Fair Accountability and Innovative Research Drug Pricing Act of 2021

II 117TH CONGRESS 1ST SESSION S. 898 To require reporting regarding certain drug price increases, and for other purposes. IN THE SENATE OF THE UNITED STATES MARCH 23, 2021 Ms. BALDWIN (for herself, Mr. BRAUN, Ms. SMITH, and Ms. MURKOWSKI) in- troduced the following bill; which was read twice and referred to the Com- mittee on Health, Education, Labor, and Pensions A BILL To require reporting regarding certain drug price increases, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Fair Accountability 4 and Innovative Research Drug Pricing Act of 2021’’. 5 SEC. 2. REPORTING ON JUSTIFICATION FOR DRUG PRICE 6 INCREASES. 7 Title III of the Public Health Service Act (42 U.S.C. 8 241 et seq.) is amended by adding at the end the fol- 9 lowing: 10 VerDate Sep 11 2014 01:00 Apr 13, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S898.IS S898 kjohnson on DSK79L0C42PROD with BILLS 2 •S 898 IS ‘‘PART W—DRUG PRICE REPORTING; DRUG 1 VALUE FUND 2 ‘‘SEC. 399OO. REPORTING ON JUSTIFICATION FOR DRUG 3 PRICE INCREASES. 4 ‘‘(a) DEFINITIONS.—In this section: 5 ‘‘(1) MANUFACTURER.—The term ‘manufac- 6 turer’ means the person— 7 ‘‘(A) that holds the application for a drug 8 approved under section 505 of the Federal 9 Food, Drug, and Cosmetic Act or the license 10 issued under section 351 of this Act; or 11 ‘‘(B) who is responsible for setting the 12 price for the drug. 13 ‘‘(2) QUALIFYING DRUG.—The term ‘qualifying 14 drug’ means any drug that is approved under sub- 15 section (c) or (j) of section 505 of the Federal Food, 16 Drug, and Cosmetic Act or licensed under subsection 17 (a) or (k) of section 351 of this Act— 18 ‘‘(A) that has a wholesale acquisition cost 19 of $100 or more per month supply, or per a 20 course of treatment that lasts less than a 21 month, and is— 22 ‘‘(i)(I) subject to section 503(b)(1) of 23 the Federal Food, Drug, and Cosmetic 24 Act; or 25 VerDate Sep 11 2014 01:00 Apr 13, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S898.IS S898 kjohnson on DSK79L0C42PROD with BILLS 3 •S 898 IS ‘‘(II) commonly administered by hos- 1 pitals (as determined by the Secretary); 2 and 3 ‘‘(ii) not designated by the Secretary 4 as a vaccine; and 5 ‘‘(B) for which, during the previous cal- 6 endar year, at least 1 dollar of the total amount 7 of sales were for individuals enrolled under the 8 Medicare program under title XVIII of the So- 9 cial Security Act (42 U.S.C. 1395 et seq.) or 10 under a State Medicaid plan under title XIX of 11 such Act (42 U.S.C. 1396 et seq.) or under a 12 waiver of such plan. 13 ‘‘(3) WHOLESALE ACQUISITION COST.—The 14 term ‘wholesale acquisition cost’ has the meaning 15 given that term in section 1847A(c)(6)(B) of the So- 16 cial Security Act (42 U.S.C. 1395w–3a(c)(6)(B)). 17 ‘‘(b) REPORT.— 18 ‘‘(1) REPORT REQUIRED.—The manufacturer of 19 a qualifying drug shall submit a report to the Sec- 20 retary for each price increase of a qualifying drug 21 that will result in an increase in the wholesale acqui- 22 sition cost of that drug that is equal to— 23 ‘‘(A) 10 percent or more over a 12-month 24 period; or 25 VerDate Sep 11 2014 01:00 Apr 13, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S898.IS S898 kjohnson on DSK79L0C42PROD with BILLS 4 •S 898 IS ‘‘(B) 25 percent or more over a 36-month 1 period. 2 ‘‘(2) REPORT DEADLINE.—Each report de- 3 scribed in paragraph (1) shall be submitted to the 4 Secretary not later than 30 days prior to the 5 planned effective date of such price increase. 6 ‘‘(c) CONTENTS.—A report under subsection (b) 7 shall, at a minimum, include— 8 ‘‘(1) with respect to the qualifying drug— 9 ‘‘(A) the percentage by which the manufac- 10 turer will raise the wholesale acquisition cost of 11 the drug on the planned effective date of such 12 price increase; 13 ‘‘(B) a justification for, and description of, 14 each manufacturer’s price increase that will 15 occur during the 12-month period described in 16 subsection (b)(1)(A) or the 36-month period de- 17 scribed in subsection (b)(1)(B), as applicable; 18 ‘‘(C) the identity of the initial developer of 19 the drug; 20 ‘‘(D) a description of the history of the 21 manufacturer’s price increases for the drug 22 since the approval of the application for the 23 drug under section 505 of the Federal Food, 24 Drug, and Cosmetic Act or the issuance of the 25 VerDate Sep 11 2014 01:00 Apr 13, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S898.IS S898 kjohnson on DSK79L0C42PROD with BILLS 5 •S 898 IS license for the drug under section 351, or since 1 the manufacturer acquired such approved appli- 2 cation or license; 3 ‘‘(E) the current list price of the drug; 4 ‘‘(F) the total expenditures of the manu- 5 facturer on— 6 ‘‘(i) materials and manufacturing for 7 such drug; and 8 ‘‘(ii) acquiring patents and licensing 9 for such drug; 10 ‘‘(G) the percentage of total expenditures 11 of the manufacturer on research and develop- 12 ment for such drug that was derived from Fed- 13 eral funds; 14 ‘‘(H) the total expenditures of the manu- 15 facturer on research and development for such 16 drug that is used for— 17 ‘‘(i) basic and preclinical research; 18 ‘‘(ii) clinical research; 19 ‘‘(iii) new drug development; 20 ‘‘(iv) pursuing new or expanded indi- 21 cations for such drug through supple- 22 mental applications under section 505 of 23 the Federal Food, Drug, and Cosmetic Act 24 or section 351 of this Act; and 25 VerDate Sep 11 2014 01:00 Apr 13, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S898.IS S898 kjohnson on DSK79L0C42PROD with BILLS 6 •S 898 IS ‘‘(v) carrying out postmarket require- 1 ments related to such drug, including those 2 under section 505(o)(3) of the Federal 3 Food, Drug, and Cosmetic Act; 4 ‘‘(I) the total revenue and the net profit 5 generated from the qualifying drug for each cal- 6 endar year since the approval of the application 7 for the drug under section 505 of the Federal 8 Food, Drug, and Cosmetic Act or the issuance 9 of the license for the drug under section 351, 10 or since the manufacturer acquired such ap- 11 proved application or license; and 12 ‘‘(J) the total costs associated with mar- 13 keting and advertising for the qualifying drug; 14 ‘‘(2) with respect to the manufacturer— 15 ‘‘(A) the total revenue and the net profit 16 of the manufacturer— 17 ‘‘(i) for the 12-month period pre- 18 ceding the date of the report, in the case 19 of a report based on an increase described 20 in subsection (b)(1)(A); or 21 ‘‘(ii) for the 36-month period pre- 22 ceding the date of the report, in the case 23 of a report based on an increase described 24 in subsection (b)(1)(B); 25 VerDate Sep 11 2014 01:00 Apr 13, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S898.IS S898 kjohnson on DSK79L0C42PROD with BILLS 7 •S 898 IS ‘‘(B) all stock-based performance metrics 1 used by the manufacturer to determine execu- 2 tive compensation— 3 ‘‘(i) for the 12-month period pre- 4 ceding the date of the report, in the case 5 of a report based on an increase described 6 in subsection (b)(1)(A); or 7 ‘‘(ii) for the 36-month period pre- 8 ceding the date of the report, in the case 9 of a report based on an increase described 10 in subsection (b)(1)(B); and 11 ‘‘(C) any additional information the manu- 12 facturer chooses to provide related to drug pric- 13 ing decisions, such as total expenditures on— 14 ‘‘(i) drug research and development; 15 or 16 ‘‘(ii) clinical trials on drugs that failed 17 to receive approval by the Food and Drug 18 Administration; and 19 ‘‘(3) such other related information as the Sec- 20 retary considers appropriate. 21 ‘‘(d) CIVIL PENALTY.—Any manufacturer of a quali- 22 fying drug that fails to submit a report for the drug as 23 required by this section shall be subject to a civil penalty 24 of $100,000 for each day on which the violation continues. 25 VerDate Sep 11 2014 01:00 Apr 13, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S898.IS S898 kjohnson on DSK79L0C42PROD with BILLS 8 •S 898 IS ‘‘(e) PUBLIC POSTING.— 1 ‘‘(1) IN GENERAL.—Subject to paragraph (3), 2 not later than 30 days after the submission of a re- 3 port under subsection (b), the Secretary shall post 4 the report on the public website of the Department 5 of Health and Human Services. 6 ‘‘(2) FORMAT.—In developing the format of 7 such report for public posting, the Secretary shall 8 consult stakeholders, including beneficiary groups, 9 and shall seek feedback on the content and format 10 from consumer advocates and readability experts to 11 ensure such public reports are user-friendly to the 12 public and are written in plain language that con- 13 sumers can readily understand. 14 ‘‘(3) TRADE SECRETS AND CONFIDENTIAL IN- 15 FORMATION.—In carrying out this section the Sec- 16 retary shall enforce current law concerning the pro- 17 tection of confidential commercial information and 18 trade secrets. 19 ‘‘SEC. 399OO–1. USE OF CIVIL PENALTY AMOUNTS. 20 ‘‘The Secretary shall, without further appropriation, 21 collect civil penalties under section 399OO and use the 22 funds derived from such civil penalties, in addition to any 23 other amounts available to the Secretary, to carry out ac- 24 tivities described in this part and to improve consumer and 25 VerDate Sep 11 2014 20:40 Apr 13, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S898.IS S898 kjohnson on DSK79L0C42PROD with BILLS 9 •S 898 IS provider information about drug value and drug price 1 transparency. 2 ‘‘SEC. 399OO–2. ANNUAL REPORT TO CONGRESS. 3 ‘‘(a) IN GENERAL.—Subject to subsection (b), the 4 Secretary shall submit to Congress, and post on the public 5 website of the Department of Health and Human Services 6 in a way that is easy to find, use, and understand, an 7 annual report— 8 ‘‘(1) summarizing the information reported pur- 9 suant to section 399OO; and 10 ‘‘(2) including copies of the reports and sup- 11 porting detailed economic analyses submitted pursu- 12 ant to such section. 13 ‘‘(b) TRADE SECRETS AND CONFIDENTIAL INFORMA- 14 TION.—In carrying out this section the Secretary shall en- 15 force current law concerning the protection of confidential 16 commercial information and trade secrets.’’. 17 Æ VerDate Sep 11 2014 20:40 Apr 13, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6301 E:\BILLS\S898.IS S898 kjohnson on DSK79L0C42PROD with BILLS