Public
Law 102-585
On
this page:
-
- Section
601 Treatment of Prescription
Drugs Procured by Department of Veterans
Affairs or Purchased by Certain Clinics
and Hospitals
- Section
602, Limitations on Prices of
Drugs Purchased by Certain Clinics
amd Hospitals
- Section
603, Limitation on Prices of
Drugs Procured by Department of Veterans
Affairs and Certain Other Federal
Agencies
Synopsis
and Section I
PL
102-585: Veterans Health Care Act of
1992102nd Congress[H.R. 5193]102 P.L.
585; 1992 H.R. 5193; 106 Stat. 4943SYNOPSIS:An
ActTo amend title 38, United States Code,
to improve health care services for women
veterans, to expand authority for health
care sharing agreements between the Department
of Veterans Affairs and the Department
of Defense to revise certain pay authorities
that apply to Department of Veterans
Affairs nurses, to improve preventive
health services for veterans, to establish
discounts on pharmaceuticals purchased
by the Department of Veterans Affairs,
to provide for a Persian Gulf War Veterans
Health Registry, and to make other improvements
in the delivery and administration of
health care by the Department of Veterans
Affairs.NOV. 4, 1992 -- PUBLIC LAW 102-585TEXT:
Be it enacted by the Senate and House
of Representatives of the United States
of America in Congress assembled,[*1]
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.(a)
Short Title. This Act may be cited as
the "Veterans Health Care Act of 1992".
[sections
not relevant to HHS deleted]
Section
601
TITLE
VI -- DRUG PRICING AGREEMENTS[*601] SEC.
601. TREATMENT OF PRESCRIPTION DRUGS
PROCURED BY DEPARTMENT OF VETERANS AFFAIRS
OR PURCHASED BY CERTAIN CLINICS AND HOSPITALS.(a)
Exclusion of Prices From Calculation
of Best Prices for Medicaid Rebate Agreements.
Section 1927(c)(1)(C) of the Social Security
Act (42 U.S.C. 1396r-8(c)(1)(C)) is amended
by striking "(excluding" and inserting "(excluding
any prices charged on or after October
1, 1992, to the Indian Health Service,
the Department of Veterans Affairs, a
State home receiving funds under section
1741 of title 38, United States Code,
the Department of Defense, the Public
Health Service, or a covered entity described
in subsection (a)(5)(B), any prices charged
under the Federal Supply Schedule of
the General Services Administration,
or any prices used under a State pharmaceutical
assistance program, and excluding".(b)
Agreements Required To Receive Payment.
-- (1) In general. The first sentence
of section 1927(a)(1) of such Act (42
U.S.C. 1396r-8(a)(1)) is amended by striking "manufacturer)." and
inserting "manufacturer), and must meet
the requirements of paragraph (5) (with
respect to drugs purchased by a covered
entity on or after the first day of the
first month that begins after the date
of the enactment of title VI of the Veterans
Health Care Act of 1992) and paragraph
(6).".(2) Agreements described. Section
1927(a) of such Act (42 U.S.C. 1396r-8(a))
is amended by adding at the end the following
new paragraphs: "(5) Limitation on prices
of drugs purchased by covered entities.
-- "(A) Agreement with secretary. A manufacturer
meets the requirements of this paragraph
if the manufacturer has entered into
an agreement with the Secretary that
meets the requirements of section 340B
of the Public Health Service Act with
respect to covered outpatient drugs purchased
by a covered entity on or after the first
day of the first month that begins after
the date of the enactment of this paragraph."(B)
Covered entity defined. In this subsection,
the term 'covered entity' means an entity
described in section 340B(a)(4) of the
Public Health Service Act."(C) Establishment
of alternative mechanism to ensure against
duplicate discounts or rebates. If the
Secretary does not establish a mechanism
under section 340B(a)(5)(A) of the Public
Health Service Act within 12 months of
the date of the enactment of such section,
the following requirements shall apply: "(i)
Entities. Each covered entity shall inform
the single State agency under section
1902(a)(5) when it is seeking reimbursement
from the State plan for medical assistance
described in section 1905(a)(12) with
respect to a unit of any covered outpatient
drug which is subject to an agreement
under section 340B(a) of such Act."(ii)
State agency. Each such single State
agency shall provide a means by which
a covered entity shall indicate on any
drug reimbursement claims form (or format,
where electronic claims management is
used) that a unit of the drug that is
the subject of the form is subject to
an agreement under section 340B of such
Act, and not submit to any manufacturer
a claim for a rebate payment under subsection
(b) with respect to such a drug."(D)
Effect of subsequent amendments. In determining
whether an agreement under subparagraph
(A) meets the requirements of section
340B of the Public Health Service Act,
the Secretary shall not take into account
any amendments to such section that are
enacted after the enactment of title
VI of the Veterans Health Care Act of
1992."(E) Determination of compliance.
A manufacturer is deemed to meet the
requirements of this paragraph if the
manufacturer establishes to the satisfaction
of the Secretary that the manufacturer
would comply (and has offered to comply)
with the provisions of section 340B of
the Public Health Service Act (as in
effect immediately after the enactment
of this paragraph) and would have entered
into an agreement under such section
(as such section was in effect at such
time), but for a legislative change in
such section after the date of the enactment
of this paragraph."(6) Requirements relating
to master agreements for drugs procured
by department of veterans affairs and
certain other federal agencies. -- "(A)
In general. A manufacturer meets the
requirements of this paragraph if the
manufacturer complies with the provisions
of section 8126 of title 38, United States
Code, including the requirement of entering
into a master agreement with the Secretary
of Veterans Affairs under such section."(B)
Effect of subsequent amendments. In determining
whether a master agreement described
in subparagraph (A) meets the requirements
of section 8126 of title 38, United States
Code, the Secretary shall not take into
account any amendments to such section
that are enacted after the enactment
of title VI of the Veterans Health Care
Act of 1992."(C) Determination of compliance.
A manufacturer is deemed to meet the
requirements of this paragraph if the
manufacturer establishes to the satisfaction
of the Secretary that the manufacturer
would comply (and has offered to comply)
with the provisions of section 8126 of
title 38, United States Code (as in effect
immediately after the enactment of this
paragraph) and would have entered into
an agreement under such section (as such
section was in effect at such time),
but for a legislative change in such
section after the date of the enactment
of this paragraph.".(3) Confidentiality
of information. Section 1927(b)(3)(D)
of such Act (42 U.S.C. 1396r-8(b)(3)(D))
is amended -- (A) by striking "this paragraph" and
inserting "this paragraph or under an
agreement with the Secretary of Veterans
Affairs described in subsection (a)(6)(A)(ii)";
(B) by striking "Secretary" each place
it appears and inserting "Secretary or
the Secretary of Veterans Affairs"; and
(C) by striking "except" and all that
follows through the period and inserting: "except
-- "(i) as the Secretary determines to
be necessary to carry out this section, "(ii)
to permit the Comptroller General to
review the information provided, and "(iii)
to permit the Director of the Congressional
Budget Office to review the information
provided.".(4) Termination of rebate
agreements. Section 1927(b)(4)(B) of
such Act (42 U.S.C. 1396r-8(b)(4)(B))
is amended -- (i) in clause (ii), by
striking "such period" and inserting "the
calendar quarter beginning at least 60
days", (ii) in clause (ii), by striking "of
the notice" and all through "the agreement)." and
inserting "the manufacturer provides
notice to the Secretary.", and (iii)
by adding at the end the following new
clauses: "(iv) Notice to states. In the
case of a termination under this subparagraph,
the Secretary shall provide notice of
such termination to the States within
not less than 30 days before the effective
date of such termination."(v) Application
to terminations of other agreements.
The provisions of this subparagraph shall
apply to the terminations of agreements
described in section 340B(a)(1) of the
Public Health Service Act and master
agreements described in section 8126(a)
of title 38, United States Code.".(c)
Budget Neutrality Adjustment. Section
1927(c)(1)(B) of the Social Security
Act (42 U.S.C. 1396r-8(c)(1)(B)) is amended
-- (1) by striking "January 1, 1993," and
inserting "October 1, 1992,"; (2) by
striking "and" at the end of clause (i);
and (3) by striking clause (ii) and inserting
the following: "(ii) for quarters (or
other periods) beginning after September
30, 1992, and before January 1, 1994,
the greater of -- "(I) 15.7 percent of
the average manufacturer price for the
drug, or "(II) the difference between
the average manufacturer price for the
drug and the best price (as defined in
subparagraph (C)) for such quarter (or
period) for such drug; "(iii) for quarters
(or other periods) beginning after December
31, 1993, and before January 1, 1995,
the greater of -- "(I) 15.4 percent of
the average manufacturer price for the
drug, or "(II) the difference between
the average manufacturer price for the
drug and the best price (as defined in
subparagraph (C)) for such quarter (or
period) for such drug; "(iv) for quarters
(or other periods) beginning after December
31, 1994, and before January 1, 1996,
the greater of -- "(I) 15.2 percent of
the average manufacturer price for the
drug, or "(II) the difference between
the average manufacturer price for the
drug and the best price (as defined in
subparagraph (C)) for such quarter (or
period) for such drug; and"(v) for quarters
(or other periods) beginning after December
31, 1995, the greater of -- "(I) 15.1
percent of the average manufacturer price
for the drug, or "(II) the difference
between the average manufacturer price
for the drug and the best price (as defined
in subparagraph (C)) for such quarter
(or period) for such drug.".(d) Reports
on Best Price Changes and Payment of
Rebates. -- (1) In general. Not later
than 90 days after the expiration of
each calendar quarter that begins on
or after October 1, 1992, and ends on
or before December 31, 1995, the Secretary
of Health and Human Services shall submit
a report to Congress that contains the
following information relating to prescription
drugs dispensed in the quarter (subject
to paragraph (2)):(A) With respect to
single source drugs and innovator multiple
source drugs (as such terms are defined
in section 1927(k)(7) of the Social Security
Act) -- (i) the percentage of such drugs
whose best price (as reported to the
Secretary under section 1927(b) of the
Social Security Act) increased compared
to the best price during the previous
calendar quarter, and the amount of expenditures
under State plans under title XIX of
such Act attributable to such drugs;
(ii) the percentage of such drugs whose
best price (as so reported) decreased
compared to the best price during the
previous calendar quarter, and the amount
of expenditures under State plans under
title XIX of such Act attributable to
such drugs; (iii) the percentage of such
drugs whose best price (as so reported)
was the same as the best price during
the previous calendar quarter, and the
amount of expenditures under State plans
under title XIX of such Act attributable
to such drugs; (iv) the median and mean
percentage increase (or decrease) in
the best price of such single source
drugs (as so reported) compared to the
best price during the previous calendar
quarter, unweighted and weighted (in
the case of the mean percentage increase
or decrease) by the dollar volume of
drugs dispensed; (v) the median and mean
percentage increase (or decrease) in
the best price of such innovator multiple
source drugs (as so reported) compared
to the best price during the previous
calendar quarter, unweighted and weighted
(in the case of the mean percentage increase
or decrease) by the dollar volume of
drugs dispensed; and (vi) the median
and mean percentage increase (or decrease)
in the best price of all such drugs (as
so reported) compared to the best price
during the previous calendar quarter,
unweighted and weighted (in the case
of the mean percentage increase or decrease)
by the dollar volume of drugs dispensed.(B)
With respect to all drugs for which manufacturers
are required to pay rebates under section
1927(c) of the Social Security Act, the
Secretary's estimate, on a State-by-State
and a national aggregate basis, of --
(i) the total amount of all rebates paid
under such section during the quarter,
broken down by the portions of such total
amount attributable to rebates described
in paragraphs (1), (2), and (3) of such
section; (ii) the percentages of such
total amount attributable to rebates
described in paragraphs (1), (2), and
(3) of such section; and (iii) the amount
of the portion of such total amount attributable
to the rebate described in paragraph
(1) of such section that is solely attributable
to the application of subclause (II)
of clause (i), (ii), (iii), (iv), or
(v) of such paragraph.(2) Limitation
on drugs subject to report. No report
submitted under paragraph (1) shall include
any information relating to any prescription
drug unless the Secretary finds that
expenditures for the drug are significant expenditures
under the medicaid program. In the previous
sentence, expenditures for a drug are "significant" if
the drug was one of the 1,000 drugs for
which the greatest amount of the Federal
financial assistance attributable to
prescription drugs was paid under section
1903(a) of the Social Security Act during
calendar year 1991.
(3)
Special rule for initial report. For
purposes of the first report required
to be submitted under paragraph (1) --
(A) the Secretary shall submit the report
not later than May 1, 1993; and (B) the
information contained in the report shall
include information on prescription drugs
dispensed during each calendar quarter
that began on or after January 1, 1991,
and ended on or before December 31, 1992.
(e) Effective Date. The amendments made
by this section shall apply with respect
to payments to State plans under title
XIX of the Social Security Act for calendar
quarters (or periods) beginning on or
after January 1, 1993 (without regard
to whether or not regulations to carry
out such amendments have been promulgated
by such date).
Section
602
[*602]
SEC. 602. LIMITATIONS ON PRICES OF DRUGS
PURCHASED BY CERTAIN CLINICS AND HOSPITALS.(a)
In General. Part D of title III of the
Public Health Service Act is amended
by adding the following subpart:"SUBPART
VII -- DRUG PRICING AGREEMENTS"LIMITATION
ON PRICES OF DRUGS PURCHASED BY COVERED
ENTITIES "Sec. 340B. (a) Requirements
for Agreement With Secretary. -- "(1)
In general. The Secretary shall enter
into an agreement with each manufacturer
of covered drugs under which the amount
required to be paid (taking into account
any rebate or discount, as provided by
the Secretary) to the manufacturer for
covered drugs (other than drugs described
in paragraph (3)) purchased by a covered
entity on or after the first day of the
first month that begins after the date
of the enactment of this section, does
not exceed an amount equal to the average
manufacturer price for the drug under
title XIX of the Social Security Act
in the preceding calendar quarter, reduced
by the rebate percentage described in
paragraph (2)."(2) Rebate percentage
defined. -- "(A) In general. For a covered
outpatient drug purchased in a calendar
quarter, the 'rebate percentage' is the
amount (expressed as a percentage) equal
to -- "(i) the average total rebate required
under section 1927(c) of the Social Security
Act with respect to the drug (for a unit
of the dosage form and strength involved)
during the preceding calendar quarter;
divided by "(ii) the average manufacturer
price for such a unit of the drug during
such quarter."(B) Over the counter drugs.
-- "(i) In general. For purposes of subparagraph
(A), in the case of over the counter
drugs, the 'rebate percentage' shall
be determined as if the rebate required
under section 1927(c) of the Social Security
Act is based on the applicable percentage
provided under section 1927(c)(4) of
such Act."(ii) Definition. The term 'over
the counter drug' means a drug that may
be sold without a prescription and which
is prescribed by a physician (or other
persons authorized to prescribe such
drug under State law)."(3) Drugs provided
under state medicaid plans. Drugs described
in this paragraph are drugs purchased
by the entity for which payment is made
by the State under the State plan for
medical assistance under title XIX of
the Social Security Act."(4) Covered
entity defined. In this section, the
term 'covered entity' means an entity
that meets the requirements described
in paragraph (5) and is one of the following: "(A)
A Federally-qualified health center (as
defined in section 1905(l)(2)(B) of the
Social Security Act)."(B) An entity receiving
a grant under section 340A."(C) A family
planning project receiving a grant or
contract under section 1001."(D) An entity
receiving a grant under subpart II of
part C of title XXVI (relating to categorical
grants for outpatient early intervention
services for HIV disease)."(E) A State-operated
AIDS drug purchasing assistance program
receiving financial assistance under
title XXVI."(F) A black lung clinic receiving
funds under section 427(a) of the Black
Lung Benefits Act."(G) A comprehensive
hemophilia diagnostic treatment center
receiving a grant under section 501(a)(2)
of the Social Security Act."(H) A Native
Hawaiian Health Center receiving funds
under the Native Hawaiian Health Care
Act of 1988."(I) An urban Indian organization
receiving funds under title V of the
Indian Health Care Improvement Act."(J)
Any entity receiving assistance under
title XXVI (other than a State or unit
of local government or an entity described
in subparagraph (D)), but only if the
entity is certified by the Secretary
pursuant to paragraph (7)."(K) An entity
receiving funds under section 318 (relating
to treatment of sexually transmitted
diseases) or section 317(j)(2) (relating
to treatment of tuberculosis) through
a State or unit of local government,
but only if the entity is certified by
the Secretary pursuant to paragraph (7)."(L)
A subsection (d) hospital (as defined
in section 1886(d)(1)(B) of the Social
Security Act) that -- "(i) is owned or
operated by a unit of State or local
government, is a public or private non-profit
corporation which is formally granted
governmental powers by a unit of State
or local government, or is a private
non-profit hospital which has a contract
with a State or local government to provide
health care services to low income individuals
who are not entitled to benefits under
title XVIII of the Social Security Act
or eligible for assistance under the
State plan under this title; "(ii) for
the most recent cost reporting period
that ended before the calendar quarter
involved, had a disproportionate share
adjustment percentage (as determined
under section 1886(d)(5)(F) of the Social
Security Act) greater than 11.75 percent
or was described in section 1886(d)(5)(F)(i)(II)
of such Act; and "(iii) does not obtain
covered outpatient drugs through a group
purchasing organization or other group
purchasing arrangement."(5) Requirements
for covered entities. -- "(A) Prohibiting
duplicate discounts or rebates. -- "(i)
In general. A covered entity shall not
request payment under title XIX of the
Social Security Act for medical assistance
described in section 1905(a)(12) of such
Act with respect to a drug that is subject
to an agreement under this section if
the drug is subject to the payment of
a rebate to the State under section 1927
of such Act."(ii) Establishment of mechanism.
The Secretary shall establish a mechanism
to ensure that covered entities comply
with clause (i). If the Secretary does
not establish a mechanism within 12 months
under the previous sentence, the requirements
of section 1927(a)(5)(C) of the Social
Security Act shall apply."(B) Prohibiting
resale of drugs. With respect to any
covered outpatient drug that is subject
to an agreement under this subsection,
a covered entity shall not resell or
otherwise transfer the drug to a person
who is not a patient of the entity."(C)
Auditing. A covered entity shall permit
the Secretary and the manufacturer of
a covered outpatient drug that is subject
to an agreement under this subsection
with the entity (acting in accordance
with procedures established by the Secretary
relating to the number, duration, and
scope of audits) to audit at the Secretary's
or the manufacturer's expense the records
of the entity that directly pertain to
the entity's compliance with the requirements
described in subparagraphs (A) or (B)
with respect to drugs of the manufacturer."(D)
Additional sanction for noncompliance.
If the Secretary finds, after notice
and hearing, that a covered entity is
in violation of a requirement described
in subparagraphs (A) or (B), the covered
entity shall be liable to the manufacturer
of the covered outpatient drug that is
the subject of the violation in an amount
equal to the reduction in the price of
the drug (as described in subparagraph
(A)) provided under the agreement between
the entity and the manufacturer under
this paragraph."(6) Treatment of distinct
units of hospitals. In the case of a
covered entity that is a distinct part
of a hospital, the hospital shall not
be considered a covered entity under
this paragraph unless the hospital is
otherwise a covered entity under this
subsection."(7) Certification of certain
covered entities. -- "(A) Development
of process. Not later than 60 days after
the date of enactment of this subsection,
the Secretary shall develop and implement
a process for the certification of entities
described in subparagraphs (J) and (K)
of paragraph (4)."(B) Inclusion of purchase
information. The process developed under
subparagraph (A) shall include a requirement
that an entity applying for certification
under this paragraph submit information
to the Secretary concerning the amount
such entity expended for covered outpatient
drugs in the preceding year so as to
assist the Secretary in evaluating the
validity of the entity's subsequent purchases
of covered outpatient drugs at discounted
prices."(C) Criteria. The Secretary shall
make available to all manufacturers of
covered outpatient drugs a description
of the criteria for certification under
this paragraph."(D) List of purchasers
and dispensers. The certification process
developed by the Secretary under subparagraph
(A) shall include procedures under which
each State shall, not later than 30 days
after the submission of the descriptions
under subparagraph (C), prepare and submit
a report to the Secretary that contains
a list of entities described in subparagraphs
(J) and (K) of paragraph (4) that are
located in the State."(E) Recertification.
The Secretary shall require the recertification
of entities certified pursuant to this
paragraph on a not more frequent than
annual basis, and shall require that
such entities submit information to the
Secretary to permit the Secretary to
evaluate the validity of subsequent purchases
by such entities in the same manner as
that required under subparagraph (B)."(8)
Development of prime vendor program.
The Secretary shall establish a prime
vendor program under which covered entities
may enter into contracts with prime vendors
for the distribution of covered outpatient
drugs. If a covered entity obtains drugs
directly from a manufacturer, the manufacturer
shall be responsible for the costs of
distribution."(9) Notice to manufacturers.
The Secretary shall notify manufacturers
of covered outpatient drugs and single
State agencies under section 1902(a)(5)
of the Social Security Act of the identities
of covered entities under this paragraph,
and of entities that no longer meet the
requirements of paragraph (5) or that
are no longer certified pursuant to paragraph
(7)."(10) No prohibition on larger discount.
Nothing in this subsection shall prohibit
a manufacturer from charging a price
for a drug that is lower than the maximum
price that may be charged under paragraph
(1)."(b) Other Definitions. In this section,
the terms 'average manufacturer price',
'covered outpatient drug', and 'manufacturer'
have the meaning given such terms in
section 1927(k) of the Social Security
Act."(c) References to Social Security
Act. Any reference in this section to
a provision of the Social Security Act
shall be deemed to be a reference to
the provision as in effect on the date
of the enactment of this section."(d)
Compliance With Requirements. A manufacturer
is deemed to meet the requirements of
subsection (a) if the manufacturer establishes
to the satisfaction of the Secretary
that the manufacturer would comply (and
has offered to comply) with the provisions
of this section (as in effect immediately
after the enactment of the Veterans Health
Care Act of 1992), as applied by the
Secretary, and would have entered into
an agreement under this section (as such
section was in effect at such time),
but for a legislative change in this
section (or the application of this section)
after the date of the enactment of such
Act.".(b) Study of Treatment of Certain
Clinics As Covered Entities Eligible
for Prescription Drug Discounts. -- (1)
Study. The Secretary of Health and Human
Services shall conduct a study of the
feasibility and desirability of including
entities described in paragraph (3) as
covered entities eligible for limitations
on the prices of covered outpatient drugs
under section 340B(a) of the Public Health
Service Act (as added by subsection (a)).(2)
Report. Not later than 1 year after the
date of the enactment of this Act, the
Secretary shall submit a report to Congress
on the study conducted under paragraph
(1), and shall include in the report
-- (A) a description of the entities
that are the subject of the study; (B)
an analysis of the extent to which such
entities procure prescription drugs;
and (C) an analysis of the impact of
the inclusion of such entities as covered
entities under section 340B(a) of the
Public Health Service Act on the quality
of care provided to and the health status
of the patients of such entities.
(3)
Entities described. An entity described
in this paragraph is an entity -- (A)
receiving funds from a State for the
provision of mental health or substance
abuse treatment services under subparts
I or II of part B of title XIX of the
Public Health Service Act or under title
V of such Act; or (B) receiving funds
from a State under title V of the Social
Security Act for the provision of maternal
and child health services that are furnished
on an outpatient basis (other than an
entity described in section 340B(a)(4)(G)
of the Public Health Service Act).
Section
603
*603]
SEC. 603. LIMITATION ON PRICES OF DRUGS
PROCURED BY DEPARTMENT OF VETERANS AFFAIRS
AND CERTAIN OTHER FEDERAL AGENCIES.(a)
Agreements With Secretary of Veterans
Affairs. (1) Subchapter II of chapter
81 is amended by adding at the end the
following new section:"8126. Limitation
on prices of drugs procured by Department
and certain other Federal agencies "(a)
Each manufacturer of covered drugs shall
enter into a master agreement with the
Secretary under which -- "(1) beginning
January 1, 1993, the manufacturer shall
make available for procurement on the
Federal Supply Schedule of the General
Services Administration each covered
drug of the manufacturer; "(2) with respect
to each covered drug of the manufacturer
procured by a Federal agency described
in subsection (b) on or after January
1, 1993, that is purchased under depot
contracting systems or listed on the
Federal Supply Schedule, the manufacturer
has entered into and has in effect a
pharmaceutical pricing agreement with
the Secretary (or the Federal agency
involved, if the Secretary delegates
to the Federal agency the authority to
enter into such a pharmaceutical pricing
agreement) under which the price charged
during the one-year period beginning
on the date on which the agreement takes
effect may not exceed 76 percent of the
non-Federal average manufacturer price
(less the amount of any additional discount
required under subsection (c)) during
the one-year period ending one month
before such date (or, in the case of
a covered drug for which sufficient data
for determining the non-Federal average
manufacturer price during such period
are not available, during such period
preceding such date as the Secretary
considers appropriate), except that such
price may nominally exceed such amount
if found by the Secretary to be in the
best interests of the Department or such
Federal agencies; "(3) with respect to
each covered drug of the manufacturer
procured by a State home receiving funds
under section 1741 of this title, the
price charged may not exceed the price
charged under the Federal Supply Schedule
at the time the drug is procured; and "(4)
unless the manufacturer meets the requirements
of paragraphs (1), (2), and (3), the
manufacturer may not receive payment
for the purchase of drugs or biologicals
from -- "(A) a State plan under title
XIX of the Social Security Act, except
as authorized under section 1927(a)(3)
of such Act, "(B) any Federal agency
described in subsection (b), or "(C)
any entity that receives funds under
the Public Health Service Act."(b) The
Federal agencies described in this subsection
are as follows: "(1) The Department."(2)
The Department of Defense."(3) The Public
Health Service, including the Indian
Health Service."(c) With respect to any
covered drug the price of which is determined
in accordance with a pharmaceutical pricing
agreement entered into pursuant to subsection
(a)(2), for calendar quarters beginning
on or after January 1, 1993, the manufacturer
shall provide a discount in an amount
equal to the amount by which the change
in non-Federal price exceeds the amount
equal to -- "(1) the non-Federal average
manufacturer price of the drug during
the 3-month period that ends one year
before the last day of the month preceding
the month during which the contract for
the covered drug goes into effect (or,
in the case of a covered drug for which
sufficient data for determining the non-Federal
average manufacturer price during such
period is not available, during such
period preceding the month during which
the contract goes into effect as the
Secretary considers appropriate); increased
by "(2) the percentage increase in the
Consumer Price Index for all urban consumers
(U.S. city average) between the last
month of the period described in paragraph
(1) and the last month preceding the
month during which the contract goes
into effect for which Consumer Price
Index data is available."(d) In the case
of a covered drug of a manufacturer that
has entered into a multi-year contract
with the Secretary under subsection (a)(2)
for the procurement of the drug -- "(1)
during any one-year period that follows
the first year for which the contract
is in effect, the price charged may not
exceed the price charged during the preceding
one-year period, increased by the percentage
increase in the Consumer Price Index
for all urban consumers (U.S. city average)
between the last months of such one-year
periods for which Consumer Price Index
data is available; and "(2) in applying
subsection (c) to determine the amount
of the discount provided with respect
to the drug during a year that follows
the first year for which the contract
is in effect, any reference in such subsection
to 'the month during which the contract
goes into effect' shall be considered
a reference to the first month of such
following year."(e)(1) The manufacturer
of any covered drug the price of which
is determined in accordance with a pharmaceutical
pricing agreement entered into pursuant
to subsection (a)(2) shall -- "(A) not
later than 30 days after the first day
of the last quarter that begins before
the agreement takes effect (or, in the
case of an agreement that takes effect
on January 1, 1993, not later than 30
days after the date of the enactment
of this section), report to the Secretary
the non-Federal average manufacturer
price for the drug during the 1-year
period that ends on the last day of the
previous quarter; and "(B) not later
than 30 days after the last day of each
quarter for which the agreement is in
effect, report to the Secretary the non-Federal
average manufacturer price for the drug
during such quarter."(2) The provisions
of subparagraphs (B) and (C) of section
1927(b)(3) of the Social Security Act
shall apply to drugs described in paragraph
(1) and the Secretary in the same manner
as such provisions apply to covered outpatient
drugs and the Secretary of Health and
Human Services under such subparagraphs,
except that references in such subparagraphs
to prices or information reported or
required under 'subparagraph (A)' shall
be deemed to refer to information reported
under paragraph (1)."(3) In order to
determine the accuracy of a drug price
that is reported to the Secretary under
paragraph (1), the Secretary may audit
the relevant records of the manufacturer
or of any wholesaler that distributes
the drug, and may delegate the authority
to audit such records to the appropriate
Federal agency described in subsection
(b)."(4) Any information contained in
a report submitted to the Secretary under
paragraph (1) or obtained by the Secretary
through any audit conducted under paragraph
(3) shall remain confidential, except
as the Secretary determines necessary
to carry out this section and to permit
the Comptroller General and the Director
of the Congressional Budget Office to
review the information provided."(f)
The Secretary shall supply to the Secretary
of Health and Human Services -- "(1)
upon the execution or termination of
any master agreement, the name of the
manufacturer, and "(2) on a quarterly
basis, a list of manufacturers who have
entered into master agreements under
this section, and "(g)(1) Any reference
in this section to a provision of the
Social Security Act shall be deemed to
be a reference to the provision as in
effect on the date of the enactment of
this section."(2) A manufacturer is deemed
to meet the requirements of subsection
(a) if the manufacturer establishes to
the satisfaction of the Secretary that
the manufacturer would comply (and has
offered to comply) with the provisions
of this section (as in effect immediately
after the enactment of this section),
and would have entered into an agreement
under this section (as such section was
in effect at such time), but for a legislative
change in this section after the date
of the enactment of this section."(h)
In this section: "(1) The term 'change
in non-Federal price' means, with respect
to a covered drug that is subject to
an agreement under this section, an amount
equal to -- "(A) the non-Federal average
manufacturer price of the drug during
the 3-month period that ends with the
month preceding the month during which
a contract goes into effect (or, in the
case of a covered drug for which sufficient
data for determining the non-Federal
average manufacturer price during such
period is not available, during such
period as the Secretary considers appropriate);
minus "(B) the non-Federal average manufacturer
price of the drug during the 3-month
period that ends one year before the
end of the period described in subparagraph
(A) (or, in the case of a covered drug
for which sufficient data for determining
the non-Federal average manufacturer
price during such period is not available,
during such period preceding the period
described in subparagraph (A) as the
Secretary considers appropriate)."(2)
The term 'covered drug' means -- "(A)
a drug described in section 1927(k)(7)(A)(ii)
of the Social Security Act, or that would
be described in such section but for
the application of the first sentence
of section 1927(k)(3) of such Act; "(B)
a drug described in section 1927(k)(7)(A)(iv)
of the Social Security Act, or that would
be described in such section but for
the application of the first sentence
of section 1927(k)(3) of such Act; "(C)
any biological product identified under
section 600.3 of title 21, Code of Federal
Regulations; or "(D) insulin certified
under section 506 of the Federal Food,
Drug, and Cosmetic Act."(3) The term
'depot' means a centralized commodity
management system through which covered
drugs procured by an agency of the Federal
Government are -- "(A) received, stored,
and delivered through -- "(i) a federally
owned and operated warehouse system,
or "(ii) a commercial entity operating
under contract with such agency; or "(B)
delivered directly from the commercial
source to the entity using such covered
drugs."(4) The term 'manufacturer' means
any entity which is engaged in -- "(A)
the production, preparation, propagation,
compounding, conversion, or processing
of prescription drug products, either
directly or indirectly by extraction
from substances of natural origin, or
independently by means of chemical synthesis,
or by a combination of extraction and
chemical synthesis, or "(B) in the packaging,
repackaging, labeling, relabeling, or
distribution of prescription drug products.Such
term does not include a wholesale distributor
of drugs or a retail pharmacy licensed
under State law."(5) The term 'non-Federal
average manufacturer price' means, with
respect to a covered drug and a period
of time (as determined by the Secretary),
the weighted average price of a single
form and dosage unit of the drug that
is paid by wholesalers in the United
States to the manufacturer, taking into
account any cash discounts or similar
price reductions during that period,
but not taking into account -- "(A) any
prices paid by the Federal Government;
or "(B) any prices found by the Secretary
to be merely nominal in amount."(6) The
term 'weighted average price' means,
with respect to a covered drug and a
period of time (as determined by the
Secretary) an amount equal to -- "(A)
the sum of the products of the average
price per package unit of each quantity
of the drug sold during the period and
the number of package units of the drug
sold during the period; divided by "(B)
the total number of package units of
the drug sold during the period.".(2)
The table of sections at the beginning
of such chapter is amended by inserting
after the item relating to section 8125
the following new item:
"8126.
Limitation on prices of drugs procured
by Department." |