# H.R. 3200/Division B/Title VII/Subtitle E
## SUBTITLE E — FINANCING
### Sec. 1741. Payments to Pharmacists.

    (a) Pharmacy Reimbursement Limits.—
          (1) In General.—
             Section 1927(e) of the Social Security Act (42 U.S.C. 1396r–8(e)) is amended—
                (A) by striking paragraph (5) and inserting the following:
                   ``(5) Use of amp in upper payment limits.—The Secretary shall calculate the Federal upper reimbursement limit established under paragraph (4) as 130 percent of the weighted average (determined on the basis of manufacturer utilization) of monthly average manufacturer prices.´´.
          (2) Definition of AMP.—
             Section 1927(k)(1)(B) of such Act (42 U.S.C. 1396r–8(k)(1)(B)) is amended—
                (B) in the heading, by striking ``extended to wholesalers´´ and inserting ``and other payments´´; and
                (C) by striking ``regard to´´ and all that follows through the period and inserting the following: ``regard to—
                   ``(i) customary prompt pay discounts extended to wholesalers;
                   ``(ii) bona fide service fees paid by manufacturers;
                   ``(iii) reimbursement by manufacturers for recalled, damaged, expired, or otherwise unsalable returned goods, including reimbursement for the cost of the goods and any reimbursement of costs associated with return goods handling and processing, reverse logistics, and drug destruction;
                   ``(iv) sales directly to, or rebates, discounts, or other price concessions provided to, pharmacy benefit managers, managed care organizations, health maintenance organizations, insurers, mail order pharmacies that are not open to all members of the public, or long term care providers, provided that these rebates, discounts, or price concessions are not passed through to retail pharmacies;
                   ``(v) sales directly to, or rebates, discounts, or other price concessions provided to, hospitals, clinics, and physicians, unless the drug is an inhalation, infusion, or injectable drug, or unless the Secretary determines, as allowed for in Agency administrative procedures, that it is necessary to include such sales, rebates, discounts, and price concessions in order to obtain an accurate AMP for the drug. Such a determination shall not be subject to judicial review; or
                   ``(vi) rebates, discounts, and other price concessions required to be provided under agreements under subsections (f) and (g) of section 1860D–2(f).´´.
          (3) Manufacturer Reporting Requirements.—
             Section 1927(b)(3) of such Act (42 U.S.C. 1396r–8(b)(3)) is amended—
                (A) in subparagraph (A), by adding at the end the following new clause:
                   ``(iv) not later than 30 days after the last day of each month of a rebate period under the agreement, on the manufacturer’s total number of units that are used to calculate the monthly average manufacturer price for each covered outpatient drug.´´.
          (4) Authority to Promulgate Regulation.—
             The Secretary of Health and Human Services may promulgate regulations to clarify the requirements for upper payment limits and for the determination of the average manufacturer price in an expedited manner. Such regulations may become effective on an interim final basis, pending opportunity for public comment.
          (5) Pharmacy Reimbursements Through December 31, 2010.—
             The specific upper limit under section 447.332 of title 42, Code of Federal Regulations (as in effect on December 31, 2006) applicable to payments made by a State for multiple source drugs under a State Medicaid plan shall continue to apply through December 31, 2010, for purposes of the availability of Federal financial participation for such payments.
    (b) Disclosure of Price Information to the Public.—
       Section 1927(b)(3) of such Act (42 U.S.C. 1396r–8(b)(3)) is amended—
          (1) in subparagraph (A)—
                (A) in clause (i), in the matter preceding subclause (I), by inserting ``month of a´´ after ``each´´; and
                (B) in the last sentence, by striking ``and shall,´´ and all that follows through the period; and
          (2) in subparagraph (D)(v), by inserting ``weighted´´ before ``average manufacturer prices´´.

### Sec. 1742. Prescription Drug Rebates.

    (a) Additional Rebate for New Formulations of Existing Drugs.—
          (1) In General.—
             Section 1927(c)(2) of the Social Security Act (42 U.S.C. 1396r–8(c)(2)) is amended by adding at the end the following new subparagraph:
                ``(C) Treatment of new formulations.—In the case of a drug that is a line extension of a single source drug or an innovator multiple source drug that is an oral solid dosage form, the rebate obligation with respect to such drug under this section shall be the amount computed under this section for such new drug or, if greater, the product of—
                   ``(i) the average manufacturer price of the line extension of a single source drug or an innovator multiple source drug that is an oral solid dosage form;
                   ``(ii) the highest additional rebate (calculated as a percentage of average manufacturer price) under this section for any strength of the original single source drug or innovator multiple source drug; and
                   ``(iii) the total number of units of each dosage form and strength of the line extension product paid for under the State plan in the rebate period (as reported by the State).
                ``In this subparagraph, the term ‘line extension’ means, with respect to a drug, an extended release formulation of the drug.´´.
          (2) Effective Date.—
             The amendment made by paragraph (1) shall apply to drugs dispensed after December 31, 2009.
    (b) Increase Minimum Rebate Percentage for Single Source Drugs.—
       Section 1927(c)(1)(B)(i) of the Social Security Act (42 U.S.C. 1396r–8(c)(1)(B)(i)) is amended—
          (1) in subclause (IV), by striking ``and´´ at the end;
          (2) in subclause (V)—
                (A) by inserting ``and before January 1, 2010´´ after ``December 31, 1995,´´; and
                (B) by striking the period at the end and inserting ``; and´´; and
          (3) by adding at the end the following new subclause:
             ``(VI) after December 31, 2009, is 22.1 percent.´´.

### Sec. 1743. Extension of Prescription Drug Discounts to Enrollees of Medicaid Managed Care Organizations.

    (a) In General.—
       Section 1903(m)(2)(A) of the Social Security Act (42 U.S.C. 1396b(m)(2)(A)) is amended—
          (1) in clause (xi), by striking ``and´´ at the end;
          (2) in clause (xii), by striking the period at the end and inserting ``; and´´; and
          (3) by adding at the end the following:
             ``(xiii) such contract provides that the entity shall report to the State such information, on such timely and periodic basis as specified by the Secretary, as the State may require in order to include, in the information submitted by the State to a manufacturer under section 1927(b)(2)(A), information on covered outpatient drugs dispensed to individuals eligible for medical assistance who are enrolled with the entity and for which the entity is responsible for coverage of such drugs under this subsection.´´.
    (b) Conforming Amendments.—
       Section 1927 of such Act (42 U.S.C. 1396r-8) is amended——
          (1) in the first sentence of subsection (b)(1)(A), by inserting before the period at the end the following: ``, including such drugs dispensed to individuals enrolled with a medicaid managed care organization if the organization is responsible for coverage of such drugs´´;
          (2) in subsection (b)(2), by adding at the end the following new subparagraph:
             ``(C) Reporting on MMCO drugs.—On a quarterly basis, each State shall report to the Secretary the total amount of rebates in dollars received from pharmacy manufacturers for drugs provided to individuals enrolled with Medicaid managed care organizations that contract under section 1903(m).´´; and
          (3) in subsection (j)—
                (A) in the heading by striking ``Exemption´´ and inserting ``Special rules´´; and
                (B) in paragraph (1), by striking ``not´´.
    (c) Effective Date.—
       The amendments made by this section take effect on July 1, 2010, and shall apply to drugs dispensed on or after such date, without regard to whether or not final regulations to carry out such amendments have been promulgated by such date.

### Sec. 1744. Payments for Graduate Medical Education.

    (a) In General.—
       Section 1905 of the Social Security Act (42 U.S.C. 1396d), as amended by sections 1701(a)(2), 1711(a), and 1713(a), is amended by adding at the end the following new subsection:
          ``(bb) Payment for graduate medical education.—
             ``(1) In general.—The term ‘medical assistance’ includes payment for costs of graduate medical education consistent with this subsection, whether provided in or outside of a hospital.
             ``(2) Submission of information.—For purposes of paragraph (1) and section 1902(a)(13)(A)(v), payment for such costs is not consistent with this subsection unless—
                ``(A) the State submits to the Secretary, in a timely manner and on an annual basis specified by the Secretary, information on total payments for graduate medical education and how such payments are being used for graduate medical education, including—
                   ``(i) the institutions and programs eligible for receiving the funding;
                   ``(ii) the manner in which such payments are calculated;
                   ``(iii) the types and fields of education being supported;
                   ``(iv) the workforce or other goals to which the funding is being applied;
                   ``(v) State progress in meeting such goals; and
                   ``(vi) such other information as the Secretary determines will assist in carrying out paragraphs (3) and (4); and
                ``(B) such expenditures are made consistent with such goals and requirements as are established under paragraph (4).
             ``(3) Review of information.—The Secretary shall make the information submitted under paragraph (2) available to the Advisory Committee on Health Workforce Evaluation and Assessment (established under section 2261 of the Public Health Service Act). The Secretary and the Advisory Committee shall independently review the information submitted under paragraph (2), taking into account State and local workforce needs.
             ``(4) Specification of goals and requirements.—The Secretary shall specify by rule, initially published by not later than December 31, 2011—
                ``(A) program goals for the use of funds described in paragraph (1), taking into account recommendations of the such Advisory Committee and the goals for approved medical residency training programs described in section 1886(h)(1)(B); and
                ``(B) requirements for use of such funds consistent with such goals.
          ``Such rule may be effective on an interim basis pending revision after an opportunity for public comment.´´.
    (b) Conforming Aamendment.—
       Section 1902(a)(13)(A) of such Act (42 U.S.C. 1396a(a)(13)(A)) is amended—
          (1) by striking ``and´´ at the end of clause (iii);
          (2) by striking ``; and´´ and inserting ``, and´´; and
          (3) by adding at the end the following new clause:
             ``(v) in the case of hospitals and at the option of a State, such rates may include, to the extent consistent with section 1905(bb), payment for graduate medical education; and´´.
    (c) Effective Date.—
       The amendments made by this section shall take effect on the date of the enactment of this Act. Nothing in this section shall be construed as affecting payments made before such date under a State plan under title XIX of the Social Security Act for graduate medical education.