Draft Bill for Medicare Services Price Negotiation
Center for Medicare Services Price Negotiations On “Not Less Than 250” Prescription Drugs 2024-2027
Bill No. ________
Amend SEC. 1192. <<NOTE: 42 USC 1320f-1.>> SELECTION OF NEGOTIATION-ELIGIBLE DRUGS AS SELECTED DRUGS.
Originally: H.R. 5376 – Inflation Reduction Act of 2022, Public Law No. 117-169, Subtitle B, Prescription Drug Pricing Reform, Part 1, Lowering Prices Through Drug Price Negotiation, Sec. 11001,
Provided further, at SEC. 1192 (b)(1) amend the number “10” negotiation-eligible drugs described in subparagraph (A) of subsection (d)(1) to “not less than 250” and amend “2026” to “2024.”
Provided further, at SEC. 1192 (b)(2) amend the number “15” negotiation-eligible drugs described in subparagraph (A) of subsection (d)(1) to “not less than 250” and amend “2027” to “2025.”
Provided further, at SEC. 1192 (b)(3) amend the number “15” negotiation-eligible drugs described in subparagraph (A) of subsection (d)(1) to “not less than 250” and amend “2028” to “2026.”
Provided further, at SEC. 1192 (b)(4) amend the number “20” negotiation-eligible drugs described in subparagraph (A) of subsection (d)(1) to “not less than 250” and amend “2029” to “2027.” Delete “or a subsequent year,”.
Provided further, the Comptroller General of the United States will audit all selections and negotiations under Sec. 1192. <<Note: 42 USC 1320f-1.>> Selection of Negotiation-Eligible Drugs as Selected Drugs as amended. The Government Accountability Office (GAO) will submit a Report to Congress with audit results not less than 6 months prior to each President’s Budget. GAO will submit legislation in the 2025 Report that gives Center for Medicare Services (CMS) permanent authority to negotiate prescription drugs if CMS successfully negotiates GAO-expected prescription drug prices. The GAO will also set expected prescription negotiation-eligible drug cost reductions for each Fiscal Year’s President’s Budget and audit CMS results.
``(a) <<NOTE: Deadlines. Publication. List. Time periods.>> In
General.--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--
``(1) 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);
``(2) 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);
``(3) 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
``(4) 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).
SUMMARY
Subtitle B--Prescription Drug Pricing Reform
Part 1--Lowering Prices Through Drug Price Negotiation
(Sec. 11001) The act requires the Centers for Medicare & Medicaid Services (CMS) to negotiate the prices of certain prescription drugs under Medicare beginning in 2026.
Specifically, the CMS must negotiate maximum prices for brand-name drugs that do not have other generic equivalents and that account for the greatest Medicare spending. The CMS must negotiate the prices of 10 drugs that are covered under the Medicare prescription drug benefit in 2026, 15 drugs that are covered under the Medicare prescription drug benefit in 2027, 15 drugs that are covered under the Medicare prescription drug benefit or under Medicare medical services in 2028, and 20 drugs that are covered under the Medicare prescription drug benefit or under Medicare medical services in 2029 and each year thereafter.
The selected drugs must be among the 50 drugs with the highest total spending over the most recent 12-month period under the Medicare prescription drug benefit or Medicare medical services and must have had market approval for at least 7 years (for drug products) or 11 years (for biologics). The act excludes (1) orphan drugs that are approved to treat only one rare disease or condition, (2) plasma-derived products, and (3) drugs that account for less than $200 million in annual Medicare spending (adjusted annually for inflation).
The CMS must enter into agreements with drug manufacturers to negotiate prices; manufacturers must submit information relating to costs and other data as part of the negotiation process. Manufacturers that fail to comply with negotiation requirements are subject to civil penalties.
(Sec. 11002) The CMS may delay negotiations for certain biologics with pending biosimilars for up to two years upon manufacturer request.
(Sec. 11003) Drug manufacturers are subject to excise taxes for failing to comply with negotiation requirements, such as failing to furnish required information during the negotiation process or failing to reach an agreement by the required deadline. The tax does not apply if manufacturers withdraw their drugs from Medicare and Medicaid coverage.
(Sec. 11004) The act provides funds for FY2022 for the CMS to implement this program.
***********
H.R. 5376 – Inflation Reduction Act of 2022
117th Congress (2021-2022)
Public Law No. 117-169 (08-16-2022)
[117th Congress Public Law 169]
[From the U.S. Government Publishing Office]
[[Page 1817]]
[[Page 136 STAT. 1818]]
Public Law 117-169
117th Congress
An Act
To provide for reconciliation pursuant to title II of S. Con. Res.
14. <<NOTE: Aug. 16, 2022 - [H.R. 5376]>>
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, <<NOTE: Appropriations
authorizations.>>
Subtitle B--Prescription Drug Pricing Reform
PART 1--LOWERING PRICES THROUGH DRUG PRICE NEGOTIATION
SEC. 11001. PROVIDING FOR LOWER PRICES FOR CERTAIN HIGH-PRICED
SINGLE SOURCE DRUGS.
(a) Program To Lower Prices for Certain High-Priced Single Source
Drugs.--Title XI of the Social Security Act is amended by adding after
section 1184 (42 U.S.C. 1320e-3) the following new part:
``PART E--PRICE NEGOTIATION PROGRAM TO LOWER PRICES FOR CERTAIN HIGH-
PRICED SINGLE SOURCE DRUGS
``SEC. 1191. <<NOTE: 42 USC 1320f.>> ESTABLISHMENT OF PROGRAM.
``(a) In General.--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--
``(1) <<NOTE: Publication. Lists.>> publish a list of
selected drugs in accordance with section 1192;
``(2) <<NOTE: Contracts.>> enter into agreements with
manufacturers of selected drugs with respect to such period, in
accordance with section 1193;
[[Page 136 STAT. 1834]]
``(3) negotiate and, if applicable, renegotiate maximum fair
prices for such selected drugs, in accordance with section 1194;
``(4) carry out the publication and administrative duties
and compliance monitoring in accordance with sections 1195 and
1196.
``(b) Definitions Relating to Timing.--For purposes of this part:
``(1) Initial price applicability year.--The term `initial
price applicability year' means a year (beginning with 2026).
``(2) Price applicability period.--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.
``(3) Selected drug publication date.--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.
``(4) Negotiation period.--The term `negotiation period'
means, with respect to an initial price applicability year with
respect to a selected drug, the period--
``(A) beginning on the sooner of--
``(i) 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
``(ii) February 28 following the selected drug
publication date with respect to such selected
drug; and
``(B) ending on November 1 of the year that begins 2
years prior to the initial price applicability year.
``(c) Other Definitions.--For purposes of this part:
``(1) Manufacturer.--The term `manufacturer' has the meaning
given that term in section 1847A(c)(6)(A).
``(2) Maximum fair price eligible individual.--The term
`maximum fair price eligible individual' means, with respect to
a selected drug--
``(A) 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
``(B) 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.
``(3) Maximum fair price.--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.
[[Page 136 STAT. 1835]]
``(4) Reference product.--The term `reference product' has
the meaning given such term in section 351(i) of the Public
Health Service Act.
``(5) Total expenditures.--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.
``(6) Unit.--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.
``(d) <<NOTE: Regulations. Applicability.>> Timing for Initial
Price Applicability Year 2026.--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:
``(1) 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'.
``(2) Subsection (b)(4) shall be applied--
``(A) 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
``(B) 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'.
``(3) Section 1192 shall be applied--
``(A) 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
``(B) 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'.
``(4) 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'.
``(5) Section 1194(b)(2) shall be applied--
``(A) 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';
``(B) in subparagraph (B), by substituting `February
1, 2024' for `the June 1 following the selected drug
publication date'; and
``(C) in subparagraph (E), by substituting `August
1, 2024' for `the first day of November following the
selected
[[Page 136 STAT. 1836]]
drug publication date, with respect to the initial price
applicability year '.
``(6) 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'.
``SEC. 1192. <<NOTE: 42 USC 1320f-1.>> SELECTION OF NEGOTIATION-
ELIGIBLE DRUGS AS SELECTED DRUGS.
``(a) <<NOTE: Deadlines. Publication. List. Time periods.>> In
General.--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--
``(1) 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);
``(2) 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);
``(3) 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
``(4) 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).
``(b) Selection of Drugs.--
``(1) In general.--In carrying out subsection (a), subject
to paragraph (2), the Secretary shall, with respect to an
initial price applicability year, do the following:
``(A) <<NOTE: Determination. Time periods.>> 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.
``(B) Select from such ranked drugs with respect to
such year the negotiation-eligible drugs with the
highest such rankings.
``(2) <<NOTE: Applicability.>> High spend part d drugs for
2026 and 2027.--With respect to the initial price applicability
year 2026 and with
[[Page 136 STAT. 1837]]
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'.
``(c) Selected Drug.--
``(1) <<NOTE: Time period. Determination.>> In general.--
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--
``(A) is approved or licensed (as applicable)--
``(i) under section 505(j) of the Federal
Food, Drug, and Cosmetic Act using such drug as
the listed drug; or
``(ii) under section 351(k) of the Public
Health Service Act using such drug as the
reference product; and
``(B) is marketed pursuant to such approval or
licensure.
``(2) Clarification.--A negotiation-eligible drug--
``(A) that is included on the list published under
subsection (a) with respect to an initial price
applicability year; and
``(B) 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.
``(d) <<NOTE: Determinations. Time periods.>> Negotiation-Eligible
Drug.--
``(1) <<NOTE: Definition.>> In general.--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)):
``(A) Part d high spend drugs.--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).
[[Page 136 STAT. 1838]]
``(B) Part b high spend drugs.--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).
``(2) Exception for small biotech drugs.--
``(A) In general.--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:
``(i) Part d drugs.--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--
``(I) 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
``(II) 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.
``(ii) Part b drugs.--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--
``(I) 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
``(II) 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.
``(B) Clarifications relating to manufacturers.--
``(i) Aggregation rule.--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.
``(ii) <<NOTE: Effective dates.>>
Limitation.--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.
[[Page 136 STAT. 1839]]
``(C) Drugs not included as small biotech drugs.--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).
``(3) Clarifications and determinations.--
``(A) Previously selected drugs and small biotech
drugs excluded.--In applying subparagraphs (A) and (B)
of paragraph (1), the Secretary shall not consider or
count--
``(i) drugs that are already selected drugs;
and
``(ii) for initial price applicability years
2026, 2027, and 2028, qualifying single source
drugs described in paragraph (2)(A).
``(B) Use of data.--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.
``(e) Qualifying Single Source Drug.--
``(1) <<NOTE: Definition.>> In general.--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) <<NOTE: Time periods.>> Drug products.--A
drug--
``(i) that is approved under section 505(c) of
the Federal Food, Drug, and Cosmetic Act and is
marketed pursuant to such approval;
``(ii) 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
``(iii) that is not the listed drug for any
drug that is approved and marketed under section
505(j) of such Act.
``(B) Biological products.--A biological product--
``(i) that is licensed under section 351(a) of
the Public Health Service Act and is marketed
under section 351 of such Act;
``(ii) 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
``(iii) that is not the reference product for
any biological product that is licensed and
marketed under section 351(k) of such Act.
``(2) Treatment of authorized generic drugs.--
``(A) In general.--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
[[Page 136 STAT. 1840]]
(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.
``(B) Authorized generic drug defined.--For purposes
of this paragraph, the term `authorized generic drug'
means--
``(i) 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
``(ii) in the case of a biological product, a
product that--
``(I) has been licensed under
section 351(a) of such Act; and
``(II) 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.
``(3) Exclusions.--In this part, the term `qualifying single
source drug' does not include any of the following:
``(A) Certain orphan drugs.--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.
``(B) <<NOTE: Time periods. Determination.>> Low
spend medicare drugs.--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)--
``(i) 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;
``(ii) 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
``(iii) 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.
[[Page 136 STAT. 1841]]
``(C) Plasma-derived products.--A biological product
that is derived from human whole blood or plasma.
``SEC. 1193. <<NOTE: 42 USC 1320f-2.>> MANUFACTURER AGREEMENTS.
``(a) <<NOTE: Deadline.>> In General.--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--
``(1) <<NOTE: Determination. Deadline.>> 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--
``(A) 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
``(B) 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;
``(2) <<NOTE: Deadline.>> 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)--
``(A) 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
``(B) 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);
``(3) 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--
``(A) 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
[[Page 136 STAT. 1842]]
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
``(B) 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;
``(4) 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--
``(A) 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
``(B) <<NOTE: Requirement.>> information that the
Secretary requires to carry out the negotiation (or
renegotiation process) under this part; and
``(5) <<NOTE: Compliance. Requirements. Determination.>>
the manufacturer complies with requirements determined by the
Secretary to be necessary for purposes of administering the
program and monitoring compliance with the program.
``(b) Agreement in Effect Until Drug Is No Longer a Selected Drug.--
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).
``(c) <<NOTE: Determination.>> Confidentiality of Information.--
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.
``(d) Nonduplication With 340B Ceiling Price.--Under an agreement
entered into under this section, the manufacturer of a selected drug--
``(1) 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
``(2) <<NOTE: Requirement.>> 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.
[[Page 136 STAT. 1843]]
``SEC. 1194. <<NOTE: 42 USC 1320f-3.>> NEGOTIATION AND
RENEGOTIATION PROCESS.
``(a) In General.--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--
``(1) 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
``(2) 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.
``(b) Negotiation Process Requirements.--
``(1) Methodology and process.--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.
``(2) <<NOTE: Applicability. Deadlines.>> Specific elements
of negotiation process.--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:
``(A) Submission of information.--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.
``(B) <<NOTE: Proposal.>> Initial offer by
secretary.--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.
``(C) <<NOTE: Proposal.>> Response to initial
offer.--
``(i) In general.--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.
``(ii) Counteroffer requirements.--If a
manufacturer proposes a counteroffer, such
counteroffer--
``(I) shall be in writing; and
``(II) shall be justified based on
the factors described in subsection (e).
``(D) Response to counteroffer.--After receiving a
counteroffer under subparagraph (C), the Secretary shall
respond in writing to such counteroffer.
``(E) Deadline.--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.
[[Page 136 STAT. 1844]]
``(F) Limitations on offer amount.--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--
``(i) exceeds the ceiling determined under
subsection (c) for the selected drug and year; or
``(ii) as applicable, is less than the floor
determined under subsection (d) for the selected
drug and year.
``(c) Ceiling for Maximum Fair Price.--
``(1) General ceiling.--
``(A) In general.--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) Subparagraph (B) amount.--An amount equal to
the following:
``(i) Covered part d drug.--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)).
``(ii) Part b drug or biological.--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) Subparagraph (C) amount.--An amount equal to
the applicable percent described in paragraph (3), with
respect to such drug, of the following:
``(i) Initial price applicability year 2026.--
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.
``(ii) Initial price applicability year 2027
and subsequent years.--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--
[[Page 136 STAT. 1845]]
``(I) 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
``(II) 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.
``(2) Plan specific enrollment weighted amount.--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--
``(A) 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
``(B) a fraction--
``(i) the numerator of which is the total
number of individuals enrolled in such plan in
such year; and
``(ii) the denominator of which is the total
number of individuals enrolled in a prescription
drug plan or an MA-PD plan in such year.
``(3) Applicable percent described.--For purposes of this
subsection, the applicable percent described in this paragraph
is the following:
``(A) Short-monopoly drugs and vaccines.--With
respect to a selected drug (other than an extended-
monopoly drug and a long-monopoly drug), 75 percent.
``(B) Extended-monopoly drugs.--With respect to an
extended-monopoly drug, 65 percent.
``(C) Long-monopoly drugs.--With respect to a long-
monopoly drug, 40 percent.
``(4) Extended-monopoly drug defined.--
``(A) <<NOTE: Time period.>> In general.--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.
``(B) Exclusions.--The term `extended-monopoly drug'
shall not include any of the following:
[[Page 136 STAT. 1846]]
``(i) A vaccine that is licensed under section
351 of the Public Health Service Act and marketed
pursuant to such section.
``(ii) 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.
``(C) Clarification.--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.
``(5) Long-monopoly drug defined.--
``(A) <<NOTE: Time period.>> In general.--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.
``(B) Exclusion.--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.
``(6) <<NOTE: Time period.>> Average non-federal average
manufacturer price.--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.
``(d) <<NOTE: Time periods.>> Temporary Floor for Small Biotech
Drugs.--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.
``(e) Factors.--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:
``(1) Manufacturer-specific data.--The following data, with
respect to such selected drug, as submitted by the manufacturer:
[[Page 136 STAT. 1847]]
``(A) Research and development costs of the
manufacturer for the drug and the extent to which the
manufacturer has recouped research and development
costs.
``(B) Current unit costs of production and
distribution of the drug.
``(C) Prior Federal financial support for novel
therapeutic discovery and development with respect to
the drug.
``(D) 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.
``(E) Market data and revenue and sales volume data
for the drug in the United States.
``(2) Evidence about alternative treatments.--The following
evidence, as available, with respect to such selected drug and
therapeutic alternatives to such drug:
``(A) The extent to which such drug represents a
therapeutic advance as compared to existing therapeutic
alternatives and the costs of such existing therapeutic
alternatives.
``(B) Prescribing information approved by the Food
and Drug Administration for such drug and therapeutic
alternatives to such drug.
``(C) 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.
``(D) 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.
``(f) Renegotiation Process.--
``(1) <<NOTE: Effective date.>> In general.--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).
``(2) Renegotiation-eligible drug defined.--In this section,
the term `renegotiation-eligible drug' means a selected drug
that is any of the following:
``(A) Addition of new indication.--A selected drug
for which a new indication is added to the drug.
``(B) Change of status to an extended-monopoly
drug.--A selected drug that--
``(i) is not an extended-monopoly or a long-
monopoly drug; and
[[Page 136 STAT. 1848]]
``(ii) for which there is a change in status
to that of an extended-monopoly drug.
``(C) Change of status to a long-monopoly drug.--A
selected drug that--
``(i) is not a long-monopoly drug; and
``(ii) for which there is a change in status
to that of a long-monopoly drug.
``(D) <<NOTE: Determination.>> Material changes.--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).
``(3) <<NOTE: Effective date.>> Selection of drugs for
renegotiation.--For each year (beginning with 2028), the
Secretary shall select among renegotiation-eligible drugs for
renegotiation as follows:
``(A) All extended-monopoly negotiation-eligible
drugs.--The Secretary shall select all renegotiation-
eligible drugs described in paragraph (2)(B).
``(B) All long-monopoly negotiation-eligible
drugs.--The Secretary shall select all renegotiation-
eligible drugs described in paragraph (2)(C).
``(C) Remaining drugs.--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.
``(4) Renegotiation process.--
``(A) In general.--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.
``(B) Consistent with negotiation process.--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.
``(5) Clarification.--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.
``(g) <<NOTE: Effective date.>> Clarification.--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.
[[Page 136 STAT. 1849]]
``SEC. 1195. <<NOTE: Deadlines. Time periods. 42 USC 1320f-4.>>
PUBLICATION OF MAXIMUM FAIR PRICES.
``(a) In General.--With respect to an initial price applicability
year and a selected drug with respect to such year--
``(1) 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
``(2) 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).
``(b) Updates.--
``(1) Subsequent year maximum fair prices.--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--
``(A) 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
``(B) 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.
``(2) <<NOTE: Determination.>> Prices negotiated after
deadline.--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.
``SEC. 1196. <<NOTE: 42 USC 1320f-5.>> ADMINISTRATIVE DUTIES AND
COMPLIANCE MONITORING.
``(a) Administrative Duties.--For purposes of section 1191(a)(4),
the administrative duties described in this section are the following:
``(1) The establishment of procedures to ensure that the
maximum fair price for a selected drug is applied before--
``(A) 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
``(B) any other discounts.
``(2) 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.
[[Page 136 STAT. 1850]]
``(3) The establishment of procedures to carry out the
provisions of this part, as applicable, with respect to--
``(A) 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
``(B) 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.
``(4) The establishment of a negotiation process and
renegotiation process in accordance with section 1194.
``(5) The establishment of a process for manufacturers to
submit information described in section 1194(b)(2)(A).
``(6) 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--
``(A) 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;
``(B) 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
``(C) 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.
``(7) The establishment of procedures for purposes of
applying section 1192(d)(2)(B).
``(b) Compliance Monitoring.--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.
``SEC. 1197. <<NOTE: 42 USC 1320f-6.>> CIVIL MONETARY PENALTIES.
``(a) Violations Relating to Offering of Maximum Fair Price.--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--
``(1) 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
``(2) 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
[[Page 136 STAT. 1851]]
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.
``(b) Violations of Certain Terms of Agreement.--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.
``(c) False Information.--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.
``(d) Application.--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).
``SEC. 1198. <<NOTE: 42 USC 1320f-7.>> LIMITATION ON
ADMINISTRATIVE AND JUDICIAL REVIEW.
``There shall be no administrative or judicial review of any of the
following:
``(1) The determination of a unit, with respect to a drug or
biological product, pursuant to section 1191(c)(6).
``(2) 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).
``(3) The determination of a maximum fair price under
subsection (b) or (f) of section 1194.
``(4) The determination of renegotiation-eligible drugs
under section 1194(f)(2) and the selection of renegotiation-
eligible drugs under section 1194(f)(3).''.
(b) Application of Maximum Fair Prices and Conforming Amendments.--
(1) Under medicare.--
(A) Application to payments under part b.--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)''.
(B) Application under ma of cost-sharing for part b
drugs based off of negotiated price.--Section
1852(a)(1)(B)(iv) of the Social Security Act (42 U.S.C.
1395w-22(a)(1)(B)(iv)) is amended--
[[Page 136 STAT. 1852]]
(i) by redesignating subclause (VII) as
subclause (VIII); and
(ii) by inserting after subclause (VI) the
following subclause:
``(VII) A drug or biological product
that is a selected drug (as referred to
in section 1192(c)).''.
(C) Exception to part D non-interference.--Section
1860D-11(i) of the Social Security Act (42 U.S.C. 1395w-
111(i)) is amended--
(i) in paragraph (1), by striking ``and'' at
the end;
(ii) 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
(iii) by adding at the end the following new
paragraph:
``(3) may not institute a price structure for the
reimbursement of covered part D drugs, except as provided under
part E of title XI.''.
(D) Application as negotiated price under part d.--
Section 1860D-2(d)(1) of the Social Security Act (42
U.S.C. 1395w-102(d)(1)) is amended--
(i) in subparagraph (B), by inserting ``,
subject to subparagraph (D),'' after ``negotiated
prices''; and
(ii) by adding at the end the following new
subparagraph:
``(D) Application of maximum fair price for selected
drugs.--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.''.
(E) Coverage of selected drugs.--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:
``(I) Required inclusion of selected drugs.--
``(i) <<NOTE: Time periods.>> In general.--
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.
``(ii) Clarification.--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).''.
(F) Information from prescription drug plans and ma-
pd plans required.--
(i) Prescription drug plans.--Section 1860D-
12(b) of the Social Security Act (42 U.S.C. 1395w-
[[Page 136 STAT. 1853]]
112(b)) is amended by adding at the end the
following new paragraph:
``(8) Provision of information related to maximum fair
prices. <<NOTE: Contracts. Requirement.>> --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.''.
(ii) MA-PD plans.--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:
``(E) Provision of information related to maximum
fair prices.--Section 1860D-12(b)(8).''.
(G) Conditions for coverage.--
(i) Medicare part d.--Section 1860D-43(c) of
the Social Security Act (42 U.S.C. 1395w-153(c))
is amended--
(I) by redesignating paragraphs (1)
and (2) as subparagraphs (A) and (B),
respectively;
(II) by striking ``Agreements.--
Subsection'' and inserting the
following: ``Agreements.--
``(1) In general.--Subject to paragraph (2), subsection'';
and
(III) by adding at the end the
following new paragraph:
``(2) Exception.--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.''.
(ii) Medicaid and medicare part b.--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.''.
(H) Disclosure of information under medicare part
d.--
(i) Contract requirements.--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)''.
(ii) Subsidies.--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''.
(2) Drug price negotiation program prices included in best
price.--Section 1927(c)(1)(C) of the Social Security Act (42
U.S.C. 1396r-8(c)(1)(C)) is amended--
(A) in clause (i)(VI), by striking ``any prices
charged'' and inserting ``subject to clause (ii)(V), any
prices charged''; and
(B) in clause (ii)--
(i) in subclause (III), by striking ``; and''
at the end;
[[Page 136 STAT. 1854]]
(ii) in subclause (IV), by striking the period
at the end and inserting ``; and''; and
(iii) by adding at the end the following new
subclause:
``(V) 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.''.
(3) Maximum fair prices excluded from average manufacturer
price.--Section 1927(k)(1)(B)(i) of the Social Security Act (42
U.S.C. 1396r-8(k)(1)(B)(i)) is amended--
(A) in subclause (IV) by striking ``; and'' at the
end;
(B) in subclause (V) by striking the period at the
end and inserting ``; and''; and
(C) by adding at the end the following new
subclause:
``(VI) 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.''.
(c) <<NOTE: 42 USC 1320f note.>> Implementation for 2026 Through
2028.--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.