S.Amdt. 4349

SA 4349. Mr. BINGAMAN submitted an amendment intended to be proposed
to amendment SA 4301 proposed by Mr. Baucus to the bill H.R. 4213, to
amend the Internal Revenue Code of 1986 to extend certain expiring
provisions, and for other purposes; which was ordered to lie on the
table; as follows:

Beginning on page 255, strike line 14 and all that follows
through line 18 on page 260 and insert the following:
``(i) In general.--A covered entity shall not request
payment under title XIX of the Social Security Act for
medical assistance described in section 1905(a)(12) of such
Act with respect to a covered inpatient drug that is subject
to an agreement under this section if the drug is subject to
the payment of a rebate to the State under section 1927 of
such Act.
``(ii) Establishment of mechanism.--The Secretary shall
establish a mechanism to ensure that covered entities comply
with clause (i). If the Secretary does not establish a
mechanism under the previous sentence within 12 months of the
enactment of this section, the requirements of section
1927(a)(5)(C) of the Social Security Act shall apply.
``(iii) Prohibiting disclosure to group purchasing
organizations.--In the event that a covered entity is a
member of a group purchasing organization, such entity shall
not disclose the price or any other information pertaining to
any purchases under this section directly or indirectly to
such group purchasing organization.
``(B) Prohibiting resale, dispensing, or administration of
drugs except to certain patients.--With respect to any
covered inpatient drug that is subject to an agreement under
this subsection, a covered entity shall not dispense,
administer, resell, or otherwise transfer the covered
inpatient drug to a person unless--
``(i) such person is an inpatient of the entity; and
``(ii) such person does not have health plan coverage (as
defined in subsection (c)(3)) that provides prescription drug
coverage in the inpatient setting with respect to such
covered inpatient drug.

For purposes of clause (ii), a person shall be treated as
having health plan coverage (as defined in subsection (c)(3))
with respect to a covered inpatient drug if benefits are not
payable under such coverage with respect to such drug for
reasons such as the application of a deductible or cost
sharing or the use of utilization management.
``(C) Auditing.--A covered entity shall permit the
Secretary and the manufacturer of a covered inpatient drug
that is subject to an agreement under this subsection with
the entity (acting in accordance with procedures established
by the Secretary relating to the number, duration, and scope
of audits) to audit at the Secretary's or the manufacturer's
expense the records of the entity that directly pertain to
the entity's compliance with the requirements described in
subparagraph (A) or (B) with respect to drugs of the
manufacturer. The use or disclosure of information for
performance of such an audit shall be treated as a use or
disclosure required by law for purposes of section 164.512(a)
of title 45, Code of Federal Regulations.
``(D) Additional sanction for noncompliance.--If the
Secretary finds, after notice and hearing, that a covered
entity is in violation of a requirement described in
subparagraph (A) or (B), the covered entity shall be liable
to the manufacturer of the covered inpatient drug that is the
subject of the violation in an amount equal to the reduction
in the price of the drug (as described in subparagraph (A))
provided under the agreement between the Secretary and the
manufacturer under this subsection.
``(E) Maintenance of records.--

[[Page S4891]]

``(i) In general.--A covered entity shall establish and
maintain an effective recordkeeping system to comply with
this section and shall certify to the Secretary that such
entity is in compliance with subparagraphs (A) and (B). The
Secretary shall require that hospitals that purchase covered
inpatient drugs for inpatient dispensing or administration
under this subsection appropriately segregate inventory of
such covered inpatient drugs, either physically or
electronically, from drugs for outpatient use, as well as
from drugs for inpatient dispensing or administration to
individuals who have (for purposes of subparagraph (B))
health plan coverage described in clause (ii) of such
subparagraph.
``(ii) Certification of no third-party payer.--A covered
entity shall maintain records that contain certification by
the covered entity that no third party payment was received
for any covered inpatient drug that is subject to an
agreement under this subsection and that was dispensed to an
inpatient.
``(5) Treatment of distinct units of hospitals.--In the
case of a covered entity that is a distinct part of a
hospital, the distinct part of the hospital shall not be
considered a covered entity under this subsection unless the
hospital is otherwise a covered entity under this subsection.
``(6) Notice to manufacturers.--The Secretary shall notify
manufacturers of covered inpatient drugs and single State
agencies under section 1902(a)(5) of the Social Security Act
of the identities of covered entities under this subsection,
and of entities that no longer meet the requirements of
paragraph (4), by means of timely updates of the Internet
website supported by the Department of Health and Human
Services relating to this section.
``(7) No prohibition on larger discount.--Nothing in this
subsection shall prohibit a manufacturer from charging a
price for a drug that is lower than the maximum price that
may be charged under paragraph (1).
``(b) Covered Entity Defined.--In this section, the term
`covered entity' means an entity that meets the requirements
described in subsection (a)(4) that has applied for and
enrolled in the program described under this section and is
one of the following:
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