Title III — Drug Pricing

S. 3 · 116th Congress · Jan 3, 2019 · Lineage

III Drug Pricing

Sec. 301 Requiring drug manufacturers to provide drug rebates for drugs dispensed to low-income individuals

(a)

In general— Section 1860D–2 of the Social Security Act (42 U.S.C. 1395w–102) is amended—

(1)

in subsection (e)(1), in the matter preceding subparagraph (A), by inserting “and subsection (f)” after “this subsection”; and

(2)

by adding at the end the following new subsection:

“(f) Prescription drug rebate agreement for rebate eligible individuals

“(1) Requirement

“(A) In general—For plan years beginning on or after January 1, 2021, in this part, the term covered part D drug does not include any drug or biological product that is manufactured by a manufacturer that has not entered into and have in effect a rebate agreement described in paragraph (2).

“(B) 2020 plan year requirement—Any drug or biological product manufactured by a manufacturer that declines to enter into a rebate agreement described in paragraph (2) for the period beginning on January 1, 2020, and ending on December 31, 2020, shall not be included as a “covered part D drug” for the subsequent plan year.

“(2) Rebate agreement—A rebate agreement under this subsection shall require the manufacturer to provide to the Secretary a rebate for each rebate period (as defined in paragraph (6)(B)) ending after December 31, 2019, in the amount specified in paragraph (3) for any covered part D drug of the manufacturer dispensed after December 31, 2019, to any rebate eligible individual (as defined in paragraph (6)(A)) for which payment was made by a PDP sponsor or MA organization under this part for such period, including payments passed through the low-income and reinsurance subsidies under sections 1860D–14 and 1860D–15(b), respectively. Such rebate shall be paid by the manufacturer to the Secretary not later than 30 days after the date of receipt of the information described in section 1860D–12(b)(8), including as such section is applied under section 1857(f)(3), or 30 days after the receipt of information under subparagraph (D) of paragraph (3), as determined by the Secretary. Insofar as not inconsistent with this subsection, the Secretary shall establish terms and conditions of such agreement relating to compliance, penalties, and program evaluations, investigations, and audits that are similar to the terms and conditions for rebate agreements under paragraphs (3) and (4) of section 1927(b).

“(3) Rebate for rebate eligible Medicare drug plan enrollees

“(A) In general—The amount of the rebate specified under this paragraph for a manufacturer for a rebate period, with respect to each dosage form and strength of any covered part D drug provided by such manufacturer and dispensed to a rebate eligible individual, shall be equal to the product of—

“(i) the total number of units of such dosage form and strength of the drug so provided and dispensed for which payment was made by a PDP sponsor or an MA organization under this part for the rebate period, including payments passed through the low-income and reinsurance subsidies under sections 1860D–14 and 1860D–15(b), respectively; and

“(ii) the amount (if any) by which—

“(I) the Medicaid rebate amount (as defined in subparagraph (B)) for such form, strength, and period, exceeds

“(II) the average Medicare drug program rebate eligible rebate amount (as defined in subparagraph (C)) for such form, strength, and period.

“(B) Medicaid rebate amount—For purposes of this paragraph, the term Medicaid rebate amount means, with respect to each dosage form and strength of a covered part D drug provided by the manufacturer for a rebate period—

“(i) in the case of a single source drug or an innovator multiple source drug, the amount specified in paragraph (1)(A)(ii)(II) or (2)(C) of section 1927(c) plus the amount, if any, specified in subparagraph (A)(ii) of paragraph (2) of such section, for such form, strength, and period; or

“(ii) in the case of any other covered outpatient drug, the amount specified in paragraph (3)(A)(i) of such section for such form, strength, and period.

“(C) Average Medicare drug program rebate eligible rebate amount—For purposes of this subsection, the term average Medicare drug program rebate eligible rebate amount means, with respect to each dosage form and strength of a covered part D drug provided by a manufacturer for a rebate period, the sum, for all PDP sponsors under part D and MA organizations administering an MA–PD plan under part C, of—

“(i) the product, for each such sponsor or organization, of—

“(I) the sum of all rebates, discounts, or other price concessions (not taking into account any rebate provided under paragraph (2) or any discounts under the program under section 1860D–14A) for such dosage form and strength of the drug dispensed, calculated on a per-unit basis, but only to the extent that any such rebate, discount, or other price concession applies equally to drugs dispensed to rebate eligible Medicare drug plan enrollees and drugs dispensed to PDP and MA–PD enrollees who are not rebate eligible individuals; and

“(II) the number of the units of such dosage and strength of the drug dispensed during the rebate period to rebate eligible individuals enrolled in the prescription drug plans administered by the PDP sponsor or the MA–PD plans administered by the MA organization; divided by

“(ii) the total number of units of such dosage and strength of the drug dispensed during the rebate period to rebate eligible individuals enrolled in all prescription drug plans administered by PDP sponsors and all MA–PD plans administered by MA organizations.

“(D) Use of estimates—The Secretary may establish a methodology for estimating the average Medicare drug program rebate eligible rebate amounts for each rebate period based on bid and utilization information under this part and may use these estimates as the basis for determining the rebates under this section. If the Secretary elects to estimate the average Medicare drug program rebate eligible rebate amounts, the Secretary shall establish a reconciliation process for adjusting manufacturer rebate payments not later than 3 months after the date that manufacturers receive the information collected under section 1860D–12(b)(8)(B).

“(4) Length of agreement—The provisions of paragraph (4) of section 1927(b) (other than clauses (iv) and (v) of subparagraph (B)) shall apply to rebate agreements under this subsection in the same manner as such paragraph applies to a rebate agreement under such section.

“(5) Other terms and conditions—The Secretary shall establish other terms and conditions of the rebate agreement under this subsection, including terms and conditions related to compliance, that are consistent with this subsection.

“(6) Definitions—In this subsection and section 1860D–12(b)(8):

“(A) Rebate eligible individual—The term rebate eligible individual means—

“(i) a subsidy eligible individual (as defined in section 1860D–14(a)(3)(A));

“(ii) a Medicaid beneficiary treated as a subsidy eligible individual under clause (v) of section 1860D–14(a)(3)(B); and

“(iii) any part D eligible individual not described in clause (i) or (ii) who is determined for purposes of the State plan under title XIX to be eligible for medical assistance under clause (i), (iii), or (iv) of section 1902(a)(10)(E).

“(B) Rebate period—The term rebate period has the meaning given such term in section 1927(k)(8).”

(b)

Reporting requirement for the determination and payment of rebates by manufacturers related to rebate for rebate eligible Medicare drug plan enrollees—

(1)

Requirements for PDP sponsors— Section 1860D–12(b) of the Social Security Act (42 U.S.C. 1395w–112(b)) is amended by adding at the end the following new paragraph:

“(8) Reporting requirement for the determination and payment of rebates by manufacturers related to rebate for rebate eligible Medicare drug plan enrollees

“(A) In general—For purposes of the rebate under section 1860D–2(f) for contract years beginning on or after January 1, 2021, each contract entered into with a PDP sponsor under this part with respect to a prescription drug plan shall require that the sponsor comply with subparagraphs (B) and (C).

“(B) Report form and contents—Not later than a date specified by the Secretary, a PDP sponsor of a prescription drug plan under this part shall report to each manufacturer—

“(i) information (by National Drug Code number) on the total number of units of each dosage, form, and strength of each drug of such manufacturer dispensed to rebate eligible Medicare drug plan enrollees under any prescription drug plan operated by the PDP sponsor during the rebate period;

“(ii) information on the price discounts, price concessions, and rebates for such drugs for such form, strength, and period;

“(iii) information on the extent to which such price discounts, price concessions, and rebates apply equally to rebate eligible Medicare drug plan enrollees and PDP enrollees who are not rebate eligible Medicare drug plan enrollees; and

“(iv) any additional information that the Secretary determines is necessary to enable the Secretary to calculate the average Medicare drug program rebate eligible rebate amount (as defined in paragraph (3)(C) of such section), and to determine the amount of the rebate required under this section, for such form, strength, and period.

“(C) Submission to Secretary—Each PDP sponsor shall promptly transmit a copy of the information reported under subparagraph (B) to the Secretary for the purpose of audit oversight and evaluation.

“(D) Confidentiality of information—The provisions of subparagraph (D) of section 1927(b)(3), relating to confidentiality of information, shall apply to information reported by PDP sponsors under this paragraph in the same manner that such provisions apply to information disclosed by manufacturers or wholesalers under such section, except—

“(i) that any reference to “this section” in clause (i) of such subparagraph shall be treated as being a reference to this section;

“(ii) the reference to the Director of the Congressional Budget Office in clause (iii) of such subparagraph shall be treated as including a reference to the Medicare Payment Advisory Commission; and

“(iii) clause (iv) of such subparagraph shall not apply.

“(E) Oversight—Information reported under this paragraph may be used by the Inspector General of the Department of Health and Human Services for the statutorily authorized purposes of audit, investigation, and evaluations.

“(F) Penalties for failure to provide timely information and provision of false information—In the case of a PDP sponsor—

“(i) that fails to provide information required under subparagraph (B) on a timely basis, the sponsor is subject to a civil money penalty in the amount of $10,000 for each day in which such information has not been provided; or

“(ii) that knowingly (as defined in section 1128A(i)) provides false information under such subparagraph, the sponsor is subject to a civil money penalty in an amount not to exceed $100,000 for each item of false information.”

(2)

Application to MA organizations— Section 1857(f)(3) of the Social Security Act (42 U.S.C. 1395w–27(f)(3)) is amended by adding at the end the following:

“(E) Reporting requirement related to rebate for rebate eligible Medicare drug plan enrollees—Section 1860D–12(b)(8).”

(c)

Deposit of rebates into Medicare Prescription Drug Account— Section 1860D–16(c) of the Social Security Act (42 U.S.C. 1395w–116(c)) is amended by adding at the end the following new paragraph:

“(6) Rebate for rebate eligible Medicare drug plan enrollees—Amounts paid under a rebate agreement under section 1860D–2(f) shall be deposited into the Account.”

(d)

Exclusion from determination of best price and average manufacturer price under Medicaid—

(1)

Exclusion from best price determination— Section 1927(c)(1)(C)(ii)(I) of the Social Security Act (42 U.S.C. 1396r–8(c)(1)(C)(ii)(I)) is amended by inserting “and amounts paid under a rebate agreement under section 1860D–2(f)” after “this section”.

(2)

Exclusion from average manufacturer price determination— Section 1927(k)(1)(B)(i) of the Social Security Act (42 U.S.C. 1396r–8(k)(1)(B)(i)) is amended—

(A)

in subclause (IV), by striking “and” after the semicolon;

(B)

in subclause (V), by striking the period at the end and inserting “; and”; and

(C)

by adding at the end the following:

“(VI) amounts paid under a rebate agreement under section 1860D–2(f).”

Sec. 302 Negotiation of prices for Medicare prescription drugs

Section 1860D–11 of the Social Security Act (42 U.S.C. 1395w–111) is amended by striking subsection (i) (relating to noninterference) and inserting the following:

“(i) Negotiation; no national formulary or price structure

“(1) Negotiation of prices with manufacturers—In order to ensure that beneficiaries enrolled under prescription drug plans and MA–PD plans pay the lowest possible price, the Secretary shall have and exercise authority similar to that of other Federal entities that purchase prescription drugs in bulk to negotiate contracts with manufacturers of covered part D drugs, consistent with the requirements and in furtherance of the goals of providing quality care and containing costs under this part.

“(2) No national formulary or price structure—In order to promote competition under this part and in carrying out this part, the Secretary may not require a particular formulary or institute a price structure for the reimbursement of covered part D drugs.”

Sec. 303 Guaranteed prescription drug benefits

(a)

In general— Section 1860D–3 of the Social Security Act (42 U.S.C. 1395w–103) is amended to read as follows:

“1860D–3. Access to a choice of qualified prescription drug coverage

“(a) Assuring access to a choice of coverage

“(1) Choice of at least three plans in each area—Beginning on January 1, 2021, the Secretary shall ensure that each part D eligible individual has available, consistent with paragraph (2), a choice of enrollment in—

“(A) a nationwide prescription drug plan offered by the Secretary in accordance with subsection (b); and

“(B) at least 2 qualifying plans (as defined in paragraph (3)) in the area in which the individual resides, at least one of which is a prescription drug plan.

“(2) Requirement for different plan sponsors—The requirement in paragraph (1)(B) is not satisfied with respect to an area if only one entity offers all the qualifying plans in the area.

“(3) Qualifying plan defined—For purposes of this section, the term qualifying plan means—

“(A) a prescription drug plan;

“(B) an MA–PD plan described in section 1851(a)(2)(A)(i) that provides—

“(i) basic prescription drug coverage; or

“(ii) qualified prescription drug coverage that provides supplemental prescription drug coverage so long as there is no MA monthly supplemental beneficiary premium applied under the plan, due to the application of a credit against such premium of a rebate under section 1854(b)(1)(C); or

“(C) a nationwide prescription drug plan offered by the Secretary in accordance with subsection (b).

“(b) HHS as PDP sponsor for a nationwide prescription drug plan

“(1) In general—The Secretary, acting through the Administrator of the Centers for Medicare & Medicaid Services, shall take such steps as may be necessary to qualify and serve as a PDP sponsor and to offer a prescription drug plan that offers basic prescription drug coverage throughout the United States. Such a plan shall be in addition to, and not in lieu of, other prescription drug plans offered under this part.

“(2) Premium; solvency; authorities—In carrying out paragraph (1), the Secretary—

“(A) shall establish a premium in the amount of $37 for months in 2021 and, for months in subsequent years, in the amount specified in this paragraph for months in the previous year increased by the annual percentage increase described in section 1860D–2(b)(6) (relating to growth in Medicare prescription drug costs per beneficiary) for the year involved;

“(B) is deemed to have met any applicable solvency and capital adequacy standards; and

“(C) shall exercise such authorities (including the use of regional or other pharmaceutical benefit managers) as the Secretary determines necessary to offer the prescription drug plan in the same or a comparable manner as is the case for prescription drug plans offered by private PDP sponsors.

“(c) Flexibility in risk assumed—In order to ensure access pursuant to subsection (a) in an area the Secretary may approve limited risk plans under section 1860D–11(f) for the area.”

(b)

Conforming amendment— Section 1860D–11(g) of the Social Security Act (42 U.S.C. 1395w–111(g)) is amended by adding at the end the following new paragraph:

“(8) Application—This subsection shall not apply on or after January 1, 2021.”

(c)

Effective date— The amendments made by this section shall apply to plan years beginning on or after January 1, 2021.

Sec. 304 Full reimbursement for qualified retiree prescription drug plans

(a)

Elimination of true Out-of-Pocket limitation— Section 1860D–2(b)(4)(C)(iii) of the Social Security Act (42 U.S.C. 1395w–102(b)(4)(C)(iii)) is amended—

(1)

in subclause (III), by striking “or” at the end;

(2)

in subclause (IV), by striking the period at the end and inserting “; or”; and

(3)

by adding at the end the following new subclause:

“(V) under a qualified retiree prescription drug plan (as defined in section 1860D–22(a)(2)).”

(b)

Equalization of subsidies— Notwithstanding any other provision of law, the Secretary of Health and Human Services shall provide for such increase in the special subsidy payment amounts under section 1860D–22(a)(3) of the Social Security Act (42 U.S.C. 1395w–132(a)(3)) as may be appropriate to provide for payments in the aggregate equivalent to the payments that would have been made under section 1860D–15 of such Act (42 U.S.C. 1395w–115) if the individuals were not enrolled in a qualified retiree prescription drug plan. In making such computation, the Secretary shall not take into account the application of the amendments made by section 1202 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Public Law 108–173; 117 Stat. 2480).

(c)

Effective date— This section, and the amendments made by this section, shall take effect on January 1, 2021.