[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[S. 1206 Introduced in Senate (IS)]
112th CONGRESS
1st Session
S. 1206
To amend title XVIII of the Social Security Act to require drug
manufacturers to provide drug rebates for drugs dispensed to low-income
individuals under the Medicare prescription drug benefit program.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
June 15, 2011
Mr. Rockefeller (for himself, Mr. Bingaman, Ms. Stabenow, Mr.
Blumenthal, Mr. Brown of Ohio, Mrs. Boxer, Mr. Franken, and Mr.
Merkley) introduced the following bill; which was read twice and
referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend title XVIII of the Social Security Act to require drug
manufacturers to provide drug rebates for drugs dispensed to low-income
individuals under the Medicare prescription drug benefit program.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Medicare Drug Savings Act of 2011''.
SEC. 2. REQUIRING DRUG MANUFACTURERS TO PROVIDE DRUG REBATES FOR DRUGS
DISPENSED TO LOW-INCOME INDIVIDUALS.
(a) In General.--Section 1860D-2 of the Social Security Act (42
U.S.C. 1395w-102) is amended--
(1) in subsection (e)(1), in the matter preceding
subparagraph (A), by inserting ``and subsection (f)'' after
``this subsection''; and
(2) by adding at the end the following new subsection:
``(f) Prescription Drug Rebate Agreement for Rebate Eligible
Individuals.--
``(1) Requirement.--
``(A) In general.--For plan years beginning on or
after January 1, 2013, in this part, the term `covered
part D drug' does not include any drug or biological
product that is manufactured by a manufacturer that has
not entered into and have in effect a rebate agreement
described in paragraph (2).
``(B) 2012 plan year requirement.--Any drug or
biological product manufactured by a manufacturer that
declines to enter into a rebate agreement described in
paragraph (2) for the period beginning on January 1,
2012, and ending on December 31, 2012, shall not be
included as a `covered part D drug' for the subsequent
plan year.
``(2) Rebate agreement.--A rebate agreement under this
subsection shall require the manufacturer to provide to the
Secretary a rebate for each rebate period (as defined in
paragraph (6)(B)) ending after December 31, 2011, in the amount
specified in paragraph (3) for any covered part D drug of the
manufacturer dispensed after December 31, 2011, to any rebate
eligible individual (as defined in paragraph (6)(A)) for which
payment was made by a PDP sponsor or MA organization under this
part for such period, including payments passed through the
low-income and reinsurance subsidies under sections 1860D-14
and 1860D-15(b), respectively. Such rebate shall be paid by the
manufacturer to the Secretary not later than 30 days after the
date of receipt of the information described in section 1860D-
12(b)(7), including as such section is applied under section
1857(f)(3), or 30 days after the receipt of information under
subparagraph (D) of paragraph (3), as determined by the
Secretary. Insofar as not inconsistent with this subsection,
the Secretary shall establish terms and conditions of such
agreement relating to compliance, penalties, and program
evaluations, investigations, and audits that are similar to the
terms and conditions for rebate agreements under paragraphs (3)
and (4) of section 1927(b).
``(3) Rebate for rebate eligible medicare drug plan
enrollees.--
``(A) In general.--The amount of the rebate
specified under this paragraph for a manufacturer for a
rebate period, with respect to each dosage form and
strength of any covered part D drug provided by such
manufacturer and dispensed to a rebate eligible
individual, shall be equal to the product of--
``(i) the total number of units of such
dosage form and strength of the drug so
provided and dispensed for which payment was
made by a PDP sponsor or an MA organization
under this part for the rebate period,
including payments passed through the low-
income and reinsurance subsidies under sections
1860D-14 and 1860D-15(b), respectively; and
``(ii) the amount (if any) by which--
``(I) the Medicaid rebate amount
(as defined in subparagraph (B)) for
such form, strength, and period,
exceeds
``(II) the average Medicare drug
program rebate eligible rebate amount
(as defined in subparagraph (C)) for
such form, strength, and period.
``(B) Medicaid rebate amount.--For purposes of this
paragraph, the term `Medicaid rebate amount' means,
with respect to each dosage form and strength of a
covered part D drug provided by the manufacturer for a
rebate period--
``(i) in the case of a single source drug
or an innovator multiple source drug, the
amount specified in paragraph (1)(A)(ii)(II) or
(2)(C) of section 1927(c) plus the amount, if
any, specified in subparagraph (A)(ii) of
paragraph (2) of such section, for such form,
strength, and period; or
``(ii) in the case of any other covered
outpatient drug, the amount specified in
paragraph (3)(A)(i) of such section for such
form, strength, and period.
``(C) Average medicare drug program rebate eligible
rebate amount.--For purposes of this subsection, the
term `average Medicare drug program rebate eligible
rebate amount' means, with respect to each dosage form
and strength of a covered part D drug provided by a
manufacturer for a rebate period, the sum, for all PDP
sponsors under part D and MA organizations
administering an MA-PD plan under part C, of--
``(i) the product, for each such sponsor or
organization, of--
``(I) the sum of all rebates,
discounts, or other price concessions
(not taking into account any rebate
provided under paragraph (2) or any
discounts under the program under
section 1860D-14A) for such dosage form
and strength of the drug dispensed,
calculated on a per-unit basis, but
only to the extent that any such
rebate, discount, or other price
concession applies equally to drugs
dispensed to rebate eligible Medicare
drug plan enrollees and drugs dispensed
to PDP and MA-PD enrollees who are not
rebate eligible individuals; and
``(II) the number of the units of
such dosage and strength of the drug
dispensed during the rebate period to
rebate eligible individuals enrolled in
the prescription drug plans
administered by the PDP sponsor or the
MA-PD plans administered by the MA
organization; divided by
``(ii) the total number of units of such
dosage and strength of the drug dispensed
during the rebate period to rebate eligible
individuals enrolled in all prescription drug
plans administered by PDP sponsors and all MA-
PD plans administered by MA organizations.
``(D) Use of estimates.--The Secretary may
establish a methodology for estimating the average
Medicare drug program rebate eligible rebate amounts
for each rebate period based on bid and utilization
information under this part and may use these estimates
as the basis for determining the rebates under this
section. If the Secretary elects to estimate the
average Medicare drug program rebate eligible rebate
amounts, the Secretary shall establish a reconciliation
process for adjusting manufacturer rebate payments not
later than 3 months after the date that manufacturers
receive the information collected under section 1860D-
12(b)(7)(B).
``(4) Length of agreement.--The provisions of paragraph (4)
of section 1927(b) (other than clauses (iv) and (v) of
subparagraph (B)) shall apply to rebate agreements under this
subsection in the same manner as such paragraph applies to a
rebate agreement under such section.
``(5) Other terms and conditions.--The Secretary shall
establish other terms and conditions of the rebate agreement
under this subsection, including terms and conditions related
to compliance, that are consistent with this subsection.
``(6) Definitions.--In this subsection and section 1860D-
12(b)(7):
``(A) Rebate eligible individual.--The term `rebate
eligible individual' means--
``(i) a subsidy eligible individual (as
defined in section 1860D-14(a)(3)(A));
``(ii) a Medicaid beneficiary treated as a
subsidy eligible individual under clause (v) of
section 1860D-14(a)(3)(B); and
``(iii) any part D eligible individual not
described in clause (i) or (ii) who is
determined for purposes of the State plan under
title XIX to be eligible for medical assistance
under clause (i), (iii), or (iv) of section
1902(a)(10)(E).
``(B) Rebate period.--The term `rebate period' has
the meaning given such term in section 1927(k)(8).''.
(b) Reporting Requirement for the Determination and Payment of
Rebates by Manufactures Related to Rebate for Rebate Eligible Medicare
Drug Plan Enrollees.--
(1) Requirements for pdp sponsors.--Section 1860D-12(b) of
the Social Security Act (42 U.S.C. 1395w-112(b)) is amended by
adding at the end the following new paragraph:
``(7) Reporting requirement for the determination and
payment of rebates by manufacturers related to rebate for
rebate eligible medicare drug plan enrollees.--
``(A) In general.--For purposes of the rebate under
section 1860D-2(f) for contract years beginning on or
after January 1, 2013, each contract entered into with
a PDP sponsor under this part with respect to a
prescription drug plan shall require that the sponsor
comply with subparagraphs (B) and (C).
``(B) Report form and contents.--Not later than a
date specified by the Secretary, a PDP sponsor of a
prescription drug plan under this part shall report to
each manufacturer--
``(i) information (by National Drug Code
number) on the total number of units of each
dosage, form, and strength of each drug of such
manufacturer dispensed to rebate eligible
Medicare drug plan enrollees under any
prescription drug plan operated by the PDP
sponsor during the rebate period;
``(ii) information on the price discounts,
price concessions, and rebates for such drugs
for such form, strength, and period;
``(iii) information on the extent to which
such price discounts, price concessions, and
rebates apply equally to rebate eligible
Medicare drug plan enrollees and PDP enrollees
who are not rebate eligible Medicare drug plan
enrollees; and
``(iv) any additional information that the
Secretary determines is necessary to enable the
Secretary to calculate the average Medicare
drug program rebate eligible rebate amount (as
defined in paragraph (3)(C) of such section),
and to determine the amount of the rebate
required under this section, for such form,
strength, and period.
Such report shall be in a form consistent with a
standard reporting format established by the Secretary.
``(C) Submission to secretary.--Each PDP sponsor
shall promptly transmit a copy of the information
reported under subparagraph (B) to the Secretary for
the purpose of audit oversight and evaluation.
``(D) Confidentiality of information.--The
provisions of subparagraph (D) of section 1927(b)(3),
relating to confidentiality of information, shall apply
to information reported by PDP sponsors under this
paragraph in the same manner that such provisions apply
to information disclosed by manufacturers or
wholesalers under such section, except--
``(i) that any reference to `this section'
in clause (i) of such subparagraph shall be
treated as being a reference to this section;
``(ii) the reference to the Director of the
Congressional Budget Office in clause (iii) of
such subparagraph shall be treated as including
a reference to the Medicare Payment Advisory
Commission; and
``(iii) clause (iv) of such subparagraph
shall not apply.
``(E) Oversight.--Information reported under this
paragraph may be used by the Inspector General of the
Department of Health and Human Services for the
statutorily authorized purposes of audit,
investigation, and evaluations.
``(F) Penalties for failure to provide timely
information and provision of false information.--In the
case of a PDP sponsor--
``(i) that fails to provide information
required under subparagraph (B) on a timely
basis, the sponsor is subject to a civil money
penalty in the amount of $10,000 for each day
in which such information has not been
provided; or
``(ii) that knowingly (as defined in
section 1128A(i)) provides false information
under such subparagraph, the sponsor is subject
to a civil money penalty in an amount not to
exceed $100,000 for each item of false
information.
Such civil money penalties are in addition to other
penalties as may be prescribed by law. The provisions
of section 1128A (other than subsections (a) and (b))
shall apply to a civil money penalty under this
subparagraph in the same manner as such provisions
apply to a penalty or proceeding under section
1128A(a).''.
(2) Application to ma organizations.--Section 1857(f)(3) of
the Social Security Act (42 U.S.C. 1395w-27(f)(3)) is amended
by adding at the end the following:
``(D) Reporting requirement related to rebate for
rebate eligible medicare drug plan enrollees.--Section
1860D-12(b)(7).''.
(c) Deposit of Rebates Into Medicare Prescription Drug Account.--
Section 1860D-16(c) of the Social Security Act (42 U.S.C. 1395w-116(c))
is amended by adding at the end the following new paragraph:
``(6) Rebate for rebate eligible medicare drug plan
enrollees.--Amounts paid under a rebate agreement under section
1860D-2(f) shall be deposited into the Account.''.
(d) Exclusion From Determination of Best Price and Average
Manufacturer Price Under Medicaid.--
(1) Exclusion from best price determination.--Section
1927(c)(1)(C)(ii)(I) of the Social Security Act (42 U.S.C.
1396r-8(c)(1)(C)(ii)(I)) is amended by inserting ``and amounts
paid under a rebate agreement under section 1860D-2(f)'' after
``this section''.
(2) Exclusion from average manufacturer price
determination.--Section 1927(k)(1)(B)(i) of the Social Security
Act (42 U.S.C. 1396r-8(k)(1)(B)(i)) is amended--
(A) in subclause (IV), by striking ``and'' after
the semicolon;
(B) in subclause (V), by striking the period at the
end and inserting ``; and''; and
(C) by adding at the end the following:
``(VI) amounts paid under a rebate
agreement under section 1860D-2(f).''.
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