Elijah E. Cummings Lower Drug Costs Now Act (H.R. 3; 117th Congress)/Title IV

by Frank Pallone

SEC. 401. DRUG PRICE TRANSPARENCY.

Part A of title XI of the Social Security Act is amended by adding at the end the following new sections:

“SEC. 1150D. REPORTING ON DRUG PRICES.

“(a) Definitions.—In this section:

“(1) 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 licensed under section 351 of the Public Health Service Act; or

“(B) who is responsible for setting the wholesale acquisition cost for the drug.

“(2) 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 the Public Health Service Act—

“(A) that has a wholesale acquisition cost of $100 or more, adjusted for inflation occurring after the date of enactment of this section, for a month’s supply or a typical course of treatment that lasts less than a month, and is—

“(i) subject to section 503(b)(1) of the Federal Food, Drug, and Cosmetic Act; and

“(ii) not a preventative 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 or under a State Medicaid plan under title XIX or under a waiver of such plan.

“(3) WHOLESALE ACQUISITION COST.—The term ‘wholesale acquisition cost’ has the meaning given that term in section 1847A(c)(6)(B).

“(b) Report.—

“(1) REPORT REQUIRED.—The manufacturer of a qualifying drug shall submit a report to the Secretary if, with respect to the qualifying drug—

“(A) there is an increase in the price of the qualifying drug that results in an increase in the wholesale acquisition cost of that drug that is equal to—

“(i) 10 percent or more within a 12-month period beginning on or after January 1, 2021; or

“(ii) 25 percent or more within a 36-month period beginning on or after January 1, 2021;

“(B) the estimated price of the qualifying drug or spending per individual or per user of such drug (as estimated by the Secretary) for the applicable year (or per course of treatment in such applicable year as determined by the Secretary) is at least $26,000 beginning on or after January 1, 2023; or

“(C) there was an increase in the price of the qualifying drug that resulted in an increase in the wholesale acquisition cost of that drug that is equal to—

“(i) 10 percent or more within a 12-month period that begins and ends during the 5-year period preceding January 1, 2023; or

“(ii) 25 percent or more within a 36-month period that begins and ends during the 5-year period preceding January 1, 2023.

“(2) REPORT DEADLINE.—Each report described in paragraph (1) shall be submitted to the Secretary—

“(A) in the case of a report with respect to an increase in the price of a qualifying drug that occurs during the period beginning on January 1, 2021, and ending on the day that is 60 days after the date of the enactment of this section, not later than 90 days after such date of enactment;

“(B) in the case of a report with respect to an increase in the price of a qualifying drug that occurs after the period described in subparagraph (A), not later than 30 days prior to the planned effective date of such price increase for such qualifying drug;

“(C) in the case of a report with respect to a qualifying drug that meets the criteria under paragraph (1)(B), not later than 30 days after such drug meets such criteria; and

“(D) in the case of a report with respect to an increase in the price of a qualifying drug that occurs during a 12-month or 36-month period described in paragraph (1)(C), not later than April 1, 2023.

“(c) Contents.—A report under subsection (b), consistent with the standard for disclosures described in section 213.3(d) of title 12, Code of Federal Regulations (as in effect on the date of enactment of this section), shall, at a minimum, include—

“(1) with respect to the qualifying drug—

“(A) the percentage by which the manufacturer will raise the wholesale acquisition cost of the drug within the 12-month period or 36-month period as described in subsection (b)(1)(A)(i), (b)(1)(A)(ii), (b)(1)(C)(i), or (b)(1)(C)(ii), as applicable, and the effective date of such price increase or the cost associated with a qualifying drug if such drug meets the criteria under subsection (b)(1)(B) and the effective date at which such drug meets such criteria;

“(B) an explanation for, and description of, each price increase for such drug that will occur during the 12-month period or the 36-month period described in subsection (b)(1)(A)(i), (b)(1)(A)(ii), (b)(1)(C)(i), or (b)(1)(C)(ii), as applicable;

“(C) an explanation for, and description of, the cost associated with a qualifying drug if such drug meets the criteria under subsection (b)(1)(B), as applicable;

“(D) if known and different from the manufacturer of the qualifying drug, the identity of—

“(i) the sponsor or sponsors of any investigational new drug applications under section 505(i) of the Federal Food, Drug, and Cosmetic Act for clinical investigations with respect to such drug, for which the full reports are submitted as part of the application—

“(I) for approval of the drug under section 505 of such Act; or

“(II) for licensure of the drug under section 351 of the Public Health Service Act; and

“(ii) the sponsor of an application for the drug approved under such section 505 of the Federal Food, Drug, and Cosmetic Act or licensed under section 351 of the Public Health Service Act;

“(E) 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 of the Public Health Service Act, or since the manufacturer acquired such approved application or license, if applicable;

“(F) the current wholesale acquisition cost of the drug;

“(G) the total expenditures of the manufacturer on—

“(i) materials and manufacturing for such drug;

“(ii) acquiring patents and licensing for such drug; and

“(iii) purchasing or acquiring such drug from another manufacturer, if applicable;

“(H) the percentage of total expenditures of the manufacturer on research and development for such drug that was derived from Federal funds;

“(I) the total expenditures of the manufacturer on research and development for such drug that is necessary to demonstrate that it meets applicable statutory standards for approval under section 505 of the Federal Food, Drug, and Cosmetic Act or licensure under section 351 of the Public Health Service Act, as applicable;

“(J) the total expenditures of the manufacturer on pursuing new or expanded indications or dosage changes for such drug under section 505 of the Federal Food, Drug, and Cosmetic Act or section 351 of the Public Health Service Act;

“(K) the total expenditures of the manufacturer on carrying out postmarket requirements related to such drug, including under section 505(o)(3) of the Federal Food, Drug, and Cosmetic Act;

“(L) 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 of the Public Health Service Act, or since the manufacturer acquired such approved application or license; and

“(M) 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 each of the 12-month period described in subsection (b)(1)(A)(i) or (b)(1)(C)(i) or the 36-month period described in subsection (b)(1)(A)(ii) or (b)(1)(C)(ii), as applicable;

“(B) all stock-based performance metrics used by the manufacturer to determine executive compensation for each of the 12-month periods described in subsection (b)(1)(A)(i) or (b)(1)(C)(i) or the 36-month periods described in subsection (b)(1)(A)(ii) or (b)(1)(C)(ii), as applicable; 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, including on drugs that failed to receive approval by the Food and Drug Administration; and

“(3) such other related information as the Secretary considers appropriate and as specified by the Secretary.

“(d) Information Provided.—The manufacturer of a qualifying drug that is required to submit a report under subsection (b), shall ensure that such report and any explanation for, and description of, each price increase described in subsection (c)(1) shall be truthful, not misleading, and accurate.

“(e) Civil Monetary Penalty.—Any manufacturer of a qualifying drug that fails to submit a report for the drug as required by this section, following notification by the Secretary to the manufacturer that the manufacturer is not in compliance with this section, shall be subject to a civil monetary penalty of $75,000 for each day on which the violation continues.

“(f) False Information.—Any manufacturer that submits a report for a drug as required by this section that knowingly provides false information in such report is subject to a civil monetary penalty in an amount not to exceed $100,000 for each item of false information.

“(g) Public Posting.—

“(1) IN GENERAL.—Subject to paragraph (4), the Secretary shall post each report submitted under subsection (b) on the public website of the Department of Health and Human Services the day the price increase of a qualifying drug is scheduled to go into effect.

“(2) FORMAT.—In developing the format in which reports will be publicly posted under paragraph (1), the Secretary shall consult with stakeholders, including beneficiary groups, and shall seek feedback from consumer advocates and readability experts on the format and presentation of the content of such reports to ensure that such reports are—

“(A) user-friendly to the public; and

“(B) written in plain language that consumers can readily understand.

“(3) LIST.—In addition to the reports submitted under subsection (b), the Secretary shall also post a list of each qualifying drug with respect to which the manufacturer was required to submit such a report in the preceding year and whether such manufacturer was required to submit such report based on a qualifying price increase or whether such drug meets the criteria under subsection (b)(1)(B).

“(4) PROTECTED INFORMATION.—In carrying out this section, the Secretary shall enforce applicable law concerning the protection of confidential commercial information and trade secrets.

“SEC. 1150E. ANNUAL REPORT TO CONGRESS.

“(a) In General.—Subject to subsection (b), the Secretary shall submit to the Committees on Energy and Commerce and Ways and Means of the House of Representatives and the Committees on Health, Education, Labor, and Pensions and Finance of the Senate, and post on the public website of the Department of Health and Human Services in a way that is user-friendly to the public and written in plain language that consumers can readily understand, an annual report—

“(1) summarizing the information reported pursuant to section 1150D;

“(2) including copies of the reports and supporting detailed economic analyses submitted pursuant to such section;

“(3) detailing the costs and expenditures incurred by the Department of Health and Human Services in carrying out section 1150D; and

“(4) explaining how the Department of Health and Human Services is improving consumer and provider information about drug value and drug price transparency.

“(b) Protected Information.—In carrying out this section, the Secretary shall enforce applicable law concerning the protection of confidential commercial information and trade secrets.”.