“(a) In general.—The Secretary shall establish a Drug Price Negotiation Program (in this part referred to as the ‘program’). Under the program, with respect to each price applicability period, the Secretary shall—

“(1) publish a list of negotiation-eligible drugs and selected drugs in accordance with section 1192;

“(2) enter into agreements with manufacturers of selected drugs with respect to such period, in accordance with section 1193;

“(3) negotiate and, if applicable, renegotiate maximum fair prices for such selected drugs, in accordance with section 1194; and

“(4) carry out the administrative duties described in section 1196.

“(b) Definitions relating to timing.—For purposes of this part:

“(1) INITIAL PRICE APPLICABILITY YEAR.—The term ‘initial price applicability year’ means a year (beginning with 2025).

“(2) PRICE APPLICABILITY PERIOD.—The term ‘price applicability period’ means, with respect to a qualifying single source drug, the period beginning with the first initial price applicability year with respect to which such drug is a selected drug and ending with the last year during which the drug is a selected drug.

“(3) SELECTED DRUG PUBLICATION DATE.—The term ‘selected drug publication date’ means, with respect to each initial price applicability year, February 1 of the year that begins 2 years prior to such year.

“(4) NEGOTIATION PERIOD.—The term ‘negotiation period’ means, with respect to an initial price applicability year with respect to a selected drug, the period—

“(A) beginning on the sooner of—

“(i) the date on which the manufacturer of the drug and the Secretary enter into an agreement under section 1193 with respect to such drug; or

“(ii) February 28 following the selected drug publication date with respect to such selected drug; and

“(B) ending on November 1 of the year that begins 2 years prior to the initial price applicability year.

“(c) Other definitions.—For purposes of this part:

“(1) MAXIMUM FAIR PRICE ELIGIBLE INDIVIDUAL.—The term ‘maximum fair price eligible individual’ means, with respect to a selected drug—

“(A) in the case such drug is dispensed to the individual at a pharmacy, by a mail order service, or by another dispenser, an individual who is enrolled under a prescription drug plan under part D of title XVIII or an MA–PD plan under part C of such title if coverage is provided under such plan for such selected drug; and

“(B) in the case such drug is furnished or administered to the individual by a hospital, physician, or other provider of services or supplier, an individual who is enrolled under part B of title XVIII, including an individual who is enrolled under an MA plan under part C of such title, if such selected drug is covered under such part.

“(2) MAXIMUM FAIR PRICE.—The term ‘maximum fair price’ means, with respect to a year during a price applicability period and with respect to a selected drug (as defined in section 1192(c)) with respect to such period, the price published pursuant to section 1195 in the Federal Register for such drug and year.

“(3) UNIT.—The term ‘unit’ means, with respect to a drug or biological, the lowest identifiable amount (such as a capsule or tablet, milligram of molecules, or grams) of the drug or biological that is dispensed or furnished. The determination of a unit, with respect to a drug or biological, pursuant to this paragraph shall not be subject to administrative or judicial review.

“(4) TOTAL EXPENDITURES.—The term ‘total expenditures’ includes, in the case of expenditures with respect to part D of title XVIII, ingredient costs, dispensing fees, sales tax, and if applicable, vaccine administration fees. The term ‘total expenditures’ excludes, in the case of expenditures with respect to part B of such title, expenditures for a drug or biological that are bundled or packaged into the payment for another service.

“(a) In general.—Not later than the selected drug publication date with respect to an initial price applicability year, in accordance with subsection (b), the Secretary shall select and publish in the Federal Register a list of—

“(1) (A) with respect to the initial price applicability year 2025, not more than 10 negotiation-eligible drugs described in subparagraph (A)(i) of subsection (d)(1), but not subparagraph (B) of such subsection, with respect to such year;

“(B) with respect to the initial price applicability year 2026, not more than 15 negotiation-eligible drugs described in subparagraph (A)(i) of subsection (d)(1), but not subparagraph (B) of such subsection, with respect to such year;

“(C) with respect to the initial price applicability year 2027, not more than 15 negotiation-eligible drugs described in subparagraph (A) of subsection (d)(1), but not subparagraph (B) of such subsection, with respect to such year; and

“(D) with respect to the initial price applicability year 2028 or a subsequent year, not more than 20 negotiation-eligible drugs described in subparagraph (A) of subsection (d)(1), but not subparagraph (B) of such subsection, with respect to such year; and

“(2) all negotiation-eligible drugs described in subparagraph (B) of such subsection with respect to such year.

Subject to subsection (c)(2) and section 1194(f)(5), each drug published on the list pursuant to the previous sentence shall be subject to the negotiation process under section 1194 for the negotiation period with respect to such initial price applicability year (and the renegotiation process under such section as applicable for any subsequent year during the applicable price applicability period).

“(b) Selection of drugs.—

“(1) IN GENERAL.—In carrying out subsection (a)(1), subject to paragraph (2), the Secretary shall, with respect to an initial price applicability year—

“(A) rank a combined list of negotiation-eligible drugs described in subsection (d)(1)(A) according to the total expenditures for such drugs under parts B and D of title XVIII, as determined by the Secretary, during the most recent period of 12 months prior to the selected drug publication date (but ending not later than October 31 of the year prior to the year of such drug publication date), with respect to such year, for which data are available, with the negotiation-eligible drugs with the highest total expenditures being ranked the highest; and

“(B) select from such ranked combined list for inclusion on the published list described in subsection (a) with respect to such year the negotiation-eligible drugs with the highest such rankings.

“(2) HIGH SPEND PART D DRUGS FOR 2025 AND 2026.—With respect to the initial price applicability year 2025 and with respect to the initial price applicability year 2026, the Secretary shall apply paragraph (1) as if the reference to ‘negotiation-eligible drugs described in subsection (d)(1)(A)’ were a reference to ‘negotiation-eligible drugs described in subsection (d)(1)(A)(i)’ and as if the reference to ‘total expenditures for such drugs under parts B and D of title XVIII’ were a reference to ‘total expenditures for such drugs under part D of title XVIII’.

“(c) Selected drug.—

“(1) IN GENERAL.—For purposes of this part, consistent with subsection (e)(2) and subject to paragraph (2), each negotiation-eligible drug included on the list published under subsection (a) with respect to an initial price applicability year shall be referred to as a ‘selected drug’ with respect to such year and each subsequent year beginning before the first year that begins after the date on which the Secretary determines at least one drug or biological product—

“(A) is approved or licensed (as applicable)—

“(i) under section 505(j) of the Federal Food, Drug, and Cosmetic Act using such drug as the listed drug; or

“(ii) under section 351(k) of the Public Health Service Act using such drug as the reference product; and

“(B) is marketed pursuant to such approval or licensure.

“(2) CLARIFICATION.—A negotiation-eligible drug—

“(A) that is included on the list published under subsection (a) with respect to an initial price applicability year; and

“(B) for which the Secretary makes a determination described in paragraph (1) before or during the negotiation period with respect to such initial price applicability year,

shall not be subject to the negotiation process under section 1194 with respect to such negotiation period and shall continue to be considered a selected drug under this part with respect to the number of negotiation-eligible drugs published on the list under subsection (a) with respect to such initial price applicability year.

“(d) Negotiation-Eligible drug.—

“(1) IN GENERAL.—For purposes of this part, subject to paragraph (2), the term ‘negotiation-eligible drug’ means, with respect to the selected drug publication date with respect to an initial price applicability year, a qualifying single source drug, as defined in subsection (e), that is described in either of the following subparagraphs (or, with respect to the initial price applicability year 2025 or 2026, that is described in subparagraph (A)(i) or (B)):

“(A) HIGH SPEND DRUGS.—The qualifying single source drug is, determined in accordance with subsection (e)(2)—

“(i) among the 50 qualifying single source drugs with the highest total expenditures under part D of title XVIII, as determined by the Secretary in accordance with paragraph (3), during the most recent period for which data are available of at least 12 months prior to the selected drug publication date (but ending no later than October 31 of the year prior to the year of such drug publication date), with respect to such year; or

“(ii) among the 50 qualifying single source drugs with the highest total expenditures under part B of title XVIII, as determined by the Secretary in accordance with paragraph (3), during such most recent period, as described in clause (i).

“(B) INSULIN.—The qualifying single source drug is described in subsection (e)(1)(C).

“(2) EXCEPTION FOR SMALL BIOTECH DRUGS.—

“(A) IN GENERAL.—Subject to subparagraph (C), the term ‘negotiation-eligible drug’ shall not include, with respect to the initial price applicability years 2025, 2026, and 2027, a qualifying single source drug that meets either of the following:

“(i) PART D DRUGS.—The total expenditures for the qualifying single source drug under part D of title XVIII, as determined by the Secretary in accordance with paragraph (3), during 2021—

“(I) are equal to or less than 1 percent of the total expenditures under such part D, as so determined, for all covered part D drugs during such year; and

“(II) are equal to at least 80 percent of the total expenditures under such part D, as so determined, for all covered part D drugs for which the manufacturer of the drug has an agreement in effect under section 1860D–14A during such year.

“(ii) PART B DRUGS.—The total expenditures for the qualifying single source drug under part B of title XVIII, as determined by the Secretary in accordance with paragraph (3), during 2021—

“(I) are equal to or less than 1 percent of the total expenditures under such part B, as so determined, for all qualifying single source drugs covered under such part B during such year; and

“(II) are equal to at least 80 percent of the total expenditures under such part B, as so determined, for all qualifying single source drugs of the manufacturer that are covered under such part B during such year.

“(B) CLARIFICATIONS RELATING TO MANUFACTURERS.—

“(i) AGGREGATION RULE.—All persons treated as a single employer under subsection (a) or (b) of section 52 of the Internal Revenue Code of 1986 shall be treated as one manufacturer for purposes of this paragraph.

“(ii) LIMITATION.—A qualifying single source drug described in subparagraph (A) shall not include a qualifying single source drug of a manufacturer if such manufacturer is acquired after 2021 by another manufacturer that does not meet the definition of a specified manufacturer under section 1860D–14C(g)(4)(B)(ii), effective at the beginning of the plan year immediately following such acquisition or, in the case of an acquisition before 2024, effective January 1, 2024.

“(C) DRUGS NOT INCLUDED AS SMALL BIOTECH DRUGS.—The following shall not be considered a qualifying single source drug described in subparagraph (A):

“(i) A vaccine that is licensed under section 351 of the Public Health Service Act and is marketed pursuant to such section.

“(ii) A new formulation, such as an extended release formulation, of a qualifying single source drug.

“(iii) A qualifying single source drug described in subsection (e)(1)(C).

“(3) CLARIFICATIONS AND DETERMINATIONS.—

“(A) PREVIOUSLY SELECTED DRUGS AND SMALL BIOTECH DRUGS EXCLUDED.—In applying clauses (i) and (ii) of paragraph (1)(A), the Secretary shall not consider or count—

“(i) drugs that are already selected drugs; and

“(ii) for initial price applicability years 2025, 2026, and 2027, qualifying single source drugs described in paragraph (2)(A).

“(B) USE OF DATA.—In determining whether a qualifying single source drug satisfies any of the criteria described in paragraph (1) or (2), the Secretary shall use data that is aggregated across dosage forms and strengths of the drug, including new formulations of the drug, such as an extended release formulation, and not based on the specific formulation or package size or package type of the drug.

“(4) PUBLICATION.—Not later than the selected drug publication date with respect to an initial price applicability year, the Secretary shall publish in the Federal Register a list of negotiation-eligible drugs with respect to such selected drug publication date.

“(e) Qualifying single source drug.—

“(1) IN GENERAL.—For purposes of this part, the term ‘qualifying single source drug’ means, with respect to an initial price applicability year, subject to paragraphs (2) and (3), a covered part D drug (as defined in section 1860D–2(e)) that is described in any of the following or a drug or biological product covered under part B of title XVIII that is described in any of the following:

“(A) DRUG PRODUCTS.—A drug—

“(i) that is approved under section 505(c) of the Federal Food, Drug, and Cosmetic Act and is marketed pursuant to such approval;

“(ii) for which, as of the selected drug publication date with respect to such initial price applicability year, at least 7 years will have elapsed since the date of such approval; and

“(iii) that is not the listed drug for any drug that is approved and marketed under section 505(j) of such Act.

“(B) BIOLOGICAL PRODUCTS.—A biological product—

“(i) that is licensed under section 351(a) of the Public Health Service Act and is marketed under section 351 of such Act;

“(ii) for which, as of the selected drug publication date with respect to such initial price applicability year, at least 11 years will have elapsed since the date of such licensure; and

“(iii) that is not the reference product for any biological product that is licensed and marketed under section 351(k) of such Act.

“(C) INSULIN PRODUCT.—Any insulin product that is approved under section 505 of the Federal Food, Drug, and Cosmetic Act or licensed under section 351 of the Public Health Service Act and marketed pursuant to such approval or licensure, including any insulin product that has been deemed to be licensed under section 351 of the Public Health Service Act pursuant to section 7002(e)(4) of the Biologics Price Competition and Innovation Act of 2009 and is marketed pursuant to such section, regardless of whether such insulin product would be described in subparagraph (A) or (B).

“(2) TREATMENT OF AUTHORIZED GENERIC DRUGS.—

“(A) IN GENERAL.—In the case of a qualifying single source drug described in subparagraph (A) or (B) of paragraph (1) that is the listed drug (as such term is used in section 505(j) of the Federal Food, Drug, and Cosmetic Act) or the reference product (as defined in section 351(i) of the Public Health Service Act), with respect to an authorized generic drug, in applying the provisions of this part, such authorized generic drug and such listed drug or reference product shall be treated as the same qualifying single source drug.

“(B) AUTHORIZED GENERIC DRUG DEFINED.—For purposes of this paragraph, the term ‘authorized generic drug’ means—

“(i) in the case of a drug, an authorized generic drug (as such term is defined in section 505(t)(3) of the Federal Food, Drug, and Cosmetic Act); and

“(ii) in the case of a biological product, a reference product (as such term is defined in section 351(i) of the Public Health Service Act) that—

“(I) has been licensed under section 351(a) of such Act; and

“(II) is marketed, sold, or distributed directly or indirectly to retail class of trade under a different labeling, packaging (other than repackaging as the reference product in blister packs, unit doses, or similar packaging for use in institutions), product code, labeler code, trade name, or trade mark than the reference product.

“(3) EXCLUSIONS.—In this part, the term ‘qualifying single source drug’ does not include any of the following:

“(A) CERTAIN ORPHAN DRUGS.—A drug that is designated as a drug for only one rare disease or condition under section 526 of the Federal Food, Drug, and Cosmetic Act and for which the only approved indication (or indications) is for such disease or condition.

“(B) LOW SPEND MEDICARE DRUGS.—A drug or biological product (other than an insulin product described in paragraph (1)(C)) with respect to which the total expenditures under parts B and D of title XVIII, as determined by the Secretary, during the most recent period for which data are available of at least 12 months prior to the selected drug publication date (but ending no later than October 31 of the year prior to the year of such drug publication date), with respect to such year is less than—

“(i) with respect to 2021, $200,000,000; or

“(ii) with respect to a subsequent year, the dollar amount specified in this subparagraph for the previous year increased by the annual percentage increase in the consumer price index (all items; U.S. city average) as of December of such previous year.

“(f) No administrative or judicial review of determinations and selections.—The determination of negotiation-eligible drugs under subsection (d) and the selection of drugs under this section are not subject to administrative or judicial review.

“(a) In general.—For purposes of section 1191(a)(2), the Secretary shall enter into agreements with manufacturers of selected drugs with respect to a price applicability period, by not later than February 28 following the selected drug publication date with respect to such selected drug, under which—

“(1) during the negotiation period for the initial price applicability year for the selected drug, the Secretary and manufacturer, in accordance with section 1194, negotiate to determine (and, by not later than the last date of such period, agree to) a maximum fair price for such selected drug of the manufacturer in order for the manufacturer to provide access to such price—

“(A) to maximum fair price eligible individuals who with respect to such drug are described in subparagraph (A) of section 1191(c)(1) and are dispensed such drug (and to pharmacies, mail order services, and other dispensers, with respect to such maximum fair price eligible individuals who are dispensed such drugs) during, subject to subparagraph (2), the price applicability period; and

“(B) to hospitals, physicians, and other providers of services and suppliers with respect to maximum fair price eligible individuals who with respect to such drug are described in subparagraph (B) of such section and are furnished or administered such drug during, subject to subparagraph (2), the price applicability period;

“(2) the Secretary and the manufacturer shall, in accordance with section 1194, renegotiate (and, by not later than the last date of such period, agree to) the maximum fair price for such drug, in order for the manufacturer to provide access to such maximum fair price (as so renegotiated)—

“(A) to maximum fair price eligible individuals who with respect to such drug are described in subparagraph (A) of section 1191(c)(1) and are dispensed such drug (and to pharmacies, mail order services, and other dispensers, with respect to such maximum fair price eligible individuals who are dispensed such drugs) during any year during the price applicability period (beginning after such renegotiation) with respect to such selected drug; and

“(B) to hospitals, physicians, and other providers of services and suppliers with respect to maximum fair price eligible individuals who with respect to such drug are described in subparagraph (B) of such section and are furnished or administered such drug during any year described in subparagraph (A);

“(3) access to the maximum fair price (including as renegotiated pursuant to paragraph (2)), with respect to such a selected drug, shall be provided by the manufacturer to—

“(A) maximum fair price eligible individuals, who with respect to such drug are described in subparagraph (A) of section 1191(c)(1), at the pharmacy, mail order service, or other dispenser at the point-of-sale of such drug (and shall be provided by the manufacturer to the pharmacy, mail order service, or other dispenser, with respect to such maximum fair price eligible individuals who are dispensed such drugs), as described in paragraph (1)(A) or (2)(A), as applicable; and

“(B) hospitals, physicians, and other providers of services and suppliers with respect to maximum fair price eligible individuals who with respect to such drug are described in subparagraph (B) of such section and are furnished or administered such drug, as described in paragraph (1)(B) or (2)(B), as applicable;

“(4) the manufacturer, subject to subsection (d), submits to the Secretary, through an online portal established by the Secretary or other form and manner specified by the Secretary, for the negotiation period for the price applicability period (and, if applicable, before any period of renegotiation pursuant to section 1194(f)) with respect to such drug—

“(A) information on the non-Federal average manufacturer price for the drug for the applicable year or period; and

“(B) all other information that the Secretary requires to carry out the negotiation (or renegotiation process) under this part, including information described in section 1194(e)(1); and

“(5) the manufacturer complies with requirements imposed by the Secretary for purposes of administering the program, including with respect to the duties described in section 1196.

“(b) Agreement in effect until drug is no longer a selected drug.—An agreement entered into under this section shall be effective, with respect to a selected drug, until such drug is no longer considered a selected drug under section 1192(c).

“(c) Confidentiality of information.—Information submitted to the Secretary under this part by a manufacturer of a selected drug that is proprietary information of such manufacturer (as determined by the Secretary) shall be used only by the Secretary or disclosed to and used by the Comptroller General of the United States or the Medicare Payment Advisory Commission for purposes of carrying out this part.

“(d) Implementation for 2025 and 2026.—Notwithstanding any other provision of this part, the Secretary shall implement this section for 2025 and 2026 by program instruction or otherwise.

“(a) In general.—For purposes of this part, under an agreement under section 1193 between the Secretary and a manufacturer of a selected drug, with respect to the period for which such agreement is in effect and in accordance with subsections (b), (c), and (d), the Secretary and the manufacturer—

“(1) shall during the negotiation period with respect to such drug, in accordance with this section, negotiate a maximum fair price for such drug for the purpose described in section 1193(a)(1); and

“(2) renegotiate, in accordance with the process specified pursuant to subsection (f), such maximum fair price for such drug if such drug is a renegotiation-eligible drug under such subsection.

“(b) Negotiation process requirements.—

“(1) METHODOLOGY AND PROCESS.—The Secretary shall develop and use a consistent methodology and process, in accordance with paragraph (2), for negotiations under subsection (a) that aims to achieve the lowest maximum fair price for each selected drug.

“(2) SPECIFIC ELEMENTS OF NEGOTIATION PROCESS.—As part of the negotiation process under this section, with respect to a selected drug and the negotiation period with respect to the initial price applicability year with respect to such drug, the following shall apply:

“(A) SUBMISSION OF INFORMATION.—Not later than March 1 of the year of the selected drug publication date, with respect to the selected drug, the manufacturer of the drug shall submit to the Secretary, in accordance with section 1193(a)(4), the information described in such section.

“(B) INITIAL OFFER BY SECRETARY.—Not later than the June 1 following the selected drug publication date, the Secretary shall provide the manufacturer of a selected drug with a written initial offer that contains the Secretary’s proposal for the maximum fair price of the drug and a list of the considerations described in section 1194(e) that were used in developing such offer.

“(C) RESPONSE TO INITIAL OFFER.—

“(i) IN GENERAL.—Not later than 30 days after the date of receipt of an initial offer under subparagraph (B), the manufacturer shall either accept such offer or propose a counteroffer to such offer.

“(ii) COUNTEROFFER REQUIREMENTS.—If a manufacturer proposes a counteroffer, such counteroffer—

“(I) shall be in writing; and

“(II) shall be justified based on the factors described in subsection (e).

“(D) RESPONSE TO COUNTEROFFER.—After receiving a counteroffer under subparagraph (C), the Secretary shall respond in writing to such counteroffer.

“(E) DEADLINE.—All negotiations shall end prior to the first day of November following the selected drug publication date, with respect to the initial price applicability year.

“(F) LIMITATIONS ON OFFER AMOUNT.—In negotiating the maximum fair price of a selected drug, with respect to an initial price applicability year for the selected drug, and, as applicable, in renegotiating the maximum fair price for such drug, with respect to a subsequent year during the price applicability period for such drug, the Secretary shall not offer (or agree to a counteroffer for) a maximum fair price for the selected drug that—

“(i) exceeds the ceiling determined under subsection (c) for the selected drug and year; or

“(ii) as applicable, is less than the floor determined under subsection (d) for the selected drug and year.

“(G) TREATMENT OF DETERMINATION.—The establishment of a maximum fair price under this section is not subject to administrative or judicial review.

“(c) Ceiling for maximum fair price.—

“(1) IN GENERAL.—The maximum fair price negotiated under this section for a selected drug, with respect to the first year of the price applicability period with respect to such drug, shall not exceed the applicable percent described in paragraph (2), with respect to such drug, of the following:

“(A) INITIAL PRICE APPLICABILITY YEAR 2025.—In the case of a selected drug with respect to which such initial price applicability year is 2025, the average of the non-Federal average manufacturer price for such drug for the first 3 calendar quarters of 2021 (or, in the case that there is not a non-Federal average manufacturer price available for such drug for any of such first 3 calendar quarters of 2021, for the first full year following the market entry for such drug), increased by the percentage increase in the consumer price index for all urban consumers (all items; United States city average) from September 2021 (or such first full year following the market entry), as applicable, to the year prior to the selected drug publication date with respect to such initial price applicability year.

“(B) INITIAL PRICE APPLICABILITY YEAR 2026 AND SUBSEQUENT YEARS.—In the case of a selected drug with respect to which such initial price applicability year is 2026 or a subsequent year, the lower of—

“(i) the average of the non-Federal average manufacturer price for such drug for the first 3 calendar quarters of 2021 (or, in the case that there is not a non-Federal average manufacturer price available for such drug for any of such first 3 calendar quarters of 2021, for the first full year following the market entry for such drug), increased by the percentage increase in the consumer price index for all urban consumers (all items; United States city average) from September 2021 (or such first full year following the market entry), as applicable, to the year prior to the selected drug publication date with respect to such initial price applicability year; or

“(ii) the non-Federal average manufacturer price for such drug for the year prior to the selected drug publication date with respect to such initial price applicability year.

“(2) APPLICABLE PERCENT DESCRIBED.—For purposes of paragraph (1), the applicable percent described in this paragraph is the following:

“(A) SHORT-MONOPOLY DRUGS.—With respect to a selected drug (other than a post-exclusivity drug and a long-monopoly drug), 75 percent.

“(B) POST-EXCLUSIVITY DRUGS.—With respect to a post-exclusivity drug, 65 percent.

“(C) LONG-MONOPOLY DRUGS.—With respect to a long-monopoly drug, 40 percent.

“(3) POST-EXCLUSIVITY DRUG DEFINED.—

“(A) IN GENERAL.—In this part, subject to subparagraph (B), the term ‘post-exclusivity drug’ means, with respect to an initial price applicability year, a selected drug for which at least 12 years, but fewer than 16 years, have elapsed since the date of approval of such drug under section 505(c) of the Federal Food, Drug, and Cosmetic Act or since the date of licensure of such drug under section 351(a) of the Public Health Service Act, as applicable.

“(B) EXCLUSIONS.—The term ‘post-exclusivity drug’ shall not include any of the following:

“(i) A vaccine that is licensed under section 351 of the Public Health Service Act and marketed pursuant to such section.

“(ii) A selected drug that had an agreement under this part with the Secretary prior to the initial price applicability year 2030.

“(C) CLARIFICATION.—Nothing in subparagraph (B)(ii) shall limit the transition of a selected drug described in paragraph (2)(A) to a long-monopoly drug if the selected drug meets the definition of a long-monopoly drug.

“(4) LONG-MONOPOLY DRUG DEFINED.—

“(A) IN GENERAL.—In this part, subject to subparagraph (B), the term ‘long-monopoly drug’ means, with respect to an initial price applicability year, a selected drug for which at least 16 years have elapsed since the date of approval of such drug under section 505(c) of the Federal Food, Drug, and Cosmetic Act or since the date of licensure of such drug under section 351(a) of the Public Health Service Act, as applicable.

“(B) EXCLUSION.—The term ‘long-monopoly drug’ shall not include a vaccine that is licensed under section 351 of the Public Health Service Act and marketed pursuant to such section.

“(5) NON-FEDERAL AVERAGE MANUFACTURER PRICE.—In this part, the term ‘non-Federal average manufacturer price’ has the meaning given such term in section 8126(h)(5) of title 38, United States Code.

“(d) Temporary floor for small biotech drugs.—In the case of a selected drug that is a qualifying single source drug described in section 1192(d)(2) and with respect to which the first initial price applicability year of the price applicability period with respect to such drug is 2028 or 2029, the maximum fair price negotiated under this section for such drug for such initial price applicability year may not be less than 66 percent of the average of the non-Federal average manufacturer price for such drug (as defined and applied in subsection (c)(4)) for the first 3 calendar quarters of 2021 (or, in the case that there is not a non-Federal average manufacturer price available for such drug for any of such first 3 calendar quarters of 2021, for the first full year following the market entry for such drug), increased by the percentage increase in the consumer price index for all urban consumers (all items; United States city average) from September 2021 (or such first full year following the market entry), as applicable, to the year prior to the selected drug publication date with respect to the initial price applicability year.

“(e) Considerations.—For purposes of negotiating the maximum fair price of a selected drug under this part with the manufacturer of the drug, the Secretary shall consider the following factors (and, with respect to post-exclusivity drugs and long-monopoly drugs, shall not consider factors other than those described in subparagraphs (B) and (C) of paragraph (1)):

“(1) MANUFACTURER-SPECIFIC INFORMATION.—The following information, with respect to such selected drug, including as submitted by the manufacturer:

“(A) Research and development costs of the manufacturer for the drug and the extent to which the manufacturer has recouped research and development costs.

“(B) Market data for the drug, including the distribution of sales across different programs and purchasers and projected future revenues for the drug.

“(C) Unit costs of production and distribution of the drug.

“(D) Prior Federal financial support for novel therapeutic discovery and development with respect to the drug.

“(E) Data on patents and on existing and pending exclusivity for the drug.

“(F) National sales data for the drug.

“(G) Information on clinical trials for the drug.

“(2) INFORMATION ON UNMET MEDICAL NEEDS AND ALTERNATIVE TREATMENTS.—The following information, with respect to such selected drug:

“(A) The extent to which the drug represents a therapeutic advance as compared to existing therapeutic alternatives and, to the extent such information is available, the costs of such existing therapeutic alternatives.

“(B) Information on approval by the Food and Drug Administration of alternative drug products or biological products.

“(C) Information on comparative effectiveness analysis for such products, taking into consideration the effects of such products on specific populations, such as individuals with disabilities, the elderly, the terminally ill, children, and other patient populations.

“(D) The extent to which the drug addresses unmet medical needs for a condition for which treatment or diagnosis is not addressed adequately by available therapy.

In considering information described in subparagraph (C), the Secretary shall not use evidence or findings from comparative clinical effectiveness research in a manner that treats extending the life of an elderly, disabled, or terminally ill individual as of lower value than extending the life of an individual who is younger, nondisabled, or not terminally ill.

“(3) ADDITIONAL INFORMATION.—Information submitted to the Secretary, in accordance with a process specified by the Secretary, by other parties that are affected by the establishment of a maximum fair price for the selected drug.

“(f) Renegotiation process.—

“(1) IN GENERAL.—In the case of a renegotiation-eligible drug (as defined in paragraph (2)) that is selected under paragraph (3), the Secretary shall provide for a process of renegotiation (for years (beginning with 2027) during the price applicability period, with respect to such drug) of the maximum fair price for such drug consistent with paragraph (4).

“(2) RENEGOTIATION-ELIGIBLE DRUG DEFINED.—In this section, the term ‘renegotiation-eligible drug’ means a selected drug that is any of the following:

“(A) ADDITION OF NEW INDICATION.—A selected drug for which a new indication is added to the drug.

“(B) CHANGE OF STATUS TO A POST-EXCLUSIVITY DRUG.—A selected drug that is described in section 1192(d)(1)(A) that—

“(i) is not a post-exclusivity drug or a long-monopoly drug; and

“(ii) for which there is a change in status to that of a post-exclusivity drug.

“(C) CHANGE OF STATUS TO A LONG-MONOPOLY DRUG.—A selected drug that is described in section 1192(d)(1)(A) that—

“(i) is not a long-monopoly drug; and

“(ii) for which there is a change in status to that of a long-monopoly drug.

“(D) MATERIAL CHANGES.—A selected drug for which the Secretary determines there has been a material change of factors described in paragraph (1) or (2) of subsection (e).

“(3) SELECTION OF DRUGS FOR RENEGOTIATION.—Each year the Secretary shall select among renegotiation-eligible drugs for renegotiation as follows:

“(A) ALL POST-EXCLUSIVITY NEGOTIATION-ELIGIBLE DRUGS.—The Secretary shall select all renegotiation-eligible drugs described in paragraph (2)(B).

“(B) ALL LONG-MONOPOLY NEGOTIATION-ELIGIBLE DRUGS.—The Secretary shall select all renegotiation-eligible drugs described in paragraph (2)(C).

“(C) REMAINING DRUGS.—Among the remaining renegotiation-eligible drugs described in subparagraphs (A) and (D) of paragraph (2), the Secretary shall select renegotiation-eligible drugs for which the Secretary expects renegotiation is likely to result in a significant change in the maximum fair price otherwise negotiated.

“(4) RENEGOTIATION PROCESS.—The Secretary shall specify the process for renegotiation of maximum fair prices with the manufacturer of a renegotiation-eligible drug selected for renegotiation under this subsection. Such process shall, to the extent practicable, be consistent with the methodology and process established under subsection (b) and in accordance with subsections (c) and (d), and for purposes of applying subsections (c) and (d), the reference to the first initial price applicability year of the price applicability period with respect to such drug shall be treated as the first initial price applicability year of such period for which the maximum fair price established pursuant to such renegotiation applies, including for applying subsection (c)(2)(B) in the case of renegotiation-eligible drugs described in paragraph (3)(A) of this subsection and subsection (c)(2)(C) in the case of renegotiation-eligible drugs described in paragraph (3)(B) of this subsection.

“(5) CLARIFICATION.—A renegotiation-eligible drug for which the Secretary makes a determination described in section 1192(c)(1) before or during the period of renegotiation shall not be subject to the renegotiation process under this section.

“(6) NO ADMINISTRATIVE OR JUDICIAL REVIEW.—The determination of renegotiation-eligible drugs under paragraph (2) and the selection of renegotiation-eligible drugs under paragraph (3) are not subject to administrative or judicial review.

“(g) Request for information.—For purposes of negotiating and, as applicable, renegotiating (including for purposes of determining whether to renegotiate) the maximum fair price of a selected drug under this part with the manufacturer of the drug, with respect to a price applicability period, and other relevant data for purposes of this section—

“(1) the Secretary shall, not later than the selected drug publication date with respect to the initial price applicability year of such period, request drug pricing information from the manufacturer of such selected drug, including information described in subsection (e)(1); and

“(2) by not later than March 1 following the selected drug publication date, the manufacturer of such selected drug shall submit to the Secretary such requested information in such form and manner as the Secretary requires.

The Secretary shall request, from the manufacturer or others, all additional information needed to carry out the negotiation and renegotiation process under this section.

“(h) Clarification.—In no case shall the maximum fair price negotiated under this section for a selected drug that is a qualifying single source drug described in subparagraph (A) or (B) of section 1192(e)(1) apply before—

“(1) in the case the selected drug is a qualifying single source drug described in such subparagraph (A), the date that is 9 years after the date on which the drug was approved under section 505(c) of the Federal Food, Drug, and Cosmetic Act; and

“(2) in the case the selected drug is a qualifying single source drug described in such subparagraph (B), the date that is 13 years after the date on which the drug was licensed under section 351(a) of the Public Health Service Act.

“(i) Implementation for 2025 and 2026.—Notwithstanding any other provision of this part, the Secretary shall implement this section for 2025 and 2026 by program instruction or otherwise.

“(a) In general.—With respect to an initial price applicability year and a selected drug with respect to such year—

“(1) not later than November 15 of the year that is 2 years prior to such initial price applicability year, the Secretary shall publish on CMS.gov the maximum fair price for such drug negotiated under this part with the manufacturer of such drug;

“(2) not later than November 30 of the year that is 2 years prior to such initial price applicability year, the Secretary shall publish in the Federal Register the maximum fair price for such drug described in paragraph (1); and

“(3) not later than March 1 of the year prior to such initial price applicability year, the Secretary shall publish in the Federal Register, subject to section 1193(c) and based on the considerations as described in section 1194(e), the explanation for the maximum fair price for such drug described in paragraphs (1) and (2).

“(b) Updates.—

“(1) SUBSEQUENT YEAR MAXIMUM FAIR PRICES.—For a selected drug, for each year subsequent to first initial price applicability year of the price applicability period with respect to such drug, with respect to which an agreement for such drug is in effect under section 1193, not later than November 30 of the year that is 2 years prior to such subsequent year, the Secretary shall publish in the Federal Register the maximum fair price applicable to such drug and year, which shall be—

“(A) subject to subparagraph (B), the amount equal to the maximum fair price published for such drug for the previous year, increased by the annual percentage increase in the consumer price index for all urban consumers (all items; U.S. city average) as of September of such previous year; or

“(B) in the case the maximum fair price for such drug was renegotiated, for the first year for which such price as so renegotiated applies, such renegotiated maximum fair price.

“(2) PRICES NEGOTIATED AFTER DEADLINE.—In the case of a selected drug with respect to an initial price applicability year for which the maximum fair price is determined under this part after the date of publication under this section, the Secretary shall publish such maximum fair price in the Federal Register by not later than 30 days after the date such maximum price is so determined.

“(a) Administrative duties.—

“(1) IN GENERAL.—For purposes of section 1191, the administrative duties described in this section are the following:

“(A) The establishment of procedures to ensure that the maximum fair price for a selected drug is applied before—

“(i) any coverage or financial assistance under other health benefit plans or programs that provide coverage or financial assistance for the purchase or provision of prescription drug coverage on behalf of maximum fair price eligible individuals; and

“(ii) any other discounts.

“(B) The establishment of procedures to compute and apply the maximum fair price across different strengths and dosage forms of a selected drug and not based on the specific formulation or package size or package type of the drug.

“(C) The establishment of procedures to carry out the provisions of this part, as applicable, with respect to—

“(i) maximum fair price eligible individuals who are enrolled under a prescription drug plan under part D of title XVIII or an MA–PD plan under part C of such title; and

“(ii) maximum fair price eligible individuals who are enrolled under part B of such title, including who are enrolled under an MA plan under part C of such title.

“(D) The establishment of a negotiation process and renegotiation process in accordance with section 1194, including a process for acquiring information described in subsection (e) of such section.

“(E) The establishment of an online portal which manufacturers shall be required to use to submit information described in section 1194(b)(2)(A).

“(F) The sharing with the Secretary of the Treasury of such information as is necessary to determine the tax imposed by section 4192 of the Internal Revenue Code of 1986 (relating to enforcement of this part).

“(G) The establishment of an attestation and verification process for purposes of applying section 1192(d)(2)(B).

“(2) MONITORING COMPLIANCE.—The Secretary shall monitor compliance by a manufacturer with the terms of an agreement under section 1193, including by establishing a mechanism through which violations of such terms shall be reported.

“(b) Implementation for 2025 and 2026.—Notwithstanding any other provision of this part, the Secretary shall implement this section for 2025 and 2026 by program instruction or otherwise.

“(a) Violations relating to offering of maximum fair price.—Any manufacturer of a selected drug that has entered into an agreement under section 1193, with respect to a year during the price applicability period with respect to such drug, that does not provide access to a price that is not more than the maximum fair price (or a lesser price) for such drug for such year—

“(1) to a maximum fair price eligible individual who with respect to such drug is described in subparagraph (A) of section 1191(c)(1) and who is dispensed such drug during such year (and to pharmacies, mail order services, and other dispensers, with respect to such maximum fair price eligible individuals who are dispensed such drugs); or

“(2) to a hospital, physician, or other provider of services or supplier with respect to maximum fair price eligible individuals who with respect to such drug is described in subparagraph (B) of such section and is furnished or administered such drug by such hospital, physician, or provider or supplier during such year,

shall be subject to a civil monetary penalty equal to ten times the amount equal to the product of the number of units of such drug so furnished, dispensed, or administered during such year and the difference between the price for such drug made available for such year by such manufacturer with respect to such individual or hospital, physician, provider of services, or supplier and the maximum fair price for such drug for such year.

“(b) Violations of certain terms of agreement.—Any manufacturer of a selected drug that has entered into an agreement under section 1193, with respect to a year during the price applicability period with respect to such drug, that is in violation of a requirement imposed pursuant to section 1193(a)(5), including the requirement to submit information pursuant to section 1193(a)(4), shall be subject to a civil monetary penalty equal to $1,000,000 for each day of such violation.

“(c) False information.—Any manufacturer that knowingly provides false information for the attestation process or verification process established pursuant to section 1196(a)(1)(H), shall be subject to a civil monetary penalty equal to $100,000,000 for each item of such false information.

“(d) Application.—The provisions of section 1128A (other than subsections (a) and (b)) shall apply to a civil monetary penalty under this section in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a).”.

“(a) Requirements.—

“(1) SECRETARIAL PROVISION OF INFORMATION.—Not later than 9 months after the end of each applicable year (as defined in subsection (g)(7)), subject to paragraph (3), the Secretary shall, for each part D rebatable drug, report to each manufacturer of such part D rebatable drug the following for such year:

“(A) The amount (if any) of the excess annual manufacturer price increase described in subsection (b)(1)(A)(ii) for each dosage form and strength with respect to such drug and year.

“(B) The rebate amount specified under subsection (b) for each dosage form and strength with respect to such drug and year.

“(2) MANUFACTURER REQUIREMENTS.—For each applicable year, the manufacturer of a part D rebatable drug, for each dosage form and strength with respect to such drug, not later than 30 days after the date of receipt from the Secretary of the information described in paragraph (1) for such year, shall provide to the Secretary a rebate that is equal to the amount specified in subsection (b) for such dosage form and strength with respect to such drug for such year.

“(3) TRANSITION RULE FOR REPORTING.—The Secretary may, for each rebatable covered part D drug, delay the timeframe for reporting the information and rebate amount described in subparagraphs (A) and (B) of such paragraph for the applicable year of 2023 until not later than September 30, 2025.

“(b) Rebate amount.—

“(1) IN GENERAL.—

“(A) CALCULATION.—For purposes of this section, the amount specified in this subsection for a dosage form and strength with respect to a part D rebatable drug and applicable year is, subject to subparagraph (C), paragraph (5)(B), and paragraph (6), the amount equal to the product of—

“(i) subject to subparagraph (B) of this paragraph, the total number of units that are used to calculate the average manufacturer price of such dosage form and strength with respect to such part D rebatable drug, as reported by the manufacturer of such drug under section 1927 for each month, with respect to such year; and

“(ii) the amount (if any) by which—

“(I) the annual manufacturer price (as determined in paragraph (2)) paid for such dosage form and strength with respect to such part D rebatable drug for the year; exceeds

“(II) the inflation-adjusted payment amount determined under paragraph (3) for such dosage form and strength with respect to such part D rebatable drug for the year.

“(B) EXCLUDED UNITS.—For purposes of subparagraph (A)(i), the Secretary shall exclude from the total number of units for a dosage form and strength with respect to a part D rebatable drug, with respect to an applicable year, the following:

“(i) Units of each dosage form and strength of such part D rebatable drug for which payment was made under a State plan under title XIX (or waiver of such plan), as reported by States under section 1927(b)(2)(A).

“(ii) Units of each dosage form and strength of such part D rebatable drug for which a rebate is paid under section 1847A(h).

“(C) EXEMPTION FOR SHORTAGES AND SEVERE SUPPLY CHAIN DISRUPTIONS.—The Secretary shall reduce or waive the amount under subparagraph (A) with respect to a part D rebatable drug that is described as currently in shortage on the shortage list in effect under section 506E of the Federal Food, Drug, and Cosmetic Act or in the case of a generic drug, when the Secretary determines there are severe supply chain disruptions.

“(2) DETERMINATION OF ANNUAL MANUFACTURER PRICE.—The annual manufacturer price determined under this paragraph for a dosage form and strength, with respect to a part D rebatable drug and an applicable year, is the sum of the products of—

“(A) the average manufacturer price (as defined in subsection (g)(6)) of such dosage form and strength, as calculated for a unit of such drug, with respect to each of the calendar quarters of such year; and

“(B) the ratio of—

“(i) the total number of units of such dosage form and strength reported under section 1927 with respect to each such calendar quarter of such year; to

“(ii) the total number of units of such dosage form and strength reported under section 1927 with respect to such year, as determined by the Secretary.

“(3) DETERMINATION OF INFLATION-ADJUSTED PAYMENT AMOUNT.—The inflation-adjusted payment amount determined under this paragraph for a dosage form and strength with respect to a part D rebatable drug for an applicable year, subject to paragraph (5), is—

“(A) the benchmark year manufacturer price determined under paragraph (4) for such dosage form and strength with respect to such drug and year; increased by

“(B) the percentage by which the applicable year CPI–U (as defined in subsection (g)(5)) for the year exceeds the benchmark period CPI–U (as defined in subsection (g)(4)).

“(4) DETERMINATION OF BENCHMARK YEAR MANUFACTURER PRICE.—The benchmark year manufacturer price determined under this paragraph for a dosage form and strength, with respect to a part D rebatable drug and an applicable year, is the sum of the products of—

“(A) the average manufacturer price (as defined in subsection (g)(6)) of such dosage form and strength, as calculated for a unit of such drug, with respect to each of the calendar quarters of the payment amount benchmark year (as defined in subsection (g)(3)); and

“(B) the ratio of—

“(i) the total number of units reported under section 1927 of such dosage form and strength with respect to each such calendar quarter of such payment amount benchmark year; to

“(ii) the total number of units reported under section 1927 of such dosage form and strength with respect to such payment amount benchmark year.

“(5) SPECIAL TREATMENT OF CERTAIN DRUGS AND EXEMPTION.—

“(A) SUBSEQUENTLY APPROVED DRUGS.—In the case of a part D rebatable drug first approved or licensed by the Food and Drug Administration after October 1, 2021, subparagraphs (A) and (B) of paragraph (4) shall be applied as if the term ‘payment amount benchmark year’ were defined under subsection (g)(3) as the first calendar year beginning after the day on which the drug was first marketed by any manufacturer and subparagraph (B) of paragraph (3) shall be applied as if the term ‘benchmark period CPI–U’ were defined under subsection (g)(4) as if the reference to ‘the month immediately prior to October 2021’ under such subsection were a reference to ‘January of the first year beginning after the date on which the drug was first marketed by any manufacturer’.

“(B) TREATMENT OF NEW FORMULATIONS.—

“(i) IN GENERAL.—In the case of a part D rebatable drug that is a line extension of a part D rebatable drug that is an oral solid dosage form, the Secretary shall establish a formula for determining the rebate amount under paragraph (1) and the inflation adjusted payment amount under paragraph (3) with respect to such part D rebatable drug and an applicable year, consistent with the formula applied under subsection (c)(2)(C) of section 1927 for determining a rebate obligation for a rebate period under such section.

“(ii) LINE EXTENSION DEFINED.—In this subparagraph, the term ‘line extension’ means, with respect to a part D rebatable drug, a new formulation of the drug, such as an extended release formulation, but does not include an abuse-deterrent formulation of the drug (as determined by the Secretary), regardless of whether such abuse-deterrent formulation is an extended release formulation.

“(C) SELECTED DRUGS.—In the case of a part D rebatable drug that is a selected drug (as defined in section 1192(c)) for a price applicability period (as defined in section 1191(b)(2)), in the case such drug is determined (pursuant to such section 1192(c)) to no longer be a selected drug, for each applicable year beginning after the price applicability period with respect to such drug, subparagraphs (A) and (B) of paragraph (4) shall be applied as if the term ‘payment amount benchmark year’ were defined under subsection (g)(3) as the last year beginning during such price applicability period with respect to such selected drug and subparagraph (B) of paragraph (3) shall be applied as if the term ‘benchmark period CPI–U’ were defined under subsection (g)(4) as if the reference to ‘the month immediately prior to October 1, 2021’ under such subsection were a reference to January of the last year beginning during such price applicability period with respect to such drug.

“(6) RECONCILIATION IN CASE OF REVISED AMP REPORTS.—The Secretary shall provide for a method and process under which, in the case of a manufacturer of a part D rebatable drug that submits revisions to information submitted under section 1927 by the manufacturer with respect to such drug, the Secretary determines, pursuant to such revisions, adjustments, if any, to the calculation of the amount specified in this subsection for a dosage form and strength with respect to such part D rebatable drug and an applicable year and reconciles any overpayments or underpayments in amounts paid as rebates under this subsection. Any identified underpayment shall be rectified by the manufacturer not later than 30 days after the date of receipt from the Secretary of information on such underpayment.

“(c) Rebate deposits.—Amounts paid as rebates under subsection (b) shall be deposited into the Medicare Prescription Drug Account in the Federal Supplementary Medical Insurance Trust Fund established under section 1841.

“(d) Information.—For purposes of carrying out this section, the Secretary shall use information submitted by manufacturers under section 1927(b)(3) and information submitted by States under section 1927(b)(2)(A).

“(e) Civil money penalty.—If a manufacturer of a part D rebatable drug has failed to comply with the requirement under subsection (a)(2) with respect to such drug for an applicable year, the manufacturer shall be subject to, in accordance with a process established by the Secretary pursuant to regulations, a civil money penalty in an amount equal to 125 percent of the amount specified in subsection (b) for such drug for such year. The provisions of section 1128A (other than subsections (a) (with respect to amounts of penalties or additional assessments) and (b)) shall apply to a civil money penalty under this subsection in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a).

“(f) No administrative or judicial review.—There shall be no administrative or judicial review of the following:

“(1) The determination of units under this section.

“(2) The determination of whether a drug is a part D rebatable drug under this section.

“(3) The calculation of the rebate amount under this section.

“(g) Definitions.—In this section:

“(1) PART D REBATABLE DRUG.—

“(A) IN GENERAL.—The term ‘part D rebatable drug’ means a drug or biological that would (without application of this section) be a covered part D drug, except such term shall, with respect to an applicable year, not include such a drug or biological if the average annual total cost under this part for such year per individual who uses such a drug or biological, as determined by the Secretary, is less than, subject to subparagraph (B), $100, as determined by the Secretary using the most recent data available or, if data is not available, as estimated by the Secretary.

“(B) INCREASE.—The dollar amount applied under subparagraph (A)—

“(i) for 2024, shall be the dollar amount specified under such subparagraph for 2023, increased by the percentage increase in the consumer price index for all urban consumers (United States city average) for the 12-month period beginning with January of 2023; and

“(ii) for a subsequent year, shall be the dollar amount specified in this subparagraph for the previous year, increased by the percentage increase in the consumer price index for all urban consumers (United States city average) for the 12-month period beginning with January of the previous year.

Any dollar amount specified under this subparagraph that is not a multiple of $10 shall be rounded to the nearest multiple of $10.

“(2) UNIT.—The term ‘unit’ means, with respect to a part D rebatable drug, the lowest dispensable amount (such as a capsule or tablet, milligram of molecules, or grams) of the part D rebatable drug, as reported under section 1927.

“(3) PAYMENT AMOUNT BENCHMARK YEAR.—The term ‘payment amount benchmark year’ means the year ending in the month immediately prior to October 1, 2021.

“(4) BENCHMARK PERIOD CPI–U.—The term ‘benchmark period CPI–U’ means the consumer price index for all urban consumers (United States city average) for the month immediately prior to October 2021.

“(5) APPLICABLE YEAR CPI–U.—The term ‘applicable year CPI–U’ means, with respect to an applicable year, the consumer price index for all urban consumers (United States city average) for January of such year.

“(6) AVERAGE MANUFACTURER PRICE.—The term ‘average manufacturer price’ has the meaning, with respect to a part D rebatable drug of a manufacturer, given such term in section 1927(k)(1), with respect to a covered outpatient drug of a manufacturer for a rebate period under section 1927.

“(7) APPLICABLE YEAR.—The term ‘applicable year’ means a calendar year beginning with 2023.

“(h) Implementation for 2023 and 2024.—Notwithstanding any other provision of this section, the Secretary shall implement this section for 2023 and 2024 by program instruction or otherwise.”.

“(a) Establishment.—The Secretary shall establish a manufacturer discount program (in this section referred to as the ‘program’). Under the program, the Secretary shall enter into agreements described in subsection (b) with manufacturers and provide for the performance of the duties described in subsection (c). The Secretary shall establish a model agreement for use under the program by not later than January 1, 2023, in consultation with manufacturers, and allow for comment on such model agreement.

“(b) Terms of agreement.—

“(1) IN GENERAL.—

“(A) AGREEMENT.—An agreement under this section shall require the manufacturer to provide, in accordance with this section, discounted prices for applicable drugs of the manufacturer that are dispensed to applicable beneficiaries on or after January 1, 2024.

“(B) CLARIFICATION.—Nothing in this section shall be construed as affecting—

“(i) the application of a coinsurance of 23 percent of the negotiated price, as applied under paragraph (2)(A) of section 1860D–2(b), for costs described in such paragraph; or

“(ii) the application of the copayment amount described in paragraph (4)(A) of such section, with respect to costs described in such paragraph.

“(C) TIMING OF AGREEMENT.—

“(i) SPECIAL RULE FOR 2024.—In order for an agreement with a manufacturer to be in effect under this section with respect to the period beginning on January 1, 2024, and ending on December 31, 2024, the manufacturer shall enter into such agreement not later than 30 days after the date of the establishment of a model agreement under subsection (a).

“(ii) 2025 AND SUBSEQUENT YEARS.—In order for an agreement with a manufacturer to be in effect under this section with respect to plan year 2025 or a subsequent plan year, the manufacturer shall enter into such agreement not later than a calendar quarter or semi-annual deadline established by the Secretary.

“(2) PROVISION OF APPROPRIATE DATA.—Each manufacturer with an agreement in effect under this section shall collect and have available appropriate data, as determined by the Secretary, to ensure that it can demonstrate to the Secretary compliance with the requirements under the program.

“(3) COMPLIANCE WITH REQUIREMENTS FOR ADMINISTRATION OF PROGRAM.—Each manufacturer with an agreement in effect under this section shall comply with requirements imposed by the Secretary or a third party with a contract under subsection (d)(3), as applicable, for purposes of administering the program, including any determination under subparagraph (A) of subsection (c)(1) or procedures established under such subsection (c)(1).

“(4) LENGTH OF AGREEMENT.—

“(A) IN GENERAL.—An agreement under this section shall be effective for an initial period of not less than 12 months and shall be automatically renewed for a period of not less than 1 year unless terminated under subparagraph (B).

“(B) TERMINATION.—

“(i) BY THE SECRETARY.—The Secretary shall provide for termination of an agreement under this section for a knowing and willful violation of the requirements of the agreement or other good cause shown. Such termination shall not be effective earlier than 30 days after the date of notice to the manufacturer of such termination. The Secretary shall provide, upon request, a manufacturer with a hearing concerning such a termination, and such hearing shall take place prior to the effective date of the termination with sufficient time for such effective date to be repealed if the Secretary determines appropriate.

“(ii) BY A MANUFACTURER.—A manufacturer may terminate an agreement under this section for any reason. Any such termination shall be effective, with respect to a plan year—

“(I) if the termination occurs before January 31 of a plan year, as of the day after the end of the plan year; and

“(II) if the termination occurs on or after January 31 of a plan year, as of the day after the end of the succeeding plan year.

“(iii) EFFECTIVENESS OF TERMINATION.—Any termination under this subparagraph shall not affect discounts for applicable drugs of the manufacturer that are due under the agreement before the effective date of its termination.

“(iv) NOTICE TO THIRD PARTY.—The Secretary shall provide notice of such termination to a third party with a contract under subsection (d)(3) within not less than 30 days before the effective date of such termination.

“(c) Duties described.—The duties described in this subsection are the following:

“(1) ADMINISTRATION OF PROGRAM.—Administering the program, including—

“(A) the determination of the amount of the discounted price of an applicable drug of a manufacturer;

“(B) the establishment of procedures to ensure that, not later than the applicable number of calendar days after the dispensing of an applicable drug by a pharmacy or mail order service, the pharmacy or mail order service is reimbursed for an amount equal to the difference between—

“(i) the negotiated price of the applicable drug; and

“(ii) the discounted price of the applicable drug;

“(C) the establishment of procedures to ensure that the discounted price for an applicable drug under this section is applied before any coverage or financial assistance under other health benefit plans or programs that provide coverage or financial assistance for the purchase or provision of prescription drug coverage on behalf of applicable beneficiaries as specified by the Secretary; and

“(D) providing a reasonable dispute resolution mechanism to resolve disagreements between manufacturers, applicable beneficiaries, and the third party with a contract under subsection (d)(3).

“(2) MONITORING COMPLIANCE.—

“(A) IN GENERAL.—The Secretary shall monitor compliance by a manufacturer with the terms of an agreement under this section.

“(B) NOTIFICATION.—If a third party with a contract under subsection (d)(3) determines that the manufacturer is not in compliance with such agreement, the third party shall notify the Secretary of such noncompliance for appropriate enforcement under subsection (e).

“(3) COLLECTION OF DATA FROM PRESCRIPTION DRUG PLANS AND MA–PD PLANS.—The Secretary may collect appropriate data from prescription drug plans and MA–PD plans in a timeframe that allows for discounted prices to be provided for applicable drugs under this section.

“(d) Administration.—

“(1) IN GENERAL.—Subject to paragraph (2), the Secretary shall provide for the implementation of this section, including the performance of the duties described in subsection (c).

“(2) LIMITATION.—In providing for the implementation of this section, the Secretary shall not receive or distribute any funds of a manufacturer under the program.

“(3) CONTRACT WITH THIRD PARTIES.—The Secretary shall enter into a contract with 1 or more third parties to administer the requirements established by the Secretary in order to carry out this section. At a minimum, the contract with a third party under the preceding sentence shall require that the third party—

“(A) receive and transmit information between the Secretary, manufacturers, and other individuals or entities the Secretary determines appropriate;

“(B) receive, distribute, or facilitate the distribution of funds of manufacturers to appropriate individuals or entities in order to meet the obligations of manufacturers under agreements under this section;

“(C) provide adequate and timely information to manufacturers, consistent with the agreement with the manufacturer under this section, as necessary for the manufacturer to fulfill its obligations under this section; and

“(D) permit manufacturers to conduct periodic audits, directly or through contracts, of the data and information used by the third party to determine discounts for applicable drugs of the manufacturer under the program.

“(4) PERFORMANCE REQUIREMENTS.—The Secretary shall establish performance requirements for a third party with a contract under paragraph (3) and safeguards to protect the independence and integrity of the activities carried out by the third party under the program under this section.

“(5) IMPLEMENTATION.—The Secretary shall implement the program under this section for 2024 and 2025 by program instruction or otherwise.

“(e) Enforcement.—

“(1) AUDITS.—Each manufacturer with an agreement in effect under this section shall be subject to periodic audit by the Secretary.

“(2) CIVIL MONEY PENALTY.—

“(A) IN GENERAL.—A manufacturer that fails to provide discounted prices for applicable drugs of the manufacturer dispensed to applicable beneficiaries in accordance with such agreement shall be subject to a civil money penalty for each such failure in an amount the Secretary determines is equal to the sum of—

“(i) the amount that the manufacturer would have paid with respect to such discounts under the agreement, which will then be used to pay the discounts which the manufacturer had failed to provide; and

“(ii) 25 percent of such amount.

“(B) APPLICATION.—The provisions of section 1128A (other than subsections (a) and (b)) shall apply to a civil money penalty under this paragraph in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a).

“(f) Clarification regarding availability of other covered part D drugs.—Nothing in this section shall prevent an applicable beneficiary from purchasing a covered part D drug that is not an applicable drug (including a generic drug or a drug that is not on the formulary of the prescription drug plan or MA–PD plan that the applicable beneficiary is enrolled in).

“(g) Definitions.—In this section:

“(1) APPLICABLE BENEFICIARY.—The term ‘applicable beneficiary’ means an individual who, on the date of dispensing a covered part D drug—

“(A) is enrolled in a prescription drug plan or an MA–PD plan;

“(B) is not enrolled in a qualified retiree prescription drug plan; and

“(C) has incurred costs, as determined in accordance with section 1860D–2(b)(4)(C) as if clause (iii) of such section included a reference to costs reimbursed through insurance, a group health plan, or certain other third-party payment arrangements, for covered part D drugs in the year that exceed—

“(i) in the case of an individual not described in clause (ii) or (iii), the annual deductible for such year, as specified in section 1860D–2(b)(1);

“(ii) in the case of a subsidy eligible individual described in section 1860D–14(a)(1), the annual deductible for such year, as specified in subparagraph (B) of such section; and

“(iii) in the case of a subsidy eligible individual described in section 1860D–14(a)(2), the annual deductible for such year, as specified in subparagraph (B) of such section.

“(2) APPLICABLE DRUG.—The term ‘applicable drug’, with respect to an applicable beneficiary—

“(A) means a covered part D drug—

“(i) approved under a new drug application under section 505(c) of the Federal Food, Drug, and Cosmetic Act or, in the case of a biologic product, licensed under section 351 of the Public Health Service Act; and

“(ii) (I) if the PDP sponsor of the prescription drug plan or the MA organization offering the MA–PD plan uses a formulary, which is on the formulary of the prescription drug plan or MA–PD plan that the applicable beneficiary is enrolled in;

“(II) if the PDP sponsor of the prescription drug plan or the MA organization offering the MA–PD plan does not use a formulary, for which benefits are available under the prescription drug plan or MA–PD plan that the applicable beneficiary is enrolled in; or

“(III) is provided through an exception or appeal; and

“(B) does not include a selected drug (as referred to under section 1192(c)) during a price applicability period (as defined in section 1191(b)(2)) with respect to such drug.

“(3) APPLICABLE NUMBER OF CALENDAR DAYS.—The term ‘applicable number of calendar days’ means—

“(A) with respect to claims for reimbursement submitted electronically, 14 days; and

“(B) with respect to claims for reimbursement submitted otherwise, 30 days.

“(4) DISCOUNTED PRICE.—

“(A) IN GENERAL.—The term ‘discounted price’ means, subject to subparagraphs (B) and (C), with respect to an applicable drug of a manufacturer dispensed during a year to an applicable beneficiary—

“(i) who has not incurred costs, as determined in accordance with section 1860D–2(b)(4)(C), for covered part D drugs in the year that are equal to or exceed the annual out-of-pocket threshold specified in section 1860D–2(b)(4)(B)(i) for the year, 90 percent of the negotiated price of such drug; and

“(ii) who has incurred such costs, as so determined, in the year that are equal to or exceed such threshold for the year, 80 percent of the negotiated price of such drug.

“(B) PHASE-IN FOR CERTAIN DRUGS DISPENSED TO LIS BENEFICIARIES.—

“(i) IN GENERAL.—In the case of an applicable drug of a specified manufacturer (as defined in clause (ii)) that is marketed as of the date of enactment of this subparagraph and dispensed for an applicable beneficiary who is a subsidy eligible individual (as defined in section 1860D–14(a)(3)), the term ‘discounted price’ means the specified LIS percent (as defined in clause (iii)) of the negotiated price of the applicable drug of the manufacturer.

“(ii) SPECIFIED MANUFACTURER.—

“(I) IN GENERAL.—In this subparagraph, subject to subclause (II), the term ‘specified manufacturer’ means a manufacturer of an applicable drug for which, in 2021—

“(aa) the manufacturer had a coverage gap discount agreement under section 1860D–14A;

“(bb) the total expenditures for all of the specified drugs of the manufacturer covered by such agreement or agreements for such year and covered under this part during such year represented less than 1.0 percent of the total expenditures under this part for all covered Part D drugs during such year; and

“(cc) the total expenditures for all of the specified drugs of the manufacturer that are single source drugs and biological products covered under part B during such year represented less than 1.0 percent of the total expenditures under part B for all drugs or biological products covered under such part during such year.

“(II) SPECIFIED DRUGS.—

“(aa) IN GENERAL.—For purposes of this clause, the term ‘specified drug’ means, with respect to a specified manufacturer, for 2021, an applicable drug that is produced, prepared, propagated, compounded, converted, or processed by the manufacturer.

“(bb) AGGREGATION RULE.—All persons treated as a single employer under subsection (a) or (b) of section 52 of the Internal Revenue Code of 1986 shall be treated as one manufacturer for purposes of this subparagraph. For purposes of making a determination pursuant to the previous sentence, an agreement under this section shall require that a manufacturer provide and attest to such information as specified by the Secretary as necessary.

“(III) LIMITATION.—The term ‘specified manufacturer’ shall not include a manufacturer described in subclause (I) if such manufacturer is acquired after 2021 by another manufacturer that is not a specified manufacturer, effective at the beginning of the plan year immediately following such acquisition or, in the case of an acquisition before 2024, effective January 1, 2024.

“(iii) SPECIFIED LIS PERCENT.—In this subparagraph, the ‘specified LIS percent’ means, with respect to a year—

“(I) for an applicable drug dispensed for an applicable beneficiary described in clause (i) who has not incurred costs, as determined in accordance with section 1860D–2(b)(4)(C), for covered part D drugs in the year that are equal to or exceed the annual out-of-pocket threshold specified in section 1860D–2(b)(4)(B)(i) for the year—

“(aa) for 2024, 99 percent;

“(bb) for 2025, 98 percent;

“(cc) for 2026, 95 percent;

“(dd) for 2027, 92 percent; and

“(ee) for 2028 and each subsequent year, 90 percent; and

“(II) for an applicable drug dispensed for an applicable beneficiary described in clause (i) who has incurred costs, as determined in accordance with section 1860D–2(b)(4)(C), for covered part D drugs in the year that are equal to or exceed the annual out-of-pocket threshold specified in section 1860D–2(b)(4)(B)(i) for the year—

“(aa) for 2024, 99 percent;

“(bb) for 2025, 98 percent;

“(cc) for 2026, 95 percent;

“(dd) for 2027, 92 percent;

“(ee) for 2028, 90 percent;

“(ff) for 2029, 85 percent; and

“(gg) for 2030 and each subsequent year, 80 percent.

“(C) PHASE-IN FOR SPECIFIED SMALL MANUFACTURERS.—

“(i) IN GENERAL.—In the case of an applicable drug of a specified small manufacturer (as defined in clause (ii)) that is marketed as of the date of enactment of this subparagraph and dispensed for an applicable beneficiary, the term ‘discounted price’ means the specified small manufacturer percent (as defined in clause (iii)) of the negotiated price of the applicable drug of the manufacturer.

“(ii) SPECIFIED SMALL MANUFACTURER.—

“(I) IN GENERAL.—In this subparagraph, subject to subclause (III), the term ‘specified small manufacturer’ means a manufacturer of an applicable drug for which, in 2021—

“(aa) the manufacturer is a specified manufacturer (as defined in subparagraph (B)(ii)); and

“(bb) the total expenditures under part D for any one of the specified small manufacturer drugs of the manufacturer that are covered by the agreement or agreements under section 1860D–14A of such manufacturer for such year and covered under this part during such year are equal to or more than 80 percent of the total expenditures under this part for all specified small manufacturer drugs of the manufacturer that are covered by such agreement or agreements for such year and covered under this part during such year.

“(II) SPECIFIED SMALL MANUFACTURER DRUGS.—

“(aa) IN GENERAL.—For purposes of this clause, the term ‘specified small manufacturer drugs’ means, with respect to a specified small manufacturer, for 2021, an applicable drug that is produced, prepared, propagated, compounded, converted, or processed by the manufacturer.

“(bb) AGGREGATION RULE.—All persons treated as a single employer under subsection (a) or (b) of section 52 of the Internal Revenue Code of 1986 shall be treated as one manufacturer for purposes of this subparagraph. For purposes of making a determination pursuant to the previous sentence, an agreement under this section shall require that a manufacturer provide and attest to such information as specified by the Secretary as necessary.

“(III) LIMITATION.—The term ‘specified small manufacturer’ shall not include a manufacturer described in subclause (I) if such manufacturer is acquired after 2021 by another manufacturer that is not a specified small manufacturer, effective at the beginning of the plan year immediately following such acquisition or, in the case of an acquisition before 2024, effective January 1, 2024.

“(iii) SPECIFIED SMALL MANUFACTURER PERCENT.—In this subparagraph, the term ‘specified small manufacturer percent’ means, with respect to a year—

“(I) for an applicable drug dispensed for an applicable beneficiary who has not incurred costs, as determined in accordance with section 1860D–2(b)(4)(C), for covered part D drugs in the year that are equal to or exceed the annual out-of-pocket threshold specified in section 1860D–2(b)(4)(B)(i) for the year—

“(aa) for 2024, 99 percent;

“(bb) for 2025, 98 percent;

“(cc) for 2026, 95 percent;

“(dd) for 2027, 92 percent; and

“(ee) for 2028 and each subsequent year, 90 percent; and

“(II) for an applicable drug dispensed for an applicable beneficiary who has incurred costs, as determined in accordance with section 1860D–2(b)(4)(C), for covered part D drugs in the year that are equal to or exceed the annual out-of-pocket threshold specified in section 1860D–2(b)(4)(B)(i) for the year—

“(aa) for 2024, 99 percent;

“(bb) for 2025, 98 percent;

“(cc) for 2026, 95 percent;

“(dd) for 2027, 92 percent;

“(ee) for 2028, 90 percent;

“(ff) for 2029, 85 percent; and

“(gg) for 2030 and each subsequent year, 80 percent.

“(D) TOTAL EXPENDITURES.—For purposes of this paragraph, the term ‘total expenditures’ includes, in the case of expenditures with respect to part D, ingredient costs, dispensing fees, sales tax, and, if applicable, vaccine administration fees. The term ‘total expenditures’ excludes, in the case of expenditures with respect to part B, expenditures for a drug or biological that are bundled or packaged into the payment for another service.

“(E) SPECIAL CASE FOR CERTAIN CLAIMS.—

“(i) CLAIMS SPANNING DEDUCTIBLE.—In the case where the entire amount of the negotiated price of an individual claim for an applicable drug with respect to an applicable beneficiary does not fall above the annual deductible specified in section 1860D–2(b)(1) for the year, the manufacturer of the applicable drug shall provide the discounted price under this section on only the portion of the negotiated price of the applicable drug that falls above such annual deductible.

“(ii) CLAIMS SPANNING OUT-OF-POCKET THRESHOLD.—In the case where the entire amount of the negotiated price of an individual claim for an applicable drug with respect to an applicable beneficiary does not fall entirely below or entirely above the annual out-of-pocket threshold specified in section 1860D–2(b)(4)(B)(i) for the year, the manufacturer of the applicable drug shall provide the discounted price—

“(I) in accordance with subparagraph (A)(i) on the portion of the negotiated price of the applicable drug that falls below such threshold; and

“(II) in accordance with subparagraph (A)(ii) on the portion of such price of such drug that falls at or above such threshold.

“(5) MANUFACTURER.—The term ‘manufacturer’ means any entity which is engaged in the production, preparation, propagation, compounding, conversion, or processing of prescription drug products, either directly or indirectly by extraction from substances of natural origin, or independently by means of chemical synthesis, or by a combination of extraction and chemical synthesis. Such term does not include a wholesale distributor of drugs or a retail pharmacy licensed under State law.

“(6) NEGOTIATED PRICE.—The term ‘negotiated price’ has the meaning given such term in section 423.100 of title 42, Code of Federal Regulations (or any successor regulation) and, with respect to an applicable drug, such negotiated price shall include any dispensing fee and, if applicable, any vaccine administration fee for the applicable drug.

“(7) QUALIFIED RETIREE PRESCRIPTION DRUG PLAN.—The term ‘qualified retiree prescription drug plan’ has the meaning given such term in section 1860D–22(a)(2).

“With respect to covered part D drugs that would be applicable drugs (as defined in section 1860D–14C(g)(2)) but for the application of subparagraph (B) of such section, the Secretary shall provide a process whereby, in the case of an applicable beneficiary (as defined in section 1860D–14C(g)(1)) who, with respect to a year, is enrolled in a prescription drug plan or is enrolled in an MA–PD plan, has not incurred costs that are equal to or exceed the annual out-of-pocket threshold specified in section 1860D–2(b)(4)(B)(i), and is dispensed such a drug the Secretary (periodically and on a timely basis) provides the PDP sponsor or the MA organization offering the plan, a subsidy with respect to such drug that is equal to 10 percent of the negotiated price (as defined in section 1860D–14C(g)(6)) of such drug.”.

“(a) In general.—For plan years beginning on or after January 1, 2023, a group health plan or health insurance issuer offering group health insurance coverage shall provide coverage of selected insulin products, and with respect to such products, shall not—

“(1) apply any deductible; or

“(2) impose any cost-sharing in excess of the lesser of, per 30-day supply—

“(A) $35; or

“(B) the amount equal to 25 percent of the negotiated price of the selected insulin product net of all price concessions received by or on behalf of the plan or coverage, including price concessions received by or on behalf of third-party entities providing services to the plan or coverage, such as pharmacy benefit management services.

“(b) Definitions.—In this section:

“(1) SELECTED INSULIN PRODUCTS.—The term ‘selected insulin products’ means at least one of each dosage form (such as vial, pump, or inhaler dosage forms) of each different type (such as rapid-acting, short-acting, intermediate-acting, long-acting, ultra long-acting, and premixed) of insulin (as defined below), when available, as selected by the group health plan or health insurance issuer.

“(2) INSULIN DEFINED.—The term ‘insulin’ means insulin that is licensed under subsection (a) or (k) of section 351 of the Public Health Service Act (42 U.S.C. 262) and continues to be marketed under such section, including any insulin product that has been deemed to be licensed under section 351(a) of such Act pursuant to section 7002(e)(4) of the Biologics Price Competition and Innovation Act of 2009 (Public Law 111–148) and continues to be marketed pursuant to such licensure.

“(c) Out-of-Network providers.—Nothing in this section requires a plan or issuer that has a network of providers to provide benefits for selected insulin products described in this section that are delivered by an out-of-network provider, or precludes a plan or issuer that has a network of providers from imposing higher cost-sharing than the levels specified in subsection (a) for selected insulin products described in this section that are delivered by an out-of-network provider.

“(d) Rule of construction.—Subsection (a) shall not be construed to require coverage of, or prevent a group health plan or health insurance coverage from imposing cost-sharing other than the levels specified in subsection (a) on, insulin products that are not selected insulin products, to the extent that such coverage is not otherwise required and such cost-sharing is otherwise permitted under Federal and applicable State law.

“(e) Application of cost-Sharing towards deductibles and out-of-Pocket maximums.—Any cost-sharing payments made pursuant to subsection (a)(2) shall be counted toward any deductible or out-of-pocket maximum that applies under the plan or coverage.”.

“(a) In general.—For plan years beginning on or after January 1, 2023, a group health plan or health insurance issuer offering group or individual health insurance coverage shall provide coverage of selected insulin products, and with respect to such products, shall not—

“(1) apply any deductible; or

“(2) impose any cost-sharing in excess of the lesser of, per 30-day supply—

“(A) $35; or

“(B) the amount equal to 25 percent of the negotiated price of the selected insulin product net of all price concessions received by or on behalf of the plan or coverage, including price concessions received by or on behalf of third-party entities providing services to the plan or coverage, such as pharmacy benefit management services.

“(b) Definitions.—In this section:

“(1) SELECTED INSULIN PRODUCTS.—The term ‘selected insulin products’ means at least one of each dosage form (such as vial, pump, or inhaler dosage forms) of each different type (such as rapid-acting, short-acting, intermediate-acting, long-acting, ultra long-acting, and premixed) of insulin (as defined below), when available, as selected by the group health plan or health insurance issuer.

“(2) INSULIN DEFINED.—The term ‘insulin’ means insulin that is licensed under subsection (a) or (k) of section 351 and continues to be marketed under such section, including any insulin product that has been deemed to be licensed under section 351(a) pursuant to section 7002(e)(4) of the Biologics Price Competition and Innovation Act of 2009 and continues to be marketed pursuant to such licensure.

“(c) Out-of-Network providers.—Nothing in this section requires a plan or issuer that has a network of providers to provide benefits for selected insulin products described in this section that are delivered by an out-of-network provider, or precludes a plan or issuer that has a network of providers from imposing higher cost-sharing than the levels specified in subsection (a) for selected insulin products described in this section that are delivered by an out-of-network provider.

“(d) Rule of construction.—Subsection (a) shall not be construed to require coverage of, or prevent a group health plan or health insurance coverage from imposing cost-sharing other than the levels specified in subsection (a) on, insulin products that are not selected insulin products, to the extent that such coverage is not otherwise required and such cost-sharing is otherwise permitted under Federal and applicable State law.

“(e) Application of cost-Sharing towards deductibles and out-of-Pocket maximums.—Any cost-sharing payments made pursuant to subsection (a)(2) shall be counted toward any deductible or out-of-pocket maximum that applies under the plan or coverage.”.

“(a) In general.—For plan years beginning on or after January 1, 2023, a group health plan shall provide coverage of selected insulin products, and with respect to such products, shall not—

“(1) apply any deductible; or

“(2) impose any cost-sharing in excess of the lesser of, per 30-day supply—

“(A) $35; or

“(B) the amount equal to 25 percent of the negotiated price of the selected insulin product net of all price concessions received by or on behalf of the plan, including price concessions received by or on behalf of third-party entities providing services to the plan, such as pharmacy benefit management services.

“(b) Definitions.—In this section:

“(1) SELECTED INSULIN PRODUCTS.—The term ‘selected insulin products’ means at least one of each dosage form (such as vial, pump, or inhaler dosage forms) of each different type (such as rapid-acting, short-acting, intermediate-acting, long-acting, ultra long-acting, and premixed) of insulin (as defined below), when available, as selected by the group health plan.

“(2) INSULIN DEFINED.—The term ‘insulin’ means insulin that is licensed under subsection (a) or (k) of section 351 of the Public Health Service Act (42 U.S.C. 262) and continues to be marketed under such section, including any insulin product that has been deemed to be licensed under section 351(a) of such Act pursuant to section 7002(e)(4) of the Biologics Price Competition and Innovation Act of 2009 (Public Law 111–148) and continues to be marketed pursuant to such licensure.

“(c) Out-of-Network providers.—Nothing in this section requires a plan that has a network of providers to provide benefits for selected insulin products described in this section that are delivered by an out-of-network provider, or precludes a plan that has a network of providers from imposing higher cost-sharing than the levels specified in subsection (a) for selected insulin products described in this section that are delivered by an out-of-network provider.

“(d) Rule of construction.—Subsection (a) shall not be construed to require coverage of, or prevent a group health plan from imposing cost-sharing other than the levels specified in subsection (a) on, insulin products that are not selected insulin products, to the extent that such coverage is not otherwise required and such cost-sharing is otherwise permitted under Federal and applicable State law.

“(e) Application of cost-Sharing towards deductibles and out-of-Pocket maximums.—Any cost-sharing payments made pursuant to subsection (a)(2) shall be counted toward any deductible or out-of-pocket maximum that applies under the plan.”.