Medicare Negotiation and Competitive Licensing Act of 2019

II 116TH CONGRESS 1ST SESSION S. 377 To amend title XVIII of the Social Security Act to require the Secretary of Health and Human Services to negotiate prices of prescription drugs furnished under part D of the Medicare program. IN THE SENATE OF THE UNITED STATES FEBRUARY 7, 2019 Mr. BROWN (for himself, Ms. BALDWIN, and Ms. KLOBUCHAR) 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 require the Secretary of Health and Human Services to negotiate prices of prescription drugs furnished under part D of the Medicare program. 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 ‘‘Medicare Negotiation 4 and Competitive Licensing Act of 2019’’. 5 VerDate Sep 11 2014 03:17 Feb 16, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S377.IS S377 kjohnson on DSK79L0C42 with BILLS 2 •S 377 IS SEC. 2. REQUIRING THE SECRETARY OF HEALTH AND 1 HUMAN SERVICES TO NEGOTIATE PRICES OF 2 PRESCRIPTION DRUGS FURNISHED UNDER 3 PART D OF THE MEDICARE PROGRAM. 4 Section 1860D–11 of the Social Security Act (42 5 U.S.C. 1395w–111) is amended by striking subsection (i) 6 and inserting the following new subsection: 7 ‘‘(i) NEGOTIATION OF LOWER DRUG PRICES.— 8 ‘‘(1) IN GENERAL.—Notwithstanding any other 9 provision of law, the Secretary shall, for plan years 10 beginning on or after the date of the enactment of 11 this subsection, negotiate with pharmaceutical man- 12 ufacturers the prices (including discounts, rebates, 13 and other price concessions) that may be charged to 14 PDP sponsors and MA organizations during a nego- 15 tiated price period (as specified by the Secretary) for 16 covered part D drugs for part D eligible individuals 17 who are enrolled under a prescription drug plan or 18 under an MA–PD plan. In negotiating such prices 19 under this section, the Secretary shall take into ac- 20 count the following factors: 21 ‘‘(A) The comparative clinical effectiveness 22 and cost effectiveness, when available from an 23 impartial source, of such drug. 24 ‘‘(B) The budgetary impact of providing 25 coverage of such drug. 26 VerDate Sep 11 2014 03:17 Feb 16, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S377.IS S377 kjohnson on DSK79L0C42 with BILLS 3 •S 377 IS ‘‘(C) The number of similarly effective 1 drugs or alternative treatment regimens for 2 each approved use of such drug. 3 ‘‘(D) The associated financial burden on 4 patients that utilize such drug. 5 ‘‘(E) The associated unmet patient need 6 for such drug. 7 ‘‘(F) The total revenues from global sales 8 obtained by the manufacturer for such drug 9 and the associated investment in research and 10 development of such drug by the manufacturer. 11 ‘‘(2) FINALIZATION OF NEGOTIATED PRICE.— 12 The negotiated price of each covered part D drug for 13 a negotiated price period shall be finalized not later 14 than 30 days before a PDP sponsor is required to 15 submit information described in subsection (b)(2) 16 for the first plan year in such negotiated price pe- 17 riod. 18 ‘‘(3) COMPETITIVE LICENSING AUTHORITY.— 19 ‘‘(A) IN GENERAL.—Notwithstanding any 20 exclusivity under clause (iii) or (iv) of section 21 505(j)(5)(F) of the Federal Food, Drug, and 22 Cosmetic Act, clause (iii) or (iv) of section 23 505(c)(3)(E) of such Act, section 351(k)(7)(A) 24 of the Public Health Service Act, or section 25 VerDate Sep 11 2014 03:17 Feb 16, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S377.IS S377 kjohnson on DSK79L0C42 with BILLS 4 •S 377 IS 527(a) of the Federal Food, Drug, and Cos- 1 metic Act, or by an extension of such exclusivity 2 under section 505A of such Act or section 505E 3 of such Act, and any other provision of law that 4 provides for market exclusivity (or extension of 5 market exclusivity) with respect to a drug, in 6 the case that the Secretary is unable to success- 7 fully negotiate an appropriate price for a cov- 8 ered part D drug for a negotiated price period, 9 the Secretary shall authorize the use of any 10 patent, clinical trial data, or other exclusivity 11 granted by the Federal Government with re- 12 spect to such drug as the Secretary determines 13 appropriate for purposes of manufacturing such 14 drug for sale under a prescription drug plan or 15 MA–PD plan. Any entity making use of a com- 16 petitive license to use patent, clinical trial data, 17 or other exclusivity under this section shall pro- 18 vide to the manufacturer holding such exclu- 19 sivity reasonable compensation, as determined 20 by the Secretary based on the following factors: 21 ‘‘(i) The risk-adjusted value of any 22 Federal Government subsidies and invest- 23 ments in research and development used to 24 support the development of such drug. 25 VerDate Sep 11 2014 03:17 Feb 16, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S377.IS S377 kjohnson on DSK79L0C42 with BILLS 5 •S 377 IS ‘‘(ii) The risk-adjusted value of any 1 investment made by such manufacturer in 2 the research and development of such 3 drug. 4 ‘‘(iii) The impact of the price, includ- 5 ing license compensation payments, on 6 meeting the medical need of all patients. 7 ‘‘(iv) The relationship between the 8 price of such drug, including compensation 9 payments, and the health benefits of such 10 drug. 11 ‘‘(v) Other relevant factors determined 12 appropriate by the Secretary to provide 13 reasonable compensation. 14 ‘‘(B) REASONABLE COMPENSATION.—The 15 manufacturer described in subparagraph (A) 16 may seek recovery against the United States in 17 the United States Court of Federal Claims. 18 ‘‘(C) INTERIM PERIOD.— 19 ‘‘(i) IN GENERAL.—Until 1 year after 20 a drug described in subparagraph (A) is 21 approved under section 505(j) of the Fed- 22 eral Food, Drug, and Cosmetic Act or sec- 23 tion 351(k) of the Public Health Service 24 Act and is provided under license issued by 25 VerDate Sep 11 2014 03:17 Feb 16, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S377.IS S377 kjohnson on DSK79L0C42 with BILLS 6 •S 377 IS the Secretary under such subparagraph, 1 PDP plans and MA–PD plans shall not 2 pay more for such drug than the average 3 of the prices available, during the most re- 4 cent 12-month period for which data is 5 available prior to the beginning of such ne- 6 gotiated price period, from the manufac- 7 turer to any wholesaler, retailer, provider, 8 health maintenance organization, nonprofit 9 entity, or governmental entity in the ten 10 OECD (Organization for Economic Co- 11 operation and Development) countries that 12 have the largest gross domestic product 13 with a per capita income that is not less 14 than half the per capita income of the 15 United States, as reported by the manufac- 16 turer to the Secretary. 17 ‘‘(ii) FEDERAL PROGRAM LICENS- 18 ING.—If such drug is not made available 19 at the price determined, the Secretary shall 20 authorize such entities to use any patent, 21 clinical trial data, or other exclusivity 22 granted by the Federal Government with 23 respect to such drug as the Secretary de- 24 termines appropriate for purposes of man- 25 VerDate Sep 11 2014 03:17 Feb 16, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S377.IS S377 kjohnson on DSK79L0C42 with BILLS 7 •S 377 IS ufacturing such drug for sale under any 1 Federal program, including those provided 2 by Medicare, Medicaid, Veterans Affairs, 3 the Department of Defense, and the Coast 4 Guard. 5 ‘‘(D) AUTHORIZATION FOR SECRETARY TO 6 PROCURE DRUGS DIRECTLY.— 7 ‘‘(i) IN GENERAL.—The Secretary 8 may procure a drug manufactured pursu- 9 ant to a competitive license under subpara- 10 graph (A) for purposes of this part or pur- 11 suant to a Federal program license under 12 subparagraph (C)(ii) for purposes of a 13 Federal program directly from the entity 14 manufacturing the drug pursuant to such 15 a license. 16 ‘‘(ii) CLARIFICATION REGARDING AP- 17 PLICATION OF BUY AMERICAN ACT.—In 18 the case where the Secretary procures a 19 drug under this subparagraph, the provi- 20 sions of chapter 83 of title 41, United 21 States Code (commonly referred to as the 22 ‘Buy American Act’) shall apply. 23 ‘‘(E) PRIORITY FOR U.S. MANUFACTURERS 24 IN AUTHORIZING COMPETITIVE LICENSES.—In 25 VerDate Sep 11 2014 03:17 Feb 16, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S377.IS S377 kjohnson on DSK79L0C42 with BILLS 8 •S 377 IS authorizing a competitive license under this 1 paragraph, the Secretary— 2 ‘‘(i) shall give preference to entities 3 that the Secretary determines have the 4 highest safety and security standards; and 5 ‘‘(ii) may give priority to entities that 6 will manufacture such drug in the United 7 States. 8 ‘‘(4) FDA REVIEW OF LICENSED DRUG APPLI- 9 CATIONS.—The Secretary shall prioritize review of 10 applications under section 505(j) of the Federal 11 Food, Drug, and Cosmetic Act for drugs licensed 12 under paragraph (3)(A). 13 ‘‘(5) PROHIBITION OF ANTICOMPETITIVE BE- 14 HAVIOR.—No drug manufacturer may engage in 15 anticompetitive behavior with another manufacturer 16 that may interfere with the issuance and implemen- 17 tation of a competitive license or run contrary to 18 public policy. 19 ‘‘(6) REQUIRED REPORTING.—The Secretary 20 may require drug manufacturers to disclose to the 21 Secretary such information that the Secretary deter- 22 mines necessary for purposes of carrying out this 23 subsection. 24 VerDate Sep 11 2014 03:17 Feb 16, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S377.IS S377 kjohnson on DSK79L0C42 with BILLS 9 •S 377 IS ‘‘(7) CLARIFICATION.—Nothing in this sub- 1 section shall be construed as preventing the sponsor 2 of a prescription drug plan or an organization offer- 3 ing an MA–PD plan from obtaining a discount or 4 reduction of the price for a covered part D drug 5 below the price negotiated by the Secretary.’’. 6 Æ VerDate Sep 11 2014 03:17 Feb 16, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6301 E:\BILLS\S377.IS S377 kjohnson on DSK79L0C42 with BILLS