment agreement under this subsection with respect to
such drug unless the manufacturer notifies the
Secretary that the manufacturer is interested in
entering into such an agreement with respect to such
drug. The decision to submit and timing of a request to
enter into a proposed risk-sharing value-based payment
agreement shall remain solely within the discretion of
the State and shall only be effective upon Secretarial
approval as required under this subsection.
``(B) Treatment of subsequently approved drugs.--
``(i) In general.--In the case of a
manufacturer of a covered outpatient drug
designated under section 526 of the Federal
Food, Drug, and Cosmetics Act, and approved
under section 505 of such Act or licensed under
subsection (a) or (k) of section 351 of the
Public Health Service Act after the date of
enactment of this subsection, not more than 90
days after meeting with the Food and Drug
Administration following phase II clinical
trials for such drug (or, in the case of a drug
described in clause (ii), not later than March
31, 2022), the manufacturer must notify the
Secretary of the manufacturer's intent to enter
into a risk-sharing value-based payment
agreement under this subsection with respect to
such drug. If no such meeting has occurred, the
Secretary may use discretion as to whether a
potentially curative treatment intended for
one-time use may qualify for a risk-sharing
value-based payment agreement under this
section. A manufacturer notification of
interest shall not have any influence on a
decision for drug approval by the Food and Drug
Administration.
``(ii) Application to certain subsequently
approved drugs.--A drug described in this
clause is a covered outpatient drug of a
manufacturer--
``(I) that is approved under
section 505 of the Federal Food, Drug,
and Cosmetic Act or licensed under
section 351 of the Public Health
Service Act after the date of enactment
of this subsection; and
``(II) with respect to which, as of
January 1, 2022, more than 90 days have
passed after the manufacturer's meeting
with the Food and Drug Administration
following phase II clinical trials for
such drug.
``(iii) Parallel approval.--The Secretary,
in coordination with the Administrator of the
Centers for Medicare & Medicaid Services and
the Commissioner of Food and Drugs, shall, to
the extent practicable, approve a State's
request to enter into a proposed risk-sharing
value-based payment agreement that otherwise
meets the requirements of this subsection at
the time that such a drug is approved by the
Food and Drug Administration to help provide
that no State that wishes to enter into such an
agreement is required to pay for the drug in
full at one time if the State is seeking to pay
over a period of time as outlined in the
proposed agreement.
``(iv) Rule of construction.--Nothing in
this paragraph shall be applied or construed to
modify or affect the timeframes or factors
involved in the Secretary's determination of
whether to approve or license a drug under
section 505 of the Federal Food, Drug, and
Cosmetic Act or section 351 of the Public
Health Service Act.
``(5) Special payment rules.--
``(A) In general.--Except as otherwise provided in
this paragraph, with respect to an individual who is
administered a unit of a covered outpatient drug that
is reimbursed under a State plan by a State Medicaid
agency under a risk-sharing value-based payment
agreement in an installment year, the State shall
remain liable to the manufacturer of such drug for
payment for such unit without regard to whether the
individual remains enrolled in the State plan under
this title (or a waiver of such plan) for each
installment year for which the State is to make
installment payments for covered outpatient drugs
purchased under the agreement in such year.
``(B) Death.--In the case of an individual
described in subparagraph (A) who dies during the
period described in such subparagraph, the State plan
shall not be liable for any remaining payment for the
unit of the covered outpatient drug administered to the
individual which is owed under the agreement described
in such subparagraph.
``(C) Withdrawal of approval.--In the case of a
covered outpatient drug that is the subject of a risk-
sharing value-based payment agreement between a State
and a manufacturer under this subsection, including a
drug approved in accordance with section 506(c) of the
Federal Food, Drug, and Cosmetic Act, and such drug is
the subject of an application that has been withdrawn
by the Secretary, the State plan shall not be liable
for any remaining payment that is owed under the
agreement.
``(D) Alternative arrangement under agreement.--
Subject to approval by the Secretary, the terms of a
proposed risk-sharing value-based payment agreement
submitted for approval by a State may provide that
subparagraph (A) shall not apply.
``(E) Guidance.--Not later than January 1, 2022,
the Secretary shall issue guidance to States
establishing a process for States to notify the
Secretary when an individual who is administered a unit
of a covered outpatient drug that is purchased by a
State plan under a risk-sharing value-based payment
agreement ceases to be enrolled under the State plan
under this title (or a waiver of such plan) or dies
before the end of the installment period applicable to
such unit under the agreement.
``(6) Treatment of payments under risk-sharing value-based
agreements for purposes of average manufacturer price; best
price.--The Secretary shall treat any payments made to the
manufacturer of a covered outpatient drug under a risk-sharing
value-based payment agreement under this subsection during a
rebate period in the same manner that the Secretary treats
payments made under a State supplemental rebate agreement under
sections 447.504(c)(19) and 447.505(c)(7) of title 42, Code of
Federal Regulations (or any successor regulations) for purposes
of determining average manufacturer price and best price under
this section with respect to the covered outpatient drug and a
rebate period and for purposes of offsets required under
subsection (b)(1)(B).
``(7) Assessments and report to congress.--
``(A) Assessments.--
``(i) In general.--Not later than 180 days
after the end of each assessment period of any
risk-sharing value-based payment agreement for
a State approved under this subsection, the
Secretary shall conduct an evaluation of such
agreement which shall include an evaluation by
the Chief Actuary to determine whether program
spending under the risk-sharing value-based
payment agreement aligned with the projections
for the agreement made under paragraph
(2)(A)(ii), including an assessment of whether
actual Federal spending under this title under
the agreement was less or more than net Federal
spending would have been in the absence of the
agreement.
``(ii) Assessment period.--For purposes of
clause (i)--
``(I) the first assessment period
for a risk-sharing value-based payment
agreement shall be the period of time
over which payments are scheduled to be
made under the agreement for the first
10 individuals who are administered
covered outpatient drugs under the
agreement except that such period shall
not exceed the 5-year period after the
date on which the Secretary approves
the agreement; and
``(II) each subsequent assessment
period for a risk-sharing value-based
payment agreement shall be the 5-year
period following the end of the
previous assessment period.
``(B) Results of assessments.--
``(i) Termination option.--If the Secretary
determines as a result of the assessment by the
Chief Actuary under subparagraph (A) that the
actual Federal spending under this title for
any covered outpatient drug that was the
subject of the State's risk-sharing value-based
payment agreement was greater than the net
Federal spending that would have resulted in
the absence of the agreement, the Secretary may
terminate approval of such agreement and shall
immediately conduct an assessment under this
paragraph of any other ongoing risk-sharing
value-based payment agreement to which the same
manufacturer is a party.
``(ii) Repayment required.--
``(I) In general.--If the Secretary
determines as a result of the
assessment by the Chief Actuary under
subparagraph (A) that the Federal
spending under the risk-sharing value-
based agreement for a covered
outpatient drug that was subject to
such agreement was greater than the net
Federal spending that would have
resulted in the absence of the
agreement, the manufacturer shall repay
the difference to the State and Federal
governments in a timely manner as
determined by the Secretary.
``(II) Termination for failure to
pay.--The failure of a manufacturer to
make repayments required under
subclause (I) in a timely manner shall
result in immediate termination of all
risk-sharing value-based agreements to
which the manufacturer is a party.
``(III) Additional penalties.--In
the case of a manufacturer that fails
to make repayments required under
subclause (I), the Secretary may treat
such manufacturer in the same manner as
a manufacturer that fails to pay
required rebates under this section,
and the Secretary may--
``(aa) suspend or terminate
the manufacturer's rebate
agreement under this section;
and
``(bb) pursue any other
remedy that would be available
if the manufacturer had failed
to pay required rebates under
this section.
``(C) Report to congress.--Not later than 5 years
after the first risk-sharing value-based payment
agreement is approved under this subsection, the
Secretary shall submit to Congress and make available
to the public a report that includes--
``(i) an assessment of the impact of risk-
sharing value-based payment agreements on
access for individuals who are eligible for
benefits under a State plan or waiver under
this title to medically necessary covered
outpatient drugs and related treatments;
``(ii) an analysis of the impact of such
agreements on overall State and Federal
spending under this title;
``(iii) an assessment of the impact of such
agreements on drug prices, including launch
price and price increases; and
``(iv) such recommendations to Congress as
the Secretary deems appropriate.
``(8) Guidance and regulations.--
``(A) In general.--Not later than January 1, 2022,
the Secretary shall issue guidance to States seeking to
enter into risk-sharing value-based payment agreements
under this subsection that includes a model template
for such agreements. The Secretary may issue any
additional guidance or promulgate regulations as
necessary to implement and enforce the provisions of
this subsection.
``(B) Model agreements.--
``(i) In general.--If a State expresses an
interest in pursuing a risk-sharing value-based
payment agreement under this subsection with a
manufacturer for the purchase of a covered
outpatient drug, the Secretary may share with
such State any risk-sharing value-based
agreement between a State and the manufacturer
for the purchase of such drug that has been
approved under this subsection. While such
shared agreement may serve as a template for a
State that wishes to propose, the use of a
previously approved agreement shall not affect
the submission and approval process for
approval of a proposed risk-sharing value-based
payment agreement under this subsection,
including the requirements under paragraph
(2)(A).
``(ii) Confidentiality.--In the case of a
risk-sharing value-based payment agreement that
is disclosed to a State by the Secretary under
this subparagraph and that is only in effect
with respect to a single State, the
confidentiality of information provisions
described in subsection (b)(3)(D) shall apply
to such information.
``(C) OIG consultation.--
``(i) In general.--The Secretary shall
consult with the Office of the Inspector
General of the Department of Health and Human
Services to determine whether there are
potential program integrity concerns (including
issues related to compliance with sections
1128B and 1877) with agreement approvals or
templates and address accordingly.
``(ii) OIG policy updates as necessary.--
The Inspector General of the Department of
Health and Human Services shall review and
update, as necessary, any policies or
guidelines of the Office of the Inspector
General of the Department of Human Services
(including policies related to the enforcement
of section 1128B) to accommodate the use of
risk-sharing value-based payment agreements in
accordance with this section.
``(9) Rules of construction.--
``(A) Modifications.--Nothing in this subsection or
any regulations promulgated under this subsection shall
prohibit a State from requesting a modification from
the Secretary to the terms of a risk-sharing value-
based payment agreement. A modification that is
expected to result in any increase to projected net
State or Federal spending under the agreement shall be
subject to recertification by the Chief Actuary as
described in paragraph (2)(A)(ii) before the
modification may be approved.
``(B) Rebate agreements.--Nothing in this
subsection shall be construed as requiring a State to
enter into a risk-sharing value-based payment agreement
or as limiting or superseding the ability of a State to
enter into a supplemental rebate agreement for a
covered outpatient drug.
``(C) FFP for payments under risk-sharing value-
based payment agreements.--Federal financial
participation shall be available under this title for
any payment made by a State to a manufacturer for a
covered outpatient drug under a risk-sharing value-
based payment agreement in accordance with this
subsection, except that no Federal financial
participation shall be available for any payment made
by a State to a manufacturer under such an agreement on
and after the effective date of a disapproval of such
agreement by the Secretary.
``(D) Continued application of other provisions.--
Except as expressly provided in this subsection,
nothing in this subsection or in any regulations
promulgated under this subsection shall affect the
application of any other provision of this Act.
``(10) Appropriations.--For fiscal year 2020 and each
fiscal year thereafter, there are appropriated to the Secretary
$5,000,000 for the purpose of carrying out this subsection.
``(11) Definitions.--In this subsection:
``(A) Chief actuary.--The term `Chief Actuary'
means the Chief Actuary of the Centers for Medicare &
Medicaid Services.
``(B) Installment year.--The term `installment
year' means, with respect to a risk-sharing value-based
payment agreement, a 12-month period during which a
covered outpatient drug is administered under the
agreement.
``(C) Potentially curative treatment intended for
one-time use.--The term `potentially curative treatment
intended for one-time use' means a treatment that
consists of the administration of a covered outpatient
drug that--
``(i) is a form of gene therapy for a rare
disease, as defined by the Commissioner of Food
and Drugs, designated under section 526 of the
Federal Food, Drug, and Cosmetics Act, and
approved under section 505 of such Act or
licensed under subsection (a) or (k) of section
351 of the Public Health Service Act to treat a
serious or life-threatening disease or
condition;
``(ii) if administered in accordance with
the labeling of such drug, is expected to
result in either--
``(I) the cure of such disease or
condition; or
``(II) a reduction in the symptoms
of such disease or condition to the
extent that such disease or condition
is not expected to lead to early
mortality; and
``(iii) is expected to achieve a result
described in clause (ii), which may be achieved
over an extended period of time, after not more
than 3 administrations.
``(D) Relevant clinical parameter.--The term
`relevant clinical parameter' means, with respect to a
covered outpatient drug that is the subject of a risk-
sharing value-based payment agreement--
``(i) a clinical endpoint specified in the
drug's labeling or supported by one or more of
the compendia described in section
1861(t)(2)(B)(ii)(I) that--
``(I) is able to be measured or
evaluated on an annual basis for each
year of the agreement on an independent
basis by a provider or other entity;
and
``(II) is required to be achieved
(based on observed metrics in patient
populations) under the terms of the
agreement; or
``(ii) a surrogate endpoint (as defined in
section 507(e)(9) of the Federal Food, Drug,
and Cosmetic Act), including those developed by
patient-focused drug development tools, that--
``(I) is able to be measured or
evaluated on an annual basis for each
year of the agreement on an independent
basis by a provider or other entity;
and
``(II) has been qualified by the
Food and Drug Administration.
``(E) Risk-sharing value-based payment agreement.--
The term `risk-sharing value-based payment agreement'
means an agreement between a State plan and a
manufacturer--
``(i) for the purchase of a covered
outpatient drug of the manufacturer that is a
potentially curative treatment intended for
one-time use;
``(ii) under which payment for such drug
shall be made pursuant to an installment-based
payment structure that meets the requirements
of paragraph (3);
``(iii) which conditions payment on the
achievement of at least 2 relevant clinical
parameters (as defined in subparagraph (C));
``(iv) which provides that--
``(I) the State plan will directly
reimburse the manufacturer for the
drug; or
``(II) a third party will reimburse
the manufacture in a manner approved by
the Secretary;
``(v) is approved by the Secretary in
accordance with paragraph (2).
``(F) Total installment year amount.--The term
`total installment year amount' means, with respect to
a risk-sharing value-based payment agreement for the
purchase of a covered outpatient drug and an
installment year, an amount equal to the product of--
``(i) the unit price of the drug charged
under the agreement; and
``(ii) the number of units of such drug
administered under the agreement during such
installment year.''.
(b) Conforming Amendments.--
(1) Section 1903(i)(10)(A) of the Social Security Act (42
U.S.C. 1396b(i)(10)(A)) is amended by striking ``or unless
section 1927(a)(3) applies'' and inserting ``, section
1927(a)(3) applies with respect to such drugs, or such drugs
are the subject of a risk-sharing value-based payment agreement
under section 1927(l)''.
(2) Section 1927(b) of the Social Security Act (42 U.S.C.
1396r-8(b)) is amended--
(A) in paragraph (1)(A), by inserting ``but
excluding any drugs for which payment is made by a
State under a risk-sharing value-based payment
agreement under subsection (l))'' after ``for coverage
of such drugs''; and
(B) in paragraph (3)--
(i) in subparagraph (C)(i), by inserting
``or subsection (l)(2)(A)'' after
``subparagraph (A)''; and
(ii) in subparagraph (D), in the matter
preceding clause (i), by inserting ``, under
subsection (l)(2)(A),'' after ``under this
paragraph''.
SEC. 209. MODIFICATION OF MAXIMUM REBATE AMOUNT UNDER MEDICAID DRUG
REBATE PROGRAM.
(a) In General.--Subparagraph (D) of section 1927(c)(2) of the
Social Security Act (42 U.S.C. 1396r-8(c)(2)) is amended to read as
follows:
``(D) Maximum rebate amount.--
``(i) In general.--Except as provided in
clause (ii), in no case shall the sum of the
amounts applied under paragraph (1)(A)(ii) and
this paragraph with respect to each dosage form
and strength of a single source drug or an
innovator multiple source drug for a rebate
period exceed--
``(I) for rebate periods beginning
after December 31, 2009, and before
September 30, 2022, 100 percent of the
average manufacturer price of the drug;
and
``(II) for rebate periods beginning
on or after October 1, 2022, 125
percent of the average manufacturer
price of the drug.
``(ii) No maximum amount for drugs if amp
increases outpace inflation.--
``(I) In general.--If the average
manufacturer price with respect to each
dosage form and strength of a single
source drug or an innovator multiple
source drug increases on or after
October 1, 2021, and such increased
average manufacturer price exceeds the
inflation-adjusted average manufacturer
price determined with respect to such
drug under subclause (II) for the
rebate period, clause (i) shall not
apply and there shall be no limitation
on the sum of the amounts applied under
paragraph (1)(A)(ii) and this paragraph
for the rebate period, and any
subsequent rebate period until the
average manufacturer price of the drug
is the same or less than the inflation-
adjusted average manufacturer price
determined with respect to such drug
under subclause (II) for the rebate
period, with respect to each dosage
form and strength of the single source
drug or innovator multiple source drug.
``(II) Inflation-adjusted average
manufacturer price defined.--In this
clause, the term `inflation-adjusted
average manufacturer price' means, with
respect to a single source drug or an
innovator multiple source drug and a
rebate period, the average manufacturer
price for each dosage form and strength
of the drug for the calendar quarter
beginning July 1, 1990 (without regard
to whether or not the drug has been
sold or transferred to an entity,
including a division or subsidiary of
the manufacturer, after the 1\st\ day
of such quarter), increased by the
percentage by which the consumer price
index for all urban consumers (United
States city average) for the month
before the month in which the rebate
period begins exceeds such index for
September 1990.''.
(b) Treatment of Subsequently Approved Drugs.--Section
1927(c)(2)(B) of the Social Security Act (42 U.S.C. 1396r-8(c)(2)(B))
is amended by inserting ``and clause (ii)(II) of subparagraph (D)''
after ``clause (ii)(II) of subparagraph (A)''.
(c) Technical Amendments.--Section 1927(c)(3)(C)(ii)(IV) of the
Social Security Act (42 U.S.C. 1396r-9(c)(3)(C)(ii)(IV)) is amended--
(1) by striking ``subparagraph (A)'' and inserting
``paragraph (3)(A)''; and
(2) by striking ``this subparagraph'' and inserting
``paragraph (3)(C)''.
<all>