Freedom from Price Gouging Act

I 116TH CONGRESS 1ST SESSION H. R. 4663 To amend title XVIII of the Social Security Act to require drug manufactur- ers to pay a Medicare part B rebate for certain drugs if the price of such drugs increases faster than inflation. IN THE HOUSE OF REPRESENTATIVES OCTOBER 11, 2019 Ms. PORTER (for herself, Ms. UNDERWOOD, Mr. CROW, and Mr. BLU- MENAUER) introduced the following bill; which was referred to the Com- mittee on Energy and Commerce, and in addition to the Committee on Ways and Means, for a period to be subsequently 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 XVIII of the Social Security Act to require drug manufacturers to pay a Medicare part B rebate for certain drugs if the price of such drugs increases faster than inflation. 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 ‘‘Freedom from Price 4 Gouging Act’’. 5 VerDate Sep 11 2014 03:44 Oct 12, 2019 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H4663.IH H4663 kjohnson on DSK79L0C42 with BILLS 2 •HR 4663 IH SEC. 2. MEDICARE PART B PRESCRIPTION DRUG INFLA- 1 TION REBATE BY MANUFACTURERS. 2 (a) IN GENERAL.—Section 1834 of the Social Secu- 3 rity Act (42 U.S.C. 1395m) is amended by adding at the 4 end the following new subsection: 5 ‘‘(x) REBATE BY MANUFACTURERS FOR SINGLE 6 SOURCE DRUGS WITH PRICES INCREASING FASTER 7 THAN INFLATION.— 8 ‘‘(1) REQUIREMENTS.— 9 ‘‘(A) SECRETARIAL PROVISION OF INFOR- 10 MATION.—Not later than 6 months after the 11 end of each calendar quarter beginning on or 12 after July 1, 2021, the Secretary shall, for each 13 part B rebatable drug, report to each manufac- 14 turer of such part B rebatable drug the fol- 15 lowing for such calendar quarter: 16 ‘‘(i) Information on the total number 17 of billing units described in subparagraph 18 (A)(i) of paragraph (3) with respect to 19 such drug and calendar quarter. 20 ‘‘(ii) Information on the amount (if 21 any) of the excess average sales price in- 22 crease described in subparagraph (A)(ii) of 23 such paragraph for such drug and calendar 24 quarter. 25 VerDate Sep 11 2014 03:44 Oct 12, 2019 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H4663.IH H4663 kjohnson on DSK79L0C42 with BILLS 3 •HR 4663 IH ‘‘(iii) The rebate amount specified 1 under such paragraph for such part B 2 rebatable drug and calendar quarter. 3 ‘‘(B) MANUFACTURER REQUIREMENT.— 4 For each calendar quarter beginning on or after 5 July 1, 2021, the manufacturer of a part B 6 rebatable drug shall, for such drug, not later 7 than 30 days after the date of receipt from the 8 Secretary of the information described in sub- 9 paragraph (A) for such calendar quarter, pro- 10 vide to the Secretary a rebate that is equal to 11 the amount specified in paragraph (3) for such 12 drug for such calendar quarter. 13 ‘‘(2) PART B REBATABLE DRUG DEFINED.— 14 ‘‘(A) IN GENERAL.—In this subsection, the 15 term ‘part B rebatable drug’ means a single 16 source drug or biological (as defined in sub- 17 paragraph (D) of section 1847A(c)(6)), includ- 18 ing a biosimilar biological product (as defined 19 in subparagraph (H) of such section), paid for 20 under this part, except such term shall not in- 21 clude such a drug or biological— 22 ‘‘(i) if the average total allowed 23 charges for a year per individual that uses 24 such a drug or biological, as determined by 25 VerDate Sep 11 2014 03:44 Oct 12, 2019 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H4663.IH H4663 kjohnson on DSK79L0C42 with BILLS 4 •HR 4663 IH the Secretary, are less than, subject to 1 subparagraph (B), $100; or 2 ‘‘(ii) that is a vaccine described in 3 subparagraph (A) or (B) of section 4 1861(s)(10). 5 ‘‘(B) INCREASE.—The dollar amount ap- 6 plied under subparagraph (A)(i)— 7 ‘‘(i) for 2022, shall be the dollar 8 amount specified under such subparagraph 9 for 2021, increased by the percentage in- 10 crease in the consumer price index for all 11 urban consumers (United States city aver- 12 age) as of the first quarter of the previous 13 year; and 14 ‘‘(ii) for a subsequent year, shall be 15 the dollar amount specified in this clause 16 (or clause (i)) for the previous year, in- 17 creased by the percentage increase in the 18 consumer price index for all urban con- 19 sumers (United States city average) as of 20 the first quarter of the previous year. 21 Any dollar amount specified under this sub- 22 paragraph that is not a multiple of $10 shall be 23 rounded to the nearest multiple of $10. 24 ‘‘(3) REBATE AMOUNT.— 25 VerDate Sep 11 2014 03:44 Oct 12, 2019 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H4663.IH H4663 kjohnson on DSK79L0C42 with BILLS 5 •HR 4663 IH ‘‘(A) IN GENERAL.—For purposes of para- 1 graph (1)(B), the amount specified in this para- 2 graph for a part B rebatable drug assigned to 3 a billing and payment code for a calendar quar- 4 ter is, subject to paragraph (4), the amount 5 equal to the product of— 6 ‘‘(i) subject to subparagraph (B), the 7 total number of billing units, as described 8 in section 1847A(b)(6)(B), for such part B 9 rebatable drug furnished under this part 10 during the calendar quarter; and 11 ‘‘(ii) the amount (if any) by which— 12 ‘‘(I) the payment amount under 13 subparagraph (B) or (C) of section 14 1847A(b)(1), as applicable, for such 15 part B rebatable drug during the cal- 16 endar quarter; exceeds 17 ‘‘(II) the inflation-adjusted pay- 18 ment amount determined under sub- 19 paragraph (C) for such part B 20 rebatable drug during the calendar 21 quarter. 22 ‘‘(B) EXCLUDED UNITS.—For purposes of 23 subparagraph (A)(i), the total number of billing 24 VerDate Sep 11 2014 03:44 Oct 12, 2019 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H4663.IH H4663 kjohnson on DSK79L0C42 with BILLS 6 •HR 4663 IH units for part B rebatable drugs furnished dur- 1 ing a calendar quarter shall not include— 2 ‘‘(i) units packaged into the payment 3 for a related procedure or service under 4 section 1833(t) or under section 1833(i) 5 (instead of separately payable under such 6 respective section); 7 ‘‘(ii) units included under the single 8 payment system for renal dialysis services 9 under section 1881(b)(14); or 10 ‘‘(iii) units of a part B rebatable drug 11 of a manufacturer that is furnished to an 12 individual, if such manufacturer, with re- 13 spect to the furnishing of such units of 14 such drug, provides for discounts under 15 section 340B of the Public Health Service 16 Act or for rebates under section 1927. 17 ‘‘(C) DETERMINATION OF INFLATION-AD- 18 JUSTED PAYMENT AMOUNT.—The inflation-ad- 19 justed payment amount determined under this 20 subparagraph for a part B rebatable drug for 21 a calendar quarter is— 22 ‘‘(i) the payment amount for the bill- 23 ing and payment code for such drug in the 24 VerDate Sep 11 2014 03:44 Oct 12, 2019 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H4663.IH H4663 kjohnson on DSK79L0C42 with BILLS 7 •HR 4663 IH payment amount benchmark quarter (as 1 defined in subparagraph (D)); increased by 2 ‘‘(ii) the percentage by which the re- 3 bate period CPI–U (as defined in subpara- 4 graph (F)) for the calendar quarter ex- 5 ceeds the benchmark period CPI–U (as de- 6 fined in subparagraph (E)). 7 ‘‘(D) PAYMENT AMOUNT BENCHMARK 8 QUARTER.—The term ‘payment amount bench- 9 mark quarter’ means the calendar quarter be- 10 ginning January 1, 2016. 11 ‘‘(E) BENCHMARK PERIOD CPI–U.—The 12 term ‘benchmark period CPI–U’ means the con- 13 sumer price index for all urban consumers 14 (United States city average) for July 2015. 15 ‘‘(F) REBATE PERIOD CPI–U.—The term 16 ‘rebate period CPI–U’ means, with respect to a 17 calendar quarter described in subparagraph 18 (C), the greater of the benchmark period CPI– 19 U and the consumer price index for all urban 20 consumers (United States city average) for the 21 first month of the calendar quarter that is two 22 calendar quarters prior to such described cal- 23 endar quarter. 24 VerDate Sep 11 2014 03:44 Oct 12, 2019 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H4663.IH H4663 kjohnson on DSK79L0C42 with BILLS 8 •HR 4663 IH ‘‘(4) SPECIAL TREATMENT OF CERTAIN DRUGS 1 AND EXEMPTION.— 2 ‘‘(A) SUBSEQUENTLY APPROVED DRUGS.— 3 Subject to subparagraph (B), in the case of a 4 part B rebatable drug first approved by the 5 Food and Drug Administration after July 1, 6 2015, clause (i) of paragraph (3)(C) shall be 7 applied as if the term ‘payment amount bench- 8 mark quarter’ were defined under paragraph 9 (3)(D) as the third full calendar quarter after 10 the day on which the drug was first marketed 11 and clause (ii) of paragraph (3)(C) shall be ap- 12 plied as if the term ‘benchmark period CPI–U’ 13 were defined under paragraph (3)(E) as if the 14 reference to ‘July 2015’ under such paragraph 15 were a reference to ‘the first month of the first 16 full calendar quarter after the day on which the 17 drug was first marketed’. 18 ‘‘(B) TIMELINE FOR PROVISION OF RE- 19 BATES FOR NEW DRUGS.—In the case of a part 20 B rebatable drug first approved by the Food 21 and Drug Administration after July 1, 2015, 22 clause (i) of paragraph (1)(B) shall be applied 23 as if the reference to ‘July 1, 2021’ under such 24 paragraph were a reference to the later of the 25 VerDate Sep 11 2014 03:44 Oct 12, 2019 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H4663.IH H4663 kjohnson on DSK79L0C42 with BILLS 9 •HR 4663 IH 6th full calendar quarter after the day on which 1 the drug was first marketed or July 1, 2021. 2 ‘‘(C) EXEMPTION FOR SHORTAGES.—The 3 Secretary may reduce or waive the rebate under 4 paragraph (1)(B) with respect to a part B 5 rebatable drug that appears on the drug short- 6 age list in effect under section 506(e) of the 7 Federal Food, Drug, and Cosmetic Act or in 8 the case of other exigent circumstances, as de- 9 termined by the Secretary. 10 ‘‘(5) APPLICATION TO BENEFICIARY COINSUR- 11 ANCE.—In the case of a part B rebatable drug for 12 which a rebate is payable under this subsection— 13 ‘‘(A) in computing the amount of any coin- 14 surance applicable under this title to an indi- 15 vidual with respect to such drug, the computa- 16 tion of such coinsurance shall be based on the 17 inflation-adjusted payment amount determined 18 under paragraph (3)(C) for such part B 19 rebatable drug; and 20 ‘‘(B) the amount of such coinsurance is 21 equal to 20 percent of such inflation-adjusted 22 payment amount so determined. 23 ‘‘(6) REBATE DEPOSITS.—Amounts paid as re- 24 bates under paragraph (1)(B) shall be deposited into 25 VerDate Sep 11 2014 03:44 Oct 12, 2019 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H4663.IH H4663 kjohnson on DSK79L0C42 with BILLS 10 •HR 4663 IH the Federal Supplementary Medical Insurance Trust 1 Fund established under section 1841. 2 ‘‘(7) CIVIL MONEY PENALTY.—If a manufac- 3 turer of a part B rebatable drug has failed to com- 4 ply with the requirements under paragraph (1)(B) 5 for such drug for a calendar quarter, the manufac- 6 turer shall be subject to, in accordance with a proc- 7 ess established by the Secretary pursuant to regula- 8 tions, a civil money penalty in an amount equal to 9 at least 125 percent of the amount specified in para- 10 graph (3) for such drug for such calendar quarter. 11 The provisions of section 1128A (other than sub- 12 sections (a) (with respect to amounts of penalties or 13 additional assessments) and (b)) shall apply to a 14 civil money penalty under this paragraph in the 15 same manner as such provisions apply to a penalty 16 or proceeding under section 1128A(a). 17 ‘‘(8) STUDY AND REPORT.— 18 ‘‘(A) STUDY.—The Secretary shall conduct 19 a study of the feasibility of and operational 20 issues involved with the following: 21 ‘‘(i) Including multiple source drugs 22 (as defined in section 1847A(c)(6)(C)) in 23 the rebate system under this subsection. 24 VerDate Sep 11 2014 03:44 Oct 12, 2019 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H4663.IH H4663 kjohnson on DSK79L0C42 with BILLS 11 •HR 4663 IH ‘‘(ii) Including drugs and biologicals 1 paid for under MA plans under part C in 2 the rebate system under this subsection. 3 ‘‘(iii) Including drugs excluded under 4 paragraph (2)(A) and billing units of 5 drugs excluded under paragraph (3)(B) in 6 the rebate system under this subsection. 7 ‘‘(B) REPORT.—Not later than 3 years 8 after the date of the enactment of this sub- 9 section, the Secretary shall submit to Congress 10 a report on the study conducted under subpara- 11 graph (A). 12 ‘‘(9) APPLICATION TO MULTIPLE SOURCE 13 DRUGS.—The Secretary may, based on the report 14 submitted under paragraph (8) and pursuant to 15 rulemaking, apply the provisions of this subsection 16 to multiple source drugs (as defined in section 17 1847A(c)(6)(C)), including, for purposes of deter- 18 mining the rebate amount under paragraph (3), by 19 calculating manufacturer-specific average sales 20 prices for the benchmark period and the rebate pe- 21 riod.’’. 22 (b) AMOUNTS PAYABLE; COST-SHARING.—Section 23 1833(a) of the Social Security Act (42 U.S.C. 1395l(a)) 24 is amended— 25 VerDate Sep 11 2014 03:44 Oct 12, 2019 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H4663.IH H4663 kjohnson on DSK79L0C42 with BILLS 12 •HR 4663 IH (1) in paragraph (1)— 1 (A) in subparagraph (S), by striking ‘‘with 2 respect to’’ and inserting ‘‘subject to subpara- 3 graph (DD), with respect to’’; 4 (B) by striking ‘‘and (CC)’’ and inserting 5 ‘‘(CC)’’; and 6 (C) by inserting before the semicolon at 7 the end the following: ‘‘, and (DD) with respect 8 to a part B rebatable drug (as defined in para- 9 graph (2) of section 1834(x)) for which a rebate 10 is payable under such section, the amounts paid 11 shall be the difference between (i) the payment 12 amount under paragraph (3)(A)(ii)(I) of such 13 section for such drug, and (ii) 20 percent of the 14 inflation-adjusted payment amount under para- 15 graph (3)(A)(ii)(II) of such section for such 16 drug’’; and 17 (2) by adding at the end of the flush left matter 18 following paragraph (9), the following: 19 ‘‘For purposes of applying paragraph (1)(DD) and section 20 1834(x)(5), the Secretary shall make such estimates and 21 use such data as the Secretary determines appropriate.’’. 22 (c) CONFORMING AMENDMENT TO PART B ASP CAL- 23 CULATION.—Section 1847A(c)(3) of the Social Security 24 VerDate Sep 11 2014 03:44 Oct 12, 2019 Jkt 099200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H4663.IH H4663 kjohnson on DSK79L0C42 with BILLS 13 [Text truncated for display. 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