108th CONGRESS
1st Session
H. R. 194
To amend title XVIII of the Social Security Act with respect to reform
of payment for drugs and biologicals under the Medicare Program.
IN THE HOUSE OF REPRESENTATIVES
January 7, 2003
Mr. STARK introduced the following bill; which was referred to the Committee
on Energy and Commerce, and in addition to the Committee on Ways and Means,
for a period to be subsequently determined by the Speaker, in each case for
consideration of such provisions as fall within the jurisdiction of the committee
concerned
A BILL
To amend title XVIII of the Social Security Act with respect to reform
of payment for drugs and biologicals under the Medicare Program.
Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the `Medicare Market Acquisition Drug Price Act of
2003'.
SEC. 2. REFORM OF PAYMENT FOR DRUGS AND BIOLOGICALS UNDER THE MEDICARE PROGRAM.
(1) IN GENERAL- Section 1842(o) of the Social Security Act (42 U.S.C. 1395u(o))
is amended to read as follows:
`(o) PAYMENT FOR DRUGS AND BIOLOGICALS-
`(1) GENERAL RULE- If a physician's, supplier's, or any other person's bill
or request for payment for services includes a charge for a drug or biological
for which payment may be made under this part and the drug or biological
is not paid on a cost or prospective payment basis as otherwise provided
in this part, the amount payable for the drug or biological shall be based
on the following:
`(A) MULTI-SOURCE (GENERIC) DRUGS- In the case of a drug or biological
that meets the requirements for a multi-source drug under subclauses (I)
and (II) of section 1927(k)(7)(A)(i), 105 percent of the volume-weighted
median average acquisition price for any drug or biological covered under
the same medicare HCPCS code.
`(B) SINGLE SOURCE (BRAND) DRUGS AND BIOLOGICALS- In the case of a drug
or biological that meets the requirements for a single source drug under
section 1927(k)(7)(A)(iv), 105 percent of the average acquisition price
for the drug or biological.
`(C) ACCESS EXCEPTION- The Secretary may modify the rate otherwise applicable
in order to assure access to necessary drugs and biologicals in the case
of sole community providers in rural and other areas where the providers
are not reasonably able to obtain the drugs and biologicals at the payment
rates otherwise applicable. Such modification shall not result in a change
of more than 15 percent of the rate otherwise applicable.
`(D) DATA-RELATED EXCEPTION- If the Secretary determines that there is
insufficient data available with respect to compute an average acquisition
price for a drug or biological for a quarter or that, because of a significant
change in price from quarter-to-quarter, the available data on the average
acquisition price does not accurately reflect the actual, current acquisition
cost for the drug or biological, the Secretary may substitute for the
quarters involved an appropriate payment for the drug or biological for
such average acquisition price.
`(E) APPLICATION OF NDC CODES- If the Secretary determines that it is
appropriate to provide for payment under this subsection using national
drug code (NDC) instead of HCPCS codes, in applying subparagraph (A) the
reference to the same HCPCS code shall be deemed a reference to the appropriate
national drug codes for those drugs or biologicals that are therapeutically
and pharmaceutically equivalent and bioequivalent (as defined for purposes
of section 1927(k)(7)(A)).
`(2) DEFINITION OF AVERAGE ACQUISITION PRICE-
`(A) IN GENERAL- For purposes of this subsection, the term `average acquisition
price' means, with respect to a drug or biological and with respect to
each dosage form and strength of the drug or biological product (without
regard to any special packaging, labeling, or identifiers on the dosage
form or product or package), the average of all final sales prices charged
by the manufacturer of the drug or biological product in the United States,
excluding sales exempt from inclusion in the calculation of best price
under section 1927(c)(1)(C) (other than under clause (ii)(III) of such
section) and excluding sales subject to a rebate under section 1927, as
reported under paragraph (3).
`(B) NET PRICE- Such average acquisition price shall be calculated net
of all of the following (as estimated by the Secretary):
`(ii) Prompt pay discounts and cash discounts.
`(iv) Short-dated product discounts (for spoilage and other factors).
`(v) Free goods and services.
`(vii) All other price concessions provided by the drug manufacturer.
The Secretary may make subsequent adjustments in such average acquisition
price to take into account updated information and differences between
the price previously estimated and the actual average acquisition price.
`(C) WEIGHTING- The average of all final sales prices described in subparagraph
(A) shall be determined by dividing--
`(i) the sum of all final prices charged by the manufacturer (net of
the adjustments made under subparagraph (B)) for sales in the period
involved that are included in subparagraph (A) for the drug or biological,
by
`(ii) the total number of units of such sales in the period.
`(D) DISTRIBUTION OF REPORTS- The Secretary shall promptly distribute
applicable payment rates under this subsection to carriers and fiscal
intermediaries and other contractors that make payment for drugs and biologicals
under this section in order to apply a uniform reimbursement rate under
this section.
`(3) PRICE REPORTING REQUIREMENT-
`(A) IN GENERAL- As a condition for payment for any drug or biological
of a manufacturer under this subsection, the manufacturer of the drug
or biological shall--
`(i) report, on a quarterly basis, to the Secretary (or the Secretary's
designee)
the manufacturer's average acquisition price and the information required
under subparagraph (C) for all drugs and biologicals of the manufacturer by
national drug code (NDC);
`(ii) maintain such records (in written or electronic form) regarding
such sales and prices for all such drugs and biologicals as may be necessary
to audit the information so reported or required to be reported; and
`(iii) provide the Secretary with access to such records in order to
permit the Secretary to audit information so reported or required to
be reported.
`(B) PENALTIES- The provisions of section 1927(b)(3)(C) shall apply with
respect to the reporting of information under subparagraph (A) in the
same manner as it applies to the reporting of information under section
1927(b)(3)(A), except that the reference in clause (i) of such section
to $10,000 is deemed a reference to $100,000 and any reference to a suspension
of an agreement is deemed a reference to a suspension of payment for the
drug or biological involved under this part. The Secretary shall promptly
refer to the Inspector General of the Department of Health and Human Services
and, if appropriate, to appropriate officials in the Department of Justice
cases in which the Secretary becomes aware of a false price representation
made in the information submitted under this paragraph.
`(C) FORM OF REPORTING- Information required to be reported under subparagraph
(A)(i) shall be reported in a form and manner specified by the Secretary.
The information required to be reported shall include the identification
of the generic name of the drug or biological and its brand name (if any),
the national drug code (NDC) and the HCPCS code assigned to the drug or
biological, the dosage form, strength, volume, and package size involved.
The information for a quarter shall be submitted not later than 30 days
after the end of the quarter. The information shall be accompanied by
a written and signed certification by an officer of the manufacturer attesting
to the accuracy of the information reported. Such information shall include
updated information on the net price realized (taking into account rebates
and other amounts affecting net price), regardless of the period for which
such a rebate or other adjustment in net price might have been earned.
`(D) AUDITING- The Secretary shall audit on a periodic basis information
reported or required to be reported under this paragraph. The Secretary
may conduct such independent price gathering activities, such as surveys
and review of published catalog information or other transactional information,
as may be appropriate to verify the accuracy of the information reported.
`(4) DISPENSING FEE- If payment for a drug or biological is made to a licensed
pharmacy approved to dispense drugs or biologicals under this part, the
Secretary shall pay a dispensing fee (less the applicable deductible and
coinsurance amounts) to the pharmacy. Such a dispensing fee shall be subject
to adjustment from year to year based upon changes in the consumer price
index over time and may be adjusted as the Secretary determines to be appropriate
to reflect differences in the costs of dispensing different drugs and biologicals.
`(5) PAYMENT REQUIRED ON AN ASSIGNMENT-RELATED BASIS-
`(A) IN GENERAL- Payment for a charge for any drug or biological for which
payment may be made under this part may be made only on an assignment-related
basis.
`(B) APPLICATION OF ENFORCEMENT PROVISIONS- The provisions of subsection
(b)(18)(B) shall apply to charges for such drugs or biologicals in the
same manner as they apply to services furnished by a practitioner described
in subsection (b)(18)(C).'.
(2) EFFECTIVE DATE- Subject to subsection (c)(2), the amendment made by
paragraph (1) shall apply to drugs and biologicals furnished on or after
January 1, 2004.
(b) REVISION IN PRACTICE EXPENSE PAYMENTS-
(1) ADJUSTMENT IN ONCOLOGIST MEDICAL SUPPLY EXPENSES- In computing the practice
expense component of the physician fee schedule under section 1848 of the
Social Security Act (42 U.S.C. 1395w.FF094) with respect to payment for
services of oncologists, the Secretary of Health and Human Services shall
make adjustments to oncologists' reported medical supply expenses in order
to ensure that such expenses better reflect the actual supply costs of providing
such services.
(2) ALLOCATION OF INDIRECT EXPENSES- In establishing such fee schedule,
the Secretary shall change the allocation of indirect expenses in a manner
so that all services, including services without direct physician involvement,
are allocated the appropriate share of indirect expenses.
(3) SERVICES WITHOUT DIRECT PHYSICIAN INVOLVEMENT- In establishing such
fee schedule, the Secretary shall calculate payments, for those services
without direct physician involvement under the basic method, using information
on the resources required for each services and, if deemed necessary, shall
validate the underlying resource-based estimates of direct practice expenses
required to provide each service.
(4) BUDGET NEUTRAL ADJUSTMENT- The changes in payment made by this subsection
shall not be treated as a change in law or regulation described in section
1848(f)(2)(D) of the Social Security Act (42 U.S.C. 1395w.FF094(f)(2)(D)).
(5) EFFECTIVE DATE- The provisions of this subsection apply to payments
for services furnished on or after January 1, 2004.
(c) STUDY OF PAYMENTS FOR BLOOD CLOTTING FACTORS AND OTHER BIOLOGICALS-
(1) IN GENERAL- The Secretary of Health and Human Services shall provide
for a study of the appropriateness of the medicare payment methodology for
blood clotting factors and other biologicals under part B of title XVIII
of the Social Security Act. Not later than 9 months after the date of the
enactment of this Act, the Secretary shall submit to Congress a report on
such study and shall include in such report recommendations regarding whether
to apply the payment methodology provided under the amendment made by subsection
(a)(1) and alternative recommendations for appropriate dispensing fees.
(2) DELAY IN EFFECTIVE DATE- The amendment made by subsection (a)(1) shall
not apply to blood clotting factors furnished before the first day of the
first calendar year that begins at least 6 months after the date the report
under paragraph (1) has been submitted to the Congress..0D
END
