This Act may be cited as the “Lowering Prescription Drug Prices for America’s Seniors and Families Act of 2020”.

(a) In general.—Section 1860D–11 of the Social Security Act (42 U.S.C. 1395w–111) is amended—

(1) in subsection (i), by striking “In order” and inserting “Except as provided in subsection (k), in order”; and

(2) by adding at the end the following new subsection:

“(k) Negotiation of prices for certain covered part D drugs following period of exclusivity.—

“(1) IN GENERAL.—Notwithstanding any other provision of law, subject to paragraph (2), the Secretary shall, for plan years beginning on or after the date on which the applicable period with respect to an applicable covered part D drug (as those terms are defined in paragraph (3)) expires—

“(A) negotiate directly with pharmaceutical manufacturers the prices that may be charged to PDP sponsors and MA organizations for such applicable covered part D drug; and

“(B) complete such negotiations not later than 3 months prior to the beginning of each such plan year.

“(2) USE OF MEDICAID BEST PRICE IF NEGOTIATIONS FAIL.—In the case where the Secretary is not able to reach an agreement under paragraph (1) with respect to an applicable covered part D drug for a plan year by the date specified in paragraph (1)(B), the price that a pharmaceutical manufacturer may charge to PDP sponsors and MA organizations for such applicable covered part D drug for the plan year shall be determined using the methodology used to determine the best price of a covered outpatient drug under section 1927(c)(1)(C).

“(3) DEFINITIONS.—In this subsection:

“(A) APPLICABLE COVERED PART D DRUG.—The term ‘applicable covered part D drug’ means a covered part D drug for which there is in effect—

“(i) in the case of a drug approved under section 505 of the Federal Food, Drug, and Cosmetic Act, a patent on an active ingredient of the drug; or

“(ii) in the case of a biological product, a patent on the structure of the biological product.

A patent shall be considered to be in effect for purposes of this subparagraph during any extension of the patent term under section 156 of title 35, United States Code.

“(B) APPLICABLE PERIOD.—The term ‘applicable period’ means, with respect to an applicable covered part D drug, any applicable patent described in subparagraph (A).

“(4) CONDITION OF COVERAGE.—

“(A) IN GENERAL.—Subject to subparagraph (B), in order for coverage to be available under this part for an applicable covered part D drug (as defined in section 1860D–2(e)) of a manufacturer with respect to a plan year beginning on or after the date on which the applicable period with respect to such covered part D drug expires, the manufacturer must provide such applicable covered part D drug to PDP sponsors and MA organizations at the price negotiated under paragraph (1) or the price determined under paragraph (2), if applicable, for the plan year.

“(B) AUTHORIZING COVERAGE IN CERTAIN CIRCUMSTANCES.—Subparagraph (A) shall not apply to the dispensing of a covered part D drug if the Secretary has made a determination that the availability of the drug is essential to the health of beneficiaries under this part.”.

(b) Effective date.—The amendments made by this section shall apply to covered part D drugs dispensed on or after January 1, 2021.

Chapter VIII of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 381 et seq.) is amended by adding at the end the following:

(a) Preserve Access to Affordable Generics and Biosimilars.—

(1) UNLAWFUL COMPENSATION FOR DELAY.—

(A) IN GENERAL.—The Federal Trade Commission Act (15 U.S.C. 41 et seq.) is amended by inserting after section 26 (15 U.S.C. 57c–2) the following:

(B) EFFECTIVE DATE.—Section 27 of the Federal Trade Commission Act, as added by this paragraph, shall apply to all agreements described in section 27(a)(1) of that Act entered into after June 17, 2013. Section 27(f) of the Federal Trade Commission Act, as added by this paragraph, shall apply to agreements entered into on or after the date of enactment of this Act.

(2) CERTIFICATION OF AGREEMENTS.—Section 1112 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (21 U.S.C. 355 note) is amended by adding at the end the following:

“(d) Certification.—The Chief Executive Officer or the company official responsible for negotiating any agreement under subsection (a) or (b) that is required to be filed under subsection (c), within 30 days after such filing, shall execute and file with the Assistant Attorney General and the Commission a certification as follows: ‘I declare that the following is true, correct, and complete to the best of my knowledge: The materials filed with the Federal Trade Commission and the Department of Justice under section 1112 of subtitle B of title XI of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, with respect to the agreement referenced in this certification—

‘(1) represent the complete, final, and exclusive agreement between the parties;

‘(2) include any ancillary agreements that are contingent upon, provide a contingent condition for, or are otherwise related to, the referenced agreement; and

‘(3) include written descriptions of any oral agreements, representations, commitments, or promises between the parties that are responsive to subsection (a) or (b) of such section 1112 and have not been reduced to writing.’ .”.

(3) FORFEITURE OF 180-DAY EXCLUSIVITY PERIOD.—Section 505(j)(5)(D)(i)(V) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(j)(5)(D)(i)(V)) is amended by inserting “section 27 of the Federal Trade Commission Act or” after “that the agreement has violated”.

(4) COMMISSION LITIGATION AUTHORITY.—Section 16(a)(2) of the Federal Trade Commission Act (15 U.S.C. 56(a)(2)) is amended—

(A) in subparagraph (D), by striking “or” after the semicolon;

(B) in subparagraph (E), by inserting “or” after the semicolon; and

(C) inserting after subparagraph (E) the following:

“(F) under section 27;”.

(5) STATUTE OF LIMITATIONS.—The Federal Trade Commission shall commence any enforcement proceeding described in section 27 of the Federal Trade Commission Act, as added by paragraph (1), except for an action described in section 27(f)(2) of the Federal Trade Commission Act, not later than 6 years after the date on which the parties to the agreement file the certification under section 1112(d) of the Medicare Prescription Drug Improvement and Modernization Act of 2003 (21 U.S.C. 355 note).

(b) Citizen petitions.—Section 505(q)(1) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(q)(1)) is amended—

(1) in subparagraph (E)—

(A) by striking “If the Secretary” and inserting the following:

“(i) IN GENERAL.—If the Secretary”;

(B) by striking the second sentence and inserting the following:

“(ii) FACTORS.—In determining whether a petition was submitted with the primary purpose of delaying the approval of an application, the Secretary shall consider—

“(I) whether it appears, based on the date that relevant information relied upon in the petition became known to the petitioner (or reasonably should have been known to the petitioner), as certified by the petitioner in accordance with subparagraph (H), that the petitioner has taken an unreasonable length of time to submit the petition;

“(II) whether the petitioner has submitted multiple or serial petitions raising issues that reasonably could have been known to the petitioner at the time of submission of the earlier petition or petitions;

“(III) whether the petition was submitted close in time to a known, first date upon which an application under subsection (b)(2) of this section or section 351(k) of the Public Health Service Act could be approved;

“(IV) whether the petition was submitted without any data or information in support of the scientific positions set forth in the petition;

“(V) whether the petition raises the same or substantially similar issues as a prior petition to which the Secretary has responded substantively already, particularly if the subsequent submission follows the earlier response closely in time;

“(VI) whether the petition concerns standards for approval of a drug for which the Secretary has provided an opportunity for public input, such as draft or final product-specific guidance applicable to the drug, and the petitioner has not provided comment other than through the petition;

“(VII) whether the petition requests that other applicants meet standards for testing, data, or labeling for a drug that are more onerous or rigorous than the standards applicable to, as applicable, the listed drug, reference product, or petitioner’s version of the same drug;

“(VIII) the history of the petitioner with the Food and Drug Administration, such as whether the petitioner has a history of submitting petitions that the Secretary has determined were submitted with the primary purpose of delay; and

“(IX) other relevant considerations, as the Secretary may describe in guidance.”; and

(C) by adding at the end the following:

“(iii) PUBLIC AVAILABILITY.—The Secretary shall publish on the internet website of the Food and Drug Administration a list of any petitions that the Secretary determines were submitted for the primary purpose of delaying the approval of an application.

“(iv) REFERRAL TO THE FEDERAL TRADE COMMISSION.—The Secretary shall establish procedures for referring to the Federal Trade Commission any petition or supplement to a petition that the Secretary determines was submitted with the primary purpose of delaying approval of an application. Such procedures shall include notification to the petitioner and an opportunity for the petitioner to respond to the Secretary prior to referral to the Federal Trade Commission.”; and

(2) by adding at the end the following:

“(J) TIMELINE FOR SUBMITTING PETITIONS.—The Secretary may establish a time period after the relevant information relied upon in a petition became known to the petitioner (or reasonably should have been known to a petitioner), as certified by the petitioner in accordance with subparagraph (H), and any petition that is submitted after such time period has passed shall be summarily denied.”.

(c) Federal Trade Commission enforcement against sham petitions.—

(1) DEFINITIONS.—In this subsection:

(A) COMMISSION.—The term “Commission” means the Federal Trade Commission.

(B) COVERED APPLICATION.—The term “covered application” means an application filed pursuant to subsection (b)(2) or (j) of section 505 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355) or section 351(k) of the Public Health Service Act (42 U.S.C. 262(k)).

(C) COVERED PETITION.—The term “covered petition” means a petition, or a supplement to a petition, filed under section 505(q) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(q)).

(D) PERSON.—The term “person”—

(i) means an individual or entity; and

(ii) includes—

(I) a successor and an assign of an entity; and

(II) a joint venture, subsidiary, partnership, division, group, and affiliate controlled by an entity, and

(III) a successor and an assign of a joint venture, subsidiary, partnership, division, group, and affiliate controlled by an entity.

(E) SERIES OF COVERED PETITIONS.—The term “series of covered petitions” means any group of more than 1 covered petition relating to the same covered application.

(F) SHAM.—The term “sham” means a covered petition that is objectively baseless and that attempts to use a governmental process, as opposed to the outcome of that process, to interfere with the business of a competitor, or a series of covered petitions that attempts to use a governmental process, as opposed to the outcome of that process, to interfere with the business of a competitor.

(2) VIOLATION.—A person submitting or causing the submission of a covered petition or a series of covered petitions that is a sham shall be liable for engaging in an unfair method of competition under section 5(a)(1) of the Federal Trade Commission Act (15 U.S.C. 45(a)(1)).

(3) CIVIL ACTION.—

(A) IN GENERAL.—If the Commission has reason to believe that the submission of a covered petition or a series of covered petitions constitutes a violation of section 5(a)(1) of the Federal Trade Commission Act (15 U.S.C. 45(a)(1)), the Commission may commence a civil action to recover a civil penalty and seek other appropriate relief in a district court of the United States against any person that submitted or caused to be submitted such covered petition or such series of covered petitions, including successors or assigns.

(B) PRESUMPTION.—In a civil action under subparagraph (A), a covered petition shall be presumed to be part of a series of covered petitions that is a sham under paragraph (2) of this subsection if—

(i) the Secretary of Health and Human Services—

(I) has determined that the covered petition was submitted with the primary purpose of delaying the approval of a covered application; and

(II) has referred such determination to the Federal Trade Commission in writing, including a reasoned basis for the determination; and

(ii) the covered petition was part of a series of covered petitions.

(C) EXCEPTION.—The presumption in subparagraph (B) shall not apply if the defendant establishes, by a preponderance of the evidence, that the series of covered petitions that includes the covered petition referred to the Commission by the Secretary of Health and Human Services is not a sham.

(D) CIVIL PENALTY.—In an action under subparagraph (A), any person that has been found liable for a violation of section 5(a)(1) of the Federal Trade Commission Act (15 U.S.C. 45(a)(1)) shall be subject to a civil penalty for each violation of not more than the greater of—

(i) any revenue earned from the sale by such person of any drug product, referenced in a covered application that was the subject of a covered petition or a series of covered petitions that is a sham, during the period in which the covered petition or series of covered petitions was under review by the Secretary of Health and Human Services; or

(ii) $50,000 for each calendar day that each covered petition that is a sham or that was part of a series of covered petitions that is a sham was under review by the Secretary of Health and Human Services.

(E) ANTITRUST LAWS.—Nothing in this subsection shall modify, impair, limit, or supersede the applicability of the antitrust laws as defined in subsection (a) of the first section of the Clayton Act (15 U.S.C. 12(a)), and of section 5 of the Federal Trade Commission Act (15 U.S.C. 45) to the extent that it applies to unfair methods of competition.

(F) RULE OF CONSTRUCTION.—The civil penalty provided in this paragraph is in addition to, and not in lieu of, any other remedies provided by Federal law, including under section 16 of the Clayton Act (15 U.S.C. 26) or under section 13(b) of the Federal Trade Commission Act (15 U.S.C. 53(b)). Nothing in this subparagraph shall be construed to affect any authority of the Commission under any other provision of law.

(4) APPLICABILITY.—This subsection shall apply to any covered petition submitted on or after the date of enactment of this Act.

(a) Requiring prescription drug plan sponsors and Medicare Advantage organizations To include real-Time benefit information under Medicare part D.—Section 1860D–4 of the Social Security Act (42 U.S.C. 1395w–104) is amended—

(1) by redesignating subsection (m) (relating to program integrity transparency measures), as added by section 6063(c) of the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (Public Law 115–271), as subsection (n); and

(2) by adding at the end the following new subsection:

“(o) Real-Time benefit information.—

“(1) IN GENERAL.—After the Secretary has adopted a standard under paragraph (3) for electronic real-time benefit tools, and at a time determined appropriate by the Secretary, a PDP sponsor of a prescription drug plan shall implement one or more of such tools that meet the requirements described in paragraph (2).

“(2) REQUIREMENTS.—For purposes of paragraph (1), the requirements described in this paragraph, with respect to an electronic real-time benefit tool, are that the tool is capable of—

“(A) integrating with electronic prescribing and electronic health record systems of prescribing health care professionals for the transmission of eligibility and formulary and benefit information in real time to such professionals; and

“(B) with respect to a covered part D drug, transmitting such information specific to an individual enrolled in a prescription drug plan, including the following:

“(i) A list of any clinically appropriate alternatives to such drug included in the formulary of such plan.

“(ii) Cost-sharing information and the negotiated price for such drug and such alternatives at—

“(I) multiple pharmacy options, including the individual’s preferred pharmacy and, as applicable, other retail pharmacies and a mail order pharmacy; and

“(II) the formulary status of such drug and such alternatives and any prior authorization or other utilization management requirements applicable to such drug and such alternatives included in the formulary of such plan.

“(3) STANDARDS.—In order to be treated (for purposes of this subsection) as an electronic real-time benefit tool described in paragraph (1), such tool shall comply with technical standards adopted by the Secretary in consultation with the National Coordinator for Health Information Technology, the National Council for Prescription Drug Programs, other standard setting organizations determined appropriate by the Secretary, and stakeholders including PDP sponsors, Medicare Advantage organizations, health care professionals, and health information technology software vendors.

“(4) RULE OF CONSTRUCTION.—Nothing in this subsection shall be construed to prohibit the application of paragraph (b)(7) of section 423.160 of title 42, Code of Federal Regulations, as is to be added to such section pursuant to the final rule published in the Federal Register on May 23, 2019, and titled ‘Modernizing Part D and Medicare Advantage To Lower Drug Prices and Reduce Out-of-Pocket Expenses’ (84 Fed. Reg. 23832 through 23884).”.

(b) Requiring qualified electronic health records To include real-Time benefit tools.—Section 3000(13) of the Public Health Service Act (42 U.S.C. 300jj(13)) is amended—

(1) in subparagraph (A), by striking “and” at the end;

(2) in subparagraph (B), by striking the period and inserting “; and”; and

(3) by adding at the end the following:

“(C) includes, or is capable of including, a real-time benefit tool that conveys patient-specific real-time cost and coverage information with respect to prescription drugs that, with respect to any health information technology certified for electronic prescribing, the technology shall be capable of incorporating the information described in clauses (i) and (ii) of paragraph (2)(B) of section 1860D–4(o) of the Social Security Act at a time specified by the Secretary but not before the Secretary adopts a standard for such tools as described in paragraph (1) of such section.”.

(c) Inclusion of use of real-Time electronic information in shared decision making under MIPS.—Section 1848(q)(2)(B)(iii)(IV) of the Social Security Act (42 U.S.C. 1395w–4(q)(2)(B)(iii)(IV)) is amended by adding at the end the following new sentence: “This subcategory shall include as an activity option, beginning with the performance period starting on January 1, 2021, use of a real-time benefit tool as described in 1860D–4(o).”.

(a) Benefit structure redesign.—Section 1860D–2(b) of the Social Security Act (42 U.S.C. 1395w–102(b)) is amended—

(1) in paragraph (2)—

(A) in subparagraph (A), in the matter preceding clause (i), by inserting “for a year preceding 2022 and for costs above the annual deductible specified in paragraph (1) and up to the annual out-of-pocket threshold specified in paragraph (4)(B) for 2022 and each subsequent year” after “paragraph (3)”;

(B) in subparagraph (C)—

(i) in clause (i), in the matter preceding subclause (I), by inserting “for a year preceding 2022, ” after “paragraph (4),”; and

(ii) in clause (ii)(III), by striking “and each subsequent year” and inserting “and 2021”; and

(C) in subparagraph (D)—

(i) in clause (i)—

(I) in the matter preceding subclause (I), by inserting “for a year preceding 2022, ” after “paragraph (4),”; and

(II) in subclause (I)(bb), by striking “a year after 2018” and inserting “each of years 2018 through 2021”; and

(ii) in clause (ii)(V), by striking “2019 and each subsequent year” and inserting “each of years 2019 through 2021”;

(2) in paragraph (3)(A)—

(A) in the matter preceding clause (i), by inserting “for a year preceding 2022,” after “and (4),”; and

(B) in clause (ii), by striking “for a subsequent year” and inserting “for each of years 2007 through 2021”;

(3) in paragraph (4)—

(A) in subparagraph (A)—

(i) in clause (i)—

(I) by redesignating subclauses (I) and (II) as items (aa) and (bb), respectively, and indenting appropriately;

(II) in the matter preceding item (aa), as redesignated by subclause (I), by striking “is equal to the greater of—” and inserting “is equal to—

“(I) for a year preceding 2022, the greater of—”;

(III) by striking the period at the end of item (bb), as redesignated by subclause (I), and inserting “; and”; and

(IV) by adding at the end the following:

“(II) for 2022 and each succeeding year, $0.”; and

(ii) in clause (ii)—

(I) by striking “clause (i)(I)” and inserting “clause (i)(I)(aa)”; and

(II) by adding at the end the following new sentence: “The Secretary shall continue to calculate the dollar amounts specified in clause (i)(I)(aa), including with the adjustment under this clause, after 2021 for purposes of section 1860D–14(a)(1)(D)(iii).”;

(B) in subparagraph (B)—

(i) in clause (i)—

(I) in subclause (V), by striking “or” at the end;

(II) in subclause (VI)—

(aa) by striking “for a subsequent year” and inserting “for 2021”; and

(bb) by striking the period at the end and inserting a semicolon; and

(III) by adding at the end the following new subclauses:

“(VII) for 2022, is equal to $3,100; or

“(VIII) for a subsequent year, is equal to the amount specified in this subparagraph for the previous year, increased by the annual percentage increase described in paragraph (6) for the year involved.”; and

(ii) in clause (ii), by striking “clause (i)(II)” and inserting “clause (i)”;

(C) in subparagraph (C)(i), by striking “and for amounts” and inserting “and for a year preceding 2022 for amounts”; and

(D) in subparagraph (E), by striking “In applying” and inserting “For each of 2011 through 2021, in applying”.

(b) Reduction in beneficiary coinsurance.—

(1) IN GENERAL.—Section 1860D–2(b)(2)(A) of the Social Security Act (42 U.S.C. 1395w–102(b)(2)(A)), as amended by subsection (a), is amended—

(A) by redesignating clauses (i) and (ii) as subclauses (I) and (II) and moving such subclauses 2 ems to the right;

(B) by striking “25 percent coinsurance.—Subject to” and inserting “Coinsurance.—

“(i) IN GENERAL.—Subject to”;

(C) in each of subclauses (I) and (II), as redesignated by subparagraph (A), by striking “25 percent” and inserting “the applicable percentage (as defined in clause (ii))”; and

(D) by adding at the end the following new clause:

“(ii) APPLICABLE PERCENTAGE DEFINED.—For purposes of clause (i), the term ‘applicable percentage’ means—

“(I) for a year preceding 2022, 25 percent; and

“(II) for 2022 and each subsequent year, 20 percent.”.

(2) CONFORMING AMENDMENT.—Section 1860D–14(a)(2)(D) of the Social Security Act (42 U.S.C. 1395w–114(a)(2)(D)) is amended by striking “25 percent” and inserting “the applicable percentage”.

(c) Decreasing reinsurance payment amount.—Section 1860D–15(b) of the Social Security Act (42 U.S.C. 1395w–115(b)) is amended—

(1) in paragraph (1)—

(A) by striking “equal to 80 percent” and inserting “equal to—

“(A) for a year preceding 2022, 80 percent”;

(B) in subparagraph (A), as added by paragraph (1), by striking the period at the end and inserting “; and”; and

(C) by adding at the end the following new subparagraph:

“(B) for a subsequent year, the sum of—

“(i) an amount equal to the applicable percentage specified in paragraph (5)(A) of such allowable reinsurance costs attributable to that portion of gross prescription drug costs as specified in paragraph (3) incurred in the coverage year after such individual has incurred costs that exceed the annual out-of-pocket threshold specified in section 1860D–2(b)(4)(B) with respect to applicable drugs (as defined in section 1860D–14B(g)(2)); and

“(ii) an amount equal to the applicable percentage specified in paragraph (5)(B) of allowable reinsurance costs attributable to that portion of gross prescription drug costs as specified in paragraph (3) incurred in the coverage year after such individual has incurred costs that exceed the annual out-of-pocket threshold specified in section 1860D–2(b)(4)(B) with respect to covered part D drugs that are not applicable drugs (as so defined).”; and

(2) by adding at the end the following new paragraph:

“(5) APPLICABLE PERCENTAGE SPECIFIED.—For purposes of paragraph (1)(B), the applicable percentage specified in this paragraph is—

“(A) with respect to applicable drugs (as defined in section 1860D–14B(g)(2))—

“(i) for 2022, 60 percent;

“(ii) for 2023, 40 percent; and

“(iii) for 2024 and each subsequent year, 20 percent; and

“(B) with respect to covered part D drugs that are not applicable drugs (as so defined)—

“(i) for 2022, 80 percent;

“(ii) for 2023, 60 percent; and

“(iii) for 2024 and each subsequent year, 40 percent.”.

(d) Manufacturer discount program during initial and catastrophic phases of coverage.—

(1) IN GENERAL.—Part D of title XVIII of the Social Security Act is amended by inserting after section 1860D–14A (42 U.S.C. 1495w–114) the following new section:

(2) SUNSET OF MEDICARE COVERAGE GAP DISCOUNT PROGRAM.—Section 1860D–14A of the Social Security Act (42 U.S.C. 1395–114a) is amended—

(A) in subsection (a), in the first sentence, by striking “The Secretary” and inserting “Subject to subsection (h), the Secretary”; and

(B) by adding at the end the following new subsection:

“(h) Sunset of program.—

“(1) IN GENERAL.—The program shall not apply to applicable drugs dispensed on or after January 1, 2022, and, subject to paragraph (2), agreements under this section shall be terminated as of such date.

“(2) CONTINUED APPLICATION FOR APPLICABLE DRUGS DISPENSED PRIOR TO SUNSET.—The provisions of this section (including all responsibilities and duties) shall continue to apply after January 1, 2022, with respect to applicable drugs dispensed prior to such date.”.

(3) INCLUSION OF ACTUARIAL VALUE OF MANUFACTURER DISCOUNTS IN BIDS.—Section 1860D–11 of the Social Security Act (42 U.S.C. 1395w–111) is amended—

(A) in subsection (b)(2)(C)(iii)—

(i) by striking “assumptions regarding the reinsurance” an inserting “assumptions regarding—

“(I) the reinsurance”; and

(ii) by adding at the end the following:

“(II) for 2022 and each subsequent year, the manufacturer discounts provided under section 1860D–14B subtracted from the actuarial value to produce such bid; and”; and

(B) in subsection (c)(1)(C)—

(i) by striking “an actuarial valuation of the reinsurance” and inserting “an actuarial valuation of—

“(i) the reinsurance”;

(ii) in clause (i), as added by clause (i) of this subparagraph, by adding “and” at the end; and

(iii) by adding at the end the following:

“(ii) for 2022 and each subsequent year, the manufacturer discounts provided under section 1860D–14B;”.

(4) CLARIFICATION REGARDING EXCLUSION OF MANUFACTURER DISCOUNTS FROM TROOP.—Section 1860D–2(b)(4) of the Social Security Act (42 U.S.C. 1395w–102(b)(4)) is amended—

(A) in subparagraph (C), by inserting “ and subject to subparagraph (F)” after “subparagraph (E)”; and

(B) by adding at the end the following new subparagraph:

“(F) CLARIFICATION REGARDING EXCLUSION OF MANUFACTURER DISCOUNTS.—In applying subparagraph (A), incurred costs shall not include any manufacturer discounts provided under section 1860D–14B.”.

(e) Determination of allowable reinsurance costs.—Section 1860D–15(b) of the Social Security Act (42 U.S.C. 1395w–115(b)) is amended—

(1) in paragraph (2)—

(A) by striking “costs.—For purposes” and inserting “costs.—

“(A) IN GENERAL.—Subject to subparagraph (B), for purposes”; and

(B) by adding at the end the following new subparagraph:

“(B) INCLUSION OF MANUFACTURER DISCOUNTS ON APPLICABLE DRUGS.—For purposes of applying subparagraph (A), the term ‘allowable reinsurance costs’ shall include the portion of the negotiated price (as defined in section 1860D–14B(g)(6)) of an applicable drug (as defined in section 1860D–14B(g)(2)) that was paid by a manufacturer under the manufacturer discount program under section 1860D–14B.”; and

(2) in paragraph (3)—

(A) in the first sentence, by striking “For purposes” and inserting “Subject to paragraph (2)(B), for purposes”; and

(B) in the second sentence, by inserting “or, in the case of an applicable drug, by a manufacturer” after “by the individual or under the plan”.

(f) Updating risk adjustment methodologies To account for part D modernization redesign.—Section 1860D–15(c) of the Social Security Act (42 U.S.C. 1395w–115(c)) is amended by adding at the end the following new paragraph:

“(3) UPDATING RISK ADJUSTMENT METHODOLOGIES TO ACCOUNT FOR PART D MODERNIZATION REDESIGN.—The Secretary shall update the risk adjustment methodologies used to adjust bid amounts pursuant to this subsection as appropriate to take into account changes in benefits under this part pursuant to the amendments made by section 121 of the Lowering Prescription Drug Prices for America’s Seniors and Families Act of 2020”..”.

(g) Conforming amendments.—

(1) Section 1860D–2 of the Social Security Act (42 U.S.C. 1395w–102) is amended—

(A) in subsection (a)(2)(A)(i)(I), by striking “, or an increase in the initial” and inserting “or for a year preceding 2022 an increase in the initial”;

(B) in subsection (c)(1)(C)—

(i) in the subparagraph heading, by striking “at initial coverage limit”; and

(ii) by inserting “for a year preceding 2022 or the annual out-of-pocket threshold specified in subsection (b)(4)(B) for the year for 2022 and each subsequent year” after “subsection (b)(3) for the year” each place it appears;

(C) in subsection (d)(1)(A), by striking “or an initial” and inserting “or for a year preceding 2022 an initial”.

(2) Section 1860D–4(a)(4)(B)(i) of the Social Security Act (42 U.S.C. 1395w–104(a)(4)(B)) is amended by striking “the initial” and inserting “for a year preceding 2022, the initial”.

(3) Section 1860D–14(a) of the Social Security Act (42 U.S.C. 1395w–114(a)) is amended—

(A) in paragraph (1)—

(i) in subparagraph (C), by striking “The continuation” and inserting “For a year preceding 2022, the continuation”;

(ii) in subparagraph (E), by striking “The elimination” and inserting “For a year preceding 2022, the elimination”; and

(iii) in subparagraph (D)(iii), by striking “1860D–2(b)(4)(A)(i)(I)” and inserting “1860D–2(b)(4)(A)(i)(I)(aa)”; and

(B) in paragraph (2)—

(i) in subparagraph (C), by striking “The continuation” and inserting “For a year preceding 2022, the continuation”; and

(ii) in subparagraph (E)—

(I) by inserting “for a year preceding 2022,” after “subsection (c)”; and

(II) by striking “1860D–2(b)(4)(A)(i)(I)” and inserting “1860D–2(b)(4)(A)(i)(I)(aa)”.

(4) Section 1860D–21(d)(7) of the Social Security Act (42 U.S.C. 1395w–131(d)(7)) is amended by striking “section 1860D–2(b)(B)(4)(B)(i)” and inserting “section 1860D–2(b)(B)(4)(C)(i)”.

(5) Section 1860D–22(a)(2)(A) of the Social Security Act (42 U.S.C. 1395w–132(a)(2)(A)) is amended—

(A) by striking “the value of any discount” and inserting the following: “the value of—

“(i) for years prior to 2022, any discount”;

(B) in clause (i), as inserted by subparagraph (A) of this paragraph, by striking the period at the end and inserting “; and”; and

(C) by adding at the end the following new clause:

“(ii) for 2022 and each subsequent year, any discount provided pursuant to section 1860D–14B.”.

(6) Section 1860D–41(a)(6) of the Social Security Act (42 U.S.C. 1395w–151(a)(6)) is amended—

(A) by inserting “for a year before 2022” after “1860D–2(b)(3)”; and

(B) by inserting “for such year” before the period.

(7) Section 1860D–43(a)(1) of the Social Security Act (42 U.S.C. 1395w–153(a)(1)) is amended to read as follows:

“(1) participate in—

“(A) for 2011 through 2021, the Medicare coverage gap discount program under section 1860D–14A; and

“(B) for 2022 and each subsequent year, the manufacturer discount program under section 1860D–14B;”.

(h) Effective date.—The amendments made by this section shall apply to plan year 2022 and subsequent plan years.

If any provision of this Act, an amendment made by this Act, or the application of such provision or amendment to any person or circumstance is held to be unconstitutional, the remainder of this Act, the amendments made by this Act, and the application of the provisions of such Act or amendments to any person or circumstance shall not be affected.