I 

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. CA ́RDENAS) 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. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Drug Price Trans5 parency in Medicaid Act of 2019’’. 

6 SEC. 2. IMPROVING TRANSPARENCY AND PREVENTING THE 

7 USE OF ABUSIVE SPREAD PRICING AND RE8 LATED PRACTICES IN MEDICAID. 

9 (a) PASS-THROUGH PRICING REQUIRED.— 


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1 (1) IN GENERAL.—Section 1927(e) of the So2 cial Security Act (42 U.S.C. 1396r–8(e)) is amended 

3 by adding at the end the following: 

4 ‘‘(6) PASS-THROUGH PRICING REQUIRED.—A 

5 contract between the State and a pharmacy benefit 

6 manager (referred to in this paragraph as a ‘PBM’), 

7 or a contract between the State and a managed care 

8 entity or other specified entity (as such terms are 

9 defined in section 1903(m)(9)(D)) that includes pro10 visions making the entity responsible for coverage of 

11 covered outpatient drugs dispensed to individuals en12 rolled with the entity, shall require that payment for 

13 such drugs and related administrative services (as 

14 applicable), including payments made by a PBM on 

15 behalf of the State or entity, is based on a pass16 through pricing model under which— 

17 ‘‘(A) any payment made by the entity or 

18 the PBM (as applicable) for such a drug— 

19 ‘‘(i) is limited to— 

20 ‘‘(I) ingredient cost; and 

21 ‘‘(II) a professional dispensing 

22 fee that is not less than the profes23 sional dispensing fee that the State 

24 plan or waiver would pay if the plan 


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1 or waiver was making the payment di2 rectly; 

3 ‘‘(ii) is passed through in its entirety 

4 by the entity or PBM to the pharmacy 

5 that dispenses the drug; and 

6 ‘‘(iii) is made in a manner that is con7 sistent with section 1902(a)(30)(A) and 

8 sections 447.512, 447.514, and 447.518 of 

9 title 42, Code of Federal Regulations (or 

10 any successor regulation) as if such re11 quirements applied directly to the entity or 

12 the PBM; 

13 ‘‘(B) payment to the entity or the PBM 

14 (as applicable) for administrative services per15 formed by the entity or PBM is limited to a 

16 reasonable administrative fee that covers the 

17 reasonable cost of providing such services; 

18 ‘‘(C) the entity or the PBM (as applicable) 

19 shall make available to the State, and the Sec20 retary upon request, all costs and payments re21 lated to covered outpatient drugs and accom22 panying administrative services incurred, re23 ceived, or made by the entity or the PBM, in24 cluding ingredient costs, professional dispensing 

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1 voice fees, discounts, or related adjustments 

2 such as direct and indirect remuneration fees, 

3 and any and all other remuneration; and 

4 ‘‘(D) any form of spread pricing whereby 

5 any amount charged or claimed by the entity or 

6 the PBM (as applicable) is in excess of the 

7 amount paid to the pharmacies on behalf of the 

8 entity, including any post-sale or post-invoice 

9 fees, discounts, or related adjustments such as 

10 direct and indirect remuneration fees or assess11 ments (after allowing for a reasonable adminis12 trative fee as described in subparagraph (B)) is 

13 not allowable for purposes of claiming Federal 

14 matching payments under this title.’’. 

15 (2) CONFORMING AMENDMENT.—Section 

16 1903(m)(2)(A)(xiii) of such Act (42 U.S.C. 

17 1396b(m)(2)(A)(xiii)) is amended— 

18 (A) by striking ‘‘and (III)’’ and inserting 

19 ‘‘(III)’’; 

20 (B) by inserting before the period at the 

21 end the following: ‘‘, and (IV) pharmacy benefit 

22 management services provided by the entity, or 

23 provided by a pharmacy benefit manager on be24 half of the entity under a contract or other ar25 rangement between the entity and the pharVerDate Sep 11 2014 23:41 Dec 06, 2019 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H5281.IH H5281

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1 macy benefit manager, shall comply with the re2 quirements of section 1927(e)(6)’’; and 

3 (C) by moving the left margin 2 ems to the 

4 left. 

5 (3) EFFECTIVE DATE.—The amendments made 

6 by this subsection apply to contracts between States 

7 and managed care entities, other specified entities, 

8 or pharmacy benefits managers that are entered into 

9 or renewed on or after the date that is 18 months 

10 after the date of enactment of this Act. 

11 (b) SURVEY OF RETAIL PRICES.— 

12 (1) IN GENERAL.—Section 1927(f) of the Social 

13 Security Act (42 U.S.C. 1396r–8(f)) is amended— 

14 (A) by striking ‘‘and’’ after the semicolon 

15 at the end of paragraph (1)(A)(i) and all that 

16 precedes it through ‘‘(1)’’ and inserting the fol17 lowing: 

18 ‘‘(1) SURVEY OF RETAIL PRICES.—The Sec19 retary shall conduct a survey of retail community 

20 drug prices, to include at least the national average 

21 drug acquisition cost, as follows: 

22 ‘‘(A) USE OF VENDOR.—The Secretary 

23 may contract services for— 

24 ‘‘(i) with respect to retail community 

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1 ly basis of retail survey prices of the na2 tional average drug acquisition cost for 

3 covered outpatient drugs for such phar4 macies, net of all discounts and rebates (to 

5 the extent any information with respect to 

6 such discounts and rebates is available), 

7 the average reimbursement received for 

8 such drugs by such pharmacies from all 

9 sources of payment, including third par10 ties, and, to the extent available, the usual 

11 and customary charges to consumers for 

12 such drugs; and’’; 

13 (B) by adding at the end of paragraph (1) 

14 the following: 

15 ‘‘(F) SURVEY REPORTING.—In order to 

16 meet the requirement of section 1902(a)(54), a 

17 State shall require that any retail community 

18 pharmacy in the State that receives any pay19 ment, administrative fee, discount, or rebate re20 lated to the dispensing of covered outpatient 

21 drugs to individuals receiving benefits under 

22 this title, regardless of whether such payment, 

23 fee, discount, or rebate is received from the 

24 State or a managed care entity directly or from 

25 a pharmacy benefit manager or another entity 


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1 that has a contract with the State or a man2 aged care entity, shall respond to surveys of re3 tail prices conducted under this subsection. 

4 ‘‘(G) SURVEY INFORMATION.—Information 

5 on retail community prices obtained under this 

6 paragraph shall be made publicly available and 

7 shall include at least the following: 

8 ‘‘(i) The monthly response rate of the 

9 survey including a list of pharmacies not in 

10 compliance with subparagraph (F). 

11 ‘‘(ii) The sampling frame and number 

12 of pharmacies sampled monthly. 

13 ‘‘(iii) Characteristics of reporting 

14 pharmacies, including type (such as inde15 pendent or chain), geographic or regional 

16 location, and dispensing volume. 

17 ‘‘(iv) Reporting of a separate national 

18 average drug acquisition cost for each drug 

19 for independent retail pharmacies and 

20 chain operated pharmacies. 

21 ‘‘(v) Information on price concessions 

22 including on and off invoice discounts, re23 bates, and other price concessions. 

24 ‘‘(vi) Information on average profes25 sional dispensing fees paid. 


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1 ‘‘(H) REPORT ON SPECIALTY PHAR2 MACIES.— 

3 ‘‘(i) IN GENERAL.—Not later than 1 

4 year after the effective date of this sub5 paragraph, the Secretary shall submit a re6 port to Congress examining specialty drug 

7 coverage and reimbursement under this 

8 title. 

9 ‘‘(ii) CONTENT OF REPORT.—Such re10 port shall include a description of how 

11 State Medicaid programs define specialty 

12 drugs, how much State Medicaid programs 

13 pay for specialty drugs, how States and 

14 managed care plans determine payment for 

15 specialty drugs, the settings in which spe16 cialty drugs are dispensed (such as retail 

17 community pharmacies or specialty phar18 macies), whether acquisition costs for spe19 cialty drugs are captured in the national 

20 average drug acquisition cost survey, and 

21 recommendations as to whether specialty 

22 pharmacies should be included in the sur23 vey of retail prices to ensure national aver24 age drug acquisition costs capture drugs 


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1 sold at specialty pharmacies and how such 

2 specialty pharmacies should be defined.’’; 

3 (C) in paragraph (2)— 

4 (i) in subparagraph (A), by inserting 

5 ‘‘, including payments rates under Med6 icaid managed care plans,’’ after ‘‘under 

7 this title’’; and 

8 (ii) in subparagraph (B), by inserting 

9 ‘‘and the basis for such dispensing fees’’ 

10 before the semicolon; and 

11 (D) in paragraph (4), by inserting ‘‘, and 

12 $5,000,000 for fiscal year 2020 and each fiscal 

13 year thereafter,’’ after ‘‘2010’’. 

14 (2) EFFECTIVE DATE.—The amendments made 

15 by this subsection take effect on the first day of the 

16 first quarter that begins on or after the date that is 

17 18 months after the date of enactment of this Act. 

Æ 


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