I 

118TH CONGRESS 

1ST SESSION H. R. 1613 

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 

MARCH 17, 2023 

Mr. CARTER of Georgia (for himself, Mr. VICENTE GONZALEZ of Texas, Ms. 

STEFANIK, Ms. ROSS, Mr. ALLEN, and Mr. AUCHINCLOSS) 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 2023’’. 


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1 SEC. 2. IMPROVING TRANSPARENCY AND PREVENTING THE 

2 USE OF ABUSIVE SPREAD PRICING AND RE3 LATED PRACTICES IN MEDICAID. 

4 (a) PASS-THROUGH PRICING REQUIRED.— 

5 (1) IN GENERAL.—Section 1927(e) of the So6 cial Security Act (42 U.S.C. 1396r–8(e)) is amended 

7 by adding at the end the following: 

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

9 contract between the State and a pharmacy benefit 

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

11 or a contract between the State and a managed care 

12 entity or other specified entity (as such terms are 

13 defined in section 1903(m)(9)(D)) that includes pro14 visions making the entity responsible for coverage of 

15 covered outpatient drugs dispensed to individuals en16 rolled with the entity, shall require that payment for 

17 such drugs and related administrative services (as 

18 applicable), including payments made by a PBM on 

19 behalf of the State or entity, is based on a pass20 through pricing model under which— 

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

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

23 ‘‘(i) is limited to— 

24 ‘‘(I) ingredient cost; and 

25 ‘‘(II) a professional dispensing 

26 fee that is not less than the profesVerDate Sep 11 2014 06:03 Mar 29, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H1613.IH H1613

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1 sional dispensing fee that the State 

2 plan or waiver would pay if the plan 

3 or waiver was making the payment di4 rectly; 

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

6 by the entity or PBM to the pharmacy or 

7 provider that dispenses the drug; and 

8 ‘‘(iii) is made in a manner that is con9 sistent with section 1902(a)(30)(A) and 

10 sections 447.512, 447.514, and 447.518 of 

11 title 42, Code of Federal Regulations (or 

12 any successor regulation) as if such re13 quirements applied directly to the entity or 

14 the PBM, except that any payment by the 

15 entity or the PBM (as applicable) for the 

16 ingredient cost of a covered outpatient 

17 drug dispensed by providers and phar18 macies referenced in clause (i) or (ii) of 

19 section 447.518(a)(1) of title 42, Code of 

20 Federal Regulations (or any successor reg21 ulation) shall be the same as the payment 

22 amount for the ingredient cost when dis23 pensed by providers and pharmacies not 

24 referenced in such clauses, and in no case 

25 shall payment for the ingredient cost of a 


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1 covered outpatient drug be based on the 

2 actual acquisition cost of a drug dispensed 

3 by providers and pharmacies referenced in 

4 such clauses or take into account a drug’s 

5 status as a drug purchased at a discounted 

6 price by a provider or pharmacy referenced 

7 in such clauses; 

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

9 (as applicable) for administrative services per10 formed by the entity or PBM is limited to a 

11 reasonable administrative fee that covers the 

12 reasonable cost of providing such services; 

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

14 shall make available to the State, and the Sec15 retary upon request, all costs and payments re16 lated to covered outpatient drugs and accom17 panying administrative services incurred, re18 ceived, or made by the entity or the PBM, in19 cluding ingredient costs, professional dispensing 

20 fees, administrative fees, post-sale and post-in21 voice fees, discounts, or related adjustments 

22 such as direct and indirect remuneration fees, 

23 and any and all other remuneration; and 

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

25 any amount charged or claimed by the entity or 


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

2 amount paid to the pharmacies on behalf of the 

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

4 fees, discounts, or related adjustments such as 

5 direct and indirect remuneration fees or assess6 ments (after allowing for a reasonable adminis7 trative fee as described in subparagraph (B)) is 

8 not allowable for purposes of claiming Federal 

9 matching payments under this title.’’. 

10 (2) CONFORMING AMENDMENT.—Section 

11 1903(m)(2)(A)(xiii) of such Act (42 U.S.C. 

12 1396b(m)(2)(A)(xiii)) is amended— 

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

14 ‘‘(III)’’; 

15 (B) by inserting before the period at the 

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

17 management services provided by the entity, or 

18 provided by a pharmacy benefit manager on be19 half of the entity under a contract or other ar20 rangement between the entity and the phar21 macy benefit manager, shall comply with the re22 quirements of section 1927(e)(6)’’; and 

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

24 left. 


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1 (3) EFFECTIVE DATE.—The amendments made 

2 by this subsection apply to contracts between States 

3 and managed care entities, other specified entities, 

4 or pharmacy benefits managers that are entered into 

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

6 after the date of enactment of this Act. 

7 (b) ENSURING ACCURATE PAYMENTS TO PHAR8 MACIES UNDER MEDICAID.— 

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

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

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

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

13 precedes it through ‘‘(1)’’ and inserting the fol14 lowing: 

15 ‘‘(1) DETERMINING PHARMACY ACTUAL ACQUI16 SITION COSTS.—The Secretary shall conduct a sur17 vey of retail community pharmacy drug prices to de18 termine the national average drug acquisition cost as 

19 follows: 

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

21 may contract services for— 

22 ‘‘(i) with respect to retail community 

23 pharmacies, the determination of retail 

24 survey prices of the national average drug 

25 acquisition cost for covered outpatient 


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1 drugs based on a monthly survey of such 

2 pharmacies; and’’; 

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

4 the following: 

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

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

7 State shall require that any retail community 

8 pharmacy in the State that receives any pay9 ment, reimbursement, administrative fee, dis10 count, or rebate related to the dispensing of 

11 covered outpatient drugs to individuals receiv12 ing benefits under this title, regardless of 

13 whether such payment, fee, discount, or rebate 

14 is received from the State or a managed care 

15 entity directly or from a pharmacy benefit man16 ager or another entity that has a contract with 

17 the State or a managed care entity, shall re18 spond to surveys of retail prices conducted 

19 under this subsection. 

20 ‘‘(G) SURVEY INFORMATION.—Information 

21 on national drug acquisition prices obtained 

22 under this paragraph shall be made publicly 

23 available and shall include at least the fol24 lowing: 


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

2 survey including a list of pharmacies not in 

3 compliance with subparagraph (F). 

4 ‘‘(ii) The sampling frame and number 

5 of pharmacies sampled monthly. 

6 ‘‘(iii) Information on price concessions 

7 to the pharmacy, including discounts, re8 bates, and other price concessions, to the 

9 extent that such information is available 

10 during the survey period. 

11 ‘‘(H) REPORT ON SPECIALTY PHAR12 MACIES.— 

13 ‘‘(i) IN GENERAL.—Not later than 1 

14 year after the effective date of this sub15 paragraph, the Secretary shall submit a re16 port to Congress examining specialty drug 

17 coverage and reimbursement under this 

18 title. 

19 ‘‘(ii) CONTENT OF REPORT.—Such re20 port shall include a description of how 

21 State Medicaid programs define specialty 

22 drugs and specialty pharmacies, how much 

23 State Medicaid programs pay for specialty 

24 drugs, how States and managed care plans 

25 determine payment for specialty drugs, the 


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1 settings in which specialty drugs are dis2 pensed (such as retail community phar3 macies or specialty pharmacies), to what 

4 extent acquisition costs for specialty drugs 

5 are captured in the national average drug 

6 acquisition cost survey or through another 

7 process, examples of specialty drug dis8 pensing fees to support the services associ9 ated with dispensing specialty drugs, and 

10 recommendations as to whether specialty 

11 pharmacies should be included in the sur12 vey of retail prices to ensure national aver13 age drug acquisition costs capture drugs 

14 sold at specialty pharmacies and how such 

15 specialty pharmacies should be defined.’’; 

16 (C) in paragraph (2)— 

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

18 ‘‘, including payments rates under Med19 icaid managed care plans,’’ after ‘‘under 

20 this title’’; and 

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

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

23 before the semicolon; and 


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

2 $5,000,000 for fiscal year 2025 and each fiscal 

3 year thereafter,’’ after ‘‘2010’’. 

4 (2) EFFECTIVE DATE.—The amendments made 

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

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

7 18 months after the date of enactment of this Act. 

Æ 


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