To amend title XVIII of the Social Security Act to deliver a meaningful benefit and lower prescription drug prices under the medicare program.

November 24, 2003

Mr. DURBIN introduced the following bill; which was read twice and referred to the Committee on Finance

To amend title XVIII of the Social Security Act to deliver a meaningful benefit and lower prescription drug prices under the medicare program.

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

SECTION 1. SHORT TITLE.

This Act may be cited as the `Medicare Prescription Drug Savings Act of 2003'.

SEC. 2. ESTABLISHMENT OF MEDICARE OPERATED PRESCRIPTION DRUG PLAN OPTION.

(a) IN GENERAL- Subpart 2 of part D of the Social Security Act, as added by section 101 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, is amended by inserting after section 1860D-11 the following new section:

`MEDICARE OPERATED PRESCRIPTION DRUG PLAN OPTION

`SEC. 1860D-11A. (a) IN GENERAL- Notwithstanding any other provision of this part, for each year (beginning with 2006), in addition to any plans offered under section 1860D-11, the Secretary shall offer a medicare operated prescription drug plan (as defined in subsection (c)) with a service area that consists of the entire United States and shall enter into negotiations with pharmaceutical manufacturers to reduce the purchase cost of covered part D drugs for eligible part D individuals in accordance with subsection (b).

`(b) NEGOTIATIONS- Notwithstanding section 1860D-11(i), for purposes of offering a medicare operated prescription drug plan under this section, the Secretary shall negotiate with pharmaceutical manufacturers with respect to the purchase price of covered part D drugs and shall encourage the use of more affordable therapeutic equivalents to the extent such practices do not override medical necessity as determined by the prescribing physician. To the extent practicable and consistent with the previous sentence, the Secretary shall implement strategies similar to those used by other Federal purchasers of prescription drugs, and other strategies, to reduce the purchase cost of covered part D drugs.

`(c) MEDICARE OPERATED PRESCRIPTION DRUG PLAN DEFINED- For purposes of this part, the term `medicare operated prescription drug plan' means a prescription drug plan that only offers the standard prescription drug coverage and access to negotiated prices described in section 1860D-2(a)(1)(A) and does not include any supplemental prescription drug coverage.

`(d) MONTHLY BENEFICIARY PREMIUM- The monthly beneficiary premium to be charged under a medicare operated prescription drug plan shall be uniform nationally and shall be determined by the Secretary related to the Secretary's estimate of the average monthly per capita actuarial cost, including administrative expenses, under the medicare operated prescription drug plan of providing coverage in the region, as calculated by the Chief Actuary of the Centers for Medicare & Medicaid Services. In calculating such administrative expenses, the Chief Actuary shall use a factor that is based on similar expenses of prescription drug plans that are not medicare operated prescription drug plans.'.

(b) CONFORMING AMENDMENTS-

(1) Section 1860D-3(a) of the Social Security Act, as added by section 101 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, is amended by adding at the end the following new paragraph:

`(4) AVAILABILITY OF THE MEDICARE OPERATED PRESCRIPTION DRUG PLAN-

`(A) IN GENERAL- A medicare operated prescription drug plan (as defined in section 1860D-11A(c)) shall be offered nationally in accordance with section 1860D-11A.

`(B) RELATIONSHIP TO OTHER PLANS-

`(i) IN GENERAL- Subject to clause (ii), a medicare operated prescription drug plan shall be offered in addition to any qualifying plan or fallback prescription drug plan offered in a PDP region and shall not be considered to be such a plan purposes of meeting the requirements of this subsection.

`(ii) DESIGNATION AS A FALLBACK PLAN- Notwithstanding any other provision of this part, the Secretary may designate the medicare operated prescription drug plan as the fallback prescription drug plan for any fallback service area (as defined in section 1860D-11(g)(3)) determined to be appropriate by the Secretary.'.

(2) Section 1860D-13(c)(3) of such Act, as added by such section, is amended--

(A) in the heading, by inserting `AND MEDICARE OPERATED PRESCRIPTION DRUG PLANS' after `FALLBACK PLANS'; and

(B) by inserting `or a medicare operated prescription drug plan' after `a fallback prescription drug plan'.

(3) Section 1860D-16(b)(1) of such Act, as added by such section, is amended--

(A) in subparagraph (C), by striking `and' after the semicolon at the end;

(B) in subparagraph (D), by striking the period at the end and inserting `; and'; and

`(E) payments for expenses incurred with respect to the operation of medicare operated prescription drug plans under section 1860D-11A.'.

(4) Section 1860D-41(a) of such Act, as added by such section, is amended by adding at the end the following new paragraph:

`(19) MEDICARE OPERATED PRESCRIPTION DRUG PLAN- The term `medicare operated prescription drug plan' has the meaning given such term in section 1860D-11A(c).'.

(c) EFFECTIVE DATE- The amendments made by this section shall take effect as if included in the enactment of section 101 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.

END