Prescription Drug Pricing Reduction Act of 2019

II Calendar No. 225 116TH CONGRESS 1ST SESSION S. 2543 [Report No. 116–120] To amend titles XI, XVIII, and XIX of the Social Security Act to lower prescription drug prices in the Medicare and Medicaid programs, to improve transparency related to pharmaceutical prices and transactions, to lower patients’ out-of-pocket costs, and to ensure accountability to taxpayers, and for other purposes. IN THE SENATE OF THE UNITED STATES SEPTEMBER 25, 2019 Mr. GRASSLEY, from the Committee on Finance, reported the following original bill; which was read twice and placed on the calendar A BILL To amend titles XI, XVIII, and XIX of the Social Security Act to lower prescription drug prices in the Medicare and Medicaid programs, to improve transparency related to pharmaceutical prices and transactions, to lower pa- tients’ out-of-pocket costs, and to ensure accountability to taxpayers, 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 VerDate Sep 11 2014 00:15 Sep 26, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S2543.RS S2543 pamtmann on DSKBC07HB2PROD with BILLS 2 •S 2543 RS SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 1 (a) SHORT TITLE.—This Act may be cited as the 2 ‘‘Prescription Drug Pricing Reduction Act of 2019’’. 3 (b) TABLE OF CONTENTS.—The table of contents of 4 this Act is as follows: 5 Sec. 1. Short title; table of contents. TITLE I—MEDICARE Subtitle A—Part B Sec. 101. Improving manufacturers’ reporting of average sales prices to set ac- curate payment rates. Sec. 102. Inclusion of value of coupons in determination of average sales price for drugs and biologicals under Medicare part B. Sec. 103. Payment for biosimilar biological products during initial period. Sec. 104. Temporary increase in Medicare part B payment for biosimilar bio- logical products. Sec. 105. Improvements to Medicare site-of-service transparency. Sec. 106. Medicare part B rebate by manufacturers for drugs or biologicals with prices increasing faster than inflation. Sec. 107. Requiring manufacturers of certain single-dose container or single-use package drugs payable under part B of the Medicare program to provide refunds with respect to discarded amounts of such drugs. Sec. 108. Clarification of Medicare average sales price payment methodology. Sec. 109. Establishment of maximum add-on payment for drugs and biologicals. Sec. 110. Treatment of drug administration services furnished by certain ex- cepted off-campus outpatient departments of a provider. Sec. 111. GAO study and report on average sales price. Sec. 112. Authority to use alternative payment for drugs and biologicals to pre- vent potential drug shortages. Subtitle B—Part D Sec. 121. Medicare part D modernization redesign. Sec. 122. Providing the Medicare Payment Advisory Commission and Medicaid and CHIP Payment and Access Commission with access to cer- tain drug payment information, including certain rebate infor- mation. Sec. 123. Public disclosure of drug discounts and other pharmacy benefit man- ager (PBM) provisions. Sec. 124. Public disclosure of direct and indirect remuneration review and audit results. Sec. 125. Increasing the use of real-time benefit tools to lower beneficiary costs. Sec. 126. Improvements to provision of parts A and B claims data to prescrip- tion drug plans. Sec. 127. Permanently authorize a successful pilot on retroactive Medicare part D coverage for low-income beneficiaries. VerDate Sep 11 2014 00:15 Sep 26, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6211 E:\BILLS\S2543.RS S2543 pamtmann on DSKBC07HB2PROD with BILLS 3 •S 2543 RS Sec. 128. Medicare part D rebate by manufacturers for certain drugs with prices increasing faster than inflation. Sec. 129. Prohibiting branding on part D benefit cards. Sec. 130. Requiring prescription drug plans and MA–PD plans to report poten- tial fraud, waste, and abuse to the Secretary of HHS. Sec. 131. Establishment of pharmacy quality measures under Medicare part D. Sec. 132. Addition of new measures based on access to biosimilar biological products to the 5-star rating system under Medicare Advan- tage. Sec. 133. HHS study and report on the influence of pharmaceutical manufac- turer third-party reimbursement hubs on health care providers who prescribe their drugs and biologicals. Subtitle C—Miscellaneous Sec. 141. Drug manufacturer price transparency. Sec. 142. Strengthening and expanding pharmacy benefit managers trans- parency requirements. Sec. 143. Prescription drug pricing dashboards. Sec. 144. Improving coordination between the Food and Drug Administration and the Centers for Medicare & Medicaid Services. Sec. 145. Patient consultation in Medicare national and local coverage deter- minations in order to mitigate barriers to inclusion of such per- spectives. Sec. 146. GAO study on increases to Medicare and Medicaid spending due to copayment coupons and other patient assistance programs. Sec. 147. MedPAC report on shifting coverage of certain Medicare part B drugs to Medicare part D. Sec. 148. Taking steps to fulfill treaty obligations to tribal communities. TITLE II—MEDICAID Sec. 201. Medicaid pharmacy and therapeutics committee improvements. Sec. 202. Improving reporting requirements and developing standards for the use of drug use review boards in State Medicaid programs. Sec. 203. GAO report on conflicts of interest in State Medicaid program drug use review boards and pharmacy and therapeutics (P&T) com- mittees. Sec. 204. Ensuring the accuracy of manufacturer price and drug product infor- mation under the Medicaid drug rebate program. Sec. 205. Excluding authorized generic drugs from calculation of average man- ufacturer price under the Medicaid drug rebate program. Sec. 206. Improving transparency and preventing the use of abusive spread pricing and related practices in Medicaid. Sec. 207. T–MSIS drug data analytics reports. Sec. 208. Risk-sharing value-based payment agreements for covered outpatient drugs under Medicaid. Sec. 209. Modification of maximum rebate amount under Medicaid drug rebate program. Sec. 210. Applying Medicaid drug rebate requirement to drugs provided as part of outpatient hospital services. VerDate Sep 11 2014 00:15 Sep 26, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6211 E:\BILLS\S2543.RS S2543 pamtmann on DSKBC07HB2PROD with BILLS 4 •S 2543 RS TITLE I—MEDICARE 1 Subtitle A—Part B 2 SEC. 101. IMPROVING MANUFACTURERS’ REPORTING OF 3 AVERAGE SALES PRICES TO SET ACCURATE 4 PAYMENT RATES. 5 (a) IN GENERAL.—Section 1847A(f) of the Social Se- 6 curity Act (42 U.S.C. 1395w–3a(f)) is amended— 7 (1) by striking ‘‘PRICE.—For requirements’’ 8 and inserting ‘‘PRICE.— 9 ‘‘(1) IN GENERAL.—For requirements’’; and 10 (2) by adding at the end the following new 11 paragraph: 12 ‘‘(2) MANUFACTURERS THAT DO NOT HAVE A 13 REBATE AGREEMENT.— 14 ‘‘(A) IN GENERAL.—For calendar quarters 15 beginning with the first calendar quarter after 16 the date of the enactment of this paragraph, 17 the following provisions shall apply with respect 18 to a manufacturer of an applicable drug or bio- 19 logical (as defined in subparagraph (B)) that 20 has not entered into and does not have in effect 21 a rebate agreement described in subsection (b) 22 of section 1927 in the same manner and to the 23 same extent as such provisions apply with re- 24 VerDate Sep 11 2014 00:15 Sep 26, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S2543.RS S2543 pamtmann on DSKBC07HB2PROD with BILLS 5 •S 2543 RS spect to a manufacturer that has entered into 1 and has in effect such a rebate agreement: 2 ‘‘(i) Section 1927(b)(3)(A)(iii). 3 ‘‘(ii) Subparagraphs (B) and (C) 4 (other than the rebate agreement suspen- 5 sion described in such subparagraph (C)) 6 of section 1927(b)(3). 7 ‘‘(B) APPLICABLE DRUG OR BIOLOGICAL 8 DEFINED.—For purposes of subparagraph (A), 9 the term ‘applicable drug or biological’ means a 10 drug or biological described in subparagraph 11 (C), (E), or (G) of section 1842(o)(1) or in sec- 12 tion 1881(b)(14)(B) that is payable under this 13 part. For purposes of applying this paragraph, 14 a drug or biological described in the previous 15 sentence includes an item, service, supply, or 16 product that is payable under this part as a 17 drug or biological.’’. 18 (b) CONFORMING AMENDMENTS.— 19 (1) TITLE XVIII.—Section 1847A(b) of the So- 20 cial Security Act (42 U.S.C. 1395w–3a(b)) is 21 amended— 22 (A) in paragraph (2)(A), by inserting ‘‘or 23 subsection (f)(2), as applicable’’ after ‘‘under 24 section 1927(b)(3)(A)(iii)’’; and 25 VerDate Sep 11 2014 00:15 Sep 26, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S2543.RS S2543 pamtmann on DSKBC07HB2PROD with BILLS 6 •S 2543 RS (B) in each of paragraphs (3) and (6)(A), 1 in the matter preceding subparagraph (A) and 2 clause (i), respectively, by inserting ‘‘or sub- 3 section (f)(2), as applicable,’’ after ‘‘under sec- 4 tion 1927(b)(3)(A)(iii)’’. 5 (2) TITLE XIX.—Section 1927(b)(3) of the So- 6 cial Security Act (42 U.S.C. 1396r–8(b)(3)) is 7 amended— 8 (A) in subparagraph (A), in the flush mat- 9 ter following clause (iv), by inserting ‘‘or sec- 10 tion 1847A(f)(2)’’ after ‘‘Information reported 11 under this subparagraph’’; and 12 (B) in subparagraph (D), in the matter 13 preceding clause (i), by striking ‘‘or wholesalers 14 under this paragraph or under’’ and inserting 15 ‘‘or wholesalers under this paragraph, under 16 section 1847A(f)(2), or under’’. 17 (3) TECHNICAL CORRECTION.—Section 18 1927(b)(3)(A)(iii) of such Act (42 U.S.C. 1396r– 19 8(b)(3)(A)(iii)) is amended by striking ‘‘section 20 1881(b)(13)(A)(ii)’’ and inserting ‘‘section 21 1881(b)(14)(B)’’. 22 VerDate Sep 11 2014 00:15 Sep 26, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S2543.RS S2543 pamtmann on DSKBC07HB2PROD with BILLS 7 •S 2543 RS SEC. 102. INCLUSION OF VALUE OF COUPONS IN DETER- 1 MINATION OF AVERAGE SALES PRICE FOR 2 DRUGS AND BIOLOGICALS UNDER MEDICARE 3 PART B. 4 Section 1847A(c) of the Social Security Act (42 5 U.S.C. 1395w–3a(c)) is amended— 6 (1) in paragraph (3)— 7 (A) by striking ‘‘DISCOUNTS.—In calcu- 8 lating’’ and inserting ‘‘DISCOUNTS TO PUR- 9 CHASERS AND COUPONS PROVIDED TO PRI- 10 VATELY INSURED INDIVIDUALS.— 11 ‘‘(A) DISCOUNTS TO PURCHASERS.—In 12 calculating’’; and 13 (B) by adding at the end the following new 14 subparagraph: 15 ‘‘(B) COUPONS PROVIDED TO REDUCE 16 COST-SHARING.—For calendar quarters begin- 17 ning on or after July 1, 2021, in calculating the 18 manufacturer’s average sales price under this 19 subsection, such price shall include the value 20 (as defined in paragraph (6)(J)) of any coupons 21 provided under a drug coupon program of a 22 manufacturer (as those terms are defined in 23 subparagraphs (K) and (L), respectively, of 24 paragraph (6)).’’; and 25 VerDate Sep 11 2014 00:15 Sep 26, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S2543.RS S2543 pamtmann on DSKBC07HB2PROD with BILLS 8 •S 2543 RS (2) in paragraph (6), by adding at the end the 1 following new subparagraphs: 2 ‘‘(J) VALUE.—The term ‘value’ means, 3 with respect to a coupon (as defined in sub- 4 paragraph (K)), the difference, if any, be- 5 tween— 6 ‘‘(i) the amount of any reduction or 7 elimination of cost-sharing or other out-of- 8 pocket costs described in such subpara- 9 graph to a patient as a result of the use 10 of such coupon; and 11 ‘‘(ii) any charge to the patient for the 12 use of such coupon. 13 ‘‘(K) COUPON.—The term ‘coupon’ means 14 any financial support that is provided to a pa- 15 tient, either directly to the patient or indirectly 16 to the patient through a physician, prescriber, 17 pharmacy, or other provider, under a drug cou- 18 pon program of a manufacturer (as defined in 19 subparagraph (L)) that is used to reduce or 20 eliminate cost-sharing or other out-of-pocket 21 costs of the patient, including costs related to 22 a deductible, coinsurance, or copayment, with 23 respect to a drug or biological, including a bio- 24 similar biological product, of the manufacturer. 25 VerDate Sep 11 2014 00:15 Sep 26, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S2543.RS S2543 pamtmann on DSKBC07HB2PROD with BILLS 9 •S 2543 RS ‘‘(L) DRUG COUPON PROGRAM.— 1 ‘‘(i) IN GENERAL.—Subject to clause 2 (ii), the term ‘drug coupon program’ 3 means, with respect to a manufacturer, a 4 program through which the manufacturer 5 provides coupons to patients as described 6 in subparagraph (K). 7 ‘‘(ii) EXCLUSIONS.—Such term does 8 not include— 9 ‘‘(I) a patient assistance program 10 operated by a manufacturer that pro- 11 vides free or discounted drugs or 12 biologicals, including biosimilar bio- 13 logical products, (through in-kind do- 14 nations) to patients of low income; or 15 ‘‘(II) a contribution by a manu- 16 facturer to a nonprofit or Foundation 17 that provides free or discounted drugs 18 or biologicals, including biosimilar bio- 19 logical products, (through in-kind do- 20 nations) to patients of low income.’’. 21 SEC. 103. PAYMENT FOR BIOSIMILAR BIOLOGICAL PROD- 22 UCTS DURING INITIAL PERIOD. 23 Section 1847A(c)(4) of the Social Security Act (42 24 U.S.C. 1395w–3a(c)(4)) is amended— 25 VerDate Sep 11 2014 00:15 Sep 26, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S2543.RS S2543 pamtmann on DSKBC07HB2PROD with BILLS 10 •S 2543 RS (1) in each of subparagraphs (A) and (B), by 1 redesignating clauses (i) and (ii) as subclauses (I) 2 and (II), respectively, and moving such subclauses 2 3 ems to the right; 4 (2) by redesignating subparagraphs (A) and 5 (B) as clauses (i) and (ii) and moving such clauses 6 2 ems to the right; 7 (3) by striking ‘‘UNAVAILABLE.—In the case’’ 8 and inserting ‘‘UNAVAILABLE.— 9 ‘‘(A) IN GENERAL.—Subject to subpara- 10 graph (B), in the case’’; and 11 (4) by adding at the end the following new sub- 12 paragraph: 13 ‘‘(B) LIMITATION ON PAYMENT AMOUNT 14 FOR BIOSIMILAR BIOLOGICAL PRODUCTS DUR- 15 ING INITIAL PERIOD.—In the case of a bio- 16 similar biological product furnished on or after 17 July 1, 2020, in lieu of applying subparagraph 18 (A) during the initial period described in such 19 subparagraph with respect to the biosimilar bio- 20 logical product, the amount payable under this 21 section for the biosimilar biological product is 22 the lesser of the following: 23 VerDate Sep 11 2014 00:15 Sep 26, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S2543.RS S2543 pamtmann on DSKBC07HB2PROD with BILLS 11 •S 2543 RS ‘‘(i) The amount determined under 1 clause (ii) of such subparagraph for the 2 biosimilar biological product. 3 ‘‘(ii) The amount determined under 4 subsection (b)(1)(B) for the referenc [Text truncated for display. 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