To amend title XVIII of the Social Security Act to establish a safety net Medicare outpatient prescription drug program for indigent beneficiaries without other outpatient prescription drug coverage.

October 17, 2003

Mr. BURTON of Indiana introduced the following bill; which was referred to the Committee on Energy and Commerce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

To amend title XVIII of the Social Security Act to establish a safety net Medicare outpatient prescription drug program for indigent beneficiaries without other outpatient prescription drug coverage.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) SHORT TITLE- This Act may be cited as the `Medicare Safety Net Prescription Drug Coverage Act of 2003'.

(b) TABLE OF CONTENTS- The table of contents of this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Safety net medicare outpatient prescription drug program for indigent, uncovered beneficiaries.

`Part D--Safety Net Medicare Outpatient Prescription Drug Program for Indigent, Uncovered Beneficiaries

Sec. 3. Exclusion of part D costs from determination of part B monthly premium.

Sec. 4. Medicaid amendments.

Sec. 5. Importation of prescription drugs.

SEC. 2. SAFETY NET MEDICARE OUTPATIENT PRESCRIPTION DRUG PROGRAM FOR INDIGENT, UNCOVERED BENEFICIARIES.

(a) ESTABLISHMENT OF PROGRAM- Title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) is amended by redesignating part D as part E and by inserting after part C the following new part:

`Part D--Safety Net Medicare Outpatient Prescription Drug Program for Indigent, Uncovered Beneficiaries

`ESTABLISHMENT OF PROGRAM

`SEC. 1860D-1. (a) PROVISION OF BENEFIT- The Secretary shall establish a Medicare Safety Net Outpatient Prescription Drug Program under this part under which an eligible beneficiary who voluntarily enrolls under this part is provided--

`(1) access to negotiated prices for costs before catastrophic threshold;

`(2) catastrophic coverage under this part; and

`(3) a prescription drug account and a public contribution into such an account.

`(b) ELIGIBLE BENEFICIARY; ELIGIBLE ENTITY; PRESCRIPTION DRUG ACCOUNT- For purposes of this part:

`(1) ELIGIBLE BENEFICIARY- The term `eligible beneficiary' means an individual who--

`(A) is eligible for benefits under part A or enrolled under part B, regardless of whether or not the individual is enrolled with a plan under part C;

`(B) does not have, and is not eligible for, any prescription drug coverage under title XIX, under a group health plan, under part C, under individual health insurance coverage, under a medicare supplemental policy, under a State pharmaceutical assistance program, or under chapter 17 of title 38, United States Code (relating to Veterans benefits); and

`(C) has current income (as defined and determined by the Secretary) to be less than 250 percent of the official poverty line.

`(2) PRESCRIPTION DRUG ACCOUNT- The term `prescription drug account' means, with respect to an eligible beneficiary, an account established for the benefit of that beneficiary under section 1860D-5.

`(c) IMPLEMENTATION OF PROGRAM-

`(1) DEADLINE FOR IMPLEMENTATION- The Secretary shall establish the program under this part in a manner so that benefits with respect to contributions to a prescription drug account and catastrophic coverage shall begin with the month of January 2005.

`(2) ADMINISTRATION THROUGH NEW DIVISION WITHIN HHS- The Secretary shall provide for establishment of a separate division within the Department of Health and Human Services that shall be responsible for the administration of this part.

`(d) VOLUNTARY NATURE OF PROGRAM- Nothing in this part shall be construed as requiring an eligible beneficiary to enroll in the program under this part.

`(e) FINANCING- The costs of providing benefits under this part shall be payable from the Safety Net Prescription Drug Account established within the Federal Supplementary Medical Insurance Trust Fund under section 1860D-6.

`ENROLLMENT; SELECTION OF ELIGIBLE ENTITY

`SEC. 1860D-2. (a) ENROLLMENT UNDER PART D-

`(1) ESTABLISHMENT OF PROCESS-

`(A) IN GENERAL- The Secretary shall establish a process through which an eligible beneficiary may make an election to enroll under this part. Under such process--

`(i) a beneficiary may enroll at any time during a year (or during an initial enrollment period beginning on October 1, 2004, for 2005);

`(ii) once first enrolled with respect to a year, a beneficiary is eligible for benefits for the remainder of the year; and

`(iii) for succeeding years, a beneficiary must recertify eligibility on an annual basis (as specified by the Secretary) to remain eligible for benefits under this part.

`(B) REQUIREMENT OF ENROLLMENT- An eligible beneficiary must be enrolled under this part for a year in order to be eligible to receive the benefits under this part for that year.

`(C) TERMINATION OF ENROLLMENT- An enrollee under this part shall be disenrolled--

`(i) upon termination of coverage under part A or part B;

`(ii) upon notice submitted to the Secretary in such form, manner, and time as the Secretary shall provide; and

`(iii) upon failure to have eligibility recertified in accordance with subparagraph (A)(iii).

Terminations of enrollment under this subparagraph shall be effective as specified by the Secretary in regulations.

`(2) PERIOD OF COVERAGE- Individuals enrolled under this part after the beginning of a year, are eligible for benefits beginning on the first day of the month following the month in which such enrollment occurs.

`(b) PROVIDING ENROLLMENT AND COVERAGE INFORMATION TO BENEFICIARIES- The Secretary shall provide for activities under this part to broadly disseminate information to eligible beneficiaries (and prospective eligible beneficiaries) regarding enrollment under this part and the prescription drug coverage made available under this part.

`(c) NO ENROLLMENT FEE- There shall be no fee for enrollment under this part.

`(d) ISSUANCE OF CARD AND COORDINATION- The Secretary shall--

`(1) issue to each enrolled beneficiary a card and an enrollment number that establishes proof of enrollment and that can be used in a coordinated manner--

`(A) to identify the beneficiary for purposes of this part, including tracking expenditures that count against the catastrophic coverage threshold; and

`(B) to make deposits to and withdrawals from a prescription drug account under section 1860D-5; and

`(2) provide for electronic methods to coordinate with such prescription drug accounts.

`ENROLLEE PROTECTIONS

`SEC. 1860D-3. (a) DISSEMINATION OF INFORMATION-

`(1) GENERAL INFORMATION- The Secretary shall disclose, in a clear, accurate, and standardized manner to eligible beneficiaries enrolled under this part, information relating to prescription drug coverage under this part.

`(2) DISCLOSURE UPON REQUEST OF GENERAL COVERAGE, UTILIZATION, AND GRIEVANCE INFORMATION- Upon request of an eligible beneficiary, the Secretary shall provide the information described in section 1852(c)(2) (other than subparagraph (D)) to such beneficiary.

`(3) RESPONSE TO BENEFICIARY QUESTIONS- The Secretary shall have a mechanism (including a toll-free telephone number) for providing upon request specific information (such as negotiated prices, including discounts) to beneficiaries enrolled under this part.

`(4) COORDINATION WITH CATASTROPHIC COVERAGE AND PRESCRIPTION DRUG ACCOUNT BENEFITS- The Secretary shall provide for coordination of such information as the Secretary may specify to carry out sections 1860D-4(b) and 1860D-5.

`(b) ACCESS TO COVERED BENEFITS-

`(1) ENSURING PHARMACY ACCESS-

`(A) PARTICIPATION OF ANY WILLING PHARMACY- The Secretary shall permit the participation of any pharmacy that meets terms and conditions that the Secretary has established.

`(B) NEGOTIATION OF PRICES- The Secretary may negotiate with different vendors different prices to be paid for outpatient prescription drugs.

`(2) ACCESS TO NEGOTIATED PRICES FOR PRESCRIPTION DRUGS- For requirements relating to the access of an eligible beneficiary to negotiated prices (including applicable discounts), see section 1860D-4(a).

`(c) COST AND UTILIZATION MANAGEMENT; QUALITY ASSURANCE; MEDICATION THERAPY MANAGEMENT PROGRAM-

`(1) IN GENERAL- For purposes of providing access to negotiated benefits under section 1860D-4(a) and the catastrophic benefit described in section 1860D-4(b), the Secretary may establish--

`(A) an effective cost and drug utilization management program, including appropriate incentives to use generic drugs, when appropriate;

`(B) quality assurance measures and systems to reduce medical errors and adverse drug interactions, including a medication therapy management program described in paragraph (2); and

`(C) a program to control fraud, abuse, and waste.

`(2) MEDICATION THERAPY MANAGEMENT PROGRAM-

`(A) IN GENERAL- A medication therapy management program described in this paragraph is a program of drug therapy management and medication administration that may be furnished by a pharmacy provider and that is designed to assure, with respect to beneficiaries at risk for potential medication problems, such as beneficiaries with complex or chronic diseases (such as diabetes, asthma, hypertension, and congestive heart failure) or multiple prescriptions, that covered outpatient drugs are appropriately used to optimize therapeutic outcomes through improved medication

use and reduce the risk of adverse events, including adverse drug interactions. Such programs may distinguish between services in ambulatory and institutional settings.

`(B) ELEMENTS- Such program may include--

`(i) enhanced beneficiary understanding to promote the appropriate use of medications by beneficiaries and to reduce the risk of potential adverse events associated with medications, through beneficiary education, counseling, case management, disease state management programs, and other appropriate means;

`(ii) increased beneficiary adherence with prescription medication regimens through medication refill reminders, special packaging, and other compliance programs and other appropriate means; and

`(iii) detection of patterns of overuse and underuse of prescription drugs.

`(C) DEVELOPMENT OF PROGRAM IN COOPERATION WITH LICENSED PHARMACISTS- The program shall be developed in cooperation with licensed and practicing pharmacists and physicians.

`(D) CONSIDERATIONS IN PHARMACY FEES- The Secretary may take into account, in establishing fees for pharmacists and others providing services under the medication therapy management program, the resources and time used in implementing the program.

`(d) GRIEVANCE MECHANISM, COVERAGE DETERMINATIONS, AND RECONSIDERATIONS- Subsections (f) and (g) of section 1852 shall apply with respect to benefits for drugs through the Secretary under this part in the same manner as such requirements apply to an organization with respect to benefits it offers under a plan under part C.

`BENEFITS UNDER THE PROGRAM

`SEC. 1860D-4. (a) SAVINGS TO ENROLLEES THROUGH NEGOTIATED PRICES-

`(1) ACCESS TO NEGOTIATED PRICES-

`(A) IN GENERAL- Subject to paragraph (2), the Secretary shall provide each eligible beneficiary enrolled under this part with access to negotiated prices (including applicable discounts) for prescription drugs.

`(B) SCOPE OF ACCESS- For purposes of this paragraph, the term `prescription drugs' is not limited to covered outpatient drugs, but does not include any over-the-counter drug that is not a covered outpatient drug.

`(C) EXEMPTION FROM COMPUTATION OF BEST PRICE UNDER MEDICAID PROGRAM- The prices negotiated by the Secretary under this paragraph shall (notwithstanding any other provision of law) not be taken into account for the purposes of establishing the best price under section 1927(c)(1)(C).

`(2) PROHIBITION ON CHARGES FOR REQUIRED SERVICES- The Secretary (and any pharmacy contracting with the Secretary for the provision of a discount under this part) may not charge a beneficiary any amount for any services required to be provided under this part.

`(b) CATASTROPHIC COVERAGE-

`(1) SCOPE OF COVERAGE-

`(A) SCOPE-

`(i) IN GENERAL- Subject to paragraph (4), the catastrophic coverage under this section shall consist of payment under this part for incurred expenses for covered outpatient drugs for an enrollee after the enrollee has incurred in a year expenses that equal the catastrophic coverage threshold specified in subparagraph (C) or (D) for the enrollee and year involved.

`(ii) PAYMENT RATE- The rate of payment negotiated by the Secretary with the manufacturer for a covered outpatient drug shall be the amount paid under this part on behalf of the individual for the drug.

`(B) APPLICATION- In applying subparagraph (A)--

`(i) incurred expenses shall only include costs incurred for the catastrophic coverage threshold; and

`(ii) expenses that are not paid directly from a prescription drug account shall be counted under clause (i) only if, under such process as the Secretary shall recognize, the account number of the individual's prescription drug account is part of the transaction involved.

`(C) CATASTROPHIC COVERAGE THRESHOLDS-

`(i) INITIAL CATASTROPHIC COVERAGE THRESHOLD- Subject to clause (ii) and subsection (e)(3), the catastrophic coverage threshold is $3,000.

`(ii) INFLATION ADJUSTMENT- The provisions of subsection (c)(2)(B) shall apply with respect to the catastrophic coverage threshold under clause (i) for a year after 2004 in the same manner as it applied to the annual Federal contribution amount for that year, except that, for purposes of this subparagraph, any reference in subsection (c)(2)(B)(ii) to `$1' is deemed a reference to `$100'.

`(2) ADMINISTRATION- Insofar as the Secretary does not provide for the catastrophic coverage under this subsection through a contract with a qualifying private entity, the Secretary is authorized to enter into such agreements with entities as may be required to provide for the benefits under this subsection. Such entities may be eligible entities, carriers under part B, fiscal intermediaries under part A, or other qualified entities.

`(c) CONTRIBUTION INTO PRESCRIPTION DRUG ACCOUNT-

`(1) IN GENERAL- In the case of an individual enrolled under this part, the Secretary shall--

`(A) establish a prescription drug account for the individual under section 1860D-5; and

`(B) make deposits into such account in accordance with subsection (c) of such section.

Amounts so deposited shall not be treated as income to the accountholder for purposes of the Internal Revenue Code of 1986.

`(2) ANNUAL FEDERAL CONTRIBUTION AMOUNT-

`(A) INITIAL AMOUNT- Subject to subparagraph (B) and subsections (d) and (e)(3), in the case of an accountholder whose modified adjusted gross income is--

`(i) not more than 100 percent of the poverty line, the annual Federal contribution amount is $2,500;

`(ii) more than 100 percent, but less than 125 percent, of the poverty line, the annual Federal contribution amount is $1,500;

`(iii) more than 125 percent, but less than 175 percent, of the poverty line, the annual Federal contribution amount is $1,100; and

`(iv) at least 175 percent, but less than 250 percent, of the poverty line, the annual Federal contribution amount is $600.

`(B) INFLATION ADJUSTMENT-

`(i) IN GENERAL- For a year after 2004, the annual Federal contribution amount shall be the amount specified in subparagraph (A) increased by the percentage (if any) by which--

`(I) the average per capita aggregate expenditures for covered outpatient drugs in the United States for medicare beneficiaries, as determined by the Secretary for the 12-month period ending in July of the previous year; exceeds

`(II) such aggregate expenditures for the 12-month period ending with July 2004.

`(ii) ROUNDING- If an annual Federal contribution amount determined under clause (i) is not a multiple of $1, such increase shall be rounded to the nearest multiple of $1.

`(d) REQUIREMENT FOR VERIFICATION OF ELIGIBILITY-

`(1) IN GENERAL- An individual shall not be treated as an eligible beneficiary for purposes of benefits under this part unless the individual--

`(A) provides such information as the Secretary may require in order to determine eligibility under section 1860D-1(b) and the appropriate category of benefits under subsection (c)(2)(A); and

`(B) authorizes in a form and manner specified by the Secretary the verification of the individual's income and prescription drug coverage status by the Secretary through arrangements with States or otherwise.

An arrangement with a State under subparagraph (B) shall provide for the payment by the Secretary under this part of the State's reasonable costs of conducting verifications under such arrangement.

`(2) PENALTIES FOR PROVISION OF FALSE INFORMATION- The provision of false information under paragraph (1)(A) is subject to criminal penalties under section 1128B.

`(3) PROCEDURES FOR DETERMINING INCOME- The Secretary shall establish procedures for determining the income of individuals seeking enrollment under this part.

`(4) DISCLOSURE OF INFORMATION- Notwithstanding section 6103(a) of the Internal Revenue Code of 1986, the Secretary of the Treasury may, upon written request from the Secretary, disclose to the Secretary such return information as is necessary to make the determinations described in subparagraph (A). Return information disclosed under the preceding sentence may be used by the Secretary only for the purposes of, and to the extent necessary in, making such determinations.

`(5) INFORMATION REGARDING PRESCRIPTION DRUG COVERAGE- In order to verify compliance with the eligibility requirement of section 1860D-1(b)(1)(B), the Secretary is authorized to establish procedures, in coordination with the Secretary of Treasury and the Secretary of Labor, for determining whether eligible beneficiaries have prescription drug coverage through insurance or otherwise, or under a group health plan or other third-party payment arrangement, and for alerting the Secretary about such coverage or arrangements. The Secretary may also periodically ask eligible beneficiaries enrolled under this part whether the beneficiaries are eligible or have such coverage. A material misrepresentation of the information described in the preceding sentence by a beneficiary (as defined in standards set by the Secretary and determined through a process established by the Secretary) shall constitute grounds for termination of enrollment under section 1860D-2(a)(1)(C).

`(e) CAPPED APPROPRIATIONS TO COVER PROGRAM EXPENDITURES-

`(1) IN GENERAL- For the purpose of carrying out this part, there is appropriated, out of any money in the Treasury not otherwise appropriated to the Medicare Safety Net Prescription Drug Account in the Federal Supplementary Medical Insurance Trust Fund established under section 1841 the following amounts:

`(A) $18,000,000,000 for fiscal year 2005.

`(B) $19,000,000,000 for fiscal year 2006.

`(C) $20,000,000,000 for fiscal year 2007.

`(D) $21,000,000,000 for fiscal year 2008.

`(E) $22,000,000,000 for fiscal year 2009.

`(F) $23,000,000,000 for fiscal year 2010.

`(G) $24,000,000,000 for fiscal year 2011.

`(H) $25,000,000,000 for fiscal year 2012.

`(I) $28,000,000,000 for fiscal year 2013.

`(2) AVAILABILITY ON A CALENDAR YEAR BASIS- The amounts appropriated under paragraph (1) for a fiscal year are authorized for obligation during the calendar year beginning in such fiscal year.

`(3) ASSURANCE OF MAINTENANCE OF PROGRAM WITHIN FUNDING LIMITATIONS-

`(A) ANNUAL ESTIMATION- Before the beginning of each year beginning with 2005), the Secretary shall estimate--

`(i) the aggregate expenditures that will be made under this part for that year (without regard to any adjustment under this paragraph); and

`(ii) the cumulative aggregate expenditures that were made under this part for previous years (beginning with 2005).

`(B) ADJUSTMENT- If the Secretary estimates under subparagraph (A)(i) for a year that such estimated aggregate expenditures will exceed the amount authorized for obligation during the year under paragraph (2) (as reduced by the amount by which the cumulative aggregate expenditures for previous years under subparagraph (A)(ii) are less than the amounts authorized for obligations during the respective years under paragraph (2)), the Secretary shall take such of the following actions for that year (or, at the Secretary's discretion, for the period, not to exceed 4 years, including that year) as will eliminate any such excess:

`(i) An increase in the catastrophic coverage threshold under subsection (b)(1)(C).

`(ii) A decrease in the Federal contribution amounts under subsection (c)(2).

`PRESCRIPTION DRUG ACCOUNTS

`SEC. 1860D-5. (a) ESTABLISHMENT OF ACCOUNTS-

`(1) IN GENERAL- The Secretary shall establish and maintain for each eligible beneficiary who is enrolled under this part at the time of enrollment a prescription drug account (in this section referred to as an `account').

`(2) ACCOUNTHOLDER DEFINED- In this section, the term `accountholder' means an individual for whom an account or reserve account has been established under this section.

`(3) EXPENDITURES FROM ACCOUNT- Nothing in this section shall be construed as requiring the Federal Government to obligate funds for amounts in any account until such time as a withdrawal from such account is authorized under this section.

`(b) USE OF ACCOUNTS-

`(1) IN GENERAL- Amounts credited to an account shall only be used for the purchase of covered outpatient drugs for the accountholder. Any amounts remaining at the end of a year remain available for expenditures in succeeding years so long as the eligible beneficiary remains enrolled under this part.

`(2) TREATMENT OF WITHDRAWALS- The withdrawal of any amounts from an account in accordance with this section shall not be subject to income or other tax.

`(c) AMOUNTS CREDITED IN ACCOUNT-

`(1) IN GENERAL- The Secretary shall credit to a prescription drug account of an eligible beneficiary Federal contributions described in section 1860D-4(c) in accordance with paragraph (2).

`(2) TIMING AND AMOUNT OF DEPOSIT- In the case of an eligible beneficiary who is enrolled under this part at the beginning of a year, the entire annual Federal contribution amount under section 1860D-4(c)(2) shall be made into the beneficiary's account at the beginning of the year. In the case of an eligible beneficiary who is enrolled under this part after the beginning of a year, the amount of such contribution shall be pro-rated by the Secretary and deposited into the beneficiary's account at the time of enrollment.

`(3) TREATMENT OF CONTRIBUTIONS- Such contributions shall not be treated as income for purposes of chapter 1 of the Internal Revenue Code of 1986.

`SAFETY NET PRESCRIPTION DRUG ACCOUNT IN THE FEDERAL SUPPLEMENTARY MEDICAL INSURANCE TRUST FUND

`SEC. 1860D-6. (a) ESTABLISHMENT-

`(1) IN GENERAL- There is created within the Federal Supplementary Medical Insurance Trust Fund established by section 1841 an account to be known as the `Safety Net Prescription Drug Account' (in this section referred to as the `Account').

`(2) FUNDS- The Account 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, the Account as provided in this part.

`(3) SEPARATE FROM REST OF TRUST FUND- Funds provided under this part to the Account shall be kept separate from all other funds within the Federal Supplementary Medical Insurance Trust Fund.

`(b) PAYMENTS FROM ACCOUNT-

`(1) IN GENERAL- The Managing Trustee shall pay from time to time from the Account such amounts as the Secretary certifies are necessary to make payments to operate the program under this part, including payments with respect to administrative expenses under this part in accordance with section 201(g).

`(2) TREATMENT IN RELATION TO PART B PREMIUM- Amounts payable from the Account shall not be taken into account in computing actuarial rates or premium amounts under section 1839.

`(c) APPROPRIATIONS TO COVER BENEFITS AND ADMINISTRATIVE COSTS- There are appropriated to the Account in a fiscal year, out of any moneys in the Treasury not otherwise appropriated, an amount equal to the payments and transfers made from the Account in the year.

`DEFINITIONS

`SEC. 1860D-7. In this part:

`(1) COVERED OUTPATIENT DRUG-

`(A) IN GENERAL- Except as provided in subparagraph (B), the term `covered outpatient drug' means--

`(i) a drug that may be dispensed only upon a prescription and that is described in clause (i) or (ii) of subparagraph (A) of section 1927(k)(2); or

`(ii) a biological product or insulin described in subparagraph (B) or (C) of such section.

`(B) EXCLUSIONS-

`(i) IN GENERAL- The term `covered outpatient drug' does not include 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 those restricted under subparagraph (E) of such section (relating to smoking cessation agents).

`(ii) AVOIDANCE OF DUPLICATE COVERAGE- A drug prescribed for an individual that would otherwise be a covered outpatient drug under this part shall not be considered to be such a drug if payment for the drug is available under part A or B (but such drug shall be so considered if such payment is not available because the eligible beneficiary has exhausted benefits under part A or B), without regard to whether the individual is entitled to benefits under part A or enrolled under part B.

`(2) POVERTY LINE- The term `poverty line' means the income official poverty line (as defined by the Office of Management and Budget, and revised annually in accordance with section 673(2) of the Omnibus Budget Reconciliation Act of 1981) applicable to a family of the size involved.'.

(b) CONFORMING REFERENCES TO PREVIOUS PART D-

(1) IN GENERAL- Any reference in law (in effect before the date of enactment of this Act) to part D of title XVIII of the Social Security Act is deemed a reference to part F of such title (as in effect after such date).

(2) SECRETARIAL SUBMISSION OF LEGISLATIVE PROPOSAL- Not later than 6 months after the date of enactment of this section, the Secretary of Health and Human Services shall submit to the appropriate committees of Congress a legislative proposal providing for such technical and conforming amendments in the law as are required by the provisions of this section.

SEC. 3. EXCLUSION OF PART D COSTS FROM DETERMINATION OF PART B MONTHLY PREMIUM.

Section 1839(g) of the Social Security Act (42 U.S.C. 1395r(g)) is amended--

(1) by striking `attributable to the application of section' and inserting `attributable to--

`(1) the application of section';

(2) by striking the period and inserting `; and'; and

(3) by adding at the end the following new paragraph:

`(2) the Medicare Safety Net Outpatient Prescription Drug Program under part D.'.

SEC. 4. MEDICAID AMENDMENTS.

(a) VERIFICATION OF ELIGIBILITY FOR PART D BENEFITS-

(1) REQUIREMENT- Section 1902(a) (42 U.S.C. 1396a(a)) is amended--

(A) by striking `and' at the end of paragraph (64);

(B) by striking the period at the end of paragraph (65) and inserting `; and'; and

(C) by inserting after paragraph (65) the following new paragraph:

`(66) provide for verification of income under section 1860D-4(d)(1)(B).'.

(2) NEW SECTION- Title XIX is further amended--

(A) by redesignating section 1935 as section 1936; and

(B) by inserting after section 1934 the following new section:

`SPECIAL PROVISIONS RELATING TO MEDICARE PART D BENEFITS

`SEC. 1935. (a) REQUIREMENT FOR VERIFICATION OF ELIGIBILITY DETERMINATIONS FOR IMPROVED PART D BENEFITS- As a condition of its State plan under this title under section 1902(a)(66) and receipt of any Federal financial assistance under section 1903(a), a State shall provide for verification of income statements in accordance with arrangements under section 1860D-4(d)(1).

`(b) PAYMENTS FOR ADDITIONAL ADMINISTRATIVE COSTS-

`(1) IN GENERAL- The amounts expended by a State in carrying out subsection (a) are, subject to paragraph (2), expenditures reimbursable under the appropriate paragraph of section 1903(a); except that, notwithstanding any other provision of such section, the applicable Federal matching rates with respect to such expenditures under such section shall be increased as follows (but in no case shall the rate as so increased exceed 100 percent):

`(A) For expenditures attributable to costs incurred during 2004, the otherwise applicable Federal matching rate shall be increased by 10 percent of the percentage otherwise payable (but for this subsection) by the State.

`(B)(i) For expenditures attributable to costs incurred during 2005 and each subsequent year through 2011, the otherwise applicable Federal matching rate shall be increased by the applicable percent (as defined in clause (ii)) of the percentage otherwise payable (but for this subsection) by the State.

`(ii) For purposes of clause (i), the `applicable percent' for--

`(I) 2005 is 20 percent; or

`(II) a subsequent year is the applicable percent under this clause for the previous year increased by 10 percentage points.

`(C) For expenditures attributable to costs incurred after 2011, the otherwise applicable Federal matching rate shall be increased to 100 percent.

`(2) COORDINATION- The State shall provide the Secretary with such information as may be necessary to properly allocate administrative expenditures described in paragraph (1) that may otherwise be made for eligibility determinations.'.

(b) AMENDMENT TO BEST PRICE- Section 1927(c)(1)(C)(i) (42 U.S.C. 1396r-8(c)(1)(C)(i)) is amended--

(1) by striking `and' at the end of subclause (III);

(2) by striking the period at the end of subclause (IV) and inserting `; and'; and

(3) by adding at the end the following new subclause:

`(V) any prices charged which are negotiated by the Secretary under part D of title XVIII on behalf of eligible beneficiaries enrolled under such part.'.

SEC. 5. IMPORTATION OF PRESCRIPTION DRUGS.

Section 804 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 384) is amended--

(1) in subsection (a)--

(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 2003, the Secretary'; and

(B) by striking `pharmacists and wholesalers' and inserting `pharmacists, wholesalers, and qualifying individuals';

(2) in subsection (b)--

(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';

(4) in subsection (d)--

(A) by striking paragraphs (3) and (10);

(B) in paragraph (5), by striking `, including the professional license number of the importer, if any';

(C) in paragraph (6)--

(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';

(D) in paragraph (7)--

(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:

`(e) TESTING-

`(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 505B 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';

(7) in subsection (g)--

(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 2003,';

(9) in subsection (k)--

(A) in subparagraph (A) of paragraph (1)--

(i) by striking `or a biological' and inserting `, a biological'; and

(ii) by striking the period at the end and inserting `, or any drug or biological product approved by the Secretary for use in connection with abortion, sex transformation, sexual dysfunction, or sexual inadequacy.'; and

(B) in paragraph (2)--

(i) by redesignating subparagraphs (D) and (E) as subparagraphs (E) and (F), respectively; and

(ii) 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).

END