[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 771 Introduced in Senate (IS)]
<DOC>
115th CONGRESS
1st Session
S. 771
To improve access to affordable prescription drugs.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
March 29, 2017
Mr. Franken (for himself, Mr. Sanders, Mr. Whitehouse, Mr. Brown, Ms.
Klobuchar, Ms. Warren, Ms. Baldwin, Mr. Reed, Mrs. Gillibrand, Ms.
Hassan, Mr. Durbin, Mr. Van Hollen, Mr. Merkley, Mr. Udall, Mr.
Blumenthal, and Mr. Booker) introduced the following bill; which was
read twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To improve access to affordable prescription drugs.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Improving Access
To Affordable Prescription Drugs Act''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
TITLE I--TRANSPARENCY
Sec. 101. Drug manufacturer reporting.
Sec. 102. Determining the public and private benefit of copayment
coupons and other patient assistance
programs.
TITLE II--ACCESS AND AFFORDABILITY
Sec. 201. Negotiating fair prices for Medicare prescription drugs.
Sec. 202. Prescription drug price spikes.
Sec. 203. Acceleration of the closing of the Medicare Part D coverage
gap.
Sec. 204. Importing affordable and safe drugs.
Sec. 205. Requiring drug manufacturers to provide drug rebates for
drugs dispensed to low-income individuals.
Sec. 206. Cap on prescription drug cost-sharing.
TITLE III--INNOVATION
Sec. 301. Prize fund for new and more effective treatments of bacterial
infections.
Sec. 302. Public funding for clinical trials.
Sec. 303. Rewarding innovative drug development.
Sec. 304. Improving program integrity.
TITLE IV--CHOICE AND COMPETITION
Sec. 401. Preserving access to affordable generics.
Sec. 402. 180-day exclusivity period amendments regarding first
applicant status.
Sec. 403. 180-day exclusivity period amendments regarding agreements to
defer commercial marketing.
Sec. 404. Increasing generic drug competition.
Sec. 405. Disallowance of deduction for advertising for prescription
drugs.
Sec. 406. Product hopping.
TITLE I--TRANSPARENCY
SEC. 101. DRUG MANUFACTURER REPORTING.
Part P of title III of the Public Health Service Act (42 U.S.C.
280g et seq.) is amended by adding at the end the following:
``SEC. 399V-7. DRUG MANUFACTURER REPORTING.
``(a) Definitions.--In this section:
``(1) Independent charity patient assistance program.--The
term `independent charity patient assistance program' means any
organization described in section 501(c)(3) of the Internal
Revenue Code of 1986 and exempt from taxation under section
501(a) of such Code and which is not a private foundation (as
defined in section 509(a) of such Code) that offers patient
assistance.
``(2) Manufacturer patient assistance program.--The term
`manufacturer patient assistance program' means an
organization, including a private foundation (as so defined),
that is sponsored by, or receives funding from, a manufacturer
and that offers patient assistance. Such term does not include
an independent charity patient assistance program.
``(3) Patient assistance.--The term `patient assistance'
means assistance provided to offset the cost of drugs for
individuals. Such term includes free products, coupons,
rebates, copay or discount cards, and other means of providing
assistance to individuals related to drug costs, as determined
by the Secretary.
``(b) Reporting on Domestic Sales.--An applicable manufacturer of
an approved drug (including a drug approved under subsection (c) or (j)
of section 505 of the Federal Food, Drug, and Cosmetic Act and a
biological product licensed under subsection (a) or (k) of section 351
of this Act) shall submit to the Secretary and to Congress an annual
report, in such format as the Secretary shall require, outlining with
respect to the previous calendar year (except as provided in subsection
(c)(3))--
``(1) with respect to each such drug--
``(A) the total expenditures of the manufacturer
on--
``(i) domestic and foreign drug research
and development, including an itemized
description of--
``(I) basic and preclinical
research;
``(II) clinical research, broken
out by clinical trial phase;
``(III) development of alternative
dosage forms and strengths for the drug
molecule or combinations, including the
molecule;
``(IV) other drug development
activities, such as nonclinical
laboratory studies and record and
report maintenance;
``(V) pursuing new or expanded
indications for such drug through
supplemental applications under section
505 of the Federal Food, Drug, and
Cosmetic Act;
``(VI) carrying out postmarket
requirements related to such drug,
including under section 505(o)(3) of
such Act;
``(VII) carrying out risk
evaluation and mitigation strategies in
accordance with section 505-1 of such
Act; and
``(VIII) marketing research;
``(ii) cost of goods sold, broken out by
source and cost of each component and
identifying specific costs that reflect
internal transfers within the manufacturer's
company;
``(iii) acquisition costs in total and per
unit sold, including costs for the purchase of
patents and licensing; and
``(iv) marketing and advertising for the
promotion of the drug, including a breakdown of
amounts aimed at consumers, prescribers,
managed care organizations, and others;
``(B) the gross revenue, net revenue, gross profit,
and net profit to the manufacturer;
``(C) the total number of units of the prescription
drug that were sold in interstate commerce in the most
recently completed calendar year;
``(D) pricing information, including--
``(i) wholesale acquisition cost;
``(ii) net average price realized by
pharmacy benefit managers for drugs provided to
individuals in the United States, after
accounting for any rebates or other payments
from the manufacturer to the pharmacy benefit
manager and from the pharmacy benefit manager
to the manufacturer; and
``(iii) the net price of the drug, after
accounting for discounts, rebates, or other
financial considerations, charged to purchasers
in each applicable country of the Organisation
for Economic Co-operation and Development;
``(E) information, including the dollar value to
the recipient of manufacturer patient assistance
programs offered by the manufacturer or a manufacturer
patient assistance program sponsored by or associated
with the manufacturer, per patient, including--
``(i) the specific forms of such patient
assistance available, such as coupons, rebates,
discount codes, or copayment cards;
``(ii) the total dollar value of each
manufacturer patient assistance program and the
dollar value of each program to the patient,
including the basis used to assign value to the
manufacturer patient assistance program;
``(iii) the duration of each type of such
patient assistance available; and
``(iv) any requirements, such as income
thresholds, for how to qualify for such patient
assistance; and
``(F) information on usage of patient assistance
offered by the manufacturer or a manufacturer patient
assistance program sponsored by or associated with the
manufacturer, including--
``(i) the number of transactions of each
type of patient assistance used;
``(ii) the number of individuals receiving
each type of patient assistance;
``(iii) the total value of each type of
patient assistance that was used;
``(iv) the average length of time that each
individual received each type of patient
assistance;
``(v) the number of individuals who were
discontinued from receiving each type of
patient assistance; and
``(vi) complete documentation of the terms
and conditions for an individual agreeing to
participate in the program for each type of
patient assistance provided;
``(G) any Federal benefits received by the
manufacturer, including the amounts and periods of
impact for each such benefit, including tax credits,
patent applications that benefitted from a grant from
the National Institutes of Health, patent extensions,
exclusivity periods, and other Federal benefits with
respect to such drug; and
``(H) the percentage of research and development
expenditures on--
``(i) activities conducted by the
manufacturer;
``(ii) activities funded by Federal
entities; and
``(iii) activities conducted by other
entities such as academic institutions or other
drug manufacturers;
``(2) executive compensation for the chief executive
officer, chief financial officer, and the 3 other most highly
compensated executive officers, including bonuses, paid by such
manufacturer, and stock options affiliated with the
manufacturer that were offered to or accrued by such officers;
``(3) any additional information the manufacturer chooses
to provide related to drug pricing decisions, such as total
expenditures on drug research, drug development, and clinical
trials on drugs that failed to receive approval by the Food and
Drug Administration, a list of drugs and drug prices against
which the manufacturer compared the applicable drug, and other
relevant information; and
``(4) any other information as the Secretary may require.
``(c) Submission of Reports.--
``(1) In general.--
``(A) Submission by drug manufacturers.--Drug
manufacturers shall submit the annual reports required
under this section submitted to the Secretary in a
usable format, as the Secretary may require.
``(B) Collation by the secretary.--The Secretary
shall collate the reports received as described in
subparagraph (A) and submit such collated reports to
Congress, together with an analysis of the reports by
the Secretary that includes--
``(i) a summary of data from the reports;
``(ii) consideration of factors such as
trends on research and development costs,
Federal benefits, and manufacturer patient
assistance programs; and
``(iii) the relationship between the
factors described in clause (ii) and
prescription drug prices.
``(C) Public availability.--The Secretary shall
make the reports submitted by manufacturers as
described in subparagraph (A) and the collated reports
together with the analysis of the Secretary described
in subparagraph (B) publicly available, including by
posting such reports to the Internet website of the
Department of Health and Human Services, in a
searchable format.
``(2) Single reports.--A drug manufacturer shall submit all
information required under subsection (b) with respect to each
applicable drug, in a single, annual report.
``(3) Initial report.--
``(A) In general.--An applicable drug manufacturer
shall submit a report pursuant to this section one year
after the date of enactment of the Improving Access To
Affordable Prescription Drugs Act (except as provided
in subparagraph (B)) that includes the information
required under subsection (b)(1) with respect to each
calendar year since the drug for which the report is
required was approved under section 505 of the Federal
Food, Drug, and Cosmetic Act, licensed under section
351 of this Act, or received an exemption under section
505(i) of the Federal Food, Drug, and Cosmetic Act or
section 351(a)(3) of this Act, or the calendar year in
which the manufacturer acquired the drug.
``(B) Small businesses.--In the case of an
applicable drug manufacturer that has fewer than 500
employees, the initial report described in subparagraph
(A) shall be submitted by a date determined by the
Secretary, which shall be not earlier than the date
described in subparagraph (A) and not later than the
date that is 3 years after the date of enactment of the
Improving Access To Affordable Prescription Drugs Act.
``(d) Penalty for Noncompliance.--The Secretary shall report to the
Office of the Inspector General any manufacturer's failure to submit a
complete report as required under this section. Any manufacturer that
fails to submit a complete report required under this section shall be
subject to a civil penalty of up to $200,000 for each day on which the
violation continues. The Secretary shall collect the civil penalties
under this subsection, and without further appropriation, shall use
such funds to support the programs under sections 409K and 485E, and,
at the discretion of the Secretary, research of the National Institutes
of Health and other activities authorized under the Improving Access To
Affordable Prescription Drugs Act, including any amendments made by
such Act.''.
SEC. 102. DETERMINING THE PUBLIC AND PRIVATE BENEFIT OF COPAYMENT
COUPONS AND OTHER PATIENT ASSISTANCE PROGRAMS.
(a) Information Reporting by Independent Charity Patient Assistance
Programs.--Section 6033(b) of the Internal Revenue Code of 1986 is
amended by striking the period at the end of paragraph (16) and
inserting ``, and'' and by inserting after paragraph (16) the following
new paragraph:
``(17) the total amount of patient assistance (within the
meaning of section 399V-7 of the Public Health Service Act)
provided to individuals who are prescribed drugs manufactured
by any contributor to the organization.''.
(b) GAO Study and Report on Impact of Copayment Coupons and Other
Patient Assistance Programs on Prescription Drug Pricing and
Expenditures.--
(1) Study.--The Comptroller General of the United States
shall conduct a study on the impact of copayment coupons and
other patient assistance programs on prescription drug pricing
and expenditures. Such study shall include an analysis of the
following:
(A) The extent to which copayment coupons and
patient assistance programs contribute to inflated
prescription drug prices and health insurance premiums,
including with respect to--
(i) the Medicaid program under title XIX of
the Social Security Act (42 U.S.C. 1396 et
seq.);
(ii) the Medicare program under title XVIII
of such Act (42 U.S.C. 1395 et seq.);
(iii) the TRICARE program under chapter 55
of title 10, United States Code;
(iv) health care under the laws
administered by the Secretary of Veterans
Affairs;
(v) the commercial health insurance market;
and
(vi) the cash pay health market.
(B) The extent to which manufacturers offering
copayment coupons and other patient assistance programs
or sponsoring manufacturer patient assistance programs
obtain tax deductions for offering or sponsoring such
assistance (either as business expenses or charitable
deductions), including--
(i) the total value of the tax deductions
claimed by manufacturers for offering or
sponsoring patient assistance programs during
the 10 years preceding the date of enactment of
this Act;
(ii) a description of the methodology for
assigning a value to the tax deduction claimed
by manufacturers for offering or sponsoring
patient assistance programs; and
(iii) an analysis of the extent to which
the activities of independent charity patient
assistance programs, which are sponsored by, or
receive funding from, pharmaceutical
manufacturers (as determined using tax returns,
sales data, and other public disclosures)
provide a financial benefit to the
manufacturers that sponsor them.
(C) The extent to which independent charity patient
assistance programs adhere to guidance from the Office
of the Inspector General of the Department of Health
and Human Services on avoiding waste, fraud, and abuse.
(2) Definitions.--In this subsection, the terms ``patient
assistance'', ``independent charity patient assistance
program'', ``manufacturer'', and ``manufacturer patient
assistance program'' have the meaning given those terms under
section 399V-7 of the Public Health Service Act, as added by
section 101.
(3) Report.--Not later than 2 years after the date of the
enactment of this Act, the Comptroller General of the United
States shall submit to Congress a report describing the
findings of the study required under this subsection.
TITLE II--ACCESS AND AFFORDABILITY
SEC. 201. NEGOTIATING FAIR PRICES FOR MEDICARE PRESCRIPTION DRUGS.
(a) Negotiating Fair Prices.--
(1) In general.--Section 1860D-11 of the Social Security
Act (42 U.S.C. 1395w-111) is amended by striking subsection (i)
(relating to noninterference) and by inserting the following:
``(i) Negotiating Fair Prices With Drug Manufacturers.--
``(1) In general.--Notwithstanding any other provision of
law, in furtherance of the goals of providing quality care and
containing costs under this part, the Secretary shall, with
respect to applicable covered part D drugs, and may, with
respect to other covered part D drugs, negotiate, using the
negotiation technique or techniques that the Secretary
determines will maximize savings and value to the government
for prescription drug plans and MA-PD plans and for plan
enrollees (in a manner that may be similar to Federal entities
and that may include, but is not limited to, formularies,
reference pricing, discounts, rebates, other price concessions,
and coverage determinations), with drug manufacturers the
prices that may be charged to PDP sponsors and MA organizations
for such drugs for part D eligible individuals who are enrolled
in a prescription drug plan or in an MA-PD plan. In conducting
such negotiations, the Secretary shall consider the drug's
current price, initial launch price, prevalence of disease and
usage, and approved indications, the number of similarly
effective alternative treatments for each approved use of the
drug, the budgetary impact of providing coverage under this
part for such drug for all individuals who would likely benefit
from the drug, evidence on the drug's effectiveness and safety
compared to similar drugs, and the quality and quantity of
clinical data and rigor of the applicable process of approval
of a drug under section 505 of the Federal Food, Drug, and
Cosmetic Act or a biological product under section 351 of the
Public Health Service Act.
``(2) Use of lower of va or big four price if negotiations
fail.--If, after attempting to negotiate for a price with
respect to a covered part D drug under paragraph (1) for a
period of 1 year, the Secretary is not successful in obtaining
an appropriate price for the drug (as determined by the
Secretary), the Secretary shall establish the price that may be
charged to PDP sponsors and MA organizations for such drug for
part D eligible individuals who are enrolled in a prescription
drug plan or in an MA-PD plan at an amount equal to the lesser
of--
``(A) the price paid by the Secretary of Veterans
Affairs to procure the drug under the laws administered
by the Secretary of Veterans Affairs; or
``(B) the price paid to procure the drug under
section 8126 of title 38, United States Code.
``(3) Applicable covered part d drug defined.--For purposes
of this subsection, the term `applicable covered part D drug'
means a covered part D drug that the Secretary determines to be
appropriate for negotiation under paragraph (1) based on one or
more of the following factors as applied to such drug:
``(A) Spending on a per beneficiary basis.
``(B) The proportion of total spending under this
title.
``(C) Unit price increases over the preceding 5
years.
``(D) Initial launch price.
``(E) Availability of less expensive, similarly
effective alternative treatments.
``(F) Status of the drug as a follow-on to
previously approved drugs.
``(G) Any other criteria determined by the
Secretary.
``(4) PDP sponsors and ma organization may negotiate lower
prices.--Nothing in this subsection shall be construed as
preventing the sponsor of a prescription drug plan, or an
organization offering an MA-PD plan, from obtaining a discount
or reduction of the price for a covered part D drug below the
price negotiated under paragraph (1) or the price established
under paragraph (2).
``(5) No effect on existing appeals process.--Nothing in
this subsection shall be construed to affect the appeals
procedures under subsections (g) and (h) of section 1860D-4.''.
(2) Effective date.--The amendments made by this subsection
shall take effect on the date of the enactment of this Act and
shall first apply to negotiations and prices for plan years
beginning on January 1, 2019.
(b) Requirement To Include a Link to the Medicare Drug Spending
Dashboard on the Medicare Plan Finder.--Beginning not later than
October 1, 2017, the Secretary of Health and Human Services shall
ensure that the Medicare Plan Finder on the Medicare.gov Internet
website includes a link to the Medicare Drug Spending Dashboard on the
CMS.gov Internet website. Such link shall be easily accessible on the
Medicare Plan Finder.
(c) Reports to Congress.--
(1) Secretary of hhs.--
(A) In general.--Not later than 3 years after the
date of the enactment of this Act, and every 6 months
thereafter, the Secretary of Health and Human Services
shall submit to Congress a report on the following:
(i) The price negotiations conducted by the
Secretary under section 1860D-11(i) of the
Social Security Act (42 U.S.C. 1395w-111(i)),
as amended by subsection (a), including a
description of--
(I) how such price negotiations are
achieving lower prices for covered part
D drugs (as defined in section 1860D-
2(e) of the Social Security Act (42
U.S.C. 1395w-102(e))) for Medicare
beneficiaries;
(II) how such lower prices are
passed through to Medicare
beneficiaries;
(III) how such price negotiations
are affecting drug prices in the
private market; and
(IV) how such price negotiations
are affecting the list price of covered
part D drugs.
(ii) Data on spending under part D of the
Medicare program on covered part D drugs,
including data on covered part D drugs with--
(I) spending on a per beneficiary
basis that is above the median spending
on other drugs in the same class or
above the median spending of other drug
classes; and
(II) high unit cost increases over
the past five years, especially where
such increases are greater than the
increases for covered part D drugs in
general.
(iii) A list of the covered part D drugs
with no therapeutic substitute and data on
spending under part D of the Medicare program
on such drugs.
(iv) Access to covered part D drugs and,
where available, compliance rates and health
outcomes associated with compliance rates.
(v) Appeals by enrollees with respect to
covered part D drugs not included on plan
formularies.
(B) Public availability of report.--The Secretary
of Health and Human Services shall publish on the
Internet website of the Centers for Medicare & Medicaid
Services a copy of each report submitted under
subparagraph (A), including the detailed tables,
figures, and data published in the report and its
appendices.
(2) MedPAC.--
(A) Study.--The Comptroller General of the United
States shall conduct a study on the price negotiations
conducted by the Secretary under section 1860D-11(i) of
the Social Security Act (42 U.S.C. 1395w-111(i)), as
amended by subsection (a), including an analysis of--
(i) how such price negotiations are
achieving lower prices for covered part D drugs
(as defined in section 1860D-2(e) of the Social
Security Act (42 U.S.C. 1395w-102(e))) for
Medicare beneficiaries;
(ii) who is benefitting from such lower
prices, such as Medicare beneficiaries, the
Federal Government, States, prescription drug
plans and MA-PD plans, or other entities;
(iii) how such price negotiations are
affecting drug prices in the private market;
and
(iv) how such price negotiations are
affecting the list price of covered part D
drugs.
(B) Report.--Not later than January 1, 2021, the
Comptroller General of the United States shall submit
to Congress a report on the study conducted under
subparagraph (A), together with recommendations for
improving such price negotiations.
(d) CMI Testing of Negotiating Drug and Biological Prices To
Improve Value.--Section 1115A(b)(2) of the Social Security Act (42
U.S.C. 1315a(b)(2)) is amended--
(1) in subparagraph (A), by adding at the end the following
new sentence: ``The models selected under this subparagraph
shall include at least 3 of the models described in
subparagraph (D), which shall be implemented by not later than
18 months after the date of the enactment of the Improving
Access To Affordable Prescription Drugs Act''; and
(2) by adding at the end the following new subparagraph:
``(D) Models of negotiating drug and biological
prices to improve value.--The models described in this
subparagraph are the following models for negotiating
drug and biological prices under the applicable titles
(including under both parts B and D of title XVIII) in
order to improve the value of payments for such drugs
and biologicals under such titles:
``(i) Discounting or eliminating patient
cost-sharing on high-value drugs and
biologicals.
``(ii) Value-based formularies.
``(iii) Indications-based pricing.
``(iv) Reference pricing.
``(v) Risk-sharing agreements based on
outcomes.
``(vi) Pricing based on comparative
effectiveness research.
``(vii) Episode-based payments for
chemotherapy and other conditions determined
appropriate by the Secretary.
``(viii) Alternative ways of paying for
drugs and biologicals under part B of title
XVIII.
``(ix) Other models determined appropriate
by the Secretary.''.
SEC. 202. PRESCRIPTION DRUG PRICE SPIKES.
(a) Identification of Prescription Drug Price Spikes.--
(1) Definitions.--In this subsection:
(A) Applicable entity.--The term ``applicable
entity'' means the holder of an application approved
under subsection (c) or (j) of section 505 of the
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355) or
of a license issued under subsection (a) or (k) of
section 351 of the Public Health Service Act (42 U.S.C.
262) for a prescription drug.
(B) Average price.--The term ``average price''
means--
(i) the average manufacturer price, as
defined in section 1927(k)(1) of the Social
Security Act (42 U.S.C. 1396r-8(k)(1)); or
(ii) in the case of a drug for which the
average manufacturer price is not available,
the manufacturer's average sales price (as
defined in section 1847A(c)(1) of the Social
Security Act (42 U.S.C. 1395w-3a(c)(1)).
(C) Commerce.--The term ``commerce'' has the
meaning given such term in section 4 of the Federal
Trade Commission Act (15 U.S.C. 44).
(D) Prescription drug.--The term ``prescription
drug'' means any drug subject to section 503(b)(1) of
the Federal Food, Drug, and Cosmetic Act (21 U.S.C.
353(b)(1)) which is covered by a Federal health care
program (as defined in section 1128B(f) of the Social
Security Act (42 U.S.C. 1320a-7b(f))).
(E) Price spike.--
(i) In general.--The term ``price spike''
means an increase in the average price in
commerce of a prescription drug for which the
price spike percentage is equal to or greater
than the applicable price increase allowance.
(ii) Price spike percentage.--The price
spike percentage is the percentage (if any) by
which--
(I) the average price of a
prescription drug in commerce for the
most recently completed calendar year;
exceeds
(II) the average price of such drug
in commerce for the calendar year
preceding such year.
(iii) Applicable price increase
allowance.--The applicable price increase
allowance for any calendar year is the
percentage (rounded to the nearest one-tenth of
1 percent) by which the medical care component
of the consumer price index for all urban
consumers (as published by the Bureau of Labor
Statistics) for that year exceeds such
component for the preceding calendar year.
(F) Price spike revenue.--
(i) In general.--The price spike revenue
for any calendar year is an amount equal to--
(I) the gross price spike revenue;
minus
(II) the adjustment amount.
(ii) Gross price spike revenue.--The gross
price spike revenue for any calendar year is an
amount equal to the product of--
(I) an amount equal to the
difference between subclause (I) of
subparagraph (E)(ii) and subclause (II)
of such subparagraph; and
(II) the total number of units of
the prescription drug which were sold
in commerce in such calendar year.
(iii) Adjustment amount.--The adjustment
amount is the amount, if any, of the gross
price spike revenue which the Inspector General
has determined is due solely to an increase in
the cost of the goods sold (excluding any
increase in costs which are related to internal
transfers within the applicable entity) which
are necessary to manufacture the prescription
drug subject to the price spike.
(G) Inspector general.--The term ``Inspector
General'' means the Inspector General of the Department
of Health and Human Services.
(2) Submission by pharmaceutical companies of
information.--
(A) In general.--For each prescription drug, the
applicable entity shall submit to the Inspector General
a quarterly report that includes the following:
(i) For each prescription drug of the
applicable entity--
(I) the total number of units of
the prescription drug which were sold
in commerce in the most recently
completed calendar quarter; and
(II) the gross revenues from sales
of such prescription drug in commerce
in the most recently completed calendar
quarter.
(ii) Such information related to increased
input costs as the applicable entity may wish
the Inspector General to consider in making a
determination under subclause (II) of paragraph
(3)(B)(ii) or an assessment in subclause (III)
of such paragraph for the most recently
completed calendar quarter.
(iii) Such information related to any
anticipated increased input costs for the
subsequent calendar quarter as the applicable
entity may wish the Inspector General to
consider in making a determination under
subclause (II) of paragraph (3)(B)(ii) or an
assessment in subclause (III) of such paragraph
for such calendar quarter.
(B) Penalty for failure to submit.--
(i) In general.--An applicable entity
described in subparagraph (A) that fails to
submit information to the Inspector General
regarding a prescription drug, as required by
such paragraph, before the date specified in
subparagraph (C) shall be liable for a civil
penalty, as determined under clause (ii).
(ii) Amount of penalty.--The amount of the
civil penalty shall be equal to the product
of--
(I) an amount, as determined
appropriate by the Inspector General;
which is--
(aa) not less than 0.5
percent of the gross revenues
from sales of the prescription
drug described in clause (i)
for the most recently completed
calendar year; and
(bb) not greater than 1
percent of the gross revenues
from sales of such drug for the
most recently completed
calendar year; and
(II) the number of days in the
period between--
(aa) the applicable date
specified in subparagraph (C);
and
(bb) the date on which the
Inspector General receives the
information described in
subparagraph (A) from the
applicable entity.
(C) Submission deadline.--An applicable entity
shall submit each quarterly report described in
subparagraph (A) not later than January 17, April 18,
June 15, and September 15 of each calendar year.
(3) Assessment.--
(A) In general.--Not later than the last day in
February of each year, the Inspector General, in
consultation with the Federal Trade Commission, shall
complete an assessment of the information the Inspector
General received pursuant to paragraph (2)(A) with
respect to sales of prescription drugs in the most
recently completed calendar year.
(B) Elements.--The assessment required by
subparagraph (A) shall include the following:
(i) Identification of each price spike
relating to a prescription drug in the most
recently completed calendar year.
(ii) For each price spike identified under
clause (i)--
(I) a determination of the price
spike percentage and price spike
revenue;
(II) a determination regarding the
accuracy of the information submitted
by the applicable entity regarding
increased input costs; and
(III) an assessment of the
rationale of the applicable entity for
the price spike.
(4) Report to internal revenue service.--
(A) In general.--Not later than the last day in
February of each year, the Inspector General shall
transmit to the Internal Revenue Service a report on
the findings of the Inspector General with respect to
the information the Inspector General received under
paragraph (2)(A) with respect to the most recently
completed calendar year and the assessment carried out
by the Inspector General under paragraph (3)(A) with
respect to such information.
(B) Contents.--The report transmitted under
subparagraph (A) shall include the following:
(i) The information received under
paragraph (2)(A) with respect to the most
recently completed calendar year.
(ii) The price spikes identified under
clause (i) of paragraph (3)(B).
(iii) The price spike revenue
determinations made under clause (ii)(I) of
such paragraph.
(iv) The average price of the prescription
drug for each month during the most recently
completed calendar year.
(v) The determinations and assessments made
under subclauses (II) and (III) of clause (ii)
of such paragraph.
(C) Publication.--Not later than the last day in
February of each year, the Inspector General shall make
the report transmitted under subparagraph (A) available
to the public, including on the Internet website of the
Inspector General.
(5) Notification.--The Secretary of the Treasury, in
conjunction with the Inspector General, shall notify, at such
time and in such manner as the Secretary of the Treasury shall
provide, each applicable entity in regard to any prescription
drug which has been determined to have been subject to a price
spike during the most recently completed calendar year and the
amount of the tax imposed on such applicable entity pursuant to
section 4192 of the Internal Revenue Code of 1986 (as added by
subsection (b) of this section).
(b) Excise Tax on Prescription Drugs Subject to Price Spikes.--
(1) In general.--Subchapter E of chapter 32 of the Internal
Revenue Code of 1986 is amended by adding at the end the
following new section:
``SEC. 4192. PRESCRIPTION DRUGS SUBJECT TO PRICE SPIKES.
``(a) Imposition of Tax.--
``(1) In general.--For each taxable prescription drug sold
by an applicable entity during the calendar year, there is
hereby imposed on such entity a tax equal to the greater of--
``(A) the annual price spike tax for such drug, or
``(B) subject to paragraph (2), the cumulative
price spike tax for such drug.
``(2) Limitation.--In the case of a taxable prescription
drug for which the applicable period (as determined under
subsection (c)(2)(E)(i)) is less than 2 completed calendar
years, the cumulative price spike tax shall not apply.
``(b) Annual Price Spike Tax.--
``(1) In general.--The amount of the annual price spike tax
shall be equal to the applicable percentage of the price spike
revenue received by the applicable entity on the sale of the
taxable prescription drug during the calendar year.
``(2) Applicable percentage.--For purposes of paragraph
(1), the applicable percentage shall be equal to--
``(A) in the case of a taxable prescription drug
which has been subject to a price spike percentage
equal to or greater than the applicable price increase
allowance (as defined in section 202(a)(1)(E)(iii) of
the Improving Access To Affordable Prescription Drugs
Act) but less than 15 percent, 50 percent,
``(B) in the case of a taxable prescription drug
which has been subject to a price spike percentage
equal to or greater than 15 percent but less than 20
percent, 75 percent, and
``(C) in the case of a taxable prescription drug
which has been subject to a price spike percentage
equal to or greater than 20 percent, 100 percent.
``(c) Cumulative Price Spike Tax.--
``(1) In general.--The amount of the cumulative price spike
tax shall be equal to the applicable percentage of the
cumulative price spike revenue received by the applicable
entity on the sale of the taxable prescription drug during the
calendar year.
``(2) Applicable percentage.--
``(A) In general.--For purposes of paragraph (1),
the applicable percentage shall be equal to--
``(i) in the case of a taxable prescription
drug which has been subject to a cumulative
price spike percentage equal to or greater than
the cumulative price increase allowance but
less than the first compounded percentage, 50
percent,
``(ii) in the case of a taxable
prescription drug which has been subject to a
cumulative price spike percentage equal to or
greater than the first compounded percentage
but less than the second compounded percentage,
75 percent, and
``(iii) in the case of a taxable
prescription drug which has been subject to a
cumulative price spike percentage equal to or
greater than the second compounded percentage,
100 percent.
``(B) Cumulative price spike percentage.--The
cumulative price spike percentage is the percentage (if
any) by which--
``(i) the average price of the taxable
prescription drug in commerce for the most
recently completed calendar year, exceeds
``(ii) the average price of such drug in
commerce for the base year.
``(C) Cumulative price increase allowance.--For
purposes of clause (i) of subparagraph (A), the
cumulative price increase allowance for any calendar
year is the percentage (rounded to the nearest one-
tenth of 1 percent) by which the medical care component
of the consumer price index for all urban consumers (as
published by the Bureau of Labor Statistics) for that
year exceeds such component for the base year.
``(D) Compounded percentages.--For purposes of
subparagraph (A), the first compounded percentage and
second compounded percentage shall be determined in
accordance with the following table:
------------------------------------------------------------------------
First Second
``Number of years in applicable period compounded compounded
percentage percentage
------------------------------------------------------------------------
2 years....................................... 32.35 44.00
3 years....................................... 52.09 72.80
4 years....................................... 74.90 107.36
5 years....................................... 101.14 148.83.
------------------------------------------------------------------------
``(E) Applicable period and base year.--
``(i) Applicable period.--The applicable
period shall be the lesser of--
``(I) the 5 most recently completed
calendar years,
``(II) any completed calendar years
beginning after March 29, 2017, or
``(III) any completed calendar
years in which the taxable prescription
drug was sold in commerce.
``(ii) Base year.--The base year shall be
the calendar year immediately preceding the
applicable period.
``(3) Cumulative price spike revenue.--For purposes of
paragraph (1), the cumulative price spike revenue for any
taxable prescription drug shall be an amount equal to--
``(A) an amount equal to the product of--
``(i) an amount (not less than zero) equal
to--
``(I) the average price of such
drug in commerce for the most recently
completed calendar year, minus
``(II) the average price of such
drug in commerce for the base year, and
``(ii) the total number of units of such
drug which were sold in commerce in the most
recently completed calendar year, minus
``(B) the adjustment amount, if any, determined
under section 202(a)(1)(F)(iii) of the Improving Access
To Affordable Prescription Drugs Act for such calendar
year.
``(d) Definitions.--For purposes of this section--
``(1) Taxable prescription drug.--The term `taxable
prescription drug' means a prescription drug (as defined in
section 202(a)(1)(D) of the Improving Access To Affordable
Prescription Drugs Act) which has been identified by the
Inspector General of the Department of Health and Human
Services, under section 202(a)(3)(B)(i) of such Act, as being
subject to a price spike.
``(2) Other terms.--The terms `applicable entity', `average
price', `price spike', `price spike percentage', and `price
spike revenue' have the same meaning given such terms under
section 202(a)(1) of the Improving Access To Affordable
Prescription Drugs Act.''.
(2) Clerical amendments.--
(A) The heading of subchapter E of chapter 32 of
the Internal Revenue Code of 1986 is amended by
striking ``Medical Devices'' and inserting ``Certain
Medical Devices and Prescription Drugs''.
(B) The table of subchapters for chapter 32 of such
Code is amended by striking the item relating to
subchapter E and inserting the following new item:
``subchapter e. certain medical devices and prescription drugs''.
(3) The table of sections for subchapter E of chapter 32 of
such Code is amended by adding at the end the following new
item:
``Sec. 4192. Prescription drugs subject to price spikes.''.
(4) Effective date.--The amendments made by this section
shall apply to sales after the date of the enactment of this
Act.
(c) Revenues Collected.--There are authorized to be appropriated to
the Secretary of Health and Human Services such sums as are equal to
any increase in revenue to the Treasury by reason of the provisions of
this section or the amendments made by this section for the purposes
of--
(1) funding or conducting research on the economic and
policy implications of price patterns of prescription drugs; or
(2) increasing amounts available to the National Institutes
of Health for research and development of drugs.
SEC. 203. ACCELERATION OF THE CLOSING OF THE MEDICARE PART D COVERAGE
GAP.
(a) Reduction in Coinsurance.--Section 1860D-2(b)(2) of the Social
Security Act (42 U.S.C. 1395w-102(b)(2)) is amended--
(1) in each of subclauses (II) and (III) of subparagraph
(C)(ii), by striking ``2020'' and inserting ``2018''; and
(2) in subparagraph (D)(ii)--
(A) in subclause (II), by inserting ``and'' at the
end; and
(B) by striking subclauses (III) through (VI) and
inserting the following:
``(III) 2018 is 100 percent.''.
(b) Increase in Manufacturer Rebate.--Section 1860D-14A(g)(4)(A) of
the Social Security Act (42 U.S.C. 1395w-114a(g)(4)(A)) is amended by
inserting ``(or, for 2018 and subsequent years, 75 percent)'' after
``50 percent''.
SEC. 204. IMPORTING AFFORDABLE AND SAFE DRUGS.
(a) In General.--Section 804 of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 384) is amended to read as follows:
``SEC. 804. IMPORTATION OF SAFE AND AFFORDABLE DRUGS BY WHOLESALE
DISTRIBUTORS, PHARMACIES, AND INDIVIDUALS.
``(a) In General.--Not later than 180 days after the date of
enactment of the Improving Access To Affordable Prescription Drugs Act,
the Secretary shall promulgate regulations permitting the importation
of qualifying prescription drugs into the United States, in accordance
with this section.
``(b) Definitions.--For purposes of this section:
``(1) Certified foreign seller.--The term `certified
foreign seller' means a licensed foreign pharmacy or foreign
wholesale distributor that the Secretary certifies under
subsection (d)(1)(B), that pays the fee required under
subsection (d)(1)(C), and that is included on the list
described in subsection (c).
``(2) Foreign wholesale distributor.--The term `foreign
wholesale distributor' means a person (other than a
manufacturer, a manufacturer's co-licensed partner, a third-
party logistics provider, or a repackager) engaged in wholesale
distribution.
``(3) Importer.--The term `importer' means a dispenser (as
defined in section 581(3)) or wholesale distributor registered
under section 503(e) who imports prescription drugs into the
United States in accordance with this section.
``(4) Licensed foreign pharmacy.--The term `licensed
foreign pharmacy' means a pharmacy located in Canada, or
subject to subsection (e), another applicable country, that--
``(A) operates in accordance with applicable
pharmacy standards set forth by the provincial pharmacy
rules and regulations enacted in Canada, or, subject to
subsection (e), such applicable rules and regulations
of the permitted country in which such seller is
located; and
``(B) is licensed to operate and dispense
prescription drugs to individuals in Canada, or,
subject to subsection (e), the permitted country in
which the pharmacy is located.
``(5) Qualifying prescription drug.--The term `qualifying
prescription drug'--
``(A) means a prescription drug that--
``(i) is approved for use in patients, and
marketed, in Canada, or subject to subsection
(e), approved for use in patients, and
marketed, in another permitted country;
``(ii) is manufactured in a facility
registered under subsection (b)(1) or (i) of
section 510 that is in compliance with good
manufacturing practices regulations of the Food
and Drug Administration;
``(iii) has the same active ingredient or
ingredients, route of administration, and
strength as a prescription drug approved under
chapter V, or, for purposes of subparagraph
(B)(iv), is biosimilar to an approved
biological product and has the same route of
administration and strength as the approved
biological product; and
``(iv) is labeled in accordance with--
``(I) the laws of Canada, or
another country from which importation
is permitted pursuant to subsection
(e); and
``(II) the requirements promulgated
by the Secretary, which shall include
labeling in English;
``(B) with respect to importers only, includes--
``(i) peritoneal dialysis solution;
``(ii) insulin;
``(iii) a drug for which a risk evaluation
and mitigation strategy is required under
section 505-1;
``(iv) biological products, as defined in
section 351 of the Public Health Service Act
that are proteins (except any chemically
synthesized polypeptides) or analogous
products; and
``(v) intravenously infused drugs; and
``(C) does not include--
``(i) a controlled substance (as defined in
section 102 of the Controlled Substances Act);
``(ii) an anesthetic drug inhaled during
surgery; or
``(iii) a compounded drug.
``(6) Valid prescription.--The term `valid prescription'
means a prescription that is issued for a legitimate medical
purpose in the usual course of professional practice by--
``(A) a practitioner who has conducted at least one
in-person medical evaluation of the patient; or
``(B) a covering practitioner.
``(c) Publication of Certified Foreign Sellers.--The Secretary
shall publish on a dedicated Internet website a list of certified
foreign sellers, including the Internet website address, physical
address, and telephone number of each such certified foreign seller.
``(d) Additional Criteria.--
``(1) Certified foreign sellers.--
``(A) In general.--To be a certified foreign
seller, such seller shall--
``(i) be certified by the Secretary in
accordance with subparagraph (B);
``(ii) pay the registration fee established
under subparagraph (C); and
``(iii) sell only qualifying prescription
drugs to importers or individuals who import
prescription drugs into the United States in
accordance with this section.
``(B) Certification.--To be a certified foreign
seller, the Secretary shall certify that such seller--
``(i) is a foreign wholesale distributor or
licensed foreign pharmacy operating an
establishment, which may include an online
foreign pharmacy, that is located in Canada,
or, subject to subsection (e), another
permitted country;
``(ii) is engaged in the distribution or
dispensing of a prescription drug that is
imported or offered for importation into the
United States;
``(iii) has been in existence for a period
of at least 5 years preceding the date of such
certification and has a purpose other than to
participate in the program established under
this section;
``(iv) in the case of a certified foreign
seller that is a licensed foreign pharmacy,
agrees to dispense a qualifying prescription
drug to an individual in the United States only
after receiving a valid prescription, as
described in paragraph (2)(C);
``(v) has processes established by the
seller, or participates in another established
process, to certify that the physical premises
and data reporting procedures and licenses are
in compliance with all applicable laws and
regulations of Canada, or, subject to
subsection (e), the permitted country in which
the seller is located, and has implemented
policies designed to monitor ongoing compliance
with such laws and regulations;
``(vi) conducts or commits to participate
in ongoing and comprehensive quality assurance
programs and implements such quality assurance
measures, including blind testing, to ensure
the veracity and reliability of the findings of
the quality assurance program;
``(vii) agrees that, pursuant to subsection
(g), laboratories approved by the Secretary may
be authorized to conduct product testing to
determine the chemical authenticity of sample
pharmaceutical products;
``(viii) agrees to notify the Secretary,
importers, and individuals of product recalls
in Canada, or pursuant to subsection (e), the
permitted country in which the seller is
located, and agrees to cease, or refrain from,
exporting such product;
``(ix) has established, or will establish
or participate in, a process for resolving
grievances, as defined by the Secretary, and
will be held accountable for violations of
established guidelines and rules;
``(x) except as otherwise permitted under
this section, does not sell products that the
seller could not otherwise legally sell in
Canada, or, subject to subsection (e), the
permitted country in which such seller is
located to customers in the United States; and
``(xi) meets any other criteria established
by the Secretary.
``(C) Certification fee.--Not later than 30 days
before the start of each fiscal year, the Secretary
shall establish a fee to be collected from foreign
sellers for such fiscal year that are certified under
subparagraph (B), in an amount that is sufficient, and
not more than necessary, to pay the costs of
administering the program under this section, and
enforcing this section pursuant to section 303(h), for
that fiscal year.
``(D) Recertification.--A certification under
subparagraph (B) shall be in effect for a period of 2
years, or until there is a material change in the
circumstances under which the foreign seller meets the
requirements under such subparagraph, whichever occurs
earlier. A foreign seller may reapply for certification
under such subparagraph (B), in accordance with a
process established by the Secretary.
``(2) Individuals.--An individual may import a qualifying
prescription drug described in subsection (b) from Canada or
another country pursuant to subsection (e) if such drug--
``(A) is dispensed, including through an online
pharmacy, by a certified foreign seller that is a
licensed foreign pharmacy;
``(B) is purchased for personal use by the
individual, not for resale, in quantities that do not
exceed a 90-day supply; and
``(C) is filled only after providing to the
licensed foreign pharmacy a valid prescription issued
by a health care practitioner licensed to practice in a
State in the United States.
``(e) Importation From Other Countries.--Beginning on the date that
is 2 years after the date on which final regulations are promulgated to
carry out this section, if, based on a review of the evidence obtained
after such effective date, including the reports submitted under
section 2(d) of the Improving Access To Affordable Prescription Drugs
Act , that importation of qualifying prescription drugs from Canada
under this section resulted in cost savings for consumers in the United
States and increased access to safe medication, the Secretary shall
have the authority to permit importation of qualifying prescription
drugs by importers and individuals from, in addition to Canada, any
country that--
``(1) is a member of the Organisation for Economic Co-
operation and Development; and
``(2) has statutory or regulatory standards for the
approval and sale of prescription drugs that are comparable to
the standards in the United States and that--
``(A) authorizes the approval of drugs only if a
drug has been determined to be safe and effective by
experts employed by or acting on behalf of a
governmental entity and qualified by scientific
training and experience to evaluate the safety and
effectiveness of drugs;
``(B) requires that any determination of safety and
effectiveness described in subparagraph (A) be made on
the basis of adequate and well-controlled
investigations, including clinical investigations, as
appropriate, conducted by experts qualified by
scientific training and experience to evaluate the
safety and effectiveness of drugs;
``(C) requires the methods used in, and the
facilities and controls used for, the manufacture,
processing, and packing of drugs in the country to be
adequate to preserve the identity, quality, purity, and
strength of the drugs; and
``(D) requires the reporting of adverse reactions
to drugs and establish procedures to recall, and
withdraw approval of, drugs found not to be safe or
effective.
``(f) Labeling.--Any qualifying prescription drug imported that
meets the labeling requirements described in subsection (b)(5)(A)(iv)
is deemed not misbranded for purposes of section 502.
``(g) Drug Testing Laboratories.--The Secretary may approve one or
more laboratories to conduct random testing of prescription drugs sold
by certified foreign sellers to assess the chemical authenticity of
such drugs.
``(h) Unfair and Discriminatory Acts and Practices.--It is unlawful
for a manufacturer, directly or indirectly (including by being a party
to a licensing agreement or other agreement)--
``(1) to discriminate by charging a higher price for a
prescription drug sold to a certified foreign seller that sells
such drug to an importer in accordance with this section than
the price that is charged, inclusive of rebates or other
incentives to the country from which the drug is exported, to
another person that is in the same country and that does not
import such a drug into the United States in accordance with
this section;
``(2) except with respect to a prescription drug on the
drug shortage list under section 506E, discriminate by denying,
restricting, or delaying supplies of a prescription drug to a
certified foreign seller, on account of such seller's status as
a certified foreign seller, that sells such drug to an importer
in accordance with this section, or by publicly, privately, or
otherwise refusing to do business with such a certified foreign
seller on account of such seller's status as a certified
foreign seller;
``(3) cause there to be a difference (including a
difference in active ingredient, route of administration,
bioequivalence, strength, formulation, manufacturing
establishment, manufacturing process, or person that
manufactures the drug) between a prescription drug for
distribution in the United States and the drug for distribution
in Canada or another permitted country, subject to subsection
(e), for the purpose of avoiding sales by certified foreign
sellers; or
``(4) except with respect to a prescription drug on the
drug shortage list under section 506E, engage in any other
action to restrict, prohibit, or delay the importation of a
prescription drug under this section.
``(i) Information and Records.--
``(1) Biannual reports.--Each importer shall submit
biannual reports to the Secretary which shall contain, for each
qualifying prescription drug imported into the United States--
``(A) the unique facility identifier of the
manufacturer of the drug, described in section 510;
``(B) the transaction information described in
section 581(26) (other than the information described
in subparagraph (C)); and
``(C) the price paid by the importer for the drug.
``(2) Maintenance of records by secretary.--The Secretary
shall maintain information and documentation submitted under
paragraph (1) for such period of time as the Secretary
determines to be appropriate.
``(j) Suspension of Importation.--
``(1) Patterns of noncompliance.--The Secretary shall
require that importation of a specific qualifying prescription
drug or importation by a specific certified foreign seller or
importer pursuant to this section be immediately suspended if
the Secretary determines that there is a pattern of importation
of such specific drug or by such specific seller or importer
that involves counterfeit drugs, drugs that have been recalled
or withdrawn, or drugs in violation of any requirement of this
section, until an investigation is completed and the Secretary
determines that importation of such drug or by such seller or
importer does not endanger the public health.
``(2) Temporary suspension.--The Secretary may require that
importation of a specific qualifying prescription drug or
importation by a specific certified foreign seller or importer
pursuant to this section be temporarily suspended if, with
respect to such drug, seller, or importer, there is a violation
of any requirement of this section or if the Secretary
determines that importation of such drug or by such seller or
importer might endanger the public health. Such temporary
suspension shall apply until the Secretary completes an
investigation and determines that importation of such drug or
by such seller or importer does not endanger the public health.
``(k) Supply Chain Security.--
``(1) Purchase from registered facilities and certified
foreign sellers.--
``(A) In general.--Except as provided in
subparagraph (B), certified foreign sellers who sell
qualifying prescription drugs for importation into the
United States pursuant to this section may purchase
such drugs only from manufacturers or entities
registered under section 510 or other certified foreign
sellers.
``(B) Exception.--Certified foreign sellers who
sell qualifying prescription drugs for importation into
the United States pursuant to this section may purchase
such drugs from foreign sellers in Canada or another
permitted country, even if such foreign seller is not a
manufacturer registered under section 510 or a
certified foreign seller, if the Secretary enters into
a memorandum of understanding or cooperative agreement
with Canada, or such other permitted country, to ensure
compliance, to the extent appropriate and feasible,
with subchapter H of chapter V. The Secretary shall
seek to enter into such a memorandum of understanding
or cooperative agreement with Canada and each country
from which importation is permitted under subsection
(e).
``(2) Importation tracing.--Certified foreign sellers shall
provide importers with the unique facility identifier
associated with the manufacturer registered under section 510
of the qualifying prescription drug and the information under
paragraph (25), paragraph (26) (other than subparagraph (C)),
and subparagraphs (D), (F), and (G) of paragraph (27) of
section 581. Certified foreign sellers shall provide such
information to individuals purchasing such drugs, upon request.
``(l) REMs.--In the case of an importer that imports a qualifying
prescription drug, where the drug with the same active ingredient or
ingredients (or that is biosimilar to an approved biological product),
route of administration, and strength that is approved under chapter V
or section 351 of the Public Health Service Act is subject to elements
to assure safe use under section 505-1, such importer shall be subject
to such elements to assure safe use, as applicable and appropriate.
``(m) Construction.--Nothing in this section limits the authority
of the Secretary relating to the importation of prescription drugs,
other than with respect to section 801(d)(1) as provided in this
section.''.
(b) Penalties With Respect to Online Pharmacies.--Section 303 of
the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 333) is amended by
adding at the end the following:
``(h) In the case of person operating an Internet website, whether
in the United States or in another country, that violates section
301(aa) by--
``(1) selling, by means of the Internet, with the intent to
defraud or mislead or with reckless disregard for safety of the
public, an adulterated or counterfeit drug to an individual in
the United States; or
``(2) dispenses, by means of the Internet, a drug to an
individual in the United States who the person knows or has
reasonable cause to believe, does not possess a valid
prescription for that drug,
such person shall be imprisoned for not more than 10 years or
fined not more than $250,000.''.
(c) No Preemption.--Nothing in this section, including the
amendments made by this section, shall be construed to preempt, alter,
displace, abridge, or supplant any remedy available under any State or
Federal law, including common law, that provides a remedy for civil
relief.
(d) Reports.--
(1) HHS.--Not later than 1 year after the date on which
final regulations are promulgated to carry out section 804 of
the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 384), as
amended by subsection (a), and every 2 years thereafter, the
Secretary of Health and Human Services, after consultation with
appropriate Federal agencies, shall submit to Congress and make
public a report on the importation of drugs into the United
States.
(2) GAO report.--Not later than 18 months after the date on
which final regulations are promulgated to carry out section
804 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C.
384), as amended by subsection (a), the Comptroller General of
the United States shall submit to Congress a report containing
an analysis of the implementation of the amendments made by
this section, including a review of drug safety and cost-
savings and expenses, including cost-savings to consumers in
the United States and trans-shipment and importation tracing
processes, resulting from such implementation.
SEC. 205. 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, 2019, 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) 2018 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,
2018, and ending on December 31, 2018, 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, 2017, in the amount
specified in paragraph (3) for any covered part D drug of the
manufacturer dispensed after December 31, 2017, 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 Manufacturers 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, 2019, 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).''.
SEC. 206. CAP ON PRESCRIPTION DRUG COST-SHARING.
(a) Qualified Health Plans.--Section 1302(c) of the Patient
Protection and Affordable Care Act (42 U.S.C. 18022(c)) is amended--
(1) in paragraph (3)(A)(i), by inserting ``(including cost-
sharing with respect to prescription drugs covered by the
plan)'' after ``copayments''; and
(2) by adding at the end the following:
``(5) Prescription drug cost-sharing.--
``(A) 2019.--For plan years beginning in 2019 or
later, the cost-sharing incurred under a health plan
with respect to prescription drugs covered by the plan
shall not exceed $250 per month for each enrolled
individual, or $500 for each family.
``(B) 2020 and later.--
``(i) In general.--In the case of any plan
year beginning in a calendar year after 2019,
the limitation under this paragraph shall be
equal to the applicable dollar amount under
subparagraph (A) for plan years beginning in
2019, increased by an amount equal to the
product of that amount and the medical care
component of the consumer price index for all
urban consumers (as published by the Bureau of
Labor Statistics) for that year.
``(ii) Adjustment to amount.--If the amount
of any increase under clause (i) is not a
multiple of $5, such increase shall be rounded
to the next lowest multiple of $5.''.
(b) Group Health Plans.--Section 2707(b) of the Public Health
Service Act (42 U.S.C. 300gg-6(b)) is amended by striking ``paragraph
(1) of section 1302(c)'' and inserting ``paragraphs (1) and (5) of
section 1302(c) of the Patient Protection and Affordable Care Act''.
(c) Effective Date.--The amendments made by subsections (a) and (b)
shall take effect with respect to the first plan year that begins after
the date on which initial reports are required to be submitted under
section 399V-7(c)(3) of the Public Health Service Act, as added by
section 101.
TITLE III--INNOVATION
SEC. 301. PRIZE FUND FOR NEW AND MORE EFFECTIVE TREATMENTS OF BACTERIAL
INFECTIONS.
Part B of title IV of the Public Health Service Act (42 U.S.C. 284
et seq.) is amended by adding at the end the following:
``SEC. 409K. PRIZE FUND FOR NEW AND MORE EFFECTIVE TREATMENTS OF
BACTERIAL INFECTIONS.
``(a) Establishment of Fund.--There is hereby established in the
Treasury of the United States a revolving fund to be known as the
`Antibiotics Prize Fund', which shall consist of funds transferred
under subsection (b).
``(b) Amounts Credited to the Fund.--There are hereby authorized to
be appropriated, and appropriated, to the Antibiotics Prize Fund, for
fiscal year 2018, out of any monies in the Treasury not otherwise
appropriated, $2,000,000,000. Such funds shall remain available until
expended.
``(c) Awards.--
``(1) In general.--During the 10-year period following the
date of enactment of the Improving Access To Affordable
Prescription Drugs Act, the Director of the NIH, in accordance
with the criteria under subsection (d) and the goals under
subsection (e), shall award--
``(A) up to 3 prizes for qualifying products that
provide added benefit for patients over existing
therapies in the treatment of serious and life-
threatening bacterial infections demonstrating in
superiority trials; and
``(B) award open source dividend prizes for
contributions that significantly advance the field of
antibiotic research with openly sourced materials,
technology, data, and knowledge.
``(2) Award amount requirements.--No more than 5 percent of
the amount available in the Antibiotics Prize Fund shall be
dedicated to open source dividend prizes.
``(d) Criteria and Structure of Prizes.--
``(1) Establishment of criteria.--Not later than 120 days
after the date of enactment of the Improving Access To
Affordable Prescription Drugs Act, the Director of NIH shall
establish criteria for the selection of recipients and
eligibility of persons for prizes under this section and
criteria for determining the amounts of such prizes, through
notice and comment rulemaking.
``(2) Considerations in establishing criteria for
qualifying products.--In establishing the criteria for
selection of recipients and amounts of prizes under paragraph
(1), the Director of NIH, in consultation with other agencies
as appropriate, shall consider the following:
``(A) The number of patients in the United States
and in other countries who would benefit from the
qualifying product that treats a serious or life-
threatening bacterial infection, and the number of
patients in the United States and in other countries
projected to benefit during the upcoming 10-year
period.
``(B) Whether the qualifying product treats, or has
the potential to treat, a serious or life-threatening
bacterial infection for which no other treatment is
currently available or for which there is a high threat
of resistance to existing treatments.
``(C) The incremental and additional therapeutic
benefit to human in the United States and other
countries of the qualifying product as compared to
other treatments available to treat the bacterial
infection, evaluating the incremental therapeutic
benefit in comparison to treatments that were not
recently developed.
``(D) The transmissibility of the bacterial
infection the qualifying product would treat, and
barriers to prevention of that infection.
``(E) The extent to which knowledge, data,
materials, and technology that are openly sourced have
contributed to the successful development of new
treatments that provide an added benefit to patients,
such as decreasing mortality or irreversible morbidity
on patient-centered outcomes, significantly advancing
the field of antibiotic research, or improving
processes for manufacturing products used for the
treatment.
``(F) Other criteria that the Director of NIH
determines to be relevant and useful in ensuring that
the prizes provide appropriate incentives.
``(3) Criteria for open source dividend prizes.--An open
source dividend prize under this section shall reward persons
that openly shared on a royalty-free, not-for-profit and non-
discriminatory basis, materials, technology, data, and
knowledge that contribute in a significant way to the
successful development of a qualifying product or significantly
advanced the field of antibiotic research.
``(e) Goals.--With respect to each year for which the Director of
NIH awards prizes under subsection (c), the Director of NIH shall
establish a framework of goals that a qualifying product or
contribution that significantly advances the field of antibiotic
research is required to show promise to help meet in order for a person
to be eligible to receive a prize with respect to such product or such
contribution. Such goals may include--
``(1) reduced hospital admissions or readmissions;
``(2) use of diagnostics prior to prescribing of drugs; and
``(3) use of innovative programs for antibiotic
stewardship.
``(f) Condition on Receipt of Prize.--
``(1) In general.--Each prize for a qualifying product
offered under this section shall be conditioned on the
following:
``(A) The recipient shall agree to offer the
qualifying product at a reasonable price as described
in paragraph (3).
``(B) Subject to applicable patient privacy
protections, the recipient shall agree to publicly
disclose all pre-clinical and clinical trial data with
respect to the qualifying product.
``(C) The recipient shall agree to submit to the
Director of NIH, for review and approval by such
director, in collaboration with the Commissioner of
Food and Drugs and the Director of the Centers for
Disease Control and Prevention, all marketing, sales,
and other promotional and educational activities
associated with the qualifying product, to ensure that
such activities align with, and advance the goals of,
resource conserving stewardship, protecting the utility
of antibiotics, and encouraging and ensuring the
correct use of antibiotics.
``(D) The recipient shall irrevocably waive--
``(i) all periods of exclusivity available
to the product under chapter V of the Federal
Food, Drug, and Cosmetic Act or section 351 of
this Act; and
``(ii) all applicable patent rights under
title 35, United States Code.
``(E) Any other conditions the Director of NIH
determines appropriate.
``(2) Applicability.--All conditions described in paragraph
(1) shall apply to subsequent owners, licensees, producers, and
manufacturers, and assignees of the product or any chemical
component of the qualifying product for which the prize was
awarded.
``(3) Reasonable price.--
``(A) In general.--A recipient may satisfy the
requirement to offer a qualifying product or
contribution at a `reasonable price' for purposes of
paragraph (1)(A) by--
``(i)(I) providing open licensing of all
necessary rights to patents, manufacturing
processes, rights in data, and other
intellectual property rights needed to make and
sell the product to manufacturers of the
generic version of such product; or
``(II) selling such product at a price that
is no more than twice the price of antibiotic
drugs approved under section 505(j) of the
Federal Food, Drug, and Cosmetic Act with
similar manufacturing costs; and
``(ii) selling such product at a price that
is not higher than the median price charged, at
the time of such sale, in the applicable 7
countries, as determined under in subparagraph
(B).
``(B) Criteria.--For purposes of subparagraph
(A)(ii), the Director of NIH shall identify, on an
annual basis, the countries that have a per capita
income that is not less than half the per capita income
of the United States, select the 7 of such countries
that have the largest gross domestic product, and
determine the median price charged for each qualifying
product for which an award has been granted under
subsection (c).
``(g) Enforcement.--If the prize recipient, or subsequent owner,
licensee, or assignee of the qualifying product, does not fulfill the
conditions described subsection (f)(1), the Secretary, in collaboration
with the Attorney General, shall take all necessary action to clawback
the prize.
``(h) Transparency.--With respect to each prize awarded under this
section, the Director of NIH shall make public--
``(1) the methodology used and criteria analyzed in
determining the prize recipient; and
``(2) a complete analysis of the recipient's fulfillment of
award conditions under subsection (e)(1).
``(i) Qualifying Product.--For purposes of this section, the term
`qualifying product' means a drug (as defined in section 201(g) of the
Federal Food, Drug, and Cosmetic Act) subject to section 503(b)(1) of
the Federal Food, Drug, and Cosmetic Act.
``(j) Study.--
``(1) In general.--The Director of NIH shall seek to enter
into an agreement with the National Academies of Sciences,
Engineering, and Medicine to conduct a study to examine--
``(A) the use of innovation inducement prize funds
and push financing mechanisms as ways to stimulate
investments in biomedical research and development that
de-links costs from product prices;
``(B) models of different possible means of de-
linking research and development costs from drug
prices, including the replacement of the monopoly on
new products as an incentive, with innovation
inducement prize funds and push financing mechanisms as
new incentives to stimulate the development of drugs,
including drugs to treat bacterial infections, rare
diseases, HIV/AIDS, and cancer; and
``(C) the size of prizes awarded under this section
and the effectiveness of such prizes in stimulating
innovation.
``(2) Authorization of appropriations.--For the purpose of
carrying out this subsection, there are authorized to be
appropriated, and there are appropriated, $3,000,000 for fiscal
year 2018. Such funds shall remain available until expended.''.
SEC. 302. PUBLIC FUNDING FOR CLINICAL TRIALS.
(a) In General.--Part E of title IV of the Public Health Service
Act (42 U.S.C. 287 et seq.) is amended by adding at the end the
following:
``Subpart 6--Center for Clinical Research
``SEC. 485E. CENTER FOR CLINICAL RESEARCH.
``(a) In General.--There is established within the National
Institutes of Health the Center for Clinical Research, for the purpose
of conducting clinical trials on drugs, as described in subsection (b),
with the intention of obtaining approval of such drug under section 505
of the Federal Food, Drug, and Cosmetic Act or section 351 of this Act.
The Director of NIH shall appoint a Director of the Center for Clinical
Research referred to in this section as the `Director') not later than
90 days after the date of enactment of the Improving Access To
Affordable Prescription Drugs Act.
``(b) Clinical Trials.--
``(1) In general.--Each year, beginning not later than 1
year after the date of enactment of the Improving Access To
Affordable Prescription Drugs Act, the Director shall select at
least 2 molecules, compounds, drugs, or biological products and
conduct clinical trials on such molecules, compounds, drugs, or
biological products, or enter into contracts with other
entities to conduct such clinical trials.
``(2) Selection of drugs.--
``(A) Criteria.--The Director shall establish
criteria, which shall be made public, for acquiring the
patent rights for, and selecting, drugs under paragraph
(1) to ensure that the drugs selected for clinical
trials through the Center--
``(i) have the potential to address an
existing or emerging need, including drugs that
can be repurposed to treat a new condition in
the case of a national emergency; and
``(ii) are not solely drugs that private
sector researchers with access to all available
information on such drugs chose not to develop.
``(B) Process.--The Director shall secure all
patent rights to each drug selected under paragraph
(1), as applicable, and perform the clinical trials at
NIH or subcontract with another entity to conduct the
clinical trials.
``(c) Treatment of Approved Drugs.--If a drug for which clinical
trials have been conducted by the Center for Clinical Research is
approved by the Food and Drug Administration under section 505 of the
Federal Food, Drug, and Cosmetic Act or section 351 of this Act, the
Director shall--
``(1) execute non-exclusive licenses to allow drug
manufacturers to manufacture the drug; or
``(2) in collaboration with other Federal agencies as
appropriate, enter into purchasing contracts.
``(d) Public Information.--
``(1) Research data and findings.--Subject to applicable
patient privacy protections, the Secretary shall--
``(A)(i) submit all completed studies (and
terminated studies, if terminated for safety or ethical
reasons) for publication in a peer-reviewed publication
within 180 days of completion or termination; and
``(ii) if a study submitted as described in clause
(i) is not selected for publication, publicly disclose
all de-identified primary clinical data not later than
180 days after the Secretary's final decision not to
pursue further submissions for publication; and
``(B) publicly disclose all de-identified primary
clinical data upon publication of a study as described
in subparagraph (A)(i).
``(2) Financial information.--The Director shall make
public all costs to the Federal Government associated with
carrying out clinical trials by the Center for Clinical
Research and with subcontract agreements under this section.
``(e) Definition.--In this section, the term `drug' has the meaning
given such term in section 201(g) of the Federal Food, Drug, and
Cosmetic Act.
``(f) Appropriations.--For the purpose of carrying out this
section, in addition to any other funds available for such purpose,
there are authorized to be appropriated, and there are appropriated,
$1,000,000,000 for each of fiscal years 2017 through 2027, to remain
available until expended.''.
(b) Clerical Amendment.--Section 401(b) of the Public Health
Service Act (42 U.S.C. 281(b)) is amended--
(1) by redesignating paragraph (25) as paragraph (26); and
(2) by inserting after paragraph (24) the following:
``(25) The Center for Clinical Research.''.
SEC. 303. REWARDING INNOVATIVE DRUG DEVELOPMENT.
(a) Drug Exclusivity.--
(1) New chemical entity exclusivity.--
(A) In general.--Section 505(j)(5) of the Federal
Food, Drug, and Cosmetic Act (21 U.S.C. 355(j)(5)) is
amended--
(i) in subparagraph (B)--
(I) in clause (i), by inserting
``except that such approval may not be
made effective before the date that is
5 years after the date on which the
drug to which the application refers
was approved under subsection (c)''
before the period; and
(II) in clause (ii), by inserting
``except that such approval may not be
made effective before the date that is
5 years after the date on which the
drug to which the application refers
was approved under subsection (c)''
before the period; and
(ii) in subparagraph (F)(ii)--
(I) by striking ``expiration of
five years'' and inserting ``expiration
of 3 years'';
(II) by striking ``, except that
such an application may be submitted
under this subsection after the
expiration of four years from the date
of the approval of the subsection (b)
application if it contains a
certification of patent invalidity or
noninfringement described in subclause
(IV) of paragraph (2)(A)(vii)''; and
(III) by striking ``seven and one-
half years'' and inserting ``6 and one-
half years''.
(B) Conforming amendments.--Chapter V of the
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 351 et
seq.) is amended--
(i) in subsection (v)(2)(A)(i)(II) of
section 505, by inserting ``the 3-year
exclusivity period referred to'' before ``under
clause (ii) of subsection (j)(5)(F)'';
(ii) in subsections (b)(1)(A)(i)(I) and
(c)(1)(A)(i)(I) of section 505A--
(I) by striking ``five years'' each
place such term appears and inserting
``3 years'';
(II) by striking ``seven and one-
half years'' each place such term
appears and inserting ``6 and one-half
years''; and
(III) by striking ``eight years''
each place such term appears and
inserting ``7 years''; and
(iii) in section 505E, by striking ``the 4-
and 5-year periods described in subsections
(c)(3)(E)(ii) and (j)(5)(F)(ii) of section 505,
the 3-year periods described in clauses (iii)
and (iv) of subsection (c)(3)(E) and clauses
(iii) and (iv) of subsection (j)(5)(F)'' and
inserting ``the 4- and 5-year periods described
in subsection (c)(3)(E)(ii) of section 505, the
3-year periods described in clauses (iii) and
(iv) of subsection (c)(3)(E) and clauses (ii),
(iii), and (iv) of subsection (j)(5)(F)'';
(2) New clinical investigation exclusivity.--Section
505(c)(3)(E)(iv) of the Federal Food, Drug, and Cosmetic Act
(21 U.S.C. 355(c)(3)(E)(iv)) is amended by inserting ``, and
the supplement shows a significant clinical benefit over
existing therapies manufactured by the applicant in the 5-year
period preceding the submission of the application,'' before
``the Secretary''.
(3) Biological product exclusivity.--
(A) In general.--Section 351(k)(7)(A) of the Public
Health Service Act (42 U.S.C. 262(k)(7)(A)) is amended
by striking ``12 years'' and inserting ``7 years''.
(B) Conforming amendments.--Paragraphs (2)(A) and
(3)(A) of section 351(m) of the Public Health Service
Act (42 U.S.C. 262(m)) is amended by striking ``12
years'' each place it appears and inserting ``7
years''.
(b) Applicability.--The amendments made by subsection (a) apply
only with respect to a drug or biological product for which the listed
drug (as described in section 505(j)(7) of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 355(j)(7)) or reference product (as such term
is used in section 351 of the Public Health Service Act (42 U.S.C.
262)) is approved under section 505(c) of the Federal Food, Drug, and
Cosmetic Act or licensed under section 351(a) of the Public Health
Service Act, as applicable, on or after the date of enactment of this
Act.
(c) GAO Study.--Not later than 1 year after the date of enactment
of this Act, the Comptroller General of the United States shall conduct
a study and submit to Congress a report that includes--
(1)(A) the number of requests for designation as a drug for
a rare disease or condition under section 526 of the Federal
Food, Drug, and Cosmetic Act (21 U.S.C. 360bb) the Food and
Drug Administration receives each year in the previous 10-year
period;
(B) the number of such requests granted, denied, and
pending;
(C) the names of all drugs receiving such designation
during such period, including the date of approval and
indication for which market exclusivity was granted; and
(D) any drugs for which such designation has been revoked
or amended during such period;
(2) for each drug so designated as a drug for a rare
disease or condition in the previous 10-year period, the total
annual expenditures for such drugs under the Medicare program
under title XVIII of the Social Security Act (42 U.S.C. 1395 et
seq.) and the Medicaid program under title XIX of the Social
Security Act (42 U.S.C. 1396 et seq.), the number of Medicare
and Medicaid beneficiaries who used each such drug each year
during such time period, and any changes in price per unit
during such time period; and
(3) for a sample of drugs (selected by the Comptroller
General) so designated in the previous 10-year period, to the
extent feasible--
(A) gross revenues of the manufacturers with
respect to each such drug, and manufacturer spending
for marketing and patient assistance programs;
(B) the average price per drug and how those prices
changed over time for the selected drugs based on
industry drug pricing benchmarks; and
(C) the indications that were the basis of such
designation and other approved indications for the
drugs, and the indications for which each drug has most
commonly been used, including non-approved indications
for which the drug may be recommended by external
organizations such as physician or patient
organizations.
SEC. 304. IMPROVING PROGRAM INTEGRITY.
(a) In General.--Subchapter E of chapter V of the Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 360bbb et seq.) is amended by adding
at the end the following:
``SEC. 569D. CONDITIONS ON AWARD OF DRUG EXCLUSIVITY.
``(a) Termination of Exclusivity.--Notwithstanding any other
provision of this Act, any period of exclusivity described in
subsection (b) granted to a person or assigned to a person on or after
the date of enactment of this section with respect to a drug shall be
terminated if the person to which such exclusivity was granted or any
person to which such exclusivity is assigned commits a violation
described in subsection (c)(1) with respect to such drug.
``(b) Exclusivities Affected.--The periods of exclusivity described
in this subsection are those periods of exclusivity granted under any
of the following sections:
``(1) Clause (ii), (iii), or (iv) of section 505(c)(3)(E).
``(2) Clause (iv) of section 505(j)(5)(B).
``(3) Clause (ii), (iii), or (iv) of section 505(j)(5)(F).
``(4) Section 505A.
``(5) Section 505E.
``(6) Section 527.
``(7) Section 351(k)(7) of the Public Health Service Act.
``(8) Any other provision of this Act that provides for
market exclusivity (or extension of market exclusivity) with
respect to a drug.
``(c) Violations.--
``(1) In general.--A violation described in this subsection
is a violation of a law described in paragraph (2), enforced by
a Federal or State governmental entity that results in--
``(A) a criminal conviction of a person described
in subsection (a);
``(B) a civil judgment against a person described
in subsection (a); or
``(C) a settlement agreement in which a person
described in subsection (a) admits to fault.
``(2) Laws described.--The laws described in this paragraph
are the following:
``(A) The provisions of this Act that prohibit--
``(i) the adulteration or misbranding of a
drug;
``(ii) the making of false statements to
the Secretary or committing fraud; or
``(iii) the illegal marketing of a drug.
``(B) Section 3729 of title 31, United States Code.
``(C) Section 286 or 287 of title 18, United States
Code.
``(D) The Medicare and Medicaid Patient Protection
and Program Act of 1987 (commonly known as the
`Antikickback Statute').
``(E) Section 1927 of the Social Security Act.
``(F) A State law against fraud comparable to a law
described in subparagraphs (A) through (E).
``(d) Date of Exclusivity Termination.--The date on which the
exclusivity shall be terminated as described in subsection (a) is the
date on which, as applicable--
``(1) a final judgment is entered relating to a violation
described in subparagraph (A) or (B) of subsection (c)(1); or
``(2)(A) a settlement agreement described in subsection
(c)(1)(C) is approved by a court order that is or becomes final
and nonappealable; or
``(B) if there is no court order approving a settlement
agreement described in subsection (c)(1)(C), a court order
dismissing the applicable case, issued after the settlement
agreement, is or becomes final and nonappealable.
``(e) Reporting of Information.--
``(1) In general.--A person described in subsection (a)
that commits a violation described in subsection (c)(1) shall
report such violation to the Secretary no later than 30 days
after the date that--
``(A) a final judgment is entered relating to a
violation described in subparagraph (A) or (B) of
subsection (c)(1); or
``(B)(i) a settlement agreement described in
subsection (c)(1)(C) is approved by a court order that
is or becomes final and nonappealable; or
``(ii) if there is no court order approving a
settlement agreement described in subsection (c)(1)(C),
a court order dismissing the applicable case, issued
after the settlement agreement, is or becomes final and
nonappealable.
``(2) Civil penalty.--A person who fails to report a
violation as required under paragraph (1) shall be subject to a
civil penalty in the amount of $200,000 for each day the
failure to report continues, beginning with the day after the
date on which such report is due as described in paragraph
(1).''.
(b) FTC.--There are authorized to be appropriated to the Federal
Trade Commission such sums as may be necessary for the purpose of
carrying out activities related to addressing criminal activity and
anticompetitive practices by pharmaceutical companies.
TITLE IV--CHOICE AND COMPETITION
SEC. 401. PRESERVING ACCESS TO AFFORDABLE GENERICS.
(a) In General.--The Federal Trade Commission Act (15 U.S.C. 44 et
seq.) is amended by inserting after section 26 (15 U.S.C. 57c-2) the
following:
``SEC. 27. PRESERVING ACCESS TO AFFORDABLE GENERICS.
``(a) In General.--
``(1) Enforcement proceeding.--The Commission may initiate
a proceeding to enforce the provisions of this section against
the parties to any agreement resolving or settling, on a final
or interim basis, a patent infringement claim, in connection
with the sale of a drug product.
``(2) Presumption and violation.--
``(A) In general.--Subject to subparagraph (B), in
such a proceeding, an agreement shall be presumed to
have anticompetitive effects and be a violation of this
section if--
``(i) an ANDA filer receives anything of
value, including an exclusive license; and
``(ii) the ANDA filer agrees to limit or
forego research, development, manufacturing,
marketing, or sales of the ANDA product for any
period of time.
``(B) Exception.--Subparagraph (A) shall not apply
if the parties to such agreement demonstrate by clear
and convincing evidence that--
``(i) the value described in subparagraph
(A)(i) is compensation solely for other goods
or services that the ANDA filer has promised to
provide; or
``(ii) the procompetitive benefits of the
agreement outweigh the anticompetitive effects
of the agreement.
``(b) Limitations.--In determining whether the settling parties
have met their burden under subsection (a)(2)(B), the fact finder shall
not presume--
``(1) that entry would not have occurred until the
expiration of the relevant patent or statutory exclusivity; or
``(2) that the agreement's provision for entry of the ANDA
product prior to the expiration of the relevant patent or
statutory exclusivity means that the agreement is
procompetitive.
``(c) Exclusions.--Nothing in this section shall prohibit a
resolution or settlement of a patent infringement claim in which the
consideration granted by the NDA holder to the ANDA filer as part of
the resolution or settlement includes only one or more of the
following:
``(1) The right to market the ANDA product in the United
States prior to the expiration of--
``(A) any patent that is the basis for the patent
infringement claim; or
``(B) any patent right or other statutory
exclusivity that would prevent the marketing of such
drug.
``(2) A payment for reasonable litigation expenses not to
exceed $7,500,000.
``(3) A covenant not to sue on any claim that the ANDA
product infringes a United States patent.
``(d) Enforcement.--
``(1) Enforcement.--A violation of this section shall be
treated as a violation of section 5.
``(2) Judicial review.--
``(A) In general.--Any party that is subject to a
final order of the Commission, issued in an
administrative adjudicative proceeding under the
authority of subsection (a)(1), may, within 30 days of
the issuance of such order, petition for review of such
order in--
``(i) the United States Court of Appeals
for the District of Columbia Circuit;
``(ii) the United States Court of Appeals
for the circuit in which the ultimate parent
entity, as defined in section 801.1(a)(3) of
title 16, Code of Federal Regulations, or any
successor thereto, of the NDA holder is
incorporated as of the date that the NDA is
filed with the Commissioner of Food and Drugs;
or
``(iii) the United States Court of Appeals
for the circuit in which the ultimate parent
entity of the ANDA filer is incorporated as of
the date that the ANDA is filed with the
Commissioner of Food and Drugs.
``(B) Treatment of findings.--In a proceeding for
judicial review of a final order of the Commission, the
findings of the Commission as to the facts, if
supported by evidence, shall be conclusive.
``(e) Antitrust Laws.--Nothing in this section shall be construed
to modify, impair, or supersede the applicability of the antitrust laws
as defined in subsection (a) of the first section of the Clayton Act
(15 U.S.C. 12(a)), and of section 5 of this Act to the extent that
section 5 applies to unfair methods of competition. Nothing in this
section shall modify, impair, limit, or supersede the right of an ANDA
filer to assert claims or counterclaims against any person, under the
antitrust laws or other laws relating to unfair competition.
``(f) Penalties.--
``(1) Forfeiture.--Each party that violates or assists in
the violation of this section shall forfeit and pay to the
United States a civil penalty sufficient to deter violations of
this section, but in no event greater than 3 times the value
received by the party that is reasonably attributable to the
violation of this section. If no such value has been received
by the NDA holder, the penalty to the NDA holder shall be
sufficient to deter violations, but in no event greater than 3
times the value given to the ANDA filer reasonably attributable
to the violation of this section. Such penalty shall accrue to
the United States and may be recovered in a civil action
brought by the Commission, in its own name by any of its
attorneys designated by it for such purpose, in a district
court of the United States against any party that violates this
section. In such actions, the United States district courts are
empowered to grant mandatory injunctions and such other and
further equitable relief as they deem appropriate.
``(2) Cease and desist.--
``(A) In general.--If the Commission has issued a
cease and desist order with respect to a party in an
administrative adjudicative proceeding under the
authority of subsection (a)(1), an action brought
pursuant to paragraph (1) may be commenced against such
party at any time before the expiration of 1 year after
such order becomes final pursuant to section 5(g).
``(B) Exception.--In an action under subparagraph
(A), the findings of the Commission as to the material
facts in the administrative adjudicative proceeding
with respect to the violation of this section by a
party shall be conclusive unless--
``(i) the terms of such cease and desist
order expressly provide that the Commission's
findings shall not be conclusive; or
``(ii) the order became final by reason of
section 5(g)(1), in which case such finding
shall be conclusive if supported by evidence.
``(3) Civil penalty.--In determining the amount of the
civil penalty described in this section, the court shall take
into account--
``(A) the nature, circumstances, extent, and
gravity of the violation;
``(B) with respect to the violator, the degree of
culpability, any history of violations, the ability to
pay, any effect on the ability to continue doing
business, profits earned by the NDA holder,
compensation received by the ANDA filer, and the amount
of commerce affected; and
``(C) other matters that justice requires.
``(4) Remedies in addition.--Remedies provided in this
subsection are in addition to, and not in lieu of, any other
remedy provided by Federal law. Nothing in this paragraph shall
be construed to affect any authority of the Commission under
any other provision of law.
``(g) Definitions.--In this section:
``(1) Agreement.--The term `agreement' means anything that
would constitute an agreement under section 1 of the Sherman
Act (15 U.S.C. 1) or section 5 of this Act.
``(2) Agreement resolving or settling a patent infringement
claim.--The term `agreement resolving or settling a patent
infringement claim' includes any agreement that is entered into
within 30 days of the resolution or the settlement of the
claim, or any other agreement that is contingent upon, provides
a contingent condition for, or is otherwise related to the
resolution or settlement of the claim.
``(3) ANDA.--The term `ANDA' means an abbreviated new drug
application filed under section 505(j) of the Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 355(j)) or a new drug
application filed under section 505(b)(2) of the Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 355(b)(2)).
``(4) ANDA filer.--The term `ANDA filer' means a party that
owns or controls an ANDA filed with the Commission of Food and
Drugs or has the exclusive rights under such ANDA to distribute
the ANDA product.
``(5) ANDA product.--The term `ANDA product' means the
product to be manufactured under the ANDA that is the subject
of the patent infringement claim.
``(6) Drug product.--The term `drug product' has the
meaning given such term in section 314.3(b) of title 21, Code
of Federal Regulations (or any successor regulation).
``(7) NDA.--The term `NDA' means a new drug application
filed under section 505(b) of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 355(b)).
``(8) NDA holder.--The term `NDA holder' means--
``(A) the holder of an approved NDA application for
a drug product;
``(B) a person owning or controlling enforcement of
the patent listed in the Approved Drug Products With
Therapeutic Equivalence Evaluations (commonly known as
the `FDA Orange Book') in connection with the NDA; or
``(C) the predecessors, subsidiaries, divisions,
groups, and affiliates controlled by, controlling, or
under common control with any of the entities described
in subparagraphs (A) and (B) (such control to be
presumed by direct or indirect share ownership of 50
percent or greater), as well as the licensees,
licensors, successors, and assigns of each of the
entities.
``(9) Party.--The term `party' means any person,
partnership, corporation, or other legal entity.
``(10) Patent infringement.--The term `patent infringement'
means infringement of any patent or of any filed patent
application, extension, reissue, renewal, division,
continuation, continuation in part, reexamination, patent term
restoration, patents of addition, and extensions thereof.
``(11) Patent infringement claim.--The term `patent
infringement claim' means any allegation made to an ANDA filer,
whether or not included in a complaint filed with a court of
law, that its ANDA or ANDA product may infringe any patent held
by, or exclusively licensed to, the NDA holder of the drug
product.
``(12) Statutory exclusivity.--The term `statutory
exclusivity' means those prohibitions on the approval of drug
applications under clauses (ii) through (iv) of section
505(c)(3)(E) (5- and 3-year data exclusivity), section 527
(orphan drug exclusivity), or section 505A (pediatric
exclusivity) of the Federal Food, Drug, and Cosmetic Act (21
U.S.C. 355(c)(3)(E), 360cc, 355a).''.
(b) Effective Date.--Section 27 of the Federal Trade Commission
Act, as added by this section, shall apply to all agreements described
in section 27(a)(1) of that Act entered into after June 17, 2013.
Section 27(f) of the Federal Trade Commission Act, as added by this
section, shall apply to agreements entered into on or after the date of
enactment of this Act.
SEC. 402. 180-DAY EXCLUSIVITY PERIOD AMENDMENTS REGARDING FIRST
APPLICANT STATUS.
(a) Amendments to Federal Food, Drug, and Cosmetic Act.--
(1) In general.--Section 505(j)(5)(B) of the Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 355(j)(5)(B)) is amended--
(A) in clause (iv)(II)--
(i) by striking item (bb); and
(ii) by redesignating items (cc) and (dd)
as items (bb) and (cc), respectively; and
(B) by adding at the end the following:
``(v) First applicant defined.--As used in this subsection,
the term `first applicant' means an applicant--
``(I)(aa) that, on the first day on which a
substantially complete application containing a
certification described in paragraph (2)(A)(vii)(IV) is
submitted for approval of a drug, submits a
substantially complete application that contains and
lawfully maintains a certification described in
paragraph (2)(A)(vii)(IV) for the drug; and
``(bb) that has not entered into a disqualifying
agreement described under clause (vii)(II); or
``(II)(aa) for the drug that is not described in
subclause (I) and that, with respect to the applicant
and drug, each requirement described in clause (vi) is
satisfied; and
``(bb) that has not entered into a disqualifying
agreement described under clause (vii)(II).
``(vi) Requirement.--The requirements described in this
clause are the following:
``(I) The applicant described in clause (v)(II)
submitted and lawfully maintains a certification
described in paragraph (2)(A)(vii)(IV) or a statement
described in paragraph (2)(A)(viii) for each unexpired
patent for which a first applicant described in clause
(v)(I) had submitted a certification described in
paragraph (2)(A)(vii)(IV) on the first day on which a
substantially complete application containing such a
certification was submitted.
``(II) With regard to each such unexpired patent
for which the applicant described in clause (v)(II)
submitted a certification described in paragraph
(2)(A)(vii)(IV), no action for patent infringement was
brought against such applicant within the 45-day period
specified in paragraph (5)(B)(iii); or if an action was
brought within such time period, such an action was
withdrawn or dismissed by a court (including a district
court) without a decision that the patent was valid and
infringed; or if an action was brought within such time
period and was not withdrawn or so dismissed, such
applicant has obtained the decision of a court
(including a district court) that the patent is invalid
or not infringed (including any substantive
determination that there is no cause of action for
patent infringement or invalidity, and including a
settlement order or consent decree signed and entered
by the court stating that the patent is invalid or not
infringed).
``(III) If an applicant described in clause (v)(I)
has begun commercial marketing of such drug, the
applicant described in clause (v)(II) does not begin
commercial marketing of such drug until the date that
is 30 days after the date on which the applicant
described in clause (v)(I) began such commercial
marketing.''.
(2) Conforming amendment.--Section 505(j)(5)(D)(i)(IV) of
the Federal Food, Drug, and Cosmetic Act (21 U.S.C.
355(j)(5)(D)(i)(IV)) is amended by striking ``The first
applicant'' and inserting ``The first applicant, as defined in
subparagraph (B)(v)(I),''.
(b) Applicability.--The amendments made by subsection (a) shall
apply only with respect to an application filed under section 505(j) of
the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(j)) to which
the amendments made by section 1102(a) of the Medicare Prescription
Drug, Improvement, and Modernization Act of 2003 (Public Law 108-173)
apply.
SEC. 403. 180-DAY EXCLUSIVITY PERIOD AMENDMENTS REGARDING AGREEMENTS TO
DEFER COMMERCIAL MARKETING.
(a) Amendments to Federal Food, Drug, and Cosmetic Act.--
(1) Limitations on agreements to defer commercial marketing
date.--Section 505(j)(5)(B) of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 355(j)(5)(B)), as amended by section
402, is further amended by adding at the end the following:
``(vii) Agreement by first applicant to defer commercial
marketing; limitation on acceleration of deferred commercial
marketing date.--
``(I) Agreement to defer approval or commercial
marketing date.--An agreement described in this
subclause is an agreement between a first applicant and
the holder of the application for the listed drug or an
owner of one or more of the patents as to which any
applicant submitted a certification qualifying such
applicant for the 180-day exclusivity period whereby
that applicant agrees, directly or indirectly, (aa) not
to seek an approval of its application that is made
effective on the earliest possible date under this
subparagraph, subparagraph (F) of this paragraph,
section 505A, or section 527, (bb) not to begin the
commercial marketing of its drug on the earliest
possible date after receiving an approval of its
application that is made effective under this
subparagraph, subparagraph (F) of this paragraph,
section 505A, or section 527, or (cc) to both items
(aa) and (bb).
``(II) Agreement that disqualifies applicant from
first applicant status.--An agreement described in this
subclause is an agreement between an applicant and the
holder of the application for the listed drug or an
owner of one or more of the patents as to which any
applicant submitted a certification qualifying such
applicant for the 180-day exclusivity period whereby
that applicant agrees, directly or indirectly, not to
seek an approval of its application or not to begin the
commercial marketing of its drug until a date that is
after the expiration of the 180-day exclusivity period
awarded to another applicant with respect to such drug
(without regard to whether such 180-day exclusivity
period is awarded before or after the date of the
agreement).
``(viii) Limitation on acceleration.--If an agreement
described in clause (vii)(I) includes more than 1 possible date
when an applicant may seek an approval of its application or
begin the commercial marketing of its drug--
``(I) the applicant may seek an approval of its
application or begin such commercial marketing on the
date that is the earlier of--
``(aa) the latest date set forth in the
agreement on which that applicant can receive
an approval that is made effective under this
subparagraph, subparagraph (F) of this
paragraph, section 505A, or section 527, or
begin the commercial marketing of such drug,
without regard to any other provision of such
agreement pursuant to which the commercial
marketing could begin on an earlier date; or
``(bb) 180 days after another first
applicant begins commercial marketing of such
drug; and
``(II) the latest date set forth in the agreement
on which that applicant can receive an approval that is
made effective under this subparagraph, subparagraph
(F) of this paragraph, section 505A, or section 527, or
begin the commercial marketing of such drug, without
regard to any other provision of such agreement
pursuant to which commercial marketing could begin on
an earlier date, shall be the date used to determine
whether an applicant is disqualified from first
applicant status pursuant to clause (vii)(II).''.
(2) Notification of fda.--Section 505(j) of the Federal
Food, Drug, and Cosmetic Act (21 U.S.C. 355(j)) is amended by
adding at the end the following:
``(11)(A) The holder of an abbreviated application under this
subsection shall submit to the Secretary a notification that includes--
``(i)(I) the text of any agreement entered into by such
holder described under paragraph (5)(B)(vii)(I); or
``(II) if such an agreement has not been reduced to text, a
written detailed description of such agreement that is
sufficient to disclose all the terms and conditions of the
agreement; and
``(ii) the text, or a written detailed description in the
event of an agreement that has not been reduced to text, of any
other agreements that are contingent upon, provide a contingent
condition for, or are otherwise related to an agreement
described in clause (i).
``(B) The notification described under subparagraph (A) shall be
submitted not later than 10 business days after execution of the
agreement described in subparagraph (A)(i). Such notification is in
addition to any notification required under section 1112 of the
Medicare Prescription Drug, Improvement, and Modernization Act of 2003.
``(C) Any information or documentary material filed with the
Secretary pursuant to this paragraph shall be exempt from disclosure
under section 552 of title 5, United States Code, and no such
information or documentary material may be made public, except as may
be relevant to any administrative or judicial action or proceeding.
Nothing in this paragraph is intended to prevent disclosure to either
body of the Congress or to any duly authorized committee or
subcommittee of the Congress.''.
(3) Prohibited acts.--Section 301(e) of the Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 331(e)) is amended by
striking ``505 (i) or (k)'' and inserting ``505 (i), (j)(11),
or (k)''.
(b) Infringement of Patent.--Section 271(e) of title 35, United
States Code, is amended by adding at the end the following:
``(7) The exclusive remedy under this section for an infringement
of a patent for which the Secretary of Health and Human Services has
published information pursuant to subsection (b)(1) or (c)(2) of
section 505 of the Federal Food, Drug, and Cosmetic Act shall be an
action brought under this subsection within the 45-day period described
in subsection (j)(5)(B)(iii) or (c)(3)(C) of section 505 of the Federal
Food, Drug, and Cosmetic Act.''.
(c) Applicability.--
(1) Limitations on acceleration of deferred commercial
marketing date.--The amendment made by subsection (a)(1) shall
apply only with respect to--
(A) an application filed under section 505(j) of
the Federal Food, Drug, and Cosmetic Act (21 U.S.C.
355(j)) to which the amendments made by section 1102(a)
of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (Public Law 108-173) apply;
and
(B) an agreement described under section
505(j)(5)(B)(vii)(I) of the Federal Food, Drug, and
Cosmetic Act (as added by subsection (a)(1)) executed
after the date of enactment of this Act.
(2) Notification of fda.--The amendments made by paragraphs
(2) and (3) of subsection (a) shall apply only with respect to
an agreement described under section 505(j)(5)(B)(vii)(I) of
the Federal Food, Drug, and Cosmetic Act (as added by
subsection (a)(1)) executed after the date of enactment of this
Act.
SEC. 404. INCREASING GENERIC DRUG COMPETITION.
(a) Listing of Generic Drugs at List of Being in Shortage.--Chapter
V of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 351 et seq.)
is amended by inserting after section 506E the following:
``SEC. 506E-1. LISTING OF GENERIC DRUGS.
``(a) Database for Manufacturers of Generic Drugs.--The
Commissioner shall--
``(1) not later than 9 months after the date of enactment
of the Improving Access To Affordable Prescription Drugs Act,
publish a complete, up-to-date list on the Internet website of
the Food and Drug Administration of all generic drugs
(including drug trade name, active pharmaceutical ingredient
manufacturer, active finished dosage form manufacturer, any
contract manufacturing organization, the date the authorized
generic drug entered the market, and marketing status);
``(2) designate each drug on the list that is a sole-source
drug; and
``(3) maintain a confidential list of the identity and
address of each manufacturer and labeler associated with a drug
reported under this section, and publicly report on the website
only the city and State or country of each such manufacturer
and labeler.
``(b) Public Health Exception.--The Commissioner may choose not to
make information collected under subsection (a) publicly available if
the Secretary determines that disclosure of such information would
adversely affect the public health (such as by increasing the
possibility of hoarding or other disruption of the availability of drug
products to patients).
``(c) Notification.--The Commissioner shall notify relevant Federal
agencies, including the Centers for Medicare & Medicaid Services and
the Federal Trade Commission, when the Commissioner first publishes the
information under subsection (a) that the information has been
published and will be updated regularly.
``(d) Definitions.--In this section:
``(1) The term `manufacturer' means a person engaged in the
manufacture of an active pharmaceutical ingredient or finished
dosage form, as defined in section 744A.
``(2) The term `sole-source' means--
``(A) A drug for which there is only one approved
manufacturer listed in the active section of the
Approved Drug Products With Therapeutic Equivalence
Evaluations (commonly known as the `FDA Orange Book');
and
``(B) for which there are no blocking patents or
exclusivities that may receive expedited review, except
where the drug was approved pursuant to a suitability
petition under section 505(j)(2)(C).''.
(b) Report on Contracts.--Section 510(j) of the Federal Food, Drug,
and Cosmetic Act (21 U.S.C. 360(j)) is amended by adding at the end the
following:
``(5) Each person who registers with the Secretary under this
section shall report to the Secretary any contract with a contract
manufacturing organization with respect to any drug such person
manufacturers, distributes, or compounds, including the start date and
end date of such contract.''.
(c) Discontinuance or Interruption in the Production of Life-Saving
Drugs.--Section 506C(a) of the Federal Food, Drug, and Cosmetic Act (21
U.S.C. 356c(a)) is amended by striking ``of a drug--'' and all that
follows through the end of paragraph (2) and inserting ``of a drug''.
(d) Decrease in Manufacturers of Drugs.--Chapter V of the Federal
Food, Drug, and Cosmetic Act (21 U.S.C. 351 et seq.) is amended by
inserting after section 506C-1 the following:
``SEC. 506C-2. DECREASE IN MANUFACTURERS OF GENERIC DRUGS.
``(a) In General.--If the Secretary determines that the number of
manufacturers of a drug approved under section 505 or a biological
product licensed under section 351 is less than 2, the Secretary may--
``(1) with respect to a manufacturer with fewer than 500
employees, including employees of affiliates of the
manufacturer, waive the prescription drug application fees
under sections 736(a), 744B(a), or 744H(a);
``(2) expedite the review of applications for the drug
under section 505(j) or section 351(k) of the Public Health
Service Act until the number of manufacturers of the drug is at
least 4; and
``(3) after consultation with the Federal Trade Commission
to ensure that the manufacturer has not engaged in
anticompetitive tactics to remove other manufacturers from the
market in order to incentivize such a contract, establish and
prioritize purchase contracts with manufacturers who are
holders of applications approved under section 505(j) or
section 351(k) of the Public Health Service Act for the drug
but who are not currently manufacturing such drug.
``(b) Guidelines for Purchase Contracts.--
``(1) In general.--The Secretary shall promulgate
regulations to establish guidelines for the drugs with respect
to which the Secretary may establish purchase contracts in
accordance with subsection (a)(3). Such guidelines shall
provide that any such purchase contract may be only with
respect to a drug that is listed as an essential medicine by
the World Health Organization, or another external entity, as
the Secretary may specify, that meets evidence-based standards
as the Secretary may require.
``(2) Pricing.--If a manufacturer enters into purchase
contract in accordance with subsection (a)(3), the Secretary,
in cooperation with the Office of the Inspector General, shall
establish a limit on the retail price at which the drug may be
made available to consumers in the United States.''.
SEC. 405. DISALLOWANCE OF DEDUCTION FOR ADVERTISING FOR PRESCRIPTION
DRUGS.
(a) In General.--Part IX of subchapter B of chapter 1 of subtitle A
of the Internal Revenue Code of 1986 (relating to items not deductible)
is amended by adding at the end the following new section:
``SEC. 280I. DISALLOWANCE OF DEDUCTION FOR DIRECT-TO-CONSUMER
ADVERTISING OF PRESCRIPTION DRUGS.
``(a) In General.--No deduction shall be allowed under this chapter
for expenses relating to direct-to-consumer advertising of prescription
drugs for any taxable year.
``(b) Direct-to-Consumer Advertising.--For purposes of this
section, the term `direct-to-consumer advertising' means any
dissemination, by or on behalf of a sponsor of a prescription drug
product (as such term is defined in section 735(3) of the Federal Food,
Drug, and Cosmetic Act), of an advertisement which--
``(1) is in regard to such prescription drug product, and
``(2) primarily targeted to the general public, including
through--
``(A) publication in journals, magazines, other
periodicals, and newspapers,
``(B) broadcasting through media such as radio,
television, telephone communication systems, direct
mail, and billboards,
``(C) dissemination on the Internet (including
social media); and
``(D) manufacturer patient assistance programs, as
defined in section 399V-7 of the Public Health Service
Act.''.
(b) Conforming Amendment.--The table of sections for such part IX
of the Internal Revenue Code of 1986 is amended by adding after the
item relating to section 280H the following new item:
``Sec. 280I. Disallowance of deduction for direct-to-consumer
advertising of prescription drugs.''.
(c) Effective Date.--The amendments made by this section shall
apply to amounts paid or incurred after the date of the enactment of
this Act, in taxable years ending after such date.
SEC. 406. PRODUCT HOPPING.
(a) Definitions.--In this section--
(1) the term ``biological product'' has the meaning given
that term in section 351 of the Public Health Service Act (42
U.S.C. 262);
(2) the term ``drug'' has the meaning given that term in
section 201 of the Federal Food, Drug, and Cosmetic Act (21
U.S.C. 321); and
(3) the term ``product hopping'' means a circumstance in
which--
(A) a manufacturer reformulates a drug or
biological product in such a way that allows the
manufacturer to submit a new drug application under
section 505(b) of the Federal Food, Drug, and Cosmetic
Act (21 U.S.C. 355(b)) or new application for a license
under section 351(a) of the Public Health Service Act
(42 U.S.C. 262(a)) with respect to such new
formulation;
(B) the new formulation described in subparagraph
(A) is intended for the treatment of the same medical
condition as the drug or biological product that was
reformulated; and
(C) actions are taken to reduce or eliminate demand
for the original drug or biological product.
(b) Report.--The Federal Trade Commission shall submit to Congress
a report on the extent to which--
(1) manufacturers of drugs and biological products engage
in product hopping, including an analysis of the timing of the
introduction of the reformulated product relative to the market
entry of a drug approved under section 505(j) of the Federal
Food, Drug, and Cosmetic Act or biological product licensed
under section 351(k) of the Public Health Service Act, the
types of changes made in the new product, the patents and
market exclusivities awarded to reformulated products, and the
various forms of product hopping manufacturers employ;
(2) manufacturers assess the profitability of a new product
based whether it launches before (or how long before) generic
entry occurs on the original product;
(3) the effect of product-hopping behavior on consumers,
including the total estimated annual cost to consumers of
physicians prescribing the substituted drug in place of a
generic version of the original product;
(4) the effect of product-hopping on insurance prices and
availability, including cost increases and coverage reductions
attributable to the economic losses described in paragraph (3);
(5) product hopping affects manufacturer profits, revenues,
unit sales, and prices; and
(6) product hopping affects the unit sales, manufacturer
profits, and prices of the generic version of the original
product.
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