Fair Accountability and Innovative Research Drug Pricing Act of 2023

II 118TH CONGRESS 1ST SESSION S. 935 To require reporting regarding certain drug price increases, and for other purposes. IN THE SENATE OF THE UNITED STATES MARCH 22, 2023 Ms. BALDWIN (for herself, Mr. BRAUN, and Ms. SMITH) introduced the fol- lowing bill; which was read twice and referred to the Committee on Health, Education, Labor, and Pensions A BILL To require reporting regarding certain drug price increases, 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 ‘‘Fair Accountability 4 and Innovative Research Drug Pricing Act of 2023’’. 5 SEC. 2. REPORTING ON JUSTIFICATION FOR DRUG PRICE 6 INCREASES. 7 Title III of the Public Health Service Act (42 U.S.C. 8 241 et seq.) is amended by adding at the end the fol- 9 lowing: 10 VerDate Sep 11 2014 22:54 Mar 31, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S935.IS S935 kjohnson on DSK79L0C42PROD with BILLS 2 •S 935 IS ‘‘PART W—DRUG PRICE REPORTING; DRUG 1 VALUE FUND 2 ‘‘SEC. 399OO. REPORTING ON JUSTIFICATION FOR DRUG 3 PRICE INCREASES. 4 ‘‘(a) DEFINITIONS.—In this section: 5 ‘‘(1) MANUFACTURER.—The term ‘manufac- 6 turer’ means the person— 7 ‘‘(A) that holds the application for a drug 8 approved under section 505 of the Federal 9 Food, Drug, and Cosmetic Act or the license 10 issued under section 351 of this Act; or 11 ‘‘(B) who is responsible for setting the 12 price for the drug. 13 ‘‘(2) QUALIFYING DRUG.—The term ‘qualifying 14 drug’ means any drug that is approved under sub- 15 section (c) or (j) of section 505 of the Federal Food, 16 Drug, and Cosmetic Act or licensed under subsection 17 (a) or (k) of section 351 of this Act— 18 ‘‘(A) that has a wholesale acquisition cost 19 of $100 or more per month supply, or per a 20 course of treatment that lasts less than a 21 month, and is— 22 ‘‘(i)(I) subject to section 503(b)(1) of 23 the Federal Food, Drug, and Cosmetic 24 Act; or 25 VerDate Sep 11 2014 22:54 Mar 31, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S935.IS S935 kjohnson on DSK79L0C42PROD with BILLS 3 •S 935 IS ‘‘(II) commonly administered by hos- 1 pitals (as determined by the Secretary); 2 and 3 ‘‘(ii) not designated by the Secretary 4 as a vaccine; and 5 ‘‘(B) for which, during the previous cal- 6 endar year, at least 1 dollar of the total amount 7 of sales were for individuals enrolled under the 8 Medicare program under title XVIII of the So- 9 cial Security Act (42 U.S.C. 1395 et seq.) or 10 under a State Medicaid plan under title XIX of 11 such Act (42 U.S.C. 1396 et seq.) or under a 12 waiver of such plan. 13 ‘‘(3) UNITED STATES MEDIAN HOUSEHOLD IN- 14 COME.—The term ‘United States median household 15 income’ means median household income for the 16 United States as published by the Census Bureau 17 for the most recent year for which data is available. 18 ‘‘(4) WHOLESALE ACQUISITION COST.—The 19 term ‘wholesale acquisition cost’ has the meaning 20 given that term in section 1847A(c)(6)(B) of the So- 21 cial Security Act (42 U.S.C. 1395w–3a(c)(6)(B)). 22 ‘‘(b) REPORT.— 23 VerDate Sep 11 2014 04:17 Apr 04, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S935.IS S935 kjohnson on DSK79L0C42PROD with BILLS 4 •S 935 IS ‘‘(1) REPORT REQUIRED.—The manufacturer of 1 a qualifying drug shall submit a report to the Sec- 2 retary if, with respect to the qualifying drug— 3 ‘‘(A) there is an increase in the price of 4 the qualifying drug that results in an increase 5 in the wholesale acquisition cost of that drug 6 that is equal to— 7 ‘‘(i) 10 percent or more over a 12- 8 month period beginning on or after Janu- 9 ary 1, 2024; or 10 ‘‘(ii) 25 percent or more over a 36- 11 month period beginning on or after Janu- 12 ary 1, 2024; or 13 ‘‘(B) the wholesale acquisition price of the 14 qualifying drug for the applicable year or per 15 normal course of treatment that lasts less than 16 1 year, as determined by the Secretary, exceeds 17 United States median household income begin- 18 ning on or after January 1, 2024. 19 ‘‘(2) REPORT DEADLINE.—Each report de- 20 scribed in paragraph (1) shall be submitted to the 21 Secretary not later than 30 days prior to the 22 planned effective date of such price increase. 23 ‘‘(c) CONTENTS.—A report under subsection (b) 24 shall, at a minimum, include— 25 VerDate Sep 11 2014 22:54 Mar 31, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S935.IS S935 kjohnson on DSK79L0C42PROD with BILLS 5 •S 935 IS ‘‘(1) with respect to the qualifying drug— 1 ‘‘(A) the percentage by which the manufac- 2 turer will raise the wholesale acquisition cost of 3 the drug on the planned effective date of such 4 price increase, as applicable; 5 ‘‘(B) a justification for, and description of, 6 each manufacturer’s price increase that will 7 occur during the 12-month period described in 8 subsection (b)(1)(A) or the 36-month period de- 9 scribed in subsection (b)(1)(B), as applicable; 10 ‘‘(C) an explanation for, and description 11 of, the cost associated with a qualifying drug if 12 such drug meets the criteria under subsection 13 (b)(1)(B), as applicable; 14 ‘‘(D) the identity of the initial developer of 15 the drug; 16 ‘‘(E) a description of the history of the 17 manufacturer’s price increases for the drug 18 since the approval of the application for the 19 drug under section 505 of the Federal Food, 20 Drug, and Cosmetic Act or the issuance of the 21 license for the drug under section 351, or since 22 the manufacturer acquired such approved appli- 23 cation or license, as applicable; 24 ‘‘(F) the current list price of the drug; 25 VerDate Sep 11 2014 22:54 Mar 31, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S935.IS S935 kjohnson on DSK79L0C42PROD with BILLS 6 •S 935 IS ‘‘(G) the total expenditures of the manu- 1 facturer on— 2 ‘‘(i) materials and manufacturing for 3 such drug; and 4 ‘‘(ii) acquiring patents and licensing 5 for such drug; 6 ‘‘(H) the percentage of total expenditures 7 of the manufacturer on research and develop- 8 ment for such drug that was derived from Fed- 9 eral funds; 10 ‘‘(I) the total expenditures of the manufac- 11 turer on research and development for such 12 drug that is used for— 13 ‘‘(i) basic and preclinical research; 14 ‘‘(ii) clinical research; 15 ‘‘(iii) new drug development; 16 ‘‘(iv) pursuing new or expanded indi- 17 cations for such drug through supple- 18 mental applications under section 505 of 19 the Federal Food, Drug, and Cosmetic Act 20 or section 351 of this Act; and 21 ‘‘(v) carrying out postmarket require- 22 ments related to such drug, including those 23 under section 505(o)(3) of the Federal 24 Food, Drug, and Cosmetic Act; 25 VerDate Sep 11 2014 22:54 Mar 31, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S935.IS S935 kjohnson on DSK79L0C42PROD with BILLS 7 •S 935 IS ‘‘(J) the total revenue and the net profit 1 generated from the qualifying drug for each cal- 2 endar year since the approval of the application 3 for the drug under section 505 of the Federal 4 Food, Drug, and Cosmetic Act or the issuance 5 of the license for the drug under section 351, 6 or since the manufacturer acquired such ap- 7 proved application or license; and 8 ‘‘(K) the total costs associated with mar- 9 keting and advertising for the qualifying drug; 10 ‘‘(2) with respect to the manufacturer— 11 ‘‘(A) the total revenue and the net profit 12 of the manufacturer for each of the 12-month 13 periods described in subsection (b)(1)(A) or for 14 the 36-month period described in subsection 15 (b)(1)(B), as applicable; 16 ‘‘(B) all stock-based performance metrics 17 used by the manufacturer to determine execu- 18 tive compensation for each of the 12-month pe- 19 riods described in subsection (b)(1)(A) or the 20 36-month periods described in subsection 21 (b)(1)(B)(ii), as applicable; and 22 ‘‘(C) any additional information the manu- 23 facturer chooses to provide related to drug pric- 24 ing decisions, such as total expenditures on— 25 VerDate Sep 11 2014 22:54 Mar 31, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S935.IS S935 kjohnson on DSK79L0C42PROD with BILLS 8 •S 935 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; and 5 ‘‘(3) such other related information as the Sec- 6 retary considers appropriate. 7 ‘‘(d) CIVIL PENALTY.—Any manufacturer of a quali- 8 fying drug that fails to submit a report for the drug as 9 required by this section shall be subject to a civil penalty 10 of $100,000 for each day on which the violation continues. 11 ‘‘(e) PUBLIC POSTING.— 12 ‘‘(1) IN GENERAL.—Subject to paragraph (3), 13 not later than 30 days after the submission of a re- 14 port under subsection (b), the Secretary shall post 15 the report on the public website of the Department 16 of Health and Human Services. 17 ‘‘(2) FORMAT.—In developing the format of 18 such report for public posting, the Secretary shall 19 consult stakeholders, including beneficiary groups, 20 and shall seek feedback on the content and format 21 from consumer advocates and readability experts to 22 ensure such public reports are user-friendly to the 23 public and are written in plain language that con- 24 sumers can readily understand. 25 VerDate Sep 11 2014 22:54 Mar 31, 2023 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S935.IS S935 kjohnson on DSK79L0C42PROD with BILLS 9 •S 935 IS ‘‘(3) TRADE SECRETS AND CONFIDENTIAL IN- 1 FORMATION.—In carrying out this section the Sec- 2 retary shall enforce current law concerning the pro- 3 tection of confidential commercial information and 4 trade secrets.’’. 5 ‘‘SEC. 399OO–1. USE OF CIVIL PENALTY AMOUNTS. 6 ‘‘The Secretary shall, without further appropriation, 7 collect civil penalties under section 399OO and use the 8 funds derived from such civil penalties, in addition to any 9 other amounts available to the Secretary, to carry out ac- 10 tivities described in this part and to improve consumer and 11 provider information about drug value and drug price 12 transparency. 13 ‘‘SEC. 399OO–2. ANNUAL REPORT TO CONGRESS. 14 ‘‘(a) IN GENERAL.—Subject to subsection (b), the 15 Secretary shall submit to Congress, and post on the public 16 website of the Department of Health and Human Services 17 in a way that is easy to find, use, and understand, an 18 annual report— 19 ‘‘(1) summarizing the information reported pur- 20 suant to section 399OO; and 21 ‘‘(2) including copies of the reports and sup- 22 porting detailed economic analyses submitted pursu- 23 ant to such section. 24 VerDate Sep 11 2014 22:54 Mar 31, 2023 Jkt 039200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S935.IS S935 kjohnson on DSK79L0C42PROD with BILLS 10 •S 935 IS ‘‘(b) TRADE SECRETS AND CONFIDENTIAL INFORMA- 1 TION.—In carrying out this section the Secretary shall en- 2 force current law concerning the protection of confidential 3 commercial information and trade secrets.’’. 4 Æ VerDate Sep 11 2014 22:54 Mar 31, 2023 Jkt 039200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6301 E:\BILLS\S935.IS S935 kjohnson on DSK79L0C42PROD with BILLS