(a) In general

Section 1927(c)(2)(C) of the Social Security Act (42 U.S.C. 1396r–8(c)(2)(C)) is amended by inserting the following new clause before the flush matter at the end:

(iv) Priority research drug

(I) Request for designation

Not later than 90 days following the date of enactment of this clause, the Secretary shall establish and make effective a process for the manufacturer of a covered outpatient drug to request that the Secretary designate the drug as a priority research drug.

(II) Designation

Not later than 60 calendar days after the receipt of a request under subclause (I), the Secretary shall designate a covered outpatient drug as a priority research drug so long as it meets the following criteria:

(aa)

As of the date of submission of such request, at least 10 years have elapsed since the date the drug was approved under section 505(c) of the Federal Food, Drug, and Cosmetic Act or section 351(a) of the Public Health Service Act.

(bb)

The manufacturer of the drug is investigating such drug under section 505(i) of the Federal Food, Drug, and Cosmetic Act or section 351(a)(3) of the Public Health Service Act for a new indication that would address a significant unmet medical need because there is no alternative drug approved under section 505 of the Federal Food, Drug, and Cosmetic Act or licensed under section 351 of the Public Health Service Act for such indication on the date that the request under subclause (I) was submitted to the Secretary.

(cc)

The new indication described in item (bb) is for a disease or condition that has a high prevalence among beneficiaries of Federal health care programs. For purposes of this clause, a disease or condition has a high prevalence among beneficiaries of Federal health care programs if at least 33 percent of claims in the population targeted by the new indication during the prior calendar year were paid for under—

(AA)

a State plan under this title or a State child health plan under title XXI;

(BB)

part D of title XVIII with respect to an individual who is eligible for subsidies under section 1860D–14;

(CC)

the drug discount program under section 340B of the Public Health Service Act (42 U.S.C. 256b; or

(DD)

a health care program administered by the Department of Veterans Affairs.

(b) Exclusion of priority research drugs from Medicaid definition of line extension

The flush matter at the end of section 1927(c)(2)(C) of the Social Security Act (42 U.S.C. 1396r–8(c)(2)(C)) is amended by inserting a priority research drug (as designated under clause (iv)) or after does not include.

(c) Exclusion of priority research drugs from Medicaid best price special rule for selected drugs

Section 1927(c)(1)(C)(ii)(V) of the Social Security Act (42 U.S.C. 1396r–8(c)(1)(C)(ii)(V)) is amended by inserting unless such drug is also designated as a priority research drug under paragraph (2)(C)(iv) during such period before the period.

(d) Exclusion of priority research drugs from Medicare definition of line extension

Section 1860D–14B(b)(5)(B)(ii) of the Social Security Act (42 U.S.C. 1395w–114b(b)(5)(B)(ii)) is amended by inserting a priority research drug (as designated under section 1927(c)(2)(C)(iv)) or after does not include.