I 

111TH CONGRESS 

1ST SESSION H. R. 904 

To amend title XIX of the Social Security Act to reduce the costs of prescription drugs for enrollees of Medicaid managed care organizations by 

extending the discounts offered under fee-for-service Medicaid to such 

organizations. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 4, 2009 

Mr. STUPAK (for himself and Mr. RYAN of Ohio) 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 reduce 

the costs of prescription drugs for enrollees of Medicaid 

managed care organizations by extending the discounts 

offered under fee-for-service Medicaid to such organizations. 

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 ‘‘Medicaid Prescription 

5 Drug Rebate Equalization Act of 2009’’. 


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1 SEC. 2. EXTENSION OF PRESCRIPTION DRUG DISCOUNTS 

2 TO ENROLLEES OF MEDICAID MANAGED 

3 CARE ORGANIZATIONS. 

4 (a) IN GENERAL.—Section 1903(m)(2)(A) of the So5 cial Security Act (42 U.S.C. 1396b(m)(2)(A)) is amend6 ed— 

7 (1) in clause (xi), by striking ‘‘and’’ at the end; 

8 (2) in clause (xii), by striking the period at the 

9 end and inserting ‘‘; and’’; and 

10 (3) by adding at the end the following: 

11 ‘‘(xiii) such contract provides that (I) 

12 payment for covered outpatient drugs dis13 pensed to individuals eligible for medical 

14 assistance who are enrolled with the entity 

15 shall be subject to the same rebate re16 quired by the agreement entered into 

17 under section 1927 as the State is subject 

18 to, and (II) capitation rates paid to the en19 tity shall be based on actual cost experi20 ence related to rebates and subject to the 

21 Federal regulations requiring actuarially 

22 sound rates.’’. 

23 (b) CONFORMING AMENDMENTS.—Section 1927 of 

24 the Social Security Act (42 U.S.C. 1396r–8) is amended— 

25 (1) in subsection (d)— 


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1 (A) in paragraph (1), by adding at the end 

2 the following: 

3 ‘‘(C) Notwithstanding subparagraphs (A) 

4 and (B)— 

5 ‘‘(i) a Medicaid managed care organi6 zation with a contract under section 

7 1903(m) may exclude or otherwise restrict 

8 coverage of a covered outpatient drug on 

9 the basis of policies or practices of the or10 ganization, such as those affecting utiliza11 tion management, formulary adherence, 

12 and cost sharing or dispute resolution, in 

13 lieu of any State policies or practices relat14 ing to the exclusion or restriction of cov15 erage of such drugs, provided, however, 

16 that any such exclusions and restrictions of 

17 coverage shall be subject to any contrac18 tual requirements and oversight by the 

19 State. As contained in the Medicaid man20 aged care organization’s contract with the 

21 State, the State shall maintain approval 

22 authority over the formulary used by the 

23 Medicaid managed care organization; and 

24 ‘‘(ii) nothing in this section or para25 graph (2)(A)(xiii) of section 1903(m) shall 


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1 be construed as requiring a Medicaid man2 aged care organization with a contract 

3 under such section to maintain the same 

4 such policies and practices as those estab5 lished by the State for purposes of individ6 uals who receive medical assistance for cov7 ered outpatient drugs on a fee-for-service 

8 basis.’’; and 

9 (B) in paragraph (4), by inserting after 

10 subparagraph (E) the following: 

11 ‘‘(F) Notwithstanding the preceding sub12 paragraphs of this paragraph, any formulary 

13 established by a Medicaid managed care organi14 zation with a contract under section 1903(m) 

15 may be based on the positive inclusion of drugs 

16 selected by a formulary committee consisting of 

17 physicians, pharmacists, and other individuals 

18 with appropriate clinical experience as long as 

19 drugs excluded from the formulary are available 

20 through prior authorization, as described in 

21 paragraph (5).’’; and 

22 (2) in subsection (j), by striking paragraph (1) 

23 and inserting the following: 


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1 ‘‘(1) Covered outpatients drugs are not subject 

2 to the requirements of this section if such drugs 

3 are— 

4 ‘‘(A) dispensed by health maintenance or5 ganizations, including Medicaid managed care 

6 organizations that contract under section 

7 1903(m); and 

8 ‘‘(B) subject to discounts under section 

9 340B of the Public Health Service Act.’’. 

10 (c) REPORTING.—On a quarterly basis, the States 

11 shall report to the Department of Health and Human 

12 Services the total amount of rebates in dollars and volume 

13 received from pharmacy manufacturers for drugs provided 

14 to individuals enrolled with Medicaid managed care orga15 nizations that contract under section 1903(m) of the So16 cial Security Act (42 U.S.C. 1396b(m)) as a result of this 

17 section for both brand-name and generic drugs. This re18 port shall be made publicly available. 

19 (d) EFFECTIVE DATE.—The amendments made by 

20 this section take effect on the date of the enactment of 

21 this Act and apply to rebate agreements entered into or 

22 renewed under section 1927 of the Social Security Act (42 

23 U.S.C. 1396r–8) on or after such date. 

Æ 


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