Sec. 5. Negotiating fair prices for Medicare prescription drugs

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Section 1860D–11 of the Social Security Act ( 42 U.S.C. 1395w–111 ) is amended by striking subsection

(i)(relating to noninterference) and by inserting the following: Notwithstanding any other provision of law, in furtherance of the goals of providing quality care and containing costs under this part, the Secretary shall, with respect to applicable covered part D drugs, and may, with respect to other covered part D drugs, negotiate, using the negotiation technique or techniques that the Secretary determines will maximize savings and value to the government for prescription drug plans and MA–PD plans and for plan enrollees (in a manner that may be similar to Federal entities and that may include, but is not limited to, formularies, reference pricing, discounts, rebates, other price concessions, and coverage determinations), with drug manufacturers the prices that may be charged to PDP sponsors and MA organizations for such drugs for part D eligible individuals who are enrolled in a prescription drug plan or in an MA–PD plan. In conducting such negotiations, the Secretary shall consider the drug’s current price, initial launch price, prevalence of disease and usage, and approved indications, the number of similarly effective alternative treatments for each approved use of the drug, the budgetary impact of providing coverage under this part for such drug for all individuals who would likely benefit from the drug, evidence on the drug’s effectiveness and safety compared to similar drugs, and the quality and quantity of clinical data and rigor of the applicable process of approval of a drug under section 505 of the Federal Food, Drug, and Cosmetic Act or a biological product under section 351 of the Public Health Service Act. If, after attempting to negotiate for a price with respect to a covered part D drug under paragraph

(1)for a period of 1 year, the Secretary is not successful in obtaining an appropriate price for the drug (as determined by the Secretary), the Secretary shall establish the price that may be charged to PDP sponsors and MA organizations for such drug for part D eligible individuals who are enrolled in a prescription drug plan or in an MA–PD plan at an amount equal to the lesser of— the price paid by the Secretary of Veterans Affairs to procure the drug under the laws administered by the Secretary of Veterans Affairs; or the price paid to procure the drug under section 8126 of title 38, United States Code. For purposes of this subsection, the term applicable covered part D drug means a covered part D drug that the Secretary determines to be appropriate for negotiation under paragraph

(1)based on one or more of the following factors as applied to such drug: Spending on a per beneficiary basis. The proportion of total spending under this title. Unit price increases over the preceding 5 years. Initial launch price. Availability of less expensive, similarly effective alternative treatments. Status of the drug as a follow-on to previously approved drugs. Any other criteria determined by the Secretary. Nothing in this subsection shall be construed as preventing the sponsor of a prescription drug plan, or an organization offering an MA–PD plan, from obtaining a discount or reduction of the price for a covered part D drug below the price negotiated under paragraph

(1)or the price established under paragraph (2). Nothing in this subsection shall be construed to affect the appeals procedures under subsections

(g)and

(h)of section 1860D–4. . The amendments made by this section shall take effect on the date of the enactment of this Act and shall first apply to negotiations and prices for plan years beginning on January 1, 2020.

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42 USC 1395w–111

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Sec. 5

Negotiating fair prices for Medicare prescription drugs

Cite42 USC 1395w–111

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