[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4811 Introduced in House (IH)]
<DOC>
117th CONGRESS
1st Session
H. R. 4811
To amend title XVIII of the Social Security Act to require the
Secretary of Health and Human Services to negotiate prices of drugs
furnished under the Medicare program, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 29, 2021
Mr. Doggett (for himself, Mr. Beyer, Mr. Blumenauer, Mr. Bowman, Ms.
Bush, Mr. Cartwright, Mr. Castro of Texas, Mr. Cicilline, Mr. Cleaver,
Mr. Cohen, Mr. DeFazio, Ms. DeLauro, Mrs. Dingell, Ms. Escobar, Mr.
Espaillat, Mr. Garamendi, Mr. Garcia of Illinois, Mr. Green of Texas,
Mr. Grijalva, Ms. Jackson Lee, Ms. Jayapal, Mr. Kahele, Ms. Kaptur, Mr.
Khanna, Mr. Kim of New Jersey, Mr. Krishnamoorthi, Mr. Langevin, Ms.
Lee of California, Mr. Levin of Michigan, Mr. Lowenthal, Mr. McNerney,
Mr. Mfume, Mr. Nadler, Mr. Neguse, Ms. Norton, Ms. Ocasio-Cortez, Ms.
Omar, Mr. Perlmutter, Ms. Pingree, Mr. Pocan, Ms. Porter, Ms. Pressley,
Mr. Raskin, Ms. Schakowsky, Mr. Sherman, Mr. Takano, Mr. Thompson of
Mississippi, Ms. Titus, Ms. Tlaib, Mr. Torres of New York, Mr. Vela,
Mr. Yarmuth, Ms. Leger Fernandez, Ms. Moore of Wisconsin, Ms. Waters,
Ms. Chu, Ms. Newman, and Ms. Velazquez) introduced the following bill;
which was referred to the Committee on Energy and Commerce, and in
addition to the Committees on Ways and Means, Oversight and Reform,
Veterans' Affairs, and Armed Services, for a period to be subsequently
determined by the Speaker, in each case for consideration of such
provisions as fall within the jurisdiction of the committee concerned
_______________________________________________________________________
A BILL
To amend title XVIII of the Social Security Act to require the
Secretary of Health and Human Services to negotiate prices of drugs
furnished under the Medicare program, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Medicare Negotiation and Competitive
Licensing Act of 2021''.
SEC. 2. REQUIRING THE SECRETARY OF HEALTH AND HUMAN SERVICES TO
NEGOTIATE PRICES OF DRUGS FURNISHED UNDER THE MEDICARE
PROGRAM.
(a) Part D.--Section 1860D-11 of the Social Security Act (42 U.S.C.
1395w-111) is amended by striking subsection (i) and inserting the
following new subsection:
``(i) Negotiation of Lower Drug Prices.--
``(1) In general.--Notwithstanding any other provision of
law, the Secretary shall, for plan years beginning on or after
the date of the enactment of this subsection, negotiate with
pharmaceutical manufacturers the negotiated prices (including
discounts, rebates, and other price concessions) that may be
charged to PDP sponsors and MA organizations during a
negotiated price period (as specified by the Secretary) for
specified covered part D drugs for such plan year for part D
eligible individuals who are enrolled under a prescription drug
plan or under an MA-PD plan.
``(2) Negotiation considerations.--
``(A) Factors.--In negotiating such prices under
paragraph (1), the Secretary shall take into account
the following factors:
``(i) The comparative clinical
effectiveness and cost effectiveness, when
available from an impartial source, of such
drug.
``(ii) The budgetary impact of providing
coverage of such drug.
``(iii) The number of similarly effective
drugs or alternative treatment regimens for
each approved use of such drug.
``(iv) The associated financial burden on
patients that utilize such drug.
``(v) The associated unmet patient need for
such drug.
``(vi) The total revenues from global sales
obtained by the manufacturer for such drug and
the associated investment in research and
development of such drug by the manufacturer.
``(B) Assessment of factors.--For purposes of
assessing the factors described in subparagraph (A)
with respect to a covered part D drug, the Secretary
shall, as soon as practicable, establish a value
assessment process consisting of standardized measures
for such factors. With respect to a negotiation that
occurs before the Secretary establishes such a process,
the Secretary may use such other assessments as the
Secretary determines appropriate (such as assessments
used with respect to ascertaining the value of drugs by
the Secretary of Veterans Affairs, the Patient-Centered
Outcomes Research Institute, the Institute for Clinical
and Economic Review, and other countries).
``(3) Specified covered part d drugs.--In this subsection,
the term `specified covered part D drug' means, with respect to
a negotiated price period beginning during--
``(A) the first plan year beginning on or after the
date of the enactment of this subsection, a covered
part D drug that is a sole source drug (as defined in
section 1833(t)(14)(F)(i))--
``(i) with respect to which gross revenues
for the preceding plan year were $100,000,000
or greater; or
``(ii) that contains an active ingredient
that was first approved by the Administrator
for Food and Drugs not later than 10 years
prior to the beginning of such first plan year;
``(B) the second plan year beginning on or after
the date of the enactment of this subsection, a covered
part D drug that is a sole source drug (as so defined)
or a biosimilar biological product;
``(C) the third plan year beginning on or after the
date of the enactment of this subsection, a covered
part D drug--
``(i) that is described in subparagraph
(B); or
``(ii) with respect to which, during the
preceding plan year, fewer than 3 manufacturers
(other than the manufacturer of such drug)
marketed a generic version of such drug; and
``(D) the fourth plan year beginning on or after
the date of the enactment of this subsection or a
subsequent plan year, a covered part D drug.
``(4) Negotiated price limitations and finalization.--The
negotiated price of each specified covered part D drug for a
negotiated price period--
``(A) may not be less than an amount necessary to
allow such manufacturer to recoup such manufacturer's
research and development costs associated with such
drug;
``(B) subject to subparagraph (A), may not exceed
110 percent of the median price of such drug for the
preceding plan year in the 10 countries of the
Organisation for Economic Cooperation and Development
with the highest gross domestic product and with a per
capita income that is not less than half the per capita
income of the United States for such preceding plan
year; and
``(C) shall be finalized not later than 30 days
before a PDP sponsor is required to submit information
described in subsection (b)(2) for the first plan year
in such negotiated price period.
``(5) Competitive licensing authority.--
``(A) In general.--Notwithstanding any exclusivity
under clause (iii) or (iv) of section 505(j)(5)(F) of
the Federal Food, Drug, and Cosmetic Act, clause (iii)
or (iv) of section 505(c)(3)(E) of such Act, section
351(k)(7)(A) of the Public Health Service Act, or
section 527(a) of the Federal Food, Drug, and Cosmetic
Act, or by an extension of such exclusivity under
section 505A of such Act or section 505E of such Act,
and any other provision of law that provides for market
exclusivity (or extension of market exclusivity) with
respect to a drug, in the case that the Secretary is
unable to successfully negotiate an appropriate price
for a specified covered part D drug for a negotiated
price period, the Secretary shall authorize the use of
any patent, clinical trial data, or other exclusivity
granted by the Federal government with respect to such
drug as the Secretary determines appropriate for
purposes of manufacturing such drug for sale under a
Federal health care program, the insurance program
under chapter 89 of title 5, United States Code, or a
group health plan or health insurance coverage offered
by a health insurance issuer. Any entity making use of
a competitive license to use patent, clinical trial
data, or other exclusivity under this section shall
provide to the manufacturer holding such exclusivity
reasonable compensation, as determined by the Secretary
based on the following factors:
``(i) The risk-adjusted value of any
Federal government subsidies and investments in
research and development used to support the
development of such drug.
``(ii) The risk-adjusted value of any
investment made by such manufacturer in the
research and development of such drug.
``(iii) The impact of the price, including
license compensation payments, on meeting the
medical need of all patients.
``(iv) The relationship between the price
of such drug, including compensation payments,
and the health benefits of such drug.
``(v) Other relevant factors determined
appropriate by the Secretary to provide
reasonable compensation.
``(B) Reasonable compensation.--
``(i) Limitations.--Reasonable compensation
described in subparagraph (A) with respect to a
specified covered outpatient drug and a plan
year may not be made in an amount--
``(I) less than an amount necessary
to allow such manufacturer to recoup
such manufacturer's research and
development costs associated with such
drug; and
``(II) subject to subclause (I),
greater than 12 percent of the
negotiated price set by the Secretary
for such drug and such plan year.
``(ii) Recovery.--The manufacturer
described in subparagraph (A) may seek recovery
against the United States in the United States
Court of Federal Claims.
``(C) Interim period.--Until 1 year after a drug
described in subparagraph (A) is approved under section
505(j) of the Federal Food, Drug, and Cosmetic Act or
section 351(k) of the Public Health Service Act and is
provided under license issued by the Secretary under
such subparagraph, PDP plans and MA-PD plans shall not
pay more for such drug than 110 percent of the median
of the prices available, during the most recent 12-
month period for which data is available prior to the
beginning of such negotiated price period, from the
manufacturer to any wholesaler, retailer, provider,
health maintenance organization, nonprofit entity, or
governmental entity in the ten Organisation for
Economic Cooperation and Development countries that
have the largest gross domestic product with a per
capita income that is not less than half the per capita
income of the United States.
``(D) Authorization for secretary to procure drugs
directly.--
``(i) In general.--The Secretary may
procure a drug manufactured pursuant to a
competitive license under subparagraph (A) for
purposes of this part or pursuant to a Federal
program license under subparagraph (C)(ii) for
purposes of a Federal program directly from the
entity manufacturing the drug pursuant to such
a license.
``(ii) Clarification regarding application
of buy american act.--In the case where the
Secretary procures a drug under this
subparagraph, the provisions of chapter 83 of
title 41, United States Code (commonly referred
to as the `Buy American Act') shall apply.
``(E) Priority for u.s. manufacturers in
authorizing competitive licenses.--In authorizing a
competitive license under this paragraph, the
Secretary--
``(i) shall give preference to entities
that the Secretary determines have the highest
safety and security standards; and
``(ii) may give priority to entities that
will manufacture such drug in the United
States.
``(6) FDA review of licensed drug applications.--The
Secretary shall prioritize review of applications under section
505(j) of the Federal Food, Drug, and Cosmetic Act for drugs
licensed under paragraph (3)(A).
``(7) Prohibition of anticompetitive behavior.--No drug
manufacturer may engage in anticompetitive behavior with
another manufacturer that may interfere with the issuance and
implementation of a competitive license or run contrary to
public policy.
``(8) Required reporting.--The Secretary may require
pharmaceutical manufacturers or any other entity to disclose to
the Secretary such information that the Secretary determines
necessary for purposes of carrying out this subsection.
``(9) Clarification.--Nothing in this subsection shall be
construed as preventing the sponsor of a prescription drug plan
or an organization offering an MA-PD plan from obtaining a
discount or reduction of the price for a covered part D drug
below the price negotiated by the Secretary.
``(10) Publication of negotiated prices and contract
terms.--The Secretary shall make available on a public website
the price negotiated under this subsection, and any contract
terms associated with such price, with respect to each
specified covered part D drug.''.
(b) Part B.--
(1) In general.--Section 1842(o) of the Social Security Act
(42 U.S.C. 1395u(o)) is amended by adding at the end the
following new paragraph:
``(8)(A) Notwithstanding any preceding provision of this
subsection, in the case of a drug or biological described in paragraph
(1) furnished during a negotiated price period beginning on or after
January 1 of the first year beginning on or after the date of the
enactment of this paragraph, the amount payable under this part for
such drug or biological shall be equal to the negotiated price for such
drug or biological and period, as established pursuant to subparagraph
(B).
``(B) The provisions of section 1860D-11(i) shall be applied to the
negotiation of a negotiated price for a drug or biological described in
subparagraph (A) and a negotiated price period in a similar manner (as
determined by the Secretary) as such provisions apply with respect to
the negotiation of a negotiated price for a specified part D drug for a
negotiated price period under such section.''.
(2) Application to ma.--Section 1852 of the Social Security
Act (42 U.S.C. 1395w-22) is amended by adding at the end the
following new subsection:
``(o) Limitation on Reimbursement for Certain Drugs.--In the case
of a drug or biological furnished during a negotiated price period (as
defined for purposes of section 1842(o)(8)) for which payment may be
made under such section, the total reimbursement for such drug or
biological made by an Medicare Advantage plan may not exceed the
negotiated price for such drug or biological and period established
pursuant to such section.''.
SEC. 3. IDENTIFICATION OF PRESCRIPTION DRUG PRICE SPIKES.
(a) Definitions.--In this section:
(1) Applicable entity.--The term ``applicable entity''
means the holder of an application approved under subsection
(c) or (j) of section 505 of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 355) or of a license issued under
subsection (a) or (k) of section 351 of the Public Health
Service Act (42 U.S.C. 262) for a drug described in paragraph
(5)(A).
(2) Average manufacturer price.--The term ``average
manufacturer price''--
(A) has the same meaning given such term under
section 1927(k)(1) of the Social Security Act (42
U.S.C. 1396r-8(k)(1)); or
(B) with respect to a drug for which there is no
average manufacturer price as so defined, such term
shall mean the wholesale acquisition cost of the drug.
(3) Commerce.--The term ``commerce'' has the meaning given
such term in section 4 of the Federal Trade Commission Act (15
U.S.C. 44).
(4) Inspector general.--The term ``Inspector General''
means the Inspector General of the Department of Health and
Human Services.
(5) Prescription drug.--
(A) In general.--The term ``prescription drug''
means any drug (as defined in section 201(g) of the
Federal Food, Drug, and Cosmetic Act (21 U.S.C.
321(g))), including a combination product whose primary
mode of action is determined under section 503(g) of
such Act (21 U.S.C. 353(g)) to be that of a drug, and
that--
(i) is subject to section 503(b)(1) of the
Federal Food, Drug, and Cosmetic Act (21 U.S.C.
353(b)(1)); and
(ii) is covered by a Federal health care
program (as defined in section 1128B(f) of the
Social Security Act (42 U.S.C. 1320a-7b(f))).
(B) Treatment of reformulated drugs.--For purposes
of this section, a prescription drug with respect to
which the Secretary of Health and Human Services has
approved any minor reformulation that does not produce
a meaningful therapeutic benefit, the drug that was
approved prior to any such reformulation and the drug
with any such reformulation shall be considered one
prescription drug.
(6) Price spike.--
(A) In general.--The term ``price spike'' means an
increase in the average manufacturer price in commerce
of a prescription drug for which the price spike
percentage is equal to or greater than applicable price
increase allowance.
(B) Price spike percentage.--The price spike
percentage is the percentage (if any) by which--
(i) the average manufacturer price of a
prescription drug in commerce for the calendar
year; exceeds
(ii) the average manufacturer price of such
prescription drug in commerce for the calendar
year preceding such year.
(C) Applicable price increase allowance.--The
applicable price increase allowance for any calendar
year is the percentage (rounded to the nearest one-
tenth of 1 percent) by which the C-CPI-U (as defined in
section 1(f)(6) of the Internal Revenue Code of 1986)
for that year exceeds the C-CPI-U for the preceding
calendar year.
(7) Price spike revenue.--
(A) In general.--The price spike revenue for any
calendar year is an amount equal to--
(i) the gross price spike revenue, minus
(ii) the adjustment amount.
(B) Gross price spike revenue.--The gross price
spike revenue for any calendar year is an amount equal
to the product of--
(i) an amount equal to the difference
between clause (i) of paragraph (6)(B) and
clause (ii) of such paragraph; and
(ii) the total number of units of the
prescription drug which were sold in commerce
in such calendar year.
(C) Adjustment amount.--The adjustment amount is
the amount, if any, of the gross price spike revenue
which the Inspector General has determined is due
solely to an increase in the cost of the inputs
necessary to manufacture the prescription drug subject
to the price spike.
(b) Submission by Pharmaceutical Companies of Information to
Inspector General.--
(1) In general.--For each prescription drug, the applicable
entity shall submit to the Inspector General a quarterly report
that includes the following:
(A) For each prescription drug of the applicable
entity--
(i) the total number of units of the
prescription drug which were sold in commerce
in the preceding calendar quarter;
(ii) the average and median price per unit
of such prescription drug in commerce in the
preceding calendar quarter, disaggregated by
month; and
(iii) the gross revenues from sales of such
prescription drug in commerce in the preceding
calendar quarter.
(B) Such information related to increased input
costs or public health considerations as the applicable
entity may wish the Inspector General to consider in
making a determination under clause (ii) of subsection
(c)(2)(B) or an assessment in clause (iii) of such
subsection for the preceding calendar quarter.
(C) Such information related to any anticipated
increased input costs for the subsequent calendar
quarter as the applicable entity may wish the Inspector
General to consider in making a determination under
clause (ii) of subsection (c)(2)(B) or an assessment in
clause (iii) of such subsection for such calendar
quarter.
(2) Penalty for failure to submit.--
(A) In general.--An applicable entity described in
paragraph (1) that fails to submit information to the
Inspector General regarding a prescription drug, as
required by such paragraph, before the date specified
in paragraph (3) shall be liable for a civil penalty,
as determined under subparagraph (B).
(B) Amount of penalty.--The amount of the civil
penalty shall be equal to the product of--
(i) an amount, as determined appropriate by
the Inspector General, which is--
(I) not less than 0.5 percent of
the gross revenues from sales of the
prescription drug described in
subparagraph (A) for the preceding
calendar year, and
(II) not greater than 1 percent of
the gross revenues from sales of such
prescription drug for the preceding
calendar year, and
(ii) the number of days in the period
between--
(I) the applicable date specified
in paragraph (3), and
(II) the date on which the
Inspector General receives the
information described in paragraph (1)
from the applicable entity.
(3) Submission deadline.--An applicable entity shall submit
each quarterly report described in paragraph (1) not later than
January 17, April 18, June 15, and September 15 of each
calendar year.
(c) Assessment by Inspector General.--
(1) In general.--Not later than the last day in February of
each year, the Inspector General, in consultation with other
relevant Federal agencies (including the Federal Trade
Commission), shall--
(A) complete an assessment of the information the
Inspector General received pursuant to subsection
(b)(1) with respect to sales of prescription drugs in
the preceding calendar year; and
(B) in the case of any prescription drug which
satisfies the conditions described in paragraph (1) or
(2) of subsection (d), submit a recommendation to the
Secretary of Health and Human Services that such drug
be exempted from application of the tax imposed under
section 4192 of the Internal Revenue Code of 1986 (as
added by section 3 of this Act) for such year.
(2) Elements.--The assessment required by paragraph (1)(A)
shall include the following:
(A) Identification of each price spike relating to
a prescription drug in the preceding calendar year.
(B) For each price spike identified under
subparagraph (A)--
(i) a determination of the price spike
revenue;
(ii) a determination regarding the accuracy
of the information submitted by the applicable
entity regarding increased input costs; and
(iii) an assessment of the rationale of the
applicable entity for the price spike.
(d) Exemption of Certain Drugs.--
(1) In general.--The Secretary of Health and Human
Services, upon recommendation of the Inspector General pursuant
to subsection (c)(1)(B), may exempt any prescription drug which
has been subject to a price spike during the preceding calendar
year from application of the tax imposed under section 4192 of
the Internal Revenue Code of 1986 for such year, if the
Secretary determines that--
(A) based on information submitted pursuant to
subsection (b)(1)(B), a for-cause price increase
exemption should apply; or
(B)(i) the prescription drug which has been subject
to a price spike has an average manufacturer price of
not greater than $10 for a 30 day supply; and
(ii) such drug is marketed by not less than 3 other
holders of applications approved under subsection (c)
or (j) of section 505 of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 355), where such applications
approved under such subsection (j) use as a reference
drug the drug so approved under such subsection (c).
(2) Clarification.--In considering, under paragraph (1)(A),
information submitted pursuant to subsection (b)(1)(B), the
Secretary--
(A) has the discretion to determine that such
information does not warrant a for-cause price increase
exemption; and
(B) shall exclude from such consideration any
information submitted by the applicable entity
threatening to curtail or limit production of the
prescription drug if the Secretary does not grant an
exemption from the application of the tax under section
4192 of the Internal Revenue Code of 1986.
(e) Inspector General Report to Internal Revenue Service.--
(1) In general.--Subject to paragraph (3), not later than
the last day in February of each year, the Inspector General
shall transmit to the Internal Revenue Service a report on the
findings of the Inspector General with respect to the
information the Inspector General received under subsection
(b)(1) with respect to the preceding calendar year and the
assessment carried out by the Inspector General under
subsection (c)(1)(A) with respect to such information.
(2) Contents.--The report transmitted under paragraph (1)
shall include the following:
(A) The information received under subsection
(b)(1) with respect to the preceding calendar year.
(B) The price spikes identified under subparagraph
(A) of subsection (c)(2).
(C) The price spike revenue determinations made
under subparagraph (B)(i) of such subsection.
(D) The determinations and assessments made under
clauses (ii) and (iii) of subparagraph (B) of such
subsection.
(3) Notice and opportunity for hearing.--
(A) In general.--No report shall be transmitted to
the Internal Revenue Service under paragraph (1) in
regards to a prescription drug unless the Inspector
General has provided the applicable entity with--
(i) the assessment of such drug under
subsection (c)(1)(A); and
(ii) notice of their right to a hearing in
regards to such assessment.
(B) Notice.--The notice required under subparagraph
(A) shall be provided to the applicable entity not
later than 30 days after completion of the assessment
under subsection (c)(1)(A).
(C) Request for hearing.--Subject to subparagraph
(E), an applicable entity may request a hearing before
the Secretary of Health and Human Services not later
than 30 days after the date on which the notice under
subparagraph (B) is received.
(D) Completion of hearing.--In the case of an
applicable entity which requests a hearing pursuant to
subparagraph (C), the Secretary of Health and Human
Services shall, not later than 12 months after the date
on which the assessment under subsection (c)(1)(A) was
completed by the Inspector General--
(i) make a final determination in regards
to the accuracy of such assessment; and
(ii) provide the report described in
paragraph (2) to the Internal Revenue Service.
(E) Limitation.--An applicable entity may request a
hearing under subparagraph (C) with respect to a
particular prescription drug only once within a 5-year
period.
(4) Publication.--
(A) In general.--Not later than the last day in
February of each year, subject to subparagraph (B), the
Inspector General shall make the report transmitted
under paragraph (1) available to the public, including
on the Internet website of the Inspector General,
subject to subparagraph (B).
(B) Proprietary information.--The Inspector General
shall ensure that any information made public in
accordance with subparagraph (A) excludes trade secrets
and confidential commercial information.
(f) Notification.--The Secretary of the Treasury, in conjunction
with the Inspector General, shall notify, at such time and in such
manner as the Secretary of the Treasury shall provide, each applicable
entity in regard to any prescription drug which has been determined to
have been subject to a price spike during the preceding calendar year
and the amount of the tax imposed on such applicable entity pursuant to
section 4192 of the Internal Revenue Code of 1986.
SEC. 4. EXCISE TAX ON PRESCRIPTION DRUGS SUBJECT TO PRICE SPIKES.
(a) In General.--Subchapter E of chapter 32 of the Internal Revenue
Code of 1986 is amended by adding at the end the following new section:
``SEC. 4192. PRESCRIPTION DRUGS SUBJECT TO PRICE SPIKES.
``(a) Imposition of Tax.--
``(1) In general.--Subject to paragraph (3), for each
taxable prescription drug sold by an applicable entity during
the calendar year, there is hereby imposed on such entity a tax
equal to the greater of--
``(A) the annual price spike tax for such
prescription drug, or
``(B) subject to paragraph (2), the cumulative
price spike tax for such prescription drug.
``(2) Limitation.--In the case of a taxable prescription
drug for which the applicable period (as determined under
subsection (c)(2)(E)(i)) is less than 2 calendar years, the
cumulative price spike tax shall not apply.
``(3) Exemption.--For any calendar year in which the
Secretary of Health and Human Services has provided an
exemption for a taxable prescription drug pursuant to section
3(d) of the Medicare Negotiation and Competitive Licensing Act
of 2021, the amount of the tax determined under paragraph (1)
for such drug or device for such calendar year shall be reduced
to zero.
``(b) Annual Price Spike Tax.--
``(1) In general.--The amount of the annual price spike tax
shall be equal to the applicable percentage of the price spike
revenue received by the applicable entity on the sale of the
taxable prescription drug during the calendar year.
``(2) Applicable percentage.--For purposes of paragraph
(1), the applicable percentage shall be equal to--
``(A) in the case of a taxable prescription drug
which has been subject to a price spike percentage
greater than the applicable price increase allowance
(as defined in section 3(a)(6)(C) of the Medicare
Negotiation and Competitive Licensing Act of 2021) but
less than 15 percent, 50 percent,
``(B) in the case of a taxable prescription drug
which has been subject to a price spike percentage
equal to or greater than 15 percent but less than 20
percent, 75 percent, and
``(C) in the case of a taxable prescription drug
which has been subject to a price spike percentage
equal to or greater than 20 percent, 100 percent.
``(c) Cumulative Price Spike Tax.--
``(1) In general.--The amount of the cumulative price spike
tax shall be equal to the applicable percentage of the
cumulative price spike revenue received by the applicable
entity on the sale of the taxable prescription drug during the
calendar year.
``(2) Applicable percentage.--
``(A) In general.--For purposes of paragraph (1),
the applicable percentage shall be equal to--
``(i) in the case of a taxable prescription
drug which has been subject to a cumulative
price spike percentage greater than the
cumulative price increase allowance but less
than the first multi-year percentage, 50
percent,
``(ii) in the case of a taxable
prescription drug which has been subject to a
cumulative price spike percentage equal to or
greater than the first multi-year percentage
but less than the second multi-year percentage,
75 percent, and
``(iii) in the case of a taxable
prescription drug which has been subject to a
cumulative price spike percentage equal to or
greater than the second multi-year percentage,
100 percent.
``(B) Cumulative price spike percentage.--The
cumulative price spike percentage is the percentage (if
any) by which--
``(i) the average manufacturer price of the
taxable prescription drug in commerce for the
preceding calendar year, exceeds
``(ii) the average manufacturer price of
such prescription drug in commerce for the base
year.
``(C) Cumulative price increase allowance.--For
purposes of clause (i) of subparagraph (A), the
cumulative price increase allowance for any calendar
year is the percentage (rounded to the nearest one-
tenth of 1 percent) by which the C-CPI-U (as defined in
section 1(f)(6)) for that year exceeds the C-CPI-U for
the base year.
``(D) Multi-year percentages.--For purposes of
subparagraph (A), the first multi-year percentage and
second multi-year percentage shall be determined in
accordance with the following table:
------------------------------------------------------------------------
First Second
``Number of years in applicable period multi-year multi-year
percentage percentage
------------------------------------------------------------------------
2 years....................................... 17.5 22.5
3 years....................................... 20 25
4 years....................................... 22.5 27.5
5 years....................................... 25 30.
------------------------------------------------------------------------
``(E) Applicable period and base year.--
``(i) Applicable period.--The applicable
period shall be the lesser of--
``(I) the 5 preceding calendar
years,
``(II) all calendar years beginning
after the date of enactment of this
section, or
``(III) all calendar years in which
the taxable prescription drug was sold
in commerce.
``(ii) Base year.--The base year shall be
the calendar year immediately preceding the
applicable period.
``(3) Cumulative price spike revenue.--For purposes of
paragraph (1), the cumulative price spike revenue for any
taxable prescription drug shall be an amount equal to--
``(A) an amount equal to the product of--
``(i) an amount (not less than zero) equal
to--
``(I) the average manufacturer
price of such prescription drug in
commerce for the preceding calendar
year, minus
``(II) the average manufacturer
price of such prescription drug in
commerce for the base year, and
``(ii) the total number of units of such
prescription drug which were sold in commerce
in the preceding calendar year, minus
``(B) an amount equal to the sum of the adjustment
amounts, if any, determined under section 3(a)(7)(C) of
the Medicare Negotiation and Competitive Licensing Act
of 2021 for each calendar year during the applicable
period.
``(d) Definitions.--For purposes of this section--
``(1) Taxable prescription drug.--The term `taxable
prescription drug' means a prescription drug which has been
identified by the Inspector General of the Department of Health
and Human Services as being subject to a price spike.
``(2) Other terms.--The terms `applicable entity', `average
manufacturer price', `price spike', `price spike percentage',
and `price spike revenue' have the same meaning given such
terms under section 3(a) of the Medicare Negotiation and
Competitive Licensing Act of 2021.''.
(b) Clerical Amendments.--
(1) The heading of subchapter E of chapter 32 of the
Internal Revenue Code of 1986 is amended by striking ``Medical
Devices'' and inserting ``Certain Medical Devices and
Prescription Drugs''.
(2) The table of subchapters for chapter 32 of such Code is
amended by striking the item relating to subchapter E and
inserting the following new item:
``subchapter e. certain medical devices and prescription drugs''.
(3) The table of sections for subchapter E of chapter 32 of
such Code is amended by adding at the end the following new
item:
``Sec. 4192. Prescription drugs subject to price spikes.''.
(c) Effective Date.--The amendments made by this section shall
apply to sales after the date of the enactment of this Act.
SEC. 5. APPLICATION OF MEDICARE PRICES TO OTHER INSURERS AND THE
UNINSURED.
(a) Federal Health Care Programs.--Part A of title XI of the Social
Security Act (42 U.S.C. 1301 et seq.) is amended by adding at the end
the following new section:
``SEC. 1150C. APPLICATION OF MEDICARE NEGOTIATED PRICES.
``(a) In General.--Notwithstanding any other provision of law, the
price recognized under a Federal health care program (as defined in
section 1128B) or the insurance program established under chapter 89 of
title 5, United States Code, for a specified covered part D drug (as
defined in section 1860D-11(i)), or a drug or biological for which
payment may be made under section 1842(o), with respect to a year for
which coverage is provided under such Federal health care program or
such insurance program may not exceed the price for such drug
established under such section 1860D-11(i) or 1842(o), as applicable.
``(b) Application of Other Provisions.--The provisions of section
1860D-11(i) shall apply with respect to a Federal health care program
and the insurance program established under chapter 89 of title 5,
United States Code, in the same manner as such provisions apply with
respect to a prescription drug plan or an MA-PD plan under part D or C,
respectively, of title XVIII.''.
(b) Private Insurer.--Subpart II of part A of title XXVII of the
Public Health Service Act (42 U.S.C. 300gg-11 et seq.) is amended by
adding at the end the following new section:
``SEC. 2730. APPLICATION OF MEDICARE NEGOTIATED PRICES.
``(a) In General.--Notwithstanding any other provision of law, the
price recognized under a group health plan, or under individual or
group health insurance coverage offered by a health insurance issuer,
for a specified covered part D drug (as defined in section 1860D-
11(i)), or a drug or biological for which payment may be made under
section 1842(o), with respect to a year for which coverage is provided
under such plan or such coverage may not exceed the price for such drug
established under such section 1860D-11(i) or 1842(o), as applicable.
``(b) Application of Other Provisions.--The provisions of section
1860D-11(i) shall apply with respect to a group health plan, or
individual or group health insurance coverage offered by a health
insurance issuer, in the same manner as such provisions apply with
respect to a prescription drug plan or an MA-PD plan under part D or C,
respectively, of title XVIII.''.
(c) Uninsured.--
(1) In general.--Notwithstanding any other provision of
law, the amount that a pharmacy furnishing a drug to a
specified individual (as defined in paragraph (2)) may require
as payment for such drug from such individual shall not exceed
the price for such drug established under section 1860D-11(i)
of the Social Security Act (42 U.S.C. 1395w-111(i)) (or, if
applicable, under section 1842(o)(8) of such Act).
(2) Definition.--For purposes of paragraph (1), the term
``specified individual'' means, with respect to a drug, an
individual who is not covered, or who has no coverage with
respect to such drug, under a group health plan or group or
individual health insurance coverage (as such terms are defined
in section 2791 of the Public Health Service Act (42 U.S.C.
300gg-91)) or under a Federal health care program (as defined
in section 1128B of the Social Security Act, but including the
insurance program established under chapter 89 of title 5,
United States Code).
(3) Enforcement.--The Secretary of Health and Human
Services may impose a civil monetary penalty of not more than
$10,000 per day on a pharmacy for a violation of paragraph (1).
SEC. 6. MANUFACTURER PROVISION OF INFORMATION.
(a) In General.--In the case of a manufacturer of a drug or
biological subject to a competitive licensing agreement under section
1860D-11(i)(5) of the Social Security Act, as added by this Act, such
manufacturer shall, upon request from an entity electing to manufacture
such drug or biological, provide to such entity materials, data, and
information relating to the manufacture or supply of such drug or
biological, including--
(1) cellular clones and hybridoma stocks;
(2) plasmids, plasmid maps, and sequences of antibody
complementarity determining regions;
(3) physicochemical and biophysical characterization;
(4) growth conditions and protocols;
(5) attenuation or inactivation protocols;
(6) extraction and purification protocols;
(7) synthetic work-up and schemes;
(8) sufficient quantities of the drug or biological for
testing;
(9) the protocols and methods used for testing the drug or
biological; and
(10) the expected outcomes from those protocols.
(b) Enforcement.--The Secretary of Health and Human Services may
impose a civil monetary penalty on a manufacturer of not more than
$10,000 per day for a violation of subsection (a).
SEC. 7. APPLICABILITY OF NEGOTIATED PRICE TO PRESCRIPTION DRUGS
FURNISHED BY THE DEPARTMENT OF DEFENSE AND THE DEPARTMENT
OF VETERANS AFFAIRS.
(a) In General.--Section 8126(a) of title 38, United States Code,
is amended--
(1) in paragraph (2), by inserting ``, but may not exceed
the amount of the price negotiated by the Secretary of Health
and Human Services under section 1860D-11(i) of the Social
Security Act (42 U.S.C. 1395w-111(i)) (as amended by the
Medicare Negotiation and Competitive Licensing Act of 2019) for
a specified covered part D drug (as defined in such section)
(or, if applicable, may not exceed the amount of the price
negotiated by the Secretary of Health and Human Services under
section 1842(o)(8) of such Act for a drug or biological payable
under such section) that is a covered drug of a manufacturer''
after ``best interests of the Department or such Federal
agencies''; and
(2) in paragraph (3), by inserting ``or, for a covered drug
of a manufacturer that is a specified covered part D drug (as
defined in section 1860D-11(i) of the Social Security Act (42
U.S.C. 1395w-111(i)) (as amended by the Medicare Negotiation
and Competitive Licensing Act of 2019)) or a drug or biological
for which payment may be made under section 1842(o)(8) of such
Act, the price negotiated by the Secretary of Health and Human
Services under such section 1806D-11(i) or 1842(o)(8) (as
applicable) for the specified covered part D drug or the drug
or biological'' after ``the price charged under the Federal
Supply Schedule at the time the drug is procured''.
(b) Department of Defense Elements for Purposes of Pricing
Standards.--Section 1074g(f) of title 10, United States Code, is
amended--
(1) in the header, by inserting ``and National Mail-Order
Pharmacy Program'' after ``Pharmacy Program'';
(2) by striking ``the TRICARE retail pharmacy program shall
be treated as an element of the Department of Defense'' and
inserting ``the TRICARE retail pharmacy program and the
national mail-order pharmacy program shall be treated as
elements of the Department of Defense''; and
(3) by striking ``provided by pharmacies under the
program'' and inserting ``provided under such programs''.
SEC. 8. SPECIFIED COVERED PART D DRUGS EXCISE TAX.
(a) In General.--Subchapter E of chapter 32 of the Internal Revenue
Code of 1986 is amended by adding at the end the following new section:
``SEC. 4193. SPECIFIED COVERED PART D DRUGS.
``(a) In General.--There is hereby imposed on the sale by the
manufacturer, producer, or importer of any specified covered part D
drug for a price in excess of the negotiated price in violation of
section 1860D-11(i)(5)(C) of the Social Security Act during any period
described in such section a tax equal to 100 percent of the price for
which so sold.
``(b) Definitions.--The terms `specified covered part D drug' and
`negotiated price' have the meaning such terms have under section
1860D-11 of the Social Security Act.''.
(b) Clerical Amendments.--
(1) The heading of subchapter E of chapter 32 of the
Internal Revenue Code of 1986 is amended by striking ``Medical
Devices'' and inserting ``Other Medical Products''.
(2) The table of subchapters for chapter 32 of such Code is
amended by striking the item relating to subchapter E and
inserting the following new item:
``subchapter e. other medical products''.
(3) The table of sections for subchapter E of chapter 32 of
such Code is amended by adding at the end the following new
item:
``Sec. 4193. Specified covered part D drugs.''.
(c) Effective Date.--The amendments made by this section shall
apply to sales on or after the date that is 1 year after the date of
the enactment of this Act.
SEC. 9. DRUG MANUFACTURER REPORTING.
Part P of title III of the Public Health Service Act (42 U.S.C.
280g et seq.) is amended by adding at the end the following:
``SEC. 399V-7. DRUG MANUFACTURER REPORTING.
``(a) Mandatory Reporting.--A drug manufacturer shall submit to the
Secretary and to Congress an annual report specifying with respect to
the previous calendar year (except as provided in subsection (d)(2))--
``(1) the total expenditures of the manufacturer on--
``(A) domestic and foreign drug research and
development, including an itemized description of--
``(i) basic and preclinical research;
``(ii) clinical research, reported
separately for each clinical trial;
``(iii) development of alternative dosage
forms and strengths for the drug molecule or
combinations, including the molecule;
``(iv) other drug development activities,
such as nonclinical laboratory studies and
record and report maintenance;
``(v) pursuing new or expanded indications
for such drug through supplemental applications
under section 505 of the Federal Food, Drug,
and Cosmetic Act;
``(vi) carrying out postmarket requirements
related to such drug, including under section
505(o)(3) of such Act;
``(vii) carrying out risk evaluation and
mitigation strategies in accordance with
section 505-1 of such Act; and
``(viii) marketing research;
``(B) the acquisition of drug components and
packaging, in total and per unit sold, broken out by
source and cost and identifying specific costs that
reflect internal transfers within the manufacturer's
company;
``(C) other acquisitions relating to drugs,
including for the purchase of patents and licensing or
the acquisition of any corporate entity owning any
rights to a drug during or after development of the
drug; and
``(D) marketing, advertising, and educating for the
promotion of a drug, including a breakdown of amounts
aimed at consumers, prescribers, managed care
organizations, and others, irrespective of whether a
particular drug is mentioned in the marketing,
advertising, or educating;
``(2) the gross revenue, net revenue, gross profit, and net
profit of the manufacturer with respect to drugs;
``(3) the total number of units of each type of drug that
were sold in interstate commerce;
``(4) pricing information with respect to the sale of
drugs, including--
``(A) wholesale acquisition cost;
``(B) net average price realized by prescription
drug benefit managers for drugs provided to individuals
in the United States, after accounting for any rebates
or other payments from the manufacturer to the pharmacy
benefit manager and from the pharmacy benefit manager
to the manufacturer; and
``(C) the net price of each drug, after accounting
for discounts, rebates, or other financial
considerations, charged to purchasers in each
applicable country of the Organisation for Economic Co-
operation and Development;
``(5) any Federal benefits received by the manufacturer
with respect to a drug, including the amounts and periods of
impact for each such benefit, including tax credits; Federal
grants, including from the National Institutes of Health, the
Department of Defense, the Department of Energy, the Centers
for Disease Control and Prevention, or other Federal
departments or agencies; patent applications that benefitted
from such grants; patent extensions; exclusivity periods; and
waivers of fees;
``(6) the percentage of research and development
expenditures described in clauses (i) through (v) of paragraph
(1)(A) that were derived from Federal funds;
``(7) executive compensation for the chief executive
officer, chief financial officer, and the 3 other most highly
compensated executive officers, including bonuses, paid by such
manufacturer, and stock options affiliated with the
manufacturer that were offered to or accrued by such officers;
and
``(8) any other information as the Secretary may require.
``(b) Voluntary Supplemental Reporting.--A drug manufacturer may
supplement a report under subsection (a) with any additional
information the manufacturer chooses to provide related to drug pricing
decisions, such as--
``(1) total expenditures on drug research, drug
development, and clinical trials on drugs that failed to
receive approval by the Food and Drug Administration; and
``(2) a list of drugs and drug prices of other
manufacturers for purposes of comparison with the
manufacturer's own drugs and drug prices.
``(c) Special Rule.--A drug manufacturer shall--
``(1) to the extent possible, disaggregate the information
required to be reported by this section by the particular drug
involved; and
``(2) submit all information required to be reported by
this section with respect to each applicable drug in a single
annual report.
``(d) Submission of Reports.--
``(1) In general.--
``(A) Submission by drug manufacturers.--Drug
manufacturers shall submit the annual reports required
under this section to the Secretary in a usable format,
as the Secretary may require.
``(B) Collation by the secretary.--The Secretary
shall collate the reports received as described in
subparagraph (A) and submit such collated reports to
Congress, together with an analysis of the reports by
the Secretary that includes--
``(i) a summary of data from the reports;
``(ii) consideration of factors such as
trends on research and development costs,
Federal benefits, and manufacturer patient
assistance programs; and
``(iii) the relationship between the
factors described in clause (ii) and
prescription drug prices.
``(C) Public availability.--The Secretary shall
make the reports submitted by manufacturers as
described in subparagraph (A) and the collated reports
together with the analysis of the Secretary described
in subparagraph (B) publicly available, including by
posting such reports to the internet website of the
Department of Health and Human Services, in a
searchable format.
``(2) Initial report.--
``(A) In general.--A drug manufacturer shall submit
an initial report pursuant to this section not later
than one year after the date of enactment of this
subparagraph (except as provided in subparagraph (B)).
``(B) Reporting period.--Notwithstanding the
requirement in subsection (a) that each report under
such subsection be for the previous calendar year, the
initial report of a drug manufacturer under subsection
(a) shall include, for each drug marketed by the
manufacturer, the information described in paragraphs
(1) through (6) of subsection (a) for the calendar year
period beginning with the later of--
``(i) the calendar year in which the drug
was approved under section 505 of the Federal
Food, Drug, and Cosmetic Act, was licensed
under section 351 of this Act, or received an
exemption under section 505(i) of the Federal
Food, Drug, and Cosmetic Act or section
351(a)(3) of this Act; and
``(ii) the calendar year in which the
manufacturer acquired the drug so approved,
licensed, or exempted.
``(C) Small businesses.--In the case of a drug
manufacturer that has fewer than 500 employees, the
initial report required by in subparagraph (A) shall be
submitted by a date determined by the Secretary, which
shall be--
``(i) not earlier than the deadline
described in subparagraph (A); and
``(ii) not later than the date that is 3
years after the date of enactment of this
clause.
``(e) Audit by Third Party.--The Secretary shall select a
percentage (to be determined by the Secretary) of the reports submitted
under subsection (a) for a fiscal year to be audited by an accredited
third-party auditor (to be selected by the Secretary).
``(f) Penalty for Noncompliance.--The Secretary shall report to the
Office of the Inspector General any manufacturer's failure to submit a
complete report as required under this section. Any manufacturer that
fails to submit a complete report required under this section shall be
subject to a civil penalty of up to $200,000 for each day on which the
violation continues. The Secretary shall collect the civil penalties
under this subsection and, without further appropriation, shall use
such funds to support research of the National Institutes of Health.
``(g) Definition.--In this section, the term `drug manufacturer'
means the manufacturer of an approved drug (including a drug approved
under subsection (c) or (j) of section 505 of the Federal Food, Drug,
and Cosmetic Act and a biological product licensed under subsection (a)
or (k) of section 351 of this Act).''.
<all>