To amend part D of title XVIII of the Social Security Act to provide for the offering of a Federal national prescription drug discount card program.

July 22, 2004

Mr. ALLEN (for himself and Mr. MICHAUD) 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

To amend part D of title XVIII of the Social Security Act to provide for the offering of a Federal national prescription drug discount card program.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE; FINDINGS.

(a) Short Title- This Act may be cited as the `Medicare Drug Card Guaranteed Savings Act'.

(b) Findings- Congress finds the following:

(1) Americans who buy their own prescription drugs often pay twice as much for prescription drugs as consumers in foreign nations or as the price the Department of Veterans Affairs obtains by negotiating directly with the pharmaceutical manufacturers. In some cases, older Americans pay 10 times more for prescription drugs than such customers. Prescription drug prices have increased 3.4 percent during the first quarter of 2004, nearly three times the rate of inflation.

(2) The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Public Law No: 108-173) established a program for the endorsement of medicare drug discount card programs in order to provide for reduced prices for drugs for medicare beneficiaries and provide a subsidy for low-income medicare beneficiaries.

(3) There are currently more than 70 endorsed medicare drug discount card programs. Medicare drug discount card programs can change the drugs that they offer and the size of the discounts every seven days. Medicare beneficiaries are allowed to change their current medicare drug discount card program only once, during an annual enrollment period between November 15 and December 31, 2004.

(4) Enrollment in medicare drug discount card programs has been less than projected due to the complexity of the programs, the limited number of drugs covered under most programs, the changing prescription drug needs of beneficiaries, and beneficiaries' concern that the programs do not guarantee real savings on prescription drug purchases. As of July 19, 2004, fewer than 14 percent of low-income medicare beneficiaries who qualify for the $600 subsidy under the law have enrolled in a medicare drug discount card program.

(5) Currently, medicare discount drug card sponsors are required to pass on to enrollees only an undefined `share' of the rebates they secure from drug manufacturers and card sponsors can use the remaining savings for administrative costs and profit. The law does not require the sponsors to reveal to enrollees the size of the rebates secured from drug manufacturers or to disclose what portion of those rebates are kept by the sponsors and not passed on to enrollees.

(6) There is a need for a Federal national medicare prescription drug discount card program that offers guaranteed discounts on all prescription drugs and that aggregates the buying power of all medicare beneficiaries in order to negotiate significant reductions in price.

SEC. 2. OFFERING OF FEDERAL NATIONAL PRESCRIPTION DRUG DISCOUNT CARD PROGRAM.

(a) Offering of Program-

(1) IN GENERAL- Subsection (a)(1) of section 1860D-31 of the Social Security Act (42 U.S.C. 1395w-141) is amended--

(A) by striking `and' at the end of subparagraph (A);

(B) by striking the period at the end of subparagraph (B) and inserting `; and'; and

(C) by adding at the end the following new subparagraph:

`(C) to provide for the offering of a Federal national prescription drug discount card program that is available for discount card eligible individuals throughout the United States (including the territories) and that meets the requirements under subsection (l)(1) in addition to the requirements otherwise applicable to an endorsed discount card program.'.

(2) EXCLUSIVE PROGRAM IN 2005- Subsection (c)(1)(C) of such section is amended--

(A) in clause (i), by striking `clauses (ii) and (iii)' and inserting `clauses (ii) through (iv)'; and

(B) by adding at the end the following new clause:

`(iv) LIMITATION TO ENROLLMENT IN FEDERAL NATIONAL PRESCRIPTION DRUG DISCOUNT CARD PROGRAM IN 2005- Notwithstanding any other provision of this section, for periods beginning with January 1, 2005, the only discount card program in which an individual may be enrolled under this section shall be the Federal national prescription drug discount card program described in subsection (l). Individuals enrolled in another program as of December 31, 2004, who do not affirmatively disenroll from all discount card programs under this section are deemed to be enrolled in such Federal national prescription drug discount card program.'.

(b) Additional Program Requirements- Such section is further amended by adding at the end the following new subsection:

`(l) Provisions Relating to Federal National Prescription Drug Discount Card Program-

`(1) ADDITIONAL REQUIREMENTS- The Federal national prescription drug discount card program described in subsection (a)(1)(C) shall also meet the following requirements:

`(A) DISCOUNTED PRICES- Through direct negotiations with prescription drug manufacturers, the discounted prices offered under the program shall be less than prices otherwise available in the retail market. Through such negotiations, the Secretary shall obtain discounted prices that are at least as low as the manufacturer's average foreign price (as defined in paragraph (3)) for the drug involved.

`(B) PASSING THROUGH ALL SAVINGS- The full amount of discounted savings are passed through to enrollees.

`(C) FEE FOR CARD- The annual fee for enrollment in the program shall be $30 (except as provided under subparagraphs (E) through (G) of subsection (c)(1)), which fees shall be available to the Secretary for administrative expenses in offering such program.

`(D) NATIONAL AVAILABILITY- The program shall be made available to individuals residing anyplace in the United States.

`(E) HANDLING FEE FOR PHARMACISTS- The program shall be designed to provide for a reasonable handling fee for pharmacists in connection with the provision of drugs obtained under the program and shall be approximately equal to the average handling fee for pharmacists of other large insurance plans that administer drug benefits.

`(2) OVERSIGHT- The oversight authority of the Secretary under subsection (i)(2) with respect to such Federal national prescription drug discount card program shall be exercised by the Inspector General of the Department of Health and Human Services.

`(3) AVERAGE FOREIGN PRICE DEFINED-

`(A) IN GENERAL- For purposes of this subsection, the term `average foreign price' means, with respect to a covered discount card drug, the average price that the manufacturer of the drug realizes on the sale of drugs with the same active ingredient or ingredients that are consumed in Canada, France, Germany, Italy, Japan, and the United Kingdom, taking into account--

`(i) any rebate, contract term or condition, or other arrangement (whether with the purchaser or other persons) that has the effect of reducing the amount realized by the manufacturer on the sale of the drugs;

`(ii) adjustments for any differences in dosage, formulation, or other relevant characteristics of the drugs; and

`(iii) any other contract or side agreement that has the effect of adjusting the effective price of the drug, including agreements to purchase non-drug products.

`(B) EXEMPT TRANSACTIONS- The Secretary may, by regulation, exempt from the calculation of the average foreign price of a drug those prices realized by a manufacturer in transactions that are entered into for charitable purposes, for research purposes, or under other unusual circumstances, if the Secretary determines that the exemption is in the public interest and is consistent with the purposes of this section.'.

(c) Conforming Amendments- Such section is further amended--

(1) in subsection (h)(1)(A), by adding after and below clause (v) the following new sentence:

`Such term also includes the Secretary with respect to the offering of the Federal national prescription drug discount card program described in subsection (a)(1)(C).';

(2) in subsection (h)(2)(A), by adding at the end the following: `The Secretary shall establish a separate procedure for the qualification of the Federal national prescription drug discount card program described in subsection (a)(1)(C).'; and

(3) in subsection (k)(6), by inserting before the period at the end the following: `, except in the case of the Federal national prescription drug discount card program described in subsection (a)(1)(C)'.

(d) Implementation-

(1) AVAILABILITY OF FUNDS- Notwithstanding any other provision of law, funds provided under section 1015 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Public Law 108-173) shall be available to the Secretary of Health and Human Services for reasonable administrative costs in offering the Federal national prescription drug discount card program described in section 1860D-31(a)(1)(C) of the Social Security Act, as added by subsection (a).

(2) TIMELY IMPLEMENTATION- The Secretary shall take such steps as may be required to provide for the offering of such program during the annual open enrollment period occurring in November, 2004.

END