[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[S. 4011 Introduced in Senate (IS)]
<DOC>
117th CONGRESS
2d Session
S. 4011
To amend title XVIII of the Social Security Act to provide for a cap on
beneficiary liability under part D of the Medicare program, and for
other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
April 6, 2022
Mr. Warnock introduced the following bill; which was read twice and
referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend title XVIII of the Social Security Act to provide for a cap on
beneficiary liability under part D of 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 ``Capping Drug Costs for Seniors Act
of 2022''.
SEC. 2. MEDICARE PART D BENEFIT 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 2025
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 2025 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 2025,'' after ``paragraph (4),''; and
(ii) in clause (ii)(III), by striking
``2020 and each subsequent year'' and inserting
``each of years 2020 through 2024,''; and
(C) in subparagraph (D)--
(i) in clause (i)--
(I) in the matter preceding
subclause (I), by inserting ``for a
year preceding 2025,'' after
``paragraph (4),''; and
(II) in subclause (I)(bb), by
striking ``a year after 2018'' and
inserting ``each of years 2018 through
2024''; and
(ii) in clause (ii)(V), by striking ``2019
and each subsequent year'' and inserting ``each
of years 2019 through 2024'';
(2) in paragraph (3)(A)--
(A) in the matter preceding clause (i), by
inserting ``for a year preceding 2025,'' after ``and
(4),''; and
(B) in clause (ii), by striking ``for a subsequent
year'' and inserting ``for each of years 2007 through
2024''; and
(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 moving the margin of
each such redesignated item 2 ems to
the right;
(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 2025,
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 2025 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 2024 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 each of years 2021
through 2024''; 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 2025, is equal to
$2,000; 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
2025, for amounts''; and
(D) in subparagraph (E), by striking ``In
applying'' and inserting ``For each of years 2011
through 2024, in applying''.
(b) Reinsurance Payment Amount.--Section 1860D-15(b)(1) of the
Social Security Act (42 U.S.C. 1395w-115(b)(1)) is amended--
(1) by striking ``equal to 80 percent'' and inserting
``equal to--
``(A) for a year preceding 2025, 80 percent'';
(2) in subparagraph (A), as added by subparagraph (A), by
striking the period at the end and inserting ``; and''; and
(3) by adding at the end the following new subparagraph:
``(B) for 2025 and each subsequent year, the sum
of--
``(i) with respect to applicable drugs (as
defined in section 1860D-14B(g)(2)), an amount
equal to 20 percent of such allowable
reinsurance costs attributable to that portion
of gross covered 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); and
``(ii) with respect to covered part D drugs
that are not applicable drugs (as so defined),
an amount equal to 40 percent of such allowable
reinsurance costs attributable to that portion
of gross covered 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).''.
(c) Manufacturer Discount Program.--
(1) In general.--Part D of title XVIII of the Social
Security Act (42 U.S.C. 1395w-101 et seq.) is amended by
inserting after section 1860D-14A 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).
``(b) Terms of Agreement.--
``(1) In general.--
``(A) Agreement.--An agreement under this section
shall require the manufacturer to provide, in
accordance with this section, access to discounted
prices for applicable drugs of the manufacturer that
are dispensed to applicable beneficiaries on or after
January 1, 2025.
``(B) Clarification.--Nothing in this section shall
be construed as affecting--
``(i) the application of a coinsurance of
25 percent of the negotiated price, as applied
under paragraph (2)(A) of section 1860D-2(b),
for costs described in such paragraph; or
``(ii) the application of the copayment
amount described in paragraph (4)(A) of such
section, with respect to costs described in
such paragraph.
``(C) Timing of agreement.--
``(i) Special rule for 2025.--In order for
an agreement with a manufacturer to be in
effect under this section with respect to the
period beginning on January 1, 2025, and ending
on December 31, 2025, the manufacturer shall
enter into such agreement not later than March
1, 2024.
``(ii) 2026 and subsequent years.--In order
for an agreement with a manufacturer to be in
effect under this section with respect to plan
year 2026 or a subsequent plan year, the
manufacturer shall enter into such agreement
(or such agreement shall be renewed under
paragraph (4)(A)) not later than a calendar
quarter or semi-annual deadline established by
the Secretary.
``(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 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 31 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 31 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.
``(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 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;
``(C) 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
``(D) providing a reasonable dispute resolution
mechanism to resolve disagreements between
manufacturers and applicable beneficiaries.
``(2) Monitoring compliance.--The Secretary shall monitor
compliance by a manufacturer with the terms of an agreement
under this section.
``(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) Implementation.--The Secretary may implement the
program under this section by program instruction or otherwise.
``(4) Administration.--Chapter 35 of title 44, United
States Code, shall not apply to the program under this section.
``(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 may impose a civil
money penalty on a manufacturer that fails to provide
discounts for applicable drugs of the manufacturer
dispensed to applicable beneficiaries in accordance
with such agreement for each such failure in an amount
the Secretary determines is equal to 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, as determined in
accordance with section 1860D-2(b)(4)(C), for covered
part D drugs in the year that exceed the annual
deductible for such year, as specified in section
1860D-2(b)(1).
``(2) Applicable drug.--The term `applicable drug', with
respect to an applicable beneficiary, means 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; 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, with respect to an applicable drug of a
manufacturer dispensed during a year to an applicable
beneficiary--
``(i) who has not incurred costs, as
determined in accordance with section 1860D-
2(b)(4)(C), 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)(i) for the year, 90 percent of
the negotiated price of such drug; and
``(ii) who has incurred such costs, as so
determined, in the year that are equal to or
exceed such threshold for the year, 80 percent
of the negotiated price of such drug.
``(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) Special case for certain claims.--
``(i) Claims spanning deductible.--In the
case where the entire amount of the negotiated
price of an individual claim for an applicable
drug with respect to an applicable beneficiary
does not fall above the annual deductible
specified in section 1860D-2(b)(1) for the
year, the manufacturer of the applicable drug
shall provide the discounted price under this
section on only the portion of the negotiated
price of the applicable drug that falls above
such annual deductible.
``(ii) Claims spanning out-of-pocket
threshold.--In the case where the entire amount
of the negotiated price of an individual claim
for an applicable drug with respect to an
applicable beneficiary does not fall entirely
below or entirely above the annual out-of-
pocket threshold specified in section 1860D-
2(b)(4)(B)(i) for the year, the manufacturer of
the applicable drug shall provide the
discounted price--
``(I) in accordance with
subparagraph (A)(i) on the portion of
the negotiated price of the applicable
drug that falls below such threshold;
and
``(II) in accordance with
subparagraph (A)(ii) on the portion of
such price of such drug that falls at
or above such 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 for purposes of 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 with respect
to applicable drugs dispensed on or after January 1, 2025, 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, 2025, with respect to applicable drugs dispensed
prior to such date.''.
(3) Inclusion of actuarial value of manufacturer discounts
in bids.--Section 1860D-11 of the Social Security Act (42
U.S.C. 1395w-111) is amended--
(A) in subsection (b)(2)(C)(iii)--
(i) by striking ``assumptions regarding the
reinsurance'' an inserting ``assumptions
regarding--
``(I) the reinsurance''; and
(ii) by adding at the end the following:
``(II) for 2025 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 inserted by clause
(i) of this subparagraph, by adding ``and'' at
the end; and
(iii) by adding at the end the following:
``(ii) for 2025 and each subsequent year,
the manufacturer discounts provided under
section 1860D-14B;''.
(d) 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 2025, 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
2025 or the annual out-of-pocket threshold
specified in subsection (b)(4)(B) for the year
for 2025 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
2025, 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 2025, 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 2025, 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 2025, the elimination''; and
(B) in paragraph (2)--
(i) in subparagraph (C), by striking ``The
continuation'' and inserting ``For a year
preceding 2025, the continuation''; and
(ii) in subparagraph (E), by striking
``1860D-2(b)(4)(A)(i)(I)'' and inserting
``1860D-2(b)(4)(A)(i)(I)(aa) (for a year
preceding 2025)''.
(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)(4)(B)(i)'' and inserting ``section 1860D-2(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 2025, 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 2025 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 2025'' after
``1860D-2(b)(3)''; and
(B) by inserting ``for such year'' before the
period.
(7) Section 1860D-43 of the Social Security Act (42 U.S.C.
1395w-153) is amended--
(A) in subsection (a)--
(i) by striking paragraph (1) and inserting
the following:
``(1) participate in--
``(A) for 2011 through 2024, the Medicare coverage
gap discount program under section 1860D-14A; and
``(B) for 2025 and each subsequent year, the
manufacturer discount program under section 1860D-
14B;'';
(ii) by striking paragraph (2) and
inserting the following:
``(2) have entered into and have in effect--
``(A) for 2011 through 2024, an agreement described
in subsection (b) of section 1860D-14A with the
Secretary; and
``(B) for 2025 and each subsequent year, an
agreement described in subsection (b) of section 1860D-
14B with the Secretary; and''; and
(iii) in paragraph (3), by striking ``such
section'' and inserting ``section 1860D-14A'';
and
(B) by striking subsection (b) and inserting the
following:
``(b) Effective Date.--Paragraphs (1)(A), (2)(A), and (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, 2025, and
paragraphs (1)(B) and (2)(B) of such subsection shall apply to covered
part D drugs dispensed under this part on or after January 1, 2025.''.
(8) Section 1927 of the Social Security Act (42 U.S.C.
1396r-8) is amended--
(A) in subsection (c)(1)(C)(i)(VI), by inserting
before the period at the end the following: ``or under
the manufacturer discount program under section 1860D-
14B''; and
(B) in subsection (k)(1)(B)(i)(V), by inserting
before the period at the end the following: ``or under
section 1860D-14B''.
(e) Effective Date.--The amendments made by this section shall
apply with respect to plan year 2025 and subsequent plan years.
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