Medicare Drug Price Negotiation Act

I 116TH CONGRESS 1ST SESSION H. R. 448 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 JANUARY 10, 2019 Mr. CUMMINGS (for himself, Mr. WELCH, Mr. DOGGETT, Mr. SEAN PATRICK MALONEY of New York, Mr. POCAN, Ms. DELAURO, Ms. GABBARD, Ms. BONAMICI, Ms. OMAR, Mr. KHANNA, Ms. NORTON, Ms. JAYAPAL, Ms. SCHAKOWSKY, Mr. HIGGINS of New York, Mr. NEGUSE, Mr. COHEN, Mr. KRISHNAMOORTHI, and Ms. TLAIB) 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 provi- sions 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 22:55 Jan 24, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H448.IH H448 pbinns on DSK79D2C42PROD with BILLS 2 •HR 448 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, with respect to an ap- 19 plicable period (as defined in subparagraph 20 (H))— 21 ‘‘(i) during the negotiation year (as 22 defined in such subparagraph) for such pe- 23 riod, negotiate with pharmaceutical manu- 24 facturers the prices (including discounts, 25 rebates, and all other price concessions) 26 VerDate Sep 11 2014 22:55 Jan 24, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H448.IH H448 pbinns on DSK79D2C42PROD with BILLS 3 •HR 448 IH that may be charged to PDP sponsors and 1 MA organizations for applicable covered 2 part D drugs (as defined in such subpara- 3 graph) furnished to enrollees during such 4 period; and 5 ‘‘(ii) complete such negotiations not 6 less than 30 days before the first day of 7 the application review process for the first 8 plan year during the applicable period for 9 new contracts or expanding existing con- 10 tracts with PDP sponsors and MA organi- 11 zations to offer prescription drug plans or 12 MA–PD plans, respectively. 13 ‘‘(B) USE OF FALLBACK IF NEGOTIATIONS 14 FAIL.— 15 ‘‘(i) IN GENERAL.—If, after negotia- 16 tions under subparagraph (A) with respect 17 to an applicable period, the Secretary is 18 not successful in obtaining an appropriate 19 price for applicable covered part D drugs 20 in accordance with clause (ii), the price 21 that may be charged to PDP sponsors and 22 MA organizations for applicable covered 23 part D drugs furnished to enrollees during 24 VerDate Sep 11 2014 22:55 Jan 24, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H448.IH H448 pbinns on DSK79D2C42PROD with BILLS 4 •HR 448 IH such period shall be the lowest of the fol- 1 lowing: 2 ‘‘(I) The contract price applied 3 pursuant to section 8126 of title 38, 4 United States Code, for such drug for 5 the contract year (as defined in such 6 section 8126). 7 ‘‘(II) The average of the prices 8 available, during the most recent 12- 9 month period for which data is avail- 10 able from the manufacturer to any 11 wholesaler, retailer, provider, health 12 maintenance organization, nonprofit 13 entity, or governmental entity in Can- 14 ada, the United Kingdom, Germany, 15 France, and Japan. 16 ‘‘(III) The best price determined 17 under section 1927(c)(1)(C) for such 18 drug for the most recent rebate period 19 (as defined in section 1927(k)(8)) ap- 20 plicable to such first plan year of the 21 applicable period. 22 ‘‘(ii) GUIDANCE.—Not later than 6 23 months before the Secretary begins nego- 24 tiations under subparagraph (A) with re- 25 VerDate Sep 11 2014 22:55 Jan 24, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H448.IH H448 pbinns on DSK79D2C42PROD with BILLS 5 •HR 448 IH spect to the first applicable period, the 1 Secretary shall issue guidance on criteria 2 to be considered for purposes of deter- 3 mining under clause (i) whether or not the 4 Secretary is successful in obtaining an ap- 5 propriate price for an applicable covered 6 part D drug. Such criteria shall include at 7 least the following: 8 ‘‘(I) The comparative clinical ef- 9 fectiveness and cost effectiveness, if 10 available, of such covered part D 11 drug. 12 ‘‘(II) The budgetary impact of 13 providing coverage under this part for 14 such covered part D drug. 15 ‘‘(III) The number of similarly 16 effective drug or alternative treatment 17 regimens for each approved use of 18 such covered part D drug. 19 ‘‘(IV) Associated unmet need or 20 severity of illness. 21 ‘‘(C) IDENTIFICATION OF APPLICABLE 22 COVERED PART D DRUGS.— 23 ‘‘(i) IN GENERAL.—The Secretary 24 shall, for each applicable period, in accord- 25 VerDate Sep 11 2014 22:55 Jan 24, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H448.IH H448 pbinns on DSK79D2C42PROD with BILLS 6 •HR 448 IH ance with the subsequent clauses of this 1 subparagraph, and pursuant to rule- 2 making, identify applicable covered part D 3 drugs for which negotiations under sub- 4 paragraph (A) shall be conducted during 5 the negotiation year for such period. In 6 this paragraph, all such covered part D 7 drugs so identified for an applicable period 8 are collectively referred to as applicable 9 covered part D drugs with respect to such 10 period. 11 ‘‘(ii) IDENTIFICATION OF PRIORITIZED 12 DRUGS.—In carrying out clause (i), except 13 as provided under clause (iii), the Sec- 14 retary may not identify a covered part D 15 drug that is not a drug prioritized pursu- 16 ant to subparagraph (D) as an applicable 17 covered part D drug until all covered part 18 D drugs that are so prioritized have been 19 identified as an applicable covered part D 20 drug for the applicable period or for a pre- 21 vious applicable period for which the nego- 22 tiated price of such drug has not expired. 23 ‘‘(iii) DRUG INCLUSIONS FOR PRICE 24 RENEGOTIATIONS.—In the case of a cov- 25 VerDate Sep 11 2014 22:55 Jan 24, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H448.IH H448 pbinns on DSK79D2C42PROD with BILLS 7 •HR 448 IH ered part D drug that is identified as an 1 applicable covered part D drug for an ap- 2 plicable period, such covered part D drug 3 shall be identified as an applicable covered 4 part D drug for each subsequent third ne- 5 gotiation year. 6 ‘‘(iv) REASONABLE NOTIFICATION.— 7 The Secretary shall carry out this subpara- 8 graph in such manner as to provide for 9 public notification of applicable covered 10 part D drugs for the applicable period 11 within a reasonable period before the be- 12 ginning of the negotiation year for such 13 period. 14 ‘‘(D) PRIORITIZATION OF CERTAIN COV- 15 ERED PART D DRUGS.—For purposes of sub- 16 paragraph (C)(ii), the Secretary shall prioritize 17 covered part D drugs— 18 ‘‘(i) that are among— 19 ‘‘(I) the 40 covered part D drugs 20 that are utilized by at least 1,000 21 Medicare part D beneficiaries and 22 with respect to which there were the 23 highest total expenditures under this 24 VerDate Sep 11 2014 22:55 Jan 24, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H448.IH H448 pbinns on DSK79D2C42PROD with BILLS 8 •HR 448 IH part during the most recent 12-month 1 period for which data is available; 2 ‘‘(II) the 40 covered part D 3 drugs that are utilized by at least 4 1,000 Medicare part D beneficiaries 5 with respect to whom the total annual 6 spending per such a beneficiary under 7 this part for coverage of such a drug 8 is at least $10,000; or 9 ‘‘(III) the 20 covered part D 10 drugs that are utilized by at least 11 1,000 Medicare part D beneficiaries 12 and with respect to which there are 13 unit cost increases at or above the 14 95th percentile of overall covered part 15 D drug unit cost increases during the 16 most recent 12-month period prior to 17 the beginning of such negotiation year 18 for which data is available; 19 ‘‘(ii) with respect to which the cost of 20 such a drug to the part D eligible indi- 21 vidual involved would exceed the annual 22 out-of-pocket threshold applicable under 23 section 1860D–2(b)(4)(B) for such nego- 24 tiation year, if the drug were prescribed to 25 VerDate Sep 11 2014 22:55 Jan 24, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H448.IH H448 pbinns on DSK79D2C42PROD with BILLS 9 •HR 448 IH the individual for the period of the year or 1 with respect to which a single treatment 2 regimen is priced above such annual out- 3 of-pocket threshold applicable under such 4 section 1860D–2(b)(4)(B) for the year; or 5 ‘‘(iii) that are single-source drugs or 6 biologicals (as defined in section 7 1847A(c)(6)(D)) and that satisfy at least 8 one other criterion described in a previous 9 clause of this subparagraph. 10 ‘‘(E) ANNUAL REPORT TO CONGRESS.— 11 Not later than 30 days after the date on which 12 the Secretary completes negotiations under this 13 paragraph for the first negotiation year and 14 each year thereafter, the Secretary shall submit 15 to Congress and make available to the public a 16 report describing the negotiations during the 17 preceding negotiation year, including— 18 ‘‘(i) the number of applicable covered 19 part D drug prices negotiated; 20 ‘‘(ii) the magnitude of savings 21 achieved as a result of such negotiations; 22 ‘‘(iii) the number of times price nego- 23 tiations failed (based on the criteria in- 24 cluded in the guidance issued pursuant to 25 VerDate Sep 11 2014 22:55 Jan 24, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H448.IH H448 pbinns on DSK79D2C42PROD with BILLS 10 •HR 448 IH clause (ii) of subparagraph (B)) and re- 1 sulted in the use of fallback prices under 2 clause (i) of such subparagraph, and the 3 rationale for any such decisions; 4 ‘‘(iv) the progress made toward nego- 5 tiating the prices of covered part D drugs 6 that are prioritized under subparagraph 7 (D); and 8 ‘‘(v) the barriers, if any, to achieving 9 savings through negotiations. 10 ‘‘(F) GAO REPORT.—Not later than De- 11 cember 31, 2024, the Comptroller General of 12 the United States shall submit to Congress a 13 report on the negotiations conducted by the 14 Secretary under this paragraph, including a de- 15 scription and analysis of— 16 ‘‘(i) the extent to which such price ne- 17 gotiations are achieving lower prices for 18 covered part D drugs for enrollees; 19 ‘‘(ii) the parties benefitting from such 20 lower prices, such as enrollees, the Federal 21 government, States, prescription drug 22 plans and MA–PD plans, or other entities; 23 ‘‘(iii) how such price negotiations are 24 affecting— 25 VerDate Sep 11 2014 22:55 Jan 24, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H448.IH H448 pbinns on DSK79D2C42PROD with BILLS 11 •HR 448 IH ‘‘(I) the list price of covered part 1 D drugs; and 2 ‘‘(II) drug prices in the private 3 market; and 4 ‘‘(iv) recommendations for improving 5 price negotiations, if applicable. 6 ‘‘(G) DEFINITIONS.—For purposes of this 7 paragraph: 8 ‘‘(i) APPLICABLE COVERED PART D 9 DRUGS.—The term ‘applicable covered part 10 D drugs’ means, for an applicable period, 11 covered part D drugs identified by the Sec- 12 retary under subparagraph (C) for such 13 period. 14 ‘‘(ii) APPLICABLE PERIOD.—The term 15 ‘applicable period’ means, with respect to a 16 negotiation year and applicable covered 17 part D drugs, the 3-plan year period be- 18 ginning with the first plan year beginning 19 after the negotiation year for such covered 20 part D drugs. 21 ‘‘(iii) NEGOTIATION YEAR.—The term 22 ‘negotiation year’ means, with respect to 23 an applicable period, a plan year, begin- 24 VerDate Sep 11 2014 22:55 Jan 24, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H448.IH H448 pbinns on DSK79D2C42PROD with BILLS 12 •HR 448 IH ning with 2020, prior to the first plan year 1 of the applicable period. 2 ‘‘(2) ESTABLISHMENT AND APPLICATION OF 3 FORMULARY BY THE SECRETARY OR CHANGES IN 4 FORMULARIES TO BE REQUIRED BY SECRETARY.— 5 ‘‘(A) IN GENERAL.—The Secretary shall, 6 for plan years beginning with plan year 2020— 7 ‘‘(i) subject to subparagraphs (B) and 8 (C), establish and apply a formulary for 9 required use by sponsors of prescription 10 drug plans and organizations offering MA– 11 PD plans under this part; or 12 ‘‘(ii) require changes, as necessary, in 13 the covered part D drugs included on 14 formularies of PDP sponsors of prescrip- 15 tion drug plans (including changes, as nec- 16 essary, in the preferred or tiered cost-shar- 17 ing status of such a drug) to take into ac- 18 count negotiations carried out by the Sec- 19 retary pursuant to paragraph (1), regard- 20 less of whether such a covered part D drug 21 is the subject of such negotiations. 22 ‘‘(B) REQUIRED INCLUSION OF DRUGS IN 23 ALL THERAPEUTIC CATEGORIES.—A formulary 24 established and applied under subparagraph 25 VerDate Sep 11 2014 22:55 Jan 24, 2019 Jkt 089200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H448.IH H448 pbinns on DSK79D2C42PROD with BILLS 13 •HR 448 IH (A)(i) shall include at least two covered part D 1 drugs in each category and class of covered part 2 D drugs as described in section 3 423.120(b)(2)(i) of title 42, Code of Federal 4 Regulations (as in effect on January 1, 2017). 5 ‘‘(C) APPLICATION OF DEVELOPMENT AND 6 REVISION REQUIREMENTS AND REQUIRED IN- 7 CLUSION OF ALL DRUGS IN CERTAIN CAT- 8 EGORIES AND CLASSES.—The requirements de- 9 scribed in subparagraphs (A) and (B) of section 10 1860D–4(b)(3) (relating to development and re- 11 vision req [Text truncated for display. 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