text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``Medicare Drug Savings Act of 2017''.
  
  SEC. 2. REQUIRING DRUG MANUFACTURERS TO PROVIDE DRUG REBATES FOR DRUGS 
                DISPENSED TO LOW-INCOME INDIVIDUALS.
  
      (a) In General.--Section 1860D-2 of the Social Security Act (42 
  U.S.C. 1395w-102) is amended--
              (1) in subsection (e)(1), in the matter preceding 
          subparagraph (A), by inserting ``and subsection (f)'' after 
          ``this subsection''; and
              (2) by adding at the end the following new subsection:
      ``(f) Prescription Drug Rebate Agreement for Rebate Eligible 
  Individuals.--
              ``(1) Requirement.--
                      ``(A) In general.--For plan years beginning on or 
                  after January 1, 2019, in this part, the term `covered 
                  part D drug' does not include any drug or biological 
                  product that is manufactured by a manufacturer that has 
                  not entered into and have in effect a rebate agreement 
                  described in paragraph (2).
                      ``(B) 2018 plan year requirement.--Any drug or 
                  biological product manufactured by a manufacturer that 
                  declines to enter into a rebate agreement described in 
                  paragraph (2) for the period beginning on January 1, 
                  2018, and ending on December 31, 2018, shall not be 
                  included as a `covered part D drug' for the subsequent 
                  plan year.
              ``(2) Rebate agreement.--A rebate agreement under this 
          subsection shall require the manufacturer to provide to the 
          Secretary a rebate for each rebate period (as defined in 
          paragraph (6)(B)) ending after December 31, 2017, in the amount 
          specified in paragraph (3) for any covered part D drug of the 
          manufacturer dispensed after December 31, 2017, to any rebate 
          eligible individual (as defined in paragraph (6)(A)) for which 
          payment was made by a PDP sponsor or MA organization under this 
          part for such period, including payments passed through the 
          low-income and reinsurance subsidies under sections 1860D-14 
          and 1860D-15(b), respectively. Such rebate shall be paid by the 
          manufacturer to the Secretary not later than 30 days after the 
          date of receipt of the information described in section 1860D-
          12(b)(7), including as such section is applied under section 
          1857(f)(3), or 30 days after the receipt of information under 
          subparagraph (D) of paragraph (3), as determined by the 
          Secretary. Insofar as not inconsistent with this subsection, 
          the Secretary shall establish terms and conditions of such 
          agreement relating to compliance, penalties, and program 
          evaluations, investigations, and audits that are similar to the 
          terms and conditions for rebate agreements under paragraphs (3) 
          and (4) of section 1927(b).
              ``(3) Rebate for rebate eligible medicare drug plan 
          enrollees.--
                      ``(A) In general.--The amount of the rebate 
                  specified under this paragraph for a manufacturer for a 
                  rebate period, with respect to each dosage form and 
                  strength of any covered part D drug provided by such 
                  manufacturer and dispensed to a rebate eligible 
                  individual, shall be equal to the product of--
                              ``(i) the total number of units of such 
                          dosage form and strength of the drug so 
                          provided and dispensed for which payment was 
                          made by a PDP sponsor or an MA organization 
                          under this part for the rebate period, 
                          including payments passed through the low-
                          income and reinsurance subsidies under sections 
                          1860D-14 and 1860D-15(b), respectively; and
                              ``(ii) the amount (if any) by which--
                                      ``(I) the Medicaid rebate amount 
                                  (as defined in subparagraph (B)) for 
                                  such form, strength, and period, 
                                  exceeds
                                      ``(II) the average Medicare drug 
                                  program rebate eligible rebate amount 
                                  (as defined in subparagraph (C)) for 
                                  such form, strength, and period.
                      ``(B) Medicaid rebate amount.--For purposes of this 
                  paragraph, the term `Medicaid rebate amount' means, 
                  with respect to each dosage form and strength of a 
                  covered part D drug provided by the manufacturer for a 
                  rebate period--
                              ``(i) in the case of a single source drug 
                          or an innovator multiple source drug, the 
                          amount specified in paragraph (1)(A)(ii)(II) or 
                          (2)(C) of section 1927(c) plus the amount, if 
                          any, specified in subparagraph (A)(ii) of 
                          paragraph (2) of such section, for such form, 
                          strength, and period; or
                              ``(ii) in the case of any other covered 
                          outpatient drug, the amount specified in 
                          paragraph (3)(A)(i) of such section for such 
                          form, strength, and period.
                      ``(C) Average medicare drug program rebate eligible 
                  rebate amount.--For purposes of this subsection, the 
                  term `average Medicare drug program rebate eligible 
                  rebate amount' means, with respect to each dosage form 
                  and strength of a covered part D drug provided by a 
                  manufacturer for a rebate period, the sum, for all PDP 
                  sponsors under part D and MA organizations 
                  administering an MA-PD plan under part C, of--
                              ``(i) the product, for each such sponsor or 
                          organization, of--
                                      ``(I) the sum of all rebates, 
                                  discounts, or other price concessions 
                                  (not taking into account any rebate 
                                  provided under paragraph (2) or any 
                                  discounts under the program under 
                                  section 1860D-14A) for such dosage form 
                                  and strength of the drug dispensed, 
                                  calculated on a per-unit basis, but 
                                  only to the extent that any such 
                                  rebate, discount, or other price 
                                  concession applies equally to drugs 
                                  dispensed to rebate eligible Medicare 
                                  drug plan enrollees and drugs dispensed 
                                  to PDP and MA-PD enrollees who are not 
                                  rebate eligible individuals; and
                                      ``(II) the number of the units of 
                                  such dosage and strength of the drug 
                                  dispensed during the rebate period to 
                                  rebate eligible individuals enrolled in 
                                  the prescription drug plans 
                                  administered by the PDP sponsor or the 
                                  MA-PD plans administered by the MA 
                                  organization; divided by
                              ``(ii) the total number of units of such 
                          dosage and strength of the drug dispensed 
                          during the rebate period to rebate eligible 
                          individuals enrolled in all prescription drug 
                          plans administered by PDP sponsors and all MA-
                          PD plans administered by MA organizations.
                      ``(D) Use of estimates.--The Secretary may 
                  establish a methodology for estimating the average 
                  Medicare drug program rebate eligible rebate amounts 
                  for each rebate period based on bid and utilization 
                  information under this part and may use these estimates 
                  as the basis for determining the rebates under this 
                  section. If the Secretary elects to estimate the 
                  average Medicare drug program rebate eligible rebate 
                  amounts, the Secretary shall establish a reconciliation 
                  process for adjusting manufacturer rebate payments not 
                  later than 3 months after the date that manufacturers 
                  receive the information collected under section 1860D-
                  12(b)(7)(B).
              ``(4) Length of agreement.--The provisions of paragraph (4) 
          of section 1927(b) (other than clauses (iv) and (v) of 
          subparagraph (B)) shall apply to rebate agreements under this 
          subsection in the same manner as such paragraph applies to a 
          rebate agreement under such section.
              ``(5) Other terms and conditions.--The Secretary shall 
          establish other terms and conditions of the rebate agreement 
          under this subsection, including terms and conditions related 
          to compliance, that are consistent with this subsection.
              ``(6) Definitions.--In this subsection and section 1860D-
          12(b)(7):
                      ``(A) Rebate eligible individual.--The term `rebate 
                  eligible individual' means--
                              ``(i) a subsidy eligible individual (as 
                          defined in section 1860D-14(a)(3)(A));
                              ``(ii) a Medicaid beneficiary treated as a 
                          subsidy eligible individual under clause (v) of 
                          section 1860D-14(a)(3)(B); and
                              ``(iii) any part D eligible individual not 
                          described in clause (i) or (ii) who is 
                          determined for purposes of the State plan under 
                          title XIX to be eligible for medical assistance 
                          under clause (i), (iii), or (iv) of section 
                          1902(a)(10)(E).
                      ``(B) Rebate period.--The term `rebate period' has 
                  the meaning given such term in section 1927(k)(8).''.
      (b) Reporting Requirement for the Determination and Payment of 
  Rebates by Manufacturers Related to Rebate for Rebate Eligible Medicare 
  Drug Plan Enrollees.--
              (1) Requirements for pdp sponsors.--Section 1860D-12(b) of 
          the Social Security Act (42 U.S.C. 1395w-112(b)) is amended by 
          adding at the end the following new paragraph:
              ``(7) Reporting requirement for the determination and 
          payment of rebates by manufacturers related to rebate for 
          rebate eligible medicare drug plan enrollees.--
                      ``(A) In general.--For purposes of the rebate under 
                  section 1860D-2(f) for contract years beginning on or 
                  after January 1, 2019, each contract entered into with 
                  a PDP sponsor under this part with respect to a 
                  prescription drug plan shall require that the sponsor 
                  comply with subparagraphs (B) and (C).
                      ``(B) Report form and contents.--Not later than a 
                  date specified by the Secretary, a PDP sponsor of a 
                  prescription drug plan under this part shall report to 
                  each manufacturer--
                              ``(i) information (by National Drug Code 
                          number) on the total number of units of each 
                          dosage, form, and strength of each drug of such 
                          manufacturer dispensed to rebate eligible 
                          Medicare drug plan enrollees under any 
                          prescription drug plan operated by the PDP 
                          sponsor during the rebate period;
                              ``(ii) information on the price discounts, 
                          price concessions, and rebates for such drugs 
                          for such form, strength, and period;
                              ``(iii) information on the extent to which 
                          such price discounts, price concessions, and 
                          rebates apply equally to rebate eligible 
                          Medicare drug plan enrollees and PDP enrollees 
                          who are not rebate eligible Medicare drug plan 
                          enrollees; and
                              ``(iv) any additional information that the 
                          Secretary determines is necessary to enable the 
                          Secretary to calculate the average Medicare 
                          drug program rebate eligible rebate amount (as 
                          defined in paragraph (3)(C) of such section), 
                          and to determine the amount of the rebate 
                          required under this section, for such form, 
                          strength, and period.
                  Such report shall be in a form consistent with a 
                  standard reporting format established by the Secretary.
                      ``(C) Submission to secretary.--Each PDP sponsor 
                  shall promptly transmit a copy of the information 
                  reported under subparagraph (B) to the Secretary for 
                  the purpose of audit oversight and evaluation.
                      ``(D) Confidentiality of information.--The 
                  provisions of subparagraph (D) of section 1927(b)(3), 
                  relating to confidentiality of information, shall apply 
                  to information reported by PDP sponsors under this 
                  paragraph in the same manner that such provisions apply 
                  to information disclosed by manufacturers or 
                  wholesalers under such section, except--
                              ``(i) that any reference to `this section' 
                          in clause (i) of such subparagraph shall be 
                          treated as being a reference to this section;
                              ``(ii) the reference to the Director of the 
                          Congressional Budget Office in clause (iii) of 
                          such subparagraph shall be treated as including 
                          a reference to the Medicare Payment Advisory 
                          Commission; and
                              ``(iii) clause (iv) of such subparagraph 
                          shall not apply.
                      ``(E) Oversight.--Information reported under this 
                  paragraph may be used by the Inspector General of the 
                  Department of Health and Human Services for the 
                  statutorily authorized purposes of audit, 
                  investigation, and evaluations.
                      ``(F) Penalties for failure to provide timely 
                  information and provision of false information.--In the 
                  case of a PDP sponsor--
                              ``(i) that fails to provide information 
                          required under subparagraph (B) on a timely 
                          basis, the sponsor is subject to a civil money 
                          penalty in the amount of $10,000 for each day 
                          in which such information has not been 
                          provided; or
                              ``(ii) that knowingly (as defined in 
                          section 1128A(i)) provides false information 
                          under such subparagraph, the sponsor is subject 
                          to a civil money penalty in an amount not to 
                          exceed $100,000 for each item of false 
                          information.
                  Such civil money penalties are in addition to other 
                  penalties as may be prescribed by law. The provisions 
                  of section 1128A (other than subsections (a) and (b)) 
                  shall apply to a civil money penalty under this 
                  subparagraph in the same manner as such provisions 
                  apply to a penalty or proceeding under section 
                  1128A(a).''.
              (2) Application to ma organizations.--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:
                      ``(D) Reporting requirement related to rebate for 
                  rebate eligible medicare drug plan enrollees.--Section 
                  1860D-12(b)(7).''.
      (c) Deposit of Rebates Into Medicare Prescription Drug Account.--
  Section 1860D-16(c) of the Social Security Act (42 U.S.C. 1395w-116(c)) 
  is amended by adding at the end the following new paragraph:
              ``(6) Rebate for rebate eligible medicare drug plan 
          enrollees.--Amounts paid under a rebate agreement under section 
          1860D-2(f) shall be deposited into the Account.''.
      (d) Exclusion From Determination of Best Price and Average 
  Manufacturer Price Under Medicaid.--
              (1) Exclusion from best price determination.--Section 
          1927(c)(1)(C)(ii)(I) of the Social Security Act (42 U.S.C. 
          1396r-8(c)(1)(C)(ii)(I)) is amended by inserting ``and amounts 
          paid under a rebate agreement under section 1860D-2(f)'' after 
          ``this section''.
              (2) Exclusion from average manufacturer price 
          determination.--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'' after 
                  the semicolon;
                      (B) in subclause (V), by striking the period at the 
                  end and inserting ``; and''; and
                      (C) by adding at the end the following:
                                      ``(VI) amounts paid under a rebate 
                                  agreement under section 1860D-2(f).''.
target: Medicare Drug Savings Act of 2017 This bill requires drug manufacturers to issue rebates to the Centers for Medicare &amp; Medicaid Services&nbsp;(CMS) for prescription drugs dispensed to eligible low-income individuals under the Medicare prescription drug benefit or a Medicare Advantage (MA) prescription drug plan (PDP). Subject to civil monetary penalties, a Medicare or MA PDP sponsor must report,&nbsp;both to drug manufacturers and&nbsp;to the CMS, specified information related to the determination and payment of such rebates.
feat_title: Medicare Drug Savings Act of 2017