Sec. 11001. Providing for lower prices for certain high-priced single source drugs
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Title XI of the Social Security Act is amended by adding after section 1184 ( 42 U.S.C. 1320e–3 ) the following new part: The Secretary shall establish a Drug Price Negotiation Program (in this part referred to as the program ). Under the program, with respect to each price applicability period, the Secretary shall— publish a list of selected drugs in accordance with section 1192; enter into agreements with manufacturers of selected drugs with respect to such period, in accordance with section 1193; negotiate and, if applicable, renegotiate maximum fair prices for such selected drugs, in accordance with section 1194; carry out the publication and administrative duties and compliance monitoring in accordance with sections 1195 and 1196.
For purposes of this part: The term initial price applicability year means a year (beginning with 2026). The term price applicability period means, with respect to a qualifying single source drug, the period beginning with the first initial price applicability year with respect to which such drug is a selected drug and ending with the last year during which the drug is a selected drug. The term selected drug publication date means, with respect to each initial price applicability year, February 1 of the year that begins 2 years prior to such year.
The term negotiation period means, with respect to an initial price applicability year with respect to a selected drug, the period— beginning on the sooner of— the date on which the manufacturer of the drug and the Secretary enter into an agreement under section 1193 with respect to such drug; or February 28 following the selected drug publication date with respect to such selected drug; and ending on November 1 of the year that begins 2 years prior to the initial price applicability year.
For purposes of this part: The term manufacturer has the meaning given that term in section 1847A(c)(6)(A). The term maximum fair price eligible individual means, with respect to a selected drug— in the case such drug is dispensed to the individual at a pharmacy, by a mail order service, or by another dispenser, an individual who is enrolled in a prescription drug plan under part D of title XVIII or an MA–PD plan under part C of such title if coverage is provided under such plan for such selected drug; and in the case such drug is furnished or administered to the individual by a hospital, physician, or other provider of services or supplier, an individual who is enrolled under part B of title XVIII, including an individual who is enrolled in an MA plan under part C of such title, if payment may be made under part B for such selected drug.
The term maximum fair price means, with respect to a year during a price applicability period and with respect to a selected drug (as defined in section 1192(c)) with respect to such period, the price negotiated pursuant to section 1194, and updated pursuant to section 1195(b), as applicable, for such drug and year. The term reference product has the meaning given such term in section 351(i) of the Public Health Service Act. The term total expenditures includes, in the case of expenditures with respect to part D of title XVIII, the total gross covered prescription drug costs (as defined in section 1860D–15(b)(3)).
The term total expenditures excludes, in the case of expenditures with respect to part B of such title, expenditures for a drug or biological product that are bundled or packaged into the payment for another service. The term unit means, with respect to a drug or biological product, the lowest identifiable amount (such as a capsule or tablet, milligram of molecules, or grams) of the drug or biological product that is dispensed or furnished. Notwithstanding the provisions of this part, in the case of initial price applicability year 2026, the following rules shall apply for purposes of implementing the program:
Subsection (b)(3) shall be applied by substituting September 1, 2023 for , with respect to each initial price applicability year, February 1 of the year that begins 2 years prior to such year . Subsection (b)(4) shall be applied— in subparagraph (A)(ii), by substituting October 1, 2023 for February 28 following the selected drug publication date with respect to such selected drug ; and in subparagraph (B), by substituting August 1, 2024 for November 1 of the year that begins 2 years prior to the initial price applicability year .
Section 1192 shall be applied— in subsection (b)(1)(A), by substituting during the period beginning on June 1, 2022, and ending on May 31, 2023 for during the most recent period of 12 months prior to the selected drug publication date (but ending not later than October 31 of the year prior to the year of such drug publication date), with respect to such year, for which data are available ; and in subsection (d)(1)(A), by substituting during the period beginning on June 1, 2022, and ending on May 31, 2023 for during the most recent period for which data are available of at least 12 months prior to the selected drug publication date (but ending no later than October 31 of the year prior to the year of such drug publication date), with respect to such year .
Section 1193(a) shall be applied by substituting October 1, 2023 for February 28 following the selected drug publication date with respect to such selected drug . Section 1194(b)(2) shall be applied— in subparagraph (A), by substituting October 2, 2023 for March 1 of the year of the selected drug publication date, with respect to the selected drug ; in subparagraph (B), by substituting February 1, 2024 for the June 1 following the selected drug publication date ; and in subparagraph (E), by substituting August 1, 2024 for the first day of November following the selected drug publication date, with respect to the initial price applicability year .
Section 1195(a)(1) shall be applied by substituting September 1, 2024 for November 30 of the year that is 2 years prior to such initial price applicability year . Not later than the selected drug publication date with respect to an initial price applicability year, in accordance with subsection (b), the Secretary shall select and publish a list of— with respect to the initial price applicability year 2026, 10 negotiation-eligible drugs described in subparagraph
(A)of subsection (d)(1), but not subparagraph
(B)of such subsection, with respect to such year (or, all (if such number is less than 10) such negotiation-eligible drugs with respect to such year); with respect to the initial price applicability year 2027, 15 negotiation-eligible drugs described in subparagraph
(A)of subsection (d)(1), but not subparagraph
(B)of such subsection, with respect to such year (or, all (if such number is less than 15) such negotiation-eligible drugs with respect to such year); with respect to the initial price applicability year 2028, 15 negotiation-eligible drugs described in subparagraph
(A)or
(B)of subsection (d)(1) with respect to such year (or, all (if such number is less than 15) such negotiation-eligible drugs with respect to such year); and with respect to the initial price applicability year 2029 or a subsequent year, 20 negotiation-eligible drugs described in subparagraph
(A)or
(B)of subsection (d)(1), with respect to such year (or, all (if such number is less than 20) such negotiation-eligible drugs with respect to such year). Subject to subsection (c)(2) and section 1194(f)(5), each drug published on the list pursuant to the previous sentence shall be subject to the negotiation process under section 1194 for the negotiation period with respect to such initial price applicability year (and the renegotiation process under such section as applicable for any subsequent year during the applicable price applicability period). In carrying out subsection (a), subject to paragraph (2), the Secretary shall, with respect to an initial price applicability year, do the following: Rank negotiation-eligible drugs described in subsection (d)(1) according to the total expenditures for such drugs under parts B and D of title XVIII, as determined by the Secretary, during the most recent period of 12 months prior to the selected drug publication date (but ending not later than October 31 of the year prior to the year of such drug publication date), with respect to such year, for which data are available, with the negotiation-eligible drugs with the highest total expenditures being ranked the highest. Select from such ranked drugs with respect to such year the negotiation-eligible drugs with the highest such rankings. With respect to the initial price applicability year 2026 and with respect to the initial price applicability year 2027, the Secretary shall apply paragraph
(1)as if the reference to negotiation-eligible drugs described in subsection (d)(1) were a reference to negotiation-eligible drugs described in subsection (d)(1)(A) and as if the reference to total expenditures for such drugs under parts B and D of title XVIII were a reference to total expenditures for such drugs under part D of title XVIII . For purposes of this part, in accordance with subsection (e)(2) and subject to paragraph (2), each negotiation-eligible drug included on the list published under subsection
(a)with respect to an initial price applicability year shall be referred to as a selected drug with respect to such year and each subsequent year beginning before the first year that begins at least 9 months after the date on which the Secretary determines at least one drug or biological product— is approved or licensed (as applicable)— under section 505(j) of the Federal Food, Drug, and Cosmetic Act using such drug as the listed drug; or under section 351(k) of the Public Health Service Act using such drug as the reference product; and is marketed pursuant to such approval or licensure. A negotiation-eligible drug— that is included on the list published under subsection
(a)with respect to an initial price applicability year; and for which the Secretary makes a determination described in paragraph
(1)before or during the negotiation period with respect to such initial price applicability year; shall not be subject to the negotiation process under section 1194 with respect to such negotiation period and shall continue to be considered a selected drug under this part with respect to the number of negotiation-eligible drugs published on the list under subsection
(a)with respect to such initial price applicability year. For purposes of this part, subject to paragraph (2), the term negotiation-eligible drug means, with respect to the selected drug publication date with respect to an initial price applicability year, a qualifying single source drug, as defined in subsection (e), that is described in either of the following subparagraphs (or, with respect to the initial price applicability year 2026 or 2027, that is described in subparagraph (A)): The qualifying single source drug is, determined in accordance with subsection (e)(2), among the 50 qualifying single source drugs with the highest total expenditures under part D of title XVIII, as determined by the Secretary in accordance with paragraph (3), during the most recent 12-month period for which data are available prior to such selected drug publication date (but ending no later than October 31 of the year prior to the year of such drug publication date). The qualifying single source drug is, determined in accordance with subsection (e)(2), among the 50 qualifying single source drugs with the highest total expenditures under part B of title XVIII, as determined by the Secretary in accordance with paragraph (3), during such most recent 12-month period, as described in subparagraph (A). Subject to subparagraph (C), the term negotiation-eligible drug shall not include, with respect to the initial price applicability years 2026, 2027, and 2028, a qualifying single source drug that meets either of the following: The total expenditures for the qualifying single source drug under part D of title XVIII, as determined by the Secretary in accordance with paragraph (3)(B), during 2021— are equal to or less than 1 percent of the total expenditures under such part D, as so determined, for all covered part D drugs (as defined in section 1860D–2(e)) during such year; and are equal to at least 80 percent of the total expenditures under such part D, as so determined, for all covered part D drugs for which the manufacturer of the drug has an agreement in effect under section 1860D–14A during such year. The total expenditures for the qualifying single source drug under part B of title XVIII, as determined by the Secretary in accordance with paragraph (3)(B), during 2021— are equal to or less than 1 percent of the total expenditures under such part B, as so determined, for all qualifying single source drugs for which payment may be made under such part B during such year; and are equal to at least 80 percent of the total expenditures under such part B, as so determined, for all qualifying single source drugs of the manufacturer for which payment may be made under such part B during such year. All persons treated as a single employer under subsection
(a)or
(b)of section 52 of the Internal Revenue Code of 1986 shall be treated as one manufacturer for purposes of this paragraph. A drug shall not be considered to be a qualifying single source drug described in clause
(i)or
(ii)of subparagraph
(A)if the manufacturer of such drug is acquired after 2021 by another manufacturer that does not meet the definition of a specified manufacturer under section 1860D–14C(g)(4)(B)(ii), effective at the beginning of the plan year immediately following such acquisition or, in the case of an acquisition before 2025, effective January 1, 2025. A new formulation, such as an extended release formulation, of a qualifying single source drug shall not be considered a qualifying single source drug described in subparagraph (A). In applying subparagraphs
(A)and
(B)of paragraph (1), the Secretary shall not consider or count— drugs that are already selected drugs; and for initial price applicability years 2026, 2027, and 2028, qualifying single source drugs described in paragraph (2)(A). In determining whether a qualifying single source drug satisfies any of the criteria described in paragraph
(1)or (2), the Secretary shall use data that is aggregated across dosage forms and strengths of the drug, including new formulations of the drug, such as an extended release formulation, and not based on the specific formulation or package size or package type of the drug. For purposes of this part, the term qualifying single source drug means, with respect to an initial price applicability year, subject to paragraphs
(2)and (3), a covered part D drug (as defined in section 1860D–2(e)) that is described in any of the following or a drug or biological product for which payment may be made under part B of title XVIII that is described in any of the following: A drug— that is approved under section 505(c) of the Federal Food, Drug, and Cosmetic Act and is marketed pursuant to such approval; for which, as of the selected drug publication date with respect to such initial price applicability year, at least 7 years will have elapsed since the date of such approval; and that is not the listed drug for any drug that is approved and marketed under section 505(j) of such Act. A biological product— that is licensed under section 351(a) of the Public Health Service Act and is marketed under section 351 of such Act; for which, as of the selected drug publication date with respect to such initial price applicability year, at least 11 years will have elapsed since the date of such licensure; and that is not the reference product for any biological product that is licensed and marketed under section 351(k) of such Act. In the case of a qualifying single source drug described in subparagraph
(A)or
(B)of paragraph
(1)that is the listed drug (as such term is used in section 505(j) of the Federal Food, Drug, and Cosmetic Act) or a product described in clause
(ii)of subparagraph (B), with respect to an authorized generic drug, in applying the provisions of this part, such authorized generic drug and such listed drug or such product shall be treated as the same qualifying single source drug. For purposes of this paragraph, the term authorized generic drug means— in the case of a drug, an authorized generic drug (as such term is defined in section 505(t)(3) of the Federal Food, Drug, and Cosmetic Act); and in the case of a biological product, a product that— has been licensed under section 351(a) of such Act; and is marketed, sold, or distributed directly or indirectly to retail class of trade under a different labeling, packaging (other than repackaging as the reference product in blister packs, unit doses, or similar packaging for use in institutions), product code, labeler code, trade name, or trade mark than the reference product. In this part, the term qualifying single source drug does not include any of the following: A drug that is designated as a drug for only one rare disease or condition under section 526 of the Federal Food, Drug, and Cosmetic Act and for which the only approved indication (or indications) is for such disease or condition. A drug or biological product with respect to which the total expenditures under parts B and D of title XVIII, as determined by the Secretary in accordance with subsection (d)(3)(B)— with respect to initial price applicability year 2026, is less than, during the period beginning on June 1, 2022, and ending on May 31, 2023, $200,000,000; with respect to initial price applicability year 2027, is less than, during the most recent 12-month period applicable under subparagraphs
(A)and
(B)of subsection (d)(1) for such year, the dollar amount specified in clause
(i)increased by the annual percentage increase in the consumer price index for all urban consumers (all items; United States city average) for the period beginning on June 1, 2023, and ending on September 30, 2024; or with respect to a subsequent initial price applicability year, is less than, during the most recent 12-month period applicable under subparagraphs
(A)and
(B)of subsection (d)(1) for such year, the dollar amount specified in this subparagraph for the previous initial price applicability year increased by the annual percentage increase in such consumer price index for the 12-month period ending on September 30 of the year prior to the year of the selected drug publication date with respect to such subsequent initial price applicability year. A biological product that is derived from human whole blood or plasma. For purposes of section 1191(a)(2), the Secretary shall enter into agreements with manufacturers of selected drugs with respect to a price applicability period, by not later than February 28 following the selected drug publication date with respect to such selected drug, under which— during the negotiation period for the initial price applicability year for the selected drug, the Secretary and the manufacturer, in accordance with section 1194, negotiate to determine (and, by not later than the last date of such period, agree to) a maximum fair price for such selected drug of the manufacturer in order for the manufacturer to provide access to such price— to maximum fair price eligible individuals who with respect to such drug are described in subparagraph
(A)of section 1191(c)(2) and are dispensed such drug (and to pharmacies, mail order services, and other dispensers, with respect to such maximum fair price eligible individuals who are dispensed such drugs) during, subject to paragraph (2), the price applicability period; and to hospitals, physicians, and other providers of services and suppliers with respect to maximum fair price eligible individuals who with respect to such drug are described in subparagraph
(B)of such section and are furnished or administered such drug during, subject to paragraph (2), the price applicability period; the Secretary and the manufacturer shall, in accordance with section 1194, renegotiate (and, by not later than the last date of the period of renegotiation, agree to) the maximum fair price for such drug, in order for the manufacturer to provide access to such maximum fair price (as so renegotiated)— to maximum fair price eligible individuals who with respect to such drug are described in subparagraph
(A)of section 1191(c)(2) and are dispensed such drug (and to pharmacies, mail order services, and other dispensers, with respect to such maximum fair price eligible individuals who are dispensed such drugs) during any year during the price applicability period (beginning after such renegotiation) with respect to such selected drug; and to hospitals, physicians, and other providers of services and suppliers with respect to maximum fair price eligible individuals who with respect to such drug are described in subparagraph
(B)of such section and are furnished or administered such drug during any year described in subparagraph (A); subject to subsection (d), access to the maximum fair price (including as renegotiated pursuant to paragraph (2)), with respect to such a selected drug, shall be provided by the manufacturer to— maximum fair price eligible individuals, who with respect to such drug are described in subparagraph
(A)of section 1191(c)(2), at the pharmacy, mail order service, or other dispenser at the point-of-sale of such drug (and shall be provided by the manufacturer to the pharmacy, mail order service, or other dispenser, with respect to such maximum fair price eligible individuals who are dispensed such drugs), as described in paragraph (1)(A) or (2)(A), as applicable; and hospitals, physicians, and other providers of services and suppliers with respect to maximum fair price eligible individuals who with respect to such drug are described in subparagraph
(B)of such section and are furnished or administered such drug, as described in paragraph (1)(B) or (2)(B), as applicable; the manufacturer submits to the Secretary, in a form and manner specified by the Secretary, for the negotiation period for the price applicability period (and, if applicable, before any period of renegotiation pursuant to section 1194(f)) with respect to such drug— information on the non-Federal average manufacturer price (as defined in section 8126(h)(5) of title 38, United States Code) for the drug for the applicable year or period; and information that the Secretary requires to carry out the negotiation (or renegotiation process) under this part; and the manufacturer complies with requirements determined by the Secretary to be necessary for purposes of administering the program and monitoring compliance with the program. An agreement entered into under this section shall be effective, with respect to a selected drug, until such drug is no longer considered a selected drug under section 1192(c). Information submitted to the Secretary under this part by a manufacturer of a selected drug that is proprietary information of such manufacturer (as determined by the Secretary) shall be used only by the Secretary or disclosed to and used by the Comptroller General of the United States for purposes of carrying out this part. Under an agreement entered into under this section, the manufacturer of a selected drug— shall not be required to provide access to the maximum fair price under subsection (a)(3), with respect to such selected drug and maximum fair price eligible individuals who are eligible to be furnished, administered, or dispensed such selected drug at a covered entity described in section 340B(a)(4) of the Public Health Service Act, to such covered entity if such selected drug is subject to an agreement described in section 340B(a)(1) of such Act and the ceiling price (defined in section 340B(a)(1) of such Act) is lower than the maximum fair price for such selected drug; and shall be required to provide access to the maximum fair price to such covered entity with respect to maximum fair price eligible individuals who are eligible to be furnished, administered, or dispensed such selected drug at such entity at such ceiling price in a nonduplicated amount to the ceiling price if such maximum fair price is below the ceiling price for such selected drug. For purposes of this part, under an agreement under section 1193 between the Secretary and a manufacturer of a selected drug (or selected drugs), with respect to the period for which such agreement is in effect and in accordance with subsections (b), (c), and (d), the Secretary and the manufacturer— shall during the negotiation period with respect to such drug, in accordance with this section, negotiate a maximum fair price for such drug for the purpose described in section 1193(a)(1); and renegotiate, in accordance with the process specified pursuant to subsection (f), such maximum fair price for such drug for the purpose described in section 1193(a)(2) if such drug is a renegotiation-eligible drug under such subsection. The Secretary shall develop and use a consistent methodology and process, in accordance with paragraph (2), for negotiations under subsection
(a)that aims to achieve the lowest maximum fair price for each selected drug. As part of the negotiation process under this section, with respect to a selected drug and the negotiation period with respect to the initial price applicability year with respect to such drug, the following shall apply: Not later than March 1 of the year of the selected drug publication date, with respect to the selected drug, the manufacturer of the drug shall submit to the Secretary, in accordance with section 1193(a)(4), the information described in such section. Not later than the June 1 following the selected drug publication date, the Secretary shall provide the manufacturer of the selected drug with a written initial offer that contains the Secretary’s proposal for the maximum fair price of the drug and a concise justification based on the factors described in section 1194(e) that were used in developing such offer. Not later than 30 days after the date of receipt of an initial offer under subparagraph (B), the manufacturer shall either accept such offer or propose a counteroffer to such offer. If a manufacturer proposes a counteroffer, such counteroffer— shall be in writing; and shall be justified based on the factors described in subsection (e). After receiving a counteroffer under subparagraph (C), the Secretary shall respond in writing to such counteroffer. All negotiations between the Secretary and the manufacturer of the selected drug shall end prior to the first day of November following the selected drug publication date, with respect to the initial price applicability year. In negotiating the maximum fair price of a selected drug, with respect to the initial price applicability year for the selected drug, and, as applicable, in renegotiating the maximum fair price for such drug, with respect to a subsequent year during the price applicability period for such drug, the Secretary shall not offer (or agree to a counteroffer for) a maximum fair price for the selected drug that— exceeds the ceiling determined under subsection
(c)for the selected drug and year; or as applicable, is less than the floor determined under subsection
(d)for the selected drug and year. The maximum fair price negotiated under this section for a selected drug, with respect to the first initial price applicability year of the price applicability period with respect to such drug, shall not exceed the lower of the amount under subparagraph
(B)or the amount under subparagraph (C).
(B)amount An amount equal to the following: In the case of a covered part D drug (as defined in section 1860D–2(e)), the sum of the plan specific enrollment weighted amounts for each prescription drug plan or MA–PD plan (as determined under paragraph (2)). In the case of a drug or biological product for which payment may be made under part B of title XVIII, the payment amount under section 1847A(b)(4) for the drug or biological product for the year prior to the year of the selected drug publication date with respect to the initial price applicability year for the drug or biological product.
(C)amount An amount equal to the applicable percent described in paragraph (3), with respect to such drug, of the following: In the case of a selected drug with respect to which such initial price applicability year is 2026, the average non-Federal average manufacturer price for such drug for 2021 (or, in the case that there is not an average non-Federal average manufacturer price available for such drug for 2021, for the first full year following the market entry for such drug), increased by the percentage increase in the consumer price index for all urban consumers (all items; United States city average) from September 2021 (or December of such first full year following the market entry), as applicable, to September of the year prior to the year of the selected drug publication date with respect to such initial price applicability year. In the case of a selected drug with respect to which such initial price applicability year is 2027 or a subsequent year, the lower of— the average non-Federal average manufacturer price for such drug for 2021 (or, in the case that there is not an average non-Federal average manufacturer price available for such drug for 2021, for the first full year following the market entry for such drug), increased by the percentage increase in the consumer price index for all urban consumers (all items; United States city average) from September 2021 (or December of such first full year following the market entry), as applicable, to September of the year prior to the year of the selected drug publication date with respect to such initial price applicability year; or the average non-Federal average manufacturer price for such drug for the year prior to the selected drug publication date with respect to such initial price applicability year. For purposes of paragraph (1)(B)(i), the plan specific enrollment weighted amount for a prescription drug plan or an MA–PD plan with respect to a covered Part D drug is an amount equal to the product of— the negotiated price of the drug under such plan under part D of title XVIII, net of all price concessions received by such plan or pharmacy benefit managers on behalf of such plan, for the most recent year for which data is available; and a fraction— the numerator of which is the total number of individuals enrolled in such plan in such year; and the denominator of which is the total number of individuals enrolled in a prescription drug plan or an MA–PD plan in such year. For purposes of this subsection, the applicable percent described in this paragraph is the following: With respect to a selected drug (other than an extended-monopoly drug and a long-monopoly drug), 75 percent. With respect to an extended-monopoly drug, 65 percent. With respect to a long-monopoly drug, 40 percent. In this part, subject to subparagraph (B), the term extended-monopoly drug means, with respect to an initial price applicability year, a selected drug for which at least 12 years, but fewer than 16 years, have elapsed since the date of approval of such drug under section 505(c) of the Federal Food, Drug, and Cosmetic Act or since the date of licensure of such drug under section 351(a) of the Public Health Service Act, as applicable. The term extended-monopoly drug shall not include any of the following: A vaccine that is licensed under section 351 of the Public Health Service Act and marketed pursuant to such section. A selected drug for which a manufacturer had an agreement under this part with the Secretary with respect to an initial price applicability year that is before 2030. Nothing in subparagraph (B)(ii) shall limit the transition of a selected drug described in paragraph (3)(A) to a long-monopoly drug if the selected drug meets the definition of a long-monopoly drug. In this part, subject to subparagraph (B), the term long-monopoly drug means, with respect to an initial price applicability year, a selected drug for which at least 16 years have elapsed since the date of approval of such drug under section 505(c) of the Federal Food, Drug, and Cosmetic Act or since the date of licensure of such drug under section 351(a) of the Public Health Service Act, as applicable. The term long-monopoly drug shall not include a vaccine that is licensed under section 351 of the Public Health Service Act and marketed pursuant to such section. In this part, the term average non-Federal average manufacturer price means the average of the non-Federal average manufacturer price (as defined in section 8126(h)(5) of title 38, United States Code) for the 4 calendar quarters of the year involved. In the case of a selected drug that is a qualifying single source drug described in section 1192(d)(2) and with respect to which the first initial price applicability year of the price applicability period with respect to such drug is 2029 or 2030, the maximum fair price negotiated under this section for such drug for such initial price applicability year may not be less than 66 percent of the average non-Federal average manufacturer price for such drug (as defined in subsection (c)(6)) for 2021 (or, in the case that there is not an average non-Federal average manufacturer price available for such drug for 2021, for the first full year following the market entry for such drug), increased by the percentage increase in the consumer price index for all urban consumers (all items; United States city average) from September 2021 (or December of such first full year following the market entry), as applicable, to September of the year prior to the selected drug publication date with respect to the initial price applicability year. For purposes of negotiating the maximum fair price of a selected drug under this part with the manufacturer of the drug, the Secretary shall consider the following factors, as applicable to the drug, as the basis for determining the offers and counteroffers under subsection
(b)for the drug: The following data, with respect to such selected drug, as submitted by the manufacturer: Research and development costs of the manufacturer for the drug and the extent to which the manufacturer has recouped research and development costs. Current unit costs of production and distribution of the drug. Prior Federal financial support for novel therapeutic discovery and development with respect to the drug. Data on pending and approved patent applications, exclusivities recognized by the Food and Drug Administration, and applications and approvals under section 505(c) of the Federal Food, Drug, and Cosmetic Act or section 351(a) of the Public Health Service Act for the drug. Market data and revenue and sales volume data for the drug in the United States. The following evidence, as available, with respect to such selected drug and therapeutic alternatives to such drug: The extent to which such drug represents a therapeutic advance as compared to existing therapeutic alternatives and the costs of such existing therapeutic alternatives. Prescribing information approved by the Food and Drug Administration for such drug and therapeutic alternatives to such drug. Comparative effectiveness of such drug and therapeutic alternatives to such drug, taking into consideration the effects of such drug and therapeutic alternatives to such drug on specific populations, such as individuals with disabilities, the elderly, the terminally ill, children, and other patient populations. The extent to which such drug and therapeutic alternatives to such drug address unmet medical needs for a condition for which treatment or diagnosis is not addressed adequately by available therapy. In using evidence described in subparagraph (C), the Secretary shall not use evidence from comparative clinical effectiveness research in a manner that treats extending the life of an elderly, disabled, or terminally ill individual as of lower value than extending the life of an individual who is younger, nondisabled, or not terminally ill. In the case of a renegotiation-eligible drug (as defined in paragraph (2)) that is selected under paragraph (3), the Secretary shall provide for a process of renegotiation (for years (beginning with 2028) during the price applicability period, with respect to such drug) of the maximum fair price for such drug consistent with paragraph (4). In this section, the term renegotiation-eligible drug means a selected drug that is any of the following: A selected drug for which a new indication is added to the drug. A selected drug that— is not an extended-monopoly or a long-monopoly drug; and for which there is a change in status to that of an extended-monopoly drug. A selected drug that— is not a long-monopoly drug; and for which there is a change in status to that of a long-monopoly drug. A selected drug for which the Secretary determines there has been a material change of any of the factors described in paragraph
(1)or
(2)of subsection (e). For each year (beginning with 2028), the Secretary shall select among renegotiation-eligible drugs for renegotiation as follows: The Secretary shall select all renegotiation-eligible drugs described in paragraph (2)(B). The Secretary shall select all renegotiation-eligible drugs described in paragraph (2)(C). Among the remaining renegotiation-eligible drugs described in subparagraphs
(A)and
(D)of paragraph (2), the Secretary shall select renegotiation-eligible drugs for which the Secretary expects renegotiation is likely to result in a significant change in the maximum fair price otherwise negotiated. The Secretary shall specify the process for renegotiation of maximum fair prices with the manufacturer of a renegotiation-eligible drug selected for renegotiation under this subsection. The process specified under subparagraph
(A)shall, to the extent practicable, be consistent with the methodology and process established under subsection
(b)and in accordance with subsections (c), (d), and (e), and for purposes of applying subsections (c)(1)(A) and (d), the reference to the first initial price applicability year of the price applicability period with respect to such drug shall be treated as the first initial price applicability year of such period for which the maximum fair price established pursuant to such renegotiation applies, including for applying subsection (c)(3)(B) in the case of renegotiation-eligible drugs described in paragraph (3)(A) of this subsection and subsection (c)(3)(C) in the case of renegotiation-eligible drugs described in paragraph (3)(B) of this subsection. A renegotiation-eligible drug for which the Secretary makes a determination described in section 1192(c)(1) before or during the period of renegotiation shall not be subject to the renegotiation process under this section. The maximum fair price for a selected drug described in subparagraph
(A)or
(B)of paragraph
(1)shall take effect no later than the first day of the first calendar quarter that begins after the date described in subparagraph
(A)or (B), as applicable. With respect to an initial price applicability year and a selected drug with respect to such year— not later than November 30 of the year that is 2 years prior to such initial price applicability year, the Secretary shall publish the maximum fair price for such drug negotiated with the manufacturer of such drug under this part; and not later than March 1 of the year prior to such initial price applicability year, the Secretary shall publish, subject to section 1193(c), the explanation for the maximum fair price with respect to the factors as applied under section 1194(e) for such drug described in paragraph (1). For a selected drug, for each year subsequent to the first initial price applicability year of the price applicability period with respect to such drug, with respect to which an agreement for such drug is in effect under section 1193, not later than November 30 of the year that is 2 years prior to such subsequent year, the Secretary shall publish the maximum fair price applicable to such drug and year, which shall be— subject to subparagraph (B), the amount equal to the maximum fair price published for such drug for the previous year, increased by the annual percentage increase in the consumer price index for all urban consumers (all items; United States city average) for the 12-month period ending with the July immediately preceding such November 30; or in the case the maximum fair price for such drug was renegotiated, for the first year for which such price as so renegotiated applies, such renegotiated maximum fair price. In the case of a selected drug with respect to an initial price applicability year for which the maximum fair price is determined under this part after the date of publication under this section, the Secretary shall publish such maximum fair price by not later than 30 days after the date such maximum price is so determined. For purposes of section 1191(a)(4), the administrative duties described in this section are the following: The establishment of procedures to ensure that the maximum fair price for a selected drug is applied before— any coverage or financial assistance under other health benefit plans or programs that provide coverage or financial assistance for the purchase or provision of prescription drug coverage on behalf of maximum fair price eligible individuals; and any other discounts. The establishment of procedures to compute and apply the maximum fair price across different strengths and dosage forms of a selected drug and not based on the specific formulation or package size or package type of such drug. The establishment of procedures to carry out the provisions of this part, as applicable, with respect to— maximum fair price eligible individuals who are enrolled in a prescription drug plan under part D of title XVIII or an MA–PD plan under part C of such title; and maximum fair price eligible individuals who are enrolled under part B of such title, including who are enrolled in an MA plan under part C of such title. The establishment of a negotiation process and renegotiation process in accordance with section 1194. The establishment of a process for manufacturers to submit information described in section 1194(b)(2)(A). The sharing with the Secretary of the Treasury of such information as is necessary to determine the tax imposed by section 5000D of the Internal Revenue Code of 1986, including the application of such tax to a manufacturer, producer, or importer or the determination of any date described in section 5000D(c)(1) of such Code. For purposes of the preceding sentence, such information shall include— the date on which the Secretary receives notification of any termination of an agreement under the Medicare coverage gap discount program under section 1860D-14A and the date on which any subsequent agreement under such program is entered into; the date on which the Secretary receives notification of any termination of an agreement under the manufacturer discount program under section 1860D-14C and the date on which any subsequent agreement under such program is entered into; and the date on which the Secretary receives notification of any termination of a rebate agreement described in section 1927(b) and the date on which any subsequent rebate agreement described in such section is entered into. The establishment of procedures for purposes of applying section 1192(d)(2)(B). The Secretary shall monitor compliance by a manufacturer with the terms of an agreement under section 1193 and establish a mechanism through which violations of such terms shall be reported. Any manufacturer of a selected drug that has entered into an agreement under section 1193, with respect to a year during the price applicability period with respect to such drug, that does not provide access to a price that is equal to or less than the maximum fair price for such drug for such year— to a maximum fair price eligible individual who with respect to such drug is described in subparagraph
(A)of section 1191(c)(2) and who is dispensed such drug during such year (and to pharmacies, mail order services, and other dispensers, with respect to such maximum fair price eligible individuals who are dispensed such drugs); or to a hospital, physician, or other provider of services or supplier with respect to maximum fair price eligible individuals who with respect to such drug is described in subparagraph
(B)of such section and is furnished or administered such drug by such hospital, physician, or provider or supplier during such year; shall be subject to a civil monetary penalty equal to ten times the amount equal to the product of the number of units of such drug so furnished, dispensed, or administered during such year and the difference between the price for such drug made available for such year by such manufacturer with respect to such individual or hospital, physician, provider of services, or supplier and the maximum fair price for such drug for such year. Any manufacturer of a selected drug that has entered into an agreement under section 1193, with respect to a year during the price applicability period with respect to such drug, that is in violation of a requirement imposed pursuant to section 1193(a)(5), including the requirement to submit information pursuant to section 1193(a)(4), shall be subject to a civil monetary penalty equal to $1,000,000 for each day of such violation. Any manufacturer that knowingly provides false information pursuant to section 1196(a)(7) shall be subject to a civil monetary penalty equal to $100,000,000 for each item of such false information. The provisions of section 1128A (other than subsections
(a)and (b)) shall apply to a civil monetary penalty under this section in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a). There shall be no administrative or judicial review of any of the following: The determination of a unit, with respect to a drug or biological product, pursuant to section 1191(c)(6). The selection of drugs under section 1192(b), the determination of negotiation-eligible drugs under section 1192(d), and the determination of qualifying single source drugs under section 1192(e). The determination of a maximum fair price under subsection
(b)or
(f)of section 1194. The determination of renegotiation-eligible drugs under section 1194(f)(2) and the selection of renegotiation-eligible drugs under section 1194(f)(3). . Section 1847A(b)(1)(B) of the Social Security Act (42 U.S.C. 1395w–3a(b)(1)(B)) is amended by inserting or in the case of such a drug or biological product that is a selected drug (as referred to in section 1192(c)), with respect to a price applicability period (as defined in section 1191(b)(2)), 106 percent of the maximum fair price (as defined in section 1191(c)(3)) applicable for such drug and a year during such period after paragraph
(4). Section 1852(a)(1)(B)(iv) of the Social Security Act ( 42 U.S.C. 1395w–22(a)(1)(B)(iv) ) is amended— by redesignating subclause
(VII)as subclause (VIII); and by inserting after subclause
(VI)the following subclause: A drug or biological product that is a selected drug (as referred to in section 1192(c)). . D non-interference Section 1860D–11(i) of the Social Security Act ( 42 U.S.C. 1395w–111(i) ) is amended— in paragraph (1), by striking and at the end; in paragraph (2), by striking or institute a price structure for the reimbursement of covered part D drugs. and inserting , except as provided under section 1860D–4(b)(3)(l); and ; and by adding at the end the following new paragraph: may not institute a price structure for the reimbursement of covered part D drugs, except as provided under part E of title XI. . Section 1860D–2(d)(1) of the Social Security Act ( 42 U.S.C. 1395w–102(d)(1) ) is amended— in subparagraph (B), by inserting , subject to subparagraph (D), after negotiated prices ; and by adding at the end the following new subparagraph: In applying this section, in the case of a covered part D drug that is a selected drug (as referred to in section 1192(c)), with respect to a price applicability period (as defined in section 1191(b)(2)), the negotiated prices used for payment (as described in this subsection) shall be no greater than the maximum fair price (as defined in section 1191(c)(3)) for such drug and for each year during such period plus any dispensing fees for such drug. . Section 1860D–4(b)(3) of the Social Security Act ( 42 U.S.C. 1395w–104(b)(3) ) is amended by adding at the end the following new subparagraph: For 2026 and each subsequent year, the PDP sponsor offering a prescription drug plan shall include each covered part D drug that is a selected drug under section 1192 for which a maximum fair price (as defined in section 1191(c)(3)) is in effect with respect to the year. Nothing in clause
(i)shall be construed as prohibiting a PDP sponsor from removing such a selected drug from a formulary if such removal would be permitted under section 423.120(b)(5)(iv) of title 42, Code of Federal Regulations (or any successor regulation). . Section 1860D–12(b) of the Social Security Act ( 42 U.S.C. 1395w–112(b) ) is amended by adding at the end the following new paragraph: Each contract entered into with a PDP sponsor under this part with respect to a prescription drug plan offered by such sponsor shall require the sponsor to provide information to the Secretary as requested by the Secretary for purposes of carrying out section 1194. . Section 1857(f)(3) of the Social Security Act ( 42 U.S.C. 1395w–27(f)(3) ) is amended by adding at the end the following new subparagraph: Section 1860D–12(b)(8). . Section 1860D–43(c) of the Social Security Act ( 42 U.S.C. 1395w–153(c) ) is amended— by redesignating paragraphs
(1)and
(2)as subparagraphs
(A)and (B), respectively; by striking and inserting the following: “ agreements .—Subsection agreements .— Subject to paragraph (2), subsection ; and by adding at the end the following new paragraph: Paragraph (1)(A) shall not apply to a covered part D drug of a manufacturer for any period described in section 5000D(c)(1) of the Internal Revenue Code of 1986 with respect to the manufacturer. . Section 1927(a)(3) of the Social Security Act ( 42 U.S.C. 1396r–8(a)(3) ) is amended by adding at the end the following new sentence: The preceding sentence shall not apply to a single source drug or innovator multiple source drug of a manufacturer for any period described in . section 5000D(c)(1) of the Internal Revenue Code of 1986 with respect to the manufacturer. Section 1860D–12(b)(3)(D)(i) of the Social Security Act ( 42 U.S.C. 1395w–112(b)(3)(D)(i) ) is amended by inserting , or carrying out part E of title XI after appropriate) . Section 1860D–15(f)(2)(A)(i) of the Social Security Act ( 42 U.S.C. 1395w–115(f)(2)(A)(i) ) is amended by inserting or part E of title XI after this section . Section 1927(c)(1)(C) of the Social Security Act ( 42 U.S.C. 1396r–8(c)(1)(C) ) is amended— in clause (i)(VI), by striking any prices charged and inserting subject to clause (ii)(V), any prices charged ; and in clause (ii)— in subclause (III), by striking ; and at the end; in subclause (IV), by striking the period at the end and inserting ; and ; and by adding at the end the following new subclause: in the case of a rebate period and a covered outpatient drug that is a selected drug (as referred to in section 1192(c)) during such rebate period, shall be inclusive of the maximum fair price (as defined in section 1191(c)(3)) for such drug with respect to such period. . Section 1927(k)(1)(B)(i) of the Social Security Act ( 42 U.S.C. 1396r–8(k)(1)(B)(i) ) is amended— in subclause
(IV)by striking ; and at the end; in subclause
(V)by striking the period at the end and inserting ; and ; and by adding at the end the following new subclause: any reduction in price paid during the rebate period to the manufacturer for a drug by reason of application of part E of title XI. . The Secretary of Health and Human Services shall implement this section, including the amendments made by this section, for 2026, 2027, and 2028 by program instruction or other forms of program guidance.
Connections14 off-index
14 references not yet in our index
- 42 USC 1320e–3
- 42 USC 1395w–3a(b)(1)(B)
- 42 USC 1395w–22(a)(1)(B)(iv)
- 42 USC 1395w–111(i)
- 42 USC 1395w–102(d)(1)
- 42 USC 1395w–104(b)(3)
- 42 USC 1395w–112(b)
- 42 USC 1395w–27(f)(3)
- 42 USC 1395w–153(c)
- 42 USC 1396r–8(a)(3)
- 42 USC 1395w–112(b)(3)(D)(i)
- 42 USC 1395w–115(f)(2)(A)(i)
- 42 USC 1396r–8(c)(1)(C)
- 42 USC 1396r–8(k)(1)(B)(i)
Citation graph
cites case law
Sec. 11001
Providing for lower prices for certain high-priced single source drugs
Cite42 USC 1320e–3
Cite42 USC 1395w–3a(b)(1)(B)
Cite42 USC 1395w–22(a)(1)(B)(iv)
Cite42 USC 1395w–111(i)
Cite42 USC 1395w–102(d)(1)
Cites 14 · showing 5Cited by 0 across 0 sources