Medicare Prescription Drug Gap Reduction Act of 2006

Medicare Prescription Drug Gap Reduction Act of 2006 - Amends title XVIII (Medicare) of the Social Security Act (SSA) to reduce the coverage gap in prescription drug coverage under SSA part D (Voluntary Prescription Drug Benefit Program), based on savings to the Medicare program resulting from the negotiation of prescription drug prices.

Grants the Secretary of Health and Human Services authority similar to that of other federal entities that purchase prescription drugs in bulk to negotiate contracts with manufacturers of covered part D drugs.

States that the Secretary shall be required to: (1) negotiate contracts with manufacturers of covered part D drugs for each fallback prescription drug plan; and (2) participate in negotiation of contracts of any covered part D drug upon request of an approved prescription drug plan or Medicare Advantage Prescription Drug Plan.

Prohibits the Secretary from requiring a particular formulary or instituting a price structure for the reimbursement of covered part D drugs in order to carry out, and promote competition, under part D.

[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 2354 Introduced in Senate (IS)]








109th CONGRESS
  2d Session
                                S. 2354

To amend title XVIII of the Social Security Act to reduce the coverage 
 gap in prescription drug coverage under part D of such title based on 
   savings to the Medicare program resulting from the negotiation of 
                       prescription drug prices.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 2, 2006

Mr. Nelson of Florida (for himself, Ms. Collins, Mr. Rockefeller, Mrs. 
Boxer, Mr. Kerry, Ms. Mikulski, Mr. Feingold, Mr. Dorgan, and Mr. Kohl) 
introduced the following bill; which was read twice and referred to the 
                          Committee on Finance

_______________________________________________________________________

                                 A BILL


 
To amend title XVIII of the Social Security Act to reduce the coverage 
 gap in prescription drug coverage under part D of such title based on 
   savings to the Medicare program resulting from the negotiation of 
                       prescription drug prices.

    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 Prescription Drug Gap 
Reduction Act of 2006''.

SEC. 2. REDUCING COVERAGE GAP.

    Section 1860D-2(b) of the Social Security Act (42 U.S.C. 1395w-
102(b)) is amended--
            (1) in paragraph (3)(A), by striking ``paragraph (4)'' and 
        inserting ``paragraph (4), subject to the increase described in 
        paragraph (7)''; and
            (2) by adding at the end the following new paragraph:
            ``(7) Increase of initial coverage limit based on medicare 
        savings due to negotiation of drug prices.--For each year 
        (beginning with 2006), the Secretary shall increase the initial 
        coverage limit for the year specified in paragraph (3) so that 
        the aggregate amount of increased expenditures from the 
        Medicare Prescription Drug Account as a result of such increase 
        under this paragraph in the year (as estimated by the Office of 
        the Actuary of the Centers for Medicare & Medicaid Services) is 
        equal to the aggregate amount of reduced expenditures from such 
        Account that the Office of the Actuary estimates will result in 
        the year as a result of the application of the amendment made 
        by section 3(a) of the Medicare Prescription Drug Gap Reduction 
        Act of 2006.''.

SEC. 3. NEGOTIATING FAIR PRICES FOR MEDICARE PRESCRIPTION DRUGS.

    (a) In General.--Section 1860D-11 of the Social Security Act (42 
U.S.C. 1395w-111) is amended by striking subsection (i) (relating to 
noninterference) and inserting the following:
    ``(i) Authority To Negotiate Prices With Manufacturers.--
            ``(1) In general.--Subject to paragraph (4), in order to 
        ensure that beneficiaries enrolled under prescription drug 
        plans and MA-PD plans pay the lowest possible price, the 
        Secretary shall have authority similar to that of other Federal 
        entities that purchase prescription drugs in bulk to negotiate 
        contracts with manufacturers of covered part D drugs, 
        consistent with the requirements and in furtherance of the 
        goals of providing quality care and containing costs under this 
        part.
            ``(2) Mandatory responsibilities.--The Secretary shall be 
        required to--
                    ``(A) negotiate contracts with manufacturers of 
                covered part D drugs for each fallback prescription 
                drug plan under subsection (g); and
                    ``(B) participate in negotiation of contracts of 
                any covered part D drug upon request of an approved 
                prescription drug plan or MA-PD plan.
            ``(3) Rule of construction.--Nothing in paragraph (2) shall 
        be construed to limit the authority of the Secretary under 
        paragraph (1) to the mandatory responsibilities under paragraph 
        (2).
            ``(4) No particular formulary or price structure.--In order 
        to promote competition under this part and in carrying out this 
        part, the Secretary may not require a particular formulary or 
        institute a price structure for the reimbursement of covered 
        part D drugs.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect as if included in the enactment of section 101 of the 
Medicare Prescription Drug, Improvement, and Modernization Act of 2003 
(Public Law 108-173).
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