CURE High Drug Prices Act

II 116TH CONGRESS 1ST SESSION S. 637 To prohibit price gouging in the sale of drugs. IN THE SENATE OF THE UNITED STATES FEBRUARY 28, 2019 Mr. BLUMENTHAL (for himself, Mr. MERKLEY, Ms. HARRIS, Ms. KLO- BUCHAR, Mr. SCHATZ, and Mr. SANDERS) introduced the following bill; which was read twice and referred to the Committee on Health, Edu- cation, Labor, and Pensions A BILL To prohibit price gouging in the sale of drugs. 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 ‘‘Combatting Unreason- 4 able Rises and Excessively High Drug Prices Act’’ or the 5 ‘‘CURE High Drug Prices Act’’. 6 SEC. 2. DEFINITIONS. 7 In this Act: 8 (1) AVERAGE MANUFACTURER PRICE.—The 9 term ‘‘average manufacturer price’’— 10 VerDate Sep 11 2014 00:36 Mar 09, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S637.IS S637 pamtmann on DSKBFK8HB2PROD with BILLS 2 •S 637 IS (A) has the meaning given the term in sec- 1 tion 1927(k) of the Social Security Act (42 2 U.S.C. 1396r–8(k)); or 3 (B) with respect to a drug for which there 4 is no average manufacturer price as so defined, 5 means the wholesale acquisition cost of the 6 drug. 7 (2) DRUG.—The term ‘‘drug’’— 8 (A) has the meaning given the term in sec- 9 tion 201 of the Federal Food, Drug, and Cos- 10 metic Act (21 U.S.C. 321); and 11 (B) includes biological products, as defined 12 in section 351 of the Public Health Service Act 13 (42 U.S.C. 262). 14 (3) FEDERAL HEALTH CARE PROGRAM.—The 15 term ‘‘Federal health care program’’ has the mean- 16 ing given the term in section 1128B(f) of the Social 17 Security Act (42 U.S.C. 1320a–7b(f)). 18 (4) MANUFACTURER.—The term ‘‘manufac- 19 turer’’ means a person— 20 (A) that holds the application for a drug 21 approved under section 505 of the Federal 22 Food, Drug, and Cosmetic Act (21 U.S.C. 355) 23 or the license issued under section 351 of the 24 Public Health Service Act (42 U.S.C. 262); or 25 VerDate Sep 11 2014 00:36 Mar 09, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S637.IS S637 pamtmann on DSKBFK8HB2PROD with BILLS 3 •S 637 IS (B) who is responsible for setting the price 1 for the drug. 2 (5) PRICE GOUGING.—The term ‘‘price 3 gouging’’ means an increase in the average manufac- 4 turer price of a qualifying drug that— 5 (A) is in substantial excess of an amount 6 that could be reasonably justified by an increase 7 in cost of producing the drug or by an increase 8 in cost due to appropriate expansion of access 9 to the drug to promote public health; and 10 (B) that because of insufficient competi- 11 tion in the marketplace, consumers cannot rea- 12 sonably avoid. 13 (6) QUALIFYING DRUG.—The term ‘‘qualifying 14 drug’’ means any drug, including a combination 15 product whose primary mode of action is determined 16 under section 503(g) of the Federal Food, Drug, 17 and Cosmetic Act (21 U.S.C. 353(g)) to be that of 18 a drug, that— 19 (A) is subject to section 503(b)(1) of the 20 Federal Food, Drug, and Cosmetic Act (21 21 U.S.C. 353(b)(1)); and 22 (B) is covered by a Federal health care 23 program. 24 VerDate Sep 11 2014 00:36 Mar 09, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S637.IS S637 pamtmann on DSKBFK8HB2PROD with BILLS 4 •S 637 IS (7) SECRETARY.—The term ‘‘Secretary’’ means 1 the Secretary of Health and Human Services. 2 SEC. 3. PRICE GOUGING PROHIBITED. 3 (a) IN GENERAL.—A manufacturer shall not engage 4 in price gouging in the sale of a qualifying drug. 5 (b) PRESUMPTION.—Price gouging shall be presumed 6 if the average manufacturer price has increased— 7 (1) 10 percent or more within the previous 12- 8 month period; 9 (2) 20 percent or more in the previous 36- 10 month period; or 11 (3) 30 percent or more within the previous 60- 12 month period. 13 (c) NOTICE BY SECRETARY.—The Secretary shall no- 14 tify the manufacturer of an increase, within the previous 15 2 years, in the average manufacturer price of a qualifying 16 drug the Secretary has reason to believe constitutes price 17 gouging, by sending notice to the manufacturer, request- 18 ing a statement of justification for the increase, which 19 may include— 20 (1) itemizing the components of the cost of pro- 21 ducing the qualifying drug; 22 (2) identifying the circumstances and timing of 23 an increase in materials or manufacturing costs that 24 caused an increase in the average manufacturer 25 VerDate Sep 11 2014 00:36 Mar 09, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S637.IS S637 pamtmann on DSKBFK8HB2PROD with BILLS 5 •S 637 IS price of the qualifying drug within the 5-year period 1 preceding the date of the average manufacturer 2 price increase; 3 (3) identifying the circumstances and timing of 4 any expenditures made by the manufacturer to ex- 5 pand access to the qualifying drug and explaining 6 any improvement in public health associated with 7 those expenditures; 8 (4) providing sales and price information for 9 other qualifying drugs with similar therapeutic ef- 10 fects, as relevant to assessing the extent of competi- 11 tion in the marketplace, and the choice available to 12 consumers; and 13 (5) providing any other information that the 14 manufacturer believes to be relevant to a determina- 15 tion of whether a violation of this Act has occurred. 16 (d) STATEMENT.—Not later than 45 days after the 17 date on which a manufacturer receives a statement under 18 subsection (c), the manufacturer shall submit to the Sec- 19 retary a statement described in subsection (c). 20 (e) DETERMINATION BY SECRETARY.—If the Sec- 21 retary determines, after review of the statement of jus- 22 tification, or based on reasonable belief if the manufac- 23 turer fails to submit a statement of justification as re- 24 quired, that the manufacturer has engaged in price 25 VerDate Sep 11 2014 00:36 Mar 09, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S637.IS S637 pamtmann on DSKBFK8HB2PROD with BILLS 6 •S 637 IS gouging with respect to a qualifying drug, the Secretary 1 shall notify the manufacturer of the determination. 2 (f) REMEDY.— 3 (1) IN GENERAL.—The Secretary may order 4 that a manufacturer determined under subsection 5 (e) to have engaged in price gouging with respect to 6 a qualifying drug— 7 (A) restore to any consumer, including a 8 third-party payor, any excessive amount paid as 9 a result of a price increase that violates this 10 Act; 11 (B) make the drug available to partici- 12 pants of any qualified health plan or Federal 13 health plan for a period of up to 1 year at the 14 price at which the drug was made available to 15 consumers immediately before the violation of 16 this Act; or 17 (C) if the price gouging is done knowingly, 18 or occurs after a previous determination by the 19 Secretary or price gouging by the manufac- 20 turer, pay a civil penalty of up to 3 times the 21 excessive amount the manufacturer received as 22 a result of a violation of this Act. 23 (2) APPEALS.—Any person adversely affected 24 by a determination of the Secretary under this sub- 25 VerDate Sep 11 2014 00:36 Mar 09, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S637.IS S637 pamtmann on DSKBFK8HB2PROD with BILLS 7 •S 637 IS section may obtain review of the determination in 1 accordance with section 1128A(e) of the Social Secu- 2 rity Act (42 U.S.C. 1320a–7a(e)). 3 (g) ENFORCEMENT BY ATTORNEY GENERAL.— 4 (1) IN GENERAL.—If a manufacturer deter- 5 mined under subsection (e) to have engaged in price 6 gouging fails to comply with an order of the Sec- 7 retary under subsection (f), the Secretary may refer 8 the matter to the Attorney General for enforcement. 9 (2) SUBPOENAS.—The Attorney General may 10 subpoena documents or testimony as may assist in 11 establishing whether the manufacturer engaged in 12 price gouging in violation of this Act. 13 (3) ACTION.—The Attorney General may bring 14 an action in an appropriate district court for relief, 15 including any relief described in subsection (f) and 16 such further relief as the court determines is appro- 17 priate. 18 SEC. 4. EFFECTIVE DATE; APPLICABILITY. 19 This Act shall— 20 (1) take effect on January 1, 2020; and 21 (2) apply with respect to all increases in the av- 22 erage manufacturer price of a qualifying drug occur- 23 ring on or after that date. 24 Æ VerDate Sep 11 2014 00:36 Mar 09, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6301 E:\BILLS\S637.IS S637 pamtmann on DSKBFK8HB2PROD with BILLS