Medicare SGR Improvement and Reform Act of 2009 - Amends title XVIII (Medicare) of the Social Security Act to provide an increased annual update for the Sustainable Growth Mechanism (SGR) formula for determining rates in the fee schedule for Medicare physician payments.
Sets a three-year time limit for the commencement of a health care lawsuit.
Prescribes requirements for: (1) unlimited damages for a claimant's actual economic losses in health care lawsuits; (2) court supervision of arrangements for payment of such damages, including limitation of contingent attorney fees; (3) restrictions on punitive damages; and (4) payment of future damages to claimants in health care suits.
Terminates funding of the Medicare Improvement Fund as of January 1, 2010.
Amends the Public Health Service Act to prescribe requirements for the licensure of biological products as biosimilar or interchangeable.
Includes under the Federal Food, Drug, and Cosmetic Act fees relating to the licensure of a biological product.
Amends patent law with respect to biosimilar products.
Directs the Secretary of Health and Human Services (HHS) to adopt a single set of consensus-based operating rules for each health information transaction.
[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4138 Introduced in House (IH)]
111th CONGRESS
1st Session
H. R. 4138
To amend title XVIII of the Social Security Act to provide for an
update under the Medicare physician fee schedule, to be fully paid for
through medical liability reform, a pathway for biosimilar biological
products, and other means.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
November 19, 2009
Mr. Gingrey of Georgia (for himself, Mr. Cassidy, Mr. Fleming, Mr.
Boozman, Mr. Herger, Mr. Sessions, Mr. Culberson, Mr. Hall of Texas,
Mr. Whitfield, Mr. Shimkus, Mr. Buyer, Mrs. Myrick, Mr. Paulsen, Mr.
Rooney, Ms. Granger, Mr. Roskam, Mrs. Blackburn, Mr. Price of Georgia,
and Mr. Roe of Tennessee) introduced the following bill; which was
referred to the Committee on Energy and Commerce, and in addition to
the Committees on Ways and Means and the Judiciary, for a period to be
subsequently determined by the Speaker, in each case for consideration
of such provisions as fall within the jurisdiction of the committee
concerned
_______________________________________________________________________
A BILL
To amend title XVIII of the Social Security Act to provide for an
update under the Medicare physician fee schedule, to be fully paid for
through medical liability reform, a pathway for biosimilar biological
products, and other means.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Medicare SGR
Improvement and Reform Act of 2009''.
(b) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; table of contents.
TITLE I--ENSURING CONTINUED ACCESS TO PHYSICIANS IN MEDICARE
Sec. 101. Improving Medicare physician payments.
Sec. 102. Statement of policy.
TITLE II--DEFICIT PROTECTION AND FISCAL RESPONSIBILITY
Subtitle A--Enacting Real Medical Liability Reform
Sec. 201. Encouraging speedy resolution of claims.
Sec. 202. Compensating patient injury.
Sec. 203. Maximizing patient recovery.
Sec. 204. Additional health benefits.
Sec. 205. Punitive damages.
Sec. 206. Authorization of payment of future damages to claimants in
health care lawsuits.
Sec. 207. Definitions.
Sec. 208. Effect on other laws.
Sec. 209. State flexibility and protection of states' rights.
Sec. 210. Applicability; effective date.
Subtitle B--Application of Medicare Improvement Fund
Sec. 211. Application of Medicare Improvement Fund.
Subtitle C--Pathway for Biosimilar Biological Products
Sec. 221. Licensure pathway for biosimilar biological products.
Sec. 222. Fees relating to biosimilar biological products.
Sec. 223. Amendments to certain patent provisions.
Subtitle D--Administrative Simplification
Sec. 231. Administrative simplification.
TITLE I--ENSURING CONTINUED ACCESS TO PHYSICIANS IN MEDICARE
SEC. 101. IMPROVING MEDICARE PHYSICIAN PAYMENTS.
Section 1848(d) of the Social Security Act (42 U.S.C. 1395w-4(d))
is amended by adding at the end the following new paragraphs:
``(10) 2 percent annual update for years 2010 through
2013.--
``(A) In general.--Subject to paragraphs (7)(B),
(8)(B), and (9)(B) and subparagraph (B), in lieu of the
update to the single conversion factor established in
paragraph (1)(C) that would otherwise apply for each of
2010, 2011, 2012, and 2013, the update to the single
conversion factor shall be 2 percent.
``(B) No effect on computation of conversion factor
for 2014 and subsequent years.--The conversion factor
under this subsection shall be computed under paragraph
(1)(A) for 2014 and subsequent years as if subparagraph
(A) had never applied, subject to paragraph (11).
``(11) Update for 2014 and possible subsequent years
through 2019.--
``(A) In general.--Subject to paragraphs (7)(B),
(8)(B), and (9)(B) and subparagraph (B), in lieu of the
update to the single conversion factor established in
paragraph (1)(C) that would otherwise apply for 2014
and, at the Secretary's discretion, for subsequent
years ending not later than 2019, the update to the
single conversion factor shall be such percentage for
each such year as the Secretary determines will result
in additional expenditures under this title in the
aggregate for all such years of $26,400,000,000. Not
later than October 1, 2013, the Secretary shall
establish by regulation the method the Secretary will
use in allocating the $26,400,000,000 under the
previous sentence between 2014 and subsequent years.
Such allocation shall be designed in a manner so that
the single conversion factor for a year is not less
than 79 percent of the conversion factor for the
previous year.
``(B) Limited effect on computation of conversion
factor for subsequent years.--The conversion factor
under this subsection shall be computed under paragraph
(1)(A) for subsequent years as if subparagraph (A) had
never applied, but taking into account the aggregate
additional increase in expenditures permitted under
such subparagraph.''.
SEC. 102. STATEMENT OF POLICY.
It is the policy of the Federal Government that the sustainable
growth rate formula, upon which physician payments are based for the
Medicare program, should be permanently repealed and replaced with a
reimbursement policy that pays doctors an amount reflecting the true
cost of services provided in a high-quality and efficient manner and
uses a fiscally responsibly funding mechanism.
TITLE II--DEFICIT PROTECTION AND FISCAL RESPONSIBILITY
Subtitle A--Enacting Real Medical Liability Reform
SEC. 201. ENCOURAGING SPEEDY RESOLUTION OF CLAIMS.
The time for the commencement of a health care lawsuit shall be 3
years after the date of manifestation of injury or 1 year after the
claimant discovers, or through the use of reasonable diligence should
have discovered, the injury, whichever occurs first. In no event shall
the time for commencement of a health care lawsuit exceed 3 years after
the date of manifestation of injury unless tolled for any of the
following--
(1) upon proof of fraud;
(2) intentional concealment; or
(3) the presence of a foreign body, which has no
therapeutic or diagnostic purpose or effect, in the person of
the injured person.
Actions by a minor shall be commenced within 3 years from the date of
the alleged manifestation of injury except that actions by a minor
under the full age of 6 years shall be commenced within 3 years of
manifestation of injury or prior to the minor's 8th birthday, whichever
provides a longer period. Such time limitation shall be tolled for
minors for any period during which a parent or guardian and a health
care provider or health care organization have committed fraud or
collusion in the failure to bring an action on behalf of the injured
minor.
SEC. 202. COMPENSATING PATIENT INJURY.
(a) Unlimited Amount of Damages for Actual Economic Losses in
Health Care Lawsuits.--In any health care lawsuit, nothing in this
subtitle shall limit a claimant's recovery of the full amount of the
available economic damages, notwithstanding the limitation in
subsection (b).
(b) Additional Noneconomic Damages.--In any health care lawsuit,
the amount of noneconomic damages, if available, may be as much as
$250,000, regardless of the number of parties against whom the action
is brought or the number of separate claims or actions brought with
respect to the same injury.
(c) No Discount of Award for Noneconomic Damages.--For purposes of
applying the limitation in subsection (b), future noneconomic damages
shall not be discounted to present value. The jury shall not be
informed about the maximum award for noneconomic damages. An award for
noneconomic damages in excess of $250,000 shall be reduced either
before the entry of judgment, or by amendment of the judgment after
entry of judgment, and such reduction shall be made before accounting
for any other reduction in damages required by law. If separate awards
are rendered for past and future noneconomic damages and the combined
awards exceed $250,000, the future noneconomic damages shall be reduced
first.
(d) Fair Share Rule.--In any health care lawsuit, each party shall
be liable for that party's several share of any damages only and not
for the share of any other person. Each party shall be liable only for
the amount of damages allocated to such party in direct proportion to
such party's percentage of responsibility. Whenever a judgment of
liability is rendered as to any party, a separate judgment shall be
rendered against each such party for the amount allocated to such
party. For purposes of this section, the trier of fact shall determine
the proportion of responsibility of each party for the claimant's harm.
SEC. 203. MAXIMIZING PATIENT RECOVERY.
(a) Court Supervision of Share of Damages Actually Paid to
Claimants.--In any health care lawsuit, the court shall supervise the
arrangements for payment of damages to protect against conflicts of
interest that may have the effect of reducing the amount of damages
awarded that are actually paid to claimants. In particular, in any
health care lawsuit in which the attorney for a party claims a
financial stake in the outcome by virtue of a contingent fee, the court
shall have the power to restrict the payment of a claimant's damage
recovery to such attorney, and to redirect such damages to the claimant
based upon the interests of justice and principles of equity. In no
event shall the total of all contingent fees for representing all
claimants in a health care lawsuit exceed the following limits--
(1) 40 percent of the first $50,000 recovered by the
claimant(s).
(2) 33\1/3\ percent of the next $50,000 recovered by the
claimant(s).
(3) 25 percent of the next $500,000 recovered by the
claimant(s).
(4) 15 percent of any amount by which the recovery by the
claimant(s) is in excess of $600,000.
(b) Applicability.--The limitations in this section shall apply
whether the recovery is by judgment, settlement, mediation,
arbitration, or any other form of alternative dispute resolution. In a
health care lawsuit involving a minor or incompetent person, a court
retains the authority to authorize or approve a fee that is less than
the maximum permitted under this section. The requirement for court
supervision in the first two sentences of subsection (a) applies only
in civil actions.
SEC. 204. ADDITIONAL HEALTH BENEFITS.
In any health care lawsuit involving injury or wrongful death, any
party may introduce evidence of collateral source benefits. If a party
elects to introduce such evidence, any opposing party may introduce
evidence of any amount paid or contributed or reasonably likely to be
paid or contributed in the future by or on behalf of the opposing party
to secure the right to such collateral source benefits. No provider of
collateral source benefits shall recover any amount against the
claimant or receive any lien or credit against the claimant's recovery
or be equitably or legally subrogated to the right of the claimant in a
health care lawsuit involving injury or wrongful death. This section
shall apply to any health care lawsuit that is settled as well as a
health care lawsuit that is resolved by a fact finder. This section
shall not apply to section 1862(b) (42 U.S.C. 1395y(b)) or section
1902(a)(25) (42 U.S.C. 1396a(a)(25)) of the Social Security Act.
SEC. 205. PUNITIVE DAMAGES.
(a) In General.--Punitive damages may, if otherwise permitted by
applicable State or Federal law, be awarded against any person in a
health care lawsuit only if it is proven by clear and convincing
evidence that such person acted with malicious intent to injure the
claimant, or that such person deliberately failed to avoid unnecessary
injury that such person knew the claimant was substantially certain to
suffer. In any health care lawsuit where no judgment for compensatory
damages is rendered against such person, no punitive damages may be
awarded with respect to the claim in such lawsuit. No demand for
punitive damages shall be included in a health care lawsuit as
initially filed. A court may allow a claimant to file an amended
pleading for punitive damages only upon a motion by the claimant and
after a finding by the court, upon review of supporting and opposing
affidavits or after a hearing, after weighing the evidence, that the
claimant has established by a substantial probability that the claimant
will prevail on the claim for punitive damages. At the request of any
party in a health care lawsuit, the trier of fact shall consider in a
separate proceeding--
(1) whether punitive damages are to be awarded and the
amount of such award; and
(2) the amount of punitive damages following a
determination of punitive liability.
If a separate proceeding is requested, evidence relevant only to the
claim for punitive damages, as determined by applicable State law,
shall be inadmissible in any proceeding to determine whether
compensatory damages are to be awarded.
(b) Determining Amount of Punitive Damages.--
(1) Factors considered.--In determining the amount of
punitive damages, if awarded, in a health care lawsuit, the
trier of fact shall consider only the following--
(A) the severity of the harm caused by the conduct
of such party;
(B) the duration of the conduct or any concealment
of it by such party;
(C) the profitability of the conduct to such party;
(D) the number of products sold or medical
procedures rendered for compensation, as the case may
be, by such party, of the kind causing the harm
complained of by the claimant;
(E) any criminal penalties imposed on such party,
as a result of the conduct complained of by the
claimant; and
(F) the amount of any civil fines assessed against
such party as a result of the conduct complained of by
the claimant.
(2) Maximum award.--The amount of punitive damages, if
awarded, in a health care lawsuit may be as much as $250,000 or
as much as two times the amount of economic damages awarded,
whichever is greater. The jury shall not be informed of this
limitation.
SEC. 206. AUTHORIZATION OF PAYMENT OF FUTURE DAMAGES TO CLAIMANTS IN
HEALTH CARE LAWSUITS.
(a) In General.--In any health care lawsuit, if an award of future
damages, without reduction to present value, equaling or exceeding
$50,000 is made against a party with sufficient insurance or other
assets to fund a periodic payment of such a judgment, the court shall,
at the request of any party, enter a judgment ordering that the future
damages be paid by periodic payments. In any health care lawsuit, the
court may be guided by the Uniform Periodic Payment of Judgments Act
promulgated by the National Conference of Commissioners on Uniform
State Laws.
(b) Applicability.--This section applies to all actions which have
not been first set for trial or retrial before the effective date of
this subtitle.
SEC. 207. DEFINITIONS.
In this subtitle:
(1) Alternative dispute resolution system; adr.--The term
``alternative dispute resolution system'' or ``ADR'' means a
system that provides for the resolution of health care lawsuits
in a manner other than through a civil action brought in a
State or Federal court.
(2) Claimant.--The term ``claimant'' means any person who
brings a health care lawsuit, including a person who asserts or
claims a right to legal or equitable contribution, indemnity,
or subrogation, arising out of a health care liability claim or
action, and any person on whose behalf such a claim is asserted
or such an action is brought, whether deceased, incompetent, or
a minor.
(3) Collateral source benefits.--The term ``collateral
source benefits'' means any amount paid or reasonably likely to
be paid in the future to or on behalf of the claimant, or any
service, product, or other benefit provided or reasonably
likely to be provided in the future to or on behalf of the
claimant, as a result of the injury or wrongful death, pursuant
to--
(A) any State or Federal health, sickness, income-
disability, accident, or workers' compensation law;
(B) any health, sickness, income-disability, or
accident insurance that provides health benefits or
income-disability coverage;
(C) any contract or agreement of any group,
organization, partnership, or corporation to provide,
pay for, or reimburse the cost of medical, hospital,
dental, or income-disability benefits; and
(D) any other publicly or privately funded program.
(4) Compensatory damages.--The term ``compensatory
damages'' means objectively verifiable monetary losses incurred
as a result of the provision of, use of, or payment for (or
failure to provide, use, or pay for) health care services or
medical products, such as past and future medical expenses,
loss of past and future earnings, cost of obtaining domestic
services, loss of employment, and loss of business or
employment opportunities, damages for physical and emotional
pain, suffering, inconvenience, physical impairment, mental
anguish, disfigurement, loss of enjoyment of life, loss of
society and companionship, loss of consortium (other than loss
of domestic service), hedonic damages, injury to reputation,
and all other nonpecuniary losses of any kind or nature. The
term ``compensatory damages'' includes economic damages and
noneconomic damages, as such terms are defined in this section.
(5) Contingent fee.--The term ``contingent fee'' includes
all compensation to any person or persons which is payable only
if a recovery is effected on behalf of one or more claimants.
(6) Economic damages.--The term ``economic damages'' means
objectively verifiable monetary losses incurred as a result of
the provision of, use of, or payment for (or failure to
provide, use, or pay for) health care services or medical
products, such as past and future medical expenses, loss of
past and future earnings, cost of obtaining domestic services,
loss of employment, and loss of business or employment
opportunities.
(7) Health care lawsuit.--The term ``health care lawsuit''
means any health care liability claim concerning the provision
of health care goods or services or any medical product
affecting interstate commerce, or any health care liability
action concerning the provision of health care goods or
services or any medical product affecting interstate commerce,
brought in a State or Federal court or pursuant to an
alternative dispute resolution system, against a health care
provider, a health care organization, or the manufacturer,
distributor, supplier, marketer, promoter, or seller of a
medical product, regardless of the theory of liability on which
the claim is based, or the number of claimants, plaintiffs,
defendants, or other parties, or the number of claims or causes
of action, in which the claimant alleges a health care
liability claim. Such term does not include a claim or action
which is based on criminal liability; which seeks civil fines
or penalties paid to Federal, State, or local government; or
which is grounded in antitrust.
(8) Health care liability action.--The term ``health care
liability action'' means a civil action brought in a State or
Federal court or pursuant to an alternative dispute resolution
system, against a health care provider, a health care
organization, or the manufacturer, distributor, supplier,
marketer, promoter, or seller of a medical product, regardless
of the theory of liability on which the claim is based, or the
number of plaintiffs, defendants, or other parties, or the
number of causes of action, in which the claimant alleges a
health care liability claim.
(9) Health care liability claim.--The term ``health care
liability claim'' means a demand by any person, whether or not
pursuant to ADR, against a health care provider, health care
organization, or the manufacturer, distributor, supplier,
marketer, promoter, or seller of a medical product, including,
but not limited to, third-party claims, cross-claims, counter-
claims, or contribution claims, which are based upon the
provision of, use of, or payment for (or the failure to
provide, use, or pay for) health care services or medical
products, regardless of the theory of liability on which the
claim is based, or the number of plaintiffs, defendants, or
other parties, or the number of causes of action.
(10) Health care organization.--The term ``health care
organization'' means any person or entity which is obligated to
provide or pay for health benefits under any health plan,
including any person or entity acting under a contract or
arrangement with a health care organization to provide or
administer any health benefit.
(11) Health care provider.--The term ``health care
provider'' means any person or entity required by State or
Federal laws or regulations to be licensed, registered, or
certified to provide health care services, and being either so
licensed, registered, or certified, or exempted from such
requirement by other statute or regulation.
(12) Health care goods or services.--The term ``health care
goods or services'' means any goods or services provided by a
health care organization, provider, or by any individual
working under the supervision of a health care provider, that
relates to the diagnosis, prevention, or treatment of any human
disease or impairment, or the assessment or care of the health
of human beings.
(13) Malicious intent to injure.--The term ``malicious
intent to injure'' means intentionally causing or attempting to
cause physical injury other than providing health care goods or
services.
(14) Medical product.--The term ``medical product'' means a
drug, device, or biological product intended for humans, and
the terms ``drug'', ``device'', and ``biological product'' have
the meanings given such terms in sections 201(g)(1) and 201(h)
of the Federal Food, Drug and Cosmetic Act (21 U.S.C. 321(g)(1)
and (h)) and section 351(a) of the Public Health Service Act
(42 U.S.C. 262(a)), respectively, including any component or
raw material used therein, but excluding health care services.
(15) Noneconomic damages.--The term ``noneconomic damages''
means damages for physical and emotional pain, suffering,
inconvenience, physical impairment, mental anguish,
disfigurement, loss of enjoyment of life, loss of society and
companionship, loss of consortium (other than loss of domestic
service), hedonic damages, injury to reputation, and all other
nonpecuniary losses of any kind or nature.
(16) Punitive damages.--The term ``punitive damages'' means
damages awarded, for the purpose of punishment or deterrence,
and not solely for compensatory purposes, against a health care
provider, health care organization, or a manufacturer,
distributor, or supplier of a medical product. Punitive damages
are neither economic nor noneconomic damages.
(17) Recovery.--The term ``recovery'' means the net sum
recovered after deducting any disbursements or costs incurred
in connection with prosecution or settlement of the claim,
including all costs paid or advanced by any person. Costs of
health care incurred by the plaintiff and the attorneys' office
overhead costs or charges for legal services are not deductible
disbursements or costs for such purpose.
(18) State.--The term ``State'' means each of the several
States, the District of Columbia, the Commonwealth of Puerto
Rico, the Virgin Islands, Guam, American Samoa, the Northern
Mariana Islands, the Trust Territory of the Pacific Islands,
and any other territory or possession of the United States, or
any political subdivision thereof.
SEC. 208. EFFECT ON OTHER LAWS.
(a) Vaccine Injury.--
(1) To the extent that title XXI of the Public Health
Service Act establishes a Federal rule of law applicable to a
civil action brought for a vaccine-related injury or death--
(A) this subtitle does not affect the application
of the rule of law to such an action; and
(B) any rule of law prescribed by this subtitle in
conflict with a rule of law of such title XXI shall not
apply to such action.
(2) If there is an aspect of a civil action brought for a
vaccine-related injury or death to which a Federal rule of law
under title XXI of the Public Health Service Act does not
apply, then this subtitle or otherwise applicable law (as
determined under this subtitle) will apply to such aspect of
such action.
(b) Other Federal Law.--Except as provided in this section, nothing
in this subtitle shall be deemed to affect any defense available to a
defendant in a health care lawsuit or action under any other provision
of Federal law.
SEC. 209. STATE FLEXIBILITY AND PROTECTION OF STATES' RIGHTS.
(a) Health Care Lawsuits.--The provisions governing health care
lawsuits set forth in this subtitle preempt, subject to subsections (b)
and (c), State law to the extent that State law prevents the
application of any provisions of law established by or under this
subtitle. The provisions governing health care lawsuits set forth in
this subtitle supersede chapter 171 of title 28, United States Code, to
the extent that such chapter--
(1) provides for a greater amount of damages or contingent
fees, a longer period in which a health care lawsuit may be
commenced, or a reduced applicability or scope of periodic
payment of future damages, than provided in this subtitle; or
(2) prohibits the introduction of evidence regarding
collateral source benefits, or mandates or permits subrogation
or a lien on collateral source benefits.
(b) Protection of States' Rights and Other Laws.--(1) Any issue
that is not governed by any provision of law established by or under
this subtitle (including State standards of negligence) shall be
governed by otherwise applicable State or Federal law.
(2) This subtitle shall not preempt or supersede any State or
Federal law that imposes greater procedural or substantive protections
for health care providers and health care organizations from liability,
loss, or damages than those provided by this subtitle or create a cause
of action.
(c) State Flexibility.--No provision of this subtitle shall be
construed to preempt--
(1) any State law (whether effective before, on, or after
the date of the enactment of this Act) that specifies a
particular monetary amount of compensatory or punitive damages
(or the total amount of damages) that may be awarded in a
health care lawsuit, regardless of whether such monetary amount
is greater or lesser than is provided for under this subtitle,
notwithstanding section 202(a); or
(2) any defense available to a party in a health care
lawsuit under any other provision of State or Federal law.
SEC. 210. APPLICABILITY; EFFECTIVE DATE.
This subtitle shall apply to any health care lawsuit brought in a
Federal or State court, or subject to an alternative dispute resolution
system, that is initiated on or after the date of the enactment of this
Act, except that any health care lawsuit arising from an injury
occurring prior to the date of the enactment of this Act shall be
governed by the applicable statute of limitations provisions in effect
at the time the injury occurred.
Subtitle B--Application of Medicare Improvement Fund
SEC. 211. APPLICATION OF MEDICARE IMPROVEMENT FUND.
Section 1898(b)(1) of the Social Security Act (42 U.S.C.
1395iii(b)(1)) is amended by striking ``for services furnished'' and
all that follows and inserting ``for services furnished on or after
January 1, 2010, $0.''.
Subtitle C--Pathway for Biosimilar Biological Products
SEC. 221. LICENSURE PATHWAY FOR BIOSIMILAR BIOLOGICAL PRODUCTS.
(a) Licensure of Biological Products as Biosimilar or
Interchangeable.--Section 351 of the Public Health Service Act (42
U.S.C. 262) is amended--
(1) in subsection (a)(1)(A), by inserting ``under this
subsection or subsection (k)'' after ``biologics license''; and
(2) by adding at the end the following:
``(k) Licensure of Biological Products as Biosimilar or
Interchangeable.--
``(1) In general.--Any person may submit an application for
licensure of a biological product under this subsection.
``(2) Content.--
``(A) In general.--
``(i) Required information.--An application
submitted under this subsection shall include
information demonstrating that--
``(I) the biological product is
biosimilar to a reference product based
upon data derived from--
``(aa) analytical studies
that demonstrate that the
biological product is highly
similar to the reference
product notwithstanding minor
differences in clinically
inactive components;
``(bb) animal studies
(including the assessment of
toxicity); and
``(cc) a clinical study or
studies (including the
assessment of immunogenicity
and pharmacokinetics or
pharmacodynamics) that are
sufficient to demonstrate
safety, purity, and potency in
1 or more appropriate
conditions of use for which the
reference product is licensed
and intended to be used and for
which licensure is sought for
the biological product;
``(II) the biological product and
reference product utilize the same
mechanism or mechanisms of action for
the condition or conditions of use
prescribed, recommended, or suggested
in the proposed labeling, but only to
the extent the mechanism or mechanisms
of action are known for the reference
product;
``(III) the condition or conditions
of use prescribed, recommended, or
suggested in the labeling proposed for
the biological product have been
previously approved for the reference
product;
``(IV) the route of administration,
the dosage form, and the strength of
the biological product are the same as
those of the reference product; and
``(V) the facility in which the
biological product is manufactured,
processed, packed, or held meets
standards designed to assure that the
biological product continues to be
safe, pure, and potent.
``(ii) Determination by secretary.--The
Secretary may determine, in the Secretary's
discretion, that an element described in clause
(i)(I) is unnecessary in an application
submitted under this subsection.
``(iii) Additional information.--An
application submitted under this subsection--
``(I) shall include publicly
available information regarding the
Secretary's previous determination that
the reference product is safe, pure,
and potent; and
``(II) may include any additional
information in support of the
application, including publicly
available information with respect to
the reference product or another
biological product.
``(B) Interchangeability.--An application (or a
supplement to an application) submitted under this
subsection may include information demonstrating that
the biological product meets the standards described in
paragraph (4).
``(3) Evaluation by secretary.--Upon review of an
application (or a supplement to an application) submitted under
this subsection, the Secretary shall license the biological
product under this subsection if--
``(A) the Secretary determines that the information
submitted in the application (or the supplement) is
sufficient to show that the biological product--
``(i) is biosimilar to the reference
product; or
``(ii) meets the standards described in
paragraph (4), and therefore is interchangeable
with the reference product; and
``(B) the applicant (or other appropriate person)
consents to the inspection of the facility that is the
subject of the application, in accordance with
subsection (c).
``(4) Safety standards for determining
interchangeability.--Upon review of an application submitted
under this subsection or any supplement to such application,
the Secretary shall determine the biological product to be
interchangeable with the reference product if the Secretary
determines that the information submitted in the application
(or a supplement to such application) is sufficient to show
that--
``(A) the biological product--
``(i) is biosimilar to the reference
product; and
``(ii) can be expected to produce the same
clinical result as the reference product in any
given patient; and
``(B) for a biological product that is administered
more than once to an individual, the risk in terms of
safety or diminished efficacy of alternating or
switching between use of the biological product and the
reference product is not greater than the risk of using
the reference product without such alternation or
switch.
``(5) General rules.--
``(A) One reference product per application.--A
biological product, in an application submitted under
this subsection, may not be evaluated against more than
1 reference product.
``(B) Review.--An application submitted under this
subsection shall be reviewed by the division within the
Food and Drug Administration that is responsible for
the review and approval of the application under which
the reference product is licensed.
``(C) Risk evaluation and mitigation strategies.--
The authority of the Secretary with respect to risk
evaluation and mitigation strategies under the Federal
Food, Drug, and Cosmetic Act shall apply to biological
products licensed under this subsection in the same
manner as such authority applies to biological products
licensed under subsection (a).
``(D) Restrictions on biological products
containing dangerous ingredients.--If information in an
application submitted under this subsection, in a
supplement to such an application, or otherwise
available to the Secretary shows that a biological
product--
``(i) is, bears, or contains a select agent
or toxin listed in section 73.3 or 73.4 of
title 42, section 121.3 or 121.4 of title 9, or
section 331.3 of title 7, Code of Federal
Regulations (or any successor regulations); or
``(ii) is, bears, or contains a controlled
substance in schedule I or II of section 202 of
the Controlled Substances Act, as listed in
part 1308 of title 21, Code of Federal
Regulations (or any successor regulations);
the Secretary shall not license the biological product
under this subsection unless the Secretary determines,
after consultation with appropriate national security
and drug enforcement agencies, that there would be no
increased risk to the security or health of the public
from licensing such biological product under this
subsection.
``(6) Exclusivity for first interchangeable biological
product.--Upon review of an application submitted under this
subsection relying on the same reference product for which a
prior biological product has received a determination of
interchangeability for any condition of use, the Secretary
shall not make a determination under paragraph (4) that the
second or subsequent biological product is interchangeable for
any condition of use until the earlier of--
``(A) 1 year after the first commercial marketing
of the first interchangeable biosimilar biological
product to be approved as interchangeable for that
reference product;
``(B) 18 months after--
``(i) a final court decision on all patents
in suit in an action instituted under
subsection (l)(5) against the applicant that
submitted the application for the first
approved interchangeable biosimilar biological
product; or
``(ii) the dismissal with or without
prejudice of an action instituted under
subsection (l)(5) against the applicant that
submitted the application for the first
approved interchangeable biosimilar biological
product; or
``(C)(i) 42 months after approval of the first
interchangeable biosimilar biological product if the
applicant that submitted such application has been sued
under subsection (l)(5) and such litigation is still
ongoing within such 42-month period; or
``(ii) 18 months after approval of the first
interchangeable biosimilar biological product if the
applicant that submitted such application has not been
sued under subsection (l)(5).
For purposes of this paragraph, the term `final court decision'
means a final decision of a court from which no appeal (other
than a petition to the United States Supreme Court for a writ
of certiorari) has been or can be taken.
``(7) Exclusivity for reference product.--
``(A) Effective date of biosimilar application
approval.--Approval of an application under this
subsection may not be made effective by the Secretary
until the date that is 12 years after the date on which
the reference product was first licensed under
subsection (a).
``(B) Filing period.--An application under this
subsection may not be submitted to the Secretary until
the date that is 4 years after the date on which the
reference product was first licensed under subsection
(a).
``(C) First licensure.--Subparagraphs (A) and (B)
shall not apply to a license for or approval of--
``(i) a supplement for the biological
product that is the reference product; or
``(ii) a subsequent application filed by
the same sponsor or manufacturer of the
biological product that is the reference
product (or a licensor, predecessor in
interest, or other related entity) for--
``(I) a change (not including a
modification to the structure of the
biological product) that results in a
new indication, route of
administration, dosing schedule, dosage
form, delivery system, delivery device,
or strength; or
``(II) a modification to the
structure of the biological product
that does not result in a change in
safety, purity, or potency.
``(8) Pediatric studies.--
``(A) Exclusivity.--If, before or after licensure
of the reference product under subsection (a) of this
section, the Secretary determines that information
relating to the use of such product in the pediatric
population may produce health benefits in that
population, the Secretary makes a written request for
pediatric studies (which shall include a timeframe for
completing such studies), the applicant or holder of
the approved application agrees to the request, such
studies are completed using appropriate formulations
for each age group for which the study is requested
within any such timeframe, and the reports thereof are
submitted and accepted in accordance with section
505A(d)(3) of the Federal Food, Drug, and Cosmetic Act
the period referred to in paragraph (7)(A) of this
subsection is deemed to be 12 years and 6 months rather
than 12 years.
``(B) Exception.--The Secretary shall not extend
the period referred to in subparagraph (A) of this
paragraph if the determination under section 505A(d)(3)
of the Federal Food, Drug, and Cosmetic Act is made
later than 9 months prior to the expiration of such
period.
``(C) Application of certain provisions.--The
provisions of subsections (a), (d), (e), (f), (h), (j),
(k), and (l) of section 505A of the Federal Food, Drug,
and Cosmetic Act shall apply with respect to the
extension of a period under subparagraph (A) of this
paragraph to the same extent and in the same manner as
such provisions apply with respect to the extension of
a period under subsection (b) or (c) of section 505A of
the Federal Food, Drug, and Cosmetic Act.
``(9) Guidance documents.--
``(A) In general.--The Secretary may, after
opportunity for public comment, issue guidance in
accordance, except as provided in subparagraph (B)(i),
with section 701(h) of the Federal Food, Drug, and
Cosmetic Act with respect to the licensure of a
biological product under this subsection. Any such
guidance may be general or specific.
``(B) Public comment.--
``(i) In general.--The Secretary shall
provide the public an opportunity to comment on
any proposed guidance issued under subparagraph
(A) before issuing final guidance.
``(ii) Input regarding most valuable
guidance.--The Secretary shall establish a
process through which the public may provide
the Secretary with input regarding priorities
for issuing guidance.
``(C) No requirement for application
consideration.--The issuance (or non-issuance) of
guidance under subparagraph (A) shall not preclude the
review of, or action on, an application submitted under
this subsection.
``(D) Requirement for product class-specific
guidance.--If the Secretary issues product class-
specific guidance under subparagraph (A), such guidance
shall include a description of--
``(i) the criteria that the Secretary will
use to determine whether a biological product
is highly similar to a reference product in
such product class; and
``(ii) the criteria, if available, that the
Secretary will use to determine whether a
biological product meets the standards
described in paragraph (4).
``(E) Certain product classes.--
``(i) Guidance.--The Secretary may indicate
in a guidance document that the science and
experience, as of the date of such guidance,
with respect to a product or product class (not
including any recombinant protein) does not
allow approval of an application for a license
as provided under this subsection for such
product or product class.
``(ii) Modification or reversal.--The
Secretary may issue a subsequent guidance
document under subparagraph (A) to modify or
reverse a guidance document under clause (i).
``(iii) No effect on ability to deny
license.--Clause (i) shall not be construed to
require the Secretary to approve a product with
respect to which the Secretary has not
indicated in a guidance document that the
science and experience, as described in clause
(i), does not allow approval of such an
application.
``(10) Naming.--The Secretary shall ensure that the
labeling and packaging of each biological product licensed
under this subsection bears a name that uniquely identifies the
biological product and distinguishes it from the reference
product and any other biological products licensed under this
subsection following evaluation against such reference product.
``(l) Patent Notices; Relationship to Final Approval.--
``(1) Definitions.--For the purposes of this subsection,
the term--
``(A) `biosimilar product' means the biological
product that is the subject of the application under
subsection (k);
``(B) `relevant patent' means a patent that--
``(i) expires after the date specified in
subsection (k)(7)(A) that applies to the
reference product; and
``(ii) could reasonably be asserted against
the applicant due to the unauthorized making,
use, sale, or offer for sale within the United
States, or the importation into the United
States of the biosimilar product, or materials
used in the manufacture of the biosimilar
product, or due to a use of the biosimilar
product in a method of treatment that is
indicated in the application;
``(C) `reference product sponsor' means the holder
of an approved application or license for the reference
product; and
``(D) `interested third party' means a person other
than the reference product sponsor that owns a relevant
patent, or has the right to commence or participate in
an action for infringement of a relevant patent.
``(2) Handling of confidential information.--Any entity
receiving confidential information pursuant to this subsection
shall designate one or more individuals to receive such
information. Each individual so designated shall execute an
agreement in accordance with regulations promulgated by the
Secretary. The regulations shall require each such individual
to take reasonable steps to maintain the confidentiality of
information received pursuant to this subsection and use the
information solely for purposes authorized by this subsection.
The obligations imposed on an individual who has received
confidential information pursuant to this subsection shall
continue until the individual returns or destroys the
confidential information, a court imposes a protective order
that governs the use or handling of the confidential
information, or the party providing the confidential
information agrees to other terms or conditions regarding the
handling or use of the confidential information.
``(3) Public notice by secretary.--Within 30 days of
acceptance by the Secretary of an application filed under
subsection (k), the Secretary shall publish a notice
identifying--
``(A) the reference product identified in the
application; and
``(B) the name and address of an agent designated
by the applicant to receive notices pursuant to
paragraph (4)(B).
``(4) Exchanges concerning patents.--
``(A) Exchanges with reference product sponsor.--
``(i) Within 30 days of the date of
acceptance of the application by the Secretary,
the applicant shall provide the reference
product sponsor with a copy of the application
and information concerning the biosimilar
product and its production. This information
shall include a detailed description of the
biosimilar product, its method of manufacture,
and the materials used in the manufacture of
the product.
``(ii) Within 60 days of the date of
receipt of the information required to be
provided under clause (i), the reference
product sponsor shall provide to the applicant
a list of relevant patents owned by the
reference product sponsor, or in respect of
which the reference product sponsor has the
right to commence an action of infringement or
otherwise has an interest in the patent as such
patent concerns the biosimilar product.
``(iii) If the reference product sponsor is
issued or acquires an interest in a relevant
patent after the date on which the reference
product sponsor provides the list required by
clause (ii) to the applicant, the reference
product sponsor shall identify that patent to
the applicant within 30 days of the date of
issue of the patent, or the date of acquisition
of the interest in the patent, as applicable.
``(B) Exchanges with interested third parties.--
``(i) At any time after the date on which
the Secretary publishes a notice for an
application under paragraph (3), any interested
third party may provide notice to the
designated agent of the applicant that the
interested third party owns or has rights under
1 or more patents that may be relevant patents.
The notice shall identify at least 1 patent and
shall designate an individual who has executed
an agreement in accordance with paragraph (2)
to receive confidential information from the
applicant.
``(ii) Within 30 days of the date of
receiving notice pursuant to clause (i), the
applicant shall send to the individual
designated by the interested third party the
information specified in subparagraph (A)(i),
unless the applicant and interested third party
otherwise agree.
``(iii) Within 90 days of the date of
receiving information pursuant to clause (ii),
the interested third party shall provide to the
applicant a list of relevant patents which the
interested third party owns, or in respect of
which the interested third party has the right
to commence or participate in an action for
infringement.
``(iv) If the interested third party is
issued or acquires an interest in a relevant
patent after the date on which the interested
third party provides the list required by
clause (iii), the interested third party shall
identify that patent within 30 days of the date
of issue of the patent, or the date of
acquisition of the interest in the patent, as
applicable.
``(C) Identification of basis for infringement.--
For any patent identified under clause (ii) or (iii) of
subparagraph (A) or under clause (iii) or (iv) of
subparagraph (B), the reference product sponsor or the
interested third party, as applicable--
``(i) shall explain in writing why the
sponsor or the interested third party believes
the relevant patent would be infringed by the
making, use, sale, or offer for sale within the
United States, or importation into the United
States, of the biosimilar product or by a use
of the biosimilar product in treatment that is
indicated in the application;
``(ii) may specify whether the relevant
patent is available for licensing; and
``(iii) shall specify the number and date
of expiration of the relevant patent.
``(D) Certification by applicant concerning
identified relevant patents.--Not later than 45 days
after the date on which a patent is identified under
clause (ii) or (iii) of subparagraph (A) or under
clause (iii) or (iv) of subparagraph (B), the applicant
shall send a written statement regarding each
identified patent to the party that identified the
patent. Such statement shall either--
``(i) state that the applicant will not
commence marketing of the biosimilar product
and has requested the Secretary to not grant
final approval of the application before the
date of expiration of the noticed patent; or
``(ii) provide a detailed written
explanation setting forth the reasons why the
applicant believes--
``(I) the making, use, sale, or
offer for sale within the United
States, or the importation into the
United States, of the biosimilar
product, or the use of the biosimilar
product in a treatment indicated in the
application, would not infringe the
patent; or
``(II) the patent is invalid or
unenforceable.
``(5) Action for infringement involving reference product
sponsor.--If an action for infringement concerning a relevant
patent identified by the reference product sponsor under clause
(ii) or (iii) of paragraph (4)(A), or by an interested third
party under clause (iii) or (iv) of paragraph (4)(B), is
brought within 60 days of the date of receipt of a statement
under paragraph (4)(D)(ii), and the court in which such action
has been commenced determines the patent is infringed prior to
the date applicable under subsection (k)(7)(A) or (k)(8), the
Secretary shall make approval of the application effective on
the day after the date of expiration of the patent that has
been found to be infringed. If more than one such patent is
found to be infringed by the court, the approval of the
application shall be made effective on the day after the date
that the last such patent expires.
``(6) Notification of agreements.--
``(A) Requirements.--
``(i) Agreement between biosimilar product
applicant and reference product sponsor.--If a
biosimilar product applicant under subsection
(k) and the reference product sponsor enter
into an agreement described in subparagraph
(B), the applicant and sponsor shall each file
the agreement in accordance with subparagraph
(C).
``(ii) Agreement between biosimilar product
applicants.--If 2 or more biosimilar product
applicants submit an application under
subsection (k) for biosimilar products with the
same reference product and enter into an
agreement described in subparagraph (B), the
applicants shall each file the agreement in
accordance with subparagraph (C).
``(B) Subject matter of agreement.--An agreement
described in this subparagraph--
``(i) is an agreement between the
biosimilar product applicant under subsection
(k) and the reference product sponsor or
between 2 or more biosimilar product applicants
under subsection (k) regarding the manufacture,
marketing, or sale of--
``(I) the biosimilar product (or
biosimilar products) for which an
application was submitted; or
``(II) the reference product;
``(ii) includes any agreement between the
biosimilar product applicant under subsection
(k) and the reference product sponsor or
between 2 or more biosimilar product applicants
under subsection (k) that is contingent upon,
provides a contingent condition for, or
otherwise relates to an agreement described in
clause (i); and
``(iii) excludes any agreement that solely
concerns--
``(I) purchase orders for raw
material supplies;
``(II) equipment and facility
contracts;
``(III) employment or consulting
contracts; or
``(IV) packaging and labeling
contracts.
``(C) Filing.--
``(i) In general.--The text of an agreement
required to be filed by subparagraph (A) shall
be filed with the Assistant Attorney General
and the Federal Trade Commission not later
than--
``(I) 10 business days after the
date on which the agreement is
executed; and
``(II) prior to the date of the
first commercial marketing of, for
agreements described in subparagraph
(A)(i), the biosimilar product that is
the subject of the application or, for
agreements described in subparagraph
(A)(ii), any biosimilar product that is
the subject of an application described
in such subparagraph.
``(ii) If agreement not reduced to text.--
If an agreement required to be filed by
subparagraph (A) has not been reduced to text,
the persons required to file the agreement
shall each file written descriptions of the
agreement that are sufficient to disclose all
the terms and conditions of the agreement.
``(iii) Certification.--The chief executive
officer or the company official responsible for
negotiating any agreement required to be filed
by subparagraph (A) shall include in any filing
under this paragraph a certification as
follows: `I declare under penalty of perjury
that the following is true and correct: The
materials filed with the Federal Trade
Commission and the Department of Justice under
section 351(l)(6) of the Public Health Service
Act, with respect to the agreement referenced
in this certification: (1) represent the
complete, final, and exclusive agreement
between the parties; (2) include any ancillary
agreements that are contingent upon, provide a
contingent condition for, or are otherwise
related to, the referenced agreement; and (3)
include written descriptions of any oral
agreements, representations, commitments, or
promises between the parties that are
responsive to such section and have not been
reduced to writing.'.
``(D) Disclosure exemption.--Any information or
documentary material filed with the Assistant Attorney
General or the Federal Trade Commission pursuant to
this paragraph shall be exempt from disclosure under
section 552 of title 5, United States Code, and no such
information or documentary material may be made public,
except as may be relevant to any administrative or
judicial action or proceeding. Nothing in this
subparagraph prevents disclosure of information or
documentary material to either body of the Congress or
to any duly authorized committee or subcommittee of the
Congress.
``(E) Enforcement.--
``(i) Civil penalty.--Any person that
violates a provision of this paragraph shall be
liable for a civil penalty of not more than
$11,000 for each day on which the violation
occurs. Such penalty may be recovered in a
civil action--
``(I) brought by the United States;
or
``(II) brought by the Federal Trade
Commission in accordance with the
procedures established in section
16(a)(1) of the Federal Trade
Commission Act.
``(ii) Compliance and equitable relief.--If
any person violates any provision of this
paragraph, the United States district court may
order compliance, and may grant such other
equitable relief as the court in its discretion
determines necessary or appropriate, upon
application of the Assistant Attorney General
or the Federal Trade Commission.
``(F) Rulemaking.--The Federal Trade Commission,
with the concurrence of the Assistant Attorney General
and by rule in accordance with section 553 of title 5,
United States Code, consistent with the purposes of
this paragraph--
``(i) may define the terms used in this
paragraph;
``(ii) may exempt classes of persons or
agreements from the requirements of this
paragraph; and
``(iii) may prescribe such other rules as
may be necessary and appropriate to carry out
the purposes of this paragraph.
``(G) Savings clause.--Any action taken by the
Assistant Attorney General or the Federal Trade
Commission, or any failure of the Assistant Attorney
General or the Commission to take action, under this
paragraph shall not at any time bar any proceeding or
any action with respect to any agreement between a
biosimilar product applicant under subsection (k) and
the reference product sponsor, or any agreement between
biosimilar product applicants under subsection (k),
under any other provision of law, nor shall any filing
under this paragraph constitute or create a presumption
of any violation of any competition laws.''.
(b) Definitions.--Section 351(i) of the Public Health Service Act
(42 U.S.C. 262(i)) is amended--
(1) by striking ``In this section, the term `biological
product' means'' and inserting the following: ``In this
section:
``(1) The term `biological product' means'';
(2) in paragraph (1), as so designated, by inserting
``protein (except any chemically synthesized polypeptide),''
after ``allergenic product,''; and
(3) by adding at the end the following:
``(2) The term `biosimilar' or `biosimilarity', in
reference to a biological product that is the subject of an
application under subsection (k), means--
``(A) that the biological product is highly similar
to the reference product notwithstanding minor
differences in clinically inactive components; and
``(B) there are no clinically meaningful
differences between the biological product and the
reference product in terms of the safety, purity, and
potency of the product.
``(3) The term `interchangeable' or `interchangeability',
in reference to a biological product that is shown to meet the
standards described in subsection (k)(4), means that the
biological product may be substituted for the reference product
without the intervention of the health care provider who
prescribed the reference product.
``(4) The term `reference product' means the single
biological product licensed under subsection (a) against which
a biological product is evaluated in an application submitted
under subsection (k).''.
(c) Products Previously Approved Under Section 505.--
(1) Requirement to follow section 351.--Except as provided
in paragraph (2), an application for a biological product shall
be submitted under section 351 of the Public Health Service Act
(42 U.S.C. 262) (as amended by this Act).
(2) Exception.--An application for a biological product may
be submitted under section 505 of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 355) if--
(A) such biological product is in a product class
for which a biological product in such product class is
the subject of an application approved under such
section 505 not later than the date of enactment of
this Act; and
(B) such application--
(i) has been submitted to the Secretary of
Health and Human Services (referred to in this
Act as the ``Secretary'') before the date of
enactment of this Act; or
(ii) is submitted to the Secretary not
later than the date that is 10 years after the
date of enactment of this Act.
(3) Limitation.--Notwithstanding paragraph (2), an
application for a biological product may not be submitted under
section 505 of the Federal Food, Drug, and Cosmetic Act (21
U.S.C. 355) if there is another biological product approved
under subsection (a) of section 351 of the Public Health
Service Act that could be a reference product with respect to
such application (within the meaning of such section 351) if
such application were submitted under subsection (k) of such
section 351.
(4) Deemed approved under section 351.--An approved
application for a biological product under section 505 of the
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355) shall be
deemed to be a license for the biological product under such
section 351 on the date that is 10 years after the date of
enactment of this Act.
(5) Definitions.--For purposes of this subsection, the term
``biological product'' has the meaning given such term under
section 351 of the Public Health Service Act (42 U.S.C. 262)
(as amended by this Act).
SEC. 222. FEES RELATING TO BIOSIMILAR BIOLOGICAL PRODUCTS.
Subparagraph (B) of section 735(1) of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 379g(1)) is amended by inserting ``, including
licensure of a biological product under section 351(k) of such Act''
before the period at the end.
SEC. 223. AMENDMENTS TO CERTAIN PATENT PROVISIONS.
(a) Section 271(e)(2) of title 35, United States Code is amended--
(1) in subparagraph (A), by striking ``or'' after
``patent,'';
(2) in subparagraph (B), by adding ``or'' after the comma
at the end;
(3) by inserting the following after subparagraph (B):
``(C) a statement under section 351(l)(4)(D)(ii) of
the Public Health Service Act,''; and
(4) in the matter following subparagraph (C) (as added by
paragraph (3)), by inserting before the period the following:
``, or if the statement described in subparagraph (C) is
provided in connection with an application to obtain a license
to engage in the commercial manufacture, use, or sale of a
biological product claimed in a patent or the use of which is
claimed in a patent before the expiration of such patent''.
(b) Section 271(e)(4) of title 35, United States Code, is amended
by striking ``in paragraph (2)'' in both places it appears and
inserting ``in paragraph (2)(A) or (2)(B)''.
Subtitle D--Administrative Simplification
SEC. 231. ADMINISTRATIVE SIMPLIFICATION.
(a) Operating Rules for Health Information Transactions.--
(1) Definition of operating rules.--Section 1171 of the
Social Security Act (42 U.S.C. 1320d) is amended by adding at
the end the following:
``(9) Operating rules.--The term `operating rules' means
the necessary business rules and guidelines for the electronic
exchange of information that are not defined by a standard or
its implementation specifications as adopted for purposes of
this part.''.
(2) Operating rules and compliance.--Section 1173 of the
Social Security Act (42 U.S.C. 1320d-2) is amended--
(A) in subsection (a)(2), by adding at the end the
following new subparagraph:
``(J) Electronic funds transfers.''; and
(B) by adding at the end the following new
subsections:
``(g) Operating Rules.--
``(1) In general.--The Secretary shall adopt a single set
of operating rules for each transaction described in subsection
(a)(2) with the goal of creating as much uniformity in the
implementation of the electronic standards as possible. Such
operating rules shall be consensus-based and reflect the
necessary business rules affecting health plans and health care
providers and the manner in which they operate pursuant to
standards issued under Health Insurance Portability and
Accountability Act of 1996.
``(2) Operating rules development.--In adopting operating
rules under this subsection, the Secretary shall rely on
recommendations for operating rules developed by a qualified
nonprofit entity, as selected by the Secretary, that meets the
following requirements:
``(A) The entity focuses its mission on
administrative simplification.
``(B) The entity demonstrates an established multi-
stakeholder and consensus-based process for development
of operating rules, including representation by or
participation from health plans, health care providers,
vendors, relevant Federal agencies, and other standard
development organizations.
``(C) The entity has established a public set of
guiding principles that ensure the operating rules and
process are open and transparent.
``(D) The entity coordinates its activities with
the HIT Policy Committee and the HIT Standards
Committee (as established under title XXX of the Public
Health Service Act) and complements the efforts of the
Office of the National Healthcare Coordinator and its
related health information exchange goals.
``(E) The entity incorporates national standards,
including the transaction standards issued under Health
Insurance Portability and Accountability Act of 1996.
``(F) The entity supports nondiscrimination and
conflict of interest policies that demonstrate a
commitment to open, fair, and nondiscriminatory
practices.
``(G) The entity allows for public review and
updates of the operating rules.
``(3) Review and recommendations.--The National Committee
on Vital and Health Statistics shall--
``(A) review the operating rules developed by a
nonprofit entity described under paragraph (2);
``(B) determine whether such rules represent a
consensus view of the health care industry and are
consistent with and do not alter current standards;
``(C) evaluate whether such rules are consistent
with electronic standards adopted for health
information technology; and
``(D) submit to the Secretary a recommendation as
to whether the Secretary should adopt such rules.
``(4) Implementation.--
``(A) In general.--The Secretary shall adopt
operating rules under this subsection, by regulation in
accordance with subparagraph (C), following
consideration of the rules developed by the non-profit
entity described in paragraph (2) and the
recommendation submitted by the National Committee on
Vital and Health Statistics under paragraph (3)(D) and
having ensured consultation with providers.
``(B) Adoption requirements; effective dates.--
``(i) Eligibility for a health plan and
health claim status.--The set of operating
rules for transactions for eligibility for a
health plan and health claim status shall be
adopted not later than July 1, 2011, in a
manner ensuring that such rules are effective
not later than January 1, 2013, and may allow
for the use of a machine readable
identification card.
``(ii) Electronic funds transfers and
health care payment and remittance advice.--The
set of operating rules for electronic funds
transfers and health care payment and
remittance advice shall be adopted not later
than July 1, 2012, in a manner ensuring that
such rules are effective not later than January
1, 2014.
``(iii) Other completed transactions.--The
set of operating rules for the remainder of the
completed transactions described in subsection
(a)(2), including health claims or equivalent
encounter information, enrollment and
disenrollment in a health plan, health plan
premium payments, and referral certification
and authorization, shall be adopted not later
than July 1, 2014, in a manner ensuring that
such rules are effective not later than January
1, 2016.
``(C) Expedited rulemaking.--The Secretary shall
promulgate an interim final rule applying any standard
or operating rule recommended by the National Committee
on Vital and Health Statistics pursuant to paragraph
(3). The Secretary shall accept public comments on any
interim final rule published under this subparagraph
for 60 days after the date of such publication.
``(h) Compliance.--
``(1) Health plan certification.--
``(A) Eligibility for a health plan, health claim
status, electronic funds transfers, health care payment
and remittance advice.--Not later than December 31,
2013, a health plan shall file a statement with the
Secretary, in such form as the Secretary may require,
certifying that the data and information systems for
such plan are in compliance with any applicable
standards (as described under paragraph (7) of section
1171) and operating rules (as described under paragraph
(9) of such section) for electronic funds transfers,
eligibility for a health plan, health claim status, and
health care payment and remittance advice,
respectively.
``(B) Other completed transactions.--Not later than
December 31, 2015, a health plan shall file a statement
with the Secretary, in such form as the Secretary may
require, certifying that the data and information
systems for such plan are in compliance with any
applicable standards and operating rules for the
remainder of the completed transactions described in
subsection (a)(2), including health claims or
equivalent encounter information, enrollment and
disenrollment in a health plan, health plan premium
payments, and referral certification and authorization,
respectively. A health plan shall provide the same
level of documentation to certify compliance with such
transactions as is required to certify compliance with
the transactions specified in subparagraph (A).
``(2) Documentation of compliance.--A health plan shall
provide the Secretary, in such form as the Secretary may
require, with adequate documentation of compliance with the
standards and operating rules described under paragraph (1). A
health plan shall not be considered to have provided adequate
documentation and shall not be certified as being in compliance
with such standards, unless the health plan--
``(A) demonstrates to the Secretary that the plan
conducts the electronic transactions specified in
paragraph (1) in a manner that fully complies with the
regulations of the Secretary; and
``(B) provides documentation showing that the plan
has completed end-to-end testing for such transactions
with their partners, such as hospitals and physicians.
``(3) Service contracts.--A health plan shall be required
to comply with any applicable certification and compliance
requirements (and provide the Secretary with adequate
documentation of such compliance) under this subsection for any
entities that provide services pursuant to a contract with such
health plan.
``(4) Certification by outside entity.--The Secretary may
contract with an independent, outside entity to certify that a
health plan has complied with the requirements under this
subsection, provided that the certification standards employed
by such entities are in accordance with any standards or rules
issued by the Secretary.
``(5) Compliance with revised standards and rules.--A
health plan (including entities described under paragraph (3))
shall comply with the certification and documentation
requirements under this subsection for any interim final rule
promulgated by the Secretary under subsection (i) that amends
any standard or operating rule described under paragraph (1) of
this subsection. A health plan shall comply with such
requirements not later than the effective date of the
applicable interim final rule.
``(6) Audits of health plans.--The Secretary shall conduct
periodic audits to ensure that health plans (including entities
described under paragraph (3)) are in compliance with any
standards and operating rules that are described under
paragraph (1).
``(i) Review and Amendment of Standards and Rules.--
``(1) Establishment.--Not later than January 1, 2014, the
Secretary shall establish a review committee (as described
under paragraph (4)).
``(2) Evaluations and reports.--
``(A) Hearings.--Not later than April 1, 2014, and
not less than biennially thereafter, the Secretary,
acting through the review committee, shall conduct
hearings to evaluate and review the existing standards
and operating rules established under this section.
``(B) Report.--Not later than July 1, 2014, and not
less than biennially thereafter, the review committee
shall provide recommendations for updating and
improving such standards and rules. The review
committee shall recommend a single set of operating
rules per transaction standard and maintain the goal of
creating as much uniformity as possible in the
implementation of the electronic standards.
``(3) Interim final rulemaking.--
``(A) In general.--Any recommendations to amend
existing standards and operating rules that have been
approved by the review committee and reported to the
Secretary under paragraph (2)(B) shall be adopted by
the Secretary through promulgation of an interim final
rule not later than 90 days after receipt of the
committee's report.
``(B) Public comment.--
``(i) Public comment period.--The Secretary
shall accept public comments on any interim
final rule published under this paragraph for
60 days after the date of such publication.
``(ii) Effective date.--The effective date
of any amendment to existing standards or
operating rules that is adopted through an
interim final rule published under this
paragraph shall be 25 months following the
close of such public comment period.
``(4) Review committee.--
``(A) Definition.--For the purposes of this
subsection, the term `review committee' means a
committee within the Department of Health and Human
services that has been designated by the Secretary to
carry out this subsection, including--
``(i) the National Committee on Vital and
Health Statistics; or
``(ii) any appropriate committee as
determined by the Secretary.
``(B) Coordination of hit standards.--In developing
recommendations under this subsection, the review
committee shall consider the standards approved by the
Office of the National Coordinator for Health
Information Technology.
``(j) Penalties.--
``(1) Penalty fee.--
``(A) In general.--Not later than April 1, 2014,
and annually thereafter, the Secretary shall assess a
penalty fee (as determined under subparagraph (B))
against a health plan that has failed to meet the
requirements under subsection (h) with respect to
certification and documentation of compliance with the
standards (and their operating rules) as described
under paragraph (1) of such subsection.
``(B) Fee amount.--Subject to subparagraphs (C),
(D), and (E), the Secretary shall assess a penalty fee
against a health plan in the amount of $1 per covered
life until certification is complete. The penalty shall
be assessed per person covered by the plan for which
its data systems for major medical policies are not in
compliance and shall be imposed against the health plan
for each day that the plan is not in compliance with
the requirements under subsection (h).
``(C) Additional penalty for misrepresentation.--A
health plan that knowingly provides inaccurate or
incomplete information in a statement of certification
or documentation of compliance under subsection (h)
shall be subject to a penalty fee that is double the
amount that would otherwise be imposed under this
subsection.
``(D) Annual fee increase.--The amount of the
penalty fee imposed under this subsection shall be
increased on an annual basis by the annual percentage
increase in total national health care expenditures, as
determined by the Secretary.
``(E) Penalty limit.--A penalty fee assessed
against a health plan under this subsection shall not
exceed, on an annual basis--
``(i) an amount equal to $20 per covered
life under such plan; or
``(ii) an amount equal to $40 per covered
life under the plan if such plan has knowingly
provided inaccurate or incomplete information
(as described under subparagraph (C)).
``(F) Determination of covered individuals.--The
Secretary shall determine the number of covered lives
under a health plan based upon the most recent
statements and filings that have been submitted by such
plan to the Securities and Exchange Commission.
``(2) Notice and dispute procedure.--The Secretary shall
establish a procedure for assessment of penalty fees under this
subsection that provides a health plan with reasonable notice
and a dispute resolution procedure prior to provision of a
notice of assessment by the Secretary of the Treasury (as
described under paragraph (4)(B)).
``(3) Penalty fee report.--Not later than May 1, 2014, and
annually thereafter, the Secretary shall provide the Secretary
of the Treasury with a report identifying those health plans
that have been assessed a penalty fee under this subsection.
``(4) Collection of penalty fee.--
``(A) In general.--The Secretary of the Treasury,
acting through the Financial Management Service, shall
administer the collection of penalty fees from health
plans that have been identified by the Secretary in the
penalty fee report provided under paragraph (3).
``(B) Notice.--Not later than August 1, 2014, and
annually thereafter, the Secretary of the Treasury
shall provide notice to each health plan that has been
assessed a penalty fee by the Secretary under this
subsection. Such notice shall include the amount of the
penalty fee assessed by the Secretary and the due date
for payment of such fee to the Secretary of the
Treasury (as described in subparagraph (C)).
``(C) Payment due date.--Payment by a health plan
for a penalty fee assessed under this subsection shall
be made to the Secretary of the Treasury not later than
November 1, 2014, and annually thereafter.
``(D) Unpaid penalty fees.--Any amount of a penalty
fee assessed against a health plan under this
subsection for which payment has not been made by the
due date provided under subparagraph (C) shall be--
``(i) increased by the interest accrued on
such amount, as determined pursuant to the
underpayment rate established under section
6601 of the Internal Revenue Code of 1986; and
``(ii) treated as a past-due, legally
enforceable debt owed to a Federal agency for
purposes of section 6402(d) of the Internal
Revenue Code of 1986.
``(E) Administrative fees.--Any fee charged or
allocated for collection activities conducted by the
Financial Management Service will be passed on to a
health plan on a pro-rata basis and added to any
penalty fee collected from the plan.''.
(b) Promulgation of Rules.--
(1) Unique health plan identifier.--The Secretary shall
promulgate a final rule to establish a unique health plan
identifier (as described in section 1173(b) of the Social
Security Act (42 U.S.C. 1320d-2(b))) based on the input of the
National Committee of Vital and Health Statistics. The
Secretary may do so on an interim final basis and such rule
shall be effective not later than October 1, 2012.
(2) Electronic funds transfer.--The Secretary shall
promulgate a final rule to establish a standard for electronic
funds transfers (as described in section 1173(a)(2)(J) of the
Social Security Act, as added by subsection (a)(2)(A)). The
Secretary may do so on an interim final basis and shall adopt
such standard not later than January 1, 2012, in a manner
ensuring that such standard is effective not later than January
1, 2014.
(c) Expansion of Electronic Transactions in Medicare.--Section
1862(a) of the Social Security Act (42 U.S.C. 1395y(a)) is amended--
(1) in paragraph (23), by striking the ``or'' at the end;
(2) in paragraph (24), by striking the period and inserting
``; or''; and
(3) by inserting after paragraph (24) the following new
paragraph:
``(25) not later than January 1, 2014, for which the
payment is other than by electronic funds transfer (EFT) or an
electronic remittance in a form as specified in ASC X12 835
Health Care Payment and Remittance Advice or subsequent
standard.''.
(d) Medicare and Medicaid Compliance Reports.--Not later than July
1, 2013, the Secretary of Health and Human Services shall submit a
report to the Chairs and Ranking Members of the Committee on Ways and
Means and the Committee on Energy and Commerce of the House of
Representatives and the Chairs and Ranking Members of the Committee on
Health, Education, Labor, and Pensions and the Committee on Finance of
the Senate on the extent to which the Medicare program and providers
that serve beneficiaries under that program, and State Medicaid
programs and providers that serve beneficiaries under those programs,
transact electronically in accordance with transaction standards issued
under the Health Insurance Portability and Accountability Act of 1996,
part C of title XI of the Social Security Act, and regulations
promulgated under such Acts.
<all>
Introduced in House
Introduced in House
Referred to House Energy and Commerce
Referred to the Committee on Energy and Commerce, and in addition to the Committees on Ways and Means, and the Judiciary, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to House Ways and Means
Referred to House Judiciary
Referred to the Subcommittee on Health.
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