text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``Fair Accountability and Innovative 
  Research Drug Pricing Act of 2016''.
  
  SEC. 2. REPORTING ON JUSTIFICATION FOR DRUG PRICE INCREASES.
  
      Title III of the Public Health Service Act (42 U.S.C. 241 et seq.) 
  is amended by adding at the end the following:
  
              ``PART W--DRUG PRICE REPORTING; DRUG VALUE FUND
  
  ``SEC. 399OO. REPORTING ON JUSTIFICATION FOR DRUG PRICE INCREASES.
  
      ``(a) Definitions.--In this section:
              ``(1) Average manufacturer price.--The term `average 
          manufacturer price' has the meaning given the term in section 
          1927(k)(1) of the Social Security Act (42 U.S.C. 1396r-
          8(k)(1)).
              ``(2) Manufacturer.--The term `manufacturer' means the 
          person--
                      ``(A) that holds the application for a drug 
                  approved under section 505 of the Federal Food, Drug, 
                  and Cosmetic Act or the license issued under section 
                  351 of the Public Health Service Act; or
                      ``(B) who is responsible for setting the price for 
                  the drug.
              ``(3) Qualifying drug.--The term `qualifying drug' means 
          any drug that is approved under subsection (c) or (j) of 
          section 505 of the Federal Food, Drug, and Cosmetic Act or 
          licensed under subsection (a) or (k) of section 351 of this 
          Act--
                      ``(A) that is--
                              ``(i)(I) subject to section 503(b)(1) of 
                          the Federal Food, Drug, and Cosmetic Act; or
                              ``(II) commonly administered by hospitals 
                          (as determined by the Secretary);
                              ``(ii) not designated as a drug for a rare 
                          disease or condition under section 526 of the 
                          Federal Food, Drug, and Cosmetic Act; and
                              ``(iii) not designated by the Secretary as 
                          a vaccine; and
                      ``(B) for which, during the previous calendar year, 
                  at least 1 dollar of the total amount of sales were for 
                  individuals enrolled under the Medicare program under 
                  title XVIII of the Social Security Act (42 U.S.C. 1395 
                  et seq.) or under a State Medicaid plan under title XIX 
                  of such Act (42 U.S.C. 1396 et seq.) or under a waiver 
                  of such plan.
      ``(b) Report.--
              ``(1) Report required.--The manufacturer of a qualifying 
          drug shall submit a report to the Secretary for each price 
          increase of a qualifying drug that will result in an increase 
          in the average manufacturer price of that drug that is equal to 
          10 percent or more over a 12-month period.
              ``(2) Report deadline.--Each report described in paragraph 
          (1) shall be submitted to the Secretary not later than 30 days 
          prior to the planned effective date of such price increase.
      ``(c) Contents.--A report under subsection (b) shall, at a minimum, 
  include--
              ``(1) with respect to the qualifying drug--
                      ``(A) the percentage by which the manufacturer will 
                  raise the average manufacturer price of the drug on the 
                  planned effective date of such price increase;
                      ``(B) a justification for, and description of, each 
                  manufacturer's price increase that occurred during the 
                  12-month period described in subsection (b)(1);
                      ``(C) the identity of the initial developer of the 
                  drug;
                      ``(D) a description of the history of the 
                  manufacturer's price increases for the drug since the 
                  approval of the application for the drug under section 
                  505 of the Federal Food, Drug, and Cosmetic Act or the 
                  issuance of the license for the drug under section 351, 
                  or since the manufacturer acquired such approved 
                  application or license;
                      ``(E) the current list price of the drug;
                      ``(F) the total expenditures of the manufacturer 
                  on--
                              ``(i) materials and manufacturing for such 
                          drug; and
                              ``(ii) acquiring patents and licensing for 
                          such drug;
                      ``(G) the percentage of total expenditures of the 
                  manufacturer on research and development for such drug 
                  that was derived from Federal funds;
                      ``(H) the total expenditures of the manufacturer on 
                  research and development for such drug that is used 
                  for--
                              ``(i) basic and preclinical research;
                              ``(ii) clinical research;
                              ``(iii) new drug development;
                              ``(iv) pursuing new or expanded indications 
                          for such drug through supplemental applications 
                          under section 505 of the Federal Food, Drug, 
                          and Cosmetic Act; and
                              ``(v) carrying out postmarket requirements 
                          related to such drug, including those under 
                          section 505(o)(3) of such Act;
                      ``(I) the total revenue and the net profit 
                  generated from the qualifying drug for each calendar 
                  year since the approval of the application for the drug 
                  under section 505 of the Federal Food, Drug, and 
                  Cosmetic Act or the issuance of the license for the 
                  drug under section 351, or since the manufacturer 
                  acquired such approved application or license; and
                      ``(J) the total costs associated with marketing and 
                  advertising for the qualifying drug;
              ``(2) with respect to the manufacturer--
                      ``(A) the total revenue and the net profit of the 
                  manufacturer for the 12-month period described in 
                  subsection (b)(1);
                      ``(B) the amount the manufacturer has spent on 
                  dividends and stock repurchases and the specific 
                  metrics used by the manufacturer to determine executive 
                  compensation, including any stock-based performance 
                  metrics, for the 12-month period described in 
                  subsection (b)(1); and
                      ``(C) any additional information the manufacturer 
                  chooses to provide related to drug pricing decisions, 
                  such as total expenditures on--
                              ``(i) drug research and development; or
                              ``(ii) clinical trials on drugs that failed 
                          to receive approval by the Food and Drug 
                          Administration; and
              ``(3) such other related information as the Secretary 
          considers appropriate.
      ``(d) Civil Penalty.--Any manufacturer of a qualifying drug that 
  fails to submit a report for the drug as required by this section shall 
  be subject to a civil penalty of $100,000 for each day on which the 
  violation continues.
      ``(e) Compliance Determinations.--In determining whether a 
  manufacturer may have been required to submit a report under this 
  section, and otherwise making determinations about manufacturer 
  compliance with the requirements of this section, the Inspector General 
  of the Department of Health and Human Services shall annually review 
  and consider the average manufacturer price information submitted under 
  section 447.510 of title 42, Code of Federal Regulations, or any 
  successor regulations.
      ``(f) Public Posting.--
              ``(1) In general.--Subject to paragraph (3), not later than 
          30 days after the submission of a report under subsection (b), 
          the Secretary shall post the report on the public Web site of 
          the Department of Health and Human Services.
              ``(2) Format.--In developing the format of such report for 
          public posting, the Secretary shall consult stakeholders, 
          including beneficiary groups, and shall seek feedback on the 
          content and format from consumer advocates and readability 
          experts to ensure such public reports are user-friendly to the 
          public and are written in plain language that consumers can 
          readily understand.
              ``(3) Trade secrets and confidential information.--In 
          carrying out this section the Secretary shall ensure the 
          protection of confidential commercial information and trade 
          secrets.''.
  
  ``SEC. 399OO-1. USE OF CIVIL PENALTY AMOUNTS.
  
      ``The Secretary shall collect the civil penalties under section 
  399OO, in addition to any other amounts available, and without further 
  appropriation, and shall use such funds to carry out activities 
  described in this part and to improve consumer and provider information 
  about drug value and drug price transparency.
  
  ``SEC. 399OO-2. ANNUAL REPORT TO CONGRESS.
  
      ``(a) In General.--Subject to subsection (b), the Secretary shall 
  submit to Congress, and post on the public Web site of the Department 
  of Health and Human Services in a way that is easy to use and 
  understand, an annual report--
              ``(1) summarizing the information reported pursuant to 
          section 399OO; and
              ``(2) including copies of the reports and supporting 
          detailed economic analyses submitted pursuant to such section.
      ``(b) Trade Secrets and Confidential Information.--In carrying out 
  this section the Secretary shall ensure the protection of confidential 
  commercial information and trade secrets.''.
target: Fair Accountability and Innovative Research Drug Pricing Act of 2016 This bill amends the Public Health Service Act to require manufacturers of certain drugs and biological products to report to the Department of Health and Human Services (HHS) price increases that result in a 10% or more increase in the price of a drug over a 12-month period. Reports are required for prescription drugs and drugs commonly administered in hospitals, except vaccines, drugs for rare conditions, and drugs with annual sales for Medicare and Medicaid enrollees of less than $1. Manufacturers that do not submit a required report are subject to a civil penalty. The Inspector General of HHS must review drug price information to determine compliance. Collected penalty funds must be used to carry out activities related to this reporting requirement and to improve consumer and provider information about drug value and drug price transparency. HHS must publish manufacturer reports, a summary of those reports, and supporting analyses.
feat_title: Fair Accountability and Innovative Research Drug Pricing Act of 2016