Stop Drug Companies from Overcharging Seniors in Medicare Part B Act of 2019

II 116TH CONGRESS 1ST SESSION S. 2081 To amend title XVIII of the Social Security Act to require drug manufactur- ers to provide rebates for drugs furnished under Medicare part B for which the growth in average sales price has exceeded inflation, and for other purposes. IN THE SENATE OF THE UNITED STATES JULY 10, 2019 Mr. PETERS (for himself and Ms. STABENOW) 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 drug manufacturers to provide rebates for drugs fur- nished under Medicare part B for which the growth in average sales price has exceeded inflation, and for other purposes. 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 ‘‘Stop Drug Companies 4 from Overcharging Seniors in Medicare Part B Act of 5 2019’’. 6 VerDate Sep 11 2014 22:24 Jul 17, 2019 Jkt 034408 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S2081.IS S2081 pbinns on DSK79D2C42PROD with BILLS 2 •S 2081 IS SEC. 2. REQUIRING DRUG MANUFACTURERS TO PROVIDE 1 REBATES FOR DRUGS FURNISHED UNDER 2 MEDICARE PART B FOR WHICH ASP GROWTH 3 HAS EXCEEDED INFLATION. 4 Section 1847A of the Social Security Act (42 U.S.C. 5 1395w–3a) is amended by adding at the end the following 6 new subsection: 7 ‘‘(h) PRESCRIPTION DRUG REBATE AGREEMENT.— 8 ‘‘(1) REQUIREMENT.— 9 ‘‘(A) IN GENERAL.—Subject to subpara- 10 graphs (B) and (C), in order for payment to be 11 made under this part for an applicable part B 12 drug (as defined in paragraph (7)(A)) of a 13 manufacturer furnished on or after January 1, 14 2020, the manufacturer shall have entered into 15 and have in effect a rebate agreement described 16 in paragraph (2) with the Secretary. 17 ‘‘(B) EXCEPTIONS.—This subsection shall 18 not apply with respect to an applicable part B 19 drug of a manufacturer— 20 ‘‘(i) if the Secretary determines that 21 the estimated average annual cost per user 22 for the associated drug billing code as de- 23 termined in such manner as the Secretary 24 determines appropriate, including with re- 25 spect to an applicable part B drug for 26 VerDate Sep 11 2014 22:24 Jul 17, 2019 Jkt 034408 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S2081.IS S2081 pbinns on DSK79D2C42PROD with BILLS 3 •S 2081 IS which a HCPCS code has not been as- 1 signed, is less than— 2 ‘‘(I) for 2020, $100; and 3 ‘‘(II) for a subsequent year, the 4 amount determined under this clause 5 for the preceding year increased by 6 the percentage increase in the con- 7 sumer price index for all urban con- 8 sumers (U.S. city average) for the 12- 9 month period ending with June of the 10 previous year; 11 ‘‘(ii) if the drug is included on the 12 drug shortage list under section 506E of 13 the Federal Food, Drug, and Cosmetic Act 14 (21 U.S.C. 356e). 15 ‘‘(C) ESTABLISHMENT OF PROCEDURES TO 16 AVOID DUPLICATION.—The Secretary shall es- 17 tablish procedures to ensure that there is no 18 duplication with respect to drug rebates pro- 19 vided by manufacturers with respect to applica- 20 ble part B drugs under this subsection and ei- 21 ther of the following: 22 ‘‘(i) Purchase by a covered entity of 23 covered outpatient drugs pursuant to an 24 VerDate Sep 11 2014 22:24 Jul 17, 2019 Jkt 034408 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S2081.IS S2081 pbinns on DSK79D2C42PROD with BILLS 4 •S 2081 IS agreement under section 340B of the Pub- 1 lic Health Service Act (42 U.S.C. 256b). 2 ‘‘(ii) Drug rebates provided by manu- 3 facturers with respect to covered out- 4 patient drugs pursuant to section 1927. 5 ‘‘(2) REBATE AGREEMENT.—A rebate agree- 6 ment under this subsection shall require the manu- 7 facturer to provide to the Secretary (to be deposited 8 in the Treasury to the credit of the Federal Supple- 9 mentary Medical Insurance Trust Fund) a rebate 10 for each rebate period (as defined in paragraph 11 (7)(B)) ending after December 31, 2019, in an 12 amount specified in paragraph (4) for applicable 13 part B drugs of the manufacturer furnished after 14 December 31, 2019, for which payment was made 15 under this section or under a separate ambulatory 16 classification group pursuant to section 1833(t) for 17 such period. Such rebate shall be paid by the manu- 18 facturer not later than 30 days after the date of re- 19 ceipt of the information described in paragraph (3) 20 for the period involved. 21 ‘‘(3) SECRETARY PROVISION OF INFORMA- 22 TION.— 23 ‘‘(A) IN GENERAL.—The Secretary shall 24 report to each manufacturer not later than 180 25 VerDate Sep 11 2014 22:24 Jul 17, 2019 Jkt 034408 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S2081.IS S2081 pbinns on DSK79D2C42PROD with BILLS 5 •S 2081 IS days after the end of each rebate period and in 1 a form consistent with a standard reporting for- 2 mat established by the Secretary, information 3 on the total number of units of each dosage 4 form and strength and package size of each ap- 5 plicable part B drug of the manufacturer fur- 6 nished after December 31, 2019, for which pay- 7 ment was made under this section or under a 8 separate ambulatory classification group pursu- 9 ant to section 1833(t) during the period. 10 ‘‘(B) AUDITS BY MANUFACTURER OF IN- 11 FORMATION PROVIDED.—A manufacturer may, 12 as determined by the Secretary, audit the infor- 13 mation provided (or required to be provided) 14 under subparagraph (A). 15 ‘‘(C) AUDITS BY SECRETARY.—The Sec- 16 retary may audit the information provided (or 17 required to be provided) under subparagraph 18 (A) and the determination of the billing-code 19 level rebate amount, including the manufac- 20 turer-level billing-code level ASP and inflation- 21 adjusted billing-code level ASP, under para- 22 graph (4). 23 ‘‘(D) ADJUSTMENTS BASED ON AUDIT RE- 24 SULTS.—The Secretary shall make adjustments 25 VerDate Sep 11 2014 22:24 Jul 17, 2019 Jkt 034408 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S2081.IS S2081 pbinns on DSK79D2C42PROD with BILLS 6 •S 2081 IS to rebates and average sales price as appro- 1 priate based on the results of an audit con- 2 ducted under subparagraph (B) or (C). 3 ‘‘(4) DETERMINATION OF BILLING-CODE LEVEL 4 REBATE AMOUNT.— 5 ‘‘(A) IN GENERAL.—The amount of the re- 6 bate specified under this paragraph for a manu- 7 facturer for a rebate period, with respect to ap- 8 plicable part B drugs of a manufacturer as- 9 signed to a billing code, shall be equal to the 10 product of— 11 ‘‘(i) the total number of units of such 12 drugs of the manufacturer assigned to the 13 billing code for which payment was made 14 under this section or under a separate am- 15 bulatory classification group pursuant to 16 section 1833(t) for the rebate period; and 17 ‘‘(ii) the amount (if any) by which— 18 ‘‘(I) the manufacturer-level bill- 19 ing-code level ASP (as defined in sub- 20 paragraph (B)) for the manufacturer 21 for the rebate period, exceeds 22 ‘‘(II) the inflation-adjusted bill- 23 ing-code level ASP (as defined in sub- 24 paragraph (C)) for the rebate period. 25 VerDate Sep 11 2014 22:24 Jul 17, 2019 Jkt 034408 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S2081.IS S2081 pbinns on DSK79D2C42PROD with BILLS 7 •S 2081 IS ‘‘(B) MANUFACTURER-LEVEL BILLING- 1 CODE LEVEL ASP DEFINED.—In this subsection, 2 the term ‘manufacturer-level billing-code level 3 ASP’ means, with respect to a manufacturer 4 and a billing code for a rebate period, subject 5 to subparagraph (E)(i), the weighted average 6 sales price (per unit) across all of the National 7 Drug Codes for a manufacturer assigned to the 8 billing code, as determined by the Secretary, for 9 the quarter used to establish payment rates for 10 such Codes during the rebate period. 11 ‘‘(C) INFLATION-ADJUSTED BILLING-CODE 12 LEVEL ASP DEFINED.—In this subsection, the 13 term ‘inflation-adjusted billing-code level ASP’ 14 means, with respect to a billing code and a re- 15 bate period, the product of— 16 ‘‘(i) subject to subparagraph (E)(ii), 17 the average sales price for all National 18 Drug Codes, regardless of manufacturer, 19 assigned to the billing code, as determined 20 by the Secretary, for the calendar quarter 21 beginning January 1, 2017; and 22 ‘‘(ii) the percentage increase in the 23 consumer price index for all urban con- 24 sumers (United States city average) be- 25 VerDate Sep 11 2014 22:24 Jul 17, 2019 Jkt 034408 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S2081.IS S2081 pbinns on DSK79D2C42PROD with BILLS 8 •S 2081 IS tween December 2016, and the month 1 prior to the quarter described in subpara- 2 graph (B). 3 ‘‘(D) TREATMENT OF SUBSEQUENTLY AP- 4 PROVED DRUGS.—In the case of an applicable 5 part B drug first marketed after September 30, 6 2016, clause (i) of subparagraph (C) shall be 7 applied by substituting ‘the second full calendar 8 quarter after the day on which the drug was 9 first marketed’ for ‘the calendar quarter begin- 10 ning January 1, 2017’ and clause (ii) of such 11 subparagraph shall be applied by substituting 12 ‘the month prior to the first month of the sec- 13 ond full calendar quarter after the day on which 14 the drug was first marketed’ for ‘December 15 2016’. 16 ‘‘(E) AUTHORITY TO MODIFY METHOD- 17 OLOGY.— 18 ‘‘(i) DETERMINATION OF MANUFAC- 19 TURER-LEVEL BILLING-CODE LEVEL 20 ASP.—In the case where the Secretary does 21 not have manufacturer level data with re- 22 spect to a billing code, the Secretary may 23 request such additional data as needed, al- 24 locate total volume for all National Drug 25 VerDate Sep 11 2014 22:24 Jul 17, 2019 Jkt 034408 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S2081.IS S2081 pbinns on DSK79D2C42PROD with BILLS 9 •S 2081 IS Codes, regardless of manufacturer, as- 1 signed to the billing Code as determined by 2 the Secretary, or use an alternate method- 3 ology as necessary in order to determine 4 the manufacturer-level billing-code level 5 ASP under subparagraph (B). 6 ‘‘(ii) DETERMINATION OF INFLATION- 7 ADJUSTED BILLING-CODE LEVEL ASP.—In 8 the case where the Secretary does not have 9 sufficient data with respect to the average 10 sales price for applicable part B drugs as- 11 signed to a billing code in order to deter- 12 mine the inflation-adjusted billing-code 13 level ASP for the period described in sub- 14 paragraph (C)(i), including through the 15 application of subparagraph (D) to such 16 subparagraph (C)(i), the Secretary may 17 modify the methodology or period as nec- 18 essary for purposes of determining an in- 19 flation-adjusted billing-code level ASP for 20 such period. 21 ‘‘(5) SUBMISSION OF DATA.—A rebate agree- 22 ment under this subsection shall require a manufac- 23 turer of an applicable part B drug to submit to the 24 Secretary at such time, and in such manner, as the 25 VerDate Sep 11 2014 22:24 Jul 17, 2019 Jkt 034408 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S2081.IS S2081 pbinns on DSK79D2C42PROD with BILLS 10 •S 2081 IS Secretary may specify such data as the Secretary de- 1 termines is necessary in order to carry out this sub- 2 section. 3 ‘‘(6) LENGTH OF AGREEMENT.—The provisions 4 of paragraph (4) of section 1927(b) (other than 5 clauses (iv) and (v) of subparagraph (B)) shall apply 6 to rebate agreements under this subsection in the 7 same manner as such paragraph applies to a rebate 8 agreement under such section. 9 ‘‘(7) OTHER TERMS AND CONDITIONS.—The 10 Secretary shall establish other terms and conditions 11 of the rebate agreement under this subsection, in- 12 cluding terms and conditions related to compliance, 13 that are consistent with this subsection. 14 ‘‘(8) DEFINITIONS.—In this subsection: 15 ‘‘(A) APPLICABLE PART B DRUG.—The 16 term ‘applicable part B drug’ means— 17 ‘‘(i) a drug or biological described in 18 section 1842(o)(1)(C) for which payment is 19 made under this section; or 20 ‘‘(ii) a drug or biological for which the 21 Secretary has established a separate ambu- 22 latory classification group under the pro- 23 spective payment system for hospital out- 24 VerDate Sep 11 2014 22:24 Jul 17, 2019 Jkt 034408 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S2081.IS S2081 pbinns on DSK79D2C42PROD with BILLS 11 •S 2081 IS patient department services under section 1 1833(t). 2 ‘‘(B) REBATE PERIOD.—The term ‘rebate 3 period’ means, with respect to an agreement 4 under paragraph (2), a calendar quarter or 5 other period specified by the Secretary with re- 6 spect to the payment of rebates under such 7 agreement.’’. 8 SEC. 3. PROTECTION AGAINST HIGH OUT-OF-POCKET EX- 9 PENDITURES FOR PART B DRUGS. 10 Title XVIII of the Social Security Act (42 U.S.C. 11 1395 et seq.) is amended by inserting after section 1847B 12 the following new section: 13 ‘‘SEC. 1847C. PROTECTION AGAINST HIGH OUT-OF-POCKET 14 EXPENDITURES FOR PART B DRUGS. 15 ‘‘(a) IN GENERAL.—Notwithstanding any other pro- 16 vision of this title, in the case of an individual enrolled 17 under this part, if the amount of the out-of-pocket cost- 18 sharing for part B drugs (as defined in subsection (b)) 19 of such individual for a year (beginning with 2020) equals 20 or exceeds the part B drug annual out-of-pocket threshold 21 specified in subsection (c) for the year, section 22 1833(a)(1)(S) shall be applied by substituting ‘100 per- 23 cent’ for ‘80 percent’. 24 VerDate Sep 11 2014 22:24 Jul 17, 2019 Jkt 034408 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S2081.IS S2081 pbinns on DSK79D2C42PROD with BILLS 12 •S 2081 IS ‘‘(b) OUT-OF-POCKET COST-SHARING FOR PART B 1 DRUGS DEFINED.—In this section, the term ‘out-of-pock- 2 et cost-sharing for part B drugs’ means, with respect to 3 an individual, the amount of the expenses incurred by the 4 individual that are attributable to drugs or biologicals fur- 5 nished under this part. 6 ‘‘(c) PART B DRUG ANNUAL OUT-OF-POCKET 7 THRESHOLD.— 8 ‘‘(1) IN GENERAL.—For purposes of this sec- 9 tion, the ‘part B drug annual out-of-pocket thresh- 10 old’ specified in this subsection— 11 ‘‘(A) for 2020, is equal to the annual out- 12 of-pocket threshold specified in section 1860D– 13 2(b)(4)(B) for 2019, increased by the annual 14 percentage increase in the consumer price index 15 for all urban consumers (United States city av- 16 erage) for the 12-month period ending in July 17 of the 2019; and 18 ‘‘(B) for a subsequent year, is equal to the 19 amount specified in this subsection for the pre- 20 vious year, increased by the annual percentage 21 increase in the consumer price index for all 22 urban consumers (United States city average) 23 for the 12-month period ending in July of the 24 previous year. 25 VerDate Sep 11 2014 22:24 Jul 17, 2019 Jkt 034408 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S2081.IS [Text truncated for display. 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