Medicare Drug Price Negotiation Act

I 117TH CONGRESS 1ST SESSION H. R. 2139 To amend title XVIII of the Social Security Act to provide for the negotiation of lower covered part D drug prices on behalf of Medicare beneficiaries and the establishment and application of a formulary by the Secretary of Health and Human Services under Medicare part D, and for other purposes. IN THE HOUSE OF REPRESENTATIVES MARCH 23, 2021 Mr. DOGGETT (for himself, Mr. WELCH, Ms. BUSH, Mr. KHANNA, Mr. POCAN, Ms. JAYAPAL, Mr. COHEN, Ms. DELAURO, Ms. TLAIB, Ms. WASSERMAN SCHULTZ, Mr. NEGUSE, Ms. OMAR, Ms. SCHAKOWSKY, and Mr. DEFAZIO) introduced the following bill; which was referred to the Committee on Energy and Commerce, and in addition to the Committee on Ways and Means, 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 provide for the negotiation of lower covered part D drug prices on behalf of Medicare beneficiaries and the establishment and application of a formulary by the Secretary of Health and Human Services under Medicare part D, 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 VerDate Sep 11 2014 01:04 May 20, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H2139.IH H2139 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 2139 IH SECTION 1. SHORT TITLE. 1 This Act may be cited as the ‘‘Medicare Drug Price 2 Negotiation Act’’. 3 SEC. 2. NEGOTIATION OF LOWER COVERED PART D DRUG 4 PRICES ON BEHALF OF MEDICARE BENE- 5 FICIARIES; ESTABLISHMENT AND APPLICA- 6 TION OF FORMULARY BY THE SECRETARY OF 7 HEALTH AND HUMAN SERVICES UNDER 8 MEDICARE PART D. 9 (a) IN GENERAL.—Section 1860D–11 of the Social 10 Security Act (42 U.S.C. 1395w–111) is amended by strik- 11 ing subsection (i) (relating to noninterference) and insert- 12 ing the following: 13 ‘‘(i) NEGOTIATION OF LOWER DRUG PRICES; ESTAB- 14 LISHMENT AND APPLICATION OF FORMULARY.— 15 ‘‘(1) NEGOTIATION.— 16 ‘‘(A) IN GENERAL.—Notwithstanding any 17 other provision of law, subject to subparagraph 18 (B), the Secretary shall, for plan years begin- 19 ning with plan year 2023— 20 ‘‘(i) negotiate with pharmaceutical 21 manufacturers the prices (including dis- 22 counts, rebates, and all other price conces- 23 sions) that may be charged to PDP spon- 24 sors and MA organizations for covered 25 part D drugs furnished to enrollees; and 26 VerDate Sep 11 2014 01:04 May 20, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2139.IH H2139 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 2139 IH ‘‘(ii) complete such negotiations for a 1 plan year not less than 30 days before the 2 first day of the application review process 3 for such plan year for new contracts or ex- 4 panding existing contracts with PDP spon- 5 sors and MA organizations to offer pre- 6 scription drug plans or MA–PD plans, re- 7 spectively. 8 ‘‘(B) USE OF FALLBACK IF NEGOTIATIONS 9 FAIL.— 10 ‘‘(i) IN GENERAL.—If, after negotia- 11 tions under subparagraph (A), the Sec- 12 retary is not successful in obtaining a rea- 13 sonable price for covered part D drugs in 14 accordance with clause (iii), the price that 15 may be charged to PDP sponsors and MA 16 organizations for such covered part D 17 drugs furnished to enrollees shall be the 18 lowest of the following: 19 ‘‘(I) The price applied pursuant 20 to section 8126 of title 38, United 21 States Code, for such drug for the 22 year. 23 ‘‘(II) The median price available, 24 during the most recent 12-month pe- 25 VerDate Sep 11 2014 01:04 May 20, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H2139.IH H2139 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 2139 IH riod for which data is available from 1 the manufacturer to any wholesaler, 2 retailer, provider, health maintenance 3 organization, nonprofit entity, or gov- 4 ernmental entity in Canada, the 5 United Kingdom, Germany, France, 6 and Japan. 7 ‘‘(III) The average manufacturer 8 price (as defined in subsection (k) of 9 section 1927) for such drug for the 10 most recent rebate period (as defined 11 in such subsection) applicable to such 12 plan year, reduced by the sum of the 13 applicable rebate factors for the drug 14 and rebate period. 15 ‘‘(ii) APPLICABLE REBATE FACTOR.— 16 For purposes of clause (i)(III), the term 17 ‘applicable rebate factor’ means, with re- 18 spect to a covered part D drug and a re- 19 bate period (as defined in section 1927(k)), 20 a dollar amount that applies for purposes 21 of determining the amount of a rebate that 22 is applicable to such drug for such rebate 23 period under— 24 VerDate Sep 11 2014 01:04 May 20, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H2139.IH H2139 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 2139 IH ‘‘(I) paragraph (1)(A)(ii) of sec- 1 tion 1927(c); 2 ‘‘(II) paragraph (2)(A)(ii) of 3 such section; 4 ‘‘(III) paragraph (2)(B) of such 5 section; 6 ‘‘(IV) paragraph (2)(C) of such 7 section; 8 ‘‘(V) paragraph (3)(A)(i) of such 9 section; or 10 ‘‘(VI) paragraph (3)(C) of such 11 section. 12 ‘‘(iii) GUIDANCE.—Not later than 60 13 days after the date of enactment of this 14 subsection, the Secretary shall issue guid- 15 ance on criteria to be considered for pur- 16 poses of determining under clause (i) 17 whether or not the Secretary is successful 18 in obtaining a reasonable price for a cov- 19 ered part D drug. Such criteria shall in- 20 clude at least the following: 21 ‘‘(I) The comparative clinical ef- 22 fectiveness and cost effectiveness, if 23 available, of such covered part D 24 drug. 25 VerDate Sep 11 2014 01:04 May 20, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H2139.IH H2139 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 2139 IH ‘‘(II) The budgetary impact of 1 providing coverage under this part for 2 such covered part D drug. 3 ‘‘(III) The number of similarly 4 effective drug or alternative treatment 5 regimens for each approved use of 6 such covered part D drug. 7 ‘‘(IV) Associated unmet need or 8 severity of illness. 9 ‘‘(C) IDENTIFICATION OF COVERED PART 10 D DRUGS SUBJECT TO NEGOTIATION AND AP- 11 PLICATION OF NEGOTIATED PRICE.— 12 ‘‘(i) IDENTIFICATION.—The Secretary 13 shall, for each plan year, in accordance 14 with the subsequent clauses of this sub- 15 paragraph, and pursuant to rulemaking, 16 identify covered part D drugs for which ne- 17 gotiations under subparagraph (A) shall be 18 conducted. 19 ‘‘(ii) APPLICATION OF NEGOTIATED 20 PRICE.—Except as provided in clause (iii), 21 the negotiated price of a covered Part D 22 drug shall be in effect for each subsequent 23 plan year, and may be adjusted for infla- 24 tion, as measured by the percentage in- 25 VerDate Sep 11 2014 01:04 May 20, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H2139.IH H2139 kjohnson on DSK79L0C42PROD with BILLS 7 •HR 2139 IH crease in the consumer price index for all 1 urban consumers over the preceding year. 2 ‘‘(iii) PROCESS FOR RENEGOTI- 3 ATION.—The Secretary may establish a 4 process whereby stakeholders may petition 5 for the negotiated price of a covered Part 6 D to be renegotiated after an appropriate 7 length of time and only if evidence justi- 8 fying the need for such renegotiation is 9 provided. 10 ‘‘(iv) REASONABLE NOTIFICATION.— 11 The Secretary shall carry out this subpara- 12 graph in such manner as to provide for 13 public notification of the covered part D 14 drugs subject to negotiations for a plan 15 year within a reasonable period before the 16 beginning of such negotiations. 17 ‘‘(D) PRIORITIZATION OF CERTAIN COV- 18 ERED PART D DRUGS.—For purposes of sub- 19 paragraph (C)(i), the Secretary shall prioritize 20 negotiating the prices of covered part D 21 drugs— 22 ‘‘(i) that are among— 23 ‘‘(I) the 40 covered part D drugs 24 that are utilized by at least 1,000 25 VerDate Sep 11 2014 01:04 May 20, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H2139.IH H2139 kjohnson on DSK79L0C42PROD with BILLS 8 •HR 2139 IH Medicare part D beneficiaries and 1 with respect to which there were the 2 highest total expenditures under this 3 part during the most recent 12-month 4 period for which data is available; 5 ‘‘(II) the 40 covered part D 6 drugs that are utilized by at least 7 1,000 Medicare part D beneficiaries 8 with respect to whom the total annual 9 spending per such a beneficiary under 10 this part for coverage of such a drug 11 is at least $10,000; or 12 ‘‘(III) the 20 covered part D 13 drugs that are utilized by at least 14 1,000 Medicare part D beneficiaries 15 and with respect to which there are 16 unit cost increases at or above the 17 95th percentile of overall covered part 18 D drug unit cost increases during the 19 most recent 12-month period for 20 which data is available; 21 ‘‘(ii) with respect to which the cost of 22 such a drug to the part D eligible indi- 23 vidual involved would exceed the annual 24 out-of-pocket threshold applicable under 25 VerDate Sep 11 2014 01:04 May 20, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H2139.IH H2139 kjohnson on DSK79L0C42PROD with BILLS 9 •HR 2139 IH section 1860D–2(b)(4)(B) for such plan 1 year, if the drug were prescribed to the in- 2 dividual for the period of the year or with 3 respect to which a single treatment regi- 4 men is priced above such annual out-of- 5 pocket threshold applicable under such sec- 6 tion 1860D–2(b)(4)(B) for the year; or 7 ‘‘(iii) that are single-source drugs or 8 biologicals (as defined in section 9 1847A(c)(6)(D)) and that satisfy at least 10 one other criterion described in a previous 11 clause of this subparagraph. 12 ‘‘(E) ANNUAL REPORT TO CONGRESS.— 13 Not later than 30 days after the date on which 14 the Secretary completes negotiations under this 15 paragraph for the first plan year and each sub- 16 sequent plan year, the Secretary shall submit to 17 Congress and make available to the public a re- 18 port describing the negotiations during the pre- 19 ceding year, including— 20 ‘‘(i) the number of covered part D 21 drug prices negotiated; 22 ‘‘(ii) the magnitude of savings 23 achieved as a result of such negotiations; 24 VerDate Sep 11 2014 01:04 May 20, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H2139.IH H2139 kjohnson on DSK79L0C42PROD with BILLS 10 •HR 2139 IH ‘‘(iii) the number of times price nego- 1 tiations failed (based on the criteria in- 2 cluded in the guidance issued pursuant to 3 clause (iii) of subparagraph (B)) and re- 4 sulted in the use of fallback prices under 5 clause (i) of such subparagraph, and the 6 rationale for any such decisions; 7 ‘‘(iv) the progress made toward nego- 8 tiating the prices of covered part D drugs 9 that are prioritized under subparagraph 10 (D); and 11 ‘‘(v) the barriers, if any, to achieving 12 savings through negotiations. 13 ‘‘(F) EVALUATION.—Not later than De- 14 cember 31, 2026, the Inspector General of the 15 Department of Health and Human Services 16 shall submit to Congress a report evaluating the 17 negotiations conducted by the Secretary under 18 this paragraph, including a description and 19 analysis of— 20 ‘‘(i) the extent to which such price ne- 21 gotiations are achieving lower prices for 22 covered part D drugs for enrollees; 23 ‘‘(ii) the parties benefitting from such 24 lower prices, such as enrollees, the Federal 25 VerDate Sep 11 2014 01:04 May 20, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H2139.IH H2139 kjohnson on DSK79L0C42PROD with BILLS 11 •HR 2139 IH Government, States, prescription drug 1 plans and MA–PD plans, or other entities; 2 ‘‘(iii) how such price negotiations are 3 affecting— 4 ‘‘(I) the list price of covered part 5 D drugs; and 6 ‘‘(II) drug prices in the private 7 market; and 8 ‘‘(iv) recommendations for improving 9 price negotiations, if applicable. 10 ‘‘(2) ESTABLISHMENT AND APPLICATION OF 11 FORMULARY BY THE SECRETARY OR CHANGES IN 12 FORMULARIES TO BE REQUIRED BY SECRETARY.— 13 ‘‘(A) IN GENERAL.—The Secretary shall, 14 for plan years beginning with plan year 2023— 15 ‘‘(i) subject to subparagraphs (B) and 16 (C), establish and apply a formulary for 17 required use by sponsors of prescription 18 drug plans and organizations offering MA– 19 PD plans under this part; or 20 ‘‘(ii) require changes, as necessary, in 21 the covered part D drugs included on 22 formularies of PDP sponsors of prescrip- 23 tion drug plans (including changes, as nec- 24 essary, in the preferred or tiered cost-shar- 25 VerDate Sep 11 2014 01:04 May 20, 2021 Jkt 019200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H2139.IH H2139 kjohnson on DSK79L0C42PROD with BILLS 12 •HR 2139 IH ing status of such a drug) to take into ac- 1 count negotiations carried out by the Sec- 2 retary pursuant to paragraph (1), regard- 3 less of whether such a covered part D drug 4 is the subject of such negotiations. 5 ‘‘(B) REQUIRED INCLUSION OF DRUGS IN 6 ALL THERAPEUTIC CATEGORIES.—A formulary 7 established and applied under subparagraph 8 (A)(i) shall include at least two covered part D 9 drugs in each category and class of covered part 10 D drugs as described in section 11 423.120(b)(2)(i) of title 42, Code of Federal 12 Regulations (as in effect on January 1, 2019). 13 ‘‘(C) APPLICATION OF DEVELOPMENT AND 14 REVISION REQUIREMENTS AND REQUIRED IN- 15 CLUSION OF ALL DRUGS IN CERTAIN CAT- 16 EGORIES AND CLASSES.—The requirements de- 17 scribed in subparagraphs (A) and (B) of section 18 1860D–4(b)(3) (relating to development and re- 19 vision requirements of the formulary) and sub- 20 paragraph (G) of such section (relating to re- 21 quired inclusion of all drugs in certain cat- 22 egories and classes) shall apply to a formulary 23 established and applied under subparagraph 24 (A)(i) of this paragraph. 25 VerDate Sep 11 2014 01:04 May 20, 2021 Jkt 019200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H2139.IH H2139 kjohnson on DSK79L0C42PROD with BILLS 13 •HR 2139 IH ‘‘(3) PLAN FLEXIBILITY TO NEGOTIATE GREAT- 1 ER DISCOUNTS.—Nothing in this subsection shall be 2 construed as preventing the sponsor of a prescrip- 3 tion drug plan, or an organization offering an MA– 4 PD plan, from obtaining a discount or reduction of 5 the price for a covered part D drug below the price 6 negotiated under paragraph (1), if applicable, in- 7 cluding through the use of preferred or tiered cost- 8 sharing status. 9 ‘‘(4) ENSURING BENEFICIARY ACCESS TO 10 NEEDED DRUGS.—Beginning with plan year 2023, 11 each PDP sponsor of a prescription drug plan and 12 organization offering an MA–PD plan shall have in 13 place a proces [Text truncated for display. Full text available on Congress.gov.]