Medicare Negotiation and Competitive Licensing Act of 2021
This bill establishes several requirements relating to the prices of prescription drugs.
Specifically, the bill requires the Centers for Medicare & Medicaid Services (CMS) to negotiate with pharmaceutical companies regarding prices for drugs covered under Medicare. (Current law prohibits the CMS from doing so.) If the CMS is unable to negotiate the price of a drug, such drug is subject to competitive licensing in order to further its sale under health insurance programs, notwithstanding existing government-granted exclusivities.
The negotiated prices also apply to other federal health care programs, private health insurance, and the uninsured; pharmacies that charge more than the negotiated price for uninsured individuals are subject to civil penalties. Manufacturers must also comply with specified reporting requirements relating to prices and licensing, subject to civil penalties.
The bill also institutes an excise tax on drugs for which the price spikes beyond a certain limit, subject to specified exemptions, as well as on drugs for which the price exceeds the negotiated price.
To amend title XVIII of the Social Security Act to require the 
  Secretary of Health and Human Services to negotiate prices of drugs 
     furnished under the Medicare program, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medicare Negotiation and Competitive 
Licensing Act of 2021''.

SEC. 2. REQUIRING THE SECRETARY OF HEALTH AND HUMAN SERVICES TO 
              NEGOTIATE PRICES OF DRUGS FURNISHED UNDER THE MEDICARE 
              PROGRAM.

    (a) Part D.--Section 1860D-11 of the Social Security Act (42 U.S.C. 
1395w-111) is amended by striking subsection (i) and inserting the 
following new subsection:
    ``(i) Negotiation of Lower Drug Prices.--
            ``(1) In general.--Notwithstanding any other provision of 
        law, the Secretary shall, for plan years beginning on or after 
        the date of the enactment of this subsection, negotiate with 
        pharmaceutical manufacturers the negotiated prices (including 
        discounts, rebates, and other price concessions) that may be 
        charged to PDP sponsors and MA organizations during a 
        negotiated price period (as specified by the Secretary) for 
        specified covered part D drugs for such plan year for part D 
        eligible individuals who are enrolled under a prescription drug 
        plan or under an MA-PD plan.
            ``(2) Negotiation considerations.--
                    ``(A) Factors.--In negotiating such prices under 
                paragraph (1), the Secretary shall take into account 
                the following factors:
                            ``(i) The comparative clinical 
                        effectiveness and cost effectiveness, when 
                        available from an impartial source, of such 
                        drug.
                            ``(ii) The budgetary impact of providing 
                        coverage of such drug.
                            ``(iii) The number of similarly effective 
                        drugs or alternative treatment regimens for 
                        each approved use of such drug.
                            ``(iv) The associated financial burden on 
                        patients that utilize such drug.
                            ``(v) The associated unmet patient need for 
                        such drug.
                            ``(vi) The total revenues from global sales 
                        obtained by the manufacturer for such drug and 
                        the associated investment in research and 
                        development of such drug by the manufacturer.
                    ``(B) Assessment of factors.--For purposes of 
                assessing the factors described in subparagraph (A) 
                with respect to a covered part D drug, the Secretary 
                shall, as soon as practicable, establish a value 
                assessment process consisting of standardized measures 
                for such factors. With respect to a negotiation that 
                occurs before the Secretary establishes such a process, 
                the Secretary may use such other assessments as the 
                Secretary determines appropriate (such as assessments 
                used with respect to ascertaining the value of drugs by 
                the Secretary of Veterans Affairs, the Patient-Centered 
                Outcomes Research Institute, the Institute for Clinical 
                and Economic Review, and other countries).
            ``(3) Specified covered part d drugs.--In this subsection, 
        the term `specified covered part D drug' means, with respect to 
        a negotiated price period beginning during--
                    ``(A) the first plan year beginning on or after the 
                date of the enactment of this subsection, a covered 
                part D drug that is a sole source drug (as defined in 
                section 1833(t)(14)(F)(i))--
                            ``(i) with respect to which gross revenues 
                        for the preceding plan year were $100,000,000 
                        or greater; or
                            ``(ii) that contains an active ingredient 
                        that was first approved by the Administrator 
                        for Food and Drugs not later than 10 years 
                        prior to the beginning of such first plan year;
                    ``(B) the second plan year beginning on or after 
                the date of the enactment of this subsection, a covered 
                part D drug that is a sole source drug (as so defined) 
                or a biosimilar biological product;
                    ``(C) the third plan year beginning on or after the 
                date of the enactment of this subsection, a covered 
                part D drug--
                            ``(i) that is described in subparagraph 
                        (B); or
                            ``(ii) with respect to which, during the 
                        preceding plan year, fewer than 3 manufacturers 
                        (other than the manufacturer of such drug) 
                        marketed a generic version of such drug; and
                    ``(D) the fourth plan year beginning on or after 
                the date of the enactment of this subsection or a 
                subsequent plan year, a covered part D drug.
            ``(4) Negotiated price limitations and finalization.--The 
        negotiated price of each specified covered part D drug for a 
        negotiated price period--
                    ``(A) may not be less than an amount necessary to 
                allow such manufacturer to recoup such manufacturer's 
                research and development costs associated with such 
                drug;
                    ``(B) subject to subparagraph (A), may not exceed 
                110 percent of the median price of such drug for the 
                preceding plan year in the 10 countries of the 
                Organisation for Economic Cooperation and Development 
                with the highest gross domestic product and with a per 
                capita income that is not less than half the per capita 
                income of the United States for such preceding plan 
                year; and
                    ``(C) shall be finalized not later than 30 days 
                before a PDP sponsor is required to submit information 
                described in subsection (b)(2) for the first plan year 
                in such negotiated price period.
            ``(5) Competitive licensing authority.--
                    ``(A) In general.--Notwithstanding any exclusivity 
                under clause (iii) or (iv) of section 505(j)(5)(F) of 
                the Federal Food, Drug, and Cosmetic Act, clause (iii) 
                or (iv) of section 505(c)(3)(E) of such Act, section 
                351(k)(7)(A) of the Public Health Service Act, or 
                section 527(a) of the Federal Food, Drug, and Cosmetic 
                Act, or by an extension of such exclusivity under 
                section 505A of such Act or section 505E of such Act, 
                and any other provision of law that provides for market 
                exclusivity (or extension of market exclusivity) with 
                respect to a drug, in the case that the Secretary is 
                unable to successfully negotiate an appropriate price 
                for a specified covered part D drug for a negotiated 
                price period, the Secretary shall authorize the use of 
                any patent, clinical trial data, or other exclusivity 
                granted by the Federal government with respect to such 
                drug as the Secretary determines appropriate for 
                purposes of manufacturing such drug for sale under a 
                Federal health care program, the insurance program 
                under chapter 89 of title 5, United States Code, or a 
                group health plan or health insurance coverage offered 
                by a health insurance issuer. Any entity making use of 
                a competitive license to use patent, clinical trial 
                data, or other exclusivity under this section shall 
                provide to the manufacturer holding such exclusivity 
                reasonable compensation, as determined by the Secretary 
                based on the following factors:
                            ``(i) The risk-adjusted value of any 
                        Federal government subsidies and investments in 
                        research and development used to support the 
                        development of such drug.
                            ``(ii) The risk-adjusted value of any 
                        investment made by such manufacturer in the 
                        research and development of such drug.
                            ``(iii) The impact of the price, including 
                        license compensation payments, on meeting the 
                        medical need of all patients.
                            ``(iv) The relationship between the price 
                        of such drug, including compensation payments, 
                        and the health benefits of such drug.
                            ``(v) Other relevant factors determined 
                        appropriate by the Secretary to provide 
                        reasonable compensation.
                    ``(B) Reasonable compensation.--
                            ``(i) Limitations.--Reasonable compensation 
                        described in subparagraph (A) with respect to a 
                        specified covered outpatient drug and a plan 
                        year may not be made in an amount--
                                    ``(I) less than an amount necessary 
                                to allow such manufacturer to recoup 
                                such manufacturer's research and 
                                development costs associated with such 
                                drug; and
                                    ``(II) subject to subclause (I), 
                                greater than 12 percent of the 
                                negotiated price set by the Secretary 
                                for such drug and such plan year.
                            ``(ii) Recovery.--The manufacturer 
                        described in subparagraph (A) may seek recovery 
                        against the United States in the United States 
                        Court of Federal Claims.
                    ``(C) Interim period.--Until 1 year after a drug 
                described in subparagraph (A) is approved under section 
                505(j) of the Federal Food, Drug, and Cosmetic Act or 
                section 351(k) of the Public Health Service Act and is 
                provided under license issued by the Secretary under 
                such subparagraph, PDP plans and MA-PD plans shall not 
                pay more for such drug than 110 percent of the median 
                of the prices available, during the most recent 12-
                month period for which data is available prior to the 
                beginning of such negotiated price period, from the 
                manufacturer to any wholesaler, retailer, provider, 
                health maintenance organization, nonprofit entity, or 
                governmental entity in the ten Organisation for 
                Economic Cooperation and Development countries that 
                have the largest gross domestic product with a per 
                capita income that is not less than half the per capita 
                income of the United States.
                    ``(D) Authorization for secretary to procure drugs 
                directly.--
                            ``(i) In general.--The Secretary may 
                        procure a drug manufactured pursuant to a 
                        competitive license under subparagraph (A) for 
                        purposes of this part or pursuant to a Federal 
                        program license under subparagraph (C)(ii) for 
                        purposes of a Federal program directly from the 
                        entity manufacturing the drug pursuant to such 
                        a license.
                            ``(ii) Clarification regarding application 
                        of buy american act.--In the case where the 
                        Secretary procures a drug under this 
                        subparagraph, the provisions of chapter 83 of 
                        title 41, United States Code (commonly referred 
                        to as the `Buy American Act') shall apply.
                    ``(E) Priority for u.s. manufacturers in 
                authorizing competitive licenses.--In authorizing a 
                competitive license under this paragraph, the 
                Secretary--
                            ``(i) shall give preference to entities 
                        that the Secretary determines have the highest 
                        safety and security standards; and
                            ``(ii) may give priority to entities that 
                        will manufacture such drug in the United 
                        States.
            ``(6) FDA review of licensed drug applications.--The 
        Secretary shall prioritize review of applications under section 
        505(j) of the Federal Food, Drug, and Cosmetic Act for drugs 
        licensed under paragraph (3)(A).
            ``(7) Prohibition of anticompetitive behavior.--No drug 
        manufacturer may engage in anticompetitive behavior with 
        another manufacturer that may interfere with the issuance and 
        implementation of a competitive license or run contrary to 
        public policy.
            ``(8) Required reporting.--The Secretary may require 
        pharmaceutical manufacturers or any other entity to disclose to 
        the Secretary such information that the Secretary determines 
        necessary for purposes of carrying out this subsection.
            ``(9) Clarification.--Nothing in this subsection shall be 
        construed as preventing the sponsor of a prescription drug plan 
        or an organization offering an MA-PD plan from obtaining a 
        discount or reduction of the price for a covered part D drug 
        below the price negotiated by the Secretary.
            ``(10) Publication of negotiated prices and contract 
        terms.--The Secretary shall make available on a public website 
        the price negotiated under this subsection, and any contract 
        terms associated with such price, with respect to each 
        specified covered part D drug.''.
    (b) Part B.--
            (1) In general.--Section 1842(o) of the Social Security Act 
        (42 U.S.C. 1395u(o)) is amended by adding at the end the 
        following new paragraph:
    ``(8)(A) Notwithstanding any preceding provision of this 
subsection, in the case of a drug or biological described in paragraph 
(1) furnished during a negotiated price period beginning on or after 
January 1 of the first year beginning on or after the date of the 
enactment of this paragraph, the amount payable under this part for 
such drug or biological shall be equal to the negotiated price for such 
drug or biological and period, as established pursuant to subparagraph 
(B).
    ``(B) The provisions of section 1860D-11(i) shall be applied to the 
negotiation of a negotiated price for a drug or biological described in 
subparagraph (A) and a negotiated price period in a similar manner (as 
determined by the Secretary) as such provisions apply with respect to 
the negotiation of a negotiated price for a specified part D drug for a 
negotiated price period under such section.''.
            (2) Application to ma.--Section 1852 of the Social Security 
        Act (42 U.S.C. 1395w-22) is amended by adding at the end the 
        following new subsection:
    ``(o) Limitation on Reimbursement for Certain Drugs.--In the case 
of a drug or biological furnished during a negotiated price period (as 
defined for purposes of section 1842(o)(8)) for which payment may be 
made under such section, the total reimbursement for such drug or 
biological made by an Medicare Advantage plan may not exceed the 
negotiated price for such drug or biological and period established 
pursuant to such section.''.

SEC. 3. IDENTIFICATION OF PRESCRIPTION DRUG PRICE SPIKES.

    (a) Definitions.--In this section:
            (1) Applicable entity.--The term ``applicable entity'' 
        means the holder of an application approved under subsection 
        (c) or (j) of section 505 of the Federal Food, Drug, and 
        Cosmetic Act (21 U.S.C. 355) or of a license issued under 
        subsection (a) or (k) of section 351 of the Public Health 
        Service Act (42 U.S.C. 262) for a drug described in paragraph 
        (5)(A).
            (2) Average manufacturer price.--The term ``average 
        manufacturer price''--
                    (A) has the same meaning given such term under 
                section 1927(k)(1) of the Social Security Act (42 
                U.S.C. 1396r-8(k)(1)); or
                    (B) with respect to a drug for which there is no 
                average manufacturer price as so defined, such term 
                shall mean the wholesale acquisition cost of the drug.
            (3) Commerce.--The term ``commerce'' has the meaning given 
        such term in section 4 of the Federal Trade Commission Act (15 
        U.S.C. 44).
            (4) Inspector general.--The term ``Inspector General'' 
        means the Inspector General of the Department of Health and 
        Human Services.
            (5) Prescription drug.--
                    (A) In general.--The term ``prescription drug'' 
                means any drug (as defined in section 201(g) of the 
                Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
                321(g))), including a combination product whose primary 
                mode of action is determined under section 503(g) of 
                such Act (21 U.S.C. 353(g)) to be that of a drug, and 
                that--
                            (i) is subject to section 503(b)(1) of the 
                        Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
                        353(b)(1)); and
                            (ii) is covered by a Federal health care 
                        program (as defined in section 1128B(f) of the 
                        Social Security Act (42 U.S.C. 1320a-7b(f))).
                    (B) Treatment of reformulated drugs.--For purposes 
                of this section, a prescription drug with respect to 
                which the Secretary of Health and Human Services has 
                approved any minor reformulation that does not produce 
                a meaningful therapeutic benefit, the drug that was 
                approved prior to any such reformulation and the drug 
                with any such reformulation shall be considered one 
                prescription drug.
            (6) Price spike.--
                    (A) In general.--The term ``price spike'' means an 
                increase in the average manufacturer price in commerce 
                of a prescription drug for which the price spike 
                percentage is equal to or greater than applicable price 
                increase allowance.
                    (B) Price spike percentage.--The price spike 
                percentage is the percentage (if any) by which--
                            (i) the average manufacturer price of a 
                        prescription drug in commerce for the calendar 
                        year; exceeds
                            (ii) the average manufacturer price of such 
                        prescription drug in commerce for the calendar 
                        year preceding such year.
                    (C) Applicable price increase allowance.--The 
                applicable price increase allowance for any calendar 
                year is the percentage (rounded to the nearest one-
                tenth of 1 percent) by which the C-CPI-U (as defined in 
                section 1(f)(6) of the Internal Revenue Code of 1986) 
                for that year exceeds the C-CPI-U for the preceding 
                calendar year.
            (7) Price spike revenue.--
                    (A) In general.--The price spike revenue for any 
                calendar year is an amount equal to--
                            (i) the gross price spike revenue, minus
                            (ii) the adjustment amount.
                    (B) Gross price spike revenue.--The gross price 
                spike revenue for any calendar year is an amount equal 
                to the product of--
                            (i) an amount equal to the difference 
                        between clause (i) of paragraph (6)(B) and 
                        clause (ii) of such paragraph; and
                            (ii) the total number of units of the 
                        prescription drug which were sold in commerce 
                        in such calendar year.
                    (C) Adjustment amount.--The adjustment amount is 
                the amount, if any, of the gross price spike revenue 
                which the Inspector General has determined is due 
                solely to an increase in the cost of the inputs 
                necessary to manufacture the prescription drug subject 
                to the price spike.
    (b) Submission by Pharmaceutical Companies of Information to 
Inspector General.--
            (1) In general.--For each prescription drug, the applicable 
        entity shall submit to the Inspector General a quarterly report 
        that includes the following:
                    (A) For each prescription drug of the applicable 
                entity--
                            (i) the total number of units of the 
                        prescription drug which were sold in commerce 
                        in the preceding calendar quarter;
                            (ii) the average and median price per unit 
                        of such prescription drug in commerce in the 
                        preceding calendar quarter, disaggregated by 
                        month; and
                            (iii) the gross revenues from sales of such 
                        prescription drug in commerce in the preceding 
                        calendar quarter.
                    (B) Such information related to increased input 
                costs or public health considerations as the applicable 
                entity may wish the Inspector General to consider in 
                making a determination under clause (ii) of subsection 
                (c)(2)(B) or an assessment in clause (iii) of such 
                subsection for the preceding calendar quarter.
                    (C) Such information related to any anticipated 
                increased input costs for the subsequent calendar 
                quarter as the applicable entity may wish the Inspector 
                General to consider in making a determination under 
                clause (ii) of subsection (c)(2)(B) or an assessment in 
                clause (iii) of such subsection for such calendar 
                quarter.
            (2) Penalty for failure to submit.--
                    (A) In general.--An applicable entity described in 
                paragraph (1) that fails to submit information to the 
                Inspector General regarding a prescription drug, as 
                required by such paragraph, before the date specified 
                in paragraph (3) shall be liable for a civil penalty, 
                as determined under subparagraph (B).
                    (B) Amount of penalty.--The amount of the civil 
                penalty shall be equal to the product of--
                            (i) an amount, as determined appropriate by 
                        the Inspector General, which is--
                                    (I) not less than 0.5 percent of 
                                the gross revenues from sales of the 
                                prescription drug described in 
                                subparagraph (A) for the preceding 
                                calendar year, and
                                    (II) not greater than 1 percent of 
                                the gross revenues from sales of such 
                                prescription drug for the preceding 
                                calendar year, and
                            (ii) the number of days in the period 
                        between--
                                    (I) the applicable date specified 
                                in paragraph (3), and
                                    (II) the date on which the 
                                Inspector General receives the 
                                information described in paragraph (1) 
                                from the applicable entity.
            (3) Submission deadline.--An applicable entity shall submit 
        each quarterly report described in paragraph (1) not later than 
        January 17, April 18, June 15, and September 15 of each 
        calendar year.
    (c) Assessment by Inspector General.--
            (1) In general.--Not later than the last day in February of 
        each year, the Inspector General, in consultation with other 
        relevant Federal agencies (including the Federal Trade 
        Commission), shall--
                    (A) complete an assessment of the information the 
                Inspector General received pursuant to subsection 
                (b)(1) with respect to sales of prescription drugs in 
                the preceding calendar year; and
                    (B) in the case of any prescription drug which 
                satisfies the conditions described in paragraph (1) or 
                (2) of subsection (d), submit a recommendation to the 
                Secretary of Health and Human Services that such drug 
                be exempted from application of the tax imposed under 
                section 4192 of the Internal Revenue Code of 1986 (as 
                added by section 3 of this Act) for such year.
            (2) Elements.--The assessment required by paragraph (1)(A) 
        shall include the following:
                    (A) Identification of each price spike relating to 
                a prescription drug in the preceding calendar year.
                    (B) For each price spike identified under 
                subparagraph (A)--
                            (i) a determination of the price spike 
                        revenue;
                            (ii) a determination regarding the accuracy 
                        of the information submitted by the applicable 
                        entity regarding increased input costs; and
                            (iii) an assessment of the rationale of the 
                        applicable entity for the price spike.
    (d) Exemption of Certain Drugs.--
            (1) In general.--The Secretary of Health and Human 
        Services, upon recommendation of the Inspector General pursuant 
        to subsection (c)(1)(B), may exempt any prescription drug which 
        has been subject to a price spike during the preceding calendar 
        year from application of the tax imposed under section 4192 of 
        the Internal Revenue Code of 1986 for such year, if the 
        Secretary determines that--
                    (A) based on information submitted pursuant to 
                subsection (b)(1)(B), a for-cause price increase 
                exemption should apply; or
                    (B)(i) the prescription drug which has been subject 
                to a price spike has an average manufacturer price of 
                not greater than $10 for a 30 day supply; and
                    (ii) such drug is marketed by not less than 3 other 
                holders of applications approved under subsection (c) 
                or (j) of section 505 of the Federal Food, Drug, and 
                Cosmetic Act (21 U.S.C. 355), where such applications 
                approved under such subsection (j) use as a reference 
                drug the drug so approved under such subsection (c).
            (2) Clarification.--In considering, under paragraph (1)(A), 
        information submitted pursuant to subsection (b)(1)(B), the 
        Secretary--
                    (A) has the discretion to determine that such 
                information does not warrant a for-cause price increase 
                exemption; and
                    (B) shall exclude from such consideration any 
                information submitted by the applicable entity 
                threatening to curtail or limit production of the 
                prescription drug if the Secretary does not grant an 
                exemption from the application of the tax under section 
                4192 of the Internal Revenue Code of 1986.
    (e) Inspector General Report to Internal Revenue Service.--
            (1) In general.--Subject to paragraph (3), not later than 
        the last day in February of each year, the Inspector General 
        shall transmit to the Internal Revenue Service a report on the 
        findings of the Inspector General with respect to the 
        information the Inspector General received under subsection 
        (b)(1) with respect to the preceding calendar year and the 
        assessment carried out by the Inspector General under 
        subsection (c)(1)(A) with respect to such information.
            (2) Contents.--The report transmitted under paragraph (1) 
        shall include the following:
                    (A) The information received under subsection 
                (b)(1) with respect to the preceding calendar year.
                    (B) The price spikes identified under subparagraph 
                (A) of subsection (c)(2).
                    (C) The price spike revenue determinations made 
                under subparagraph (B)(i) of such subsection.
                    (D) The determinations and assessments made under 
                clauses (ii) and (iii) of subparagraph (B) of such 
                subsection.
            (3) Notice and opportunity for hearing.--
                    (A) In general.--No report shall be transmitted to 
                the Internal Revenue Service under paragraph (1) in 
                regards to a prescription drug unless the Inspector 
                General has provided the applicable entity with--
                            (i) the assessment of such drug under 
                        subsection (c)(1)(A); and
                            (ii) notice of their right to a hearing in 
                        regards to such assessment.
                    (B) Notice.--The notice required under subparagraph 
                (A) shall be provided to the applicable entity not 
                later than 30 days after completion of the assessment 
                under subsection (c)(1)(A).
                    (C) Request for hearing.--Subject to subparagraph 
                (E), an applicable entity may request a hearing before 
                the Secretary of Health and Human Services not later 
                than 30 days after the date on which the notice under 
                subparagraph (B) is received.
                    (D) Completion of hearing.--In the case of an 
                applicable entity which requests a hearing pursuant to 
                subparagraph (C), the Secretary of Health and Human 
                Services shall, not later than 12 months after the date 
                on which the assessment under subsection (c)(1)(A) was 
                completed by the Inspector General--
                            (i) make a final determination in regards 
                        to the accuracy of such assessment; and
                            (ii) provide the report described in 
                        paragraph (2) to the Internal Revenue Service.
                    (E) Limitation.--An applicable entity may request a 
                hearing under subparagraph (C) with respect to a 
                particular prescription drug only once within a 5-year 
                period.
            (4) Publication.--
                    (A) In general.--Not later than the last day in 
                February of each year, subject to subparagraph (B), the 
                Inspector General shall make the report transmitted 
                under paragraph (1) available to the public, including 
                on the Internet website of the Inspector General, 
                subject to subparagraph (B).
                    (B) Proprietary information.--The Inspector General 
                shall ensure that any information made public in 
                accordance with subparagraph (A) excludes trade secrets 
                and confidential commercial information.
    (f) Notification.--The Secretary of the Treasury, in conjunction 
with the Inspector General, shall notify, at such time and in such 
manner as the Secretary of the Treasury shall provide, each applicable 
entity in regard to any prescription drug which has been determined to 
have been subject to a price spike during the preceding calendar year 
and the amount of the tax imposed on such applicable entity pursuant to 
section 4192 of the Internal Revenue Code of 1986.

SEC. 4. EXCISE TAX ON PRESCRIPTION DRUGS SUBJECT TO PRICE SPIKES.

    (a) In General.--Subchapter E of chapter 32 of the Internal Revenue 
Code of 1986 is amended by adding at the end the following new section:

``SEC. 4192. PRESCRIPTION DRUGS SUBJECT TO PRICE SPIKES.

    ``(a) Imposition of Tax.--
            ``(1) In general.--Subject to paragraph (3), for each 
        taxable prescription drug sold by an applicable entity during 
        the calendar year, there is hereby imposed on such entity a tax 
        equal to the greater of--
                    ``(A) the annual price spike tax for such 
                prescription drug, or
                    ``(B) subject to paragraph (2), the cumulative 
                price spike tax for such prescription drug.
            ``(2) Limitation.--In the case of a taxable prescription 
        drug for which the applicable period (as determined under 
        subsection (c)(2)(E)(i)) is less than 2 calendar years, the 
        cumulative price spike tax shall not apply.
            ``(3) Exemption.--For any calendar year in which the 
        Secretary of Health and Human Services has provided an 
        exemption for a taxable prescription drug pursuant to section 
        3(d) of the Medicare Negotiation and Competitive Licensing Act 
        of 2021, the amount of the tax determined under paragraph (1) 
        for such drug or device for such calendar year shall be reduced 
        to zero.
    ``(b) Annual Price Spike Tax.--
            ``(1) In general.--The amount of the annual price spike tax 
        shall be equal to the applicable percentage of the price spike 
        revenue received by the applicable entity on the sale of the 
        taxable prescription drug during the calendar year.
            ``(2) Applicable percentage.--For purposes of paragraph 
        (1), the applicable percentage shall be equal to--
                    ``(A) in the case of a taxable prescription drug 
                which has been subject to a price spike percentage 
                greater than the applicable price increase allowance 
                (as defined in section 3(a)(6)(C) of the Medicare 
                Negotiation and Competitive Licensing Act of 2021) but 
                less than 15 percent, 50 percent,
                    ``(B) in the case of a taxable prescription drug 
                which has been subject to a price spike percentage 
                equal to or greater than 15 percent but less than 20 
                percent, 75 percent, and
                    ``(C) in the case of a taxable prescription drug 
                which has been subject to a price spike percentage 
                equal to or greater than 20 percent, 100 percent.
    ``(c) Cumulative Price Spike Tax.--
            ``(1) In general.--The amount of the cumulative price spike 
        tax shall be equal to the applicable percentage of the 
        cumulative price spike revenue received by the applicable 
        entity on the sale of the taxable prescription drug during the 
        calendar year.
            ``(2) Applicable percentage.--
                    ``(A) In general.--For purposes of paragraph (1), 
                the applicable percentage shall be equal to--
                            ``(i) in the case of a taxable prescription 
                        drug which has been subject to a cumulative 
                        price spike percentage greater than the 
                        cumulative price increase allowance but less 
                        than the first multi-year percentage, 50 
                        percent,
                            ``(ii) in the case of a taxable 
                        prescription drug which has been subject to a 
                        cumulative price spike percentage equal to or 
                        greater than the first multi-year percentage 
                        but less than the second multi-year percentage, 
                        75 percent, and
                            ``(iii) in the case of a taxable 
                        prescription drug which has been subject to a 
                        cumulative price spike percentage equal to or 
                        greater than the second multi-year percentage, 
                        100 percent.
                    ``(B) Cumulative price spike percentage.--The 
                cumulative price spike percentage is the percentage (if 
                any) by which--
                            ``(i) the average manufacturer price of the 
                        taxable prescription drug in commerce for the 
                        preceding calendar year, exceeds
                            ``(ii) the average manufacturer price of 
                        such prescription drug in commerce for the base 
                        year.
                    ``(C) Cumulative price increase allowance.--For 
                purposes of clause (i) of subparagraph (A), the 
                cumulative price increase allowance for any calendar 
                year is the percentage (rounded to the nearest one-
                tenth of 1 percent) by which the C-CPI-U (as defined in 
                section 1(f)(6)) for that year exceeds the C-CPI-U for 
                the base year.
                    ``(D) Multi-year percentages.--For purposes of 
                subparagraph (A), the first multi-year percentage and 
                second multi-year percentage shall be determined in 
                accordance with the following table:


------------------------------------------------------------------------
                                                   First        Second
    ``Number of years in applicable period       multi-year   multi-year
                                                 percentage   percentage
------------------------------------------------------------------------
2 years.......................................         17.5         22.5
3 years.......................................           20           25
4 years.......................................         22.5         27.5
5 years.......................................           25          30.
------------------------------------------------------------------------

                    ``(E) Applicable period and base year.--
                            ``(i) Applicable period.--The applicable 
                        period shall be the lesser of--
                                    ``(I) the 5 preceding calendar 
                                years,
                                    ``(II) all calendar years beginning 
                                after the date of enactment of this 
                                section, or
                                    ``(III) all calendar years in which 
                                the taxable prescription drug was sold 
                                in commerce.
                            ``(ii) Base year.--The base year shall be 
                        the calendar year immediately preceding the 
                        applicable period.
            ``(3) Cumulative price spike revenue.--For purposes of 
        paragraph (1), the cumulative price spike revenue for any 
        taxable prescription drug shall be an amount equal to--
                    ``(A) an amount equal to the product of--
                            ``(i) an amount (not less than zero) equal 
                        to--
                                    ``(I) the average manufacturer 
                                price of such prescription drug in 
                                commerce for the preceding calendar 
                                year, minus
                                    ``(II) the average manufacturer 
                                price of such prescription drug in 
                                commerce for the base year, and
                            ``(ii) the total number of units of such 
                        prescription drug which were sold in commerce 
                        in the preceding calendar year, minus
                    ``(B) an amount equal to the sum of the adjustment 
                amounts, if any, determined under section 3(a)(7)(C) of 
                the Medicare Negotiation and Competitive Licensing Act 
                of 2021 for each calendar year during the applicable 
                period.
    ``(d) Definitions.--For purposes of this section--
            ``(1) Taxable prescription drug.--The term `taxable 
        prescription drug' means a prescription drug which has been 
        identified by the Inspector General of the Department of Health 
        and Human Services as being subject to a price spike.
            ``(2) Other terms.--The terms `applicable entity', `average 
        manufacturer price', `price spike', `price spike percentage', 
        and `price spike revenue' have the same meaning given such 
        terms under section 3(a) of the Medicare Negotiation and 
        Competitive Licensing Act of 2021.''.
    (b) Clerical Amendments.--
            (1) The heading of subchapter E of chapter 32 of the 
        Internal Revenue Code of 1986 is amended by striking ``Medical 
        Devices'' and inserting ``Certain Medical Devices and 
        Prescription Drugs''.
            (2) The table of subchapters for chapter 32 of such Code is 
        amended by striking the item relating to subchapter E and 
        inserting the following new item:

   ``subchapter e. certain medical devices and prescription drugs''.

            (3) The table of sections for subchapter E of chapter 32 of 
        such Code is amended by adding at the end the following new 
        item:

``Sec. 4192. Prescription drugs subject to price spikes.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to sales after the date of the enactment of this Act.

SEC. 5. APPLICATION OF MEDICARE PRICES TO OTHER INSURERS AND THE 
              UNINSURED.

    (a) Federal Health Care Programs.--Part A of title XI of the Social 
Security Act (42 U.S.C. 1301 et seq.) is amended by adding at the end 
the following new section:

``SEC. 1150C. APPLICATION OF MEDICARE NEGOTIATED PRICES.

    ``(a) In General.--Notwithstanding any other provision of law, the 
price recognized under a Federal health care program (as defined in 
section 1128B) or the insurance program established under chapter 89 of 
title 5, United States Code, for a specified covered part D drug (as 
defined in section 1860D-11(i)), or a drug or biological for which 
payment may be made under section 1842(o), with respect to a year for 
which coverage is provided under such Federal health care program or 
such insurance program may not exceed the price for such drug 
established under such section 1860D-11(i) or 1842(o), as applicable.
    ``(b) Application of Other Provisions.--The provisions of section 
1860D-11(i) shall apply with respect to a Federal health care program 
and the insurance program established under chapter 89 of title 5, 
United States Code, in the same manner as such provisions apply with 
respect to a prescription drug plan or an MA-PD plan under part D or C, 
respectively, of title XVIII.''.
    (b) Private Insurer.--Subpart II of part A of title XXVII of the 
Public Health Service Act (42 U.S.C. 300gg-11 et seq.) is amended by 
adding at the end the following new section:

``SEC. 2730. APPLICATION OF MEDICARE NEGOTIATED PRICES.

    ``(a) In General.--Notwithstanding any other provision of law, the 
price recognized under a group health plan, or under individual or 
group health insurance coverage offered by a health insurance issuer, 
for a specified covered part D drug (as defined in section 1860D-
11(i)), or a drug or biological for which payment may be made under 
section 1842(o), with respect to a year for which coverage is provided 
under such plan or such coverage may not exceed the price for such drug 
established under such section 1860D-11(i) or 1842(o), as applicable.
    ``(b) Application of Other Provisions.--The provisions of section 
1860D-11(i) shall apply with respect to a group health plan, or 
individual or group health insurance coverage offered by a health 
insurance issuer, in the same manner as such provisions apply with 
respect to a prescription drug plan or an MA-PD plan under part D or C, 
respectively, of title XVIII.''.
    (c) Uninsured.--
            (1) In general.--Notwithstanding any other provision of 
        law, the amount that a pharmacy furnishing a drug to a 
        specified individual (as defined in paragraph (2)) may require 
        as payment for such drug from such individual shall not exceed 
        the price for such drug established under section 1860D-11(i) 
        of the Social Security Act (42 U.S.C. 1395w-111(i)) (or, if 
        applicable, under section 1842(o)(8) of such Act).
            (2) Definition.--For purposes of paragraph (1), the term 
        ``specified individual'' means, with respect to a drug, an 
        individual who is not covered, or who has no coverage with 
        respect to such drug, under a group health plan or group or 
        individual health insurance coverage (as such terms are defined 
        in section 2791 of the Public Health Service Act (42 U.S.C. 
        300gg-91)) or under a Federal health care program (as defined 
        in section 1128B of the Social Security Act, but including the 
        insurance program established under chapter 89 of title 5, 
        United States Code).
            (3) Enforcement.--The Secretary of Health and Human 
        Services may impose a civil monetary penalty of not more than 
        $10,000 per day on a pharmacy for a violation of paragraph (1).

SEC. 6. MANUFACTURER PROVISION OF INFORMATION.

    (a) In General.--In the case of a manufacturer of a drug or 
biological subject to a competitive licensing agreement under section 
1860D-11(i)(5) of the Social Security Act, as added by this Act, such 
manufacturer shall, upon request from an entity electing to manufacture 
such drug or biological, provide to such entity materials, data, and 
information relating to the manufacture or supply of such drug or 
biological, including--
            (1) cellular clones and hybridoma stocks;
            (2) plasmids, plasmid maps, and sequences of antibody 
        complementarity determining regions;
            (3) physicochemical and biophysical characterization;
            (4) growth conditions and protocols;
            (5) attenuation or inactivation protocols;
            (6) extraction and purification protocols;
            (7) synthetic work-up and schemes;
            (8) sufficient quantities of the drug or biological for 
        testing;
            (9) the protocols and methods used for testing the drug or 
        biological; and
            (10) the expected outcomes from those protocols.
    (b) Enforcement.--The Secretary of Health and Human Services may 
impose a civil monetary penalty on a manufacturer of not more than 
$10,000 per day for a violation of subsection (a).

SEC. 7. APPLICABILITY OF NEGOTIATED PRICE TO PRESCRIPTION DRUGS 
              FURNISHED BY THE DEPARTMENT OF DEFENSE AND THE DEPARTMENT 
              OF VETERANS AFFAIRS.

    (a) In General.--Section 8126(a) of title 38, United States Code, 
is amended--
            (1) in paragraph (2), by inserting ``, but may not exceed 
        the amount of the price negotiated by the Secretary of Health 
        and Human Services under section 1860D-11(i) of the Social 
        Security Act (42 U.S.C. 1395w-111(i)) (as amended by the 
        Medicare Negotiation and Competitive Licensing Act of 2019) for 
        a specified covered part D drug (as defined in such section) 
        (or, if applicable, may not exceed the amount of the price 
        negotiated by the Secretary of Health and Human Services under 
        section 1842(o)(8) of such Act for a drug or biological payable 
        under such section) that is a covered drug of a manufacturer'' 
        after ``best interests of the Department or such Federal 
        agencies''; and
            (2) in paragraph (3), by inserting ``or, for a covered drug 
        of a manufacturer that is a specified covered part D drug (as 
        defined in section 1860D-11(i) of the Social Security Act (42 
        U.S.C. 1395w-111(i)) (as amended by the Medicare Negotiation 
        and Competitive Licensing Act of 2019)) or a drug or biological 
        for which payment may be made under section 1842(o)(8) of such 
        Act, the price negotiated by the Secretary of Health and Human 
        Services under such section 1806D-11(i) or 1842(o)(8) (as 
        applicable) for the specified covered part D drug or the drug 
        or biological'' after ``the price charged under the Federal 
        Supply Schedule at the time the drug is procured''.
    (b) Department of Defense Elements for Purposes of Pricing 
Standards.--Section 1074g(f) of title 10, United States Code, is 
amended--
            (1) in the header, by inserting ``and National Mail-Order 
        Pharmacy Program'' after ``Pharmacy Program'';
            (2) by striking ``the TRICARE retail pharmacy program shall 
        be treated as an element of the Department of Defense'' and 
        inserting ``the TRICARE retail pharmacy program and the 
        national mail-order pharmacy program shall be treated as 
        elements of the Department of Defense''; and
            (3) by striking ``provided by pharmacies under the 
        program'' and inserting ``provided under such programs''.

SEC. 8. SPECIFIED COVERED PART D DRUGS EXCISE TAX.

    (a) In General.--Subchapter E of chapter 32 of the Internal Revenue 
Code of 1986 is amended by adding at the end the following new section:

``SEC. 4193. SPECIFIED COVERED PART D DRUGS.

    ``(a) In General.--There is hereby imposed on the sale by the 
manufacturer, producer, or importer of any specified covered part D 
drug for a price in excess of the negotiated price in violation of 
section 1860D-11(i)(5)(C) of the Social Security Act during any period 
described in such section a tax equal to 100 percent of the price for 
which so sold.
    ``(b) Definitions.--The terms `specified covered part D drug' and 
`negotiated price' have the meaning such terms have under section 
1860D-11 of the Social Security Act.''.
    (b) Clerical Amendments.--
            (1) The heading of subchapter E of chapter 32 of the 
        Internal Revenue Code of 1986 is amended by striking ``Medical 
        Devices'' and inserting ``Other Medical Products''.
            (2) The table of subchapters for chapter 32 of such Code is 
        amended by striking the item relating to subchapter E and 
        inserting the following new item:

               ``subchapter e. other medical products''.

            (3) The table of sections for subchapter E of chapter 32 of 
        such Code is amended by adding at the end the following new 
        item:

``Sec. 4193. Specified covered part D drugs.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to sales on or after the date that is 1 year after the date of 
the enactment of this Act.

SEC. 9. DRUG MANUFACTURER REPORTING.

    Part P of title III of the Public Health Service Act (42 U.S.C. 
280g et seq.) is amended by adding at the end the following:

``SEC. 399V-7. DRUG MANUFACTURER REPORTING.

    ``(a) Mandatory Reporting.--A drug manufacturer shall submit to the 
Secretary and to Congress an annual report specifying with respect to 
the previous calendar year (except as provided in subsection (d)(2))--
            ``(1) the total expenditures of the manufacturer on--
                    ``(A) domestic and foreign drug research and 
                development, including an itemized description of--
                            ``(i) basic and preclinical research;
                            ``(ii) clinical research, reported 
                        separately for each clinical trial;
                            ``(iii) development of alternative dosage 
                        forms and strengths for the drug molecule or 
                        combinations, including the molecule;
                            ``(iv) other drug development activities, 
                        such as nonclinical laboratory studies and 
                        record and report maintenance;
                            ``(v) pursuing new or expanded indications 
                        for such drug through supplemental applications 
                        under section 505 of the Federal Food, Drug, 
                        and Cosmetic Act;
                            ``(vi) carrying out postmarket requirements 
                        related to such drug, including under section 
                        505(o)(3) of such Act;
                            ``(vii) carrying out risk evaluation and 
                        mitigation strategies in accordance with 
                        section 505-1 of such Act; and
                            ``(viii) marketing research;
                    ``(B) the acquisition of drug components and 
                packaging, in total and per unit sold, broken out by 
                source and cost and identifying specific costs that 
                reflect internal transfers within the manufacturer's 
                company;
                    ``(C) other acquisitions relating to drugs, 
                including for the purchase of patents and licensing or 
                the acquisition of any corporate entity owning any 
                rights to a drug during or after development of the 
                drug; and
                    ``(D) marketing, advertising, and educating for the 
                promotion of a drug, including a breakdown of amounts 
                aimed at consumers, prescribers, managed care 
                organizations, and others, irrespective of whether a 
                particular drug is mentioned in the marketing, 
                advertising, or educating;
            ``(2) the gross revenue, net revenue, gross profit, and net 
        profit of the manufacturer with respect to drugs;
            ``(3) the total number of units of each type of drug that 
        were sold in interstate commerce;
            ``(4) pricing information with respect to the sale of 
        drugs, including--
                    ``(A) wholesale acquisition cost;
                    ``(B) net average price realized by prescription 
                drug benefit managers for drugs provided to individuals 
                in the United States, after accounting for any rebates 
                or other payments from the manufacturer to the pharmacy 
                benefit manager and from the pharmacy benefit manager 
                to the manufacturer; and
                    ``(C) the net price of each drug, after accounting 
                for discounts, rebates, or other financial 
                considerations, charged to purchasers in each 
                applicable country of the Organisation for Economic Co-
                operation and Development;
            ``(5) any Federal benefits received by the manufacturer 
        with respect to a drug, including the amounts and periods of 
        impact for each such benefit, including tax credits; Federal 
        grants, including from the National Institutes of Health, the 
        Department of Defense, the Department of Energy, the Centers 
        for Disease Control and Prevention, or other Federal 
        departments or agencies; patent applications that benefitted 
        from such grants; patent extensions; exclusivity periods; and 
        waivers of fees;
            ``(6) the percentage of research and development 
        expenditures described in clauses (i) through (v) of paragraph 
        (1)(A) that were derived from Federal funds;
            ``(7) executive compensation for the chief executive 
        officer, chief financial officer, and the 3 other most highly 
        compensated executive officers, including bonuses, paid by such 
        manufacturer, and stock options affiliated with the 
        manufacturer that were offered to or accrued by such officers; 
        and
            ``(8) any other information as the Secretary may require.
    ``(b) Voluntary Supplemental Reporting.--A drug manufacturer may 
supplement a report under subsection (a) with any additional 
information the manufacturer chooses to provide related to drug pricing 
decisions, such as--
            ``(1) total expenditures on drug research, drug 
        development, and clinical trials on drugs that failed to 
        receive approval by the Food and Drug Administration; and
            ``(2) a list of drugs and drug prices of other 
        manufacturers for purposes of comparison with the 
        manufacturer's own drugs and drug prices.
    ``(c) Special Rule.--A drug manufacturer shall--
            ``(1) to the extent possible, disaggregate the information 
        required to be reported by this section by the particular drug 
        involved; and
            ``(2) submit all information required to be reported by 
        this section with respect to each applicable drug in a single 
        annual report.
    ``(d) Submission of Reports.--
            ``(1) In general.--
                    ``(A) Submission by drug manufacturers.--Drug 
                manufacturers shall submit the annual reports required 
                under this section to the Secretary in a usable format, 
                as the Secretary may require.
                    ``(B) Collation by the secretary.--The Secretary 
                shall collate the reports received as described in 
                subparagraph (A) and submit such collated reports to 
                Congress, together with an analysis of the reports by 
                the Secretary that includes--
                            ``(i) a summary of data from the reports;
                            ``(ii) consideration of factors such as 
                        trends on research and development costs, 
                        Federal benefits, and manufacturer patient 
                        assistance programs; and
                            ``(iii) the relationship between the 
                        factors described in clause (ii) and 
                        prescription drug prices.
                    ``(C) Public availability.--The Secretary shall 
                make the reports submitted by manufacturers as 
                described in subparagraph (A) and the collated reports 
                together with the analysis of the Secretary described 
                in subparagraph (B) publicly available, including by 
                posting such reports to the internet website of the 
                Department of Health and Human Services, in a 
                searchable format.
            ``(2) Initial report.--
                    ``(A) In general.--A drug manufacturer shall submit 
                an initial report pursuant to this section not later 
                than one year after the date of enactment of this 
                subparagraph (except as provided in subparagraph (B)).
                    ``(B) Reporting period.--Notwithstanding the 
                requirement in subsection (a) that each report under 
                such subsection be for the previous calendar year, the 
                initial report of a drug manufacturer under subsection 
                (a) shall include, for each drug marketed by the 
                manufacturer, the information described in paragraphs 
                (1) through (6) of subsection (a) for the calendar year 
                period beginning with the later of--
                            ``(i) the calendar year in which the drug 
                        was approved under section 505 of the Federal 
                        Food, Drug, and Cosmetic Act, was licensed 
                        under section 351 of this Act, or received an 
                        exemption under section 505(i) of the Federal 
                        Food, Drug, and Cosmetic Act or section 
                        351(a)(3) of this Act; and
                            ``(ii) the calendar year in which the 
                        manufacturer acquired the drug so approved, 
                        licensed, or exempted.
                    ``(C) Small businesses.--In the case of a drug 
                manufacturer that has fewer than 500 employees, the 
                initial report required by in subparagraph (A) shall be 
                submitted by a date determined by the Secretary, which 
                shall be--
                            ``(i) not earlier than the deadline 
                        described in subparagraph (A); and
                            ``(ii) not later than the date that is 3 
                        years after the date of enactment of this 
                        clause.
    ``(e) Audit by Third Party.--The Secretary shall select a 
percentage (to be determined by the Secretary) of the reports submitted 
under subsection (a) for a fiscal year to be audited by an accredited 
third-party auditor (to be selected by the Secretary).
    ``(f) Penalty for Noncompliance.--The Secretary shall report to the 
Office of the Inspector General any manufacturer's failure to submit a 
complete report as required under this section. Any manufacturer that 
fails to submit a complete report required under this section shall be 
subject to a civil penalty of up to $200,000 for each day on which the 
violation continues. The Secretary shall collect the civil penalties 
under this subsection and, without further appropriation, shall use 
such funds to support research of the National Institutes of Health.
    ``(g) Definition.--In this section, the term `drug manufacturer' 
means the manufacturer of an approved drug (including a drug approved 
under subsection (c) or (j) of section 505 of the Federal Food, Drug, 
and Cosmetic Act and a biological product licensed under subsection (a) 
or (k) of section 351 of this Act).''.
                                 <all>
Medicare Negotiation and Competitive Licensing Act of 2021
To amend title XVIII of the Social Security Act to require the Secretary of Health and Human Services to negotiate prices of drugs furnished under the Medicare program, and for other purposes.
Medicare Negotiation and Competitive Licensing Act of 2021
Rep. Doggett, Lloyd