109th CONGRESS
1st Session
H. R. 4395
To amend titles XVIII and XIX of the Social Security Act to provide
for an improved voluntary Medicare prescription drug benefit, to provide
greater access to affordable pharmaceuticals, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
November 18, 2005
Mr. CONYERS 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 titles XVIII and XIX of the Social Security Act to provide
for an improved voluntary Medicare prescription drug benefit, to provide
greater access to affordable pharmaceuticals, and for other purposes.
Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled,
SECTION 1. SHORT TITLE; REFERENCES IN ACT; TABLE OF CONTENTS.
(a) Short Title- This Act may be cited as the `Medicare Prescription Drug
Affordability Act of 2005'.
(b) Amendments to Social Security Act- Except as otherwise specifically
provided, whenever in this Act an amendment is expressed in terms of an
amendment to or repeal of a section or other provision, the reference shall
be considered to be made to that section or other provision of the Social
Security Act.
(c) Table of Contents- The table of contents of this Act is as follows:
Sec. 1. Short title; references in act; table of contents.
TITLE I--MEDICARE PRESCRIPTION DRUG BENEFIT
Sec. 101. Substitution of voluntary Medicare outpatient prescription drug
program.
`Part D--Voluntary Prescription Drug Benefit for the Aged and Disabled
`Sec. 1860D-1. Medicare outpatient prescription drug benefit.
`Sec. 1860D-2. Negotiating fair prices with pharmaceutical manufacturers.
`Sec. 1860D-3. Contract authority.
`Sec. 1860D-4. Eligibility; voluntary enrollment; coverage.
`Sec. 1860D-5. Provision of, and entitlement to, benefits; reduction in
coinsurance for lower income beneficiaries.
`Sec. 1860D-6. Administration; quality assurance.
`Sec. 1860D-7. Federal Medicare Prescription Drug Trust Fund.
`Sec. 1860D-8. Compensation for employers covering retiree drug costs.
`Sec. 1860D-9. Medicare Prescription Drug Advisory Committee.
Sec. 102. Provision of Medicare outpatient prescription drug coverage
under the MedicareAdvantage program.
Sec. 103. Medigap revisions.
Sec. 104. Assistance for low income beneficiaries.
Sec. 105. Expansion of membership and duties of Medicare Payment Advisory
Commission (MEDPAC).
TITLE II--AFFORDABLE PHARMACEUTICALS
Subtitle A--Importation of Prescription Drugs
Sec. 204. Importation of prescription drugs.
Sec. 205. Use of counterfeit-resistant technologies to prevent counterfeiting.
`Sec. 505C. Counterfeit-resistant technologies.
Subtitle B--Quality Control and Cost Containment Blue Ribbon Task Force
TITLE III--DEFENSE OF MEDICARE
Sec. 301. Elimination of privatization of Medicare.
Sec. 302. Repeal of MA regional plan stabilization fund.
Sec. 303. Repeal of health savings accounts.
Sec. 304. Application of risk adjustment reflecting characteristics for
the entire Medicare population.
Sec. 305. Phase-in to payment at 100 percent of fee-for-service rate.
Sec. 306. Repeal of Medicare expenditure cap.
Sec. 307. Continuous open enrollment in MedicareAdvantage plans.
Sec. 308. Effective date.
TITLE I--MEDICARE PRESCRIPTION DRUG BENEFIT
SEC. 101. SUBSTITUTION OF VOLUNTARY MEDICARE OUTPATIENT PRESCRIPTION DRUG
PROGRAM.
(a) In General- Subject to subsection (b), part D of title XVIII, as inserted
by section 101(a)(2) of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (Public Law 108-173), is amended to read as follows:
`Part D--Voluntary Prescription Drug Benefit for the Aged and Disabled
`MEDICARE OUTPATIENT PRESCRIPTION DRUG BENEFIT
Subject to the succeeding provisions of this part, the voluntary prescription
drug benefit program under this part provides the following:
`(1) NO PREMIUM- There is no monthly premium.
`(2) NO DEDUCTIBLE- There is no annual deductible.
`(3) COINSURANCE- The coinsurance is 10 percent.
`(4) OUT-OF-POCKET LIMIT- The annual limit on out-of-pocket spending on
covered drugs is $1,500.
`(5) REDUCED COST-SHARING FOR LOWER-INCOME INDIVIDUALS- Under the provisions
of the medicaid program, for individuals with income not exceeding 150
percent of the poverty level, coinsurance is reduced to not exceed a copayment
of $1 for a generic drug or $3 for a brand name drug.
`NEGOTIATING FAIR PRICES WITH PHARMACEUTICAL MANUFACTURERS
`SEC. 1860D-2. (a) Authority to Negotiate Prices With Manufacturers- The
Secretary shall, consistent with the requirements of this part and the goals
of providing quality care and containing costs under this part, negotiate
contracts with manufacturers of covered outpatient prescription drugs that
provide for the maximum prices that may be charged to individuals enrolled
under this part by participating pharmacies for dispensing such drugs to
such individuals.
`(b) Promotion of Breakthrough Drugs- In conducting negotiations with manufacturers
under this part, the Secretary shall take into account the goal of promoting
the development of breakthrough drugs (as defined in section 1860D-9(b)).
`CONTRACT AUTHORITY
`SEC. 1860D-3. (a) Contract Authority-
`(1) IN GENERAL- The Secretary is responsible for the administration of
this part and shall enter into contracts with appropriate pharmacy contractors
on a national or regional basis to administer the benefits under this
part.
`(2) PROCEDURES- The Secretary shall establish procedures under which
the Secretary--
`(A) accepts bids submitted by entities to serve as pharmacy contractors
under this part in a region or on a national basis;
`(B) awards contracts to such contractors to administer benefits under
this part to eligible beneficiaries in the region or on a national basis;
and
`(C) provides for the termination (and nonrenewal) of a contract in
the case of a contractor's failure to meet the requirements of the contract
and this part.
`(3) COMPETITIVE PROCEDURES- Competitive procedures (as defined in section
4(5) of the Office of Federal Procurement Policy Act (41 U.S.C. 403(5)))
shall be used to enter into contracts under this part.
`(4) TERMS AND CONDITIONS- Such contracts shall have such terms and conditions
as the Secretary shall specify and shall be for such terms (of at least
2 years, but not to exceed 5 years) as the Secretary shall specify consistent
with this part.
`(5) USE OF PHARMACY CONTRACTORS IN PRICE NEGOTIATIONS- Such contracts
shall require the contractor involved to negotiate contracts with manufacturers
that provide for maximum prices for covered outpatient prescription drugs
that are lower than the maximum prices negotiated under section 1860D-2(a),
if applicable. The price reductions shall be passed on to eligible beneficiaries
and the Secretary shall hold the contractor accountable for meeting performance
requirements with respect to price reductions and limiting price increases.
`(i) IN GENERAL- Except as provided in clause (ii) and subject to
subparagraph (B), the contract entered into between the Secretary
and a pharmacy contractor shall require the contractor to administer
the benefits under this part in a region determined by the Secretary
under subparagraph (B) or on a national basis.
`(ii) PARTIAL REGIONAL BASIS-
`(I) IN GENERAL- If determined appropriate by the Secretary, the
Secretary may permit the benefits to be administered in a partial
region determined appropriate by the Secretary.
`(II) REQUIREMENTS- If the Secretary permits administration pursuant
to subclause (I), the Secretary shall ensure that the partial region
in which administration is effected is no smaller than a State and
is at least the size of the commercial service area of the contractor
for that area.
`(i) IN GENERAL- In determining regions for contracts under this part,
the Secretary shall--
`(I) take into account the number of individuals enrolled under
this part in an area in order to encourage participation by pharmacy
contractors; and
`(II) ensure that there are at least 10 different regions in the
United States.
`(ii) NO ADMINISTRATIVE OR JUDICIAL REVIEW- The determination of administrative
areas under this paragraph shall not be subject to administrative
or judicial review.
`(i) IN GENERAL- Subject to subparagraph (B), each entity desiring
to serve as a pharmacy contractor under this part in an area shall
submit a bid with respect to such area to the Secretary at such time,
in such manner, and accompanied by such information as the Secretary
may reasonably require.
`(ii) BID THAT COVERS MULTIPLE AREAS- The Secretary shall permit an
entity to submit a single bid for multiple areas if the bid is applicable
to all such areas.
`(B) REQUIRED INFORMATION- The bids described in subparagraph (A) shall
include--
`(i) a proposal for the estimated prices of covered outpatient prescription
drugs and the projected annual increases in such prices, including
the additional reduction in price negotiated below the Secretary's
maximum price and differentials between preferred and nonpreferred
prices, if applicable;
`(ii) a statement regarding the amount that the entity will charge
the Secretary for administering the benefits under the contract;
`(iii) a statement regarding whether the entity will reduce the applicable
coinsurance percentage pursuant to section 1860D-6(a)(1)(A)(ii) and
if so, the amount of such reduction and how such reduction is tied
to the performance requirements described in subsection (c)(4)(A)(ii);
`(iv) a detailed description of the performance requirements for which
the administrative fee of the entity will be subject to risk pursuant
to subsection (c)(4)(A)(ii);
`(v) a detailed description of access to pharmacy services provided
by the entity, including information regarding whether the pharmacy
contractor will use a preferred pharmacy network, and, if so, how
the pharmacy contractor will ensure access to pharmacies that choose
to be outside of that network, and whether there will be increased
cost-sharing for beneficiaries if they obtain drugs at such pharmacies;
`(vi) a detailed description of the procedures and standards the entity
will use for--
`(I) selecting preferred prescription drugs; and
`(II) determining when and how often the list of preferred prescription
drugs should be modified;
`(vii) a detailed description of any ownership or shared financial
interests with pharmaceutical manufacturers, pharmacies, and other
entities involved in the administration or delivery of benefits under
this part as proposed in the bid;
`(viii) a detailed description of the entity's estimated marketing
and advertising expenditures related to enrolling and retaining eligible
beneficiaries; and
`(ix) such other information that the Secretary determines is necessary
in order to carry out this part, including information relating to
the bidding process under this part.
The procedures under clause (vi) shall include the use of a pharmaceutical
and therapeutics committee the members of which include practicing pharmacists.
`(8) AWARDING OF CONTRACTS-
`(A) NUMBER OF CONTRACTS- The Secretary shall, consistent with the requirements
of this part and the goals of providing quality care and of containing
costs under this part, award in a competitive manner at least 2 contracts
to administer benefits under this part in each area specified under
paragraph (6), unless only 1 pharmacy contractor submitting a bid meets
the minimum standards specified under this part and by the Secretary.
`(B) DETERMINATION- In determining which of the pharmacy contractors
that submitted bids that meet the minimum standards specified under
this part and by the Secretary to award a contract, the Secretary shall
consider the comparative merits of each bid, as determined on the basis
of relevant factors, with respect to--
`(i) how well the contractor meets such minimum standards;
`(ii) the amount that the contractor will charge the Secretary for
administering the benefits under the contract;
`(iii) the performance standards established under subsection (c)(2)
and performance requirements for which the administrative fee of the
entity will be subject to risk pursuant to subsection (c)(4)(A)(ii);
`(iv) the proposed negotiated prices of covered outpatient drugs and
annual increases in such prices;
`(v) factors relating to benefits, quality and performance, beneficiary
cost-sharing, and consumer satisfaction;
`(vi) past performance and prior experience of the contractor in administering
a prescription drug benefit program;
`(vii) effectiveness of the contractor in containing costs through
pricing incentives and utilization management; and
`(viii) such other factors as the Secretary deems necessary to evaluate
the merits of each bid.
`(C) EXCEPTION TO CONFLICT OF INTEREST RULES- In awarding contracts
with pharmacy contractors under this part, the Secretary may waive conflict
of interest laws generally applicable to Federal acquisitions (subject
to such safeguards as the Secretary may find necessary to impose) in
circumstances where the Secretary finds that such waiver--
`(i) is not inconsistent with the--
`(I) purposes of the programs under this part; or
`(II) best interests of beneficiaries enrolled under this part;
and
`(ii) permits a sufficient level of competition for such contracts,
promotes efficiency of benefits administration, or otherwise serves
the objectives of the program under this part.
`(D) NO ADMINISTRATIVE OR JUDICIAL REVIEW- The determination of the
Secretary to award or not award a contract to a pharmacy contractor
under this part shall not be subject to administrative or judicial review.
`(9) ACCESS TO BENEFITS IN CERTAIN AREAS-
`(A) AREAS NOT COVERED BY CONTRACTS- The Secretary shall develop procedures
for the provision of covered outpatient prescription drugs under this
part to each eligible beneficiary enrolled under this part that resides
in an area that is not covered by any contract under this part.
`(B) BENEFICIARIES RESIDING IN DIFFERENT LOCATIONS- The Secretary shall
develop procedures to ensure that each eligible beneficiary enrolled
under this part that resides in different areas in a year is provided
the benefits under this part throughout the entire year.
`(b) Quality, Financial, and Other Standards and Programs- In consultation
with appropriate pharmacy contractors, pharmacists, and health care professionals
with expertise in prescribing, dispensing, and the appropriate use of prescription
drugs, the Secretary shall establish standards and programs for the administration
of this part to ensure appropriate prescribing, dispensing, and utilization
of outpatient drugs under this part, to avoid adverse drug reactions, and
to continually reduce errors in the delivery of medically appropriate covered
benefits. The Secretary shall not award a contract to a pharmacy contractor
under this part unless the Secretary finds that the contractor agrees to
comply with such standards and programs and other terms and conditions as
the Secretary shall specify. The standards and programs under this subsection
shall be applied to any administrative agreements described in subsection
(a) the Secretary enters into. Such standards and programs shall include
the following:
`(A) IN GENERAL- The pharmacy contractor shall ensure that covered outpatient
prescription drugs are accessible and convenient to eligible beneficiaries
enrolled under this part for whom benefits are administered by the pharmacy
contractor, including by offering the services 24 hours a day and 7
days a week for emergencies.
`(B) ON-LINE REVIEW- The pharmacy contractor shall provide for on-line
prospective review available 24 hours a day and 7 days a week in order
to evaluate each prescription for drug therapy problems due to duplication,
interaction, or incorrect dosage or duration of therapy.
`(C) GUARANTEED ACCESS TO DRUGS IN RURAL AND HARD-TO-SERVE AREAS- The
Secretary shall ensure that all beneficiaries have guaranteed access
to the full range of pharmaceuticals under this part, and shall give
special attention to access, pharmacist counseling, and delivery in
rural and hard-to-serve areas, including through the use of incentives
such as bonus payments to retail pharmacists in rural areas and extra
payments to the pharmacy contractor for the cost of rapid delivery of
pharmaceuticals and any other actions necessary.
`(D) PREFERRED PHARMACY NETWORKS-
`(i) IN GENERAL- If a pharmacy contractor uses a preferred pharmacy
network to deliver benefits under this part, such network shall meet
minimum access standards established by the Secretary.
`(ii) STANDARDS- In establishing standards under clause (i), the Secretary
shall take into account reasonable distances to pharmacy services
in both urban and rural areas.
`(E) ADHERENCE TO NEGOTIATED PRICES- The pharmacy contractor shall have
in place procedures to assure compliance of pharmacies with the requirements
of subsection (d)(3)(C) (relating to adherence to negotiated prices).
`(i) IN GENERAL- The pharmacy contractor shall ensure that, in the
case of an eligible beneficiary who loses coverage under this part
with such entity under circumstances that would permit a special election
period (as established by the Secretary under section 1860D-4(b)(3)),
the contractor will continue to provide coverage under this part to
such beneficiary until the beneficiary enrolls and receives such coverage
with another pharmacy contractor under this part or, if eligible,
with a MedicareAdvantage organization.
`(ii) LIMITED PERIOD- In no event shall a pharmacy contractor be required
to provide the extended coverage required under clause (i) beyond
the date which is 30 days after the coverage with such contractor
would have terminated but for this subparagraph.
`(2) ENROLLEE GUIDELINES- The pharmacy contractor shall, consistent with
State law, apply guidelines for counseling enrollees regarding--
`(A) the proper use of covered outpatient prescription drugs; and
`(B) interactions and contra-indications.
`(3) EDUCATION- The pharmacy contractor shall apply methods to identify
and educate providers, pharmacists, and enrollees regarding--
`(A) instances or patterns concerning the unnecessary or inappropriate
prescribing or dispensing of covered outpatient prescription drugs;
`(B) instances or patterns of substandard care;
`(C) potential adverse reactions to covered outpatient prescription
drugs;
`(D) inappropriate use of antibiotics;
`(E) appropriate use of generic products; and
`(F) the importance of using covered outpatient prescription drugs in
accordance with the instruction of prescribing providers.
`(4) COORDINATION- The pharmacy contractor shall coordinate with State
prescription drug programs, other pharmacy contractors, pharmacies, and
other relevant entities as necessary to ensure appropriate coordination
of benefits with respect to enrolled individuals when such individual
is traveling outside the home service area, and under such other circumstances
as the Secretary may specify.
`(A) The pharmacy contractor shall make data on prescription drug negotiated
prices (including data on discounts) available to the Secretary.
`(B) The Secretary shall require, either directly or through a pharmacy
contractor, that participating pharmacists, physicians, and manufacturers--
`(i) maintain their prescription drug cost data (including data on
discounts) in a form and manner specified by the Secretary;
`(ii) make such prescription drug cost data available for review and
audit by the Secretary; and
`(iii) certify that the prescription drug cost data are current, accurate,
and complete, and reflect all discounts obtained by the pharmacist
or physician in the purchasing of covered outpatient prescription
drugs.
Discounts referred to in subparagraphs (A) and (B) shall include all volume
discounts, manufacturer rebates, prompt payment discounts, free goods,
in-kind services, or any other thing of financial value provided explicitly
or implicitly in exchange for the purchase of a covered outpatient prescription
drug.
`(6) REPORTING- The pharmacy contractor shall provide the Secretary with
periodic reports on--
`(A) the contractor's costs of administering this part;
`(B) utilization of benefits under this part;
`(C) marketing and advertising expenditures related to enrolling and
retaining individuals under this part; and
`(D) grievances and appeals.
`(7) RECORDS AND AUDITS- The pharmacy contractor shall maintain adequate
records related to the administration of benefits under this part and
afford the Secretary access to such records for auditing purposes.
`(8) APPROVAL OF MARKETING MATERIAL AND APPLICATION FORMS- The pharmacy
contractor shall comply with requirements of section 1851(h) (relating
to marketing material and application forms) with respect to this part
in the same manner as such requirements apply under part C, except that
the provisions of paragraph (4)(A) of such section shall not apply with
respect to discounts or rebates provided in accordance with this part.
`(c) Incentives for Cost and Utilization Management and Quality Improvement-
`(1) IN GENERAL- The Secretary shall include in a contract awarded under
subsection (b) with a pharmacy contractor such incentives for cost and
utilization management and quality improvement as the Secretary may deem
appropriate. The contract may provide financial or other incentives to
encourage greater savings to the program under this part.
`(2) PERFORMANCE STANDARDS- The Secretary shall provide for performance
standards (which may include monetary bonuses if the standards are met
and penalties if the standards are not met), including standards relating
to the time taken to answer member and pharmacy inquiries (written or
by telephone), the accuracy of responses, claims processing accuracy,
online system availability, appeal procedure turnaround time, system availability,
the accuracy and timeliness of reports, and level of beneficiary satisfaction.
`(3) OTHER INCENTIVES- Such incentives under this subsection may also
include--
`(A) financial incentives under which savings derived from the substitution
of generic and other preferred multi-source drugs in lieu of nongeneric
and nonpreferred drugs are made available to pharmacy contractors, pharmacies,
beneficiaries, and the Federal Medicare Prescription Drug Trust Fund;
and
`(B) any other incentive that the Secretary deems appropriate and likely
to be effective in managing costs or utilization or improving quality
that does not reduce the access of beneficiaries to medically necessary
covered outpatient drugs.
`(4) REQUIREMENTS FOR PROCEDURES-
`(A) IN GENERAL- The Secretary shall establish procedures for making
payments to each pharmacy contractor with a contract under this part
for the administration of the benefits under this part. The procedures
shall provide for the following:
`(i) ADMINISTRATIVE PAYMENT- Payment of administrative fees for such
administration.
`(ii) RISK REQUIREMENT- An adjustment of a percentage (determined
under subparagraph (B)) of the administrative fee payments made to
a pharmacy contractor to ensure that the contractor, in administering
the benefits under this part, pursues performance requirements established
by the Secretary, including the following:
`(I) QUALITY SERVICE- The contractor provides eligible beneficiaries
for whom it administers benefits with quality services, as measured
by such factors as sustained pharmacy network access, timeliness
and accuracy of service delivery in claims processing and card production,
pharmacy and member service support access, and timely action with
regard to appeals and current beneficiary service surveys.
`(II) QUALITY CLINICAL CARE- The contractor provides such beneficiaries
with quality clinical care, as measured by such factors as providing
notification to such beneficiaries and to providers in order to
prevent adverse drug reactions and reduce medication errors and
specific clinical suggestions to improve health and patient and
prescriber education as appropriate.
`(III) CONTROL OF MEDICARE COSTS- The contractor contains costs
under this part to the Federal Medicare Prescription Drug Trust
Fund and enrollees, as measured by generic substitution rates, price
discounts, and other factors determined appropriate by the Secretary
that do not reduce the access of beneficiaries to medically necessary
covered outpatient prescription drugs.
`(B) PERCENTAGE OF PAYMENT TIED TO RISK-
`(i) IN GENERAL- Subject to clause (ii), the Secretary shall determine
the percentage of the administrative payments to a pharmacy contractor
that will be tied to the performance requirements described in subparagraph
(A)(ii).
`(ii) LIMITATION ON RISK TO ENSURE PROGRAM STABILITY- In order to
provide for program stability, the Secretary may not establish a percentage
to be adjusted under this paragraph at a level that jeopardizes the
ability of a pharmacy contractor to administer the benefits under
this part or administer such benefits in a quality manner.
`(C) RISK ADJUSTMENT OF PAYMENTS BASED ON ENROLLEES IN PLAN- To the
extent that a pharmacy contractor is at risk under this paragraph, the
procedures established under this paragraph may include a methodology
for risk adjusting the payments made to such contractor based on the
differences in actuarial risk of different enrollees being served if
the Secretary determines such adjustments to be necessary and appropriate.
`(d) Authority Relating to Pharmacy Participation-
`(1) IN GENERAL- Subject to the succeeding provisions of this subsection,
a pharmacy contractor may establish consistent with this part conditions
for the participation of pharmacies, including conditions relating to
quality (including reduction of medical errors) and technology.
`(2) AGREEMENTS WITH PHARMACIES- Each pharmacy contractor shall enter
into a participation agreement with any pharmacy that meets the requirements
of this subsection and section 1860D-6 to furnish covered outpatient prescription
drugs to individuals enrolled under this part.
`(3) TERMS OF AGREEMENT- An agreement under this subsection shall include
the following terms and conditions:
`(A) APPLICABLE REQUIREMENTS- The pharmacy shall meet (and throughout
the contract period continue to meet) all applicable Federal requirements
and State and local licensing requirements.
`(B) ACCESS AND QUALITY STANDARDS- The pharmacy shall comply with such
standards as the Secretary (and such a pharmacy contractor) shall establish
concerning the quality of, and enrolled individuals' access to, pharmacy
services under this part. Such standards shall require the pharmacy--
`(i) not to refuse to dispense covered outpatient prescription drugs
to any individual enrolled under this part;
`(ii) to keep patient records (including records on expenses) for
all covered outpatient prescription drugs dispensed to such enrolled
individuals;
`(iii) to submit information (in a manner specified by the Secretary
to be necessary to administer this part) on all purchases of such
drugs dispensed to such enrolled individuals; and
`(iv) to comply with periodic audits to assure compliance with the
requirements of this part and the accuracy of information submitted.
`(C) ADHERENCE TO NEGOTIATED PRICES- (i) The total charge for each prescription
drug dispensed by the pharmacy to an enrolled individual under this
part, without regard to whether the individual is financially responsible
for any or all of such charge, shall not exceed the price negotiated
under section 1860D-2(a) or, if lower, negotiated under subsection (a)(5)
(or, if less, the retail price for the drug involved) with respect to
such drug plus a reasonable dispensing fee determined contractually
with the pharmacy contractor.
`(ii) The pharmacy does not charge (or collect from) an enrolled individual
an amount that exceeds the individual's obligation (as determined in
accordance with the provisions of this part) of the applicable price
described in clause (i).
`(D) ELECTRONIC TRANSMITTAL OF PAYMENT- At the option of a participating
pharmacy, the pharmacy shall be promptly provided in an electronic manner
reimbursement for prescription drugs dispensed under this part.
`(E) ADDITIONAL REQUIREMENTS- The pharmacy shall meet such additional
contract requirements as the applicable pharmacy contractor specifies
under this section.
`(4) APPLICABILITY OF FRAUD AND ABUSE PROVISIONS- The provisions of section
1128 through 1128C (relating to fraud and abuse) apply to pharmacies participating
in the program under this part.
`ELIGIBILITY; VOLUNTARY ENROLLMENT; COVERAGE
`SEC. 1860D-4. (a) Eligibility-
`(1) IN GENERAL- Each individual who is entitled to hospital insurance
benefits under part A or is eligible to be enrolled in the medical insurance
program under part B shall, subject to subsection (b)(3), be enrolled
in accordance with this section for outpatient prescription drug benefits
under this part.
`(2) PUBLICITY- The Secretary shall widely disseminate, through public
service announcements and other means, the benefits availability through
enrollment under this part. The Secretary shall enter into arrangements
with hospitals and senior centers for educating medicare beneficiaries
concerning enrollment and the benefits under this part.
`(3) AUTHORIZATION OF APPROPRIATIONS- There are authorized to be appropriated
$10,000,000 to carry out paragraph (2) and the issuance of the pamphlet
described in subsection (b)(2)(B).
`(b) Automatic Enrollment Without Need for Separate Application-
`(1) IN GENERAL- The Secretary shall automatically enroll under this part
each eligible individual described in subsection (a) without the need
for any separate application.
`(2) ISSUANCE OF MEDICARE PRESCRIPTION DRUG CARD; INFORMATION PAMPHLET-
`(A) IN GENERAL- The Secretary shall provide for the issuance, through
the mail to each individual enrolled under this section, of a medicare
prescription drug card evidencing such enrollment. Such card shall be
designed to indicate whether or not the individual is eligible for lowered
cost-sharing under section 1860D-5(e)(2).
`(B) INFORMATION PAMPHLET- The issuance of such card shall be accompanied
by a brief pamphlet that describes the benefits available under this
part and how to use them.
`(3) VOLUNTARY PROGRAM- Nothing in this section shall prevent an individual
from voluntarily electing not to be enrolled under this part. No penalty
shall be imposed under this part at any time for an individual who voluntarily
decides to enroll or not enroll in the program under this part.
`(A) IN GENERAL- The Secretary shall broadly distribute information
to individuals who satisfy subsection (a) on the benefits provided under
this part. The Secretary shall periodically make available information
on the cost differentials to enrollees for the use of generic drugs
and other drugs.
`(B) TOLL-FREE HOTLINE- The Secretary shall maintain a toll-free telephone
hotline (which may be a hotline already used by the Secretary under
this title) for purposes of providing assistance to beneficiaries in
the program under this part, including responding to questions concerning
coverage, enrollment, benefits, grievances and appeals procedures, and
other aspects of such program.
`(5) ENROLLEE DEFINED- For purposes of this part, the term `enrollee'
means an individual enrolled for benefits under this part.
`(1) IN GENERAL- The period during which an individual is entitled to
benefits under this part (in this subsection referred to as the individual's
`coverage period') shall begin on such a date as the Secretary shall establish
consistent with the type of coverage rules described in subsections (a)
and (e) of section 1838, except that in no case shall a coverage period
begin before July 1, 2006. No payments may be made under this part with
respect to the expenses of an individual unless such expenses were incurred
by such individual during a period which, with respect to the individual,
is a coverage period.
`(2) TERMINATION- The Secretary shall provide for the application of provisions
under this subsection similar to the provisions in section 1838(b).
`(d) Provision of Benefits to MedicareAdvantage Enrollees- In the case of
an individual who is enrolled under this part and is enrolled in an MA plan
under part C, the individual shall be provided the benefits under this part
through such plan and not through payment under this part.
`(e) Election of Pharmacy Contractor to Administer Benefits- The Secretary
shall establish a process whereby each individual enrolled under this part
and residing in a region may elect the pharmacy contractor that will administer
the benefits under this part with respect to the individual. Such process
shall permit the individual to make an initial election and to change such
an election on at least an annual basis and under such other circumstances
as the Secretary shall specify.
`PROVISION OF, AND ENTITLEMENT TO, BENEFITS; REDUCTION IN COINSURANCE
FOR LOWER INCOME BENEFICIARIES
`SEC. 1860D-5. (a) Benefits- Subject to the succeeding provisions of this
section, the benefits provided to an enrollee by the program under this
part shall consist of the following:
`(1) COVERED OUTPATIENT PRESCRIPTION DRUG BENEFITS- Entitlement to have
payment made on the individual's behalf for covered outpatient prescription
drugs.
`(2) LIMITATION ON COST-SHARING FOR PART B OUTPATIENT PRESCRIPTION DRUGS-
`(A) IN GENERAL- Once an enrollee has incurred aggregate countable cost-sharing
(as defined in subparagraph (B)) equal to the stop-loss limit specified
in subsection (c)(4) for expenses in a year, entitlement to the elimination
of cost-sharing otherwise applicable under part B for additional expenses
incurred in the year for outpatient prescription drugs or biologicals
for which payment is made under part B.
`(B) COUNTABLE COST-SHARING DEFINED- For purposes of this part, the
term `countable cost-sharing' means--
`(i) out-of-pocket expenses for outpatient prescription drugs with
respect to which benefits are payable under part B, and
`(ii) cost-sharing under subsections (c)(3)(B) and (c)(3)(C)(i).
`(b) Covered Outpatient Prescription Drug Defined-
`(1) IN GENERAL- Except as provided in paragraph (2), for purposes of
this part the term `covered outpatient prescription drug' means any of
the following products:
`(A) A drug which may be dispensed only upon prescription, and--
`(i) which is approved for safety and effectiveness as a prescription
drug under section 505 of the Federal Food, Drug, and Cosmetic Act;
`(ii)(I) which was commercially used or sold in the United States
before the date of enactment of the Drug Amendments of 1962 or which
is identical, similar, or related (within the meaning of section 310.6(b)(1)
of title 21 of the Code of Federal Regulations) to such a drug, and--
`(II) which has not been the subject of a final determination by the
Secretary that it is a `new drug' (within the meaning of section 201(p)
of the Federal Food, Drug, and Cosmetic Act) or an action brought
by the Secretary under section 301, 302(a), or 304(a) of such Act
to enforce section 502(f) or 505(a) of such Act; or
`(iii)(I) which is described in section 107(c)(3) of the Drug Amendments
of 1962 and for which the Secretary has determined there is a compelling
justification for its medical need, or is identical, similar, or related
(within the meaning of section 310.6(b)(1) of title 21 of the Code
of Federal Regulations) to such a drug, and--
`(II) for which the Secretary has not issued a notice of an opportunity
for a hearing under section 505(e) of the Federal Food, Drug, and
Cosmetic Act on a proposed order of the Secretary to withdraw approval
of an application for such drug under such section because the Secretary
has determined that the drug is less than effective for all conditions
of use prescribed, recommended, or suggested in its labeling.
`(B) A biological product which--
`(i) may only be dispensed upon prescription;
`(ii) is licensed under section 351 of the Public Health Service Act;
and
`(iii) is produced at an establishment licensed under such section
to produce such product.
`(C) Insulin approved under appropriate Federal law, and needles, syringes,
and disposable pumps for the administration of such insulin.
`(D) A prescribed drug or biological product that would meet the requirements
of subparagraph (A) or (B) but that is available over-the-counter in
addition to being available upon prescription, but only if the particular
dosage form or strength prescribed and required for the individual is
not available over-the-counter.
`(E) Smoking cessation agents (as specified by the Secretary).
`(2) EXCLUSION- The term `covered outpatient prescription drug' does not
include--
`(A) drugs or classes of drugs, or their medical uses, which may be
excluded from coverage or otherwise restricted under section 1927(d)(2),
other than subparagraph (E) thereof (relating to smoking cessation agents),
as the Secretary may specify and does not include such other drugs,
classes, and uses as the Secretary may specify consistent with the goals
of providing quality care and containing costs under this part;
`(B) except as provided in paragraphs (1)(D) and (1)(E), any product
which may be distributed to individuals without a prescription;
`(C) any product when furnished as part of, or as incident to, a diagnostic
service or any other item or service for which payment may be made under
this title; or
`(D) any product that is covered under part B of this title.
`(c) Payment of Benefits-
`(1) COVERED OUTPATIENT PRESCRIPTION DRUGS- There shall be paid from the
Federal Medicare Prescription Drug Trust Fund, in the case of each enrollee
who incurs expenses for prescription drugs with respect to which benefits
are payable under this part under subsection (a)(1), amounts equal to
the sum of--
`(A) the price for which the drug is made available under this part
(consistent with sections 1860D-2 and 1860D-3), reduced by any applicable
cost-sharing under paragraphs (2) and (3); and
`(B) a reasonable dispensing fee.
The price under subparagraph (A) shall in no case exceed the retail price
for the prescription drug involved.
`(2) NO DEDUCTIBLE- There is no deductible applicable to payment of benefits
under this part.
`(A) IN GENERAL- The amount of payment under paragraph (1) for expenses
incurred in a year shall be further reduced (subject to the stop-loss
limit under paragraph (4)) by coinsurance as provided under this paragraph.
`(B) PREFERRED DRUGS- Subject to subsection (e), the coinsurance under
this paragraph in the case of a preferred drug (including a drug treated
as a preferred drug under paragraph (5)), is equal to 10 percent of
the price applicable under paragraph (1)(A) (or such lower percentage
as may be provided for under section 1860D-6(a)(1)(A)(ii)). In this
part, the term `preferred drug' means, with respect to drugs classified
within a therapeutic class, those drugs which have been designated as
a preferred drug by the Secretary or the pharmacy contractor involved
with respect to that class and (in the case of a nongeneric drug) with
respect to which a contract has been negotiated under this part.
`(C) NONPREFERRED DRUGS- Subject to subsection (e), the coinsurance
under this paragraph in the case of a nonpreferred drug that is not
treated as a preferred drug under paragraph (5) is equal to the sum
of--
`(i) 10 percent of the price for lowest price preferred drug that
is within the same therapeutic class; and
`(ii) the amount by which--
`(I) the price at which the nonpreferred drug is made available
to the enrollee; exceeds
`(II) the price of such lowest price preferred drug.
`(4) NO COINSURANCE ONCE OUT-OF-POCKET EXPENDITURES EQUAL STOP-LOSS LIMIT-
Once an enrollee has incurred aggregate countable cost-sharing under paragraph
(3) (including cost-sharing under part B attributable to outpatient prescription
drugs or biologicals) equal to the amount specified in section 1860D-1(4)
(subject to adjustment under paragraph (8)) for expenses in a year--
`(A) there shall be no coinsurance under paragraph (3) for additional
expenses incurred in the year involved; and
`(B) there shall be no coinsurance under part B for additional expenses
incurred in the year involved for outpatient prescription drugs and
biologicals.
`(5) APPEALS RIGHTS RELATING TO COVERAGE OF NONPREFERRED DRUGS-
`(A) PROCEDURES REGARDING THE DETERMINATION OF DRUGS THAT ARE MEDICALLY
NECESSARY- Each pharmacy contractor shall have in place procedures on
a case-by-case basis to treat a nonpreferred drug as a preferred drug
under this part if the preferred drug is determined to be not as effective
for the enrollee or to have significant adverse effect on the enrollee.
Such procedures shall require that such determinations are based on
professional medical judgment, the medical condition of the enrollee,
and other medical evidence.
`(B) PROCEDURES REGARDING DENIALS OF CARE- Such contractor shall have
in place procedures to ensure--
`(i) a timely internal review for resolution of denials of coverage
(in whole or in part and including those regarding the coverage of
nonpreferred drugs) in accordance with the medical exigencies of the
case and a timely resolution of complaints, by enrollees in the plan,
or by providers, pharmacists, and other individuals acting on behalf
of each such enrollee (with the enrollee's consent) in accordance
with requirements (as established by the Secretary) that are comparable
to such requirements for MA organizations under part C;
`(ii) that the entity complies in a timely manner with requirements
established by the Secretary that (I) provide for an external review
by an independent entity selected by the Secretary of denials of coverage
described in clause (i) not resolved in the favor of the beneficiary
(or other complainant) under the process described in such clause
and (II) are comparable to the external review requirements established
for MA organizations under part C; and
`(iii) that enrollees are provided with information regarding the
appeals procedures under this part at the time of enrollment with
a pharmacy contractor under this part and upon request thereafter.
`(6) TRANSFER OF FUNDS TO COVER COSTS OF PART B PRESCRIPTION DRUG CATASTROPHIC
BENEFIT- With respect to benefits described in subsection (a)(2), there
shall be transferred from the Federal Medicare Prescription Drug Trust
Fund to the Federal Supplementary Medical Insurance Trust Fund amounts
equivalent to the elimination of cost-sharing described in such subsection.
`(7) PERMITTING APPLICATION UNDER PART B OF NEGOTIATED PRICES- For purposes
of making payment under part B for drugs that would be covered outpatient
prescription drugs but for the exclusion under subparagraph (B) or (C)
of subsection (b)(2), the Secretary may elect to apply the payment basis
used for payment of covered outpatient prescription drugs under this part
instead of the payment basis otherwise used under such part, if it results
in a lower cost to the program.
`(8) INFLATION ADJUSTMENT-
`(A) IN GENERAL- With respect to expenses incurred in a year after 2006,
the stop-loss limit under paragraph (3) is equal to the stop-loss limit
determined under such paragraph (or this subparagraph) for the previous
year increased by such percentage increase. The Secretary shall adjust
such percentage increase in subsequent years to take into account misestimations
made of the per capita program expenditures under this subparagraph
in previous years. Any increase under this subparagraph that is not
a multiple of $10 shall be rounded to the nearest multiple of $10.
`(B) ESTIMATION OF INCREASE IN PER CAPITA PROGRAM EXPENDITURES- The
Secretary shall before the beginning of each year (beginning with 2007)
estimate the percentage increase in average per capita aggregate expenditures
from the Federal Medicare Prescription Drug Trust Fund for the year
involved compared to the previous year.
`(C) RECONCILIATION- The Secretary shall also compute (beginning with
2008) the actual percentage increase in such aggregate expenditures
in order to provide for reconciliation of deductibles, and stop-loss
limits, under the second sentence of subparagraph (A) and under section
1860D-5(d)(2).
`(d) No Monthly Premiums- In accordance with section 1860D-1(1) there is
no monthly premium for prescription drug benefits under this part.
`(e) Reductions in Coinsurance for Lower Income Beneficiaries-
`(1) INSTITUTIONALIZED INDIVIDUALS- In the case of an individual who is
a full-benefit dual eligible individual (as defined in paragraph (4)(C))
and who is an institutionalized individual or couple (as defined in section
1902(q)(1)(B)), the coinsurance under subsection (c)(4) shall be eliminated.
`(2) INDIVIDUALS WITH INCOME BELOW 150 PERCENT OF THE POVERTY LEVEL- In
the case of an individual who is not described in paragraph (1) and whose
family income does not exceed 150 percent of the poverty level applicable
to a family of the size involved, the coinsurance under subsection (c)(4)
shall not exceed--
`(A) $1 in the case of a preferred drug described in subsection (c)(3)(B);
or
`(B) $3 in the case of a nonpreferred drug described in subsection (c)(3)(C).
`(3) PROCESS OF QUALIFICATION FOR REDUCED COINSURANCE-
`(A) IN GENERAL- The Secretary shall provide a process for the qualification
of beneficiaries for reduced coinsurance under this subsection. Such
process shall be coordinated, to the maximum extent practicable, with
State medicaid programs, but shall also permit individuals to qualify
on the basis of simple, 1-page applications made directly to the Secretary
(or the Secretary's designee, such as through a local pharmacy).
`(B) NO ASSETS TEST- An individual's eligibility for reduced coinsurance
under this subsection shall be determined without regard to the amount
of the assets of the individual or family members.
`(4) DEFINITIONS- In this part:
`(A) FAMILY INCOME- The Secretary shall define the term `family income'.
`(B) POVERTY LEVEL- The term `poverty line' has the meaning given the
term `poverty line' in section 673(2) of the Community Services Block
Grant Act (42 U.S.C. 9902(2)), including any revision required by such
section.
`(C) FULL-BENEFIT DUAL ELIGIBLE INDIVIDUAL DEFINED-
`(i) IN GENERAL- The term `full-benefit dual eligible individual'
means, with respect to a month, an individual residing in a State
who--
`(I) has coverage for the month for covered part D drugs under this
part (including under an MA plan under part C); and
`(II) is determined eligible by the State for medical assistance
for full benefits under title XIX for such month under section 1902(a)(10)(A)
or 1902(a)(10)(C), by reason of section 1902(f), or under any other
category of eligibility for medical assistance for full benefits
under such title, as determined by the Secretary.
`(ii) TREATMENT OF MEDICALLY NEEDY AND OTHER INDIVIDUALS REQUIRED
TO SPEND DOWN- In applying clause (i) in the case of an individual
determined to be eligible by the State for medical assistance under
section 1902(a)(10)(C) or by reason of section 1902(f), the individual
shall be treated as meeting the requirement of clause (i)(II) for
any month if such medical assistance is provided for in any part of
the month.
`(5) TREATMENT OF RESIDENTS OF TERRITORIES- The Secretary shall provide
for such adjustment in the application of this subsection to residents
of the territories as may be necessary to take into account differences
in average family income for such residents compared to average family
income for eligible individuals residing in the 50 States or the District
of Columbia.
`ADMINISTRATION; QUALITY ASSURANCE
`SEC. 1860D-6. (a) Rules Relating to Provision of Benefits-
`(1) PROVISION OF BENEFITS-
`(A) IN GENERAL- In providing benefits under this part, the Secretary
(directly or through the contracts with pharmacy contractors) shall
employ mechanisms to provide benefits appropriately and efficiently,
and those mechanisms may include--
`(I) price negotiations (consistent with subsection (b));
`(II) reduced coinsurance (below 20 percent) to encourage the utilization
of appropriate preferred prescription drugs; and
`(III) methods to reduce medication errors and encourage appropriate
use of medications; and
`(ii) permitting pharmacy contractors, as approved by the Secretary,
to make exceptions to section 1860D-5(c)(3)(C) (relating to cost-sharing
for non-preferred drugs) to secure best prices for enrollees so long
as the payment amount under section 1860D-5(c)(1) does not equal zero.
`(B) CONSTRUCTION- Nothing in this subsection shall be construed to
prevent the Secretary (directly or through the contracts with pharmacy
contractors) from using incentives to encourage enrollees to select
generic or other cost-effective drugs, so long as--
`(i) such incentives are designed not to result in any increase in
the aggregate expenditures under the Federal Medicare Prescription
Drug Trust Fund; and
`(ii) a beneficiary's coinsurance shall be no greater than 20 percent
in the case of a preferred drug (including a nonpreferred drug treated
as a preferred drug under section 1860D-5(c)(5)).
`(2) CONSTRUCTION- Nothing in this part shall preclude the Secretary or
a pharmacy contractor from--
`(A) educating prescribing providers, pharmacists, and enrollees about
medical and cost benefits of preferred drugs;
`(B) requesting prescribing providers to consider a preferred drug prior
to dispensing of a nonpreferred drug, as long as such request does not
unduly delay the provision of the drug;
`(C) using mechanisms to encourage enrollees under this part to select
cost-effective drugs or less costly means of receiving or administering
drugs, including the use of therapeutic interchange programs, disease
management programs, and notification to the beneficiary that a more
affordable generic drug equivalent was not selected by the prescribing
provider and a statement of the lost cost savings to the beneficiary;
`(D) using price negotiations to achieve reduced prices on covered outpatient
prescription drugs, including new drugs, drugs for which there are few
therapeutic alternatives, and drugs of particular clinical importance
to individuals enrolled under this part; and
`(E) utilizing information on drug prices of OECD countries and of other
payors in the United States in the negotiation of prices under this
part.
`(b) Price Negotiations Process-
`(1) REQUIREMENTS WITH RESPECT TO PREFERRED DRUGS- Negotiations of contracts
with manufacturers with respect to covered outpatient prescription drugs
under this part shall be conducted in a manner so that--
`(A) there is at least a contract for a drug within each therapeutic
class (as defined by the Secretary in consultation with such Medicare
Prescription Drug Advisory Committee);
`(B) if there is more than 1 drug available in a therapeutic class,
there are contracts for at least 2 drugs within such class unless determined
clinically inappropriate in accordance with standards established by
the Secretary; and
`(C) if there are more than 2 drugs available in a therapeutic class,
there is a contract for at least 2 drugs within such class and a contract
for generic drug substitute if available unless determined clinically
inappropriate in accordance with standards established by the Secretary.
`(2) ESTABLISHMENT OF THERAPEUTIC CLASSES- The Secretary, in consultation
with the Medicare Prescription Drug Advisory Committee (established under
section 1860D-9), shall establish for purposes of this part therapeutic
classes and assign to such classes covered outpatient prescription drugs.
`(3) DISCLOSURE CONCERNING PREFERRED DRUGS- The Secretary shall provide,
through pharmacy contractors or otherwise, for--
`(A) disclosure to current and prospective enrollees and to participating
providers and pharmacies in each service area a list of the preferred
drugs and differences in applicable cost-sharing between such drugs
and nonpreferred drugs; and
`(B) advance disclosure to current enrollees and to participating providers
and pharmacies in each service area of changes to any such list of preferred
drugs and differences in applicable cost-sharing.
`(4) NO REVIEW- The Secretary's establishment of therapeutic classes and
the assignment of drugs to such classes and the Secretary's determination
of what is a breakthrough drug are not subject to administrative or judicial
review.
`(c) Confidentiality- The Secretary shall ensure that the confidentiality
of individually identifiable health information relating to the provision
of benefits under this part is protected, consistent with the standards
for the privacy of such information promulgated by the Secretary under the
Health Insurance Portability and Accountability Act of 1996, or any subsequent
comprehensive and more protective set of confidentiality standards enacted
into law or promulgated by the Secretary. Nothing in this subsection shall
be construed as preventing the coordination of data with a State prescription
drug program so long as such program has in place confidentiality standards
that are equal to or exceed the standards used by the Secretary.
`(d) Fraud and Abuse Safeguards- The Secretary, through the Office of the
Inspector General, is authorized and directed to issue regulations establishing
appropriate safeguards to prevent fraud and abuse under this part. Such
safeguards, at a minimum, should include compliance programs, certification
data, audits, and recordkeeping practices. In developing such regulations,
the Secretary shall consult with the Attorney General and other law enforcement
and regulatory agencies.
`(e) Use of 800 Number- Through the tollfree number provided under section
1804(b), the Secretary shall provide a means for beneficiaries to discuss
problems and challenges with costs or access to prescription drugs under
this part.
`(f) Use of Website- The Internet website maintained by the Secretary for
purposes of this title shall include information on the price of, access
to, and quality of prescription drugs provided under this part.
`FEDERAL MEDICARE PRESCRIPTION DRUG TRUST FUND
`SEC. 1860D-7. (a) Establishment- There is hereby created on the books of
the Treasury of the United States a trust fund to be known as the `Federal
Medicare Prescription Drug Trust Fund' (in this section referred to as the
`Trust Fund'). The Trust Fund shall consist of such gifts and bequests as
may be made as provided in section 201(i)(1), and such amounts as may be
deposited in, or appropriated to, such fund as provided in this part.
`(b) Application of SMI Trust Fund Provisions- The provisions of subsections
(b) through (i) of section 1841 shall apply to this part and the Trust Fund
in the same manner as they apply to part B and the Federal Supplementary
Medical Insurance Trust Fund, respectively.
`COMPENSATION FOR EMPLOYERS COVERING RETIREE DRUG COSTS
`SEC. 1860D-8. (a) In General- In the case of an individual who is eligible
to be enrolled under this part and is a participant or beneficiary under
a group health plan that provides outpatient prescription drug coverage
to retirees the actuarial value of which is not less than the actuarial
value of the coverage provided under this part, the Secretary shall make
payments to such plan subject to the provisions of this section. Such payments
shall be treated as payments under this part for purposes of sections 1860D-7
and 1860D-4(e)(2). In applying the previous sentence with respect to section
1860D-4(e)(2), the amount of the Government contribution referred to in
section 1844(a)(1)(A) is deemed to be equal to the aggregate amount of the
payments made under this section.
`(b) Requirements- To receive payment under this section, a group health
plan shall comply with the following requirements:
`(1) COMPLIANCE WITH REQUIREMENTS- The group health plan shall comply
with the requirements of this Act and other reasonable, necessary, and
related requirements that are needed to administer this section, as determined
by the Secretary.
`(2) ANNUAL ASSURANCES AND NOTICE BEFORE TERMINATION- The sponsor of the
plan shall--
`(A) annually attest, and provide such assurances as the Secretary may
require, that the coverage offered under the group health plan meets
the requirements of this section and will continue to meet such requirements
for the duration of the sponsor's participation in the program under
this section; and
`(B) guarantee that it will give notice to the Secretary and covered
enrollees--
`(i) at least 120 days before terminating its plan, and
`(ii) immediately upon determining that the actuarial value of the
prescription drug benefit under the plan falls below the actuarial
value required under subsection (a).
`(3) BENEFICIARY INFORMATION- The sponsor of the plan shall report to
the Secretary, for each calendar quarter for which it seeks a payment
under this section, the names and social security numbers of all enrollees
described in subsection (a) covered under such plan during such quarter
and the dates (if less than the full quarter) during which each such individual
was covered.
`(4) AUDITS- The sponsor or plan seeking payment under this section shall
agree to maintain, and to afford the Secretary access to, such records
as the Secretary may require for purposes of audits and other oversight
activities necessary to ensure the adequacy of prescription drug coverage,
the accuracy of payments made, and such other matters as may be appropriate.
`(1) IN GENERAL- The sponsor of a group health plan that meets the requirements
of subsection (b) with respect to a quarter in a calendar year shall be
entitled to have payment made on a quarterly basis of the amount specified
in paragraph (2) for each individual described in subsection (a) who during
the quarter is covered under the plan and was not enrolled in the insurance
program under this part.
`(A) IN GENERAL- The amount of the payment for a quarter shall approximate,
for each such covered individual, 2/3 of the sum of the monthly Government
contribution amounts (computed under subparagraph (B)) for each of the
3 months in the quarter.
`(B) COMPUTATION OF MONTHLY GOVERNMENT CONTRIBUTION AMOUNT- For purposes
of subparagraph (A), the monthly Government contribution amount for
a month in a year is equal to the amount by which--
`(i) 1/12 of the average per capita aggregate expenditures, as estimated
under section 1860D-5(c)(8) for the year involved; exceeds
`(ii) the monthly premium rate under section 1860D-5(d) for the month
involved.
`MEDICARE PRESCRIPTION DRUG ADVISORY COMMITTEE
`SEC. 1860D-9. (a) Establishment of Committee- There is established a Medicare
Prescription Drug Advisory Committee (in this section referred to as the
`Committee').
`(b) Functions of Committee- The Committee shall advise the Secretary on
policies related to--
`(1) the development of guidelines for the implementation and administration
of the outpatient prescription drug benefit program under this part; and
`(2) the development of--
`(A) standards required of pharmacy contractors under section 1860D-5(c)(5)
for determining if a drug is as effective for an enrollee or has a significant
adverse effect on an enrollee under this part;
`(i) defining therapeutic classes;
`(ii) adding new therapeutic classes;
`(iii) assigning to such classes covered outpatient prescription drugs;
and
`(iv) identifying breakthrough drugs;
`(C) procedures to evaluate the bids submitted by pharmacy contractors
under this part;
`(D) procedures for negotiations, and standards for entering into contracts,
with manufacturers, including identifying drugs or classes of drugs
where Secretarial negotiation is most likely to yield savings under
this part significantly above those that which could be achieved by
a pharmacy contractor; and
`(E) procedures to ensure that pharmacy contractors with a contract
under this part are in compliance with the requirements under this part.
For purposes of this part, a drug is a `breakthrough drug' if the Secretary,
in consultation with the Committee, determines it is a new product that
will make a significant and major improvement by reducing physical or mental
illness, reducing mortality, or reducing disability, and that no other product
is available to beneficiaries that achieves similar results for the same
condition. The Committee may consider cost-effectiveness in establishing
standards for defining therapeutic classes and assigning drugs to such classes
under subparagraph (B).
`(c) Structure and Membership of the Committee-
`(1) STRUCTURE- The Committee shall be composed of 19 members who shall
be appointed by the Secretary.
`(A) IN GENERAL- The members of the Committee shall be chosen on the
basis of their integrity, impartiality, and good judgment, and shall
be individuals who are, by reason of their education, experience, and
attainments, exceptionally qualified to perform the duties of members
of the Committee.
`(B) SPECIFIC MEMBERS- Of the members appointed under paragraph (1)--
`(i) 5 shall be chosen to represent practicing physicians, 2 of whom
shall be gerontologists;
`(ii) 2 shall be chosen to represent practicing nurse practitioners;
`(iii) 4 shall be chosen to represent practicing pharmacists;
`(iv) 1 shall be chosen to represent the Centers for Medicare &
Medicaid Services;
`(v) 4 shall be chosen to represent actuaries, pharmacoeconomists,
researchers, and other appropriate experts;
`(vi) 1 shall be chosen to represent emerging medicine technologies;
`(vii) 1 shall be chosen to represent the Food and Drug Administration;
and
`(viii) 1 shall be chosen to represent individuals enrolled under
this part.
`(d) Terms of Appointment- Each member of the Committee shall serve for
a term determined appropriate by the Secretary. The terms of service of
the members initially appointed shall begin on January 1, 2006.
`(e) Chairperson- The Secretary shall designate a member of the Committee
as Chairperson. The term as Chairperson shall be for a 1-year period.
`(f) Committee Personnel Matters-
`(A) COMPENSATION- Each member of the Committee who is not an officer
or employee of the Federal Government shall be compensated at a rate
equal to the daily equivalent of the annual rate of basic pay prescribed
for level IV of the Executive Schedule under section 5315 of title 5,
United States Code, for each day (including travel time) during which
such member is engaged in the performance of the duties of the Committee.
All members of the Committee who are officers or employees of the United
States shall serve without compensation in addition to that received
for their services as officers or employees of the United States.
`(B) TRAVEL EXPENSES- The members of the Committee shall be allowed
travel expenses, including per diem in lieu of subsistence, at rates
authorized for employees of agencies under subchapter I of chapter 57
of title 5, United States Code, while away from their homes or regular
places of business in the performance of services for the Committee.
`(2) STAFF- The Committee may appoint such personnel as the Committee
considers appropriate.
`(g) Operation of the Committee-
`(1) MEETINGS- The Committee shall meet at the call of the Chairperson
(after consultation with the other members of the Committee) not less
often than quarterly to consider a specific agenda of issues, as determined
by the Chairperson after such consultation.
`(2) QUORUM- Ten members of the Committee shall constitute a quorum for
purposes of conducting business.
`(h) Federal Advisory Committee Act- Section 14 of the Federal Advisory
Committee Act (5 U.S.C. App.) shall not apply to the Committee.
`(i) Transfer of Personnel, Resources, and Assets- For purposes of carrying
out its duties, the Secretary and the Committee may provide for the transfer
to the Committee of such civil service personnel in the employ of the Department
of Health and Human Services (including the Centers for Medicare & Medicaid
Services), and such resources and assets of the Department used in carrying
out this title, as the Committee requires.
`(j) Authorization of Appropriations- There are authorized to be appropriated
such sums as may be necessary to carry out the purposes of this section.'.
(b) Retention of Certain Provisions-
(1) TITLE I OF MPDIMA- Except as provided in paragraph (2), the provisions
of title I (other than sections 105 and 107(c)) of the Medicare Prescription
Drug, Improvement, and Modernization Act of 2003 (Public Law 108-173)
are repealed and the laws affected by such title shall be in effect as
if such title had not been enacted.
(2) PART D PROVISIONS- The following provisions of part D of title XVIII
of the Social Security Act, as inserted by section 101 of the Medicare
Prescription Drug, Improvement, and Modernization Act of 2003 (Public
Law 108-173), shall remain in effect:
(A) Section 1860D-31 (relating to medicare prescription drug discount
card and transitional assistance program).
(B) Section 1860D-4(e) (relating to electronic prescription program).
(c) Application of General Exclusions From Coverage-
(1) APPLICATION TO PART D- Section 1862(a) (42 U.S.C. 1395y(a)) is amended
in the matter preceding paragraph (1) by striking `part A or part B' and
inserting `part A, B, or D'.
(2) PRESCRIPTION DRUGS NOT EXCLUDED FROM COVERAGE IF APPROPRIATELY PRESCRIBED-
Section 1862(a)(1) (42 U.S.C. 1395y(a)(1)) is amended--
(A) in subparagraph (H), by striking `and' at the end;
(B) in subparagraph (I), by striking the semicolon at the end and inserting
`, and'; and
(C) by adding at the end the following new subparagraph:
`(J) in the case of prescription drugs covered under part D, which are
not prescribed in accordance with such part;'.
(d) Conforming Amendment- Section 1171(a)(5)(D) (42 U.S.C. 1320d(a)(5)(D))
is amended by striking `or (C)' and inserting `(C), or (D)'.
SEC. 102. PROVISION OF MEDICARE OUTPATIENT PRESCRIPTION DRUG COVERAGE
UNDER THE MEDICAREADVANTAGE PROGRAM.
(a) Requiring Availability of an Actuarially Equivalent Prescription Drug
Benefit- Section 1851 (42 U.S.C. 1395w-21) is amended by adding at the end
the following new subsection:
`(j) Availability of Prescription Drug Benefits-
`(1) IN GENERAL- Notwithstanding any other provision of this part, each
MA organization that makes available an MA plan described in section 1851(a)(2)(A)
shall make available such a plan that offers coverage of covered outpatient
prescription drugs that is at least actuarially equivalent to the benefits
provided under part D. Information respecting such benefits shall be made
available in the same manner as information on other benefits provided
under this part is made available. Nothing in this paragraph shall be
construed as requiring the offering of such coverage separate from coverage
that includes benefits under parts A and B.
`(2) TREATMENT OF PRESCRIPTION DRUG ENROLLEES- In the case of an MA eligible
individual who is enrolled under part D, the benefits described in paragraph
(1) shall be treated in the same manner as benefits described in part
B for purposes of coverage and payment and any reference in this part
to the Federal Supplementary Medical Insurance Trust Fund shall be deemed,
with respect to such benefits, to be a reference to the Federal Medicare
Prescription Drug Trust Fund.'.
(b) Application of Quality Standards- Section 1852(e)(2)(A) (42 U.S.C. 1395w-22(e)(2)(A))
is amended--
(1) by striking `and' at the end of clause (xi);
(2) by striking the period at the end of clause (xii) and inserting `,
and'; and
(3) by adding at the end the following new clause:
`(xiii) comply with the standards, and apply the programs, under section
1860D-3(b) for covered outpatient prescription drugs under the plan.'.
(c) Payment Separate From Payment for Part a and B Benefits- Section 1853
(42 U.S.C. 1395w-23) is amended--
(1) in subsection (a)(1)(A), by striking `and (i)' and inserting `(i),
and (j)'; and
(2) by adding at the end the following new subsection:
`(j) Payment for Prescription Drug Coverage Option-
`(1) IN GENERAL- In the case of an MA plan that provides prescription
drug benefits described in section 1851(j)(1), the amount of payment otherwise
made to the MA organization offering the plan shall be increased by the
amount described in paragraph (2). Such payments shall be made in the
same manner and time as the amount otherwise paid, but such amount shall
be payable from the Federal Medicare Prescription Drug Trust Fund.
`(2) AMOUNT- The amount described in this paragraph is the monthly Government
contribution amount computed under section 1860D-8(c)(2)(B), but subject
to adjustment under paragraph (3). Such amount shall be uniform geographically
and shall not vary based on the MA payment area involved.
`(3) RISK ADJUSTMENT- The Secretary shall establish a methodology for
the adjustment of the payment amount under this subsection in a manner
that takes into account the relative risks for use of outpatient prescription
drugs by MA enrollees. Such methodology shall be designed in a manner
so that the total payments under this title (including part D) are not
changed as a result of the application of such methodology.'.
(d) Separate Application of Adjusted Community Rate (ACR)- Section 1854
(42 U.S.C. 1395w-24) is amended by adding at the end the following:
`(i) Application to Prescription Drug Coverage- The Secretary shall apply
the previous provisions of this section (as such provisions were in effect
before the date of the enactment of the Medicare Prescription Drug, Improvement,
and Modernization Act of 2003 (Public Law 108-173), including the computation
of the adjusted community rate) separately with respect to prescription
drug benefits described in section 1851(j)(1).'.
(e) Conforming Amendments-
(1) Section 1851 (42 U.S.C. 1395w-21) is amended--
(A) in subsection (a)(1)(A), by striking `parts A and B' and inserting
`parts A, B, and D'; and
(B) in subsection (i) by inserting `(and, if applicable, part D)' after
`parts A and B'.
(2) Section 1852(a)(1)(A) (42 U.S.C. 1395w-22(a)(1)(A)) is amended by
inserting `(and under part D to individuals also enrolled under such part)'
after `parts A and B'.
(3) Section 1852(d)(1) (42 U.S.C. 1395w-22(d)(1)) is amended--
(A) by striking `and' at the end of subparagraph (D);
(B) by striking the period at the end of subparagraph (E) and inserting
`; and'; and
(C) by adding at the end the following:
`(F) the plan for part D benefits guarantees coverage of any specifically
named prescription drug for an enrollee to the extent that it would
be required to be covered under part D.
In carrying out subparagraph (F), an MA organization has the same authority
to enter into contracts with respect to coverage of preferred drugs as
the Secretary has under part D, but subject to an independent contractor
appeal or other appeal process that would be applicable to determinations
by such a pharmacy contractor consistent with section 1860D-5(c)(5).'.
(f) Limitation on Cost-Sharing- Section 1854(e) (42 U.S.C. 1395w-24(e))
is amended by adding at the end the following new paragraph:
`(5) LIMITATION ON COST-SHARING- In no event may a MA organization include
a requirement that an enrollee pay cost-sharing in excess of the cost-sharing
otherwise permitted under part D.'.
SEC. 103. MEDIGAP REVISIONS.
(a) Required Coverage of Covered Outpatient Prescription Drugs- Section
1882(p)(2)(B) (42 U.S.C. 1395ss(p)(2)(B)) is amended by inserting before
`and' at the end the following: `including a requirement that an appropriate
number of policies provide coverage of drugs which complements but does
not duplicate the drug benefits that beneficiaries are otherwise eligible
for benefits under part D of this title (with the Secretary and the National
Association of Insurance Commissioners determining the appropriate level
of drug benefits that each benefit package must provide and ensuring that
policies providing such coverage are affordable for beneficiaries;'.
(b) Effective Date- The amendment made by subsection (a) shall take effect
on January 1, 2006.
(c) Transition Provisions-
(1) IN GENERAL- If the Secretary of Health and Human Services identifies
a State as requiring a change to its statutes or regulations to conform
its regulatory program to the amendments made by this section, the State
regulatory program shall not be considered to be out of compliance with
the requirements of section 1882 of the Social Security Act due solely
to failure to make such change until the date specified in paragraph (4).
(2) NAIC STANDARDS- If, within 9 months after the date of enactment of
this Act, the National Association of Insurance Commissioners (in this
subsection referred to as the `NAIC') modifies its NAIC Model Regulation
relating to section 1882 of the Social Security Act (referred to in such
section as the 1991 NAIC Model Regulation, as subsequently modified) to
conform to the amendments made by this section, such revised regulation
incorporating the modifications shall be considered to be the applicable
NAIC model regulation (including the revised NAIC model regulation and
the 1991 NAIC Model Regulation) for the purposes of such section.
(3) SECRETARY STANDARDS- If the NAIC does not make the modifications described
in paragraph (2) within the period specified in such paragraph, the Secretary
of Health and Human Services shall make the modifications described in
such paragraph and such revised regulation incorporating the modifications
shall be considered to be the appropriate regulation for the purposes
of such section.
(A) IN GENERAL- Subject to subparagraph (B), the date specified in this
paragraph for a State is the earlier of--
(i) the date the State changes its statutes or regulations to conform
its regulatory program to the changes made by this section; or
(ii) 1 year after the date the NAIC or the Secretary first makes the
modifications under paragraph (2) or (3), respectively.
(B) ADDITIONAL LEGISLATIVE ACTION REQUIRED- In the case of a State which
the Secretary identifies as--
(i) requiring State legislation (other than legislation appropriating
funds) to conform its regulatory program to the changes made in this
section; but
(ii) having a legislature which is not scheduled to meet in 2006 in
a legislative session in which such legislation may be considered;
the date specified in this paragraph is the first day of the first calendar
quarter beginning after the close of the first legislative session of
the State legislature that begins on or after January 1, 2006. For purposes
of the previous sentence, in the case of a State that has a 2-year legislative
session, each year of such session shall be deemed to be a separate
regular session of the State legislature.
SEC. 104. ASSISTANCE FOR LOW INCOME BENEFICIARIES.
(a) QMB Coverage of Cost-Sharing- Section 1905(p)(3) (42 U.S.C. 1396d(p)(3))
is amended--
(1) in subparagraph (A)--
(A) by striking `and' at the end of clause (i),
(B) by adding `and' at the end of clause (ii), and
(C) by adding at the end the following new clause:
`(iii) premiums under section 1860D-5(d).'; and
(2) in subparagraph (B), by inserting `(i)' after `(B)' and by adding
at the end the following new clause:
`(ii) A reduction in coinsurance under subparagraphs (B) and (C)(i)
of section 1860D-5(c)(3) to the amounts specified in section 1860D-5(e)(1).'.
(b) Reduction in Cost Sharing for Beneficiaries With Income Below 185 Percent
of the Poverty Level- Section 1902(a)(10)(E) (42 U.S.C. 1396a(a)(10)(E))
is amended----
(1) by striking `and' at the end of clause (iii);
(2) by adding `and' at the end of clause (iv); and
(3) by adding at the end the following new clause:
`(v)(I) for making medical assistance available, subject to section
1905(p)(4), for a reduction in medicare cost-sharing described in section
1860D-5(e)(1) for individuals (other than qualified medicare beneficiaries)
who are enrolled under part D of title XVIII and are described in section
1905(p)(1)(B) or would be so described but for the fact that their income
exceeds 100 percent, but does not exceed 135 percent, of the official
poverty line (referred to in such section) for a family of the size
involved;
`(II) for making medical assistance available, subject to section 1905(p)(4),
for a reduction in medicare cost-sharing described in section 1860D-5(e)(2)
for individuals (other than qualified medicare beneficiaries and individuals
described in subclause (I)) who are enrolled under part D of title XVIII
and are described in section 1905(p)(1)(B) or would be described under
such section but for the fact that their income exceeds 135 percent,
but does not exceed 185 percent, of the official poverty line (referred
to in such section) for a family of the size involved; and
`(III) for individuals (other than qualified medicare beneficiaries
and individuals described in subclause (I) or (II)) who are enrolled
under part D of title XVIII and would be described in section 1905(p)(1)(B)
but for the fact that their income exceeds 200 percent, but does not
exceed 300 percent, of the official poverty line (referred to in such
section) for a family of the size involved, for making medical assistance
available for medicare cost-sharing described in section 1905(p)(3)(A)(iii);'.
(c) Federal Financing of Additional Low Income Assistance- The third sentence
of section 1905(b) (42 U.S.C. 1396d(b)) is amended by inserting before the
period at the end the following: `and with respect to amounts expended that
are attributable to the amendments made by subsection (a) or (b) of section
104 of the Medicare Prescription Drug Affordability Act of 2005'.
(d) Treatment of Territories-
(1) IN GENERAL- Section 1905(p) (42 U.S.C. 1396d(p)) is amended--
(A) by redesignating paragraphs (5) and (6) as paragraphs (6) and (7),
respectively; and
(B) by inserting after paragraph (4) the following new paragraph:
`(5)(A) In the case of a State, other than the 50 States and the District
of Columbia--
`(i) the provisions of paragraph (3) insofar as they relate to section
1860D-5 and the provisions of section 1902(a)(10)(E)(v) shall not apply
to residents of such State; and
`(ii) if the State establishes a plan described in subparagraph (B) (for
providing medical assistance with respect to the provision of prescription
drugs to medicare beneficiaries), the amount otherwise determined under
section 1108(f) (as increased under section 1108(g)) for the State shall
be increased by the amount specified in subparagraph (C).
`(B) The plan described in this subparagraph is a plan that--
`(i) provides medical assistance with respect to the provision of covered
outpatient drugs (as defined in section 1860D-5(b)) to low-income medicare
beneficiaries; and
`(ii) assures that additional amounts received by the State that are attributable
to the operation of this paragraph are used only for such assistance.
`(C)(i) The amount specified in this subparagraph for a State for a year
is equal to the product of--
`(I) the aggregate amount specified in clause (ii); and
`(II) the amount specified in section 1108(g)(1) for that State, divided
by the sum of the amounts specified in such section for all such States.
`(ii) The aggregate amount specified in this clause for--
`(I) 2006, is equal to $25,000,000; or
`(II) a subsequent year, is equal to the aggregate amount specified in
this clause for the previous year increased by annual percentage increase
specified in section 1860D-5(c)(8)(B) for the year involved.
`(D) The Secretary shall submit to Congress a report on the application
of this paragraph and may include in the report such recommendations as
the Secretary deems appropriate.'.
(2) CONFORMING AMENDMENT- Section 1108(f) (42 U.S.C. 1308(f)) is amended
by inserting `and section 1905(p)(5)(A)(ii)' after `Subject to subsection
(g)'.
(e) Application of Cost-Sharing- Section 1902(n)(2) (42 U.S.C. 1396a(n)(2))
is amended by adding at the end the following: `The previous sentence shall
not apply to medicare cost-sharing relating to benefits under part D of
title XVIII.'.
(f) Effective Date- The amendments made by this section apply to medical
assistance for premiums and cost-sharing incurred on or after January 1,
2006, with regard to whether regulations to implement such amendments are
promulgated by such date.
SEC. 105. EXPANSION OF MEMBERSHIP AND DUTIES OF MEDICARE PAYMENT ADVISORY
COMMISSION (MEDPAC).
(a) Expansion of Membership-
(1) IN GENERAL- Section 1805(c) (42 U.S.C. 1395b-6(c)) is amended--
(A) in paragraph (1), by striking `17' and inserting `19'; and
(B) in paragraph (2)(B), by inserting `experts in the area of pharmacology
and prescription drug benefit programs,' after `other health professionals,'.
(2) INITIAL TERMS OF ADDITIONAL MEMBERS-
(A) IN GENERAL- For purposes of staggering the initial terms of members
of the Medicare Payment Advisory Commission under section 1805(c)(3)
of the Social Security Act (42 U.S.C. 1395b-6(c)(3)), the initial terms
of the 2 additional members of the Commission provided for by the amendment
under paragraph (1)(A) are as follows:
(i) One member shall be appointed for 1 year.
(ii) One member shall be appointed for 2 years.
(B) COMMENCEMENT OF TERMS- Such terms shall begin on January 1, 2006.
(b) Expansion of Duties- Section 1805(b)(2) (42 U.S.C. 1395b-6(b)(2)) is
amended by adding at the end the following new subparagraph:
`(D) PRESCRIPTION DRUG BENEFIT PROGRAM- Specifically, the Commission
shall review, with respect to the prescription drug benefit program
under part D, the following:
`(i) The methodologies used for the management of costs and utilization
of prescription drugs.
`(ii) The prices negotiated and paid, including trends in such prices
and applicable discounts and comparisons with prices under section
1860D-6(a)(2)(E).
`(iii) The relationship of pharmacy acquisition costs to the prices
so negotiated and paid.
`(iv) The methodologies used to ensure access to covered outpatient
prescription drugs and to ensure quality in the appropriate dispensing
and utilization of such drugs.
`(v) The impact of the program on promoting the development of breakthrough
drugs.'.
TITLE II--AFFORDABLE PHARMACEUTICALS
Subtitle A--Importation of Prescription Drugs
SEC. 201. SHORT TITLE.
This subtitle may be cited as the `Pharmaceutical Market Access Act of 2005'.
SEC. 202. FINDINGS.
The Congress finds as follows:
(1) Americans unjustly pay up to 1000 percent more to fill their prescriptions
than consumers in other countries.
(2) The United States is the world's largest market for pharmaceuticals
yet consumers still pay the world's highest prices.
(3) An unaffordable drug is neither safe nor effective. Allowing and structuring
the importation of prescription drugs ensures access to affordable drugs,
thus providing a level of safety to American consumers they do not currently
enjoy.
(4) According to the Congressional Budget Office, American seniors alone
will spend $1.8 trillion dollars on pharmaceuticals over the next ten
years.
(5) Allowing open pharmaceutical markets could save American consumers
at least $635 billion of their own money each year.
SEC. 203. PURPOSES.
The purposes of this subtitle are as follows:
(1) RELIEF FROM HIGH DRUG COSTS- To give all Americans immediate relief
from the outrageously high cost of pharmaceuticals.
(2) CORRECT ECONOMICS OF DRUG MARKET- To reverse the perverse economics
of the American pharmaceutical markets.
(3) LIMITING IMPORTATION OF DRUGS TO THOSE ONLY APPROVED BY THE FDA- To
allow the importation of drugs only if the drugs and the facilities where
they are manufactured are approved by the Food and Drug Administration,
and to exclude pharmaceutical narcotics.
(4) USE OF COUNTERFEIT-RESISTANT PACKAGING- To require that imported prescription
drugs be packaged and shipped using counterfeit-resistant technologies
approved by the Bureau of Engraving and Printing (technologies similar
to those used to secure United States currency).
SEC. 204. IMPORTATION OF PRESCRIPTION DRUGS.
(a) Restoration of Former Text- The Federal Food, Drug, and Cosmetic Act
is is amended--
(1) in section 804 (21 U.S.C. 384), by amending the section to read as
if section 1121(a) of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (Public Law 108-173) had not been enacted;
(2) in section 301 (21 U.S.C. 331), by amending the section to read as
if section 1121(b)(1) of such Act had not been enacted; and
(3) in section 303 (21 U.S.C. 333), by amending the section to read as
if section 1121(b)(2) of such Act had not been enacted.
(b) Importation of Prescription Drugs- Section 804 of the Federal Food,
Drug, and Cosmetic Act, as amended by subsection (a), is amended--
(A) by striking `The Secretary' and inserting `Not later than 180 days
after the date of the enactment of the Pharmaceutical Market Access
Act of 2005, the Secretary'; and
(B) by striking `pharmacists and wholesalers' and inserting `pharmacists,
wholesalers, and qualifying individuals';
(A) by amending paragraph (1) to read as follows:
`(1) require that each covered product imported pursuant to such subsection
complies with sections 501, 502, and 505, and other applicable requirements
of this Act; and';
(B) in paragraph (2), by striking `, including subsection (d); and'
and inserting a period; and
(C) by striking paragraph (3);
(3) in subsection (c), by inserting `by pharmacists and wholesalers (but
not qualifying individuals)' after `importation of covered products';
(A) by striking paragraphs (3) and (10);
(B) in paragraph (5), by striking `, including the professional license
number of the importer, if any';
(i) in subparagraph (C), by inserting `(if required under subsection
(e))' before the period;
(ii) in subparagraph (D), by inserting `(if required under subsection
(e))' before the period; and
(iii) in subparagraph (E), by striking `labeling';
(i) in subparagraph (A), by inserting `(if required under subsection
(e))' before the period; and
(ii) by amending subparagraph (B) to read as follows:
`(B) Certification from the importer or manufacturer of such product
that the product meets all requirements of this Act.'; and
(E) by redesignating paragraphs (4) through (9) as paragraphs (3) through
(8), respectively;
(5) by amending subsection (e) to read as follows:
`(1) IN GENERAL- Subject to paragraph (2), regulations under subsection
(a) shall require that testing referred to in paragraphs (5) through (7)
of subsection (d) be conducted by the importer of the covered product,
unless the covered product is a prescription drug subject to the requirements
of section 505C for counterfeit-resistant technologies.
`(2) EXCEPTION- The testing requirements of paragraphs (5) through (7)
of subsection (d) shall not apply to an importer unless the importer is
a wholesaler.';
(6) in subsection (f), by striking `or designated by the Secretary, subject
to such limitations as the Secretary determines to be appropriate to protect
the public health';
(A) by striking `counterfeit or'; and
(B) by striking `and the Secretary determines that the public is adequately
protected from counterfeit and violative covered products being imported
pursuant to subsection (a)';
(8) in subsection (i)(1)--
(A) by amending subparagraph (A) to read as follows:
`(A) IN GENERAL- The Secretary shall conduct, or contract with an entity
to conduct, a study on the imports permitted pursuant to subsection
(a), including consideration of the information received under subsection
(d). In conducting such study, the Secretary or entity shall evaluate
the compliance of importers with regulations under subsection (a), and
the incidence of shipments pursuant to such subsection, if any, that
have been determined to be misbranded or adulterated, and determine
how such compliance contrasts with the incidence of shipments of prescription
drugs transported within the United States that have been determined
to be misbranded or adulterated.'; and
(B) in subparagraph (B), by striking `Not later than 2 years after the
effective date of final regulations under subsection (a),' and inserting
`Not later than 18 months after the date of the enactment of the Pharmaceutical
Market Access Act of 2005,';
(9) in subsection (k)(2)--
(A) by redesignating subparagraphs (D) and (E) as subparagraphs (E)
and (F), respectively; and
(B) by inserting after subparagraph (C) the following:
`(D) The term `qualifying individual' means an individual who is not
a pharmacist or a wholesaler.'; and
(10) by striking subsections (l) and (m).
SEC. 205. USE OF COUNTERFEIT-RESISTANT TECHNOLOGIES TO PREVENT COUNTERFEITING.
(a) Misbranding- Section 502 of the Federal Food, Drug, and Cosmetic Act
(21 U.S.C. 352; deeming drugs and devices to be misbranded) is amended by
adding at the end the following:
`(x) If it is a drug subject to section 503(b), unless the packaging of
such drug complies with the requirements of section 505C for counterfeit-resistant
technologies.'.
(b) Requirements- Title V of the Federal Food, Drug, and Cosmetic Act (21
U.S.C. 351 et seq.) is amended by inserting after section 505B the following:
`SEC. 505C. COUNTERFEIT-RESISTANT TECHNOLOGIES.
`(a) Incorporation of Counterfeit-Resistant Technologies Into Prescription
Drug Packaging- The Secretary shall require that the packaging of any drug
subject to section 503(b) incorporate--
`(1) overt optically variable counterfeit-resistant technologies that
are described in subsection (b) and comply with the standards of subsection
(c); or
`(2) technologies that have an equivalent function of security, as determined
by the Secretary.
`(b) Eligible Technologies- Technologies described in this subsection--
`(1) shall be visible to the naked eye, providing for visual identification
of product authenticity without the need for readers, microscopes, lighting
devices, or scanners;
`(2) shall be similar to that used by the Bureau of Engraving and Printing
to secure United States currency;
`(3) shall be manufactured and distributed in a highly secure, tightly
controlled environment; and
`(4) should incorporate additional layers of non-visible covert security
features up to and including forensic capability.
`(c) Standards for Packaging-
`(1) MULTIPLE ELEMENTS- For the purpose of making it more difficult to
counterfeit the packaging of drugs subject to section 503(b), manufacturers
of the drugs shall incorporate the technologies described in subsection
(b) into multiple elements of the physical packaging of the drugs, including
blister packs, shrink wrap, package labels, package seals, bottles, and
boxes.
`(2) LABELING OF SHIPPING CONTAINER- Shipments of drugs described in subsection
(a) shall include a label on the shipping container that incorporates
the technologies described in subsection (b), so that officials inspecting
the packages will be able to determine the authenticity of the shipment.
Chain of custody procedures shall apply to such labels and shall include
procedures applicable to contractual agreements for the use and distribution
of the labels, methods to audit the use of the labels, and database access
for the relevant governmental agencies for audit or verification of the
use and distribution of the labels.'.
Subtitle B--Quality Control and Cost Containment Blue Ribbon Task Force
SEC. 211. TASK FORCE.
(a) Establishment- There is established a permanent bipartisan advisory
committee (appointed by the congressional officials specified in subsection
(c)), to be known as the Quality Control and Cost Containment Blue Ribbon
Task Force (in this section referred to as the `Task Force').
(b) Duties- The duties of the Task Force shall be the following:
(1) To study the following:
(A) The most cost-effective ways to reduce the costs of prescription
drug costs without compromising quality.
(B) The use of generic drugs and imported drugs to reduce the costs
of prescription drugs under the medicare program.
(C) The effect of patents and other intellectual property rights on
the costs of prescription drugs, including all possible options to reduce
such costs through more innovative and flexible patent laws.
(D) The impact of both government and private research and development
on the costs of prescription drugs, including all possible options to
reduce such costs through more innovative and flexible ways to research
and develop new prescription drugs.
(2) To provide testimony to the Congress on ways to contain prescription
drug costs without compromising quality.
(3) To submit an annual report under subsection (f).
(1) APPOINTMENT- The Task Force shall be composed of 20 members, as follows:
(A) 5 members, appointed by the Chairman of the Committee on Energy
and Commerce of the House of Representatives.
(B) 5 members, appointed by the ranking member of the Committee on Energy
and Commerce of the House of Representatives.
(C) 5 members, appointed by the Chairman of the Committee on Commerce,
Science, and Transportation of the Senate.
(D) 5 members, appointed by the ranking member of the Committee on Commerce,
Science, and Transportation of the Senate.
(2) QUALIFICATIONS- The members of the Task Force shall be appointed from
among academics, economists, physicians, representatives of nongovernmental
organizations, and scientists, who are experts in the fields of business,
economics, medicine, and patent law.
(3) TERM- Each member of the Task Force shall be appointed for a term
of not more than 3 years and may be reappointed for 1 or more additional
terms.
(4) VACANCIES- Any member appointed to fill a vacancy occurring before
the expiration of the term for which the member's predecessor was appointed
shall be appointed only for the remainder of that term. A member may serve
after the expiration of that member's term until a successor has taken
office. A vacancy in the Task Force shall be filled in the manner in which
the original appointment was made.
(5) BASIC PAY; TRAVEL EXPENSES- Members of the Task Force shall serve
without pay, except that each member shall receive travel expenses, including
per diem in lieu of subsistence, in accordance with applicable provisions
under subchapter I of chapter 57 of title 5, United States Code.
(1) APPOINTMENT- The Task Force may appoint and fix the pay of not more
than 5 staff members.
(2) APPLICABILITY OF CERTAIN CIVIL SERVICE LAWS- The staff of the Task
Force may be appointed without regard to the provisions of title 5, United
States Code, governing appointments in the competitive service, and may
be paid (to the extent and in the amounts provided in advance in appropriation
Acts) without regard to the provisions of chapter 51 and subchapter III
of chapter 53 of that title relating to classification and General Schedule
pay rates.
(e) Hearings and Sessions- The Task Force may, for the purpose of carrying
out this section, hold hearings, sit and act at times and places, take testimony,
and receive evidence as the Task Force considers appropriate.
(1) IN GENERAL- The Task Force shall provide an annual report to the President,
the Congress, and the Centers for Medicare & Medicaid Services on
the results of the studies conducted by the Task Force under subsection
(b).
(2) DISSENTING OPINIONS- The Task Force shall give each Member of the
Task Force an opportunity to include a dissenting opinion in each annual
report under this subsection.
(g) Authorization of Appropriations- To carry out this section, there are
authorized to be appropriated $400,000 for fiscal year 2006 and each subsequent
fiscal year.
TITLE III--DEFENSE OF MEDICARE
SEC. 301. ELIMINATION OF PRIVATIZATION OF MEDICARE.
(a) Repeal of Comparative Cost Adjustment (Cca) Program- Subtitle E of title
II of the Medicare Prescription Drug, Improvement, and Modernization Act
of 2003, and the amendments made by such subtitle, are repealed.
(b) Prohibition of Privatization- No provision of law, including the new
prescription drug program under part D of title XVIII of the Social Security
Act, shall be applied in a manner that prevents a medicare beneficiary from
continuing to obtain benefits under a traditional fee-for-service medicare
program.
SEC. 302. REPEAL OF MA REGIONAL PLAN STABILIZATION FUND.
(a) In General- Section 1858 of the Social Security Act, as added by section
221(c) of the Medicare Prescription Drug, Improvement, and Modernization
Act of 2003, is amended--
(1) by striking subsection (e);
(2) by redesignating subsections (f), (g), and (h) as subsections (e),
(f), and (g), respectively; and
(3) in subsection (e), as so redesignated, by striking `subject to subsection
(e),'.
(b) Conforming Amendment- Section 1851(i)(2) of the Social Security Act
(42 U.S.C. 1395w-21(i)(2)), as amended by section 221(d)(5) of the Medicare
Prescription Drug, Improvement, and Modernization Act of 2003, is amended
by striking `1858(h)' and inserting `1858(g)'.
SEC. 303. REPEAL OF HEALTH SAVINGS ACCOUNTS.
Section 1201 of the Medicare Prescription Drug, Improvement, and Modernization
Act of 2003, and the amendments made by such section, are repealed.
SEC. 304. APPLICATION OF RISK ADJUSTMENT REFLECTING CHARACTERISTICS FOR
THE ENTIRE MEDICARE POPULATION.
Effective January 1, 2006, in applying risk adjustment factors to payment
to organizations under section 1853 of the Social Security Act (42 U.S.C.
1395w-23) in a budget neutral manner, the Secretary of Health and Human
Services shall assure that such factors, in the aggregate, take into account
the actuarial characteristics of the entire medicare population, and not
merely the population of individuals enrolled under a plan under part C
of title XVIII of such Act.
SEC. 305. PHASE-IN TO PAYMENT AT 100 PERCENT OF FEE-FOR-SERVICE RATE.
Notwithstanding any other provision of law, the Secretary of Health and
Human Services shall provide, in a phased-in manner over a 5-year period
beginning with 2006, for adjustment of payment rates to organizations under
section 1853 of the Social Security Act so that, at the end of such phase-in
period, such payment rates reflect only the payment rate described in subsection
(c)(1)(D) of such section (relating to 100 percent fee-for-service payment).
SEC. 306. REPEAL OF MEDICARE EXPENDITURE CAP.
Subtitle A of title VIII of the Medicare Prescription Drug, Improvement,
and Modernization Act of 2003 is repealed.
SEC. 307. CONTINUOUS OPEN ENROLLMENT IN MEDICAREADVANTAGE PLANS.
Section 1851(e)(2) of the Social Security Act (42 U.S.C. 1395w-21(e)(2))
is amended to read as follows:
`(2) OPEN ENROLLMENT AND DISENROLLMENT OPPORTUNITIES- Subject to paragraph
(5), an MA eligible individual may change the election under subsection
(a)(1) at any time and without any penalty or charge.'.
SEC. 308. EFFECTIVE DATE.
(a) In General- The amendments made by this title shall take effect as if
included in the enactment of the Medicare Prescription Drug, Improvement,
and Modernization Act of 2003.
(b) Application of Laws- If any amendment to any provision of any Act is
repealed by this title, such provision shall be restored, applied, and administered
as if the amendment had never been enacted.
END
