Stopping the Pharmaceutical Industry from Keeping drugs Expensive (SPIKE) Act of 2019

II 116TH CONGRESS 1ST SESSION S. 474 To amend title XI of the Social Security Act to require drug manufacturers to publicly justify unnecessary price increases. IN THE SENATE OF THE UNITED STATES FEBRUARY 13, 2019 Mr. WYDEN (for himself, Mr. CARDIN, Mr. CARPER, Mr. COONS, Ms. DUCKWORTH, Ms. KLOBUCHAR, Mr. MENENDEZ, Ms. STABENOW, and Mr. TESTER) introduced the following bill; which was read twice and re- ferred to the Committee on Finance A BILL To amend title XI of the Social Security Act to require drug manufacturers to publicly justify unnecessary price increases. 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 ‘‘Stopping the Pharma- 4 ceutical Industry from Keeping drugs Expensive (SPIKE) 5 Act of 2019’’. 6 VerDate Sep 11 2014 21:36 Feb 26, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S474.IS S474 khammond on DSKBBV9HB2PROD with BILLS 2 •S 474 IS SEC. 2. DRUG MANUFACTURER PRICE TRANSPARENCY. 1 Title XI of the Social Security Act (42 U.S.C. 1301 2 et seq.) is amended by inserting after section 1128K the 3 following new section: 4 ‘‘SEC. 1128L. DRUG MANUFACTURER PRICE TRANSPAR- 5 ENCY. 6 ‘‘(a) IN GENERAL.—Effective beginning on July 1, 7 2019, subject to subsection (e), the Secretary shall require 8 a manufacturer of an applicable drug to submit to the Sec- 9 retary the justification described in subsection (c) in ac- 10 cordance with the timing described in subsection (d). 11 ‘‘(b) DEFINITIONS.—In this section: 12 ‘‘(1) APPLICABLE DRUG.—Subject to paragraph 13 (2), the term ‘applicable drug’ means a drug, as de- 14 fined in section 201(g) of the Federal Food, Drug, 15 and Cosmetic Act (21 U.S.C. 321(g)), that is sub- 16 ject to section 503(b)(1) of such Act (21 U.S.C. 17 353(b)(1)), and that the Secretary determines is de- 18 scribed in either of the following subparagraphs: 19 ‘‘(A) The drug (per dose)— 20 ‘‘(i) has a wholesale acquisition cost of 21 at least $10 dollars; and 22 ‘‘(ii) had an increase in the wholesale 23 acquisition cost of the drug, with respect 24 to determinations made— 25 VerDate Sep 11 2014 21:36 Feb 26, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S474.IS S474 khammond on DSKBBV9HB2PROD with BILLS 3 •S 474 IS ‘‘(I) during 2020, of at least 100 1 percent since the date of the enact- 2 ment of this section; 3 ‘‘(II) during 2021, of at least 4 100 percent in the preceding 12 5 months or of at least 150 percent in 6 the preceding 2 years; 7 ‘‘(III) during 2022, of at least 8 100 percent in the preceding 12 9 months or of at least 200 percent in 10 the preceding 3 years; 11 ‘‘(IV) during 2023, of at least 12 100 percent in the preceding 12 13 months or of at least 250 percent in 14 the preceding 4 years; or 15 ‘‘(V) on or after January 1, 16 2024, of at least 100 percent in the 17 preceding 12 months or of at least 18 300 percent in the preceding 5 years. 19 ‘‘(B) The drug (per dose)— 20 ‘‘(i) is in the top 50th percentile of 21 net spending under title XVIII or XIX in 22 at least one of the preceding 5 years; and 23 VerDate Sep 11 2014 21:36 Feb 26, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S474.IS S474 khammond on DSKBBV9HB2PROD with BILLS 4 •S 474 IS ‘‘(ii) had an increase in the wholesale 1 acquisition cost of the drug, with respect 2 to determinations made— 3 ‘‘(I) during 2020, of at least 15 4 percent since the date of the enact- 5 ment of this section; 6 ‘‘(II) during 2021, of at least 15 7 percent in the preceding 12 months or 8 of at least 20 percent in the preceding 9 2 years; 10 ‘‘(III) during 2022, of at least 15 11 percent in the preceding 12 months or 12 of at least 30 percent in the preceding 13 3 years; 14 ‘‘(IV) during 2023, of at least 15 15 percent in the preceding 12 months or 16 of at least 40 percent in the preceding 17 4 years; or 18 ‘‘(V) on or after January 1, 19 2024, of at least 15 percent in the 20 preceding 12 months or of at least 50 21 percent in the preceding 5 years. 22 ‘‘(2) SPECIAL RULE.—For purposes of applying 23 paragraph (1), the Secretary may substitute for each 24 percentage described in subparagraph (A) or (B) of 25 VerDate Sep 11 2014 21:36 Feb 26, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S474.IS S474 khammond on DSKBBV9HB2PROD with BILLS 5 •S 474 IS such paragraph (other than the percentile described 1 subparagraph (B)(i) of such paragraph) a percent- 2 age within a de minimis range specified by the Sec- 3 retary below the percentage so described. 4 ‘‘(3) MANUFACTURER.—The term ‘manufac- 5 turer’ has the meaning given that term in section 6 581(10) of the Federal Food, Drug, and Cosmetic 7 Act (21 U.S.C. 360eee(10)). 8 ‘‘(4) WHOLESALE ACQUISITION COST.—The 9 term ‘wholesale acquisition cost’ has the meaning 10 given that term in section 1847A(c)(6)(B). 11 ‘‘(c) JUSTIFICATION DESCRIBED.—The justification 12 described in this subsection is all relevant information and 13 supporting documentation necessary to justify the increase 14 in the wholesale acquisition cost of the applicable drug of 15 the manufacturer, which may include the following: 16 ‘‘(1) The individual factors that have contrib- 17 uted to the increase in the wholesale acquisition 18 cost. 19 ‘‘(2) An explanation of the role of each factor 20 in contributing to such increase. 21 ‘‘(3) Total expenditures of the manufacturer 22 on— 23 ‘‘(A) materials and manufacturing for such 24 drug; 25 VerDate Sep 11 2014 21:36 Feb 26, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S474.IS S474 khammond on DSKBBV9HB2PROD with BILLS 6 •S 474 IS ‘‘(B) acquiring patents and licensing for 1 each drug of the manufacturer; and 2 ‘‘(C) costs to purchase or acquire the drug 3 from another company, if applicable. 4 ‘‘(4) The percentage of total expenditures of the 5 manufacturer on research and development for such 6 drug that was derived from Federal funds. 7 ‘‘(5) The total expenditures of the manufac- 8 turer on research and development for such drug. 9 ‘‘(6) The total revenue and net profit generated 10 from the applicable drug for each calendar year 11 since drug approval. 12 ‘‘(7) The total costs associated with marketing 13 and advertising for the applicable drug. 14 ‘‘(8) Additional information specific to the man- 15 ufacturer of the applicable drug, such as— 16 ‘‘(A) the total revenue and net profit of the 17 manufacturer for the period of such increase, as 18 determined by the Secretary; 19 ‘‘(B) metrics used to determine executive 20 compensation; 21 ‘‘(C) any additional information related to 22 drug pricing decisions of the manufacturer, 23 such as total expenditures on— 24 VerDate Sep 11 2014 21:36 Feb 26, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S474.IS S474 khammond on DSKBBV9HB2PROD with BILLS 7 •S 474 IS ‘‘(i) drug research and development; 1 or 2 ‘‘(ii) clinical trials on drugs that failed 3 to receive approval by the Food and Drug 4 Administration. 5 ‘‘(d) TIMING.— 6 ‘‘(1) NOTIFICATION.—Not later than 60 days 7 after the date on which the Secretary makes the de- 8 termination that a drug is an applicable drug under 9 subsection (b), the Secretary shall notify the manu- 10 facturer of the applicable drug of such determina- 11 tion. 12 ‘‘(2) SUBMISSION OF JUSTIFICATION.—Not 13 later than 180 days after the date on which a manu- 14 facturer receives a notification under paragraph (1), 15 the manufacturer shall submit to the Secretary the 16 justification required under subsection (a). 17 ‘‘(3) POSTING ON INTERNET WEBSITE.— 18 ‘‘(A) IN GENERAL.—Subject to subpara- 19 graph (B), not later than 30 days after receiv- 20 ing the justification under paragraph (2), the 21 Secretary shall post on the internet website of 22 the Centers for Medicare & Medicaid Services 23 the justification, together with a summary of 24 such justification that is written and formatted 25 VerDate Sep 11 2014 21:36 Feb 26, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S474.IS S474 khammond on DSKBBV9HB2PROD with BILLS 8 •S 474 IS using language that is easily understandable by 1 beneficiaries under titles XVIII and XIX. 2 ‘‘(B) EXCEPTION.—The Secretary shall es- 3 tablish a process under which a manufacturer 4 of an applicable drug may submit a request to 5 the Secretary that certain proprietary informa- 6 tion disclosed as part of justification in sub- 7 section (c) be excluded from the posting de- 8 scribed in subparagraph (A) if, as determined 9 by the Secretary (in consultation with the In- 10 spector General of the Department of Health 11 and Human Services), the public disclosure of 12 such information would directly lead to in- 13 creased prices of prescription drugs. If propri- 14 etary information is excluded from the posting 15 pursuant to the preceding sentence, to the ex- 16 tent feasible, the summary of the information 17 described in subparagraph (A) shall include a 18 summary of such proprietary information. 19 ‘‘(e) EXCEPTION TO REQUIREMENT FOR SUBMIS- 20 SION.—The requirement to submit a justification under 21 subsection (a) shall not apply in the case where the manu- 22 facturer, after receiving the notification under subsection 23 (d)(1) with respect to an applicable drug of the manufac- 24 turer, reduces the wholesale acquisition cost of a drug so 25 VerDate Sep 11 2014 21:36 Feb 26, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S474.IS S474 khammond on DSKBBV9HB2PROD with BILLS 9 •S 474 IS that it no longer meets the definition of an applicable drug 1 under subsection (b) for at least a 6-month period, as de- 2 termined by the Secretary. 3 ‘‘(f) PENALTIES.—The provisions of subsection 4 (b)(3)(C) of section 1927 shall apply to a manufacturer 5 that fails to submit the justification required under sub- 6 section (a) on a timely basis or that knowingly provides 7 false information in the same manner as such provisions 8 apply to a manufacturer with an agreement under that 9 section.’’. 10 Æ VerDate Sep 11 2014 21:36 Feb 26, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6301 E:\BILLS\S474.IS S474 khammond on DSKBBV9HB2PROD with BILLS