We PAID Act

II 116TH CONGRESS 1ST SESSION S. 2387 To establish a process by which reasonable drug prices may be determined, and for other purposes. IN THE SENATE OF THE UNITED STATES JULY 31, 2019 Mr. VAN HOLLEN (for himself and Mr. SCOTT of Florida) introduced the fol- lowing bill; which was read twice and referred to the Committee on Health, Education, Labor, and Pensions A BILL To establish a process by which reasonable drug prices may be determined, 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 ‘‘We Protect American 4 Investment in Drugs Act’’ or the ‘‘We PAID Act’’. 5 SEC. 2. FINDINGS. 6 Congress finds the following: 7 (1) In addition to spurring economic growth, 8 the National Institutes of Health supports some of 9 the most significant breakthroughs in biomedical in- 10 VerDate Sep 11 2014 23:10 Aug 12, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S2387.IS S2387 pamtmann on DSKBFK8HB2PROD with BILLS 2 •S 2387 IS novation, including some that are commercialized 1 into new pharmaceutical products. 2 (2) The National Institutes of Health funding 3 contributed, either directly or indirectly, to the de- 4 velopment of all 210 new molecular entities approved 5 by the Food and Drug Administration between 2010 6 and 2016, according to an analysis published in the 7 Proceedings of the National Academy of Sciences. 8 (3) In fiscal year 2019, Congress provided 9 $39,100,000,000 in funding for the National Insti- 10 tutes of Health. 11 (4) According to a Kaiser Family Foundation 12 health tracking poll in February 2019— 13 (A) nearly 80 percent of people in the 14 United States say that the cost of prescription 15 drugs is ‘‘unreasonable’’ and only 25 percent 16 trust pharmaceutical companies to price their 17 products fairly; and 18 (B) one-fourth of people in the United 19 States say it is difficult to afford their prescrip- 20 tion drugs, and 3 in 10 say they have not taken 21 their medications as prescribed due to costs. 22 (5) According to a September 2018 report from 23 the AARP— 24 VerDate Sep 11 2014 23:10 Aug 12, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S2387.IS S2387 pamtmann on DSKBFK8HB2PROD with BILLS 3 •S 2387 IS (A) between 2016 and 2017, retail prices 1 for 267 widely used brand name prescription 2 drugs increased by 8.4 percent after 5 straight 3 years of double-digit average annual price in- 4 creases; 5 (B) brand name drug prices increased 4 6 times faster than general inflation in 2017; and 7 (C) retail prices increased in 2017 for 87 8 percent (231 of 267) of the widely used brand 9 name prescription drugs reviewed, and all but 5 10 such increases exceeded the rate of inflation. 11 (6) In 2016, prescription drug spending in the 12 United States was $477,000,000,000, according to 13 an estimate from the Assistant Secretary for Plan- 14 ning and Evaluation of the Department of Health 15 and Human Services. 16 (7) Prescription drugs account for nearly $1 17 out of every $5 in overall spending under the Medi- 18 care program, as well as 21 percent of Medicare 19 beneficiaries’ out-of-pocket health spending, not in- 20 cluding premiums. 21 (8)(A) A drug’s list price has a significant im- 22 pact on what payors and patients pay to purchase 23 prescription drugs. 24 VerDate Sep 11 2014 23:10 Aug 12, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S2387.IS S2387 pamtmann on DSKBFK8HB2PROD with BILLS 4 •S 2387 IS (B) In prescription drug plans under Medicare 1 part D, and a growing number of commercial health 2 plans, seniors’ and other beneficiaries’ cost-sharing 3 is based on a percentage of a drug’s list price. As 4 a result, higher drug list prices mean higher out-of- 5 pocket costs for Medicare beneficiaries for their re- 6 tail prescriptions. 7 (C) For prescription drugs covered under Medi- 8 care part B, beneficiaries are responsible for paying 9 20 percent of the Medicare-approved amount for the 10 drug, and the part B deductible also applies. This 11 can be a significant burden for high-cost part B 12 drugs. 13 (D) A drug’s list price is a factor in deter- 14 mining the amount of the rebate paid to State Med- 15 icaid plans by the drug’s manufacturer under the 16 Medicaid Drug Rebate Program, and an increase in 17 the drug’s list price may result in increased Med- 18 icaid costs. 19 (E) In the private health insurance market, 20 pharmacy benefit manager and wholesaler fees are 21 based on a percentage of the list price. Higher list 22 prices increase costs in this part of the distribution 23 chain. 24 VerDate Sep 11 2014 23:10 Aug 12, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S2387.IS S2387 pamtmann on DSKBFK8HB2PROD with BILLS 5 •S 2387 IS (F) From 2007 through 2017, enrollment in 1 high-deductible health plans with a health savings 2 account (4.2 percent to 18.9 percent) and without a 3 health savings account (10.6 percent to 24.5 per- 4 cent) increased among adults between ages 18 and 5 64 with employment-based coverage, while enroll- 6 ment in traditional plans decreased, according to the 7 Centers for Disease Control and Prevention. Individ- 8 uals with high-deductible health plans pay more out 9 of pocket for medical expenses until their deductible 10 is met, making high-cost drugs challenging to afford. 11 (G) A larger share of prescription drug plans 12 under Medicare part D charged a deductible in 2019 13 than in 2018 (71 percent in 2019, and 63 percent 14 in 2018), according to the Kaiser Family Founda- 15 tion. Fifty-two percent of prescription drug plans 16 will require enrollees to satisfy the standard deduct- 17 ible of $415 in 2019. 18 SEC. 3. DEFINITIONS. 19 For purposes of this Act: 20 (1) APPLICABLE DRUG.—The term ‘‘applicable 21 drug’’ means a drug (as defined in section 201 of 22 the Federal Food, Drug, and Cosmetic Act (21 23 U.S.C. 321)) that— 24 VerDate Sep 11 2014 23:10 Aug 12, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S2387.IS S2387 pamtmann on DSKBFK8HB2PROD with BILLS 6 •S 2387 IS (A) is approved under section 505(c) of the 1 Federal Food, Drug, and Cosmetic Act (21 2 U.S.C. 355(c)) or section 351(a) of the Public 3 Health Service Act (42 U.S.C. 262(a)); 4 (B) is subject to section 503(b)(1) of such 5 Act (21 U.S.C. 353(b)(1)); and 6 (C) is covered by a qualifying patent on 7 the drug, on a method of using such drug, or 8 on a method or machine used to manufacture 9 or administer such drug with respect to which 10 the drug sponsor retained the title to any sub- 11 ject invention under section 202 of title 35, 12 United States Code, or entered into a licensing 13 agreement after the date of enactment of this 14 Act. 15 (2) CONFLICT OF INTEREST.—The term ‘‘con- 16 flict of interest’’ means an association, including a 17 financial or personal association, or past employ- 18 ment, that has the potential to bias or have the ap- 19 pearance of biasing an individual’s decisions in mat- 20 ters related to the Drug Affordability and Access 21 Committee or the conduct of other activities under 22 this Act. 23 (3) MANUFACTURER LIST PRICE.—The term 24 ‘‘manufacturer list price’’ means the national price 25 VerDate Sep 11 2014 23:10 Aug 12, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S2387.IS S2387 pamtmann on DSKBFK8HB2PROD with BILLS 7 •S 2387 IS for a prescription drug established by the manufac- 1 turer or licensee found in a catalogue or other public 2 source that is the price from which market discounts 3 and price concessions are calculated. 4 (4) PERIOD OF MARKET EXCLUSIVITY.—The 5 term ‘‘period of market exclusivity’’ means any pe- 6 riod of market exclusivity granted with respect to a 7 prescription drug under clause (ii), (iii), or (iv) of 8 section 505(c)(3)(E) of the Federal Food, Drug, and 9 Cosmetic Act (21 U.S.C. 355(c)(3)(E)), clause (ii), 10 (iii), or (iv) of section 505(j)(5)(F) of such Act, sec- 11 tion 527 of such Act (21 U.S.C. 360cc), or section 12 351(k)(7) of the Public Health Service Act (42 13 U.S.C. 262(k)(7)), and any extension of such period 14 granted under section 505A or 505E of the Federal 15 Food, Drug, and Cosmetic Act (21 U.S.C. 355a, 16 355f). 17 (5) QUALIFYING PATENT.—The term ‘‘quali- 18 fying patent’’ means any patent— 19 (A) held by the Federal Government; or 20 (B) which the applicant with respect to the 21 patent was required to disclose under section 22 202(c)(6) of title 35, United States Code, in the 23 application for the patent. 24 VerDate Sep 11 2014 23:10 Aug 12, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S2387.IS S2387 pamtmann on DSKBFK8HB2PROD with BILLS 8 •S 2387 IS (6) SECRETARY.—The term ‘‘Secretary’’ means 1 the Secretary of Health and Human Services. 2 SEC. 4. NATIONAL ACADEMY OF MEDICINE STUDY ON DE- 3 TERMINING A REASONABLE DRUG PRICE. 4 (a) IN GENERAL.—Not later than 60 days after the 5 date of enactment of this Act, the Secretary shall seek 6 to enter into a contract with the National Academy of 7 Medicine (referred to in this section as the ‘‘Academy’’) 8 under which the Academy agrees to study— 9 (1) how best to determine the reasonableness of 10 a drug’s manufacturer list price and retail price and 11 develop at least 1 framework for determining the 12 reasonableness of a drug’s manufacturer list price 13 and retail price taking into consideration— 14 (A) affordability of the drug to payers, 15 purchasers, and patients across wide market 16 segments in a manner that ensures equitable 17 access; 18 (B) investment by the National Institutes 19 of Health or any other Federal Government en- 20 tity in the development of the drug; 21 (C) inclusion of research funded by the 22 National Institutes of Health or other Federal 23 Government entity in the development of the 24 drug; 25 VerDate Sep 11 2014 23:10 Aug 12, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S2387.IS S2387 pamtmann on DSKBFK8HB2PROD with BILLS 9 •S 2387 IS (D) manufacturer research and develop- 1 ment costs as shown on the manufacturer’s 2 Federal tax filing under sections 41 and 174 of 3 the Internal Revenue Code of 1986; 4 (E) investment and the rate of return 5 needs for the drug manufacturer; 6 (F) market for the drug; 7 (G) the cost of production and distribution 8 of the drug; 9 (H) the price of the drug in other similar, 10 industrialized countries; 11 (I) estimated global and domestic sales of 12 the drug; 13 (J) gross and net expenditures by public 14 payers for coverage of the drug under Federal 15 health programs, to the extent available; and 16 (K) any additional information the Acad- 17 emy determines appropriate; 18 (2) an appropriate timeline for the submission 19 of information to the Drug Affordability and Access 20 Committee required under section 6(a)(2) to deter- 21 mine the reasonableness of a drug’s manufacturer 22 list price and retail price; and 23 (3) an appropriate timeline for the Drug Af- 24 fordability and Access Committee to determine the 25 VerDate Sep 11 2014 23:10 Aug 12, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S2387.IS S2387 pamtmann on DSKBFK8HB2PROD with BILLS 10 •S 2387 IS reasonableness of a drug’s manufacturer list price 1 and retail price to be in effect the second year after 2 coming to market. 3 (b) REPORT.—Any contract between the Secretary 4 and the Academy under this section shall include a re- 5 quirement that the Academy submit a report on the re- 6 sults of the study described in subsection (a) to the Sec- 7 retary, the Drug Affordability and Access Committee, and 8 Congress. 9 SEC. 5. DRUG AFFORDABILITY AND ACCESS COMMITTEE. 10 (a) ESTABLISHMENT.—There is hereby authorized to 11 be established a nonprofit corporation to be known as the 12 Drug Affordability and Access Committee (referred to in 13 this section as the ‘‘Committee’’), which is neither an 14 agency nor establishment of the United States Govern- 15 ment. The Committee shall be headed by an Executive Di- 16 rector. 17 (b) PURPOSE.—The purpose of the Committee is to 18 determine a reasonable manufacturer list price and retail 19 price for each applicable drug. 20 (c) BOARD OF DIRECTORS.— 21 (1) IN GENERAL.—The Committee shall have a 22 Board of Directors, which shall be composed of ex 23 officio and appointed members in accordance with 24 VerDate Sep 11 2014 23:10 Aug 12, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S2387.IS S2387 pamtmann on DSKBFK8HB2PROD with BILLS 11 •S 2387 IS this subsection. All appointed members of the Board 1 shall be voting members. 2 (2) EX OFFICIO MEMBERS.—The non-voting ex 3 officio members of the Committee shall be the fol- 4 lowing individuals or their designees: 5 (A) The Secretary of Health and Human 6 Services. 7 (B) The Director of the National Institutes 8 of Health. 9 (C) The Commissioner of Food and Drugs. 10 (D) The Director of the Agency for 11 Healthcare Research and Quality. 12 (E) The Director of the Centers for Dis- 13 ease Control and Prevention. 14 (F) The Administrator of the Centers for 15 Medicare & Medicaid Services. 16 (G) The Assistant Secretary for Planning 17 and Evaluation. 18 (3) APPOINTED MEMBERS.— 19 (A) IN GENERAL.—Ten additional mem- 20 bers shall be appointed to the Committee by the 21 Comptroller General of the United States not 22 later than 180 days after the date of enactment 23 of this Act. Such members shall include— 24 VerDate Sep 11 2014 23:10 Aug 12, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S2387.IS S2387 pamtmann on DSKBFK8HB2PROD with BILLS 12 •S 2387 IS (i) 2 patient and consumer represent- 1 atives not affiliated with any organization 2 that receives funding from pharmaceutical 3 manufacturers; 4 (ii) 3 provider representatives, includ- 5 ing 1 hospital representative and 1 phar- 6 macist representative; 7 (iii) 1 health services researcher; 8 (iv) 1 health care economist; 9 (v) 1 representative of a sponsor of a 10 health plan or health insurance coverage; 11 (vi) 1 pharmacy benefit management 12 services representative; and 13 (vii) 1 drug manufacturer representa- 14 tive. 15 (B) DURATION OF TERMS.—Members ap- 16 pointed to the Committee under subparagraph 17 (A) shall be appointed to serve 5-year terms, 18 which shall be staggered for the members first 19 appointed. 20 (C) TERM LIMITS.—Members appointed to 21 the Committee under subparagraph (A) may 22 not be so appointed for more than 2 terms. 23 (D) CONFLICTS OF INTEREST.— 24 VerDate Sep 11 2014 23:10 Aug 12, 2019 Jkt 089200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S2387.IS S2387 pamtmann on DSKBFK8HB2PRO [Text truncated for display. 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