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108th CONGRESS
1st Session
H. R. 1045
To amend title XVIII of the Social Security Act to provide for coverage
of outpatient prescription drugs under part B of the Medicare Program,
and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 3, 2003
Mr. Engel introduced the following bill; which was referred to the
Committee on Energy and Commerce, and in addition to the Committee on
Ways and Means, for a period to be subsequently determined by the
Speaker, in each case for consideration of such provisions as fall
within the jurisdiction of the committee concerned
_______________________________________________________________________
A BILL
To amend title XVIII of the Social Security Act to provide for coverage
of outpatient prescription drugs under part B of 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 Outpatient Prescription
Drug Coverage Act of 2003''.
SEC. 2. MEDICARE COVERAGE OF OUTPATIENT PRESCRIPTION DRUGS.
(a) Description of Covered Outpatient Drugs.--
(1) Coverage.--Section 1861(s)(2)(J) of the Social Security
Act (42 U.S.C. 1395x(s)(2)(J)) is amended to read as follows:
``(J) covered outpatient drugs (as defined in subsection
(t)(2));''.
(2) Drugs defined.--Section 1861(t) of such Act (42 U.S.C.
1395x(t)) is amended--
(A) in the heading, by adding at the end the
following: ``; Covered Outpatient Drugs'';
(B) in paragraph (1)--
(i) by striking ``paragraph (2)'' and
inserting ``the succeeding paragraphs of this
subsection'', and
(ii) by striking the period at the end and
inserting ``, but only if used for a medically
accepted indication (as described in paragraph
(4)).''; and
(C) by striking paragraph (2) and inserting the
following:
``(2) Subject to paragraph (3), the term `covered outpatient drug'
means--
``(A) a drug which may be dispensed only upon prescription
and--
``(i) which is approved for safety and
effectiveness as a prescription drug under section 505
or 507 of the Federal Food, Drug, and Cosmetic Act or
which is approved under section 505(j) of such Act;
``(ii)(I) which was commercially used or sold in
the United States before the date of the enactment of
the Drug Amendments of 1962 or which is identical,
similar, or related (within the meaning of section
310.6(b)(1) of title 21 of the Code of Federal
Regulations) to such a drug, and
(II) which has not been the subject of a final
determination by the Secretary that it is a `new drug'
(within the meaning of section 201(p) of the Federal
Food, Drug, and Cosmetic Act) or an action brought by
the Secretary under section 301, 302(a), or 304(a) of
such Act to enforce section 502(f) or 505(a) of such
Act; or
``(iii)(I) which is described in section 107(c)(3)
of the Drug Amendments of 1962 and for which the
Secretary has determined there is a compelling
justification for its medical need, or is identical,
similar, or related (within the meaning of section
310.6(b)(1) of title 21 of the Code of Federal
Regulations) to such a drug, and
(II) for which the Secretary has not issued a
notice of an opportunity for a hearing under section
505(e) of the Federal Food, Drug, and Cosmetic Act on a
proposed order of the Secretary to withdraw approval of
an application for such drug under such section because
the Secretary has determined that the drug is less than
effective for all conditions of use prescribed,
recommended, or suggested in its labeling;
``(B) a biological product which--
``(i) may only be dispensed upon prescription,
``(ii) is licensed under section 351 of the Public
Health Service Act, and
``(iii) is produced at an establishment licensed
under such section to produce such product; and
``(C) insulin certified under section 506 of the Federal
Food, Drug, and Cosmetic Act.
``(3) The term `covered outpatient drug' does not include--
``(A) any drug, biological product, or insulin when
furnished as part of, or as incident to, a diagnostic service
or any other item or service for which payment may be made
under this title (other than physicians' services or services
which would be physicians' services if furnished by a
physician); or
``(B) any drug that is intravenously administered in a home
setting.
``(4) For purposes of paragraph (2), the term `medically accepted
indication', with respect to the use of an outpatient drug, includes--
``(A) any use which has been approved by the Food and Drug
Administration for the drug, and
``(B) any other use of the drug, unless the Secretary
determines that such use is not medically appropriate.''.
(3) Conforming amendments repealing separate coverage of
certain drugs and products.--(A) Effective January 1, 2005,
section 1861(s)(2) of such Act (42 U.S.C. 1395x(s)(2)) is
amended--
(i) in each of subparagraphs (A) and (B), by
striking ``(including drugs'' and all that follows
through ``patient)''; and
(ii) by striking subparagraphs (G), (I), (O), (Q),
and (T).
(B) Effective January 1, 2005, section 1861 of such Act (42
U.S.C. 1395x) is amended by striking the subsection (kk).
(C) Effective January 1, 2005, section 1881(b) of such Act
(42 U.S.C. 1395rr(b)) is amended--
(i) in the first sentence of paragraph (1)--
(I) by striking ``, (B)'' and inserting
``and (B)''; and
(II) by striking ``, and (C)'' and all that
follows and inserting a period; and
(ii) in paragraph (11)--
(I) by striking ``(11)(A)'' and inserting
``(11)''; and
(II) by striking subparagraphs (B) and (C).
(b) Deductible and Payment Amounts.--(1) Section 1833(a)(1) of such
Act (42 U.S.C. 1395l(a)(1)) is amended--
(A) by striking ``and (U)'' and inserting ``(U)''; and
(B) by striking the semicolon at the end and inserting the
following ``, and (V) with respect to expenses incurred for
covered outpatient drugs, the amounts paid shall be the amounts
determined under section 1834(e)(2);''.
(2) Section 1833(a)(2) of such Act (42 U.S.C. 1395l(a)(2)) is
amended--
(A) by inserting ``(other than covered outpatient drugs)''
after ``(2) in the case of services''; and
(B) by striking ``(other than a covered osteoporosis drug)
(as defined in section 1861(kk))''.
(3) Section 1833(b) of such Act (42 U.S.C. 1395l(b)) is amended--
(A) in clause (1), by inserting ``or for covered outpatient
drugs'' after ``1861(s)(10)(A)'', and
(B) in clause (2), by striking `` (other than a covered
osteoporosis drug (as defined in section 1861(kk)))''.
(4) Section 1834 of such Act (42 U.S.C. 1395m) is amended by
inserting after subsection (d) the following new subsection:
``(e) Payment for Covered Outpatient Drugs.--
``(1) Deductible.--
``(A) Application.--
``(i) In general.--Except as provided in
clauses (ii) and (iii), payment shall be made
under paragraph (2) only with respect to
expenses incurred by an individual for covered
outpatient drugs during a calendar year on or
after such date in the year as the Secretary
determines that the individual has incurred
expenses in the year for covered outpatient
drugs (during a period in which the individual
is entitled to benefits under this part) equal
to the amount of the prescription drug
deductible specified in subparagraph (C) for
that year.
``(ii) Deductible not applied to 1st year
immunosuppressives.--The prescription drug
deductible established under this paragraph
shall not apply to drugs described in section
1861(t)(2)(A) used in immunosuppressive therapy
and furnished, to an individual who receives an
organ transplant for which payment is made
under this title, within 1 year after the date
of the transplant.
``(B) Response to application.--If the system
described in section 1842(u)(4) has not been
established and an individual applies to the Secretary
to establish that the individual has met the
requirement of subparagraph (A), the Secretary shall
promptly notify the individual (and, if the application
was submitted by or through a participating pharmacy,
the pharmacy) as to the date (if any) as of which the
individual has met such requirement.
``(C) Prescription drug deductible amount.--The
prescription drug deductible specified in this
subparagraph for--
``(i) 2005 is $250, and
``(ii) any succeeding year, is the
prescription drug deductible for the preceding
year, increased by the percentage by which the
monthly premium under section 1839 for months
during the year exceeds the monthly premium
under such section for months during the
preceding year.
``(2) Payment amount.--
``(A) In general.--Subject to the prescription drug
deductible established under paragraph (1)(A) and
except as provided in subparagraph (B), the amounts
payable under this part with respect to a covered
outpatient drug is equal to 80 percent of the lesser
of--
``(i) the actual charge for the drug, or
``(ii) the applicable payment limit
established under paragraph (3).
``(B) Treatment of certain cost-based prepaid
organizations.--In applying subparagraph (A) in the
case of a Medicare+Choice organization under part C, an
organization under a reasonable cost reimbursement
contract under section 1876, and in the case of an
organization receiving payment under section
1833(a)(1)(A) and providing coverage of covered
outpatient drugs, the Secretary shall provide for an
appropriate adjustment in the payment amounts otherwise
made to reflect the aggregate increase in payments that
would otherwise be made with respect to enrollees
in such an organization if payments were made other than under such
clause or such a contract on an individual-by-individual basis.
``(3) Payment limits.--
``(A) Payment limit for non-multiple source drugs
and multiple-source drugs with restrictive
prescriptions.--In the case of a drug that either is
not a multiple source drug (as defined in paragraph
(9)(A)) or is a multiple source drug and has a
restrictive prescription (as defined in paragraph (9)(B)), the payment
limit for the drug under this paragraph for a payment calculation
period is equal to the lesser of--
``(i) the 90th percentile of the actual
charges (computed on a statewide basis,
carrier-wide basis, or other appropriate
geographic area basis, as specified by the
Secretary) for the drug for the second previous
payment calculation period, adjusted (as the
Secretary determines to be appropriate) to
reflect the number of tablets (or other dosage
units) dispensed; or
``(ii) the amount of the administrative
allowance (established under paragraph (4))
plus the product of--
``(I) the number of tablets (or
other dosage units) dispensed, and
``(II) the per tablet or unit
average wholesale price for such drug
(as determined under subparagraph (C)
for the period for purposes of this
subparagraph).
``(B) Payment limit for multiple source drugs
without restrictive prescriptions.--In the case of a
drug that is a multiple source drug but does not have a
restrictive prescription, the payment limit for the
drug under this paragraph for a payment calculation
period is equal to the amount of the administrative
allowance (established under paragraph (4)) plus the
product of--
``(i) the number of tablets (or other
dosage units) dispensed, and
``(ii) the unweighted median of the per
tablet or unit average wholesale prices
(determined under subparagraph (C) for purposes
of this subparagraph) for such drug for the
period.
``(C) Determination of unit price.--
``(i) In general.--For purposes of this
paragraph, the Secretary shall determine, with
respect to the dispensing of a covered
outpatient drug in a payment calculation period
(beginning on or after January 1, 2005), the
per tablet or unit average wholesale price for
the drug.
``(ii) Basis for determinations.--
``(I) Determination for non-
multiple-source drugs.--For purposes of
subparagraph (A), such determination
shall be based on a biannual survey
conducted by the Secretary of a
representative sample of direct
sellers, wholesalers, or pharmacies (as
appropriate) of wholesale (or
comparable direct) prices (excluding
discounts to pharmacies); except that
if, because of low volume of sales for
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