Medicare Negotiation and Competitive Licensing Act of 2019

I 116TH CONGRESS 1ST SESSION H. R. 1046 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 HOUSE OF REPRESENTATIVES FEBRUARY 7, 2019 Mr. DOGGETT (for himself, Mr. WELCH, Mr. CUMMINGS, Ms. ADAMS, Ms. BASS, Mrs. BEATTY, Mr. BLUMENAUER, Ms. BONAMICI, Mr. CART- WRIGHT, Mr. CASE, Mr. CASTEN of Illinois, Ms. CASTOR of Florida, Mr. CASTRO of Texas, Ms. JUDY CHU of California, Mr. CICILLINE, Mr. CISNEROS, Mr. CLAY, Mr. CLEAVER, Mr. COHEN, Mr. COURTNEY, Mr. CRIST, Mr. CROW, Mr. DANNY K. DAVIS of Illinois, Mr. DEFAZIO, Ms. DELAURO, Mr. DESAULNIER, Mrs. DINGELL, Mr. MICHAEL F. DOYLE of Pennsylvania, Ms. ESCOBAR, Mr. ESPAILLAT, Mr. EVANS, Ms. FRANKEL, Mr. GALLEGO, Mr. GARAMENDI, Mr. GOLDEN, Mr. GONZALEZ of Texas, Mr. GREEN of Texas, Mr. GRIJALVA, Ms. HAALAND, Mr. HARDER of California, Mr. HASTINGS, Mr. HIGGINS of New York, Ms. HILL of California, Ms. JACKSON LEE, Ms. JAYAPAL, Ms. JOHNSON of Texas, Ms. KAPTUR, Mr. KHANNA, Mr. KIM, Mrs. KIRKPATRICK, Mr. KRISHNAMOORTHI, Mr. LANGEVIN, Mr. LARSON of Connecticut, Mr. LAWSON of Florida, Ms. LEE of California, Mrs. LEE of Nevada, Mr. LEVIN of Michigan, Mr. LEWIS, Mr. LIPINSKI, Mr. LOEBSACK, Ms. LOF- GREN, Mr. LOWENTHAL, Mr. LYNCH, Mrs. CAROLYN B. MALONEY of New York, Mr. SEAN PATRICK MALONEY of New York, Ms. MCCOLLUM, Mr. MCNERNEY, Ms. MOORE, Mr. NADLER, Mrs. NAPOLITANO, Mr. NEGUSE, Ms. NORTON, Ms. OCASIO-CORTEZ, Ms. OMAR, Mr. PERL- MUTTER, Mr. PETERSON, Mr. PHILLIPS, Ms. PINGREE, Mr. POCAN, Ms. PORTER, Ms. PRESSLEY, Mr. RASKIN, Mr. RICHMOND, Mr. ROSE of New York, Ms. ROYBAL-ALLARD, Mr. RUPPERSBERGER, Mr. RUSH, Mr. RYAN, Mr. SARBANES, Ms. SCHAKOWSKY, Mr. SCHIFF, Mr. SCOTT of Virginia, Mr. SERRANO, Mr. SHERMAN, Ms. SLOTKIN, Ms. SPANBERGER, Mr. SUOZZI, Mr. TAKANO, Mr. THOMPSON of Mississippi, Ms. TITUS, Ms. TLAIB, Mrs. TORRES of California, Ms. VELA´ZQUEZ, Mr. VISCLOSKY, Ms. WASSERMAN SCHULTZ, Ms. WATERS, Ms. WILD, Mr. YARMUTH, and Mr. MALINOWSKI) 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 VerDate Sep 11 2014 00:51 Feb 20, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6652 E:\BILLS\H1046.IH H1046 pamtmann on DSKBFK8HB2PROD with BILLS 2 •HR 1046 IH 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 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 SEC. 2. REQUIRING THE SECRETARY OF HEALTH AND 6 HUMAN SERVICES TO NEGOTIATE PRICES OF 7 PRESCRIPTION DRUGS FURNISHED UNDER 8 PART D OF THE MEDICARE PROGRAM. 9 Section 1860D–11 of the Social Security Act (42 10 U.S.C. 1395w–111) is amended by striking subsection (i) 11 and inserting the following new subsection: 12 ‘‘(i) NEGOTIATION OF LOWER DRUG PRICES.— 13 ‘‘(1) IN GENERAL.—Notwithstanding any other 14 provision of law, the Secretary shall, for plan years 15 beginning on or after the date of the enactment of 16 this subsection, negotiate with pharmaceutical man- 17 ufacturers the prices (including discounts, rebates, 18 VerDate Sep 11 2014 00:51 Feb 20, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H1046.IH H1046 pamtmann on DSKBFK8HB2PROD with BILLS 3 •HR 1046 IH and other price concessions) that may be charged to 1 PDP sponsors and MA organizations during a nego- 2 tiated price period (as specified by the Secretary) for 3 covered part D drugs for part D eligible individuals 4 who are enrolled under a prescription drug plan or 5 under an MA–PD plan. In negotiating such prices 6 under this section, the Secretary shall take into ac- 7 count the following factors: 8 ‘‘(A) The comparative clinical effectiveness 9 and cost effectiveness, when available from an 10 impartial source, of such drug. 11 ‘‘(B) The budgetary impact of providing 12 coverage of such drug. 13 ‘‘(C) The number of similarly effective 14 drugs or alternative treatment regimens for 15 each approved use of such drug. 16 ‘‘(D) The associated financial burden on 17 patients that utilize such drug. 18 ‘‘(E) The associated unmet patient need 19 for such drug. 20 ‘‘(F) The total revenues from global sales 21 obtained by the manufacturer for such drug 22 and the associated investment in research and 23 development of such drug by the manufacturer. 24 VerDate Sep 11 2014 00:51 Feb 20, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H1046.IH H1046 pamtmann on DSKBFK8HB2PROD with BILLS 4 •HR 1046 IH ‘‘(2) FINALIZATION OF NEGOTIATED PRICE.— 1 The negotiated price of each covered part D drug for 2 a negotiated price period shall be finalized not later 3 than 30 days before a PDP sponsor is required to 4 submit information described in subsection (b)(2) 5 for the first plan year in such negotiated price pe- 6 riod. 7 ‘‘(3) COMPETITIVE LICENSING AUTHORITY.— 8 ‘‘(A) IN GENERAL.—Notwithstanding any 9 exclusivity under clause (iii) or (iv) of section 10 505(j)(5)(F) of the Federal Food, Drug, and 11 Cosmetic Act, clause (iii) or (iv) of section 12 505(c)(3)(E) of such Act, section 351(k)(7)(A) 13 of the Public Health Service Act, or section 14 527(a) of the Federal Food, Drug, and Cos- 15 metic Act, or by an extension of such exclusivity 16 under section 505A of such Act or section 505E 17 of such Act, and any other provision of law that 18 provides for market exclusivity (or extension of 19 market exclusivity) with respect to a drug, in 20 the case that the Secretary is unable to success- 21 fully negotiate an appropriate price for a cov- 22 ered part D drug for a negotiated price period, 23 the Secretary shall authorize the use of any 24 patent, clinical trial data, or other exclusivity 25 VerDate Sep 11 2014 00:51 Feb 20, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H1046.IH H1046 pamtmann on DSKBFK8HB2PROD with BILLS 5 •HR 1046 IH granted by the Federal government with respect 1 to such drug as the Secretary determines ap- 2 propriate for purposes of manufacturing such 3 drug for sale under a prescription drug plan or 4 MA–PD plan. Any entity making use of a com- 5 petitive license to use patent, clinical trial data, 6 or other exclusivity under this section shall pro- 7 vide to the manufacturer holding such exclu- 8 sivity reasonable compensation, as determined 9 by the Secretary based on the following factors: 10 ‘‘(i) The risk-adjusted value of any 11 Federal government subsidies and invest- 12 ments in research and development used to 13 support the development of such drug. 14 ‘‘(ii) The risk-adjusted value of any 15 investment made by such manufacturer in 16 the research and development of such 17 drug. 18 ‘‘(iii) The impact of the price, includ- 19 ing license compensation payments, on 20 meeting the medical need of all patients. 21 ‘‘(iv) The relationship between the 22 price of such drug, including compensation 23 payments, and the health benefits of such 24 drug. 25 VerDate Sep 11 2014 00:51 Feb 20, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H1046.IH H1046 pamtmann on DSKBFK8HB2PROD with BILLS 6 •HR 1046 IH ‘‘(v) Other relevant factors determined 1 appropriate by the Secretary to provide 2 reasonable compensation. 3 ‘‘(B) REASONABLE COMPENSATION.—The 4 manufacturer described in subparagraph (A) 5 may seek recovery against the United States in 6 the United States Court of Federal Claims. 7 ‘‘(C) INTERIM PERIOD.— 8 ‘‘(i) IN GENERAL.—Until 1 year after 9 a drug described in subparagraph (A) is 10 approved under section 505(j) of the Fed- 11 eral Food, Drug, and Cosmetic Act or sec- 12 tion 351(k) of the Public Health Service 13 Act and is provided under license issued by 14 the Secretary under such subparagraph, 15 PDP plans and MA–PD plans shall not 16 pay more for such drug than the average 17 of the prices available, during the most re- 18 cent 12-month period for which data is 19 available prior to the beginning of such ne- 20 gotiated price period, from the manufac- 21 turer to any wholesaler, retailer, provider, 22 health maintenance organization, nonprofit 23 entity, or governmental entity in the ten 24 OECD (Organization for Economic Co- 25 VerDate Sep 11 2014 00:51 Feb 20, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H1046.IH H1046 pamtmann on DSKBFK8HB2PROD with BILLS 7 •HR 1046 IH operation and Development) countries that 1 have the largest gross domestic product 2 with a per capita income that is not less 3 than half the per capita income of the 4 United States. 5 ‘‘(ii) FEDERAL PROGRAM LICENS- 6 ING.—If such drug is not made available 7 at the price determined, the Secretary shall 8 authorize such entities to use any patent, 9 clinical trial data, or other exclusivity 10 granted by the Federal government with 11 respect to such drug as the Secretary de- 12 termines appropriate for purposes of man- 13 ufacturing such drug for sale under any 14 Federal program, including those provided 15 by Medicare, Medicaid, Veterans Affairs, 16 the Department of Defense, and the Coast 17 Guard. 18 ‘‘(D) AUTHORIZATION FOR SECRETARY TO 19 PROCURE DRUGS DIRECTLY.— 20 ‘‘(i) IN GENERAL.—The Secretary 21 may procure a drug manufactured pursu- 22 ant to a competitive license under subpara- 23 graph (A) for purposes of this part or pur- 24 suant to a Federal program license under 25 VerDate Sep 11 2014 00:51 Feb 20, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H1046.IH H1046 pamtmann on DSKBFK8HB2PROD with BILLS 8 •HR 1046 IH subparagraph (C)(ii) for purposes of a 1 Federal program directly from the entity 2 manufacturing the drug pursuant to such 3 a license. 4 ‘‘(ii) CLARIFICATION REGARDING AP- 5 PLICATION OF BUY AMERICAN ACT.—In 6 the case where the Secretary procures a 7 drug under this subparagraph, the provi- 8 sions of chapter 83 of title 41, United 9 States Code (commonly referred to as the 10 ‘Buy American Act’) shall apply. 11 ‘‘(E) PRIORITY FOR U.S. MANUFACTURERS 12 IN AUTHORIZING COMPETITIVE LICENSES.—In 13 authorizing a competitive license under this 14 paragraph, the Secretary— 15 ‘‘(i) shall give preference to entities 16 that the Secretary determines have the 17 highest safety and security standards; and 18 ‘‘(ii) may give priority to entities that 19 will manufacture such drug in the United 20 States. 21 ‘‘(4) FDA REVIEW OF LICENSED DRUG APPLI- 22 CATIONS.—The Secretary shall prioritize review of 23 applications under section 505(j) of the Federal 24 VerDate Sep 11 2014 00:51 Feb 20, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H1046.IH H1046 pamtmann on DSKBFK8HB2PROD with BILLS 9 •HR 1046 IH Food, Drug, and Cosmetic Act for drugs licensed 1 under paragraph (3)(A). 2 ‘‘(5) PROHIBITION OF ANTICOMPETITIVE BE- 3 HAVIOR.—No drug manufacturer may engage in 4 anticompetitive behavior with another manufacturer 5 that may interfere with the issuance and implemen- 6 tation of a competitive license or run contrary to 7 public policy. 8 ‘‘(6) REQUIRED REPORTING.—The Secretary 9 may require pharmaceutical manufacturers to dis- 10 close to the Secretary such information that the Sec- 11 retary determines necessary for purposes of carrying 12 out this subsection. 13 ‘‘(7) CLARIFICATION.—Nothing in this sub- 14 section shall be construed as preventing the sponsor 15 of a prescription drug plan or an organization offer- 16 ing an MA–PD plan from obtaining a discount or 17 reduction of the price for a covered part D drug 18 below the price negotiated by the Secretary.’’. 19 Æ VerDate Sep 11 2014 00:51 Feb 20, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6301 E:\BILLS\H1046.IH H1046 pamtmann on DSKBFK8HB2PROD with BILLS