What This Bill Does
This bill changes how prescription drug inflation rebates work for drugs sold through Medicare Part B and Part D. It expands these rebates to apply to drugs sold in the regular commercial market, not just those bought through Medicare. It also changes the starting year used to calculate whether drug prices have gone up too much.
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Who It Affects
Drug manufacturers who sell prescription drugs covered by Medicare Part B and Part D programs. The Secretary of Health and Human Services, who oversees Medicare. States that report drug pricing information. Potentially Medicare beneficiaries (people over 65 and some disabled people who use Medicare).
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Key Provisions
* The bill changes how billing units are counted for Part B drugs to include drugs sold in the commercial market, not just those paid for by Medicare (Sec. 2(a)(1)).
* For Part D drugs, manufacturers must now report total units used to calculate average manufacturer price, excluding units sold through state Medicaid programs, certain Part B drug programs, and the 340B discount program (Sec. 2(b)(1)).
* The bill moves the base year for calculating drug price increases from January 2021 to January 2016 for Part B drugs (Sec. 2(a)(2)).
* The bill moves the base year for calculating drug price increases from January 2021 to January 2016 for Part D drugs (Sec. 2(b)(2)).
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What Changes
If this becomes law, drug manufacturers will need to count how many units of their drugs are sold in the open market, not just through Medicare. This affects how rebates are calculated when drug prices rise faster than inflation. The starting point for measuring price increases goes back five years earlier than the current law says. The Secretary will use drug pricing information that manufacturers and states already report.
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Important Definitions
* **Billing units**: Units of medication converted into the standard measurement system used for billing and payment codes for a specific drug.
* **Part B rebatable drug**: A prescription drug covered by Medicare Part B (doctor-administered medications).
* **Part D rebatable drug**: A prescription drug covered by Medicare Part D (the prescription drug benefit).
* **National Drug Code**: The identification number assigned to each drug product.
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Effective Date
The changes take effect as if they were included when the original inflation rebate law was passed (Sec. 2(a)(3) and Sec. 2(b)(3)).
II
118TH CONGRESS
1ST SESSION
S. 1139
To amend title XVIII of the Social Security Act to apply prescription drug
inflation rebates to drugs furnished in the commercial market and to
change the base year for rebate calculations.
IN THE SENATE OF THE UNITED STATES
MARCH 30, 2023
Ms. CORTEZ MASTO (for herself, Ms. KLOBUCHAR, Mr. REED, Ms. BALDWIN,
Mr. BROWN, Ms. STABENOW, Ms. SMITH, Mr. WELCH, and Mr.
BLUMENTHAL) introduced the following bill; which was read twice and re-
ferred to the Committee on Finance
A BILL
To amend title XVIII of the Social Security Act to apply
prescription drug inflation rebates to drugs furnished
in the commercial market and to change the base year
for rebate calculations.
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 ‘‘Lower Drug Costs for
4
Families Act’’.
5
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•S 1139 IS
SEC. 2. APPLICATION OF PRESCRIPTION DRUG INFLATION
1
REBATES TO DRUGS FURNISHED IN THE
2
COMMERCIAL MARKET; CHANGE OF BASE
3
YEAR FOR REBATE CALCULATIONS.
4
(a) PART B DRUGS.—
5
(1) APPLICATION OF PRESCRIPTION DRUG IN-
6
FLATION REBATES TO DRUGS FURNISHED IN THE
7
COMMERCIAL MARKET.—Section 1847A(i) of the So-
8
cial Security Act (42 U.S.C. 1395w–3a(i)) is amend-
9
ed—
10
(A) in paragraph (1)(A)(i), by striking
11
‘‘units’’ and inserting ‘‘billing units’’;
12
(B) in paragraph (2)(A), by striking ‘‘for
13
which payment is made under this part’’ and
14
inserting ‘‘that would be payable under this
15
part if such drug were furnished to an indi-
16
vidual enrolled under this part’’; and
17
(C) in paragraph (3)—
18
(i) in subparagraph (A)(i), by striking
19
‘‘units’’ and inserting ‘‘billing units’’; and
20
(ii) by striking subparagraph (B) and
21
inserting the following:
22
‘‘(B)
TOTAL
NUMBER
OF
BILLING
23
UNITS.—For purposes of subparagraph (A)(i),
24
the total number of billing units with respect to
25
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•S 1139 IS
a part B rebatable drug is determined as fol-
1
lows:
2
‘‘(i) Determine the total number of
3
units equal to—
4
‘‘(I) the total number of units, as
5
reported under subsection (c)(1)(B)
6
for each National Drug Code of such
7
drug during the calendar quarter that
8
is two calendar quarters prior to the
9
calendar quarter as described in sub-
10
paragraph (A), minus
11
‘‘(II) the total number of units
12
with respect to each National Drug
13
Code of such drug for which payment
14
was made under a State plan under
15
title XIX (or waiver of such plan), as
16
reported by States under section
17
1927(b)(2)(A) for the rebate period
18
that is the same calendar quarter as
19
described in subclause (I).
20
‘‘(ii) Convert the units determined
21
under clause (i) to billing units for the bill-
22
ing and payment code of such drug, using
23
a methodology similar to the methodology
24
used under this section, by dividing the
25
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•S 1139 IS
units determined under clause (i) for each
1
National Drug Code of such drug by the
2
billing unit for the billing and payment
3
code of such drug.
4
‘‘(iii) Compute the sum of the billing
5
units for each National Drug Code of such
6
drug in clause (ii).’’.
7
(2) CHANGE OF BASE YEAR FOR REBATE CAL-
8
CULATION.—Section 1847A(i) of the Social Security
9
Act (42 U.S.C. 1395w–3a(i)) is amended—
10
(A) in paragraph (3)—
11
(i) in subparagraph (D), by striking
12
‘‘July 1, 2021’’ and inserting ‘‘July 1,
13
2016’’; and
14
(ii) in subparagraph (E), by striking
15
‘‘January 2021’’ and inserting ‘‘January
16
2016’’; and
17
(B) in paragraph (4)—
18
(i) in subparagraph (A)—
19
(I) by striking ‘‘December 1,
20
2020’’ and inserting ‘‘December 31,
21
2015’’; and
22
(II) by striking ‘‘January 2021’’
23
and inserting ‘‘January 2016’’;
24
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•S 1139 IS
(ii) in subparagraph (B), by striking
1
‘‘December 1, 2020’’ and inserting ‘‘De-
2
cember 31, 2015’’; and
3
(iii) in subparagraph (C), by striking
4
‘‘January 2021’’ and inserting ‘‘January
5
2016’’.
6
(3) EFFECTIVE DATE.—The amendments made
7
by this subsection shall take effect as if included in
8
the enactment of section 11101 of Public Law 117–
9
169.
10
(b) COVERED PART D DRUGS.—
11
(1) APPLICATION OF PRESCRIPTION DRUG IN-
12
FLATION REBATES TO DRUGS FURNISHED IN THE
13
COMMERCIAL MARKET.—Section 1860D–14B of the
14
Social Security Act (42 U.S.C. 1395w–114b) is
15
amended—
16
(A) in subsection (b)—
17
(i) in paragraph (1)—
18
(I) in subparagraph (A)(i), by
19
striking ‘‘the total number of units’’
20
and all that follows through the semi-
21
colon and inserting the following: ‘‘the
22
total number of units that are used to
23
calculate the average manufacturer
24
price of such dosage form and
25
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•S 1139 IS
strength with respect to such part D
1
rebatable drug, as reported by the
2
manufacturer of such drug under sec-
3
tion 1927 for each month, with re-
4
spect to such period;’’; and
5
(II) by striking subparagraph (B)
6
and inserting the following:
7
‘‘(B) EXCLUDED UNITS.—For purposes of
8
subparagraph (A)(i), the Secretary shall exclude
9
from the total number of units for a dosage
10
form and strength with respect to a part D
11
rebatable drug, with respect to an applicable pe-
12
riod, the following:
13
‘‘(i) Units of each dosage form and
14
strength of such part D rebatable drug for
15
which payment was made under a State
16
plan under title XIX (or waiver of such
17
plan), as reported by States under section
18
1927(b)(2)(A).
19
‘‘(ii) Units of each dosage form and
20
strength of such part D rebatable drug for
21
which a rebate is paid under section
22
1847A(i).
23
‘‘(iii) Beginning with plan year 2026,
24
units of each dosage form and strength of
25
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•S 1139 IS
such part D rebatable drug for which the
1
manufacturer provides a discount under
2
the program under section 340B of the
3
Public Health Service Act.’’; and
4
(ii) in paragraph (6), by striking ‘‘IN-
5
FORMATION.—The Secretary’’ and all that
6
follows through ‘‘rebatable covered part D
7
drug dispensed’’ and inserting the fol-
8
lowing: ‘‘AMP REPORTS.—The Secretary
9
shall provide for a method and process
10
under which, in the case of a manufacturer
11
of a part D rebatable drug that submits
12
revisions to information submitted under
13
section 1927 by the manufacturer with re-
14
spect to such drug’’; and
15
(B) by striking subsection (d) and insert-
16
ing the following:
17
‘‘(d) INFORMATION.—For purposes of carrying out
18
this section, the Secretary shall use information submitted
19
by manufacturers under section 1927(b)(3) and informa-
20
tion submitted by States under section 1927(b)(2)(A).’’.
21
(2) CHANGE OF BASE YEAR FOR REBATE CAL-
22
CULATION.—Section 1860D–14B of the Social Secu-
23
rity Act (42 U.S.C. 1395w–114b) is amended—
24
(A) in subsection (b)(5)—
25
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•S 1139 IS
(i) in subparagraph (A)—
1
(I) by striking ‘‘October 1, 2021’’
2
and inserting ‘‘October 1, 2016’’; and
3
(II) by striking ‘‘January 2021’’
4
and inserting ‘‘January 2016’’; and
5
(ii) in subparagraph (C), by striking
6
‘‘January 2021’’ and inserting ‘‘January
7
2016’’; and
8
(B) in subsection (g)—
9
(i) in paragraph (3)—
10
(I) by striking ‘‘January 1,
11
2021’’ and inserting ‘‘January 1,
12
2016’’; and
13
(II) by striking ‘‘October 1,
14
2021’’ and inserting ‘‘October 1,
15
2016’’; and
16
(ii) in paragraph (4), by striking
17
‘‘January 2021’’ and inserting ‘‘January
18
2016’’.
19
(3) EFFECTIVE DATE.—The amendments made
20
by this subsection shall take effect as if included in
21
the enactment of section 11102 of Public Law 117–
22
169.
23
Æ
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