[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5281 Introduced in House (IH)]
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116th CONGRESS
1st Session
H. R. 5281
To amend title XIX of the Social Security Act to improve transparency
and prevent the use of abusive spread pricing and related practices in
the Medicaid program.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
December 3, 2019
Mr. Carter of Georgia (for himself and Mr. Cardenas) introduced the
following bill; which was referred to the Committee on Energy and
Commerce
_______________________________________________________________________
A BILL
To amend title XIX of the Social Security Act to improve transparency
and prevent the use of abusive spread pricing and related practices in
the Medicaid program.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Drug Price Transparency in Medicaid
Act of 2019''.
SEC. 2. IMPROVING TRANSPARENCY AND PREVENTING THE USE OF ABUSIVE SPREAD
PRICING AND RELATED PRACTICES IN MEDICAID.
(a) Pass-Through Pricing Required.--
(1) In general.--Section 1927(e) of the Social Security Act
(42 U.S.C. 1396r-8(e)) is amended by adding at the end the
following:
``(6) Pass-through pricing required.--A contract between
the State and a pharmacy benefit manager (referred to in this
paragraph as a `PBM'), or a contract between the State and a
managed care entity or other specified entity (as such terms
are defined in section 1903(m)(9)(D)) that includes provisions
making the entity responsible for coverage of covered
outpatient drugs dispensed to individuals enrolled with the
entity, shall require that payment for such drugs and related
administrative services (as applicable), including payments
made by a PBM on behalf of the State or entity, is based on a
pass-through pricing model under which--
``(A) any payment made by the entity or the PBM (as
applicable) for such a drug--
``(i) is limited to--
``(I) ingredient cost; and
``(II) a professional dispensing
fee that is not less than the
professional dispensing fee that the
State plan or waiver would pay if the
plan or waiver was making the payment
directly;
``(ii) is passed through in its entirety by
the entity or PBM to the pharmacy that
dispenses the drug; and
``(iii) is made in a manner that is
consistent with section 1902(a)(30)(A) and
sections 447.512, 447.514, and 447.518 of title
42, Code of Federal Regulations (or any
successor regulation) as if such requirements
applied directly to the entity or the PBM;
``(B) payment to the entity or the PBM (as
applicable) for administrative services performed by
the entity or PBM is limited to a reasonable
administrative fee that covers the reasonable cost of
providing such services;
``(C) the entity or the PBM (as applicable) shall
make available to the State, and the Secretary upon
request, all costs and payments related to covered
outpatient drugs and accompanying administrative
services incurred, received, or made by the entity or
the PBM, including ingredient costs, professional
dispensing fees, administrative fees, post-sale and
post-invoice fees, discounts, or related adjustments
such as direct and indirect remuneration fees, and any
and all other remuneration; and
``(D) any form of spread pricing whereby any amount
charged or claimed by the entity or the PBM (as
applicable) is in excess of the amount paid to the
pharmacies on behalf of the entity, including any post-
sale or post-invoice fees, discounts, or related
adjustments such as direct and indirect remuneration
fees or assessments (after allowing for a reasonable
administrative fee as described in subparagraph (B)) is
not allowable for purposes of claiming Federal matching
payments under this title.''.
(2) Conforming amendment.--Section 1903(m)(2)(A)(xiii) of
such Act (42 U.S.C. 1396b(m)(2)(A)(xiii)) is amended--
(A) by striking ``and (III)'' and inserting
``(III)'';
(B) by inserting before the period at the end the
following: ``, and (IV) pharmacy benefit management
services provided by the entity, or provided by a
pharmacy benefit manager on behalf of the entity under
a contract or other arrangement between the entity and
the pharmacy benefit manager, shall comply with the
requirements of section 1927(e)(6)''; and
(C) by moving the left margin 2 ems to the left.
(3) Effective date.--The amendments made by this subsection
apply to contracts between States and managed care entities,
other specified entities, or pharmacy benefits managers that
are entered into or renewed on or after the date that is 18
months after the date of enactment of this Act.
(b) Survey of Retail Prices.--
(1) In general.--Section 1927(f) of the Social Security Act
(42 U.S.C. 1396r-8(f)) is amended--
(A) by striking ``and'' after the semicolon at the
end of paragraph (1)(A)(i) and all that precedes it
through ``(1)'' and inserting the following:
``(1) Survey of retail prices.--The Secretary shall conduct
a survey of retail community drug prices, to include at least
the national average drug acquisition cost, as follows:
``(A) Use of vendor.--The Secretary may contract
services for--
``(i) with respect to retail community
pharmacies, the determination on a monthly
basis of retail survey prices of the national
average drug acquisition cost for covered
outpatient drugs for such pharmacies, net of
all discounts and rebates (to the extent any
information with respect to such discounts and
rebates is available), the average
reimbursement received for such drugs by such
pharmacies from all sources of payment,
including third parties, and, to the extent
available, the usual and customary charges to
consumers for such drugs; and'';
(B) by adding at the end of paragraph (1) the
following:
``(F) Survey reporting.--In order to meet the
requirement of section 1902(a)(54), a State shall
require that any retail community pharmacy in the State
that receives any payment, administrative fee,
discount, or rebate related to the dispensing of
covered outpatient drugs to individuals receiving
benefits under this title, regardless of whether such
payment, fee, discount, or rebate is received from the
State or a managed care entity directly or from a
pharmacy benefit manager or another entity that has a
contract with the State or a managed care entity, shall
respond to surveys of retail prices conducted under
this subsection.
``(G) Survey information.--Information on retail
community prices obtained under this paragraph shall be
made publicly available and shall include at least the
following:
``(i) The monthly response rate of the
survey including a list of pharmacies not in
compliance with subparagraph (F).
``(ii) The sampling frame and number of
pharmacies sampled monthly.
``(iii) Characteristics of reporting
pharmacies, including type (such as independent
or chain), geographic or regional location, and
dispensing volume.
``(iv) Reporting of a separate national
average drug acquisition cost for each drug for
independent retail pharmacies and chain
operated pharmacies.
``(v) Information on price concessions
including on and off invoice discounts,
rebates, and other price concessions.
``(vi) Information on average professional
dispensing fees paid.
``(H) Report on specialty pharmacies.--
``(i) In general.--Not later than 1 year
after the effective date of this subparagraph,
the Secretary shall submit a report to Congress
examining specialty drug coverage and
reimbursement under this title.
``(ii) Content of report.--Such report
shall include a description of how State
Medicaid programs define specialty drugs, how
much State Medicaid programs pay for specialty
drugs, how States and managed care plans
determine payment for specialty drugs, the
settings in which specialty drugs are dispensed
(such as retail community pharmacies or
specialty pharmacies), whether acquisition
costs for specialty drugs are captured in the
national average drug acquisition cost survey,
and recommendations as to whether specialty
pharmacies should be included in the survey of
retail prices to ensure national average drug
acquisition costs capture drugs sold at
specialty pharmacies and how such specialty
pharmacies should be defined.'';
(C) in paragraph (2)--
(i) in subparagraph (A), by inserting ``,
including payments rates under Medicaid managed
care plans,'' after ``under this title''; and
(ii) in subparagraph (B), by inserting
``and the basis for such dispensing fees''
before the semicolon; and
(D) in paragraph (4), by inserting ``, and
$5,000,000 for fiscal year 2020 and each fiscal year
thereafter,'' after ``2010''.
(2) Effective date.--The amendments made by this subsection
take effect on the first day of the first quarter that begins
on or after the date that is 18 months after the date of
enactment of this Act.
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