To establish an America Rx program to establish fairer pricing for prescription drugs for individuals without access to prescription drugs at discounted prices.

April 14, 2005

Mr. MICHAUD (for himself, Mr. ALLEN, Mr. BERRY, Mr. BROWN of Ohio, Mr. CASE, Mr. CROWLEY, Ms. DELAURO, Mr. FRANK of Massachusetts, Mr. GRIJALVA, Mr. HINCHEY, Mr. HOLDEN, Mr. LARSON of Connecticut, Mr. MEEHAN, Mr. MCDERMOTT, Mr. PALLONE, Mr. REYES, Mr. ROSS, Mr. SANDERS, Mr. STARK, Ms. WOOLSEY, and Mr. WYNN) introduced the following bill; which was referred to the Committee on Energy and Commerce

To establish an America Rx program to establish fairer pricing for prescription drugs for individuals without access to prescription drugs at discounted prices.

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

SECTION 1. SHORT TITLE; FINDINGS; PURPOSE.

(a) Short Title- This Act may be cited as the `America Rx Act of 2005'.

(b) Findings- Congress finds the following:

(1) Affordability is critical in providing access to prescription drugs for residents of the United States.

(2) It is not the intention of the Congress to discourage employers and health insurers from providing coverage for prescription drugs, including discounts for the purchase of those drugs.

(c) Purpose- The purpose of this Act is to establish an America Rx program that utilizes manufacturer rebates and pharmacy discounts to reduce prescription drug prices to those residents who are without access to discounted prices for outpatient prescription drugs.

SEC. 2. ESTABLISHMENT OF AMERICA RX PROGRAM.

(a) Establishment-

(1) IN GENERAL- The Secretary of Health and Human Services shall establish a program (in this section referred to as the `America Rx program') consistent with the provisions of this section to provide qualified residents with access to discounted prices for outpatient prescription drugs.

(2) PRINCIPLES- The Secretary shall design and execute the America Rx program in a manner consistent with the following principles:

(A) Medicaid beneficiaries and other low-income individuals, as well as senior citizens and the disabled, are not hurt or disadvantaged as a result of the program's implementation.

(B) Pharmacies participating are ensured reasonable and timely payment of discounts they provide to qualified residents under the program.

(C) The Federal Government will fully reimburse States for reasonable costs they incur in carrying out the program.

(D) Individuals who apply for benefits under the program are screened for eligibility under the medicaid program and other applicable Governmental health care programs and, if found eligible, are enrolled in such program or programs.

(E) The Secretary provides for--

(i) outreach efforts to build public awareness of the program and maximize enrollment of qualified residents; and

(ii) simplified eligibility procedures and uniform eligibility standards for qualified residents.

(3) QUALIFIED RESIDENT DEFINED- For purposes of this section, the term `qualified resident' means an individual who--

(A) a citizen or national of the United States (or an alien lawful residing permanently in the United States); and

(B) as determined under regulations of the Secretary, is not covered under any public or private program that provides substantial benefits (which may be discounted prices) towards the purchase of outpatient prescription drugs.

(b) Rebate Agreements With Manufacturers-

(1) IN GENERAL- Under the America Rx program the Secretary shall negotiate with manufacturers of outpatient prescription drugs rebate agreements with respect to drugs offered under the program to qualified residents.

(2) MINIMUM AMOUNT OF REBATES- In negotiating the amount of such a rebate under paragraph (1), the Secretary shall take into consideration the amount of the rebate calculated under the medicaid program, the average manufacturer price of prescription drugs, and other information on prescription drug prices and price discounts. The Secretary shall negotiate the amount of such rebates in a manner so that the rebates on average are comparable to the average percentage rebate obtained in outpatient prescription drugs provided under section 1927(c) of the Social Security Act (42 U.S.C. 1396r-8(c)).

(3) PAYMENT- Such rebates shall be payable to the Secretary according to a schedule (not less often than quarterly) negotiated with manufacturers and shall be paid, directly or through States, to participating pharmacies that provide discounts to qualified residents.

(4) INCENTIVE- In order to induce manufacturers of outpatient prescription drugs to enter into such rebate agreements, the Secretary shall, in a manner consistent with the design principle specified in subsection (a)(2), provide, in the case of a manufacturer that has not entered into such an agreement, for a denial of a deduction under chapter 1 of the Internal Revenue Code of 1986 for the amount of expenses of the manufacturer for advertising and marketing of drugs of the manufacturer, other than expenses for free samples of drugs subject to section 503(b)(1) of the Federal Food Drug, and Cosmetic Act intended to be distributed to patients.

(5) APPLICATION OF REBATES- Amounts received by the Secretary as rebates under this subsection shall be placed into an appropriate account in the Treasury and shall be available in advance of appropriations to the Secretary for the payment of discounts and other costs of participating pharmacies in carrying out the America Rx program and for the payment of administrative costs in carrying out the program.

(c) Arrangements With Participating Pharmacies-

(1) IN GENERAL- Under the America Rx program arrangements are made with pharmacies for the provision of prescription drugs at discounted prices to qualified residents in a reasonably accessible manner. Such arrangements shall provide that--

(A) each participating pharmacy shall--

(i) provide discounts on prices for outpatient prescription drugs for qualified residents in return for prompt reimbursement of the amount of such discounts and a reasonable dispensing fee;

(ii) not charge qualified residents more (before such discounts) for outpatient prescription drugs than the amount that individuals who are not qualified residents are charged for such drugs; and

(iii) report to the Secretary (or the Secretary's designee) information regarding the discounts provided and fees incurred; and

(B) the program shall--

(i) reimburse a participating retail pharmacy on a prompt basis (no less promptly than as provided under the medicare program) for discounted prices provided to qualified residents under the program and for reasonable dispensing fees; and

(ii) not impose any additional fees on such pharmacies in connection with participation in the program.

(2) DISCOUNTED PRICES- The amount of the discount provided to enrolled qualifying residents shall reflect the amount of rebates obtained, reduced by expenses relating to administrative costs of the Federal and State governments and of participating pharmacies. The Secretary shall specify the method for computing and applying discounts, including a method for computing and applying discounts on a uniform, average percentage basis.

(d) Administration-

(1) IN GENERAL- Under the America Rx program the Secretary may enter into appropriate arrangements with States under which States provide for the administration of the program in return for payment of the reasonable administrative expenses associated with such administration.

(2) ADMINISTRATIVE FUNCTIONS- Such administration functions may include--

(A) determinations of eligibility of qualified residents;

(B) arrangements with participating pharmacies; and

(C) such other functions as the Secretary determines appropriate.

(3) CONTRACTUAL AUTHORITY- In carrying out responsibilities under this section, the Secretary and States may enter into agreements with pharmacy benefit managers and other third parties.

(e) Definitions- For purposes of this section:

(1) The term `manufacturer' has the meaning given such term in section 1927(k)(5) of the Social Security Act (42 U.S.C. 1396r-8(k)(5)).

(2) The term `medicaid program' means a State program under title XIX of the Social Security Act, including such a program operating under a Statewide waiver under section 1115 of such Act.

(3) The term `outpatient prescription drug' has the meaning given the term `covered outpatient drug' in section 1927(k)(2) of the Social Security Act (42 U.S.C. 1396r-8(k)(2)).

(4) The term `Secretary' means the Secretary of Health and Human Services.

(5) The term `State' has the meaning given such term for purposes of title XIX of the Social Security Act.

END