SPIKE Act

I 116TH CONGRESS 1ST SESSION H. R. 2069 To amend title XI of the Social Security Act to provide for drug manufacturer price transparency. IN THE HOUSE OF REPRESENTATIVES APRIL 3, 2019 Mr. HORSFORD (for himself and Mr. REED) 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 subse- quently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned A BILL To amend title XI of the Social Security Act to provide for drug manufacturer price transparency. 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 Act’’ or 5 the ‘‘SPIKE Act’’. 6 VerDate Sep 11 2014 20:34 Apr 17, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H2069.IH H2069 amozie on DSK9F9SC42PROD with BILLS 2 •HR 2069 IH 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 TRANS- 5 PARENCY. 6 ‘‘(a) IN GENERAL.—With respect to each year, begin- 7 ning with 2021, the Secretary shall, at least once during 8 such year, determine if there is a triggered SPIKE in- 9 crease (in accordance with subsection (b)) with respect to 10 an applicable drug (as defined in subsection (f)(1)). If the 11 Secretary determines, with respect to a year, there is such 12 an increase with respect to an applicable drug, the manu- 13 facturer of the applicable drug shall submit to the Sec- 14 retary the justification described in subsection (c), subject 15 to subsection (b)(3), for each such triggered SPIKE in- 16 crease in accordance with the timing described in sub- 17 section (d). 18 ‘‘(b) TRIGGERED SPIKE INCREASE.— 19 ‘‘(1) IN GENERAL.—A triggered SPIKE in- 20 crease occurs, with respect to an applicable drug and 21 year (beginning with 2021), in any of the following 22 cases: 23 ‘‘(A) If there is a 10 percent (or $10,000) 24 increase with respect to the wholesale acquisi- 25 tion cost (or alternative cost measure specified 26 VerDate Sep 11 2014 20:34 Apr 17, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2069.IH H2069 amozie on DSK9F9SC42PROD with BILLS 3 •HR 2069 IH by the Secretary under paragraph (2)) of such 1 drug during any 12-month period beginning 2 and ending within the lookback period that is 3 the 5-year period preceding 2021 or 2022, re- 4 spectively. 5 ‘‘(B) If there is a 25 percent (or $25,000) 6 increase with respect to the wholesale acquisi- 7 tion cost (or such alternative cost measure) of 8 such drug during any 36-month period begin- 9 ning and ending within such respective lookback 10 period. 11 ‘‘(C) In the case of such a drug that is 12 first covered under title XVIII with respect to 13 such year, if the estimated cost or spending 14 under such title per individual or per user of 15 such drug (as estimated by the Secretary) for 16 such year (or per course of treatment, as de- 17 fined by the Secretary) is at least $26,000. 18 ‘‘(2) ALTERNATIVE TO WAC.—The Secretary 19 may, for purposes of making determinations under 20 paragraph (1), in addition to using the wholesale ac- 21 quisition cost for an applicable drug, use alternative 22 cost measures of such drug. 23 ‘‘(3) EXCEPTION.—A justification under sub- 24 section (c) shall not be required for a triggered 25 VerDate Sep 11 2014 23:19 Apr 15, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H2069.IH H2069 amozie on DSK9F9SC42PROD with BILLS 4 •HR 2069 IH SPIKE increase described in paragraph (1) of an 1 applicable drug of a manufacturer if there is any 2 portion of the lookback period described in the re- 3 spective subparagraph of such paragraph for such 4 increase that is included within the lookback period 5 for another triggered SPIKE increase (or combina- 6 tion of such increases) for which a justification is 7 made under this section for such drug by such man- 8 ufacturer. 9 ‘‘(4) UNIT DETERMINATION.—For purposes of 10 determining the wholesale acquisition cost in car- 11 rying out this section, the Secretary shall determine 12 a unit (such as a unit size) to apply. 13 ‘‘(5) PUBLIC POSTING.—Beginning with respect 14 to 2021, the Secretary shall publicly post on the 15 Internet website of the Department of Health and 16 Human Services— 17 ‘‘(A) alternative percentages, dollar 18 amounts, and lookback periods that, if applied 19 under paragraph (1), would be projected to in- 20 crease the number of applicable drugs for which 21 a triggered SPIKE increase would occur for 22 such year; and 23 ‘‘(B) the number of applicable drugs for 24 which a triggered SPIKE increase would occur 25 VerDate Sep 11 2014 23:19 Apr 15, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H2069.IH H2069 amozie on DSK9F9SC42PROD with BILLS 5 •HR 2069 IH for such year of such an alternative percentage, 1 dollar amount, or period were applied for such 2 year. 3 ‘‘(c) JUSTIFICATION DESCRIBED.— 4 ‘‘(1) IN GENERAL.—The justification described 5 in this subsection, with respect to a triggered 6 SPIKE increase described in subsection (b)(1) of an 7 applicable drug of a manufacturer, is— 8 ‘‘(A) all of the information described in 9 paragraph (2); 10 ‘‘(B) all of the information and supporting 11 documentation described in paragraph (3), as 12 applicable to the increase and drug; and 13 ‘‘(C) a certification described in paragraph 14 (4). 15 ‘‘(2) REQUIRED INFORMATION.—For purposes 16 of paragraph (1), the information described in this 17 paragraph is the following: 18 ‘‘(A) The individual factors that have con- 19 tributed to the increase in the wholesale acqui- 20 sition cost. 21 ‘‘(B) An explanation of the role of each 22 factor in contributing to such increase. 23 ‘‘(3) INFORMATION AS APPLICABLE.—For pur- 24 poses of paragraph (1), the information and sup- 25 VerDate Sep 11 2014 23:19 Apr 15, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H2069.IH H2069 amozie on DSK9F9SC42PROD with BILLS 6 •HR 2069 IH porting documentation described in this paragraph is 1 the following: 2 ‘‘(A) Total expenditures of the manufac- 3 turer on— 4 ‘‘(i) materials and manufacturing for 5 such drug; 6 ‘‘(ii) acquiring patents and licensing 7 for each drug of the manufacturer; and 8 ‘‘(iii) costs to purchase or acquire the 9 drug from another company, if applicable. 10 ‘‘(B) The percentage of total expenditures 11 of the manufacturer on research and develop- 12 ment for such drug that was derived from Fed- 13 eral funds. 14 ‘‘(C) The total expenditures of the manu- 15 facturer on research and development for such 16 drug. 17 ‘‘(D) The total revenue and net profit gen- 18 erated from the applicable drug for each cal- 19 endar year since drug approval. 20 ‘‘(E) The total costs associated with mar- 21 keting and advertising for the applicable drug. 22 ‘‘(F) Additional information specific to the 23 manufacturer of the applicable drug, such as— 24 VerDate Sep 11 2014 23:19 Apr 15, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H2069.IH H2069 amozie on DSK9F9SC42PROD with BILLS 7 •HR 2069 IH ‘‘(i) the total revenue and net profit of 1 the manufacturer for the period of such in- 2 crease, as determined by the Secretary; 3 ‘‘(ii) metrics used to determine execu- 4 tive compensation; 5 ‘‘(iii) total expenditures on— 6 ‘‘(I) drug research and develop- 7 ment; or 8 ‘‘(II) clinical trials on drugs that 9 failed to receive approval by the Food 10 and Drug Administration; and 11 ‘‘(iv) any additional information re- 12 lated to drug pricing decisions of the man- 13 ufacturer. 14 ‘‘(G) Any other relevant information and 15 supporting documentation necessary to justify 16 the triggering SPIKE increase. 17 ‘‘(H) Any other relevant information and 18 supporting documentation, as specified by the 19 Secretary. 20 ‘‘(4) CERTIFICATION.—For purposes of para- 21 graph (1), the certification described in this para- 22 graph is a certification, that all such information 23 and documentation is accurate and complete, by one 24 of the following: 25 VerDate Sep 11 2014 23:19 Apr 15, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H2069.IH H2069 amozie on DSK9F9SC42PROD with BILLS 8 •HR 2069 IH ‘‘(A) The chief executive officer of the 1 manufacturer. 2 ‘‘(B) The chief financial officer of the 3 manufacturer. 4 ‘‘(C) An individual who has delegated au- 5 thority to sign for, and who reports directly to, 6 such chief executive officer or chief financial of- 7 ficer. 8 ‘‘(d) TIMING.— 9 ‘‘(1) NOTIFICATION.—Not later than 60 days 10 after the date on which the Secretary makes the de- 11 termination that there is a triggering SPIKE in- 12 crease with respect to an applicable drug, the Sec- 13 retary shall notify the manufacturer of the applica- 14 ble drug of such determination. 15 ‘‘(2) SUBMISSION OF JUSTIFICATION.—Not 16 later than 90 days after the date on which a manu- 17 facturer receives a notification under paragraph (1), 18 subject to subsection (b)(3), the manufacturer shall 19 submit to the Secretary the justification required 20 under subsection (a), including a summary of such 21 justification, in a form and manner specified by the 22 Secretary. In specifying such form, with respect to 23 the summary required under the previous sentence, 24 the Secretary shall provide that such summary shall 25 VerDate Sep 11 2014 23:19 Apr 15, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H2069.IH H2069 amozie on DSK9F9SC42PROD with BILLS 9 •HR 2069 IH be in an easily understandable format, as specified 1 by the Secretary, and shall permit the manufacturer 2 to exclude proprietary information from such sum- 3 mary. 4 ‘‘(3) POSTING ON INTERNET WEBSITE.—Not 5 later than 30 days after receiving the complete jus- 6 tification under paragraph (2), the Secretary shall 7 post on the Internet website of the Centers for Medi- 8 care & Medicaid Services the summary included for 9 such justification. 10 ‘‘(e) PENALTIES.— 11 ‘‘(1) FAILURE TO SUBMIT TIMELY JUSTIFICA- 12 TION.—If the Secretary determines that a manufac- 13 turer has failed to submit a justification as required 14 under this section, including in accordance with the 15 timing and form required, with respect to an appli- 16 cable drug, the Secretary shall apply a civil mone- 17 tary penalty in an amount of $10,000 for each day 18 the manufacturer has failed to submit such justifica- 19 tion as so required. 20 ‘‘(2) FALSE INFORMATION.—Any manufacturer 21 that submits a justification under this section that 22 knowingly provides false information in such jus- 23 tification is subject to a civil monetary penalty in an 24 VerDate Sep 11 2014 23:19 Apr 15, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H2069.IH H2069 amozie on DSK9F9SC42PROD with BILLS 10 •HR 2069 IH amount not to exceed $100,000 for each item of 1 false information. 2 ‘‘(3) APPLICATION OF PROCEDURES.—The pro- 3 visions of section 1128A (other than subsections (a) 4 and (b)) shall apply to a civil monetary penalty 5 under this subsection in the same manner as such 6 provisions apply to a penalty or proceeding under 7 section 1128A(a). Civil monetary penalties imposed 8 under this subsection are in addition to other pen- 9 alties as may be prescribed by law. 10 ‘‘(f) DEFINITIONS.—In this section: 11 ‘‘(1) APPLICABLE DRUG.— 12 ‘‘(A) IN GENERAL.—Subject to paragraph 13 (2), the term ‘applicable drug’ means, with re- 14 spect to a lookback period described in para- 15 graph (2), a covered outpatient drug (as de- 16 fined in paragraph (2) of section 1927(k), with- 17 out application of paragraph (3) of such sec- 18 tion) that is covered under title XVIII and is 19 not a low cost drug. 20 ‘‘(B) EXCLUSION OF LOW COST DRUGS.— 21 For purposes of subparagraph (A)(iii), not later 22 than January 1, 2021, the Secretary shall 23 specify a threshold (such as a cost or spending 24 threshold) for identifying (and shall identify) 25 VerDate Sep 11 2014 23:19 Apr 15, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H2069.IH H2069 amozie on DSK9F9SC42PROD with BILLS 11 •HR 2069 IH low cost drugs to be excluded from the defini- 1 tion of the term ‘applicable drug’, such as a 2 drug that has a wholesale acquisition cost of 3 less than $10 per unit or less than $100 in av- 4 erage estimated expenditures under title XVIII 5 per individual per year or per user of such drug 6 per year. For purposes of this section, a drug 7 shall not be considered specified as a low cost 8 drug for a lookback period described in para- 9 graph (2) with respect to a year unless such 10 drug is identified as being below the specified 11 threshold for the entirety of the lookback pe- 12 riod. 13 ‘‘(2) MANUFACTURER.—The term ‘manufac- 14 turer’ has the meaning given that term in section 15 1847A(c)(6)(A). 16 ‘‘(3) WHOLESALE ACQUISITION COST.—The 17 term ‘wholesale acquisition cost’ has the meaning 18 given that term in section 1847A(c)(6)(B).’’. 19 Æ VerDate Sep 11 2014 23:19 Apr 15, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6301 E:\BILLS\H2069.IH H2069 amozie on DSK9F9SC42PROD with BILLS