II 

112TH CONGRESS 

1ST SESSION S. 1356 

To amend title XIX of the Social Security Act to encourage States to 

increase generic drug utilization under Medicaid, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JULY 13, 2011 

Mr. BROWN of Massachusetts (for himself, Mr. WYDEN, and Mr. MCCAIN) introduced the following bill; which was read twice and referred to the Committee on Finance 

A BILL 

To amend title XIX of the Social Security Act to encourage 

States to increase generic drug utilization under Medicaid, and for other purposes. 

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 ‘‘Affordable Medicines 

5 Utilization Act of 2011’’. 


smartinez on DSK6TPTVN1PROD with BILLS
2 

•S 1356 IS

1 SEC. 2. SAVINGS REBATE FOR STATES THAT INCREASE GE2 NERIC DRUG UTILIZATION UNDER MEDICAID. 

3 (a) IN GENERAL.—Section 1903 of the Social Secu4 rity Act (42 U.S.C. 1396b) is amended by inserting after 

5 subsection (g), the following: 

6 ‘‘(h)(1) With respect to each of fiscal years 2012, 

7 2013, and 2014, if the generic substitution rate deter8 mined for the State under section 1927(l)(2) for the most 

9 recent preceding fiscal year for which data is available is 

10 greater than the State’s generic substitution rate (as so 

11 determined) for the most recent second preceding fiscal 

12 year for which data is available, the amount determined 

13 under subsection (a) for the State for each quarter of the 

14 fiscal year shall be increased by the amount equal to 50 

15 percent of the generic drug utilization savings amount de16 termined for the State and the quarter under paragraph 

17 (2). 

18 ‘‘(2) The generic drug utilization savings amount de19 termined under this paragraph with respect to a State and 

20 a quarter is the product of— 

21 ‘‘(A) the difference between the— 

22 ‘‘(i) total amount expended by the State 

23 for the corresponding quarter of the preceding 

24 fiscal year for providing medical assistance for 

25 multiple source drugs (as defined in section 


smartinez on DSK6TPTVN1PROD with BILLS
3 

•S 1356 IS

1 1927(k)(7)(A)(i)), as determined after the ap2 plication of section 1927(b)(1)(B); and 

3 ‘‘(ii) total amount expended by the State 

4 for the quarter involved for providing medical 

5 assistance for such drugs (as so determined); 

6 and 

7 ‘‘(B) the State percentage determined for the 

8 State under section 1905(b).’’. 

9 (b) ANNUAL DETERMINATION OF STATE GENERIC

10 SUBSTITUTION RATES AND PERFORMANCE RANKINGS.— 

11 Section 1927 of the Social Security Act (42 U.S.C. 1396r– 

12 8) is amended by adding at the end the following: 

13 ‘‘(l) ANNUAL DETERMINATION OF STATE GENERIC

14 SUBSTITUTION RATES AND PERFORMANCE RANKINGS.— 

15 ‘‘(1) IN GENERAL.—Not later than January 1, 

16 2012, and annually thereafter, the Secretary shall 

17 determine the generic substitution rate (as defined 

18 in paragraph (2)) for each State for the most recent 

19 preceding fiscal year and the most recent second 

20 preceding fiscal year for which data are available. 

21 The Secretary annually shall publish on the Internet 

22 Web site of the Centers for Medicare & Medicaid 

23 Services the generic substitution rates determined 

24 for each State for such preceding fiscal years and 

25 the percentage increase or decrease in such rates 


smartinez on DSK6TPTVN1PROD with BILLS
4 

•S 1356 IS

1 when compared with each other with respect to a 

2 State. On the basis of such comparison, the Sec3 retary shall list the States in order of the States 

4 with the greatest increase in the generic substitution 

5 rate. 

6 ‘‘(2) GENERIC SUBSTITUTION RATE.—In para7 graph (1), the term ‘generic substitution rate’ 

8 means, with respect to a State, the share of all drug 

9 units for which payment is made to the State under 

10 this title for the 20 most widely prescribed multiple 

11 source drugs under the State program under this 

12 title that have a specific National Drug Code and 

13 meet the requirements of subsection (k)(7)(A)(i).’’. 

14 (c) EVALUATION AND REPORT.— 

15 (1) IN GENERAL.—Not later than December 31, 

16 2014, the Secretary of Health and Human Services 

17 shall evaluate and report to Congress on the effec18 tiveness of the generic drug utilization savings pay19 ments authorized under section 1903(h) of the So20 cial Security Act (42 U.S.C. 1396b(h)) (as added by 

21 subsection (a)) in encouraging States to increase 

22 their Medicaid generic substitution rate. The evalua23 tion shall include (but is not limited to) the fol24 lowing: 


smartinez on DSK6TPTVN1PROD with BILLS
5 

•S 1356 IS

1 (A) An analysis of the amounts each State 

2 Medicaid program saves through increased ge3 neric drug substitution. 

4 (B) An analysis of any indirect savings to 

5 State Medicaid programs through increased 

6 medication adherence due to increased accessi7 bility and affordability of prescriptions. 

8 (C) An analysis of future estimated sav9 ings to State Medicaid programs and the Fed10 eral Government after termination of the ge11 neric drug utilization savings payments author12 ized under such section. 

13 (2) MEDICAID GENERIC SUBSTITUTION RATE.— 

14 In paragraph (1), the term ‘‘Medicaid generic substi15 tution rate’’ has the meaning given the term ‘‘ge16 neric substitution rate’’ with respect to a State 

17 under 1927(l)(2) of the Social Security Act (42 

18 U.S.C. 1396r–8(l)(2)) (as added by subsection (b)). 

Æ 


smartinez on DSK6TPTVN1PROD with BILLS